The disability allowances hereby provided for shall at all times be limited to the fund created by section eight of this act, and if any valuation of the fund shows the liabilities for allowances to be in excess of the resources of such fund, then the allowances shall be reduced pro rata to a sum within the fund.

SEC. 10. That in case of reinstatement in the classified civil service of any person who at the time of his separation therefrom received a refund under section seven of this act, his period of service for the purpose of retirement and of making the monthly deduction from his salary shall be computed from the date of such reinstatement, unless he shall, within ninety days after reinstatement, pay to the Secretary of the Treasury the amount refunded to him, with interest at five per centum per annum, in which case the same shall be replaced to the credit of his account, and the former period of service shall be counted. SEC. 11. That beginning with the first day of July next following the passage of this act every employee to whom this act applies shall be entitled, on reaching the retirement age, or having already passed that age, to retire from the service under the provisions hereinbefore contained, and also, in addition to the annuity herein provided for by his own contributions from his salary, to receive from the United States during the remainder of his life an annuity equal to one and one-half per centum of his total compensation during service prior to the taking effect of this act; and the Secretary of the Treasury is hereby authorized and directed to pay such annuity quarterly, upon proper certification of the retirement of such employee by the appointing officer under whom he last served. Annuities from the United States for the period of service prior to the passage of this act shall be payable only on condition that the employee remains in the service until he reaches the age of retirement: Provided, however, That employees of group one may receive the annuity granted by this section on retirement at the age of sixty years or thereafter. On the death of the employee the payment of annuities provided for by this section shall cease and determine. Annuities payable by the United States on salaries in excess of $2,500 per annum shall be based upon an annual salary of $2,500.

SEC. 12. That the period of service upon which the annuity to be paid by the United States is based shall be computed from the original employment, whether as a classified or unclassified employee, and shall include periods of service at different times and service in one or more departments, branches, or independent offices of the Government, the Signal Corps prior to July first, eighteen hundred and ninety-one, and the general service in or under the War Department prior to May sixth, eighteen hundred and ninety-six.

SEC. 13. That every person to whom this act applies, who shall continue in the classified civil service after the passage of this act, as well as every person to whom this act applies, who may hereafter be appointed to a position or place, shall be deemed to consent and agree to the deductions made and provided for herein, and shall receipt in full for the salary, pay, or compensation which may be paid monthly or at any other time, and such payment shall be a full and complete discharge and acquittance of all claims or demands whatsoever for services rendered by such person during the period covered by such payment, notwithstanding the provisions of sections one hundred and sixtyseven, one hundred and sixty-eight, and one hundred and sixty-nine of the Revised Statutes of the United States, or of any other law, rule, or regulation affecting the salary, pay, or compensation of any person or persons employed in the classified civil service to whom this act applies.

SEC. 14. That the Secretary of the Treasury shall prepare and keep all needful tables, records, and accounts required for carrying out the provisions of this act. The records to be kept shall include data showing the mortality experience of the employees in the various branches of the service and the rate of withdrawal from the classified service and any other information that may be of value and may serve as a guide for future valuations and adjustments of the plan for the retirement of employees. The Secretary of the Treasury shall make a detailed comparative report annually to Congress showing all receipts and disbursements under the provisions of this act, together with the total number of persons receiving annuities and disability allowances and the amounts paid them.

SEC. 15. That the provisions of this act shall apply to all persons entering the classified civil service after the first day of July next following the passage of this act, and to all persons in the classified civil service prior to the taking effect of this act who shall, by written application to the Secretary of the Treasury within one year after the first day of July next following the passage

of this act, elect to become subject to the provisions of this act. The classified civil service is hereby defined to include all officers and employees in the executive civil service of the United States except unskilled laborers and persons appointed by the President and confirmed by the Senate.

No person serving in a position excepted from examination or registration as defined in the civil-service rules shall be included within the provisions of this act unless he has served in a competitive positon for at least one year. Whenever any person becomes separated from the classfied civil service by reason of appointment in the unclassified service, such separation shall not operate to take him out of the provisions of this act. The President shall have power, in his discretion, to exclude from the operation of this act any group of employees whose tenure of office is intermittent or of uncertain duration.

SEC. 16. That none of the moneys mentioned in this act shall be assignable either in law or equity or be subject to execution or levy by attachment, garnishment, or other legal process.

