Senator LA FOLLETTE. The highest rate now charged is 5%1⁄2 per cent? General Hines. Yes.

Senator SHORTRIDGE. What is the average rate?

General HINES. The average rate is a little below 5 per cent, I should say about 4.75 per cent.

Senator WATSON. You may go ahead.

General HINES. Now, let me complete the total number of loans: The approximate total number of loans made by the bureau; that is, not to different veterans, you understand, but all loans, is 2,923,891. Those loans were made to approximately 1,600,000 veterans, meaning of course that some of them had borrowed more than once. The number of redemptions made from banks is 348,379. Those are just straight loans.

Senator WALSH of Massachusetts. What percentage of eligible veterans have secured loans on their certificates, approximately, I mean?

General HINES. Well, I should say about forty-odd per cent.
Senator WALSH of Massachusetts. All right.

General HINES. Now, Congress each year has appropriated to the redemption fund for these certificates, it being contemplated that that fund that the amount appropriated by Congress each year with the earnings of the fund-would equal in 1945, when these certificates were to mature, the amount necessary to refund all the certificates. Senator HARRISON. How much do we appropriate annually?

General HINES. Recently at the rate of $112,000,000 annually. I will give you status of the fund at this time: The status of the adjusted service certificate fund, as of the commencement of business January 1, 1931, was appropriated $784,000,000. Cash collectionsthat is, interest on the certificates and other investments in that fund, amounted to $62,475,179.10. Redemption of loans, principal, about $24,986,430.05. Then we have made payments from that fund totalling $138,452,097.73

Senator COUZENS (interposing). For what purpose?

General HINES. Those were payments made to beneficiaries.
Senator CoUZENS. Beneficiaries of veterans who died?

General HINES. Yes; and certificates taken in, redeemed from the banks. You see the Government life insurance fund does not redeem those. You see the Government life insurance fund does not do that, but this Government service fund redeems certificates defaulted upon at the banks.

Senator CONNALLY. How is that fund invested?

General HINES. It is in the hands of the Treasury Department and invested by them. I will give you a list of the securities heldSenator CONNALLY (interposing). It is not in cash?

General HINES. It is not in cash but in Government securities. The law contemplates that it will be invested in Government securities. Senator HARRISON. How is the matter working out? I mean in regard to the matter now before the committee, as compared to what was intended when the law was framed?

General HINES. In what way?

Senator HARRISON. Well, how is it working out?

General HINES. It is working out as far as we can tell. Of course we have only gone six years, but it is working out approximately as contemplated so far as we can see.

Senator WALSH of Massachusetts. In other words, it would appear that in 1945 the fund would be sufficient to meet the obligations of the Government?

General HINES. That is true. But up to date the total amount is not what we thought would be necessary. Whereas $112,000,000 was appropriated, one year probably $116,000,000 or $120,000,000 was needed. We have taken that flat amount, contemplating that later on we could make up that amount because the mortality is running less than the American experience table.

Senator HARRISON. Has Congress appropriated what you recommended, or has the fault been with the Congress?

General HINES. No, the amount appropriated has been the amount agreed upon in the Budget. There has been no argument upon it. I think Congress has kept up its end very well.

Senator HARRISON. All right.

General HINES. The total value of the fund, less disbursements, on January 1, 1931, was $771,550,391.15.

Senator COUZENS. Was any estimate made at the beginning as to the probable amount of borrowings that might be made?

General HINES. I do not recall. That was handled before I got actively into it, and the most of the estimates were made by actuaries of the Treasury Department. The amount that might be borrowed I think was pretty much a guess, as no one could tell just how the veterans might call for loans, or what the conditions of the future might be. They always assumed that the total loan value would be available for loans.

Senator COUZENS. Do you know whether any estimates were made at that time as to the probable number of veterans that would borrow on those certificates?

