Mr. MARTIN. That would show an increase of around $72,000? Mr. LAWLER. It would, Mr. Chairman.

Mr. MARTIN. Now, it has been claimed by practically all the opponents that the benefits carried under this bill will completely exhaust the fund, but it is also clear that no additional burden can be placed on the railroads until we have new legislation, and at least the carriers, if that situation develops, will have the satisfaction of being able to say to the other fellows, "I told you so."

Mr. LAWLER. Mr. Chairman, may I explain this term "benefits awarded"? When a man becomes unemployed, he files an application for benefits, and after considering the case the State gives us advice that the employee is eligible to receive so much in benefits, and the amount here shown is the amount determined to be payable to the man this year, if he is unemployed. This same figure is projected into figures under the bill. All of thsee men have received or are receiving benefits. Just what they have been actually paid to date I do not know, but the figures here represent the State's determination of what they are eligible for this year. Of course, if they are not unemployed the full time to take up their full benefits, the amount would be correspondingly reduced under the adjoining column headed "Benefits payable to those individuals under proposed bill.

This statement only shows what has happened to date. It does not purport to show all the claims that have been filed, for I have no information on that question. There may and probably have been many other claims filed, some of which have not been passed on, and others which may have been declined by the States for any of a large number of reasons. Another thing to remember is that these States have only been paying benefits for a very short time, and doubtless there are many potential claimants who have not yet presented claims because they are not familiar with all the possibilities of the plan. But people soon learn of their opportunities and doubtless many delayed claims will be filed early enough for handling. It is my judgment that in the kind of claims I have just mentioned, that low-salary groups will greatly predominate, so that eventually the comparison between the benefits allowed under the State plans as against the benefits proposed in the present bill will indicate a far more liberal allowance under the bill than is indicated in this exhibit.

And, finally, the railroad industry has a definite relationship to the objectives of local governments of the States in which they operate. Until such time as the present State systems have had a fair and reasonable trial and the State administrators have had an opportunity to simplify and unify their procedure, we submit that no attempt should be made to disrupt the orderly procedure of their experiment. I thank you for your indulgence, Mr. Chairman.

Mr. MARTIN. Thank you very much, Mr. Lawler. You may extend and revise your remarks in the record; and that applies to all who have appeared before the committee.

The remaining witness for the opponents is Mr. Souby. Mr. Souby, we shall be glad to hear you now.

STATEMENT OF J. M. SOUBY, ASSISTANT GENERAL COUNSEL, ASSOCIATION OF AMERICAN RAILWAYS

Mr. SOUBY. Mr. Chairman and gentlemen of the committee, so far as the detail sof the bill go, they have been adequately covered by our witneses. I have only a few rather general questions to which I wish to draw attention.

Dr. Parmelee stated in the beginning of his testimony that the bill here raises two fundamental issues. One is as to the desirability of separating these railroad workers from the general unemployment scheme which we have set up now in the country, and setting them up in a separate Federal scheme.

The second question is, assuming that to be desirable, is this proposed bill here a satisfactory dealing with the matter?

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Now, that latter question we have covered fully and I do not think the committee is left with any doubt as to what we think the answer is as to that last question. It is emphatically that this bill will not do, even assuming that we should have a separate Federal system of unemployment insurance for the railroad employees.

But it is on the first question that I wanted to make a few statements. We do not know what the answer to that is.

Mr. MARTIN. There is one answer that is quite obvious, and that is that the State unemployment insurance for railroad employees is an anomaly in railroad regulation. There is not any other exception that I know of in regulating the railroads of the country by State agencies instead of Federal.

Mr. SOUBY. If I had time, I would like to go into that. But there are two or three rather general thoughts that I wanted to get to the committee, if I can.

Our position is that so far as the factual answer to the question is, we do not know what it ought to be. It may well be that we will some day welcome a separate scheme of this sort. But I wanted to make clear what out position is at this time. And that is simply that we do not think this is the time to try to do it, because we do not think the committee has any more information on it than we have. And we know that we do not have enough to enable us to make up our mind on the question.

