m Cornell University Library JK 791.A5 1919a Retirement of civil service employees H^ 3 1924 002 407 942 JIC U. S. Congress; Senate. Committee orvCiVil 791 Service and Retrenchment, ' v, A5 ^^. Retirement of civil service employees. ^s 1919^..;-^ /9/9v the Senate and House of Representatives of the United States of Aiiiciica in Conf/ress assembled, Thai beginning at the expiration of ninety days next following the passage and approval of this act, all employees in, the classified civil service of the United States who have on that date, or shall have on any date thei'eafter, readied the a,Ke of sixty-live years and rendered at least fifteen years of service computed as prescribed in section ,3 of this act, shall be eligible for retirement on an annuity as provided in section 2 hereof: Pro- vided, That mechanics, city and rural letter carriers, and post-office clerks shall he eligible for retirement at 62 years of age, and railway postal clerks at 60 years of age. The provisions of this act shall include employees of the Library of Congress and the Botanic Gai'deiis, excepting persons appointed by the President and confirmed l)y the Senate, and may be extended by Executive order, upon recom- mendation of the Civil Service Conunissiou, to include any employee or group of employees in the civil service of the United States not classitted at the time of the passage of this act. The President shall have power, in his discretion, to exclude from the operation of this act any employee or group of employees in the classified civil service whose tenure of office or employment is intermittent or of uncertain duration. All regular annual employees of the municipal government of the District of Columbia, appointed directly by the commissioners, including those receiving per diem compensation paid out of general appropriations, but whose services are continuous, and including public-school employees, excepting school officers and teachers, shall be included in the provisions of this act, but members of the police and fii-e departments shall be excluded therefrom. Postmaster, and such employees of the Lighthouse Service as come within the provisions of section 6 of the act of June 20, 1918, entitled, "An act to authorize aids to navigation and for other works in the Lighthouse Service, and for other purposes," shall not be included in the provisions of this act. Sec 2. That for the purpose of determining the amount of annuity which retired employees shall receive, the following classifications and rates shall be established : ■ Class A shall include all employees to whom this act applies who shall have served the United States for a total period of thirty years or more. The annuity to a retired employee in this class shall equal 60 per centum of such 3 4 EETIREMBNT OF CIVIL SERVICE EMPLOYEES. employee's average annual basic salary, pay, or compensation from the United States for the ten years next preceding the date on which he or she shall retire : Provided, That in no case shall an apnuity in this class exceed $720 per annum or be less than $360 per annum. Class B shall include all employees to whom this act applies who shall have served the United States for a total period of twenty-seven years or more, but less than thirty years. The annuity to a retired employee in this class shall equal 54 per cetnum of such employee's annual basic salary, pay, or compen- sation from the United States for the ten years next preceding the date on which he or she shall retire : Provided, That in no case shall an annuity in this class exceed $648 per annum, or be less than $324 per annum. Class C shall include all employees to whom this act applies who shall have served the United States for a total period of twenty-four years or more, but less than twenty-seven years. The annuity to a retired employee in this class shall equal 48 per centum of such employee's average annual basic salary, pay, or compensation from the United States for ten years next preceding the date on which he or she shall retire : Provided, That in no case shall an annuity in this class exceed $576 per annum or be less than $288 per annum. Class p shall include all employees to whom this act applies who shall have sei-ved the United States for a total period of twenty-one years or more, but less than twenty-fou,r years. The annuity to a retired employee in this class shall equal 42 per centum of such employee's average annual basic salary, pay, or compensation from the United States for the ten years next preceding the date on which he or she shall retire : Provided, That in no case shall an annuity in this class exceed $504 per annum or be less than $252 per annum. Class E shall include all employees to whom this act applies who shall have served the United States for a total period of eighteen years or more, but less than twenty-one years. The annuity to a retired employee in this class shall equal 36 per centum of such employee's average annual basic salary, pay, or compensation from the United States for the ten years next preceding the date on which he or she Sha:ll retire : Provided, That in no case shall an anpuity in this class exceed $432 per annum or be less than $216 per annum. Class F shall Include all employees to whom this act applies who shall have served the United States for a total period of fifteen years or more, but less than eighteen years. The annuity to a retired employee in this class shall equal 30 per centum of such employee's average annual basic salary, pay, or compensation from the United States for the ten years next preceding the date on which he or she shall retire ■.'Proridfyl', That in no case shall an annuity in this class exceed $360 per aniiuni' or be less than $180 per annum. The term " basic salary, pay, or compensation " wherever used in this act shall be so construed as tb e#61ud^ from the operation of the act all bonuses, allowances, overtime pay, or ■SEtlarj'-, tjay, or compensation given in addition to the base pay of the positions fis fixed' bS'' law or regulation. Sec. 3; That for the ^tirpdseg of this act and subject to the provisions of section 10 hereof, the peribd- of service' shall be computed from the date of original employment, whethief as a clas.n until examined by a medical officer of the United States or a duly qualified physician or surgeon or board of physi- cians or surgeons designated by the Commissioner of Pensions for that purpose and found to be disabled in the degree and in the manner .specified herein. Every annuitant retired under the provisions of this section, unless the dis- ability -for which retired is permanent in character, shall, at the expiration of one year from the date of such retirement and annually thereafter until reach- ing the retirement age as defined in section 1 liereof, be examined under direc- tion of the Commissioner of Pensions by a medical officer of the United States, or a duly qualified physician or surgeon or board of physicians or surgeons des- ignated by the Commissioner of Pensions for that purpose, in order to ascertain the nature and degree of the annuitant's disability, if any ; if the annuitant re- covers and is restored to his or her former earning capacity before reaching the retirement age, jiaynient of the annuity- sliall be discontinued from the date of the medical examination showing such recovery ; if the annuitant fails to appear for examination as required under this section, payment of the iinuuity shall be suspended until continuance of the disability has been satisfactorily established. The Couimissioer of Pensions is hereby autliorized to order or direct at any time such medical or othei- examination as he shall deem necessary to determine the facts relative to the nature and degree of disability of any employee retired on an annuity under this section. Fees for examinations made under the provisions of this section by physicians or surgeons who are not medical officers of the United States shall be fixed by the Commissioner of Pensions, and such fees, together with the employee's rea- sonable traveling and other expenses incurred in order to submit to such ex- aminations, shall be paid out of the appropriations for the cost of administering this act. In all cases where the annuity is discontinued under the provisions of this section before the annuitant has received a sum equal to the total amount of his or her contributions with accrued Interest, the difference shall be paid to the retired employee, or to his or her estate, upon application therefor in such form and manner as the Commissioner of Pensions may direct. No person shall be entitled to receive an annuity under the provisions of this act, and compensation under the provisions of the act of September 7, 1916, en- titled "An act to provide compensation for employees of the United States suf- fering injuries while in the performance of their duties, and for other pur- poses," covering the same period of time ; but this provision shall not be so con- strued as to bar the right of any claimant to the greater benefit conferred by either act for any part of the same period of time. Sec. 6. That nil employees to whom this act applies shall, upon the expira- tion of ninety days next succeeding its passage, if of retirement age, or there- after on arriving at retirement age as defined in section 1 hereof, be auto- matically separated from the service, and all salary, pay, or compensation shall cease from that date, and it shall be the duty of the head of each department, branch, or independent office of the Government to notify such employees under his direction of the date of such separation from the service at least sixty days in advance thereof; Provided, That if within sixty days after the passage of this act or not less than thirty days before the arrival of an employee at the age of retirement, the head of the department, branch, or independent office of the Government in which he or she is employed certifies to the Civil Service (Commission that by reason of his or her efiaciency and willingness to remain in the civil service of the United States the continuance of such employee therein would be advantageous to the public service, such employee may be retained for 6 RETIREMENT OF CIVIL SERVICE EMPLOYEES. a term not exceeding two years upon certification by tlie Oivil Service Coinniis- siou, and at tlie end ol tlie two years lie or slie may, by similar certification, be conrlnued for an additional term not exceeding- two years, and so on : 1 rovtaert, however. That at the end of ten years after this act becomes effective no em- ployee shall be continued in the civil service of the United States beyond the age of retirenwnt defined in section 1 hert^of for more than four years. Sec. 7. That every employee who is or hereafter becomes eligible for retire- ment because of age as provided in this act shall, within sixty days after its passage or thirtv days before reaching the retirement age. or at any time there- after, file with the Commissioner of Pensions, in such form as he may prescribe, an application for an annuity, supported by a certificate from the head of the department, branch, or independent office of the Government in which the ap- plicant has been employed, stating the age and period or periods of service of the applicant and salary, pay, or compensation received during such periods, as shown by the official records : Provided, lioirrrcr. That in the case of an employee who is'to be continued in the civil service of the United States beyond the_retii-e- ment age as provided in section 6 hereof, he or she may make application for retirement at any time within such period of continuance in the service; but nothing contained in this act shall be construed to prevet the compulsory retire- ^ inent of such employee when in the .iudgment of the head of the department, branch, or independent office in which he or she is employed such retirement would promote the best interests of the service. Upon receipt of satisfactory evidence the Commissioner of I'ensions shall forthwith adjudicate the claim of the applicant, and if title to annuity be estab- lished, a proper certificate shall be issued to the annuitant under the seal of the Department of the Interior. Annuities granted under this act for retirement on account of age shall com- mence from the date of termination of pay fur active service on or after the date of this act shall take efCect, and shall continue during the life of the annuitant. Annuities granted for disability under the provisions of section 5 hereof shall be subject to the limitations specified in said section. Sec. 8. That beginning on the first diiy of the third month next following the ]iassage of this act and monthly thereafter there shall be deducted and withheld from the basic salary, pay, or compensation of each employee to whom this act applies a sum equal to 2+ per centum of such employee's basic salary, pay, or compensation. The Secretary of the Treasury shall cause the said deductions to be withheld from all specific appropriations for the particular salaries or compensation from which the deductions are made and from all allotments out of lump-sum appropriations for payments of such salaries or compensation for each fiscal year, and said sums shall be transferred on the books of the Treasury De- partment to the credit of a special fund to be known as " the civil-service retire- ment and disability fund," and said fund is hereby appropriated for the payment of annuities, refunds, and allowances as provided in this act. The Secretary of the Treasury is liereby directed to invest from time to time, in interest-bearing securities of the United States, such portions of the " civil- service retirement and disability fund " hereby created as in his judgment may not be immediately required for the payment of annuities, refunds, and allow- ances as herein provided, and the income derived from such investments shall constitute a part of said fund for the purpose of carrying out the provisions of section 11 of this act. The Secretary of the Treasury is hereby authorized and empowered in carry- ing out the provisions of this act to supplement the individual contributions of employees -with moneys received in the form of donations, gifts, legacies, be- quests, or otherwise, and to receive, invest, and disburse for the purposes of this act all moneys which may be contributed by private individuals or cor- porations or organizations for the benefit of civil-service employees generally or any special class of employees. Sec. 9. That every employee coming within the provisions of this act shall be deemed to consent and agree to the deductions from salary, pay, or compensa- tion as provided in section 8 hereof, and payment less such "deductions shall be a full and complete discharge and acquittance of all claims and demands whatso- ever for all regular services rendered by such employee during the period covered by such payment, except the right to the benefits to which he or she shall be entitled under the provisions of this act, notwithstanding the provisions of sec- tions 167, 168, and 169 of the Revised Statutes of the United States, and of any other law, rule, or regulation affecting the salary, pay, or compensation of any person or persons employed in the civil service to whom this act applies. RETIREMENT OF CIVIL SERVICE EMPLOYEES. 7 Sec. 10. That upon the transfer of any employee from an unclassified to a classified status, or upon the reinstatement of a former employee, credit for past service rendered subsequent to the date of this act shall take effect, or for any part thereof, shall be granted only upon deposit with the Treasurer of the United States of the amount of such deductions with interest as provided in this act as would have been made for the periods of actual service, or part ■ thereof, for which credit is to be given, but such interest shall not be computed for periods of separation from the service : Provided, That failure to make such deposit shall not deprive the employee of credit for any past service rendered prior to the date of this act shall become operative, and to which he or she would otherwise be entitled. Sec. 11. Tliat in the case of an employee in the classified civil service of the United States who shall be transferred to an unclassified position, and in the case of any employee to whom this act applies who shall become absolutely separated from the service before reaching the retiring age, the total amount of deductions of salary, pay, or compensation with accrued interest computed at the rate of 4 per centum per annum, compounded on June 30 of each fiscal year, shall, upon application, be returned to such employee ; and in case an annuitant shall die without having received in annunities an amount equal to the total amount of the deductions from his or her salary, pay, or compensation, together with interest thereon at 4 per centum per annum compounded as herein provided up to the time of his or her death, the excess of the said accumulated deductions over the said annuity payments shall be paid in one sum to his or her legal representatives upon the establishment of a valid claim therefor ; and in case an employee shall die without having reached the retirement age, or without having established a valid claim for annuity, the total amount of deductions with ac- crued interest as herein provided shall be paid to the legal representatives of such employee. Sec. 12. That annuities granted under the terms of this act shall be due and payable monthly on the first business day of the month following the month or other period for which the annuity shall have accrued, and payment of all annuities, refunds, and allowances granted hereunder shall be made by checks drawn and issued by the disbursing clerk for the payment of pensions in such form and manner and with such safeguards as shall be prescribed by the Secretary of the Interior in accordance with the laws, rules, and regulations governing accounting that may be found applicable to such payments. Sec. 13. That it shall lie the duty of the head of each executive department and the head of each independent establishment of the Government not within the jurisdiction of any executive department to report to the Civil Service Commission in such manner as said commission may prescribe, the name and grade of each employee to whom this act applies in or under said department or establishment who shall be at any time in a nonpay status, showing the dates such employee was in a nonpay status, and the amount of salary, pay, or compensation lost bv the employee by reason of such absence. The Civil Service Commission shall keep a record of appointments, transfers, changes in grade, separations from the service, reinstatements, loss of pay, and such other information concerning individual service as may be deemed essential to a proper determination of rights under this act, and shall furnish the Commissioner of Pensions such reports therefrom as he shall from time to time request as necessary to the proper adjustment of any claim hereunder, and shall prepare and keep all needful tables and records required for carrying out the provisions of this act, including data showing the mortality experience of the employees in the service and the percentage of withdrawal from such service and any other information that may serve as a guide for future valuations and adjustments of the plan for the retirement of employees under this set The Commissioner of Pensions shall make a detailed comparative report annually showing all receipts and disbursements on account of refunds, allow- ances, and annuities, together with the total number of persons receiving annuities and the amounts paid them. , . ,^. ^ , -,, u .ci„.,ov.io Sec 14 That none of the moneys mentioned m this act shall be assignable, either in' law or equity, or be subject to execution, levy, or attachment, garnishment, or other legal process. . ^ u Sec 15 That for the fiscal year ending June 30, 1920, there is hereby authorized to be appropriated, from any moneys in the Treasury not otherwise appropriated, the sum of $100,000 for salaries and for clerical and other services the purchase of books, office equipment, stationery, and other supplies. 8 KETIREMBNT OF CIVIL SERVICE EMPLOYEES. and all other expenses necessary in carrying out the provisions of this act, Including traveling expenses and expenses of medical and other examinations as provided in section 5 hereof. The Secretary of the Interior shall submit annually to the Secretary _ot the Treasury estimates of the appropriations necessary to continue this act in tuU force and effect. .^, i^. 4. Sec. 16. That all laws and parts of laws inconsistent vi^ith this act are hereby repealed. The Chairman. The committee will be in order. I call attention to the fact that three bills have been introduced m the Sen- ate and referred to this committee on this subject, Senate bill 63, introduced by Senator McKellar, Senate bill 731, introduced by, Senator Pomerene, and Senate bill 1699 introduced by myself. Senate bill 1699 is a bill which has been prepared for the most part, at least, by or at the instance of a committee of civil-service employees appointed for that purpose, and it is the same as House bill 3149, introduced in the House by Congressman Lehlbach. The House Committee on Civil Service have been considering the Lehl- bach bill, and as I understand finished its hearings yesterday. Since the Lehlbach bill has been considered by the House commit- tee and has been the basis of the action of that committee, I think we will consider Senate bill 1699 as the basis of our work here. Before proceeding with oral testimony or statements, I submit for the record a letter received several days ago from Mr. F. D. Bying- ton, chief clerk of the Bureau of Pensions, bearing on different phases of the subject of civil-service retirement. I will not take the time to read the letter now, but it may be placed in the record. (The letter referred to is here printed in full in the record as follows:) Dbpabtment of the Interiok, BuEEAtr of Pensions, Washington, June 5, 1919. Hon. Thomas Stbklikg, United States Senate, Washington, D. C. My Deak Senatoe : Knowing your Interest in the subject of retirement for civil employees of the Government, I venture to submit to you herewith certain suggestions for provisions which in my judgment should be embodied In retirement legislation. Compulsory retirement. — Ketirement should be compulsory on reaching the age of 74 years, or, regardless of age. whenever it shall have been determined, after due medical examination, that an employee is permanently and totally disabled ; that is, suffering from n permanent disability which totally unfits him from the performance of official duties. It is believed safe to assume that in the majority of cases a person who has reached the age of 74 years is not capable of rendering reasonably ade- quate and efficient service, and in that event it is a real detriment to the efficiency of Government woi-k as well as an injustice to younger employees to retain such a person in a position which can be filled far more acceptably by a younger clerk, who is in most instances at least receiving less pay. I believe that under tlie conditions stated the rule should be rigid and not provide for exceptions. If any exceptions were permitted, it is probable that great pressure vs^ould be brought to bear upon administrative offlcers through political influence or otherwise to have the time for retirement ex- tended. The inevitable result would be that the employee without influence, political or personal, would have to go while the others might be retained, and thus the purpose of the law would, to a considerable extent be defeated. Retirement on account of disability should only be ordered after competent medical examination, in order to protect the rights of the employee and prevent his compulsory retirement on this alleged ground through prejudice or hostility toward him. In this connection it should be borne in mind that a person, through physical infirmity of some sort, might be totally unfitted for the par- RETIREMENT OP CIVIL SERVICE EMPLOYEES. 9 ticHlai- duties of a position lield by iiim at a given time, and yet not unfitted lor the performance of otlier duties wliich it might be possible to assign to him. Tor example, one might have some disability such as rheumatism or lameness, which would render him unfit for messenger service or any active work, and at the same time be wholly competent to work at a desk. Voluntary retirement. — Provision should be made for voluntary retirement ■on attaining the age of 6.5 years, or after 30 years' service. Such action should be taken, first of all, in the interest of the Government. There are doubtless a considerable number who would take advantage of the -opportunity to retire with the assurance of a fair annuity, and their places -could be filled by younger and more active clerks, which would go a long way toward solving the problem of superannuation. This plan would also make .iust provision for employees who had reached an advanced age or had rendered many years of faithful service to the Govern- ment. It would also extend the opportunity to recognize merit by promotion to higher grades of clerks who have demonstrated their fitness but who have been denied proper recognition because, under present conditions, promotions must generally await the creation of vacancies by the death or resignation of those higher up. Annuity. — While I do not offer any suggestions as to the actual maximum and minimum amounts, I do believe that a fair basis for computing the annuity would be the average annual compensation during the entire period of Govern- ment service rather than the average for the last 5 or 10 years of service. Many clerks who have rendered faithful and efficient service have suffered a reduction in salary during the last 5 or 10 years of their service on account of impaired efficiency due to advancing age. In any event the whole period of service should be taken into account and not merely the latter part of it. If a fund for retirement is to be provided by compulsory contributions, I "believe they should not exceed 21 per cent of the annual salary. I have been in the Government employ for 25 years as a clerk in the different grades and as chief clerk of this bureau for 6 years, and it is my decided opinion that an employee can give the best and most effective service between the ages of 18 and 65 years, and I believe that conditions should gradually be adjusted so that ultimately these ages could be adopted as the maximum and minimum. Sincerely, yours, F. D. Byington, Chief Clerk. The Chairman. Mr. Alcorn, I think perhaps you know the order in which the witnesses should be heard, and if you will give the names, we will hear them. Mr. Alcorn. Mr. Chairman and gentlemen of the committee, we are here in the interests of the chairman's bill, S. 1699, which is the bill indorsed by the joint conference committee on civil-service reform. This bill, as you know. Senator, has the almost unanimous indorse- ment of the conference committee representing the civil service of the United States. After many months of meetings and conferences on the subject, going into every phase of the question, we tried to he consistent in every respect, both for the Welfare of the Govern- ment and of the employees, thereby agreeing on the terms as out- Jined in your bill. At this time, Mr. Chairman, we would like to have heard Mr. Saltz- g'aber, Commissioner of Pensions, as to the merits of the bill. The Chairman. The committee will be glad to hear Mr. Saltz- g'aber. STATEMENT OF ME. GAYLORD M. SALTZGABER, COMMISSIONER OF PENSIONS. Mr. Saltzgaber. Am I expected, Mr. Chairman, to make a gen- eral statement, or to answer such inquiries as the committee chooses to make? 10 RETIEEMENT OF CIVIL SERVICE EMPLOYEES. The Chairman. I think the committee rather expects a general statement and discussion from you as to the merits of civil-service retirement, and of this bill particularly. Dr. Jordan. And as to the need of it. The Chairman. And tlie committee may want to follow your state- ment up with some questions. Mr. Saltzgaber. I just received your communication before noon^ Mr. Chairman, so that very recently I have not given much con- sideration to the subject, especially after reading the bill which bears, your name. My convictions have existed for a long time that it is to the inter- ests of the Government and of tlie employees, as well as economic and humane, that a bill like this should be enacted into law. I pre- sume that in the Pension Bureau we have the most conspicuous ex- ample of the need of such legislation. We have a great many clerks who have served the Government for a long period of time, some of them over 50 years, and they have reached an old age at which they are no longer efficient, some of them; and yet Congress does not. require it, and we do not turn them out of employment. They are still carried on the roll, but practically they are of very little, if any, bene- fit to the Government by way of service that they render. Senator Colt. If they were placed on a retirement list in accord- ance with this act it would be a matter of economy to the Govern- ment ? Mr. Saltzgaber. It would be a matter of economy. It can be dem- onstrated by figures, so far as those in the Pension Bureau are con- cerned. If half of those who are inefficient were allowed to go, as they should be allowed to go, under a retirement law, the saving of the Government would be very large. The Chairman. I suppose, Mr. Commissioner, a good many em- ployees in your bureau are old soldiers, are they not— soldiers of the Civil War? Mr. Saltzgaber. We have about 90 of those who served in the Civil War out of about 878, which is, I believe, the total number on our roll now. The Chairman. How many employees, all told, have you in the Pension Bureau ? Mr. Saltzgaber. The present roll, I think, is 878. I will tell you that exactly in a moment. [After consulting memorandum.] Yes, sir ; it is 878 actually serving. I would say that of that number 29 employees are over 80 years of age. Eighty-two are between 75 and 79 ; 104 are 74 years of age ; 88 are between 65 and 69. That makes a total of 303 who are over 65 years of aoe. Senator Ball. What is the total number that you have employed? Mr. Saltzgaber. Eight hundred and seventy-eight. That makes about 37 per cent that are really inefficient. Of that number I be- lieve they have figured that exactly 295 would be eligible for pension. Under the statute, 3890, section 4, we are required to report everv year the number below " fair," and last year we reported 23. Really, there are more than that number. The Chairman. That is, below " fair " in efficiency ? Mr. Saltzgaber. Yes, sir. But we were never required to do any- thing with them, no matter how poor and inefficient they mav be EETIREMENT OF CIVIL SERVICE EMPLOYEES. li SO that they are still continuing on the roll. There are 50, I would say, whose services are of no use, practically. We have them engaged ■in some light work, but the Government as an employer would sav that their service was not of value. Senator Bau.. Are they accurate in the work they do ? Mr. Saltzgaber. The work we confide to their care, of course, we are yeiy careful about. There are 150 of the total number that are of httle use. That is to say, if this law was adopted, they would be eligible to receive the benefits of it, and it would be in the interests of the Government to see that such provision was made, and instead of paying them the salaries they now receive they Avould be paid a much less amount under the retirement law. The Chairman. Much less would be paid to them as an annuity under the retirement law than they are now receiving? Mr. Saltzgaber. Yes. Senator Capper. That is entirely agreeable to all the employees, is it? Mr. Saltzgaber. No ; I think not. I have heard, not directly but indirectly, some expression from some of the employees to the effect that even if this law were passed they would not avail themselves of the privilege. My own opinion is that the law ought to be made compulsory, after a certain age, because probably the least worthy would be unwilling to go. The Chairman. You know the provisions of this bill, S. 1699, Mr. Saltzgaber, with regard to retirement ? Mr. Saltzgaber. Yes. The Chairman. The provisions as to the age of retirement? Mr. Saltzgaber. Yes. The 'Chairman. I would like to hear your views with regard to that. Sixty-five is the maximum age provided for in the bill, and yet on certification by the head of the department or bureau of the efficiency of the employee, he is to be allowed to remain two years longer; and then, after the expiration of that two years, upon fur- ther certification he is again to be allowed to remain in the ser^'ice two years longer. Mr. Saltzgaber. I approve the entire provisions of the bill, pei- haps with a slight reservation concerning that matter. If the head of the bureau, as jon say, or the department, certifies. That expres- sion is not very clear in that respect. It says the department or branch, and just what meaning is attached to the word " branch " T do not know; but those who would be eligible for retirement, and should be retired, may insist on using improper persuasion, undue influence, to remain where they are. I do not loiow how else I can express that, and I leave it to you gentlemen to supply any omission so far as the words are concerned. I think you get my meaning. I believe that it ought to require a retirement at a certain age, and I would not extend the privilege that is thereby given. Senator Colt. "What age would you fix if you had a compulsory retirement ? Mr. Saltzgaber. I think the generarconcensus of opinion of man- kind is 70 years. Some of the States have fixed that for retirement age for judges, and I believe that the Bible says that our usefulness is ended at that period. 12 EETIEEMENT OF CIVIL SERVICE EMPLOYEES. Senator Wolcott. The modern doctrine is that we are no good after 40, I believe. Mr. Saltzgaber. Yes. That is with exceptions, however. We are not agreed as to that. Senator Colt. Would you apply that to Senators, do you think? Mr. Saltzgaber. I leave that to the Senators themselves. The commissioner, of course, would come under the same qualification. Senator Wolcott. What is the age of retirement for employees of the Pennsylvania Eailroad, 70? Mr. Saltzgaber. I am not sure. I knew once. Mr. Alcorn. It is 65. Dr. Jordan. That is the age of retirement in the English Govern- ment service. It is compulsory at 65, and there are no exceptions. Senator Colt. It would naturally depend somewhat upon the na- ture of the employment. There might be physical employment, or physical occupation that one of 65 could not perform, whereas other kinds of work, mental, I should think, could be performed. I should think that we might benefit by the example of those countries that have gone into this question. Perhaps 65 would be as near as you could get to the proper age. You mean, by " compulsory," that they would cease to be paid at all? Dr. Jordan. Automatically pass off the roll at that age. Senator Colt. Yes. The Chairman. What would you say, Mr. Commissioner, in re- gard to the classes of employees as provided in the bill, and the maximum and minimum annuities provided for, according to the classes and length of service. Mr. Saltzgaber. The arrangement that is made in the bill, I think, is very admirable in all those respects. The Chairman. And as to the per cent of their compensation which the employees would be required to contribute? Mr. Saltzgaber. About that I have very grave doubts. I think that the more contribution you require from the employee the more you will take that into consideration in fixing his salary, and it makes an unnecessary complication. If I were doing it I would give a straight-out pension, without any contribution whatever. I do not see any need of that. The Government gives so much for service; and in the case of retirement, it is done because of benefit to the Government as well as to the employee, and it saves that com- plication of contribution by just taking a certain amount for the pension. I have had some experience in insurance, especially in fraternal insurance, and there a contribution is required of all, which goes into a general fund and is kept there, and therefore those who remain get the benefit of the contributions of all. But in this case the bill provides that the contributions shall be returned to the participants. Dr. Jordan. If you will allow me to interrupt you there, is it not a fact that those who do not get the benefit are the ones that lose out in that common arrangement that you refer to? Those who reach the retirement age get the benefit, and those who die before reaching the retiring age do not get the benefit ? Mr. Saltzgaber. No ; they get no benefit from the pension ; but the contribution they have made, I understand, is returned to them. Dr. Jordan. Yes; but under the suggested plan it is not. RBTI'KEMENT OF CIVIL SERVICE EMPLOYEES. 13 Mr. Saltzgaber. I do not think any contribution ought to be re- quired. The Chairman. I think this bill contains one provision not in any of the other bills, and that relates to retirement and an annuity in case of disability, and after a service of 15 years. Do you care to make any conunent on that provision ? Mr. Saltzgaber. No ; except that I think it is very highly proper. I think the Government owes that as a duty to the employee. The Chairjian. Is there anything else you care to say? lyir. Saltzgaber. No ; nothing that I care to volunteer. The Chaikman. Do any of the members of the committee desire to ask the Commissioner of Pensions any questions? Senator Capper. I would just like to ask one question, which possi- bly has no direct bearing on this bill. I would like the commis- sioner to tell me what, in his opinion, has been the increase of cost of living in this District, based on the information that you get from your men over there? Mr. Saltzgaber. That is a very frightful question. Senator Capper. I would like to have your opinion as to just what has been the increase. Mr. Saltzgaber. In the District, as to percentage? Senator Capper. Yes; approximately. Mr. Saltzgaber. I do not think I care to venture that. There are tables prepared by others who have gathered statistics, and I think I had better not venture on that. I know it is very high, however. That is my own experience. Dr. Jordan. Mr. Chairman, may I ask the commissioner one ques- tion? The Chairman. Certainly, Dr. Jordan. Dr. Jordan. Will you explain for the benefit of the committee the facilities for handling this work in the Bureau of Pensions ? Mr. Saltzgaber. We think that our facilities would be most excel- lent for that purpose. The allowance of civil-service retirement pen- sions would be entirely analogous to the allowance of pensions for services in the Army or Navy. Our bureau has been organized for ever so many years, and we have the benefit of the added wisdom of all those who have ever been in the bureau. There are many experts in the bureau, although, as I have told you, a certain percentage of the employees have become old; but another and larger number, 700 of our employees, are very expert in that line of work. They could consider every question that relates to this matter without any diffi- culty and, I think, arrive at a proper conclusion, and the machinery we now have — the organization we have, as well as material ma- chinery which we have for handling pension claims — is well adapted for this purpose. The Chairman. Have you made any estimate with reference to the cost to the Government to begin with, or later, after the lapse of a period of years ? Mr. Saltzgaber. I have made no estimate, but I understand that the total number of those who would be eligible to become bene- ficiaries at the present time would be in the neighborhood of 6,500 ; and if that be so, the added cost ought to be very small, compara- tively. It would not be large. 14 BETIREMBNT OF CIVIL SEEVICE EMPLOYEES. Tlie Chairman. You mean by added cost the cost over and above the contributions made by the employees ? Mr. Saltzgabee. No; over the present operating expenses m the Pension Bureau. The additional work would not be very great. The Chairman. Are there any further questions to be asked of the Commissioner of Pensions by any member of the committee ? Unless you have some further statement, Mr, Saltzgaber, that will be all. Mr. Saltzgaber. I think not ; I am much obliged to you, gentlemen. The Chairman. The committee is obliged to you. Mr. Alcorn.