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ongrtssional Htcord
United States
of America



Vol. 96

No. 119

House of Representatives
The House was not in session today. Its next meeting will be held on Monday, June 19,1950, at 12 o'clock noon.

FRIDAY, JUNE 16,1950

{Legislative day of Wednesday, June 7, 1950)
The Senate met at 12 o'clock meridian,
on the expiration of the recess.
The Chaplain, Rev. Frederick Brown
Harris, D. D., offered the following
Eternal Spirit, we thank Thee that
Thou art not far off, out on the vast rim
of the universe; but nearer to us than
breathing; warm, sweet, tender, a present help, waiting to live in us, to work
through us; our daily sustenance, the
fountain of a courage that will not fail
and of a power that can use our so fallible weakness as its healing and illu-.
minating channel.
In this confused day, with its noisy
voices and contending claims, grant unto
these Thy servants that .they may be
faithful to every trust committed by the
people to their hands, giving utterance
only to their highest, noblest thought;
and that upon their shoulders there may
rest unsullied the white mantle of the
Nation's honor. Amen.

On request of Mr. MCFARLAND, and by

unanimous consent, the reading of the
Journal of the proceedings of Thursday,
June 15, 1950, was dispensed with.

On his own request, and by unanimous
consent, Mr. YOUNG was excused from
attendance on the sessions of the Senate
for all of next week.
On his own request, and by unanimous
consent, Mr. HOLLAND was excused from
attendance on the sessions of the Senate
on Monday, Tuesday, and Wednesday of
next week.

On request of Mr. MCFARLAND, and by

unanimous consent, the Committee on
Armed Services and the Committee on

Foreign Relations, sitting jointly, were
authorized to meet this afternoon during the session of the Senate.
On request of Mr. MCFARLAND, and by

unanimous consent, a subcommittee of
the Committee on Labor* and Public
Welfare was authorized to meet during
the session of the Senate today.

questions of the Senator from Florida
tc the Senator from Colorado.
The PRESIDENT pro tempore. Without objection, it is so ordered.
Mr. McFARLAND. I suggest the absence of a quorum.
The PRESIDENT pro tempore. The
clerk will call tht roll.
The legislative clerk called the roll,
and the following Senators answered to
their names:

- Mr. McFARLAND. Mr. President, I
ask unanimous consent that immediately
Hlckenlooper Maybant
after the quorum call the Senator from Aiken
Florida [Mr. HOLLAND] be permitted to Benton
propound questions on the pending so- Butler
cial-security measure to the Senator Cain
Neely Chapman
Johnson, Colo. O'Mahoney
from Colorado [Mr. MILLIKINL
Johnson, Tex. Robertson
The PRESIDENT pro tempore. Is Chavez
there objection to the request of the Cordon
Senator from Arizona? The Chair hears Darby
none, and it is so ordered.
Smith, N. J.
Mr. McPARLAND. Mr. President, I Eastland
ask unanimous consent that immedi- Ellender
Thomas, Utah
ately thereafter the calendar be called. Ferguson
The PRESIDENT pro tempore. For Flanders
the consideration of measures to which Frear
there is no objection?
The PRESIDENT pro tempore. Is Hayden
there objection to the unanimous-conMr. SALTONSTALL. I announce
sent request of the Senator from Arizona? The Chair hears none, and the that the Senator from Maine [Mr.
calendar will be called, beginning at the BREWSTER], the Senator from Ohio [Mr.
point where we left off at tie last call BRICKER], the Senator from New Jersey
[Mr. HENDRICKSON], the Senator from
of the calendar.
Indiana [Mr. JENNER], the Senator from
tor from Delaware [Mr. WILLIAMS] are
Mr. McFAELAND. Mr. President, I necessarily absent.
modify my previous request for unaniThe Senator from Indiana [Mr.
mous consent, and ask that after we CAPEHART], the Senator from North Dahave a quorum call Senators be per- kota [Mr. LANGER], the Senator from
mitted to submit petitions and memo- Oregon [Mr. MORSE], the Senator from
rials, introduce bills and joint resolu- Michigan [Mr. VANDENBERG], and the
tions, and present routine matters for Senator from Wisconsin [Mr. WILEY]
the RECORD, without debate, before the are absent by leave of the Senate.



The Senator from Pennsylvania [Mr.
MARTIN] is absent by leave of the Sen-

ate on official business.
The PRESIDENT pro tempore. A
quorum is present.

The PRESIDENT pro tempore laid
before the Senate a message from the
House of Representatives announcing
itz disagreement to the amendments of
the Senate to the joint resolution (H, J.
Res. 238) to provide the privilege of becoming a naturalized citizen of the
United States to all immigrants having
a legal right to permanent residence,
and requesting a conference with the
Senate on the disagreeing votes of the
two Houses thereon.
Mr. McCARRAN. I move that the
Senate insist upon its amendments,
agree to the request of the House for a
conference, and that the Chair appoint
the conferees on the part of the Senate.
The motion was agreed to; and the
President pro tempore appointed Mr.





JENNER conferees on the part of the


The PRESIDENT pro tempore laid before the Senate a communication from
the President of the United* States,
transmitting a revised estimate of appropriation, involving an increase of
$5,199,400, fiscal year 1951, for the Department of the Interior'in the form of
an amendment to the budget, which,
with the accompanying paper, was referred to the Committee on Appropriations and ordered to be printed.

Whereas we believe that such proposed
"up-grading" by bringing carcasses of lower
grades into higher' brackets than now expressed will, in the minds of the general public, be taken as an act of deception: Now,
therefore, be it
Resolved, That the Nebraska Stock Growers Association in Its sixty-first annual convention assembled at Alliance, Nebr., this
10th day of June, 1950, go on record as absolutely opposed to any change in the present
and universally accepted standards and
grades of beef, and that copies of this resolution be filed with the director of the Livestock Branch, Production and Marketing Administration, , United States Department of
Agriculture, Washington, D. C, on or before
July 11, 1950.

State of Nebraska, ss:
The above and foregoing is a true and
exact copy of the resolution adopted at the
sixty-first annual convention of the Nebraska Stock Growers Association, at the annual
business session, June 10, 1950*

the RECORD, a resolution adopted by the

Mr. O'MAHONEY. Mr. President, on
behalf of the Joint Committee on the
Economic Report I submit, pursuant to
Public Law 304, Seventy-ninth Congress,
the report of that committee together
with a supplementary statement of the
Senator from Illinois [Mr. DOUGLAS] and

the minority views. I should like to add
that this document will be available for
sale at the office of the Superintendent
of Documents, Washington 25, D. C , for
35 cents the copy.
The PRESIDENT pro tempore. The
report will be received, and printed.

The Secretary of the Senate reported
that on today, June 16, 1950, he presented to the President of the United
States the enrolled bill (S. 2440) to authorize certain construction at military
and naval installations, and for other

Mr. FLANDERS. Mr. President, from
the Committee on Banking and Currency, which committee had the extension
of the Rubber Act within its purview in
the last session of Congress, I submit
views of that committee, on the bill
(H. R. 7579) to extend the Rubber Act
to be printed in the RECORD, as follows:
of 1948 (Public Law 469, 80th Cong.),
Resolution 6
and for other purposes, and ask unaniResolution on grading beef carcasses
mous consent that they be printed as
part 2 of Senate Report No. 1786.
Whereas there is today an effort on the part
of certain individuals and organizations to
The PRESIDENT pro tempore. The
change the present standards and grades of
views will be received, and without obcarcass beef as set forth on page 2845 of the
Federal Register, dated Friday, May 12, 1950; jection, printed as requested by the Senator from Vermont.
Whereas many years of effort at much cost
has been put forth to publicize and establish
in the minds of the consuming public, students, and producers of beef animals the
present and satisfactory standards ana
grades; and
Whereas we believe that such proposed
•'up-grading'1 of beef carcasses, will tend to
weaken the confidence on the part of the
general public who are new familiar with
and have confidence in our present grades
of beef carcasses; and

ture and office of an Administrative Assistant )53cretary of Agriculture, and for other
purposes; to the Committee on Agriculture
and Forestry.
S. 3784. A bill authorizing the Secretary
of the Interior to issue a patent in fee to
Maud Door; to the Committee on Interior
and Insular Affairs.
S.3785. A bill for the relief of Gerhard
H. A. Anton Bebr; to the Committee on the
By Mr. CAIN:
S.3783. A bill to amend chapter 61 (relating to lotteries) of title 18, United States
Code, to make clear that such chapter does
not apply to certain contests to advertise or
develop the natural or recreational resources
of a State or any region or section thereof;
to the Committee on the Judiciary.
By Mr. ELLENDER (for Mr. LONG) :

S. 3787. A bill authorizing adjudication of
the claim of Dudley Tarver against the
United States; to the Committee on the Judiciary.

Mr. BUTLER. Mr. President, I present for appropriate reference and ask EXTENSION OF RUBBER ACT OF 1948—
unanimous consent to have printed in
sixty-first annual convention of the Nebraska Stock Growers Association at Alliance, Nebr,, relating to changing the
present standards and grades of beef.
There being no objection, the resolution was referred to the Committee on
Agriculture and Forestry, and ordered



Bills were introduced, read the first
time, and, by unanimous^ consent, the
second time, and referred *as follows:
By Mr. THYE:
S.3782. A bill for the relief of Ruzena
Pelantova; to the Committee on the Judiciary.
By Mr. ET.LENDER (by request):
S.3763. A bill to establish two additional
offices of Assistant Secretaries of Agricul-

Mr. LEHMAN submitted an amendment to the committee amendment, intended to be proposed by him to the bill
(H. R. 60C0) to extend and improve the
Federal old-age and survivors insurance
system, to amend the public-assistance
and child-welfare provisions of the Social Security Act, and for other purposes,
which was ordered to lie on the table and
to be printed.
Mr. NEELY (for himself and Mr. KILGORE) submitted an amendment intended

to be proposed b: them, jointly, to House
bill 6000, supra, which was ordered to
lie on the table and to be printed.
Mr. LUCAS (for himself, Mr. MYERS,

and Mr. BENTON)



ments intended to be proposed by them,
jointly, to the bill (H. R. 6826) to provide
for the common defense through the
registration and classification of certain
male persons, and for other purposes,
which were ordered to lie on the table
and to be printed.

Mr. WATKINS. Mr. President, I submit an amendment intended to be proposed by me to House bill 6000, to extend
and improve the Federal old-age and
survivors insurance system, to amend the
public-assistance and child-welfare provisions of the Social Security Act, and
for other purposes, to be substituted for
an amendment which I have previously
submitted. I ask that this amendment
be printed and lie on the tt-ble.
The PRESIDENT pro tempore.- The
amendment will be received, printed, and
lie on the table.
Mr. MYERS. Mr. President, on behalf of myself, the senior Senator from
Illinois [Mr. LUCAS], the junior Senator


[Mr. BENTON], the

junior Sanator from Illinois [Mr. DOUG-

LAS], the Senator from Rhode Island
[Mr. GREEN], the Senator from Minnesota [Mr. HUMPHREY], the senior Senator
from West Virginia [Mr. KILGORE], the



Senator from New York [Mr. LEHMAN]. endar year in which the wages were received
respect to which refund of tax is
the senior Senator from Connecticut with
and (B) such claim is made within
EMr. MCMAHON], the Senator from Mon- claimed,
2 years after the calendar year in which such
tana [Mr. MURRAY], the junior Senator wages were received. No interest shall be
from West Virginia [Mr. NEELY], the allowed or paid with respect to any such
Senator from Florida [Mr. PEPPER], and refund.
" '(4) Special rules in the case of Federal
the Senator from Utah [Mr. THOMAS], I
submit amendments intended to be pro- and State employees.—'"
11. On page 320, line 7, strike out "$3,000"
posed by us, jointly, to the bill (H. R.
6000) to extend and improve the Federal and insert in lieu thereof "$4,200."
On page 339, line 25, strike out "$3,000"
old-age and survivors insurance system, and12.insert
in lieu thereof "$4,200."
to amend the public-assistance and
On page 358, line 18, strike out "$3,000"
child-welfare provisions of the Social and13.insert
lieu thereof "$4,200."
Security Act, and for other purposes. I
ask unanimous consent that the amendThe statement presented by Mr.
ments, together with an explanatory MYERS is as follows:
statement by me be printed in the STATEMENT BY SENATOR MYERS ON INTRODUCING

The PRESIDENT pro tempore. The
amendments will be received and lie on
the table, and without objection, the
amendments and explanatory statement
will be printed in the RECORD. The Chair
hears no objection.
The amendments submitted by Mr.
MYERS (for himself and other Senators)
are as follows:
1. On page 237, line 18, strike out "$3,000"
and insert in lieu thereof "$4,200."
2. On page 260, line 5, strike out "$3,000'f
and insert in lieu thereof "$4,200."
3. On page 263, line 25, strike out "$3,000"
and insert in lieu thereof "$4,200."
4. On page 264, line 6, strike out "$3,000"
and insert in lieu thereof "$4,200."
5. On page 267, line 5, strike out "$150"
and insert in lieu thereof "$250."
6. Oh page 273, line 21, strike out "$3,000"
and insert in lieu thereof "$4,200."
7. On page 315, line 3, strike out "$3,000"
and insert in lieu thereof "$4,200."
8. On page 316, line 17, strike out "$3,000"
and insert in lieu thereof "$4,200."
9. On page 317, line 7, strike out "$3,000"
and insert in lieu thereof "$4,200."
10. On page 319, between lines 14 and 15,
insert the following:
"(b) So much of section 1401 (d) (2) of
the Internal Revenue Code as precedes the
second sentence thereof Is amended to read
as follows:
'"(2) Wages received during 1947, 1948,
1949, and 1950: If by reason of an employee
receiving wages from more than one employer during the calendar year 1947, 1948,
1949, or 1950, the wages received by him
during such year exceed $3,000, the employee
shall be entitled to a refund of any amount
of tax, with respect to such wages, imposed
by section 1400 and deducted from the employee's wages (whether or not paid to the
collector), which exceeds the tax with respect to the first $3,000 of such wages
"(c) Section 1401 (d) of the Internal
Revenue Code is amended by adding at the
thereof the following new paragraphs:
*(3) Wages received after 1950: If by
reason of an employee receiving wages from
more than one employer during any calendar year after the calendar year 1950, the
wages received by him during such year exceed $4,200, the employee shall be entitled
to a refund of any amount of tax, with respect to such wages, imposed by section 1400
and deducted* from the employee's wages
(whether or not paid to the collector), which
exceeds the tax with respect to the first
$4,200 of such wages received. Refund under
this section may be made in accordance with
the provisions of law applicable in the case
of erroneous or illegal collection of the tax;
except that no such refund shall be "made
unless (A) the employee makes a claim,
establishing his right thereto, after the cal-


Mr. President, I am submitting an amendment to increase the taxable wage base as set
forth in the social-security bill reported from
the Senate Finance Committee, an amendment to increase this base from $3,000 to
$4,200. Joining me in sponsoring this amendment are Senators LUCAS, BENTON, DOUGLAS,

THOMAS of Utah.

I do not intend to go into any great detail
on the wage-base question. I feel that by
now it has been very thoroughly discussed in
the preceding debate and I think that the
arguments are pretty well understood.
Fifteen of the seventeen memfcers of the
Senate Advisory Council on Social Security
recommended that the wage base, established
at $3,000 in 1939, be increased to $4,200 in
ord to carry out the policy determined by
the Congress in the original law. When the
$3,000 wage base was set up in 1939, 95 percent of the employees working at covered
jobs had average earnings of $3,000 a year or
less. In view, now, of today's high wage
levels, the figure of $4L200 is required to bring
the wage base in line with present conditions,
and I do not see how any substantial argument can be raised against this.

Mr. MYERS. Mr. President, on behalf
of myself, the senior Senator from Illinois [Mr. LUCAS] , the junior Senator from
Connecticut [Mr. BENTON], the junior
Senator from Illinois [Mr. DOUGLAS], the
Senator from Rhode Island [Mr. GREEN],
the Senator from Minnesota [Mr. HUMPHREY], the senior Senator from West
Virginia [Mr. KILGORE], the Senator from
New York [Mr. LEHMAN], the senior Senator from Connecticut [Mr. MCMAHON],
the Senator from Montana [Mr. MURRAY], the junior Senator from West Virginia [Mr. NEELY], tlie Senator from
Florida [Mr. PEPPER], and the Senator
from Utah [Mr. THOMAS], I submit
amendments intended to be proposed by
us, jointly, to the bill (H. R. 6000) to extend and improve the Federal Old-Age"
and Survivors Insurance System, to
amend the public assistance and child
welfare provisions of the Social Security
Act, and for other purposes. I ask unanimous consent that the amendments, together with an explanatory statement by
me, be printed in the RECORD.

The PRESIDENT pro tempore. The
amendments will be received, printed,
and lie on the table, and, without objection, the amendments and explanatory
statement by the Senator from Pennsylvania will be printed in the RECORD. The
Chair hears no objection.


The amendments submitted by Mr.
MYERS (for himself and other Senators)
are as follows:
On page 267, line 3, after the word "be",
insert "the sum of the following: (A)."
On page 267, line 5, strike out the period
and insert in lieu thereof a comma and the
following: "(B) an amount equal to 1 percent of the amount computed under clause
(A) multiplied by.the number of years prior
to 1951 in which $200 or more of wages were
paid to such individual, and (C) an amount
equal to one-half of 1 percent of the amount
computed under clause (A) multiplied by
the number of years after 1950 in which the
sum of the wages paid to and the selfemployment income derived by such individual was $200 or more."
On page 273, beginning with line 10, strike
out all down to and including line 13 and
insert in lieu hereof the following:
"(C) With respect to calendar years after
1950, the 1-percent addition provided for in
section 2C9 (e) (2) of this act as in effect
prior to the enactment of this section shall
be one-half of 1 percent and shall be made
with respect to any such year in which the
sum of the wages paid to and the selfemployment income derived by the individual was $200 or more."

The explanatory statement presented

by Mr. MYERS is as follows:


Mr. President, I am introducing, on behalf

THOMAS of Utah an amendment to the pending social security bill which will add an increment factor to the benefit formula set
forth in the bill reported from the Senate
Finance Committee. I do not intend at this
time to make an elaborate explanation of the
amendment, but I would like to observe that
the benefit formulas set forth in both the
House-approved bill and the recommendations of the Senate Finance Committee are
decided improvements over the present law.
Retirement benefits will be substantially increased under either provision.
The bill as it passed the House included a
so-called increment in its formula. Under
the House provision, the primary retirement
benefit, as calculated by the formula, would
be increased by one-half of 1 percent for each
year the insured person has contributed to
the program. In other words, for a person
who worked in covered employment for 20
years this would mean that his primary insurance benefit on retirement would be increased by 10 percent, or one-half of 1 per,cent of increase for each year that he had
contributed to the system.
It will be recalled that the benefit formula
under the present law contains an increment
factor of 1 percent. The Senate Finance
Committee, however, in reporting the bill has
recommended that the increment factor be
dropped altogether.
I am in accord with the modifications
which the Senate committee made in liberalizing eligibility requirements for retirement benefits and with the more liberal alternative suggestions for calculating average
earnings on which benefits are determined,
and I feel that it is inconsistent with the
policy which these recommendations reflect
to have dropped the increment altogether.
In effect, the use of the increment recognizes that the benefits which a working person shall receive on retirement should be related to the number of years he has contributed to the insurance fund. Yet, tinder the
provisions of the Senate bill, it makes no
difference whatsoever whether a given per-



son has contributed 5 years or 40 years. His
ultimate benefits depend solely upon his
maximum average earnings and are in no
way related to the number of years he has
forked in covered employment.
Certainly, Mr. President, I believe a strong
argument can be made for the psychological
advantage of having a worker's benefits depend, in part at least, upon the number of
years that the worker chooses to remain in
covered employment. It preserves and promotes Individual incentive because it emphasizes and reinforces the principle that the
man who pays more in contributions receives
more in benefits.
I know, Mr. President* that any liberalizing
amendment to the pending bill necessarily
raises the question: How much will this cost?
If we use the assumptions adopted by the
Finance Committee in determining the ultimate costs of the retirement insurance system, the inclusion of an increment as proposed in our amendment would increase the
level-premium from 6.15 percent of payroll
by about an additional. 1 percent. In this
connection, however, I should like to point
out that if we alter the taxable wage base,
of $3,000 in the Senate formula to $4,200, that
change would result in a reduction of level
premium cost of about two-tenths of J, percent of payroll. Thus, if we consider together the increment amendment and the
amendment to Increase the wage base to
$4,200, the net increase in cost is under I
percent of payroll.
With our steadily expanding economy,
bringing with it over the years a larger and
larger national payroll, I am convinced that
the ultimate cost of the insurance system
will not, in fact, reach the level of 7 percent
of payroll or more if we decide now to include the increment. I say this because I
refuse to believe our economy is static. I
believe our national payrolls will continue to
Increase. If they do Increase, the insurance
system will not cost nearly as much proportionately as we are led to believe by those who
toase their estimates of future cost on the
assumption that our total national payroll
will never be larger than it is today.
In closing, Mr. President, I should like to
point out that our amendment differs somewhat from the increment provision contained
in the House bill. We propose that an increment of 1 percent be paid for each year of
covered employment prior to January 1,
1951—thus recognizing the rights which have
accrued to those who have contributed to the
pension fund during the period that an increment of 1 percent was part of the existing
law. We propose further, that an increment
of one-half percent annually be added for
each year of coverage after January 1,1951.

Mr. MYERS. Mr. President, on behalf
of myself, the Senator from Rhode Island
[Mr. GREEN], the Senator from Minnesota [Mr. HUMPHREY], the senior Senator
from West Virginia [Mr. KILGORE], the
Senator from New York [Mr. LEHMAN],
the Senator from Montana [Mr. MURRAY] , the Senator from Oregon [Mr.
MORSE], the junior Senator from West
Virginia [Mr. NEELY], the Senator from
Florida [Mr. PEPPER], and the Senator
from Utah [Mr. THOMAS], I submit
amendments intended to be proposed by
us, jointly, to the bill (H. R. 6000) to
extend and improve the Federal Old-Age
and Survivors Insurance System, to
amend the public-assistance and childwelfare provisions of the Social Securityx
Act, and for other purposes. I ask
unanimous consent that the amendments, together with an explanatory
statement by me, be printed in the

The PRESIDENT pro tempore. The
amendments will be received, printed,
and lie on the table, and, without objection, the amendments and explanatory statement by the Senator from
Pennsylvania will be printed in the
RECORD. The Chair hears no objection.
The amendments submitted by Mr.
MYERS (for himself and other Senators)
are as follows:
Amendments intended to be proposed by
Mr. MYERS (for himself Mr. GREEN, Mr.

and Mr. THOMAS of Utah) to the bill (H. R.
6000) to extend and improve the Federal oldage and survivors insurance system, to amend
the public assistance and child welfare provisions of the Social Security Act, and for
other purposes, viz:
On page 209, line 14, after the word "benefits" and before the comma insert "or was
entitled to disability insurance benefits for
the month preceding the month in which he
attained retirement age."
On page 254, line 19, strike out "219" and
insert In lieu thereof "221."
On page 255, lines 1 and 9, strike out "219"
and insert in lieu thereof "221."
On page 259, line 8, strike out "219" and
insert in lieu thereof "221."
On page 260, lines 12 and 19, strike out
"219" and insert in lieu thereof "221."
> On page 263, between lines 23 and 24, insert the following:
"(ii) no quarter any part of which is included in a period of disability (as defined in
section 219 (i)), other than the initial or
last quarter, shall be a quarter of coverage."
On page 263, line 24, strike out "(ii)" and
Insert in lieu thereof "(ill)."
On page 264, line 1, strike out "clause (i) "
and 1 insert in lieu thereof "clauses (i) and
(ii). '
On page 264, line 3, strike out "(ill)" and
insert in lieu thereof "(iv)."
On page 264, line 7, after "shall", insert
"(subject to clause (U))."
On page 264, line 8, strike
out "(lv)*' and
Insert In lieu thereof "(v).' f
On page 266, line 7, strike out "or."
On page 266, strike out line 8, and insert
in lieu thereof:
"(B) twenty quarters of coverage within
the forty quarter period ending with the
quarter In which he attained retirement age
or with any subsequent calendar quarter or
ending with the quarter In which he died; or
"(C) forty quarters of coverage;
not counting as an elapsed quarter for purposes of subparagraph (A), and not counting
as part of the forty quarter period referred to
in subparagraph (B), any quarter any part
of which Is Included in a period of disability
(as denned in section 219 (I)) unless such
quarter is a quarter of coverage."
On page 266, line 10, strike out "or (2)
(A)" and Insert in lieu thereof "or in clause
(A) or (B) of paragraph (2)."
On page 266, between lines 11 and 12, insert the following:
"(4) If an individual upon attainment of
retirement age Is not, under paragraph (2),
a fully insured individual but (were it not
for his attainment of retirement age) would
have been entitled to a disability insurance
benefit for the month In which he attained
retirement age or for any subsequent month,
he shall be a fully insured individual beginning with the first month for which he would
have been so entitled to disability Insurance
benefits. For the purpose of determining
whether an Individual would have been so
entitled to disability insurance benefits, his
application for old-age Insurance benefits
shall be considered as an application for disability Insurance benefits."
On page 266, line 19, strike out the period
and insert In lieu thereat "# excluding from


such thirteen-quarter period any quarter any
part of which is Included in a period of disability unless such" quarter is a quarter of
On page 268, line 11, strike out the period
and Insert "and any month in any quarter
any part of which is included in a period
of disability (as defined in sec. 219 (i))
unless such quarter is a quarter of coverage,
and excluding from such total of wages and
self-employment income any wages paid In
or self-employment Income credited to any
quarter any part of which is included in a
period of disability unless such quarter is a
quarter of coverage."
On page 268, line 17, after the words "shall
be", insert the words "(I) for the purposes of
benefits under section 202."
On page 268, line 20, strike out the period
and insert ", and (ii) for purposes of disability insurance benefits (under sec. 219)
shall be the first day of the quarter In which
his disability determination date occurred."
On page 268, line 23, after the word "under," insert "clause (i) of."
On page 268, line 24, after the words "closing date", Insert "for the purposes of benefits under section 202."
On page 269, line 7, after "(B)", insert "for
the purposes of benefits under section 202."
On page 269, line 16, strike out the period
and Insert in lieu thereof "or, If the computation is being made for an individual
who Is entitled to disability insurance benefits with respect to a disability. In or after
the month in which occurs his disability
determination date for such disability."
' On page 273, line 7, after the word "benefits", insert "or bis disability determination
On page 273, between lines 15 and 16, Insert the following:
"(E) For the purposes of this paragraph
the term 'primary Insurance benefit1 includes
disability Insurance benefit."
On page 297, between lines 5 and 6, insert
the following:

"SEC. 107. Title n of the Social Security Act
la amended by adding after section 218
(added by sec. 106 of this act) the following:

"'Conditions of entitlement
" 'SEC. 219. (a) (1) Every permanently and
totally disabled Individual (as defined In
subsection (h)) who—
has not attained retirement age,
•(*(B) has filed application for disability
insurance benefits,
"'(C) is insured for disability Insurance
benefits, and
" ' (D) has been under a disability throughout his waiting period, shall be entitled to a
disability-insurance benefit for each month,
beginning with the first month after his
waiting period in which he becomes so entitled to such insurance benefits and ending
with the month preceding the first month in
which any of the following occurs: he ceases
to be a permanently and totally disabled individual, dies, or attains retirement age.
Such Individual's disability-insurance benefit for any month shall be equal to his primary insurance amount (as defined in sec.
215 (a)) for such month.
"'(2) The term "waiting period" means,
with respect to the disability of any individual, the period beginning with the calendar
month in which occurred his disability determination date (as determined under subsec, (c)) and ending at the expiration of
the .sixth calendar month following such
" *(3) An individual who would have been
entitled to a disability-insurance benefit f ° r
any month had he filed application therefor
prior to the end of such month shall be entitled to such benefit for such month if ho



files application therefor prior to the end of
the sixth month succeeding such month; except that the provisions of this paragraph
shall -not apply for purposes of determining a
period of disability (as defined in sutosec.
(i)), or when a disability determination date
"'(4) No application for disability insurance benefits filed prior to 7 months before
the first month for which the applicant becomes entitled to receive such benefits shall
be accepted as an application for purposes
of this section.
" 'Determination of insured status
*"(b) An individual is insured for purposes of disability-insurance benefits if he
had not less than—
"'(1) six quarters of coverage (as determined under section 213 (a) <2) during the
13-quarter period which ends with the quarter in which his disability determination date
occurred; and
•"(2) twenty quarters of coverage during
the 40-quarter period which ends with the
quarter in which his disability determination date occurred.
In case such individual was previously entitled to disability insurance benefits, there
shall be excluded from the count of the
quarters in each period specified in paragraphs (1) and (2) any quarter any part of
•which was included in a period of disability
unless such quarter is a quarter of .coverage.
"'Disability determination date
(c) An individual's disability determination date shall be whichever of the following days is the latest:
•"(1) The day the disability began;
•••(2) June 30, 1951;
"•(3) The first day of the thirteenth
month prior to the month in which he filed
such application; or
*"(4) The first day of the first quarter in
Which he would be insured for disability insurance benefits with respect to such disability If he had filed application therefor In
such quarter.
" 'Determination of disability
(d) The Administrator shall make adequate provisions for. determination of disability and redetermlnations thereof at necessary Intervals; he shall provide for such
examination of individuals as is necessary
for purposes of determining or redetermining disability and entitlement to benefits by
reason thereof. An Individual ehall not be
deemed a permanently and totally disabled
individual unless he furnishes such proof
of his disability as may be required by regulation; and unless the evidence In the case
affirmatively establishes his disability. Reexaminations for redetermining the disability of an individual shall be made at periodic intervals except that the Administrator
may dispense with such reexamlnations of
an Individual after he has been entitled to
disability benefits for 2 years upon finding
that such examinations serve no further
purpose. Official medical examinations may
be performed in existing medical facilities
of the Federal Government If services are
readily available, and by impartial private
physicians, clinics, hospitals, or other ^medical facilities designated for conducting such
examinations. In the case of any individual submitting to an examination to determine his disability there may be paid
(1) the necessary travel expenses (Including subsistence expenses Incidental thereto),
either on a flat rate or a commuted basis,
"of such individual In connection with such
examination, and (2) If the examination Is
made by an individual who is not an employee of the United States, there may be
paid, either directly or through appropriate
Federal or State departments, agencies, or
commissions, the necessary fees, costs of
tests, and necessary travel expenses, either
on a fiat rate or a commuted basis, for such

examination. 'There Is hereby authorized to
be appropriated for each fiscal year from the
trust fund such amount as may be necessary
for the purpose of this subsection.
-" 'Reduction of benefit
*"(e) (1) Where a benefit Is payable to any
individual under this section and a workmen's compensation benefit or benefits have
been or are paid to such individual on account of the same disability for the same
month, such individual's benefit under this
section for such month shall, prior to any
deductions under section 220, be reduced
by one-half, or by an amount equal to onehalf of such workmen's compensation benefit or benefits, whichever is the smaller.
*"(2) In case the benefit of any Individual under this section Is not reduced as
provided in paragraph (1) because such benefit is*pair prior to the payment of the
workmen's compensation benefit, the reduction shall be made by deductions, at such
time or times and in such amounts as the
Administrator may determine, from any
other payments under this title payable on
the basis of the wages and self-employment
income of such individual.
" '(3) If the workmen's compensation benefit is payable on other than a monthly
basis (excluding a benefit payable in a lump.
sum unless it is a commutation of, or a
substitute for, periodic payments), reduction* of the benefits under this subsection
shall be made in such amounts as the Administrator finds will approximate, as nearly
as practicable, the reduction prescribed in
paragraph (1).
•"(4) In order to assure that the purposes
of this subsection will be carried out, the
Administrator may, as a condition to certification for payment of any disability Insurance benefit payable to an individual
under this section (If It appears to him that
there is a likelihood that such Individual
may be eligible for a workmen's compensation benefit which would give rise to a reduction under this subsection), require adequate assurance of reimbursement to the
trust fund in case workmen's compensation
benefits, with respect to which -such a reduction should be made, become payable to
such Individual and such reduction is not
*'*(5) For purposes of this subsection,
the term "workmen's compensation benefit"
means a cash benefit, allowance, or compensation payable under any workmen's compensation law or plan of the United States
or of any State.
" 'Termination of entitlement to benefits by
" *(f) In any case in which an Individual
has refused to submit himself for examination or reexamination in accordance with
regulations of the Administrator, or has
without good cause refused to take all steps
necessary to obtain and to accept rehabilitation services available to him under a
State plan approved under the Vocational
Rehabilitation Act (29 U. S. C, ch. 4) after
being directed by the Administrator to do
so, the Administrator may find, solely because of such refusal, that such individual
is not a permanently and totally disabled
individual or that his disability (previously
determined to exist) has ceased. The Administrator may find that an Individual is
not a permanently and totally disabled individual or. that his disability (previously
determined to exist) has ceased, if such individual is outside the United States and the
Administrator flnds^that adequate arrangements have not been made for determining
or redetermining such Individual's disability.
" 'Cooperation with agencies and groups
*• *(g) The Administrator is authorized to
secure the cooperation of appropriate agencies of the United States, of States, or of the
political subdivisions of States and the co-


operation of private medical, dental, hospital,
nursing, health, educational, social, and welfare groups or organizations, and where
necessary to enter into voluntary working
agreements with any of such public or private agencies, organizations, or groups in order that their advice and services may toe
utilized in the efficient administration of
this section.
"'Definitions of "disability" and "permanently and totally disabled individual"
- *(h) For the purposes of this titled"'(1) the term •'disability" means (A) inability to engage in any substantially gainful
activity by reason of any medically demonstrable physical or mental impairment which
Is permanent, or (B) blindness; and the term
"permanently and totally disabled individual" means an individual who has such
a disability; and
"*(2) the term ••blindness" means central
visual acuity of 5/200 or less in the better eye
with correcting lenses. An eye in which the
visual field is reduced to 5 degrees or less
concentric contraction shall be considered
for the purposes of this paragraph as having
a central visual acuity of 5/200 or less.
' " 'Definition of "period of disability"
" * (i) As used in this title, the term "period
of disability" means, with respect to any in-i
dividual, a period of one or more consecutive
calendar months for each of which such individual was entitled to a disability insurance benefit and the six calendar months,
preceding the first month of such period of
one or more consecutive calendar months,
except that if such individual ceases to be entitled to disability insurance benefits with
respect to a disability because he dies or
attains retirement age, the month in which
such individual died or attained such age,
as the case may be, shall also be included
in the period of disability with respect to
such disability.
" 'Rehabilitation
- " *(j) There is hereby authorized to be appropriated for each fiscal year from the trust
fund such amount as may be necessary to
provide rehabilitation services for the rehabilitation of disabled Individuals who are
entitled to disability Insurance benefits or
serving a waiting period for such benefits,
where It appears that such services may aid
in enabling such disabled individuals to return to gainful work. Insofar as practicable,
such services shall be provided through utilization of the services and facilities of State
agencies (or corresponding agencies in the
case of Territories or possessions) cooperating with the Federal Government In carry-^
ing out the purposes of the Vocational Rehabilitation Act, as amended (29 U. S. C,
ch. 4). Agencies providing such services shall
be reimbursed for the cost thereof.

