I do not want to be mistaken in condemning my kind completely. I said, and I repeat it, that there have been outstanding examples of business men in the country, but the percentage has been so small that you can honestly say that the business man on this type of legislation has always felt that business was not ready to stand it; that some day it should be ready but not today. So that I do not think that the committee ought to pay very much attention to that type of argument.

There is another phase of this bill which I think is sometimes lost track of. When all these different plans present argument as to whether the employer and the employee should contribute to this type of thing that this bill calls for, I am afraid we lose track of the fact that the employee is already contributing very largely to unemployment by being out of work. And just inasmuch as the employer is responsible for not prolonging this lack of work, just so much is the employee making his contribution to any unemployment fund that may be set

up.

So that I do not think there is very much to be argued in that regard at the moment.

There is no objection that I can see to that, after we make our start.

Mr. LEWIS. You mean in the waiting period he is already making the first contribution?

Mr. FILENE. I mean being out of employment, without a job, he is making his contribution.

Mr. LEWIS. Yes, sir.

Mr. FILENE. After all, the employee is not responsible for being out of employment. It is our economic system which is responsible for that. And, as Mr. Flanders says, and rightfully, business is not always responsible for that, yet at least it ought not to be lost sight of that the employee is now making his contribution, and has been making his contribution. So the argument for employee contribution to be brought in at this time, according to my own personal opinion, should not be very seriously considered. There is no objection, after such a bill as this has been passed, and there is a system that is working, if the employers and employees want to get up some other scheme of contribution to a joint fund which they can add to theirs. There is nothing to prevent that. But we have got to get a start, and the way to make a start is a simple start, and this is a simple

start.

Of course, the other important thing that this bill makes a contribution to is that it does away entirely with the argument that one State cannot afford to do it because another State will be in competition with it. This bill will make it for the State's interest and the employers in every State to establish a law within their States which makes it possible to keep that money within the State instead of going to the National Government.

Somebody before me spoke about State funds, putting this money into State funds, into a general fund-I think Mr. Flanders, my good friend here, whom I usually agree with. I think the argument against having a general fund is that the weak employer will benefit constantly by the strong employer. If there is any general contribution into a general fund, each man ought to stand upon his own feet, that is, each employer, and pay his own way.

I think I ought to say to your committee that I am not talking for my corporation. It just happens that I have been serving here for months now with Mr. Flanders on the Industrial Advisory Board and our board has not officially taken up this bill for consideration. I think I can say that my associates are in general approval of something that should be done, from our conversations from time to time on this subject.

They would probably have their own individual opinions as to whether this is the time or the rate is right or what not. We have not discussed that in our directorate, and I am not in position to speak for them.

I am chairman of the active management of the board of our business, and chairman, as I say, of the Federated Department Stores' Board of Directors, as well as being chairman of the directors of my business. My brother, whom I notice from the list of witnesses, seems to have appeared here, has spoken to you, but I am not quite sure what he has said. But if you find that he feels differently about it than I do, you will know that we have very friendly feelings, but very different opinions at times.

I think that is about all the contribution I want to make. If I have said anything which seems to call for disapproval on the part of the committee, I will answer any questions if I can.

One of the committee asked the question about the labor costs. It may interest you, if you do not know it, to learn that the Harvard Business Bureau gave out 18.7 as the ratio of pay roll to sales volume in the retail stores of the country.

Mr. LEWIS. Does that include salaries?

Mr. FILENE. This was pay roll. The figures which I quoted to you before were only the pay roll figures of the people involved in this bill. It does not include these big salaries which were listed as being received by the heads of the business.

To compare with this we have a recent report of the Massachusetts Department of Labor and Industry, giving statistics as to manufacturers in Massachusetts in 1932. This covers the principal industries and gives detailed information as to 18. The total amount of wages of these industries was 21.9 percent of the value of their products.

I thought, since the question was asked, that these figures might have some value.

Mr. LEWIS. We thank you very much for your time and your contribution, Mr. Filene.

