Evening Star Newspaper, October 28, 1937, Page 13

) > a Tax Structure Revision Needed. Improvementsin ‘‘Crazy Quilt” Would Help Business, Is Theory. By DAVID LAWRENCE. GENERAL revision of the entire Federal tax structure so as to afford a better balance and a more equitable relationship between rates may be confidently ex- pected to materialize for the coming calendar year 1938 on recommendation of Secretary Mor- _ genthau and with the approval of § President Roose- 3 velt. This develop- ment,perhaps one of the most en- % couraging American ness could pos- sibly anticipate at this time, will doubtless not be eredited until the & ‘Ways and Means Committee of the House and the Finance Committee of the Senate get together next month and begin con- sideration of Treasury proposals. But the important fact is that the full drive of the administration will be behind the effort to achieve tax revision. Heretofore tax “revision” has usually meant indiscriminate increases in rates and the public has come to look upon every change as more burdensome than its predecessor. But the time now has come for a realistic understanding that it is not a revisjon of rates but a revision of tax methods which is bound to bring sustenance and support to a business recovery. America's tax system has been developed with typical political in- consistency as a sort of crazy quilt. Rates have been compromised between extremes in Congress that never have represented any well-considered tax theory as & whole, but simply the individual efforts of certain Congress- men to win political prestige by soak- ing this or that class in the com- munity. Business Recession Factor. David Lawrence. Today the complicated tax system of America is one of the major factors in the current business recession. Considerable study has been given by Roswell Magill, Undersecretary of the Treasury, and some of his asso- ciates to the British system of ad- ministering taxes and it may be that| some of the methods that have worked well in Great Britain will be found | among the Treasury's forthcoming recommendations. A good example of the clumsy and destructive way that tax laws have evolved may be seen in the way the undistributed profits tax was intro- duced. President Roosevelt proposed in 1936 to abandon the corporate income tax, the excess profits tax and the capital stock tax and to substitute the undistributed profits tax for all of them. Apprehension over possible Yoss of revenue and the usual hit-or- miss methods in drafting tax legisla- tion prevailed so that finally all these taxes were retained as well as the so- called substitute. Also instead of doing away with the graduated income tax for corporations, the principle first injected in the 1935 law was modified somewhat to provide a lower starting point, but the top bracket was kept unchanged at 15 per cent. In other words, there has not been in the making of our tax laws any well- defined plan, but & sort of makeshift that has suited the political condi- tions of the moment. So far as tax theory itself is concerned, very little popular education on it has been de- veloped. Many business men talk frequently of wanting to see a “broad- ening of the base,” by which they mean & lower exemption, and while there is undoubtedly much merit in reducing the exemptions somewhat, the latest studies of the Twentieth Century Fund research staff show that hidden taxes are proportionately more burdensome to the persons of small incomes than any other group. The Basic Need. Basically, what is needed is a general recognition of the important prin- ciples that should guide the Congress in making tax laws. First and foremost is acceptance of the principle that “capacity to pay” is a desirable yardstick, but that de- struction of incentive has ill effects upon the normal expansion of business activity, Secondly, it will be conceded uni- versally that the primary purpose of taxation should be to get the revenues necessary to balance a prudently built budget, but here again as between two methods both of which are likely to attain the goal, the decision might well be in favor of the tax that bur- dens least the exchange of goods or the price structure. Thirdly, the imposition of a tax purely to accomplish social reform is detrimental to the growth or expan- sion of business. This principle per- haps could better be stated thus: Tax- ation to get revenue is desirable but regulation in the guise of taxation is undesirable. Fourthly, the revision of taxarates, some of which may actually reduce |H. 0. L. C. COLLECTIONS | averaged 96.3 per cent of the amount "THE EVENI‘%’G STAR, - WASHINGTON, D. - C, What’s Back of It All .y . Case—U. S. Probes Ship’s Sit-Downs. By H. R, BAUKHAGE. HERE has been much high romance written of the case of the ill- I fated steamship Alfic, her story hias been called another “Mutiny 5 “Sea-lawyers” heve