bill would be introduced, because I do not believe that any single Member of Congress has that information. I told them that I was not aware of the actuarial soundness of this bill, but I would present this to the committee when it came up.

Mr. HARRIS. I hope our colleague does not in any way get the impression that there is any implication in the questions that we have asked about your having introduced the bill. It certainly shows your interest, and we want to compliment you for it.

Does your bill provide for any additional payments to the fund?

I believe it does not.

Mr. BENNETT. No, it does not. It would cost, unless there was some arrangement made for financing it. That is not in the bill.

Mr. HARRIS. I had not intended to ask you anything about that phase of it, because you said in your statement that you would have other witnesses that would discuss that phase of it.

Mr. Hale had a question.

Mr. HALE. I just wanted to say that when you come to this question of how a fund of this character should be invested, you have a lot of things to think about besides the safety of the fund and the return on the fund. For example, if you allow a fund of this kind to buy the bonds of States, then I can see that you make the Federal Government a creditor, or, in effect, the Federal Government becomes the creditor of a lot of States. If you allow a fund of this kind to buy common stock, the first thing you know the Government would be owning General Motors. There has been considerable discussion about the ownership of common stocks by great colleges and universities, which, in effect, places these institutions in industry It is a delicate, tricky thing when you think about the implications of public policy all the way around.

Mr. BENNETT. Well, you certainly have given me some food for thought there. It just seems to me that since there are a number of very conservative organizations in our country which do have a more liberal policy, that some additional money could be found in that way. I do realize, in view of what you and Mr. Dolliver have said, that there are some special problems about this particular fund which are not in most funds.

Mr. HARRIS. Thank you very
Mr. BENNETT. Thank you.

much.

Mr. HARRIS. One of our colleagues whom we highly esteem, a member of the committee, has a bill, H. R. 3590, that, I believe, is identical to this one. Mr. Friedel, who introduced it, is with us this morning. We will be glad to hear from you, sir.

STATEMENT OF HON. SAMUEL N. FRIEDEL, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MARYLAND

Mr. FRIEDEL. Mr. Chairman, and members of the committee, may I first thank you for the opportunity you have given me to appear here today in favor of my bill H. R. 3590.

Mr. HARRIS. I may say I believe this is the first time since our colleague has been a member of the committee that he has appeared before us as a witness.

Mr. FRIEDEL. I thank you for the opportunity.

This bill is identical to the bill that my colleague, Congressman Bennett, introduced. Rather than to be repetitious and prolong the hearing, I would like to insert my statement into the record at this point.

Mr. HARRIS. Without objection it will be received. We are glad to have it.

(Mr. Friedel's statement follows:)

Mr. Chairman and members of the committee; may I first thank you for the opportunity you have given me to appear here today in favor of my bill, H. R. 3590, which is supported by a large majority of railroad employees. I have received hundreds of letters and post cards from rail employees urging favorable consideration of this legislation, which should give you some indication of their views.

H. R. 3590 proposes to make three material changes in our present act. The first of these provides retirement at age 60 years with 30 years of service or 35 years service, regardless of age. There is a sorely felt need for passage of such an amendment. As you know, modernization of railroading has deprived many worthy employees of their life-long jobs in specialized railroad service. Many of these fine people have been thrown out of work because of the use of diesel engines and other causes. Many have had to use all their savings, sell their homes and in the ebbing years of their lives been forced to seek relief through city, county and State welfare agencies. It would be an act of mercy if the retirement plan that they paid taxes into for so long a time could help them now.

My bill proposes to eliminate the "test period" 1924-1931 which is used today to determine rail annuities where service was performed prior to the taxing provision of the act, January 1, 1937. This period covered the depression era of 1929-1930 and has no relation to our present economy. It is entirely out of line with current earning power of railroad men and women. Even Social Security has recognized this principle. A social Security annuity is based on the four highest years of earnings. This feature alone reduces the rail annuity of all those who were in the service prior to 1937. In lieu of this, H. R. 3590 would substitute the 5 years of highest earnings.

