The New York herald., 1922-03-13
wouid Not BE Desirable Paper.

Regarding the acceptance Of the GER
tificate by the banks, the Secretary
says that needless to say, paper
which is secured by non-negotiable
collateral. and which may not be re-
paid for three years. is not desirable
paper for commercial banks to hold"
Another serious objection to the bill
which the Secretary points out is the
provision that the loans be fioated at
the banks, on the credit OF the United
States. The plan involves danger
Gus abuse Of the Governments credit,
says the Secretary, for 1t contemplates
the issue of vast amount OF Govern
ment obligations which are 'non-ne-
gotiable 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 upon default by the
veterans"
He says this practically means that
cash payments on adjusted service
certificates would be financed for the
next three years upon forced loans
from the banks.
.
borrowing on the credit of the United
States fully as much as If the loans
were made direct by the United States
and financed by direct borrowing on
Government bonds, notes or certifl-
tates OF indebtedness"
Expense of Indirection.
In rejecting the point of view OF the
)anking system and general financial
situation. the Secretary says 1T would
be far better IL a bonus was to be
financed by borrowing for the Govern
ment to resort to direct borrowing and
10 provide for direct policy loans on
adjusted service certificates from the
butset than to attempt to avoid direct
cost to the Government for the time
being, at the expense OF both the bank
ing systems and the Government
credit"
After calling attention TO the tables
prepared by the Treasury actuary. the
Secretary continues:
1T is clear from these estimates that
whatever form the soldiers bonus may
take, whether IL contemplates the
thoroushgoing insurance plan or fol-
lows the outlines of the bin which is
pending. II viii cost from 5000. 900, 900
to $500, 100000 for the next three or
<our years, or may involve continuing
liability thereafter OF more than $780,
900, 900 year until i943. II is impos-
sible to avoid the cost IL bonus is to
be adopted. and IL Is both dangerous
and unwise 20 attempt to avoid Il for
tho time being by throwing the bur
den upon the banks of the country
and piling up for the Treasury an ac-
cumulated liability which in 1925 may
amount to more than $500. 600. .000."
The statements Of Secretary Mellon
confirm the objections TO the insurance
certificate loan scheme presented BY
Senator Glass. Senator Borah. Comp
troller OF the Currency Crissinger and
the most responsible financial experts
or the country.
Members agreed tonight that the
outlook for the certificate loan plan
was uncertain" Secretary Melons
letter will undoubtedly carry convic-
ton 10 Senator'S and Representativ
who have been awaiting definite
analysis OF the latest Tordney pro-
posal.
Chairman Fordney's opinion.
Mr.. Fordney docs not think the Sec
retarys letter win influence many
members whose sole desire Is to put
the bonus raid through the House re-
gardless OF It's fate In the Senate or
at the hands OF the President lie
said that he had received Mr. Melons
letter last night.
1T has not changed my views on
the pending bill In the slightest de-
yrce," he said, and doubt very much
II any OF the other members OF the
( committee will withdraw their support
| from tho hill now under consideration.
The fact Il VIC have known Cor some