Evening public ledger. [volume] (Philadelphia [Pa.]) 1914-1942, 1922-03-13
stand PAT ON new
BONUS BILL PLAN
Mouse Committee Determined
to Report Measure Despite
u Mellon and crissinger
WILL NOT HEED WARNINGS

"destlHktONs EhaTCn io''NP""'N"''
members Of the Houss Ways and Means
Committee decided at a conference to-
day to stand pat on their determination
TO report the Compromise Soldiers
Bonus Bill, despite objections to its
provisions by Secretary Mellon and
Comptroller of the Currency Crissingcr.
The only amendment Of consequence
which appeared probable. Chairman
rordney said. was elimination of the
requirement that a war veteran must
decide within six months which Of the
options provided in the bill he would
accept.
Secretary Mellon. in his criticism
Of the bill in his letter to Chairman
Fordney, made public last night, ex-
pressed the view that the measure as now
drawn involved "a dangerous abuse of
Government credit" Secretary Mellon
disapproved the provision for bank
loans uron adjusted service certificates
A. indirect and forced" borrowing by
the Government. He contended that
ut Is both dangerous and unwise" to
seek to avoid paying the cost OF bonus
Tor the time being.
Secretary Melons Views
II notice the bill carries no appro-
priation." Secretary Mellon said. "but
merely an authorization of appropria-
tfon, which will mean. Of course. that
no moneys could be paid under it by
the Treasury unless further legislation
should make an nctual appropriation.
I notice further that the bill makes 10
provision whatever for raising addi-
tional revenue to meet the cost of the
bonus to the Government.
There is no way he asserted. "by
which the American taxpayer can avoid
the burden, and II bonus Is 70 be i'm +.
posed It is far better for all concerned,
that it be placed upon direct and
definite basis and paid for each year
out of current revenue. To do this
at this time will necessarily mean the
imposition Of additional taxes for the
purpose.
Mr.. Mellon. under the new measure
estimated the cost of the bonus at more
than 81 zoe. 100000 by January 1,
1925. He declared the bonus would
cost the Government from $500. 900, ,00C
to $400. ZOO. 900 for the next three OF
four years and more than 5000. 900, ,0OC
q year until 1913 was cited as possible
liabilities.
In tables accompanying his letter
1sAE. OHeltu DdStu
20 per cent of the men taking certif.
Gates and 90 per cent of them borrow
ing money on them. showing insurance
certificate option would cost the Gov.
ernmcnt. at the end of twenty years
$2,3I9. 500 900. He computed cost oi
an estimated . ne. cent of the meI
electing the land settlement option a,
$4,000. 900 in 1926.
II the reclamation scheme is carried
through. however. he said. a probabl,
800. 900. 600 a year after 1923 should
be added. He presented an estimate I,
show the maximum cash payment OF
account of default in loans to banks a
the end Of the first three years would b.
about $685., ,437 600.
Says 1t Would Freeze" Credit
Apart from the direct cost of tn
bill. a most serious feature is the pro
vision for bank loans upon adjuste,
iservice certificates during the perio,
between it's passage and September 80
1926" said Mr. Mellon. Its effect Is t,
transfer the cost of policy loans from
the Government to the banks. and t
place in the banks, to the extent tina
the ex-service men are able to obtair
loans from them. mass Of unliquid
non. negotiable paper upon which tn
banks will be unable to realize unit,
1925.
"The result would be frozen ban
loans and imitation of currency an
credit. To the extent that the bank
are obliged to make loans on adjuste
care of the demands of business an
industry will be correspondingly re
duced, and even though the paper ac
crued by the certificates may not b
eligible for rediscount ut the Fedora
J Reserve Banks, the indirect result |
certain to be increased borrowings b
! member banks from the Federal Reserv
(, Banks In order to provide funds fo
carrying the paper until it is eithe
repaid by the borrower or redeemed b
the Government in 1928.
Secs Abuse Of Federal Credit
From the point of view of tn
Treasury. the most serious aspect @
these loans on adjusted service certifi
Gates is the fact that the loans woul
be foated at the banks on the credit @
the United States. The plan in sub
stance. therefore. involves a dangerou
abuse of the Government credit. 10
1t conremplates the issue Of vas
are non negotiable and have no presen
realizable value unless pledged wit
banks, in which event the obligation
become, in effect. two or three yea
notes, which the Government would b
Obliged to pay off in 1925 upon defaul
by the veterans.
This virtually means that cash nav
ments on adjusted service certificate
would be financed for the next thre
years through forced loan from tn
banks. This Is borrowing on the credi
Of the United States fully as much a
IL the loans were made direct by til
United States and financed by direc
borrowings on Government bonds note
or certificates Of indebtedness. "