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Mr. TEMPLE. That would cover expenses which he would not incur as a private person but which he must incur as an official person.
Mr. CARR. Quite so. He must do various things. He must do a liberal amount of entertaining, otherwise his usefulness as an ambassador is restricted. He must come in contact with our people; he must travel about the country in order to gain a correct understanding of our people and of opinion and conditions. He should not have to pay that expense personally. The travel is for the benefit of the people and the Government he serves, and can be made important factor in promoting good relations between our people and his own people.
Mr. ROGERS. May I ask again, to get the comparison straight for the record, Is it a fair comparison to make between the $90,000 to $100,000 that the British ambassador at Washington gets and the $17,500 that the American ambassador at Paris gets?
Mr. CARR. In a general way it is. Washington may be a slightly more expensive place to live in.
Mr. ROGERS. Is it the total compensation in each case?
Mr. TEMPLE. Please make it clear in comparing the British ambassador in Paris with the American ambassador in Paris, where living conditions are just the same.
Mr. CARR. Answering Mr. Rogers's question first, the salary of the American ambassador in London is $17,500. The salary of the British ambassador in Washington, I think, is something like $12,000 to $15,000, or thereabouts. The British ambassador in Washington has a home completely furnished for occupancy as ambassador. The American ambassador in London at the present moment has no home furnished, but will have very shortly, when the repairs are done on the house which Mr. Morgan gave to the Government for the residence of the ambassador. The American ambassador in London pays his own house rent, and if he gives a dinner, if he gives a Fourth of July reception, if he does anything else that costs money in representing his Government, he must pay for it out of his own pocket or out of his $17,500 salary. The British ambassador in Washington, on the other hand, has his $12,500 salary, and in addition to that he has the difference between that and approximately $97,350 provided by his Government as a lump sum for the expenses in representing his Government and doing the things necessary to make him an efficient representative.
The American ambassador in Paris gets $17,500. He has no house furnished by the Government. He has no other allowance for representation expenses of any character whatsoever. He is given merely the allowance usually made for the office expenses.
Mr. COLE. How about traveling expenses-anything at all?
Mr. CARR. All that he gets. The British ambassador in Paris has a magnificent residence, purchased by the British Government many years ago, which, before the World War was supposedly worth $1,500,000. He gets in addition to that $80,000 salary and representation allowances.
Mr. TEMPLE. Do you happen to know how much the American ambassador in Paris pays out of his own pocket for rental?
Mr. CARR. I do not happen to know that.
Mr. TEMPLE. It has been at times as high as $20,000, out of a salary of $17,500.
Mr. CARR. Yes. That, of course, depends on the ambassador, his private means, his tastes, etc. That brings us to another point which I might mention, and that is, the evil of that sort of thing. By not paying sufficient salary, by not having Government-owned residences, by not allowing an amount for expenses of representation we have had the spectacle of diplomatic appointments being given to men of great wealth who have lived magnificently and made lavish expenditures for entertainment, being followed by very eminent men with modest means, who were commented upon most unfavorably because they were not able to live in a manner comparable with that in which their predecessor had been living. That is not democratic; that is not right. There ought to be such a scale of living established as would enable an ambassador to represent this country properly but not overdo it and be unduly lavish in expenditure.
Mr. ROGERS. I think it may not be altogether clear in our minds what the technical distinction is between representation allowance, which is a new
phrase in our legislation, as far as I know, and post allowance, which is a fairly familiar phrase to this committee, and is also embodied in legislation.
Mr. CARR. I would explain that somewhat in this manner. A representation allowance is an allowance which has its origin in the practice of foreign governments.
