The New York herald., 1922-01-25
BONUS MPERILS
TREASURY, MELLON
WARNS CONGRESS
Only New and Heavy Taxes
Can Meet 1t, He
Asserts.
FEARS BOOST IN DEBT
Dangerous Initiation Would
Follow Increase, Declares
Treasury Head.
CITES VETERANS ITEM
Finds $l5O,O0O,OOO Being
Spent Yearly for Them Is
Second on List.
CITES VETERANS ITEM
Special Dispatch to THE New YORK HERALD.
New York Herald Bureau,
WnshingtOn. ID. e.. Jan. "A.

Special Dispatch to THE New YORK HERALD
New York Herald Bureau,
Washington. ID. g., Jan. "a. !
Secretary OF the Treasury Mellol
told the Ways and Means Committe
Of the House and the Finance Com
mittee of the Senate to-day tha
bonus legislation at this time-b.
whatever means paid-would be
serious If not disastrous drain upol
the Treasury, upon the nation ant
upon the people. Secretary Mellol
made these points:
The Treasury faces deficit for
the current fiscal years of $24,000,-
900. For the fiscal year 1923 it
faces a deficit of $167,000,000 on
the basis of the budget, with a
probable s112.000,00O additional
in items not carried in the bud
get, but to be appropriated by Con-
gress.
Taxes on the present basis are
too onerous for the country's
good.
Expenditures must be reduced
still further--not increased.
The Government faces a heavy
shrinkage in receipts. this shrink
age being faster than the lessen
ing Of expenditures by the great
economies effected.
Veterans Getting 100000.
Veterans of the war are not now
being stinted.. In all $3.50, ,000, 900
year is being spent for their re-
lief. This is more than any other
single item of Government outgo
except interest on the public debt.
1t would be dangerous in the ex-
treme to attempt to, finance the
expenditures involved In the
bonus through new borrowing.
II the Government should great
ly increase the public debt, infia-
tion and higher money rates
would prejudice business and in
dustry and the Treasury's own
refunding program.
The Treasury faces a serious
situation in the refunding of six
and a half billion dollars of war
debt, and this cannot be done IL
the process is embarrassed by
other operations.
If bonus legislation is adopted,
new and extraordinary taxes must
6e simultaneously provided to pay
for it. On the present basis an
additional 100000, 900 is needed
to balance the budget.
Most conservative estimate is
that the bonus would cost $780,
100000 and possibly cost $780,
100000. The estimated minimum
payment for the first two years is
SS50,000.000. with a probable
$1,000. 100000.
Use of foreign debt is imprac-
ticable and too costly.
Secretary Melons letter was sen
in response to request from Chair
man Fordney of the Ways and Mean
Committee Of the House asking hi
view on behalf of the committee will
regard to the outlook for Govern
ment finances and suggestions, o.
recommendations as to legislation.
Tackled to Debt BnIl.
After the Mellon letter was re
ceived, but before its contents ha,
been made generally known in boil
houses, Senator Simmons IN. c.
tackled the McCrmber bonus measur,
on the foreign debt refunding bill al
an amendment. He sought to pro
vide payment through sale or conver
sion of the foreign debt.
Secretary Mellon made no tax sug
gestions or recommendations bu
presented exhibits showing the con
dition Of the Treasury and the publ,
debt. He closed with the Statement
that he presented such an extended
analysis that the Congress nigh
have before 1t in definite form 9Th,
facts as to what financial conse
the soldiers bonus would en-
tail and what added burdens 1t woult
inevitably place upon the country.
Secretary Melons letter follows:
IL appears that for 1922 the bulge
estimates indicate deficit OF owe