Government loan is needed to cover the expenses of disposing of the remains as desired.

ADVANTAGES

There is a funeral director located in or close to most inhabited areas in the United States, and one is almost always readily available. Since the funeral director who would witness the execution of the promissory note would also probably be the one who would handle the funeral arrangements for the body shipped from abroad, he would have an interest in performing this service well and expeditiously.

DISADVANTAGES

Except for the likelihood of ready availability, this alternative suffers from the disadvantages of the postal official alternative described above: Promissory note forms would have to be stocked in thousands of funeral directors' offices; the funeral directors would have to be educated in the procedures for witnessing the execution of the note, informing the Department, and forwarding the note and one copy. Most of these funeral directors would never have occasion to act on this information so that the time and effort involved in getting them the forms and instructing them would be largely wasted. Then, too, the funeral directors would not have access to U.S. Government-leased telephone and cable lines so that this alternative would involve some additional communications costs. There is also some question as to whether a non-U.S. Government employee would be acceptable as a witness to a promissory note for a U.S. Government loan. Finally, it could be argued that there would be a possible conflict of interest in that the funeral director would be the vendor of the service and therefore one of the interested parties. For these reasons this alternative procedure seems neither practical nor feasible.

(c) Administrative cooperation of American Express or Western

Union

Neither of these alternatives offers any advantages that alternatives (a) and (b) do not offer. They suffer from all the disadvantages, and at least one additional disadvantage; namely, that as private sector companies, American Express and Western Union would want payment-and not just reimbursement-for the promissory note service and its related actions.

GENERAL OBSERVATIONS ON PROMISSORY NOTE ALTERNATIVES

(1) None of the people that might perform the promissory note service would be in a position to verify the claimed indigency of the signee, nor could they be expected to pass judgment in this regard. The system would have to operate on an unvetted basis, with all the conse quences of bad debt jeopardy.

(2) Next of kin who cannot afford to have remains of deceased fam ily members returned to the United States might under emotiona stress make a bad decision in this respect, opt for return of the remains and regret that decision later when payment falls due. In these cir cumstances, the Government can expect a high percentage of defaults

(3) Unless the loan was made on the going prime rate of interest basis, next of kin who might have sufficient funds available or be able to obtain funds from other private sources would be tempted to borrow from the U.S. Government at a reduced interest rate. The Government would then become a competitor of private lending institutions at the taxpayers' expense.

(4) Promissory notes now signed by Americans in foreign countries for loans to cover medical expenses and/or repatriation are notarized by the consular officer. There appears to be no feasible way, given the time constraints, that a promissory note signed by a next of kin for disposal of remains could be notarized.

(5) There would be inequity and discrimination in providing loans for disposition of remains of Americans who die abroad without doing so for Americans who die within the United States at a distance from their final resting place. For example, it can cost just as much, or more, to prepare and ship a body from Hawaii or Alaska to New York as it does from Europe to New York.

COSTS TO U.S. GOVERNMENT OF PROMISSORY NOTE LOAN PROGRAM

A promissory note loan program would involve two cost elements: (1) The funds that would have to be appropriated to provide the loans, and (2) the additional costs to administer the program. It is impossible to predict with accuracy the amount that would be needed to cover the loans. Based on the 1977 statistics, we can predict with some confidence that slightly more than two-thirds of the American citizens who die abroad, most of them naturalized Americans who had returned to their native land for retirement, will be buried or cremated and disposed of locally. Our experience would seem to indicate that most next of kin of these people will not need U.S. Government loan assistance to cover the expense of local burial or cremation. It would also be a rare case in which the next of kin of native Americans who die in retirement abroad will need a U.S. Government loan either for local burial or return of the remains to the United States for burial. Most of these native Americans, if not wealthy, would have sufficient financial resources for these purposes.

We estimate about 400 next of kin might apply for a Government loan to return the body of a relative to the United States. With the average cost of preparing a body for shipment (including casket), and airfreight charges of about $3,000, an appropriation of about $1.419,000 would be needed to provide loans for returning remains to the United States. These estimates are very general because of many variables.

The cost of administering a promissory note loan program should not be great. Printing of the promissory note forms and distributing them, and printing and distributing instructions to whoever might witness the execution of the notes, would cost an estimated $40.000. There might be some small increase in communications cost, but we would anticipate that no additional funds would be necessary for new positions.

An estimate based on costs reported in the spring of 1978, inflation and fall of the dollar internationally in the interim, and known actual costs in cases during October and November 1978.

GUARANTEED BANK LOAN PROGRAM

In this alternative procedure the death notification cable would inform the next of kin or legal representative that if financing was required to dispose of the remains as desired, he or she could go to the nearest national bank or other lending institution and obtain a loan that would be guaranteed by the U.S. Government.

The loan transaction would be between the lending institution and the next of kin or legal representative, with the U.S. Government serving as guarantor for the repayment of the loan in the event the borrower defaulted within a stipulated time frame and the lender has exhausted his available legal remedies and has been unable to effect recovery of the debt. We would anticipate that the interest rate would be the going rate at the time the loan was executed. The lending institution would not be required to establish the credit-worthiness of the borrower.

Having obtained the loan, the next of kin or legal representative would transmit the funds to the Department through commercial channels and the Department in turn would authorize the consular officer to proceed with the arrangements for the disposition of the remains according to the next of kin's or legal representative's instructions. In short, the Department would handle the case as it now handles trust fund cases involving transmittal of funds abroad.

