STATEMENT BY BENJAMIN C. MARSH, EXECUTIVE SECRETARY, PEOPLE'S LOBBY, INC., WASHINGTON, D. C.

Four facts need to be considered in connection with social security proposals: 1. No social security system can provide any more security than the economic system of which it is a part.

2. Social security measures must not be used to further imperialist designs. 3. Extension and increase of public social security measures postulate at least equal controls by Government of all economic activities and of individuals. 4. Only the Federal Government, can operate social security measures effectively, and economically.

1. The lure of health and unemployment insurance, and old-age pensions, tends to obscure the fact that such measures cannot be a substitute for a sound economic system under an economy of abundance, but on the contrary tend to postpone such an economy to the extent they are accepted as a substitute therefor. Security and social benefits can be fully realized only out of maximum possible production, with such objective, and not the quest for profits, the motive for production.

Continuous deficiteering—and in only 2 out of the past 20 years has the Budget ever been balanced, though 8 years have been prosperous-dooms the effectiveness of social security measures.

Our economic system is in a state of highly unstable equilibrium, postponing a smash only through expenditures of billions for arms, and the cold war, a large part of it being paid for by long term interest bearing bonds.

Living off succeeding generations, doesn't provide security, it conceals the fact of insecurity.

2. First Germany and then Britain adopted a system of social security, such as we have undertaken-Germany to condition her workers for a supreme Deutschland über Alles effort in World War I to challenge Britannia Rules the Waves, and Britain a few years later, to condition her workers for the struggle to maintain that rule.

When Germany tensed for her second effort in World War II, and America's real rulers sensed the opportunity, to try to grasp the scepter from Britain's faltering hands-and so prevent Germany from grabbing it-President Roosevelt and Senator Wagner espoused social security here.

Social security and the concept of the American century developed simultaneously.

We grabbed bases throughout the world, in an effort to anticipate any other nation's getting them, tried to control the San Francisco Conference at which the United Nations was organized, and instigated the veto, in the Security Council.

3. The concepts of complete individual freedom and complete responsibility of Government to insure maintenance when unemployed and after working years— whether retirement be at 60, 65, or 70—are mutually exclusive painful as that fact is to politicians, whose slogan is "as thy promises, so shalt thy votes be."

The Congressional Joint Committee on the Economic Report correctly stated, over a year ago: "The Government, which is the only instrumentability that can balance the needs of agriculture, industry, and labor, cannot afford to be without a plan."

Senator Joseph C. O'Mahoney, chairman of the joint committee, in submitting its report on the steel industry, said "The collectivist corporation in our time has become the most significant aspect of our whole economic structure.

"These organizations are dominating a steadily increasing segment of the industrial and commercial activities of the whole Nation. They affect the lives not of the people of one city or one State, but of the people of the entire United States.

"Their managers may, and do determine by their private decisions, how much of a given commodity 144,000,000 people may have, and the price they pay for it."

Social security payments, whether for old-age pensions, unemployment benefits, or widows' allowances, come out of the national product.

Wages and prices determine temporarily, the degree of security while working; payments made by Government through taxes upon profits or other income (or by bonds which are a lien on future income), determine temporarily, the degree of security during periods of sickness, or unemployment, or as old-age pensions.

Obviously Government must determine the location and nature of production as well as the retained profits of production, and also rate of pay and place of employment of workers when it attempts to insure maintenance from the womb, whose productivity is encouraged by certain dogmas, to the tomb, recourse to which is being postponed.

This is merely to apply the practice of parity payments, farm-price supports, and conservation payments to farmers, all of which ineluctably involve acreage limitations, and Government direction of production.

4. At present about 39,800,000 persons are included in our old-age pension system, of whom 35,000,000 are in trade and industry.

Pending legislation proposes to add some 10,650,000 of whom about 4,500,000 are self-employed and 3,800,000 State and city employees.

About 10,150,000 persons will not be covered, even if pending pension legislation is enacted, including many who most need such pensions-1,600,000 farmfamily workers, 1,500,000 farm laborers, 1,100,000 self-employed earning less than $400 a year net, 750,000 part time domestics, and about 500,000 nonsalaried doctors, dentists, lawyers, engineers, clergymen, and so forth.

