recommendation merely limits the application of the plan for the present. The recommendations are given below with the reasons for each:

(1) Every employee who is 70 years of age or over should be retired at once on an annuity paid from the Federal Treasury equal to half pay, the maximum annuity to be $600.

It has been shown that the age of 70 is the one most suitable as the general age of retirement for members of the civil service of the country. All employees at that age or over when a retirement plan goes into effect should be retired at once in order that the benefit to the service from the establishment of a retirement plan may begin at once. The improved efficiency of the service is desired now, not a generation hence. The Government must assume all liability for annuities payable to these employees, because there is no other way of retiring them. They can not provide for themselves at this late date, and it would not be just to tax the younger employees for their benefit. Besides, the Government itself is the principal beneficiary from their retirement.

(2) Every employee remaining in the service after the law takes effect should be required to lay aside monthly such sum as will, with interest at 4 per cent, compounded annually, provide an annuity of half pay on retirement at the age of retirement, the maximum annuity to be $600, such monthly deduction, however, to be in no case more than 8 per cent of the employee's salary, and in case the fund accumulated by the employee by this deduction is not sufficient to provide the annuity of half pay, with a maximum of $600, the Government should make up the difference between the sum so accumulated and the amount necessary to provide the annuity. In the case of employees who retire before the age of 60, their contributions should be returned to them with the interest credited thereon in one sum. In the case of employees who retire after the age of 60 but before reaching the age of 70 years, their contributions when in excess of $600 should be returned to them with the interest credited thereon in not less than 10 annual installments. In the case of employees who remain in the service to the age of 70, their contributions should be returned only in the form of an annuity with a payment at death of the difference between the amount on deposit at the date of retirement and the amount paid in annuities.

The annuity has been limited to $600 a year because of the commission's belief that the only interest which the Government has in cooperating in the establishment of a retirement plan is to relieve itself from the inefficiency due to superannuation, which is at present causing it considerable loss and will inevitably cause it much greater loss as the number of its aged employees increases. The commission is of the opinion that, after the Government has protected itself

against this loss by making retirement at a given age compulsory under conditions which make the destitution of the employee impossible (and such would be the case on an annuity of $600 a year), it has, on the one hand, little if any interest in compelling its employees to save money, and, on the other hand, a very questionable right to force those employees to make an investment which may be less profitable than some of them can themselves make.

The per cent of deduction has been limited to 8 per cent of salary because the commission believes that any greater deduction would be very burdensome to many employees.

The commission's reasons for recommending the three methods of settlement stated above, and only those three, at the various ages are: That employees retiring before reaching the age of 60 years are ordinarily fully capable of managing their own affairs, and if they should, through unwise investment or otherwise, lose their savings, they are still young enough to secure employment; that the amount to the credit of employees between the ages of 60 and 70 would be considerably larger than at the earlier ages, and its loss at those ages would probably be a far more serious matter than at an earlier age, and be more likely to result in an effort on the employee's part to reenter the service; that the amount to the credit of employees retiring at age 70 should be paid only in the form of a life annuity, with return at death of any balance of deposit not received in annuities, (a) because cash settlements undoubtedly would, in many cases, result in the loss of the employee's savings through unwise investments, so that the employee would finally be worse off than if no plan of retirement had been provided; (b) because if a straight annuity were granted in which the employee forfeited his entire principal in case of death soon after entering on the annuity, great dissatisfaction would result among the families of employees who elected to take such settlements, and possibly claims might be presented to the Government for the refund of the money paid for such annuities, on the ground that the employee was incompetent at the time of making the selection; (c) because by requiring all employees 70 years of age to accept this settlement, the so-called "selection" against the Government-through robust employees taking annuity settlements and employees in poor health taking cash-would be removed, and the rates charged the employees as a whole could safely be based on a mortality table that contemplated a somewhat higher rate of mortality, and consequently a lower price fixed for the annuities.

(3) Persons entering the service after the law takes effect should be required to lay aside the full amount necessary, with interest at 4 per cent, compounded annually, to provide their own annuities of half pay with a maximum of $600. The methods of settlement on retirement for this group of employees should be the same as for those employees already in the service as described in the preceding section.

