tion since it was in last year's bill, which may have entered into the picture to some extent.

Mr. HARDY. My thought was simply this. Actually these people that are in this hump have known that this problem eventually was going to catch up with them.

Mr. BLANDFORD. Oh, no.

Mr. HARDY. They are bound to know. So the question of equity I am not sure would have any play. Because there had to be somemaybe they were going out a little faster. Maybe they wouldn't be given an opportunity to reach that point of statutory authority to go to 26 years. Maybe more of them would have to go out on 20.

Mr. BLANDFORD. I think the question of equity is at this point: I doubt that any officer who was integrated during World War II or shortly thereafter could even have foreseen the possibility of a 75 percent attrition rate from major to lieutenant colonel.

Mr. HARDY. At that time I think that is right. But as the effect of the Officer Personnel Act has become clear, certainly over a period of a number of years now, the people in this group have recognized the facts that they were in a hump group and that something was going to have to give pretty soon.

Mr. BLANDFORD. Oh, yes, but

General WELLER. Yes, sir, they have recognized that. There is no question about it.

Quite candidly, we can't predict exactly what people are going to do in response to this legislation.

We don't know whether the voluntary applications for retirement will go up. We suspect they will. But we can't be sure.

There has been a great deal of misunderstanding of this problem, Mr. Hardy. The officer corps as a whole does not really know what this problem literally is. They don't know exactly what this legislation will do. And until they have gotten a look at this thing, they will be making up their minds based on the legislation.

Mr. KILDAY. Of course, it is reasonable to anticipate that once there is legislation, that everybody within its provisions would give consideration to it as it affected him personally.

General WELLER. Yes, sir.

Mr. KILDAY. That being true, what are you going to do to prevent the best officers and the ones that you want to keep from going ahead and retiring rather than taking any chance on remaining on or being one of those selected out?

sir.

General WELLER. We are on the horns of a dilemma here, I think,

Mr. KILDAY. I would think that your able man who might be able to do a good job in civilian life might be the first one to leave on you, unless you have some solution for it.

General WELLER. Of course, he also probably has the best chance of promotion.

We just simply can't predict solidly what this problem will present to us. We have thought about it. Whether we let officers retire voluntarily Mr. Bates talked to that point earlier-when we are going to turn around and levy a rather heavy attrition on them, whether this question we just haven't worked out, because we don't know what the perimeter of the problem, what the circumference is.

We just don't know how the officer corps is going to react to this. We will just have to feel our way here and see what happens, sir.

Mr. KILDAY. We will go the next point.

Mr. BLANDFORD. The other point, Mr. Chairman

Mr. KILDAY. Just one second. Mr. Bates?

Mr. BATES. What has the general attitude been from headquarters in respect to voluntary retirement?

General WELLER. We have accepted voluntary retirements when they have been submitted.

Mr. BATES. You haven't encouraged

General WELLER. We have not encouraged it. We have simplywell, encourage. By the fact that we have accepted voluntary retirements, except in a very, very few instances, where an individual had received formal education in a civilian school-P.G. school or something of this sort-where he had made a contract with the Government not to resign in less than a certain length of time. We have held him to that kind of a contract.

I would say that the general answer to this question would be what are the needs of the Marine Corps at the time, and they would have to be assessed based on that.

You must protect the service first and the equity and the individual second.

Mr. GAVIN. In that event you are protecting the Marine Corps, but you are jeopardizing the future of the individual, because he is still uncertain whether you are going to retain him or not. And if he has an opportunity on the outside, regardless of what education opportunities he has had, and he can't take it, then he is stuck.

General WELLER. Well, sir, we don't think he has really been stuck, when you consider that probably he got 3 years of the finest technical education at the expense of the Government. I wouldn't say that officer had suffered terribly, sir.

