Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-02-14
Financing the Bonus Loans.

The so-called compromise" bill for
increasing the loan value of the soldiers
bonus certificates is a compromise be-
tween the advocates of various schemes
for cashing the certificates. 1t is not
q compromise with opponents. Secrc-
tary Melons statement en- the Ways
and Means Committee bill, reported to
the House yesterday and scheduled for
an early vote next week, interposes OBJ
jections to the measure that rerove all
possibility of administration support
and again bring the legislative and
executive branches of the Government
into a conflict that has become ira
ditional.
The issue, as raised by Mr.. Mellon,
10 not whether the certificates should
be cashed, whether the veteran bene-
dciaries need the money, whether the
certificates represent a debt that now
should be paid, whether the country
would benefit by the release Of cash
placed in circulation by increasing the
loan value of the certificates. The is
sue is whether the bill proposed in the
House can be financed without serious
damage to the Governments fiscal
plans. Boiled down, Secretary Mel
Ions statement asks, Where Is the
money coming from?"
The House Ways and Means Com
n1ittee did not report its measure with
out some attempt to answer that ques-
ton before 1t was asked. Statements
have been made that if the loan value
Of the certificates is increased to so
per cent Of their face value only so per
cent Of the certificate holders would
be likely to apply for loans, and while
the potential obligation assumed by the
bill amounts to $1,71I 500, 600, the net
increase in the obligation, allowing for
the amount represented by loans now
outstanding. would be 81 1856, SOC, 900. If
only so per cent of the certificate hold
ers apply for loans, the increased liabil-
ity would amount to something more
than $7oo,0o0,ooo, which approximates
the amount Of the adjusted service
certificate fund. The estimates of
the liability, as Mr.. Mellon explains,
run all the way from $3.50, 900 900 to
$1,00o,ooo.00o over the loans now out
standing. After discussing the amount
Of money available to meet the de-
naand, Mr.. Mellon concludes that "un-
less Congress is prepared to incur an
obligation without providing means of
meeting it, an appropriation of approx
mately $1,00o,o00,oOO is necessary"
Why not be honest about the pro-
posal to cash the certificates, either in
the form recommended by the House
Ways and Means Committee or by some
other method that may be substituted?
II the demand from the country at
large Is for cashipg the certificates and
that demand cannot be ignored, the
legislation should specifically state the
source Of the revenue that must fur
nish the cash and provide the means
70 raise this revenue. II it is neces-
eary to cash the bonus, it should be
considered as necessary to furnish the
money, either through increased taxa
ton or through some plan Of special
financing that would not, as the Treas
ury has warned, disrupt the securities
market of the Nation. Congress must
either furnish the money or the Treas
ury must borrow it.
1t Is not sound financial policy to
assume potential Liability in the hope
and belief that the actual liability will
be lessened by the refusal of con-
jectural number Of veterans to take
advantage of the new loan provisions.
In enacting bonus legislation the Con-
gress should look the matter squarely
In the face and plan for the assump-
ton Of the maximum obligation, and
II it cannot meet it be frank enough
to state that fact.