Labor relations in the transportation industry particularly on the railroads are not conducted on a localized basis. Wages, hours, and working conditions are established through agreements which cut across State lines and upon occasion are national in scope. It would be unreasonable to suppose that the unemployment-insurance laws of all of the States would be uniform. On the contrary there would inevitably be wide variation in these laws. These differences would in time tend to disturb existing wages and working conditions, and so would adversely affect the labor relations especially on the railroads. Moreover in the transportation industry there is a greater amount of transfer of employees across State lines than in any other industry. Such transfers are a normal phases of employment in the industry and would make very difficult the successful operation of an unemployment-insurance law on a State basis. To remove transportation from the jurisdiction of the States would not only facilitate the administration of unemployment insurance for the transportation industry but it would also simplify some of the administrative problems of the States. The regulation of all aspects of interstate transportation and the agencies which conduct such transportation is primarily the function of the Federal Government.

The further principle which deserves consideration is that unemployment insurance and old-age insurance for the transportation industry ought to be administered by the same body. First of all, a total contribution for these purposes would thus be collected in one payment from each employer in the industry rather than by two payments made to different agencies. Second, the same set of records would be made to serve the same purpose. If the benefits to be paid are to have relation to any contributions paid by employees themselves, these records would be the main basis for the allowance or disallowance of claims.

That was the statement of Mr. Eastman.

In presenting this bill, therefore, we are but presenting a proposition consistent with the course and logic of railroad legislation history for a half a century and answering the anticipations and contemplations of the students of unemployment insurance approaching the subject both from the State and the Federal angle.

EXPERIENCE SHOWS PRESENT SYSTEM COMPLICATED

Subsequent events show that the Coordinator and the other authorities were right in anticipating that there would be complications and difficulties in administering State unemployment-insurance laws particularly insofar as they had to do with railroad employees. They show that there were prophets par excellence.

In fact, if they had limited their prophecy to complications and difficulties attending the general administration of the State laws they would have been good prophets, if not prophets par excellence. The task of administering the social-security systems, when made as simple as possible, is rather difficult if not a stupendous one.

This has been rather distressingly stated by men who have been in the midst of the administration of these laws. For instance, Mr. Clarence Jackson, executive director, Unemployment Compensation Board of Indiana, Mr. Herman A. Gray, chairman of the New York Unemployment Insurance State Advisory Council, Mr. Glenn A. Bowers, until recently executive director, Division of Placement and Unemployment Insurance of New York, and the Unemployment Compensation Commission of Montana, all have made statements to the effect that the administration of the unemploymentinsurance system of the States with which they have knowledge is threatened with disaster because of the complexities and difficulties attending those administrations.

The burden of their statements is that the laws must be "fundamentally revised." They unite in criticizing the collection of taxes by both Federal and State Governments, the duplication of adminis

trative agencies and functions and complexities of the present laws. They manifestly are in an attitude to welcome any proposition that will tend to simplify and make less difficult the administration of the State laws. They, I am sure, are in a position to look upon one who approaches with a plan that would tend to simplify that in any respect as a friend rather than an enemy of the State unemployment-insurance system; and may I say that anything I shall say in the course of my remarks with respect to State unemployment-insurance laws is said as a friend, as one anxious to see those systems perfected, and hence anxious to see them relieved of as great burden of administration as possible.

RAILROAD INDUSTRY ADDS COMPLICATIONS

That the attempt to administer those laws in their application to employees in a national industry such as the railroad industry adds to the difficulties these men are struggling with at the present time no one will deny. He who runs may read that fact.

BURDEN ON STATE ADMINISTRATION

Let us look at certain facts which will convince anyone that the very nature of railroad employment would tend to complicate the difficulties. Let us look first at the laws themselves: The laws have varying definitions of what constitutes unemployment; varying definitions of what constitute employment within a certain State; varying definitions as to "waiting periods"; varying prescriptions by the amount of benefits is determined, and so on. One State will consider a worker as within that State upon the application of one certain principle and another State will consider the same worker as working in that State because of the application of other principles to his employment.

