given to the maintenance by the States of their rightful role in these worthy efforts to protect the welfare of their citizens.

Despite past differences of opinion, the principles of Social Security are accepted by the American public as a permanent feature of our governmental pattern. Indeed, before the war virtually every civilized nation in the world had acknowledged the necessity for such measures. But let it be emphasized that such programs should not be devices whereby the individual is relieved of responsibility to provide for himself. Rather they should represent the mechanics through which a measure of protection, otherwise unobtainable, is achieved.

America_became great through private initiative and the self-reliance of its citizens. Properly conceived and sanely administered security measures are designed to complement the efforts of the individual, not to smother them. This fundamental fact must be considered in determining the scope of the field to be covered and the nature of each program.

There are Federal laws now in effect covering old-age and survivors insurance, and Federal laws supplemented by State enactments pertaining to old-age assistance, aid to dependent children, maternal and child welfare, public-health work, and aid to the blind. There are State laws covering the payment of compensation during unemployment, as well as workmen's compensation for industrial injuries sustained.

During the past year various proposals have been before Congress seeking major changes in existing Federal social-security legislation. Underlying all these is the philosophy that the Federal Government should assume more and more authority in this field. In two important phases, the present State program would be completely federalized.

These bills propose to broaden the coverage and liberalize the benefits under Federal old-age and survivors insurance. They provide for a new Federal program covering permanent disability benefits, a Federal program covering temporary disability, a Federal system for medical care and hospitalization. Our present State systems of unemployment compensation would be superseded by a national system paying benefits on a uniform basis. The employment services "loaned" on an "emergency" basis at the request of the President would never be returned to the States.

To thoughtful citizens, anxious to maintain their governmental system as it was originally conceived, the foregoing proposals contain at least three dangerous elements:

First. The Federal Government would be extending its social services into fields never before invaded.

Second. There would be no proper division between State and Federal authority, in fact, State participation would be practically eliminated.

Third. The already overtaxed public might not be able to stand the additional financial burden.

Public assistance has been established as a responsibility of government. It is a responsibility to be discharged as long as there are human beings in need of the basic necessities of life. It is logically a program under which the existence of such need should be determined by objective methods by local agencies fully familiar with local conditions.

One of the most serious problems confronting the Nation today is aid to the indigent sick-not only those receiving public assistance but those unable to pay for the type of medical care they should receive. Measures have been proposed whereby the Federal Government would regiment medical science. It is suggested that the central government should exercise controls which, throughout our history, have been left to the discretion and integrity of the medical profession. Federal intervention to the extent suggested would be most unfortunate. While revisions and readjustments may be necessary, the medical profession can be depended upon to meet the emergency, without submitting to the dictation of government. Furthermore, the States can be of great assistance in this regard by the extension of medical services, in cooperation with the profession, so that modern medical care shall not be denied the suffering.

Another problem is the matter of temporary disability, sickness, or accident, which results in loss of wages and is not compensable under State workmen's compensation laws. That there is both merit in and need for such a program is evidenced by the ever-increasing number of private plans providing such protection. One State, Rhode Island, already has a law under which cash benefits are paid to the worker who is unable to work because of illness. This subject deserves exploration by the States.

Mere reference to children's services brings into focus the perplexing problems affecting the future generation. Too much home life is being disrupted. Health hazards are continually being created. Children, in alarming numbers, are living in overcrowded houses under deplorable conditions.

The answer may not be easy to find, but it is certainly not in the shirking of responsibility by the people themselves. They should be assisted by their immediate governments, the States. Would it not be helpful to have the States establish over-all commissions to deal not only with youth problems but to conduct continuing studies of all phases of civilian services? If such a commission would combine the experience and facilities of State Departments of Education, Health, Public Welfare, and Mental Hygiene, of the Judiciary, of Parole and Correction, and be fortified by sound advice from outstanding men and women, there would be supplied an agency to meet present-day needs.

