it back and say we don't want it, we would just as soon work out our own problems in that relationship.

The Federal Government is not expected to do anything that is beyond its reason and ability but the Federal Government, I repeat to you, Congressman, is expected to measure up, because it is all over-reaching in its budget that you have set up, its foreign aid and everything that goes on with it, and I think in a section of the State or a State that is so vital to develop, if it is hurt, then the United States of America is hurt and we expect, as we say to you, that at least there ought to be a study and check and determination whether you want that to continue or not.

If when you are through you say, "Yes, let it continue," we can't quarrel with you, sir, except to argue about it.

Mr. ALGER. I am not sure what relation that has with being thy brother's keeper, but I think I agree with some of the things you say. Are we talking about more relief or more jobs?

Then you go into the final page here of your statement pointing out some of the things to be done. As a mayor, I suspect you are well aware of the impact of Federal taxation in reducing the amount of local tax revenue; is that not correct?

Mr. MIRIANI. Well, I don't know whether you reduce it or not. Mr. ALGER. The more taxes we take federally, the less money there is in effect to be available for taxation locally, is that not correct, for your city?

Mr. MIRIANI. No, because most cities work under charters with the State restricting their ability to collect anyway and whether you reduce the taxes doesn't give us any more taxes.

Mr. ALGER. I am not talking about the technique by which you collect taxes. I am talking about the moneys you can collect for entities to support themselves. The more we take federally, the less there is for the cities.

Mr. MIRIANI. The less there is for consumption.

Mr. ALGER. Put it that way if you like.

You must get your money to support your city and have the necessary tax to impose.

You suggest then, in the middle of page 4:

Federal relief offers the only available solution.

Then you go through a program here of Federal projects of all kinds. Then you say right after this we need less tax relief measures, and then in the final paragraph, we "seek desperately for aid in providing jobs", and so forth.

It seems to me to be obvious that the more Federal programs we have, the greater the Federal tax and the less tax revenues there can possibly be for your city, and I am just wondering if we are not going a little too far in suggesting in unemployment compensation that we continue to pyramid the Federal expenditures.

Mr. MIRIANI. You do two things: You can keep the same amount of moneys that you have had in the past 3 or 4 years for industrial development, which in effect does create more jobs, or if we don't create more jobs you will simply have to try to tide somebody over. Whether it is unemployment compensation or relief money, it is immaterial to me. It is part of the whole fund that is going to come out of some

place, and I think if the situation of relief continues through unemployment, the Federal Government is going to pay it.

The question I see is whether or not you wish to do it through unemployment compensation of shoring it up to a degree, or whether you want to do it through the relief rolls.

Mr. ALGER. One final question, Mr. Mayor. Do you feel that Detroit, Mich., is unusual or very similar in its needs and problems as the other cities in the country?

Mr. MIRIANI. They are the same. Our only problem is that we are harder hit, that's all. Percentage wise, I imagine you could say harder than Philadelphia, Chicago, St. Louis, New York, and Washington, I

suppose.

Our problem is that we have possibly, percentagewise, twice as many cases on relief as any other city.

Mr. ALGER. I was very concerned and very interested in the fact that Michigan, which has been the most highly unionized State in the Union, and in this case Detroit, Mich., who has so many of the auto workers getting income from all over the country in the auto business, appears to me to be in the worst shape of all.

Mr. MIRIANI. Let's put it this way: Our capacity to do things is very good. Our capacity of borrowing is excellent, as we borrow money just as cheaply as the city of New York, but our capacity of continuing an abnormal relief due strictly to unemployment, people who can't work, is the problem.

In the 1930's to 1942, when the war began, the Federal Government was a part of those programs because of abnormality, and I think the only suggestion being made, and it is not novel through me, because I am sure Congressman Knox remembers some of those things that we had to do as part of a program that we worked out, is that you may have to revive those programs. The only difference we see is, you need not revive the WPA days because all cities have good capital improvement programs and all cities can spend for themselves if they can get the money without handouts.