The Social Security Administration reports that during the year ended June 30, 1949, $3,530,000,000 was collected from Federal, State, and local Governments, by the needy, the old and the jobless of which the Federal Government paid $1,721,000,000 or nearly half.

During that year, Federal-State jobless payments amounted to $1,193,000,000 compared with $753,000,000 the year before, and 5,644,975 persons drew jobless pay, compared with 3,820,744, the preceding year.

Average weekly payment in fiscal 1949 was $19.91 compared with $18.19 in 1948.

Federal-State relief paid the needy, aged, blind and dependent children, amounted in 1949 to $1,710,000,000, an increase of $316,000,000 over the preceding year, and went to 4,062,505 individuals.

United States News and World Report, (March 17, 1950) states:

"People in 21 States of the Union get more cash from Federal, State, and local governments, than they get from factory pay rolls. In 15 other States, Government payments are more than half as large as manufacturing pay rolls. "In no State do Government payments amount to less than a fourth of the income paid by manufacturers to their workers.

"Nearly 6,000,000 civilian workers depend upon some government directly for their livelihood.

"Government payment to individuals amounts to about $28,000,000 a year, compared with $46,000,000,000 in pay rolls of the manufacturing industry."

It shows that in North Dakota Government payments were 644 percent of manufacturing pay rolls, in South Dakota 336 percent, in New Mexico 413 percent, in Arizona 333 percent, in Utah 213 percent, in Nevada 325 percent, and in Wyoming 268 percent.

About a fifth of the Federal Government's receipts is now derived directly or indirectly from taxes on consumption, regardless of ability to pay.

Pensions paid by corporations, or other employers, are paid by consumers regardless of ability to pay, in higher prices. Only the Federal Government can levy progressive income taxes so as to put the burden of noncontributory payments for pensions, upon those able to pay.

Industry payment of pensions deprives the Government of revenue. All such payments like wages, are deducted from tax liability, as legitimate costs of doing business.

Business concerns are taxed chiefly at a fixed rate.

There is, however, a growing demand that excessive profits be distributed to stockholders, so they may be taxed even more progressively.

Industry pension plans enable them to escape more of such taxes, which is probably the reason many of the big stockholders in steel and coal and automobiles favor industry-paid pensions.

Government will have to pay most of pensions as well as of unemployment benefits, minus current contributions, because most collections to date are in Government securities, and the Government must borrow or tax.

The Federal Security Administration in reply to a question from People's Lobby, Inc. wrote us April 8, 1949, about social insurance collections:

"Collections since the beginning of these social insurance collections have been about $29,000,000,000. It is inevitable even under the present law, that the tax rate must go up at some future date, either by increase of the pay-roll taxes, or by contributions from the general fund."

There are about 11,300,000 persons in the United States, 65 years of age and over, most of them living on small fixed incomes, and many of them dependent on Federal or local relief or private charity.

It is too late for any contributory pension system to help them.

Company pensions will tend to make employees more conservative and content with the profit system, or at least compliant, since loss of a job usually means either less of the pension, or a reduction, by transfer.

Only the Federal Government can insure continuity in pensions; the crash of 1929-33 would have disrupted many company systems.

Every person working, with an income above the minimum requisite for a decent standard of living, should make an annual contribution to old-age pensions, as to unemployment compensation, and by some similar system of payment, because the past few years has developed an unfortunate and false conception here, that the Federal Treasury is the widow's cruse of oil, and selfreplenishing.

Such contribution should be lower for heads of families with several dependents.

The experience of the United Mine Workers' pension and welfare fund proves the necessity of public supervision of funds collected from the public through laws giving employers such authority.

Of the nearly 40,000,000 persons now under a Government-pension system, about 7,200,000 are also covered by industrial pension and profit-sharing plans. Of the 490,000 corporations in the United States, 13,000 have pension plans, and of these 4,662 are paid for in part by the employees, while in 8,338 employers pay the entire cost.

