Albuquerque morning journal. [volume] (Albuquerque, N.M.) 1903-1926, 1922-03-13
BanRLoan Provision In
New Soldier Bonus Bill
Is Attacked by Mellon

tainty as to which of the plans
will be chosen, and in what pro-
portions. But the government ac-
tuary has prepared tables of esti-
mated cost on the assumption that
70 per cent will choose the certifi-
cate plan, 23 per cent the farm
and home aid plan, 5 per cent the
vocational training plan and two
per cent the land settlement plan.
In the calculations as to the cost
of the certificate plan, it is as
sumed that the certificate holders
will borrow on their certificates
from the banks and default on
their loans, in view of the attrac-
tive provisions for cash redemp-
tion in case of default
1t appears from these tables that
on the basis assumed by the actu-
ary the total direct cost to the
government in the fiscal year 1923
would be $3.50, $4,000 in the fis-
cal year 1924, $21G,440, 600; in the
fiscal year 1925. $t2S,013,000 and
in the fiscal year 1926. for the
most part by october IS, 1925,
when the adjusted certificate is
sued as security for bank loans
would have to be redeemed, $615,-
$4,000 This would mean total
payments within three and one
half years Of over $1,000. 900, 900.
These estimates take no account
Of aromtiza ton or other reserves
against certificates to remain out
standing after the fiscal year 1926,
which would add at least $40, 600,
600 n year to the current charges,
or of possible additional costs un-
der the land settlement plan If the
reclamation projects therein au-
thorized should be carried through,
1t is estimated that about $780,
100000 per annum would be re-
quired after 1928 if these reclama-
tion projects should be pressed.
Certificate Plan.
EFF all the veterans should
choose the certificate plan the
total face amount of the certifi-
Gates would amount to over $4,-
500, 100000, distributed over twen-
ty years and if all the veterans
should choose the farm and home
aid plan, the total cost would
amount to s2,093, 100000 within
the next two or three years.
apart from the direct cost of
the bill, most serious feature is
the provision for bank loans upon
adjusted service certificates during
the period between its passage and
September 30, 1925. The effect of
this provision is to transfer the
cost of policy loans from the gov
- 10, -
in the banks, to the extent that the
eX-service mon are able to obtain
loans from them. a mass of un-
liquidated, non-negotiable paper,
upon which the banks will be un-
able to realize until 1925. The re-
suit would be frozen bank loans
and initiation of currency and
credit, To the extent that the
banks are obliged to make loans
on adjusted service certificates,
their ability to take care of the
demands of business and industry
will be correspondingly reduced,
and even though the paper ac-
crued by the certificates may not
be eligible for rediscount at federal
reserve banks, the indirect result
is certain to be increased borrow
ings by members banks from the
federal reserve banks.
Most Serious Aspect.
"From the point of view of the
treasury, the most serious aspect of
these loans on adjusted service GER
tificates is the fact that the loans
would be floated at the banks on
the credit of the United States. The
plan, in substance. therefore, in
wolves a dangerous abuse of the
governments credit, for it contem-
plates the issue OF a vast amount
of government obligations which
are non-negotiable and have no
present realizable value unless
pledged with banks. in which event
the obligations become. in effect,
two or three year notes, which the
government would be obliged to
pay off in 1925 upo default by
the veterans.
Forced Loan From Banks.
This practically means that
cash payments on adjusted service
certificates would be financed for
the next three years through
forced loan from the banks. =
"From the point of view of the
banking system and the general
financial situation, it would be far
better if bonus is to be financed
by borrowing, for the government
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