and again I quote the President's plan, "group, coordinate, and consolidate agencies and functions of the Government according to major purposes.

The President states his second reason, and I quote, "(2) to increase the efficiency of the operations of the Government."

The Federal Security Agency was created for the sole and specific purpose of administrating the Social Security System within the limitations of Federal authority. Certainly nothing but confusion can result from transferring a part of these functions to another Department, namely, the Department of Labor.

Although the President under authority of the First War Powers Act, 1941, transferred the United States Employment Service temporarily to the Department of Labor this was done at the time of a national emergency when labor recruitment was the sole problem involved. Today we have a totally different economic situation—there are now comparatively large numbers of unemployed persons who are drawing unemployment insurance benefits and the Employment Service must again operate as the most important part of the unemployment insurance system. We submit that your committee must remember that it is the function of the Employment Service to find jobs for workers who are drawing unemployment insurance.

It is perfectly obvious that this is part of one and the same program and certainly cannot be efficiently administered by two separate Government Departments—. much less by a Department designed to protect only one-half of the interests involved.

Would your committee see any logic whatsoever in transferring any part of this program to the Department of Commerce? If any part of this unemployment insurance system belongs in the Department of Labor, why does not part of it belong to a Government Department designed to assist business interests?

The President states as his third reason, and I quote, "to promote economy to the fullest extent consistent with the efficient operation of the Government."

The Social Security Board and subsequently the Social Security Agency were purposely and intentionally created by the Congress as a neutral agency to protect the interests of both employer and employee and also to provide one Government Department to handle the entire social sécurity program which, as your committee well knows involves many associated problems not under specific discussion at this time.

We believe that the President's plan is unsound and we hope that your committee will act favorably on House Concurrent Resolution No. 131.

Sincerely,

The CHAIRMAN. Mr. Silbernagel?

JAMES MUSSATTI, General Manager.

Mr. SILBERNAGEL. I have a short summary here that I prepared, of my brief. If that goes into the record, I would like to present that summary at this time.

STATEMENT OF JOHN J. SILBERNAGEL, REPRESENTING THE WISCONSIN STATE CHAMBER OF COMMERCE

Mr. SILBERNAGEL. Mr. Chairman, and members of the committee, my name is John J. Silbernagel. I am secretary of the committee on social security of the Wisconsin State Chamber of Commerce, and am representing the State chamber in opposing President Truman's reorganization plan No. 1 of 1948. The Wisconsin State chamber consists of some 2,000 members, representing many types of business as well as local chambers of commerce and various trade associations. As you know, Wisconsin was the first of the States to enact an unemployment compensation law. Since the time of its enactment in 1932 many improvements have been made and today we have an unemployment compensation system and administration of which we are rightfully proud.

Because it has an important bearing on the problem at hand, I should like to read a portion of the declaration of policy contained in Wisconsin's unemployment compensation law. It reads as follows:

Unemployment in Wisconsin is recognized as an urgent public problem, gravely affecting the health, morals, and welfare of the people of the State. The burdens resulting from irregular employment and reduced annual earnings fall directly on the unemployed worker and his family. The decreased and irregular purchasing power of wage earners in turn vitally affects the livelihood of farmers, merchants, and manufacturers, results in a decreased demand for their products, and thus tends partially to paralyze the economic life of the entire State.

You will note that this statement of policy expresses clearly that unemployment is a public problem, that it affects farmers, merchants, and manufacturers as well as the worker, and that it has an important bearing on the economic life of the entire State. When the Wisconsin unemployment compensation law was written this basic philosophy of protection for the public was incorporated in it. This philosophy still constitutes the fundamental justification for the law's existence.

Social protection is also the underlying concept of all phases of the security program contained in the Social Security Act. This concept applies today as it did in 1935 when the act was passed. The whole public is vitally interested.

We come now to the President's reorganization plan which seeks to place both Federal unemployment compensation activities and the United States Employment Service permanently in the Department of Labor. This is a proposal, which Wisconsin business vigorously opposes not only because it is against the interest of business, but because it violates the concept on which our own law was based-that of protection to the public. The unemployment compensation law is not the private property of any one group.

If our unemployment compensation reserves are to be available to relieve economic distress, then it follows that their reserves cannot be dissipated for other purposes by the biased action of any agency entrusted with their administration.