To limit the deduction from the salary of a person entering the service after the law takes effect to 8 per cent would place a continuing burden on the Government, the amount of which could not be calculated in advance, and put a premium on old people entering the service. On the contrary, by limiting the aid from the Government to those already in the service now eligible for retirement and to those already in the service who can not provide the full annuity for themselves before reaching the age of retirement, the total maximum cost to the Government can be definitely known in advance. The increasing deduction required with advancing age of entrance to the service would practically prohibit aged people from entering the service, and this is, the commission believes, as it should be.

(4) This retirement plan should be restricted in the beginning to employees in the District of Columbia.

As superannuation is very much greater in the District than it is outside the District, the need of a retirement plan is much more urgent there than elsewhere. The statistics collected by the commission show that of the 22,754 employees in the classified service in the District of Columbia on November 1, 1911, 2,024 were 65 years of age or over, or a little less than 1 in 11. Employees 70 years of age or over numbered 951. Aside from the fact that a retirement law is more needed in the District of Columbia than elsewhere, the advisability of thus restricting the plan at the outset is urged on the ground that it is desirable to proceed slowly in the inauguration of new measures. If the operation of the system adopted proves to be successful, it will be comparatively easy to extend its application, with such modification in detail as may seem desirable, to the Government service as a whole. The commission believes that the proposed savings and annuity plan meets all the objections that may be brought against it, and that the cost of establishing it is kept within the sum which, it has been shown in the course of this investigation, the Government will have to lose in the next 36 years through superannuation if no plan is adopted. In 20 years the annual loss from superannuation, which is an increasing amount, will equal the annual cost of establishing the retirement plan, which is a decreasing amount. In the last 16 years of that 36-year period the saving to the Government will equal the cost in the first 20 years.

The commission presents as a result of its investigation the draft of a bill based on the same fundamental principles set forth in the preceding recommendations:

DRAFT OF A BILL FOR THE RETIREMENT OF EMPLOYEES IN THE CIVIL SERVICE IN THE DISTRICT OF COLUMBIA.

SECTION 1. That beginning with the first day of July next following the passage of this act there shall be deducted and withheld from the monthly salary, pay, or compensation of every officer or employee of the United States to whom this act applies

an amount computed to the nearest tenth of a dollar that will be sufficient, with interest thereon at four per centum per annum, compounded annually, to purchase from the United States, under the provisions of this act, an annuity, payable quarterly throughout life, for every such employee on arrival at the age of retirement, as hereinafter provided. The deductions herein provided for shall, in the case of employees who are in the service of the Government at the time this act goes into effect, not exceed eight per centum of the said salary, pay, or compensation; and shall be based on such annuity table as the Secretary of the Treasury may direct, and interest at the rate of four per centum per annum, compounded annually, and shall be varied to correspond to any change in the rate of salary, pay, or compensation of the employee. SEC. 2. That the amount so deducted and withheld from the salary, pay, or compensation of every employee to whom this act applies shall be deposited in the Treasury of the United States and shall be credited, together with interest at four per centum per annum, compounded annually, to an individual account of the employee from whose salary, pay, or compensation the deduction is made, and the Secretary of the Treasury is hereby directed to invest and reinvest such funds or any portion of such funds in any of the following securities, viz: Bonds of the United States, bonds or other interest-bearing obligations of any State of the United States or any legally authorized bonds issued for municipal purposes by any city or town which has been in existence as a city or town for a period of twenty-five years, and which for a period of ten years previous to such investment has not defaulted in the payment of any part of either principal or interest of any funded debt authorized to be contracted by it, and which has at such date more than 25,000 inhabitants as established by the last national census and whose net indebtedness does not exceed five per centum of the valuation of the taxable property therein, to be ascertained by the last preceding valuation of the property for the assessment of taxes; or any legally authorized bonds issued for municipal purposes by any city or town in the United States which has been in existence as a city or town for a period of twenty-five years, and which for a period of ten years previous to such investment has not defaulted in the payment of any part of either principal or interest on any funded debt authorized to be contracted by it, and which has at such date more than 200,000 inhabitants as established by the last national census, and whose net indebtedness does not exceed seven per centum of the valuation of the taxable property therein, to be ascertained by the last preceding valuation for the assessment of taxes. In this clause the words "net indebtedness" mean the indebtedness of any city or town, omitting debts created for supplying the inhabitants with water and debts created in anticipation of taxes to be paid within one year and deducting the amount of sinking funds available for the payment of the indebtedness included.

