Hence, the Railroad Retirement Board will receive the benefit of reimbursement from the social security trust fund for the account of railroad employees, and we feel that with proper weights attached this feature will be very gainful to the railroad retirement account in the not-too-distant future.

Mr. Younger questioned me relative to a statement of mine, on page 10 of my testimony, which reads as follows:

"Many Government securities pay much greater returns. FHA mortgages, some Federal certificates and even savings bonds pay in excess of 3 percent, and those securities are insured as to their value by the Federal Government, hence no loss is anticipated."

Mr. Younger took exception to the fact that the bill increasing the yield on the savings bonds had not passed both Houses of Congress, consequently, the interest had not actually been increased at the time my statement was written. Most certainly it was not my intention to mislead the members of this committee on that point. Really, it was my earnest desire to make clear that the trend at present is to increase the interest yield on all securities for investment, whether Government or otherwise.

I hope that this explanation will clarify, in the minds of the members of your committee, any misunderstanding that may have developed from my attempts to present the facts, as I saw them, to the committee, and I would like to have this statement made a part of the official record in order to correct any possible misunderstanding.

THOMAS G. STACK,

President, National Railroad Pension Forum, Inc.

The CHAIRMAN. There are other statements which will be referred to the clerk and the reporter.

I understand that the representatives of the Railway Labor Executives' Association perhaps desire an opportunity to include some additional material in the record.

Mr. SCHOENE. I think that likely, Mr. Chairman. We have particularly in mind that some of the bills here discussed have not even been introduced at the time we had previously appeared. It may also be necessary to submit some additional financial data.

The CHAIRMAN. Would that be sufficient to satisfy your desires? Mr. SCHOENE. Yes, I think if we are given an opportunity to submit a written statement that will take care of what we have in mind. The CHAIRMAN. Yes, you may have that privilege.

(The following documents were later submitted for the record:)

SUPPLEMENTAL STATEMENT ON H. R. 4353 AND H. R. 4354 BY LESTER P. SCHOENE ON BEHALF OF RAILWAY LABOR EXECUTIVES' ASSOCIATION AND BROTHERHOOD OF LOCOMOTIVE ENGINEERS

In my original testimony I fully discussed the bills H. R. 4353 and H. R. 4354 and it is not my purpose to elaborate upon that testimony. However, the Association of American Railroads has seized upon the pendency of the proposals contained in these bills to put forth proposed devastating amendments to the Railroad Unemployment Insurance Act. These proposals were not before the committee at the time I testified but were covered by the subsequent testimony of witnesses on behalf of the Association of American Railroads and have been embodied in H. R. 6016 and H. R. 6040. This memorandum will be directed primarily to those proposals. The financial and economic testimony submitted by the Association of American Railroads will be commented upon in a supplemental statement by Mr. E. L. Oliver.

A general preliminary observation is pertinent. It is elementary that the proponents of a measure have the burden of proof of establishing the desirability of its enactment. That burden with respect to a proposed radical overhauling of the Railroad Unemployment Insurance Act cannot be met except by a demonstration from experience that the actual operation of the system has been so unsatisfactory that radical revision is required. The basic essentials of this system have been in existence for nearly 20 years and amendments have been made from time to time in response to demonstrated needs. Ample experience is available upon which to base proposed changes. Theoretical and conjectural objections do not suffice. Examination of the hearings before a subcommittee of

this committee on H. R. 10127, 75th Congress, 3d session, on May 26, 27, 31, June 1, 2, and 3, 1938, reveals that railroad witnesses at that time posed virtually identical objections to the bill that became the original Railroad Unemployment Insurance Act. In the absence of experience only theory and conjecture was possible. But a renewal of these objections as a basis for drastic revision at this time should certainly be based upon a demonstration that the system is defective in actual operation. No such demonstration has been made. Abstract argument and theory are again the sole support of the railroad proposals. The railroads propose that an individual benefit year and an individual base year for each employee be substituted for the present calendar base year and fiscal benefit year and that each individual's base year terminate and his benefit year begin when he becomes unemployed. The alleged advantage of this change is to eliminate the 6-months' lag between the end of the base year and the beginning of the benefit year. It is said that this lag may result in an individual who becomes unemployed during this lag period being ineligible for immediate benefits and on the other hand drawing benefits up to 18 months after the end of the base year. No demonstration is made that in actual operation this con dition results in substantial hardships or inequities.

