It is obvious that a widow or parent who paid, or is in a position to pay, Federal income tax the previous year should not be granted such compensation. Other exclusion tests which would determine reasonably the fact of dependency should be established. It is impossible, of course, to estimate the annual saving such legislation would accomplish, but that it would be considerable is evidenced by the payment of $36,720,364 to this class of beneficiaries during the past fiscal year. Legislation such as that contained in the bill mentioned above (H. R. 8578) should be vigorously opposed. Legislation granting compensation to dependents of World War veterans who died from service causes should be placed on a necessity basis, and no benefits other than those provided by the veteran in his adjusted-service certificate or his Government insurance policy should be paid the dependents of veterans who die from nonservice-connected causes. OTHER ADVANTAGES GRANTED VETERANS Section 307 of the World War veterans' act, inserted by the amendment of July 3, 1930, makes all contracts or policies of insurance incontestable except for fraud, nonpayment of premiums or on the ground that the applicant was not a member of the military or naval forces of the United States. The veteran, moreover, may elect to make claim on any prior contract or policy and, if found entitled thereto, shall be entitled to payments under the prior contract or policy, thus enabling him to claim benefits under insurance contracts that have been abrogated at his own request or by his own actions. Section 205 of this act provides that, except in cases of fraud participated in by the beneficiary, no reduction in compensation shall be made retroactive, yet compensation itself is retroactive for one year prior to the date of claim. In this connection, it must be kept in mind that in some cases the claim may have been filed five years before and denied at that time, only, to become valid by subsequent liberalizing amendments. Section 28 provides that there shall be no recovery of payments from any beneficiary who, in the judgment of the administrator, is without fault on his part. Congress originally provided that priority should be given veterans on civil service lists. This was interpreted to mean that, after the veteran had made a passing grade, he would be given preference, other conditions being equal. This has been so materially liberalized that the spirit of the civil service act is violated. By Executive order of March 2, 1929, ex-service men can pass with a grade of 65 and those rated disabled with 60, whereas the regular passing grade is 70. Once passed, veterans with war incurred disability are placed at the top of the list. Thus a disabled veteran, already drawing compensation for his disability, with a grade of 60 receives preference over the nonservice expert with a grade of 98. Government service naturally suffers and the intent of the civil service act is perverted. ADMINISTRATION The committee has observed many directions in which the administration of veterans' benefits has been improved under the consolidated independent establishment-the Veterans' Administration. A task of large, even unwieldy, proportions is placed by present laws upon this service. In view of the tendencies and efforts to liberalize the laws, there is grave danger of further complicating the affairs of the unit. It must be recognized that it is obliged to discharge as faithfully as appropriations and other conditions permit the duties placed upon it by Congress. This committee would not add to its task, but would urge that it be reduced and simplified to the greatest possible extent consistent with adequate care of those veterans and their dependents suffering from disabilities clearly attributable to war service. The estimated cost of salaries for the Veterans' Administration for the fiscal year ending June 30, 1933 is $59,670,475. Elimination of all nonservice-connected disability allowances, of emergency officers' retirement pay, of the legal staff working on reinstatement of insurance and of hospitalization for disabilities not service connected with consequent curtailment of construction, would permit a reduction in personnel of approximately 50 per cent. A decrease in salaries of $20,000,000 appears entirely practical with these changes in legislation and with resultant administrative consolidations that would be feasible. 150490-33-VOL 1-9 Mr. LEASURE. That concludes our presentation in chief, Mr. Chairman. The VICE CHAIRMAN. Have you any other testimony to offer? Mr. LEASURE. No, sir. The VICE CHAIRMAN. We thank you for your presentation here this morning. Mr. LEASURE. Thank you, sir. The VICE CHAIRMAN. Are there any other witnesses? The SECRETARY. No, sir. There are no other witnesses scheduled for to-day. The VICE CHAIRMAN. Has the committee any subject matter to take up? Then, the meeting will be adjourned until to-morrow at 10.30 o'clock a. m., at which time the National Economy League will present testimony. (Whereupon the committee adjourned to meet at 10.30 o'clock a. m., Tuesday, December 20, 1932.) VETERANS' AFFAIRS THE JOINT CONGRESSIONAL Tuesday, December 20, 1932. The committee met at 10.30 o'clock a. m., in room 212, Senate Office Building, John McDuffie, chairman, Representative from Alabama, presiding. The CHAIRMAN. Gentlemen of the committee, I see no reason why we should not proceed. There are five members here and all the testimony is to be reduced to writing and go into the record. I believe those gentlemen who are absent would have no objection to our proceeding. The committee will come to order. If I remember, or as I understand it, we have to-day the National Economy League, as well as a gentleman suggested by Congressman McSwain and Senator Byrnes of South Carolina. Does the committee wish to take that gentleman first or shall we proceed with the Economy League? Mr. LAPORTE. Let him go first. The CHAIRMAN. Is the gentleman here whom Mr. McSwain suggested would like to be heard before the committee? He doesn't seem to be present. We will proceed then with the hearing of the Economy League. Who will speak for the Economy League? Mr. LAPORTE. Mr. William Marshall Bullitt, of Louisville, Ky. The CHAIRMAN. The committee will be very glad to hear from you. Will you give your name and address? (Mr. Bullitt gives name and address to reporter.) STATEMENT OF HON. WILLIAM MARSHALL BULLITT, OF LOUISVILLE, KY., REPRESENTING THE NATIONAL ECONOMY LEAGUE Mr. BULLITT. Mr. Chairman and gentlemen of the committee, the