request legislation to make policies of United States Government life insurance and national service life insurance incontestable for fraud unless asserted by the Veterans' Administration within 2 years (H. R. 1261); to request amendments to Veterans Regulations to provide a presumption of service connection for malignant tumors (H. R. 45) and tuberculosis other than pulmonary (H. R. 46); and to request legislation to prohibit the severance of a service connection which has been in effect 10 or more years (H. R. 463 and H. R. 628).

We shall oppose with all the vigor at our command any efforts to increase either administratively or by legislation the interest rates on Veterans' Administration guaranteed home or business loans.

REORGANIZATION OF THE VA

We have heard much of the survey of the Veterans' Administration made by Booz, Allen & Hamilton and have familiarized ourselves with its recommendations. Long before its release and at our national convention held in Boston, Mass., last August, we passed a resolution which certainly indicates familiarity with the fact that the Booz, Allen & Hamilton report would markedly restrict the service to the disabled veterans, tear down the present structure of the VA and all without any proof of real savings in the cost of administration. This resolution is interesting for no other reason than it shows the DAV, my organization, in convention assembled was and is alert and aware of the continued attacks against the VA and that the delegates indicated in no uncertain terms our organization's determination to fight such a program to the end. Let me read part of this resolution into the record:

DISABLED AMERICAN VETERANS, 1952 CONVENTION REHABILITATION RESOLUTION 381 Whereas the extended activities of the many groups designed to reorganize the Veterans' Administration have reached the point where definite action is now contemplated. At great cost surveys have been completed, including sections of the Hoover report and the latest prepared by the firm of Booz, Allen & Hamilton; Whereas it is clear that a move is under way and action expected momentarily that will destroy the entire structure of the Veterans' Administration as we know it. This will mean that the several services will be operated separately and independently-such as the Claims Service, Medical Department, Education and Training, Loans, Insurance, etc.-all unrelated, meaning that the term "Veterans' Administration" will be abolished. The number of offices for the several services will be reduced to a fraction of the present setup. The veteran will no longer receive complete service under one department but rather must pursue multiple agencies for separate benefits;

Whereas this is a return to a similar system in operation prior to the merger creating the Veterans' Administration shortly after World War I. The new plan will prove costly and inefficient to the Government, multiply red tape and create long delays to the veteran and his dependents receiving their just benefits; Whereas we urge that essential services involving the disabled which include medical, outpatient, and hospital, claims and administrative services remain intact: Now, therefore, be it

Resolved, That this convention authorize and mandate its officers to seek such legislation or to act otherwise with the hope of forestalling such reorganization and that all facts in connection with this proposed moved be made available to the entire membership by complete publication in the Semimonthly.

We think that the answer to the Booz, Allen & Hamilton report, the answer to the recommendations of the Hoover Commission, the Hoover Commission's task force, the Trundle Engineering Co., and the Citizens Committee for the Hoover Report can be found in the

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reorganization plan of the Veterans' Administration as produced by the Administrator of Veterans' Affairs and his staff. We feel that this recent reorganization plan of General Gray contains much of the meritorious suggestions of all these surveys and studies and at the same time it is clear and evident that the Administrator and his staff have not lost sight of the grave importance and the magnitude of the task assigned to the Veterans' Administration by Congress and which can be recognized in one comprehensive phrase "service to America's war veterans" which can only be accomplished by proper administration of all laws benefiting veterans.

We are familiar with General Gray's reorganization plan and we are indeed pleased with his determination to retain and uphold the present general structure of the Veterans' Administration. Certainly the DAV approves his recognition of the importance of the regional offices in their present location. It is the regional office as now constituted which grants most of the benefits to the veteran and his dependents. The regional office brings the VA to the veteran. A reduction of these offices to 10 centers shorn of most of their authority would go far toward the ruination of the service and the destruction of the VA.

Why should the serviceman in uniform hear so much about the value and virtues of unification of the services only to learn on his return to civil life of the proposed disintegration of the VA into a scattered and disorganized mess-and all under the guise of economy and efficiency.

General Gray's recognition of and familiarity with the entire VA program and his identification and division of the "product lines" into their basic departments, medical, insurance, and veterans' benefits must be accepted as an effort to improve the operation and efficiency of the VA without reduction in service to the veteran and his dependents. We are sincere in our belief that his plan as submitted is superior to those plans previously submitted by professional surveys.

Certainly the Disabled American Veterans desire that General Gray's organization program be given a fair trial and the support of all groups honestly concerned in the rehabilitation of our war veterans. It does not mean that we subscribe to this new reorganization plan without reservation. In fact, I can assure this committee that the DAV will continue its primary interest in the care of our wartime disabled, his widow and dependents and, as ever, reserve the right to offer fair, honest, and constructive criticism of the VA when we feel circumstances require it and where errors of omission or commission are interfering with the proper application and distribution of benfits under the law.

