Health, Education, and Social Security, should be noted. Is the Administration attempting to add to the prestige of the Federal Security Agency or to diminish its scope? Certainly, if the reorganization plan is not rejected, the case for the proposed Department would be materially weakened.

THE ECONOMY ISSUE

The reorganization plan was transmitted under the Reorganization Act of 1945. This act provides:

It is the expectation of the Congress that the transfers * * * under this act shall accomplish an over-all reduction of at least 25 percent in the administrative costs of the agency or agencies affected.

Moreover, a stated purpose of the law is "to reduce expenditures and promote economy."

While the message transmitting the plan mentions economy as a purpose it is to serve, no indication is given of wherein or how economy would be promoted. I am not aware of any reason to think that the United States Employment Service and the Bureau of Employment Security would operate more efficiently in the Department of Labor than in the Federal Security Agency. Indeed, is not the administration again inconsistent in offering the present plan in the name of economy when last year's plan-which would have separated the two employment security arms-was also offered in the name of economy?

Of course, savings will be possible if and when the Employment Service is returned to the Federal Security Agency as provided under present law. The President's plan does not present an opportunity for additional savings, which is the point at issue.

If anything, the two programs would be more efficient if operated in conjunction with other social-security activities. Indeed, when President Roosevelt, through a reorganization plan, placed the Employment Service in the Federal Security Agency in 1939, where it could operate in conjunction with the Agency's unemployment compensation and other social-security activities, he did so on the grounds that efficiency could best be promoted in this way..

THE WORK OF THE HOOVER COMMISSION

The timing of the President's reorganization plan is worth comment. For one thing, it was transmitted very shortly before the expiration of the President's powers under the 1945 Reorganization Act.

More important, however, is the fact that the plan was transmitted prior to the completion of the work of the Commission, headed by Herbert Hoover, which is now making a comprehensive survey of the organization of the executive branch of the Government.

The Commission is giving its attention to the Government's health, education, and social security functions. It has delegated to the ⚫ Brookings Institution the task of preparing a special report on these activities.

It is difficult to see any reason why Congress should assent to any reorganization plan while the Hoover Commission is at work.

THE EMPLOYERS HAVE THE JOBS TO OFFER

Let me make just one more point about the President's plan: The interests of employers should not be overlooked because their cooperation is essential if the employment service and unemployment compensation programs are to operate successfully. Both activities rest on a foundation of employment and jobs, and it is the employers who have the jobs to offer.

ARTICLE BY COMMISSIONER W. O. HAKE, OF TENNESSEE

Mr. Chairman, I have based the preceding remarks to a considerable extent on an excellent article by W. O. Hake, commissioner of the Tennessee Department of Employment Security. The article, Should Federal Employment Security Activities be Placed in the Labor Department? appeared in the November-December 1947 issue of American Economic Security, a magazine published by the chamber of commerce. At this point I should like to offer a copy of the article for inclusion in the record, if the committee so desires..

THE RIO CONFERENCE

Let me now turn to the recent Rio meeting of the Inter-American Committee on Social Security-a phase of the over-all social-security problem about which Chairman Hoffman asked me to comment.

I first became interested in the Inter-American Conference on Social Security in August 1947, when I visited Rio de Janeiro to attend a meeting of the Permanent Committee of the Hemispheric Insurance Conference.

The Chamber of Commerce of the United States sponsored the First Hemispheric Insurance Conference in New York City in 1946 and it was attended by insurance company executives from some 15 countries in the Western Hemisphere. The conference authorized the appointment of an interim or permanent committee, comprised of one member from each country. This committee, off which I am the secretary, met in Rio in August.

At that time I learned that the Brazilian insurance companies were very much concerned about the forthcoming meeting of the InterAmerican Conference on Social Security which was held in Rio in November 1947. One of the four items on its agenda was "The Insurance of Occupational Risks" but the actual proposal was that the conference use its influence to advocate the socialization of workmen's compensation insurance by governments throughout the hemisphere, that is for the governments in each country to take over the writing of workmen's compensation insurance to the exclusion of private insurance companies.

I would like to present to the committee for inclusion in the record, if that is proper, a reprint of an article entitled "The Rio Meeting; Socializing Workmen's Compensation" which I wrote on this subject for American Economic Security, a magazine published by the chamber of commerce.

