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side of the Chamber unitedly voted against that proposition j?nd made the tax on corporations 12% per cent.
Yes; I am glad to defend my position with reference to it I wish that the Treasury of this Government were in such condition that we could reduce the corporation tax to 10 per cent, or to 8 per cent, aye, I wish the time would come when we can bring the tax back to the pre-war days of only 1 per cent. The American people, I do not care whether they live in Iowa or in New York or in Mississippi, do not get much pleasure out of paying taxes; no one does; a tax is a burden; and I say that the broad shoulders of the highly favored few should carry the burden more than the bowed and bent backs of the moderately well-to-do many of this country. That is the position of the Democratic Party; that is our record in this body. I do not believe in destroying any kind of business except the kind that is illegitimate, the kind that, through the violation of laws, saps the lifeblood out of the Nation, and fetters with chains of bondage our own citizens.
Mr. COPELAND. Mr. President
The PRESIDING OFFICER (Mr. Steck in the chair). Does the Senator from Mississippi yield to the Senator from New York?
Mr. HARRISON. I yield to the Senator from New York.
Mr. COPELAND. Does it not strike the Senator from Mississippi as strange that our friend the Senator from Iowa [Mr. Bbookhart], who is devotedly interested in the welfare of the farmer, should be anxious to have taxes remain high? That certainly means, to me at least, that every artide that the farmer buys from the manufacturer, every article that the household purchases, will be increased in price by reason of the high tax. The people pay the tax. It does not come out of the rich man's pocket; he does not go out and pick up a chest of gold somewhere to pay the tax. The manufacturer charges it against the people, and the farmers of the West, who are seeking relief, are going to be relieved just as much from the lowering of taxation as any other citizens of the country are going to be benefited by it.
Mr. HARRISON. The Senator from New York is exactly right. The higher corporation taxes are the more the purchaser will have to pay for the products made by corporations.
Mr. President, let me say a few words more in regard to the corporation tax. The Senator from Iowa asked why not help the farmers in some way? I want to help the farmers. I have always helped them. Through proposed legislation and otherwise I have pursued that course. I should like to vote to reduce the tariff rates that are now bleeding the American farmer and other citizens of this country to the amount of $4,000,000,000 annually in increased high costs; but what can we do on that question in the Senate, may I ask the Senator? We can not originate that kind of legislation, nor do we control the machinery that grinds it out. And what would his colleagues over there do with reference to that particular matter?
I am not unaware that the Senator from Wisconsin [Mr. Elaine] has offered an amendment to this bill on the tariff question. I am opposed to that amendment, and when it shall be offered I will state the reasons for my opposition, and I think then the Senator from Wisconsin will also be against the proposal. I am honestly and sincerely in favor of a tax reduction bill. I want to see taxes reduced by $300,000,000 or $325.000,000, if possible, but if we can not get such a reduction as that because of the circumstances here and our minority position, then I am in favor of getting the most we can. If the utmost is only $200,000,000, well and good; but I am not in favor of the Senate of the United States doing anything that will defeat the final passage of the pending revenue measure. There are many provisions in it that will give some relief; and I am not going to be a party to accepting amendments offered by certain Senators who are in favor of taking all the surplus and paying the national debt without giving any reduction of taxation to the American taxpayer.
Do not let the Senator fool himself that a 13% per cent or a 12% per cent corporation tax does not increase the cost of living in this country. The Senator may get it into his head that only the rich in this country own stock in corporations, but it is estimated—the figures vary—that millions of people hold stock in corporations, and I know that when a corporation has to pay a 12% Per cent tax or a 13% per cent tax it must make it up and that it makes it up by increasing the price of its products to those who buy them.
I know that there are many corporations which give to their employees .shares of stock. Many of them are doing that. Those working for the corporations are interested, and I know that when a corporation has got to pay 12% or 13% per cent as a corporation tax it is very likely to reduce wages of the men, when it can do so, who work in the particular industry.
So, Mr. President, it seems to ine, inasmuch as the Government has increased the corporation tax from 1 per cent in 1909 to 13% per cent in 192G, the least we can do is to reduce it to 11% per cent. That was the proposition that was before the Senate. I have said all I desire to say.
Mr. BROOKHAKT. Mr. President, I care to reply to but one or two of the suggestions made by the distinguished Senator from Mississippi. In the first place, his argument, as suggested by the Senator from New York [Mr. Copeland], is to the effect that the corporations add their tax to the price of their products and pass it on to the farmer; in other words, the corporations pay no tax. There is some truth in that in reference to the big corporations, but the 177,000 corporations that have operated at a loss since 1922 have passed nothing on to the farmer. The corporation tax should be graduated so that could not be done, but under the plan the Senator is proposing there is no such graduation.
