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Mr. MCFADDEN. I have no bill on that subject, but will be pleased to file one covering this suggestion.

Mr. TREADWAY. Mr. McFadden, let me understand you a little better. Do I understand your idea to be that, as a form of payment of the loans we have now outstanding to foreign governments, we issue to the men these participating certificates secured practically by those bonds, and when the foreign governments' bonds are paid these participating certificates that we would issue would be then cashed in for the benefit of the men? Is that the idea?

Mr. MCFADDEN. No, sir; not exactly. The soldier would be delivered a bond which would be really a participating certificate and would be issued by a trustee, say the Secretary of the Treasury, or someone else designated by law.

Mr. TREADWAY. If that was the law, it would be delivered to the man right away?

Mr. MCFADDEN. The certificates or bonds would be issued by this trustee, payable to bearer and distributed to the soldiers as provided by law. I would place those British Government bonds or French bonds, or any other foreign loans as security with the trustee for the payment at a fixed period to be fixed by the Secretary of the Treasury, 10 or 20 years. I would use those English bonds as a basis of settlement with our soldiers rather than issue our own Government bonds at this time.

Mr. BACHARACH. Would not that be issuing Government bonds? Mr. TREADWAY. That is just the thought I had. It would be a Government bond.

Mr. MCFADDEN. No, it would be a different class of security and it would not interfere with our own issue of bonds or our own monetary situation, but would be simply a participation bond or certificate back of which would be the English bonds held in trust.

Mr. TREADWAY. What feature would that have of any possible payment of these loans by the foreign governments to us? Mr. MCFADDEN. What effect would it have?

Mr. TREADWAY. Yes, what bearing would it have?

Mr. MCFADDEN. It would have no bearing whatever. It seems to me that it would be a good plan for us to make some disposition of these bonds which are now in the United States Treasury. I think it would be wise to get those bonds into the hands of the investing public, if it can be done, thus taking out of administration hands these securities and place them in the hands of our people, "these soldiers."

Mr. HAWLEY. But we have not those bonds.

Mr. MCFADDEN. I would see that the Secretary of the Treasury gets those bonds and in permanent form, and at once. There should be no further delay in this. I would suggest that you get the British Government to issue those bonds in denominations that could be distributed to the soldiers, say, in bonds of $50 and multiples thereof. I would further provide that if you enact legislation permitting the boys to acquire a farm or a home, that the Federal farm loan system be so amended as to permit British bonds to be accepted as a basis for loans the same as a mortgage. That is an additional way in which the soldiers could get relief and not disturb the financial situation of the country. If your committee sees fit to recommend a plan for the soldiers to buy homes, I would provide also that those

bonds could be accepted from the soldier at par as the basis for the issuance of securities under this loan.

Mr. HADLEY. Your plan is primarily a plan for United States bonds with the English bonds as collateral?

Mr. MCFADDEN. No, sir. My plan is to utilize the security we already have in our Treasury instead of having new securities, the English bonds to be the sole security, unless you want to add the guaranty at maturity of principal and interest by this country, which I don't think would be necessary.

Mr. TREADWAY. You realize that we have not the actual bonds in the Treasury?

Mr. MCFADDEN. I understand we have temporary certificates.
Mr. HAWLEY. No; we have notes of hand.

Mr. MCFADDEN. Í understand we have the obligations signed by the ambassadors.

Mr. GREEN. What we sometimes speak of as I. O. U.

Mr. MCFADDEN. I understand that the Secretary of the Treasury is negotiating for permanent securities covering these loans. My original thought was that if the Secretary of the Treasury could negotiate with the British Government to issue the bonds on 10 or 20 years' time in denominations that could be easily issued to our soldiers, that if it was necessary the United States could guarantee the payment of interest at maturity, but these bonds in the hands of our soldiers would never be defaulted by any Government, and I do not think they would default payment of interest.

The CHAIRMAN. We have heard this gentleman much longer than the time asked for and we must limit the time in order to hear other witnesses on the calendar for this morning.

Mr. GARNER. I think the gentleman is making a very novel, ingenious, and attractive suggestion with reference to the method by which, if you give a bonus to these boys, it might be accomplished. I would like to ask Mr. McFadden two or three questions. I do not understand you propose that the United States Government shall increase its obligations by the issuance of these so-called certificates or bonds?

Mr. MCFADDEN. I do not.

