The New York herald., 1922-02-05
SAYS FOREIGN DEBT
CAN FINANCE BONUS
Representative McFadden Al
tacks Opposition of Mellon
to This Plan.
BRITISH CREDIT rs GOO
Will Sell Easily, He Declares
Protests Continue to Pour
Into Capital.
BRITISH CREDIT is GOO

Special Dispatch to THE New York HEaND.
New York Herald Bureau.
Washington. ID. O.. Feb. 4.
Representative McFadden (Pa.). chair
man Of the House Banking and Cur
rency Committee. took sharp issue to-
day with Secretary of the Treasury
Mellon over the question OF using the
foreign debt to pay the soldier bonus.
He proposed as feasible the thing Mr..
Mellon cast aside as impracticable-the
use of British bonds underwritten by
the American Government and sold TO
the people Of the United States to get
the money needed.
Mr.. McFadden's statement was strik-
ing evidence of the utter lack Of har
mony among Government financial adj
visers on the method Of satisfying the
demand for a bonus. 1t served, further
more. to emphasize the difficulty con-
fronting members of Congress as re-
CARDS the fiscal aspects Of the proposal.
Mr.. McFadden appeared before the
Ways and Means Committee. not in
advocacy Of the bonus but to discuss
the method which might be pursued
in order to get the necessary funds.
He attacked in detail the statement Of
Secretary Mellon that the foreign debt
could not be counted on in any scheme
Of financing attempted.
1T Is necessary to take exception to
the position OF Mr.. Mellon, Chairman
McFadden said. 1T is perfectly feasible
to finance the bonus by the sale Of
foreign bonds underwritten by the
United States. Such bonds would find
a ready market.
Against More Taxation.
In March. 1920. I said that the way
to pay the bonus, II we were going to
grant one. would be to obtain the per-
Inanent bonds of the British Govern
ment and either give them to the SOL
diers directly or sell them for their BEN
efit It seems to me that the same sit
uation exists now.
There is no question but that the
levy of additional taxes on the people
Of the country would disrupt business.
The people are not in the mood for
more taxes and business would be seri-
ousy handicapped by the extra burden.
Under the foreign debt funding bill
which has been passed by Congress the
Treasury Department has the author
ity to obtain from the British Govern
ment permanent bonds which are o run
for twenty-five years. These British
bonds are the ones which should be
used for the financing Of the bonus
The reason Is that the British owe the
United States more than any other ma
tion-a total of 81. ESQ. 900. .000-and. In ad-
dition, British credit is good and there
never will be any question as to the
ability and the intention of the British
to pay.
IF these bonds were to carry Az per
cent. interest 1t is my judgment they
would bring more even than Liberty
bonds. British bonds backed by the
United States ought to be the best Sc
curity in the world. and I believe they
would be sold at par.
Sell Bonds to Meet Needs.
"It has developed in the hearings that
$500. 100000 would have to be avail
able by October 1. Well, that money
could be obtained by that time. 1t should
not be difficult to obtain the bonds from
the British. The United States Treas
ury. then. could take them out OF the
strong box and sell them as the money
was required.
1.-THE chief opposition to this scheme
which has developed up to date has been
from the group In favor of the cancel
lation of the foreign debt, mostly inter-
national bankers and others interested
In foreign trade.
There is no basis, either. for the
argument that In selling these bonds to
elC pCOpic VIC WOuiQ ot ldllil
with the purchasers of Liberty bonds
There was no agreement In the Liberty
loan act that the money. which was to
be loaned abroad, should be used for the
redemption Of Liberty bonds"
In discussing the foreign debt situa-
tion Chairman McFadden declared that
the United States should not make pro-
vision for spending the interest derived,
around s500.0o0,ooo year. This money.
ne said. should be loaned to Germany
along with s50o.000,0o0 more. over pc
riod of ten years. "Such an arragene-
ment." he said, would provide the |
means of disposing of American mill and
farm products"
Letters Of protest continued to pour
In on members OF the Senate and the |
House to-day in condemnation of the |
bonus. They were In line with letters |
and kilograms received generally In the |
last week, their general tenor being |
that Congress was playing politics in the
bonus legislation proposed.