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But, while we are in the frame of mind and while we have this under consideration and while we have so favorable an atmosphere for it, why not put in a real good one.

Mr. BULWINKLE. You do not call this a good one, then?
Mr. MCALLISTER. I beg your pardon?
Mr. BULWINKLE. You do not call this a good bill?
Mr. MCALLISTER. I call it just about fair to middling.
Mr. BULWINKLE. Nothing better than fair to middling?
Mr. MCALLISTER. Yes; but it could be made so much better.
Mr. MARTIN. Mr. Chairman.
The CHAIRMAN. Mr. Martin.

Mr. Martin. Now, as I understand the bill, there is no compulsory enforced retirement. A man can continue to run over the 30-year period, or 40 years, or 50 years. But, he does not get any extra retirement or pension by virtue of his excessive service over 30 years, does he?

Mr. McALLISTER. Not after the age of 65.
Mr. MARTIN. No.
Mr. MCALLISTER. Not after 65.

Mr. Martin. Then if the man of the future, we will call him, can only get 30 years' service as a basis of computing his pension, what advantage will he have over a man of the past, as we will call him, who will also get 30 years' service. If he has had that amount of service, he gets 30 years' service even if he retires now, and had 28 years' service before the enactment date and 2 years afterwards; he would get 30 years, and if a man begins now, even though he works 50 years he will only get 30. What is the advantage?

Mr. McALLISTER. As to that particular instance, that is true, where you have exactly 30 years. Of course, the old man gets the worst of it, between 50 and 60, he also get the worst of the annuity.

Mr. MARTIN. The young man does not get any increased pension in the future by virtue of the fact he may have worked 40 or 50 years. Anything in excess of or over 30, as I understand, is not counted in computing his pension.

Mr. MCALLISTER. He gets all his time after June 30, 1937. He gets all of it. He can get 50 years. If he is a telegraph operator and starts at 19, he can go on until he is 69 and get 50 years. The old man cannot do that.

Mr. MARTIN. I was wrong about them, then. I had in mind that his service after 65 is not computed.

Mr. MCALLISTER. Yes.
Mr. MARTIN. He would still have to pay for it?

Mr. MCALLISTER. Well, that may be, but the old man put him there so that he had this possibility. He had this railroad. This whole system has been built up that way, and we should not discriminate against the old man.

The CHAIRMAN. The committee will adjourn at this time and resume hearings tomorrow morning at 10 o'clock.

(Thereupon, at 12:10 p. m., the committee adjourned to meet the following morning, Thursday, May 20, 1937, at 10 a. m.)

RAILROAD RETIREMENT

THURSDAY, MAY 20, 1937

HOUSE OF REPRESENTATIVES,
COMMITTEE ON INTERSTATE AND FOREIGN COMMERCE,

Washington, D. C. The committee met, pursuant to adjournment, at 10 a. m., Hon. Alfred L. Bulwinkle presiding:

Mr. BULWINKLE. The committee will come to order.

STATEMENT OF FRANK E. MCALLISTER, COUNSEL FOR THE

RAILROAD EMPLOYEES' NATIONAL PENSION ASSOCIATION, CHICAGO, ILL.-Resumed

Mr. MCALLISTER. Mr. Chairman.

Mr. BULWINKLE. I am going to ask you, inasmuch as the chairman requests to have these hearings closed today, to limit yourself as much as possible.

Mr. MCALLISTER. Yes, sir; I shall do so.

Mr. BULWINKLE. There are three other gentlemen to follow you. You may proceed.

Mr. MCALLISTER. I will be brief, gentlemen, and summarize this, Mr. Chairman and members of the committee.

I wish to call attention at the outset to the proviso on page 9 of the bill, subdivision 1.

Mr. BULWINKLE. Can you get through in 10 minutes ?
Mr. MCALLISTER. Yes, I think I can do so, Mr. Chairman.

Page 9 of the bill: Mr. Harrison suggested an amendment there to cut out all after the first line and a half. However, that has not yet gone out of the bill, and I want to call the attention of the committee to the fact that under the bill as it reads, without that amendment, it provides that a person must be, if his annuity is to be computed, in an employment status on the enactment date and also on the date he became eligible.

