Senator NEUBERGER. I think it is a proper point and to complete the presentation of that particular episode, we would appreciate it if you would obtain it for us.

(The complete record from the Minneapolis civil-service examination reads as follows:)

"We have given 53 examinations during the year 1956.

"3,220 competitors have taken the clerk-carrier during 1956.

"We have called in 1,010 clerks for appointment and 353 accepted.

"We have called in 343 carriers and 173 have accepted.

"A total of 526 clerks and carriers accepted.

"Only about one third of those who took the test passed.

"320 quit in 1956."

We also were advised that on May 21, the day this hearing was held, 7 men reported to the Assistant Postmaster's Office in Minneapolis to turn in their resignations.

Senator NEUBERGER. Do you have any other questions, Mr. Paschal? Mr. PASCHAL. No other questions.

Senator NEUBERGER. Mr. Kerlin, do you have some questions?

Mr. KERLIN. Mr. Doherty, the President of the United States stated that increases, if any, should be hinged to productivity. I noticed in your statement you gave a great many figures on comparable wages. that show a disparity but have you anything that you can state as to the productivity of these employees?

Mr. DOHERTY. That is a very good question, Mr. Kerlin. If you will look at the annual report of the Postmaster General for the fiscal year ending June 30, 1955, on pages 1 and 2 thereof, the answer will be found. The mail volume during 1955 was 8.4 percent greater than in 1953, 55.2 billion pieces as against 50.9 billion pieces but the total man-years necessary to handle it were only 0.3 percent greater than they were in 1953 with an 8.4 percent increase in volume. This indicates an increase in working efficiency of more than 10 percent. That is right from the Postmaster General's own record.

Mr. KERLIN. You do not favor piecework pay but if they were paid on a piecework basis, their rate of pay, according to that, would have gone up some 10 percent or more?

Mr. DOHERTY. There is no question about that, Mr. Chairman and members of the subcommittee. We do not favor piecework under any stretch of the imagination but on the matter of productivity, there is 10 percent in that category alone.

If I may make a brief reference to the Cordiner Report, I was very much entranced, I might say, by the chart that appears on page 34 thereof, which is the most revealing thing that has come to my attention in a long, long time. It is chart 6, entitled Comparison of Civilian Salary Increases, 1952 to 1956, and it shows the defense white-collar worker as having received a 72 percent increase in that period whereas the industry white-collar worker in that time has received in excess of 20 percent.

Now, according to that calculation, we are at least 1212 percent off and if we take 10 percent for the increase in our productivity, that is 2212 percent from 1952 to date. But in my calculations, even prior to 1952, back in the previous administration, our postal wages were always geared to the cost of living and in my estimation, that is the wrong approach to this vital problem. The cost of living keeps going forward and our people are always struggling to come up somewhere near the cost of living. As a result, we find ourselves the caboose on the

economic train. As a matter of fact, postal workers and Government employees generally might well be considered to be in an economic straitjacket.

S. 27 is within the confines of reason. The figures quoted in that bill are justifiable and I hope that the bill is reported out without amend

ment.

Senator NEUBERGER. Any other questions, Mr. Kerlin?

Mr. KERLIN. You heard the testimony yesterday in opposition to a pay raise. Were you impressed by the persuasiveness of the reasons advanced why there should not be a pay raise?

Mr. DOHERTY. Well, I sat all through the hearing yesterday morning. I believe after the able chairman of the subcommittee brought out his letter from a physician in Salem, Oreg., and our longtime friend from Kentucky, Senator Morton, brought out his letter from a postal supervisor in Kentucky, that neither the representative of the Bureau of the Budget, Mr. Merriam; our good friend the Chairman of the Civil Service Commission, Mr. Ellsworth, nor the Solicitor of the Post Office, Mr. Abe Goff, had any defense. It is merely a matter of saying, "We are against an increase in wages for Federal employees," and that was about all they could do. In fact, they did not make a case against the bill in my estimation.

Senator NEUBERGER. Mr. Chumbris, do you have a question?

Mr. CHUMRBIS. Yes, just one point. In the testimony of Mr. Merriam, he based two specific reasons as to why the bill should not be passed: One, that it would be added income available for services and goods; and the second part was as to surpluses. Mr. Doherty, I wanted to ask you about the first part. Now, letters that were introduced by the chairman and letters by Senator Javits indicated that in the case of the chairman's letter, that the lady could not pay for a doctor bill of $8.75 a month. In the case of Senator Javits' letter, the man had a 10-inch television set that had not been working for several months because he could not even pay to repair the television set, much less buy a new one.

Now, in answer to that, I think Mr. Merriam stated that those are isolated cases and you can always get letters of that sort. I was wondering if your organization has ever made a survey to determine this and whether this increase in salaries is not really a pay increase, but merely a salary adjustment to bring their income to a level where they can just meet their expenses, year by year, rather than continuously go in debt?

