Evening star., 1922-01-25
MELLON COMMENT
ON BONUS STUDIED
Secretary Tells House Only
Way to Make Provision Is
by Added Taxes.

Congressional leaders preparing tc
carry out the administrations plan
to put through a soldiers bonus bill
were analyzing today the statement
Of the Treasury's reason for contin-
ued opposition to the bonus. as trans
mitted in letter from Secretary
Mellon to Chairman Fordney of the
House ways and means committee.
Writing TO MIR. Fordney late yester-
day in response to request for al
expression of the departments views
Secretary Mellon declared that any
attempt to provide for the bonus
through use of the principal and In
terest of the foreign debt to this
country would be futile as well as
unwise," and that an attempt to dc
ings would be dangerous in the ex-
treme."
If there Is to be a bonus. however
the Secretary said, 1t must be pro,
vided for through taxation. and
through taxation in addition to the
taxes imposed by existing law.
kstim...es of government receipts
and expenditures for the fiscal years
1922 and 1923 showed there would
more probably" be deficit than a
surplus, he said, and there had been
no allowance for such additional eX-
penditure as would be involved in a
soldiers bonus for the first two years.
On the most conservative estimates,
he said. this would probably be not
less than $S50.000.000.
1t would accomplish nothing, MT.
Mellon argued. to set aside the
foreign debt for the payment OF the
bonus, even if enough could be
realized in time.
Retirement Of Bonds.
'.As the law now stands he said.
land in justice to the millions of
liberty bond holders, the government
ments by foreign Cover nrents, as
well as any proceeds of sale, to the
retirement of outstanding liberty
bonds. about 100000 of which We're
issued in the first instance to provide
for advances to foreign governments
Interest collected, he declared.
should also go to provide interest on
liberty bonds. SO that if the proceeds
of the foreign debt were applied to
the bonus the government would to
that extent have to provide for the
principal and interest of liberty bonds
from other sources. This means. he
asserted, taxes otherwise unnecessary.
The plan to use the foreign obli
cations to pay soldier bonus, there
fore" Mr.. Mellon continued. would
still leave the burden on the shoul-
ders of the American taxpayer"
Discussing the financial outlook of
the government, Mr.. Mellon presented
detailed figures covering budget esti-
mates which, he said. indicated a
deficit of over s24,000.000 for 1922 and
a deficit of over s1S7 .O00. 900 for 1923,
not allowing for $4,000, 900 requested
by the Shipping Board for the paS-
ment of claims. s7.O00.00O to be spent
for Russian relief by the United
States Grain Corporation and $1,000
goo to be paid as the 1923 INSTALL
ment under the treaty with Colum-
bia-a total of $112.90O.00O.
Must Reduce Expenditures.
To overcome these dencits. he ex-
planned. expenditures must be reduc-
ed in the aggregate by about $780,
100000 in the next two years. while
at the same time the government
faces a heavy shrinkage of receipts.
In view of the depression in busi-
ness, he added, there is grave doubt
whether the estimates of receipts
which appear in the budget can be
realized.
The overshadowing problem of the
Treasury. Mr.. Mellon declared. was
the handling Of the, public debt.
year to s23.43S.9S4.351. of which
$4,000. 100000 falls due within the
next sixteen months. The refunding
of this vast maturity, he asserted,
would require the Treasury's con-
How much additional taxation would
be necessary to pay q soldiers bonus,
Mr.. Mellon declared, would be diff
cult to estimate. but on the basis of
the McCumber bill, 1t would appear
that the total cost would be about
1880. 100000, Of which at least $780,
100000 would fall due In the first
two years of operation. and possibly
as high as $1.000,000.0 900. if an unex-
pectedly large number Of veterans
should choose cash. The minimum
cost he placed at about S1,560, ,000, 900
based on cash payments. and the
maximum cost at about $3.50. .0O0. 900.
IL all the veterans should take certifi-
Gates in lieu of cash.
These estimates. he added. took no
account of the cost of administration.
and the expenditures involved would
be in addition to about 450,000,000 a
year for 1922 and 1923. already esti-
mated for relief of disabled veterans.