Mr. HARRISON. If the Senator will permit me to interrupt him, I know he wants to be absolutely fair. Let me say that in the proposal we made on last Saturday to give a reduction of 5, 7, and 9 per cent to corporations whose net incomes were less than $15,000 there was carried out the idea of a graduation which gave greater relief to the smaller corporations; but the Senator cast his vote against the proposition.
Mr. BROOKHART. That would not give any relief to the small corporations.
Mr. SMOOT. Mr. President
Mr. BROOKHART. I yield to the Senator from Utah.
Mr. HARRISON. I wish the Senator from Utah would permit me to ask the Senator from-Iowa why the tax proposed will not give any relief to the smaller corporations.
Mr. BROOKHART. I have yielded to the Senator from Utah.
Mr. HARRISON. Will not the Senator from Utah allow the Senator from Iowa to make an explanation? I want the explanation of the Senator from Iowa.
Mr. BROOKHART. I should prefer to do my own yielding.
Mr. SMOOT. Mr. President, one thing that will happen if the graduated tax shall be adopted will be that all chain stores in the United States, in all the little cities wherever they may be located, are not going to pay the 12% per cent tax; but they are going to take advantage of the graduated tax. There has already been adopted by the Senate a resolution providing for an investigation of those very stores, it being claimed that they are interfering with legitimate business men of the country; and, just as certain as we live, if the graduated tax becomes a part of this bill as proposed they are going all to fall under the lowor brackets.
Mr. REED of Pennsylvania. Mr. President, will the Senator from Iowa permit me to ask a question of the Senator from Utah?
Mr. BROOKHART. I yield.
Mr. REED of Pennsylvania. I was not able to be here on Saturday when that amendment was discussed, but it occurred to me as I read the text of it that it ought to be called "An amendment for the relief of the Standard Oil Co.," because they can create a separate corporation for every gasoline station; and by this amendment that the Senate put. in on Saturday they are going to get away with a 5 or a 7 per cent tax instead of a 121/2 per cent tax.
Mr. HARRISON. Mr. President, will not the Senator yield now so that I can ask him a question?
Mr. SMOOT. Mr. President
Mr. HARRISON. Just one question.
The PRESIDING OFFICER. The Senator from Iowa has the floor. Does the Senator yield, and, if so, to whom?
Mr. BROOKHART. I yield to the Senator from Utah to finish his statement
Mr. SMOOT. Mr. President, I had one of the experts in the Government service engaged since Saturday up to the present time iu trying to figure out what that amendment really means, and as nearly as he can figure it will be over .$50,000.000; and who is going to benefit?
Mr. HARRISON. Has the Senator conferred with Mr. McCoy, the actuary?
Mr. SMOOT. I have not seen Mr. McCoy.
Mr. HARRISON. The Senator will not accept his figures on the proposition. With whom has the Senator conferred who gave him those figures?
Mr. SMOOT. An official of the Government.
Mr. HARRISON. The Senator must have been playing mnmblety-peg with himself.
Mr. SMOOT. I wish the Senator would play muniblety-peg sometimes instead of milking the statements that he makes. I think it would be to the advantage of the Government of the United States.
Mr. HARRISON. No; I would rather work with the Actuary of the Treasury Department. Mny I ask the Senator a question in the time of the Senator from Iowa?
Mr. BROOKHART. I yield.
Mr. HARRISON. Was the purpose of the Senator in throwing himself into this breach and answering questions for the Senator from Iowa, when he employed the chain-store argument and the Senator from Pennsylvania employed the Standard Oil argument, merely to hold the Senator from Iowa in liue on this proposition?
Mr. SMOOT. Not in the least. The Senator from Iowa is in line just as strongly as any Senator in this body.
Mr. HARRISON. But the Senator wants to hold him there?
Mr. SMOOT. I am sure he thinks for himself; and if any statement made by the Senator from Utah or the Senator from Pennsylvania was not approved by the Senator from Iowa, he would say so and act in accordance therewith.
Mr. WALSH of Massachusetts. Mr. President, will the Senator yield?
The PRESIDING OFFICER. Does the Senator from Iowa yield to the Senator from Massachusetts?
Mr. BROOKHART. I yield to the Senator from Massachusetts.
Mr. WALSH of Massachusetts. May I have the attention of the Senator from Utah? As I understand the Senator's argument, it is that a graduated income corporation tax will result in the breaking up of the big trusts and combines and result in the formation of small unit corporations. I should like to know if that is not going to be a public benefit. For local control, knowledge of ownership, and for levying State and municipal taxes it will be an advantage.
Mr. SMOOT. The Senator from Utah never made any such statement. The Senator from Utah thinks these chain stores nre small units in almost every little city that there is in the United States.
Mr. WALSH of Massachusetts. The Senator, I understood, stated that they would incorporate in small units, so as to get the benefit of the low tax upon small incomes.
Mr. SMOOT. And make their returns, perhaps, in affiliated returns, owned by the same identical people, the same percentage owned in every institution.