The moneys deducted from salaries and the income derived therefrom shall be held and invested, as above described, by the Secretary of the Treasury until paid, as is hereafter provided. Any deficiency in the fund hereby created to carry out the provisions of this act shall be paid out of any money in the Treasury not otherwise appropriated.

For the purpose of aiding the Secretary of the Treasury in investing the funds created by this act, a board of investment is hereby created, composed of the Treasurer of the United States, the Comptroller of the Currency, the person appointed by the Secretary of the Treasury to enforce, under his direction, the provisions of this act, and two persons to be designated by the President from among the employees of the classified civil service. The members of the board of investment shall be sworn and shall hold office until others are appointed and qualified in their stead.

SEC. 3. That the retirement age herein referred to shall be seventy years, and that after this act takes effect no employee to whom it applies shall be permitted to remain in the service of the United States after attaining the age of retirement.

SEC. 4. That upon absolute separation from the classified civil service covered by this act prior to the age of sixty years, and only upon such separation, the employee may withdraw his savings in one sum, together with interest at four per centum per annum, compounded annually, then credited to his account, as hereinbefore provided. In case of the death of an employee while in the service, the amount of his savings, together with the interest then credited thereon, shall be paid to his legal representatives.

SEC. 5. That upon separation from the classified civil service prior to the retirement age, but after reaching the age of sixty years, the employee shall be entitled to receive the amount of his savings, including the interest credited thereon, in one payment, but if the amount exceeds six hundred dollars payment shall be made in ten annual installments, the first (to be paid one year after separation) being one-tenth, with one year's interest at four per centum per annum, and each installment thereafter being one-tenth and interest at the same rate for the preceding year on the balance to his credit at the beginning of the year. In case of the death of an employee so separated from the service, the amount of his savings, together with the interest then credited thereon, shall be paid to his legal representatives.

SEC. 6. That in case of reinstatement in the classified civil service any person who at the time of his separation therefrom received a refund under section four of this act shall for the purposes of this act be deemed to be a new entrant to the service and 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 Treasurer of the United States the amount refunded to him, with interest at four per centum per annum, compounded annually, in which case the same shall be placed to the credit of his account and the former period of service shall be counted. SEC. 7. That beginning with the first day of July next following the passage of this act every employee to whom this act applies who, at that time, shall have reached the retirement age shall be retired from the service and shall receive from the United States during the remainder of his life an annuity (payable quarterly) equal to onehalf of the average annual salary, pay, or compensation received during the five years immediately preceding the taking effect of this act, such annuity not to exceed a maximum of six hundred dollars and to cease and determine at his death.

SEC. 8. That beginning with the first day of July next following the passage of this act every employee who shall remain in the service to which this act applies shall, on reaching the retirement age, be retired from the service and shall receive such annuity, payable quarterly, as can be purchased from the United States with the deductions theretofore made from his salary, pay, or compensation, and the interest credited thereon as heretofore provided; and in case such annuity is less than onehalf of his average annual pay during his entire period of service, an annuity equal to the difference between such annuity purchased from the United States and an annuity equal to one-half of his average annual salary, pay, or compensation during his entire period of service shall be paid to him by the United States during the remainder of his life, but the one annuity or the sum of the two in no case to exceed six hundred dollars. On the death of a person receiving an annuity under the provisions of this section the annuities shall cease and determine; provided, that in case he shall not have received in annuities sums equal to the amount of the deductions from his salary, pay, or compensation, with interest as herein before provided, the United States shall pay to his legal representatives the balance remaining to his credit.

SEC. 9. That every employee to whom this act applies who shall enter the service of the United States after the first day of July next following the passage of this act shall, upon reaching the age of retirement, be retired from the service and shall receive from the United States during the remainder of his life an annuity, payable quarterly, equal to one-half of his average annual salary, pay, or compensation which he shall