The cates would be so vitally helpful to so great a number of veterans as now. near 2,000,000 loans on adjusted service certificates made by the Veterans' Bureau alone testifies to the financial condition of the veterans who own them or did own them. The worst of it is, in many cases where loans are made, the veteran sacrifices the major part of the benefit intended for him because the loan value is only a small fraction of the face value and accumulating interest charges wipe out the remainder before the veteran is able to redeem it. 3. Mr. Mellon states a bond issue of sufficient size to pay the adjusted service certificates could not be floated. On the contrary there are excellent reasons for expecting the success of such an issue. The last three refinancing issues of the United States Treasury were heavily oversubscribed in the face of a rapidly descending interest rate. The last issue (November, 1930) yielded interest at the rate of 1% per cent. The average interest rate which the Government has paid for all money borrowed since 1911 is 3.6 per cent. At times when business is good and money is profitably employed, the Government can not get enough for its needs at less than 3.75 to 4 per cent. Hence it may be seen that in the final analysis the Government may even save considerable money by borrowing at the present exceedingly low interest rate to pay off its debt rather than to complete its adjusted compensation sinking fund with the use of high-priced money later on. At the same time there appears to be not the slightest danger that such a bond issue would drain the credit supply of the country. Such a suggestion seems to be simple bogey-raising, in the light of the following facts. For instance, this would be a popular bond issue, similar to the large war-time loans. But in the supply of available money we now have a tremendous advantage over the war-time period. The amount of money seeking employment now is greater than before even the first Liberty bond was issued to start the United States into the World War, with no need to make comparison with the less favorable conditions when the later Liberty loan issues were made. They were all successful, and the industries of this country expanded simultaneously at an unprecedented rate. There is not the same degree of necessity for industrial expansion now, if indeed there is any need at all. What seems to be needed most at this time is sufficient buying power to employ the services of men and machines waiting and literally aching for a chance to produce more than is now being produced. Surely, under such conditions a $4,000,000,000 bond issue, the proceeds of which would immediately find its way into the channels of trade, would be highly beneficial and not detrimental in the least. 4. If the adjusted-service certificates are to be regarded as "compensation" as they are termed in their very titles, and in the act of Congress which authorized them, they should be paid to the veterans themselves. Death claims have heretofore been paid to the beneficiaries of more than 70,000 vetearns (Veterans' Bureau report) who were entitled to this "compensation." The death rate among veterans is increasing as they grow older. A great many more of the "country's saviors" will be absent at roll call in 1945, when the first of the adjusted-service certificates begin to mature. So it behooves the Government to hurry if it would compensate the men themselves, who fought at its bidding between April 6, 1917, and November 11, 1918. The subject is far from being exhausted, but I believe the above will show you the point of view alluded to in the beginning, which is, that not all the statistics in the Government's yearbooks tend to show the immediate payment of the "bonus" to be impractical by any means. I am sure you will find many who are convinced, as I am, that the immediate discharge of this obligation is not only in the interest of the veterans as such, but is also greatly in the interest of the Government and the country in general. In fact, I would be pleased to bring further proof of this proposition if you desire it. Sincerely yours, W. J. HOWELLS, National President. PAYMENT OF VETERANS' ADJUSTED-SERVICE CERTIFI CATES TUESDAY, FEBRUARY 3, 1931 UNITED STATES SENATE, The committee met, pursuant to adjournment, at 10 o'clock, a. m. in its committee room in the Senate Office Building, Senator Reed Smoot (chairman) presiding. Present: Senators Smoot (chairman), Reed, Couzens, Deneen, Bingham, La Follett, Thomas of Idaho, Harrison, George, Walsh of Massachusetts, Barkley, and Connally. The CHAIRMAN. The committee will come to order. General Hines, will you proceed? STATEMENT OF BRIG. GEN. FRANK T. HINES, ADMINISTRATOR OF VETERANS AFFAIRS, WASHINGTON, D. C.-Resumed General HINES. Mr. Chairman and gentlemen of the committee, Senator Couzens, when I appeared before the committee previously, asked that we look up the history relating to the bonus legislation. We have done so, and I would like to place in the record a synopsis of the legislation, preceded by this short statement, if I may. The theory of giving the veterans a bonus under the present plan of adjusted service certificates was proposed in bill H. R. 14157 of the sixty-sixth Congress, introduced in 1920. At that time the Congress considered giving five options: First, adjusted-service pay: Cash settlement, not to exceed $625 for overseas service or $500 for home service. Second, adjusted-service certificates: Face value equal to adjusted service pay plus 40 per cent, plus interest for 20 years. Third, vocational training aid. Fourth, farm or home aid. Fifth, land-settlement aid. The adoption of the three options last mentioned was eliminated from consideration quite early in the consideration of the bill. Hearings on the bills that contained the first two options in modified form show that the proposal to add 40 per cent, later enacted to 25 per cent, to the adjusted service pay as the basis of the certificates, was for the purpose of making more attractive this plan of settlement, and thus induce the veterans to take the certificates rather than cash. Following consideration of plans to give the veterans an option, the law finally enacted, as you know, gave cash to those living veterans whose credit was $50 or less. If the veteran died before enactment of the World War adjusted compensation act, or died subsequently without making application for an adjusted-service certificate, certain designated dependents received adjusteds-ervice credit cash, which can not exceed $625 for overseas service, or $500 for home