" 'Events for which deductions are made
"'SEC. 220. (a) Deductions, in such
^mounts and at such time or times as the
Administrator shall determine, shall be made
from any payment or payments under this
title to which an individual is entitled, until
the total of such deductions equals such individual's benefit under section 219 for any
*'*(1) in which such individual rendered
services as an employee (whether or not
such services constitute employment as defined in sec. 210) for remuneration of more
than $50; or
' (2) for which such individual is charged,
pursuant to the provisions of subsection (c>
of this section, with net earnings from selfemployment (as determined pursuant to
subsec. (d) ) of more than $50; or
"'(3) in which such Individual fails to
submit himself for examination in accordance with regulations of the Administrator



•• *(4) in which such individual refuses
Without good cause to accept rehabilitation
services available, to him under a State plan
approved under the Vocational Rehabilitation Act after direction by the Administrator to do so; or
" '(5) in which such individual is outside
the United States if the Administrator finds
that adequate arrangements have not been
made for determining or redetermining the
existence of the disability of *such individual.
The Administrator may, if in his judgment
it will aid in the process of rehabilitation of
any* individual, suspend or modify the application of paragraphs (1) and (2) of this
subsection for any month during which such
Individual is receiving rehabilitation services under a State plan approved under the
Vocational Rehabilitatidn Act; except that
the Administrator may not so suspend or
modify the application of such paragraphs
for any month after the eleventh month following the first month for which such suspension or modification was applicable.
" 'Occurrence of more than one event
** *(b) If more than one event occurs in any
one month which would occasion deductions
equal to a benefit for such month, only an
amount equal to such benefit shall be deducted. The charging of net earnings from
self-employment to any month shall be
treated as an event occurring in the month
to which such net earnings are charged.
"'Months to*which net earnings from selfemployment are charged
" *(c) For the purposes of subsection (a)
(2) of this section—
" *(1) If an individual's net earnings from
self-employment for his taxable year are not
more than the product of $50 times the number of months in such year, no month in
Buch year shall be charged with more than
$50 of net earnings from self-employment.
" *(2) If an individual's net earnings from
self-employment for his taxable year are
more than the product of $50 times the number of months in-such year, each month of
such year shall be charged with $50 of net
earnings from self-employment, and the
amount of such net earnings in excess of
such product shall be further charged to
months as follows: The first $50 of such excess shall be charged to the last month of
such taxable year, and the balance, if any,
of such excess shall be (fharged at the rate
of $50 per month to each preceding month
In such year until all of such balance has
been applied, except that no part of such
excess shall be charged to any month (A)
for which such individual was not entitled
to a benefit under this title, (B) in which
an evenf described in paragraph (1), (3); (4),
or (5) of subsection (a) occurred, or (C)
in which such individual did not engage in
'"(3) As used in paragraph (2), the term
"last month of such taxable year" means the
latest month in such year to which the
charging of the excess described In such paragraph Is not prohibited by the application
of clauses (A), (B), and (C) thereof.
"'(4) For the purposes of clause (C) of
paragraph (2), an Individual will be presumed, with respect to any month, to have
been engaged in self-employment in such
month until it is shown to the satisfaction of
the Administrator that such individual rendered no substantial services In such month
with respect to any trade or business the net
income or loss of which Is Includlble for the
purposes of this subsection In computing his
net earnings from self-employment for any
taxable year. The Administrator shall by
regulations prescribe the methods" and criteria for determining whether or not an Individual has rendered substantial services
with respect to any trade or business.

" 'Special rule for computation of net earn-*
ings from self-employment
*'f(d) For the purposes of this section, an
individual's net earnings from self-employment for any taxable year shall be computed
as provided in section 211 with the following
"(1) Such computation shall be made
without regard to the provisions of subsections (a) (2), (c) (1), (c) (4), and (c) (5)
of section 211, and
*"(2) Such computation shall be made
' without regard to the provisions of sections
116, 212, 213, 251, and 252 of the Internal
Revenue Code.
" 'Penalty for failure to report certain events
" *(e) Any individual in receipt (on behalf
of himself or another individual) of benefits
subject to deduction under subsection (a)
because of the occurrence of an event specified, therein (other than an event described
in paragraph (2) thereof) shall report such
occurrence to the Administrator prior to the
receipt and acceptance of a disability insurance benefit for the second month following the month in which such event occurred.
If such Individual knowingly fails to report
any such occurrence, an additional deduction
equal to that imposed under such subsection
shall be imposed, except that the first additional deduction imposed by this subsection
In the case of any individual shall not exceed
an amount equal to 1 month's benefit 'even
though the failure to report is with respect to
more than 1 month.
" 'Report to Administrator of net earnings
from self-employment
" '(*) (1) If an individual is entitled to any
disability insurance benefit during any taxable year in which he has net earnings from
self-employment in excess of $50 times the
number of months in such year, such individual (or the Individual in receipt of such
benefit on his behalf) shall make a report
to the Administrator of his net earnings from
self-employment for such taxable year. Such
report shall be made on or before the fifteenth day of the third month following the
close of such year, and shall contain such
information and be made in such manner as
the Administrator may by regulations prescribe. If the individual fails within the time
prescribed above to make such report of his
net earnings from self-employment for any
taxable year and any deduction is imposed
under subsection (a) (2) of this section by
reason of such net earnings—
" ' (A) such individual shall suffer one additional deduction in an amount equal to his
benefit for the last month In such taxable
year for which he was entitled to a disability
Insurance benefit; and
" ' (B) if the failure to make such report
continues after the close of the fourth calendar month following the close of such taxable year, such individual shall suffer an
additional deduction in the same amount
for each month during all or any part of
which such failure continues after such
fourth month';
except that the number of the additional
deductions required by this paragraph shall
not exceed the number of months in such
taxable year for which such individual received and accepted disability Insurance
benefits and for which deductions are Imposed under subsection (a) (2) by reason of
such net earnings from self-employment.
If more than one additional deduction would
be imposed under this paragraph with respect
to a failure by an individual to file a report
required by this paragraph and such failure
Is the first for which any additional deduction la Imposed under this paragraph, only
one additional deduction shall be Imposed
with respect to such first failure.
"'(2) If the Administrator determines, on
the basis of information obtained by or sub-


mitted to him, that it may reasonably be
expected that an individual entitled to disability Insurance benefits for any taxable
year will suffer deductions Imposed under
subsection (a) (2) of this section by reason
of his net earnings from self-employment for
such year, the Administrator may, before the
close of such taxable year, suspend the payment for each month in such year (or for only
such months as the Administrator may
specify) of such benefits payable to him; and
such suspension shall remain in effect with
respect to the benefits for any month until
* the Administrator has determined whether or
not any deduction is imposed for such month
under subsection (a). The Administrator is
authorized, before the close of the taxable
year of any individual entitled to benefits
during such year, to request of such individual that he make, at such time or times
as the Administrator may specify, a declaration of his estimated net earnings from selfemployment for the taxable year and that he
furnish to the Administrator such other Information with respect to such net earnings
as the Administrator may specify. A failure
by such Individual to comply with" any such
request shall in Itself constitute justification
for a determination under this paragraph
that it may reasonably be expected that the
individual will suffer deductions imposed
under subsection (a) (2) of this section by
reason of his net earnings from self-employment for such year'."
On page 297, line 7, strike out "107" and
insert in lieu thereof "108."
On page 297, line 8, strike out "218" and
"106" and insert In lieu thereof "220" and
"107", respectively.
On page 297, line 11, strike ou*t "219" and
Insert in lieu thereof "221."
On page 297, line 21, strike out "108" and
insert in lieu thereof "109."
On page 307, line 12, strike out "109" and
Insert in lieu thereof "110."

The explanatory statement presented
* by Mr. MYERS is as follows:

Mr. President, on behalf of myself and

Senator THOMAS of Utah, I am introducing
an amendment to restore the disabilityInsurance provisions to the social security bill
essentially In the form in which they were
contained in the bill as it passed- the House
last year.
In proposing this amendment, I want to
make it quite clear that I do not intend to
detract from the merits of the bill as It was
reported from the Senate Finance Committee. Speaking as a member of that committee, I am very well aware indeed of the conscientious fashion In which the committee
worked out the provisions which were finally
reported in the bill, and I want especially
to pay tribute to the capable leadership of
the Senator from Georgia, as chairman of tho
A great deal of the committee's attention
was directed to the question of disability. A
provision for Insurance benefits to the disabled was incorporated in the original bill
as It was reported from the House Ways and
Means Committee, and as I have already indicated earlier* the disability feature was
adopted by the House In passing the bill.
A majority of the Senate Finance Committee, however, after considerable discussion,
voted to eliminate the House provision at
this time.
Essentially, Mr. President, I think we can
regard the problem of a person who becomes
permanently and totally incapacitated prior



to reaching the retirement age of 65 as simply
another phase of the aging process. All of us
realize, of course, that there are many persons who are perfectly capable physically
and mentally of constructive and useful employment for many years after they have
reached the age of 65. On the other hand,
there are obviously thoSe who age more
rapidly, usually as a result of an accident or
of some infirmity which incapacitates them
earlier than 'the age of 65. Whatever may
be the cause of the premature disability, the
net effect upon that person and upon those
dependent upon him is precisely the same as
the problem which is faced by one forced into
retirement at age 65 or thereafter.
The disabled person, incapable of further
employment, faces a loss of income in precisely the same way as one who goes into
retirement at 65. But the problem is more
serious when we consider that a person who
becomes disabled at, say, age 55, has 10 years
to wait before he can possibly become eligible
for retirement insurance benefits. Moreover,
the incapacitated person of 55 ceases to contribute further to the insurance fund with
the result that the retirement benefits he
might ultimately receive will be reduced or,
in many instances, wiped out altogether because he had not contributed a sufficiently
long period of time to vest permanently his
right to retirement insurance.
Most difficult of all for the 55-year-old
worker, and I will continue to use him as an
example here, is the bleak prospect of rehabilitation that lies ahead of him. While
it is true that substantial strides have been
made in recent years through rehabilitation
work, there are many types of disability
which are of such a serious nature that it is
utterly impossible to fit the incapacitated
person into any form of gainful employment
from which he may derive an Income.
Now there have been many arguments advanced against the principle of disability insurance. One of these most frequently
heard is directed at the malingerer—that is,
the employed person who simply grows tired
of working and drums up some plausible ailment, which so he says, makes further employment impossible. Critics of disability insurance contend that once such a provision
is brought into being there will be a wholeBale exodus of lazy people from their present
employment who will choose to sit and wait
for a monthly disability check to come in.
What I believe the critics fail to see, Mr.
President, is the fact that the disability insurance payments represent but a fraction
of the average earnings which the disabled
person received while fully employed. In
most instances the payments will be but a
third or less of the average income received
by the incapacitated person while working.
This, certainly, Mr. President, is a scant ln r
ducement to fraud. Moreover, the disability
payments do not depend upon the number
of dependents which the disabled person has.
A man with a family to support will find no
incentive here to abandon a Job he is capable
of handling in order to receive a payment
monthly which is but a small fraction of
what he is capable of earning.
But most important of all is my firm
belief in the American people—my belief
that they will not voluntarily give up to
laziness. Those who assert that disability
insurance will turn us into a nation of malingerers and laggards have no faith in the
fibre and the character of our people.
The amendment which we are submitting,
Mr. President, differs in some respects from
the provisions as set forth in the House bill.
I do want to make It clear that I believe
the House gave this problem the most thorough study and that its program was essentially sound. Further study of the House
measure, however, indicates several points
which can be clarified. I have included these
clarifications and improvements in my

For one thing, it is not clear from'the language of the House bill as to how great a
burden of proof would be imposed upon the
applicant for disability insurance. To my
mind, the disabled person should certainly
be required to carry the burden of proving
his incapacity. This is certainly a necessary
safeguard and a Just one. The incapacitated
person cannot merely contend that he has.
for example, an aching back, and thus is no
longer able to work. His disability must be
such that it can be demonstrated by clear
medical proof—medical proof that the disability is permanent and total and of such
a nature that he is Incapable of any type
of work, not just his usual job. A finding
would be required which would have to
show that the individual has no residual
work capacity which would permit him to
earn a regular iiving.
To be eligible for benefits, the worker
must have been in covered employment for
at least 5 of the 10 years preceding the
disability, and, in addition, he must have
worked in covered employment for at least
half of the 3 year-period immediately preceding disability. Benefits would become
payable only after a 6-month waiting period
and even then, only in an amount sufficient
to give XL minimum of security.
The amendment also provides that a person who had received disability payments
prior to the age of 65 would be transferred
automatically to the ordinary retirement
pension on reaching age 65.
The argument is often made that this proposal requires further study, and we often
hear that it would be Impossible to administer disability insurance objectively and efficiently. Both of these arguments fly
squarely into the face of our long-standing
experience with hundreds of disability programs—both public and private—which are
today administered successfully in every
State in the Union.
Disability provisions are found in retirement programs enacted by Congress for Government employees and railroad workers;
States and the Federal Government have
long administered disability programs under workmen's compensation laws. And, of
course, we cannot ignore the long and successful experience gained under programs for
disabled veterans.
I think it was quite fully developed in
the hearings before the committees ofN the
House and Senate that the disability problem Is one of extreme gravity. This certainly is conceded even by those who do not
favor the disability insurance principle as
the best means of meeting the need. It is
estimated that some 2,000,000 persons In our
working population who are below age 65 are
chronically disabled.*
A substantial segment of this group are
today cared for by existing public measures—
primarily local relief programs—and it is
quite generally agreed that the programs now
in existence are inadequate to meet the needs
of disabled workers with families. There is
agreement generally among those who favor
and oppose disability insurance that this
problem can only be met through some form
of public program, and that governmental
machinery must be established to provide
income maintenance, and furthermore, to
assist in rehabilitating as many disabled
people as possible.
Those who object to the principle of Federal disability Insurance contend that the
problem can best be met tnrough publicassistance programs—direct relief grants—
supplemented to some extent by private disability insurance.
Thus, Mr. President, it seems to me that
those who argue against disability Insurance
on the ground that lazy people will misrepresent their physical conditions are, at the
same time, admitting that it is perfectly all
right to support such people under local relief
programs. This, to me, is a curious contra-


diction. However, as I have indicated, I have
a sufficient faith in the integrity of the American people to believe that they will work
whenever they can find work, that they will
do the best they possibly can to enjoy all of
the good things of the American way of life
which they can possibly earn for themselves.
I see no inducement to malingerers in order
to get a disability insurance check which is
but a small fraction of their earning capacity
or to quit work in order to receive relief payments under some local program.
In connection with private disability Insurance, I should like to remark that, while
such insurance is available of course, these
policies are most circumscribed in their operation. They are, for the most part, limited
to a small specified list of risks, usually those
which might be encountered, say, in a given
Industrial situation or something of the sort.
Moreover, they are expensive and well beyond
the means of low-Income families. Perhaps
the most serious shortcoming of virtually
every private disability insurance system is,
the fact that the limited extent of their coverage fails to provide protection for some of
the most common causes of permanent disability. This becomes apparent when you
consider that 9 out of 10 accidents which
result in a permanent' incapacity are not
work-connected. Thus, workmen's compensation laws are of no assistance whatsoever
where the disability is not work-connected.
"A very essential part of any disability Insurance program involves the question of
rehabilitation work. That is, through the
operation of programs which assist the incapacitated person in adapting himself to
some form of useful employment from which
he may earn a livelihood. Our amendment
adds a feature not found in the House bill
In this regard. We are proposing to provide
additional assistance to State and local governments which will enable them to amplify
their existing rehabilitation facilites. Thus,
it Is not contemplated that the Federal Gov.
ernment will maintain and operate rehabilitation services as such, but rather, we fee!
that it is in the best interest to have t h t
rehabilitation programs developed and operated on State and local levels. We do recognize, however, that few if any State rehabilitation programs have yet developed to the
level that they are today adequate to meet
the needs of their disabled populations.
We propose that this assistance to the
States In enlarging their rehabilitation facilities should be made available from the insurance fund by earmarking a part of the
fund for this purpose. But, I repeat, our
fundamental Intention here is to permit
States and local governments to develop rehabilitation services to meet their particular
needs and we are merely using the mechanism of the trust fund to give them some
additional help in expanding their services.
In my discussion thus far I have sought to
outline the provisions of our amendment and
to set forth in a very general way some of the
supporting reasoning behind It. This discussion Is far from complete. Those Members of the Senate who are familiar with the
recommendations of the Senate Advisory
Council on Social Security will recall that
the Council, speaking through 15 of its 17
members, strongly advised adoption of the
disability Insurance provision. The Council
In the opening paragraph of Its discussion on
disability Insurance had this to say:
"Income loss from permanent and total
disability is a major economic hazard to
which, like old age and death, all gainful
workers are exposed. The advisory council
believes that the time has come to extend
the Nation's social-Insurance system to afford protection against this loss" (p. 69).
The council's report went on to observe:
"The council Is strongly Impressed with
the seriousness of the problems created by
permanent and total disability and with the
social disadvantages of compelling the vie-



tims of this misfortune to depend upon public assistance. We believe that there is
enough administrative ability in our Government organization to provide effective
machinery for meeting, this pressing social
need" (p. 70).
I want to expand somewhat, Mr. President,
on the council's observation that public assistance is scarcely the way in which the
problem of permanent and total disability
should be met. For one thing, as I have already stated, public-assistance programs are
quite inadequate to handle this problem. A
still more fundamental difficulty, I believe,
is found in the fact that public assistance
is not a self-supporting program. It is, instead, supported by general tax revenues.
Too, as I mentioned in my opening remarks,
disability prior to retirement age is simply
another phase of the retirement problem.
It is premature retirement brought about
through some circumstance, generally accidental in nature, which removes a worker
from gainful employment prior to the time
persons of his age would normally expect to
retire. Yet, the problem for the disabled
person is just as acute as is that faced by a
worker who retires at age 65 or thereafter
and is without other income to maintain
himself and his family. But, in one sense,
this forced premature retirement as a result
of disability may have more serious economic
consequences than retirement at the normal
retirement age. An unexpected disability
may come well in advance of the time that
a man who is planning for his ultimate retirement may have anticipated. And this
I believe is particularly tragic, because disability frequently occurs at the peak of a
man's earning capacity, at a time he may be
completing the purchase of his home and
just beginning to put aside money for his
ultimate retirement.
So, in closing, Mr. President, I urge strongly that our amendment be adopted. I believe that a self-supporting insurance system is far and away preferable to the present
method which depends exclusively on taxsupported public assistance for the support
of our needy disabled. What we are doing,
in short, by adopting this amendment, is
merely lowering the retirement age for those
forced from gainful employment as a consequence of permanent and total disability.
I think that this is completely consonant
with the concept of social insurance which
is designed to provide minimum security for
these who suffer income loss as a result of
retirement—and I believe it is only consistent that we should recognize retirement may
not be caused exclusively by reaching the
legally prescribed age of 65.
Adoption of this amendment, Mr. President, would eradicate the shadow of insecurity and virtual destitution which threatens any working person today who might tomorrow find himself totally incapacitated
and incapable thenceforth of providing for
himself and his family. Social insurance is
a dignified means of banishing that shadow.
It is self-supporting. It does not carry with
it the stigma of a relief hand-out. We have
in this-amendment a vehicle by means of
which those covered by social security may
by their contributions to the insurance fund
spread the risk of economic tragedy which
might befall them in the event of disability.

As in executive session,
The PRESIDENT pro tempore laid
before the Senate messages from the
President of the United States submitting sundry nominations, which were
referred to the appropriate committees.
(For nominations this day received,
see the end of Senate proceedings.)


As in executive session,
The following favorable reports of
nominations were submitted:
By Mr. JOHNSON of Colorado, from the
Committee on Interstate and Foreign Commerce :
George E. Sterling, of Maine, to be a member of the Federal Communications Commission for a term of 7 years from July 1,
1950 (reappointment).

The PRESIDENT pro tempore. In
his capacity as a Senator, the Chair asks
unanimous consent to have inserted in
the RECORD an editorial about the Corps
of Engineers of the "United States Army,
today, June 16, being the anniversary
of the corps, which has done such wonderful things for our country in both
peace and war.
This editorial is entitled "Fighting
Builders," and was written by Mr. Jack
Carley, of the Commercial Appeal, of
Memphis, Term., and published in the
Sunday, June 11, 1950, edition of that
It is one of the most beautiful tributes
to the Corps of Engineers the Chair has
seen in a long time, and he takes pleasure in having it printed in the RECORD.
The Chair calls the attention of all Senators to the editorial and hopes they will
read it.
There being no objection, the editorial
was ordered to be printed in the RECORD,
as follows:

MaJ. Gen. Richard Gridley was busily supervising construction of Bunker Hill's breastworks on the day General Washington appointed him Chief Engineer of the Grand
Army (Continental). Gridley kept on building and made such a good Job of it that
Britain's crack grenadier guards quit after
three unsuccessful assaults against the
breastworks and what was behind them.
This week the Corps of Engineers, United
States Army, is pridefully observing .its
founding anniversary.
Since Gridley's day the Corps of Engineers
has marched far, built much, and fought
all comers. Along with that, it has produced such perless military leaders as the
South's incomparable Robert E. Lee and the
present turbulent world's redoubtable Douglas MacArthur; and that's a reminder that
great names and tough jobs have -been common with the corps—George Goethals building the Panama Canal; Lew Pick bulldozing
a Ledo road into vital usefulness; Bill Hoge
directing the taking of the Remagen Bridge
with the same ease he'd direct the building
of a main-line levee; Don Noce's amphibian
engineers putting combat troops ashore in
147 Southwest Pacific beachhead landings.
From Gridley's breastworks in 1775 to the
killing drifts of the West's 1948 Operation
Snowbound, the "pick-and-shovel soldiers"
have helped make gallant American history
with sweat and blood and calloused hands.
What's written into so fine a record is as
imperishable as it has been brave.
We started to felicitate old friends. Somehow It seems more fitting Just to say,
"Thanks, soldier—and good going."

Mr. STENNIS. Mr. President, I ask
unanimous consent to have inserted in
the RECORD a statement prepared by me


and a proclamation by the Governor of
Mississippi commemorating the onehundred and seventy-fifth anniversary
of the United States Corps of Engineers.
There being no objection, the statement and proclamation were ordered to
be printed in the RECORD, as follows:
It was a fortunate circumstance that our
first great general was an engineer. It was
Just 175 years ago today that-a request of
General George Washington was acted upon
by the Continental Congress and the Corps of
Engineers created.
The Corps consisted of a chief and two
assistants and their first job was to throw
up the defenses at Bunker Hill; and, their
second, to put aside shovels and join in the
The Army engineers have been serving the
National Military Establishment and the
Nation down through the years to the present
day. The Engineer Corps increased in size
and Importance through the years as the
young Nation moved forward to its high
The Corps reached Its pinnacle of strength
in the recent war when 700,000 officers and
enlisted men wore the famous castle insignia. It is interesting to note that more
than 500,000 of these men were overseas in
the thick of battle operations. The greatest
single production feat of the war, the development of the atom bomb, was under the
direction of the Corps of Engineers.
But, Mr. President, age and size and wartime achievement are not the basic fact
about the engineers in their relation to our
Nation's growth. The important thing is
that they have been kept as active in the
service of their country in years of peace as
in war.
At every hand, in every State, there is some
useful monument to their service, be It a
giant dam, a magnificent building, or merely
a surveyed boundary line. Year after year,
at the bidding of the Congress, they have
been entrusted with vast funds and important works. It Is a unique tribute to
their honesty and integrity that no serious
reflection has ever been cast upon their
In my own State the engineers are held in
highest esteem for having harnessed the
great flood tides that roll down the Mississippi to the sea.
In recognition of their work and as a mark
of the peopled appreciation, the Governor of
Mississippi, the Honorable Fielding Wright,
has caused to be Issued a proclamation commemorating this one-hundred and seventyfifth birthday of the Corps of Engineers.
It reads as follows:

"Whereas June 16 marks the one hundred
and seventy-fifth anniversary of the establishment of the Corps of Engineers, United
States Army, by the Continental Congress;
"Whereas this body of trained engineers
has, through great courage and resolute
spirit, crossed the seas and bridged the rivers
to reach our enemies in time of war; and
"Whereas through their civil works program as authorized by the Congress, the Corps
of Engineers, United States Army, has Improved the Nation's harbors for world trade
and harnessed rivers for protection against
floods; and for the extension and advancement of water-borne commerce; and
"Whereas the activities of the Corps of
Engineers, United States Army, both in peace
and war have been of great benefit to this
"Now, therefore, I, Fielding L. Wright,
Governor of the State of Mississippi, do hereby proclaim the day of June 16, 1950, to be
Engineers Day and do urge the citizens of the
State of Mississippi to pay homage to their
past accomplishments, to their mighty war
efforts, and pledge our support to their progressive and constructive works during our
years of peace.
, '
"In testimony whereof, I have hereunto set
my hand and causey the gr,eat sqal of the
State of Mississippi totoe,affixed,* this the 2d
day of June 1950.


r ng


organization In Europe; Congress will
Inevitably consider anew several factors:
1. The economic Integration of Europe Is a
Digger Job and will take a longer time than
was at first realized by most people.
2. The building of an integrated European
3conomy can take place only behind restrictions which will keep out competing United
States supplies of certain farm and manufactured products while "infant" soft-currency sources of supply are developed. The
hope is that after a transition period the new
Integrated Europe will be able to stand on
Lts own feet in competition for world markets and that its revived economy will provide a better market for United States exports than ever before. The short-run consequences of such action when the United
States is beginning to be conscious of the
problem of finding markets for its exports
cannot be ignored.
3. The commitment of the United States to
i regional military program by our participation in the North Atlantic Treaty may necessitate" a regional economic program as a sup- *
plement. Nations which are bankrupt or
the victims ^of increasing economic 1 .unrest
sannot be effective military partners.
4. A strong argument can be made that at
some time before 1952 a change in the basis
for ECA appropriations should be made:
that is, funds should be allocated less and
less on the basis of the dollar deficits of the
receiving countries and more and more to.,
finance programs for constructive development. An appropriation to underwrite the
European Payments Union would be a step in
this direction.
Such an appropriation should not be made
as an addition to ECA aid. Every dollar
Europe receives from any source eases its
dollar shortage. An appropriation to finance
a clearing arrangement should be a diversion
of dollars which would otherwise have been
allocated to individual countries.
OF 1950

and share croppers, need social-security protection. The public-assistance loads in the
agricultural States reflect this heed. To go
beyond the coverage that is proposed in the
bill, however, without further study of the
administrative problems that would arise,
would be impracticable. I regret that I am
compelled to advocate delaying the extension
of coverage to agricultural workers not covered by the bill until a thorough study of
the feasibility of such coverage has been

Later in his statement the able Senator from Georgia made further reference
to the same subject in the following
As I indicated earlier, the bill does not
provide social-security protection for all citizens of the Nation. Some groups, such as
share croppers, migrant agricultural labor,
and part-time domestic servants, who are
not brought under Insurance coverage, need
protection. I regret that further extension
of coverage must await more detailed study
of the problems inherent*in bringing additional persons within the system.

I fully approve the conclusion reached
by the Senate Committee on Finance
that workers on farms need social-security protection. I als i approve their recommendation that all of such workers
who can be brought under the protection
of the system at this time without bringing on complex bookkeeping and administrative burdens for the farmers should '
be included within the scope of the pending amendments.
Inasmuch as only a part of the agricultural workers are included within the
amendment, whereas a larger part are
excluded, I think it is highly desirable
to clarify the subject for the record as
much as possible. Since the Senator
from Georgia is'absent on official busiThe Senate resumed the consideration ness I should like to address several quesof the bill (H. R. 6000) to extend and im- tions to the distinguished junior Senaprove the Federal oldage and survivors tor from Colorado [Mr. MILLIKIN], rankinsurance system, to amend the public- Ing minority member of the committee,
assistance and child-welfare provisions relating to those provisions of the pendof the Social Security Act, and for other ing bill which deal with the subject of
agricultural labor. I shall appreciate it
The PRESIDING ^OFFICER. There if the Senator from Colorado will accord
being no further routine business, the me that privilege,
Senator from Florida [Mr. HOLLAND] is
Mr. MILLIKIN. Mr. President, if the
recognized under the unanimous-consent Senator
will yield, I wish to say that I
be delighted to do the best I can.
Mr. HOLLAND. Mr. President, I note shall
Mr. HOLLAND. I thank the Senator.
that in his opening statement in the defirst question is this. At the top
bate of the pending measure, H. R. 6000, of My
263 of the printed bill, in secthe distinguished chairman of the Sen- tionpage
104 (a) of the bill, there appears
ate Committee on Finance [Mr. GEORGE] as a part
of section 213 of the amended
speaking.for himself and as chairman
Security Act the following verbiof the committee, advised the Senate Social
that under the recommendations of the age:
SEC. 213. {a) For the purposes of this
committee about 1,000,000 persons en- title—
gaged in agricultural work are brought
(1) The term "quarter** and £he term
under the social-security system. I "calendar
quarter" means a period of three
quote from the statement of the Senator calendar months ending on March 31, June
from Georgia, as follows:
30, September 30, or December 31.
Workers on farms who are employed by one
Applying the definition just quoted to
employer at least 60 days and earn $50 or
that portion of the bill that deals with
more in a calendar quarter are covered, and,
in addition, border-line agricultural workers, agricultural labor, is it possible to consuch as those engaged in processing and. strue the terms "quarter" or "calendar
packing of agricultural and horticultural
quarter" to mean a 3 months' period
commodities off the farm, are brought under
commencing with the first day-of the
the system. These groups total about 1,000,- employment of any agricultural laborer,
000 persons. The committee gave careful
or is the time of employment of an agristudy to the extension of coverage to workcultural laborer under the terms of this
ers on farms. It proposes this limited extenbill computed strictly with reference to
sion of coverage at this time in order to
the calendar quarters defined by that
assure simplicity of administration for the
farmer. There is no question but that work*
portion of the bill which I have just
ers on farms, including migratory workers

J U N E 16
Mr. MILLIKIN. Mr. President, I do
not believe It is possible to construe the
terms "quarter" or "calendar quarter"
to* mean a 3 months* period commencing with the first day of the employment of any agricultural labor. It seems
clear to me that the language means a
calendar quarter, the first quarter being
the first 3 months starting from the first
of the year, the second quarter being
the next 3 months, and so on, until we
have four quarters.
Mr. HOLLAND. I thank the Senator.
I next refer to that portion of the bill
appearing as part of section 210 of the
amended Social Security Act (a) (1) (A),
beginning at line 16, page 240 of the
printed bill, and extending through line
7 of page 241, which reads as follows:

Except that, in the case of service performed after 1950, such term shall not include—
(1) (A) Agricultural labor, as denned in
subsection (f) of this section) performed in
any calendar quarter by an employee, unless
the cash remuneration paid for such labor is
$50 or more and such labor Is performed for
an employer by an individual who is regularly employed by such employer to perform
such agricultural labor. For the purposes
of this paragraph, an individual shall be
deemed to be regularly employed by an employer during a calendar quarter only if (i)
on each of some &> days during such quarter
such Individual performs agricultural labor
for such employer for some portion of the
day, or (ii) such individual was regularly employed (as determined Under clause (i) ) by
such employer in the performance of such
labor during the preceding calendar quarter.

My second question to the distinguished Senator from Colorado relates
to the requirement that an individual
farm employee shall be deemed to be
regularly employed by an employer during a calendar quarter, only if such individual performs agricultural labor for
such employer "on each of some 60 days
during such quarter." What is the
meaning of the words "some 60 days," as
appearing in the section of the bill from
which I have just quoted?
Mr. MILLIKIN. The use of the word
"some" is to afford a distinction between
60 consecutive days of labor during the
quarter and 60 unconsecutive days of
labor during the quarter.
Mr. HOLLAND. In other words,
whether the 60 days are consecutive or
not, if they appear as days within the
calendar quarter, they will satisfy this
particular requirement of the bill. Is
that correct?
Mr. MILLIKIN. Exactly.
Mr. HOLLAND. My third question relates to the words "for some portion of
the day" as they appear in the section
which I last quoted. Am I correct in my
understanding that if the employee performs agricultural labor for the employer during any portion of a calendar
day during a calendar quarter, whether
such portion shall be for only a few minutes or for any number of hours of said
calendar day, such calendar day snail
count as 1 day of employment during said
calendar quarter?
Mr. MILLIKIN. I think the Senator
Is entirely correct in his interpretation.
Mr. HOLLAND. My fourth question
is this. Then the hours worked by the
employee bear no relation whatever to



the day factor, either by way of permitting the employer to add together parttime work in a group of several days to
make 1 day or by way of fixing any
limitation on the number of hours of
work in any 1 day which should count
as a full day, with the right of the employee to carry over any excess number
of hours of work to another or a different
Mr. MILLIKIN, The employee or the
employer would not have any right to
carry over any of the hours of 1 day's
work to some other day.
Mr. HOLLAND. My fifth question is
this: If the agricultural worker qualified
under the term employment for the first
quarter, both by working 60 days and by
receiving cash remuneration of $50, is it
not correct that for the second of two
consecutive quarters, the only requirement for coverage under the term employment is the payment of $50 of cash
remuneration during the second quarter?
- Mr. MILLIKIN. The distinguished
Senator is entirely correct.
Mr. HOLLAND. My sixth question is
this: What provision of the bill, if any,
will prevent an employer from employing an agricultural worker 59 days or
less in a quarter and rehiring him in th&
succeeding quarter for 59 days or less,
thus depriving the worker of the coverage of the law?
Mr. MILLIKIN. There is nothing in
the bill which would prevent that.
Mr. HOLLAND. My seventh question
is this: What provision of the bill, if any,
will prevent an employee who does not
want to make contributions under the
bill from working 59 days or less in a
quarter for a single employer, and then
ceasing work or going to work for another employer, thus avoiding coverage
under the law?
Mr. MILLIKIN. My answer is that
there is no provision of the bill which
would prevent a practice of that kind.
Mr. HOLLAND. My eighth question
Is this: Referring to the statement of
the Senator from Georgia [Mr. GEORGE],
on page 8615 of the CONGRESSIONAL RECORD of June 13, 1950, to the effect that
migrant agricultural labor is not
brought under insurance coverage by
the pending measure, is it not true that
this statement is based entirely on the
provision which may be referred to as
the 60 days and $50 provision in section
210 (a) (1) (A), which I have quoted
into the RECORD? In other words, there
is no express reference to migrant agricultural labor, as such, by the terms of
the pending measure, is there? Also,
is it not true that part-time employees
are equally excluded, along with migrant
employees, under that provision?
Mr. MILLIKIN. Answering the first
question first, let me say that I do not
recall any specific reference in the bill
to migrant agricultural labor, described
as such. The Senator is entirely correct when he says that the basic definition, that which excludes a migrant
worker from the coverage of the bill, is
in the language he has quoted.
Mr. HOLLAND. That is, in the 60day and $50 provision?
Mr. MILLIKIN. Yes; in the 60-day
and $50 provision.

Mr. HOLLAND. Am I also correct in
saying that, by the same provision, parttime labor—that is, labor which has not
been employed 60 days in any calendar
quarter and has not received $50 in such
calendar quarter—is also excluded,
along with migrant labor, from the coverage of the law?
Mr. MILLIKIN. That is true.
Mr. HOLLAND. My ninth question
is this: Is it not true that share croppers
are excluded from the coverage of the
bill? If so, is it not true that this exclusion of share croppers arises entirely
under the cash-remuneration reouirement in section 210 (a) (1) (A)? In
other words, is it true that there is no
express reference to share croppers, as
such, by the terms of the pending measure?
Mr. MILLIKIN. I do not recall any
description of share croppers, as such,
in the pending measure.
Mr. HOLLAND. Is it true that they
are ex?luded from coverage, as statsd
by the distinguished senior Senator from
Georgia [Mr. GEORGE] , by th^ us* of the

words "cash remuneration/' which is
required to constitute any regular employee?
Mr. MILLIKIN. That is correct.
Mr. HOLLAND. My tenth question is
this: When is the employer privileged
to begin making deductions for socialsecurity tax from the compensation of
the employee? We have received a considerable number of requests on this
point from vegetable producers in the
State of Florida, who, recognizing the
fact that it will not be known until late
in the quarter whether an employee is
covered or is not covered, are disturbed
about the question of whether they
should begin to make deductions to cover
the employee's contributions to this tax
at the first employment, • or only after
the 60 days of labor have been completed, thus qualifying the worker to
come within the term of "regular agricultural employee."
Mr. MILLIKIN. As a matter of right,
as distinguished from what might be an
agreement between the employer and
the employee, I would say there is no
right to make a deduction until 60 days
have been worked in a calendar quarter.
That leaves, I suggest, sufficient protection to the employer.
I assume that the Senator has in mind,
perhaps, some worker who may be working for 60 days, being paid, we will say,
weekly, and perhaps disappearing before
the proper deductions are made. I think
that, as a practical matter, the last
week's work, or whatever the number
of days that would be involved, would
provide sufficient wages out of which the
employer could make his deduction. The
reason for being required to wait that
long is that the worker has a right to
quit after the first week, or at any time
short of a full quarter, and it would be
unfair to make a deduction from his
first week's pay, if he left after that
time, before completing 60 days' work
in the quarter, because he would not be
owing anything; and, on the other hand,
the employer is not obligated to make
any reports or payments until after the
man has worked 60 days.


