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Steel, GSTACK: act starte bill HIPOTI

Mr. STACK. They get a rebate in there of that 52 percent.

Mr. YOUNGER. The same argument applies to the payroll that is deductible from the income tax. Mr. STACK. Of course, they charge all their retirements.

Mr. YOUNGER. They charge all their payroll, of course, and every other corporation does. That is true of all corporations, United States Steel, General Motors, Ford, et cetera. There is nothing new in that.

Mr. STACK. That is right. That condition did not exist in 1934 when the first act started.

Mr. YOUNGER. That bill was thrown out by the Supreme Court. Mr. Stack. It was not thrown out on anything like that. In the 1937 act they didn't have that provision in it.

Mr. YOUNGER. We are dealing with existing laws. Mr. STACK. They did not have any reduction on income tax. I don't know what year that went in, but it is quite recently that the corporations got that 52-percent rebate.

Mr. YOUNGER. The difficulty I have with all of your statements, and the same difficulty we had 3 years ago when you were before the committee, is that you just make broad statements without any foundation whatsoever.

As a result, listen to this: “Savings bonds now pay in excess of 3 percent."

Now, you verify that. . Mr. STACK. Well, you have a bill in your House Ways and Means Committee.

Mr. YOUNGER. I am not talking about bills in the future. I am talking about the statement you make here. · "Savings bonds now”—that means today—“pay in excess of 3 percent."

You know that is not a true statement. Mr. STACK. Well, it may be passed any day. Mr. YOUNGER. That does not make any difference. It is not a true statement, is it?

Mr. STACK. Probably not. : Mr. YOUNGER. That is the difficulty we had with you before or I had with you when you were talking about the investment of funds 3 years ago.

I asked you to go out and get some proof of investments available which you mentioned and you did not do it. I do not understand why you continually come before the committee with statements of this kind that you know are not true and why you make them.

Mr. STACK. We knew the matter was coming up before Congress on the bonds to increase the interest.

Mr. YOUNGER. There you go again into thin air. You are supposed to come here before the committee representing 126,000 workers and they are dependent upon you for something.

Mr. Stack. That is right. Mr. YOUNGER. Is this the kind of representation you give them? Frankly, I have never been able to see it. With 126,000 people, 126,000 members, who must pay you something, you ought to go out and employ good sound actuarial data and present it, as our colleague, Mr. Moss, has suggested, and to discontinue giving us statements that you have to admit on the stand are not true.

That is all, Mr. Chairman.

Mr. MacK. Are there any further questions? Mr. Stack, I just wanted to inquire as to your membership. You make the statement that you have 126,000 members. Is that paid membership?

Mr. STACK. That is right.
Mr. MACK. Are those current from year to year?

Mr. STACK. That is for last year. That was just completed. I got it last week.

Mr. Mack. Mr. Stack, thank you for your appearance before the committee today. Mr. STACK. Thank you, Mr. Chairman. I certainly appreciate it. Mr. Mack. Mr. Guy F. Fain is our next witness.

Mr. Fain is president of the International Association of Retired and Veteran Railway Employees.

STATEMENT OF GUY F. FAIN, GRAND PRESIDENT, NATIONAL ASSO

CIATION OF RETIRED AND VETERAN RAILWAY EMPLOYEES

Mr. Fain. Mr. Chairman, I won't take up very much of your time. I would like to preface my statement by this fact: that I had 48 years of service on the Baltimore & Ohio Railroad in train and yard service.

I was the local chairman for 36 consecutive years and a member of the general committee of the B. & O. representing the trainmen and I am still a member of the Brotherhood of Railroad Trainmen.

I make that statement for this reason, gentlemen: Mr. Stack has been informed in regard to the setup at Cincinnati with the Procter & Gamble people. I happened to be the one that made the contract with the Big Four representative as to how our men would work in Procter & Gamble and how they would be paid.

On the Baltimore & Ohio we work 6 months with 3 engines in the Procter & Gamble factory. The Big Four takes over and they work 6 months. So Procter & Gamble have three engines in there that they do pay the railroad retirement on, or part of it, but the other engines of the Big Four and the B. & O. we pay our own amount into the railroad retirement account.

I just wanted to clear that point up because somebody has informed Mr. Stack wrong because I helped make that contract, and I know.

