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should be corrected and I therefore respectfully ask that you bring this certified copy of the resolution to the attention of the other members of the committee and have it incorporated in the record of the hearings.

Sincerely and respectfully yours.

NELSON H. CRUIKSHANK, Director,

Social Insurance Activities, AFL.

(Mr. Cruikshank's prepared statement is as follows:)

[From American Federation of Labor information and publicity service]

(Following is the text of testimony presented today by Nelson H. Cruikshank, director of social insurance activities of the American Federation of Labor before the Senate Committee on Expenditures in the Executive Departments in relation to President Truman's Reorganization Plan No. 2 of 1949)

Mr. Chairman, my name is Nelson H. Cruikshank, and I am director of social insurance activities for the American Federation of Labor.

I wish at the outset to thank the committee for permitting me the opportunity to present the views of the American Federation of Labor on the President's Reorganization Plan No. 2 which provides for the transfer of the Bureau of Employment Security from the Federal Security Agency to the Department of Labor and for such changes in the organization of that Department as are made necessary by the plan including authorization of wider responsibility for the tripartite Federal Advisory Council.

In order that it may be perfectly clear that the position that I present to this committee is in complete harmony with the official position of the American Federation of Labor, I should like at this point to have included in the record a copy of a resolution which was unanimously passed by the sixty-seventh convention of the American Federation of Labor in Cincinnati, Ohio, November 20, 1948.

"We note the rejection by Congress of the President's proposal to place the USES and the Bureau of Employment Security in the Department of Labor. It is a policy long advocated by the American Federation of Labor that all labor functions should be located in labor's special Department. The promised restoration of the Department of Labor should include the transfer of these two agencies as well as all other agencies serving labor" (Reference: P. 419, official proceedings, sixty-seventh convention, American Federation of Labor).

This action was taken by the convention, reaffirming positions repeatedly expressed in the past on the basis of wide experience and in the belief that a proposal such as that now contained in the Reorganizaiton Plan No. 2 provides the soundest administrative pattern for the economical and efficient operation of an employment security program.

There is apparently no disagreement concerning the necessity of having the two agencies which deal with the matter of employment security located in the same department of the Federal Government. Reorganizaiton Plan No. 2 of 1947, you will recall, provided for the retention of the USES within the Department of Labor, but failed of approval by the narrow margin of one vote in the Senate, largely on the basis of the contention that the Employment Service and unemployment-compensation programs would under that plan be administered in separate agencies. The plan your committee is now considering meets this objection by placing both parts of the program in the same Department. This will make immediately and directly available all of the statistical and informational services relating to the labor market now within the Department of Labor to these offices whose functions relate specifically to employment.

Reorganization Plan No. 1 of 1948 was opposed on the ground that action on the matter should await the recommendation of the Hoover Commission. The Hoover Commission has submitted its report, and this plan is a part of the President's stated purpose to implement the program the Commission recommended. There would now appear to be no logical basis for opposition, since both previous objections have been met.

The proposal, in addition to bringing together at the Federal level these closely related functions, would provide an administrative and organizational pattern which would be in conformity with the predominant pattern of administration of the corresponding agencies within the States. Attached to this statement there is a list of 16 States, including such major industrial States as New York, Pennsylvania, Illinois, Connecticut, Massachusetts, and New Jersey, in which the

unemployment-compensation agencies and employment services are located in the State departments of labor or comparable departments. In addition, there is a list of six States which have the two agencies located in departments having other labor functions. It is equally important to note that in not one State are these two agencies located in the State department of public welfare or other State agency having responsibility for public health, education, or other matters similar to those which constitute the main responsibilities of the Federal Security Agency.

Throughout its history the Department of Labor has been devoted to the purposes set forth in the act of 1913 establishing the Department, and in fulfilling its obligations it has rendered valuable assistance to wage earners in achieving the highest living standards enjoyed by workers anywhere in the world. It has done so without being destructive of other interests, for while the living standards of American workers have steadily improved through the last 36 years, industry has also prospered and agriculture has advanced.

The Department of Commerce has been of great assistance to members of the business community, and this is as it should be. Likewise, the Department of Agriculture has been of tremendous value in assisting the farmers of our Nation to improve their conditions. Affairs of government which relate to industry and business management properly belong within the Department of Commerce and affairs of government of special interest to farmers belong within the Department of Agriculture. We would not have it otherwise. But we insist that affairs of government which relate to employment and to labor belong within the Department of Labor. Otherwise there is no reason for having a Department of Labor. Surely no governmental function can be more closely related to the purpose of advancing "opportunities for profitable employment" than the United States Employment Service. It belongs in the Department of Labor by definition.

