ment compensation is concerned. Until such time as it is clearly evident or demonstrated that we are unable to handle that, we feel that the Federal Government should not participate and should permit us to carry on. At the present time we have $158,000,000 in our fund; and if I may project that to 1945 and 1946, we will have better than $250,000,000 to take care of our problem in Massachusetts.

We have, the Advisory Council of Massachusetts and myself, been studying this problem, following it very closely ever since the beginning of this war and we have been looking ahead. We have been working with the post-war committees we have in Massachusetts, both legislative and those who are working with industry. On the basis of all of our studies we are definitely convinced that this sum is adequate.

Now, thirdly, we recognize that we have approximately, 100,000 employees of the Federal Government who are in the navy yards, arsenals, and so forth. They are not taken care of at the present time. We feel the Federal Government might well make some provision for them. I might point out that the present fund we have is raised by taxation of the employers only in Massachusetts and the thought has been in Massachusetts that that fund was for private employment. We do not believe it is fair that this fund provided by private enterprise should be used to pay Federal employees. Therefore, the Federal Government may rightfully participate and contribute taxes.

We believe the benefits should be based upon the same eligibility qualifications and at the same schedules that are paid in Massachusetts so that neighbors living alongside each other will be paid the same amount of benefits and that perhaps the Federal Government could reimburse us for the expenditures we might make.

Beyond that the problem of coverage on a long-term proposition is one that must be worked out through Federal-State action due to present inability to cover them under our law due to the fact that they are Federal employees. In Massachusetts we have a duration of 20 weeks, we have a maximum benefit of $18, graduated from $6 to $18. On the lower level, the $6 level, it is possible for a person there earning $3 a week, which would give them 52 weeks employment, or $150 a year, to get $6 a week for at least 5%1⁄2 weeks, which on a weekly basis is 200 percent of their earnings. It goes up to a $30-a-week man who is entitled to $18. In other words, our schedule is approximately on the basis of 67 percent of the average weekly earnings in the higher quota. If that was reduced on the average weekly earnings on an annual basis, it probably would come close to 80 percent of the average weekly earnings on that basis.

The Massachusetts Legislature at its last session went into this matter of adequacy very thoroughly and adopted the present schedule of benefits. They are meeting in 1945 and the advisory council is already reexamining this question of adequacy and I am very certain, we are all certain in Massachusetts, that the legislature can determine all these questions for our State and we much prefer to be left alone.

Senator TAFT. What is your situation as to merit rating?

Mr. MARSHALL. We have had a merit rating there since 1940, I think effective 1941-42.

Senator TAFT. You think it tends to spread employment to companies trying to secure that benefit?

Mr. MARSHALL. The experience is still short, as we feel, but we found it has stimulated stability of employment. We find employers up there spending a great deal of time, establishing research departments, and trying to arrange their products, get new products in, so they can give employment to people 52 weeks of the year.

Now, the stability of employment in Massachusetts at the present time, of course, is high due to the war, but even in the nonwar industries we find that they are fairly stable.

The average rate is only 1 percent, approximately 1 percent, in Massachusetts now due to the experience rating and we find right down to construction-industries people, concerns, individuals as well, that are getting down to the lower rates, and it is on the basis of giving real jobs to people and steady jobs throughout the year.

So far I would say the indication is that it has been beneficial. Senator TAFT. It would be more important to eliminate unemployment than it is to compensate for it.

Mr. MARSHALL. We feel that unemployment compensation is just medicine, that the real cure is jobs. We are not unmindful, and I bring up the point that it is within our hands to abolish that experience rating to get more revenue in the post-war period and we can go beyond the 2.7. It is the people of Massachusetts and the employers of Massachusetts who are going to pay for any post-war benefits inevitably, and the means of getting that money is in our hands. It is not one of those situations where we have not got the sort of revenue and have to use the vehicle of the Federal Government in order to get it.

Mr. RUSSELL. You mean, Mr. Marshall, that the total assessment rate in Massachusetts is now only 1 percent?

Mr. MARSHALL. That is the average. In spite of that, we feel our fund is adequate.

The CHAIRMAN. How much have your eligibles increased during the war, that is, people who are eligible for unemployment compensation?

Mr. MARSHALL. Well, you mean covered employment?

The CHAIRMAN. Yes; covered employment.

Mr. MARSHALL. Our net is probably 350,000 more than we had before.

The CHAIRMAN. How many people outside of Massachusetts are now employed within the State in war work, have you made any census?