National Economy League Mr. MILLIGAN. As a member of the committee I would like to hear the gentleman's name and address. Mr. BULLITT. William Marshall Bullitt, of Louisville, Ky. Mr. BULLITT. Yes. Senator WALSH. As an attorney? Mr. BULLITT. No. Senator WALSH. As an officer of the Economy League? Mr. BULLITT. No; I don't think I am even a member of it. Senator WALSH. Who asked you to come? How did you happen to come? Mr. BULLITT. Well, the reason I happened to come was because some of the men who were closely associated with me in the formation of the Plattsburg Military Training Camp in 1915 and who are also interested in the Economy League, asked me to do it, and on account of my old connection with them I was very glad to do it when they asked me a few days ago. Senator WALSH. You are the officially designated representative of the Economy League? Mr. BULLITT. Precisely. Senator ROBINSON. But you are not a member of the league? Senator ROBINSON. How can you speak for the organization when you are not even a member or an official or an attorney? Mr. BULLITT. Because they asked me Senator ROBINSON. Well, isn't there a member of the organization who can speak for it? Mr. BULLITT. The organization has asked me to speak for it. Mr. BULLITT. Yes; I am not even having my expenses paid. The CHAIRMAN. You were formerly the president of the American Bar Association, were you not? Mr. BULLITT. No, I was not. I was Solicitor General of the United States at one time-about 20 years ago. Senator ROBINSON. You have no particular interest in the Economy League at all? Mr. BULLITT. None whatever except that I am in entire sympathy with their objects. Senator ROBINSON. But, do you undertake to state what their principles are and what they are standing for, not being an attorney, a member, or an official of the league? Mr. BULLITT. That is precisely what I intend to do because they have authorized me to do so. If you say "attorney"-I am not paid as an attorney in that sense, but if you use the word in the old sense of an attorney in fact, perhaps you could describe me as such. Senator ROBINSON. Who is the president of the organization? Mr. BULLITT. There is no president. The officers are: Rear Admiral Richard E. Byrd, retired, of Boston Mass., chairman; Maj. Henry H. Curran, of New York, director; Graham B. Blaine, of New York, treasurer. Senator ROBINSON. Are any of these officers here? Mr. BULLITT. Mr. Curran is here. He is director. The CHAIRMAN. You may proceed now, Mr. Bullitt. gentlemen have qualified you as a witness. These Mr. BULLITT. The National Economy League has requested me to present its views regarding "such economies as will lessen the cost to the United States Government of the Veterans' Administration." To-day one-half of all the revenues of the United States from taxes and internal revenue receipts and custom receipts are being paid to the veterans of the former wars or for their accountone-half. Now, I propose to give you the facts on the basis of which the National Economy League urges, first, that all demands of the highly organized minorities of the Spanish-American War and of the World War veterans for the extension of veterans' benefits should be denied; and second, that $450,000,000 of expenditures of the Government should be saved by the elimination of $450,000,000 that is now being spent on that subject, and that that can be done without doing any injustice to any veteran or to his dependents, who either died or suffered any disability or loss of earning power as the result of his war service. Now, how can that great reduction be accomplished without any injustice? The answer is simple. First, eliminate $109,000,000 for Spanish War service pensions paid annually, where there has been no death or disability connected with service in the Spanish War. Second, eliminate $310,000,000 from the World War veterans' payments, which can also be done without affecting payments made on account of death or disability that was either incurred in, or that was in any way aggravated by, service in the World War. Third, if you do these two things, that will automatically reduce by $30,000,000 the present administration expense of the Veterans' Administration, which is approximately $60,000,000 a year. You can cut it in two if you eliminate these other things. Now, it will simplify this discussion to say right at the outset that the Economy League does not urge any reduction on account of payments either to the Regular Army or Navy establishments, or on account of the War of 1812, or the Mexican War, or the Indian wars, or the Civil War, for these reasons: First, so far as the Regular Establishment is concerned, the War of 1812, and the Mexican and Indian wars, the appropriation is only about $12,200,000. The pensions for the Regular Army and Navy are small. They are absolutely proper. They are in effect carrying out the obligation that the Government directly assumed to the Regulars who have devoted their careers to the military and naval establishment of the country. Senator ROBINSON. Are you speaking of pensions or retired pay? Mr. BULLITT. In the Regular Army or Navy establishments, whatever term you choose to call it, the benefits paid for disabilities or retired pay as prescribed by the statutes. Senator ROBINSON. I agree with you thoroughly, but where does that differ from the retirement pay of emergency officers. Mr. BULLITT. Well, I can answer that question now, or I will reach it later. I can answer it now or later, just as you prefer. Senator ROBINSON. I would like to have you answer it right now. I have never been able to see the difference. Maybe you can show me. Mr. BULLITT. I will try to do that. So far as an ordinary citizen Senator ROBINSON. You are speaking for the Economy League. I would like you to tell us how they feel about that. Mr. BULLITT. So far as the regular officers of the Army and Navy are concerned, speaking generally they are young men, who have been educated at Government expense at West Point or Annapolismaybe a few have been admitted by selective examination-they have devoted their lives-that is to say, the active part of their lives, when a man ordinarily is able to accumulate money to get married or to take care of himself in his old age-to a profession where the pay is not so great, where educated men of their ability can generally succeed better in civil life; and it has been substantially understood for practically 100 years or more that they would get upon retirement certain advantages in the way of retirement pay; and that is |