APPENDIX (A letter from the Chief of the Reemployment Division of the Selective Service System follows :) NATIONAL HEADQUARTERS, SELECTIVE SERVICE SYSTEM, Washington, D. C., December 7, 1943. Subject: S. 1543, H. R. 3742 (Mustering-Out Pay) Hon. EDWIN C. JOHNSON, United States Senate. DEAR SENATOR JOHNSON: Senator Reynolds asked me to submit my opinions on S. 1543 and the corresponding House bill, H. R. 3742, overing mustering-out pay for members of the Armed Forces. My thoughts are as follows: 1. I am in accord with the principle of providing mustering-out pay for men discharged from the armed services except those dishonorably discharged. 2. I believe the amount set, of $300, to be as nearly the proper sum as can be determined by judgment of the situation. 3. I believe section 2 of H. R. 3742, providing a sliding-scale of pay below the $300 sum for men with short terms of service, to be more equitable than the uniform sum regardless of length of service. 4. I would submit for consideration the following amendments to the bills, which affect only method and time of payment and not the amount or the principle: (a) That no part of the mustering-out pay be paid at the point of discharge but that all payments be made after the veteran reaches the destination from which he is seeking a job or his permanent home. It is important that this money be actually available to the veteran when he arrives home for meeting the costs of reinstating himself in civilian status. There are, as we all know, considerable chances that precisely those men with the smallest financial reserves are the ones most apt to arrive home having already expended a substantial portion of any cash received at camp for purposes other than re-establishing themselves in civil life. Secondly, men in the armed forces during a time of war have an entirely different estimate of relative values than the same men have in civil life. They could not fight a battle otherwise. It takes at least a few weeks back in a civilian economy to restore them to their civilian estimate of values. Therefore, many men would expend funds during the first few days after their discharge from the service for items and purposes that they would not think of using their funds for 2 or 3 weeks later. A veteran, therefore, should be given a reasonable chance to expend his funds according to his sober, considered judgment, rather than upon impulses during a very violent transition period. All discharged men are furnished transportation home by the Government, and all of them have some final pay coming, so that all should have sufficient funds for their journey home without any necessity of using any part of the mustering-out pay for this purpose. (b) I would recommend that the first payment of the mustering-out pay be by check sent to arrive at the man's destination about 15 days after his discharge. I recommend payments to follow the first to be made at 30-day intervals and to be made in the same manner. (c) I would recommend that the checks be mailed to the post office in the town designated by the man, and in the case of large cities to the sub post office designated by him. That the check be delivered to him by the post office upou presentation of his military papers, identifying him, and that he fill out a receipt card and information as to whether he has a job or is in need of assistance in getting a job, together with any additional information that may be found advisable. (The primary difficulty experienced in rendering service to veterans through the various Government agencies established for their benefit is to make contact with the man and ascertain his needs before he has gotten into difficulties. As prevention of hardship to the veterans is our primary objective rather than relief of hardship after it has occurred, this method of delivering the checks will go far toward insuring adequate service to the veteran when and as he needs it, without regimenting him.) (d) For veterans currently being mustered out and those previously mustered out, I would recommend paying at this time only the first $100 payment of the mustering-out pay, the two remaining payments of $100 each for those entitled to this amount to be made at a later date, when general demobilization is in progress and when temporary unemployment situations due to the transformation from a war to a peace economy will make the full $300 necessary for the men then being discharged, and when the men who have now been discharged will find the additional $200 much more useful to them than it will be today. That the $100 is adequate to meet current needs of men now being discharged is indicated by the reports of the American Red Cross and the Army Emergency Relief, which indicate that not over 5 percent of discharged veterans are being aided, and the average amount of aid is approximately $43. There might also be considered the fact that we already have a heavy pressure for inflation, due to the ever-widening gap between income and goods and services available to supply the demands, and the payment at this time of the additional $200 not needed for reinstatement in civil life under current conditions would add another inflationary factor. It would seem sounder to reserve this payinent for the time when it will be more useful to the veteran and assist in stabilizing industry by maintaining consumption, rather than paying it now when its effect will be adverse. Recently, a naval officer wrote, and I quote him: "While on the subject of mustering-out pay, you realize of course that a lumpsum payment will be more than useless, a social evil. If they really want to help these men, why not just continue their present monthly salary (without allowances) for a period of 6 or 12 months. After