1918. OONGRESS!ONAJ: -RE.dORD-ROtrSE. 10229 urer and recei\er general of ·Massachusetts, protesting against names, made and signed in the citY of Buenos Aires, in the the proposed tax on municipal bonds; to the Committee on Ways Argentine Republic, August 20, 1910, and · for other purposes ; an
That is up in Mr. MooRE's State, and everyone of the men in that _Mr. MOORE of ~ennsylnrnia. Mr. Chairman, I yield 30 scandalous performance are Uepublicans. I do not say that mmutes to the gentleman from Oregon [Mr. HAwLEY]. because they did graft that other Republicans do or will, but AN ILLUSTRATED PRUIEB OF THE INCOME TAX PBOVISIONS OE THE W A.n these gentlemen must not keep talking about graft under a Demo llEVENUE BILL IN WORDS OE O:NE OR ,MORE SYLL.!BLES. cratic administration when it is Republicans doing the grafting. [Laughter on the Democratic ~ide.] Mr. HAWLEY. 1\Ir. Chairman, it is the purpose of these re Now, Mr. Chairman, I do want to say that I can commeml marks to present plainly in the English of conversation :ind some of the remarks that I have heard from the gentleman from commerce the incom e-ta..~ feature of the pending war-revenue Chicago [1\lr. 1\lADDEN], and' there are other patriots here from bill (H. R. 12863, 65th Cong., 2d , e ,.,, ) chiefly by means of lllinois-McKENzn:, good and true; Foss ; and some otters illustrations. that r couid name. But, gentlemen, I must judge Members by These taxes are five in number: what they do and say. By their fruits ye shall know them. Individuals pay- No,..,., ure yon going to circulate the speech made- by Mr. RoLEN· First, a normal tax ( ec.. 210) ; and BERG? Are you going to circulate the speech made by another Second, a surtax (sec. 211). Republican in another body attacking the Commander in Chief · Corporations pay- anrt seeking to sow seeds of discord. doubt, and division where First, a normal ta.x (sec. 230) ; ana. an should be unity of purpose and concert of action? Do you Second, either a war-profits tax (sees. 310, 311, 312) or an belie\e that it is patriotic to circulate surh speeches? Instead excess-profits tax (sees. 315, 316), whichever is the highei·. of circulating them you should repudiate them. I have seen The e are tl1e mo. t important features of the bill, inc tl1e disposition on the part of some Republicans over there to $5,676,186.000 of the 8,182,492,000 the bill is intended to rai e, shield men who have net been as loyal supporters o.f the Gov or over 69 per cent of its total amount, will be derived from th ernment as they should have been. I have attacked their income taxes. - records and exposed their conduct · upon this :floor, and s<'me In the computations given below too great detail has not been gentlemen over there have resorted to every pretense possible attempted, but the segreg:ations are sufficient to . illustrate the under the rules to shield them. application of the principles upon which such taxes are ba ed. The CHAIRMAN. The time of the gentleman has expired. Accuracy in the computations and simplicity in their presenta~ 1\lr. HEFI.. IN. I ask for five minutes more. tion have been the chief aim. Mr. FERRIS. I yield the gentleman five minutes. Supposed returns from individuals and corporations have Mr. MOORE of Pennsylvania. There is no objection on this been used as illustrations, and the purpose has been to present side, so far as that is concerned. illustrations covering typical cases, and as nearly as possible 1\Ir. HEFLIN. The g~ntlemu.n from Pennsylvania could not including all the essential features of each tax without em stop· me if he desired to do so. He- is one of the fellows that l barrassing the illustrations with multitudes of details. had in mind in what I have just said. [Laughter on the Demo cratic side.] I remember how he used to try to shield certain The adoption of the income-tax amendment to the Constitu. gentlemen over there who are going· to be repudiated at the tion plior to the outbreak of the present war was mo~t fortunate. poll· in November. Otherwise it would have been a practically impo sible thing to have raised over $8,000.000,000 by taxation and distributed the M .. MOORE of Pennsylvania. I wanted to give the gentle burden n.mong the taxpayers with any approach to an equi man a chance to tell about it. The gentleman is always very table appol'tionment of the burden in proportion to ability to entertaining. pay. Mr. HEFLIN. I may have another-opportunity. I can not tell a.bout it in five minutes; it will take more than five minutes PARTNERSHIPS. to pay p1·oper respect to •the gentleman's record. [Laughter.] Partnerships as such do not pay the normal tax or the surtax. l\fr. MOORE of Pennsylvania_ I am in control of the time, But each membet~ of a partnersliip will pay both the normal tax and possibly I can yield some of it to the gentleman. and the surtax upon his pro rata share of the taxab:e income Mr. HEFLIN. I should be very grateful if the gentleman of the partnership, whether the earnings have been distributed would, and I wish he had been willing for me to use time back or not. yonder when I \TitS going inW the record of the gentlemen who INDIVIDUALS. were embarrassing and opposing the President of the United Individuals pay bYo kinds of income taxes, but on net income States. only: Mr. MOORE of Pennsylvania_ I am afraid many of them are L A normal tax (sec. 210). from Wall Street. · The gentleman should look into that. 2. A surtax (sec. 211). J.\.Ir. HEFLIN. That reminds me of Newberry, the noininee of Net income (sec. 212) is ascertained by computing the gross the RepubUcan Party for the Senate in Michigan, who expended income (sec. 213.) and subtracting therefrom certain deductions in the recent primary $178;000, the salary of a United States (sec. 214) (but excluding certain items not deductible, sec. 215) Senator for nearly 24 years, nearly a quarter of a century. The and credits (sec. 216). hungry bos es of the Republican Party, putting up seats in the CROSS INCOME (SEC. 213), Senate for sale and traffic to the highest bidder! The poor man of the United States has no chance against the moneybags of Gross income (sec. 213 (a)) is the total upon all gains, prof· the mighty leaders of the Republican Party. The gentleman its, and income derived from salarie , wages, or compensations, mentioned Wall Street; yes, two men from New York City con from professions, vocations, trades, businesses, commerce, sales, tributed $25,000 each to the campaign of the l\lichigan man. or dealings in property, interest, rent. dividends, or secm·ities, Let the gentleman from Pennsylvania feed on that nut for a or gains fro:r;n any busines transaction, or gains, profit , or while. [Applause on the Democratic side.] Now, Mr. Chair income from all sources whatever. man, there is a gJ.'eat deal that I would like to say, but I must clo e. I want to say this in conclusion: God bless the women IT:'::JUS NOT INCLUDED IN GROSS IXCO:llE (SEC. 2 1::: (B)). , _ of America. They are doing everything in their power to win The following items are not included in the trross income: this war. [Applause.] They have giYen their boys to die for Life insurance paid to beneficiaries or to an estate. the country; they are sending their sons to battle, and their love Refund of premiums paid on life in urance. and blessings go with them; and the fathers of America, the great Value of property acquired by gift, bequest, devise, or rank and file, are supporting lovingly and loyally Woodrow Wil descent, but income derived therefrom is included in gross son, the Commander in Chief. [Applause.] The voter who by income. his ballot helps to ·send back to this body a disloyal Member is Interest on securities issued by State, Territory, or munici unfaithful to our great leader and untrue to the boys \Yho are palities or obligations of the United States, under CE'rtaln fighting and dying at the front. restrictions. 1\lr. PURNELL rose. Accident or health insurance or money recei"Ved under "Work Mi.·. HEFLIN. I can not yield now. 1\zy time is nearly out. ingmen's compen ation -acts. Mr·. Chairman, let us stand together and present a solid front Soldiers, sailors, and marine~ serving abroad or at sea pay to the en ernie· of our country. Let no more' discordant notes be income taxes only upon that portion of the compen sounded in this. body. Let America present a solid front to our sation receiYed from the Government which is in cxc" s enemy and the world's enemy, the German Kaiser. Let these of $3,500.
men who are trying to destroy Woodrow 'Vilson try to destroy DEDUCTIO~S AND CREDITS. the Kaiser. Let us be Amerlcans all, whole-hearted Americans. with the light of loyalty upon our faces, foUowing faithfully him Deductions (sec. 214) : From the gros income M<'PrtRinE>tl who <':.UTies at thi hour the Nnti.on's flag. [Applause.] as above stated there are subtractell the following <.leductious 1918. CONGRESSIONAL R.ECORD-- HO·USE. 10235
(sec. 214) arising during the year for which the taxes are CERTAIN ITEMS 01!' WHICH XO ACCOUXT IS TAKEN I~ COMPUTlXG THE paid: GROSS IXCO:UE. Ordinary and necessary expenses incurred in carrying on He received during the year the following sums which are the trade, profession, or business. not included in his gross income, and of which no account is Interest paid or accrued. taken in computing his gross income (sec. 213 (b)) : Taxes paid or accrued, except income, war-profits, and ex Life insurance carried by his father ______$5, 000 cess-profits taxes levied by the United States. From beque t of his father------~------10, 000 Losses sustained and charged off, where not compensated Refund of premiums ou insurance______100 for by insurance or otherwise. Interest on public or municipal securities (none held). Debts ascertained to be worthless and charged off. From accident and health insurance______1, 000 Reasonable allowance for wear and tear. •cERTAIN ITE:US FOR WHICH NO DEDUCTIO~ IS ALLOWED. Depletion in the case of oil or gas wells, or other natural deposits, or timber. He is not allowed to deduct these items (sec. 215): Contributions or gifts for religious, charitable, scientific, Personal, living, and family expenses-----~------$4, 000 and educational purposes not in excess of 15 per cent of Improvements and betterments, adding to the value of the net income. the propertY------10,000 Crcdi ts (sec. 216) : There is further subtracted from the Repairsance ______compensated for under the wear-and-tear allow- 4,000 gross income the amount of the following credits (sec. 216): Dividends received from corporations taxed before being Premiums on life insurance inuring to his benefit______1, 000 distributed. COMPUTATION OB' THE NORMAL TAX AND THE SURTAX. Interest on secw·ities issued by public authority. Normal tax.: We are now ready to compute his normal tax: $1,000 for each single person, $2,000 for each head of Gross income ______$90,000 family or married persons living together, and $200 for each dependent child. Deductions allowed ______. ______$34, 000 Credits allowed______9, 000 11\DIVIDUALS UXDER SECTION 220. Amounts received by individuals as dividends from corpora Total------~------43,000 tions which have paid tax prior to distribution are not subject to the norrual tax, but are subject to the surtax. Ket income for purposes of the normal tax______47, 000 SMALL SPECIAL DEDUCTIONS. He will pay normal tax on- There is a special small deduction for individuals in comput $4,000 at the rate of 6 per cent______240 ing the normal tax of $1,000 for single persons and $2,000 for $43,000 at the rate of 12 per cenL------~------5,160 head of famHy or married persons living together and $200 for Total norlllal tax______each dependent child. These deductions are made· to relieve a 5,400 limited amount of living expenses from taxation. Sw·tax: The surtax is computed as follows: The equality of the apportionment of the burdens of taxation can be more readily determined if the method of the working of Gross incollle------~------$90,000 the proposed law is clear. Deductions allowed ______$34, 000 No credits allowed------0 ILLUSTRATION. This illustration is taken from the experience of John S. Total------~------34,000 Brown, a thrifty and versatile merchant, doing business in a town of 20,000 people, intet>ested in local business enterprises, Net income on which 1:.urtax is to be paid______5G. 000 buying and selling city and farm property, and lending money. The surtax is a graduated tax, and therefore his tax will be His gross income ( ec 213 (a)) consists of the following items: computed in the followin~ manner: . Profits as a merchant______$60, 000 On $5,000 to $7,500, or $2,500, at 2 per cent______$50 Salary as president of the local water company______3, 000 On $7,500 to $10,000, or $2,500, at 3 per cent______75 Compensation as manager of the electric-light company_ 2, 000 On $10,000 to $15,000, or $5,000, at 7 per cent______350 Sale of city property bought for $5,000 and sold for On $15,000 to $20,000, or $5,000, at 10 per cent______500 $8,000------~------3,000 On $20,000 to $30,000, or $10,000, at 15 per cent______1,500 Sale of farm bought for $20,000 and sold for $30,000 __ _ 10,000 On $30,000 to $40.000, or $10,000, at 20 per cent______2,000 Rents from city property------ 1,000 On $40,000 to $50,000, or $10,000, at 25 per cent______2,500 Rents from farm property------2,000 On $50,000 to $56,000, or $6,000, at 32 per cent______1,320 I ntere t on n1oney lent ______3,000 Dividends from corporation securities------G,OOO Total surtax______8, 895 It \\"ill be noted that he had only $6,000 in the last bracket, Total gro. s income______90, 000 which includes amounts from $50,000 to $60,000. He i allowed the following deductions (sec. 214) from the Combining the taxes he will pay- gross income ascertained above: Normal tax ------$5, 400 Rent paid for store building______$5, 000 Surtax ------8, 895 Salaries to employees ------10, 000 Numerous incidental item.S necessary for the conduct of ~otal ______~------14,2fi5
the business------2,000 CORI'OR.\.TIO~S. State, county, and local taxes______4,000 Loss from fire. le~s insurance ______2,000 Corporations pay two out of three kinds of tax~. Th_f par. Debts ascertained to be worthless and charged off ____ _ 2,000 on their net income only : \Vear, tear, and depreciation ___ :------1,000 1. All pay a normal tax (sec. 230), and Gifts aml contributions-Red Cross, $1,000; church, 2. Either an excess-profits tax, or . '600; Y. 1\1. C. A., $400; college endowment, $5,000; A war-profits tax. other conh·ibutions, $1,000------8, 000 They pay either the excess-profits tax or the war-profits tax, depending upon which of the two will cause the larger sum to be Total deductions ______34,000 paid into the Treasury. For the purpose of the normal tax only he is allowed the fol GllOSS INCOliE (SEC. 233). lowing credits (sec. 216) as a further reduction of the gross For the purpose of the normal tax, gross income is ascertained incom~: in the same manner as that for individuals (sec. 213), with the Dividends received on corporation on which the tax was modifications provided in section 233 for three special cases. paid prior to distribution ------$6, 000 From tile gross income so ascertainell there is then subtracted Interest on securities issued by public authority (none the deductions allowed in sections 23-t ::?36, and 320 to determine held). the net upon which the normal tax is to be paid. $2,000 as married man living with his wife and $200 each The Treasury sheets will contain all the items in detail and for 5 dependent children______3, 000 with minuteness. I!: would complicate this explanation and require a large number of pages even t() enumerate all the pos Total credits allowed______9, 000 sible items that are deductible arising out of the various trades, CONGRESSIONAL RECORD-HOUSE. SEPTEl\IBHR' 12' businesses, and occupations; ~ ha.ve attempted only the general The tax will then be computed as follows : uescriptions. Net income for 1918 __..;.______:_ ____ $150, 000 For the purposes of these taxes: the Important. factor ts to Special exemption______.--- ·----- $3, 000 ascertafn the· net income· for the taxable year,. and around ~ the Prewar het income______60, 000 wrious methods for arriving thereat, for determining the ayer. 10 per cent of added capitaL ___. ------5, 000 a:ge profits for the years 1911, 19.12, and 1913, known as the pre- · w-ar period. and the· definition Gf invested' capital the battle of Total deductions_ __ ~------~-. ----~--- 68, 000 eonflicting Oflillions rages~ ,DEDUCTIONS: AND· CREDI'l)S. ; Amount On W.hieh WaY-profits tax iS eompute(L_~_.:..- 82, 0(){) Deductions (sec. 234) : The following deductions from the 80 per cent of net t;axable income of$82,000 is______65, 600 gross income are authorized· which a.rise during the year . for PA..RENTHESIB (SEc. aJ.2B). which the tax is to· be paid: : lf the corporation was not in existence during the whole of AlL ordin..'l:ry, rumal, and. necessary expenses paid ot, in- any one· calendar year during the prewar per:iod_; or if it bad curred in carrying on the business, tra-de or oecupatlori.. no net income for the prewar perfod ; or if the av~rage net in- Ta.xes paid or accroed, except income, war-profits~ or excess- come for the prewar period (plus or minus as tile case may be profits taxes, or taxes assessed against local benefits· ,but 10 per cent· of the invested capital added or withdrawn since the the war-profits or excess-profits tax. paid by a corpora- c!osc of' the prewar period) is less than 10. per cent ot its in tion is deducted from its net fneome before .computing vested capital for the taxable year, then its prewar credits its normal tax: shall be: · Lo ses sustained and cha:rged off aru:L not covered by· in Specific exemption______$3, 000 surance or otherwise. 1() per-cent of invested capitaL for- the. taxable year-. Debts- ascertairi.ed to be worthless and charged .off.. Dividends from other corporations which have -Paid tax. The following illustration shows how the tax will be computed. thereon. The Lake Coal Corporation had no net income in the prewar Allowances for exhaustion, wear, and tear of property used period, but had an invested capital of $100,000. in the trade or fiusiness. In 1918 it had a net income of $4.0,000 .. Amortization allowance for bu.ildings constructed, machinery The ~ · in thiS insta:.nce will be computed" as follows-: provided, etc., used in the production of articles for the Net income for 1918------$40-, 000 present war. · Special exemption.______~------$3, 000 Depletion allowance for oil or gas wellS, or g.tile.J: natural 10 per cent o! in¥e:Sted capitaL______10,.000 deposits and ti'mber. , Additions required by law to reserve fund-s in case of in ~otal deductions ------~--·- I3,. 000 surance companies, death losses, and annuity payments. There are other provisions: for lnstiranre companies. Taxable income subject t() war-profits taX------~--- 27~ 000 Credits (sec. 236}: The foflowing credUs are also allowed· to 8Q, per cent of net taxable in~om.e of f27,00(} ______21..600 be deducted from the gross income arising in the yerur fot· Thi.ch the tax is to be paid : · EXCESS-PROFITS· METHOD (SEC&. 315-316")~ Income from securities issued by public· authority and in The determining factors under the excess-profits metnod are cluded in the gross income under section 233. the invested capital and the rate per- cent earned thereon as net ·war-profits and excess-profits taxes, for normal tax only. profit. Special exemption of $3,000 for war-profits tax and excess ILLlJf:!TRATION. profits ta.x. Special exemption of $2,000 for normal corporation tax. The Carson Coa.F Co:. ba.s an invested capital of $300,000 for Certain credits for taxespaid to other countries. (Sec. 238.) the taxable year of 19~~ - It makes $150,000 net profits, or at a rate of 50 ·per cent. ITE.liS NOT DEDUCTIDLE. Net profit, Rate of profit, Invested capital, The same items. as for individuals under section 215. $150,000 50 per cent. $300,000. WAn-PitUF.lT.S AND EXCEHS"-PROFITS 'l)AXE:S. Net income :eor 1918----~------· ------·$150, 000 It will be uece5sary to compute these taxes before computing Sp~al exemption______$3, 000 the normal tax, as the amount paid in such taxes is deducted 8 per cent of invested: capitaL------. ___ ~ 0.00 from the net income before computing the normal tax. Both the· war-profits tax and the excess-profits tax are· com Total deductions---~------~---- 27,000 puted for each corporation which will pay whichever is the higher. · Net income subject to excess-profits tfL'"'r______J.23., 000 There are rome special cases. Section 302: provides that a corporation having an invested caJ)ital of not mo~e- than $25,000 Computation of tax: sh-all not pay more than 35 per cent on its n-et income in excess 35 per cent of net taxable income in. excess of 8 per of $3,000, and a corporation having- more than $25,000, and not cent of invested capital and not in excess of 15 exceeding $50,000, of invested capital shall pay not to exceed per cent of invested capital, or 7 per cent of 40 per cent on its net" income in excess of $3,000. This section, $300,000, whiclr is $21,000, less special exemption however, does not apply to a corporation having a net income of $3,()()(}, leaving $18,000 taxed at 35 per cenL_ 6",300 ·in excess of $50,()()(}-. 50 per cent of net taxable income in excess of 15 per Section 303 provides that a corporation whose earnings are cent and not in excess of 20 per cent of invested chiefly due to the personal work of its principal owners shall capital, or 5 per cent of the invested capital of pay the normal tax n.nd 20 per cent of its net income in excess $300,000, which is $15,000; taxed at 50 per cenL 7,500 of $3,000; but income from Government contracts and corpora 70 per cent of net income in. excess of 20 per cent tions having over $100,000 capital will pay either the excess- of the invested capital, er tlie difference between profits or the war-profits tax. . 50 per cent, the net r-ate of ea.rning, and 20 per cent, or 30 per cent of $300,000, or $90,000 taxed WAll-PROii'ITS METHOD (SECS". 31.0-312)r at-70 per cent______:.. 63, 000 The pivotal question under the war-profits method: is, "-"What was the average yearly net income of the corporation during the Total excess-pFofits tax______.:_ __ _ 76,800 years 1911, 1912, and 19~3, called the "prewar ' period? " The computation under the last paragraph can be simJ)lified by The tax is 80 per cent of the net taxable income~ computing 70 per cent on the remainder of the net taxable ILLUSTnA:TIO!f. income left after subtracting the amounts in the first and second . The Carson Cement Corporation was organized in 1908 and paragraphs, as follows: hru:; been a going concern since that date. In 1911 its net in $123,000 less $18,000" and $1.5,000 leaves $90,000; 70 per cent come was $50,000, in 1912 was 60.000, and in 1913 was $70,000. of $00,000 is $63,000: The average. for the prewar period was therefore $60,000. Since the war-profits tax is $65,600 and the exces -profits tax The inve ted capital was originally $250,000, but in 1918 it is $76,800, or $11,200 higher, it is evident that the Carson was increased by 50,000, making the capital for 1918 $300,000. Cement Corporation will pay- the e.x:c -profits tax, because it is The net income for 1918 is $150,000. higher than the war-profits tax. 1918. .CONGRESSIONAL RECORD-HOUSE. 10237
SIMPLIFIED METHOD Oli' COMl'UTIXG TIDl" EX:CESS-PROJCITS TAX. WAR PROFITS METKOP (SECS. Slo-312), Take the case of tbe Carson Cement Corporntlon used above: ~et Income for 1918------... ------$10, ()()(} Special exemption______$3, 000 Net profit1 Rate o:f pr<»fit~ Invested eapltal~ $150,0()(} 50 per cent $300,000 ' Prewar profiL-----~------20~ 000 Net income for 1918______~ ____ ..:______$150, 000 Special exemption ------$3., 000 TOtal deduction~------~------23, OO(l 8 per cent on invested capitaL-~------24, 00() Net taxable income for 1918-----~~------4'L, 000' Total deductions------27, 000 80 per cent of 471()()0-, or war-profits tax;...-----~---- 31,. 600- --~- EXCESS-PROFITS 1ETHOD (SECS. 315-316). 123,000 Net taxable income for 1918------~-- Net profit. Rate. of p~ofit to~ 1918,- Invested capital, 35 per cent on 7 pet: cent of invested capital leSS- $70,000. 35 per cent. $200,000. $3.000, or $18,000------~------6,300 50 per c~nt on 5 per cent of invested capital <>f $15,000- 7,500 Net income for 1918------~------~ ------$70., ()()() Special exemption...------.--- $3, 000 70 per cent on remainder of taxable income of $90,000_ 63,000 Bo/o of invested capitaL ______16, 000 Total ·excess-pl'ofits tax_____..~~------~•--- 76,800 Explanation.-The brackets under the ~cess-profits tax are: Total deductions...-~------~------19, 000 85 per cent on the part of the net income in excess of 8 per cent and not in exces.s of 15 p cent of the invested cap- Net taxable income ______-:------=--- 51, 000 ita.l, which difference in per c · is the 7 per cent used above. 35 per cent on 7 per cent of invested e.a~ital, less $3,000, 50 per cent on the pnrt in excess ot 15 J>er' cent and not ln or $11,000 ------..------~------3, 850 excess of 20 per cent of invested capital, whieb i!J the- 5 50 per cent- on 5 per-eent of invested capttal, or $10;000_ 5~ 000 per cent used above. . 70 per cent on :remainder ot ta.nble income, or $30..()()()~ 21, 000 70 per cent of the pnrt in excess- ot 20 per cent of invested • capital, which of course will. be the remt.inder ot tbe net. Total exc~s-pro.ftts tax ------~-----~-- 29, 850 tnxable income. Since th~ war-proflts. tax of $37,600 ls larger thn..a the excess- WHY THE wAR-PROFITs TAXES A-ro TliE t:XCESs-no:n:Ts TAXES MUlJ~ p1•ofits- tax of $29,850, the. Union F(}undcy Co.rpo:ration. will pay BOT.a Bll C(»U'Uflll) .BI!l!'OQ Tim NOU.MAL T..U: IS COMPUTED, the WUI'-proftts tax. Sinee a corporation is. entitled to deduct either- the- war-profits NoRnAI'.!c 'l'.U. ta. or the excess-profits tax:. whichever it pay~ fr'()m its net . Normol tnx (see. 280) : Bavin!l' n_..,.rtained that the Urt" ~"' income befcre the normal tax IS computed, it is necessary to -a -.."" uu4 compute tbem botb, to ascertain which is. tbe b~et' tax _and ln. Fmmdry Corporation will pay the war-profits t~ we are now order to deduct the tax so paid from the net income to. find the ready to compute the normal tax of the eorpomti Net income for 1918------~--~------$1501 000 Interest on obligations issued by public au- 'Vnr-profi.ts tax------· $37,600 Normnl tiU----~------~~-- ~ ------4, 272 thority ------0 Excess-profits tuX------$76, 800 Total tax______:______41, 872 Specific exemption------~-~---~------2, ~ Or, it will pay 60 ner- cent of its total net income in taxes. Total deductions ______"'______78. 800 YERlFIC.ATION 011' J.l~'l'URNS. In order to prevent evasions of the taxes invo.lved in incor Net income liable to normal ta:t--~------71,200 reet returns, untenable statement£ of invested capital~ prewar Of this amount, suppose the corporation distributes to its earnings or claims for deductions,. or other errors, the bill pl·o stockholders a dividend of 10 pel' cent on its capital, or $30,000, vides an additional appropriation for the office of' the Collector and retuins $4.1,200 in its business, the ta:t will then be com of Internal Revenue in the sum of $7,500,000 for the employ puted ~s follows: ment of some 2,500 persons to investigate the returns made for 12 per cent on the $30,000 distributed_____ ~------$3. 600 the past year and succeeding years to ascertain that every tax 18 per cent on the 41,200 not distribute CHART I. Con~putation of tcu:. On runounts between- COUPUTIXG THE GROSS INCOME, DED"GCTIONS, A"!'<"'D CREDITS OF JOHX S. $5.000 to $7,500, or $2,600, he will pay at the rate of BROWN IN ORDER TO ASCERTAIN HIS NET INCOMiil. . GO Gross income. (Sec. 21~ (a).) $7~5tf6rt~e$io;oo0.-or-i2,5oo:-iie-wiii-i>ay-at-tllc-iafe-or Profits as merchant------$60,000 75 Compensation as president of the local water company______3, 000 ,t8,tf66 i~nii5:0oo:-oi-fS.ooo;lle-wiil--paiat-iiie-iate-ot Compensation as manager of tpe local electric light company__ 2, 000 350 Profit on sale of city property______3, 000 $l~.J>oe6 t~en~o.ooo~-oi$5:ooo,-1ie-Wi.1l-'Pa'Y-aTiiie-iafe-or Profit on sale of farD) propertY------10, 000 10 per cent------500 Rents from city proper~------1, 000 Rents from farm proper ------2, 000 $2~5o~Oertoc~~~~~~~~-!=~~~-~-~=~~-~~~-~~!