"Almost lost in the tumult of congressional investigators and debate on the European recovery program is another Presidential reorganization plan which will transfer unemployment compensation and other employment service functions to the Department of Labor. Labor organizations and Department of Labor spokesmen have been putting on pressure for this change in hopes of a more liberal paying out of unemployment benefits through redefinition of what constitutes "unemployment." Such redefinition will likely extend Unemployment Compensation to many categories not now recognized for that purpose. Under a biased administration this fund of nearly $8,000,000,000 may be converted to job-hold-out money." These palpable fabrications must be rejected out of hand. The unemploymentcompensation reserve is not now in the custody of the Federal Security Agency but is in a trust fund, owned by the States, and upon which the United States Government pays interest. The States regularly requisition these funds from the Treasury to be expended by the States in the payment of unemploymentcompensation benefits without review or restriction by any Federal agency whatsoever. The allegation that unemployment-compensation benefits would be paid by the States to workers on strike or otherwise unwilling to accept employment if the reorganization plan goes through is wholly unfounded. Everyone knows that whether or not a worker receives benefits is a matter for determination by State agencies, administering State laws. Neither the Federal Security Agency, the Department of Labor, or any other Federal agency has any influence at all in the determination of which workers do and which do not receive benefits. Such irresponsible allegations deliberately blink the fact that for the past 21⁄2 years, during which the United States Employment Service has been a part of the Labor Department, it has enjoyed fuller cooperation from, and has given more effective service to, employers than during any other previous period in its history including the 3 years of its 15 years during which it was a part of the Federal Security Agency. Mr. SIFTON. Mr. Chairman, that type of propaganda is what is alluded to in the replies in the first five points which I asked to be inserted in the record. Senator DONNELL. Thank you very much, Mr. Sifton, for your testimony this afternoon. I am informed by Senator Ball, who was compelled to leave on account of another matter, that Mr. John D. Davis, commissioner of Employment Security Department of Olympia, Wash., has very kindly consented to defer his testimony until tomorrow. I would like the record to show with respect to myself, that I came here today absenting myself from the hearing on S. 1988, relating to submerged lands in the marginal belt of the ocean, and that I found, and so understood when I came here today that it would be essential, in my judgment, for me to be present tomorrow at that hearing on S. 1988, and I, therefore, would like the record to show the reason for my not attending this meeting tomorrow. Senator, is there anything further you would like to have in the record? Senator MURRAY. No. Senator DONNELL. Very well. The meeting is recessed until 10 o'clock tomorrow morning in the same room. (Whereupon, at 5:40 p. m., an adjournment was taken until 10 a. m., Saturday, February 28, 1948.) REORGANIZATION PLAN NO. 1 OF 1948 SATURDAY, FEBRUARY 28, 1948 UNITED STATES SENATE, COMMITTEE ON LABOR AND PUBLIC WELFARE, SUBCOMMITTEE ON LABOR, Washington, D. C. The subcommittee met, pursuant to notice, at 10: 10 a. m., in the committee room, Capitol Building, Senator Joseph H. Ball, presiding. Present: Senators Ball (presiding) and Murray. Senator BALL. The committee will come to order. Our first witness this morning is John D. Davis, commissioner, Employment Security Department, of Olympia, Wash. I have a letter here from Mr. Victor Christgau attached to which is a statement of the results of a poll on the attitude of the employment-security agencies on the Reorganization Plan No. 1 of 1948. I think perhaps it might be a good idea to place that letter and the results of this poll in the record prior to your testimony. (The papers referred to are as follows:) INTERSTATE CONFERENCE OF EMPLOYMENT SECURITY AGENCIES, Hon. JOSEPH H. BALL, Senate Office Building, Washington, D. C. DEAR JOE: Attached is a statement on the results of the poll on the Reorganization Plan No. 1, which I would like to have placed in the record of the Senate hearings on the plan. Since the States were divided on the issue, the conference, as such, has taken no position on the plan. It is my understanding, however, that individual State administrators will appear for and against the plan. Sincerely yours, VICTOR CHRISTGAU, President. STATEMENT OF THE RESULTS OF A POLL ON THE ATTITUDE OF THE EMPLOYMENT SECURITY AGENCIES ON THE REORGANIZATION PLAN No. 1 OF 1948 A copy of the reorganization plan, along with a questionnaire, was sent to all State agencies on January 23. Below the questions of the poll are restated and the totals indicated after each question: 1. Do you favor UC and ES being in same department at Federal level? To this question 46 States voted "Yes"; no State voted "No." 2. If UC and ES are in the same department do you favor or oppose A single over-all appropriation and budgets, with fiscal flexibility at State level, which would permit discretion on part of States in expending the total funds available to the State in such manner as to best serve the entire employmentsecurity program? To this question 42 States voted in favor; 2 States voted opposed. 