Cornell University Library JK 791.A5 1919 Retirement of employees in the classifie 002 434 458 JK U. S. Congress. House. Committee on Reform 791 in the Civil Service. A5 Retirement of employees in the classified 1919 civil service. THE LIBRARY OF THE NEW YORK STATE SCHOOL OF INDUSTRIAL AND LABOR RELATIONS AT CORNELL UNIVERSITY RETIREMENT OF EMPLOYEES CLASSIFIED CIVIL SERVICE U3RAny MPY OYEES IN THE HEARINGS BEPOEB THE COMMITTEE ON REFORM IN THE CIVIL SERVICE HOUSE OF REPRESENTATIVES SIXTY-SIXTH CONGRESS FIRST SESSION JUNE ig^m 1919 WASHINGTON GOVERNMENT PRINTING OFFICE 1919 COMMITTEE ON REFORM IN THE CIVIL SERVICE. House of Represbktatives. FREDERICK R. LEHLBACH, New Jersey, Chairman. LOUIS W. FAIRFIELD, Indiana. HANNIBAL L. GODWIN, North Carolina. ADOLPHUS P. NELSON, Wisconsin. .TAMES A. HAMILL, New Jersey. JOHN M. C. SMITH, Mlcblgan. CHARLES A. MOONEY, Ohio. ADDISON T. SMITH, Idaho. JOSEPH ROWAN, New York. WILLIAM J. GRAHAM, Illinois. WILLIAM H. HILL, New York. FRANK CEOWTHER, New York. RETIREMEJJT OF EMPLOYEES TN THE CLASSIFIED CIVIL SERVICE. Committee on Reform in the Civil Service, House of Kepresentatives, Thursday, June 19, 1919. The committee met at 10.30 o'clock a. m, Hon. Frederick E. Lehl- bach (chairman) presiding. The Chairman. This meeting was called in order to afford a hear- ing to all persons who are interested in the various bills introduced and referred to this committee on the subject of retirement of super- annuated or disabled employees of the classified civil service of the Government on annuities. There have been introduced and referred to this committee 10 such bills, and it was the judgment of the com- mittee that we have a hearing on the subject at which not only the desirability of such legislation or suggestion with reference to it could be made but the relative or respective merits of these various measures could at the same time be discussed. Mr. LaGuardia, of New York, has introduced one of these meas- ures, and I understand that he has a meeting of the Committee on Military Affairs to attend, and is desirous of getting away to attend it as soon as possible. Therefore, without objection, I think we will hear him first. Mr. LaGuardia's bill is H. R. 418. STATEMENT OF HON. FIORELLO H. LaGUARDIA, A REPRESENTA- TIVE IN CONGRESS FROM THE STATE OF NEW YORK. Mr. LaGtjaedia. Mr. Chairman, I just desire to make a short state- ment. I urge the committee to look over my bill at least and to con- sider the propositions suggested in that bill. I advocate a straight- out-out-out pension after a certain service. My bill provides for 30 years' service and straight retirement. I do not believe in putting any strings to this or in panhandling arrangements. . I am against the contributory plan for this reason : There is no economy in it. If we have a contribution system that would require the employees to pay a certain percentage, their salaries will be increased correspond- ingly, so that the Government in the end will not gain anything by it'. We have arrived at the time now that this measure can not be •delayed any longer. The country understands it, and the people see the justice and necessity of it, not only as a matter of justice to the employees, but as a matter of efficiency to the Government. Every department of our Government is now carrying a large number of superannuated employees who are not able to do the work and are drawing salaries. They can not dump them on the street. Some of them are, unfortunately, dismissed. 3 4 EETIEBMENT OF EMPLOYEES IN CLASSIFIED CIVIL SERVICE. We have now arrived at a time when this kind of a bill must be passed, and we might as well face the situation and have the right kind of a law providing for pensioning employees after a certain number of years, or after disability incurred in line of duty, and make a straight out-and-out provision, so that those employees who have given faihtful service to the Government will have enough to live on without going on the street and selling shoestrings for the rest of their lives. This matter is so well known to the committee that I do not believe there is anything for me to add. I also urge. the com- mittee to profit by the experience of our war-risk insurance act and not create another bureau of that kind. I believe that the Pen- sion Bureau has the machinery and the experience to carry out the provisions of this bill. Let us not dump any work into the War Eisk Insurance Bureau, which can not carry, and is not carrying, out the work it is supposed to do. The Chairman. Are there any questions any member would like to ask Mr. LaGuardia with reference to his bill ? Mr. Fairfield. Mr. LaGuardia, your bill would require compul- sory retirement after 30 years ? Mr. LaGuardia. No; not compulsory, but retirement after 30 3 ears. Mr. Fairfield. It is not compulsory ? Mr. LaGttardia. It would be compulsory if the employee was not able to do his work. Mr. Fairfield. But if the department thinks that he is competent he may be retained in the service? Mr. LaGuardia. Yes ; but he must be able to do his work. Mr. Jordan. May I ask the Congressman a question ? The Chairman. Yes. Mr. Jordan. Congressman, have you had any opportunity to have even an approximate estimate made of the cost of the provisions of your bill ? Mr. LaGuardia. No; but I do not believe it will cost any more than the contributory plan, for the reason that we will increase the salaries correspondingly. Mr. Fairfield. What percentage does your bill allow ? Mr. LaGuardia. Three-quarters of the average pay of the last five years of service. Mr. Nelson. In reading your bill here, I confess I have not had an opportunity to read it over as carefully as I ought to, but in looking at page 1, line- 8, you have a provision which says that the employee- shall be retired after 30 years. Mr. LaGuardia. Yes, sir. Mr. Nelson, Is not that mandatory in that case? Mr. LaGuardia. That might be toned down a little. Mr. Nelson. My reason for asking that question, Congressman, is this : That, in my judgment, a man having served 30 years, who may have started in the service of the Government very young, is at the very period of his life when he is of the most use to the Government, Mr. LaGuardia. Oh, yes ; there are exceptions, Mr. Nelson. We ought to place ourselves in such a position that we can obtain the benefit of the ripe experience of a thoroughly trained man in all these departments. BETIREMENT OF EMPLOYEES IN CLASSIFIED CIVIL SERVICE. 5 Mr. LaGuaedia. Oh, yes. Mr. Nelson. That is one reason why I am opposed to any set age or any mandatory provision in regard to age, because that will de- plete our departments and defeat us from obtaining the best service that can be obtained. Mr. LaGuaedia. Oh, yes; there is something in that. I want to say that whichever bill is reported from this committee I wish to include the consular officers. They will have nobody here to repre- sent them. I served five years in the consular service myself and I know that there is no possibility of saving anything on the salaries they receive. Any man who served 30 years in the consular service is entitled to come home and retire. As it is now, they are promoted from time to time, and when they get to the age where they are senile and incompetent, we find them holding responsible offices. I therefore urge the committee to take into consideration the consular service in connection with my bill. That is all I have to say on the bill. Thank you. The Chaikman. Among the bills providing for retirement that have been introduced is one by Representative Sims, of Tennessee, H. R. 261. We will be glad to hear from Mr. Sims. STATEMENT OF HON. THETUS W. SIMS, A REPRESENTATIVE IN CONQRESS FROM THE STATE OF TENNESSEE. Mr. 'Sims. Mr. Chairman, the bill I introduced is simply the bill that was reported to the House by the Committee on Interstate and Foreign Commerce in the last Congress, of which committee I was chairman, and is not in any sense a personal bill of mine. All I have tried to do is to accomplish the objects and purposes of legis- lation of that character. I have no personal pride in it. I want you to get out the best bill you can that will accomplish the purpose and be as broad as possible in its scope. So far as a maximum or minimum is concerned, I have no standard at all. I want to help you get the proper legislation. I have heard since that the gentle- men who were before us interested in this legislation have sug- gested something that I understood you, as chairman of this com- mittee, had introduced or would introduce. I want to help all I can to get legislation that is remedial and comprehensive enough to cover the proper cases, and yet at the same time I do not want you to put anything into it that can not get through the House. That is all I have to say, Mr. Chairman, and it is only to express my best wishes, and pledge all the help I can to you. Mr. Nelson. Mr. Sims, what are the general provisions of your bill, in brief? Is there any definite period or mandatory time in the bill? Mr. Sims. The bill speaks for itself on those details. It is the bill just as it was reported by the committee having charge of it at the last session. Of course, it did not include the employees in the public service in the District of Columbia, because they were not in the classified service. Mr. Faiefield. Mr. Sims, have you any idea as to the number of superannuated clerks who would be released at once in case that bill is passed ? D EETIEEMENT OF EMPLOYEES IN CLASSIFIED CIVIL SERVICE. Mr. SiJis. I do not remember, but that information appeared in the hearings and was furnished by Dr. Jordan and Mr. Alcorn and Capt. Beach, who had looked into these matters carefully, and they ftii'nished the information that is in the report. The Ci-iAiEMAx. There has also been introduced a bill dealing with this subject by Congressman Hamill, of NeAv Jersey, a member of this committee, H. R. 552. I understand that Congressman Hamill is at present in Europe and I would like to inquire if there is any one present who desires to speak particularly with reference to this specific bill. Congressman Fitzgerald, of Massachusetts, has also introduced two measures, one practically a duplicate of the other, with some slight changes. Does anyone here wish to discuss that particular measure, or the bills by Congressman Raker of Cali- fornia ? Mr. Alcokn. Congressman Kaker said that he was going to be here this morning when I niet him in the corridor. The Chairman. It may be that he will come later. The same with reference to the bill introduced by Congressman Caldwell, of iSTew York. There is also a bill introduced by Congressman Sabath, of Illinois. The bill introduced by your chairman, H. R. 3149, is also a meas- ure dealing with this question, and unless some one suggests another plan, I think the committee will be glad to hear from Dr. Jordan at this time. Mr. Jordan. Mr. Beach is chairman of our committee. Mr. Alcorn. Mr. Tieman, Assistant Commissioner of Pensions, is here and I would like to have him heard first. STATEMENT OF MR. EDWARD C. TIEMAN, DEPUTY COMMIS- SIONER OF PENSIONS. Mr. TiEMAN. Mr. Chairman and Gentlemen, I think, because of the fact that the Pension Bureau is one of the oldest bureaus in the Government service, we can demonstrate there in the most effective i-.nd easily-recognized way the advisability, both from an economic and a humane point of view the advantages of a retirement law. At present we have about 870 employees on our rolls. We find that 295 of that number are eligible for retirement under the provisions of this bill. They are 65 years of age, have had the necessary service, and come within the requirements of either the voluntary or the compulsory provisions of this act. I have found, on making a personal investigation, that approxi- mately 150 of the 870 employees in our bureau would probably take advantage of a retirement law. I can say this, without any reflection upon that 150, nearly all of whom are employed in sorne manner, that we could dispense with their services at this time and not lose in appreciable degree any measure of efficiencj'^ in the bureau. It is not to us a helpful service so far as the administration of pension matters goe:-. I would say further that at least 50 of that 150 are inefficient and do not render any ui^:eful service whatever to us. They could be retired. In order that' you may understand just what 1 mean by what I have said Avith reference to the number who might retire or be retired under this law, I would say that the 150, whose RETIREMENT OE EMPLOYEES IN CLASSIFIED CIVIL SERVICE. 7 services could be dispensed with, 50 efficient clerks would render us a better service and a more useful service than those 150 clerks. If those 150 clerks were to take advantage of the provisions of this bill, the annuity paid to them would approximate $90,000. The amount of salary paid to them is approximately $190,000. If their services were not replaced at all with new appointes in this bureau, there would be an outright saving in salaries of $100,000. But, of course, it goes without saying that we would have to appoint persons to take the places of those who nvs going out. But I repeat that 50 efficient persons would render us a far more valuable service than is rendered by the entire 150. Now, I think that demonstrates, in a practical way, the benefits in the Pension Bureau of this bill or of any other retirement bill as an economic and humane proposition. It is humane, because it is our experience that old people, who have been efficient, who have rend- ered loyal and splendid ser\ice, who have had their responsibility of families, who have educated their children, and who have reached the ages where they have become inefficient, ought to be taken care of, because it would ba absolutely inhumane to retire them arbitrarily from the service without any sort of provision for meeting the exigencies of life. We use our inefficient people down there the best Vi'ay we can. We shift them from one place to another. They render all the service they can and they render it in the best way that they can. But these people ought to be retired. They do not render a service that is valuable to u^ nor could they render it elsewhere. The Chairman. Commissioner, have you read H. E. 3149? Mr. TiEMAx. Yes, sir. The Chairman. You know that a part of the administration of this law will be vested in the Bureau of Pensions? Mr. TiEMAN. Yes, sir. The Chairman. AYould you care to say anything as to the capacity of the bureau as at present organized to absorb this work ? Mr. Tieman. I would be very glad to do so. The proceedings inci- dent to adjudicating claims for pensions and the proceedings incident to the administration of a bill of this character are so nearly related and so similar in general character that the practice Avhich now ob- tains in the Pension Bureau and the practice which would obtain in administering the benefits of an act of this character are so nearly alike that the training and experience of the clerks now in the bureau would be invaluable if they were required to take up this additional work. While we have a large number of inefficients, there are about 700 trained expert clerks in the Pension Bureau who are not only capable of giving advice but they are capable of supervising and directing the efforts and energies of other clerks. Out of that 700 clerks we have a sufficient number who could be put in charge of this work and other less experienced clerks could be put under them, so that this work from its very inception would go forward without a particle of delay. At the same time, with the addition of such help as will be required, because of the retirement of some clerks who are engaged upon pension work, we could handle the pension work and go ahead with the administration of both laws without delay, with absolute satisfaction to everybody concerned, and with great economy. 8 EETIREMENT OF EMPLOYEES IN CLASSIFIED CIVIL SBEVIOE. There would be no considerable expenditure because of this addi- tional work. We have the building, equipment, and a system of filing already in operation which could be used in this connection. We have a corps of trained clerks which, if increased as was found nec- essary to administer the pension laws and this law, would not involve a large amount of expense. We have a medical division which would cieterndine all medical questions. We have a special examination di- vision which covers practically the entire United States, which would investigate every question that brought up a matter of doubt. Our medical division has under its control local examining boards in prac- tically every county in every State of the United States, before which an applicant for the benefits of this law might appear for examina- tion. Those boards are maintained without a dollar of expense to the Government, because the members of the board are paid only for the examinations they actually make and report. Now, those same boards would handle this business just as they handle the pen- sion claims because the same character of questions would be con- sidered. We have a disbursing division where, already installed, is all the machinery necessary for the payment of this annuity. We are paying now about 630,000 pensioners every quarter. The employees in the disbursing division are engaged 12 months in the year in making out and mailing checks, and the financial division is mak- ing out vouchers for those who are paid under voucher. The record division is maintaining a perfect system of indexes which could be enlarged to include the beneficiaries of this law. The persons entitled to annuities under a retirement law could be paid every month through our disbursing division without the ex- penditure, I think, of a single dollar for additional mechanical ap- pliances. The only requirement would be a few more clerks. Mr. Nei^on. Have you estimated approximately how many addi- tional clerks would be required? Mr. TiEMAN. I do not know. I have not estimated it. But I can say with all confidence that the amount of the appropriation for the administration of this law, $100,000, would be more than ample at the present time. I want to impress this upon you, gentlemen : We ' •would have to replace, in order to carry on the work of the Pension Bureau, the services of the 150 employees who probably would take advantage of a retirement law; although they do not render to us what we call an efficient service, they do render some service. We contend that we can retire every eligible over there who does not render valuable service and replace them by 50 efficient clerks and be the gainer in the end. Now, that does not relate to the number of clerks it would require to adminster this law. Some one told me a moment ago that, he thought there might be 6,500 who could benefit by this law at the present. Mr. Nelson. Does that mean the total number in the Government service now ? Mr. TiEMAN. Yes. Mr. Faibfield. I judge that your organization is of such a nature that it can expand or contract to meet any particular exigencies that might arise? Mr. TiEMAN. Yes. I want to lay particular stress upon the fact that we can expand in almost any degree and yet not lose a particle of efficiency, because we have about 700 clerks who, by reason of ex- RETIREMENT OF EMPLOYEES IN CLASSIFIED CIVIL SERVICE. 9 perience and information with reference to the jpension laws and their experience in considering and weighing evidence and their legal knowledge, are competent not only to instruct other clerks, but to direct them. They are the nucleus of a working force that makes our possibilities almost unlimited. Mr. FAiEriELD. How large a personnel can you take care of in the way of pensions ? Mr. TiEMAN. On our clerks' roll? Mr. Fairfield. I mean on your pension rolls? Mr. TiEMAN. About 630,000. Mr. Fairfield. With your 870 clerks? Mr. TrEMAN. Yes, sir.' Mr. Fairfield. I am wondering what fundamental difference there is between the nature of the work to be done in the Pension Bureau and the nature of the work that is done in the War Risk Insurance Bureau ? Mr. TiEMAx. The War Risk Bureau handles three different classes of work. First, it handles insurance ; then it handles allotments and allowances; and claims for compensation. Compensation and pen- sion are identically the same thing. Both are a provision that the Government makes soldiers and sailors on account of disabilities contracted in their military or naval service and line of duty. The original pension law granted pension only for disabilities or in- jures so contracted or incurred. Compensation is given for exa'tly the same reasons. There has grown out of that law pension legis- lation which recognized age and length of service. That is a straight age and service law for the benefit of Civil War soldiers only. Tlie rate of pension is determined by the soldier's age and the length of his service. In order to be entitled to compensation a man must haA'e contracted the disability for which he makes a claim in the line of duty, so that 3'ou see the proposition is the same all the way through. If a claimant for pension who incurred his disability while serving in the Regular Army or in the Navy or in the War "with Spain, came to the Pension Bureau with a claim for pension, he would have title under the general law which makes provision for service disability only. The compensation feature of the war risk act compensates those disabled or injured in the service and in line of duty. So they are exactly the same thing differently spelled. Mr. Fairfield. My judgment was that in the framing of the law, the compensation act and the allotment phase at least, should have gone to the Pension Department, and I am wondering whethei' ulti- mately that would not be a relief possibly for the congestion that has arisen. Mr. TiEMAN. Undoubtedly anything that lessens the volume of work now before the War Risk Bureau would relieve them vastly and benefit those who are claimants for the benefits of the law. Mr. Fairfield. That would be true so far as they referred to your department, on account of the efficiencj- and experience of your de- partment and its ability to expand and contract. The Chairman. At the present time is the pension roll decreasing to any appreciable extent? Mr. Tieman. It is, for this reason: The War Risk Act provides that all claims based upon disability incurred in the Armj- or Xavy 10 RETIREMENT OF EMPLOYEES IN CLASSIFIED CIVIL SERVICE. subsequent to October 6, 1917, shall be adjudicated in the "War Eisk Bureau, and they became from that date claimants for compensation and not claimants for pension. Consequently, we have had none of that business. So you can see that without that class of claimants being added to our work, and the fact that the Civil War soldiers are dying very rapidly, the rolls show a decrease, but not so much as you would think, because the law making provision for Civil War soldiers and their widows has been liberalized to the extent that a large percentage of them are benefited. Where a soldier leaves a widow, in 75 per cent of the cases she is entitled to a pension, because the amended law of April 16, 1908, gives a widow a pensionable status if she married the soldier prior to June 27, 1905. The old law was 1890 instead of 1905, and that cut out a great many of them. Consequently when an old soldier goes ojff the rolls and leaves a widow, she usually is entitled to a pension. The rolls, therefore, are not decreasing so much as you would think. Then other legislation relating to Indian War sur- vivors and Spanish War widows added a considerable number to our rolls. jSTow, I have spoken very haltingly and without preparation. I would be veiy glad to answer any questions, because I do not think I have covered the question as thoroughly as I would want to. Mr. Faikmeld. The decrease in the next 10 years will be very rapid. Mr. TiEMAN. I think so. Mr. Fairfield. And therefore if your bureau had charge of com- pensation and all other things except the war risk insurance, which I think belongs properly to another department, you could very easily expend and take care of these compensation cases? Mr. TiEMAN. Undoubtedly, from the day it came to the Pension Bureau. Now, that is all unless there are some further questions. The Chaiesian. Thank you very much. Commissioner. Xow. I believe those who are interested in H. E. 3149 particularly have in some measure agreed among themselves as to the speakers upon that bill. Former Congressman Keating is here from the joint congres- sional commission. STATEMENT OF HON. EDWARD KEATING, MEMBER OF THE JOINT COMMISSION OF RECLASSIFICATION OF SALARIES OF CIVILIAN EMPLOYEES. Mr. Keating. Mr. Chairman, I received an invitation to come here this morning. It was addressed to me as a member of the Congres- sional Joint Commission on the Eeclassification of Salaries of Civil- ian Employees, and I take it that what the committee wanted was a statement from the commission rather than my personal views. Unfortunately, the Commission's work has not progressed to the point where it is prepared to make a formal statement to this com- mittee on the subject of retirement. We have issued questionnaires to 104,000 employees of the Government in the District of Columbia. Those questionnaires have been returned and contain a great deal of information which would be of interest to this committee. That information has not been tabulated and in the natural course of our RETIREMENT OF EMPLOYEES IN CLASSIFIED CIVIL SERVICE. 11 commission's work will not be tabulated until October or November, too late, I take it, for consideration bj'' this committee. In order that the information might be placed in such shape that it could be consicjered by this committee, it would be necessary for our Commission to detail perhaps as many as 10 expert clerks for a period of a month, together ^^•ith the services of sojne expert who could prepare a proper analysis of the figures. The questionnaires to which I have referred call for information concerning the age of the employee, his compensation and the time he has been in the civil service. Those three items, of course, would enable this com- mittee to ascertain the number of employees in the District of Colum- bia who would be eligible to retirement under the pr()visions of this bill, together with the prt)bable cost. Mr. Nelson. What proportion of the entire number would that be, approximately? Mr. Keating. We have not examined the figures to an extent which would enable me to answer that question. Mr. Nelson. I mean what proportion of the total number of employees ? Mr. Keating. I imagine that not much more than 25 per cent of the Government's employees are in the District of Columbia. Our figures show that exclusive of the navy yard workers and the postal employees, and by postal employees I mean those in the city post office, there are probably 105.000 employees on the Government pay roll in the District of Columbia. Counting the navy yard workers and the postal employees, and some men and women who have a military status, but who are really performing the work of civilians in the Navy and War Departments, I think it is quite safe to say there are 125,000 em- ployees on the pay roll of the Government in the District of Colum- bia. Of course, that would be exclusive of all military and naval officers and enlisted men, except those who are performing work which would naturally fall to civilians. If the committee desires our commission to tabulate the informa- tion which I have suggested, I think it would be well, if I might make a suggestion to the committee, to secure some action by the House, because the act creating our commission rather definitely determined our jurisdiction, which is to classify civilian employees and fix schedules of salaries. Of course, it is not necessary for me to say that in case we receive the necessary authorization from the House, our commission would be glad to comply wuth any sug- gestion that came from this committee. So much for the Commis- sion on Reclassification of Salaries. Now, as an individual. I want to say just a word on behalf of this bill. In the last Congress I introduced a bill which in principle was in complete harmony with this measure. It was referred to the Committee on Interstate and Foreign Commerce and was reported favorably to the House by the unanimous vote of that committee. A similar bill, in fact the same bill, was introduced in the Senate by Senator McKellar, of Tennessee. It was reported favorably by unanimous vote to the Senate, but on account of the congested con- dition of the Senate calendar it was impossible to bring the bill to a vote, and it died with the adjournment of Congress. So far as the 12 KETIEEMENT OF EMPLOYEES IN CLASSIFIED CIVIL SBKVICE. House was concerned the bill could have been passed at any time, if we could have given assurance that there was possibility of action being taken in the Senate. The bill you are considering to-day, and I am now referring to Mr. Lehlbach's bill, H. E. 3149 — I understand you have a number of bills before you, but the only one I have examined is the one introduced by Mr. Lehlbach — ^that bill increases the maximum pension granted employees from $600, as provided in the so-called McKellar-Keating bill of the last Congress, to $720. I think the increase is a desirable provision. You have also reduced the age limit and I believe that amendment is a most desirable one. Those are the principal amend- ments to which my attention has been called. The matter of what bureau shall administer the measure is, of course, an important one, although I do not consider it is a vital point, because we may take it for granted that any bureau of the Government which is intrusted with this very important task will see that it is properly performed. It will not perhaps be improper to say that when we drafted our bill in the last Congress and provided that it should be administered by the Bureau of War Risk Insurance we were not actuated by any desire to reflect upon the efficiency of the Pension Bureau. Now that it is all over I think it might be well to confess that it was our desire to bring the bill before a committee which would give consideration to the measure and not bury it in a pigeonhole, and we found that bills relating to War Risk Insurance went to the Interstate and Foreign Commerce Committee. The Chairman. Mr. Keating, did you not think that it was an erroneous reference? Mr. Keating. Well, upon the advice of counsel, T decline to ex- press an opinion, especially in view of the fact that I suggested the reference myself. Now, Mr. Chairman, as a member of the Commission on Reclassi- fication and as a Member of Congress for six years, during which time I was in somewhat intimate touch with the departments, just as you are all in touch with the departments, the necessity for re- tirement legislation has been impressed upon me. No man who goes through the departments in Washington and confers with employees and supervisory officials and examines into the departmental organ- izations can come away without feeling that a proper retirement bill is absolutely essential to the proper conduct of the public business. There is no getting away from that proposition, and there is no division of sentiment among men who have really investigated the subject. This committee might call before it every responsible super- visory official in the District of Columbia, and I will venture the assertion that not 2 per cent of these officials would question not only the desirability but the necessity for the enactment of this kind of legislation. Gentlemen may say, as has been said before, that the Government is under no obligation to keep superannuates on the pay rolls, and technically that is correct. But in practice no bureau or departmental official has been found so calloused, except in very rare instances, as to dismiss from the public service old and faithful employees, be- cause they were no longer able to do a full day's work, and that sys- tem will continue. Supervisory officials will tell you blunty that BETIEEMENT OF EMPLOYEES IN CLASSIFIED CIVIL SERVICE. 