Mr. HOFFMAN. No, no experience at all in there.

The CHAIRMAN. There have been only two men, one is President and the other was President.

Mr. HOFFMAN. I can cite you a record before the committee where President Hoover and President Roosevelt both went wide of the mark about employment.

The CHAIRMAN. At this point I should like to read in the record a telegram from President Hoover whom we had requested to appear before this committee:

I have several long established commitments in the West which prevent my appearance before the committee on the dates mentioned in your telegram. No doubt the committee will incorporate in its hearings the majority report upon the Labor Department made by the Commission on Organization of the Executive Branch of the Government. The Commission pointed out that the Labor Department has been steadily denuded of functions at one time established within it. It pointed out that good organization to prevent waste, overlap and conflict required grouping of agencies as to their major purpose. It pointed out that the Department of Labor was originally created by the Congress for the exact purpose of bringing these agencies together. They are now diffused over many parts of the Government. The Commission pointed out that the overhead of the Department, in staff and expense, is equal to several other major departments of the Government some of whom administer funds 100 times as great and have employees 100 times larger with the same overhead. With such overhead staff the Department could better administer the various labor agencies than by diffusion over the Government. On pages 9 and 10 of that report we enumerated the agencies which we believe should be placed in, or restored to, the Labor Department. We stated that these functions were more nearly related to the problems of labor than they were to those with which they were associated in other agencies. The President's Reorganization Plan No. 2 does not transfer all of the agencies we recommend but so far as the plan goes I can endorse it. I would like to suggest to the committee that it might call Mr. James Rowe, Jr., a member of the Commission who is a resident of Washington and who is familiar with the studies of the Commission.

Are there any other questions to ask the witness?

HERBERT HOOVER.

Mr. BOLTON. If I understand you correctly, Mr. Hoffman, the real objection you have to this is due to the fact that it is possible the Labor Department may decide with respect to unemployment compensation too much in favor of labor. Is that your real reason?

Mr. HOFFMAN. Not only possible but naturally probable, and has. Mr. BOLTON. Is that your only reason for not transferring this? Mr. HOFFMAN. That is the principal one. I am not criticizing the Labor Department on that any more than any other department. Every other department does the same thing.

Mr. McCORMACK. At that rate why should we have any function that normally would go into the Department in there? Why not shift to any other department?

Mr. HOFFMAN. What I would try to do is to get an unbiased department to administer this particular thing.

Mr. McCORMACK. You said every department.

Mr. HOFFMAN. We act as a check on all of the departments. The CHAIRMAN. Dr. Schmidt, will you take the seat right over next to the reporter?

We are honored to have with us Dr. Emerson Schmidt who is from the United States Chamber of Commerce. He is secretary of the committee on social security of the Chamber of Commerce of the United States. I believe each one of you have his statement. At this time we are going to hear from Dr. Schmidt.

STATEMENT OF EMERSON P. SCHMIDT, SECRETARY, COMMITTEE ON SOCIAL SECURITY, CHAMBER OF COMMERCE OF THE UNITED STATES

Mr. SCHMIDT. Thank you, Mr. Chairman.

I am glad to be here and to have this opportunity to present our views on this matter. I am especially glad to have had the benefit of the executive session before making my presentation.

I think I will read my statement. I had intended to just summarize it.

Mr. LANHAM. I wonder if we could not save a lot of time and have Dr. Schmidt summarize it and then submit to questions.

Mr. SCHMIDT. I was going to say, Mr. Lanham, that I was going to do that but because there has been so much confusion and uncertainty, I think my statement answers a lot of these questions. If you have the time, I should like to read it. If not, I shall try to summarize it. It is up to you, Mr. Chairman.

The CHAIRMAN. You can read your statement and we will ask you questions as you go along.

Mr. SCHMIDT. All right.

First, I should like to say that the Chamber of Commerce of the United States is a federation of over 3,000 regional, State, and local chambers of commerce and trade associations with a membership of more than 1,300,000 businessmen.

These organizations have adopted a policy which says:

All Federal activities in the social security field should be centralized in oneFederal agency or department (which might also deal with other matters). This agency should be unbiased-not devoted to advancing the interests of any particular group in our national life *

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Employment service and unemployment compensation activities are organically related to each other, employment services thus forming an integral part of social security. Accordingly, all Federal employment service activity should be conducted in the same unbiased Federal agency which should house all other social security activities.

