The plan has the support of the very people in the Federal Government who are all charged with its administration and with the responsibility of making the Bureau of Employment Security operate most effectively and efficiently for the benefit of the people of the United States. It has the unqualified support of the Chief Executive of the United States, the President. It has the wholehearted support of the Federal Security Administrator, who is now charged with its administration. It is strongly supported by the Director of the Bureau of Employment Security, who is seated here at my right, who actually administers the employment service and the unemployment compensation service. On a day-to-day basis. I believe that the judgment of these gentlemen is entitled to the greatest weight in your determination. If the Congress approves this plan, the President, the Secretary of Labor, and the Directors of the Bureau of Employment Security will have the opportunity and the responsibility of proving that the Hoover Commission was right. We will welcome this opportunity and this responsibility.

There are four general points which I wish to raise deliberately and discuss frankly with you concerning plan No. 2 because I believe they cover matters of special interest to the committee. These points are: (1) The question of bias;

(2) The experience-rating system;

(3) The cost of the program in the Department of Labor; and

(4) The interdependence of the program with other departmental programs.

Coming to the question of bias, I can assure you that the Bureau of Employment Security will be operated in the Department of Labor in the same impartial manner as it now operates, and by the same impartial personnel, including the present Director, Mr. Goodwin, who now operates it.

In this connection, I wish to call to your attention the Federal Advisory Council, established as directed by the Wagner-Peyser Act. I particularly requested that this Advisory Council, which now advises only as to the employment service, under the law, as written, also act in the future as to all matters pertaining to unemployment compensation.

This Council has by statute the purpose

of formulating policies and discussing problems relating to employment and insuring impartiality, neutrality, and freedom from political influence in the solution of such problems.

Mr. LANHAM. If I may interrupt, how is that board appointed? Secretary TOBIN. The board is appointed at the present time by the Director of the Federal Security Agency. Under the Reorganization Plan, the board would be appointed by the Secretary of Labor. I would like to present for the record a list of the membership of the Advisory Council, comprising the public representatives, management representatives, labor representatives, and veterans representatives.

(The list referred to is as follows:)

Public representatives:

Dr. William Haber, professor of economics, University of Michigan, Ann Arbor, Mich., chairman of the Council.

Mr. John J. Corson, circulation director, Washington Post, Washington, D. C.

Mrs. Saidie Orr Dunbar, past president, Federated Womens' Clubs, Portland,
Oreg.

Dr. Merle E. Frampton, principal, New York Institute for the Education of
the Blind, New York City.

Mr. Fred K. Hoehler, executive director, Community Fund of Chicago, Inc.,
Chicago, Ill.

Mrs. Henry A. Ingraham, former president, national board, YWCA, Brook-
lyn, N. Y.

Mr. Roscoe C. Martin, bureau of public administration, University of Alabama, University, Ala.

Mr. Ira D. Reid, professor, Haverford College, Haverford, Pa.

Mrs. Anna M. Rosenberg, New York City.

Mr. Max F. Baer, national director, B'Nai B'rith Vocational Service Bureau, Washington, D. C.

Dr. Sumner Slichter, professor of economics, Harvard University, Cambridge, Mass.

Dr. Edwin E. Witte, department of economics, University of Wisconsin,
Madison, Wis.

Management representatives:

Miss Bess Bloodworth, vice-president, The Namn Store, Brooklyn, N. Y. Mr. Prentiss L. Coonley, business consultant, Washington, D. C.

Mr. John Lovett, general manager, Michigan Manufacturers' Association, Detroit, Mich.

Mr. H. S. Vance, chairman of the board, Studebaker Corp., South Bend, Ind. Mr. Frank DeVyver, Duke University, Durham, N. C.

Mr. Marion Folsom, treasurer, Eastman Kodak Co., Rochester, N. Y.

John A. Hall, Lockport, N. Y.

C. V. Maddux, Denver, Colo.

NOTE. At the moment there is one vacancy.

Labor representatives:

Mr. John Brophy, director, Industrial Union Councils, Congress of Industrial Organizations, Washington, D. C.

Mr. Harry Boyer, president, Pennsylvania Industrial Union Council, Harrisburg, Pa.

Mr. Nelson H. Cruikshank, director, social insurance activities, American Federation of Labor, Washington, D. C.

Mr. James L. McDevitt, president, Pennsylvania Federation of Labor, Harrisburg, Pa.

Mr. H. L. Mitchell, president, National Farm Labor Union, American Federation of Labor, Washington, D. C.

Mr. Paul Sifton, national legislative representative, UAW, Congress of Industrial Organizations, Washington, D. C.

