a number of employees from whose pay deductions were being made of amounts representing the evaluation of certain benefits they are entitled to receive but do not receive, except partly in some instances, either through election or compulsion. Where no benefits are received and a deduction in pay is made despite that fact, obviously an employee would not be receiving compensation in accordance with the Classification Act.

The benefits consist of quarters, subsistence, and laundry, any or all. Captain Wilkinson, of the Navy, testified on this matter before your committee last year, and, I think, made a very convincing presentation. For some reason or other the committee did not see fit to recommend the appropriation. I know you gentlemen to be fair-minded and, therefore, wish to be fair, and it just seems to me you must have been actuated by a misapprehension of the facts in the case, which may not have carried the appeal at the time of presentation as they do in the printed record.

The purpose of my presence here today is to urge you to reconsider the matter.

Years ago, when the Naval Home was established where it is now situated, the site was well outside of the city. Employees were fed at the home, some were quartered at the home, and some of the latter were accorded laundry privileges. Those benefits were weighed and considered in connection with the wages offered and paid.

As the city expanded, the need for according these privileges diminished, and, at the present time, the need no longer exists except in certain classes of employment where the conduct of the home requires residence upon the reservation or employment before and after regular working hours.

When the Classification Act of 1923 was extended to en ployees in the field, definite pay rates were established for each position, and, in cases where employees received benefits having a definite monetary value, it became necessary to evaluate such benefits and to pay employees their classification salaries less the appraised value of the benefits they were accorded. Such a procedure does not apply to the Naval Home alone. It is the prevailing rule and practice throughout the Federal service.

Operating within limited funds, naturally the Naval Home has been prevented from making salary adjustments as employees from time to time have ceased to avail themselves for personal and family reasons of the benefits or privileges they one time by choice or force of circumstances received.

I should like, Mr. Chairman, to include as a part of my statement a copy of my letter upon this subject to Admiral Laning, the Governor of the Naval Home, on December 13, 1937, and of his reply to me. dated December 16, 1937. The Admiral's letter gives a splendid, comprehensive account of the whole proposition. He enumerates 30 positions where there is no need for the incumbents to participate in any benefits or privileges of the Home. The deductions now being made from the salaries attached to those 30 positions amount to $5,952.

It is not the purpose of the Home authorities to deny privileges to any of the 30 who may prefer them to pay in lieu thereof. It is now known that some of the 30 wish, for the present, at least, to continue to have certain or all of the privileges it has been the practice to extend. In this connection the Admiral states:

In connection with the foregoing list it may be said that not all the persons involved desire to change the method of compensation. In such cases and where the interests of the Government would be served the change should not take place, but inasmuch as the individual action cannot be foretold the total money for the change would have to be provided in the appropriation if the change is actually made.

The Budget last year recommended $5,000. Admiral Laning says it would require $5,952 if all the present cases were put wholly on a cash compensation basis. I am willing to abide by your judgment as to the amount which should be allowed.

I submit, gentlemen, that this merely is a case of doing simple justice. The Classification Act prescribes the rate of pay and that rate should be paid, unless an employee, who has the election, prefers, instead of all cash, part cash and part in benefits.

Furthermore, I really believe that an employee not required by the home to live on the reservation, or to be subsisted by the home, or to have laundering done by the home, and who, nevertheless, suffers a reduction in his lawfully prescribed rate of pay, is being unlawfully deprived of a part of his compensation. He has just as much right to his full scale of compensation, established in pursuance of law, as an employee who becomes legally entitled to additional compensation in consequence of his position being reclassified, and there is no question about that in anybody's mind. But unless you gentlemen provide the means whereby that which is rightfully due may be paid, these people at the Naval Home in Philadelphia must continue to be subjected to this unfair and unjust treatment.

I thank you and trust that you will do the right thing.

Mr. UMSTEAD. You may include the letters you referred to as a part of your statement.

It has been a pleasure to have you come in and we shall give what you have said careful consideration.

Mr. McGRANERY. Thank you, Mr. Chairman.

Rear Admiral HARRIS LANING, United States Navy,
Governor, United States Naval Home,

Philadelphia, Pa.

DECEMBER 13, 1937.

DEAR ADMIRAL LANING: The Navy Department's budget for the current fiscal year ending next June 30, included an amount of $5,000 to enable the Naval Home to pay compensation at full scale to a number of employees from whose alaries deductions were being made of amounts representing the value of subsistence and laundry service which they were no longer dependent upon the Home to supply.

