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Mr. LANHAM. Let me ask you this: The man who made this state' ment yesterday, as I remember it, had been the chairman of your organization, the national organization.

Mr. MARSHALL. That is W. O. Hake, past president of the organization.

Mr. LANHAM. That is right. Well, it seems to me he ought to have even a better opportunity than you to know about that question.

Mr. MARSHALL. I do not think so, sir, because I was down here for two solid weeks on the part of the interstate conference on particularly the personnel transfer that worked out and got from all of the States over this country the difficulties that would be run into as the law was originally proposed, and the result of our efforts—there were two provisos written into Public Law 549.

One was in the personnel transfer that the Secretary found that the provisions of that were inconsistent with either the State constitutions or the statutes in the States, then he was permitted to still grant the funds. Also there was another provision written into that Public Law 549, and by the efforts of the interstate conference in the personnel regulations, they must be consistent with and not deviate from those that have been promulgated by the Department of Labor.

Does that answer your question, sir?

Mr. LANHAM. I suppose so. You just admit that you know more about it than he did.

Mr. MARSHALL. I do not say that I know more about it. I say from my experience, I have been into it and I have had equal knowledge with my good friend W.0. Hake in the matter.

The CHAIRMAN. And it might be due to the fact, too, that this gentleman was doing the actual work while the other gentleman was a sort of a top man like the president of the United States Chamber of Commerce. I would respectfully submit that he does not actually know quite as much about the practical questions.

Mr. MARSHALL. I might say that within the interstate conference we are all a family and we all perhaps have equal knowledge of these particular matters because we exchange views.

Now, to continue the reasons why the Social Security Administration-I believe that they should have it—the first one is that they no longer are attempting to dictate to it. Back in 1939 when we were operating under the Social Security Administration they had very, very simple regulations. There are only about 12 pages of regulations that were back in there, and in very, very few places compared with those of the Department of Labor do they say the State shall do this and shall do that. In most instances they suggest that the State shall include in its plan of operation certain things. The Social Security Administration has continually forced the integration; they believe in the integration.

Next, they believe in one appropriation being made by Congress for this program, that is, the employment security program which has the two functions.

Mr. HARDy. Don't you think the Labor Department would believe in one appropriation if they had them both?

Mr. MARSHALL. They have not up to the present time.
Mr. HARDY. They have not had them both either, have they?

Mr. MARSHALL. From their own statements and from their history on the thing—and there is nothing in this reorgznization plan, there is nothing in the statements of the Secretary of Labor to indicate that he intends to carry this thing on as one program. Their whole history is that they believe that these should be two separate programs and merely coordinated, not operated as an integrated thing.

Mr. HARDY. Well, it seems to me that you are taking a queer position. Of course, the Federal Security Agency would want one appropriation if they were going to administer both of them. Perhaps that is one argument for them to try to get both of them, but if they were both in the Department of Labor it seems to me it would be foolish to presume even that the Departmnt of Labor would want two separate appropriations to operate a program that they can completely control.

Mr. MARSHALL. We in the State, I think, would like to have that clarified because it is very important to me in Massachusetts in trying to run one organization, to know whether I am going to get two or three separate grants. I have got to pool that and account for it later, whether or not I am going to get one single grant.

Mr. HARDY. It seems to me that is a purely administrative proposition and I can't conceive of any desire on the Department of Labor to keep these things separate if they are operating. It doesn't seem to make sense to me.

Mr. MARSHALL. I think that the evidence indicates that that has been the tendency and there is no assurance, there is nothing in this. I might add that I think it is section 5 of the Reorganization Plan, which says that the Secretary of Labor, insofar as practicable, shall establish uniform regulations, standards, and so forth.

Now, that does not mean one; it means two programs and merely that the regulations for both shall be uniform, not be one.

Mr. HARDY. But, obviously, he would not promote unification of the two programs if he had only one, unless he was prepared to give that one up.

Mr. MARSHALL. I am speaking, sir, of the reorganization plan as submitted. I think it is section 5. There is an indication that there are to be two separate programs and there shall merely be uniform regulations on it.

