Senator WATSON. Yes. Senator CONNALLY. I would like to ask Undersecretary Mills one question. A moment ago you said the Garner plan would involve $2,100,000,000. Is it not true that there is in the sinking fund, and other funds, an accumulation of $100,000,000? Undersecretary MILLS. You mean the adjusted-service certificate fund? Senator CONNALLY. Yes. Undersecretary MILLS. About $756,000,000. Senator CONNALLY. The other day it was brought out here that there was some other fund of $400,000,000. General HINES. That is the converted insurance fund. Those would have to be liquidated, too. Senator CONNALLY. As a matter of fact, with respect to those already represented by securities, it would not be difficult. It would be merely an exchange, would it not? It would be a refunding process, as was pointed out by Secretary Mellon. Secretary MELLON. There would have to be fresh money acquired. Senator CONNALLY. There would have to be fresh money acquired to the extent of the difference between the $700,000,000 already on hand in securities, and the $2,000,000,000. Secretary MELLON. There is no $750,000,000 on hand. Senator CONNALLY. There has been testimony here that there was that amount of funds. Secretary MELLON. That amount of securities. Senator CONNALLY. The testimony here was that it was invested in United States bonds. Undersecretary MILLS. It is; we have the special 4 per cent notes. We have not the cash. We have $756,000,000 of Treasury notes. Secretary MELLON. And we would have to go out and sell those, too. Senator WATSON. We will adjourn until to-morrow, at 10 o'clock. (Whereupon, at 12 o'clock noon, the committee adjourned to meet to-morrow, Thursday, January 29, 1931, at 10 o'clock a. m.) PAYMENT OF VETERANS' ADJUSTED-SERVICE CERTIFI CATES THURSDAY, JANUARY 29, 1931 UNITED STATES SENATE, The committee met pursuant to adjournment, at 10 o'clock, a. m., in its committee room in the Senate Office Building, Senator James E. Watson presiding. Present: Senators Watson (presiding), Reed, Couzens, Bingham, La Follette, Harrison, George, and Barkley. Senator WATSON. The committee will be in order. Senator CoUZENS. Is there a Mr. Howells here from Detroit? Senator WATSON. Let us hear Congressman Parman first. He is here. He is the author of one of these bills. STATEMENT OF HON. WRIGHT PATMAN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF TEXAS Mr. PATMAN. Mr. Chairman and members of the committee, I am the author of the bill to pay 100 per cent of the full face value of the adjusted-service certificates, and I believe it can be justified. I know there are many members who have presented bills proposing that 25 per cent be paid, or that 50 per cent be paid, or that 75 per cent be paid-in fact, almost every per cent has been covered by different bills in the House and Senate; but I am one of those who has not yet yielded, and still contend that 100 per cent is due and 100 per cent should be paid. I base that upon this argument. When the war was over, Congress gave to each veteran $60 in cash to buy himself a suit of clothes. When the soldier went in the Army, the first thing he did was to pull off everything from his hat to his shoes and give them to the Red Cross. The Red Cross sent this clothing to Belgium and to France. When the war was over, Congress felt obligated to give that veteran $60 to buy himself a civilian outfit. That was done. The major generals, who drew $8,000 a year besides additional allowances, and other high-salaried officers, drew this $60 just the same as the buck privates. Later, in 1924, this adjusted compensation act came up before Congress, and Congress agreed that there should be an adjustment of pay. In fact, two proposals were presented by the committee in making its report to the House and to the Senate. The first was that it was the object and intention of that committee to confer substantial benefits upon the veterans; second, that the bill therein proposed should represent, in a measure, the difference in pay between what the veteran actually received, and what the lowest paid laborer in the United States received during the World War. In that connection it must be remembered that the soldier who received $30 a month did not get $30 a month. Take, for example, a company of 150 men. I have seen half of them fall out and never sign the pay roll because they did not have one penny coming. They would always go by the pay table with their hats in their hands and rake off what they had coming to them, so as to take up just as little time as possible. You would get up to the pay table, and there would be the pay roll. get First, there would be an allotment, perhaps ten or fifteen dollars a month, to your dependents. Then there was insurance, $6.60 a month. Then