Unquestionably the day is coming when calm and deliberate consideration of changes affecting our long-range social security program will be in order. It is the history of social legislation that it never reaches a point of perfection.

All of you will remember the so-called war displacement benefits bill introduced early in 1942. At that time it was said an emergency existed in connection with the conversion of plants from peace to war production. Three hundred million dollars of Federal funds were offered to meet the supposed emergency, in return for Federal control over State laws. Today, the same interests which sponsored that 1942 legislation are trying again to federalize our unemployment systems. Again, today, it is claimed that an emergency exists in connection with conversion from war to peace time production.

Now, as in 1942, we are told that an emergency confronts the Nation which the States cannot meet. We were told in 1942 that there was no thought of federalizing our State systems; that all they wanted to do was to aid us with some extra money out of the Federal Treasury.

In passing, it is interesting to note Maryland's experience in the matter of adequacy of its reserve fund. Despite the dire predictions, the fund has nearly tripled since 1942. We have the same confidence in the future as we had then. The bait of Federal money is again being dangled before our eyes. It is a tempting lure, but all of us are fully aware that Federal money means Federal controls.

Those of us who feel most strongly that State systems of unemployment compensation are preferable to a uniform national system have sound reasons for our convictions. There is always grave danger to our form of government in the centralization of power at the Federal level.

The very nature of the problems which arise in unemployment compensation is such that the States can function more effectively and efficiently.

The several States present a variety of patterns as to their economic structures. Each State law is designed to meet the conditions prevailing in the individual State because its effect is essentially local in character. With an understanding of local situations the State is the proper jurisdiction to determine what constitutes a labor dispute, what type of job referral is suitable for the unemployed worker, what constitutes good cause for quitting employment, the amount of weekly payments, and the period of time during which payments are to be made.

The correct answer in one State might prove wrong in another. General rules and regulations prescribed for use from coast to coast cannot be applied with equal success everywhere.

We doubt the ability of a single official in Washington to prescribe regulations which will apply satisfactorily from Maine to California. The intimate contact necessary to efficient administration with tens of millions of individuals can best be supplied by local and State authorities.

If effected, the proposed radical changes in this field would mark a turning point in Federal-State relationships. For this reason thorough consideration is not only justified but demanded.

Federalization of the State unemployment compensation programs would ultimately, inevitably, result from any plan providing Federal money for the payment of State benefits.

The sponsors may point out that some current proposals for Federal aid would leave administration with State governments. But such local administration would be only a shell, with the substance destroyed. Federal standards would control.

Under any of these plans, the Federal Government would either force or induce (through Federal funds) compliance by every State with the views of Federal officials on all basic questions.

The Federal Government would ultimately fix the benefits to be paid to all classes of individuals. It would fix the rules by which administrators would determine whether individuals are voluntarily or involuntarily unemployed.

The benefits and the rules under which benefits are paid would be identical in all States, regardless of local conditions or local desires.

State administration would be reduced to the routine of carrying out orders handed down from Washington.

The functions of State legislatures would be reduced to enactment of enabling legislation to permit the Federal program to operate.

Suggestions that a temporary program be adopted only for the reconversion period are unrealistic.

If the Congress once makes Federal funds available for payment of State benefits, thus usurping States' responsibility, the States will, in effect, be invited to seek a permanent Federal subsidy.

The result will be permanent, uniform, federally controlled unemployment compensation.

The

Present State programs are supported by earmarked employers' taxes. cost is clear to everyone concerned. But under a Federal program the cost would be hidden in general Federal taxes, merged with general revenues. Unemployment compensation would become another major Treasury leak, contributing to higher and higher Federal deficits and to higher and higher general Federal tax levels.

An interesting argument is being made that unemployment compensation resulting from the war should be paid for as a war cost. As a matter of fact, the present State systems are being paid for in this manner. The States have accumulated a reserve of almost five and one-half billion dollars against future unemployment benefit costs. Half of this amount has been accumulated since Pearl Harbor.

