PART 10.

SOLDIERS' ADJUSTED COMPENSATION.

COMMITTEE ON WAYS AND MEANS,

HOUSE OF REPRESENTATIVES,

Washington, D. C., Saturday, March 13, 1920. The committee this day met, Hon. Joseph W. Fordney (chairman) presiding.

STATEMENT OF HON. ISAAC R. SHERWOOD, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF OHIO.

Mr. SHERWOOD. Mr. Chairman and gentlemen of the committee, I have received a large number of letters upon this question of a soldier's bonus. On the 16th of November, at the request of a number of returned soldiers of the World War, I introduced a bill granting a bonus of $500. Since that time I have had a very large correspondence, whether it is owing to the fact that they write to me as an old soldier of the Civil War, or because I introduced that bill, I do not know.

My theory of a pension has always been that it must be for service or disability, and I suppose a bonus ought to be on the same basis. On the 7th of December, 1907, I introduced what was known as the Sherwood dollar-a-day pension bill, and in that connection. you have my most profound sympathy in framing a bill for this bonus, because I had an experience of four years. The Senate was in favor of a pension on account of age. I fought that for four years because I wanted the pension roll to be a roll of honor. There is no virtue in being old. If there were, I would be the most virtuous man in Congress, because I am the oldest man in Congress. I am the oldest man who ever served in Congress, from 1787 down to this time. There is no merit, however, in being old.

The letters I am getting from soldiers are in a measure in favor of something now. I have an idea that we can save about $600,000,000 by reducing the Regular Army to a peace basis. We are now providing for an Army of 280,000 men, in the bill which is pending in the House, with 18,000 officers. At the close of the Civil War, on the 26th of April, 1865, we had 2,212,272 soldiers, enlisted from first to last. We had a casualty list in killed in battle and lied of wounds of 110,070 (official), a much larger casualty than in this World War. We had at the close of the war about 900 miles of hostile Indians on the western border. Gen. Grant, then recognized as the foremost man in all the world, was elected President in

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1868. He reduced our Army down to 37,000 men and 900 officers; and that was more than we ever needed. If you reduce the Regular Army down to, say, 50,000 men, you can save $500,000,000, according to the way I figure it. You can reduce the naval bill at least $100,000,000, and in the meantime these economies will result in an absolute benefit to the country.

We can not reduce the high cost of living unless we increase production, and you can not take our young men from the farms, and mines, and offices of this country and make idlers out of them, and increase production.

All I care to say about this question is that I am in favor of a bonus-all that we can give. When I had a hearing in the House on the dollar-a-day pension bill in 1908, it was said on both sides of the House that the Government could not stand it; that it would increase the pension roll by $75,000,000. I made some figures and said it would not cost $42,000,000. Mr. Fitzgerald, the chairman of the Committee on Appropriations at that time, fought the bill because he said the Treasury could not stand it, and Mr. Gillett, the present Speaker of the House, I think also opposed the bill. Well, I made the figures showing that it would only cost $42,000,000. My figures proved to be within $500,000 of being correct, because at the end of the year the increase was $41,500,000.

Now, I have made figures allowing $1,400 a year for a private soldier, and $3,500 for officers, and if you reduce this Army bill down to what it ought to be-what it should be in peace times you can save about $500,000,000, and you can save $150,000,000 in the naval bill. The balance agreed upon can be raised by taxation.

As to the question of how this bill should be framed, I have faith in the judgment of the committee.

I thank the gentlemen of the committee for giving me this hearing.

Mr. TREADWAY. May I, in connection with the statement that the general made, just call attention to this fact: He said he was the oldest Member of Congress. I think it is a virtue that he is. He disclaimed any virtue in it. The general was born, I find by the Congressional Record, on August 13, 1835. Ex-Speaker Cannon was born May 7, 1836. Maj. Stedman, of North Carolina, was born January 29, 1841. I think we ought to congratulate and felicitate the dean of Congress.

Mr. GARNER. You do not claim to be the most virtuous man in Congress, do you, General, because you are the oldest?

