dropped from the rolls. Few men in the lower grades of public service in Washington, having due regard to the great cost of the comforts of life, of the decent maintenance of their families, and of the education of their children, are able to make adequate provision for an unproductive old age. When, therefore, such disability comes to these old men, as it will to some, it appears a harsh reward for a lifetime's service to throw them out upon the cold sympathies of the world. Suitable provision for their last years is a fair call of humanity. At the same time it would serve a valuable public purpose as well, for it would attract to and retain in the service of the Government a class of employees of exceptional capacity who, without such inducement, now turn to a private career, because of the greater opportunities there found for the accumulation of a reasonable competency for their old age."

From report of Brig. Gen. F. A. Smith, commanding Department of the Missouri:

66* * * It is also recommended that some measures be taken to provide a pension or a system of retirement for clerks and employees who have become superannuated and who have devoted the greater part of their lives to the Government service."

From report of Brig. Gen. C. L. Hodges, commanding Department of Dakota : 66 * * * I also recommend that steps be taken to have such legislation enacted as will provide a system of retirement for all clerks and employees of the War Department who have become superannuated in the Government service."

Adjt. Gen. F. C. Ainsworth, when Chief of the Record and Pension Office, War Department, in his testimony before the House Committee on Reform in the Civil Service on February 12, 1904, compared the present need of the civil service for a satisfactory retirement plan to the need of a similar measure once felt by the military service. He went so far as to say that our present system of retaining the superannuated in office amounts in effect to the maintenance of a civil pension list. Said he:

In the absence of some measure of relief it is the inevitable result of permanence of tenure of office in the civil as well as in the military establishment that there shall be an accumulation of superannuated or otherwise incompetent officials. The truth of this statement is well illustrated by the condition which existed in the Army of the United States for many years prior to the Civil War. There being no retired list at that time, officers were as a rule retained on the active list until they died. The result of this was that the Army, especially in the higher grades, was burdened with a large number of disabled or superannuated officers, some of whom rendered no actual service for many years, and all of whom held the grades and received the salaries which should have been held and received by junior officers who actually performed the duties of these grades. At the beginning of the Civil War Congress enacted a retirement law, and this relieved the Army of the incubus which it had borne so long. A similar state of affairs exists in the civil service to-day, although, of course, the evil has not yet attained, and possibly may never attain, very dangerous proportions. But, disguise the situation as we may, the fact remains that so long as any employees of the civil establishment are retained on the pay rolls beyond the period of their ability to render a fair return in service for the salaries paid them to that extent a civil pension list or civil retired list has

been established. Such a list, although not a large one, and perhaps a comparatively unimportant one at the present time, is in existence to-day and will continue to exist until the situation is materially changed by legislation.

The present Postmaster General, the Hon. Frank A. Hitchcock, discussed the need of making provision for the retirement of superannuated employees in his annual report of 1909, as follows:

In recent years the subject of making provision for the retirement of superannuated employees in the civil service has received much consideration. It is believed that the interests of the employees and of the Government alike demand legislation to this end.

The work of the postal service, like that of every great business institution, public or private, requires special training. Years of experience are necessary for the attainment of a high degree of proficiency in the discharge of the duties devolving on postal employees. The department's policy is therefore to recruit its force from young men, and to retain them until such time as their usefulness is impaired by advancing age.

In view of the increased cost of living, the salaries paid are barely sufficient to enable the employees to meet current needs, and the opportunity to make provision for old age is small. These conditions suggest the adoption of measures that will insure Government employees against want after they pass the period of active service. Private business establishments in this and foreign countries find that such a course brings practical returns in the increased loyalty and zeal of employees.

Experience has shown that in default of such provision administrative officers hesitate to recommend the dismissal or the reduction in salary of superannuated employees who have spent their lives in the Government service. The drain on the national finances by their retention at full pay after they have become incapacitated for efficient service is far greater than would be the cost of a reasonable system of civil pensions.

