about through elections; and if, during all those months, old-age pensioners bear the burden of the neglect of their administrative officers, then this provision in the law itself would defeat one of the main objectives of the law, namely, Federal aid for those aged persons needing assistance.

In the ordinary human relations and by the long-established principles of law a party is able to go into a court of equity and show that he has made the adverse party whole by doing that which he is legally required to do, and ask and secure relief in a court of equity from a forfeiture which the law may have imposed upon him by his violation of the adverse party's rights. He secures the benefit of the familiar equitable maxim, "Equity abhors a forfeiture," and of the equitable principle that equity will relieve against a forfeiture. In the construction of section 4, these principles should be available to the citizens of Ohio in securing relief from the harsh rule imposed by the Social Security Board in this matter. There is no loss to the United States, and Ohio has done what it is legally required to do by the Board. Under that principle Ohio should now be made whole by the restoration of the October grant.

The wrongdoing against which this forfeiture is invoked is not that of the citizens and the taxpayers of Ohio nor of the old-age pensioners of Ohio, but that of public officials over whom they had no immediate control. We submit that it is unfair to penalize Ohio citizens and taxpayers and Ohio old-age pensioners for derelictions of duty on the part of Ohio public officials, and especially so when they are not any more serious than charged against Ohio officials in this case.

We therefore respectfully contend and submit that under the liberal and equitable construction of the Social Security Act to which it is entitled a penalty and forfeiture in the amount of $1,338,160.92 should not be invoked against the citizens and the taxpayers of Ohio under the circumstances of this case; that, inasmuch as this payment cannot be obtained from the Social Security Board, the Congress should relieve Ohio from this penalty and restore the October grant for old-age assistance by enacting this bill.

Mr. ROPSION. Does the Board take the position that it legally withheld this payment?

Mr. CHASE. Yes.

Mr. CELLER. There is a sharp conflict. You say that the Social Security Board takes a wrong construction of section 4 of the Social Security Act. It has been pointed out to me that section 257 of the Judicial Code provides as follows (Judicial Code, sec. 151):

Reference of claims by Congress: Whenever any bill, except for a pension, is pending in either House of Congress providing for the payment of a claim against the United States, legal or equitable, or for a grant, gift, or bounty to any person, the House in which such bill is pending may, for the investigation and determination of facts, refer the same to the Court of Claims, which shall proceed with the same in accordance with such rules as it may adopt and report to such House the facts in the case and the amount, where the same can be liquidated, including any facts bearing upon the question whether there has been delay or laches in presenting such claim or applying for such grant, gift, or bounty, and any facts bearing upon the question whether the bar of any statute of limitation should be removed or which shall be claimed to excuse the claimant for not having resorted to any established legal remedy, together with such conclusions as shall be sufficient to inform Congress of the

nature and character of the demand, either as a claim, legal or equitable, or as a gratuity against the United States, and the amount, if any, legally or equitably due from the United States to the claimant. If it shall appear to the satisfaction of the court upon the facts established, that under existing laws or the provisions of this chapter, the subject matter of the bill is such that it has jurisdiction to render judgment or decree thereon, it shall proceed to do so, giving to either party such further opportunity for hearing as in its judgment justice shall require, and it shall report its proceedings therein to the House of Congress by which the same was referred to said court (March 3, 1887, c. 359, P. 14, 24 Stat. 507; June 25, 1910, c. 409, 36 Stat. 837; March 3, 1911, c. 231, p. 151, 36 Stat. 1138).

Could we not simply pass a resolution conferring upon the Court of Claims the right to hear and determine the facts in this case and have the court report back to us whether the Board was right in its construction of the law?

Mr. CHASE. We do not need any finding of facts. There is no dispute as to the facts.

Mr. BARNES. He assumes that the Board took the right position, but it is a hardship on the State of Ohio.

Mr. CELLER. He said that the Board's construction of section 4 is improper.

Mr. CHASE. Yes; there is a conflict there.

Mr. CELLER. We could confer upon the Court of Claims the right to determine that. If the court should report back to us that the State of Ohio is right, there would not be any question about the pending bill.

Mr. MICHENER. I do not believe that is the solution.

Mr. CELLER. I think there is something in this that should be considered. I think we should look to see whether there is a remedy.

