Under date of August 12, 1936, Brig. Gen. H. E. Knight, War Department, left with the Administrator of Veterans' Affairs for consideration the following memorandum: Memorandum for the Administrator of Veterans' Affairs: Subject: Benefits for enlisted men. Recently the question has been raised as to the possible inadequacy of the benefits received by enlisted men of the Regular Army who are rendered unfit for further active military service because of physical disability incurred in line of duty. The War Department's views in the premises are as follows: 1. Benefits available to persons who have become disabled while serving as enlisted men are those provided by laws administered by the Veterans' Administration. In this connection the War Department is strongly of the opinion that disabled enlisted men should continue to be cared for by way of pension under the Veterans' Administration rather than by way of retirement similar to that for officers under the War Department. This opinion is based upon the following facts: (a) The officer, in coming into the service, has an education and a potential earning power which when placed at the disposal of the service is lost for other pursuits. The recruit seldom has a trade, slight education only is required for enlistment, and in his earlier years of service his general capacity to earn a livelihood is enhanced by such service. (b) When a young man accepts a commission, he adopts the service as a career. Once in, the Government can hold him indefinitely. The enlisted man, on the other hand, is in the service under a relatively short-service contract, renewable at the option of the Government, but only on application by the individual. In most cases the recruit upon entering the service does not contemplate adopting the Army as a career and a relatively small percent reenlist in normal times. (c) Pay in the earlier stages or in the lower grades at any stage is so small that a percentage retirement based on this pay would not take care of a man who has suffered a serious disability. (d) Only in the higher grades would a percentage retirement based on activeduty pay take care of a man who has suffered a serious disability, but the tenure of office of the noncommissioned officer is not permanent nor secure. He may become a private under various circumstances and, while in that grade, he would be in jeopardy of an unsatisfactory disability retirement. (e) A retirement system for enlisted men would be unsatisfactory and unjust because of relatively generous payments to large numbers of men with low disability retirements in their earlier years of service, while high disability retirements were being relatively inadequately compensated. In this connection it must be remembered that the officer's pay is increased progressively with service and consequently his retirement is proportioned according to service rendered, but that this is not always true with enlisted men. It is therefore more nearly adequate to care for such enlisted men in proportion to his disability rather than by retirement benefits based on his active duty pay. (f) The retired officer is available for service and may render active restricted service. while under a disability retirement. The nature of enlisted men's duties would not often permit this use of their services. (g) In addition to the above, the matter of practical administration of benefit laws should be carefully considered. It is believed that disability compensation for enlisted men should properly be based primarily upon the degree of impairment to the earning power of the individual as is done under the present laws administered by the Veterans' Administration which administration is set up to handle persons on that basis, along with thousands of other veterans. Any system based upon the degree of impairment and to be administered by the War Department would compel the Department to duplicate the system already in operation in the Veterans' Administration. It is quite evident that this would constitute a diversion from the real mission of the War Department. 2. The existing laws for the benefit of persons disabled while serving as enlisted men are deemed inadequate in two respects, for such laws should provide, as a first consideration, compensation equal in amount to the impairment of the individual's ability to earn a livelihood, and, as a second consideration, compensation as a reward for long and faithful service or for loss of career for those limited numbers of enlisted men who have adopted the service as a career. 3. In connection with the first consideration, it is believed that the rates of payments now authorized for wartime disability are appropriate as compensation based on the amount of impairment of the individual's ability to earn a livelihood and that in justice to all concerned such rates should apply for peacetime and wartime disabilities alike. The particular situation under which the disability was incurred would appear to have no bearing on the amount paid for the purpose because the degree of assistance needed should be the controlling factor rather than the time or circumstance of the disability. An individual is little concerned with whether he lost an arm in battle or on the target range, the loss to him is the same, the time and place is not material but merely incidental. 