Mr. SHERWOOD. I do not. You provide for the Coast Guard 30,000 soldiers. That is all unnecessary. No country of the world has ever declared war against the United States in our whole history. Let us prepare for peace and not for war. No Coast Guard has ever fired a shot and never will, although we have had two foreign wars since the useless guard was established.

Mr. TREADWAY. I was calling attention to the fact that we should felicitate you on your usefulness, being the oldest man in Congress, having been born August 13, 1835, six months or more before ExSpeaker Cannon, and six years before Maj. Stedman. We congratulate you most heartily, sir.

STATEMENT OF MR. JEROME A. DITCHY, CLEVELAND, OHIO.

The CHAIRMAN. Please give your name, your address, and state whom you represent.

Mr. DITCHY. Jerome A. Ditchy is my name. I am from Cleveland, Ohio. I do not represent anybody in particular. I just happened to have an humble suggestion that I wanted to offer to you, and if it is of any value, I am sure you gentlemen will make use of it. The CHAIRMAN. You represent no one but yourself?

Mr. DITCHY. Yes, sir. I have not a great deal to say. I just want to read to you what I have put down here, a few thoughts which will express my idea, and then afterwards, if you would like to discuss anything about it, I will try to go into it.

I am not going to try to show why there should be compensation or anything of that sort. I think a great many other men have gone into that. I am going to try to show where you can get the means to take care of it after you have decided on how much you will give. Mr. YOUNG. You are the man we are looking for.

Mr. DITCHY. I hope I will hold up. I am just going to read this to you now. To the victor belongs the spoils, is my idea. As a net result of the war we have a merchant marine, from which we should derive the means of compensating the ex-service men who made victory possible as no other body of men in this country have done. The Government spent $3,000,000,0000 for the merchant marine, which marking off one-third of the cost would leave the value of the ships, shipyards, and other assets of the shipping board, about $2,000,000,000. I do not say that is the exact amount to mark off, or anything of that sort, or that you need to mark off anything at all. I am of the opinion that the stuff we have is pretty valuable. This money has been spent by the Government and has been raised by the people. It would organize a company with a capital of $2,000,000,000. You can call it the Liberty Shipping Corporation, or anything you like, and turn the assets of the Shipping Board over to that company. The company will issue stock or bonds against its assets, and give them to the service men. The dividends on the stock would be guaranteed as we are guaranteeing the stockholders of railroad securities. The stockholders of the railroads did no particular service for the Government as stockholders during the war which the service men did.

If you can guarantee these men dividends for six months, and give them an implied guarantee for two years additional, I feel that it would be a logical principle to grant a similar guarantee to the service men in a business venture of equal possibilities for all time.

Now, the shipping corporation would operate and make a profit. I feel pretty certain of that myself. I have been in contact with this work a little. The Shipping Board, according to the latest report, has made about 6 per cent, and that is not figuring on a lot of other work they have done that could really be remunerated for from the Army, and so on, which I guess you understand. They reported that they made $160,000,000 last year, but they could have made about $300,000,000 if they had charged for everything they did, so that would make about 10 per cent that they made.

I believe the corporation will earn the guaranteed profits from the start. These bonds would have security guaranteed by the

Government and pay more interest than that which could be carried by any bond, and the merchant fleet that we acquired during the war would be kept in American hands. That is another big feature of it. The people would become thoroughly interested in the shipping business and in our merchant marine and its possibilities. That is my whole thought right there.

Mr. YOUNG. You say they have made 6 per cent?

Mr. Dгrchy. I did not try to figure it accurately.

Mr. YOUNG. Of course, that is under conditions where very high rates have been charged by all shipping concerns the world over. When we get back to peace times, do you think they can make anything in competition with British shipping, and the shipping of Holland, Norway, and other countries?

Mr. DITCHY. Yes, sir; I do think so. As a matter of fact, we have made 6 per cent with a green organization, so to speak, very green. Mr. YOUNG. The prospect looks good enough to you so that you would be willing to accept that kind of stock issue in place of United States bonds?

Mr. DITCHY. Yes, sir; I would, and I think the average service man would also, if it was properly put up to him with a little advertising.

