The Washington herald., 1922-03-02
PROVIDES LOAN
PLAN In PLACE
OF CASH BONUS
Subcommittee Considers
Making Insurance Ba-
sis of Borrowing.

Elimination Of cash bonuses, but
with a provision enabling former
service men to borrow from banks
so per cent of the face value of GER
tifcates, was under consideration
yesterday by a subcommittee Of the
House Ways and Means Committee.
The subcommittee, consisting of
Representatives Fordney Of Michi-
gan, Green OF Iowa, Longworth of
Ohio. Hawiey Of Oregon. Treadway
Of MassssApss1kn.aa<a aa<a-6spssv-s<-xs-
linois. was appointed by the Repub-
lican members Of the committee af-
ter a decision was reached to at
tempt to work out a plan which
will not involve a heavy drain on
the Treasury during the next two
years.
Rejects Sales Tax.
The full Republican membership
of the committee. it was learned.
definitely rejected the proposed
sales tax by a vote of 9 to 6.
The plan to eliminate cash
bonuses contemplates that the in
surance certificates, forming Que Of
the other four options in the FIVE
fold plan. may be used as a basis
for loans.
Veterans in need will be able to
borrow at banks in. amounts up TO
so per cent of the value Of their
certificates. In case the loans are
not repaid. the government. at the
end of three years, will reimbur3e
the banks. Certificates will be based
on length of service, at the rate OF
81 for each day served
Value Triples I'm Twenty Years:
At the end of three years, the GER
tificates will have a loan value with
the government, of IS per cent Of
their face value. But II they are
kept twenty years, at which time
they mature. their value will just
about triple. This, it was thought.
would keep men from borrowing
except where there is great need
for money.
The postponement of payments
means that the large funding opera
tions of the government can in the
meantime be carried out. Taxation
need not be increased for the pres
ent, and during the next three
years an opportunity will be given
further to reduce government ex-
penditures. The payments, whea
made, will be distributed over a Pc
riod of seventeen years.
Would Exceed s5,Oee,oO0,eo0.
The cost to the government has
not been ascertained. If all vet
Grams took the certificate plan,
which was one of the alternatives
in the original bill, the total ulti-
mate payments were figured at
more than $1,000, ,000, ,000,,. providing
no one utilized the privilege of
borrowing. Uncertainty as to how
many will do this makes accurate
calculations diff1cult. The average
face value of the certificates, it Is
figured, will be s32s; the maximum
is ss25. ''..'..-'.'.' ya.
Whether the interest rate banks
may charge veterans is to be f1xed
has not been determined, but COM
mittee members indicated care
would be taken to prevent loan
sharks from profiting at the ex-
pense of needy service men. Also
it is to be decided whether the
certificates will be re-discountable
by the banks.
Would save Pensions.
One of the arguments used in
support of the, certificate plan Is
that II would eliminate the possi-
bility of direct. pensions for the
twenty-year period. and probably In
the long run; would Prove an
economy. T. *
The attitude of President Hard
ing has not been ascertained, but
II was thought he would approve.
He has objected to immediate cash
payments. -
"If in the settlement of the debts
owed to the United States by for
eign countries" said Senator Lodge.
money, whether principal or In
terest. Is received-and 1t seems
probable that some such payment
will occur within a reasonable time
then these funds can be used to
care for the appropriations for the
soldiers and the taxes made neces-
sary by the obligations of the COM
pensation act can be removed or
reduced /" 50 aE