[Debates, Congressional Record, April 19, 1924, vol. 65, pt. 7, p. 6709] STATEMENT BY SENATOR WALSH AS TO AMENDMENTS TO BILL BY FINANCE COMMITTEE, TITLE 5, AMENDed The next amendment was, under heading "Title 5, adjusted-service certificates," in section 501, on page 11, line 25, after the word "director," to strike out" of the United States Veterans' Bureau (hereinafter in this title referred to as the 'director')," so as to read: TITLE ADJUSTED-SERVICE CERTIFICATE SEC. 501. The director, upon certification from the Secretary of War or the Secretary of the Navy, as provided in section 303, is hereby directed to issue without cost to the veteran designated therein a nonparticipating adjusted-service certificate (hereinafter in this title referred to as a "certificate") of a face value equal to the amount of 20-year endowment insurance that the amount of his adjusted service credit increased by 25 per cent would purchase, as his age on his birthday nearest the date of the certificate, if applied as a net single premium, calculated in accordance with accepted actuarial principles and based upon the American experience table of mortality and interest at 4 per cent per annum, compounded annually. And so forth. The amendment was agreed to. [Debates, Congressional Record, April 21, 1924, vol. 65, pt. 7, p. 6770] STATEMENT OF SENATOR WALSH * * * Do I exaggerate? Does not your bill compute the amount of adjusted compensation due the ex-service men, 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 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 paid-up 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 certificate is $50 or less, he will receive a cash payment only. * Senator WALSH of Massachusetts. May I divert your attention to another matter for just a moment? General HINES. Yes. Senator WALSH of Massachusetts. How many veterans have borrowed upon the certificates? You have stated this before, but I want to get it before me. General HINES. In round numbers, 1,600,000. Senator WALSH of Massachusetts. Is it fair to assume that all of that number of veterans, at least, would participate in drawing any cash disbursements that were permitted under legislation we might enact here? General HINES. I believe, if you authorize the full cash payment, all of them would participate. If you paid the face value, I would say that 50 per cent of them would participate. Senator WALSH of Massachusetts. Of these 1,600,000? Senator THOMAS of Idaho. You say "face value." Do you mean present value? General HINES. No. I mean the value indicated on the certificate, the full value that would mature in 1945. Senator CONNALLY. You said full value, and then you said face value, differentiating between the two. You did not mean to do that? General HINES. No. Senator WALSH of Massachusetts. If the face value is paid, all veterans, whether they borrowed or not, will undoubtedly take the amount? General HINES. Yes. In other words, that is the value that the certificates will mature in 20 years. That is what I mean. Senator WALSH of Massachusetts. If the present value is paid, how many of these veterans would you say would take advantage of it? General HINES. Senator, I would say that included in that number necessarily must be those veterans that are in the greatest need. In other words, they have indicated that by borrowing, many of them to the limit. Senator WALSH of Massachusetts. Yes. General HINES. So that I would feel that a large percentage of those 75 per cent, at least-would take the value. Senator WALSH of Massachusetts. Seventy-five per cent of all veterans? General HINES. No; 75 per cent of that group. Senator WALSH of Massachusetts. That would be something like 1,000,000. General HINES. But I think, on the average, 50 per cent of all veterans eligible would take the present value. Senator WALSH of Massachusetts. How many would that be? General HINES. That would be one-half of the total number, about 1,700,000. Senator WALSH of Massachusetts. What per cent have the veterans been able to borrow? General HINES. Twenty-two and one-half per cent is the present loan value for 1931. Senator WALSH of Massachusetts. What per cent is that of the present value? General HINES. About 40 per cent. Senator WALSH of Massachusetts. So that 1,600,000 veterans would have a chance to draw 60 per cent of the present value of their certificates should we provide for a cash payment on the present value basis? General HINES. Yes; that would be approximately correct. Senator WALSH of Massachusetts. Have you figured out how much that would represent? General HINES. Yes. I have here a table which I have prepared. Senator WALSH of Massachusetts. In other words, I want to know how much it would cost the