property included in the gross estate. The credit allowed by this subsection shall not exceed 25 per cent of the tax imposed by this section." We have in this language the first attempt of the Federal Government to influence the States in the legitimate use of their reserve taxing power. In section 301, subsection (a), of the same act, being the section immediately preceding the above quotation, was set forth a schedule showing the rate of tax to be applied to each net estate having a value of more than $50,000, that amount being exempt from taxation under the provisions of the revenue act of 1924. The percentage of tax was graduated according to the value of the net estate and the rate extended from 1 to 40 per cent, the 40 per cent rate being applicable to large estates.

By means of the 25 per cent credit allowance to estates it was then intended that each State should raise its own estate, inheritance, or legacy tax rates suficiently high so that in computing the State tax they could obtain the full 25 per cent allowance. Any State failing to do this subjected the estates of its own citizens to payment to the Federal Government of an amount in excess of that to be paid by citizens of other States having sufficiently high rates to absorb the full amount of credit. A financial advantage, therefore, was offered to each State to enact sufficiently high rates to absorb the full credit. Failing in this respect, the amount of death taxes in the aggregate to be paid by any estate was neither enhanced nor diminished by the provisions of this subsection. The failure of any State to impose death taxes had the effect of punishing the State to the amount of 25 per cent of the gross tax which the Federal Government in every case collected. States having constitutional amendments which did not permit the imposition of this form of tax were required to pay the full measure of penalty. The provisions of the law quoted appeared not to have been sufficiently drastic in coercive effect to accomplish all that the Congress desired. In 1926 the law was amended in such manner that a credit of 80 per cent of the aggregate amount of Federal tax was allowed. (See sec. 301, subsec. (b), of the revenue act of 1926.) Thus the Federal pressure is seen to be progressive. Three States (namely, Alabama, Florida, and Nevada) enacted no law by which to absorb the 25 per cent credit; neither have they enacted any law to absorb the 80 per cent credit; but the new law reaches far beyond the three States named, for in order to absorb the 80 per cent credit most, if not all, of the States then imposing death taxes were obliged to raise the same or lose money in varying amounts which they might obtain. As under the 1924 law, States which were unable to enact death tax laws by reason of constitutional prohibitions suffered the extreme penalty.

Suppose a millionaire of either Alabama, Florida, or Nevada should die during the time the revenue act of 1926 is in effect, just what is the consequence of the provisions of this Federal statute? The estate of such decedent is at once made subject to the Federal tax of $80,000. This amount is required to be paid to the Federal Government and for its general use. Having no death tax law, the 80 per cent credit allowance is unavailable, and the State loses $64,000, which, if it would enact sufficiently high death tax rates, it might obtain for its own uses. If the same person were a resident at the time of his death of a State having a sufficiently high death tax rate, all up to 80 per cent of $80,000, or $64,000, would be credited by the Federal Government in favor of such State. The State of residence would receive in such case $64,000, and the Federal Government would receive 20 per cent of $80,000, or $16,000. The aggregate of such taxes paid on the estate would be the same regardless of the State of residence of the decedent. It is clear, therefore, that the estate of the deceased resident of Alabama, Florida, or Nevada would pay to the Federal Government four times the amount which would be paid by any taxable estate of a decedent whose residence at death was in a State having death tax rates sufficiently high to absorb the full amount of credit allowance. The financial urge upon States, by reason of the situation created by this Federal law, to enact death tax laws and to enact them at a sufficiently high rate to absorb the full credit allowance, is seen to be very great. With respect to other States the Federal pressure is increased or decreased to depend upon whether the State rates are high or low. The Federal estate tax law of 1926 raised the exemption from $50,000 to $100,000. As a tax law this made the matter worse, because it disclosed the temper and spirit of the Congress to sacrifice sound principles of taxation on the altar of expediency or to enter upon a program of social legislation under the guise and use of the taxing power of the Government. President Coolidge obviously saw this when, on February 19, 1925, he said:

"I do not believe that the Government should seek social legislation in the guise of taxation. We should approach the question directly, where the arguments for and against the proposed legislation may be clearly presented and universally understood. If we are to adopt socialism, it should be presented to the people of this country as socialism, and not under the guise of a law to collect revenue. The people are quite able to determine for themselves the desirability of a particular public policy and do not ask to have such policies forced upon them by indirection."

So far as is known, no administration of the Federal Government has adopted a policy of equalizing fortunes by the use of the taxing power.

However, Congress, in 1924, after a short debate and as far as is known without public hearing, did increase the rate of tax from a maximum of 25 per cent to 40 per cent.

