Representative BROYHILL. It is my understanding, Mr. Chairman, that the Chairman's bill will place the system on an actuarial sound basis.

The CHAIRMAN. That is true.

Mr. BROYHILL. I recognize that there is a serious problem in the railroad industry. Something has to be done for the railroads themselves to provide the funds to meet these increases, but I submit further, Mr. Chairman, that it is no different from the problem in any industry.

We cannot ignore our responsibilities to our employees in meeting the increase in cost to the industry and the problems of the industry themselves. I have been in the building business out there. We have had problems there. We have had increases in the cost of material and we have had times when we have had to actually take a loss on our subdivisions, but never at any time have we tried to pass on any loss or increase in cost, which are our problems, to our employees.

We have always had to meet our obligations to them and meet our competition with them. I hope the committee will be successful in its deliberations in finding a solution to this problem and will find its way clear to favorably act on H.R. 1012.

The CHAIRMAN. Mr. Broyhill, thank you very much. We appreciate having your statement and expression of interest in this program.

Mr. BROYHILL. Thank you, sir.

The CHAIRMAN. I am endeavoring to see if we have any other colleague of ours present who desires to be heard on this subject.

Mr. Oliver of Maine, our colleague, is present. Mr. Oliver, we will be glad to hear you.

STATEMENT OF HON. JAMES C. OLIVER, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MAINE

Mr. OLIVER. I wish to record myself in support of H.R. 1012 as submitted by the distinguished chairman of this committee.

We are all aware that the railroad industry has been seriously afflicted by the recession. Thousands of workers are idle, not to mention the loss of the productive capacity of millions of dollars' worth of railroad equipment. The number of idle railroad workers has increased from 670,000 to 720,000 during the past year. The number of unemployed railroad workers in my own State of Maine has increased from 900 to 1,600 during the same period. The proposed bill will provide much needed assistance to those without work by extending the period of availability of employment insurance benefits for as much as 26 weeks and by increasing the maximum daily benefit from $8.50 to $10.20. A 10 percent increase in all annuities under the retirement system is mandatory in the light of the inflationary spiral and recent increases in benefits granted under other retirement systems. The bill has the dual advantage of placing the railroad. retirement social and unemployment insurance systems on a sound actuarial basis as well as increasing unemployment, survivor, and retirement benefits.

These increases in employee benefits, of course, are not viewed as a panacea for the problems of the railroad industry. However, increases in benefits are necessary for humanitarian motives, also as a

stimulus to our economy, and in order to preserve a trained labor force for any defense emergency. Certainly, this legislation can be viewed as a necessary measure to hold the line until the railway industry can assume its former status in our economy through the enactment of permanently constructive legislation for the industry itself.

It seems to me that the problem we face in the rail industry is not only the need for this constructive revision of the railroad retirement systems, but one of revitalization of the entire industry. The fact that during the past 6 years our economy has grown at only an average annual rate of slightly over 1 percent has not only had a telling effect on the rail industry but the textile, coal mining, and other industries as well. What is needed is an overall stimulating program which would involve the expansion of the whole economy of America at an annual rate of 5 percent. I feel that this Congress, through the enactment of constructive measures to encourage production such as among other programs, housing, community facilities, and depressed areas legislation, can help to bring about the stimulation of our economy as a whole and thereby, the railway industry in particular. Just as we Americans cannot accept continuing unemployment and low living standards, from a humanitarian standpoint, we also can not tolerate economically the idleness of the productive components of our society, whether it be human effort or railway equipment.

Mr. Chairman, I support the passage of this measure as a necessary and realistic step forward, but we need the basic expansion of our economy to bring health to our railroad systems. I earnestly hope that this Congress will see fit to enact the necessary legislation to put the railroad industry back on its feet economically.

The CHAIRMAN. We appreciate your testimony, Mr. Oliver.

Mr. OLIVER. Thank you, Mr. Chairman.

The CHAIRMAN. Our colleague, Hon. Richard H. Poff, will be the next witness.

