sections of H. R. 6000, in my estimation. are unwarranted extensions of Federal bureaucracy and is a matter which has been and is now satisfactorily handled in the States by private insurance firms. Each State in its Workmen's Compensation Act provides for disability insurance in all degrees, from temporary dis ability to permanent disability. Extension of the Federal Security Agency into this field would, in my estimation, be an unwarranted invasion of the field of States' rights. I am not opposed to sound programs for the social betterment of the people, and where there are voids in these programs, I think logically the Federal Government might be expected to lead the way in exploring the necessity for such programs. But where satisfactory programs are in existence. being handled by the States or by voluntary organizations, it is very poor inde ment, in my opinion, to increase the taxpayers' expense by adding new Government bureaus, more employees and a multitude of new regulations, all of which will merely be superimposed on existing ones. I urge the committee to delete the entire section 107 and all related sections from H. R. 6000 before it is reported to the Senate. NEWSPAPER ACTIVITY H. R. 6000, now before the Senate Committee on Finance, contains in section 210 (a) (16) (A) (B) an exemption for newsboys and news vendors identical with that in the present social-security laws. Ample testimony and evidence has been taken by various congressional committees as to the equity for these exclusions and I urge the Senate committee to retain these exclusions in the bill to be reported to the Senate floor. Previously in this statement I have called attention to certain specific sections in the bill defining employees. In addition to those specific sections cited, I want to emphasize the importance of retaining the definition of employees as cot tained in the present social-security laws. In my estimation, to extend the definition of employees as is done in H. R. 6000 now before the committee would open the door to numerous controversies and lawsuits. There is no successful guide to determine the extent of coverage under the proposed definitions. I stress again the fact that the Advisory Council made no recommendation regarding the amendment of the definition of employee. NONPROFIT, RELIGIOUS, CHARITABLE, ETC. ORGANIZATIONS Section 210 (a) (9) proposes to amend the Social Security Act by including employees of nonprofit organizations organized and operated exclusively for religious, charitable, scientific, literary, educational, or humane purposes if such organization is not engaged in substantial lobbying activities and to exclude only licensed, ordained ministers of the church in exercising his ministry or a member of a religious order exercising the duties required by such order. In addition an entirely new concept is provided. Contributions from the employees are compulsory but those by employers are voluntary. It seems inequitable to have coverage extended to these groups on a basis which wond be discriminatory against the employees because of the reduction in benefits as a result of this partial contribution. The Advisory Council made no rever mendations as to the discrimination indicated in this section. UndoubreS5 certain groups now excluded might wish to be included and it would seem te me that it should be voluntary on their part. In the same manner self-employed are covered. I suggest that the committee seriously consider this aspect of the problem. I further suggest that the proposed longuage as contained section 210 (a) (9) is too restrictive since it covers some groups which sta be excluded. I have been requested by the Utah Society of Naturopathie Physicians and Surgeons, Inc. to support their position as expressed in a letter of Mrs 1950, to the committee. This association is desirous of amending 211 (C) (5) by adding the wind "Naturopath" immediately following the word “Osteopath.” It is then them to of this association that their members practicing naturopathic treatment be 15cluded from coverage on H. R. 6000 as a self-employed professional go The amendment suggested to section 211 (C) (5) would accomplish this guine STATEMENT OF HON. JAMES G. POLK, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF OHIO Mr. Chairman and members of the committee: I am appearing before your committee today on behalf of the Wilknit Hosiery Co., Inc., of Greenfield, Ohio. This is a direct-selling company whose hosiery is distributed by approximately 20,000 independent sales people, most of them working only part time. Subsection 4 on page 51 of the bill H. R. 6000, relating to the definition of the word employee should be stricken from the bill. I refer to lines 4 to 16, inclusive, on page 51, which defines an employee as "(4) any individual who is not an employee under paragraph (1), (2), or (3) of this subsection but who, in the performance of service for any person for remuneration, has, with respect to such service, the status of an employee, as determined by the combined effect of (A) control over the individual, (B) permanency of the relationship, (C) regularity and frequency of performance of the service, (D) integration of the individual's work in the business to which he renders service, (E) lack of skill required of the individual, (F) lack of investment by the individual in facilities for work, and (G) lack of opportunities of the individual for profit or loss." The above definition of the word "employee" is so involved and uncertain in its scope that it is basically undesirable. If retained in the bill, I believe it will result in costly and unnecessary litigation to determine what it means and you will find the courts will be unable to agree on the proper interpretation and application of the definition to