pensions as well as old-age pensions. Very few of these pensioners have been in service since before August 29, 1935.

7. The bill makes no provision for the men of the same age retired on these same railroads without any pension. The bill makes no provision for men of the same age who have all been retired on other railroads which have no pension. These include some of the larger railroads such as the Southern, the Milwaukee, and other systems. These old men who after having given their lives to the railroad service now have a very few years to live are surely entitled to the same consideration in annuity payments out of the United States Treasury or even out of any common fund such as provided for under the 1934 act. These men were not in service August 29, 1935, and surely taking them in, men who are now reemployed without being in service on that date cannot be denied a pension for prior service. The act of 1934 as well as the present law contemplated working out some provision for taking care of these old men, including those who had given like service to all the railroads. It is absolutely something that should be done and the hopes and expectations of present pensioners should be met. At the same time all similarly situated must be provided for.

8. The discussions indicate that the bill is now designed to put the payment of railroad retirement annuities under some sort of a so-called reserve system and abandon the simple and practical provision which has twice been almost unanimously approved by Congress in providing for these annuities on the basis of current outgoing and such current income with a reasonable provision for contingencies as Congress may provide. It is not pretended that even accumulation of the sum of $1,000,000,000 mentioned by Mr. Latimer will provide adequate individual reserves even after all prior service annuities have all been paid. This bill, the same as the present law, contains no provision for anything but payments out of the United States Treasury and for current appropriations by Congress from year to year to meet these payments with some surplus accumulation to meet larger payments in later years. The provision for reporting out liabilities of subsection (d) of section 15, should be stricken from the bill. It is wholly unnecessary and inconsistent with the theory of this legislation. Likewise, there should be stricken out any reference to any saving from the Social Security Act. There is no such saving and there is no warrant for Congress attempting to make any such finding.

Generally the Railroad Retirement Act of 1935 follows the principles which have been embodied throughout in the proposed legislation from the beginning In brief, this legislation provides an annuity for every railroad employee in service on or after the date when the law took effect. This annuity is based upon his average wages and the total of all service for all railroads up to 30 years of such service, without regard to whether this was rendered before or after the law took effect. The employee gets an absolute right to the annuity, which cannot be taken away from him for any reason. Once entered upon it is not subject to any condition or reduction.

The whole purpose of this legislation is to provide, in the interest of the employees, the carriers, and the public, a satisfactory method of terminating the service of the aged employee. He is provided an annuity which really costs less than his continued wages after the ability for the most effective service has ceased. While in service he is able to look forward to some relief to the financial cares of old age. The taking of the old man out of service provides advancement and greater certainty of continued employment for those in the service and an opportunity for reemployment for those out of the service.

To best accomplish these objectives, the annuity must bear a reasonable relationship to the wage and be fairly satisfactory to the employee to make him satisfied to retire when that becomes desirable.

Except as this bill takes away some rights of the employee provided under the present law, it is throughout based upon the same principles as the present law and the proposals which have preceded it. The only attempted justification for taking anything from the present law away from the employees is to assure a reduction in cost which will appeal to the railroad companies as their reason for accepting the law as constitutional.

It has not been suggested that there is anything in this bill which removes any question of constitutionality that has been raised against the present law. It is freely conceded by those who have appeared both for the railroads and the employees on this bill that the question of constitutionality may at any time be raised by other parties, including any individual stockholder or individual employee.

Nor is the situation under the existing legislation wholly unsatisfactory. The collection of the tax under the existing tax act has been enjoined by the District of Columbia District Court. This court specifically refused to hold the Retirement Act void and merely enjoined the imposition upon the railroads of any expense in furnishing records for which they were not compensated. An appeal from the decision on the tax act is now pending in the United States Circuit Court of Appeals. The railroads have not appealed and no appeal has been made from the decision with regard to the tax act.

In the meantime the Railroad Retirement Board has proceeded to put the law in operation, and Congress has made repeated appropriations for this purpose and for the purpose of paying annuities under the retirement law. Such annuities are being certified daily and are being paid out of the United States Treasury. When Congress extended the present tax act to June 30, 1938, from February 28, 1937, they had on the later date accumulated a combined carrier and employee tax liability to the United States Treasury by the railroads and the employees of about $130,000,000, of which the railroads had withheld under the act about $65,000,000 from the wages of the employees. Since July 1936, about 6,000 annuities have been granted and more thar 40,000 applications are pending by employees who are delaying retirement until satisfied that the legislation is valid and that the annuity payments will be made.

I want to protect the constitutionality of this legislation in every way possible and to respect every desire to avoid combining the present act or the present bill for the payment of retirement annuities with the present tax act or the proposed tax act. However, Congress has enacted the present legislation in two separate acts and it is proposed to do the same now. I can see no gain in failing to recognize that Congress must always, in making appropriations, consider providing the money and that this must come from taxes. It has never been recognized before that there is anything wrong in an incidence of burdens and benefits. It appears that the railroads, under the threat of contesting constitutionality, have driven here a hard bargain.