SEC. 17. That for the clerical and other service and all other expenses necessary in carrying out the provisions of this act during the fiscal years nineteen hundred and thirteen and nineteen hundred and fourteen, including salaries and rent in the city of Washington, there is hereby appropriated the sum of $50,000 out of any money in the Treasury not otherwise appropriated, to be available until expended.

SEC. 18. That the Secretary of the Treasury is hereby authorized to perform or cause to be performed any and all acts and to make such rules and regulations as may be necessary and proper for the purpose of carrying the provisions of this act into full force and effect.

[Hearings before the Committee on Reform in the Civil Service, House of Representatives, 63d Cong., 2d sess., Friday, Feb. 20 and Mar. 6, 1914.]

CONTRIBUTORY PLAN OF RETIREMENT.

STATEMENT OF MR. THOMAS F. FLAHERTY, SECRETARY-TREASURER NATIONAL FEDERATION OF POST-OFFICE CLERKS, WASHINGTON, D. C.

Mr. FLAHERTY. I represent the National Federation of Post-Office Clerks, which is made up largely of the younger element of the service, the men who are just coming in or who have been in but a comparatively short time, and I must confess that we are

The CHAIRMAN. The post-office clerks in Washington?

Mr. FLAHERTY. All over the country; and I must confess that we are more concerned with our present-day needs than any future contingencies, but as civil-service employees we know our promotion or our advancement depends to a great extent upon the advancement and promotion of those who have preceded us in the service. And if there is any stoppage or any stagnation anywhere along the line it affects us all-we who are just starting as well as those at the other end of the line. For that reason we have always considered this subject of superannuation and retirement, and it has been discussed in our official monthly journal and also at the annual conventions, and we have gone on record repeatedly in the last six years as being in favor of a contributory plan of pension rather than a straight plan of pension. I have not the time to go into any exhaustive explanation for these reasons, but briefly I can say that we favor a contributory plan of pension because we think it will accomplish what the straight pension plan will not, and what is in my opinion the only justification for any system, and that is it will improve the efficiency of the service, because under a straight pension plan it will be almost impossible for any departmental head to rid the service of an inefficient man. Naturally he would not want to deprive this employee of his pension rights, and the same humanitarian mode would prevail as prevails to-day and clog up the service with inefficient men, in a modified form of course.

We are also opposed to a straight pension plan because only 1 employee in 8 would live or stay in the service long enough to derive the benefits; and speaking from the viewpoint of the postal employee, under the present-day conditions and the excessive amount of work with the excessive scheme study and with the conditions as we face them, there is, I am sure, but little chance of any more than 1 in 8 remaining in the service, and it is not much of a prospect

for a man in a large post office, compelled to work as they are compelled to work, under the most unsatisfactory, insanitary conditions, sometimes in basements where the sunlight never penetrates, handling mail equipment that is filth-begrimed and germ-begrimed with the accumulated dirt of years-I assure you, gentlemen, there is not much of a prospect for those men to look forward to 25 years of such work even with the lure of the pension.

The CHAIRMAN. Do you men work more than eight hours a day?

Mr. FLAHERTY. Since the 4th of last March if we worked more than eight hours we are paid overtime.

The CHAIRMAN. Does that apply to all second and third class offices? Mr. FLAHERTY. That applies to all second-class offices; yes. A man working on Sunday, of course, is compensated by one day off within the following six days. But for holidays there is no compensation. If a man works on the Fourth of July, he loses the day; if he works Thanksgiving, he loses the day, and if he works Christmas and New Years, he loses the day, and so on. That applies to clerks in the distributing part of the office, because what we call the finance division, general delivery, and stamp divisions are closed, but other portions are never closed, and those men, particularly, of course, would be opposed to any pension plan that all these years in which they had to remain in the service tend to lessen their chances for more needful legislation. Just at the present time we particularly want to see the six hours of duty for night work introduced. There are men working nights year after year. I know of one concrete example of a clerk in Chicago who told me this when I was on my way here last fall, that he had been 32 years in the service, and he goes to work at 3 o'clock in the afternoon and he works until 1 in the morning. He has been on that shift for more than 30 years. In the meantime, his two little daughters have grown up to womanhood and married, and that man scarcely knows them. Of course, last March we got a weekly rest day. Prior to that we did not. You would work Sunday and you would get neither time nor compensation nor anything else.

