WAR DEPARTMENT,

Washigton, April 2, 1938.

Hon. ANDREW J. MAY,

Chairman, Committee on Military Affairs,

House of Representatives.

DEAR MR. MAY: Careful consideration has been given to the bill, H. R. 9721, Seventy-fifth Congress, entitled "A bill authorizing the disbursement of funds appropriated for compensation of help for care of material, animals, armament, and equipment in the hands of the National Guard of the several States, Territories, and the District of Columbia, and for other purposes", which you transmitted to the War Department under date of March 7, 1938, with a request for the views of the Department relative thereto.

Existing provisions of law which will be affected by the bill are those contained in section 90 of the National Defense Act, as amended (44 Stat. 673; 45 Stat. 440; 49 Stat. 392; U. S. C. 32:42).

The legal effect of the bill, if enacted, would be:

(a) To authorize moneys hereafter appropriated by Congress pursuant to the National Defense Act, as amended, for compensation of help for care of materials, animals, armament, and equipment of the Federal Government in the custody of the National Guard of the several States, Territories, and the District of Columbia, to be disbursed for the hire of caretakers for such property, not only when they are performing their normal duties as caretakers, but also when they are employed on clerical duties incidental to their duties as caretakers.

(b) To authorize the using of moneys appropriated for the purpose stated in subparagraph (a) above, as a supplement to moneys appropriated by the several States and Territories, for the support of the National Guard, in paying such caretakers.

(c) To authorize the utilization of the services of such caretakers on duties other than those of caretaking, and clerical duties incidental thereto, if such additional duties do not interfere with the complete performance of their caretaking and incidental clerical duties.

(d) To authorize not more than 10 percent of all moneys appropriated for the purpose stated in subparagraph (a) above, to be used, under such regulations as the Secretary of War may prescribe, for the employment exclusively of clerks to assist the United States property and disbursing officers of the several States, Territories, and the District of Columbia in the performance of their official duties. (e) To ratify and validate certain payments previously made for the hire of caretakers, which would stand disallowed on the date of the enactment of the bill, or would thereafter be disallowed, by the Comptroller General but for the enactment of this measure.

(f) To save to the Government all existing rights to collect from personnel concerned any amounts determined by the Secretary of War to be due the United States.

The funds to which the bill pertains are those carried in the second item under the heading "National Guard" of the Military Appropriation Act, 1938 (50 Stat. 461), as follows: "For compensation for care of materials, animals, and equipment, $2,755,244."

War Department estimates for caretakers for 1939, now before Congress, contain an item of $2,706,948, following similar language. Justification for the estimates for both years show that the funds were and will be required to cover the pay of authorized caretakers, in accordance with definite tables of allowances. These funds are allotted to the several States, Territories, and the District of Columbia in accordance with their actual strengths in units, horses, searchlights, motor vehicles, guns and howitzers, tanks and air squardrons. As borne out by the hearings on War Department appropriation bills before the subcommittee of the House Committee on Appropriations (p. 486 for fiscal year 1937 and p. 479 for fiscal year 1938), these funds are not available for the hire of clerks. Hence authorizing legislation will be required to permit these funds properly to be disbursed for the payment of caretakers employed as indicated in subparagraphs (a), (c), and (d) above, particularly in view of certain rulings by the Government accounting officers.

With respect to subparagraph (b), above, the War Department is informed that considerable difficulty is being experienced by the National Guard in connection with the hire, employment, and payment of the caretakers in question. They are paid from Federal funds at the rate of from $5 to $125 per month. Those in the lower-pay brackets naturally seek some other employment to supplement their meager Federal pay. The States frequently also employ them with State funds

to bring their total pay up to a living wage, but the Comptroller General has ruled to the effect that any work performed by the caretakers for the States must be outside the Government 8-hour day, and that the Federal funds may not be used to supplement State funds in paying such caretakers. It is believed that legislation will be required, if the situation is to be corrected.

With reference to subparagraph (e), above, the provision for the relief of disbursing officers has no doubt been initiated at this time to clear certain disallowances resulting from recent investigations of United States property and disbursing officers by representatives of the General Accounting Office, or because of disallowances raised by that Office in the normal course of audit. There are of record in the War Department suspensions or disallowances involving the payment of caretakers in five different States, over a period of the past several years, aggregating approximately $15,000. The investigation of many of these cases has been completed and, where no loss to the Government, or evidence of fraud, is indicated by the investigation, there would seem to be no objection to ratifying and validating such payments. However, some of the cases involved are now in the hands of proper officers for investigation and report, and it is possible that others may arise in the future. Manifestly, none of these payments should be validated where, after a full and complete investigation, there is proof of fraud or wrongful loss to the Government. It is believed, however, that the provision in the bill, to the effect that such payments shall be ratified and validated "in such amounts only as are approved by the Secretary of War," will obviate the validation of any payments of the kind just mentioned.

Referring to subparagraph (ƒ), above, should the Secretary of War determine, after a full and complete investigation of any particular case, that there has been a loss to the Government, through fraud or other wrongful acts or omissions, in view of the terms of the last proviso of the measure, he would not be prevented by any language used in the act from proceeding to collect from persons concerned any amounts due the Government.

