There have been a few cases where we have passed veterans, very few. As a rule, there is no attempt made to disqualify a veteran unless something shows up or looms up in his record which would indicate unsuitability.

I recall one case where the top eligible was a veteran and we disqualified the veteran in a reason submitted to the Civil Service Commission on the ground that this top eligible had been postmaster at one time and had been removed from the office for embezzlement of funds and we did not propose to submit his nomination again. The Civil Service Commission has been so rigid on passing upon these reasons that they would not go along with us on that particular reason at all. We had to submit the nomination of the nonveteran who was a second eligible notwithstanding the fact that the Civil Service Commission would not go along with us on it.

Quite recently we had an eligible register where the top eligible was a veteran. Our file was replete with information concerning his gambling activities. He had been arrested and prosecuted for running gambling houses and so forth. We passed him and appointed a nonveteran. But there has been very little difficulty because of the Veterans' Preference Act.

Now sometimes this happens: All three eligibles are veterans, and when they are all veterans you may select any one of them. If you happen to select eligible No. 2 or eligible No. 3, you have a complaint from eligible No. 1 that he had the highest grade, is a veteran, and should be appointed, and sometimes you have correspondence with the veterans organizations on it; but so do you also have that trouble where all three are nonveterans. There is quite a preponderance of feeling that the person who makes the highest grade ought to be appointed regardless of his qualifications.

Senator DwORSHAK. I was thinking of the case, Mr. Donaldson, where you might have the best two of the eligible three nonveterans and the third a veteran. What would you do in that case?

Mr. DONALDSON. You may appoint any one of those three in that case. The law only applies to appointing a nonveteran who is lower on the register than the veteran. If the top eligible is a nonveteran and eligible No. 2 and eligible No. 3 are veterans, you have a perfect right to appoint a nonveteran because you do not pass over anybody when you do that.

Senator FREAR. Is it possible to have a 10-point veteran in third place on the eligible register?

Mr. DONALDSON. No, sir. If a 10-point veteran qualifies on the examination, that is, if he is given a rating of 60, he gets his 10 points, which gives him 70, and that is passing. Then he goes to the top of the list. He goes on the list ahead of a nonveteran who might make 100. He goes on the list ahead of a 5-point veteran who might make 100 and with his 5 points it would make him 105. The only person who can compete with a 10-point veteran is another 10-point veteran who makes a higher rating on the examination.

I have seen eligible registers where 5-point veterans were given ratings of 90 or 95 and a 10-point veteran just barely passes with 61. His 10 points give him 71, but he heads the list.

Of course you cannot get around that 10-point veteran with a nonveteran but a 5-point veteran who is eligible No. 2 or eligible No. 3

can be selected because there is nothing in the law that prohibits you from selecting one veteran and passing another veteran.

Mr. LATIMER. Last year we had a bill before us, the Cain bill, S. 115, which carried two sections. One section was deleted. The bill was reported out with the first section which requires that before the 5 points and the 10 points can be added they must make a passing grade of 70, and that is now pending in the House. I thought it might be helpful to you to know that, that this committee has acted and has reported out a bill. The section that was taken out of the bill before it was reported by this committee required that before a disabled veteran can get his 10 points he must have a compensable injury of a minimum of 10 percent. That part was not reported but it was in the original Cain bill, S. 115.

Mr. DONALDSON. The Veterans' Preference Act does not require any amount of disability. You can have a fraction of 1 percent of disability.

Mr. LATIMER. If the Cain bill had become law as it was before the committee originally, there are two things that would have happened. First of all, he would have had to have a minimum of 10 percent disability and, secondly, he would have to make 70 points before he could get either 5 or 10 points added. We reported out only the former section; we deleted section 2.

Senator FREAR. Where did you say that bill is now?

Mr. LATIMER. The bill is pending on the House Calendar. It is S. 115.

Senator FREAR. I do not know whether Senator Dworshak is familiar with that.

Mr. LATIMER. It was passed by the Senate on the Consent Calendar and is now pending before the House.

Mr. DONALDSON. As I stated, S. 2213 is identical with the draft we submitted.

There are two other bills which have been before this committee. One is S. 2062 which pertains to other matters but among them in section 7 it has reference to appointment of postmasters. I presume in reading that section of the bill it was intended that it accomplish the same thing that our suggested legislation would accomplish although it is not written in the right kind of form to do that. It is only a part of this bill.

