1. The definition could be so interpreted as to require the various companies to whom I sell my pulpwood and lumber to collect socialsecurity taxes on those producing the pulpwood and lumber, notwithstanding the fact that the companies purchasing the pulpwood and lumber have no record of the wages paid to those who produced it. In like manner, it could be so interpreted as to require me, as a buyer of pulpwood, to pay social-security taxes on those who actually produce it, even though I did not know who produced it nor the amount of wages paid to them by their actual employer. If this definition is adopted for social security purposes, it would most certainly be extended to other legislation, such as unemployment and workmen's compensation, where coverage is now limited to employees in fact, as determined by the application of common-law rules and precedence. Its enforcement would be a physical impossibility and would result in great hardships on the small-business men of the country.

2. If the new definition remains in the social-security law, it will destroy small contractors and producers and result in the large companies taking over the business now conducted by several independent operators. Such a result would strike deeply at private enterprise. If the large companies took over pulpwood dealers, their producers would be declared employees, rather than self-employed, thus destroying their individuality and independence. Its adoption would tend to put in the hands of a few the operations now being conducted by many men who know themselves as independent contractors.

3. According to the act the definition of an employee now appearing in the House version, H. R. 6000, is not a precise definition of an employee. It leaves the status of many people to be determined by the administrative opinion whether or not they are an employee or self-employed.

4. I would like to state here, as an independent dealer in pulpwood and lumber for the past 14 years, buying pulpwood where I found it for sale, and selling it to various mills in the South, under the present system under which we are now permitted to operate, those who make their living by dealing in these forest products have greatly prospered. They have nice homes, automobiles, and live on improved farms upon which they pay taxes. If they are forced to abandon this status and become employees of the larger companies, they will lose their incentive for the forward drive.

Finally, it is the belief of all small-business men that they should be permitted to continue the operation of the pulpwood and lumber industry in the manner in which it is now operated; that Congress, and not an administrator, should determine who is and who is not an employee, and that their destinies should not be surrendered by Congress to any such agency. I sincerely believe that the present definition of employee as set forth in Public Law 642 is sound, fair, and reasonable, and that there should be no departure therefrom.

I am a lot like Mr. Adams, Mr. Chairman; you shook the bushes pretty hard to get us fellows up here. Of course, it is of so much importance to us that we feel that we had to come before you gentlemen. The CHAIRMAN. Where is Harleyville, sir?

Mr. UTSEY. It is about 40 miles from Charleston. It is between Charleston and Columbia.

The CHAIRMAN. You are not right in on the coast?

Mr. UTSEY. No, Mr. Chairman; about 40 miles out.

The CHAIRMAN. Thank you very much for coming.
Are there any questions? If not, thank you, sir.
Mr. UTSEY. Thank you, too, sir.

The CHAIRMAN. The next witness is Mr. Dexter. Will you identify yourself for the record, please, sir?

STATEMENT OF A. K. DEXTER, PRESIDENT, MISSISSIPPI FORESTRY AND CHEMURGIC ASSOCIATION, INC., JACKSON, MISS.

Mr. DEXTER. Mr. Chairman and gentlemen of the committee: I am A. K. Dexter, a resident of Canton, Miss., and president of the Mississippi Forestry and Chemurgic Association, which is a nonprofit organization of Mississippi landowners, and others, who are making an effort to improve the forests of the State of Mississippi. This group includes large and small landowners, wood-using industries, farmers, civic clubs, businessmen of all categories, and other citizens of our State.

This organization functions chiefly in the field of education and information to acquaint the general public with the need of protecting, conserving, and improving the forests. The purpose of this effort is, in the end, to advance the welfare of the citizens of the State and to encourage the conservation of its natural resources. The Association is therefore vitally interested in any phase of the growth, conservation, and use of forest products.

The association, after studying paragraph 4 of H. R. 6000 has determined that the Administrator would have the power to interpret the term "employee" in such a manner as to place undue responsibility upon the small timber growers, independent producers of forest products, and others engaged in small forest products businesses.

