tioned in the Duquesne Warehouse case, where the identical question under the Unemployment Insurance Act comes up through one procedure in one circuit and the same question under the Retirement Act comes up through another procedure in another circuit, and there are conflicting decisions.

Senator JOHNSON of Colorado. Aren't all those court cases cited in each case so that the determining court has before it the decisions that are made in other courts?

Mr. SCHOENE. Surely they are.

Senator JOHNSON of Colorado. Especially in the superior courts. Mr. SCHOENE. Surely they are, but the same question has to be litigated twice when there is only one decision involved. It has to be litigated twice and by different procedures. We believe that is unnecessarily complex and the procedure ought to be uniform. We consequently provide that the judicial review provisions now in the Railroad Unemployment Insurance Act shall apply also to the Railroad Retirement Act. We select the Unemployment Insurance Act procedures because they are spelled out a little more explicitly and in more detail than they are under the Retirement Act. Now, that, as I say, is the only reason for doing anything on the subject of judicial review. Since we were dealing with the subject, however, we do provide in this bill at the same time that the initial court of review should be the circuit court of appeals. Mr. Miller suggests that puts a hardship on the claimant because there are so many more district courts than there are circuit courts of appeal. Our reason for putting it in the circuit courts of appeal is twofold: In the first place, we think the convenience which Mr. Miller cites is a wholly illusory convenience because the right of appeal lies in all these cases.

Of course, the Railroad Retirement Board, when it makes a decision, thinks it is right about the decision it has made, and if the district court disagrees with it the Board does not accept the decision of the district court. It appeals to the circuit court of appeals. It has been true, without exception, that every case that has been decided against the Board has been appealed to the circuit court of appeals.

Incidentally I might mention that practically none of the cases that have been decided against the Board are claimants' cases. They are general issues of coverage rather than claimants' cases, but, regardless of that, it has been true, without exception, that the claimant has got to go to the circuit court of appeals before he has any chance of getting a decision that will do him any good.

Senator SHIPSTEAD. You want to go to the appeals court direct? Mr. SCHOENE. Yes. We say, under those circumstances, it is actually more convenient in the long run for the claimant that he go directly to the circuit court of appeals.

The second reason we believe it is to the claimant's advantage to go to the circuit court of appeals relates to the matter of procedure. Even in the district court these cases are not the subject of a whole new trial in which witnesses are sworn, and so on. They are tried on the record that is made administratively. Of course, we think that is desirable because to do anything else would put a claimant to a great deal of unnecessary expense. We believe that if, after having established what he thinks is a good case administratively, he still has to go through the whole process again, subject to all the rules of evidence,

trying to establish it in court, it would be quite a hardship. So they are tried on the administrative record.

Now, the district-court rules are not well adapted to trying a case that way. What happens is this: The claimant may attach the record to his complaint. Sometimes he does; sometimes he doesn't. If he does attach the record, the whole issue is brought up by the Government on a motion to dismiss or on a motion for summary judgment. If he does not attach the record, generally the Government will file an answer and attach the record and then make a motion for summary judgment on the ground there is no substantive issue of fact. The record is already there and the matter is presented to the court that way. That comes up usually on the motions calendar in the courtvery frequently not even on a special setting. There will be 15 or 20 or more motions being disposed of in very short order on some Monday morning in the court. The court has the whole attitude of disposing of a motion. It just isn't a procedure calculated to give it the thorough kind of consideration that we feel we are entitled to under the circumstances.

We feel, if we go directly to the circuit court of appeals, we get a court of three judges, we get a procedure that is calculated to give thorough consideration, and we serve the convenience of the claimant in the long run.

That is the answer to your question, Senator Johnson, but before I leave the subject I want to point out that the quotation from me which Mr. Miller used in this connection was extremely misleading. His quotation was interpreted to attribute to me the feeling that since the Board made very good decisions, we didn't care much about judicial review. In fact, the full quotation, from which he quoted merely an excerpt, said. the exact opposite. The full statement was this:

-As Mr. Robertson stated last year in connection with H. R. 4805, it is our desire to have and to preserve to the claimant the complete right of appeal from decisions of the Board.

Here is the part which Mr. Miller quoted:

We think the record of the Board has been very good. They are usually very careful in their disposition of these cases and we have confidence that they will continue to be so.

There is where Mr. Miller's quotation ended. I went on to say:

Nevertheless, we feel it is a healthy practice, a necessary safeguard, that the right of appeal be allowed, but it is the right of appeal and not judicial administration that we think is appropriate.

That, Mr. Chairman, concludes my comments. I would be glad to answer any questions you might have.

Senator JOHNSON of Colorado. Any questions, Senator Hawkes? Senator HAWKES. I would like to ask Mr. Schoene, just for my enlightenment-we have gone into this thing quite thoroughly, but a friend of mine who is in the trucking business called on me and wanted to know whether I considered his trucking company, that did pick-up jobs of freight around town to take to the railroad station, came in under your coverage if this law was enacted. What would you say as to that?