- Mr. Galloway, of the Civil Service Commission, wants to be heard. STATEMENT OF MR. CHARLES M. GALLOWAY, A MEMBER OF THE UNITED STATES CIVIL SERVICE COMMISSION. The Chairman. What is your position, Mr. Galloway? Mr. Galloway. United States Civil Service Commissioner. The Chairman. How long have you held that position ? Mr. Galloway. Since June 20, 1913, a little over six years. The Chairman. You may proceed and make your statement in your own way, Mr. Galloway. Mr. Galloway. In reply to a request of the chairman of the House Committee on Reform in the Civil Service for a statement as to the commission's views regarding employees' retirement, the commission, in a letter dated June 18, said : In response to your conniiiinication of .Tune 12. your attention is invited to tlie Inclosed extracts from recent reports to tlie commission relating to retire- ment of employees. The commission as at present constituteil is in at'cord witb tlie views therein expressed, and trusts that the subject will have the earnest attention of your committee. The Government is now actually pensioning its superannuated employees, and this in a very expensive, indirect, and unsatisfactory way. Heads of departments and bureaus have not the heart to discharge men and women who have grown old and Infirm in the service, and so their names are carried on the pay rolls year after year, with little regard for ability to render an etiuivalent in service. Many of these old people, who would otherwise resign, continue in th«r positions in the hope of having the benefit of a retirement law. With provision made for retirement appointing officers would have less hesitation in relieving the service of the deadwrjod that now encumbers it. A retirement law is urgently needed in the interests of efficient public service. Yours, very truly, President.' Mention is made of certain excerpts from certain former annual reports of the commission, and if the committee wishes, I will read those extracts, or hand them to the stenographer for insertion in the record. The Chairman. You may read those excerpts. I think the com- mittee would be glad to listen to them. Mr. Galloway. Very well. In the annual report of the Civil Service Commission for the year 1916, under the heading of " Retire- ment," the report says: Superannuation is older than the civil-service act. and any increase does not result from the merit system. That system does not protect incompetents Improved administrative methods and the standardization of salaries can not be efEectively made until a retirement system is established which will provide for superannuated employees. The commission believes that a contributory plan would be just and practicable and earnestly recommends its adoption RETIBEMEOSrT OF CIVIL SERVICE EMPLOYEES. 15 In its annual report for the year 1917, under the heading of " Ee- tirement," the commission said : The increased demands upon the personnel of the civil service by the war liave given emphasis to the need of a retirement system. It is too costly to continue the aged and infirm in positions requiring alertness and vigor, espe- ■cially where they have supervision of other employees, and a retirement system is possible which would be alilse in the interests of the Government and of the worlEer. While inefficiency is a just cause for removal, appointing officers naturally hesitate to dismiss old employees who have become incapacitated after rendering long and efficient service, and a virtual pension system thus exists. The commission does not favor a system of straight civil pensions. Tem- porary or permanent injuries received in the performance of duty are already provided for out of the Public Treasury in the compensation act of September 7, 1916, which extends to personal injuries sustained while in the performance of duty and applies to all civilian employees of the United States Government. The commission favors a general system of retiring annuities, based upon length of service, the annuity to be provided by deductions from the salaries ■of employees invested under the supervision of the Government, the Interest on which will be sufficient to provide the annuity to be paid. A retirement system would give stability to the service, create an inducement to capable men to continue in it, contribute to improved administrative methods, and make possible a standardization of salaries and other needed reforms. The benefits to the service from an equitable retirement system would justify a direct contribution from the Public Treasury to create an annuity for super- annuated employees in the service at the time the system is established. I have here also a brief reference to retirement in the report for 1915. Shalll read that? The Chairman. You may. Mr. Galloway. In the commission's report for the A^ear 1915, under the heading of " Eetirement," it says : In , the establishment of improved administrative methods serious difficulty has been found in dealing with superannuated employees. The commission does not regard superannuation as an outgrowth of the merit system, but deals with the sulbject of retirement in its i-eports because of its relation to improved administrative methods. Superannuation Is older than the civil-service act, and any increase is not a result of the merit system. Examinations and efflcienc-y ratings tend to minimize superannuation by exposing incapacity, that otherwise would be hidden. The civil-service rules have never protected incompetents. Tlie improvement of methods and the proper adjustment of pay can not be efEectively provided for until a retirement system is established which will make provision for this class of employees. The commission be- lieves that a contributory plan is the only just and practicable one for the retirement of employees, and earnestly recommends its adoption at an early date. The Chairman. Is the 1918 report of the commission vet pub- lished? Mr. Galloway. I have not got that report with me. I can sub- mit that later. No; the report for 1918 is not published; 1918 and 1919 go together. That will not be ready for publication until Oc- tober. The Chairman. You have given us these excerpts from the re- ports of 1915, 1916, and 1917? Mr. Galloway. Yes, sir. The Chairman. Now, by the reference to the contributory plan, Mr. Galloway, is it understood that the commission favors a wholly contributory plan ; that is, a plan under which the employee will con- tribute the entire sum, which with interest will go to create the an- nuity that he is to be paid on retirement? 16 RETIREMENT OF CIVIL SERVICE EMPLOYEES. Mr. Galloway. To begin with, the Government, of course, would! have to start the system by putting up all the money. The Chairman. That is true of the contributory plan? Mr. Gallowat. Yes. The Chairman. Of the ^Yholly contributory plan? Mr. Galloway. Yes, sir. The Chairman. That wpuld not be true of the contributory plan, whereby the employee contributed a part onlj^ Senator Wolcott. It would be partially so, would it not? Mr. Galloway. Yes. Senator Wolcott. The Government would have to put up some ? Mr. Galloway. Yes. The Chairjian. Senator Colt calls my attention to the fact that you have hardly answered the question yet, as to whether or not the- commission is to be understood as favoring the wholly contributory plan in preference to all others. Mr. Galloway. Yes. The Chairman. In preference to a partially contributory plan such as is provided for in the pending bill ? Mr. Galloway. Yes ; in preference to any other plan. Senator Colt. What is the reason for that, or what is the objection: to the other? Mr. Galloway. My personal reason is that I do not believe that; the country is yet willing to pension a civil servant. The Chairman. Have you made an estimate as to how much it, would cost the Government the first year under this plan as pro- posed in the bill we are considering ? Mr. Galloway. I have not those figures with me, Mr. Chairman,, but I can furnish them for you. Senator Colt. What is the proportion in this proposed bill. Sena- tor? The Chairman. It does not name the proportion exactly, but I think it is in the proportion of about three-eighths to five-eighths, is; it not ? Dr. Jordan. Correct. The Chairman. Three-eighths to be contributed by the employee- and five-eighths by the Government. Senator Colt. What is the system in the other countries of the- world ? Dr. Jordan. If you will pardon me, I was going to make a state- ment, and if you will indulge me I will submit a statement on that. Mr. Alcorn. That will be submitted in the hearing. The Chairman. Yes. Is there any other feature of the bill in- regard to which you would like to make a statement ? Mr. Galloway. Yes, sir. Senator Colt. You seem to have given thought to this matter May I ask you, have you made any inquiries as to what the expense to the Government would be— a general estimate, without being- accurate ? Mr. Galloway. I could not even approximate the expense at this time, but I could furnish that information also so far as we have it Senator Colt. Would it run up into the millions? Mr. Galloway. Yes, sir ; it would. KETIREMENT OF CIVIL SERVICE EMPLOYEES. 17 The Chairman. The committee, I am sure, would be obliged to you for that statement, Mr. Galloway, because it is very important in this hearing. Mr. Galloway. All right. Senator Colt. But as a matter of principle, Mr. Galloway, as af- fording the best retirement bill, do you think that it would be better for the employee to contribute all ? In other words, do you not think possibly some burden ought to be thrown upon the Government? Mr. Galloway. Yes; I think that the Government should bear part of it. The Chairman. In justice to the employee? Mr. Galloway. I think that a man or woman who has given his life, you may say, to a service, not only the Government service, but the service of the Pennsylvania Railroad, for instance, or any institu- tion or establishment, should in a measure be compensated by that establishment, and I think it would be economy for our Government to put up one-half of the money right now to begin a retirement system at once. Senator Colt. In large corporations they often furnish the whole amount, do they not? Mr. Galloway. I do not know about the Pennsylvania Railroad. I do not know whether they contribute part or not. Dr. Jordan. The Pennsylvania Railroad contributes it all, Senator. Mr. Alcorn. Yes. Senator Ball. In these regulations do you not imply that it would be economy to do it ; that it would save the department more than it would cost, in the end ? Mr. Galloway. It would eventually ; yes, sir. Senator Ball. The efficiency in the department would overbalance the amount contributed? Mr. Galloway. I think so. I think it would tremendously increase the efficiency of the Government service if all the superannuated people were retired at once. Senator Colt. You are carrying some of them now ? Mr. Galloway. Xes; some of them get salaries as high as $3,000 or $4,000 a year. The Chairman. About every civilized country in the world pen- sions its civil-service employees, does it not? Mr. Galloway. Yes, sir. The Chairman. Do you know of any country wherein the em- ployee is required to contribute ? Is it not a straight pension ? Mr. Galloway. I do not recall a single country where the em- ployees are required to contribute anything. Senator Colt. I have a general idea in my head that the Govern- ment ought to contribute the major part of it, and the employee ought to contribute something; that it would tend to efficiency, and to the end we seek, that the employee should contribute something, but that the Government ought to stand back of it. The tendency of the times is all in that direction. Mr. Galloway. That is true, sir. Senator Colt. And we have to follow tendencies which amount to something. 125022—19 2 18 RETIREMENT OF CIVIL SERVICE EMPLOYEES. The Chairman. What would you say as to the age for retirement in the bill, Mr. Galloway? . . . „f f>,ir,ir Mr. Galloway. That is general, in my opinion. I do not tnmK you could have a hard and fast rule, because some men are very capable at 65 years of age and others are not so capable at bO but in order to have a system that would work well administratively, I think that the age limit of retirement should be fixed accordmg to a hard and fast rule, and the employees should go off the Govern- ment roll automatically onto the roll ot the retirement system. Ihat would make it easy of administration, and there would be no argu- ment as to whether or not a man would want to continue alter He had reached the age limit for a time. • n , Senator Ball. Suppose, under this bill, they automatically went on that retirement roll, and the pensioners contributed a portion ot that fund, then would the Government have the right to say that you must go off if it was a part of your own money that was paying the pension ? ^ ^ ^^ Mr. Galloway.. Under that plan probably the Government would not have the right to say that. It would be a grave question as to whether or not the Government should say that. Senator Ball. Yes. Mr. Galloway. But on a straight pension, of course, it would be proper for the Government to fix the age at which the pensioner should go off the roll. Senator Colt. Would there be any objection to making it discre- tionary with the Government at 65 years of age ? You can not have any hard and fast rule, as you say, that will work justly in all cases, because you are familiar with individual cases that vary. Some men are ]ust as good at 70 as they are at 65. Mr. Galloway. Ordinarily men are able to perform a fair degree of work with efficiency up to 65 years of age, and if you have a definite time for retirement you will avoid a difficulty that I heard Commissioner Saltzgaber make a while ago that a man or woman might begin a campaign to remain in the Government service longer than the age of 65 if that age limit vsras adopted, so that 1 think it would be very much easier to administer if a fixed age is decided upon. Senator Colt. I quite agree with you that you have got to fix an age limit at some time. Mr. Galloway. Yes. Senator Colt. It works better. In regard to the retirement of judges, generally the age is fixed. It varies in different States, but .the age is fixed almost everywhere. Mr. Galloway. Yes. It is fixed for the Army and Navy. Senator Colt. Yes; and if you introduce any limitation upon it you get into trouble. It creates complication and confusion. Mr. Galloway. Mr. Chairman and gentlemen, in section 13 page 16, beginning on line 13, the bill provides: The Civil Service Commission shall keep a record of appointments, transfers, changes In grade, separations from the service, reinstatements, loss of pay, and such other Information concerning Individual service as may be deemed essential to a proper determination of rights under this act, and shall furnish the Commissioner of Pensions such reports therefrom as he shall from time to time request as necessary to the proper adjustment of any claim hereunder, RETIREMENT OF CIVIL SERVICE EMPLOYEES. 19 and shall prepare and keep all needful tables and records required for carry- ing out the provisions of this act, including data showing the mortality experi- ence of the employees in the service and the percentage of withdrawal from such service, and any other information that may serve as a guide for future valuations and adjustments of the plan for the retirement of employees under this act. In connection with that section I should like to say that -that im- poses a good deal of new work upon the Civil Service Commission for which we would have to have additional help. Now, a good deal of the information requested or set out in this section the commission already has. Of course I am unable now to give you an estimate of the additional expense; but just to make a guess, I should say that it would not be so great an increase in expense to carry out the re- quirements of that provision. The Chairman. You would need , additional help for that pur- pose, you say? Mr. Galloway. Some; yes. The Chairman. Could you give an estimate to the committee of about how much the additional cost would be and what appropriation would be needed? Mr. Gallowat. I could not, nor do I think anyone else would be prepared at this time to do so. But at the present time I do not think it would be very great. Much of this work, as is suggested, we are now doing. The Chairman. I think it would aid the committee, Mr. Gallo- way, if you do think that some additional help would be needed under those provisions, to make an estimate and submit it to the committee. Mr. Galloway. I would be very glad to do it. Dr. Jordan. I would like to ask the commissioner one question. The Chairman. You may ask your question. Dr. Jordan. How many employees are there in the classified civil service that would be beneficiaries under this law, as of date? Mr. Gallowat. To go back to the last figures that the commission compiled of the number of persons in the executive civil service prior to the war, they aggregated a half million. At that time there were approximately' 35,000 employees in the departmental service in Washington. To-day I suppose there are more than 100,000. Senator Wolcott. What did your figure of a half a million cover ? Mr. Galloway. It covered the executive civil service. Dr. Jordan. But they would not be all beneficiaries. Senator Wolcott. I was about to say, of course, they are not all eligible for retirement under this bill. Mr. Galloway. No. Dr. Jordan. That is what I wanted to bring out. How many would be eligible? Senator Wolcott. How many would be eligible, Mr. Commissioner? • Mr. Galloway. In Washington, I should say approximately 3,000. Mr. Alcorn. How many in the entire service? Mr. Galloway. That would be an estimate. I think approxi- mately 20,000 to 25,000. Dr. Jordan. I think the commissioner has misunderstood my ques- tion. ' Let me reframe it. What I wanted to develop for the benefit of the committee was this : How many people are there in the classi- fied service who would contribute under the provisions of this act, say as of July 1, 1918. There must be about 350,000 or 360,000? 20 EETIREMENT OF CIVIL SERVICE EMPLOYEES. Mr. Galloway. About that. Dr. Jordan. I just wanted to get that into the record. That bears on the question of cost, Senator, which we will bring out later. Senator Colt. Yes. Senator Capper. You say there are about 100,000 in the civil service here in Washington now? There are that many employees in the Government service in Washington ? Mr. Galloway. They are not all under the civil service. Senator Capper. How many would you say there are in the civil service ? Mr. Galloway. The service has grown so rapidly that it has been impossible for the commission to collect those data — to get those records up to date — up to now. Senator Capper. Do you think it is going to be necessary to retain that number for any length of time ? Mr. Galloway. My personal opinion is that the necessary em- ployees in Washington will not be again less than 65,000 to 70,000, as compared with 35,000 before the war, because the Government has expanded in every branch, in every direction. Senator Capper. Is the number of applications now for positions in the civil service greater? Is the tendency toward increased num- bers, or is it falling off? Mr. Galloway. Kecently the number of applications is increasing. Senator Capper. That would indicate more people out of employ- ment in the country generally ? Mr. Galloway. Yes, sir. The Chairman. Of course, there were many brought into the serv- ice during the war who did not come in under civil-service rules ? Mr. Galloway. That is correct. The Chairman. Who did not come in under examination? Mr. Gallom'ay. Yes. Dr. Jordan. I simply would like to ask, off the record, whether the commissioner could give, for the benefit of the committee, a state- ment of how many people were in the service on July 1, 1918. Mr. Galloway. I will be very glad to furnish such a list. The Chairman. I call attention to the fact that on this matter of the age at retirement the bill itself is not inflexible. Section 6 pro- vides as follows: Sec. 6. That all employees to whom this act applies shall upon the expiration of ninety days next succeeding its passage, if of retirement age, or thereafter on arriving at retirement age as defined in section 1 hereof, be automatically separated from the service, and all salary, pay, or compensation shall cease from that date, and it shall be the duty of the head of each department, branch, or independent office of the Government to notify such employees under his direction of the date of such separation from the service at least sixty days in advance thereof. Now comes this proviso : , Provided, That if within sixty days after the passage of this act or not less than thirty days before the arrival of an employee at the age of retirement, the head of the department, branch, or independent office of the Government in which he or she is employed certifies to the Civil Service Commission that by reason of his or her efficiency and willingness to remain in the civil service of the United States the continuance of such employee therein would be ad- vantageous to the public service, such employee may be retained for a term not exceeding two years upon certification by the Civil Service Commission, and at the end of the two years he or she may, by similar certification, be continued for an additional term not exceeding two years^ and so on. RETIREMENT OF OIVIL SERVICE EMPLOYEES. 21 Then there is this concluding proviso which puts an absolute limit of 69 years upon those who, under the bill, would be required to retire at the age of 69 years : Providea, however, That at the end of ten years after this act becomes ef- fective no employee shall be contlnudd in the civil service of the United States beyond the age of retirement defined in section 1 hereof for more than four years. So that in any event the man who is subject to retirement at 65 may, upon proper certification of efficiency, continue in the service for two successive periods of two years each, making in all 69 years. Is there anything further you want to say, Mr. Galloway ? Mr. Gallowat. In that connection, I have the same opinion about that that I have about the maximum age limit. That would cause more or less of friction in determining- whether or not that person was efficient at that time and therefore could properly continue for a period of two years. I think that the more definitely a matter of that kind can be arranged in the bill, the better it will be and the more easy it will be to administer it and without friction. The Chairman. Do you not think this would be a great improve- ment over the present system ? Mr. Galloway. Very great, indeed. The Chairman. Which allows them to continue on indefinitely, to 80 or even 90 years of age, at times, out of sympathy, after they have lost all efficiency? Mr. Gallowat. I might suggest this, Mr. Chairman : The head of an office, we will say, certifies that an employee is not efficient, and therefore should go on the retired list. That employee, on the other hand, might claim that he or she is efficient, and should not go on the retired list. Who will settle that difficulty ? The Chairman. Under the present system, of course, there is no annuity, no pension provided for at all, and hence the case appeals to the head of the department or the bureau. But here an annuity is provided for, and that appeal will not be so effective, because the head of the department can say : " You are provided for ; you have an annuity;" or "The Government has in part provided for you." And there would be less reluctance, it seems to me, under this bill in retiring a man than there would be under the present condi- tions. Senator Colt. I can easil^y understand that the head of a branch or department would not care to take the responsibility of deciding upon the question of efficiency. Senator Capper. Can you tell me what the minimum is here in Washington, in the civil service of the Government ? Mr. Galloway. The minimum wage is $20 a month for charwomen. Senator Capper. For clerks what is it? Mr. Galloway. They vary. The minimum wage for clerks is $720. There are some $720 clerks, some $840, some $900, some $1,000, and on up. The Chairman. Those clerks now get the bonus provided for? Mr. Galloway. Yes; at present $120 a year bonus; and after July 1 they will get $240 a year bonus. Senator Capper. Is that in keeping with the increased cost of liv- ing, do you think, in the last two years ? 22 KETIREMENT OF CIVIL SBEVIOE EMPLOYEES. Mr. Galloway. That is pretty hard to say, sir; I know that my living expenses have about doubled — just to judge from myself. Since the war started my living expenses have about doubled. Senator Cappee. I coiafess I do not see how one of these Govern- ment employees can live in this town, with the prices they are paying for everything now. Mr. Galloway. There is a small grocery store right across from my apartment house, my wife went over there and priced some ham, and it was priced at $1 a pound. The Chairman. Is not that a thing to be considered, too, in con- sidering whether we should make this retirement bill a wholly con- tributory plan on the part of the employee ? Mr. Galloway. I think it should be taken into consideration, by all means — that it takes so mu.ch to live, and people can not live with- out so much. The Chairman. Yes. Mr. Galloway. That it takes so much to live, and peole can not live without so much. Senator Capper. You are brought into contact with Government employees from all over the country. Do you hear any complaint that prices here in the District of Columbia are higher than they are in other places ? Mr. Galloway. Yes; I hear a general complaint that prices in Washington are higher than they are elsewhere. Senator Ball. I might say, Mr. Chairman, that the Committee on the District of Columbia is taking up that matter, and they are going to attempt to get the prices of the various classes of food products in all the principal cities of the United States, that we may have some comparison. They are starting on that project now. We had a meet- ing a few days ago. The Chairman. Does any member of the committee desire to ask Mr. Galloway any further question? Senator Colt. Mr. Galloway, are you not inclined to the opinion, rather, that the prices which prevail generally, that the higher prices not only in this country but throughout the world, have come to stay, in a large measure ; that they can never go back to what they were, or that they will not go back to what they were before the war ; and have not the economists who have studied the question of prices, reached that conclusion ? Mr. Galloway. That is my very definite conclusion. Senator Colt. That is, founded, fundamentally, upon the fact of the increase in currency, held not only in gold but in paper money, so that the currency circulation of "the world, or of the leading nations, we will say, runs up as high as thirty-seven or thirty-eight billions. The amount of the circulating medium has increased to an enormous extent, and you have much more of the circulating medium, and, of course, that puts up the prices, and you pay more. That is, the purchasing price of the circulating medium is less, and the amount that we can purchase is less, and that fundamental fact would keep up the prices. You must add to that also the fact that production is going on and that demand is going on, and where you have great demand there is a tendency to keep up the price; and, from those three great factors, RETIREMENT OP CIVIL SERVICE EMPLOYEES. 23 the increase in the quantity of the medium of exchange, the increase of production and the increase of demand, which are going to remain and increase, they reason it out that prices will not decrease. What causes high prices is one of the most difficult questions to solve ; but my judgment is that there is very little hope that prices are going to decline, and the way to meet the question, and the only way, is to raise the salaries that you pay your employees. That is the only solution. Mr. Galloway. It seems to me. Senator, that there are two things that control present prices; first, the cost of labor, and secondly, the cost of materials. Senator Colt. Yes. Mr. Galloway. And, in my opinion, none of us will live to see prices as low as they were before the war. Senator Colt. It is in line with this, what the chairman said, that he had made a different scale in this bill from the old McKellar bill. I entirely concur with him. Did I understand you to say that your department, though, was rather of the opinion that the employee ought to contribute all? That is what I understood you to say when you began, that you thought the employee ought to contribute all. Mr. Galloway. No ; not all of the " pot,"' to use a rough expression, but a portion of it. Whatever would be reasonable for the Government to contribute to the sum total of the pension it ought to contribute. Senator Wolcott. I understood your position to be this: That purely by reason of the state of what I will call public opinion to- ward the idea of pensioning the civil list, you thought that the coun- try would not accept Mr. Galloway. A straight pension. Senator Wolcott (continuing). A straight pension, and that the employees ought to bear it ; but as a matter ■ of principle the employees ought to bear a portion of it. Mr. Galloway. A portion of it. Senator Wolcott. Is that correct? Mr. Galloway. Yes. The Chairman. Is that all? Mr. Galloway. Yes, sir. Mr. Alcoen. The Secretary of War is present, Mr. Chairman, and we would like him to be heard next. The Chairman. The committee will be glad to hear the Secretary of War. STATEMENT OF HON. NEWTON D. BAKEE, SECRETARY OF WAR. The Chairman. If the Secretary will permit me, I will say that I acldressed a letter to each of the heads of departments, notifying them of this meeting, and suggesting that the committee would be pleased to have them attend and make any statements that they de- sired to make, and I am very glad to note that Secretary Baker is here. The committee will be pleased to hear you. Mr. Secretary. Secretary Baker. Senator, I will be very glad. I appreciate the courtesy of the committee in permitting me to be hero. 24 RETIREMENT OF CIVIL SERVICE EMPLOYEES. I undoubtedly am not familiar with the details of the bill whicli the committee is considering, but I have been an executive officer of the Federal Government lon^ enough now to have, I think, a very sure feeling of the necessity for some such legislation, and I wanted to come before the committee and urge as strongly as I could the pas- sage of legislation which would permit the retirement of superannu- ated or disabled employees, so that the good of the service may be conserved. I do not believe that anybody who has had an executive place has failed to realize the 'practical impossibility of securing the dismissal of superannuated employees who have been faithful and whose Only fault is their supei'annuation and enfeeblement by the process of age. It leads to the clogging up of the service ; it discourages and dispirits those who are already in the service. I myself am frequently called upon to reduce clerks who have given practically the whole of their lives to the service of the Gov- ernment, and yet have reached a place where the maximum of their capability is that they should be the custodian of more or less dead files, and they get into positions of inactive occupation, as it were, with very modest income but always with a feeling of grievance and resentment, and a difference of opinion between them and their superiors as to whether tlieir enfeeblement is real, or their reduction is based upon some prejudice. As a matter of fact, every department in Washington has employees whose entire life has been devoted to the Federal service, who have now reached the place where nothing but the necessity of their daily bread keeps them at any occupation, and where out of pure humanity and against all reason the head of the department is obliged to retain them in the service. There is another consideration to which I would like to ask the attention of the committee. I do not want to moralize about it, but I have a very strong feeling that we ought to do everything we can to make the service of the Government dignified, to make it honorable and respected, and to attract into it the very best material that we can possibly find. Generalizations are always dangerous, and this will be dangerous, but I am going to suggest it. I feel perfectly sure that in the vast emergency which this war has presented, if the public service had been intririsically more dignified, it would have enabled us to get along with fewer employees, and would have enabled us to do away with a very large number of wholly in- experienced employees who were brought into the service because they were the only people who were procurable, through the channels of the civil service or otherwise. I think that the public service should be put upon a dignified basis so that it would mean not only just compensation during the period of active service, but that it would provide a system of retirement which will enable that same employee who has given full service to the Government to have enough to live upon in a very modest way for the remaining years of his life. Every consideration that I can think of, humanitarian, toward the employee, and the good of the service so far as the Government itself is concerned, so far as getting the best type of employees, and getting the best service out of those we have, dictates, I think, the necessity of some sort of retirement provision for the employees in the public departments. RETIREMENT OF CIVIL SERVICE EMPLOYEES. 25 I think there is nothing beyond that which I care to msike by way of statement ; but if the experience which I have had as an employer for the Government in the last four years is of value, I would be glad to answer any questions of the members of the committee. The Chairman. Does any member of the committee desire to ask any questions ? I will ask you a question or two, Mr. Secretary, with reference to the bill itself. Secretary Baker. Yes. The Chairman. The bill divides employees into three classes with reference to age of retirement; those who may retire at the age of 65, which embraces the great body of the employees, and then mechanics, city and rural letter carriers eligible for retirement at 62 years of age, and railway postal clerks at 60 years of age, the retirement to be after 15 years of service. The maximum annuity provided for those in the first class, here, is $720. The minimum annuity is just one-half of that. It is estimated that in making the fund from which the annuity will be paid, the employee' will contribute out of his monthly com- pensation about three-eighths of that fund, and the Government would contribute about five-eighths. What do you think about the reasonableness of these provisions, first, in regard to age and then, secondly, in regard to the amounts to be contributed, respectively, by the Government and by the employee? Secretary Baker. The age limits seem to me all right, Mr. Chair- man — the ages of retirement fixed for the three classes of employees. I think the service of 15 years is much too short. I do not believe an employee should go on the retired list after only 15 years of serv- ice. I think it ought to be at least 20 years, and I would prefer 25 years. I do not think that the employees ought to make any contribution to the fund at all. The Chairman. You think it should, rather, be a straight pension fund ? Secretary Baker. Unquestionably. The Government has to pay it in either case, and you will have to add it to the wages of the em- ployees and then take it away from them, and that always creates trouble. The Chairman. This question has been raised in regard to the straight pension — whether or not when there is a proposed increase of salaries of the employees, the pension will not be pointed to as being a reason why there should be no increase of salaries at all; whereas, if the employee contributes a part of the fund, that same argument w^ll not prevail or be of such weight. Secretary Baker. I think it would be pointed to. Senator, but I do not think it will have any weight; and if, in addition to that, you allow the employee to contribute to that fund, then he has an equitable interest in it which has to be adjusted on his separation from the service, and you will constantly have people who are faithless to the public service who can not be discharged, because they will claim that they have an equity in that fund that has been built up. The Chairman. There is this, also, that will be appreciated in the consideration of every bill, that there is a very large element — we find it, perhaps, in trying to procure the passage of any bill — who will contend that the employees should contribute the whole. 26 RETIREMENT OF CIVIL SERVICE EMPLOYEES. Secretary Baker. Yes. The Chairman. This is a compromise between the wholly con- tributory plan and the straight pension. Secretary Baker. I have had a good deal of experience with it, not in the" Federal Government, but in earlier executive capacities. I was city solicitor of Cleveland and mayor of Cleveland, and we lip.d pension funds for the police department and the fire depart- ment, and later a pension fund for the school-teachers of that city, all of which were in their original form based upon contributions from the members of the group. In each instance it was found to work badly, and in each instance the legislature finally directed that it be taken over wholly by the Government itself. It does not seem to me likely that the salaries of Government employees are ever likely to be as much as is paid for correspondingly dignified and difficult and resjaonsible work on the outside. There is always a presumption that working for the Government in an honor Avhich compensates for a less salary. I think that there is something in that; not as much as is currently believed. In these days of the high cost of living you can not live very long on the honor of the place you happen to hold, but there is something in that, and I think employees would be willing to have a somewhat lower scale of wage if they had a proper retirement fund to provide for their old age. But I am inclined very strongly to the theory that 15 years is much too short a period of service. The Chairman. There is provision in this bill, and I think it differs in that respect from all other civil service retirement bills now pending in either House, for retirement for disability after 15 years of service. What do you think of that provision ? Secretary Baker. That is, disability incurred in the serviced The Chairman. Yes; incurred in the service. Secretary Baker. I think it ought, plainly, to be included, if the disability is incurred in the service. Senator Wolcott. Not as necessarily incident to the office. A.s to any disability incurred while in the service, that is true. Dr. Jordan. That is true. Senator Wolcott. If incurred in a street-car accident, for .in- stance. Secretary Baker. If the disability is total and permanent, it ought to be included. In other words, it is making the industry bear the cost rather than the general public fund. But I do not- believe that disabilities that are not permanent and not total ought to be included, unless incurred in the service. ^ The Chairman. The bill seems to be pretty carefully, guarded in that respect, because it provides for medical examinations. Secretary Baker. Does the bill provide for retirement at the sev- eral ages, at the election of the employee, or is it a compulsory retirement ? Mr. Alcorn. For the first 10 years Secretary Baker. For the first 10 years it is at the election of the employee ? Dr. Jordan. On the certificate of the head of the department, for the first 10 years. That is to allow the service to adjust itself. Secretary Baker. I still am not quite clear about it. Perhaps that is not importnnt. Suppose a man gets to be 65 years of ao'e. KETIREMENT OF CIVIL SERVICE EMPLOYEES. 