The Washington herald., 1920-12-24
Predicts President Will
son Will Veto War FL
nance Measure.
AGAINST OUTLAY
FOR WAR VETERANS
Suggests Cut in Army
/. And Navy to Curb
Vast Expense.

Opposition on lne part VI ooCio-
tary of the Treasury Houston to the
hill reyiving the War Finance Cor
poration will lead to the veto of that
measure which was received at the
White House yesterday, those keep
ing in touch with the situation be-
lieve. Similar opposition on the part
of Houston will lead to defeat Of
the proposed soldiers bonus meas
ure. on which hearings are now
being held by a subcommittee OF
the Senate Finance Committee. 1t Is
believed. Houston bases his opposi-
tion to both measures on the state
ment that the present financial OBJ
LEGATIONS Of the government will not
stand additional burdens.
IF the Federal government is
forced to continue in, the banking
business, and go out and raise ad-
ditional loans. as 1t certainly will
have to do to support either the
finance corporation or a soldiers
bonus" Mr.. Houston told newspaper
correspondents, cit will be a dan
gerous business and it's immediate
result will be to further debate the
value of government securities al
ready touching low rates on the
market"
Secretary Houston appeared be-
fore the Senate subcommittee hand
ling the bonus yesterday. He
warned the Senators that the pres
ent fiscal year would see a national
deficit Of s2.1oo. .ooO,o 900. and next year
would present a similar deficiency
of $1,5oo, ,oOe, ,oo0. He explained that
ordinary receipts for this year
should exceed ordinary expenditures
by about $500, soc, 900 and next year
by about s556. 900; but these
excesses would not meet the annual
interest on the public debt OF ap-
proximately s1,2o0,00o, 900, in addi-
tion to which there Is the sum
usually laid away in the sinking
fund to meet maturing obligations
and the interest on the current
floating debt. The sinking fund
plan, the Secretary urged, must not
be bothered.
when we go tampering with the
sinking fund.-" he said. i believe
we are gone"
Means Treasury Demand.
The point emphasized by the Sec
retary as all important was thar
the first step in reviving the cor
poration would mean a demand on
the Treasury for the $3s6,O0O,O0O
credit which it now has with the
Treasury as the result of its war
time operations. Then. ghe said. the
Treasury would be forced into the
open market again to raise addi-
tional sums that might be needed
to finance the corporation. The
worst feature of this program, he
declared, would be the depression
resulting on government bonds.
In dealing with the bonus issue
the Secretary explained the Treas
ury would have no money with
which to make bonus payments oil
support bonus measures, unless spe-
cial provision were made to raise
the needed sum. The governments
annual income is hardly enough to
meet annual expenses, under pres
ent day expenditures and it will
take the government a third of a
century to pay of its war debt, he
told the committee. Mr.. Houston
was not asked his attitude on the
bonus measure. but when he re-
turns to the hearing next Monday
he will undoubtedly tell the Sena-
tors he is opposed to the measure
if 1t means additional Treasury bur-
dens.
NCut Army Funds.
The army and navy appropria-
tions were pointed to by the Secre-
tary in his testimony as the natural
place to begin to curb expenditures
The estimates for these services, he
pointed out, call for an appropria-
tion of $1,000, 100000 this year, ano
huge cuts in expenditures could be
made If the Congress would deter
mine not to have an army and navy
on the scale now adopted.
No suggestion was made as to the
proper sources of revenue to be
tapped to make up for deprecia.
tions now beginning in existing
revenue agencies. When asked
what revenue sources were declin-
ing Secretary Houston cited first the
excess profits tax. which is showing
a declinH and declared payments on
the higher schedules of theN\income
tax were also falling off markedly
Another matter touched upon by
Secretary Houston at both the hear
subject of a billion-dollar CONNER
cial credit extension to Germany
which has recently been broach&d
in some quarters. He described
both this suggestion and the financ-
ing. of foreign trade plan as only