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apparent, perhaps, but which eventually may prove disastrous. In retirement system legislation, where the full effects of present action may not be felt for half a century, basic principles should never be forgotten. Let me suggest, then, two basic social security principles, which the committee may wish to bear in mind in considering the proposed ImeaSureS: 1. There should be a sound, comprehensive, equitable, and administratively simple program of social security for all American workers. The program should provide a minimum layer of basic protection against major economic hazards of life with respect to which private .#. either individual or group, has been demonstrated to be substantially inadequate. 2. All compulsory social security legislation should be uniform and nondiscriminatory (as, indeed, should legislation generally). The Government should never engage in unjust discriminations among the Nation's citizens. It should furnish the sort of example which Americans would like to see the rest of the world emulate. May I digress here for just an instant to offer one suggestion— not germane to the present bills which, however, might prove of real value as a step toward a comprehensive, nondiscriminatory social security structure. The suggestion is that the Federal Government should have one, and only one, agency in which are centralized all Federal social security functions. Apart from administrative savings, such an agency could take a broad, over-all view, and might i. expected to make constructive recommendations to Congress for the elimination of unwarranted gaps in protection, overlapping benefits, anomalies, inconsistencies, and discriminations. In large measure the Federal Security Agency is already such an agency. As soon as reasonably possible, Congress should therefore consider legislation including the Railroad Retirement Board within that agency.


Because of its belief that social-security legislation should be uniform, comprehensive, and nondiscriminatory, the Chamber of Commerce of the United States favors an extension of coverage under the old age and survivors insurance provisions of the Social Security Act to all employed and self-employed persons—including railroad employees—who are not now covered thereunder. In this regard, the following policy declaration was adopted by the membership of the chamber on April 28, 1948, at the annual meeting:

The present system of old age and survivors insurance should be extended to employees of nonprofit organizations, governmental employees, railroad employees, agricultural employees, and other employees not now covered thereunder, including the self-employed, to the extent feasible.

This position, it may be noted, is in close agreement with the recent recommendation of the Advisory Council on Social Security to the Senate Finance Committee in its report on “Old age and survivors insurance.” The Advisory Council, in recommending that a study be made of how best to make the railroad retirement system supplementary to old-age and survivors insurance, clearly implied that an extension of old-age and survivors insurance coverage to railroad employees was desirable.

Once it is agreed that old-age and survivors insurance coverage should be extended to railroad employees, the next question is: What should be done with the existing railroad retirement system? This much is clear: No legislation should operate to reduce the total amount of retirement protection which present railroad employees now possess. Consequently, an extension of old-age and survivors insurance coverage to railroad employees would require the revision of the railroad system, for at least a transitional period, in order to provide benefits, supplementary to old-age and survivors insurance, sufficiently large to insure that no railroad employee would suffer or should suffer any loss of present or prospective benefits. Should such supplementary railroad retirement benefits be payable for a transitional period only or should they be made permanent? The Chamber of Commerce believes that such benefits should be transitional only. In this regard, the following policy declaration was also adopted by the chamber on April 28, 1948: Existing legislation creating the composite social security program for railroad employees—comprising retirement benefits, survivors' benefits, unemployment benefits, sickness benefits, and maternity benefits, is discriminatory and otherwise inconsistent with sound social-security principles. Such legislation should be repealed, with suitable transitional provisions to protect the rights already acquired by individuals under it. Railroad employees should then be included within the coverage of appropriate general social security programs. While supplementary benefits would be needed, for a period, to avoid a breach of faith with present railroad employees, to continue them in perpetuity would be to continue—in a less objectional form, it is true—the present unjust discriminations against the many millions of employees now covered by an old-age and survivors insurance and against the additional millions not having any social-security protection. Apart from the issue of discrimination, the continuance of preferential railroad benefits would involve heavy and unpredictable costs. Concerning costs, the following policy do of the Chamber of Commerce was adopted by the membership on April 28, 1948: The eventual costs of social security are bound to be large, and excessive costs would impair the basic economy upon which all security rests. Therefore, a primary consideration in evaluating proposals for social security benefits must be the impact of their present and future costs upon the Nation's economy. One further point in this regard: there is much evidence that within the next few years the benefits of the old-age and survivors insurance program will be increased substantially. They may well be increased to a level that would not compare unfavorably with the present level of railroad retirement benefits. In such event, the transitional benefits should or could then be discontinued—except for special cases—with the over all result that the special discriminatory system would have been eliminated without any loss in benefits or in benefit exceptions to a single railroad employee.


