Senator CANNON. You referred to the officers, the beginning officers, at $270 a month, although with the allowances, the net take-home pay of an O-1 is $391 a month.

Now, that compares with the pay grade of the GS-7, which is normally compared there, and the net take-home pay of a GS-7 is $410 a month, so the disparity there is, on a take-home pay basis, not quite as great as some people are led to believe, even though it is certainly, there is, a disparity, and I do not mean to imply that there is not. Secretary KORTH. Right, sir.

Senator CANNON. As a matter of fact, if H.R. 5555 should pass, the 0-1 then would only start, would only have a take-home pay, of $405 a month, so it would still be under the pay of a GS-7, which has a take-home pay of $410.

Secretary KORTH. Mr. Chairman, these are married officers that you are speaking of.

Senator CANNON. Yes, sir.

Admiral SMEDBERG. And two-thirds of those officers are not married. Senator CANNNON. Well, let us go up into the next grade then and take

Admiral SMEDBERG. That is over 2 years, sir. We are not talking about that.

Senator CANNON. Well, the average of the O-2, even though some of those will be less than 2 years, and some will be over, but the average in take-home pay under the present scale is $475, and the GS-8 is $450.

Now, under H.R. 5555 the O-2, the average goes up to $522, but, of course, that average is brought up by reason of the people with over 2 years of service, obviously.

Secretary KORTH. That is right.

Senator CANNON. If no change is made in the act.

In any event, these charts have been made a part of the record. Admiral, what are your views on the receipt of either sea pay or family separation allowance, but not both?

Admiral SMEDBERG. Mr. Chairman, there is no question in my mind but that each is important for a separate and particular purpose. I feel that each should be authorized and, as I said before, one is for the rigors of sea duty, the sea pay. This compensates for the lack of companionship outside the ship, the cramped quarters and constantly being on call, and the more than 80-hour-a-week workweek, which is common on board ship. The other is for the extra expenses at home. They are not for the same purposes.

Secretary KORTH. Mr. Chairman, may I ask General Simpson to comment not only on the O-1's but likewise on the foreign duty and sea pay so that you may have the Marine Corps view also?

Senator ČANNON. Yes, sir. I intended to give General Simpson an opportunity to testify later, but it is very fine to have him bring it in right at this particular point.

Secretary KORTH. Yes, sir.

Senator CANNON. General, you may give us your views on it.
General SIMPSON. Thank you very much.

Mr. Chairman, I would first like to address myself to this matter of the officers with under 2 years of service.

We have before the committee consideration of a pay bill which provides for an increase for all officer pay grades and all enlisted grades except for the 0-1's. To my mind it is just simply not right to come out with a pay bill that provides nothing for these young

officers.

We talk in terms of retention of these officers, sir, and it is true that we can get the numbers that are required. But what are we really interested in is retaining in the services the best of these young men.

It is my belief, sir, if we maintain these people at what really amounts to a substandard wage for 2 years that then the request for, the arguments for, them to stay on as career officers fall on deaf ears. This young man is not so much interested in what he is going to be making 8 years from now. He wants to know what he is going to be making next month, and if we continue to have him serve for 2 years at this very, very low wage that has been mentioned here, I believe that we engender in the minds of all too many of them the idea of "All right, I will stay for my 3 years, that is what I am obligated for. Don't talk to me about making a career. I am going to get out as quickly as I can." Most of them are doing just this thing.

The matter of sea pay and family allowance are for two different things. We do not believe, sir, that for a married enlisted man to draw both of those modest allowances would give him any excess amount of money.

Senator CANNON. Mr. Secretary, you stated that you supported the provisions of the Department of Defense proposal for the increase to the officers, as they have outlined it, and as a part of that increase it seemed to me they were saying that they are going to get some of the money from elimination of the subsistence increases. I am wondering, do you support their proposal for the elimination of subsistence? Secretary KORTH. I do support their proposal.

Senator CANNON. We are talking now about the elimination of the $3 subsistence and the varying amounts for the enlisted man. Secretary KORTH. Yes, sir.

Senator CANNON. And keeping the commutation of rations at the actual cost of the rations rather than fix it at a statutory level.

Secretary KORTH. This is correct, Mr. Chairman, with the understanding, of course, as was stated by Secretary Paul, that the matter of subsistence is now under the process of intensive review.

Senator CANNON. Do you have anything to add to that, Admiral Smedberg?