Government to pay that 60 per cent to the 1,600,000 who have already borrowed, and who would appear to be among the ones that are really in need. General HINES. We have worked out, under these several plans, in addition to the various bills that I had up before, a table showing the amounts, and I would like to ask that this table go into the record,. if I may. However, I will read from it. (The table referred to is as follows:) Face value. Basic credit plus 6 per cent interest from 1918.. Basic credit; interest 4 per cent with full 25 per cent additional credit. Present value basis; allowing earned portion of 25 per cent credit.. Arbitrarily increasing loan value to 50 per cent... $3, 423, 000, 000 $3, 116, 250,000 $267, 750, 000 $13,750,000 $25, 250,000 $3, 409, 250,000 2,784, 464, 605 2, 477, 714, 605 267, 750, 000 13, 750, 000 25, 250,000 2,770, 714, 605 2, 120, 000, 000 1,813, 250,000 267, 750,000 13, 750, 000 25, 250,000 2, 106, 250, 000 1,742, 520, 393 1, 435, 770, 393 267, 750, 000 13, 750, 000 25, 250,000 1,728, 770, 393 1, 711,500,000 1,404, 750,000 267,750,000 13,750,000 25, 250,000 1,697, 750, OCO General HINES. This table shows the following plans: Face valuebasic credit plus 6 per cent interest from 1918; basic credit-interest 4 per cent with full 25 per cent additional credit; present value basis, allowing earned portion of 25 per cent credit, in other words, sixtwentieths of the 25 per cent; and arbitrarily increasing the loan value to 50 per cent. The first column gives the total cost Senator WALSH of Massachusetts. Pardon me, General. Is that equivalent to treating this certificate as a savings-bank account, realizing that it has a value in 20 years of so much money, and you are determining on six-twentieths of its value now? General HINES. Yes; that is this plan, present value with interest at 4 per cent plus the earned portion of 25 per cent. Senator WALSH of Massachusetts. In other words, it is sixtwentieths of the value of the certificate in 1945? The CHAIRMAN. Based on the assumption that 50 per cent of the soldiers will ask for it. But suppose 75 per cent of them did? We would have to add the 25 per cent to those. General HINES. This table I am giving indicates that they will all take advantage of the various plans which the table shows. Senator WALSH of Massachusetts. Every veteran? General HINES. Yes; taking the first plan to which you have given consideration at your previous hearings, the full face value, the total cost of that would be $3,423,000,000. The amount payable to the veterans would be $3,116,250,000; the amount necessary to reimburse the Government's converted insurance fund would be $267,750,000. The amount required to redeem notes in the adjusted-service certificate fund would be $13,750,000. The amount payable to banks for loans which they now hold would be $25,250,000. The total amount to be raised by the Treasury under first plan would be $3,409,250,000. Taking the next plan, basic credit plus 6 per cent interest from 1918 Senator WALSH of Massachusetts. If that plan were put in operation it would wipe off the books every obligation we have with these veterans growing out of these certificates, including the loans, face value, and all. General HINES. Not only to the veterans, but to the Government's insurance fund, the adjusted service certificate fund, and the banks. The CHAIRMAN. In other words, it would put them on the basis of having a pension? Senator WALSH of Massachusetts. It would give them an opportunity Senator BARKLEY. Of course, that is a mere assumption, a mere opinion. The CHAIRMAN. No, it is not. You know it is not a mere assumption. Senator BARKLEY. Of course it is. It can not be anything else but an assumption. General HINES. The next plan is basic credit plus 6 per cent interest from 1918. Some bills pending in the House contemplate that plan, and that is the reason we worked it out. Senator WALSH of Massachusetts. That is a plan, you say, based upon what? General HINES. Taking their basic service credit, that is $1 a day for each day served in the United States, and $1.25 a day overseas,. with interest at 6 per cent from 1918. That does not include the 25 per cent. Senator WALSH of Massachusetts. That is a newly invented plan? General HINES. That is one of the plans proposed in the House. Senator COUZENS. I think Congressman Patman suggested this scheme when he was here the other day. He said it would be ninetyfour and a fraction per cent of the face value of the adjusted compensation certificates now out. General HINES. That is about right. They had 40 bills pending. before the Ways and Means Committee of the House, and I grouped them under these four plans. They could all fall very well under one of the