Three Figures

"How much will the proposed soldier bonus bill cost?" asked the Senate Finance Committee.

"$2,119,000,000," said Howard P. Brown, actuary of the Veterans' Bureau.

"$3,300,000,000," said Herbert Hess, actuary of the American Legion.

"$4,850,000,000," said Joseph S. McCoy, actuary of the Treasury Department.

"Well, well, well," said the Finance Committee. "Will the War and Navy Departments kindly send us their data? We'll do the calculating ouselves. "

Of course, the three actuaries know how to add, multiply and divide. The differences between their figures are due to different basic assumptions, of which these are the chief:

1) The number of veterans eligible for a bonus and the average amount each would be entitled to receive is a matter of dispute. It is to determine this that the Committee asked for War and Navy Department records.

2) The chief feature of the proposed bonus is the issuance of 20-year endowment insurance policies te veterans. It is proposed to meet these policies by establishing a sinking fund to which the Government would add about $100,000,000 a year from its current revenues. The question is: "Should interest be calculated on this sinking fund in estimating the final amount which the Government will have to pay off the policies?" The actuary of the Veteran's Bureau figured that this interest should be added. There was some misunderstanding as to whether or not the American Legion's actuary added in this interest. The Treasury actuary did not calculate that such interest was allowable. He reasoned that if such a sinking fund were established, it would be invested in Government bonds; eventually the sinking fund would hold bonds equivalent to the value of the insurance policies outstanding; but in the final year when the policies are payable, the Government would have to raise enough cash to pay off all bonds in the sinking fund with accrued interest--in other words, that it was foolish to credit the Government with a profit on interest which it is paying to itself.