Mr. HOLLAND. As another part of
the sams question, I should like to ask
the distinguished Senator this: If deductions for the tax are made by an
employer, and the employee works less
than 60 days, is it not true that the employee is entitled to a refund under F*ich
Mr. MILLIKIN. H: certainly would
be. That carries me back to a remark I
made a moment ago. If by agreement
between employer and employee, the employer were entitled to take out the tax
week by week, obviously I should think
such an agreement would require a rebate of the money. Otherwise, I do not
believe the question arises, because,
as I suggested before, the employer has
no reporting obligation and no paying
obligation until after the 60-day period
during the quarter, and he will have the
opportunity, I suggest, let us say during
the last week, of having sufficient money
due the employee to make the necessary
Mr, HOLLAND. My eleventh question
is this
Mr. MILLIKIN. May I make one
more suggestion?
Mr. HOLLAND. I shall be glad if the
Senator will.
Mr. MILLIKIN. The amount is l*/2
percent of the rate of the worker'sJ wages,
and as a practical matter that l /2 percent, applied to any wages which might
be received by the type of employee the
Senator is discussing, would allow, perhaps even out of one day's employment,
considerable leeway for the deduction at
the end of the quarter.
Mr. HOLLAND. My eleventh question
is this.: section 210 (a) (1)
(A)t line 24, page 240, through line 7t
page 241 of the printed bill, is it not true
that under this provision agricultural
workers working side by side in a farmer's field will be differentiated as to
whether they are subject to social-security benefits by virtue of the number
of days they have worked for that particular employer during the previous calendar quarter?
Mr. MILLIKIN. That is entirely correct.
Mr. HOLLAND. My twelfth question
is this: I note that there is no definition
of the word "employer" stated in the bill
itself, as there is of the word "employee,"
and of most all the other terms. Will
the Senator state for the RECORD the
definition of the word "employer" which
he would regard as appropriate for the
purposes of this bill?
Mr. MILLIKIN. I should not want to
attempt an off-the-cuff definition of the
word, but I think that, in common parlance, it has a very well-defined meaning.
It is the man who pays the wages, and it
is the man who has control and direction over the employee's labor.
Mr. HOLLAND. I will not press the
Senator, but will he say for the record
that the proper definition of this term
for the purposes of this bill would be
the common-law definition as the same
may be affected by any of the specific
verbiage of the bill?
Mr. MILLIKIN. Yes; I would say so.
Mr. HOLLAND. The Senator has
been extremely patient, which I appreciate.



Mr. MILLIKIN. I wish to express my
appreciation of the very finely phrased
and important questions which the
Senator from Florida has propounded.
Mr. HOLLAND. I thank the Senator,
It seemed to the Senator from Florida,
in view of the fact that only a small
fraction of the total of agricultural
workers was to be covered under the
terms of the proposed bill, and that
many of its terms were new to the body
of our law, that it was highly appropriate, if not necessary, that this entire
matter be explored for the protection of
the worker and for the protection of employers in the agricultural field, particularly under the.statement of the Senator
from Georgia, that the committee had
sought to confine itself, by the additional and partial coverage given in that
field under this bill, to such coverage as
could be effected without bringing undue
hardship or complexity or administrative difficulties upon the farmers of the
Mr. MILLIKIN. I think the Senator's
questions are especially pertinent, due to
the conditions that exist in his own
State and in other States which have
somewhat comparable situations, where
a large amount of migrant labor is necessary for the harvesting of the crops.
Mr. HOLLAND. I thank the Senator.
I should like to ask one additional question, because I think it is wholly pertinent. So far as migrant labor is concerned, is it correct that there is nothing whatever to exclude migrant labor
by reason of the mere fact that the
workers travel from place to place, provided that they stay in any one place
of employment under one particular
agricultural employer so long as to have
worked 60 days and to have received $50
in cash remuneration during any calendar quarter, as set forth in the bill?
Mr. MILLIKIN. The Senator is entirely correct. In asking his question,
I am sure he has in mind what happens in the second quarter, where a man
has complied with the conditions affecting the first quarter. He does not have
to work 60 days in the second quarter;
he can work any amount of time, if he
gets $50 during that time.
Mr. HOLLAND. I thank the Senator.
The real purpose of my question was to
make it clear that there was no purpose
on the part of the committee, nor will
there be any purpose on the part of the
Senate if it passes this measure—which
I hope it will—to exclude any workers or
their families from the coverage of the
law by reason of the mere fact that they
travel from place to place in following
the crops and therefore come within the
accepted category of the term "migrant"
or "migratory agricultural workers."
Mr. MILLIKIN. They would be clearly included in the coverage if they met
the 60-day and $50 per quarter requirements.
Mr. HOLLAND. I am deeply appreciative of the kindness and the patience
of the Senator from Colorado.
Mr. MILLIKIN. I thank the Senator
very much.

The PRESIDENT pro tempore. The
next order of business is the call of the

Mr. STENNIS. Mr. President, not being able to tell the time at which the
questions were going to be concluded,
quite a number of Senators are absent.
I suggest the absence of a quorum.
The PRESIDENT pro tempore. The
clerk will call the roll.
The legislative clerk called the roll,
and the following Senators answered to
their names:

Johnson, Colo.
Johnson, Tex.

Smith, Maine
Smith, N. J.
Thomas, Utah


S. 404. An act for the relief of Emma L
S.749. An act for the relief of Ferd H<
S. 977. An act for the relief of Jacque3
Yedid, Henriette Yedid, and Ethel Danielle
S. 1693. An act for the relief of Karin Margareta Hell en and Olof Christer Hellen;
S. 1719. An act to amend section 3 of the
act of Congress approved June 28, 1906,
relating to the Osage Indians of Oklahoma;
S. 1739. An act to amend section 4934 of
the Revised Statutes (XT. S. 0., title 35, sec.
78), as amended, to permit public libraries
of the United States to acquire back copies
of United States letters patent, and for other
S. 1929. An act for the relief of Anna Samudovsky;
S. 2338. An act for the relief of J. M. Arthur; and
• S. 3093. An act to amend section 82 of the
Hawaiian Organic Act relating to the Supreme Court of the Territory of Hawaii and
temporary vacancies therein.

The PRESIDENT pro tempore laid
The PRESIDENT pro tempore. A, before the Senate the following message
quorum is present.
from the President of the United States,
which was read and, with the accomMESSAGES PROM THE PRESIDENTpanying bill, ordered to lie on the table
Messages in writing from the Presi- and to be printed:
dent of the United States were commu- To the Senate:
nicated to the Senate by Mr. Miller, one
I am returning herewith, without my
of his secretaries, and he announced that approval, S. 1008, a bill to define the
the President had approved and signed application of the Federal Trade Comthe following acts:
mission Act and the Clayton Act to cerOn June 12, 1950:
tain pricing practices.
S. 947. An act for the relief of the Baggett
It is the purpose of this bill to elimiTransportation Co. Inc.;
S. 1510. An act for the relief of James I. nate confusion and uncertainty under
these acts regarding the legality of
freight absorption and the sale of goods
S. 1798. An act for the relief of Mrs. Minda
at delivered prices. Further, the Trill
Moore; and
S. 2646. An act for the relief of the Artlc- provides a definition of the extent to
aire Refrigeration Co.
which "good faith" meeting of competiOn June 13, 1950:
tion is a defense against a charge of
S. 1863. An act for the relief of Fremont
illegal price discrimination.
Rider; and
It is obviously desirable for laws to be
S. 2385. An act for the relief of Edward C.
as clear as possible. After careful study,
On June 14, 1950:
however, I am convinced that the bill
S. 274. An act for the relief of Constantin
would not achieve the clarification which
E. Aramescu;
is desired. Instead, through the introS. 1423. An act for the relief of Alex Mornduction of new and uncertain legal
terminology, and through its confusing
S. 1856. An act for the relief of Sisters
legislative history, the bill would obMaria Rita Rossi; Maria Domenlca Paone,
scure, rather than clarify, the law. As
Rachele Orlando, Assunta Roselll, Rosa Innocenti, and Maria Mantinelli;
a result, it would make it more difficult
S. 1959. An act to commemorate Jim
for businessmen, administrative agenWhite and his contribution to the early hiscies, and the courts to understand and
tory of Carlsbad Caverns, in the State of New
apply the legal safeguards against moMexico, and for other purposes;
nopoly and unfair competition. MoreS. 2108. An act for the relief of Italo Vespa
over, the bill contains provisions which
de Chellis;
might be interpreted, after protracted
S. 2117. An act to provide for the designalitigation, to impair the effectiveness of
tion of the reservoir to be formed by the
Davis Dam on the Colorado River as Lake
the antitrust laws.
Because of the increasing complexity
S.2274. An act to provide for the addiof our economic system, the laws protion of certain lands to El Morro National
tecting fair competition have been
Monument, in the State of New Mexico, and
amended from time to time, and thfc
for other purposes;
S.2969. An act to authorize relief of aujudicial decisions interpreting those laws
thorized certifying officers of terminated war
have taken account of specific situations
agencies in liquidation by the Department
not anticipated by those who drafted the
of Commerce; and
laws originally. When further amendS. 3226. An act to authorize relief of auments of the antitrust laws are needed
thorized certifying officers of terminated war
to meet new problems, they should be
agencies In liquidation by the Department of
enacted in a form which clearly preInterior.
serves the basic purpose of these laws— On June 15, 1950:
S.356. An act for the relief of Hugo Gelthe protection of fair competition and
the prevention of monopoly.



committed to a three-step program.
With any assurance of administrative
backing they would form a patriotic organization to project the spirit and will
of the American people through the Russian curtain into the eyes and ears and
hearts of the people of Russia. This
would be done in news sheets, leaflets,
magazines, and radio programs.
Along with this should go a stepping
up of the use of existing Government
agencies to pour information into Russia
and her satellites. This was the purpose
of Senate Resolution 243, submitted by
the junior Senator from Connecticut,
of which I, myself, was one of the 13
sponsors from both sides of the aisle.
The third step would be to create underground machinery for penetrating the
iron curtain with this gospel of friendship, understanding, and cooperation.
The agents of this crusade would be the
Russian escapees now in Europe. I have
had letters from more than one of them
indicating their desire to do something
constructive instead of rusting their lives
away in exile. The means are at hand.
Let us use them.
Surely, Mr. President, here is a plan
worth getting behind and supporting.
When soldiers work for peace and present a clear-cut plan for undertaking it,
the rest of the country, and certainly its
Government, cannot refuse its support.
Mr. President, and I speak now both
to the President of the Senate and to the
President of the United States, let us go
on the offensive and end the cold war.
Mr. President, I express my thanks to
the Senator from Washington for yieldr
ing to me in order that I might make the
OF 1950

The Senate resumed the consideration
of the bill (H. R. 6000) to extend and improve the Federal old-age and survivors
insurance system, to amend the publicassistance and child-welfare provisions
of the Social Security Act, and for other
Mr. KNOWLAND. Mr. President, will
the Senator from Washington yield to
me for a statemjnt, not to exceed 10.
minutes, relative to an amendment I am
submitting to the pending bill?
Mr. CAIN. Mr. President, the Senator from Washington asks unanimous
consent that the Senator from California
be permitted to speak for 10 minutes
without the Senator from Washington
losing his right to the floor.
The PRESIDING OFFICER (Mr. LEHMAN in the chair). Without objection,
it is so ordered, and the Senator from
California may proceed.
Mr. KNOWLAND. Mr. President, at
this point in the RECORD, as a part of my
remarks, I should like to have printed a
copy of an amendment which I have
heretofore submitted to House bill 6000,
to extend and improve the Federal oldage and survivors insurance system,
and so forth, and along with that I
should like to have printed immediately
following it a telegram which I have received from James G. Bryant, director
of employment, California Department

of Employment; a telegram from Harry
Benge Corzier, chairman, and Dwight
Horton, and Dean W. Maxwell, commissioners, of the Texas Employment Commission; and a telegram from Gov. Allan
Shivers of Texas.
There being no objection, the amendment and the telegrams were ordered to
be printed in the RECORD, as follows:
KNOWLAND TO H . R . 6000

At the end of the bill add the following:

AUSTIN, TEX., June 15, 1950.

United States Senate,
Washington, D. C:
The Texas Employment Commission warmly commends you for sponsoring amendment
to H. R. 6000. We are sure all of the State
agencies are grateful to you.






AUSTIN, TEX., January 15f 1950.

"SEC. 405. (a) Section 1603 (c) of the I n - Senator WILLIAM F. KNOWLAND,
United States Senate,
ternal Revenue Code is amended (1) by strikWashington, D. C:
ing out the phrase 'changed its law' and
Your amendment to H. R. 6000 is highly
inserting In lieu thereof 'amended its law*,
and (2) by adding before the period at the appreciated by me as I am sure it is by
end thereof the following: 'and such finding governors of other States.
has become effective. Such finding shall beGovernor of Texas.
come effective on the ninetieth day after
the governor of the State has been notified
Mr. President, the
thereof unless the State has before such
unemployment-compensation amendninetieth day so amended its law that it
ment I propose is made necessary by
will comply substantially with the Secretary's .interpretation of the provision of sub- recent events to which I shall refer.
section (a). In which event such finding
As we know, the Federal unemployshall not become effective. No finding of a ment-compensation-tax laws impose a 3failure to comply substantially with the pro- percent tax on employers. When a State
vision in State law specified in paragraph
(5) of subsection (a) shall be based on an has an unemployment-compensation law
containing provisions specified in the
application or Interpretation of State law
with respect to which further administrative Federal law, employers subject to the
or judicial review is provided for under the State law receive a 90-percent credit
laws of the State/
against the 3-percent Federal tax, and
"(b) Section 303 (b) of the Social Secuaccordingly pay one-tenth of that
rity Act is amended by inserting before the
amount ,or three-tenths of 1 percent.
period at the end thereof the following: The States under the Social Security Act
*: Provided, That there shall be no finding
under clause (1) until the question of en- receive Federal grants covering their entitlement shall have been decided by the tire administrative costs in operating
highest Judicial authority given Jurisdiction their systems. Today every State is reunder such State law: Provided further, ceiving these grants and employers covThat any costs may be paid with respect ered by every State system are receiving
to any claimant by a State and included as this 90-percent credit against the Fedcosts of administration of Its law'."
eral tax,
SACRAMENTO, CALIF., June 15, 1950.

Senate Office Building:
Confirming our conversation re amendment to H. R. 6000 the various States are
now subject to pressure from Secretary of
Labor's office on unemployment Insurance
benefit decisions if unions disagree with such
decisions, as was the case in the maritime
conformity Issue Involving California last
December. Under the proposed amendment
employers or unions involved must exhaust
their Judicial remedies in the State courts
and until such Is done the Secretary of Labor
would not be able to raise a conformity question. After decision by the Supreme Court
the Secretary of Labor may then raise conformity question and provide the State with
opportunity for hearing thereon In the event
the Secretary of Labor then made findings
of fact and conclusions of law that the State
statute as Interpreted by the State supreme
court did not conform to the standards laid
down In section 1603 of the Internal Revenue
Code, his decision would be held In abeyance for 90 days in order to permit the State
to convene Its legislature and amend the
State law to bring it into conformity with
the Federal standards. Such an amendment Is highly desirable In order to achieve
proper Federal-State relationship as It affects the unemployment insurance program.
The background of the California conformity hearing of last December Is being
sent you under separate cover, air mall,

Director of Employment, California
Department of Employment.

The Secretary of Labor is required
under existing law, on December 31 of
each year, to certify for the 90-percent
tax credit against the Federal tax each
State whose law has been approved as
containing the provisions required in the
Federal law. However, he is not to certify if he finds either that the State has
so changed its law that it no longer contains the required provisions, or that the
State has failed during the year to comply substantially with these provisions.
On such a finding he can withhold tax
credit certification. Without the Secretary's certification, taxpayers of the
State must pay an additional penal Federal tax of nine times their normal tax,
in addition to any State tax. Furthermore, the Federal grants to the State
for all administrative purposes will be
During more than a decade of operation before the authority over tax credit
was transferred to the Labor Department, although there have been thousands of claims decisions, no hearing was
ever held on the question of State conformity to the Federal law arising from
such decisions. But there were hearings
last December, just before the deadline
for tax credit certification, on the question of whether the States of California
and Washington would be certified.
Neither State was accused of failing to
conform to the federally required provi-



sion by virtue of a legislative change in
Its law or by virtue of its court's interpretation of its law. Each State was
cited to a hearing in Washington, p. C.t
because of mere appealable administrative applications of the law in certain
claims cases. Nobody can know how the
claims would have been decided under
the State law, as the claimants had not
completed the normal procedure under
that law of establishing their rights.
What happened was that late last
November both States were notified to
appear at the Labor Department, and in
December were tried by a minor official of
that Department on the issue of the
State being out of conformity—because
of these appealable administrative claims
These States escaped the penalty of
having their grants withheld and the
State unemployment compensation taxpayers of these States escaped in excess
of $200,000,000 in tax penalties only because the State agencies agreed at the
last minute to meet the Secretary's demands.
Thus, even assuming that the initial
claims actions complained of were incorrect, and contrary to the Federal provisions, it Is utterly disruptive of State
administration of its law for the Secretary to concern himself with this kind
of day-to-day appealable action. It disrupts all the State corrective machinery,
and interjects the Federal administrators
into the State administrative processes,
In effect denying to the State court
charged with the duty of final action the
right to hear and correct administrative
Yet, because of his conclusion that certain appealable administrative actions
were erroneous, the Secretary insisted
that the State itself should be held out of
conformity and denied grants, and that
employers subject to that act be penalized an extra tax equal to 2.7 percent of
their, payrolls for the year unless the
State administrator immediately capitulated to the Secretary's requirements.
, Such a development raises a vital
Issue-—whether the State claims procedure is to be scrapped. So far, the Secretary has actually intervened between
the highest level of administrative decision and appeal to the State courts for
Interpretation and application of State
law. Tomorrow he may step in between
Initial claims action and the administrative appeal from such action. It is
not compatible with State administration that the Federal Secretary of Labor,
rather than the review forum specified
in State law, should pass on day-to-day
problems. The Federal interest is certainly amply protected by the Secretary
awaiting a final decision of the State on
a case before deciding that the State is
out of conformity.
The proposed amendment clarXias
congressional intent as to the point nt
which the Secretary may act to hold a
State out of conformity. It merely requires that the Secretary shall not intervene in State proceedings on appealable
matters, but shall act only after the
State itself has spoken finally through
its highest appeal forum. This provision merely gives the State an opportunity to follow through its prescribed

procedure In determining whether to
give or deny benefits to the claimants
in question. The limitation on the Secretary^ action In no way deprives him
of his subsequent authority to determine
whether the State is or Is not out of
conformity with the Federal statute
after the review procedure of the State
has been completed.
The second important provision of the
amendment gives the State a 90-day
period to get in conformity after the
Secretary has held the State to be out
of conformity.. In the two cases previously cited, the State administrators
were able to meet the Secretary's demands because the claims in question
had not become a matter of court decision. The situation may be that it is
a court interpretation rather than an
administrative interpretation which the
Secretary finds to throw the State out
of conformity with Federal standards.
In such a situation it would be impossible to obtain immediate compliance by
administrative action, as occurred in the
two recent cases. It would be necessary
to convene the legislature after the court
decision, and where the decision is late
in the year legislative action might be
impossible before the December 31 deadline. After this deadline, State legislative action could not relieve the State
of the penalties. The amendment would
merely give the State a 90-day compliance period and relieve the State of the
penalties of the Secretary's action If,
and only if, the State conformed with
the Secretary's interpretation of the
Federal standard within this 90 days.
Mr. President, I think that all Members of the Senate who have expressed
an interest in States' rights and in
proper administrative procedures in the
several States of the Union which have
a responsibility should support this
Mr. CAIN. The Senator from Washington has been very much interested in
what the Senator from California has
stated, and wishes now to associate himself with the views expressed by the Senator from California. He joins with the
Senator from California in hoping sincerely that the amendment proposed by
him will be adopted by the Senate next
Mr. KNOWLAND. Mr. President, I
should like to take this opportunity of
expressing my appreciation to the Senator from Washington for yielding. One
of the cases to which I referred grew out
of a situation in the State of Washington. I think the amendment involves a
question of tremendous importance to
every Member of the Senate. The reason I took the opportunity of interrupting the Senator from Washington at this
point was because I wanted the material,
which included a telegram from the Governor of Texas, from the Texas Commission on Unemployment, and from the
State of California, to be in the RECORD
so that it might be examined by Members of the Senate as background material on this subject.
Mr. CAIN. Mr. President, when the
junior Senator from Washington yielded
late yesterday afternoon to make v/ay for
a conference report on the bill (H. E.
2143) to amend the gatch Act the Sena-


tor from Washington was discussing the
pending business, House bill 6000, and
was when interrupted analyzing the
Finance Committee report on House bill
6000. The Senator from Washington
hopes to conclude this analysis within
the hour.
The argument which the Senator from
Washington has been and is presenting
is being offered in the hope that appropriate committees of the Congress will
shortly undertake to recommend to the
Congress and the Nation a new socialsecurity system to replace our prevailing
system which was established in 1935. It
is generally admitted by both those who
advocate and those who resist the
passage of House bill 6000 in this session
of the Congress that our prevailing
social-security system has fallen so far
short of achieving its objective, which is
that of providing for the legitimate needs
of America's aged population, and Is so
possessed of fundamental and basic
faults and inequities, that this system
must be replaced in time, and the sooner
the better, with a system which would
probably provide for universal coverage
and be maintained on a true pay-as-yougo or annual basis. In recognition of
this obvious need the Committee on
Finance has offered a resolution to authorize and encourage a study of every
possible social-security system. The
Senator from Washington is of the considered view that this study and the resulting recommendations ought to be
made before House bill 6000 is passed. It
seems, however, to be the consensus of
opinion that House #bill 6000 ought to be
and will be approved by the Senate next
Tuesday. The Senator from Washington
Is offering his criticisms of House bill
6000 in an effort to be of constructive
assistance to any group which may be
formed to encourage future social-security improvements which are so imperatively required.
Mr. President, in recent weeks the
junior1 Senator from Washington has
carried on correspondence with a number of persons throughout the United
States for whose judgment and ability
he has considerable respect. A good
many of these persons to whom the Senator from Washington has written represent American corporations and companies in which Americans by the tens
of millions have invested their savings.
It seems to the Senator from Washington
that others aside from himself—and I
think this Is likely to be so—ought to be
terrifically and thoughtfully interested
in the observations which have been
made to the Senator from Washington
by those who now manage, and have so
successfully managed in recent decades,
the savings which belong to trie American people. I have before me at the
moment only two letters, which I wish
to read. The first one was received
under date of June 13, 1950, and was
written by Mr. J. W. Scherr, Jr., executive vice president of the Inter-Ocean
Insurance Co., which has its executive
offices in Cincinnati, Ohio.
Mr. Scherr writes as follows:
5K: I was indeed interested In your speech
before the Senate on the subject of an investigation of the social-security program.
Apropos to this subject, I have Just returned



from a meeting in New York of the Health
and Accident Underwriters Conference and
as might be expected, your stand on the
question of H. R. 6000 and the future of our
Bocial-security system has commanded the
respect of the entire insurance industry. I
assure you that those of us who deal in
probabilities and who are vitally concerned
with the economic welfare of the people of
this country are not entirely selfish in our
opposition to further extension of the program. We feel that any system which completely ignores the insurance principle must
eventually fall by its own weight and we are
prepared to help you fight your battle with
the tools at hand.

Mr. Scherr goes on to say:
I am today sending the following telegram

The telegram is quoted as follows:

Urge that you act favorably on Cain resolution 92. H. R. 6000 not compatible with
insurance principle and can virtually destroy
our economy. Reconsideration of entire
'social-security program essential to future of

Mr. Scherr concludes his letter by saying this:
I appreciate the urgency of this matter and
feel that the strategy which you have employed to defeat H. R. 6000 or to delay action
on this bill represents a great service to the
Cordially yours.

Mr. President, I should like to say to
Mr. Scherr, in reply, at this time, that
the junior Senator from Washington has
stated what he feels to be a fact, that
H. R. 6000 will be passed in the Senate of
the United States next Tuesday. The
Senator from Washington is very grateful to be a medium through which the
views of Mr. Scherr and other thoughtful
actuarial students can be offered to the
The junior Senator from Washington
feels that the contributions to be made
by Mr. Scherr and his associates
throughout this land will constitute a
prime case to lay before whatever commission or group or committee is established, either by the Senate or by the
House, or by both branches of the Congress, to reexamine the system and make
recommendations for the future with
respect to the social-security program
needs of the people of the United States
of America.
Mr. President, under date of May 23,
1950,1 received a letter which was signed
by Mr. Charles J. Haugh, who is the
secretary of the Travelers Insurance Co.,
with offices in Hartford Conn. I take it
that probably there is no American living anywhere in this great country who
does not recognize the name of the
Travelers Insurance Co. to be a byword
throughout the land. The secretary of
that company is a gentleman who, together with his colleagues, takes our
money, turns over to us insurance policies in lieu of that money, and promptly
proceeds to so invest and make secure
our savings that when the policies come
due we not only will receive the total
number of dollars called for in the
policies, but the dollars we receive will
have a maximum of purchasing power
contained within them.

The Travelers Insurance Co/s official
point of view, then, with reference to
the pending bill—and their views ought
to be of concern to most Americans—is
as follows:


ployed by that committee, of social-security systems other than the one which
has been in force in this country since
1935. The junior Senator from Washington hopes and expects that some or
perhaps all the amendments offered by
I am writing in reply to your letter of
May 12 relative to the social-security bill the Senate Committee on Finance to
(H. R. 6000) which is about to be considered H. R. 6000 are designed to improve a parby the Senate.
ticular system. What the Senator from
As you so clearly state, an effective re- Washington has been suggesting is that
vision of the Social Security Act designed
his view anyway, it would have been
to accomplish the objectives which are gen- better
t,o examine other systems before
erally understood to be sought by such legislation can best be accomplished only after seriously endeavoring to patch up a system which the proponents of H. R. 6000
a thorough independent investigation by
a commission comprised of individuals well have, told us in the Senate must eventversed in this field.
ually, and they hope soon, be replaced
Unless and until a well-thought-out study by a different system.
is made,' It is inevitable that the social
Mr. KERR. Has the Senator seen the
security program will be subjected to perennial assault of well-meaning, but ill- document of blue paper which has been
advised individuals who seek to remedy placed on the desk of each Senator since
defects (either real or imagined) by legis- the beginning of the debate?
lation which may create two problems where
Mr. CAIN. I have not personally seen
only one grew before, and by individuals it.
who seek to use the social-security program
Mr. KERR. Mr. President, would the
as a means of injecting the Federal GovernSenator be surprised to know that that
ment into any and every kind of business
document contains a tabulation, first, of
pursuit possible. In saying this, I do not in
the provisions of the present law with
any way intend to cast aspersions on individuals merely because they propose to revise reference to our social-security system;
second, a tabulation showing the differthe social-security laws of the country. I
merely want to stress the fact that the probence between the present law with reflem is an extremely technical one and, as
erence to each item of H. R. 6000, as
such, offers opportunity to seriously involve
passed by the House, and, third, the difan already complicated situation and also
ference between the present law and H.
offers a medium for adroit individuals to
R. 6000, as reported by the Senate Comseek in an indirect way to accomplish an
objective which, if clearly made known, mittee on Finance with reference to each
would be rejected vigorously by the Congress. one of the main provisions? FurtherIt is only sound logic to se«k the advice of
more, is not the Senator from Washingtechnicians before reaching a conclusion.
ton aware that the Senate Finance Comhad the bill before it for some 3
Parenthetically, I would suggest that mittee
months of hearing, and had the benefit
with reference to the present we are not of
the recommendations of its own adinclined, as a Senate, to seek the advice visory
council, which had worked on the
of technicians before reaching a conclu- matter
for some 2 years or longer with
sion. We are determined to reach a reference
to each one of 'those points?
conclusion on Tuesday next. It is simMr. CAIN. The Senator from Washply the hope of the Senator from Washington, and now of Mr. Hall, of the ington is aware in general of what the
Travelers Insurance Co., and a goodly Senator from Oklahoma has just said.
number of other Americans, that in the The Senator from Washington merely
near future, after we have taken action returns to the premise that no examinaon and approved H. R. 6000, we shall tion of any other possible system has
seek advice from the best qualified tech- been made or deeply studied or reflected
nicians of the United States, and ask upon, so far as the Senator from Washthem, "What have we so recently done^ ington knows, by the advisory council,
without first seeking your advice and by the Senate Finance Committee, by the
staff of that committee, or by any techyour counsel?"
nicians employed by it, because the SenMr. KERR. Mr. President
ate Finance Committee conceived that it
confronted with a very practical
STENNIS in the chair). Does the Senator
need for improving, insofar
from Washington yield to the Senator matter—the
as it was possible for them to do, the
from Oklahoma?
existing system.
Mr. CAIN. I am pleased to yield.
Mr. KERR Then the Senator would
Mr. KERR. Is it not entirely possible
that H. R. 6000 represents the result really be surprised to know that the adnot only of research by experts and tech- ' visory council studied all known socialnicians, referred to by the distinguished security laws, and that testimony with
Senator from Washington, but also of reference to many of them was brought
the best thinking of the members of the to the Senate Committee on Finance.
Committee on Finance? And is it not If the Senator would read the documents
possible that it might represent a great to which he referred yesterday, as I reimprovement over the present social- call, in terms of their weight, embracing
security law, and be far better than what the two volumes I hold in my hand, the
we now have, and yet still not be the ulti- facts I have stated would be apparent to
mate we hope eventually to have?
Mr. CAIN. The Senator from OklaMr. CAIN. The junior Senator from
homa has posed a reasonable question, Washington expects pretty soon to be
for which I think there is a reasonable able to refer to the same 11 or 12 pounds
answer. I have been advised, and I of hearings and reports on the basis of
think correctly, that no study has yet his having read them, sir, from begin* been made by either the Senate Finance ning to end. That task has just-been unCommittee, or by the technicians em- dertaken and is by no means completed,



and certainly will not be completed by
Tuesday of next week.
Mr. KERR. Then, the Senator is doing what he thought maybe the Finance
Committee did when he said they recommended a bill and then decided to
study the matter, in that the Senator
from Washington is advising against the
bill and after having done so expects to
read the hearings with reference to it?
Mr. CAIN. No, I think that is not so:
Mr. KERR. Maybe I misunderstood
the Senator.
Mr. CAIN. I think in part the Senator has. No. 1.1 have not read all the
hearings, though I have read a good part
of them. Particularly have I read the
testimony offered by those who dissent
from the provisions of H. R. 6000. When
the junior Senator from Washington
says he considers that the advisory committee has not given thoughtful, thorough attention to.the merits of other
social-security systems, he thinks he is
on very sound ground. There is a difference between an advisory committee
giving, if not lip service, at least casual
service to a study of other systems and
giving the other systems a comprehensive going over.
Mr. KERR. Mr. President, will the
Senator yield for one further question?
Mr. CAIN. I am pleased to yield, sir.
Mr. KERR. In our search for perfection, would the Senator think that we
should use the exclusive method of waiting until it had been fully achieved before making any change, or would he
countenance the .possibility of merit in
approaching it gradually and by stages?
Mr. CAIN. The Senator from Washington would think that every 'question
of that character would have to be considered on its individual merits. He
takes the position, from which a majority of the Members of the Senate are
going to dissent that a new approach to
our social-security problems in this
country could be recommended and established in about a 2-year period. He
does not see an impelling need for liberalizing and expanding a system which its
chief proponents and defenders on the
floor of the Senate tell us they think must be replaced by another system.
Mr. KERR. I should like to give the
Senator the information that the advisory council of the Senate Finance
Committee, which, by the way, I believe
was created during the time we had
what was known as the Republican
Eightieth Congress
Mr. CAIN. Yes.
Mr. KERR. And the Republicans had
a majority of members on the committee.
Mr. CAIN. The chairman then, the
distinguished junior Senator from Colorado [Mr. MILLHON] and his fellows, began the undertaking of a very serious
study. But I take it that the Senator
from Colorado, together with the Senator from Georgia [Mr. GEORGE] , the present able and distinguished chairman of
the Senate Finance Committee, will not
maintain on this floor, as in. fact they
said otherwise the other day on this floor,
that those studies undertaken during the
Eightieth Congress have by any means
been completed.

Mr. KERR. No; the position is not
taken that they have been completed,
but neither is there a feeling on the part
of the committee at this time that the
studies were entirely without effect, or
that no progress whatever was made, but
that on the contrary, much progress was
made, and based upon the studies and
recommendations, further progress was
made by the Finance Committee in its
very extended study and hearings on the
bill this year.
Mr. CAIN. The Senator from Washington has not maintained that some
progress has not been achieved.
Mr. KERR. Then, if it has been
achieved, does not the Senator think
that the Congress might be wise to take
advantage of that which has been done
and implement it by this proposed legislation, and yet look forward to a further continuance of the study in the hope
that still greater progress may be made?
Mr. CAIN. At this time the junior
Senator from Washington would by no
means agree. The Senator from Washington and the Senator from Oklahoma
and other • Senators know the approximate number of persons now paying in to
the social security system. We know approximately the number of Americans
who are benefiting from that system.
We know that for a very limited period
of time we are going to be able to take
in money much more rapidly than we
are required to pay it out. We are presently suggesting a liberalization of the
benefits to go to the beneficiaries of this
system at this time purely, it seems to
me, because we arefinanciallyin a position so to do.
I think it was about 2 or 3 days ago
that other Senators on this floor, in
answer to a question relating to financial matters, said that in their view the
reserve fund .would not be in jeopardy
or in possible trouble for the next 4 or
5 years. Beyond that they would not
venture a guess, because 4 or 5 years
from now it stands to reason that many,
many, additional persons will be drawing
benefits from the system.
Mr. KERR. The Senator is aware of
the fact, is he not, that the committee
took into consideration not only the fact
that .the fund had certain amounts of
reserves, but that the compelling reason
for the liberalization of the provisions of
the law was not on the basis of the
amount of money in the reserves, but
on the basis of the need and the equitable
considerations with reference to those
participating in the program?
Mr. CAIN. The Senator from Oklahoma is scratching a fundamental at the
moment. I think we are all in agreement
that we are only willing to double, on
the average, the benefits to go to the
aged who are members of the social se- •
curity system, because in the past 15
years we have cut the value of the American dollar just about in two. Because
we have a system today which takes in
much more than it has to give out, in
the immediate future we are in a much
better position to move much more rapidly in liberalizing the benefits, without
giving too much consideration as to what
our financial involvement is to be possi-


bly 4 or 5 or 10 or 15 or 20 years from
Mr. KERR. Then the Senator recognizes, does he not, that there is some
considerable merit to moving, to the extent that we feel we can do so, to meet
that increased need of those who now
are benefiting or participating in the
Mr. CAIN. I feel that my Government, of which I and the Senator from
Oklahoma, the Senator from Colorado,
and all other Americans are a very proud
part, has recognized an obligation to
the aged of America. In resisting in
what I think is a reasonable way the
enactment of House bill 6C00, I do so
because I hope that before very long
there will be'an admission by everyone
of what is simply a fact, and that we
shall establish in this country a socialsecurity system which will offer—offer,
by the way, because many persons ought
to turn it down—to every aged American
what is offered to other aged Americans,
whereas our present social-security system, if continued in this country for a
thousand years, would, in my opinion,
never achieve that objective.
Mr. KERR. Then the Senator will
admit, will he not, that the billjiow being
considered is a great improvement over
the present law?
Mr. CAIN. I think I have not maintained otherwise. What I have maintained is that whatever may be the
merits of the suggested new law—and
there are considerable merits to it, upon
some of which the distinguished Senator
from Oklahoma has just commented—
it still remains a fact, and a very distressing one, that we are extending and
broadening a system which we recognize
possesses faults of such a nature that
in time—and I merely stress the rapid
passage of time—it must be replaced
with an entirely different system.
I am not unmindful of the fact that
Members on both sides of the aisle of the
United States Senate have been saying,
in the course of .this debate, "We are
going'to adopt a resolution authorizing
a study." I am so hopeful of the results
of that study that I have done my best
to provide in the RECORD certain arguments which that study group-will want
to examine, along with arguments
offered before it by, I hope, thousands of
groups and interested persons in the
Mr. KERR. I thapk the Senator very
Mr. CAIN. I thank the Senator from
Oklahoma most sincerely.
Mr. President, I should like to read
now the last several paragraphs of the
letter written to me by the secretary of
the Travelers Insurance Co. Its author,
Mr. Haugh, concludes by saying the following:
When it comes to suggesting Individuals
who might be considered to serve on a commission to make a study of this nature, I am
naturally Inclined to lean to the type of
individual whose training and experience is
such as to afford him a good knowledge of
the economic and administrative problems
which are involved. It is for this reason
that I suggest consultation with the Casu-



alty Actuarial Society and with the Society
of Actuaries. They can be reached as follows: Mr. Harmon T. Barber, president.
Casualty Actuarial Society, care of the Travelers Insurance Co., 700 Main Street, Hartford, Conn.; Mr. Edmund L. McConney,
president, Society of Actuaries, care of
Bankers,Life Co., Des Moines, Iowa.
I shall not suggest specific individuals
within these organizations as I would prefer to leave that to the organizations themselves. Neither do I suggest that any such
commission be comprised entirely of actuaries.
I sincerely trust that you will be successful in your effort to have this matter thoroughly studied by a competent commission
so that any modification of the Social Security, Act which may be adopted will be adopted in the light of full consideration of all
facts and with full knowledge of the effects
of such legislation, both immediate and
Very truly yours,


I would simply say to Mr. Haugh that
I am not speaking only for myself, Mr.
President, but I believe I am speaking
for a good many persons of like mind.
Those to whom I have referred and I,
likewise, will continue to be anxious and
hopeful that any study group established
and authorized by the Congress will undertake a serious analysis of the socialsecurity needs of the aged population of
the United States, in order that in the
years soon to come we shall have replaced the present system, with all its
faults and all its inequities, with a system which will provide as much justice
to one aged American as it provides to
any other such person.
Mr. President, if House bill 6000 is
passed, it seems to me that it will only
result in paying old-age and survivors
benefits to 2,700,000 persons during the
coming year; but - as the coverage expands and as the number of insured
reach retirement age and claim benefits,
then the threat of trouble will begin.
Mr. President, let me say parenthetically that we are not in tremble at this
time with reference to our American
social-security system, but I think we
are headed for trouble, and, in my opinion, it is quite proper to run up a flag
of warning in this year of 1950.
The step-rate tax rises come at intervals beginning in 1956, 6 years from
now. Then the race starts between the
social-security tax income and the benefit outgo. If the benefit outgo exceeds
the tax income, and if the trust fund is
absorbed, and there is a very good likelihood that that will- occur, then there
will be nothing but brass knuckles and
a club in the shape of increased taxes
to keep the system from bankruptcy.
Mr. President, I quote now from page
33 of the report:
Estimates of the future costs of the old-age
and survivors insurance program are affected
by many factors that are hard to determine.

