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Mr. MCALLISTER, You see, the bill has not been known—was not made known to us until within the last few days. In fact, amendments were submitted only yesterday, which, after taking out one of the worst clauses in the bill—that is, where a man was receiving no annuity when engaged in regular gainful employment—that was placed back in yesterday by an amendment providing that whenever he was working at any employment, whether such as is defined in the act or not, he should receive no annuity.

We naturally were not able to report to our membership until we knew what was before us, until we know what the bill was.

Another drastic change was made in the bill when we came down here. Formerly, as the bill was written, a man was not eligible for a pension unless he was an employee of the carrier on the enactment date and also on the date that he was eligible for the pensions. The eligibility date was taken out by an amendment here.

So that now he only has to be an employee on the date—that is, the enactment date,

Mr. Royster told you about the 1-year death-benefit payment, which was really a funeral benefit under the old act, section 5.

We believe that should be restored, should be a part of this act, or that the old act should be passed.

He also spoke of this irrevocable election for an annuity for the surviving spouse.

Unless he elects, the election is made 5 years before a man receives his pension; unless it is made before January 1, 1938, he cannot have it. That is irrevocable. If he makes a wrong decision, it is just too bad. We believe that should come out.

We also believe that this question of permanent and total disability is a vicious thing. It should be mental or physical disability, as I have told you, about a man merely losing his hearing or sight, eyesight, or something that would temporarily put him out of his employment.

This provision that I have referred to of a man receiving no pension, no annuity, while he is doing anything for any employer is also a bad thing.

This thing where there is a joint annuity, where he is receiving half and his wife is receiving half, and he is trying to get along with a little pittance, trying to piece out his income with employment, some little employment, and if he does that he loses that during that time.

That compels him to live on this pension or forfeit it.

And that provision means "regular employment for hire”, means anywhere, any employment, any kind.

Now, there is only one employment this man is fitted for. If any. thing happens to him, if any calamity overtakes him before he is 60 or 65 years of age, he is out. He has got only one thing to face, either become a tramp or do whatever he can until he is eligible for a pension.

Most of these men now working on the railroads are men in those brackets, This eliminates most of the younger men in the railroad service. Those men who are working on the railroads are in that zone. They are vitally affected by that particular provision. They are vitally affected by the provision governing what we call prior service,

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If you examine this bill you will find that everywhere it takes care of the subject of subsequent service. Prior service is hedged about with limitations and restrictions. It cannot exceed 30 years. A man can have all of the subsequent service he wants. He cannot have any prior service unless the subsequent service is less than 30 years.

The amendments of the bill seems to restrict and penalize this prior service which the present employees of the railroads have above everything else, which is their real stock in trade in this pension situation.

Another thing we object to, on page 4, line 19, where the employment relation is defined, and they refer to a man being on furlough or being on leave of absence, what rights he shall have, and it states that it shall all be in accordance with established rules and practices in effect on the employer.

That gives the employer the power and control to establish rules that may put these men out. For example, on the Pennsylvania Railroad, on our last hearing down here, there was a group of men who were in objecting to that very phase of it, because the Pennsylvania Railroad had a rule to the effect that if a man was on furlough for more than 90 days he lost his job and lost his rights.

That phrase is vicious. It is left in the hands of the employer. It seems to us, and we believe that the committee should consider, that the employees should have some voice in a thing of that kind. It should be reciprocal.

In fairness, however, I might say that that vicious provision is also in the old act, and we were never in accord with it.

Also, the question of forfeiting the payments on the first of the month, as the old act read, for that month. It is now on the next month. That has been lost.

Now, on the question of eligibility: I have gone over that, about the question of their working for anybody. If they are working at anything they are not eligible. If he is working for an employer, whether such as is defined in the act or not, he cannot get his pension.

So there is no chance to piece out his meager pension at anything. He must live upon it.

Now, on the question of the years of service for annuities: I might also say we certainly do protest against the proviso to the effect that if a man is disabled and he afterward returns to employment he is eligible for a pension, but he must pay back what he has received.

As Mr. Royster says, he pays his own disability.

