SECRET-SERVICE DIVISION. Mr. JOHNSON. What is the next item? Mr. BAILEY. On page 95, the Secret Service Division. We are asking that the salary of the chief be made $4,500 instead of $3,600. Mr. JOHNSON. That position is not now filled, is it? Mr. BAILEY. No, sir; it is not. Mr. JOHNSON. What position is Mr. Wilkie filling? Mr. BAILEY. I think it is $4,500. Mr. JOHNSON. Suppose we should make the salary of this position $4,500, then he would fill this place. What would then become of the place he is now filling? Mr. BAILEY. I think he would stay where he is. This place really ought to be filled, but you can not fill it properly, in my judgment, with the salary at $3,600. Mr. JOHNSON. Is this place in the classified service? Mr. BAILEY. Yes, sir. Mr. JOHNSON. And you think if we were to increase this salary to $4,500 it would be necessary to get somebody else for the place? Mr. BAILEY. Yes, sir. I think both places should be filled. DIRECTOR OF THE MINT. Mr. JOHNSON. You have the mint, I believe. Do you want to tell us about that little increase there on page 95? Mr. BAILEY. That is in the office of the Director of the Mint here in Washington, and the man who is to get this increase--Mr. Dewey-has been in the service for years and is a very valuable man. The request is also made to increase the salary of the private secretary of the director from $1,400 to $1,600. This salary was formerly $1,800. Mr. JOHNSON. These two promotions here, if made, are to be made in the office? Mr. BAILEY. Yes, sir. The pay of the private secretary is below that generally fixed for that grade of work. FREIGHT ON BULLION. Mr. JOHNSON. We reduced the appropriation for freight on bullion for the current year, and I see that you are not asking for any increase. You will find that on page 96. Mr. BAILEY. No, sir; this is Mr. Roberts's judgment of the item. ASSAY OFFICES. Mr. JOHNSON. How would you like for us to make a reduction in the number of assay offices, so far as Members of Congress will permit us to abolish them? Mr. BAILEY. The Secretary made that recommendation last year and has not changed his views. Inasmuch as these offices are established by law, he believed himself required under the law to make 67260-12- -4 estimates for them; but that has been done as nearly as possible without making increases. At Carson City there is a reduction of $650; at Denver, a reduction of $200; at New Orleans, a reduction of $3,000; at Philadelphia, a reduction of $10,450; at San Francisco, a reduction of $4,300; at Boise, a reduction of $250; at Helena, a reduction of $3,750. At New York there is an increase of $14,250. The increase at New York occurs because of extending the operation of the new refinery. CONTINGENT EXPENSES AT PHILADELPHIA MINT. Mr. COURTS. Under the head of the Philadelphia Mint, on page 128, there are some changes in that contingent expense item. I think the committee would like to find out whether that contemplates this scheme they have of manufacturing souvenir medals. Mr. BAILEY. No, sir; this provision does not authorize that plan. Under section 3551 the mint makes medals for the Army and Navy, and for other public purposes; the proposed change in the contingent expense item will permit the mint to have these medals enameled and to buy cases for them, and to be reimbursed for the medals and expense of the enameling and cases. This change overcomes the ruling of the comptroller as to the enameling and cases, and avoids considerable bookkeeping. SAN FRANCISCO MINT, CONTINGENT EXPENSES. Mr. COURTS. On page 129 you will find the item of contingent expenses at the San Francisco Mint. Mr. BAILEY. It is a change in language only, to clear up an ambiguity. OFFICE OF AUDITOR FOR THE POST OFFICE DEPARTMENT. STATEMENT OF MR. CHARLES A. KRAM, AUDITOR. Mr. JOHNSON. Mr. Kram, there are some slight changes on page 84. Do you desire to make any statement in regard to them? EXPERT ACCOUNTANT. Mr. KRAM. The first is a recommendation for an increase of $250 in the salary of the expert accountant. The position is a very responsible one and is filled by a very efficient employee, who, in my opinion, is entitled to the recommended advance in salary. Mr. JOHNSON. How long since he had an increase in his salary? Mr. KRAM. Two years. The increase then was from $2,250 to $2,750. Mr. GILLETT. The same man? Mr. KRAM. The same man. That is the only increase recommended in the estimates of the office in either amount of salary or in amount of appropriation for the office. A reduction is recommended in the number of statutory positions in the $1,000 grade and in the grades from $900 to $660. A proviso in the appropriation act for the fiscal year 1913 