A neutral agency: Why does the chamber emphasize the importance of a neutral agency? It is the employers who have the jobs to give. If they are to make full use of the employment services they must have full confidence in these services at both the local and Federal level.

The statute creating the Department of Labor specifically orders it to "foster, promote, and develop the interests of wage earners.' s." The Secretary of Labor is by custom selected only after consultation with labor leaders. Two assistant secretaries are in effect nominated by the two major competing labor federations.

Mr. LANHAM. Let me interrupt the witness right there. Is it not true that the labor unions are at odds with the President because he did not accept their recommendations in appointing one of the Assistant Secretaries?

Mr. SCHMIDT. I do not want to get into that.

Mr. LANHAM. You made the statement. I just want to clear the matter up. Is that true?

Mr. SCHMIDT. Does that negate my statement?

Mr. LANHAM. I think it does. It destroys the effectiveness of it. Mr. BOLTON. I have a question which I should like to ask at this point.

The CHAIRMAN. I do not believe the witness has answered the question.

Mr. LANHAM. He has not answered it; he has evaded it.

Mr. SCHMIDT. It does not negate my statement.

Mr. LANHAM. You know it is true?

Mr. SCHMIDT. No, I do not know.

Mr. LANHAM. You have not read it in the papers?

Mr. SCHMIDT. No.

Mr. LANHAM. You have not?

Mr. SCHMIDT. No.

Mr. LANHAM. Then you do not keep up with these affairs very well. Mr. HOFFMAN. What statement are you referring to that the witness has made?

Mr. LANHAM. The witness says the two competing labor organizations dictate the appointment of the Assistant Secretaries.

Mr. SCHMIDT. I did not say dictate.

Mr. HOFFMAN. You said nominate.

Mr. LANHAM. I asked you if the President refused the nomination recently and appointed someone else.

Mr. SCHMIDT. As to an organization or a particular person?
Mr. LANHAM. As to a particular person.

Mr. SCHMIDT. It is customary for the labor organizations to nominate two or three people.

Mr. LANHAM. Do you not know that one of the labor organizations is at odds with the President because he did not follow their recom. mendations?

Mr. SCHMIDT. I would not be surprised if that were the case.
Mr. LANHAM. Do you know?

Mr. SCHMIDT. No.

Mr. LANHAM. Had you heard it?

Mr. SCHMIDT. No; not until you mentioned it.

Mr. HOLIFIELD. Mr. Joseph Galvin was appointed by the President and the nominee of one of the labor organizations was refused. Mr. Galvin is not a member of either the American Federation of Labor or the Congress of Industrial Organizations.

Mr. BOLTON. On the first page you say it is the employers who have the jobs to give. Then you say it is necessary for the employers to have confidence in these services at both the local and Federal level. Is it not true that in most cases the employer, of course, deals from a local level in getting help? Most of those offices are combined, both Federal and State combined in the same office and the party operating the same offices?

Mr. SCHMIDT. The local and State offices are combined at the local level.

Mr. BOLTON. The contact of the employers with those offices is on the local level?

Mr. SCHMIDT. That is right.

Mr. BOLTON. Why should they not have confidence in the particular offices?

Mr. SCHMIDT. Because of the very point brought out in your executive session. The statute is very brief and very simple but the agency administering the statute must issue innumerable rules and regulations. I think the present rules and regulations run something in the order of 61 pages.

Mr. BOLTON. What condition could arise to cause any employer not to have confidence in that particular office? I am making this inquiry with all the sincerity I have. I am not fully sold on this yet, but an employer deals with a local office in getting help.

Mr. SCHMIDT. That is right.

Mr. BOLTON. What circumstances could arise in creating no confidence or rather a lack of confidence on the part of many employers in that particular office?

Mr. SCHMIDT. Industrial relations, as we all know, are very critical these days. If a local officeholder wants to promote a particular person, put a particular person into a particular shop, he can recommend that particular person, for example.