specific cases. To retain this complicated definition will, in my judgment, only result in confusion and a large number of lawsuits by individuals suing for benefits or for the establishment of wage credits or to avoid a tax on the self-employed. I am not a lawyer, but I know there are many able and experienced lawyers on this committee and I am going to suggest to you that in place of subsection 4 you substitute the old and well-understood common-law definition of the word "employee." The common-law definition has been construed by the courts to have a certain definite and well-understood meaning. I strongly urge your favorable consideration of my proposal to restore the common-law rule on who is or is not an employee. To retain the complicated and unworkable definition of employee in subsection 4 of this bill will work great hardships on many businesses and will give small benefits to the salespeople involved. In conclusion, may I quote from a letter I have received from Mr. L. Lowell Wilkin, general manager of the Wilknit Hosiery Co., Inc., under date of March 1, 1950: "We now have approximately 130 local employees, and it takes 2 girls about 2 days a week to keep each employee's record up-to-date. There are approximately 20,000 independent salespeople selling our hosiery (most of them part time). From the preceding figures it takes 4 working days per week to keep 130 employees' records up-to-date. In the case of salespeople we believe that it would take one-fourth that time, which would be only 1 day per week for each 130 employees. In a 5-day week 1 girl could take care of 650 employees. Therefore, we would need 1 extra employee for each new 650 employees. If this bill, H. R. 6000, classes our 20,000 salespeople as employees, it would require over 30 more persons for us to employ locally. Of course, we could not operate. "We have no control over these 20,000 independent salespeople. They do not even sign their name to applications. Many of them sell various lines of merchandise, and how could tax be figured in these cases? They collect their own profit when they make the sale. No wages are involved. There exists no means by which a wage could be established beyond guesswork, because we are not sure what prices they charge since we require only the "balance due" to be received by us. There are no pay rolls, no rate of pay, and no pay periods. Except in the mind of the salesperson no one knows how much time is put in." There are no doubt a large number of business concerns in the United States similarly affected by subsection 4 of this bill. In our effort to increase and extend social-security benefits, and I favor these increases in benefits, we should not harm private enterprise. It is through employment by private enterprise that the part-time salespeople earn a livelihood. Many of these persons will be unable to secure employment if business concerns like the Wilknit Hosiery Co. are not able to profitably use the services of part-time salespeople. It is my hope that this committee will eliminate subsection 4, and more clearly define the word "employee" as used in the bill. DEPARTMENT OF AGRICULTURE, Hon. WALTER F. GEORGE, Chairman, Committee on Finance, United States Senate. DEAR SENATOR GEORGE: This is in reply to your request of October 14, 1949. for a report on H. R. 6000, a bill to extend and improve the Federal old-age and survivors insurance system, to amend the public assistance and child welfare provisions of the Social Security Act, and for other purposes. For the present our comments relate only to those provisions of the bill which affect employees of Farm Credit Administration agencies operating under the supervision of the Department. At the present time, none of the employees of the Farm Credit institutions (except employees of 116 production credit associations in which a production credit corporation no longer owns any stock) are covered under the Federal old-age and survivors insurance system, since the basic statutes pertaining to these institutions exempt them from the tax imposed by section 1410 of the Internal Revenue Code. However, the employees of the production credit corpo rations, the Federal Intermediate credit banks, the district banks for cooperatives, Central Bank for Cooperatives, the Federal land banks, and the Federal Farm Mortgage Corporation are covered by the Civil Service Retirement Act Consequently, the employees of 1,224 national farm loan associations and 387 production credit associations are the only ones working for Farm Credit institutions who are not covered under either one of the retirement systems. On several occasions, the Department has favorably recommended the enactment of legislation which would extend coverage of the Federal old-age and survivors insurance system to the employees of these associations. Section 203 (a) on page 127 of the bill, together with the definitions of employment contained in se tion 210 of the Social Security Act, and section 1426 (b) of the Internal Revenue Code, as amended by sections 104 (a) and 205 (a) of the bill (p. 34 and p. 186 respectively), would make all national farm loan associations and production credit associations subject to the tax imposed by section 1410, and would cover their employees under the Federal old-age and survivors insurance system. The Department favors these provisions and strongly recommends the inclusion of both groups of associations as a part of the general legislation to broader the coverage under the Federal old-age and survivors insurance system. However, under the provisions referred to above, it appears that the Federa land banks inadvertently would also be made subject to the tax and their e ployees would come under the Federal old-age and survivors insurance system As indicated above, these