27 in the War Department, we will say, and he has been a clerk 10 years or fifteen years, or whatever the time is. Can the Secretary of War direct the retirement of that person ? Senator Wolcott. He retires automatically, but the Secretary of War can arrest the process and keep him in for an additional four years. Secretary Baker. Against the will of the employee? The Chairman. No ; the employee must manifest his desire to be retained in the service. Mr. Alcorn. His willingness. Secretary Baker. But he can not force himself to stay in against the will of the Secretary ? The Chairman. No. Secretary Baker. But the Secretary can force him out? The Chairman. Yes. Secretary Baker. That is the way it ought to be. The Chairman. When he reaches the age of 65 years he can be retired, willy nilly, if the Secretary will not certify as to his effi- ciency. In other words he must be certified as efficient, and he may then be allowed to remain t'W'o j^ears longer. At the end of that two years, if he still desires to remain in the service, on the certifi- cate of the Secretary — in your particular case — he may be kept two years longer. Secretary Baker. I think that is proper. Senator. Now, may I ask one further question? Does it provide this? Suppose the Wai Department had a $2,000 clerk, and that clerk had reached the age of retiring, but was still perfectly able to do work m a place for which the compensation ordinarily would be $1,500; is the Secre- tary authorized, on such a certificate of extension, to take that clerk into the less highly-compensated place for the period that is pro- vided, and then when his ultimate retirement comes, retire him on a basis of his higher compensation ? The Chairman. That is not covered in this bill. Secretary Baker. It would be desirable if it could be, because there are employees who have lived in Washington for a number of years, and who do not want to live anywhere else, and who do not want to rust out in idleness, and who would accept a less highly- compensated place for the time of extension of their service, and yet would not want to retire on the basis of the less highly-paid employ- ment when the time for their retirement came. The Chairman. I think that is a suggestion worth considering. Mr. Alcorn. That is not in the bill. The Chairman. I know that it is not. Senator Wolcott. May I ask, was there any service requirement in the city of Cleveland when you were there prior to your coming here ? Secretary Baker. Yes; in the fire department and the police de- partment it was 25 years. I do not remember what it was in school teaching. Unhappily, however — I do not want to cite that as too favorable an experience — in the city of Cleveland a man could re- tire in the police department or the fire department after he had served 30 years, no matter what his age was, and we had there the very ungracious spectacle of men 52 and 53 years of age, who were in the full possession of all their faculties, retiring with a pension, and 28 EETIEEMENT OF CIVIL SERVICE EMPLOYEES. going off and entering into a much more remunerative occupation than they had had in the city service, so that they were quite pros- perous. The Chairman. Thank you, Mr. Secretary. Mr. Alcoen. Mr. Ayers, chief, clerk of the Department of the In- terior, would like to be heard. STATEMENT OF ME. E. J. AYEES, CHIEF CLEEK OF THE INTEEIOK DEPAETMENT. Mr. Aters. Mr. Chairman, I want to speak not directly on the bill, but as to some of the conditions. As chief clerk and chief executive officer of the Interior Depart- ment, where I have been employed for 23 years, and as chief clerk for the last three years and a half, I have become very closely associated and in contact with its employees, and we have numerous cases in which they have grown old and feeble in the service, and we have not discharged them, but they are virtually pensioners to-day on the rolls of our department, from whom we get but very little service ; and in the interests of these people and in the interest of the prevention of the clogging of the wheels of the department I am urging the passage of this bill by you gentlemen. It is very imperative that something be done. This measure or measures similar to this have been consid- ered for a number of years, and hope has been held out to these people that if they would remain they eventually would become wards or pensioners to such an extent that they would be taken care of in their old age. This has been revived in the last two or three years, and the pres- sure being applied to the departments to retain these people, and they appealing that they be retained under some condition until some legis- lation affording them relief can be passed, it is. seriously embarrassing us at the present time ; so that in giving consideration to this I hope this committee in its wisdom will either give them something that they may retire on, or give them assurances that it will not be done, and then perhaps it will ease up in some way by which they will com- mence to either die or quit or be taken out, or something will happen to them so that the wheels can run again. They certainly have got the wrench in the cogs at the present time in relation to moving this class of people. And it is pitiful ! There are conditions in the service that are pitiful. I have a woman in one of our services who was brought up in culture and refinement, a splendid character. Through reverses she came into the service ; and now every morning she goes around the room, and the little brain that she has remaining goes back to the days when she was in culture and refinement, and she goes about plucking imaginary flowers from the walls, and she will make a wreath and go and hang it on the door knob, and when she has accomplished that then she sits down at a desk and shuffles some papers, and that con- tinues until 3 or 4 o'clock in the afternoon, when somebody has to go out with her and see that shfe gets home safely, that she is not run over by the street cars. There are lots and lots of such cases. The Chairman. This woman you speak of has no means of live- lihood? Mr. Ayers. None at all. If she was thrown out, she would go to some institution as a ward of charity. RETIREMENT OF CIVIL SERVICE EMPLOYEES. 29 On the other hand, we have a man there who is 80 years of age. He has been in the Interior Department for 52 years. He came in as a skilled mechanic and cabinetmaker. He served in the Civil War, not in a military capacity but as a railroad man, in construction, so that he does not draw a pension. Fifty-two years ago he got $1,200 a year. After he had been there for seven years his salary was changed and reduced to $900 on the statutory roll as a carpenter, and his salary has not been changed in the last 45 years. He is our master mechanic ; he is the chief carpenter in the Patent Office. He raised a family of five children, and he has saved $600 in 45 years, and he bought six $100 liberty bonds during this war period. Senator Capper. What is his salary ? Mr. Atees. $900 is what he has been getting for 45 years. ■ Senator Capper. What is the minimum salary for clerks in your department ? Mr. Ayers. $720. Senator Capper. I am strong for this retirement pension plan, but do you not think it is equally important that the Government should pay its employees a decent wage, so that they can live decently ? Mr. Aters. Yes ; surely ; they should pay an adequate wage. Senator Capper. Can they live decently and comfortably on their salaries now ? Mr. Ayers. They can not. The Chairman. Of course, this man you speak of gets the bonus ? Mr. Ayees. He gets the $120 bonus. They can not live on the pres- ent wage. Those wages were adjusted, I aiii told, back in 1857, and there has been no general readjustment of wages since that time, and prices have steadily advanced in the last few years until they are driven to want and to povertj', and they can not get the necessary subsistence for their families to-day. A man came to me yesterday who is holding two positions, working for a man on Seventh Street from 8.30 to 6 o'clock at night, and then he comes into the service and works his eight hours in the service, in order to keep his family together, and he has just paid up his back debts. He is making $70 a month, and his grocery bill, for his wife and two children and himself, is $15 a week, $60 a month, for groceries alone, which leaves him $10 a month for clothes, house rent, medical attention, and such other necessities of life as he can get; and he goes out and works 10 hours outside. He is breaking down under that strain, and he is not efficient in his service to either us or the other employer. Senator Wolcott. Of course, the passing of this pension bill would not help the situation of that man. Mr. Ayers. No ; it is a question of raising his salary. Senator Wolcott. It would put an additional burden upon him because he would have to contribute to the fund, which would make an additional expense. Mr. Ayers. The bill should not require a man or woman to con- tribute one penny toward this retirement fund. The Chaieman. If an adequate salary were paid, would there be any injustice in requiring a contribution of at least a part of the sum that went to make up the annuity ? Mr. Ayers. No, sir; not if an adequate salary were paid. I am basing it upon the conditions that exist at present. 30 EETIEEMiJNT OF CIYIL SEBVICE EMPLOYEES. The Chairman. Would there not be something beneficial to the employee if, out of his monthly compensation, granting that it was a reasonable compensation, he was obliged to lay by a little, here, denying himself something that he did not have to spend the money for and did not need ? Mr. Ayers. Cooperation is a good thing. Senator Wolcott. Does the presence of this deadwood in the de- partments result in the employment of additional assistance that otherwise would not be employed if the wood were live ? Mr. Aters. Oh, if we could eliminate the deadwood, you could, replace with 50 per cent of live wood. You can not get additional help. It means overtime work and an additional burden on the others 'to do the work. Senator Wolcott. You would not have to replace employee for employee ? Mr. Aters. No ; I will give two for one. Senator Wolcott. At present you do not take on the additional help, but you simply suffer a clogging of business, and things do not get done? Mr.^ Aters. That is it ; or it is overtime work and additional bur- dens upon other people to get it done. Dr. Jordan. Do you believe in a compulsory age of retirement? Mr. Aters. Yes. Dr. Jordan. Why? Mr. Aters. Because of the diiRculty of convincing people, when they have reached the age, that they should retire. There will be a contention arise immediately as to whether they are or are not effi- cient, and generally the fellow that is not efficient will maintain that he is. The Chairman. The Chair will state that he has received some letters protesting against any limit at all on the retirement age. Mr. Aters. I would like to say that there are very many people who are very good after 65 or 70. I'his carpenter that I speak of at 80 years of age is performing his service to the eminent satisfac- tion of the department, and this j'ear has been called upon as an expert in his line of work ; but I do think that the compulsory fixing of a date or period of retirement is the proper way, because it cuts off all comebacks or flarebacks in the plan. Mr. Alcorn. Col. Hersey would like to say just a few words. STATEMENT OF COL. H. B. HERSEY, UNITED STATES ARMY. Col. Herset. Mr. Chairman, I do not think it is advisable for me to take up the general aspects of this question; it has been so well gone over by people who are in the work. But there are some points I would like to speak of. One thing, it is for the good of the Government, if we leave the charitable question all out. If we were hard-hearted enough to take these old people and pitch them down the steps and say, " Go ; we are through with you " ; right then it would pay us to put this bill through, m dollars and cents to the Government. It would result in putting live, vital, blood through the whole service, from the lowest man that came in up to the top. It would strengthen it, and increase the vitality all the way through, and in that way you will be able to RETIEBMBNT OF CIVIL SERVICE EMPLOYEES. 31 get along with fewer clerks, fewer employees, and get better work done. There is not any question in the world about it. The various corporations have found that out, and they are not noted for having such wonderful humanitarian ideas. They have found out that it pays them to take care of their people as they grow old. They get them to work for them longer, and they are better satisfied ; and in every way it should provide for itself. Now, in regard to the question of age, I think that this bill on that is excellent. I have listened to these heads of departments, who want it fixed so that they will take no responsibility. There is that good thing about it. The man can say, " 1 would like the best in the world to keep you here a year or two longer, but this cruel law that Congress has passed forbids it." But it is going to be a different proposition here. You are going to be able to say, " Here is an allow- ance for you; not as much as we would like to have, but it is an allownnce which counts for something, and we shall have to let you go." Now, if the Secretary of the department has got backbone enough to say, " This is the law that we stand on, and you have been reported as not quite up to the right standard of efficiency to remain over- time, consequently it is necessary to let you go," I do not look for anj^ trouble in that. I think that flexibility as to age is a good point in it. We have had men like this carpenter who at 80 years of age is still efficient. This provides for 69 years as the final time for retirement, but this grades down so that it takes care of them very well indeed. Another thing, ther« is a variety of opinions on every subject brought up in life, and I guess there is about as great a variety on this subject as any other. It is variety of opinion that is one of the things that has kept the bill from passing heretofore. With regard to whether it should be contributory, all paid by the Government, or part by the one side and part by the other, I do not consider that very material. I do think that the way that is drawn is excellent in the respect that if a man does go out for any reason, he has a chance to draw out what he has put in there. He does not have to live clear through the time to get what he has contributed ; and it puts m-ore responsibility on him in regard to that. I look upon that as a very good thing. But I do not consider it important either way. But it is extremely important that Congress should pass some kind of retirement bill. If it is not found perfect— and it probably will not be — you gentleman can amend it. When the faults appear they can be worked out. But, for Heaven's sake, get something on there and get it on at this session of Congress. That is the great I have one little plea that I want to put in for the soldier men. In this place, speaking of the age here, that 65 is the general age, and 62 is the age for mechanics, city letter carriers, and 60 for -post-office railway mail clerks, I am going to recommend and ask that thi» little proviso go right in after line 2, page 2 : /* is further provided, That all employees in Class ^^1^ have served honor- ably in the Army, Navy, Marine Corps, or Coast Guard of the United States while this country was at war for one year or more shall be eligible for retirement at 62 vears of age, and all employees who have served m like manner for two years "or more shall be eligible for retirement at 60 years of age. 32 BBTIKEMENT OF CIVIL, SERVICE EMPLOYEES. That puts those Avho have served for one year or more on the same basis as mechanics and rural carriers, while those who have served in like manner for two years or more are eligible for retirement at 60 years of age, which puts them the same as the railway postal clerks. These men that I am speaking for have gone into the Army and these other branches of the service of their own free will, and have faced what was asked of them, and some of them have had a good many hardships. It is possible that some of them might like to get out at 60. It is possible that some of them at 60, unless they are feeling pretty weak and shaky, will be anxious to hang on. There is going to be more danger of their hanging on than of their get- ting out. Senator Wolcott. But you are conscious that these men while serving in the Army and Navy during war, are at the time of re- tirement in the classified civil service ? Col. Heesey. Yes; and complying with all the other conditions. They must have served in the civil employment for 30 years. It simply gives them, if they have served 30 years, and for 1 year in time of war, the right to be retired at 62, and if they have served 2 years, they are eligible for retirement at 60. Senator Wolcott. I want to hear somebody explain this distinc- tion in the retirement which is appearing in the bill now, under which one retires at 62, another at 60, and another at 65. Mr. Alcorn. Mr. Jordan is more familiar with that. Senator Wolcott. I do not want to inject that at this moment. I suppose there is some reason in the line "of occupation. Now, what is the peculiar reason underlying the case of the soldier boy; is it simply the fact that he served the country in time of war ? Col. Herset. That is one of the reasons ; that he came forward and oflfered his life and body to defend his country. Senator Wolcott. Yes. Col. Hersey. Another thing is that some of them underwent great hardships, sleeping in the trenches, and so on. Senator Wolcott. That is incidental to the soldier's service — in- cidental to the soldier's life. Col. Hersey. Yes. Senator Wolcott. In other words, you would graft upon this bill, as to the soldier, a very mild form of pension — indirect form of pension ? Col. Herset. No, sir. Senator Wolcott. Is not that what it comes to ? Col. Hersey. He would get no more than anybody else. Senator Wolcott. He would get the benefit of the pension at an earlier date than any one else would, getting that benefit by reason of his service in the Army. ' . Col. Hersey. Yes. Senator Wolcott. Therefore, it is a species of indirect pension? Col. Hersey. If he did the service, he would be eligible for pension the same as the post-oiRce clerks or others. Senator Wolcott. I do not know what the reason is. Senator Ball. Is it not that the man in the service grows old faster than others ? RETIREMENT OF CIVIL SERVICE EMPLOYEES. 33. Col. Hersey. Yes. Senator Ball. You take the railway mail clerk, and lie is as old at 60 as a man in any other pursuit would be at 70. Col. Heesey. He should be. Senator Ball. That is true as to the average man. Physical strength and all other things considered, the strain that he is under in sorting that mail in the moving train, and all the other strain that he is under, ages him, necessarily, faster than men in other coii- ditions. Col. Heesey. Yes; absolutely. Senator Ball. And that is the condition you present, with regard to the man who went through two years of war? Col. Hersei'. Yes, sir. Senator Wolcott. Is that true, that a man who has spent two year& in the Army ages earlier than he otherwise would ? Senator Ball. It is so with the railway mail clerks. They do not live as long as others, by several years. The insurance companies, take that into consideration. Senator Wolcott. Now, that is a sensible and logical provision irk the bill, and ties into the whole series of the bills as a civil pension bill ; but can you bring the soldier into the same logical connection ? Can you show that he ages, by reason of the fact that he is in the military service, earlier than others ? Col. Heesey. You can look at a good many of them and see that. they have aged in those two years — not all of them. But they put themselves into a position where they would take experiences that would age them. They offered not only their health but their lives. Senator Wolcott. You understand that I am not arguing against the idea that a soldier by reason of his having been such should b© compensated in the benefit of a pension or otherwise. I am just questioning the propriety of introducing the soldier into this s 'heme and giving him the preference, based purely upon military service, whereas all these preferences are based upon civil service. Col. Heesey. In the civil service we have that very point, and it has been on the books ever since the civil-service law existed — that the soldiers have preference in regard to ages and in regard to exami- nations and in regard to appointments in certain lines — and that has been passed upon by Congress as something they believed to be just and right. If they change their minds about it, it is up to them to do it, but I do not think they will. Mr. Alcoen. I might say, so far as our committee is concerned,, that we have no objection to the insertion of that language. The Chaieman. You have that proposed amendment in form,. Colonel? Col Hersey. Yes sir. The Chaieman. Will you just submit that, leaving it with the com- mittee? It will be considered. (^fi\ TTersey' Yes sir. The Chaieman. Is that all? We are much obliged to you', sir. Mr. Alcorn. Mr Chairman, Mr. Libby, chief clerk of the Depart- ment of Commerce, desires to be heard at this time. The Chaieman. We will hear Mr. Libby. 125022—19 3 •34 RETIKEMENT OF CIVIL SERVICE EMPLOYEES. STATEMENT OF MR. E. W. LIBBY, CHIEF CLERK OF THE DEPART- MENT OF COMMERCE. Mr. LiBBY. Mr. Chairman and gentlemen, Secretary Redfield de- sires me to express his appreciation of the invitation extended to him to come to this hearing, and also to express his regret at being unable to be here. He also asked me to say that at any time when the committee holds future hearings, if they desire him to come, he will be glad to do so. The Secretary has quite a few ideas on superannuation and retire- ment, and he asked me to deliver to you a copy of this letter which he sent to Mr. Lehlbach on the question of the Lehlbach bill pending in the House. If you care to have me read it, I will do so, or I will liand it to the stenographer. The Chairman. I will be very glad to have you read that. Mr. LiBBY. It is short, and it has some good ideas in it [reading] : .Tune 14, 1919. My Deab Me. Chaikman : I am glad, in response to your favor of the 11th instant, to hand you extracts from the annual reports of this department during the past six years relating to the subject of legislation' for retirement of super- annuated and disabled Government employees. Since the extracts forwarded were written by myself, it may hardly be neces- sary to add to them in further expression of my views, yet I regard the subject as of such importance that I must not leave undone anything within my power to advance it. I look at it from the standpoint of common justice on the one hand and from that of efficient service on the other hand. Large private concerns recognize that a lifetime spent in their service carries with it an obligation of honor toward the employee who has thus served faithfully when years make him incapable of further effective work. The business house that would turn out an aged employee, saying to him in substance, " Now look out for yourself," after a long and good record would be damned by the common opinion of the business world, and ought to be. The only conceivable excuse that could be made would be that the employer had paid during the long service a sufficient salary over and above all the exigencies of life to have enabled the employee to provide himself for his own old age. No one will charge the Government with doing that, especially when objection is made to an employee endeavoring in his own time to add something to his or her income. Failure to be as just in these matters as private concerns are injures the 'Government, either by causing the ambitious to seek better opportunities for service elsewhere or by relaxing the efforts of its employees generally through the unconscious drag that comes from hopeless service. i The result of the present condition is seen in the survival of many old people in the Government work, who struggle on when they should have ceased from their labors, because they needs must. Enactments requiring these aged workers to be discharged are substantially repealed by the higher law of humanity. They are demoted and maintained at reduced pay, thus creating what is in substance a pension without retirement, without the dignity of a recognition by the Government of their worth, and maintaining the inefficiency which everyone seeks to remove. I am not specially concerned as to the details of any measure, but do earnestly hope it may be possible soon to establish a civil retirement system which will at once justly provide for those who have served many years, open the door to more rapid promotion and to larger opportunities for younger and more active employees, and make the Government work more efficient, not only through the removal of ineffectives, but by the unconscious but very real self-discipline that comes in response to wise and far-seeing treatment of the employee. BETIEEMENT OF CIVIL SERVICE EMPLOYEES. 35 I firmly believe that after a year of experience with any sound retirement system no voices will be lifted against it. ' Yours, very truly, William C. Redfield, Secretary of Commerce. Hon. Fredeeick R. Lehlbach, Chairman Committee on Reform in the Civil Service, United States House of Rexfresentatives, Washington, D. C. Mr. Chairman, the chief clerk of the Interior Department has made a statement which I believe will apply pretty generally to all executive departments to-day. We may not all have cases as ex- treme as some that he cited, but nevertheless those cases do exist. The question has been discussed to-day about compulsory retirement at a certain age. Personally, I believe in that. I believe it will benefit the service. The service should be made attractive, so that it will attract the proper kind of people into it, who will give good service. When a man starts from college, perhaps, he hesitates about going into the Government service as to whether or not it is a broad enough field for him. He knows that up at the top of the line it is choked up with old people who can not be removed, perhaps, until death does the work for them. But if he knew that at the age of 65 those people would be retired, and that there was going to be an opening up and a general advancement of the employees up the line, there would be an attraction there for him that would cause him to think seriously before declining Government employment. At the same time it would fill the service with a younger element. There would constantly be a turnover. People would constantly be reaching the retirement age. It would move the line up, there would be promotion, and it would be the very best thing, to my way of thinking, that the Government ever did in the way of civil service. I do not believe there is any argument against it, and I believe firmly in compulsory retirement. Of course, we all know that some of the most brilliant minds in the world are far over 65, but I am speaking now of the average worker sitting down to a desk day after day, grinding away pretty much along the same lines day after day. At 65 he is not worth very much. He has deteriorated. The general subject is one that the Government employees are actively watching. They are just sitting still, watching to see what, if anything, is going to be done, and I believe that as soon as the employees as a whole learn that Congress does contemplate something of this kind it is going to be the most pleasing thing that was ever handed out to them. The Chairman. You are familiar with the provisions of the bill? Mr. LiBBY. Not as much as I would like to be. I have only read it for the first time this morning. I got the request to come up here, and I had to hurriedly read the bill, but there may be some parts I am familiar with. I had to appear before another Senate committee this morning, and I have not had time to digest it as I would like to. The Chairman. What is your opinion as to the age fixed for the retirement age, or as to the several ages for retirement as fixed in the bill? . . , ^ , Mr. Ltbbt. I believe in 65 years, Mr. Chairman, and I do not know that I would discriminate against the different vocations. I 36 RETIREMENT OF CIVIL, SERVICE EMPLOYEES. would retire them all at one age, at which I believe a man can play out in any line of constant work. For instance, you take a brain worker and a carpenter, a man who works at his bench, and I think it would be only fair to provide the same age for retirement. I believe in the 65 years. Senator Wolcott. Sixty-five years flat? Mr. LiBBY. Yes, sir. The Chairman. Senator "Wolcott asked what reason there was for making a distinction here between the employees as to_ the employ- ments in which they were engaged. Do you see any distinction be- tween the average employees, the mechanic, and the city and rural letter carriers, and the postal clerks? Is there some reason for that distinction, making the ages different ? Mr. LiBBY. If you will allow me, I will let Mr. Hyatt, who is presi- dent of the Postal Clerks, and Mr. Lyons, who is president of the Eailway Mail Clerks, who are familiar with the conditions in which those employees have to work, answer that. It may be the committee would like to hear them at this particular time on that particular work. The Chairman. We will hear these gentlemen if they wish to be heard. We will finish with you first. Mr. LiBBY. That is about all I have, unless the committee would like to ask me some questions. Dr. Jordan. The Senator wanted your judgment. Mr. LiBBY. I could not answer that, because I do' not know who drew the bill, and I do not know why the distinction was made. The Chairman. I think I can see a reason for distinction as to the railway postal clerks, the retirement age being 60 in their case. It is because of the nature of ifie service, trying as it is on the man and on his nerves, so that at 60 years of age, after 25 or 30 years in the service, he may have suffered physically in a way that another employee in a different line of service would not have suffered. Senator Wolcott. There must be in the insurance statistics some data throwing pretty accurate light on the lives of this class of em- ployees. Dr. Jordan. There is. Senator Wolcott. I should not favor any distinction as to age unless there are some very reliable data to act upon. The Chairman. What do you think, Mr. Libby, in regard to the proportion which should be paid by the employees in making up this annuity fund? Mr. LiBBY. I do not believe the employees should contribute. I be- lieve in either giving the employees something or not doing it at all. I do not believe that the large corporations throughout the country who have a pension system penalize their employees by deducting from their wages a contribution each rnonth for that. I believe it would be more gracious to give them the annuity rather than to have them pay for it. Of course, it is a broad question, I realize. There are two sides of it There is another side to it, that it perhaps will make the employee in some instances feel that he is accepting charity unless he is permitted to contribute throughout his life of service. But. on the Avhole, I believe that the Government should pay it all. I believe when a man faithfully performs his duties as may be specified for a EBTIEEMESTT OF CIVIL SEKVICE EMPLOYEES. 87 number of years, he should be rewarded; and we all know that it takes all he can make in salary to afford the little necessities of life, without having to pay for his annuity. The Chairman. If the salary was added to, there would not be so much objection to it, would there? Mr. LiBBY. Mr. Chairman, it is perhaps a bold statement, but if the salaries of the Government employees are increased, as I believe they will be — as they should be — the prices are going to increase so much that we are hardly going to feel it. Now, that is perhaps a little off the line of argument, but for that reason I would still say that the Government should pay it all. Dr. Jordan. Do you not believe it would encourage a certain amount of thrift on the part of the employee if he was required to save some- thing against his old age? Mr. LiBBT. Yes ; to an extent, I do. But if he was able to save any- thing at all, he should put it in another channel. He should buy his life insurance, and things of that kind. I do not believe in the half- way plan of the Government pretending to give something to the em- ployee and then making the employee pay for it. The Government should do it altogether. I do not believe that the Army and the Navy have to pay for theirs. Of course, their life is hazardous, there is no doubt about it, but it is simply a choice. When a man goes in the Army or the Navy, he knows what he is going into. He chooses his own line. The men who go into the Army and Navy are not forced into it, and I do not believe that the civil employee, any more than the Army or Navy man, should have to pay for his annuity. The Chairman. But the pension given to the Army or Navy man is based on his service in the line of duty. Mr. LiBBY. No ; but they are retired after a certain age. The civil branch is just as necessary as the militarj'^ branch, and they have both done good service in their respective lines, and I do not believe that discrimination should exist. The Chairman. If you have nothing else to- say, you are excused. We are much obliged to you. I will have inserted in the record at this point a letter from Hon. W. B. Wilson, Secretary of Labor. Also I present a letter received from the Acting Secretary of State, Mr. Frank A. Polk, for insertion in the record. (The letters referred to are here printed in full in the record, as follows:) Department of Labor, Office of the Secretary, Washington, June 25, 1919. Hon. Thomas Sterling, Chairman Committee on Civil Service and Retrenchment, United States Senate, Washitigton, D. C. My Dear Senator : Your letter of June 23, inviting me to attend tlie hear- ing lield by your committee to-day on tlie subject of civil-service retirement, or to submit any statement I might desire to make on the subject matter, vs^as received this morning. As your office has been advised, my engagements to-day were such that I was unable to be present at the hearing. In view of the fact that practically all other governments have long ago enacted legislation of this character, and that a very large percentage of the private employing corporations have inaugurated retirement pension systems, Congress wouid do well, in my judgment, to lose no time in enacting an ade- quate civil-service retirement law. S8, KETIRBMENT OF CIVIL SEKVICE EMPLOYEES. Entirely apart from the humanities and justice involved in such legislation, it would seem to be high time to recognize the fact that the executive depart- ments have a pension roll whether they like it or not, and that it is the most expensive, cumbersome, and in many ways inhuman sort of a pension system. What I refer to here is the water-logged pay roll, which in all essentials pro- duces a pension system without the retirement. In other words,, aged and decrepit employees who have been worn out in Government service are retained on the pay roll at a salary which is considerably higher, in most cases, than would provide an adequate pension. These people are not discharged, can not and will not be discharged by the heads of departnlents for humane reasons which we need not go into here. On the other hand, they must be at their desks each day for seven hours in order to receive the salary at which they are listed. This is not only a physical hardship upon them, it is a useless and inhumane one. On the other hand, it has a demoralizing effect upon the other employees, particularly those who, going in at the entrance grade, are perhaps getting a salary for real work much less than the pensioners are receiving. These old people do nothing and are expected to do nothing, and the young clerks coming in at a lesser rate are naturally more or less incensed at being required to do the work that these " old-timers," so called, are unable to do. If the pay rolls could be relieved of this water logging, the Government could pay the entire cost of a reasonable system, such as is outlined in your bill, and save money. ' You will see from this that I do not look upon the retirement of civil em- ployees as a charity measure. All of the great corporations do it as a busi- ness proposition. Some of these corporations and some foreign governments have a contributory system, and some pay the amount outright from the Treasury. Personally I do not favor the contributory system. I believe that ultimately the Government of the United States will adopt a fair civil-service retirement annuity paid from the Treasury of the United States. However, at this time and for the purpose of getting the principle of retire- ment accepted, I should be glad to see even a contributory system enacted. I sincerely trust that Congress will enact at this session some sort of civil- service retirement. Sincerely, yours. W. B. Wilson, Secretary. Depabtment of State, Washington, June 25, 1919.. My Deae Senator Steemng : I have just this morning received your letter of the 23d of June, informing me that hearings on the subject of civil-service retirement will be held this afternoon, June 25, at 2 p. m., in room 450, Senate Office Building, by the Senate Committee on Civil Service and Retrenchment, and inviting me to appear and state my views for the consideration of the committee. It so happens that I have official engagements which make it impossible for me to appear before the committee to-day, and therefore I hasten to say that if the committee should desire especially to ask me any questions upon the sub- ject of civil-service retirement, I should be glad to appear before it at some other time. I have no information to present to the committee further than to say that I am strongly in favor of the adoption of some practical plan for retirement of civil service employees as a measure greatly in the interest of efficiency, and one which, in the end, would be economically advantageous. It is my belief that this is one thing that would help to bring about a much-needed improvement in the Government service, not only by making suitable provision for worthy men and women who have devoted their best years to the service of the Government at a very modest rate of compensation, but also by offering inducements to persons of ability to devote their lives to the service of the Government with the assurance that when their usefulness is at an end the Government will provide an annuity for the period after their earning capacity shall have ceased. Thanking you for your invitation, I am, my dear Senator Sterling, Very sincerely, yours, Fbank L. Polk. Hon. Thomas Steeling, Chairman Committee on Civil Service and Retrenchment, VrUted States Senate. RETIREMENT OF CIVIL SERVICE EMPLOYEES. 3^ Mr. Alcorn. Mr. Eegar, appointment clerk of the Post Office De- partment, has somethmg to say to the committee from the Postmas- ter Greneral. The Chairman. Proceed, Mr. Eegar. STATEMENT OF MR. R. S. REGAR, APPOINTMENT CLERK OF THE POST OFFICE DEPARTMENT. Mr. Eegar. I have only a brief statement to make, Mr. Chair- man, merely showing the Postmaster General's attitude on this proposition of retirement. In answer to a letter written by Con- gressman Lehlbach, of the House Committee on Eeform in the Civil Service, he said that he is in favor of an equitable retirement law providing for the retirement of superannuated and disabled em-' ployees of the civil service, to the end that a higher standard of. efficiency may be maintained. As you probably know, Mr. Chairman, we have approximately 300,000 employees in the different branches of the Postal Service. I do not have any statistics on all these branches in connection witlt the years of service and the ages, but in" connection with the depart- ment proper I have a few statistics. We have on the statutory roll 1,410 empl'oyees. Three hundred and ninety-nine of those 1,410 employees have been in the service 15 years or over. Eighty-four out of the 1,410 employees are 65 years of age or over. In connection with this proposition I have an excerpt from Post- master General Burleson's report for 1913, and also excerpts from former Postmaster General John Wanamaker's reports, and it seems; that these two men are in accord on the proposition to a large extent. Senator Wolcott. You speak of the present Postmaster General and of ex-Postmaster General Wanamaker as being in accord on this S reposition. Are we to infer that they are the only two Postmasters, -eneral who have expressed themselves as favorable to the idea? Mr. Eegar. No; but I just have these excerpts from these two- Postmasters General, because one is a Democrat and the other a. Eepublican. Senator Wolcott. To show the nonpartisan character of the- matter ? Mr. Eegar. Yes. Postmaster General Burleson states in his report for 1913 as follows, on page 187: Retirement of disabled or superannuated clerks. — The requirments of the- Railway Mail Service are exacting and the performance of duty is attended* by danger and hardship. From the nature of the worli performed it is neces- sary that the force be active and energetic, and it must be replenished con- stantly with an element of that character in order to maintain a high degree of efficiency. When the work of a railway postal clerk deteriorates it is- neces ary to change his assignments to postmasterships in second, third, and fourth class post offices if these positions are placed under the civil service. Provision should also be made for their retirement from the Railway Mail Service when disabled or superannuated upon some eystem of limited payment provided for by a contributory plan or otherwise. Senator Wolcott. Or otherwise? Mr. Eegar. Yes. Senator Wolcott. That is from whom ? Mr. Eegar. Postmaster General Burleson. 