The Secretary of Labor would be subjected to similar pressures in connection with the duties and responsibilities which he would have under plan No. 2 in respect to certifying the experience rating and other provisions of State unemployment insurance laws, which if not certified would subject employers to double taxation. This might well result in the weakening if not the elimination of experience rating, a matter in which it must be agreed employers have a direct interest. The Hoover Commission report, in addition to recommending that the functions of the Bureau of Employment Security and Veterans' Placement Service Board be transferred to the Labor Department-which proposal would be carried out under the President's Reorganization Plan No. 2-further recommended that the Selective Service System also be transferred to the superintendence, supervision, and direction of the Secretary of Labor. This latter recommendation, however, is not embodied in Reorganization Plan No. 2. We therefore respectfully submit that plan No. 2 should not be approved unless the Congress is willing to also approve the transfer of the administration of the Selective Service System to the Secretary of Labor. The institute believes the foregoing proposed transfer to be unsound and unwise, since the experience in World War II clearly demonstrated the necessity for close operating relationship between the Selective Service System and the mobilization of manpower effected through the public employment offices during that war. We submit that both of these functions, which are so inextricably tied together, should be independent of the Department of Labor. The situation has not changed and no new factors have been introduced that would warrant or justify the proposed transfer of the Bureau of Employment Security from the Federal Security Agency to the Department of Labor since the President's similar reorganization proposals in this respect were rejected by the Congress in 1947 and 1948. For the reasons stated in this letter, we respectfully urge the favorable consideration by your committee of House Resolution 301 and its adoption by the House. Very truly yours, FRANK J. TAYLOR, President. AMERICAN FEDERATION OF LABOR, Hon. WILLIAM L. DAWSON, Chairman, Committee on Expenditures in the Executive Departments, DEAR CONGRESSMAN DAWSON: President William Green has informed me that on his return to the city this morning he sent you the following telegram: "Regret I was absent from city during hearings by your committee on President's Reorganization Plan No. 2. Please inform committee members American Federation of Labor wholeheartedly in support this plan transferring Bureau Employment Security to Labor Department. Statement setting forth our reasons for this position in full follows by letter." In accordance with this telegram he has asked me to send you this letter setting forth in more detail the position of the American Federation of Labor. He has seen this statement and wishes me to assure you and the members of the Committee on Expenditures in the Executive Departments that it represents his views. I have also been asked by Mr. A. E. Lyon, executive secretary of the Railway Labor Executives' Association, to inform you and the members of the committee that the position set forth herein represents also the position of that association with respect to 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. The following resolution 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, offcial 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 Reorganization 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. Reorganization Plan No. 2 of 1947, you will reall, 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 no State in the Union are these two agencies located in the 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 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. 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 theretofore 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. In closing I respectfully request that this letter be included in the record of the hearings on the plan which were held this week before your committee. Sincerely yours, NELSON H. CRUIKSHANK, Director, Social Insurance Activities. STATEMENT STATES WHICH HAVE UNEMPLOYMENT COMPENSATION AND EMPLOYMENT SERVICES IN A STATE DEPARTMENT OF LABOR OR COMPARABLE DEPARTMENT STATES WHICH HAVE UNEMPLOYMENT COMPENSATION AND EMPLOYMENT SERVICES LOCATED IN A DEPARTMENT HAVING OTHER LABOR FUNCTIONS STATEMENT OF INTERNATIONAL ASSOCIATION OF MACHINISTS Mr. Chairman and members of the committee, my name is George R. Nelson, grand lodge representative for the International Association of Machinists. My address is Machinists' Building, Ninth at Mount Vernon Place NW., Washington 1, D. C. The International Association of Machinists is an independent labor organization with a membership in excess of 600,000. Our association was founded 61 years ago and today we have contractual relations with 11,237 employers. We have approximately 1,500 local lodges located in every State and section of this country. I mention these facts to show our sincere interest in the Bureau of Employment Security. We appear here today to support the recommendation of the Hoover Commission, the President of the United States, the Federal Security Administrator, and the Secretary of Labor, that the Bureau of Employment Security be transferred to the Department of Labor. We also endorse that particular part of the plan which transmits the vesting in the Secretary of Labor, the functions of the Federal Security Administrator in the carrying out of this plan. We have no selfish motive in making this recommendation. It is our sincere belief that the Department of Labor is adequately capable of protecting the best interests of labor, management, and the general public in their administration of the Bureau of Employment Security. It is certainly a sound economical proposal to return this bureau to the Department which carries on so many allied functions to those of this