Evening star., 1935-04-23
Revelation Comes as Shock
After Claims Made for
Harrison Plan.
DECLARES U. S. CREDIT
PERILED BY MEASURE
Tells Senate Finance Committee
Strain Would Be Too Great
Without More Levies.
BY the Associated Press.

BY the Associated Press.
Secretary Morgenthau told the
Senate Finance Committee today that
any of the bonus plans now pending
would require additional expenditures
and therefore would call for addi-
tional taxes.
The tall cabinet officer, surrounded
by a semi-circle of Senators, warned
that "a material decline In the mar
ket price of Government securities"
would result from any large expendi-
ture outside the budget.
Questioned by members Of the COM
mittee, Morgenthau said If the bonus
passed the Treasury was prepared
to recommend a Federal inheritance
tax that would raise from $500, 600, 900
to $500, 100000 year.
Includes All Bonus Bills.
Making a prepared statement, Nor
genthau did not mention any of the
various bonus plans by name, but on
being questioned by committeeman
he said his warning included the Har-
rison compromise proposal as well as
the full cash payment bill.
This statement came as something
Of shock to administration leaders,
as only yesterday Chairman Harrison,
who offered his bill in an effort to
reach a compromise satisfactory 10
the administration, predicted 1t would
not require new taxes.
Earlier, American Legion spokes-
men had demanded full cash pay
ment of the bonus before the commit
tee, rejecting compromise proposals.
Legion Backs Vinson BILL
They urged enactment of the Vim
son-Legion bill, rather than either
the inflationary Patman bill or the
compromise Harrison proposal.
Frank T. Hines, administrator OF
veterans affairs, also was on hand to
testify. Chairman Harrison hoped to
close the brief hearings by nightfall.
John Thomas Taylor. legislative
counsel, and Frank N. Belgrano. jr.,
national commander, appeared for the
Legion.
Text of Statement.
Morgenthau's prepared statement
follows In full:
"Your committee has under consid-
Grafton number Of bills proposing
plans for settlement of the World War
veterans adjusted service certificate
claims. I shall not attempt to 60
into the merits of any of these bills
or to analyze them In detail, believ-
ing that to be a service that can
best be performed by other officers Of
the Government.
"The Treasury Is, however, deeply
interested in any problems which in
volve additional or earlier expendi-
ture Of public funds than those for
which careful preparation has al
ready been made in budget and
financing plans.
II believe 1t is true of all the So
called bonus settlement plans which
you have had under consideration that
each one of them calls for greater or
earlier payments from the Treasury
than were contemplated in the orig
inal adjusted service certificate plan
and payments during the fiscal year
Of 1886, for which no provision has
been made in the budget Of that year.
Sees Peril to U. S. Credit.
"AIl of the financial plans made by
the Treasury for the coming year
have been based on adherence to the
Presidents budget. Moreover, the
credit Of the United States Govern
ment depends very largely, In my opin-
ion, upon scrupulous adherence to the
Presidents program.
"I don't think we can continue to
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