Subsection (b) of section 10 is further amended by adding a new paragraph which authorizes the requirement in a license that each licensee pay a pro rata share of the expenses incurred in connection with the administration of a license. The operation of any marketing plan necessarily involves certain expenses which properly should be borne by the particular groups affected. Such expenses should be relatively minor as compared with benefits received by the producers affected by the marketing agreement and license programs. It is obviously necessary, however, for the expenses to be borne on a pro rata basis by all licensees since otherwise such expenses would have to be borne entirely by those who were willing to subscribe voluntarily to a marketing agreement. Such an arrangement would place at a disadvantage those who are cooperating voluntarily in programs designed to improve the position of producers. Language has been inserted in this subsection which will preclude the levying of assessments upon licenses to cover the cost of handling any commodities received by the license authority and held for the benefit of producers or any other persons who are not licensees.

SAVING CLAUSE

Section 7 of S. 1807 declares that nothing contained in the amendatory bill shall be construed to invalidate any agreement or license in effect upon the date of enactment of the bill, nor of any act done pursuant to such an agreement or license before or after the enactment of the bill. This will enable the Secretary to continue to administer licenses and agreements now in effect without fear of legal prejudice as a result of enactment of the amendatory bill.

O

S. Repts., 74-1, vol. 1-63

APRIL 15 (calendar day, APRIL 25), 1935.-Ordered to be printed

Mr. HARRISON, from the Committee on Finance, submitted the following

REPORT

[To accompany H. R. 3896]

The Committee on Finance, to whom was referred the bill (H. R. 3896) to provide for the immediate payment to veterans of the face value of their adjusted-service certificates, for controlled expansion of the currency, and to extend the time for filing applications for benefits under the World War Adjusted Compensation Act, and for other purposes, having considered the same, report favorably thereon with amendments and recommend that the bill do pass.

The act of May 19, 1924, made provision for the granting to persons serving in the military or naval forces, within a delimited period, of adjusted compensation at the rate of $1 per day for services in the United States and $1.25 per day for services overseas. Sixty days of service were excluded for the purpose of computing the amount of adjusted compensation, as was also service in a grade above that of captain in the Army or Marine Corps and lieutenant, senior grade, in the Navy. Entitlement was not acquired by service in certain specified organizational units nor under prescribed conditions stated in the act. For a service credit of $50 or less payment was made in cash, but if the service credit exceeded $50 an adjusted-service certificate was issued. A restricted class of surviving dependents of eligible veterans were privileged to receive benefits. If the amount of the credit was $50 or less a lump sum cash settlement was authorized. If the credit exceeded $50 payments were made in 10 equal quarterly installments. The amount of the adjusted-service certificate was determined by taking the net service credit and adding thereto 25 percent and the figure thus arrived at was used as a net single premium, according to the American Experience Table of Mortality, with interest at the rate of 4 percent, compounded annually, to procure for the veteran a paid-up 20-year endowment policy of insurance. The amount of insurance procurable by a fixed

credit varied according to the age of the insured at the time of issuance, but in the average case the amount stated on the face of the adjustedservice certificate represents approximately two and one-half times the net credit as computed by allowing the adjustment of $1 and $1.25 per day, based upon the field of service.

The original act permitted certificates to be borrowed upon at the expiration of 2 years from the date of issuance to an amount equivalent to 90 percent of the reserve value of the certificate on the last day of the current certificate year, the reserve value to be based upon an annual level net premium for 20 years and computed according to the American Experience Table of Mortality with interest at the rate of 4 percent per annum, compounded annually. The maximum rate of interest was fixed at 2 percent above the rediscount rate for 90-day commercial paper in the Federal Reserve district in which the loan was made. The law as first enacted provided for loans to be made only by incorporated banks and trust companies. The law was amended on March 3, 1927, in order to permit loans to be made out of the United States Government life-insurance fund. This fund represents a trust administered by the Government but the beneficial interest therein lies with the holders of United States Government life-insurance policies, so that to all purposes, loans made from this fund are in the same category as loans made by banks. On March 4, 1929, a further enactment limited the rate of interest to 6 percent per annum on loans made by the Veterans' Bureau. Legislation which became effective February 27, 1931, granted authority for the making of loans from the adjusted-service certificate fund.

