amounts authorized should be sufficient to meet these costs, and no matching is required.

Title IV: Grants-in-aid are to be made to the States to assist them in giving aid to dependent children. In making these grants, the Federal Government will, within certain limits, put up one-third of the total amount paid in the State for aid to dependent children.

Title V: Grants-in-aid are made to the States for aid in their services relating to maternal and child welfare, the care of crippled children, and vocational rehabilitation. Most of these grants are to be made on an equal matching basis.

Title VI: Grants-in-aid are to be made to the States for developing their public-health services, and authorization is made for the Public Health Service to carry on its investigatory work.

Title VII: A Social Security Board, which is to be an independent agency in the executive branch of the Government, is established. The board is to have three members, holding office for 6-year terms. Title VIII: An income tax, measured by a certain percentage of wages (beginning with 1 percent in 1937 and increasing to 3 percent by 1949), is levied on most wage earners, with certain large groups, such as domestic servants and agricultural laborers, exempted. An excise tax, measured at the same rates on wages paid, is levied on employers, with similar exemptions. These taxes first take effect on January 1, 1937.

Title IX: An excise tax is levied on employers of 10 or more persons (with certain exemptions), measured by 1 percent of wages payable for 1936 and increasing to 3 percent by 1938. This tax goes into effect on January 1, 1936, and is first payable a year later. Credits against the tax are allowed for contributions which the taxpayer may have made to State unemployment funds under State unemployment compensation laws.

Title X: This title contains general definitions and miscellaneous provisions applying to the whole act.

HISTORY OF LEGISLATION

Legislation on the subject of social security was promised the country in a Presidential message of June 8, 1934, in which he said:

Our task of reconstruction does not require the creation of new and strange values. It is rather the finding of the way once more to known, but to some degree forgotten, ideals and values. If the means and details are in some instances new, the objectives are as permanent as human nature.

Among our objectives I place the security of the men, women, and children of the Nation first.

This security for the individual and for the family concerns itself primarily with three factors. People want decent homes to live in; they want to locate them where they can engage in productive work; and they want some safeguard against misfortunes which cannot be wholly eliminated in this man-made world of ours.

Subsequently, the President (by Executive order) created the Committee on Economic Security, composed of the Secretary of Labor (chairman), the Secretary of the Treasury, the Attorney General, the Secretary of Agriculture, and the Federal Emergency Relief Administrator, instructing the committee to study the entire problem and to make recommendations which might serve as the basis for consideration of legislation by the present Congress.

The Committee on Economic Security devoted 6 months to this study in which it was assisted by a staff of specialists and by 14

advisory groups, representative of every interest concerned with the problems of economic security, including capital, labor, and the general public. For personnel of advisory committees, see the appendix of this report. The committee made a unanimous report to the President in January of this year, which the President transmitted to both Houses of the Congress, with his endorsement of the legislation recommended therein, in a special message on January 17, 1935, the concluding paragraphs of which were as follows:

The establishment of sound means toward a greater future economic security of the American people is dictated by a prudent consideration of the hazards involved in our national life. No one can guarantee this country against the dangers of future depressions but we can reduce these dangers. We can eliminate many of the factors that cause economic depressions, and we can provide the means of mitigating their results. This plan for economic security is at once a measure of prevention and a method of alleviation.

We pay now for the dreadful consequence of economic insecurity-and dearly. This plan presents a more equitable and infinitely less expensive means of meeting these costs. We cannot afford to neglect the plain duty before us. I strongly recommend action to attain the objectives sought in this report.

These recommendations were incorporated in H. R. 4120 on which this committee held extended hearings from January 21 to February 12, at which more than 1,000 pages of testimony were taken. Since the conclusion of the hearings the measure has received the constant attention of the committee until the present moment, and numerous changes in the content and form were agreed upon. These changes involved a complete revision resulting in the drafting and introduction of H. R. 7260, herewith recommended for passage.

PURPOSE AND SCOPE

The need for legislation on the subject of social security is apparent at this time. On every hand the lack of such security is evidenced by human suffering, weakened morale, and increased public expenditures.

This situation necessitates two complementary courses of action: We must relieve the existing distress and should devise measures to reduce destitution and dependency in the future.

Thus far in the depression, we have merely attempted to relieve existing distress, but the time has come for a more comprehensive and constructive attack on insecurity. The foundations of such a program are laid in the present bill.

Work for the employables on relief is contemplated in the workrelief bill; a second vital part of the program for security is presented in this bill. The bill is designed to aid the States in taking care of the dependent members of their population, and to make a beginning in the development of measures which will reduce dependency in the future. It deals with four major subjects: Old-age security, unemployment compensation, security for children, and public health. These subjects are all closely related, all being concerned with major causes of dependency. Together they constitute an important step in a well-rounded, unified, long-range program for social security.