Before concluding I would like to state that our organization will ask the Congress for a supplemental appropriation of $15 million for the hospital and medical service of the Veterans' Administration to operate on for the balance of this fiscal year. When this bill reaches the floor of the House we will need your support.

I again wish to thank the committee for inviting me here today and I assure you that my entire staff will always be available to testify on the various matters we have just discussed.

Listed below are DAV resolutions adopted or reaffirmed at the 1952 national convention of the DAV held in Boston, Mass., August 10-16, 1952, together with the number of House bills pending before the Veterans' Affairs Committee:

Housing Resolution No. 83: Extension and liberalization of direct loan authority of the Veterans' Administration. H. R. 27 by Mrs. Rogers.

Legislative Resolution No. 156: Requesting legislation to provide a service connection for injuries incurred en route to induction. H. R. 345 by Mrs. Rogers. Legislative Resolution No. 371: Requesting legislation authorizing a system of judicial review of certain decisions of the Administrator of Veterans' Affairs. H. R. 1994 by Mr. Evins.

Legislative Resolution No. 384: Requesting corrective legislation for the purpose of uniformity in the rates of disability and death compensation. H. R. 43 and 44 by Mrs. Rogers.

Rehabilitation Resolution No. 34: Requesting an increase in the present burial allowances. H. R. 47 by Mrs. Rogers.

Rehabilitation Resolution No. 51: Requesting an amendment to Public Law 877, 80th Congress, to make dependency allowance benefits uniform among all service-connected disabled veterans. H. R. 48 by Mrs. Rogers.

Rehabilitation Resolution No. 110: Requesting legislation to provide a presumption of service connection for tuberculosis other than pulmonary. H. R. 46 by Mrs. Rogers.

Rehabilitation Resolution No. 131: Requesting an amendment to Public Law 346, 78th Congress, to insure proper review of disability status of persons discharged from the armed services. H. R. 40 by Mrs. Rogers.

Rehabilitation Resolution No. 198: Requesting legislation to prohibit the severance of a service connection, except for fraud, which has been in effect for 10 years. H. R. 463 and 628 by Messrs. Kearney and Teague, respectively. Rehabilitation Resolution No. 199: Requesting legislation to establish a presumption of service connection for malignant tumors developing to a 10 percent or more degree of disability within 2 years following separation from active service. H. R. 45 by Mrs. Rogers.

Rehabilitation Resolution No. 209: Same as Legislative Resolution No. 384. Rehabilitation Resolution No. 224: To provide that policies of United States Government life insurance and national service life insurance shall be incontestable for fraud unless asserted by the Government within 2 years following issuance or reinstatement of a policy. H. R. 1261 by Mr. Kearney.

Rehabilitation Resolution No. 232: Requesting legislation to extend the delimiting date, July 25, 1956, to those veterans who have been precluded from applying for training under Public Law 16 by reason of chronic service-connected disabilities requiring prolonged hospitalization. H. R. 462 and 630 by Messrs. Kearney and Teague, respectively.

Rehabilitation Resolution No. 244: Requesting legislation to provide chiropractic treatment in Veterans' Administration hospitals and on an outpatient basis. H. R. 54 by Mrs. Rogers.

Rehabilitation Resolution No. 279: Requesting legislation to permit claims for waivers of insurance premiums. H. R. 547 by Mr. Philbin.

Rehabilitation Resolution No. 308: Requesting legislation to provide assistance to certain World War I disabled veterans in purchasing an automobile under the same terms and conditions as veterans of World War II and of service on and after June 27, 1950. H. R. 42 by Mrs. Rogers.

Rehabilitation Resolution No. 338: Requesting legislation to prohibit the reduction of any rating of total disability or permanent disability which has been in effect for 25 years or more. Appropriate bill to be introduced.

Rehabilitation Resolution No. 381; To oppose all efforts to reorganize the Veterans' Administration by transfer of essential functions to other executive departments. H. R. 1291 by Mr. Multer.

RESOLUTIONS FROM PREVIOUS CONVENTIONS REAFFIRMED AT THE 1952

NATIONAL CONVENTION

To provide increases in the rates of death compensation payable to certain widows and children of World War I, World War II, or of service on and after June 27, 1950. H. R. 461 by Mr. Kearney.

To provide office space and stenographic assistance to the accredited representatives of certain veteran organizations. H. R. 498 by Mr. Lane.

To provide additional compensation for the loss of hearing. H. R. 260 and 264 by Mr. Elliott.

The CHAIRMAN. Thank you very much, Mr. Commander, for a very fine statement.

I am sure you feel, as I do, that the Korean war has been called a police action, and to take the men out of the Veterans' Administration hospital and put them in private hospitals under the Public Health Service would mean treating them as if they were police officers rather than soldiers and veterans.