Cases are on record in which it has been shown that by the application of the principles of two different States a certain worker was working in both States and by the application of principles of another he may be found to be disqualified from benefits in either State.

When it is contemplated, therefore, to make these varying laws applicable to workers who work not only in one State, but as in the case of many of them, in many States, "multi-State" workers, as we may call them, and when we apply them also to men who move from one State to another as is necessary in railroad operations the difficulties are made clear and indeed most distressing.

BURDEN ON RAILROADS

These systems not only burden the administration of the law from the standpoint of the States, but they burden it from the standpoint of the railroads. The railroads are required to report to the various States. Railroads run, of course, in many States. Some of them in as high as from 15 to 16 States. They must report because of having employees in other States; some of them, in as high as 25 States. These reports are not uniform in their nature.

The expense, therefore, attached to this item which must be borne by the railroads, is most considerable.

Mr. Cashen referred to the fact that by the enactment of this measure the railroads would be saved from $3,000,000 to $5,000,000.

They would be relieved of reporting to States, and under this bill report to one agency, the agency to which they already report under the Railroad Retirement Act.

BURDEN ON EMPLOYEES

The system is not only burdensome to the State administrators, and burdensome to the railroads, but burdensome to the railroad workers as well.

As Mr. Cashen has said, we are not coming here simply to try to relieve the railroads of their burdens, although we can assure the gentlemen who represent the railroads that any measure of relief that we can bring them we do so most cheerfully, because we know that their problems are somewhat distressing at the present time. We lay emphasis upon the fact also that great inequities are visited upon railroad workers by the existing systems.

I call attention to these outstanding facts: Under the existing State laws railroad workers get different amounts in different States. In two States they get nothing-Wisconsin and Alabama-unless some individual railroad desires to elect to come under the State law. The amounts prescribed in other States vary. Some of them are more liberal than others. In six States they pay contributions from 1⁄2 to 11⁄2 percent of their wages; in the other States no contributions. These facts alone present a condition calculated to lead to discontent and unrest among railroad workers. They work under national agreements; they presumably should be given throughout the industry the same fair and equitable treatment. We therefore submit that these systems which visit upon them inequalities and inequities of the existing systems are not good for the workers. It is not good for the relations between the workers and the railroads themselves.

RAILROAD WORKERS LOYAL

History attests that in periods of prosperity and adversity railroad workers have been loyal. They have been loyal servants of the railroads and loyal servants of their country. They have been loyal as they have seen their numbers increase and loyal when they have seen their ranks depleted and their brothers join the bread lines.

Therefore, when railroad workers come before any congressional committee and ask for the enactment of a mesaure, not adding to the burdens of the railroads; not burdening the public; but doing only equity and justice to them, they are entitled to fair treatment.

WE SUBMIT A SIMPLE PLAN

In lieu of the existing complicated, expensive, inequitable, unworkable plan, we present this bill which we submit, set alongside the plans under which railroad men are working today, is simple, economical, equitable, and easily workable.

COVERAGE SAME AS RAILROAD RETIREMENT ACT

In the first place we provide that the coverage of this act shall be identical with the coverage of the Railroad Retirement Act; that is to say, it applies, speaking briefly and in summary, only to men who in

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some capacity or other are engaged in the operation of the country's railroad system. In the second place, it applies in the contribution or taxing side to identically the same tax base as is carried in the carriers' taxing act.

In the third place it is to be administered, by the same agency which administers the Railroad Retirement Act.

Addressing myself for just a moment to the first proposition, namely, that the coverage is identical with the coverage of the Railroad Retirement Act. In his report, Mr. Eastman suggested the inclusion in a bill of this sort of other interstate agencies, such as busses and trucks. We have decided not to make that inclusion in this bill, because of the distinct and outstanding advantage in the simplicity and economy of administration of making the coverage the same as in the Railroad Retirement Act. If that act covered the other workers, we would see no objection to covering them in this bill, but because we have already set up this agency and the fitting in of this system to the system already established, would be so much simpler, so much more economical, that we deem it advisable not to extend to coverage beyond that of the Railroad Retirement Act.