Mr. FILENE. You are quite welcome.

Mr. LEWIS. Miss Dawson is here, and we would be glad to hear from her.

STATEMENT OF MISS MARY W. DEWSON, OF WASHINGTON, D.C., REPRESENTING DEMOCRATIC NATIONAL COMMITTEE

Miss DEWSON. My name is Mary Dewson, and I am director of the women's division of the Democratic National Committee. This begins as it should, in a slightly political way. I will make two quotations from the platform of the Democratic National Convention of 1932.

One: "We believe that a party platform is a covenant with the people to be faithfully kept by the party when entrusted with power. Two: "We advocate unemployment and old age insurance under State laws."

In my opinion the Federal administration has a right to be proud of the steps it has taken to fulfill the promises of our party, especially under the stress and strain of the depression.

Why have not the State legislatures controlled by Democrats fulfilled in any State the one pledge made for State action? Some States it is true have enacted old age insurance laws but not one State has passed an unemployment insurance measure and the legislature of every State in the Union have been in session since 1932.

I believe the pledge was not kept because the industrialists of every State protested that if unemployment insurance was established in their State, they would be at a disadvantage in interstate competition.

This fear may or may not be well grounded. It is however a genuine obstacle to the passage of proper unemployment insurance legislation in the States.

The Wagner-Lewis bill would remove at one stroke the only argument against the immediate enactment of State unemployment insurance laws.

It would also refund to the Government some of the cost of carrying industrial workers during future periods of unemployment until business is ready to reemploy them.

If there is time I should like to state more in detail why I consider unemployment insurance so important. I have been interested in this legislation since the Huber bill was introduced in Wisconsin in the early twenties. I have been chairman of the labor standards committee of the National Consumers' League for a good many years. The need for some just and adequate method of providing for the hardships of unemployment is now generally recognized. It has long been my belief that just as business has built up "reserves" for depreciation, taxes, and interest and even surpluses from which to pay dividends during slack periods, so business should be required by law to build up reserves to help carry the burden of unemployment, now chiefly borne by the workers. A large part of the cost of unemployment is borne by the taxpayers also, through the huge cost of relief entailed during periods of unemployment, such as we have known in acutest form during the past 4 years.

I have long believed that unemployment reserves or insurance should be required by law, since only a handful of employers have taken voluntary action along these lines.

The benefits of legislation setting up some system of compensating for unemployment are twofold. First of all, it will be prevention. Properly devised unemployment reserves law can stimulate management to provide steadier work, thus reducing to the minimum the irregularities of work and of production which exist today.

Under various proposals and under the Wisconsin Act, the rate of contribution by an employer is progressively reduced and may cease when his account shows a stated reserve per employee. He can be sure from the start of the full saving due to his better management. The incentive to regularize business is thus strongly reinforced.

On the other hand when management can lay off workers with impunity, irregularity of employment is often the easiest way out. Yet a considerable number of businesses in the country, large as well as small, have shown that efficient management can in large part determine regularity of operation by the intelligence with which orders are accepted or refused, plant capacity expanded, new customer habits created, and so forth.

Mr. Ernest G. Draper, himself an employer who is proving the possibilities of stabilization in industry, points out for a single instance that a highly competitive business like Procter & Gamble, which made a net profit of $9,132,000 in 1932, has worked out an all-year around production schedule for a product like cottonseed oil, the use of which has never been regularized before. (The Survey, Jan. 15, 1934, p. 11.) Furthermore, steadier employment in relatively normal times should gradually help to lessen if it cannot do away with, the recurring disasters of unemployment such as have taken place in 1907, 1921, and so forth.

Secondly, the provision of unemployment reserves or insurance will provide some measure of security for workers who are laid off from work, and will thus contribute to the purchasing power of the community.