But what of a Federal program? The Federal Government has levied no tax for this purpose. The Federal Government has no resei ve. The only place the Federal Government can get money for this purpose is from taxes levied in the future.

There is no way now that Federal unemployment-benefit grants can be paid out of war taxes.

Again, it must be realized that if a Federal subsidy is added to these State funds, the cardinal principle of unemployment compensation is destroyed. The present system is insurance based on actuarial principles. It is not relief. Change that purpose by putting all workers on what would be virtually a dole basis and the purpose and aims are definitely lost.

It is timely to recall the transfer of the State employment services to Federal control shortly after Pearl Harbor. This action, taken at the request of the Commander in Chief of the Army and Navy, was approved by the Governors of the country upon the representation that it was necessary for the fullest utilization of manpower for war production. But it was definitely understood that it was to be temporary.

The time is approaching when these services should be returned to the States. General information bears out the contention that the need for Federal direction is ending, if it has not already passed. The States are capable of carrying on these services as they did in the past.

Such an employment service is an integral part of unemployment compensation. It must be responsive to the quick changes occurring in the State labor market. It is essential to the normal operations of business and labor and must have their full support. Last, but not least, it can play a major role in post-war planning at the local level and in readjusting our returning veterans into civilian life.

I have dwelt at some length on the proper role of our national and State governments in the field of unemployment compensation because proposals are currently pending to put the National Government in the saddle and even to eliminate State functioning entirely. But I am also keenly aware that similar trends exist in many other fields, which must be as vigorously resisted.

We must be on guard against undue centralization of governmental powers lest we destroy our system of government and the democracy our sons are fighting to preserve.

What then is the alternative, if the Federal Government is not to be expected or allowed to take the controlling part in these matters? The answer is that State government must and will assume its rightful place as one of the dual sovereignties.

It must never be forgotten that the State governments are an integral part of our organized freedom. The deeper we go into the throes of war, with its ramified efforts, the more clearly is it apparent that the war effort here at home is furthered by State sovereignty. This pattern is not 48 subdivisions of government, but rather 48 vital functions of the united organism.

But

Others may have wondered how this miracle of America was wrought. those who have understood the inherent value of the States, as sovereign governments, have no reason to wonder. The fact is that the Nation was made great by its formation from the sum of 48 smaller nations. Each of these nationsStates we call them-has ever remained an identity unto itself. It chooses its own official leaders, enacts its own laws, levies its own taxes, maintains its own militia has its own sense of pride, its boundaries, and to some extent its own language.

But instead of being a deterrent to national unity, these 48 regional principalities are actually the stones out of which the temple is built.

The America we know was born of principles not possible of transplantation from the spot of their origin to a central governmental area. These principles and policies flourish best in the climate where their seeds took root.

The ideal of liberty was not the manufactured result of the statesmen's handiwork. Rather the thoughts and the words written into America's charter were merely the reflections of the thing itself. Before Thomas Paine ever used the expression "United States of America," Pennsylvania had given us Valley Forge; already Americans had died for liberty at Bunker Hill, and every hamlet and farm from the rocks of the North to the savannahs of the South had sent the flower of its manhood to fight for the Stars and Stripes, the symbolic emblem of 13 States but only one Nation.

Before Daniel Webster uttered the words "Liberty and Union, one and inseparable, now and forever," the mold previously had been cast. The fact that freedom and unity were the twin pillars of our Nation had already been established on the decks of the Bon Homme Richard and on the ramparts of Yorktown. Webster's words, no matter how eloquent, were but the echoes of the cannonades of John Paul Jones and of the battle cries of the men whose charge broke the last stand of Lord Cornwallis.

