Mr. TAVENNER. Mr. Chairman, we will never be able to obtain the maximum of efficiency from any of our Government departments until some plan is devised for the retiring of the superannuated employees of the Government. There are hundreds of aged men and women in the Government service who are doing but one-half, and even as little as one-third, of the work being performed by younger persons. It is neither practical nor humane to turn out these old people, who have served the Government faithfully for so many years, to become public charges. I say it is not practical, meaning that the heads of the departments simply will not turn them out to go to the poorhouse, and I must say that in my opinion this is to their credit. I have heard heads of departments say there are many aged employees under them who are not doing one-third as much work as younger employees who receive less salary, but that they will permit the President to discharge them from office before they will turn them out.

The solution of the problem is the retirement of these superannuated employees on a pension or service annuity.

If this bill is reported to the House, the argument I intend to make for its passage will be that the plan embraces a money-saving, and therefore a money-making, proposition for the Government. Many of the greatest private corporations of this country have demonstrated this beyond successful contradiction. Much of the criticism against legislation of this character will vanish when it becomes known that it is really an economic and not a philanthropic scheme. It is not my purpose, however, to make any extended remarks on this subject at this time, as there are many gentlemen gathered here this morning to testify who have a great deal more knowledge on the subject from first-hand information than I could possibly have, many of them having studied the subject for years and years. Therefore I cheerfully yield to them.

Mr. Chairman, I desire to take advantage of this opportunity to thank the committee, and particularly the chairman, for this opportunity to be heard on behalf of the bill. I think I can also say that thousands upon thousands of Government employees, old and young, are also grateful to the committee. Mr. Chairman and gentlemen of the committee, we are grateful for this favor, and will appreciate in the same proportion your action in reporting the measure to the House so that the entire membership of that body may have an early opportunity to consider and vote upon it.

The chairman having asked me to introduce the witnesses, I will first present to the committee Mr. Ethelbert Stewart, chief statistician of the Bureau of Labor Statistics, who will give the business side of the argument in support of retirement legislation.

STATEMENT OF MR. ETHELBERT STEWART, CHIEF STATISTICIAN BUREAU OF LABOR STATISTICS.

Mr. STEWART. There is such a large number of people here who desire to be heard that I think I had better submit a written statement with the tables that I have prepared, simply giving their essence. As a man who has had to do with the administration of a bureau, I have taken the position that an old-age pension is a money

making scheme, cutting out entirely the humanitarian side of it. I do not know, but I believe that Congress has never asked for the percentage of employees in any large department who have exceeded the age of 70 years. So I can simply take my own little bureau as an illustration. We are 30 years old.

The CHAIRMAN. What bureau is that?

Mr. STEWART. The Bureau of Labor Statistics, which was organized January 1, 1885. We are 30 years old, as I have said, and 8 per cent of our employees are 70 years and over; 2 per cent are 80 years and over; 13 per cent have passed the age of 65. Assuming that 70 is the proper age for compulsory retirement, the Bureau of Labor Statistics, as I show here, could pay the 8 men half of the highest salary they have ever received-50 per cent of the most that they ever were paid by the Government-retire them on that 50 per cent, and have enough left as between that 50 per cent and what we are now paying them to employ four young men at the entrance salary, who within 30 days would be doing more work than the eight men. Then we would have in training young men who would be growing more efficient instead of eight men who are, in the nature of things, growing less and less efficient. In other words, you have a pension roll whether you like it or not. You have an army of pensioners, but no pension system.

That leads up to the statement that I make about the corporations and big business concerns. I submit a list of the largest business concerns in the United States that have pension systems. They have these pension systems because they had a water-logged pay roll that they had to fix up. In other words, they had a pension pay roll without a pension system, and they had to devise a pension system in self-defense.

I give you the plans of some 12 or 13 of these corporations in addition to a list of the firms.

I give you a list of 238 cities of the United States that have found it necessary to install civil-service retirement pension schemes.