3. Regardless of how you voted on 1 and 2, please check the one of the following which most nearly represents your recommendation to the conference on the reorganization plan. (a) The conference should actively support the reorganization plan. 113 Ten1 States voted the conference should actively support the reorganization plan. (b) The conference should actively oppose the reorganization plan. 2 Twenty-four States voted the conference should actively oppose the reorganization plan. (c) The conference should stay neutral and make no recommendations to Congress on this issue. Ten States voted that the conference should stay neutral on this issue. STATEMENT OF JOHN D. DAVIS, COMMISSIONER, EMPLOYMENT SECURITY DEPARTMENT, OLYMPIA, WASH. Mr. DAVIS. Mr. Chairman, I filed a statement for the record, and assuming that it will be read, I see no reason to read that statement. Is that proper? Senator BALL. All right. You can put it in the record or read it yourself. Mr. DAVIS. All right. If I may, sir, I will enter the statement in the record. Senator BALL. It will be inserted, to follow your testimony. Mr. DAVIS. Mr. Chairman, I have here a letter from H. B. Turcan, administrator of the Louisiana Division of Employment Security, enclosing copies of his letters to the Honorable Allen J. Ellender, Senator from Louisiana, and Hon. John H. Overton, Senator from Louisiana, asking that I submit these copies of these letters for the record in the event that Senator Ellender is not here to do so. Senator BALL. Very well. Mr. DAVIS. Mr. Turcan is ill. Senator BALL. They are probably pretty much the same letters. We can put one in. Mr. Davis. At my request I suggest the letter to Senator Ellender be made a part of the record. (The letter referred to is as follows:) Hon. ALLEN J. ELLENDER, United States Senate, Washington, D. C. FEBRUARY 13, 1948. DEAR SENATOR ELLENDER: You will recall that when the President's Reorganization Plan No. 2, 1947, placing the United States Employment Service permanently in the Department of Labor, was under consideration last June I wrote to you urging that you support that plan. The fact that you interested yourself in the merits of this plan and strongly supported it as being in the best interests of the workers and employers of Louisiana and of the whole Nation is well remembered by all of us. Had there been just a few others who acted as effectively as you did in this matter last year, we would now be much further along toward a stable employment-security system today. Unfortunately, however, plan No. 2, 1947, was rejected by one vote in the Senate, and as a result Congress is having to divert its attention from other matters of great importance to consider the President's Reorganization Plan No. 1, 1948, which seeks to place the Bureau of Employment Security and the United States Employment Service in the United States Department of Labor. You will recall that last year I advocated that both these agencies be transferred to the Labor Department, even though the President's Plan No. 2, 1947, provided only for the transfer of the Employment Service. Consequently I regard plan No. 1, 1948, as even more deserving of active support than the plan of last year. 195%. 2 24%. Because of two States having a divided vote, one of them half and half and the other one-third and two-thirds, the total came out in sixths, but to avoid confusion in stating the results of the poll it was decided to give them in round numbers. You remember last year all sorts of strange arguments were presented before your committee opposing plan No. 2, 1947. Most of these arguments were plainly unrealistic and motivated by factors other than the best interests of workers and employers. The only really legitimate argument advanced against plan No. 2, 1947, was that both the Bureau of Employment Security and the United States Employment Service should be placed together in one Federal department so that the State employment security agencies could have the advantage of dealing with one Federal agency rather than two. This argument has been met by plan No. 1, 1948, which proposes to place both Federal agencies together in the Department of Labor. True to form, however, the people who last year were more interested in grinding their own axes than they were in the efficiency of the employment-security program have thought up some other arguments which do not make sense to many of us who have the responsibility of serving employers and working. Their three principal arguments are italicized below: 1. They contend that the United States Department of Labor is controlled and directed by organized labor. I have had 10 years of first-hand experience in dealing with the United States Department of Labor, and regard the above argument as potently ridiculous. It is in the same category as a statement to the effect that the United States Department of Justice is controlled and directed by the American Bar Association. The Department of Labor, in carrying out its responsibilities under the law, employs several outstanding individuals from organized labor. The Department of Justice employs numerous eminent lawyers affiliated with their professional associations. Every department of the Federal and State Government employs specialists in its particular functions. This has not created a situation in which each department is only a thinly disguised front for special interests. They are actually instruments of government created and governed by the laws of the land. I do not know of a single instance in my dealings with the United States Department of Labor during the past 10 years in which the decisions or actions of that Department have been dominated by organized labor, or prejudicial to the interests of employers. It is doubtful that anyone appearing before your committee can cite specific instances of such domination or prejudice. The rules and regulations of the Secretary of Labor under which the States operate their employment services were made and issued only after a series of conferences and negotiations with State officials. I do not know of a single State official who feels that the Secretary's rules and regulations are not equitable and fair. Furthermore, neither management groups nor organized labor have objected to these rules. It is also a matter of fact that not one single State official since November 16, which is the time the Employment Service was returned to State operation, has experienced any difficulty with the United States Employment Service or the Department of Labor which can be attributed to organized-labor domination. My position in this matter is neither prolabor nor antilabor. My position is simply that of a State employment-security administrator who would like to see an intelligent solution to this problem of Federal organization so that we can devote full time and energy to rendering both employers and workers the full measure of service to which they are entitled. I believe that the President's Plan No. 1, 1948, provides such a solution. 