Mr. SCHOENE. That would depend on whether or not he does it for the railroad. If he is carrying out a pick-up and delivery service

which the railroad offers, that is to say, if the railroad tariff calls for the railroad getting it at a store door and delivering it at a store door, and so on, and he is working for the railroad carrying that out, that service would be covered. If he is simply a local cartage man working for shippers or consignees, it would not be covered.

Senator HAWKES. What would happen if he spent about half of his time, even if the railroad did pay him-I don't know whether they do or not-but what would happen if he spent about half or a third of his time picking up freight that way and the rest of it in the regular trucking business?

Mr. SCHOENE. The full service would be covered under those circumstances. We cover the full time of individuals who regularly and substantially work on railroad work.

Senator HAWKES. According to your plan, however, if he owned 10 trucks and he devoted 3 trucks and the men on those 3 trucks to picking this stuff up under a contract with the railroad for the service that was rendered, the men who operated those trucks would come in under this thing and the rest of his business would be outside of it?

Mr. SCHOENE. That is it, precisely.

Senator HAWKES. All right. Thank you.

Senator JOHNSON of Colorado. Senator Shipstead, any questions? Senator SHIPSTEAD. No.

Senator JOHNSON of Colorado. Thank you, Mr. Schoene.

I have a telegram here from New Orleans with respect to the inclusion of State and political subdivisions of a State, incorporated municipalities, and other political governments being taken into this bill. I want to insert that in the record.

(The telegram is as follows:)

Hon. EDWIN C. JOHNSON,

Chairman, Senate Subcommittee:

NEW ORLEANS, LA., July 25, 1945.

This has reference to Senate bill 293, now before Senate subcommittee. This board as a State agency is opposed to their inclusion in the term of "employer" in this bill and respectfully urges, first, adding the following to the definition of the word "employer":

"The term 'employer' shall not include any State or any political subdivision of a State or any corporate municipal instrumentality of one or more States or of one or more political subdivisions of States, except that if a State or a political subdivision thereof or a corporate municipal instrumentality of one or more States or political subdivisions thereof shall engage in operations as a common carrier by railroad, subject to part I of the Interstate Commerce Act, such State, political subdivision, or corporate instrumentality shall be deemed to be an employer but only with respect to individuals whose principal work forms part of such carrier operations."

Secondly, by clarifying sections II and IV of the act so as to make them more definite and certain, indicating specifically that the State or agency thereof and its employees are exempt from the provisions of this act.

It is urgently requested that favorable consideration be given to these changes. E. O. JEWELL, General Manager.

Senator JOHNSON of Colorado. I also have a statement from Mr. C. H. Callaghan, who was unable to be present and would like to have his statement included. It is from the Maritime Association of the Port of New York. I asked the reporter to put that in yesterday, but it got mixed up with some other papers.

(The statement is as follows:)

STATEMENT OF C. H. CALLAGHAN, EXECUTIVE VICE PRESIDENT, THE MARITIME ASSOCIATION OF THE PORT OF NEW YORK, 80 BROAD STREET, NEW YORK, N. Y.

The Maritime Association of the Port of New York, organized in 1873, has a present membership of over 1,300. Embraced therein are steamship owners, agents, and operators of vessels engaged in the coastwise, intercoastal, and foreign trade, including owners, lessees, and operators of terminals and piers, stevedores, towboats, lighterage, warehouse, canal transportation, and all other branches of the marine industry. Many prominent representatives of shipping in other Atlantic, Gulf, and Pacific coast ports are members of the association. Paragraphs (2), (4), (5), and (11) of section 1 on pages 2 to 8 of this bill, if enacted, will transfer the business activities of our members from coverage under the Social Security Act to coverage under the higher taxation provisions which are set forth on pages 12 and 13 of this bill. The resulting immediate increase in taxation for old-age or retirement benefits will be from the present Social Security Act rates of 1 percent on employers' pay rolls and 1 percent deduction from salaries and wages of employees to the proposed higher Railroad Retirement Act rates of 5.75 percent on employers and 5.75 percent on employees, a total increase of 9.5 percent. Beginning on January 1, 1949, each of the two 5.75 percentages will be raised to 6 percent, and on January 1, 1952, will be increased to 6.25 percent. There will also be an increase of approximately 1 percent on employers' pay rolls for unemployment insurance soon after the enactment of this bill. See pages 14 and 15 of the bill.

This proposed increase of approximately 10.5 percent of pay rolls, or even one-half of that large increase, will be a very exceptional and burdensome increase in taxation. Our Congress in December 1914 refused to sanction the proposed small increases of taxation, 1 percent on employers and 1 percent on employees, under the Social Security Act. In respect thereto the Committee on Ways and Means, in its report to the House of Representatives, said:

"The committee does not feel that any unnecessary increase in the existing high tax burden should be made now in view of the problems of reconversion from war to peace that soon will confront us and which must be solved."