40 BETIEEMENT Or CIVIL SERVICE EMPLOYEES. Senator Wolcott. I gather from that that Postmaster General Burleson has no choice between the contributory plan and the plan in which the Government assumes all the burden ? Mr. Regae. Senator Wolcott, I would state that in that letter to Congressman Lehlbach he says that he favors an equitable retire- ment law. Now, if the contributory plan is more equitable than the other, of course he favors whichever one is most equitable, naturally. Senator Wolcott. The whole argument hinges on whether it is equitable. It is not a very definite commitment, is it ? Some might say that the employees should bear all of the burden. Mr. Eegar. Of course, that would be determined, I suppose, by statistics, maybe. That is all that I have to say, Mr. Chairman. I just wanted to show the attitude of Postmaster General Burleson on the retirement law. The Chairman. Will you leave the letter from the Postmaster General"? Mr. Eegar. The extracts from his reports ? The Chaiemak. Yes. Mr. Eegar. Yes; I will leave them. Is that all, Mr. Chairman? The Chairman. That is all. Are there any questions to be asked? Dr. Jordan. I would like to ask how the employees of the Post Office Department feel .about the retirement age which this bill car- Ties. It has been fixed in this bill at 62. What have you to say about that? Mr. Eegar. I do not have any comment to make in that connection. Dr. Jordan. Do you think that is too low ? Mr. Eegar. I would not like to make any statement, although I ■can get the Postmaster General's attitude on that proposition if you would like to have it embodied in the hearing. Dr. JoRDON. Do you not think. Senator Wolcott, that it would be at least informing as to the ages at which these letter carriers suffer these breakdowns? We have reduced the age to 62 for that ■class of employees, and we clearly understand the reasons for placing the age at 60 for railway mail clerks. Now, it^ may be that the Post Office Department has some specific statistics on this. Senator Wolcott. I think there should be something in this record to justify that distinction. Otherwise it would seem to be a gratui- tous favor to a particular class of employees, and that would be entirely unsatisfactory. Mr. Eegar. What is the information that you want to have in the hearings ? What is the question ? , Dr. Jordan. To ascertain whether the city and rural letter carriers, by reason of their conditions of employment, break down earlier, justifying an earlier age of retirement than the average civil-service worker in the departmental service, for example. Our committee, I might say, was influenced by the representations made by the rep- resentatives of the city letter carriers. We accepted their view about it. The Post Office Department may have some further •evidence on that point. Senator Wolcott. May I ask if the conditions of labor under which the letter earners have to work, particularly as to time, are at all different now from what they were, say, four or five years ago? Mr. Eegar. I, of course, do not have anything to do personally with the Postal Service. I am the appointment clerk for the Post KETIEEMENT OF CIVIL SERVICE EMPLOYEES. 41 Office Department proper; and, there being 300,000 emploj'ees in the Postal Service, I am not familiar with details ; but I will be very glad to embody that in the hearing. Senator Wolcott. I asked that for this reason. If it should appear that the mortality in that class of employees was higher than in the general class of employees, that fact would be of significance or not, now, according as the conditions of work now are the same as they ;have been during the period covered by the statistics that you might iave. Do you see what I mean? Mr. Alcoen. Yes. Mr. Eegae. Will you repeat the question, Senator ? Senator Wolcott. You are to give whatever information the Post •Office might have showing the average length of life of the man in 1;he city and in the rural carrier service. Now, let us assume that that :shows his average length of life to be less than that of other people ■employed by the Government. The question I have in mind is whether or not those statistics are of great significance now. If the "working conditions are the same now as they were during the period when the statistics were collected, they would be significant, but if the hours of labor are shorter or in any other way the conditions of labor performed by those particular employees have changed for the better,, then the statistics would be out of date, so to speak, because they would be predicated upon a different situation from what now prevails. Mr. Eegae. Yes. Senator Wolcott. So that the statistics ought to be accompanied by any such information as I have just mentioned. Mr. Alcoen. Mr. Chairman, there are several speakers here to be heard yet on the question of retirement, but they are speakers that we have here. I think some of them would like to be heard this evening, but others could come back to-morrow, at your suggestion. We have Tiere Mr. Beach, who has a knowledge of the provisions of the bill and would like to discuss the merits of this particular bill; but the chairman has suggested that that matter be deferred until to-morrow, when there will probably be a larger representation of the committee liere. The Chaieman. Yes ; if he expects to go into an analysis of the bill I would like to have it done when there is a fuller attendance of the ■committee, if we can get it. Mr. Beach. That would be entirely agreeable to me. I will be glad to wait until there is a fuller attendance of the committee. The Ciiaieman. We will have to adjourn over, anyhow. We can not finish to-day. • Mr. Alcoen. We would be glad to have the committee hear Mr. Brown, representing the rural letter carriers, at this time. The Chaieman. Mr. Brown, we will be glad to hear you. STATEMENT OF MR, W. D. BROWN, ATTORNEY FOR THE NA- TIONAL RURAL LETTER CARRIERS' ASSOCIATION. Mr. Beown. Mr. Chairman and gentlemen of the committee, as attorney for the National Eural Letter Carriers' Association I de- sire to express my approval of the bill you have under consideration, Senate bill 1699. 42 KETIREMBNT OP CIVIL, SERVICE EMPLOYEES. The rural letter carriers occupy an unusual position in Govern- ment service, being the only class of Government employees, outside of fourth-class postmasters, who are required to furnish all the equipment necessary for the performance of their official duties. The compensation of rural letter carriers never has been anything like adequate to their needs or commensurate with the duties that have been required of them. As a result of the inadequacy of their compensation last year — ^that is, for the fiscal year 1918—18 per cent of the me a in the rural-delivery service voluntarily resigned. That is a situation, Mr. Chairman, that I am sure the Congress of the United States does not approve of. The Postal Service is the one service of the Government that comes in daily contact with all the people, and the Postal Service is certainly a branch of Government service that ought to be maintained at its highest efficiency always;- and to do that it is not only necessary to pay the men adequately, but to insure them some safe getting-off place when they have reached a point where they can not render efficient and satisfactory service. Senator Wolcott has rather pressed the question about the dis- crimination in the ages of retirement, and I believe if the Senator will consider this phase of it Senator Wolcott. T am simply seeking information. Mr. Beown. I realize that. Senator Wolcott. I have no predisposition in that matter at ail. Mr. Brown. I was perhaps unfortunate in my expression ; I under- stood your purpose. But I will ask the Senator to consider the direct urge upon every employee of the Postal Service. Without tflra wing any invidious distinctions between department employees in Wash- ington and elsewhere and employees of the Postal Service, I believe I may fairly say this, that there is not the immediate demand for prompt service anywhere else that there is in the Postal Service. Every man, woman, and child in the United States is right on tlie back of the postal employee,- and every mim in the Postal Service is being urged to do his very utmost all the time. He is under a nervous strain that does not apply to any other branch of the Gov- ernment service. I am speaking of the local post-office employees, the post-office clerks; and supervisory officials, and rural carriers, and everybody connected with the local post office. They are under a stress that does not apply in another branch of the Government service, and I believe that if the Senator will consider that phase of the subject it will probably convince him that the discriminations between the different ages of retirement as provided in Senate bill 1699 are very fair. Senator Wolcott. Mr. Brown, have we anything in the way of accurate information, aside from speculation and theory, to indicate that this life of constant stress and strain which you have described as incident to the duties of a rural carrier does reflect itself iq earlier breakdown of that class of postal employee? Mr. Brown. I do not know, Senator, whether any statistics have been compiled on that subject or not, but I do know this much, from 10 years' active representation of the rural letter carrier body that the daily grind, the daily traveling over all kinds of roads in good weather and bad weather, does have a serious effect on a man's RETIREMENT OF CIVIL SERVICE EMPLOYEES. 43' physical condition. It superinduces kidney trouble and other or- ganic troubles that necessarily incapacitate a man at an earlier period than otherwise would occur. We have so many complaints of that sort, and I know personally of a great many enforced resignations due to that. Conditions are getting better, unquestionably. Koad conditions are improving all over the country. Many men are get- ting now so that they can use automobiles, where a few years ago they had to use horses and wagons. But the men who had to use the horse and wagon years ago and contracted these physical dis- abilities still suffer from them, regardless of somewhat easier con- ditions in certain localities where the road conditions have improved. ■ The Chairman. Mr. Brown, this has occurred to me, that the out- door life and exercise of a rural carrier would be beneficial and that they would not deteriorate, physically, as rapidly as a man who is confined to an office in his work and at a desk. Mr. Brown. I know, Senator, there is an idea of that kind extant, but it is theory rather than something tha.t has been proven by years of experience. There are isolated cases where men have quit seden- tary employment and gone into the Rural Free Delivery Service in order to recover their health and have been successful; but there have been a great many cases where men went into the Rural Free Delivery Service not to improve their physical condition, but as a means of livelihood and have broken themselves down in that serv- ice. Take it in South Dakota. I can cite instances where men going out with the thermometer 30 or 40 below zero have had their faces frozen and have suffered a loss of fingers, frozen. There is a case in Tennessee where a man was frozen to death on his rural free delivery route. Now, if it was always fair weather it would be a different .thing, but the man must cover his rural route every day, regardless of weather and road conditions. And it is that dqily urge, that sense of duty that hangs over him all the time, that does make it a real hardship for the man in the Rural Delivery Service, who must keep going every day whether he feels like it or not. Now, I hope the time will come when the compensation to our rural carriers — and this is a little apart — ^will be more nearly ade- quate to their needs. If you can provide a reasonable retirement measure so that when a man becomes superannuated or incapacitated he can be ■ taken care of, at least partially, you will take a long stride toward improving not only the rural mail service, but the entire Postal Service and, of course, the Government service gen- ally. Now, Mr. Chairman, there is another matter that I want to speak about. There is one class of civil-service employees that you elimi- nate in this bill, and that is fourth-class postmasters, and what I shall say I hope will not have the effect at all of discouraging favor- able consideration of the general bill, and I know it will not, but I feel impelled to speak for fourth-class postmasters, who are under civil service. They are under civil service; part of them have been since 1908 and the balance of them since 1910, I believe. I can con- ceive of no good reason why they should be excluded. I can under- stand why you might say that a fourth-class postmaster has a side business ; that his having a post office in a store will draw trade to that store. Formerly that was the case, but it is not so any more, generally speaking. 44 RETIREMENT OF CIVIL, SERVICE EMPLOYEES. Senator Wolcott. Why do you narrow your comment in that par- ticular to fourth-class postmasters ? Are not all postmasters now on the. civil service ? Mr. Brown. No, Senator ; and there is a provision of law that other, postmasters appointed by the President and confirmed by the Senate have a different status. Fourth-class postmasters are appointed by the Postmaster General. Senator Wolcott. They are under civil service by statute? Mr. Brown. The fourth class ? No. By Executive order. Senator Wolcott. Is there not the same kind of Executive order with respect to first, second, and third class postmasters ? Mr. Brown. That will require legislative action, in my opinion, be- cause now to appoint a postmaster of the, presidential class, the first, second, and third classes, requires confirmation by the Senate, That is a different matter. What I am speaking of is the civil-service post- master. And I may say that within the past two or three weeks I have attended two or three State conventions of fourth-class post- masters, and the hardships that I have heard recounted at those con- ventions opened my eyes. They are going to come to Congress and ask for substantial recognition, and if you can do something for them in this bill it will only be a matter of simple justice. They are now civil-service employees, and they, in my opinion, are entitled to full consideration by this committee just the same as other employees of the civil service. If you can do anything for them now, you will pro- tect them in their position and partly insure the perpetuity of the local post office in communities where they are so badly needed. I was told by postmasters at the conventions that I recently have attended that unless Congress does do something for these men Very shortly there will be a greater number of resignations from the Postal Service than there has ever been before among postmasters. The Chairman. It would be a rare thing to find fourth-class post- masters in office the requisite time to make them eligible for retire- ment. Mr. Brown. I had an idea of that sort, but it is not as rare as you might think. I was in Michigan two weeks ago, and I was surprised to find the tenure of office of some of those postmasters. Now, there is another thing, which I do not know whether you have considered under this bill or not. I understand that Congress is going to do something substantial for all Government employees. I believe that it is absolutely necessary. I believe that the requirements of the Government service must be met by the continued service of the efficient men in it, and when you fix the salaries adequately and then fix a just retirement provision after a man has reached a condition of superannuation, then you ought to fix it so that the man may stay in the service until he reaches that age. In other words, tighten up the civil-service laws. That surely comes within the purview of your committee. Tighten up the civil-service laws so that before a man reaches the age when he can be retired no executive officer of the Government can say to him. " You are no longer needed." There ought to be some court to which the civil-service employee can apply for a fair and impartial hearing of his case if charges are preferreii agaisnt him. I know of a great many cases in the branch of the service that I am interested in where men have been dismissed, you might RETIREMENT OF CIVIL SERVICE EMPLOYEES. 45 almost say summarily, without having a fair report of the charges that were made against them, without an opportunity to confront their accuser, without an opportunity to present witnesses, without anything that a court of justice would accord a man in protection of himself. Now, you take a rural letter carrier, and I speak particularly for them. As the honorable chairman knows, out in the rural districts the rural letter carrier is proud of his position, and his family is proud that he is the rural letter carrier. His relatives all realize that he is the direct representative of the Government. Now, some- body will prefer charges against the carrier and he will not know who did it. They are vague and indefinite. He is charged in a blanket sort of way with having committed an offense against the postal regulations on some unnamed day, and they call on him ta answer those charges by a specified time. If the charges are pre- ferred the chances are that he will be dismissed. It means that he is humiliated, that his family is humiliated. The safe thing to do, and the just and proper thing for the Congress to do if they are going to have a civil-service law that requires a man to pass an examination for an appointment, showing that he is qualified for the position that he seeks, is to pass a companion law to protect that man in his position after he has established his qualifications and received the appointment, and not leave that to the whim, you might say, of some superior officer. I believe, Mr. Chairman, in your retirement law, and I earnestly hope that something of the sort will be enacted ; but I believe it will fall far short of its purpose, of its best purpose, unless you enact a companion measure to protect the men in their positions after having taken the examination. The Chairman. Do complaints relative to the conduct of rural carriers go to the Fourth Assistant Postmaster General ? Mr. Beown. Yes; and they are referred to an inspector and the inspector writes a brief blanket sort of letter — ^" Complaint has been made that you failed to deliver mail on your route to such and such a man," or something of that sort. He has not the date of the alleged offense, he does not know who accuses him, he does not know the animus behind the accuser, and he does not know anything about it. He must do the best he can to answer. That is not peculiar to the present administration, but to my knowledge has prevailed for the last 10 years. . Senator Wolcott. Do the inspectors decline to give the carriers the information they want?i . . Mr. Brown. Oh, yes. Ordinarily they put a time limit when the carrier must file his answer in detail to the charges. He has not time to go back and say, " I want to know who charged me with this, and I want to know all the facts in the case." _ , , ,, Senator Wolcott. Can it be true that any inspector would call a man to book for violating postal rules and regulations and not tell him where he did it and about the circumstances, and call him to answer the charge ? -r ■,■,■, ^-^ ^ m i ^i. Mr. Bkown. Yes. It can be true. I should hke to file a letter that i received in the past two or three days. , , , , , , , Senator Wolcott. I think such an inspector ought to be grabbed by the scruff of the neck and thrown out. 46 RETIREMENT OF CIVIL SEEVICB EMPLOYEES. Mr. Brown. I will file a letter that I received within the past few days to this effect that charges were preferred against a rural letter carrier, and the inspector came to the post office where this carriei* was employed and instead of coming to the carrier he got his states ment about the matter, and without permitting the carrier to cite witnesses in his behalf he went around and saw other people and never went near the carrier at all. The Chairman. The carrier then had no chance to be heard in his own behalf? Mr. Brown. Absolutely not. Senator Wolcott. In that particular case what was the charge against him? Mr. Brown. I do not recall. I have so many of these complaints that it has gotten to be an old story with me. They tell their troubles because they can not tell them to the Fourth Assistant. There is a regulation that prohibits their writing to their superior direct. They must write through the postmaster rather than direct. They tell me their troubles and ask if I can do anything to help them out. Of course I can not. Mr. Chairman, that is what I desired to say, that the rural car- riers cordially and enthusiastically indorse this bill, not that it is perfect, but that it is a start in the right direction, and we feel sure that it will result in a very great improvement in the entire Govern- ment service. We ask for consideration for fourth-class postmasters and we also ask for a tightening up of the civil-service laws. Senator Wolcott. That subject could hardly be dealt with in this bill. Mr. Brown. I think probably it might not, and yet there should be a companion bill to go along with this. I thank you, Mr. Chair- man. The Chairman. We are glad to have heard you, Mr. Brown. (Thereupon, at 4.50 o'clock p. m., the committee adjourned until Thursday, June 26, at 10.30 o'clock a. m.) RETIREMEI^T OF EMPLOYEES IN THE CLASSIFIED CIVIL SERVICE. THURSDAY, JUNE 26, 1919. United States Senate, Committee on Civil Service and Retrenchment, Washington, D. C. The committee, pursuant to the call of the chairman, met in room 449, Senate Office Building, at 10.30 o'clock a. m.. Senator Thomas Sterling presiding. STATEMENT OF COMMISSIONEB, LOUIS N. BROWNLOW. Commissioner Beownlow. Mr. Chairman, the Commissioners of the District of Columbia heartily indorse the principle of the meas- ure under consideration, and most earnestly urge that (he paragraph appearing on page 2 of the bill, from lines 16 to 22, inclusive, be re- tained, since this paragraph applies particularly to the employees of the municipal government of the District of Columbia. As Sena- tors well know, the employees of the District of Columbia are not under the civil service. They are not in the classified service. They are not employees of the Federal Government in the strict sense, but as a matter of fact and in practice they are comparable in every waj'^ to the employees of the Federal Government, except one, and that is, that their compensation is very much lower for like work than the compensation of employees of the Federal Government. That, per- haps, is not true with respect to some of the minor clerkships and positions that have been created by statute in the last few years, but it is a persistent fact that arises out of the circumstance that between ■30 and 40 years ago when the District clerks received the same com- pensation as that paid to the clerks of the Federal Government, a horizontal cut of 25 per cent was made in the pay of the District employees, and that has never been fully gotten over. In particular this paragraph applies to all regular annual em- ployees of the municipal government of the District of Columbia appointed directly by the commissioners, including those receiving per diem compensation paid out of the general appropriations, but whose services are continuous. That would include about 1,200 so- called statutory employees, the exact number at the present time under the present appropriation act being 1,179. It would include per diem employees whose employment is continuous from year to year and of a character that the men would come under the classifi- cations from (a) to (f) in this bill, since they are employed not only continuously through the year, but for years and for many years con- tinuously. In that class would be included about 300. 48 RETIREMENT OF CIVIL SERVICE EMPLOYEES. The Chairman. Per diem employees? Commissioner Beownlow. Per diem employees appointed directly by the commissioners. There is a difference between the per diem employees appointed directly by the commissioners, whose services are continuous, and those per diem employees who are worlnnen and laborers hired from time to time as the jobs arise by subordinates of the commissioners immediately in charge of construction or other work. The Chairman. And who would not come within the provisions of this bill? Commissioner Beownlow. Who would not under any circum- stances come within the provisions of this bill. The next class, beginnin^^ in line 19, includes public-school em- ployees, except school teachers and officers, to be included in the pro- visions of the act, and the bill provides that members of the police and fire departments shall be excluded from the provisions of it. The- public-school employees other than school officers and teachers are the janitors, firemen, building custodians, and employees of that charac- ter, and of that class there are about 300; so that with the per diem men estimated, and the statutory employees, the number of District of Columbia employees who would come within the provisions of this measure are 1,779, in round numbers, 1,800. The school officers and teachers are excepted because of a retirement bill especially applying to school-teachers, which is similar to the school-teacher retirement bills in other cities, and is now being considered in this Congress and has been favorably reported by the House Committee on the District of Columbia. The members of the police and fire departments are excluded because they now have the benefits of a police and firemen's pension act, which is working satisfactorily. Of the 1,800 employees to whom the terms of this bill are appli- cable there are now about 80 persons who would be subject immedi- ately to retirement within 90 days after the passage of this bill. That is not the exact number, because we have not gone into the classifica- tion of ages in a careful way, but it would not vary 10 in my opinion either way, so that it would be perfectly safe to say between 70 and 90 persons. The Chairman. Of your public-school employees, how many, if any, are per diem employees? Commissioner Beownlow. None of those. There may be one or two, but practically all of them are statutory — the janitors and the clerks. The per diem employees — those 300 — are a class of people typified by those who are employed in the water registrar's office, who are paid out of the water-rate fund. They are all per diem em- ployees, but their employment is continuous, and has been, for very many years. I think I ought to say, for the benefit of the committee, that although the government of the District of Columbia has not had civil service — that is it has not been under the Civil Service Com- mission, it has had in some of its- departments a departmental civil service, in so far as admitting applicants to positions through means of examinations. But we have had continuous employment, and any change of administration, any change of commissioners, has not re- sulted in any general turning over, and as a matter of fact the tenure of office has been just about the same as the tenure of office of the Federal employees who are under the classified service. KETIEEMENT OF CIVIL SEEYICE EMPLOYEES. 49 The Chairman. Do j^ou mean to say that in some of the depart- ments of the city government applicants for positions therein are required to take an examination? Commissioner Brownlow. Yes. That was true in several of the departments down until the last two years, when, if you delayed to get an examination, you would probably lose your man. That custom has been temporarily in abeyance. That was true formerly of the street-cleaning department for inside positions, and true of all the positions under the health department and, of course, is true at all times of the fire and police departments, but they are not included within the provisions of this bill. In any event, where there was not an examination, there usually Avas a practical test, but that is a mere incident, the point I thought pertinent to the inquiry being prosecuted by this committee, being that there have been continuous employments. We have men employed who are between 70 and 80 years of age, and one or- two over 80, who have been employed con- tinuously by the District of Columbia for a half century. We have a good many employees whose services antedate the present form of government of the District of Columbia, and I believe that was the basis for a very strong argument why the District employees should be included, and I brought it in because some one not quite familiar with the circumstances might conclude that because we were not under the civil service we would have very few persons who are continued from year to year, when, as a matter of fact, the employ- ment is as continuous and the tenure of office in practice compares with that of the Federal Government. The Chairman. Is there anything further that you wish to say? Commissioner Brownlow. Nothing, unless the committee has some questions that they desire to ask. The Chairman. I think not, unless it is this : What do you think of extending the principles of the civil service to the employees of the District, generally ? Commissioner Brownloav. The Commissioners of the District of Columbia since I have been in office have very strongly recommended that to Congress. There ought to be, in my opinion, one condition, however, and that is that the matter of apportionment among the States be waived as to the District of Columbia, and that the em- ployees be drawn from among the people of the District. In other words, not that we would bo termed classified under the Federal Civil Service Commission, but that the Federal Civil Service Com- mission be constituted a municipal civil service commission for the uses and purposes of the District of Columbia government. That I have always favored, and that I believe would be protection to the commissioners, and it would not radically change the customs and practices that have been in vogue through many administrations. The Chairman. Appointments now are not apportioned at all as among the several States— of course, they could not be. Commissioner Broavnlow. They are not. In conclusion I should like to say on behalf of the commissioners that we heartily favor the principle underlying this bill. We have not thought it necessary to go into the discussion of the principles of retirement legislation, but we do most earnestly urge that the employees of the District of Columbia, who have a public employment here in the District of 125022—19 4 50 RETIREMENT OF CIVIL SERVICE EMPLOYEES. Columbia, be given exactly the same treatment with respect to retire.- ment that is accorded to the employees of the Federal Government itself. The Chatrjian. I think I express what will be the feelings of the committee when I say, Mr. Brownlow, that we thank you for your presentation of this subject. I know that it will settle and make plain some questions that will surely arise in the discussion of the bill in the Senate. STATEMENT OF DE, W. W. FOSTER, Dr. Foster. Mr. Chairman and gentlemen, the first thing that occurs to me to suggest is a correction of two or three typographical errors in the bill. On page 3, line 20, the word " average " should appear between the words " employee's " and " annual " in order to bring it in line with the provisions of the other clauses. The Chairman. So that it would read " employees' average annual basic salary " ? Dr. Foster. Yes. On page 12, lines 2 and 3, I think, should be amended so as to read : Annuities granted under this act for retirement on accouijt of age shall commence from the date of separation from the service. The Chairman. Instead of " from the date of termination of pay ''? Dr. Foster. Because a man may be on leave without pay for months before he is retired, and he would not want to antedate his pension prior to the actual date of retirement after the passage of the act. I think Mr. Beach agrees with that amendment. Mr. Beach. I agree with that. The Chairman. Just give that again. Dr. Foster. In the second line on page 12 I would strike out the word " termination " and in the third line I would strike out the words " of pay for active," and insert after the word " of " in line 2 the words " separation from the," so that it will read " from the date of separation from the service on or after the date this act shall take effect." On page 14, line 9, the word " of," occurring between the word " date " and the word " this " should be stricken out, because it does not convey the sense intended. The Chairman. It should read " to the date this act shall take effect " ? Mr. Foster. That is it — ^not " the date of this act," because the act takes effect 90 days after its passage. The Chairman. That is probably a typographical error. Dr. Fosa'ER. Yes ; that is what it is. I want to offer an amendment to the section relating to disability, section 5, and this is the amend- ment which I desire to offer. Beginning on line 17, page 7, after the AYord " hereof " insert the following words : Provided, That in no case shall an annuity for disability be less than $360 per annum. The Chairman. I would like to hear your statement in support of that proposed amendment. Dr. Foster. My statement is this, that if a man is retired for disability after a medical examination as provided in this bill, KI3TIEEMENT OF CIVIL SERVICE EMPLOYEES. 51 the only reasonable presumption is that that man is going to be unable to do anything. Thirty dollars a month, or $1 a day, for a man who is totally disabled from earning anything by effective work, is very little pay, a very small amount in these days. Under the provisions of the bill as drawn without this amendment the man may receive only $15 a month, half a dollar a day. A man who is disabled, who is sick, requiring, perhaps, special diet, requiring medical attendance and nursing, would not get along very well on $15 a month, and unless you give those people a sufficient amount so that it looks as though they were getting something, the tendency is and will be to keep them on the rolls of the department or the independent establishment where they are working, rather than to put them out in the cold on a mere pittance of $15 a month. The object of the bill will be to see that unless you allow those people who are disabled, who, of course, have the sympathy of every one, and whose cases will appeal to the heads of the departments, to keep them on the rolls — unless you allow them something more than $15 a month, they will be kept on the rolls at their present salary rather than turned out on a very small amount. In order to make it seem decent and reasonable that they be dropped from the rolls when unable to work, I say, give them enough so that they can do something with it, so that they can at least buy their medicines, and something in the way of special food, as many of them will require. For instance, a consumptive requires a great deal of milk and eggs and butter and fat, and they are especially high just at the present time. The Chairman. Would not that reasoning apply to others than those retired on account of disability? Would it not be contended that you are making a workman's compensation act ? Dr. Foster. Not exactly ; because a man who is retired at 65 after 30 years' service in many cases will be able to go out and earn some- thing toward a living. I know men in the bureau where I work who are excellent men at 65. They can go outside and get something to do, especially in davs like these, when help of all kinds is in great de- mand. They can get a position in a store or in a bank where they can do clerical work and earn something to supplement their annuities. But a man who is totally disabled, discharged after a medical exami- nation on the ground that he can not do anything, will not be able to go outside and earn something to help himself along. That is the way it appeals to me. ■ -, ,■ ^ The Chairman. The committee will give due consideration to your proposed amendment and the reasons which you give. Dr. Foster. In regard to the bill itself there seems to be a good deal of misapprehension about it, because I have heard the statement made repeatedly that under this bill the Government is going to pay the amount which is required to retire the ]3eople for the first year. There is nothing in that contention. There is no provision m this bill any- where which requires or commits the Government to pay one single cent toward retiring anybody at any time. There is a provision that a fund of $100,000 shall be created to pay the clerical and. necessary exnenses of administering the act, but that does not go to the people who are retired. So far as the bill goes, there is no provision that now or at any time in the future, from now to eternity, the Government shall pay one single cent for retirement or annuity for disability to 52 BBTIEEMENT OF CIVIL SERVICE EMPLOYEES. any person. Of course, we admit that the probability is that when the fund which the employees contribute fails the Government will step in and supplement it by making payments from year to year, so as to carry out the declared intention of the act, but this bill does not commit the Government to anything, and we are going on our good faith in the Government's future act. There is a further statement made from time to time by people who are misinformed, that this is a 50--50 proposition — that the Govern- ment puts in one-half and the employees one-half . There is nothingto that. The Government does not put in a cent. During the first 12 years, according to the best information that we can get, according to actuaries, the Government does not put in anything except the cost of administering the act. After the first 12 years the Government will gradually begin to contribute, and at the end of 25 years from the present time, if the bill should pass, the Government will be paying about five-eighths and the employees about three-eighths, and the fund will be stabilized in about that proportion. The Chairman. Do you mean to say that the amount contributed by the employees out of their monthly compensation will itself create such a fund as to require no payment by the Government for the first 12 years after the passage of this act ? Dr. Foster. That is exactly it. The Chairman. And that after that 12 years the Government will be contributing about five-eighths ? Dr. Foster. No. After the 12 years the Government begins to con- tribute, gradually increasing the amount from year to year, until at the end of 25 years the Government will be contributing five-eighths and the employees three-eighths, and that fund will be practically stabilized in that proportion after 25 years. We have the figures under the McKellar bill, which differs slightly from this bill, and under that bill there would be required a little less in the way of pay- ments. Under the McKellar bill it has been figured out that after the end of five years from the date payments begin the Government will have accumulated from the funds paid by the employees, without pay- ing in a single cent, $29,550,000, after paying all retirement provi- sions. This would come from the 2^ per cent deducted from the sal- aries of the employees. At the end of 10 years the Government will still be taking from the salaries of the employees an amount which will pay all annuities and retirement provisions, and will have an excess of $1,000,000 a year more than is paid out in annuities; but, of course, the Sterling bill will require larger payments, because the amount paid to the highest class is $750, instead of $600 as in the McKellar bill, and there is also added the disability feature, which is not in the McKellar bill. In regard to the disability feature I would like to say this. The Commissioner of Pensions told us yesterday that 303 men in the Pension Bureau are over 65 years of age out of 878 employees. I am particularly acquainted with the force in the Pension Bureau, having been there for 30 years. I venture to say that there are not five men under 65, or women for that matter, who would be retired for disability if this act should pass and take effect on the 1st of July, so that the number of retirements for disability of people under the age limit of 65 is going to be very, very few. That is not going to encumber the service or injure the fund very greatly, EETIREMENT OF CIVIL SEEVICE EMPLOYEES. 