committee and the House last year: first, the limitation of responsibility financially to a 50-50 basis, which was not in the old proposal; second, the complete separation of this fund and the civil service fund in its administration.

Mr. CARR. Quite so.

Mr. ROGERS of Massachusetts. Third, the proposal that we shall not exclude from the benefits of the retirement law service men promoted who are now ambassadors or ministers. Otherwise and in all respects, the substance of the two plans is identical.

Mr. COOPER. This provides that the benefits shall not accrue also to the civil service employee who has been appointed to the grade of ambassador or minister, or appointed to any official position in the Department of State, so that if any diplomatic secretary or consular officer is appointed to any official position under the Department of State, and that might not be a promotion, he might be appointed to some subordinate position in the Department of State, which would not amount to a promotion, but a clerkship here, still he would' be entitled to the foreign service retirement provision of the law.

Mr. CARR. Because he had made his contribution to the foreign service allowance, just exactly as if he were taken from the Department and put into the foreign service. In order to get the benefits: of the foreign service annuities, he would have to put into the foreign service fund the difference between the annuity and the contribution to the civil service retirement fund. It works both ways. For example, as to what is meant there are Mr. Leland Harrison, present Assistant Secretary of State; Mr. Wright, present Third Assistant Secretary; Mr. William Phillips, Undersecretary of State; and Mr. McMurray, Chief of the Division of Far Eastern Affairs; Mr. White, Chief of the Latin-American Division; and so on, who have spent their lives in the foreign service. Under such a bill as this they would have been contributing all these years to the foreign service fund.

Mr. COOPER. Just what is meant? Will you please define what is meant by "official position in the Department of State? What officers does that include? How low and how high? Would it include clerkships?

Mr. CARR. I think that is not the intention.

Mr. COOPER. Some one who would be a subordinate employee and direct some division?

Mr. CARR. A chief of division, chief of bureau, assistant secretary, etc.

Mr. COOPER. It would not include clerks?

Mr. CARR. No.

Mr. CONNALLY. They would be covered by the other act.

Mr. CARR. Clerks; yes.

Mr. CONNALLY. I was wondering what official position in the State Department meant.

Mr. CARR. The practical working out of it would be inevitably the bringing back of men from the foreign service as is now done. Mr. COOPER. You might use an ambassador in a position in the State Department. The point is what is meant by official position in the Department of State?

Mr. CARR. I had assumed a position above that of a clerkship was meant. I am not at all particular about the language.

Mr. MOORE. The comptroller would undoubtedly construe that as meaning a position for which the Senate would have to confirm an appointee, and you would have trouble with the comptroller all the time. It is not what you and I and Mr. Carr would think, but what the comptroller would think.

Mr. CARR. If that is so the language ought to be changed.
Mr. MOORE. I think so.

Mr. CARR. Because it would work an injustice to the officer who is brought back from the field.

Mr. MOORE. Do you not know that the comptroller would so construe it?

Mr. CARR. I did not know it.

Mr. CONNALLY. Why not say "assigned to duty in the State Department"?

Mr. CARR. Because it might so happen as in the case of Mr. McMurray, that the officer would not be assigned to duty as some of the other secretaries are, but would have resigned his place in the diplomatic service and have been appointed to another office in the State Department. Mr. Wright resigned his place in the diplomatic service to be made Third Assistant Secretary.

Mr. MOORE. He was confirmed.

Mr. CARR. In each case the officer assumed a different office from that which he held in the foreign service.

Mr. COOPER. A man in China rendering efficient service might not want to be brought back here, and might be in a subordinate capacity doing consular work in Shanghai, say. He is brought back here and assigned to a position in the department, but the moment you begin to use the expression "official position," then you meet the suggestion of Mr. Moore in the legal interpretation of that, because there is a difference between an office in the State Department and an official position.

Mr. CARR. Why would not your objection be disposed of by making it "assignment or appointment to a position in the State Department?"

Mr. MOORE. I think that would be better. It will be safer.

Mr. COOPER. If the department wishes to retain his services and to justify his transfer to Washington, so as to give him the benefit of the proposed act, then say official position.