The Chamber's policy recommendations, which I have given, are based squarely on the general social-security principles which were set forth at the outset. In a word, the continuance of the discriminatory railroad retirement system in perpetuity is inconsistent with the sound aim of developing a comprehensive and equitable socialsecurity program for all American workers.

There are two further points, which may be made, also supportin the Chamber's policy recommendations. First, the coverage of a American workers—including railroad workers—under one uniform system would offer a permanent solution to the many present anomalies which mar the existing relationship of railroad retirement and social security. Secondly, a uniform program would contribute greatly to over-all administrative simplicity.

Perhaps these points need not be elaborated at this time. However, may I respectfully suggest that the committee invite an appropriate official of the Social Security Administration—perhaps the Chief of the Accounting Operations Division in the Bureau of Old-Age and Survivors Insurance—to appear before the committee and explain the complicated, time-consuming, burdensome procedures—and the anomalies that nonetheless remain—now being used under existin legislation to coordinate old-age and survivors insurance with j retirement—particularly on survivors' benefits and on disputed coverage cases. These complexities may then be contrasted with the much simpler procedures employed with respect to persons all of whose coverage has been within the sole purview of social security—as railroad employees would be were the Chamber's recommendations followed.

Questions about anomalies and administrative complexities are not theoretical; they are down to earth matters. There could be a substantial pruning of Federal expenditures for administration, and of Federal administrative personnel, under a uniform social-security SVStem. *Woover. the present complexities and anomalies will get worse and worse with the passage of time, if a separate railroad program is maintained. In England, anomalies got so bad that special “anomalies regulations” were promulgated. In Germany, the anomalies became so grave that uniform benefits were eventually found to be necessary.


No doubt there are many and good reasons why the Committee on Interstate and Foreign Commerce should not, at the present time, consider legislation looking toward the coverage of railroad employees by old-age and survivors insurance with the eventual abolition of the special railroad program after a transitional period. However, the central point of this testimony has been that—while such legislation may not be immediately practical—at least no legislation should be adopted at this time that would make difficult the eventual adoption of legislation to effectuate this desirable objective. Obviously, an increase in present discrimination is not a step toward the elimination of discriminatory legislation. Particularly deplorable is the present competitive situation with efforts being made, on the one hand, to keep railroad retirement a few jumps ahead of social security, and on the other, to push socialsecurity benefits up to the level of those under the railroad program, or beyond. Sound social-security legislation cannot be achieved on a pressure oup basis. We must seek to see the Nation's social-security probems in their entirety. We must seek legislation that promotes the welfare of all, but which affords special privilege to none.