63 because if it comes to the Pension Bureau we will see that the medical examination is thorough and that people do not skip out unless there is something the matter with them. They are not going to play any such tricks with us. We have an interest in it ourselves. Personally I am here as the chairman of the Committee on Legis- lation of the Federal Employees' Union, Local No. 2, of the District of Columbia. If I had written the bill, I would have written it differently. I am representing the union now, and I am in favor of this bill from beginning to end, with the exception I suggest in regard to making the payment for disability not less than $30 a inonth. The Chairman. Is that all you care to say, Dr. Foster ? Dr. Foster. I have one or two suggestions that I want to make in regard to matters brought up yesterday. It was stated here, I , believe, by Col. Hersey that there was no act on the statute books now which allowed tlie retirement of enlisted men. I think that was his statement. The act approved February 4, 1884, provicles that an enlisted man in the Army or Marine Corps who has served as a private or a noncommissioned officer, or both, shall apply to the President and be placed on the retired list at his present rank and receive 75 per cent of his present pay and allowances at the time of retirement. I think that does away with his argument that the soldiers should be included in this bill and retired at a lower figure, because there is no limit of time in this Army retire- ment bill. It is simply 30 years' service and 75 per cent of the pay and allowances. In regard to the Navy, the act of March 2, 1867, amended by the act of December 23, 1886, which did not materially change the original act, it is provided that an enlisted person or appointed petty ofiicer in the Navy or Marine Corps after 20 years' service who has not been discharged for misconduct, who is disabled from sea service, from age or infirmity, in lieu of receiving a home in the Naval Asylum at Philadelphia, shall be paid one-half of the pay which he is receiving at the date of his discharge. He does not have to put any money into the funds. The fund from which he is paid is made up from the sale of prizes and penalties, which are set aside. The Chairman. He contributes nothing to it? Dr. Foster. Nothing whatever. The Chairman. How long does this run? Is it in the form of an annuity? Dr. Foster. He gets quarterly payments, equal to one-half of the pay at the time of discharge. Now, every disabled person in the Navy or Marine Corps, under the circumstances, who is examined and found suitable for release after 10 years' service, should be granted for a specified time a pension not to exceed the rate allowed for full disability of his grade, or if he is pensioned under the provisions of the general pension laws, not to exceed one-quarter of his pension, and in the first case, added to any pension that he is receiving; and in the second case, if he is pensioned, one-quarter of his pe-nsion is added because of his 10 years service and the fact that he is disabled. I thought it might be well to note these positions because some people thought that there is no chance for an enlisted man to get anything— that he must be disabled or he could get nothing. 54 KETIEEMENT OF CIVIL SERVICE EMPLOYEES. In regard to the age limit, I say that I am here representing the Federal Employees' Union. Now, if I had been writing the bill I think I would have made it so that a man might retire at 65 unless the head of the bureau asked to have him remain two years. I would like that to be repeated once, but at the end of -four years he would have to get out. The Chairman. That is practically the requirement of the bill. Dr. Foster. The bill provides as I read it that the man may be recertified for two years for five times more. The Chairman. After 10 years after the passage of the act then there can only be two extensions. Dr. Foster. That makes 14 years for a man who is in the service now. The Chairman. It might be for the man that is in the service now if he was qualified and certified by the head of the department or branch or bureau, but after 10 years from the passage of the act he is limited to four years, all told. Di-. Foster. Yes ; that is right. I would cut out the 10-year limi- tation if I were drawing the bill. Mr. Ayres spoke about a carpenter 80 years old who is doing good work. He can be certified for 14 years longer, making him 94. There is nothing to prevent that in the law. The Chairman. The discretion of the head of the department in regard to that and his knowledge of his fitness ought to determine. Dr. Foster. But there are men in the various bureaus — I do not want to state which bureau — to my personal knowledge, who are drawing $1,800 or more and doing practically nothing. Now, are those men who are over 65 willingly going to take $720 ? No. They are bringing every social and political influence to bear upon the head of the department that they can to be retained, and the head of the department may turn down the influence, but maybe he will not. The Chairman. One theory — and I think it is a sound one — is that the head of the department, knowing that the employees will be pro- vided for, will be less reluctant to dismiss them from the service when they have reached a point where they are not efficient in the service. That is one object in providing these annuities, in order that the head of the department, who would be moved by sympathy to retain inefficient employees, in case they have an annuity, will have no such reason for retaining them. Dr. Foster. That is a good argument, but that is one of the fatal elements of the bill, from my standpoint. The Chairman. The committee is much obliged to you. Doctor. STATEMENT OF MK. aiLBEET E. HYATT, PRESIBENT NATIONAL FEDEKATION OF POSTAL EMPLOYEES, WASHINGTON, D. C. Mr. Hyatt. A great deal was said yesterday in the discussion in regard to the proper ages of retirement, the question being raised in regard to the introduction of evidence by the post-office employees, for example, that they should be retired at a lower age limit, and I would like to say a little about the peculiarities of the occupation of the post-office clerk, with the idea of showing why this limitation was put in the bill. The term "post-office clerk," as applied to the men of our class, of service, is misleading. They should not be called clerks at all,. BETIKEMENT OF CIVIL SERVICE EMPLOYEES. 55 ^^^^], ^^^^^^I ?^l Standing and our struggle for better conditions would be aided i± our name was simply changed to something that was descriptive of the work which they' perform. The post-office clerk, so called, is a distributor of mail, and being a distributor of mail, that means that he must stand on his feet through his entire tour of duty and be under a constant strain in regard to accuracy, and not only accuracy but speed. Not only that, but in certain phases of the calling, for instance, the men who work on the platforms taking care of newspapers and second-class matter, the men that work m the parcel-post sections, etc., in addition to having this strain of accuracy and speed over their heads have to perform manual labor, which is at times of a severe nature. And one of the things that make the occupation of a post-office distributor the position of a young man, or at any rate not an aged man, is that his ability is based upon his knowledge of large num- bers of details, very uninteresting details that are hard to learn, and are only learned by the severest application and long-continued study, and that this faculty of the mind which allows a man to acquire that sort of thing with facility is one that deteriorates at an earlier age than the other faculties, so that a man might be at the height of his efficiency along some other line at 65, perhaps, but the idea that he is going to be able to keep up with the constant changes in the distribution by reason of the changes of railroad lines, and so forth, is not to be supposed. There is another angle of the post-office clerks' work which is inseparable with the very functioning of the department, and that is that the essence of a good mail service is, of course, celerity, speed, and it might be said that the Post Office Department functions by a series of explosions like a gasoline engine. At certain times of the day, the evening hours, for instance, from 5 o'clock on, after the business firms close, there is a condition in every post office in the United States that is a hard one to meet. The mail is literally duniped in these offices by the ton, and it is usually the case that the mail trains that carry this mail out of the cities leave within a half hour after the close of business. The usual arrangement out of a big city seems to be to have the trains leave shortly after the dinner hour. The result is that every man in the service in this distribution work, every available man that can be used, is crowded to the limit to meet this peak of the load, and not only is that a strain on the individual man, but a lowering of the efficiency of the individual man lowers the efficiency of the whole plant. Then, we have these periods like the Christmas-time rush. That is a crisis in the mail service every year. Also the first of the year, and the first of each quarter, and of each month, at which a man not only has to work at the verj' height of his speed under a severe strain, but after he has reached a certain age in the service he can not rise to the emergency. We have often discussed the question of night work in tlie service, which is an unnatural condition for an old man, and the overtime that the boys have to work has been spoken of a great deal, all of which makes a condition of affairs which does not either from the standpoint of efficiency or of humanity, allow the continuation of the aged in the service, and 62 is not at all a low age. 56 RETIREMENT OF CIVIL SERVICE EMPLOYEES. The labor problem in the Post Office Department is one which has a direct bearing on this question of retirement. The Post Office Department, in order to have its skilled men, is in the unique posi- tion of having to train them. It has no outside source of supply. It might be that the Government could allow its service in some other lines to deteriorate, and then it could remedy those conditions, and the service would be naturally recruited from men who entered the service from similar occupations in private industry. But there is no other corporation or any other institution in the world that uses the knowledge that the Post Office Department has to have, and which is a form of skill which requires considerable training. So when a condition arisis in the Post Office Department — which has been a cumulative condition for a long period of years — that the inducement is for the young man as soon as he realizes what the young man is up against, to get out, and the old man must remain, and you have a continual accentuation not only of the problem of retirement, but the accentuation of the recruiting problem in the post office. At the present time, with the salary low, below a living wage even in the maximum grades, and having been low for a period of 10 years, the obvious condition arises that the men who have re- mained in the service have been unable to provide for themselves. They have been unable to raise any funds to take care of themselves in their old age. The young man who would recruit their ranks, who would supply the losses of those who voluntarily retire, or who die, or who are forced out by inability, is entirely cut off, because the young men will not go into the service in the Post Office Depart- ment. So in a city like Detroit where he can get $6 or $7 a day as an ordinarily skilled or unskilled Avorker he is not willing to become a post-office clerk at the entrance salary of $1,000 a year. Just how drastic this situation is, not only in this particular office but in practically all of the big offices of the country, is shown in a telegram which was received from the Detroit post-office clerks, which I should like to insert in the record. The Chairman. I think you might read that. Mr. Htatt. It bears on the wage situation, but the reason I brought it at this time is that it shows the actual necessity of pro- viding for the service in a way which will keep the young men in. The telegram is dated June 23, and is as follows : Whereas the postal service being rendered the city of Detroit has reached such a point of inefficiency which, if continued, may resolve itself into a liability upon the industrial, commercial, and social life of a city, in so far as it liinges on the postal service ; and Whereas this condition has been brought about by the utterly inadequate wage allowed postal workers, causing resignations from the service witliout paral- lel in the history of the Detroit post office and resulting in the existence of an appalling number of vacancies in the force, at the present time, which the Post Office Department is unable to fill, except with inexperienced, incompe- tent, and unstable help ; and Whereas numerous competent and experienced employees contemplate leaving the service if no immediate relief is forthcoming in the shape of a living wage, thereby aggravating a serious situation : Therefore be it Resolved, That we. Local No. 295, Detroit Post OlHce Clerks' Association of the National Federation of Postal Employees, do hereby go on record as earnestly requesting Congress to grant an immediate increase of ,$500 per annum to each post-offlce clerk, letter carrier, and marine letter carrier, and an in- crease of 35 cents per hour to all temporary find substitute employees, to the RETIREMENT OF CIVIL SERVICE EMPLOYEES. 57 end that the Post Office Department may be enabled to recruit the post-office force of the city to its full working strength and render to this large industrial and commercial center of 1,000,000 inhabitants the postal service which it de- mands ; and be it further Resoh^ed, That we, as postal employees, in this resolution are requesting nothing more than a right to live and that in the event Congress is unable to grant us the desired relief by July 1, that in justice to the employees who are unable to make ends meet on the present inadequate wage, it so inform our officer in order that these employees may seek other lines of more remunerative employment, of which there is plenty in this city. The Chairman. Is that from the local union at Detroit? Mr. Hyatt. At Detroit. That condition is not peculiar to Detroit. That same situation exists in most of the big industrial cities in the United States, and the obvious evil of the situation is the one that 1 have already touched upon, namely, that it is the young man, the man who is most able to meet the strain of this occupation, who is the transient employee, who comes in for a short time and then gets out again, and the old man who feels most unable to train himself for a new occupation remains. So it is becoming known throughout the country that the Post Office Department is not only an undesirable occupation from the standpoint of wages, but an undesirable occupa- tion from the standpoint that it comes in evidence as deliberately cut- ting off from the Post Office Department its source of labor supply, and I do not think we are exaggerating in the least when we make the statement that if something is not done, not only in regard to providing a future for the old man, but to take care of the laudable and obvious ambitions of the young man that enters the service, the Post Office Department willnot be able to function in any manner which will be satisfactory to the people of the country. The contributory feature of this bill bears, in my opinion, directly on the question of wages. The organization that I represent has been on record as being in favor of a contributory pension. The reason that we have been on record for that form of pension is this : That the civil-service employee is handicapped enough in all conscience in his fight for better conditions, in his fight to keep his head above water, and we are afraid of this line of reasoning. We are afraid that if a pension was given the employee without cost to himself it would be said : " You have a wage that you can live on, and the obvious fact that you are alive shows that you can live on the wage that you have, and when you get old you have a pension and you do not need any raise.'' And it would just accentuate the difficulty of our battle, which has teen a sorely handicapped one, for better conditions. Mr. Alpokn. May I be permitted to ask a question? The Chairman. Yes. Mr. Alcorn. To what extent has the organization favored con- tributory pensions? Mr. TivATT. It has been continuous. Mr. Alcorn. How much would you say? Do you favor the plan of the bill? Mr. Hyatt. I consider the plan a splendid arrangement. I con- sider it is a perfectly just arrangement. Obviously with the con- ditions as they are we could not stand the whole strain of the pen- sion. It would be impossible. As long as a man has an equity in his pension, which is a real equity, as established by this bill, I think that meets the requirements of the position. 58 EETIKBMENT OF CIVIL SERVICE EMPLOYEES. Mr. Alcoen. You mean that the amount specified in the present bill would be about all that the employees in your department would M'ould care to contribute? Mr. Hyatt. Under the present wage scale, it would be all they could contribute. It would be a question of their ability to con- tribute. The statistics on the subject, the obvious facts in the case shoAv, that they are below the scale of a- decent living wage by se\- eral hundred dollars at the present time. There is an angle to this pension question that was touched upon by Mr. Brown of the rural free delivery carriers yesterday, and that is this, that after a man has been in the service 10 or 15 years, and has begun to feel that he has an equity in a pension, especially i| this was a noncontributory or straight pension, coercion might apr pear ; that he might have aggressions visited upon him upon the sup- position that he would submit to almost anything in order to remain in the service. And for that reason the establishment of an equity in the pension would tend to curb the tendency of a certain class of supervisors to drive men to the limit. They need protection in the form of a court of appeals of some kind at the present time. They need it bitterly and desperately, and I sincerely hope that nothing will appear in the administration of the retirement measure which will further tie their hands. I think that is all I have to say. Dr. Jordan. May I be permitted to ask a question ? The Chairman. Yes. Dr. Jordan. Do you believe, Mr. Hyatt, in what is popularly de- scribed as the compulsory age of retirement? What are your views on that? Mr. Htatt. Yes, sir ; I do ; and I think my own views on the sub- ject have been clearly expressed by other witnesses. I think that there will be always a certain percentage of the employees who will want to remain on the rolls after they should be retired. We all know that this psychology prevails in the mind of the aged man, prevails in the minds of men of all ages, that is, that they are thor- oughty competent, and one of the last things that'a man of advanced age wants to acknowledge is that he is slipping, that he has slowed up, and those men would use their friendship with the supervisor perhaps, and use this outside influence, that they may be permitted to remain in the service as long as they possibly could, and thereby ■ defeat the very purpose of a retirement measure. I am heartily in favor of an arbitrary age of retirement. But there is another angle which comes back again in this question that I have been talking about, of the proper recruiting of the service so as to keep it at a reasonable, average age, and that is when you keep the old men in the service, which might be done without a reason- able, arbitrary age limit, and is being done now under this present very nonsensical and inhumane system of retirement that we have of retiring them on their feet on the floors of these offices, this situation would be remedied by forcing the old man out. The young man would then get promotions and would get the day jobs, the prefer- ence tricks, and would see their way clear to supervisory positions, and all that sort of thing. There are a number of angles from which the retirement of the man who has slowed up is desirable. The age should be definitely set. KETIKEMENT OP CIVIL SERVICE EMPLOYEES. 59 Mr. Alcoen. Mr. Chairman, I desire to have heard at this time, Mr. Collins, who is the industrial secretary of the Railway Mail Association. STATEMENT OF MR. W. M. COLLINS, INDUSTRIAL SECRETARY RAILWAY MAIL ASSOCIATION, WASHINGTON, D. C. Mr. Collins. Mr. Chairman, I hardly think it is necessary to enter into any discussion of the principles and necessities for a proper re- tirement measure. I desire to present some additions that relate to the railwav mail service. This bill provides for an age of 60 years for railway 'postal clerks as a retiring age. We believe that to be justified on account of the strenuous and hazardous nature of the occupation. Our service is so organized that it is impossible for the man to perform a straight day's work. He is required to work consecutive hours in excess of an ordinary day's work, and is given compensating time on some other day. This is a necessity of the service and can not be avoided. But it has an effect upon the employee that it ages him more quickly than he would age under a regular day's service. That is why we believe that the lower age limit should be' established. All the records and statistics will bear out the fact that railway postal clerks age more quickly than other emploj'ees. Their service being performed on moving trains, they are subject to peculiar conditions which affect them physically. Their hours are longer than the hours of the ordinary Government employee. The hours of road service run approximately that of departmental employees, without any allow- ance for the additional time required for their clerical duties and study. They are required to take at least three examinations a year, and that work must be performed outside of their regular service. That, in the aggregate, compels them to labor eight hours or more On the aA'erage for the j'ear. The disability section as provided in this bill will probably affect our service to a certain extent, although disabilities incurred in the line of duty will naturally be taken care of by the compensation law as that provides a higher rate of compensation. The only disabilities under this law that we would have would be from a sickness incurred or resulting from service conditions which are not covered under the compensation law. A condition that is rather peculiar to our service, and is somewhat striking with reference to some evidence that hasbeen offered, is the fact that the old men are not retained in the Railway Mail Service. It has not been the policy of the Post Office Department to retain these old men. They have dropped a number of them in the last few years from the rolls' of the Post Office Department, without any com- pensation. They are simply out of the service. The Chairma'k. At what ages have these men been dropped ? Mr. Collins. What records I have indicate that they have not any set age for this purpose. I know of some men that have been dropped at 55, and with your permission I would like to read a copy of an order which illustrates this quite clearly. The Chairman. We would be glad to have it. 60 EETIREMENT OF CIVIL SERVICE EMPLOYEES. Mr. CoLLixs. This is a copy of a letter from the Post Office Depart- ment : Boston, Mass., August 11,. 1917. A A. G. Pratt, R. P. C, Alton Bay, K. H.: The apartment car service in the Alton Bay and Dover R. P. O. will be discon^ tinned with the close of the present season and closed pouches substituted therefor. We are In receipt of statement from tlie department that their records — " Indicate that the clerk on this line, Mr. Albert G. Pratt, is 62 j'ears old, and while he appears to be capable physically and mentally it is stated that he lacks ability to grasp new conditions." We are directed to discontinue your pay and services with the discontinuance of the line, and notify you that in view of the large number of surplus clerks throughout the Railway Mail Service it is deemed advisable to drop you from the rolls without pre.ludice. You will be notified later of the exact date of discontinuance of apartment car service in Alton Bay and Dover R. P. O. Kindly acknowledge receipt of this communication. Feed 'C. Street, C. C, Dig. 6. That illustrates the policy of the department. I have other orders of similar nature, where they have dropped a number of these men without prejudice; that is, removed them from the rolls without pay. Another department of the Government can employ them if they can procure this employment. The Chairman. But it means that they are without consideration dropped from the service in which they have been for years 'i Mr. Collins. Yes; absolutely. I could not get the record of any one of these employees procuring other employment from the Gov- ernment. Now, these have been dropped recently, and this policy has been continued during all the last few years and during the war, when it was apparent that there was a shortage of experienced employees. It appears that, if possible, some provision or some consideration should be given these men. They are employees that have served from 30 to 50 years in our service, and they are dropped just on the eve of some measure being adopted for superannuation, and it is a pitiful condition for them to be in. Another condition in our service is the fact that without some provision to take care of these old men we are unable to secure com- petent help for our service. It has been absolutely impossible in the last few years to get young men to come into the service. The record' will bear that out to the effect that in the examinations that are now being held and have been held in the last year it has been impossible to get applicants to take the examination. This has resulted in the employment of thousands of uncertified employees, and that is detri- mental to good service. In connection with that I might say that approximately 10,000 of these uncertified employees have been at some time in the Eailway Mail Service in the past year or two. They come and work a few days or a week and leave. The young man will not stay. He can receive better compensation from an outside source. That affect^ the future of our service. The Chaiejian. Now, do you think that the relief given by this bill, in the way of an annuity, will imjjrove that situation? Mr. Collins. I think it will. It will provide for those superan- nuated and eligible for retirement. I think that there will be no KETIEEMBNT OF CIVIL SERVICE EMPLOYEES. 61 .question in our service that practically all of them will be willing to accept it immediately, and it would induce those outside of the service to come in as it used to do years ago. Our service was desirable and we had many applicants for it. The Chairman. It would give some assurance to the young man that when he did reach the retiring age some provision would be made for him ? Mr. Collins. Yes. I may say that the Railway Mail Association, which represents these railway postal clerks, has indorsed this bill this last week at their national convention held in St. Louis, and they have indorsed it because we believe that some provision should be enacted soon, and, while there are some particular parts of it that we may not favor entirely, we believe that we should lend our efforts to securing some measure. Mr. Alcorn. I want to ask Mr. Collins a question in reference to the age limit fixed for employees in his department. Do you feel that that is about right, Mr. Collins 1 Mr. Collins. I think that is high enough. I think a man of 60 years' service is much older than a man of 65 years in department service. The Chairman. That is because of the nervous tension and strain under which he is in that particular service? Mr. Collins. Yes, sir. Dr. Jordan. What is your view, Mr. Collins, about the compulsory age of retirement and the period of extensions as provided in the bill? Mr. Collins. I am quite in favor of the arrangement provided in this bill. I believe that as far as our employees are concerned that CO years is high enough, although there will be cases where they will be efficient beyond that age, and with eventually a four-year limita- tion that would place them at 64 years, which 1 think is high enough for road service. The Chaiejman. That is all. Mr. Collins. That is all. The Chairman. Much obliged to you. Mr. Alcorn. In discussing the different age limits of the different occupations, I thmk those have been covered with reference to the post-office clerks, the letter carriers, and the railway mail clerks. They have given their views on the subject. We would like to have the committee hear Mr. Alifas in reference to the machinists' side of the question, Mr. N. P. Alifas, the president of District No. -14, Inter- national Association of Machinists. STATEMENT OF MR. N. P. ALIFAS, PRESIDENT OF DISTRICT NO. 44, INTERNATIONAL ASSOCIATION OF MACHINISTS. Mr. Alifas. Mr. Chairman, the organization which I have the honor to represent comprises the machinists employed m the Gov- ernment service. We have approximately 95 per cent of them m our organization, so we represent fairly that branch of the mechanical enfployees. This bill as it affects our membership is substantially the same as it would affect most of the mechanical trades— blacksmiths, coppersmiths, pattern makers, and so on. In a general wav our organization has approved the principle embodied m this bill. At 62 RETIREMENT OF CIVIL SERVICE EMPLOYEES. our last convention we approved a retirement bill. It was not speci- fied just what sort of a retirement bill should be urged, but it was left to the officers of the organization to confer with the officers of other organizations and reach some agreement as to a bill that we felt we could support. The consensus of opinion of the members of our organization is that the provisions of this bill are about as liberal as we could ask for at this time, and we approve it in general terms. I do not think I ought to go into the question of the merits of the different sections. I am sure that has been very well covered by men who have spoken before me. But I would like to touch upon at least one aspect of the bill that possibly has not been referred to, because it has not affected the other people who are concerned in the bill as it does our people. That is the difference in the ages at which people retire, depending upon the class of service they are per- forming. Now, the mechanics, according to this bill, are eligible for retire- ment at the age of 62. That, if applied to a clerk, for instance, might be a rather early age for a man to retire. I believe that it is gen- erally conceded that a man's mental development arrives later in life and lasts longer than a man's physical ability and development. Now, our trades are such that we combine the mental and the physical pretty much. One, for instance, can be a rather decrepit individual physically and still be a first-class, efficient clerk ; but if a mechanic, while we do not bow to the clerk in the matter of intelligence, it does require considerable physical exertion and a high degree of proficiency of our various talents. We have to have a good sight, for instance, good hearing, our hands must not shake, and all of such phases of physical characteristics as that, to do our work. Now, those are phases of a person's life which will be on the downward grade long before they reach the age of 60. A man of 60 or 62 who has been a mechanic for 30 years, for instance, if he is a machinist, and he is required to take fine measurements, he may find it difficult to read the micrometers and scales and to take measurements in vari- ous other ways. He has to put on his glasses every time he takes measurements, his hand may tremble, and for that reason a great many men at the age of 62 are really in a position where they ought to be retired. They can not do their work satisfactorily. That is one reason why the age limit for mechanics is proper at 62, with the age of retirement of clerks at 65, and the employees of the railway mail service being at 60. I think the bill is very well balanced in that respect. Another reason why I think the mechanics ought to have the privi- leges of retiring a little bit earlier is because, taking the question by and large, the mechanics are among the better paid employees in the Government service. Their skill requires it. You can not secure that character of service without paying good salaries to employees. Un- der the terms of the bill the higher paid employees Avill pay a larger portion for the maintenance of the scheme than the lower paid em- ployees, and, while they are perfectly willing to do that, if they do get a little advantage of that kind, it ought not to be objected to, inasmuch as by the time a man is 62 years old he will have paid a larger share into this fund than if he were working at some other occupation. KETIKEMENT OF CIVIL SERVICE EMPLOYEES. 63 The Chairman. That is by reason of the application of a certain rate per cent to his higher salary ? Mr. Alifas. Yes, sir. We pay up to 2^ per cent, and, of course, 2i per cent of $150 a month is more than^on $100 a month, for the reason that he would be paying more toward this retirement fund. He should have this added advantage, which should be given to him as a matter of justice. The Chairman. How many employees would come under the desig- nation " mechanics " in the Government service ? Mr. Alifas. In the navy-yard service we have at the present time approximately 65,000. This^ varies, of course, at different times. At the arsenals we have approximately 17,000 employees at the present time. Mr. Alcorn. That does not include all mechanics. Mr. Alifas. No ; that does not include all the mechanics. That is just the 10 large navy yards and the 5 large arsenals. Then we have a large number of employees of the same kind in some of the depots. I would say that there might possibly be again that many, if you took all the rest put together in the small bureaus of the Government. In regard to the maximum of 2-^ per cent, that is the very highest limit that our people would be satisfied to pay. If it were increased to the extent of even half a per cent I believe they would be inclined to prefer that the bill would not pass until it could be made 2i per cent. Two and one-half per cent is the highest they would want to pay toward it at the piesent time. Now, our people were for a long time in favor of a straight retire- ment bill, but they have yielded to the concensus of opinion that a contributory plan is, after all, an equitable one, and they are disposed for that reason to compromise and to jdeld to the general situation. They also have in mind that both the Democratic Party and the Kepublican Party at the last national conventions agreed to pass an equitable retirement bill, and if there is anything in the word ■' equity " or " equitable," it would mean that both sides Avould have to yield something. The contributory plan would naturally mean that both sides Avould be yielding something, and we feel for that reason that while this 2-^- per cent is the highest we want to go, we are heartily in favor of having the bill passed. The Chairman. It has been suggested that the contributory plan would be of benefit to the employees generally, for the simple fact that it would encourage thrift and saving on the part of the em- ployees. Do you believe that is true ? Mr. Alifas. Yes, I believe that is a very good feature of it. If a man should leave the service, he would have a little sum of money to fall back uijon. The Chairman. A little self-denial perhaps would not hurt him, would it? It might help in the way of building up character? Mr. Alifas. No ; self-denial is supposed to be a valuable attribute to anyone. The Chairman. Yes, indeed. Mr. Alifas. And especially this sort of self-denial is really a temporary self-denial, for it is in order to have a -f-^'^re advantage. Tc IS really no self-denial at all. The Chairman. Not in the end. 64 EETIREMENT OF CIVIL SERVICE EMPLOYEES. Mr. Alifas. In no event can the employee lose what he puts in. Most everybody would be disposed to save some money, put it in the bank, and the amount of interest would be about equivalent to the bank interest. So that an employee is really not losing anything. The Chairman. 'Would you like to ask any questions of Mr. Alifas? Mr. Alcorn. I would like to ask Mr. Alifas whether or not in his opinion a higher contribution than is provided for in the act would not be the means of taking out of the service the most efficient and most aggressive employees in the service? Do you not believe that it would have a tendency in that direction ? Mr. Alifas. I firmly believe that the 2^ per cent is the maximum that the employees are willing to yield of their own accord, and if they should be forced to yield it by reason of placing a higher per- centage in the bill over their protests, that it would be the mean.s of a large proportion of them leaving the service. I am satisfied of that as far as the mechanics are concerned. While they all like to save — as we were talking about a minute ago, I believe it is a good thing — many want to save in their own way; perhaps want to put their savings in a home. But they are willing to make this concession anyway, though I am afraid a higher concession would drive a large number of them out of the service, and not only those in the service out, but would be a discouraging factor in securing good, competent mechanics. Dr. JorjJAN. Will you give the committee, Mr. Alifas, the benefit of your views on a compulsory age for retirement — you have dis- cussed the features of tlie bill — and the period of extensions of service? Mr. Alifas. I believe that there ought to be some period beyond which a man should not be allowed to stay in the service. If you make it discretionary indefinitely, it might lead to what we would generally term political wire-pulling, and I believe that if the ques- tion of aman's retirement is going to be based on his actual worth to the Government, that there should be some period beyond which he could not work. There might be a very small percentage of the men who would be able to do satisfactory service beyond that age, but 95 per cent of them would not, and it would be poor policy, in my judgment, to retain that very small percentage with a chance of not having a definite policy for the rest of them. In other words, I believe a definite policy, that is reasonably satisfactory, is better than discretion without end. I do not know whether that covers your point or not. Dr. Jordan. Yes. Mr. Eeed. This would ultimately be the limit for mechanics, four years beyond 62. Does that seem a reasonable age on which to re- quire a mechanic to be retired ? Mr. Alifas. My observation is that in our trade there are very few men above 66 years of age. Dr. Jordan. Most of them die before they get to 70 ? Mr. Alifas. Sixty-eiglit would not be a "bad age for our trade, but 66 is a fair age, I think. It is not anything that we have become thoroughly. set upon. Whether the age limit for our trade shall be 66 or 68, I do not think would be a serious question. I would just BETIEEMENT OF CIVIL SERVICE EMPLOYEES. 