The Mena weekly star., 1922-03-16
9ONUS BILL WON'T
 DO, SAYS MELLON
ecxetaxy of the Treasury Declares ' Plan to Force Banks to Lend on Certificates Is Dangerous
 Abuse Urges Taxation.

Y Washington, March 13.--The new oldier's bonus bill as drawn by Mouse Republicans was attacked last tight by Secretary Mellon as involv- nq "a dangerous abuse of govern
 aent credit.'
 | Replying to request for the treas |ry's comment on the new bonus bill, 1r. Mellon, in letter to Chairman Yordney of the House ways and ns6ns Committee, made public by the
 roa4ury, sharply criticized the feat lx6s of the proposed measure pro- ddinx For loans by banks upon ad-
 1ated service certificates as indirect
 {orced" borrowing by the gov
 41meut. He suggested that "the di- <o<< and regular way" to provide for pH1si-up endownment insurance |kaatUrc would be to authorize insur- |6rc< certificates with provision for |direTf policy loans to be financed by |E6o government.
 Mellon contended that s'it is |bQth 6angerous and unwise" to at |temnt fo avoid the cost of the bonus |E6f Ell time being.
 Taxpayer Can't Escape
 Ere Is no way,D he said, "by
 zIif& <he American taxpayer can 4118 <6e burden, and if bonus is to 4 1<1oEed, it is far better for all
 6II61xned that 1t be placed upon di-
 6ck md definite basis and paid for \ 1ch YeAr out of current revenues. To | fl16 at this time will necessarily i&6l1 tfe imposition of additional e Ih6 8ccretary estimated the cost of |n1& I0l11zs under the bill, considering E 3c4 1T the possible choices offered to ot6<1&1, at more than 1900 mil |e:on oI|ars by January 1, 1926. v2 21ot@x0< form the bonus measure K nE4k <zke, he asserted, would mean K cot t8 the government of from 300 ID lQQ million dollars for the next |: hree yeers or four years, and possi- |Il{y continuing liabilities thereafter of |llore th4n 200 million dollars a year
 (@e2lls Harding's Suggestion. Nr= Mellon called attention to the | n1 1t the bill makes no provision | H 1I1I1g additional revenue to meet .1ozzQzk of the bonus and recalled to K f Kcxdney President Harding's let r of February 16, in which it was lgRested that a general sales tax be 1acted to provide the necessary bI luds or the bonus legislation be ostponed. Secretary Mellon's let r. in part, follows;
 |.. "1n the calculations as to the cost |- the certificate plan, it is assumed |a at half of the veterans will borrow fl their Certificates from the banks B. Id default on their loans. in view of .le attractive provisions for cash re-
 nnpti0n in case of default.
 Tn 3K Years 1,200 Million. |A Thin would mean total payments s1ttLn about 3h years of more than |N xQ0 million dollars. These esti- |hs Atee take no account of amortiza- |s on or other reserves against certif- De I<o1 tQ remain outstanding after the k HeHl yeAr 1926, which would add at so1t 70 million dollars a year to the |r ur<1t charges, or of possible addi- |g onal costs. under the land settle |hs ent plan if the reclamation projects |slerein authorized should be carried |diru. It is estimated that about 100 k fIlion dollars per annum would be |M squired after 1928 if these reclama- ron pr0jects should be pressed.
 From the point of view of the | sensury, the most serious aspect of slese loans on adjusted service certi sAtes is the fact that the loans |hs4uld be fioated at the banks on the |h H1It of the United States. The |ir in substance, therefore, in- |s xxee 2 dangerous abuse of the gov 4ent's credit, for it contemplates |ul Issue of vast amount of govern 8ut ob1igations which are non-nego- b. 14fe and have. no present realizable slue unless pledged with banks. in |r Hieh event the obligations become, in |h two or three-year notes. which kayernment would be obliged to o8 in 1925 upon default. by the t'+AH{lH-