Mr. WALSH of Massachusetts. But is it not true that they can not get the benefit of this graduated corporation income tax unless their income is small; and to get a small income they will break up into small corporations, small units?
Mr. SMOOT. That is what they are doing to-day.
Mr. RKED of Pennsylvania. Mr. President, will not the Senator yield to me?
Mr. BROOKHART. Mr. President, I desire to answer the suggestion of the Senator from Massachusetts myself about that breaking up and the effect of it on these great corporations.
I helped conduct the first hearing against the Standard Oil Co. down in Kansas City, Mo., when the proceedings were started which finally resulted in its dissolution; and after we dissolved it it was worse than it was before. There has got to be something more effective than the mere breaking up of big corporations because there are other powers, when they are broken up, which enable them, providing they are under the same sympathetic management, to engage in less competition and make more profits from the people than they did before.
Mr. REED of Pennsylvania. Mr. President, will the Senator permit a suggestion?
Mr. BROOKHART. Yes.
Mr. REED of Pennsylvania. It is all as simple as A, B, C. If they own a hundred gasoline stations, they organize a hundred subsidiary corporations. They own all the stock of every one of them; but those 100 corporations make separate accountings and they get In under the benefits of this amendment adopted here last Saturday, on the theory that they are small corporations, and the benefit all goes to the parent corporation which owns their stock.
Mr. SIMMONS. Mr. President
The PRESIDING OFFICER. Does the Senator from Iowa yield to the Senator from North Carolina?
Mr. BROOKHART. Just a moment.
The Senator from Massachusetts himself suggested that we had reached a stage In the creation of these corporations where as monstrous a thing as that just described by the Senator from Pennsylvania can be done, and I believe that is true. Until we have regulated these corporations by a law that reaches their profits—there is no other place to touch a corporation—and that graduates their tax according to their rate of profit, we have accomplished nothing by the amendments which have been suggested by the Senator from Mississippi.
Now I yield to the Senator from North Carolina.
Mr. SIMMONS. Mr. President, it is rather late to make the observation, but do I understand the Senator from Pennsylvania as making the point that because the people who own these service stations in copartnership, probably, or In cooperation with the Standard Oil Co. would get the benefit of these graduated rates, we are to deny the same benefit to all the traders of the United States?
Mr. BROOKHART. As far as I am concerned, I would reach that conclusion. I am for taxing the higher rate of profits at a heavier tax than the lower rate of profits.
Mr. SIMMONS. The Senator is in favor of a graduated tax, as I understand him.
Mr. BROOKHART. But not on the basis of the mere total earnings of any corporation. That does not get the results.
Mr. SIMMONS. Ihat does not appeal to the Senator? The Senator does not favor a graduated tax upon the incomes of corporations up to $15,000?
Mr. BROOKHART. Yes; I believe in a graduated tax on the incomes of corporations. ,
Mr. SIMMONS. That is what this bill does.
Mr. BROOKHART. But it does not do it on the basis in which I believe.
Mr. SIMMONS. I understand that the Senator now is discussing the corporate tax, not the individual surtax. He is discussing the corporate tax; and what is done by the amendment that the Senate agreed to on Saturday is simply to graduate the tax on incomes of $15,000 or less.
Mr. BROOKHART. But it is ou the basis of the total income.
Mr. SIMMONS. On the basis of the total income.
Mr. BROOKHART. And that is not a fair basis of graduation. The right basis is the rate of return on the capital investment Whenever the Senator brings in a graduated tax of that kind I will stand for it. I have talked it out many times with, the late Senator Jones of New Mexico. I was in complete accord with his ideas; but the amendments offered here are not of that character.
What do I mean by that? Here is a corporation earning 4 per cent on its honest capital, we will say. It should have a tax rate perhaps not above 2 per cent of that—a low tax rate. If it earns 4*4 per cent, the rate should be perhaps 3 per cent. If it earns 4Vj per cent, it should be 4 per cent, or perhaps more. I am only using these rates by way of illustration; because after it goes above 5% per cent, which is all the American people can produce, then the graduation should go still higher. I have no objection, a little above that, to taking all of the excess profits in taxes.
Mr. SIMMONS. Then the Senator would readjust all of our individual income-tax rates. They are based upon income, without reference to the amount of capital invested. I may have $100,000 invested In my farm; but if I do not make anything on it I have no Income to be taxed, notwithstanding the investment that I have in it.
Mr. BROOKHART. I shall be glad to discuss that proposition with the Senator.
Mr. SIMMONS. That is the basis upon which all of our legislation since the war with reference to individual income taxes and corporate taxes has been based. We have based it, not upon the capital invested, but upon the amount of net profits earned in the operation of the business in which that capital was invested.
Mr. BHOOKHART. There are some cases where the same injustice applies as in the illustration the Senator has given, no doubt, and I am perfectly willing to correct those injustices; but there is no proposition of that kind here.