65 as leave have 68, for my part, as 66— that is, with the discretion stiJ! existing. The Chairman. Is that all ? Mr. Alifas. That is all. STATEMENT OF MR. PAUL F. MYERS, CHIEF CLERK, TREASURY DEPARTMENT. Mr. Myees. I should like briefly to say a few words in support of the retirement measure. The Secretary of the Treasury, in response to the request of the chairman of this committee, has submitted a letter which I will make a part of the record here, with your permis- sion, indorsing the general retirement measure. The Chairman. This may go into the record, and I had expected to put it into the record until I learned that you might possibly come. (The communication referred to is here printed in the record, as follows:) Treasuey Department, Washington, June 25, 1919. Hon. Thomas Sterling, Chairman Committee on Civil Service and Retrenchment, United States Senate. My" Dear Senator: In compliance with the request contained in your letter of the 23(1 instant, I take pleasure in inclosing excerpts from recent annual reports of the Secretary of the Treasury relating to retirement of superannu- ated and disabled Government employees. In reply to your request for an expression of my personal views on the subject of enacting legislation which will provide for retiring civil-service em- ployees, I am of the opinion that an efficient service is not practicable without a method of honorably and justly retiring persons whose efficiency because of age or physical or mental incapacity is seriously impaired. The Treasury De- partment is constantly engaged in the work of increasing its efficiency and diminishing the relative expense of operation, but any extensive and successful effort to improve the administrative operations of this large, department is very heavily handicapped by the absence of a just method of retirement. The efficiency of the department is retarded for want' of a retirement law. I believe that the enactment of legislation providing for superannuated or dis- abled employees of the civil service in this department would result in econo- mies and Increased efficiency in the transaction of public business. It would be a measure of benefit to the Government and of justice to the employees who faithfully have devoted their talents and the best years of their lives to the interests of the Government. In this connection I should like to draw particular attention to the following recommendation contained in the annual report of my predecessor, Secretary McAdoo, for the fiscal year 1918: "Recommendation has been made in previous annual reports of the Secre- tary for the enactment of an equitable retirement law for civil-service em- ployees. The necessity for effective action of some character along this line has been accentuated during this period of war. It would seem to be not only a measure of justice to faithful pubhc servants who have devoted their lives and talents to the Government but it would also be in the interest of economy and increased efficiency in the administration of the public business. " In considering this' important question, the attention of Congress is respect- fully invited to the possibilities of an expansion of the principles underlying the Bureau of V^ar Risk Insurance. Humanity demands that something be done for the civil employees of the Government, and suggestions of pen- sion systems, while praiseworthy as an effort to render justice and effec- tive as an expedient, would probably not afford a real solution. It is confi- dently believed that the solution lies along the lines of insurance with both 125022—19 5 66 RETIREMENT OF CIVIL SERVICE EMPLOYEES. the Government and the civil employees contributing to a scientific plan that ■will provide for retirement as v/eW as insurance against death." I heartily indorse the suggestion outlined above. ' Sincerely, yours, Caeteu Glass, Secretary. Excerpts from Annual Reports of Secretaries of the Treasury Relating to Retirement of Superannuated and Disabled Government Employees. [Annual report of Mr. MacVeagli for 1909.] RETIRING pensions. Any inquiry into the efficiency of administration very soon involves a consid- eration of a policy of civil-service retiring pensions. And it seems to me that the conclusion is unavoidable that a really efficient service is out of the ques- tion vyithout a method of honorably and justly retiring persons whose efficiency is seriously impaired. It is quite true that the older clerks of the service are no more likely than the younger clerks to be Inefficient. Indeed, their experi- ence and their settled relations to the service could easily compensate for the lack of some other personal equipment. But just as there are instances where the younger clerks should be disciplined or dismissed so there are many cases of the older clerks where, in justice to both themselves and the service, they ought to be honorably relieved. The service is blocked in many instances by the unwillingness of the officials in charge to throw out of place worthy men and women who have given the best of their lives to the work of the Government. So that, in a very im- portant and wholly unsatisfactory manner, practically a pension system is and long has been in operation. The United States is the only Nation that has no general legal retiring pension for the employees of its civil service. AVe have this unique position in the world, along with a reputation for great wealth and for otherwise liberal expenditures. The entire civilized world has shown great and growing recog- nition of pensions or retiring allowances ; and, while the United States is so far behind the rest of the world in civil pensions, it has by far the largest pension list among the nations. The war and navy pensions are a recognized part of our policy ; and in civil service pensions have been extended to the judiciary. And though as a Government we have halted at a general retiring allowance for civil employees, the great universities of our country and the great corporations have been taking immense steps along this very line, and the Federal Government is becoming more and more isolated. While I have spoken only of the effect upon the service itself of the lack or a system of retiring pensions, there are, as everyone knows, other claims upon the Government to establish this policy. I hope that the Congress will take up and consider favorably one of the various forms of law that are proposed. This subject has been before the country and before the Government for a long while ; and if the policy were to be adopted at this time, it would undoubtedly give a strong impulse to that improvement of every branch of the service which is now so much desired by the people and which is a matter of so much interest to the Congress and to the administration. In expressing my opinion in favor of the retiring allowance, I purposely avoid the expression at this time of a prefer- ence for any particular plan or system. [Annual report of Mr. MacVeagh for 1910.] CIVIL-SERVICE RETIREMENT. I now beg to refer, as I did last year, to another requisite — anothCT absolute requisite — of a satisfactory service. There is no practical way to put the Gov- ernment service properly on its feet vrtthout a fair and just method of civil- service retirement. This is not only a requisite, it is a prerequisite, and unless Congress shall give the executive this necessary method of improving the service the country must accept a service that is not fully satisfactory and which can not be made fully satisfactory. Fortunately this retiring provision can be made — and this is mathematically demonstrable — without the expense of one dollar to the Government. The con- tributory system of retiring allowances is not only the only system that has any RETIREMENT OF CIVIL SERVICE EMPLOYEES. 67 chance whatever of being adopted, but it fortunately is the best system by far for the men and women of the service ; and it is, therefore, the part of wisdom for all the friends of this movement to concentrate upon this method. Of course, there must be paid by the Government the retiring allowances until the contributions by the members of the service have become sufficient to take care of the payments ; but these preliminary payments by the Government need not cost the Government anything whatever. All of the executive departments which have so far been consulted stand ready to carry out such a law without asking any addition whatever to their ordinary appropriations. The objection, therefore, that we might be introducing another pension roll, has no justifica- tion. It had complete justification as long as the straight pension was in con- templation. The contributory allowance, however, is an entirely different matter and eliminates this objection altogether. The Government, therefore, can without any expense to itself, and by the mere passing of a law, set this who'e matter right. It is only necessary to mention two things about the con- tributory plan, as contrasted with the pension plan, to make clear its advantages to the people in the service. It could never be taken as an answer to a claim for increased pay. It is a contribution of their own and not a contribution of the Government, and it is in no sense an estoppel of any argument in favor of in- creased pay at any time during its operation. On the other hand, a straight pen- sion paid by the Government would always be taken as an additional salary and would perpetually have a tendency to estop any argument for increased compen- sation. The other consideration is that under a pension system a man must not only live beyond the retiring age, but he must continue always in the service until that period in order to receive any pension at all ; whereas, under the contributory system, under all the accidents of life, he gets what belongs to him of the savings of the system. It is impossible not to regard a straight pension as a part of the salary, and if a man loses it altogether, owing to the accidents of life, he loses a part of his aggregate salary. The Treasury Department is engaged in the work of increasing its efficiency and diminishing the relative expense of operation. It has made considerable progress, but has not nearly reached the end. At least 400 positions have been abolished. So far we have been able to take care of all of the displaced em- ployees, except in the case of the mint at Philadelphia and in other offices out- side of Washington and New York, where, in the nature of the case, there were no opportunities for transfer. We have succeeded in transferring those who were displaced to places becoming vacant in the normal way ; such vacancies having been allowed to accumulate by temporary appointments. Whether it will be possible to continue to take care in this way of the employees whose positions we are abolishing I do not know. But this is clear, that any successful effort to improve the administrative operations of a large department like the Treasury is immediately handicapped and might well be discouraged entirely by the absence of a just method of retirement. And even when it is possible to protect these displaced clerks from being thrown into the streets it is done, in many cases, in denial of the right of an office to efficient help. AVorking in these improvements brings constantly to mind the helplessness of ever arriving at a complete state of efficiency without a way of retiring clerks in a just and humane manner. I have no doubt that this very discouraging feature has m the past stood in the way of many attempts to improve the efficiency and econ- omize the expense of operation in the departments. [Annual report of Mr. MacVeagli for 1911.] CIVIL SERVICE EETIEEMENT. The possible extent of efficiency and economy that is attainable by any of the departments ^s rigidly restricted by the lack of a retirement allowance and system In a Government so generous and intelligent as ours, the absence of a civn-retirement system is singularly inappropriate and inexplicable. Self- Uiterest flone ought to secure this enlightened provision for the civil employees, not to speak of the human interest which in this regard is now almost univer- sallv felt and adopted. Not only governments but an ever-increasing number of Trvate corpora °ons have provided a retiring system for their employees. In- deed fte adoption of a provision retiring members of the civil service has become so usual and so a matter of course that America is the only important cfvuSed government which does not recognize this as a national duty, both to fte employees and to the Government and people. And this Government would 68 KETIEEMENT OF CIVIL SERVICB EMPLOTEES. not at this late date, I believe, be lagging in this important respect so far be- hind all of its world neighbors but for the unhappy disputes of our Government clerks. So far the clerks appear to have no leaders or leadership equal to the occasion ; and unless something adequate in the way of this necessary leader- ship shall arise it is only too likely that nothing will be soon accomplished. And yet the responsibility, after all, rests upon the Government, and especially upon the Congress — and the Congress should, of course, ignore the unfortunate disagreements among the clerks and take the matter into its own hands. The executive departments are suffering e?.tremely for want of a retirement law ; and all improvements of the public service have to constantly meet the discouragements of this condition, while much improvement is by this condition discouraged even from a beginning. I appeal, therefore, to Congress again, as I have done each year, in behalf of such a law. Every consideration of hu- manity, economy, and efficiency, that is conceivably related to the question calls for action at this session. The retirement system which I consider most in the interest of the clerks- themselves is the contributory system ; and that would cost the Government no money whatever — if that were thought to be desirable. That this system could be put into operation without increased expenditures, I believe is entirely true ; and I think it could be adopted with the provision that each de- partment Should put it into operation without any cost to the Government ; but it is at the same time a question whether that would be the best course to pursue. This contributory system, if adopted, would leave the claims of the clerlvs to revised or higher salaries unaffected. On the other hand, the so-called straight pension — the pension paid wholly by the Government — would take the place "of any possible advance in salaries for, at any rate, a considerable period, notwithstanding the fact that under such a system comparatively few of the clerks would ever become beneficiaries. However, some system of retiring allowance is so greatly needed as an aid to economy and efficiency, that I would be glad to see any system adopted which could be put into effect immediately ; for any system could be changed after experience showed its defects. [Annual report of Mr. MacVeagh for 1912.] CIVIL PENSION SYSTEM. I beg to repeat my numerous recommendations for a retirement provision for classified civil employees. As I have said before, ours is the only one of the great governments of the world that has not adopted this policy. And the policy has spread and is constantly spreading among private employers. Therefore, the reluctance of Congress to adopt a policy that is almost univer- sally believed in, and which is part of the progressive humanitarian move- ment must sooner or later give way. I wish it might be soon. The entire country is so interested in humanitarian legislation, and the national parties are so eager to recognize their obligations toward humanitarian projects in genera], that it seems that this particular humanitarian project can not be rejected much longer. It concerns a very large and growing body of our population, which, like all the people, is entitled at the hands of the Govern- ment, to the results of modern thought. IVIoreover, the cost to the Government of what I believe will prove to be the best, most humane, and most enlightened system would be little or nothing. I make this final appeal as Secretary of the Treasury in behalf of this wise, generous, and almost costless legislation, believing that it is essential not only to progressive government, but equally to administrative efficiency. Final efficiency and economy of administration is, in my judgment, impossible without a system of civil-service retirement. [Annual report of Mr. McAdoo for 1916.] KETIKEMENT OF CIVIL-SERVICE EMPLOYEES. The need for an adequate civil-service retirement law is becoming more im- perative each year. The Treasury Department bears upon its rolls a large number of aged employees whose efficiency is gradually waning. The introduc-, tion of new and improved methods of performing the constantly increasing volume of work in the department has served to emphasize the need for mak- ing some provision for the older employee who is unable to keep step with RETIKEMENT OF CIVIL SERVICE EMPLOYEES. 69 progress. It does not seem humane or fair to discontinue arbitrarily the serv- ice of superannuated employees who have given their entire energies and spent the best years of their lives in the service of the Government. To do so would in most cases, leave the employees without any source of income and result in serious hardship. To reduce aged employees does not entirely meet the needs of the case, as it leaves the employee still on the rolls «f the department. I believe that the enactment of an equitable retirement law for superannuated and disabled employees of the civil service in the Treasury Department would result in actual economies and increased efficiency in the handling of the busi- ness of the department, and I therefore recommend this subject to the Congress for its serious consideration. [Annual report of Mr. McAdoo for 1917.] RETIKEMENT OF CIVIL-SERVICE EMPLOYEES. In my last annual report, I submitted recommendation for .the enactment of an equitable retirement law which would enable the departments of the Govern- ment to retire their aged civil-service employees. I desire to renew that recom- mendation. [Annual report of Mr. McAdoo for 1918.] EETIETCMENT OF CIVIL-SERVICE EMPLOYEES. Recommendation has been made in previous annual reports of the Secretary for the enactment of an equitable retirement law for civil-service employees. The necessity for effective action of some character along this line has been accentuated during this period of war. It would seem to be not only a measure of justice to faithful public servants, who have devoted their lives and talents to the Government, but it would also be in the interest of economy and in- creased efficiency in the administration of the public business. In considering this important question the attention of Congress is respect- fully invited to the possibilities of an expansion of the principle underlying the Bureau of War Risk Insurance. Humanity demands that something be done for the civil employees of the Government, and suggestions of pension systems, while praiseworthy as an efCort to render justice and effective as an expedient, would probably not afford a 'real solution. It is confidently believed that the solution lies along the lines of insurance with both the Government and the civil employees contributing to a scientific plan that will provide for retirement as well as insurance against death. Mr Mters. I would like to say that the Secretaries of the Treas- ury have for a long period of years, 15 years I believe, recommended this relief for a condition in the Government service m so tar as it affects the Treasury Department is concerned. For two reasons, something ought to be done m this matter, i^ irst, from a purely business point of view, it woukl be for the interests of the Government service, in the interest of efficiency and m the in- terest of economy, to provide some means whereby old employees who have served faithfully and have come to the age where they can no longer do the work efficiently, some means should be provided whereby those employees could be retired and efficient employees put '''There i^a' large number of employees in the Treasury Depart- mentl should sal, roughly speaking, about. 1,000 employees who W reached the age where they are no longer rendering first-class service toTe Government. Som'e of them are rendering 90 per cent efficient service, some of them 50 per ^^en^ some of them 25 per cent and a few practically nothing, and officials f ,^^^\^?^^r™*J^J officials of the Treasury Department, and, I think, that is true ot aU departments, feel that it is inhumane to drop these people from theS f^r th^ reason that they would be forced to depend upon public charity for support. 70 KETIKEMBNT OF CIVIL SERVICE EMFLOYEES. In the Treasury Department there are approximately 32,000 em- ployees in Washington and 25,000 employees in the field service, and I believe that if a measure giving adequate provision for retirement is passed probably 1,000 people will be affected, and that 250 people can probably do the work that this 1,000 people are doing now. The Chaieman. Do you think in that respect it would be a saving to the Government ? Mr. Myers. I do, and I believe it would add to the general tone of the Government service, especially in the older organizations of the Government. I know that is true in the Treasury Department in the older divisions. That is where the aged employees are now located. To get young people in there would add to the morale and it would speed up the work done, because older employees, doing slower work, tends to slow down the work of the whole force. The Chairman. Would the fact that we have a provision for retire- ment on an anuity make the head of a department less reluctant to " dismiss an aged person who had grown inefficient ? Mr. Myers. I think it would. The Chairman. There would be no longer much excuse, would there, for retaining the inefficient person in the position if reasonable provision is made for an annuity ? Mr. Myers. I am inclined to the opinion that there ought to be a definite period at which an employee should retire, and there might be exceptional cases for which provision could be made. The Chairman. What do you think of the ages provided in this bill — 65 for employees generally and 62 for mechanics and men in that class and 60 for the railway mail clerks ? Mr. Myers. As far as the 65 years applies to the general clerical forces, I think that is about right. I think mechanics at 62 years is all right. I am not acquainted with the Railway Mail Service. As far as 65 and 62 years is concerned, I think that is all right. The Chairman. You know latitude is given to the head of a de- partment to extend the period of service beyond 65 years of age ; first, two years, if the employee is efficient and desires to stay in the service or is willing to stay, and then a further period of two years upon certification by the head of a department. Would you regard a pro- vision like that as reasonable ? Mr. Myers. I would, yes. I think you would find, Senator, that there are exceptional cases probably where an employee at the age of 75 is still vigorous and rendering good service. I have in mind such an employee in the Treasury Department right now, but those cases are very rare. The Chairman. Is there anything further ? Mr. Myers. Nothing further, but I believe it would be in the in- terests of the service, as a business proposition, and an economy to the Government. It would add to the tone of the service, increasing the morale of the service, and it would be doing a thing that ought to be done for old employees. There are many pathetic cases. I could cite you where employees have held onto their jobs, pleading they be retained until Congress did sornething in the way of retirement Three of those in the past year died. Three of those cases I know of are very pathetic. The Chairman. There is one question to which I should like to call your attentioui The letter of the Secretary of the Tresury submits . RETIREMENT OF CIVIL SERVICE EMPLOYEES. 71 also the opinions of several of his predecessors, and he gives excerpts from the reports of Secretary MacVeagh for the years 1909, 1910, 1911, 1912, I think, and then excerpts from the reports of subsequent Secretaries. Now, I remember some years ago to have read from the report of Secretary MacVeagh, and he at that time was very much in favor of a plan which was wholly contributory on the part of the employee — that is, the employee should contribute the entire amount which went to make up the annuity which would be paid upon retire- ment. Have you any views upon that proposition, as to whether it should be wholly contributory or only partially contributory on the part of the employees, the Government contributing the rest ? Mr. Myers. I think the suggested bill covers the case adequately so far as I am concerned. The Chairman. It is estimated that after a certain period of years the Government will be paying five-eighths of the amount necessary to make the annuity and the employee about three-eighths. Mr. Myers. The Government will not be obliged to contribute anything for a number of years if the annuities have been paid on the 2J per cent basis. The Chairman. That provides the annuities? Mr. Myees. Yes. I think. Senator, that there are many individual views, but that the most important thing now is to have something that will let the employees of the Government know that somehing is going to be done. There might be criticisms of some of the pro- visions of the bill, but generally I think it is a good bill. Experi- ence will demonstrate whether or not it ought to be changed. It is a beginning that should be made. The Chairman. I quite agree with you in that, and I also am of the opinion that Secretary MacVeagh, if he were to report on the matter now, would recognize the changed conditions. Mr. Myers. Yes. The Chairman. Is that all ? Mr. Myers. Yes ; thank you very much. STATEMENT OF MR. J. W. STARR, REPRESENTING THE UNITED STATES CIVIL SERVICE RETIREMENT ASSOCIATION, WASHING- TON, D. C. Mr. Starr. Much has been said here in relation to old people, and there does not seem to be much to be said favorable to them, but during the Civil War, after the fight of the Monitor and the Merri- mac, Congress appropriated $20,000,000 to build monitors, and prices rose, as they have during this war. The consequence was that the contractors for those vessels had to come to Congress and ask for another appropriation to meet the cost of building them. They made those appropriations to meet the cost, along about 1876. Sub- sequently, only a few years ago, these people or their relatives came back to Congress for bills for the excess cost of building those ships, and when the committee sent to the Navy Department to get that information, they could not find any. The^ were hunting there for tWo or three weeks, trying to find it. After a while they went to an old gentleman who was there. He told me he was 93 years old. " They asked him if he knew anything about it, and he said that he did know something about it. They said that they wanted to know 72 RETIREMENT OF CIVIL SERVICE EMPLOYEES. where those records were, but he said that he did not know, but would try to locate them. He told me that he worked three or four days, and then one night he went home, and after he had retired he got to thinking about it, and he says that he remembered taking a lot of documents from the Navy Department and sending tham down to the navy yard, and they stored them away in what was then the sail loft. They were thought to be obsolete. He went down there to the navy yard and looked around and finally found them and brought them back. That saved to the Government many hundreds of thousands of dollars. The Chairman. When was this, Mr. Starr ? Mr. Stabe. I think about six years ago. He found those records, and he saved the Government making a reappropriation. If they had not been found, they would have felt inclined to make the ap- propriation on account of the high cost, and it would have been paid the second time, but he saved the Government ten times the salary that he had ever received or ever would receive. So that in the case of the older employees there are many things that they have in raind that the others do not know. I want to call your attention to the difference between the con- tributory and the noncontributory plan. Mr. Rebenack, who estab- lished the Pennsylvania Railroad system, said that the reason the Pennsylvania Railroad adopted it was because if they permitted the employees to contribute there would be established a vested right in the fund, and that they might go into court to have the matter straightened out. The payment of the whole matter by the railroad company gave them not only absolute control but prevented a great many vexatious lawsuits, which they wanted to get rid off. The Pennsylvania Railroad appropriates a certain sum of money to meet these requirements, and if the number of men who have to be retired causes it to exceed that, they can raise it. They practically have absolute control of it. The employees have nothing to do with it. It is a gratuity on the part of the railroad. That, I think, is the cause of the railroads and corporations paying the whole amount, so that they may have absolute control. Dr. Jordan. Do you not think it also tends to minimize strikes on the part of the employees ? Mr. Starr. Yes; because Mr. Rebenack said so in some of his speeches. There is another matter that comes into this question, and that is the question of the hazardous work of the employees. I called upon the Life-Saving Service and had a table made of the casualties covering the period of the Life-Saving Service, and I wrote a letter to the War Department, and they furnished a table showing the causualties in the Army in time of peace. I wrote also to the Post- master General and was furnished with a table of the Railway Mail Service. I have now the table of the Life-Saving Service, but the table of the Railway Mail Service I have not here, and the service of the Army. I thought possibly you might be interested in the difference. Both the Railway Mail Service and the Life-Saving Service are more hazardous than the Army in time of peace. The Chairman. Would they come under the disability clause of this bill? BIETIKEMBNT OF CIVIL SERVICE EMPLOYEES. 73 Mr. Stare. Yes, sir. Dr. Jordan. The Lighthouse Service, it may be said, is separately cared for. They are already under a pension system. Mr. Starr. The question of cost comes in, and I thought perhaps you would be interested in Gen. Ainsworth's table. He makes a statement relative to the retirement of the Army officers of the United States Army, and this is his report, and I will sum up the matter by stating that he estimated for retirement, after 45 years' experience in the Army ; he shows that the estimated cost of the re- tired list would be as follows: Eetired at 64 on three- fourths pay would not exceed 10.19 per cent ; retired at 64 on one-half pay would not exceed 6.75 per cent; retired at 70 on three-fourths pay would not exceed 5.25 per cent; retired at 70 on one-half pay would not exceed 3.50 per cent. That is taken from the records of the War Department. Frank Scott, after 28 years' experience with the Grand Trunk Eailway of Canada, made out a table showing the cost from year to year, and a number of other matters that you probably have asked for, and I also have here Frank Scott's letter in relation to it. Perhaps you would like to have those go into the record. The Chairman. Is the table there? Mr. Starr. Yes, sir. The Chairman. You may leave that for the record. (The table and communication referred to are here printed in the record, as follows:) 74 RETIREMENT OF CIVIL SERVICE EMPLOYEES. II Tfn35i;DOCSrHt^QOi £ . .- ^ ^ r^ 5 t^ OJ 1-H .-H t-- CO ffi-O CO c w^S3ffi'2oO'*cc(Dco^^co'*-*«Deoooo2S'ifcS9 2'5 .-«COC»Oiit5lOQ0001iOOOCOtOCOi-H(S«lDOOiOOtDC30'*^ -»NNCScoeococoeoco-^coco'^'*»o;D woi^coc^T-Hoooocoi^r^coiocceooioocooi-isoiOi-iiniQeaoo ecoc«coco(Oooi-noco«DO»oiOi-iOi-»(OCO'»JOOOmOcCQOOOi-HO'*»OI-^y5 BkC"Qcot-oOi-Ht*OiP2eooo 9 Cq M .-( CO M N CS Cq CO C5 "H M ■* "* Tj< 00 >-l CO ■«*• >0 Tf ® pj rt " o coo0Oi-(ai(DOaiC0'£50JNi-l'« P(NlOCfllOlOr— O^t^r-ICOlOlftfN-rtfr- HO^OOIMQOOOW --—lOtOtoeooieo tH i-H rlM WCO - OOOOOOOliH P D00-*OJCDOt>«ir5->*<00"*t^C ■^r-irtTlOiHCOU5NW5lOI>MeOCOC3C>55DNOQt^wmt^-*cooOi-(Oi"*ifl or-iQooiot-oioooajcoooi— it^c^oof-ooMoiN-^co'^-^a) 00C>lC0aii-H'^-*C0i-lwNi-(00r^C5O>'!fl>C0CTi01C0W0iO0000i-( SOJ(Ncoco■*c^c^■^oo^-'-<^*0^-'Ql^cD«^^^-^^OJOloo■*'^ool i-t 1-4 r-1 iH i-< i-Tih^i-Tn CiC^c^ccncom-^-^-^-^tritn-otSt^ OsOi-HcDi— IOaQCO':pcOWOiaal>00COlOiO-^r-(iSCO00OJi— lOOsr^CDtX) S© W C^ C^ iS) -^ lO lO CD t- QO O --H C^ -^ CD CD CS K. =* O ■* «0 05 ^ C^ i-Ti-ri-H^i-H^rH'rH^r^'w^tN'C^C^rCsrN'co'co" inc^irtTHi— icooit--uT|0)co'#oooo»rtQO'^cst»'ttHooNi>e^cDcoMxi t^ioo^coo3t^oM'*it^-^ococ^co*rar^coiooiiramcDcoojrHoo C0i-(C»OC0-c0O0ir-(0>t^i-lO-^ti00Ot^i0OI>C0C0i0 t--t^000aCflrfC0O0Scci(NM*t^05^3J^'#C00si0 ioNy2'^i-(coOjr^iraoicD'*ooooiftoo^oioo^oOMt*NcocoCiia3 coi— iooocDcocoojiMr~'x>ooi»-r-iHOi^oooc^icot^cocom t:r't~~''^^^'^o!3^'^'^crTH"Tjrio'ori>rwri--^Q"<^-t-cDcot-a5oiCT>O.HrHr-0'— ic^co-^iotot— OOOC *^»'^t7^'*<*°Q<««3'»OOOOQOOOOJOJOiOJOJOOlOlCTiOiOOO OOOOOOOOCOODGCOOQOOOOOOOOOCOOOOOOOOOODODOOOOOOOOOOffiSci RETIREMENT OF CIVIL SERVICE EMPLOYEES. 75 THE GRAND TRUNK RAILWAY PENSION SYSTEM. The Grand Trunk Railway superannuation system was inaugrated in the year 1374 for the purpose of making provision for the retirement on a pension of officers and employees who Jiad served the company faithfully and efficiently for many years. It had been felt that many cases of extreme hardship had arisen from the necessity of dispensing with the services of employees whose only fault consisted in the fact that advancing years had undermined their usefulness, rendering it necessary to replace them by the employment of younger men. In many cases it had been found that no provision whatever for the future had been made by such retired employees. The company was then confronted with the alternative of allowing men to remain at work whose usefulness had been impaired or of dismissing them from the service without any means of support. Motives of common humanity, as well as self-interest, urged the formation of a pension system, and, accordingly, in the year above stated an act was passed incorporating the " Grand Trunk Railway of Canada Superannuation and Provi- dent Fund Association." The scheme embraced all officers, passenger or freight agents, telegraph opera- tors, and the clerical stafE generally, who on the date of its becoming effective were under 37 years of age and in receipt of more than $400 per annum. Mem- bership was optional for officers and employees then in the service, but com- pulsory upon all who entered after the 1st of October, 1874. The revenue of the fund is derived from a contribution from the members of 24 per cent of their pay, deducted monthly on the pay rolls, the amount so con- tributed being augmented by a contribution of an equal amount monthly by the Grand Trunk Railway Co. The funds of the association are invested in the names of three trustees ap- pointed by the directors of the company. A report is made every five years by competent actuaries as to the position and prospects of the fund, and after the experience of 29 years it has been found to be in an entirely healthy and solvent condition. Members are eligible for a pension at the age of 55 years, such pension being computed on the basis of one-sixtieth of the retiring pay for each year of mem- bership, the allowance, however, in no case to exceed two-thirds of the average annual pay during the period of membership. . In the event of a member being incapacitated for work, owing to mental or bodily infirrfiity, after having contributed for 10 years or over, he is entitled to a pension on the same basis. Objections have occasionally been made as to the compulsory character of the system, but such are the result of a lack of consideration of the subject. The scheme is the outgrowth of a desire to apply for their individual welfare, the opportunity afforded by the employment of a large body of men. It is an adaptation of the sound principle, " the greatest good of the greatest number." The opportunity would be thrown away were the system made a voluntary one, because such a course would neutralize any benefit obtainable by reason of the collective feature. The organization is under the control of a committee of management con- sisting of the principal officers of the company and representatives elected by the members. The practical results consequent upon the operation of the fund have been excellent. In many instances where employees dispensed with would otherwise have been reduced to penury they have been enabled to pass the remainder of their lives in comparative comfort. The knowledge that provision has been made to guard against property m old age has been found an incentive for officers and employees to perform their duties in a satisfactory and efficient manner. They realize that unsatisfactory conduct may at any time entail the loss of a very valuable asset. It has been stated that the existence of a pension fund acts as a detriment to efficient service owing to the tendency on the part of an employee approaching the retirement age to become lax in the performance of his duties m consequence of the knowledge that he will shortly be able to leave the service and draw his pension The experience of this company has demonstrated that such reason- ing is entirely fallacious. In the first place, no railway officer or employee if in good health, is likely to desire to retire at the minimum age of 55. By the time he has reached that age the performance of his duties has become second nature to him, and in no case, so far as the experience of the Grand Trunk Co. is concerned, has a member voluntarily retired at the pension age of 55, although 76 RETIREMENT OF CIVIL SERVICE EMPLOYEES. many members have been placed on the pension list at an earlier age as a result of ill health. Each year of service means a larger retiring allovs^ance, and an employee vs'ill do his best to efBciently perform his duties as long as possible in consequence. When the encroachments of old age necessitate the retirement of an employee it is generally found that he has entirely failed to appreciate that his usefulness has become impaired and usually becomes very indignant at the imputatioB. The prospective pension, while sufficient to secure a member from absolute want, is not large enough to justify him in running any risk of having his services terminated before he is eligible for retirement. In the event of an employee leaving the service after contributing for 5 years, he received one-half, and after 10 years, the whole of his contributions. Should he die at any time his widow receives the whole amount paid in by him, or if he leaves no widow, then the same is paid to his legal representatives. A comparison of much interest was recently made between the plan in force on the Grand Trunk Railway and that adopted by another company. The pro- visions of the latter did not involve the payment of any contribution by the employees, the company setting aside annually a sum estimated to be sufficient to provide for the probable pension claims. At first sight such a proposition would appear more attractive to an employee than one based on contributions by him, but the very fact of his not having to do so detracts from his personal interest in the scheme, and the benefits consequent upon faithful and efficient service are not brought home to him in the same manner. Moreover, there is an element of more or less uncertainty arising fronl the possibility that adverse business conditions might necessitate the curtailment of the appropriation annu- ally made by the company. There is also, perhaps, a latent fear that the com- pany for its own purposes might see fit to dispense with the services of em- ployees shortly before reaching the pension age. Such an imputation may be unfair, but without doubt the thought exists to a greater or less extent and exerts an influence in lessening the value of the prospective pension, in the esti- mation of employees. The advantages possessed by a system such as that in force on the Grand Trunk Railway over one that does not involve the payment of contributions by the members may be summarized as follows : • FROM THE MEMBERS' STANDPOINT. 1. The fund is administered jointly by officers of the company and the men>- bers' representatives, thus preventing any criticism or charge of discrimination in the conduct of its affairs. 2. The stability afforded by having funds invested for the benefit of the mem- bers, and the consequent assurance that there is something tangible to look for- ward to in the event of a member reaching the pension age. 3. Any member reaching the pension age can claim his pension, and has the absolute right to enjoy the same without restriction for the remainder of his life. The amount of pension payable is fixed by merit and term of service, is not dependent upon favor or influence, and partakes in no way of the nature of a gratuity. FEOM THE company's POINT OF VIEW. 1. The expense is moderate and can be regularly met without difficulty, no matter what adverse business conditions may prevail. 2. The appreciation of employees for the assured benefits in prospect will make them take a deeper interest in the company's welfare and generally in- crease their efficiency. It is a practical application of the cooperative principle. 3. If the company's interest demand the removal of an employee at any time after 10 years' service, -he will be refunded the whole of his contributions and have some money to provide for his immediate necessities. A large majority of the members of the Grand Trunk Railway Superannua- tion Association prefer the present system, because they consider that they obtain value for the money paid, whereas under the other method the uncer- tainty of fruition more than offsets its apparent attractiveness. The question has been dealt with at some length, but it is hoped that the remarks may not be without interest, in view of the fact that the Grand Trunk pension system is probably the oldest organization of the kind among the rail- ways of this continent and has been entirely successful in its operations. Frank Scott. Montreal, November 9, 1903. RBTIEBMBNT OF CIVIL SBEVICE EMPLOYEES. 77 Mr. Staek. Another matter which I wish to refer to is the leaves of absence which have been mentioned here. Mr. Lyman is the appointment clerk of the Treasury Department, and he made a state- ment in relation to it in which he shows that the average annual leave taken by females is 28.5 days, one day and a half below the limit, and 5^ days if you count Sundays in. They are entitled tO' 30 days. The average on account of sickness was 8 days for females, against 4.8 for males. The loss of pay for excessive absence ranged only 0.9" of a day as against 0.8 of a day. The total absence was 38.4 days. Combining the males and females, the general average of both sexes- was 34.6 days. That was made by the Treasury Department. The Chairman. We are much obliged to you. STATEMENT OF ME. HENRY STERLING, LEGISLATIVE REPRE- SENTATIVE OF THE AMERICAN FEDERATION OF LABOR. Mr. Stebung. I desire to present to the committee the official action of the American Federation of Labor on this matter. I have here the preamble and resolution adopted by the 1918 annual conven- tion of the American Federation of Labor, held at St. Paul in June of last year. In presenting this particular preamble and resolution, I wish to say that my understanding is that a similar and practically identically preamble and resolution has been adopted again at the recent convention in Atlantic City, extending from June 9 to Mon- day last, June 23, 1 think. But I have no official information to that effect, and, therefore, I do not want to submit that resolution, prefer- ring to use this one, with the assurance that the attitude of the or- ganization has not changed since that time. This is the resolution adopted last year : Whereas the retirement of superannuated civil-service employaes upon service annuities is bow generally recognized as justifiable from both a humane and a business standpoint ; and Whereas the United States Government is one of the few in the world that makes no provision for the retirement of its aged civil-service workers, re- sulting in one of two conditions, men are heartlesslyi dismissed after years of faithful service or they are retained upon the pay roll when no longer able to render efficient service ; and , ^ . ^ ^ Whereas the compensation of Government employees is insufficient to permit of adequate saving for voluntary retirement in old age ; and Whereas all political parties in their platforms have pledged their support for the enactment of retirement legislation : Therefore, be it Resolved, That this thirty-eighth convention of the American Federation of Labor does hereby go on record as favoring an equitable retirement law for superannuated Government employees, as contemplated by the McKellar-Keat- ing bill now pending before Congress, and that the executive committee is here- by instructed to use every means at its command to secure the enactment of such legislation by the Sixty-fifth Congress. The committee of the convention which considered this resolution recommended its adoption, and the report of the committee was * It seems to me, Mr. Chairman, worth while to call attention to that word in the first whereas, " humane." It is not usual that one em- ployee works for one employer for a lifetime, but certainly when that occurs Mr. Chairman, it is unseemly and inhumane for the aged em- ployee' to be dismissed without consideration of his future sustenance. 