Now, on the years of service for annuities: As I say, everything is emphasized on subsequent service. That may be a good thingwe do not deny it will be-in 1960, when as you have spoken of the peak period of this fund. That may be all right. But most of these men now in service, over a million of them, will not be here in 1960. They are interested in receiving something now. They want everything they can get for their prior service which is the only thing they have now.

The CHAIRMAN. Mr. McAllister, it seems there must be a distinction along that line. Here we have a situation where the average age of the employee is very high in the railroad service, and these men who go in now become beneficiaries without having borne any of the burden in the past. The burden that is assumed under this bill in effect is assumed by their fellow employees, and by the rail. road companies, and it is rather surprising to me that the companies

and the men could get together on a bill as generous as it is to past service, yet I realize that the greatest human appeal of this bill is the taking care of those aged men; but is not that situation ample reason for some discrimination as between those classes?

Mr. MCALLISTER. I cannot see it that way, Mr. Chairman. I know that pensions are accorded to municipal employees, Government employees, judges of the Federal courts, without taking account of the human phase of it. It may be held that that is a gratuity, but they are getting it just the same. I do not see why these old men should be discriminated against. It is their work, their labor, their toil, which built the railroads up to what they are today, and made this thing possible. Whether you call it a deferred wage, a moral obligation, or what you will, it seems to me they are entitled to it more so than the young man. After all, the gratuity pensioners are included in this. They are not bearing any burden of it. It amounts to $20,000,000 a year. And, I am for that. Why not include the rest of them?

The CHAIRMAN. Of course, it is impossible to take care of the desires of everybody in a plan of this scope and it seems to me rather wonderful that they have done as much as they have for the man who has heretofore not contributed. I admit that from the humanitarian standpoint be has the greatest needs of anybody, but the fact that the burden of it must be borne by his fellow employees and the companies, should make us look with consideration, I think, upon the distinctions such as you have mentioned.

Mr. MCALLISTER. Well, we believe they should receive the same show that the subsequent employees should, that their prior service should receive the same consideration that the subsequent service does. After all they are in the picture now. They compose the great body of men interested in this particular bill, this particular enactment.

The CHAIRMAN. Mr. Royster enumerated the 11 conditions which are more unfavorable, as he regarded them, than under the present bill.

Mr. MCALLISTER. Yes.

The CHAIRMAN. I take it that some of those are not of great consequence.

What are the principal objections you have to the measure which are material and of consequence?

Mr. McALLISTER. I can enumerate them very quickly. The principal ones are the question of prior service, which we have just been discussing; the question of eligibility as to the men who have been working before; the question of this permanent and total disability for any employment for hire; and section 5 under the old act, which give one-half.

Now, so far as the burden of this is concerned, under the old act, the employees only took one-third of the burden. Under this act they have been forced to take one-half.

We believe, of course, that the major part of this burden should be assumed by the employers, by the railroads. I know some who do not agree with that. But, I may say that the plight of the railroads today is largely due to the action of men like Hill and Harriman and Gould, and the very railroad which challenged the constitutionality of this act in 1934 was the Alton, which was one of the

most unsavory, blackest pictures in the old history of railway financing.

We believe the railroads are well able, too. I understand their earnings reports, according to their records, are higher lately. They are well able to assume a greater burden than they do.

Mr. MARTIN. Mr. Chairman.
The CHAIRMAN. Mr. Martin.

Mr. MARTIN. I would like to ask the witness a question. I did not get back here in time to hear Mr. Royster's statement, due to the fact that I had to attend another committee meeting. And, I did not hear the first part of your statement, but suppose a man had 25 years of service completed on the enactment date, which was August 29, 1935, and he would be eligible on August 29, 1940, for a pension, completing his 30 years, and would be 65 years of age. He gets the benefit of his 25 years' prior service. What would be the discrimination against him under this bill as compared with the man whose service began on the enactment date, August 29, 1935, and who will not complete his 30 years' service until August 29, 1965? What would be the discrimination against the prior man?

Mr. MCALLISTER. Just this: The man who has subsequent service has no limit to the years he may take. The man with prior service is limited to 30.

