Mr. RAINEY. That is all that I am trying to get.

Mr. KITCHIN. As I understand it, there is an organization known as the Veterans of the World War?

Mr. HALE. Yes, sir.

Mr. KITCHIN. And there is another organization, which you represent, known as the Veterans of Foreign Wars?

Mr. HALE. Yes.

Mr. KITCHIN. Your organization represents all the overseas men that were in the World War, although you do not call your organization by that name, "Veterans of the World War"?

Mr. HALE. That is clearer than I can put it, Mr. Kitchin.

Mr. RAINEY. That is exactly as I understand it. There is no doubt about it. Then, speaking for your organization, which embraces all the veterans of the World War, and with reference to the compensation or bonus for veterans of the World War, are you going to publish in your paper a blacklist of Members of Congress who do not vote for the proposition you are standing for now?

Mr. HALE. It has never even been broached by the organization. Mr. RAINEY. You do not know whether they are or not, so far as you are concerned?

Mr. HALE. No, sir.

Mr. RAINEY. Ánd you do not know whether your organization is willing to take some of the burden of saying to the clerks that they ought to step out of the way for you?

Mr. HALE. No, sir. As I told you, it is impossible for me to say. Mr. RAINEY. And you are not going to ask the American Federation of Labor to give way in their demands for your private demands, are you?

Mr. HALE. We can not, without the consent of the national encampment.

Mr. RAINEY. And you are not going to take a position against either of these demands on our national resources?

Mr. HALE. No, sir.

Mr. GARNER. If you are going on with this witness, may I ask some questions now?

The CHAIRMAN. Yes.

Mr. GARNER. I gathered from your prepared statement that you based the request for this bonus on the dire necessity-I think that is the term you used-of the service men?

Mr. HALE. Not the "dire necessity." I do not believe that I put it that strongly.

Mr. GARNER. All right; what term would you use?

Mr. HALE. I said on the existing exigency.

Mr. GARNER. What do you mean by the "existing exigency"? Mr. HALE. I mean that the men who are now in the transitory stage, between their military career and their resumption of civilian status, lacking sufficient capital to carry them through, are in need of financial assistance from the Government at the present time.

Mr. GARNER. You do not propose, however, in this legislation to confine relief to the character of service men that you have just mentioned?

Mr. HALE. It would be a physical impossibility to draw the line of demarcation, and probably the cost of the administration would not justify drawing the line of demarcation.

Mr. GARNER. What proportion of the service men in the recent war do you contend are in the financial state that you just spoke of? Mr. HALE. I should say probably 3,000,000.

Mr. GARNER. Three million out of the 4,000,000?

Mr. HALE. Yes.

Mr. GARNER. Three-quarters of them, then, are in a condition where they would need this compensation for the purpose of starting them off in life?

Mr. HALE. That is the way I feel. There is another thing. You must remember that when this appropriation has been made it has been intimated by certain organizations that it will not be compulsory on every man who was in the service and might be eligible for this bonus to accept it.

Mr. GARNER. Yes; I understand that it is not compulsory.

Mr. HALE. And, furthermore, I hope that those who do not need it will carry out their intention of not accepting it.

Mr. GARNER. What percentage do you suppose will not accept the provision of the law?

Mr. HALE. That I do not know. I would not like to commit myself.

Mr. GARNER. You have said, and I believe Mr. D'Olier has said, and others, that you do not ask for any legislation that would be detrimental to the economic condition of the country.

Mr. HALE. We have tried to avoid any financial difficulty.

Mr. GARNER. You have asked for two billion dollars' worth of bonds. What rate of interest do you want those bonds to bear?

Mr. HALE. We suggested 4 per cent. That would be a matter for the Congress to decide themselves, if they decide to issue the

bonds.

Mr. GARNER. I am trying to get at just the practical features of the legislation which you would ask of Congress. If you issued $2,000,000,000 worth of 44 per cent bonds similar to the last Victory loan, you would have to sell those bonds to the public in order to get the money to pay over to the service men ?

Mr. HALE. No; the idea was to issue the bonds direct to the vet

erans.

Mr. GARNER. Well, let us see just what effect that would have. You propose to issue the bonds direct to the service men?