Admiral SMEDBERG. No, sir.

Senator CANNON. General Simpson?

General SIMPSON. Only to say, sir, that in taking this position, 1 believe this is what the Secretary implies and it is certainly my understanding, we are not saying that the enlisted man does not need an increase in subsistence. What we are saying is we are not quite sure exactly what that should be, and we support Mr. Paul in saying: "Let us find out precisely what that is and come back to the Congress and tell you what the rationale and the basis for it was.”

Secretary KORTH. This was the intention of my remarks, my response.

Senator CANNON. Now, Secretary Paul also proposed for the DOD that we eliminate the retroactive application of the proposed new

rates of basic pay to members retired after January 1, 1963 and before the effective date of the bill, for the reasons that you heard him state. Would you state your position on that, and I presume that you probably feel that if they can go along with recomputation as it is proposed in the bill, that then we should-it is a matter of determination of where the cutoff point is, is that it?

Secretary KORTH. I do support fully, Mr. Chairman, the position of Secretary Paul as outlined to you this morning. I urge, however, in that connection, of course, that the bill be enacted as quickly as can be done.

Senator CANNON. I want to assure you that the subcommittee is going to attempt to complete the hearings at the earliest possible date, and to try to mark up a bill and get it through when we can. I am not committing myself to what the bill will be, but we certainly have no intention of trying to delay it.

Secretary KORTH. I am certain of that, Mr. Chairman.

Senator CANNON. General, do you have anything further to add now with respect to any provisions of the bill or with respect to your position on the matters of which the Secretary and which Admiral Smedberg have testified?

General SIMPSON. No, sir; I support that position.

Senator CANNON. Senator Young?

Senator YOUNG. I have no questions. Thank you, Mr. Chairman. Senator CANNON. We thank you very much for being here, Mr. Secretary, and Admiral and General, and we will now move on to the next witness.

Secretary KORTH. Thank you, Senator.

(The following letter was subsequently received by the subcommittee chairman:)

Hon. HOWARD W. CANNON,

DEPARTMENT OF THE NAVY,

OFFICE OF THE SECRETARY, Washington, D.C., July 18, 1963.

Chairman of the Subcommittee, Committee on Armed Services,

U.S. Senate, Washington, D.C.

DEAR MR. CHAIRMAN: This is to amplify certain statistics alluded to by Vice Admiral Smedberg and myself during our testimony on July 16, 1963, before the Senate Armed Services Subcommittee. We feel that official records should be clarified and explained.

During his testimony, Admiral Smedberg stated that the pay of an ensign was $270 per month. This figure was derived by adding the basic pay of an 0-1 with under 2 years' service ($222.30) and the officers basic allowance for subsistence ($47.88). This is the pay which 79 percent of our newly commissioned ensigns receive. These officers are unmarried and report directly to ships or reside in bachelor officer quarters ashore. With this figure as a base, if we subtract $30 a month as the income tax deduction for this unmarried officer, we see that the take-home pay amounts to $240 per month. This pay represents what the Navy, in competition with the civil service and industry, can offer the majority of college graduates as inducement for accepting a commission. Of course, many of our newly commissioned ensigns do get married and are therefore entitled to the additional BAG allowance of $110.10 per month with the resultant take home pay of $360.

It is our understanding, Mr. Chairman, that the tables which were utilized in the hearing by members of the subcommittee during our testimony reflected the average take-home pay of all the officers of the various grades of the uniformed services. Assuming this to be correct, I should like to point out that within the 0-1 grade approximately 30 percent have in excess of 2 years' service in grade or are former enlisted personnel with over 4 years' prior service. This fact naturally tends to raise the average take-home pay for this grade signifi21-482-63- -6

cantly and certainly does not reflect the pay of a newly commissioned officer. I should like to reiterate that the figure of $270 referred to by Admiral Smedberg reflects the gross pay of the majority of our newly commissioned ensigns and is therefore, a more representative figure for any comparative purposes. It is this group about which we have deep concern.

It was indeed a privilege for me to appear before your subcommittee and to have participated in your objective hearings. I hope that the included information will clarify this very important point concerning the pay of our young officers.

Sincerely yours,

FRED KORTH.

Senator CANNON. We have Mr. Vance, Secretary of the Army, next, who was kind enough to step aside so that Secretary Korth could appear and be ready for his next hearing.