13 they have not the heart to dismiss these men, and you have the spec- tacle of men and women who have to be assisted to their desks in the departments. Some gentlemen urge that they are opposed to the principle of pen- sioning civilian employees. I want to call your attention to the fact "that you are now maintaining a very expensive and utterly unscien- tific pension system, because you are maintaining on the pay rolls these superannuates, many of whom can not render any service to the Government, and you are paying them varying salaries. In some cases you are paj'ing them a rather high salary. In other cases you are maintaining on the pay roll a man or woman who can render perhaps 10, 20, 30, or 40 per cent of what would be a fair day's work. Now, the difference between the service they are rendering and the service they should render, represents the pension that you are paying, and if the figures could be secured, if it were possible for us to place before you gentlemen an accurate statement showing vthe names and salaries and ages of those who are eligible to retirement, and with that a fair statement showing the efficiency of those em- ployees, you would find that the Government was maintaining a pension system — because that is all it is — vastly more expensive than the pension system proposed in this measure. But that is not the only loss to the Government. In addition to that, there is the slowing up of the processes in the various depart- ments. You have a superannuate working beside a man or woman who is capable or doing the regular amount of work. The superan- nuate slows up the capable worker, and in many other ways the morale of the department has been affected. Of course, it is not necessary to call your attention to the fact that no private concern would tolerate that system any longer than was necessary to change it. All the great industrial concerns, practically all, have retirement systems. Mr. Nelson. May I ask you a question right there? Mr. Keating. Yes, sir. Mr. Nelson. In looking over some of these bills, and observing this provision as to age, do you think the arbitrary setting of an age is the proper thing in a system of this kind ? Mr. Keating. Well, I think you have to make an arbitrary age limit. Mr. Nelson. My reason for asking that question was this: Is it not true that in a great many instances a man, even 65 years of age, may be capable at that particular age of rendering most vluable service to the Government? Mr. Keating. I fully agree with that statement. Mr. Nelson. And should it not be flexible in some degree, to make it possible for the man so efficient as that to be retained in the service of the Government? Mr. Keating. It would be highly desirable to retain many men and many women who had passed the age limit, but in making that kind of an amendment you will have to keep that in mind: That the exercise of that discretion should be always made in favor of the Government ■ and of the Government service. If you are not care- ful and leave too many loop holes, you will find that appeals will be made to supervisory officials to retain individuals on the pay rolls. M EETIKEMENT OF EMPLOTEES IN CLASSIFIED ClVIIi SERVICE. Without any stretch of the imagination at all, I can imagine a num- ber of cases of that kind. I can imagine how Members of Congress and Senators would be bombarded by men and women who felt in their hearts that they were just as efficient as their fellow employees. Mr. Nelson. You alluded a while ago to the efficiency system of private corporations. It seems to me that the Government ought to take cognizance of the fact that the same system that is maintained by well-organized business corporations ought to apply here also, namely, that a man at 65 who is giving the very best service, the most efficient service, should not be dismissed; that it is very poor policy for the organization to dismiss him. The Chairman. This bill provides for a series of two-year periods during which the department heads may retain a person beyond that age with his consent. Mr. Keating. There is such a provision and I intended to men- tion it, but even that provision must be carefully safeguarded so as to see to it that the Government's interests are safeguarded. A great many people imagine that retirement legislation is urged for the benefit of the employee exclusively. This is an erroneous pre- sumption. As a matter of fact, retirement legislation is just as much in the interest of the Government of the United States as it is to the interest of the employees — that is, providing it is enforced in the proper spirit — and I am sure that a measure such as the one you have under consideration, if enacted, will result in very material in- crease in the efficiency of the Government service. I merely wanted to add that indorsement, Mr. Chairman. Mr. MooNET. Did the bill that you introduced in the last Congress carry the 2^ per cent deduction ? Mr. Keating. Yes, sir. Mr. MooNET. May I ask how you arrived at that figure? Mr. Keating. The history of the legislation may be of some in- terest to those Members who are not familiar with the story. The form of the bill was agreed upon at a conference between Senator McKellar and myself and representatives of various civil service employees' organizations. We worked on the measure off and on for a period of more than a year, as I recall it. You will find, those of you who have not been in Congress before, that this innocent-looking gentleman at the end of the table, Mr. Robert Alcorn, does not sleep, and seldom eats when retirement legislation is before Congress. He is one of the most persistent, intelligent, and courteous advocates I have known on this subject. Mr. Alcorn was the chairman of a joint committee representing the employees' or- ganizations, and we thrashed the question out with him and his associates, and agreed upon a bill which we believed safeguarded the interests of the Government and the employees. We called in Mr. Herbert D. Brown, of the United States Bureau of Efficiency, and he sent out a questionnaire to all employees asking for infor- mation. Those questionnaires were returned, and I presume were analyzed. I am not familiar with the details. Mr. Jordan. They were. Mr. Keating. Mr. Brown detailed Dr. Madrill as an export to analyze the figures and keep in touch with our informal conference. This 2|- per cent provision was based en the report made by Dr. RETIREMENT OF EMPLOYEES IN CLASSIFIED CIVIL SERVICE. 15 Madrill on the bill which we had under consideration at that time, and which provided for a maximum pension of $600 a year instead of $720. Dr. Madrill estimated that the cost of the bill, if enacted, would be approximately 5 per cent. He repeatedly described it as a 5 per cent bill. So the employees were asked to subscribe 2^ per cent, the Government bearing the other 2^ per cent. Now, we also agreed on that figure because we felt that it was as high as we could go with the employees. A man who is getting $100 a month should not be asked to contribute more than $2.50 a month to a pension system. Mr. MooNEY. The custom among private organizations is to make no contribution at all. Mr. Keating. I think that is right. Mr. MooNEY. Was the 2^ per cent provision put in in the hope that it might make the bill more easily passed ? Mr. Keating. Yes ; that was one consideration. In the considera- tion of retirement legislation there have been three schools : Men who advocated a straight pension, where the Government met the entire expense; men who. insisted that the employees should be paid suffi- cient salaries to enable them to contribute the entire cost of such a system ; and, third, the middle ground, that the Government benefits greatly from retirement and the employee also benefits, and therefore each side should contribute an equal share of the expense. We took the middle course, because we believed that was the only course that would enable us to get legislation through Congress, and I am still disposed to think that the straight pension system, while it might meet with favor in the more popular branch of Congress, would en- counter infinitely greater difficulty in the Senate. The Chairman. Is not this a consideration : Under the plan where- by the employee contributes a certain percentage of his salary, he is assured that in the event he separates from the service before receiv- ing the benefits of retirement, that money he has paid in, with accu- mulated interest, will be returned to him. Thus, in effect, the Gov- ernment assists him to acquire those habits of thrift and caution mid foresight which we all agree are desirable. Mr. Keating. I think that is one of the very fine provisions bf the bill. Mr. MooNEY. My objection to the 2^ per cent proposition is be- cause it is not fair. Of course, that may be because I belong to the No. 1 crowd. Mr. Keating. Of course, there is this to be said in favor of it: The desirability of getting legislation through at the earliest , possible date. Then all the representatives of the employees, men who are directly affected by the legislation, have indorsed the proposition and iniiicated their willingness to have it enacted. Now, gentlemen, in conclusion I want to congratulate the members of this committee on having taken up. this bill. Later on the members of our commis- sion will have the honor of presenting some suggestions for further improvement in our civil-service system. The ci^dl-service system has been neglected by the people of the United States and by the Congress for a good many years. The Chairman. I apprehend that the report of your commission will be referred to this committee. 16 BETIREMENT OF EMPLOYEES IN CLASSIFIED CIVIL SERVICE. Mr. Keating. The commission feels that it is extremely fortunate in having the report referred to this committee and will be very, glad to cooperate with you. On behalf of the commission I would like to invite the members of this committee to come down to our headquarters and examine the work we are doing there, so you may be prepared for certain recommendations that we may make. I* is quite essential, in considering our suggestions, that you should be familiar with the processes by which we reached our conclusions. We have headquai'ters- at Four-and-a-half Street and Massouri Avenue and our questionnaires are there ; our classifiers and others are now at work, and I venture the suggestion that you gentlemen will be very much interested in the method adopted by the commis- sion to perform the very delicate and important task assigned to it in connection with this work. That is all I have to say. Thank you very much, Mr. Chairman. Mr. Jordan. Is it your idea to invite representatives of the depart- ments to appear at these hearings ? The Chairman. I invited them to appear or present their views, and I have responses from the Secretary of Commerce, the Secretary of the Interior, the Secretary of the Treasury, and from various chiefs of bureaus. Of course, we would be very glad to hear them in person if they desire to appear, but if not, I think the committee will determine to append their written statements to the hearings and print them with the oral testimony which is being taken. Mr. Jordan. I want to say in that connection that I was author- ized to introduce as a part of my own statement a letter and excerpts from the report which came from our Secretary of the Treasury. The Chairman. I have a letter from Secretary Glass and excerpts from others. Thereupon, at 12 o'clock noon, the committee took a recess until 2 o'clock p. m. AFTER RECESS. The committee reassembled at 2 o'clock p. m., pursuant to the^tak- ing of recess. The Chairman. The committee will resume its session. Mr. Alcorn. Mr. Chairman, I desire to have Mr. John S. Beach, representing the National Federation of Federal Employees, state the merits of the chairman's bill, known as the Lehlbach bill. STATEMENT OF ME. JOHN S. BEACH, REPRESENTING THE NATIONAL FEDERATION OF FEDERAL EMPLOYEES. Mr. Beach. Mr. Chairman, the organization which I represent has indorsed the principle of retirement as embodied in the bill intro- duced by the chairman of this committee, Mr. Lehlbach, on May 26, 1919, and known as H. R. 3149. In the hearings this morning ref- erence was made to the fact that the McKellar-Keating bill, which received a favorable report at the last session of Congress, only failed of passage in the House of Representatives because of a lack of opportunity of getting a vote upon that bill. The McKellar-Keat- ing bill was more extensively indorsed than any other retirement bill RETIREMENT OF EMPLOYEES IN CLASSIFIED CIVIL SERVICE. 17 which has ever been before Congress. It was indorsed by the Ameri- can Federation of Labor at its convention in St. Paul last year ; it was indorsed by the American Association for Labor Legislation at their convention in Kichmond last year ; it was indorsed by the Joint Conference Committee on Retirement, which includes in its member- ship representatives of every organization of civil-service employees ; it was indorsed by State legislatures, a rather unusual proceeding, particularly by the legislatures of the State of California and the State of Oregon. It was also indorsed by numerous other organiza- tions and societies. The principles embodied in the bill introduced by the chairman of this committee are the same as those embodied in the McKellar- Keating bill, but, in the opinion of the members of the Joint Confer- ence on Retirement, this is a much stronger bill than the McKellar- Keating bill. It will more nearly meet the needs of retirement leg- islation. It is true that it includes certain provisions which are more liberal to the employees, but the administrative features have been more carefully worked out, they have been harmonized, and this bill includes a provision which was absent from the McKellar-Keating bill, namely, one for the retirement of those who become incapacitated for efficient service before reaching retirement age. Mr. Chairman, it is my purpose to take up for discussion briefly the provisions of this bill, H. E. 3149, section by section, and I shall be very glad to answer any questions, as I proceed, in reference to the provisions of this bill. The purpose of the bill is to provide retirement on an annuity, j)ay- able monthly, for employees in the classified civil service of the United States and certain other employees specifically mentioned 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 at- tained a given age, specified in section 1, or have become totally dis- abled for efficient service under conditions defined in section 5. An- nuities are graduated, in relation both to the number of years in the service, within certain limitations, and to the average salary, pay, or compensation during the last 10 years of service. 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. The age for optional retirement for the employees in the preferen- tial classes is reduced for the reason that their occupation is either hazardous, laborious, or subject to exposure, Or the conditions of their employment are such as to incapacitate them for efficient serv- ice at a comparatively early age. By referring to section 6 we find that retirement is not compul- sory 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 ques- tion of optional and compulsory retirement will be made when that section is reached. Employees of the Library of Congress and of 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 124396—19 2 18 RETIREMENT OF EMPLOYEES IN CLASSIFIED CIVIL SERVICE. peculiar status. Although they are not in the classified civil service, yet their duties, rights, and privileges are analagous to those oi other civil-service employees and their tenure of office is of reason- ably certain duration. The Chairman. Right there, if I may interrupt, it has been called to my attention that there is a class of employees of the United States, under the "War Department, I believe, who are cemetery superintendents, and who are not in the classified civil service, but who have permanent tenure. There are about 75 of them m the country. Have you any suggestions as to the desirablity of their inclusion in this bill, or any reason why they should not be in- cluded, or would you care to comment on that at all ? Mr. Beach. That question has been brought to my attention only very recently. The Chairman. I will just briefly read from this letter : I believe a large proportion of tliem are Civil War Veterans, and a great number of them are of the retirement age. Mr. Beach. They do not hold presidential commissions, I take it. The Chairman. No; they are appointed by the Secretary of War, and the suggestion is made to have them covered on page 2, line 4, by inserting words after the words, " Botanic Gardens." Mr. Beach. I am sure there could be no objection to such pro- cedure. It is undoubtedly the desire of the organizations represented in the Joint Conference to extend the provisions of this bill to as many classes of employees as would be practicable and yet be con- sistent with good administration. This matter_ can be left to |;he discretion of this committee, but there certainly will be no objection on the part of our organization. Reverting to the employees of the Library of Congress and the Botanic Gardens, I desire to continue by saying that 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 ^'ested 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 exclude 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 invoked only to meet extraordinary contingencies which may arise from time to time, and in cases which would render administra- tionrf)f the law difficult; or in cases where to enforce the law would be prejudicial to the interests of the Government or the employees con- cerned. The Chairman. Let me call your attention to the exact language. You say : " The President shall have power, in his discretion, to ex- clude from the operation of this act any employee or group of em- ployees in the classified civil service whose tenure of office is inter- mittent or of uncertain duration." Have you given any thought to giving this power, which, of course, we all know, the President does not exercise personally, but on the recommendation of bureau chiefs and division heads, etc., with respect to an individual rather than a group or class ? This act does not say merely to exclude from the operation of this act any group of employees, but you say, " any employee," which means any individual in a group. KETIEEMENT OF EMPLOYEES IN CLASSIFIED CIVIL SERVICB. -19 Mr. Beach. Yes ; any individual. It might possibly happen that a certain contingency would affect an individual employee. Of course, I can not forsesee this and I do not know of any specific ex- ample of this kind, but there might be a case of an individual em- ployee coming within the provisions of this bill, that it might be wise, after all, to exclude from the operation of the law. Of course, by having in here, " any employee or group of employees " does not limit the authority of the President to groups. The Chairman. I was just wondering whether it might not be worth considering whether this power should not.be limited to groups, rather than extended to individuals ? Mr. Beach. I know of an employee who is getting $6,000 a year who comes within the provisions of this bill. He holds a highly administrative position. It might be found by experience that it would not be wise to keep that person within the provisions of the law, and therefore we single out any employee ok group of em- ployees, giving the President the power to exclude them. The Chairman. I believe, under department heads who draw $12,000 a year there are employees who draw $25,000 a year, and they would have deducted 2|- per cent of it. Mr. Beach. I think the highest civil service position pays $6,000 a year. Mr. Jordan. May I interrupt the speaker to say for the record that this language which is embodied in this bill is the language which has been used in every retirement bill from the very inception of this movement, and it is borrowed somewhat from the language found in the civil-service act itself. Mr. Beach. Certain employees of the municipal government of the District of Columbia are also included in the provisions of the bill. The conditions of employment in this branch of the service are such as to warrant the extension of the law to include the em- ployees mentioned in the third paragraph of section 1. It will be noted, Mr. Chairman and members of the committee, that, after all, it is very limited in its application. It means, in sub- stance, including in the provisions of the law regular annual em- ployees of the municipal government of the District of Columbia; that is, those who fill the clerical positions. I know that the District commissioners are very heartily in favor of this provision. This is the first bill in which it has ever been incorporated. The Chairman. There is a communication from the District com- missioners on file. May I ask why the public-school teachers, police, and firemen are excluded. Mr. Beach. The public-school teachers already have a bill before Congress. It passed the Senate at the last session, but was never considered by the House Committee on the District of Columbia. It has been considered by the House Committee on the District of Columbia at hearings within the last few days, and the press yes- erday announced that there probably would be a favorable report upon the bill. The condition of employment by the school-teachers is consider- ably different from what it is in the executive departments of the TJnited States, and also in the municipal offices, consequently it would seem to be wise that they should have a bill of their own, and the police and firemen already have a retirement law. 20- RETIREMENT OF EMPLOYEES IN CLASSIFIED CIVIL SERVICE. Mr. Jordan. Those were considered, however, by us in the draft- ing of this bill. Mr. Be^ch. Postmasters are specifically excluded from the pro- visons of the act for the reason that their occupation, as such, is usu- ally incidental to other lines of business ; in fact, in a large propor^ tion of cases, they give only part time to the duties of the office, and therefore the application of a retirement law for postmasters would be exceedingly difficult, if not inequitable, as compared with other branches of the classified service. An act of Congress approved June 20, 1918, provides for retirement of certain employees in the Lighthouse Service, and as that act con- fers 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 number of years in the service and to the average annual salary, pay, or compensation during the last 10 years of service. I have here a table which will explain that very briefly. (The table referred to is as follows:) Sample table of annuities. Average annual salary. Class A, 30 years or more, 60 per cent. Class B, 27 to 30 yeais, 64 per cent. Class C, 24 to 27 years, 48" per cent. Class P, 21 to 24 years, 42 per cent. . Cla.ss B, 18 to 21 years, 36 per cent. Class F, 15 to 18 years, 30 per cent. $720 660 600 540 480 420 360 $648 694 540 486 432 378 324 $676 528 480 432 384 336 288 $504 462 420 378 336 294 252 $432 396 360 324 288 252 216 $360 $1 100 330 SI 000 300 $900 270 J800 240 $700 210 $600 or less 180- A maximum 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. In this respect the bill under consideration differs from the Mc- Kellar-Keating bill, which fixed the maximum at $G0O per annum, but placed no minimum in any class. It would have been possible; under the terms of that bill to have retired employees on an annuity of $150 per annum or less, and consequently we have deemed it wise to indorse this principle that there shall be, after all, an absolute minimum. Certainly the minimum of $180 seems to be very, very low, but it can be said in this connection that such annuity would be applicable to only a very limited class of employees, and the average annuity will be about $610 per annum. 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 re- ceipt 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 compensation for RETIREMENT OF EMPLOYEES IN CLASSIFIED CIVIL SERVICE. 21 such service, then the period of militarj- or naval service may be in- cluded. 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. Mr. Jordan. That is in line with what the civil-war veterans have incorporated in the bill. Mr. Beach. Section 4 provides for administration of the act by the Commissioner of Pensions under the direction of the Secretary of the Interior. This question was so splendidly handled by the Acting Commissioner of Peiisions this morning that I do not deem it necessary to go into any further details, except to say, that I have been an employee of the Bureau of Pensions for the greater part of the time since 1893, and I can substantiate everything he said in re- gard to the capacity of that bureau to take charge of and administer this act. I am confident that it can be administered more efficiently and with more economy than in any other branch of the service at the present time. There is one point that the acting commissioner did not touch on, and that is that the claimant or annuitant would have the right of nppeal to the Secretary of the Interior from any adverse action by the Commissioner of Pensions in his construction of the retirement law, and that said appeal would be acted upon by a constituted board of appeals in the Department of Interior, which would insure to the applicant or to the annuitant a judicial determination of his claim, and such procedure would be in entire harmony with the present procedure in pension matters. Section 5 provides for retirement of employees who become totally incapacitated for efficient service before reaching the re- tirement age. This is a new section as compared with the Mc- Kellar-Keating bill, although a similar provision has been incor- porated in some of the other retirement bills which have been intro- diiced in Congress in previous years. Retirement is conditioned upon examination by competent med- ical authority, and total disability for efficient service must be sat- isfactorily 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 dis- continuing the payment of annuity upon recovery from the disa- bility, or for suspending the annuity if the annuitant fails to com-' ply with the rules and regulations 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 disability for which the employee has been retired. If the nature of the disability is such as to give the employee the rights to benefits under the United States employees' compensation act, then he may elect whether he will accept such benefits or re- tirement on annuity as provided in section 5. This means, in substance, that there will be a certain class of em- ployees who will become disabled in the line of duty. If they are eligible for compensation under the compensation act, they will have the right of election, but iti no event may they receive a com- pensation' and annuity for the same period of time. 22 EETIBEMENT OF EMPLOYEES IN CLASSIFIED CIVIL SERVICE. This section is one that needs to be carefully safeguarded in order that the interests of the Government be protected. It is believed that section 5 will provide a measure of relief to a very deserving class of employees, and at the same time that the interests of the Government will not be jeopardized by placing annuitants upon the roll, and continuing them there without examination. This means that they must be examined annually to determine that the disa- bility is continuous. If it ceases for any cause whatsoever, then they will be dropped as annuitants. Mr. MooNEY. This section means that no person can collect an annuity until after 15 years' service. Mr. Beach. It means that they must have had as much as 15 years' service. Mr. MooNET. There is not anything in the bill which will cover accidents resulting from particular kinds of work. Fifteen years of service is the minimum time fixed in this bill. Mr. Beach. No; the annuity is predicated upon the 15 years' service. An accident prior to 15 years would come under the dis- ability act. Mr. Jordan. The point is this, if I may interrupt the speaker for a moment to answer your question, that under the emj)loyees com- pensation act, in the event he is disabled owing to accident in the line of duty, he is cared for immediately without regard to whether he has been in the service one day or 24 hours. Mr. MooNEY. This will in no way affect that ? Mr. Jordan. Not in the slightest. The Chairman. The contingency of which you speak would be cared for under the act of September 7, 1916. Mr. Beach. Section 6 defines the conditions under which retire- ment shall be compulsory, or may become optional. Upon reaching retirement age the employee shall be automatically separated from the service, unless arrangements have been made previously for his retention. The right to retire upon reaching the requisite age, or at any time thereafter, belong to the employee; he can not be com- pelled to remain in the service after having attained retirement age. Eetention in the service beyond retirement age depends primarily upon the decision of the administrative officer as to whether the em- ployee is still capable of rendering efficient service to the Govern- ment; 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 conipulsory at the end of four years after reaching the retirement age defined in section 1. RETIREMENT OF EMPLOYEES IN CLASSIFIED CIVIL SERVICE. 23 Perhaps that may need some explanation. Under the terms for retirement in section 1 we find that the greater number of employees will have the option of retirement at 65 years of age. During the first 10 years, under the provisions of this bill, any employee, no matter what his age is, may be continued in the service for two-year periods, upon certification that he is still efficient and is still willing to remain in the service, but after this act has been in effect for 10 years, then it will be only possible to continue that employee in the service for four year beyond the retirement age, which means that the optional age for retirement, except in the preferential classes, will be 65 years, and will be compulsory at 69 years, so that after 10 years it will not be possible for any employee coming within the pro- visions of the law to remain in the service beyond 69 years of age. Mr. C. E. Eeed. May I ask whether the provisions .in the para- graph preceding that giving the President the right to exclude a certain employee from the provisions of this act might be inter- preted to mean that the President might allow a certain individual that he particularly wants to remain in active duty under the pro- visions of this paragraph? Mr. Beach. Speaking for myself, I never have placed that inter- pretation upon the provision to which you refer. Mr. Reed. I have not thought of it before, either. The Chairman. The right of the President to exclude is limited only to such persons whose tenure of office is of intermittent or of uncertain duration, so a man holding a regular job could not be ex- cluded by Executive order. Mr. Beach. This question of optional and compulsory retirement is an intensely human one. I do not know of any one phase of the retirement question, as we are studying it to-day, that brings out quite so sharply the human element. We find a great many who are eligible for retirement contending that they are just as good as they ever have been. We find those who are approaching the retirement age, such as myself, who are looking forward with great anticipation to the time when they will become 65 years of age and who believe now they will be only too glad to retire when that times comes. Then, regarding the question of compulsory retirement, it has been pointed out that many employees in the service, 75, 80, and even 85 years of age are still efficient, but in weighing a question of this kind, we must take the service as a whole into consideration, and I am unhesitatingly of the opinion that the ideal civil service of the future will be a service in which there will be no person over 65 years of age. I believe, however, that during this formative period, when we are attempting to put a retirement law into operation, there should be a certain amount of elasticity because in some branches of the service, perhaps, to sweep out of office all of those who are over a certain age would bring great difficulties to that service. And then there is the individual case. A great many have made no preparation for retirement. While it has been agitated for years, yet I understand they have gone on from day to day and year to year and have lived up to their entire income, and in certain in- dividual cases to compel them to retire without warning, in my opinion, would be almost inhuman ; so we must vest certain discre- tion in the administrative officers during this period, and at the same 24 RETIEEMENT OF EMPLOYEES IN CLASSIFIED CIVIL SEBVIOE. time it gives every employee in the civil service a 10-year warning. Every employee will know that 10 years from now it will be im- possible for him to be continued in the service beyond 69 years of age. Mr. Jordan. May I interrupt the speaker, with your permission, Mr. Chairman, to add that the English Government found that it was absolutely necessary, after experimenting with its first retire- ment law, to establish a compulsory age of retirement, and the .age of retirement in that country is 65 years. Mr. Beach. 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 annuity after separation from the service. The time is not limited, however. Within which he may file the applica- tion, 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 Department of the Interior becomes evidence of the right to the annuity therein defined. I desire particularly to call the attention of the committee to the last paragraph of section 7, beginning on line 21, page 11. That paragraph was drafted with the intention that there should be no lapse of time between the time when the employee ceases to draw his pay and the time that his annuity shall commence, but after this bill was introduced the language has been carefully analyzed, and it is the opinion of those who have analyzed the language that if it remains as now written it would work a mani- fest injustice to a certain class of employees; that is, a class of employees who may be on leave without pay at the time the act goes into effect. There are to-day a few employees who are being carried on the rolls because of physical incapacity, in anticipation that they may become beneficiaries of a retirement law when enacted, and conse- uently I believe that the language should be changed in that par- ticular paragraph by striking out in line 22 the word " termination," all of line 23, and in line 24, the first two words, " take effect," and insert in lieu thereof the words, " separation from the service." The clause as amended will then read : " Annuities granted under tiiis act for retirement on account of age sliall connnence from the (late of separation from tlie service, and sliall continue durins' tlie life of the aniniitant." I respectfully recommend that this change be made in the interest of a certain class of employees who, if we allow this to be enacted into a law as now written, would be barred from participation in the benefits of this act, and I am quite sure the committee will not desire to do that. For example, I know a man who has been 42 years in the service of the United States. He is so crippled with rheumatism that it is impossible for him to get to his office. He is 75 years of age. He is on leave without pay, and if this language were to remain as written it would bar him and those in the same category from the benefits of the act. Mr. JoKDAN. Mr. Chairman, I want to interrupt the speaker for a question. Do you think that language that you have suggested would take care of that individual without question ? KBTIEEMENT OP EMPLOYEES IN CLASSIFIED CIVIL SERVICE. 25 Mr. Beach. I have every reason to believe it will, Dr. Jordan, because it is not only my own personal opinion, but it is the opinion ■expressed by law officers who have examined this paragraph in con- nection with myself. Mr. JoBDAN. That is the point I wanted to bring out. The Chairman. It seems to me there is certainly no reasonable ■doubt but that a person who is on leave without pay and still car- ried on the rolls as an employee is still in the service. Mr. Jordan. That is the point. Mr. Beach. I am quite sure it would be so construed by any admin- istrative officer. Section 8 provides for deduction of 2^ per cent form the employee's Isasic salary, pay, or compensation, and such deductions are to be transferred to the credit of a special fund known as the " civil-service retirement and disability fund." This fund will become immediately available for the payment of annuities, refunds, and allowances. The interest of the individual employee in the deductions from his or her salary, pay, or compensation is fully safeguarded by the provisions contained in section 11. Perhaps the members of the committee would like to have some explanation as to just exactly what this means. It means that 2| per •cent of the basic salary or compensation should be taken from the ■employee's compensation and transferred on the books of the Treas- ury Department to this fund, which will become immediately avail- .able for the payment of annuities. This will mean that the amount of these deductions will be sufficient to pay all annuities for the first 10 years, at least, under the operation of this act. Thereafter, per- haps about the twelfth year, the Government will be called upon to contribute to the fund by making an appropriation to supply any deficiency, ultimately, in my opinion, and the opinion is based upon •careful figures which I have made, the relations between the em- ployees' contribution and the appropriation by the Government will reach a point of stability. This point will not be reached, however, until about 25 or 30 years, when, under the present scale of salaries, assuming they are still in existence at that time, the ratio of deduc- tions from the employees' salaries to the amount to be appropriated by the Government would bear the following proportion: Three- eighths of the fund will be provided by the contributions of the em- ployees and five-eighths by the Government. This is somewhat dif- ferent from the principle which was incorporated in the McKellar- Keating bill, which was supposed to be, and I believe was, very nearly -accurate in its supposition, that it was a fifty-fifty proposition; but the annuities were considerably lower in the McKellar-Keating bill than they are proposed in the bill under consideration, and the age was somewhat higher. I am firm in my coriclusions, based upon the present scale of salaries, and assuming the civil service goes along in the same general tenor that eventually, say, at the end of about 25 or 30 years, the cost will become stabilized, and the ratio of contri- "butions and deductions will be as heretofore stated. Mr. Jordan. Mr. Chairman, I want to interrupt the speaker. Is it your understanding, Mr. Beach, that the deduction of 2^ per cent will be made on the basis of one year, or monthly? How will that operate practically? 