The advantages of these various options have been discussed on page 108, under the caption of "Two forms of annuities." The second part of the section makes provision for the disposal of savings not withdrawn by the employee on retirement.

RETIREMENT BECAUSE OF RESIGNATION, DISMISSAL, OR DEATH.

Section 7 of the bill contains the provisions, under the plan, for the return of an employee's savings, in case of his separation from the service before reaching the age of retirement, by reason of his resignation, dismissal, or death. It reads as follows:

SEC. 7. That upon absolute separation from the civil service prior to the retirement age, and only upon such separation, the employee may withdraw his savings in one sum, and in case he has been in such service not less than six years he may also receive in addition thereto interest on his savings at the rate of three and one-half per centum per annum, compounded annually; or, in case his savings amount to at least one thousand dollars he may withdraw the same under any one of the foregoing options, computed on the basis of his attained age. In case of the death of an employee while in the service the amount of his savings, together with the interest credited thereon, shall be paid to his legal heirs.

IN CASE OF RESIGNATION.

Under the proposed savings plan the employee who leaves the service to engage in some other occupation will not go penniless to his new work. If nothing else, he will have at least the amount of his enforced savings while in the Government service. This will be returned to him, since the Government claims no right to compel him to lay it aside except with the understanding that it shall be paid back to him on his absolute separation from the service, whether at the age of retirement or earlier.

INTEREST ALLOWED ON SAVINGS AFTER SIX YEARS' SERVICE.

The question whether interest should be paid on these savings in case the employee leaves the service before reaching the age of retirement is one that has received considerable attention. Some are inclined to believe that no interest should be paid on the savings of those employees who remain only a short time in the service, since those who do so usually regard the service as merely a means to an end. With this class of employees in mind, section 7 was made to provide that interest on savings should only be allowed an employee who leaves the service through resignation or dismissal after he has been in the service at least six years. The loss of interest to the individual who has been in the service less than six years is small in every case-not sufficient to affect the rate of resignations one way or the other. A $1,200 employee aged 25 on entrance into the service would have $314.74 to his credit after being in the service five years, of

which $288 would represent his own contributions. If he resigned after five years, he would forfeit the difference between $314.74 and $288, or $26.74, the amount of interest contributed by the Government. The sum of $26.74 is certainly not sufficient to hold in the service an employee who has reasons for wishing to resign.

On the other hand, the forfeiture of that small amount of interest would amount in the aggregate to a considerable sum returned to the Government, which would ultimately be divided among the clerks that remained in the service and took annuities on retirement, and thus be an additional safeguard in guaranteeing the interest rate.

It has been suggested that interest might be withheld in all cases except where the employee has been in the service for an extended period, such as 20 years or more. It is said that such a forfeiture of interest might have a tendency to hold employees in office longer than if there were no penalty attached to resigning. The practical objection to such a proposal is that the interest after 19 years amounts to a very considerable sum. The employee mentioned above as forfeiting $26.74, if he left after five years, would forfeit $449 of the $1,533 to his credit if he left at the end of 19 years. The result would be a mild form of peonage, at best a kind of coercion difficult to defend in the case of enforced savings.

ANNUITY ON SEPARATION FROM SERVICE BEFORE AGE OF RETIREMENT IN CASE

SAVINGS AMOUNT TO $1,000.

The clause providing that an employee, on retiring from the service before reaching the age of retirement, may, if he so desires, withdraw his savings in the form of an annuity, computed on the basis of his attained age for such an amount as his savings will buy, seems to call for no particular comment. Table XXII, on page 126, shows the amount of cash accumulations to an employee's credit at the end of various years of service and the life annuity that may be granted him on resignation in lieu of cash.

IN CASE OF DISMISSAL.

The employee who is dismissed from service under this plan would have to his credit the amount of his savings, and in case he has been in the service six years he would also have the interest on his savings. To dismiss him under those circumstances would be less difficult than if he were known to be without funds. The efficiency of the service is thus protected.

SUPERIORITY OF THIS PLAN OVER CIVIL PENSION ILLUSTRATED IN CASE OF DISMISSAL.

The general wisdom of a savings plan, from the viewpoint of the service, in contrast to a civil pension of any description, appears in the provisions of section 7 as applied to those whose separation from

the service comes through dismissal. Everyone familiar with the executive departments of the Government knows that not all the inefficient clerks are found among the superannuated. While the rules enforced by the Civil Service Commission are effective in preventing the entrance of incompetents into the service, they are not so successful in maintaining efficiency among those who secure entrance, a fact set forth in their reports:

The conditions which have forced large business institutions to adopt pension systems exist to an intenser degree in the public service, partly due to the reluctance of appointing officers in making removals and partly to the lack of a wise system for making promotions upon efficiency. Under the enforcement of sound promotion regulations reductions and dismissals would tend to reduce to a minimum the number of inefficient and incapacitated employees, because under such regulations there would be a constant weeding out and reduction to lower grades of this class of employees.1

This reluctance of officers to make removals and the difficulty of doing so, even after they have definitely concluded to make the particular removals, was strikingly brought out by Hon. E. F. Ware, Commissioner of Pensions, in testimony before the House Committee on Reform in the Civil Service on February 9, 1904. A leaf from the hearing of the committee on that occasion reads as follows:

Mr. SMITH. Have you any plan or theory as to the proper and humane way of disposing of the old people?