~:-~~:e_~~ 1,500 Interest on money loane ------3, 000 $30,000 to $40,000, or $10,000, he will pay at the rate of Dividends received from corporation securities------6, 000 20 per cent------2,000 $40,000 to $50,000, or $10,000, he will pay at the rate of Total gross income------;------90, 000 25 per cent------~------~.500 $50.00032 per to cent $56,000,______or $6,000, he :will ______pay at t::.e rate of _ Deductions. (Sec. !1.f.) 1,!120 Rent paid for use of store building ______6,000 Pay of employees------ 10,000 Total surtaX------~------s,s9u Incidental expenses in connection with the business------2,000 State, county, and local taxes for the year ______4,000 His total tax will be- Loss from fire, less insurance received------2,000 5 400 Debts ascertained to be worthless and charged off ______2,000 NormalSurtnx ______taX------_: ______Wear and tear and depreciation of propertY------ 1,000 s:s9u Gifts and contributions------8,000 Total ded uctlons_ ------· 34,000 Total of taxes------14,295 The surtax is comp · on the same amounts, except that FOR NORMAL TAX ONLY, he is not allowed to de net the credits. His gross income is Credits. (Sec. 216.) $90,000 ; his total deduction is $34,000. He is not allowed Divillends received from corporation securities------ 6,000 Interest from securities issued by public authoritY------ (I credits provided in section 216. This leaves an amount of He is married llDd lives with his wife------2,000 $56,000 upon which the surtax is to be calculated. The surtax He has five mincw. dependent children, $200 each ______1,000 begins at $5,000. He will really pay surtax on $51,000 only. Total credits------9, 000 On the amount between $5,000 and $7,000, or $2,500, he pays 2 The first cha1·t deals with the income tuxes paid by individuals. per cent, or $50; .on the amount from $7,500 to $10,000, or This chart takes the suppo ed returns made for and the taxes $2,500, at 3 per cent, or $75; and then, in tl!e next bracket, on paid by John S. Brown, a merchant in a town of 20,000 people, $5,000, at 7 per cent, $350; the next bracket, of $5,000, nt 10 doing n general mercantile business, buying and selling real per cent, $50; the next bracket, of $10,000, 15 per cent, S1 ,500 ; estate, city and country, owning a farm and some city property; the next, $10,000, at 20 per cent, or $2,000; the next, of $10,000 and having some money at interest. As the income taxes are at 2.'1 per cent, $2,500; and then on the difference between levied only on net incomes the important factor, then, in any $50,000 and $56,000, or $6,000, at 32 per cent, $1,920, or a total computation for any individual it is essential to ·ascertain what surtax- of $8,895. · his net income is. 1\.Ir. Brown has a gross income under section Add the normal tax of $5,400 to the total surtax of $8,8~5, and 213 (a) of the bill on his profits as merchant, of $60,000; it is apparent that Mr. Brown will pay a total of $14,295 in as president of the local '"ater company, $3,000; as manager taxes on this statement of facts. of the local electric light company, $2,000; as a profit on a city Mr. MOORE of Pennsylvania. Will the gentleman yield? property that be bought and sold, $3,000; as profit on farm prop Mr. HAWLEY. Yes. erty, $10,000; rent on city property, rent on farm property, l\Ir. MOORE of Pennsylvania. It was shown here the other interest on loans, dividends from corporations securities, making day in the debate that on a $7,500 income $470 would be paid. a total gross income of $90,000. 1\.Ir. HAWLEY. That is right if the $7,500 is the net income. The deductions allowed under the bill are the rent on the store Mr. MOORE of Pennsylvania. That was the total for an building, the pay of the employees, incidental expenses, city, income of $7,500 a year? county, and local taxes, loss from fire, insurance, debts, wear Mr. HAWLEY. Net taxable income on $7,500. and tear in depreciation, gifts, and purchases, making a total Mr. MOORE of Pennsylvania. Less $5,000. Has the gentle of $34,000. The credi~ provided in the bill under section 216 man made a calculation as to what a man would pay who e and shown in Chart I apply only to normal taxes on the indi income was $1,000,000? '\"idual and not on the surtax on individuals. So the credits 1\.Ir. HAWLEY. No; I have not, for the reason that I could under this section are the dividends from corporations, which find no larger sheets than these in town, but I will insert such . he must report in his gross income, but for which be is given a calculation in my remarkS as Chart II. credit in the credits, interest on public securities, of which he Mr. ROBBINS. Mr. Chairman, will the gentleman yield?· held none, and, being a married man, living ·with his wife, be is Mr. HAWLEY. Yes. entitled to a $2,000 deduction, and, having five children, a fur Mr. ROBBINS. Is that all Ute tax an individual pays-the ther deduction of $200 for each- child, making $3,000 in all, and normal tax and the surtax? a total credit of $9,000. Mr. HAWLEY. Yes; the normal tax and the surtax. The CHART II. individual bas been relieved under this bill from paying the NORMAL TAX TO DE PAID BY JOHN S, BROWN, excess-profits tax and the normal tax rates and the surtax g~d~~~~s~~======~======::::::::::::::::-$34;ooo $9o,ooo rates have been increased. Credl ts------~------"------9, 000 Mr. HARDY. 1\.Ir. Chairman, Will the gentleman yield'! 1\.Ir. HAWLEY. Yes. Total of items to be subtracted------43, 000 Mr. HARDY. Does the gentleman's calculation agree with Net amount subject to normal taX------47, 000 that on page 87 of the report of the committee? He wlll pay .on- · 1\fr. HAWLEY. Exactly; because my figures were gone $4,000 at a rate of 6 per cenL------240 over by the most capable and able clerk of the committee, Mr. $43,000 at the rate o.f 12 per cent------5, 160 John E. Walker. •rotal normal taX------5, 400 Mr. HARDY. The reason I ask that question is that they do Having ascertained the factors necessary to determine what not give the odd number; yes, they give $56,000, aud they say tax you "ill pay, we will compute the normal tax on 1\Ir. Brown, the tax under this bill on $55,00Q-yours is what? pai Mr. DEN£SON. Among the deductions are bad debts. What Mr. MOORE of Pennsylvania. Mr. Chairman, will the gentle does that include'? man yield? Mr. HAWLEY. That is stated in the bill to be debts ascer- Mr. HAWLEY. Yes. tained to be worthless and charged oft' during the taxable year. Mr. MOORE of Pennsylvania. Before th~ gentleman goes Mr. SNOOK. 1\fr. Chairman, will the gentleman yield? . to that-the prewar system applies in the excess-profits tax in 1\Ir. HAWLEY. Yes. the existing law, does it not? . . Mr. SNOOK. As to the individual tax and the normal tax Mr. HAWLEY. We take no account, ns I understand the Jaw, and surtax, would it not have been possible for the committee to of the prewar earnings in computing the excess-profits tax. have worked out some kind of a simplified scheme in one sched 1\lr. MOORE of Pennsylvania. The prewar basis ' is used tn ule and not two? It would simplify the bill. the statute we now have. I am distinguishing the war-profits Mr. HA'VLEY. They have done so, and there is in the report, tax from the existing excess-profits tax. I think, a table showing the combined tax. But the facts in · llir. HAWLEY. I have not gone back into the existing law. I every individual case are different, and in order to make it per was simply discussing what the present bill provides, in order fectly clear and to make the bill work perfectly fairly among to avoid complications. all individuals it was thought best to retain the two kinds of tax Mr. MOORE of Pennsylvania. I understand that. on the individual, the normal tax and the surtax. It is not a Mr. DENISON. 1\Ir. Chairman, will the gentleman yield? complex matter as it is now arranged. Mr. HAWLEY. Yes. CORPORATIONS. Mr. DENISON. Before the gentleman leaves the war-profits ta.x will the gentleman state what will be deducted if the cor Corporations pay two out of three kinds of taxes. They pay poration made no money during the prewar period, but lost a normal corporation tax in every instance and either a war money? profits tax or an excess-profits tax. It is necessary to compute both the war-profits tax and the excess-profits tax on each Mr. HAWLEY. If the corporation was not in existence dur corporation, because the corporation will pay whichever is the ing the whole of any one calendar year during the prewar higher tax. In order to ascertain that fact, then, each col'pora period; or if it had no net income during the prewar period; tion must compute both war profits and excess profits taxes. or-- I have. not given a statement of facts regarding the gross in Mr. MOORE of Pennsylvania. If it was not in operation or come deductions, credits, and so forth, in order to ascertain the made less than 10 per cent. net income for corporations for the reason that they are arrived 1\Ir. HAWLEY (continuing). Or if the average net income for . ·at in a manner similar to that used in the case of an individual. the prewar period (P111;S or minus, ns the case m:ty be. 10 per Each corporation's gross income and its deductions will vary cent of the invested capital added or withdrnwn since the close according to its operations. Each will have items that others of the prewar period) is less than 10 per cent of its invested will not have. As legislators, I thought we would probably be capital for the ta~able year, then the tax will be computed as more concerned in the nature of the taxes and how they are follows: There will be deducted from the net income for the computed, because that involves a matter of judgment upon taxable year the special exemption of $3,000, and also 10 per which we have to pass in the enactment of the legislation. cent of the invested capital for the year; the tax will be 80 CHART IV. - per cent of the remainder, as a war-profits tax. 'J'A..!r Mr. SNYDER. . What would the normal tax in addition be? COMPUTATlO~ Oli' WAR-PROJJ'I':[S 0~ CARSON CllMENT CORPORATION.' Mr. HAWLEY. You can not tell that until you ascertain Data for computation. whether the corporation will pay under the war-profits or [Organized in 1908 and bas been a going concern since.] excess-profit method. Original capital invested ______:_:______:.______$250, 000 Now, the central feature of the excess-profit method is the Capital added in 1918------:r ------50, 000 Prewar earning: 1911, $50,000; 1912, $60,000; 1913, $70,000; invested capitfll. I have a chart-chart V-illustratlng the average prewar earntng____ ~------60,000 excess-profits method. Net income for 1918------150, 000 CHART v. aomputatian of taa:. . COMPUTATION OF ll.XC!!lSS-PROFITS TAX PAID BY THE CARSON CEMENT Net income for 1918------150, 000 CORPORATION- Speclfic' exemption------·------$3, 000 Prewar average earning______60,000 Data for computation. Ten per cent on $50,000 capital added in 1918------5, 090 lnve~d capital Jn 1918------~------$300, 000 Net income for 1918------150,000 Total to be subtracted------68,000 aomputatfon of ta:e. Net income subject to war-profits tax______82. 000 NetSpecial Jncome exemption for 1918------______: $3, 000 150, 000 Eigbty per cent tax on $82,000 amounts to $65,600, wblch is the war· proUts tax. 8 per cent {)f invested capital-~------24, 000 I have taken here what is called the Carson Cemen~ Corpora Total to· be subtracted------~------27, 000 tion. It was organized in 1908. It has been a going concern ever since. It had an invested capital of $250,000 to begin with, Net incom(> subject to excess-profits tax______123, 000 but in 1918, tllis taxable year, it added $50,000 to its capital. 35 per cent on portion of taxable income in excess of 8 per cent Now, the determining factor in the war-profits taxes is the pre and not in excPss of 15 per cent of in\'ested capital or 'l per cent of $300,000, which is $21,000, less $3,000 special ex- war earnings of the corporation. You can not compute this tax emption, leaving $18,000 ------___ __ 6, 300 unless you know what its prewar earnings were. The pre 50 per cent on Eortion of taxable income 1n excess of 15 per war years are 1911, 1912, and 1913. In 1911 this corporation cent and not n excE.>ss of 20 per cent of invested capital, or 5 per cent of $800.000 or $15,000------7, 500 had a net income of $50,000; in 1912 it had a net income of 70 per cent on remainder of taxable income, or $90,000------63, 000 $60,000, and in 1913 a net income of $70,000. It is evident that its average pre'\Tar earnings were $60,000. Total excess-profits tax______. ______76, 800 Now, the net income for 1918 was $150,000 for the taxable Since the excess-profits tax of $76,800 is higher than the war~ profits year. Now, compute the tax. The net income for 1918 wns tax of $65,600, the Carson Cement Corporation will pay the excess-profits $150,000; a special exemption is allowed to all corporations of tax. $3,000. That is to take care of some small corporations. :No'l'E.-If the special exemption of $3-000 is not exhausted in It also takes into consideration the fact that in the prewar -the first bracket the remainder is subtracted from taxable years many corporations were making little or nothing. Those amounts in succeeding brackets until the $3,000 has all been happened to be bad years for f#Ome particular kinds of business, deducted. so corporations are allo'\Ted a $3,000 special exemption. Irr I am still using the illustration of the Carson Cement Corpo addition, they are allowed as a deduction 10 per cent of the ration. Invested capital, $300,000; net income, $150,000; rate added capital, or 10 per cent of $50,000, or $5,000, making a . of profit, 50 per cent-that is, the net income for 1918 is total deduction of $68,000. Corporations are allowed this deduc- $150,000. It has a specific exemption also of $3,000. Now, . tion of 10 per· cent on all additions to the invested capital put the exemption on account of invested capital is S per cent of .into tile business since the prewar period. the invested capital. Eight per cent of $300,000 is $24.000. So Corporations have a special exemption of $3,000 from net .in it will have a total deduction of $3,000 plus $24,000, or $27,000. come in computing the war-profits tax or the exceSs-profits ~tax, leaving a net amount taxable under the excess-profits tax and $2,000 in computing the normal tax. method of $123,000. It pays 35 per ~ent on tLat p::;.rt of the Now, $150,000 net income minus $68,000 leaves $82,000 as net income which is in excess of 8 per cent of the capital and the amount on which to compute the war excess-profits tax. hot in excess of 15 per cent of the capital. The difference be The war excess-profits tax is 80 per cent of the taxable amount. tween 8 per cent and 15 per cent is 7 per cent. Seven per cent of $82,000, or $65,600. _of $300,000 is $21,000; subtracting the $3,000 special exemption, 10240 CON GRESSION .A_L RECORD-HOUSE. SEPTE~IBER 12; leaYes $18,000 . to be taxed under the first bracket, at 35 per l\Ir. HA. WLEY. In order to compute the normn.l tax you cent, and results in a tax in this bracket of $6,300. must find out first what the excess-profits tax is and what the · Sornebody will say, " What about the $24,000 'exemption, war-profits tax is, to ascertain which is the larger, and sub repre enting 8 per cent of the investeu capital?" As th~J tract that from the net income before computing the normal tax. bracket began with 8 per cent, that will de facto exempt the 8 The last tax to be computed is the normal tax. per cent of invested capital, or $24,000. The second bracket ls l\fr. SNYDER. The normal 12 per cent tax does not apply to 50 per cent, on that part of the net income by which it ex the surtax nor to that part of the profit after the surtax is ceeds 15 per cent of the invested capital and does not exceeu deducted? 20 per cent of the invested capital, which is 5 per cent, and 5 Mr. HAWLEY. Corpor~tions Jo not pay a surtax. per cent of $300,000 is $15,000. Fifty per cent of $15,000 pro l\fr. SNYDER. I did not mean the surtax, I meant the excess duces a tnx: of $7,500. Then the tax in the third bracket is 70 profit tax. per cent on the remainder of the net income. Adding $18,09<) 1\Ir. HAWLEY. No ; the .normal tax applies only to the anu ,'15,000 together we ha\e $33,000. Subtracting that from m~ount rem.aining after the war-profits tax or the excess $123,000, \Ye ha\e a remainder of $90,000 to be taxed at 70 per profits tax has been U.educted from the net income. cent, resulting in a further amount of $63,000. Adding to 1\Ir. STAFFORD. Will the gentleman yield? gether $6,300, $7,500, and $63,000 we have a total excess-profits l\Ir. HAWLEY. Yes. tax of $76,800. · 1\fr. STAFFORD. As I understand the bill, it woulU be the Now, looking over the figures we find that the corporation policy of stockholders who pay a surtax to haYe the earnings will pay $65,600 under the war-profit tax, but under the excess retained as capital, and pny 18 per cent, rather than to have profits tax: it will pay $76,800. It is apparent that it will . be the earnings distributed and pay 12 :>er cent, which latter would requireu to pay the excess-profits tax, because that is the higher have to pay a surtax by individual holders. Am I right in that of the two. construction of the bill? CHA.UT VI. Mr. HAWLEY. The dividends received from a corporation NOlUfAL TA.-.'i:: rMD BY THE CARSON CEMENT CORPORATION. which bas already paid the tax are exempt from the normal Oomputatior~ of ta:c. tax on individuals, as was shown in the illustration of Mr.. NetHpecial inc on1eexemption for 1918------______$2, 000 $150,000 Brown. Excess-profits tax ______:______76, 800 1\fr. LONGWORTH. Exempt from the normal tax. l\lr. STAFFORD. That was the question I propounded, 'rotnl to be subtracted------78, 800 whether it would be to the interest of the stockholder or the Net amount suhjcct to norl.llill tax ______71, 200 policy of the corporation where the stockholders would pay the The corporation distributes n 10 per cent dividend to its stock surtax on the diviclends to have them retained and pay,18 per holders, amounting tO------ 30, ooo cent, rather than declare them and pay 12 per cent to the Gov- It retains in its business untlistributed------41• 200 ernment. Tax: Mr. LONGWORTH. May I suggest to the gentleman thnt it 12 per cent on $30,000 c.listribute<.i------18 per cent on $41,200 not t.Hstributcd ______~; ~?g was for that \ery purpose that the committee made the differen ---- tial, or, in other Words, offered a bonus for distributing the Totnl normal tax______11, 010 earnings, because a large number of corporations are controlled Total taxes paid by the Carson Cement Corporation: by rich men, and otherwise no distribution would be made. In . Normal tax______11,·016 a ·case like this they might prefer to pay the 18 per cent. Excess-profits taX------76, 800 The CHAIRMAN. The time of the gentleman from Oregon Total of tuxes------87, 816 has expired. Which is 59.5 per cent of its net income of $150,000. 1\Ir. LONGWORTH. 1\fr. Chairman, I yield to the gentleman Having ascertaineu the fact thnt the Carson Cement Corpora- 15 minutes more. tion will pay the exec s-profits tax, we will compute its normal l\Ir. SMITH of Michigan. Will the gentleman yield? tax. ·Net income for 1918, $150,000. Excess-profits tax, $76.800. ·1\fr. HAWLEY. Yes. It is alloweu that uecluction, because we uo not charge a tax on a 1\fr. Sl\1ITH of Michigan. Suppose during the year the cor- tax. The special exemption unuer the normal tax is only $2,000. poration had invested its income from time to time in liberty You will recall, howeYer, to avoid error that the special exemption bonds. When the time came around to compute the tax on the under the war-profits tax n.nu the excess-profits tax is $3,000. corporation woulu the liberty bonds be taxed the same as though That makes a total deuuction of $78,800. Subtracting, we find they had kept the money in the Treasury? the amount subject to t11e normal tax is $71,200. Now, under 1\fr. HA. 'VLEY. Investments in liberty bonds are not cle- tlle bill, if the corporation retains all of this amount in its ductible from· the net income in computing the normal tax. busine s it pays 18 per cent normal tax on it, but if it distributes 1\Ir. VARE. Will the gentleman yield? part as dividends anu retains the rest in its business it still pays 1\fr. HAWLEY. Yes. on what it retains in its business 18 per cent, but only 12 per l\1r. VARE. I would like to ask the gentleman if he has a cent on that which it distributes. Taking this into considera. table showing what this same business woulu pay if it was con tion, suppose the corporation distributes a 10 per cent dividend trolled by an individual? on its investecl capital' of $300,000, or $30,000 in dividends. It· 1\lr. HAWLEY. I '\"\ill insert such a calculation in my remarks retains undistributed, $41,200. Now, tJ1e tax, 12 per cent on as Chart VII. $30,000 uistributed, is $3,600; 18 per cent on the $41,600 not dis- Mr. SNOOK. Will the gentleman yield? tribute() is $7,416; thus making a total normal tax of $11,016. l\Ir. HAWLEY. Y~s. The total tax to be paicl by the corporation consists of the normal 1\Ir. SNOOK. On the war-profit table you have an item of tax of $11,016 plus the excess-profits tax, being the higher, of $50,000 adued to the capital in 1918, making a dedtiCtion of 10 $76,800, or a total of $87,816, or 59.5 per cent of its net income. per cent. How is that arrived at? 1\Ir. MOORE of Pennsylvania. Will the gentleman yield? Mr. HAWLEY. That is in the war-profit method, and is l\Ir. HAWLEY. I yield to the gentleman from Pennsylvania. hased on the fact that it was added in the taxable :rear, or since 1\Ir. l\IOORE of Pennsylvania. The- gentleman has shown two informing tables, and I think they help the House very the prewar period. much to unuerstand the difference between the war-profits tax Mr. SNOOK. Suppose it was added in 1917? as advocated by the Secretary of the Treasury and the excess- Mr. HA'VLEY. The deduction is allowed for the taxable profits tax as originally advocated by the committee. Under the year. It is 10 per cent of what is added in the taxable year scheme he has presented in these two tables it would appear that or during any year since the close of the prewar periotl. under the excess-profits-tax method the corporation w·ould pay Mr. SNYDER. If it had been added in 1917, the year before, $87,816 and under the war-profits tax it would pay only $65,000. it would be in the capital. Mr. HA\VLEY. And it would h'aYe to pay, in addition to the Mr. HAWLEY. Yes. excess profits, a normal tax also. Mr. HARDY. Will the gentleman yielu? Mr. MOORE of Pennsylvania. That is what I wanted to Mr. HAWLEY. Yes. bring out. I wanted the gentleman, because he has given great 1\fr. HARDY. Is it not most likely true that if this had been thought to the matter, to explain \Yhich cne of the systems an individual business the tax would be as estimated on page would pay the higher tax. 87 of the report, $70,095? Has the gentleman examined that? · 1\Ir. HARDY. In the corporation tax can the gentlemait state Mr. HAWLEY. I have not compared the two. whether the normal tax· should be· taken out before the -excess- · 1\Ir. HARDY. The gentleman does not doubt that that is cor· ·profit tax, or the excess-profit tax ta.ken out before the norinal 1rect? tax7 · . . 1\.Ir. HAWLEY. No; I do not. r_ ' 'I .. • -, - ,. 1918. ·CONGRESSIONAL RECORD--n·ousE. 10241 .. . . . Mr. HARDY. The table says that if it was an individual of the invested capital, or 7 per cent on $200,000, or $14,000, less busine. sit would have \1. tax of $70,095. the $3,000 special exemption, leaves $11,000, to be taxed at the M:r. HAWLEY- - rate of 35 per cent, giving a tax in the amount of $3,850; 50 CHART VII. per c~nt on that part of the net income in excess of 15 per cent WHAT TAXES WOULD HAVE BEEN PAID IF THE BUSINESS OF THE CAllSON and not in excess of 20 per cent of the invested capital, or CEMENT CORPORATIO~ HAD BEE?i COZ.."DUCTED BY AN INDIVIDUAL, WHO IS A MARRIED PERSON. 5 per cent of $200,000, or $10,000, taxed at 50 per cent, gives NormaZ faa:. a tax of $5,000; 70 per cent on the remainder of the net in come of $30,000 produces a further amount of $21,000. Adding ~:~~~a~~:--=--=--=--=--=--=--=--=--=--=--=-·=::::.-=.:::.-=--=--=--=--=--=--=--=--=--=--=--=--=-:::::.::::::.::::: $15g: 888 these amounts of $3,850, $5,000, and $21,000 together, we have Amount subject to normal tax______148, 000 a total excess-profits tax of -$2.9,850. The war-profits tax is $4,000 nt 6 per cent______:_ ___ _:______240 $37,600. It is evident that this corporation will pay the war $144,000 at 12 per cent-----~------17,280 pr:ofits tax. In a general way we may say- that when the differ ence between the earning now and in the prewar period is Yery Total normal tax ______:··------17, 520 great the corporation will in all probability pay under the war Surtaa:. profits method, but if the difference between the prewar earn On amounts between- ing and the present earning is not so great it will probably pay $5,000 to $7,500, or $2,500 at 2 per cent______50 under the excess-profits method. $7,500 to $10,000, or $2,500 at 3 per cent______75 $10,000 to $15,000, or $5,000 at 7 per cent______350 Mr. SNYDER. 1\Ir. Chairman, under this war-profits tax the $15,000 to $20,000, or $5,000 at 10 per cent______500 Government gets $37,600 plus the difference between $47,000 ~20,000 to $30,000, or $10,000 at 15 per cent------1,500 and $70,000, at 12 or 18 per cent. fi30,000 to $40,000, or $10,000 at 20 per cent______2,000 $40,000 to $50,000, or $10,000 at 25 per cent______2,500 1\fr. HAWLEY. The exact amount will be shown on $50,000 to $60,000, or $10,000 at 32 per cent______3,200 Chart X. 00,000 to $70,000, or $10,000 at 38 per cent______3,800 CHART X. 70,000 to $80,000. or $10,000 at 42 per cent______4,200 180,000 to $90,000, or $10,000 at 46 per cent______4,600 NOllllAL T.U: P.!ID BY THE UNION FOUNDRY COnrORATIOX. $!lO,OOO .to $100,000, or $10,000 at 48 per cent______4,800 Data tm· computing the tax. $100,000 to $150,000, or $50,000 at 50 per cent------25,000 Net income for 1918------$70,000 Total surtax------~------52,575 It pays a war-profits tax oL------37, 600 Net income for 1918------70, 000 That is, tt the business had been conducted by an individual the taxes Special ('xemption ------$2, 000 paid would be- VVar-profits taX------37,900 ~~~~il_:a~======:: $~~:g~g Total to be subtracted------39, 600 Totaf of ta:{eS------""------·--- 70, 095 Net amount subject to normal tax ______30,400 Under what condition would a corporation pay the war-profits The corporation 1\fr. HAWLEY. It -would 'be allowed ·deduction .of 110 .per : Mr~ :SNYDER. I think ·that 1s ·a very -good 'POint to have cent of the amount so :paid. cleared up, just the same. . M-r1 '&~DER It does not apply to -pr~>'fit at MI. You are · l\Ir. HASTINGS. Then take the question of the smaller '(lea-ling mth net -profit. - corporations, which have a taxal>le capital of $50,000 and under, lli. HA'VLE"Y:.. It affects i:he taxable amonnts. has the gentleman any illustration of thnt showing-- Mr. SNYDER. After all debts and intere t nave been 11ait1. 1\Ir. HAWLEY. 'There are in the biTI provisions to take care Mr. WALDOW. Mr. Chairman, to get baclr to .my ·question, of the very small corporation, and in the time at my disposal I ]f rthe prewar profits of the Union Foundry Corporation were can not pl'esent the exception in full. $70,000, then I take it their tax would not be ·found .ii:. the war Mr. HASTINGS. The gentleman has not an illustration of profits tax:. It would ha·.-.J to be arrived at under the excess ili~? . profits tax. .Mr. HAWLEY. No. 1\lr. HAWLEY. If their net income had been how much'1 CHART XI. Mr. WALDOW. If their ·pl'ewar ,profits had been the same as 'NORM:&L TAX AND SURTAX 0~ INl>IVIDU;\L HAVING A NET INCOME OF :the net income for 1918. $1}>00,000, DEDUCT10NS HAVIXG B&EN ~KE.' ·OUT, II!' MARRIED LIVING Mr. HAWLEY. They would come under the three exceptions WI'l'H WIFE OR HUSBAND. ' that I ·have mentioned, an illustration of which occms ·earlier Jtet lncotne------$1, 000, 000 in m.y remarks. The corporation would pay under the ex.cess pedal exetnption ------~------2, 000 .Profits method. Net .nmount subject to normal tax______, __ 998,000 Mr. PLATT. In estimating pro1its, of course, inventories are $4;000 nt G JlCr ceii'L------240 taken into consideration. There is an inventory at the begin $994,000 at 12 per cent______119,280 ning of the year and another at the end of the year? Total ·normal tax______1\Ir. HAWLEY. Yes. 119,520 l\lr. PLATT. The second inventory is made up of the cost Surta:D. price of goods on a rising market at liiO'h pri-ces, ·and the profit is O:n am.ounts oetween- made up partly by subtracting the first inventory. Suppose be .$5.000 to $7.'500, ,or '$2.500, a..t .2 pa- cent______50 .$7,500 to ·$10.000, or -$2.'500, at 3 per cent______75 .fore these goods are sold peace comes and prices .go down, how $10,000 to $15,000, or $5,000, at 7 per cent______350 Il.l'e you going to save that company .from aankruptcy, having · 15,000 to $20,000_, or $5,000, at 10 per cent______500 -paid taxes on profits it never made? In all possibility, far 20,000 :to ~30.000, o1· 10;000, at 15 per cent______1,500 so 36,000 to · 40,00 , :or 10;000, at 20 per cent ______as this ·present taxable year is concerned that will not lulppen. · 1 2,000 S40,000 to Go,ooo, or ro,ooo. at 25 per cent ______2,500 Should not there be allowances in there? '$50,000 to 60,000, or 10,000, at .32 per o nL------3,2 ) 1\!r. IIAWLEY. Th~re are in the biTI many allowances, and 60,006 to $70.000, o:r 10,000, at .38 per cent____ _ 3, 00 $70,000 to $ 0,000, or $10,000, at 42 per cent______4,200 tbere is a board to be created in the Treasury Department to '$80,000 to $90,000 .or 10,000, at 46 per cent_ ___ _ 4, 600 determine such questions. $90,000 to $100.000. or $10,000, at 48 J)er cent______4, '00 1\fr. PLATT. It ls fro· oil and gas, but for stacks and goods 100,-()00 to $200.000, or $100,000, at 50 per cent_ ___ _ 50,000 200,000 to $2"00,000. or $100,006, .at 52 J)er cent_ ___ _ 52, ·ooo there is not anything in the bill that allows the Treasury to 1300,000 to $500,000. or $200.000, at 54 per {'UlL--- 108.000 'hanole it. $500,000 to ~1,000,000, or $500,000, a.t 58 per cent_ __ _ 290,000 l\Ir. HAWLEY. In order to meet the difficulty suggested by · the gentlemen, inventories are taken, both ·nt ·the beginning and Total snrtax ------:527,57'5 the end of the year, for the purpose of determining what deduc- Normal tax------ll!l, 520 :tions ru.