STATEMENT OF HON. RICHARD H. POFF, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF VIRGINIA

Mr. POFF. Mr. Chairman and members of the committee, on January 9, 1959, under a 15-minute speech order of the House, I discussed pending railroad retirement legislation and expressed the hope that your great committee would be able to schedule early hearings on this important subject. Personally and on behalf of the 8,000 active railroad workers and the several thousand retired and furloughed railroad workers in the Sixth Congressional District of Virginia, I express our most profound appreciation and commendation."

In my January 9 speech I reviewed the unhappy history of the 85th Congress' legislative failure in the railroad retirement field and called attention to the fact that the 85th Congress had passed a series of bills to benefit other retired workers and the owners of the railroads. Certainly, the new 86th Congress will not be guilty of the same failure.

Pending before your committee as subjects of this hearing are the following briefly described bills which I have introduced:

(1) H.R. 218, to reduce the retirement age to 60 after 30 years of service and any age after 35 years of service and to install the 5 best years rule.

(2) H.R. 217, to reduce the women's benefit age to 62 to conform to the social security age.

(3) H.R. 219, to repeal the so-called "last employer clause" of the Railroad Retirement Act under which so many railroad workers have lost their retirement benefits.

(4) H.R. 220 to repeal the so-called "dual benefit restriction" with respect to spouses and widows and other survivors of deceased employees.

Mr. Chairman, I think it is important to emphasize the fact that the adoption of the 5 best years rule would materially increase the retirement benefits of all railroad workers, both active and retired. In previous testimony, I have repeatedly reminded the Committee that the 1924 to 1931 base period presently employed in the act as the yardstick for computing retirement benefits is antique and unrealistic. Every railroad worker, whether retired or still active, earned far less during this period than they did in subsequent years, and the old benefit formula has long since ceased to be an equitable yardstick, especially in view of the comparison between the value of the 1931 dollar with the value of the 1959 dollar.

I am also vitally concerned about the unemployment problem in the railroad industry. By reason of dieselization and other technological and economic developments, hundreds of railroad workers were furloughed in our Sixth Congressional District last year. While some of them have been recalled and while a few have been able to find new jobs in other industries, most of these men, who lost their jobs through no fault of their own, are still in the ranks of the unemployed with little hope of reemployment. Moreover, the period of entitlement for unemployment benefits under the current law has already begun to expire and they are brought face to face with economic calamity. Inasmuch as Congress last year saw fit to authorize an extension of the entitlement period for unemployed workers other than railroad employees, I do not see how Congress can continue to close its eyes to the problems of unemployed railroad workers.

I realize that the adoption of any of the bills I have introduced or any of the other bills pending before the Committee will increase the drain on the railroad retirement fund. I also realize that the loss of revenue to the fund resulting from the unemployment problem is aggravating the fund's operating deficit. If the estimates of the actuaries are correct, the fund's revenue will have to be increased to finance any additional benefits approved by Congress. Of course, the fund's revenue can be increased only by an increase in the tax rate or the tax base. The Social Security tax base was increased last year from $350 to $400, and I understand that one of the bills now pending before the Committee recommends a similar increase in the railroad retirement tax base, in addition to an increase in the tax rate from 64 to 64 percent beginning January 1, 1959, and to 74 percent beginning January 1, 1962.

Mr. Chairman, from my correspondence and extended conversations with individual workers, I am convinced that the average railroad worker still fortunate enough to be employed would be willing to pay a higher tax rate to help liquidate the fund's operating deficit and finance the cost of additional benefits. However, I am also convinced that the workers in my district are opposed to an increase in the tax

base. Many of the workers in my district participate in private supplemental railroad retirement programs, and any increase in the tax base would adversely affect and in some instances completely destroy the supplemnetal program.

I fully recognize the tremendous task which faces this committee, and I realize that the committee cannot approve each and every one of the bills pending before it and still make provisions for financing which would be acceptable to all concerned. Moreover, I know that no law reaches the statute books without legislative compromise. However, I earnestly hope that any compromise bill which this committee reports will not compromise the rights and welfare of the railroad workers whose future security depends upon the fairness and justice of the Congress.

The CHAIRMAN. Thank you for your statement, Mr. Poff.

Mr. POFF. Thank you, Mr. Chairman.

The CHAIRMAN. The next witness is Mrs. Katharine St. George, our colleague from New York.