26 EETIEEMENT OF EMPLOYEES IN CLASSIFIED CIVIL SEBVICB. Mr. Beach. The bill itself is specific in its terms. It will be de- ducted monthly. Mr. .ToEDAN. You did not bring that point out. Mr. Beach. 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 moneys and contributions and to disburse the same as outlined in the last paragraph of section 8. I might say in this connection that we know by figures which are reasonably accurate that we will start out with a surplus of perhaps $4,000,000. This surplus will increase year by year for the first seven years until there will be a maximum surplus of about $13,000,- 000. The surplus will then gradually diminish until, as before indi- cated, in about the twelfth or thirteenth year the surplus will be wiped out, and then it will become necessary for the Government to make an appropriation. Consequently, it seemed to be wise to direct the Secretary of the Treasury to invest in interest-bearing securities of the United States any surplus which may not be needed for the immediate requirements under this bill. 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 of the contract between himself and the Government. This section modifies certain sections of the Revised Statutes which fix the classification of salaries of employees in the departments. Section 10 defines the conditions under which employees who are in 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. Provision is also made for those who become separated from the service and who are subsequently reinstated. 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. Those who become separated from 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 pro- portional 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 ac- crued interest undei' three contingencies : First, in case of separation of an employee from the service for any cause whatever before reaching the retirement age, the total amount of deductions with accrued interest shall be returned to the employee. EETIEEMENT OF EMPLOYEES IF CLASSIFIED CIVIL SERVICB. 27 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. 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. It will be seen that the interests of the employee are fully pro- tected by the provisions of this section. The Chairman. This interest, which is to be returned with the money paid in from deductions made, is compounded. As a matter of fact, ought the Government itself return as interest on the money it receives from the employee more than the money so received may possibly earn? Mr. Beach. Of course, that is a matter of administrative book- keeping. We will assume that the Government starts with a sur- plus the- first year of $4,000,000 and that it will invest that $4,000,000 at 4 per cent interest. The next year they will have a surplus of $8,000,000, and they will invest that, together with the interest, at 4 per cent, and consequently it will be compounding the interest. The Chairman. Do you think the Government, as a matter of fact, will be compounding interest just as fully as its return of small amounts to the Government employees? Mr. Beach. I think so. I do not think there is anything in this provision that is impracticable or unworkable. It is up to the Gov- ernment to make the very best uses possible of the balance remain- ing in the fund. Mr. Jordan. The Canadian system, Mr. Chairman,vunder similar conditions, compounds the contributions semiannually. You will observe that we make it annually, in order that the Government may be safe. Mr. Beach. Section 12 provides for the payment of annuities in monthly installments under such rules and regulations as the Sec- retary of the Interior may prescribe. If the present practice in the payment of pensions is followed, checks will be issued without re- quiring separate vouchers in all cases where payments are to be made directly to the annuitant. In other pases vouchers may be required. Perhaps that is a technical matter of administration that might not be comprehended, but in the payment of pensions to-day, where the payments of the pension is to the pensioner direct, he is not required to execute any voucher or give any receipt ; the check is simply mailed to him. We contemplate the same action here. In the case of a pensioner who is insane or laboring under any legal disability, the guardian, or conservator, whoever he may be, is re- quired to execute a voucher as evidence of his right to draw that pension. We contemplate the same action here. This means, in substance, that the annuitants will receive their money monthly with- out any action on their part whatsoever. 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 Commissioner of Pensions with a report upon each individual 28 EETIKEMENT OT EMPLOYEES IN CLASSIFIED CIVIL SERVICE. claim, whenevier called for, showing all facts necessary to a proper adjustment of such claim. The Chairman. To what extent does the Civil Service Commission now keep a record of these facts ? Mr. Beach. Practically all, except where an employee is in a non- pay status — that is, on leave without pay. They never have kept any such record. This act requires the department to report to the Civil Service Commission all changes in the status of the employee. This simply requires them to perfect a system they already have in exist- ence, and, of course, their card record will become an official record to confirm the allegation of the applicant for an aionuity. The appli- cant will allege that he had a certain period of service and has re- ceived certain compensation during that period of service as a basis for his annuity. The Commissioner of Pensions will ask the Civil Service to confirm that. The records are nearly all in existence at the present time. They simply need perfecting. The Commissioner of Pensions is required to make an annual report showing in detail all relevant data in connection with receipts and disbursements on account of annuities, refunds, and allowances. Mr. Chairman, I ask you to turn to page 16, line 18. After the word " mortality " the comma should be stricken out. That should be "mortality experience." Section 14 provides that none of the moneys mentioned in this act shall be assignable in law or equity, and that they shall not be sub- ject to execution, levy, attachment, garnishment, or other legal process. Section 15 authorizes the Jippropriation of the sum of $100,000 for the purpose of carrying out the administrative provisions of the act for the next fiscal year and makes provisions for future estimates. In this connection I desire to emphasize what the Acting Com- missioner of Pensions stated this morning — that if the administra- tion is vested in the Commissioner of Pensions this amount undoubt- edly is far in excess of what the actual requirements will be, because we can utilize our force down there and the mechanical appliances without any appreciable cost for administration. It is presumed, how- ever, that the Civil Service Commission would require some part of this appropriation for the purpose of perfecting their records and keeping them in existence. I desire to say, in conclusion, Mr. Chairman and members of the committee, that this plan, as outlined in Mr. Lehlbach's bill, meets with the very hearty indorsement of our organization. It is, in our opinion, a plain, simple, workable proposition. It is stripped of all technicalities or complications and of unnecessary administra- tive details. We are very earnest in our indorsement of the plan as contemplated in this bill. The_ Chairman. Mr. Carss, of Minnesota, desires to make a state- nient in regard to the bill, and the committee will be glad to hear him now. STATEMENT OF HON. W. L. CARSS, A REPRESENTATIVE IN CON- GRESS FROM THE STATE OF MINNESOTA. Mr. Carss. Mr. Chairman and gentlemen of the committee, I do not know that there is anything that I can say to illuminate the subject, but I want to say very emphatically that' I favor legislation EETIBEMENT OF EMPLOYEES IN CLASSIFIED CIVIL SERVICE. 29 of this nature. I see by going around through the different depart- ments, both in Washington and in other parts of the country, that there are many old employees who have been in the service, some of them, for a period of 30 or 40 years, and they are functioning at about 40 per cent of their maximum, and I believe that this legis- lation will be beneficial not only to the old faithful employees, but to the general public, as I think it would be economical to retire those old employees on a pension and to fill their places with younger and more vigorous people. Of course, it is unthinkable that we should turn these old em- ployees adrift to face poverty in their declining years, and that would be the fate of a large majority of them because the rate of pay that they have been receiving from the Government has been so low that it has been impossible for them, especially under the present cost of living, to lay up anything for the future, and I want to say that I indorse legislation of this kind and hope that the committee will take favorable action on this bill. The Chairman. Mr. Eaker, of California, is here, and desires to make a statement. Mr. Raker, the committee will be pleased to hear you. STATEMENT OF HON. JOHN E. RAKER, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA. Mr. E.AKEE. Mr. Chairman and gentlemen of the committee, I have been interested in this legislation for sottie time, and desire to say a few words in favor of the proposed legislation. Of course, I appreciate the situation that the chairman has his bill pending, but, nevertheless The Chairman. We have officially before us all, bills on the sub- ject, and you have two bills before the committee. Mr. Kaker. The first bill is the one I introduced, and had it amended, H. R. 5129, and before I get through I will call attention to that amendment, so that the matter will all come before the com- mittee for its consideration. I have discussed this matter in California and have given it more or less consideration since I have been here during the last eight years, and the plan provided for in H. R. 5129 corresponds in many respects to the bill of the chairman, and, of course, I submit the pro- visions of this bill for the consideration of the committee as well as the general legislation. Right now I want to call specific attention to a letter of the Assis- tant Secretary of Commerce, which I desire to have inserted in the record, which puts in the bill that I refer to, on page 1, line 9, the following proviso: Provided, That such employees of the Lighthouse Service as come withia 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. ' I call the committee's attention to that first, and" present the letter so that this legislation will not affect the provisons of that act, as it is working in very good shape now. I will ask, Mr. Chairman, that the letter oe inserted, so as to call that particular feature to the at- tention of the committee. 30 EETIKEMENT OF EMPLOYEES IN CLASSIFIED CIVIL SERVICE. The Chairman. Without objection the letter may be inserted in the record. (The letter referred to is as follows:) Depaktment of Commerce, Washington, Jurtje 2, 1919. My Deae Congkessman : My attention has been called to H. R. 2727, a bill to provide for tlie retirement of employees in the classified civil service, and for other benefits and purposes in connection therewith. There is no reference in the bill to 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." Under the provisions of this section certain employees of the Lighthouse Service are entitled to retirement pay. The act has worked exceedingly well and I would much dislike having it now changed. I am therefore taking the liberty of suggesting that the follow- ing exemption be inserted in your bill : " Provided, That 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." Yours, very truly, E. F. Sweet, Assistant Secretary. Hon. John E. Rakeb, House of Representatives. Mr. Rakee. Speaking generally of the question of retirement, a plan will be evolved by this committee, and I am satisfied that a workable bill will be gotten so that it may be presented to the House, and we hope passed shortly by the Senate and become a law. The people of this country are in favor of this class of legisla- tion. It is only a question of delay in bringing it about. In 1912 the Eepublican Party, in convention assembled at Chicago, from June 18 to June 22, incorporated this provision in its platform in regard to the civil service: We favor legislation to make possible the equitable retirement of disabled and superannuated members of the civil srvice In order that a higher standard of efficiency may be maintained. The Democratic Party, in national convention assembled at St. Louis, Mo., June 14^16, 1916, in their platform inserted the follow- ing plank, under the head of " Government employment " : An equitable retirement law providing for the retirement of superannuated and disabled employees of the civil service ,to the end that a higher standard of efficiency may be obtained. Those are practically the same. The Republican convention in 1916 just overlooked to include this in its platform. I know they intended to do it, and I give them all credit for what they have done in both parties, but that was over- looked at this time, and there were a number of us present at this Democratic convention, and without taking any personal credit to myself, I wish to state that I was fortunate enough to be on the reso- lutions committee in California, and among other things this is one of the matters that I urged, with others, before that convention, and had it indorsed, because of what I had seen here, and I made a statement of what I had observed here in Washington and of the necessity of this legislation. There has been much said pro and con — there can be much said — on account of the fact that we applied it only to Government officials. It should apply to all alike, whether they are in the Government RETIKEMENT OF EMPLOYEES IN CLASSIFIED CIVIL SERVICE. 31 service or not, but we are legislating now solely and only for the Government officials and employees, and let us not take the other side and say we will give it to all. Let us dispose of the Government officials and provide an equitable retirement law to the end that we might treat them right and get better service and better results, which is the thing we want, and not consider so much the question as to how they should contribute. Some claim they should con- tribute 100 per cent. There is a good deal of merit in that, but I am not going to dwell on that, because I think that it is the general concensus of opinion and approximately a 50-50 basis which you Srovide for would be equitable, and it is a basis upon which the overnment can stand and be protected and the Government em- ployees also protected. The Chairman. I notice that your bill carries a 2 per cent con- tribution. Mr. Raker. Yes. The Chairman. H. E. 3149 carries a 2^ per cent contribution, and that figures three-eighths of the expense to be borne by the em- ployees and five-eighths to be borne by the Government when it becomes stabilized, so 2 per cent would not be quite 50-50, but would be about one-third and two-thirds. Mr. Eaker. I thought it was 50-50. I did not really figure it up. I thought that would be a fair ratio, but that is a matter that the committee will adjust, and I believe, in talking as I have with others, that it would be a fairly equitable adjustment, because, as a matter of fact, in any business there is a general expenditure of money, irrespective of price, and we have our teachers' retirement fund in California,* or pension law, and it is working admirably and giving splendid satisfaction, so don't let that hold the committee up on a qviestion of getting good legislation, or getting this legislation out. I am satisfied that the people generally will support a 50-50 propo- sition, and the employees, as a general thing, will support a provi- sion of that kind. If you can make it better for them, of course, I am satisfied. If you make it two-fifths and three-fifths — two-fifths by the emloyees and three-fifths by the Government, it would be all right. It would make it approximately 50-50, and it would work all right. Now, as to the necessity of this. I have made it my business to go through the various departments in the morning and see them come in, and I have made it my business to be there when they came out at noon and at evening, and I have seen them at work, and none of us willing to observe and give credence to what he sees as well as what he hears from a good source but must be convinced that there are many old men and women that are not able to do the work they are doing, and are not doing it because they can not do it. If, some arrangement had besn made in advance whereby they could have contributed some of their salary, and a provision made, as in this bill, that th'e Government contribute toward a pension fund, at the age when they became so old that they could not do the work, they could retire and would then be looked after in their old age. Somebody must look after them, there is not any question about that. You can not get over it. After you have gotten up to a certain age, if you have been unfortunate enough not to have ac- 32 RETIEEMENT OF EMPLOYEES IN CLASSIEIBD CIVIL SEEVICB. cumulated something, we know the results, and if you have children and friends, they take care of you. So, as a matter of fact, it is a godsend -to all of us to make provision while we are living to the end that there might be a provision for us when we get old and can not do the work, and, in the Government ssrvice especially, the Gov- ernment ought not to have people who can not give a fair day's work. There are others to take their places, but we ought not to be so inhuman as not to make provision for them when they do get in that position where they have got to go to the poorhouse or de- pend upon their friends to support them. That is not a harsh state- ment, but it is true. We see it every day. It is this kind of legisla- tion which will avoid people going to the poorhouse that will other- wise go; it will prevent people from being supported by their friends that will otherwise have to be supported; and, third, and most important, it will give the Government at all times competent, capable, and efficient employees. That is what it wants, what it needs, and what it ought to have. That being the case, the Government ought to be ready and willing to pay a part of the fund that is set aside for these annuities that they will receive when they retire, because with 100 competent peo- ple, efficient people, of an age that they can do the work, they will do more work than 500 that are incompetent and are beyond the^ age limit, that have lost their vitality, lost their strength, and lost their cunning so that they can not work. Therefore, in conclusion, and not to take too much of your time^ from my personal observation and experience in every walk of life, and from what I have seen here particularly, I am convinced beyond the peradventure of a doubt that we ought to, at an early date, as rapidly as possible, provide for the unfavorable, unworkable condi- tions that now exist in our Government bureaus, and with that, Mr. Chairman, I thank you for the kindness of allowing me to say these- few words. Mr. Alcorn. Mr. Chairman, representing the committee on this question, is Dr. Jordan. Dr. Jordan, with Mr. Beach, and others of the committee, made a careful study of the question, and is one of the most able of its exponents, and he desires to discuss it as a general proposition in foreign lands and throughout the world. STATEMENT OF DR. LLEWELLYN" JORDAN, CHIEF OF THE SEC- TION OF SURETY BONDS, TREASURY DEPARTMENT, AND SECRE- TARY UNITED STATES CIVIL SERVICE RETIREMENT ASSOCIA- TION, WASHINGTON, D. C. Dr. Jordan. Mr. Chairman, I want to pay a tribute here of ap- preciation to Congressman Eaker before he leaves. Congressman Baker, as he stated to the committee, was actively interested in having tl^e resolutions committee of the Democratic Party at St. Louis in 1916 adopt practically the same language used in the Republican platform of 1912. The language was suggested by a joint committee of civil service representatives. Mr. Rakee. We were all of us there together, the chairman and myself. "Dr. Jordan. I want to address myself, Mr. Chairman and gentle- men of the committee, briefly to one phase of this matter, one which RETIREMENT OF EMPLOYEES IN CLASSIFIED CIVIL SERVICE. 33 fundamentally affects the cost of any plan of retirement which Con- gress in its wisdom may adopt for the benefit of the superannuated and disabled employees "in the Government civil service. It was pointed out by one of the speakers that there were three dis- tinct types or plans of retirement which had been proposed, one known as the straight civil pension plan, where the entire expense is to be borne by the Government, another carrying a contribution in varying amounts from the employees, with the added provision that the Government provide from its revenues sufficient to make up what the employees othei-wise would have contributed for past or back services. While a third plan in line with the provisions of this bill contem- plates direct contributions by the Government and. the civil service employees. The plan which we present to you, and which has been so admirably explained by Mr. Beach, offers another solution of this problem. In the original McKellar-Keating bill an effort was made to divide the cost approximately upon a 50-50 basis, between the Government and its employees. The employees of the Government are unanimously agreed that the high cost of living and low salaries paid make it impossible for them to assume a greater burden than that fixed under the provisions of this bill. With the reduction in the ages as proposed in the bill, increasing the maximum annuities and fixing minimum annuities, it has slightly changed the 50-50 basis of the McKellar-Keating bill, but, as Mr. Beach pointed out, while it places a little larger burden on the Gov- ernment than that proposed in the McKellar-Keating bill, it still recognizes what, in my judgment, is one of the most fundamental principles of any sound and satisfactory plan f oV establishing a civil service retirement system for civil service employees of the Govern- ment. I am personally opposed to the Government assuming the entire cost of any pension plan, and I base that opposition upon some of the fundamental conceptions of human nature. We all want to get something for nothing. Let us make a practical application of this idea to a straight civil pension plan, and let us turn for a moment to the history of the English Government, from which we have borrowed many admi- rable ideas. The English Government in its effort to solve this problem, established in 1859 what is known as a straight civil pen- sion plan, where the government assumed the entire cost. . What happened ? Within a comparatively short period after the adoption of the plan it was found that those employees who were given a pensionable status were receiving less compensation for their services than those who were not in the pensionable class. What was the reason for that? The reason was found in the fact that in fixing the salaries of these employees the pension benefit was always taken into account, and the pension came to be regarded as deferred pay or compensation. How did it work out? It worked out in actual practice that about one person in seven of the English civil service ever received the benefit of a pension. Those who were expecting it and were in the pensionable class received during their earning 124396—19 3 34 EETIKEMENT OP EMPLQYBES IN CLASSIFIED CIVIL SEKVICE. period, however, less salary than they otherwise would have received. That led to an agitation on the part of these beneficiaries, and after 50 years of agitation the Parliament of that country conceded that an injustice was being done to these public servants, and the law of 1859 was amended by the act of September 20, 1909, and provided that in the event an employee left the service within a stipulated period he was to receive what was supposed to be the commuted value of the pension benefit, and if he died while in the service before reaching the age of retirement his estate or his per- sonal representatives received the equivalent of one full year's salary. Under the plan that we propose, the employee is encouraged to make provision in cooperation with the Government to the extent of his ability in providing for his own physical and mental infirmi- ties. This plan encourages thrift upon the part of the employee; it gives him an added interest in the administration of the law; it makes him feel that he is not an object of charity but that he has helped, as far as he is able, to provide for himself in his old age in accordance with our American traditions. Speaking as a supervisory employee of the Government, and in the interest of the Government, a plan of this kind makes it possible to relieve the service of inefficient employees, who will have accu- mulated something, who will have something to take away with them, whereas under a straight civil pension plan where the Government pays the entire expense the employee comes to feel that he has a vested right in his pension benefit, and if separated from the service, though on the ground of inefficiency, believes a great injustice has been done him, alleging that he is thrown upon the labor market, where he can not capitalize his experience in the business world. Therefore, I believe that the most satisfactory scheme that can be evolved is the one which contemplates a reasonable deduction from the salary of the employee. It may be of interest to the committee to call attention to the work of the Oarnegie Foundation for the Advancement of Teaching. This benefaction, founded in 1905, through the philanthrophy of Mr. Andrew Carnegie, undertook to establish a system of free pensions for superannuated teachers and professors in American and Canadian colleges. As originally organized it was not the purpose of the founder of this benefaction to require the teachers to contribute any part of their salary, pay, or compensation to supplement the benefits conferred in the way of a free pension. The foundation, in its efforts to carry out the intentions of Mr. C!arnegie, undertook a most comprehensive and thoroughgoing in- A^estigation of all civil pension schemes affecting teachers and civil- service employees of States and municipalities throughout the world. This work of investigation was conducted by experienced experts and competent actuaries and was undertaken for the purpose of extend- ing the benefits of the foundation to a larger number of schools and colleges, both in this country and in Canada. The work of this corps of experts has been compiled and the result of its labors summarized in a pamphlet recently issued by the Carnegie Foundation for the Advancement of Teaching, in the form of a bulletin from which I quote. These experts state that as a result of their study covering a RETIREMENT Or EMPLOYEES IN CLASSIFIED CIVIL SERVICE. 35 series of years they are clearly of the opinion that their investigations ■establish, amongst other fact's, this fundamental principle : A pension system paid out of income, whether of a Government or of ii cor- poration, at no cost to the beneflciary, is expensive beyond all anticipation. Its cost is not only impossible to estimate in advance but has proved an intolerable Ijurden even to the practically unlimited income of a Government. These experts are unanimous in their opinion that — Experience' shows further that while under the noncontrihutory plan the iDeneflciary appears to get something for nothing, it is certain that in a limited number of years the pension will, be absorbed in the wage or salary schedule, and become practically deferred pay, received by only a minority of those interested. The effect of the so-called free pension upon the individual is distinctly demoralizing. The notion of getting something for nothing appeals to our universal human nature, but it is a prolific breeder of human selfishness. Not only is this true, but the lifting from the shoulders of the individual of a responsibility properly and rightfully his is a source of weakness, not of strength. What society needs is the machinery under which the individual shall be able to discharge his obligation, without making an unreasonable demand either ujion his financial resources or upon his self-control. The foundation thereupon was convinced that it was necessary to make a radical change in its system of pensioning superannuated college teachers. Quoting again from the bulletin referred to, the trustees of the foundation make this comment: The evidence brought together convinced the trustees that a noncontrihutory pension system, such as they liad inaugurated, was not in the permanent in- terest of th(J college teacher and that it should be transformed into a system in which the expense could be definitely estimated in advance, in which the teacher should have the security of an individual contract, and in which the teacher and his' employer, the college, should cooperate in establishing, main- taining, and governing the organization tlirough which the contracts for retir- ing allowances were to be made und carried out. It is a source of great satisfaction that the founder himself ap- proved these conclusions heartily and completely. When the trustees had come thus far, their task was only begun. It is one thing to point out the defects of a piece of social mechanism ; it is quite another to construct in its place one that will serve. In this constructive effort the trustees sought to avail themselves of every possible aid from experts in America and Europe, and they •endeavored also to consult all those directly interested in the out- come, desiring not only to obtain the benefit of constructive sugges- tion but also to meet as far as possible the points of view of the teachers themselves, and of the various colleges and universities. With this end in view the foundation corresponded not only with hundreds of individual teachers, and with college and university authorities, but invited organizations such as the Association of American Universities, the Association of 'State Universities, the Association of American Colleges, and the American Association of University Professors to criticize the provisional plans proposed, and to set forth themselves such constructive measures as in their individual or collective judgment were desirable or important. These exchanges occupied more than two years and afforded every opportunity for conference with and the cooperation of those in- terested. Finally, the trustees of the foundation appointed a commission to consider a provisional plan and to report upon the fundamental 36 EETIEEMBNT OF 'EMPLOYEES IN CLASSIFIED CIVIL SERVICE. principles of a pension system. Besides trustees of the foundation, this commission contained representatives of the various organizations. just mentioned. The commission had the assistance of expert actu- aries. In their report to the foundation the commission stated ia definite and carefully chosen words the fundamental principles of a sound pension system. These principles fall into two groups — the one resting upon economic and social considerations, the other upon actuarial and financial facts. The principles thus -formulated' by the commission were the following : 1. The function of a pension system is to secure to the individual who par- ticipates in it protection against the rislt of dependence due to old age or to- disability. 2. The obligation to secure this protection for himself and for his family re?ts first upon the individual. This is one of the primary obligations of the existing social order. Society has done its best for the individual when it provides the machinery by which he may obtain this protection at a cost within his reasonable ability to pay. 3. Men either on salary or on wages are, in the economic senre, employees- The employer, whether a Government, a corporation, or an individual, has a direct financial interest in the establishment of some pension system which shall enable old or disabled employee^ to retire under satisfactory conditions. In addition, society demands to-day that the employer assume some part in the moral and social betterment of his employees. The obligation of the em- ployer to cooperate In sustaining a pension system is primarily a financial one, and in the second place, a moral one. 4. A pension system designed for any group of industrial or vocational workers i-hould rest upon the cooperation of employee and employer. 5. Teachers' pensions should be stipendiary in character, amounting to a fair- proportion of the active pay. II. 1. In actuarial terms a pension is a deferred annuitj' upon the life of onc- er more individuals, payable upon the fulfillment of certain conditions. 2. In order that an individual participating in a pension system may be- ai-'sured of his annuity when due, one condition is indispensable : There must be set aside, year by year, the reserve necessary, with its accumulated interest, to provide the annuity at the age agreed upon. On no other conditions can the- particular obtain a satisfactory contract. The man of 30 who participates in a jpension plan under which he expects an annuity 35 or 40 years in the- future will take some risk of disappointment in accepting any arrangement less secure than a contractural one. 3. A pension system conducted upon the actuarial basis of setting aside,., year by year, the necessary reserve is the only pension system whose cost can he accurately estimated in advance. 