Now, as a representative of our people, 90 percent of my membership are retired, their wives and widows, and not 7 percent like Mr. Stack says he has.

There are 90 percent or more retired people. They are in support of H. R. 4353 sponsored by your worthy chairman and cochairman and this bill is also approved by the standard railroad organizations.

Our organization wants to be recorded as saying likewise because we are in favor of this particular bill.

Some of the people that wrote me feel that they should have a little bit more in regards to the widows and so on. I believe you gentlemen will agree that the evidence presented here by the representatives of the organizations was far beyond what I can say or do and I think they made a wonderful statement.

We are fully in accord with these brotherhoods.

Now, that is all I am going to say, I will ask if you will embody my statement in the record because it is not very long and I want to

say to you gentlemen that we appreciate, our old retired people appreciate, everything that you have done over these many years for us and we likewise appreciate what the brotherhoods have done. We feel without the help of the brotherhoods we never could have gone as far as we have with our railroad retirement.

We thank you and I want to say, too, for the benefit of the Railroad Retirement Board, as to myself, I have had great cooperation and they have been of great assistance to our old people and I want to thank them and I want to thank you for this little consideration.

Mr. MacK. Thank you, Mr. Fain. Your statement will be included in the record at this point. Mr. FAIN. Thank you, Mr. Chairman. (The statement referred to is as follows:)

STATEMENT OF GUY F. FAIN, GRAND PRESIDENT OF THE NATIONAL ASSOCIATION OF

RETIRED AND VETERAN RAILWAY EMPLOYEES Mr. Chairman and members of your committee, my name is Guy F. Fain and my home is Glendale, Ohio. My presence before your committee is as grand president of the National Association of Retired and Veteran Railway Employees, an organization national in scope with local units located throughout the United States.

Our association is regularly constituted and is governed by a constitution and bylaws. The business is conducted by legally elected officers, chosen by elected delegates from each local unit in regular convention assembled, and is a nonprofit organization.

I appear before your committee in support of H. R. 4353 and other pending bills to amend the Railroad Retirement Act.

Your bill, Mr. Chairman, has the approval of all the railway labor organizations, and representatives of these organizations will very ably discuss the various phases of the legislation provided under bill H. R. 4353.

The organization I represent is in hearty accord with their position, and wants to be so recorded.

However, I would be neglectful of my duties, as representative of our association, should I not take this opportunity to bring to your attention and the attention of the members of your committee, other bills that are pending, providing for certain changes in the Retirement Act, not provided for in H. R. 4353, and I am afraid, do not have the full endorsement of the railway labor organizations.

I speak of a few of the bills that have been referred to your committee.

First: Bills that would provide for the repeal of the provisions of the act, which reduces the annuity of the spouse of a retired employee by the amount of certain monthly benefits payable under the Social Security Act. Bills H. R. 1008 by Congressman John Bell Williams, and H. R. 3420 by Congressman James Van Zandt, provide for this change in the act, and I ask that they be given some consideration.

Second: Bills that would permit an annuitant to receive his annuity even though he rendered service for the outside employer by whom he was last employed before his annuity began to accrue. A number of bills including this change have been presented, and again I ask that some consideration be given to the following bills : H. R. 3421 by Congressman James Van Zandt, H. R. 3756 by Congressman Paul Cunningham and H. R. 4523 by Congressman Richard H. Paff.

Third, and to me the most necessary is legislation that provides for a 25 percent increase in widows' annuities. H. R. 3422 by Congressman Van Zandt provides for such legislation, and certainly is most worthy of consideration. In these times when millions of dollars are being expended for the relief of strangers to our shores and our way of life, we have thousands of widows of retired railway employees actually in want, not for the nice things in life, but for housing, medical care, and yes, for the proper food. I ask of you, please consider this legislation.

Personally, I could relate many hundreds of heart-rending appeals from widows of retired employees, but I know that many of the members of your committee, coming from districts where large rail centers are located can attest to these conditions.

While there is nothing pending before your committee on the following needed changes in the act, and I therefore do not want to take up the time of the committee, might I ask in a few brief words that the provisions of the act that deny the beneficiary of an annuitant compensation for the month in which the annuitant dies, even though death occurs on the last day of such month, be eliminated and something be entered into the act that would provide either for a pro rata payment based on the date of death or for full payment if death occurred after the 15th of such month. This would add very little to the cost of retirement benefits.

