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History of Adjusted Compensation - Veterans' Administration - 1936

Front Cover, Annual Report of the Administrator of Veterans' Affairs For the Fiscal Year Ended June 30, 1936.

Front Cover, Annual Report of the Administrator of Veterans' Affairs For the Fiscal Year Ended June 30, 1936. GGA Image ID # 18713868bd

This, the Sixth Annual Report of the Veterans' Administration sets forth concisely the activities incident to rendering Government relief to veterans and their dependents, showing in many of the statistical tables the number of beneficiaries at the close of each fiscal year from the origin of the benefit.

$60 Discharge "Bonus" to Honorably Discharged Military

At the conclusion of hostilities of the World War but few of the members of the military forces whose services were intended to embrace only the period of duration of said war found themselves with sufficient funds to defray expenses incident to the transition from a military to a civil status. In an attempt to meet this situation, there was approved on February 24, 1919; an act which provided that at the time of discharge an additional payment of $60 would be made to persons who were separated from such service under honorable conditions.

During the year 1919, various proposals were made for the granting of other considerations to persons who had served in the military or naval forces during the World War, principal of which were the following:

  1. Cash bonus.
  2. Home and farm aid.
  3. Land settlement aid.
  4. Vocational training aid.
  5. Issuance of service bonds.

In 1922 a bill was passed by the Congress which provided for the following optional types of settlement:

  1. Adjusted-service pay; but the veteran could not choose this plan if the amount of adjusted service settlement would exceed $50.
  2. Paid-up endowment insurance.
  3. Vocational training aid.
  4. Farm or home aid.

This proposed legislation was vetoed by the President and the veto sustained by the Congress.

Finally, on May 19, 1924, there was enacted Public, No. 120, Sixty-eighth Congress, which provided adjusted compensation for veterans of the World War. Essentially, the act provided a basic service credit of $1 a day for each day’s service in the United States and $1.25 a day lor each day’s service overseas, with a maximum credit of $625 for overseas service and $500 for home service.

To those veterans who had basic credits of $50 or less the act provided that the payments be made in cash. In the event the veteran had been killed or had died prior to the passage of the act, the adjusted- service credit was paid in 10 equal quarterly installments to the dependents of the veteran if the amount was over $50, otherwise in one sum.

In the case of a living veteran, to the basic credit of $50 or more there was added 25 percent, and this sum (the basic service credit plus 25 percent) was used as a single net premium to purchase for the veteran at his then attained age a paid-up endowment certificate maturing upon the death of the veteran or at the end of the 20-year period.

While the amount of insurance procurable by a fixed credit varied according to the age of the insured, the face value of the adjusted-service certificate in the average case was approximately two and one-half times the net service credit.

On July 3, 1926, there was enacted Public, No. 472, Sixty-ninth Congress, amending the World War Adjusted Compensation Act, the most important provisions of which were: (a) In the event a veteran dies after application is made, and before it is filed, it may be filed by any person; (6) a valid application may be filed by a surviving widow where the veteran dies between May 19, 1924, and July 1, 1924; (c) no deductions on account of any indebtedness of the veteran to the United States shall be made from the adjusted-service credit, or from any amounts due under this act; and (d) the director is authorized to issue a duplicate adjusted-service certificate where the original has been lost, or destroyed, or defaced without bad faith upon the part of the person entitled to payment thereon.

The original act of May 19, 1924, permitted certificates to be borrowed upon at the expiration of 2 years from the date of issuance to an amount equivalent to 90 percent of the reserve value of the certificate on the last day of the current certificate year, the reserve value to be based upon an annual level net premium for 20 years and computed according to the American Experience Table of Mortality with interest at the rate of 4 percent per annum, compounded annually.

The maximum rate of interest was fixed at 2 percent above the discount rate for 90-day commercial paper in the Federal Reserve district in which the loan was made. The law as first enacted provided for loans to be made only by incorporated banks and trust companies.

The act of March 3, 1927, authorized the director of the Veterans’ Bureau to make loans to veterans upon the security of adjusted-service certificates out of the United States Government life insurance fund.

Public, No. 570, Seventieth Congress, May 29, 1928, extended the date for the filing of applications for benefits under the World War Adjusted Compensation Act from January 1, 1928, to January 2, 1930. The provisions of the original act relative to the method of filing applications were further outlined.

The act of March 4, 1929, Public, No. 1031, Seventieth Congress, limited the rate of interest to 6 percent per annum on loans made by the Veterans’ Bureau upon the security of adjusted-service certificates.

The act of June 5, 1930, Public, No. 303, Seventy-first Congress, extended the time within which applications for benefits under the adjusted compensation act might be filed from January 2, 1930, to January 2, 1935.