Mr. HOLIFIELD. What is wrong with that? Mr. MARSHALL. Because they should not be. Let's go back to when the Social Security Administration had that. With the exception of the small amount that Congress appropriated under the Wagner-Peyser Act, I think, $4,000,000; Massachusetts only got $100,000. The employment offices cost a million and a half dollars to run, the bulk of the money, and it amounted to one appropriation coming from title III funds. There was one appropriation made under title III of the Social Security Act by Congress.

The Social Security Administration granted to Massachusetts one sum, flexible for either of the two functions. In Massachusetts I have one organization and an integrated thing and it was not distinguished, wasn't so much money for employment service functions, and so much money for unemployment compensation. It was one sum of money for both.

Mr. HOLIFIELD. For administration?

Mr. MARSHALL. For administration. Therefore I could meet my pay rolls and I had only one set of books, one accounting. When the Federal auditors came in there was only one set of books.

Mr. HOLIFIELD. That would be true in case they were united either in Federal Security Agency or in the Department of Labor.

Mr. MARSHALL. It goes beyond that. Even though they are both put in the same department, the question is whether the Department of Labor believes in integration of those two services made into one program.

Mr. HOLIFIELD. That there will be one budget?
Mr. MARSHALL. That is right.

Mr. HOLIFIELD. When we get our next witness on the stand from the Department, if we have another one, I intend to ask that question.

Now, in Massachusetts you have both of these departments under one, under the Department of Labor, do you not?

Mr. MARSHALL. We do not have two departments.
Mr. HOLIFIELD. I say you have them united in Massachusetts.
Mr. MARSHALL. We have them united and integrated.

Mr. HOLIFIELD. In other words, you have in Massachusetts the same thing that is advocated in the reorganization plan provided they integrate them?

Mr. MARSHALL. Yes.

Mr. HOLIFIELD. You have them together in the Department of Labor?

Mr. MARSHALL. Yes.

Mr. HOLIFIELD. Why haven't you changed that in Massachusetts over the years? You functioned that way over the years. Why haven't you changed it there?

Mr. MARSHALL. We have it integrated in Massachusetts.

Mr. HOLIFIELD. Absolutely. All right. If the programs are integrated nationally, you won't have any objection to them going into the Department of Labor just as in Massachusetts?

Mr. MARSHALL. I have objection to them going into the Department of Labor.

Mr. HOLIFIELD. Do you have objection to them going into the department of labor in Massachusetts?

Mr. MARSHALL. Yes.
Mr. HOLIFIELD. Why haven't you changed them in Massachusetts?

Mr. MARSHALL. We have not under the control of the department of labor in Massachusetts-you were not here, sir, when I explained that. In Massachusetts you have a constitutional limitation of 20 departments. Massachusetts wanted to have it an independent agency and to get around that they wrote into the laws that there should be within the department of labor a division of employment security, but not subject to the control of the department of labor. I am responsible only to the Governor of Massachusetts.

The Department of Labor has absolutely no control, and we did that, and I have explained the reasons.

Not to be repetitive, I explained prior to your coming the reasons why in Massachusetts that was done. Prior to February of 1939 they had two separate organizations, and because the mess that the whole business had got in, the Legislature of Massachusetts passed a reorganization act. ”It so happened that it was at that time that the then Governor Saltonstall, now Senator Saltonstall, called me in to reorganize.

The CHAIRMAN. You have been all over that in your previous testimony.

Mr. MARSHALL. I have been answering this question.
Mr. HOLIFIELD. I am sorry I was not here to hear it.

Mr. MARSHALL. I am very glad to answer whatever questions members of the committee submit.

I would like to clear up one further thing—questions were raised here yesterday as to the Federal Security Agency being a welfare agency. We do not regard it as a welfare agency. We regard it as a security agency.

Perhaps the largest operation that they have is the administration of the old age and survivors insurance system. That is an insurance system. This unemployment compensation and employment service is an employment security program and is also an insurance program.

If we enact a disability insurance later, that will be an insurance program. If you enact hospitalization, that will be an insurance program. I say that is what the Federal Security Agency was set up for, to handle these insurance programs.