So we are asking frankly that you delay the matter until you can get sufficient information on which to act intelligently and with some assurance that you are acting correctly.

Now, that is not merely a plea for a delay, in the ordinary sense, because we have now under operation a scheme from which we will get the necessary information, one of the purposes of which was, as suggested by the committee that recommended it, that it would enable us to secure statistical data which is now so sorely lacking and which is absolutely necessary, if we are going to deal intelligently with this whole problem of unemployment.

In asking for delay here we are not without some precedent. If you understand the application of this bill that is here before you, you can see that there is no rush to pay a man anything after he gets out of work, under the bill.

Suppose your bill were in effect now. I go in to Mr. Latimer, and I say to him, "I am an old railroad man. I am out of a job. I am hungry. I have not had any work for the last 2 months.

I cannot

find another job and I understand you have got a scheme here to take care of just such fellows as I am.'

Mr. Latimer says, "We surely have. When did you work for a railroad?"

"Well," I say, "I worked for them 3 or 4 months."

"How much did you earn?"

"Well, I earned about $250 but, of course, it cost me practically all of that to live while I was earning it and what little I had left I bet on the favorite in the Kentucky Derby and, of course, lost that." Mr. Latimer says, "I am not interested in what you did with it. But when did you earn this money last?"

"Well, the first part of this year.

Mr. Latimer looks up at the calendar and he says, "This is just June. Did you earn anything the year before last with the railroad?" I say, "No. I did not work for a railroad the year before last. What has that got to do with it?”

"Well," Mr. Latimer says, "that's too bad. You have not got any base year. I cannot give you anything. By the way," he says, "did you earn anything last year?"

I say, "No; I did not get anything last year, either."

Mr. Latimer says, "Well, that is still worse, because if you did earn something last year, if you would come in to me in July of this year, I could give you something. But since you did not earn anything except the first part of this year, if you will come to me after July 1 next year I will figure out what you are entitled to and give you something." Now, that is exactly what this simple bill that Judge Hay has been telling you about provides with respect to relief in certain cases. I did not say my illustration is typical or representative, but it does apply just that way, as Judge Hay so clearly explained when he told us how simple it was and how fine in its operation it was.

Mr. MARTIN. On the other hand, that is not going to cost the carrier anything, is it?

Mr. SOUBY. Now, I want to ask, what is the hurry about this legislation? We are not asking you to leave these fellows without any protection while you are waiting to learn whether or not this proposal is a desirable one.

So far as the better-paid men go, they have just the same protection now under these State systems that these gentlemen are proposing to give them under this new system. It is only this poor fellow I was just speaking of, and fellows that fall somewhat in his category, that will not be as well treated as they would be under this bill, except he would not have to wait quite so long in some instances under the present system as he would, in some instances, under the new bill.

Mr. MARTIN. Well, some of these payments would be so small that it would be hardly worth waiting for.

Mr. SOUBY. That is true. The point I am trying to make is that there is not any real need for this rush act that these brothers are trying to put across here. Speaking frankly, that is what it is. They are trying to rush through here, in the later stages of a busy Congress, a bill nobody has any chance to understand and it deals with a subject with respect to which nobody knows very much, as I am trying to impress upon you.

Now, I think that in making an objection to the effort to put this thing through in a rush, we have a right to expect of this committee

and of Congress credit for being sincere, at least, in our objection. We at least are entitled to credit for having reasons which in our own mind are valid for objecting to it. And I want to give you an indicacation why we do think we have a right to that consideration. And it is simply by referring to our past record and our past reputation with respect to the dealings with labor.

Judge Hay and I sat across the table from one another here for 2 or 3 weeks and wrote the preliminaty draft of what is now your Railroad Retirement Act. And that was a result of friendly negotiations and agreement, across the table, between the railroad management and the representatives of labor. I sat for 3 weeks, ending in May 1935, on two occasions for stretches of 18 hours without a break across the table from my friend Don Richberg in drawing up what is recognized as one of the most enlightened agreements between management and labor that has ever been written. And that is the agreement with respect to the dismissal wages in the event of the coordination and consolidation of railroads.