employees are presently covered by the civil service retirement system. The Department believes that coverage of these employees under the civil service retirement system should be continued. Simple amesements in lines 12 and 13 on page 37 and lines 11 and 12 on page 139, which would consist of striking the words "which is partly or wholly owned by the United States" would accomplish the desired purpose, and we recommend that sut amendments be made. The suggested amendments would have the effect of exempting the Federal land bank employees so long as they are covered by the civil service retirement system, but, if such employees were ever taken out from under the civil service retirement system, they would automatically be subject to the Federal old-age and survivors insurance system. The Bureau of the Budget advises that, from the standpoint of the program of the President, there is no objection to the submission of this letter. Sincerely, CHARLES F. BRANNAN, Secretary Hon. WALTER F. GEORGE, FEDERAL SECURITY AGENCY, OFFICE OF VOCATIONAL REHABILITATION, Chairman, Committee on Finance, United States Senate, Washington, D. C. DEAR MR. CHAIRMAN: I have followed with considerable interest the hearing that the Committee on Finance has been conducting on H. R. 6000, am set, ti extend and improve the Federal old-age and survivors insurance system t amend the public-assistance and child-welfare provisions of the Social Secr3 Act, and for other purposes. During the course of these hearings, several witnesses, in discussing the problems and needs of disabled persons, have indicated that practically all totally and permanently disabled persons can attain economic security through the State-Federal program of vocational rehabilitation and that the introduction of a contributory program of disability insurance would not be necessary to achieve this objective. Such statements have deeply concerned me and warrant, it seems to me, further clarification. I would appreciate having this letter inserted in the record. There is no doubt that the rehabilitation of disabled persons so that they might enter upon or return to work and become self-supporting is a sound investment in the conservation of our human resources. At the same time, it must be recognized that persons who come within the category of totally and permanently disabled for all forms of employment represent, in the main, those disabled persons for whom the possibilities of vocational rehabilitation are at present extremely limited or nonexistent. Further, there are certain economic problems associated with total and permanent disablement which cannot be met through the provisions of the existing vocational rehabilitation program. On the basis of the information which follows it is my opinion that permanent and total disability insurance would provide in part for an important and as yet unmet need, and would greatly facilitate the rehabilitation of disabled persons. One of the major problems confronting disabled persons who are capable of being rehabilitated is the need for financial support for themselves and their dependents between the onset of disablement and the time they are physically and otherwise capable of undergoing rehabilitation. The State-Federal program of vocational rehabilitation does not authorize financial assistance to disabled persons during this period of their disablement. Data from some of our periodic studies of persons rehabilitated by the State agencies point up, at least partially, the extent of this problem. Sixty-five percent of the 58,020 disabled persons who were rehabilitated by the State agencies during the 1949 fiscal year were reported to have had a prior work history of substantial employment at the time they were interviewed for rehabilitation, whereas 14 percent had never worked, and 21 percent had some work experience that was considered unsubstantial. Ten percent were dependent upon either public or private relief as the major source of support. Twenty-six percent were dependent upon wage earnings, which includes some living on savings from recent earnings as well as those who were currently working (mostly part time) but nevertheless required rehabilitation services to continue their employment or to secure more suitable employment. Some type of insurance benefits were reported as the major source of support for only about 8 percent of the cases-this includes 3 percent whose major source of support was workmen's compensation. An additional 10 percent were dependent upon friends, long-term savings other than insurance, and other miscellaneous sources. Therefore, approximately 46 percent of the total group were dependent upon their families for their major source of support at the time they were interviewed for rehabilitation services. These facts appear even more significant when one considers that close to onehalf of the total group had one or more dependents at the time of application for services under the vocational rehabilitation program. As will be pointed out later, it should be kept in mind that only a portion of the 58,020 disabled persons referred to would come within the category of totally and permanently disabled as contained in H. R. 6000. Another urgent need is that of financial support for the disabled person and his dependents while undergoing vocational rehabilitation. While maintenance is one of the services provided needy disabled persons it is available only in connection with certain other services and solely during the period the individual is receiving such services. For example, an individual may have completed his preparatory services and encounter several months' delay before securing suitable employment. Maintenance would not be available to the disabled individual under the rehabilitation program during this particular period. Perhaps of even greater importance is the fact that even though disabled persons in process of vocational rehabilitation may have dependents, financial assistance for the support of the families of these disabled persons is not available under the program. The lack of adequate financial means of support for disabled persons and their families during the period of rehabilitation not only frequently complicates the development of a suitable plan for the complete rehabilitation of disabled persons, but in many instances may be so serious as to make rehabilitation impossible. 