4. Existing pension rates under Veterans' Administration are as follows: Pension rates under Veterans' Administration Loss of 2 hands, or 2 feet, or 1 hand and 1 foot, or needs regular attendance- War Peace time time dis dis ability ability $25 $12 In addition to the above, pension rates are prescribed for dependents who survive the above-discussed persons. The rates are somewhat complicated to tabulate, but in general, the rates under the peacetime column are about 74 percent of the wartime column. 5. In connection with the second consideration it is believed that the objective should be attained not by substituting a complete and different method of providing compensation, but rather by adding to the benefits under the existing disability system additional compensation for long and faithful service or loss of career in proportion to the length and value of such service. 6. At just what point of service an enlisted man may be considered to have been committed to the Army as a career cannot be stated with mathematical accuracy, but for pension purposes it is believed that compenation for long service or for loss of career should commence only after approximately 10 years of such service. In this connection it must be remembered that as the Government contracts with men for only a 3-year period of time, it will accept them, on their first enlistment, at ages up to their thirty-fifth birthday, or at an age which precludes probability of a long military career. By far, the greater number of enlisted men enter the Army as a matter of expediency rather than by way of adoption of a career, and it is quite evident that in such cases the individual is not entitled to a reward for long and faithful service nor for loss of a military career. 7. Two methods appear appropriate to provide adequate compensation as a reward for long and faithful service or loss of career: (a) To provide that the disability payment to a veteran of over 10 years' service be increased by an amount equal to a fixed percent of his last active duty pay. (It is estimated that 20 percent would be a fair percentage.) 73557-38-6 In view of the fact that as a rule the soldier's active duty pay increases with length of service, this method would in a measure compensate him for the loss of a career in accordance with his length of service and grade. However, it is open to the objection that no greater percent of active duty pay is provided for longer service than is provided for lesser service. A person with 10 years' service would receive the same percent increase of his active duty pay (20 percent) as would a person of 29 years' service. The following table indicates the additional compensation which this method would provide for the various grades: 1 75 percent of active duty pay now authorized by law. Allowances of $9.50 per month in lieu of rations and clothing and $6.25 per month in lieu of quarters, fuel, and light is not included. (b) To provide that the disability payment to a veteran of over 10 years' service be increased either by an amount equal to 2.5 percent of his last active duty pay multiplied by the number of years of his actual service in the Regular Army or by an amount equal to 3.75 percent of his last active duty pay multiplied by the number of years in excess of 10 that he has served in the Regular Army. Under existing law, enlisted men acquire eligibility for retirement and retired pay only by completing 30 years of service, including such credit for double time as may have been authorized prior to denial of further double-time credit by act of August 24, 1912 (37 Stat. 575). Service establishing credit for retirement need not be consecutive. This retirement for 30 years of service, with appropriate retired pay (75 percent of last active duty pay plus allowance of $15.75), which is considered a fitting reward to those who have spent their active lives in the service, is distinguishable from compensation rights accruing by virtue of physical disability which interrupts or precludes the renewal of the enlistment contract then in force. It therefore follows that if 10 years is determined as the proper number of years after which an enlisted man is considered to have committed himself to the Army as a career, full justice would dictate that his compensation for loss of career should be in proportion to the equity toward retirement that he has earned. Based upon 75 percent of his active duty pay for 30 years of service and considering that his equity toward retirement begins to run from date of original enlistment, such equity would be 2.5 percent of his active duty pay per year of service. Based upon the conclusion that an enlisted man is considered to have adopted an Army career after 10 years of service and that he has earned compensation at the rate of 75 percent of his active duty pay after 30 years of such service, his equity in retirement would be at the rate of 3.75 percent for each year after 10 years of service. The following tables show the additional compensation which these methods would provide for the various grades. TABLE I.—25 percent of active-duty pay per year of service TABLE I.