Mr. SIMMONS. But I did not interrupt the Senator for the purpose of that sort of a discussion. I had that sort of a discussion with the Senator from Michigan, and after we had had some discussion he seemed to yield the point and retire from the combat. I rose for the purpose of answering the statement of the Senator from Pennsylvania.
The Senator from Pennsylvania said that when we graduated this tax we allowed certain subsidiary companies, such as service station companies of the Standard Oil Co., to obtain some benefit. It may be, Mr. President, that the law which we have passed in order to give every little corporation in this country the benefit of these lower rates, where their income Is less than $15.000, may result in some benefit to some corporation connected or affiliated in some way with the great trusts; but are we to deny relief to the masses of the people of this country because possibly and incidentally some little corporations organized as subsidiaries of these big trusts may get some benefit from it?
Mr. BROOKHART. 1 think with 177.000 out of 420.000 corporations operating at a loss, we are taking care of the little fellows. They are more tban being taken care of by the big fellows now.
Mr. SIMMONS. If a man is operating at a loss, he has Dotting that the Government ought to tax.
Mr. BROOKHART. No; he has nothing, and it Is these big combinations that are forcing him to operate at a loss; and if we allow them to break up into little suakes, little subsidiaries that eat up the little independent ones still faster, we have gained nothing by that operation.
No; the Senator is on the wrong basis of graduation of corporation taxes. I am for it on the basis figured out by the lute Senator Jones of New Mexico, whom I regarded as a very great expert upon this proposition.
Mr. KING. Mr. President, will the Senator yield?
The PRESIDING OFFICER. Does the Senator from Iowa yield to the Senator from Utah?
Mr. BROOKHART. I yield.
Mr. KING. The Senator appreciates, I have no doubt, the difficulties which were encountered, when the excess-profits tax was a part of our revenue system, in reaching these results, because of the almost insurmountable difficulties in determining valuations.
Mr. BROOKHART. If the Senator will permit me, I mentioned that in the beginning. I concede that the administration of that kind of a law, as we create corporations in this wild and unrestricted fashion in the United States, is a difficult, almost impossible, proposition. I am ready to put regulations around these corporations that will give us control of their capitalization and control of their earnings, so that we can tax them as they ought to be taxed. We have not done that, however; and we will not have a graduated corporation tax law that is just or fair until we do our duty in that regard. I deplore the fact that the Congress of the United States lies back here helpless, powerless, and says, "We can do nothing," and allows these great corporations practically to rule the country, economically as well as politically.
Mr. KING. Mr. President, may I say to the Senator that the plan which the Senator from New Mexico expounded to the Senate was presented to the Democrats, and in one of our conferences it commended itself to the Judgment of the Democratic Party, and it was presented here to the Senate.
Mr. BROOKHAKT. I voted for it in 1924, and it passed the Senate.
Mr. KING. I know the Senator did; but I am just adverting to the fact that difficulties are encountered In enforcing that policy. I believe, however, apparently insuperable as those difficulties are, that it is a just system of taxation to graduate the taxes upon corporations as we graduate the taxes upon the earnings of individuals; and I think perhaps some formula might be worked out by which the valuation of properties could be ascertained In a just and fair way as a basis for the introduction into our revenue system of a graduated profits tax.
Mr. BROOKHART. If the Senator will present it, I shall be only too glad to support it.
Mr. KING. May I interrupt the Senator again?
Mr. BROOKHAKT. I should like to conclude very soon.
Mr. KING. I do not want to misunderstand the attitude of the Senator. I rather got the view from his statement a moment ago that he doubted the practicability of enforcing any laws against mergers and corporations and trusts and monopolies.
Mr. BROOKHART. Not any law. If we go straight to the core of the matter I think we can draw a law that can be easily enforced. The trouble about It is that our laws do not Ko straight to the point.
Mr. KING. Does not the Senator think that the Sherman Antitrust Act and the Clayton Act, if properly interpreted and vigorously enforced, will rob these monopolies of the power which they are now exercising and, by the criminal processes and the iiijunctive processes of those acts, arrest their monopolistic course, which has so ruthlessly destroyed competition in many branches of industry?
Mr. BROOKHART. That would help some; but the "ifs" the Senator has put in his statement are mountain high. I do not know whether we could even fly to them.
Mr. KING. The Senator knows there are "ifs" in many things in life and in the administration of laws; and many la.vs which are just and intended to accomplish social and political reform fail in their purpose because not enforced. The trouble with many governments is that when laws have been enacted which have teeth in them and they are not enforced, demands for additional laws are made, and when responded to and these laws fail, still others are demanded, until
we have mountains of laws and statutes upon statutes. If the earlier laws were applied the evils sought to be corrected would have disappeared.