Secretary Vance, the subcommittee is very happy to welcome you here today and to have your testimony on the military pay bill. I see that General Wheeler, Chief of Staff of the Army is with you. We are also very happy to welcome you, General.

You may proceed.

STATEMENT OF HON. CYRUS R. VANCE, SECRETARY OF THE ARMY

Secretary VANCE. Thank you, Mr. Chairman.

Mr. Chairman, and members of the committee, this is a time when the Nation's need for a modern, battle-ready Army is clearly appreciated. Reflecting this, the administration, with the knowledgeable and sympathetic support of the Congress, is moving rapidly to provide significant improvements in Army materiel, organization, and manpower. As a result, the U.S. Army today is more powerful and more versatile than ever before in peacetime. It will be stronger tomorrow.

I would emphasize, however, that the Army's fundamental strength derives even more from the worth and spirit and morale of its men than it does from any other factor. When the machines have been made and the materiel produced, it then devolves upon the American soldier to use these tools to defend the Nation. This is no ordinary task to be undertaken by ordinary men. The quality and spirit of the soldier comprise the ultimate measure of the Army's combat readiness.

For these reasons, I welcome the opportunity to testify today in behalf of a pay raise for the members of the armed services. Just and adequate compensation is essential if we are to attract and retain the caliber of men we need. It is a measure of recognition for difficult services in difficult times. And it is vital to morale.

I appreciate the knowledge and understanding which you bring to your task. Therefore, I propose to discuss briefly those elements of the pending legislation which I consider especially important or which I judge to be in considerable question. I shall, of course, be glad to respond to your questions on any aspect of the matter.

First, let me say that I was in full accord with the aims of the military pay proposals originally submitted by the Department of Defense. In my judgment the current House bill, H.R. 5555, is a very constructive piece of legislation which fulfills those original aims in large measure. I have, however, certain reservations and comments which I should like to make concerning it. In doing so, I would note

that the increases originally proposed by the Defense Department and those contained in H.R. 5555 would cost approximately the same. My remarks are framed within this approximate cost context.

This bill, I believe, clearly supports the important needs of the enlisted soldier. The retention of his skills and diverse capabilities is essential to the Army, and further reward for his courage and dedication is long overdue. As I shall point out later, I do not now favor statutory increases in subsistence allowances for any ranks. This is a subject warranting detailed study. With this chief reservation, I am very glad to see that the Congress is moving so strongly to support the enlisted men of all the services.

On the other hand, I am of the very firm opinion that H.R. 5555 provides inadequate increases in pay for officers. The original Defense proposals, combining raises in both basic pay and subsistence allowances, have been cut by approximately $26 for each officer grade. Those original proposals were carefully drawn in terms of equity, officer attraction and retention, and proper balance between pay for each rank and its attendant responsibilities.

I believe it is possible, through savings which I shall suggest in a moment, to restore pay increases for most officers to the levels of our original proposals without materially changing the total cost of this legislation. I would propose that this be accomplished by eliminating the small officer subsistence increase in H.R. 5555, and adding $30 to basic pay. It seems certain to me that this can be done for officers in the ranks of first lieutenant, captain, major and lieutenant colonel, or their equivalents, having more than 2 years' service. I urge this change.

Another change which I suggest in H.R. 5555 concerns the subsistence allowances which I mentioned earlier. The House, as you know, proposed substantial increases in these for enlisted men and smaller raises for officers. This matter is now, quite properly, under study in the Defense Department with an eye to possible simplification of the whole pay system. Further statutory fixing of subsistence allowances at this time would run contrary to this effort. Therefore, pending the outcome of the Defense study which will be reported to the Congress next year, it seems wise to concentrate principally on increases in basic pay and not to introduce further rigidity in this area of allowances. Accordingly, I recommend against any increase in subsistence allowances at this time and suggest that the savings so effected be diverted to the immediately urgent necessity for adequate officer pay increases.

The House bill contains another provision which I consider unwise. This would authorize service members retired on or after January 1, 1963, and before the effective date of this legislation, to recompute their retired pay on the new basic rates. This would set a precedent which would be difficult to overturn with respect to any future legislation. It would also seem to draw an unwarranted line between those retiring on or after January 1, 1963, and those retiring, for example, in December of 1962. Elimination of this provision would provide another saving to apply to more justifiable purposes.

However, on a related matter, I am very much in favor of the pending proposal to permit recomputation of the pay of those who retired prior to June 1, 1958, on the basis of the 1958 pay scale. Along