All I say is that the normal housekeeping services of the city belong to us and we shall finance them. Ninety thousand people is the normal load in that area of people being out of work through transfer or one kind or another.

We say when it is over ninety thousand, it is not a local problem any more. Somewhere along the line, if you are thinking of defense, if you are thinking of some of the things that can be done in the case of emergency, the Federal Government and the State governments are involved, too.

Mr. ALGER. I do not follow that, but thank you very much.

Mr. MIRIANI. But to what degree? That is your problem. I mean it is for you to say what degree.

Mr. ALGER. Thank you very much.

The CHAIRMAN. Mr. Machrowicz will inquire.

Mr. MACHROWICZ. After rereading sections of your statement which the gentleman from Texas referred to, I want to say that I do not see any need for changing them or apologizing for them at all. I think they are very, very proper. I think there is in some areas in this country and in some areas of Washington a calloused attitude toward this problem, and I think for the answer to the question that

was raised also as to where these additional funds for the Federal Government should come, we might possibly have to look to some sources which have probably not been paying their full share. We have to look at all resources. Probably some of these funds could be picked up.

The CHAIRMAN. Thank you, Mr. Mayor.

Our next witness is Mr. Vernon Herndon, representing the American Hotel Association.

Mr. Herndon, although we remember well your previous appearances, for the purpose of the record, will you please identify yourself by giving us your name, address, and capacity in which you appear? STATEMENT OF VERNON HERNDON, REPRESENTING AMERICAN HOTEL ASSOCIATION, ACCOMPANIED BY M. O. RYAN, WASHINGTON OFFICE, AMERICAN HOTEL ASSOCIATION

Mr. HERNDON. Mr. Chairman, my name is Vernon Herndon. I am vice president of Hilton Hotel Corp. and general manager of the Palmer House, Chicago, Ill.

I would like to present Mr. M. O. Ryan, our associate in our Washington office here.

The CHAIRMAN. You are recognized, Mr. Herndon.

Mr. HERNDON. I am also vice president of the American Hotel Association and I appear before your committee today in my capacity as a member of the Governmental Affairs Committee of that organization.

While the various bills before your committee relating to unemployment compensation take a number of different approaches, we would like to direct our comment to those bills which establish Federal standards for unemployment compensation providing for not less than 39 weeks' duration of benefits up to one-half of the weekly wage. Our objections to these bills are both practical and philosophical.

Our experience in attempting to staff our hotels with dishwashers, kitchen workers, and other types of unskilled help gives us a great deal of experience upon which we base our practical objections. Frankly, some low-paid jobs in hotels are not pleasant.

On the other hand, the productivity of some of our employees is very limited. Others are seasonal workers who do not wish yearround employment. In some cases they work only long enough to qualify for unemployment insurance benefits.

We have had numerous instances in which men have been referred to us by the local employment service, and have presented themselves in dirty clothing, with dirty hands and face, unshaven, or with liquor on their breath. We know them as a type. They present themselves for a job when they are referred to us by the employment service. However, they are skillful in making themselves unacceptable to employers without jeopardizing their unemployment benefits. They do this by deliberately failing to qualify as a desirable employee. About the only time that men of this type will go to work is when they have exhausted their unemployment compensation benefits.

The enactment of legislation which is now before your committee would prolong this period by 50 percent or more, in some States.

Some of the bills which you have before you would make unemployment even more attractive as a way of life for persons in this group. For example, bills such as H.R. 3547 and other similar type proposals, provide a weekly benefit up to one-half of the individual's average weekly wage, in addition to compensation for dependents. In some cases this will mean that a person would have more spendable income from unemployment compensation than he would have if he were employed. That is because such benefits are not subject to Federal or State income taxes or employment taxes, and the unemployed individual does not have expenses for transportation and other items incidental to employment.

It seems incredible that serious thought would be given by the Congress to a program which, in 46 out of the 50 States, would establish entitlement benefits which far exceed the base year wage earnings of an employee. Such a program clearly places a premium on idleness, it seems to me.