four. That is why this table was worked out. It will probably be helpful to you here in the general discussions. We designated this plan as "Basic credit plus 6 per cent interest from 1918." The total cost would be $2,784,464,605. The amount that would go to the veterans would be $2,477,714,605. The same amount would go to the Government insurance fund as under the previous plan; the same amount to the adjusted service certificate fund; the same amount to the banks; and the total amount to be raised by the Treasury would be $2,770,714,605. Senator WALSH of Massachusetts. How many veterans do you estimate would take advantage of that particular measure of relief? General HINES. That would be rather difficult to say, but I have an idea that it would probably get up close to the full number. The CHAIRMAN. The figures are based upon the full number. General HINES. Yes. These figures are based upon the full number.. Senator WALSH of Massachusetts. He has testified in your absence, Mr. Chairman, that under some of these measures, in his opinion the number that would apply would be much less than the full number, and in some cases would be as low as 50 per cent, but these figures are based on the full number. General HINES. The next plan is, "basic credit with interest at 4 per cent, with full 25 per cent additional credit." The total cost would be $2,120,000,000; the amount to the veterans would be $1,813,250,000; the same amount to the Government insurance fund as under the previous plan; the same amount to the adjusted service certificate fund; and the same amount to the banks. The total amount to be raised by the Treasury under this plan would be $2,106,250,000. On the present value basis, allowing the earned portion of 25 per cent credit, with interest at 4 per cent, which is the plan that has been discussed the most, the total cost would be $1,742,520,393, of which $1,435,770,393 would go to the veterans; the same amount would be payable to the Government converted insurance fund as under the previous plans, that is, $267,750,000; and $13,750,000 to the adjusted service certificate fund, and $25,250,000 to the banks. The total amount to be raised by the Treasury under that plan would be $1,728,770,393. Senator WALSH of Massachusetts. Is not that the plan that you stated you thought about 50 per cent would take advantage of? General HINES. Yes, sir. The CHAIRMAN. It is based on 50 per cent? General HINES. No. This is based on the full number. Senator WALSH of Massachusetts. So, the amount of money that would have to be borrowed would be one-half of $1,700,000,000? General HINES. It would be my estimate that about 50 per cent of the veterans would cash in on that plan. Senator WALSH of Massachusetts. That would represent about $800,000,000. General HINES. The last group is the plan to arbitrarily increase the loan value to 50 per cent. The amount required under that plan would be $1,711,500,000. Senator WALSH of Massachusetts. For all veterans? General HINES. For the whole thing. This contemplates that they would all borrow. The veterans would borrow $1,404,750,000. It would be necessary, of course, to reimburse the converted insurance fund and also the adjusted-service certificate fund, although that amount could be arranged to be left there for a period, but the banks would have to be reimbursed, and the total amount of cash to be raised if they all took full advantage would be $1,697,750,000. That, of course, contemplates replacing the amount in the converted insurance fund and the adjusted-service certificate fund, and taking the loans in from the banks. Senator WALSH of Massachusetts. Based upon the number that have borrowed in the past, the amount of money necessary to finance that plan would be about a third of that sum, would it not? Based upon the number of those who have borrowed upon the certificates in the past, the number who would probably take advantage of this plan would be about a third, and it would take at least $500,000,000 to finance that. General HINES. I would think so. That would be the hardest on to estimate, because the inducement there is not so great. That would really be limited, I should say, to those who are forced to borrow. Senator HARRISON. How many do you estimate would take advantage of that loan feature? General HINES. The last one? Senator HARRISON. Yes. General HINES. I should say probably a third. I think all those who have borrowed, or the majority of those who have borrowed, would increase their loans, and probably some others. Senator HARRISON. Then a third would take about $600,000,000? General HINES. I would say between $500,000,000 and $600,000,000. It is a very difficult thing to estimate, because we have the situation |