I wish to call particular attention of the committee to that part of the bill, because if that were left in it would mean that if a man were discharged at any time before he become 60, for some infraction, this would avail him nothing. He has to be an employee when he is 60, when he became eligible, or he cannot get a pension.

That would be a most dastardly thing, a most unjust and harsh thing in its application, and will put a premium upon discharging a man before he is 60 years old to get out of paying the pension.

Now, so far as the joint-and-survivor annuities are concerned, I want to just call the committee's attention to a little example. We

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will take the 4-percent proviso. The thing has very little value for the men who are now working on the railroads for this reason: If a man is getting $2,400 a year, let us say, in 10 years all he will have is $24,000 total compensation and taking 4 percent of that would only be $960, so that a man getting less than $2,400 a year would have to work 20, 25, or 30 years for that to have any particular value to him.

The proviso as to the irrevocable feature is one we wish particularly to emphasize, because a man at the time of making the election, we will say, as to the surviving spouse to receive the annuity, may be is the best of health at that time, never anticipate anything else. and he may later be broken in body and mind, in a short time.

This irrevocable feature, of course, makes it impossible for him to do anything in that connection after he once elects or fails to elect.

With reference to pushing out the older men, putting them on pension, we believe that that is a fine thing and the question has been raised as to whether the younger men will not protest against that. Going over some of the former hearings, I find the sentiment to be quite the contrary. The young men are glad to have the older men retire on a fair pension, and are willing to carry their part of the burden if it might give them an incentive, an inducement to retire even though it might mean that they have to pay more, because that means that, within the meaning of the act, new jobs and new opportunities will be created for them, and new opportunities for promotion.

Congressman Martin, I believe, introduced or put in that amendment with reference to the one-fifteenth penalty for those remaining after the age of 65 years in order to encourage them to retire at that time.

Mr. Martin. Pardon me right there. No; I did not introduce that, but I favored it. I thought that it ought to be made one-tenth, to enforce retirement at the pensionable age and provide employment for younger men on the list.

Mr. MCALLISTER. Yes.
Mr. MARTIN. In order to speed up retirements.
Mr. MCALLISTER. So that has been before the committee before.

Now, our position briefly summarized is this: We believe the present act to be superior to the act, as amended. It offers more to the employees than the amended act does. It gives them greater benefits.

Now, against this, I know that it will be urged here that a bargain has been struck with the executives of the class I railroads that they will not contest the act.

In return for that bargain, the present act has been emasculated, to our way of thinking, and too much has been paid for that bargain from the side of the employees.

There is a chance that there will be a challenge as to the constitutionality of the taxing act as at present written. There is no challenge as against the constitutionality of this act, of this Railroad Retirement Act, and so far as the bargain is concerned, as I pointed out before, it is not worth very much, the fact that the class I railroads will not challenge it, does not mean that it cannot be challenged and that its constitutionality cannot be challenged from

three or four other sources, and undoubtedly it will. We in our organization are not afraid of that. We believe that the act will stand. We have confidence that it will stand.

Now, with reference to the other points, that is with reference to the adding of the gratuity pensions, and the adding of the railroad organization employees: We are in favor of that. We believe that is a good thing. They have been enumerated. Mr. Royster enumerated the good points in that act, which we stand for.

As to the other points, we criticize, they are all set forth in detail in his statement, and I believe that summarizes our position.

Now, there is just one thing, one other point that I wish to bring before the committee, and that is the question of the gratuity action. We do not feel that it is just or fair to take the gratuity pensioners who are on the pay rolls of the railroads today and to shut out those old employees who are not.

I have before me the testimony given before the United States Senate committee in April 1934, on one of the prior bills and in that hearing Dr. Lorenz, who was the actuary for the Interstate Commerce Commission, testified at the hearing as to the age of the railroad employees, and in that testimony in 1934 he testified that 90.6 percent of the employees on the railroads were under some sort of a pension or retirement system, some sort or other, leaving only 9.4 percent who were not in 1934, and I do not doubt but what those figures are approximately correct today.