The proposal did not get beyond the Appropriation Committee, and I am wondering if the matter has been taken care of in some other way.

My information upon the subject convinces me that the employees involved had or have a just grievance, and if there has been no remedy I wish to assist in any way I can to help them out of their difficulty.

I should appreciate it if you would advise me promptly of the present status of the matter and, if still unsettled, the number of employees affected, what their salary would be without any deduction and what the amount of the deduction is in each case.

With assurances of my high regard, I am

Very sincerely yours,

JAMES P. McGRANERY.

UNITED STATES NAVAL HOME,

Hon. JAMES P. MCGRANERY,

Philadelphia, Pa., December 16, 1937.

House of Representatives, Washington, D. C.

DEAR CONGRESSMAN MCGRANERY: 1. I have to acknowledge receipt of your letter of the 13th instant, concerning an increase in the Naval Home appropriation "to enable the Naval Home to pay compensation at full scale to a number of employees from whose salaries deductions were being made of amounts representing the value of subsistence and laundry service which they were no longer dependent on the home to supply."

2. You say "my information upon the subject convinces me that the employees involved had or have a just grievance, and if there has been no remedy I wish to assist in any way I can to help them out of their difficulty," and you also desire to know if the matter has been taken care of in some other way than through the home's regular appropriation.

3. The matter has not been taken care of in any other way. As you know the home asked for the necessary money in the appropriation for the current year, but the matter did not get beyond the Appropriations Committee, so the money was not provided. Because of that fact no provision was made for the money in this year's estimates for the home, but in submitting its estimates for the coming fiscal year the home made the following remarks: "While no provision is made in these estimates, nevertheless.the governor desires to again invite attention to the question of the allowances of quarters, subsistence, and laundry furnished to the civil employees of the home for which a monetary value is placed and deductions made from the respective positions. The secretary, electrician, and two chauffeurs are furnished with family quarters, with no allowances for subsistence, and it is deemed to the best interests of the home that these employees be quartered on the reservation. The three members of the guard force and the two beneficiary attendants are furnished quarters, subsistence, and laundry, and as their services are subject to be required at any hour of the day or night to quell disturbances, care for the infirm beneficiaries, and for fire purposes, etc., no change in the allowances now furnished is desired. At the present time employees of the office force, the foreman mechanic, superintendent of grounds, carpenter, one painter, machinist, two laborers, and one scrubber receive no allowances in addition to their cash compensation. The remainder of the civil force receives either quarters, subsistence, and laundry, or subsistence and laundry only, the monetary value of which ranges from $192 to $252 per annum.

The services of the employees in the kitchen and dining room forces are required before and after the usual working hours in the preparation and serving of meals and no change is desired in the allowances furnished these employees. However, the Governor is of the opinion that it is not necessary to quarter or furnish subsistence and laundry to employees in the mechanical, fireroom, laboring, and scrubbing forces, and of the 30 employees involved only a few take all of their meals in the home mess and approximately 55 percent of them by count, who have family connections outside, take an average of only one or two meals throughout the week.

Under the circumstances it is felt that deductions of the full monetary value of meals and laundry from the basic salary of these employees is not fair, and it is strongly recommended that the appropriation for personal services (classified labor) be increased by $6,000 to permit the termination of deductions for allowances to be made in the cases before mentioned.

I do not know what action may be taken as a result of this recommendation. 4. In order to give you a full understanding of the matter I invite your attention to the following:

To properly administer the Naval Home, and due to its location, all the civil positions when originally established provided a certain cash compensation and in addition thereto certain perquisites, i. e., heat, light, quarters, subsistence, and laundry. The perquisites were carried at no charge to the employee but were over and above the cash compensation. This practice was continued until 1926 when, due to the provisions of the civil-service statutes, particularly the Civil Service Retirement Act, it became necessary to evaluate these allowances in order to establish a base pay for each position. This resulted in a nominal increase of the base pay of the employees so affected so that all of the advantages of the Civil Service Retirement Act might accrue to the employee's benefit. The action as taken did not decrease the employee's cash compensation but by evaluating his allowances gave him the advantage of a higher rate of base pay. Some employees elect not to take advantage of the allowances offered them and thus have the idea

that they are required to pay for something not received. However, it should be borne in mind that this apparent loss of allowances is the result of these employees' own action in failing to partake of all of the particular allowances provided by the Naval Home. Many of the employees prefer and do take them.

