Atlanta tri-weekly journal. [volume] (Atlanta, Ga.) 1920-19??, 1922-03-11
NEW BONUS PLAN
WOULD FREEZE"
MILLIONS IN BANKS
Treasury Says Funds Would
Be Better Obtained by
Direct Borrowing Post
ponenQent of Issue Seen
BY DAVID LAWRENCE
(Leased Wire Service to The Journal.)
(CopyriCht, 1922

Copyright, 1929
WASHINGTON, March 10.-Five
hundred million dollars will be
frozen" in the banks of the United
States If the soldier bonus bill be-
ing considered by the house OF rep
resentatives should become a law.
Also it may mean net cost to
the government in three years. of
about a billion dollars.
This is the view of the treasury.
department, which continues I'M
abated it's opposition to the method
prescribed by the house ways and
means committee to provide funds
for a soldier bonus. The treasury
view is that if the bonus must be
paid, the funds would better be OBJ
tanned by direct borrowing on the
part of the United States, though
that form is hardly as good as a
sales tax or any of the other forms
of taxation suggested.
Indeed, the treasury looks upon
the scheme to compel the banks Of
the United States to loan money on
the so-called service certificates as
the worst possible way. that could
have been devised to handle the sit
uation.
The position of the treasury UNI
,questionably will be made known to
the house ways and means commit
tee, though to be sure there is
reason to believe Secretary Mellon
communicated his views to the pres,
ident and Mr.. Harding as a conse!
quence issued his statement of Tues
day reiterating his proposal that the
whole bonus issue be postponed or
sales tax imposed.
Opposition Explained
Officials. at the treasury explain
their opposition to the house plan
this way:
They say that the so-called LOAF.
certificates will embarrass the banks
OF the country for 1T compels them
to lend money to the soldiers and
yet the certificates ATE not transfer
able or negotiable. The moment the
banks pay the soldiers the sums they
borrow, the certificates must remain
in the banks for three years.
Upwards of five hundred millions
of capital which might otherwise go
into business investments or be used
to finance the country's normal
Io0 nd If
at the end of the end of three years
the soldiers who have borrowed the
money should default, the govern
ment not only must make good the
banks loss, but it must pay the sol
diers the remaining half of the
money they were privileged to Dor
row under the soldier certificates.
AS viewed at the executive end of
the avenue, the plan means a trans
fer of the drain for the moment from
the treasury to the banks of the
country. AS between the two, it is
contended that the treasury is bet
ter able to stand such borrowing
than are the banks. In the end the
treasury considers the government
will have tC reimburse the banks, so
it amounts to the same thing though
for three years the capital of Amer
lean banks would be tied up or
frozen"
Postponement Likely
Comptroller of the Currency Girls
singer, who by law is entrusted with
the supervision of national banks;
and who halls from Marion, O.,
where for years he has been Presi-
dent Harding's intimate friend, in
sists that the scheme is SO unsound
that he would not advise banks to
lend money on the certificates which
congress is talking about.
Unless some better way is devised
to pay the soldier bonus, it is DOOM
ed For the consensus of opinion
in executive quarters is that the lat
est plan is filled with more dangers
to the countrys finances than any
yet proposed and that the soldiers
themselves will insist upon a sales
tax when they find out, that pain
full as it may be, the sales tax af
fords the soundest scheme Of flnanc-
ing the bonus.
The farm bloc and other elements
in congress, however, oppose the
sales tax.
Fer the moment, it looks as If the
postponement of the issue by letting
it rest in the senate is inevitable.