4. A method by which a pension is paid for in advance in annual or monthly Installments i^^ the most practical plan which can be devised for purchasing a deferred annuity, provided that the contributions begin early in the employee's career, and provided also that the contributions paid in year by year receive the benefit of the current interest for safe invep-tments. 5. As a matter of practical administration, a pension system should apply to a group whose members live under comparable financial and economic con- ditions. To attain its full purpose, participation in the pension system to the- extent of an agreed minimum should form a condition of entering the service or employment the members of which are cooperating In the pension system. The trustees of the foundation conclude their report with the fol- lowing statement: The trustees of the foundation have sought honestly and sincerely to appre- hend and to state clearly the fundamental conditions for a pension system that shall be effective but shall not demoralize. In formulating these principles- and ill reconstructing their own system in accordance therewith, they have EETIREMENT OF EMPLOYEES IN CLASSIFIED CIVIL SEEVICE. 37 dealt in a small way with a question witli which the Nation must deal on a far greater scale. The trustees have sought to discharge their obligation, not only to a trust and to a particular group in the body politic, but an obliga- tion to the country as well. Previous speakers have emphasized the necessity as well as the urgency of this legislation. It would seem to be unnecessary, after v20 years of agitation, when both dominant political parties are on record in favor of this legislation, to emphasize its necessity before your committee. The departments themselves are sufficient evidence, when day after day we witness these cases of helpless old age and see the utter inability of many of these aged people to do even a modicum of ^^•ork. Is it not high time for the United States, the great Republic of this Western Continent, to get in line with the ad- \ance thought of the other civilized nations of the world? It is a humiliating reflection to know that our country is the only country that pretends to be civilized that has not evolved some scheme of decently and humanely retiring its aged civil-service workers. I do not know, Mr. Chairman, that I care to prolong what I have to say except to take advantage of the privilege afforded me of intro- ducing as a part of my statement a letter with excerpts from the re- ports of former Secretaries of the Treasury, recommending and urging the enactment of a civil -service retirement law. This letter with the •data is in response to a request addressed by the chairman to the Sec- retary of the Treasury. Secretary Glass in his letter not only empha- sizes the necessity for the enactment of remedial legislation but states that the efficiency of the Treasury Department is retarded for the Tvant of a retirement law. The Chairman. Is that the letter under date of June 14? Dr. Jordan. Yes, sir; that is the one, and I beg to call attention to the recommendation of former Secretary McAdoo in his annual Teport of 1918, and which recommendation is heartily indorsed by Secretary Glass. Mr. McAdoo recommends that the true solution of the problem lies along the lines of insurance with both the Gov- ernment and civil employees contributing to a scientific plan that will provide for superannuation as well as insurance against death. I want to thank you. (The letter and data above referred to are printed in the ap- pendix.) The Chairman. Congressman Fitzgerald, of Massachusetts, has introduced bills, one being an amendment of his original one on this subject, and they are, respectively, H. E. 2543, and H. R. 4675. We will be glad to hear from you, Mr. Fitzgerald. STATEMENT OF HON. JOHN F. FITZGERALD, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MASSACHUSETTS. Mr. Fitzgerald. I wish to take up as little time of the members •of the committee as possible, because everybody who has been here has emphasized the fact, of course, that legislation of this kind is absolutely necessary now. The previous speaker has dwelt upon the fact that this matter lias been pending for the last 20 years or more, and it is a shame that the United States did not pasg legislation that would take •care of deserving employees on the roll when I was here 25 years 38 RETIREMENT OF EMPLOYEES IN CLASSIFIED CIVIL SERVICE. ago. At that time I found men in the condition just described by the previous speaker, old decrepit, and unable to do any work, and yet they were upon the Government pay roll, and the suggestion is that there are hundreds of those persons here. When I was mayor of Boston I had the honor to sign the first pension bill for employees of the city of Boston, the fire and police departments, which provided a pension for the laborers employed in the city departments, but up in Boston the pension bill as passed by the legislature does not provide for any contribution on the part of the employees. That is one of the things that I like about this legislation here, that the employees of the Government express a willingness to come in with 2^ per cent. In some States that phase of the bill has been dodged, and I think, perhaps, one of the reasons for the lack of pension bills in the different parts of the .country, has been the failure or unwillingness on the part of employees to make any contribution. Happily that situation seems to be avoided here, so there is no need of taking up the time of the committee upon that particular thing. My bill varies a little from the chairman's in so far as I say that the annuity shall reach $800 a year, rather than $720. Is that the amount prescribed in your bill? The Chairman. Seven hundred and twenty dollars; yes. Mr. Fitzgerald. My reasons for that are these, that when a man or woman works for the Government for the period of time which this bill provides — I think it is 30 years or more, is it? The Chairman. Yes. Mr. Fitzgerald. And if they have given 2^ per cent contribution to the Treasury in the meantime, that will amount to more than the salary which they have received, because it would pay for itself in 40 years, and in 30 years, together with the continuous interest, it would amount to more than that, and therefore I think that the amount could be very properly placed at $800 rather than $720. Mr. Alcorn. Maximum? Mr. Fitzgerald. Yes, the maximum. I am one of those that be- lieve that living conditions are going to continue high for a very long time. This morning the papers report the fact that there are millions of foreigners going out of the country Avithin the next few months or few years, and they are going to take billions of dol- lars out of the country, and for the past four or five years, due to the war and the stringent immigration laws, we have had very little labor coming into the country. This morning's paper also reported the fact that some Senator introduced a bill prohibiting immigration for 20 years. I do not say that Congress feels that way about the prohibition of immigration for 20 years, but there is a very strong feeling in Congress, which I do not agree to at all, that immigration -should be prohibited for some years to come. Now, with the laborer going out who has been here for quite a few years back, and taking his money along with him, with immigra- tion stopped, with a prohibition bill in force within a few months, another hindrance to immigration, labor is going to be very high, very, very high. When I was mayor of Boston we paid the unskilled man $2 a day, and I increased his pay while I was mayor to $2.25 and then $2.50, and then they thought they were getting big pay. Now it is $3.50 and $4 that they are being paid. The other day, in RETIREMENT OF EMPLOYEES IN CLASSIFIED CIVIL SERVICE. S9 connection with some building operations in New York, the ques- tion was not the skilled man, but it was the common laborer. They could not get them. If that is the condition, what is going to hap- pen a couple of years from now? So I am one of those who believes that building is going to be very high and that commodities are going to be very high. It is not going to be reduced through Germany because of the tremen- dous expenses that are to be borne by that country, and the same way with England. They have lost 2,000,000 men and 10,000,000 more are incapacitated physically, and the taxes these governments are going to bear for the next generation or two are such that it is going to make it almost impossible for the people to meet them. Labor is going to make a stand in their demands for increased wages, and they are going to get them, if labor is not coming in from Europe like it has during the past 20 years, and it is my belief that things are going to be very high. Eight hundred dollars does not now represent what $400 did 10 years ago ; it will not represent any more than what $400 did a few years ago. Yesterday's paper said that a suit of clothes that a few years ago cost $22 now called for $60, and it is predicted that ready-made clothing will sell at $100 a suit this year. The laboring man that goes out in the ordinary store for a pair of shoes for his children, and they have got to have shoes if they are in school, can not get them under $5 or $6, and a pair of shoes for himself costs $6 or $7, and women's shoes now are even higher, and it is the same way with everything. Women's clothing has increased 100 per cent within the last two or three years. So that I am very strongly in favor of the provision in my bill for $800 as the maximum amount rather than $720. I believe that men ought to go into the Government service with this feeling, that when it comes to the end of their service they are going to be taken care of, and they ought to be taken care of in a manner where they can go down the hill of life with those whom they love the best. I wish I had the statistics that I had in mind sometime ago when I advocated pensions for the city of Boston, but, as I recall, the number of men that approached 60 years of age without absolutely anything to take care of them was astonishing. The history is appalling in that par- ticular respect. What has been the result? In Boston, while I was mayor of the city, I built an institution for the old women of that city and one for the old men. I did not, like to do it, and if it had occurred a couple of years afterwards, after what I saw in Germany, I would have built an institution where old men and their wives could have gone down the hill of life together. We do not do that in the United States, at least in our part of the country. We build one institution for the women and another for the men. I think that is inhuman. Therefore, I say that in this law, if you are going to enact a law, particularly in view of the fact that they are willing to give 2^ per cent of their wages to the Government for 30 years, and most of them fpr 40 years, because the average person goes into the Government service now at 20 years of age, and hundreds and thousands of them have gone in at 18 years of age, so that when they approach 62 years of age that will have been more than 40 years of service, if you give 40 EETIEEMENT OF EMPLOYEES IN CLASSIFIED CIVIL SERVICE. them $800, that will make them feel that when they enter the Gov- ernment service that they are going to be taken care of, and they will do the best work that they can for the Government, and all the time there will be a pleasant atmosphere about the work, a feeling that there is a degree of cooperation on the part of the Government that they are working for, and therefore the best quality of work will be obtained, because that $800 will be staring them in the face all the 'time, and they will say, "Well, we can get by on that amount of money." That is all I care to say, Mr. Chairman. STATEMENT OF DR. WARREN W. FOSTER, CHAIRMAN COMMIT- TEE ON LEGISLATION, FEDERAL EMPLOYEES' UNION, NO. 2. Dr. FosiTEE. My name is Warren W. Foster, and I am chairman of the committee on legislation. Federal Employees Union, No. 2. That is what brings me here primarily, although I have a personal interest also. If I do not show you in 10 minutes that you are going to get a gilt-edge proposition by enacting this bill, my name is Dennis. A man drawing $1,200, after he has been in the service 40 years and reaches 65 years of age will not do more than three-fourths of the work which a younger man will do drawing $1,200, so the Govern- ment will get that saving right there. More than that, this bill provides that the entire amount shall be paid by the employee, and in case the amount contributed by the employee is 2J per cent deduction from his salary, as shown by Dr. Mandrill, under the Keating bill — it will perhaps be a little less under this bill — the Government again, at the end of five years, would have accumulated $29,500,000, without paying out one single, soli- tary cent for annuities or disabilities. The only thing it would pay out would be the expenses of administering the act, $100,000 which I think is appropriated in this bill. Any man who would be the beneficiary under this bill could not do more than three-fourths of the work which he ought to do for the salary given, say $1,200, so that puts his work entirely on the backs of the people who are working and supposed to be doing good work. So the Government really takes the money out of my pocket, and John's pocket, and Mary's pocket, and puts it into the pocket of the man who is retired. That is a very plain, simple proposition to me. I do not know whether any of the rest of you can see it. • I can see it, because there is no provision made in any of these bills that the Government is to pay a single dollar for benefits to the employees. They provide for the money to be deducted from the salaries of the employees, and put it in a fund called the annuity fund and kept in the Treasury at interest, and we can conclude it will be 30 years be- fore the Government will have to put up a single dollar for the pay- ment of an annuity or disability benefit, and according to this lan- guage the fund will not be exhausted before the end of that time. If that is not a gilt-edged proposition I do not know one when I see it. The Chairman. On what do you base your figures? Dr. Foster. I base my figures, on the statement of the actuary of the Bureau of Efficiency, Dr. James D. Mandrill, who shows here, assuming that th6 law goes into effect, that is the Keating bill, on EETIEEMENT OF EMPLOYEES IN CLASSIFIED CIVIL SERVICE. 41 the 1st of July, 1919, on the 1st of July, 1920, the Government will be $6,900,000 ahead, just in the money the employees themselves put up at 2^ per cent of their annual salary, pay, or compensation. On the 1st of July, 1921, the Government will have $6,550,000 more added to the first $6,900,000, and so on until at the end of five years it figures up to $29,500,000 accumulated in the Treasury in this fund frona the 2^ per cent paid by the employees, without the Government putting up a single, solitary cent. The Chaibmax. Of course, in the first few years, possibly 12 years, there will be a surplus, but when the thing gets stabilized, then the disbursements for annuities, etc., will be $22,600,000, and the em- ployees' contribution will be $8,500,000 and the difference appro- priated from the Treasury. Dr. Foster. How long do you admit it will be before that occurs? The Chairman. Twelve years. Mr. Nelson. Will you repeat that? The Chairjian. When this becomes stabilized, when the number of retirements is at its maximum and is on a continuing basis, and the number of contributions is equal, and all are in and all are con- tributing, on the figures of Dr. Mandrill, and those which were obtained from other sources, the estimate is that it will cost the departments for annuities $22,600,000, and the employees' contribu- tions will amount to $8,538,000, and the difference, something over $13,000,000, will have to be appropriated from the Treasury. Mr. Nelson. That is the contribution on a 2^ per cent basis ? The Chairman. Yes. Dr. Foster. Do you understand that will be the case 12 years from the time the law goes into effect ? I think that is a mistake. I will ask Mr. Beach what he thinks about that. Mr. Nelson. Then the statement you made that the contributions will be sufficient to pay the annuities entirely is not quite true, ac- cording to that statement? Dr. Foster. I will ask Mr. Beach about that. Mr. Beach. I think the chaii'man has misinterpreted the figures. My figures are that it will be entirely self-supporting until about the twelfth or thirteenth year, and then the amount contributed by the Government will increase each year, but it will be about 25 years be- fore those figures will be reached. The Chairman. But when it is on a stable basis, assuming the bill is passed, then the conditions will be practically as stated, and the disbursements will be as stated? Mr. Beach. That is the best of my judgment. Dr. Jordan. That is at the end of 25 years. Dr. Foster. There is a further point. There is no provision in the bill that the Government shall ever pay a cent. At the end of 25 years there is nothing in the act which would hinder Congress from saying, " We will raise this to 3^ per cent or 4 per cent. You have done it all during this time, and you can keep on doing it." The Chairman. A present Congress can not bind the actions of a subsequent Congress in any way. _ We can not prevent any subse- quent Congress from repealing this law, no matter what we write in it. Dr. Foster. But it might contribute toward the expense. Would it be unfair for the Government to contribute during this time each 42 RETIREMENT OF EMPLOYEES IN CLASSIFIED CIVIL SERVICE. year an amount equal to what the employees will contribute from their own pockets ? Would that be unfair ? The Chairman. That would be merely a bookkeeping proposition. The Secretary of the Treasury would say, " There is contributed to this fund so much money, and the expenses of administration are so much, and the balance is invested in bonds at 4 per cent." It is just using up a little more pen and ink. Dr. Foster. I am talking about the fairness of the proposition, not that I advocate that, because I agree to this bill as a compromise. I do not consider it an ideal. I think Mr. Raker's bill is much more liberal to the employees, and would not be unfair to the Government, but I say I advocate this bill as a compromise. I especially had in mind making a few remarks in I'egard to the disability clause. I hare seen at least three people die at their desks right in the building, on the way to work in the Pension Bureau, who were obliged to come because they needed money and they came until they were practically dead. Two men dropped dead, practically, and another man died at his desk, and I know of a number of instances, although I did not actually see the people die. I have seen people sit there at their desks in the Pension Bureau when they were in a dying condition. Mr. Nelson. How old were they? Dr. Foster. 65 or 70. I have seen people with chronic diseases sit at their desks when they were unable to work. That is one reason why I am in favor of this bill, and I am willing to take part of my salary to help retire those people. I think it is nothing more than common humanity. I have seen men coming into the department, carried on crutches, and carried in so they could get in there and draw their salaries. Of course, we know that the heads of the departments will not turn those people out to suffer, people who are unable to do anything, but in regard to this disability bill it seems to me that the provision for an annuity under that or the allowance under that is not quite sufficient. I believe that if a man is disabled for efficient work, it is merely fair to allow him, we will say, 25 per cent of his salary, or at least $180 a year, which I believe is the lowest rate there. I think it is $180. The Chairman. He is retired just exactly like a man who reaches the retirement age. There is no lesser retirement for a man under disability than a man who, on account of old age and length of service, is entitled to the benefits of .the act. Dr. Foster. The point I want to make is this, that a man who is totally disabled for efficient service, that is for doing any useful work, is retired before a man would be for length of service, age not con- sidered, and it seems to me that is not quite just, because a man who is retired at 65 after 30 years' service may go into private life and go out somewhere else and, drawing his retirement pay all the while, earn half as much again in an office, or maybe more than that. It seems to me that the rates allowed him should not be less than one-half the average salary received by him for the 10-year period preceding his retirement, because assuming that the aver- age salary is $1,200, that would be only $50 a month, and that is mighty little to keep a man who is totally disabled, who naay be a burden on his family, and require a nurse and a doctor's care. So KETIBEMEls^T OF EMPLOYEES IN CLASSIFIED CIVIL SERVICE. 43 far as his familj- is concerned they would be better off financiallj' df he were not in existence. Mr. Nelson. _Do you not think that Congress must rather legislate on the basis of justice and service and not on the basis of sympathy? Dr. Foster. We have the Federal employees compensation act, which gives a man a certain allowance if he is disabled by injury without regard to the time he has served. Now, if he is disabled by disease, why is it not just as fair to give him a compensation for that without regard to length of service? There is still another point that I want to bring before the committee. The employee may have a contagious disease, say tuberculosis, and he may work at a desk from day to day, right among the other employees, with the possi- bility of infection to those around him. He is unable to get along without his salary, and he stays there and works from day to day when he ought to be taken care of. The duty of the Government is not to take care of him out of sympathy but from the standpoint of sanitation. I think it would be much better for him to be out of that office and in some place being taken care of rather than working there from day to day and being a menace to everybody else. Mr. Nelson. Is that condition prevalent in the department now, that men who are tuberculous are permitted to remain at work ? Dr. Foster. I would not say it is prevalent, but it does occur. Mr. Nelson. You would regard that as imprudent, then? Dr. Foster. I certainly do. Then, 1 think that the disability sec- tion ought to be modified becavise it provides for 50 per cent of the employee's salary for the past 10 years. I think the rate should not be less than one-half in anj' event. The Chair3ian. The committee thanks you for this expression of your views. Miss Johnstone, representing the National Civil Service Reform Association, is here. Do you wish to make a statement, Miss Johnstone? t Miss JoHNSJONE. I will submit a memorandum. The Chairman. It will be printed in the hearings. Mr. Alcorn. Mr. Hyatt, president of the National Federation of Post Office Clerks, is anxious to be heard, and I will present him now. STATEMENT OF MR. GILBERT E. HYATT, PRESIDENT OF THE NATIONAL FEDERATION OF POSTAL EMPLOYEES. Mr. Hyatt. Mr. Chairman, every one who has spoken about the question of civil service retirement has emphasized the fact that the Government already has a retirement system of a most clumsy and inhuman nature, and also one that is very expensive, in that old men are carried on the rolls long past the period when they can perform the work that they were supposed to perform. I do iiot think that point can be overly emphasized, because it is actually and literally true in every department of the Government service that I know anything about. It is peculiarly the case in the Post Office Depart- ment among the class of men that I represent. Congressman Keating ^poke about men being brought up to work in the department in chairs and assisted to their desks. Now, in the Post Office Depart- ment that sort of thing can not occur for this reason, that the nature 44 RETIREMENT OF EMPLOYEES IN CLASSIFIED CIVIL SERVICE. of the duties to be performed in the Post Office Department are highly exacting, and the ability of the Post Office Department to absorb these men of lowered efficiency is not so great as it is in some • of the other departments, for the simple reason that the type of work performed is not one that will allow any great amount of shifting s,iound or the making of easy berths, etc. The distributor, who is the typical post-office, clerk, stands on his feet all day; he has to stand on his feet throughout his entire period of duty, and the work itself, although not laborious in the sense of lifting heavy weights, requires stooping and twisting; for instance, to get a letter in the topmost box in the large case and then in the lower box on the other side. In other phases of the work there is considerable heavy physical exercise. To learn the duties of a distributor requires a strain on the memory; in fact, thousands of distinct facts in regard to the post office must be impressed upon the mind, and that is a faculty which disappears to a large degree after one increases in age. I believe it is harder for a person to acquire new facts when he in- creases in age, so that it might be said that the memory portion of a man's mind is the first one to decrease in sensibility. • For that reason after a man is 45 years of age it is very hard for him to acquire a constant succession of new facts which he must acquire in order to be an expert distributor. Another thing is the fine degree of accuracy which is required by the unremitting nature of this work. Then there is 70 per cent or a higher percentage of the men who work at night, and that work is a severe strain on a man of ad- vancing age. It is a severe strain on men of any age, and when a man grows up in years and needs his rest at night this extra work is the contributory cause of an early breakdown. Another contribu^ tory cause of early breakdowns is in the admittedly scandalous in- sanitary conditions in a great many post offices. In large numbers of post offices they are, in the first place, very much crowded. In some places they were from the very time they were built absolutely unfitted for the purposes for which they were designed. Then, we find this to occur also, in cases that are more common than they ought to be, that the ordinary sanitary conditions that are possible even under handicapped circumstances are not taken care of. For instance, you know that in the Chicago post office they had a ■ ventilating system which they (iid not use on account of the ex- pense. The health authorities of the city of Chicago pronounced the post office insanitary. Thfey said that even if the utmost energy was used in regard to sanitating the Chicago office it would still not be a sanitary institution. Yet those things that they could use in the way of ventilation are not used. Mr. Nelson. 'Was that ventilating system dispensed with or not used by order of the Postmaster General ? Mr. Hyatt. No ; that comes under the Treasury Department, the- oretically. Mr. JoRDEN. It is under the Supervising Architect's Office, in the Treasury Department. Mr. Hyatt. Yes ; we are in one of those beautiful situations where they can "pass the buck." The Treasury Department owns the building and the Post Office operates it. You go to one official and EETIEEMENT OF EMPLOYEES IN CLASSIFIED CIVIL SERVICE. 45 he points to the other fellow as beine- the guilty one. However, to whatever source you may go to tracethe responsibility for this situa- tion, nevertheless, the conditions exists in many cases. The post offices are unsanitary, and in such condition that a man working in them year in and year out and having occasional breakdowns from overwork, would reach a period of decreased efficiency earlier than he would in a department where these disadvantages do not occur. Now, another thing that the post-office clerk labors under, another disadvantage against which he complains bitterly, and which con- tributes to the shortening of his lifetime at the highest efficiency, is the overtime at which he must work. Of course, this has been a ver;;^ heavy burden during the past few years while the war was on, but it has always been a crying fault in the Post Office Department, so much so, that the so-called eight-hour day, which is supposed to prevail in the Post Office Department, is rather the expression of an opinion by Congress, than an established fact. Mr. Nelson. According to your knowledge, what would be your judgment of an average day in the post office; how many hours? Mr. Hyatt. There is a sharp line of demarcation between the big office and the little office. As a general thing some of these do work an eight-hour day, but that is not the typical post office. In the big offices, of the type of New York, Omaha, Chicago, Pittsburgh, Minneapolis, I would saj' that the men in those post offices, through- out the whole J'ear, work heavy periods of overtime. The evil of the thing is that it is piled up during the rush period, the first of the month, the first of the year, and times of that nature. They work beyond the limits of efficiency and beyond the limits of con- tinued endurance. For instance, at Chicago at one period of time they required five hous' overtime from the regular crew, and it left the crew that much further on the road to retirement. Dr. Jordan. Do they get pay for that overtime? Mr. Htatt. Yes; they are paid for overtime, but they get pay at a smaller rate for overtime than for their regular work. This is the situation: They actually work 26 days in the month and they have their Sundays off ; or, when they work on Sundays, they compensate for it in time off on other days, so that they are actually working 26 days a month. Now, when the department comes to compute their time for overtime they compute it on a 30-day basis. We believe that is one of the things that contributfs to overtime in the Postal Service, and we believe that there is only one thing that will' bring about an eight-hour day, and that will be time and a half for overtime. The Chairman. They think it is cheaper to work the force over- time than to hire extra help ? Mr. Hyatt. Well, it is the easiest way. It is much easier for the foreman to say to Tom, Dick, or Harry, " You work two hours m.ore to-day," than to go and get a substitute. Mr. MooNEY. As a matter of fact, it is hard to find men outside to do skilled work? Mr. Hyatt. Yes ; I have some stuff here that bears directly along that line. This tendency was apparent in the service when I entered it something like 16 years ago, and that is the tendency in young men to walk in and look around and walk out again. A young man who 46 EETIEEMENT OF EMPLOYEES IN CLASSIFIED CIVIL SERVICE. entered the service even 15 years ago, when I did, with the common delusion that every one had at that time, that every job under the Grovernment was a good job, after he got into the service and found out what it was, a very large percentage of the younger men, as com- pared with the total force of the men in the service, would leave, per- haps before they were trained, or just after the Government had gone to the point of getting them trained and perhaps made them good distributers. ' Now, directly bearing on the subject of the question you have asked, I received a letter a day or two ago from a post-office clerk in Detroit, in which he made the most strenuous plea for a general amelioration of conditions. His particular plea' was for more money. He said at the present time they found it very difficult to keep temporary help in the post office over two days, and that the old help were resigning at the rate of 10 or 15 a week. He said that he^ould figure out with a lead pencil that there would be 50 of the old skilled employees left in the Detroit post office the 1st of July. Now, this shortage of men exists in New York, Minneapolis, Omaha, and Chicago, and all post offices of that size in a greater or less degree. It seems as if thu greater the post office the less help you can get. The Civil Service Chronicle, a paper published in New York, states that owing to the difficulty of securing men in the Postal Service, semimonthly examinations were to be held until further notice, and that considerable chagrin was experienced at the fact that the last examination had received such a few number of applicants and that all of those who applied for this examination were immediately em- ployed. Now, these things that I have spoken of, this labor crisis in the Post Office Department, as I might call it, is not going to be cured entirely by retirement legislation, but the passage of a retirement measure would be a very decidedly remedial measure. It would remove one of the things that is objected to by the type of man who comes into the service and goes out again, and that is that the low wage does not present a reasonabale certainty of saving anything for the future. He goes into the service knowing that there is not going to be any high wage paid him, and he has to face a life- time of economy to get by on his wages and then look forward to a destitute old age. Congressman Keating and the other gentlemen have spoken about the question of lowered morale, and I do not think that can be dwelt upon too much, because these boys in the Post Office Department have before their eyes every day that they work the example of the penalty that a man pays for spending his life in the Post Office Department. I recall to mind one case that was a source of considerable grief to all the clerks in the Minneapolis post office. An old gentleman, who is a Civil War veteran and a splendid man with a tremendous amount of pride, so much so that he tried to hold up his end at all tirnes. We could see that he was doing his work at a strain on his vitality to keep up year in and year out. He had been unfortunate, and sickness and other things had made is impossible for him to save any money. Little by little he became less able to hold up his end, and the boys who were in the adjacent cases used to slip over and do a little of his work, and the foreman used to do his work and wink at the fact. When there was overtime called for, it used to be the usual thing that the old gentleman could slip away. EETIKEMENT OF EMPLOYEES IN CLASSIFIED CIVIL SEEVICE. 