The Pensacola journal. (Pensacola, Fla.) 1898-1985, 1922-01-25
SECRETARY MELLON DECLARES THAT
SOLDIER BONUS MUST NECESSARILY
BE PROVIDED BY SYSTEM OF TAXES
= Attempt to Provide Through
Use of Principal and Inter
est of Foreign Debt Is
Futile.
tRy The Associated Pressl

kby The ASSociateG FreSsl
WASHINGTON. Jan. 24.--Treasury op-
position to a soldiers bonus remains un-
changed. but il there is t9nhe bonus It
must bc provided throuW taxation in
addition 70 taxes imposed by existing
law, Secretary Mellon declared tonight in
o letter 70 Chairman Fordney OF the
house ways and means committee. Any
attempt TO provide for the bonus through
the use OF the principle and interest OF
the foreign debt to this country. no con-
tended. would be futile, as well as un-
wise"
Mr.. Melons letter was in response to
a request from Mr.. Fordney for an ex-
preston OF the views of the secretary and
the treasury department on the govern
nent financial outlook for the coming
year and half and for suggestions as
to legislation. Submitting detailed esti--
mates OF government receipts and expen-
ditures for the fiscal year 1922 and 1923
and the treasury plan for refunding the
short dated debt, Mr.. Mellon declared no
allowance has been made for any extra
ordinary expenditures for a soldiers
bonus. which would cost. on tho most
conservative estimates. he said probably
not less than $3.50, 1000, 900 in the first two
years.
THE figures" he contended, "show
but more probably a deficit and that with
the enormous refunding operations which
the treasury has to conduct it would be
dangerous In the extreme to attempt 10
finance the expenditures involved In the
bonus through new borrowings The po- |
si;ion OF the treasury remains un-
changed, but il there is to be soldiers
bonus, II Is clear that 1t must be pro- |
vided for through taxation. and through !
-. salHi
by existing law"
OF financing the bonus would make it !
any less an expense to be borne in the
long run by the taxpayer. Mr.. Mellon de- |
clarcd, taking up the proposal to use the |
foreign debt as a basis for bonus pay
ments.
II is impossible. he maintained, in ad- (
vance OF funding arrangements to esti-
mate what may be collected on the for
eign debt in the near future by way OF
principal or interest. The obligations
which are in the form of demand obliga-
tions. are not. he asserted, In shape TO
sell TO the public, while to offer them
with the guaranty Of this government
would interfere with the treasury's re-
funding operations and prove more ex-
nensive than the sale OF direCt obligations
OF the government
"At the same time" he added, 'It
would enormously complicate the interna-
tional situation and certainly embarrass
tho funding negotiations"
II would accomplish nothing. Mr.. Mel
lon argued, to set aside the foreign debt
for the payment OF the bonus, even IL
enough could be realized in time.
Discussing the financial outlook of the
government. Mr.. Mellon presented de-
tailed figures covering budget estimates
which, he said. Indicated deficit OF over
s24 OO0, 600 for 1922, and deficit of over
siST 600. 900 for 1923. Not allowing for
$50. 000, 900 requested by the shipping
board for the payment Of claims, $1,000
900 10 be spent for Russian relief by the
United States Grain corporation and
SIS. OOO, 600 to be paid as tho 1928 install
rnents under the treaty with Colombia,
n total OF Sli2.e00,ooo.
To overcome these deficits, he eX-
planned, expenditures must be reduced in
the aggregate by about $S00.ooc.00O in
the next two years, while at the same
time the government faces heavy
shrinkage of receipts. In view of the de-
In business, he added. there is
grave doubts whether the estimates OF
receipts which appear in the burdget can
be realized.
The overshadowing problem OF tho
the handling Of the public debt, amount
inE at the end Of past year to S2S,4SS,-
,s5i OF which $500, 100000 falls duo
within the next is months. The refund
ing OF this vast maturity. he asserted,
would require the treasmy's constant at
thntion from now on.
How much additional taxation would
be necessary to pay a soldiers bonus,
Mr.. Mellon declared. would be difficult
TO estimate but on the basis Of the Nc
Culnber bill IL would appear that the total
cost would be about $3.50. .0oo.00 OF
which at least $3.50 100000 would fan due
IN the first two years OF operation and
possibly as high as $1,000. 900. 600 IL an
large number of veterans
should choose cash. The minimum cost
he placed at about 1850. 000, 900 based on
cash payments and the maximum cost
at about IS, .5O. 900. 900 II all the veterans
ehould take certificates I'm liam of cash.