Mr. HALE. Yes.

Mr. GARNER. And you propose to have those bonds negotiable, so that they can be transferred?

Mr. HALE. Unquestionably. Otherwise the men would have very little use for the same.

Mr. GARNER. Suppose that the issuance of this $2,000,000,000 of additional bonds should reduce the value of the $26,000,000,000 worth of existing bonds; that, by placing them in the hands of 4,000,000 service men who would go upon the market and sell them would result in a 10 per cent reduction of the market value of the present bonds, including the $2,000,000,000 that are to be issued to you; and suppose that this would also reduce down to 90 per cent of its value the market value of the property held by between 15,000,000 and 20,000,000 people, including the 4,000,000 service men who would own the bonds that we would issue to you, you would by that one act reduce the value of the property of 15,000,000

or 20,000,000 people of this country by that 10 per cent. That is what you would do.

Now, suppose that the Treasury Department tells this committee that by doing what you want us to do you will reduce the market value of the property held by 15,000,000 or 20,000,000 people, including the 4,000,000 service men who will receive these bondsMr. DICKINSON. You have already said that, once.

Mr. GARNER. All right. That you will reduce the value of that property $2,600,000,000; would you ask Congress to do it?

Mr. HALE. Your interrogation is based entirely on a supposition, that the service men, as soon as they receive these bonds, the entire 4,000,000 men, will immediately rush out and unload these bonds on the market.

Mr. GARNER. I am not asking you for a supposition; I am asking you this question. I can assure you that the Treasury officials, according to this committee, and I think according to the Congress, are the best judges as to the probable effect upon the market of the country, and upon the United States bonds, of the issuance of $2,000,000,000 of additional bonds.

Mr. HALE. The committee and yourself have probably made a deeper study of the financial situation than I have, but I can not see, and the members of our committee can not see, how $2,000,000,000 of bonds-it will not take $2,000,000,000; it will probably take lessplaced in the hands of the service men of the country, are going to be unloaded at one time, and I do not think that the committee need concern itself with that situation, or that side of the proposition, at all. You will find that the majority of the men will hold the bonds instead of disposing of them.

Mr. GARNER. Just a moment. Then, upon that theory, following up my suggestion further; suppose that this committee was conscientiously convinced, from the statements of men who are qualified to speak on the subject probably better than you or I, that the issuance of this $2,000,000,000 worth of bonds to the service men will reduce the market value of the present outstanding bonds, including the ones that we issue, 10 per cent: I will ask you if you, as a Member of Congress, would pass that legislation?

Mr. HALE. Yes.

Mr. GARNER. You would?

Mr. HALE. Yes.

Mr. GARNER. Then your statement with reference to the fact that you did not want legislation passed that would injure the American people is not true?

Mr. HALE. Because, Mr. Garner

Mr. GARNER. I did not ask you

Mr. HALE. Let me answer that question, please.

Mr. GARNER. All right.

Mr. HALE. Because I do not want to get anything in the record that will put me in a peculiar situation or in an unjust situation. If, as you assume-and I disagree the issuance of these bonds is going to reduce the market value of the holdings of 15,000,000 people of the United States by 20 per cent

Mr. GARNER. Ten per cent, I said.

Mr. HALE. Ten per cent; if you will consult those bondholders they will tell you that even if they have to make a sacrifice to help

the men that made it possible for their bonds to be worth even 80 per cent, they are in favor of it.

Mr. GARNER. I am asking you now for your statement with reference to it; just a mere statement. That is your conclusion. Mr. HALE. You asked me for my conclusion, I believe.

Mr. GARNER. You are in favor of issuing $2,000,000,000 worth of bonds and placing them in the hands of the service men, and you would do that for the purpose of giving them money with which to rehabilitate themselves in a business way in the country; and then you follow up that statement by saying that you do not believe that any considerable percentage of those men would dispose of their bonds?