already tried her case. But the real tale hasn't been told, won't be officially until the repre- sentatives of the Department of Justice begin the preliminary hearings in November. Likewise, the plans of the Government for handling the case, which may be one of the most significant i~ American maritime history. There was no Capt. Bligh aboard this ill-fated ship. There was no blood mutiny. But the case may be the turning point in the efforts to immovable body of the laws of the sea will come up squarely against what modern labor leaders believe is an “irresistible force”: The right to strike whenever and wherever such action is most effective. ‘The Department of Justice takes up the case with gloves, not because lawyers say they have the Gov- ernment trussed to the yardarm— but because of what's behind it. The seamen cry that they passed in 1790, when “five lashes” on the bare back was part of the rules of th® Navy. This, according to the Gov- leading. It can be definitely stated that they are now planning to prosecute under section 483 of title 18 of the United States Code. This is & part of the law, revised, codified and enacted in 1909, The specific charges will include conspiracy, confederation and agree- ment to vesist the lawful orders of the master of the ship. The defense will, in all probability, declare that such law as there is applies to the “high seas” not to a ship in port, explanation published in conjunction with the codified law: “That the admiralty and maritime jurisdiction of the United States extends to the high seas and all navigable waters within the territory of the United States will not be questioned. It seems equally clear that it when on a navigable water within the limits of a foreign state, and all cases arising on board such vessel while on any such waters are clearly cases within the admiralty and maritime jurisdiction of the United States.” _There is precedent, too lengthy to cite here. Testimony will undoubtedly bring out some interesting facts which haven't been broadcast before. For instance, there were three, not one; sit-down strikes on the Algic, not including the one before she sailed from Baltimore. ville. The men demanded an extra “wiper” in the engine room. The captain hired one, stating that the requirements of the Marine Inspection Division of the Department of Commerce had already been fulfilled and that he would prébably have to pay for the ertra Then, according to information in the hands of the Department of Justice, the men sat down again, two hours or so later, and demanded two more wipers. A union representative came aboard and convinced the men they had enough. shore, dropped anchors fore and aft. Non-union stevedores came aboard at 6 a.m. The men sat down. The current was strong and the ship began to drag anchor. Nece: sary orders were given. The men refused to get up and the officers The cable from Chairman Kennedy arrived. The men had the choice of being put in irons or resuming work The strike ended. Those are the high spots of the story from the “Government side,” if you want to call it that., Future of Merchant Marine Seen Involved in Algic on the Bounty.” Some of the facts hitherto unrevealed can now be related. build & merchant marine—if we are to have one. The reason is that the it is considered a difficult one from the legal standpoint—though the sea~ are being prosecuted by a ’'law ernment's lawyers, is highly mis- * %k k% To this the Department of Justice lawyers may well reply with the extends to vessels belonging to the United States or to citizens thereof * KK K The first “sit-down” after she started was in the port of Jackson- man out of Ris own pocket. The ship later put into Montevideo, and, about & mile and a half from did the job. The ship was put into position again. Of course, there is another side. Disinterested persons say that the food on some of “these ships is ter- rible. There are other bad living conditions. Perhaps the public will believe that “the end justifies the means”; that no other way is open to im- prove the conditions of the sailors except refusing to obey the master of the ship. That, however, doesn't concern the law. Meanwhile, it is admitted that morale and discipline on American ships have reached the point where it will take more than commissions and subsidies to save our merchant marine, * ok K American peace sentiment is supposed to have reached its all-time high, but apparently there are still some folks who think Americans wouldn't be averse to making a little money out of a nice war, just the same. One of this group appears to be a New York investment house This firm sent out a letter to prospects which opens by saying that some “substantial investors” have learned that they can “secure from 8 per cent to 12 per cent on their money without saerificing safety.” But the clincher of the letter has the real bait: “If