Mr. FINDLEY. That was the impression that I got.

The CHAIRMAN. At any rate, if he made a direct statement, I did not understand it.

Senator IVES. Mr. Findley was here when the Secretary was testifying, I believe.

Mr. FINDLEY. I heard the latter half of his testimony, Senator; I did not get in until 10: 30.

Senator IVES. You should have heard all of it, because I think you perhaps heard the Secretary make the statement that he construed the obligation of the Administrator, or the administrating agency, whichever that might be, whichever Department it might be, was to conform to the statute itself, with a certain minima in the way of requirements that would be placed in the statute. Were you here when the statute was read?

Mr. FINDLEY. I was, Senator.

Senator Ives. I myself have been receiving a great many letters of apprehension regarding that particular angle, and that is why I went into the thing so rather exhaustively, to find out just exactly what the attitude of the Secretary might be. You heard the Secretary state, however, I believe, did you not, that he construed the requirements to exist whereby those minima, that particular section of the law, would have to be carried out?

Mr. FINDLEY. That is right.

Senator IVES. And then he stated that any plan which was submitted, as long as that plan came within the purview of that requirement, would have to be accepted. That is what I gathered from what the Secretary said. That being the situation, Mr. Findley, why do you fear the placement of this particular function or functions in the Labor Department? I think we will all agree that they should be together.

Mr. FINDLEY. I agree with that.

Senator IVES. I believe everybody believes that, I do not think it is debatable. Then why do you feel that it should not be in the Labor Department, if the Secretary makes such a statement?

Mr. FINDLEY. Senator, Secretaries come and Secretaries go, and the very purpose for which this Department was organized in the first place is a one-sided purpose. It was for the purpose of favoring the laboring man. Nothink is said about employers, and nothing is said about the public. Perhaps if Secretary Tobin were a permanent fixture, we would not have too much to fear, but when the Department is loaded in favor of labor as much as it is, and when we realize that, if the experience rating is knocked out, these funds and these claims and these payments can be so handled that they can be used for the benefit of one or other of the political parties

Senator Ives. How can that be done, may I ask? I do not like to interrupt the statement you are making, but I would like to know how that could be done?

Mr. FINDLEY. It cannot be done, Senator, as long as Congress stands at the hole in the wall and keeps back the flood waters, but we know that a Department, by constant pressure, frequently has an opportunity to get over a program that it has in mind. The thing that I fear, and the thing that the people I represent, I believe I can con

scientiously say, fear, is that as long as the people that are administering this particular function want to get rid of experience rating, they will keep constant pressure to get rid of experience rating, and some day it may disappear.

Senator IVES. Because of their influence in Congress?

Mr. FINDLEY. Yes.

Senator IVES. I thought the Senator from Louisiana pretty well answered that in connection with the Taft-Hartley Act.

Mr. FINDLEY. But Congresses do change. I believe we will have to admit that.

Senator IVES. I may say that some people have fought, and some people have hoped. I can speak very deeply on that subject. I hope that is corrected.

The CHAIRMAN. Senator Smith, do you have any questions?

Senator SMITH. I would just like to make an observation, Mr. Chairman.

It seems to me that we are not going on with our job or carrying on our responsibility if we say we fear such and such a thing, but do not do anything to correct it except to continue to spread the functions. Would it not be better to bring all the functions together and reorganize and see that the Department does what the Congress and the people want it to do?

Mr. FINDLEY. Senator Smith, if that could be done in such a way that the Labor Department was no longer impressed with the primary function of favoring one class of society in the United States, I think that might be advisable. I furthermore would like to say that, if all of the recommendations of the Hoover Commission had been adopted as a whole, I doubt very much if we would be here objecting to this one particular part, but when certain recommendations of the Hoover Commission are picked out, those that possibly-I am not saying "definitely"—have some political angle, or may be helpful to the political party that may be in power at the present time, then I think we have to look for, what shall I say, "the worm under the drip."

Senator SMITH. But the Hoover Commission was unanimous in its recommendation on this.

Mr. FINDLEY. They were unanimous in their recommendation, but the task force itself, that studied this, made no recommendation. But if you will read-you probably have the recommendation of the Hoover Commission, the recommendation was based upon a desire or a belief that something should be done to increase the prestige of the Department of Labor, that so many things had been taken away that the Department no longer functioned in the same degree of importance, perhaps, as some of the other Departments. I think that is a very poor reason for recommending a transfer.

Senator SMITH. I think the task force did make some recommendations as contained in appendix P. I still feel that we cannot continue to evade these issues. We must face the issues and find the solution, rather than spreading, as we have been doing.

