Evening star. [volume] (Washington, D.C.) 1854-1972, 1926-12-25
BACKGROUND OF EVENTS
BY PAUL Y. COLLINS,

Santa Claus is actually coming to
hold certificates of adjusted compen-
| sation, but he sends word that he will
be a week later than Christmas. He
cannot get to the soldiers until January
l. Then if they hang up their socks
or something, in the nearest bank,
they may find in them loans amount
ing to $S5 per thousand dollar Ger.
tff1cate, provided the particular certifi-
cate is two years old. Since the first
of such certificates was issued Janu-
airy J.. 1925. and the clerical labor
delayed others, from day to day, only
compa ratively few will be ripe" on
New Year day, but from that date
on many will mature into loanable
securities, daily.
The situation is a new one in
American finance, and is viewed from
different angles, according to the
standpoint of the viewer.
In lieu of a cash bonus which the
soldiers had expected, they received
from the Government thesecertificates
or adjusted compenSation-so called
measured according to length of serv-
Ice and the age Of the veteran at the
time of the issuance thereof. The
certificates are actually paid.up en-.
dowment insurance, maturing in 20
years, or upon the death of the holder.
II death comes sooner than 20 years.
The total number of the certificates
ISSUED Is 3,048.932, with an average
race value of $1,029 each, making a
total face value of $3,137, 65S, O62. At
the end Of the first two years after
ID,
Sh2 per cent of their face; and. as is
usual with insurance policies. the loa
vaiue increases as they become older,
me total loan value maturing in 1927
VIII be 1852 .53S, 344; In 1928. $370'91O.
1876 ,686. WV V"''''
The figures mean that the amount
stated for loan value" is the total
then loan value, less whatever shall
nave been previously borrowed. For
example, If the maximum of 1927 he
actually borrowed, and nothing more
De borrowed until 1880. then in 1880
the net loan value would be the $500
oOO.oOO less $262, 100000, making the
aSS0 net loan value approximately
1898 200, 900. ''-S
* j; x x
All Federal National banks are All.
tnorlzed to lend a veteran S1h per
cent or the face value, in 1927. and
take the certificate as security. They
must not charge more than per cent
interest, and nobody is permitted
under penalty of 800. payable to the
veteran) to charge anything for "serv.
ices In securing such a loan.
The banks may take the veterans
note for not to exceed six months,
and the interest cannot be collected
In advance; 1t must be made collectible
when the note natures. If the maker
of the note defaults in payment upon
maturity. the bank must hold the
defauited note and security six
months. interest continuing to accrue,
and at the end Of the six months the
bank may forward note and certificate
security to the United States Veterans
Bureau, when the director may, in
his discretion. accept the certificate
and note, cancel the note (but not the
certificate) and pay the bank in full
satisfaction Of it's claim. the amount
of the unpaid principal due it, and
the unpaid interest accrued, at the
rate fixed in the note, up to the date
OF the check issued to the bank. The
director shall restore to the veteran
at any time prior to it's maturity, any
certificate SO accepted. upon receipt
from him of an amount equal to the
sum Of the amount paid by the United
States to the bank in cancellation OF
his note, plus interest on such amount
from the time Of such payment to the
date OF such receipt, at 6 per centum
per annum, compounded annually"
x X " y
Section sos provides that mo Ger.
tificate shall serve as security for a
loan. except upon the exact terms
provided in the act. Any negotiation
assignment or loan made in violation
of any provision of this section shall
be held void" None but national
banks may make such loans on GER.
tif1cates.
1t is reported that some loans have
been made by Washington banks
prior to loan availability next Satur.
day. All such are void. and even if
the banks relied on the maturing of
the 20-year endowment policy, the
Certificates the only way they could
collect the frozen asset" at the ma
turity would be to sue the heirs.
1t is also reported that in a few
cases the bankers have misunderstood
conditions and have actually loaned
the face value and taken the certifi
cate. Their possession of the certifi.
cate is unlawful and the security is
void according to Veterans Bureau