(At this point Representative John McDuffie, chairman of the committee, entered.)

The VICE CHAIRMAN. I will say for the benefit of the committee that arrangements have been made to have the meetings of the committee in the minority caucus room of the Senate.

General HINES. Now, Mr. Chairman, on the matter of the organization we have proceeded

Mr. CHIPERFIELD. Could I ask a question before you get to that? Now, your eight hundred and thirty-one million does not include such items as the amortization of the adjusted service compensation and such items as the governmental contribution to war risk insurance. Are there any other items that are included in your total appropriations of any substance besides those two in addition?

General HINES. Yes, there is about twenty million a year made up for the civil service retirement fund which went to the Veterans' Administration in connection with the Pension Bureau.

Mr. MILLIGAN. Which has nothing at all to do with the veterans? General HINES. Which has nothing to do with the veterans.

Mr. MILLIGAN. Nor any benefits the Veterans' Administration might pay only as veterans will be beneficiaries, no more than any other organization.

Mr. TABER. Does that figure 831 or 841?

General HINES. 841. The total in round numbers, a billion dollars. In 1932, the total appropriation was $987,541,297.27. The detail of that if you wish it, I will read.

Mr. TABER. I don't think it is necessary to read it unless somebody wants it.

The VICE CHAIRMAN. We will insert it in the record.

EXHIBIT H

Appropriations for relief of veterans of all wars from 1930 to 1933

1 Included in administration, medical, hospital, and domiciliary services during fiscal years 1932 and 1933. ? Includes $47,213.58 transferred to Veterans' Administration from War Department. NOTE.-Appropriations for retirement of civil employees not included in above figures.

Mr. CHIPERFIELD. General, one other question. If you will turn to page 49, does that fifteen billion three hundred seventy million which appears on the fourth line in the beginning paragraph on that page include the appropriations on account of adjusted service compensation or war risk insurance?

General HINES. It includes war risk insurance.

Mr. CHIPERFIELD. But not adjusted service?

General HINES. Not adjusted service certificates; but it includes war-risk insurance, because that is an expendable item.

The VICE CHAIRMAN. Do you not think it well to make your statement making that clear?

General HINES. Yes; I will be glad to. Of course, as I indicated referring to that table, there should be a deduction of nine hundred and seventy million shown at the bottom of that table for payments in disbursements for allotments, and so on.

Mr. TABER. Do you remember a place I thought you made a mistake? Can you turn to that question?

General HINES. I know the item the Congressman refers to. It is Government liability on term insurance.

Mr. TABER. Now, on that I wanted to ask so as to be clear, it appears there that the war risk premiums were five hundred million and the Congress expenditures were something like two billion sixty million and the net liability $1,560,940,407.60. Were you using net figures or gross? You didn't use this figure here in giving the fifteen billion.

General HINES. We only used the part of that one billion that has already been appropriated or liquidated for we have on the books remaining to be liquidated something close to $700,000,000, so that this is the net liability after crediting the premiums; but in the item of fifteen billion is only included that part which Congress has so far appropriated for and which has been liquidated. Now, Mr. Chairman, in the discussion there is bound to be some question raised as to what portion of the annual appropriation goes to the service-connected group and nonservice-connected group, and so on, and I have had prepared a table in this substantial form, the approximate distribution of the 1933 appropriation, by purposes and class of beneficiary. That pertains to the appropriation we are working on this year.

The above table shows the World War group and other wars giving the item, salaries and expenses, hospitalization, domiciliary care, burials, construction, military and naval compensation, military and naval insurance, State and Territorial homes, and printing and binding, giving the amount with the percentage of the total that is expended for the cost that we permit service-connected cases, the next group showing nonservice-connected cases of the World War and the total with percentages for the World War group. The next columns show the other wars with the amounts and percentages and then the total appropriation for 1933 pertaining to those items. If the committee desires, I can give you some of those percentages. I used one yesterday in my report indicating that approximately 71 per cent was spent on the World War group but I did not attempt to divide that between the service and nonservice cases. Now, if you desire me to discuss that now it can be done but at this point

Mr. TABER. It will be in the record?