Mrs. Katherine Ellickson, assistant director of research, Congress of Industrial Organizations, Washington, D. C.

Mr. James Brownlow, secretary-treasurer of the metal trades department, American Federation of Labor, Washington, D. C.

Mr. Joseph M. Rourke, secretary-treasurer, Connecticut State Federation of Labor, Bridgeport, Conn.

Veterans' representatives:

Mr. Robert S. Allen, author, member of American Veterans' Committee, Washington, D. C.

Mr. Lawrence J. Fenlon, chairman, national economic commission, American Legion, Chicago, Ill.

Mr. Omar B. Ketchum, director, national legislative service, Veterans of Foreign Wars, Washington, D. C.

Mr. Millard W. Rice, executive secretary, Disabled American Veterans' Service Foundation, Washington, D. C.

Mr. Edgar C. Corry, Jr., past national commander, American Veterans of World War II, Washington, D. C.

Secretary TOBIN. I propose to take over the existing group, and under the reorganization plan they will not only be advisers for the United States Employment Service, but also for the unemployed compensation phase of the work of the Bureau of Employment Security.

Mr. LANHAM. Thank you, sir, and pardon me for interrupting you. Secretary TOBIN. The Council has, by statute, the right ofaccess to all the files and records of the United States Employment Service. The Council is composed of men and women representing employers and employees in equal numbers and the public.

It is composed, as you will note, of 35 leading citizens of the United States. I want the advice of these men and women on the administration of all the functions of the bureau, including the experience rating system.

I can assure you that I will consider very carefully the advice of the Council as to every phase of the activities which are proposed to be transferred to the Department of Labor. In fact, Mr. Chairman, it will be my statutory duty to do this, if the plan is approved. Needless to say, the Council will have access to all the files and records of the Bureau of Employment Security.

Next, I want to make very clear that my authority to act as Secretary of Labor stems from many different statutes covering various fields of departmental activity. Each statute contains within its own four corners its own mandate and must be interpreted by me in the light of its specific language.

The particular statute alone must be my guide. The general statement of the purposes of the Department of Labor as set forth in the act of 1913 has nothing to do with the administration or interpretation by me of these statutes.

There are many examples of particular statutes each having its own purpose. We administer the Davis-Bacon Act, the WalshHealey Public Contracts Act, certain child labor provisions of the Fair Labor Standards Act, the statute creating the Women's Bureau, the various statutory provisions which create and give authority for the operation of the Bureau of Labor Statistics, the provisions of the Selective Service Act of 1940 which relate to veterans reemployment rights and statutory provisions prescribing the duties of the Secretary of Labor with respect to apprenticeship training. Under each of these acts I must be guided by the standards they establish and by those standards alone.

To relate this point to the provisions of Reorganization Plan No. 2, I wish to point out that the administration of the Bureau of Employment Security is and must be covered solely by the provisions of the Wagner-Peyser Act, the Servicemen's Readjustment Act, the Social Security Act, and the Federal Unemployment Tax Act.

If the Bureau should be transferred to the Department of Labor, then it follows absolutely, in my opinion, that I must similarly be guided by these statutes, and these statutes alone, in formulating policies and making determinations with respect to employment service and unemployment compensation.

The standards which must guide me are clearly specified in these laws, and I would have no administrative discretion to look beyond these laws in carrying out my duties.

One further point I wish to make is that the Department of Labor, like all other departments and agencies of the Government, is required by the Constitution to carry on its activities in a manner consistent with the welfare of all of the people of the United States.

In this connection, it is worth noting the record of cooperation with the assistance to employers that has been achieved by the Department of Labor under the 1913 act itself. No evidence has ever been produced that employers refuse to use the facilities of the Department.

On the contrary, more than 40,000 employers, both large and small, have cooperated with the Department in establishing more than 40,000 apprentice programs having approximately 250,000 apprentices under training. Many management associations, colleges, universities, and labor organizations have requested and received special study data from the Bureau of Labor Statistics at cost.

Never have these statistical studies been questioned in connection with the statistics program, and I have never heard of a management organization which failed to cooperate. They all have confidence in the integrity of this bureau of the Labor Department.

The Bureau of Veterans Reemployment Rights has secured the voluntary services of thousands of persons from all walks of life to act without pay as Veterans Reemployment Rights committeemen to help the Department perform efficiently and economically its functions assisting veterans with respect to their reemployment rights upon return from the armed services.

The Bureau of Labor Standards, utilizing an advisory council composed of management as well as labor representatives, has carried on, particularly during the war, an accident prevention program relying primarily upon hundreds of safety engineers loaned from private industry and paid by private employers.

