Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-02-14
Smoot in Senate and HaWley
in House Back Mellon
in Opposition.
TREASURY HEAD SEES
SEVERE STRAIN AHEAD
Backers of Measure, However, Re
main Firm in Belief It Will
Be Adopted.
BY the Associated Press.

committees which deal with revenue
raising legislation joined Secretary Mel
lon today in opposition to the veterans
loan compromise.
Chairman Smoot of the Senate FL
nance Committee agreed with Chairman
Hawley of the House Ways and Means
Committee that the Government would
have to raise taxes or float bond issue
to meet the cost of the bill.
Hawley said he favored aid to veter-
ans. He added, however, it seemed the
benefit to veterans under the Bacharach
compromise, estimated to cost from
$7oo, 900 900 to $1,000, oo0, 900. would do
more harm to the country than 1t would
good to ex-service men.
Deficit to Be Larger.
Smoot warned the Government al
ready faced deficit at the end of the
fiscal year much more than he pre-
dicted several months ago when he
placed it at $3.50 600, 900.
Supporters of the veterans loan COM
promise appeared. however, to be hold
| ing firm in the face of the opposition.
|
certain Congress would not be material
ly influenced by the Secretary's state 4
ments. Garner said had it not been
| for a 5000, 0OO, 900 ''blunder" of Mel
| Ions when the bonus question was be-
| fore Congress in 1924 the matter would
have been settled.
"Mr. Mellon estimated q deficit for
that fiscal year of some $500, 900, 600,
whereas there was in reality surplus
of more than $300,000,000. small
error OF $900,000,000 within a period OF
less than 80 days"
Estimate of Payments.
Garner said officials of the Veterans
Bureau estimated that not more than
go per cent of the veterans would take
advantage of the loan provision, and
that under no conditions would 1t be
necessary to convert Government Sc
curities into cash in excess OF bOO,OOO,-
| 900 for the first six months.
THE best authority is that this would
not materially affect the bond and
stock markets" he added.
Representative Tilson OF Connecu-
cut, the majority leader, said he had
hoped a proposition which did not go
as far as the Bacharach compromise
i could have been decided upon, 80 l
could have gone along"
Representative Rankin, Democrat,
Mississippi, assailed Secretary Melons
opposition to the proposition.
Mellon Opposes Bill.
Secretary Mellon, basing objection
almost exclusively on the difhcult stu
alton of the Treasury-increaSed appro-
priations, dwindling revenues and inn
pending large refunding operations
communicated the administration view
to Chairman Hawley last night.
Hawley already had sought delay in
action on the loan plan, sponsored by
Representative Bacharach, Republican,
New Jersey, to ascertain definitely
where the money would come from, but
before the Mellon statement was issued
Speaker Longworth said he did not be-
heve any expression from the admin
istratfon would change his attitude in
favor Of the measure as a sane, SEN
Sible and sound" piece of legislation.
Bacharach said he would make the
formal report on his measure to the
House today. presenting also the Mellon
statement, but accompanying it with
comments of his own.
Sentiment is Divided.
The effect on the membership which
had appeared Overwhelmingly for the
bill, was not Immediately calculable, in
view Of the division among the majority
leaders. Longworth and Chairman
Smell of the Rules Committee were
virtually committed to the legislation.
The plans sponsors forecast, however,
| 1t would pass as scheduled.
It was because Of Hawley's position
that the committee in ordering II to 4 a
favorable report, turned the task over to
Bacharach.
Secretary Melons statement said he
could not too urgently recommend that
this measure should have reconsidera
ton In order that it should be placed
upon basis which will not damage our
whole financial system"
Need Of Appropriation.
He calculated the cost of the legisla-
ton at Its potential maximum, $l,720,-
600, 900 less the amount already loaned
and said it would involve an appropria-
ton Of approximately a billion unless
Congress was prepared to incur an OBJ
legation without providing means Of
meeting it.
Bacharach, asserting the veterans
borrowed only so 100000 last year de-
/ spite the extreme hard times" esti-
mated they would not withdraw more
than $250,000,000 under his plan.
But Secretary Mellon said the amount
could not be determined and estimates
ran from $3.50, 100000 to $1,000 900 900.
THE suggested use of the adjusted
service certificate fund ($772 O0O, 900
less $21 ,000, 900 reserved for payment of
death claims this year, does not alter
the situation as these reserves are in
Treasury obligations, which will need
to be converted into cash by means of
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