Letter to Congressman Robert L. Doughton on Unemployment Insurance.

Dear Mr. Congressman:

I have received your inquiry about my opinion on H. R. 7659, a bill levying a Federal excise tax upon large employers, but allowing them to deduct from their tax amounts contributed pursuant to unemployment insurance laws that have been or may be passed by the several States.

I need not tell you that for a long time I have advocated unemployment insurance as an essential part of our program to build a more ample and secure life. The loss of a job brings discouragement and privation to the individual worker and his family. If an insurance or reserve fund has been accumulated, even a small payment from it at such a critical time will tide over the worker and keep up his morale and purchasing power.

The benefits of such a system will not be limited to the individual, however, but will extend throughout our social and financial fabric. We have in the past relied almost entirely upon private charities and public treasuries to sustain the costs of seasonal and intermittent unemployment. This is a practice that necessity will compel us to change to a very substantial degree. There is no reason why they should assume the entire burden of meeting a foreseeable loss, the major cost of which ought to be computed and borne like every other cost of a business.

Of course, unemployment insurance alone will not make unnecessary all relief for all people out of work for the entire period of a major economic depression, but it is my confident belief that such funds will, by maintaining the purchasing power of those temporarily out of work, act as a stabilizing device in our economic structure and as a method of retarding the rapid downward spiral curve and the onset of severe economic crises.

I am interested to see that the bill before your committee seeks to promote unemployment insurance under State rather than national laws. This is an approach with which I agree, and which fulfills the promise of the Democratic Platform for 1932 to favor "unemployment insurance under State laws." The States are peculiarly equipped to administer legislation of this type, and the recent efforts of this Administration in such a closely allied field as the creation of public employment offices have been along this line.

The bill has another advantage in establishing a suitable relation of the national Government to unemployment insurance. Under our system of government the task of caring for the unemployed falls primarily on the States. If a State cannot bear the burden, the United States must be prepared to do so and to collect 'revenue for that purpose. That is why this bill is properly considered a revenue measure. But if a State, by requiring local industries to contribute to unemployment reserves, has cared for its needy and avoided a strain upon the Federal Treasury, such contributions ought to be deductible from Federal taxes.

The general principles of H. R. 7659 seem to me sound, and the effect sought a necessary one for recovery and prevention of future economic crises; and I hope that the bill will be passed by the Congress at this session.

Sincerely yours,

Hon. Robert L. Doughton,

Chairman,

Committee on Ways and Means,

Washington, D. C.