by additional allowances.

We were unable to relieve our consuls and secretàries 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. 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 information 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 Čongress 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. for example, a post like Ottawa.

Mr. MOORES. And Canada, of course.

Let us take,

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 lavishness or waste of public money.

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. CARR. The total amount was $378,000 for both services and the retirement.

Mr. TEMPLE. The total increase?

Mr. CARR. The total increase.

Mr. TEMPLE. The total yearly increase resulting from this proposed bill?

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. CARR. That is divided among 520 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. My experience is identical with that of Doctor Temple.
Mr. CARR. That is the general sentiment in the service.

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.

Proposed foreign service, showing adjustment of present personnel to the new classification.

Mr. CARR. I am very glad to do that. We have, of course, assumed that if this bill were put into operation the adjustment would throw a certain number of men into each class, that number depending upon length of service and relative efficiency and present classification. We have assumed that certain men would, on account of their age, retire from the service when this bill is put into operation. Their salaries now being known, and their length of service being a matter of record, it is not difficult to calculate when they reach the age of 65 and retire what amount they would draw from the retirement fund. Basing our calculations upon the men whom we think would unquestionably be retired, the salaries which they now enjoy, the length of service which they have had, we get a figure which brings the cost of the retirement for the first year within $50,000. Then calculating the contributions from the service at 5 per cent of the salaries to be paid, plus 4 per cent interest, and deducting the annual retirement pay from that we find that the first appropriation from the Government after the $50,000 required for the year 1924 would be due between 1935 and 1938. The maximum appropriation would be reached in 1958 or 1960. The appropriation required would be progressive from 1935 to 1938, and reach in 1958 or 1960 the maximum, $378,000, the highest annual amount that this system will cost the Government with the number of men we have now, and based on the retirement of approximately 18 men a year.

Mr. ROGERS. That $378,000 includes the element of expense in this bill and not really the retirement element?

Mr. CARR. The $378,000 I have just mentioned is the maximum Government share of the retirement cost in 1958 or 1960. The $378,000 of which you are now speaking is the total immediate cost for 1924, of which only $50,000 is for retirement pay. In order to ascertain just what the last-mentioned $378,000 means, let us deduct $50,000 required for 1924 for starting the retirement system. Then we have left $328,000, made up of a small increase of 14 per cent in salaries in the Consular Service and a much greater increase in the salaries of diplomatic officers in order to bring the personnel of both services into this unified single-salary scale. We figure that we will have a certain number of men in each one of these classes of foreign-service officers under this new classification, a certain number to be assigned to the consular branch and a certain number to the diplomatic branch. We do not contemplate having any more men, but do contemplate bringing about a single-salary scale; bringing about interchangeability between the two services; breaking down the wall between the two services which now seems to separate them into water-tight compartments, and have men in one branch unavailable for the other branch; produce better morale; afford opportunity for greater experience, for broader training, and give a greater incentive to men to come into the service and a greater incentive to men to stay in the service once they are in.

The CHAIRMAN. Assume this bill would become a law. Who would actually classify these men?

Mr. CARR. I could not positively tell you that, but I should say that probably the Secretary of State would appoint a board of officers, in whom he had confidence, to recommend a classification of officers on as just and as equitable a basis as possible.

The CHAIRMAN. And the action of that board would be submitted to the President for approval?

Mr. CARR. Yes, sir. This bill provides that before it shall take effect the Secretary of State shall report to the President the names of those men who, because of their efficient service, should be classified and recommissioned as stated in this bill, and to report the names of those other men, who because they have not measured up to the required standard of efficiency should be either reclassified in lower classes than those specified, or some other disposition be made of them. In other words, it would put into law the principle of classification and of promotion for efficiency, which is not now in the law and which is required only by Executive order, and which, I assume, all of you agree is the proper thing to do. It would place upon the Secretary of State in his recommendation to the President the responsibility for the determination of the just and proper classification of each officer and then leave the President in a position to act in whatever way he might deem proper. Do I make myself

clear?