Mr. DOHERTY. Well, in the first instance, I might say to the gentleman that our people do not have television sets. They cannot afford to buy them. If they buy them, they buy them on the installment plan and they will be forever trying to pay for them. I definitely believe that it is wrong to keep us everlastingly geared to a cost-of-living proposition when we find ourselves in an economic straitjacket and that is where letter carriers and Government workers generally find themselves in this day and age. They are always trying to catch up with the cost of living and the cost of living keeps going forward and in answer to a question yesterday, if I may, sir, relative to the cost of living, it is a matter of public record that the cost of living has broken all-time highs for the past 7 months.

92764-57-6

In each of the past 7 months, the cost of living has exceeded all-time highs. That is a matter of public record and I might, for the recordI believe you asked the question yesterday relative to BLS figures-give those figures from 1950 through 1956:

The national average was 102.8 in 1950; 111.0 in 1951; 113.5 in 1952; 114.4 in 1953; 114.8 in 1954; 114.5 in 1955 and 116.2 in 1956. In March 1955, the cost of living, according to BLS figures was 114.3; in March 1957, the cost of living was 118.9. These are the actual figures taken from the Bureau of Labor Statistics as of late yesterday.

As I say, we do not like to see the wage structure in postal and Government operations geared to the cost of living, but here then is at least another 5 percent to justify S. 27.

Senator NEUBERGER. Thank you very much, Mr. Doherty. I just think the meat of the coconut is this: That if you are correct in your statement that the average annual salary of letter carriers, whom you represent, is $4,300, I feel certain in my own mind that that is not enough to support an average-sized American family in view of these cost-of-living figures.

Mr. DOHERTY. Thank you, Mr. Chairman, and the figures come from the Post Office Department.

I have just one brief reference to an article appearing in the Washington Daily News of yesterday, Mr. Chairman, and if I may, for the next 30 seconds, put this in the record. It is by Peter Edson and it is entitled "A Report by Secretary Weeks, No Criticism Was Heard." I would like to put this in the record, but the glowing thing in the article, it says:

Included in the council membership are such men as Ralph J. Cordiner, of General Electric; Harlow H. Curtice, of General Motors; Crawford H. Greenwalt, of Du Pont, and others.

And, it quotes Mr. Weeks

"There was no criticism of the budget at Hot Springs," Secretary Weeks declares. "And there was no real discussion of tax cuts." He admits that everyone-including himself-would like a tax cut.

Then the article goes on:

The conclusion was that too rapid wage increases could only end in higher costs and higher prices. BAC recommended that the Government should not move too fast on its own wage increases.

On this point, says Secretary Weeks, the Government is not the pacesetter. In fact, only in the past year has the Government caught up with private industry in such things as health insurance, unemployment benefits and pensions, on wage levels, the Government is considerably behind private industry.

I submit, Mr. Chairman, that our people cannot eat fringe benefits. May I submit this article for the record?

Senator NEUBERGER. Without objection, it will be included in the record.

(The above-mentioned article follows:)

"NO CRITICISM WAS HEARD"

By Peter Edson

Secretary of Commerce Sinclair Weeks says most of the reported business criticism of the Eisenhower administration is exaggeration.

After his return here from the Hot Springs, Va., meeting of the Government's Business Advisory Council, Secretary Weeks declared:

"I didn't hear any criticism of the Eisenhower program down there, either on or off the record."

The Secretary explains that the council meeting-attended by nearly 100 of the very biggest business executives in the country-had a regular agenda to follow. No session was scheduled just for criticism of the Eisenhower program. "But I didn't even pick up any criticism in the corridors," says Mr. Weeks.

One of the principal functions of the Business Advisory Council is to enable business leaders to tell the Government what economic policies they think it should follow.

Included in the Council membership are such men as Ralph J. Cordiner, of General Electric; Harlow H. Curtice, of General Motors; Crawford H. Greenwalt, of Du Pont, and others.

"There was no criticism of the budget at Hot Springs," Secretary Weeks declares. "And there was no real discussion of tax cuts." He admits that everyone-including himself-would like a tax cut. But the blue-chip business leaders in BAC had no specific recommendations on how to obtain a tax cut now.

There was a session on peaceful uses of atomic energy. Secretary Weeks reported on Department of Commerce matters. Deputy Secretary of Treasury Randolph Burgess and Federal Reserve Board Chairman William McChesney Martin reported on fiscal policy. There was a general session on the business outlook.

The subject which seemed of most concern to the BAC group was the current wage-price-profit squeeze. This is not a Government issue, but a private business policy matter entirely.

