Omaha daily bee., 1921-08-08
Where Money May Be Saved.

When Secretary Mellon appeared before the
ways and means committee of the house, ne
excited train OF activity that may in its final
application touch the point. Floor Leader
Mondell in the house, ably seconded by Mr..
Madden, a member OF the appropriations COM
mittee, and Senator Borah in the senate, have
become clamorous for reduction in expenditures
that taxes may be lowered. All this is COM
mendable, and The Bee hopes that the rash will
spread, until every honorable gentleman under
the dome is affected by it.
However, the methods proposed vary. and
until they can be harmonized we fear little of
real good will come from it. Mr. Mondell, for
example, is ready to accept deficit OF $l,0o0,-
100000, that 50 much may be Topped off the i'm
mediate tax levy. Mr.. Madden is willing to
forego, for the year at least, the $5OO,OOO,OOO
sinking fund contribution, and some similar ex-
pedients are suggested. Mr.. Borah would fur
ther reduce the army, navy, and shipping board
appropriations. Each Of these suggestions con-
tains the element of further waste.
In his second year in Office Secretary Nc
Adoo was compelled to resort to short-tine
borrowing in anticipation of tax collections, that
the government might meet its obligations and
pay current expenses in cash. The deficit has
been present steadily since then, one years turn
over in short-time certificates amounting to
slo,O00,OOo0O0 plus. For the year 1920 these
certificates were redeemed in the sum Of
$l5,sSo,ll745 and in 1921 the total re-
deemed was $Ss52,225, $1,000. These figures will
give IN idea OF the magnitude of the transac-
tions in short-time loans to the government
This money has been borrowed at rates varying
from to per cent, mostly around 5H per
cent. The last statement of the public debt
showed total of approximately $4,000 900 900,
Of which, in round numbers. $4,000, 100000 was
h Tie s-8 ts.s 81 -StsaSd SSS Victory sa.ss and
War Savings certificates. This leaves $6,0OO,-
100000 Of floating indebtedness, on which the
interest charges at 5 per cent amount to
$300O00,000 year.
Secretary Mellon wants to fund this floating
indebtedness at rate Of interest not exceeding
that paid on the Liberty bonds. This will admit
Of return to a cash basis, and will save at least
$l00O00000 a year in interest charges. The
Borah demand for further progress in disarma-
nent may we'll await the proceedings OF the
Forthcoming conference on the point, while his
demand for the discharge of clerks and other
curtailments of public service can easily be lett
to General Dawes, who is diligently progressing
with his undertaking as head of the budget bu-
reau. The Mondell plan will entail the addition
of 900 to the annual interest charge, while
the Madden proposal will simply postpone the
payment Of $500, 100000 of indebtedness and con-
tinue the interest charge of $2000O0O0 year
thereon.
Secretary Mellon is proceeding on business
principles The plan he suggests for the gov
ernment has been adopted by some of the great
business houses of the country, who were forced
to borrow large sums at ruinous rates OF in
terest, and who have since succeeded in con-
,verting the indebtedness so created into bonds
rather than notes or certificates. The advantage
of this must be readily apparent to any who
give careful thought to the subject. If the
Treasury can be put back to a cash basis, fur
ther borrowing eliminated, and the budget bu-
reau achieves even portion OF what is expected
from it. relief from taxation will be certain. Such
relief in permanent form cannot be achieved by
smashing things The burden was piled up
through the adoption of haphazard methods ol
meeting a great emergency, and will only be
properly removed by the application OF sound
principles Of finance.