Evening star., 1934-12-31
Original Amount
of Bonus GrolDs
Under Act of 1924

Memorandum regarding adjusted
compensation, or "the bonus:
The Congress, by the passage of the
act Of May 10, 1924, provided for the
granting Of additional compensation
to each veteran, with certain specified
exceptions, Of 81 per day for services
in the United States and $1.25 per
day for services over seas, in excess Of
the first 60 days of services. The
amount thus determined was in
creased by Is per cent because Of
deferment of payment. Using the ag-
gregate as a net single premium ac-
cording to the American experience
table of mortality with interest at
per cent per annum. entitlement was
granted to the veterans to payment,
20 years after 1925 or date of appli-
cation of a sum approximately two
and-one-half times that of the basic
adjustment. The $50 per cent in
crease represents the additional
amount granted because Of deferment
of payment and the compounded in
terest. Thus an original grant of $400
In 1925 would enlarge itself to 81 900
In l945. II In 1925 the 81 and $1.25
per day adjustment had been paid in
cash the veterans would have re-
ceiyed total Of 1,400, 100000, but
by deferring the payment 20 years
the sum became $500, ,000, 900.
Under the original law veterans
were permitted to borrow on their
certificates according to the reserve
value thereof, but in February, 1881,
an amendment increased, without re-
gard to actuarial value, the amount
which could be borrowed to SO per
cent of the maturity value. This
amendment also fixed the maximum
interest which could be charged on
loans at Az per cent, which rate was
subsequently reduced to 81 per cent
by the act of July 81, 1882. The
amount, including interest charges
now outstanding because of loans made
to veterans Is slightly less than
81 600, ,000, 900. OF this amount 81 ,470,-
100000 is represented by actual pay
ments disbursed by the Veterans Ad-
ministration. The difference between
the maturity value and the present
liens on certificates Is $3.50 ,O00, 900.
However, the difference between the
present value Of the certificates, actu-
arially computed, and the amount out
standing as liens is only s410, 900 900.
As the major portion of this difference
Is represented by the value of the one
half million certificates which have
not been borrowed upon, only $780,
100000 would be payable on the
present value basis to the 5000 900
men who have borrowed on their GER
tificates, representing an average
equity Of about $43 on the average
certificate in contrast to the $500
which is now sought to be paid by the
resolution Of the American Legion.
In substance, this resolution seeks
the remitting of interest in an amount
in excess of s220,00O.0 900 charged to
the veterans accounts, but would re-
quire the immediate payment by the
Government of interest that will not
have been earned until 1945, which
together with the amount granted
on account of deferred payment totals
s2,l00, 100000 more than the 81 and
SIPS a day adjustment provided by
the original act. The present value
OF the certificates in force is s2,1Oo.-
100000, whereas 1t is sought to have
now paid s3,720,000, 900 (the ma
tur1ty or face value plus remittance
OF 1nterest), or an additional amount
OF 81 $40 100000 over and above the
present value and 81, 800 900. 900 more
than the original basic adjustment.