Mr. FINDLEY. Forrestal and Manasco, who were members of the Hoover Commission, had a minority report with regard to the matter of transferring the Selective Service System over to the Labor Department. Their conclusion was: "We believe that the Selective Serv

ice System should be an independent agency." Their arguments are practically the same as we have. In other words, it is a biased agency to start with. For the same reason, Forrestal and Manasco did not expand or extend their recommendation to include the unemployment services, but I think they very well might have.

The CHAIRMAN. Senator Schoeppel, have you any questions?
Senator SCHOEPPEL. No, Mr. Chairman.

The CHAIRMAN. Senator Long, do you have a question? Senator LONG. I would say that as far as the Hoover Commission report is concerned, certainly if we find some of the recommendations were not thoroughly worked out, we would not have to accept them.

For example, I can show you one recommendation that is based on five assumptions, and three of them are obviously incorrect to anybody who knows anything about the matter. If you find an incorrect recommendation, you would not want to leave that in. But if you were to find a mistake in any recommendation, it would not follow that you would have to throw out the whole plan.

Mr. FINDLEY. My point was this: That the advantage of adopting the whole plan would be so great that maybe we could afford to take a little bitter with all of the sweet. But when a pick and choose of seven items out of several hundred recommendations is made and try to put them in effect, then I think we have reason to object.

Senator LONG. I believe basically you and I are in complete accord. That is, that what we should do with the Hoover Commission plan is to put into effect the recommendations that are sound and proved to be worthy while those, which in the light of further study do not prove to be well based on facts, should be rejected.

Mr. FINDLEY. I will agree with you.

The CHAIRMAN. I may correct one thing for the record. Reference has been made that the recommendation of the Hoover Commission was unanimous. That does not necessarily follow just because there was not a dissenting opinion written by the Commission.

In many instances a majority of the Commission favored some particular recommendation, whereas others were not fully satisfied by it, but they did not file any dissenting report.

I happen to know, because I served on the Commission. There was a general reservation printed in the last report, I believe, that indicated that in many instances where there is no dissent the report and the recommendations simply represented the views of the majority and not necessarily a unanimous representation.

Thank you very much, Mr. Findley. Your prepared statement will be printed in the record in full at this point.

(The statement is as follows:)

STATEMENT OF A. R. FINDLEY, VICE PRESIDENT OF WIEBOLDT STORES, INC.,

CHICAGO, ILL.

My name is Ray Findley, vice president of the Wieboldt Stores, Inc. I am chairman of the social security committee for the National Retail Dry Goods Association, and I am appearing for this association in opposition to the President's Reorganization Plan No. 2 of 1949. My appearance likewise is on behalf of the Illinois Federation of Retail Associations and the Chicago Retail Association.

94651-49- -13

I fully subscribe to the general theme that has been registered during the prior hearings on this same matter-that is, Reorganization Plan No. 1 of 1947 and Reorganization Plan No. 2 of 1948-that the Department of Labor by its inherent nature is not the proper agency to administer an insurance program designed in the over-all public interest. It was created to "develop, foster, and promote the welfare of the wage earner." It is in effect a special department concerned with the particular interest of a particular group. The fact that this group is comprehensive in numbers does not detract from the special-purpose nature of the Department or in any manner identify it as an independent agency designed to impartially administer congressional enactments in the interest of each and every citizen without reference to group affiliation.

Not only was the Department of Labor created as a special-group agency, but it is common knowledge that it is administered as such. It is further common knowledge that the two Assistant Secretaries are chosen from the two major labor organizations-one from the A. F. of L. and one from the CIO.

Matters affecting legislation and administration in the program here in question result, in a great number of instances, in opposed viewpoints between management and labor. This is as it should be, for it represents an application of the system of checks and balances which is the governor of our democratic system. However, it is significant to note that on November 15, 1948, the Secretary of Labor, Mr. Maurice J. Tobin, appeared before the A. F. of L. convention in Cincinnati and gave his pledge of honor to consult the leaders of organized labor on all major policy issues, both legislative and administrative. I wonder how this could be construed that the Labor Department is a neutral agency and should be the Department to handle the program designed for the over-all good of the general public.

The Director of the Bureau of the Budget, in a statement before this committee on July 21, stated: "The most basic consideration in determining the administrative location of the Employment Service and unemployment-compensation programs is the strengthening of the Employment Service." I am in complete agreeinent that there should be a strong Employment Service, and that is one of the reasons why I oppose plan No. 2.