Mr. BROOKHART. I think the Senator is right in that proposition. With reference to this matter of passing these taxes on to the consumer all the time, if they were able to do that without question, as the Senator from Mississippi has suggested, the United States Chamber of Commerce would not be before Congress asking for tax reduction. It would be perfectly satisfied with the situation, because it would add in the tax in all cases, and then add in a profit for adding it in, and charge it all up to the people of the country. But they do not succeed in that result so fully, and the fact is that they have to pay some of the*e taxes. Therefore I think the argument upon that proposition falls.
In conclusion—and I am sorry the Senator from Mississippi ran away; it seems impossible for me to keep him in the Chamber—in the beginning of this session we passed a resolution, introduced by the Senator from South Dakota [Mr. Mcmastkk], in which we declared for tariff reduction at this session of Congress, and the Senator from Mississippi voted for it. Now he announces that if that is offered by the Senator from South Dakota as an amendment to this tax bill he will vote against it. Who has done the backsliding on this tax question?
MESSAGE FBOM THE HOUSE
A message from the House of Representatives, by Mr. Chaffee, one of its clerks, transmitted the resolution (H. Res. 204) of the House adopted as a tribute to the memory of Hon. Ladislas Lazako, late a Representative from the State of Louisiana.
The message also announced that the House had passed without amendment the bill (S. 3565) to provide compensation for disability or death resulting from injury to employees hi certain employments in the District of Columbia, and for other purposes.
The message further announced that the House had agreed to the report of the committee of conference on the disagreeing votes of the two Houses on the amendment of the House to the bill (S. 744) to further develop an American merchant marine, to assure its permanence in the transportation of the foreign trade of the United States, and for other purposes.
ENROLLED BILLS SIGNED
The message also announced that the Speaker had affixed his signature to the enrolled bill (S. 777) making eligible for retirement, under certain conditions, officers and former officers of the Army, Navy, and Marine Corps of the United States, other than officers of the Regular Army, Navy, or Marine Corps, who incurred physical disability in line of duty while in the service of the United States during the World War, and it was signed by the Vice President.
MEDICAL OFFICER ASSIGNED TO WHITE HOUSE
The PRESIDING OFFICER (Mr. Binoham in the chair) laid before the Senate the amendment of the House of Representatives to the bill (S. 3456) allowing the rank, pay, and allowances of a colonel, Medical Corps, United States Army, to the medical officer assigned to duty as personal physician to the President, which was. on page 1, line 7, after the word "serving," to insert a colon and 'Provided, That the officer now assigned to that duty shall have the rank, pay, and allowances herein provided from the dale of his assignment."
Mr. REED of Pennsylvania. I move that the Senate concur in the amendment of the House.
Mr. KING. May I ask the Senator if. after the officer assigned to this position ceases to occupy it, he will still have the same rank, pay. and allowances?
Mr. REED of Pennsylvania. The bill as passed by the Senate and by the House provides that he shall have temporary rank while so serving.
Mr. KING. And the same will be the case with regard to pay and allowances?
Mr. REED of Pennsylvania. The same with pay and allowances.
The PRESIDING OFFICER. The question is on agreeing to the amendment of the House.
The amendment was agreed to.
OOV. ALFRED E. SMITH
Mr. HEFLIN. Mr. President, I brought to the attention of the Senate and of the country last Saturday the fact that Mr. Van Namee, a member of the Public Service Commission of New York State, appointed by Governor Smith In 1924 for a term of 10 years, is managing Governor Smith's campaign for the Presidency. I want to read the testimony, in brief, on that phase of this matter:
The Chairman. One of tlie members of the committee suggests thnt I ask out- further question. Are you a member of the public utilities commission i\t this time?
Mr. Van Namkk. I am a member of the public service commission. I have iM-cn since June or July. 1924.
The Chaibmas. You are an appointee of Governor Smith, are you not?
Mr. Van Namek. I am.
The Chairman. That is an appointive position?
Mr. Van Namke. Yes, sir; confirmed by the Senate of the State of Now York.
Senator Karklky. What Is the length of the term?
Mr. Van Namek. Ten years.
The Chairman. Where is the chief office or headquarters of the commission?
Mr. Van Namke. At Albany, the capital.
So Mr. Van Namee has left his headquarters, his official frtnticn. and has gone down to Now York City to take personal chaw of the campaign of Governor Smith.
Mr. President, I mentioned here Saturday the fact that wo had another case on all fours with the case of Frank Smith, of Illinois, a Republican. One of the chief things that caused me to oppose seating him in this body was the fnct that while occupying a place on the utilities commission in Illinois Frank Smith was supported by Mr. Instill, the power king of Illinois. Mr. Insult was contributing money to Smith's campaign fund—tremendous sums. Mr. Frank Smith was rendering decisions, as an official of Illinois, paying back many times over to Mr. Insull the amount Instill was contributing to him. So we hurt the awful and ugly situation, where the power king outside was raising his rates upon the consumers of Illinois, and Mr. Smith, on the inside, as a State official, was rendering decrees that Mr. Insull wanted rendered, approving the increase of rates upon the consumers of hydroelectric power, which put that money back many times over into the pocket of Mr. Insull. No honest man can indorse such miserable and corrupt d<;ings.