Mr. HALE. Neither will they. They will do as I did with my Liberty bonds, go to a bank and borrow what they need on them. Mr. GARNER. Then you would take those $2,000,000,000 worth of bonds and inflate the credit of the country to the extent of a $2,000,000,000 loan based upon your bonds, which undoubtedly will increase the cost of production of everything; because if you inflate the credit-I think everyone will agree to the proposition-so do you inflate the prices of the products of the country. Thus by placing your bonds-not selling them for cash but going to a bank and getting loans on them just to that degree you would inflate the credit of the country and increase the cost of living in the country. The result will be that you will reduce the value of the holdings in Government securities of 15,000,000 or 20,000,000 people by reducing the market value of their bonds, and you will inflate the credit of the country and increase the cost of living; and you will not only do that but you will decrease the production of the country; because you must realize that a percentage of the service men, at least, when they receive this bonus will not work overtime as long as they have got that money. Do you admit that premise?

Mr. HALE. No, sir.

Mr. GARNER. You do not admit, then, that any percentage of these 4,000,000 service men, when they get this bonus that will carry them for a moment in their efforts to make a living, will produce less?

Mr. HALE. I believe that those men to whom you entrusted the welfare of this country can be trusted with the bonds when you get ready to issue them, and Congress need not be concerned as to the disposition of those bonds, once they are placed in the hands of the men who are entitled to them. If the war had continued for two years more, it would have been necessary for Congress to find the ways and means to finance it, and the people of this country are far more willing to suffer additional taxation, if it is necessary-and when I say the people I am talking about the people practically of moderate circumstances, on whom this tax eventually will fall; they are willing to suffer additional taxation just as readily, and far more willingly-than they would have been to pay additional taxation for the men who would have had to go across the sea if the war had continued.

Mr. GARNER. Now, you say that you favor a bonus proposition, and you would rather have it in bonds than in cash, with a provisiot of taxation providing for the payment of it; and your reason for tha

is not an economic one. I believe you stated that the tax feature would probably have been sounder, economically, but you were afraid if you undertook to impose a tax feature in a bill it might be inconsistent and be defeated.

Mr. HALE. If you are going to question me along legal lines, I want to say that I plead guilty to not being a lawyer. I said that because it had been suggested to me; and it would be far better for the Ways and Means Committee to ask those questions of some one who is legally trained. I am an auditor and not an attorney.

Mr. GARNER. Would you rather have the bonds, worth only 80 cents on the dollar, for these service men, or would you rather have the dollars in cash?

Mr. HALE. From present information in the matter, I would prefer the bonds.

Mr. GARNER. You would rather have the bonds?

Mr. HALE. Yes, sir.

Mr. GARNER. Then you would rather have a bond for $100 bearing 4 per cent interest, which you could sell for only $80, or on which you could borrow considerably less-not desiring to transfer it, as you said a while ago-than to have $100 in cash?

Mr. HALE. For this reason, that I believe that with this issue of bonds placed in the hands of the service men, the biggest proportion will be retained by the service men. Of course, the bonds might possibly go below par.

Mr. GARNER. You know that the 4 per cent bonds now issued are below par, and the others also. They are all below par.

You say you think the men will keep these bonds, and you follow that up by saying that they will take these bonds to the banks and get money in order to rehabilitate themselves in a business way. So that, after all, they have got to get the money to rehabilitate themselves.

Mr. HALE. Certainly.

Mr. GARNER. So that you would prefer to have a bond that is now selling below par, and go to the bank and borrow money on it, rather than to have the actual cash in hand?

Mr. HALE. I said that was my personal opinion on it, and I reiterate it.

Mr. BOWERS. Would not the members of your organization of veterans, who are to be benefited by this legislation, rather have a registered bond; a bond showing on its face precisely the number of days a man served, and made out in the name of the proper individual

I know that a number of the boys would prefer to keep the bonds if they were registered in their own names, rather than to have an ordinary unregistered bond, and if that was done probably only 25 to 30 per cent of those bonds would be forced upon the market. Mr. HALE. In recommending the issuing of bonds, or rather in supporting the Johnson bill, you know it is discretionary with the Congress as to the character of the bond that is issued. Whatever decision the Congress may come to upon that point will be satisfactory to the Veterans of Foreign Wars.

Mr. GARNER. Do you mean that you would be willing to accept a bond payable to you and not transferable?

Mr. HALE. The gentleman did not say "nontransferable."