The limited responsibilities for the administration of unemployment compensation which under our laws belong to the Federal Government are likewise labor functions, since they deal with the employment relationship, and since they are of direct concern to both industry and labor. The unemployment-compensation program is an insurance system which provides partial compensation for wage losses arising from involuntary unemployment. It is not a relief program administered in relation to need, and is therefore not properly a responsibility of a department or agency whose main functions relate to the administration of public welfare. It is concerned with bringing about a greater measure of employment stability and job continuity.

One phase of the President's plan has not, in our opinion, been given the attention that its importance merits. That is, that it includes broadening the functions of the tripartite Federal Advisory Council which was originally set up under the provisions of the Wagner-Peyser Act to advise the Secretary of Labor. Upon the adoption of the plan, this Council will become the group in which representatives of management and labor and the public will develop policies for the operation of the employment service and the unemployment-compensation programs insofar as these policies are determined at the Federal level. We in the American Federation of Labor have had long experience in serving on such advisory councils, and we thoroughly believe that with the inevitable extension of administrative law such councils offer an appropriate and effective means of guiding bureaus and agencies of government in the interests of those most directly affected and in the interest of the general public without diluting administrative responsibility.

When the manpower problem became acute during World War II the USES was, in effect, the operating division of the War Manpower Commission, and the policies of the WMC were developed by a management-labor policy committee which included in its membership the representatives of industrial management, of labor, and agriculture. Under the policies and programs recommended by this tripartite committee this Nation not only achieved the greatest production record in history but remained throughout the war the only major nation engaged in that great struggle which did not have to resort to national service legislation. It was my privilege to serve as the executive assistant to the labor members of this committee and, while I can recall that many sharp differences developed between the representatives of management and labor, the policies agreed upon by that group were in the end accepted unanimously.

Surely nothing could be more appropriate to our democratic way of life than to provide that the guiding policies of a Federal office dealing with matters of employment and unemployment should come out of a free consultative process among the representatives of the groups most directly concerned with the

operation of such programs. I stress this point because it appears that some representatives of business-management who have expressed their distrust of the Department of Labor have failed to recognize that the plan provides adequately for their participation in the development of the policies that would guide the Secretary of Labor in the administration of the employment-security program. This advisory council is now in existence within the Federal Security Agency and there is attached to this statement a list of the representatives of the public, of industrial management, labor, and veterans' organizations which presently comprise its membership.

The plan which your committee is now considering represents a step forward in progressive reorganization of Government responsibilities. It provides for bringing into the United States Department of Labor functions which properly should be administered within that Department and makes adequate provision for the coordination of the interrelated programs. It provides sound administrative procedures for the operation of these programs and authorizes a tripartite advisory council which will represent all interested groups in the formulation of policies in accordance with our best democratic traditions and experience. This plan therefore carries out both the spirit and letter of the Reorganization Act of 1949 and the recommendations made by the Commission on Organization of the Executive Branch of the Government. The American. Federation of Labor therefore earnestly urges this committee to take favorable action on this plan.

ATTACHMENT I

STATES WHICH HAVE UNEMPLOYMENT COMPENSATION AND EMPLOYMENT SERVICES. IN A STATE DEPARTMENT OF LABOR OR COMPARABLE DEPARTMENT

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STATES WHICH HAVE UNEMPLOYMENT COMPENSATION AND EMPLOYMENT SERVICES LOCATED IN A DEPARTMENT HAVING OTHER LABOR FUNCTIONS

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Dr. William Haber, professor of economics, University of Michigan, Ann Arbor, Mich., Chairman of the Council.

Mr. Max F. Baer, national director, B'nai B'rith Vocational Service Bureau, Washington, D. C.

Public representatives-Continued

Mr. John J. Corson, circulation manager, Washington Post, Washington,
D. C.

Mrs. Sadie OrrDunbar, past president, Federated Women's Clubs, Port-
land, Oreg.

Dr. Merle E. Frampton, principal, New York Institute for the Education of
the Blind, New York City.

Mr. Fred K. Hoehler, executive director, Community Fund of Chicago, Inc.,
Chicago, Ill.

Mrs. Henry A. Ingraham, former president, National Board, YWCA, Brook-
lyn, N. Y.

Mr. Roscoe C. Martin, bureau of public administration, University of
Alabama.

Mr. Ira D. Reed, professor, Haverford College, Haverford, Pa.

Mrs. Anna Rosenberg, New York City.

Dr. Sumner Slichter, professor of economics, Harvard University, Cambridge,
Mass.

Dr. Edward E. Whitte, department of economics, University of Wisconsin,
Madison, Wis.

Management representatives:

Miss Bess Bloodworth, vice president, Namm Department Stores, Brooklyn, N. Y.

Mr. Prentice A. Coonley, business consultant, Washington, D. C.

Mr. John Lovett, president, Michigan Manufacturers Association, Detroit, Mich.

Mr. George Mead, president of the Mead Corp., Dayton, Ohio.

Mr. H. S. Vance, chairman of the board, Studebaker Corp., South Bend, Ind. Mr. Frank DeVyver, Duke University, Durham, N. C.