·e to be allowed. Surta.x ------~------527,575 1\Ir. PLA.T.C. Depreciation might come very suddenly from Total tax______647,005 ~eac~ , . Mr. S~IITH of 1\Ilchigan. Do I undei'Stand the payment of The bill proposes 1:o raise a revenue of .an enormous amount. the taxes can be made in installments? It is justifiable •only, n.nd especially ns to many of tts feature , Mr. HAWLEY. They can be paid one-third the 15th of as a war measure. It is a mighty .an wer to the military domi March, one-third the 15th of May, and a third the 15th of J'uly. nation proposed by tbe trntocratic powers of Germany. The 1\Ir. SNYDER. If the gentleman will permit, my colleague moneys r.a.i ed under the .bill will speed the sprea.d of liberty , [l\Ir. WALDOW] a :ked a few moments .ago if the gentleman in the wolid and .establish upon a firm foundation the rights of would how what the taxes upon this same concern would be .men and women in the peaceful pursuit of their lives and the nad tile prewa·r profit been '$70,000. Can the gentleman give quiet possession o'f their ·property. --ns any light 'On that? 'The day will come when ·our enemies, with their weapons Mr. HAWLEY. The'corporation ;vou1d pay the excess-'Profitc_; grounded and their hands upraised, will ask the ·conquering tax, and not the war-profits tax. armies of the United States and our allies in possession of our Mr. STAFFORD. Will the gentleman yield! enemies' country what terms of ;peace we will give them. Those Mr. IIA'WL'EY. I will. terms will ensure, I am confident, the future peace of the world. Mr. STAFFORD. I tmderL·tand wherever the income of a , I have two sons, and they .;have been in France for more than corporation for the prewar pericrd exceeds the income for the a year. l am confident they will return. But when they do it taxab1e -year, then the corporation -pnys under the excess-profits must be with the flag, unconquereu in all preceding wars, un- method? conquered still, and with the bugles of a humanity, redeemed 1\lr. HA'VLEY. Yes; but-- from the plots of a ruler drunk with power and mad with ·the l\Ir. ST.AFFORD. How -can it be ·otherwise? lust of conquest and plun8er, echoing round the werld the vic- ~lr. HAWLEY. If the difference between the J)rewar period torious strains of "The Star-spangled Banner" as a salute to and the present profit is very large, a corporation will probably the banner whose people saved them. That peace, honor, e. pay under the war-profits method, otherwise it will pay under curity, and liberty may prevail in the world, the event of the the exce s-profits method. war awaits the "uncond~tional surrender" of .our enemies. Mr. TAFFORD. In the case instanced by the gentleman [Applause.l from New York . [1\fr. WALDOW] where an income of the pre- The CHAIRl\IAN. The time ·of tbe o-entleman bas again ex- w·ar period is $70,000 and the income for the taxable yenr is pired. , S70,000, how, in that case, could the1·e be any war-profits tax at lVlr. H.A WLEY. Mr. Chairman, may I ask unanimous consent un? Would not tbe corporation pay under the excess-profits tax? to extend and revise my remarks? Mr. HAWLEY. It would, I tbink, pay under the excess- The CHA.IRl\IAN. The gentleman asks unanimous con ent profits method. to extend and revise his remarks. Is there objection? [After a 1\lr. ST.dFFOTID. So, speaking generally, the corporation pause.] The ·Chair heal's none. wl10se profit during the prewar period was large -and in excess Mr. HENRY T. RAINEY. Mr. Chairman, I yield 20 minutes of the profit during the taxable year, it will necessru.ily pay the to the gentleman from North Carolina [Mr. Pou]. 1 .~ser um under the excess-profits method? l\Ir. POU. Mr. Chairman, under our Constitution the vote1·s fr . .HARDY. If the profits this yenr were no greater than of the Nation will elect a new House of llepre entatives on in the prewar period, th-ere w-oul-d be no prewar profits? the 5th of the coming November. In-other nations election have Mr IL~WLEY. No-- been postponed becau e of the war. In America snch postpone- 1\ir. HARDY. It would be bound to come under that. · ment is impossible. Surely this is an hour "'hen the call of any 1\lr. HA. WLEY. Or one of the three exceptions. Answering political party is but feebly heard, if heard at all. The Nation the inquit·y of the gentleman from Wisconsin [Mr. STAFFORD], if calls to duty every man. and woman of America. The patriot its profit in tl'>e prewar period ·greatly exceed its present prof- hears nothing but his country's call, and the Nation demands n it , it wi1l in n·'i probability pay the war-profits tnx. higher d-egree of devotion tha,n mere loyalty. 191'8. ,coNGR .EsT_ oN \._~ j_{l_EooRn--noiJ sE. ·· 162.3 Col. W. D. Boyce-, in the Saturday Blade, has exposed the utter Cabinet, and so far as I know ·or have heard there has been Impotence and umYorthiness of the man who is merely loyal no whisper of corruption about any man intrusted by President by the side of the man who is patriotic. The person who ts noth Wilson with the duty of expending tlie billions-not millions ing more than loyal does keep out of prison. The person who is of taxes paid by the people. patriotic is not only ready but willing to give all, even life itself, Mr. Chairman, every great measure considered by this House for his country. To call a patriot loyal is to insult him. This since the war began represents the combined work of men of spirit makes our boys glad to go to the front. It makes the both political parties. ·we haYe seen measures in charge of men father who can not go wonder and feel unworthy. on both sides of the aisle. If any check upon anybody is Mr. hairman, America is on fire with a ferYid determination needed, you alrea '10244 CONGRESSIONAL RECOR~HOUSE. !.lr. POU~ I prefer not to yield further. wisdom of such action. The burden is thus placed most largely As a matter ot fact, if it was necessary to sustain· McKiniey on those best able. to bear it. This will' more fully appear by a in the· Spanish-American War, if it was necessary to sustain brier analysis·. o.f. the bill. Roosevelt when peace negotiations we1·e going orr at Portsmouth, ANALYSIS OF THE llJLL: Nr H., it is ten thousand times.more necessary that there be. no The committee. has divided the_ bill into '14 general titles, as misunderstanding as to this question now, that a majority should follows: be. sent back to this House. ab.out whose position in respect tD 1. General definitions. the administrati n there can be- no doubt or question. 2. Income tax on individuals and corporations. Mr. GA.l\TNON. Will the gentleman yield for one additional 3. War-profits and excess-profits tax. 4. Estate tax. question? 5. Tax (ln trans~rortation. insurance, etc. Mr. POU. I will. 6. Tax on beverages. 1. Tax on cigars, tobacco etc. Mr. CANNON. At the time the gentleman spe rs of the 8. Tax on admissions and· dues. Democratic Party was almost solid against appropriations. 9 .. Excise taxes. 1\lr. POU. That is· not. an answer to the question now. If 10. Sp.eclal taxes; 11. Stamp taxes. the. Democratic Party did wrong then-and 1 am not saying 12. Advisory tax board. that it did .or did not-there is no reason why the Republican 13. General: administrative provisions. Party hould do wrong now. . 14. General provisions ~ Mr. CANNON. 'Ve vote solidly for appropriations, as solidly The first title contains specific definitions of the terms used as your side. [Applause.] You voted against appropriations in the bill. ,It is unnecessary to includ& them in this analy is. then, and we vote for them now. . fNDlVIDUAL. INCOME TAXES. 1\Ir. Chairman, I do not know John F. Giddings, but I , believe Existing income taxes have been increased throughout the this· interview eA-pre se the intention of a great many Repub schedule.. Under the law o.f 1916 a normal tax of 2 per cent licans and independents. 'J,~ey are patriotic Americans, and they was. levied on all incomes, but an exemption was given to a hold that they can not afford to take the :risk of having the action. head of a family or married person of $4,000 and· to an. un of America misunderstood in Germany or anywhere else. As I married person of' JS,OOO. Under the law of 1917 a like normal have said, an appeal was made to sustain the lamented McKinley tax of' 2 per cent was. levied,. but the exemption was reduced to in the Spanish-American War. The people responded by eieeting $2,000 for a married and $1,000 for an unmarried person. Under a Republican Congress. An appeal was made to sustain Presi the present bill the- exemption l"emains. the same as in the law ot dent Roosevelt· while peace negotiations were under way during 1917, but the normal tax is increased. to 6 per cent on the first the closing months of the Russian-Japanese War. Again the $4,000 and is !2 per cent above- that amount. . people responded by electing a. Republican Congress. Now it is In addition to the increase in. the normal tax on incomes in suggested that a Republican House should be elected to act as a -creases in the form of surtaxes have been made on the larger eheek ·on President Wilson. I submit he needs no check of any incomes ranging from 2. to 65 peT cerrt. kind. The people of this Nation. do not wish to check or hamper The following table- shows the income tax and surtax under the PresWent in any way whateyer, and there is no denying the the law of 1917 and as proposed in the pending bill, arr exemp statement made by this Ohio Republican that there is. a tisk in tion of $2.00G as for a married person being deducted: electing a Republican House-the risk of having· the national purpose misunderstood. Tax under- In this hour it would be in poor taste to praise the President I, for one, am proud to follow him. I was with him in the begin Incomes. if Existing Proposed ning, and, I am living, I will' be with him to tha end. To-day law~ bill there are a few names ·on the tongues of every child who is taught . anything of American history-Washington, Lincoln, and a few others. The child student of history of the next generation, not $2,500 .•.••••. - ..•••..•••.•.••.•.•...•. , ...... '•• $10 sao $3,000 .••• -· ..• ·-.••...•. ·-·-· .•.•••.••. : . •.•..••....••...• 20 60 only in America but throughout tlle civlliz.ed Christian world, $3,~00 •• , •. ·-...... - •.••••.• ..•.••• ·-•• .• -· •.•.•....•.••. 30 90 will add to these the name of Woodrow Wilson. [Applause on $4-,000 •••••••• -· ...... ·- •••• - - ~ •••• ·-•••••• -· -· ••••• 40 120 the Democratic side.] The Nation called him in the supreme $4,500 ...... - ...... • 60 150 $0,000 •••••••••••• _. , ...... 80 1 0 hour of the wol'ld's history, and the world. will give- him a place $5 ,~()0 ••••••••••••••••••••••••••••••••••••••••••••••••••••• 105 220 with the immortal fE-w who served faithfnlly and unsel.fisllly in 6,000 .• ·-·· ••••••••• : • ... ······-•••••• ·····-··· ...... _. 13(} - 260 shaping the destiny of mankind. [Applause.] $6,500 •••••• ••••• ...... •••·· ••••••••••••• •••••••••• 155 330 $7,000 .•• •• •••••• ·-•••• ·-•••• -· ••••••••••••••.••••••••••••• 180 400 Mr. TOWNER. Mr. Chairman, I desire, first of all. to c.om $7,500-. -· •... ··-..... · -· ...... 205 470 plime.nt the chairman and the membe-rs of the Wa.ys and Means ,000 •.. -· •••..•••.•.•. -·-· ··-·· ...... ···-··-· .• •••••• ?35 545 Committee on their \vork in the formation of this bill. Con ,500 ..••••••••••••.••••••••••••••••••••••••.••••• -~ •••••• 265 620 9,000 ...•••.••.•....•..•.•.•...... •...... ••.•.••.•.••••• 295 695 fronted with an unprecede:rited task, the framing of a revenue $9,500 .• .• •.•••••.•.••.•.•...••.•••••....••• -·. - · ..•.•••••• 325 770 measure which shall raise by taxation $8,000,000,000, an amount 355 845 s~;ggg~::: ·.:: ~:::: :::: :~: ::::::: :·:::::: ::::::::::::::::::: 530 1,320 larger than was ever- befo.re imposed on this. or any otheT nation $15,000 •••••••••••••••••.••••••••••••.•••• : ••••••• ••••••••• 730 1,795 either in peace or war, they have with patience.· and diligence $20,000 .••• ······-······················-····· ...... 1,180 2,895 labored long and efficiently in its preparation. The result is $25,000 ...... •••••·•• •.•• ··•••· ••••• 1, 780 4,245 creditable to them and to the House. I doubt if a bette1· dr.afted 2,380 5,595 ftg:~:::::: ::::::::::::::.:::::::::::: :::~:::: :::::::::::: . 2,980 7,195 re;renue bill, or one mot=e comprehensive and harmonious was 3,580 8, 795 e\7er before presented to the-Americarr Congress. tg:~:: ::: ~::::::::: ::::::::::::::::::::::::::::::::::::: 4,38(). 10,645 This does· not mean that the bill as presented is not subject $50,000 ...... ~ .. •••••••••••••• 5~180 12,495 $55,000 ••••••.•••••• • -· ··-········· · - ·- ·······-······· ... 14., 695 to criticism. Both in some of the provisions which it contains 160,000 ~-- •• --· ..... -· ••• ·-.... -· --•.• ---· .••.••••••••• ~:~~ . 16,895 and in matters omitted it. might be improved. But in general $70,000 ••••••••• ··- · --•••• -·-••••••• - .... -··· ••••••• 8,880 21,895 sso.ooa ..•. -~· •. .• ··-••.. : ...... ·--·· ••••. ...•• ·--•• 10,980 27,295 and as a whole it should meet with approval and support. $100,000-...... ·- ••• ·-·. ·-· •.•• ·--••••••• ·-· •••••••• 16,180 39,095 Doubtless in its course through Congress amendments will be $150,000 ••••• ·~··-···· •••••••••••• - ···--·. ·-·. ··-··· .. ·-·. 3'1.fi80 70,095 made which will improve the bill; but I predict that in its main 49,180 101,095 92,680 165,095 features it will be little changed when it is finally passed~ a5 ·~:::: ::::::::::: ~- ::::: :~::::~::: :::::::::::: ~:::: 192,680 297,095 The estimates of the departments for the next fiscal year 475,180 647,095 require preparation to meet an expenditure of $24,ooa,ooo,ooo. ~::::~::: ::::::::::::::::.:::::::::::::::.:::::::::::::::: 3,140,180 3,527,095 . The committee in approval of the recommendation of tl!.e Secre- , ______!.,. ___ ....!,_ __ _ tary of the Treasury has adopted the policy of raiSing ohe-third An exemption of $200 is also .arrowed for each dependent child of the amount of the total expenditures by taxation and two- under 18 xears of age. thirds by bond issue , or $8,000,000,000 by taxation and $16,- A. partnership as such L-; not liable to the income tax, but each 000,000,000 by bond issues. This is a larger proportion of. taxa- partner will. be required to pay an income tax: upon his share of tion than has been adopted by any other country engaged in the the partnership profits. Every person, including minors, must war. Great Britain has so far financed her war expenditures by make a. return. if in receipt: of a net income of $1,000 if single or a proportion of about 25 per cent taxation and. 75 per cent bonds. $2,000 if married. The other countries have imposed a still less proportion of taxes. Upon figures furnished by the Treasury Department it is However, it does not seem apparent that fo this country at this shown that about 615,000 persons have taxable incomes of over time the proportion of taxation proposed is excessive. $4,000 per annum an.d 2~440,000 have. taxable inromes of $4,000 Following the recommendation of the President the com- or less. It is estimated that on the rates provided in this hill mittee bas pTovided for the revenue demanded chiefly by in- the individual normal income tax will yield $414,000,QOQ and the creasing the taxes on incomes, excess or war profits, luxuries. surtaxes $1,068~186,000, or a. total from this som·ce. of $1,182, and semiluxuries. There will be few who will controvert the 18.6,000. 1918. - CONGR:FlSSION ~ L RECORD-·· ~()USE. COllPOllATIO~ INCOME TAXES. not more than 50 cents; and a tax of 10 cents on all messages on Under the re\cnue law of 1916 'the normal corporation tax which the charge is above 50 cents. was 2 per cent upon the net income. Under the act of 1917 it The tax now i'mposed of 8 cents on every $100 on life insurance was 4 per cent. Under the present bill it is fixed at 18 per cent. policies is continued. On fire insurance, 1 cent on the dollar of But it is provided that the rate shall be only 12 per cent upon the premium charged is imposed. such amount as does not exceed the dividends paid during the TAX ON BEVERAGES. taxable year and the amount paid in discharge of bonds or other The tax on distilled spirits for beverage purpo es has been in obli~ations outstanding. A credit is allowed all corporations in creased from $3.20 to $8 per gallon ; and on spirits to be used for the sum of $2,000. Credit is also allowed for the amount re manufacturing purposes from $2.20 to $4.40. cei red as interest on bonds and the amount paid as a war or On all other beverages, except soft drinks, the rates under ex excess-profits tax. isting law are doubled. The net income of corporations for the current taxable year The tax on soft drinks is 30 per cent levied upon the manu is estimated by t1le Treasury Department to be $10,000,000,000. facturers', producers', or importers' selling price of cereal bever The amount subject to taxation will be about $6,300,000,000. The ages, and of 20 per cent on all other soft drinks. The tax on ice total revenue estimated from corporation income tries mil be cream, sodas, and other similar articles is 2 cents for each 10 $894,000,000. cents on the sale price. In case of sales of 7 cents or less the tax W' ~R-PROil'ITS AXD EXCESS-PROFITS TAXES. is 1 cent These taxes are not imposed on individuals but only on cor The estimated revenue from spirits will be $806,600,000, and porntions, including voluntary associations and joint-stock com from fermented liquors $240,000,000. The total tax on beverages panics. E\ery corporation having u net income of $3,000 or is expected to amount to $1,137,600,000. This estimate will be more must make a return. greatly reduced if contemplated prohibitory legislation is en Two methods of imposing these taxes are provided--{)ne, a acted. tax on war profits, and the other a tax on excess profits. Both TAX ON CIGARS AND TOBACCO. will not be imposed, but the Government has the option of im The existing taxes on cigar~, cigarettes, tobacco, snuff, and so po~ing that method which· will yield the greater revenue. forth, have been greatly increased. The taxes impo ed on this On corporations having an invested capital of not more than class of articles under the act of 1916 amounted to $155,000,000. $25,000 neither an excess nor war-profits tax shall exceed 35 Under the act of 1917 the amount collected was $212,000,000. per cent of the net income in excess of $3,000. On corporations Under the operation of the present bill the estimated amount with nn invested capital of more than $25,000, but not more than will be $341,000,000. $50,000, the amount of the tax shall not exceed 40 per cent. TAX 0~ ADliiSSIO~S AND DUES. ·war-profits taxes are imposed on corporations upon the fol The present tax of 1 cent for each 10 cents paid for admission lowing basis : The average net income of corporations for the to theaters, "movies," shows, and other places of amusement prewar period embracing the years 1911, 1912, and 1913 is taken has. been increased to 2 cents. If the admission is 7 cents or as a basis. The bill pro\ides a tax of 80 per cent upon the less the tax is 1 cent. An additional tax is imposed on tickets amount of net income of the taxable year in excess of the aver sold at news stands, hotels, and so forth. age for the prewar period. Each corporation is allowed a The present tax of 10 per cent on the amount paid as dues or specific exemption of $3,000. If a corporation was not in exist membership fees to any social, athletic, or sporting cluh is in ence during the prewnr period, or if its prewar earnings creased to 20 per cent when such amount is in excess of $10. were less than 10 per cent, it is allowed an exemption of 10 per EXCISE TAXES. cent in addition to the specific exemption of $3,000. The committee in stating the.method employed in the laying of Excess-pr;ofits taxes are imposed upon the following basis: A this class of taxes report they endeaYored to select for taxation crooit is given each corporation of $3,000, and in addition eacll articles which in themsel\es were considered luxuries, and tho e corporation is allowed a further exemption of 8 per cent of the which when sold for a large price might fairly be deemetl in·re:..1:ed capital for the taxable year. On the excess profits Iru...·uries. above these exemptions a tax is imposed of 35 per cent of the Increases are made on articles now taxed, and new excise net income on tile amount abo\e the exemptions and not in excess taxes are also imposed. On automobiles the tax to be paid by of 15 per cent of the invested capital, 50 per cent on the amount the manufacturer when sold is increased from 3 to 10 per cent. in excess of 15 per cent and not in excess of 20 per cent, and 70 On piano players, phonographs, jewelry, cameras, and sporting per cent in exce of 20 per cent. · goods a like increase is made. . No one will dispute the justice of taxing .heavily the large On pianos, pipe organs, clock , candy, tapestries, lot ma profit · made by certain corporations growing out of war con chines, furs, yachts, paintings, statu::ry, and so forth, a tax of 10 tract'. The war-profits tax is based upon that proposition. The per cent is placed. Pistols and revolvers are taxed 23 per cent; bill e tablishes a prewar standard, allows the corporation what dirks, bowie knives, and dagger , 100 per cent. A tax of 2 cents ever profits it was then making, and if the corporation is now per gallon is levied on gasoline. making more it is a. sumed that it is because of war conditions A 20 per cent tax is imposed on carpets and rugs, on the amount · ai1d the exce s is taxed 80 per cent. The tax is large, but is cer of the sale price in excess of $5 per square yard ; picture fmmes tainly justified. in excess o~ $10 ; umbrellas and parasols in excess of $4 ; men's It was founu that certain corporations were making excessive suits and overcoats in excess of $50; women's st:it£ and cloaks profits both during the prewar period and also during the war. in exces of $50; women's hats in exce s of $15; men's hats in The excess-profits method was adopted in order to reach such excess of ~3 ; boots un.: shoes in excess of $10 ; men's hose in case·. No form of taxation is more just than one which prevents excess of $1; women's stockings in excess of $2.. Ot:1er articles in war time exce ive profits. The committee is.to be commended of similar character are subject to a sale price tax. Sales price for pro\iding both methods, so that no profiteer shall escape. taxes shall be paid by the purchaser to the vendor and shall be It i estimnted that the amount that will be received from paid by him to the Government. the e tnxes ·will be $3,200,000,000. SPEClAL TAXES. ESTATE TAX. In selecting special tax sources the committee endeavored This tax, is a graduated tax upon the devolution of the net to select such objects as would yield considerable revenue and e tate of a decedent. The tax was first impo ed by the revenue be fairly well distributed. act of 1916 and was continued in the act of 1917. Some changes The tax on corporations is increased from 50 cents for each haYe been made in the present bill, most of which are manifest $1,000 exceeding $99,000 to $1 for each $1,000 exceeding $5,000. improvements. Increases in the rates have been impo ed. Under Brokers' tax is increased from $30 to $100; on tileaters the exi tiug law tile rates range from 2 to 25 per cent. Under the tax is doubled, and ranges from $50 to $200 ; circuses, increased pre ent bill they run from 3 to 40 per cent $100 to $200; billiard rooms, increased from $5 to $10 for each TRAXSPORTATIOX AND INSURAXCE. table. Special taxes are also placed on liquor dealers and The present rate of 3 per 'cent on the amount paid for trans manufacturers of cigars and tobacco. A special tax on the portation of freight i continued in the present bill. use of automobiles is imposed ; on 23 horsepower or less $10, The pre ent rnte of 1 cent for e-very 20 cents or fraction thereof 23 to 30 horsepower $20, 30 to 40 horsepower $30, more than on expres is uiRo continued. 40 horsepower 50. Eight per cent, the amount now imposed on passenger rates, is STAliP TAXES. a1 o retained. The present tamp-tax law is reenacted except that nn. The 10 per cent now charged on Pullman rates is reduced to 8 increase from 7 to 8 cents per package is placed on playing per cent, in oruer to make it uniform with passenger rates. cards. The bill proYiues n tax of 5 cents on each telegraph or tele In this brief analysis of the bill I have not enueavo1·eu to go phone message on which the <..~barge is more than 14 cents and into details. l\fembers of the House will consult '.lw text of the 10246 CONGRESSION Arl R-ECORD£HOUSE. SEPTEJ\IBER 12' bill for provisions relating to administration. Thev will also cocoa, coffee, chicory, matches, and so forth. Her pre ent consult the text to understand the effect of the m'any defini revenue derived from customs is about $10.22 per capita of l"ter tions, exceptions, and conditions contained in the bill. For population. this purpose the able report of the committee accompanying the Under existing Jaws in the United States our revenue from bill and the published reports of the hearings will also be customs duties is constantly decreasing while the amount of our amilable. imports is continually increasing. ADVISORY TAX BOARD. The bill wisely provides for the creation of an advisory tax Revenue from customs duties in U11ited .States. it board to pass upon cases which may be referred to by the Ad Secretary of the Treasury and the Commissioner of Internal valorem lle>enue. Cases are constantly arising involving in many in rate. stances large sums of money in which hearings arc necessary to ascertain and determine questions of fact and law. This Per c~nt .. board will sit as a court on these que tions and recommend the 1, 813,000,000 ~312, 000, 000 1 appropriate findings to the determining officers. The board is 1 893,000,000 283' 000, OOJ 15 to consist of five members, to be appointed by the President an1l i!~ ~: ::: : : : : ~: ::: : : : : : : : : : : : : : : : : : : : : : :: l, 67!, 000,000 205,lJOu,OOO 12 2, 197,000, OO"J Zu9, 000, r ()() 9 confirmed by the Senate. " 1917.:::::::::::::::::::::::::::::::::::: 2, 6.39, 000, ()()() 221,00J,(){)I) s 1918 ...... -. 3, coo, 000,000 1so,ooo;o:JO 6 COMMITTE!: ON EXPENDITURES. In this connection it is proper to ~tate tllat it is a matter to be regretted that the committee di<.l not al o provide for the With our present imports upon the basis of the tariff rate of creation of a joint committee,· composed of Members of the 1913, ow· re....-enue from that som·ce would be for the current Senate and House, on expenditures. Congress is imposing un: year $540,000,000 instead of $180,000,000. With an estimated precedented taxes upon the peopte and appropriating immense population of 110,000,000, our revenue from the tariff is $LG3 sums for carrying on the war and is making no attempt to see per capita as compared with $10.22 recei>ed by Great Britain. whether the money is expended as designed and is pl'oviding The proposition to increase our revenue from tariff duties is no safeguards against extravagance and waste. l\loney pro not and should not be considered a polftical question at this time. tided is turned over to officials whose primary thougllt is speedy Protectio~ ts and free traders, so called, both understand tllat rrccomplishment. That object is commendable, but without the questiOn is now primarily a question of re\enue. Protec supernsion leads to needless and 1eckless extravagance. tionists stand for revenue and protection. Free traders stand Other nations act more wisely than we. Great Britain has a for a tmi.ff for revenue only. Protectionists do not demand antl committee of Parliament on expenditures composed of 20 mem do not expect a general revision of the tariff in accordance with bers. They are divided into >arious subcommittees and are re their views at this time. They have ah>ays maintained that quired to report from time to time. In this country we have no re>enue was a necessary element in the fixing of tariff scl1edules. congressional supervision of expenditure . Only in flagrant They have also maintained that protection of our agl'icultural, cases, where the loss is so great as to be brought to·the attention manufacturing, and commercial interests was a necessary ele of Congress, is any investigation made. In the aircraft investi ment. They do not, however, belieYe it wise at this time to in gation it was shown by the report of the Senate committee that sist on the element of protection being considered. That wilt the immense sum of $640,000,000 appropriated by Congress to come up for consideration and action at the close of the war. pro>ide our Army with aeroplanes was almost entirely wasted But botll protectionists and free h·aders agree on a tariff for revenue, and it is difficult to understand why the committee on unnecessary expenditures lllld fruitless e~-periments. In the Hog Island ca e money was squandered with a reckless extravrr should ignore a source of revenue which has al\Yays been used gance never before equaled even in this country. The cost-plus during our own history and which is being used by other nations system so generally adopted is an incenti>e to extravagance and at this time. It is difficult to understand why our tariff which has led to the lo s of millions. The practice of the various de is now lower in amount than it has been for many rears' which partments of the Government of bidding ngainst each other for is lower in percentage than eYer before in the history' of ·the the arne material i indefensible. The e things could be at least Nation, and which is lower tllan that of any other great nation mensurably remedied by a strict supervi ion of expenditures. at this time, should not hn....