you want a better than average return on your money now, coupled with an excellent hedge against inflation—plus the tremendous profit in the event of war, it will pay to investigate . . . etc. . . . etc.” (Copyright, 1937, by the North American Newspaper Alliance, Inc.) ington third with 120.1 per cent, the District of Columbia fourth with 113 per cent and Virginia fifth with 111.7 per cent. 96.3 PCT. FOR MONTH TS PR The next five States in line were Charles A. Jones, general mmlzPY!Oregan. Maine, California, Utah and of the Home Owners' Loan Corp., re- | west Virginia. ported today collections in September |in one section, and a different wage | | national law covering all industry and due on home mortgage loans, as com- pared with 88.9 per cent in the cor- responding period last year. Nevada led all the States with a percentage of 131.6, Wyoming was second with 123.4, the State of Wash- e, Flying Club Makes Drive. With more than 100 members al- ready enrolled, a working men's flying club in Southend-on-Sea, England, wants 100 more and offers a half-hour lesson in flying each week for 50 cents. A New Editorial Dimension ... WHAT’S THAT? Blending the functions of reporter and forecaster, Newsiceek gives you a new form of journalism new editorial dimension...news p» e 'ojection. It brings you the news and the meaning of that news . .. the how and why of today, the where and what of tomorrow. Newsweek revenues but encourage business activ- ty, should be balanced against the imposition of taxes that increase reve- nues without discoursging business yolume. Tip-Heavy Tax Structures. What iz little realized perhaps is that most of the States of the Union have been bullding top-heavy tax structures and that with 48 dif- ferent taxing systems in the States, to say nothing of the municipal tax experiments, busi- ness volume finds itself hampered at every turn in an effort to plan ex- penses as much as & year in advance. For a long time there has been agi- tation in favor of a conference be- tween Federal and State authorities to eliminate duplication and specifi- cally to prevent competition in certain _tax flelds as between Federal and local taxing bodies. Impetus for the . holding of such a conference can come ~ only from the President of the United . States. It would be a constructive “ move if a start in this direction could soon be made. President Roosevelt, however, is well aware of the impor- tance of : general tax revision and rumor hath it, as an example of his attitude, that he already has agreed to substantial change in the undis- tributed surplus tax and revision, if not repeal, of the capital gains tax, both of which moves would be consid- ered quite favorably by the business world. (Copyright, 1837.) CUT TODA At Leading Newsstands | 10¢ 5 "THE CONTORTIONIST'S DUNK" Intriguing but difficult even with lkins Coffee! « 'HE opinions of the writers on this page are their own, not necessarily The Star’s. S uch opinions are presented in The Star’s effort to give all sides of questions of interest to its readers themselves and directly opposed although such opinions ma; be contradictory among to The Star’s. ot States and Labor Laws Federal Ban on Shipments Seen Effective Way to Prevent Loss of Localities’ Rights. By MARK SULLIVAN, N WASHINGTON this week there has been the fourth annual con- ference of Btate labor legislation— that is, of persons interested in labor laws enacted by the States as distinct from labor laws enacted by the National Government. To this conference President Roosevelt sent a letter in which he said: “I have called a special session of Congress to enact, among other things, a wage and hour bill which I hope will supplement and strengthen your legis- lation in behalf of workers. In the administration of the Federal legis- lation, we shall need your active participation so that by joint effort we may develop a fuller protection to the workers of . the country than either the Federal & Government alone or the States could achieve in expression i Mr, Roosevelt may mean little. It may mean merely that there is to be a national wage and hour law covering all labor engaged in any activity which is “interstate,” and that there are to be State laws regulating labor in activities which are strictly local. Such a division would leave little to the States, for since the decision of the Supreme Court up- holding the Wagner Labor Act, the area of industry which is called “interstate” and thereby subject to Federal legislation is greatly enlarged. The States would be permitted to legis- late about labor in small, strictly local industries, such as, perhaps, hotels, | restaurants, beauty shops and barberi shops—while everything else, the great bulk of industry, would be regulated from Washington. This was certainly the intention of the original wage and hour measure that was introduced in the recent session