The necessity for the most drastic economy further appears from the fact that the gross national debt in the last three years has not only increased by over two and a half billions of dollars, but that, owing to the operations of the Reconstruction Finance Corporation, there is a large contingent liability as well. The Government, at a cost of $500,000,000, purchased the stock of this corporation, and then sold Government obligations, with which it bought the obligations of the Reconstruction Finance Corporation. The Reconstruction Finance Corporation has loaned to a great variety of borrowers who promised to repay the loans with interest and gave security therefor. The amount of these loans outstanding as of October 31, 1932, is $1,144,058,980.99 and the corporation is authorized to loan up to $3,800,000,000. If any or all of the loans should go bad, as a number of them surely will, the Government would have no corresponding fund with which to meet the obligations by the sale of which it supplies funds to the corporation to enable it to make loans. Of course, not all of the loans will go bad, but the probability is that there will be a heavy loss. The necessity to raise money to meet these contingent liabilities may arise and must be borne in mind whenever Government expenditure is under consideration.

In order to effect any real economy in governmental expenditure a heavy cut in veterans' costs can not be avoided. This is demonstrated by an analysis of the appropriation for the fiscal year 1933.

The total original appropriation was $4,036,400,000. Of this, $1,239,000,000 is for the debt service, trust fund and tax refund payments, leaving $2,797,400,000. Of this, $125,600,000 is for postal deficit ($81,000,000), and District of Columbia ($44,600,000), leaving $2,671,800,000. Of this, $621,400,000 is for Army and Navy (exclusive of nonmilitary items), leaving $2,050,400,000. Of this, $632,500,000 is for highway, post-office construction, and rivers and harbors, leaving $1,417,900,000. Of this, $489,900,000 is for the civil branches of the Government (including executive, legislative, judicial, Consular and Diplomatic, Agricultural, Commerce, Labor, Interior Department, and Panama Canal) leaving $928,000,000, all of which figure is for veterans.2

25

Thus the veterans' appropriation is 23 per cent of the total appropriations. But the total appropriations for all purposes will probably exceed the total revenue by about $2,000,000,000, so that the veterans will absorb about 45 per cent of the entire revenue.

The total appropriated for the fiscal year 1933 was supposed to be reduced $150,000,000 by the so-called economy act. This hope may not be realized; in any event the economy act does not pretend to effect any substantial reduction in the two largest items of expenditure, namely, public debt and veterans. Therefore, any reduction effected by the economy act will magnify the relative size of the veteran expense, as compared with the size of any of the other items, except the debt service. Nobody of responsibility proposes to reduce expenditure for the debt service or greatly to reduce the expenditure for the Army and Navy, since the credit and safety of the country depend on the debt service being faithfully maintained and the Army and Navy not being crippled. The District of Columbia expenditure can not be substantially reduced and there are many difficulties in reducing the Post Office deficit. Consequently, the way to effect any really substantial reduction in governmental expenditure is to eliminate the enormous unjustified expenditure for veterans for nonservice-connected death and disability.

25 These distributions and the distributions of the total appropriations for the fiscal year beginning July 1, 1932, given on the following diagram, are based upon a classification contained in a letter dated Nov. 5, 1932, from James H. Douglas, jr., Assistant Secretary of the Treasury, to the National Economy League. This classification deals with round numbers; for example, it is stated that the veterans' appropriation is $928,000,000, whereas the exact figure is $927,849,000.

The total revenue collected by the Government from all sources during the fiscal year 1932 was $2,121,228,006, whereas the veterans' cost (including loans on the "bonus ") for the same year was $1,078,168,504, or more than 50 per cent of the total revenue.

CONCLUSION

BASIC PRINCIPLES

1. The Government should be generous to the living veterans and to the dependents of the dead who are disabled or who died as a result of military service; where there is a fair doubt the veteran should have the benefit of the doubt.

2. The pension list should not be a secret but a public record. It should be a roll of honor. There can be no objection to the publication of a roll of honor. The best way to maintain the pension list as a roll of honor is to publish it.

3. The compensation of veterans or their dependents for death and disability incurred as a result of military service should not be confused with relief of the unemployed. One is a payment that justice requires the central Government to make; the other is a gratuity that should be given locally on the ground of humanity.

4. There is no justification for the grant of a pension or bounty to a living veteran who-in truth-incurred no disability as a result of military service; and there is no justification for pensions or bounties to widows or dependents of veterans who incurred no disability as a result of military service.

5. The obligation of the Government to veterans who have suffered injury or disease in truth, and not according to any legal fiction or presumption—as a result of military service is to provide hospitaliation and vocational rehabilitation and to grant compensation to those temporarily or permanently disabled.

The Government has no other obligation to living veterans. In respect of veterans who have died as a result of military service, the obligation is to grant compensation to those who are in truth-their dependents.

