Evening Star Newspaper, November 13, 1936, Page 11

New Tax Law Inspires Big Dividends Evils to Be Brought Out in March and Next Deflation. BY DAVID LAWRENCE. IVIDENDS by big corporations to an amount beyond 1929 have come somewhat as s surprise since the election to most persons, who believe that the decision to disburse dividends has, somehow or other, an appearance of political cause and effect. The distribu- tion of dividends is, however, the direct conse- quence of the new tax law passed last Spring by Con- gress, in which corporations were to be penalized if they did not pay out dividends. What we are witnessing is the first steps in s piece of reform legislation that aims to force the private corporations to do what the Government has been doing—spend money taken out of what ought to be future reserves. The spending philosophy has many enthusiastic advocates, but it also has considerable opposition. Maybe the administration itself will wake up next March when the tax receipts come in and it is found that a revi- sion of the tax structure is necessary because the gains from taxes were not at all what ought to come from this source of taxation. The Govern- ment must make up its mind whether it prefers experimentation with the economic system or higher tax receipts. Many Small Stock Owners. ! 1In other words, what is happening today is & tax avoidance on the part of big corporations, who, by distrib- uting dividends enable their businesses to avoid the payment of larger taxes. Now, when the dividend money gets into the hands of the stockholders, .the fallacy commonly held is that the Government gets a big slice of tax revenue. There are supposed to be about 15,000,000 stockholders in the United States, and probably not more than 2,500 of them are in the so-called upper brackets where the Government takes from 50 to 75 per cent of the profits. The vast bulk of the dividend money will go to rela- tively small or moderate income groups and the Government’s share of this will be much less than it would have been had the Treasury been able to take, say, a flat 20 per cent 1in taxes out of the corporations before dividends were paid. ‘The Treasury is going to get, of course, s substantial increase in tax money, but not by any means enough to balance the budget, and, apart from social security taxes, the Fed- eral Government will be lucky to col- Sect $5,500,000,000 in taxes next year with which to meet its $8,000,000,000 proposed budget. Reaction o Set In. ‘The importance of what is occur- ring is that the heavy dividend dis- tributions may be very helpful in demonstrating conclusively to the skeptics that even when corporations are paying out more dividends than in 1929, the Treasury is still running David Lawrence. s substantial deficit in blmom—not‘ millions—of dollars. The lesson of all this will be a drjve to cut Federal expenses, for it is the only way income And outgo can meet. Entirely apart from the heavy deficit | for the 1938 budget when the figures are ready in January, the nation will face some concrete economic effects arising from the paying out of divi- | insignificance here yesterday as the | dends and recent increases in wages. Bmaller companies without existing | surpluses and new corporations which are virtually prevented by the tax law | from building up surpluses will find it | more and more difficult to compete | with the big institutions already en-| trenched in the field that are delib- erately increasing the cost of doing business by more and more wage payments. The monopolies or virtual monopo- Hes will get bigger and more powerful and will be able to pay out more and | more dividends and pay less taxes while their competitors will be strug- | gling to build up a surplus. Some | amendment to the law to permit new | businesses a five-year exemption from | she undistributed surplus tax law, and requiring them to pay a straight 15 or 18 per cent corporation tax instead, probably would solve the problem, provided some ingenious person would write a statute that really differen- tiated between new businesses and old 80 &5 to avoid the temptation to re- organize by means of new corpora- tions 30 as to take advantage of the sxemptions. Workers Gratified. The payment recently of increased wages is unquestionably a step in the direction of making the low-income groups better satisfied with the Ameri- ean economic system, but it is doubt- ful whether this was in any way re- lated to a conscicus interpretation of | broad political issues. It is more the sirect result of an effort to avoid high taxes and to invest in good will, know- tng now that pay increases can be followed in bad times by pay cuts. For with reserves depleted deep pay euts will be imperative in depression | i 8o long 85 America goes through a boom nobody will be much concerned with whet is happening, but the old- type of person who knows | that political government never has THE EVENING STAR, WASHINGTION, D. C. News Behind the News Roosevelt Keeps His Counsel Regarding Program as Rumors Sweep Capital. % BY PAUL MALLON. mmg.mmmnynmn-mwmadonuwmauzm ear muffs. A blizsard of Washington rumors is on. It is heavier and Mcm'{‘\ulouryunm,mwohblyvmwumnnm in the