Mr. GARNER. You simply propose that upon this $9,700,000,000 worth of foreign securities that we hold that bonds be issued either direct from the English or other governments, to the soldiers for whatever sum we may determine, or, if that can not be done, or is not practicable, that we put the securities in the Treasury and issue a note or certificate to the soldiers, having this property for security? Mr. MCFADDEN. Yes, sir.

Mr. GARNER. That is what I wanted to get at. In response to Mr. Treadway I gathered that you wanted to issue a bond of this Government making this Government responsible for the debt, with the foreign bond as security for the payment by the Government of the certificate

Mr. MCFADDEN. No. I suggest, as a matter of facilitating the transaction, that the Secretary of the Treasury could issue a participating certificate, which would not be an obligation of the United States, but that the United States or whoever is designated would be simply a trustee to hold these English bonds or notes for the pay

ment at maturity of these participating certificates which we deliver to our soldiers.

Mr. GARNER. Just one other question in regard to the farm loan. If the committee should decide that it would pursue a policy of making it easy for the soldier to purchase a home or continue to own a home, in addition to providing for the purchase of a home, you would issue these certificates and give them as security for money from the farm loan banks?

Mr. MCFADDEN. I introduced a bill here in Congress, H. R. 8820, which provided for the creation of a special fund in the office of the Secretary of the Treasury and that the farm-loan system was to loan. to a soldier. For instance, if a soldier wanted to buy a farm he must first apply to the Farm Loan Board for a loan. The Farm Loan Board agrees to loan him the full limit under the law. Then the soldier would put a new mortgage upon the farm, which would be from this fund in the hands of the Secretary of the Treasury. Then the soldier must put up about $1,200 out of his own money. My purpose is that in addition to the $1,200 the soldier might use these participating certificates the same as money with the Farm Loan banks as a final payment in the purchase of the farm.

Mr. GARNER. Now, you are going to have a double proposition. You are going to provide for the soldier to be paid so much in certificates and then in addition to that you are going to provide that he could purchase a farm as provided in your bill and use this certificate that the Government has given him as a bonus in part payment on the farm?

Mr. MCFADDEN. As a cash payment; yes.

Mr. CAREW. Your idea would create a large number of English bond holders?

Mr. MCFADDEN. Yes, sir.

Mr. TREADWAY. I suggest that Mr. McFadden file a bill with the committee.

Mr. MCFADDEN. I would be very glad to do that.

(The following statement was subsequently submitted by Mr. McFadden:)

The United States has advanced to its Allies in the form of loans a little over $10,000,000,000. The Secretary of the Treasury is custodian of the temporary securities of these foreign Governments. Great Britain's share is over $4,000,000,000: France's share is nearly $3,000,000,000. Italy's share is $1,750,000,000.

It seems to me that in any plans provided by Congress for the payment of a bonus or additional compensation to the soldiers and sailors of the World War that Congress should provide the necessary authority for the Secretary of the Treasury to negotiate with these foreign countries, preferably Great Britain, for the issuance to the United States of the permanent bonds or securities covering all of this indebtedness, and that a definite time of payment of 10 or 20 years, with interest payable semiannually at 41 per cent per annum, should be agreed upon. And further that the Secretary of the Treasury should have authority to arrange that these securities be issued in denominations of $50 and multiples thereof, to thus enable the United States to deliver to the soldiers and sailors these bonds or securities in settlement of any bonus or further compensation allotted to them by Congress.

In case the Secretary of the Treasury in his negotiations with Great Britain or any other foreign country owing the United States finds it inadvisable to secure the issuance of securities by that country along the line just indicated the Secretary of the Treasury should have authority from Congress to deposit sufficient of the obligations of these foreign countries in trust either with the Treasurer of the United States or with some other suitable trustee, thus to enable the Secretary of the Treasury to issue participating certificates or debentures to the soldiers and sailors in settlement of any payment due them on account of bonus or additional compensation authorized

by Congress, the interest to be paid on these certificates semiannually at the same rate of interest as paid by the foreign government, the United States simply acting as trustee for the convenience of the settlement with the soldiers and sailors.