Mr. CHASE. We are agreed as to the facts involved; but there is a difference of opinion as to how section 4 of the Social Security Act should be construed. If the Board is right in its legal construction of that section, we still contend that the Congress should relieve the State of Ohio from this forfeiture under a liberal and humane construction of the act and the purposes for which it was enacted.

Note the language in section 4. It says, in part, that

further payments will not be made to the State until the Board is satisfied that such prohibited requirement is no longer so imposed, and that there is no longer any such failure to comply.

Mr. ROBSION. Section 4, subsection 1, provides that if the Board finds, after reasonable notice and opportunity to be heard, that a State plan

has been so changed as to impose any age, residence, or citizenship requirement prohibited by section 2 (b), or that in the administration of the plan any such prohibited requirement is imposed, with the knowledge of such State agency, in a substantial number of cases

the Board shall notify such State agency that further payments will not be made to the State until the Board is satisfied that such prohibited requirement is no longer so imposed, and that there is no longer any such failure to comply. Has there been any change in the Ohio plan?

Mr. CHASE. NO. Our plan was approved August 19, 1938, March 31, 1936, and August 3, 1937.

Mr. ROBSION. Subsection 2 of section 4 provides that the Board shall, after reasonable notice and opportunity for hearing to the State agency administering or supervising the administration of such plan, notify such State agency that further payments will not be made to the State if in the administration of the plan there is a failure to comply substantially with any provision required by section 2 (a) to be included in the plan until the Board is satisfied that such prohibited requirement is no longer so imposed, and that there is no longer any such failure to comply. I do not think you failed to comply with subsection 2 of section 4.

Mr. CHASE. The Social Security Board claims we did.

Mr. MICHENER. The Board has discretion to determine this matter and it has concluded that you failed and has withheld your money for October 1938. There is no appeal to any court; therefore you must come to the Congress for relief.

Mr. CHASE. That is correct.

Mr. MICHENER. The question is whether this is the best remedy. Mr. CHASE. Yes. Since there is disagreement between the Board and the State as to the meaning of section 4, there is no place other than Congress to which we may go for relief.

The language of section 4, says, payments will not be made until the State complies, clearly indicating that upon compliance the suspended payments would be made. As I have said, we confidently submit that section 4 of the act was never intended to operate as a forfeiture against the noncomplying State. On the contrary, it was intended to be used as a club in enforcing compliance with the Board's regulations to the end that when compliance had been made payments during the period of suspension would be made.

Mr. CELLER. I think that provision was placed in the statute in order to compel compliance by the States.

Mr. CHASE. Yes; I agree with that.

Mr. CELLER. If a State should willfully refuse to comply, that would destroy the efficacy of the act. There must be some punitive power within the Board so that it may have a whip over the backs of the State.

Mr. CHASE. As I have said, it is our contention that section 4 was intended to be used as a club in enforcing compliance with the Board's regulation to the end that when compliance had been made payments during the period of suspension would be made.

Mr. CELLER. That is the question.

Mr. CHASE. You are going to have to agree with that or else say that the Congress intended to invoke a forfeiture in connection with a matter of administration.

Mr. CELLER. In this case the Board invited the State to come to a hearing of this matter, but the State refused the invitation and was not represented at the hearing. Does the State still refuse to comply with the requirements of the Board?

Mr. CHASE. No. The Board sent some of its agents there in November 1938, and they consulted the agents of the State of Ohio. The representatives of the Board returned to Washington and reported to the Board that the State of Ohio was going to make some corrections in its administration of the old-age-assistance program, and immediately thereafter payments to the State by the Board were

resumed.

Mr. CELLER. The fact that the Board paid the State in November indicates that the objectionable practice had been stopped.

Mr. CHASE. Yes. We lost only the payment for October.

The act provides, we say, that there shall be suspension of payment during a period of noncompliance; and it does not provide for a forfeiture.

Mr. MICHENER. I do not agree with that general philosophy. If that were true, it would be very easy near election time for a State to violate the rules and regulations of the Board and know there would not ultimately be any penalty. A State could do most anything just before election and a month after the election come to the Board, show compliance as of that time, and receive money.

Mr. CHASE. We cannot think that sensible persons would be actuated by such motives in connection with old-age assistance.

Mr. ROBSION. The Board charged political use of this money, did

it not?

Mr. CHASE. The complaints are set out in the Board's findings, which will, as I understand, be made a part of the record.

