effectively placed in industry. Even able-bodied workers in the older age groups find it hard to secure new jobs when out of employment for 6 months or more. For totally and permanently disabled workers in similar circumstances, finding employment in the competitive labor market is even more difficult. Although rapid strides are being made in the successful placement of disabled persons in industry, self-employment, and sheltered employment, it may take many years before a significant portion of the totally and permanently disabled are absorbed in the labor market. A contributory disability-insurance program would provide this group with protection against the contingencies of early forced retirement resulting from disablement. During the process of the hearings some witnesses have indicated that the availability of disability benefits, even when small in amount, would encourage persons to accept benefits rather than undergo vocational rehabilitation. This position is not supported by experience in the administration of the publicly supported program of vocational rehabilitation during the past 30-year period. Within this period a substantial number of disabled persons who were recipients of insurance, workmen's compensation, or similar benefits have been rehabilitated annually. I am sure you will find that the experience of the Veterans' Administration in the vocational rehabilitation of veterans with serviceconnected disabilities, of both wars, will substantiate our experience. The experience of rehabilitation centers such as the Institute of Rehabilitation and Physical Medicine in New York, curative workshops, and similar facilities, in which many of the patients are beneficiaries of some form of financial assistance, I am sure will provide similar evidence. The fact that industrial compensation insurance carriers utilize these facilities in providing services to beneficiaries and the fact that one insurance carrier has established its own rehabilitation center is another case in point. It is my belief, which I am confident will be confirmed by those administering vocational rehabilitation in the States and other authorities in rehabilitation and allied fields, that disability benefits, especially when modest in amount, would have a positive influence and with few exceptions would facilitate materially the vocational rehabilitation of disabled persons. In fact, in many instances meaning the difference between success or failure. In addition to providing a source of support for a number of disabled persons undergoing rehabilitation, another way in which a disability insurance program would facilitate vocational rehabilitation is that it would assist in the early referral of disabled persons for services. In this connection, I wish to point out that early provision of vocational rehabilitation services is important in the successful rehabilitation of disabled persons and is therefore important in keeping the number of persons who cannot be rehabilitated at a minimum. Rehabilitation can be more easily accomplished if services to the individual are initiated as soon as possible after the onset of disability-before the disabled person becomes discouraged and apathetic and before he loses his working skills. The problem of reaching disabled persons while they are still in the early stages of disability-one that has been somewhat troublesome to the State rehabilitation agencies-would be reduced considerably under a program of disability insurance. Before closing I wish to point out that the complementary nature of rehabilitation and disability insurance has long been recognized. Back years ago, it was apparent to those charged with the administration of workmen's compensation laws that the seriously disabled workman needed retraining, often in an entirely new occupation, if he were to make a successful job adjustment. In fact, the support given by such groups for public provision of vocational rehabilitation for civilians was an important factor in relation to the passage of the Vocational Rehabilitation Act of 1920. The Federal Employees' Compensation Act Amendments of 1949 (Public Law 357, 81st Cong.) including provision for the vocational rehabilitation of permanently disabled Federal employees drawing benefits under the act. Recently the importance of rehabilitation in relation to the payment of disability benefits has been emphasized in the way that the State-Federal vocational rehabilitation program has been cooperating with the officials of the welfare and retirement fund in rehabilitating disabled mine workers. With respect to disabled veterans of both wars, Congress has recognized the complementary nature of the two by providing rehabilitation services for veterans drawing disability benefits. Finally, may I emphasize, that rehabilitation does not obviate the need for a disability-insurance program. An expanded program of vocational rehabilitation is necessary in order to reach all of the disabled who are in need of and can benefit from such services; a program of disability insurance will assist by rounding out the rehabilitation program and in meeting the needs of