end. You hear on colossal authoriiy, for instance, that President Roose- velt is going to revive the old A. A. A, that he {favors the Johnson plan of N. R. A, that he favors the Richberg plan of N. R. A, that he favors & constitutional amendment for both N. R. A. and A. A. A, that he is going to throw out the cabinet, that he is going to rejigger his old com- modity dollar theory, and so on. The simple fact behind these rumors is that, while Mr. Roosevelt has been delivered from his enemies by the election, he is yet to be rescued from his friends. Out of the 25,000,000 people who voted for Mr. Roosevell, about 24,999,999 apparently consider the election result ss a personal vindica- tion and a mandate for some pet method of reform they have in mind. And each of the thousands of pol- g pnas iticlans who worked for his elec- / Z tion will whisper to you in private that Mr. Roosevelt is going to do whatever they happen to want him to do. The warning which the Presi- dent gave in s press conference the other day was not & customary evasion. His advice against pre- dicting the future course of gov~ ernment was apparently sincere, % for the obvious reuson that he has not m:d:‘ u; l;h An\lnAd :hntu he is going to do. That is, his purposes regarding N. R. A, A. A. A, etc, are well known, but his methods have not been selected, even in general outlines. The snow makers, of course, are merely attempting to influence his decision. . * % ¥ % The President’s working technique now is the same as during the early days of his administration. He accepts recommendations and orders studies by half a dozen different advisors on the same topic. limitation of hours and wage increases. Such opposite polar explorers as Gen. Johnson and Donald Richberg have submitted opposite methods. In addition, equal or greater consideration is being given to the Federal incorporation plan, vaguely hinted in a bill introduced last year by Sen- ator O'Mahoney, but written by certain presidential advisors. Some- thing along this line is supposed to be favored by the new White House favorite advisor, Tom Corcoran, co-author of the holding companies act, etc. There are also other plans for constitutional amendments and many other methods. No ome can mow say with any degree of certainty that the President will accept one or any of these plans, At the same time, he will, positively, have “a” new N. R. A. plan. The wisest of Washington counselors, who has lived and worked near the White House long enough to have an objective and philosophical view- point, sees the present situation from the inside in this analytical way: “Roosevelt reacts well to responsibility. It seems to make him big and great. For that reason, it is probably just as well the election was a sweep. “He is a great winner, but I would hate to be around wheun he loses, or to work with him when he was occupied with just an ordinary annoying job.” * % % Another thing which is still certain is that Jim Farley will retire from the postmaster generalship January 20. He will go back to New York in the building business to make some money. At the same time, he will continue as Democratic National Committee chairman. It is unlikely that Frank Walker ‘will be persuaded to take the posi- master job. It is impossible that Commerce Secretary Roper will get it. ‘There is a very strong prospect that the Post Office Department of the Government will be reorganized under a non-political business administration, believe it or not. The current commodity dollar rumor spread from a brief phrase Mr. Roosevelt himself used in his press conference. He indicated that he in- tended to pursue the purpose of the commedity dollar, without having one. This does not mean he has in mind any new artificial money machinery | to maintain a balance between prices and purchasing power. Apparently what he hopes to do is to work in a general way, as with his new N. R. A. to increase wages and purchasing power to meet the general price increase, which every one believes is coming. Not an ecomomist within his official family, and jew outside, still believe it is possible to manipulate prices directly by manipulat- ing gold and credit. Major senatorial problem is where to place Senator Norris. He is neither fish, flesh nor fowl, neither Democrat, Republican nor Farmer-Labor, but really the first real independent (with a capital I) who has ever been elected to the Senate. He really should be seatd out in the middle of the aisle be- tween the Republicans and Democrats, However, as the authorities wish to keep the aisle open, he will probably go back to his old desk among-the Re- publicans, much to their disgust—and his. (Copyrisht. 1936.) For example, on N. R. A, every one knows he wants to accomplish BY the Assoclated Press. ENCINO, N. Mex., November 13.