Mr. McCORMACK. You are up here on policy, are you not?

Mr. SCHMIDT. That is right. The chamber makes policy.

Mr. McCORMACK. That is right, but there has been no meeting of your committee?

Mr. SCHMIDT. That is right.

Mr. McCORMACK. The Chamber of Commerce makes policy. Under those circumstances have you ascertained or sought to ascertain the views of the individual members of the chamber?

Mr. SCHMIDT. On the Hoover plan?

Mr. McCORMACK. On this particular reorganization Plan No. 2. Mr. SCHMIDT. Of course not, because we have a very clear statement on the issue.

Mr. McCORMACK. You are not impressing me with that because we are living in America. We are not living in Russia or not in Germany. We are living in a country where, when a man appears and he is a member of a committee, it is assumed that the committee has had a meeting and directed him to appear.

Mr. SCHMIDT. The Hoover plan came out in March. Our annual meeting was the first week in May. This language was adopted the first week in May.

Mr. McCORMACK. But the reorganization plan did not come up here until a short while ago.

Mr. SCHMIDT. It is in the Hoover Commission report. We knew what it was.

Mr. McCORMACK. In other words, you oppose the Hoover Commission report?

Mr. SCHMIDT. We oppose that particular recommendation, and that seems to me a perfectly democratic process. This was adopted after the Hoover Commission report was out without a dissenting voice at our annual meeting in May.

Mr. McCORMACK. In other words, you consider it a democratic process for your committee to operate in between anual meetings of the Chamber of Commerce?

Mr. SCHMIDT. The committee never makes policy.

Mr. McCORMACK. What does the committee do?

Mr. SCHMIDT. The committee studies and reviews, investigates, and we generally have people from the Government meet with the committee.

Mr. McCORMACK. Then you are not appearing here as a member of the committee, representing the committee rather?

Mr. SCHMIDT. I am secretary of the committee.

Mr. McCORMACK. You say the committee does not make policy. Mr. SCHMIDT. That is right; it only recommends to the board or to the full members.

Mr. McCORMACK. Therefore, you are not appearing here for the committee.

Mr. SCHMIDT. Not primarily. I am secretary of the

Mr. McCORMACK. You are appearing here representing the Chamber of Commerce?

Mr. SCHMIDT. That is right.

Mr. McCORMACK. You take that responsibility?

Mr. SCHMIDT. That is right.

Mr. McCORMACK. You are certain that you are representing the Chamber of Commerce now?

Mr. SCHMIDT. That is right.

Mr. McCORMACK. On something expressing the view of the Chamber of Commerce on Reorganization Plan No. 2 which was transmitted to the Congress by the President on June 20, 1949?

Mr. SCHMIDT. That is right.

Mr. McCORMACK. At the annual meeting of the Chamber of Commerce?

Mr. SCHMIDT. At the annual meeting.

Mr. BURNSIDE. Have you attempted to poll any of the members of the Chamber of Commerce since this date?

Mr. SCHMIDT. No, we did not think it was necessary. We knew where the chamber stood.

Mr. McCORMACK. Who is "we"?

Mr. SCHMIDT. The chamber.

Mr. McCORMACK. I thought you said the committee did not have a meeting.

Mr. SCHMIDT. The chamber family in general.

Mr. McCORMACK. So it could not be the committee that did not think it was necessary?

You said "we" now. You said the committee did not have a meeting. Mr. SCHMIDT. I happen to know every member very personally. I know where they stand and have stood over the years.

Mr. McCORMACK. Did you consult with any of them?
Mr. SCHMIDT. Not with respect to the Hoover plan.
Mr. McCORMACK. You did not think it was necessary?

Mr. SCHMIDT. Because the committee has made recommendations. The full membership has adopted its policy since the Hoover report came out. It would seem to me highly unnecessary to go back and find out what the chamber membership means.

Mr. McCORMACK. That is right, but the sum and substance is that your appearance here today is that you have formed an opinion and judgment without consultation with other members of the committee. Mr. SCHMIDT. No.

Mr. LANHAM. Do you know since the report has come out that there has been a great change in sentiment or rather that the people of the country have gotten behind the Hoover Commisison report and are urging its adoption? You did not think that might have changed any of your committee members' opinions?