The liberty bell in Philadelphia finds its echoes in the humming factories of Detroit; the thundering cannon of Old Ironsides have their continuation in the naval exploits on the vast waters of the Pacific, wrestling island after island from the Japanese. The descendants of men who crossed the nearby Delaware River to smite the Hessians and other descendants of men who defended Fort McHenry, in my own State, where the Star Spangled Banner was written, will soon be crossing the English Channel in an invasion that will carry on to Berlin. Such was the background for the drama which was unfolded in the adoption of the Constitution, when the founders of this Republic prefaced it with the words "We, the people." They had in mind the people of the States who really composed the Government and for whom the National Union was founded. They referred to people from north, south, east, west; from city or village-farm worker, factory worker, office worker.

These very people, whether they be of the 1770's or of the 1940's were and are basically the same; they have believed in the principle which holds that the government is best which is closest to the people. The present-day generation considers it a duty to carry out the original concept of this dual sovereignty by maintaining the States in the fullest plenitude of their power. They insist upon keeping up the basic partitions upon which the country was founded. They are determined to prevent the deprivation of State responsibilities and to avoid the centralization of Federal power

Into this setting will be brought the social-security program of tomorrow. It looms up as one of first importance for the years immediately ahead.

The desirable route in the handling of social-security problems will be along State lines so that economical and efficient operation may be achieved. The return of State responsibilities and State powers must be sought insistently. Friendly cooperation with the National Government on those matters which of necessity take their way to Washington is of course to be desired. But socialsecurity measures and their administration will be successful to the extent that the combined knowledge, experience, and traditional policies of the various States are brought to bear upon the subject.

Such full use of State processes will make for strength and stability of these sovereign governments. It will also operate eventually to the proper and res

tricted use of the Federal power. In short, it will make for and maintain the original and the all-desirable pattern of "an indestructible Union of indestructible States."

The CHAIRMAN. Mr. Connelly.

STATEMENT OF EDWARD F. CONNELLY, ASSOCIATED INDUSTRIES OF MASSACHUSETTS

The CHAIRMAN. Mr. Connelly, will you identify yourself for the record, please?

Mr. CONNELLY. My name is Edward F. Connelly. I am assistant to the president of Crompton & Knowles Loom Works, of Worcester, Mass. I am here this morning representing the Associated Industries of Massachusetts. The Associated Industries of Massachusetts is composed of manufacturing companies employing some 90 percent of the industrial workers of the State. I am here to present the viewpoint of that association with respect to the matter before the committee.

Briefly, it is this: We oppose any change in the present FederalState unemployment relationship that would nullify the powers of the State Unemployment Compensation Divisions and that would vest in the hands of the Federal Government and Federal bureaus more extensive powers of control over the operation of that system. Now, with the indulgence of the committee, I should like to present the reasons for that position.

First, if I understand it correctly, this committee is concerned with the problem of post-war demobilization of industry and the immediate post-war problems involved in the transition of the human element from a war economy to a peace economy.

If I understand it correctly also, this committee is consdering the advisability of changes in the present relationship between the Federal Government and the States, as such relationship relates to unemployment compensation, only insofar as such changes might be of value as instruments in meeting the human problems involved in the transition from a war- to a peace-time economy.

I feel I may be incorrect-that the whole broad subject of what should be the proper relationship between the Federal Government and the States in this unemployment-compensation question is not at issue. Undoubtedly there is much ground for opinion one way or the other as to the inadequacy of the State laws in some respects, but I am going on the basis that this committee is only interested in whether or not these inadequacies are such that their adjustment would substantially contribute to the solution of the problems we will have in the transition from a wartime economy to a peacetime economy.

Therefore, the question seems to come down to this: Are the present unemployment-compensation systems of the States in such a position of solvency that they can during the transition period meet the payment of unemployment benefits under the benefit structures as they now exist? Or, would it be necessary, under such benefit structures, for the Federal Government to come in and subsidize the State systems in order that such benefits could be paid?

Speaking for Massachusetts and the Massachusetts unemployment compensation fund, there is nothing that exists at the present time that in any way leads me to believe that the reserve fund of Massa