These examples are, to my mand, a complete repudiation of the specious allegation that employers will not use the Department of Labor or employment services administered at the Federal level through the Department of Labor.

However, there is one last point and, to my mind, a most important point, I would like to make on the allegation of bias, and that is this: During the 24 years when the Employment Service was in the Department of Labor, employers did use it and on a constantly increasing scale. In fact, job orders and placements recorded in the official records of the Employment Service in the years 1945 to 1948, when the Employment Service was in the Department of Labor, show that employers used this service more than any other peacetime year since thee Wagner-Peyser Act was enacted in 1933.

I would also like to place in the record at this point a colloquy between Senator Ives and Mr. Hoover at the Senate hearings which indicates Mr. Hoover's views on this subject of bias.

EXCERPTS FROM REMARKS OF THE HONORABLE HERBERT HOOVER

Mr. HOOVER. I do not think any reasonable employer would have prejudices on that account. In any event, I do not see any difference which will arise in the administration of a bureau wherever it is. I do not believe that an employer ought to have any less confidence in the objectivity of the Labor Department than the Federal Security Agency. If there is such criticism, the employer ought to realize that these bureaus placed in the Labor Department will be under the more vivid searchlight of public opinion, than if in the Federal Security Agency, whose major purposes are not related to the subject.

My own view is that both sides would be better protected.

Senator IVES. I do want it understood, in the questions I raise, they are not raised in any spirit of criticism on my part. They are only for information; and that only.

I think you have largely answered my next question, but I pose it just the same. Do you believe that any employer then would have any justification for preferring administration of the Employment Service by a so-called neutral agency, which would have no inclination to be prejudiced in favor of either the employer or employee?

Mr. HOOVER. I think it is no longer a reason. The Labor Department has many other functions in relation to labor. It has the cost-of-living services and several other services that bear directly or indirectly on the agencies we propose should be transferred. I do not believe that the Labor Department is a prejudiced Department advocating one aspect of American life any more than the Department of Commerce.

We have to believe that the departments of the Government are going to act on behalf of all of the citizens of the country, and that the searchlight of the public opinion and the action of Congress will keep them on that track. Certainly I do not like to see a poor administrative structure just because of prejudice.

As to the experience rating system, I will say that the Department of Labor has no policy with respect to the abolition or retention of the experience rating system, and I should not care to establish a policy until I have studied the facts completely.

Some question has also been raised with respect to the experience rating system under the various State unemployment compensation laws, with the fear being expressed that the Department of Labor might disapprove in the future a particular State plan for experience rating.

I should like to submit for the record a copy of the memorandum on this subject, prepared by the Solicitor, and already presented on request to a distinguished member of the Senate Committee on Expenditures in the Executive Departments.

(The memorandum referred to is as follows:)

To: The Secretary

From: William S. Tyson, Solicitor

MEMORANDUM

JULY 22, 1949.

Subject: Experience rating systems under State unemployment compensation laws.

This is in reference to your request for information as to the provisions of applicable Federal statutes relating to approval of State laws which provide for so-called "experience ratings." Specifically, you ask my opinion whether the Federal Security Administrator or any other Federal official upon whom Congress may devolve the responsibility for approving State laws providing for additional tax credits as provided for in section 1602 (a) of the Internal Revenue Code, possesses unlimited discretion with respect to whether or not he shall approve such State law.

As you know, the Federal Unemployment Tax Act (26 U. S. C. A., sec. 1600– 1611) imposes on employers employing eight or more persons during a certain number of weeks in a taxable year, a tax of 3 percent of the total wages paid by the employer during such year. However, the taxpayer may credit up to 90 percent of such tax the amount of contributions he had made into an unemployment fund maintained during the year under the unemployment compensation law of a State which the Federal Security Administrator finds complies with the standards set forth in sections 1600-1611 of the Federal Unemployment Tax Act.

In order to encourage employers to decrease their labor turn-over, section 1602 (a) of the Federal Unemployment Tax Act provides that a taxpayer shall be allowed additional credits with respect to a reduced rate permitted by State law if the Federal Security Administrator finds that such State law meets certain prescribed Federal standards. The act provides for at least three general types of State plans in this regard. While each of these plans must conform to certain conditions, definite standards are imposed as to the size of the reserve necessary to qualify for such additional credits with reference to two plans. The plans referred to are those establishing a so-called guaranteed employment account or reserve account. The statutory standards relating to these plans are most definite. The size of the reserve is mathematically ascertainable under the