At the time this was done there was no fiscal reason for increasing such rates; on the contrary, there was reason against it. The adminis tration opposed rather than asked for this result. But why were the rates so increased? It was not done in response to the demands of the public. The high rates were cut in half in response to the demands of the public two years later, but while the high rates were so reduced the exemption was doubled, the enactment of that year being employed openly and intentionally to require States to increase rates to take up all or a part of the reduction made in the new Federal schedule. Using the language of Professor Adams, has not the intent and purpose of the Congress been "to reduce and relieve the striking inequalities in wealth and income?"

The plan for coercing States is claimed to be necessary because of the actions of Florida, that State having adopted a constitutional amendment which forbids the imposition of such tax. It may be noted in this connection that the change in the Florida constitution places that State in the same position as Alabama and Nevada. In reality what Florida did was to advertise the fact that such an amendment had been adopted as a means of inducing citizens from other States to take up their residence in Florida. Alabama and Nevada, having done little or no advertising of the kind, are seldom mentioned as being of sufficient importance in the picture to justify congressional attention. Next to the now deflated land boom, the hysteria over Florida's tax advertisements is the greatest phenomenon of the decade. It may be said in passing with respect to Florida's tax situation that the State, like all others, will have to find revenue to meet its public expenditures. That the public debt of the municipalities and subdivisions of the State of Florida has increased in the last four years faster than such debt has increased in any other State of the country is very well known. In the course of a very short time, if not immediately, plans for raising reve nue in Florida will have to be revised. The time will come when it will not be sufficient to say that the State, as such, has no public debt. The millionaires who take up their residence there will be compelled to observe that whether the State has a public debt or not is not of greatest importance. On the contrary, it will be learned that the principal of local bonds must be paid at maturity and that Florida as a State will have to find means, either by itself or its subdivisions, to raise the revenue to redeem such bonds. If such should not be the case, and Florida by any plan of financial legerdemain can so manage affairs that its tax burdens as a whole will be less than those imposed on citizens of the other States in the country, that State should reap the benefit which flows from superior management of its financial affairs. It is possible when Florida comes to the point of revamping her tax laws, as she must do, she will be able to do so in such outstanding and excellent manner that other States can profit by her example. If Florida, or any other State, so manages its public business as to attract nation-wide or world-wide attention, and thereby, together with good climate, offers an incentive to people to take up their residence within its borders, Congress appears to be going far afield to enact legislation, punitive or otherwise, by which to divert from that State the benefits which in justice and sound reason ought to flow to such State. If the overburdened taxpayers of cities of the country, or of any other locality where public debts are increasing at an alarming pace, desire to escape oppressive tax burdens, the other States which maintain more responsible governments should suffer no punishment because of the public spirit and interest which citizens thereof have shown in the management of public busiThe present Federal estate tax anomaly places the States in a strait-jacket. It is based on the doctrine that the citizen, in whichever State he lives, must pay taxes locally and for State purposes in accordance with the congressional will. The strait-jacket is a presumption of authority and works an injustice to every State in which the citizens have thoughtfully attended to public business. The 80 per cent credit device accomplishes by indirection that which could not be considered as possible by directly imposing on any State the obligation to enact any kind of tax laws. No one would stand for such direct action by the Congress; such a proposal would not be considered. By the Indirection found in the Federal law the same purpose is accomplished. Prior to 1924 the determination of whether the State would or would not have death tax laws was regarded as a matter exclusively of its own concern. Since the passage of this law, while free to make such determi nation, each State is subjected to penalty for failure to make the determination in accordance with the Federal plan.

ness.

The States in the Constitutional Convention yielded the right to the Federal Government to impose taxes only in reliance upon the constitutional limitations as to apportionment and uniformity. It was intended that the Constitution should forbid discrimination by the levying of duties, imposts, or excises upon a particular subject in one State and a different duty, impost, or excise on the same subject in another State. The burden was to be uniform in all States.

The necessity for uniform death taxes is no greater than the necessity for imposing uniform personal income taxes or uniform corporation net income taxes. No reason exists for uniformity in the several States with respect to such taxes. Indeed, uniformity in this regard is

undesirable except as there may exist uniform sentiment in the States imposing such taxes and other uniform conditions too varied in character to be enumerated. If the strait-jacket principle is sound, other strait-jackets, possibly and probably less comfortably fitting, may be devised in course of time to fit other States which refuse to obey the congressional will. By application of Federal power of the purse the discomfort of three States now may be slight in comparison with that which other States may feel in a decade or two.