Mr. MARTIN. Yes; he has no limitation of future years, but he has to put in his entire life to acquire an eligibility rating, and he has to pay for it besides,

Mr. MCALLISTER. That is true.
Mr. MARTIN. It seems to me that is a very great difference.

Mr. MCALLISTER. Of course, if you put it down on a cold dollarsand-cents proposition, that is true.

After all, there is some burden being borne here by these men who have spent their lives in this railroad service. They are entitled, I think, to some consideration and the same break that those are who are paying. Many of these men are going to pay from now on. Many of them will not be eligible for 5 years, as we say, or 10 years, as you cite. The fact is that they have not paid during all of these years, because there was no pension system extant, is no reason why they should be penalized.

We believe they should receive the same treatment as subsequent service employees. That is the burden I think that naturally and logically devolves upon legislation of this kind.

Mr. HALLECK. Mr. Chairman,
The CHAIRMAN. Mr. Halleck,

Mr. HALLECK. Do you not think that the further extension of the benefits in the way suggested by you would set up even more of an unfavorable reaction among the younger railroad workers by reason of the burden, the part of the burden, they would be required to carry!

Mr. MCALLISTER. I do not think so, Mr. Halleck. After all, these younger workers will be interested in a favorable pension, because the day is coming when they too will reach this situation; when they too will want these pensions.

Mr. HALLECK. Do you not believe that they will think that they are paying for the pensions which they are to receive ?

Mr. MCALLISTER. Well, these men helped build up the railroads. Perhaps they may take that view of it, very selfishly.

Mr. HALLECK. Well, if the railroads themselves were paying all of the pensions, there might be more to what you say; but insofar as it is expected that some part of the expense will be contributed by the workingmen themselves, it seems to me that too great an extension of the benefits might well result in an unfavorable reaction on the part of the younger employees.

Mr. MCALLISTER. I think in the end, Mr. Halleck, it will work to their benefits for this reason: We have always been in favor of this proviso in the old act, putting the one-fifteenth cut back on the man who is 65 years and stays in the service. We believe the intent and spirit of that act was just as much to create new jobs, provide opportunities for promotion of the younger men, as to pay these benefits.

Now, by encouraging these older men to quit with a good, reasonable pension system, get out, and encouraging them to do that by giving them enough to live on, you make way for the younger employees, and for their promotions. It helps them. I think that they will be in favor of it if they see it in that light.

Mr. HALLECK. Of course, I think that part of the difficulty in our understanding each other on this arises out of the fact that this is in effect an annuity plan, retirement plan, while it is apparent that you are discussing it more on the basis of a pension.

Mr. MCALLISTER. Well, call it what you will, Mr. Halleck, it amounts to about the same thing.

The object of either one of them is to pay some sort of a retirement annuity or pension, or whatever you may term it, to enable a superannuated employee to live on during the few remaining years he has to go, to enable him to step down when he is full of years of service and make way for the younger man and still have enough so that he will not be an object of charity; not be driven out to starve, but he can still maintain himself, maintain his self-respect and gladly and willingly lay down his burden, thereby making way for younger men to step in and be promoted and provide more jobs.

Mr. BULWINKLE. Now, Mr. McAllister, what do you find that is good, which you can commend in this bill?

Mr. MCALLISTER. I commend a good deal of it, Congressman, except those provisions which I have criticized here. I believe the inclusion of the gratuity pensions is a good thing; but I see no reason to discriminate against those poor fellows who do not have gratuity pensions.

There is a discrimination which is going to cause untold. havoc.

Mr. BULWINKLE. I asked you about what you could commend. What is it, right briefly.

Mr. MCALLISTER. You mean what am I in favor of in this act?
Mr. BULWINKLE. Yes.

Mr. MCALLISTER. In the first place, I favor the enactment of a pension system, of an annuity system. There is none on the railroads now except those railroads which themselves have inaugurated and which they used in the past as a bludgeon at the time of strikes, and things of that type. And it means the abolition of that. That is a good thing. It is the first step forward in pension enactments, and it is going to be a good thing.

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