The Washington herald., 1921-07-07
Tells Senator Treasury
Fears Added Strain
On Finances.
SEES LIVING COSTS
GREATLY INCREASE
Makes Administrators
Position on Bill
Clear.

Passage OF the soldier bonus bt1
would increase the cost Of living.
bring higher taxes, and defeat ths
Administrators program Of econo-
my, Secretary of the Treasury Mei-
lon has Informed the Senate.
Mr.. Mellon denounced the hf1l IN
vigorous terms and warned Of The
serious situation" and -inevitable
financial consequence which he is
certain its enactment would entail
Vast additional burdens imposed on
the Treasury, however financed
would seriously interfere with re-
funding operations. Mr.. Mellon
stated. and would bring additional
deficits to be met either through
new taxes or further borrowings
M.kes Pesitisa Clear.
Mr.. MELONS letter was written
in response to an inquiry as to the
probable cost OF the bonus. made by
Senator Freylinghuysen- Of New
Jersey. Freylinghuysen laid the
letter before the Senate yesterday
as Il was about TO proceed to con-
sideration Of the bill.
The letter served to make clear
the position of the administr1- icn
on the bonus. which up TO nJv hEs
been in doubt. The determined op-
position, il was believed, VII -
the one thing needed TO dc - r.
definitely. and in all probabillty XII
the bonus project which Congress
has been lodging for months L.sc =
ers have at all times been loan -
support the bonus and had EXPECTED.
to delay final action on it. m sptte
Of the fact that consideratior had
been forced by the insists-et 81
Senators and organized veterLas
Costs ss-sse. .ees.
Mr.. Mellon said IL is imT - Eio,s-
to make definite estimates a. 20 TIE
totzI ultimate cost of the eoEuk
The minimum. II all veters n Ec-
cepted adjusted service pay, he pUt
at 81 500 200 900. The maximum. II
all accepted adjusted service certth-
Gates, he estimated at S5.25o,o0e,OoO.
The actual cost OF the bill would
fall between these two extremes,
M Mellon wrote IF, as seems
probable, at least one-half should
about one-half the certificsle plan,
with one-third Of the latter Eorrow-
ing on their certificates, t. ulti-
mate cost of the bill. il is estimated
would be over S3,3O0,o 900 .0OC.
Mr.. Mellon said sdministrs I've ~
penses and selection OF other cP-
tional plans by veterans rc1id
swell the total. He added:
Scores Delayed PAYNE.
These estimates, incom. ..-e IS
they are, show the heavy 9Dt'sE-
tions to which the penG.nE nti
would commit the country. 70 m
pose these vast additional llzsi-iries
upon the treasury, particull-ly IN
der present conditions in l7GuStry
and commerce, would in r. iudg--
ment, create a serious 5 latlOn."
Mr.. Mellon saw as not rag east
disturbing feature" Of the ls.i the
proposal to postpone actus4 dnE3-
button OF the benefits to le-1--
This means that withClt con-
ferring immediate benefits on for
mer service men. the country would
be committing itself 20 a. stupen-
dous indeterminate liability which,
once assumed. il would have to
carry through, no matter how en-
barrassing Il might be TO the
finances Of the government and the
business OF the country when the
time comes for fulnllment," con-
tinued Mellon.
Mr.. Mellon said this feature tends
to mislead the people into the be-
lief that the Treasury would not
be seriously embarrassed.
AS a matter OF fact" he con-
tinued, "a plan TO disburse over a
period of years up 70 $4,000. .OOO.Ooo
or $4,000, 100000 as adjusted COM
pensation' must inevitably Increase
by just that much the war burden
which the American people have TO
bear. IL would greatly swell thu
cost OF government and virtually
defeat the administration's program
of economy.
TT could be financed only by ada
ing to the burden Of debt and taxes
under which the country is now
staggering. However financed. no
such sum could be taken out Of the
public treasury without throwing
corresponding load upon the whole
people in the form OF increased in
terest charges, increased taxes. and
increased cost o. living.
This burden. moreover. would be
in addition TO that already Imposed
in most Of the States. which hava
provided bonuses in various degrees
OF liberality to veterans OF the late
war"
Grave complications" would be
introduced into the governments
Funding operations. Mellon said.
pointing out that $4,000. .oOO. .eo9 in
securities fall Que in the year IN
which II is proposed to begin bonus
payments.
The market for outstanding gov
ernmenr securities would he sd-
versely affected" he declared. "and
the patriotic holders of Liberty
bonds instead of looking forward
TO Improved market conditions.
would have to face the threat of
further depression. know OF no
one thing. for example, that would
so greatly strengthen the market
for Liberty bonds as the assurance
that Congress had once for all Civ
en- up consideration OF a soldiers
bonus-
Mr.. Mellon said there is grave
danger that without any additional
expenditures the expenses OF the
government In the near future viii
exceed its current receipts.
PfeaAx for Delay.
I'm these ckrcamstsnces,- he,ssid
csoNTxn ON PAGE FIVE.