Senator Smith, did you have some letters to present? Senator SMITH. Yes, I have several letters and telegrams I should like included at the proper place in the record. Also a statement from the Labor Department signed by Secretary of Labor Tobin in answer to some of the opposition. The CHAIRMAN. They may all be placed in the record. (The documents referred to follow :) Hon. ANDREW F. SCHOEPPEL, KANSAS STATE CHAMBER OF COMMERCE, Washington, D. C. Topeka, Kans., July 26, 1949. DEAR SENATOR SCHOEPPEL: The Kansas State Chaber of Commerce is opposed to Presidential Reorganization Plan No. 2, transferring control of Unemployment Compensation and Employment Service to the Department of Labor. Our position will be expressed before your Committee on Expenditures in the Executive Departments by Mr. Herschel Atkinson of Columbus, Ohio, executive vice president of the Ohio State Chamber of Commerce and chairman of the social-security committee of the Council of State Chambers of Commerce. In addition, we will appreciate it if you will submit to the committee the enclosed statement by Fred W. Stein, Atchison, president of the Kansas State Chamber of Commerce. Ws urge you to actively oppose Presidential Reorganization Plan No. 2. Very truly yours, C. C. KILKER, Manager. STATEMENT OF FRED W. STEIN, ATCHISON, KANS., PRESIDENT, KANSAS STATE CHAMBER OF COMMERCE Mr. Chairman and members of the committee, the Kansas State Chamber of Commerce, with a membership of more than 2,000 Kansas businessmen from every section of our State, opposes Presidential Reorganization Plan No. 2, transferring jurisdiction over unemployment compensation employment service programs from the Federal Security Agency to the Deparment of Labor. The opposition of the Kansas State chamber is not something which has been created by the current proposal. We have expressed our position each time the proposal has been made, and our basic position remains the same on this occasion. We believe that the control and administration of the unemployment compensation and employment service programs are matters of general public concern and, consequently, should not be lodged in a department whose basic philosophy is directed by law toward furthering the interests of a single group. The Kansas State Chamber of Commerce has no quarrel with labor or with the department set up to serve it. We believe that it is proper to have a department concerned with being of service to labor, as it is proper to have the Department of Commerce serving business. We do not believe, however, that the department serving labor should be allowed full and final administrative control over programs which are of vital and equal concern to labor, to business, and to the general public. At the present time, this administrative control is lodged in an agency which is much more able to maintain a neutral attitude and to assure equal protection to the interests of all concerned. The Kansas State Chamber of Commerce recognizes that the current proposal is being brought forward with the contention that it has the blessings of the Hoover Commission. In general, we subscribe to the excellence of the Hoover Commission reports. We fear, however, that in this instance the Commisison overlooked the primary and fundamental fact that the transfer of these two programs to the Department of Labor would be ignoring the public interest in favor of the interests of the single segment of the population which this Department represents. There are many other convincing arguments as to why this transfer should not be made, and we are sure that they will be capably presented to the members of this committee. We have requested Mr. Herschel Atkinson of Columbus, Ohio, executive vice president of the Ohio Chamber of Commerce and chairman of the social security committee of the Council of State Chambers of Commerce, to represent the Kansas State chamber in the presentation of these additional arguments. We do, however, desire to submit this separate statement in an effort to emphasize our considered conviction that transfer of unemployment compensation and employment service to the Department of Labor will be in direct violation of democratic processes. We urge you to consider carefully the ultimate effects of permitting a department which is directed by law to service a single group to control completely programs which are by their very nature, as well as by their legal structure, of vital concern to every member of our citizenry. For these reasons, and for the additional reasons which Mr. Atkinson will express on our behalf, we earnestly urge that your committee recommend that the Presidential Reorganization Plan No. 2 be refused. Hon. MARGARET CHASE SMITH, United States Senate, Washington, D. C. DEPARTMENT OF LABOR, DEAR SENATOR SMITH: This is in reply to your request for information as to whether the contribution rates paid by employers in Maine under the experience rating system, now ranging from 1.09 to 2.7, would be raised if the unemployment compensation program is transferred to the Department of Labor. I appreciate the opportunity of clearing up this question. Only Congress and the State legislatures can abolish or change the experience rating system. The Federal Security Agency, and the Social Security Board before it, have advocated the abolition of the experience rating system for over 10 years, but this has had no effect on Congress. During this period the Social Security Board and the Federal Security Agency approved experience rating plans for every State and Territory covered by the Federal Unemployment Tax Act. My interpretation of my powers, if the unemployment compensation program is transferred to the Department of Labor, is that I must approve any plan that meets the requirements of section 1602 (a) of the Federal statute enacted by Congress which is commonly known as the Internal Revenue