It is not possible definitely to determine at this time the fiscal effects of the measure, but it is believed that the increase, if any, in appropriations which would result from the enactment of the bill will be relatively small.

In view of the foregoing, the War Department will interpose no objection to the enactment of the bill, H. R. 9721, Seventy-fifth Congress, in its present form. This report was submitted to the Bureau of the Budget which advised that, insofar as the financial program of the President is concerned, there would be no objection to its submission to Congress.

Sincerely yours,

APRIL 7, 1938.-Committed to the Committee of the Whole House on the state of the Union and ordered to be printed

Mr. NICHOLS, from the Committee on the District of Columbia, submitted the following

REPORT

[To accompany H. R. 10066]

The Committee on the District of Columbia, to whom was referred the bill (H. R. 10066) to amend the District of Columbia Revenue Act of 1937, and for other purposes, having considered the same, report it back to the House with the following amendments and recommend that the amendments be agreed to and the bill do pass: Page 6, line 19: After the word "premiums" insert the words. "received for reinsurance assumed, and premiums".

Page 15, line 16: Strike out the words "of that" and insert in lieu thereof the words "to real".

Page 19, line 2: Change the semicolon after the word "transfer" to a period. Strike out the words "Provided, however, That"; change small "t" to capital "T" in the word "the"; change the word "name" to "names"; and transpose all words from and including the word "The" line 2, to and including the word "tax", line 8, to follow after the word "thereon" line 17.

Page 20; lines 2, 4, 6, and 15: Insert the words "of Columbia" after the word "District".

Page 24, line 20: Strike out the word "laws" and in lieu thereof insert the word "requirements".

Page 42, line 4: Insert:

insurance companies, building and loan associations, and companies, incorporated or otherwise, which guarantee the fidelity of any individual or individuals, such as bonding companies, all of which pay taxes upon gross premiums or earnings under existing laws of the District of Columbia; and railroads, express or steamship companies which report to and are subject to regulation by the Interstate Commerce Commission under the provisions of the Interstate Commerce Act of 1887, as amended.

Page 56, line 10, strike out "14" and insert in lieu thereof "2". Page 57, line 22, beginning with the word "and" in said line 22, strike out entire paragraph and insert the following in lieu thereof:

Any tax paid upon gross earnings by national banks, and any other incorporated banks or trust companies, or companies which furnish abstracts of title, and savings banks, within the time prescribed by law for the payment of such tax by the taxpayer, shall be allowed as a credit against the tax imposed by this title for the taxable year for which such tax on gross earnings is paid.

Page 78, line 14, strike out the figure "1" and insert in lieu thereof

"2".

Page 97, line 3, strike out the period after the figure "30" and insert a comma and the following: "but shall not include any disbursing officer of the United States Government".

Page 99, line 24 add:

and that after June 30, 1922, where the United States is the owner of ground or the holder thereof in trust for the public, upon which improvements have been made at the joint expense of the United States and the District of Columbia, the revenues therefrom shall first be used to pay the United States 3 per centum of the full value of the ground as a ground rent, and the remainder shall be divided between them in the same proportion that each contributed to said improvements, and for such purposes the assessor for the District of Columbia shall fix the full value of the ground after he has first made oath that he will fairly and impartially appraise the same; and that after June 30, 1922, any revenue derived from any activity or source whatever, including motor-vehicle licenses, not otherwise herein disposed of, which activity or source of revenue is appropriated for by both the United States and the District of Columbia, shall be divided between the two in the same proportion that each has contributed thereto;

*

Page 100: Strike out the words "Spirits and" in title.

Page 100, line 13: Strike out the figure "75" and insert "50" in lieu thereof.

The bill is divided into eight sections, the first seven amending the District of Columbia Revenue Act of 1937, and the eighth adding four new titles to that act. In the administration of the District of Columbia Revenue Act of 1937 (hereinafter for convenience called "the act") by the Commissioners and their representatives, the need for amending the act has become apparent. In most instances the amendments are of purely administrative character.

SECTION 1

Section 1 of the bill relates to title I of the act.

Paragraph (a) of Section 1 of the bill amends section 1 of title I of the act, by authorizing the examination by the assessor of the books, etc., of any person bearing upon matters required to be included in any return of personal property for taxation purposes; and making a refusal of any person to permit such examination a misdemeanor and punishable by a fine of $300. Section 1 of title I of the act reads as follows:

SEC. 1. The assessor of the District of Columbia, or any person designated by him, for the purpose of ascertaining the correctness of any return of personal property, tangible or intangible, for taxation or for the purpose of making a return where none has been made, is authorized to examine any books, papers, records, or memoranda bearing upon the matters required to be included in the return and may summon any person to appear before him and produce books, records, papers, or memoranda bearing upon the matters required to be included in the return and to give testimony or answer interrogatories under oath respecting the same, and the assessor, or assistant assessor, shall have power to administer oaths to such person or persons. Such summons may be served by any member of the Metro