Take the ordinary post-office clerk. Say he enters the service after one year or two years as a sub, and during the time which he subs he is fortunate if he averages a dollar a day. He is appointed at an entrance salary of $600, and he gradually, at the end of six years, can reach the maximum salary of $1,200, providing he has no demerits, providing he has no dereliction of duties, and providing he has not violated any of the thousands of rules that hedge him in. All this time, of course, the cost of living has been soaring, and that man, from the time he enters as a sub for the dollar a day, has probably accumulated nothing except a lot of debts. There is one thing that can be said about a Government job: It is a fine medium for borrowing money, because the presumption of everybody you come in contact with is your job is as good as a bond. The result is that it is easy enough to get into debt, and we all know how mighty difficult it is to get out of it. I heard the eloquent Mr. Dies describe the civil-service employee, when he told of him eating red apples and going to the moving-picture shows, and if the post-office clerks should enjoy such pleasant times as he described they would be perfectly happy and would not want anything. The most of them, however, can not go to picture shows, because they are working at night.

Mr. DIES. This place that I described in New York I said was the exception to the rule.

Mr. MORGAN. Do you say that the rules require the clerks to do a certain amount of work on holidays?

Mr. FLAHERTY. That is it absolutely; but to return to the post-office distributor: A man to learn a distribution scheme can study year in and year out all the time, and it is something he never learns, because it is something that is constantly changing, and yet this knowledge which he acquires after years of concentration and study is of absolutely no value to him in any other employment whatever. He can not start a rival post-office business. He has no hope that some competing firm is going to offer him more money. He has absolutely no market for his knowledge; he can not capitalize it in any way whatsoever. I have studied post-office schemes for 12 years and I know every post office in the State of California, every train leaving San Francisco, just what trains to dispatch mail on to reach a point in the quickest time, and there is not a business house in this country that would give me $5 a month for that knowledge, because there is no value to it. And yet these years I have worked for the Government, given it the best I know how, and I have never been able to save

or accumulate anything toward the day of old age, when I will be inefficient, when I will be cast on the scrap heap in some way or another.

So we favor a contributory plan, principally because it would not make us servile, would not make us lose independence nor our manliness at all. We feel that a straight pension plan might tend that way, because a man would always be under the dread, especially in the last years of his service; anyway the thought of losing his pension would obtrude to a demoralizing extent.

Mr. SCOTT. You said at the outset that your organization represented the younger element of the service. You say you are in favor of the contributory method. Do you know what the prevailing sentiment is among the younger element of the Postal Service as touching that question?

Mr. FLAHERTY. The younger element of the Postal Service is much more concerned with a correction of present-day needs rather than any pension system. I truthfully say they would not want a pension system that was going to act against any possible chance of an increase in wages or a correction of these more vital things-present-day needs. We feel that there are so many other things in the service which need correction and that any pension system that might tend to prevent us getting those things we would not favor.

Mr. SCOTT. That does not go directly to the question. I get the impression from this that your element in the service were opposed generally to the contributory system and favored more particularly the straight pension plan.

Mr. FLAHERTY. No; that can not possibly be, because the straight pension would mean that for 20 years they would have to be tied to the job, because there could not be any betterment of conditions because of the existence of those pensions; as Mr. Dies said, they would be given a certain valuation. If we come to ask for better hours and more money, it would be said, "You are getting a pension; go home and wait 20 years and you will get something." We do not want that.

Mr. DIES. Would not the best way be to take up the different employees of the Government and reclassify the service and pay every man who works for the Government a living wage and just salary?

Mr. FLAHERTY. Absolutely; that would be the idea.

Mr. DIES. Then let them contribute of their own free will if they wanted to establish an annuity fund, or properly have the Government insist that they shall provide some sort of a fund.

Mr. FLAHERTY. A saving fund, I think, would be right.

Mr. DIES. Do you not think it would be unjust to take money out of every man's salary and have the Government invest it at 3 or 4 per cent when he may be saving, himself, and buying a home and trying to pay for a home to make his little savings worth 10 per cent, and you reach over and get his money and he objects. He would say, "I do not go to the moving-picture show; I am buying a home. You are going to take my money, worth 10 per cent, in order to protect this other fellow because he throws his money all away." You would not injure the man who is trying to build a home and trying to save something in order to help the fellow who is indifferent and careless and who does not make any provisions for his future? Would not that be the effect of compulsory contributions? Would not the best way be to give the Government employee a fair, square salary?

