PENSIONS : THE UNITED STATES. The soundness of a pension system depends principally on whether the system contains within itself the power of self-perpetuation and not on the nature of the organization nor the scale of the pension benefits. If financial provisions, scientifically calculated, will provide the pen sion payments as they fall due, the system is self-perpetuating, assuming an administration that adheres to its rules. This condi tion rarely exists except on a reserve basis, where enough is accu mulated before the pension is granted to pay it during its entire existence. If a pension system is dependent upon casual collections or on a periodic vote of funds out of a corporation treasury, it does not contain within itself the element of perpetuity and is practically always on a cash disbursement basis where the re sources are provided as the pension payments are actually made.
When there is no question of the financial adequacy or the good faith of the organization, as in the case of governments, such a system is reliable.
The problem of the accrued liabilities must be recognized ; it is the fact that during the past service of all members of a pension system, there has been no financial provision for that part of their pension represented by this past service. Either there must be a large sum paid down, or a proportionate loading of future financial provisions or a partial or total repudiation of such past service, if the pension system is not to start bankrupt. A rigid adherence to the rules on which the actuarial calculations were made is as essential as the calculations themselves. (M. SA.) Military Pensions.—On Aug. 26, 1776, Congress offered pen sions equal to half-pay to officers and men disabled in the Revo lutionary War, with proportionate pensions in case of partial disability. For all following wars and the various Indian disturb ances, pension laws of constantly expanding liberality for the sol diers, their widows and other relatives, have been passed. For each war, generally, first pensions on account of disability alone were passed, then pensions in case of dependence, and finally pensions based solely on service however short. Politics unavoidably figured largely in this pension legislation. Since 1861, outside of the liberal general acts, 69,254 cases were dealt with by special acts of Congress. In 1905 the pensioners exceeded 1,000,000. On June 3o, 1927, there were 489,942 names on the pension rolls, of which 302,692 were the result of the Civil War. The total expendi
ture for the fiscal year ending June 3o, 1927, was $230,152,712, of which $166,493,209 was for the Civil War, $57,232,828 for the War with Spain and the rest for a few survivors of earlier wars and for the regular establishment. The total expenditure for pen sions, 1866-1927, was $7,397,053,627.09. From 1776 the total is War Risk Insurance act became a law on Oct. 6, 1917, and provided allowances for the immediate dependents of those in the service, compensation for the soldier in the event of disability or for his dependents in case of death and war risk in surance providing benefits to the veteran during his permanent and total disability and to his relatives in the event of his death. No general pension laws were enacted. Insurance protection at a peace time rate was provided for every soldier, the hazard of war being borne by the United States. Upon application and without medical examination, insurance was granted against death or total permanent disability in any multiple of $500, and not less than $1,000 or more than $10,00o. The beneficiaries were limited to a spouse, child, grandchild, parent, brother or sister or to any or all of them and during total permanent disability to the injured per son. The benefits were payable in 24o equal monthly installments of $5.75 for each $1,000 of insurance. Benefits for total permanent disability were payable during total permanent disability without limitation as to the number of installments. This insurance was authorized at the net premium according to the American Experi ence Table of Mortality and interest at 31% per annum, on the yearly renewable term basis, computed for payment monthly. Pro vision was made for the conversion of this term insurance into other forms of level premium insurance within five years after the date of the termination of the war, and for the termination of such insurance, unless converted, at the end of such period. This limi tation date was later extended by law to include July 2, 1927. Within 15 months after the passage of the amendment, insurance had been granted to more than 4,500,000 applicants amounting to approximately $40,000,000,000. The liability incurred by the United States for losses under war risk insurance is approximately $1,500,000,000, while the total amount of premium received is less than $500,000,000. The monthly benefits payable will extend over a period of more than 20 years after the date of the termina tion of the war.