3. They have broadened "employment relation" to justly cover cases where an employment relation could not be established because of inability on account of sickness to respond to a call to get into active service (sec. 1 (d)). 4. They have broadened the term "compensation" to include wages for time lost (sec. 1 (h)). 5. They have provided an alternative to determine a fair average monthly wage of an employee where the test period 1924-31 is insufficient to constitute a just and equitable basis (sec. 3 (c)). 6. They have provided a return of 4 percent of aggregate earnings for subsequent service, to spouse or estate, in the event of death (sec. 5). 7. They have provided a way to secure the gratuity pensioners in their pension by putting them on the rolls of the Railroad Retirement Act. We are happy, indeed, that this has been agreeably accomplished. Theoretically, the employees will pay one-half of the cost of these pensions. If so, what may we say to the retired employees of the Milwaukee road, the Chicago Great Western, the Minneapolis & St. Louis, the Pere Marquette, the Chicago & Alton, the Southern Railway, and many other railroads? What may we say to these employees to excuse so rank a discrimination? I have said that theoretically, the employees in the service will pay one-half of the cost of the pensions paid to the lucky gratuitants, while we have no word of authority to say about the rules governing carrier gratuity pensions associations, which determine who shall or who shall not be a beneficiary. A so rank a discrimination smells to heaven. There is the record of accomplishment. Nos. 2, 3, 4, and 5 are curative of provisions of the present law which needs the Congress would readily prescribe, upon its attention. being called to it. No. 1 pertains to the 21 brotherhoods as organizations. Nos. 6 and 7, we must assume, are the benefits which are to accrue to the employees for which it is intended to trade the 11 points, as I have enumerated above. Points 1 and 6, which are representative of the great victory won by our labor chiefs over the Association of American Railroads, or all seven points, could easily be legislated into the law if presented to the Congress. The Congress would surely not insist on imposing the injury of the 11 points on the employees to enact this legislation. The four curative points are needed legislation for a fair administration of the act. Points 1 and 6 would not involve great difficulties. Point 7, dealing with the gratuity pensions, is worthy legislation and we are for it with every fair means. It will meet the favor of the employees almost to a man and should be legislated. We cannot see any necessity of emasculating the present law to gain these minor points, 1 and 6. We cannot conceive a good reason for the Associa tion of American Railroads to opposite it. Mr. Chairman and gentlemen of the committee, I protest to high heaven against this tragic barter. Before I go further, I wish to express my good will and appreciation of any assistance that has been given or may be given to our cause by the Association of American Railroads, but I must remind you, in the interest of 1,250,000 employees affected by the Railroad Retirement Act, that the legis lation, sponsored by the Railway Labor Executives' Association and the Association of American Railroads, will net the latter association handsome savings. A return to them of the 10 months' tax for 1936 is nearly $50,000,000; the saving to them on the 234-percent tax over and above what it would cost them under the 32-percent tax is nearly $13,000,000; the saving to them on their gratuity pensions by putting them on the Railroad Retirement Act rolls is nearly $20,000,000 annually, a total of all savings amounting to more than $80,000,000. I am not surprised that the carriers are for the bill. It is impossible for us to reconcile this bill with a sincerity of purpose. It is collusive rather than cooperative. It is a bill greatly advantageous to the carriers and is cruel, vicious, and hurtful to the employees. In its major particulars it is the carriers' bill. The 11 points that I have enumerated, which are so damaging to the employees, will be explained to you by our counsel, Mr. Frank E. McAllister, a practicing attorney of Chicago and St. Paul, Minn. Incidentally Mr. McAllister is a member of the Order of Railroad Telegraphers, an associate organization of the Railway Labor Executives' Association. I beg your indulgence for a concluding remark. As president of the Railroad Employees' National Pension Association, representing it and its membership, standing before this honorable committee, having a lifetime experience as a railroad employee, I would be thoroughly ashamed and humiliated to meet my fellow employees if I were to give our endorsement to H. R. 6956 as it is drafted today. Thank you. Mr. COLE. Mr. Chairman The CHAIRMAN. Mr. Cole. Mr. COLE. I notice your criticism of section 5. Will you explain as briefly as you can the difference between the bill before