Mr. CARR. That would be entirely agreeable to me.

The CHAIRMAN. I think that ought to be done.

Mr. CARR. There is one other thing, if I may just take a moment of your time, one other difference between this section and the one in the bill last year, on page 32, which is as follows:

(1) Whenever any foreign service officer, after the date of his retirement, accepts a position of employment the emoluments of which are greater than the annuity received by him from the United States Government by virtue of his retirement under this act, the amount of the said annuity during the continuance of such employment shall be reduced by an equal amount: Provided, That all retired foreign service officers shall notify the Secretary of State once a year of any positions of employment accepted by them, stating the amount of compensation received therefrom, and whenever any such officer fails to so report it shall be the duty of the Secretary of State to order the payment of the annuity to be suspended until such report is received.

It is understood that there was objection in this committee last year to the provision permitting gentlemen going on the retired list,

the Government being deprived of their services, and yet engaging in private business at a very much larger compensation, and it was not seen why the Government should continue to pay any annuity. to such men, especially if they were getting compensation in excess of said annuity.

The CHAIRMAN. What about the 5 per cent which they had paid in for the 30 years? Would they be entitled to a partial return of that during the time payment of annuity was suspended?

Mr. CONNALLY. The annuity starts again when he quits the private employment, when he loses the job.

Mr. MOORES. I think that is a very unreasonable objection, and the House finally disposed of it in the Harbord matter as it should have. That is, they gave him his retired pay, although he gets $25,000 a year from the Radio Corporation of America.

Mr. COOPER. I voted against the Harbord proposition. I do not think any man should be on the retired list who is getting $25,000 a year from the radio company.

Mr. MOORES. You and I disagree.

A

The CHAIRMAN. There was another element in that case. number of Members thought that the Radio Corporation was doing business with the Government, and that that is the reason they employed General Harbord. Personally, I thought it was an injustice to the general. This is different from that. A man who serves 30 years in the foreign service and pays the 5 per cent and still has energy and ability enough to go out and get employment after he is 65 years of age ought not to be interfered with.

Mr. CONNALLY. This applies to those who have not paid in anything at all, as in the case of a man who retires the next day after the bill is enacted, and the annuity starts at once.

Mr. CARR. You are providing in this bill in another section for holding these men five years beyond the age of 65 if the Government should choose to do so.

The CHAIRMAN. If the Government lets him go it is the fault of the Government.

Mr. CARR. Yes.

Mr. O'CONNELL. The situation parallels that in the police department in New York where a man retires when he is probably in the full vigor of manhood as soon as his 25 years are finished, when he gets a pension, and then gets a place as policeman in some bank. There is an instance cited where a police captain retired in New York, got his pension, and now he is a captain in New Rochelle or Mount Vernon with the same pay.

The CHAIRMAN. What is the age of retirement there?

Mr. O'CONNELL. After 25 years in the service.

The CHAIRMAN. That means a man who enters the service at 21 is retired at the age of 46.

Mr. O'CONNELL. Yes; the law is mandatory.

Mr. MOORES. I had a letter carrier who has been in the service 40 to 50 years, getting $1,200 or $1,300. He was retired at $720, and came into my law office in Indianapolis and cried and cried. But the next day he came back and said a music house had offered him $2,500 a year, and he was satisfied with the $720. He was a very good musician.

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The CHAIRMAN. Even Members of Congress retire and many of them then get salaries three or four times as much as what they receive here.

(Thereupon, at 12.05 o'clock p. m., the committee adjourned to meet again at 10 o'clock a. m., Friday, January 18, 1924.)

COMMITTEE ON FOREIGN AFFAIRS,

HOUSE OF REPRESENTATIVES, Washington, Friday, January 18, 1924.

The committee this day met, Hon. Stephen G. Porter (chairman) presiding.

The CHAIRMAN. Will you proceed with the witness, Mr. Rogers? Mr. ROGERS of Massachusetts. Proceed, Mr. Carr.

STATEMENT OF HON. WILBUR J. CARR, DIRECTOR OF THE CONSULAR SERVICE, STATE DEPARTMENT.

