Guard. This letter gives a detailed explanation of the basis upon which 60 percent of the war service-connected rates was arrived at. It shows that many material factors were considered and that liberal principles were applied in arriving at the conclusion. These factors included that of the average pay and allowances and in arriving at a more liveral rate of pension, the difference between wholesale costs used by the War and Navy Departments in determining average pay plus allowances, and retail costs, was considered.

Mr. MAAS. I do not believe that is a correct interpretation of the cost, because you have to take this question of allowances into consideration, and I do not believe you have taken into consideration the value of quarters as compared with civilian rentals, on an actuarial basis.

General HINES. We have taken quarters at the estimated value given by the service departments, necessarily. Now, we have the same problem in dealing with civilian employees. That is up right now in the Veterans' Administration, that is, the question of pay and allowances and deduction for quarters and subsistence, and so forth. That becomes a very broad problem when we try to apply it throughout the United States.

Mr. MAAS. Is there any way of compiling any statistics as to what the average rent paid by civilian employees is, by which you would be able to get a correct basis?

General HINES. I have no doubt that that data is pretty well prepared by the Bureau of Labor Statistics in the Department of Labor.

Mr. MAAS. That was not used in computing the cost?

General HINES. No; we accepted the statement from the service departments.

Mr. MAAS. I do not believe that is a correct way of handling it. I think that should be compared against the figures of the actual amount of rent being paid by civilian employees.

General HINES. That is what I said. We get those figures from the departments and consider all those factors. We considered in the same way the allowances of a man as an employee of the Federal Government, and the best we could get from the departments is just what I have stated. The Navy Department has a higher amount than the average of the others, and by taking the average of the other two, and the Coast Guard, we reached an average of $76.76.

Mr. MAAS. It seems to me that the Compensation Commission could give you a fairly accurate figure for comparison, because we have a great many civilian employees in the classified service doing comparable work in our navy yards and in our service industrial plants. General HINES. That is true, but they take a very much higher rate than those enlisted in the service; there is no question about that.

Mr. MAAS. That is true, and that is why I was thinking that that ought all to be taken into consideration in arriving at an equitable compensation base for the military services.

General HINES. I have a feeling that if we did that you would find in many instances that a man discharged for disability would draw more than he is drawing as service pay.

Mr. SMITH. Of course, there is no such study as you have indicated that has ever been made upon that basis.

Mr. MAAS. I think it ought to be made so it would be available to this committee. I have a very definite feeling that certainly the present rates are not adequate

General HINES. I agree with you.

Mr. MAAS. To give these people the decent things to which Americans are entitled.

General HINES. We feel that the rates should be increased. We are perfectly willing to make any studies which I think the President and the Budget have in mind, because I am sure they feel as we do that we should not hastily pass legislation, feeling that the rates were not adequate.

You will recall that we recommended a provision for 75 percent of the old rates and that bill was passed.

Mr. SMITH. I think the committee could act more intelligently on this legislation if we had that kind of a study before us.

General HINES. We will be glad to give you any data we have that you desire in any way that you see fit.

Mr. SMITH. Of course, at the present time you consider the bill you have recommended as scientific an approach to the question as could be made.

General HINES. Under the premise we have worked upon.

Mr. MAAS. If this were not passed at the present session you do not mean that that would be the final conclusion and that we would have the same thing when we come back in January?

General HINES. No.

Mr. SMITH. In the meantime, this study could be made.

Mr. MAAS. If this were not passed now you would be able to make a further study and possibly get results?

Mr. SMITH. And probably get better results.

General HINES. I will be glad to develop it along that line.

For the information of the committee, if you desire it, we have a great mass of information that has been going back and forth between the departments. Everything which we have developed we have submitted to the departments.

Mr. MAAS. I think if we do not pass the bill we ought to have that data in the record and the members of the committee ought to have that available to study, assuming that the bill is not passed at this session. I think we should have these hearings printed so that all that information may be available to the committee.