STATEMENT OF HON. KATHARINE ST. GEORGE, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NEW YORK

Mrs. ST. GEORGE. Mr. Chairman and members of the committee, I am glad to have this opportunity to make a statement on H.R. 941, a bill to provide that railroad employees may retire on a full annuity at age 60 or after serving 30 years; to provide that such annuity for any month shall be not less than one-half of the individual's average monthly compensation for the 5 years of highest earnings and for other purposes.

I have introduced similar legislation before and still feel that it is important and worthy of your consideration at this time.

The most important part of the bill is that it will provide a full annuity at age 60 or after serving 30 years. It seems to me, and I believe it is the opinion of most railroaders, that after 30 years of continuous service an individual is entitled to retirement, and full retirement at that. It also seems proper, and is generally conceded, that full retirement should be attained at the age of 60 in this particular profession.

There is no doubt that among railroad employees youth is important, reflexes have got to be quick, and health has to be of the best. For this reason, and many others that are obvious, the age of 60 seems to be eminently suitable for retirement.

It is also true that in permitting a fairly early retirement we will make more room for the younger men and women who wish to come into the service and it will permit them to look forward to earlier and better promotions.

I sincerely hope that this legislation will be favorably considered and that my bill will be presented to the Congress. If not, I hope your distinguished Committee will present similar legislation.

The CHAIRMAN. Thank you for your statement, Mrs. St. George. Mrs. ST. GEORGE. Thank you, Mr. Chairman.

The CHAIRMAN. The Honorable Adam Clayton Powell asked to be permitted to include a statement in the record on H.R. 223 and H.R. 225. He may do so at this point.

[A statement was not received from Mr. Powell.]

The CHAIRMAN. The next witness is our colleague from Massachusetts, the Honorable Thomas P. O'Neill, Jr. Mr. O'Neill, we will be glad to hear you at this time.

STATEMENT OF HON. THOMAS P. O'NEILL, JR., A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MASSACHUSETTS

Mr. O'NEILL. Mr. Chairman, and members of the committee, it is a pleasure for me to appear here before you this morning in support of H.R. 1012, which is the chairman's bill, and H.R. 3052, an identical measure, which is my own bill to amend the Railroad Retirement Act, the Railroad Retirement Tax Act, and the Railroad Unemployment Insurance Act.

In the Commonwealth of Massachusetts, this legislation, when enacted, will immediately affect about 7,000 retired railroad employees, and 5,000 survivors (widows and children). In addition, 20,000 other railroad workers will benefit either through extension of unemployment benefits, or upon eventual retirement, for a total of approximately 32,000 persons within the State.

The level of employment in Massachusetts, and other New England States has been decreasing steadily, particularly in the railroad industry. Many of the railroad workers have exhausted their unemployment benefits, and since last fall have been without funds and unable to find work. The supplemental unemployment benefits provided for in this bill will pay them the same benefits accorded other workers under State employment systems who were covered under legislation passed in the 85th Congress.

The bill calls for a 10 percent increase in all forms of railroad retirement benefits, extension of periods of unemployment payments, an increase in the maximum daily unemployment benefit to $10.20 (instead of the present $8.50) and for adjustments in tax rates to assure a sound actuarial basis for the increased benefits.

The increase in benefits would be applicable to survivors of deceased railroad workers. Spouses, and women employees with less than 30 years of service, may elect to retire at age 62 on a reduced basis.

Disabled annuitants may earn up to $1,200 a year (instead of $100 a month as at present) in outside employment, without losing benefits. Retirement benefits would be financed by a tax increase applicable to both employees and employers. The increase would be from 614 percent to 634 percent beginning with January 1, 1959, and continuing through December 31, 1961, when the rate would be raised to 74 percent. Effective January 1, 1949, the rate would apply to as much as $400 of monthly compensation as compared to the present $350 maximum.

The bill would increase unemployment insurance benefits for long service employees. Those with 15 or more years of service who are now entitled to a maximum of 130 days would have the benefit period extended an additional 130 days. Unemployment benefits for employees have less than 15 but at least 10 years of service would have an extension of unemployment benefits with a maximum of 65 additional days of unemployment. Employees with less than 10 years of service, who have after June 30, 1957, exhausted their rights to unem