-e been increased for purely revenue The >ery fact that a committee is in existence whose duty it is purposes. to examine into the manner in \Yhich appropriations are ex With a rewnue from the tariff less than hns been receiwll for pended would have a salutary effect. 20 years, there is no effort made to increase it, notwith tanding We are a rich Nation and can spend more money tllan any our demand for revenue is greater than it ever was before. other and cnn raise it more easily. But there is a limit to even Searching for every available source, we entirely ignore this most our ability. And we are not justified in spending a single easily imposed, most cheaply collected, and most lightly borne dollar of the people'. money neeq..Iessly. It is no justification of all sources of revenue. ot· excuse to say that extravagance nn Mr. KEAll.NS. 1\Ir. Chairman, the statement has be-en made A popular tax is an unknown quantity, and when we levy the on the floor of this House that one John F. Giddings, a Republi largest tax ever known in history as the rate and amount levied can, of Canton, Ohio, bas been reported in the press as saying increase we naturally are running in absolutely the opposite that he believes it would bring joy in Berlin if the next Congress direction from likes or dislikes which make for popularity. It should be Republican. It is reported in the press that John F. is probably true this bill is bound to be unpopular in <.lirect pro Giddings has been a lifelong and influential Republican, living portion to the amount of tax le\ied. But that is of slight con in the city of Canton, Ohio. sequence. If any such tax as this should be dreamed of for .J ohn F. Giddings's name does not appear in the city directory ordinary affairs of the Go\ernment, it would be likely to cause of Canton, and there appears no name similar to that. Any per an upri ing, provideLl even such an act received favorable action son b~· the name of John F. Giddings is absolutely unknown in by Congress. tl~c city of Canton, Ohio. . But these are not ordinary times any more than this is an Mr. lUOORE of Pennsylnmia. Is that the name that was re ordinary tax bill. It is not a question of popularity; it is a .fetTed to in one of the speeches just made on the floor? question of patriotism. It is a que tion of providing the sinews l\fr. KEARNS. That was the name given in the speech just for the best support \ve can render to our Army and Navy. m:Hle by the. gentleman from North Carolina [Mr. Pou] a few The American people will gladly permit their pocketbooks to moments ago. · · be hard hit and their pursestrings absolutely lmtied in order l\Ir. l\lOORE of Penru;ylvania. 1\fr. Chairman, I yield 30 min that the men who compose our Army and ~avy may have ~he ute to the g-entleman from 1\fassachusetts [1\Ir. TREADWAY], a nece ary equipment for doing their work quickly and well. In member of the committee. addition to this, they will have t.he feeling of moral support l\!r. TREADWAY. Mr. Chail-man, in his opening address to that the people have willingly responded to the nece sru·y taxa the House on Friday, the chairman of the Ways andl\Ieans Com tion. Uo,'I>USTniAL RESOURCES. mittee e~--pressed his appreciation of the work of the members of the committee in framing this revenue bill, especially speak In his opening remarks the chairman of the committee, 1\Ir. ing of the patriotic and nonpartisan attitude of the members KrTcmN, said, in substance, that if every bit of the resources which brought about a unanimous report. There were, naturally, of the country should be taken in the support of the war to its diffet·ences of opinion expressed, many arguments used pro and close the recuperative power of the country was so great that con, but underlying it all two factors, to my view, were con we would rise from the blow and again become the powerful spicuous in bringing about the result to which the chairman re and wealthy Nation we were at the beginning of the war. I ferretl. One- he has himself mentioned, and the other his mod heartily indorse this view. A meager sacrifice is asl~ed of us in esty would deter him from mentioning, even if he realized how the form of dollars when compared with the supreme sacrifice important it was. Af3 a junior minority member of this great of the men in khaki daily offering their lives on the battle field. committee, it may not be out of place for me to say that the addi Let the tax collector take our all, that victory may sooner come tional factor in the unanimous report wa the personal courtesy, to the Stars and Stripes and that fewer live be sacrificed in invariable good nature, willingness to patiently hear every mem obtaining it. [Applause.] ber, and the entire fairne s of the distinguished chairman. [Ap Mr. Chairman, the State which I in part represent, and of plau e.] I feel this word is due him in the opening of my re which I am the only member on the Ways and l\feans Committee, marks. has very large industries. Under all the tax titles in the bill FOUNDATIO~ FOR THE BILL, l\fru achusetts, in proportion to its population, will undoubtedly On May 27 Pre ident Wil on delivered the address before pay a very large share. Otller New England States have cor the Congress, as the result of which the Ways and Means Com respondingly large industries affected by this bill. The pa mittee promptly took up the preparation of this bill. I quote triotic spirit displayed by the persons in control of tlw:se. in from hi. address: du tries in the present emergency is a source of great pride. They a k that the industries should not be unduly penalized in Enormous loans freely spent in the stimulation of industry of almost every . ort produce inflations and extravagances which presently make order that they may continue to do their part both in furnishing the whole economic structure questionable and insecure and the very necessary material as well as their part of the money required basis of credit is cut away. Only fair, equ1tably distributed taxation, by the Government's stupendous operations. If a way could be of the wiliest incidence and drawin"' chiefly ft•om the sources which 'Yould be likely to demoralize credit by theh· very abundance, can pre found to secure the needed reYenue without resorting to the vent inflation and keep our industrial system free of speculation and high rates established by this bill, no one would be more gratified w:u>t <' . 'We shall naturally turn, thet·efore, I suppose, to war profits than myself, in view of the interests of the section which I and incomes and luxuries for the additional taxes. represent. A study of the bill will show that the committee has carefully TARIFF Arm COXSUl\IPTIO~ TAX. followed his suggestions, endeavoring a far as possible to lay There are two possibilities of additional revenue not inclm1ed thi enormous burden along the line which the President himself in this bill. One is the tariff, which it is estimated might re mapped out. 'l'be Secretary of the Treasury. both in the letter turn several hundred millions. Should this method of securing be tr:msmitted to the committee and in his testimony before it, additional revenue be brought up for serious consideration it gave similar advice, and while the committee enuea\oreu to exer would undoubtedly bring on a partisan debate, as the tariff has cise it own judgment, it realized tllat the Treasury suggestiqns so long been one of the chief points of difference between the W<'I'C well de erving of most careful consideration. This bill does two great political parties. As we are endeavoring in every not change the law for exemption of small incomes and does not way to avoid partisanship in anu out of Congress to-day, this imiJose taxes upon the absolute necessarie of life. It is fair to would, to my mind, be unfortunate. The other alternative is say that this enormous burden fal1s almost entirely upon those laying a consumption tax, perhaps more tmpopular than any who have accumulated and been successful. It is a tax on wealth other form of taxation. A sales ta:s: and a consumption tax: are and success. The exigencies of the times seem to justify the of the same nature anu would reach rich and poor alike. The adoption at the present time of this method. President could not have had a sales tax in mind whoo be The Assistant Secretary of the Treasury, l\lr. Leffingwell, in addressed Congress on May 27. It certainly can be said that the course of hi statement, draws attention to the fact that we a consumption tax is an easy tax to lay and would be productive may be approaching the point where certain rates of taxes of large revenue. It will reach more directly to the masses might destroy business itself or the principal on which the tax than any other form contained in the present bill. In this par is levied. Certainly this danger point must be avoided, and it ticular it has one f~ature to commend it, namely, it quite likely hn been the studious effort of the committee to avoid this very woulu be a means of impressing on the minds of the people the trouble. In order to secure these enormous returns, there must absolute need of the strictest economy in all details of our daily be a tability of principal. There must even be an allowance of life. an inct·ease of principal or capital. 'Ve must not only not (>n It is hoped that the actual revenue secured under this act cronch on principal in levying a tax, but we must go further will be more than the estimates made by the Treasury experts, anu . tnbilize large capital. In other words, we must not de but should it prove otherwise a consumption tax is the only stroy the confidence of the investor that a fair return may be alternative we see in Yiew. 'Ve have carefully avoided in secured upon hi inve tment and that the principal itself will cluding a consumption tax, not that the masses are not "illing not be destroyed or confi cated. to pay their proportionate part, but because we were able to P.\TUIOTIC TAXATIOX. place fair burdens on those be t able to carry them. I have, hmYever, sufficient faith in the imlividual patriotism l\1any criticisms of the bill have been offered. It is proper that of our 110,000,000 people to be confident that should Congress the,\· should be, and when founded on thorough knowledge and find there is nee PROPORTION OF TAXES A "D BO~DS. proves the prediction that following a war there is sure to come In view of the very complete analysis of the bill made by the business depression. We therefore must not burden the future chairman and supplemented by the gentleman from Michigan with too heavy a load. It is a sound financial doctrine that [Mr. FoRDNEY] and other members of the committee, it is not having to-day the ability to pay, we should meet as large a pro my purpo e to take the time of the House to deal '\Yith many portion of the obligation on a "pay-as-you-go " ba is as possible. specific items. Personally, I should have preferred to have seen the original I quote from the chairman's report the following: rate of normal tax decided upon by the committee left in the In cial taxes have been laid -wherever there seemed to be pro~r Government but supplement the wishes of the people in the reason therefor tile item to which I desire to call attention is harmonious effort we are making for our country's success. worthy of consideration. This bill represents the best thought an discrimination against the people of my State in reference to measure, I am constrained to believe that the rate of taxation freight rates, not brourrht about by any provision of this bill on freight transportation should be reduced from 3 to 2 per cent. nor by any act of the Director General of Railroad , which This reduction, while infinitesimal when compared with the the provisions of this bill will add as an additional burden. Prior amount to be ~·ai ed by the entire bill, will save a bw·den on the to the order of the Director General putting into effect th9 ronsumers of $38,3o1,511.54 annually and at the same time raise increase of 25 per cent on freight rates the railroads that $2,788,182 more re\enue than the 3 per cent rate without the "trnxerse my State put into force a 28 per cent increase in 25 per cent increase in freight rates. In other words, the taxes rate , so that the increase of 25 per cent ordered by the in thi bill on transportation should not overburden the people Director General makes more than a 50 per cent increase above of the Nation, and in making the levy we should keep in mind the rates in effect in Oklahoma prior to the 25th day of the results of the increase in rates. March, 1918. At the proper time I shall offer an amendment reducing the From an investigation made of the effect of these rates the rate of taxation on freight transportation from 3 per cent, as discrimination against the people of my State can be illustrated provided in the bill, to 2 per cent. . as follows: The ta.""{ on passenger fares is high enough, and I am glad to Cattle can be shipped from Purcell, . Okla., to Fort Worth, know that no increase is provided in the bill and that the Direc Tex., and shipped back as dressed meat, making a total distnnce tor General has requested that the tax rate be made uniform so of 342 miles, for 58 cent per 100 pounds, which i only 7! cents 1 thnt univerEal mileage may be issued. more than the charge for shipping the cattle to Oklahoma City This will meet the commendation of the traveling public who, and the dres ed meat back to Purcell, a distance of 67 miles. If under the present congested conditions, travel under great hard the cattle be shipped from Wayne, Okla., instead of Purcell, a ships. The recent order of the Director General, requiring cour station 40 miles from Oklahoma City and 164 miles from Fort teous treatment of the employees toward the public, met a hearty ·worth, Tex., the rate would be H cents per 100 pounds less appreciation from the people generally. if the slaughtering is done at Fort Worth, than if done at the In view of the attitude of employees toward the public after packing plant at Oklahoma City. Pauls Valley, Okla., can the Go\ernment took over the control of the roads the order was obtain meats at Fort Worth, Tex., 150 miles away, at 7?! cents timely. per 100 pounds cheaper than meat slaughtered at Oklahomu Years ago a great railroad magnate in an unguarded moment City, which is only 55 miles from Pauls Valley. • gave expression to the thought "the public be damned," and his A farmer at Shawnee, Okla., slaughtering his cattle can ship employees proceeded to conduct themselves accordingly. A timid the hides and mal'ket them at Kansas City. 380 miles away, at a country woman, with a little tow-headed boy, went up to the rate of only 1! cents above that to Oklahoma City, 36 miles ticket window and a ked when the h·ain would arrive, and re be given those working conditions that '\\ill conduce to efficiency Tile question was taken; and the Clluirman announced that the and wel1-being. noes seemed to have it. I am led to discuss this afternoon, with that thought in view, Mr. SHERLEY. 1\Ir. Chairman, I ask for tellers. a department of this Government that is served by the greatest The CHAIRMAN. Tellers are demanded. number of employees and workers in any branch of the Govern Tellers were ordered; and the Chair appointed Mr. H..iRRiso~ ment service, a department that intimately touches every citi of Mississippi and 1\Ir. SHERLEY to act as tellers, zen. In presenting these remarks I desire it to be · \Ve who knew l\fr. Burleson before he became Postmaster If there is any department of the publlc service that should be free from partisan spoil it is that which administers to the convenience of General expected he would administer that office along the the business illterests of the country and promotes the greater unity of narrowest and most bitterly partisan lines. We were in no 'the people through the distribution of the agencies of intelligence and sense disappointed. He is the arch politician of·the time. He the lar"'er intercourse of the peoples of the different States by letter communication. All of these beneficent featm:es he (Burleson) has can see no proposition except in a bitterly partisan way. If utterly disrupted by the most brazen contempt of the ordinary legal any of you are in do1,1bt, ask anyone who served with him in · restraints imposed on his departuient, and his utter disregard of the Congress. When, therefore, 1.\Ir. Burleson stepped into his high commonest political decencies. His hn.s been the most shameful record, the greatest scandal on American Government. Strong words? All office, we smiled as he promptly announced there was some true, and the worst part of the record still unreacJ_. thing wrong with the bookkeeping of his predecessor~ It will be remembered Mr. Hitchcock during the last Republican ad Inquiry discloses that the greatest cause of inefficiency in the ministrntion had perfected the Postal Service so that it was Postal Service is the B~leson system'& treatment of its em not only supremely efficient but, for the first time in its history, ployees. The great characteristic of this system, and that self-supporting. This was too much foi"" Mr. Burleson; he could which has demoralized the Postal Service, is the attitude of :r;wt stand for any Republican to have that credit. So he Burleson toward all men and women- who work, toward. the jumped into the press, charging there- was a deficit for the 300,000 employees whose fortunes and who e· welfare are in the year 1911 of $732,301.90 instead of a surplus· of $2~9,118.12, as hollow of his hand. Almost at once the system attacked postal claimed by Hitchcock. Of C(lurse, we a.ll knew Hitchcock was employees with undisguised vigor. Apparently to see workers right and Burleson was wrong. We smiled, because Burleson well paid, contented, and in high spirits, doing their l)est, annoys was coming up to expectations. There is no satisfaction that greatly the head of this system. That sight he does not propose equals the one we feel when we see a. man come up to expecta- to see if he can help it. A little thing like an act of Congres ~oo& . does not bother Burleson very much. Our smile broadened consideratily when his first annual re His system is always restive under restraint. A few years port appeared. In that he claimed great credit fot· a surplus ago Congress, . after full consideration, increased the pay of in the year ending June 30, 1913. Having pushed his prede rurnl maii carriers from $~100 to $~200 per year for standard cessor off the roost of successfully handling the Post Office De routes. The Burle~on system had ordered the rural carriers partment, he promptly perched himself then~on and began to to refrain from all activity toward Members of Congress to ·crow wildly. · secure the increase. T.his notwithstanding Congress had in . In that report he said that at last the department, under his-· 1912 passed a law specificall"7' gfving all postal employees this \Yise management, had become self-supporting for the year re right. Imagine Burleson's rage when Congre s granted this ferred to, and the subsequent year each showed a surplus. It most deserved increase. But lie was not to be beaten. By a neYer occurred to him that eight months of that first year cunning device, such a1 only a mind like his could produce, he were under Mr. Hitchcock,_ and the other four must of neces found a way to defeat llie will of Congress, and the rural car sity iiave been but a continuance of his system, as ·1\Ir. Bu:rle riers did not get the increase. They were thus robbed of about sou had only taken office and was completely absorbed in firing $3,000,000. The next ·year Congress, with some spirit, passed a Republican postmasters right and left, and putting in both de resolution that compelled the Postmaster General to obey . the serving and undeserving Democrats. law and grant this increase. In his next annual report Burle Shortly after Mr. Burleson took office, a 1.\Iember of this son gives this insult to Congress: House, . receiving many . telegrams from po tmasters in his dis The ditl'erence between this amount and the audited surplus ls due largely to payments made in 1917 to rural carriers in excess o! com trict that they. had been summarily ordered to resign, though pensation earned under the law far ervices performed in 1!)15. These their terms of office had not expired, called on the Postmaster payments, in the nature of a gratuity, were made pursuant to an act General and protested. He was suavely informed that while of Congress. theretofore the Post Office Department had been conducted on Gratuity, indeed ! It was salary due them under an act of party lines, now a _new era had dawned, and the department Congress and which Burleson had illegally withheld. Congress would be conducted on a pm·ely business and nonpartisan basis. -made the system di gorge, and it hurt. Remember, these rn:ral The Congressman grinned and replied: "Burleson, tell that to carriers are men then earning, as all the evidence disclosed, some one who does not know you ; do not waste it on me." scarcely $25 a month after paying for their hoi""se feed: and other The year ending June 30, 1915, found Mr. Burleson in a expenses. dilemma. Twist as he might, and juggle as he would, there The Post Office bill recently passed by Congress grants an ~ stared in llis face a deficit of $11,000,000. He- could not rub it crease of pay to the rural carriers. The Burleson system -re out ; he could not wipe it out. So h~ dodged it. He serenely hemently protested against this increase; but the Republicans-, attributed it to the war in Europe. Just how the war in Europe joined by many Democrats, put it through. Likewise, the sys in 1915 could affect the postal receipts and expenditures in tem arbitrarily reduced the salaries of collectors in the City America is not easy to see. If this war in Europe ends before Delivery Senice from $1,200 to $1,000 a year, and continued BuL'leson's term expires, and the postal deficit continues, as it this practice even after Congress ordered the proper salaries will, Burle on will be in a devil of a fix. re::;tored. Boys delivering special-delivery letters had been re Let no one be decei-red by the announced policy of the Presi ceiving 8 cents each, a.s provided oy law, but the system could dent that certain classes of postmasters are to be selected under not endure seeing a bo-y earn the whole 8 cents the patron had the civil service. The President may have proposed, but Burle placed on the letter for the· purpose, so it put t11e boys on a son has dispos~. The Burleson system has the matter well in miserly salary or substituted for them one of its favorite con hand. In the first place, the policy was not made operative tract systems. Anyone who gets a speeial-delivery letter now until all Republicans had · been eliminated and Democrats- ap in advance of the regular mail is in great luck. [Ap{!lau e on pointed. Then Burleson's rules omitted all reappointments the Republican side.] Substitutes for carriers who, in hope from the civil-service test. In other words, all Democratic some day of steady employment, had been hanging between life po. tmasters could be sure of holding their jobs as long as they and starvation, getting 30 cents an hour when they worked, did not steal or die. But the Burleson system went much were shoved a little nearer starvation by Burleson's system, fm·ther. It required the Civil Service Commission to place a which cut their scanty wages to 27! cents per hour. City letter representative of Burleson on the examining board of three, carriers and post-office clerks were arbitrarily robbed of their who will, naturally, dominate the board and, in addition to · holidays until Congress came to their rescue. A cheap-labor that, the method of mar1."ing, the percentage to be given for contract system, without regard to efficiency, always looks good this, that, and the other, all prescribed by Burleson, enable ·the to Burleson's system. It has tried its best to have establisheLl Postmaster General to keep the appointments wen in hand. such a system in place of the present rural currier system. That Tl1e Cinl Senice Commission has been made an agency of system has been put into operation in the star-route service, and the Postmaster General, its freedom destroyed, and its capacity a.ll the world knows how fearfully that has deteriorated. to act justly and fairly taken away. I wish to state, however, Repressive measures of all kinds have been put into effect. that it is m.r opinion that the First Assistant Postmaster General Privileges enjoyed by the employees, making their work more is doing his best to act fairly and. impartially, but the system agreeable and life more pleasant, have all been taken away, and under which he works pre\ents that general result. The un now men are chained to their work, cowed., and browbeaten. holy fruit of this system is already beginning to appear. In a Burleson's system has ruthlessly discharged aged Civil War vet Massachusetts city the man who stood highest in the examina erans, ridiculing as sickening sentimentality any sympathy tion .l\lr. Bru:leson declined to appoint because the man had shown for such unfortunates. partisan J)i"Oclivities-in ot}ler words, because he was a Re When the National Guard was sent to the Mexican boruer in publican. The next man on the list w·a&· a faithful Democrat, 1916 many members were in the Postal Service, and the system therefore de-roid. of partisanship, and so was appointed. The compelled them, although engaged in protecting their country on Wheeling Intelligencer says: the border, to resign from the Postal Service, and thus deprived .. 1918. .tCONGRESSIONAL RECOR.D-HQUSE. il0253 their families· often of their- only means of subsistence. In my last annual repont 1\Ir. Burlesen severely condeJl1.D$ organized own State was one- distressing case of a postmaster of a third la.bor for. attempting- to organize{ the_employees · of hiS< depart clas offiee. He wen1: with tbe.. Guard to- the· border, and was ment; and. he- distinctly lay . .dowu. . th~Jaw against the-a:tflliation compelled by· Burleson tO' resign:, leaving a wife and four small of postal emPloyees witb.rother labor 01-ganizations. This atti chil(l.ren practically without any means of support.. On one tude of. the. Postmaster_General is impoJJtant, not only because occasion a letter C'arrier asked for leave· tO' attend his fath€r'S: o:ti the 300,000 postal employees under him but especiall:y because funeral and was refused. he aims to be the political dictator of this administration, direct:. The Burleson system requires that its lieutenants throughout ing the adm.i.nistration's policies in. this... rega1·d,: and thu.s llk:ely the country re:fiect the Burleson mind in their attitude to the tQ affect·millions:. of. workers in th.e land. · employees unde:r them, Thus it· is almost· a capital offense for a Tile American. Federation· o! Labor, in. its meeting. at Butl'n.lo, postmaster to be· on good terms with the employees of the office. N. Y.