mately in the course of years, well worth that sum of money to the people of the United States, but which, commercially, would not bring in a thousand dollars if placed on the market for sale. Since the inefficiency of an employee engaged in work that has such an uncertain market value is not so easily detected or so likely to be regarded as serious as would be the case in private business, he is usually permitted to remain in the Government service, whereas he would be very promptly dismissed by a private house.

The fact that the administrative officials at the head of Government offices have not entire control over the selection of their subordinates makes it impossible for those officials to be held as strictly responsible for results as is the case in private businesses. What is everybody's business is nobody's business. Since also the position of the executive head of the office is not greatly endangered by the incompetency of his assistants, especially where the effect of the incompetency can not be readily measured by reduction in actual output of some kind, it follows that he can afford to be lenient with them. He is especially inclined to be so if the employee's inefficiency is known to be the result of old age, or any other cause which makes an appeal to the natural feelings of humanity. In case the inefficient employee is working under a pension system whereby he is entitled, on reaching a certain age, to retirement on a competence, the head of the office will be all the more reluctant to dismiss him before he reaches that age. But a pension system has exactly the opposite effect where a private corporation is the employer. In that case the administrative official at the head of any office is held directly responsible either to the owner of the business or a board of directors for the inefficiency of his subordinates. The output can usually be measured in terms of tons or dollars, and if it falls below the required amount the position of the man in charge is jeopardized. In selfdefense, therefore, he is obliged to hold every subordinate up to the highest standard of efficiency and to stifle any feeling of humanity or sympathy which might otherwise tempt him to show leniency. That being his state of mind, a pension system becomes a powerful aid to him in his effort to maintain discipline and secure obedience and industry, as explained by Mr. Vanderlip in the article quoted above. Undoubtedly, the reason why railroads and other corporations are disposed to favor the straight pension with entire control of the pension fund rather than any contributory plan with a fund in any way controlled by the employees, is that it helps them to approximate the establishment of military discipline among their subordinates. They look on a pension as a useful kind of strike insurance. For fear of forfeiting his pension, the employee, like the soldier, will sacrifice much of his personal liberty, including his right to strike for better wages or shorter hours.

It may be argued that commercial or military ideas and practices of economy and discipline should be maintained in the Government service. It is, however, an open question whether to do so is more than theoretically possible and certainly it would be dangerous to count on their successful introduction in considering the establishment of a civil pension system. The whole question is 'more complicated than the outside business man realizes, for the minute the head of an office were given a free hand in the selection and removal of his subordinates, as would be the case in a private business, political influence would be brought to bear on him to employ this, that, or the other individual, and the public offices would once more become the retreat of the indigent friends of successful politicians. Whatever financial losses may be occasioned by lack of authority or responsibility on the part of executive heads is slight in comparison with the cost of the frequent changes and corrupt practices sure to characterize the administration of politically controlled offices.

It thus appears that, while the enforcement of that part of the civilservice law relating to the dismissal of the incompetent is sufficiently difficult at present, it would become greatly more so under a civil pension system, unless military discipline such as rules in the Army and Navy and in commercial establishments were introduced into the civil service. The straight pension in the Army and Navy may be defended somewhat as a logical offset to the surrender of individual independence. In private business it is on exactly the same footing, though the attempt is usually made by the corporation to present it to the employee in the guise of a beneficence. It may be disputed whether such discipline in the civil service would be an improvement over present conditions or not, but it should be established first if the establishment of a civil pension system is undertaken, unless complete demoralization of the service is desired, for to bestow the straight pension on civil employees under present conditions would be to introduce a temptation to even greater leniency with the incompetent than is at present the case. On the other hand, the establishment of a savings and annuity plan like that in the proposed bill would have exactly the opposite effect, since administrative officials would be less reluctant to dismiss an incompetent clerk who was known to have a goodly sum to his credit than one who would be penniless, as is more often the case under present conditions.

THE CIVIL PENSION MEANS WAGES BELOW MARKET PRICE

Finally, it is shown by the history of civil pensions in other lands that they are not in the interest of the civil servants themselves. The experience of Great Britain is especially instructive, for the statesmen of that country have been experimenting a full century with legislation of one kind or another designed to remedy the evil of

superannuation in office. It would be the part of folly for the United States to disregard the plain lesson taught by their experience, that only those comparatively few members of the civil service who survive to pensionable age and remain in the service until that age derive any benefit from the pension system, while the others who die or drop out before reaching pensionable age are actually worse off than if there were no pension list. This is due to the fact that, human nature being as it is, the pension always comes to be taken into account in fixing salaries, even though established in the beginning as a pure gratuity, and the result is that the pensionable employee works below the current market price. In case he lives to receive the value of this “deferred pay"—to use the phrase common in England-in the form of a pension, he has no cause for complaint, but, according to the English statistics, he either dies or leaves the service before that time in six cases out of seven. During the years that the pensionable employee is working for less than the market wage his family has just so much less to live on than they would have were he a nonpensionable employee, and in case he dies or leaves the service before reaching pensionable age, his family has absolutely no return for all those years of deprivation, unless they can get a gratuity or compensation on one pretext or another, a concession which in itself is an abuse of the system, as has just been shown. The civil pension, in the last analysis, is therefore a pure tontine in which all persons lose except those who succeed in three things: Living to a certain age, remaining in the service until that age, and living beyond that age long enough to get back the value of their contributions. As soon as the members of a service begin to realize that the " theory of probabilities" is against them, and that they have only one chance in seven to recover the amount of their " deferred pay," expressions of dissatisfaction with the pension system, once so ardently desired, will surely be heard.