authorized the Secretary of the Treasury, in his discretion, to diminish the number of positions in the several grades below the grade of clerk at $1,000 and use the unexpended balance of the appropriation as a fund to pay on a piece-rate basis the compensation of employees engaged in tabulating the accounts of the postal service by the use of mechanical devices. Under this proviso the Secretary has diminished 217 statutory positions. INCREASE OF WORK. Mr. JOHNSON. I presume the work of your office has largely increased by reason of the establishment of postal savings banks? Mr. KRAM. Yes, sir. During the year the postal savings system has been extended to embrace all presidential post offices and a considerable number of money orders of the fourth class. Postmasters render their postal savings accounts monthly, and the records show that certificates of deposit amounting to upward of $31,000,000 were issued during the fiscal year 1912. The net amount of money on deposit increased from $679,000 to $20,237,000 during the same period. There was also an increase of 8 per cent in the money-order business. Mr. JOHNSON. Yet you are not asking for any increase in the appropriation? Mr. KRAM. None at all. We believe that by the use of the new mechanical tabulating equipment we will be able to handle the increased money-order business without any increase in the clerical force. Mr. GILLETT. Has this piece system worked well? Mr. KRAM. It has been very satisfactory. An analysis of the pay rolls shows that the average compensation paid employees transferred from the salary roll to the piece-rate basis has been increased 15 per cent as a result of the transfer. On the other hand, the increased output of work has reduced the cost of key-punching cards from 24 cents per hundred to 15 cents per hundred, resulting in a net saving to the Government of approximately 36 per cent. Mr. BAILEY. There was a decrease of $100,120 last year in that office. PURCHASE OF LABOR-SAVING DEVICES. Mr. JOHNSON. Mr. Kram, I am sure that all the members of the committee are very much pleased with the showing you have made. There is just one question I want to ask you. On page 109 I see you are asking for the same amount of money for the purchase of tabulating equipment, etc., that you had for the current year. It ccurred to me possibly there might come a time when you would not have to purchase as many machines. In other words, when will you get equipped so that we can reduce that item? Mr. KRAM. Out of the $81,700 appropriated for the fiscal year 1912, $60,000 will be spent during the year for cards and $16,800 will be used for the rental of 30 sorting machines and 20 tabulating machines. The balance has been expended for the purchase of machines. There has been an increase of about 8 per cent in the number of money orders during the year. This increase will require during the next fiscal year 10,000,000 additional cards. It is recommended that $19,200 out of the total of $81,700 be made available for the rental of tabulating machinery. This is an increase of $2,400. To handle the increased business we will be required to rent additional tabulating and sorting machines-two tabulating machines at $480 per annum each and six sorting machines each at $240 per annum. Mr. GILLETT. From your statement I do not understand why you do not need an additional amount. How are you getting these new cards? Mr. KRAM. During the present fiscal year $6,150 was used for the purchase of 240 key punches and 12 gang punches. No additional machines of this type will be required for several years. That amount will be used to purchase the additional cards necessary to take care of the increase in the money-order business. Mr. GILLETT. What you save on machines you spend on cards? Mr. JOHNSON. There is mentioned at the bottom of page 85 and at the top of page 86 a new division to take care of the postal savings work. Is that the force that is now employed out of the lump-sum appropriation? Mr. KRAM. The estimate is submitted for a force of 39 employees. At present we have but 19 engaged on the work. The number of postal savings depositories in existence on November 1 was 12,812. We understand it will be the purpose of the Post Office Department to gradually increase the number of postal savings depositories until every money-order office 49,695-is established in the postal savings business. The increase in the clerical force for the auditing of the accounts of the postal savings service is based on the estimate of the department for the extension of the service in 1914. The amount recommended is in the aggregate the same amount appropriated for the fiscal year 1913, but