or fraudulent statement or report in response to any report or statement required to be made for the purpose of this Act, or who shall knowingly make or aid in making any false or fraudulent statement or claim for the purpose of causing an award or payment under this Act, shall be punished by a fine of not less than $100 nor more than $10,000 or by imprisonment not exceeding one year.

SEPARABILITY

SEC. 14. If any provision of this Act, or the application thereof to any person or circumstance, should be held invalid, the remainder of the Act, or application of such provision to other persons or circumstances, shall not be affected thereby

RAILROAD RETIREMENT ACCOUNT

SEC. 15. (a) There is hereby created an account in the Treasury of the United States to be known as the railroad retirement account. There is hereby appropriated to the account for each fiscal year, beginning with the fiscal year ending June 30, 1937, as an annual premium an amount sufficient, with a reasonable margin for contingencies, to provide for the payment of all annuities, pensions, and death benefits in accordance with the provisions of this Act. Such amount shall be based on such tables of mortality as the Railroad Retirement Board shall from time to time adopt, and on an interest rate of 3 per centum per annum compounded annually. The Railroad Retirement Board shall submit annually to the Bureau of the Budget an estimate of the appropriation to be made to the

account.

(b) At the request and direction of the Board, it shall be the duty of the Secretary of the Treasury to invest such portion of the amounts credited to the account as, in the judgment of the Board, is not immediately required for the payment of annuities, pensions, and death benefits in accordance with the provisions of this Act in interest-bearing obligations of the United States or in obligations guaranteed as to both principal and interest by the United States. For such purpose such obligations may be acquired on original issue at par or by purchase of outstanding obligations at the market price. The purposes for which obligations of the United States may be issued under the Second Liberty Bond Act, as amended, are hereby extended to authorize the issuance at par of special obligations exclusively to the account. Such special obligations shall bear interest at the rate of 3 per centum per annum. Obligations other than such special obligations may be acquired for the account only on such terms as to provide an investment yield of not less than 3 per centum per annum. It shall be the duty of the Secretary of the Treasury to sell and dispose of obligations in the account if it shall be in the interest of the account so to do. Any obligations acquired by the account, except special obligations issued exclusively to the account, may be sold at the market price. Special obligations issued exclusively to the account shall, at the request of the Board, be redeemed at par plus accrued interest. The Board shall include in its annual report the status of the account. All amounts credited to the account shall be available for the payment of all annuities, pensions, and death benefits in accordance with the provisions of this Act.

Act.

(c) The Board is hereby authorized and directed to select two actuaries, one from recommendations made by representatives of employees and the other from recommendations made by representatives of carriers by railroads subject to this These actuaries, along with a third who shall be designated by the Secretary of the Treasury, shall be known as the actuarial advisory committee for the railroad retirement account. The committee shall examine the actuarial reports and valuations made by the Railroad Retirement Board and shall have authority to recommend to the Board such changes in actuarial methods as they may deem necessary. The compensation of the members of the committee of actuaries, exclusive of the member designated by the Secretary, shall be fixed by the Board on a per-diem basis.

(d) The Board shall include in its annual report a statement of the operations of the railroad retirement account. At intervals not longer than three years the Board shall make a valuation of the liabilities created by this Act, having due regard for the recommendations of the actuarial advisory committee for the railroad retirement account and shall include such valuation in its annual report. Such valuation shall take into account the reduction in liabilities under title II of the Social Security Act arising out of the maintenance of this Act.

APPROPRIATION FOR ADMINISTRATIVE EXPENSES

SEC. 16. There is hereby authorized to be appropriated from time to time such sums as may be necessary to provide for the expenses of the Board in administering the provisions of this Act.

SOCIAL SECURITY ACT

SEC. 17. The term "employment", as defined in subsection (b) of section 210 of title II of the Social Security Act, shall not include service performed by an employee of an employer as defined in section 1 (a) of this Act or service performed for an organization of employees by a representative who is an employee within the meaning of section 1 (b) of this Act.

SEC. 18. It shall not be unlawful for carriers by railroad subject to this Act to furnish free transportation to persons receiving annuities or pensions under this Act in the same manner as such transportation is furnished to employees in their service.

SHORT TITLE

SEC. 19. This Act may be cited as the "Railroad Retirement Act of 1935".