That statement is the truth, if the
truth ever was spoken.
The report further says, on page 34,
that there has been recommended—
A tax schedule which • • * will make
the system self-supporting as nearly as can
be foreseen under present circumstances.
Nc. 119


How is this masterpiece of self-support demonstrated? It is demonstrated
by a series of actuarial tables, presumably prepared under the eagle eye of
Robert Myers, the chief actuary of the
Social Security Administration. Mr.
President, every once in a while a person
is entitled to make a guess as to the
author of a particular work, and I have
made mine. If we look closely at these
tables, however, we shall find escape
hatches scattered along the way. In
reading further from the report, on page
37 wefindthis statement:
. The range of error in the estimates may be
fully as great for contributions as it is for

Certainly that is a very reassuring
Furthermore, Mr. President, we find
the following on page 33 of the report:
Because of numerous factors such as the
aging of the population of the country and
the Inherent slow but steady growth of the
benefit roll in any retirement insurance program, benefit payments may be expected to
increase continuously for at least the next
50 years.

Of that there can be no doubt. We
know for a fact that the number of old
persons in the country is increasing. We
also know that the greater the number
who are taken into the system, the greater the number—always assuming that no
trick conditions to throw old persons out
of the system will be invented—who will
claim benefits.
Mr. President, on what basis have the
estimates been prepared? They are prepared by making a whole series of calculations, and those. calculations, required to be made in the absence of certain obtainable facts, are based on a
variety of factors—continued high employment being one of them. As one of
the escape hatches, table 19, based on
unfavorable economic assumptions, is inserted on page 50 of the report.
Then there are figured out low-cost
estimates and high-cost estimates and
out of these two we get a blend called intermediate-cost estimates. Says the report, at page 43:
It should be recognized that these Intermediate-cost estimates do not represent the
most probable estimates, since iCis impos-'
sible to develop any such figures. Rather,
they have been set down as a convenient and
readily available single set of figures to use
for comparative purposes. Also, a single intermediate figure is necessary in the development of a tax schedule which will make the
system self-supporting.

If that set of sentences says anything,
it says that intermediate cost estimates
are not the most probable ones, since any
such probable figures are impossible to
develop; yet, for"all that, the intermediate figures are essential to figure out
taxes that will make the system selfsupporting. That is as clear as crystal,
is it not?
What all this fancy figure work comes
down to is this: The Social Security
actuaries do not know. They will not
admit it in so many words—and I can
understand that—but the fact remains,
they do not know.
We do know that the number of old
people in the country is increasing. We


likewise know that if H. R. 6000 passes,
coverage will be expanded and the number of oncoming benefit claimants must
inexorably expand.
But whether the social-security-tax
income will be sufficient to pay these
benefits Mr. Altmeyer does not know,
and his actuaries do not know, and
nobody on earth knows. That is why
this question excites the curiosity and
interest of many of us.
So we are going to proceed arbitrarily
to increase benefits out of current income, knowing, and having a reason to
know, that the day must come when the
brass-knuck taxes must be socked to the
young boys and girls in their first jobs,
who "right now are being told, and encouraged to think, that they are paying
for some kind of annuity.
There was a man, not so many years
ago, who briefly succeeded with a variation of this scheme. His name was
Charles Ponzi, and he eventually landed
in jail. What the prospects are for our
Social Security officials getting into deep
trouble in the future is unknown at the
What I have suggested is that if we
look for some solid basis for cost estimates we do not find facts sufficient to
give us reassurance about the future.
What I have said is that if we look for
some solid basis for cost estimates we do
not find any.
Remember that I have suggested that
this is a Siamese-twin system and that,
so far as the taxpayer is concerned, they
must be considered together.
Look, for example, at some of the
things the report tells us about the year
1970, only 20 years hence.
Table No. 7, found on page 35, tells
us that in 1970 the number of men and
women 65 and over in the United States
will be anywhere from 15,900,000 to
18,500,000. A wide range of estimate, I
would say.
Then table 9, found on page 38, gives
us the estimated number of old people
in 1970 drawing benefits—that is, the
number of primary beneficiaries and the
widows and the parents.
• The range of such old beneficiaries
runs, according to these calculations,
from a little over 6,000,000 to a little
over 9,000,000.
In other words, Mr. Altmeyer's lowest
estimate of the number 65 and over in
1970 is 15,900,000 persons, almost 16,000,000 human beings. I refer to table 7, on
page 35.
On the other hand, his highest estimate of OASI aged beneficiaries is a little
over 9,000,000—to be exact, 9,117,000—
table 9, page 38. However, it is sliced,
20 years hence, according to Altmeyer
calculations, there will still be, at the
very least, more than 6,000,000 persons
65 and over not drawing benefits from
the social-security system.
Yet we are told in the face of these
tables—whatever they may be worth—
that the costs of old-age assistance may
be expected to decrease.
Tofinishpiecing out this jigsaw puzzle
let us turn to the sacred wage record



Everyone who works in a covered cate;ory, however briefly, and who has paid
ocial-security taxes has a wage record
n Baltimore, Md.
Mr* Altmeyer told the Finance Comnittee last January—page 2$, Senate
searings—that there are 80,000,000 individual wage records in the files. This
toes not mean at all that 80,000,000 perons are insured. Indeed, says Mr. Altleyer, "at any one time we estimate that
here are only about 35,000,000 workers
ctually in insured employment." What
fc means is that 80,000,000 persons, over
nd above current benefit-receiving old
>eople, have worked in covered employment at one time or another and estabished a wage record if only for a few
It has been said that to handle these
0,000,000 accounts a rental of more than
, million dollars a year is paid to Interlational Business Machines. Whether
his is true or not I do not know, for Mr.
Utmeyer does not seem to have been very
xplicit on this point.
These 80,000,000 records are supposed
0 represent live accounts. Some of the
arsons with records in Baltimore may
e, and probably are, dead. But some
aethod has been figured out to discard
ead people, and the 80,000,000 are preomed to be alive, if not all of them
The Senator from Maine [Mr. BREWTER] last January—page 30, Senate
.earings—said to Mr. Altmeyer that the
imount of money which the Federal
Government had received from these
persons, now uncovered or perhaps
dead—and I quote the Senator—"runs
into many hundreds of millions of dollars." Said Mr. Altmeyer, "I think this
is true."
But, said the Senator from Maine, "Do
you intend to keep that up forever?
Sometime you will have to make a check,
will you not?"
Mr, Altmeyer's rejoinder to this was
as follows—page 31, Senate hearings:
What we have to do, of course, is to use the
various avenues of public information. Some
streetcar companies, for example, Have given
us free space for those cards you see inside
of streetcars. We have not resorted to loudspeakers and that sort of thing. * * * We
get out explanatory pamphlets. We send
those pamphlets to groups that we think
would be particularly interested, like labor
organizations and employers, and we have a
very definite program of local contact by our
local managers. We try in every way to tell
people what their potential rights are, but
we do not have any way of maintaining individual contact with each one of these

1 am told that it requires more than
6,000 persons to look after these records.
I should think it would.
Pamphlets we have, though no loud
speakers, and an amount paid in through
these slumbering accounts of sums running perhaps to hundred of millions of
Did I say that this system was a Rube
Golberg invention? -Goldberg, in his
most extreme flight of fancy, never
dreamed up anything to equal what the
Social Security Administration has done.
On these wage records, supposedly, are
based the various sums that beneficiaries
are paid. But when these formulas have

to be arbitrarily changed and benefits
shifted in order to get the right answers, what is the value of all these
The truth is that the longer one looks
at it the more it becomes apparent that
aged human beings are not the concern
of the system at all. What Mr. Altmeyer
and his functionaries are concerned
about primarily are categories and machinery. They have fixed up a giant's
cat's cradle which only they can understand, and it is the cat's cradle that
they want to enlarge, expand, and entrench.
They hang on like grim death to their
preposterous wage records and at this
minute they have a bill over in the Public Works Committee of the House—H. R.
7873 is the bill—asking for $11,500,000
with which to buy land here in the District and-construct a building to put
those records in.
You will hear people say, Mr. President, that one reason why it is impossible
to change this system is that these 80,000,000 persons, living and dead, have
paid taxes and hence have acquired a
vested right in the present system.
Look a little closer at this so-called
vested right, for it is something. Carefully examined, we find it a half-true,
half-false, proposition.
It is perfectly true that those 80,000,000
persons have paid taxes for a longer or
shorter time, but what is the character
of the vested right?
An actuary, after careful scrutiny of
H. R. 6000, gives me this picture about
the real source of benefits that thousands
will receive:
Consider two men who earn $100 a month
and $250 a month, respectively, from 1937 to
1955, each retiring in 1956 at age 68—which
is a typical retirement age. Under H. R.
6000 the first man will receive a primary
benefit of $50 a month; the second man, one
of $72. A very conservative actuarial valuation of their future primary benefits, taking
account of some probability of each having
a wife or widow qualifying for benefitst would
show the first man to get total benefits worth
$7,500; the second worth $10,800. The first
man has paid in $264 in employee contributions; the second, $660. Interest on these
amounts is ignored, as the value of the survivorship insurance received by each is more
than the interest. In tabular form the figures and their relationship are as follows:


of Eate of of value
Employee Value
benecontribube re- tions to fits over
tions paid toceived
benefits contributions




NOTE.—It may be noted that the $250 man has paid a
higher proportion of the value of his benefits than the
$100 man. But neither has paid a significant proportion
anyhow, and each one therefore gets a substantial profit
from the system^ This profit is derived partly from employer contributions—which are charges on the general
public in the shape of higher prices—but larpely are from
contributions by and on behalf of younger employees.

In other words, Mr. President, the socalled vested rights of many of these
people are for benefits that will have
to be sweated out of the hides of the
younger men and women whose own
benefits, in the future, look more than


All this vested right really amounts
to is the fact that 80,000,000 persons,
living and dead, have paid social security taxes in varying amounts.
Why make this fact the excuse for
getting deeper and deeper in with an
unjust, capricious, inflationary, and
hopelessly complicated system?
Why not, rather, face the task, if we
must, of paying back what those people
have paid in, or of squaring the deal in
what seems the most reasonable way,
and then making a truly fresh start
where age is the only qualification and
all receive the same sum, raised and paid
for year by year, as it must be raised and
paid for by those of us who are
Mr. President, the contention is also
made that the Old Age and Survivors
Insurance Fund and the payroll tax supporting it, willfinallybe made universal,
with a minimum payment to all persons,
augmented by their wage credits acquired as at present. All this is supposed to happen simply by steadily expanding coverage.
I see no prospect of success here, Mr.
President I see only the same old delusions. Some people call what we have*
now a pay-as-you-go system simply because for the moment the tax income is
greater than the benefit put-go.
I notice with tremendous compliment
to those involved that in recent days
neither the senior Senator from Georgia,
the chairman of the Finance Committee
[Mr. GEORGE] , nor the junior Senator
from Colorado [Mr. MILLIKIN], the ranking minority member of that committee,
have made any such contention that we
are presently paying as we go in connection with our social security system.
Expand coverage however you will under the present system, but the day of
reckoning must come. What right have
we to dump this fearful problem on our
children and grandchildren, simply because we have not the moral fortitude
and, energetic imagination to face the
truth today?*
Mr. President, if this has seemed a
lengthy statement I can assure the Senate that in attempting constructively
to describe the almost fathomless intricacies of our present siamese-twin
system of so-called social security, I have
barely scratched the surface. *
If we pass House bill 6000, we make
even more complicated that which is already complex beyond endurance. It is
necessary and healthy for us to admit
and know what we do.
As I have said before, we simply make
worse a situation where millions of the
present aged get no consideration and
where millions of future aged have no
assurance, whether they pay socialsecurity taxes or not, that they will ever
get any benefit.
Mr. President, just a short time ago
on May 24, I introduced,Senate Concurrent Resolution 92 calling for the appointment of a commission of completely
independent experts to undertake, full
time, divorced from all influence of the
Social Security Administration, a complete investigation of the present social
security system and an investigation of
other possible systems.



I earnestly appeal for support of this
In the statement which I made when I
Introduced the resolution, I said:

I am urging that the social-security establishment be left as it is, pending a thorough
and completely Independent investigation
and overhauling.' This overhauling, it seems
to me, should be undertaken by a commisWhy pass a bill that we know is bad, de- sion, and carried out along the line specified
spite the best efforts of the Finance Comby former President Hoover in his letter on
mittee, when with the expenditure of a lit- social-security revision to Chairman Doughtle more time we might have legislation that
ton of the House Ways and Means Committee
is good?
a year ago.
I have become increasingly skeptical
I can only repeat what I said then and
urge that the most serious consideration about the present deferred-benefit system
which excludes—and must continue to exbe given to what I have proposed.
clude—so many of today's aged from our soLet us not try to mortgage the future called
insurance and gives large beneof our children. Let us halt where we fits to social
some who qualify after making only
are now and try to discover what is best token contributions. Back in 1935 when the
to do. Let us do nothing further to en- Social Security Act was first passed, it was
trench what is fundamentally a cheat, a assumed that the insurance system with
dishonest system, that does not deserve reasonable promptness would cover the old
people and that old-age assistance (means
the name of social security at all.
test relief supported by Federal subsidies)
Mr. President, if Senate Concurrent would
soon pass out. The reverse has hapResolution 92 is not to be approved by pened. The groups covered by insurance
the Senate, then the junior Senator have slowly expanded; relief for destitute
from Washington will place his faith old people has zoomed ahead. What this
and hope in the results to be achieved amounts to is that social-security legislahas pushed many of the States, includfrom the adoption of the resolution of- tion
ing my own, into trying to handle these probfered this afternoon by the junior Sena- lems
through jerry-built relief plans, often
tor from Colorado [Mr. MILLIKINI for practically
unsupervised and depending, of
himself and the senior Senator from course, on Federal subsidy.
Georgia [Mr. GEORGE]. I know that if
Patching up unworkable social-security
.their joint wishes come true, our present programs!—as H. R. 6000 attempts to do and
social-security system will soon be re- as any bill of the type will do—is bound to
placed by a system which offers to one create more maladjustments than it cures.
need a fundamental technical
aged American what is offered to every We badly
that can lead to a constructive reother aged American. These two distin- study
of our social-security system.
guished Senators have publicly agreed design
My own feeling is that an honest pay-asthat there is no long-range cure for the you-go system with age the only qualificafundamental weaknesses to be found in tion necessary is probably the answer. The
the pending bill which seeks to patch up benefit, I suppose, should be a certain numa social-security system, 1935 model, ber of dollars a month—small enough to Inwhich is neither now, nor can it be in the dicate the normal expectation of other personal provision and large enough to be of
future, a reasonable or workable answer some
in the income of the reto the needs of the aged persons of cipient.significance
I set neither age nor figures; the
America. The junior Senator from Commission's
work would have to give us
Washington will appreciate an opportu- the answer or the basis for an answer. I
nity to work with the Senators men- would suppose that the benefits would be
tioned and other Senators in looking for financed by an earmarked tax, from the lowand establishing the right answer for est earnings up to some such maximum as
$3,000 now used in the limited, discrimithe needs of the aged who live now and the
tax-now in current use. This simwho will live in the future in our great natory
ply means that the producing workers of
the Nation are paying a tax to aid in the supMr. President, it will take but a very port of the old and by the earmarked tax
each knows and is conscious of what he Is
few minutes to summarize my position paying.
In no way should such a benefit
concerning the pending bill.
regarded as taking the place of personal
Mr. President, when I made my state- be
thrift, nor does it take the place of local
ment on May 24 last, in introducing Con- charity and relief. The system ought to be
current Resolution 92, providing for an designed to get the Federal Government out
investigation of the social-security sys- of the business of subsidizing relief in the
tem, I offered a letter which I had writ- States.
I am asking you, as a person whose proten to several hundred persons throughout the country, persons who in one way fessional interests have included socialproblems, to let me have your views
or another had had direct experience security
on this question. I ask that you write me
with social-security problems and had with
all frankness about the objectives, the
given a great deal of time ajid thought personnel, and the method of study that
to them.
might be pursued by such a Commission as
The letter which I wrote was as fol- I have described above. There must be men
of standing—independent, competent, and
informed in this area—who could help in
As you know the social-security bill (H. R. this
task. We ought rightly to expect that
6000) which passed the House last October, such men would represent a truly .Ameriis now before the Senate Finance Committee
can approach to these problems—an apand shortly will be reported out for Senate
proach which so far has been sedulously
action. This bill represents the first major
avoided by the official advisory councils.
revision made in our social-security legislaI am persuaded that this is a matter of
tion since 1939 and is no unimportant piece
of legislation. Although we do not yet have vital imporHtnce to the preservation of our
of free enterprise and the noncollecthe completed Senate bill three committee
releases have specified what the bill will tivist way of life;
Since the bill will be before the Senate
contain in respect to old-age assistance and
any day now, I appeal to you for a prompt
expanded old-age and survivors insurance
consideration of this letter.
coverage and benefits.
After considerable thought, I have come
To show the deep feeling which this
to the conclusion that I cannot vote for a
bill containing these provisions. Instead, social-security question has aroused—


and I think it is a very healthy f eelini
indeed—I shall now refer to and as;
permission to insert some of the replie
in the RECORD.

If these letters which the junior Sen
ator from Washington has received fror
competent Americans from every sectio:
of the United States do nothing else
I think they will help to convince th
Senate that the insurance people, amon
others—and to the insurance peopl
generally I may say again American
everywhere in all confidence turn ove
their savings to be properly investedare anything but unanimous in thei
support of our social-security system.
The junior Senator from Washingto:
wishes, and in fact is privileged, to brin
the views of such students of the ques
tion to the attention of every Senate
on both sides of the aisle who now or i
the future may become interested in thi
Mr. President, I should like unanimou
consent that a letter from Mr. Elgin Fas
sel, the actuary of the Northwester;
Mutual Life Insurance Co. of Milwaukee
be made a part of my remarks at thi
There being no objection, the lette
was ordered to be printed in the RECOR]
as follows:

Milwaukee, Wis., May 19, 1950.

United States

Washington, D. C.

MY DEAR MR. CAIN: I have pleasure in ac

knowledging your letter of May 11, addresse
to me personally and asking my views as tc
social security. You state the you do no^
expect to vote for H. R, 6000 and instead an
urging no change in social security at thlf
time, and that there be an investigation anc
overhauling undertaken by a commlssior
along lines suggested by former Presideni
Hoover. Also you favor the pay-as-you-gc
I have long felt that the accumulation plar
is a mistake in the social-security system
and that it ought to be on the pay-as-you-gc
The concept that each generation ought tc
accumulate vast national funds with whicl
to look after its own old'age is a delusion
because such funds become political target:
and are likely to fail of their purpose. Ir
giving such assistance as may be desired tc
the aged and infirm, it is .proper for th^
State to operate on the pay-as-you-go plai
because it has the taxing power. This i
quite a different situation from that of in
divlduals providing for old age out of thei
own resources, which of course can only b<
done by saving in an accumulation plan.
If I had a vote it also would be agains
H. R. 6000, and I agree with you that a stud;
and overhauling of the existing law woulc
be advisable. If it is your idea that actuarie
would be of assistance on the proposed com
mission, I would refer you for suggestions t<
Mr..E. M. McConney, president, Society o
Actuaries. The headquarters of the soclet;
are at 208 South LaSaJle Street, Chicago
HI., but Mr. McConney also is president o
the Bankers Life Co., Des Moines 7, Iowa
and would ordinarily be reached at the lattei
A number of actuaries have been actively
associated with the social-security develop'1
ment. Mr. M. A. Linton, president, Providen
Mutual Life Insurance Co., Philadelphia 3£j
Pa., has been in close association from thi
start. Mr, R. A. Hohaus, actuary, Metroi
politan Life Insurance Co., New York 10, N. Y!
has been in close contact for many year£

benefit system. Among the objectives, then,
of a Commission of competent informed
thinkers, the most important at the outset
seems to me a study of the objectives proper
in the United States of America in a national
program of shared provision of some portion
of the very personal responsibilities represented in programs of social security.
I am giving a paper before the Health and
Underwriters Conference in New
Mr. CAIN. Mr. President, I may say Accident
City on Monday, June 5, and in dealing
hat a number of the replies which I York
with the subject I outline rather dogmatiiave received urged that I consult Mr. cally certain conclusions I have reached. I
jnton, Mr. Williamson, and Mr. Hohaus. am enclosing a copy of that discussion. The
have done so. No reply has yet come Commission should seriously analyze puro me from Mr. Hohaus, but I have let- poses, philosophy, program, and performance
the United States of America. The prime
ers both from Mr. Williamson and Mr. for
question is: "What are we trying to do, and
,inton. They are more than interest- what
should we try to do?*' The Commisng; they are in complete contradiction. sion should
start with the American uniqueI am going to read them.
ness—the economic conditions and environMr. Linton is president of the Provi- ment of freedom. Since the report of the
ent Mutual Life Insurance Co. of Phila- original Committee on Economic Security of
hia. He was an actuarial consultant 1934 and 1935, the Advisory Councils of 1937and 1948, there has been a steady and an
3 the Economic Advisory Committee 38
obvious avoidance of facing any full considack in 1934 and 1935. He was also a eration
of the subject. There- has been
aember of the advisory counsel set up by rather every
to avoid opening up the
he Senate Finance Committee during consideration effort
of a full program for all the
he. Eightieth Congress as a result of the citizens—at least it seems that way to an unassage of Senate Resolution 141. prejudiced observer.
Mr. Williamson was for 20 years an
This study requires persons with a comprectuary with the Travelers Insurance hension of demography, actuarial science as
o. of Hartford and, thereafter, from handled in private insurance—the better to
936 until his resignation in 1947, was avoid the deferments and the individual
ctuarial consultant first to the Social equities of such protection—the law, busiecurity Board and then the Social Se- ness economics and finance, business, and
research. Congressman CURTIS says
urity Administration. He Is presently public
competent men should be engaged who
n actuarial consultant in private prac- that
can put consecutive time for many months
tce here in Washington.
canvassing the situation, and setting
Mr. President, in order not further to on
down the results of their studies. They
onsume the time of the Senate I ask should be free of the domination from the
unanimous consent that the letters re- Social Security Administration or political
ceived by the junior Senator from Wash- expediency. Such men exist, and they
ington from Mr. Linton and from Mr. should be found. They must be mature,
Williamson be made a part of my re- competent, honest, patriotic. As my paper
for June 3 sets forth, I believe the insurance
marks at this point.
designation a misleading one, and I suggest
There being no objection, the letters calling the proper program social budgeting
were ordered to be printed in the RECORD, to bring in the sense of financial responsibility in budgeting, and to sidetrack the oppresas follows:
sive bargains for all appeal in the current
OASI program.
I shall perhaps add a second letter later,
Philadelphia, Pa., May 5,1950.
but in this one I want to discuss the prob3on. HARRY P. CAIN,
lem of costs which is so much the province of
United States Senate,
the actuary. A paper of mine on cost facCommittee on Public Works, '
tors appeared in a social-security bulletin
Washington, D. C.
while I was actuarial consultant for the
DEAB SENATOR CAIN: Thank you for your
letter of May 31 about H. R. 6000. I am Social Security Board—in 1938. In 1947 after
strongly in favor of enacting the bill as re- I had left the Social Security Administration,
sorted by the Senate Finance Committee, there appeared Actuarial Study Number 21,
rhen, next year study can be made "of ex- written by Mr. L. O. Shudde, still with the
tending it to cover the present retired aged. Office of the Actuary—Social Security Administration—and by George Immerwahr, then
Cf that extension could be made we could
ihen have a program which would provide1 with the Actuarial Section of the Analysis Division of the Bureau of Old Age and Surbenefits reasonably related to the workers
vivors, now with the Monumental Life of
economic status prior to retirement, and
The purpose of both reports was
supported by the kind of tax which has been
to make clear the wide range present in these
accepted by the country, and which would
continue to be accepted, I believe, because cost factors and the essential unpredictability
;he relationship between the taxes and the of costs over time in such a program as oldage and survivors insuranca. This is so
evel benefits would be so close.
fundamental an item that in spite of careful
Sincerely yours,
disclaimers as to the prophetic power in the
actuarial section of Senate Report No. 1669,
Just off the press, the avoidance of certain
WASHINGTON, D. C, May 27,1950.
Important items tends to create misappreSenator HAUBY P. CAIN,
hension. Thus while table 12 indicates low
Senator from Washington,
and high costs at the end of the century reSenate Office Building,
spectively of eight and one-halt billion and
Washington, D. O.
thirteen and 'one-fifth billion, on the asCOMMISSION OP EXPERTS ON SOCIAL SECURITY
sumption of no wage advance, optimists
DEAB SENATOR CAIN: I find myself very
talk of 4 percent a year and pessimists
argely in agreement with the position you
perhaps 1 percent or 2 percent a year. Most
iake in your letter of May 24 and I should
administration discussion assumes at least
ike to deal with certain aspects in this reply, double the wages—and through another
mere has been an Increasing recognition of
application—or maybe half a dozen—of to;he "wrong start" represented by the deferred
day's new start, it would be more rational in
Ir. W. Rulon Williamson, 3400 Fairhill Drive,
Vashington 20, D. C, has also had a good deal
f contact and in the past has been actuarial
onsultaht of the Social Security Board:
It will of course be understood that the
xpressions herein are my personal views
Yours truly,


the expanding planned economy to expect
twenty-five billion or forty billion as* the
annual costs at the century's end.
The population of that time aged 65 and
over—see table 7—could be 19,000,000, or it
could be 29,000,000. The census has recently
corrected upward the figure for 1950 to a
higher point than that used in the projections, and another correction may well occur
from the 1950 enumeration. Table 9 shows
a low of 13,000,000 old-age beneficiaries and
a high of 20,000,000—but with gerontological
maintenance of work to advanced ages, and
the threat of great extension of life at those
high ages and earlier retirement, the range
could be much wider. Ten million to thirty
million might be logical. If we had only
$600 a year at the lower end as benefits and
$2,000 a year at higher assumption, there
is a range of from $6,000,000,000 to $50,000,000,000 as the benefits range way out there.
Dollar costs have no deflniteness off there
in the future, but last year the outlay of
two-thirds of a billion is about 1 percent of
that top figure in the future. Percentage
costs hide a lot more vagaries, but nothing
can hide the speculation which is possible.
The level-premium costs have an apparent
definiteness that does not bring out sufficiently the fact that there is no expectation
of collecting such sums in advance, and
earning the interest on them. They do not
bring out the fact clearly enough that table
19 can occur many times before 2000, butthat in the years when the benefits have piled
up to tremendous proportions an outgo of
50 percent more than the income could really
be serious. Such guides seem to me about
like a New York street sign, floating on an
errant flying Dutchman In the Sargasso
Through the 15 years since the act of 1935
went through, we have had pious warnings
at each yearly interval that benefits were
indeterminate and that it would be well to
collect more money. But always as to the
current time when we could know barely
what current requirements might be, OASI
has neglected them and has centered attention on the remote future when we could not
know. It has seemed a strangely inverted
concern, but we have been very sure that
current outlay would not be large. Thia
report, however, seems to open up a route of
easy qualification, only six quarters of covered employment, with as little as $300 earnings from employment, or as little as $600
earnings from self-employment—and perhaps affecting six to eight million persons in
the next 5 years. Whether we regard it
as a racket or not, It has all the earmarks,
but it brings down to the current situation
the lndeterminateness that affected the distant future heretofore. We might qualify
only 1,000,000; we might qualify 6; we might
have the minimum of $25 or even $20 a
month for most, or we might have a minimum wage of 75 cents an hour—or at the
rate of $125 a month—to give over $50 a
month in benefits. So now we have Indeterminate costs almost at once, as well as
in the distant future.
We run into the values of the sociologists—
the assessments made by American citizena
of these devious folk ways so untried and
so fundamentally unattractive to responsible
citizens. How measure the persistence of
integrity, the power of the dollar of benefits
for a penny of contributions—or less?
Public assistance has been the leading
source of benefits to the aged and the dependent children—three times the payments
last year that were handled through OASL
This is a very interesting fact, that virtually
no forecast is made for the major plan, while
these serious studies have been developed for
the minor one.
There are in fact four categories of the
aged: 1, the recipients of OASI benefits; 2,
the recipients of old-age assistance and aid to
dependent .children; 3, the recipients of both;



and 4, the recipients of neither. The third
category is one of major importance hereafter, since the new bill calls attention to
the convenience of collecting from both
sources, by limiting the Federal grant to the
States to $25 instead of $30 available for the
recipients of two alone.
In short we have undependability both
now and later under the repommendations of
the Senate Finance Committee, and I have
gone to this trouble to show how badly needed is the financial responsibility of men of
the right type in this Commission. There Is
internal evidence that the actuary is trying
to tell his story in this report, but that he
has not been free to bring out the long-run
hazards sufficiently. The type of "open-end"
program was that of the assessment and fraternal insurances of the 1870's and 1880's,
which have been so unsatisfactory over the
years for the relatively small groups- which
they involved. Large numbers of life actuaries regard this OASI as inherently of the
same danger, but the area of operation multiplied a hundredfold.
Financial irresponsibility seems to me to
characterize this program, but if the benefits
to the existent aged are now dangled before
the eyes of these old people and the qualifications are as few as set forth in this report,
I expect that current unhappiness can be
more serious in the next few years than a
long-delayed nemesis.
I have covered much of this, with extreme
brevity, in some of my testimony before the
Ways and Means Committee and the Senate
Finance Committee. This should not be just
a debate, a showing up of flaws, though the
flaws should be examined. It should be the
sort of analysis that the British used to call
a "Royal Commission." I t should get the
outside opinion, so carefully avoided by the
last advisory council, and It should integrate
much available data both within the Federal
Government and outside.
The magnitude of the present OASI and
Public Assistance Benefits would permit adjustment now. The difficulty of adjustment
would be many times harder, should H. R.
6000 be enacted first. Next to the value of
the Commission is .blocking H. R. 6000, with
its contradictory principles, and its unpredictable costs.
I am tremendously impressed with the
objectivity of your letter, and with the importance of your resolution. If I can be of
any help to you, either as an actuary or as a
citizen, please feel free to call upon me.
Yours sincerely,

WASHINGTON, D, C, May 28, 1950.
Senator HARRY P. CAIN,

Senator from Washington,
Senate Office Building,
Washington, D. C.
DEAR SENATOR CAIN: I wrote you yesterday

to bring cut one fundamental point in connection with OASI—its unpredictability of
costs, and the danger that this unpredictability will be glossed over by such expedients as level premium costs, the use of
percentage of pay roll costs and the absence
of any really critical examination of these
Today I wish to discuss very briefly too, the
unsuitability of the use of employment and
unemployment as- a basis for our Federal
program of national sharing. It sesms to
me that the goal should be a program for
all the citizens, so that for the aged we treat
the two sexes equitably. In Report No. 1669,
there is a little table on page 36, which shows
that by 1970—20 years from now, only 66 to
75 percent of the persons aged 65 and over
will be fully insured among the males, and
only 13 to 19 percent among the females.
That is—20 years from now the major part
of the ponulation will still not be provided
for directly.

Today only 8 to 10 percent of the aged
•widows of 65 and over are drawing benefits
from OASI. Since on the whole formal employment is uncommon for women from 40
onwards, the gearing of major dependence
upon employment records is not the way
to grant benefits to such persons. The substitute of using the employment of the husband and giving 50 percent of the husband's benefits, of 75 percent of the former
husband's benefits, for wives and widows
respectively is a method of discriminating
against women.
Steadily the administrators of social security have been bringing evidence to show that
relating benefits to past records of wages
has been unsatisfactory—requiring a doubling of benefits—though not handled that
simply—for the retired groups and the group
to be retired later—and by implication correcting for the clumsiness whenever the
shoe pinches later.
The system does not fit the presumptive
needs of women, it does not fit the presumptive needs of men—as natural changes take
place in the economy. It does not even
insure the majority of our older people for
«20 years.
We do not handle sufficient data to show
what the assets and incomes presumably are
for the existing older persons. We need such
a comprehensive review as to the status of
the American citizens today—quite different
than it was in the sad days of the depression,
and absolutely different than it was implied
to be, when all married women were regarded
as dependents—essentially penniless—without regard to the earnings or property of the
So a major objective of the Commission's
work is factual analysis not yet really attempted.

Mr. CAIN. Having offered these two
letters, both from persons who have had
intimate contact with social-security affairs, I want to offer two others from
persons who in different ways have seen
at close range exactly how our present
social-security system operates.
The first of these next letters is from
Mr. Jay Igiauer, vice president and treasurer of Halle Bros, department store in
Cleveland. Mr. Igiauer was a member
of the special committee appointed in
1937-38 to study the Social Security Act.
If I am not mistaken, the junior Senator
from Illinois [Mr. DOUGLAS! was also a
member of that committee, and I would
draw Mr. Iglauer's letter to the attention
of the junior Senator from Illinois.
The second of these letters is from
George Imnerwahr, now a consulting actuary, of Baltimore, but formerly chief
actuary of the Bureau of Old-Age and
Survivors' Insurance in the Social Security Administration.
Again, Mr. President, in an effort to
save time, and because I know the letters
probably will be read by my colleagues,
I ask unanimous consent that both of
them be made a part of my remarks at
this time.
There being no objection, the letters
were ordered to be printed in the RECORD,
as follows:

Cleveland, Ohio, May 17, 1950.

