Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-01-28
u. S. FINANCE UPSET
by BONUS PAYMENT
FEARED BY MELLON
Says Certificate Cashing
Would Retard Business and
ProIong Unemployment.
DISASTROUS EFFECTS
OF BILL ARE FORECAST
Mills Says Treasury Can Judge
What Is Best for Veterans
as a Whole.
Ry the Associated Press.

BY the Associated Press.
Secretary Mellon appeared before the
Senate Finance Committee today to
warn that cash redemption of the SOL
diers' bonus would upset the Nations
financial structure and greatly disturb
world equilibrium"
The veteran Secretary of the Treas
ury said the caShing of the adjusted
service certificates, which has been
urged as a relief measure, would Sc
riously retard business recovery, and
so prolong unemployment"
Treasury Shows Deficit.
He testified the Treasury will close the
fiscal year with deficit, according to
present indications, OF not less than
S375 10000 and that cash payment of
the face value of the certificates would
cost about $4,000 0O0,0 900.
II can say without qualification" he
said, that the Treasury Department
could not sell $3,400,000 900 of bonds at
the present time except on terms which
it would be very hard to justify and
without complete disorganization of the
Government and other security markets,
with the most serious consequences not
only to the public credit, but to our
entire economic structure"
Continuing, he said: But serious as
would be the direct consequences to the
Treasury and to the public credit, the
indirect consequences to the country
would be even more serious" Among
the indirect consequences" he listed:
Immediate depreciation very ma
terially of the price of all United States
bonds. The effect of which would be
equivalent to a capital levy on the
holders of all United States Govern
ment securities
Destruction of capital values running
into hundreds of millions of dollars.
Greater Depression Feared.
Death of the bond market for any
other kinds of securities.
securities, which, he said, mot only
would interfere with the marketing Of
our surplus products, but would also
greatly disturb world trade and world
equilibrium"
Eventually a deeper depression than
the one from which the world Is suffer-
ing today.
There is no economic merit in the
proposal Secretary Mellon testified.
FROM the point OF view OF SLlmulallng
business, it is a plan for unmitigated
imitation. with the disastrous results of
which the world is only too familiar.
ION the investment side it means the
exhaustion of the security markets and
the creation of serious impeachment to
business recovery both here and abroad
ITO the unemployed it spells further
retardation of the day when normal
employment will be available.
From the point of view Of the
United States Treasury it represents
complete disorganiZation of an orderly
program for the refunding and retire.
ment of our war debt and tremen-
dous increase in interest charges.
Not Advisable for Taxpayer.
ITO the taxpayer it means the de-
struction of all hope of the tightening
of the load of taxation for years to
come and a probable increase in taxes
in the very near future.
How the veterans and their fami-
lies, who, after all. are an inseparable
part of the American people and whose
prosperity and welfare are inextrica-
bly, bound up with the prosperity and
welfare of all, can hope to find relief
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