60805-50-pt. 3-76 Take, for example, a manual laborer, with two or three dependents, who is found to have tuberculosis in the advanced stage. Such a person would be totally disabled and might remain so permanently. With proper medical treatment and sanatorium care over an extended period of time, there might be some chance for recovery to the point where, with rehabilitation services, he might be returned to some form of employment. He would probably require vocational training as well as guidance and counseling before he could be placed in suitable employ ment. Although his tuberculosis would be arrested, he would, in order to preserve his health, have to enter employment compatible with his physical condi tion which in some instances might require sheltered employment. His problem during the sanatorium and postsanatorium period would be complicated by the financial needs of his family. Studies indicate that this is one of the major problems in the treatment and rehabilitation of persons with tuberculosis. The worry of family responsibilities often retards the process of medical recovery. Frequently, such persons either do not enter the hospital at all, leave the hospital and return to work before they are physically able, or discontinue rehabilitation services to secure unsuitable work-only to suffer a relapse requiring another period of prolonged hospitalization and possibly leading to an early death. Without some means of financial support for his family during the long period of necessary hospitalization and rehabilitation, this man might never be able to resume his family responsibilities. Disability-insurance benefits would, by pro viding the necessary economic security for the family, reduce the psychological effects of the prolonged disability and increase the chances of recovery. Although it is recognized that not all victims of tuberculosis would come within the scope of the proposed program of extended disability insurance the above situation would be equally applicable to other types of cases of prolonged disablement. It was mentioned earlier that although all persons rehabilitated under the State-Federal rehabilitation program have some permanent physical or mental impairment that constitutes a substantial employment handicap, only a small proportion of them would be considered as totally and permanently disabled. Of the total number rehabilitated during the fiscal year 1949, approximately U percent were under 31 years of age, and somewhat more than one-third bad never worked or had only unsubstantial employment. Data are not available to indicate the number who currently are not accepted for rehabilitation because of the severity of their disablement, advanced age, or who are unable, for physical or other reasons, to apply for and undergo vocational rehabilitation. At the same time it must be recognized that some persons generally considered to be totally and permanently disabled can be rehabilitated. Some could be prepared to enter the competitive labor market whereas the more severely disabledİ might be confined to a sheltered type of employment. The State agencies have, in fact, rehabilitated many persons who would be classified as totally and perma nently disabled. For example, during the 1949 fiscal year, the State agencies rehabilitated into employment a total of 3,166 blind persons as well as 750 persons with such disabilities as multiple amputations, impairment of two or more limbs, and back and spinal injuries, including paraplegics. You may be interested in a specific example or two, as illustrative of such cases. (1) A man totally blind and part of the right arm amputated was supplied with training and equipment necessary to engage in the poultry-raising business, and he now builds his own chicken-breeder equipment and maintains an income sufficient to support his wife and two children. (2) A young man, 24 years of age, injured in an accident which resulted in total paralysis of the lower extremities. Be was hospitalized for 1 year with an additional year devoted to training in radrepairing. Necessary equipment was provided him to set up a radio-repair step in his own home. Without these services he probably would have continued to be totally and permanently incapacitated for gainful employment. (3) A young man with double leg amputations was supplied with artificial legs, training in their use, and institutional training in watch repairing. He is now snoveset: "J employed and supporting his wife and children. Without these services be di doubt would be classified as totally and permanently disabled. Although many persons considered to be totally and permanently disne could, under the most favorable conditions, be rehabilitated. I believe there would remain a substantial number of such persons for whom vocationa) re2 vbilitation would not be possible. This is particularly the case for the older — sip. For example, about two-thirds of all those disabled for 6 months or more are in the 45-65 age group. A large portion of those who might qualify for disah "T benefits under H. R. 6000 would be older persons with heart or other forTIN U chronic diseases who could not, even under present economie conditions, de |