I give you then a list of the countries of the world that have civil-service retirement schemes. I find them in China, Egypt, Russia-practically everywhere except Turkey and the United States. Mr. Chairman, in addition, I have drawn a plan of the essential features of the pension systems of the principal countries of the world, showing the scheme and how it works out.

Mr. Chairman, I am convinced that it would be practically the unanimous opinion of men in administrative positions in the Government that an adequate civil-service retirement law would be the best financial investment that the United States Government could make. While not blind to the humanitarian side of old-age pension provisions, I prefer to look at this as purely a business matter.

In any organization where the salaries are fixed by statute, or for that matter whether so fixed or not, if the working force is protected from ruthless discharge, either by civil-service regulations, by questions of policy, or by the dictates of justice and humanity, the question of inefficiency through an accumulation of people too old adequately to perform the work is bound to arise. Any working force, which is limited in number by statute or otherwise, is bound to become water-logged sooner or later by an accumulation of old employees who occupy positions on the pay roll from which they can not be dislodged. In other words, whether you like it or not or whether you want it or not, a certain amount of your pay roll becomes a pension roll, and, as the

bureau grows older, the percentage of the pension to the total pay roll will constantly increase.

The reason many of the large corporations of the United States have adopted an old-age pension system was precisely this, that they already had old-age pensions, but no old-age pension system, and the system was devised and adopted because it was a money saver as compared with the growth of the pension roll without the system. Unfortunately, no large department of the United States Government has ever been called upon, so far as I know, to furnish figures upon which any broad generalization of the facts in the Government service can be made. I can, therefore, only give you the experience of one of the smallest bureaus.

The Bureau of Labor Statistics has been in existence since January 1, 1885. It is, in other words, 30 years old. Of its 100 employees, 8 are 70 years old and over. Taking the 8 per cent of the employees under discussion, and taking the highest salaries that these employees have been paid during their connection with the bureau-you will understand that some of them have been reduced-we have a total of $10,520. The total amount now paid to these eight persons is $9,220. A pension system which would permit the Bureau of Labor Statistics or the Department of Labor to retire each of these persons upon one-half of the highest salary paid to them at any time, would give to these persons an average pension of $658 a year, the entire amount of which could be paid by the Bureau of Labor Statistics from its present appropriation with a saving of $4,000 over and above the present amount paid to these eight persons. With the $4,000 four young men could be employed at an entrance salary of $1,000 each, and, after 30 days of experience in the office, they would do as much or more work than the eight persons referred to. These four young men would be constantly improving in the character and efficiency of their work. In other words, we would have four men on the upgrade for the money we are now paying eight people who, while in past years have been worth all or more than they were ever paid, are at this time, in the very nature of things, growing less and less capable of performing a standard day's work. Our sick leave and annual leave charges are also augmented disproportionately by this 8 per cent of the employees.

Private corporations have instituted old-age pension schemes for two purposes: First, to relieve the water-clogged condition of the pay-roll personnel, in other words, to adapt a system of pensioning to that part of the pay roll which was essentially a pension anyhow. Second, to furnish an inducement to efficient employees to remain with the company during the years of greatest efficiency, notwithstanding, perhaps, greater salary inducements offered by other corporations which did not provide for competency and comfort in old age.

The comparatively satisfied condition of the German workingmen under appallingly low wages, because of their assurance or belief at least that they will be provided for in old age and in sickness, forms the psychological basis for the private old-age pension systems adopted by employing corporations in the United States.

I know it is generally said, and possibly believed, that the United States Government does not lose its more efficient employees either because of the comparatively low salaries paid or because it has no civil-service retirement plans. No man in an administrative position believes this to be true for one minute. The Government does lose and is losing its most efficient people right in the years of their maximum efficiency and doing it every day. The fact of the business is that the various departments of the United States have been systematically bled by the industrial and business interests of the country of its most efficient men in the most efficient years of their lives until the departments in Washington are looked upon on the outside simply as training schools to develop efficient men for private corporations. We grow and ripen the plums and peaches of financial, industrial, and educational efficiency to have them plucked when ripe by the bankers and commercial, industrial, and educational institutions of the country. The remedy, as I see it, is to adopt the business methods of the business men who are able to pick off our more efficient employees and at the same time, while preventing a water-logging of their own pay rolls, provide a system which brings satisfaction and contentment with the conditions which they are able to offer.