Now, the old age and survivors insurance is based upon wage records. Our system is based upon wage records. We get all our social security numbers from the old age and survivors insurance. We process our claims on the basis of that. We have to keep in close contact with the old age and survivors insurance so that our files are up to date so that we can operate with them, and as between some of the States—one State I think is Utah, which has been experimenting in using the old age and survivors insurance records for the processing of their unemployment compensation claims in the States.

One further thing, all of these statistics, these labor market records do not come from the Department of Labor and the Bureau of Labor Statistics. They are produced right by the local agencies. In Massachusetts, we have all of those statistics. We collect them. We have the field advisers that go out and get this labor market information, and it is we who furnish to the Department of Labor--

Mr. HOLIFIELD. You are speaking of the State-wide level. You get that information on the State-wide level.

Mr. MARSHALL. We do, and we furnish it to both BLS and to the other agencies of the Department of Labor.

Mr. HOLIFIELD. That is very true, but your National Department is one clearing house for the 48 States, and they take the data which you turn over to them and give it, for instance, to the State of California or some other State that wants it.

Mr. MARSHALL. That is correct.

Mr. HOLIFIELD. They are the clearing house. In other words, it is much more efficient for one clearing house to clear all of this information and send it to each one of the States than it would be for an interchange between all of the States.

Mr. MARSHALL. And that is done in the Federal Security Agency, that is the Social Security Administration right at the present time.

Mr. HOLIFIELD. And it is done in the USES, too.
Mr.' MARSHALL. Yes.
Mr. HOLIFIELD. From their statistical report.

Mr. MARSHALL. That is correct, and it can be well done based upon our reports in the Federal Security Agency just as well as the Department of Labor.

Mr. HARDY. They are duplicating each others work there?

Mr. MARSHALL. There is some overlapping. These statistics are just as important for unemployment compensation as they are for employment service.

Mr. HOLIFIELD. They are both important, but in the main the Bureau of Labor Statistics does not compile, and I am speaking now in the field of employment and job opportunity; it does not compile parallel statistics to the FSA.

Mr. MARSHALL. No, and it does not compile the statistics that we use in the operation of our employment service in the local office. It is not the BLS. It is right within the USES itself.

I think Mr. Levine is a gentleman in the United States employment who has charge of that. They collect these labor market figures, and they issue them; not the BLS.

Mr. HOLIFIELD. You use statistics that come from the Labor Department as well as the FSA in the State?

Mr. MARSHALL. We do not use it.

Mr. HOLIFIELD. You do not use any statistics from the Department of Labor, Bureau of Labor Statistics?

Mr. MARSHALL. We do not, because they are not helpful. My problem is the economic conditions in Massachusetts, and I have them first hand.

Mr. HOLIFIELD. And you state you are an economic island in Massachusetts without any regard to what happens in the other States. You have no concern as to what happens in the neighboring States.

Mr. MARSHALL. I personally have a concern on it, but from an operating standpoint it is not necessary.

Mr. HOLIFIELD. It is not necessary to know if you need employees and there are some available in a State two or three times removed from you?

Mr. MARSHALL. As far as Massachusetts is concerned, that is like the hair on the tail of the dog. It is so small and inconsequential.

The CHAIRMAN. That is to say, in Massachusetts.
Mr. HOLIFIELD. We will have an interpretation from the chairman

now.

Mr. MARSHALL. We have very, very little of this so-called problem of migratory labor.

Mr. HOLIFIELD. I realize that Massachusetts is one of the large industrial States; so is New York.

Mr. JUDD. Mr. Chairman, I would like to ask this question: Last year, when the subject was before us, the Department of Labor at that time was advocating that they be kept separate. They did not want the two functions together, because they were sure that the employment functions would be subordinated to the payment of unemployment compensation.

One of the arguments presented was this: Suppose there came in a man who was a new worker, had never previously been employed, therefore while he did not have a job it wasn't because he had been put out of the job; it was because he never had been in the labor market before. "At the same time a man came in who was unemployed, had lost his job.

The Labor Department at that time contended that the man who was unemployed, was out of a job, would be given preference because naturally the unemployment compensation people want to reduce the

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