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: 93 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.

Mr. CARR. That is perfectly true, and Mr. Herbert Brown, Chief of the Bureau of Efficiency, has constantly maintained that the figures given in my testimony last year are very considerably higher than they need be. Mr. George B. Buck, who is consulting actuary in New York City, and who is a member of the present board of actuaries employed under the provision of the civil-service retirement and disability act, told me three or four days ago, upon my exhibiting those figures to him, that these figures are unquestionably outside figures and the actual cost would be very much within those figures, but the precise amount he was not able to say without quite extensive calculations. Basing his conclusions upon the data which we furnished to him of men in the service, their ages, the present salary scale, the annual number of retirements from the service, and all other pertinent data which we could furnish to him, he produced a report the substance of which, or the percentages of which, I have already given you. The report is signed him, by Mr. Madrill, and Mr. McCoy, the actuary of the Treasury, and states, as I told you yesterday, that the total cost of this system would be met by the 5.79 per cent contribution by the Government and 5 per cent contribution by the men, provided the so-called reserve-fund system were adopted, namely, the Government and the men contributing year by year, and that in any event the relative cost will be no greater than the cost of the present civil-service retirement system.

It is now proposed to go one step further than that and we place a definite limitation upon the maximum cost to the Government, and make it not in excess of the amount contributed by the men themselves. In that we go a step further than the present civilservice system.

Mr. COLE. Do you make any allowances for the fact that the pensioners may at some time think they are entitled to higher annuities? Is not that the experience of all such services?

Mr. CARR. I think that you need not be disturbed by that in reference to this bill for this reason. In your civil-service system you provide exactly the same percentage rate of annuity that is advocated for this bill, but you put a maximum limitation upon it. You say, for example, that a man who has had 30 years' service shall upon retirement receive 60 per cent of his average salary for the 10 years preceding the date of his retirement, but that in no case shall that annuity exceed $720 a year. This bills omits that proviso, that arbitrary limitation to $720 a year, and lets the officer draw 60 per cent of the average annual salary he has received for the 10 years preceding date of retirement.

Mr. COLE. You think that would be forever satisfactory? You know it is only a few years since various retirement acts were passed. but in every department there is a demand for increased pensions.

Mr. CARR. But that, I feel certain, is due to the fact that the maximum of $720 is not enough for the average civil-service employee to live upon; at least, he says it is not.

Mr. MOORES. I will suggest to you that in the long experience of the Government with military and naval retirement pay, there has been no demand to my knowledge for an increase except that the officers have claimed from time to time in a very modest way that they ought to be entitled to fogies during their retirement, especially the officers who retired as captains and first lieutenants but

who had not had 20 years' service, but retired for disability. That is the only claim that has been made. Is that true?

Mr. CARR. That is true in my experience; yes. The Navy and Army have had a retirement system now for a number of years which is more favorable than this which is proposed for the foreign

service.

Mr. COLE. Does that mean that the Army and Navy will be coming here to ask to be placed on a par with the foreign service?

Mr. CARR. Not at all, because the Army and Navy will never come to you and ask to be placed on a par with the foreign service for the very simple reason that they are now better provided for than it is proposed to provide for the foreign service. Their retirement pay is higher than proposed for foreign-service officers, and they do not contribute a cent, while the foreign service propose to contribute 5 per cent of the cost. The Army and Navy system is a noncontributory system. Your judicial retirement system is on full pay and is a noncontributory system. The system of the British Government for their foreign service is better than that proposed by this bill, but it is a noncontributory system. Hence, there is not anything unreasonable about this proposed plan. It is merely an application of a principle which Congress has already adopted, providing annuities that are less than those paid to the Army and Navy, and the men provide half the cost of the annuities out of their salaries.

Mr. COLE. I think you will find that in the end everybody will want to be retired on full pay.

Mr. ROGERS of Massachusetts. There is a sliding scale of annuities which is never higher than 60 per cent and runs down as low as 30 per cent to men who have not served the full period of 30 years. There is a fixed scale in the Army and Navy of three-fourths pay.

Mr. CARR. And in the recent revenue bill Congress provided for the retirement of members of the Board of General Appraisers on full pay for the rest of their natural lives after they reach the age of 70.

Mr. ROGERS of Massachusetts. I think it is important to notice that there is no contribution made by the classes of officials to which I have just alluded. None of them has had his salary reduced one penny during the period of active service. In this bill every man pays every year 5 per cent of his salary to the Government. I think the criticism of the retirement provision in this bill is that it is a niggardly provision, but we wanted to be sure to get it through, and I did not go nearly as far as I personally should like to go.

Mr. COLE. I did not object to it because it is too large. I have come to the conclusion that we are gradually drifting into the time where everybody who has served the Government in any capacity will want to have his pay continued as long as he lives, on the theory that public service has incapacitated him for further service.

Mr. CARR. I would like to say on that point that the principle we are discussing here is one which is, apparently, looked upon with favor throughout national and State governments and municipal governments for the very simple reason that all of them have found it necessary to consider or adopt retirement plans. As I said yesterday, I do not care to discuss the question of retirement for the benefit of men. In all my discussion of this question of retirement I should