The railroad unemployment insurance system is closely integrated with the railroad retirement system for administrative purposes. From the wage and service reports that the Board is required to maintain under the Railroad Retirement Act the Board can promptly ascertain from its own records virtually all the information required to adjudicate unemployment insurance claims. Before the benefit year begins the Board receives all the base year information, processes it, and has in the hands of each individual employee as well as readily available upon its own records the information from which eligibility for and the amount of benefits can be determined. Experience has shown that by this system the Board is able to pay the benefits for the first period of unemployment within a few days after the end of the first registration period. This is very important. When people become unemployed their need for benefit payments is immediate and any substantial delay in adjudication would to a substantial degree vitiate the purposes of the system.

Under the railroads' proposal the Board would have on its own records not one item of the necessary information at the time unemployment occurs. Even the base year and the benefit year of the individual employees are not ascertainable until unemployment occurs. The Board would then further have to ascertain in each individual case what was the last daily basic rate paid within the base year minus withholding taxes and railroad retirement taxes, whether 87 times the daily basic rate was earned within the base year, whether such earnings were earned in less than 6 months in the base year, whether those 6 months included 2 months in the last half of the base year, whether the employee quit his employment without good cause, whether the employee was discharged for good cause and whether the employee is or upon application would be entitled to either a disability annuity or an age annuity under either the Railroad Retirement Act or the Social Security Act. One can only guess at the length of time that would be required to obtain all this information in each individual case, but it is obvious that unconscionable delays in making initial payments would result and that administrative expense would be enormously increased. The reason for the present 6-month lag between the end of the base year and the beginning of the benefit year is purely a matter of administrative requirements. Inherently there is no other reason why a fixed benefit year could not begin immediately upon the conclusion of a fixed base year. We have inquired from time to time as to the feasibility of reducing this time interval and beginning the benefit year, say, on February 1 or March 1. We are informed, however, that this period is required for the Board to receive and process the necessary base year data and that it is not feasible to make any substantial reduction in the interval.

The railroads also propose to make drastic restrictions in the conditions for qualifications, as they did in 1938. Originally the base year earnings necessary to qualify were only $150. The amount of qualifying earnings required has been increased from time to time as wage rates and thus earnings opportunities have increased. We now propose to increase it to $500 which is more than 3 times the original qualification requirement.

The railroads, however, propose to set up a series of hurdles designed to exclude employees from qualifying. Not only would the amount of requisite base year earnings be drastically increased (i. e. to 87 times the basic daily rate, which in the case of a $15 rate, barely above the present minimum, would

be over $1,300) but more importantly, earnings would be required in each of 6 months, 2 of which would have to be in the last half of the base year. In support of this proposition the railroads point out that substantial numbers of unemployment insurance beneficiaries work in less than 6 months during the base year. It is then asserted with no proof whatever that this condition is not indicative of unemployment exceeding 6 months but of shifting to nonrailroad jobs. The assertion is not only unproven but is contrary to the facts. A substantial amount of railroad work, particularly in the northern regions, is seasonal and is performed in areas where other work is not readily available in the off season. Many of the employees engaged in this seasonal work are firmly attached to the industry, return to it year after year, but when the season is short may work less than 6 months. These are the classes of employees to whom unemployment insurance benefits are the most vital. A general indication of the effect of this seasonality may be gained from page 139 of the Retirement Board's Annual Report for 1956. The table there shows the number of unemployment insurance beneficiaries by months from July 1955 through June 1956, broken down by major categories of employment. It appears that in the group including the maintenance of way employees other than craftsmen the number of beneficiaries was rather constantly around 9,000 during July and August and September. It rose sharply to 11,500 in October and continued to rise until it reached a peak in January when a gradual decline began; but the number was still nearly 16,000 in April and it was not until May that the number fell below that of the previous July. It is thus apparent that throughout this 7-months' period substantial numbers were seasonally unemployed; they had not shifted to other jobs and did not have an opportunity to work in each of 6 months.

With respect to unemployment due to sickness the railroads propose to impose all the conditions of eligibility that would apply to unemployment due to lack of work, most notably a showing that the individual would be available for railroad work if he were not sick. This is patently merely a devise to make qualification for benefits more difficult. When an individual is sick he is obviously not available for work of any kind and whether he would be available if he were not sick is irrelevant. The individual must have had the necessary

work during his base period, an unemployment tax was paid with respect to his wages for the purpose of protecting him against unemployment and sickness during the ensuing benefit year. He cannot equitably be disqualified if he ex

periences sickness during that period.