OLD-AGE SECURITY

There are now approximately 7,500,000 men and women over 65 years of age in the United States, and for decades the number and percentage of old people in the population have been increasing. This

tendency is almost certain to continue throughout the century. Statisticians estimate that by 1970 there will be 15,000,000 people over 65 years of age and by the end of the century, about 19,000,000. In contrast with less than 6 percent of the entire population now over 65, more than 10 percent will fall in this age group in 1970, and above 12 percent by the end of the century. These, moreover, are minimum estimates, which may be greatly exceeded if cures are discovered for the major causes of death among old people.

TABLE I.-Actual and estimated number of persons aged 65 and over compared to total population, 1860 to 2000

Approximately 1,000,000 men and women over 65 years of age are dependent upon the public for support, the great majority of them on relief. This number is certain to increase in the future due to (1) the rapid increase of persons over 65 years of age, (2) the fact that many of the older workers now unemployed will never be steadily employed again, (3) the disappearance during the depression of the lifetime savings of many families approaching old age, and (4) the lessened ability of children to support their parents. The social problem of old age dependency, great as it is today, is certain to become more acute in the future unless adequate measures are taken

now.

Experience, both in this country and in other lands, has demonstrated that the best way to provide for old people who are dependent upon the public for support is through old-age-assistance grants, more commonly called "old-age pensions." Twenty-nine States and the Territories of Alaska and Hawaii have old-age pension laws. Approximately 200,000 old people are now in receipt of old-age assistance under these laws, and while the grants are often inadequate, the lot of the pensioners is distinctly less hard than that of old people on relief. But due in part to restrictive provisions in the State laws, and still more to the financial embarrassment of many State and local governments, the old-age pension laws are limited in their application and do not provide adequately for all old people who are dependent upon the public for support.

To encourage States to adopt old-age pension laws and to help them carry the burden of providing support for their aged dependents, this bill proposes that the Federal government shall match the expenditures of the State and local governments for old-age pensions, except that the Federal share is not to exceed $15 per month per individual. A few standards are prescribed which the States must meet to entitle them to Federal aid, but these impose only reasonable conditions and leave the States free of arbitrary interference from Washington.

TABLE II.-Operation of old-age pension laws of the United States, 1934

Source: Data collected by the Committee on Economic Security.

The provisions for Federal aid, included in title I, are designed for the support of people now old and dependent. They do not, however, furnish a completely satisfactory solution of the problem of old-age support, considered from a long-time point of view. If no other provisions are made, the cost of gratuitous old-age pensions is bound to increase very rapidly, due to the growing number of the aged and the probable increasing rate of dependency. Unless a Federal benefit system is provided, the cost of old-age pensions under title I, shared equally by the Federal Government and the States, would by 1960 amount annually to more than $2,000,000,000 and by 1980 to nearly $2,600,000,000, on the basis of an average monthly pension of $25.

To keep the cost of Federal-aided State pensions under title I from becoming extremely burdensome in future years, and to assure support for the aged as a right rather than as public charity, and in amounts which will insure not merely subsistence but some of the comforts of life, title II of the bill establishes a system of old-age benefits, paid out of the Federal Treasury, and administered directly by the Federal Government. The benefits provided for workers who have been employed during substantially all their working life, will probably be considerably larger than any Federal-aided State pen

sions could be. The benefits to be paid are related to the wages earned, but there are adjustments favoring the lower paid employees and those approaching old age. The minimum monthly benefit payable is $10, and the maximum is $85. An employee whose total wages, as defined in the act, prior to the age of 65 amount to less than $2,000 will not qualify for benefits, but he will receive 31⁄2 percent of his wages in a lump sum at the age of 65. He may be eligible also for a Federal-aided State pension under title I.

TABLE III.-Illustrative monthly Federal old-age benefits under title II

The establishment of the Federal old-age benefit system will materially reduce the cost of Federal-aided State pensions under title I in future years. It will not entirely replace that system, because not all persons will be under the Federal old-age benefit plan. It will operate, however, to reduce the total cost of old-age pensions under title I to the Federal and State Governments in the future by more than $1,000,000,000 annually.

TABLE IV.-Estimated appropriations, benefit payments, and reserves under title II [In millions of dollars]

It is important to note that by the investment of the large reserve on hand in the old-age reserve account, the Treasury will be able to withdraw from the market outstanding Federal bonds and hold them in the account. Their withdrawal will prevent the loss in income