47 In other words, he was not delivering the goods when he thought he was. Finally, they had to make up a job for him out of whole cloth, and that was folding labels and preparing labels for the other dis- tributors to use. But at last he could not do this any longer, and the distributors had to go over and pull out the slips for their own cases. Finally, he did not come back one day, and died a short time after the last time he appeared in the post office. That thing is going on all over the country. My work brings me in contact with postal clerks all over the United States. I met a splendid old fellow the other day and he was on his way back. He had been up the ladder and was coming down again. He had risen to superintendent and he was reduced gradually until he was filling a sort of makeshift appointment as time clerk. He was very trembly and shaky, and the time was in sight when he could not do that work. The other clerks in the office were dividing up the work he should ha^'e done and he was getting by with it. Now, he was actually pensioned. He was actually pensioned on the floor of that office, although the Government would not think so. He was not only pensioned, but he was pensioned at the maximum salary. I think he was drawing $1,400 per year. I am not sure of that, "how- ever. ' This is the situation that has attacked all civil-service systems in the country as they grow older, and I would like permission to insert in the record three short statements. One is from Mr. William Gishorne, of New. Zealand. He has made a study of the Government of New England. Another is a statement by Mr. Fox, an actuary employed in retirement work in New Zealand. The third is by the chancellor of the exchequer in 1859, showing their opinions of the necessity of retirement legislation. (The papers referred to follow:) Mr. William Gishorne, in a book entitled " Colony of New Zealand," lays down as one of five essentials for an effective civil-service retirement measure. A Mr. Fox, an actuary employed in retirement work in New Zealand, had this to say about the indispensability of this resolution : " The advantages arising fi-oni well-considered superannuation schemes are so evident that many large employers of clerical and other labor have recog- nised their Importance by adopting schemes of the kind in practice, and the ten- dency of the present day appears to be In the direction of extending the sys- tem. It has been pointed out by others tliat a sentimental consideration for the employee was not the sole motive for e.N:penditure of this kind by corpora- tions and "bodies of men engaged in the profitable Investment of capital. They are certainly guided by business principles and realize that well-considered ex- penditure in this direction is justified liy the ultimate results. All employees are compelled to provide, partially, for their future, thus relieving their em- ployer of the assistance he would be practically compelled to extend in neces- sitous cases. But, perhaps, the chief advantages to the employer are that the employees as a body are more firmly attached to his service, and he is enabled to exercise a freer hand in retiring aged employees at high salaries and promot- ing younger men at lower salaries. All interests are best served in the end by placing on the pension list old servants who are past their work and replacing them by vounger ones who are in their prime." Statement of chancellor of exchequer in 1859 in England as to value of retirement : " I think that superannuation is a very good institution, indeed. We get men young ; we teach them their business ; we shall get them with a very fair prospect of having men of good intelligence— by superannuation we contrive to retain them in the service, whereas had we not superannuation we would have to be teaching and bringing up people who would carry their attainments to a higher market. I think that superannuation is a very good institution and an economical one." 48 EETIKEMESTT OF EMPLOYEES IN CLASSIFIED CIVIL SEKVICB. The fact that retirement is coming to be a very common thing, in fact the general thing, in corporations who are not supposed to ap- proach these things from the humanitarian standpoint, shows that it has value from the economic point of view. I find, without going into all the details of the statistics that I have gathered here, that it is practically the universal thing in cities of the IJnited States to pen- sion their employees, and peculiarly those typical of a municipal- ity, such as firemen, policemen, school-teachers, and people of that sort. Not only have the corporations, the employers' side of the ar- gument, committed themselves to the idea of retirement, but the agencies for the employees, the trade-unions, have been strongly committed for a long period to the principle of retirement, going so- far in some cases that some of these trade-unions themselves maintain a pension system for their own members, realizing the fundamental necessity of old men being taken care of in some way so that they will not be an object of charity or a burden on the community. The American Federation of Labor has not only repeatedly in- dorsed the principle of retirement, but they have indorsed the McKellar-Keating bill, and repeated the indorsement by indorsing this particular bill that the chairman of this committee has intro- duced. The resolutioft introduced in the Atlantic City convention of the American Federation of Labor I would like to have put in the record. The Chairman. Will you read that resolution? Mr. Hyatt. Yes, sir. Resolution No. 92. — By Delegates Edward J. Gainor. of the National Associa- tion of Letter Carriers ; William D. Clark, of the Plate Printers' International Union; John B. Colpoys, of the Washington, D. C, Central Labor Union; Charles D. Duffy, of the National Association of Letter Carriers; Edward J. Ryan, Railway Mall Association ; Luther C. Steward, National Federation of Federal Employees; Thomas F. Flaherty, National Federation of Postal Em- ployees. Whereas the retirement of superannuated civil-service employees upon service annuities is now 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, result- ing in one of two conditions — men are heartlessly dismissed after years of faithful service or they are retained upon tlie pay roll when no longer able to render efficient service ; and Whereas the compensation of Government employees is insufficient to permit of adequate savings 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-ninth 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 Lehlbach bill (H. R. 3149), now pending before Congress, and that the executive council is hereby Instructed to use every means at its command to secure the enactment of such legislation by the Sixty-sixth Congress. Now, I do not understand that that resolution has come on the floor of the convention as yet. Mr. Alcoen. Yes; they have just reached the resolution. Mr. Htatt. But there is no question about the convention follow- ing the sentiment expressed in previous conventions and indorsing this measure. It seems_ to me that with practically everybody that has approached the subject at all committed to the necessity and the RETIREMENT OF EMPLOYEES IN CLASSIFIED CIVIL SEEVICB. 49 humanity of retirement, that now that the employees themselves have reached some kind of basis of understanding, that there ought to be no question about its passage. I remember a statement made by the late Carl C. Van Dyke, vcho was himself a railway-mail clerk and who interested himself in our problems when he was in Congress, at a meeting of Government employees, in which he pointed out about six different divisions existing in that one gathering. He said, " I am with you, I am for you, my heart is with you. I lost my job and went back on the pay roll of the Government in a different capacity for your sake, and if you find out what you want we will give it to you." It seems now that the Government employees have found out what they want or at least what they can agree upon in this 50-50 plan. It is certainly hoped from the standpoint of efficiency and. hunianity that the establishment of retirement will appear at this session of Congress. Thank you. Mr. Nelson. Mr. Hyatt, I am certainly very much pleased at the statement you have made. I wonder if you have much knowledge of the average conditions of pay of the employees of post offices in small places, say 1,000 people or 800 people. Mr. Hyatt. The average pay? Mr. Nelson. Yes. Mr. HxATT. Well, the small post offices do not come under the clas- sification act. The first and second class men are under a classifica- tion basis. Mr. Nelson. I received some leters recently in which there seemed to be very strong protest made against the payment of post-office em- ployees in some of the smaller offices, even as low as $40 to $45 a month. Mr. Hyatt. That would occur in the offices where the postmaster hires his own help, but of course in the other offices, in the classified offices, it is fixed by law. But it is a fact, nevertheless, that the scale of pay of the Pogt Office Department at the present time is very low, and it would not be a fair thing to attempt to settle the pay on the basis of the size of the office. There was a sentiment at one time that a man in a small office was in better circumstances than the man in the post office in New York or Chicago, and undoubtedly that i& true to a great extent, but the war that has overturned so many other things, has overturned that contention in many cases. For in- stance, take the post office at Wyandotte, Mich., on the outskirts of Detroit, a small place where the cost of living is just as high as in Detroit and other offices of that type. It can be safely said that the present salary, with a temporary maximum of $1,600 for the postal clerks, is altogether too low for all offices. The fact that every agency which has investigated the cost of living with the idea of ascertaining what is necessary to support the average family in decent style, placed the minimum above $1,500 a year shows that the post-office worker is in need of a higher salary than he is receiving at the present time ; he needs; more than that just to live on. You are up against a problem of figuring how to provide for the old man when he can no longer- work. The Chairman. Is it contemplated that the Joint Commission ort lieclassification of Salaries is to include postal employees? 124396—19 4 50 KETIEEMENT OF EMPLOYEES IIST CLASSIFIED CIVIL SEKVICE. Mr. Jordan. There is another commission which will handle postal employees. Mr. Hyatt. You referred to the commission that Mr. Keating represented, Mr. Chairman? The Chairman. Yes. I think they excluded the postal employees. Mr. Hyatt. Yes, sir. There is another commission that is going to hold a meeting in July, and they will consider postal employees. That is all I have to say. Mr. Alcorn. The next gentleman to be heard is Mr. Sterling, the legislative representative of the American Federation of Labor. STATEMENT OF MR. HENRY STERLING, LEGISLATIVE REPRE- SENTATIVE OF THE AMERICAN FEDERATION OF LABOR. Mr. Sterling. Mr. Chairman, I was intending to present to your committee the resolution adopted by the American Federation of Labor last year at St. Paul. From the reading of the preceding speaker it appears that the same resolution was introduced into tb/3 convention this year. It was not my intention to allude to it, be- cause I had no information as to any action having been taken on that resolution as yet. The resolution at St. Paul in 1918 is prac- tically identical with the one which the gentleman read to you, and it was adopted, and my note at the bottom here is that the commit- tee of the convention which considered this resolution recommended its adoption and the report of the committee was adopted. To me, Mr. Chairman, it would be exceedingly interesting if the many friends of this bill, who have information on the subject, would file with the committee the exact words of the statements in the plat- forms in connection with this statement in the resolution, that " all political parties in their platforms have pledged their support for the enactment of retirement legislation." t The Chairman. Congressman Eaker this afternoon read the planks of both the 1912 Republican and 1916 Democratic platforms. Mr. Sterling. I did not know that. Then it seems to me it would be wise to have a list of those countries who pension their civil em- ployees in some way, in view of the suggestion contained in this reso- lution that practically all Governments except ours are pensioning their employees in that way. Now, the measure itself has been discussed from a humane stand- point. It seems to me it is a matter of social and civil righteousness and it ought to be discussed more from that point. How an employer •can take a young man and carry him through all the period of his VForking life, and wring him dry, and throw him away like a worn- out dishrag, and conceive that he has done any measure of justice to that man, it is beyond my comprehension. That is what the United States Government, as an employer, is doing all the time, except where it keeps the man in service to the detriment and suffering of the man who remains on the pay roll when he is not earning his money. Those are the two alternatives that you are up against. It seems to me that a Government at least, if not a private individual, owes it to the men to provide for their old age. It owes it to them in the first place because the Government has had not only their services, but these men have also rendered another service to the Gov- ernment in rearing a family of children, which most of them do. RETIKEMENT OF EMPLOYEES IN CLASSIEIED CIVIL SERVICE. 51 Then there is the point of underpayment, and in that connection our Government is about as heartless, as callous, as indifferent as any employer on the face of God's earth. There are employees by the thousands, I am given to understand, whose wages have not been. re- adjusted in 5.0 years. Mr. Nelson. Are there many of those? Thousands, you said? Mr. Steeling. The exact number is not given, but I understand a year ago last April it was 66,000. The Chairman. The classes have not been readjusted, but the individuals have moved from one class to another class. Mr. Nelson. The same individual would keep on going up in the scale of wages, would he not ? Mr. Htatt. Yes ; if he was permitted to do so. Mr. Jordan. I have had 32 years of actual contact with conditions in the Treasury Department, and I know of numerous instances where people have not been promoted for 10, 15, or 20 years. Mr. Nelson. And no readjustment at all? Mr. Jordan. No, sir; none whatever. Mr. Nelson. That is the point I want to get .at. Mr. Steeling. Perhaps I have overstated, the case, and I do not want to do that. You can not find a reputable firm in this country with any considerable number of employees but what has been obliged to adjust the wage scale in the last four or five years. It is true that some of them have not been readjusted in the last 10 years. I think that justifies, to a certain extent, my statement of the heart- less indifference of Congress to its own employees in the matter of underpayment. Now, Congress threw out its chest and patted itself on the back last year quite a little because it gave a $240 bonus to its employees. In April of last year I had occasion to try to learn the exact increase in the cost of living in the past few years. Now, I am not absolutely certain whether we took the year 1913 or 1914, but from one or the other of those two years the exact figure as it lies in my mind was 79.9 per cent of increase within those two years, the increase in the cost of living. The exact figures are given by the Government itself through its official bureau. Now, some people think that considerable was done for the public employee by giving such a bonus as that $240 last year, but if you consider that the $800 man, and there are quite a number of them who got the $240 bonus, received only a 30 per cent increase in his annual income, while the increased cost of living was practi- callv 80 per cent, you can see that that employee worked for the Gov- ernment in a very serious dilemma ; or if he was a $1,200 clerk and got this $240 bonus, in that case he received an incease of 20 per cent to offset his increased cost of living of 80 per cent, and if he was a $1,500 employee he only got an increase of 15 per cent to offset 80 per cent increase in the cost of living. Now, those increases are in no way commensurate with what the laboring people throughout the country have been receiving. You know they are not receiving that proportion of increase; you know it from common knowledge. You have heard a lot of talk about a dollar an hour and 80 cents an hour and all that kind of talk, but the point I am trying to make is that the Government is not dealing with full justice toward its em- ployees, and that this measure, if passed would, at least, in some 52 RETIREMENT OF EMPLOYEES IN CLASSIFIED CIVIL SERVICE. degree possibly make up for the underpayment which the Govern- ment has been guilty of heretofore. That is about what it might be considered, an offset for what the Government has unrighteously with- held in other years. In my opinion, Mr. Chairman, when I came into the room I was strongly set with the idea that the Government should pay the whole cost. I listened to Dr. Jordan's explanation of what happened to Great Britain in paying the whole cost of the matter, and I concluded in my mind that that was something that I had not given sufficient con- sideration to and that perhaps I was wrong in thinking the Govern- ment should pay the full cost. Nevertheless, the employees come to you and ask you to provide for 3| per cent of the proposition to be paid for by themselves, and it seems to me that they are doing more than should be expected of them. I believe that among those govern- ments which made provision for their retiring civil servants was the Government of Germany, one not happy to allude to at the present time. But I want to say that they have a startling thing which we in this country think is wholly out of the question. The German Imperial Government and the German State governments, of which there were 26, and the German city governments, all of them, for their civil employees, built thousands and thousands of houses and homes, in which they might live at the cost of the Government, which was a tremendous addition to their wages, and they continued to live there until their retirement, which was an enormous relief to them. I only mention this to tell you how far behind our Government is in this indifferent treatment of its public employees. The Chairman. I was going to ask whether such a plan would be feasible and practicable in this country, and whether the civil em- ployees of the Federal Government and the municipal employees would like the employers or the Government for doing this? In other words, does not the American employee like to choose where he is going to live, and does he not like to acquire his home, even through a building and loan association? Mr. Sterling. The employees in Germany had the right to choose where they wanted to live just the same as American employees, They could have gone elsewhere and paid for quarters if they wanted to. They were not compelled to live in these Government houses. The Government simply made that provision for them in order that they might not be oppressed by extortionate landlords or real estate speculators. I believe it is just as feasible for us to do that in this country as to -build schbolhouses, waterworks, sewer works, police stations, and things like that. You have demonstrated during the war that it is entirely feasible for the United States Government to build something like 6,000 houses, and while you were meddling with it and it was a new venture there were some faults and some criticisms found, but on the whole it was one of the most beneficial measures that the Government ever engaged in, and it should be carried to a very much larger extent than it has been. As I said before, there was criticism and there is bound to be criticism, and just criticism, for the reason that it is a human institution, and there is nothing in the way of human institutions that yau can not find fault with in some way. Now, the resolution that was read by the preceding speaker is now before the convention at Atlantic City, and I assume that it will be RETIREMENT OF EMPLOYEES IN CLASSIFIED CIVIL SERVICE. 53 passed. It merely indicates to your committee that 3,500,000 men throughout the country believe, as expressed through their duly accredited representatives, that it is just and right the civil employ- ees of the Government, after they have exhausted their vitality and manhood on behalf of the Government, should be taken care of. There has been some criticism of the Government employees by some people who think it is smart or funny to take flings at them, some- what in the manner of ex-Speaker Cannon in his comments on the military people when he said they wore spurs to keep their feet from slipping off the desk. The fact remams that the public-service employees of the Government of the United States are faithful, loyal, and efficient, and during the war, Mr. Chairman, they fur- nished the basic element on which all the feverish and almost hysterical excitement would make its play and do all the wonderful things which we did during the war, and but for their wonderful, loyal, efficient, and basic services other services could not have been rendered. Now, Mr. Chairman, the facts are that with the exception of a very few the great majority of these servants of the United States must have been faithful and efficient and competent in the performance of their duties or the United States Government could not function as it does, because the functioning of the Government always de- pends on the functioning of the lowest strata. I sincerely hope that your committee will be ]ust enough and socially righteous enough to recommend favorable consideration of this bill to the House. Mr. MooNEr. Mr. Chairman, I would like to ask Dr. Jordan a question. You made a statement a little while ago that in Great Britain, when the retirement bill was first put into effect, the Gov- ernment bore the entire expense. Mr. Jordan. That is true. Mr. MooNET. That the Government bore the entire expense? Mr. Jordan. Yes, sir. Mr. MoONEY. Plow does the salary of the civil service employee of Great Britain compare with the salary of the man in private employ- ment? Mr. Jordan. That I am not able to answer. That is one phase of the matter that I have never stvidied. I can say this, however, that it was found upon investigation that where those employees were put into the pensionable class, that their salaries were anywhere from 18 per cent, to 25 per cent, less than when, they were not in the pensionable class, so that the Parliament took into consideration this fact, that if they lived out the ~ entire age they would have to fix the salaries accordingly. Now, it developed that only one person out of seven actually got that settlement. Today a man goes to work on a retirement plan on a lower wage than he would otherwise receive, and he may die next week or he may live several weeks and die and leave dependents. Mr. MooNEY. Of course, if it means a lower wage Mr. Jordan (interposing). That is just what it did amount to. Mr. MooNEY. Well, my point is this, that if they were receiving more than they were before they would benefit to that extent. Mr. Jordan'.' It is a question of adjustment. Mr. Sterling. There is just one other rnatter which I wanted to bring to your attention that slipped my mind when I was speaking 54 RETIREMENT OF EMPLOYEES IN CLASSIFIED CIVIL SEKVICB. a moment ago, and that is a system identical in principle with the one that is here proposed and almost identical in details, has been in operation among the public employees of the State of Massachu- setts since .1907 with the most intense satisfaction on all sides. I have never heard any complaint about it. The Commonwealth was so well pleased with it that shortly afterward they enacted a similar law for all the teachers of the State, and that is also in operation with the very greatest satisfaction. Those things are available to the committee if they desire to make a study of them. The Chaibman. In speaking of this Great Britain compensation law of 1859, there is a rather interesting fact, and I do not know whether it has come to your attention or whether I am misinformed. Did not the Government of Great Britain at the same time or shortly thereafter, in order to prevent the civilian employees from using their political power, deprive them of suffrage ? In other words, did they not disfranchise them at the same time they pensioned them? Mr. Jordan. I have a slight recollection that that is true. Mr. Alcorn. Mr. Edward M. Dawson, representing the civil serv- ice employees of the District of Columbia. STATEMENT OF EDWARD M. DAWSON, REPRESENTING THE CIVIL SERVICE EMPLOYEES OF THE DISTRICT OF COLUMBIA. Mr. Dawson. Mr. Chairman, I want to say that the Commissioners of the District of Columbia are heartily back of the Lehlbach bill, and they so instructed me to state. There is no doubt that it would be a good thing for the District employees, although only a certain proportion of the District employees would be affected — that is, those that have their appointments directly from the commissioners — and that would let out a great body of per diem employees that are hired by the heads of the different departments. So that possibly altogether only 1,800 annual employees — ^janitors, custodians, and caretakers of the schools— would be affected. The remainder of the 7,200 District of Columbia employees would not be affected by this bill. I want to say to you that it has always struck me that the civil employees of the Government merit as much consideratieci as the officers in the Army or Navy of the Government, who are lib- erally provided for after reaching the age of retirement. I think the age is 63, if I am correct. Mr. Alcorn. Sixty-two. Mr. Dawson. Sixty-two or sixty-three. He is promoted one grade higher and then given two-thirds of the salary belonging to that ad- vanced grade. Now, if the officer of the Army or Navy is so well taken care of, it seems to me it is the duty of the Government to take care of its less showy but equally meritorious employees, the ones that carry on the important work of the Government at home. Now, I do not want to attack in any way the services rendered by the Army or Navy officers in the great war, but they have had the benefit of retire- ment legislation for a great many years, and I am glad they have it, but it strikes me that the Government ought to contribute if not all, at least half, of the money that should be available to" the employee after giving up his life practically in the service of the Government, EETIEEMENT OF EMPLOYEES IN CLASSIFIED CIVIL SEEVICE. 55 Jt certainly strikes me that the civil employees are entitled to some consideration in that regard, and up until now they have had none. Mr. Alcorn. Mr. Chairman, I think that is about all who desire to be heard to-day. There are a number of representatives of the joint copference and of various organizations that are not here, but who would like to be heard later. For instance, there is Mr. Fla- herty, of the postal clerks, and he would like to discuss with you cer- tain phases of the bill. Then there is Mr. Gainor, national president of the Letter Carriers' Association, and Mr. Brown, of the Eural Letter Carriers; Mr. Ryan, of the Eailway Mail Association; Miss Johnstone, of the Civil-Service Reform; and Mr. Alifas, of District 44, International Machinists; and also Miss McNally. The Chairman. I was going to confer with the members of the committee and see whether it suits their convenience to continue this hearing until Tuesday, June 24, and start in again at 10.30 in the morning, with the understanding that if possible the hearings are to be then concluded, because after what we have heard to-day and what we can hear on Tuesday, the rest becomes a matter of reitera- tion and not particularly helpful, and for that reason I think we ought to be able to conclude the hearings on this bill on Tuesday. I do not think the committee needs much urging to report some legis- lation on this subject, and the matter of details is for the committee in conference. I think it well, for that reason, to give notice that there will be another opportunity to be heard on Tuesday, and all those who have not been heard orally but who desire to submit memo- randa or briefs must have them here to be filed on Tuesda;.-, and the testimony will be considered closed at that time. If that meets with the approval of the members of the committee present, it will be so ordered. Mr. Alcorn. Just before closing, Mr. Chairman, I want to say, on behalf of the conference of civil service employees, that we appreci- ate this hearing very much, and I want to thank the committee for the interest it has taken in the subject. I am sure that if we had had the interest taken years ago that we have here to-day we would have a law on the statute books providing for civil service retirement. I have nothing further to say at this time. (Therepuon, at 5 o'clock p. m., the committee adjourned until Tuesday, June 24, 1919, at 10.30 o'clock a. m.) Committee on Reform in the Civil Service, House of Representatives, Tuesday, Jwne 23, 1919. The committee met at 10.30 o'clock a. m., Hon. Frederick R. Lehl- bach (chairman) presiding. The Chairman. The meeting of this committee was called pursu- ant to adjournment taken last Thursday to continue hearings on the various retirement bills which have been introduced and referred to this committee. Those who have spoken on soihe of the other meas- ures have been heard already, on Thursday, and I know of no other requests to be heard further on those measures or on any other meas- ures. Therefore, the only bill remaining for further hearing at this time is H. R. 3149. 56 KETIKEMENT OF EMPLOYEES IN CLASSIFIED CIVIL SERVICE. Mr. Alcoen. Mr. Chairman, Mr. Brown, of the Rural Letter Car- riers, desires to be heard. The Chairman. Mr. Brown, the committee will be glad to hear from you. STATEMENT OF MR. W. D. BROWN, ATTORNEY FOR THE NA- TIONAL RURAL LETTER CARRIERS' ASSOCIATION. Mr. Beown. Mr. Chairman and g^entlemen, as attorney for the Na- tional Rural Letter Carriers' Association, and representing approxi- mately 44,000 rural letter carriers throughout the United States, and also quite a large number of a certain class of postmasters, I wish to express my approval of this bill, H. R. 3149, known at the Lehlbach bill. Some little time ago I published this bill in its entirety in my paper, the R. F. D. News, and broadly speaking, it has met with the approval of my clientele. It is not necessary, I take it, for me to dwell upon the necessity for a retirement bill. I believe that is well recognized. It particularly applies to the Postal Service, and, con- tinuing the refinement, to the Rural Delivery Service. The Rural Delivery Service is the newest branch of the Postal Service and has been in an experimental stage up to the present time ; in fact, it may be said to be still in an experimental stage. The men employed in that service never have received the compensation that they should have received. They have been subjected to expenses unknown in other branches of the Government service. In a great many sections of the country we hear serious complaint not only with reference to the Postal Service generally, but particularly with reference to the Rural Delivery Service. So many men have resigned on account of inadequate pay and lack of any inducement for them in other di- rections to remain in the service. During the fiscal year 1918, according to the latest report of the Postmaster General, and his report for 1918 is the latest report that has been made, 18 per cent of the entire rural letter-carrier force resigned voluntarily. Now, there was quite a large number of em- ployees who were separated from the service during that time, but 18 per cent resigned voluntarily. I submit to you, Mr. Chairman and gentlemen of the committee, that any branch of the Government service whose conditions are so unfavorable as to force 18 per cent of its employees to resign in one year, certainly needs revision and im- provement. One of the biggest things that can be held out to a rural letter carrier is something like a retirement bill that will take care of him in his old age, or after he has reached a physical state that will prevent him from doing further work. You must bear in mind that men who travel from 24 to 36 miles day after day, week after week, in season and out of season, regardless of roads or Aveather conditions, are up against a serious proposition. It is a serious condition and affects their health. We have a great many men who have been forced to resign on account of kidney trouble result- ing from this constajit day in and day out jogging along over bad roads. Of course, we all recognize that road conditions are now very much more improved than they used to be, but that does not take care of these men who have been working for many years. RETIREMENT OF EMPLOYEES IN CLASSIFIED CIVIL SERVICE. 