The Department of Labor as you know was designed to serve primarily the interests of labor and it is strongly influenced by the will of organized labor. If this Department is given control over Federal unemployment compensation activities as well as the United States Employment Service, is it not possible that unemployment compensation will be changed from a security program to a specialized program for organized labor? Under the President's plan, the Department of Labor would take over broad powers:

1. To make rules, including those determining eligibility of claimants to receive benefits, especially under the definition of "suitable work."

2. To allocate funds for administration of unemployment-compensation and employment-service systems within the States, with further power to withhold such funds under specified conditions.

3. To approve and certify the unemployment-compensation laws of the various States.

In other words, gentlemen, the Department will be able to dictate some of the conditions under which a worker may draw compensation and make of it a labor program.

Because this proposal constitutes a breach of faith with employers and the public, Wisconsin businessmen are rightfully alarmed. They have also availed themselves of their rights to express their views to their Senators and Representatives in Congress. I have with me today a sheaf of the extra copies of letters sent by Wisconsin businessmen

to their Congressmen. You will be interested in some of the comments made, for they represent an interesting cross section of the thoughts of business in our State on this issue:

If the unemployment-compensation-fund administration is turned over to the Department of Labor, the various unions may decide what they consider suitable work for the unemployed person. They can say that any work paying less than their union scale is not suitable work, or any work outside of the employee's own craft is not suitable work.

I firmly believe that this proposal is another step toward the administration's aim of usurping present State funds and control of unemployment compensation activities.

We are relying on your straight thinking to see that such a proposal gets a resounding defeat and that activities that were designed for a good purpose in our national life are not to become a labor plaything.

We definitely believe that the unemployment compensation activities are a part of the Federal social security program and that as such this agency should not be transferred to the Department of Labor.

The assignment to the Labor Department of a program which concerns the employers and the public as much as organized labor is, we believe, contrary to our type of government and the American way of thinking.

It is apparent, gentlemen, that employers who have intimate daily contact with employment and unemployment compensation payments see grave danger in the President's plan. They see the threat of Labor Department dictation over the concept of suitable work; the threatened withholding of administration funds to coerce acceptance of Labor Department rulings; the rejection of the public's interest in unemployment compensation; and, finally, the threat of outright federalization.

Is the President's plan to be used as a stepping stone to federalize our entire employment security program?

Shall the basic philosophy of public protection which justifies the very existence of unemployment compensation now be rejected?

The Wisconsin State Chamber of Commerce respectfully urges that these questions be given a resounding answer in the negative and that the President's plan be decisively rejected.

The CHAIRMAN. Do you have anything else that you wish to add? Mr. SILBERNAGEL. I do not wish to add anything to it, Mr. Chairman. I just made a summary for the benefit of the committee, inasmuch as I did not care to take the full time to read the entire brief.

The CHAIRMAN. Well, the members of the committee who are. interested in this will read all of these statements; but if there is anything that has occurred to you that you would like to say anything that has been brought out by the statements of other witnessesyou may say it.

Mr. SILBERNAGEL. Well, I imagine that the question might be raised of Wisconsin as it has in some of these other cases, about our additional commission, and I would like to point out that the Industrial Commission of the State of Wisconsin is as much a representative of employers as it is of labor. It is a neutral department in the State of Wisconsin. We have no separate department of labor or separate department of commerce.

The CHAIRMAN. Then it has no particular bias against or feelings of sympathy for either employer or employee?

Mr. SILBERNAGEL. That is correct, sir, and the Industrial Commission of the State of Wisconsin has been vested with our unemployment compensation program since the inception of that program.

The CHAIRMAN. Do you think it would be of advantage or of dis-· advantage to have the administration of the program returned to the States advantage to your State, that is?

Mr. SILBERNAGEL. Well, I think Wisconsin is perfectly capable of handling the function themselves without administrative supervision. from the Federal Government. I think in our case it would be an advantage.

The CHAIRMAN. Of course, there would be some economy, would there not, because whenever these funds come, as we might say, to Washington, before they get back, Washington has to take its cut?

