I just point out the experience of a State that I really know something about, because I was in the thick of this thing. Being executive director of our commission, I know what happened in Missouri. I make the statement to the committee mainly to have the committee consider it, hoping it might be possible that the so-called brass hats could be made to understand the situation that we have laws in the several States to take care of post-war benefit payments which will only cost the Government a relatively few millions of dollars, whereas the proposal for Federal handouts to the States, which the States do not want and do not need, will cost the Government billions of dollars in the post-war era.

Senator AUSTIN. Let me interrupt once more.

Mr. ROZIER. Yes, Senator.

Senator AUSTIN. Is it your theory that no financial aid would be needed from the Federal Treasury if the States were all on the same footing as Missouri?

Mr. ROZIER. It is my contention, Senator, that even though they are not on the same footing as Missouri, that no State needs any financial aid from the Government; no State has asked for any; no State legislature has requested any; no Governor of any State has requested any; the unemployment compensation agencies do not believe that any money will be needed to finance the benefit payments under the State laws in the post-war era. We believe we are completely and absolutely solvent.

Senator AUSTIN. May I ask you if you are speaking with the knowledge, at least, of the Governor of your State?

Mr. ROZIER. I am. I discussed this matter with him, and later on in this presentation, Senator, I will introduce the resolution that was passed unanimously at the Governors' Conference just concluded at Hershey, Pa., which is speaking for all of the Governors of all the States on this matter.

Senator AUSTIN. All right.

Mr. ROZIER. I will go into that resolution at this time. I had the privilege and honor of attending that conference at Hershey as a guest of the Governors of the United States at the request of Governor Donnell, of Missouri. All of the Governors of the United States recognized that this problem of social security generally, and Federal subsidies to unemployment compensation particularly, would be discussed and would be a matter that would be gone into at great detail at the Governors' conference, and the matter was discussed in detail. After much discussion the resolution, which I would now desire to read to you, was adopted by the Governors, which bears directly on this specific proposition.

This is the resolution:

Whereas during the past 8 years all of the States, with increasing efficiency, have been administering their unemployment compensation laws in a manner satisfactory alike to those entitled to benefits and to their citizens generally; and

Whereas during this period the States have built up and accumulated large reserves totaling in the aggregate five and a half billion dollars; and

Whereas the efficiency of State administration of unemployment compensation and the funds thus accumulated constitute our largest and most important safeguard against post-war depression and unemployment: Therefore be it

Resolved: (1) That the Governors' conference restates and reemphasizes its opposition to any and all efforts, including those now pending, on the part of

Federal institutions and agencies to centralize and federalize the administration of unemployment compensation; and

(2) That the executive committee of the Governors' conference be directed to take whatever steps it might deem necessary to see that the present method of State administration of unemployment compensation systems shall be maintained in full force and effect, and not either transferred to Federal control directly, or indirectly hampered by Federal subsidy provided in the name of some possible future emergency; be it further

Resolved, That in order to be able to meet all post-war problems through the use of State unemployment compensation systems as now constituted, the States should consider action along the following lines:

(1) Each State should make careful estimates of its probable post-war unemployment benefit payments, and of the solvency prospects of its unemployment fund;

(2) Any State whose fund is in danger of post-war insolvency should take prompt steps to build more adequate reserves, through legislation requiring higher wartime contribution rates;

(3) Each State should review the coverage and benefit provisions of its law, to determine their adequacy and with a view to making such improvements as are found desirable and practicable;

(4) Each State should reexamine its statutory provisions and its administrative procedures with a view to assuring speed and efficiency in paying benefits under the peak-load conditions of the post-war period;

(5) Each State should participate fully in plans to solve interstate problems in the field of unemployment compensation through interstate cooperation, and should provide any legislative authorization needed for such cooperation; and (6) Each State should carefully consider the proper relation between its law and any Federal program for veterans' demobilization allowances, and should provide such legislative authorization as may be indicated to permit full and proper State cooperation in relation to veterans' payments.

Senator AUSTIN. Were great States like Pennsylvania and New York participating in it?

Mr. ROZIER. Yes, Senator. I will explain it to you, if I may. Senator AUSTIN. I have another question. Were States that were heavily industrialized by the war effort, like California, Massachusetts, and Connecticut, involved in that?