It may cover furniture and furnishings for the official residence, and the rent of the officer's residence. It may cover entertainment. It may cover an allowance for receptions on the annual Fourth of July celebration. It may cover an allowance for expenses of official entertainment given to the officers and commanders of our fleets when they visit foreign ports. It may cover various outlays which the head of a mission or a consulate makes in properly representing his government. Moreover, it is to be accounted for in precisely the manner in which expenditures are usually accounted for, so that it is known what has been done with the money and usually the exact benefit derived from the outlay. The post allowance, on the other hand, was used by the British, by the French, by others, and by us during the war, and immediately after the war to cover that increase in expenditure arising out of the fluctuations in exchange, the sudden rise in cost of living, and that sort of thing. It was a sort of war bonus such as we had here for the classified civilservice employees and was given as additional compensation and hence was a personal bonus for the officer.
Mr. ROGERS. Do representation allowances take into consideration the cost of living at a particular capital, depreciation in exchange, and such matters?
Mr. CARR. It depends altogether on the attitude of Congress toward that. It is perfectly possible to cover the two purposes in one authorization, or one appropriation, or keeping the two purposes separate, whichever happens to be the will of Congress to do.
Mr. ROGERS. Representation allowance is a term that is broad enough if we desire to include all that post allowance includes and more things besides?
Mr. CARR. It might include more things besides. I personally think that it is of the utmost importance in proper conduct of the Diplomatic and Consular Service that there should be such an allowance.
Mr. MOORE. There does not seem to be any representation allowance provided for by this bill.
Mr. CARR. There is an authorization on page 7, section 13, line 12. There is no appropriation requested at this time, but there is in that section an authorization for appropriations for representation allowances in case Congress at some future time should desire to make appropriations for that purpose.
We have now post allowances of some $200,000. It was thought that if for the time being the new scale of salaries should be adopted in the form contained in this bill Congress might well drop the post allowance for the time being, at least, to see if we can go on without it, and at some future time when conditions require it and when Congress is in a position to be more generous to the foreign service, feels it can afford to spend the money, it may be well to make some better provision for both diplomatic and consular officers, or, certainly for ambassadors and ministers, by appropriating under this authorization a representation allowance to help them bear the cost of properly representing the Government. Furthermore, it is thought also that Congress might, rather than appropriate large salaries or salaries that would seem, perhaps, to us and to Congress unduly large, be willing to find in the representation allowance the medium of providing adequate expenses to defray the cost of our foreign representation. That is the general thought back of proposing representation allowances. Now, the question whether you should combine post allowances with representation allowances and consider representation allowance to cover both post and representation allowances, as I have sought to define them, or whether you should provide an authorization for post allowances separately from representation allowances, I submit to the committee for its own determination. One or both should be included in any measure for the permanent improvement of the foreign service.
Mr. MOORE. Is post allowance carried in the existing bill?
Mr. CARR. The appropriation is carried in the existing appropriation bill, but there is no statutory authorization for it. I would submit that there is a need for statutory authorization for representation allowances and post allow
In 1918, I think it was, there was a very sudden advance in exchange in the Far East, which automatically cut in half the purchasing power of the salaries which we pay our men out there. We had the entire Consular Service and some of the legation staff on the point of resigning from the service, because the purchasing power of their salaries had become too low to cover their living expenses. The Standard Oil, the British-American Tobacco Co., and other big companies in China immediately supplemented the salaries of their employees by additional allowances. We were unable to relieve our consuls and secretaries without an appropriation by Congress. There was a great deal of suffering and we underwent a great deal of anxiety through that period of almost a year before Congress was convinced that an additional allowance ought to be appropriated. Under the present adjustment for the handling of legislation in Congress, unless there is statutory authorization, you might have difficulty in acting quickly in a case of that kind in the future.
Mr. RODGERS. This particular item was before the House yesterday afternoon, and although subject to a point of order, the point of order was not made, and $150,000 was authorized. I am glad to know that Director Carr, who, I assume, is the present witness, was quoted as the basis for the propriety of that action,
The CHAIRMAN. These post allowances are under your supervision so far as the Consular Service is concerned?
Mr. CARR. Yes.
The CHAIRMAN. Who has charge of these so far as the legations and embassies are concerned ?
Mr. CARR. The Third Assistant Secretary.