Mr. MARSHALL. We have not made any census. In fact, we tried to make a census but we found that tying in the Social Security members and so forth, it is very difficult to get it accurately. We do not believe we have a great problem in that connection and we do not worry about that, because we shall have the interstate plan of benefits, so if they earn it and go back home we pay them the benefits anyway and it comes out of our fund.

We know the number of covered workers and what our potential liability is, which is the important thing as far as we are concerned. Also I might point out in Massachusetts I do not believe we have a conversion problem as great as some of the other States. We can go back to peacetime industries much easier than many of the other

States concerned. We have examined with interest the solvency studies throughout the States. As far as we are concerned in Massachusetts, we concur in the view that all these State systems are capable and adequate at the present time and can take care of the situation.

The CHAIRMAN. Thank you very much, Mr. Marshall. Do you wish to make a statement, Mr. Molnar?

Mr. JOSEPH MOLNAR. No, sir; but I have a bill here which I would like to file and if the committee wishes any statement about it later, I will be glad to make it.

Senator TAFT. I suggest that the bill be made a part of the record. The, CHAIRMAN. It may be made a part of the record. (The bill referred to follows:)

A BILL To create the Unemployed Service Association; to operate farms and industries cooperatively; to provide work for the unemployed; to provide necessary shelter and general relief to needy adult persons, and to promote the general social and economic harmony and security.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That the amount of one billion dollars ($1,000,000,000) be appropriated for the purpose of this Act from the general funds in the Treasury of the United States.

SEC. 2. SHORT TITLE.— -This chapter may be cited as the "Unemployed Service Association Act of 1943".

SEC. 3. DEFINITIONS. -As used in this chapter

(a) The term "Associated" means the Unemployed Service Association created under section 4 of this title.

(b) The term "Secretary" means the Secretary of the Treasury as mentioned in section 4 of this chapter.

(c) The term "Board" means the Board of Directors created under section 4 of this title.

(d) The term "Unit" means a cooperative unit chartered by the Association as provided in section 6 (a) of this chapter.

SEC. 4. UNEMPLOYED SERVICE ASSOCIATION-(a) Creation; direc'ors.-There is hereby created a corporation to be known as the Unemployed Service Association which shall be an instrumentality of the United States, which shall have authority to sue and be sued in any court of competent jurisdiction, Federal or State, and which shall be under the direction of a Board of Directors and operated by it under such bylaws, rules and regulations as it may prescribe for the accomplishment of the purposes and intent of this section. Said Board shall consist of three directors to be appointed by the President by and with the advice and consent of the Senate for a term of four years. Such directors shall receive compensation at the rate of $10,000 per annum, payable from interest on loans as elsewhere provided in this act.

(b) Capital stock; subscription by United States.-The Board shall determine the minimum amount of capital stock of the Association and is authorized to increase such capital stock from time to time in such amounts as may be necessary, but not to exceed in the aggregate $1,000,000,000. Such stock shall be subscribed for by the Secretary of the Treasury on behalf of the United States and payments for such subscriptions shall be subject to call in whole or in part by the Board and shall be made at such time or times as the Secretary deems advisable. The Association shall issue to the Secretary receipts for payments by him for or on account of such stock and such receipts shall be evidence of the stock ownership of the United States.

(c) Reorganization, consolidation, etc. of units.-The Board shall have full power to provide in the rules and regulations herein authorized for the reorganization, consolidation, merger, or liquidation of cooperative units, including the power to appoint a conservator or receiver to take charge of the affairs of any such unit and to release any such unit from such control and permit its further operation.

SEC. 5. LOANS AND PAYMENTS. (a) To effect the purposes of this Act and to provide for the maintenance and operation of the Association there is authorized to be appropriated out of the Treasury of the United States such additional sums as may be necessary from time to time for such purposes.

(b) Such association shall advance, through the use of the facilities of the Secretary of the Treasury who is authorized to make loans under the provision of this Act, under rules and regulations prescribed by its directors, $6,000 to be paid over to said Association by the Secretary and for the purposes that such Association shall allot to every family or family group or individual complying with the requirements of this Act who is without income, or whose income is inadequate to provide a standard of living compatible with ordinary health and security requirements, who makes application to become part of a cooperative unit as set up and provided by this Act.

(c) The said sum of $6,000 shall be treated as a loan to the family, or the family group, or the individual, and shall be allotted in a sum of not more than $100 per month nor more than a period of time extending five years at an interest rate of 3 percent.

(d) The maximum wage of $100 per month shall be extended to the aforementioned parties only when such parties produce goods, commodities, or articles of value to equal or exceed the sums necessary to repay or amortize the loan over a period of fifty (50) years; plus 3 percent interest charges and all costs accrued in the operation of the provisions of this Act.