H. R. 3590 provides a 15 percent increase in all rail pensions and annuities. It has been almost 5 years since any increase was given to our retired railroad workers although many increases have been granted to labor in this interval. The retired railroad employee must live, too. His medical care creates a burden that under present conditions cannot be overcome. Today many railroad retirement beneficiaries receive compensation from charitable agencies to supplement their meager rail pension and annuity. It is time we did something to help him. The cost element of this bill is a very vital factor. I myself do not profess to be an expert on this subject. However, it is my understanding that today there is 3.5 billion in the Railroad Retirement Reserve, that is not considered a reserve in the sense of the word, but is chargeable to future liabilities, based on projections over a period of 50 years. I am told this reserve is growing each year, with the Government using the money for current expenses. It has been suggested that these projections should be extended over a much shorter periodsay 20, but not more than 25 years if the level cost basis is continued. It is very difficult to call upon either the railroads or their employees for additional moneys to support the system while such huge reserves are credited to the account.

With further regard to the cost element of this bill, I should like to submit for your consideration the following. Effective December 1, 1951, all railroad employees were reinsured under Social Security, so that the Social Security System pays a major part of Railroad Retirement benefits. Take for example, the very limited number that receive the maximum Railroad Retirement annuity of $165.60 per month. Social Security reimburses the Railroad Retirement Board $108.50; whereas they only pay $57.10 of this amount. In many cases, mostly in the lower brackets, Social Security reimburses the Railroad Retirement Board the full amount.

The 6th actuarial survey of the Railroad Retirement Account, page 22a shows 6,346,700 employees with less than 10 years—or 120 months of rail service were removed entirely from the books of the Railroad Retirement Board, and their benefits were payable exclusively by Social Security. In other words, the Board reimbursed the Social Security System 4 percent on those employees, while the Board actually collected 122 percent from the wages of these same èm

ployees-a profit of 82 percent. This vast additional capital has been placed to the credit of the Retirement Board.

I trust that the committee will give this bill its most careful consideration, and if at all possible, approve it in whole or in part.

Mr. FRIEDEL. I heartily concur in everything that Congressman Bennett said. I would like to state one point, that as far as liberalizing the investments, I do know there are a lot of good State bonds, very, very good and healthy, and maybe that might be a field where they could invest money. We have a civil-service pension system in Baltimore. They have liberalized their plans for investing the money for the pensioners, and they have done wonders. They are all safet and sound investments. That may be a good avenue to consider. Mr. HARRIS. Does that conclude your statement?

Mr. FRIEDEL Yes, Mr. Chairman, and thank you very much.
Mr. HARRIS. Thank you very much. We are glad to have your

statement.

Mr. HALE. What is the number of Mr. Friedel's bill, Mr. Chairman ? Mr. HARRIS. 3590. It is an identical bill to Mr. Bennett's bill, 3087. In fact, there are a number of bills which are companion bills.

We have our good friend and colleague from South Carolina, Mr. Dorn, who introduced a companion bill, H. R. 3209. Would you discuss your bill, Mr. Dorn?

STATEMENT OF HON. W. J. BRYAN DORN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF SOUTH CAROLINA

Mr. DORN. Thank you, Mr. Chairman and gentlemen of the committee. I am going to only take a moment to say that I am in favor of this bill, or certainly some of the major features of it, and that my mail has been running along the lines of these other gentlemen. I have had some very interesting letters on it.

One widow states that her husband spent over 50 years in railroad work and died at 77. She is still receiving only $48 a month.

My own agent at the railroad station in my home town says that he will have to work 48 years before he can be retired.

I just think that some provisions of this act certainly can be studied carefully by this committee, and I am sure will be. Actually, I am not familiar with the technicalities of railroad retirement, but I have the utmost confidence in this committee and its counsel.

The main point I get in talking with people and in the mail I get, is that the railroad industry is more or less a static industry and they do not anticipate in the future any more employees than they have today as a whole, although it might fluctuate a little bit. They seem to think that if more of the older fellows can be retired it will give employment to some of the younger ones wishing to enter railroad work. Therefore, they urge that serious consideration be given to retirement at 60 after 30 years or after 35 years at any age, and an increase in the annuities.

As to how it is to be financed, I would not dare try to suggest to this committee or to the Railroad Retirement Board. But I do think there are some things that probably could be worked out.

Mr. Chairman, that is all I have to say. I hesitate to take up any more time of the committee. I would like you to know that my bill is similar to quite a few others which have been introduced.

I appreciate the committee holding hearings so early in the session so that these bills can be given the consideration and study that is needed. I have, again, the utmost confidence in the committee, and if they can work out something I know they will, without jeopardizing the fund.

I understand the fund is increasing all the time without any great overall increase in the number of employees in the railroad industry. As far as investments, I would not dare to suggest to them. It is a question that warrants very serious study. I would not go back to my people and advocate something which will jeopardize the future of this fund.