service. Certificates were issued to all others who made application therefor. With the option feature eliminated, the theory upon which the 25 per cent was finally added to the adjusted-service credit was presumably that the amount would be in the nature of a bonus because payment was to be deferred. This statement is supported by the following extracts from debates in the Senate on April 21, 1924. I quote from a statement made by a Senator at that time: Do I exaggerate? Does not your bill compute the amount of adjusted compensation due the ex-service man, and do you not say, having agreed to that, "I can not pay you now, so I am presenting you with a gift of an amount equal to 25 per cent added to your compensation, and 4 per cent interest compounded annually, on the condition that you wait 20 years"? Under the bill as reported by the Finance Committee, the veteran has no choice of benefits. If his adjusted service credit is in excess of $50, the veteran will receive the equivalent of a paidup 20-year endowment policy for the amount which his adjusted service credit, plus 25 per cent, would purchase at his age of such insurance, computed in accordance with accepted actuarial principles, with interest at 4 per cent per annum compounded annually. If the veteran's adjusted service credit is $50 or less, he will receive a cash payment only. That is the end of the statement made by the Senator, as it is con-tained in the Congressional Record for April 21, 1924, volume 65,, page 6770. This synopsis, gentlemen, gives the various references which will be helpful at any point in the consideration of the legislation, right up to the point that the act became a law. The CHAIRMAN. General Hines, what were you reading from? General HINES. I was reading then from the statement which I gave to the Ways and Means Committee, which has not been printed as yet. The CHAIRMAN. I thought it was. Senator COUZENS. One reason I asked for this is because, while I do not care about a play of words, the fact is that everybody keeps referring to this as a bonus, and I do not consider it as a bonus. The certificates do not so indicate. The settlement of this matter, as I understand it, was adjusted compensation, and there is a wide difference, in my opinion, between a bonus and adjusted compensation. The CHAIRMAN. They were discussing the two together at the time the proposition was first considered, and I think the committee, and, in fact, the Congress, accepted the adjusted compensation, but it was always talked of as a bonus just the same, in all the discussions. Senator COUZENS. I understand, but there is a good deal of difference. I notice the press keeps referring to it as a bonus. I think there is a great deal of difference between a bonus and adjusted compensation. The impression has been created in the public mind that this is a gift to the veterans. I do not so consider it. I want to bring out the fact that it is not a gift, but that it was a matter of justice. It was called adjusted compensation because of the fact that the man had not got adequate pay during the service. Senator CONNALLY. Senator, the reason they take the attitude that it is a gift is that, as a sovereign, we had the right to demand that the soldiers serve for nothing if we wanted to. Having fixed the pay at a certain figure, and afterwards adjusted it, that is the reason it is referred to as a gift. I do not so claim, but there is some basis for that belief. General HINES. Gentlemen, I have several extracts of various parts of the debates. Unless you desire them in the record, I would not wish to encumber the record. These are extracts from the debates on the floor of the Senate on this very point. Senator WALSH of Massachusetts. I think they should be put in the record. Senator COUZENS. I think so, too, because it is going to be debated in the Senate, and we had better know the history of this thing. General HINES. I will ask that these be introduced together. (The statements referred to are as follows:) ADJUSTED COMPENSATION ACT SIXTY-SEVENTH CONGRESS, FIRST SESSION H. R. 1, introduced by Mr. Fordney April 11, 1921, Congressional Record; volume 61, part 1, page 86. Hearings on H. R. 1, Committee on Ways and Means. SIXTY-SEVENTH CONGRESS, SECOND SESSION H. R. 10874, introduced by Mr. Fordney, March 13, 1922, Congressional Record, volume 62, part 4, page 3835. House hearings on H. R. 10874, Committee on Ways and Means. Reported with amendments (H. Rept. 804), Committee on Ways and Means, March 16, 1922, Congressional Record, volume 62, part 4, page 3997. H. Report 804, part 2, submitted March 18, 1922, Congressional Record, volume 62, part 4, page 4100. H. Report 804, part 3, submitted March 20, 1922, Congressional Record, volume 62, part 4, page 4156. Made special order (see H. Res. 309), March 23, 1922, Congressional Record, volume 62, part 5, page 4361. Debated, March 23, 1922, Congressional Record, volume 62, part 5, pages 4350-4448, 4449-4484, 5420-5423; part 6, page 5831; part 13, page 13776. Referred to Senate Committee on Finance, March 24, 1922, Congressional Record, volume 62, part 5, pages 4503-4504. Reported with amendments (S. Rept. 756), June 8, 1922, Congressional Record, volume 62, part 8, pages 8370-8371, 8398. Debated, Congressional Record, volume 62, part 8, pages 8623-8626; part 9, pages 8905-8906, 9010-9017, 9019-9037, 9091-9100, 9102-9104, 9243-9245, 9297-9298; part 11, pages 11634-11637, 11673-11685, 11689, 11742-11746, 11754, 11772, 11773-11784, 11800, 11813-11816, 11819, 11839-11861; part 12, pages 11885-11889, 11892-11893, 11949-11977, 12018-12020, 12321–12032. Amended and passed Senate, August 31, 1922, Congressional Record, volume 62, part 12, page 12033. Senate insists upon its amendments and asks for a conference August 31, 1922, Congressional Record, volume 62, part 12, page 12033. Conferees appointed, Congressional Record, volume 62, part 12, pages 12033, 12118-12125. House disagrees to Senate amendments and agrees to conference (see H. Res. 422), December 1, 1922, Congressional Record, volume 62, part 12, page 12118. Conference Report submitted in House (H. Rept. 1209), September 13, 1922, Congressional Record, volume 62, pages 12444, 12592–12610. Debated, Congressional Record, volume 62, part 12, pages 12375-12379, 12592-12607, 12607-12610. Agreed to, September 14, 1922, Congressional Record, volume 62, part 12, page 12607. Conference report submitted in Senate, September 15, 1922, Congressional Record, volume 62, part 12, page 12677. Debated, Congressional Record, volume 62, part 12, pages 12677-12697, 12697-12698. |