If it were necessary for the Federal Government to establish such principle as underlies this tax, no good citizen would inveigh against it. There is no such Federal necessity. Serving no useful Federal purpose, it is submitted that it serves no useful State purpose. If the constitutionality of this question should be raised in the courts and the Supreme Court of the United States should decide on its merits that an enactment of this kind is constitutional, the situation would be unchanged. Whether constitutional or unconstitutional, this law not only is in conflict with the spirit of the fundamental law, but it destroys that equilibrium essential to the progressive political career of the American people. As the historian Fiske pointed out:

"The hopes that may have been built upon it [the Constitution of the United States] for the future happiness and prosperity of mankind will be wrecked forever."

Hon. HIRAM BINGHAM,

OFFICE OF THE TAX COMMISSIONER,

STATE OF CONNECTICUT, STATE CAPITOL, Hartford, Conn., January 3, 1928.

Care of United States Senate, Washington, D. C. DEAR SENATOR BINGHAM: Your letter of the 28th instant, wherein you ask me to please tell you more of the particulars respecting the duress to which the State of Connecticut has been subjected is at hand. This request for information leads straightway into the meat of this coconut. The record of the hearing had before the Ways and Means Committee prior to the enactment of the revenue act of 1926 discloses the fact that the estate-tax provision was not devised as a revenue measure. To state it more accurately, the revenue feature was incidental to another purpose in the enactment. Anyone reading that hearing can form his own conclusions as to what its purpose was. With respect

to this, there may be some differences of opinion. However, an important and probably the main design of the law was to obtain uniformity with respect to death taxes which States should impose. To obtain such uniformity among the States, there was need of interference with States' business. There was the necessity of devising some scheme by which to induce, enforce, and coerce States to have death taxes and at rates sufficiently high to meet the congressional requirement. It was admitted that States if let alone would not maintain uniform rates. Therefore, the necessity of coercion, persuasion or compulsion, or pressure or duress by Federal authority upon State legislatures. Congressman HULL of Tennessee, chairman of the Democratic National Committee, at the recent hearing (record p. 600) stated this: "I am one Member who is anxious and willing to see that the States levy a very substantial inheritance tax."

66

By this statement Mr. HULL claims the right of Congress to determine what tax and what rates States should impose. There is no reason for splitting hairs on what constitutes duress, coercion, urge, pressure, or what Mr. HULL calls cooperation." The fact is if Connecticut, as it has done, continues to be without sufficiently high rates to meet the congressional will and to absorb the full 80 per cent credit, the estates of its deceased citizens, where the net estate is in excess of $100,000, will pay more money to the Federal Government than will the estates of deceased citizens of States which surrender to the congressional pressure and absorb the full 80 per cent credit. There is a Some tremendous misunderstanding about this 80 per cent business. Congressmen appear to think that it is a refund from the Federal Government to the States and talk freely about refunding the amount of money paid to the Federal Government. There is no refund. It is a set-off or credit computed by the Federal officials after the amount of death taxes due to the States in every case will have been paid. If Connecticut wishes to employ arithmetic and use a lead pencil upon which to determine its political principles, it can save money to its treasury; but to this time in its history, as I understand it, its principles have not been either purchased, sold, or given away without sharp and decent resistance. The record of the hearing had prior to the enactment of this law in 1926 shows that the 80 per cent credit clause, while designed to accomplish uniformity, had the support of those in Congress, and now the Committee on Ways and Means, who desired to accomplish a redistribution of wealth. I think the uniformity claim is "window dressing" for the redistributors. They regard uniformity and redistribution of wealth as of more importance than the independence of the States, and found the means of controlling State systems of taxation through indirection employed in this 80 per cent clause of the law. In the pamphlet which I sent to you, at page 13, I illustrated the position in which Florida, Alabama, and Nevada were situated and, among other things, brought out accurately the conclusion that the estate of a millionaire who dies in Florida will pay to the Federal Government four times the amount that a millionaire would

pay in a State which had yielded to this Federal coercive scheme. This sentence is found in the pamphlet, after illustrating the Florida situation :