The chairman of the Inter-American Conference on Social Security is Mr. Arthur J. Altmeyer, Commissioner of the United States Social Security Administration. Also attending the meeting in Rio from the United States was Mrs. Clara Beyer of the Department of Labor and Mr. Wilbur Cohen of our Social Security Administration.

The proposal for the socialization of workmen's compensation insurance came before the Rio conference in the form of a report written by the Mexican Social Security Institution which speaks specifically of the important influence which the conference might exert in each country in carrying out its socialization program.

I discussed the conference with Mr. Altmeyer in advance, and also with Mrs. Beyer, and pointed particularly to the Mexican report on this subject which was to come before the meeting in November. I pointed out to them that workmen's compensation insurance had been successfully handled in the United States for more than 30 years, predominately by private insurance companies, and that what the Mexican report was advocating was entirely foreign to our theory and practice in this country. I urged them to speak against the adoption of the resolution in order that the conference and particularly the influence of the United States could not be used in other countries by the advocates of socialization.

Both Mr. Altmeyer and Mrs. Beyer expressed some misgivings that any statements by them before the conference, pointing out the superiority of private insurance or private business of any kind over the Government monopoly, would have any effect on the members of the conference.

I am happy to be able to say to this committee, however, that Mrs. Beyer spoke effectively against the adoption of the resolution before a subcommittee of the conference and she has furnished me a copy of her remarks at that time. She also assured me Mr. Altmeyer, in his position as chairman, did what he could to prevent the adoption of the resolution.

The conference did, however, vote to have a further study made on this subject by a special subcommittee so the matter is not dead by

any means.

This raises an important question as to the propriety of officials or employees of the United States Government participating in this Inter-American Conference on Social Security. The purposes of the conference are far from clear. The matter of who is to represent our Government and how their vote is to be determined on such matters as this one, is not at all clear. Furthermore, because the United States is so much more highly industrialized than any of the Latin American countries, our social-security problem is hardly related at all to the problems of other countries where they have a very high percentage of nonindustrial and even low income and illiterate population. Furthermore, if these questions, which affect both employers and labor, are to be discussed with representatives of foreign countries, it seems to me it would be highly proper for representatives of employers and labor to be represented in the discussions, rather than representatives of government only.

Congress has never authorized United States participation in this inter-American conference. It is my understanding that it is conducted solely as the responsibility and at the expense of the State Department. Until the objectives of the conference are clarified and

the value of these international discussions are more clearly established and, further, until there is some assurance that the conference will not be used as a propaganda agency in foreign countries, it seems to me that participation by the United States should be withheld. If it later develops that there is some proper basis for discussion of social-security problems among the countries of the Western Hemisphere then provision should be made for adequate representation by employers and labor, as well as by government.

(The following was submitted for the record:)

DECLARATION OF POLICY OF THE CHAMBER OF COMMERCE OF THE UNITED STATES ADOPTED BY THE MEMBERSHIP AT ITS 1947 ANNUAL MEETING WITHOUT DIS

SENT

The State public-employment services should remain under State jurisdiction. Agricultural and other public placement operations should be consolidated with such services. The consolidated services should be conducted pursuant to the public policies of the individual States.

The necessary Federal activities in connection with the State public-employment services (consolidated as indicated above) should be integrated with the Federal unemployment compensation activities in the Federal Security Agency (or any successor).

Mr. KIRKPATRICK. I have included in my statement reference to the United States participation in the Inter-American Conference on Social Security.

Our Government is participating in this international organization without the authority of Congress, and we feel that the organization is being used improperly for propaganda purposes on matters that are contrary to the theory and practice in this country.

The CHAIRMAN. You said you have included that in your statement?

Mr. KIRKPATRICK. Yes.

The CHAIRMAN. Well, will you enlarge a little bit? I have not had an opportunity to read your statement as carefully as I would like. Just what is your point? I am interested in that.

Mr. KIRKPATRICK. The last half of my statement is devoted to that subject, starting with the middle of the statement. I would like to offer to the committee for insertion in the record a reprint of an article which I wrote and which was printed in American Economic Security in the same issue in which Mr. Hake's article was printed, and which you have there, in which I discuss that conference, and one of the items on its agenda.