Mr. WILLIAMS. Mr. Chairman, I do have one question. Perhaps I should have asked this question of Mr. Bennett and Mr. Friedel, also.

You recognize the difficulty the committee is going to have in financing these liberalizations, do you not, Mr. Dorn?

Mr. DORN. Yes, it is a very difficult situation.

Mr. WILLIAMS. I am sure you realize also that if this bill were enacted into law as it stands now the committee would have a tremendous burden on its shoulders so far as financing the bill is concerned. I am wondering what you might consider, because this is an all-inclusive bill, the most pressing or the most salient feature of the bill, if you feel that there is a most important feature in the bill.

Mr. DORN. I gather from the people who have contacted me that the age, the retirement age of 60 after 30 years or after 35 years regardless of age, is probably the one that is most widely discussed. I would get that impression. I may be wrong.

Mr. WILLIAMS. Apparently you do not feel that the method of computing annuities is proper now. Do you consider that of more importance than the lowering of the retirement age?

Mr. DORN. To this committee I would say "Yes," probably so. But as to the average layman, I would say the other, the retirement age, is more important.

Mr. HARRIS. That is of interest to me, too, I may say to my colleague. I understood you said that you feel probably the point of greatest interest to the greatest number is reducing the age requirements for retirement on a full annuity to age 60 after 30 years of service or after 35 years regardless of age. Statistics furnished by the Railroad Retirement Board indicate that generally at age 65 the men do not retire and take their benefits, but they keep on working. I think the average railroad employee works until he is about 68 or 69. If your bill were adopted do you think that the average railroad employee would retire at age 60?

Mr. DORN. Well, the present trend, as you say, probably indicates otherwise. But if the retirement was attractive enough, I do not see why they should not.

Mr. HARRIS. Of course if they got as much as they made working, that would be one thing. I am sure, however, the gentleman knows it cannot be done.

Mr. DORN. Of course.

Mr. HARRIS. I wish there was some way that we could get data about this proposal. You cannot go out and ask the men what their intentions are because sometimes when they are 58 they feel like they would like to retire at 60, but when they reach 60 it is quite a different story. I am sure my colleague realizes that here in the House we have the optional retirement provision of 62. You do not find any Members of Congress retiring at 62. That is the reason I think it is rather important to understand what is behind the so-called ground swell or the particular interest in this phase of retirement, when the record indicates that the men do not retire at 60.

This is a very interesting subject. I do not want to belabor the matter or delay you too long, but I did want to get a little more explanation about the friend that you mentioned who passed away at the age of 77, or maybe he had retired. What was that?

Mr. DORN. Mr. Chairman, the only information I have there is what the widow wrote to me.

Mr. HARRIS. Was he still working at age 77?

Mr. DORN. No. He died, and she, the widow, is only getting $48. That is according to the letter she wrote me.

Mr. HARRIS. The reason I wanted to inquire a little more about that particular case is that she would not be affected by this bill at all except for the increase, is that true?

Mr. DORN. That is true.

Mr. HARRIS. You mentioned another case.

Mr. DORN. That was a younger fellow who is still working. He tells me that he will have to work 48 years before he can retire. Mr. HARRIS. Without mentioning his name, how old is he now? Mr. DORN. I would say probably 40.

Mr. HARRIS. How long has he been working?

Mr. DORN. I do not know the exact number of years as to how long he has been working, but apparently a pretty good while, if what he told me is correct.

Mr. HARRIS. You did not happen to ask him whether or not he planned to retire when he reached the age of 60, did you?

Mr. DORN. No. I did not ask him that.

Mr. HARRS. Well, thank you very much. We appreciate your interest and we know you are sincere in behalf of these people. We appreciate having your statement.

I see another one of our colleagues on the committee who has a bill here in which he is interested. Of course, we are closely associated on this committee with our distinguished colleague from Michigan. We always like to give consideration to any proposal he has.

This bill is H. R. 5702, by Mr. Bennett of Michigan.

We are glad to welcome you in the capacity of a witness. Ordinarily, you sit up here telling us what to do, and now you can tell us as a witness what we should do.

Mr. BENNETT. Thank you.

STATEMENT OF HON. JOHN B. BENNETT, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MICHIGAN

Mr. BENNETT. I am speaking in behalf of H. R. 5702. I have a prepared statement which I would like to insert into the record, and