that one of the underlying premises of the present system is perhaps wrong and should be thoroughly reexamined at the present time.

In essence, this thinking would provide for an immediate maturity of our social-security program, as contrasted with the present ap proach, wherein the full impact of the cost of the obligations which we are now legislating do not mature for at least another working generation.

It seems to us that we should be willing to provide for our present aged the minimum benefits that we now, by legislation, are asking our children to provide for us.

I may say that I thoroughly share this view, and further that many of my fellow committee members are also in accord with it. It seems elementary that in the last analysis the support of an aged population is the responsibility of the generation then at work. No one has yet been able to devise a scheme under which a government can save in advance for all the aged in its population.

With this basic principle in mind, it seems that the most favorable method of attacking this problem before us is to immediately extend benefits under the insurance plan to all persons now 65 and over not working. This in effect is doing what an industrial concern does in extending past service credits to all its workers, and granting any increase in pension credits to its already retired workers.

This would give all eligible persons a minimum amount provided in the insurance law, and those with wage credits would receive the additional amount to which such wage credits would entitle them under the formula. Those benefits, together with the other benefits under the insurance program, should be financed by us now on a contributory basis. However, a primary advantage would attach, in that current tax collections could be proportioned to the total amount of benefit payments to be made in the current year. Thus, we would be on a realistic pay-as-you-go basis.

Now, there are some immediate and obvious advantages to such a program. First, it provides universal coverage. Second, it would take the Federal Government immediately out of the public-assistance programs and would relieve the States of enough of the burden of caring for the aged so that they could make any needed supplements on a needs basis.

Of tremendous significance, in my estimate, is the fact that it would require us and all succeeding generations to face squarely up to the over-all cost of the program. Also, a safety factor or balance is provided against any unreasonable extensions, in that the Congress, which votes for increased benefits, must make provisions for increased revenue at the same time.

I would like to urge upon you gentlemen serious consideration at this opportune time of this new approach to the old-age insurance problem.

I want it also understood that this is not established chamber policy. It represents my views and those of many of the committee who have been studying this problem for many months.

I thank you, sir.

The CHAIRMAN. Thank you very much.

I would like to make this suggestion. You are assuming that we are going to abandon deficit spending when you make this last recommendation?

Mr. MARSHALL. I trust you will, sir.
The CHAIRMAN. Senator Millikin?

Senator MILLIKIN. Here is a young fellow who enters the labor force, 20 years old today. He has 45 years ahead of him before he becomes 65. How would he feel about paying full cost of that system for 45 years before he would get benefit from it?

Mr. MARSHALL. We have found under our contributory pension plan-we have a contributory pension plan in our company-that the situation is that we are forced to explain the program to that young man before we can get him to contribute; that we have to sell it to him, explain it; and that because he is contributing to the program, he understands it and is much more interested in it and appreciative of it from the age of, say, 20 to 40, than he ever was before. When we had a noncontributory plan, as we did for some 40 years, I for one was under it, and I don't remember knowing that we had a pension plan until I was 30 years old. But today I get questions in our office from people who are 25 or 30 years old. Why? Because they take out their pay checks and see something taken out of it for pension. They want to know about it. When we explain it to them, and explain that it is a fair system and a just one, we think, they are glad they are under it. Senator KERR. They are glad, are they not, because they feel they are contributing to a pension system that will be for their individual benefit.

Mr. MARSHALL. That is right.

Senator KERR. Now, under the suggestion you have just made, he would become aware of the fact that he was contributing to a pension. system for the benefit of others, and that no part of it was being kept for a system that would be for his benefit, and that he must make these contributions himself and gather such happiness as he can from the knowledge that he is paying for it for others and the hope he may have that others will be able to pay for it when his turn comes.

Mr. MARSHALL. Of course, Senator, I recognize that problem. It is largely a matter of presentation.

Senator KERR. Could a rose by some other name be presented so as to smell less sweet, or any more?

Mr. MARSHALL. On the other hand, Senator, the amount that this young man at age 20 who works for 45 years is going to get under the legislation in effect at the time will be determined by whether he does contribute for 45 years to the program or whether, during a 5year period, he decides not to work, and goes to Florida. The ultimate benefits will be determined by the number of years which he does contribute to the program, assuming, as we all have to assume, that this program will remain in effect for the 40-year period.