"With respect to other States the Federal pressure is increased or decreased to depend upon whether the State rates are high or low." The inheritance-tax rates in Connecticut, as you will see by the inclosed schedule, are, and have been since 1915, fairly high. For the year ended June 30, 1925, of the total State receipts 9.96 per cent was collected from the inheritance tax; for the year ended June 30, 1926, 8.47 per cent; and for the year ended June 30, 1927, 8.08 per cent. The percentage of inheritance taxes collected to the total State receipts was decreased slightly in the last three years because of the increase of receipts from motor vehicle and gasoline taxation. Prior to these years the inheritance-tax receipts ran between 10 and 11 per cent of the total State receipts. This is exclusive of the so-called Connecticut penalty tax which is imposed on the property of decedents found in estates with respect to which no ad valorem tax had been paid in the five years preceding the death of such decedent, but 80 per cent of the penalty-tax receipts go to the towns wherein the decedent resided at the time of his death. Such receipts are, in fact, death taxes, but I have not included this in the percentage figures

for the reason that they are not entirely State receipts. I am not certain that I can show you what percentage of the full 80 per cent credit Connecticut is obtaining because of the complications involved in such an undertaking. If I should undertake to explain a problem in quadratic equations by letter to a person who had not studied algebra, I should be confronted with a similar difficulty. The point is it is almost impossible for anyone to understand this who has not had practical contact with it. Some phases of it no one in this tax department can figure out. I am sending to you herewith a manuscript entitled, "Mutual interdependence of Connecticut inheritance tax and Federal estate tax (1926 act)." This is written in as simplified form as we are able to get it out. Those in the bureau in Washington who are handling this subject will understand this, but they will not attempt to show its difficulties to Members of Congress, as, of course, these phases of this question have never been printed in the CONGRESSIONAL RECORD. They have never been gone into by any Congressman, so far as I know, and I am asking Senator SI COT to give us a hearing so that we can get into the meat of this coconut and try to make its difficulties understandable to those in congressional authority. I think that they should know something about the mischiefmaking provision of the 1926 laws.

After you will have gone through this document, if you do not then feel that you are clear with regard to it, let me know and I will send Mr. Knapp to you, or, possibly, Mr. O'Donnell, who are daily in contact with this problem. They know more about this than I do, because I do not interfere with their administration work unless there is dispute between them and the taxpayer. I wish you joy in trying to find out what this means.

Georgia,

Another phase of this problem is interesting. In 1924 the situation with respect to estates was as follows: Florida, Nevada, and Alabama had no death taxes. Mississippi and Utah had estate taxes only. Oregon and Rhode Island had both an estate tax and an inheritance tax. All the rest of the States had inheritance taxes at varying rates, In 1927 Alabama, Florida, and Nevada had no death taxes. Mississippi, North Dakota, and Utah had an estate tax only. Of these States, the tax levied by Georgia was to take up the the 80 per cent. As to Mississippi, from 1918 to 1924, it had inheritance tax and an estate tax. In 1924 the inheritance abolished and an estate tax at fairly high rates was North Dakota formerly had an inheritance tax, but in 1927 substituted an estate tax at low rates. Utah had an estate tax with only low rates since 1901. The following States have both an estate tax inheritance tax:

"California, Colorado, Delaware, Maine, Massachusetts,

slack of both an tax was established.

and an

Montana,

Missouri, New York, North Carolina, Oregon, Ohio, Pennsylvania,

Rhode Island, Vermont, and Virginia."

tax was This one estate

In the case of all, except one, of these States an estate added in order to take up the slack of the 80 per cent credit. State is Oregon, which has had both an inheritance and an tax for a number of years, but in 1927 an additional estate

tax was

imposed to take up the slack of the 80 per cent credit provision.

(Chapter 810 of the laws of 1926.) inheritance taxes only.

All the rest of the Sta tes have

I will try to obtain for you, as I have not the information at hand,

the names of the States which increased their inheritance-t owing to pressure of the revenue act of 1926, and which_

rates

at the

same time, passed resolutions calling on Congress to repeal ta is law.

This is extremely interesting. Green, GARNER, and RAINEY

be interested more in the amount of money expended in order cure a hearing before the Ways and Means Committee than other subject connected with this business. Of course, it is

Seem to

to pro

in any

Silly to

claim that 23 States were purchased in order to pass the resolution

condemning the 80 per cent clause.

I am writing to Mr. Casey, of

the National Council of State Legislatures, asking him to send a copy of each of the resolutions passed by the States.

to you

At

a

later

date I will send you a communication showing the reasons why, in the judgment of tax people, New York and California adhere to the notion that this Federal estate-tax scheme is desirable. Briefly, it is desirable in those State because they are plunging so heavily into debt that they find it comfortable to pass the buck to Congress as a reason for increasing their inheritance-tax rates. Massachusetts is an example of this also. The tax commissioner of Massachusetts admits that if the Federal estate tax law should be repealed the legislature of that State would not raise the rates so as to collect such money as is now being gotten from that source of revenue, He is willing to appeal over the heads of the people of Massachusetts as expressed in the legisla

Tax on net estate. Exemption applies to class as whole.

