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Col. BIRMINGHAM. Yes.
The CHAIRMAN. We are very much obliged to you.
Mr. ALCORN. Capt. Daly will address the committee.
The CHAIRMAN. You may proceed, Captain.

STATEMENT OF CAPT. CHARLES P. DALY, OFFICE OF THE

QUARTERMASTER GENERAL, WAR DEPARTMENT.

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Capt. Daly. The Quartermaster General directed me to represent his office at this hearing, and I can only speak as to conditions existing. We have in our office in the Quartermaster General's office the regular force of 330 employees. Out of 330 there are 49 over 65 years of age, 25 of whom are over 70; one of the 25 is 83. In the department at large, the Quartermaster Corps, the field service, we have about 8,000 regular employees. We have now perhaps 12,000 or 14,000, but the regular force is about 8,000, ranging in salaries from $360 to $2,400 per annum. Of the 8,000 there are 135 over years

of

age. Most of these men are drawing small salaries. A good many of them have been getting the higher rates of pay, some as high as $1,800, but due to age and infirmity they have slowed up and have been reduced in compensation until they now, most of them, are at the lower rates. Of 49 in our office perhaps 60 per cent of them are rendering fair service; 40 per cent are rendering hardly any service. The office has followed the policy that I presume has been really about a sort of unauthorized pension of reducing these men year after year from a higher to a lower grade as their efficiency becomes impaired, until we finally get them at the lower rate and carry them on, and although they show up in the office they are unable to render much service. That accordingly impairs the efficiency of the office, and some provision I am quite certain ought to be made to remove that defect. I have in mind a tragic case of a man named Ming, who has had nearly 40 years' service as packmaster. He was reduced from $100 a month to $60, later to $40, and placed on duty at Fort Huachuca as watchman. He became so decrepit that he could not render service as a watchman; after 40 years' service he was dropped in March last, as we had no other recourse but to discharge him, and there is a case of another man at the same place, a teamster, for 35 years, faithful, efficient, and hard working, who had to be dropped, as there was no place to put him. He could not do the work or render any service.

I am quite certain that the Quartermaster General favors the plan of straight pensions—that is, the Government to pay all of the costs. I think he does favor the idea of a central board passing upon the retirement of the individuals. Of course the names of those individuals would reach the central board from the office reports twice a year passing upon the qualifications of these men and their efficiency. I do not think the Quartermaster General is in favor of the department board. I do not think there is anything else I have to say.

The CHAIRMAN. We are very much obliged to you.

Senator Smoot. Mr. Chairman, I will ask you to excuse me as I have to be in the Senate to present a resolution. I would like to stay longer but I will have to go to the Senate.

The CHAIRMAX. Very well, Senator.

Mr. ALCORN. Mr. Chairman, there are several representatives of different departments here who desire to be heard.

The CHAIRMAN. All right, sir.

Mr. ALCORN. The next speaker will be Mr. Galloway, commissioner of the civil service.

The CHAIRMAN. Very glad to have Mr. Galloway speak.

STATEMENT OF HON. CHARLES M. GALLOWAY, UNITED STATES

CIVIL SERVICE COMMISSIONER.

Mr. GALLOWAY. I have here, Mr. Chairman, a statement representing the views of the commission with reference to retirement of civil. service employees. As you know, the commission has for a number of years favored the contributory plan of retirement, and with your permission I will just submit this for the record.

(The matter referred to above is here printed in full as follows:) The commission does not regard the existing evils in superannuation as a necessary incident or outgrowth of the merit system and the subject of retirement is dealt with in its reports because of its bearing in the establishment of improved administrative methods. Superannuation existed before the merit system was established, and it has not noticeably increased as a result of that system. On the contrary, it is believed that the greater freedom which appointing officers may exercise in removals as a result of the merit system tends to relieve the evils of superannuation. Neverthless the improvement of methods of administration and the proper adjustment of pay can not be effectively provided for until a retirement system is established which will make provision for this class of employees as a definite incidence of employment such as is being gradually extended and coming to be accepted in public and private services. It is more and more being recognized that employment systems, both public and private, should protect the employer against the old age or infirmity of his employees.

