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have applicable to them the provisions of chapter 73, title 10, United States Code (the chapter being amended), as it existed on the date of enactment except for a change or revocation coming under section 7 above. This would permit the payment of annuities to survivors who had a valid election in effect upon date of enactment even though retired prior to completion of 18 years. Otherwise the restrictions imposed by the new section 1446 would be applicable.

Chairman RUSSELL. Admiral Houser, I understand, wants to make a statement on this bill. Have a seat, Admiral. You may proceed, sir.


Admiral HOUSER. Mr. Chairman and members of the committee; I am Rear Adm. Harold A. Houser, U.S. Navy, retired, legislative counsel of the Retired Officers Association, with headquarters in this city. Our association consists of over 49,000 members, representing retired officers of all of the seven uniformed services, including both Regulars and Reserves.

The association appreciates the opportunity to present its views in connection with the committee's consideration of the bill, H.R. 6668, a bill to amend title 10, United States Code, with respect to annuities based on retired or retainer pay, and for other purposes.

It appears that enactment of this bill would accomplish its purpose of increasing the attractiveness of the program established by the Uniformed Services Contingency Option Act of 1953. This law authorized members of the uniformed services to make an election whereby they agree to forego a certain amount of their retired pay in return for annuities their widows and other dependents receive upon the death of the persons concerned, after retirement. The Contingency Option Act set up a self-sustaining program involving no direct contribution on the part of the Government.

The receipt of the annuity provided by the above law was not intended by the Congress to prejudice the right of the recipient to receive any pension to which otherwise entitled under the existing law. The enactment of a subsequent law, however, did bring about this unfortunate result.

It is desired to invite the committee's attention to the language in the Contingency Option Act covering this point. It is found in section. 11, and reads, as follows:

Annuities payable under this act shall be in addition to any pensions or other payments to which the beneficiary may now or hereafter be entitled under any other provision of law, and shall not be considered income under any law administered by the Veterans' Administration.

After the enactment of the above law, the heads of the uniformed services, through appropriate means, acquainted personnel of the several services as to the various provisions contained in that law. In so doing, it was made clear that the payments to be made under this law would not be interpreted as "income" in determining the qualifications for a pension.

This was a very important consideration because of the income. limitation a person must meet in order to qualify for a pension. As an illustration, a widow (without dependents) of a World War I veteran cannot qualify for a pension if her income exceeds $1,800 per annum. The Veterans Pension Act of 1959, effective June 1, 1960, has been construed as requiring that the annuities paid under the Contingency Option Act be considered income in determining qualification for a pension. This is in direct conflict with the plain language on this subject which was contained in the Contingency Option Act of 1953, as quoted above. The question of electing to participate in the program provided in the 1953 law posed a very difficult question for many officers. Among the points they took into consideration was the effect it might have on other benefits available to dependents, including the right to a pension. The official assurance that participation in the Contingency Option Act would not prejudice this right was one of the strong motivating causes and, in many instances, the determining factor that was involved in this decision.

It is submitted, Mr. Chairman, that the legislative history as outlined above demonstrates that there has been a unilateral modification of a contract entered into in good faith by many members of the uniformed services. This, obviously, is true as to those who elected to come under the contingency option program prior to July 1, 1960.

It is, therefore, recommended, with respect to this group, that the bill, H.R. 6668, be amended to reenact, with appropriate language, the substance of section 11 of the Uniformed Services Contingency Option Act of 1953, to which the committee's attention has been invited. Subject to the foregoing, the Retired Officers Association urges favorable consideration of the bill by the Congress.

Thank you, Mr. Chairman.

Chairman RUSSELL. Thank you for your able statement, Admiral Houser.

Admiral HOUSER. Thank you, sir.

Chairman RUSSELL. Any questions?

Senator SALTONSTALL. This question, Mr. Chairman: I have just been informed by our expert in charge of this matter that this suggestion or recommendation that you make is not within the jurisdiction of this committee; that it is a question of the Veterans' Administration and the Finance Committee; and that if we pass this bill or make this suggestion or recommendation here, that we are putting ourselves in conflict with the Veterans' Administration.