This is the fund which was created for the purpose of accumulating the necessary reserve in order to meet the maturity values on the certificates. This amendment also discarded the actuarial basis upon which loans had formerly been computed and fixed the loan value at 50 percent of the maturity values of the certificates, as well as reducing the maximum rate of interest which could be charged on loans to 41⁄2 percent. On July 21, 1932, a further change in the rate of interest on loans was made, reducing the maximum rate to 3%1⁄2 percent, and the provision requiring that a 2-year period elapse from the date of issuance of the certificate before a loan could be secured thereon was eliminated. This amendment had the effect of permitting veterans to borrow at a rate of interest the maximum of which was one-half of 1 percent less than that allowed on the adjusted-service credit in accumulating the maturity value.

The House bill provides for the immediate payment of the face value of adjusted-service certificates and waives the collection of interest from October 1, 1931, on loans made. It amends the law so that the time for filing applications for benefits is extended from January 2, 1935, to January 2, 1940. Provision is made for payment by the issuance of United States noninterest bearing notes. Alternative methods for the contraction of the issues of currency are also provided for.

The bill reported by the committee declares a policy relative to benefits to veterans of the World War and provides for the optional conversion of adjusted-service certificates.

At the option of the veteran he may surrender all rights to his adjusted-service certificate and receive in consideration of such surrender the amount of his adjusted-service credit, that is, the $1 or

$1.25 a day adjustment stated in title II of the act, as of November 11, 1918, and interest at the rate of 4 percent per annum compounded annually, to the 1st day of the January or July next succeeding the date of filing of the application. Interest, however, may be credited only to January 1, 1945. The veteran may at his election receive either a cash payment or negotiable coupon bonds of the United States bearing interest at the rate of 3 percent per annum payable semiannually. Provision is made for the extending of the time for filing of applications under the act to January 2, 1937.

Section 1 of the bill declares a policy against the enactment of general pension laws for World War veterans or their dependents. Section 2 amends section 507 of the World War Adjusted Compensation Act by making the adjusted-service certificate fund available for payments therefrom on account of certificates surrendered.

Section 3 permits veterans to surrender their certificates and in lieu thereof receive their adjusted-service credits with interest at the rate of 4 percent per annum, compounded annually from November 11, 1918, to the 1st day of the January or July next succeeding the date of the filing of the application, not beyond January 1, 1945, less any indebtedness against the certificate. No payment is to be made or bonds issued until the certificate is in possession of the Administrator of Veterans' Affairs and all obligations against such certificate discharged. If a certificate is held by a bank, a method is provided whereby a loan thereon may be paid and the certificate redeemed from the bank by the Administrator of Veterans' Affairs. Settlements under the provisions of this section shall be made as of the 1st day of the January or July next succeeding the date of the filing of the application with the Administrator of Veterans' Affairs, whichever is the earlier date. The veteran may receive the benefits of this section by application filed during the lifetime of the veteran with the Administrator of Veterans' Affairs, either by the veteran or his representative. If the veteran dies after the application has been filed, the settlement authorized under the provisions of this section shall be made to the estate of the veteran.

In making settlement of the amounts payable under this section, the Secretary of the Treasury is authorized to issue negotiable United States bonds with coupons attached bearing interest at the rate of 3 percent per annum payable semiannually, up to the highest multiple of $50 in the amount due, the difference being payable by check drawn upon the Treasurer of the United States. By making election at the time of filing application, the veteran may receive instead of bonds a check in the full amount due drawn upon the Treasurer of the United States. Bonds issued to veterans under this section are protected against exploitation by a provision which prohibits for 6 months negotiation or assignment for an amount less than that shown on the bond as the redemption value thereof. In acquiring title to notes held on account of the United States Government Life Insurance Fund, the Secretary of the Treasury is authorized and directed to make payment therefor by the issuance of bonds. All bonds issued for the purpose of this act shall be issued under the Second Liberty Bond Act.

If, at the date of maturity of the certificate, the certificate has not been surrendered, and if at the time of filing application for payment under section 501 the amount of the adjusted-service credit and interest at 4 percent per annum compounded annually from November 11,