-25 percent of active-duty pay per year of service-Continued 8. To summarize, the War Department is of the opinion that the primary purpose of legislation in the matter should be to obtain for persons disabled in peacetime service the same disability pensions as is provided for those disabled in wartime, thus eliminating an apparent discrimination imposed by existing laws. The matter of providing additional compensation in the nature of a reward for long and faithful service or loss of career is believed to be appropriate and the War Department will heartily endorse legislation which would provide, in addition to disability pensions, a reasonable compenastion for long and faithful service provided that the existing disability pension scheme is not jeopardized. In this connection it is felt that any plan adopted should provide that the disability payment to a veteran of over 10 years' service be increased by a fixed percent of his last active duty pay (20 percent suggested), or by an amount equal to 3.75 percent of his last active duty pay multiplied by the number of years in excess of 10 that he has served in the Regular Army. The latter method is deemed preferable. 9. The data necessary to estimate the cost of the above relief measures are not readily at hand and this estimate must therefore be deferred until such time as definite legislation is proposed. The primary objective sought at this time is to reach an agreement on the nature of legislation which would be acceptable to all concerned. It is fully realized that the amount of relief eventually provided must necessarily depend on the cost to the Government. H. E. KNIGHT, ILLUSTRATIVE CASE Assume a sergeant (fourth grade) 26 years' service. His pay is $67.50 a month. He is discharged 60 percent disability. He would receive from Veterans' Admin istration a pension of $27 a month (60 percent wartime disability is $60).. We seek in addition to the above one of the following increases: (a) Twenty percent of his last active duty pay, or 20 percent of $67.50-$13.50 ($60+$13.50=$73.50). (b) Two and five-tenths percent of his last active duty pay times the number of years of service, or 2.5 percent $67.50X26 years=$43.87 ($60+$43.87= $103.87). (c) Three and five-tenths percent of his last active duty pay times the number of years over 10 of service, or 3.5 percent $67.50×16 years=$37.80 ($60+ $37.80 $97.80). We favor C Had this soldier remained in the service until he was retired after 30 years' service, he would have received $50.62+$15.75=$66.37. Following the enactment of Public, No. 788, Seventy-fourth Congress, the Administrator of Veterans' Affairs conducted a conference March 18, 1937, which was attended by representatives of the War Department, Navy Department and Coast Guard, and members of the staff of the Veterans' Administration. Based upon conclusions reached in the conference certain proposals were prepared and forwarded to the Service Departments, May 13, 1937, copies of which follow: The honorable the SECRETARY OF WAR, War Department, Washington, D. C. MAY 13, 1937. SIR: This is with further reference to the matter of benefits for enlisted men of the Regular Establishment, concerning which subject communications have been exchanged by the Veterans' Administration and War Department. The last action taken was a conference held by me on March 18, 1937, when the War Department was represented by Brig. Gen. L. D. Gascer and Maj. Oscar B. Abbott. At the conclusion of the conference I indicated that drafts and estimates would be prepared and submitted to the departments for their comment and recommendation. Several drafts have been prepared (copies enclosed) the enactment of which would liberalize pensions to the veterans of the Regular Establishment. Proposal No. 1 would, by the provisions of section 1, increase the rates under part II of Veterans Regulation No. 1 (a), as amended, to 50 percent of the wartime rate, except as to the 10 percent rate where the minimum pension provision of $6 per month in section 2 of Public, No. 2, Seventy-third Congress, is for application. It would not affect the specific rates above total disability as they now bear the 50-percent relationship. It is estimated that this section would affect approximately 14,300 Regular Establishment veterans at an annual increased cost of approximately $480,200. Section 2 provides for an increase of such rates by 25 percent where the person has served a total of 10 years but less than 20 years and an increase by 50 percent where the person has served a total of 20 years or more. It is estimated that this section would provide increased pensions to approximately 600 Regular Establishment veterans at an annual cost of approximately $46,700. The total cost of this draft is approximately $526,900 annually. The above proposal is based upon the conference of March 18, 1937, particularly the suggestion that if it is intended to inject the retirement feature into the pension program that a 25-percent increase of pension could be considered for a man with 10 years' service, but less than 20, and a 50-percent increase if the man had 20 years' service or more but less than 30 years, on the theory that as to 30 years' service there is ample retirement provision. The proposed increase of the pension rate from $45 to $50 per month for total disability, with proportionate increase for the partial rates, is based upon the principle of uniformity by establishing all of the peacetime rates at 50 percent of the wartime service-connected rates provided in part I of Veterans Regulation No. 1 (a), as amended, subject to the minimum pension provision of $6 per month in section 2 of Public, No. 2, Seventy-third Congress. Proposal No. 2 would provide disability pensions for this group at three-fifths or 60 percent of the wartime service-connected rate under part I of Veterans Regulation No. 1 (a), as amended. It is estimated that this proposal would |