Admiral HOUSER. Senator Saltonstall, might I comment on that,


The basic law originated in the House Armed Services Committee and hearings were held, as I understand it, in this committee when it was enacted in 1953.

I just assume that modification of a bill which had its inception in these two committees would be properly before these committees. Senator SALTONSTALL. But what is considered as income and not considered as income in connection with a pension, as I understand it, is under the Veterans' Administration, if I am correctly informed, so that if we pass this bill and put in an amendment such as you suggest, then we are in direct conflict or we may be in direct conflict with the Veterans' Administration and its laws as to what is or is not income.

That is what I am informed. I do not know whether that is right or not, but I trust our expert.

Admiral HOUSER. I do not think I could add anything to what I have said, Senator Saltonstall. I believe I have said all I can say on that point, sir.

Chairman RUSSELL. Senator Byrd?

Senator BYRD of West Virginia. No, thank you.

Chairman RUSSELL. Senator Smith?

Senator SMITH. No questions.

Chairman RUSSELL. Thank you very much, Admiral Houser. We are very glad to hear from you.

Admiral HOUSER. Thank you, Mr. Chairman.


Mr. Chairman and members of the committee, we appreciate the opportunity to appear before your committee and present our views on this most important piece of legislation.

H.R. 6668 will give individuals who desire to exercise the contingency option sufficient time so that they can fully determine their needs and act accordingly.

We have had a standing mandate from our national convention for several years requesting the Defense Department and Congress to make a study in order to ascertain if the time element in which the option had to be exercised could be shortened. H.R. 6668 will accomplish this.

We feel that H.R. 6668 will permit officers to make the election more judiciously than the present law, whereby they have to exercise the option many years prior to retirement.

We are in full support of this bill and hope that your committee will see fit to favorably report the same.

We want to thank you for permitting us to express our views.


Chairman RUSSELL. Senator Goldwater is here with respect to a brief statement to the committee on Senate Joint Resolution 108. There has been some confusion, Senator Goldwater.

As I told you yesterday, we had no report from the Department on it. Then I called and read the report and it turns out the report was from the Department of the Air Force but we have not yet received any report from the Department of Defense.

Despite that, however, we are perfectly willing to have a hearing on this bill. We are glad to hear from you.

(S.J. Res. 108 is as follows:)

[S.J. Res. 108, 87th Cong., 1st sess]

JOINT RESOLUTION To authorize the presentation of the Distinguished Flying Cross to Major General Benjamin D. Foulois, retired

Resolved by the Senate and House of Representatives of the United States of America in Congress assembled, That the Secretary of the Air Force is hereby authorized and directed to present the Distinguished Flying Cross to Major General Benjamin D. Foulois (AO1590), United States Air Force, retired,

in recognition of his extraordinary and heroic achievements in aerial flight while serving with the air arm of the Army from 1908 to 1935, and in recognition of his outstanding contributions to military aviation during that period. As Chief of the Air Service, American Expeditionary Force, during World War I and later as Chief of the Army Air Corps from 1931 to 1935 he was highly instrumental in developing the fledgling air arm of the United States from its infancy to a position of power and prestige.


Senator GOLDWATER. Thank you very much, Mr. Chairman and members of the committee.

This is a resolution to take care of what I like to think of as an oversight in justice which is nobody's fault because at the time this man could have been awarded a Distinguished Flying Cross for his flying activities, we did not have such an award.

Gen. Benjamin D. Foulois entered the service in 1898 as an enlisted man in the Army Engineers. Later on he became a commissioned officer in the Army, and in 1908 he was assigned to the aviation section of the Signal Corps. He performed a rather unique feat in learning to fly in that he learned by correspondence with the Wright brothers. We had an airplane but nobody understood how to fly it.