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EXPERIENCE OF ENGLAND PROVES CIVIL PENSION IS DEFERRED PAY."

The experience of England with the civil pension is briefly as follows: A contributory scheme inaugurated in 1829 by treasury minute and confirmed by the superannuation act of 1834 was abolished in 1857, because it was fundamentally unsound and therefore unsatisfactory, and succeeded by a system of free pensions, established by the superannuation act of 1859. This system, which remained unchanged for a half century, was one of the most liberal ever devised for the benefit of a civil service; but study of the grievances presented by representatives of the service to different royal commissions appointed from time to time to inquire into the condition of the civil establishments, reveals the astonishing fact that the civil servants generally came to believe that in reality they were paying for their

own pensions, because the salaries in the "established "or pensionable service are generally less than in the nonestablished or nonpensionable service, and to feel that the Government was treating them unfairly. The theory that "pensions are deferred pay " gained ground, especially after the investigation of the civil establishments made by the Ridley Commission in 1886-1888. A committee of employees, which took the name of the Deferred Pay Committee, was organized, and of the 100,000 civil servants about 70,000 joined the organization. As a result of their agitation, the Courtney Commission was appointed in 1902 to investigate the grievances of the civil employees. The latter held that not only were their salaries lower than they would have been had the pension system not been adopted, but that the amount withheld from their salaries was more than sufficient to pay the pensions. They asked, therefore, that the difference should be put into a fund and returned in the form of insurance benefits for their dependents. The commission refused to concede that the amount withheld from salaries was more than sufficient for the payment of pensions, but decided that it might be more satisfactory to diminish the amount of the pension and turn the difference into a cash sum to be paid at death or on withdrawal from the service. By act of Parliament of September 20, 1909, the law of 1859 was accordingly modified so that new entrants to the service shall receive a pension calculated on the basis of one-eightieth of salary for each year of service instead of one-sixtieth, a cash sum in case of resignation after two years' service, equal to one-thirtieth of salary for each year of service, and a cash sum, in case of death, after five years' service, while still in the service, equal to one year's pay, provided that if the employee died after reaching the age of 65 the amount of the gratuity should be reduced by one-twentieth for each year he had served after attaining that age. This last provision was to discourage continuance in office after the age of 65, for, although all persons in the established civil service in England are liable to compulsory retirement at that age, the power of retention, in special circumstances, for a period not exceeding five years, is lodged with the Treasury.

The present situation in England, then, is this: The Government has acknowledged the contention of the employees that salaries are less because of the pension, and that the employees are, in reality, paying for their own retirement. The English law has been so modified as to make the pension system virtually a contributory system, the only difference being that the contributions are theoretical rather than actual, i. e., the difference between the value of the employee's service and his actual pay. The result is that the present arrangement, while more satisfactory to the employees than the old system, is less equitable than it would be if it had been worked out

on a priori principles, with a definite benefit for a definite contribution. At present, it can not be shown whether the amounts received by the employee in the form of pension, insurance, and cash-surrender values correspond with the amounts contributed by him, since it has not been ascertained what percentage of salary is withheld as a contribution.

THE SUBSTITUTE PLAN A FORM OF CIVIL PENSION.

A form of civil pension that has seemed to be attractive to many members of the civil service is what is known as the substitute plan. Every argument that can be advanced against the straight pension can be successfully brought against the substitute plan and a few others besides.

It is a plan based on the theory that salaries increase with age, that the oldest employees receive the highest salaries, and that employees above a given age generally perform service which could be performed with equal efficiency by new clerks at half the salary. In other words, the plan is founded on the theory that the Government is already paying an indirect pension to the old employees equal to half the salary which they receive, and that it would therefore cost the Government nothing (additional) to retire the old employees on half their salaries and use the other half in the employment of new clerks. The advocates of the plan declare, therefore, that it can be established and maintained" without expense to the Government." Assuming for the moment that their plan has all the merit which they claim for it, it would be more accurate to say "without additional expense to the Government," for it is manifest that if the employees eligible for retirement are receiving salaries sufficient to retire themselves on adequate annuities and enough more to employ younger men of equal capacity, then the Government is already incurring an expense equal to the amount on which they are retired. This is also a plea for appropriation by indirection, since the difference between the salaries paid and the salaries appropriated would be diverted to another purpose than that for which the money was appropriated by Congress. The policy of diverting money to a purpose other than that for which it is appropriated is always to be condemned as dangerous.

It must be admitted, too, in favor of a straight pension that, in some cases, the pensioning of the aged employees would result in the promotion of the younger employees; but under the substitute plan, if public expenditures are not increased, promotions must of necessity be governed by two factors-the mortality among the pensioners and the expansion in the service. The death of a pensioner would allow the Government to apply his pension to an increase of some other person's salary. As long as the service continues to expand the ratio of pen