A special BAC committee reported on the effects of wage increases made faster than productivity increases warranted. This was reported to be a major inflationary factor in today's economy. The conclusion was that too rapid wage increases could only end in higher costs and higher prices. BAC recommended that the Government should not move too fast on its own wage increases.

On this point, says Secretary Weeks, the Government is not the pacesetter. In fact, only in the past year has the Government caught up with private industry in such things as health insurance, unemployment benefits, and pensions; on wage levels, the Government is considerably behind private industry.

Secretary Weeks recognizes that organizations like the United States Chamber of Commerce and National Association of Manufacturers have been highly critical of the Republican Administration. This applies particularly to the budget and Government spending. He says, however, that: "They just haven't studied the picture. They don't understand the implications."

Secretary Weeks points to a public opinion research poll for further evidence of his contention that criticism of the Eisenhower program is considerably exaggerated.

On the question: Do you approve of the manner in which the Eisenhower administration is proceeding?-59 percent said, "Yes" last October, while 61 percent said "Yes" in March.

The breakdown was most significant, the Secretary believes. It showed 29 percent of the Democrats approving last October and 42 percent approving now. For the independents, 56 percent approved in October, and 64 percent approved

now.

The 4-point drop in Republican support was more than made up by the 13-point increase in Democratic approval and the 8-point increase among the independents. Senator NEUBERGER. Thank you very much, Mr. Doherty. We appreciate your being here.

Mr. DOHERTY. Thank you, Mr. Chairman and members of the subcommittee.

Senator NEUBERGER. Our next witness will be Mr. Albert Pratt, whom I understand will have some people with him also. I should like to say for the record and for the benefit of those present, we are extremely pleased to have Mr. Pratt with us, the Honorable Albert Pratt, former Assistant Secretary of the Navy for Personnel and Reserve Forces. His appearance here is by invitation of the subcommittee.

Mr. Pratt served as a member of the Cordiner Committee, which has been referred to here on a number of occasions, and he is here today representing the Cordiner Committee.

Mr. Pratt is accompanied by some of the able gentlemen who served with him and I think it would be appropriate that he be permitted

to introduce his associates himself. I want to assure Mr. Pratt that we appreciate very much his coming here today to give us the benefit. of his information. Mr. Pratt, thank you very much for coming.

STATEMENT OF HON. ALBERT PRATT, OF THE FIRM OF PAINE, WEBBER, JACKSON & CURTIS, INVESTMENT BANKERS; ACCOMPANIED BY H. DWIGHT MEADER AND GEORGE S. MAHARAY

Mr. PRATT. Thank you, Mr. Chairman. If I may be bold enough to start off by disagreeing with you, I am not here as a representative of the Cordiner Committee. I have no remaining official connection with the Government or its committees at all. I am here as a private citizen and as a former member of the Cordiner Committee, which is now dissolved. I came here as a taxpayer and at my own expense.

Senator NEUBERGER. The record will be so corrected.

We are glad to have you here in any case and we hope that some of the information you give us will have some direct bearing on this critical problem with which the subcommittee is confronted.

Mr. PRATT. Thank you very much, Mr. Chairman.

I do have with me, Mr. H. Dwight Meader, a consultant on salaried employee compensation for the General Electric Co., a position which he has held for several years. He is also an associate member of the American Management Association and a member of the National Industrial Conference Board. He served as a consultant to the committee and was kind enough to come down with me in case there were some particular questions he could be helpful in answering.

Senator NEUBERGER. We are pleased to have Mr. Meader here, too. Mr. PRATT. I also have with me some members of the staff who worked on the various studies which formed the basis of the Cordiner report, including Mr. George S. Maharay, who was assistant staff director for all of the studies on civilian personnel.

us.

Senator NEUBERGER. We are pleased to have these able people with

Mr. PRATT. I understand, Mr. Chairman, that you would like to know a little bit about the background of the Cordiner Committee and a brief summary of its findings?

Senator NEUBERGER. That is correct.

Mr. PRATT. I do not have a statement but I will talk from notes, if I may.

Senator NEUBERGER. That is fine.

Mr. PRATT. For some time, Mr. Wilson, the Secretary of Defense, had been concerned about the excessive turnover in the Armed Forces and in the civilian workers of the Department of Defense. As a result, he formed a special committee to advise him on that problem and particularly, on the question of the compensation practices of the Defense Department, both for military and civilian.

The committee was headed, as you know, by Mr. Ralph J. Cordiner, president of General Electric. Carter L. Burgess, then Assistant Secretary of Defense for Manpower and Personnel, was vice chairman; and the other Committee members were drawn, the 3 Assistant Secretaries for Personnel for the various military services, 4 senior or retired officers from the Army, Navy, Marine Corps and Air Force, and one-third from the general public, including such men as Charles R. Hook, who is chairman of the board, Armco Steel Corp., and has