those disabled persons who have no prospect of returning to the labor market. I urgently recommend that a program of disability insurance be enacted. Sincerely yours, MICHAEL J. SHORTLEY, Director. AMERICAN HOTEL ASSOCIATION, Hon. WALTER F. GEORGE, Chairman, Senate Finance Committee, United States Senate, Washington, D. C. DEAR SENATOR GEORGE: In connection with H. R. 6000, which is currenty before the Senate Finance Committee in executive session, we are eager to place one further statement before your committee. We are aghast at the misinformation and erroneous figures which were included in the statement of Mrs. Imogene B. Wright, who, as the final witness before your committee, testified regarding tip income of service personnel in hotels and restaurants. Mrs. Wright estimated : (1) That there are three-million-odd service workers who receive tips or gratuities; (2) That a grand total of $2,030,000,000 a year in tips is received by these employees. Page 913 of the 1949 Statistical Abstract of the United States shows that there are a total number of employees in restaurants equaling 594,648. Obviously this includes all employees, and not simply those servic employees who are in position to receive tips. Page 193 of the abstract shows total employment in the Nation's hotels of 607,575. In the testimony of Daniel J. O'Brien, whe appeared before your committee, representing the American Hotel Association. appears the estimate that no more than 30 percent of employees in the Nation's hotels work in those departments which dispense food and beverages. This would account for only 182,272 people out of the total number of employees quoted above. Here, again, this includes all employees in the food and beverage department. So these Government figures reveal that less than 800,000 employees are engaged in restaurants and hotels in the food and beverage departments, and even this number is not in position to benefit from guests' gratuities. Then, Mr. O'Brien testified that total tip income of service employees in hotels of the Nation is $70,000,000 annually. This is based on gross sales of food and beverage departments of approximately $1,000,000,000. In the light of these reputable estimates by the industry, coupled with official Governmer? figures, it is readily apparent that Mrs. Wright's statistics appear to be with at foundation whatsoever. Finally, Mrs. Wright urged that H. R. 6000 be amended in a manner which would make the tip income of service employees subject to pay-roll tax as a means of enhancing old-age and retirement benefits for these employees. We call to your attention the fact that under current Bureau of Internal Revenne procedure, an employer is obliged to pay the social-security tax on any up income declared by the employee. So, if this service personnel is desirons of enhancing their own social-security coverage, they have only to make a declaration to their employer of tip income under existing regulations. No modification of the statute is necessary to achieve this objective. DEAR SENATOR GEORGE: This is to advise that inasmuch as New Hampshire was not represented at the hearings before your committee on H. R. 6000 and since this State has a major interest in such legislation, not only in the proposed amendments relating to public assistance but also those relating to the soon security system, we should like you to consider this correspondence as a statement of our position regarding the bill. This department, like other State agencies concerned with the administration of assistance, has long been disturbed by the growing size and cost of assistance programs. It is our opinion that public-assistance programs, which are based upon a needs test, were never intended to care for the large number of persons who are now forced upon them. We do not look with enthusiasm on growing assistance programs. Our board of public welfare and the administrators of the agency itself have been alarmed both by the failure of the contributory social-insurance system to keep pace in benefit levels with the rising cost of living and by the failure to extend the contributory system to a larger portion of the population. Today, because the contributory social-insurance programs are not carrying their share of the burden of economic need, public-assistance case loads and costs are disproportionately greater than necessary. The result is that the taxpayers are overburdened with the cost of an ever-increasing publicassistance program. It is, therefore, our conclusion that the present old-age and survivors insurance program be extended in coverage, its eligibility requirements liberalized, and its benefit payments increased substantially. Another matter of grave concern to New Hampshire is medical care. An item of cosiderable expense in the administration of public welfare in our State today is medical and hospital care. The present provisions of H. R. 6000 limit Federal sharing in medical-care cost to those individual cash grants which do not exceed Federal matching. In a State such as New Hampshire, where the average monthly payment is so close to the Federal ceiling, the medical-care