bureau. It is our sincere belief that the transfer of the Bureau to the agency which now administers the Federal Employment Services, is both economically sound and will tend to improve and stabilize the functions of the present employment service and the Bureau of Employment Security. It is for this reason that we respectfully request this committee to favorably report the Reorganization Plan No. 2. STATEMENT OF JOHN LEWIS SMITH, VICE-CHAIRMAN, NATIONAL ECONOMIC COMMISSION, THE AMERICAN LEGION Mr. Chairman and members of the committee, my name is John Lewis Smith, practicing attorney in the District of Columbia and vice chairman of the National Economic Commission of the American Legion. I appear before this committee to express the wholehearted support of the American Legion of Reorganization Plan No. 2, which would transfer the Bureau of Employment Security from the Federal Security Agency to the Department of Labor and vest in the Secretary of Labor the functions of the Veterans' Placement Board and of its chairman. The position of the American Legion in this respect is stated in the resolution presented to the national executive committee by the national economic commission and the national employment committee and adopted by the national executive committee during its last meeting in May of this year in Indianapolis. I should like to read this resolution: "Whereas the Bureau of Employment Security is now a part of the Federal Security Agency and its functions are properly a part of other bureaus and agencies embraced within the Department of Labor, and the American Legion has heretofore urged the placing of the Employment Security Services in the Department of Labor: Now, therefore, be it "Resolved by the national executive committee of the American Legion, Indianapolis, Ind., May 4-6, 1949, We urge that the Bureau of Employment Security, now a part of the Federal Security Agency, be transferred to the Department of Labor, and that the American Legion support whatever adm`nistrative measures or legislative actions necessary to effect this objective." I might add, at this time, that a resolution urging the placing of the employmen service functions within the Department of Labor was adopted by the American Legion at the last National convention, held in Miami. in October 1948. The American Legion, of course, is primarily interested in this matter from the standpoint of the veteran. Our p.incipal concern, therefore, is the location the Veterans' Employment Service in the agency of the Federal Government where the employment interests of veterans are most likely to be advanced. We feel that the Department of Labor is that agency. In taking this position we have a record to rely on; for 9 of the 16 years since the enactment of the Wagner-Peyser Act the United States Employment Service, of which the Veterans' Employment Service is a part, has been administered by the Department of Labor and we consider that during those 9 years the employment interests of veterans were best promoted. That is said with no intention to reflect upon the good intentions or efficiency of the other agencies which at other times have administered the employment service. It is reasonable to expect the employment service to prosper when located in the agency of Government where it appropriately belongs-the agency which has been created for the purpose, among other things, of advancing the opportunities of wage earners for profitable employment. In the Department of Labor, the employment service would have the advantage of close relationship with other bureaus and agencies which are also concerned with employment matters. The Department of Labor, furthermore, contains the Bureau of Veterans' Reemployment Rights. Certainly this function is closely related to the job of providing employment for veterans and I am sure that both the employment service and the Bureau of Veterans' Reemployment Rights would benefit by the closer liaison which would be made possible by the relocation of the USES in the Department of Labor. We note with approval the provision of the reorganization plan which would transfer the functions of the Veterans' Placement Service Board and those of its Chairman to the Secretary of Labor and abolish the Board. We consider it desirable that the power of appointment of the Chief of the Veterans' Employment Service be vested in the head of the agency in which the service is located rather than in the chairman of a board, who, by law, is the head of another agency primarily concerned with other matters. We consider that the concentration of the responsibility for the administration of the Veterans' Employment Service in one official is a vast improvement, from an administrative standpoint, over the previous arrangement whereby this responsibility was vested in a board which was largely inactive. Because of our greater interest in the Veterans' Employment Service and the United States Employment Service, we have not referred to the transfer of the unemployment insurance function. There seems to be unanimous agreement, however, that this function should be lodged in the same agency which includes the USES. Since both are Federal-State programs dealing with labor-force conditions, the appropriate agency is the Department of Labor. To summarize, it is the position of the American Legion, expressed by resolution of its last national convention and of its national executive committee, that Reorganization Plan No. 2 of 1949 should be approved. That position is based upon the belief that the employment interests of veterans will best be served by the location in the Department of Labor of the Bureau of Employment Security. STATEMENT OF PAUL W. KERR, ELKHART, IND., PRESIDENT, HENRY WEIS MANUFACTURING Co.; DIRECTOR, INDIANA STATE CHAMBER OF COMMERCE; FORMER MEMBER, INDIANA STATE SENATE I am Paul W. Kerr, of Elkhart, Ind. I am president of the Henry Weis Manufacturing Co., a small concern producing metal compartments and shower cabinets. My appearance before your committee is in the dual capacity of private |