The railroads propose to eliminate maternity benefits entirely and in fact would go so far as to deny all benefits for unemployment due to sickness in the case of pregnant women unless it is shown that the cause of sickness is unrelated to pregnancy. This is indeed an inhuman and reactionary proposal. This committee and the Congress as a whole fully considered the desirability of maternity benefits when they were first included in the act. The railroads opposed their inclusion for the same reasons that they now urge their elimination. Congress disagreed with them and they have shown no new reason for reconsideration of that conclusion. When Congress decided to make provision for unemployment due to sickness special consideration was given to maternity benefits primarily for one very important reason: It is desirable from the standpoint of the health of the expectant mother and of the expectant child that the expectant mother cease active employment some time earlier than the time at which her condition renders her physically unable to work and that she remain out of active employment for a reasonable period following childbirth even though she might physically be capable of returning to work at the risk of permanent impairment of her health; it was recognized, however, that married women employees whose economic condition was such as to cause them to be holding regular jobs in the industry would be economically forced to run these risks of impaired health unless some provision were made to give them partial protection against the wage loss that would occur if they avoided these risks. These conditions have not changed. The railroads have not shown either that the risk of health impairment by working immediately before and immediately after childbirth has declined nor have they shown that it is less desirable to protect the health of these people than it was when the provision was originally enacted.

In the field of disqualifications the railroads' proposal seeks again to impose harsh and unjustified restrictions upon the payment of benefits.

They point out, as they did in 1938, that the railroad act differs from unemployment compensation acts generally in that it disqualifies employees who

are unemployed because of a strike in which they are participating only if the strike was commenced in violation of the Railway Labor Act or of the laws of the labor organization to which they belong. This difference has existed since 1938. It was consciously adopted in recognition of the fact that the procedures of the Railway Labor Act themselves subject railroad employees to much greater restrictions than are applicable to other industrial employees. It was believed that the procedures of the Railway Labor Act were such as to assure that every means of amicable adjustment of disputes would have been exhausted before a strike would occur; consequently, there was no justification for denying benefits for unemployment occurring during a strike that was not in violation of the Railway Labor Act or of the laws of the organization. Consider, by contrast, the situation of employees in other industries. Even today the Taft-Hartley Act imposes upon other industrial employees no procedures for the adjustment of disputes comparable to those of the Railway Labor Act, although it might well be that if the strike disqualifications in State unemployment compensation acts were reconsidered today in the light of the Taft-Hartley Act, they, too, might be relaxed. However, at the time the State unemployment compensation acts were being adopted the original Wagner Act was in effect; it guaranteed to employees the right to organize and bargain collectively through representatives of their own choosing without employer interference or coercion and placed no restrictions whatever upon the exercise of collective bargaining power; in fact, the exercise of that power was enhanced by the Norris-LaGuardia Act's prohibition upon the Federal Courts' enjoining strikes and similar prohibitions upon the power of State courts through State legislation in many States.

Nothing has occurred since 1938 to warrant reversal of the policy then adopted. The railroads have not undertaken to show that the nature of the present disqualification has tended to encourage strikes or to interfere with the amicable settlement of disputes in accordance with the purposes of the Railway Labor Act. They could make no such showing if they attempted it. It appears from page 47 of the annual report of the Railroad Retirement Board for 1956 that in the entire year ended June 30, 1956, out of a total of 137,600 unemployment insurance beneficiaries only 300 were unemployed by reason of strikes.

In the testimony of Mr. D. P. Loomis an effort is made to demonstrate the injustice of the limited nature of the present strike disqualification by tracing a hypothetical dispute through the procedures of the Railway Labor Act and making it appear that at every stage in the handling of the dispute the carrier is exerting every effort to achieve an amicable solution whereas the union is arbitrarily and relentlessly pressing toward a strike. This is a highly imaginary picture bearing no relation to reality. Since the enactment of the Railway Labor Act there has been only one railroad strike of major extension both in area and in duration. That was the 1955 strike on the Louisville & Nashville system which extended into 13 States and lasted for 58 days.

