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is therefore entitled to greater consideration than the man who selects such a vocation in peacetime.

The history of veterans' relief legislation in our country reveals the policy of providing more extensive relief for wartime service. When we enter a war, the existing law then applicable to the Regular Establishment, is applicable, but during the war or after its termination, service pensions, higher service-connected rates and other special considerations have been granted.

There are two groups of veterans of the Regular Establishment, those who incurred disability in service prior to April 21, 1898, and those who incurred disability on and after that date. When the Economy Act was passed, Congress decided that those pensions that were being paid for disability incurred prior to April 21, 1898, would not be disturbed. That group has not been disturbed.

We are now dealing with the veterans of the Regular Establishment subsequent to 1898, and the situation that followed the enactment of the Economy Act of March 20, 1933, resulted in this, that the number of veterans on the rolls on January 31 of this year whose pensions were increased as a result of that legislation is 4,799. The number of veterans whose pensions were decreased as a result of that legislation is 7,296, 1,030 remained the same. A number of veterans, 2,877 to be exact, were dropped from the rolls under the regulations issued pursuant to the Economy Act. However, there were some 8,206 veterans who were added to the rolls.

So we are dealing with a group of the Regular Establishment on the rolls on January 31, 1938, amounting to 21,331.

Then, certain Spanish-American War veterans, due to a definition of the wartime period, have been classed as peacetime veterans, and there are 27 of those. The number of World War veterans changed to peacetime veterans, due to a change in the definition limiting the dates of the war, is 9,577.

Of the Regular Establishment prior to 1898, we have 1,022. Then we have some on the rolls by special acts, numbering 794, making the total of all involved in the group we are now dealing with, 32,751.

The average monthly pension for the men of the Regular Establishment on the rolls, where the service was subsequent to 1898, is $22.22. The estimated average monthly pension for men in the Regular Establishment, under the bill we have submitted for your consideration, which gives them 60 percent of the wartime rates, would be $25.65. The average monthly compensation for the wartime veterans group with service-connected disability, as of April 30, 1938, was $40.28.

I will not take the time of the committee to read the report that we have submitted, because it has been printed and is in your possession. I call your attention to Committee Document No. 44, containing a letter dated June 4, 1938, to the chairman of this committee, Mr. Gasque, reviewing the history of the pensions and allowances for the regular veterans, and windiug up with the suggestion which you will find on page 154 (page 91 of these hearings), with a proposed bill which establishes, as against the present average of 45 percent of wartime rates, 60 percent of wartime rates, with the exception that for certain disabilities of major character there are special rates provided for, which you will find on page 155 (page 92 of these hearings).

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I also wish to call your attention to the statement made in the closing part of that letter, as follows:

If, upon deliberation, it is the desire of the committee to recommend the above proposal, I am authorized to state that in accordance with the understanding reached with the Acting Director, Bureau of the Budget, the proposed legislation would be in accord with the program of the President, provided that enactment thereof is deferred until the first session of the Seventy-sixth Congress. It should be stated that in accordance with such understanding the Veterans' Administration under ordinary circumstances would not present the proposed legislation to the Congress until the first session of the Seventy-sixth Congress, but in view of the nature of H. R. 8948 it is considered advisable to inform the committee of the results of the study and to make recommendation for relief of the nature proposed, subject to the budgetary understanding.

The study referred to in that report is the study I have previously referred to, made by the service departments, which involved these considerations:

The first proposal submitted by the Veterans' Administration to the departments involved giving consideration to length of service. In other words, the departments felt that men with longer service should have an increased rate of allowance. We felt in the Veterans' Administration that such a proposal involved more of a question of retirement pay than of a pension, and that we could not very well support increase after, say, 10 years service, with a certain percentage up to 30 years of service.

The proposal which we have submitted to you here is one which at the time we submitted it to the departments was the one recommended, with the possible exception that the War Department suggested, in lieu of our 60 percent of the wartime rates, that that be increased to 75 percent. The Navy and the Coast Guard agreed to the 60 percent.

Mr. Smith. General Hines, do you know why the Acting Director of the Budget wants this deferred until the next Congress?