Mr. WARE. No, sir. The reason I have not any plan is this: There was an old man in the bureau who was so thoroughly inefficient that I concluded to dismiss him. He was over 80 years of age, and I had the paper on my desk ready to issue when the next morning before the dismissal could take place he dropped dead, and it scared me. If I had issued the order for his dismissal, it might have been charged that I inhumanely murdered him. I have not been able to bring my courage up to the point of dismissing any of those very old people. I therefore say this: I think that the Government should fix an age at which they should leave the service. That is one way of handling this whole question. However, I do not believe that my views on this particular branch of the subject would be worthy of present consideration, for there are better ways.

Mr. LACEY. Have you had occasion to think of this idea: Suppose that every man in your office had to be reappointed at a fixed period, five, seven, or eight years, or some other fixed period, and it was optional to appoint or not, do you not think it would enable you to weed out the least efficient in that way from time to time when the periodical time of appointment arrived, requiring also that every man who is appointed shall undergo an examination, not a civil-service examination, but a departmental examination, along the line of work at which he has been employed? Did you ever investigate or think out the question whether that would give you relief, so as to be constantly getting new blood into the office?

Mr. WARE. I have never had that point presented to me, but there is in my bureau a class of appointees called "special examiners," 150 in number, whose services expire every year, on the 1st of July, and unless they are reappointed by the Pension Commissioner they are no longer connected with the service.

1 See Twentieth Report of Civil Service Commission, p. 155.

It has been my experience that all of the poor members of that class (called special examiners) knowing their inferiority, begin during June to work any political influence on me which they have, and the poorer the clerk the greater the influence, so that by the 1st of July I am completely overwhelmed with demands to keep such persons in the service.

Last year I got rid of three men, and I had more trouble in getting rid of those three men than I had from other sources in the entire bureau during a month's work, and the job was so great that I have decided not to undertake it a second time, because the influence that was brought to bear upon me only began with me. Some of it was carried to the department. I was haled up to the department to answer some of the demands of the persons interested in the reappointments and the President himself was even applied to. I would not feel that it was any protection to a bureau to have the right you suggest, because it is as easy to dismiss as it is to stand the pressure that comes from keeping bad clerks in. I believe that answers the question.

The same points were brought out a few days later, February 12, 1904, by Adjt. Gen. F. C. Ainsworth, then Chief of the Record and Pension Office, War Department, in his testimony before the same committee. Among other things, he said:

It goes without saying that whenever an employee of the civil establishment, by reason of age or any other cause, becomes unable to render a reasonable return in service for the salary paid him it is the plain duty of his bureau chief and the head of his department to cause his reduction in grade or his discharge from service. But it is difficult to bring one's self to recommend or order the reduction or dismissal, in his old age, of an employee who has rendered many years of faithful and efficient service, who probably has no means of support other than his salary, and with whom no fault can be found other than that he has become worn out in the public service. In such a case sentimental consideration usually prevails, the call of duty is neglected, and the old employee retains his position, virtually as a pensioner, while the duties which he should perform are neglected or are discharged by another, often at an inadequate compensation.

In addition to all this, whenever an attempt is made to reduce or discharge an employee who has become useless or unfit for service by reason of age or any other cause, it is almost invariably the case that more or less political and social pressure is brought to bear in his behalf upon the chief of his bureau and the head of the department. The exercise of such influence is especially to be looked for in the cases of those, young or old, whose record of service is indifferent or bad. As a rule, to which there are but few exceptions, the value of an employee bears an inverse ratio to the political and social support which he brings to bear in his own interest. It is at best difficult to bring about the discharge of a worthless, inefficient, unfaithful, or insubordinate employee, and it is equally difficult after his discharge to resist the importunities of his friends and supporters for his reinstatement.

Under the proposed plan, the retention of inefficient clerks out of humane considerations or because of their political prestige would be far less imperative than it now is. On the other hand, the tendency of a civil pension would be just the reverse, since the chief who dismissed an incompetent clerk would know that he not only deprived him of the salary of which he probably had most pressing need, but

that he also deprived him of a kind of intangible right to the pension that would ultimately be his if he were allowed to remain in the service until reaching the age at which it would be granted, and which he had already partly earned. (See Chap. I, p. 54, discussion under head, Civil pension is demoralizing to the service.)

IN CASE OF DEATH.

The savings plan would certainly not be condemned in the home of any employee removed by death from the service. The last sentence in section 7 provides that interest on the employee's savings shall be paid in case of his removal from the service by death, regardless of the length of time he has been in office.

IN CASE OF DISABILITY.

The last retirement bill introduced in the first session of the Sixtieth Congress (H. R. 21261), known as the first "Gillett bill," contained no provision for separation from the service in case of disability. This omission seemed at that time to be disapproved by the employees of the Post Office Department. At the annual convention of the United States Association of Post-Office Clerks, held in Birmingham, Ala., September 7 to 11, 1908, the president of the association strongly opposed this bill because of the elimination of the disability provision contained in the so-called Keep bill, the first of the series introduced covering this plan of retirement and known officially as H. R. 17969. Since then, the association seems to have changed its attitude toward the disability question, for it is understood to oppose the second "Gillett bill" (H. R. 22013), the one last favorably reported, on the ground that the disability provision is unsatisfactory. This attitude seems to be decidedly inconsistent in view of the fact that the disability provision in this last bill is the most liberal of any yet proposed. Opposition is understood to be based on the theory that the cost of disability should be paid for entirely by the Government instead of out of any fund created by the employees. In taking this position the members of the postal service have not seemed to realize that the passage of this last bill would enable them to get accident insurance at net cost, and that they would be benefited out of all proportion in comparison with the members of the other departments by participating in any mutual fund, since the number of accidents among members of the postal service is naturally much greater than among members of other branches of the service. If the criticism of inequity is raised it should be directed toward cutting down benefits to the members of the postal service.