78 EETIRBMENT OF CIVIL SERVICE EMPLOYEES. We can conceive of private employers feeling compelled through the necessity of showing profits, through the exigencies of business, being compelled to dismiss employees in that way. But the heartlessness of an employer like the United States Government, knowing through a century of experience that there will be in its employ at all times a large number of men and women who have devoted their entire lives to the service of the Government and who need provision for old age — I say the heartlessness of the Government which would go on for a century and a half and make no such provision is even worse than the heartlessness that we meet sometimes in private employ- ment, of which bitter complaint is made from time to time. This is a thing, Mr. Chairman, which ought to be done and which ought to have been done 50, 75, or 100 years ago., Whatever the provision was, whether contributory or partly contributory or wholly paid for by the Government, it ought long, long ago to have been done and been in practice, and not subject thousands upon thousands of loyal, faithful, efficient employees to the menace of destitution in old age or to the anxiety which must have to some extent blunted their efficiency. From its own standpoint, Mr. Chairman, such a course by the United States Government is shortsighted, wasteful, and wrong, and since that duty has not been performed until this day, it seems to me urgent that the Sixty-sixth Congress in its first session should forth- with enact the best legislation that it can devise along this partic- ular line. I have referred to the heartlessness of an employer who would dis- miss an employee in that way, assuming first that the employee might have through all those years been paid an adequate salary, such a salary that he might have made provision for himself. But in this case the heartlessness extends further, for the United States em- ployees have not been paid a salary sufficient to make such provision, nor have they been paid a salary that is adequate or equitable under the circumstances of the service rendered. I caih not answer for the time before the war, but my understand- ing of it is that the salaries paid the Government employees before the war were less than equity demanded. It seems to me quite surely so, when I recall the fact that the offi- cial statistics showed an increase of the cost of living from the nine- ties up to December, 1913, of 72 per cent, and I am absolutely certain that no such increases of salaries, or any inceases in salaries at all, commensurate with the 72 per cent were received by the Government employees; and that from 1913, with the World War, there has been a wild jump again in the cost of living ; and my opinion is that there are a good many positions under the civil service of the United States Government which have' had no readjustment of salaries in the last 50 years, notwithstanding the amazing increase. The report on the Nolan $3 minimum wage bill, brought in April, 1919, showed, if my recollection is correct, that there were 66,000 employees of the United States Government getting less than $3' per day, and the cost of living had increased from the nineties, when that $3 was fixed, up to the present time, nearly 200 per cent. Now, no one can claim that that is even decent treatment of Gov- ernment employees. It is not. There is absolutely no approach to RETIREMENT OF CIVIL SERVICE EMPLOYEES. 79 equity, and there is no margin there left, Mr. Chairman, for em- ployees under such wages to make any provision whatsoever for old age; and, excepting they be high-salaried employees, if a few should make such provision for old age they could only do it by injuring the future of the Eepublic by withholding from their children the op- portunities that the children of the American Republic ought to have, and laying aside the money for their own provision. We have heard a great deal about thrift, and we have heard a little about it this morning, and thrift is a very fine thing and very de- sirable if construed into wise expenditure of money. But if con- strued into the withholding of money and hoarding it when it ought to be expended, then thrift is a very mischievous thing from a social, a national, and a personal standpoint. It came to my attention this morning in relation again, to the heartlessness of the "Government, that certain classes of the District of Columbia employees are being reduced in wages in the pending sundry civil bill, notwithstanding the high cost of living, and one set of men, the oilers, were named as being reduced. I forget what they were getting, Mr. Chairman, but it was urged to me that the pending sundry civil bill reduces them back to $1.75 per day. The Chairman. Do you recall what particular class or classes of employees have their salaries reduced by the terms of the sundry civil bill? Mr. Steeling. The water and sewer division, and the municipal buildings, I think. Now, I am not quite sure about that classifica- tion. Water and sewers were both mentioned. I do not think it is entirely pertinnent to this bill, but I am quite sure that if it was desir- able I could bring the man with his figures before this committee and make them a part of this record. I do not think that is quite di- rectly involved. The Chairman. It is hardly involved here. Mr. Sterling. It is hardly involved, except on the general proposi- tion, the general arraignment I wish to make of the conduct of the Government itself, which manifests itself through the indifference aind the apathy of Congressmen. I recognize the general desire for retrenchment, and I recognize the necessity for rentrenchment ; but the retrenchment, Mr. Chairman, should not come from the food and the raiment and shelter of the employees of the Government, and many efforts are being made to retrench in that line. The reason that I have brought that in at this particular time, Mr. Chairman, is simply to indicate that the United States Government owes to its employees something which it has not yet paid. i ^t. My conclusions are that at least since the nineties, when the increasing cost of living began, the general body of employees of this Government have been underpaid. Leaving out the humane part of the problem as to whether a man who has been reasonably well paid for the work of a lifetime has any claim at all on his employer for consideration for the rest of his life, omitting considera- tion of that, there seems to be absolutely no doubt that, as a body, these men have been underpaid since late in the nineties, m 1»97, the increasing cost of living began and no adequate readjustment o± their salaries has ever been made. There have been some readjustments, but they were in no way commensurate with the increasing cost o± living. 80 RETIREMENT OF CIVIL SERVICE EMPLOYEES. Dr. Jordan. Is the cost of living going to continue to rise, in your judgment? Mr. Sterling. I think it is. The increasing cost of living has some relation to gold and the production of gold, the basic currency. Now, what that relation is, so far as I know, and what its effects are, no human mind has yet discovered ; or, if they have, they have not con- vinced the world at large that they have discovered it, and that they can tell the world just what are the effects of a gold standard, or the increase in the production of gold, or whatnot ; but since the increased production of basic currency would seem in all reason to produce an increase in the cost of living, and since, so far as I am personally concerned, such an increase in the basic currency has always produced an increase in the cost of living, as that basic currency is being in- creased in production to-day and is likely to be increased in produc- tion in the future, I see absolutely nothing ahead except a constantly increasing cost of living. The increasing cost of living, Mr. Chairman, it is deplorable to say, is added to by a multiplicity of monopolies in this country, great and small, who have fastened themselves upon the body politic and apparently can not be gotten rid of. Now, they can be gotten rid of by legislation ; and again, the United States Government is blamable, for it has never taken any effective measures to wipe out vicious and pernicious private monopolies. These monoplies prey upon the people at large and upon the Government employees also. The Chairman. I do not know but that you are entering into a debatable field there, Mr. Sterling, in regard to that. Mr. Sterling. I am not going to press it, Mr. Chairman, and I am going no further with it. I simply raise the question and ask whether the Government itself has not been derelict in its conduct to its employees, not only to the people at large but to its own em- ployees, that it has not solved that problem of private monopolies practicing extortion on the people. I read in one publication where flour made from wheat produced in North Dakota was sold at $17 a barrel, and the same flour made from the same wheat was sold in London at $8 a barrel. That is to say, the English Government at that time, at least, on that particular point, was protecting its people from extortion. The Chairman. Government price fixing, you know, has had probably something to do with that. Mr. Sterling. Government price fixing did reduce, I think, and did keep down the cost of living; but Government price fixing as a permanent policy would be a weak reed on which to lean. The Chairman. I agree with you in that, Mr. Sterling. Mr. Sterling. There are fundamental reasons for those things, and those fundamental reasons should be ascertained and removed. The Chairman. Yes. Mr. Sterling. Now, Mr. Chairman, I think I have made my point. I have spread in the record a statement that our 3,500,000' people are strongly and apparently unanimously in favor of legisla- tion that will provide for the old age of Government employees. I have made some comment intending to show that such provision was rightfully due from the Governnient — equitably due from the Gov^ ernment. I think it is fair for me to leave the case there with the chairman, thanking you for your patience. RETIREMENT OY CIVIL SERVICE EMPLOYEES. 81 The Chairman. May I ask you again — ^the record may show it, but I do not recall — what is your position in the American Federation of Labor? Mr. Sterling. Legislative agent for the American Federation of Labor. The Chairman. Are you a resident of the District here? Mr. Sterling. My home is in Boston, Mass. My residence is here at the present time. The Chairman. That is all, and we are much obliged to you. Mr. Sterling. Thank you for your patience. Thank you for your courtesy. Mr. Alcorn. Miss McNally, who is the field organizer of the Na- tional Federation of Federal Employees, would like to be heard for about five minutes. The Chairman. We will hear Miss McNally. STATEMENT OF MISS GERTRUDE M. McNALLY, ORGANIZER, NATIONAL FEDERATION OF FEDERAL EMPLOYEES, Miss McNallt. Mr. Chairman, I am here to indorse this bill for the Woman's Union, particularly in the Bureau of Engraving and Printing. There were employed in the Bureau of Engraving and Printing, on the 1st day of June, 4,003 women, and their rates of pay, you know I believe, are very low, from $2.37 to $2.50 a day, that being perhaps the highest. The Chairman. Do you mean to say that the rate of pay of the women in the Bureau of Engraving and Printing is from $2.37 to $2.50 a day? Miss McNally. Per day. The Chairman. They are not paid an annual salary? Miss McNally. No, sir; they are paid by the day. All of the employees in the Bureau of Engraving and Printing are paid by the day with the exception of plate printers, who are paid by the piece, and a very few statutory positions that are taken care of in the legislative bill. All the others are taken care of in the sundry civil bill and are paid by the day. This organization indorses the provisions of this bill. The subject matter in the bill has been gone into so extensively that it is not necessary for me to do so ; but we are very anxious for the early enactment of a retirement measure, because we have in the bureau a great many very old women ; women who are of very little if any benefit to the Government, and to care for whom during the day and in getting to and from the cars takes the other employees away from their work. . . ,• -i i The women in the Bureau of Engraving and Printing are eligible for transfer to the' Treasury Department, but as Mr. Myers has told you, there are so very many old people in the Treasury Department that it has been impossible for them to take over to the Treasury Department anyone from the bureau except the younger girls and those whose seniority really did not entitle them to transfer. That causes confusion in the service, and certainly a great amount of discontent. We can appreciate also that the Treasury Department 125022—19 6 &Z KEWREMEITT OF CIVIL, SERVICE EMPLOYEES. does not want old women of course. Thirty-five is the age limit for transfer to the Treasury Department. . The Chairman. Thirty-five is the age beyond which they can not be transferred ? Miss McNai,ly. Beyond which they can not be transferred; and they do not want to take them at that age if they can help it, but they have set that as an outside limit. We believe that a retirement measure will in great measure take care of them. The Chairman. When transferred to the Treasury Department, do they receive an annual salary? Miss MoNally. Yes ; they receive an annual salary. They go into the Bureau of Engraving and Printing at a per diem. Of course we would prefer, naturally, being so poorly paid, a system that did not contemplate a contribution, but because we see the very practical necessity of some retirement scheme of some kind, we have indorsed the provisions of this bill ; but we hope very much that it will not go over 2^ per cent if the bill is enacted into law, because we could not stand it. It would be a hardship that we could not stand. The Chairman. What is the reason for the per diem plan of pay- anent in that bureau instead of the salary ? Miss McNally. The work in the bureau is of rather a mechanical nature, and I believe the director had that in mind when he changed the pay. Up until 1907, 1 believe, we were on an annual salary basis, and then the change was made to the per diem basis. We have no sick leave, or any of these provisions that relate to the positions of per annum employees in the other bureaus. The Chairman. How long have you been in that bureau? Miss McNali.y. I am not in the bureau at the present time. I have worked there 12 years, but at the present time I am doing organization work for the organization of which I am a member in the bureau. The Chairman. Are there any questions to be asked of the witness? Dr. Jordan. How many ladies of those employed in your bureau would be eligible for retirement under the provisions of this bill, could you tell us approximately ? Miss MoNally. I have asked the director for those figures and he said he would give them the best he could. The Chairman. Put them in the record, will you ? Miss MoNally. I think, from my personal knowledge, there would be about 200 that would be immediately eligible. The Chairman. If you get those figures, we will see that they go into the record. Miss MoNally. I am much obliged. Mr. Alcorn. Mr. Chairman, before you take a recess for luncheon, Mr. Franklin, who is first vice president of Local 88 of the Federal Employees' Union of the District of Columbia, would like to be heard. The Chairman. Proceed, Mr. Franklin. STATEMENT OF MR. WILLIAM F. FEANKLIN. Mr. Franklin. I am here to supplement what Commissioner, Brownlow said this morning, that we are unanimously in favor of this bill. It will be a great relief to about 70 to 90 employees of the KETIEEMENT OF CIVIL SERVICE EMPLOYEES. 83 District Building. At the present time we have some of our em- ployees who have not been at work for several months, and we are taking up a collection every pay day to send something home to them to keep them from going to the poorhouse. We had an employee who was sick for 15 months. His annual leave and sick leave had been used, and we started a club so that we would guarantee his envelope being sent home to him until he dies. We have another case that we are taking care of, another employee about 70 years of age, and we expected that he was going to pass away, too. Those cases are arising that way all over the office, in every branch of the District service; and the Federal employees are not forgetting them. We would like to have a bill of this kind passed so as to relieve us of that burden. (At 1.10 o'clock p. m. the committee took a recess until 2 o'clock p.m.) AFTERNOON SESSION. The committee reconvened, pursuant to the taking of the recess, at 2 o'clock p. m.. Senator Thomas Sterling presiding. The Chairman. Before proceeding with the oral testimony I call attention to a letter that I have from the Secretary of Labor concern- ing civil-service retirement, which I will have go in the record in connection with the statement of the chief clerk of thp Treasury Department, and the letter from the Secretary of the Treasury sub- mitted by him, and the excerpts which accompany the letter. Also in the same connection, I have a letter received from Mr. Polk, the Acting Secretary of State, in regard to the same subject. I have also a letter received from Mrs. Frances C. Axtell and Mr. Charles H. VerrilL commissioner of the United States Em- ployees' Compensation Commission, in which letter is discussed the question as to the proper body to administer this law, it being urged in the letter that the United States Employees' Compensation Com- mission is a proper body to administer the law, which reads as follows : United States Employees' Compensation Commission, Washington, June 25, 1919. Hon. Thomas Sterling, Chairman Ccymmittee on Civil Service and Retrenchment, United States Senate, Washington, D. C. Dear Sir : In connection with the bill for the retirement of employees In the classified civil service (H. R. 3149), it seems proper that your attention should be called to the fitness and availability of the adminietratlve machinery of this commission for the administration of a retirement law. This commission is charged with the admiiuritration of the employees' com- pensation act of September 7, 1916, which provides certain benefits for civil • employees of the United States Government when injured while in the per- formance of duty. These benefits are medical, surgical, and hospital services and supplies, compensation during disability, and, in case of death, a limited allowance for burial expenses and compensation for certain dependents, either for life or for a fixed number of years. The commission, in order to provide these benefits in case of need, must be m close touch with all Government establishments in order to inform officials of their duties under the law and to inform employees of their rights and the proper procedure in case of injury. Arrangements must be made for medical, surgical, and hospital treatment by Government medical officers and in Govern- ment hospitals wherever practicable. Where such Government facilities are not 84 EETIREMENT OF CIVIL SERVICE EMPLOYEES. available physicians and hospitals must be designated in order that there may be no lack of medtcal service promptly available in case of emergency. The administrative machinery must also be organized for the securing of reports and claims and for the investigation of. claims, with adequate facilities for medical examinations when necessary in connection with such investigrttions. The prompt payment of compensation must also be arranged for, as the very purpose of the compensation act is to make compensation payments take the place of wages lost on account of disability for work. Some of the reasons why the Compensation Commission is in a position to take charge of the administration of a retirement law will thus be obvious. The commission is at all times necessarily in close touch with all Government establishments inasmuch as injuries arise and medical service and compensation must be furnished without delay. The commission must see to it that'in all Government establishments oflSclals and employees have an understanding of the purposes of the compensation act and of the procedure necessary to secure its benefits. Medical and hospital service as organized for the purposes of the compensa- tion act will be particularly useful in questions arising under a retirement law, particularly when retirement is sought in advance of the regular retirement age on account of disability. If the retirement bill shall be so amended as to provide medical service for employees retired because of disability in advance of the retirement age the medical service organized by this commission would be available. This commission necessarily must investigate, through its own agents and the cooperation of other Government ofBcials, claims on account of disability, and has arranged for the services of medical specialists in connection with such in- vestigations. Such investigations would be necessarily a part of the adminis- tration of a retirement act, especially in connection with retirements on account of disabilityjin advance of the regular retirement age. In this work the or- ganization set up by this commission would be suitable and available. In the payment of compensation benefits and medical and hospital bills, pay- ments under awards on account of death are made twice each month, while payments of compensation on account of disability are made daily when dis- ability for work has terminated or at least two weeks' compensation has be- come due, the claim having been perfected. The machinery for the payment of compensation will be well adapted for the payments under a retirement law and would be adequate for such demands with but small additions to the working force of the commission. Frequently claims alleged to be on account of injury are found, upon investir gation, to be actually due to disability on account of disease. A con.siderable number of these cases are cases properly coming under a retirement law where the right to retirement would not infrequently be clearly established by the investigations of the commission. The administration of the compensation act is by a commission of three ap- pointed by the President for terms of six years. Administration of such a com- mission has been found in most of the States having workmen's compensation laws as far more satisfactory than administration by a single official. While the questions arising under a retirement law will perhaps not be so difficult or so numerous as those under a compensation act, it is believed that the number in which the rights of the employees will be in question will be sufficiently great, so that the advantages of a commission of three will be needed. It is believed, furthermore, that the administrative authority in charge of a retirement lavsr should be one independent of the jurisdiction of any single department. Such an independent administration can only be secured by placing the act under the jurisdiction of an independent commission clothed with full authority and entirely impartial, as is the Employees' Compensation Commission. Respectfully, Mrs. Frances C. Axtell, Chas. H. Vereh,!., Commissioners. Mr. AicoEN. Mr. Beach, who has made a very careful analysis of this bill, and also of the House bill, will go into it, section by section, and try to explain the merits of it. KETIEEMENT OF CIVIL, SERVICE EMPLOYEES. 85 STATEMENT OF MR. JOHN S. BEACH, REPRESENTING THE NA- TIONAL FEDERATION OF FEDERAL EMPLOYEES. The Chairman. Is the National Federation of Federal Employees affiliated with the American Federation of Labor? Mr. Beach. Yes, sir. Mr. Chairman and members of the committee, the National Fed- eration of Federal Employees, which includes in its membership practically all of the employees in the classified civil service except- ing the machinists and the Postal Service, have given their hearty indorsement to the principles of retirement as embodied in the bill introduced by the chairman of this committee, and known as Senate biU 1699. It will be recalled that at the last session of Congress a bill was introduced by Senator McKellar which was favorably reported to the Senate, but failed of passage. That bill was more. extensively indorsed, perhaps, than any other retirement bill that ever was pend- ing before Congress. It was indorsed by the American Federation of Labor at their convention in St. Paul last year, it was indorsed by the American Association for Labor Legislation, it was indorsed by the joint conference on retirement which includes in its member- ship representatives from all classes of civil-service employees, it was indorsed by the State legislatures of California and Oregon, and various other organizations and societies. The same underlying principle which was incorporated in the McKellar bill is likewise incorporated in the bill which we now have under consideration. Consequently, it is entirely consistent that our organization shall have indorsed that bill and this one also. Mr. Chairman and gentlemen of the committee, I had prepared a review of this bill section by section, with the idea of discussing it with the committee briefly, if it is your desire to do so. The Chairman. We will be glad to hear from you, Mr. Beach. I will be glad to have witnesses bear in mind, however, that I have another committee meeting at 3.30 o'clock. My understanding was that we might get through in that time. Mr. Alcorn. I think we will, Senator. Mr. Beach. The purpose of the billis to provide retirement on an annuity, payable monthly, for employees in the classified civil service of the United States and certain other employees specifically men- tioned in the bill. Annuities are to be granted to employees only in case they shall have rendered, in the aggregate, at least 15 years of service and have attained a given age specified in section 1 or have become totally disabled for efficient service under conditions defined in section 5. Annuities are graduated, in relation both to the num- ber of years in the service, within certain limitations, and to the average salary, pay, or compensation during the last 10 years of service. „ . , ^ „e Section 1 fixes the optional age for retirement at 65 years, except for mechanics, city and rural letter carriers, and post-office clerks for whom the age is fixed at 62 years, and for railway postal clerks at 60 years. • , .■ ^ -r ,t . The Chairman. You describe that as the optional age. Is that quite correct? You speak of it as the optional age. In some in- ^6 BETIREMENT OF CIVIL SERVICE EMPLOYEES. stances, of course in many instances, it would not be optional with the employee at all, would it ? It would depend upon his efficiency upon arriving at that age ? Mr. Beach. Yes. It is optional in this sense, that the administrar tive officer will have the option of retaining this employee in the service beyond the retirement age. We differentiate between optional age for retirement and compulsory, because, after all, there is a period during which the employee may be retained beyond the re- tirement age, at the option of the administrative officer. Conse- quently, we referred to it under that term. The Chairman. I see. Mr. Beach. The age for optional retirement for the employees in the preferential classes is reduced for the reason that their occupa- tion is either hazardous, laborious, or subject to exposure, or the con- ditions of their employment are such as to incapacitate them for efficient service at a comparatively early age. This question has been discussed this morning by the representaf- tives of those particular branches of the service which would be affected, the postal service and the mechanics, consequently, I hardly deem it necessary to go further into detail with reference to that pro- vision. They brought out the reasons, I think, very clearly, as to why these employees should be given a preference over those who are engaged in purely departmental activities. By referring to section 1 we find that retirement is not compulsory at the ages specified in section 1, but that employees may be continued in the service beyond the retirement age under certain conditions defined in section 6 ; more extended reference to the question of op- tional and compulsory retirement will be made when that section is reached. Employees of the Library of Congress and the Botanic Gardens are included in the provisions of the bill. These employees, coming as they do under the legislative branch of the Government, have a peculiar status. Although they are not in the classified civil service, yet their duties, rights, and privileges are analogous to those of other civil-service employees and their tenure of office is reasonably certain ; therefore, it would appear to be an act of justice to put them on the same footing with employees in the classified civil service as regards retirement. The power vested in the President to extend the scope of the law is in harmony with the authority already conferred upon the Execu- tive in civil-service matters. That he shall have added power to ex- clude from the operation of the. law certain employees is deemed wise, particularly in the interest of good administration. It will be noted, however, that this power is limited, and it is presumed will be in- voked only to meet extraordinary contingencies which may arise from time to time, and in cases which would render administration of the law difficult ; or in cases where to enforce the law would be preju- dicial to the interests of the Government or the employees concerned. I have a reference in this review to the advisability of including within the law certain employees of the District of Columbia. That has been covered, however, very admirably by Commissioner Brown- low, and therefore I will omit any further reference to that topic unless it is the desire of the committee that I express further opinion. KETIKEMENX OF CIVIL SEEVICE EMPLOYEES. 87 The Chairman. You agree, do you, that it would be wise to, in- clude those employees in the bill? Mr. Beach. Most heartily. I believe it would be a step which would ultimately result in the classification of the District employees, which would be entirely desirable in my opinion. The Chairman. So that they would come under the classified civil service ? Mr. Beach. So that they would come under the classified civil service. I am quite sure that the District Commissioners desire that this action shall be taken. Commissioner Brownlow brought out that thought this morning. Postmasters are specifically excluded from the provisions of the act for the reason that their occupation as such is usually incidental to other lines of business, and in fact in a large proportion of cases they give only part time to the duties of the office. Therefore the application of a retirement law for postmasters would be exceed- ingly difficult, if not inequitable, as compared with other branches of the classified service. The Chairman. You heard the statement of Mr. Brown yesterday in regard to fourth-class postmasters? Mr. Beach. Yes, sir. The Chairman. Do you think that it would be advisable to in- clude fourth-class postmasters within the provisions of this law considering the inadequacy of their pay, etc., as related by Mr. Brown ? Mr. Beach. Taking it from that viewpoint, it might be desirable; but when we consider that the average fourth-class postmaster as such uses his office as an incident to other business and only gives part time to it I hardly see how it would be possible to administer a law equitably with that complication. Now, we know that there is a wide discrepancy in the compensa- tion of the fourth-class postmasters. I believe some of them receive as low as $20 a year, and from that up to $1,000 a year. Of course when they get to the $1,000 point then they are included in the third class. Now, to deduct 2^ per cent from their compensation, which is not fixed but is based upon receipts, would be very difficult. Moreover, the fact, as before stated, is that many of them only give very slight attention to duties of the office. I do not want to go on record in opposition to the plan if the committee looks favor- ably upon it, but I do believe, in justice to myself and in justice to the plan which we have under consideration, we ought to point out to the committee the possible difficulties that would come in attempting to administer a retirement law, particularly where there is a contribution from the employees. As before stated, the com- pensation of these fourth-class postmasters is entirely dependent upon the receipts of the office. I believe I am correct in that statement. The Chairman. I think you are right in that. Mr. Beach. An act of 'Congress approved June 20, 1918, pro- vides for retirement of certain employees in the Lighthouse Service, and as that act confers a greater benefit upon those employees than they would receive under this bill they are also specifically excluded- Section 2 defines the classifications and rates to be used as a basis for computing annuities, which are graduated both in relation to the 88 RETIREMENT OF CIVIL SERVICE. EMPLOYEES. number of years in the service and to the average annual salary, pay, or compensation during the last 10 years of service. A maxi- mum and a minimum annuity are fixed for each class, and it is provided that in no case shall an annuity exceed $720 or be less than $180 per annum. As before indicated, no annuity shall be granted for less than 15 years of service. I have here a little table of annuities, which will show at a glance the scale. (The table referred to is here printed in full in the record, as follows:) Sample table of annuities. Average annual salary, pay, or compensation. Class A, 30 years or inore, 60 per cent. Class B, 27 to 30 years, 54 per cent. Class C, 24 to 27 years, 48 per cent. Class D, 21 to 24 years, 42 per c«nt. Class E, 18 to 21 years, 36 per cent. Class F, 15 to IS years, 30 per cent. 81,200 or more S720 660 600 540 s 480 420 360 $648 594 ' 540 486 432 378 324 $676 528 480 432 384 336 288 $501 462 420 378 336 294 252 S432 396 360 324 288 252 216 $360 $1 100 •330 Sl.OOO 300 $900 270 S800 240 $700 210 S600 or less . . 180 Mr. Beach. The term "basic salary, pay, or compensation," is defined in the last paragraph of section 2. Section 3 gives the employee the benefit of all periods of service, including civil, military, and naval, for the purpose of assignment to classes defined in section 2. If, however, the employee is in I'eceipt of a pension or compensation on account of military or naval service, the period of his or her service in the Army or Navy shall not be included for the purpose of assignment to classes, in the event that such employee is not in receipt of a pension or compen- sation for such service, then the period of military or naval service may be included. This means in effect that the retired employee may receive an annuity in addition to a pension or compensation, but the period of military or naval service in such cases shall be eliminated for the purpose of computing annuity. The Chairman. And eliminated for the purpose of computing the time at which he will be entitled to an annuity. That is, it would not be any part of the 15 years ? Mr. Beach. No ; that is the idea, that if he is entitled to a pension or compensation, then the period of that military or naval service would be taken out when computing his aggregate time of service in the civil service. The CHAiEMAisr. I see. Mr. Beach. To illustrate, there are employees who were in the civil service and have been in the military service very recently. They will come back and take up their civil service. Now, if they have received no pensionable disability whatsoever, then when the time comes for them to retire on an annuity under the provisions of this act, the time of their military service will be included. It will give them the benefit of that service. If, on the other ha6d, they have received a pensionable disability, if they avail themselves of the privilege of taking a pension or compensation, then the period BETIREMENT OF CIVIL SERVICE EMPLOYEES. 89 of military service, the time of military service, will be excluded for the purpose of computing an annuity. The CSaieman. And will not be any part of the 15 years that the man is required to serve before he will have the benefit of this act? Mr. Beach. No. Section 4 provides for administration of the act by the Commissioner of Pensions under direction of the Secretary of the Interior. In view of the fact that you have a statement before you from the United States Employees' Compensation Commission setting forth, as I understand, the reasons why they believe admin- istration _ should be vested in their commission, I will go a little further into detail as to why, in my opinion, the administration should be vested in the Bureau of Pensions. ; The Bureau of Pensions is splendidly equipped to undertake this additional work. It is located in a spacious public building, well lighted and well ventilated, and affording maximum facilities for transaction of official business. Included in its personnel are many employees who, by reason of education and training, have become skilled in the law and practice governing adjustment of pension claims. The medical division, under direction of the medical ref- eree, includes employees possessing a technical knowledge of medical jurisprudence. More than 1,200 boards of examining surgeons scat- tered throughout the country come under the control of the bureau and are available for the purpose of making examinations at a minimum cost. I might say, in that connectioi;i, that these boards of examining surgeons are paid by fees only. Consequently, if they make no examinations there is no cost to the Government. There is also a corps of special examiners in the field service trained in making inquiries affecting the rights and interests of claimants and pensioners. The disbursing office is fully equipped with every modern mechanical appliance used for the purpose of writing and mailing pension checks, and the system of accounting is perfected in harmony with statutory and other requirements. It will be possible to utilize all these agencies in the business of ad- justing claims for annuities and making payments when granted, thus providing administration at a minimum cost and yet with a maxi- mum of efficiency. I might say for the information of the committee that I have been an employee in the Pension Bureau for more than 20 years, and con- sequently I am very emphatic in my statements in my belief, that the Commissioner of Pensions can more efficiently and more economically administer this law than any other Government agency. I base that opinion, as I say, upon personal experience, upon my firm conviction, after investigating other proposed agencies for administering this law. The right of appeal to the Secretary of the Interior from any ad- verse action of the Commissioner of Pensions in his construction of the retirement law would be in harmony with present practice in pen- sion matters, and the assurance that such appeal would be considered by a regularly constituted board will guarantee to the appellant a judicial determination of his claim. 