The first paragraph of subsection (i) of section 12 of H. R. 9798 has been eliminated since it gave the administrative agency the authority to establish, maintain, and operate employment offices and to designate as employment offices for placement within the maritime industry facilities maintained by others. The last paragraph of subsection (i) of section 12 of H. R. 9798 has been modified so as to direct the administrative agency to establish, maintain, and operate registration offices for the purpose of accepting registrations and applications for benefits. Provision for the payment of benefits at employment offices has been eliminated here but is included with modifications, in subsection (k).

In subsection (j) of section 12 references to employment offices have been eliminated, and in one case a reference to registration offices has been substituted for employment offices. H. R. 9798 authorized the administrative agency to make notations on certificates of discharge and in continuous discharge books. H. R. 5446 specifies that such notations shall consist of the name of the administrative agency and the place, date, and time of registration.

The last paragraph of this subsection of H. R. 9798 prohibited the administrative agency from taking any action in connection with the procedures at employment offices which would tend to impair and interfere with any system for providing employment established pursuant to contracts or arrangements between employers and labor organizations. With the authority of the administrative agency so restricted that it cannot operate employment offices for placement in the maritime industry, there may be a question as to whether or not any such provision is needed. If, however, it should be thought appropriate to include some such restriction, it may be desirable to leave the administrative agency free to prevent any action by anyone operating an employment facility which would have the effect of substantially increasing benefits. The present language, however, now found beginning with the word "except" in line 13 on page 52 to the end of the paragraph may go too far. A perfectly reasonable change in the procedure of an employment facility might have some incidental effect on benefits. If language of this character is to be included, the administrative agency ought not to be required to take any action unless it finds that the change of procedure has been established for the purpose of increasing benefits.

Subsection (k) of H. R. 5446 includes in part what was eliminated from subsection (i). Provision is here made for benefits to be paid through registration offices. These are, of course, offices of the administrative agency.

In connection with the administration of the Railroad Unemployment Insurance Act, the Railroad Retirement Board has found it necessary to take claims for benefits at outlying points where there are no railroad or other facilities. It has been found practicable to make arrangements with local persons, such as postmasters, school teachers, mayors, or ministers, to be remunerated at a piece-rate basis. This piece rate, incidentally, is 50 cents per claim. Doubtless a similar situation will be encountered in connection with the administration of the maritime unemployment insurance system. Subsection (1) (p. 53, lines 14 to 22) would authorize the administrative agency to appoint registration agents for the purpose of registering employees where no other facilities are available and remunerate such persons on a piece-rate basis.

At the time H. R. 9798 was being prepared, there was pending before Congress a proposal to amend the Railroad Unemployment Insurance Act so as to authorize the Railroad Retirement Board to grant leaves of absence with pay to employees in offices where claims were adjudicated and whose annual rate of pay did not exceed $3,300 per annum as a recompense for overtime. There is a highly seasonal factor in unemployment insurance in the railroad industry and doubtless will be in the maritime industry. For example, in certain offices of the Railroad Retirement Board the claims load in January will be eight or nine times the claims load in July. It would simplify the personnel problems of the Board if it were possible to work overtime in January and give the employees what amounts to compensatory time off in July. This proposal for amendment of the Railroad Act, however, was rejected. While the Board still feels that this proposal would be desirable, it ought not to be applicable to one act which the Board administers and not to another. Accordingly, the last paragraph of subsection (1) of section 12 of H. R. 9798 has been eliminated from H. R. 5446.

Although provision is made in H. R. 5446 for the coverage of the branches of the maritime industry other than the deep sea under State laws, it is recognized that the subject may warrant some further study. In subsection (m) of section 12 of H. R. 9798 the administrative agency is directed to make a report to the President for submission to Congress within 3 years after this bill becomes law. The report is to recommend such changes in the system as will insure its adequacy and permanency. Subsection (m) of H. R. 5446 expands this provision to include a report to Congress to be made at the earliest practicable date with respect to the provisions being made for unemployment benefits for persons engaged in employment connected with transportation on the inland waterways and on the Great Lakes. Perhaps it would be desirable to extend this instruction to include the other two main fields of maritime employment, that is, the fisheries and work within the confines of a single harbor. Section 13 has been extensively revised and expanded as compared with H. R. 9798. Subsections (b), (c), and (d) are new, and perhaps the section heading should be changed to reflect the addition or the new material. What was subsection (b) of section 13 of H. R, 9798 is now subsection (a) of section 13 in H. R. 5446. This subsection has been unchanged in its substance although certain dates have been eliminated and references to the time when benefits become payable under the bill have been substituted. Subsection (b) would amend section 1603 (a) of subchapter C of chapter 9 of the Internal Revenue Code. This act sets up a basic 3-percent tax on covered employments but permits to be offset against such tax, up to 90 percent thereof, contributions with respect to such employments under a State unemployment compensation act, provided such State act has been approved by the Social Security Board. Certain standards are set up which must be met before the State act can be approved by the Board.