PART II

The claims of persons who, prior to the passage of this amendatory Act, shall have relinquished all rights to return to employer service and become eligible for annuities shall be adjudicated by the Board in the same manner and with the same effect as if this amendatory Act had not been passed: Provided, however, That no reduction shall be made in any annuity certified after the passage of this amendatory Act because of continuance in service after age seventy or after age sixty-five without filing with the Board an agreement to continue in employment: And provided further, That service rendered prior to the day on which the Railroad Retirement Act of 1935 was enacted to an employer which was subject to that Act on the day it was enacted shall be included in the service period in connection with any annuity certified in whole or in part by the Board after the passage of this amendatory Act, irrespective of whether, at the time such service was rendered, the employer was an employer as defined in section 1 (a) of that Act. Any person who prior to the passage of this amendatory Act shall have relinquished all rights to return to employer service and who was not eligible for an annuity under the Railroad Retirement Act of 1935 as originally enacted but who would have been eligible therefor if this amendatory Act had been in force from and after August 29, 1935, shall have his right to an annuity adjudicated under this amendatory Act: Provided, however, That no such annuity shall begin prior to the date of the passage of this amendatory Act.

The Railroad Retirement Act of 1935 shall be deemed to continue in force and effect with respect to the terms of office of the present members of the Railroad Retirement Board and the rights of persons granted annuities prior to the passage of this Act.

STATEMENT OF GEORGE M. HARRISON, PRESIDENT OF THE BROTHERHOOD OF RAILWAY CLERKS, CINCINNATI, OHIO

The CHAIRMAN. I understand that both the railroads and the brotherhoods have agreed upon the bill. Am I correct in that? Mr. HARRISON. That is true; yes. I was going to make a preliminary statement leading up to the development of the legislation. The CHAIRMAN. Yes.

Mr. HARRISON. For the purpose of the record, my name is George M. Harrison. I am president of the Brotherhood of Railway Clerks, and I reside in Cincinnati, Ohio.

I appear here this morning as the chairman of the Railway Labor Executives' Association, representing the 21 standard railway labor organizations, having in their membership substantially all of the approximately 1,150,000 railway workers in the United States.

Senator SMITH. Does that include all the organizations-the conductors, firemen, and so forth?

Mr. HARRISON. All of them, Senator Smith.

S. 2395 is a bill proposing to amend the Railroad Retirement Act of 1935. For the information of the committee, perhaps it would be advisable that I make a brief statement giving the history of the development of the bill under consideration. In 1934 the Congress of the United States enacted railroad retirement legislation. The railways contested that legislation, in the Federal courts, resulting finally in a decision of the United States Supreme Court, 5 to 4, holding that the legislation was contrary to the Constitution. The railway labor organizations then undertook to develop legislation which in their judgment would meet the objections of the Court, and submitted other legislation to Congress in 1935; and on the 29th of August 1935 the Congress passed, and the President signed, another Railroad Retirement Act. The railways again challenged that legislation, in the Federal courts, and succeeded in securing a decision from the District Supreme Court, in Washington, D. C., holding that the Tax. Act was contrary to the Constitution, restraining the Bureau of Internal Revenue from collecting the taxes from the railways, and restraining the Railroad Retirement Board from requiring the railways to furnish the Retirement Board with any information concerning the records of service of the employees. However, the court did not restrain the payment of retirement benefits.

My understanding of the decision is that the court declined to enjoin the payment of benefits, because the railroads could not complain in that instance. However, the court did say that in its judgment the tax law and the benefit law were inseparable, and the two had to be considered as one measure.

As a

As a result of that adverse decision the Government filed notice of appeal; and we who represent the railway workers advised that they should continue in their employment until such time when the permanency of the legislation was established through the courts. result of that advice relatively few railway workers undertook to secure the advantage of the legislation; and since August 29, 1935, only such railway workers as have been arbitrarily retired by railway management have sought the benefits of the existing legislation.

My information is that up to the present time there have been less than 6,000 who have been certified for annuities under the existing legislation.

Due to the constant legal controversy with the railways about retirement legislation, the President of the United States wrote the president of the Association of American Railroads and myself, as the chairman of the Railway Labor Executives' Association, early in December of 1936, and suggested that the two interests get together and undertake to work out an agreement on retirement legislation, so that the uncertainty then could be removed and railway workers could finally enjoy the benefits of a Federal system of retirements. Both groups accepted the recommendation of the President, and the conference got under way in Washington on the 7th day of January and continued, with some degree of regularity, until the 18th day of February, at which time we reached an agreement on the principles to be contained in retirement legislation.

Subsequent thereto, the legislation was drafted by the attorneys of the two groups, and the legislation was submitted to a meeting of the Railway Labor Executives' Association, in Cincinnati, on March 5,

1937, at which time the 21 unions unanimously ratified the work of their committee in bringing about an agreement as I have pointed out. Shortly before the 5th of March-and I do not know the exact date the railways, as represented by the Association of American Railways, held a meeting in Chicago; and the various railway companies ratified the action of their committee in entering into the agreement with labor's committee.

Before I undertake to make an explanation of this bill, S. 2395, I should like to offer some amendments.

The CHAIRMAN. All right.