6. The sound and fair basis of compensation for death or disability incurred as a result of military service is not the individual's pre-war earnings, but a fair average cost of living based on American standards.

7. The Government should not engage in the insurance business-especially at a loss. If hospitalization, vocational rehabilitation, and pensions have been granted, the grant of insurance at a loss is an unjustified governmental expenditure, since it amounts to the grant of double compensation.

8. There is no justification for granting to veterans any preference over other citizens in the civil service. Injury and disease resulting from military service should be fully compensated through pensions, hospitalization, and vocational rehabilitation; in which case any preference or other bounty amounts to double compensation. (A veteran should not be deemed "disabled" for the purpose of enabling him to draw a pension and at the same time be deemed free from all disability for the purpose of drawing a Government salary.) Civil-service preferences are not only inconsistent with efficient and economical administration of the Government's affairs, but are inimical to the national welfare. 9. All statutes under which unjustified pensions and bounties are now being paid should be repealed. There is no legal or moral ground for the continued enjoyment of unjustifiable pensions or bounties; they are no more and no less than an abuse, and their enjoyment, even though long continued, does not convert them into vested rights.

10. The Veterans' Administration should not be an independent bureau. Its vast size and great financial importance require it to be within an established department under the direction of a cabinet officer, namely the Secretary of the Treasury.

RECOMMENDATIONS

1. The pension list should be arranged geographically and alphabetically and made available to public inspection at all times in the post offices throughout the country. The published list should be revised at least annually.

2. The disability allowance law of July 3, 1930, should be forthwith repealed, and all allowances paid under it immediately discontinued.

3. The Spanish War pension acts of July 16, 1918, and June 5, 1920, as amended, should be forthwith repealed, and all pensions being paid thereunder should be immediately discontinued. Those veterans disabled as a result of military service, and the dependents of those veterans, who died as a result of military service and who are now receiving pensions under said acts should be granted pensions under the statutes in force prior to July 16, 1918, and applicable to such veterans and dependents.

4. Section 202 (10) of the World War veterans' act of June 7, 1924, as amended, allowing free hospitalization to veterans of all wars, without regard to the nature or origin of their disabilities, should be repealed, and all such hospitalization should be discontinued.

5. All hospital and domiciliary home construction should be forthwith discontinued, and no further appropriation for hospital or domiciliary home construction or alteration should be made. All superfluous hospitals should be closed and disposed of as rapidly as possible.

6. The provisions of section 200 of the World War veterans' act of June 7, 1924, as amended, regarding diseases being presumed to be service connected, should be forthwith repealed, and all disability compensation paid thereunder should be discontinued except in cases where the disability was, in truth, incurred as a result of service. The conclusive presumption of soundness on induction into service should be amended in order that the Government may show what was the true condition of the veteran.

7. Sections 305 and 309 of the World War veterans' act of June 7, 1924, as amended, providing for the reinstatement of lapsed and post mortem life insurance should be forthwith repealed. The Government should withdraw from the insurance business in so far as it legally can.

8. The act of June 7, 1924, section 202 (2) as amended in so far as it grants pensions to veterans with arrested or cured tuberculosis should be repealed. Veterans in truth disabled from tuberculosis resulting from service should receive disability compensation under other provisions of law.

9. Section 202 (7) of the World War veterans' act of June 7, 1924, as amended, in so far as it grants substantial compensation to veterans in hospitals for service-connected disabilities should be forthwith repealed, but their dependents should be granted suitable compensation.

10. The emergency officers' retirement act of May 24, 1928, should be forthwith repealed, and all payments being made under it immediately discontinued. All emergency officers who are, in truth, disabled as a result of military service should be granted the same pensions and aids as the emergency enlisted men. 11. Section 203 of the World War veterans' act of June 7, 1924, as amended by the act of July 2, 1926, in so far as it grants a per diem allowance to veterans while traveling and under observation in order to establish a claim to disability compensation or allowance should be repealed.

12. Section 200 of the amendatory act of March 4, 1925, as amended, in so far as it allows compensation in certain cases where a disability was caused by the veteran's own willful misconduct, often the exposure to venereal disease, should be forthwith repealed.

13. Section 205 of the World War veterans' act of June 7, 1924, in so far as it empowers the Veterans' Administration retroactively to increase compensation, should be forthwith repealed.

14. All statutes and parts of statutes which in effect allow the prepayment of any part of the "bonus," should be repealed.

15. The act of July 11, 1919, granting civil service preferences to veterans should be repealed.

16. The Executive orders of March 2, 1929, and of April 24. 1931, under which veterans who fail to pass the civil service examinations are, under certain circumstances, deemed to have passed, should be rescinded.

17. The act of August 9, 1921, as amended, in so far as it orders the Director of the Veterans' Bureau (now the Administrator of Veterans' Affairs) to establish regional administrative offices throughout the United States, should be repealed.