The Second Assistant Postmaster General, the Hon. Joseph Stewart, emphasized in his report of the same year the special need of a retirement measure for the benefit of the Railway Mail Service:

Recommendation has been submitted from time to time that suitable provision be made for the retirement of railway postal clerks who have become unfit for active service by reason of advanced age or physical disability. The need for this in the Railway Mail Service is more urgent, perhaps, than in other branches of the postal service, because the character of the work demands young and active men. Old men can not stand the excitement and nervous strain of service on our heavy lines, and an endeavor to retire them, as far as practicable, to lighter runs usually finds opposition because it necessarily involves a reduction in salary, and in some cases the breaking of home ties by change of residence. If retained on the heavy lines the burden of performing some portion of their duties necessarily falls on younger clerks, or is met by an additional clerical force. There has been a general discussion for some years with reference to a suitable provision for the retirement of civil-service employees upon terms fair and equitable to both the Government and the employees, which I favor. If such provision be made it will no doubt cover the Railway Mail Service. If, however, there is no prospect for early action it is recommended that consideration be given a provision covering the Railway Mail Service.

The former Auditor for the Post Office Department, the Hon. M. O. Chance,1 has dwelt on the need of a suitable and adequate superannuation measure in his reports for 1909 and 1910. He states also that he has considered the various solutions offered to the problem of superannuation and that the only plan that commends itself to him as sound and equitable is the one embodied in Senate bill 1944, the plan discussed in this report. His reasons are thus set forth:

I wish to repeat, with emphasis, what I said in my last annual report in regard to the need in this office of a suitable and adequate superannuation

measure

* *

The various straight-pension and contributory plans of retirement proposed have received my careful attention, and I have no hesitation in saying that the only plan that commends itself to me as a thoroughly sound and equitable solution of this most difficult problem is that embodied in Senate bill 1944, commonly referred to as the Perkins bill, and found in a modified form in the Gillett bill. This bill makes provision for retiring civil employees on annuities purchased by themselves by means of monthly deductions from salary. It is in effect a compulsory savings scheme, the Government merely to stand back of it by guaranteeing a certain rate of interest, taking care of the small expense of administration, and providing the annuities for services rendered up to the passage of the bill.

As compared with a straight civil pension paid out of the Federal Treasury, this plan has many advantages, both for the Government and for the employees. The principal obligation of the Government would be to establish the plan by providing for those already grown old in the service, an obligation that would ultimately cease; whereas under a pension the burden on the Public Treasury would continually increase. The chief advantage to the employee in this plan over a civil pension is the fact that his contributions remain his property under all conditions, and in case of resignation from the service before the age of retirement, or in case of death, they are returned to him or his estate with compound interest. On the other hand, under a civil pension scheme only those who live and are able to remain in the service to a stated age receive any benefit. This means, furthermore, that the employee works below the market price, since the pension is invariably taken into account in fixing salaries, and unless he lives and remains in the service to pensionable age and enough longer to draw the full value of his deferred pay his family is worse off through all the years of his service than they would have been had there been no civil pension list.

It is manifest also that this contributory plan would tend to stimulate strongly the independence of the individual, as it should do, while a pension paid out of public funds on condition that the employees survive and remain in the service to a stated age must of necessity have the opposite effect and destroy the independence of the employee. A straight pension would have a numbing effect also on the public service, since it would interfere with the removal of young or middle-aged employees who are incompetent, dismissal under a pension system meaning forfeiture not only of salary but of prospective pension already partly earned.

For these reasons, chiefly, I most heartily indorse the plan embodied in Senate bill 1944.

The subject of superannuation in the public service has received the attention of President Taft in two annual messages to Congress. In

1 Now secretary of the Efficiency and Economy Board, recently appointed by President Taft.

his message to Congress in 1909, under the caption of "Reduction in the cost of governmental administration," he recommended legislation for the retirement of superannuated civil servants, coupling with it a recommendation for an increase of salaries. He said:

More than this, every reform directed toward improvement in the average efficiency of Government employees must depend on the ability of the executive to eliminate from the Government service those who are inefficient from any cause, and as the degree of efficiency in all the departments is much lessened by the retention of old employees who have outlived their energy and usefulness, it is indispensable to any proper system of economy that provision be made so that their separation from the service shall be easy and inevitable. It is impossible to make such provision unless there is adopted a plan of civil pensions.

Most of the great industrial organizations, and many of the well-conducted railways of this country, are coming to the conclusion that a system of pensions for old employees, and the substitution therefor of younger and more energetic servants, promotes both economy and efficiency of administration.