General HINES. The service departments have all seen our studies, and it was their official indication that the proposal which would increase the cost of these benefits $1,273,600 a year and involve 60 percent was the one they would prefer, with the exception of the War Department which indicated a preference for the provision of 75 percent.

Mr. MAAS. Is there a study of the 75-percent basis included in what you will furnish the committee for the record?

General HINES. Yes.

Mr. CARLSON. If Congress enacts the bill as proposed by the Veterans' Administration, would that place the present Regular Establishment on the same basis that existed previous to 1898? Would that be a continuation of that?

General HINES. It would increase many of them.

Mr. MAAS. Do you mean it would increase the rates of 1898?

General HINES. Do you mean those in effect prior to the Economy Act?

Mr. CARLSON. No; I had reference to the act regarding those in service in 1898.

General HINES. This was subsequent to 1898; we have not touched those.

Mr. CARLSON. Would this be an extension of that act on the same rate basis?

General HINES. Yes; in other words, we would not touch the rates prior to 1898.

Mr. MAAS. Would these rates bring them in line with those prior to 1898?

General HINES. No; they would be higher. The rates prior to 1898 involved the matter of rank, which we have discarded in the regulations.

Mr. MAAS. I intend to offer an amendment to the bill to exclude the deduction from regular veterans who are domiciled in the Soldiers' Home in Washington.

I have read your analysis of it and the legal foundation for making this deduction. But it is all predicated on the fact that these moneys were under the control of the United States. That is a technicality of the law.

The fact remains that the foundation of that money was moneys levied on Mexico by the commanding general of the United States forces in Mexico and it is maintained by deductions from the veterans themselves while in the service.

I see no reason why we should make the deduction from the pensions of the veterans while they are in the Soldiers' Home in Washington. General HINES. Congressman Maas, at the time the Veterans Regulation was promulgated reducing single men in hospitals or homes, it included all of those establishments that were operated by the United States and subdivisions thereof, and at that time deductions from active service pay for the Soldiers' Home were not being made, I think. However, since that time they are making deductions under Public, No. 444, Seventy-fourth Congress, February 13, 1936.

The whole theory of monetary benefits of a man in a home or a hospital is based upon the principle of avoiding a duplicating benefit. In other words, paying him a pension and at the same time taking care of him in a home or a hospital.

If this man in the home, in fact, is paying for his care, and the United States is not paying for the operation of that plant, the principle upon which our deduction is made is not good.

Mr. MAAS. The Government is not paying for the maintenance of this home

General HINES. I am not prepared to say to what extent it is or is not at this time.

But I do recall that about the time this law went into effect that the fund which had been built up had reached the point where it looked as though it was going to be exhausted, and that the Government would pay the cost.

I do not know-I am perfectly willing to consider your bill, and it seems to me it would be sound if it is found that there is no way of paying for the running of that home.

Mr. MAAS. I would like to have you report on that, because all of my information is that the men themselves are paying for it, and that the Government did not even pay for the founding of the home.

General HINES. I think the home was built up as you have indicated, but there is another home which is in the same position; that is the naval home in Philadelphia.

Mr. MAAS. I have no familiarity with the naval home.

General HINES. Probably this home was built up to some extent on what you might term prize money, or moneys of that character, plus the deductions made.

Mr. MAAS. In other words, it never came out of a levy upon the taxpayers, direct.

General HINES. Not to that extent.

Mr. MAAS. Then I believe it would be perfectly proper to consider both homes at the same time. I was not familiar with the naval home in Philadelphia.

General HINES. I feel, however, that the principle of our deductions in the homes and hospitals generally under the Veterans' Administration is sound.

Mr. MAAS. I agree with you on that, but this is a specific case. General HINES. I would not feel that in any establishment where the men might be, where the Government is not paying the cost, that that would be sound.

Mr. SMITH. We thank you, General, for your very fine and fair statement.