of Congress and passed by the Senate, and which will be considered by the House in the coming special session. Under that proposal, as orig- inally introduced, a national board of five men sitting at Washington would have power to dictate wages and hours for every industry (except tiny local ones) in every State and section. It would be empowered to fix one wage | Mark Sulllvan. for the same industry in another | section. It would be empowered to| grant exemptions, set up arbitrary | differentials and make exceptions, Objections to Measure. In the time that has elapsed since the introduction of the original meas- ure there has arisen, in Congress and elsewhere, realization of strong objec- tions to it. The objections are seen and conceded by persons who believe thoroughly in the principle of mini- mum wages and maximum hours. The objections include two main forms. One is the sheer difficulty in- herent in having all wages and all hours in all parts of the United States | regulated from Washington. Gen. Hugh Johnson, speaking from his ex- perience with N. R. A, has said that | it would take 10 years for the board to do all the things which the measure proposed it should do. g Another objection is that States will be deprived of all control over all in- dustry except tiny local ones. The industries and businesses in each State | would be subject to grave handicaps or even extinction dictated by the national board at Washington. Because of these objections to one one national board at Washington with power over all industry, & new approach has gained ground. The | identical objective, minimum wages and maximum hours, can be attained in a different way. This way con- forms to the formula outlined in Presi- dent Roosevelt's letter —a national wage and hour bill which will supple- ment State legislation. Laws for Each State. Each State can pass its own law fixing its own standard of & minimum wage and its own standard of maxi- mum hours. Thereafter Congress can pass a law making it illegal to ship into any State goods made by labor which is paid a lower wage than the minimum one of that State, or made by labor working longer hours than the maximum of the State. This national law covering ship- ments into States would end the con- dition which in the past has made separate State laws impracticable. In the past New York, f6r example, might fix a minimum wage. Thereupon a New York factory cowd move into a State having no minimum wage law and send its products into New York for sale as before. This the national law would end. Any factory any- where that wishes to sell in New York would be obliged to pay its labor the minimum prescribed by New York. This is an intricate subject. It is not possible to deal with all the argu- ments for and against separate State laws as distinguished from one na- tional law covering all the country. One objection sometimes made to hav- ing separate State laws says, in effect, that the system of State laws would result in 43 separate standards. But there would not be 48 separate stand- ards. The total number of differing standards for minimum wages would not be more than four or five, running from perhaps $10 & week in one State to $14 in another. And the tendency in practice would be to approximate a single standard, the highest one. Every factory everywhere in the coun- try would want access to the largest market, and the largest market is in the densely populated States, such as New York and the New England States. It is precisely these States that would be likely to have the high- est standard of minimum wages. To- ward this high standard all the other States would be obliged to approxi- mate. The system of separate State laws, with the Federal law to supplement them and make them completely en- forceable, would achieve the objective of minimum wages and maximum hours. If that objective is all that the administration wishes, this is a way to accomplish it while preserving State powers. There are in the ad- ministration, of course, persons who want centralization of power at Wash- ington for centralization's sake, who want power for power's sake. Persons thinking this way are likely to con- tinue to demand one national law cov- ering the whole country. But it is apparent that Congress is moving gradually in the direction of preserv- ing the powers of the States. (Copyright, 1937.) TRAFFIC REGULATIONS IN PARKWAYS WATCHED Police Ordered to Give Waterside Drive Special Attention in Enforcement. United States park police have been instructed to redouble their efforts in enforcing traffic regulations on park thoroughfares during the morning and evening rush hours, G. Marshall Fin- nan, superintendent of National Capi- tal Parks, said today. Special attention is to be given the | two-way traffic regulation on Water- side drive between Massachusetts ave- nue and the Rock Creek and Potomac P