Senator MILLIKIN. Well, how will you sell this: He says, "Looky, Mister. I have got to contribute 45 years to get my retirement, if I live that long. But some old Jakes 65 years of age are going into this System tomorrow at 65 years of age without contributing anything. Why should I have to contribute to keep those old fuddy-duddies enjoying Florida?"

Mr. MARSHALL. Of course, you have now that problem on the pension system. Those usually have not been on a contributory basis. The past service credits that have been granted have usually been

granted on a noncontributory basis. So the problem doesn't come up as acutely as you posed it.

But it does seem to me that I am willing to take a little bit of issue with you on whether or not even under this proposed system it cannot be truly called an insurance plan. I will admit that there is one major difference between that and what we normally think of as an insurance plan, namely, that it has no accumulated reserves. But I submit, from conversations with my friends, the actuaries, again, that a system that is based upon the credit and taxing power of the United States Government needs no reserves. That is one point. The second point is that the Federal Government cannot really have real

reserves.

So, because you do not need them, and secondly because you cannot have them, I believe that you can truly call this program that we are proposing an insurance program, without a funded reserve.

Senator MILLIKIN. All right. Let us call it an insurance program. Assuming it without conceding it, let us call it that. What do you say to this young fellow that come bustling into your office and says, "Looky, Mister, do you mean to tell me that I am going to have to contribute 5 percent of my wages from now until I am 65 years old to take care of a lot of old fuddy-duddies that have been in this system 4 or 5 years and are now 65 and are commencing to get all this dough?" What do you say to him? How do you inspire him? How do you do this salesmanship job that you are talking about? Mr. MARSHALL. No. 1, I would say to him, "Of course, that is your father and your mother and your uncle."

Senator MILLIKIN. "No," he says, "I am an orphan.'

Mr. MARSHALL. And No. 2, I would say to him, "If you do that for these people, the next generation will do it for you."

Senator MILLIKIN. But he says, "Mister, listen. Where do you get this nice magic globe of yours that can enable you to say what some Congress is going to do 45 years from now for me?" What do you say to that? "Or even next year?"

Mr. MARSHALL. Well, I would present it to this fellow in this way: This is an insurance program with no funded reserve. Now, you have this situation as to pensions, under such a program, even under an industrial pension plan. I think Mr. Lattimer testified before the steel panel that with a corporation of the size and strength of the United States Steel Corp., a funded reserve was not necessary for a pension plan and all you needed to do was to pay in the interest that such a fund would have earned, plus the current contributions of the employees and the employer, and that would be sufficient for all time to come to meet the pension outgo.

Now, I submit that if it is true in the case of the United States Steel Corp. it is much more true as to the United States that you don't need a funded reserve, that no matter what you call it the cost of the pension is the interest on the funded reserve that you would otherwise have, plus the current contributions by the employer and the employee. And those must be equal to your current outgo, to your current pension payments.

So to my young man friend I would say: "Whatever you do, this is what each generation has got to pay to meet the cost of the aged who are not working."

Senator MILLIKIN. Are there not perhaps two answers? One, taking the Railroad Retirement System, the young fellow who goes into that system is paying-how much, Mr. Fauri?

Mr. FAURI. Six percent.

Senator MILLIKIN. Six percent. And he will continue to pay that until he reaches retirement. So it has been sold there.

Mr. MARSHALL. That is true.

Senator MILLIKIN. No. 2, his union representatives, who are very smart salesmen, say, "Listen, brother. You do not need to worry about that. Your boss is going to pay for it." Is that not right? Mr. MARSHALL. That is right.

Senator MILLIKIN. And that is what will happen, is it not?
Mr. MARSHALL. Of course, that would bother me if it did happen.
Senator MILLIKIN. Of course, it is going to happen.

Mr. MARSHALL. Because I think one of the big safeguards of a program of this kind to prevent its running away into a British plan is the fact that it is contributory on the first increment, and I think it is very important that we keep it so.

Senator MILLIKIN. Of course it is going to happen. It is the business of the union to see that it does happen. That is how all "deducts" are sold: "We have 'deducts' for the taxes. And so you don't have to worry about that. That is one of our bargaining points. We are working to get you a net take-home pay that is satisfactory, and you don't have to worry about the additions. We bargain that out. That is what we are here for." And they do a good job at it.