Mr. BOLTON. Right at that point, what effect would the consolidation of these offices in Washington have on a situation of that kind? Mr. SCHMIDT. Because the Washington office has to issue rules and regulations that govern the conditions under which they operate. They furthermore govern and control, as you well know, the whole environment, the outlook, the philosophy that must dominate these local organizations. If there is, as one of the Congressmen said, a predominant organized-labor viewpoint in the Department of Labor and that viewpoint comes to dominate the agency, it is bound to filter through the local level. Therefore, the employer may have employees preselected for him with the purpose of accomplishing a certain objective. We think we ought to have a clearinghouse where workers can get jobs and employers can get workers. If the employers have not full confidence in the employment agency, they are going to bypass it. That is old stuff to anybody who has ever looked at this problem. Mr. DONOHUE. Are not all these employees civil-service employees? Mr. SCHMIDT. Yes.

Mr. DONOHUE. They are not selected by the Secretary of Labor, are they?

Mr. SCHMIDT. There are some rules that are issued with respect to civil-service merit ratings.

Mr. DONOHUE. You made a statement just a few minutes ago that there are 61 pages of rules and regulations. Where was that information obtained?

Mr. SCHMIDT. That was brought out in Senate hearings.
Mr. DONOHUE. Do you know that of your own knowledge?

Mr. SCHMIDT. I have confidence in the witnesses who stated it.

Mr. DONOHUE. Would it surprise you to know that the regulations are compiled in the matter of 11 pages?

Mr. SCHMIDT. I would be surprised.

Mr. DONOHUE. In full.

Mr. SCHMIDT. That statement was not challenged in the hearings. Mr. DONOHUE. Who made that statement?

Mr. SCHMIDT. Several witnesses.

Mr. DONOHUE. Was it Mr. Rector?

Mr. SCHMIDT. I do not know. I do not know whether he testified. Mr. HOFFMAN. Are you talking about printed or typewriten pages? Mr. DONOHUE. I wonder what difference that makes if it is part of the record. The gentleman stated it was in the record.

Mr. SCHMIDT. That is a matter of finding out what the facts are. Does that apply to the United States Employment Service?

Mr. DONOHUE. These regulations that you have stated are incorporated in a pamphlet that covers 61 pages, I was wondering if you were relying on hearsay evidence or evidence that you found out yourself?

Mr. SCHMIDT. I did not happen to look at the particular regulations but I am sure there are people here who can answer the question.

Mr. DONOHUE. You are testifying. We should like to have the benefit of your positive evidence.

Mr. McCORMACK. Mr. Schmidt, you are secretary of the committee on social security of the Chamber of Commerce of the United States? Mr. SCHMIDT. That is right.

Mr. McCORMACK. How many members are on that committee? Mr. SCHMIDT. About 25.

Mr. McCORMACK. When did the committee meet to take the position that you are representing now?

Mr. SCHMIDT. This has been a position that we have had for quite a number of years. This particular language on page 1 was adopted May 1 at our annual meeting.

Mr. McCORMACK. Of course, Reorganization Plan No. 2 was not up here at that time.

Mr. SCHMIDT. That is right. The problem was here, as my testimony will bring out.

Mr. McCORMACK. I know, but have you had a meeting of your committee?

Mr. SCHMIDT. No, we did not think it was necessary as the policy is quite clear.

Mr. McCORMACK. You did not think it was necessary?

Mr. SCHMIDT. No; the policy is clear.

Mr. McCORMACK. So you are appearing yourself without a meeting of the committee to find out their view of the Hoover Commission report?

Mr. SCHMIDT. No; we had a meeting in January. We discussed this thoroughly. We are in constant touch with the committee members.

Mr. McCORMACK. You did not know of course what the President was going to recommend in January. There was no reorganization. Mr. SCHMIDT. I think the date of that was March.

Mr. McCORMACK. Yes; that is March. There was no reorganization bill.

Mr. SCHMIDT. But, as was brought out in your executive session, this has been an old problem. We knew it would come up again.

Mr. McCORMACK. I know, but is it the procedure of the Chamber of Commerce to have somebody representing one of its committees come up here, appearing before us when something is new without that committee meeting and formally taking action on it?

Mr. SCHMIDT. It has taken action.

Mr. McCORMACK. It has not taken action since the reorganization bill.

Mr. SCHMIDT. It has taken action on the issue.

Mr. McCORMACK. There has been no meeting, formal meeting. There has been no formal meeting of the committee of which you are secretary in relation to this particular reorganization plan.

Mr. SCHMIDT. Furthermore, our committees never make policy.