~ Novembel~ 12, 1917, concurred in. the followiug resolutton There is no way foi"" a postmaster or field superintendent to presented. by1 certain deleiDl-tes : · secure smiling favor- at. the throne like earning a reputatioa Rerolved, That· tn.e· Ame.:ti.can" F-ederation of. Labor, in: convention for harsh and exacting treatment of· employees. Under such a assembled, emphatically condemns the· antoetatic policy of Postmaster General Burleson. towar. the postal employees, and hereby- instructs system is there any· wonder that the service has deteriorated? the exec~couneil to cooperate with representatives ot the afii.liated The Burleson system now demands that- Congress repeal the p-ostal employees' organizations in securing an audience with President act of 1912, giving- po~tal em:ployees the right to petition Con• Wilsorr and placing· before him all ti'le fa.cts concerning the oppres ive gress and its Members. This is in_ keeping with its views labor policy of Postmaster· General Burleson. towm·d people- who work and in keeping with that which has The: query naturally comes;. I& this unfl'iendly attitude toward been done in its department. Formerly the Postmaster General labor a recent development on the part of Mr; Burleson. and his received the representatives of the employees, talked things system? And inquiry into the past discloses that it is not. over with them. and friendly relations existed. But no such Rather it is-a manifestation of- an attitude toward labor which situation with Burleson.. When the represe-ntatives of the em the Postmaster General may have inherited' from his surround ployees called. to sec him he refused to receive. them. and the ings, but which he certainly-always has had. Burleson system throughout shut the doors against all repre- · 1\fr. Burleson. inherited n. la-rge quantity of land in Texas- sentatives of employees. . several thousand acres-and in partnership with his brother Mr. Burleson can not endure any organization of his e~ in-law, ·c. D. Johns; operated these broad acres, using convict ployees. For years: there have been four large organizations labor; These laborers weJJ'e hired from the State. and were of postal employees to advance their interests, to ad-vance their worked on the Burleson. and Johns farm. 1\!r. Burleson is. nat welfare, and promote efficiency of service. They are the Asso to be charged with the inst itution of the convict-labor system ciation of Letter Carriers, Railway Mail. Clerks, I:Jost- Office or its abuses in Texas. The institution was there, and had been Clerks, and· Rural Carriers. After five years of the Bur-leson for some time, in. all its. revolting character. Mr. Burleson's system there is not much left of them. Whenever any of their sole responsibility comes. from his having utiliz.ed the system officers were bold enough tO' speak up for their· rights such_ tor his own profit . This feature is-· discussed here· solel;y: to. officers have been promptly eliminated from the service. Thus sh-ow· tha..t-; by training, surroundings, and practice, 1\lr. Burle the pres,ident of the Rural Carriers' Association, the president son's attitude toward labor is one that has brought hardship to of the Railway Mail C.terks~ Association, and the secretary of• our postal employees and. decreased the.effi.ciency of the service. the Post Office Clerks' Assnciation, whose only offense was to There were. several. convict farms of this character in Texas call the department's attention to certain injustices, were sum besides the- Burleson farm, nnd conditions on all these became marily discharged. Tile system's attitude toward these. assoct.a,. so unspeakable that· a committee of the-Texas Legislature, con tions is displayed in. the Postmaster- General's recent annual sistin~ of· f!mr senators and five representatives, conducted an report. After.. a two-page- attack on these organizations ho says: investigation~ Conditions were found so monstrous on. these farm.s: that rull o:£ Texas was... horrified; an:d the legismture speed These organizations hold National and State conventions and some1 ily passed. a law. fore-ver prohibiting·the_p.ractice. publish jom:nals. Th& time. of these conventions and the spaee in tbese, Th t t bet B I journals are devoted almost entirely to matters of selfish interest.. e con rae \¥een W: eson and his brother-in-law with the State penitentiary ofiicials·provided that while the convicts How monstrous ! What a crim&·! These men are even work- were at. work they should be nnder the management and control ing to help themselves in the wodd. Sel.fish, indeed! Alas ! of the· prison gnards, that 6Q. per• cent- of the p1·o1its should go that any employees.of that department should ever have-a selfish to the State and 40 per ceu to Burles<>on and Johns,1while sec thought when they are under the Great Albert, whose whole life tion 2 provides tbat the con.-victs· worked shall be white, and has been such a model of self-denial and un-se-lfish devotion to 1\fe.xiean, and they are " to consist of that class of convicts who the welfare and interests ·of his fellow· man, with never a because of· youth, old age, or some' physical infirmity are not thought for himself~ suited fm:. contraet farms or railroad wotk." Burleson's system is going to see to it that tbBse men do not Tims it-will be seen that the. poor:• wretches who were to, toil waste any time going to conventions and looking out for their an.d suffer were young: rads whose feet had. .strayed for the-first own intere, ts. The worm is not to wiggle 1 less the tyrant time and the old men. whose· faltering- steps. would: soon lead speaks. It has fixed them all right. It issued · a migh order them ta the grave. To these were added thos.e suffering· from forbidding all'Jeaves of absen-ce· except for sickness. That put sickness or bodily infirmity-the very cheapest kind of -labor. a stop to their· organizations· and selfish work. Thereafter 'they That to which these tender youths~ feebie old men, and phys would keep their noses to the grindstone- and cease to think.. ically infirm were· subjected is· well-nigh incredible. But the as well-regulated workers ought to behave. lli. E. J. Gainor, evidence is so clear, complete, arrd_undenied that, revolting-as it of Muncie, Iod., was the- president of th€ Le-tter Carriers' Asso- all is:; it must-be believed. ciation. As such he had placed in his care property belonging to The committee of investigation to which I have referred re the association valued at nearly a millioR dollars. He a.sked fol" ported the testimony they took;. thei~:- conclusions and recom u temporary leave of absence to atterrd to some- business con- menda.tions; in a bool& that was published by the Texas Legis nected with this trust. His request' was emphatically refused. latul·e, entitled "Report of. the Penitentiary Investigation Com- Later: there gathered at Buffalo the American: FedeFation of mitte~" - Labo1; cO'n.vention, a great convention of representatives of organ""' Ih their rep9rt this committee said on page 12: ized labor. That convention was opened by the-President of the o.n.. practically all farms · the men are ta.k~n from: the, buildings as United States with a notable speeeh. Mr~ Gainor was a dele- eatly. i.ri tire morning as the guards can· seerto guard them. and prevent gate to that convention, representing. his 2.5,000 letter carriers, their escape, and are returned tQ. the buildings !o~:- the day between. sun· He applied for permissio~ to attend, and was told the only way down and dark. . he could go was to resign from the Postal Service. He resigned , And on the same page: and went. I h The e\idence disclosed that these convicts were often this alleged murder and acquitted because, as it was stated, whipped, using a short handle of wood, to which were fastened there was not evidence corroborati\e of the convicts, and under several straps 5 feet long, each above an inch wide. Under t11e Texas law a convict's testimony was not sufficient to convict this cruel lash the naked flesh was cut and torn, and in many a man of a crime. In 1913 l\Ir. Burleson became Postmaster instances the poor sufferer died. Commenting on this, two General, and during tllat year he appointed this man Durham members of the investigating committee_ speak as follows, _a postmaster at Longview, in Texas. page 20: · A former governor of Texas recently bad tl:.e following to Those intrusted with the care of human beings, even be they con say: victs, have proven by their action in whipping many of these helJ?less In the 'spring of 1916 I was informed by Burleson's associate in creatures illegally, inhumanely, and some of them to death for tnvial business that the famous Burleson-Johns plantation of several thou offenses, that they have forfeited their trust, and hence the only sand acres, formerly worked by leased convicts from the State to remedy is to absolutely forbid them to exercise their brutal incllna· Burleson and Johns, could be leased to the State. I looked at the tions by abolishing the use of this corporal and soul-killing instru place and there was nothing doing. When I looked at the place there ment. If a mother, at the birth of her babe, knowing the hellish con came back to my . mind the vivid and regretful recollection of that ditions prevailing on some of the Texas penitentiary farms, camps, and system of slavery· which Texas all too long permitted-of leasing the coal mines, could foresee that her darling would in course of time unfortunate convicts to the taskmasters, wbo laid the unmerciful be condemned to one of these. places, she would perform a charitable lash upon the bare backs of unoffending prisoners in order that more act to emulate the mocking blt·d, when it, failing to liberate its en work be done in a day. Tainted money-yea, tbere will never be a snared young one, bring.:; it a poisonous berry, utters a chirping cry, mot·e martyred human sacrifice in the history of man than that vanishes into space-and mourns. endured and suffered by the Texas convicts, whose liberty in the past In October, 1909, this investigating committee visit~d the has bem sold to those whose greed would weigh so many ounces of Burleson and Johns farm, and there the following testimony Government gold against so many drops of human blood. was taken, as applied to that farm. (See p. 578.) Such was the system in Texas under which Mr. Burleson Capt. Brooks, of the Burleson and Johns farm, looking at his acted, and from it his \iews on labor must have been largely record book, testified : influenced. It could not he otherwise. l\Ir. Burleson doubtless This shows B. F. I.ruce punished, 18 licks; offense, laziness. The would never have put into effect any such hideous barbarities, other man's name is Joe Oliver; punished on the 4th for lazine s and but he must have known of their existence, and he used the given 17 licks. This book is my time book. Yes, sir; both of these system. From such surrounding and experience we do not men were punished for laziness. think any man can come JVith sound views respecting the toilers Picture, if you can, these tender youths in their teens, tllese of the world. There have now been placed in the Po tmaster tottering old men, these sick and infirm, with bared backs. General's hands the fortunes of 400,000 workers of the tele receiving the lash for laziness! Little wonder many sank and phone and telegraph systems of the country. What is to be died. · tlleir fate? I for one am convinced that the welfare of the J. C. Zachery, on pnge 581, testified as follows: country requires a change in the system's policy toward the I was in the plowing gang. I don't kriow how they got ncross the post:..'ll employees and all other employees intrusted to it. Con- - river. I had to cross it myself. I waded it Yes, sir; in cold wcathe.· and all kinds, every night and morning. I generally pulled my shoes, gress must safeguard the interests of these faithful and deserv pants and drawers off to cross. The water was not the same depth all in" employees. [Applause on the Republican side.] ·the time. It would generally come from the knees up to the waist l\Ir. KITCHIN. Mr. Chairman, I yield 10 minutes to the on me. gentleman from Tennessee [Mr. l\IooN]. [Applause.] • The convict, P. Hubbard, on page 584, testified as follo"\\S: Mr. MOON of Tennessee. Mr. Chairman and gentlemen of the I would be ·afraid to tell of any complaint I had to make. My reason Honse, I do not feel called upon to enter any defense for the is that I have been in here a long time and have never seen a convict tell anything to anyone that came in to visit them or anyone going out Postmaster General against the calumnies and slanders that that they didn't get punished for it if they ever found it out. There is have been uttered on the floor of this House. He needs none. a whole lot that has been done here, and I know you gentlemen will do I came into the Hall just as the gentleman from Minnesota was what you say, but I am uneasy about telling it. I am here for a long time yet, and my punishment would be so severe I couldn't stand it. beginning the second part of his speech in denunciation of the If I was only here for ::1 short while, I would tell you and ·take my Postmaster General. I did not hear what he had said before. - punishment. I am 25 years old. I have been in ov-er 6 years. His speech was a prepared one and was read by him from the On page 993, J. B. Maurice testified as follows: stand. He seemed to have concluded long ago that it was The inspector wex:t into the building. He said to the men, " I have necessary for him, in order that he might obtain some distinction turned you all o>er to Capt. Brooks, and if 20 licks don't do I'll g!ve or importance upon this floor, to villify and calumniate his per orders for 120; and if that don't do, by the eternal l?ods I will glVe 1,020; as long as you got a-1'11 furnish the leather. ' sonal, political, and moral superiors. [Applause.] I do not know about all that the gentleman has said. That part about On page 585, J. S. Lo"'TY testified as follows: which I do know which he discussed, every word that he uttered Yea, sir; he knew of the guards whipping Foster. I said I didn't in reference to it was absolutely untrue. The gentleman feels count the licks. They whipped him four or five times a day. They beat hfm up until they saw he was going to die, and kept him there two called upon every day to rush down this aisle and take his stand or three weeks and sent him to Huntsville. I saw the guards make here and instruct this House about something that he thinks the .Foster get tlp into a tree. The tree was full of ants and they got all House does not know. It has reached the point in the House over him. They kept him there 30 or 40 minutes. 'l'he ants got on this man Foster when they put him in the tree. The old stump was when every man upon this side, at least, when the gentleman infested with ants, and they came out and got on hin1. The stump from Minnesota speaks, realizes that he has come full of venom. was 2 or 3 feet high. hatred, and vituperation to utter against people who do not Behold that picture if you can! This man, with naked body, happen to agr~e with him, politically or otherwise. As far as I torn by the lash and bleeding from a score of wounds, compelled am concerned, I have formed a profound contempt fo1· his con to stand on an old stump, while ants swarmed over him, crawled duct long since. Now he charges Burleson with falsely saying into his wound , and stung his quivering fie h into a frenzy of that the administration that preceded him had not produced a pain! · surplus. Every man who is not a fool or a liar knows that it Continuing, this witness said : did not produce a ~urplus; that the only surplus indicated was, ~'here was two or three other men murdered in cold blood down there as shown upon the proof, a surplus produced by the acceptance on the farm. The first man's name I do not remember, but they called of credits by the department for the last quarter of that fiscal him "Hot Bread." That was in May, 1907. He was murdered because he couldn't keeE up with the squad, and the guard tied a rope around year and a failure to charge bills payable. That was in the his neck and t ed it to the horn of his saddle. He lived about three Hitchcock administration. Burleson has so managed the affairs days after that. Jim Kittlebrand, the dog sergeant, did that. He was of the Post Office Department as to produce, since he has heen in burled on the hill near the prison. I don't know where Kittlebrand is now. I know he is on the black list The next man was by the name office, not only a more efficient and a better service than tile of Dunn. He was beaten to death by Bob Whitley and Boss Kittlebrand. Government ever had before, but it has extended the service. He liveu until about 9 o'clock that night. They didn't have the doctor [Applause on the Demoeratic side and laughter on the Repub with him. They buried him up on the hill, too. The sergeant was there on the camp. Gentry was the sergeant at the time. There was lican side.] Yes; you on that side hate the truth, but listen to another fellow, a Mexican, that died this same night. I don't remem the facts. Did he not give the mail to 20,000,000 more people ber his name or his nickname or anythl,.ng by which you could identify than had ever had it before? him. He was whipped with Mick Dunn in the field, and the guard whipped them until they gave out and then tied them down in the field Certainly the man that laughs at that is foolish. [Laughter.] with their face up to the sun. Not only that, but he has produced a surplus in this period of I lla>e felt the burning tropical ;mn when it parched and more than $12,000,()()().-never before done, except under a Demo blistered and seemed more than the human frame could endure; cratic administration many years before. but that was as nothing compared to th·e suffering of these two Of course, )le has been economical. Of course, he has been, miserable creatures, whipped until they fell, with naked bodies in a measure, exacting to enforce on the part of. the employees - bleeding and torn, tied clown with their faces up to the burning of the Government obedience to orders and in the performance southern sun ! l\Ir. Chairman, hell can have no terrors for con of a public duty. Gen. Burleson is not popular with those gentle victs that toiled and suffered on one of these convict farms. men on the Republican side who feel that under the civil-service A man named Durham was accused by the grand jury of rules every Republican that was in the Post Office Depart murder of one of the convicts on t:qis far?l. He was tried for ment when the D~mocratic administration came in should con- 1918. . ·-j,,(f", . ~D~GRESSION.A.L RECORD:T""HOUSE. :10255 tinue ·and everybody else appointed ought to be RepubU:ean. Mr. FOGHT. Yes; I waRt to know what the country is deeply You have forgotten that power was wrenched from you on ac interested in knowing. count of your crimes, and you have no right to demand ti. Mr. MOON. Mr. Chairman, I take it the gentleman has asked '[Applause on the Democratic side.] that question in good faith-- l\fy only charge against Gen. BUI·leson is that be has been too . Mr. FOCHT. I have. liberal in giving offices to Republicans. You are not entitled to Mr. MOON. And that it is not a part of the alignment of the them, and y"ou ought not to have them, and you are not going contemptuous charges which the venomous gentleman from Min to get them, I hope, under the',Post Office Department, even nesota presented. Therefore, -I shall try to answer him. The though you -do get from every other source under the Govern Post Office Department has charge of the mail, as I am informed, ment more than you could rightfully demand. until it is deliv-ered in France. Gentlemen, it is ve1·y comillOn for a gentleman to get up here The CHAIRl\!AN. The time of the gentleman from Tennessee and abuse public officials. I do not 1mow anything about these has expired. cbftrges made by the gentleman from Minnesota about condi Mr. KITCHIN. Mr. Chairman, I yield the gentleman one tions in Texas on convict-labor farms. I assume, however, that minute more. Mr. Burleson is not responsible for the convict system of Texas, Mr. MOON. When the mail reaches France it is then turned wh-ether it be a good system or a bad one. But I could not help _over to the representatives of the War Department to ·find the thinking as the gentleman proceeded, making statement after soldier, wherever he may be. No one knows the exact address statement in referenee to the private life and public career of of ·the soldier at the time. The postal officials there could not Gen. Burleson, that he felt some way the superiority of Gen. obtain it at the tune. It has to go through the military channels Burleson over him both as a private citizen and as -a public man after it leaves the postal channels, and . wherever the soldier and felt that the only way to attract attention in this House_ may be-on the march or in the field or camp--he must first be against Gen. Bm·leson was to make the assault that he did make. found and the mail is then delivered. That is my information. it is the inevitable result of low breeding and a low order of I have never been there and I do not know personally about it. mind exemplified by the commonest of plebians. [Applause on The gentleman can see very readily that having to pursue that . the.Democratic side.] course it is impossible to ha~e a prompt delivery of mail. Un Now, the gentleman speaks of Mr. Burleson refusing to grant questionably mail is delayed sometimes beyond the period whic-h leave of absence. I defy him to show in the whole Post "Office it ought to be delayed. That probably results from want of in· Department where a person who was entitled under the law, formation on the part of those at the place distributed in re either to the sick lea\e or to the generall~ve, who hfts not got spect to the location {)f the soldier to whom the mail is addressed. ten it. He tells us about the gag law, that the -employees of the The gentlem·an certainly knows that the Post Office Department department . were not permitted to consult their Congressmen is exercising all of the care and discretion it can, and as much and Senators under the gag law, and that Burleson wanted to as anybody could, under the circumstances, to give the best reenact it. Let me remind the gentleman that the gag law was delivery of mail to the soldier. inugurnted by the Republican Party for the Post Office Depart Mr. FOCHT. Does the gentleman not feel tbat if they would ment and exercised and enforced with the utmost vigor, and it treat the men a little better-the men on the postal cars, the was only when the Democrats got control that the infernal law men who go out t>ver the mountains .and the rivers-if they were or rule was repealed. [Applause on the Democratic side.] treated a little better-those who go out in the storm and in Mt·. GOOD. 'Vill the gentleman yicld? the heat-by Mr. Burleson-- Mr. MOON. What is the question? Mr. MOON. The gentleman means here at home? Mr. GOOD. 1\!y recollection is that that law-! looked it up Mr. FOCHT. In this country ; yes. some time ago~that order was first promulgated by President J.\.fr. MOON. 0~ I enn tell you about that. . Cleveland and subsequently reissued by President Roosevelt and 1\ir, FOCHT. I can give the gentleman thousands of ihstnnces afterwards by President Taft. · of ine~ciency n.nd demoralization on account of poor pay and Mr. MDON. Oh, no ; that rule was never promulgated except bad working conditions. by a partisan Republican, with Hitchcock at the head Mr. 1\[ILLER of l\linnesota. I shall put into the RECORD the H any such convict shall attempt to injure the buildings or ap- · purtenances, or to resist the lawful authority of any officer or gun.rd or entire contract, if the gentleman desire . shall refuse to obey theii· reasonable demand, such officer or guard :rhay Mr. BUCHANAN. Let it go in. enforce obedience and discipline in such manner as may appear neces 1\fr. MILLER of Minnesota. And the gentleman will find sary; and if, in so doing, any convict so resisting lawful authority shall be necessarily wo~ndP.d or killed by such officer, guard or assistant the~: that Bm·leson and Johns owned the farm. shall be held justified. ' ' 1\fr. BUCHANAN. · Sure. Mr. l\IILLER of Minne ·ota. And hired the com·icts under Go sweep your own hou~e before tt·ying to interfere with a the system I have mentioned. . sister State. [Applause on the Democratic side.] I regret that l\lr. BUCHANAN. Sure they owned the land, and the State the gentleman has seen proper to indulge in villification and of Texas leased it from them for a portion of the crop. abuse of an honest man. Mr. Burleson may hav~ some faults; l\lr. MILLER of Minne ota. The gentleman is wTong. The every man has faults. .l\Iankind and all his works a.re imperfect State of Texas had nothing to do with the land. but dm·ing his more than 25 years of public service no mail ca~ l\Ir. BUCHANAN.· We will see who is wrong. truthfully assail his honesty, his integrity, and his fearless dis~ Mr. l\IILLER of Minnesota .. I shall put it in the RECORD. I charge of his every duty. Let me tell you the character assassin, have it here. the tongue of the slanderer, is the greatest evil that a.fllicts ·Mr. BUCHANAl~. We will see who is wrong. This, l\lr. humanity. I heard this amply illustrated once when I heard Chairman, is not a new subject. Its sole object is for the pur there exi ted a good priest, a member of the Catholic Church, pose of bolstering up the political fortunes of a man, and I want and many sinners went to him to be given pardon and absolu to make the statement that the man who attempts to tear down tion for their sins. One ca.J:Qe in and admitted that he had stoleti, the character of another to benefit himself is an undesirable and he forgave him by telling him to restore to the man from citizen. [Applau eon the Democratic side.] This is not a new whom he had stolen the umount he had stolen. Another con subject. Let me read you a letter that was written to a United fessed he had committed burglary, another to burning a house, State Senator by the Postmaster General himself in reply to and be required of them, if possible, to make all restitution. same charges during the campaign: Finally a man came in-I ·imagine he looked like the man from Minnesota [Mr. l\IILLF.R] ; I imagine he had the same coun ALLE~HURST, N. J., September 8~ 1916. lion. ------, . tenance, and the same expression, and the same temperament, United States Se11ate~ Wasllington~ D. C. and the same intent and design. He said, "Holy Father, I have DEAn SE!\ATOR: I have just read of the attack on me made by you slandered by fellow man and I have slandered a woman." The tn the Senate on September 7. To me it is inconceivable that a man who has been elected to the ULited States Senate would willingly lend holy father Enid, "There is a duck out in the yard. Take that himself as a tool for the dissemination of baseless slanders, hence I am duck and kill it. Go down this road ; walk slowly and pick it as forced to belieye that some contemptible creature has shamefully you go. Come back by the time you have picked off ~very feather deceived you. For years the State of Texas, in an effort to solye the Texatious and all down from that duck." The penitent went and did as he con•ict probl<'m In the most humane way; has employed the unfortunates was told. He came back, and said, "Father, I have complied w-ho haYe been convicted in her courts of felonies in the cultivation of with your request." The father said, "Now travel the same corn. cotton, and-cane on plantations owned by the State. When the policy was first adopted Texas did not own cultivated land road you traveled, ·gather together every feather, gather together sufficient for this purpo e. I was part owner of an isolated plantation every particle of down, put them in this sack, and bring them which the Stnte authorities deemed desirable to use in carrying out back to me." The penitent hung his head, scratched it, and said, this policy. The owners of this plantation leased it to the State and for years it was so used. The plantation was leased, just as other land "Father, that is impossible. The high wind has blown the lords leased their lauds to tenants, for a fractional part of the corn and feathers and the down to the uttermost corners of the earth." cotton grown thereon, with this difference, namely : In ordinary cases The father said, "Just so it is impossible for you to render resti~ the landlord has some voice about the work done in cultivatin"' his land, whereas in the lease of the plantation above referred to the 'State tution for the crime of slander you have committed. Every sin authorities reserved the exclusive right to manage, control, and dis . under the Catholic faith is forgivable, but it is the one sin that cipline the labor used in its cultivation. Thus, you see, by no process is beyond the scope of restitution. It is God's worst enemy and of reasoning can you reach the conclusion that I either hired convict labor or was responsible for its management. Neither have I ever been the devil's best friend." Gentleman, I thank you. [Applause.] charged with unfriendliness to labor nor a -wanton slanderer of their 1\fr. MILLER of Minnesota. Mr. Chairman, may I have just leaders. . a moment to ask the gentleman from. Texas if he desires a copy Maj. Thomas E. Durham, t.he superintendent of the planta.tion re ferred to, was employed by the State. He was an honest, efficient, of this contract to be placed in the RECORD? capable servant of his State. He was indicted, as you charge, but it Mr. BUCHANAl~. I am perfectly willing to have it placed · was belleTed by those in a position to know, that this indictment was in the RECORD. secured in order to emba1·rass the then governor of Texas, who was distantly related to l\Iaj. Durham. · The testimony relied on for his con Mr. MILLER of Minnesota. l\fr. Chairman,· I ask unanimous viction was that of convicts, and in order for them to qualify as wit consent to print the contract which I am informed is correct. nesses the governor was called on to pardon them. This he refused to The CHAIRMAN. The gentleman from Minnesota asks unani do. Afterwards, while another was go>ernor, the case w-as disposed of, and 1\Iaj. Durham was speedily acquitted. He was an applicant for a mous consent to extend his remarks. Is ther·e objection? small post-office appointment, and, with the acquiescence of his Repre Mr. MILLER of Minnesota. Mr. Chairman, I think the gen sentative in Congress, I recommended his appointment. He made a . popUlar and efficient officer. He is now dead and can not speak for tleman ought to have a chance to look it over; I am informed it himself, but either Senator from Texas can tell you that be was a good is correct, although I have not compared it myself. citizen. Mr. BUQHANAN. I will look it over. These are the facts. is Desperate indeed mu t be the political situation when men are driven The contract referred to as follows : to the adoption of such foul methods of fighting. Eight times I was ST.