In his testimony he further quotes that of the men over 70—and practically all of these old pensioners are over 70—that there are in number some 3,500 or 4,000 only. Now, we say that we ought to take those men in, that scattering few, and that they will suffer grievously if they are not taken in, because of their unfortunate choice of railroads, which they could not anticipate, when they went to work, whether there would be a pension system or not, To me, to leave them out, would be a grave injustice, and the burden of taking them in would indeed be a small one, in the million or over railroad employees who pay for this act,

Mr. MARTIN. Pardon me. Is that the estimate of the number that are entirely left out?

Mr. MCALLISTER. That is.
Mr. MARTIN. Who are not working?

Mr. MCALLISTER. No; Mr. Martin. That is the number of employees who are working. He states here that the number of men who are actually employed is estimated at about 3,500 to 4,000. That does not include the men who would be retired, but it is a small factor in determining the question of the million or more railroad employees who would come under the benefits of this act.

Mr. MARTIN. What kind of an amendment would it take to take care of that?

Mr. MCALLISTER. I have one which I wish to suggest to the committee. I can hand it up if the committee desires, or I can read it.

Mr. BULWIN KLE. You had better hand it up. You have only got 2 or 3 more minutes.

Mr. MCALLISTER. It just simply amends section 6, page 16, line 4, following the colon after the word "employer", as follows:

Provided further, That each person who has been retired by an employer by reason of his employment and who has attained seventy years of age or over,

whether or not such employer maintained a gratuity pension board or association and paying pensions to its retired employees, shall be eligible for a pension beginning July 1, 1937, and thereafter upon making application for same. No pension shall begin to accrue prior to July 1, 1937, or more than sixty days prior to the date received by the Board of any application made thereafter. The amount of such pension shall be determined (1) by taking the average of the monthly compensation earned by an employee in calendar months included in his years of service in the years 1924–1931, and (2) where the service in the period 1924–1931 is insufficient to constitute a fair and equitable basis for determining the monthly compensation, the Board may determine the monthly compensation for such service in such manner as in its judgment shall be equitable. One per centum of such averaged wage, multiplied by the number of years of service shall be the amount of the monthly pension payments. No earnings in excess of $300 for any one month shall be considered in determining the monthly compensation.

Mr. MARTIN. That applies in the case where employees are retired prior to the enactment date?

Mr. MCALLISTER. It would apply to any employee who made an application, who had been retired at any time, arising out of his employment.

Mr. MARTIN. That would apply prior to the enactment date?
Mr. MCALLISTER. Prior as well as afterwards.

Mr. Martin. You think that that would meet the objection raised in the courts on the original act !

Mr. MCALLISTER. I think that that is true, Congressman; but I really think, as a lawyer, that the Supreme Court's decision on the 15 points in which it invalidated the prior act is so drastic and farreaching that when confronted with the same situation as they were in the Adkins case and in the recent minimum-wage law, I think they will reverse themselves on that. There was a 5-to-4 decision.

Mr. MARTIN. I know that there was a 5-to-4 decision, and a very able dissenting opinion rendered by Chief Justice Hughes.

Mr. McALLISTER. Of course, they claim that we are reaching back to do that, but we are reaching back with this act and taking in the gratuity pensioners.

That whole chapter, as I said at the outset, may have some danger in it if that decision were allowed to stand and it were to be followed. The adopting of all of the gratuity pensions is open to that objection as the act is now amended.

So, I say, if we are going to have 90 percent of those old superannuated employees in, why not bring them all in?

I thank the committee for your attention.

STATEMENT OF HERMAN L. EKERN, MADISON, WIS.

Mr. BULWINKLE. We will hear you, Mr. Ekern. How much time do you want?

Mr. ЕKERN. I think that I can get through in half to three-quarters of an hour.

Mr. BULWINKLE. What?

Mr. ЕKERN. I think I can get through in a half to three-quarters of an hour.

Mr. BULWINKLE. That is too much; too much.
Mr. ЕKERN. I will try to make it as brief as possible, Mr. Chairman.

Mr. BULWINKLE. All right. We will go ahead a while, but we are trying to get this hearing over with, and we want to have an executive

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