Code. Attached is a copy of an opinion dated July 22, 1949, from the Solicitor of Labor to me to this effect. I hope that this information will be helpful to you, and if you should require any additional information, please do not hesitate to call upon me. Yours very truly, MAURICE J. TOBIN, Secretary of Labor. DEPARTMENT OF LABOR, Memorandum. To: The Secretary. From: William S. Tyson, Solicitor. Subject: Experience rating systems under State unemployment compensation laws. This is in reference to your request for information as to the provisions of applicable Federal statutes relating to approval of State laws which provide for so-called experience ratings. Specifically, you ask my opinion whether the Federal Security Administrator or any other Federal official upon whom Congress may devolve the responsibility for approving State laws providing for additional tax credits as provided for in section 1602 (a) of the Internal Revenue Code, possesses unlimited discretion with respect to whether or not he shall approve such State law. As you know, the Federal Unemployment Tax Act (26 U. S. C. A., sec. 16001611) imposes on employers employing eight or more persons during a certain number of weeks in a taxable year, a tax of 3 percent of the total wages paid by the employer during such year. However, the taxpayer may credit up to 90 percent of such tax the amount of contributions he had made into an unemployment fund maintained during the year under the unemployment compensation law of a State which the Federal Security Administration finds complies with the standards set forth in sections 1600-1611 of the Federal Unemployment Tax Act. In order to encourage employers to decrease their labor turn-over, section 1602 (a) of the Federal Unemployment Tax Act provides that a taxpayer shall be allowed additional credits with respect to a reduced rate permitted by State law if the Federal Security Administrator finds that such State law meets certain prescribed Federal standards. The act provides for at least three general types of State plans in this regard. While each of these plans must conform to certain conditions, definite standards are imposed as to the size of the reserve necessary to qualify for such additional credits with reference to two plans. The plans referred to are those establishing a so-called "guaranteed employment account" or "reserve account." The statutory standards relating to these plans are most definite. The size of the reserve is mathematically ascertainable under the somewhat complex formulae set forth in the statute. In view of the definiteness of the standards established, it is my opinion that the Administrator possesses very little, if any, discretion with respect to the approval of State laws conforming to such standards. With respect to the third type of plan (so-called pooled fund or partially pooled fund), the only condition set up by Federal law is that no employer's rate shall be lower except on the basis of 3 years' experience "with respect to unemployment or other factors bearing a direct relation to unemployment risk." It seems self-evident that request for approval of this type of a plan may require the Administrator to exercise greater range of judgment by virtue of the indefiniteness of the statutory standard involved. However, this does not mean that the Administrator has unlimited discretion with respect to the approval of this type of a State plan. It seems clear that Congress in enacting the Social Security Act and its companion statute, the Federal Unemployment Tax Act, intended to specify the minimum requirements of a sound unemployment compensation law, and left to the States to determine whether they wished to enact laws with higher standards. Consequently, notwithstanding the broad and somewhat vague standard which Congress has set up, it is my opinion that the Federal Security Administrator is nevertheless definitely circumscribed in the scope of judgment he may exercise with respect to the approval of this type of a State plan. It is also very likely that the exercise of the Administrator's judgment in this regard is subject to court review. As stated by the Supreme Court in a relatively recent decision, "Administration, when it interprets a statute, acts as a delegate to the legislative power. * * * An agency may not finally decide the limits of its statutory power. That is a judicial function." Social Security Board v. Nierotko (327 U. S. 358, 369 (1946)). While this case involved an interpretation of the term "wages" as used in the Social Security Act, the language employed appears to be equally apropos of the discretion vested in an administrative agency whether a particular factual situation meets a prescribed statutory standard. The CHAIRMAN. Is Senator Aiken available? (No response.) Is Dr. Fischelis present? Will you come forward, Doctor, please. Do you have a prepared statement? Dr. FISCHELIS. I have, Mr. Chairman. The CHAIRMAN. Do you wish to read it? Dr. FISCHELIS. I think I should like to read most of it. The CHAIRMAN. All right, you may proceed with it. If you fail to read all of it, it may be incorporated in the record. Dr. FISCHELIS. Thank you, sir. STATEMENT OF DR. ROBERT P. FISCHELIS, SECRETARY AND GENERAL MANAGER, AMERICAN PHARMACEUTICAL ASSOCIATION, WASHINGTON, D. C. My name is Robert P. Fischelis. I am secretary and general manager of the American Pharmaceutical Association, located at 2215 Constitution Avenue NW., Washington, D. C. I am here to express approval of the President's Reorganization Plan No. 1 of 1949, which proposes the creation of a Department of Welfare to include the present functions and subdivisions of the Federal Security Agency. No plan of organization of any executive branch of the Government could please everyone in every detail, but we believe that, all things considered, the proposal to create a Department of Welfare on the