— Rodeo thrills and spills from Salinas to Madison Square Garden faded into boys told how Bill Bourne took off from & careening “gas-buggy” to win the world’s first “coyote-doggin’” championship. Bourne downed his coyote in 22 minutes in the Armistice day running of what appears to be something of a cross between a motorized fox and hounds chase and the bulldogging events of the Western rodeo. In the orthodox event the contest- ant leaps from his saddle horse, grabs & bull by the horns and twists its head until the animal flops to the ground. But the “coyote-doggers” took off from stripped down automobiles and chased coyotes to earth across the open, rugged mesa. The title was Bourne’s because he was the only entrant to make his “critter eat dirt.” ‘The 22 minutes was measured from the time Bourne and his driver took out in pursuit of the coyote across the mesa until the animal was winded and pinned to the ground. Woodward Conn didn’t have what it takes to bulldog his entry and had TROU Coyote Bulldogger Wins Title In 22-Minute Auto Chase EISEMAN’S SEVENTH & F STS. TO MATCH A \ ODD COATS to shoot it when the coyote led him | into the rough country. Herman Nor- | ris crippled the coyote he jumped. | Bud Small, Bird Ross and Ernie Prior failed to qualify when they couldn't even catch up with the speedy ani- mals, Casusities included three coyotes, seven jackrabbits and a number of broken automobile springs. CITY TRAFFIC BRINGS DEATH TO BUCK DEER | BY the Assoelated Press. ELGIN, Ill, November 13.—A five- prong buck deer invaded Elgin's busi- ness district yesterday, became fright- ened at the heavy traffic and crashed through the plate-glass window of & shoe store. A shard of glass pierced the deer's throat, and it was shot by policemen who found the animal cowering on & heap of shoe boxes. State Game Warden Frank Wewet- ser said the buck apparently escaped from a zoo-or game preserve, although he had received no reports of that kind. Its death will mean a venison banquet Sunday for a children’s home. J.cPHE opinions of the writers on this page are their own, not ©7 mecessarily The Star’s. Such opinions are presented in | The Star’s effort to give all sides of questions of interest to its { readers, although such opinions may be contradictory among /| themaselves and directly opposed to The Star’s. We, the Peoplé : Farmers’ Demand for Overriding Supreme Court on BY JAY FRANKLIN. amusing theory that the election was only a great, big- hearted snake dance to uproot ; the Republican goal posts at $he end of the game received a sharp jolt when the farm organizations de- manded s revival of the Triple-A crop-control system which the Su- preme Court ruled out as uncon- stitutional by its 6-to-3 decision last Winter. Henry A. Wallace had called the farm leaders together to consider ways and means for “crop insurance in kind” through the “ever-normal granary” idea. The farm groups were by no means hostile to Wallace's Droposals, but what they really wanted was protection of farm prices through production control and benefit pay- ments, _The villain of the piece is the farmer's old enemy—that fear of plenty which obsesses our commercial society. The more abundant life has meant, in practice, starvation prices for the farmer and overproduction In terms of effective demand. The droughts of 193¢ and 1936 saved the administration’s hide, but “normal weather” is just around the corner and “H. A.” sald repeatedly in the course of the campaign that acyear or two of “normal weather” would catch the farmers flatfooted with unmanageable surpluses. So it was not altogether a surprise to “H. A"—and far from an em- barrassment—to have Ed O'Neal and the horny-handed sons of the soil come crashing through with what amounts to a demand that the ad- ministration buck the Supreme Court and the Constitution in the interest g:'ldpnee protection through crop con- Justices “on the Spot.” As & matter of fact, revision of the Constitution has long been one of Mr. Wallace's pet ideas and there is a con- siderable amount of sly satisfaction among his colleagues that the farmers caught the hint of “normal weather” and have lit a good-sized bonfire under the six elderly jurists who agreed that farming is a “local enterprise” not sub- ject to Federal regulation even by ex- penditures under the ‘“general wel- fare” clause of the Constitution. Before January, by present indica- tions, & number of merry little blazes will be crackling under at least aix black robes and the people who elected Roosevelt will be demanding con- stitutional fuel with which to fry their economic fish. All this is highly gratifying to Henry Wallace and rather disconcerting to those who believed that they could get the umpire to convert the New Deal victory into a scoreless tie. ‘This does not mean that crop in- surance is out. Far from it! insurance is just where it has been— a3 one of the phases of a many-sided agricultural policy which scientific land use, agricultural credit, soil conservation, tenant legislation and production control. The indirect production eontrol of the present soil conservation act was always considered as a fundamental part of the crop io- Crop | includes | A. A. A. Adds Weight to Wallace Program. surance plan, and another Triple-A would only make it easier to apply. No Coercion of Farmers. ‘The problem involved.in crop in- surance is really the protection of those farmers who cuiltivate regions where climatic conditions result in wide variations of yleld. Eastern agriculture in a more stable climate would not benefit much from crop insurance and, if insured, would have to pay far lower premiums than the crop gambling of the Western Plains. Moreover, for crop insurance to succeed it would have to be voluntary. There was never any intention of compulsory crop insurance, since hu- man experience has shown that there is no percentagé in trying to make farmers do anything they don't want to do. After a couple of famines, even the omnipotent Soviet officials learned that lesson. The Farmers’ Ideas. 