Ever since the inception of the Railroad Retirement Act in the year 1935 Congress has designedly relieved the steamship companies and the whole maritime industry from the application of these two special railroad insurance statutes. This bill, in paragraph (10) of section 1, page 5, lines 3 to 12, reflects a radical departure from that plan of exemption in that only the steamship companies who hold themselves out directly to the public as common or contract carriers will continue to have such exemption. Operators of steamship piers, stevedoring companies, and other employers, members of this association, who as independent contractors or otherwise perform steamship or maritime terminal services at our ports are not such carriers, and therefore will be deprived of their present exemption upon enactment of this bill. Stated briefly, this bill proposes a heavy taxation of a large part of the steamship terminal services to provide pensions and unemployment insurance for friendly aliens—the railroad employees. The scope and application of paragraphs (2), (4), (5), and (11) are not confined to the railroad industry. These paragraphs will apply to any hauling or transfer of freight performed by "any person" who, as an employer, functions on steamship, private, or other nonrailroad premises, and the handling or transfer services may be a component part of steamship, private, or other nonrailroad business activities far beyond railroad functions, supervision, knowledge, and authority. The sole ground for jurisdiction, as improperly asserted in the bill, is the extraneous circumstance that the freight so handled or transferred has been or will be transferred by railroad at some time not indicated. The jurisdiction of the Railroad Retirement Board and the scope of the railroad insurance is supposed to be confined and attached to railroad and rail-service employees performing railroad or rail-service work.

The two special railroad insurance statutes converted all of the railroads in this country into one employer and provided a compulsory system of retirement and old-age pensions adapted to the exceptional and peculiar conditions attending employment in railroad service. One of the conditions was an "overload" of old-age employees in railroad service in the year 1935 (Railroad Retirement Board v. Alton R. Co., 295 U. S. 330). Now that the overload is having its natural effect in creating a large financial deficit in the special railroad insurance 75978 4522

fund, the improper and arbitrary proposal in this bill is to recoup through the exaction of exceptionally high taxes from strangers-from a large part of the maritime industry represented by this association.

The maritime industry is not a component part of that group of railroad employers and it has not accepted any part of the special railroad insurance plan which stands condemned as being invalid by the Supreme Court of the United States. The grouping of a large part of the marine industry with the railroads, to absorb a large financial deficit from past administration of the railroad employees' insurance, would be an incongruous grouping of dissimilar industries. The marine industry will not voluntarily pay high taxes to provide pensions for retired railroad employees who never were employed in the maritime industry. In the maritime industry the longshoremen employed by stevedoring companies and many other employees of that industry are short single-job employees who are hired by the hour and are paid by the hour. The longshoremen shift from the employment of one stevedoring company to another so often that permanency does not attend their employment. Permanency is an outstanding feature in railroad employment. These longshoremen are not members of any railroad union; they are members of the International Longshoremen's Association. The president of the International Longshoremen's Association, in his brief in opposition to this bill, stated that the frequent shifting of these longshoremen from one employer to another will make it very difficult for that union to verify the proposed deductions of taxes from their wages. The burden of recording the tax deductions will be heavier and more unfair to the employers. No labor union authorized to speak for the employees of the maritime industry has advocated the inclusion of these employees in the special railroad insurance plan. That plan was designed for permanent railroad employment and it is not suited to, and cannot be adapted to, the large number of short-term shifting employees of the maritime industry. Having no continuous long-term record in railroad or any other single employment, the longshoremen will derive little, if anything of value, in retirement benefits from the proposed large deductions from their wages.

Although the steamship companies are supposed to have complete exemption from the high taxation of these special railroad insurance statutes, the enactment of this bill will seriously impair that exemption. The major part of the tonnage of freight loaded into and unloaded from steamships at American ports is handled by stevedoring contractors. This bill proposes an increase in the taxation of the stevedoring contractors that is too large for them to absorb by them. Consequently, they must pass it on to their principals, the steamship companies.

*

The requirement, in paragraph (2) of section 1 of the bill, which means that stevedoring contractors and others who handle and transfer freight on steamship piers and on lighters, shall compute and pay taxes predicated on freight "transported * or to be transported by a carrier" (defined to be a railroad company), is impracticable and unworkable. The freight handled at the piers, at the port of New York, consists of large quantities of import, export, coastwise, intercoastal, canal, barge, railroad, storage, warehouse, and several other classes of freight. At the times the stevedoring contractors handle this freight they do not know, and they cannot ascertain, whether large quantities of the coastwise, intercoastal, canal carriers, and warehouse freight has been or will be transported by railroad. A taxing statute so predicated will be impracticable and unworkable.

The large increase in taxation provided for in this bill would be warranted only when proposed for appropriate purposes, and then only when supported by a strong public demand. No public demand whatever has been manifested. The employers and employees in the maritime industry are opposing the enactment of the expanded coverage_provisions of this bill. For the employees, see the brief of the International Longshoremen's Association printed on page 930 in part 2 of the record before the House committee on H. R. 1362, There is no support for these objectionable coverage provisions, which propose the large increase in taxation, except that given by the Railroad Retirement Board. If thme Board needs funds to overcome a large financial deficit in its railroad insurance program, then it should seek a special appropriation for that purpose. It should not be granted a discriminatory imposition of taxes on the maritime industry to provide pensions or unemployment insurance for railroad employees who never worked in the maritime industry.

This committee should disapprove the whole bill. In any event the com mittee should reject and strike out all of paragraphs (2), (4), (5), and (11)