The Wright brothers were in Dayton and the general wrote letters to the brothers and learned to fly.

Chairman RUSSELL. What was his rank?

Senator GOLDWATER. He was a lieutenant. He became a captain later on, I am not certain what date, but he was sent to Texas when the first of the Texas flying fields were beginning to open up in San Antonio about 1913, if I remember correctly. There he helped organize the first instruction field at San Antonio and later was placed in command of the 1st Aerial Squadron.

In fact, it was the first company of the First Aerial Squadron.

In 1915, he was sent with this aerial squadron into Mexico and was stationed at various points from Columbus, N. Mex., on down to a point below Chihuahua City. The story of this squadron's activity in the Mexican War is a very interesting one.

I will not relate it here, but the aircraft were not suitable for the missions that were assigned, but they did do a very commendable job. They flew mail, they flew messages, and they flew observation missions in aircraft that frankly could not get high enough to do the mission properly.

He had an interesting experience in Chihuahua City where two aircraft landed in a flight north of the city, two landed south and one from the south went to the north, and they threw rocks and poked holes and undertook to dismantle the aircraft on the north side.

One aircraft was destroyed. The others got away.

After this period from about March of 1915, I would say, through August of the same period, that mission was finished, and, by the way, just as the outfit returned to Columbus retired General Spaatz joined the 1st Aerial Squadron.

Chairman RUSSELL. It may be interesting to know, Senator, that the Air Force presented the committee with a flag today with all of their battle streamers, and the first one was commemorating that

1915-16 campaign. That is the first battle streamer on the Air Force flag.

Senator GOLDWATER. I am very glad to hear that, and I am glad to be here on the day that it was brought over to this committee. Chairman RUSSELL. We had those exercises before the committee. Senator GOLDWATER. It makes my argument even stronger for recognition of this man's flying activities. He became the commander of the Air Service in the First World War in Europe, and when he returned from Europe, he eventually became the first commander of the Air Service of the Air Corps of the Army.

He retired in 1935, and during this whole period of service
Senator SALTONSTALL. Is he still alive?

Senator GOLDWATER. Yes, he is still alive, and I might say extremely active in promoting air power. He visits-I imagine he speaks every day to some young group some place in this country about airpower and about the military in general.

He is a very striking man, quite small, very rugged. He looks to be in the best of shape even though he is 83 years old now.

But he was never awarded any recognition of his flying during the formative years of aviation in the Army, and it is because of that that a number of us felt that he should be so recognized, particularly because of the great contribution then and now, and I have introduced this resolution calling for the award of the Distinguished Flying Cross to the retired Gen. Benjamin Foulois.

Chairman RUSSELL. Any questions?

Senator SALTONSTALL. Šenator Goldwater, what was his part in World War I?

Senator GOLDWATER. I mentioned it. He was made Chief of the Air Service of the American Expeditionary Forces in France. Then after that he served as military attaché and military observer in various posts in Europe.

And when he came back to this country in 1925, he was made commanding officer at Mitchel Field in New York, and in 1927 was elevated to the post of Assistant Chief of the Air Corps, and in 1931 he became Chief of the Air Corps, and he held this post until he retired in 1935.

Chairman RUSSELL. Any further questions?

Senator THURMOND. I am just wondering:

Has the Air Force ever given any consideration to this matter? Senator GOLDWATER. Yes, the Air Force is very interested in having this brought about. But, as I understand it, it has to be done by a resolution because the award did not exist during the period that he performed in a manner that would have caused the award to have been made at that time. The Flying Cross did not come into being until the 2d of July 1926, and by that time I would suppose he had reached around 50 years of age, and if the Air Corps was then what it is now, they begin to frown on you when you get that age.

Senator THURMOND. The Air Force is in accord with your resolution?

Senator GOLDWATER. Yes.

Chairman RUSSELL. We have the Air Force supporting the resolution but the Department of Defense has made no report on it.

Senator GOLDWATER. Do awards have to be approved by the Department of Defense?

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