MUTUAL INTERDEPENDENCE OF CONNECTICUT INHERITANCE TAX AND FEDERAL ESTATE TAX (1926 ACT) SHOWN BY A ONE MILLION DOLLAR NET ESTATE.

Net estate as used above, means the net estate remaining after the deduction from the gross estate of all of the allowable deductions under Connecticut law, such as debts, executors' fees, expenses of administration, etc. In thus arriving at the net estate there is not deducted either the $100,000 flat exemption allowed by the Federal estate tax nor the exemptions allowed by Connecticut law, which are $10,000 on property passing to class A (wife, children, etc.), $3,000 on property passing to class B (brothers, sisters, etc.), and $500 on property passing to class C (cousins and strangers to the blood).

The above is how it would work out at its very simplest, starting with the flat figure of $1,000,000, for figuring both Federal and State taxes. But since the Federal estate tax, being an administration expense, is an item to be deducted from the Connecticut gross estate in order to arrive at the Connecticut net estate, if we wish to obtain a more accurate computation of the Connecticut tax we shall be obliged to deduct from the assumed $1,000,000 net estate the amount which it may be expected that the executors will have to pay to the Federal Government as an estate tax (i. e., $8,300). The computation then becomes as follows:

tax is finally determined and paid. Contrariwise, under our Connecticut law, the Connecticut inheritance tax can not be computed until the Connecticut net estate is known, and that can not accurately be determined until the Federal estate tax is settled and paid. In this dilemma, neither tax being determinable until the other is, the only way out is to use estimates, which will approximate the true result, but can not be accurate.

It must be remembered that the above is based on the assumption that the net estate is $1,000,000 for both Federal and State purposes. It is seldom, however, that this correspondence exists. There are at least five factors which may, and often do, vary.

(A) The Federal appraisals may differ from the State appraisals of the same property. This often happens. Owing to its superior strategical position the Internal Revenue Bureau can force estates to accede to higher valuations than can the State.

(B) The decedent may have owned real estate or other property outside of Connecticut and not subject to Connecticut inheritance tax, but which is nevertheless subject to Federal estate tax.

(C) There may have been previously taxed property" in the estate-that is, certain property owned by decedent may have been subject to Federal estate tax within five years, in which case it is exempt from Federal estate tax on this particular decedent's estate. Connecticut has no such rule as to "previously taxed property."

(D) Gifts to certain institutions may be exempt under Federal law which are not exempt under Connecticut law.

(E) Connecticut tax proceedings must be closed within 14 months after decedent's death. The Federal Government has three years. It often happens that the Federal authorities, long after the Connecticut tax is fixed, reopen the case and change many figures.

Besides these there are many other ways in which Federal and State authorities may differ in arriving at the net taxable estate. A mere reading of regulations 70, governing Federal estate tax, will indicate how minute and meticulous are the regulations, and how many points they cover. It would serve no useful purpose here to go into detail, but there may be mentioned differences of viewpoint upon exercises of powers of appointment, and upon gifts to take effect at death (especially since the case of Coolidge v. Nichols (47 Sup. Ct. Rep. 710, 712, Ed. 797, U. S. S. C. May 31, 1927), which has thoroughly upset the situation; the effect of foreign transfer taxes upon the question of whether the estate is entitled to the full 80 per cent credit or only part thereof, and so on.

There are, indeed, many cases where it is quite impossible ever to determine either tax with even a remote approach to accuracy; this so whenever the State tax is less than 80 per cent of the Federal tax. In such a case no executor or administrator, however well qualified by experience, can compute the tax which his estate will be called upon to pay. His best estimate may be thousands of dollars out of the way. The State inheritance-tax official is in the same situation, and all because of the mutual interdependence of Federal and State death duties.

An example will make this clear: Take an estate of $1,500,000 passing to class A (lineal descendants of decedent), and suppose, to make it as simple as possible, that no variable factors are introduced, so that Federal and State authorities start upon exactly the same basis. The Federal tax on an estate of this size, not deducting the credit, would be $88,500. The Connecticut tax would be $46,650. The Connecticut tax being 52.7 per cent of the Federal tax, the executor can take not more than 52.7 per cent credit against the Federal tax, or $46,639.50, so that the executor will have to pay the Federal Government the balance, or $41,860.50. This necessitates recomputing the Connecticut tax, using $41,860.50 as a deduction in ascertaining the net estate. The Connecticut tax on this basis is $50,325.58. But this figure is 56.8 per cent of the Federal tax, so that the executors ought to be allowed to take that much credit or $50,268 and would have to pay as Federal tax only the balance, or $38,232. Again it is necessary to recompute the Connecticut tax on this new basis, and so on ad infinitum. Neither tax can ever be determined by this method. If it is figured back and forth long enough the result will eventually be zero. When this point is reached in such a case, the executor and the State inheritance-tax department usually quit figuring in disgust and decide upon an arbitrary figure which shall represent the amount allowed as a deduction on account of Federal estate tax in ascertaining the net estate subject to Connecticut inheritance tax.