Mr. HARRISON. In offering these amendments, I should like to say that the amendments have been agreed to by the railway management, by railway labor, and by the Treasury of the United States. We have inserted the amendments in the proper places, and we have enough corrected copies of the bill to distribute to five or six of the members of the committee.

The first of these amendments is as follows: On page 2, paragraph (a), strike out lines 3, 4, 5, 6, 7, and 8, and also strike out the words "trucking service" on line 9; and in lieu thereof, substitute the following [reading]:

(a) The term "employer" means any carrier (as defined in subsection (m) of this section) and any company which may be directly or indirectly owned or controlled by one or more of such carriers or under common control therewith, and which operates any equipment or facility or performs any service (except trucking service, casual service, and the casual operation of equipment or facilities).

The CHAIRMAN. What is the meaning of "casual"?

Mr. HARRISON. Well, the railways occasionally employ a contractor to repair a depot or to build a bridge, or do some other work for them that ordinarily is carried on by the railway force. In that instance, we would not undertake to take in the force of the contractor, just because those men were doing occasional work for the railroad

company.

Senator WHITE. These are services that are not ordinarily performed by the railroad company or by its employees?

Mr. HARRISON. That is true.

The CHAIRMAN. Does this include busses operated by the railroads? Mr. HARRISON. No. If the bus is operated by the railroad as a part of its transportation, then the workers on the bus would come under the proposed law. However, if there is a subsidiary bus or truck company, then it is subject to part II of the Interstate Commerce Act; and this bill applies only to part I of the Interstate Commerce Act "such common carriers as are subject to part I of the Interstate Commerce Act." And they are

any express company, sleeping-car company, or carrier by railroad, subject to part I of the Interstate Commerce Act, and any company which may be directly or indirectly owned or controlled thereby or under common control therewith, and which operates any equipment or facilities or performs any service (other than trucking service) in connection with the transportation of passengers or property by railroad, or the receipt, delivery, elevation, transfer in transit, refrigeration or icing, storage, or handling of property transported by railroad. In other words, part of the railroad plant.

Senator DAVIS. What trucking service do you except?

Mr. HARRISON. Well, you see the railroads recently have inaugurated store-door pick-up and delivery merchandise service, for merchandise freight. And that store-door pick-up and delivery service

for merchandise freight is at the present time quite generally handled under contract by an outside trucking company.

Senator SMITH. And not by the regular employees of the railroad? Mr. HARRISON. No. So therefore it only excludes a company that might be engaged in the transportation of property for the railroad, if that company is engaged in the business of trucking the freight; that means motor trucks.

Senator MINTON. Does it take in a company like the Greyhound Co.?

Mr. HARRISON. No; that comes under title II of the Interstate Commerce Act.

The CHAIRMAN. But it says [reading]:

(a) The term "employer" means any express company, sleeping-car company, or carrier by railroad, subject to part I of the Interstate Commerce Act, and any company which may be directly or indirectly owned or controlled thereby or under common control therewith.

Mr. HARRISON. Yes; but that is qualified later on, Senator.

The CHAIRMAN. I see; I was wondering if there was a qualification. I did not see any in that paragraph.

Senator MINTON. It says "trucking service."

Mr. HARRISON. Well, this is the statement [reading]:

(a) The term "employer" means any express company, sleeping-car company, or carrier by railroad, subject to part I of the Interstate Commerce Act, and any company which may be directly or indirectly owned or controlled thereby or under common control therewith, and which operates any equipment or facilities or performs any service (other than trucking service) —

And then here is the qualification [reading]:

in connection with the transportation of passengers or property by railroad, or the receipt, delivery, elevation, transfer in transit, refrigeration or icing, storage, or handling of property transported by railroad.

Senator JOHNSON. I cannot find his subsection "(m)"; it goes only to (j).

Mr. HARRISON. It has been inserted, Senator; that is on page 6. Senator BROWN. How about bus transportation? What provision is there for a bus line operated by a railroad, intrastate?

Mr. HARRISON. If the bus transportation is operated directly by the railroad company, as part of the railway's operation, then the employee engaged in the operation of the bus would be covered, as a railroad employee. We have such a situation in a few instances where the railroad companies have abandoned branch operations and have substituted motorbusses. But that motorbus is operated by the railroad. You buy your railroad ticket, and ride on the bus to the main line of the railroad, and then complete your trip in a railroad car on the main line of the railroad. On the other hand, if the bus is operated as a subsidiary operation, then that is excluded and comes under part II of the Interstate Commerce Act.

Senator BROWN. The Boston & Maine, in New Hampshire, has a bus company. The passengers on those busses get railroad tickets, and the busses are coordinated with the railroad line.

Mr. HARRISON. Well, they have an arrangement for supplemental service, but it is not part of the railroad operation.

Senator BROWN. They have formed a subsidiary corporation, and operate under that?

Mr. HARRISON. Yes.