There are also present this morning Mr. Nieman, representing the Regular Veterans' Association; Mr. Millard Rice, representing the Veterans of Foreign_Wars; Mr. Bull, representing the American Veterans' Association; Lt. Comdr. E. B. Hatch, representing the Navy; Commander Reed-Hill, representing the Coast Guard; and Maj. Paul L. Ransom, representing the War Department. Inasmuch as the House is meeting at 11 o'clock this morning, and we have not permission to sit during the sessions of the House, I will ask these gentlemen to submit written statements to be included in the hearing we have had today.

I have received the following telegram, which I want to read into the record, from the Department Commander of the Regular Veterans' Association of the State of Washington:

[Western Union telegram]

United States Capitol Building:

United States Representative MARTIN SMITH,

JUNE 7, 1937.

Earnestly urge you vote pension bill H. R. 8948 favorably out of your committee Wednesday morning.

IRVIN S. FRENCH, Department Commander, Regular Veterans' Association, State of Washington.

Mr. DIXON. Mr. Chairman, I have a telegram from the commander of the departments of Ohio and Kentucky of the Regular Veterans' Association, which I would like to insert in the record. It reads as follows:

On behalf of enlisted and former enlisted men of the Regular Establishment, now residing or serving in Ohio and Kentucky, I urge you to attend the committee meeting June 8th and vote favorably in favor of H. R. 8948. Our representatives have spent over $40,000,000,000 to end this depression but have miserably failed in their duty to consider the men who make it possible for this country to exist. Please send me a list of representatives on this committee and how each of you vote. We hope to have you with us to discuss the problems of the Regulars this fall, via the air. ROBERT FOX,

Commander, Departments Ohio-Kentucky, Regular Veterans Association. WRITTEN STATEMENT OF J. E. NIEMAN, NATIONAL ADJUTANT AND LEGISLATIVE REPRESENTATIVE OF THE REGULAR VETERANS ASSOCIATION, WASHINGTON, D. C. REGULAR VETERANS ASSOCIATION, Washington D. C., June 8, 1938.

Hon. ALLARD H. GASQUE,

Chairman, House Pension Committee,

House Office Building, Washington, D. C.

MY DEAR CHAIRMAN GASQUE: In accordance with the request of the acting chairman of the committee in the hearing held on the bill H. R. 8948, June 8, 1938, there follows the reactions of this organization to the question of compensation for service incurred disabilities.

1. A rated degree of disability pensionable at an arbitrary amount is not the solution to the problem of compensation for line of duty disabled Regulars for the following reasons:

Rates of pay cover 7 different grades and 13 separate ratings for enlisted personnel as follows:

(a) Grades (rank) from seventh up to first in a base pay range of $21 to $126, with additional pay based on length of service, and other considerations of cash

'pay.

(b) Ratings ranging from private first class to specialist sixth class and in pay for such rating ranging from $30 to $3 in addition to base and longevity pay. For example, an enlisted person in the Army could be rated private, first class, specialist first class with pay

(A great variation in cash wage arrangements is possible and practiced in all the services.)

(c) To be justly compensated for his disabilities as a career Service man, full consideration must be given to the rate of pay received at the time of disability, cost of comparative benefits such as food, clothing, quarters, preparation of food, maintenance of quarters, service retirement privileges, impairment for following a gainful pursuit on the "outside," age, probable future value as a government employee had the disability not been incurred, and other obvious considerations. 2. The only sane, equitable and scientific solution to the problem is provided through a method whereby the line of duty disabled Regular may have option to disability retirement at three-quarters of his cash pay at time of disability incurrence or to take rated degree of disability which would be predicated on 1 (c), above, and which the author and this association advocates in the bill H. R. 8948 which is the initial step toward a sane and scientific solution of the problem. Commenting on this paragraph, it is realized that certain objections will be raised to enactment of disability retirement for the enlisted personnel, however, it is a privilege that the commissioned personnel of the four armed Services now enjoy, and is also enjoyed by the enlisted personnel of the Coast Guard after a certain period of service. The merits are unquestionable.