Great Falls tribune., 1922-03-13
WAR BOUNTY
CONTINUED From Page onel

between its passage and September
so. 1925. The effect Of this provis-
ion is to transfer the cost Of policy
loans from the government to the
banks and to place in the banks, to
the extent that the ex-service men
are able to obtain loans from them,
mass of unliquidated, non-negotiable
paper, upon which the banks will be
nnabIe to realize until 1925. The
result would be frozen bank loans and
initiation of current and credit. To
the extent that the banks are obliged
to make loans on adjusted service
certificates, their ability to take care
of the demands of business and indus
try will be correspondingly reduced,
and even though the paper accrued
by the certificates may not be eligible
for rediscount at federal reserve
banks, the indirect result is certain
to be increased borrowings by mem
banks.
Implies Forced Loan
From the point of view Of the
treasury, the most serious aspect OF
these loans on adjusted service GER
would be floated at the banks on the
credit of the United States. The
plan in substance, therefore, involves
a dangerous abuse of the governments s
credit, for it contemplates the issue
Of vast amount of government obii-
cations which are non negotiable ana
have no present realizable value unless
pledged with banks, in which event
the obligations become. in effect, two
or three-year notes which the gov
ernment would be obliged to pay off
tn 1925 upon default by the veter-
ans.
This practically means that cash
payments on adjusted service certifi-
Gates would be financed for the next
three years through forced loan
from the banks.
If Put On Insurance Basis
From the point of view of the
banking system and the. general fin
ancial situation, it would be far bet
ter if bonus is to be financed by
borrowing, for the government to re-
sort to direct borrowing and to pro-
vide for direct policy loans on adjust
ed service certificates from the out
set If congress concludes to adopt
soldiers bonus with paid-up endow-
ment insurance as its chief feature,
the direct or regular way would be
to authorize insurance certificates with
provisions for direct policy loans and
the amortization or other reserves
that would be required as a matter of
plan on this basis. il chosen by all ex-
service men eligible to elect it, would,
according to the best available esti-
mates, mean an aggregate liability of
about 81, 500.0O0,00O and on the basis
of O 2O-year maturity would involve
the following current charges each
year for the next 20 years (1) the
payments necessary each year on ac-
count of the maturity Of certificates
on account of death averaging about
$4O.OOO,O0O: f2) amortization pay
ments, computed at 4 per cent com
pounded annually, calculated to pro-
vide within 20 years for the whole
liability. averaging about $123OO0. 900
year: and GO provision for direct
policy loans from the government on
about the same basis as is customar-
lily allowed by life insurance com
panies, in an amount that would prob
ably average not less than S2OOOOO,-
900 year for the first two or three
years of the operation of the plan.
On tuiS DdSts anu llsuTdllCG pan.
standing by itself, would cost at the
minimum about $40O,O00,00O a year
for the next few years.
'It is clear from these estimates
that whatever form the soldiers
bonus may take it will cost from $500
100000 to $40O,000,000 for the next
three or four years. and may involve
continuing liabilities thereafter of
over $500, 100000 year. until 1943.'