Mr. KITCHIN. It is your estimation that the soldiers will be satisfied with this stock rather than a cash bonus?

Mr. DITCHY. Of course, I can not talk for all the men, because I am just one little individual, but I think they will be satisfied pretty well.

Mr. GARNER. Nearly all the testimony we have had so far indicates that the men want the money. I was just wondering whether, if we issued these certificates of stock in this corporation that you speak of, they could take them and put them in the market and get cash for them?

Mr. DITCHY. I do not see why they could not.

Mr. GARNER. Might they not have to sell, and if we put $2,000,000,000 worth of stock on the market, or a goodly portion of it at one time, would not the market value of it likely fall, and might they not have to sell it for 75 cents on the dollar, and would they not then say to Congress, "You acknowledged that you owed us so much money, because you issued this stock in this corporation to us, and we were able to get only 75 cents on the dollar for it, and we think you ought to pay us the other 25 cents."

Mr. DITCHY. I do not think so; no, sir. For that matter, I am very much in favor with the plan of the American Legion of giving several options, but only just one of them; and if a fellow did not want it, he would not take it.

Mr. KITCHIN. We can make this stock good. The Government could give a mortgage on all the ships it owns and on all the public lands and mineral interests it has, and perhaps on the Navy and other property, and on all its public buildings, and this would make the stock just as good as gold. [Laughter.]

Mr. DITCHY. Certainly. The Hamburg-American docks in New York, I am sure, would be worth a great deal. Furthermore, I do not believe that you will find, Mr. Congressman, any stock that was paying 6 per cent dropping to 75 or having to be sold at 75.

Mr. GARNER. I am inclined to think myself that if the Government organized a company such as you speak of and put in it assets of $2,000,000,000 and issued certificates of stock against it bearing 6 per cent interest, and the Government guaranteed 6 per cent interest for all time to come, that I would want a little bit of that stock myself. I would buy that from the soldiers and pay for it, and even pay

above par.

Would there be any difference between that kind of security placed in the hands of the soldiers and a United States bond bearing 6 per cent?

Mr. DITCHY. No; but

Mr. GARNER. It would be absolutely the same, would it not?
Mr. DITCHY. Very much the same.

Mr. GARNER. You would merely form a corporation and issue stock bearing 6 per cent interest, and the Government would become its indorser for 6 per cent, and give it to each soldier, so much for the time he served. There is not a bit of difference between that and giving a soldier a 6 per cent bond and letting him sell it or keep it, as he may deem proper, is there? I can not see a particle of difference, so far as the value of the piece of paper is concerned. The piece of paper is the Government's obligation, upon which the Government guarantees that you are going to get 6 per cent interest; so there is not a bit of difference whether you issue it through a corporation or issue it in the form of bonds. The Government, in the last analysis, has got to pay it.

Mr. DITCHY. I think it is going to make 6 per cent, to begin with. Mr. GARNER. I agree with you there.

Mr. DITCHY. Furthermore, I think another thing about it is this, that in this way you are going to give the service man a vote in this corporation, and he is going to take an interest in an American merchant marine, and it is going to stimulate the interest we need all over the country right in the very start.

Mr. GARNER. Your principal object in making the suggestion is to so interest the American people in the American merchant marine that it will be continued and kept up?

Mr. DITCHY. And make 6 per cent.

Mr. GARNER. That is a laudable purpose, of course.

The CHAIRMAN. My friend, have you noticed the profits of the shipping corporation, as published by the chairman of the Shipping Board?

Mr. DITCHY. Yes, sir.

The CHAIRMAN. You say it is about 6 per cent?

Mr. DITCHY. Yes, sir; $166,000,000, I believe.

The CHAIRMAN. Did you see what items made up the cost of operation?

Mr. DITCHY. No. I heard the chairman myself a couple of times. I did not go into details.

The CHAIRMAN. Do you know there was no interest charged on all that investment? Do you know there was no depreciation charge? Do you know that the cost of the officers of the Army and Navy who drew the plans and operated the ships is charged up to the Army and Navy, and not to the cost of operation of the ships? Do you know that?