United States Senate,
Washington, D. C.
DEAR SENATOR CAIN: I have seldom seen a

position regarding the social-security problem which is so accurately in accord with
my own views, as your letter of May 12.
H. R. 6000 is an illustration of the dangers
Inherent upon embarking on any long-term


program such as social security without
full realization of the ultimate consequence;
When Congress established the first social
security law it created the impression tha
the employer and the employee jointly, wit:
some small assistance from the Governmeni
were to create a fund, out of which would b
paid the minimum subsistence requirement
of the aged—not as a matter of charity, bn
as a matter of right. I hope you have fol
lowed carefully the testimony of 'W. R. Wil
liamson, one of the original actuarial COB
sultants to the Social Security Board, whos
opinion I have learned to respect highl;
He has come to the same conclusion as youthat the public assistance has now over
shadowed the so-called insurance system c
which you speak.
You may recall that I was a member c
the committee appointed by Joint action c
the Senate and the Social Security Board t
study the Social Security Act in 1937-S8. A?
ready at that time members of that commit
tee were deeply concerned over the fact the
the funds paid in by employees, and in whic
they had a moral vested right, were bein
paid into the Federal Treasury along with th
employers* contributions, and that to th
extent that they were not being currentl
used to pay benefits the remainder of th
funds were being used by the Federal Go\
eminent for every purpose. The answer c
the political economists has been that to th
extent that the Government has used the*
funds they did not have to borrow with bone
of the United States for other Governmer
purposes and therefore the credit of th
United States of America was thereby e
much improved.
With the advent of World War II and th
enormous public debt that was created a v
a consequence, it becomes clear that as arr
when the amount of benefits that were con
templated to be paid in 1960, 1970, and 198,
approached the maximum and then exceeded
the collections, the Government would have
to borrow or impose additional taxes to meet
any underestimates or any liberalization ol
The trouble with the whole program is that
the accumulation of tax payments for socia]
security in the earlier years of the system
produces so-called "trust funds" so large that
the temptation is constantly present to liberalize benefits and/or to increase coverage
I agree with you that a pay-as-you-go system, with minimum subsistence coverage for
all, is the only answer. That, I believe, is in
the main the thesis of Mr. Williamson's
position too.
I am particularly glad that you have taken
the position in favor of a well-organized
Commission to study the whole social-security problem. Such a Commission should be
composed of—
1. Representatives of the actuarial profession.
2. Representatives of the Government.
3. Representatives of business.
4. Representatives of labor.
5. Representatives of the general public.
Care should be taken that the Commission's personnel should be nonpartisan in
character so far as it is possible, or at least
balanced as to the principal political parties
Such a Commission might well be expected
to take a full year or two to arrive at conclusions.
A word about my observations concerning
the previous Social Security Commission on
which I served—I was impressed with the
high character, ability, and conscientious
attitude of the majority of that special committee. If there was any unfavorable aspect
to that committee, it was the absence from
most of the committee conferences of the
representatives of labor.
I believe that such a program as you envisage is the only way to approach the problem that bids fair to have oich serious consequences to the whole economy. I believe
also that such a proposal would meet with



) support of every right-thinking organlzan concerned with these problems,
tfith your permission I am sending a copy
your letter to the chairman of the Social
jurity Committee of the National Retail
/ Goods Association and the Social Secu7 Committee of the American Retail Fedtion, and I shall ask them to give support
your proposal.
shall await your reply with interest.
Sincerely yours,

Vice President and Treasurer.
BALTIMORE, MD., June 12, 1950.
nator HARRY P. CAIN,

Senate Office Building,
Washington, D. C.
DEAR SENATOR CAIN: Though there have

en some other national issues in which I
ve not been in accord with your views, I
[ist say that I am most definitely in accord
th those expressed in your letter of May
1950, relating to the proposed social serity bill. H. R. 6000. I am convinced that
extend the defects of our present social
;urity law as H. R. 6000 does would be most
fortunate, and that'What is needed is a,
trough, independent study which will go"
3k to fundamentals and reconstruct our
:iai security system from scratch.
\s you probably know, I served on the
uarial staff, of the Bureau of Old-Age and
rvivors Insurance in the Social Security
cninistration for 7 years, ultimately betiing the chief actuary for the Bureau,
ion I began this work I was most enthusi;ic over the social security program as It
s then conceived. After some years in this
rk, however, I came to the recognition
*t this program was not working out as
a been contemplated and that its defects
re so serious and so fundamental that it
)Uld not work out effectively without comete revision, and this recognition was one
the factors that led me, late in 1946, to
ave the Social Security Administration and
iter another Government agency. And
en more impelling factor was my realizaon that Social Security Commissioner Alteyer and some of my other superiors, who
my opinion must have been as well aware
most of these basic defects as I was,
jvertheless apparently lacked the intelleclal honesty needed to come to an open adission of these defects and to seek their
imlnation, but instead chose to temporize
ith what they knew to be defective, to
>ver up one mistake with another, to divert
le public's attention from the real defects
the social security program and instead to
ame the program's failure on factors of a
uch less pertinent nature. It seemed to
e, also, that there were various ulterior moves which I shall describe later. So long
? this attitude and these motives prevailed
nong the officials of the Social Security Adinistration, it seemed useless for me to reain there.
I will not give here a full 3tory of what I
>nsider to be the defects of the social seirity program and the proposed patchingo legislation, nor shall I spell out my recnmendatlons for correcting the program,
ecause I was an employee of the Bureau of
lternal Revenue at the time of the House
id Senate hearings on social security, I
juld not testify personally at their hearigs. However, an address which I prepared
)r a local actuarial club was inserted in the
snate hearings by another club member and
ipears on pages 1979-1&87 of the hearings,
id this address indicates my views. In
any respects they are quite similar to the
ews indicated in your letter. I oppose the
-esent system and the proposed legislation
i the grounds that it excludes from benefits
le great majority of today's old people (and
ould still exclude them despite extension of
average among people still working), that
le major cash costs of the system are de-

ferred to such an extent that the costs actually accruing are concealed beyond any
possible public recognition, that no adequate
financing method can be developed for such
a system, that the benefit formula, under
which benefit amounts are more or less proportionate to previous income, gives rise to
a socially incorrect and wasteful distribution
of the funds available for social security purposes, and that the basing of benefits on
wage and payroll records is needlessly complex in its administration. Like yourself, I
favor a system in which Federal benefits
would be available to all in certain categories; for example, to all those above a specified age. Benefit amounts would in general
he uniform, but they might be tapered down
,or beneficiaries above a certain income level;
if so, such tapering down would be based
on taxable income (as shown in the beneficiary's tax return) but not on a needs test.
The Federal Government would no longer
subsidize public assistance. Federal benefits
would be financed out of an earmarked addition to Federal income tax.

What seems most important for me to pass
on to you now is some vital but little-known
information concerning the Social Security
Administration, its motives in sponsoring
legislation, and its tactics in furthering its
aims. These must be appreciated if a proper
course of action is to be taken.
First, there is a definite desire on the part
of the Social Security Administration, to
convey to the public the idea that socialsecurity benefits—that is, old-age and survivor pension benefits furnished through the
social-security system—are far more inexpensive than the same benefits furnished in
any other way. A deferred-benefit system,
in which benefits are denied a large proportion of the old, the survivors and the disabled of the present but generous promises
are made to those who will be old, survivors,
or disabled in the future, plays right into
the hands of this desire. Because the number of beneficiaries under such a system in
its early years is a very small proportion—
say one-eighth or one-tenth—of the ultimate
number, such a system appears to be cheap
even though a large actuarial cost is accruing, and it is easy to promise benefits at an
ever-increasing level without the public
realizing the cost to which it is ultimately
committed. The proposed method of financing the benefits of H. R. 6000 by employer
and employee contributions which rise from
iy2 percent to 3% percent by a series of
scheduled increases is entirely unrealistic.
All experience to date indicates that the
increases will not place as scheduled unless either future disbursements rise faster
than predicted or benefit increases are
promised with the contribution increases—
and either of these conditions would render
the scheduled increases insufficient to make
the system self-supporting.
The contribution increases which had been
scheduled for the existing benefit law did
not take place as scheduled, so that today's
contributions fall considerably short of indicating the true cost of the system. Social
Security Commissioner Altmeyer will tell you
that the blame is on Congress, that he favors
an actuarially balanced system, but he knows
that an actuarially balanced system is a political impossibility if scheduled contribution increases are to be relied upon. If he
were really sincere about an actuarial balance for the system, he would insist on the
full level premium rate being assessed from
the start. But this would give the public
pause about the cost of the system. Similarly, in a true pay-as-you-go system of the
type both you and I advocate, the system's
real costs would be immediately apparent,
and this too is a situation the Social Security Commissioner could not tolerate.


Mr. Altmeyer will tell you that at various
times during the war years he resisted the
freezing of the employer and employee tax
rates at 1 percent on the ground that this
was well below the level actuarial cost of
the existing program. Yet at the same time,
he did nothing to discourage the hopes of
labor groups who were supporting a tax increase in the belief, that the increase would
lead to higher benefits. In the Social Security Administration we played a double
game; we told Congress that the tax rates
were too low for the existing scale of benefits, yet we told covered workers that they
were "paying for their benefits." We talked
of the system as if it were contributory, yet
the employee taxes represented such a small
proportion of true cost that the system
could not really be called contributory in
any true sense. But the public deception
went on and still goes on; in fact I recall
one time when I was told by Commissioner
Altmeyer's office to refer to the employee
taxes not merely as contributions but instead as "premiums," to convey .even more
emphatically the erroneous Idea that the
worker pays the cost of his benefits.
* Second, the Social Security Administration wishes that Its system be looked to as
the source of the major portion of Income
for retired persons and survivors and not
merely the source of a subsistence benefit
on which the worker or beneficiary can fall
back if all else fails. If a man who has been
earning $5,000 a year writes In to the Administration and complains that his $45-amonth benefit is far insufficient to maintain
him after retirement In the manner to which
he is accustomed, I think you and I would
agree that the correet answer to the man
would be that after earning $5,000 a year
for some years, he should have laid aside
for himself a substantial additional amount
In the form of insurance and savings, perhaps in an owned home. We would tell him
that because the cost of social Insurance
benefits is substantial, before his benefit was
raised, our first effort should be to make
sure that a benefit providing at least subsistence should be made available to his
less fortunate fellow who had been earning
only $1,200 or $1,500 a year and who, therefore, had probably been unable to lay aside
for his old age. We would tell him that
the differential between his employee taxes
and those paid by the $l,200-a-year man
paid for a differential in benefit of only $2
a month, whereas he was already getting a
differential In benefit over the lower-paid
man far above that figure, and that actually
It was not the responsibility of the Government of the United States to give him a
benefit much higher'than that of the lowpaid man merely because he enjoyed a higher
standard of living already.
But the Social Security Administration
officials would send him an altogether different answer. They would agree with him
that his benefit Is much too small, despite
the fact he had already had an income well
above that of the average-paid worker and
should have been able to make considerable
provision for himself. They would stress
the fact that they had repeatedly urged Congress to liberalize benefits like his. It Is of
Interest to note that in the social-security
bill which it advocated, H. R. 2893, the
monthly benefit of a man who has earned
$4,800 or more a year since 1937 would have
been increased by about $50, while that of
the man who has earned $50 a month would
have been increased by less than $6, despite
the fact that it is the latter man whose benefit under the present law Is so pitifully small
and for whom a benefit increase is eo
desperately needed.
Third, the Social Security Administration
stresses the payroll tax method of financing
social security even though it knows that this
method Is unsatisfactory in theory and in
practice and can never be extended to cover



100 percent of gainful work in this country.
This method, which Involves employee taxes
withheld by employers and matched by employer taxes, seems to work out conveniently
for the presently covered employment groups,
though even here are various administrative
difficulties on the part of both Government
and employers that are not generally realized.
But to extend this method to the myriad
borderline forms of employment, the casual
earnings, the small earnings of marginal selfemployed persons is a process which can be
attempted only with a great degree of trouble
and never will be perfected. Even for the
partial extension of payroll tax coverage contemplated in EL R. 6000 we find numerous
difficulties of definition and enforcement, a
disproportionately increased administrative
expense, and the quite intenable formula of
taxing the self-employed by one and onehalf times the employee rate.
Since social security is really a charge on
the country as a whole, why not recognize it
as such and finance it by adding an earmarked tax to our existing individual
income-tax system? The machinery for this
system has already been developed; it covers
income earners of all types, whether employer
or employee, farmer or factory worker or investment holder, and it leaves out the trifling
amounts of income (those under $600 a year)
which it is a nuisance to tax for social-security purposes or otherwise.
The reason for rejecting this ready-made
and suitable form of taxation in favor of the
inappropriate employment tax structure and
the mammoth system of wage records is that
of implementing the impression that this
Bocial-sscurity program is a contributory program, and second, that the employer pays
part of the cost. The error of the first of
these impressions I have already pointed out.
The second impression, that the employer
pays part of the cost is also erroneous, in
that the employer tax is largely passed on to
the consumer; that is, to the general public.
Nevertheless this employer-bears-the-cost
argument is one which has been continually
used by the Social Security Administration
In order to get the support of labor groups
and others. The idea is to make labor think
the other fellow pays.
Fourth, the incomplete Job coverage, inevitable under the payroll-tax method, forms
a very convenient scapegoat on which the
Social Security Administration can place the
major blame for the social-security program's
shortcomings. When asked by the Senate
Finance Committee why only 2,000,000 out of
11,000,000 people over 65 are receiving benefits, Commissioner Altmeyer answered:
"Exactly, and why is that? Because we did
not start a system with universal coverage,
I hate to remind you but the Committee on
Economic Security did recommend universal
coverage in 1935, Just as we are recommending it today." Mr. Altmeyer knows that the
major reason for the small proportion of
beneficiaries among the present aged is the
more fundamental defect that people already
too old on January 1, 1937, to work on and
after that date could not become beneficiaries
under any Job-coverage definition, and even
if his own bill, H. R. 2893, had been law since
1937, over 6,000,000 of today's 9,000,000 nonbeneficiaries would still be nonbeneficiaries,
but this device of blaming the trouble all on
incomplete job coverage seems to have
worked wonders for him. Even the normally
astute Prof. Stunner Sllchter was taken in
by this deception, as is indicated in his
prepared statement to the Finance Committee (see p. 2128 of the recent Senate
Even the estimates in the committee report
on H. R. 6000 show that extension of Job
coverage will pay only a limited number of
today's older people on the benefit rolls, and
it should be remembered that those who do
come on the rolls are either those who are
still working or some others who are in a
position and of a nature to work the system

by getting a few extra "quarters of coverage**
for themselves. Those who are now off the
benefit rolls and are no longer working and
who are too honest to work the system In
this way will remain off the benefit rolls.
Even at that, I believe the estimates of
number of beneficiaries in 1955 are too high.
I am not aware of what pressures the present Social Security Administration actuaries
work under, but I know that during my
years as an actuary for that organization
there was a decided pressure exerted to produce high estimates of the number of beneficiaries in the immediately ensuing years.
This was partly to create a good impression of the effectiveness of the system and
partly,to assure a safely padded administrative budget for the organization. I recall,
for example, how on one occasion I had
worked out estimates covering, I believe, a
2-year period and submitted a detailed statement in support of them. Mr. John J. Corson, then Director of the Bureau of Old-Age
and Survivors Insurance, sent the estimates
back to me with various changes of his own
penciled in, raising the estimates by probably 50 or 75 percent, and directed me to
work out a justification of these revised estimates of his. This, of course, I had to
do, though I was convinced of the greater
accuracy of my original estimates, and it
subsequently turned out that even my original estimates were-too high. Some of the
published actuarial estimates in connection
with the 1939 legislation were several times
too high; for example, it was estimated that
the number of retired workers who would
receive benefits in the middle of 4945 would
be from a low of 1,217,000 to a high of 1,854,000, but the actual figure turned out to bo
only 431,000.
Fifth, the Social Security Administration
officials will tell you that they prefer contributory social insurance to public assistance. They know, however, that passage of
H. R. 6000 will transfer practically none of
the present assistance recipients to the insurance benefit rolls and that despite thepassage of'H. R. 6000 the assistance rolls
will probably grow for some years to come.
The passage of a really effective social-security program, under which the current aged
and the current survivors would be brought
on the rolls to receive automatic benefit—
that is, without a needs test—would mako
it appropriate Tor the Federal Government
to withdraw completely from the assistance
field, but nothing could be more distasteful
to the Social Security Administration officials
than this.
The two reasons for their preference of
the perpetuation of this dual system of insurance and assistance are these: First,
through participation in the State programs
of public assistance the Social Security Administration officials are enjoying an increasing Influence in State welfare administration, and, second, they are able to pit
insurance recipients and assistance recipients in competition with each other for increasing benefit levels. I t is a form of competition which has played beautifully into
their hands thus far, and why throw away
a device like this.
Sixth, vested interests in the existing form
of program have been well developed. The
Social Security Administration has encouraged covered workers to believe that they
have paid for the benefits promised them
and in this way a resistance on the workers'
part has been built up against any change
in the form of the program. But even more
unfortunate is the vested interest of the
Social Security Administration itself. Naturally it has the usual vested interest of a
bureaucracy in its jobs, but. even more, it
is concerned about the perpetuation of the
techniques and the philosophy it has built
up. The wage-record system, for all the mechanical techniques and skill which have
gone into its making, has become such a
mammoth thing that any-curtailment of it


is unthinkable to the Administration,
recall the reaction I got to a proposal I mad
for a less steeply graded benefit scale, a pro
posal which I argued on the basis of bot:
social desirability and actuarial equity
Other officials protested that if we adopte;
such a proposal, we might become unabl
to justify the wage-record system. Trul
this system has become not a means to a
end but an end in itself.

The most unfortunate thing the Ssnat
could do would be t o pass H. R. 6000 on th
supposition that it would investigate it
shortcomings later. Obviously, if it approve
the bill, it will not hurry to take up a stud
of it later. But more important is the fac
that the passage of this bill now would mak
it much more difficult and costly to develo
an effective bill later. As it is politicall
next to Impossible to lower benefits, if th
Senate desires now to go to a unifori
benefit system, it can do so now by settin
the uniform benefit at about $45 a montl
but if now this bill is passed and then a un:
form benefit is decided upon, the benefit levi
will have to be much higher.
It is safe to say that no really lndependen
study of this subject has been made sine
the enactment of social security. There ar
those who will claim that the Senate Financ
Committee's advisory council which studie
the subject in 1948 was independent. Tr
men and women who served on this counc
were big-name persons who were extreme"
busy in their own fields and could not d*
vote the time necessary for extended orif
inal study of this subject. As the resul
the study staff, whose members were recon
mended by the Social Security Administration, did the real work. The data which th
staff members provided for the council merr
bers were those which the Social Securit
Administration wanted them to see, and
have ascertained from some of the counci
members that various other facts whid
might have led to different results were neve
brought to their attention. There were in
dependent qualified people who sought t
serve on the staff and who later sought t
come before the council meetings, but wh
were denied that opportunity. Social Secu
rity Commissioner Altmeyer was the onl
"outsider" permitted to come before th
council with an expression of his views.
You ask me in your letter how an appro
priate study commission should be formec
and, as I have already indicated, I feel J
should include persons who are proficien
Btudents, drawn from a variety of field*
persons who can approach the subject with
out pride of sharing authorship in the exist
ing system, and persons who can devot
extended full time to do original work.
Once the commission is formed, it is essen
tial that it admit for expression of view
. point any person who can demonstrate clos
association with the field of social securit;
including those who wish to appear "off th
record." If the commission is permitted t
see only officially sanctioned data and to nee
only officially stated views, as was the ca<
with the 1948 advisory council, the who!
project is wasted. I should propose thz
Government employees who have had ea
perience with this program should be pei
mitted to appear, with their presence an
views held confidential. Some very intei
esting and valuable testimony could, in fac
be furnished by some present social-securit
employees whom I know, if this protectic
were granted them. Persons who appear o
the record usually have a more genuine ir
terest than many of the witnesses who appei
at a congressional committee hearing, mar
of whom express views that are not their ow
and are given merely for the record.
I cannot tell you emphatically enoug
how necessary it is to have a study of th
sort before any bill is enacted, and I si*



srely -wish you success in your efforts to
chieve this end.
Yours very truly,

versality, current rather than deferred protection, and broad social equity rather than
individual equity. The system should allow
contributions from all active citizens both
employed and recipients of investment income. The system should not provide progressive taxation but rather earmarked taxes,
probably as a part of the wage-withholding
plan. The needs test should be avoided.
There should be no disqualifications because
of former intelligent thrift. The social budgeting system should eliminate the demoralization and awkwardness of present publicassistance programs. I agree with you that it
should be the purpose of the investigatory
commission to recommend the age at which
benefits should become receivable and should
indicate the size of benefits to provide the
floor for subsistence. I am wholeheartedly in
favor of an earmarked tax to make each individual citizen conscious of what he is paying.
Such a system will, by means of an informed
electorate, prevent future indiscriminate increases.
At your request, the above suggestions have
been prepared hurriedly and only in skeletal
fashion. I hope that my views may be of
assistance to you.
Very sincerely yours,

Senate Office Building,
Washington, D. C.
DEAB SIR: This is in reply to your letter
)f May 12. May I commend your unwillngness to vote favorably for H. R. 6000 as
t is expected to be reported to the Senate
)y the Senate Finance Committee, and your
preference for a resolution that the social
security establishment be left as it is, pendng a thorough and completely Independent
nvestigation of its purpose, present status
md future development.
May I suggest that your resolution contain
;hree major provisions:
1. H. R. 6000 should be deferred pending
m Independent study of the philosophy of
>ocial budgeting and its dominant charac;eristics as contrasted to the present system
)f OASI and public assistance. This should
:onstitute, in essence, the mandamus to the
nvestigatory group.
2. The personnel of this investigatory body
should exclude any present employee of the
Social Security Administration or the Fedsral Security Agency, because, in all likelilood, such an individual would be predisposed to recommend, prejudicially, a con;lnuation and expansion of the present sys;em. I would recommend that the following
people be named to the investigatory group:
Mr. W. Rulon Williamson, a Mr. Calhoun, and
vlr. Alfred Guertin, the latter a staff member
A the American Life Convention.
3. The method of study should be independent, fair and Impartial; should allow at
east one year's time to prepare a report,
\nd should utilize and accept opinions,
offered by conference method, from leaders
n government, business and labor. Leaders
n agricultural and consumer groups should
ilso be consulted.
My personal opinion is that our present
system should be scrapped entirely and substituted with a system of social budgeting
•national sharing), providing a floor of proection for the incidence of catastrophic conagencies. This system should provide uni-

at any further time if I can be of any assistance.
Yours very sincerely,

Vice President-Actuary.
A democratic society must provide some
orderly machinery for providing protection
against inability of individuals to attain
their own security. Before living became so
complicated it was possible for the aged-to
do odd jobs around the farm, to help with
the children, and to perhaps help with sewing and such small Jobs. There were not the
small homes with no extra rooms for the old
people, and work was carried on without the
specialization that has now come to be widespread.
There should not be any conflict or confusion between proper social security and
the exercise of personal industry and thrift.
Social security should represent the protection, the floor of subsistence to replace reliance upon charity and public relief. It
should not prevent the individual from having the right and opportunity to raise himself to such level of security as his industry
and thrift dictate. If social-security benefits are ever made acceptable as a standard
of security, the will to work will be weak*
ened and destroyed.
In 1935 the first Federal Social Security
Act was passed providing monthly benefits'
for retired employees which was amended in
1939 to provide benefits for certain specific
dependents. It was recognized that it would
be a long time before the so-called old-age
and survivorship insurance would adequately provide for aged. To supplement the oldMay 17 Indicating such sound views on our age benefits, so-called assistance was also
social-security bill which is now before the provided which was to be financed Jointly by
Senate. It so happens that within the last the States and the Federal Government.
2 weeks I was requested to write a note about The old-age and survivorship insurance Is all
our social-security plan that could be under- Federal. The old-age assistance is operated
stood by laymen.
by the States with widely varying rules for
I have been out of town most of the time receiving such assistance. Each State deand have written such a note rather hur- cides how much property or other resources
• riedly* but I am pleased to enclose a copy.
those at age may have. The Federal GovernYou will note that many of the ideas set ment contributes one-half of whatever the
forth therein are similar to those stated in State pays each person. This, of course, has
your letter. I am thoroughly in accord with resulted in some States having much larger
your statement that patching up unworkable portion of their aged people receiving such
social-security programs is bound to produce benefits varying from about 13 percent In
more maladjustments than cures. We have Ohio to nearly 90 percent' in Louisiana. It
had studies and commissions, but probably has also resulted in the wealthier States rethe personnel, although capable, did not have ceiving more assistance from the Governthe time and independence that were neces- ment, since they match the number ,of dollars that the States pay out.
I think you will find that educators tend
At the present time there are less than
to be too idealistic, lawyers are legalistic, 2,000,000 receiving old-age insurance beneand professional economists become too in- fits for which they paid something and
volved in theories. In 1935 I was with the nearly 3,000,000 are receiving old-age assistTreasury Department for about 3 months ance for which they paid nothing. The avworking entirely on social security tax queserage old-age benefits are nearly twice what
tions. At that time there was a substantial is received under the insurance benefits. It
difference of opinion among actuaries. It
is hardly fair to pay twice as much to the
was Interesting that 15 years later actuarial ones who have contributed nothing.
opinion was almost unanimous.
House bill 6000 is now before the Senate.
As a profession we are notoriously poor Under the present bill about 35 percent of
politicians, but perhaps some progress is the men and 5 percent of the women over
being made. Your letter is one indication.
age 65 are covered. Tw&nty years from now
The commission, if it should be ap- under the present bill, about 55 percent of
pointed, should not be composed of repre- the men and 12 percent of the women will be
sentatives of certain groups such as labor, covered. Under H. R. 6000, which Is the new
business, insurance, or the security-board bill now under consideration, 20 years from
bureaucracy. Actuaries are practically never now approximately 70 percent of the men
wealthy enough to have much of a stock and 15 percent of the women will be covinterest in insurance and are usually inde- ered.
It is obvious from these few figures
pendent thinkers. The commission should
both the present bill and the suggested
be heavily weighted with Members of the that
are far from adequate to the problem of
Congress and with actuaries who have been one
our aged people. Government security
studying the development of the social- plans
cannot operate as private Insurance
security plan for many years. It is unfortunate that we have followed the European companies do and build up reserves to take
ideas rather than some of the better thought care of future benefits. Each generation of
that has come from our Latin-American working people must take care of their own
friends. One of the soundest books that has old people; that is, the ones who are now
been written on this subject is in Spanish by currently dependent, Just as they must take
care of those who are now children and not
Mr. Walter Dittell in Guatemala. *
old enough to work. To promise large beneSince time is the essence I have written
fits payable In dollars years from now, means
this hurriedly promptly upon receipt of your nothing unless we know what those dollars
letter, but would be glad to hear from you
will purchase. Our standard of living will

Mr. CAIN. Mr. President, In conlusion, I have two groups of letters
efore me. Thefirstgroup consists of
ix letters. Each one of them is from
different type of organization, person
r group in this country. One of the
itters Is from the International AssoLation of Accident arid Health Underwriters. The second letter is from the
Accidental Life Insurance Co. The third
itter comes from the board of pensions
f the Methodist Church. The fourth
jtter is from the Insurance Economics
ociety of America. Thefifthletter is
t*om Mr. A. R. Findley, who Is serving as
hairman of the social security commitee of the National Retail Dry Goods
Lssociation. The sixth letter is from an
ctuary of an Insurance company, which
ouches on the necessity of a study by a
Isinterested technical staff.
Because I think such letters are of
3al and positive Interest to all Memers of the Senate, I ask unanimous conOCCIDENTAL LIFE INSURANCE CO.,
mt, sir, that I may be permitted to inN. C , May 19, 1950.
srt them in the RECORD as part of my The HonorableRaleigh,
3marks at this point.
United States Senate,
There being no objection, the letters
Washington, 2). C.
ere ordered to be printed in the RECMY DEAB SENATOR: It is certainly heartening
such as you wrote me on
RD, as follows:
Chicago, III., May 19, 1950,
The Honorable HARRY P. CAIN,





in your letter. In fact, at a meeting of the
directors of NRDGA held last January, I
argued at some length that the association
should adopt these conclusions as its policy.
While many of those present agreed that such
a policy is the only logical conclusion, they
felt that the association could not publicly
take such a position without taking a poll
of its members and that extended education
must precede the taking of such a poll.
There is no question in my mind but that
you are on the right track. I sincerely hope
that the arguments of yourself and others
Executive Secretary.
of a like mind may prevail and that the Congress can be prevailed upon to authorize a
thorough study prior to adoption of any
amendments as contemplated by H. R. 6000.
Chicago, 111., May 22, 1950.
May I have your permission to send copies
of your letter to the members of the NRDGA
Senate Office Building,
social security committee, some 20 in numWashington, D. C.
ber? I think it would be' helpful in crystalDEAR SENATOR: I deeply appreciate the oplizing their thinking.
portunity given me in your letter of May 15,
Sincerely yours,
1950, to express my views relative to H. R.
6000 and I am delighted to note your reaction
Vice President and Treasurer,
and your approach to the problem of old-age
survivors insurance.
You are to be congratulated upon your
forthright stand in this situaton and I am
pleased to give you my thoughts in an
Mass., May 22,1950,
attempt to solve a problem that ^requires an Hon. HARRY P. Boston,
immediate solution.
United States Senate,
We should not expand the Social Security
Washington, D. C.
Act now operating on a false basis Until a
D2AR SENATOR CAIN: My morning's mall
thorough study is made of the act since its
Mr. Williamson and
Inception in 1935. What is needed is an
independent commission with authority and from Mr. Pauley, both referring to discuswith adequate funds to ascertain the best sions or correspondence with you about our
method for handling the problem of caring country's social security structure. This is
for the Nation's aged. Patching up the pres- just a note to express my strong agreement
with the proposition that an independent
ent law is not the answer.
I agree in your think realtive to an honest commission should weigh the faults of our
pay-as-ygAi-go system which could be kept present structure against the desirability of
on a supportable basis, thereby keeping the the type of immediate widespread minimum
cost of social security before the people at coverage which has-been called "pay as you
all times and not creating a further debt go". We have had studies of our social se. curity system by able and disinterested men,
to be passed on to future generations.
The Commission which you propose should but unfortunately the value of their studies
be composed of men of standing with no prior is clouded because they did not have the
connections with the Social Security Board. services of a disinterested technical staff.
I feel that one of the greatest long-range
In the past too many advisory councils on
social security have been dominated by in- services that could be rendered to our coundividuals committed to the continuation and try now would be the institution of such a
study with a proper independent staff, and
expansion of the act.
I hope that your, efforts bear fruit.
This matter is of vital importance to our
As a.matter of possible interest I am enAmerican
you will lead the way in correcting a piece closing a copy of a statement submitted to
Senate Finance Committee this spring.
implicaChicago, 111., May 23, 1950.
tions for the future of our country.
Yours very truly,
Senator HARRY P. CAIN,
I hope you will be successful, and if I
United States Senate,
can be of any help, please do not hesitate
Secretary and Actuary.
Washington, D. C.
to call on me.
DEAR SENATOR CAIN: I have your letter of
Sincerely yours,
May 16 about the extension of the socialE. H. O'CONNOR,
security bill (H. R. 6000) which, if I under(By Jarvis Farley, Wellesley, Mass.)
stand correctly, has been already reported
My name is Jarvis Farley. I am an actuout for action.
ary, living In Wellesley, Mass., and working
I thoroughly agree with you that the
in Boston. I make no claim to being an
Chicago, III., May 22, 1950.
whole social-security program needs reexpert In social security matters, but my
vamping in the interest of national security. Hon. HARRY P. CAIN,
work as an actuary has necessarily required
Wholesale adventures in socialism (which
Senate Office Building,
me to give more thought than the average
seems to be the political passion of the moWashington, D. C.
citizen to considerations of practice and of
ment), can involve us in a vast mass of
MY DEAR SENATOR: I am'so impressed with principle with which social-security legislapractically invisible contingent liabilities
the cogency of your arguments and the con- tion must deal and has given me some apprethat can in a few years outrun the published
ciseness, as well as the completeness, of your
ciation of the practical problems which must
presentation that I am constrained to volun- be encountered in connection with the comFederal indebtedness.
teer my views, even though you have not
Careful restudy of this fundamentally implicated individual accounting structure of
asked for them.
portant concern of the Nation is a must
our present social-security lav/. Although I
By way of introduction and background, I do not speak as an expert, therefore, I do
Knowing something of the results of farshould like to state that I am now serving have some well-formed opinions which I
my 5th year as chairman of the social sereaching social-security schemes in Auswould like to express for your consideration.
curity committee of the National Retail Dry
tralia, Great Britain, and elsewhere, I am
much inclined to think that we could go on. Goods Association, and am also a member
of the social security committee of the
Of those opinions there are two on which
the rocks just as hard as they have, unless
we take counsel with wise actuaries who United States Chamber of Commerce. I have I hold the strongest convictions and which
given a great deal of study to social security run directly counter to our present laws
are capable of taking an unbiased view of
problems and, more recently, to H. R. 600O and to this bill (H. R. 60C0). One is the conthe total picture. A commission like that
itself and the significance of the changes viction that to postpone the full cost and
recently headed by ex-President Hoover
proposed therein.
full benefits of the social-security structure
would seem to be in order.
Quite some time ago, I arrived at the same for a full generation is unnecessary, unsound,
A pay-as-you-go system would be much
and dangerous. The second conviction is
more realistic and hard-headed than the conclusions you have so admirably set forth

depend .upon production, and the standard
of living 50 years from now will also depend
upon production 50 years from now regardless of whether the average income is $2,000
or $20,000' a year. Everyone knows that it
takes $2 now to do what $1 would do 10
years ago.
The present old-age security plan is discriminatory in favor of those who have more.
The honest and thrifty farmer, small-business man, and school t&acher receive nothing
from our present social security unless they
are willing to draw old-age assistance which
is based on pauperism. The man who has
drawn $3,000 a year and over for a few years
a*nd has recently reached age 65 is the one
who is receiving the windfall of benefits
amounting to about 10 times the value of
what he paid in.
In addition to old-age insurance and oldage assistance, the third Federal recognition
of the aged exists in a $6,000 income-tax
exemption over age 65. This benefits obviously the well-to-do, and the higher in the
income-tax bracket the more is the benefit.
The whole question of social security
should be referred to a commission of experts
who made a study of such plans with
the idea of solving the problem that now
exists instead of promising large benefits
for political purposes for working people
When they retire years hence and which may
of may not, most likely not, be sufficient to
provide any reasonable living standard. The
current tax collections which are made from
the laboring people are sufficient to provide
a floor of protection on the subsistence level
to everyone who is presumptively in need.
There should be no necessity of concealing
small savings or of pretending to be a pauper
in order to collect benefits. Presumptive
need might be those who are 70 and over,
those between 65 and 70 who are not employed, and those between 60 and 65 who are
invalids or unable to work.
The present plan discriminates greatly
against women and children. It discriminates against the workingman in the small
income-tax brackets in favor of the worker
who makes the higher salary. It discriminates against the farmer and the small-business man. It discriminates against school
teachers and State and municipal employees.
The present bill is inadequate.

No. 119


present procedure. Those who work for
wages should bear the current cost of a
basic pension for all who cannot any longer
work. On that basis, every family would be
brought to realize that the wage earners and
not Santa Claus are the real carriers of. this
social responsibility. The idea that it can
be cared for painlessly is bunk.
Your thoughts on this subject, as expressed in your letter, are quite in line with
Cordially yours,



that the maintaining of Individual accounts
for persons covered under the social-security
laws is unnecessary and constitutes an u n justified and wasteful expense. I urge most
strongly, therefore, that your committee
study those aspects of the present law fully
and objectively before making any decision
which would make a later correction of these
faults more difficult to accomplish.
In support of these opinions it is useful
to look at the reasons why our social-security
laws were first adopted. Each person is exposed during his life to the possible loss of
the income upon which he relies for the
means of living. Workers grow old or become blind, wives are widowed, and children
are orphaned, and our Congress enacted legislation with the goal of providing a minimum income for each of those conditions.
Even if the present bill were enacted, however, our social-security structure would fall
far short of meeting that goal, partly because the full benefits of the law have been
postponed for a generation* and partly because our accounting structure is so complicated that it cannot provide wage records,
and therefore provides no assured benefit,,
for a large proportion of our population.
Why were the full benefits deferred for a
generation? A part of the restson lies in the
reserve concept of the original legislation.
It was thought then that the ultimate cost
to the participants would be reduced if there
were first developed a substantial reserve
whose interest earnings could bear some of
the ultimate cost. Part of the reason was the
principle of individual equity—the concept
that the benefits to each individual should
reflect in some measure his personal contributions, so that no one was to receive
full benefits unless he had been taxed for
his full working lifetime. And third, if we
are completely honest with ourselves I think
we must recognize that a part of the reason
for deferring the benefits was to postpone
the full cost of social security. It seemed
easier to accept the cost burden when the
first impact was relatively light, but the full
cost could not be posponed unless the benefits were also postponed.
How valid are those reasons today?
The reserve principle has already been
substantially discarded, and there Is no need
to repeat here the reasons why the concept
of reserves, so utterly essential to private
voluntary insurance, is a dangerous fiction
as originally adopted prior to the 1949 amendments.
The concept of individual equity—relating
benefits to contributions—undoubtedly has
political attraction. Individual equity is an
essential characteristic of voluntary, private
Insurance operations, because in our democratic and competitive world insurance policies, like any other economic serivce, will be.
"bought only if the purchaser is satisfied that
he will get his money's worth. In one sense
it is a high compliment to our private insurance companies that the sound principles
which they developed in their voluntary operations were considered to be necessary in
the Government's operations. The entire
social-security structure, however, is based
upon governmental compulsion, and, therefore, is subject to different concepts and requirements from those which govern private
insurance. The Government can abandon
the principle of individual equity and pay
every aged or blind citizen and every widow
and orphan today at a uniform benefit rate.
Today's beneficiaries would have paid much
less over the years than the beneficiaries a
generation from now; but that result, alter
all, is only a special example of progressive
taxation. Our whole progressive income-tax
structure is an example of the Congress1 willingness to depart from principles of individual equity when it feels that some greater
benefit can thereby be obtained.