Cabinet level, which is to include the Public Health Service, the Food and Drug Administration, and the Office of Education, is logical and sound in the light of past experience with the grouping of these Departments in the Federal Security Agency. The American Pharmaceutical Association was founded in 1852 and is the professional society of pharmacists in the United States. Membership is on an individual basis but the house of delegates of the association, which is its policy-forming body, includes delegates from all of the State pharmaceutical associations, all important national pharmaceutical associations, the sections of the associations, affiliated associations, and members of the council. In the interim between annual meetings, the association is governed by a council of 16 members. The officers and members of the council are elcted by a mail ballot submitted to the entire membership. We are not a trade association and do not concern ourselves with the business of pharmacy. There are trade associations of manufacturers, wholesalers, and retailers, which deal with trade problems concerning the production and distribution of drugs. We are concerned with the relation of pharmacy and pharmacists to the public health, to the education of pharmacists, to licensure and registration of pharmacists, and to the development of the ethics of the profession. We publish two scientific and professional journals and the National Formulary, which is one of the official compendia for drug standards under the Federal Food, Drug and Cosmetic Act, and we maintain a laboratory for the development of impartial standards for drugs. My own experience includes the practice of pharmacy, teaching, journalism, and regulatory work at both State and Federal levels, and I have had nearly 8 years of service as a member of a State board of health, and nearly 20 years of experience as a cooperating State official with the Federal Food and Drug Administration. I have also been with the War Production Board during the war years in an executive capacity. Pharmacists are in continual contact with the State and Federal health departments and with State and Federal regulatory officials dealing with the production and distribution of drugs and medicines. They are also in frequent contact with the State and Federal departments of education, especially the divisions dealing with higher and professional education. Our experience with the Federal Security Agency and its subdivisions has been very satisfactory and we are hopeful that its present form of organization and means of contact with the profession of pharmacy and the drug industry will be disturbed as little as possible. Elevation of the agency to a department headed by a Cabinet officer will contribute greatly to its ability to get things done and we believe it rates Cabinet status from any point of view. We have been impressed with the broad definition for health which was included in the constitution of the World Health Organization. This document defines health as a "state of complete physical, mental, and social well-being and not merely the absence of disease or infirmity." In the light of this definition, the association of health, education, and welfare in one department is not only logical but gives assurance of essential integration of activities that contribute to the public health and welfare. Nearly 5 years of experience as a section chief and division director in the Office of Civilian Requirements of the War Production Board convince me that Cabinet rank for any Government department is a great asset which is almost indispensable to an agency dealing with such important public projects as health, education, and social security. Without going into the merits or justification of separate Cabinet rank for each of these categories, it seems clear that good organization and economy of operation at this time demands as few additional departments as possible. There is hardly any grouping of activities into a single department which seems more logical than the one proposed. Hence, we believe that the President's approach to the problem of organizing these services is realistic. When the council of the American Pharmaceutical Association recorded itself in favor of Cabinet status for the Federal Security Agency, it simultaneously called attention to the fact that it is opposed to any regimentation of the professions dealing with medical care, and I want to make it clear that endorsement of Cabinet status for the Federal Security Agency is in no manner to be construed as an endorsement by the American Pharmaceutical Association of compulsory national health insurance to which the association is definitely opposed. We have issued a separate statement on this subject which has been made available to the committees of the Senate and the House of Representatives considering the subject. We do not believe that this issue should be confused with the establishment of a Department of Welfare to carry on the present functions of the Federal Security Agency and its subdivisions. In our judgment, it is best for agencies dealing with the problems of education, the problems of health, and the problems of social welfare, to be organized for their specific professional, technical and other expert functions, but to be responsible to an over-all administrator. This administrator need not be an educator or a physician or a sociologist. He should be, above all, a public-spirited citizen of great capacity, who has an adequate appreciation of all of the factors that make up a good program of education, health and social welfare and the ability to give leadership and administrative supervision to such a program. If the President should find a member of the legal, medical, or allied health professions, or an educator, or a sociologist, or a member of some other profession, or an industrialist with wide |