In 1946, of 526,363 corporations reporting on income, 359,310 reported a net income, and 131,842, or 25 percent, a deficit. In 1937, 57 percent of all corporations reported deficits and in 1938, 61 percent. Usually about a fourth to a third of corporations do not make a profit.

Of the 3,500,000 businesses (of all sorts) in the United States, 26,900 corporations-less than eight-tenths of 1 percent-employ 52 percent of the workers, so most employers have only a few employees.

Some two-fifths of new enterprises fail within 2 or 3 years, and only about one-tenth last much beyond the fifth year. Commercial and industrial failures (exclusive of banks) were 3,476 in 1947, or three times as many as in 1946, but a relatively small number compared with 31,822 in 1932, and even with 14,768 in 1939-before heavy Government spending started for hot and cold war. New business risks are largely taken by private investment.

The congressional Joint Committee on the President's Economic Report in a report on investment published October 11, last year, states that capital requirements of the 600,000 retail and 70,000 wholesale firms which started between the first of 1945 and October 1947, were $7,000,000,000.

Of this, "63 percent was provided from the personal savings of the enterpreneurs, 14 percent from bank loans, 8 percent from suppliers, and 11 percent from other loans."

There is no reason to think the fate of these concerns will be any better than of other newcomers in our competitive system, and an additional pension charge of 3 percent or even 2 percent of pay roll will hasten their demise.

WEIL, GOTSHAL & MANGES, Washington, D. C., March 9, 1950.

Hon. WALTER F. GEORGE,

Chairman, Senate Finance Committee,

United States Senate, Washington, D. C.

MY DEAR SENATOR GEORGE: I respectfully wish to comment upon one particular phase of the amendments to be made to the Social Security Act as provided in H. R. 6000. My thoughts are addressed principally to the provision of the proposed act which will extend old-age and survivors insurance coverage to employees of nonprofit charitable institutions and the impact which this provision will have upon persons over 65 years of age who are employed by these institutions and are receiving insurance benefits under the present law as well as the financial burden which will be imposed upon these institutions.

Under section 209 (b) of the present law, employment by nonprofit charitable institutions is expressly exempted from coverage of the act. Consequently, wages

received from such employment are not subject to the provision of section 203 (d) (1) of the act which is applicable only to wages received in covered employment. Thus, a person over 65 years of age may receive wages for employment by a nonprofit charitable institution without forfeiting any of the benefits to which he may be entitled on the basis of wages previously earned in covered employment.

H. R. 6000 will extend coverage of the act to include employment by nonprofit charitable institutions so that persons now employed by such institutions who are also receiving insurance benefits on the basis of prior covered employment will lose such insurance benefits. Section 103 (b) proposes to increase from the present exemption of $15 a month to $50 a month the amount that may be earned by an insurance beneficiary from covered employment without loss of benefits. However, in most instances, wages received from such employment will exceed this exemption so that, in effect, the extension of coverage of the act will deprive these persons of the insurance benefits which they are presently receiving.

In this regard, there appear to be two cogent factors which your committee should consider:

First, many persons over 65 years of age have taken employment with charitable institutions because they are not physically able to perform arduous manual labor and they cannot readily find employment in productive occupations in private industry. Although wages paid by charitable institutions are substantially lower than the level of wages in productive industry, these persons have been able to supplement their income by the benefits provided under the present act and thus provide a minimum aggregate income for the support of themselves and their immediate dependents. H. R. 6000, in its present form, will deprive these persons of the insurance benefits which they have been receiving and reduce the bare minimum income which is necessary for their maintenance and support. When persons have attained the age of 65 years, they have established a certain pattern of living which is based upon the income which they can expect to have. If this income is reduced, they are faced with two alternatives, either to obtain higher wages in their present employment or to find new employment which will provide them with the necessary minimum wage. In the case of persons over 65 years of age now employed by charitable institutions, neither of these alternatives will be available. Charitable institutions themselves operate on minimum budgets and they cannot afford to increase wages to replace the loss of insurance benefits. As to the second alternative, it is extremely difficult even in periods of economic prosperity for persons over 65 years of age to find new employment in private industry. Under present economic conditions, such employment would be entirely unavailable to these persons.