(e) Hereafter, the Secretary of the Treasury shall withhold not more than 20 percentum from the applicant persons or individuals of that part taken in any of this cooperatives unit, off his earned wages in escrow of that which is effected by this act and until said unit is completed.

(f) Any applicant shall have the right to withdraw at any time and may withdraw the 20 percent in escrow.

(g) A party to or a member of any cooperative unit may withdraw from inclusion in the unit at any time he may so desire.

(h) One-fifth of surplus interest shall be appropriated for administrative

expenses.

SEC. 6. ORGANIZATION OF UNITS.-(a) Under the terms of this act a cooperative unit shall be construed to be any organization, or association, or combination, or group of individuals participating in the production, distribution, and selling of goods, commodities, articles of commerce, or services; such function of production to be organized not for the purpose of making profit, but for the maximum distribution of those goods and services produced.

(b) Such cooperative unit shall not produce for profit, but shall produce goods or services, or both, to a market value not to exceed the amount of monies necessary to provide for the amortization of those loans extended by the Congress of the United States, and to provide for the maintenance and operative costs which the cooperative unit may require.

(c) Each unit shall have the right of self-autonomy and shall govern itself and its interests by democratic principles of majority decision.

(d) Each unit shall elect its own officers and administrators for whatever term of tenure it may deem advisable.

(e) Each unit shall decide what form of production it shall engage in, it shall decide what commodities, goods, articles of value, or services it shall produce, and to what amounts or divisible portions they shall be produced, such amounts or portions not to be in violation of subsection (b) of this section.

(f) The Association shall have the right to approve the decision of the unit as concerns subsection (e) of this section, and upon that right of approval shall or shall not secure the claims of said unit for those funds appropriated to its usage by the Congress of the United States.

SEC. 7. COMPLAINTS. Any party to a cooperative unit may at any time file a complaint against the administrators or officials of the Unit for their conduct in the management of the policies or administration of the business of the Unit; such complaint to be filed with the proper authorities of the Association.

SEC. 8. INVESTIGATION.-Upon the receipt of such complaints as aforementioned in section 7, the Association shall immediately hold an investigation of the cause of such complaint and make an adjudication thereupon.

SEC. 9. OBLIGATIONS.-The cooperative unit shall in no way be responsible for any legal obligation incurred by any individual party to the unit, unless such obligation was incurred in behalf of and for the purposes of the Unit in its entirety and within the scope of its legitimate functions.

SEC. 10. CONFLICTS.-Any rules or regulations that the Unit may devise to govern the operations of its affairs and business shall in no way be understood to supersede the pertinent laws of the community, or of the State, or the United States; nor shall the operation of this Act or the bodies created by this act in any way exclude these parties participating in cooperative production under the

terms and meaning of this act from any benefits that may accrue to them as citizens of any community, or any State, or the United States.

SEC. 11. MAJOR PURPOSES.-The Unemployed Service Association shall be authorized by this legislation to build any and all kinds of buildings, including health resorts, which may be deemed necessary to fulfill the effectiveness of this Act, and manufacture machinery, commodities, and merchandise of all kinds and buy, sell, rent, or lease farms, mines of any kind, or other buildings and deal with live or dead stock or poultry or fish and provide for the transport, export, or import of same.

SEC. 12. SUPERVISION.- The Association shall approve the full use of this money to the Secretary of the Treasury through its directors and shall supervise the inspection, according to local requirements, of all produce accruing to the United States.

SEC. 13. REQUIREMENT OF FUNDS.-The money shall be paid over to the Association during the establishment and development of the same, as it may be required.

SEC. 14. REPORTS.-The Association shall make immediate report of all sale or exchange of articles to the Secretary of the Treasury annually or whenever the Secretary may require.

SEC. 15. DIVISIBIL.TY OF PROVISIONS.—If any provision of this Act, or the application thereof to any person or circumstances, is held invalid, the remainder of the Act, and the application of such provisions to other persons or circumstances, shall not be affected thereby.

SEC. 16. ADMINISTRATIVE APPROPRIATION.-There shall be authorized by the Senate and House of Representatives of the United States, the expenditure of One Hundred Thousand Dollars ($100,000) for the administration of this Act to be repaid from the interest on loans made.

The CHAIRMAN. We, will adjourn until 10 o'clock tomorrow morning.

(Whereupon, at 3:20 p. m., the committee recessed until 10 a. m. Friday, June 2, 1944.)