there was your canteen bill, your tailor bill, and your barber bill. You had to pay for mending your own clothes and your own shoes. There were lots of expenses that the soldier was compelled to pay that have never been mentioned. Consequently, at the end of 30 days that $30 had dwindled to almost nothing. As I have said, I have seen half a company fall out and not get a penny, and they would go on for months in the same way. I venture to say there were men who served in the Army over a period of from 8 to 20 months who did not collect as much as $25 or $50 during the entire time. The Liberty loan payments must be made. Every fellow in the company stood at attention while some follow made a Liberty loan speech, and gave him to understand that, although he was wearing the uniform of his country, he would be considered a slacker in disguise unless he bought a Liberty loan bond. He was told, "Although you have not any money yourself the Government is willing to credit you. We will charge you $5.50 a month, or $10, or $12 a month on this bond, depending on the size." Consequently, when he made all these payments he did not have aynthing left. I think Congress was right when it said that we should adjust their pay. They did not receive anything for their services. They paid for the risk that Congress caused them to take in going to the battlefields to risk their lives. Of course, the Government has been saved a tremendous sum of money by reason of that risk they have paid for out of their own money. They went, and Congress finally said, "We should adjust their pay to $1 a day and $1.25 a day, for home service and service overseas, respectively." I do not prpose to go behind that. I will say, for the sake of argument, that that was a just and a fair settlement. I do not want to go behind that settlement. It is all right, although men who worked on the public roads during the war down in Virginia and elsewhere and worked oustide the reservations, had their pay adjusted by an act of Congress after the war. They got as much as $6.33 a day extra pay. I read into the Record a while back a copy of a pay roll I found down at the Bureau of Public Roads. It showed that one man was a corporal, and his pay as a corporal was $1.66% a day. He worked side by side by civilians. The testimony was that those civilians were getting as much as $8 a day. He had an adjustment of $6.33 a day extra pay, confessed to him, and the department of Agriculture paid that money-$158.25 a month extra adjusted pay-during the time he worked on the public roads in Virginia, North Carolina, Texas, and other States in the Union. Other people had adjusted pay besides the veterans. The war contractors had adjusted pay. It was that principle that was invoked for them. It was the principle of adjusted pay that was invoked for the railroads. Nobody said to those veterans who worked on the public roads, or to the railroads, or to the war contractors, or to the 250,000 Government employees who received $240 a year during the war and for several years after, that they must wait until 1945 to get their money. Nobody even suggested that that be postponed. Everybody said, "We will just pay the money," although our Government was $10,000,000,000 more in debt then than it is to-day. No one suggested the postponement of that payment. But when the veterans' bill came up in 1924, of course, the Secretary of the Treasury estimated then that there was going to be a deficit of $347,000,000 in the Treasury anyway, whether that bill was passed or not. However, at the end of the fiscal year there was a surplus of $600,000,000. It just happened that he missed the estimate by nearly $1,000,000,000 that year, or I believe the veterans would have been paid in cash at that time. Of course, I do not impugn his motives. He was making an honest estimate, an estimate he thought was right, but, at the same time, there was a mistake made, and had it not been for that mistake I believe the veterans would have been paid in cash then. With respect to this dollar or dollar-and-a-quarter a day, when was it due? Was it due in 1925? No. It was due in 1918. So, my theory is to go back and pay those boys just what Congress confessed was due, not as of 1925, but as of 1918, the time when the service was rendered, from 1917 to 1919. Select a date that is half-way between the beginning and ending of that period of service, and give that man interest on that obligation at the rate of 6 per cent compounded annually during that time, and you will find, if you do that, that that will amount, on February 1 of this year, in just a few days, to 964 per cent of the face value of his certificate. Is that right? The veteran had been paying the Government 6 per cent interest compounded