Evening star. [volume] (Washington, D.C.) 1854-1972, 1926-12-25


according to the laws provisions.
On the other hand, a recent confer
ence Of bankers indicated the bankers
conservative suspicion of the language
providing for the Governments TAX
ing up the defaulted loans. 1t says:
THE director Veterans Bureau) may,
in his discretion, accept the certificate,
ETC." I'm his discretion" Suppose
he decides arbitrarily not to so ac-
cept, what recourse has the lending
bank? Or suppose some general ffnan-
cial conditions make 1t undesirable for
the director to take up the certificates?
Shall the banks hold the bag?
A study of paragraphs te) and G) of
the same section t503) shows that the
director has no such liberty to play
fast and loose with the lenders. (E)
provides that IL the veteran dies be.
fore maturity. 1.-The director shall
thereupon cancel the note and pay the
bank" CD provides that If the veteran
has not died and has failed to pay his
note, "the director shall cancel the
note and pay the bank" The imme-
date obligation Of the Government
to reimburse the lenders Is absolute
An appropriation of 500, 900 900 is al
ready in the hands of the director for
that purpose. and it is inconceivable
that any Congress would dare default
in good faith by refusing to make ap-
preparations from year to year to
cover requirements, since in the end
such sums are payable under present
obligations. "~
All loans must be made from the
bank to the veteran; there is no other
source. although it has been argued
hot ho VII
date the veterans Congress should
change the law to establish the Vet
Grams Bureau, with the support Of the
Federal Reserve Bank as the national
bank for all veteran borrowers, using
the appropriations already provided
and to be provided for covering de-
faulted loans.
The large city banks, when not in
spired with patriotic sympathy with
the struggling veterans, may refuse
to accommodate them. The loans are
too small to be attractive from a
bankers standpoint.
Banks in small cities will hardly
dare defy local influences demanding
the cooperation. Where a veteran
owes his grocer or clothier, or desires
to make purchase. payable with the
loan, the request for the loan will be
urged by creditor or salesman, even
without fee, and while the banker
might turn down the soldier, as he is
not a depositor. the merchant who will
receive the cash is a depositor, whom
the bank cannot afford to offend, since
the loan Is legally made, is absolutely
safe. being guaranteed by the Govern
ment.
The interest cannot exceed per
cent, and banks are now getting 6b
per cent, SO the bank might lose half
of per cent per annum. UIow much
has the veteran lost by his service In
defending the NationO Farmers may
borrow at 512 per cent, through the
Federal Land Banks. Last fortnight
the Government had occasion to Dor
row $500. 000, 900 and offered az per
cent, bonds. 1t was deluged with Of
fers amounting to 81 ,096, 0O0, 900 at 3H.
Since 1t assumes all risks on the vet.
Grams loans, 1t is asked by leading vet
Grams why 1t should not lend It's own
money at cost az per cent?. especially
II the bankers are dissatisfied with 6
per cent.
x X X
There are some f1nanciers who
view with alarm the relief of the
soldiers. on two grounds: (a) the in.
fiation OF currency by some millions
will upset the market and initiate
prices of all commodities. Other finan.
ciers'laugh at the idea that what sum
VIII be paid the veterans can possibly
amount to enough to affect general
trade. (b) The veterans will spend
the money recklessly. They will make
first payments on automobiles or use
the $S5 average to go to Paris next
September to the Legion convention.
They need guardians. and what bet.
ter guardians than bankers who do
not want to bother with $85 loans?
The average age of veterans now Is
about 80 years. Guardians needed?
On the other hand, there is always
the danger that eating into an endow-
ment insurance will wear it out in
driblets, doing no substantial good.
With an average age now of So years
in Is years the average veteran will
have reached the peak of his earning
power, il he is dependent upon his
hands mainly for production. Mental
work does not become Oslerized so
early. Hence as a matter of general
soundness in thrift all veterans are
advised and urged not to surrender
their policies Certificates, but to Keep
them intact, either for their dependents
or for themselves as old age endow-
ments.
tCopyriEht 1926, by Paul v. ColIins.)