Mr. Marion Folsom, treasurer, Eastman Kodak, Rochester, N. Y.

Labor representatives:

Mr. John Brophy, director of industrial union councils, Congress of Industrial Organizations, Washington, D. C.

Mr. Harry Boyer, president, Pennsylvania State CIO council.

Mr. Nelson H. Cruikshank, director of social insurance activities, American Federation of Labor, Washington, D. C.

Mr. James McDevitt, president, Pennsylvania State Federation of Labor. Mr. H. L. Mitchell, president, National Farm Labor Union, AFL, Washington, D. C.

Mr. Paul Sifton, national legislative representative, UAW-CIO, Washington, D. C.

Mrs. Katherine Ellickson, assistant director of research, Congress of Industrial Organizations, Washington, D. C.

James A. Brownlow, secretary-treasurer, Metal Trades Department, American Federation of Labor, Washington, D. C.

Mr. Joseph M. Rourke, secretary-treasurer, Connecticut State Federation of Labor, Bridgeport, Conn.

Veterans representatives:

Mr. Robert S. Allen, author, member of American Veterans Committee. Mr. Lawrence J. Fenlon, chairman, national economics commission, American Legion.

Mr. Omar B. Ketchum, director of national legislative services, Veterans of Foreign Wars.

Mr. Millard W. Rice, executive secretary, Disabled American Veterans.
Mr. Edgar C. Corry, Jr., past national commander, American Veterans of
World War II, Washington, D. C.

Senator IVES. Two witnesses, Mr. Paul Sifton and Dr. George Nelson, who are not here, will go over and be heard at tomorrow morning's hearing, which will begin at 10 o'clock in the morning.

(The following telegrams, letters, and statements will be printed in the record.)

Senator JAMES O. EASTLAND,

Senate Office Building, Washington, D. C.:

JACKSON, MISS., July 21, 1949.

Mississippi employment security agency definitely feels that Presidential Reorganization Plan No. 2, insofar as employment service, and unemployment

compensation are concerned, should be defeated. Interest of program can best be furthered by remaining in Federal Security Agency, an independent agency as distinguished from Department of Labor. Urge and request if consistent with your views that you support this position in Senate committee departmental hearings on July 25.

Regards.

Gov. FIELDING L. WRIGHT.

LITTLE ROCK, ARK., July 23, 1949.

Hon. JOHN L. MCCLELLAN,

Chairman, Committee on Expenditures in the Executive Departments,

United States Senate, Washington, D. C.:

I herewith respectfully transmit the following resolution: "Associated Industries of Arkansas, Inc., representing manufacturers of Arkansas, hereby declares its opposition to the President's Reorganization Plan No. 2, providing for transfer of the administration of unemployment compensation and the employment services from the Federal Security Agency to the Department of Labor.

"Associated Industries of Arkansas, Inc., takes this position for the following

reasons:

"1. It appears probable that such a transfer, far from effecting economies in the expenditure of Government funds, would actually result in greater outlays because of resulting expansion of the Department of Labor.

"2. Inasmuch as the unemployment-insurance funds are derived from a tax upon pay rolls, employers and the public generally have an important stake in the impartial administration of benefits and the fixing of qualifications therefor. It is believed that an independent, neutral Federal agency is best suited to deal with the several States in this regard.

"3. The policy of Congress heretofore has been to look upon unemployment compensation as a part of the whole social-security program. This concept is regarded as logical and no pressing reason for taking the program away from the Federal Security Agency is apparent.

"Accordingly, Associated Industries of Arkansas, Inc., expresses hope that the Congress of the United States will reject the President's Reorganization Plan No. 2 prior to its effective date."

ASSOCIATED INDUSTRIES OF ARKANSAS, INC., By FRANK CANTRELL, Managing Director.

MILWAUKEE, Wis., July 25, 1949.

Senator JOHN L. MCCLELLAN,

Chairman, Senate Committee on Expenditures in the Executive Departments, Senate Office Building, Washington, D. C.:

We strongly urge your committee favor rejection Reorganization Plan No. 2. Federal unemployment compensation activities and employment service functions should not be administered by Department of Labor-a special group interest agency. Federal Security Agency representing broad public interest should continue to administer. We desire the above statement placed in the record of your committee hearing.

FRANK T. FREY,

Chairman and Treasurer, Geuder Paeschke & Frey Co.

RACINE, WIS., July 25, 1949.

Senator JOHN L. MCCLELLAN,

Chairman, Senate Committee on Expenditures in the Executive Departments, Washington, D. C.:

Believe it would be a serious mistake to approve President's Reorganization Plan No. 2 as I am firmly convinced present procedure will assure much more efficient results. Hope you will oppose this action.

BELLE CITY MALLEABLE IRON CO.,
C. S. ANDERSON, President

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