The problems thus raised by two mutually dependent indeterminates can only be solved by a complicated algebraic formula. Executors and administrators are ordinarily in no position to work out such a formula for themselves, and it is unreasonable to expect them to do so. A similar matter was once passed upon by the Supreme Court of the United States in the case of Edwards r. Slocomb (264 U. S. 61). This case was under the revenue act of 1918, but the principle is equally applicable to subsequent acts, including those of 1924 and 1926. In the case mentioned decedent, after making specific bequests in her will, had bequeathed the residue to charitable and educational institutions, which bequests were exempt from estate tax. In order to arrive at the amount of residue which would be exempt, the Government claimed that there should be deducted from the gross estate not only the allowable deductions, such as debts, expenses, etc., and the amount of specific bequests, but also the amount of Federal estate tax which was to be paid on this estate. The purpose of this was, of course, to cut down the amount of residue which would be exempt. It resulted in the ridiculous procedure of having to guess at what the Federal estate tax might be in order to use it as a deduction in ascertaining the Federal estate tax itself. This is a reductio ad absurdum in taxation.

Justice Holmes, in refuting the Government's contention, said, "The Government offers an algebraic formula by which it would solve the problems raised by two mutually dependent indeterminates. It might fairly be answered, as said by circuit court of appeals, that algebraic formulæ are not lightly to be imputed to legislators.'" It was held that the contention of the Government was not supportable and that for the purposes of the deduction on account of charitable bequests the amount of bequests to charity out of the residuary estate is the amount of the residuary estate after State transfer or succession taxes have been paid therefrom by the terms of the will, without further reduction by the amount of the Federal estate tax on the net estate, though such tax in fact does reduce by its amount the residuary estate passing to charity.

This decision by the United States Supreme Court makes clear the attitude of that court toward a tax law which is so arranged that complicated algebraic formulæ must be used in order to arrive at the amount of tax. The present situation, however, is one that calls for an algebraic formula, because of the two mutually dependent indeterminates in any case where the Connecticut inheritance tax is less than the 80 per cent of the Federal estate tax. It is thus manifest that the 80 per cent credit clause in section 301 (b) of the present Federal act contains in itself an absurdity which has already been disapproved by our Supreme Court, and which, therefore, should be wiped off the books.

Since the above-mentioned decision, the Federal Government, SO far as is known, has abandoned the use of such formulæ, but because of the absurdity inherent in section 301 (b) of the law, the burden of using such an algebraic formula is thrown squarely upon the Connecticut inheritance-tax department if accuracy is desired, as, of course, it is. The Federal Government does not have to trouble about any formula, because the Federal Government says flatly that it will pay no attention to any claim for credit until the Connecticut tax is correctly determined and paid. This necessitates fixing the Connecticut tax first, which can not be done, as shown above, without the use of an algebraic formula so complicated that, to the knowledge of the Connecticut inheritance-tax department, none has yet been worked out.

The only way to avoid this absurdity is to raise Connecticat rates so high that they will surely absorb the 80 per cent credit. Here appears an added element of coercion upon Connecticut.

Mr. CARAWAY. Mr. President, I wish to offer an amendment. I do not want to have it read.

The PRESIDING OFFICER. The amendment will be received, printed, and will lie on the table.

Mr. FLETCHER. I understand the pending amendment will be the one offered by the Senator from Connecticut? Mr. SMOOT. That is correct.

MESSAGE FROM THE HOUSE

A message from the House of Representatives, by Mr. Haltigan, one of its clerks, announced that the House insisted upon its amendments to the joint resolution (S. J. Res. 82) providing for the erection of a public historical museum on the site of Fort Defiance, Defiance, Ohio, disagreed to by the Senate; agreed to the conference asked by the Senate on the disagreeing votes of the two Houses thereon, and that Mr. LUCE, Mr. ALLEN, Mr. DAVENPORT, Mr. GILBERT, and Mr. BULWINKLE were appointed managers on the part of the House at the conference.

ENROLLED BILLS AND JOINT RESOLUTIONS SIGNED

The message also announced that the Speaker had affixed his signature to the following enrolled bills and joint resolutions, and they were signed by the Vice President:

S. 766. An act to fix the compensation of registers of local land offices, and for other purposes;

S. 1662. An act to change the boundaries of the Tule River Indian Reservation, Calif.;

S. 2084. An act for the purchase of land in the vicinity of Winnemucca, Nev., for an Indian colony, and for other purposes;

S. 2340. An act to transfer to the city of Duluth, Minn., the old Federal building, together with the site thereof;

S. 3026. An act authorizing the construction of a fence along the east boundary of the Papago Indian Reservation, Ariz.; S. 3365. An act to authorize allotments to unallotted Indians on the Shoshone or Wind River Reservation, Wyo.; S. 3456. An act 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; S. 3556. An act 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;

S. 3565. An act to provide compensation for disability or death resulting from injury to employees in certain employments in the District of Columbia, and for other purposes;

S. 3699. An act 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; S. 4034. An act authorizing the Calhoun Bridge Co., an Illinois corporation, its successors and assigns, to construct, maintain, and operate a bridge across the Illinois River at or near Grafton, Ill.;

S. 4045. An act granting the consent of Congress to the Highway Department of the State of Tennessee to construct a bridge across the French Broad River on the Newport-Ashville (N. C.) road near the town of Del Rio, in Cocke County, Tenu.; S. 4059. An act authorizing the State Highway Commission, Commonwealth of Kentucky, to construct, maintain, and operate a bridge across the Tennessee River at or near the mouth of Clarks River;

S. 4060. An act authorizing the State Highway Commission, Commonwealth of Kentucky, to construct, maintain, and operate a bridge across the Cumberland River at or near Canton, Ky.; S. 4061. An act authorizing the State Highway Commission, Commonwealth of Kentucky, to construct, maintain, and operate a bridge across the Cumberland River at or near Smithland, Ky.;

S. 4062. An act authorizing the State Highway Commission, Commonwealth of Kentucky, to construct, maintain, and operate a bridge across the Tennessee River at or near Egners Ferry, Ky.;

S. 4253. An act authorizing H. L. McKee, his heirs, legal representatives, and assigns, to construct, maintain, and operate a bridge across Lake Sabine at or near Port Arthur, Tex.; S. 4254. An act authorizing the State of Texas and the State of Louisiana to construct, maintain, and operate a free highway bridge across the Sabine River at or near Pendleton's Ferry; S. 4288. An act authorizing the State Highway Commission. Commonwealth of Kentucky, to construct, maintain, and operate a bridge across the South Fork of the Cumberland River at Burnside, Pulaski County, Ky.;

S. 4289. An act authorizing the State Highway Commission, Commonwealth of Kentucky, to construct, maintain, and operate a bridge across the Cumberland River at or near Neelys Ferry, in Cumberland County, Ky.;

S. 4290. An act authorizing the State Highway Commission, Commonwealth of Kentucky, to construct, maintain, and operate a bridge across the Cumberland River at or near Burkesville, Cumberland County, Ky.;

S. 4291. An act authorizing the State Highway Commission, Commonwealth of Kentucky, to construct, maintain, and operate a bridge across the Cumberland River, at or near Arat, Cumberland County, Ky.;

S. 4292. An act authorizing the State Highway Commission, Commonwealth of Kentucky, to construct, maintain, and operate a bridge across the Cumberland River at or near Center Point, in Monroe County, Ky.;

S. 4293. An act authorizing the State Highway Commission, Commonwealth of Kentucky, to construct, maintain, and operate a bridge across the Cumberland River at or near Creelsboro, in Russell County, Ky.;

S. 4294. An act authorizing the State Highway Commission, Commonwealth of Kentucky, to construct, maintain, and operate a bridge across the North Fork of the Cumberland River at or near Burnside, Pulaski County, Ky.;

S. 4295. An act authorizing the State Highway Commission, Commonwealth of Kentucky, to construct, maintain, and operate a bridge across the Cumberland River at or near the mouth of Indian Creek, in Russell County, Ky.;

H. R. 8126. An act to repeal the sixty-first proviso of section 6 and the last proviso of section 7 of "An act to establish the Mount McKinley National Park, in the Territory of Alaska," approved February 26, 1917 ;

H. R. 13032. An act to amend the act of February 8, 1895, entitled "An act to regulate navigation on the Great Lakes and their connecting and tributary waters";

H. R. 13037. An act to amend section 1, rule 2, rule 3, subdivision (e), and rule 9 of an act to regulate navigation on the Great Lakes and their connecting and tributary waters, enacted February 8, 1895 (chap. 64, 28 Stat. L., sec 645) ;