us and the existing law, as to the way it affects widows and orphans; that is, at the death of a railroad employee, say, 70 years of age with a widow of the same age, who has traveled all through life with him; what difference is there between the existing law in her case, what she would be entitled to, and this? Mr. ROYSTER. Mr. Cole, the existing law provides that an annuitant or an employee who is eligible for an annuity-just to be 65 years of age does not make you eligible. The Railroad Retirement Board has held that a person to be eligible for an annuity must have made an application and stated a date for his annuity to begin and has to sever his relations for active employment with his carrier. All of that must be done before he becomes eligible. Well, such a person as he, if after attaining that eligibility, he should die, then in that event whatever pension he may have qualified for, or annuity, he may have qualified for, one-half of that will be paid to that widow for the next 12 months, for 1 year. Mr. COLE. Is that under the existing law? Mr. ROYSTER. That is under the existing law. That has been omitted in the amending bill. Mr. COLE. Then explain also, in omitting it from the present bill, what happens to the widow under this bill? Mr. ROYSTER. Nothing is done for her. Nothing is done for him until such a time as subsequent service will amount to something. At the present time no employee in the United States has more than 4 months of subsequent service. This is the fifth month. This will be 5 months. That is all of the subsequent service that there is available to the railroad employees and the amending bill provides that in such a case the widow or the estate will get 4 percent of his aggregate earnings for his subsequent service. The subsequent service dates from December 31, 1936, forward. Mr. COLE. Well, in reading section 5 of the present law it is very easy for me to understand what it does. Section 5 of this bill is somewhat complicated. Your view is that the widow gets less under the bill before us than she does under the present law? Mr. ROYSTER. Well, you say that the present law is complicated. Mr. COLE. No; I say that the present law I think is very simple. Mr. ROYSTER. It is, indeed. Mr. COLE. But we have all of this language here in the bill before us. I do not know whether it is true or not, but it looks as if she gets less than under the present law. I want to know some reason for it. Mr. ROYSTER. Of course, section 5 of the amending bill and section 5 of the present law do not deal with the same subject matter entirely, because of the fact that in the present law they deal with those who are qualified for annuities, and I am frank to say to you, Mr. Cole, that under the present law, if an employee who was not qualified for a retirement pension and if he were to die, there is no provision made for that widow, and with this difference, with this section 5, that is in here which we are considering, it is a good feature, except that we consider it a good feature, but it is not valuable at the present time. It will be increasingly so as time goes on, but not for 15, 20, or 25 years will it become of great value. Mr. HALLECK. Mr. Chairman The CHAIRMAN. Mr. Halleck. Mr. HALLECK. Are you opposed to the passage of this bill as it is now drawn? Mr. ROYSTER. As it is now drawn, I am; yes, sir. Mr. HALLECK. As I understand you, you are the president of, or manager of an association or organization which was formed for the purpose of procuring railroad pension legislation. Mr. ROYSTER. We are the original initiators of the pension movement; yes, sir. Mr. HALLECK. And, of course, if the objective of the association is reached, insofar as the enactment of some railroad pension law is concerned, I take it that the continuation of your association will be a rather difficult matter? Mr. ROYSTER. We do not have any wish to continue this association, if that is what you are driving at; we do not have any wish to continue this association further than what its needs may be. Mr. HALLECK. Did I understand you to say that you did not represent any of the standard railroad brotherhoods? Mr. ROYSTER. I do not represent them. I am a member of one of those standard organizations. I am a member of the Brotherhood of Locomotive Engineers and have been for 33 years. Previous to that time I was a member of the Brotherhood of Locomotive Firemen. I am straight. Mr. HALLECK. Have you had any connection with any of the railroad brotherhoods other than that connection? Mr. ROYSTER. I related that I was chairman of Mr. HALLECK. I mean other than what you have testified to? Mr. HALLECK. Other than you have heretofore testified to? Mr. HALLECK. I think that is all. Mr. COLE. Mr. Chairman The CHAIRMAN. Mr. Cole. Mr. COLE. Mr. Royster, you supported the present law, did you not? Ma. ROYSTER. Yes, sir; we stood solidly behind it. Mr. COLE. You appeared before the committee? Mr. ROYSTER. We would like to see that present law stand with the good things that