57 Quite a number of them have served 15 to 18 years, and those men particularly need recognition now, and they need something that will take care of them after they have not only given their best years to the service, but also their health and almost their lives. Particularly m behalf of those men I make this appeal to you and enthusiastically mdorse this bill, H. E. 3149. Now, there is another matter that is of greater importance to the postal employees, and I can only speak for them because that is the only branch of the service I know anything about, and that is some- thing that will tighten up the civil-service laws ; that will give a man a chance. I have seen too many cases, far too many, where, for some reason unknown to the employee, charges have been filed against him without giving the employee a chance to face his accuser, with- out giving him specific information regarding the offense with which he has been charged, or without any opportunity to make an ade- quate, complete, and satisfactory defense, and the man has been shunted out of the service. Now, to my mind, the most impqrtant fact, far more important than a retirement bill, is strengthening the civil-service laws so as to take care of the man who has passed his examinations, and by a competitive test demonstrated his qualifications for the duties that the Government I'equires of him and which he has performed, so that when charges of any sort are preferred against him he may have his day in court. I have letters on my desk to-day that have reached me in the past two or three days where charges have been preferred against an employee of the service who knew nothing about the complainant, who knew nothing about the specific instance, and was absolutely unable to make a clean, clear cut, definite defense. It was simply a general charge. Now, a man is almost on trial for his life. Rural letter carriers, and I speak for them particularly, because they are my clients, occupy a unique position in the rural community. The rural letter carrier is looked upon as a direct representative of the Government. Time was when the postmaster was looked up to in that way, but now the rural letter carrier has in a great measure supplanted the postmaster, because he carries the mail directly to the people, and is the representative of the Government in that com- munity and it is a stain on his character, a stain on his reputation when charges are trumped up against him unjustly. Ynu know when you go into a court on a civil or criminal charge you have got to put down the actual offense that the man is charged with commit- ting, and the defendant has an opportunity to face his accuser, but that is not so in the particular branch of the service that I represent. Mr. Smith. Is it not true, Mr. Brown, that the regulations require that charges shall be served on the employee before he is brought into court, as you say? Mr. Brown. In a way, that is true, Mr. Smith, but the charges are too vague. I can submit to you a number of charges — ^well, I with- draw that statement, because I can only submit to you a few cases, on account of the fact that there have gotten to be so many of them that it is an old story, and I can not pay so much attention "to it now. This is nothing new in the last three or four or five years. It has been so all along. I know it has been so for the past 10 years of my own knowledge, because I have represented the rural letter carriers for the 58 RETIREMENT OF EMPLOYEES IN CLASSIFIED CIVIL SERVICE. past 10 years. The present administration is not any different from the former administration in that respect. Mr. Godwin. Do not these employees against whom charges are made have an opportunity to be heard ? Mr. Brown. No, sir; they have this opportunity only; the in- spector will go to them and ask them cpiestions and the rural carrier never has an opportunity to face his accuser; in fact, he does not know who his accuser is. Mr. Smith. Is not that the same policy that they have in many of the other departments? Mr. Brown. I do not know. I can not answer that question. But I want to bring this to your attention because I believe it needs a remedy. Mr. Godwin. How would you remedy that? Would you hoH a public hearing? Mr. Brown. 1 think, Mr. Godwin, that a very good way to remedy that condition would be this: Where charges are preferred against a civil-service employee there ought to be some tribunal to which he can appeal and present his ckse for a fair and impartial hearing, and, to my mind, that tribimal would be the United States commis- sioner. I do not know just how many commissioners there are, but there are several in each State, probably one in each large city. The United States commissioner is easy of access and arrangements could be made for him to hold these hearings in the same manner as other hearings are held. Now, when these hearings are held and the commissioner reaches his decision, it could be forwarded to the Civil Service Commission or to some other duly constituted tribunal to take care of these men. The only asset that the civil-service employee has is his job, and if he is not safeguarded in that particular he is done an irreparable injury.. Mr. Godwin. Mr. Brown, do you know of any case where an em- ployee has had a job taken away from him without a definite inquiry ? Mr. Brown. There is one case I can cite to you. Mr. Godwin. How many cases? Mr. Brown. I could not give you the number. I could cite you one case that came to me this week, where the inspector never saw the rural carrier at all. The rural carrier tried to get a hearing be- fore the inspector and he would not give it to him and gum-shoed around and talked to other people and went away and made his report about the rural carrier without ever giving the accused an opportunity to be heard. Mr. Godwin. Is it not a fact that the rural carrier could have se- cured another inspector? Mr. Brown. No, sir; he can not. Mr. Godwin. Is not that the custom? Mr. Brown. No, sir; he can not do that. Mr. Godwin. I have never failed to do that. Mr. Brown. Secure an investigation by another inspector? Mr. Godwin. Yes ; you can do that. You can secure an investiga- tion by another inspector if you are not satisfied with the first one. Is not that a common custom? Mr. Brown. I do not think so. EETIRBMENT OF EMPLOYEES IN QLASSIFIED CIVIL SERVICE. 59 Mr. Godwin. I have done that under both administrations, Demo- cratic and Republican alike. Mr. Brown. Assuming that to be true, Mr. Godwin, would it not be a fairer plan, a more businesslike and economic plan, to have a hearing in the first case and not leave it to the inspector? Mr. Godwin. Well, I am not objecting to the hearing at all, but I am assuming that there is ample opportunity to make a fair adjudi- cation of the case as it is. Mr. Brown. I am soriy that I can not agree with you, but 10 years' experience along that line has given me the opinion that I maintain. I have heard these cases more frequently than any other man in the United States, as the 44,000 men that I represent come to me with their troubles. After 10 years of cases of this kind I have realized my helplessness and I finally quit trying to do anything because it was absolutely useless. The Chairman. Mr. Brown, the committee is very glad to get your views on this question and at some time in the future they will give them proper consideration, but at the present time we are consider- ing the retirement bill. Mr. Brown. Well, to get back to the bill, I will proceed for just a few minutes more. I believe in your bill you exclude postmasters ? The Chairman. Yes. Mr. Brown. Of course, you have your own reasons for doing that, but as representing a certain class of postmasters I would like to ask if there would not be some chance, as long as fourth-class postmas- ters are under civil service, to give them the same consideration as other civil-service employees? Why not take care of those fellows? Why not give them something to look forward to? The Chairman. Is it not a fact that, in a majority of these cases, the postmastership is not the man's main vocation, but an asset to his business? In other words, is not the salary paid so small that the percentage contribution toward retirement would be entirely in- adequate as a retirement compensation? Mr. Brown. That is probably true. The Chairman. And is not the postmastership a general asset to their grocery business or their hotel business, as the case may be? Mr. Brown. I am glad you asked that question, Mr. Chairman, because I can answer it, almost without qualification, in the negative. Time was when the postmastership was a very valuable asset to the country postmaster in his grocery or oth?r business, but that time has now passed, for this reason : The rural letter carriers, who cover about 1,250,000 miles of public road every day and deliver mail to some 20,000,000 people, have cut the patrons off from the post office in the country stores in a very large measure. No longer does a man have to go to the store to get his mail ; no longer is he drawn to this particular store, which contains the post office, because the rural let- ter carrier has relieved him of that by taking the mail out to him. There are several instances right here in town^ for instance, at Park Road and Mount Pleasant Street, where there was a substation or branch post office. They were paying $300 a year for that substation, and the pro- prietor of the drug store realized that he was losing money in it, and the druggist askecl the Post Office Department to relieve him of the 60 RETIREMENT OF EMPLOYEES IN CLASSIFIED CIVIL SERVICE. station, and they did. We who live in that neighborhood were de- prived of any niail facilities at all, and we had to ^6 Seven or eight blocks to buy a postage stamp. They finally came back and offered him $1,000 a year, and he said, " It is of no value to my business ; in- stead of that, it is a detriment to my business, because I must keep a clerk behind the counter all the time and people come in to buy postage stamps when they do not want anything else; people who want toilet articles and ice cream and things of that kind will come in anyway, but when they want postage stamps they simply take up the time of my clerks and it does not pay." And I think they paid him $1,000 a year after that. Mr. Nelson. Approximately how many employees would be added to the list of beneficiaries under this bill if you include the post- masters ? Mr. Brown. There are in excess of 50;000 fourth-class postmasters. Mr. Nelson. You mentioned these rural routes covering from 24 miles to 36 miles a day. Is there any appreciable number of routes in excess of 36 miles ? Mr. Brown. No; 36 miles is the limit under the law. I should say from 32 to 36 miles. There are approximately 1,000 routes. I do not remember the exact figures. Mr. Smith. Do you not think that if you loaded this bill up with 50,000 fourth-class postmasters that there would be very little chance of its meeting with approval in Congress? Why not let that matter rest until we try this out, and later we could put in an amendment? Mr. Brown. Well, Mr. Smith, frankly I did not have much hope that the committee would do that, but I wanted to call your attention to these things. Justice is justice. I want to say that one of the most diiScult things we have had to contend with, or that I have had to contend with m my feeble efforts to represent the rural letter carriers, was due to the fact that there were so many of them that a very small increase for their benefit meant such a large sum, and when it was something that they needecf, something that was neces- sary for their welfare, that it was impossible to take care of them adequately. That is all, thank you. Mr. Alcorn. Mr. Chairman, Mr. Ayers, the Chief Clerk of the Interior Department, would like to be heard. The Chairman. Tlie committee will be glad to hear from Mr. Ayers. STATEMENT OF MR. EZEKIEL J. AYERS, CHIEF CLERK OF THE DEPARTMENT OF THE INTERIOR. Mr. Ayees. Mr. Chairman and gentlemen, I do not want to take up too much of your time in support of this bill. We who have had to do with the administration of the affairs of the department realize best what it means to be encumbered with dead-and-down timber. That has been particularly true in the last two years when there has been increased agitation in Congress for the retirement of superannuated clerks. They have hoped against hope that this might be accomplished, and therefore they have retained their positions to the very limit. RETIREMENT OF EMPLOYEES IN CLASSIFIED CIVIL SERVICE. 61 Tn fact, even where they have reached the stage where it is im- possible for them to perform service or to get to the office by their own strength, they are being brought here and are being handled as carefully as possible, the department maintaining them on the rolls with a view of some action being taken toward their relief. This is not a mercenary measure on our part. It is the vital ques- tion of enabling them to continue a respectable existence in lieu of going to an asylum or some charitable institution. A great many of these people in the older departments have had very limited sal- aries and never sufficient to accumulate enough to live on or to enable them to retire. It brings them face to face with an actual tragic condition. The trouble that we are stru_ggling with now in our department is that these helpless old people are simply begging and imploring to be retained on the rolls until Congress in its wis- dom and humanity does something to relieve them. Mr. Godwin. What is your department? Mr. Ateks. The Interior Department. Mr. Godwin. How many have you in that department? Mr. Ayers. There are 5,000 in Washington and 15,000 outside. Mr. Godwin. You mean of incompetent age? Mr. Ayers. Oh. no sir; I mean employees. Mr. Godwin. How many have you that are incompetent to work on account of age? Mr. Aters. I have not brought those figures. In fact, I have not wanted to know how many there were, because our sympathies run away with us when we look into that phase of the question. Mr. Nelson. Have you any approximate idea ? Mr. Ayees. At the present time it may be 300 or 400 who are waiting for an opportunity to retire from the service. Mr. Nelson. Those men are absolutely incompetent, are they? Mr. Ayees. They are not as efficient as they should be and some of them are reaching the stage where they are totally incompetent. Mr. Nelson. May I put this question? In one of the other de- partments we had a statement that there were about 150 incom- petent men whose services could well be performed by 50 real young efficient clerks. Now, you speak of 300 or 400 in your department that are incompetent and should be retired. About how many really efficient men could do the work of those 300 or 400 men? What I am trying to get at is to see what we are indirectly paying these employees in pensions. Mr. Ayees. I see your point. I will say half of that number. Mr. Nelson. Half of that number ? Mr. Ayees. Yes, sir. They are practically incompetent and their work could be done by half that number. Now, I am coming to that end of the question. I have in mind a mechanic who is carried on the rolls and has already exhausted his leave for the entire year— 30 days sick and 30 days annual. After 17 or 18 years of service, he now comes to the department so physically incapacitated that he can not find his room. He was carried on the rolls for six months in this condition, and the only thing he did was this : He had four or five blocks and every day he pushed them down and then piled them up again. Finally, it became unsafe for him to pass around certain machinery in the office, so we had to restrict him to one corner of the room at a small table with his blocks ; then he would 62 RETIREMENT OF EMPLOYEES IN CLASSIFIED CIVIL SERVICE. get out of the room, and we had to have an attendant to bring him back. He had other troubles. He went to sleep in the park and was arrested and sent to the House of Detention. We got him out of the House of Detention and he was placed in a sanitarium. Wlien funds gave out we got his family together and it was decided to take him ?rom the sanitarium. With the aid of an organization that he be- longs to he was sent to Iowa. Now he returns to the department, seeking reinstatement. He had been an intelligent man, so I called him in and said : " You have had all these years of service, and you persist in coming back here. What is there in yovir mind that dic- tates what the Government ought to do for you?" He said, "I have spent the best .years of my life in the service, and I think it is due—" Mr. Nelson (interposing). How rnany^. years? Mr. Ayers. I said a while ago 17 years, but it is much longer than that ; it is something like 24 or 25 years. I asked his age and he said, " I am 61 years old. I was'born in 1850." That would make him 69 years old. During my conservation with him he said, " I can not count my money; I do not know how much money I have got, because I have got three 10''s, one 10, and a 5. How much is that? " Mr. Godwin. How long has he been that way? Mr. Atees. He has been failing rapidly the last five years. Mr. Godwin. He has been unable to perform service for five years ? Mr. Ayees. No ; three years. Mr. Godwin. How much salary does he get? Mr. Ayees. $60 a month. Wlien he can not even count his money he is in a very helpless and pitiful condition. Mr. Godwin. He is still on the rolls ? Mr. Ayees. No. He is begging to get back on the rolls, believing this bill will go through. His mind is cloudy in other respects, but the one straw he clings to is that he did his duty faithfully while he had his health and strength, and now that both are gone Congress will surely enable him to live in decency the few j-ears remaining to him. I have another instance: A lady came with us 37 years ago, who was a school-teacher. She has a great many friends, and at least five Congressmen went to school to her. She was an accountant and bookkeeper, and she kept her accounts so correctly that when the inspectors audited her accounts they were correct to a penny. During all these years she Icept her ledgers by pen, calculating machines having only recently been installed. Her books are to-day worth seeing, the penmanship presenting so neat an appearance. All the present mechanical calculations were then worked out daily by the brain alone. She has grown old in the service and finally we have had to lay her off the rolls. She was of so high a type of womanhood that when she realized that her physical condition was such that she could not perform her work to her own satisfaction she voluntarily asked to be reduced from $1,400 to $1,200 a year. She asks to be retained on the rolls so that she would have a competencj: to live on, because she is now dependent upon her nephew, with whom she lives. Being a single woman, her money largely went to charity and charitable institutions. She may have been in a position to save a little money at one time, but these things RETIREMENT OF EMPLOYEES IN CLASSIFIED CIVIL SERVICE. 63 appealed to her and she performed these acts of charity and now she has nothing. There are numerous such cases tliroughoxit the service. No^Y, I hope that you gentlemen in your wisdom will either do something or that you will assure these people that you will not do anything, so that the service will know where it stands and these people will know that nothing is going to be done for them. We would not throw them out, but they will automatically be released and will then understand that there is not a ray of hope held out to them. For many years Congress has promised that a retirement law would be passed, and this false hope has clogged the wheels of the Government to such an extent that you should now endeavor to aid the departments in relieving the conditions I have described. Mr. Godwin. What is your suggestion? Mr. Ayers. If you have a bill here that is acceptable, put it across. I have nothing to say about merits of the bill at all. I only want to show you a few facts as to the condition in the service. Mr. Smith. The condition that you refer to, Mr. Ayers, has con- fronted the executive officers of the departments for the last quarter of a century. Mr. Ateks. Certainly. We report the supei'annuated employees every year to Congress. We do not drop them or fire them, and Congress in its wisdom has not taken them off the rolls. The same condition exists in the Pension Office. That is one of the bureaus of the Interior Department. That is all, thank you. Mr. Alcorn. Mr. Myers, the chief clerk of the Treasury Depart- ment, is the next witness. STATEMENT OF ME. PAUL P. MYERS, CHIEF CLERK OF THE TREASURY DEPARTMENT. Mr. Myees. Mr. Chairman and gentlemen, I would like to say a word in support of some bill that will give relief to inefficient employees who have served a long time in the Government service and' are now on the rolls, many of them in an almost pitiable condi- tion. I believe, in the- first place, that it is only human to do it. While Mr. Ayers was relating several instances, there occurred to my mind five cases in the Treasury Department of employees during the past year. I think three of them died during the past year. These employees were kept on the rolls and reported to Congress as practically entirely inefficient and superannuated. They were just kept on the rolls in the hope that Congress would at some time give this relief. They were paid such salaries that they could not save anything to retire on, and the only thing they had in store for them when they were taken off the rolls was the poorhouse. As I say, three of those people died. Now, there are many more on the rolls of the Treasury Department that I know of at the present time. Furthermore, I believe that it would be in the interest of efficient administration to provide for employees that reach a cer- tain age where they are no longer efficient, in order, that some young blood may be brought in to handle the work for less money and more efficiently. 64 RETIREMENT OF EMPLOYEES IN CLASSIFIED CIVIL SERVICE. I have not any accurate data on this, but I believe there are ap- proximately 1,000 people in the Treasury Department eligible for retirement, and I do not say and do not pretend that those 1,000 are totally superannuated or totally inefficient, but I do believe that if those 1,000 people were retired practically and given an adequate retirement allowance, that probably 25 per cent of that number in new blood would handle that work more efficiently. Mr. Nelson. Then you would say that we are paying now prac- tically a pension to 750 men in your department who are unable to do their work properly? You say there are 1,000, and one-quarter of that number would be 250, which is the number of men who could take the place of the other three-quarters, or 750. Then the statement would be that 750 employees in that department are really on the rolls of the Government without rendering any service to the country, and that we are thereby indirectly paying a pension to 750 employees of your department? Mr. Myers. I think that is a fair statement. I have not any data to back it up, but I believe from observation that that is a fair statement. There are 32,000 employees of the Treasury Depart- ment here in Washington, and 25,000 in the field service. Mr. Godwin. Thirty -two thousand in the Treasury in "Washing- ton and 25,000 in the field service in the country ? Mr. Myees. Yes, sir. The Chairman. It would appear from the letter of Secretary of the Treasury Glass indorsing the retirement bill, and appending excerpts from some of the previous Secretaries of the Treasury, that practically every Secretary of the Treasury from Mr. MacVeagh in 1909, including Mr. McAdoo, and now Mr. Glass, have urged the retirement bill because of practical conditions as they found them in their department. Mr. Myeks. That is correct. Every Secretary for a long period of years has recommended annually to Congress that provision be made by Congress to remedy this situation. Mr. Nelson. May I ask this question : Are these men who are in- competent largely men who are drawing the lower salaries ? Mr. Mtees. You mean men and women? Mr. Nelson. Yes, sir; men and women. Mr. Myers. I should say a large percentage of them are. Probably 90 per cent of them are in the very low salaried grades. Mr. Nelson. But what would be the average salary? Mr. Myers. I should think approximately — and this is only a guess on my part — it is around $1,000 or $1,200. Mr. Nelson. Have many of these men on salaries of that kind families of any size? Mr. Myers. I tried to check up a little bit this morning in one of the divisions where we employ a lot of counters, and I believe that a good many of those people have some dependents of some sort, have some obligations. I have enough data to justify the belief that that is one of the reasons why Ihey were held here, that they had no other recourse and they had dependents and they were tied down here and could not get out, and they stuck them "on these low-salaried positions. The Chairman Is there an age limit for employees de novo in the Treasury Department beyond which you do not employ people? In RETIREMENT OF EMPLOYEES IN CLASSIFIED CIVIL SERVICE. 65 other words, do you employ people regardless of age? Do you em- ploy a person of the age of 55 or 60 as a new clerk, or do you have a top limit of age beyond which you do not consider a person eligible for employment? Mr. Myers. That is governed largely by the civil-service rules. All of the employees, with practically no exception, in fact I know of no exception, are under the civil service and they are taken under the civil-service rules, and if they pass the examination they are put on the rolls. There was before the war an age limit of 45, but I do not know whether that applies now. However, I can say this, that practically 90 or 95 per .cent of the employees who are taken on are very young people. The Chairman. But that has been the practice and to some ex- tent there has been for a number of years a 45-year age limit? Mr. Mters. Yes, sir. Mr. SMim. Excuse me, but that does not apply to the departmental service. You do not limit the employees through the Civil Service' Commission to the age of 4-5 years. There is nothing in the civil- service rules that fixes a maximum age, is there? It is all up to the appointing officer. Mr. Myers. No; I think it is up to the Civil Service Commission- We have got to take our new people from the civil-service registeis and we can not object to them on account of age. Mr. Smith. I have known of people 60 years old who have been appointed. Mr. Myers. Watchmen, I believe, are appointed beyond 45 years. Mr. Smith. Yes; and clerks, too. I think you are mistaken when you say there is a maximum age in the civil service law except in cer- tain places where they work under such conditions where a man of 60 or 65 might not be any good. Mr. Myers. Now, I am not qualified to say definitely what the civil-service rules are right now. I know of many people who tried to take the civil-service examination and said they could not do it because of the age limit. I believe that during the war they raised the age limit in the Civil Service Commission. The Chairman. That being so, that in some degree at least an age limit on appointments exists and that the common practice is to ap- point young people, is it not a fact that these people who by reason of age have become to a certain degree incompetent, have been in the service a long number of years ? Mr. Myers. Yes; that is true. The Chairman. Now, if they have been in the service a long num- ber of years and have during that period of time, as their retention, in the service would indicate, performed their duties acceptably^ would not they, by progressing from class to class, have received the higher salaries ? Mr. Myers. A large number of the employees affected are in the subclerical grades or in minor clerks grades. The Chairman. What I wanted to ascertain or bring out was that if 90 per cent of these employees are on low salaries, is it because of their inefficiency or partially inefficient work that they have been reduced in grade or pay ? 124396—19 5 66 RETIREMENT OF EMPLOYEES IN CLASSIFIED CIVIL SERVICE. Mr. Myees. No ; a very small percentage of these people have been reduced. The Chairman. In other words, it is not the practice in the de- partment to reduce in grade or pay for inefficiency by reason of old age? Mr. MxEES. We have not done that except when we have been forced to do it in cases where the inefficiency is total. For instance, where the employee held the position of chief of division, and that position had to be filled efficiently. That is an exceptional case. The Chairman. That is an exception to the rule? Mr. Myers. Yes; that is an exceptional case. Now, I would like to point out that' a large percentage of these superannuated em- ployees are in the minor and subclerical grades, in my opinion, and a few of them have been reduced from higher salaries, and a very few are still drawing salaries around $1,200, $1,400, and $1,600. Mr. Nelson. Is it your opinion that the provision here that 2J per cent contribution be made by the beneficiary, is a good thing? Mr. Myers. I think the bill is a very good beginning. I think experience will determine more just what it will do than I can sur- mise. I think the amount of annuity in this bill is exceedingly small to retire an employee on, under present conditions, exceedingly small. But I would not make any objection to the bill, because I think it is a good beginning. I think experience should demonstrate whether or not it is effective enough. Mr. Smith. You would not be in favor of compulsory retirement on account of age, would you? Mr. Myers. I think there ought to be some leeway. Mr. Smith. For instance, our friend over here in Statuary Hall, Andy Smith, is just as competent at 65 as he was when he first came here. The Chairman. The bill allows repeated retention periods of two years each, so that if a man is satisfactory and doing efficient work at 65 he can be retained in the discretion of the department or bureau head for two years longer, and then has another chance for another two-year extension. In other words, if a man is doing efficient work at 65 he can be retained until he is 69, but the bill does not provide for his retention in service beyond 70 years of age. Mr. Nelson. It is a very difficult matter to draw a bill of this kind and prescribe the age at which a man should retire. The Chairman. Yes; because as a man increases in age and de- creases in efficiency, it is very hard to have him realize that fact. Mr. Smith. Some of our most able men in both branches of Con- gress are over 70 years of age. For instance, Mr. Elihu Eoot, who is acknowledged to be one of the most intellectual men of the day, I think, is over 70, about 76. Mr. Myers. There is this element, gentlemen, I believe, in the age question. There are lots of fine men at 70 or 75 years of age who would be totally inefficient as routine workers, and yet they might be splendid men in other lines of work. Mr. Smith. Yes; that is true. I had in mind some of the tech- nical positions in the Government service. Mr. Godwin. It would depend entirely on the man and the class of work he was doing. EETIEEMENT OF EMPLOYEES IN CLASSIFIED CIVIL SERVICE. 67 Mr. Smith. Oh, yes. Mr. Nelson. And would not that largely lie in the men who are of large caliber and have the larger and more influential positions, because of the fact that their minds are constantly active, rather than the ordinary routine worker, whose business has been the same work day after day? In other words, wTien a man is engaged on routine work it is very apt to make him a sort of automatic machine after a while, whereas the men you speak of are men engaged, not ija. any routine work, bu.t men who are constantly taking up and dealing with the larger problems of the country, and consequently you will fmd that in men of that character the age of 75 or 80 makes them more valuable, and their counsel is more sought after, because they have had that long experience. The Chairman. Men of that class, if they were in Government service, would not be in the classified service. They would be in the executive positions and they would not be in the classified service. Mr. Smith. But there are a lot of men in the classified service who are holding executive positions paying some $5,000 to $6,000 a year. The Chairman. Of course, that is true. But, as was suggested at the previous hearing, if you stretch out the limit of retention above the age of 70, and with the inability of men to realize that they are not as capable as they were when they were younger. Sen- ators and Members of Congress would be pretty well bedeviled by applications to be retained- in the civil service, and all sorts of in- fluence of that kind would be brought to bear to keep them in the service. Mr. Smith. I did not have that kind of influence in mind; I do not mean influence. My idea was that you could call some board of physicians to determine the fitness of a man for holding his position when he got to an advanced age. The Chairman. Is it not a little unfair for the men in charge of of a bureau, or a division, not to be the judges of the efficiency of their employees, and to have an employee foisted upon them by some outside board? Mr. Smith. No; I did not say an outside board. I said some board of physicians who could pass upon the physical ability or the mental ability of the employee. Now, Mr. Myers, have you not some men in your department over 70 years of age on whom you rely for advice and opinions on very important matters, because of their long experience and very bright minds? . Mr. Mters. I know of one such man now, but he is in an excepted position in the solicitor's office. The average routine workers doing the average Government work I do not believe will stand up in vigor of mind with the exceptional mind that is doing the excep- tional and brilliant work in the Government service. The -routine work has a tendency to overcome them prematurely. I think that is the experience of anyone who has any knowledge upon the subject. Mr. Jordan. I might add, Mr. Chairman, that that is the experi- ence that the English Government has had in the operation of its civil-service act. England had to adopt a compulsory age and they started out very much in the same way that you are endeavoring to inaugurate this bill. But they were forced into a system of 68 EETIEEMENT OF EMPLOYEES IN CLASSIFIED CIVIL SERVICE. retirement for essentially the same reason as Mr. Myers has sug- gested. The Chairman. It may be unfair, without notice to the employee, and withput giving him opportunity to prepare for it, to provide for retirement at a substantiall}'' less sum than the employee is earning at the present tinfe, and for that reason this provision that a man could be retained from time to time was inserted in the bill. After this bill has been operative for 10 years, the employee has ample notice that he is going to be retired after he reaches his seven- tieth birthday, so that ever'y employee has at least 10 years' notice that he is going to be retired. In order not to work that injustice, with- out notice to the employees, this detail has been incorporated in the bill, and I think it is only fair to do so. Mr. MiTJES. There is one point that we must not fail to take into consideration in a matter of this kind and that is that it is very diffi- cult to get a man to admit that he is superannuated. I have seen men going on the superannuated roll who would insist that they were just as efficient as they were the first day that they entered the Gov- ernment service, and the very manner in which they presented the matter showed conclusively that they were mistaken. You have got to make some arbitrary limitation, and if a man starts in the service with the distinct understanding that at a certain age his services to the Government will terminate, it is no injustice to him. Mr. Smith. I know, but you must take into consideration the in- terest of the Government. It is not fair to the Government to dis- pense with the services of a man when he reaches the age of 70 if he is still performing good and efficient work. Mr. Myees. Yes, but how many men will you have over 70 who will not be eligible to retirement ? There are, of course, exceptional cases. The Chairman. After 70, while a man may be good for a little while yet, like the one-horse shay, he goes to pieces some day and he goes all at once. Mr. Alcorn. Mr. F. S. Curtis, chief clerk of the Navy Depart- ment, will be heard now. STATEMENT OF MR. F. S. CURTIS, CHIEF CLERK OF THE NAVY DEPARTMENT. Mr. Cttrtis. Mr. Chairman, I came down here on rather short notice to make any statement. The departments have all been inter- ested for a great many years in this retirement legislation. In that connection I will submit for the record extracts from one of the an- nual reports of the Secretary of the Navy. Mr. Smith. Suppose you read that, if it is short? Mr. Curtis. This is an extract from Secretary Daniels's report for 1917, and it reads as follows: For sometime there has been annually presented to Congress, and to the executive departments of the Government plans for the retirement with com- pensation or pensions of civilian employees who have grown old In the public service. The operations of the compensation and insurance of soldiers and sailors will no doubt lead to fome just measure by which civilian employees, by paying monthly installments in their years of vigor, may make provision through governmental direction and assistance for their old age. RETIREMENT OF EMPLOYEES IN CLASSIFIED CIVIL SERVICE. 