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Address to the Senate Urging Unfavorable Action Upon Bill to Adjust Compensation of Veterans of the World War

July 12, 1921

Mr. President, and Gentlemen of the Senate:

There has come to my attention the pending unfinished business before the Senate, and it is an imperative duty to convey to you the probable effect of the passage at this time of the proposed act, providing for adjusted compensation to our service men in the World War. If this measure could be made effective at the present time without disaster to the Nation's finances and without hindrance to imperative readjustment of our taxes it would present an entirely different question than that which is before you. In a personal as well as a public manner, which ought to be a plight of good faith, I have commended the policy of generous treatment of the Nation's defenders, not as a part of any contract, not as the payment of a debt which is owing, but as a mark of the Nation's gratitude. Every obligation is to the disabled and dependent. In such reference as has been made to general compensation there has been a reservation as to the earliest consistent time for such action if it is taken. Even without such reservation, however a modified view would be wholly justifiable at the present moment, because the enactment of the compensation bill in the midst of the struggle for readjustment and restoration would hinder every effort and greatly imperil the financial stability of our country. More, this menacing effort to expend billions in gratuities will imperil our capacity to discharge our first obligations to those we must not fail to aid.

I am addressing the Senate directly because the problem is immediately yours, as your unfinished business, but the Executive branch of the Government owes it to both Houses of Congress and to the country frankly to state the difficulties we daily are called upon to meet, and the added peril this measure would bring.

Our land has its share of the financial chaos and the industrial depression of the world. We little heeded the growth of indebtedness or the limits of expenditure during the war because we could not stop to count the cost. Our one thought then was the winning of the war, and the survival of the Nation. We borrowed and loaned—individuals to the Nation and the Government to other governments, and to those who served the Nation, with little thought of settlement. It was relatively easy then, because national life was at stake. In the sober after- math we face the order of reason, rather than act amid the passions of war, and our own land and the world are facing problems never solved before. There can be no solution unless we face the grim truths and seek to solve them in resolute devotion to duty. After a survey of more than four months, contemplating conditions which would stagger all of us were it not for our abiding faith in America, I am fully persuaded that three things are essential to the very beginning of the restored order of things. These are the revision, including reduction, of our internal taxation, the refunding of our war debt, and the adjustment of our foreign loans. It is vitally necessary to settle these problems before adding to our Treasury any such burden as is contemplated in the pending bill.

It is unthinkable to expect a business revival and the resumption of the normal ways of peace while maintaining the excessive taxes of war. It is quite as unthinkable to reduce our tax burdens while committing our Treasury to an additional obligation which ranges from three to five billions of dollars. The precise figures no one can give. If it is conceivably true that only two hundred millions a year will be drawn annually from the Treasury in the few years immediately before us, the bestowal is too inconsequential to be of real value to the Nation's defenders; and, if the exercise of the option should call for cash running into billions, the depression in finance and industry would be so marked that vastly more harm than good would attend.

Our Government must undertake no obligations which it does not intend to meet. No Government fiat will pay our bills. The exchanges of the world testify today to that erroneous theory. We may rely on the sacrifices of patriotism in war, but today we face markets, and the effects of supply and demand, and the inexorable laws of credits in time of peace.

At the very moment we are obliged to pay 5 per cent interest for Government short-time loans to care for our floating indebtedness, a rate on Government borrowing, in spite of tax-exemption, which ought to prevail in private transactions for the normal interest charges in financing our industry and commerce. Definite obligations amounting to seven and a half billions in war savings certificates, victory bonds and certificates covering floating indebtedness are to mature in the two years immediately following, and the overburdening of the Treasury now means positive disaster in the years immediately before us. Merest prudence calls out in warning.

Our greatest necessity is a return to the normal ways of peace activities. A modest offering to the millions of service men is a poor palliative to more millions who may be out of employment. Stabilized finance and well-established confidence are both essential to restored industry and commerce.

The slump which is now upon us is an inevitable part of war's aftermath. It has followed in the wake of war since the world began. There was the unavoidable readjustment, the inevitable charge-off, the unfailing attendance of losses in the wake of high prices, the inexorable deflation which inflation had preceded. It has been wholly proper to seek to apply Government relief to minimize the hardships, and the Government had aided wherever possible, and is aiding now, but all the special acts ever dreamed of, all the particular favors ever conceived will not avoid all the distress nor ward off all the losses. The proper mental state of our people will commit us resolutely and confidently to our tasks, and definite assurances as to taxation and expenditure will contribute to that helpful mental order. The only sure way to normalcy is over the paths nature has marked throughout all human experience.

With the approval of Congress the Executive branch of Government has been driving toward that decreased expenditure which is the most practical assurance of diminished taxation. With enthusiastic resolution your administrative agents are making not only conscientious effort to reduce the call for appropriations, but to reduce the cost of government far below the appropriations you have already provided. It is easy to believe that the only way to diminish the burdens which the people must pay is to cut the outlay in which public moneys are expended. War is not wholly responsible for staggering costs; it has merely accentuated the menace which lies in mounting cost of government and excesses in expenditure which a successful private business would not tolerate.

I can make you no definite promise in figures today, but I can pledge you a most conscientious drive to reduce Government cost by many millions. It would be most discouraging to those who are bending their energies to save millions to have Congress add billions to our burdens at the very beginning.