Mr. FLAHERTY. Throw him on his own resources; but the salary you are giving him will not permit what you are describing.

Mr. DIES. Some of the salaries are too high and many are too low, and they ought to be rearranged and reclassified, and every man and woman given what they deserve.

The CHAIRMAN. We have to give every man and woman a fair salary if we want to keep them.

Mr. DIES. We could provide that before a man entered the Government
service he should associate himself with some association within the Government
itself, just among the clerks, providing for mutual annuities and mutual insur-
ance, whereby they could mutually provide for themselves. The Government
should say,
"You not only read and write, but you must join one of these

societies."
Mr. BRYAN. What about the man who has already become superannuated?
Mr. DIES. I am afraid I have been taking up too much of this gentleman's
time.

Mr. FLAHERTY. As a representative of an organization of post-office clerks, a relatively young organization made up for the most part of men who would not

1

be the beneficiaries of a direct pension system for many years to come, I voice the sentiment of the membership of the National Federation of Post Office Clerks in favor of a contributory plan, a direct contributory plan, I might say. for any system of retirement, regardless of what virtues may be claimed for it, is contributory in its effect and operation.

Though the majority of the membership of the Federation of Post Office Clerks are young men in years and in length of service, they nevertheless have a direct interest in this subject of retirement or superannuation. They realize their promotion and advancement is and will continue to be retarded unless some equitable plan is adopted to retire the aged employees who have passed beyond the stage of efficiency. Hence the federation has always given considerable thought to the solution of this problem. It has been discussed at conventions and in the columns of our official journal. The organization, since 1908. has recorded its wishes in favor of a retirement system whereby the Government would contribute an amount equal with that of the employee, which sum, with compound interest, would be available to the employee upon severance from the service.

Prior, however, to the installation of any contributory plan of retirement, we, knowing from actual experience the inadequacy of the present salaries to permit of any deductions, would heartily indorse a general revision upward of the 'wage schedule of the civil-service employees.

Speaking for the membership I represent, I can say with all candor that we consider the present-day needs as paramount to any future contingencies. We appreciate the immediate necessity of taking care of the present superannuated employees in the Postal Service; the aged, faithful men who have preceded us. but we are unalterably opposed to the adoption of any pension plan that would retard the granting of rights which appear to us more imperative. We oppose a straight pension plan because we believe it would have a tendency to delay or postpone the enactment of legislation of even a greater need to the postoffice clerks.

Aside from the objection that a straight pension plan would not make for increased efficiency because, under its operation, it would be almost impossible to rid the service of inefficient workers prior to the retirement age, it has the additional objection that but one out of every eight employees remains in the service long enough to become a participant in its provisions. . Thus seveneighths of the employees, nonparticipants in the pension or retirement feature, must suffer by the loss of other remedial concessions in order that one-eighth may receive a service pension.

To one intimately acquainted with the work of a large post office, particularly that portion where the mails are received or dispatched, it is easy to understand the unwillingness of the clerks to sacrifice the possibilities of present-day improvement in working conditions in order to share in some promised reward at the end of years of service. Of what possible benefit, they think, is a pension or retirement plan, based on 20 or more years of service, to a man compelled to work nights at top speed, at high tension, amid insanitary surroundings who can not reasonably hope to live long enough to become eligible? These men are naturally reluctant to be tied to a position by a pension plan which will operate, as they view it, to block or at least delay the improvements they think preferable to any phantasm of the dim future.

No pension measure will correct the most serious evil that menaces a great portion of the post-office clerks in the largest offices of the country. While laudable efforts are now being made to protect those injured on duty or their dependents in case of death by a provision in the post-office appropriation bill, yet no consideration is shown the man whose death follows a gradual undermining of his health because of post-office conditions under which he must labor. While the man suddenly killed is shown proper consideration, the one gradually driven to his grave by excessive night work, by speeding up. by constant scheme study after office hours, also needs corrective legislation. The postal clerk to-day who falls a victim to the ravages of a disease he contracted in the unwholesome surroundings in which he was forced to labor would not share in a pension. He would not even be granted a day's sick leave. His pay stops the moment he is incapacitated. The clerks working wholly under electric lights, in the grime and dirt of a germ-infected basement. where the sun never penetrates, handling sacks and mail equipment that is heavy with the accumulated filth of years, do not view with much joy a pension measure that only operates to doom them to 20 years or more of such work.