Yowv:: roped nméing when you tie nto a glass of Ballkntine’s Ale or Beer. Try it today—call fer this famous brew when you get tonflfir jvvith your friends —let your own ta: to say, .:o tall the story. Itpays MAKE MINE ‘BALLANTINE'S! On draught...in bottles @ oz. and full quart) ...in coppe -coloredBans (12 oz. and full quart).,. America’s finest since 1840. THURSDAY, ' OCTOBER 28; 1937. We, the People Democratic Committee’s Excursions Into Local Politics Seen Revealing “Thundering Stupidity.” By JAY FRANKLIN, T IS just as well that Big Jim Farley is not to conduct any political reprisals against the Republicrats who embezzled the results of the last New Deal landslide For the Democratic National Committee's two recent excursions into local politics reveal such thundering stupidity and such cynical short-sightedness that the brain reels. In Arkansas, for example, the national administration lined up behind Gov. Carl Bailey, after he had tried to grab the senatorial nomination for himself (to replace the late Joe Robinson) and to sidestep the State laws, which provide for a temporary appointment followed by a special election within a specified period. It was slippery work, work which aroused resentment throughout the State, Representative Miller led the political revolt against these hijacking tactics and Bailey's efforts to show that he was the choice of the national committee and had the blessing of the New Deal only made matters worse for him. Such “foreign” interference raised the issue of popular sovereignty and Bailey was soundly trounced It was mud in Mr. Roose- velt's eye, for ‘which he can thank the indiscreet attempt to use the national Democratic party ma- chinery to dictate a local Demo- cratic candidacy. That's not the way for Mr. Roosevelt to obtain a New Deal Congress. Still more stupefying is the spectacle of Postmaster Gen. Far- ley, Gov. Lehman and Senator ‘Wagner of New York State coming out in thundering support of a rou- tine machine Democrat for Mayor 2 of New York City in an effort to beat Mayor Fiorello H. La Guardia, the only man who has made local New Deal politics national news east of the Hudson. B * K K K ‘The capture of the Tammany organization by Farley & Co. is desir- able if the Democrats are to win the next State election. Mr. Farley is believed to have ambitions to enter the Governor's mansion at Albany without being required to take off his hat first. Now that Dr. Copeland has bitten the dust, the pro-New Deal bosses of New York City are rally- ing behind Judge Jeremiah T. Mahoney, who expresses himself as being also in favor of the New Deal. But La Guardia is the New Deal, so far as New York Cily is concerned, and one-tenth of the population of the United States lives in the metropolitan area which the “Little Flower” dominates. Not only is La Guardia a New Dealer but he was one before Mr. Roosevelt was nominated at Chicago, and during the grim years of Republican “normalcy,” he was one of the little band who kept the flag fying for progressive reform and the principle of political action. For leaders of the New Deal administration at Washington—Gov. Lehman doesn't count in ‘New Deal politics since he stabbed Roosevelt in the back during the Supreme Court fight—to prefer an amiable second- rater like Judge Mahoney to a first-rate progressive administrator like La Guardia is more than a scandal. It is also a serious blunder. I am not a political prophet, but if there is anything in the law of averages, La Guardia should win in New York City in 1937 as unmistakably as Roosevelt won in the Nation in 1936. His popular backing, like Mr. Roosevelt's, is strong, deep and cuts across party lines and geographical and racial groups into the politics of the future. Mr. La Guardia has made municipal good government exciting, he has made humane government picturesque, he has made cultured government good politics. Under his administration municipal reform has seemed as romantic as old-style Tammany rascality. He ought to win and, judging by the heavy New York registration, he probadly will win, since political machines do their best in a light vote. So it can be taken for granted that the odds strongly favor La Guardia's re-election. 