Even were there not the threatened paralysis of our Treasury, with its fatal reflexes on all our activities which concern our prosperity, would it not be better to await the settlement of our foreign loans? At such a time it would be a bestowal on the part of our Government when it is able to bestow.

The United States participates in none of the distributable awards of war, but the world owes us heavily, and will pay when restoration is wrought. If the restoration fails world-bankruptcy attends. I believe the world restoration is possible, but only with honest, diligent work in productivity on the one hand, and honest and diligent opposition to needless public expenditure on the other.

If the suggested recommitment of this measure bore the merest suggestion of neglect or a hint of national ingratitude I would not urge it. It has been my privilege to speak to Congress on our obligations to the disabled and dependent soldiers and the Government's deep desire to prove its concern for their welfare, I should be ashamed of the Republic if it failed in its duty to them. Neither armistice nor permanent peace puts an end to the obligations of Government to its defenders or the obligations of citizens to the Government. Mindful of these things the administrative branch of the Government has not only spoken, it has acted and has accomplished.

In view of some of the things which have been said, and very carelessly said, perhaps I ought to report officially some of the things which have been done. In the Department of War Risk Insurance there have been filed up to July 7, 1921, compensation and insurance claims numbering 813,442. Of these, 747,786 have been adjudicated, at an expenditure of $471,946,762. There were 200,000 claims pending when the War Risk Department was reorganized, late in April, this year, and the number of pending claims has been reduced by 134,344. All work in this department will be current by the 21st of this July; that is to say, all action which the bureau may take on a given case will be current, though new claims are being filed at the rate of 700 per day.

There have been requested 887,614 medical examinations, and less than fourteen thousand await medical action. Up to July 7 there have been 26,237 disabled soldiers hospitalized, and in Government controlled hospitals today there are 6,000 available beds without occupants. You are already aware of the progress made toward the construction of additional Government hospitals, not because we are not meeting all demands, but to better meet them and the better to specialize in the treatment of those who come under our care.

There has been paid out in allotment and allowances the sum of $578,465,658, and nearly $4,000,000,000 of Government insurance is in force.

In vocational training and rehabilitation of disabled soldiers there have been enrolled to date 107,824 men. Today there are 75,812 men who are training with pay, at the maximum cost of $160 per month; 8,208 training without pay, but at a tuition and supply outlay of $35 per month. Four thousand disabled men have completed their training and have been returned to gainful employment. These earned an average of $1,051 per year before entering the Army, and are earning today, in spite of their war disability and in spite of diminished wage or salary > levels, an average of $1,550 per annum.

It is an interesting revelation and a fine achievement, attended by both abuses and triumphs. Congress has appropriated $65,000,000 for this noble work for the current year, but the estimated acceptance of training for the year before us contemplates an average of 95,000 disabled men, and the cost will be in excess of $163,000,000, or nearly a hundred millions more than Congress has provided. This additional sum must be made available. With the increase of availability to training, as recently urged upon Congress, the estimated additional expenditure will be $468,000,000 per annum, until the pledge of training is discharged. These figures suggest neither neglect nor ingratitude. It is more than the entire annual cost of Federal government for many years following the Civil War, and challenges every charge of failure to deal considerately with our Nation's defenders. I do not recite the figures to suggest that it is all we may do, or ultimately ought to do. It is in-evitable that our obligations will grow, and grow enormously. We never have neglected and never will neglect the dependent soldier, and there is no way to avoid Time's remorseless classifications.

Contemplating the tremendous liability, which the Government never will shirk, I would be remiss in my duty if I failed to ask Congress to pause at this particular time, rather than break down our treasury from which so much is later on to be expected. The defenders of the Republic amid the perils of war would be the last of our citizenship to wish its stability menaced by an individual pittance of peace.

I know the feelings of my own breast, and that of yours and the grateful people of this Republic. But no thoughtful person, possessed with all the facts, is ready for added compensation for the healthful, self-reliant masses of our great armies at the cost of a treasury breakdown which will bring its hardships to all the citizens of the Republic. Its enactment; now in all probability would so add to our interest rates that the added interest charge on new and refunded indebtedness may alone exceed the sum it is proposed to bestow. When Congress was called in extraordinary session I called your attention to the urgent measures which I thought demanded your consideration. You promptly provided the emergency tariff, and good progress has been, made toward the much-needed and more deliberate revision of our tariff schedules. There is confessed disappointment that so little progress has been made in the readjustment and reduction of the war-time taxes. I believe you share with me the earnest wish for early accomplishment.

It is not expected that Congress will sit and ignore other problems of legislation. There are often urgent problems which must enlist your attention. I have not come to speak of them, though the reorganization of the war risk and vocational training, now pending, would hasten the efficient discharge of our willing obligations to the disabled soldiers.

But I want to emphasize the suggestion that the accomplishment of the major tasks for which you were asked to sit in extraordinary session will have a reassuring effect on the entire country and speed our resumption of normal activities and their rewards which tend to make a prosperous and happy people.

Warren G. Harding, Address to the Senate Urging Unfavorable Action Upon Bill to Adjust Compensation of Veterans of the World War Online by Gerhard Peters and John T. Woolley, The American Presidency Project https://www.presidency.ucsb.edu/node/329272

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