Evening star., 1934-12-31
PRESIDENT OPENS
FIGHT ON BONUS
Says Veterans Are Misin.
formed on Time Pay
ment Is Due.
Continued From First Page.)


with one paragraph Of your letter
which confirms another conviction I
have that the service men generally
have the interests of their country
and Government at heart. I have
had prepared for me a memorandum
which outlines In detail exactly what
Congress did in 1924 when they au-
thorized the issuing of the adjusted
service certificates known generally as
the bonus. This memorandum I
am inclosing herewith. I am sure
that you will find in this memoran-
dunn sufficient information to enable
you to decide for yourself the staEd
you should take on this issue as well
as being in a position, as I feel you
should be, to advise Legionnaires who
come to you seeking information in
regard to the immediate payment Of
the balance due on the adjusted serv-
ice certificates.
1T is quite apparent from your let
ter in which you advise me of the rea-
sons why the service men are demand
ing immediate payment of the bonus,
that there Is a general misunderstand-
ing in regard to the Governments
OBJ igation In this matter. When, in
1924 Congress decided to issue the
adjusted service certificates, they act
ually authorized bonus of 81 AGO.
300, 900. but because of the stand taken
at that time by those advocating the
measure who felt that it would be in
the interest of the service men them
selves, this cash outlay was not made
{y,,y, "A 10 to1v k@,,& I-f- On
years. Because of this deferment the
initial bonus was increased rs per cent
so that the 81 400 .000, 900 invested for
the service men at 4 per cent COM
pounded annually. would mature in
20 years $500 900 900. Or putting 1t
another way, suppose that a veterans
original grant by Congress in 1924
was $400 and the veteran did not bor-
row on his certificate, permitting the
interest to accumulate to maturity,
the $400 would grow so that 1t would
pay the veteran when due in 1945
81 900. In other words, the amount
which Is printed upon the face Of
every adjusted service certificate is
not the amount of the basic or orig
inal bonus voted by Congress, but is
an amount plus 25 per cent added for
deferred payment which with interest
at per cent compounded annually
over 20year period. will produce the
face or maturity value. This would
seem to dispose Of the question as to
whether the obligation is Immediately
due.
Billion Borrowed.
There is another feature in connec-
ton with this matter that impresses
me, and that Is the fact that out of
3,5oo.ooo certificates outstanding,
| 3.o38.5O0 veterans have borrowed
thereon approximately 1880 ,000. 900.
In other words, some have borrowed
more than the present worth Of their
bonus certificates. This is brought
about by the action of Congress per-
| mitting a veteran to borrow up to so
| per cent of the face or maturity value
OF his certificate, even though that
certificate may have been issued only a
| few days before the loan is made. OF
coures, all the certificates were not
i issued at the same time in 1925, but
| have been issued from that date up to
| the present time, so their present value
or earned value, as we may put 1t, Is
| not the same in all cases, but taking
| the aggregate Of all the certificates
| issued, they have a present value Of
s2,l0O, 100000 whereas their face value
Is $500. 100000. Then. too, believe
| 1t has been suggested that the interest
paid or now accumulated be Cancelled
or remitted. II this plan were carried
/, out, the total amount would increase
to s3,72o,000,000; or, putting it an
other way, making the cost $780,
100000 over and above the present
value and $2,320, 100000 above the
| amount which the Congress fixed as
the original basic adjustment.
II feel sure that many of the vet
Grams have not given the question
suficient study to realize the vast
sums required to meet the demands
suggested.
Your statement advising me that
those who favor the immediate pay
ment OF the bonus feel that a good
reason for doing so is because the
Government has spent millions of
dollars on the recovery program. and
that much Of these funds will not be
repaid, while by the payment Of the
bonus the Government will be dis
charging an obligation, and by so
discharging this obligation the money
spent by the veterans will do much
in practical way of stimulating re-
covery, is interesting.
Relief Expenditures.
"T know that you appreciate that
all expenditures for relief have been
made in the interest of recovery and
for all our citizens, non-veterans as
well as for veterans. All citizens in
need have shared in the direct distri-
button for relief. and in employment,
as you no doubt are aware, a very
definite and distinct preference Is
, given to veterans. I am advised that
at the time the issue of paying the
balance of the bonus was up and a
compromise was made by increasing
the loan value to SO per cent of the
face value, there resulted a distribu-
ton Of approximately a billion dollars
and at that time the same argument
was advanced that the expenditure
OF such q large amount of money
by the veterans would greatly stimu-
late business and aid recovery. A sur
vey Of the results showed otherwise.
This large payment resulted In little
stimulation Of business, and In many
OF the large cities no material change
was indicated at all. It was found
that Indebtedness created by the vet
Grams prior to the payment was liqui-
dated, and the money advanced to
veterans went to clear that indebted
ness rather than to create new busi-
ness. No doubt the same result would
obtain II the balance were now paid
However, in this connection what to
me is very important, having In mind
that the bonus certifictee is a paid
up endowment policy. payable either
to the veteran upon its maturity OF
to his beneficiary, generally the wife
and children in the event of his
death, Is the fact that of the veterans
| NH die fal rxor nov,{