Mr. KING. Mr. President, will the Senator yield?
Mr. IIKFLIN. I yield.
Mr. KINO. I do not wish to project myself into any controversy or into the discussion. I feel, however, notwithstanding my attitude toward the Smith case, that perhaps in the Interest of fairness and accuracy it ought to be said that the Public Utilities Commission in Illinois, during a number of years after the appointment of Mr. Smith, lowered the rates upon public utilities, as I remember now. $14.000,000. It has been some time since I read the record and I may not speak accurately, and if I am wrong I shall be glad to correct the statement. I thought in fairness I ought to call the attention of the Senator to that fnct.
Mr. IIKFLIN. Mr. President, in numbers of instances after Mr. Insull commenced to contribute large sums of money to Mr. Frank Smith's senatorial campaign Mr. Smith increased the rates, anil Mr. Insull took in large sums of money because of Mr. Smith's action in the matter. Governor Smith's case is on all fours with that of Frank Smith. Tlie man he appointed to office on the same kind of commission, a powerful commission, which holds the power of life and death over the corporate interests of New York State, has it in his power to increase or lower rates, to approve contracts or disapprove them, and he is taken away from the capital ut Albany and put in charge of the campaign headquarters at the Biltmore Hotel to gather in campaign funds for Governor Smith.
Mr. President, I submit that that is exactly parallel with the case where the judge of a court, with a number of people who have cases before him, civil and criminal, have an agent of the judge to come to them and ask for campaign contributions to help reelect the judge to the office he holds. Most of those people would make some contribution, and that deal, if it were put over, would be a shocking, astounding, and criminal act.
Governor Smith has picked out the man of all men appointed by him with power to influence, yes, and to coerce, contributions to Governor Smith's campaign. Mr. Kenny, a rich contractor in New York, a man who has made his hundreds of thousands, his millions, and his tens of millions, in the contracting business in New York City and State. Van Namee sits buck in the Smith headquarters, while Kenny is out on the highways and the byways gathering Up campaign funds. Mr. Kenny admits that he gave $20,000 and that he loaned $.">0,000 to Mr. Van Namee for Governor Smith.
Senators, I wonder how many are going to get into this dehate on this subject before this matter is over. I wonder how miiny Senators are going to be able to explain to their constituents that they sat idly by when this pha.se of the matter was being discussed, when an effort was being made to put
the high office of President upon the auction block and barter it to the highest bidder.
Van Namee holds this power. Kenny will go from him to a corporate concern—a street-car company, a railway company, or any other company-—and no doubt say, "Mr. Van Namee would like for you to contribute $10,000 or $50,000 or $100.000. Do not send it to him or give it to me, but give it to John Jones at a certain address in this city, and he will send it to North Carolina, or to some other point, and no account will be kept, of it, and we will not have to report it." Senators, that Is what is going on I am told. They m;ide the very startling statement, the astounding statement, that they had gathered up and expended only $103,000. It would come nearer being $10,000,000 than the amount they named.
I wonder if we are going to permit this to continue, and let them with their pussyfooting scheme accumulate millions to buy the nomination? I am not in favor of any Democrat buying it, I am not in favor of any Republican buying the Republican nomination. I fight corruption in both parties wherever I find it, it does not make any difference with me whether a man is a Democrat or a Republican. When I was convinced that Governor Harding, of my State, appointed by President Wilson head of the Federal Reserve Board, had gone into a conspiracy with the Republican leaders and Wall Street financiers to wreck that banking system and produce a panic. I laid siege to him in the Senate, and I drove him off the Federal Reserve Board in a fight I conducted here for two years.
It did not make any difference to me that he had been a Democrat, and was appointed by President Wilson, a Democrat. I said it is more my duty as a Democrat to clean crooked Democrats out of our ranks than it is particularly to go after crooked Republicans. Each party ought to get rid of that kind of men in its ranks.
Day by day I am going to bring this scandalous matter to the attention of the Senate, and I want to ask the investigating committee publicly to summon Jesse Jones, of Texas, and ask him about contributions; to summon Thomas F. Ryan, of New York: to summon William G. McAdoo. and ask him if he knows anything in connection with this matter, or can give. the committee any light, or can point his finger toward where important things can be found out. I want them to bring Mr. Van Namee and Mr. Kenny back again for some more questioning, and I want us to get a list from Mr. Kenny of the big contractors in New York City and State, so that we can interrogate them.
