of State unemployment compensation laws. It was probably a good bill, but we couldn't understand it. It was too complex. Under it, as under the present State laws, no worker would ever really understand his rights. So we appointed a subcommittee of the Railway Labor Executives' Association to study the subject primarily with a view to simplification. We had several different bills drafted one after another. They were studied by our subcommittee and the chiefs of the railway labor organizations, until finally we arrived at the present bill, which we believe to be the simplest and soundest bill for unemployment insurance ever introduced into any legislature in this country.

It will be simple in its administration. Both railroad retirement and unemployment insurance will be administered by a single agency, on the basis of a single set of reports, from exactly the same employers, paying what is in effect a single tax because the contributions are levied on exactly the same wage base as the taxes under the Carriers' Taxing Act.

It will be simple to understand. The bill doesn't contain a single formula that will take three lawyers and five statisticians to untangle. Benefits are payable at six rates according to a worker's total compensation in the preceding calendar year. When the Railroad Retirement Board sends each worker his annual compensation statement, that will at once tell him whether he is eligible for benefits or not, and, if so, in what amounts and for how long. Further, the bill provides that relatively larger benefits will go to the lower paid workers who are most likely to become unemployed, and, that, if a worker is eligible at all, he will be eligible for a substantial minimum amount, enough to really mean something to him, and enough to justify the cost of writing his check. Under this bill, there will be no checks for a very few cents, such as we are told some States are paying under their present laws.

When we had the bill nearly in shape, we asked the Association of American Railroads to confer with us in the hope that we might introduce this to you as an agreed-to bill. We met with their committee of railroad presidents and each group appointed a special committee to thrash the matter out in detail. After the subcommittees had worked on the subject for some weeks, our special committee again conferred with the railroad presidents but, although we are reasonably certain that some railroads are in favor of this bill, we found that they would not agree to support it. We never really understood their excuses but we think we know their real reason. Apparently they feel that if they agreed with us to support this bill, they would be obligated to continue to pay contributions no matter what happens to the State unemployment compensation plans. We don't know whether any of these State plans will collapse-we hope notbut we were told by some of the presidents, in almost so many words, that they would not support any Federal law until it was evident that the State laws were here to stay.

Perhaps at this time I should emphasize that this bill will not cost. the railroads a penny; that, in fact, it will save them several millions of dollars. We know definitely that it will save them at least $1,200,000 a year in decreased taxes, and we firmly believe that it will save them $3,000,000 or more a year in decreased costs of social security accounting and reporting. When this bill becomes effective, the railroads will simply continue their present reports to the Railroad

Retirement Board and will stop reporting to each of the many States in which they have employees covered by an unemployment compensation law. We confess, frankly, that we didn't draft the bill for the purpose of saving money for the railroads, but we found quickly that any plan of social insurance that could be simply administered-and no plan is sound that cannot be easily administered-would automatically mean a substantial saving to employers. When the railroads are pleading poverty so vigorously, it is curiously inconsistent for them thus to reject certain and almost immediate savings of several million dollars a year. Perhaps they feel so poor, that they have got to the point where they cannot think in terms of less than hundreds of millions of dollars. At the present time they appear to be afflicted with a wage-cutting complex and regard a saving of four or five million dollars as of no importance in the interests of economy.

Our association has had two principal objectives in this matter. We want a plan of unemployment insurance that any railroad worker can understand. We want a plan of unemployment insurance that is practical for railroad workers, that fits their needs and the conditions of their employment. I have already said that the passage of this bill will mean a landmark in the history of social-security legislation in the United States, because we know that all our members will clearly understand their rights under it. I want now to emphasize our second purpose.

I don't need to tell this committee that the railroad industry is a national industry and that all its problems are national in scope. This committee would not think of referring the President's recent message on the railroad problem to the legislatures of the several States. It would not think of passing back to the States the functions of the National Mediation Board, the National Adjustment Board, the Railroad Retirement Board or the Interstate Commerce Commission. Why should unemployment insurance be treated differently? We can never hope to get a workable system of unemployment insurance for railroad employees under 53 separate laws, each administered in part by several different agencies.

