Viewing page 55 of 200

This transcription has been completed. Contact us with corrections.

Captain Robert A. Stone - 2 September 14, 1948

It will be asked immediately whether or not the present form of legislation is the only conceivable kind which Congress might legislate. The answer to this question is "no". There are two other forms which legislation might take. The original Railroad Retirement Act was said to be based on the authority of the Congress to regulate interstate commerce. In a five-four decision the Supreme Court held that this regulatory power of Congress did not extend to the creation of pension and retirement systems and that, therefore, the original Railroad Retirement Act was invalid. That holding was in large part responsible for the form of the present legislation. Many lawyers feel that the Railroad Retirement Act decision of 1935, while never specifically over-ruled, is not now good law. I am myself of that view. However, the Congressional sponsors of social security legislation, at least up through the 60th Congress, have felt that the legal situation is less clear than it seems to me to be; and, in any event, they feel that no chances ought to be taken. In any event it is unreasonable to suppose that a regulation of commerce would be held valid if its operation were dependent on the voluntary action of those allegedly regulated. Even if the Congress were willing, there is no way in which its regulatory power could be used to permit voluntary coverage under a retirement plan.

In the original draft of the bill which became the Social Security Act, as introduced in the House of Representatives, there was a provision for the issuance of what were to be called "United States Annuity Bonds". This would have involved, in effect, the Federal Government's engaging in the business of selling annuities to those who chose to buy, an activity in which many governments (such as the Canadian) have in fact long engaged. In this proposal there was to be no effort to compel any one to purchase such annuities; a pilot alone, or with other pilots or air lines, could buy annuities when and in such amounts as they chose. This provision of the Social Security bill was vigorously opposed by the insurance companies and, as reported out by the Committee on Ways and Means in the House and passed by the House, the voluntary annuity provision was not included. 

The Senate Finance Committee, however, in reporting out the Social Security bill reinstated the provision for the sale of "United States Annuity Bonds" in substantially the same form that had been under Committee consideration in the House. In order that the provision might not be regarded as competitive with the insurance companies, there was a limit placed on the annuities which would be payable to any one person of $100 a month. Despite this limitation and despite the belief of the Finance Committee that insurance companies would not be adversely affected, Senator Augustine Lonergan of Hartford, Connecticut, moved an amendment to strike the whole voluntary annuity provision from the Social Security bill. The Senator stated in advocating his amendment: