Daily Kennebec journal. [microfilm reel] (Augusta, Me.) 1870-1975, 1922-01-25
Additional Tax.
Must Care for Bonus,
Treasury Head States


washington, Jan. 24i-Treasury o.
position to a soldier bonus feniains
unchanged. bat IL there IL to lie a DO.
nus 1t must be provided through taxa.
ton in addition to taxes Imposed by
existing law. Secretary Mellon declared
tonight in a letter to Chairman Ford
ney Of the House ways and means COM
mittee. Any attempt to provide for
the bonus through the use Of the
principal and interest Of the foreign
debt to this country he eohtended.
would be futile as we'll as unwise."
Mr.. MELONS letter was In response
to a request from Mr.. Fordhey for an
expression Of the Views Of the secre-
tary and the treasury department on
the governmental financial outlook for
the coming year ana half and for
suggestions as to legislation.
Submitting detailed estimates of
government receipts and expenditures
for the fiscal years 1922 ana 1928 ana
the treasury plan for refundifg the
short dated debt, Mr.. Mellon declared
no allowance has been made FOR any
extraordinary expenditures fpr d coli
diers' bonus, which would cost on the
most conservative estimates. he said,
probably not elss than ss5e,001,O p9 in
the first two years.
THE figures" he said. ''shew that
there will be no available surplus, but
more probably deficit. and that with
the enormous fefuhding operations
which the treasury has to conduct. it
would be dangerous in the extreme
to attempt to finance the expenditures
Involved In the bonus through neW
borrowings"
On the ether hand, no indirect means
Of financing the bonus would make 1t
any less an expense to be borne in the
long run by the taxpayer, Mr.. Meilen
declared, taking UP the proposal ito
use the Foreign debt as d basis for
bonus payments.
It is impossible. he maintained, in
advance Of funding arrangements to
estimate what may be collected. on
the foreign debt in the near future
by way Of principal or interest. The
obligations, which are Ii, the form of
demand obligations, are not he assert
ed. in shape to sell to the public, while
to offer THEM with the guarantee %
this government would Interfere with
the treasury's fefunding operations
and prove more expensive than the
sale of direct obligations of the gov-
ernmcnt.
cat the same time" he added, ut
would enormously coWplicate the in
ternatiohal situation ana Certainly ein-
barfass the funding negotiations. "
It would accomplish nothing. Mr..
MAleh argued, to set aside the foreign
debt for the payment Of the boriits,
even if enough could be realized in
time
AS the law now stands" he said,
"and in justice to the millions of Lib
erty bond holders, the government is
bound to apply any principal pay
ments by foreign governments, as
we'll as any proceeds of sale, to the re-
trement of outstanding Liberty bonls.
about ten million of which were issued
in the first instance to provide for ad-
vances to foreign governments.
Interest collected, he declared,
SHvuiu diso .eO u pfONiue Interest OH
Liberty bonds, 50 that IL the proceeds
OF the foreign debt were applied to
the bonus the government would. 10
that extent. have to provide for the
principal and interest Of Liberty bonds
from other sources. This means. he
asserted. taxes otherwise UNNECESSARY.
1.-THE plan to use the foreign obli-
cations to pay a soldier bonus,"' Mr..
Melen continued. "would still lpave the
burden on the shoulders of the Amer
lean taxpayer"
should Congress-" he concluded.
determine to adopt the policy of pay
ing a soldier bonus It would be iieces-
sary to impose general taxes or broad
classes OF articles or transactions in
order to pay it, For such taxes. IN
their mature Of wide application.
might be said as substitutes FOR exist
ing taxes. but the treasury would hes.
itate to Recommend them as additional
taxes. except to meet some extfaoraia
nary purpose"
'