Mr. BLANDFORD. I think, Mr. Chairman, in this connection that we all ought to remember that the Officer Personnel Act which was in effect in 1947, contemplated attrition at all of these promotion points. So these officers have known all along that they have been exposed to a career hazard of not being selected to the next higher grade, and it was only through the vicissitudes of the international situation that a lot of them were promoted.

Mr. GAVIN. He has been exposed, but now he has an opportunity on the outside and he can't be separated from the service, so he loses an opportunity, and it is questionable whether or not he is going to be retained in the service.

Mr. BLANDFORD. Well, the only man actually-as I understand the DOD directive on it, the only people who are flatly refused retirement are general officers, until they complete 30 years of service. The other officers-all of the requests for retirement are given consideration. The law, of course, never guaranteed a man that he could retire with 20 years of service.

The only law on the books says that a man who completes 40 years of service shall be retired. You can't even retire with 30 years actually. You have no legal right to it. You can't enforce it in court. The only other set of figures

Mr. KILDAY. Go ahead.

Mr. BLANDFORD. Mr. Chairman, is question 18, and that is the effect of this legislation over the next 5 years. It says how many officers serving in the grade of colonel will be forcibly retired prior to the completion of 30 years of service. There are 175 colonels and 386 lieutenant colonels, which will create 561 vacancies in the grade of lieutenant colonel. Of course, that will carry down.

Mr. KILDAY. Are there any questions from members of the committee?

Mr. BATES. Just one question.

Mr. KILDAY. Mr. Bates?

Mr. BATES. Mr. Chairman, on yesterday we considered the meaning of the concept of serving at the pleasure of the President. I think that is on all commissions, if I am not mistaken, is that correct? General WELLER. That is correct.

Major LEROND. Yes, sir; that is correct.

Mr. BATES. My own personal construction was that you could be dismissed from the service by this authority, by the President.

And in reading the answer to question 17 here, I see that the Marine Corps has come to the same conclusion.

Now, I wonder if we can get some legal interpretation

Mr. KILDAY. May I say to the gentleman from Massachusetts before we met this morning I had a conversation with Admiral Smith with reference to this. I asked that they have some work done. Of course, the admiral had made the statement that an officer served at the pleasure of the President. I felt that perhaps he had security of tenure and it may be that we are both too far out on the ends and the answer is in the middle and we are going to study it.

Mr. BATES. The Marine Corps refers to the same point here, indicating not a question of assignments as we discussed yesterday, but rather tenure. If we could get a legal interpretation of that, we would all be in better position

Mr. KILDAY. I have asked the Navy Department to work on it. We will work on it with the staff to find where the proper point is. It is probably someplace between the two extremes that we have mentioned here.

Mr. BLANDFORD. Mr. Chairman, General Weller has finished his formal presentation and at this point we have the people here who can discuss the cost of the proposed legislation, which probably will take up the rest of the time.

Mr. KILDAY. I think we should proceed to the costs.

Did you have something to suggest, Admiral Smith?

Admiral SMITH. No, sir. I would just like to introduce Commander McCreery who will indicate the net costs of the legislation as we proposed it.

Last year when we appeared before the committee we gave cost approximations for the retired list only. We now have some offsetting savings on the active duty pay, which Commander McCreery will demonstrate.

Mr. KILDAY. Come up, Commander McCreery. Do you want a seat there or do you prefer to stand for your charts? Whichever you desire.

Commander MCCREERY. Sir, I would like to stand.

My name is Comdr. P. L. McCreery, Supply Corps, U.S. Navy.

Admiral Smith has indicated the method of our cost analysis computations. Two officer personnel plans were prepared and priced: One with the legislation and the other without the needed legislation. Comparative costs thereby became evident.

Now the first part of our presentation will include the costs for both the Navy and the Marine Corps and the period covered is the immediate one, fiscal year 1960 through fiscal year 1965.

After the two plans had been prepared and priced, significant dollar increases or decreases were evident in these two areas-retired pay and active duty pay. The retired pay appropriations with the legislation can be expected to increase during the period fiscal year 1960 through 1965. And that is due to the payment of retired pay to officers who otherwise would not yet have been retired.