One of these standards is that no compensation shall be payable with respect to any day of unemployment occurring within 2 years after the first day of the first period with respect to which contributions are required under State law. This standard was probably

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intended to apply only to the initial operation of the State law. It, however, might conceivably be applied to a situation as is here contemplated where a new industry is to be brought within coverage. Paragraph (i) of subsection (b) would make it clear that the 2-year accumulation period is not to be applied with respect to maritime workers. On the contrary, benefits would be payable, under the proposed standard, to individuals engaged in maritime service with respect to unemployment occurring subsequent to 60 days from the adjournment of the first regular session of the legislature convened after the enactment of the act and under the same terms and conditions and to the same extent as compensation is payable under such State law with respect to the unemployment of individuals engaged in other services.

Paragraph (ii) of subsection (b) of section 13 of H. R. 5446 would add a seventh standard to the six standards which are now incorporated in subsection (a) of section 1603 of the Federal Unemployment Tax Act. The proposed standard recites that effective not later than January 1, 1943, contributions shall be payable with respect to employees engaged in "maritime service." It is made clear that "maritime service" includes maritime employments generally except those which are covered under the Maritime Unemployment Insurance Act. The Federal Unemployment Tax Act, however, applies only to employers having eight or more employees; and that numerical limitation would apply in the maritime field just as in other employments.

Section 1607 of the Federal Unemployment Tax Act contains definitions. The term "employment" as presently defined means any service performed prior to January 1, 1940, which was employment as defined in section 1607 prior to such date, and any service, of any nature, performed after December 31, 1939, within the United States by an employee for the person employing him, irrespective of the citizenship or residence of either, except, among other things, service performed as an officer or member of the crew of a vessel on the navigable waters of the United States.

Subsection (c) of section 13 would amend the general definition of employment by removing in part the restriction of employment to service rendered in the United States. As proposed to be amended, the definition would extend coverage to include employment on an American vessel under a contract of service which is entered into within the United States or during the performance of which the vessel touches at a port in the United States, if the employee is employed on and in connection with such vessel when outside the United States. The exception to the general definition would be rephrased to read as follows:

Service performed on or in connection with a vessel not an American vessel by an employee, if the employee is employed on and in connection with such vessel when outside the United States, and service with respect to which benefits are payable under the Maritime Unemployment Insurance Act.

The exception in the Federal Unemployment Tax Act of service performed as an officer or member of a crew of a vessel on the navigable waters of the United States is broad enough to exclude from the act's coverage most, if not all, employment in the fisheries. H. R. 5446 would bring within the coverage of that act and within the coverage of State laws those parts of the fisheries which are

included under the Federal old-age and survivors insurance system. Paragraph (iv) of subsection (c), therefore, adds a new exception to the list now contained in section 1607 (c), to be numbered 16, and reading as follows:

(16) Service performed by an individual in (or as an officer or member of the crew of a vessel while it is engaged in) the catching, taking, harvesting, cultivating, or farming of any kind of fish, shellfish, crustacea, sponges, seaweeds, or other aquatic forms of animal and vegetable life (including service performed by any such individual as an ordinary incident to any such activity), except (A) service performed in connection with the catching or taking of salmon or halibut, for commercial purposes, and (B) service performed on or in connection with a vessel of more than 10 net tons (determined in the manner provided for determining the register tonnage of merchant vessels under the laws of the United States).

This language would bring under the Federal Unemployment Tax Act the salmon and halibut fisheries and any other fishing done on vessels of more than 10 net tons, where in each case the employment was performed for an employer who on each of some 20 days during a taxable year employed eight or more persons.