A satisfactory system of unemployment insurance for railroad workers must be Federal. All our argeements are negotiated without reference to State lines. Most of our members have seniority rights under these agreements. These seniority rights take no account of State lines. Telegraphers, for example, may have rights over a whole system which runs through many States. Seniority rights may be confined to a single division but these often cross Štate linesWashington to Philadelphia, Philadelphia to Jersey City, Jersy City to New York, for example, on the Pennsylvania Railroad. If our agreements about wages and working conditions take no account of State lines, why should State lines suddenly intrude to affect our rights to unemployment insurance?

Many railroad workers in the ordinary course of their duties perform service in several States. Under which law should they, when when unemployed, apply for benefits? A group of our workers on the Western Maryland Railroad recently applied at the Hagerstown office for benefits under the Maryland law. In due course they were advised that they were not covered by the Maryland law because contributions on their wages had been paid to Pennsylvania. They crossed the line to Chambersburg and applied under the Pennsylvania

law but were again denied benefits because, although contributions on their wages had been paid to Pennsylvania, all their employment had been in Maryland and the contributions should have been paid to Maryland. These men are definitely entitled to benefits, but, as far as I know, they haven't yet been able to collect them from either State. When the State commissions themselves don't know, how can you expect the unemployed worker to know where he stands? Some of our members on the New Haven and Boston & Maine roads are fussing all the time about the State to which they should be reported for unemployment-compensation purposes. Massachusetts and Rhode Island have employee contributions; New Hampshire and Connecticut don't. It is human nature for the men to want to be reported not to Massachusetts or Rhode Island, but to Connecticut or New Hampshire, where they would not have to pay employee contributions.

In the ordinary course of their duties or in the exercise of their seniority rights, many railroad workers frequently transfer their headquarters from one State to another. The result is that when unemployed, they may be eligible for benefits under one or more than one law or may lose some or all of the rights to which they would have been entitled if they hadn't moved. The State unemployment compensation agencies are experimenting with an interstate plan for the payment of benefits but this means more red tape to snarl the worker and doesn't really assure him of any real protection against loss of benefit. rights. These problems are not confined, of course, to railroad workers, but we constitute so large a proportion of both those workers. who perform services in more than one State and those who move from State to State, that some State unemployment compensation administrators are frank enough to say they would be glad to get rid of the headaches caused by these movements of railroad workers. The railroad workers themselves would rather be covered, in this matter, as in all others, by a single Federal law, which would assure them of the same treatment regardless of the State in which they happen to be.

No group in this country realizes more than the committees on interstate commerce of the Congress that the railroad industry presents one of our most pressing national problems. This bill, it is true, will make only a very small contribution to its solution, but we firmly contend that we cannot afford to reject even the minor economies it offers, nor to miss an opportunity at this time to charge one of our best qualified Government agencies with the duty to study the ever more serious problems of railroad employment and unemployment. Our organizations have long argued that there may be unrealized possibilities, for example, in the regularization of seasonal employment on railroads. This could never be stimulated by State agencies that must confine their thinking within their State boundaries, for one solution of the problem might require seasonal transfers of workers from road to road across State lines. We not only want or special problems to be the subject of specialized study, but we want assurance that unemployment insurance for railroad workers will be coordinated with all the other activities of the Federal Government and with any of the future results of the deliberations of your committee which may affect the employment opportunities for our members.

We recognize that the transfer of our coverage from State laws will create some temporary problems but these are just one of the costs of

progress and we believe that, in the hands of State and Federal administrators who really care about social security, they are possible of ready solution. We have been advised that our program will meet the opposition of vested interests in a few States, but we believe this opposition is short-sighted and will prove temporary also, because every State law, presumably in anticipation of such a bill as this, includes provisions for cooperation between the State administrator and the agency administering any Federal unemployment insurance law.

I leave the further expansion of our argument to our written submissions, to my colleague Judge Hay and our several witnesses. On behalf of the railroad workers of this country, I want to thank the Committee for this opportunity to present their case. We firmly believe and vigorously contend that the enactment of this legislation will be in the best interests, not only of the railroads and their employees, but also of the State unemployment compensation agencies, the whole Social Security program, and sound public policy.

Mr. CROSSER. Thank you, Mr. Cashen.