are in this law amended to it. That is what we would like to see, but we do not feel it is fair to the rank and file of the employees to crucify them by giving away those 11 points that have been enumerated. There is no need of it. This legislation can be had from the Congress-I feel that the Congress is willing, eager, would be glad to give us the benefit of this legislation. The CHAIRMAN. Thank you, Mr. Royster. We will hear from Mr. McAllister. STATEMENT OF FRANK E. MCALLISTER, COUNSEL FOR THEÈ RAILROAD EMPLOYEES' NATIONAL PENSION ASSOCIATION, CHICAGO, ILL. Mr. MCALLISTER. I appear here as counsel for the Railroad Employees' National Pension Association. Mr. BULWINKLE. How many members belong to this assocation? Mr. MCALLISTER. They run into the thousands, Congressman. I do not know just exactly what the membership is now. I have been associated with them for the last 2 or 3 months and I was their first counsel at the time the movement was initiated. Mr. Royster would be in a better position to answer that than I am. I take it from the sentiment that has been expressed around here that this committee is very much in favor of the passage of this act, and I appear as I would perhaps appear before a somewhat hostile jury, so I ask you, Mr. Chairman, and members of the committee, to bear with me while I call attention to the various phases of this act, which we are not in accord with. I do not want to be captious about it, but I do believe this act is open to the gravest criticism, and I believe more than that, that this committee and this chairman should not be awed by the fact that there is an agreement between the 21 standard railroad brotherhoods and the railroad executives of the class I railroads. In the last analysis, the men who are in the shops and on the engines and in the yards of the railroads are going to pass upon the fairness of this bill and they are going to express themselves in no uncertain terms. I am a veteran member of the Order of Railroad Telegraphers and I am not at all in accord with the stand taken by that organization in this particular. Mr. BULWINKLE. You do not mean that as a threat to the Members of Congress, do you? Mr. MCALLISTER. No, Your Honor; no indeed, Congressman. I am just simply saying that I hope that the committee will afford me a full hearing on that matter and give weight to what I have to say, because I do believe Mr. Harrison made the statement here the other day that they had to answer, answer to their constituency for their action here in their conventions, and I say that they will have to answer. There will be a response from this. These men are vitally concerned. The men working in the yards and shops and on the engines do not understand the intricacies of the legal verbiage and many of the provisions of this act, but they will understand them when it comes to a practical application of it. Mr. BOREN. You do not represent any of the railroad brotherhoods? Mr. MCALLISTER. No; not a one of them. But Mr. BOREN. I just wanted my specific question answered for the record. Mr. MCALLISTER. Now, with reference to this agreement as to not challenging the constitutionality of this act: I do not think that is worth very much. The fact that the class I railroads have agreed not to challenge the constitutionality of this act does not mean that it cannot be challenged by a small railroad, by a railroad employee who is not a union member, and objects to these deductions, or by a stockholder of a railroad who objects to the railroad deducting these payments, and it may even be brought up by any Federal judge who has a railroad under 77 who instructs his trustees, the trustees of that particular railroad. There are five or six in Chicago now which are not deducting these payments. The constitutionality will come up then, and it will go to the Supreme Court. I expect to see this legislation challenged in the courts. I think it will stand up. I think it is constitutional. Just last month the Supreme Court of the United States did a complete somersault in the minimum wage law and overruled the Adkins case and I defy any lawyer to find the distinction used in that case. They just simply overruled it. So far as the Social Security Act is concerned, I do not think we have to wait for a decision on that. Mr. MAPES. I do not care to discuss the Supreme Court issue here, but as long as you have referred to it, the Court in its opinion did make a distinction, did it not? Assuming that the members of the Court are lawyers, they have already made the distinction. Mr. MCALLISTER. Yes; they always extinguish the old case under the method of giving a distinction. Mr. MAPES. When you defy any lawyer to make a distinction, there are lawyers, quite eminent lawyers, who did. Mr. MCALLISTER. You have to search with a microscope to find it. Now, so far as the Social Security Act is concerned, I believe that this bill is unique in that railroading is unique. There is something more involved here than the mere social welfare of the cit |