69 The large corporations in the country have i-ecognized the ad- vantages of retirement. Mr. Godwin. Could you explain something of their system? Mr. Curtis. I have not given sufficient study to the details of the systems of retirement inaugurated by the large corporations of the country, but I know the principle has been recognized by a large number of private corporations in the country where they have gone on the retirement basis. One of the ideas of the Government is the idea of retention in the service of people who are valuable. There is a constant turnover in the Government service and we lose a good many employees because they see nothing in the future for them, and the retirement feature would have the effect of keeping them back in the service. Mr. Nelson. How many employees have you now ? Mr. CtJETis. Right in the department proper we have about 6,000 clerks. Mr. Nelson. How many of those 6,000 clerks do you regard as being incompetent or men who should be retired ? Mr. Curtis. A comparatively small number. I do not think it would run up to 200. I think that would be an extreme. Mr. Nelson. How many new men of vigor and strength could take the place of those 200 men ; that is, the services of those 200 incom- petent men now ? Mr. Curtis. I could say without question that 100 men could per- form the duties of those 200. Mr. Godwin. You say you have 200 now who are incapacitated? Mr. Curtis. Not entirely incapacitated. Mr. Godwin. Why is it necessary to keep them there ? Mr. Curtis. A good many of them have had long j^ears of ex- perience and have done excellent work in the past, and it is very hard to throw them out in their old age. Mr. Godwin. It is purely a matter of charity, is it not ? Mr. Curtis. Yes ; purely charity. Now, it does not mean that they are entirely inefficient, because there are some of them who are of some value — of a great deal of value in some cases — ^through their long service in the department. Mr. Nelson. Do you take on new blood right along? Mr. Curtis. Yes, sir. Mr. Nelson. About how many do you get on an average ? ]\Ir. Curtis. Oh, of course, we have been going through an emer- gency now. During the war emergency we took on an immense num- ber. We were under a peculiar condition at that time. Most of them are young. Mr. Nelson. Is it your belief that such a measure as this bill would be of great value to your department ? Mr. Curtis. Yes, sir ; I think it would be of great value to the entire Government service. I think it would be of great benefit to the Govern- ment all the way around. If the retirement bill should not go through, what I would like to see is a measure to take care of every new man who goes into the service. Of course the Government would not get the benefit of that for a good many years. Mr. Godwin. I did not get that statement. What is your sug- gestion ? 70 RETIREMENT OF EMPLOYEES IN CLASSIFIED CIVIL SERVICE. Mr. Ctjktis. If this retirement bill does not go through as a whole, I would like to see some .provision made whereby every new employee going into the Government service accepts the position and agrees to pay for his own retirement. The Government would not get the benefit of that for a good many years, probably 30 or 40 years. Mr. Jordan. May ± ask a few questions, Mr. Chairman? The Chairman. Certainly; go ahead. Mr. Jordan. You would make it applicable to all new entrants ? Mr. Cttrtis. Yes, sir. Mr. Jordan. Do you believe in a compulsory age retirement 5 Mr. Curtis. Yes, sir. Mr. Jordan. Upon what ground do you base that opinion? What are your reasons briefly for it? Mr. Curtis. Just the general experience of the Government in re- gard to Navy officers and Army officers. They put the retij'eraent age at 62 or 64. A great many of those officers go out in excellent physical condition. Mr. Godwin. What age would you suggest generally throughout all departments? Mr. Curtis. Sixty-five, I think, would be a fair age. Mr. Godwin. E'er automatic retirement? Mr. Curtis. Yes, sir; that would be the age for automatic retire- ment. Mr. Godwin. Unconditional? Mr. Curtis. Unconditional. Mr. Smith. Have you not a good many men in your department over 65 drawing good salaries and doing good work ? Mr. Curtis. Not a very large number ; we have some. Mr. Godwin. Do you not think that the Government of the United States ought to be considered over the individual, and that if a man is over 65 and is rendering a competent efficient- service he ought to be kept on the rolls? Mr. Curtis. That would not interfere with the plan if you can de- vise some means for an arbitrary board to decide that question. Mr. Godwin. Do you not think that something like 8 or 10 years should be left in the discretion of the Secretary of the department Mr. Curtis. I appreciate what the chairman just spoke of about the notice of age limit. I would let the 65 age limit go in and give him notice beforehand. Mr. Smith. We are not legislating entirely for the benefilt of the employees. We have got to keep in mind the Government's interest. If you have a trained man who is 65 years of age and in good physical and mental condition, it seems to me it would not be fair to the Gov- ernment to turn him out, because of his experience with regiird to governmental affairs that would take another man a number of years to acquire. Mr. Curtis. There are a few exceptions, undoubtedlv, but the ma- jority should go at about 65, in my opinion. Mr. Smith. You do not want that sort of rule enforced on you, do you, Mr. Curtis? Mr. Curtis. I expect to take it ; I expect to get it anyhow. Mr. Smith. I expect to be in my prime at 65. I think that is a pretty arbitrary provision in the bill. RETIREMENT OF EMPLOYEES IN CLASSIFIED CIVIL SERVICE. 71 Mr. Godwin. I do not think there is any danger in a thing like that for some time to come, if the age is 65. I should suggest some- thing like To, with full and ample discretion in the head of the de- partment. Mr. Smith. I would not leave it to the head of the department ; I would put in a board, because, as Mr. Lehlbach says, if it is in the hands of the department head there would be a lot of people who, would try to use political influence and other influences to be retained in the service beyond the period fixed in the law. Mr. Godwin. It is immaterial where the power is vested, but it ought to be vested somewhere. The Chairman. If there are no further questions, we will proceed. Thank you, Mr. Curtis. Mr. Alcorn. I would like to call at this time Mr. Collins, industrial secretary of the Railway Mail Association. STATEMENT OF MR. W. M. COLLINS, INDUSTRIAL SECRETARY OF THE RAILWAY MML ASSOCIATION. Mr. Collins. Mr. Chairman, the Railway Mail Association repre- sents the railway postal clerks in the Railway Mail Service of the Post Office Department. It is an organization which has a member- ship which represents them to a great extent, a large majority, about 80 per cent, so that the organization can speak for these employees. The officials of the organization participated in the preparation of this bill and it meets with our approval. I might say that the national convention of our organization was held in St. Louis last week and they indorsed this bill heartily. There is a condition with reference to our service somewhat dif- ferent than in other departments. Our employees enter the service at a comparatively young age, the entrance age being 18 years. Temporarily at the present time, since the war, it is 16. The age was 18 to 35. At the present time it is 16 to 40. Previously a man could not enter the service after 35 years of age, so that in any event re- tiring at the age of 60, he would have at least 25 years' service, aiid we have some employees to-day that are over 40, one or two cases that have served 50 years. Our service is rather strenuous and haz- ardous and a man becomes superannuated rather more quickly than he does in a clerical position. Therefore, I believe the age of retire- ment should be lower than the age which is fixed in this bill. Another condition that we have had in recent years is the fact that some of our employees who have become partly superannuated have not been retained on the rolls. They have been dropped with- out prejudice, or, in other words, removed from the service and they can enter another branch of the Government service. But the Postmaster General has taken that position, that they are super- annuated and inefficient, and a number of them have been dropped in that way. The exact number I can not give. Mr. Godwin. What provision was made for those who were dropped ? Mr. Collins. No provision. They were just out of the service and their salaries stopped. Mr. Godwin. They were dropped for the good of the service? 72 RETIREMENT OF EMPLOYEES IN CLASSIFIED CIVIL SERVICE. Mr. C0L1.1NS. For the good of the service ; yes. Mr. Nelson. May I ask what salaries are paid in your classifica- tion service? Mr. Collins. We have a graduated classification. The basic sal- ary runs from $900 to $1,800. Mr. Nelson. $1,800 is the limit? Mr. Collins. $1,800 is the limit. This year we have a $200 bonus in each grade. A large proportion of the employees are in 'the $1,500 class or less. The higher grades belong to the men who are in charge of the cars. Mr. Nelson. How many hours a day do you have to put in in your service? Mr. Collins. Our road service on the heavier lines at the present time is a little under seven hours per day ; on the lighter lines about eight, and in a few exceptional cases it runs up to nearly nine hours. That does not take into consideration the study requirements, as our employees are required to take at least three examinations each yeur. That comes in addition to the road service. Mr. Godwin. How many days of road service do they have before they get an intermission or rest period of some kind ? Mr. Collins. That varies. In some organizations they would work four days, some six days, and on the median lines they will run two weeks, and on some of the lighter lines three weeks. A number of the small lines run daily except Sunday. The organizations vary according to the importance of the lines. Mr. Smith. Is there not some provision of law under which rail- way postal clerks who' are incapacitated may be compensated or pensioned in some way? Mr. Collins. They ndw come under the United States employees compensation law if they are disabled while on duty. Mr. Smith. Is there iiny provision made in case they become ill from exposure, or anything of that kind ? Mr. Collins. No, sii/. Mr. Godwin. How ^uch leave do they get? Mr. Collins. TheV get 15 days' annual leave. Mr. Godwin. And how much sick leave ? Mr. Collins. We have what is called sick leave but it is not the sick leave that the other departments have. They are granted 30 days' sick leave during the year, provided we furnish a substitute for our work at our expense. Now, it may be that you can employ a new man at the lower rate and you will receive the difference be- tween his salary and yours. It must be without expense to the department. Mr. Nelson. As a matter of fact, really it is not a sick leave at all? Mr. Collins. It is not a sick leave in the sense of the sick leave they have in the other departments. Mr. Smith. You are entitled to only 15 days' annual leave while the clerks in other departments are entitled to 30 days ? Mr. Collins. Yes, sir; and that is only in the last two or three years. Mr. Nelson. In your department there are not very many in the service because they can not very well be inefficient in your particu- lar kind of work, can they ? RETIREMENT OF EMPLOYEES IN CLASSIFIED CIVIL SERVICE. 73 Mr. Collins. No. The proportion is very much less in our service because we have a very stringent efficiency system at the pre.^ent time, and as a result these men have been dropped. The last figures that I have, I believe, are on the previous bill that was introduced in the last Congress. The number of men in our service at the retirement age at that time was somewhere around 240. Mr. Godwin. What would be your idea as to the age of retirement? Mr. Collins. I believe that in our service to have a man retire at ■60, or in the event it became a law, that he could be retired at 64, that is sufficient for our service. Men of that age are not as efficient as a younger man in our road service. Mr. Godwin. Plow about the short lines, where the work is verv light? ^ Mr. Collins. I may say that the short lines, while apparently they may seem to have light work, do not require light work. There is a great deal of responsibility, and while the physical labor may be. lighter than it is on a trunk line, I think the additional responsi- bility that these men have over some of the men on the trunk lines rather offsets the idea that they might be placed on small lines at that age. There may be exceptional cases where that may be done, but as a general rule I think our employees should not be retained =beyond the age of 64 years. Mr. Nelson. Has this bill the approval of your entire association, -SO far as you know? Mr. Collins. I attended the national convention last week, and just returned yesterday, and I have the resolution passed at that convention. It is as follows: We heartily indorse the Lehlbach retirement bill and asls that the executive ■committee and our national oflBcers use their best efforts to secure its passage. That is the action of our national convention. Mr. Alcoen. The next witness we desire to have heard is Miss Gertrude M. McNally, organizer for the National Association of Federal Employees. STATEMENT OF MISS GEETRUDE M. McWALLY. Miss McNallt. Mr. Chairman and gentlemen of the committee, I do not want to take up your time further, because I believe you have had all the information that you need to have on this bill. I just want to say that our organization is heartily in favor of this t)ill, but I desire to add one particular word for the women em- ployees in the Bureau of Engraving and Printing. We have a great many very old women in the bureau and, as you know, the work in the bureau is rather of a mechanical nature, and after they have served a good many years the women lose their efficiency possibly more rapidly than they would if they were doing work of a clerical nature. The Government will make a good investment, so far as this particular branch of the service is concerned, if it retires the employees on full pay, and it will make a doubly good investment on the proposition embodied in this bill, because these women not onlv are not able to do the work required to be done during the da3', but it is necessary for the younger women around them to stop their work often to help these older women. There are many of 74 EETIBEMENT OF EMPLOYEES IN CLASSIFIED CIVIL SEKVICE. them who need to be taken to the doors in the evenings where friends meet them and take them home, and they have to be cared for all during the day, so that from our standpoint we hope very much that this retirement bill will be enacted into law quickly. Mr. Nelson. Approximately, how many would you say of the older women are in the condition which you have just described ? Miss McNallt. It would be rather difficult for me to say, except from nw own personal knowledge. Mr. Godwin. Could you speak with refereiace to all the depart- ments in Washington? Miss McNallt. Not so well. I was employed in the bureau for 12 years, and I am more familiar with that than any other branch of the service. I should say we have in the bureau 4,003 women. Mr. Nelson. Of that 4,003 women, how many would you approxi- mately guess would be in the condition that you have just described? Miss McNallt. I should say conservatively more than 150; 200 would be a safe estimate ; but then, of course, we have some very old women down there who are not quite so helpless as those I have de- scribed. Mr. Godwin. They are kept there on the same basis of pay as the other women? Miss McNallt. Yes. Mr. Godwin. They are not able to render proper service for the compensation they receive? Miss McNallt. No. Mr. Godwin. But they are kept there because nobody wants to turn them out? Miss McNallt. And because of their long service. Mr. Nelson. You said they were very old. Approximately, what do you mean by very old ; what is the age of these women ? Miss McNallt. Many of them are over 70. Mr. Nelson. Are there any as old as 80? Miss McNallt. Yes ; there are some ; not very many. Mr. Nelson. There are quite a few at 75 ? Miss McNallt. I should say from 72 to 75. Mr. Godwin. We have been considering the question of age limit for employees. What suggestion would you make as to the age of retirement ? Miss McNallt. I believe that the provision as carried in the bill is proper ; that provision has been indorsed by our organization. Of course, it is very difficult to estimate the age at which a person should retire, because you have to take into consideration the difference in the activities of different persons at a certain age. Mr. Godwin. Do you believe in a compulsory age of retirement; do you believe it would be of advantage to the service to have retire- ment compulsory? Miss McNallt. I should think we should have a compulsory- age for retirement. I do not see how you could make the provisions of the bill operative otherwise. Mr. Godwin. Mr. Chairman, would it be of any value to the com- mittee to have the Director of the Bureau of Engravino- and Print- ing give statistics on the number of superannuated people in his bureau ? RETIREMENT OF EMPLOYEES IN CLASSIFIED CIVIL SERVICE. 75 The Chairman. The committee would be very glad to have that information. Miss McNally. The figures I have given relate particularly to the women. Mr. Godwin. Will you get that information? Miss McNally. Yes ; I will be glad to have that information pre- pared for the committee. Mr. Alcoen. Mr. Tade, also of the bureau, wants to say Jul. a word. STATEMENT OF MR. IRVINa P. TADE, CUSTODIAN OF THE FEDERAL RESERVE FUND. Mr. Tade. Mr. Chairman, I have been in the bureau for something over 27 years and have been interested in retirement for some years, and I have studied the situation from our point of view. I have not any set speech to make, but perhaps I might add to what has been said with reference to the salaries of the womfen to which Miss McNally has made reference. This group of women are, as a whole, r think, almost without exception, underpaid. Those who are most liberally paid may get $900, and there are some few, perhaps one or two, who might get $1,000; but the majority are getting in the neighborhood of $660, $720, $780, $840, and $900 salaries, along in that neighborhood, and they have had no opportunity to lay up for themselves for the days of advancing years. Mr. Nelson. Of the 4,003 women, approximately how many have the salary limit of $900? Mr. Tade. All of them, practically; very few receive otherwise. A few of the clerks may be getting a little more, but the great ma- jority ^o not. Mr. Godwin. In what department is that ? Mr. Tade. In the Bureau of Engraving and Printing. Mr. Smith, of Idaho. Then there would be many employees who would practically receive on retirement full pay if they served 30 years ? Mr. Tade. Many have served 50 years. You would be surprised to go through there and find how the people have advanced in years. I think the bill provides for only 60 per cent ; that would be $420. Mr. Godwin. Why is it that they have not received more than $900 a year? Mr. Tade. The bureau in its operation is more or less in competi- tion with outside institutions doing similar work; consequently the salaries must be kept down so that the balance would favor the Government doing the woi-k. I might say with reference to a number of cases that I have had knowledge of in the past years as to saving, I call to mind two men who served 30 to 40 years; I do not know exactly how long they have served, but they had worked there practically all their life— both are now dead — they served many years, and were absolutely incapacitated for work. One was brought to the department in a carriage, and we would take him fi'om his work to the carriage almost bodily. These two men got $3,252 each. One ordinary man, a very ordinary man, could have produced more work in a day that both of them together. One or- dinary man at $1,000 would have done more efficient work and pro- 76 EBTIEEMENT OF EMPLOYEES IN CLASSIFIED CIVIL SBBVICB. cluco more work than the two of them, and that is only one case of many. Mr. Smith of Idaho. They were kept there purely from a sympa- thetic standpoint? Mr. Tade. They had nothing on which to fall back. Mr. Smith of Idaho. The executive officer shut his eyes to the fact that they were not rendering service commensurate with the salaries received ? Mr. Tade. It was a matter of existence for them. They were doing the best they could and worked faithfully and as well as they could. That is only* one case of many. There are numerous cases just like that in all the departments, as you will hear from the various chief clerks and others who are in a position to know. Mr. Godwin. You said a while ago that they had to cut the salaries down in that department on account of outside competition. Do they pay less than out-side printers? Mr. Tade. The printers are paid for piece work; they work en- tirely on piece work. I am not prepared to say how their piece-work rates compare with outside rates, but the employees generally are not paid in the same proportion that employees for similar work would be paid elsewhere. The work of the clerks, of course you all know, is confining. Individually and personally, at least, I worked for 18 years in a clerical position, and tlie confinement is terrific. We can not get up and go outside. For 18 years I sat at a desk writing all of the time, and sometimes I would get up and it would seem as though I could scream. Mr. Godwin. How many hours a day is the work? Mr. Tade. They work practically eight hours, from 8 o'clock in the morning when they open until they close at 4. We are not ex- cused for lunch. Mr. Nelson. They do not allow you to eat a lunch? Mr. Tade. Oh, yes ; we eat our lunch during that time, but we are not permitted to leave the building. We are on duty from the time we come in until we leave at night. Mr. Smith of Idaho. What is the feeling among the employees in your Bureau who seem to be so very poorly paid about having their salary taxed 2^ per cent? Mr. Tade. There was qaite a sentiment against it. They thought there ought to be a pension system provided where the Government would supply the entire pension. Mr. Smith of Idaho. They get the benefit of the bonus? Mr. Tade. Yes. Mr. Smith of Idaho. If that bonus were made permanent instead of appropriated from year to year the feeling would be different? Mr. Tade. It would be. Those figures probably include the bonus, in most cases. Miss McNally. The $900 includes the bonus. Mr. SmiI-h of Idaho. What is the lowest wage without the bonus? Miss McNally. $600. Mr. Godwin. What do they do? Miss McNally. They are pres? feeders. Mr. Alcorn. There will be just one or two more who wish to be hoard, Mr. Chairman. RETIREMENT OF EMPLOYEES IN CLASSIFIED CIVIL SERVICE, 77 Mr. Godwin. Have you any new matter in addition to what we have heard ? Mr. Alcorn. No ; I think it is all about the same ; I do not think there is much new to be added. Mr. Godwin. What I want to know about is the age limit? The Chairman. How many other witnesses do you intend to have ? Mr. Alcorn. Only one other, I believe. The Chairman. Are there any other gentlemen or ladies present who desire to .be heard ? Mr. Alcorn. I think you have heard all who care to be heard. The Chairman. I had in mind that we could limit the time, but if there is only one more we will allow him to make a shoi;t statement. STATEMENT OF MR. JACOB W. STARR, EMERITtTS PRESIDENT AND ADVISORY MEMBER OF THE EXECUTIVE COMMITTEE OF THE UNITED STATES CIVIL SERVICE ASSOCIATION. Mr. Starr. Mr. Chairman and gentlemen of the committee, I wish to say that I am sometimes called the father of this movement. I called together the committee that organized the movement and conse- quently am pretty well acquainted with its initiation. I want to say that I have had more people call on me' and say that this bill was satisfactory than I have ever had in regard to any other bill that has been written. I wish to say also that the first bill drafted for re- tirement of clerks was drafted by Jacob CoUamer, of Vermont, when Postmaster General in the Cabinet of Zachary Taylor, and the bill was lost at the time of Mr. Brosius's death. This bill seems to be more satisfactory than any bill that has ever been drafted, and many bills have been drafted. I have written out practically all that I wish to say ; it relates more especially to the manner in which the data has been obtained, to show you that the data is official, either from the Government or from the corporations mentioned, and as to the cost to the Government and the benefits to be derived by the Government and by the employees. I wish to insert this written statement, if I may. The Chairman. That will be inserted in the record. Mr. Alcorn. I believe that concludes all we wish to say to-day, and the only thing I wish to add in conclusion at this time is that 1 most earnestly request the committee to give us a favorable report, and we feel that there should be something done at an early date. Thank you very much. Mr. Godwin. Would it not be good idea to get a statement from the different Cabinet officers? The Chairman. I have here, to be incorporated in the hearings, a statement of the Secretary of the Treasury, a statement of the Secretary of War, statement of the Postmaster General, statement by the Acting Secretary of the Department of the Interior, and a statement by the Secretary of the Department of Commerce; a statement by the United States Civil Service Commission, and statement from the District of Columbia commissioners, who are in part included in this bill. All the department heads have been in- vited to express their views, and those who have been here have availed themselves of the opportunity to give such information as they desired. 78 EETIRBMENT OF EMPLOYEES IN CLASSIFIED CIVIL SERVICE. Dr. Jordan. Mr. Chairman, what Mr. Godwin had in mind was a suggestion I made to him to find out how many people would be eligible for retirement under the provisions of this bill. This bill has never been presented to the departments as a whole; it has come to you as it came from us, and I suggested to Mr. Godwin that the departments be called upon to furnish you — which they can do very readily within a week or 10 days — the number of people who would be eligible for retirement. That would bring the work down to the minute, and I think it would be very informing to this committee, because we have indulged in general statements, and no one can give you that information concretely and satisfactorily un- less it be compiled in that way. While the departments are all in f^vor of the bill, or some legislation for retirement, they have not yet given you the data upon which you may rely when you come to make your argument before the House. The CiiArRMAN.' The Chair will entertain a motion that the several department heads be called upon for that information. Mr. Nelson. I will make that motion. Mr. Smith of Idaho. I will second it. The Chaikman. It is regularly moved and seconded that the de- partment heads be called upon to furnish an estimate of the num- ber of employees in their respective departments who would be eligible for retirement under the terms of H. K. 3149. In that con- nection, Mr. Godwin, a member of the joint commission on classifica- tion of civil-service employees, and Mr. Keating stated to this commit- tee, at the hearing on Thursday, that it would take the services of 10 expert clerks a period of 30 days to compile this information that we have asked for now. Mr. Beach. I wish to invite your attention to the figures contained in the Senate hearing in 1918, as of July 1, 1916, when the condition of the service at that time was given ; and, taking that as a basis, I have furnished yon with a memorandum approximating the figures for the present time. The Chairman. Is it not a fact that a computation based on the conditions of 1916 would be more sei'viceable to this committee than an estimate based on the present time, because since then war con- ditions have intervened and conditions in the various departments have not yet become stabilized again. Mr. Beach. I believe that such would be the case. We are at an abnormal period just now as regards the civil service of the United States. In 1916 is was normal, and, perhaps, in 5 or 10 years, it will resume normal proportions again. Mr. Nelson. I suggest that the chairman simply make that sug- gestion to the department heads, as to the statements that have been given already, and in that way let them know that we do not expect them to go into details such as Mr. Keating spoke of. Dr. Jordan. The figures compiled by the Bureau of Efficiency related to entii'ely different ages of retirement. This bill has reduced the ages of retirement and consequently we are not prepared to say how many people, even approximately, would be eligible for retire- ment under the provisions of this bill, based upon information ob- tained for us as of July 1, 1916, because we are now discussing an entirely different bill. KETIRBMENT OF EMPLOYEES IN CLASSIFIED CIVIL SERVICE. 79 Mr. Beach. The tables prepared by the Bureau of Efficiency gave the age periods of all employees. Mr. Staer. I would like to say that the Central Labor Union passed a resolution indorsing this bill, and I believe the National Federation of Labor at Atlantic City did the same thing. The Chairman. This will conclude the hearing on this bill. (Thereupon, at 12.15 o'clock p. m. the committee adjourned.) APPENDIX. Teeasuky Dbpaetment, Washington, June 14, 1919. Hon. Feedeeick R. Lehi.bach. Chairvian Committee on Reform in the Civil Service, Rouse of Representatives, Washington, D. C. My Deae Congbesswan ; In compliance with the request contained In your letter of the 11th instant, I take pleasure in inclosing excerpts from recent an- nual reports of the Secretary of the Treasury relating to retirement of super- annuated and disabled Government employees. In reply to your request for an expression of my personal views on the sub- ject of enacting legislation which \A-ill 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 he 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, Secrotiry McAdoo, for the fiscal year 1918 : " 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 efEective 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 Go^'ernment, 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 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 effort 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." I heartily indorse the suggestion outlined above. Sincerely, yours, Caetee Glass, Secretary. 80 BETIREMENT OF EMPLOYEES IN CLASSII'IED CIVIL SERVICE. Excerpts feom Annual Reports of Secbetaries of the Tkeasuby Relatino. TO' Retirement op Superannuated .and Disabled Government Employees. [Annual report of Mr. MacVeagh for 19y'J.] RETIRING PENSIONS. Any inquiry into the efficiency of administration very soon involves a con- sideration of a policy of civil service retiring pensions. And it seems to me tliat the conclusion is unavoidable that a really efficient service is out of the question without a method of honorably and .justly retiring persons whose efficiency is seriously impaired. It is quite true tha;t the older clerks of the service are no more likely than the younger clerks to be inefficient. Indeed, their experience and their settled relations to the service could easily com- pensate 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 hnve given the best of their lives to the work of the Government. So that in a very imperfect and wholly unsatisfactoi-y 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. We have this unique position in the wiorld, along with a reputation for great wealth and for otherwise liberal expenditures. The entire civilized world has shown great and gi'owing recognition 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 the civil service pensions have been extended to the- judiciary. And though as a Govei'nment 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 moi^e and more Isolated. While I have spoken only of the effect upon the service itself of the lack of 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 whids 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 preference for any particular plan or system. [Annual report of Mr. MacVeagh (or 1910.] CIVIL SERVICE RETIREMENT. I now beg to refer, as I did last year, to another requisite — another absolute- requif^ite — of a satisfactory service. There is no practical way to put the Gov- ernment service properly on its feet without a fair and jut 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 ser-vlce the country must accept a service that is not fully satisfactory, and which can not be made fully satisfactory. Fortunately this retiring provision cato be made — and this is mathe- matically demonstrable — without the expense of one dollar to the Government. The contributory system of retiring allowances is not only the only system, that has any 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 al- lowances 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 EETIKEMENT OP EMPLOYEES IN CLASSIFIED CIVIL SEKYICE. 81 ' executive departments which have so far been consulted stand ready to carry out such a lavif without aslting any addition whatever to their ordinary ap- propriations. The objection, therefore, that we might be introducing another pension roll, has no justification. It had complete justification as long as the straight pension was in contemplation. 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 whole matter right. It is only necessary to mention two things about the contributory 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 increased pay at any time during its operation. On the other hand, a straight pension would always be taken as an additional salary and would perpetually have a tendency to estop any argument for increased compensation. 