Mr. SILBERNAGEL. That is correct, sir. I might say that the Wisconsin State Chamber of Commerce is on record as being in favor of a 100-percent offset credit for the Federal employment tax, with the entire funds being raised by the State and the administration of the State being paid from those funds.

The CHAIRMAN. And, in your opinion, is it or is it not true that rules promulgated to administer the plan fairly and equitably in one State may not be applicable to the conditions in others?

Mr. SILBERNAGEL. I think that is true, sir.

The CHAIRMAN. Have you any questions, Mr. Lanham?
Mr. LANHAM. No; since I have not heard the testimony.

The CHAIRMAN. Have any of the other members of the committee any questions?

We wish to thank you.

Are there any other witnesses here?

Will you identify yourself, Mr. Morrison?

Mr. MORRISON. My name is John Morrison, executive director of the employment security agency in Kansas.

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Mr. Chairman, I have been unable to prepare a statement such as is required for the committee, not knowing that I would be a witness here until the day before yesterday, at the Governor's request. have, however, made some remarks here, and I would like to supply the committee with them.

The CHAIRMAN. At whose request do you appear?

Mr. MORRISON. Governor Carlson's request.

The CHAIRMAN. Former Member of the House?

Mr. MORRISON. Yes, sir.

The CHAIRMAN. You may proceed.

Mr. MORRISON. We in Kansas have grave doubts regarding the wisdom of the reorganization of these two agencies as planned by the President.

While heartily endorsing consolidation of the two agencies at the Federal level-we submit that such is already an accomplished factthe action of the Congress and President in 1939 brought about that realization, and separation was effected temporarily in 1942 only for expediency in furthering the war effort. The consolidation existing prior to 1942 could be restored by the mere signature of the President returning the status existing prior to the emergency, which surely has ceased in the fields of employment security and unemployment compensation.

As one of the several States interested in these joint Federal-State endeavors, we are deeply concerned regarding this eventual Federal status of the programs. Remember that as the operating partner we have 90 percent of the responsibilities and that those responsibili

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ties are to a public program serving both employers and workers, with the service to workers-veteran and nonveteran alike-depending entirely on the cooperation of the employers. If for any reason employers do not use the service, do not order their workers from us, we then have nothing in the way of jobs to offer to workers, who would then be at the mercy of the fee agencies.

The public employment agencies, relying as they do on voluntary support and cooperation from the employing group, must therefore be administered by a completely neutral, impartial agency, which is hardly descriptive of the United States Department of Labor. wouldn't give a hoot for it if it was.

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Like many States, Kansas is predominantly agricultural, and many job openings with placement opportunities are available for farm hands, harvesters-of various crops-and in related industries, through our offices.

It is unlikely that either of these groups supplying the demand for workers in Kansas would look with favor, or desire to rely, on an agency of the United States Department of Labor for assistance in hiring labor. In other words, whether it is justified or not, it remains an undisputed fact that neither of these groups, reflecting the public acceptance of the programs, would feel like cooperating with the Department of Labor. I personally think their attitude is wrong, but we cannot deny the existence of it.

It will be argued here today that a substantial number of States arenow operating these programs successfully under the State labor department. This is quite true. I think some 12 States now have the unemployment compensation and the employment security as a division of the labor department. It is equally true in Kansas. However, as a former commissioner of the Labor Department, I submit that there is a vast difference between State labor departments and the United States Department of Labor.

The CHAIRMAN. Right there, would you mind telling us why you make that statement?

Mr. MORRISON. I beg your pardon, sir?

The CHAIRMAN. The question is tell us the reasons why you think there is a difference between the State and Federal Departments of Labor, or will you later on?

Mr. MORRISON. Yes; I will. In fact, most State departments in name and in performance are really departments of labor and industry-a combination of the agencies of labor-commerce at the Federal level

The CHAIRMAN. Now if that idea that you express there was carried through, then we would have the Labor Department and the Department of Commerce combined, would we not, here in the national picture?

Mr. MORRISON. Quite right. Responsible through the Governor to both labor and industry as compared to the Federal Departments. of both Labor and Commerce responsible for furthering the interests. of their respective groups.

The agency now known as the labor department in Kansas has been. titled the public service commission-the commission of labor and industry-workmen's compensation commission, and has been administered numerous times by attorneys and others having no relation or allegiance to organized labor.

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