With the legislation there will be an increase in the number of involuntary retirements during the period 1960 through 1965.

Of course the terminal leave settlement for these officers and the travel costs for sending them home will likewise increase during that period, and they have been included on the increase side of the ledger. The active duty pay appropriations will be affected this period by changes in the accrual of active duty pay, hazardous duty pay, and to some extent, allowances. Now the total amount of such pay will decrease annually with the legislation due to a decrease in longevity credits for pay purposes in active duty force and some minor net reduction in the total numbers of senior officers on board.

With the legislation, it is planned to retire some of our more senior officers and they will be replaced with officers entitled to less active duty pay in grade. These officers will have less longevity for pay purposes.

An increase in the retired pay and a decrease in active duty pay. Our next slide will indicate the magnitude of these increases or decreases for the fiscal years concerned-1960 through 1965. This vertical line along the left-hand side of the chart here is calibrated in millions of dollars. The bottom is marked off by fiscal year.

Now this first series of red standpipes which are shown here indicate the annual increases due primarily to disbursements of retired pay to these officers who otherwise would not yet have been retired. I want to emphasize that what is shown here is the difference in retired pay and the terminal leave costs and the travel costs of sending the officers home, with the legislation versus those same costs without the legislation.

There is an increase for each fiscal year.

I think, also, it should be mentioned at this point that what is shown here can be somewhat misleading, in that the retirement cost for an early retiree until such time as he reaches normal retired point is inordinately on a comparative basis somewhat high. However, when he does reach his normal retirement point, the difference in rate between what he is getting versus what he would have gotten had he remained on to the normal retirement point results in cutting back on that initial disbursement of retired pay and will continue to do so for as long as the officer is alive.

Therefore, what is shown here in the way of an increase in the difference is considerably more than the long-range retired pay differential.

Along the red standpipes which indicated the increases are now shown in black the annual decreases in disbursements in the active duty pay. Now here again what is shown by these black stovepipes is the difference in active duty pay with the legislation and active duty pay without the legislation. The figures at the top of the standpipes indicate the difference.

In totaling up the black standpipes, they come to about $57 million. This figure will become significant later in the presentation.

This third series of blocks here indicates the net increase or decrease in cost to the taxpayer for each fiscal year, 1960 through 1965. In other words, the increase for each year was matched against the decrease, and this is the result.

For fiscal year 1960, as near as we can determine at this time, there will be an increase of approximately $5.7 million.

In fiscal year 1961, it is $300,000; $400,000 in 1962.

But in fiscal year 1963, we see a reversal, and there is a decrease in cost to the taxpayer in the amounts indicated for those 3 fiscal years. For this overall period there is a net decrease of approximately $11 million. Now the reason for this is that during that period the increases in retired pay are more than offset by decreases in active duty pay, by about $11 million.

The active duty pay for a younger Navy with less longevity ingrade is considerably cheaper. This covers the period 1960 through

1965.

What about the long-range costs of the proposed legislation? There has been some apprehension expressed that enactment of the proposed hump bill would lead to a loading on the retired rolls, a marked increase in long-range ultimate retired pay costs.

Well, after considerable study and research of this problem, we are assured that it will not.

The compilation of any comparative cost information over a long period of time is a very complex, indeed, business and it requires particular knowledge and training. Therefore this order to provide you with figures that we felt was meaningful and could be checked by sources outside of the services, we adopted for purposes of the long-range study a methodology which is advanced by trained actuaries and which we understand to be in use by the life insurance industry in the United States.

We have a complete report on this long-range costing aspect so far as retired pay is concerned available, along with a detailed explanation of the methodology, and with your permission, sir, we would like to present it for the record.

Now I know

Mr. KILDAY. That will be included in the record at this point, as per your request.

Commander MCCREERY. With your permission, sir.