\TE OF TEXAS, unanimously nominated for Congress in the district where I was born County of Walker: nnd reared. Eight times I was elected-fiye·times without opposition from any party. Never during all the e years were the Republicans of This agreement made and entered into by and between Benton Mc my district willing to sacrifice hone ty and truth to the extent of even Millin, of Walker County, Tex., and J. A. Herring, of Walter County, attempting to make the leasing to the State of the plantation referred State of Texas, acting for themselves and their successors in office in to a political issue. their official capacities as financial agent and superintendent of the I take it that you will be willing, when the facts are made known to Texas State penltenbarles, parties of the first part, and hereinafter you, to correct the Tilely false impressions left on the minds of those designated as the State, and A. S. Burleson, of Travis, and C. D. Johns. who heard or may read the statement you made. also of Travis County, acting for themselves, parties of the second Be honest and tell the truth. These are safe rules of human conduct. part, witnesseth : · . . . ' Their observance is neces ary for those who enjoy the confidence of 1. That this is an agreement between the said parties to work on the worthy men. share system, with convict labor, the farm or farms in Hill and Bosque Respectfully, A. S. BURLESO~. Counties, known as the Steiner Valley Farm, for the term of two (2) years commencing January 1, 1908, and ending December 31,- 1909, and Now, it is true, u the gentleman from Minnesota [Mr. Mirx.En] subject to the conditions hereinafter named ~n this contract. said, that Maj. Durham, who was indicted for having whipped a 2. For the purpose of operating said farm on said share system the convict who died from other causes, was acquitted because con State agrees to perform and furnish as follows: (1) The labor and services of 125 or more (a.s can be furnished by the victs could not te 'tify against him ; but another governor from State) convicts belonging to the Texas State penitentiaries, who are to Texas was elected, tl1e· case was continued, and the convicts 1 were pardoned, and they testified and Maj. Durham promptly ~~ ~~i::ctel t! ~~~~~u~Y3e ~~ ~::it~~t~r th~afi~~~~~~t~~e rroe~o~~ sist of that class of convicts, who because ol youth, old age, or some came clear. Why did not the gentleman state those facts when physical infirmity are not suited for contract farms or raill'oad work, ~peaking to the que tion if lle wanted to be honest about it? but who are nevertheless capacitated to perform labor on a share farm. [Applause O!l the Democratic side.] Kow, gentlemen, I want to (2) To appoint and pay a sergeant and a sufficient number of guards to ket>p · securely said convicts and to maintn.in amongst them proper know if the gentleman llas inve tigated the laws of Minnesota. industry and good discipline; also to feed and board said sergeant and They used to hire convicts out and gave control of them to private guards. . concerns, that their blood might be coined into dollars. The (3) To clothe and feed sa'id conyicts in accordance with the rules and regulations of the penitentiaries ; to furnish them with bedding, Legislature of l\1innesota, like the Legislature of Texas, passed with tobacco, with medicines, and medicia1 attention. a law stopping that, an mous sentiment of the Republican side, who from the beginning If the history of the past is the guide that marks our future of this war have subordinated their personal ideas for the good and affords us the means upon which to base our judgment, is of our common country. [Applause on Republican side.] What it not fair to suppose that there would not have been fouml in ever criticism has been offered on the various essential war this ball, or throughout the country, the same unanimity of pur measures, none has been made for the purpose of defeating them pose in support of the administration that is found today? but for the purpose of improving them, and the whole country The Democratic organizations are in every State in the Nor th knows that time and time again has this criticism resulted in putting forth their supremest efforts to elect a Democratic ma great good. It will be a sorry day for this country and for the jority to the next House of Representatives, and are using as progress of this war shoulU the time ever come when honest, their battle cry for this purpose, " Stand behind the President; constructiYe criticism can not be uttered upon this floor. · give .him a majority of his own ])arty followers, upon whom he So fai thful and reliable has been the support of the Republican can depend to support his war measures:" And we are being 1\lembers of this House since the beginning of this war in behalf constantly reminded of the language attributed to Lincoln in the of the meusures necessary for its successful prosecution that campaign of 1864, that " we should not swap horses while cross leaders on the Republican side have had to take charge on ing the stream " ; also to the language used by Theodore Roose more than one occasion of the management and passage of these velt and former President Harrison, in the second McKinley measures through the House. This was notably true with ref campaign, that the President should have a majority of his own erence to the conscription bill, which was opposed by a majority party in the Congress to support him. · of the Military Affairs Committee, including its chairman, and The answer to these cries is found in the facts that I have its success in passing this House, according to the declaration attempted to relate: First; the minority party in Lincoln's time of our Speaker, Mr. CLARK, was attributable more to the efforts was doing everything in the world to embarrass him and to de of our colleague, Juuus KAHN, than any other Member. [Ap feat the cause for which war was being waged. Second, the plause on Republican side.] minority party in McKinley's time was doing all it could to Are we not therefore justified in saying that the attitude of embarrass the administration and to defeat the exalted purpose the Republican Party toward this administration is without a for which the war with Spain was waged. Third, the minority parallel in the political history of this country? party now is "standing behind this administration with eYen Yet, notwithstanding this unselfish devotion and unanimous greater unanimity than the majority party is supporting him. support so freely and ungrudgingly given by the Republican So if the advice given in Lincoln's or in McKinley's time is to Party in this House, those who are in charge of the immediate find responsive expression through the voice of the people this and future welfare of the Democratic Party are proclaiming fall in the election of a Congress that will stand behind the ad tl1at this is their war; that they should be the heir to all its ministration and in favor of the prosecution of the war to a political advantages; and that the most of it should be made.for peace based upon victory, rather than to "a peace without vic political purposes. tory," the Republicans will have a splendid majority in the next No less a personage than our Vice President, the Bon. TnmrAs House anu a good working majority in the Senate after the R. MARSHALL, a few weeks ago, when sounding the keynote in 4th of March, 1919. the Democratic campaign in the State of Indiana, said, "This Mr. MOORE of Pennsylvania. 1\Ir. Chairman, will the gen war is a Democratic asset." 'This he said with the full knowl tleman yield? edge of the attitude of the Republican minority not only in this Mr. WOOD of Indiana. I will. House but in the Senate in.supporting the administration in the Mr. 1\IOORE of Pennsylvania. It seems to have been oYer successful prosecution of this war. · looked by the gentleman that at one time when a number of What a mighty change has come over this statesman in two Democratic Members resigned to take office in New York the short years. In the campaign of 1916, Mr. M.AllsHAI.L declared, House of Representatives was virtually Republican, and no in a public address, that e-very person who voted for Mr. Hughes effort was made by the Republican Members to embarrass or for President of the United States should go to the nearest take any advantage of the administration at that time. [Ap· enlisting station and enlist, for his election meant 'var. And plause on the Republican side.] he further declared that if we wished to stay out of this war the l\fr. WOOD of Indiana. I am very glad you have st ated this people should vote for the reelection of President Wilson, who fact. . had so successfully kept us out of war and who would continue Then, as now, the Republican Party will be found standing to do so if reelected. true to its traditions. It was born of devotion to country and That the adminish·a tion kept us out of war was the asset in was baptized with the blood that saved and preserved the J916 upon which l\lr. 1\IARSHALL and his party relied. Not only Union. In its 64-years of existence it has stood steadfast, sup was this proclaimed by the Vice President as their asset, but it porting the Government in e-very crisis. It is standing solidly was likewise proclaimed by President 'Vilson, who gave utter in support of it now ; it will continue so to stand until this war nnce to these words in his Shadow Lawn speech, delivered Oc is over and the victory is won ; a victory that will bring a con tober 21, 1916 : clusive and lasting peace; a peace worthy of the sacrifice that I am not expecting this country to get into war. I know that the our country will make of her sons and her treasure. With no wav in which we have presen-ed peace is objected to, and that certai~ gentlemen say that they woulll have taken another way that would -in other kind of peace will the Republican Party be content. [Ap- evitably have rf'sulted in war, but I am not expecting this country to get plause.] , into war partly because I am not expecting those gentlemen to have a 1\ir. KITCHIN. Mr. Chairman, I yield five minutes to the chance to make a mess of it. gentleman from Missouri [Mr. DECKER]. The assertion that Pre ·ident Wilson bad kept and would con Mr. DECKER. l\Ir. Chairman and members of the committee, tinue to keep us out of wnt', and the charge that if the Republi the speech by the gentleman., from Indiana [1\lr. Wooo], who has cans ''"ere successful they would plunge us into war, were the just closed, and the speech by the gentleman from Minnesota direct and conclusive i ·sues upon which the Democratic Party [1\Ir. MILLER], made here this afternoon, have moved me to say succeeded in 1916. This fact I do not think any one now will a few words at this time. I could not help but notice not only. ·eriously -deny. Is it not, therefore, pertinent to inquire, ~ U the the adroit and skillful effort made by these gentlemen to inject Republican Party was the war party then, what has happened into this debate the partisanship which exists between the par to make it any tile less the war party now? [Applause on Re ties of to-day, but also the skillful effort to stir up the bitterness publican side.] If the Democratic Party ,yas the preeminent and the strife of 60 years ago. One of these gentlemen made a _ party of peace that it professed itself to be then, why should it bitter, abusive, and personal attack upon 1\lr. Burleson, the be accepted now as the sole possessor of all the martial spirit Postmaster General, a member of the Cabinet, who enjoys the :md of all the militant knowledge and efficiency in the land? confidence and shares the responsibility of this Government We are now told that at the very time the Democratic press 'vith our President. The other gentleman went back to the and the Democratic orators were so successfully administering Civil War and read the Democratic platform of 1864. their "he kept us out of the war" soothing drops to the voters As the son of a Union soldier, as one who has the honor to of this country, those who were in charge of the administration represent a district where live to-day many survivors from both of this Government were in poF~sesslon of facts that convinced sides of that tragic struggle of long ago, I desire to resent on them then that our getting into this war sooner or later was in behalf of them this kind of speech making. While some were evitable. These facts, however, were not confided to the voters wrangling here over petty politics and rural carriers, and while prior to the election of 1916, and not a single move was mad~ by some were b·ying to inject the bitterness of the Civil War, the those in possession of these facts td prepare for the inevitable. news came from the White House that at 4 o'clock this very In view of all this a great many people over this country havp morning the American Army had started its greatest offensive. 'vondered, and are now 'vondering, as to what the attitude of On this very morning the " sons of the men who wore the tat the Democrats would haYe been toward the Republican adminis tered gray and marched to the tune of '\Vay Down South in tration in the event it had succeeded in 1916 and the war had Dixie,' and the so-ns of the men who wore the blue and marched come on as it did. to the tune of 'Yankee Doodle,'" the sons of men from the 10260 CONGRESSIONAL RECORD-HOUSE. SEPTEl\illER 12 North and South, the East and West, all dressed in khaki. com of other Members of this body and of the other body and they man Total I Damocmts. Republicans. Briel title of bilL Bill No. Record Illinois, lndian!l, Mlnnc3ota, Iowa, page. Rodenberg. Wood. Miller. Good '-;,:;:- Nay,. IYoa. NaY' Yea>. NaYJ 1---- War measures, first session, SL"rty-fourth Congress: Revenue bill passage ...... H. R. 16763 .. ~8 142 199 0 39 14! 10i68 No .•...... No ...... Yes ....• ~. Yes. Fordney .lllOtion to recommit to table ..... do ..••..• 199 181 196 0 0 181 10767 No .•...... No ...•.... No .....••. No. appeal. I Ab~~ plate pla!lt amendment to naval H. R.15947 .. 236 135 192 f 44 1S3 Sl87 No ...... No .....••• Not pras- Yes. ent. Shipping Board bill! •..•..•.•.•...•...... H.R.15455 •• 209 161 2)3 180 E374 lro•...... No ...... Not pres- No. ent. Previous question on rule to comider .....•... do ...... 192 145 189 0 1 145 8075 No ...... lto ...... No ...... No. Adopt ion or rula to consider ....•.•.•.•.•.•... do ...•... 19t 142 190 0 4 143 8076- Not pres- 1-to .•.. -.. - No .. ·-··· No. ent. Ra.ilroad strike (8-hour law) .••.•..••.... H. R.l7700 •. 239 [( 171 (8 l 4 13608 Yes ...... Ye3 ...... Not pres- Not pre3· ent. eut. War ta.x, to extend (stamp tax)• ...... H. J. Res. 5!J. 206 191 :204 4 0 187 361 No ...... •. N1 ...... lto ...... No McLemore resolution table; ... -·-··· .... H.R. 147 •••• 276 142 180. st !i6 . 111 3720 No ...... No .•...... No ...• - ... No. Previous question on mlo to consider .... _ .... do ...... 256 160 193 f! 63 138 3699 No ...... No-...•..• No .••..•.. No. Adoption of rule to consider ...... •...... do .•..... 271 137 196 12 75 185 269) No ...•.... No ..••.•.. No ...••••• Yes. Second session, Sixty-fourth Congress: Revenue bill passage ...•...•...... ·- H. R. 20573 •• 211 195 211 0 19£ 2441 lto ...... :Ito ...•.••. No .... - .. No. l!'ordney motion to recommit and strike ..... do ...•... 187 219 1 213-' 186 (j 2440 Yes- ..... Yes •••.... Yes ...... Yes. out all cxcess-protits ta.x: ' To arm merchant vessels .. --··· ...... H. R. 21{)52 .• 403 14 215 s 188 11 4692 Yes ...... Yes ...... Yes •••.... Yes. Motion to recommit on Cooper amend- -.•..• do...•... 125 :ala 4-7 1il 76 122 4691 Yes ...... Ye$.,...... No ...... Ye:t. mont.' JTo recommit with instructions to incorporate a protective tari1f. ~To 11.-ppropriate i20,0001 0J!J for armor-olate pla:nt. This caused great redtretion in price paid by Navy for armor plate.. •This was fillibmtered to death in 1915 in Senate, but was passea in both Houses in 1916. •This was for revenue needed for MexiCIUl war situation and to meet decreasa or revenne beca-use of war in Europe. 1 Re:Jolved1 That the House of Representatives ofthe Sixt;r-forn;th Congress of th& United States do, and It hereby solemnly doe3, request tha Pro5ident to warn all American citlZens, within the borders of the United States or its possession.'l or elsewhere, to refrain from traveling on any or all ships of any and all oJ tho powera now or :e~~~~t ~iu';~; o~~~~~~~n°J !t~~~ch~~~!~r~~:~e~~ :f~~~~~r~;:~~e~e~ar!e~~ t~df;~~XX~~~~ Jilli!~s''d~0:a~~ ~~ ~ue;ho~!;~ g;I~;~:n~ ships that they do so at their own risk. ~Amendment prohibited armed Amar-ican ships carrying munitions to belligerent nations. 10262 CONGRESSION.A.L RECORD-HOTISE. SEPTEJ\IBER 12' Total. Democrats. Republicans. Brief title of bill Bill No. Record j lllinois, Minnesota, Iowa page. Rodenberg. Miller. Good., Yeas. Nays. Yeas. Nays. Yeas. Nays. · ------~---1------l-----l------l ------~ ------l ----~--~------!------First session Sixty-fifth-Congress: H. J. Res. 24. 373 50 196 16 177 3B 412 J{o ....•... Yes ...... Yes ...... Yes. ;~~~~e ~~i~:'.·.·. ~ ~::::::::::::::::: H. R. 291 .... 260 106 172 9 88 97 1841 Yes ...... No ...... Yes ...... No. Motion to recommit and strike out press ..... do....••. 184 144 :18 133 14(] 11 3144 Yt~------Yes ...... Yt"-...... Yes. censorshlp: Explosive:> uct, motion to stri!i:e out seo- H. R.3932 ... 156 165 10 157 14(] 8 3123 Yes ...... Y u ...... Y u ...... Y ts. tion 3 of.t Zo::J.C system, incre!lsera.te on second class H. R.4280 ... 257 150 184 Pt 73 129 2817 Yes ...... Not pms- 1... 0 • ••••••. Ko. mail, amendment to. cnt. Revenue bill passage ..•....••••....•...... do.·...... 329 76 !?OS 0 121 'i6 2819 No ...... Not pres- Yes ...... No. cnt. Distribution a~r icultura.l pro::lucts, on H.R.ll8S ... 81 222 18 143 65 i9 3012 Not pre.;- Y es 4...... Y es •...... Yc!.• motion to recommit.3 cnt Sixttfift h Con~rcss, scc.'lnd session: ;o!ldemuation of land for nitrate plant .. S.399L ..... 309 0 168 0 145 0 4981 Yes ...... Yes ...... Yes . . .•.... Kot pres- out. Motion to rec;ommit on an amendment to ..... do...... 122 137 0 153 1! ! 32 . 4980 Y es...... Y es...... Yes ...... ~ T ot prc3· prevent m3nUf.1Ctura of fertilizer for ent.. f:lrmers.5 1 A !?ill to pu~is h acts of in te rrore n~,with the forei~ rehtions~ the neutrality, an_d t_he for_eign commerce of the United States, and for other purpos 1918. CONGRESSIONAL RECORD-HOUSE. 1(}263 would they do with it? Of course, it is human nature that they then, will the other four billions and more be raised? The should want it. But should the country give them control of Republicans want to be in power when the day of levying the next House, and why should they want it? Let me tell you. those taxes comes in peace times. It the Democrats remain in It is altogether possible that this war may end before the power, the people know how the taxes will be raised. Eighty duties and services of the next elected House of Representatives per cent of them will be raised by income taxes and corpora shall end, and if it does, then within that time will begin the tion taxes and excess-profits taxes. If the Republican Party period of the readjustment and reorganization of the social and return to power how will they be rnised? Who can say? political status and of the industrial conditions of thjs country. The income tax, the corporation tax, the excess-profits' tn:x: are The period of construction, as it were, will come. For that the children of Democratic teaching and toil. period no less · han for the conduct of the war during the war The Republican Party will prove but a harsh stepfather the great breadth of vision and stiltesmanship of the man in the to these children. If the people wish to go back to _the policies White House to-day will serve his counh·y• nuder God as this of ancient stand-pat Republicanism. and at the sa me time send country belie>'es no other man can. [Applause.] Take the the message to Germany that America is not back of her great measures, both wru.· and peace measures of this adminis President, let them elect a Republican Congress. If they wish tration, all the serious criticisms of them, all the blocking of to retain the fruits of all the reforms, so hardly won under them comes from that side of the aisle. In the hour of recon the present administration, and send word to Ge~·many that struction and readjustment that must follow as the aftermath of America backs· the President, let them elect a Democratic the war, is it well to saddle the President with a hostile ma Congress. [Applause.] jority in the House of Representatives, to clog the wheels of 1\fr. FORDNEY. I yield 40 minutes to the gentleman from legislation or to re>'erse the course of legislation? The popular Iowa [1\.lr. Goon]. reforms that swept Woodrow 'Vilson into power in 1913 were l\Ir. GOOD addres ed the committee. not and are not ~opular with the staQd-pat Republicans, who During the rernarns of Mr. Goon the following occurred: dominate that party to-day. Mr. BLANTON. ·wm the gentleman yield? l\Ir. LONGWORTH. Will the gentleman yield? _ Mr. GOOD. No. l\Ir. HARDY. No; I can not yield. I have not .the time. I Mr. BLANTON. Mr. Chairman, I make the point of order know that after the great war between the States there were that no quorum is present. many war measures upon the statute books. To carry on that Mr. GOOD. I do not yield for that purpose. war it was necessary to tax wealth as well as to tax poverty, 1\-lr. CARTER of Oklahoma. The gentleman from Texas has and ti,e tarifi and revenue laws were S1.1ppleml:lnted by great a right to make a point of order that no quorum is present; the levies upon incomes-the income taxes of that time. · Internal Constitution requires a quorum to be present. revenue taxes were increased, occupation taxes imposed. The excessive tariff of that day was apologized for with the state The CHAIRMAN (1\fr. SAUNDERS of Virginia). The Ohair ment that it was a war measure, and the levy of an income tax will count. Forty-eight Members present, not a quorum. was apologized for with the statement that it was a war meas Mr. KITCHIN. I move, 1\fr. Chairman, that the committee ure, and the people were promised that the high tariffs would be do now rise. reduced and that the income-tax law would be repealed when the The question was being takent when Mr. KrrcHIN demandeu war was ended. But when the war was ended, faithful to their tellers. promise to the wealth of this country, they did repeal the income Tellers were ordered. tax laws and other laws that bore hard on wealth, but they The committee again divided; and the tellers reporteu that doubled and piled higher the taxes that went onto the backs of there were 1 aye and 57 noes. the rna ses and of the poor. When this war is ended new poli The CHAIRl\IA...l'i. Nat a quorum, and the Olm·k will call cies must be mapped out, new measures must be adopted, and the roll. . .every man in this country who believes that Woodrow \Vilson The Clerk called the- roll, and the following 1\.le.mhers faile 1()-264 CONGRESSIOK \..L l{ECORD-HOUSE. SEPTE~l.BER 12' Tlle committee rose; and l\Ir. GARRETT of Tennes ee having at war with Mexico with like expenditures during the adminis· resumed the chair as Speaker pro tempore, l\1r. SAUNDERS of Vir trations of Roosevelt and Taft. lie would pass ·over without ginia, Chairman of the Committee of the Whole House on the notice the hundreds of millions of dollars expended during the state of the Union, reported that that committee, finding itself Wilson administration in our war' with and occupation in without a quorum, he had caused the roll to be called, that 224 Mexico, and claim the entire appropriation for a preparedness :i\fembers responded to their names, a quorum, and he handed in program. lhe names of the absentees for printing in the RECORD and the But, 1\Ir. Chairman, the attituue of a political party on a greut Journal in accordance witll tlle rule. · question can not be measured by a single act or by the acts. (If a Tile committee resumed its session. single Congress. The things a political party really stands for 1\!r. GOOD. l\Ir. Chairman, the speech made a few days ago can only be weighed by an analysis of the party's position co-.er by tlle gentleman from Oklahoma, l\fr. FERRIS, is both remark· ing a period of years. If a party for a period of years continu able and important. It is remarkable because it announces an ously voted for a small Navy and never lost an opportunity to entire reversal of the principles upon which the Democratic weaken and make smaller a small Army which it maintained, Party has gone to the people in the past two campaigns; it is that party can not seriously be regarded as a party favoring important because it was made by the chairman of the Demo- preparedness. Let us, therefore, adopt a fair test. Let us tako . ct:atic congressional committee, who is intrusted with carrying the measure of Republicans and Democrats alike in Congress, by on the Democratic campaign this fall in every congressional the same yardstick, for a period of years, on the great questions · district throughout the country and indicates his party's posi of preparedness, nnd see whether the Democratic Pru·ty has, as tion in this campaign. That utterance, therefore, should receive is claimed by the gentleman from Oklahom~. been the prepared more than passing notice. ness party in the United States. 'Vhen any fair test is applied Parties, like men, are measured, not by their promises but by and the result announced the gentleman from Oklahoma [Mr. theil· performances. The man who for profit or place makes a FERRIS] and his party will regret that he raised this issue. solemn promise and through it gratifies his ambition, and then President Roosevelt laid down during his administration a straightway breaks his word, can not long retain the respect of real naval program. That program provided for the building his neighbors. So. too, the party that stands for a very definit-e of two battleships a year, with auxiliary cruisers and other craft · thing before election, and immediately after election repudiates necessary to make it a well-rounded fighting force. 