1In this case, the Postmaster General, the Governor and both Tammany Senators run the risk of backing the wrong horse and thus losing some of their power and prestige in the State and Nation. If they succeed in their cynical design to defeat one of the principal New Dealers just because he wears no Democratic label, they risk losing control of the State in 1938. For La Guardia has never stayed licked for long and his defeat in November would set him free to try for the governorship next year. * ok o % He is the only conceivable non-Democrat who could get the up-State Republican vote and still swing a heavy vote in New York City. Win or Iose, New Deal support of Judge Mahoney for mayor of New York City seems to be a stupid blunder. This brings us back to political first principles. Any New Deal “re- prisals” against conservative Dem- ocrats are ridiculous except in terms of generally liberal policies, popu- lar candidacies and progressive votes. Organization tactics, pat- ronage, attempts to subordinate re- form to control of machines repre- sent failures in fundamental democracy. T don't know Arkansas politics but I'd gamble that Gov. Bailey would have stood a better chance against Miller if Bailey had not tried to rail- road himself into the Senate by yelling that he was a New Dealer and then turning in an alarm for the Washington New Dealers to come rushing to his aid. I do know enough about New York City politics to state that the spectacle of big-time National Democrats teaming up for a 13-to-the.dozen city politician, against an able and recognized New Dealer, is bound to shake popular faith in the honesty and sincerity of New Deal Washington. Under our system of divided sovereignty and poltical “regularity” Mr. Roosevelt is powerless to prevent this sort of thing, but those who know the situation are aware that Roosevelt at Washingon and La Guardia in New York are fingers of the same hand and that the New Deal would be maimed if either of them were to be defeated or seriously injured. (Copyright, 1937.) "BRINGING UOME Tut BACON Parkway, which changes to a on?-!ha\'e not been observing the center- | way regulation on the parkway from P street to Constitution avenue, south- line ruling and in some cases hav failed to comply with the one. bound in the morning and north- ruling on the parkway, thereby caus- | |ing congestion and danger of acci- bound in the afternoon. Motorists using Waterside drive | dents, it was said. An American You Should Know Joseph Ballantine Knows Far East From Actual Experience. BY DELIA PYNCHON. HERE is a certaln contempla~ tive look about people who have lived in the Far East. Joseph Ballantine, a career diplomat, is no exception. Assistant chief of the Far Edstern Division, State Department, he is daily called upon to utilize his vast experience for the benefit of the present Far Eastern crisis. He smokes his pipe calmly. His brown eyes brood introspectively, Recommendations appear to be in temperate hands. Born in Ahmed- nagar, India, of medical missionary parents, Ballantine inherits a philo= sophic turn of mind, and linguistie ability. He answers questions in his deep, slow voice, choosing his words with discrimination, adroitly changing the subject from prophecy to remie niscences. These have been legion in his 27 years of travel and American foreign service. He headed for Japan in 1909, a graduate of Amherst Coliege. A student interpreter at the American Embassy under the wise leadership of the late Thomas J. O'Brien, Mr. Ballantine learned to love the East, learned, also, to “speak the languagze better than the Japanese do themse selves,” as & famous Japanese states- man once said, when he presented Ballantine to the late Ambassador Morrow. Consular posts have dotted his path, The consulates at Kobe, Yokohamsa, Tansui, Kolohama, Tokio, Dairen claimed Ballantine's services until he was detailed to the London naval conference of 1930. Facing east again, he was appointed Consul General at Canton and Mukden. The first Consul General to vene ture into unknown territory. Ballan« tine struck boldly forth into interior China in 1930, as the guest of Mare shal Li. He traveled 600 miles b | sampan and chair, took a “look-see at conditions. vidence of the artie | sanship of an older order still pere sisted. Canton itself “was less mod- ern, more serenely Oriental” than he had expected. It became the spark plug of the Chinese Republic's march northward. His reminiscences of Japan show & changed picture. There were still remains of a feudal civilization when Ballantine first arrived in Japan. From Tokio to Yokohama then wers | only rice fields. Now factories fill the intervening space. Japan has leaped amazingly from an agrarian to an industrial civilization. Cruising taxes have taken the place of rick- shaws, modern garb the place of kimonos in factories. Moving pice tures, appeasing the Japanese theatrie cal thirst, are a larger industry than Hollywood. America has been the pattern, even in Japanese modern ex- pressions. An apartment is called an “aparto,” a department store a “departo,” a modern boy & “mogo,” modern girl “mago,” and so on Mr. Ballantine can correlate the changing Eastern picture. He has lost those near and dear to him on foreign sofl. His sister and brother in-law were killed in the Japanese earthquake. . Hawaii Strikers Lose. Strike difficulties in sugar planta- tions of Hawaii have resulted in the OLD GOLD AND SILVER will bring you SELINGER’S . look for thcth clock TREET N.W. .l y Copr, 1937, P. Ballantine & Sons, Newarks N.Jo ~