Mr. ROZIER. Yes, Senator.

Senator AUSTIN. They participated in that action?

Mr. ROZIER. They did; and I will explain to the Senator, if I may, what happened.

Senator AUSTIN. One other question.

Mr. ROZIER. All right.

Senator AUSTIN. Were small States, where there is a very small proportion of war contracts, involved in this, and did they participate? Mr. ROZIER. Yes, Senator.

Senator AUSTIN. All right.

Mr. ROZIER. What I wanted to explain to the members of this committee is that no resolution may pass the Governors' Conference unless it passes unanimously. The Governors' Conference has worked out a scheme whereby they do not resolve upon any proposition unless they unanimously agree upon it. Thirty-eight States were represented at the Governors' Conference. All of the Eastern States to which you referred and all of the heavily industrialized States had their Governors present. The Governors from the South were there; the Governors from the West were there; Governor Warren was in attendance from California-you asked about California; Governor Dewey was there from New York; Governor Saltonstall was there from Massachusetts. As a matter of fact, the 10 Governors who could not attend

were Governors from States generally that were not heavily industrialized.

This resolution was considered, and it was considered to this extent, that Governor O'Conor of Maryland made a very stirring speech to the whole conference on this problem and took a firm stand against any Federal subsidy, and after his speech, which unquestionably was one of the most widely and finely received speeches at the conference, the Governors crowded around him and shook his hand. He was the last man who left the room. He had struck a note at the Governors' Conference that was generally accepted by every Governor present. This resolution unquestionably indicates the feeling of the Governors who attended that conference, and I would like to say again that it was passed unanimously.

If I may briefly point out one or two things in the resolution and then I will be through. I would like to do it, because I was there, and I know the feeling respecting this resolution and what the tenor of the resolution means.

The Governors, in reaffirming their belief in State unemploymentcompensation systems, took the stand that they want to follow the present law. When the present law was enacted, its author appeared before the Senate Finance Committee in 1935 and explained in detail how the economic conditions in the several States varied to such great extent that it was necessary to have 48 different jurisdictions administering the provisions of this law so it might fit into the economic patterns of the respective States.

The Governors reaffirmed that.

Secondly, the Governors, took a stand against subsidies. Subsidies were discussed in detail by Governor O'Conor in his speech which was so widely accepted in that conference. They said, respecting subsidies, that they are opposed to the unemployment compensation systems being transferred to Federal control, directly or indirectly, hampered by Federal subsidy provided in the name of some possible future emergency.

Then, what did they say respecting what their States were going to do? It is their No. I recommendation to the States that they make careful estimates of probable post-war unemployment benefit payments, and of the solvency prospect of their unemployment funds. That is not a new thing. They were reaffirming what all of the States of the United States except five have already done.

Senator AUSTIN. What are the five States?

Mr. ROZIER. I will get that for you, Senator. They are small States. All of the large States have completed the solvency survey, but they said they are going to make it again, and they are going to continue examining from time to time the solvency of their State funds, to see to it that they keep them adequate, and to continue to reexamine all of the provisions of the unemployment-compensation law; that they are going to review the coverage and benefit provisions of the law, to determine the adequacy and modify it if necessary, making such improvements as are found desirable and practical in the particular State; that they are going to reexamine the statutory provisions and administrative procedures with a view to speeding up the payments of benefits under peak-load conditions in the post-war era. Throughout the resolution it is clear that the Governors understood that they were dealing with post-war problems, and they believed that their unem

ployment compensation reserves, which are impounded in the Federal Treasury in excess of $5,000,000,000 is sufficient to meet the post-war needs of unemployment compensation, and consequently they have taken this stand against Federal subsidies.

Everyone knows that it is impossible to have a system of subsidization by the Federal Government without also having Federal control, and if our unemployment compensation systems are subsidized and a system of Federal standards is imposed upon us, our local State agencies will become nothing more than clerical functionaries of the Social Security Board at the local level in the States and we will no longer be in control, from the State standpoint, of unemployment compensation. So we are opposed to these proposals; we are opposed to any form of subsidization. We would like to stand on our own feet. If given the opportunity, we will justify in unemployment compensation legislation confidence in State government close to home, close to the people, where the legislatures will react to the public sentiment and where they know intimately the public needs.