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 worlj: 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 outside 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 efllcient help. Working in these improvements brings constantly to mind the hopelessess 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 in the past stood in the way of many attempts to improve the efficiency and economize the expense of operation In the departments. [Annual report of Mr. MacVeagh for 1911.] CIVIL SEEVICE BETIEEMENT. The possible extent of efficiency and economy that is attainable by any of the departments is rigidly restricted by the lack of a retirement allowance and system. In a Government so generous and intelligent as ours, the absence of a civil retirement system is singuarly inappropriate and inexplicable. Self- interest alone ought to secure this enlightened provision for the civil employees, not to speak of the human interest which in this regard is now almost uni- versally felt and adopted. Not only Governments but an ever-increasing num- ber of private corporations have provided a retiring system for their employees. Indeed the adoption o'f a provision retiring members for the civil service has become so usual and so a matter of course that America is the only important civilized Government which does not recognize this as a national duty both to the employees and to the Government and people. And this Government would not at this late date, I believe, be lagging In this Important respect so far behind 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 eoual to the occasion ; and unless something adequate In the way of this neces- sary leadership shall arise It Is only too likely that nothing will be soon 124396—19 6 82 RETIREMENT OF EMPLOYEES IN CLASSIFIED CIVIL SERVICE. accomplished. And yet the responsibility, after all, rests upon the Govern- ment 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 extremely 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 department 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 clerks 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, notwith- standing the fact that under such a system comparatively few of the clerks would ever become beneficia.ries. 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 adopteil this policy. And the policy has spread and is constantly spreading among private employers. There- fore, the reluctance of Congress to adopt a policy that is almost universally believed in, and which is part of the progressive humanitarian movement 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 general, 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 Government, to the results of modern thought. Moreover, 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.] BETIEEMENT OF CIVIL-SBaiVICE 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 vol- ume of work in the department has served to emphasize the need for making some provision for the older employee who is unable to keep step with progress. It does not seem humane or fair to discontinue arbitrarily the service of super- annuated 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 RETIREMENT OF EMPLOYEES IN CLASSIS'IED CIVIL SERVICE. 83 hardship. To reduce aged employees does not entirely meet the needs of the case, as it leaves the employees still on the rolls of 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.] KETIBEMENT 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.] KETIBEMENT OF CIVIL-SEBVICE 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 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 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 effort 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. Wab Depabtment, Washinglon, June 18, 1919. Hon. Feedbeick R. Lehlbach, House of Rrpresentatives. My Deab Me. Lehlbach : I am in receipt of your letter of the 11th instant and In response to your request inclose herewith extracts of such comment as has been made in recent annual reports of the Secretary of War which relate to the question of retirement of civil-service employees. I am in favor of some plan providing for the retirement of civil-service em- ployees on an adequate annuity, but I think that such a plan should contemplate enforced retirement at a given age for all employees. Sincerely, yours, Newton D. Baker. Secretary of War. [Annual Report of the Secretary of War for 1912.] In my last annual report I expressed myself as being heartily in favor of some measure by which employees of the Federal Government might be retired and pensioned when they reached a condition of impaired usefulness after years of faithful service. I earnestly renew that recommendation. I regret the at- tack made against the retirement plan during the last session of Congress, when an effort was made to attach a limited tenure of office rider to the legislative, executive, and judicial appropriation bill. I believe the effect of such legisla- tion would have been to overthrow the merit system.' The tendency of the merit s.vstem, as established by the civil-service law, is to make service in a classified position under the Government a life work or profession, and some sort of re- tirement provision follows as a necessary consequence, just as it does in the Army, the Navy, and the Judiciary, if the best results are to be secured. 84 EBTIKEMENT OF EMPLOYEES IN CLASSIFIED CIVIL SERVICE. [Annual Report of the Secretary of War for 1913.] Heads of departments and chiefs of bureaus have many times recommended the enactment of legislation for the retirement of civil-service employees, and J find that in four of the annual reports of my immediate predecessors in the War Office the principle of retirement for superannuated employees in keeping with the growing trend of railroads and other great business organizations in this direction has been strongly indorsed. Conferences with the bureau chiefs of this department and a study of the subject generally lead me to the conclusion that some provision for retirement of faithful employees for superannuation at a prescribed age will work to the advantage of the Government in the civil service and is demanded If this service is to be administered on better business principles, as now recognized in the case of large private business organizations. I find that the need for a retirement law has been pressed upon the atten- tion of Congress at almost every session during the past 27 years. Since 1886 72 bills on this subject have been introduced In Congress, but so far as I am advised none of these numerous retirement bills has ever been favorably re- ported from the committee to which it was referred, except the retirement measures introduced by Mr. Gillett, which were favorably reported to the House by the Committee on Reform in the Civil Service on February 23, 1909, and on April 4, 1910. Another measure introduced by Mr. Gillett during the special session of the Sixty-third Congress (House bill 3336) was referred to the same committee, but no further action has been taken. The Gillett biUs were all based upon the principle that it is for the interest of the Government to be relieved of its employees when by age they become unserviceable, or partially unserviceable; that it would lower the standard of the Government service if employees were dismissed when their usefulness be- comes impaired by age unless they were assured against want ; that it is the business of the employees themselvSte to make provision for their old age, and that the Government will hereafter. In its own interest, compel them so to do, in the case of employees who enter the service hereafter, by deductions from their monthly salaries of a sum sufficient to provide an adequate annuity, and for all employees under 70 who are now in the service, by deductions from " their monthly salaries until they reach the age of 70, and where the deductions so made are insufficient for the purpose, by such contributions by the Govern- ment in addition thereto as may be necessary to provide an annuity not to exceed $600. In the case of employees 70 years or older, and therefore subject to immediate retirement, the Government to provide the entire annuity. On April 7, 1913, Mr. Austin introduced a bill (H. R. 196, 63d Cong., 1st sess.), the material differences between this bill and the pending Gillett bill being that the Austin bill provides for a 15 per cent increase of salary and for in- terest on the employee's savings at the rate of 5 per cent Instead of 4. The Austin bill also makes provision for retirement for disability, while the Gillett bill does not. On May 6. 1912, President Taft transmitted to Congress with his " unctuali- fied approval " a retirement plan recommended by the President's Commission on Economy and Efficiency and embodied in a tentative draft of a bill which accompanied the commission's report. The essential differences between this bill and the pending Gillett bill are that its provisions were limited to the classified service in the District of Columbia, where, as stated by the President,. " the loss from superannuation is greatest," the idea being to keep the plan within narrow limits during its experimental stage, with a view to its exten- sion generally throughout the service if it should prove successful in the execu- tive departments and offices at Washington; and that the annuity was fixed at one-half of the average annual pay for the entire period of "service for annual salaries of $1,200 ot less and at $600 a year for annual salaries above $1,200. The maximum cost to the Government for the annuities for persons thus- retired is estimated by the President's Commission on Economy and Efliciency, tinder its plan, to be $16,112,603, extending over a period of about 40 years. This does not take into account the saving to the Government that would result, from a discontinuance of the payment of that part of the salaries now paid to superannuated employees which is not earned. A modified plan of retirement which has been prepared as a result of the conferences with bureau chiefs above referred to is submitted herewith as- Appendix P. In brief, this plan provides for the compulsory retirement of all EETIEEMENT OF EMPLOYEES IN CLASSIFIED CIVIL SEEVICB. 85 employees of the classifleci departmental service in Washington at 70 years on an annuity of one-half of their annual pay, not to exceed a maximum of $600 where the Government pays any part of the annuity, or $900 when the em- ployee provides it all, with the privilege of retirement between the ages of 65 and 70 on such smaller annuity as the funds to the credit of the employee will procure ; all employees of the age of 70 or above in the service on the date of the approval of the act to be retired at the expense of the Government. The Gillett bills, the Austin bill, the economy and efficiency commission bill, and the War Department plan all provide in effect for a compulsory savings form of retirement instead of a straight pension provided entirely by the Government. I feel quite sure that it is practicable to save the Government money and to benefit the Government service by establishing a retirement system. I do not believe, however, that there is any possibility of such a system being provided for in the near future by any measure that will call for larger appropriations from the Federal Treasury than would be required to pay the annuities for those now in the service ; that Is, the entire annuity of all those who are now 70 years of age or over, and part of the annuity of all others now in the service who shall remain therein until they reach 70 years of age ; and I think it wis6 that the maximum annuity of which the Government pays any part should be fixed at one-half the annual salary for employees with annual salary of $1,200 or less and at $600 for those whose annual salary exceeds $1,200. All persons who accept employment under the Federal civil service after the passage of a retirement act should do so under provisions of law which would compel the accumulation of a fund derived from monthly deductions from their salaries that would make it humanely possible for the Government to retire them at 7Q years of age, or before that age should supera:nnuation or other disability re- quire it. Mr. Hamill has introduced and strongly advocates a bill which was referred to the Committee on 'Reform in the Civil Service on May 15, 1913, which pro- vides for a straight pension. Objections have been urged against a straight pension paid for entirely by the Government that in practice it has operated un- satisfactorily in countries where it has been tried, and that it has a tendency to defeat the primary interest of the Government in the matter, which is to pro- duce a condition under which an employee of long and faithful service may, without inhumanity, be removed when he reaches a condition of Incapacity to render effective service. Under the contributory plan an employee, after a con- siderable length of service, would receive periodically from the fund accumu- lated by his contributions a sum sufficient to keep him from actual want, where- as under the straight pension plan he can not derive any benefit from the pen- sion until he reaches the prescribed age. In other words, under the straight pension plan there would be almost the same situation that confronts us now, namely, the retention in the service, through considerations of humanity, of persons who have become incapacitated for efficient service. [Annual Report of the Secretary of War for 1916.] An examination of the reports of my predecessors for a number of years shows that they have continuously recommended consideration of the subject of an equitable 'retirement law providing for the retirement of superannuated and disabled employees of the civil service. I am very happy to renew the recommendation. From time to time bills have been introduced into Congress providing for such retirement, but as yet none has been enacted into law. In the meantime various industrial and transportation companies have found it to their interest to retire and pension superannuated employees. The Federal Government is and should be a model employer. The provisions now made by the Government in the matter of compensation, hours of labor, vacations, sick leave, and holidays are all wisely generous both as an example and as establishing a harmonious and helpful relation between employer and employee, which both conserves the spirit and health of the employee and secures for the employer that willingness and good will out of which service of maximum efficiency naturally arises. There seems to remain as the chief thing yet to be done this provision for retirement upon superannuation. The law ought not, in my judgment, to provide a mere service pension as has sometimes been done in municipal and State services in this country, under which employees who have served a stipulated number of years are authorized to retire irre- 86 BETIREMENT OF EMPLOYEES IN CLASSIFIED CIVIL SERVICE. spective of their ability still to render competent service. . The law ought rather, upon a minimum service required, to authorize retirement either for disability arising in the course of the service or occasioned by the service itself, and this retirement should be in the hands of a competent authority which would determine the inability of the particular employee further to render adequate service in his place of employment. The efCect of such a law would be to give an assurance of a competent and comfortable old age. It would relieve the employee from the fear of loss of occupation and of livelihood, would further inspire him to loyalty to the Government as an employer, thus improving the general quality of the service rendered by Government, employees, although that is already high, and would permit the replacement of some employees In the various departments who have long and faithfully served the Government and reached venerable but enfeebled years without having had an opportunity to accumulate any competence upon which their retirement can rest. Office of the Postmastkb Geneeal, Washington, D. C, June 2.4, 1919. Hon. Fbederick R. Lehlbach, Chairman Committee on Reform in the Civil Service, Bouse of Representatives. Mt Deab Me. Lehlbach : Acknowledging your recent communication in rela- tion to proposed legislation for retirement of superannuated and disabled Government employees, I beg to state' that I favor an equitable retirement law providing for the retirement of superannuated and disabled employees of the civil service to the end that a higher standard of efficiency may be maintained. Very truly, yours, A. S. BtTELESON, Postmatser General. [Ppstmaster GeDeral Burleson's Report for I9I3, p. 187.] EETIEEMENT OF DISABLED OB SUPEEANNUATED CLEBKS. The requirements of the Railway Mail Service are exacting, and the per- formance of duty is attended by danger and hardship. From the nature of the work performed it is necessary that the force be active and energetic, and it must be replenished constantly 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 necessary to change his assignments to postmaster- ships In second, third, and fourth class post office 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 system of limited payment provided for by a contributory plan or otherwise. [Postmaster General Wanamaker's Report for 1890, p. 38.] > I wish that some scheme might be devised by which the departmental force, and all parts and branches of the Postal Service, classified or to be classi- fied, might be encouraged into new exertions by some just, general, and certain plan of promotions. This would perhaps involve the retirement at a certain age of Government employees who have been efficient in the past, and would possibly involve, too, the payment to them of a stated sum, or of smaller sums at stated periods. But scores of places 'in the departments, and in the large post offices, as I doubt not, are to-day filled with superannuated clerks who fail to do the work which the department is required by Con- gress and the public to expect of them, and also prevent those from taking their places who would be glad to do all of the work well. It would seem as if we might either heartlessly remove these useless Government employees or else confess that we really have a civil pension roll. In any occupation it is the man who is looking for better work to do and, for better pay for doing it that deserves the better work and the better pay ;and I am certain that the efficiency of the whole postal force would be incrceased beyond all calculation if there could exist, in it and through it, a continual upward movement, a regular and certain retirement in some just and humane way, and a consequent influx of the young, the strong, the ambitious. EETIEEMENT OF EMPLOYEES IN CLASSIFIED CIVIL SEBVICE. 87 [Postmaster General Wanamaker's Report for 1892, p. 85.] THE IDEAL POSTAL SYSTEM. I would unify the work, hold It up by a strong controlling hand, reduce the hours of labor at almost all points, equalize and advance the pay, make the promotions in every branch for merit alone, retire old or disabled clerks perhaps on a pension fund to be provided by an annual payment of one-half of 1 per cent out of each month's salary. Department of the Inteeiob, Washington, June 18, 1919. My Dear Mr. Lehi,bach : Complying with your request of June 11, I inclose herewith excerpts from the reports of the Secretary of the Interior for the years 1909, 1910, 1911, and 1912, bearing on the subject of the retirement of superannuated and disabled Government employees. No reference has been made to this subject in the Secretary's report since 19] 2. I have caused the annual reports of the various bureaus of the depart- ment to be examined between 1909 and 1918 and find that no reference was made to the subject of retirement of superannuated employees in any of the annual reports except that of the Commissioner of Pensions, and an excerpt from his report for 1918 is herewith transmitted. This department is in thorough sympathy with the efforts which have been made to induce Congress to enact suitable retirement legislation. Cordially, yours, Alexander T. Vogelsang, Acting Secretary. Hon. Frederick R. Lehlbach, Chairman Committee on Reform in the Civil Service, House of Representatives. Excerpts from Reports of the Secretary' of the Interior, 1909 to 1912, Inclusive, in Relation to Legislation for Retirement of Supeeannuated and Disabled Government Employees. [Annual report of Secretary, 1909.] PERSONNEL OF THE DEPARTMENT. Of a total of 18,916 officers, clerks, and employees of this department, 4,629 are stationed in Washington and the remainder are in the field service. Under my predecessor diligent effort was made to improve the efficiency of this force, by the elimination of incompetent persons and the instillation of a spirit of individual responsibility for the character of the service performed, and this policy Is being continued. But no policy within the reach of the executive can humanely -solve the difficulties involved in the discharge of superannuated clerks. RETIREMENT FUND FOR GOVERNMENT EMPLOYEES. The Department of the Interior in all its bureaus in "Washington is laboring under a great disadvantage in trying to Introduce modern business methods and to keep pace with the increasing volume of work, because of its inability to retire members of the clerical and laboring force after they have become incapacitated by age or other causes. Intermittent efforts have been made to secure congressional aid to retire them upon a basis that will recognize their long service and protect them against want. An involuntary retirement and sustenance statute, by which all persons after arriving at a prescribed age, or for other reasons, should be required to stand an examination before a competent board as to physical and mental ability, with a fund created by national appropriation — in the first instance, and maintained by some equitable system of contribution from salaries — would seem to me to be advisable. 88 RETIREMENT OF EMPLOYEES IN" CLASSIFIED CIVIL SERVICE. [Annual report of Secretary, 1910.] The appropriations for the maintenance of the service of the department and of its buildings and grounds can be lessened only by a unification and simplification of business methods In the several bureaus and the establish- ment of a retirement fund for Government employees. So long as a retirement fund is vs^ithheld, the practice of pensioning superannuated and defective, though deserving, clerks by retaining them on the salary rolls must continue. This necessarily results in many competent persons receiving inadequate salaries and a i-eluctance to reward the highest grade of service by compen- satory remuneration. A table showing distribution of force In various bureaus and number in field force by States and Territories is shown in Appendix D. I am glad to be able to say that the vcork of the department shows that important progress was made during the past year in all branches of the service and in securing legislation in the public Interest. Number of employees and distribution as to employment Nov. bureaus, offices, JwspitaU, reservations, etc. 1, 1910 , DV Place of employipGnt. 1 f CO o i II |S go 1° o I ■3 ■ 5 Is ■3-3 ■ o O g o 1 o CO 1 ' 1 CO •s i 1 1 ■go ■C.2 II so |£ Total 14,262 307 23 1,487 5,705 934 1,579 178 1,063 1,745 198 909 86 26 ?? Alabama . . 5 144 S45 65 436 263 1 1 4,580 18 1 2 454 75 26 43 139 16 9 11 1 68 302 7 15 684 266 173 9 3 536 67 27 382 42 978 332 242 1 781 29 4 190 1 2 593 1 237 221 909 3 24 34 23 74 104 1 1 Alaska 119 1 10 543 268 Arkansas. . . 2 21 2 1 1 1,133 1 1 40 16 5 California 304 55 2i 97 .... Delaware. , . District of Columbia Florida. 299 536 17 215 934 324 72 52 e 22 Hawaii 2 Idaho... . 67 134 21 253 18 Hhnois 33 25 22 36 16 2 11 1 25 24 1 3 6 3 1 Iowa 21 96 Kansas 7 Louisiana 7 Maine.... MaryJand Michigan 3 45. 4 3 102 •26 26 40 256 Minnesota ..: 7 391 82 117 Montana..,'. 190 157 31 1 N e w Hampshire 9 2 New Jersey 1 1 2 60 435 12 25 303 33 7 New York 63 1 North Carolina ... North Dalcota 27 61 1 4 Ohio 38 2 1 SO 1 1 26 2 1 1 1 2 1 19 Oklahoma 19 70 952 202 72 5 2 67 PfiTm.le to pay a retirement allowiince of 50 per cent "of the salra-y up to and including $2,000 per annum, as stated, the first actuaries we employed, or rather who volunteered their services, were Messrs. Hunter & Grow, actuaries of the New York Life Insurance Co., of New York. The services of the notuaries were tendered us without fee or reward by Mr. George W. Perkins, an officer of that company. We submitted to them the data that we gathered in the District of Columbia through tlie cards we had presented and sent through the departments and upon a proposition to retire the employe upon 66f per cent of his salai-y, we paying the whole cost, they reported to us that upon the proposition prescribed it would be necessary to deduct 71 per cent of the salary received. We subsequently submitted that data and this proposition to Mr. Walter C. Wright, the eminent actuaiT of Boston, an actuary of the greatest and longest experience in the United States, to ascer- tain actually for us the cost of retirement of Government employees on 66| per cent of their annual salary up to and including a salary of $2,000 per annum, as set forth in a bill we had prepared and introduced in both the United States Senate and the House of Representatives. In the House of Representatives it was known as the Fowler bill and was numbered 19375 of the Fifty-ninth Con- gress. In the Senate it is known as the Perkins bill, and is numbered 1944, Fifty-ninth Congress, having been introduced by Representative Fowler, of New Jersey, and Senator Perkins, of California, respectively. Mr. Wright made a thorough analysis of our bill and pronounced those conditions feasible. In his statement to the association he says: "A 5 per cent collection will, on the whole, be abundant to fulfill the proposal of the bill, which is that each annuity to be paid shall equal one-sixtieth of the average salary of the last 10 years of service, for each year of service not exceeding 40 years, which \^ould be 66S per cent in every case of 40 or more years of service. Indeed, the probability is that an annual allowance of 5 per. cent to produce annuities of 66f per cent of the average salary for the last 10 years, after at least 40 years of service, and proportionately less percentages after shorter terms of service, would prove superabundant on the whole and create some surplus." In a subsequent statement Mr. Wright says: I am so well satisfied that 5 per cent will prove the most popular contribu- tion rate which could be fixed upon and that it will prove sufficient for all purposes, that I have not considered any other rate. Mr. Miles Menander Dawson, a consulting actuary of New York City, basing his calculation upon the unoflicial data we had collected prior to the issuing of Bulletin No. 12, United States Census Office, concluded that an assessment of 5.6 per cent will produce an annuity equal to one-sixteenth of the average annual salary for the 10 years preceding retirement for every year of service rendered in any and all departments of the Government plus a death benefit ■of $900 and a sick benefit of $6 per week. The calculations of Mr. Dawson are concurred in by Henry Moir, consulting actuary of New York City. In a statement to the Committee on Reform in the Civil Service of the House of Representatives, February 12, 1904, Maj. Gen. Fred 0. Ainsworth, The Adjutant General of the Army of the United States, submitted a memorandum in which he showed the cost of retirement at 70 years of age on one-half pay would not exceed 3.5 per cent of the active list. These figures are the result of a calculation based upon known data respecting the active and retired service of the United States Army and covering 45 years of experience. James Howard Gore, Ph. D., of George Washington University, and Fellow of the Actuarial Society, also consulting actuary of the Mutual Life, New York Life, and Equitable Life' Insurance Associations of New York, the three largest and most successfud corporations in this country, says of our bill : " I am con- vinced that the assessment proposed will be adequate and that it will be found that the machinery you suggest will be satisfactory." Prof. Gore was so well satisfied that a surplus would accrue that he strongly recommended the " adoption of a section to our bill that would increase the benefits or reduce the contributions after five years." 124396—19—7 98 EETIREMENT OF EMPLOYEES IN CLASSIFIED CIVIL SEEVIUK. An interesting statement and table based upon 28 years' actual experience are those submitted by Mr. Frank Scott, then treasurer and now vice presi- dent of the Grand Trunk Railway of Canada. I can not do better than to reproduce these verbatim, which, with the permission of the committee, I shall do. THE GRAND TRUNK KAILWAT PENSION SYSTEM. The Grand Trunk Railway superannuation system was inaugurated in the year 1874 for the purpose of making provision for the retirement on a pension of officers and employees who had served the company faithfully and efficiently for many years. It has 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 dismi.'^sing them from the service without any means of support. Through motives of common humanity, accordingly, in the year above stated, an act was pas ed incorporating the " Grand Trunk Railwa.v of Canada Superannuation and Provident Fund Association." The scheme embraced all officers, passenger or freight agents, telegi'aph operators, 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. Membership was optional for officers and employees then in the service, but compulsory upon all who entered after the 1st of October, 1874. The revenue of the fund is derived from a contribution from the members of 2J per cent of their pay, deducted monthly on the pay rolls, the amount so contributed being augmented by a contribution of an equal amount monthly by the Grank Trunk Railway Co. The funds of the association are invested in ttie names of three trustees appointed by the directors of the company. A report is made every 5 years by competent actuaries as to the condition 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 membership, 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 and bodily infirmity, after having contributed for 10 years or over, he is en- titled to a pension on the same basis. Objections have occasionally been made as to the compulsory character of the system, but such are the results 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 poverty in 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 approach- ing the retirement age to become lax in the performance of his duties in conse- quence 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 reasoning is entirely fallacious. In the first place, no railway officer or em- ployee, if in good health, is likely to desire to retire at the minimum age of RETIREMENT OF EMPLOYEES IN CLASSIFIED CIVIL SERVICE. 99 55. By the time he has reached that age the performance of his duties has be- come second nature to -him, and in no case, so far as the experience of the Grand Trunlc Co. is concerned, has a member voluntarily retired at the pension age of 55, although many members have been placed on the pension list at an earlier age as the result of ill health. Each year of service means a larger retiring allowance, and an employee will do his best to efficiently per- form 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 useful- ness has become impaired, and usually becomes very indignant at the imputa- tion. The prospective pension, while sufficient to secure a member from abso- lute want, is not large enough to .iustify him in running any risk of having his services terminated before he is eligible for retirement. lu the event of an employee leaving the service after contributing for 5 years, he receives 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 i)ension 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 benefit consequent upon faithful and efficient service is not brought home to him in the same manner. Moreover, there is an element of more or less uncertainty arising from the possibility that adverse business conditions might necessitate the curtailment of the appropriation usually made by the company. There Is also, perhaps, a Intent fear that the company for Its own purposes might see fit to dispose of the services of employees before reaching the pension age. Such an imputa- tion 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 estimation of the 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 mem- 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 members, and the consequent assurance that there is something tangible to look forward 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 claim 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. FKOM 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 demands the removal of an employee at any time after 10 years' service, he will be refunded the whole of the contributions and have some money to provide for his immediate necessities. A large ma.iority 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 railways of this continent, and has been entirely successful In its operations. - ' Frank Scott. 100 EETIKEMENT 01' EMPLOYEES IN CLASSIFIED CIVIL SERVICE. g.g IBS lili Ill's osi-*toQCiOic'iQooocoo»ococcr*a(D^o»H-*ooo.-««i^io5o Ne'3P3^CC^TfC*H>t>COOOOO»OOONe»l«l CO N Oi r^ '-D en " , jiOCniQt-NOOC' «l>Ua»-H00lif3SO«rcDCO00rfH ^ 0> ^ O O CC- 14./ t^.; 1-^ UJ ^L^ WJ WJ utj i;^ ^<4 *^^ ^^!r >*^ U9 tjJ -C*IOflMMCCPOMKlfO^COCOTtH^iC-£ Hit3COtDO»niO'-iOr as»0-*C0u000W-^iQCN'-i'-HTl«MC0C0f~QC0t^00'-ir^0SC0C0i0O -( c(NOKicc"ot-t-m'*ooo30 ■^i>oo6cceoi-^oocqQ3CQCt^i^c»iOCMcn»T(oou3-^o rjiHffi00c»3Cfla»as"*'-I^OC>JMNO"*0C-*00'«'W300CCt^ ■« OS W Tt< CO 00 !> 00 01 OS fleOOTjicOiooOsOttJOOT- ■•e-a 9| cv;>a<(omi>in-*cccc'-*CTno!OOsot^mcOml>t-cooi-< «3cOO>CDQOO^O-^OOOiOOi-(OaeOtOOOSi-H-^ 3»n e^int-^DQoo^oi-!j*-c 'CDOO'~4^.tHaOI--ODei)OM-*CO''!t<''J-'C<1 *oot;T-^^,o^.u^KeD«^-r^ti-S£S*■^l^^m 3t»-ffiT-fC^Wtt(CD^OOJ'-tNt^^r'OS»D CTiO'-lcC'-t©OIMCCOJOOOa(£}tO(DCOOOSior*i-lO-*''*iaiMOCa iOI^'«!5C»COgOiraW3 0l>e?I>COC*lCDOiWCS)Osi«MOrH«inCi0005-3 O0a(N£X)00OcDOC».c00iOO">t'O-*rH00THMt^«.-H00irsOiOO t-^cOOOlO^Ow^'et^5CWWO»^-02Q5^0^0^1-lU^POOOOlT-lOal^~COX »(3 N in -* »-i CO OS i^'io aaeD'^oowinQO'^ooo-iHQCiCii^cjtoeoNtf: cortoootoeccoosMc-eooo— lc>^-1-lOs■ri^i>rcro'to'o'o^a3*io'r-r'i--rco" oii^-HOOOi*oiOif-<.-«iH^l>oseooo:50M^b-S-i<5;'w''^cooiin w M Tt- ■^p -!»( U3 »o in r- r- to o t-- 00 25 OJ S iH w rH .-H « 00 ^ S K ob r-i tO(Ni/ST?rHmfflt--'Q03'^-^Q00Cift00-*0S0QTji00C«lr-pq(OJ0CM00 m.-<00OC0eDWmNt>(0O0i'-<01l>.rt05Tt<00Ot--i0Ol>.C0SlK r-Tf-^ oo'orc(;'"cr 'H^'a^lo"c^^.^^^^^■^c^c^!C^c^lz^tD^u^'^«^^-^"co' Oi^-IH0COl^OTOi■-^"^■^*|^-O'. 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