On the philosophical level, we feel that the enactment of bills such as I have just described would be a complete departure from the basic concept upon which the original Federal unemployment compensation statute was passed, and upon which it has been administered in most States.

As I understand it, the original concept was that unemployment resulted to a great extent from the failure or inability of employers to properly schedule production and work schedules, and that since unemployment resulted largely from maladjustments in working schedules, employers should bear the expense of unemployment for persons who are in the work force. Benefits were in the nature of insurance against temporary hardship resulting from unemployment and were not considered to be in the nature of welfare payments or relief. It was a matter of right.

Individual employers in many States, through experience ratings, were given the opportunity of reducing their payments into the fund by scheduling their work to prevent any of their employees from being temporarily or seasonally unemployed.

Slowly but surely, the law has abandoned these original concepts. For example, the idea that a recipient must be part of the work force before he is eligible for benefits has been whittled away. I think that it is obvious to anyone that a man can be unemployed for 4 to 6 weeks and still be part of the work force.

In some circumstances, most individuals might fail to find employment during an even greater period of time. But in any event, there comes a time when the employer's obligation to pay the individual ceases, and it becomes a responsibility for society generally.

In my own opinion, when a person has been unemployed for 26 weeks, he no longer should be entitled as a matter of right to payments from the fund accumulated by a tax on employers, but society at large should support him only if he is unable to support himself. In other words, relief or welfare payments are more appropriate to such persons.

Many communities throughout the United States are supported to a great extent by unemployment compensation checks mailed to persons who have no intention of working regularly. Such communities generally engage in farming, logging, recreation, or other activities

of a purely seasonal nature. Out of season, there simply is no work for employable persons in such areas.

Prior to the enactment of unemployment compensation statutes, it was the custom for persons in these areas to save enough during the work season to support themselves for the entire year, or to migrate from one area to another to find work. However, because of unemployment compensation, people in these groups are enabled to live for 7, 8, or 9 months in the year at the expense of employers generally, because they have worked for 3 or 4 months in a seasonal activity. This brings about a drag on unemployment reserve funds which might some day jeopardize the protection of legitimate, yearround workers who become unemployed through no fault of their own. It is further important to note that many such persons are students or housewives, not generally in the labor market, and who are supplementary wage earners in the family, and therefore there is no question of need. They now regard unemployment compensation benefits as a matter of right, and they accept them without shame.

It is unfair to impose the obligation of supporting such persons upon the employers of the State in which they are located.

To avoid widespread abuse of unemployment compensation, we feel that a longer period of employment should be required before a person can qualify for benefits, particularly where they have drawn^unemployment compensation benefits during the preceding 3 or 4 years. In other words, we think that the law should be amended to spare employers the burden of supporting persons who regard unemployment compensation benefits as a way of life, and apply for them regularly, year after year. We feel that the duration of benefits should be limited to 26 weeks, because beyond that it is questionable whether a person is actually in the labor market. If they are unable to secure employment for 26 consecutive weeks, it is probably because of some physical or mental handicap, it which event welfare payments are the appropriate remedy.

And last, we do not feel that the benefit payments should be so high that they make unemployment attractive to large numbers of persons who otherwise would accept employment.

I think that the concept of unemployment compensation has been widely accepted among businessmen under the impression that it is a form of insurance. In the past, employers have willingly made the payments under the impression that it provided protection for their own employees in the event of unforseen events which result in unemployment.

However, I feel that employers will completely lose confidence in this whole idea if the potential claims against such funds become so great that any resemblance to insurance becomes completely ridiculous. No insurance program can be administered soundly where one employer is forced to pay the premiums and the employees of another receive the benefits, especially where no effort is made to eliminate poor risks.

The enactment of these bills would destroy the insurance concept and impose upon employers obligations which should be borne by society generally. By that, I mean that persons who are regularly or chronically unemployed should not be entitled to payments as a matter of right out of a fund obtained from employers, but they