annually for his own money, and if it is right for the veteran to pay the Government 6 per cent interest compounded annually, for his own money, why is it not right for the Government to pay the veteran 6 per cent interest compounded annually for the money that was due him back at the time when that service was rendered? Some people will say that you ought not to pay 6 per cent compound interest, but that you should pay simple interest. You can base that upon reason. I will admit that. In connection with income tax overpayments, I noticed here some time ago where one large concern had millions of dollars returned to it as of 1918. Did the Treasury Department pay that concern interest from 1925? No. The Treasury Department paid that concern interest from 1918, at the rate of 6 per cent, not 4 per cent. However, it was simple interest. Certainly if the Government is indebted to people who overpaid their taxes, and those people made those overpayments as of a certain year, and they receive interest from that particular year, the Government, for a debt that was confessed to the veteran as of 1917 to 1919, should pay him as of that date, but with interest from that date. If you do it as of the time the service was rendered, with 6 per cent simple interest, it will amount to 81 per cent of the face value of their certificates now. That is so near the total value that it occurs to me that they should have the additional amount for waiting. In asking for this, I am not asking for any gratuity for the veteran. I am not asking for any bonus. Many Members talk about giving them an adjusted-service credit, increased by 25 per cent. I am even deducting that 25 per cent. The Government is not paying any bonus or gratuity of any kind. I am just asking the Government to liquidate this obligation in the same business way that it has liquidated other Government obligations. The only distinction I make is that the Government should pay 6 per cent interest compounded annually, because the veterans have been paying the Government 6 per cent compounded annually, for their own money, and if it is fair for one, it is fair for the other. If the Government will do that, the face value of these certificates will be due October 1 this year, which is so near the date of their maturity, as a matter of right, that the full amount should be taken care of now. But in doing this, in asking that it be paid as of 1917, 1918, and 1919, I am not deducting that $60. Congress, in passing this bill, deducted the $60. I do not think Congress should have done that. Why make the men, who served in the ranks, pay the $60 back? The fellows who made five or six or eight thousand dollars a year, kept their $60. Nobody asked them to pay theirs back. Of course, they did not get an adjusted-compensation certificate, because they were not entitled to adjusted compensation. But they kept their $60. So, if they are going to keep their $60 and not be required or expected to pay it back, why should the men who served in the ranks pay their $60 back? So, my proposal is that you pay this debt as of the time the service was rendered, with 6 per cent interest, compounded annually, from that date, which will amount to so nearly the face value of the certificates that it should be paid now. With reference to these other bills, take the bill proposing that the adjusted service credit be paid as of 1925, increased by 25 per cent, with 4 per cent, compounded annually, and that the veteran be permitted to accept that amount in lieu of his certificate. My good friend, Mr. Garner, a man for whom I have the highest regard, has introduced that proposal. I am very sorry that I can not agree with him on that proposal, but if I were to do that I would be sacrificing a principle for which I have fought ever since this legislation was passed. In advocating that legislation you are compelled to deprive the veteran of interest from 1917, 1918, or 1919, the time the service was rendered, up until 1925. But, you say, you are giving him 25 per cent extra. Yes; but that 25 per cent does not compensate him for it. If you take the average certificate, at $1,008, using, as an illustration, a $1,000 certificate, John Doe served 210 days in home service, for which he got $210 adjusted service credit. He served 200 days overseas. That gives him a credit of $250. The total is $460. The first thing Congress did was to deduct that $60. It should never have done it. It made an "Indian giver" out of the Government. Congress deducted that $60, which left $400. Then Congress said, "We are going to add 25 per cent for waiting." That is what the hearings disclose it was added for. That makes it $500. Five hundred dollars will purchase an endowment policy equal to about $1,000 |