The bill that we submitted, which was incorporated in S. 2213, was submitted after searching all legislation pertaining to the appointment of postmasters and it is in much better form than that section 7 of S.

2062.

There is another bill before this committee, S. 2027, to which the Department makes a vigorous protest. I do not believe it would be suitable at all in the administration of the postal service. This bill goes farther than anything we have proposed and requires among other things, reading at the bottom of page 1:

Provided, That the appointee shall be (1) a supervisor, clerk, or carrier in the classified service at the office where the vacancy occurs or (2) selected under civil-service regulations from a register to be made up and furnished the Postmaster General by the Civil Service Commission from a competitive examination open only to persons who have resided within the delivery of the office for 1 year or more next preceding the closing date for applications for the examination and who on the date of the examination are not more than 63 years of age but have

attained the age of 21 years for third-class offices; 23 years for second-class offices; or 25 years for first-class offices.

As I read this bill, this proposes to make it almost mandatory that the appointment first be made from some employee in the vacancy office. Of course, that would be bad legislation. The Post Office Department has always felt that it is good to select competent people from the postal service and to promote them to these positions where you have qualified personnel. It increases the morale in the office and increases the morale throughout the postal service; but there are many, many cases where there is not competent personnel in the post office and where we would be going back if we selected or were required to select somebody from that office to appoint as postmaster.

In the third-class offices throughout the country prior to July 1, 1945, the employees were the personal appointees of the postmaster. The allowance for clerk hire in those offices was limited and we authorized the postmaster to spend so much money in any 1 year for help in his office, the payments to be made upon vouchers submitted by the postmaster showing the employment of somebody to perform the clerical work in the office. If his allowance in a large-size third-class office, was as much as $1,400 a year for clerk hire, he could employ one person and pay him the entire allowance or he could employ two and divide the allowance. But the appointees or clerks in those offices were personal appointees of the postmaster and were not under civil service.

On July 1, 1945, when Public Law 134 became effective, those positions in third-class offices were placed on a salary basis, either on an hourly rate of pay or on an annual rate of pay by the Congress. Following that, the Civil Service Commission then included those positions under civil service and therefore we have had in a lot of those third-class offices part-time employees who worked 2 or 3 or 4 hours a day maybe and in many of those offices the remuneration on a parttime basis is so small on an annual rate that the postmaster cannot always employ the most competent people.

Senator THYE. In other words, S. 2027 in the form in which it is drawn is not practical at all?

Mr. DONALDSON. No, sir; it is not.

Senator THYE. We might just as well fold that up and lay it aside. Senator FREAR. Senator Thye, Senator Taylor appeared before a hearing of the subcommittee on March 1 and in his opening statement he said:

After reading S. 2213, which was introduced by the chairman of this subcommittee, I am convinced his bill is a better bill than the one I introduced, namely, S. 2027.

It is more carefully drawn; and for that reason I just want to appear here in behalf of the idea, and not in behalf of my bill, S. 2027.

Mr. LATIMER. Mr. Chairman, may I ask the Postmaster General a question?

Senator FREAR. Yes.

Mr. LATIMER. Since the question of the constitutional mandate was mentioned earlier, has there been any thought or discussion or any ruling from the Attorney General that it would require more than legislative action to change this? Would it require an amendment? I thought the committee might want to know about that.

Mr. DONALDSON. No. The provision in the Constitution that authorizes the President to make an appointment by and with the advice and consent of the Senate, relates to what is termed in the Constitution as "inferior offices," and that applies to presidential postmasters, gives the President this right, but also provides that the Congress may legislate otherwise. So, if Congress should legislate otherwise, it would be constitutional in my opinion.

Senator FREAR. Senator Dworshak, do you have any questions? Senator DWORSHAK. No questions.

Senator FREAR. Senator Thye?

Senator THYE. I have no questions.

Senator FREAR. If it is agreeable to you gentlemen, I would very much like to have action on these bills.

Senator DWORSHAK. That is all right with me.

Senator THYE. Mr. Chairman, personally I am ready to take action and recommend the bill to the full committee; that is, what is known as the Frear bill.

Senator FREAR. S. 2213.