We fully realize that the elimination of the so-called dual-benefit clause and the increase in the widows' annuity are highly controversial subjects, and as stated before your committee on previous occasions when it has been my privilege to appear before you, we want only such benefits that the funds of the Retirement Board can safely provide, but we do ask that some study be given these two subjects.

Thank you for your courtesy in allowing me to appear before your committee.

Mr. MACK. We certainly appreciate the time you have taken to come here to testify and your patience in waiting to testify before this committee. We certainly appreciate the fact that you are interested in a sound program to preserve the fund for the employees at a later date.

I want to ask my colleagues if they have any questions that they would like to ask you, if that is agreeable to you, Mr. Fain. · Mr. Moss. I have no questions, Mr. Chairman. . Mr. YOUNGER. I have one question.

I understand that your group, being mostly retired people, would be in favor of this bill of the chairman's regardless of whether the Ways and Means Committee passed the other bill? :,: Mr. Fain. We surely are.

, Mr. YOUNGER. Because you are not concerned about the deductions ...so far as the income tax is concerned ? :

Mr. Fain. We are in one respect. Of course, we realize that we do not pay a thing into the railroad-retirement account, yet we have an equity. We have paid many years before. Of course, we appreciate it is going to cost money. ,

Mr. YOUNGER. But you would like to have this bill, whether the other bill in the Ways and Means Committee is reported out, or not?

Mr. Fain. Yes, sir; we would. 1. Mr. YOUNGER. That is all..

Mr. MacK. Thank you very much, Mr. Fain.

Mr. Fain. Thank you, Mr. Chairman, and members of the committee.

Mr. MACK. That concludes the testimony for this afternoon.

The hearings on the railroad-retirement legislation will be continued on March 26, at which time we will hear the representatives of the Association of American Railroads.

The committee stands adjourned.

(Thereupon, at 3:35 p. m., the committee was recessed, to reconvene at 10 a. m., Tuesday, March 26, 1957.)

RAILROAD RETIREMENT AND RAILROAD UNEMPLOY

MENT INSURANCE LEGISLATION

MONDAY, MARCH 25, 1957

HOUSE OF REPRESENTATIVES,
COMMITTEE ON INTERSTATE AND FOREIGN COMMERCE

Washington, D.C. The committee met at 10 a. m., pursuant to adjournment, in room 1334, New House Office Building, Hon. Oren Harris (chairman), presiding.

The CHAIRMAN. The committee will come to order.

This morning the committee is meeting for a continuation of public hearings on H. R. 4353, and other bills pending, to amend the Railroad Retirement Act, the Railroad Retirement Tax Act, and the Railroad Unemployment Insurance Act.

First, I would like to announce that if there is anyone in this room who is to appear or be present at the hearings on the Highway Safety Committee, you will proceed to the Banking and Currency Committee Room, which is just across the way from here. That is Mr. Roberts' subcommittee.

It was announced when the committee recessed last week on the railroad retirement bills that other witnesses that had not been reached would be given an opportunity to testify on the 26th, which is tomorrow. It developed in the interim that there was some witnesses who could not be here tomorrow or later in the week and they requested that they be given an opportunity to be heard today. So for their convenience, the committee has been called in session today to hear Mr. David C. Bevan, financial vice president of the Pennsylvania Railroad Co. and Mr. Thomas Rice, president, Richmond, Fredricksburg & Potomac Railroad Co., of Richmond, Va.

Mr. Bevan, we are very glad to have your testimony at this time.

STATEMENT OF DAVID C. BEVAN, FINANCIAL VICE PRESIDENT,

PENNSYLVANIA RAILROAD CO., PHILADELPHIA, PA.

Mr. BEVAN. Thank you, Mr. Chairman. I want to express my appreciation for making it possible to be heard this morning.

I am going to talk on the financial position of the railroad industry and the Pennsylvania Railroad with respect to their ability to stand additional expenses. Later on others will discuss the various provisions of the plan and of the bills and the costs involved specifically.

I am financial vice president of the Pennsylvania Railroad Co., 'a graduate of Haverford College and Harvard Business School, I have

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