Omaha daily bee., 1922-03-13
Bonus
Plan Flayed
By Mellon
seersis~e,.. ,..'Sos. isury Says
~ ,,r,s AsN :. Proposal
pps'''" Equal Outlay in
Original Scheme.
No Way to Avoid Burden
BY ARTHUR SEARS HENNINo
Omaha nse leased Wire,

/ Warrington, March ls'-.AssAil-
Ing the new republican soldier bo.
nus bill as proposing "a dangerous
abuse OF the governments credit"
Secretary OF the Treasury Mellon.
In a letter TO Chairman Fordney
OF the house committee on ways and
means, asserts that the actual cash
outlay by the government in the
next three and 4 hall wears under
! the plan would be Sl.200,000,000 or
as much as the probable cost Of the
original cash bonus scheme.
The secretary expresses more Wig
orouS and sweeping disapproyal ot
the latest bonus plan than OF any
OF lis predecessors. He unsparingly
criticised the bank loan feature.
which. he asserts. would be closing
the countries financial machinery
with "frozen credits" producing in
ilation.
Much wiser than this scheme. lie
SAYS, would be the financing OF the
bonus by the issuance OF bonds and
In any event il the bonus IS TO take
the form OF endowment insurance It
would be better for the government
to loan directly TO former soldiers
on their certificates from the start.
No Way to Avoid Burden.
"Therc is no way concludes the
Mellon letter, by which the. Amer
ican taxpayer can avoid the burden,
and il a bonus is 10 be imposed II
is far better for all concerned that
il be placed upon a direct and deti-
mite basis and paid ior each year
out OF current revenue. To do this
at the present time will necessarily
mean the imposition OF additional
taxes for the purpose"
Mr.. Fordney received the letter |
last night, bat declined to comment
upon it today. That his opinion OF
the practicabilty and wisdom OF the
new plan has not been changed by
the arguments OF the secretary is
indicated. however. By the congress
mans assertion that he expects the
bill to be favorably reported with
out change by the committee to-
morrow. He said he would lay. the
Mellon letter before the committee
for its information.
Estimated Cost Heavy.
Tn view of the avowed object OF
tic new bill to spare the govern
ment any great expenditure. III the
next three years, one OF the features
OF the Mellon letter is the assertion
that it would cost immediately as
much as the original cash bonus. |
plan. Mr.. Mellon estimates that If
20 per cent OF the veterans chose the
certificate plan, e per cent took
farm and home aid, ) per cent Sc
lccted vocational training and z per
cent the land settlement, the direct
cost to the government during the
fiscal wear 1925 will be S289, ,o54, 600.
In the fiscal year 1924 the direct
cost would be S2l6,44O.OOO: in the
fiscal year 1925. $l28,0l3,OO0, and Ill
The first half of the fiscal year 1870,
s615.S22, or more than $780,
100000 within three and ape-halt
,ears. These estimates are based
m the assumption that half of those ,,
Who take certificates will borrow ,
rom the banks and default on the
oans, thus causing the banks to de-
nand the money from the govern
nent after October /, 1925.
The total cost to the government :
or the period of 20 years during
which the certificates run, under {
hese estimates, would be S2.995.- !
5000, not including probably $780, T
100000 additional per annum after
o23 if the land settlement aid plan /
5 developed. This ultimate cost is a
omewhat less than members OF the {
vavs and means committee had es- J
mated. Some have estimated that
he ultimate cost might be nearly a
5,0O0,000,000. v
Opposes Loan Feature. +
Apart fronf the direct cost OF the =
ill.," says Mr.. Mellon, "a most Sc
ious feature is the provision for 4.
ank loans upon adjusted service :,
ertificates during the period be- v
ween its passing and September so, :,
925. -.. =. L
"The effect of this provision is to
ansfer the cost of policy loans
rom the government to the banks, .
nd to place in the banks. to the cX- =,
snt that the ex-service men are able "
, obtain loans from them. mass :.
{ unliqud, non-negotiable paper I;
pom which the banks will be un- l. J.,
bic to realize until 1925. h h
The result would be frozen bank {,
,ans and initiation OF currency and ., =,
redit. To the extent that the banks w. "
re obligated to make loans on ad- T
lsted service certificates. their abii 9;
Y to take care of the demands OF n
ysiness and industry will be cor le
,spondingly reduced G
From the point OF view OF the cl
easury. the most serious aspect OF f.
lese loans on adjusted service GER al
ficates is the fact that the loans c
ould be floated at the banks on the T
edit OF the United States. The
an, in substance therefore, involves Ia
dangerous abuse OF the govern
cnt's credit"