General HINES. It will be in the record. To me it is a very illuminating table. Can I at this point suggest to the committee that in your deliberation this subject is so large that you have to break it down and I have prepared as expert witnesses some of my assistants on each particular item. That is, if you were to consider compensation, I would call a certain member who I consider an expert on compensation, etc. If you are considering medical care, hospitalization, I have some one else prepared. Generally, I am prepared as well as a man can be on the subject, I hope, and would of course be present with those members and try to answer the detailed questions.

The VICE CHAIRMAN. How are we going to find out, General, how efficient the administration is and what savings can be made in the cost of administration?

General HINES. Can I offer this suggestion? I have always in appearing before committees indicated that I felt as an administrative officer that it was my position to give the committee the facts and let them determine what legislation should follow. I am in that same position on this subject. I am prepared to give you facts, if you desire I am prepared to give recommendations voluntarily. I would not make some recommendations unless the committee desires to proceed except on those items where I feel that for the sake of good administration, for the sake of the veterans themselves certain changes should be made.

The VICE CHAIRMAN. I understand that, but we would not expect any person from your department to criticize the management or point out to us where economies could be made.

General HINES. I will do it for this committee because I feel that there are opportunities for economy. I would not want to of course be in a position of criticizing my subordinates when I know they have been doing a good job. There are some handicaps they are working under.

Now, I think in fairness to Congress and in fairness to all, where weaknesses exist we should bring them to the attention of the committee and when we do that I think we will accomplish something. There are two roads we can follow, gentlemen: One is that with a view of accomplishing prompt economy, the other is to pursue the course of adopting a sound national policy in dealing with the

veterans.

The VICE CHAIRMAN. You mean one based on principles of equity and justice?

General HINES. Yes; the first I believe can within a reasonably short time be pursued to a conclusion with probable cooperation of the service organizations in certain changes. The other would take longer study and much controversy on certain items.

The VICE CHAIRMAN. What do you mean by the other?

General HINES. I mean the adoption of a sound national policy because to do that would involve changing rating procedure; for instance, changing allowances, all of those items would undoubtedly bring objections from different groups. Now, I think it is safe to say that we are not particularly concerned with the groups, say, Spanish War group:

I doubt if anyone would advocate very much of a change unless it was a change to make sure that the veterans of the several wars, the Indian war, or dependents of those were given benefits equal to any we are granting now. In other words, the revision of those groups would probably be upward in some cases and we have an elaborate study of inequalities there which, if you think the committee has time, I have a man who will explain it to you. Now, it may be, in the consideration of the problem when you reach the Spanish War group because of the age of that group you would not wish to apply the same principles that would apply to our future problem. The great problem of the future is the World War group. I have said here, and at the proper time will put in the record a chart which indicates as best we can the numbers that may be on the rolls of the World War group, either pensions or compensation, year by year up to 1999, if we can predict that far away.

The VICE CHAIRMAN. I was going to ask you if you had prepared a table showing what increase in appropriations would be necessary, assuming the present status was maintained?

General HINES. I have that right here and can take it up whenever you desire. Now, I said in order to be fair that predicting a great distance in the future is a dangerous proposition for anybody. I think we may safely predict 10 years, but would not go much further although we have taken this table and worked it out on what seems to be a sound basis. I have also had worked out for the committee suggestions in changing our eligibility to hospitalization, our eligibility to soldiers' homes, a new rating policy, and am prepared to suggest administrative changes. Now, I felt that before we proceed to get into those that it would be well if it could be decided, whether it would be the purpose of this committee and of course that is a matter for you to decide and not me, where changes could be made and bring about economy.

If we are to pursue on that time can be saved by indicating that and then either listening to me or listening to the service organizations' suggestions on those questions which the economy committee considered last year and which I understand were objected to last year because of the lack of hearing on those items with the exception of the first item which would place into the law a factor of need, which is objectionable to the service organizations, I think the other items could be agreed upon. Nevertheless, I think that is the principle that the service organizations contend for. Now, if the committee