all, these men have been living in an economic sanctuary, they must readjust to the problem of providing all of their needs from their salary, not just the pleasures of life as they have done while in the service. For a fact, we have paid men at this station well over a thousand dollars accumulated pay at the time of discharge, and we have had them back asking for help within a week. Specifically, one man discharged on Friday of last week was paid $480. On Monday he applied to the Red Cross for railroad fare to his home, blew his roll in one grand sweep without leaving town. Others have been rolled for their money. This town is particularly good for that. It is a port and is accustomed to having men come ashore with accumulated pay. The local boys and girls are real experts in redistributing such wealth." Sincerely yours, LEWIS SANDERS, (A report from the Administrator of Veterans' Affairs on S. 1543 follows:) Hon. ROBERT R. REYNOLDS, Chairman, Committee on Military Affairs, VETERANS' ADMINISTRATION, Washington, December 13, 1943. United States Senate, Washington, D. C. MY DEAR SENATOR REYNOLDS: Further reference is made to your letter dated November 29, 1943, requesting a report on S. 1543, a bill to provide for payment of mustering-out pay to members of the armed forces, and for other purposes. The purpose of the bill is to provide that all members of the armed forces of the United States who shall bave been in active service during the present war and who shall have been discharged or relieved from active duty under other than dishonorable conditions after December 7, 1941, shall be eligible to receive mustering-out pay. It is provided that mustering-out pay shall not be payable to any person who, at the time of discharge or release from active service, holds either a temporary or permanent commission of any rank above captain in the Army or any equivalent rank in any of the other armed services or to any member of the armed forces who, at the time of discharge or release from active duty, is eligible for placement on the retired list. The amount of mustering-out pay is $300, one hundred of which is payable at the time of separation from active service and $200 payable in two consecutive monthly payments, except that in the case of persons selected for training under the Servicemen's Education and Training Act of 1943, all payments are suspended during the time such person has been selected for attendance at an approved educational institution. The reference to the Servicemen's Education and Training Act of 1943 apparently pertains to S. 1509, a bill to provide for the education and training of members of the armed forces and the merchant marine after their discharge or conclusion of service, and for other purposes, which is pending before the Committee on Education and Labor of the Senate. Because of the specific provision that $100 will be payable immediately at the time of discharge, the question arises as to whether the payments to be suspended are the remaining $200, despite the fact that the bill provides for suspension of all payments. The need for clarification of the bill in this regard is indicated. Members of the armed forces discharged or released from active service before enactment of the bill and otherwise entitled to mustering-out pay will receive the first installment one month after the date the bill is enacted. In case of the death of the veteran before receiving the full amount of the mustering-out pay, the amount which he would have received had he lived will be payable to his surviving widow; or, if no widow, to his minor children, if any; and if no surviving widow or minor children, then in equal shares to his surviving parents. No other person may receive mustering-out pay. Members of the armed forces of the United States, as used in the bill, means any member of the Army of the United States, the United States Navy, the United States Marine Corps, the United States Coast Guard, or any of their respective components. There is authorized to be appropriated such sums as are necessary to carry out the provisions of the act, which shall be administered by the Secretary of War and the Secretary of the Navy. Several other bills have been introduced which would provide benefits for certain persons who served in the active military or naval forces on or after Decem ber 7, 1941, which are intended to bridge the economic gap between discharge and employment, although payments are not contingent upon unemployment, and notwithstanding that approximately 1,000,000 have been discharged from service since Pearl Harbor, most of whoin, if able to work, apparently have had little difficulty in finding employment. The present bill, in common with several others, bears no relationship to the length or character of service, and provides the same benefit for those who were discharged after a few days of service in this country as is provided for those who served in combat for long periods of time in foreign countries. The bill provides pay for all below the ranks designated except those eligible for retirement. It does not take cognizance of the probable duplication of benefits under other laws providing benefits for honorably discharged veterans except to suspend payments of mustering-out pay during the time a veteran is in a certain type of training. There seems to be general agreement that there should be legislation which will ease the transition from military to civil life, especially during and after demobilization. The thought is rather general, too, that the benefits provided should not be a lump sum, but should be available for a reasonable period of time, particularly if there be widespread unemployment. These principles, together with consistency and