They seek, under the amendments to the retirement act here proposed and which are accepted by the representatives of labor under that coercion, to deprive the employees of very substantial benefits under the present act and to relieve themselves of a present pension plan burden of their own of a present value of about one-third of a billion dollars. This is in addition to the relief granted under the present law and to be continued under the bill from their having to pay future new benefits under their own plans at their own cost. They want to take back more than $50,000 due the Treasury under the present act and reduce future taxes for 9 years, for which the addition of onefourth of 1 percent beginning in 1949 will not at 3 percent interest compensate in less than 59 years from this time.

Finally, they propose by agreement between these railroad executives and labor executive committees to bind the employees to submit for all time to an equal division of a tax burden. It is a hard bargain. It cannot bind Congress. It is no justification for attempting to take anything from the employees.

The amendments I have submitted will correct the things I have criticized. The tax question is not here and is not of great interest. No Congress can bind another Congress in this respect.

Mr. BULWINKLE. Proceed.

Mr. EKERN. In view of that fact, I wish to have the record show the number of employees as of the various companies from 1920 to 1936 and for August 1935, and February 1937, which is the latest I have the data from the Interstate Commerce Commission here. Mr. BULWINKLE. You may put that in the extension of your remarks.

(The statement referred to is as follows:)

INTERSTATE COMMERCE COMMISSION,

BUREAU OF STATISTICS, Washington, May 11, 1937.

Mr. HERMAN L. EKERN,

Hotel Dodge, Washington, D. C.

DEAR SIR: In response to your letter of May 8, I am sending herewith a statement showing the average number of employees, steam railway companies,

the Pullman Co., and express companies; and the charges to operating expense
account 457 (pensions) by class I steam railways for a series of years. I am
also enclosing a statement which shows for the years 1927-36 the amount
charged to operating expenses for pensions by express companies reporting to
this Commission and the amount charged to operating expenses for pensions
and relief by the Pullman Co.

I am sending herewith a copy of this Bureau's summary of operating reve-
nues and operating expenses of class I steam railways for the month of Decem-
ber and the 12 months ended with December 1936-35, and copies of wage
statistics of class I steam railways for the month of December 1936 and the
year 1936.

Very truly yours,

M. O. LORENZ,
Director of Statistics.

P. S.-Number of pensioners not available in the Commission's records.
Average number of employees, steam railway companies, the Pullman Co., and ex-
press companies; and the charges to operating expense account 457 (pensions)
Class I steam railways for periods indicated

1 Figures exclude switching and terminal companies of Classes II and III.

?Data not available.

Number of employees as of middle of month.

Amount of charges to operating expense account-Pensions by express companies;
and charges to operating expenses for pensions and relief by the Pullman Co. for
year 1927-36

Mr. EKERN. Then, Mr. Chairman, I would like to submit also for the record copies of suggested amendments which I have here on this.

Mr. BULWINKLE. Have you sufficient copies for the members of the committee?

Mr. EKERN. I have sufficient copies for the committee and also for those present who are interested, I think.

(The matter referred to is as follows:)

AMENDMENT SUBMITTED BY HERMAN L. EKERN

SECTION 3 (A) AND (B). PRIOR SERVICE

Explanation. This amendment would leave the law as it now is in the present law, section 3, Railroad Retirement Act of 1935, giving the employee in all - cases a pension or annuity based on all service, not exceeding 30 years, including service before August 29, 1935, the enactment date. This bill would calculate the annuity only upon service after December 31, 1936, for any employee not in service or in the employment relation both (1) on August 29, 1935, and (2) on the day he is to get his annuity. Those not in service on August 29, 1935, will never get credit for any prior service. Every present employee will always be in danger of losing his prior service. Any employee so affected will get practically nothing now and very little in an annuity for years to come. The amendment retains the provision of the bill that more than 30 years of service, if all after December 31, 1936, may be included in fixing the amount of the annuity. Proposed amendment no. 1.-Amend subsection (a) of section 3 by inserting after the word "be" (p. 8, line 19) the words "the sum of amounts", and by striking out the words "a person's" (p. 8, line 20) and inserting "the number of”, and by striking out the word "his" (p. 8, line 21) and inserting the word "the."Amend subsection (b) of section 3 by striking out the part of the first sentence of subdivision (1) ending with the word "disability" (p. 9, lines 1-8) by inserting after the word "years" (p. 9, line 10) the words "of service", by inserting after the word "service" (p. 9, line 12) the words "rendered in calendar months last", by striking out the word "then" (p. 9, line 11), and by striking out subdivisions (2), (3), and (4) of said subsection (p. 10, lines 5-16). So that said subdivisions (a) and (b) of section 3 shall read as follows:

COMPUTATION OF ANNUITIES

SECTION 3. (a) The annuity shall be the sum of amounts computed by multiplying the number of "years of service" by the following percentages of the "monthly compensation": 2 percent of the first $50, 12 percent of the next $100, and 1 percent of the next $150.