The third reason for deferring benefits—
the postponement of cost—has already served
its-basic purpose. The social-security law
has been enacted and is widely accepted. I t
is still politically attractive to continue postponing the cost, but it is dangerously easy to
underestimate costs of the distant future.
It would be politically attractive and much
more realistic to pay now the level of benefits which are provided for a generation from
now—and to pay them to all aged, orphaned,
and widowed citizens, not only to those on
whose account there happens to be a wage
You have been urged to provide greater
benefits—sometime in t h e future—and to
levy taxes accordingly—also sometime in the
future. Opponents of the present bill have
said that the ultimate cost of the proposed
benefits will be far greater than the proponents can visualize. In effect you are being
asked to enact a law which may be workable
if everything works out as its proponents
suggest, but which could be disastrous if the
passage of time shows that the opponents
were better prophets.
The key of your problem is uncertainty
as to the cost of what you are being asked
to do. I suggest most strongly that the
solution of that problem is to make the calculation as* of today, not as of some date
many years from now. Give the benefits
now, give them to everybody now, and accept
the cost now. Give benefits which you are
sure, on the basis of present calculations, the
country can afford now. If experience proves
that the benefits you provide cost less than
we are prepared to pay, then extend the
benefits currently and accept the cost currently; but base your actions and decisions
on present conditions—on what you can see
today, not on the unknown and unknowable
future. What looks like a dilemma is really
an opportunity, a rare opportunity, to create
a sounder structure and provide greater benefits by a single decision.
Finally, if you provide a uniform benefit
plan you will make it unnecessary to keep
individual accounts. I don't know the .cost
of the present social security accounting establishment in Baltimore, but 'it must be
tremendous; and yet the cost of the individual accounting system is not to be measured
solely in terms of the Government's establishment. The greater part of the cost is
borne by the employers of our country. Maybe you saw a while ago a cartoon which pictured a small factory and beside it a large
office building labeled "Accounting Department." The cartoon exaggerated, of course,
but an important part of the cost of doing
business today lies in the reports and accounts which the Government requires for
each individual employee. The cost of
maintaining accounts of individual wage records, essential under the present benefit
structure, would be quite unnecessary if a
uniform benefit were provided for every eligible person. Thus the tremendous present
cost of individual accounting would be a
saving to credit, along with the saving from
present assistance payments, against the
increased present cost of providing the bene:
fits now.
This is not, of course, the first time these
ideas have been expressed. You have heard
them frequently from Mr. Williamson, and
you axe all familiar with the excellent statement which Mr. Curtis appended to the
House report in connection with this bill. I
agree with their views, and I urge most
strongly and sincerely that before you make
any decision on House bill No. 6000 you
cause to be made, by disinterested people, a
complete and objective study of the desirability of accepting now the full cost of paying benefits and of freeing the country from
the cost of the present individual accounting system.


Mr. CAIN. As I recall it was on the
12th day of May that the junior Senator
from Washington wrote an identical
letter to several hundred people throughout the country who he had reason to
believe were authorities of one kind, or
another on the social-security question.
From perhaps as1 many as a hundred replies I have selected 26, only because
they offer more in fewer words than do
the remainder of the letters. However,
the Senator from Washington wishes to
express his real appreciation to everyone who was thoughtful and kind
enough to write to him in reply to his
letter of May 12. I think the inclusion of this group of 26 letters from
students of the social-security question
in America will complete the record on
the pending bill which the junior Senator
from Washington in all sincerity and
with a complete sense of humility has
attempted to establish. Therefore I ask
unanimous consent that the 26 letters to
which I have referred may be printed in
the RECORD at this point in my remarks.
There being no objection, the letters
were ordered to be printed in the RECORD,
as follows:

Evanston, til., May 23, 1950.

Senate Office Building,
Washington, D. C.
DEAR SENATOR CAIN : Thank you very much

for writing me as you did on May 17 regarding H. R. 6000.
I agree with everything you say in your
letter. The present social-security law needs
a complete and thorough study and overhauling by experts in the field, including
actuaries. Such a study should investigate
the feasibility of placing the law on a payas-you-go basis. The members of any study
commission should consist mostly of experts
outside of the Government, so that the commission would not be controlled by experts
now employed in the Social Security Administration.
The inequities' as to benefits and taxes
whereby the young workers carry the burdens
of the older workers should be corrected and
such benefits and taxes kept to a minimum to
encourage savings through private channels.
As a matter of fact, I personally feel that
compulsion of any kind is in the direction
of socialism, and all people should be encouraged to save through presently existing
private sources, such as banks, building and
loan associations, Government bond savings,
life insurance, etc. The Government should
step in only where the States fail, and then
only on the basis of a means or needs test.
The tax burden is now so heavy that starting a new business is often abandoned because of tax considerations. Reducing or
eliminating the social-security tax would be
a good place to start in taking the Government out of business and reducing Government personnel and record keeping and
I feel as you do—that nothing should be
done at all now and that H. B. 6000 should
not be passed. We hope that you can convince the Senate that a thorough study
should be made instead.
If I can be of any assistance to you in any
way please let me know.
This letter is also written in behalf of Mr.
H. R. Kendall, chairman of the board of this
company, to whom you addressed a similar
Yours very truly,

Vice President and General Counsel,



Chicago, III., May 18, 1950.

The United States Senate,
Washington, D. C.





much the opportunity given me in your letter of May 15, 1950, to express my views with
regard to the social security bill (H. R. 6000)
arm your approach to the whole problem of
old-age and survivors insurance.
Personally I agree 100 percent with your
approach to the problem, and while I cannot
speak for our 150 members, I believe that
most of them would agree with you. I feel
that your letter is such an important contribution to the subject that I am sending a
copy to each of our members. No doubt you
will hear from many of them.
You have evidently given this question an
unusual amount of thought and study, and
I want to commend your realistic and courageous approach to the difficult and complicated problems involved in the care of the
aged regardless of any political consideration.
While I have no doubt that the Senate
version will be an improvement over the
House bill, it will not even attempt to cure
the inequalities, injustices, and omissions of
the present law. Neither will it get away
from the exceedingly cumbersome and expensive system of wage records, but will only
Increase the size of that operation.
I agree with you that there should be a
complete overhauling of our whole old-age
insurance and assistance program, and that
it should be done now before more people
acquire more or less of a vested interest.
The Commission which you propose should
be composed of outstanding citizens representing every important segment of our population which would have an interest in the
result of the investigation including general
business, insurance, and labor. They should
have a competent and independent technical
staff, not dominated by any special interest,
and especially free from control or influence
ot the personnel of the Social Security Administration, who are the authors of the
present system and are committed to its
continuation and expansion.
The working out of the details and the
necessary legislation should, of course, await
the report of the proposed commission.
I hope that you will succeed in bringing
to pass the kind of investigation you propose,
and if I can be of help to you in any way, do
not hesitate to call upon me.
Sincerely yours^

Managing Director,
WASHINGTON, D. C , May 18, 1950,

United States Senate,
Washington, D. C.
DEAR SENATOR CAIN: This is in response to

you letter of May 11 requesting my views
as to objectives, personnel, and methods
which might be followed by a commission
established to make a fundamental technical
study that can lead to a constructive redesign
of our social-security system.
You point out some practical results of
the present "insurance" and "assistance"
programs, particularly in their application
to today's aged, and the importance of a basic
reappraisal and revision of social security
rather than merely amending these programs.
This need for a basic reappraisal is apparent when we look back on what has happened so far in the development of the*socialsecurity programs, and especially when we
appraise some of the unplanned results of
these programs.
I feel certain that practically everyone who
has frivcn serious thought to the problems of
social security has been profoundly troubled
by the trends away from the conception of

individual and family responsibility • In the
decade and a half since the Social Security
Act was adopted.


all of our citizens to only some of them.
The Federal grant program is supported by
general taxation. Human nature being what
It Is, this is an Inherently dangerous proGENESIS OF SOCIAL SECURITY
cedure, tending to create a tremendous presMost of us can recall the considerable defor more and more funds from recipigree of economic distress leading to a series sure
ents and prospective recipients, while the
of emergency measures during the depresgreat
mass of citizens are unaware of the
sion, and to the" eventual adoption of the ultimate
consequences of the system, and
Social Security Act in 1935 on the principal
consequently afford no present effective
basis of its being a desirable alternative to
checks and balances.
emergency relief. It cannot be overlooked
obviously there is a justification
that even at that time there was a school forWhile
social-security payments under
of thought interpreting the Social Security somemaking
circumstances, just as obviously payAct as an official admission that individual
ments should not be made without a clearenterprise had failed as a method of achiov- cut justification.
ing security, and that the Federal GovernPURPOSES OF COMMISSION
ment is obligated to underwrite the IndividI should conceive it to be the function
ual economic security of its citizens.
and purpose of a social-security commission
You wilL recall that there was a so-called
to examine anew the broad problems of ineconomic brief compiled at that time and
dividual and family security, ascertain the
used before the Supreme Court in arguing
the constitutionality of old-age and sur- areas where private initiative and group efvivors' insurance and unemployment com- fort are in fact inadequate to afford opportunity for a reasonable security, and make
pensation. This brief consisted largely of
recommendations as to the extent and
depression statistics selected to maintain a
through what mechanisms. Government
thesis that a large portion of our populashould supply benefits to the families and
tion are helpless pawns on the chessboard
of economic forces and cannot provide any individuals concerned.
This is a herculean task. It involves the
reasonable security for themselves or their
employment of competent task forces t o
families. The argument was that this situagather various pertinent data to make certion was so typical of our citizenry and so
tain that the factual basis of the commisnational in scope that destitution had besion's conclusions is sound. It involves getcome a matter of national concern justifying
action by Congress. Furthermore, the brief ting at the actual current economic facts of
put forth the thesis that destitution was so life instead of relying on the selected deprestypical in the case of unemployment or at- sion statistics of the economic brief pretainment of age,65 that benefits paid on a viously referred to.
There was no economic brief adverse to
presumption-of-need basis—that is, withthis Government brief submitted to the
out regard to the actual situation—were
court. So far as I know, no such comprejustified.
hensive compilation has since been made
We have seen a rapid development of the
conception that benefit payments are ft and no attempt has been made to explore
the soundness of the conclusions or the'
"right." Some of these payments are now
called insurance, though, at the same time, validity of the statistical data or methods
reflected in the brief. Thus acceptance of
the contractual implications of the term are
the depression-born statistical conclusions
disregarded in a demand for larger and
urged on the court has been by default, and
larger monthly amounts—particularly for
It is of basic importance that an up-to-date
those whose income hasv been largest and
whose presumptive need should be least. unbiased appraisal be substituted for the
old economic brief. Presumably there should
We have also found an untenable distincbe a considerable difference In appropriate
tion between the millions of our citizens who
social-security measures In an economy
have not been cavered under old-age and
where there is a widespread ability to achieve
survivors* insurance and are receiving no
benefits and our fortunate aged who have individual security and in an economy where
there is no such ability. It is thus of pribe?n covered and can qualify for benefits
costing actuarlally perhaps 20 times the mary importance to examine into the original
factual and statistical basis of social security.
OASI taxes they have paid. Many of us have
Perhaps the most important single funcbeen troubled by the propaganda that these
tion of the Commission itself as contrasted
fortunate beneficiaries have paid for their
with Its technical staff would be the formulabenefits.
tion and publication of a social-security
You will also recall that in 1035, when the
philosophy, based on documented premises.
Social Security Act was adopted, it was genQuite probably the actual end result of such
erally conceded that the fiscal position of
an effort would be the formulation by facthe Federal Government was much better
tions of the Commission of two or more
than that of many State and local governsocial-security philosophies. I cannot bements, and thus that it was expedient for
lieve it likely that,any clear-cut philosophy
the Federal Government to participate by
could be developed to which all members
way of Federal grants to the costs of State
. relief programs for the needy aged, for needy would subscribe. However, if opposing
philosophies are announced and spelled out
children in broken homes, and for the needy
by factions of the Commission, this would be
a striking advance over the present situaWe have all observed that since that time
At least the Congress and the people
the relative fiscal positions of the Federal
would'have two spelled-out philosophies preGovernment and of State governments have
sented for their choice, and each philosophy
been almost reversed, and also that old-age
would be subjected to attack on any of its
and survivors' insurance now covers a
vulnerable points.
large part of the population, and that the
Today we have only a kind of an u n economic condition of the typical family
acknowledged official philosophy concerning
is not to be compared with a few years back.
individual and state obligations. This ofThe logic of the situation Is that the needy
flcial philosophy is evidenced by official viewrolls should be much smaller and that Fedpoints of the Federal Security Agency and
eral grants should be no longer required.
But, in fact, we find many more on the the Department of Labor, and these viewpoints coincide for most practical purposes
needy rolls, greatly augmented Federal
with the viewpoints officially expressed by
grants, and pressure for bigger payments
labor leaders. Both have issued an enorunder the present programs and for covering
mous amount of propaganda to support their
disability and all medical care.
These Federal grants in essence represent
a compulsory transfer, though the exercise
While a strong protest has been voiced to
of the general taxing power* of money from
some specific recommendations that have



been predicated on this unadmitted official
philosophy, those disapproving, by and large,
have not presented arguments derived from
any clear-cut common philosophy.
It Is important to the country that the
general philosophy supporting or opposing
any series of recommended changes in social
security be clarified in terms of underlying
assumptions as to the rights and obligations
properly existing between the state and the
individual, assumptions as to the individual's
obligations and opportunities for working out
his own economic security, and the conditions under which, and extent to which, his
personal welfare may ethically require a compulsory transfer of purchasing power from
We badly need, for example, a critical examination and appraisal of the philosophy
and assumptions underlying statements such
as the following, which was made at the
[recent social-security hearings before the
Senate Finance Committee:
"The workers are insistent that they receive adequate benefits and additional types
of benefits not now Included In the socialsecurity law."
"Properly financed and administered, retirement benefits are as much a charge
against Industry as depreciation of machinery or any other contingency that industry may provide for. That the Government has a like responsibility Is also true.
In the Instance of old-age and survivors insurance, the worker is willing and does make
his contribution, thereby sharing the cost
with the employer, who might well have to
meet It all, and with Government who meets
it in another form by taxation, referring of
course again to direct aid to the States and
so forth under the so-called old-age benefit plans."

Zt would seem to be of basic Importance
that the Commission's field of work should
be specified to be extremely broad. By implication, at least, the work of the two advisory councils appointed by the Senate Finance Committee has been essentially the.
improvement of, and additions to, the programs provided for in the Social Security Act,
as contrasted with a basic reappraisal of the
problems of individual and family Insecurity. This was likewise true of the Ways and
Means Committee's technical study. There
has also been, to put it mildly, resentment
in some quarters where the study overlapped
into areas covered by systems such as railroad, civil service, and military retirement
and veterans' benefits. The underlying
problems of security should mark the scope
of the study, and this requires an appraisal
of all the existing mechanisms, by whatever
name called, which affect the broad underlying problems of security.
In the opinion of many, there are fundamental differences in philosophy and practical Justification of the various governmental systems. Certainly, It Is exceedingly important that they all be appraised by
the Commission if it is to effectively survey
the underlying problems of security. It is
of general public importance that an Impartial Commission get at the basic facts
and furnish the public with a comprehensive description of each system, and of its
purpose and justification.
The public
should know what each program is costing,
tfho is footing the bill, who are covered by
the system, and the effects of coverage. The
appraisal should not only cover the matter
of required contributions, if any, and potential benefit amounts, but also cover matters such as certainty of protection, individual incentives toward thrift, and other
Important consequences of each system.
Only through such a comprehensive overall factual study can there be an intelligent appraisal of the underlying problem

of individual and family security, what Government is doing about it, and what Government should do about it.
The scope of the study must naturally go
further than an appraisal of what government Is doing in the field of security. For
the end result of the study—what government should do—requires a*h appraisal also
of what individuals are doing, and what they
should be expected to do for their own security, through individual or nongovernmental group action. There has been a
great deal of ingenuity and effort given by
government to the development of facts
indicative of the shortcomings of free enterprise in providing security. It Is equally
Important that facts- be developed indicative of the limitations and consequences of
governmentally operated mechanisms designed to provide security.

It would seem to be of fundamental importance in establishing a commission that the
membership should be appointed on some
basis which would insure that social-security
issues would not tend to be prejudged. As
it would be primarily a researcher and adviser for the Congress, there is a strong
basis for its membership to be appointed by
congressional leaders. To insure at least a
bipartisan approach, I should suggest that
one-fourth of the members be nominated by
the President of the Senate, one-fourth by
the minority leader of the Senate, onefourth by the Speaker of the House, and
one-fourth by the minority leader of the
Respectfully yours,

Cleveland, Ohio, May 23,1950,


Senate Office Building,
Washington, D. C.
DEAR SENATOR CAIN: It is an honor to


Included among those you have asked for
advice with respect to our social-security
While none of us here at Swartwout are
experts In such matters, we have" a community of interest in the way we work together,
and an understanding of conditions which
affect our own and country's welfare which
is, I believe, definitely above the average.
So instead of giving you my own personal
answer, I gave your letter to Charles E.
Cooper, superintendent; Robert Boodman,
president of our local' union; and Edward
Sadar, who is a member of the executive
board and one of the stewards of the union.
The union is affiliated with Mechancis Educational Society of America.
After all had read your letter, we met and
discussed the problem thoroughly. The
following represents our carefully considered
opinion, based upon the belief that the common-sense principles to which we must adhere in our business If we are to survive*
should also be practiced in any national
1. Old-age benefits should be applied alike
to every person who has reached the stipulated age. There Is manifestly nothing either
fair or sensible about including some and
excluding others. We would not differentiate between those who are very well off
fiinancially, those who are modestly fixed,
and others less fortunate. Nor would we
require anyone to stop work in order to
qualify. Each time elaborate conditions are
set up, there must be an Increase in the
army of clerks and statisticians to check
and recheck all of the data. It should be a
comparatively simple matter to satisfactorily
prove one's age, and then devise a means to
atop the payment with death.
2. The amount of the old-age benefit is
exceedingly important. It should be great
enough to make certain that life can be


sustained with some simple comforts, and
without the recipient becoming a burden
upon relatives and friends, Insofar as the
bare necessities of life go. But in no case
should the amount be great enough to encourage people to draw old-age benefits
rather than working when they are perfectly
able to do so. Of course, It is easier said
than done to state these basic considerations
for selection of an amount for old-age benefits. We realize that the amount necessary
to support a person in one part of the country Is much less than in another part of the
country; also, that the matter of health has
much to do with it. We would be inclined
to make the amount large enough to sustain a person in the more expensive areas
and not worry about the excess of payment
in the less expensive areas because the
money would be spent anyway and add to
the general activity of business. The greatest hazard to be avoided is having the
amount great enough to lead many people
to draw old-age benefits rather than work.
3. We would put the whole payment on
a pay-as-you-go basis. There are at least
two basic defects In the present method. In
the first place, the idea that there are true
credits to everyone who is making a contribution is fictitious. Inasmuch as the collections have been put into Government
bonds, which we owe to ourselves, and which
must ultimately be retired through taxation,
it simply means that we, collectively, have
spent the money that has been collected
and are going to have to produce it all over
again In sufficient amount to pay benefits.
So it seems to us a lot more sensible to
admit that we are really on a pay-as-you-go
basis, and set up a minimum amount of cash
which must be maintained at all times to
cover variations In collections as compared
with payments, but not go beyond that. It
does not seem to us that it should be considered as insurance in the usual sense because the only Insurance is our earning
ability to earn and pay the necessary amount
when the time comes.
I n the second place, when collections are
made as at present and credited to the individuals, there is a tremendous amount of
work that must be done by the employer.
This costs money and involves a lot of people who are not producing the things and
services we all want. On top of that, when
these figures come into Washington, another
army of thousands of people must handle
them and sort them out, again with a great
waste of human effort. On top of that', if
we are to include everybody under the present plan, imagine the difficulty of reporting
on some small percent pf pay all the laundresses and people in domestic service who
are not in any way connected with a corporation that has adequate bookkeeping
4. This brings us to the matter of collections. As it is both impractical and very
expensive to go on as at present, we suggest
the money be collected by taxation In a way
which will eventually come out of everyone's
income. While we, who derive our own earnings from the success of the Swartwout Co.,
are not particularly anxious to saddle taxes
on corporations, it would seem as though a
specific part of the income tax on corporations might be devoted to that purpose. Obviously, the taxes paid by corporations must,
in the long run, be Included in the selling
prices of the products. Since nearly every
article and every service we all buy Is manufactured or provided through the efforts of
corporations, it would seem that a tax
arrived at in this way would ultimately be
paid by all of us pretty much In proportion
to the money we spend, which is In turn related to our income.
5. We would then do the entire administration Job through the States. The sole
function of the Federal Government would
be to see that there was a uniform law which



did truly apply to every single citizen who
had reached the qualifying age, and then
collect the money and distribute it to the
States. It would take a very small office force
en the part of the Federal Government to do
this job. The distribution to the States
would, perforce, be in proportion to the need
of the States, which would, in turn, be based
upon certified statements each year as to
the number of people qualified to receive
old-age benefits in each State. We would
go farther than that, and carry that responsibility fcr a certified list of qualified citizens
down to the smallest community within the
State. It would be the job, for example, of
the Government in the village in which I
reside, to receive and check applications, and
then furnish such a list to the State. It
would cost very little to do this and the State,
on its part, would also have a relatively small
clerical Job to maintain such checks as were
needed upon the reliability of the local lists,
and then pay out the money according to
those lists.
6. Finally, so that everyone could understand exactly what was going on, and be
able to recognize objectionable practices if
they crept in, we would like to see the Federal Government publish an annual financial statement. Our first thoughts are' that
such a statement would show* on one sheet
and with respect to all of the States in the
United States, the following information:
(a) Number of qualified recipients as of
the year end.
(b) Estimated percent of population represented by these recipients.
(c) Dollars paid to the recipients.
(d) Dollars received from the States.
(e) State administrative costs, Including
local municipalities.
(f) Percent of State administrative cost to
the payments made by the State.
(g) Total Federal administrative cost.
(h) Percent of Federal administrative cost
to either the money paid out or money received.
(i) Total dollars paid out.
(J) Total dollars received.
(k) Balance in fund.
(1) Tax rate for current year.
(m) Proposed tax rate for next year.
With this information available, reasonably promptly after Lthe year end (and it
should be a simple thing to provide that),
the working and cost of this old-age benefit
plan could be very plain to anyone.
In order to maintain the minimum cash
balance necessary in the fund, the rate of
taxation should be varied every year. This
again, it seems to us, would be a very simple
thing to figure, and one that would be easily '
understood by everyone.
Again we want to thank you for your
courtesy in asking our Judgment in this matter. We are vitally interested, all of us. The
group in our company consists of 250 people
in shop and office, and we do about $2,500,000
worth of business each year, in the industrial equipment field. We also share in the
profits of our business. We want to keep
on doing that, and we want to do it in a way
which will be better and better for us, and
better and better for everyone else, and at
the same time with a minimum of hardship
when our folks or others reach the age when
they are no longer able to work.
Sincerely yours,

CAMBRIDGE, MASS., May 16, 1950.
Senator HARRY P. CAIN.

DEAR SENATOR: 1 have not made a de-

tailed study of H. R. 6000. However, I have
read the bill which Congressman KENNEDY
sent me several weeks ago at my request.
I am very strongly opposed to H. R. 6000
for the following reasons:
1. Only a comprehensive actuarial study
can provide a reasonably reliable estimate

of the future annual disbursements under
the bill. However, it is obvious to me as an
actuary, that ultimately the annual disbursements will require tax revenues equal
to at least 8 percent of the payrolls of all
persons eligible to receive benefits, and that
possibly the disbursements will require ultimately, annual revenues equal to as much
16 or 20 percent of such payrolls.
A bill requiring such enormous revenues
for its maintenance should not be enacted
until actuarial estimates of cost, based upon
adequate study, have been made; and, outstanding economists, using such estimates,
have expressed their opinions as to the effect
of such a program and its cost upon the
welfare of the American people.
Without such prior actuarial and economic r£udy, enactment of H. R. 6000 may
readily be found in practice to be an actual
serious ultimate detriment to the American
people, instead of a boon.
2. The bill does not provide death and oldage economic protection for 100 percent of
the American people but is applicable only
to certain portions of the people—perhaps
40 to 80 percent. Many classes of low- and
medium-income people whose economic
need and moral claim to such protection are
equally as great are excluded from the benefits. However, they are not excluded from
the expenses. Either directly through taxation to make up ultimately the difference
between the disbursements and revenues
provided in the bill,; or, indirectly through
the increase in the cost of consumer goods
that necessarily results from the bill, these
excluded people will contribute to pay the
costs. H. R. 6000 does broaden the base to
cover many groups that are not within the
benefit provisions of the present social-security laws. It would not be difficult to
devise a revised, and, I believe, a more
equitable law that would cover all of the
people who have need for such protection
and who have an equally valid moral claim
for it.
I strongly recommend:
(A) Rejection of H. R. 6000.
(B) Appointment of a senatorial or congressional committee with power to employ
actuarial and economic experts, to make a
comprehensive study with the aid of such
experts, and prepare a bill that will provide
death and old-age protection on an economic-needs basis for all American citizens
and lifetime residents of the country.
Very sincerely yours,

Fellow of the Society of Actuaries.


cient funds to care for future payments.
There is almost no appreciation of a factor
cut in your letter—that stopgap,
oldJage assistance is not gradually diminishing but i3 actually expanding at an "unbelievable rate.
Certainly a completely independent investigation of our whole social-security program is urgently demanded. Such an inquiry should be conducted by a commission
with a definite minority membership of
Government officials or employees. Sst seme
real insurance actuaries and seme trained
financial men to work to analyze this situation just as Dun & Bradstrest would look
into the financial standing of a corporation
or individual.
Let us do everything possible to install and
maintain a social-security program that will
be thoroughly understood by our citizens
and that will have a chance of doing what
it is supposed to do.
I am enclosing copies of three columns I
have written for our newspaper (circulation,
23,184) on social security. There is always
the risk of oversimplifying the situation or
particular phases cf it, but in writing for
daily newspaper publication one must always take that chance. So I try in each instance to pound on one point of the problem,
for the sake of emphasis and (I hope) clarification.
Congratulations again on the intelligence
and forthrightness you are displaying on this
vital matter.
Sincerely yours,

P. S.—I am taking the liberty of sending
a copy of this letter to our Senators from
Michigan and to GEOIIGE A. DONDEF.O; the Rep-

resentative in Congress from this district.
P. J. M.

Peoria, 111., May 18, 1950.

Senate Office Building,
Washington, D. C.
DEAR SENATOR CAIN : It is my understanding

that you contemplate leading the floor fight
against H. R. 6000.
Even though it is my understanding that
the Senate finance Committee has made
some changes in this bill, in my opinion
there should not be any extension of social
security until such time as a fair and impartal commission has had an opportunity
to make a survey of what is necessary.
Therefore, I welcome your opposition to this
bill, and wish you every success.
Sincerely yours,

Royal Oak, Mich., May 18, 1950.



United States Senate,
Washington, D. C.
DEAR MR. CAIN: Your realistic letter about
the social-security bill (H. R. 60C0) and the
social-security situation in general is a most
encouraging exhibition of common sense.
That you cannot go along with the highly
deceptive proposal now before Congress is a
tribute to both your honesty and your courage.
Describing our. present social-security system as insurance is a swindle which our citizens who are now 20, 30] or 40 years of age
will wake up to some day. I believe my own
feeling on this matter is much the same as
yours; that no amount of wishing to help
others, no emotional mouthing of highsounding phrases, will set aside the established laws of arithmetic. Two plus two plus
two always makes six, whether it refers to
plain, single dollars or to billions.
My own inquiries disclose the astonishing
fact that the average citizen thinks our present social-security system is a scientifically
planned way of insurance; that the workers
of this country (those now covered) and
their employers are actually piling up suffi-


Chattanooga, Tenn., May 18,1950.

Senate Office Building,
Washington, D. C.
' MY DEAR SENATOR: Your letter of May 16

Is most encouraging.
I hope sincerely that we may soon have
a thorough and fundamental review of social
security. It is preferable that this study
precede any revision of the present act, but
It will still be needed even if the bill reported
out yesterday becomes a law.
The study commission should weigh the
relative responsibilities to be assumed by
the community, the individual and his employer. It should develop an orderly method
to discharge the community part of the responsibility. This needs to be well within
our power to pay and must leave a sufficient
Incentive to thrift.
The answer will be futile unless It can
command broad public support. For that
reason I would like to see the commission
include men with experience is legislation*



It should also enlist economists, tax special,
ists, and actuaries.
The commission should have a sufficient
operating budget that it can retain independent specialists and thus secure information from all pertinent sources.

Fellow of the Society of Actuaries.

New York, N. Y., May 22,1950.

Committee on Public Works,
United States Senate,
Washington, D. C
DEAR SENATOR CAIN: Thank you for your

letter regarding social security legislation,
I agree with what you have to say about
social security generally and the pending
legislation in particular. In fact I believe
that there is a very strong feeling among
actuaries who have taken a special interest
in social insurance, that the system should
properly be placed on a current cost-current
benefit basis. I am entirely in accord with
the idea that a fundamental technical
study—objective and nonpolitical—is needed for our social security system.
You are no doubt familiar with the recent
testimony before the Senate Committee on
Finance. A number of insurance men including actuaries contributed to this testimony.
You will find an ardent supporter of your
views in one of our leading actuaries, Mr.
W. R. Williamson. He was at one time
actuarial consultant to the Social Security
Board and has studied both our own social
insurance system and those of other countries. I mention him in particular because
he lives in Washington and would, I am
sure, be glad to help you in any way he can.
If I can be of any further help, please let
me know.

Chicago, 111., May 16, 1950.
The Honorable HARRY P. CAIN,

United States Senate,
Washington, D. C.
DEAR SENATOR CAIN: I agree in principle

with everything you say in your letter of
May 12. One unfortunate result of the policies pursued by the Federal Government
since March 4, 1933 is the almost complete
eradication of thrift among our people. Government paternalism has been one factor and
excessive taxation another.
There is no doubt but that the rapid aging
of our population has created a problem—
a problem which will grow for at least a
few years. Reluctance of business and industry to employ people over 45 years of age
has accentuated this problem.
The plain truth is that we are now headed
for, if not actually in, an economy in which,
as my good friend Prank Dickenson likes to
say, the old people are climbing piggy-back
upon the young and riding to the grave.
This adds to the difficulty of young people
toeing thrifty.
There Is not the slightest doubt but that
the entire social-security program is in great
need of study and reevaluation before it is
expanded. A commission, made up of the
type of people you describe, would be the
only body which could produce a sound
study. ' This should be made up of economists, physicians interested in the care of
the aged, and what might be called citizens
of the national community. Professional
welfare workers would be a menace. The
commission could obtain all of the technical
assistance needed and it is not necessary to


not destroy the incentive to save. This system should be separate from relief. The
Federal Government should get out of the
old age assistance programs of the individual
States. Any system supported by taxes
should aim to provide a floor of protection.
It should avoid discrimination. It will not
take the place of employer plans because the
problem of retiring the older workers at a
pension which will look reasonable to them
and their fellow workers will remain.
As regards personnel of such a commisThe Director.
sion, Mr. W. R. Williamson (statement, January 30, 1950,. before Senate Finance ComTHE MUTUAL BENEFIT LIFE INSURANCE CO.,
mittee) has listed tax men, business econoNewark, N. J., May 19, 1950.
financial men, demographers, and acHon. HARRY P. CAIN,
tuaries as typifying the thorough professional
United States Senate,
approach which should be given, and I would
Committee on Public Works,
agree. It Is important that the study should
Washington, D> C.
In the hands of non-Government men.
Mr DEAR SENATOR: Your letter of May 16
about H. R. 6000 and about the deliberations Also, sufficient time should be given for, an
of the Senate Finance Committee in con- adequate study; Mr. Hoover said a year.
If, as you say, men of standing—indenection therewith interested me greatly.
When H. R. C000 was under consideration, pendent, competent, and informed in this
area, are secured for this commission then
I sent to several Members of the House of
Representatives the enclosed letter, marked they and their leader will probably be most
*'A" in the upper right-hand corner. Inci- competent to outline the methods to be
followed. I think the principal members,
dentally, when this came to the attention of
of whatever profession or calling, should inRepresentative ROBERT W. KEAN, he sent me
clude the whole study as their field but each
a copy of Report No. 1300 of the House of
group should do the specialized work for
Representatives, Eighty-first Congress, first
session, which contains a report of a minor- which the members are best fitted. For exity committee, of which Representative KEAN ample, I would expect that the group of
was a member. No doubt this document has actuaries on the commission would be particularly concerned with what level of benecome to your attention.
When the amendments to the Social Se- fits at what starting age can be provided
curity Act were being discussed in th& Sen- by what tax.
I thank you for writing me and giving me
ate, I sent to each of our New Jersey Senators a memorandum, a copy of which Is en- an opportunity to comment on this matter of
closed and is marked "B" in the upper right- such vital importance. Unfortunately, due
to the railroad strike or other reason, I did
hand corner.*
These will indicate to some extent my cur- not receive your letter till yesterday and
I hope you may get this in time for your
rent thinking on this important topic.
My suggestion of the omission of the year- purpose.
Sincerely yours,
ly increase in the benefit for each year of
coverage (the so-called increment) is in harA. E. ARCHIBALD.
, mony with the point expressed in the paraCALIFORNIA-WESTERN STATES
graph at the top of the second page of your
Sacramento, Calif,, May 18, 1950.
In fact, I am becoming more strongly of
the opinion that a straight pay-as-you-go Senator HARRY P. CAIN,
plan would have much to commend it, not
Senate Office Building,
the- least of the advantages being the ability
Washington, D. C.
to abandon the complicated and huge mass
MY DEAR SENATOR CAIN: Your letter of May
of records established and maintained in
12 in regard to social-security bill (H. R.
the Baltimore bureau to implement the 6000) was received.
terms of the act. Procedures which are
I find myself of the same opinion as you
sound and, in fact, essential in the operation express in your letter.
of private insurance and annuity plans are
The Federal participation in providing
not necessarily most suitable for public benefits for old people on a means test relief
vplans, and t h e management of the latter, basis is very wrong in my opinion. If It is
must be regarded in very broad terms.
• not stopped it will ultimately annihilate
The suggestion in the second paragraph the regular social security old age plan.
of your letter that the matter be placed in
I do not regard myself as having enough
the hands of a competent commission seems information to criticize the present socialto be timely and likely to produce useful
security benefits, but I heartily agree with
the thought that something like the Hoover
Yours very truly,
Commission should study them and make
recommendations. I think such a commission might well include such men as ReinTHE VOLUNTEER STATE LIFE
hard A. Hohaus, actuary of the Metropolitan
Life Insurance Co. I have followed his reChattanooga, Tenn., May 17,1950.
ports and discussions of the social-security
program for many years and regard him as
Senate Office Building,
well informed, sound, capable, and, I believe,
Washington, D. C.
in a position where he can be free to view
DEAR SENATOR CAIN: I am in thorough
the subject from the standpoint of the insympathy with the views expressed in your
terest of the public and the Federal GovernMay 11 letter.
You ask that I write you about the objecI would also suggest the name of William
tives, the personnel, and the method of study Rulon Williamson as a member of the acthat might be pursued by an independent
tuarial fraternity, who is capable and incommission on social security.
tensely Interested in the social-security proThe objective is to obtain a workable sysgram. If you are not in touch with him,
tem. It should have a minimum of adminyou should most certainly appeal to him.
istrative cost and bureaucracy. Clearly, it
His address is: W. Rulon Williamson, senior
must be adjusted to the economic strength of
actuarial consultant, the Wyatt Co., 3400
the country. We should give an assurance
Fairhill Drive, Washington 20, D. C.
of basic security to widows with children, to
Sincerely yours,
orphans, and to the aged. Equally, we must
include technicians in its membership. The
greatest need is for an honest actuarial study
of the situation—not the kind that Is constantly being made by the Federal Security
I feel sure that every American who wants
to keep this country a land^of opportunity
will support you wholeheartedly in your
Sincerely yours,




Appleton, Wis., May 19, 1950.