Now, I say with the record we have back of us for fair dealing with labor, we have a right to the presumption that when we come in here objecting seriously, as we do, to a measure of this sort, we at least in our own mind, have valid ground for objection to it.

I will just briefly give you what is a little bit of expansion of what

our reasons are.

This whole scheme of unemployment insurance is admittedly and frankly nothing but an experiment. I could read you, if I had the time, any number of quotations from the report of the special committee appointed by the President of the United States on whose recommendations the present general plan was based. I have not the time to do that, but I want to call your attention to this fact, that if you should proceed to enact this proposed bill, you would be undertaking to deal with one of the most fundamental issues involved in the whole problem. When you consider the broad social basis or the broad economic aspects on which the very idea of unemployment insurance is based, you can realize that there is room for any number of fundamentally different views with respect to how the thing should be constituted.

Right at the outset, the question is, How are you going to finance it? On that point there are two widely divergent schools of thought. The first fellow says, "Why, sure, make the industry pay for taking care of its own employees when they are out of work."

Another fellow comes along and says, "That is just merely indirectly loading it on society, because if you make industry pay, they have got to recoup it in their cost and society pays it anyway. Why not support it by a broad scheme of general taxation?"

The next fellow comes along and says, "Assuming you are going to put it on industry, as they have decided tentatively to do it"-of course the committee that I referred to expressed grave concern about whether that would be the ultimate method or not. They said that it was worth trying and we will see how it works. So they say, "If you are going to put it on industry as distinguished from supporting it through general taxation, what form of contribution are you going to demand from industry?"

First, shall it be levied both on the employer and the employee? Second, whether you adopt the one of the other method, so far as the

employer's contribution is concerned, what form of tax are you going to use?

There is respectable authority for the proposition that the minute you put it on the pay roll of the employer you are working diametrically against one of the fundamental purposes back of your whole socialsecurity program, which is to reduce unemployment, along with its relief. That school of thought says that the minute you put your tax on the pay roll of the employer, you discourage any expansion of his employment. In times of improvement of business, he will say, "I cannot afford to build up a big pay roll here and pay taxes on it. Maybe I won't need them but a short time."

Those are some of the problems with which you are confronted. This social-security scheme that was set up left a great deal of that optional with the States. And the result is in the various State measures we have under trial practically all the various schemes that could have worked. One of the practical questions that arises-and it is a more fundamental problem than any of them, other than the base of the tax-is, if you are going to put in a scheme of this sort, are you going to pool all industry, or are you going to deal with it industry by industry? If you deal with it industry by industry, why not break that down and deal with it employer by employer within each industry?

You are undertaking in this bill, if you pass it, to answer one of those fundamental questions; that is, whether we are going to deal with this thing by industries. If you couple with it the merit rating idea that has been talked about here so much, then you go one step further and take employer by employer within a given industry.

But my suggestion is that before you undertake to commit the Government to a definite policy with respect to the question that is as fundamental and is as serious as this, you should wait until you have some data on which to base some of these calculations that are necessary to determine what the result is going to be.

Now, we do not know how it is going to work in the States. But one of the main reasons that has been suggested by some of these proponents of the bill-I do not mean in this hearing, but I have reference to speeches that I have seen; I saw one from one of our Congressmen who suggested as one of the primary reasons for this proposal the thought that these State plans are going to fall through, they are going to break down.

Now there is not anything that could be done, that would come in here, assuring that result any more, if there is any danger of it, than to take the railroad industry out of the State plan. I say that for two reasons. In the first place, these gentlemen claim that the primary justification for what they are proposing here is that the railroad employment is much more regular and that there is much less unemployment among the railroads than in industry generally. Now, if that is true, you are taking the best risk out of the State arrangement. We do not know whether it is true or not. That is one of these assertions which can be made with only one assurance, and that is the assurance that nobody can prove that you are wrong when you make it. On the other hand, they cannot prove they are right when they do make it. But that is much more assurance than a lot of people need these days for the most extravagant assertions.

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