(The matter referred to is as follows:)

THE RIO MEETING: SOCIALIZING WORK MEN'S COMPENSATION

(By A. L. Kirkpatrick, Manager, Insurance Department, Chamber of Commerce of

the United States)

There has been quite a distinct trend throughout Latin America in recent years toward the socialization of workmen's compensation insurance; that is, a trend toward government monopoly in the workmen's compensation field, with private insurance companies excluded. These government activities usually are combined with an integrated social-security system.

PRESENT STATUS IN VARIOUS COUNTRIES

In Mexico, for example, workmen's compensation insurance formerly was written throughout the country by private insurance companies. Then, in 1944, the Social Insurance Institution took over all workmen's compensation in Mexico City and within the Federal district, the private companies being excluded.

In

1945, the institution took over such insurance in the main industrial citiesMonterrey, Guadalajara, and Puebla, among others—again squeezing out the private companies. The Government's plan, it is understood, is to take over in the remainder of the country in due time.

In Brazil, workmen's compensation insurance is still written by the private companies. However, a law passed in 1944 provides that, beginning January 1, 1949, the Social Security Institute shall commence gradually to take over the writing of workmen's compensation insurance, and shall achieve a complete monopoly by the end of 1953.

In some other countries, such as Costa Rica, there is already a government monopoly in the field, but workmen's compensation insurance is kept separate from the social security fund. In fact, the Government monopoly in Costa Rica operates with much the same sense of accountability that is generally considered an especial merit of private insurance.

In the United States, of course, workmen's compensation has been handled primarily by private insurance companies for more than 30 years. It is true, though, that during the early days of workmen's compensation seven States created State monopolies for handling this insurance. Eleven other States established State funds competitive with the private insurance companies.

However, the early trend in the United States toward socializing workmen's compensation was soon arrested. After the initial State monopolies were created, the legislatures of other States were able to compare the records of the monopolies with the records of the competitive, private insurance companies operating elsewhere. Because of the decisive superiority of private enterprise in this area, no State has created a monopolistic fund since 1919. Particularly noteworthy in this connection are the valuable accident-prevention work of the private companies and their excellent record for the prompt payment of claims. A further point in favor of free enterprise in the workmen's compensation insurance field is the opportunity afforded for self-insurance.1

As for the unification of workmen's compensation with social security, no such proposal has been adopted in any State, although such unification is known to be favored by staff members of the Federal Security Agency.

THE INTER-AMERICAN COMMITTEE ON SOCIAL SECURITY

In spite of the predominant theory and practice in the United States recognizing workmen's compensation insurance as a proper part of the free-enterprise system, officials of the Federal Government appear to be engaged in promoting throughout the Western Hemisphere a doctrine of socialization for workmen's compensation insurance.

The Inter-American Committee on Social Security, an organization affiliated with the International Labour Office, is meeting this November in Rio de Janeiro. The Chairman of the Committee is Commissioner Arthur J. Altmeyer of the United States Social Security Administration.

In

The purposes and objectives of the Committee are not clearly defined. general, however, it is an organization of social-security administrators from the countries of the Western Hemisphere for the purpose of exchanging ideas, information, and experience. Mr. Altmeyer's theory, he states, is that the Committee should not attempt to influence legislation or social trends in any country. In practice, however, the group appears to do just that, insofar as its actions and opinions are effective in so doing.

WORKMEN'S COMPENSATION ON RIO AGENDA

At the November conference in Rio, one of the four items on the agenda is "The Insurance of Occupational Risks.' The subject was introduced through the presentation of a draft report by the Mexican Social Insurance Institution. Among the conclusions of the draft report is the statement: "Technical, economic and social factors indicate the necessity for the unification of the different branches of social insurance so that the worker has complete protection for himself and his family in any contingency that may arise during his lifetime."

After pointing out the alleged disadvantages of private insurance, the report discusses the best method of bringing about the complete socialization of insurance

1 Apart from the specific arguments mentioned, a government should not-as a matter of basic, democratic theory-engage in activities which can successfully be conducted by private enterprise. As stated in a policy declaration of the Chamber of Commerce of the United States: "Tax-free, rent-free, cost-free, artificially low-cost financing, and other government competition with the lawful enterprises of private citizens are destructive and should be ended. Whatever form unfair competition by government assumes, its effects are detrimental to the general welfare."-Editor's note.