needs of most recipients must be met largely from State and local funds. We therefore urge the committee to consider the advisory council's recommendation for a new and separate reimbursement formula for medical care furnished assistance recipients. In conclusion, may we express the hope that the committee will find it possible to extend coverage, to liberalize benefits realistically, and otherwise strengthen old-age and survivors insurance, which from the point of view of public welfare, is basic to the country's total social-security program. We feel that if the Congress will act now to extend this self-financing method of assuring security, a method already in accord with our American tradition of independence, we can definitely look forward to the time when public-assistance case loads and costs will diminish. Respectfully submitted. JAMES J. BARRY, Commissioner. TEXAS TRADE ASSOCIATION EXECUTIVES, Hon. Toм CONNALLY, United States Senate Office Building, Washington, D. C. DEAR SENATOR: On behalf of the attached list of 28 Texas trade and business groups representing 40,000 Texas employers, we will appreciate your attention to the attached statement of our views regarding H. R. 6000. Our attention has been required on so many other matters lately, such as wagehour legislation, etc., that only recently were we able to consider these proposed amendments to our Social Security Act. We are now advised that hearings on this bill before the Senate Finance Committee will be concluded on March 24. Therefore we will greatly appreciate it if you will file this statement with the Senate Finance Committee on our behalf, in lieu of a personal appearance which would be impossible at this late date. While we have listed some of our specific objections to H. R. 6000 on the attached statement, it is our further opinion that the bill as a whole is unsound and unworkable, and if such a course is pursued it will result in irreparable harm to our national economy. We feel that Congress should adopt an entirely new approach toward amending our present Social Security Act. Respectfully yours, GENE EBERSOLE, President, TEXAS TRADE ASSOCIATION EXECUTIVES. STATEMENT OF TEXAS BUSINESS AND TRADE REPRESENTATIVES REGARDING SOCIAL SECURITY ACT AMENDMENTS OF 1949 Some of the features of this bill which we consider most objectionable are as follows: 1. Definition of employee.-The common-law rules are broadened by the addition of seven factors to be considered in determining employee status. These factors ignore legal considerations in the determination of this status and there is placed in an administrative agency substantial power to determine such status, Since this bill generally broadens the Social Security base, the agency will inevitably take the position that all persons doing any character of work for an employer are employees. The social aspect of this amendment strikes at little businesses and independent contractors and the trend will be for the employer to discontinue doing business with such persons due to the uncertainties and increased costs with respect to tort liability, wage-hour liability, and similar prob lems, or for employers to take over such businesses or contractors, either & ternative being contrary to the principles of independent enterprise. The uncertainty under this definition will lead to increased administrative costs and prolonged litigation. If this definition is adopted it will probably be incorporated in the Federal and State unemployment compensation laws and in the law requiring the withholding of income tax at source which will further increase business costs. 2. Definition of wages.-This bill raises the annual wage base from $3,000 to $3,600 and therefore substantially increases the tax of both the employer and employee. Proper benefit increases can be made without this change. In addition, it also needlessly complicates present business pension and retirement programs based on the $3,000 wage limit. This $600 annual increase would probably be extended into Federal and State unemployment compensation programs, resulting in further increased taxes. 3. Public assistance.-The proposed act makes more Federal funds available * the States for public assistance to those not included in the Federal social-se rity program, for example, old age, blind, dependent children. This is further Federal encroachment on State powers. Effective social security should de crease, not increase, the need for public assistance and since H. R. 6000 increases public assistance it promotes Federal socialization. 