The watchman and southron. [volume] (Sumter, S.C.) 1881-1930, 1922-03-15
BONUS Bill
GROSS ABUSE
OF CREDIT
Secretary Of Treasury
Mellon Gives His
Opinion in Pl in
Language Of Pro-
posed Raid on the
Treasury

house Republicans was attacked
tonight by Secretary Mellon as in
volving "a dangerous abuse OF
government credit
Replying to requ It for the
treasury comment on the new bo-
nus bill, Mr.. Mellon in Il letter 10
Chairman Fordney. made public
tonight by the treasury, sharply
criticised the features OF the pro-
posed measure providing for loans
by banks upon adjusted service
certificates. as indirect and fore
ed" borrit.wing by the government.
He SUGGESTED q that the direct an.l
regular way" TO provide for Il paid
up endowment insurance feat.:r>.
wou:ld -. TO authorize inSura lc:.
cer:.i:c;s1e:> with provisions for Ill
rec: pulcy loans to be financed by
the government. Mr.. Mellon con-
tended that 1T is both dangerous
and unwise' to attempt 10 avoid
the cost Of the bonus for the time
being.
There is no way" he said. "by
which the American taxpayer can
avoid the burden ARD if a bonus
is to be imposed, it is better Tor all
concerned that it be placed upon 4
direct and definite basis and paid
for each year out Of the current
revenues To do tbs at this time viii
necessarily mean the imposition OF
additional taxes for the purrose
The secretary estimated the cost
o! the bonus under the bill, consid-
ering each OF the possible choices
offered TO veterans. a. more than
$I.2O0,000,c zoo by J0:iuary. 1926.
Whatever form the bonus measure
might take, he asserted. would
mean cost to the government OF
from $500. 100000 to 500 100000
for the next three or four years
and possibly continuing liabilities
thereafter OF more tn: \ $200,00O.-
900 a year until l943.
AFR Mellon called attention 10 the
fact that the bill makes no prori-
sion for raising additional revenue
to meet the cost Of the bonus and
recalled to Mr. Fordney, President
Hardins's letter of February IL. in
whi,-i, it was suggested that :. SEN
er.,i sales tax be enacted to provide
th4 ieccssary funds or, that the
bonus legislation be postponed.
Secretary MELONS letter saii in
pait:
1.-The bill makes no provision
whatever for sinking fund, amori-
Zation or other reserves against
either the liabilities that would be
thrown upon the government III
1925, or against the liability on
the certificates 50 the end OF 90
years. nor does it make any pr"vi-
sion for the payments which wo:i!.t
accrue in ordinary course rom
year to year on account OF tie
death of veterans.
The direct cost to the govern
rrent CT Il bill carrying these pro-
visions for about $500. 600 eN-:'.r
vice men is almost Impossible 20
estimate because of the uncertain
" as TO which of the plans Will he
chosen and in what properties.
Dut the government actuary nas
prepared tables OF estimated cost
on the assumption that 20 per cent.
will choose the certificate plan, %
per cent. the farm and home plan.
per cent. the vocational training
plan. and.2 per cent. the land SCI
tlement plan.
IN the calculations as to the
cost of the certificate plan. it is
assumed that half OF the veterans
will borrow on their certificates
from the banks and default on tlcT
loans. in view Of the attractive pro-
visions for cash redemption in case
of default. II appears from
these tables that on the basis as
sumc6 by the actuary the total dl-
rect cost to the government in the
fiscal year 9.3 would be $3.50
954 900: in the fiscal year 1924.
S2lG. 440 900: in the fiscal year
1925, $l2S.G13. 900, and in the fiscal
year 1926. for the most part by Oc-
tobcr -. 1928. when the adjusted
certificates used as security tor
bank loans would have he redeemed
$6l5. .S22 900. This would mean to-
;al payments within about three
and one-half years Of over Sl.2Oo.-
600 coo. These : IN Il " : take
no account Of amortization or
OF her reserves against ccrtlilc. tion
To remain outstanding after the tiS-
cal year 1896. which would add III
least $40. 900 600 4 year t" the cur
rent charges. or Of possible. add
tional costs under the land settle
mont plan il the rcclar tion pro
iecta therein authorized should b"
carried through 1t is estimated
that about 500 600. .000 per anniim
would hc required after l?.3 ii
these reclamation projects should
be pressed
"If all the veterans should choose
Che certificate plan he total face
value Of the certificates would
amount To over $500 900 .ooa dis
trib,,ted over % years. and if al
the veterans should choose The
farm and home Gtd plan tn" total
tc"St would amount To SOB. 600.
900. within the next two or three
years
apart from the direct cost of IN"
hill u most serious feature Is tn"
provision FOR bank loans upon ad-
n1stcd service certificates durin"
the period between its passage aud
September 80, 1925. The effect Of
+1;c ,ro,-;c;o,, &c fo fra nsfpr the cost