Arizona republican., 1922-03-13
LRepubIIean A. p. Leased wlreI

WASHINGTON, Mar 12-The new
soldiers bonus bill, as drawn by
house Republicans, was attacked to-
night by Secretary Mellon as involv-
ing dangerous abuse of govern
ment credit"
Replying to request for the treas
ury's comment on the new bonus bill,
Mr.. Mellon in letter to Chairman
Fordney of the house ways and means
committee made public today by the
treasury, sharply criticised the feat
ureS of the proposed measure provid-
ing for loans by banks upon adjusted
service certificates as indirect and
forced" borrowing by the govern
ment. He suggested that the direct
and regular way" TO provide for a
paid-up endowment insurance feat
ure would be to issue certificates
with provision for Greet policy loans
TO be financed by the government
Mr.. Melon contended that il is both
dangerous and unwise" TO attempt to
avoid the cost or the bonus for the
time being.
There is no way" he said, "by
which the American taxpayer can
avoid the burden. and il a bonus is
10 be imposed ii is far better for
all concerned that it be placed upon
a definite basis and paid for each
year out of current revenues. To
DO this at this time will necessarily
mean the imposition OF additional
taxes of the public
The secretary estimated the cost OF
the bonus under the bill considering
each of the possible choices Offered
to veterans. at more than $i.200.000,-
600 by Jan. !, 1926. Whatever form
the bonus measure might take, he as
serted, would mean a cost to the gov
ernment OF from $500. 600, 900 to $400,-
10000 for the next three or four
years and possible continuing liabili-
ties thereafter of moro than $780,
100000 a year until 1943.
Accompanying his letter, Mr.
Mellon transmitted statistical tables
prepared by the treasury experts
showing the varying cost of a bonus
according to what percentage OF vet
Grams might choose the different
plans of payment offered.
No Revenue Provision
Mr. Mellon called attention TO the
fact that the bill makes no provision
for raising additional revenue TO
meet the cost OF the bonus. and re-
called TO Mr.. Fordney. President
Haring's letter Of Feb. 16, in which
it was suggested that a general sales
tax be enacted TO provide the neces-
sary funds or the bonus legislation
be postponed
Secretary Melons letter in part
follows:
"The bill makes no provision what
ever for sinking fund, amortization
or other reserves against either the
liability that would be thrown upon
the government in 1925. or against
>the liability on the certificates at the
end of 20 wears. nor does IL make
any provision for the payments
which would accrue in ordinary
course from year TO year on account
OF the death or veterans.
THE direct cost to the governDe ent
Of a bill carrying these provisions for
about $500 900 ex- service men is al
most impossible TO estimate because
of the uncertainty as to which of the
plans will be chosen. and in what
proportions. Burt the government
actuary has prepared tables on esti-
mated cost on the assumption that
10 per cent will choose the certificate
plan, % per cent the farm and home
and aid plan. five per cent the voca-
tional training plan and two per cent
the land settlement plan. In the call
culations as to the cost Of the certifi-
cate plan. il is assumed that the cer-
tificate holders will borrow on their
certificates from the banks and de-
fault on their loans, in view OF the
attractive provisions for cash re-
demption in case of default
II appears from these tables that on
the basis assumed by the actuary
the total direct cost to the govern
ment in the fiscal year 1928 would
be $3.50. a.954000: in the fiscal year
1924, $216,440,00O; in the fiscal year
1925. s1eS,0lS,00O and in the fiscal
wear 1926, for the most part by OCT.
Is. 1925, when the adjusted certiti-
Gates issued as security for bank