Secondly, the impact of this provision will impose a severe financial hardship upon charitable institutions. They will be faced with pressure by their employees to increase wages to compensate for the loss of insurance benefits. Furthermore, if the threat of loss of the increased insurance benefits provided under H. R. 6000 should discourage persons over 65 years of age from continuing their employment, these charitable institutions will be forced to employ younger people who will require higher wages.

In view of the consequences which I have described herein, I would respectfully recommend to the committee that H. R. 6000 be amended so as to provide that persons over 65 years of age who are presently employed by a charitable institution may continue to receive without reduction the insurance benefits which have heretofore been paid to them. Although H. R. 6000 provides for an increase in insurance benefits, it would seem to be equitable if the foregoing provision is adopted that insurance benefits be paid to these persons at the rates presently in effect and not upon the increased rates provided under the proposed act. The provision could be so phrased that these persons would be entitled to receive benefits at the increased rates upon their retirement from employment and subject to the exemption of $50 per month provided under section 103 (b) (1) of H. R. 6000, or upon attaining the age of 75.

It is my understanding that only a relatively small number of persons would be eligible to avail themselves of the relief which would be provided by such provision and the cost thereof would be relatively small in comparison to the burden to which these persons would otherwise be subjected.

I trust that this matter will receive your favorable consideration and I would be happy to discuss this matter with you further if you should so desire.

Respectfully yours,

ELY KUSKEL.

STATE OF NEW YORK, SENATE RESOLUTION NO. 114
ALBANY, February 28, 1950.

Committee on Rules (at request of Mr. Wicks):
Concurrent resolution of the senate and assembly memorializing the Congress
of the United States to exclude members of retirement systems within the
State from pending provisions extending the social-security law

Whereas there is now pending before the Congress of the United States certain legislation to extend the provisions of law, commonly referred to as the social security law, to include all public employees in the United States including public employees of the various cities and the governmental subdivisions of such States, and

Whereas in the State of New York pension and retirement systems have been established for many years and are available for membership by every public employees of the State, or its various subdivisions; and

Whereas under the constitution of the State of New York all such public employees, notably policemen, firemen, and public school teachers who are members of any such pension or retirement system within the State, enjoy a contractual relationship under which their rights cannot be diminished or impaired: Now therefore be it

Resolved (if the assembly concur), That the Congress of the United States hereby respectfully is memorialized to exclude from the provisions of such pending legislation members of the police departments, fire departments, public school teachers, and all other employees who are presently members of any pension or retirement system administered by the State of New York or any of its governmental subdivisions; and be it further

Resolved (if the assembly concur), That copies of this resolution be transmitted to the Secretary of the United States Senate, the Clerk of the House of Representatives, to each United States Senator and to each Member of the House of Representatives elected from the State of New York.

To the Members of the Senate Finance Committee. (Attention Hon. Walter F. George, chairman)

DEAR SENATORS: This association represents the members of the naturopathic profession in the United States, comprising some 7,000 naturopathic physicians. Naturopathy is a therapeutic system embracing a knowledge of the constitution, diseases, injuries, and disabilities of man and remedially employing nature's agencies, forces, processes, and products in the practice thereof.

We have observed that certain self-employed professional groups are specifically excluded from coverage in H. R. 6000, section 211 (c), (5), providing with reference thereto as follows: "The performance of service by an individual in the exercise of his profession as a physician, lawyer, dentist, osteopath, veterinarian. chiropractor, or optometrist or as a Christian Science practitioner, or as an aeronautical, chemical, civil, electrical, mechanical, metallurgical, or mining engineer; or the performance of such service by a partnership."

According to the report of the Committee on Ways and Means of the House of Representatives, the term "physician" as used in the section above quoted means "an individual who is legally qualified to practice medicine." It is quite obvious that is the reason osteopaths and chiropractors sought and obtained exclusion from coverage.

This association respectfully requests that the foregoing section 211 (c), (5), be amended by adding the word "naturopath" immediately following the word "osteopath," thereby according the naturopathic profession the same recognition and exempt status provided and granted the other schools of the healing arts in said section.