practicability of administrative operation, should form the basis of whatever legislation is favorably considered. In connection with various studies made by committees on which I have served heretofore, I expressed the view that for ease of administration the service departments should pay for the first 2 months after discharge the full service pay; for the next 2 months 75 percent of the said pay and for the succeeding 2 months 50 percent. The objections are-paying service pay to one not in the active service, and conversely retaining military control in a furlough or leave status for the purpose of avoiding the said objection. I think any committee considering these bills will want to give careful thought to the cost involved. Several plans envisage total expenditures per person of from $800 to $1,000 or more; and while in some of the bills these amounts are reduced to the minimum of $100 and a maximum of $300, they contemplate other provisions er bereits such as 1 year or more of schooling for selected groups, unemployment P at Federal expense, and social-security coverage for the period in seevsop with the so-called tax deduction therefor to be paid wholly out of Federal funds, i. e., without contribution on the part of the person in service, and these several benefits may well average $1,000 per person in service. It should be mentioned that none of the bills apparently takes into consideration the fact that demobilization may extend over a considerable period of time and no allowance is made for those separated from the service heretofore (more than 1,000,000 since Pearl Harbor, as above stated) nor for a large number who may remain in the service due to the continued needs of both the Army and the Navy. It is not believed there should be a pecuniary incentive to seek discharge any more than to avoid securing a job. Generally, no provision is made to prevent overlapping of so-called mustering-out pay and disability pensions. These service-disability pensions range from $10 per month for a 10 percent disability to $100 per month for a total disability, with statutory provisions, as for the loss of certain members, increasing the amounts to as high as $250 per month. While the pension laws preclude the payment of pension while the veteran is in receipt of active service or retirement pay, these proposed benefits do not fall in either category. In addition to the easily appreciated moral hazard inherent in providing payments in such amount in individual cases as to mitigate against a healthy desire to seek civil rehabilitation, there must be considered over-all cost as indicated above. If this should average $1,000 per person the cost can scarcely be calculated at less than $10,000.000.000 considering the number of persons which now are, or will be, in the active service. The cost of any of these proposals may readily be estimated. None would be less than an average of $500 per person; hence, for 12,000,000 veterans this minimum would be $6.000.000.000. While, for security reasons, current figures are not available to the Veterans' Administration, we did, some few years since, with the assistance of the War and Navy Departments, calculate that the average pay plus maintenance of those in service was $77 per month. With the increase in the pay base made by Public Law 607, Seventyseventh Congress (Pay Readjustment Act of 1942), plus the added cost of maintenance under war conditions the average of pay and allowances (not including family allowances) would doubtless exceed $100 per person per month or over $1,200 per year. For 10.000,000 veterans this would mean $1,000.000.000 per month, or $12,000,000,000 per year; which will afford a readily applied measure for calculating cost of any plan based upon so many months of pay. I think the committee may well be interested in benefits now available for those serving in the present war. To detail them in this letter would require too great length; hence, there is enclosed a summary showing all such benefits. Therefrom, or rather from the table appended, it can be seen that there have been paid out by way of benefits to veterans of World War I, to date, something over $15,000,000,000. Existing obligations in this connection to veterans of all wars and the peacetime or regular establishment will unquestionably equal $1,000,000,000 annually for several years. The question that must be faced in consideration of any of these bills, for one or more of these proposals, will be what additional necessary and desirable benefits should be extended to veterans as such and what is the most equitable basis, as well as the practicability of administering such benefits. Popular sentiment naturally and properly extends to those bearing the burden of the tremendous conflict, but a sound program is one which in the cold afterthought of paying the costs will appear just and equitable, and which will leave no just claims for equivalent treatment. Further, precedents as to benefits afforded veterans of prior wars will have a tremendous bearing, as has been shown by past as well as present experience. For example, the official program of the United Spanish War Veterans has always called for benefits identical to those extended to the veterans of the Civil War, and that of the several service organizations is that benefits to veterans of World War II shall be on a parity with those of World War I. There is the further principle that the service based benefit should bear some relationship by reason of the sacrifice of the service. This has been the basis of both service and disability pensions, as well as disability or death pensions. Again even the present high pay rates plus all allowances, including liberal income-tax exemptions, do not compare too