'Vhatever its preelection position and champions the very opposite, can not of strength the Navy possessed at the outbreak of the war with long retain the confidence and respect of the American electo Germany was due to this program. For 10 years that program rate. The position taken before the election may have been has had practically the unanimous support of the Republican wrong and the subsequent action right, yet the people will membership of this House and it has had almost the unanimous reprove and repudiate tile practice of such hypocrisy anC. deceit. opposition of the Democratic side of the House. Since the outbreak of the European war we have held two Mr. CARTER of Oklahoma. Can the gentleman give us the national elections in which the l\fembers of this House were votes in the Sixtieth Congress-how many Democrats and how elected. Clearly do we recall the issue in 1914, when the Demo many Republicans? cratic textbook contained the title printed in big, black letters: Mr. GOOD. Oh, yes; the gentleman can get that vote. I have "'Var in Europe; peace in America; God bless 'Vilson." That not gone back of the Sixty-first Congress. entire campaign was waged from the standpoint of the pacifist. During the past 10 years a great many bills and amendments Again, in the presidential election of 1916 the Democratic have been voted upon in this Chamber vitally affecting the Army. Party posed as the peace party of the Nation. Its slogan was: A comparison of the votes of Republicans with Democrats in "'Vilson's wisdom wins without war." For two years the ad the House on such measures will show that Republicans have, ministration had been carefully setting the stage for that cam in the main, at all times supported measures calculated to paign. Every speech on preparedness made on the Democratic strengthen the Army, and that the Democratic side of the House side of this House was a pacifist speech. Even the utterances has apparently welcomed every opportunity to weaken that ·of the President during that period can not be claimed" to be great branch of our national defense. In taking this action our in fa-.or of preparedness. It was no less a personage than Democratic fl•iends did not lack in patriotism, but only in vision. President Wilson, who, three days after the sinking of the The record, however, stands as I have indicated, as we shall Lusitania, said that we were too proud to fight. Ten months presently see. before the last election he said he was incllned to think that Germany had a right to sink armed belligerent merchant ships Let us now examine the record in the House since the Sixty without warning. Six months before that election President first Congress and apply this test and see whether these deduc . Wilson said that with the causes and objects of the European tions I have made are warranted. war we were not concerned. And on the very eve of the elec- THE NAVY. tion, speaking from Shadow Lawn, the President said: First, as to the Navy. In the third session of the Sixty-first I am no~ expecting this country to g~t into war. I know that the Congress, when the naval appropriation bill was under discus way in wh1ch we have preserved peace 1s objected to and that certain sion 1\Ir PADGETT of Tennessee offered a· motion to recommit gentlemen say that they would have taken another way that would , w, ' • • • ' •• ' · • ineYJtably have resulted in war, but I am not expecting thls country.. me bill, Stnking OUt the prOVlSlOn for tWO first-ctass battleShlpS to get Into war partly because I am not expecting those gentlemen tO: . :;and inserting a provision for but one battleship. On this vote - havl' a chance to make a mess of it. ., ili:e yeas were 137 and the nays were 167. Of those voting for 'l'llere can be no question but that the issue raised in the last two battleships 121 were Republicans and only 4e were Demo· campaign by the administration in power was that the Demo- crats. Of those voting for one battleship instead of two,'43 were cmtic Party was the peace party and the Republican Party the Republicans and 94 were Democrats. (CoNGRESSIONAL RECORD, war party; that the election •of President Wilson and a Demo- vol. 46, pt. 4. p. 3125.) cratic Congt·ess meant peace and the election of a Republican In the second session of the Sixty-second Congress, when llie President and a Republican Congress meant war. That was the Democrats had control of the House; an open caucus was held Democratic claim. by them and a resolution was passed by a vote of 98 to 68 which Another election is approaching. We are at war. A mUllon provided that no battleships should be ordered constructed dur anu a half of American fathers and mothers have brave sons ing that session of COngress. The resolution in that caucus by whom they hold most dear fighting on French soil for humanity which it was attempted to stop battleship construction would and democracy. And if the word that comes to-day from those have been adopted by'a. much larger vote but for the fact thnt it boys oveL· there is to be relied upon they are giving a . good ac· was coupled with the pork-barrel public-buildings bill, and count of themselves. [Applause.] The minds of the voters wlll many of the 68 Members 'vho voted against battleship con scrutinize this fall, as they have never scrutinized before, the ac- struction were, in fact, as their votes subsequently showed, onl.Y tion of their Representatives in Congress. They are interested opposed to the provision which eliminated the appropriations for not only in the things they stand for now bnt in the things they public buildings and were not opposed to that part of the resolu stood for before we entered the war. tion which stopped the building of battleships. I shall insert Tile scene, therefore, changes, and according to the gentleman in the RECORD the article which appeared in the 'Vasllington Star from Oklahoma his great party, which posed as the pacifist of January 30;1912, containing an' account of thut caucus ~m And so the bill went to the Senate in accordance with the reso- providing for t'IVo first-class battleships and additional craft. ·lution adopted by the Democratic caucus, witllOUt containing On this vote there 'vere 183 yeas and 189 nays. Voting for this provision for a single battleship. The Senate added two battle measure of preparedness there were 159 Republicans and only 2-1 ships to the program, and the vote on the conference report for Democrats, -while voting against it were 14 Republicans anc1175 two battleships resulted in 78 yeas and 150 nays. Seventy-one Democrats. (Co~GRESSIONAL RECORD, June 2, 1916.) ·nepublicans and only-seven Democrats voted for two battleships. Again, on the conference report on that bill, whlch contained Voting against two battleships were 18 Republicans and 132 a Senate amendment providing for a naval building program, Deru{)Crats. (CONGRESSIO~.AL RECORD, VOl. 48, pt. 11, p. 11189.) there were 282 yeas and 51 nays. Voting for this amendment Speaking against the construction of any battleships on that were 147 Republicans and 135 Democrats; voting against it occnsion, 1\fr. Gray of Indiana said: were but 15 Republicans and 35 Democrats. (Co~GRESSIONAL .Mr. Speaker, I am opposed to an appropriation for two battleships. I RECORD, Aug. 15, 1916.) am opposed to an appropriation for one battleship. I am opposed to any It must be remembered in this connection that in closing the appropriation for battleships. If we are to take our place among the nations of the world as first standing for peace and against war, then debate upon that amendment the gentleman from Tennessee we should declare our position by an appropriation for peace and not for [Mr. PADGETT]. in moving that the House agree to the Senate war. [.Applause.] But it we must appropriate for one battleship to amendment, said: appease the insatiable demands of the militarism of to-day, let us save at least the principle of the cause of mediation and appropriate as I feel I am discharging a wise and patriotic ser:vicc. In view of the much to promote peace as we appropriate to bulld warships. [.Ap- statement that was made early in the debate, I w1sh to state het·c that plause.] • • • · I have been in close touch in conference with the President of the This appropriation bill will not only burden the people of our own United States and his whole heart is in this matter, and ever since last land: but it will be caught up in the spirit of war and military rivalry ~eptember be' !las advocated a continuo?s progra!D, and has advoc:;tted by all nations, to be multiplied and weighed upon all the people of the a program that would meet with the w1U and wishes of the .Amencan world It will wrest food from the hungry, clothing from the half-clad people. . and the naked, fuel from the cold and the shivering, and shelter from the homeless and unhoused. · Notwithstanding this message from the White House to the These warships to be bullt will fill the wor'd with blood, anguish, and Democratic side of the House, there were two Democratic votes aevastatlon if they are used, &nd their cost will bring want and desti for every Republican vote in opposition to that program.. Even tution to the human race, whether they are used or not used. the party lash could not make preparedness advocates out ot This speech seems to have struck u responsive chord in the pacifist advocates. heart of the President, for a little later, in writing a letter to 1\fr. The net result of this analysis is that on seven roll calls, when Gray's campaign manager in a political contest where Mr. Gray's the question was squarely presented whether we should authorize attitude on preparedness was challenged, the President said: the construction of one or two battleships, Republicans almost I am very glad, indeed, to reply to your letter of June 15, that the unanimously voted for . two battleships as against one battle Bon. Finly H. Gray throughout his membership in the ~ouse has given the present admimstratlon the most generous and cordial support. It ship, while the Democ~ats voted almost. unanimously fol' but would afford me the greatest gratification to see him return to the one battleship and aga1nst two batt1esh1ps. On one roll call Douse of Representatives. ihe question was fairly presented of authorizing the construc (Signed) Woonnow WILSON. tion of one battleship or no battleships. Two lone Republicans Hence it is seen that your action for a ·small Navy carried the voted against the construction of any battleship, but they had Presidential approval. the company of 139 Democrats, who voted against the construc The House having rejected the provision for two battleships in tion of any battleship whatever. Only eight Democrats voted the conference report which I have just referred to, the same with the Republicans for one battleship. · rna tter came before the House again on August 20, 1912. This In this connection it is interesting to note the attitude of the time the conference report contained a provision for one hattie present preparedness advocate of the administration, the gentle ship; instead of two. This report was opposed by Democrats man from Oklahoma [Mr. FERRis]. By reference to the article because it contained any provision for battleship construction. that appeared in the Washington Star of January 30, 1912, it On this vote there were 150 yeas.and 51 nays, and it is to the will be noted that he voted against the elimination of the credit of the llepublican Party that every vote against the build $16,000,000 pork-barrel building bill, which was coupled with a ing of a single battleship was east by a Democrat. (CoNGREs -provision eliminating battleship construction. But his opposi SIONAL RECORQ, VOl. 48, pt. 11, p. 11390.) tion to that motion seems to have been centered on the loss of In the third session of the Sixty-second Congress, when the pork, ruther than in the loss of battleships for the American Naval appropriation bill was under discussion, a motion was Navy; for he subsequently, on every occasion, when the proposi made to strike out the provision for two battleships and insert a tion was advanced to build one battleship {)r two battleships, provision for one battleship. On this vote the yeas were 174 and voted against two battleships, and for but one battleship. And the nays were 156. One hundred an(,} ten Republicans and but when the proposition was fairly put to the House for the con 46 Democrats voted for two battleships. Only 25 Republicans struction of one battleship or no battleship, he voted against the voted for one instead of two battleships, but 148 Democrats construction of any battleship. , voted for one as against two battleships. (CONGRESSIONAL llEC• Having done all this to weaken this first line of America's OTID, VOl. 49, pt. 4, p. 4107.) defense, one would naturally think our Democratic friends, if Later, on the adoption of the conference report on this bill, they really believed just a little in preparedness, wo~ld have the question was presented of authorizing the construction -()f stopped here, and would have left the Army unimpaired. But two first-class battleships instead of one, and on this . T~ tfict'() stich is not the case. As a party it seems that th_ey never missed. were 144 yeas and 168 nays. Ninety-six Republicans ancl "1>ut--'8 nn opportunity to vote against preparedness in the Army, ancl Democrats voted for two . battleships; 19 Republicans and 149 C{)nstantly voted for those things which would tend to weaken or Democrats voted for one and against two battleships. (CoN even destroy this great arm of our defens~. GRESSIONAL REOORD, VOl. 49, pt. u, p. 4810.) On March 3, the day before Congress adjourned, the conference TilE ARMY. report was agreed to, containing a provision for but one battle In the third session of the Sixty-first Congress the vote on the shiP instead of two. The pacifists in control of the Democratic motion to suspend the rules and pass a bill to increase the effi Party had their way. ciency of the Organized Militia, by providing for pay for the In the Sixty-third Congress, about 60 days before the out · National Guard in time of peace and for a certain standm: .OI:ily' 13 Democrats .voted for the bill; 6 Republic:ms. joined ml I_n favor ~f this ~easure .0~ preparedness ~here ' were i56 R~pub Democrats in opposing this preparedness measure. ( CoNGRES- hec'l.ns and qnly 34 Democrats; opposed to rt were 29 Republlcat15 SIONAL RECORD, VOL 46. pt. 4, p. 3801.) but 18?1 D~mocrat.s. (CoNruu:SSIO),VAL RECORD, 1\lar. 23, 1~16.) On February 16, .1912 1\fr. Hay, chairm.·m of the Military In the. fir~t sesswn of the Sl:rtSr-fourth Congress the gentle~n Affairs Committee, offereu a motion to abolish five regiments of from llhn01s [1\~. McKENziE] offered an amen~n;tent to J?rov1~e Cavalry. Think of it! Can it be said that a man or a party for the productwn of an adequ.ate supply of mtl:ogen ~n thts wlw would support that kind of a measure at a time when our ~untry. ~verybody knows that we ~roduce very httle m~rogen .standing Army was less than 90,000 could be said to be in favor m the Urnted St~tes and ~re dep~ndmg larg~ly upon Chrle for of preparedness? Only three Republicans voted for this pacifist ou~ supply. The Importan<:e of thrs amendment can not be over measure, but 161 Democrats voted for it. It was opposed by . es~tmated ?-S a preparedness measure. And yet the vote upon 3 lone Democrats, but it had the opposition of 109 Republicans. thts .very rmport:mt amendment .resulted as. follows: For, lle (CoNGRESSIONAL REcoRD, vol 48, pt. 3, p. 2143.) publicans 182, Democrats 41; agarns~ Republicans 8, Democrats And again, the gentleman from Oklahoma [1\Ir. FERRIS] voted 171. (C?NGRES~IONAL RECORD, 1\:Iar. -3, 1916.) . . with his party to abolish five regiments of Cav-alry. . Our ~rwnd from Oklahoma, l\lr .. ~~RIS, havmg !oted agam t 'l'ake the Hay amendment . to the Army appropriation bill ~creasrng. the efficiency o~ the militl?- on three drfferent occa clmnging the term of enlistment from three to five years, ma1:ing srons, haVIng voted to abo~h five regiments ~f Cavalry, ami for it more difficult to secure enlistments at a time when it was the Hay amendment changmg ~be term of enllstment f~om three almost impossible to keep the strength of the Army up to its re- to ~ve years, tb.e:eby \vea~emng the Army, an_d havmg voted quirements. The gentleman from California [1\ir. KAHN], dur- aga1~st the ~roviSion gt·aJ?-ting extra pay to men m the Army for in Mr. GOOD. That is a fair question. I made the mistake of tion of all Republicans in this campaign that I shall re.:'l they haven't- made a. fatal political mistake. The assault on the naval Mr. HEFLIN. No further than I did in. my remarks after in cr <> as ~ was by way of an afterthought. After the- caucus bad been in session a couple of hours it· became ap the gentleman. made the point. parent that the resolution introduced by Chairman Fitzgerald·, ef. th(> 1\fr. DENISDN. Very well, I clo not object. A{>propriations Committee, declaring it to be the sense ot the caucus The CH.A.IRMAN. Is there objection. that tha present state of the Government's finanees and the. fact that was the Supervising Architect's Office is several years bc~hintl in- its work There no objection. made it inadvi~able to autho~ additional public buildillgs at this ses Air. KITCHIN. l\lr. Chairman, I yield 30 minutes to the gen.. sion, tlemun from New York [:~k. LONDON]. In re:aliatiun the publie-bm1ding5' advocates, angered by seeing the pork barrel rolled ont of sight just. when they were hoping: fur a grand: dib-1:ri Mr. LONDON. 1\Ir. Chairman and gentlemen, I shall be brief. bution. in ~isted on a declaration aga:i.nst battleship • SJleak:er CLAB~ I just w-ant to pay my compliments tQ the Republican and Demo M.'ljority Leader UNDERWOOD, 1\Ir. Fitzgerald. a.nd their frumd~ !i!ll into cratic statesmen who, instead of discussing- the n.ll-impo:~.·tunt line nn 1918. CONGRESSION ...t\.L . RECORD-HOUSE. 10269 · ···-dn ·· - • t c.Ien•• ns day You necessarily embrace Germany and every When Republicans talk about prepare ess as an I_Ssue o- ai .... • day h.ow silly! When they charge against some Democrats other country. . that they ha\e failed in the past to vote for large navies and . :au·. NORTON. Mr. Chail'man, will the gentleman now yieltl? large armies for preparedness, what a• stupid slogan to catch Mr. LNONDOOfN. YI.est.ake l·t "'""n·t actions speak louder than fools with it is. The word " preparedness" has no meaning Ml~. roRT N. I,J.lll. unless you .know the purpose of the preparedness. You prepare wo~~·LONDON. Well, will the gentleman ask me a question? for a certa.m purp?se. . . . . Mr. NORTON. Yes. Does the gentteffi-an think that Ger- If I were preparmg to follow th~ car~ of a ~er, I wou1 d many can be brought to evacuating Belgium and tearing up the study theology ; if ~ were preparmg to be a pugilist, I would Brest-Lltovsk treaty by suc:h actions and such resolution as develop myself physically. Preparedness shoul~ be measure~ by' were· passed by the Socialist Party at St. Louis. and by such the policy of the country. It. was not the policy o! the- Umted votes as the o-entleman has recorded on the war question in this ~tates to pre~are for a war Wlt:J:l any coun?"Y· On the contrary, Honse? [Applause.} 1t was our P?-hcy by actual p~ctiee· to ~nvmce the world that we M'r. LONDON. Oh, my dear si:r, so far as the vote is con had no des1gns upon any o~.her nation, that no one had any cerned, the gentleman should not forget this: A ma.n has a right, reason to fear. us, and that we feared. none. ~ mainte- every democrat-using the word ''democrat" 'in the wide nance of a oommal11rmy was consistent Wlth Olll" pohcy at that: . sense--bas the ri::!ht-- time. . . · Mr. NORTON. b Was the gentleman opposed to our entering' When some· of those noisy organizations wh1ctl assume a su... . int& the war against Germany? perior wisdom and a supreme patri.otis~ ask to-day, "Are you Mr. LONDON. Of course; I voted against it. in fa-vor of preparedness after too wart ~ey confess that the Mr. NORTON. Did you expect to defeat Germany by talking slogan of the statesmen of the world that thiS is the last wro: is about that? · a fraud, because this war will . have bee~ an ov~rwhe~mmg Mr. LONDON. I do not care to go into a discussion of the disaster, a nightmare without reJ!ef, unless !tends m an mter· reasons for my vote. I had very good reasons which appealed national agreement among nations for disa~ament. lAp- to me, and I am not inclined to apologize for my vote. The plause.] And when we speak o:f preparedness l-et It be prepared- gentleman asked if I had voted against war. Of course I did. ness by developing strong men, by d~velopingteehnical education~ If the gentleman had carefully read my speeches which r de by improving opportunities for education ~or the masses, and livered in the Sixty-fourth C'ongress he would have learned improving eonditiong. tn factories . and b1 mmes ; pyepare by El-e- something, and Ile wo.uld have learned the reasons :for my vote. veloping strung and able m~n-:-str.ong physically, ~tenecttrally, Mr. BLACK. Mr. Chairman, will the gentleman yleld? and morally; prepare by elirmnatin~ the p;ofiteer ~ prepare by Mr. LONDON. In one mfrment.. In a democracy you must developing political democracy a:nd mdu~Ia:l democracy, mak· permit men to- express an opinion. I, as a Socialist, advise to ing it genuine and real. That lS the kmd of a preparation ~ obey the law. Only then, when I have been given an OIJJ)Or· stand for and have always stood for. ¥ . tunity by voice and vote to- oppose the enactment of a law with Mr. NORTO~ . Will the gentleman y1eid? which I disagree, only when 1 have been given an opportunity to Mr. LONDON. Yes. . . • oppo e a law 'With which I disagree by voice and vote, can I come Mr. NORTON. The gentleman speaks Oof an international . with a free and honest conscien-ce and say," Obey that law. It league of nations to· seeure peace. Would ·the gentleman _3o1ft is the law of demo-cracy. It is the· law of majority rule. I with Germany in that kind of a league Rnd make a peaee. at this have· not been suppressed by a vulgarian, I have not been sup time, and have this: Nation unprepared, and expect a contmuance pressed by an ignoramus, because I happened to- differ with him. of peace? I have been given- n chance to speak my mind and vote my l\fr. LONDON. That tak~s me away from the Stlbject :Vhich convictions~ The others- are in the majority. We are in a I intended to discuss, because,. after giving you a drubbmg, I minority. We are members of a great ReP-ublic. Obey the intend'ed to talk about the bill. will of the majority as expressed in a constitutional way." Will ~fr. NORTON. You need not be patrticular about any drub- any manly man criticize me for having spoken my mind and bin..,. you may give me. Do not let that worry you. having Yoiced the opinions of th:ose who have sent me h~re? Mr. LONDON~ I am after your purty, not after you person- The· man- who woul'd deny to me this right and this pri-vilege ally. As to Germany, I would not deal with Germany at all would suppress every p-Tinciple upon which a sound democracy until Germany announces her readiness to evacuate every piece is based. [Applause.] . of territory she has taken d'u:rfng the war. [Applaus.e.J I would Mr. BLACK~ 1\Ir. Ohairmrrn, will the gentleman yield now? not talk peace with Germany. unless Germany announces her 1\fr. LONDON. Yes. _ · readiness to tear up the infamous Brest·Lltovsk treaty. [Ap- Mr: BLA.CK~ I just want to ask the gentleman this question: piau e.} When Germany will have announced her readiness to Does he or doe-s he not approve the :Platform declaration of do that, as a preliminary to entering into a peace conference? his party at St. Louis that de-clared this Wal" to be "a capi when the basic principles upon which a durable peace can be ta.listic war"? .. maue will have been admitted, then the question of th~ perma- Mr. LONDON. wen, let me say this: The platform of the nent securing of the peace arrangement by the formation of a Socialist Party adopted at St. Louis was drafted under very permanent league to secure peace must be taken up. In other pecuHa1· and extraordinary circum~ ta.nces. The convention was words-- called to meet, I believe, in April-April 8 or 10. As the g.en~ lUr. NORTON. Will the gentJeman yield? tlemftn will recall, the President called the special session, of . 1\Ir. LONDON. In just one moment. The gentleman asked Congress for April 15; originally for April 15. The Socialists-., me a very serious question. wh<>' were opposed to- the· entry of the United States into the Mr. NORTON. I want to let the gentleman finish. l want war, called a con-vention for the purpose of adopting resalu to be fair with the gentleman, if the gen.tleman will be fair tions protesting against the contemplated declaration of war, with me. . • resolutions which they undoubtedly had the right to promnl· 1\fr. LONDON. We are not fighting the German people. We gate; resolutions which were being adopted by thousands and do n{)t want to destroy the German people. That is all non- hundreds of thousands of Republicans and Democrats. After sense. In the exclterr.ent and n¢se and hypnotism of war many the convention had been ·called, but before the conventio-n met, talk about the German people as " Huns." That is all nonsense. the President advanced the date of the special session of Con If the geptleman had been fortunate enough to attend the Uni- · gress, and when they did meet they found themselves with versHy of Heidelberg before the war lle would have beel). quite Congress in special session. proud of it. We should talk sense. We do not want to. see the This resolution of the St. Louis convention was a protest, an Germun people destroyed. We. have no enmity town.rd them. outcry. It offered no workable program of action, and there We are at war with them~ because OUL' rights have been in- immediately began a division of opinion. · vaded, and we ·have found it necessary to be at wa:r with their I ha\e always taken this stand on war: I am in duty State, and their State commands th~ people. That is the sit- bound to oppose the entry of my country into war, not because nation. I do not love but because I do love my country. I am for the 1\IL'. NORTON. Will the gentleman yield? United Stutes. r am n.sh:xmed of cheap professions of patriot- lfl.·. LONDON. One moiLent. Now, an international leagu,e ism. I am proud of the achievements o:t' A.meTica, of ber must ultimately take in Germany and Austria. Because, if it glorious past, and of tile promise for the future that she holds were not to take them in, it would simply mean that there out to the wor:i-d. It is all foolishness-~ this constant proclaiming would be an alliance against an alliance. .There would be an of one's love of country. [Applause.] It is taken for granted n.lliance of the central powers as against the other aUiance of by all intelligent men. [Applause.] After war is declared, powers. When you speak of an international league to secure then my obligation assum-es this character. Let the gentleman peace :you necessarily embrace the whole wo.J:ld. That is as. from Texas listen and he will agree with rne. 10270 CONGRESSIONAL RECORD-HOUSE. SEPTEJ\IBEU 12' Mr. BLACK. It seems to me that the gentleman is not an how it all began to disappear. The gentlemen saw the anomaly swering the question whether he does or does not agree with the of the Democrati'c Party federalizing the State 1\lilitia. The St. Louis platform. Democrats could not help it. State rights had to be curtailed l\lr. LONDON. I said that the platform was not a platform when the Union became indissoluble. It is impossible to con in any sense of the word. It was not constructive; it did not ceive an international 1eague to secure peace without a code offer a method or a policy for the party. I so declared at the of ethics which should be superior to the individual national earliest opportunity I had. code. There can be no international code with each nation After war is declared my theory is this, particularly in a insisting that it can do as it pleases whenever it pleases. In republic: A greater evil than a foreign war is a civil war. In other words, international order involves the lo . , to some ex a republic the majority .having decided for war, that will must tent, of what nations claim now as absolute so\·ereign rights be carried out. I can only permit myself to present my ideas of just as the individual has surrendered his sovereign rights a~ international peace in a manner which will not obstruct the car an individual in order to live as a member of the community. rying on of the war, which will not give encouragement to the I would like to have lived and talked and dreamed in my own . enemy, which will not create dissension. I must content myself way, but I have to live in accordance with customs and laws, during war, in order to keep the ideal aliYe, to analyzing the and sometimes customs are even superior in their coercive historical causes which led nations into war and to point out power to la\\·s. Once there is an agreement of that sort that the basic principles upon which a lasting peace can be obtained certain rules are to be sanctioned by international law n;tions wllen the war is concluded. That has been my rule. I have will have to subordinate their selfish national design~. What contented myself with that modest way of keeping alive my is the complaint against Germany? The complaint against ideas-of sticking by my higher religion, the religion of humanity. Germany is that the German says_to-day, "Germany, right or Mr. GOOD. Will the gentleman yield? wrong." If every nation is to insist that whatever it desires Mr. LONDON. Yes. is right and that tl1e opinion of the ·.vorld is not to be con Mr. GOOD. I hstened to the gentleman's speech made in sulted, there can. of course, be no lasting or any other kind of opposition to the declaJ;ation of war; and if I am not correct in peace among nations. what I am about to say, it is because my memory does not serve We must learn to measure our conception of right by that me. l\Iy recollection is that the gentleman tried to point out to which prevails among our neighbors for whom we have respect. the House that capital was doing a great deal to bring the war There must be an international code of morality, an interna on, and that it was a war brought on by the capitalists. tional code of right, worked out not only by a few very clever Mr. LONDON. Oh, Mr. Chairman, anybody who does ·not statesmen who will come together and draft a clever plan for understand that most wars are caused by the conflict of eco an international league; no. It must grow with the growth of nomic interests of nations, by rivalry for markets and spheres intelligence among the masses of the people, and that is why I of influence and spheres of interests, does not understand consider it so wrong for anybody to prohibit the discussion of history. international questions. \Ve want to educate the great masses of the people. Among the European people there has been a If the gentleman needs a good authority, I will refer him to great deal of education on this question. The Socialist move the Encyclopedia Britannica. Let him read the article on Europe ment throughout the world demands the organization at the and European history where the rivalries between European conclusion of the war of an international league to secure peace. nations for the possession of new markets are described, and That is why that movement has grown all over the world. he will find that the contest among nations for the extension Unfortunately we here are too much victims of the idea that of their economic and commercial power is one of the principal even Members of Congress must not discuss international ·rela reasons for war. tions, but that it should be done a couple of blocks a way. Now Let me say that one of the reasons why the allies will defeat if the gentleman will yield me 10 minutes I will come to th~ Germany is just this, that the economic isolation of Germany thing about which I want to speak. has been accomplished. Fifty-eight per cent of the raw materials The CHAIRl\1A.l~. The time of the gentleman has expired. which went into the manufacture of German products were :Mr. KITCHIN. I yield the gentleman 10 minutes additional. being imported prior to the war, and because Germany is l\lr. LONDON. This has been a diversion. I want to nd- isolated from the rest of the world it is only a question of time dress myself to the subject of the revenue bill. When you speak when she will be compelled to yield. [Applause.] The economic of a re>enue bill of $8.000,000,000 it is not a tax bill in any sense phase should not be overlooked. Whenever the Socialist speaks of the word. Its magnitude changes the character of the legisla of the economic causes of war he speaks of an historical fact. tion. Taxes are collected for the ordinary purposes of the Gov · I have been trying to make it clear that the United States, as ernment to carry out the governmental functions of a civilized a participant of the war, has no selfish designs. community. When you speak of $8,000,000,000 you impose a I recall an amusing. incident when the Pre-sident said in the burden of $400 for every family of five annually, nearly one course of a certain speech that we had no dofinite grievance, or half of the average earnings of the average family-engaged in something to that effect. indu trial occupation; when you speak of that as taxes you Some Democrats were scared to death. 