It has been estimated that in New York State, for instance, if early in the depression a 2-percent contribution from all pay rolls in the State had been available from only a 2-year accumulation period, there would have been in hand 75 million dollars for distribution in benefits. Nor would this have been all. For with any proper system of unemployment insurance, a precentage of the pay roll of those still employed would have been added to the fund. There would thus have been in hand more than 75 million dollars early in the depression to maintain the purchasing power of the unemployed workers—a small but steady income for business, invaluable precisely at the time when a depression is setting in.

Not only would business have benefitted greatly but even more important, the morale and self-respect of the workers would not have been undermined as they have been during the 4 years of the depression by the fear of approaching insecurity, the humilitation of seeking relief and a standard of living reduced far below the American level by inadequate aid. Medical authorities are agreed that while the undernourishment and mental suffering of the unemployed, both children and adults, may not be reflected in statistics of mortality, the inroads upon health and vitality are already unmistakably evident.

From the point of view of the taxpayer also, unemployment insurance offers a legitimate and material source of aid. Instead of the millions spent in relief, both tax paid and through private charity, the more than 75 million dollars would have been available in the State of New York alone from the reserves of industry, a sum far greater than what was raised to help bear the burden of unemployment from private or public doles at that time. In a single city in the Middle West it is reported that taxpayers paid more than 8 million dollars in relief when 100,000 employees of a great manufacturer were laid off.

Granted that these objectives of unemployment insurance have been gradually recognized not only as desirable, but essential for the

United States, how shall the necessary legislation be carried through? In only one State, Wisconsin, has a beginning been made by the enactment of a statute which goes into effect this summer. During 1935, 30 legislatures will be in session. I believe that no device could be more effective or more reasonable, to stimulate State legislation than the provisions contained in the Wagner-Lewis bill. It leaves to the States the choice of various methods to be pursued, whether reserves shall be pooled or kept in separate company accounts, whether industry alone should contribute as being responsible for management, or whether the workers should also be called on; what the size of benefits should be, length of waiting period and many other points. The essential thing, as all students of the subject agree, is that action should be taken now. When prosperity returns the need of providing for unemployment is far less readily seen. If the WagnerLewis bill is enacted at this session of Congress, it will be the most potent force to stimulate action by the States in 1935.

I want to say that I rather agree with Mr. Filene, that it is unfair to ask one employer, who has carefully stabilized his business with a great deal of thought and work, to bear an equal burden with the man who has been exceedingly careless about this matter. I am quite familiar with industry and I know there is a great variation in what is done in different industries, and I think that this gentleman here, this Congressman [indicating]

Mr. LEWIS. Congressman Cochran of Pennsylvania.

Miss DEWSON. I think he need not fear that it will be unfair to the manufacturers because this 5 percent is equal all along the line, so that that is perfectly fair.

At the same time, I am particularly pleased with this bill because it permits the different States to experiment with the best form of unemployment-insurance legislation, and it also gives them that freedom for State action which I think is very desirable. So that although each manufacturer will pay the same, the States themselves can work out a plan by which, if they choose, their manufacturers who have made a great effort to stabilize their business will be in a better situation if they use the plan which is used in Wisconsin. I should be very glad to have them have the chance to do that, but I am also glad to have them have the other plan, too.

Mr. LEWIS. Thank you very much, Miss Dewson.
Rev. Francis J. Haas is next.

STATEMENT OF REV. FRANCIS J. HAAS, OF WASHINGTON, D.C., MEMBER OF THE NATIONAL LABOR BOARD OF THE NATIONAL RECOVERY ADMINISTRATION

Reverend HAAS. My name is Francis J. Haas, director of the National Catholic School of Social Service, member of the Labor Advisory Board, and member of the National Labor Board.

Mr. Chairman and members of the committee, there are four major reason why this bill should become a law. One, it will be a beginning at least of recognition in law of the obligation of industry to pay every worker a year-round wage; two, it is Nation-wide in scope and effect; three, it is compulsory and uses the most effective kind of compulsion; and four, it is a necessary preparation for whatever course the Government sees fit to follow after the expiration of N.R.A. in June 1935.