The salient features of this proposition are: First. The obligation to our soldiers and sailors is thus paid without an additional Liberty bond issue, which if made at this time to the extent of two or three billion dollars owing to our peculiar financial situation would probably reduce the market value of our outstanding Government bonds 10 points. Second. This plan of settlement would obviate the levying of an additional tax burden upon the people of this country, a portion of which would necessarily have to be borne by our soldiers and sailors. Third. This plan will not interfere with our financial equilibrium in the United States, but will simply furnish to investors an additional security investment at a favorable rate of interest. Attention is called to the present market value on both British and French loans in this country. Fourth. Soldiers and sailors receiving this settlement are less likely to dispose of the same for extravagant expenditures which will help curtail overconsumption and thus help to reduce the cost of living. Fifth. This plan will take out of the Treasury of the United States securities for which the United States has paid par and place in the hands of the investing public these securities to the necessary amount required to settle with the soldiers and sailors. It is safer for the American people that these securities be held by individuals and institutions rather than in the Public Treasury, as this distribution removes the temptation from the administration officials to cancel or compromise these obligations in any adjustments or settlements in connection with our international problem. The argument is put forward that these foreign countries are asking for an extension of time in the payment of interest on these obligations, and the Secretary of the Treasury has asked Congress for directions to aid him in his negotiations with these countries in this respect. It is to be hoped that Congress will so instruct the Secretary of the Treasury in these negotiations, to the end that the United States may receive without further delay the issuance of the permanent and bona fide obligations of these countries representing these loans made to help them win the war, with the thought in mind that later on if it is advisable that a gift be made to any or all of these countries by the United States that it be clearly defined and set forth in a positive manner as a gift.

STATEMENT OF MR. FRANKLIN D'OLIER, OF PHILADELPHIA, PA., NATIONAL COMMANDER OF THE AMERICAN LEGION.

Mr. MILLER. Mr. Franklin D'Olier is here and he has a short statement to make. He will precede me, if that is agreeable to the committee.

The CHAIRMAN. We will be glad to hear Mr. D'Olier.

Mr. D'OLIER. The overwhelming majority of ex-service men feels strongly that this Government owes an obligation to all persons who are handicapped either bodily or financially because of military or naval service during the recent war.

The American Legion representing over 1,000,000 ex-service men and women spoke very plainly on this point at its national convention last November.

Although this obligation to the disabled man, handicapped bodily, was universally acknowledged it required a special meeting of the American Legion in Washington during December, over a year after the signing of the armistice, to secure satisfactory action by Congress for the disabled man to the end that he would no longer be an object of private charity but could live on his increased compensation allowances.

The average man has been out of the service over one year, and outside of the $60 which hardly bought him a civilian outfit, he has received no aid from his Government in overcoming the handicap ncidental to his service.

In accordance with resolutions passed at the national convention of the American Legion, its national beneficial legislation committee is now ready to submit recommendation for legislation covering four features as follows:

1. Land settlement covering farms in all States and not confined to a few States.

2. Home aid to encourage purchase of homes in either county or city.

3. Vocational training for all ex-service persons desiring it.

4. Adjustment of compensation or final adjustment of extra back pay based on length of service for those not desiring to avail themselves of any one of the previous three features.

The ex-service person to be given his option of any one and only one of the above four features, and only upon his application.

The American Legion asks for no bonus, wants no bonus-that sounds too much like a gift or a present from the Government. It merely asks the Government to assist the ex-service man in overcoming some of the financial disadvantages incidental to his military or naval service.

It asks that each of these four features shall only be as liberal as is consistent with the welfare of the whole country. The American Legion asks nothing in its selfish interests at the expense of the country, but at the same time does not feel that this obligation to ex-service men and women should be altogether passed by at this time and all economizing done at the expense of the ex-service man. If legislation is wisely framed covering land settlement, home aid, and vocational training, every dollar invested by the Government will bring ultimately great returns to the country by making the ex-service man a better citizen and greater producer and will increase the wealth of the nation.

Having waited over a year, it is not unreasonable to now expect some action showing that the interests of the ex-service man have not been altogether forgotten.

All that the American Legion asks is as liberal treatment as is consistent with the welfare of the whole country-legislation that is fair to the ex-service man and at the same time just as fair to the entire nation as well.

The chairman of the legislative committee, Mr. Miller, will bring out these points more in detail and answer any questions in reference to this suggested program.

Mr. GARNER. That is only a preliminary statement. Do you propose to testify in the future, Mr. D'Olier?

Mr. D'OLIER. Mr. Miller, chairman of the legislative committee, will handle the details of it.

Mr. GARNER. Are you through now?

Mr. D'OLIER. Yes, sir.

Mr. GARNER. You are not going to testify in the future? I want an opportunity to cross-examine you.

The CHAIRMAN. The committee may ask you such questions as they like. Do you want to be questioned now or do you want Mr. Miller to be heard first, and then you will be called upon whenever the committee chooses?

Mr. D'OLIER. After Mr. Miller, if you choose, sir.

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