5. At the present time, due to changes, chiefly in the growth of the city and improvement in transportation, it is not actually necessary to house all the employees on the reservation as formerly was the case. It will be possible therefore, if funds are provided, to permit some of them to forego their allowances and be paid the equivalent additional cash. In a letter dated September 9, 1936, to the Navy Department on this point it was stated: "It is not considered necessary to quarter or furnish subsistence and laundry to employees in the mechanical, fireroom, laboring, and scrubbing forces."

The discontinuance of allowances in all of these forces would increase the cash salaries in the following positions:

In connection with the foregoing list it may be said that not all the persons involved desire to change the method of compensation. In such cases and where the interests of the Government would be served the change should not take place, but inasmuch as the individual action cannot be foretold the total money for the change would have to be provided in the appropriation if the change is actually made.

6. Members of the policing, kitchen, and dining-room forces are furnished quarters, subsistence, and laundry, and no change should be made in this practice as the services of the employees engaged therein are required before and after the usual civil-employee working hours in police protection and in the preparation and serving of meals.

7. On the occasions of appointing the various persons employed, the conditions of pay, reductions for allowances, etc., are very fully explained to each prospective employee and are made part of their appointment. To the extent that our very limited funds permitted a liberal attitude has always been taken toward the various individuals concerned in relation to their allowances, but at the present time we have not sufficient funds to pay the value of the allowances shown on the above list. The substitution of cash for the value of these allowances would require a permanent increase in the Naval Home appropriation for personal services, over what has been asked for for the coming fiscal year, of $6,000 per annum. In this connection it is believed that the present per annum cash compensation at the Home is probably a little higher than the average cash earnings of per diem employees for similar work in the other stations under the Navy Department.

Believing the above contains all the information you asked for and with assurance of my high personal regard, I remain

Most sincerely yours,

HARRIS LANING,
Rear Admiral, United States Navy,

Governor.

WEDNESDAY, JANUARY 5, 1938.

INDUSTRIAL STOREHOUSE, MARE ISLAND NAVY YARD

STATEMENTS OF HON. FRANK H. BUCK, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA; ACCOMPANIED BY CAPT. H. DE F. MEL, BUREAU OF SUPPLIES AND ACCOUNTS, NAVY DEPARTMENT

Mr. UMSTEAD. We are glad to have with us at this time Mr. Buck of California, who wishes to present a matter to the committee. Mr. Buck, we shall be glad to hear you at this time. Mr. Buck. Thank you, Mr. Chairman.

I am here asking that the committee include an item of $800,000 for an industrial stroehouse at Mare Island Navy Yard, to carry out the authorization contained in Public Law 36, Seventy-fourth Congress. I do not know that I need go into this matter very deeply. At least four of you gentlemen present here perhaps more visited Mare Island Navy Yard last summer and saw the helter-skelter condition in which industrial stores were kept in the yard.

There is a lack of adequate storage facilities there today. It has been suggested that certain supply warehouses are subsequently going to be erected at another point on San Francisco Bay. I do not know anything about that and officially your committee cannot know anything about it, because there has been no authorization bill passed as yet by Congress for that purpose.

But regardless whether any such authorization is ever made or not, the need of this industrial warehouse is of paramount importance and it has been recognized as such by the Navy Department itself.

When I came before you a year ago the need was not so acute and it had not been recognized by the Department as so acute. But as I shall present to you, or as perhaps a representative of the Navy Department will present to you, this particular project has been advanced very materially on the priority list, until it now has a very high priority number.

The Navy Department asked that this item be included in this year's Budget. It was cut out by the Director of the Budget, and I have come to you, therefore, to ask you to include this, regardless of what action has been taken by the Budget. You have the authority and are justified in doing so, because it is an authorized project. It is proposed to erect a several-storied, reinforced concrete structure within the yard proper, to house these industrial supplies.

At the time that the authorization was made, it was assumed that the amount of money was sufficient to build a 5-story warehouse. I believe testimony was given you by Captain Fite from the Navy Department last year, as to just what would go into that building With the increase in construction costs, unless this recession has dropped them again--I do not know whether it has or not-it will probably not be possible, with $800,000, to build a five-story warehouse; so that it would be impossible to build a five-story warehouse unless you gentlemen find some means of raising another $100,000. But it is suggested that it be built in such a manner as to complete. four stories with foundations sufficiently strong to add a fifth story at a later date.