Mr. MARSHALL. Of course, I frankly am hopeful that in the long run we will develop a generation of labor statesmen in the labor field who will really look to the long term best interests of their constituents, as you gentlemen do for our Nation, so that we will get some real statesmanship in that field, and not the crisis type of thing that we have been seeing during the past few years.

Senator MILLIKIN. I respectfully suggest to you that the job of the labor leader is to try to pass on these costs to the employer. And he does. And that is another way of saying that the public pays the bill.

The CHAIRMAN. Thank you very much, Mr. Marshall, for your contribution.

Mr. MARSHALL. Thank you. I am delighted to have had the opportunity, Senator.

(The exhibit attached to Mr. Marshall's statement follows:)

POLICY DECLARATIONS OF THE CHAMBER OF COMMERCE OF THE UNITED STATES

ON SOCIAL SECURITY

Following are the applicable policy declarations of the Chamber of Commerce of the United States on social security as revised and readopted by the membership at the thirty-seventh annual meeting in May 1949. These declarations are in full force and effect and supersede all previous declarations:

Employment a prerequisite. However desirable and necessary social security may be, it is no substitute for productive employment and, therefore, every effort should be made by business and other groups to encourage high levels of production and steady employment.

Hazards to be covered. Protection against periods of job and income losses should be provided either by voluntary or by governmental action. Social security provided by governmental action should be restricted to those major hazards of life concerning which individual effort has been demonstrated to be substantially inadequate or impractical.

Level of protection. A social-security program should provided a minimum layer of basic protection against the major economic hazard with which it deals, and should be so designed and administered as to encourage additional savings and self-protection by the individual through his own efforts.

Role of State and local governments. Every effort should be made to encourage State and local governments to assume primary responsibility for social security in order to keep such activities close to the employers, to the employees, and to other taxpayers.

Coverage extension. The present system of old-age and survivors insurance should be extended to employees of nonprofit organizations, governmental em· ployees, railroad employees, agricultural employees, and other employees not now covered thereunder, including the self-employed, to the extent feasible.

Benefit level. Any adjustment of the old-age and survivors insurance benefit level should be conditioned upon a general extension of coverage (as above) and upon appropriate adjustment in the supporting tax schedule (as below). Conditioned upon these integrally related changes, the benefit level should be adjusted so as to contniue to be in line with the program's objective of providing a minimum layer of basic protection.

Financing. The tax schedule of existing law supporting old-age and survivors insurance should be increased appropriately to take account of any amendments increasing prospective benefit disbursements; otherwise, no increase in the schedule of tax rates should be adopted until necessary to prevent diminution in the funds of the program.

Governmental employees. When governmental employees are covered under old-age and survivors insurance, the civil service retirement system and the many other Federal, State, and local systems for such employees should be revised to provide supplementary protection (if such protection is desired), just as the staff retirement plans of other employers have been revised.

Total and permanent disability benefits. Voluntary agencies and the State public assistance systems, in conjunction with the State vocational rehabilitation agencies, offer the best means of providing for the totally disabled. No Federal system of total and permanent disability benefits should be established either in connection with old-age and survivors insurance or otherwise.

Temporary Federal participation. The present system of Federal grants to States for public assistance should be recognized as a temporary expedient. The States should assume an increasing proportion of the costs of public assistance as the beneficiary rolls of the Federal old-age and survivors insurance program expand. Eventually, the entire costs of such assistance as is needed to supplement old-age and survivors insurance should be borne by the States and their local subdivisions.

The CHAIRMAN. The next witness is Mr. Herschel C. Atkinson.
You may be seated if you wish, sir.

STATEMENT OF HERSCHEL C. ATKINSON, EXECUTIVE VICE PRESIDENT, OHIO CHAMBER OF COMMERCE, COLUMBUS, OHIO

Mr. ATKINSON. Thank you, sir.

Mr. Chairman and members of the Senate Finance Committee, my name is Herschel C. Atkinson. I am executive vice president of the Ohio Chamber of Commerce whose principal offices are at Columbus, Ohio. The membership of our organization consists of over 4,000 industrial and commercial firms in Ohio, from the smallest to the largest. They engage in practically every line of business in our State. The views which I am presenting today are those of our Ohio Chamber of Commerce committee on social legislation, which consists of 25 representative business executives who are specifically charged with day-to-day handling of social-security problems for their own firms. After much careful study this committee submitted a series of recommendations on H. R. 6000 which were, in turn, reviewed and voted upon by our board of directors. The board is made up of top executives of