I believe that Congress should not only provide for an increase in salary for those on the statutory rolls, but that a part of this increase, say at least 5 per cent of the salary paid, should be made a part of a civil-service retirement fund. If, for instance, a 10 or 20 per cent increase in salaries is made

and 20 per cent would not build the salaries of statutory employees up to anywhere near cover the increase in cost of living since the statutory salary classification was made-then all but 5 per cent of the increase should go directly to the employee, that 5 per cent being reserved as his contribution to the civil-service retirement fund. It would then be possible to retire every person above 70 years of age who had rendered more than 20 years' service to the United States Government on 50 per cent of the highest salary received by that person in the department in which he reaches his seventieth year, as a retirement annuity.

It will be useless to provide for any mere pittance in the way of pensions. The same convictions which now prevent the head of a department from turning old people out of that department penniless would operate to defeat a law which authorized him to turn them out practically penniless. In other words, you must provide a pension which must insure the old employee against actual hunger, cold, and want or your pension system will defeat itself. There should be a minimum which certainly ought not to drop much below $600. If you want a maximum, and I think you do, then the law should provide that $1,800 or $2,000 should be considered the highest salary to which the 50 per cent should be applied; that is, if a man had received $2,500 or $3,000 a year at some time in the department in which he reaches the age of 70, he should not receive 50 per cent of $2,500 or of $3,000, but $2,000 should be considered as a maximum salary to which the 50 per cent should be applied. In brief, you get a maximum pension of $1,000 and a minimum pension of $600. As stated above, the plan when applied to the Bureau of Labor Statistics gives an average pension of $657. The highest would be $700 on taking only the 8 per cent of employees which I have referred to above.

If the experience of the Bureau of Labor Statistics can be applied to all the civil-service employees of the United States Government, then there are practically 40,000 persons in the Federal civil service who have reached the age of 70 or over. Personally I believe that this proportion can not be applied, because, in the first place, the Bureau of Labor Statistics is very much older than many of the bureaus. It would be exceedingly helpful in any study of this sort if Congress would ask the various departments to submit statements showing the number and per cent of employees 70 years old and over, the average highest wage received by this group of persons, and the average per cent wage received by such group. It would then be possible to determine the cost of installation of a civil-service retirement system.

If the Bureau of Labor Statistics figures can be applied to the entire Government civil service, then it would increase the total appropriations of Congress by 2 per cent to inaugurate a pension system on the basis I have outlined and maintain it at Government cost during the lives of those who would be pensioned immediately upon the law's becoming effective. Those reaching the retirement age after that would, of course, contribute to their own retirement. Upon the proposition that old-age pension systems pay, I want to submit to your committee a list of the large firms and corporations in the United States, including 28 of the largest railroad companies, that have inaugurated old-age pension systems. There will be found in this list a total of 114 companies. Four of the sovereign States of this Government-Illinois, Massachusetts, New Jersey, and Pennsylvania-have inaugurated civil-service retirement laws more or less comprehensive.

In addition, I want to submit a list of the cities of the United States which have provided for municipal pensions. Every one of the 18 cities having a population of more than 300,000 has a pension fund. Six cities of between 200,000 and 300,000 population, 30 of the 31 cities of between 100.000 and 200,000 population, and 39 of the 54 cities with a population from 50,000 to 100,000 have some pension plans, and this is also true of 69 of the smaller cities, ranging from 25,000 to 50,000 in population. The list of such cities, showing the population and the nature of the pensions provided, is herewith submitted. I would like to submit also a list of the foreign countries having civil-service retirement legislation. If the committee desires, I will read this list; otherwise I shall submit it as a part of my testimony. I would like, however, to call your attention to the fact that there is here listed practically every country in the world, including China, Egypt, Japan, Russia, Persia, and India. The list does not include Turkey and the United States.

