The Indianapolis times. [volume] (Indianapolis [Ind.]) 1922-1965, 1934-12-31

payment was 1lQu1QaLeQ, ana the
money advanced to veterans went
to clear that indebtedness rather
than to create new business. No
doubt the same results would obtain
if the balance we're now paid. How
ever, in this connection what to
me is very important, having in
mind that the bonus certificate is a
paid-up endowment policy payable
either to the veteran upon its ma
turity or to his beneficiary, generally
the wife and children in the event
of his death, is the fact that of the
veterans who die, approximately IS
per cent of them leave no other as
set to their family but ne adjusted
service certificate or the balance due
on the certificate.
DisapprOveS Pay Theory
II feel, therefore, that those who
advocate the payment of these GER
tificates at this time for the pur-
pose of stimulating business GER
tainly can not have given the in
terests of the veterans much
thought.
81 appreciate your truly patriotic
interest in desiring to obtain full
information on an issue so vital to
the service men and our country.
I am giving you this information
with. the hope that it will be useful
in enabling you to reach a conclu-
sion in your own mind regarding the
matter as well as helping Others to
determine the fair thing to do"
Text of the memorandum regard
ing adjusted compensation or the
bonus" sent to Farmer by the Pres
ident follows:
The Congress, by the passage of
the act of May 10, 1924, provided
for the granting of additional COM
pensation to each veteran, with
specified exceptions, of 81 a day
for services in the United States
and SIPS a day for services over
seas, in excess of the first go days
of services.
The amount thus determined was
increased by 25 per cent because
of deferment Of payment, using the
aggregate as 2. net single premium
according to the Am erican expert
ence table OF mortality with interest
at 4 per cent per annum. Entitle-
ment was granted to the veterans to
payment, 20 years after 1925 or date
of application, Of sum approx
mately two and ore-hah times that
of the basic adjus tment.
Figures Are Cited
The $50 per cent increase rep
resents the additional amount
granted because of deferment Of
payment and the compound inter
est. Thus an original grant of $500
in 1925 would enlarge itself to $1,000
in 1945. If in 1925 the 81 and $1.25
day adjustment had been paid in
cash the veterans would have re-
ceived a total of 81 400, 100000, but
by deferring the payment 20 years
the sum became $500, 100000
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
regard to actuarial value, the
amount which could be borrowed 10
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 re-
duced to 81 per cent by the act of
July 81, 1882. The amount, includ-
ing interest charges now outstand-
ing because of loans made to vet
Grams, is slightly less than $780,
100000. Of this amount 81, 47O,O0O,-
600 is represented by actual pay
ments diSbursed by the veterans
administration.
Billions in Differences
The difference between maturity
value and the present liens on GER
tificates is $1,810, 100000. However.
the difference between the present
value of the certificates, actuarially
computed. and the amount out
standing as liens is only 100000
AS the major portion of this diff
ference is represented by the value
of the one-half million certificates
which have not been borrowed upon
only $130,000,000 would be payable
on the present value basis to the
three million men who have bor-
rowed on their certificates, repre-
Senting an average equity of about
SAB on the average certificate in
contrast to the $500 which is now
sought to be paid by the resolu-
ton of the American Legion.
In substance, this resolution seeks
the remitting of interest in an
amount in excess of $220,000,000
charged to the veterans accounts,
but would require the immediate
payment by the Government of in
terest that will not have been earned
until 1915, which together with the
amount granted on account of de-
ferred payment totals $2,100,000,000
more than the 81 and $1.25 a day
adjustment provided by the original
act.
The present value of the certif1-
Gates in force is $4,000, 100000, where
as it is Sought to have now paid 3d.
72O,00OO0O, (the maturity or face
value plus remittance of INTEREST,"
or an additional amount of $780,
100000 over and above the present
value and $2,32O,OOO,OOO more than
the original basic adjustment.
Fall IN Tee Fatal