I am aware that there is a strong feeling in both Houses of Congress, and possibly in the country, against the establishment of civil pensions, and that this has, naturally, grown out of the heavy burden of military pensions, which it has always been the policy of our Government to assume; but I am strongly convinced that no other practical solution of the difficulties presented by the superannuation of civil servants can be found than that of a system of civil pensions.

The business and expenditures of the Government have expanded enormously since the Spanish War, but as the revenues have increased in nearly the same proportion as the expenditures until recently, the attention of the public, and of those responsible for the Government, has not been fastened upon the question of reducing the cost of administration. We can not, in view of the advancing prices of living, hope to save money by a reduction in the standard of salaries paid. Indeed, if any change is made in that regard, an increase rather than a decrease will be necessary; and the only means of economy will be in reducing the number of employees and in obtaining a greater average of efficiency from those retained in the service.

In his next and most recent annual message to Congress (1910) President Taft went still further and recommended a definite planthe one discussed in this report-and a definite bill-the Gillett bill (H. R. 22013)—as the one, in his judgment, best calculated to solve satisfactorily the problem of superannuation in the civil service. He said:

It is impossible to proceed far in such an investigation without perceiving the need of a suitable means of eliminating from the service the superannuated. This can be done in one of two ways, either by straight civil pension or by some form of contributory plan.

Careful study of experiments made by foreign governments shows that three serious objections to the civil pension payable out of the Public Treasury may be brought against it by the taxpayer, the administrative officer, and the civil employee, respectively. A civil pension is bound to become an enormous, continuous, and increasing tax on the public exchequer; it is demoralizing to the service since it makes difficult the dismissal of incompetent employees after they

have partly earned their pension; and it is disadvantageous to the main body of employees themselves since it is always taken into account in fixing salaries and only the few who survive and remain in the service until pensionable age receive the value of their deferred pay. For this reason, after a half century of experience under a most liberal pension system, the civil servants of England succeeded, about a year ago, in having the system so modified as to make it virtually a contributory plan with provision for refund of their theoretical contributions.

The experience of England and other countries shows that neither can a contributory plan be successful, human nature being what it is, which does not make provision for the return of contributions, with interest, in case of death or resignation before pensionable age. Followed to its logical conclusion this means that the simplest and most independent solution of the problem for both employee and the Government is a compulsory savings arrangement, the employee to set aside from his salary a sum sufficient, with the help of a liberal rate of interest from the Government, to purchase an adequate annuity for him on retirement, this accumulation to be inalienably his and claimable if he leaves the service before reaching the retirement age or by his heirs in case of his death. This is the principle upon which the Gillett bill now pending is drawn. The Gillett bill, however, goes further and provides that the Government shall contribute to the pension fund of those employees who are now so advanced in age that their personal contributions will not be sufficient to create their annuities before reaching the retirement age. In my judgment this provision should be amended so that the annuities of those employees shall be paid out of the salaries appropriated for the positions vacated by retirement, and that the difference between the annuities thus granted and the salaries may be used for the employment of efficient clerks at the lower grades. If the bill can be thus amended, I recommend its passage, as it will initiate a valuable system and ultimately result in a great saving in the public expenditures.

It would seem from these and similar statements that the chief executive officials of the Government are agreed in feeling that the highest degree of effectiveness and economy is impossible in the administration of the public offices so long as Congress fails to enact legislation for the retirement of superannuated employees. Most of them hesitate to indicate preference for any particular plan of retirement, feeling apparently that that is a matter to be worked out by experts. The Secretary of Commerce and Labor has, however, declared himself in favor of a "straight pension system" if salaries remain as they are; the Secretary of the Treasury and the Secretary of the Interior have expressed preference for a "contributory plan," and President Taft and Auditor Chance have recommended, respectively, the Gillett (H. R. 22013) and Perkins (S. 1944) bills, two bills covering a contributory plan which are identical in principle and almost so in detail. Nearly every public officer who has discussed the problem has made reference also to the inadequacy of Government salaries, seeming to appreciate the fact that the question of salaries and of retirement are two phases of the same general problemefficiency in the civil service.