favorably with the average labor earnings before the war, and less so as to wartime average labor pay scales (average, 1940, $1,362; 1942, $1,900; 1943, $2,000). Because of the cost involved and the large numbers of individuals affected and which, unless the plan be of the simplest possible nature, would involve tremendous administrative difficulties, I find it difficult to formulate any reason able plan which would eliminate all of the possible objections. The bill (S. 1543) would be simple in operation, and would cost for 12,000,000 veterans $3,600,000, 000, plus the cost of administration. either a temporary or permanent commission of any rank above captain in the Army or any equivalent rank in any of the other armed services or to any member of the armed forces who, at the time of discharge or release from active duty. is eligible for placement on the retired list. The amount of mustering-out pay is $300, one hundred of which is payable at the time of separation from active service and $200 payable in two consecutive monthly payments, except that the case of persons selected for training under the Servicemen's Education and Training Act of 1943, all payments are suspended during the time such person has been selected for attendance at an approved educational institution. The reference to the Servicemen's Education and Training Act of 1943 apparently pertains to S. 1509, a bill to provide for the education and training of members of the armed forces and the merchant marine after their discharge or conclusion of service, and for other purposes, which is pending before the Committee on Education and Labor of the Senate. Because of the specific provision that $100 will be payable immediately at the time of discharge, the question arises as to whether the payments to be suspended are the remaining $200, despite the fact that the bill provides for suspension of all payments. The need for clarification of the bill in this regard is indicated. Members of the armed forces discharged or released from active service before enactment of the bill and otherwise entitled to mustering-out pay will receive the first installment one month after the date the bill is enacted. In case of the death of the veteran before receiving the fuil amount of the mustering-out pay, the amount which he would have received bad he lived will be payable to his surviving widow; or, if no widow, to his minor children, if any; and if no surviving widow or minor children, then in equal shares to his surviving parents. No other person may receive mustering-out pay. Members of the armed forces of the United States, as used in the bill, means any member of the Army of the United States, the United States Navy, the United States Marine Corps, the United States Coast Guard, or any of their respective components. There is authorized to be appropriated such sums as are necessary to carry out the provisions of the act, which shall be administered by the Secretary of War and the Secretary of the Navy. Several other bills have been introduced which would provide benefits for certain persons who served in the active military or naval forces on or after Decem ber 7, 1941, which are intended to bridge the economic gap between discharge and employment, although payments are not contingent upon unemployment, and notwithstanding that approximately 1,000,000 have been discharged from service since Pearl Harbor, most of whom, if able to work, apparently have had little difficulty in finding employment. The present bill, in common with several others, bears no relationship to the length or character of service, and provides the same benefit for those who were discharged after a few days of service in this country as is provided for those who served in combat for long periods of time in foreign countries. The bill provides pay for all below the ranks desig nated except those eligible for retirement. It does not take cognizance of the probable duplication of benefits under other laws providing benefits for honorably discharged veterans except to suspend payments of mustering-out pay dur ing the time a veteran is in a certain type of training. There seems to be general agreement that there should be legislation which will ease the transition from military to civil life, especially during and after demobilization. The thought is rather general, too, that the benefits provided should not be a lump sum, but should be available for a reasonable period of time, particularly if there be widespread unemployment. These principles, together with consistency and practicability of administrative operation, should form the basis of whatever legislation is favorably considered. In connection with various studies made by committees on which I have served heretofore, I expressed the view that for ease of administration the service departments should pay for the first 2 months after discharge the full service pay; for the next 2 months 75 percent of the said pay and for the succeeding 2 months 30 percent. The objections are-paying service pay to one not in the active service, and conversely retaining military control in a furlough or leave status for the purpose of avoiding the said objection. I think any committee considering these bills will want to give careful thought to the cost involved. Several plans envisage total expenditures per person of from $600 to $1,000 or more; and while in some of the bills these amounts are reduced to the minimum of $100 and a maximum of $300, they contemplate other provisiors or benefits such as 1 year or more of schooling for selected groups, unemployment insurance at Federal expense, and social-security coverage for the period in service with the so-called tax deduction therefor to be paid wholly out of Federal |