General Hines. Yes. The Congress knows, and we all know, the demands that have been made upon funds for various purposes. The legislation so far passed during the two sessions of this Congress has increased the monetary benefits to veterans and their dependents to the extent of about $15,655,000. He felt that we have gone about as far as we could go with veterans' legislation this year, taking into account the other demands that have been made, and the feeling that this subject itself merits very careful consideration on the part of Congress, and that no legislation at this stage of the session should be hurried through.

Mr. Smith. Do you think that attitude was known to the Senate when they passed S. 3503 yesterday?

General HINES. I have an idea it was, but I am not sure what prompted them to pass the bill. But I feel confident that they understood, because I sent the same letter to the Senate committee, which appears in their hearings, that I sent to this committee. I was hopeful, of course, that the bill would be deferred, and I am hopeful that this committee will give it very careful consideration and will grant hearings to all those interested in it, not only in the Veterans Administration, but the Regular Veterans' Association, or anyone else who is interested.

Mr. Smith. Were any hearings held by the Senate committee?

General HINES. Yes, there were some hearings; they are printed. We did not testify before the Senate committee at any length, because those who represented me there indicated that the matter of clearing a report that we would make through the Budget and through the President had not taken place.

As soon as that report was ready, I sent it to the committee, and their report indicates that they gave consideration to that, because this language appears in the report of the Senate committee on page 4:

The Veterans' Administration made an adverse report on S. 3503. However, the Veterans' Administration pointed out, on the basis of its studies of the situation pertaining to pensions for other than wartime disabilities of members of theRegular Establishment, that it had concluded a liberalization of the present law to be justified upon practicable and scientific considerations. The Veterans' Administration recommends favorably a proposal to amend present law to provide a total disability rate of 60 percent of the wartime rate. The Bureau of the. Budget has no objection to this recommendation of the Veterans' Administration, provided action is deferred until next year.

That indicates that they did give some consideration to that. Mr. Chairman, we made no recommendation in our bill dealing with the dependents of veterans of the Regular Establishment for this reason, that if the theory upon which we have proposed this legislation is sound and the rates now established are within keeping, we say that if the committee should increase the figure beyond 60 percent, then the question of possible adjustment might arise.

I have some tables here worked out on the basis of what would happen in the case of a provision for 80 percent for the dependents. The war rate for the widow under 50 is $30; that is just for the widow alone. The rate under Senate bill 3503, at 80 percent, would be $24.

Under Public, No. 2 the present rate for the Regular Establishment is $22, so that would increase that rate only $2.

For the widow between 50 and 60, the wartime rate is $37.50, and the rate under the 80-percent provision, in the Senate Bill, would, of course, increase that to $30. Únder Public, No. 2 the rate is now $26, so there is an increase there of $4.

There are some comparisons of rates that would bring about inequalities if the 80-percent bill was adopted, particularly if you attempt to involve those rates that are now provided for under the general law and the increases and decreases brought out by Senate bill 3503

Mr. Bailey, will you point out to the committee, because you have studied the chart, the inequalities you see from this table?

Mr. BAILEY. In the case of a widow under 50, the rate under Public 304 is $30 per month, and 80 percent of that rate would be $24.

Under the general law the rate to a widow is from $12 to $30 per month, depending upon the rank. In the case of a widow of a lieutenant colonel or an officer of higher rank, this bill would bring about a $6 decrease. But there is a protective provision in the bili which would prevent any one from being decreased.

There are certain other instances where there would be increases or decreases.

Mr. Maas. In that case a decrease is protected against, so that no one would actually be reduced.

Mr. BAILEY. That is correct.

General Hines. I should call the committee's attention to the fact that following the Economy Act, under the first Presidential regulations the permanent and total rate for the Regular Establishment was $30, and by subsequent Presidential regulation it was moved up to $45.

This bill that we propose moves all rates for this group up to 60 percent of the war service-connected rates.

Mr. Maas. That is the bureau's proposal?
General Hines. Yes, sir; that is the bureau's proposal.

We feel that the $60 rate would be fair, considering all factors, one of which is that it would not be out of line with the rate structure of the Federal Employees Compensation Act.

For instance, I call your attention to this fact:

The Federal Employees Compensation Act, in section 6, provides for monthly compensation for total disability at not more than $116.66 nor less than $58.33, unless the employee's monthly pay is less than $58.33, in which case his monthly compensation is the full amount of his monthly pay.