Mr. MICHENER. If that is established as a principle, a State could do anything it wished politically just before an election and immediately after the election come to the Board, show that objectionable practices had been discontinued and receive money.

Mr. CHASE. It looks perfectly plausible to me that when the idea is to benefit the aged, and the delinquencies were on the part of the State officials, over which the people of the State had no immediate control, and the objectionable practices have been discontinued, we are entitled to this money. To take another view, one must simply say, "You have fallen down; therefore, you must forfeit this grant that is intended for the old-age assistance."

Mr. MICHENER. By this type of law we are going to make the States see to it that they have the proper kind of officials and that they administer the law properly and not for political ends. We are not going to permit a State to do anything it likes in connection with this money, say, a month before an election, and then right after the election come in and get the money.

Mr. CHASE. If that is the intention of the Congress, my argument is wrong. I do not agree, though, that such is the intention of the Congress. There might be a bad administration in a State, to cure which it would take, say, a year. Would one say that during that whole time the State would not get any money?

Mr. ROBSION. According to that reasoning, one man in Ohio or Kentucky could deprive 100,000 persons of the old-age assistance. Mr. CHASE. That is true. The people could not turn out an unsatisfactory administration before election day.

Mr. ROBSION. By this power of withholding or forfeiting Federal grants to the States we put the States under the heel of the Federal Government.

Mr. CELLER. Very many States have asked for that.

Mr. ROBSION. Yes; my own State and several others have done that by asking for money from the Federal Government.

Mr. JENKINS. The Board indicates that this is a continuing proposition. It did at all times during October, following the September decision, do all it could to encourage the officials in Ohio to come in, comply with the Board's requirements, and receive this money. I

think the fiscal consideration is the obstacle in the way of the Board's doing what we ask. The Board does not have any money of its own. The Secretary of the United States Treasury is the treasurer.

Mr. CHASE. We should like to have an opportunity to file with the committee a brief covering this subject.

Mr. CELLER. You will be accorded that opportunity.

Mr. JENKINS. There are present several Members of Congress from Ohio, including Mr. Lewis, who has made a careful study of this matter and wishes to be heard.

STATEMENT OF HON. EARL R. LEWIS, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF OHIO

Mr. CELLER. We shall be glad to hear Mr. Lewis at this time. Mr. LEWIS. I should be at the outset like to cite a precedent for what we are asking. It is found in section 383, title 7, United States Code, act of the Sixty-fifth Congress, and it refers to a contribution. by the Federal Government to the State of Georgia. It says:

SEC. 383. Payment to Georgia Experiment Station authorized. The Secretary of Agriculture is hereby authorized and directed to certify to the Secretary of the Treasury for payment, and the Secretary of the Treasury is authorized and directed to pay all appropriations to the Georgia Experiment Station authorized by this chapter in accordance with the Act of the General Assembly of Georgia approved December 29, 1888, establishing the Georgia Experiment Station, and the Act of August 18, 1906 (Ga. Laws 1906, p. 1116): Provided, That nothing herein shall be construed as limiting the authority of the Secretary of Agriculture over and respecting the supervision of the operation of said Georgia Experiment Station as set forth in this chapter (October 1, 1938, ch. 178, 40 Stat. 998). The act indicates that there had been some sort of disagreement between the State of Georgia or the administrative officials of that State and the officials of the Federal Government in connection with a contribution by the Federal Government on account of the Georgia Experiment Station. The question of whether or not the State had forfeited its rights to this Federal assistance was acted upon. Mr. ROBSION. That is a special act, is it not?

Mr. LEWIS. Yes. I tried to run down the background of this subject and learn the nature of the dispute; but I have not been able to do that. I was referred to this precedent by the regislative reference bureau of the Library of Congress. The citation was given to me as a precedent for what we are asking.

Mr. CELLER. What was the amount involved?

Mr. LEWIS. It was substantial.

Mr. ROBSION. There is no question about the right of Congress to do this thing.

Mr. LEWIS. That is true. There is nothing in the Constitution that prevents it.

I do not know any case under the Social Security Act like the Ohio

case.

Mr. ROBSION. It was done in Oklahoma, was it not?

Mr. LEWIS. The money was withheld from the State of Oklahoma 45 days. At the end of that time the Board paid the money covering those 45 days and continued thereafter to make payments. In that case the State was alleged to have had ineligible persons on the oldage-pension rolls.