The commission believes that a contributory plan is the only just and practicable one for the retirement of public employees and earnestly recommends its adoption for the classified service. Under such a plan the persons to whom retiring allowances are granted would be required to make definite periodical payments from their salaries or to consent to deduction therefrom as contributions to the fund from which the allowances are to be paid, not as a gratuity, but as a definite measure for securing efficiency apart from sentiment. It is recognized that private services have almost without exception adopted the noncontributory principle of pensioning employees in order to avoid contractual obligations on the part of employees, but public services are to an increasing extent establishing retirement systems on the contributory principle, both the public treasury and the employees sharing the cost of the future payments. The differences between public and private services require a difference in the system of retirement. In a public service a pure pension leads to inefficiency by making difficult the dismissal of incompetent employees and is disadvantageous to the employees, because being regarded as deferred pay and creating a favored class it exercises an adverse influence upon salaries. It gives support to fresh claimants insistent in their demands for similar favors. A contributory system, on the other hand, would meet with earlier and more general public acceptance as freer from liability to abuses and a necessary measure for securing efficiency by enabling appointing officers to more readily dispense with the superannuated and the inefficient. It is in the interest of public policy as also of the employee that savings should be compulsory. The Government is benefited in obtaining increased efficiency and would be more than compensated in bearing a .part of the cost of a retirement system along with the entire burden of making provision for superannuation existing at the time of adopting the system. It is proven by experience that voluntary means are ineffectual for provision for old age and that compulsion must be exerted upon employees to make deductions from their salaries.

A uniform centrally controlled administration of a retirement system just alike to the interests of the Government and the employee established under action by Congress is necessary to guard against abuses, and in the interests of stability, definite statistical information, economy, the avoidance of failure through lack of sound actuarial advice, to tide over difficulties in application, and to provide for discrepancies in actuarial computation. A system established by law upon a scientific basis and actuarial advice and supervision would alone give assurance of perpetuity. Without Government support there could be no element of certainty in the life of the scheme and avoidance of its pitfalls and no assured scale of retirement pay so that each employee's account upon withdrawal, disability, or death would bear a secure relation to the sum paid in by him, all pension systems at times being subject to unusual demands owing to differences in mortality.

The CHAIRMAN. Let me ask you about that; it is a plan of retirement?

Mr. GALLOWAY. No; just a suggestion of a contributory plan. The question was asked by you a while ago whether there would be much of a saving if these superannuated people were now retired. I wanted to say that I feel satisfied that there would be a considerable economy effected if some of the higher salaried superannuated persons were retired and paid, say, $50 a month, and let their positions be filled by lower salaried clerks at $1,000 or $1,200. Some are drawing salaries as high as $4,800 a year.

The CHAIRMAN. Have you made yourself or had made any figures on that subject?

Mr. GALLOWAY. Yes; along that line.
The CHAIRMAN. I would like to have those figures.
Mr. GALLOWAY. I will be very glad to submit them.
The CHAIRMAN. You may include them in your hearings.

Mr. GALLOWAY. Yes, sir. In connection with Gen. McCain's statement about the value of men past 70 years of age, I wish to read you a letter from the Assistant Secretary of the Treasury, dated November 1, 1909, and addressed to the then president of the Civil Service Commission. This is very brief (reading):

DEAR GENERAL: The efficiency test in the Treasury Departinent is not complete, but it already demonstrates clearly to us that old age and inefficiency are by no means synonymous. We find in the department clerks who have passed! the three-score years and ten, and are, nevertheless, among our most efficient workers. The fact is that in a great department like this experience and knowledge of customs and of what has been done in the past is an important and valuable factor. But, aside from that consideration, the actual activity of many of the older clerks is fully equal to that of many younger men.

CHARLES D. NORTON, Assistant Secretary. Mr. Chairman, I will be very glad to submit these figures that you mention when I have opportunity to get a copy of the hearing.

The CHAIRMAN. Do you favor a central board to pass on it?

Mr. GALLOWAY. Yes, sir; I am heartily in favor of a central board to pass on questions of retirement.

The CHAIRMAN. How would you appoint them?
Mr. GALLOWAY. I think they should be appointed by the President.
The CHAIRMAN. By and with the advice and consent of the Senate ?
Mr. GALLOWAY. By and with the advice and consent of the Senate.

The CHAIRMAN. Would you have any restrictions about partisanship?

Mr. GALLOWAY. Yes, sir; I think the board should be composed of three persons, not more than two of whom should be members of the same party. In my opinion this board should pass upon all questions relating to retirement.

The CHAIRMAN. In other words they would simply receive recommendations from the departments and then go into the matter and

pass on it?

Mr. GALLOWAY. Yes.
The CHAIRMAN. What is your idea about the age limit?

Mr. GALLOWAY. The age limit is a part of the matter that the board should pass on.

I do not think it would be a good idea to fix an arbitrary age limit, because a great many men of 65 years, and some at 70, and some even at 83, as we have heard testimony here this morning, are valuable men in the service.

