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Statement on the Disapproval of a Bill To Provide for the Establishment of a National Employment System.

March 08, 1931

[Released March 8, 1931. Dated March 7, 1931 ]

THE PRESIDENT stated today:

I have given earnest study to the so-called Wagner bill for improvement of public employment agencies, in an effort to find a method to make it of use in the present employment situation. I find upon study, however, that if I would prevent a serious blow to labor during this crisis, I should not approve the bill. I have repeatedly urged a proper extension of public employment agencies, but this bill, unfortunately, abolishes the whole of the present well-developed Federal Employment Service, and proposes after certain requirements are complied with, to set up an entirely new plan by subsidies to the States from the Federal Treasury. And even were there no other objections to the plan, it cannot be made effective for many months or even years. It is not only changing horses while crossing a stream but the other horse would not arrive for many months. This situation alone required that legislation be deferred, as it will not help in emergency but will do great damage.

"The fundamental questions involved also require more consideration. This bill proposes, as I have said, to destroy the Federal Employment Service in the Department of Labor, which has developed out of many years of experience, and to substitute for it 48 practically independent agencies, each under State control, the Federal Government paying for them as to 50 percent, and based not upon economic need of the particular State but upon mathematical ratio to population. On the other hand, the existing Federal Employment Service is today finding places of employment for men and women at the rate of 1,300,000 per annum. It cooperates and coordinates with the service already established by some 30 States. It applies its energies to interstate movements, and, being a mobile service, it concentrates upon the areas in need. Beyond this, however, the present Federal Service has special divisions devoted to the planting and harvest movement in agriculture and a special organization for veterans. There is no provision for the continuation of these two very important special services under the new plan, and the interstate quality of the Federal Service is destroyed. In any event, the bill required effective action by the legislatures and Governors of the various States at a minimum time requiring so long a period for its establishment as to be of no purpose in this emergency. And there is, therefore, ample time to consider the whole of the questions involved. There is no financial loss to labor in allowing this bill to lapse. While the bill provides for $1,500,000 expenditure over the next 15 or 16 months, one-half of it would be absorbed in relieving one-half the present expenditure of the States without any additional service on their part. On the other hand, the present Federal Service has available over the next 15 or 16 months nearly $1 million for the conduct of its agencies, which are being rapidly expanded through the emergency appropriations.

"I am asking the Secretary of Labor to cooperate with the various interested organizations to draft a plan for presentation to the next session of Congress which will avoid the difficulties presented by this bill.

"A more ample statement indicating the difficulties of the bill is given in the reports to me by the Secretary of Labor and the Attorney General, which are attached."

Note: Congress adjourned on March 3, 1931, making the President's action technically a pocket veto.

In his statement the President referred to a letter from the Attorney General, dated March 6, 1931, and a letter from the Secretary of Labor, dated March 7, 1931, which follow:
Dear Mr. President:

I have examined the provisions of S. 3060, the Act to provide for the establishment of a national employment system for cooperation with the States in the promotion of such system and for other purposes, which has not yet received your approval.

This examination made in conjunction with the Secretary of Labor has been for the purpose of ascertaining what the effect of this Act would be during the next year upon the efforts of the Department of Labor to relieve unemployment. The Labor Department now has an employment bureau which is rendering excellent service. Section One of this Act expressly provides:
"The Employment Service now existing in the Department of Labor is hereby abolished."

If this bill becomes a law, the present employment bureau would thus be immediately abolished and steps would then have to be taken under this Act to construct an entirely new employment service along new lines. It is obvious that months must elapse before substantial progress could be made in setting up the new service. The state authorities would have to be consulted, the action of state legislatures awaited, and when some progress had been made in setting up new agencies to aid the unemployed, the restrictive provisions of this Act such as that for apportionment of funds, would deprive the system of flexibility and hamper efficient action in the present emergency.

Without attempting here to analyze in detail all the complicated provisions of this Act, it is obvious that by its terms it would have the effect at this time when labor is in greatest need of assistance, of destroying the employment service now being maintained in the Department of Labor and making it impossible for months to come to replace it with a working organization.
Respectfully yours,
WILLIAM D. MITCHELL
Attorney General

[The President, The White House]

My dear Mr. President:

I have to submit to you my recommendation that you should not sign Senate Bill 3060, the so-called Wagner Bill.

As you can imagine, I have all my life most urgently advocated the maintenance and development of national employment services. This bill seeks to destroy the present Federal Employment Service by substituting Federal subsidies to the forty-eight States for conduct of separate agencies based upon population, not upon need. It destroys the interstate phase of service to labor movement, submits labor to the idiosyncrasies of state politics and gains nothing to the worker. Of the utmost immediate importance, its first provision is the abolition of the Federal Employment Service, which Service has been built up over years and out of great experience.