According to the best figures available there are 35,000 places for full-time employment for woodworkers in the forests of Mississippi. However, most of this work is part-time employment so that a con servative estimate places the number of persons, part or full time, employed in such industry at approximately 100,000. The prevailing system used in removing the forest products is 90 percent carried out by contract operators. These contractors employ, in some instances, only one person and in other instances employ several hundred in their operations. In some instances the contractor is a farmer himself, cutting and delivering his own forestry products to market.

Under the present definition of the "employer" and "employee" relationship under existing law, all parties know their responsibility concerning social security. The proposed definition would be confusing and would practically eliminate the small operators. As interpreted by the Administrator, it would undoubtedly affect every type of forest operations such as sawmill operations, the paper-wood dealer, crosstie maker, veneer and plywood logger, poles and piling, and even the cutting of forest products for fuel.

After careful study by the directors of the Mississippi Forestry and Chemurgic Association it is their opinion that the suggested change in the definition of "employee," as appears in H. R. 6000, would completely paralyze this great industry in our State and would be a severe hardship on the small operators, independent contractors and businessmen, now engaged in the forest products industry, and they have au

thorized and directed me to file this statement registering their protest against the proposed definition.

The association does not oppose social security. Its only concern is the suggested change in the "employer" and "employee" relationship. We therefore respectfully urge that you reject the proposed definition in H. R. 6000 and retain the present definition of the relationship.

The CHAIRMAN. Are there any questions, gentlemen?

If not, thank you very much, Mr. Dexter.

Mr. DEXTER. Thank you, Mr. Chairman.

The CHAIRMAN. Mr. W. L. Rhodes of Estill, S. C., has requested that his statement be filed for the record, and without objection, that will be done at this point.

(The statement of W. L. Rhodes, Estill, S. C., follows:)

STATEMENT OF W. L, RHODES, ESTILL, S. C.

My name is W. L. Rhodes, and I am a pulpwood dealer residing in Estill, S. C. I have been engaged in various forms of the timber business for more than 40 years, and have operated in Florida, Georgia, and South Carolina. I am vitally concerned with and will be seriously affected by the pending social-security bill, H. R. 6000. I sincerely feel that if the bill is made into law in its present form that it will necessitate my going out of the business, as the hazards, increased expense, and uncertainty that will be produced by such a law will not warrant the required risk of capital involved in such business. The industry is at the present time thriving. This statement embraces both the producers and their employees. A complete harmony now exists between the dealer, producer, and laborer. The present order of things has proven itself mutually profitable to all three of these groups. I am sure that none of these groups are actually demanding any change such as that proposed by this bill. The change has probably originated with some person or groups of persons who have no conception of the pulpwood industry or its needs and, even if they can understand the bill as written, they have not the slightest idea of the practical impact and effect which it will work upon the pulpwood industry. There are a great many people today who mistake any change for progress. They are unwilling to permit an harassed businessman to understand and apply one set of governmental regulations before they promulgate an entirely new and different set of regulations. The time-tested and essential principle of "stability in business" is apparently alien to their thinking. The result is that businessmen and their employees are kept in a constant mental attitude of anxiety, unrest, and turmoil. The following are some specific objections which I have to the proposed legislation as it affects my small business.

(1) To begin with, I am unable after reading several times the definition of "employee" as contained in the bill, to even vaguely understand it or to know what its practical application would be. This is probably not surprising in view of the fact that I am a mere businessman and no lawyer. However, I have handed a copy of this bill to a very competent and experienced attorney, and he tells me, after studying it, that he is just about as confused by the legal hodgepodge as am I. Is it possible that Congress would pass legislation that is this ambiguous?

(2) From the above paragraph it is apparent that those of us who would be embraced within this proposed legislation would have no idea of how to interpret it. It means that we would possibly and probably place an interpretation upon the legislation different from the Administrator. We would not know of this "wrong guess" of ours until some bureaucrat advised us of it. In the meantime we would probably have incurred severe penalties for noncompliance. With the staggering toll which taxes already take from our business, it would quite possibly mean that we would have to go out of business rather than try to operate under a system where the bureaucratic referee makes the rule as the game is being played.