2. They contend that the employment service and unemployment insurance programs are much more closely related to the functions of the Federal Security Agency that they are to the functions of the United States Department of Labor. As you well know, this question was settled a long time ago in Louisiana and in many other States by placing these two functions in the State department of labor. We attribute the success of our agency here very largely to the fact that our functions have not been confused with welfare activities, but have been identified for years with the dignified and responsible relationships between employers and workers in a free-enterprise economy. My point of view, which is shared by all thinking officials of Government, industry, and labor, is that any attempt to dispense biased justice or service as between employers and workers would do the cause of workers irreparable damage. The best interests of labor have always been, and are today, best served by the square deal, the even-handed administration of the law, in order that there not be set in motion power politics within the Government itself for perverting the law to the service of any special group. Wherever in any country unequal consideration has become a policy of Government, labor has always been first to suffer. Wherever the rights of labor have been abridged, the rights of employers likewise have soon disappeared. These things are mentioned simply to emphasize the point that in Louisiana and in many other States, the employment service and unemployment insurance programs are administered by the State department of labor; that this administration has met with the approval and support of employers, workers, and the public; that the President's Committee on Administrative Organization in 1937 endorsed this type of administration; and last, that there is a basic philosophy of administration of labor affairs which has served always to guide administrators in labor matters toward equal and unbiased justice as the best guaranty of the rights of employees. To place the employment service and unemployment insurance programs in the Federal Security Agency with public relief, cancer control, and public hospitals is to imply that the employment process is a pathology, the labor market a group of people requiring special Government protection, and the Department of Labor an organ of the Federal Government corrupted by special interests with the official approval of the Congress and of the executive department itself. With these implications I cannot agree. 3. They contend that the action should be deferred until the Hoover commission reports to the Eighty-first Congress. This is plainly an administrative filibuster which keeps the Nation's whole employment-security program in a state of confusion for another year or two. The Hoover Commission now studying the organization of the executive branch of the Government is undertaking essentially the same task of the 1937 Commission-which recommended that all programs of benefits to workers based on right be placed in the Labor Department. The Hoover Commission is composed of men of ability and integrity, and there is little doubt that they will confirm the findings of the able commission which preceded them in this task. Senator, a summary of my position can be quickly stated. As a citizen I have confidence in the integrity of the President in submitting Plan No. 1, 1948, to Congress; from experience I know that the United States Department of Labor has the ability and will deal justly, fairly, and efficiently with both employers and workers. As a State administrator, I know it is imperative that the employment service and unemployment insurance programs be given a unified leadership by the Department of Labor, which legally, logically, and by experience is the best qualified to give such leadership. I therefore respectfully urge that you again give the same earnest and effective attention to support of Plan No. 1, 1948, that you gave to Plan No. 2, 1947. Sincerely yours, H. B. TURCAN, Administrator. Mr. DAVIS. I am appearing here to support the Reorganization Plan No. 1 of 1948. The details of my views on the subject are contained in the statement which has been filed with the committee. In the beginning I should like to point out that the views which I hold are held in substance by several other of the State administrators. Our National Association of Employment Security Administrators recently conducted a poll on this reorganization plan, the results of which have been submitted for the record. This poll was conducted by Victor Christgau, president of our national association. Senator BALL. I might say for the benefit of those here that 46 States voted in favor of UC and ES being in the same department, 42 States voted in favor of a single budget, and 10 States were in favor of supporting the reorganization plan while 24 States wanted a conference to oppose it. Ten States wanted a conference to remain neutral. An additional seven jurisdictions were apparently not interested in the proposition sufficiently to reply to the poll. Mr. DAVIS. I favor integration of these two functions at the Federal level immediately because I think there exists a substantial lack of correlation in the activities of the two agencies whose ends are, in fact, common. The correlation occurs in the area of the budget, appropri |