Mr. CASHEN. Thank you.

Mr. CROSSER. The next witness will be Mr. Hay.

STATEMENT OF CHARLES M. HAY, ST. LOUIS, MO., COUNSEL FOR THE COMMITTEE OF RAILWAY LABOR EXECUTIVES' ASSOCIATION

Mr. HAY. Mr. Chairman and members of the committee, my name is Charles M. Hay. I live in the city of St. Louis. I am counsel for the Committee of Railway Labor Executives' Association, of which Mr. Cashen is chairman, which supervised the preparation of this bill, and requested its introduction into the Congress.

PURPOSE OF BILL

The purpose of this bill, in a sentence, is this: It is to do with respect to unemployed compensation what the Railroad Retirement Act does with respect to old-age annuities for the railroad industry; that is to say, it is designed to create a separate system applicable only to that industry just as the Railroad Retirement Act creates a separate system of old-age benefits.

BILL CONSISTENT WITH RAILROAD LEGISLATION FOR HALF A CENTURY

We submit that this bill is in keeping with the logic of railroad legislation history for more than half a century; certainly since the enactment of the Interstate Commerce Act in 1887.

The "range laws" demonstrated beyond per adventure, the futility of State efforts to regulate railroad rates. There arose a demand for recognition of the railroad industry as what it was, distinctly a national industry, to be dealt with effectively not only with respect to rates, but in other features, by bodies empowered to act for the national authority.

Since the enactment of the Interstate Commerce Act in 1887, numerous laws have been enacted applicable only to the railroad industry, recognizing that industry as a distinct national entity.

I mention but a few of them which will occur to you: The Adamson law; the Hours of Service Act; the Safety Appliance Acts; the Transportation Act of 1920; the Emergency Transportation Act; the Retirement Act, which I mentioned; and the Railway Labor Act.

These acts, I say, recognize the distinct individual national entity of the railroad industry.

Not only have acts been passed applicable only to that industry, but acts designed to cover industry generally, as for instance, the N. R. A., and the National Labor Relations Act, and the Social Security Act, with respect to old-age benefits, have exempted the railroad industry.

The attempt, therefore, to cover the railroad industry into the unemployment compensation systems of the various States runs counter to the logic of railroad legislation history for over a half a century. It is, if not unprecedented, certainly violative of the whole course of history since the date I mentioned.

BILL CONTEMPLATED WHEN SOCIAL SECURITY ACT PASSED

When the State and Federal authorities approached the consideration of the subject of unemployment insurance or unemployment compensation, they manifestly had in mind that the railroad industry should be treated with respect to that subject the same as it has been treated with respect to the other subjects to which I have referred.

I submit in support of that statement these facts: Wisconsin was the first State to enact an unemployment-compensation law. That State exempts the railroad industry, except as their railroads individually might elect to come under the operation of that system. After the passage of the Social Security Act, when the States approached the enactment of their unemployment compensation laws, more than 40 of them carried in their bills a specific provision written manifestly in contemplation of the enactment of a separate measure to cover the railroad industry, as has been enacted in the Railroad Retirement Act. The provisions to which I refer are such as this:

Service with respect to which unemployment compensation is payable under an unemployment-compensation system established by an act of Congress.

That is in more than 40 of the State acts; 48 States express a willingness to enter into cooperative arrangements with an agency administering a Federal unemployment-compensation law. The typical provision reads as follows:

*

The Commissioner is hereby authorized and directed to enter into agreements with the proper agencies under such act of Congress * * to provide reciprocal treatment to individuals who have, after acquiring potential rights to benefits under this Act, acquired rights to unemployment compensation under such Act of Congress or who have, after acquiring potential rights to unemployment compensation under such Act of Congress, acquired rights to unemployment compensation under this Act.

EASTMAN'S STATEMENT

In 1934 the then Coordinator, Mr. Eastman, made a report upon the general subject of unemployment compensation and other matThat authority is so eminent that I ask the privilege of quoting what he had to say about the subject which we present to this committee at this time. This is what Mr. Eastman said:

ters.

The first principle calls for the establishment of a national transportation unemployment-insurance system rather than a host of separate State systems.