New-York tribune., 1916-07-07
Panama Bonds and McAdooism

Panama Bonds and McAdooism
The Ways and Means Committee of The
House Of Representatives favors bone
issue of at least S125,OO0,000 to meet the
extraordinary expenses of mobilization or
the Mexican border. No legislation Is re
ouired 70 make this sum available for such
use. Under existing laws the Secretary OF
the Treasury is authorized to issue Pan
ANA Canal bonds for the purpose of re
paving to the Treasury general fund caSf
which il has advanced for the construction
Of the Panama Canal.
Up to July last the Treasury had ad
vanced for canal work 1867 67,312,O69. OF
this sum S13S.6O0, 500 had been reimbursed
through bond sales. The Treasury has
still authority to issue canal bonds to the
amount Of S24O,569OOO. There is there
fore no sound reason why the balance OF
the money loaned 10 the canal enterprise
should not be repaid and used to meet
part of this years extraordinary eXpendl-
ture for military preparedness.
Only couple of foolish political COM
mitments on the Administration part
stand in the way. At time when Presl-
dent Wilson was much less eager to sec
money spent on military preparedness
than he is to-day he laid down the prln-
ciple that the cost of an enlarged army
and navy ought TO be met exclusively
through new taxation. He was unwilling
to let Congress spread even part OF the
cost over two or three generations. lie
was especially keen about keeping intact
the tidy little sum owed by the canal en-
terprise to the Treasury's general fund.
In order to chill popular ardor for prep
aration on an adequate scale he evolved
the idea that raising money through the
issuance Of bonds-even to pay off loan
already contracted could be JUSTIFIED
only when the sums thus raised were tc
he spent for permanent things which
"many generations will certainly benefit
bv." He stoutly denied that any eXpendl-
ture whatever for military purposes
could be classified as "in the interest OF
posteritv as we'll as in our own" and
sternlv admonished Congress in making
provision for the national defence 10 put
away any thought Of depending on
bond issues. Congress can now force the
Administration to issue canal bonds TO
nav for the Mexican mobilization only by
fatty disregarding an alleged principle OF
public finance most vigorously insisted
upon by Mr.. Wilson in his preparedness
message of December 1915.
But still another thing stands IN the
way. Secretary McAdoo was as strongly
opposed last December as President VIII
son was TO the use Of any Of the Panama
Canal collateral to pay for preparedness
of a strictly military character. He
wanted to segregate and protect that
fund for use later in floating his own pet
government ship purchase proposition.
Recently, with Mr.. Wilson's approval
he has induced the House of Representa-
tives to set aside S50,000,0OO Of the
Panama Canal nest egg fund for the pur-
nose of capitalizing a ridiculous five
wear venture in government ownership
and operation of deep sea freight carriers
In his opinion it would be wicked to use
this ready cash for military purposes
when it could be dumped with celerlt!
and neatness into a worthless government
shipping enterprise. This visionary five
wear speculation is, Of course, in the
Administration present view, one Of
those investments of permanent value
from which "many generations WI
certainly benefit
Congress should not stop with indicat
ing its belief that the pledged Panama
Canal bonds ought to be sold to pay to
the Mexican mobilization. 1t should eX
plicitly direct that they be sold for tha
purpose. Let the Treasury recover tn
whole S228,711,2OO now owed it and de
vote that sum to payment in part of thu
wears increases in the military and nava
establishments. That would equalize th'
burden Of a necessary correction Of ou
military policy. 1t might also help, b!
dissipating Mr.. McAdoo's pet reserve
fund, to kill the mischievous and waste
ful McAdoo ship purchase BILL