In the midst of our emergency we are to be compelled to abandon this vital help to labor and the new system, rounded upon an old plan of State subsidies, could not be substituted for many months and even years. It would destroy the interstate character of the Federal service, which is vital to employment and which is essentially a Federal function, and would set up these forty-eight independent employment services with no practical method of effective control.
In amplification I may say:

(1) The idea in this bill is not new. It has been proposed and rejected at different times over many years. Hearings were held on the subject in the Sixty-sixth Congress by Joint Committee of both houses, and this plan was completely abandoned. Notwithstanding statements to the contrary, the principles on which the present bill are based are directly contrary to the recommendations of the Employment Conference of 1921 of which you were Chairman. Its details likewise antagonize the conclusions of the Senate Committee on Education and Labor of February, 1929. This bill was passed by the Senate in May, 1930. The House took no action upon it until recently. Upon my accepting this office, you requested that I should take up the matter and endeavor to find a practical basis for strengthening of the Federal Employment Service, and you authorized an increase in appropriations therefor. After persistent negotiation I was unable to secure such amendment to this bill as would make it practicable, and a substitute measure was prepared by the Department of Labor and submitted to the Judiciary Committee of the House, and was approved last month. This substitute was predicated upon a decade of experience of the Department, and proposed to strengthen our present flexible interstate system, which stimulates cooperation with the States, permits freedom of action to meet local and regional need. In the proposal which I made we especially undertook to serve in the so-called technological unemployment. We have an emergency appropriation of $500,000 for our present Service, which would be lost if this bill becomes a law.

(2) As I have said, by the first paragraph of the pending measure the present Employment Service is abolished. Therefore, should this bill become a law the government, now in the midst of a serious emergency in unemployment, is faced with the destruction of all the practical machinery it has set up in the past decade and which is now functioning and the Labor Department is compelled to abandon duties of the utmost importance to labor of the United States. It would take months and even years to work out the cumbersome plans proposed by this measure, with all of its detail of submission to the respective States for rejection or adoption. I will not go into the complicated details by which the system was proposed to be worked out, but even if workable it involves enormous delay when agencies tested by experience are of the utmost value. The present Federal Service in the past twelve months, in cooperation with State agencies, has placed over 1,300,000 persons in employment. In addition to its general functions, it contains two special functions, that is, nation-wide service to agriculture and nation-wide service to veterans. Both of these special services are totally abolished by the bill and no provision is made for their continuation. During the past year 700,000 farm laborers have been found employment, largely in inter-state movement, and many scores of thousands of veterans have been placed in profitable work. I wish to emphasize that both of these special services will end under this bill. I cannot approve a measure which proposes to scrap these agencies.

(3) The present Federal Employment Service is rounded upon the idea of coordination with State and local employment agencies and especially for purposes of aid in which may be termed interstate placements. The President's Conference on Unemployment and the report made by the Senate Committee on Education and Labor on February 25, 1929, emphasized this important interstate function. This primary Federal function is destroyed under this bill. This bill, as I have said, seeks to set up by substitute forty-eight separate organizations in the United States, based not upon need but upon population, with no definite authority of control by the Federal government and no function of interstate movement of labor. Railway and other interstate public services have always presented especial difficulties to State employment agencies. It is well known that some of the railroads and labor organizations have been forced to maintain their own bureaus because of the interstate problems involved. No interstate service would be possible under the set-up proposed in this bill.

(4) The pending measure is so framed that there can be no definite certainty whether it would ever come into complete operation. With the present Service abolished, if by the end of June, 1933, some of the States were unable or unwilling to appropriate funds or to cooperate as this measure requires, then there would be no service in those States or no interstate movement to and from those States.

(5) There are a great many other objections to this bill. The whole question of Federal subsidy to State governments is subject to the great question as in same States it would be used to set up agencies, given over largely to politics. In others the Federal appropriations would be used merely to relieve the State of one-half its present expenditure, with no increase in services. There is no provision to guarantee the character of State employees who would be partly paid by Federal funds. There can be no basis in our form of government for the Federal Government to force State legislative policies, such as this bill might imply. The measure provides for the establishment of forty-nine advisory councils, which means the widest variety of opinion and the maintenance of permanent friction, dispute and interference with administration. It would be difficult to devise a better plan to defeat the unification of employment policy.

The measure lacks that practical flexibility essential for a function of this character. Unemployment is not a factor of population as this bill purports. It is a factor of industry and the economic situation of the times and the variation of the economic ebb and flow. To unite successfully men with jobs, effort must be timed to actual employment conditions. This bill simply sets up forty-eight separate-establishments with no respect to the problems of the times.
In conclusion:

I cannot in the interest of the working people of the United States give my approval to a proposal which, while abolishing the tested machinery of a decade of service, leaves the government at a critical moment without any practical instrumentality to carry forward its necessary services. The existing Employment Service is fortunately in possession of funds with which to carry forward the work in which it has been efficiently engaged and which assure that the interest of the wage-earners will be protected.

Nor can I conclude without again emphasizing that this is not in essence emergency legislation. On the contrary, if it would be made workable at all, it would require a long period for coordination and establishment. Far from assuring the cooperation of the States in the development of a public employment system, as the title of this measure suggests, it destroys all existing cooperation and makes the future development of any substitute system dependent upon acceptance or rejection of the provisions of the bill by forty-eight separate States. I cannot, therefore, give my approval to a proposal which, while ostensibly in the interest of labor, would, practically, and directly operate to the immediate injury of the wage-earner.

As it serves no emergency purpose and in fact destroys our emergency action, it is in the interest of labor that carefully and constructively formulated legislation should be undertaken rather than to approve this measure. Furthermore, there is nothing in the present set-up of the United States Employment Service which would prohibit any of the States appropriating any money they may see fit in carrying forward employment work within the States and in cooperation with the Federal Government.
Faithfully yours,
W. N. DOAK

[The President, The White House]

Herbert Hoover, Statement on the Disapproval of a Bill To Provide for the Establishment of a National Employment System. Online by Gerhard Peters and John T. Woolley, The American Presidency Project https://www.presidency.ucsb.edu/node/207461

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