General HINES. No, sir. But the assumption was generally made that whenever the loan value was available that a fair percentage would take advantage of the loan value. I doubt if they ever estimated the number. An estimate of that kind would be pretty much a guess.

Senator COUZENS. Have you any views based on your own judgment with respect to the anticipated number of loans and the number actually made?

General HINES. Yes, sir; I have very decided views. We have noticed during this year particularly, that the loans for the month of January are way in excess of the loans made last January.

Senator LA FOLLETTE. How much are they up, General Hines? General HINES. The bureau has made direct loans from January 1 up through January 23 of this year at the rate of approximately $1,000,000 a working day.

Senator LA FOLLETTE. Could you furnish for the record at this point a comparative statement by months for the year 1930 with 1929? General HINES. Yes; we can do that.

Senator HARRISON. And also for 1928?

General HINES. All right.

Senator WALSH of Massachusetts. That is in the record, already, I mean for 1928.

Senator LA FOLLETTE. But we should like to have a comparative statement up to date for the two years.

General HINES. All right.

(The statement called for will be inserted at this point.)

1927

1928

1929

1930

Senator WATSON. You may proceed.

General HINES. I should like to say in answer to Senator Couzens's question, that we estimated that beginning with the month of January of this year, instead of running about $8,000,000 a month, we would run about $20,000,000. And up to the 23d of this month our records show that we are keeping up with that estimate of $20,000,000 for the month of January.

Senator COUZENS. If you are running a million dollars a day you are running ahead of that estimate.

General HINES. If we take the amount of money that we have so far it has exceeded it, but we are anticipating that it will not run for the full month that much.

Senator COUZENS. But you jumped your estimate from $8,000,000 to $20,000,000 a month, and that has been exceeded this month. General HINES. Yes, sir.

Senator BARKLEY. Does this represent an increase in loanable value?

General HINES. Yes, sir; and new loans are being made on top of old loans.

Senator COUZENS. Have you a statement of the new applications being received other than those who have heretofore applied?

General HINES. We have not at this moment. But at the end of this month, when we get full reports from the fields, we can furnish that information.

Senator LA FOLLETTE. Will you furnish that information?

General HINES. Yes, sir.

(The information called for is not available.)

Senator WATSON. You may proceed.

General HINES. We know that by the average amount of the notes for central office-for instance, the number of loans from January 1 up to January 22, 1931, were 62,927. The amount of checks issued was $2,950,960.61. The amount of notes was $17,549,008.42, giving the average amount of the notes made as $278.88. That would indicate that a number of new loans have been made, because the average amount of those who had borrowed once before was very much less than that.

Senator SHORTRIDGE. Out of what fund according to the terms used are these loans made?

General HINES. These loans are made from the Government's converted insurance fund. Only the amount taken out of the sinking fund. In other words, the adjusted service fund for redemption of certificates; they were those where the veteran had defaulted and they came in from the banks and were redeemed and the bank paid off and the note carried in that fund.

Senator COUZENS. Have you information to indicate the areas to which those loans are made?

General HINES. It runs about the same percentage all over, I understand.

Senator COUZENS. I thought we would like to have that information because generally the statement is made in the press that these. demands are coming from limited areas. I have taken exception to those published statements and should like to know the experience of the bureau.

General HINES. I am sure that I can safely say at this time the demands are general. There are certain sections.that I feel are above the average, but there is a general demand for loans greater this year than we have had before.

Senator COUZENS. How many areas do you have?

General HINES. We have 54 regional offices. Practically every State has a regional office, and then in some States we have more than one regional office. So that the information we get as called for by that table will be by States.

I can read from a table, which I will insert in the record, of loans made back in some of the previous years, which might be helpful. Senator COUZENS. Suppose you just put that statement in, but give us some of the figures so we may have them before us now.

(The statement to be furnished by General Hines will be inserted at this point:)

Direct loans made by bureau on security of adjusted service certificates by stations, United States Government life insurance fund