The CHAIRMAN. Discretionary power in the case of the Consular Service is vested in you?
Mr. CARR. Yes.
The CHAIRMAN. And in the case of embassies, in the Third Assistant Secretary?
Mr. CARR. Yes.
The CHAIRMAN. It is your duty and the duty of the Third Assistant Secretary to meet these conditions and adjust the amount in an equitable way?
Mr. CARR. Yes. We seek as a basis for the expenditure of the appropriation to get reports annually from the officers abroad, following a certain definite form, bring out their informaton on the cost of living, the actual facts as to prices of articles entering into the cost of living of the average individual. Then we check them by price index numbers, such as those published by the Federal Reserve Board, or practically the entire world. We take into consideration the effect, upon results thus obtained, of depreciated currency of the foreign country, the amount of allowance that ought to be made for gain, by exchange, and accordingly the actual net purchasing value of the salaries. Then we try to allow an amount, which in the light of needs elsewhere and the amount of the available appropriation, would seem to be equitable and be just to the men.
Mr. MOORES. What maximum have you already reached in making those allowances ?
Mr. CARR. At one time when we had some $600,000 or $700,000 there were cases where the salaries were cut to such an extent that we allowed almost the full amount of the salary in addition, but the post allowances never went to the high-salaried men. They practically always went to the medium and low salaried men.
The CHAIRMAN. That large appropriation of $600,000 was during the war?
Mr. CARR. Yes; toward the end of the war, when there was the greatest rise in the cost of living and the most marked fluctuation in exchange. Mr. Lay has just called my attention to the fact that we had telegraphic resignations of consuls in Chile at that time when we were trying to get from Congress an appropriation to relieve the condition which arose out of the fluctuation in exchange.
Mr. MOORES. You can not tell the propriety or necessity of post allowances everywhere. But is there not an especial need for them in positions where we have no diplomatic representation, such as South Africa, India, Australia, and Ireland, where certain social duties are forced on consular officers?
Mr. CARR. I am glad you asked that question. That is true. Let us take, for example, a post like Ottawa.
Mr. MOORES. And Canada, of course.
Mr. CARR, Ottawa, Calcutta, Melbourne, Capetown, Singapore, Batavia, Java, and places of that kind. You might conceivably double the value of your representation if you could supplement the compensation of your representative in such a way as to enable him to advance his scale of living, to do more entertaining, to come into more intimate contact with public men and the principal commercial people of that particular section. If you were engaged in a large business in this country and you were to send a representative or agent to reside and do business in any one of the places mentioned, you would certainly do several things. In the first place, you would require him to take quarters in a very dignified place that was worthy of your business.
You would give him adequate compensation, but you would also give him a certain amount, a certain allowance, a certain amount of money which he was to expend in representing you. Well, representing you how? By getting in touch with the people to whom he was going to sell goods, having them to lunch occasionally, perhaps to dinner occasionally, going to their houses on occasions, belonging to the clubs that would bring him into contact with those people. This is the course which every well-established business house doing business on a large scale takes as a matter of every day practice. The Government would gain in a similar way from adopting exactly the same method under proper administrative control, avoiding lævishness or waste of public money.
That, I think, practically finishes what I have to say on the subject of the need of better compensation for our diplomatic and consular officers.
Mr. MOORE. Will you let me ask a question that may be put in the House? With the present basis of compensation, have you been having any difficulty in securing suitable people for this service?
Mr. CARR. I think I can best answer that question in this way: At our last examination there were some 100 candidates. We passed, I think, 12, for the Consular Service. Some of the best men that we have had, a number of them, have left the service to take up better positions in private concerns. For instance, a year and a half ago a man who was a credit to the service, one of the highest grade consuls general we had, receiving a salary of $8,000, went to New York at $25,000. A short time ago a man in charge of the commercial department of my own office in the department, a consul of the $5,000 class, took a business position paying $20,000 to $25,000 a year. He was actually driven out of the service because family reasons compelled him to make more money. He went out of the service into a place paying between $20,000 and $25,000. I could go on and give you name after name of men who have done that sort of thing. Mr. Lay calls my attention to one of our inspectors who has only recently refused $28,000. I did not know that the commercial enterprises who wish his services had raised their offer to $28,000; they have been trying to persuade him for four years to go with them. They began at $15,000 and have been going up ever since.