Paragraph (v) of subsection (c) of section 13 would add a new definition to section 1607 of the Federal Unemployment Tax Act covering the term "American vessel." The definition is as follows:

The term "American vessel" means any vessel documented or numbered under the laws of the United States; and includes any vessel which is neither documented or numbered under the laws of the United States nor documented under the laws of any foreign country, if its crew is employed solely by one or more citizens or residents of the United States or corporations organized under the laws of the United States or of any State.

The Federal Unemployment Tax Act provides for the making of a return of the tax imposed therein not later than January 31 following the close of the taxable year. The tax may be paid at the time of the return or in four equal installments, the first, in the latter case, being due on the last day for filing the return and three payments at intervals of 3 months thereafter. The effect of the amendments to the Federal Unemployment Tax Act, resulting from enactment of subsection (c) of section 13 of H. R. 5446, would be that a return would be due not later than January 31, 1942, by the maritime employers, other than those covered under the Maritime Unemployment Insurance Act, for a 3 percent tax on the 1941 pay rolls. Since presumably such employers would have paid little, if any, taxes under State laws, a full tax of 3 percent on the pay roll for 1941 without offset would be imposed by the proposed amendment.

If a State law is not approved by the Social Security Board in accordance with the provisions of Section 1603 of the Federal Unemployment Tax Act, contributions under the State law may not be offset against the 3-percent tax. In title III of the Social Security Act there are provisions made for grants of Federal funds to States to cover administrative expenses of the State unemployment compensation systems. After basic approval of the State law under section 1603 of the Federal Unemployment Tax Act, the Social Security Board must make certain findings with respect to the law of the State as a condition precedent to the payment of administrative grants. Subsection (a) of section 303 of the Social Security Act sets up the tests to be applied to State laws by the Social Security Board in making these findings. To some extent these tests are the same

as the standards under section 1603 of the Federal Unemployment Tax Act. A State law, therefore, must be approved under section 1603 in order that contributions thereunder may be credited against the tax imposed by section 1600, and must meet the standards of section 303 of the Social Security Act in order that grants may be made for its administration. In order to assure that there will be applied the same basic standards under section 1603 and section 303 with respect to the coverage of maritime unemployment under State acts, a new standard 10 has been added to subsection (a) of section 303 of the Social Security Act, which incorporates the provisions added to section 1603 (a) of the Federal Unemployment Tax Act.

Section 14 of H. R. 5446 provides for the establishment in the unemployment trust fund of an inland waterways account to which would be appropriated 90 percent of the taxes collected as a result of the amendments which I have just described. The Federal Unemployment Tax Act does not now itself provide for the appropriation of any of the tax proceeds which are collected thereunder. However, the result aimed at by section 14 has, as a practical matter, been achieved. All the contributions under State unemployment insurance acts, which are in substance a substitution for 90 percent of the taxes under the Federal Unemployment Tax Act, are paid by each State into the unemployment trust fund for the account of the particular State. In theory, if a State does not have an unemployment compensation law, taxes under the Federal Unemployment Tax Act would all be credited to the general funds of the Treasury. That done in 1936 when certain collections were made in full from the employers in certain States where no unemployment compensation act was in effect. But later when unemployment compensation laws had been passed in all the 51 jurisdictions, by the act of August 24, 1937 (Public, No. 363, 75th Cong.), there was appropriated to each of the various States which at the end of 1936 did not have an unemployment compensation law the 90 percent of the taxes collected in each such State under what was then title IX of the Social Security Act and which is now in substance the Federal Unemployment Tax Act. Thus in effect Congress has adopted a policy of regarding as a trust 90 percent of the taxes collected under what is now the Federal Unemployment Tax Act. Subsection (a) of section 14 carries out that policy with respect to the new taxes which would be collected. under the Federal Unemployment Tax Act should H. R. 5446 become law.

It is inevitable that some time will elapse before States will be able to cover under their laws the branches of the maritime industry which would be assigned to them by this bill. The bill would not try to compel the State to hold special sessions of their legislatures in order to accomplish this result. Provision is therefore made for the allocation to the various States of the taxes paid into the inland waterways account when the Social Security Board shall approve the modified State law. This in effect carries out the policy of the act of August 24, 1937, and makes unnecessary further legislation on this subject by Congress so long as the policy of covering certain parts of the maritime industry under State law remains unchanged.

Subsection (c) of section 14 defines maritime service and other terms in the same terms as in section 13.