There are special provisions for the partial disabilities and also provisions for a lump-sum payment. It should be noted that the employees' compensation rates for total disability range to $116.66 per month. The submission of the Veterans' Administration would authorize payment of pension at the rate of $60 per month for total disability. The rates in excess of $60 per month are for specified conditions, considered to warrant rates in excess of total disability and the entitlement to those specific rates is not based upon the employee's earnings as is the case with employees' compensation, but upon meeting the eligibility requirements for high degrees of disability.

Those special rates are referred to in the report which has been printed.

We realize that the desire on the part of the services for increases in these rates is based upon sound practice and theory. And we all realize that in these days there has been a change in the type of enlisted men and noncommissioned officers in the Regular Establishment, and necessarily, because there has been a marked change in the type of equipment and the technique in handling that equipment.

We feel that these men, after they are trained for that kind of work, would have to have an incentive along that line to remain in the service.

The question will arise that this group does not always include many technical men. But our investigation, made in cooperation with the War Department, shows a rather interesting thing which the committee should have before it.

The War Department made a study of a representative group of enlisted men selected at random and it was ascertained, as to occupational qualifications, that 27 percent were ordinary laborers, 13 percent farmers, 42 percent occupational specialists in skilled trades and occupations, and 18 percent students. None had less than a sixth grade grammar school education while 20 percent had stopped after completing eighth grade, 18 percent first year high school, 14 percent second year high school, 11 percent third year high school, 22 percent fourth year high school, and a small percentage had college training.

So the theory that they all go in probably because of unemployment or being forced into service, or because of a desire to see the world, I think, does not necessarily hold good, and the Veterans' Administration is in sympathy with the departments in trying to retain good men that go into the services, and feels that this will be an incentive in that direction.

Mr. Maas. Also, there has been a vast increase in the mechanization of the military and naval services which requires an entirely different type of men than you had in times gone by.

General HINES. That is right. Mr. Maas. And there must be a different incentive to get the type of men you want.

General H.NES. That is right.

Naturally, you will wish to consider, in connection with this study and analysis, the age and length of service of some of these men on the rolls on January 31, 1938. We have a table that shows that, and it can be inserted in the record, if you desire.

In reference to age at discharge, the average age at discharge is 27. At the age of 20 there were 1,060, or 5 percent. The greater percentage of the group, 71 percent, was found to be between the ages of 20 and 29. Some of them, a small number, less than 1 percent, were between the ages of 50 and 59. Only 24 out of that group were over 60 years of age.

The amount of pension drawn prior to March 20, 1933, and the numbers are also covered by a table which I will be glad to insert in the record, if you desire. This table reveals increases, decreases, and no change in rates as a result of the present law. There will also be furnished a table showing rates being paid Regular Establishment veterans, service subsequent to April 20, 1898.

Mr. Chairman, we feel that this subject is one of far-reaching importance and that our past dealing with it, without any intention to criticize the agencies or the Congress, has been rather piecemeal.

It is a matter that merits the most careful consideration.

If it is to go on a wartime basis, then we must discard the idea that we should keep the rates in line with those provided by the Employees Compensation Act, and we must discard the theory of not having higher pension rates than the average pay of the men on active duty in the service.

These men are in fact employees of the United States Government, and while in such service they were following it as a vocation-a peacetime vocation. I can think of no better basis for establishing their pension rates than that we have recommended.

Mr. Maas. The only point in that regard was that, accepting the theory that we adopt the employees' compensation basis, you do not arrive at an equitable comparison because you are taking the pay

of the soldier and the sailor as the foundation and comparing that with the pay of the civilian employee. But, as a matter of fact, the pay is entirely different because the man in the service, as a part of his emoluments, gets his clothing, he gets his food, and he gets his lodging.

General HINES. We take that into account in our studies. We took that into account.

You will probably be interested in our report on that.

There seems to be, however, a difference between the average pay as reached by the Army and the average pay as reached by the Navy.

I am inserting in the record a copy of my letter to the Secretary of War, May 13, 1937, a similar letter having been dispatched the same date to the Secretary of the Navy and commandant of the Coast

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