Senator THYE. I also am of the conviction that that bill complies with the Hoover Commission reorganization as closely as it could be drafted to comply with it. I think I am correct in that. We have the Postmaster General here.

Senator DwORSHAK. You are satisfied then to eliminate confirmation by the Senate?

Senator THYE. That is the only question, but I thought we could take that up before the full committee.

If you start drawing certain specific provisions out of the Hoover Commission report, you mislead the public to this extent that they think all the while you are trying to destroy what the Hoover Commission recommendations are and that you are preventing the reorganization that is going to give you the most efficient functioning government. For that reason I am reluctant to pull out any provision of the Hoover Commission's reorganization recommendation because it is misleading to the general public.

I do not know that it is sufficiently important that we as a subcomnittee need to make any specific mention of it. Now if the full committee in their discussion of it feel that the Senate committee might well have the right to make recommendations or rather have the right to approve the Postmaster General's appointees, I should not quarrel long over the question. I have said before that I think it is bringing it closer to the grass roots if the people have an opportunity to express through their congressional representative what their views and convictions are on the appointee. But I do not think it is too important in view of the fact that the Civil Service Commission has to act and the Civil Service Commission qualifies the personnel from the standpoint of not only the examination taken but to qualify them from the standpoint of the character of the individual because they have to look at that character report before they are in a position to certify. So I think we are safeguarded in every manner except that it is a little easier for the local folks to submit an objection or approval to their local representative. That is the only reason I say I think there would be some merit in senatorial action.

Senator FREAR. Was that in the form of a motion?

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Senator THYE. I still move that the bill be recommended to the full committee. I made the explanation of what my views are on the entire question, not to influence anybody but just to express my thoughts.

Senator FREAR. Is there a second to Senator Thye's motion?

Senator DwORSHAK. I second the motion.

Senator FREAR. All in favor of the bill will please say "Aye." (General response.) All opposed? (No response.)

We will report the bill favorably.

Would you like to make disposition of the other two bills pending before the subcommittee? Would you like to make a motion to table them indefinitely?

Senator THYE. That motion would be in order in view of our action on S. 2213, so I move that.

Senator DwORSHAK. Second the motion.

Senator FREAR. All in favor of the motion will please say "Aye." (General response.) Opposed? (No response.)

I would like to thank you very very much, Mr. Postmaster General, for appearing here this morning. I am sure you have given us information we have been looking for. We thank you for that and also for your approval.

Mr. DONALDSON. Thank you, Mr. Chairman.

(The following statement was submitted for the record:)

STATEMENT OF JOSEPH R. MCCARTHY, SENATOR FROM WISCONSIN

Mr. Chairman, in 1776, the year of our own independence, Adam Smith wrote in the Wealth of Nations: "The post office is properly a mercantile project It is perhaps the only mercantile project which has been successfully managed by, I believe, every sort of government. * * There is no mystery in the business. Smith's statement was documented at the time, and has since been proven true.

**

*

*

The British system has shown a surplus almost every year since consolidated under Queen Ann in 1711. Our own system has moved in cycles, showing surpluses or deficits periodically.

I do not believe that there is anything new or startling in our decade of the 1950's which disproves the historical record. I am, therefore, convinced that it should be possible to reduce this deficit to a point where-except when it is a vehicle for congressionally approved subsidies-the post office can break even. Since the Hoover Commission was not authorized by law to make recommendations on subsidies granted by Congress as a matter of public policy, it did not do so. However, it did recommend clear statement of, and appropriation for, subsidies to air lines and others. But this is not a matter of direct concern in S. 2062, S. 2213, or the other Hoover Commission bills. Hence, deficits arising from subsidies are not included in my further remarks today.

My underlying premise is that ordinary postal deficits are not necessary. History has proven that. This problem comes down to two factors, (1) rates on special services and (2) efficiency of operation.

RATES FOR SPECIAL SERVICES

In S. 2062, we have provided that the Postmaster General set self-supporting rates for every special service of general usage. The Hoover Commission, basing its figures on 1948 estimated the additional revenues from this increase at $113,000,000 annually. Present volume might well make this figure closer to $130,000,000 through special services and penny post cards alone. Therefore, I urge you to enact the rate provisions of S. 2062 forthwith.

EFFICIENCY OF OPERATIONS

The other savings by which the deficit can be sharply cut can come through most efficient operations. The Hoover Commission employed the outstanding