8o the Department of Agriculture will continue to hold conferences and to study actuarial tables and practical facilities with a view to adding the ever-normal granary system of crop insurance to its growing armory of weapons for the defense of agricul- ture. In the meantime, Mr. Wallace's “surprise” at discovering that the farm leaders have no qualms at the idea of a direct reversal of the Su- preme Court adds power to his pro- gram. For this means that the most conservative section of the supporters of the New Deal has put itself on record as favoring not only the triumphant uprooting of the consti- tutional goal posts but also scoring & lot more touchdowns as soon as Con- gress gets back from the locker room and lines up for the second half. For that, strange as it seems, is what the farmers think the election was all about. (Copyrisht, ESCAPES DEATH Blowing Up Toy Balloons Saved Accident Victim. SCOTTSBLUFF, Nebr., November 13 (#).—Alfred Malchow, 21, who lay in a hospital here blowing up a toy 1936,) | balloon every 15 minutes to prevent an injured lung from collapsing, was homeward bound today, recovered from injuries suffered in an automobile accident which killed two others. His brother Arthur, 23, and Fred Poriso of S8andusky, Mich., died in the crash September 29. Malchow’s stomach was pushed, up- side down, into his left chest cavity and his heart was jammed into the right side of his chest. Physicians returned the organs to their normal positions in an operation October 186. Gives Wax to Post Office. A patron of the Birmingham. Eng- land, post office has presented it with a large quantity of sealing wax. FRIDAY, NOVEMBER 13, 1836. This Changing World French System of Alliances Built at Such Heavy Cost Begins to Crack. BY CONSTANTINE BROWN. HE French system of alliances—bullt so laboriously and with such heavy expenditure to the French taxpayer—is cracking. The war- frightened European nations either take refuge in an ephemeral neu- trality declaration, or are siding with the strongest—or what they think to be the strongest—military power. Belgium has openly broken away from & dangerous entanglement. Rumania and Yugoslavia are by way of getting out af the treaty of alliance with Prance, not officially, but factually. ‘The recent conference between the Rumanian premier, Tataresco, and his Yugoslav colleague, Stoya- dinovich, was arranged for that purpose. ok xx The governments of these two countries are in sympathy with the French, but are afrald that this friendship might lead them into trouble if they were to get in- volved in a war against the Fascist states. ‘They believe in the slogan “safety first” and are seeking that safety in & neutrality which will be benevolent toward the Reich, with whom they have close economic ties. A few years ago such & wholesale desertion of the Entente ship would have caused a panic in France. Now it causes a certain amount of umeasiness among the military and a certain section of the public, but the Blum government does not seem to care much. PFrance has been under s tremendous strain lately. Its people have gotten so used to the idea of an inevitable war that they give now a sigh of relief when they begin to see that the fewer people they have to protect the smaller are the chances of getting entangled in a war with the Germans, % X% The Blum cabinet sincerely believes that because of this imminent danger of & war the prospects for some sort of peaceful arrangement might be possible at the present time. Blum and his colleagues are looking hopefully toward the United States and President Roosevelt to contribute to the pacification of the world. Prance used to be, as far as disagreement is concerned, like a nagging ‘wife who repents herself when she sees that there is a chance of losing her henpecked husband. She is now willing to go all the way and collaborate to the pacification of the world at the slightest sign from Washington. — > * * x® % ‘Whether Washington is going to turn on the green signal depends on the preliminary conversations which will be initiated shortly. The President and the State Depart- ment do not want to go into a con- ference unless they see at least 80 per cent chances of being a success. ‘The previous so-called peace con- ferences have rendered the situ- ation what it is today because of their lack of intelligent preparation. Diplomats and political leaders used to go into peace parleys merely to show their peoplé that they were not idle. When their at- tention was drawn to the serious basic differences between the na- tions gathered around the green table they merely shrugged their shoulders and said: “We will irom this out between ourselves at Geneva (or London). Have we not got good-will?” And their pac- ifist followers applauded loudly their “‘courageous” stand. These mistakes are not going to be repeated if there is another meeting of powers within the next few months. That is certain. * * % % Mussolini has got recently a few extra lines on his forehead; he is wor- ried over matrimonial problems Since he took Albania under his wing, it was made clear to him that he is expected to find husbands for the numerous unmarried sisters of King Zog. And this is more than he had bargained for. 11 Duce is canvassing Rome and the provinces for suitable husbands for the young Albanian ladies, but it appears that the patriotsim of the young Italian noblemen goes only so far and no further. They are willing to die for the country and I! Duce, but not marry for him. WOMAN, 82, MET AT DOCK BY 40 GRANDCHILDREN Mrs. Anna Agnese Gets Rousing Welcome on Arrival From Italy. BY the Associated Press. NEW YORK, November 13.—Mrs. | docked. Anna M. Agnese, spry and robust at 82, arrived from Naples on her first | immediately plunged into the up- roarious business of greeting 40 grand- children she never had seen before. Her five children, who left the old country years ago, also were almost | strangers to her. They were such | little bambinos when she saw them terday. All in all, it was & tumultuous re- . first air circus at Salisbury. Headline Folk and What They Do Ranny Olds’ “Horseless Carriage” Upsets Lan- sing Residents. BY LEMUEL F. PARTON. LD date lines piece out history and yield a glimpse before and after, For instance: Lansing, Mich., Septem- ber 21, 1886.—Residents of this town were awakened at 3 o'clock this morn= ing by an outburst of ripping, roar~ ing noise that caused them to leap from their beds and rush to the win- dows. The din which filled the streets was unmistakably that of a major military engagement. The action seemed to be shifting, as the firing was heard first in one block and then another, Some citizens ran to the street, scantily clad, while others hastened to summon the authorities, to find the night watchmen already in pursuit of the shocking matutinal uproar. Civil War rifles and sabers were snatched from walls or attics. Sternly ordering women and children to stay indoors, men swarmed out for swift mobilization. Suddenly the noise ended. A strange odor filled the streets. Several blocks from its point of origin the cause of the disturbance was located. A bulky object was discerned, but, in the con- fusion, with the dim morning light, it was difficult for the excited and fright- ened citizens to learn what it was. Finally, with the watchmen holding back the crowd, the explanation was at hand. It was young Ranny Olds, testing out a contraption which he calls a “horseless carriage.” On account of the noise he had taken it out in the early morning so it would not frighten horses and cause runaways. Onlook= ers was amazed to discover that he really had made the thing go. The Olds boy seemed nervous, as the con- trivance had been jumping and roar- ing terribly, but, when the excitement had calmed down, he explained how it worked. It has a small engine, the exact nature of which could not be de- termined, although it is not a steam engine. It runs on three ordinary buggy wheels, with ordinary tires. The car- riage is built mainly of boxwood, with the frame of oak. The power of the engine is applied to the axle by a chain made of strap iron. There is some mysterious mechanism for regulating speed, also involved in starting and stopping, which the ingenious Ranny | had contrived from a set of lathe | gears. The wooden encasement acted as a sounding board and amplified | dreadfully the noise which, Ranny | explained, came from the engine. | Guidance is provided by a horizontal | last she hardly recognized them yes- | | trip to this country yesterday and lever. Ranny Olds. about 20 years of age, is the son of Pliny Olds, a highly re- spected machinist of this city. He made his “horseless carriage” in his father’s machine shop. He is & hard- working boy, with a good record in | high school, and amused citizens were indulgent about the disturbance he | had created. Constables, however, | warned onlookers not to approach too union when the Italian liner Rex | closely, on account of the danger of : explosion, and no close inspection w: | allowed. Judge L. D. Mumford a | dressed the elder Mr. Olds, who had Southern Rhodesia has just held its | joined the crowd. | (Cepyright, 1936.) EISEMAN’S SEVENTH AND F Hundreds of Fine ALL-WOOL Young Men’s $ 2 2.'50 CHARGE IT—NOTHING DOWN—4 MONTHS TO PAY PAYMENTS START IN DECEMBER-NO INTEREST CHARGES Men a modest cost are buying at Eiseman’s. Definitely new suits and topcoats, tailored of finer quality all-wool We’re selling more who want style and value at fabrics—smarter, richer patterns—that’s what $22.50 buys here. of these fine garments than ever before. You $ 3 95 Need trousers?—run to Eiseman’s. Choose get more for your money—really better values than ever before. Hun- dreds of ts to choose from, for men and young men. Single and double breasted models—sports and conservative types. Go to Eise- man’s tomorrow and see these unequaled values. BIG, BURLY, ALL WOOL O0’COATS, $22.50 Charge It—Nothing Down—4 Months to Pay-No Interest o i L i