Public, No. 743, Seventy-first Congress, February 27, 1931, granted authority for the making of loans from the adjusted-service certificate fund. This fund was created for the purpose of accumulating the necessary reserve in order to meet the maturity values on the certificates.

This amendment also discarded the actuarial basis upon which loans had formerly been computed and fixed the loan value at 50 percent of the face value of the certificate after such certificate had been in effect 2 years. It further provided that in no event shall the rate of interest on any loan exceed 4 1/2 percent per annum, compounded annually.

Public Resolutions Nos. 35 and 39, Seventy-second Congress, approved July 8 and July 15, 1932, respectively, authorized the furnishing of transportation and the payment of 75 cents per day travel subsistence to certain honorably discharged veterans of the World War who were temporarily quartered in the District of Columbia at the time of the approval of the resolutions and who wished to return to their homes.

These veterans constituted the so-called Bonus Army and it was required that the transportation and subsistence expenses would be furnished only up to July 25, 1932. The amounts expended were charged against the adjusted-service certificates of the veterans who secured payments and constituted a noninterest bearing loan which was deductible at the time settlement on the adjusted-service certificate was made.

Public, No. 303, Seventy-second Congress, reduced the rate of interest on loans from to 3% percent, and eliminated the provision in the original act requiring that a 2-year period elapse from the date of issuance of the certificate before a loan could be secured.

This amendment had the effect of permitting veterans to borrow at a rate of interest the maximum of which was one-half of 1 percent less than that allowed on the adjusted-service credit in accumulating the maturity value.

The act of August 23, 1935, Public, No. 312, extended the time for which applications for benefits under the World War Adjusted Compensation Act might be filed from January 2, 1935, to January 2, 1940.

Public, No. 425, Seventy-fourth Congress, second session, January 27, 1936, authorized the payment of adjusted-service certificates by the issuance by the Secretary of the Treasury of the United States, bonds in denominations of $50, having a total face value up to the highest multiple of $50 in the amount certified as due the veteran, the difference to be paid to the veteran or his estate by the Secretary of the Treasury.

Loans outstanding are deductible, together with unpaid interest accruing prior to October 1, 1931. The bonds are dated June 15, 1936, to mature June 15, 1945, with interest at the rate of 3 percent per annum, no interest to be paid on any bond redeemed prior to June 15, 1937.

Bonds are redeemable at the option of the veteran or his estate at any time and at such places, including post offices, as the Secretary of the Treasury may designate.

The act of June 3, 1936, Public, No. 634, authorized the delivery of bonds and checks issued in payment of adjusted-service certificates through the Treasury and Post Office Departments and provided for the issuance of a duplicate in case a bond is lost, stolen, or destroyed while being transmitted.

Public, No. 833, June 26, 1936, amends section 4 of the Adjusted Compensation Payment Act, 1936, to eliminate unnecessary expenses in the administration of estates of deceased and incompetent veterans in connection with the payment of adjusted-service certificates under that act.

The act provides that such payments shall be made to the person or persons determined by the Secretary of the Treasury to be lawfully entitled thereto, without the necessity of the appointment by judicial proceedings or otherwise of a legal representative of the estate of any veteran or of any other persons, or of compliance with State law in respect of the administration of estates.

As of June 30, 1936, there had been issued 3,757,259 adjusted- service certificates, with a maturity value of $3,692,167,014. Of these certificates 231,109 had matured on account of death and $229,536,044 had been awarded to the designated beneficiaries, leaving 3,526,150 certificates in force with a maturity value of $3,462,630,970.

Payments to veterans of $50 or less have been made in 165,184 cases to the value of $5,206,310.09. Cash settlements have been made to the beneficiaries of 135,615 veterans who died in service or before receiving adjusted-service certificates in an amount aggregating $44,696,412.58.

Immediately following the enactment of the Adjusted Compensation Payment Act, 1936, on January 27, 1936, forms were made available to holders of adjusted-service certificates upon which to make application for settlement.

Through cooperation with other Government departments, procedure and forms were developed and plans were completed to permit certification of the amount due on adjusted-service certificates by Central Office, Washington, D. C., and 53 field stations of this Administration.

Additional personnel was employed and within a short time the work of preparing certifications to the Treasury Department of the amount payable had begun.

By June 30, 1936, the Veterans’ Administration had received 3,264,016 applications for settlement, of which 3,227,829, or 98.9 percent, had been certified to the Treasury Department and the remaining 36,187 applications were in process of certification.

The face value of the adjusted-service certificates upon which certifications had been completed was $3,206,434,462, while the total amount certified as payable after deducting outstanding liens was $1,764,847,665.88.

Veterans' Administration, "Adjusted Compensation," in Annual Report of the Administrator of Veterans' Affairs Fort the Fiscal Year Ended June 30, 1936, Washington, DC: United States Government Printing Office, 1936. pp. 21-24.

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