90 EETIBEMEITT OF CIVIL SERVICE EMPLOYEES.' Senator Colt. Is there any other departnient of the Government the administration of which so resembles the administration of this proposed law as the department referred to^the Pension Bureau ? Mr. Beach. In my opinion, Senator, there is not. Senator Colt. I mean, does not the administration run along on all fours in many respects ? They are analogous ? _ Mr. Beach. Yes, sir. Senator Colt. It would seem offhand as if your position was very strong, that there is no other department that is so well equipped for the work, and it seems as if it was in harmony, a great deal, with this class of work. Is that true or not ? . Mr. Beach. Entirely true. I can not speak too strongly upon that phase of the question. In that bureau it is true that there are a great many superannuates, but as has been brought out in the hearings in the last few days, they still have Senator Colt. Has any other department been suggested here to do the work? The Chairman. One other. I introduced to-day a letter to be put into the record. , Mr. Beach. The National Employees' Compensation Commission IS bidding for the administration. " The Chairman. I did not have time to read the entire letter my- self. I thought that it should go into the record. Senator Colt. I will not interrupt you further. Mr. Beach. I will be only too glad to be interrupted. I thought it would be of real interest to the committee to discuss this bill section by section, and give you such information as we have at hand. The Chairman. One other question. I would like to know what other agencies have been suggested, other than the Bureau of Pen- sions and this compensation commission? Mr. Beach. The Bureau of War Eisk Insurance. The McKellar- Keating bill provided for administration by the Bureau of War Risk Insurance, and you will find they incorporated that in the bill. Senator Colt. The Bureau of War Risk Insurance is of recent creation, is it not ? Mr. Beach. Yes, sir. It was created specifically by the act of September 14, for marine insurance. Senator Colt. The Pension Bureau has had long experience? Mr. Beach. Yes, sir. The Chairman. There is some question, I think, whether the War Risk Insurance Bureau should not have been placed under the ad- ministration of the Bureau of Pensions rather than having two dis- tinct bureaus. Senator Colt. I want to ask your opinion. Are you entirely sat- isfied that the employees should contribute part toward the payment of the annuity, or do you think that the Government should pay the whole ? Mr. Beach. Senator, I have convinced myself, judging by the history of retirement systems of other countries, after reading the testimony of those who have made it a life study, that we should adopt a system under which the Government and the employee shall contribute to the fund. That is a question on which we might per- haps spend an indefinite length of time in discussion. BETIBBMENT OP CIVIL SERVICE EMPLOYEES. 9l Senator Colt. Is it the opinion of the employees themselves, in their associations such as this you represent, that they should con tribute a part ? Mr. Beach. Yes, sir. Senator Colt. Very well. _ Mr. Beach. Almost unanimously we have arrived at that conclu- sion. The time was when some of the organizations which are rep- resented in our joint conference advocated the straight pension, but we finally agreed, after weighing this question carefully, to indorse a plan as embodied in this bill, that the employees should contribute a certain amount, and that the Government will supplement that con- tribution to the extent of providing for the fund. Senator Colt. If the salaries were fair— I use the term. "fair"; I will say if they were other than they are now — would there not be more reason why the employees should contribute? You take a compensation of $600 a year ; the employee would have to contribute some of that? Mr. Beach. He would have to contribute 2^ per cent of that $600 a year, which would be $15. Senator Colt. Fifteen dollars ; yes. Is that the ratio provided in this bill? The Chairman. Yes ; 2^ per cent. Mr. Beach. Yes, it is 2| per cent. Senator Colt. Whatever might be my first impressions about it, I want to satisfy the employees. That is my desire. The Chairman. Yes. Senator Colt. And if they indorsed the plan as being better, upon the whole, as you seem to indicate, and as I hear from other sources, too, I would waive any opinion 1 might have about it, espe- cially as the bill was drawn that way. I wanted to be a little relieved on that main point, that is all. Mr. Beach. Dr. Jordan, who will succeed me in the discussion of the retirement system, is probably better qualified than I am to speak on that subject. But to reiterate what I have said on that question, the latest idea of students on this, based upon experience of years, is. that the best system is one in which the employee and em- ployer both participate in the fund. Senator Colt. You spoke of foreign countries and their experi- ence in this matter. Do you mean England or France? Mr. Beach. I will let Dr. Jordan answer that. Dr. Jordan. What countries have you in mind ? Senator Colt. Take England, for instance. Dr. Jordan. There is contribution under their plan, it is true, but it is contribution in the sense that the employee, if he separates him- self from the service, gets what he considers and what the Govern- ment considers to be the commuted value of what he would be en- titled to receive if he had actually contributed. I am going to dis- cuss that briefly. Senator Colt. Well, no matter ; go ahead. Mr. Beach. I trust the Senators will feel free to ask me questions. If I am unable to answer, I am always free in maldng that state- ment, also. 92 eetieem;bnt of civil service employees. Section 5 provides for retirement of employees who become totally incapacitated for efficient service before reaching the retirement age. The interests of the Government have been carefully safeguarded in the drafting of. this section. The employee must have had at least 15 years of service^ to be eligible for retirement on account of disability. Eetirement is con- ditioned upon examination by competent medical authority, and total disability for efficient service must be satisfactorily established. The annuitant must submit to a medical examination annually until reaching the retirement age, unless the disability is permanent in character. Provision is made for discontinuing the payment of an- nuity upon recovery from the disability, and for suspending the an- nuity if the annuitant fails to comply with the rules and regula.tions applying to medical examinations. The Commissioner of Pensions is given full authority to institute special examinations at any time to determine the facts relative to the disabilty for whch the employee had been retired. This means, in substance, that any employee who is retired on ac- count of disability will be under the supervision and guardianship, as it were, of the Bureau of Pensions, and that it will exercise a su- pervision over the employee until such time as he reaches the retire- ment age as fixed in section 1. If the nature of the disability is such as to give the employee the light to benefits under the United States employees' compensation act, then he may elect whether he, will accept such benefits or retire- ment on annuity as provided in section 5. Section 6 defines the conditions under which retirement shall be compulsory, or may become optional. Upon reaching retirement age the employee shall be automatically separated from the service, un- less arrangements have been previously made for his retention. The right to retire upon reaching the requisite age, or at any time there- after, belongs to the employee; he can not be compelled to remain in the service after having attained retirement age. Retention in the service beyond retirement age rests primarily upon the decision of the administrative officer as to whether the employee is still capable of rendering efficient service to the Government. Even under these conditions the continuance of the employee in the service must be by mutual agreement between him and the administrative officer. Continuance in the service beyond retirement age shall be upon certification, first by the administrative officer stating that the em- ployee is efficient and is willing to continue in the service, and finally upon certification by the Civil Service Commission as a matter of official record. The certification shall be for two-year periods only, but may be terminated at any time during continuance in the service at the will of the employee, or by the administrative officer should he decide that the employee shall have become inefficient. This point is clearly set forth in the proviso contained in section 7. After the act has been in full force and effect for 10 years, retire- ment becomes compulsory at the end -of four years after reaching the retirement age defined in section 1. Perhaps we may pause here for a moment to discuss this question of optional and compulsory retirement. It was discussed quite ex- tensively this morning by those who presented their testimony. There EETIBEMENT OF CIVIL SERVICE EMPLOYEES. 93 ^eems to be a strong consensus of opinion that there should be an age fixed for compulsory retirement. I adhere to that opinion, that there should ultimately be an age fixed for compulsory retirement, but T do believe that during this formative period we should not under- take to svf eep out of the service all of those who may be over a given Mge. It might work serious embarrassment to some particualr branch of the service. Then, too, we must take into consideration the individuals. Many of them have made no preparation for retirement, and to be sum- marily separated from the service might work hardship. And so I believe, after all, that the provisions incorporated in this bill, which has received the most careful consideration by our organi- zation, should be adhered to. If it is the experience of the administra- tive officers that too much pressure is being brought to bear upon them to retain in the service those who are beyond the retirement age, of course it will be entirely within the power of the Congress to rectify that matter. Section 7 gives the employee the privilege of filing an application for annuity 30 days in advance of his retirement, which will facilitate the adjudication of his claim and insure prompt payment of the an- nuity after separation from the service. The time is not limited, however, within which he may file the application, but it is absolutely necessary that he shall make claim in proper form before his annuity can be granted, which claim must be supported by relevant facts based upon authentic records. The certificate to be issued by the Depart- ment of the Interior becomes evidence of the right to the annuity therein defined. It had been my intention, Mr. Chairman, and mem- bers of the committee, to offer at this point an amendment similar in terms to that offered by Dr. Foster this morning, to the first para- graph found on page 12. The Chairman. I was just about to call your attention to -that. I remember his proposed amendment. Mr. Beach. I think perhaps it might be well for us to discuss the exact language to be used in the amendment before we adopt any par- ticular language, but at least the though should be carried out. There was an attempt made by those who presented this particular section to make provision so that there should be no lapse of time between the time the employee became separated from the service and the time when his annuity shall begin. But after the bill was intro- duced, and after a careful analysis of this particular paragraph by law officers, it was decided that if we let the language stand, it would work an injustice to those who might be on leave without pay at the time if that goes into effect. Eeference has been made to this class of cases by the chief clerks of the departments. There is a class of employees who are being carried on the rolls of the departments in anticipation of the enactment of a retirement law. The language as it stood would in effect bar them from participation in the benefits of the retirement law, and I am quite sure we do not want to do that. Therefore, we recommend a change in the language, and I will sub- mit to you at a later date the exact verbiage which I believe should be incorporated in that section. Section 8 provides for deduction of 2^ per cent from the em- ployee's basic salary, pay, or compensation, and such deductions are 94 EBTIBEMBNT OF CIVIL SERVICE BMELQYEES, to be transferred to the credit of a special fund known as the " Civil- service retirement and disability fund." T^iis fund will become immediately available for the payment of annuities, refunds, and allowances. The interest of the individual employee in the deducr tions from his or her salary, pay, or compensation is fully safe- guarded by the provisions contained in section 11. No doubt the committee would be interested in a brief statement as to what these deductions will provide. In our opinion, the amount of deductions from salaries will be sufficient to pay annuities for at least the first 10 years under the administraion of this act. In sub- stance, this means that the Government is accepting these deduc- tions as a loan, will pay the annuities, refunds, and allowances, and perhaps at the end of 10 years or 12 years the Government will be called upon to make an appropriation to supply the deficiency. The Chairman. What factors do you take into consideration,. Mr. Beach, in making that statement, the statement that for the first 10 or 12 years the contributions of the employees will pay all annuities? Mr. Beach. I base my conclusions upcn certain figures which were collected or, compiled, rather, by the Bureau of Efficiency on statistics collected in 1916. These figures are incorporated in the hearings held on the McKellar bill. In 1916 there were 263,000 employees that would have been eligible for retirement under the terms of a bill similar to this. I have gone on the assumption that when we reach again a normal condition there will be at least 300,000 em- ployees in the classified civil service coming under the provisions of this bill. As shown by the figures before referred to, the average salary of employees in the classified service is $1,138. Now, by a process of multiplication we find 300,000 employees receiving an average salary of $1,138, and by computing 2| per cent upon that we will have an income of about $8,500,000 a year that will become immediately available. Now, I have arrived at the conclusion, based also upon those fig- ures, that about 6,400 employees will retire at once, and there will be a gradual increase to that roll during the succeeding years. Then we must also take into consideration those who resign from the serv- ice and take out their accumulations. Of course, those who resign at first will have but little accumulations. As years go by that accumu- lation will grow more and more and subsequently there will be a greater draft upon the fund from that source. Now, -we must be guided by past experience. I believe under normal conditions there were about 15,000 resignations every year. During the war it rose to 50,Q00. I have gone on the assumption that when we get to a period of stability again there will be something like 20,000 resigna- tions every year on a basis of 300,000 in the service. Now, this is problematical again. The result of studying the retirement systems brings us to the conclusion that when we inaugurate a retirement sys- tem, there will be less resignations. So here we have the unknown quantity as to hOw many will resign. Nobody knows. We have got to be guided by experience; It will depend upon industrial condi- tions, and there are many other contingencies which become a factor in computing the probable cost of the system. It occurs to me that perhaps the best way is to inaugurate the system, and 5 or 10 years from now we will all of us know more about the cost of the system, RETIREMENT OF OiVIL SERVICB EMPLOYEES. 95 But it is quite certain, I feel confident, that from the figures which 1 have compiled, m any event, the Government will not be called upon to contribute any amount for the payment of annuities during the first 10 years at least. Of course they are borrowing the amount from the contributions of the employees. We can not disguise that fact. But It IS entirely logical that this practice should be done. The Secretary of the Treasury is directed to invest in interest- bearing securities of the United States such portions of the " civil- service retirement and disability fund " as may not be immediately required for the payment of annuities, refunds, and allowances, and he is empowered to receive and invest certain monevs and contribu- tions, and to disburse the same as outlined in the last paragraph of section 8. _ Section 9 provides that every employee coming within the provi- sions of the act shall be deemed to consent and agree to the deduc- tions from salary, pay, or compensation, as specified in section 8, and by so doing he becomes a party to the contract between himself and the Government. This section modifies certain sections of the Eevised Statutes which fix the classification of salaries of employees in the departments. I would like to say in this connection that the section of the Ee- vised Statutes referred to has bearing upon the salaries and classi- fications, and it has been deemed wise to incorporate this provision in the proposed law in order that the employees, by the very fact that they remain in the service or that they enter the service, become a party to this contract. Section 10 defines the conditions under which employees who are iii the unclassified service at the time of the passage of the act, but who subsequently attain a classified status, may obtain credit for service rendered prior to classification or prior to the passage of the act. The Chairman. Do you think it a wise provision, that those who theretofore have been in the unclassified service may have the benefits ' of the act, although at the time of the retirement they may not have been in the classified service but a comparatively short period of time? Mr. Beach. Well, we believed it was an act of justice. They will have rendered service to the Government. They may have been in an unfortunate position of not having been in the classified service, but we are giving the same privilege essentially to those in the classified service now by giving them the credit of that period of time when they were in the unclassified service. I was in that position myself. My first service for the Government was not in the classified service. The service in which I was engaged was sub- sequently brought into the classified service by an Executive order. Now, when the time comes to compute my annuity, I would get it from the time when I was in the classified service. Those transferred from the unclassified to the classified service may obtain credit for the period of their unclassified service subse- quent to the passage of the act only by depositing with the Treasurer of the United States an amount to cover deductions and accrued interest, the same as though they had been in the classified service for that period. 96 EETIEEMEKT OF CIVIL SERVICE EMPLOYEES. , Those who become separated ifrom the classified service and with- draw their deductions and accrued interest, or any part thereof, and who are subsequently reinstated, must, in order to receive propor- tional credit for prior service, deposit with the Treasurer of the United States the total amount so withdrawn. A provision is made, however, so that failure to make the requisite deposit shall not de- prive the employee of credit for service rendered prior to the date when the act shall become effective. Section 11 makes provision for return of deductions with accrued interest under three contingencies : First, in case of separation of an employee from the service for any cause whatsoever before reaching the retirement age, the total amount of deductions with accrued interest shall be returned to the employee. Second, in case an annuitant shall die without having received annuities equal to the total amount of deductions with accrued in- terest, the difference shall be paid to the legal representative of the annuitant. The Chairman. When you speak of interest, you mean accrued compound interest? Mr. Beach. Accrued compound interest. The Chairman. Such as the Government would have received on investments ? Mr. Beach. The interest is specifically provided for in the act. Senator, in the bill. The Chairman. Four per cent? Mr. Beach. Yes, sir. Of course, we do not undertake to say to the Government what rate of interest they shall accumulate on these deductions. If they can do better than 4 per cent, that will be to the good ; but we are only asking for the employees 4 per cent, com- pounded annually. Third, in case an employee shall die without having reached the retirement age or before establishing a valid claim for annuity, the total amount of deductions with accrued interest shall be paid to the ' legal representative of the employee. Section 12 provides for payment of annuities in monthly install- ments under such rules -and regulations as the Secretary of the Interior may prescribe. If the present practice in the payment of pensions is followed checks will be issued without requiring separate vouchers in all cases where payments are to be made directly to the annuitant. In other cases vouchers may be required.- That simply is following out the same line as we pay pensions to-day, without requiring any action on the part of the annuitant. . The checks will be mailed to them monthly. Section 13 requires the Civil Service Commission to keep a com- plete record of all appointments, changes in grade, separations from the service, and all other relevant data which will enable it to furnish the Comjnissioner of Pensions with a report upon each individual claim, whenever called for, showing all facts necessary to a proper adjustment of such. claim. The Chairman. How much will that add to the work of the Civil Service Commission now? Do they have to keep a record of ap- pointments, transfers, and changes in grade? RETIREMENT OF CIVIL SERVICE EMPLOYEES. 97 Mr. Beach. They keep practically everything that will be required under this act excepting that they do not keep a record of those- •who are on leave without pay. Now, this act contemplates that the- head of every department or independent establishment shall fur- nish to the Civil Service Commission a record of those who are on' leave without pay, the period for which absent, and the amount of pay, this list to be used as a basis for computing annuities under , the terms of this act. The Civil Service Commission yesterday spoke of the fact that it would naturally mean some extra work upon the part of the Civil Service Commission. I appreciate that. But at the same time I believe we have made ample provision, appro- priating $100,000 as provided in section 15. It is anticipated that this amount of money will be divided between the Bureau of Pen- sions and the Civil Service Commission during the first year under the operation of the act, as much as each may require. In my opin- ■ ion the appropriation is ample, and thereafter the cost of adminis- tering both bureaus will be reduced to a minimum — just purely a. few extra clerks. The Chairman. If I remember correctly, the Civil Service Com- missioner, who testified yesterday, was to furnish an estimate of what he thought the additional cost would be. Mr. Beach. Yes. The Commissioner of Pensions is required to make an annual re- port showing in detail all relevant data in connection with receipts and disbursements on account of annuities, refunds, and allowances.. Section 14 explains itself; likewise section 16. I have already referred to section 15 as making the appropriation of $100,000 for the first fiscal year. Mr. Chairman and gentlemen of the committee, I believe that con- cludes all that I desire to say in special reference to this particular bill. I do desire to give the very hearty indorsement of the organiza- tion which I represent to this plan. We believe, after mature study — and this goes over a period of somo. years — that it will serve the best purpose and will cover the present emergency. Before retiring I do desire to say a word in reference to Senate 731 introduced by Mr. Pomerene, and which has been referred to this committee. This bill. Senate 731, contemplates a wholly con- tributory plan. In the very first paragraph it says : There shall be deducted and withheld from the monthly salary, pay, of com- pensation of every officer or employee of the United States to whom this act applies an amount computed to the nearest tenth of a dollar that will be suffi- cient with interest thereon at 4 per cent per annum, compounded annually, to purchase from the United States an annuity, payable quarterly throughout life, for every such employee upon arrival at the age of retirement, as herein provided. My criticism of this bill is that no person knows the amount which the employees will be required to contribute. It says that the an- nuity shall be based upon such annuity tables as the Secretary of the Treasury may direct. Now, this bill, or one of similar import, has been pending in the Congress for several years, and yet up to the present time I have failed to find anything that gives any, reliable estimate as to what the amount of contribution will be required of the employees under this plan. The nearest that we have anything 125022—19 7 98 EETIREMBNT OF CIVIL, SERVICE EMPLOYEES. bearing upon the subject was in a report made to the Senate by Mr. Pomerene from the Committee on Civil Service and Retl-enchment, under date of February 13, 1917. The Chairman. You have not the number of that report, have you ? Mr. Beach. Calendar 939, February 13, 1917. In that report is this statement: It is estimated by Mr. Herbert D. Brown, Chief of the Bureau of Efficiency, that the assessments to purchase these annuities will be approximately as ioUows : Age 20, 3 per cent. Age 25, 4 per cent. Age 30, 5 per cent. Age 35, ej per cent. Age 40, 8 per cent. '] Without going further into detail, I desire to submit as my per- igonal opinion that an assessment of 8 per cent from any employee in the United States Government at this time would be. inequitable.' The Chairman. How would it affect the service, do you think, in regard to the continuance in service of the employees? Mr. Beach. That is hard to predict. It certainly would be dis- heartening, to say the least, if any employee at this presenttime were required to contribute 8 per cent of his salary for the purpose of purchasing an annuity. This is accentuated from the fact that'this extraordinary assessment would fall the heaviest upon those who are .less able to pay it. In other words, in my opinion, this means: that .every employee who is 40 years or over and who is receiving $1,500 or less would be compelled to contribute 8 per cent toward the pur- chase of his annuity. Senator Colt. May I askthe chairman if the Pomerene > bill, when -it was in the Senate, received any indorsement in the Senate? The Chairman. I did not hear, any remarks in favor of it except by! Senator Pomerene himself, although there was a vote which sub- stituted the Pomerene for the McKellar bill. Mr. Beach. I was just going to bring out that matter. I would not have referred to this phase of the question had it not been for the fact that when Senator McKellar was endeavoring to get his bill acted upon favorably by the Senate, the Senate, by a majority of votes of those present at that time, voted to substitute the Pomerene Mil -for the McKellar bill. I am perfectly willing to believe that the United States Senate, if it were properly informed about this question, would not take that action, and I trust sincerely, gentlemen of the committee, that if this attempt is made again to foist upon the Government employees . a system which is so devoid of equity as that contemplated by the Pomerene bill it will be resisted to the utmost. Senator Colt. I did not happen to be present. It would depend upon how many Senators voted for the bill. Dr. Jordan. The vote was 26 to 31. Some voted under a mis- apprehension. Mr. Alcorn. I think, a very large;number did. Mr. Beach..! desire to bring that to the attention of this com- mittee at this time. Some voted under a misapprehension. Senator Sutherland the next day moved to reconsider the vote, but that KETIEBMENT OF CIVIL, SERVICE EMPLOYEES. SB* never came to any legislative action. That was the status of the bill when the Congress adjourned on the 4th of March. Senator Colt. I do not attach, myself, any great importance tO' that. Mr. Beach. Of course, it was disheartening to those of us who had been working so hard for what we believed to be an equitable retire- ment law, and it seemed as if there was at one time a danger that the United States Senate would, after all, pass a bill which, in my opinion, contains a provision which is not equitable, to say the least. The Ci-iAiKMAN. There are very many, I think, who have not heard the subject discussed or who have not compared the different plans. Mr. Beach. I want to thank the committee for hearing me with so- much patience and apologize for taking so much of your time. The Chairman. The committee is obliged to you for taking it up so thoroughly. Senator Colt. I might say to Mr. Beach that I was very glad to have him go over the different sections in detail. I have been so engaged, as the chairman knows, that I was very glad to have it reviewed in this lucid and clear way. STATEMENT OF DR. LLEWELLYN JORDAN, CHIEF SECTION OF SURETY BONDS, TREASURY DEPARTMENT, Dr. Jordan. The task assigned to me is to discuss briefly for the- information of your committee the advantage of what is known as the partially contributory system. As a preface to what I shall say, I wish to make this statement: There are three well-recognized plans or systems which have been adopted at various times in connection with the establishment of retirement systems. The first is known as the straight civil pension plan, where the employer, whether it be a corporation or a govern- ment, pays the entire expense. The second is a plan where the employee contributes wholly to the- creation of the fund, and where those funds are commingled, and where there is no attempt to segregate the individual contributions with any idea of return of the contributions to the employee should he separate himself from the employment or should he die before reaching the age of retirement. The third plan is known as the partially contributory plan, where the employer and the employee contribute in definite proportions. That plan is illustrated by the bill which you have under consid- eration. The study which the best actuarial minds have been able to give to this subject may be summarized in a few words as a result of those studies, that the pension system paid out of income, whether of a government or corporation, at no cost to the beneficiary, is expensive beyond all anticipation. Its cost is not only impossible to estimate in advance, but has proved an intolerable burden even to the practically unlimited income of a government. I want to draw the attention of the committee to the fact that the Carnegie Foimdation for the Advancement of Teaching, which set out initially to pension a certain class of teachers in selected institu- 100 RETIREMENT OF CIVIL SERVICE EMPLOYEES. tions throughout the country and Canada, contemplated that these' pensions which should be paid to these retired superannuates was to, t)e the income from this endowment, the teachers contributing abso- lutely nothing. That was established in 1906. After six years of an effort to administer that fund the foundation found that it was not only consuming very largely all of the income, but that it was also unsatisfactory in other details, which I shall not discuss for the information of this committee. The foundation thereupon employed a corps of experts and as a result of study covering more than six years of every known pension system in this country and in Europe' affecting civil employees, of governments, or municipalities they concluded that the most sensible, the most businesslike, the most economical plan of creating any system of retirement is one which contemplates contribution on the part of both the employer and the; employee. Another student of that question who has devoted considerable time to the subject. Paul Studensky, of the bureau of municipal research. New York City, has summarized his views in a little book-' let called " The Pension Problem and the Philosophy of Contribu- tion," in which he concretely sets forth the advantages and the ■disadvantages of these several plans to which I have referred in my opening statement, and I wish to read for the record his statement in commendation of what he calls the partly contributory system, which is illustrated by the type of bill which you have under consid- eration. He states : It is a compromise between the foregoing two extreme systems. It har- moniously combines with social insurance and with its principle that every worker must participate in the cost of his protection. It is a joint undertaking which involves mutual benefits and a twofold purpose on the one hand, in- suring the employees and their dependents against want in old age, disability, ■death, and, to some extent, resignation and dismissal. On the other hand, facilitating the elimination of the inefficient from the service and permitting an esprit de corps. It tends to give both sides an equal voice in management. It permits a clear •distinction between pension and wages, each side knowing what It pays. It is -not intended either to reduce or increase wages, does not depress the wage, and 4oes not become deferred pay. It mnkes possible the establishment of a financially sound system, the cost of which amounts to 10 or 11 per cent, or even more, by dividing the cost and requiring the employees to pay 5 or 6 per cent, as is being done all over the world. Concurrently with its adoption for both the present employees and new entrants, the old vested rights and privil- eges are being swept away. It is a system which progresses in harmony with social evolution while the other systems are dying, and it expresses the growing mutual responsibilities which make for a greater democracy and a happier -community. Now, turning to the first plan, a straight pension is objectionable from several points of view. In the first place, the Government is Tinable to estimate with any fair degree of accuracy what it is going to cost it from year to year, and unless you do what the English Gov- ernment was compelled to do, after 50 years of experimentation with straight civil pension systems, it inevitably comes to pass that that kind of a plan is figured in and constitutes a part of the pay, the compensation of the employee. Now, if that be true, and that wages are fixed with reference to that ultimate or deferred benefit, and no provision is made to commute the value of what that benefit is to be, and the employee dies before reaching the age of retirement, and he RETIREMENT OF CIVIL SERVICE EMPLOYEES. 101 Jias worked for a long period of service on reduced pay, he has lost something. He has lost the benefit if, as it did happen in the case of the English civil service, a man working under those conditions went on the retired list, and lived only for a short time, he did not ^et the full benefit returned to him or to his estate of the value of what he had lost in the way of reduced wage or compensation. It was shown by statistics that in the English Civil Service of 125,000 employees one out of every seven actually got the benefit of a retiring system. The result of it was that it created a great state ■of unrest and discontent among those employees and the English Government was compelled to change that system so that while it is not a direct contribution yet the English Government in the ad- ministration of its new law recognizes that there is a value to the em- ployee in the way of a deferred payment, so that if he leaves the service he gets that commuted and given to him, or if he dies his •estate gets it. Now, our plan simply takes the same principle and permits the employee to know exactly what he is contributing, and the Government, acting for him as a custodian, invests it and pro- tects it and returns it to him in the event he leaves the service, with interest added; or in the event he dies before reaching the age of retirement, it becomes an asset of his estate. Now, Senator Sterling desired me to discuss, but the time is too brief, the plans in other countries. But permit me to call your atten- tion to the fact that the French system of pensioning its civil-serv- ice employees is a partially contributory plan. The French civil- service employee contributes 5 per cent of his stipend or compensa- tion, and with few exceptions I could point out in detail and will put in the record, if the Chairman desires, how generally throughout Europe, before it went through this process of reconstruction, those ■countries were taking care of their civil employees, and in all in- stances, or with very few exceptions, the employees were contributing a proportion of their wage toward the creation of their annuities, so the committee, in adopting this form of bill, or the principle which we enunciate in this bill, is acting in complete harmony with the progress of the times, with the recognized soundness on the part of those who are competent to advise us economically and actuarily with respect to any plan or system of retirement, whether it be for ■Government employees or for industrial corporations. The Chairman. Has England adopted the partially contributory plan as yet? Dr. Jordan. It has a partially contributory plan, Mr. Chairman, in the sense that the employee, by reason of the fact that he is receiv- ing a less wage than he otherwise would have received when he is put into the pensionable class, gets upon retiring from the service what we call in insurance parlance the commuted value. So he does not lose what he otherwise might have contributed directly. The only ■difference, Senator, is that we know what we are contributing. Senator Colt. It seems to me that that is very much better, the method that we are proposing. I will be glad to have you put into the record, besides the French plan which you mentioned, the systems of other countries. Dr. Jordan. I did not want to encumber the record with too much material. 102 BETIEEMENT OF CIVII. SERVICE EMPLOYEES. Senator Colt. I thought that I should like to have the experience of other countries on that, but you have spoken of France and you have said that that method prevailed generally in most other coun- tries. If you have the data at hand specifying other countries, it is not material, but it might be well to put it in. Dr. Jordan. I would be glad to incorporate that. The Chairman. You may incorporate that. Dr. Jordan. Thank you, sir. Senators, in conclusion I want to. thank you for making the change which in your judgment was thought advisable in section 8, which provides that the Secretary of the Treasury is authorized to invest certain funds or contribution^ in the way of deductions. That has not been touched upon, but briefly I may say that it was suggested to me that it would be advisable to incorporate such a provision in a retirement law, as there are many generously disposed people who in my judgment will be glad to sup- plement the work from contributions to assist these employees, and this provides a way by which they can do it, and the language which you have adopted meets with my entire approval. The Chairman. It was just a question of phraseology there, in order to make it a little more definite. Is that all ? Dr. Jordan. I can say much more, but you are rushed and I will incorporate the balance of my remarks in the record. The Chairman. We are much obliged to you. Mr. Alcorn. Just a word, if you will bear with me. Let me say on behalf of the joint conference and those who have not been able to participate that we trust that you will be able to report the bill out favorably at the earliest opportunity. Since Mr. Sterling spoke this morning, submitting a copy of the resolution which was adopted by the American Federation of Labor at St. Paul last year, I have received a copy of the resolution adopted at the convention last week at Atlantic City. It was signed by Dele- gates Edward J. Gainor, of the National Association of Letter Car- riers ; William D. Clark, of the Plate Printers' International Union ; John P. Colpoys, of the Washington (D. C.) Central Labor Union ^ Charles D. Duffy, of the National Association of Letter Carriers ; Ed- ward J. Ryan, Railway Mail Association ; Luther C. Stewart, National Federation of Federal Employees; Thomas F. Flaherty, National Federation of Postal Employees. Mr. Chairman, may I say just this, that we feel that there is suf- ficient to bear out the committee's action on this particular plan. The employees to a unit are behind it, and we would appreciate the fact if you could get this bill out at an early date, so that we may assist in a small way in getting it through. The Chairman. We thank you for your assistance in this matter^ The committee will stand adjourned, to meet later in executive ses- sion at the call of the chairman. (Thereupon, at 3.30 o'clock p. m., the committee adjourned to. meet at the call of the chairman.) X ':•■'• .."^'^^i',: '^ "'':/