we will use less than $50,000 this year for the present force. LEAVE OF ABSENCE, PIECE-RATE WORKERS. Mr. JOHNSON. Mr. Kram, I believe you wanted to make a statement about the leave of absence of people who are engaged on piecework? Mr. KRAM. When the estimates were submitted last year with the proviso authorizing the Secretary of the Treasury to diminish the salaried positions and create a lump fund it was then believed that under the general law they would be entitled to leave of absence with pay, the same as other employees, but after the appropriation bill had passed the House we ascertained that this was not the fact. Mr. JOHNSON. The comptroller held they were not entitled to it? Mr. KRAM. Yes, sir; and we find there is a special law giving the piece-rate workers in the various bureaus the leave privilege-for instance, in the Bureau of Engraving and Printing, Census Bureau, and Government Printing Office. Mr. GILLETT. You mean there is a special law for each department? Mr. KRAM. Yes, sir; in every department where there are piecerate workers. To give piece-rate workers the same privileges as other employees, it is recommended that they be given leave with pay, the same as the other employees. Mr. GILLETT. How do you decide their compensation during leave? Mr. KRAM. The pay of the piece-rate employees during such leave will be determined by the average quantity of work done by such employee and the pay therefor. Mr. GILLETT. During the preceding month? Mr. KRAM. During the whole time the employee has been on piece rate work. We are further asking that this leave privilege be made effective upon the passage of the act. DIVISION OF CUSTOMS. STATEMENT OF MR. F. M. HALSTEAD, CHIEF. Mr. HALSTEAD. Mr. Chairman, on page 67 there is a provision for an increase of two clerks of the law-clerk grade. What Mr. Cabell has said about increases applies here. This is a tax-collecting office, but the special purpose of this increase is not to enable us to collect more, but to enable us to reduce the expenses of our field service. Until the past two years not a very close attention was given to the expenditures from our general appropriation, "Expense of collecting revenue from customs." It increased on an average of $300,000 a year for 10 years. Last year Congress gave us a slight increase in our office, and enabled us to get a little bit closer supervision upon the business methods at the various ports. We have just started the work, and during the last fiscal year there was a reduction in our expenditures of about $60,000. Now, that is not very considerable, but it is a start, and it must be remembered that our work is increasing not only with the increased volume of imports, but there is constantly legislation being enacted that puts a little bit more work upon us; for instance, the act passed by Congress last year providing for the quarantine of plants and nursery stock. On nursery stock imported into the United States we must have close and careful supervision by the customs office to see whether or not it is admissible. Of course, the Agricultural Department makes the rules, but we must inspect the papers filed and certificates, and nearly every year there is some new law like that. When we started in last year to look into this matter we found some conditions that we did not suppose had existed. The arrangement for the supervision of the customs service and the transaction of business is quite different from that of the InternalRevenue Service. They have a big bureau and do a great deal of their work in Washington. They have almost ten times as many people in Washington as the customs service has in its administration office, and they collect a little bit less, ordinarily, than the customs service collects. We have found that our supervision of our ports of entry is too weak, especially in the matter of business methods. Their methods have grown obsolete. I will give an illustration. We sent a man out to make an inquiry this fall, and he found in one of our customs districts that they kept an impost book at each subport of entry, and he found them all being duplicated at the port of entry. That work was absolutely useless, and there was an expenditure of about $7,000 a year, which was worse than a waste. Consequently we have concluded that if we had a force large enough to enable us to send out men to find out what they were doing in our field service and standardize their methods, we could reduce our expenditures and keep them within bounds and from growing up inordinately in the future. It is also true there is considerable money that is getting away from us in the customs service. In the last four years we have |