(3) The producer is very unhappy over the proposed legislation. At present he is an individual operating his own little business. He is free to exercise his own judgment and initiative. He is justly proud of his independence. The

dealer does not even know who the producer employs, the manner in which he produces, or any other part of the operation of his business. As I understand it, this legislation could mean that the dealer would be held responsible for paying social security on the employees of the producer and, of course, would ultimately, if not immediately, mean that the dealer would be held liable in tort for injuries sustained by the employees of the producer while at work. Thus, the dealer would have no recourse but, if he stayed in business, to eliminate entirely the role of the producer, of which there are thousands in the South. Would this result be fair to this hard-working, free-enterprising producer? Would this be in keeping with our so-called free enterprise system?

(4) The pulpwood industry has been a godsend to the economy of the South. This year the section of South Carolina in which I live, which is principally an agricultural area, experienced the worst crop failure in recent history. It has been designated as a "distress area" by the Department of Agriculture. The economic salvation to these small farmers this year has been the fact that they have been able to sell pulpwood from their farms and provide food and clothing for their families. Should we discourage and hamper an industry which is operating satisfactorily to all concerned and which is so vital a part of the economy of the South?

I have not undertaken to discuss the technical and legal aspects of the proposed legislation as I am not qualified to do so. I have attempted to briefly state how the small dealer, such as myself, feels about this bill. I sincerely and earnestly hope that the good sense and judgment of the men in our Senate will assert itself to prevent the enactment into law of this impractical legislation. The CHAIRMAN. That completes the hearing for the morning. We will recess until 10 o'clock tomorrow morning.

(Whereupon, at 12: 10 p. m., the committee recessed to reconvene Wednesday, March 15, 1950, at 10 a. m.)

SOCIAL SECURITY REVISION

WEDNESDAY, MARCH 15, 1950

UNITED STATES SENATE,
COMMITTEE ON FINANCE,
Washington, D. C.

The committee met at 10 a. m., pursuant to recess, in room 312, Senate Office Building, Hon. Walter F. George (chairman) presiding. Present: Senators George, Byrd, Lucas, Hoey, Kerr, Myers, Millikin, Butler, and Martin.

Also present: Mrs. Elizabeth B. Springer, chief clerk, and F. F. Fauri, Legislative Reference Service, Library of Congress.

The CHAIRMAN. The committee will come to order, please.

Senator Millikin, will you please take over until I can finish a conference with a gentleman from my State?

I think Mr. Reuther is the first witness this morning.

Senator MILLIKIN (presiding). The first witness is Mr. Reuther. Will you come forward, please?

STATEMENT OF WALTER REUTHER, PRESIDENT, UNITED AUTO WORKERS, CONGRESS OF INDUSTRIAL ORGANIZATIONS, DETROIT, MICH.

Mr. REUTHER. My name is Walter P. Reuther. I am appearing here as the president of the United Automobile Workers Union, representing more than a million wage earners in the automobile, aircraft, and agricultural implements industries.

I appreciate this opportunity to appear before the committee to testify on the legislation now before your committee. I would like to submit to the committee a prepared statement, and in addition to that an appendix describing a tentative approach to an American standard family budget that we have been working on. We have put into this budget about 4 months of very careful research, and I think it represents one of the most comprehensive jobs that has been done to date. We would like very much to include both my prepared statement and this tentative approach to the American standard budget for an elderly couple into the record.

Senator MILLIKIN. It will be put into the record at this point. (The statement and budget referred to follow :)

STATEMENT PRESENTED TO THE SENATE FINANCE COMMITTEE IN HEARINGS ON H. R. 6000 BY WALTER P. REUTHER, PRESIDENT, UAW-CIO

At the UAW-CIO 1949 convention, a large mural across the convention hall had three panels. One panel was a photograph of an aged worker and his wife. The second was of a disabled worker in a hospital. The third and principal