4. Permanent and total disability. This proposal would create a new prod of insurance against loss of earnings due to permanent and total disabi Insurance companies have found this unworkable and extremely expensi Subjective claims for disability are impossible to evaluate. Such a na program encourages worker laziness and security greed, and furnishes an effe tive national mechanism for vote influence. It is our sincere belief that the basic issues involved in this legislation are of such significance and are such a radical departure from our present system that it behooves our Congress to reconsider the entire approach to the probe of amending our present social-security laws. While some remedial legislation may be necessary, we do not believe it should be done in the manner prop si in H. R. 6000. LIST OF TEXAS TRADE AND BUSINESS GROUPS JOINING IN THE FOREGOING STATEMENT Texas Private Truck Owners' Associa- Associated Credit Bureau of Tux2 tion. Texas Lumbermen's Association. Dallas Chapter, Associated General Contractors. Texas Good Roads Association Texas Association of Life Under writers. Texas Hardware and Implement Ass ciation. Retail Furniture Association of Texas Associated Employers, Inc. Texas Appliance and Air-Conditio& "; Texas Retail Dry Goods. Asexbit tion. Texas Wholesale Grocers Asociatie: Southwestern Ice Manufacturers' Asso- Texas State Association of Builds ciation, Inc. Owners and Managers. LIST OF TEXAS AND TRADE BUSINESS GROUPS JOINING IN THE FOREGOING STATEMENT-Continued Texas Association of Employers. Texas Restaurant Association. San Antonio Manufacturers Associa- Texas Butane Dealers Association. tion. OLD-AGE AND SURVIVORS INSURANCE FOR FARMERS (Statement Submitted by W. I. Myers, Dean of the New York State College of Agriculture, Cornell University, Ithaca, N. Y.) This statement deals with reasons favoring the extension of the old-age and survivors insurance program on an all-inclusive basis to self-employed farmers. 1 strongly favor extension of this program to hired farm workers also, but I shall not add to the testimony already presented in favor of this proposal. Instead, the entire statement is devoted to reasons why the program should be extended not only to the urban self-employed as provided in H. R. 6000, but to farmers as well. Conditions on farms are almost completely different from those of a century ago. Formerly farm families were relatively self-sufficient and independent. Little capital was required and most of the things which were needed on the farm and in the home were produced on the farm. The welfare and future of rural people depended largely on factors which were under the direct control of the farm family. The modern farmer, however, is a businessman who usually has to go into debt not only for his farm but for livestock and machinery as well. He buys large quantities of raw materials and sells them as manufactured or partly manufactured goods. Although most farmers raise part of their own food and do not have to pay rent, total cash farm family expenditures frequently exceed the value of things which are provided by the farm and used in the home. The liquidation of the debt involved in financing a modern farm business usually requires most of a working lifetime, even under favorable conditions. This continued and progressive commercialization of farming has made the welfare of farmers increasingly dependent on factors beyond their control. A severe and prolonged decline in prices received for farm products, for example, can wipe out a lifetime of savings and destroy any possibility of income for their declining years. Farmers who happen to be born at a time which enables them to liquidate their debts under a stable or rising price level are fortunate. More farmers, however, are likely to encounter one or more periods of declining prices which may delay or prevent the repayment of their debts. Economic security for farmers which was relatively certain a century ago has now become difficult and in most cases inadequate. Increasing numbers of older farmers now approach their retiring years with uncertainty concerning sources of funds to meet their cash living costs. At this point I should like to make it clear that I have no plan to remove all or even most of the risks and uncertainties involved in farming. It is, of course, impossible and in addition might be undesirable. Nor do I favor changes in the old-age and survivors insurance program which would assure sufficient retirement income to meet all needs of retired persons during their declining years. I do, however, favor extending the present old-age and survivors insurance program on a compulsory basis to self-employed farmers to give them a minimum level of retirement income to which they can plan to add income from savings, investments, and insurance, and provide, if possible, sufficient income to meet all of the needs of their declining years. The reasons for favoring this extension of the program are as follows: Farmers face same risks as others.-It cannot be denied that farm people experience about all the hazards faced by city people. Old age and death play no favorites. Although the needs for their retirement years are lower in terms of dollars for farm people than for city people, the need does exist and provision should be made for meeting the need. In fact, it might be argued that farmers are more in need of OASI benefits than wage-earners because of the uncertainty and wide variations in net income in contrast to regular wage earnings which are more conducive to a planned savings or retirement program. Many farm people have some OASI credit.-There is no way of knowing exactly how many farm operators have worked in covered employment or how |