I wish especially to submit a table which shows the principal features of the civil-service retirement legislation in representative countries. As a running

comment upon the material shown in the table, let us take, for instance, Argentina. The pension system is compulsory for those not otherwise provided for, elective for others. It is contributory. The age of retirement is 55 years, and the retirement is voluntary. Years of service required range from 20 to 30. The burden of the payment is as follows: Employees pay 5 per cent of the salary. They also pay one-half of the first month's salary upon entering Government employ. In addition, they pay one month's increase upon the event of each promotion. The balance is paid by the State. The amount of the pension is 2.7 per cent of the average salary for the last five years of employment multiplied by the years of service. For example, an employee who has seen 20 years of service would get 54 per cent of his average salary for the last five years before reaching the age of retirement. The maximum pension is 95 per cent of this average for five years of basic salary. The pensioner's survivors have an interest in his pension. The widow is entitled to one-half of the pension for 15 years, or until the marriage of the widow or daughter or the attainment of 20 years of age for the son. In case of the disability of the civilservice employee there is a pension equal to 2.4 per cent of the average salary for the last five years multiplied by the years of service. This general class of facts is shown for the principal countries in the table which I desire to submit. I must say that the Bureau of Labor Statistics prepared and submitted to the Senate for publication the civil-service retirement laws in operation in the following countries: Great Britain, New Zealand, New South Wales, and Australia. We also submitted to the Senate on October 20, 1914, a report on civilservice retirement in Canada. This material was prepared in response to a resolution of January 11, 1910. The report was referred to the Senate Committee on Civil Service and Retrenchment, with accompanying papers showing operation of the Canadian law in detail. I am not prepared to say why this report has not been printed by the Senate.

• PENSION PLANS OF VARIOUS LARGE CORPORATIONS AND BUSINESS CONCERNS.

1. One-half of the yearly salary for the average of the 10 years preceding retirement, not to exceed $500 per annum.

2. For each year of service 1 per cent of the average wage for 10 years preceding retirement, minimum being $240 per annum.

3. One-half of the annual salary, not to exceed $3,600 per annum.

4. One-half of the average earnings during the preceding year, with an additional 5 per cent for each year of service after 25 years.

5. One dollar per day flat rate.

6. One-half of the annual pay for the average of the preceding 10 years, not to exceed $500 per year nor less than $20 per month.

7. For each year of service 2 per cent of the annual wage paid at the time of enrollment in pension system.

8. One-half of the average pay for the preceding 10 years, not to exceed $500 per annum.

9. For each year of service 13 per cent of the average annual pay during the consecutive five years when pay was highest.

10. For each year of service 1 per cent of the annual wage paid at the time of enrollment in pension system.

11. One per cent of the last average wage for each year of service.

12. Two per cent of the average yearly pay for the 10 years preceding retirement, payable monthly; also sick and death benefits.

13. For each year of service 1 per cent of the average annual pay for the preceding 10 years, plus $10 per month.

14. For each year of service 14 per cent of the highest pay during any consecutive 10 years up to $50 per month and three-fourths of 1 per cent of any excess over $50.

15. A pension system classified according to years of service: Class 1, 20 to 24 years' service, 50 per cent of the average annual pay for the preceding five years; class 2, 25 to 29 years' service, 55 per cent of the average annual pay for the preceding five years; class 3, 30 years' service or over, 60 per cent of the average annual pay for the preceding five years.

16. For each year of service 1 per cent of the average annual pay during the 10 years preceding retirement, not to exceed $100 per month or less than $21 per month.

17. A graduated scale of pensions running from 30 to 50 per cent of the monthly wages, minimum being from $25 to $80 per month.