The circumstances giving rise to that strike are revealing. The nonoperating organizations served proposals on the railroads on a national basis pursuant to the Railway Labor Act on May 22, 1953, in which they sought improved vacations, paid holidays, premium pay for Sunday work, a comprehensive health and welfare program for employees and their dependents to be provided by the carriers, and free transportation for employees and their families. When it appeared that no settlement could be developed on the individual railroads the carriers established the customary carriers' conference committees to handle the dispute on a joint national basis. However, because of delays in securing national conferences the employees invoked the services of the National Mediation Board on October 20, 1953, 5 months after the proposals had been served. The Mediation Board arranged conferences for November 3, 1953, but the carrier committees refused to negotiate on the subjects of health and welfare and free transportation, holding those subjects not bargainable. When the employees insisted upon bargaining with respect to the entire subject matter of their proposals the carriers filed a declaratory judgment suit to determine whether they were legally required to bargain on these subjects. This suit was dismissed by the district court as not presenting a justiciable controversy and during the pendency of an appeal by the carriers from that decision the dispute progressed through mediation and the eventual establishment of an Emergency Board on December 28, 1953. The Board began its hearings on January 19, 1954, and continued hearings to April 3, 1954.

The Emergency Board made its report and recommendations on May 15, 1954, 1 week short of a year after the unions' proposals had been served. The recom

mendations were disappointing to the unions, particularly by virtue of the fact that only limited health and welfare protection was recommended for employees only with the employees to bear one-half of the cost. Nevertheless, negotiations proceeded between the carriers committees and the Employees' National Conference Committee resulting in a joint national agreement on August 21, 1954, which put into effect the recommendations of the Emergency Board on all the major railroads of the country except on a number of southeastern roads. The Louisville & Nashville system railroads had a personal representative on the Southeastern Carriers' Conference Committee and participated in the national handling through conferences, mediation, Emergency Board proceedings, and subsequent negotiation until about August 10, 1954. By that time substantial agreement had been reached on the health and welfare plan providing for an equal sharing of costs between carriers and employees. The Louisville & Nashville system railroads were not in accord with the terms of the agreement reached and withdrew their authority from the Southeastern Carriers' Conference Committee.

After the agreement of August 21, 1954, the National Mediation Board again sought to settle the dispute with the Louisville & Nashville system railroads as well as a number of other southeastern railroads who had similarly withdrawn from national handling. The organizations patiently persisted in their efforts to achieve an amicable settlement and eventually settlements corresponding to the national agreement were made with the other wihdrawing carriers, but the Louisville & Nashville system railroads remained adamant. The major point at isue was the unwillingness of the carrier to require 100 percent participation of its employees in the health and welfare plan on a contributory basis. The organizations pointed out that the contributory basis was not of their seeking but had been recommended by the Emergency Board and indicated their willingness to accept a noncontributory plan. The efforts to arrive at a settlement continued until March of 1955 at which time the carriers unilaterally put into effect a nonnegotiated health and welfare plan of their own. This left the organizations no alternative but a strike.

After a successful strike of 58 days the organizations nevertheless agreed to submit the dispute to a sole arbitrator, agreeing to accept his determination as binding; and returned to work during the arbitration proceedings.

Notwithstanding the geographic extent and duration of this strike, the number of unemployed beneficiaries who were unemployed on account of strike during the benefit year 1954-55 was only 18,000 out of a total of 305,900 beneficiaries. This appears from page 66 of the Annual Report of the Railroad Retirement Board for 1955.

In light of these facts, experience would indicate that the retention of the present limited disqualification is warranted. It does not unduly load the economic scales in favor of the employees. On the contrary, the carrier proposal would unduly load the scales the other way. Workingmen today have many more fixed charges than they used to have. As living standards have improved they have obligated themselves with insurance programs, purchases of homes, other installment obligations, etc., which gives the loss of wages during a strike a much more formidable impact than it used to have. People can still tighten their belts and eat from soup kitchens during strikes as in times gone by. But when the loss of wages means the loss of investments accumulated over a period of time the bargaining position of the employees has been substantially impaired.

Another disqualification which the carriers propose to change is that relating to voluntary leaving of employment. An individual who voluntarily leaves his employment is now disqualified for a period of 30 days; thereafter he may draw benefits provided he is available for work but he is not able to find, and the Board is not able to find for him, any suitable work. The railroads would continue this disqualification until after a return to railroad employment. This amounts to a permanent penalty, si nce under the present law it is a condition of his continued receipt of benefits that he return to employment whenever a suitable job is available.

The railroads also propose to disqualify employees who are discharged for cause. Such a disqualification was contained in the original act in 1938 but was removed almost immediately thereafter. The reason for its removal was recognition of the fact that what is proper cause for discharge is usually highly controversial and is often the subject of sharp conflict between the carrier and the organizations representing employees. Furthermore, under the Railway Labor Act the National Railroad Adjustment Board is the tribunal established for the solution of such controversies. It was considered most undesirable