Mr. President, we have been sent here to faithfully guard the interests of this Nation, to protect it from misrule and abuse, and to keep it clear of corruption. Now, when two candidates are literally trying to buy the Presidency we ought certainly to be on our guard. I think Mr. Hoover is spending a vast sum of money in his effort to obtain the Republican nomination, and we know what is going on with Governor Smith's Roman machine. Look what it did to Jim Reew up in Wisconsin. He polled 35.000 votes. Smith polled about 8,000, but in an evil hour somehow the Smith machine got in its work and hooked the delegation away for Smith.
I have a great deal of confidence in this committee. I hope the members of it will not be timid. I know that when it is all over they will not want anybody asking questions as to why they did not inquire into this and inquire into that. I know of a lot of information that is going to be given to them and suggestions that are going to be made. I will help them all I can from time to time. I make that promise now.
When I voted in the Senate to deny Frank Smith a seat in this body it was mainly because he used Insult's money to obtain the Republican nomination for the Senate in his State and in return corrupted his office as utility commissioner and laid the burden of increased light and power rates upon the consumers of that State. It appeared on its face to be a corrupt deal, and I would not stand for it. Other Senators felt as I did about it When Governor Smith, of New York, runniug for the Democratic nomination for President, appoints a member of his Tammany Roman machine to the ofliee of public utilities commissioner or public service commissioner— tiie siime thing, because Van Namee's work is the same kind of work that Frank Smith did—and when he or his friends select that State officer, with all his great power over the business enterprises of New York State, to go out and get contributions for Governor Smith's campaign, it is time for honest Democrats who love their party and their country to pause and ask themselves the questions: Can we afford to permit this man, with his conception of civic virtues, as shown by this unfortunate, ugly, and brazen act of his, and by his utter lack of appreciation of the desire and importance of preserving American ideals and institutions in their true American form, to become, through the secret and lavish use of money and corrupt campaign methods, the leader of the party of Jefferson, Jackson, Cleveland, and Wilson? No. And they are not ^oing to do it.
MESSAGE FROM THE HOUSE
A message from the House of Representatives, by Mr. Chaffee, one of its clerks, announced that the House had agreed, without amendment, to the following concurrent resolutions of the Senate:
S. Con. Res. 6. Concurrent resolution to print and bind the proceedings in Congress together with the proceedings at the unveiling in Statuary Hall of the statue of Alexander Hamilton Stephens, presented by the State of Georgia; and
S. Con. Res. 18. Concurrent resolution to provide for the printing of the report of the Federal Commission on Cooperative Marketing of Farm Products.
The message also announced that the House had agreed to the report of the committee of conference on the disagreeing votes of the two Houses on the amendments of the House to the bill (S. 3555) to establish a Federal farm board to aid in the orderly marketing and in the control and disposition of the surplus of agricultural commodities in interstate and foreign commerce.
EAST PORTLAND-ROSEVIIiE RAILROAD IN OREGON AND CAJJFOBNIA
The PRESIDING OFFICER (Mr. Steck in the chair) laid before the Senate the amendments of the House of Representatives to the bill (S. 3699) for the relief of the land-grant railroad operated between the station formerly known as East Portland, In the State of Oregon, and Roseville, in the State of California, which were, on page 1, line 6, to strike out the words "the same"; on page 1, line 7, after the word "States," to insert "at the same rate"; and on page 1, line 10, after "278)," to insert "Provided, That the Congress hereby reserves the right at any time by law to prescribe such charges as it deems advisable for such Government transportation."
Mr. McNARY. I move that the Senate concur in the House amendments.
The motion was agreed to.
TIMBER AND OTHER FOREST PRODUCTS
The PRESIDING OFFICER laid before the Senate the amendment of the House of Representatives to the bill (S. 3556) to insure adequate supplies of timber and other forest, products for the people of the United States, to promote the full use for timber growing and other purposes of forest lands in the United States, including farm wood lots and those abandoned areas not suitable for agricultural production, and to secure the correlation and the most economical conduct of forest research in the Department of Agriculture, through research in reforestation, timber growing, protection, utilization, forest economics, and related subjects, and for other purposes, which was, on page 5, line 2, after the word "States," to insert ", and in addition to establish and maintain one such station for the intermountain region of Utah and adjoining States, one for Alaska, one in Hawaii, and one in the tropical possessions of the United States in the West Indies, and one additional station in the Southern States."
Mr. McNARY. I move that the Senate concur in the amendment of the House.
The motion was agreed to.
The Senate, as in Committee of the Whole, resumed the consideration of the bill (H. R. 1) to reduce and equalize taxation, provide revenue, and for other purposes.
Mr. WALSH of Massachusetts. Mr. President, may I have the attention of the Senator from North Carolina [Mr. SimMons!? I understand the amendment which the Senator pro]K)ses in behalf of the minority, with reference to the levying of surtaxes, is now before the Senate.