Mr. SCHMIDT. No; I do not think so.

Mr. LANHAM. But you do not know.

Mr. HOFFMAN. This issue has been before the Chamber of Commerce at least as far back as 1947, has it not, and they have acted on it time and again and sent witnesses up here?

Mr. SCHMIDT. That is right.

Mr. HOFFMAN. Do you know that the leader of the majority party sometimes states his position for the party over on the floor without consulting the members?

Mr. SCHMIDT. Very undemocratic.

Mr. McCORMACK. Are you making that comment in trying to extricate yourself from an uncomfortable situation?

Mr. SCHMIDT. I am not, Mr. Congressman.

Mr. McCORMACK. You are agreeing with him. You come up here and you make a statement about 61 pages of rules and regulations when you do not know anything about it yourself. Now you are just

simply very conveniently falling in with what my friend asked you because it coincided with your views.

Mr. SCHMIDT. I did not say he was correct. I said very undemocratic.

Mr. McCORMACK. But that is assuming what he says is correct. Does the chamber ever change its mind?

Mr. SCHMIDT. Yes.

The CHAIRMAN. Mr. Schmidt, since you are not representing the social security committee of the Chamber of Commerce, I should like to ask you, is the chamber a neutral organization in this matter? Mr. SCHMIDT. No.

The CHAIRMAN. It represent the employers, does it not?
Mr. SCHMIDT. The employers.

The CHAIRMAN. The Chamber of Commerce represents the employers in the main, does it not? It is composed of employers? Mr. SCHMIDT. That is right.

Mr. HOFFMAN. In spite of the propaganda which has created the opinion so widespread that the Chamber of Commerce is a damnable sort of organization, you still think it has some principles that tend to promote the good of the country?

Mr. SCHMIDT. I would not be surprised.
Mr. HOFFMAN. Now and then one?

Mr. SCHMIDT. I would not be surprised.

The CHAIRMAN. You would say the same thing for labor unions? Mr. SCHMIDT. Right.

Mr. McCORMACK. Of course, you know the word "damnable" was considered by our friend from Michigan and not by anybody else because the Chamber in my opinion is a very fine organization. The only thing is that many years ago it just simply took a blithe position and destroyed its effectiveness for a number of years, but in recent years it has gradually come back in public opinion-very slowly though.

Mr. SCHMIDT. There was a survey of public opinion recently in which a number of organizations were listed and the public was asked to list them in terms of their broad public purpose. It would interest you to know that the American Legion was first in the esteem of the American people and the Chamber of Commerce of the United States was second. I can give you the rest if you want them.

Mr. McCORMACK. I am prochamber and hope that it will become stronger and more virile. I just wanted to observe that nobody whom I know, unless it is my friend from Michigan, thinks that the chamber of commerce is a damnable organization.

Mr. HOFFMAN. I have heard it characterized as such-not by me. I thought there was a world of good in it.

The CHAIRMAN. Will you proceed with your statement?

Mr. WAGNER. The witness has mentioned several times about something we have done in our executive session. What does he mean by that?

Mr. SCHMIDT. Before you had any witnesses.

Mr. LANHAM. Mr. Hoffman was the first witness.

Mr. SCHMIDT. I see; and it was not an executive session.

Mr. WAGNER. Let us clear the record on that.

Mr. HOFFMAN. That is important.

Mr. WAGNER. Yes; because you were a witness, Mr. Hoffman. I consider you a very good witness on some occasions; not too often.

Mr. SCHMIDT. Continuing in the middle of page 2 of my statement, we have been repeatedly told that it is important to rebuild the Labor Department. Perhaps this is important from certain viewpoints. But the Labor Department in the long run can build prestige and a solid foundation as it develops a reputation for integrity, forthrightness, and objectivity. The Bureau of Labor Statistics has over the years developed a reputation for such objectivity and its findings are generally accepted by management, by labor, and by other groups. Mr. LANHAM. You said something a few moments ago about the confidence of the business people in the Department of Labor or in the Employment Service. Formerly the Employment Service was in the Department of Labor. As I recall it, it had the confidence of the people of America and of the employers. I want to ask you if that is not true?