United States Senate,
* Washington, D. C.
DEAR SENATOR CAIN: It was a pleasure and

a very gratifying experience to receive your
letter of May 16. I am pleased to know that
there are those in the Senate, such as yourself, who are becoming increasingly conscious
of the real implication contained in H. R.
I have, with great interest, followed the^
development of the social-security legisla-"
tlon and particularly the progress of the
efforts of the present Social Security Administration to obtain revisions in the present
act which can only break down further our
system of free enterprise and the noncollectivist way of life.
I completely agree with SenStor TAFT and
many others who are finally realising that
the word "insurance" is very improperly used
when referring to any benefits under the
Social Security Act. Our social security program is not insurance at all. When stripped
of its ramifications it is only a program
which gives benefits to certain groups who
qualify under the terms of the act. The program is supported by taxes also levied against
certain groups, but there is no relationship
between the taxes and the benefits. Such an
arrangement is completely foreign to the
true concept of insurance.
I am glad to know that you have concluded
that you cannot vote for the bill containing
the provisions of H. R. 6000. I believe that
you are completely sound in urging that the
social-security establishment be left as it
is, pending a thorough completely independent investigation and overhauling. I believe
you are also completely right in your statement that patching up unworkable socialsecurity programs is bound to create more
maladjustments than it cures.
I would urge you to fight hard for the establishment of some sort of Hoover Commission that would undertake the study along
the lines which you have in mind. There
are men of standing—independent,- competent, and informed in this area who could
help in this task. There are not so many
as there should be. The field of social insurance, and all phases related thereto, is comparatively new and the problems involved are
so vast that few competent minds have been
developed which understand the real problems. Men like M. Albert Linton, president
of the Provident Mutual Life Insurance Co.,
Philadelphia; R. A. Hohaus, actuary of the
Metropolitan Life Insurance Co.; and W. R.
Williamson, consulting actuary of Washington, B. C, are men who, in my opinion,
really understand the ramifications of a
social-security system, not* only from the
actuarial standpoint, but from the economic,
social, and political standpoints as well.
As to the method of study that might be
pursued by such a commission, I fear I have
little to offer. It would, however, seem to me
that whatever our eventual social-security
system should develop into, it should be
based on a policy and objectives which are
completely nonpolitical. This is perhaps the
greatest obstruction in obtaining an adequate study at this time. In the 15 years
since social security was first spread across
our Federal statutes, we have learned much
which was not available at the time the Social Security Act of 193,5 and the 1939 amendment were passed. I believe that the knowledge gained during that time has not been
used adequately in the development of H. R.
The results of social-security systems on
the Federal Government level throughout
the world are certainly not compatible with
the free-enterprise system which we so highly
prize in our country. Real factual and com-'
petent analyses of all of these systems should
be included in any study forming the basis

of a recommendation for change in our social-security system.
Incidentally, I have noticed that Just this
week the Senate Finance Committee has approved a modification of H. R. 6000. The
newspapers did not carry what I believe to be
the major modification; namely, the provisions for benefits in the event of permanent
and total disability. It is my understanding
that the Senate committee eliminated that
provision, and I am certainly glad to know
that they did that much. In my opinion,
if the provision for permanent and total disability were to be included in any revision at
this time, it would be a great mistake. The
inclusion of disability benefits brings an entirely new concept, entirely new administrative problems into a system which is already
suffering from unworkable provisions. If the
Senate committee did not eliminate the permanent and total disability provisions, this
bill should be defeated on that score alone,
In my opinion.
I am sending a copy of this letter to the
two Senators from Wisconsin. If, in addition thereto, you would care to give me the
names of other Senators who might be influenced by similar letters, I would be pleased
to write them also.
Very truly yours,

Actuary, Fellow of the Society of

Washington, May 19,1950.

United States Senate,
Washington, D. C.
MY DEAR HARRY: Tour letter of May 16, un-

fortunately, catches me in preparation for a
brief western trip, and, therefore, I am u n able to give you all of the help which you ask.
I am gratified, however, to find that the
conclusion to which you have come on the
social-security program is so much in line
with my own thinking. Tour thought that
what is needed at this time is a thorough and
independent restudy and assessment of the
whole problem of social security is one in
which I strongly concur. It is indeed important to oppose the pending social-security
bill and to urge as an alternative the appointment of a commission along the lines
of the Hoover idea.
At this tune I am not in a position to comment on the matter of the personnel and
method of study that might be pursued by
such a commission. I do feel, however, that
a study and review commission, if provided
for, should be composed of men who are socially and economically liberal, but definitely
sound in their monetary and fiscal views. It
ought to be possible to find men of standing
and competence who have these qualifications. Given a commission of this type,
adequately staffed with technicians of broad
training and experience in the field, I am
confident that appropriate methods of inquiry and study will be developed.
You may be interested in some views on
our social-security problem which I expressed
in a recent speech. I quote them in full:
"Regarding social security, let me say at
the outset that I think this is a field in which
a great deal can be done to provide for a more
stable expansion of consumer expenditures,
which would help to bring about a more balanced increase in capital expenditures. But
if we want such a social-security system we
will have to change our whole approach to
the subject.
"In the first place, It must be a Federal
Government program and it must be greatly
expanded in scope from the one that is in
existence today. The Government should
underwrite and guarantee for all of its citizens unemployment income, education,
health, and old-age security up to its ability
to pay for such benefits and at the same time


maintaining a climate that would produce
sufficient savings and incentives to provide .
needed productive facilities for an increasing
standard of living and an increasing population. By doing this, the Government would
assure a basic level of purchasing power in
the economy that would provide a certain
market for a substantial share of the commodities and services produced by our industry and agriculture.
"Secondly, the social security benefits
should be paid for currently out of general
tax receipts. They should not be financed
out of payroll tax receipts that have been
accumulated over time in a large reserve
fund. Payroll taxes are too heavy a burden
directly on consumption and Indirectly on
investment and are therefore undesirable
when what we need in the long run is increased private consumption and investment.
Reserve funds have to find lodgment in Government obligations, the proceeds from
which must be spent to pay for Government
deficits or to retire other outstanding obligations.
"These ideasv on Federal social security are
by no means radical. I should like to quote
from an editorial published in the New Tork
Herald Tribune on March 2:
" 'What our social security system demands
today is not a mere expansion of the existing
structure; it demands first of all a thorough,
restudy of the problem and revision of that
structure if it is to have any chance of carrying the much vaster needs now contemplated
for it.
" 'The system was set up in 1936. Thirteen
years' experience has established beyond serious question the principle of national and
public responsibility for providing security
against the hazards of old age and dependence; the same experience has at the same
time led powerfully to the conclusion that
the system was not well designed, that it is
extravagantly wasteful, and in an important
sense a virtual failure.
" I t is impossible for such a plan to offer
any insurance against changing price levels
and particularly so when the very operation
of the plan can have its inflationary effect.
It cannot in any real sense save u p through
a reserve fund, when Government bonds are
the only possible investment for the fund
and its only "earnings" are those provided
by the taxpayers who meet the interest on
the bonds. However, the financing may
be Juggled, the provision for old age Is a
current cost on the community, coming in
any given year out of the current production,
and it is already an urgent question whether
a frank shift to a current cost or pay-asyou-go system would not yield a structure
far more economical, more equitable, more
adequate to current needs and offering much
more genuine security for the citizen's future
than the present one.*
"I could not state my views on the socialsecurity question more simply and directly
than the editors of the New York Herald
Tribune have done in that editorial.
"As a final point on social security, I should
like to say that I think the recent growth in
private pension funds is a very undesirable
long-run economic development. I am
opposed to this development primarily because I feel that the growth of these funds
will tend to affect the functioning of the
economy adversely in two important ways.
They will result in the further accumulation of funds in reserves seeking low risk
Investment opportunities. This encourages
Government deficits to provide securities to
absorb accumulating reserves. They will also
result in some redistribution of Income from
low to higher income groups. This will come
about because the financing of private pension funds will increase the prices of goods
and services that are purchased in the main
by the low-Income groups. The pensions will




A change in the qualifications as indicated
as far as public funds are involved, the anshould silence the schemes for stamp books nual appropriation by the appropriate govand other complicated administrative proernmental unit of the share of the total pencedures, as well as induce greater honesty
sions to be paid from public funds, and the
in the submission of tax returns. In convery gradual release of reserve funds previnection with the latter, assuming that a
ously accumulated under predecessor syssimple method could be found to corretems, as they become needed to partially offlate information between the Treasury Deset the rising costs due to increasing pension
partment and the Social Security Board,
loads. This recommendation was adopted
there would be no objection to scaling the
and the anticipated beneficial results are
benefits over a moderate range, according to
being slowly realized.
income reported In the return. This feature
3. The objectives of the contemplated
might, however, have to be omitted entirely. study might include such topics as—
Because of the future load on productive
(a) The extension of the social-security
workers to carry the old-age pensioners, I system to cover the millions of people now
am not sure that I favor automatic payment
excluded. This phase of the study should
regardless of earnings status, even though
include not only the question of including
this would simplify' the administration. In the system more groups presently emParticularly, I do not think it wise to conployed* but also the present retired aged
template age 65 as the automatic age at in the population who are not under benewhich payments are to begin, whether or
fit in the old-age and survivors insurance
not an employee continues to work, since it
program. This phase of the study would demay well become necessary or desirable to pend partly on the solution to the problem
retire' the average employee at a later age in
In the next following Item.
the future.
(b) Consideration of the problem of removing the Federal Government from the
I look forward to hearing of your success
assistance field by bringing all, or substantiIn furthering this Important project.
ally all, the present aged into immediate
Sincerely yours,
* benefit and by removing all Federal assistM. S. ECCLES.
Vice President and Actuary,
ance to the States, leaving to the States or
municipalities the entire problem of aid to
any persons not covered, or not 'amply
enough covered, by the old-age and survivora
Chicago, III,, May 15, 1950.
insurance system.
The Honorable HARRY P. CAIN,
Boston, Mass., May 19,1950.
(c) Consideration of the respective merits
Committee on Public Works,
Hon. HARRY P. CAIN,of various types of benefit formulas, the deUnited States Senate,
Member, United States Senate,
to which such formulas should depend
Washington, D. C.
Washington, D. C.
upon wages earned prior to receipt of beneMY DEAR SENATOR CAIN: The matter covMY DEAR SENATOR CAIN: I was very much
fit, and the associated problem of the adered by your letter of May 12 Is most timely,
Interested In the comments in your letter of
ministrative costs of maintaining wage
and I am pleased to offer a few views on the
May 12 with reference to H. R. 6000 and the
social-security legislation * now pending. social-security problems related thereto. I t
(d) Retention of the provision for lumpThese comments follow the points brought
is easy to understand why you have consum benefits only In cases where no other
out in yur letter and will necessarily be brief.
cluded that you cannot vote for the provibenefits become payable.
First of all, I agree that a thorough review sions embodied in H. R. 6000 nor In the
(e) Reconsideration of the schedule for
by an Independent commission formed of exforthcoming Senate version thereof and why
payroll taxes in the light of the
perts in various fields (among others: social
you are urging instead that "the social-secuprogram finally adopted.
insurance, economics, law, finance, and ac- rity establishment be left as It is pending
(f) Increase from $15 to $50 a month In
tuarial science) is essential to the construca thorough and completely Independent
the amount of earnings permitted without
tion of a sound program. The present methInvestigation and overhauling."
loss of social-security benefit (no limit after
od of separating old-age benefits between
In particular, you question the necessity
age 70).
Insurance and assistance is little short of
of the dual system of Federal old-age assistridiculous, In my opinion, and merely af(g) Study of proper integration of private
fords an excuse for poorly conceived and
pension plans and social-security benefits.
loosely administered relief programs by the you favor a pay-as-you-go system with age
• In this connection It will be difficult, if not
as probably the only qualification; you favor
States. Furthermore, It appears that adunwise, because of serious overlapping, to
providing a reasonable floor of pension beneministrative difficulties in the way of univerextend
social-security benefits to various
fit which would leave room for personal
sal OASI coverage are more fancied than real,
classes of public employees already amply
and result from thinking which is restricted
provided for under pension plans supported
retaining the present taxable maximum of
to the framework of the present law. That
In large part by public funds at State and
$3,000 of annual earnings.
old-age benefits might well be provided on a
municipal levels, as well as at Federal levels.
quesdifferent basis seems never to have occurred
In the case of pension plans applicable to
tion, Including "the objectives, the per- nonpublic employees, benefits may be adto many advocates of H. R. 6000.
justed relatively easily to reflect those availUnless a suitable method of administering
be pursued" by the special commission which
able under the social-security program.'
universal old-age benefits Is devised, and
This Is not the case with plans covering pubunless the total present burden Is properly
In reply I am pleased to state that I share
lic employees since such plans arise from
related to social-security taxes on a pay-aswith you your general apprehension about
special legislation, the amending of which
you-go basis, we are going to be faced with
is difficult to accomplish.
public misunderstanding of the true costs
and that H. R. 6000 is not the way to solve
and many unsound proposals for Increased
(h) Encouragement for extension of prithe problem.
benefits. I believe in getting the OASI payvate contributory pension plans to supplements up and the assistance payments down,
1. I agree with you that there is no justiment the floor of coverage provided by socialas soon as possible.
fication for permanently continuing the pressecurity benefits.
Like you, I am opposed to the keeping of
(i) Question of enforced retirement at age
65 of employees who are able to stay in
and old-age and survivors Insurance. The
detailed wage records to determine benefits,
and believe that social benefits, being in the
question of abandoning the Federal assistnature of subsistence, are properly divorced
ance program and the means by which this
(J) Employment opportunities for elderly
from the concept of individual equity—the
Is accomplished, is a subject requiring very
range in possible benefits under the present
serious consideration.
(k) Problems involved In the care and
law, according to earnings level, Is quite nar2. I would place more emphasis on the housing of the aged.
row already, and hardly justifies the detailed
pay-as-you-go system and would favor a
(1) Consideration of the governmental
record-keeping—a proper flat benefit under
level at which the problems in (J) and (k)
relinquishment of the present deferredpresent conditions might be between $50 and
are to be handled.
benefit system, which by Its nature Implies
$75 a month. Likewise, for receipt of bene- the accumulation of reserves.
(m) Inadvisability of providing for a sysfit, consideration might be given to an age
In this connection, you may be interested
tem of total and permanent disability benecondition alone, although it might be desirto know that in 1944 and 1945 I was a memfits on a Federal basis, and the advisability
able to deny benefits to anyone who has not
of handling such benefits, if at all, at a
ber of a special legislative commission apfiled a personal income-tax return for a
State or local level, possibly on the basis of a
pointed to study the retirement systems of
specified minimum period of years—such
the Commonwealth of Massachusetts and its
return possibly including a special line for
political subdivisions. This commission
to the personnel of such a comthe social-security tax.
recommended the use of a nonreserve basis
mission, I assume above all that it should
be paid, on the other hand, only to a few
selected and relatively well-paid groups of
executives and industrial workers.
"I am also opposed to the development of
private pension funds on other economic
grounds. They will discriminate against
small companies, for only large companies
can afford them. The growth of private pension funds will make it even more difficult
for small businesses to survive in a world of
Industrial giants. Private pension funds will
also greatly inhibit the mobility of labor
from one firm to another for workers will be
extremely reluctant to forfeit the pension
rights they have built up. They will also
probably lead to discrimination against
older workers, for employers will hesitate to
employ people near the retirement age."
You will gather from these paragraphs that
I am in full agreement with you that the
matter of social security is one of "vital importance to the preservation of our system
of free 1enterprise and the noncollectivist way
of life. '
Please be assured cf my every encouragement to your effort to correct basic errors.
If I can be of further help in this matter,
please do not hesitate to call on me.
Sincerely yours,



be nonpartisan and that it should include
the declining powers of old age, blindness,
representatives from the fields of industry, etc., do not starve but in various ways they
labor, farming, medicine, social services, and
are taken care of by society, either in the
insurance. The representative organizations form of relatives, local authorities, charities,
functioning in these fields can furnish you or by government. In all such cases, these
with the names of suitable and qualified
unfortunates receive a basic minimum
representatives. For the life-insurance inamount from such sources. It must be
dustry, I would suggest you communicate remembered however, that all such amounts
with Mr. Bruce E. Shepherd, manager, Life
spent for adult unfortunates as well as the
Insurance Association of America, 488 Madiamounts spent to raise our children to the
eon Avenue, New York 22, N. T.
age when they go to work must b£ provided
5. I would urge you to refer to the papers from the national income of those who are at
on Social Budgeting developed by Mr. W. R. work, and by those, I mean Individuals as
Williamson, at present a consulting actuary well as the legal entitles we call corporations.
residing in Washington, which outline a
In our more complex civilization, the docsolution to our present social-security dif- trine has arisen that these people and chilficulties. I refer you also to the speech of
dren must be taken care of by a more centhe Honorable CARL T. CURTIS, of Nebraska,
tralized body than in the pioneer society,
in the House of Representatives on October
and consequently, we have the Social Se4, 1949, with which you are undoubtedly
curity Act, unemployment insurance, aid for
familiar. I believe, also, that the writings on
children, and blind and other retirement acts.
this subject by the two actuaries, Mr. R. A. The benefits under all these plans just as in
Hohaus and Mr. M. A. Linton, would be the pioneer society must come out of the
valuable. As you may know, the former is
national income of individuals and corpoan actuary connected with the Metropolitan rations. It is most Important that we keep
Life Insurance Co. and the latter is also an
this in mind and that we do not raise the
actuary, serving as president of the Provident benefits of any of these various plans to a
Mutual Life Insurance Co.
figure that makes the whole cost too much of
a drain on the sources of contributions. I t
6. As to the method of approach, I assume
that this would consist of a period of inten- is, therefore, vitally important that we survey the whole picture as one unit Instead
sive study by the special commission, folof, as I have already mentioned, tinkering
lowed by public hearings. In this connecWith first one piece and then another piece.
tion, I would call your attention to the
Now to return to the Social Security Act
recent study made by the Brookings Instituitself. Back in 1935, It was most unfortunate
tion in connection with social-security probthat
the insurance idea used In individual
lems. Undoubtedly such a commission
annuities and pension plans got mixed u p
should seek the advice of experts in the variwith the Government's plan. A governmenous fields to which the problems are closely
tal, compulsory plan is entirely different
the usual insurance plans because the
In closing, I would like to stress abouve all
has the power of compulsion.
that any revision of benefits under our
In a private plan, since there is no compulsocial-security system should not elevate
sion. It would be quite the natural thing In
such benefits above a reasonable maximum
human nature to postpone buying insurance
floor level and that ample room should reuntil one is 111 and to postpone buying an
main for additional benefits to be provided
annuity until one Is about to retire. We
above such level through regular employee
have seen the troubles of assessment comand employer pension schemes and other
panies which had no power of compulsion.
vehicles designed to encourage and stimulate
It is for this fundamental reason that all inIndividual effort.
surance plans require the accumulation of
I trust that you will find these comments
reserves, \7hen one comes, however, to govof help to you in your investigation of this
ernmental plans with the power of compelvery important problem.
ling people to Join, we can very well use a
Sincerely yours,
system or one that is pracHAROLD A. GROUT,
tically that. The insurance concept in the
Vice President and Actuary.
original Social Security Act has led us Into
all sorts of novelties such as taking care of
those already old In a different manner to
those In the plan. This other plan, old-age
Des Moines, Iowa, May 18,1950.
assistance, has not worked out at all as It
Senator HARRY P. CAIN,
was originally thought and Instead, It Is
United States Senate,
rapidly while the insurance social
Washington, D. C.
security concept is growing slowly.
DEAR SENATOR: It was a pleasure to receive
The whole question is a very Involved one.
your letter in regard to the social security
I hope that I am not boring you with a few
bill (H. R. 6000). The bill in its original
form seemed to me to go too far and I am of my thoughts. I sincerely hope that Congress will take Its time to look thoroughly
glad that the Senate committee has taken
into the over-all problem and that It will
out some of the features from the original
appoint a broad committee who will carefully
It may be that this bill has gone so far consider t h e whole problem of social benethrough the legislative process that it is not fits and all Its ramifications and study the
possible to postpone consideration of it, but, road In which we are going. I firmly believe
of course, that is in the hands of Senators that if this Is done, we will clearly understand and be able to plan for methods of takand Congressmen.
ing care of unfortunate people in our sysI sincerely hope that before any more tinkering is done with the Social Security Act, tem of free enterprise but we must approach
the problem with our eyes open or we may
Congress will appoint a broad committee
very well find ourselves with a system that
which will study not only the Social Security
has all the glittering promises that are held
Act, but the whole broad problem of social
out by collectivist systems of the world
benefits which at present are covered in
which in reality are a cloak for slavery.
many different acts. When we deal with
the whole problem piecemeal we are very
I hope our paths cross some day before
apt to find overlapping benefits, omissions, long so we may chat a t greater length than
conflicting doctrines, and many other things
is possible in a letter.
of that sort.
With best wishes.
Sincerely yours,
In a pioneer society the people upon whom
E. M. MCCONNEY, President.
misfortunes like disability, unemployment,
No. 119



New York, N. Y., May 18,1950.

Committee on Public Works,
United States Senate,
Washington, D. C.
DEAR SENATOR CAIN: I n response to your

letter of the 11th of May concerning social
security legislation, I quite agree with you
that a thorough and completely independent
Investigation is required of our social security program. Also, I am favorably disposed
toward a pay-as-you-go system with the
retirement payments linked to a payroll tax,
The commission selected to study the social security program, should be nonpartisan, nonpolitical, and composed of highlj
qualified experts. Such men, I feel certain
could be obtained from universities and alsc
from the business world. Time will be re<
quired for such an Investigation in order tha>
the report may be searchingly thorough. A
hazardous guess is it would take at least s
year from the time the committee is appointed before the report is completed.
I appreciate your letter and would be happy to be of any assistance I can.
Sincerely yours,

Professor of Banking.

Wilmington, Del., May 22,1950.

Senate Office Building,
Washington, D. C.
DEAR SENATOR CAIN: I was extremely In

terested in your letter of May 13, setting
forth your views on the present social security program and your thoughts concerning the need for a change in our thinking
concerning such legislation. I agree with you
in the points you covered in your letter.
To confuse old-age assistance and old-age
and survivors benefits with Insurance as is
ordinarily construed to'cover other hazards
is fundamentally wrong. I n my opinion the
setting up of a so-called insurance fund to
cover a situation which, while remote, nevertheless is predictable insofar as we know that
it is going to develop and only unpredictable
Insofar as we cannot now assess its magnitude, Is overly optimistic thinking. Why we
should not, as you suggested, adopt a realistic
and practical approach t o this problem by
putting it on a "pay-as-you-go system" 3
cannot understand, unless It is because oi
the fact- that the magic in the use of the
word "insurance" insures the sale of the idea
to the American people.
Everything contained in your description
of the system as you visualize it I personally
feel Is logical and practicable. Certainly it
would have the effect of placing squarely before the people the question of whether oi
not they wanted to embark on such a program, and from time to time would serve tc
remind them, at the time of the budget foi
the forthcoming year, of the lnevitabls
mounting costs of such a program even or
the conservative basis on which you outlinec
It. Actually, such a program, as I see it
would be no more than a universally administered relief fund, offered without the necessity of a means test.
I have given relatively little thinking to the
subject of exactly how this program mighi
be investigated, but it would seem to me
that as a matter of course a commission established for this purpose would need to rel;
heavily on the services of population expert;
as well as actuaries and experienced statisticians. I have no doubt that In many insurance companies as well as in a number o:
universities there are men of this ability whe



7OUld be competent to view this problem in
m objective and dispassionate manner. A
;ommission embarking on such a study
hould hope to arrive at a reasonable compuation of the year to year cost to this country
or the kind of program you outline at some
late in the future, for example, I960, with
ilternative costs based on greater or less
benefits. Such a group should recognize the
allibility of putting these costs on anything
mt a percentage basis or in some terms
vhich would make the cost understandable
n terms of future inflation. For example,
mr recent upswing in pension demands is a
obering reminder of the fact that sums set
iside for old-age benefits today may prove
0 be entirely inadequate in the "expanding
iconomy" era of the future. Mere dollars
et aside, therefore, are likely to constitute
1 poor yardstick of actual cost to the Nation
Ls compared to some other method of exression.
It would seem to me that the first field of
xploration on the part of such a commlsion as you suggest should be an attempt at
n honest appraisal of the amount the Amersan people are willing and able to contribute
a such a program, on the assumption that
t will be applied currently to the entire
opulation over a certain specified age. This,
think, should be a matter more for the unliased interviewer than for the social worker
r social planner who would be apt to begin
uch an undertaking with very preconceived
Seas as to public desires, both as to the reeipt of funds and the expenditure of them.
Fundamentally, of course, such a survey
hould be made by a bipartisan group, not
ddicted to any specific program but suffiiently conscious of the need for some reaonable and intelligent assistance. I think
hat such men can and should be found.
I hesitate to write on a subject on which
[ am comparatively uninformed and have
developed ideas only as a sort of bystander
n the field of social insurance. I am really
•egretful that more specific plans and ideas
as to the personnel which might implement
such a study are not within my grasp, but
[ want you to- be assured that I thoroughly
concur in your feelings and would willingly
help In any way that I can to bring about the
ipproach you so ably recommend.
I should like to suggest that Mr. Allen B.
Thompson, vice president and actuary of
;he Associated Hospital Service of New York,
^ew York City, from his wide experience in
;he Blue Cross and Blue Shield field, and Mr.
Max S. Bell, vice president of Continental
American Life Insurance Co., Wilmington,
Del., might offer you some worth-while suggestions.

and the position which Senator BUTLER, of
Nebraska, has taken in regard to this legislation.
You have summarized the situation, as I
see it, when you state that "patching up
the present unworkable social-security program will create more maladjustments than
it cures.'* If we accept the notion that the
Government must provide some benefits for
the aged and the indigent, certainly common sense dictates that the whole socialsecurity situation be surveyed in an objective
manner by people who can bring a disinterested point of view to bear on the problem.
As you well know, it is most unlikely that
such objectivity can be found in the Federal
security agencies. I heartily endorse the
study that you propose. I hope that Congress in its good judgment will vote such a
survey and will delay taking any action on
amending the present system until the results of such a study are available. I believe that competent personnel who do not
have an ax to grind can be found to conduct
such a study. Their objectives should be
to determine to.what extent the Government
should accept responsibility for the aged,
the orphaned, and the widowed, and by
what means provision can be made for them.
Certainly in a time when the economy of
the country is strained by the necessity of
carrying on a cold war it is folly to heap
additional heavy burdens upon the taxpayer
in order to indulge in reckless social experimentation. You are to be congratulated
upon your courage in taking the position
that you have in this matter.
Cordially yours,


Chicago, 111., May 12,1950.
Senator HARRY P. CAIN,


While I do not have any specific names
to suggest, it occurs to me that the places
to look for those with the desired endowments are on the bench, among churchmen
and college presidents (perhaps freshly retired), I think I would depart from your
specifications as to the type of commissioner
wanted to the extent of deemphasizing "informed in this area" at least insofar as some
of the members are concerned. It is my observation that the best informed in this area
are the most dogmatic, the least disposed to
take a fresh look, to permit factors other
than those to which they are wedded to circulate in their consciousness. That is entirely human and natural and a product of
age. I remember that advisers in setting
up the system originally in 1935, very shortly saw the mistake of too slavish copying of
the private insurance reserve principle in
the field of public pensions, and they had not
become too brittle to change direction. Today that same group, I think could hardly
be expected to read the signs so clearly and
change direction so readily. These informed
men would bring attitudes, facts, opinions,
background and history to the council table,
but it seems to me that there' is a place for
men who can evaluate all this welter of viewpoint, who can see a problem, simplify it,
project the answers into the future and come
forth with a crystal clear analysis.
Your letter is proof of your statesmanlike
approach to this bewildering problem and it
deserves a far more penetrating reply than
I have been able to give. It is perfectly clear
that there are no absolute principles in this
field that are clearly apparent today and you
are most assuredly on firm ground in advocating as today's step, a superior type of
You have my very best wishes.
Faithfully yours,

United States Senate,
SEATTLE, WASH., May 22, 1950,
Committee on Public Works,
Washington, D. C. Hon. HARRY P. CAIN,
United States Senate,
MY DEAR SENATOR CAIN: For a variety of
Washington, D. C.
personal and business reasons, I have not
MY DEAR SENATOR CAIN: It is encouraging
been able to give the kind of attention*to
have given such serious
replying to your May 11 letter propounding
consideration to the character of our present
social security questions that it deserves.
legislation and the various
I am complimented by your inquiry and social-security
to amend it. I find myself in comI only wish that I could offer some helpful proposals
with your position, both
suggestions. In general I find that I con- with respect to the
discriminations involved
cur in your thesis and especially do favor in our present social-security
system and
the idea of a thoroughgoing study of the with respect to the folly of attempting
whole social security system and theory. cure these discriminations by a patch-work
There is, I believe, ho urgency for legisla- Job such as Is proposed by H. R. 6000.
tion today; there are no great and reasonIt seems to me that the fundamental misable wants that cry for satisfaction at this conception
Involved In the present socialmoment. Moreover as time goes on, the security
legislation is the idea that John Doe
evidence of experience may point strongly in Citizen is saving through social-security
one direction or another. Hence the kind taxes some money which will help him take
Managing Director.
of study that you envisage can be afforded care of his old age. What John Doe Citizen
and would be a wise plan.
needs to understand is that the social-secuWOODMEN ACCIDENT CO.,
The make-up of the commission would be rity taxes which he now pays are used for
Lincoln, Nebr., May 22, 1950.
all-important. It could very well embrace current Government expenses, Including
Senator HAERY P. CAIN,
men with capacity to understand the whole payments to those who are now eligible for
Senate Office Building,
of a problem and with intuitive and im- social-security benefits. In turn, John Doe
aginative qualities, but who have not been Citizen will get his social-security benefits,
Washington, D. C.
deeply involved with social security mat- not from what he has saved during his workDEAR SENATOR CAIN: Thank you for writing
oae as you did on May 15 regarding the social- ters. 1$ would presumably be necessary to Ing years, but from taxes paid by John Doe,
individuals representing various ele- Jr., and other taxpayers of future years.
security bill, H. R. 6000, on which a report
ivill shortly be rendered by the Senate Fi- ments of the population and with consider-/ What he receives will not bear any relationnance Committee. We have followed the able social security background. But to get ship to what he paid in taxes.
development of this legislation both in the together simply a group of men who have
The social-security law was originally conSouse and during the hearings before the been more or less living with this problem ceived as a law which would provide subSenate Finance Committee and are in com- for the past 10 or 15 years, I think would sistence benefits and the dollar benefits now
plete accord with your conclusion that H. R. accomplish little.
In the law were determined in the light of
3000, if passed or enacted with the amendNecessarily these men have developed at- the purchasing power of the dollar in 1939.
ments proposed by the Senate Finance Com- titudes that are more or less frozen and As the value of our dollar changes, we can
nittee, would constitute nothing more nor they may have a record of consistency to expect the amount of benefit to be changed
Less than a perpetuation of the unsound maintain, they may cling to answers that from time to time so that it will continue to
existent system. You are undoubtedly fa- were good on the evidence of 10 years ago provide subsistence benefits. It is apparent
miliar with the minority report of Repre-- but are questionable today. What would be that In the long run the benefit that John
;entative CABL CURTIS, who is a member of
good would be a balance between men Doe Citizen will get will be much more de:he House Ways and Means Committee. Mr. steeped in this thing and men with the pendent upon the changing value of our
3UHTTS represents the First Nebraska District capacity to come to grips with such a monu- currency than upon John Doe's wage record.
ind I am one of his constituents. I am in mental problem but without serious prior
It is wasteful, and therefore It is stupid, to
complete accord with Mr. CURTIS' conclusion exposure to it*
build up a cumbersome record of wages for



the millions of citizens who have come under
the social-security system. Because the value
of the dollar is not a fixed but a changeable <
thing, most of the wage records which have
been accumulated will ultimately be useless.
It is foolish to build up two systems of
providing subsistence benefits for older citizens; one which we call assistance, and give
only to' those who can prove that they are
in need, the other we call Insurance, because
those who are in the insured group have paid
a special tax. The contradictions ot the dual
system are pointed up by the fact that many
persons eligible for the insurance benefit
claim the assistance benefit because it is
When it comes to specific suggestions as
to personnel I naturally think first of those
In my own profession who have been concerned with the technical problems of insurance, annuities, and pensions. I would
particularly suggest the following:
W. R. Williamson, 3400 Fatrhill Drive;
Washington, D. C. Mr. Williamson was actuarial consultant for the Social Security
Board' during the first 10 years that this law
has been in effect. He has probably given
more serious thought to the fundamental
problems of this law than any other man in
this country. He is currently senior actuarial consultant to the Wyatt Co., a firm of
consulting actuaries and pension consultants.
Joseph B. Maclean, Yarmouth Port, Mass.
Mr. Maclean was formerly vice president and
actuary of Mutual Life Insurance Co. of New
York and is a past president of the Actuarial
Society. He is the author of the well-known
reference book Life Insurance. While Mr.
Maclean is now retired he is carrying on
an independent consulting practice and Is
a man of considerable vigor and exceptional
Thomas A. Phillips, chairman of the board,
Minnesota Mutual Life Insurance Co., St.
Paul, Minn. Mr. Phillips is a past president
of the American Institute of Actuaries. I
believe that his present company duties are
euch that he can spend a considerable
amount of time on a project such as the
one we are now talking about.
The following men are all of outstanding
competence In the professional field and
have given considerable attention to social
security problems. However, most of them
have substantial executive and administrative responsibilities in their companies and
it might be difficult for them to arrange to
devote the proper amount of time to such
a commission as you propose:
Edmund M. McConney, president, Bankers
Life Co., Des Moines, Iowa. Mr. McConney
is now president of the Society of Actuaries.
(This Is the main professional body representing life insurance actuaries on this continent and was organized last year as a consolidation of the Actuarial Society and the
American Institute of Actuaries.)
B. D. Murphy, executive vice president and
actuary, Equitable Life Assurance Society
of New York and a former president of the
Actuarial Society.
M. Albert Linton, president, Provident Mutual Life Insurance Co., Philadelphia, Pa.f
and a former president of the Actuarial Society.
R. A. Hohaus, actuary, Metropolitan Life
Insurance Co., New York, N. Y., and a former
president of the American Institute of Actuaries.
A. J. McAndless, president, Lincoln National Life Insurance Co., Fort Wayne, Ind.,
and a past president of the American Institute of Actuaries.
Henry Beers, vice president, Aetna Life
Insurance Co., Hartford, Conn.
Ronald G. Stagg, president, Northwestern
National Life Insurance Co., Minneapolis,
Minn., and vice president of the Society of
Clarence Tookey, actuarial vice president,
Occidental Life Insurance Co. of California,

Los Angeles, Calif., and vice president of the
Society of Actuaries.
What I have said above merely repeats
thoughts which obviously have occurred t o
you and to other legislators who have both*
ered to look behind the form of our present
social-security laws to their substance. The
arguments for a thoroughgoing revision of
those laws have been forcibly set forth by
Representative CARL CURTIS in his minority

report on H. R. 6000.
• You have asked for my views on the objectives, personnel and method of study
which might be employed by a commission
to make a fundamental study of the social
security program. The problems that such
a commission would have to face would be
very broad and I have not had an opportunity
to give the matter much thought. However,
for what they are worth, here are some views
on the subject:


Is anything which I can do to be helpful to
you in your efforts to this end, please feel
free to call on me.

Consulting Actuary.

