Evening star., 1935-05-06
BONUS MAY STRIKE
AT TNAT|0N'S CREDIT
Yet Talk of Taxes to Meet
Specific Drain Seen Sud.
den Caution.
BY DAVID LAWRENCE.

the Treasury of the United States and
. serious impairment Of the national
credit?
- To put it another way, can the
Federal Government borrow only $2,-
0o0o0o,0o0 more than it plans to do
dnder the Presidents program?
: Members of the Senate, who have
ehe responsibility Of voting soon on
The soldier bonus plan. have been
discussing with each other in the
last few days just what Secretary
Morgenthau meant in his warning
before the Senate Finance Committee
with respect to additional expendi-
lures and whether. if the situation is
as serious as the Secretary paints it.
the President might be justified in
using $4,000, 900 900 out of his $4,-
$50 100000 so-called work-relief fund
to pay the soldier bonus.
Exact Testimony Cited.
The situation can best be described
bv quoting the exact text Of a portion
Of the testimony. the printed record
Of which has just become available:
Senator Bailey North Carolina
Let me call your attention to some
very impressive words here from your
statement (Secretary Morgenthaus):
Moreover, the credit of the United
states Government depends very
largely. in my opinion, upon scrupulous
adherence to the Presidents program.
Scr,,pulous adherence-that means
absolute. does it not?,
Mr.. Morgenthau-I wrote 1t. and
I do not say something ! do not be-
iieve."
Senator Bailey That was the
strongest word you could use, was IL
not?
Mr.. Morgenthau-I think so.
Securities Rates Discussed.
Senator Bailey - You say further,
II don't think we can continue to en-
tov the present favorable rates and
favorable market for the sale of Gov
ernment securities il the new expen-
ditures are incurred which 60 far be-
yond the limits of those which nave
already been outlined. A material oe-
cline in the market price OF Govern
n,ent securities. which would be very
likely to result from large expendi-
tures outside the budget, would work
q grave injustice upon all purchasers
of Government securities, and would
tend to slow up the whole recovery
program" That is your considered
opinion given to us?
Mr. Morpenthau-Freely
;. Senator Clark (MisourD-Mr. Secre-
tary, the same necessity for additional
revenue would exist If Congress were
to pass the Harrison bill as If it passed
the Vinson bill or the Patman bill?
Mr.. Morgenthau-If you do not
mind. Senator. would rather not get
into the different bills.
Senator Clark understand. but,
# understood your statement mo-
ment ago. your position Is that the
massage of any Of these bonus, bills
would require additional revenue?
Mr.. Morgenthau-That Is correct.
Hines Reveals Estimates.
A little later in the same hearings
Gen. Hines, head of the Veterans Ad-
administration and the man In the Gov
sernment who knows more about the
bonus figures and costs than anybody
else. testified that each Of the three
bills would cost sum over and ,bove
the amount actually owed by the Gov
ernment-that is. the increase in liza
bility would be 1880 .000, 900 with the
Patman bill. 81, 800. .000, 900 in addition
to the present outstanding certificates
IN the case Of the VinSon bill, and
an addition Of $3.50, 900 900 more than
the present certificates in the case OF
the Harrison compromise.
But even this did not clear up what
would be involved as an actual ex-
penditure today in the case of the
three measures, so the Senators drew
from Gen. Hines the statement that
the amount to be paid out to veterans
under the Patman plan would be
1884 900 900. and $2.016.500. 900 under
the Vinson plan, whereas the Har-
rison plan would require $4,000, 900
So the crux OF the whole matter was
that the Secretary Of the Treasury
predicted that the credit of the Nation
would be impaired unless correspond
AK revenues tdAdIlOIl WCtC NOtCA
Tax Talk Inconsistent.
This however, is puzzling to men,
bers of Congress, because, up to now
with billions of dollars of deficits and
with $4,000. 900 900 for all sorts OF
Tugwellian plans, no demand for in
creased taxation has been made. Why
they ask. Is it suddenly necessary to
provide increased taxes just because
the Government is going to pay OF in
advance a large part of what it owes
the soldiers anyway? And who ID
going to say that the fantastic work
relief plans are going to put money
into circulation any better than the
payment now Of the soldier bonus?
The present administration also Il
committed to a policy Of raising prices
and cutting down the purchasing pow
er Of the dollar This means that II
the veterans get their money few
years hence the dollars will not buy
as much as they would today. Such
Q step by the Federal Government
that is. postponement until matur-
ity-will only lead to demands for ad-
tustment in later years and. in lieu
OF this, o demand for pensions.
The American Legion did not conn
forth with its demand for cash pay
ment when the administration wa,
engaged in an economy effort just
after March 4, 1888. The Legior
revived its demand when the Roose
welt administration began spending
billions on unproductive public works
and the veterans intensified their in
terest in the subject when the ad'
ministration outlined in vague, genera
terms its idea on planned economy
and brain-trust spending.
Other Pertinent Questions.
But apart from the bonus question
the testimony Of Mr.. Morgentfau ha!
raised some interesting queries. Doe
the administration feel it has COM
30 the limit Of public spending ant
that it will encourage private spend
ing BY the removal Of restrictions OF
business. SO that recovery can be &C
celerated? Or does 1t mean that Their
IA a difference in the Treasury viev
between q budget out of balance du'
TO "the Presidents program" and
y,,,d0st oalt of balance when 1t come