bond interest annually throughout the years on the accrual basis, but, for reasons of convenience, didn't. So today he is worrying about a possible heavy future tax bite on his savings bonds and wondering if he can't put a halt to the accrual and also realize current income from the present cash value of those bonds.

He can!! P.L. 86-346 amended the Internal Revenue Code to provide a tax-free substitution of bonds having a definite increase in value each year (Series E and J and Series F issued on and after 1 January 1948) for current income bonds of Series H. They may be exchanged in even multiples of $500 at current redemption values on a tax-deferred basis. This does not mean that the increment on Series E bonds accrued to date of exchange will escape tax entirely. It will become taxable when the Series H bonds are redeemed 10 years hence, but further bunching of the interest increment on the Series E bonds will be avoided. Interest received on the Series H bonds is taxable when received, however. There is a possibility that the due date of Series H bonds received in exchange will be extended, at the holders option, as has happened with past issues of both Series E and H bonds. If this happens it may be possible for many middle-aged savings bond holders to enjoy current income derived in part from the untaxed increase in value of Series E bonds until they are well into retirement.

This plan is not without its dangers, however, and there are several points to watch. Remember that once you elect to report the interest each year you must continue to do so for all bonds owned and those acquired later. Suppose, in the year of making a tax-deferred switch to Series H bonds, you elect to change to current reporting on Series E bonds being purchased by payroll deductions. All of the tax-deferred increment in the exchanged Series E bonds then becomes fully taxable by reason of your election. To prevent this from

IN CONCLUSION, the new exchange offering permits an owner of Series E, F, or J savings bonds to enjoy current interest income from a tax-deferred increment which, for all practicable purposes, has heretofore been dead and useless until the bonds were redeemed. The deferred increment won't escape income taxes forever, unless you die while the sole owner of the Series H bonds, and each such bond issued in exchange will bear a legend showing how much of the purchase price thereof represents interest on the exchanged bonds which must be treated as income, for Federal income tax purposes, in the year when the Series H bonds is redeemed.

Full details are contained in Treasury Department Circular No. 1036 of December 31, 1959, and Secretary of the Treasury announcement of January 15, 1960, to owners of Series E, F, and J savings bonds, both of which may be obtained from the Treasury Department, Washington, D.C., or any Federal Reserve Bank. Bonds may be exchanged at any bank in the United States which redeems savings bonds.

By JALMER O. ROLFSON Office of the Judge Advocate General

MILITARY PERSONNEL DIVISION

The following is a list of change of duty or station orders issued to all officers transferred to or from the Office of the Judge Advocate General and to all Navy law specialists regardless of assignment. The list includes orders issued before 15 April 1960. LTJG Pat F. Beadle, USNR, from SNJ (under inst.) to Marine Corps Base, Camp Pendleton, Calif. CDR David Bolton, USN, from JAGO to COMFAIRJAPAN.

LCDR Ben N. Cole, USN, from Justice Dept., San Francisco to ComTwelve.

LCDR Nathan Cole, USNR, from JAGO to NAS, Jacksonville, Fla.

CAPT Daniel J. Corcoran, USN, from COMFAIRELM to COMAIRPAC.

LT Stuart M. Cowan, USN, from COMSERVPAC to COMTWELVE.

LT Frederick P. Dacey, Jr., USNR, from JAGO to NSC, Oakland, Calif.

THE HUMP LAW
and the

CONTINGENCY OPTION ACT

Legislation is presently pending which, if enacted into law, would delete the beneficial provisions of the "Hump" Law which now permits an "effective revocation" under the Contingency Option Act at any time before involuntary retirement under "Hump" becomes effective. This new legislation, in changing this "Hump" provision, would require that a revocation, to be effective, must be or have been made within the same period of time as would otherwise have been permitted had the officer been retired under the normal involuntary retirement laws. Because of the retroactive feature of this pending legislative change to "Navy Hump" and of the present probability of its enactment, officers should be cautious in relying on the present USCOA revocation provisions of "Hump." (See JAG Journal, May 1960, p. 12)

THE LEGAL ASSISTANCE program of the Navy has been in operation since 1943. Firmly established in 1954 by the Secretary of the Navy Instruction 5801.1, it continues to serve the Navy in improving the morale of its personnel and in reducing disciplinary problems. Through it, members of the Navy and their dependents are able to obtain required legal services from Navy lawyers and from cooperating volunteer civilian lawyers.

How does Legal Assistance fit in with leadership? General Order No. 21 would seem to provide one answer to this question, for Legal Assistance falls squarely within two parts of the quoted sentence "personal attention" and "moral responsibility." According to this mandate, the personal attention demanded of the naval leader by traditional naval leadership must be based on "moral responsibility." What do we mean by the word "moral"? In its broadest sense it connotes “what is right” as distinguished from "what is wrong" according to the mores of the society in which men live. A close search for a definition of these mores reveals that the "law" is one rod by which we can measure “right and wrong." Certainly the law sets a minimum standard of conduct and if we fall below that standard we are "wrong."

Law after all is of itself basically "right." In a civilized democratic community the law will always reflect the minimum morality of that community so that seldom is the law-abiding citizen a morally irresponsible one. Thus, at a time when the Navy is revitalizing its concern for "moral responsibility," we in the Navy cannot afford to overlook the tremendous potential of an effective legal assistance program if we are to give full significance and meaning to moral responsibility as an element of leadership. In considering the value of this service we should keep the following in mind:

(1) A problem, no matter how small, is important to the person who has it and distracts his concerted attention from his job. If he cannot solve the problem he will frequently get further and further involved and almost always end up a disciplinary case.

(2) The Navy expects of its people unquestioned obedience, unswerving loyalty, and complete devotion to duty. In return it has many responsibilities—one of which is the area of day to day living. This encompasses not only curative advice or advice on what to do after trouble has been encountered-but preventive advice, or a process of education in how to live within the law and avoid difficulties. Energetic execution of this responsibility commands

Efficiency may be maintained for a period of time through strict discipline, high professional demands, and a policy of ignoring the human element. This results in drivership not leadership.

(3) Not all problems can be solved. Some are beyond resolution, and the lawyer is after all a lawyer, not a magician. He can, however, wage a constant battle against ignorance of the law and against panic in the face of personal difficulties.

(4) The success of the operation depends to a great extent on the interest, the patience and the understanding of the individual attorney and the support given him by his superiors in the way of adequate facilities, proper equipment and official recognition. Since leadership is the responsibility of every officer, it is also a primary responsibility of Command. It is here that Legal Assistance has proved itself to be an invaluable tool of Command where it has been used and properly exploited. If made an integral part of the Command setup, less and less people would be trying to straighten out their difficulties "in their own way" and more and more people would be following their careers and their leaders with a feeling of dedication.

WHEN A PROBLEM is solved, of course, the Legal

Assistance Officer, the Command and the Navy have scored a victory and have usually made a man a little better equipped to cope with life and devote his full energies toward an organization which "looks out for him." Experience has also shown, moreover, that many people whose problems are not capable of immediate resolution can find a new outlook on life if they are allowed to talk, if they have a sympathetic audience, and if a few practical suggestions are made.

The relief and appreciation can be both heard and felt. This might well be called leadership in action. This is an area then where every single individual in the Naval service is vitally concerned, regardless of his rank, his religion, his philosophy or his political affiliation. An individual's personal problems, be they large or small, and their resolution, be it favorable or unfavorable, are of immediate concern to him and what is of immediate concern to the individual should be of immediate concern to his command.

LCDR NATHAN COLE, JR., USNR Office of the Judge Advocate General

JUNE 1960