This alternative procedure would of course require a guarantee arrangement between the U.S. Government and the lending institutions that might agree to participate.

ADVANTAGES

National banks or lending institutions are readily accessible to most Americans, at least during the 5 normal workdays. There would be a minimum of administrative paperwork and few additional services would be required of either the Department or its consular officers abroad. The cost to the U.S. Government would be limited to covering defaulted loans, and the Government itself would not get into the loan collecting aspect of the transaction.

DISADVANTAGES

Assuming that national banks and other lending institutions would agree to participate in this alternative procedure, the major shortcoming would be the difficulty or impossibility of the next of kin's or legal representative's obtaining a loan on weekends or holidays. In view of the urgency involved in death cases, this lack of availability would be a serious impediment. Also, the default rate could be high.

COSTS

This guaranteed bank loan alternative would involve minimal administrative costs to the U.S. Government. Assuming that 400-500 next of kin or legal representatives might take advantage of such a loan guarantee program and that 40-50 percent of them might default (the present rate of default on repatriation loans) the total additional costs of the program to the U.S. Government could amount to as much as $500,000 to $625,000.

PRIVATE COMPANY INSURANCE POLICY

As an alternative procedure, a private insurance company, either a nonprofit organization or a standard insurance company, might market a policy covering the disposition of remains of deceased Americans. abroad. The policy might be designed to cover local burial, cremation and disposal of the ashes, or preparation and shipment of the body to the United States. The Department would give the policy maximum publicity through the international travel industry. The policy might be sold at airports as are flight accident insurance policies now. This alternative has been discussed with several private insurance companies, which promised to take the proposal under advisement and come back to the Department of State with their views.

ADVANTAGES

Except for the publicity provided by the Department, this procedure would entail no additional costs whatever for the U.S. Government. All financial aspects would be kept in the private sector, among the insuring firm, the policy holder and the next of kin, with the U.S. Government through the Department merely acting as conduit for transmitting information.

DISADVANTAGES

Only persons who purchased a policy would be covered, thus leaving some persons uncovered, depending on marketing techniques and attractiveness of the policies.

COSTS

This alternative procedure would entail no significant additional cost to the U.S. Government. No additional positions and no additional appropriated funds would be required.

COMPULSORY SURCHARGE ON PASSPORT FEE

The present charge for a passport is $10, plus an execution fee of $3 for the initial application. If an additional $3 were charged and this surcharge were placed in a special "disposition of remains account, enough funds would be generated to defray the cost of preparing and returning the bodies of all Americans who die abroad each year and whose families wish the bodies or ashes to be returned.

Approximately 3,300,000 fee passports are issued each year so that the $3 surcharge would generate about $9,900,000 annually. As noted earlier, of the 6,584 Americans who died abroad (excluding Canada) in 1977, the bodies of 1,702 were returned for burial in the United States. The ashes of 366 were returned. Our posts estimate that an additional 173 bodies might have been returned had Government funds been available for this purpose, thus making 2,241 at most whose bodies or ashes would have been returned in 1977. To this figure should be added about 100 bodies (for calendar 1979) to account for the estimated increase in the number of American deaths abroad each year due to the greater number of Americans traveling internationally, and another 100 (necessarily a rough estimate) for Americans who die in Canada, for a total of 2,441. At an average cost of $3,000 for returning embalmed bodies, the total cost of returning all bodies of Americans

who die abroad whose next of kin desire such return would be about $7,323,000. The $9,900,000 generated by the $3 surcharge would be sufficient to cover this cost and any additional costs due to inflation, fluctuations downward in the value of the dollar in international markets, large numbers of American deaths due to disasters and any miscalculations in the variables.

The $3 passport surcharge would be a form of compulsory insurance which would be of potential benefit to the families of all Americans traveling or residing abroad.

ADVANTAGES

The problems of processing promissory notes would be eliminated. since no loans would be involved. The time factor problem in the next of kin's obtaining and transmitting funds would also be eliminated since the cost for returning to the United States the remains of all Americans who die abroad would be automatically covered. The consular officer would proceed with arranging for the return of the remains immediately upon receiving information on the next of kin's desires and the Department could transmit the funds to cover the expenses, drawing on the funds in the special account generated by the $3 surcharge. The death notification cable would simply instruct the next of kin or legal representative to inform the Department of his or her desire with respect to disposition of remains, noting that if the choice is for embalming and shipment of the body, the U.S. Government would defray the cost, including that for a decent but a moderately priced casket. The discrimination element in providing for the return of bodies of Americans who die abroad while not providing for the return of bodies from one State in the Union to another would be eliminated because passport holders would be paying for this coverage with the $3 surcharge. While legislation would be required to authorize the surcharge, no additional appropriations would be

necessary.

DISADVANTAGES

There are some countries-Canada, Mexico, and some of the Caribbean islands-that do not require American tourists to have valid passports for entrance. Large numbers of Americans travel to these countries each year. The question arises, therefore, whether Americans who visit these countries without a passport, and hence would not have paid the $3 surcharge, should be covered for the disposition of their remains should they die in one of these countries.

About 15 million Americans presently hold passports with validity up to a period of 5 years. Since these people would not have paid the $3 surcharge, should they be covered for return of their remains if they die abroad?

This alternative would require the consular officer to make every effort to assure that local funeral directors' charges for preparation of the body and for the casket are reasonable, and not inflated in the knowledge that the U.S. Government is defraying the costs.

This alternative would also involve certain additional administrative costs for collecting the $3 surcharge, for transmitting it to the special account and for accounting purposes.