Mr. MOORE. Does that condition mean less stability in our service than in the British service?
Mr. CARR. Yes. The opportunities, I think, for our men to go out into higherpaid positions is greater here than, perhaps, it is over there. Our attitude in this country toward governmental positions, of course, is different from the attitude in either Great Britain or France. There the honor of representing the Government counts for much more than it does over here, and men are willing to keep on at salaries which the Government pays them. It is that very thing which we should seek to develop in this country in all branches of the Government service, particularly in our foreign service. Man for man the British or French secretary or consul will be willing to serve for less compensation than an American, and yet I have shown you that the British salaries are much greater than ours. “I believe I am safe in saying that there are a large number of men among the best of our men in the service who are staying on, holding on in the hope that some such measure as this will be enacted that will bring some relief to them, giving them something more to look forward to, making them feel that the increased compensation and prospects will enable them to stay on in the service. They want to do this particular work, to serve the country in the foreign service. They will do that as long as they can do it without too great a sacrifice. I could give you at once, I think, safely, the names of 25 men in the Consular Service alone who could step out at anywhere from twice to three or four times the amount the Government pays them. There are many in the Diplomatic Service who could do likewise. It is that kind of men we ought to keep in the service. The Government needs them now as never before.
The CHAIRMAN. What is your salary?
Mr. ROGERS. What is the total salary increase attributable to the Consular Service that Secretary Hughes mentioned yesterday as likely to result from the enactment of this bill?
Mr. CARR. The total amount was $378,000 for both services, and the retireinent.
Mr. TEMPLE. The total increase?
Mr. CARR. The total yearly increase is only $328,000. The amount for the first year would be $378,000, because there is included $50,000 to start the retirement system. The increase for the Consular Service would be, minus the retirement fund, $261,000. Take off half the post allowances and you would have $161,000, really.
Mr. ROGERS. That is divided among some 400 men?
Mr. ROGERS. The average increase would be extremely small in the Consular Service?
Mr. CARR. Yes. Mr. Lay says 14 per cent, in the aggregate. But you are leaving out of consideration, of course, the effect upon these men of the adoption of the retirement system. That is the thing that gives the men a sense of security. These men are not interested in making money, or they would not be in this service. They are interested in serving the Government and doing a class of work which they would rather do than anything else, providing they can do it without too much sacrifice to their families. Most of them will continue at less than outside employment would offer if they can have assurance that at some time in the future they will not be thrown out on the world because they are too old and too inefficient to justify being carried on the active salary roll. If we can enable them to look forward to eventual retirement upon reasonable compensation we will find that it will go a long way toward doing away with the necessity of having any marked increase of salaries.
Mr. TEMPLE. I talked this summer with some of the men in Berlin, Prague, Vienna, and Paris, and know that all of them are more interested in the retirement feature of this bill than any other part of it.
Mr. CARR. Exactly.
Mr. TEMPLE. That is, I mean from the personal point of view. They are all convinced, also, that it will very much increase the efficiency of the service.
Mr: CARR. I do not know of any more effective way to do that than through the retirement provision.
The CHAIRMAN. Jy experience is identical with that of Doctor Temple.
Mr. ROGERS. In order to give us figures as to the added expense which will result from the enactment of a bill like this you must, I assume, have placed the consular force and the diplomatic force into classes in a more or less arbitrary way.
Mr. CARR. Yes.
Mr. ROGERS. In other words, in a way which might not be followed in practice if the law should be enacted. I think it might be useful, if you can do this, to put in the record the tabulation which shows how you work this thing out.
16 Net cost.