The CHAIRMAN. Yes.

Mr. GALLOWAY. That should be in the discretion of the board as to a man's work and how he is performing it. That can be ascertained.

The CHAIRMAN. You can easily see how that might be open to great abuse.

Mr. GALLOWAY. That is true. I would not fix an arbitrary age limit, such as 65 or 70, because some men over 70 years of age are capable of doing as good work, as much work, as persons of 40. In our own establishment we have about 260 employees, and I think we have only one over 70 years of age.

The CHAIRMAN. How many that are incapable?
Mr. GALLOWAY. We have none that are incapable.
The CHAIRMAN. All are well, fit, and in good shape.
Mr. GALLOWAY. Yes.

The CHAIRMAN. Then, as far as your division is concerned, they don't need it?

Mr. GALLOWAY. No, sir. I should like to submit here, Mr. Chairman, a statement, a brief excerpt, from the thirty-third annual report of the commission, with reference to retirement.

(The excerpt referred to from the thirty-third annual report of the commission is here printed in full, as follows:)

Superannuation is older than the civil-service act, and any increase does not result from the merit system. That system does not protect incompetents. Improved administrative methods and the standardization of salaries can not be effectively made until a retirement system is established which will provide for superannuated employees. The commission believes that a contributory plan would be just and practicable and earnestly recommends its adoption.

The CHAIRMAN. The statement you have previously put into the record as to the effect-it would be a half-and-half plan, or what?

Mr. GALLOWAY. A contributory plan.
The CHAIRMAN. A contributory plan?
Mr. GALLOWAY. Yes.
The CHAIRMAN. Do you not think that is the only way?
Mr. GALLOWAY. Yes.

The CHAIRMAN. Have you ever looked into the question to see what would be the cost, say, 25 years from now?

Mr. GALLOWAY. No, sir; I have not gone that far into it. This suggestion that I make to you about retiring those persons drawing the higher salaries would result in a considerable saving.

The CHAIRMAN. I am confident of that.

(The figures referred to will be submitted to the committee by Mr. Herbert H. Brown, chief of the Bureau of Efficiency, at a later date.)

Mr. ALCORN. Mr. James M. Baity, Auditor of the War Department, would like to be heard.

The CHAIRMAN. Proceed, Mr. Baity.

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STATEMENT OF MR. JAMES M. BAITY, AUDITOR FOR THE WAR

DEPARTMENT.

Mr. Barty. I want to invite your attention to a condition in my office. It obtained last February. I had on my roll 207 people 62 of those at an average age of 74 years, 50 of them at an average age of 76 plus. That is a condition that I do not think any bureau ought to be compelled to operate under.

The CHAIRMAN. Now, how many of those do any work at all? Take those over 76—how many do work?

Mr. Baity. They all do work in my office, except four people. The CHAIRMAN. Four people? That includes all clerks? Mr. Baity. I have four people that do nothing. The CHAIRMAN. How many have you who only do a small amount of work?

Mr. BAITY. Well, the salaries of these people run from $900 per annum to $1,800. I have three clerks of that age who draw $1,800. Up to recently they were reasonably worth it. They are slipping now, and not worth it. The rest of them would run down from $1,800 to $900.

The CHAIRMAN. How many employees--you said you had four that were absolutely incapable of working?

Mr. BAITY. Yes.

The CHAIRMAN. How many have you that are just capable of doing a little work. Mr. Baity. Out of that 62, I would say

there were 30

per

cent of them that were worth very little to the office.

The CHAIRMAN. Yes; and what would be the average pay to those 30?

Mr. BAITY. $1,200 to $1,400.

The CHAIRMAN. $1,200 to $1,400. Your idea is you can get a clerk at $900 to $1,000 who would do the work very much better?

Mr. Baity. About a year ago that number of clerks were receiving in my office about $99,000. If I had been at liberty, I could have pensioned these people at $600 a year and not had to expend nearly all the left-over balance for employees able to do the work out of that saving

The CHAIRMAN. You would pay those 62 people $38,000 and then you would have $61,000, and your idea is that how many clerks could do all the work of these 62 ?

Mr. BAITY. I think with half that number.
The CHAIRMAN. Thirty clerks?
Mr. Baity. Yes. They could have been employed at $900.

The CHAIRMAN. That would be a saving to the Government, according

to your figures ? Mr. Baity. Yes. From the standpoint of economy in my office a retirement bill would save the Government money. I do not know whether that would apply in all Government offices, because I do

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