Mr. MING. We certainly agree with you there, Madam Chairman. I have with me today our Director of Claims, Mr. Cicero Hogan, and our Assistant Legislative Director, Mr. Charles Foster.

The CHAIRMAN. Both are very fine men. I know of their activities, as do the other members. They never stop working.

Mr. MING. If there are any questions, we would be glad to answer them.

The CHAIRMAN. Are there any questions that the committee would like to ask now, or would they rather wait and ask the questions later on?

Mr. HAGEN. In this statement on page 4 of opposition to efforts to increase the interest rate on veterans' loans, would you give us the reason for that position?

Mr. MING. Yes, Congressman Hagen. Primarily it stems from the fact that at each convention our organization has gone on record in some form of a resolution asking that the Veterans' Administration be allowed to work out a program that will do what Congress intended when they first made this benefit possible. So far, and as I understand the latest report of General Gray, there are 30,000 Veterans' Administration loans made a month. But what is not covered in that statement is the percentage of those loans that are not made at 4 percent interest. It might, on the surface, be a 4-percent proposition, but under the present means of getting the final financing a builder has to increase his selling price because most of these loans contain a 112-percent service charge, 12 percent of the original loan total, plus a 5-percent discount.

Assume that there was a $10,000 loan: If you had this 5-percent discount, which is required to sell it to the final lender, and the 12-percent service charge, that amounts to $650 that the builder has to pass on to the veteran. He cannot assume that and stay in business. When that occurs the veteran has to pay in addition to 4 percent interest the $650, whether it be in the form of a discount or service charge. Now if you take that same loan over a 20-year basis and increase the interest to 412 percent it would be $320. So under our present 4-percent formula, unless you can get a direct loan through the Veterans' Administration, but very few are made in western areas, you are actually penalizing the veteran to the tune of about $330 above what the law originally calls for, and under the interest rate as set by the Administrator of the Veterans' Administration. In other words, the veteran today is paying more than what 42 percent would be.

I do not wish to get into a controversy about the 42-percent rate, because our organization is mandated to attempt to make this work on a straight 4-percent basis, but we do have in our resolutions—and this appears on the first page of our supplemental report-this language: "Extension and liberalization of direct-loan authority of the Veterans' Administration." The Chairman has introduced H. R. 27 to extend and liberalize the direct-loan authority of the Veterans' Administration. This would break the deadlock without having to

increase the interest rate and still stay within the purpose and intent of the original GI bill.

Mr. HAGEN. In response to what pressures that this discount provision and other provisions come from the lenders of the money?

Mr. MING. Here is the odd position that the lender is placed in. Take any and many of the large lending institutions throughout the United States that make these loans. They can invest their money in tax-exempt Government bonds and draw 2.3 to 2.7 percent interest, which actually yield more than they can by lending money at 4 percent on a loan-guaranty basis to the GI, so if you were a lender what would you do? You do not have to worry about a foreclosure proposition. Mr. HAGEN. They control these requirements; is that it?

Mr. MING. Actually, I think what it is, there are two branches of our Federal Government competing with each other, and one is not sure what the other is doing. You find one branch of our Government offering bonds and another branch guaranteeing loans at 4 per

cent.

Mr HAGEN. Your organization urges the more expanded directloan basis like the State of California has?

Mr. MING. You are very familiar with that program, and so am I. In the State of California you build a home and get a loan at 3 percent interest, and the State makes a tidy sum. If that is the means of breaking this deadlock, I think the rights and privileges of our veterans should come first. The California plan is not new. It has been in existence since 1923. It was created for World I veterans and has shown there is a tidy profit at 3 percent interest.

Mr. ADAIR. You make it quite clear, Commander Ming, that your organization views with considerable skepticism, to say the least, certain of these Veterans' Administration reorganization plans as proposed. I take it, then-and this is to clarify our thinking that by and large you do not favor the suggestions made in Booz, Allen & Hamilton report?

Mr. MING. Definitely not.

Mr. ADAIR. And you do not favor the reorganization plan as proposed by the so-called Hoover Commission report?

Mr. MING. That is right.

Mr. ADAIR. But you do favor the reorganization plan proposed by General Gray last November?

Mr. MING. That is right in most casses. May I call on our Director of Claims to answer that?

Mr. ADAIR. Let me suggest that I would like very much to discuss specific titles of that with the members of your staff.

And a final point is, on page 5 of your statement you quote from a resolution of your 1952 convention. Do I read that correctly, beginning in the third line from the bottom, to mean that you feel that if the Booz, Allen & Hamilton recommendations, for example, were carried out, that we would even do away with the title "Veterans' Administration"? Does your organization mean that literally?

Mr. MING. I would not think that would be the literal interpretation. I was not on the resolutions committee at that time.

Mr. ADAIR. I am glad you clarified that, because it did seem to me to be a very extreme statement.

Mr. MING. That is erroneous. Thank you for bringing that to our attention.