Mr. SIMMONS. I do not know whether I have offered it formally yet or not. If I have not offered it, I will do so now.
The PRESIDING OFFICER (Mr. Bratton in the chair). The ponding question is on the Senator's amendment.
Mr. WALSH of Massachusetts. I understand the number of surtax payers who are to benefit, if the amendment proposed by the majority of the Finance Committee prevails, is 125,000 individuals.
Mr. SIMMONS. I think that is about the number.
Mr. WALSH of Massachusetts. I would like to ask what number of individual taxpayers will benefit by having the surtax amendment, which the Senator has offered, indorsed or approved by the Senate?
Mr. SIMMONS. I am not in a position to tell the Senator ifxactly the number.
Mr. M'ALSH of Massachusetts. Mr. McCoy, the Treasury Actuary, tells me it will be 225,000.
Mr. SIMMONS. That is about my recollection.
Mr. WALSH of Massachusetts. So the difference between those benefiting under the amendment proposed by the Senator from North Carolina, representing the minority of the committee, and under the amendment proposed by the Senator from Utah, representing the majority of the committee, is the difference between 225,000 and 125,000 individual taxpayers. In other words, 100,000 more individual taxpayers who will benefit if (he amendment of the Senator from North Carolina prevails?
Mr. SIMMONS. It is my understanding that 225,000 would get the tota.l benefit under the minority plan of reduction. They are the relatively smaller taxpayers.
Mr. WALSH of Massachusetts. May I ask the Senator another question about it? The Senator's amendment would reduce the surtaxes upon that class of individuals whose income is from $10,000 to $20,000 as well as those who have an income of over $20.000.
Mr. SIMMONS. Yes.
Mr. WALSH of Massachusetts. While the proposal of the majority is that no benefit shall be given by a reduction of surtaxes to that group of individual taxpayers who have incomes between $10,000 and $20,000.
Mr. SIMMONS. That is true.
Mr. WALSH of Massachusetts. So that the additional advantage of the Senator's amendment is that it reaches a class of individual taxpayers who are now receiving or reporting incomes of between $10,000 and $20,000.
Mr. SIMMONS. That is correct.
Mr. WALSH of Massachusetts. The third advantage, as I understand it, is that the Senator's amendment would give a reduced surtax to all taxpayers having incomes of between $10,000 and $70,000, while the amendment offered by the majority does not stop in the reduction of taxes at those who have incomes of $70,000, but reduces the taxes on the very rich taxpayers who have incomes in excess of $70.000, the theory of the Senator from North Carolina being that those taxpayers who have incomes of over $70,000 have already had a sufficient reduction. Am I correct in that statement?
Mr. SIMMONS. The Senator is correct. The majority would give a reduction to everybody whose income exceeds $70,000 up to the peak of incomes listed for taxation.
Mr. WALSH of Massachusetts. What sound opposition or argument can be made to the proposition of the Senator from North Carolina, in view of the fact that it reaches a larger number of taxpayers and reaches that class of taxpayers who, most of all. need a tax reduction?
Mr. SIMMONS. That is what I am going to discuss now.
Mr. WALSH of Massachusetts. May I direct the Senator's attention to this thought, which he will probably discuss. To my mind the Federal taxes bear most heavily and are most burdensome to-day, not in the amount that Is paid but in the requirement to pay taxes at all, upon that class of professional and business men and women who receive incomes from investments that are within the income brackets between $10,000 and $20,000. They usually are professional men or small business men. They have families. They are educating their children. The cost of maintaining their standard of living is excessively high, and every dollar of tax is burdensome. It seems to me that that part of the Senator's amendment which would give some relief to that very large number of taxpayers—it must be nearly 100,000, according to the figures presented by the experts, who have incomes of between $10,000 and $20,000— makes the amendment proposed by him very much better and very much more desirable than the amendment offered by the majority.
Mr. SIMMONS. Mr. President, in the beginning of this
scheme of taxation I think we all agreed that income taxes
should be based largely upon the principle of ability to pay.
Tested by that rule, of course, the man of small income is
entitled to the greatest consideration, because his ability to pay
j the tax is very much less than that of the big man. For
[ instance, the man who receives an income of $10,000 has not
[ the same ability to pay taxes as the man who receives an in
| come of $100,000 or an income of $1,000,000.
Mr. President, I think the feeling of all of us is that, so far as is consistent with a reasonably clear presentation of the questions upon which the Senate is to vote, the exigencies of the situation are such that we should restrain and limit ourselves in debate to a discussion of such questions as are absolutely pertinent and supposed to be necessary in order to enlighten the Senate. Recognizing that fact, I propose to make my discussion of the surtax question as brief as I possibly can.
Ever since the passage of the act of 1026 there seems to hnve been an universal agreement upon one proposition, namely, thai in the reduction made in that year the taxpayer in the lower brackets of the surtax schedule was not given his jnst propor