The effectiveness of the United States Employment Service is dependent upon acceptance by the employers of the Nation, and I think it is fairly well conceded that the employers of this Nation look to the Labor Department as a protagonist of the viewpoints of organized labor. Whether it is just or unjust, they have developed a fear concerning this Department. The Employment Service after all is just an agency designed to assign unemployed individuals to positions made available by employers. It cannot create jobs. If the employers do not have sufficient confidence in the group that is administering the program at the Federal level, they will not use the facilities available for job placement. If employers fail to use the Employment Service and they have no jobs to refer claimants to, then the filing at the Employment Service becomes a superfluous step to drawing unemployment-compensation benefits. I feel that the transfer of the Employment Service to the Department of Labor will weaken that Service instead of strengthening it, as the Director of the Bureau of the Budget indicates.

Another point that the employers of this Nation fear, and quite justly so because of the well-established record as far as the viewpoint of organized labor on this particular point, is the elimination of experience rating. All the State systems at this time have some form of experience rating, and organized labor has, on occasions too numerous to mention, indicated that they are against any form of experience rating.

In carrying out their opposition to experience rating, it is very interesting to read the excerpts from the Thirteenth Annual Conference of Labor Officials of 1946. The commissioners of the State labor departments, or industrial commissions (whichever the case might be), are annually invited to Washington for a conference held at the Department of Labor. It is noteworthy, I believe, that the State chieftains of the A. F. of L. and CIO are also invited to attend, and it was at such a conference that the following excerpt was adopted:

Page 17, paragraph E, experience or merit rating:

"(1) The experience-rating provisions in State laws have not proven effective in stabilizing employment but have proven to be powerful incentives to the adding of disqualification and restrictive eligibility provisions to the State laws, and to narrow interpretation of these provisions with the result that many persons in need of protection of unemployment insurance are deprived of their benefits.

"(2) The committee recommends that the experience-rating provisions be removed from State unemployment-compensation laws."

Under effective experience rating each employer has an individual concern in the amount of benefits, the duration of benefits, and the conditions under which the benefits are paid. These factors have a direct bearing on his tax rate. Thus the individual employer interest is harnessed to the general public interest, providing a proper balance between legislation and administration. So long as we have this individual employer interest in the future which condition tax rates, we will have a system of checks and balances which will keep the program sound. The employers today know that they are footing the bill and that their contribution rate is based on their own experience. They know that the contesting of a fraudulent benefit claim is expensive and time consuming, and very few indeed will take the trouble to do so except for the direct impact on their own rates.

The function of the State agency is to determine claims on the actual facts in the case. Presentation of the facts by employers cannot deprive any individual of benefits, if he is entitled to them under the State law. However, failure of an employer to present the facts means that the claimant, in effect, gets a default judgment. That is to say, his claim is taken at face value, regardless of the true facts, unless those facts are brought out in testimony before the State agency. Much criticism has been made of experience rating, but no labor organization has been able to point out situations where employers have made misrepresentations as to disqualifying facts.

The greatest safeguard to proper administration is a general knowledge among claimants that misrepresentation by them may be disclosed to the State authorities by their employers.

The labor indictment I have referred to above was not that employers have misrepresented facts at hearings, but rather that employers have been interested enough in the program to appear and present their viewpoints to State legislators. This is an odd indictment to be made against any group in a democratic government. On this basis, all who appear to present the employer's viewpoint before your committee stand indicted by the representatives of labor who are also appearing.

In conclusion, I think it is very significant that the highly respected tack force, which made the study for the Hoover Commission relating to these particular functions, failed to make any recommendation to the commission but submitted the following language (p. 19, appendix P):

"The nature of this issue regarding the proyper location of the Federal Agency administering the Employment Service and unemployment compensation precludes its settlement on a purely factual basis. A decision must be arrived at on the basis of judgment, and in last analysis this judgment must be exercised by the duly elected representatives of the people. The Brookings Institution is not submitting any formal recommendations on the subject because detailed facts alone do not determine the issue."

This objective group, after an extensive study of both the Federal Security Agency and the Labor Department, could find no advantage either administratively or economically for the transfer to the Labor Department. They indi'cate that the decision should be left to the duly elected representatives of the pleople. The Congress of the United States has twice since May 1, 1947, rejected similar proposals, and it is my considered judgment at this time that, in the interest of economy, efficiency, and good administration, this committee and Congress should again reject this plan.

The CHAIRMAN. We were to have this morning a witness, Mr. James C. Lucas, representing the American Retail Federation. Is Mr. Lucas here?

Mr. LUCAS. Yes, sir, Mr. Chairman.

The CHAIRMAN. I believe you suggested that you would be willing to just file your statement.

Mr. LUCAS. As you wish, Mr. Chairman.

The CHAIRMAN. You may file it and it will be printed in the record.