Mr. CARR. Mr. Chairman, resuming my testimony where I left off yesterday, I would like to discuss further section 16 of the bill, providing for retirement of foreign service officers.

As to what would be the cost in dollars of the system proposed is very difficult to determine. Actuaries themselves disagree on that point. One may reach a conclusion that the contributions of the men will be exhausted in 1944, and the Government will have then to begin to pay. Others say the contributions of the men will last over to 1948, depending altogether on the factors used in estimating the length of time during which contributions will cover the annuity and annuities will be paid.

We made some calculations last year, which will be found on page 30 of my testimony of last year, showing that the contributions from the foreign service employees would be at the rate of $143,000 a year, approximately; that these contributions would carry the annuities to be paid up until 1944, when the Government would begin with a part of its contribution, amounting to about $48,900, and that the annual contribution from the Government, which had up to that time paid nothing, would gradually increase until 1958, it would have reached approximately $504,000. Of course, if the Government were to begin now and appropriate annually its share the Government would actually appropriate about $140,000 or $145,000 a year, the amount which would be paid in by the men. That would draw 4 per cent interest in the same way that the employees contribution would draw 4 per cent interest, and result in that manner in reducing the total ultimate cost to the Government; but you have embarked, as I said yesterday, upon a different policy, which you applied to the civil service employees, and I presume you would wish to apply that policy to the foreign-service employees, namely, that of letting employes' contributions carry the retirement system until those contributions shall have been exhausted, after which time it would be understood that the Government would assume the responsibility of making its contributions and continuing them year by year thereafter.

That is a more expensive method, but it, apparently is the method Congress wishes to employ, so we are not suggesting the adoption of a new one. I merely point out that in my hearings of last year, to which I referred, on page 30, there are the estimates in dollars of the annual cost of this retirement scheme.

Those figures are pronounced by the Government actuaries to be conservative figures, to be outside figures in fact, because they are based on the actual contributions on the basis of salary, the annuity on the basis of the men now in the service, their length of service, their age and probable salary, also upon the probability that each of those men would continue to draw an annuity during 11 years of the so-called period of expectancy, and then drop off the roll because presumably they would not live longer than that. The actuaries say those are outside figures for this reason, that it is not likely, according to the experience of life insurance companies, that every man on the retired list would live througout the 11 years of expectancy. There might also be resignations.

Mr. BROWNE. How do you figure that 97 per cent of those in the foreign service that go in at the age of 30 will remain in the service 35 years? That seems quite a large percentage.

Mr. CARR. It is assumed that they will if the service is made sufficiently attractive.

Mr. BROWNE. That accounts for deaths, etc?

Mr. CARR. That accounts for everything.

Mr. BROWNE. Ninety-seven per cent.

Mr. CARR. Quite a large per cent.

Mr. ROGERS of Massachusetts. Very high indeed, I think.

Mr. BROWNE. So if only 90 per cent remain in the service it would be just that much more money for the fund?

Mr. CARR. Of course, the higher percentage of men who remain throughout their period of service and go on the retirement roll when they have reached the maximum of their advancement the higher the cost of the retirement system. We have based our figures upon the following considerations: 933 per cent of our men remain in the service now. By the improvements which this bill will make and the greater attractiveness which will result we hope to raise the percentage to 97 per cent.

We have tried to make these figures outside figures. They say if 75 per cent of the men should continue to go on the annuity roll that element would be just so much more cheaply maintained.

Mr. ROGERS of Massachusetts. After you testified last year, Mr. Carr, and before the bill came up in the House for discussion, a great deal of work was done in trying to make those figures concise and conclusive.

Mr. CARR. Yes, sir.

Mr. ROGERS of Massachusetts. The Bureau of Efficiency was called in, as you will remember, and the conclusions of the chief of that bureau were that the figures which you had given in your testimony and to which you have again referred this morning were very materially higher than the facts would warrant. Furthermore, when the bill came up for discussion in the House, Mr. Madden, at our request, made a careful study of this general retirement cost question and took the position on the floor of the House that our figures were almost absurdly higher than they would work out in practice.