Dallas, Tex.t May 23,1950.
The Honorable HARRY P. CAIN,

United States Senate,
Washington, D. C.
Mr DEAR SENATOR: I feel greatly honored
that you should write to me as you did on
the 11th of May. There was some delay In
the mailing of your letter because it was not
received In Dallas until the 18th.
For your convenience I recite my professional qualifications. I became a fellow of
the Faculty of Actuaries of Scotland by examination in the year 1909. I am a past?
president of the American Institute of ActuThe assignment of this problem to a com- aries.
mission should make It clear that the fundaI am very sympathetic to your proposal
mental objective of the present social secu- that the most important subject of social serity system, namely, the provision of an eco- curity should be exhaustively investigated by
nomic floor of protection for all citizens of
an independent committee. If such a comthe Nation, is to be preserved. However, the mittee is organized I think It would be most
Commission should be empowered to explore
appropriate to call upon the president of the
possible alternative systems for acompltshing
Society of Actuaries for recommendation of
this objective. The Commission's work such members of that society as, in the opinshould include the following:
ion of the president, are experienced and
1. It should examine the present system capable of cooperation on a matter of great
from the standpoint of the ability of the national interest.
Nation to carry out in the future the promPersonally I am sympathetic to social seises which the social security legislation
curity. I favor the establishment of social
makes to our citizens today;
security on a pay-as-you-go basis. I recom2. It should examine the relationship bemend that basis because it will avoid the
tween the old-age insurance program and
accumulation of great reservoirs of capital
the old-age assistance program, with par- which would Inevitably become the target
ticular reference to the equity or inequity
for attack.
of treatment of citizens In different classes,
It Is manifest that without in any way
such as the present aged who are eligible
destroying the individnual initiative that
only for old-age assistance benefits, the preshas
made the United States of America a
ent aged who are eligible only for some oldgreat country, there is a place for minimum
age insurance benefits, those who are eligible
established by the Federal Governfor either, and those who are not eligible benefits
ment. I draw your particular attention to
for either one, the self-employed, the worker
say "minimum benefits." We
who shifts from covered employment to u n - should not beI unmindful
of the great progcovered employment, or the reverse, and
ress that has taken place In recent years in
finally the employed taxpayer in uncovered
public health, surgical skill, and medical care.
These changes have promoted a vast increase
3. If the Commission finds the present sys- In the expectation of life.
tem to be defective or inadequate It should
As a result of the great change that has
be authorized to recommend whatever re- taken place in the expectation of life there
visions it finds most appropriate.
is a growing disproportion between retired
workers and productive workers. Care
Such a commission should be composed should be taken that we do not saddle inof persons whose training and ability are dustry and the productive worker with a
such that their recommendations can be ex- burden that many years from now might
pected to be satisfactory to all political fac- compel a retreat that would be deeply emtions. This is perhaps an ideal which can- barrassing to the Federal Government.
I am indeed sympathetic to your comnot be attained in our present political a t ment on old-age assistance within the sevmosphere. Nonetheless, ' the Commission
should be composed primarily of persons who eral States supported by Federal subsidies.
' Sincerely yours,
will seek and accept facts regardless of
whether or not they agree with their preVice President.
conceived ideas, and who will form independent judgments from those facts.
should contain persons who would command
the confidence and the respect of the leaders
Muskegon, Mich,, May 22, 1950.
of both major parties. I t should have a Hon. HARRY P . CAIN,
staff drawn from sources outside the Social
The United States Senate,
Security Administration but this staff should
Washington, D. C.
have the power to call upon staff of the
DEAR SENATOR CAIN: I have before me a
Social Security Administration for any as- copy of the letter which you addressed to
sistance or information.
Mr. C. O. Pauley, managing director, Health
I assume that any such commission should
and Accident Underwriters Conference,
have representatives from other fields in- under date of May 15, 1950. As a profescluding educators, scientists, businessmen, sional actuary and as a private citizen, I
and labor leaders, perhaps even some econam tremendously pleased to learn of your
omists. You are probably much better
critically Intelligent attitude on the above
equipped than I to suggest names of people legislation.
In these fields who would be suitable and
Just as long as we have the present frameavailable.
work of the social-security system under
There is an ever-widening realization of
vhich new promises of increased benefits—
the unsatisfactory character of our present
always on a deferred basis—we will be drawsocial-security legislation and a commission
ing closer and closer to ultimate disillusionsuch as you suggest could be very valuable ment under which those have contributed
in hastening the day when the necessary
the most will receive the greatest disapfundamental revisions will be made. If there


ent law in this respect. The Senate bill
I do wish I knew of some way to express as wide as I should like to see them—are
proposes an over-all average benefit of
long steps in the right direction.
my feelings on this subject more effectively
so that as a Nation we would face the probIt is comforting to realize that in this $49 compared to the average of $26 prolem of care tor the aged on a basis that
debate the question is not whether we vided under present law. Obviously, the
would be economically sound and stable.
should have social security. That is now present benefits have no relation to realRespectfully yours,
accepted in principle by almost all of us. ity. That is best illustrated by the fact
It is to be recalled, however, that when that the over-all average public-assistVice President and Secretary.
the first social-security measures were ance grant to the needy aged in 1949—
originally proposed in 1935, violent oppo- the so-called pension to the aged who
WEST NEWTON, MASS., May 15,1950.
sition was offered both in the Congress have made no contributions—was $45,
Senator HARRY P. CAIN,
of the United States and the Legislature or almost $20 more than is now provided
Senate Office Building,
of New York State, of which I was Gov- under the insurance system. I want to
Washington, D. C.
DEAR SENATOR CAIN : Thank you very much
ernor at that time. Perhaps some may emphasize that to be eligible for these
for your letter of May 12.
recall that in the Presidential election of public-assistance aids, the so-called
There is enclosed herewith a copy of a
1936, the party on the other side of the pensions, the aged individuals involved
letter which I wrote to Senators LODGE and aisle argued that social security was
must pass a means test, must take a
SALTONSTALL in regard to H. R. 6000. You
regimentation—that awful word—and pauper's oath..
will note that my views correspond almost
In many States today, including my
that the American people were soon to be
exactly with yours.
required to wear dog tags as a result of own, these public-assistance payments to
There is also enclosed a copy of a letter
the needy aged are far higher not only
which I sent to Senators LODGE, SALTON- having social security numbers. HapSTALL, and MCCLELLAN as chairman of the
pily that argument is now gathering dust than the benefits now available under
Subcommitte on National Legislation of the in the attic of poltical discards.
the Federal insurance program, but, in
Massachusetts Medical Society* You will
Today the question is how much social some cases, higher even than those now
note that this letter concerns itself with the
security we should have and can afford proposed under the Senate bill. This
medical^ aspects of H. R. 6000 and sets out
and what is the best method for extend- disparity between a system based on inour opposition to a Federal program of pering social security to as wide a sector of surance savings and a system based on
manent total disability compensation.
outright grants to the needy must be
In regard to a committee to study the the population as possible. I congratuwiped out. The emphasis must be transproblem, I was impressed by General Eisen- late those of my colleagues on the other
hower's suggestion made before the New side of the aisle who have come to this
ferred to the insurance system. The inYork Herald Tribune Forum that a group of
advanced position. At this point my surance system must be made more atoutstanding experts in the field of social
tractive than public assistance to the
and economic problems be convened at Co- argument with them is one of degree and
lumbia University. While he did not go into not of kind.
Today I appeal to the Senate to liberalEven the average $49 pension proposed
detail in regard to the composition of such
a group, my own inclination would be to ize the present measure—not merely to by the Senate bill is woefully inadequate,
approve it. Today I speak to my col- and lacks the essential element of recogexclude from participation those persons
who are intimately associated with the Fed- leagues in behalf not only of a socialnition of the length of time during which
eral Security Agency and therefore have an
security program but of a broadened the individual has contributed, and also
ax to grind. You will recall that in the in- 4 social-security program—a program fails to accept as a base for taxation a
vestigations carried on to date employees broadened beyond even the limits set
sufficiently high wage level. It does not
or former employees of the Federal Security
forth in the Senate bill.
recognize the fact that the monetary
Agency have played a dominant role behind
I cannot presume to be the adminis- wage level of our working population has
the scenes. Any future
tration spokesmen on this subject, but doubled in the past 10 years. The liberalshould avoid the possibility of this kind of
I think I speak the mind and will of izing amendments which will be proposed
If I can be of any further assistance to you,
the administration and of the intent of on thefloortake cognizance of these real
please do not hesitate to get in touch with
the Democratic platform—certainly of changes in the national situation.
the platform on which I ran last year—
Another vital liberalizing amendment
when I say that the liberalization of the would provide disability insurance on
social-security program is our mandate the same principle as that approved by
Mr. LEHMAN. Mr. President, I from the people. That mandate is not the House. This provision might be exshould like at this time to speak briefly only for the pending bill but for the lib- pected to add approximately 500,000
in general support of ^L R. 6000.
eralizing amendments which have been people to the pension rolls by 1960. The
There are and will be pending, as the introduced.
average pension would be about $50 per
Senate knows, many amendments to the
Amendments which I and other-Sena- month—certainly not an overgenerous
pending social-security measure. Most tors have sponsored would extend cover- amount. Still other liberalizing amendamendments, I understand, will be di- age to 2,000,000 more people than would ments would increase Federal grants for
rected toward liberalizing the bill re- be covered under the pending bill. special assistance; yet other amendments
ported out by the Senate Finance Com- Approximately 1,000,000 of these would would extend public assistance to Puerto
mittee. I shall be inclined to support be domestics, the group that possibly Rico and the Virgin Islands, and thus
most of the amendments directed toward needs social-security coverage more than honor our commitments to the people
this end. I have introduced and joined any other. One additional million would of those dependent Territories.
with others in sponsoring some of these be agricultural workers.
One further amendment would help
amendments. I shall speak on them
One liberalizing amendment would in- finance more adequate medical care for
again when they are called up next crease the average benefit under the the needy. The Advisory Council on
OASI program from an over-all average Social Security recommended such a proBefore discussing amendments, how- of $49 proposed in the Senate bill to an vision.
I know that there are some who will
ever, I should like to make clear that average of $55. Moreover, it would inin my opinion the Senate Finance Com- crease the maximum amount which say that these measures are impractical
mittee has done an outstanding job with could be obtained by an individual who or that they are luxuries which we canthis complex and difficult piece of legis- has made his contributions for 5 years not afford. My answer is simple: These
lation. The committee as a whole has from the proposed level of $72.50 to a are not luxuries but investments in the
shown a forward-looking attitude to- new level of $100—and fbr an individual security and welfare of our people.
ward the problem, and the committee who has worked and contributed for 20 These investments will earn for our Nation a liberal return in increased conchairman, the senior Senator from Geor- years, to a maximum of $114.
In view of our present standard and tentment and increased productivity.
gia, has earned the thanks and admiraThis, I take it, is the object of tha
tion of all of us in this great work which cost of living, this is not a princely penhe has directed so skillfully and thor- sion. It is only barely enough for a per- social-security program.
son to live at a self-respecting level and
The able and scholarly senior Senator
from Ohio may say that with these libThe liberalization of the benefits in to maintain his health.
I recognize, of course, that the Senate eralizing amendments, we-are providing
some categories and the extension of
coverage in the Senate bill—while not bill is a vast improvement over the pres- for increased payments out of the social-




security fund while making no provisions for increased payments into the
social-security fund.
It is estimated that if all the amendments I have referred to are adopted,
the increased cost to the fund over the
projected period, which means until the
year 2000, will be approximately ll/z
percent of payroll."
I wish to say that in my judgment,
after studying the experience of the past
many years, I am convinced that a dynamic and expanding economy, and our
steadily rising wage pattern will provide
the increased collections which the increased expenditures will require. That
has been our experience in the past; I
am sure that will be our experience in
the future. In my judgment there is no
reason to increase the present schedule
of social-security taxes beyond that already provided. If the need should
arise, however, I would be perfectly willing to increase the tax schedule when
that time comes.
At this point I should like to take a
quick look backward and examine for a
moment just what it is we are talking
about when we talk about social security.
It might be worth while to recall that
the quest for security is one of the
most ancient in the history of mankind.
Security against aggression and security against the natural hazards of life,
of sickness, of old age, of drought, and
of famine have been sought by men in
various ways since the first dawn of
time. As soon as people first developed
the art of communal living, they took
their first steps toward social security in
its broadest sense.
External aggression being the greatest
threat to security in ancient days, towns
were built with great walls for purposes
of security, armies and navies were assembled for security, constabularies and
police departments were organized for
security. In organizing these measures
for security, the whole people were taxed
in order to provide security for those
who required it.
Later, when the need for financial
security and health security gained recognition along with the need for security
from theft and aggression, banks, insurance companies, and hospitals were organized for the security of individuals
and of groups of individuals. The demand for security is neither new nor
revolutionary. It is as old as man himself.
The fact that the present emphasis is
on governmentally provided security
against the hazards of sickness, unemployment, and old age merely recognizes
the increasing complexity of society and
the advancing status of our concept of
social obligations. We now recognize
that human life, itself, is a precious
national resource. We realize that the
conservation of that resource against the
extraordinary hazards of twentieth-century existence is an essential function of
government and is, indeed—as I have
said—an investment in the material welfare of the Nation.
Today we all accept this fact, although
some may not publicly acknowledge it.
Political conservatives as well as liberals

have certainly reached agreement on the
desirability of social security. It has
passed out of the realm of political controversy. Of course, there are still some
few exceptions. There are some individuals who would, if they could, turn
back the clock to, another age. I doubt
whether this point of view has any significant representation in this body.
Today we discuss the extent of social
security, the exact amount of the benefits, and the specific groups which can be
covered, and how to guarantee that the
money will be available in the future
when the swelling fraction of our population over the age of 65 reaches such
proportions that the aged would be an
unmanageable burden on the revenue
resources of the Nation, unless provided
for in an insurance system such as this.
By 1990, the percentage of our population over 65 it is estimated will be 13.2
percent, and the liabilities of the old-age
trust fund will be of such a magnitude—and constantly growing—that unless some reserves are built up now, the
national economy may have a liability
which cannot be practicably met out of
budgetary appropriations.
That is the reason for this insurance
system, rather than for a straight universal pension system supported entirely
by current Government revenues. I
would like to see our old-age system enlarged now, and all the ll,5pO,OOO of
our aged covered under the system. I
favor universal old-age coverage. This
must and will be soon provided. That
will be our next step.
Meanwhile, however, I think our public
assistance grants should be liberalized,
but the insurance system should keep
pace, in order that benefits based on
earnings and contributions may in the
not too distant future replace public
assistance grants altogether.
These are general goals. These are
problems to be worked out. We must
beware, however, of those who would
call a halt to the insurance system, and
to improvements in it, pending another
study. Studies designed to delay action
rather than to enlighten action are the
most deadly device in the arsenal of the
opponents of progress.
We debate today on the amount and
kind of public assistance to extend
through grants in aid to States and to
Territories for their welfare activities
for children, for the needy aged, and for
the health of the people.
All these programs are part of the pattern of the welfare state. I need not
tell my colleagues in the Senate that I
am for the welfare state. The people,
too, are for the welfare state. But some
of my colleagues are inclined to confuse
the concept of the welfare state with the
conflict over Federal-State authority.
They are afraid of federalization and
say that they favor welfare activities
by government, but only by State governments and not by the Federal Government.
I shall not enter into this argument
today. But I want to point out thatjn
the field of social security, the Federal
Government, under the general welfare
clause of the Constitution, has a mandate to serve the people. If this can


best be done by direct Federal action,
it must be so done. If it can best be
done through the States, that should
be done. But to block action by insisting that the Federal Government
may not provide for the general welfare
in the field of social security because
this is properly a State function is to
deny our essential responsibilities and
to fail the people in their basic needs.
While we weigh and debate the best
method of accomplishing what we seek,
we must remember that we are one Nation, indivisible, with liberty and justice
for all. That is what we say in our
Pledge of Allegiance. That is what we
must justify by action on the pending
bill, and on the pending amendments
to liberalize that bill.
Mr. BTJTLER. Mr. President, there
has come to my attention in recent
years a deeply disturbing observation.
People are saying that we are so far along
the road to statism that we cannot possibly turn back, and so we might as well
make the best of it. This, of course, is
the most malicious nonsense.
If we are on the wrong road—and
statism is the antithesis of democracy—
then we must reorient ourselves. But
we do not have to waste time going back,
Far better, we can cut a new trail across
country until we reach the right road
off which we wandered.
Mr. President, it is because* I sincerel$
believe that the road we are traveling
in regard to social security is leading uf
away from American ideals and toward
ultimate national insecurity and disaster,
that I am voting against H. R. 6000.
However, I do not advocate standing
still, much less going back. On the contrary.
I am offering you a new concrete proposal for a pay-as-you-go, full coverage
social-security program which would give
more protection to more Americans than
H. R. 6000 and spell security rather than
insecurity for our national economy.
The bad features of our present Social
Security Act—and H. R. 6000 would in
the main simply multiply them—these
bad features fall into two broad categories: First, inhumanities, injustices,
and undemocratic discriminations; and
second, economic unsoundness.
So-called social security has been with
us now for 15 years. Back in 1933, weary
and discouraged from depression, many
believed the promises then made by
President Roosevelt that the magic formula of contributory, deferred-payment,
social insurance would free us from the
fear of poverty in old age. The Nation
did not examine carefully who was in
and who was out—but passed the Social
Security Act confident that, by virtue of
compulsory contributions, it was purchasing, in a dignified manner, adequate
retirement pensions. There would be
no more poor houses; no more public
charity; no more of the humiliation and
grief of the means test.
Now, after 15 years, what do we find?
Out of our 11,500,000 men and women
over 65, only around 2,000,000 are receiving OASI benefits as a right; and of
these, 250,000 are forced to undergo the
means test to qualify for supplementary
local public assistance because theii



OASI benefits are insufficient. Two million seven hundred thousand who have
not qualified for OASI—although many
of them may have several years of contributions—are on public assistance with
all the indignity that that implies. And
over 6,500,000, not qualified for OASI and
too proud to apply for assistance, receive
neither the one nor the other. Many of
them may be as worthy as those selected
for the former and as needy as those
subjected to the latter. In addition, according to the Bureau of the Census, the
largest single group of these 6,500,000
forgotten old folks are widows who are
not working and whose incomes range
from $1,000 all the way down to zero.
In short, after 15 years, out of some
11,500,000 men and women over 65, we
have only around 2,000,000 receiving insurance benefits and the rest—over
9,000,000—receiving public assistance or
Is this security or is it sand in our eyes?
Certainly it is not what we bargained
for; it is not what the people of this
country want; and it is not what they expect Congress to give them. If the
tionest people of America really understood the restrictions and discriminations implicit in H. R. 6000 and there
would be a referendum on the subject,
[ feel sure they would vote, as I will,
against it.
H. R. 6000 discriminates against the
present 9,500,000 OASI-excluded aged
who cannot be brought in under the employee insurance formula.
My program, on the other hand,
awards them immediate protection.
H. R. 6000 discriminates against all
OASI ineligibles. To them it says: "If
you are in need, declare yourself a
pauper, prove you have no assets, no
close relatives who might be made to
support you. Open your books. Let a
paid social worker snoop around and look
under the rug to see that you have nothing hidden. Then as a public ward you
will be sent a check made up partly of
State and local taxes, partly of Federal
taxes. But if you should have the luck to
earn a few dollars, you will be cut off and
run the risk of losing your place on the
My program wipes out the pauper's
test forever and guarantees recipients
the dignity of a pension. Under my program no social worker will darken their
H, R. 6000 discriminates shamelessly
against those unlucky OASI contributors
who fall a fraction of a quarter short of
Insured status. As of January 1, 1950,
for the 80,400,000 men and women who
had contributed to OASI since the beginning only 43,700,000 had fully insured
status. It is true that H. R. 6000 would
extend eligibility to a few hundred thousand of the present aged, former OASI
contributors—but only a few. Even so/
:or the future, H. R. 6000 still would cut
people off from benefits entirely if catas;rophe struck and if they missed their
•equired number of quarters.. In other
vords, the social-security system would
remain a lottery system under this bill.
My program is free of all such capri;ious juggling of formulas and funds.
Jnder my program .the only qualificaions are age and state of income.

H. R. 6000 would discourage elderly
individuals from working, and so wouldreduce over-all production. Even under
the new amendments if a man should
earn $51 a month or more he would be
cut off from all benefits. At the same
time, he would be permitted as much
unearned income as he pleased, without
reducing his benefits by a single dollar.
My program puts no premium on idleness. Under my program a man can
continue to work without being cut off
from his pension entirely.
H. R. 6000 would exclude from OASI
privileges some fifteen to twenty million
of the gainfully employed—among whom
are those most likely to be in need, such
as marginal workers in domestic service,
migratory farm labor, share croppers,
and so forth.
My program would cover every American citizen.
H. R; 6000 would hand windfalls to retired bank presidents, and would supply
less than enough to live on to old folks
in the lower wage brackets. Although
benefits would be increased between 85
and 110 percent, the poor fellow now
drawing an OASI benefit of $10 a month
would have that benefit increased only
to $20—still not enough to meet the increased cost of groceries.
My program would leave no aged
American with an inadequate income.
Under H. R. 6000, it would be possible
for a man of 65 to qualify for benefits
at the bottom of the ladder, with 6 quarters and a total contribution of $4.50.
For this $4.50, if he retired immediately
after his 6 quarters he would receive a
primary benefit of $20 a month for the
rest of his days. If his wife were the
same age, with the usual life expectancy
of 13 years for him and 15 for her, they
would net for that original $4.50 investment. $4,826. However, a 65-year-old
man earning $3,000 or over, would do
even better. Under the same set of circumstances, he and his wife might expect to receive $17,373 worth of handouts from Uncle Sam—quite a nice prize.
These figures that I have quoted are
conservative estimates; and under particular circumstances, such as when
there are a greater number of dependents
and more years of life, the windfalls
would come much higher.
What a contrast between this situation and that of the aged widow who
receives absolutely nothing because her
deceased husband barely missed acquir1
ing sufficient quarters of coverage.
My program holds no such unjust, undemocratic, un-American distinction.
Now let us consider the economic aspects of H. R. 6000.
In the first place, OASI is not an insurance at all in the actuarial sense.
This is readily understandable when a
comparison is made between the total
contributions and the windfall benefits
of persons retiring during the first 20
years. Even with the rising payroll
tax rate during the maturing years of
the system, benefits far outstrip what
the employee's contribution of tax would
purchase actuarially. This means that
other people must pay the actuarial margin of error. Not only is the employers'
part of the tax passed on to the consumers in the form of higher prices, but


the forfeitures of some contributors add
to the windfall of others.
In addition, there is the question of
what happens to the payroll taxes collected. Obviously the money cannot be
kept safe and sound in a sack. It must,
under law, be invested in Government
obligations. The Government promptly
spends the money, pays interest to itself
from the taxpayers* pockets on the slips
of paper in the Treasury and then, when
these old-age and survivor insurance
I O U's fall due, must either float new
bond issues or tax the people again to get
the cash to pay benefits.
But by far the most dangerous element
in the economics of H. R. 6000 is to be
found in the rising costs of the dual oldage and survivors' insurance—publicassistance system. OASI deferred payments increase precipitously as greater
numbers retire on a high-benefit scale.
If past performance is any indication of
future trends, political pressures would
continue to multiply the millions of Federal grants-in-aid for State and local
public assistance.
Dr. H. G. Moulton, president of the
Brookings Institution, in his preface to
Cost and Financing of Social Security,
by Lewis Meriam and Karl T. Schlotterbeck, declares:

The old-age and survivors insurance system In its present form involves constantly
mounting costs over a 50-year period. Great
confusion has been engendered in the public
mind because of the assumption that these
costs can be gradually provided for through
the application of ordinary insurance principles. That is, it is widely believed that the
social-security taxes now being paid furnish
the resources from which the future benefits
will be paid. The fact is that a practically
universal governmental system cannot successfully apply the actuarial legal reserve
devices of private, voluntary Insurance systems. As the present system operates, no
real reserve funds with which to meet future
requirements are accumulated. The benefits
will have to be paid out of future taxes.
. The future demands upon the Government
for benefit payments—to be paid out of future taxes—will be so great that It appears to
us essential that they be given full consideration now before the commitments are
made. 'The demand for cash for benefits
must be studied in the light of other governmental cash requirements for national defense, foreign relations, veterans benefits,
interest on the public debt, and all other
activities of Government.

The authors conclude with a recommendation for a true pay-as-you-go system under which persons now in need will
have those needs met from current revenues.
Mr. President, during more than 3
months of public hearings and many
weeks of executive session, the Senate
Finance Committee labored to report
Social Security Act amendments that
would be fair and just to all Americans.
However, we found that it was impossible to devise an OASI formula to make
the present aged eligible for benefits or
to cover those most likely to be in need—
such as marginal domestics, migratory
farm labor, and share croppers.
I strongly suspect that the majority
of the Finance Committee is not only unhappy concerning the conglomerate
amendments which have emerged, but,
for reasons of justice and considerations
of economy, would favor an honest pay-



as-you-go social-security system. This
Is proven by the proposed committee resolution to set up a subcommittee specifically instructed to study pay-as-yougo systems.
During the hearings it became apparent that the opponents of the present
system and of H. R. 6000 fall into three
principal groups: First, those who would
like to see a pay-as-you-go plan adopted,
but who cling to the idea of contributions; second, those who wanted a payas-you-go, low, flat-rate floor of protection for all citizens without a means test;
and third, those who believed, with the
Brookings Institution, in pay-as-you-go
protection for the aged, but on the basis
of some kind of a means test, as the only
system economically sound.
The proposal which I am about to outline Is an attempt to incorporate In one
universal-eligibility, pay-as-you-go social-security program the best features
of these various points of view. That Is:
First, equal protection for all, under the
law; second, freedom from the means
test; third, universal contributions; and
fourth, economic soundness: pay-asyou-go, go-as-you-pay, on an incometax, income-supplement basis, for all
aged persons and dependent children
whose income or means of support drop
below a given minimum.
In a nutshell, my program is a universal contributory social-security system, in the sense that everyone with income would pay a special, earmarked income tax to support it; and thus, at some
period of his life every individual would
be consciously contributing to his own
future security.
It is pay as you go, In the sense that
the receipts for any particular year
would be roughly the amount necessary to pay the benefits for that year.
It Is go as you pay, In the sense that
we would be doing for the old people today exactly what we expect the young
people of tomorrow to do for those past
65 in their time.
Here is the plan: Every American citizen, aged 65 and over, will be entitled to
an Individual citizen's pension under the
following conditions:
Every American man or woman aged
65 or over, whose income for the year
ahead on the estimated income declarations currently used for income-tax purposes, amounts to a figure under $600,
will receive a citizen's pension of $50 a
month, or $600 a year—that is, $100 a
month for a man and his wife, both 65
or over.
Every American man or woman whose
income amounts to $600 or over will receive a citizen's pension of $1 a month
less for every $50 more of annual income.
In other words, If his or her income
amounts to between $600 and $650, he
or she will receive a citizen's pension of
$49 a month or $588 a year. If his or
her income is between $650 and $700,
he or she will receive a citizen's pension
of $48 a month or $576 annually. And
so on. The pensiori tapers off to zero at
around $3,000, although the repeal of the
present $600 special income-tax exemption for persons over 65 will not make It
worth while to apply for pension after
the $2,450 level. If this income changes

during the course of the year, the pension rate also will be changed.
In principle, the same system will apply to dependent children. That is, inadequacies in means of support will be
made up in benefits on a graduated
As to financing, although, on pay as
you go, the special old-age and dependent children's tax rate will be determined by the current outgo, and vice
versa, it is thought that to support the
pension schedule indicated, the initial
tax will be about 5 percent of the first
$3,000 of individual income. However,
this 5 percent will not be a net increase
in taxes for the following reasons: First,
the existing OASIS payroll tax will be
repealed; second, the greater part of the
present local taxes required to support
the State public-assistance programs
will be unnecessary;
third, a reduction of
about 2l/z percent in the regular incometax rates on the first $3,000 of individual
Income will probably be effected, in recognition of the fact that the new system
will relieve the Federal Government of
substantially over a billion dollars a year
in grants-in-aid to States for public assistance. At the same time, it might
prove wise to abolish the existing $600
personal income-tax exemption for individuals 65 and over.
The advantages of this program, like
the disadvantages of H. R. 6000, fall into
two primary categories: First, social,
and, second, economic.
Taking the economic advantages first:
My proposal would mean tremendous
savings in costs over the committee bill.
I have been supplied with a preliminary
cost study on my proposal by Mr. George
Immerwahr, former chief actuary for
old-age and survivors insurance, a distinguished authority in this field. The
concluding sentence of his memorandum
is as follows:
When allowance is made for these further
savings, It seems conservative to state that
the adoption of this proposal In lieu of H. R.
6000 would produce an ultimate saving of
95,000,000,000 a year.

Instead of the gigantic, pyramiding
costs of H. R. 6000, which may either
bankrupt the taxpayer or destroy the
value of the dollar in the years to come,
my proposal provides a system well within the ability of the taxpayer to carry.
I am inserting Mr. Immerwahr's brief
memorandum in the RECORD at the conclusion of my remarks.
Let me mention now the advantages of
my proposal from the standpoint of the
individual American, groups of Americans, and the Nation as a whole:
My proposal matches the equal opportunity of our American way of lif e with
equal protection against loss of income
In old age. It plays no favorite, offers
no special privileges. It is just, nondiscriminatory, thoroughly American.
It assures every American, the richest as well as the poorest that if catastrophe strikes, he or she will be adequately provided for in old age. At the
same time It puts the burden of responsibility on the Individual to work and
to save for his own old age and for his


It also makes the individual over 65
responsible for making an honest declaration of his income for the year
ahead—just as now he is expected to
make an honest income-tax return—
and upon this declaration his citizen's
pension is based. No investigation is
anticipated beyond the usual Treasury
sample check for fraud.
It frees every American from the fear
of ever having to submit to the indignity
of the means test in the event of income
loss in old age. No one's neighbor will
have to know whether Joe Doakes and
his wife are receiving citizen's pensions—
any more than the neighbors know the
amount of income tax Joe Doakes now
My proposal to abolish the means test
will have a direct, immediate appeal for
the approximately 3,000,000 present public-assistance recipients—not to mention
any who might have to undergo the test
in the foreseeable future.
My proposal to bring In the present
aged will affect 6,500,000 persons, in addition to those 3,000,000 now on assistance.
My proposal for universal eligibility
will affect 15 to 20 million farmers, sharecroppers, migratory farm labor, and
marginal domestic servants.
My proposal to pay pensions on a graduated, income-loss basis will give more
in pensions to greater numbers.
Organized labor will gain right down
the line. It is true my proposal will reduce the over-all pensions of those few
retired workers who hold a 25-year record
of service with companies having no offset clause in their collective-bargaining
pension contracts. However, it will give
more to the vast majority of workers
who are employed by small business and
who change jobs every few years.
Farmers will approve my proposal as
a guaranty of their traditional independence rather than in any way interfering with it. Rural areas generally will
be emancipated from the oppression of
public assistance.
State Governments will be relieved of
a large share of their present financial
outlay for public assistance. State funds
will be freed for other necessary local
developments, or for tax reduction.
The advantages of my program for the
individual American, for Important
groups of Americans, and for the country as a whole, it seems to me, Mr. President, add up to an impressive total.
The 3,000,000 present aged on public
assistance, the 6,500,000 present aged on
neither OASI nor public assistance, plus
thefiftten to twenty million of the gainfully employed who would remain uncovered by House bill 6000 amount to more
than 25,000,000 Americans who will be
benefited Immediately by the adoption
of my program.
Add to this the advantage to be won
by the members of organized labor and
by the farm population on top of the
financial relief to State treasuries, and
whom have we left against it? Those
OASI contributors who might—but then
might not—land a windfall. They are
the only ones who would lose.
Mr. President, I am well aware that
the change-over from one type of oldage security system to another will re-



quire the talents, time, and services of gram as an indication of the way to reach
men of the caliber of the Hoover Com- the American road, and I ask support
from my colleagues on both sides of the
Such a commission, for instance, will - aisle for my stopgap measure to give
have to determine what do with the pres- us the time necessary to reach that road.
ent OASI fund. It might be refunded to
Mr. President, in conclusion, I should
former contributors with interests in the like to insert in the RECORD at this point
form of bonds. It might be used for op- in my remarks a comparison of costs of
erations during the first year of the new the Butler proposal with those of House
system. It might also be held intact as bill 6000.
an interest-bearing investment to cushThere being no objection, the comparion recession periods when incomes drop ison of costs was ordered to be printed in
and appreciably more old people receive the RECORD, as follows:
Mr. President, to give the time and
opportunity for such careful study as the
The proposal to pay a general benefit of
committee already has recommended— $50 a month to all persons over 65 without
to work out details of my proposal and a needs test, the benefit amount to be reto analyze and incorporate the best fea- duced or eliminated for persons who (acto their Income tax returns) are in
tures of sundry other pay-as-you-go pro- cording
higher income brackets (and to be made
posals, I am introducing as an amend- the
subject to offset for various other Federal
ment to House bill 6000, a stopgap meas- pensions)
has a distinctly higher cost than
ure of 2 years' duration.
H. R. 6000 in the immediate years but reThis stopgap measure goes exactly as sults in an ultimate cost saving. The folfar as House bill 6000 in liberalizing eli- lowing table shows the estimated benefit
of the proposal as compared with those
gibility requirements for the present costs
of H. R. 6000, using for both the intermeaged. It increases benefits from the diate-cost
assumptions used in the commitpresent $10 a month minimum to $25 tee report on
H. R. 6000. Use was also made
minimum with a maximum of $50. Thus of data re income of the aged, released by
it goes further than House bill 6000 for the Census Bureau, and appropriately adthe lowest benefit groups and, during the Justed to fit in with the conditions of the
Interim period, meets the demand of proposal. In the table, the proposal is extended to provide $35 benefits for orphan
the increased cost of living for all present children.
[Moneyfiguresin billions]
My amendment strikes out all of House
bill 6000 after the enacting clause exGross benefit costs Corresponding bencept the portion relating to the unemefit costs under
under Butler proH. R. 6000
ployment fund. However, if any titles
thus struck out,
ent Children ' and "Aid to the Needy
ToAnOld Chil- Total Old
age other tal
Blind/' should be considered necessary
during the interim 2-year period of my
$0.5 $2.1
bill, I shall be the first to ask that the 1951
difficulties be ironed out in conference.
If I might stress one final point: This 1980
stopgap bill of mine meets the real, im- 2000
mediate need as well as House bill 6000
The above comparison Is only partial, aa
is supposed to meet it. It takes care of
the urgent requirements—the injustices it fails to take account of the Federal cost
savings resulting from the elimination of
resulting from the fall in the purchas- Federal
for OAA (old-age assistance)
ing power of the dollar; and it matches and ADCgrants
to dependent children) and
House bill 6000 in correcting certain eli- also of the (aid
fact that the administrative costs
gibility inequities.
under H. R. 6000 would be largely eliminated
I know that many Members of Con- under the proposal. The following table
gress promised their constituents to pro- shows the net change In Federal costs when
vide more liberally for the aged by allowance is made for these factors.
[Moneyfiguresin billions]
broadening social security. *
This stopgap measure of mine goes
as far as does House bill 6000 in proin Federal
Increase Decrease
due cost
viding immediate relief. My proposal for
due to
of cost due intocost
Year to benefit in admin- elimina- change
a universal-eligibility pay-as-you-go
system provides more protection for
more Americans on a more equitable,
more democratic basis.
A vote for House bill 6000 would be a 1951
vote to multiply and perpetuate the in- 1955
justices of our present system, for after 1960
the windfalls are once increased it would 2000
be many years before it would be posi Less than $50,000,000.
sible to make constructive changes. A
vote for House bill 6000 would also be a
But even this latter table does not tell the
vote against the 9,500,000 old folks of full story. It fails to show the various
today and the fifteen to twenty million Federal tax gains under this proposal, such,
of the gainfully employed who will never as that resulting from the taxability of benefits and the denial of the double exemption
be eligible for benefits under this bill.
those older people who accept the benefits.
A vote for my stopgap measure is a to
I t falls to show the savings to the States,
way to make good on our promises—to whose assistance costs, though not eliminated
offer hope to 25,000,000 more Americans. like those of the Federal Government, will
Mr. President, I offer my full-eligibil- be at least reduced. Most Important of all,
ity, pay-as-you-go social-security pro- It does not take account of the large savings


that will result from the avoidance of overUberallzatlon of Federal benefits far beyond
the level of H. R. 6000, an overllberalization
which is inevitable when we operate under
a deferred-benefit system like that of H. B.
6000, with which it Is so easy to yield to
political pressures for benefit liberalization,
since the structure of the system conceals
Its real costs.
When allowance is made for these further
savings, it seems conservative to state that
the adoption of this proposal In lieu of H. R.
6000 would produce an ultimate saving of
$5,000,000,000 a year.

Former Chief Actuary for Old-Age
and Survivors' Insurance, Social
Security Administration.

question is on the adoption of the
amendment of the Senator from Illinois
[Mr. LUCAS] to the committee amendment.

Mr. ELLENDER. Mr, President, I
move that the Senate now stand in recess
until Monday next at 12 o'clock noon.
The motion was agreed to; and (at 4
o'clock and 53 minutes p. m.) the Senate
took a recess until Monday, June 19f
1950, at 12 o'clock meridian.

Executive nominations received by the
Senate June 16 (legislative day of June
7), 1950:

Milton Katz, of Massachusetts, to be the
United States special representative In Europe, with the rank of Ambassador Extraordinary and Plenipotentiary, pursuant to title
I of the Foreign Assistance Act of 1948.
The following-named persons to be members of the Board of Directors of the ExportImport Bank of Washington for terms of
5 years expiring June 30, 1955 (reappolntments):
Hawthorne Arey, of Nebraska.
Herbert E. Gaston, of New York. •
Clarence E. Gauss, of Connecticut.
Lynn U. JStambaugh, of North Dakota.

The following-named person for appointment In the United States Air Force in the
grade indicated, with date of rank to be determined by the Secretary of the Air Force,
under the provisions of section 500, Public
Law 381, Eightieth Congress (Officer Personnel Act of 1947):
To be second lieutenant
Andrew J. Myers, Jr., AO900043.

The following officer of the United States
Coast Guard Reserve to be a lieutenant
(junior grade) in the United States Coast
James G. Norman

The following-named persons to be postmasters:

William T. Boyd, Gadsden, Ala., in place
of W. M. Thompson, deceased.
Lester A. Tucker, Sumiton, Ala., in place
of E. M. Fowler, removed.

Blanch T. Kelley, Thatcher, Ariz., in place
of C. H. Layton, resigned.

Carroll T. Gambill, Eudora, Ark., In plac*
of R. c. Grubbs, transferred.
Clifford C. Fry, Gravette, Ark., in place of
F. H. Milburn, transferred.