In the second place there are certain distinctive characteristics of employment and unemployment with respect to the railroad industry that do not pertain even to other interstate transportation agencies. In the third place, many, if not in fact large numbers of busses and trucks are operated by small operators who are not familiar with making reports and carrying on a business on any such scale as the railroads. That would add to the difficulty of administration, of reporting and of accounting; In the fourth place, numbers of these bus and truck operators are intrastate and not interstate and it was thought best to wait until the Interstate Commerce Commission out of experience has defined it more definite rules for ascertaining those who are engaged in interstate business.

TAX BASE SAME AS CARRIER'S TAX ACT

The tax or contribution is on the same basis as the Railroad Retirement Act: Mr. Cashen made the statement that this bill would not cost the railroads a cent in taxes, but save them $1,200,000 annually. That would result from the fact that under the existing systems the railroads pay in all States as much as 3 percent of their pay rolls, whole pay rolls, and in some States more than 3 percent. I say on the whole pay roll. Under this bill we limit the tax or contribution to 3 percent upon that part of wages and salaries which do not exceed $300 per month. All over and above that is not subject to this tax. The percentage of total wages above that figure is 1.84. Three percent of that amount would be about $1,200,000.

Mr. Chairman, you have no idea how much pleasure it gives us to present a bill in which we can point out that there is $1,200,000 definite saving to the railroads. I know it is a mere bagatelle in these days when we talk in billions. A friend of mine after listening to an economist's speech drove up to a gasoline station and cried, "Give me a million gallons of gasoline." I know that a million dollars is a small amount; but we do come here, not proposing to add to the railroads' burdens, but to take off $1,200,000. We think these gentlemen ought to clasp hands with us and thank us for offering to reduce it by that amount.

ADMINISTRATION IN RETIREMENT BOARD

In the third place we put the administration of this act in the Railroad Retirement Board, the same agency that administers the Railroad Retirement Act. This board is to have entire administration of this act both on its receiving and spending end. It is proposed that the board shall collect the contributions, deposit them, in the Treasury of the United States, which Treasury is to put them in two accounts: 90 percent in an unemployment-insurance account, out of which the benefits are to be paid and 10 percent into an unemployment administration fund, out of which the expenses of administration are to be paid.

The Board is given authority to administer the act on the other end. It is to determine the right of the employees to benefits; to pass upon their claims; to issue certifications to the Treasurer of the United States, who is to pay upon those certificates out of the fund which is deposited there.

PROPOSAL CONSTITUTIONAL

I am sure it will occur to you at once, that we are proposing, by vesting both collecting and dispensing provisions of this bill in the hands of the same board, to earmark these funds. It may be suggested that we have drawn a bill which follows the principle of the first Railroad Retirement Act. If there had ever been any doubt about the right to earmark funds, that doubt was certainly dissipated by the decision of the Supreme Court in the case of the Cincinnati Soap Co. v. The United States in two hundred and one United States Reports.

The law considered in that case imposing a tax upon the processing of coconut oil. The proceeds resulting from that tax were to be placed to the credit of the Philippine Islands. While the case was under consideration the fund had not yet been turned over and was in the Treasury of the United States and was referred to by the Supreme Court as being in "the form of a trust fund." In passing upon that case Mr. Justice Sutherland said:

Standing apart, therefore, the tax is unassailable. It is said to be bad because it is earmarked and devoted from its inception to a specific purpose. But if the tax, qua tax, be good, as we hold it is, and the purpose specified to be one which would sustain a subsequent and separate appropriation made out of the general funds of the Treasury, neither is made invalid by being bound to the other in the same act of legislation.

The exactions here proposed, while called contributions, may well be held to be taxes. If not, and if this bill is held to be drawn on the same principles as the first Railroad Retirement Act, we do not have the slightest doubt of its constitutionality or that it would now be held constitutional by the Supreme Court of the United States.

It is our opinion that lawyers generally hold that the powerful dissenting opinion of Chief Justice Hughes in the first Railroad Retirement case would now be adopted in any similar case as the opinion of the Court.

With all due respect to the majority opinion and the writer thereof, I submit that that opinion was not only bad law, but that it has resulted in certain cumbersome and rather specious legislation in an effort to make valid certain policies of the Government which could