18. All statutes establishing particular rates or percentages of compensation for specific injuries or diseases should be repealed. All that should be prescribed by statute is the maximum rates of compensation for total disability and for any given percentage of disability. The determination of the percentage of disability in each particular case should be left to impartial medical, surgical and psychiatric experts. The disability rating schedule should be free from legislative control or interference. It should be revised forthwith under the direction of such experts and thereafter whenever necessary.

19. All statutes and parts of statutes which direct or allow any expenditure for living veterans, except hospitalization, vocational rehabilitation, and compensation for disabilities, in truth, resulting from military service should be repealed.

20. All statutes and parts of statutes which direct or allow any expenditure with regard to deceased veterans, except in respect of the death of veterans which, in truth, resulted from or was hastened by military service should be repealed.

21. Legislation should be enacted placing the Veterans' Administration within an established department of the Government under the direction of a Cabinet officer, namely, the Secretary of the Treasury.

22. There should be a review of the cases of all pensioners now on the roll whose claims are not justified by the Army or Navy records, as being founded on death or disability incurred as a result of military service. To this end there should be established an impartial and permanent board of review and award composed of 9 men appointed by the President, to serve during good behavior, 3 to be medical men, 3 to be lawyers, and 3 to be citizens of neither profession. For the assistance of the President of the United States in making the appointments, the president of the American Medical Association should recommend to the President of the United States a list of 9 medical men, 3 of whom should be physicians, 3 surgeons, and 3 psychiatrists. The president of the American Bar Association should recommend to the President of the United States 9 lawyers. The board of review and award, so constituted, should not only have power to review existing awards but should have power to review the denial of any application heretofore made. Any future application should be submitted to and be preliminarily examined by the Administrator of Veterans' Affairs, who should then make his decision. Such decision, if the

claim on which it is based be justified by the Army or Navy records as being founded on death or disability incurred as a result of military service, should be final except in case of appeal to the board of review and award by the claimant or the Government. In cases where the claim is not justified by the Army or Navy records it should be submitted to, and be preliminarily examined by, the Administrator of Veterans' Affairs, who should make no decision but should report his recommendation to the board of review and award for decision, from which decision there should be no appeal, judicial or otherwise. In all proceedings before the board of review and award the Government should be represented by the Attorney General of the United States.

23. The present jumble of pension legislation should be replaced by a comprehensive and permanent statute drawn in accordance with the above-mentioned basic principles and recommendations and applicable to the future as well as to the past.

THE NATIONAL ECONOMY LEAGUE.

Prepared by Tompkins McIlvaine, of the executive committee, assisted by Alphonse A. Laporte, Robert C. Bryan, Graham D. Mattison, and Henry W. Whitney.

Mr. BOEHNE. I would like to insert in the record at this point, if it pleases the committee, a hearing on the bill (H. R. 9461) for the relief of Richard Evelyn Byrd, jr., United States Navy, in the Sixtyeighth Congress, first session. The hearings are only two pages long.

Senator WALSH. What does it relate to?

Mr. BOEHNE. It relates to the promotion of Mr. Byrd after he had been in the service two or three years to lieutenant commander. The CHAIRMAN. Yes; you have permission.

A HEARING ON THE BILL (H. R. 9461) FOR THE RELIEF OF RICHARD EVELYN BYRD, JR., UNITED STATES NAVY

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE OF THE COMMITTEE ON NAVAL AFFAIRS,

Thursday, May 29, 1924.

The subcommittee this day met, Hon. A. E. B. Stephens (chairman) presiding.

Mr. STEPHENS. We will take up for consideration H. R. 9461 for the relief of Lieut. Richard Evelyn Byrd, jr., United States Navy. The clerk will read the bill and the report.

(The clerk read the bill and the report, as follows:)

[H. R. 9461, Sixty-eighth Congress, first session]

A BILL For the relief of Lieut. Richard Evelyn Byrd, jr., United States Navy Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That the Secretary of the Navy is hereby authorized to appoint, by and with the advice and consent of the Senate, Lieutenant Richard Evelyn Byrd, junior, United States Navy, a lieutenant commander on the retired list of the Navy: Provided, That nothing contained herein shall entitle Lieutenant Richard Evelyn Byrd, junior, to any back pay or allowances

NAVY DEPARTMENT, Washington, May 28, 1924.

THE CHAIRMAN COMMITTEE ON NAVAL AFFAIRS, HOUSE OF REPRESENTATIVES.

MY DEAR MR. CHAIRMAN: Replying further to the committee's letter of May 27, 1924, inclosing a bill (H. R. 9461) for the relief of Lieut. Richard Evelyn Byrd, jr., United States Navy, and requesting the views and recommendations of the Navy Department thereon, the department has the honor to inform you as follows:

Enactment of the bill H. R. 9461 would operate to promote Lieut. Richard Evelyn Byrd, jr., United States Navy, retired, from the rank of lieutenant to the rank of lieutenant commander.