Mr. SCHMIDT. That was not the judgment of President Roosevelt, as I will bring out in my testimony in a moment.

Speaking again of the Bureau of Labor Statistics, which is in the Department of Labor, it has gone out of its way to consult outside impartial experts to test its performance.

With respect to some other phases of the Department of Labor's work, successive Federal administrations and Congresses apparently have not felt completely content to put numerous services into the Department of Labor or keep them there.

In other words, your committee in this concern with rebuilding the Department of Labor cannot ignore the facts and forces that caused this Department to shrink in the past decade or so. It must ask itself, "Why did this happen?"

Now here is a bit of history that I think may clear up some of the issues that have been under discussion:

In 1933 the original Wagner-Peyser Act created a new United States Employment Service as a separate bureau of the Department of Labor.

The President's Economic Security Committee in its report prior to the passage of the Social Security Act of 1935 recommended that the social-security program be placed in the Department of Labor where the small but growing United States Employment Service was already housed.

The Congress decided against this, and we think correctly.

From 1935 to 1939 the Federal Government's activities under unemployment compensation were lodged in the Social Security Board while the United States Employment Service was still in the Department of Labor. It became increasingly clear that the Federal activities relating to job placement and unemployment benefit payments should be coordinated in a single unit. Work with full wages is better than half pay for the unemployed.

The separation of these two functions at the Federal level created much confusion. Nearly everyone agreed that they ought to be coordinated even though the Federal Government did not actually run local employment offices or pay the unemployment benefits. President Roosevelt in his message transmitting his 1939 plan on Government reorganization said:

I find it necessary and desirable to group in a Federal Security Agency those agencies of the Government, the major purposes of which are to promote social and economic security. In order that their similar and related func

tions of social and economic security may be placed under a single head and their internal operations simplified and integrated.

Mr. McCORMACK. The United States Employment Service was taken out of the Department of Labor in July 1948 under a rider to an appropriation bill, was it not?

Mr. SCHMIDT. I come to that section a little bit later.

Mr. McCORMACK. That is a fact, is it not?

Mr. SCHMIDT. That is right.

Mr. McCORMACK. There were no hearings at all by any committee? Mr. SCHMIDT. There were extensive hearings in 1947 and 1948. Mr. McCORMACK. In connection with the rider on the appropriation bill?

Mr. SCHMIDT. I do not know whether it was in connection with the rider. Something happened on the floor.

Mr. McCORMACK. That does not just happen.

Mr. SCHMIDT. President Roosevelt was not concerned only with tying USES and UC together but with a broader grouping of all social-security activities of the Federal Government.

Much of the present confusion in this respect grows out of the wartime abolition of State employment services and the complete Federal control and operation of the United States Employment Service from Washington. Although this transfer from the 48 States was requested by the President as a wartime emergency "loan," persistent and vigorous efforts were made to convert the loan into a kind of confiscation "finders, keepers." The Congress by large majorities felt that this constituted a serious breaking of the faith with the people in the States and their Governors.

Mr. McCORMACK. As a matter of fact, there was not any intention to keep that away from the States. There was a difference of opinion as to what time the wartime powers, the wartime action, should be returned to the States. But as I remember, there was never any difference of opinion that ultimately it would come back to the States in the form that it was before the war and it is now in substance.

Mr. SCHMIDT. It is interesting to review the record on that. That is true of this committee and yourself.

Mr. McCORMACK. I am speaking of public experience. I know what the state of mind of Congress was. I know what my own state of mind was. I do not think you can find in one statement made by the late President an intention to keep it permanently from State operation. There was a difference of opinion as to what time it would go back, I will agree as to that, and from that one might draw inferences of an intention to keep it permanently from State operation, but it never was justified.

Mr. SCHMIDT. Without going into the numerous hearings and details of 1945 through 1947, it should be pointed out that in the latter year, the Pretsident's Reorganization Plan No. 2 would have continued separation of the United States Employment Service in the Department of Labor and unemployment compensation matters in the Federal Security Agency-successor to the Federal Security Board. This was proposed in spite of almost universal agreement that the two agencies ought to be combined. This Presidential reorganization failed of adoption in the Congress, for good and valid reasons.