(b) The "years of service" of a person shall be determined as follows:

The years of service shall include all his service subsequent to December 31, 1936, and if the total number of such years of service is less than 30, the years of service shall also include his service rendered in calendar months last prior to January 1, 1937, but not so as to make his total years of service exceed 30: Provided, however, That with respect to any such person who rendered service to any employer after January 1, 1937, and who on enactment date was not an employee of an employer conducting the principal part of its business in the United States no greater proportion of his service rendered last prior to January 1, 1937, shall be included in his "years of service" than his total compensation (including compensation in any month in excess of $300) for service after January 1, 1937, rendered anywhere to an employer conducting the principal part of its business in the United States or rendered in the United States to any other employer as defined in section 1 (a) of this act bears to his total compensation (including compensation in any month in excess of $300) for service rendered anywhere to an employer after January 1, 1937.

SECTION 2 (A). AGE AND DISABILITY ANNUITIES-ELIGIBILITY

Explanation. This amendment takes out of the bill the reduction of the age annuity when disability annuity payments have been received by the employee No such reduction is practicable. None is provided in the present law. The

amendment is also intended to consolidate and clarify the disability provisions. The amendment also provides that the disability shall be for employer service instead of for regular employment for hire. The amendment retains the new provision for a disability annuity between ages 60 and 65 without regard to length of service as proposed in the bill. It is, however, suggested that the reduction provided at the end of subdivision 3 be omitted, as the disability annuity is smaller because of the shorter period of service. No such reduction is provided in the bill or the present law for disability after 30 years. Proposed amendment No. 2.-Amend subsection (a) of section 2 by striking out the following, “2 (b) and" (p. 6, line 24) and by striking out all of paragraphs 1, 2, and 3 (p. 7, lines 1-25 and p. 8, lines 1-10) and inserting the following:

1. A person who on or after the enactment date shall be 65 years of age or

over.

2. A person who on or after the enactment date shall be 60 years of age or over and shall have completed 30 years of service, but the annuity of such person shall be reduced at the rate of one one-hundred-eightieth for each full calendar month such person is under age 65 when the annuity begins to accrue. 3. A person who on or after the enactment date is totally and permanently disabled for employer service shall be entitled during such disability until attaining age 65 to an annuity (a) after 30 years of service or (b) to an annuity after attaining age 60.

Satisfactory proof of such total and permanent disability and of the continuance of such disability until age 65 shall be made from time to time as may be prescribed by the Board. On failure to make such proof, except as excused for good cause shown to the Board, or on recovery from such disability, the annuity shall cease upon the last day of the calendar month in which such failure or recovery occurs, but without prejudice to the rights of such person under subdivisions 1 and 2 of this subsection.

SECTION 2 (A) 1. SERVICE AFTER AGE 70

Explanation. If it is desired that the provision in the present law reducing the annuity where service is continued beyond age 70 or beyond age 65 (sec. 2, Railroad Retirement Act of 1935) be retained in some part, the following addition is suggested:

Proposed amendment no. 3.—Amend subdivision 1 of subsection (a) of section 2 to read as follows:

"1. A person who on or after the enactment date shall be 65 years of age or over, but the annuity of such person shall be reduced by one one-hundredeightieth for each calendar month during which such person, after December 31, 1937, and after attaining age 70, shall have earned compensation from an employer before the annuity begins to accrue."

SECTION 6. AGED FORMER EMPLOYEES EMPLOYER PENSION PLANS

Explanation. The taking over of all employer pensions up to $120 per month proposed in the bill is extended to include all aged employees similarly situated and to relate benefits to those provided in the bill recognizing primarily the amounts of employer payments as promised when granted.

Proposed amendment no. 4.-Amend by striking out all of section 6 (p. 15, lines 16-24, and p. 16, lines 1-13) and inserting the following:

"SEC. 6. A person who, on the enactment date or within 5 years thereafter, shall have attained 70 years of age, after not less than 10 years of service within 13 years prior thereto and having ceased to engage in employer service and relinquished all right to return to employer service, shall without proof of being in service or in the employment relation on or after the enactment date be paid an annuity on July 1, 1937, and on the first day of each calendar month thereafter. Such annuity shall be applied for, granted, computed, and paid as provided in this act: Provided, That the computation for determining the amount of annuity shall include the years of service, if any, subsequent to December 31, 1936, and the years of service shall include the service rendered in calendar months last prior to January 1, 1937, but not to make the total years of service exceed 30. No annuity shall be paid under this section to a person receiving an annuity under section 2 of this act.

"Such annuity shall be in substitution for an equal amount in a pension or gratuity, if any, granted to the such person by the employer, any excess of such