'What·! Declare war abuse an economic term. without any definite economic or material object to be accom This is a great, heavy burden; a burden made necessary by plished? Do not we want to grab a piece of land and bring it the exigency of war. What is the statesmen's problem? It is to the people of the United States? Do we not want to get an not so much to search through the dictionary for names of additional colony and say, "Hete, boys, yau have shed your articles on which you can impose taxes. I understand the blood and here is a bit of territory for you?" They were scared gentleman from Massachusetts • has discovered that bicycles to death. They did not see the spiritual significance of the in have not been 'faxed, and· somebody else has discovered that fluence of the United States when fighting for no selfish pur toothpicks lm ve not been taxed. There may be some articles pose. They did not understand it or realize it. which have escaped the tax gatherer. . In a way-and I have to praise myself, for you gentlemeu The task of the men who are responsible for the guidance will not do it-I have been the interpreter of the President's of the are bound to be h.envy. There is no question about that. Now, "No; we do not want to keep them. We want to give them this as umed heavy burden must be provided for. The interest back to the private capitalists. We want those capitalists to on the national debt will probably amount to as much as the establish and maintain a C'Orruption lobby ; we want them to entire budget of the Government required before the war. · control the financial and industrial life of the country ; we want Tile unprecedented borden, with its new and heavy respon them to have it in their power to refuse employment or to give sibilities-, requires new thoughts, demands new methods. employment to millions of men. We w.. ill not interfere witll \Ve must begin to preserve, conserve, and enlarge all our them. Oh, no. Right after the war we will turn the railroads national resources. over to the magnates, you know. We are Jeffersonian Demo The beginning must be made with the human material, the crats and are not supposed to have learned anything since Jef mo t valuable asset. Thirty-six out of every hundred men ferson's day.u examined for military service have been found to be physically Of course the Democrats, in spite of their democratic in- defective. Some of these are taken to the camps, it is true, stincts, are not &ocialists. They do not know en<>ugh to he and an effort is made to fix them up, but the succe s is rather Socialists. They have promised to turn oyer the railroads to limited. Just think of the economic waste to the Nation in the private owners within 21 months after the termination of volYed in the fact tha.t 36 out of every 100 are physically defec the war. tive. The census of 1910 gh·es tbe number <>f illiterates in the No matter what the Democrats or Republicans may think United States at 5,516,163, with the native born (negro and now, the growing sentiment in favor of national ownership of white, inclusive) in the majority. A sinful waste of human public utilities will make it impossible to return the railroads material. \Ve have neglected technical education. When the to prlrate ownership. It is safe to predict that all national country was young and opportunity was unlimited all was left platfoflllS in 1920 will (leal with that pi"Oblem. to the individual, who had concern for -himself only. The Nation can incr-ease its productive powers -tenfold by Indo trial accident , insanitary conditions in factory and pooling its resources, by eliminating useless and wasteful com mine, 600,000 premature deaths annually from preventable dis petition, and by introducing democracy and cooperation in in eases, the stunting of the child's growth by child labor-what a dustry and agriculture. tremendous loss in the p1·oduction power of the Tation all these The CHAIRMAN. The time of the gentleman has expired. things invol\e! 1\fr. LONDON. Mr. Chairman, I ask unanimous consent to We have not utilized more than one-fourth of the land. revise and extend my remarks in the RECORD. Large tracts lie idle and are held for speculation. . The majority The CHA1RMAN. Is there objection? [After a pause.] The of the farmers are handicapped by inadequate -agricultu.r.al im Chair hears none. plements. This de ·erves our thought. Mr. KITCHL!.'l'. :Mr. Chairman, I move that t11e committee Tal{e water power. We are wasting a tremendous power, a do now rise. power which can not be consumed in use. This indestructible The Ill()tion was agreed to. power is going to waste. We have a proposition before Con Accordingly the committee ·rose; and :Mr. GARRETT of Ten gre ·s to conserve water power. How? To have all sorts of nessee having assumed the chair as Speaker pro tempore, Mr. individual capitalists exploit the people and to give to these SAUNDERs of Virginia, Chairman of the Committee of the Whole individuals the control over the natural resources of the country. House on the state of the Union, reported that that committee The· coal lands, the oil lands, the mineral lands in private had had under consideration the bill (H. R. 12863) to provide hands-did you ever stop to think bow much waste that in revenue, and for other p:nrposes, and had come to no resolution volves to the Nation, to the people collectively? thereon. There is now a proposition before Congress to encourage. the LEAVE OF ABSENCE. production of minor minerals by aiding and encouraging, at public expense, private individuals in mining enterprises, and · Mr. GooDWIN of Arkansas, by unanimous consent, was granted not-Heaven forbid-by the people undertaking the task for the leave of absence indefinitely, on account of illness. permanent benefit of the people. SUPPT..'EME.NT\ING SE.CO~ LIBERTY-BOND ACT. " Te are now constructing, at public expense, a merchant ma rine. Where was private capital? Private capital was seeking 1\fr. KITCIDN. 1\!r. Speaker, I present the unanimous report the accomplishment of private ends, and ·when it found foreign (H. Rept. No. 778) of the Committee on Ways and l\1earu; on ship cheaper it used the cheaper article. It never stopped to House bill 12923, a bill to supplement the second liberty-loan act consider tlle interests of the Nation. as amended_, and for other purposes. Everybody rails against profiteering. Is not all business The SPEAKER pro tempore. Tl1e gentleman from North based upon profiteering! Men are in business for profit. I Carolina presents a report from the Committee on Ways and think it was a Democratic Representative from Texas who said, .1\!eans. The Clerk will report it by title. in Teplying to the Republican charge that not everything was The Clerk read as follows: Report on H. R. 129~3. a bill to supplement the .second liberty-bond ju t right at Hog I land, that the profiteers were Republicans. act as amended, and for other purposes. , I can imagine that the profiteers were largely Republicans, be cause they haYe a larger number of well-to-do people, grand The SPEAKER pro tempore. It will be referred to the Com- • la..rceny being the Itepublican province .and petit· larceny the mittee of the Whole House on the state of the Union. Democratic sphe.re. [Laughter.] Now, profiteering can only 1\lr. STAFFORD. Mr. Speaker, I reserve all points of order. be eliminated in proportion to the growth of the principle of The SPEAKER p1·o t~mpore. The gentleman from Wisconsin industrial democracy, in proportion to the application of the xeseryes all points of order. theory that in industrial relations there should prevail tb.e EXTENSION OF REMARKS. same principle of democracy which you Democrats claim to 1\ir. BAER. 1\Ir. Speaker, I ask unanimous consent to extend hold sacred in politics, and which you Republicans claim to my remarks in the REcom> by inserting a short address that I han'! inherited from Lincoln. delivered to the soldier boy~ at Camp Humphreys anout a week Tbe worst about profiteering is that it is the most prolific ago. source of waste. Tens of thousnnds of establishments in · The SPEAKER pro tempore. The gentleman from North adequately equippe(l, with insufficient capital, competing witp Dakota asks unanimous consent to extend his remarks in the· one imother, crossing and recrossing the same territory with RECORD by inserting a short address delivered by him to the ho ts of expensive salesmen and advertising agents; what a soldier boys at Camp Humphreys recently. Is there ob.jection? wa te of energy, what a lo s of productivity, what a throwing There was no objection. away of resources. all this implies. - Unrestrained individUalism in industry. is bankrupt. The ORDER OF llUSINESS. Nation must undertake to guide industry along lines , which 1\Ir. KITCHIN. 1\fr. Spenlrer, I would like to say that to will eliminate the waste of useless competition and do away morrow we hope to dispose of the bill which '"e haYe introduced. with the profiteer. We must introduce a larger application of to-day, the bill to supplement the second liberty-bond act, .and the idea of industrial democracy in the life of nations. We also to close the general debate <>n the revenue bill. mu t get rid of the army of grafting middlemen, who stand be Mr. STAF.FORD. l\1r. Speaker, will the gentleman yield? twee:p. the farmer and the consumer, between the producer and Mr. KITCHIN. I will. the consumer. Mr. STAFFORD.- ·Is it the pm·pose of the gentleman to take Take the railroads. Why, you Democrats are charged by the up for consideration the bill that has just been pre ented? Republicans with being Socialists, and tbe gentleman from Ala~ .Mr. KITCHIN. Yes. bama [~r . .HEFLIN] re eots it. I -do not blame him. He the railroads. The distinguished Democrat from Alabama says1 done. 10272 · CONGR.ESSION.AL R.ECORD-IIOlTSE. SEPTEJ\IBER 12' Mr. WALSH. It will have to be done by unanimous consent. extent permitted by rules and regulations pt·escribed by the Comptroller 1\Ir. KITCHIN. I ask unanimous consent, Mr. Speaker, that of the Currency, with the approval of the Secretary of the Treasury\ 10 Per cent of su_ch capital stock and surplus fund of such association.'• the bill and report be printed in the RECORD. SEc. ?· That the short title of this act shall be •• Supplement to The SPEAKER pro tempore. The gentleman from North second liberty-bond act." · Carolina asks unanimous consent to have the bill and report printed in tl1e RECORD. [ Il. Rcpt. No. 778, 65th Cong., 2d sess.] l\Ir. C.ANNON. And the ordinary print ought" to be made and . Ur. KI'-':'CHI~, from tile Cemmittee on Ways and Means submitted be available here to-morrow, because the RECORD is printed in the followmg report : · . ' fine type for a partially blind man. The C~mmJttee on Ways and Means, to whom was referred the bill 1\Ir. KITCHIN. Yes; 1.\Ir. Speaker, I make that request. (11. R. 1292<>) to supplement the second liberty-bond act as amended and for ot!Jer purpo es, having had the same under consideration reports . The SPEAKER pro tempore. The gentleman from North it back to the House without amendment and recommends that' the bil.i Carolina asks unanimous consent that the bill H. R. 12923 and do pass. the report thereon may be printed. in the REcoRD. Is there ob PGRPOSE OF THE BILL. jection? f. The. chief purpose of this legislation is to provide a limited exemption rom mcome surtaxes and war and excess-profits taxes upon income to There was no objection. ~e derived from the fourth liberty loan bond issue, the flotation of which The bill and report refer_red to are as follows: ~s to opeu on September 28, and also to free a larger portion of the mco~e from the first, second, and third Uberty loan issues from similar · A bill (ll. R. 12923) to supplement the second liberty-bond act as tax!lt1~n. Your <.ommittee believes that this legislation will materially amended, and for other purposes. assiSt m the sale of-the next liberty bonds. Be it enacted, etc., That until the expiration of two years after the THE NEW MEASCRE. f1ate of the t ermination of thl' war betv,een the United States and the INTEREST FROM LIBERTY LOAN BO:\DS EXEMPT. Imperial German Government, fixed by proclamation of the President- ( 1) The interest on an amount of bonds of the fourth liberty loan Section l of the proposed bill provides that interest on fourth liberty the principal of ''hich does npt exceed $30.000 owned by any indiviflual. loan bon!Is not in ex~ess of $30i000, owned by any person, partnership, partnership, association, or corporation, shall be exempt from graduated corporatiOn, or assoCUJ.tion, sha I be exempt from surtaxes and excess additional income taxes, commonly known as surtaxes, and excess-profits profit!;; or war-pt·ofits taxes. nnd war-profits taxes, now or hereafter imposed by the United States, This. section also provides that the interest from the first, secontl, and · tJpon the income or profits of individuals, partnerships, associations, or third llberty bonds shall be exempt from surtaxes and excess-profits or corporations; war-pro~ts taxes to the extent of one and one-half times the amount of (2) The interest received after January 1, 1918, on an amount of fourth llberty loan bonds sul>scril>ed and held upon the date of the bonds of the first liberty loan converted, dated either November 15, t?-x return by any such taxpayers, but it is provided that such exemp 1tJ17, or May D, 1918, the second liberty loan, converted and uncon tion shall not exceed 45,000 of such bonds. ,-erte exempt by their terms, w·as dep_re ssed by the newspaper reports.,of a which would r<>fuse all exemptions from surtaxes, and the practical greatly increased surtax, · to which the mterest on the bonds Wl.l be_ necessity of taking into account the fact that such exemptions will in subject. I have been anxious to stabilize the interest rate. upon Gov any event be gained, as surtaxes are steadily increased, by shifting funds . el'Oment bonds, believing that by RO doing we should be reducmg the_ cost into governmental, State, and municipal bonds, the income from wblcn of the war not only to-day for ourselves but in the future for our is exempt from surtaxes as well as fPOm normal taxes. - selves and for our brave men who are fighting in France and who will In granting such exemption, I think appropriate provision should be have little or no opportunity to accumulate and invest in liberty bonds, made to the end that those who subscribe for bonds of the fourth liberty though they must upon their return join the army of taxpayers who loan may, to the extent of a specified portion of their holdings, partici must pay this interest. I have sought to avoid the issue of bonds _at pate in the exemption in respect to bonds of the first Uberty loan con s uch a rate and upon such terms as might resu l~ ultimately, when the_ vertPcl to the second liberty loan converted and unconverted, and the wat• is won in the accumulation of great wealth m the hands of a rela third liberty loan. tively smali proportion of our population, carrying interest at a high Should these views commend themselves to the Congress, I believe rate and exempt from taxes. •- that immediate action should be taken so that the status of the bonds of The magnificent patriotism of our people and the fervor and effi ciency the fourth liberty loan, in respect to taxation, may be promply known. of the liberty-loan or~anization have made it polilsible to place the lib It is, in fact, imperative that this status should be quickly known. erty bonds in the hands of many millions of persons who bad neve!" be There are certai.n other matters to which I desire to call the atten fore been investors in securities of any kin!l. Bonds of the third liberty tion of your committee at this time: loan received the widest possible distribution, and I feel that we all &we The provisions of section 8 of the second liberty-bond act, as amended a duty to the millions of subscribers of .small means not merely to pay by the third liberty-bond act, should be extended so as to authorize the them a fair rate of interest, which we are doing, but to take such meas- Secretary to deposit the proceeds a.rislng from the payment of war-profits . ures as may be necessary to insure to them a mar ket for the bonds at taxes with qualified depositary banks and trust companies in the United approximately 02r in case their necesB.ties are such as to force them to States in the same manner as the proceeds of income and excess-profits realize upon the investment which they have made in the Government's taxes. obligations. The bond-purchase fund, which was provided. in the. tbii·d The timG has rome to make provision for the sale of war-savings liberty-bond bill, bas been very us<> ful in stabUlzing the pnce of hberty C'ertlficates in 1919. The li!uit of $1,000 on the amount which may be bonds but it has not been, and we could not expect it to be, effective held by any one person should be made to apply separately to the to sustain price against adverse developments, and in the face of the series which will be issued in 1919, so that one bolder may own $1,000 fact that the Government's r ecurring demands upon tbe_ absorptive of that sPries in addition to $1.000 of the ileries of 1918. At the same power of the investment community are in such proportions and of such time the limit of $2,000,000,000 now imposed on the aggregate amount frequency as to prevent the develC>pment of any important buying power of the issue should be enlarged, or, better, removed, for the necessary in the investment market between liberty-loan campaigns. distribution of the war-savings stamps among thousands of post offices I have been much impressed by the success of the plan which has been and other agencies engaged in making sales over the counter may make adooted In Canada for the purpcse of maintaining the market value of the limit very embarrassing long before the cash receipts of the Treasury Canada's victory bonds. A careful study of that plan is being made in indicate that the limit is about to be reached. the Treasury nnd by the War Finance Corporation, and I am glad to In the negotiations which I have had and am having with or In for learn that the bankers of the country have ~en making a similar study.· eign countries in the <>ffort to stabilize _foreign exchange, I find myself I am not without hope that some such plan may be made effective in the seriously hampered because I am without the freedom of action which United States, although conditit•ns here are very different and it will is possessed by the finance miniRters of European countries. I may not do to depend too much upon the experience of our neighbo.r. In any only sell bonds or Treasury certificates of indebtedness, which involves event, it will not do to proceed in this matter abr~ptly, ~or without often international complications, and may not obtain banb.-ing credits the creation of an immense organization country w1de in Its ramifica nor operate as freely as may be necessary in the effort to stabilize ex tions. To make ::;uch a plan e1fective it would be necessary to put an change. Notwithstand.ing these restrictions, the Trear.ury- bas been able end to dealings in bonds on the exchanges, and accordingly to substitute to make substantial progress in dealing with this difficult problem. I an active and adequate market through the banking houses of the United urge upon you, however, the incorporation in the law of the necessary States acting in close cooperation with an instrumentality. of the Gov authority to give greater flexibility to the operations of the Treasury in ernment, probably the War Finance Corporation. At the same time it this respect. would be necessary to put an end to the numerous schemes, many of I believe it is highly desirable at this time that the President should th<>m actually fraudulent, for inducing inexperienced holders of liberty be empowered to investigate, regulate. or \)robibit not only the export bonds to exchange them for merchandise or property of less inherent or earmarking of gold or silver coin or bullton or currency, but also the value, though carrying the promise of a higher val~e or a b~~ber income . boarding or melting thereof. 1·eturn. In order that the Treasury may be placed m a posin~m to carry such plans as these into effect, if they should be found expedient, I sug Last March I called the attention o: the Congress to the importance of gest for your consideratioc the present enactment of appropriate legis amending the provisions of section 5200 of the Revised Statutes, Hmit ing the amount of loans which national banks may make to any one lation. borrower. A bill was reported by the Banking and "Currency Committee Last yeaz: I had the privilege of explaining to you and your colleagues of the House (H. R. 10691), passed by the House, and reportPd with on the Ways and Means Committee very fully the reasons why I advo amendments by the Commit1!ee on Banking and Currency of the Senate; cated making the income from liberty bonds subject to income surtaxes. but not acted upon by the Senate. The Senate did pass a bill ( S. 4099) I still believe that that course was wise and that the arguments ad dealing to a certain extent with the same ·subject matter, prior to the vanced in favor of it were sound. It will not do, however, to press any Senate committee report on the House bill, and on the Senate bill no theory however sound, to an extremity, and it is obvious that as a prac action bas been taken by the House. It is essential that this matter tical matter we can not keep the interest rate on Government bonds sta be disposed ol before the fourth liberty loan is offered. tionary, or substantially so, and continue indefu?.itely to inc~ease the surtaxes, to which the income from tho.se bonds IS subject, Without at ny way of suggestion and in order the better to formulate my views the same time limiting the market for liberty bonds to those who have for your consideration, I h.ave taken the liberty of preparing a bill little or no surtaxes to pay. .Since the bond and ta.x legislation which which would deal with the various points I have mentionad in this was under discussion in the summer of 1917 and which was enacted in letter. A draft of this bill is inclosed. May I not ask that the Ways the fall of 1917, the interest on liberty bonds has been inc.reased o!llY and Means Committee give these points its immediate attention, with a one-fourth of 1 per cent, whereas the surtax rates now in contemplatiOn view to the enactment of the necessary legislation, if my suggestions would carry an mcrease in the taxes to which the interest on the bonds commend themselves to the cummittee, in ample time to become effective is subject, rising above 150 per cent increase in some classes. . Surtaxes before the opening of the fourth liberty loan campaign on September 28. on incomes from $5t000 to $200,000 would under the new tax bill, on thP I feel that the success of this loan is deeply involved in this legislation. average, be doublea. In order to give the numerous small holders of Mr. LE:ffingwell is fully informed of my views concerning these matters liberty bonds the advantage of a market upon which ·they may sell their and is authorized to speak for me in my absence should the committee bonds In case of necessity, and also to attract subscriptions from the desire any further information. · great 'number of investors of ample means but not of great wealth, it Cordially, yours, W. G. McAI>oo. will be necessary immediately either to increase the interest rate or to Hon. CL.AUDlil KITCHIN, neutralize the increased surtaxes by freeing the bonds to a limited Ohainnan Ways and Means Committee, extent from such taxes. House of Representatit:es, Washington, D. 0. I recommend that a portion of the income of these bonds should be P. S.-I am sending a copy of this letter and the inclosure to Senator free from surtaxes for the period of the war and for a · brief interval SIMMOXS. . thereafter. This course would make it possible to meet the exigencies ADJOURNMENT. of the present situation and to counterbalance the adverse effect on the market value of liberty bonds of the increased surtax rates, and at the )Ir. KITCHIN. 1\Ir. Speaker, I move that the House do nmv same time would not be open to the very grave objection which exists against any unlimited or permanent exemption, which would deprive adjourn. the Government of the United States of the power to meet its necessities The motion was agreed to; accordingly (at 7 o'clock and 2 in the future by supertaxes on incomes derived from liberty bonds. If minutes p . m.) the House adjourned until to-morrow, Friday, the surtax rates should be reduced after the war, the interest which is fixed in the bonds would contillue. Having, as I beli<> ve, in fairness to September 13, 1918, at 12 o'clocl~ noon. the patriotic people wbo will subscribe for the four th liberty loan, to choose between one of two methods for making the bonds more attractive, neither of which is wholly satisfactory, I am inclined to recommend at EXECUTIVE COMMUNICATIONS, ETC. this time that the holders of these bonds be given a qualified and limited "Under clause 2 of Rule XXIV, a letter from the Acting Secre freedom from surtnx<>s in respPct to their holdings rather than that the interest rate should be increased. I believe that on the whole the wise tary of the Treasury, transmitting estimates of appropriation and expedient thing is to grant a limited exemption calculate1l to for Bureau of Printing and Engraving, 'Vashington, D. C., for counterbalance the increase in surtax rates now contemplated, and inclusion in some appropriation bill (H. Doc. No. 1273), was which I believe will be only temporary, rather than to incr ease the in terest rate on liberty bonds for th<' lile of the bonds. taken from the Speaker's table. referred to the Committee on Ap- I am influenced in this determination by the fact that It continues propriations, and ordered to be printed. · necessary to sell liberty bonds in competition with billion!': of dollars of bonds of the United States, the various States and municipalities. which are wholly exempt from surtaxes, as well as from all fo rm!'! of taxation, REPORTS OF COl\11\HTTEES 0~ PUBLIC BILLS AXD so that the person whose income is subject to surtaxes is apt to make .1 UESOLUTIONS. compariso!l of the income return from the liberty bonds which he is asked to subscrlbe for, not with the income return from corporation and Under clause 2 of Rule XIII, other securities such as carry no exemption from t axation, but with the Mr. STEELE, from the Committee on the Judiciary, to which income retm·n from wholly exempt bonds of the United States and the wns referred the bill (B. R. 12801) to amend section 1 of Title various States and municipalities. Under the existing state or the Constitution and laws, such a comparison can not be avoided. In these VII of the act entitled "An act to punish acts of interference with circumstances, we must find a middle ground between the sound view the foreign relations, 'the neutrality, and the foreign commerce LVI-650 1fr27 };f- -. CONGRESSIONAL RECORD-SENATE. 8EPTE1\IBER 13, of the Upited States, ·to punish espionage, and better to enforce By Mr. GALLIVAN: Petition of Cha1:les M. Cox, of Boston the criminal laws of the United 'States, and for other purposes/' Mass., suggesting modification of the Gore amendment to Hous~ approved June 15, 1917, reported the same with amendment. bill 11945 ; to the Committee on Agriculture. accompanied by a report (No. '177), which said bill and report Also., petition of Alfred R. Brown, of Boston, 1\Iass., making were referred to the House Calendur. suggestions as to the proposed tax on clothing; to the Committee on Ways and Means. By TOWNER: Petition of citizens in and near Braddey PUBLIC BILLS, RESOLUTIONS, A...'N "D MEM:ORIA.LS. Mr. ville, Iowa, for the immediate prohibition of the sale of all in Under clause 3 of Rule XXII, bills, resolutions, and memorials toxicants; to the Committee on the Judiciary. were introduced and severally refel'red as follows : By l\1r. VARE: Petition of HUD.. Thomas E. 8.!nith, mayor of By 1\Ir. MAGEE: A bill (H. R. 12921) providing for the pur Philadelphia, protesting against the tax on city bonds; to i:~d chase of uniforms, accouterments, and equipment by any