Mr. RUSSELL. Mr. Rozier, the State systems are already subsidized by the Federal Government to the extent of their administrative expenses, are they not?

Mr. ROZIER. They are and they are not. The administrative expenses are paid out of taxes collected from the employers on the basis of the 3-percent pay-roll levy that is made under the internal revenue act. A credit up to 90 percent may be taken against that tax for moneys paid to the State for unemployment compensation purposes. That State money goes into a State unemployment compensation trust fund that is impounded in the Federal Treasury. The 10 percent of the 3 percent tax-which the Federal Government collects is clearly earmarked-not earmarked; that is the wrong word, it is not earmarked; it was put into effect for the purpose of paying the administrative cost of the States in administering the unemployment compensation laws. The Social Security Board was given the duty and authority to determine whether a State law was in conformity with the Social Security Act in all respects and, if it was, then to grant administrative funds for the administration of the law. But, as a matter of fact, the taxpayers of the particular State pay that cost, and I might point out right here that the Federal Government has never given the State back, for administrative purposes the total amount of money collected for that purpose under the original Social Security Act and later the internal revenue act.

Mr. RUSSELL. Well, has that appropriation from the Federal Government interfered with your administration?

Mr. ROZIER. We think definitely it has.

The CHAIRMAN. Are there any further questions?

Senator AUSTIN. Yes. I would like to inquire if you know where the litigation is now?

Mr. ROZIER. Our litigation?

Senator AUSTIN. Your litigation.

Mr. ROZIER. Well, I have not been back at our agency for a week and a half, but if the committee will permit I will write a letter for incorporation into this record, giving the complete status and history of that litigation. Would that be agreeable, Senator?

The CHAIRMAN. Senator Austin was inquiring as to the present status. Before what court is it?

Mr. ROZIER. Before the circuit court, which is the court you must go to before you get into the Supreme Court.

Senator AUSTIN. You mean it is in a Federal court?

Mr. ROZIER. No; in a State court. The Federal law itself provides that they must go into a State court where the State court can resolve the question. The procedure is this: The State agency makes the determination, then our State law provides for judicial review by the State courts. The first step is to take judicial review to the circuit court and then appeal to the Supreme Court.

Senator AUSTIN. You are talking about the State court?

Mr. ROZIER. The preliminary determination is in the State court because the State of Missouri and State employers are involved. The CHAIRMAN. I suppose the levy of this additional tax is being resisted on the ground that it violates the State constitution.

Mr. ROZIER. That is correct, that it violates the State constitution. The CHAIRMAN. Any further questions?

Senator AUSTIN. That is all.

The CHAIRMAN. Thank you very much, Mr. Rozier.

Mr. ROZIER. Thank you very much.

The CHAIRMAN. Mr. Huiet.

STATEMENT OF BEN T. HUIET, ADMINISTRATOR, BUREAU OF COMPENSATION OF THE STATE OF

UNEMPLOYMENT

GEORGIA

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

Mr. HUIET. My name is Ben T. Huiet, commissioner of labor of Georgia. I am also the administrator of the bureau of unemployment compensation of the State of Georgia.

I may say for Senator Austin's benefit there, that I am in a little different position than most of these gentlemen here this morning and yesterday. I am elected by the people as you are in your State elected Senators by the people.

First, I want to go on record as concurring with Mr. Paul Raushenbush, of Wisconsin, Mr. Claude Williams, of Texas, and my friend from Missouri who just preceded me, in their remarks with reference to this

matter.

These are some of the recommendations I would like to submit to the committee:

Cooperative development of Federal-State policies to end activities. by the Federal Government duplicating the job that the State and local agencies are equipped to do.

Return to the State the control, as soon as practicable, of the State employment services loaned to the Federal Government at the President's request at the start of the war.

The present State administration of unemployment compensation systems should be maintained in full effect and not either transferred to Federal control directly or indirectly hampered by Federal subsidy. In Georgia we have principally an agricultural State. We have also a number of industries there, and industry and other organizations of the State are backing these remarks that I have referred to.