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The CHAIRMAN. Mr. Kendrick, I note that the same thought runs through your entire statement, that is, an argument in favor of uniform social security with respect to all employees. Mr. KENDRICK. Yes. The CHAIRMAN. I think that one might have that thought in the first instance, but it has seemed to me, first, that there can be a very good reason given for differentiation between railroad workers and those who are in other industries, due to the fact that there is a safety element that is necessary in the operation of our railroads. I think that we all agree that continuity of employment provides a measure of safety in itself; at least promotes it. Continuity of employment depends upon working conditions, not always just wages; but other conditions, as well. Therefore, when you give a satisfactory retirement system to railroad workers that enables them to look into the future, not with fear and timidity, but with some degree of assurance, it has the effect, in my opinion, of making a better and a more satisfactory worker. That means continuity of employment and with continuity of employment it promotes safety. The public is interested in safety and, therefore, it would seem to me that there is a very good reason, fundamental reason, that might be considered as differentiating this class of workers from others In the second place, while it may be true for the reasons that I have stated that there should be a more generous recognition of service of the railroad workers, yet I have also been pleased to think that the railroad brotherhoods have been setting a mark. They have been fixing an ideal to which others might likewise aspire, by reason of increased annuities and so forth in retirement. I think the railroad brotherhoods have done a fine job in having emphasized the importance of railroad retirement for their workers on a basis that is helpful. I hope that as the railroad brotherhoods in this instance, as in so many other instances—take for instance the sitting down together with railroad management in the consideration of this bill and conferences of that kind which in my opinion are very helpful—over, the long Fo of years have performed a fine service that that which they ave done can be recognized in a more remunerative way for industry in general. Mr. KENDRICK. May I comment? The CHAIRMAN. Yes. Mr. KENDRICK. I think the points you have made are well taken. I think they may well be good reasons for the railroad employees to receive special treatment, but there are other groups too that might be able to produce equally persuasive reasons why they should receive special treatment. There was a bill in Congress several years ago to create a special separate social security system for employees of nonprofit organizations and no doubt there are many arguments that could be developed in favor of such a separate system there and then a few years back, before the present mine workers' pension plan was set up, a suggestion was made—I am not sure that there was a bill to that effect—that, a separate social-security system be established for miners; that they have a particularly important role and are especially deserving of favorable treatment; but once you start down that road, where does it end? Does not that result in a whole group of special retirement systems; separate little systems not coordinated and only with diffi

culty among themselves; each supported by its own pressure group; all competing with one another for benefits, and do we not lose sight of the fact that the over-all picture where under the Government all persons should be treated alike

The CHAIRMAN. Well, as I pointed out to you in the beginning, this committee only has jurisdiction over one phase of the subject. I am very proud of the fact that legislation that has come out of this committee over the period of years has been of a character that you can look at with a feeling of pleasure and certainly with much greater gratification than we can look at some of the other social security legislation that now prevails in this country; and when you speak of the miners, you strike a very sympathetic cord with me.

Mr. KENDRICK. I meant merely to suggest that for each of these groups there may be excellent reasons why they should receive favorable treatment, but once we start down that road we do not know where it may lead.

The CHAIRMAN. Well, I want to impress upon you that this com mittee is going to do the kind of a job that we think ought to be done in behalf of the workers, and the committees have jurisdiction over other phases of the subject I am hopeful will have the same feeling of sympathy toward those in other industries that this committee has in this.

Mr. KENDRICK. Well, Mr. Chairman, I think we realize that this legislation in all likelihood will be enacted. I think our purpose The CHAIRMAN. I will be terribly disappointed if it is not.

Mr. KENDRICK. Our purpose is merely to state for the record and for such future reference as may be made, our position in favor of the uniform nondiscriminatory, all-inclusive social-security program for this nation.

The CHAIRMAN. Thank you.
Mr. MILLER. Mr. Chairman.
The CHAIRMAN. Mr. Miller.

Mr. MILLER. Before the witness leaves I would like to ask one question. Does it seem fair to refer to this system as discriminatory when the employees and the industry themselves are financing the program? It seems to me that it is perfectly sound. If the railroad labor through our contributions and the railroads through theirs can improve and pay benefits much better than the social-security benefits why should not they do that and why is that not a good thing; why would it not be a good thing for the miners to do likewise and eventually other industries to follow suit and to get a retirement system that the industry can finance? By "industry" I mean both management and labor-and get away from this mere pittance, that they have now under the general social security.

I think that this organization is setting a good example for all other industries,

Mr. KENDRICK. Well, I think there are several answers that could be made to your point, but I have attended sessions of this committee before and I have heard representatives of the union explain that the tax increase would not really hurt the railroads, because they are going to be taken into account in setting the rates. In other words, these preferential benefits, to some extent at least may be paid by the public at large through higher rates, and that at least is one reason why we favor a uniform social-security program.

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