H. J. Res. 184. Joint resolution designating May 1 as Child Health Day;

S. J. Res. 119. Joint resolution granting an easement to the city of Duluth, Minn.;

S. J. Res. 125. Toint resolution authorizing the President of the United States to accept a monumental urn to be presented by the Republic of Cuba, and providing for its erection on an appropriate site on the public grounds in the city of Washington, D. C.; and

S. J. Res. 129. Joint resolution to provide for eradication of pink bollworm and authorizing an appropriation therefor.

POLITICS AND THE COLORADO RIVER

Mr. BINGHAM. Mr. President, I ask to have printed in the RECORD an article entitled "Politics and the Colorado River," published in the Electrical World of the 12th instant, by R. I. Harriman, president of the New England Power Co., of Boston, Mass.

There being no objection, the article was ordered to be printed in the RECORD, as follows:

POLITICS AND THE COLORADO RIVER SCHEME TO INJECT FEDERAL GOVERNMENT INTO POWER BUSINESS DISGUISED AS SAFEGUARD AGAINST IMPERIAL VALLEY FLOODS

By H. I. Harriman, president New England Power Co., Boston, Mass.

SOUND EXPERT ADVICE

(Impressive because restrained and convincing because it offers a constructive program based on competent personal investigation on the ground, Mr. Harriman's analysis of the Boulder Dam project and the related political program for utilizing the Colorado River at the expense of the Federal Government deserves careful reading by every friend of individual initiative in the United States. Mr. Harriman shows most effectively how protection against floods can be attained at a cost far below the anticipated outlay required to embark the Federal Government in the power business as a gigantic by-product of an apparently innocent scheme to regulate and utilize stream flow in a basin occupying one-thirteenth of the area of the country.)

Under the guise of a beneficent plan to protect the Imperial Valley of California against floods from the Colorado River by damming that stream at Boulder Canyon, developing hydroelectric power for transmission to the Los Angeles district, and constructing a water supply from the Colorado Basin to serve a future population of 5,000,000 in southern California, it is proposed to launch the United States Government into the power business at enormous cost and with all the uncertainties which beset vast political undertakings entered into without due regard to economic factors which should control action in such a situation.

A proper understanding of the problem of the Colorado River demands a brief explanation of the topography of its basin and the characteristics of its river flow. The Colorado Basin lies betwen the Continental Divide and the Coast Range. It includes southern Wyoming, parts of Utah and Colorado, the western half of New Mexico, substantially all of Arizona, and slight areas in Nevada and California. Its area of more than 200,000 square miles is a territory larger than the German Empire and comprises about one-thirteenth of the entire area of the United States. It is a land of extreme variations in rainfall, in elevation, and in the character of the country. The northerly part of the basin is highly mountainous and heavily timbered, a territory of warm summers and cold winters, a land of deep snowfall, a region that stores snows of winter and pours them forth in irresistible floods in the early summer.

The middle section of the Colorado Basin is a territory of low rainfall (6 or 7 inches), of high plateaus, and of vast canyons. In no place in the world are there such deep, marvelously colored, and wonderfully beautiful gorges and canyons.

The southern portion of the basin is a desert country, relatively low in elevation, with a rainfall varying from 3 to 4 inches, and of tremendous summer heat, 115° to 120° being not unusual temperatures over much of this southern area in the months of June, July, and August. Irrigation is of tremendous importance in the arid West. The normal annual flow of the Colorado River is about 17,000,000 acre-feet, extreme years ranging from 9,000,000 to 25,000,000 acre-feet. Storage of water is vitally essential. The normal flow will irrigate about 5,000,000 acres, but in extremely dry years only half that area can be served. The Reclamation Service estimates that in the United States Basin of the river about 7,000,000 acres could be irrigated if the water supply was sufficient. To this we must add about 1,000,000 acres in the delta region of Mexico. Already about 2,500,000 acres in the United States Basin is irrigated, plus 200,000 in Mexico.

In 1921 representatives of the various States in the basin convened to draw a treaty which would definitely divide the waters of the river between the various States and permit the development of storage without fear that the States not benefited would be deprived of the future use of their just portion of the water.

The conference, while only partially successful, agreed that the four upper basin States should always so regulate their takings for irrigation that over a 10-year period an annual average of not less than 7,500,000 acre-feet should pass Lees Ferry for use by the three lower basin States, and to this was added 1,000,000 acre-feet for the use of the lower basin States represented by the flow of the Gila River.

Unfortunately, the treaty did not attempt to divide the waters between the various States in the upper and lower basins, and so far Arizona has failed to ratify the treaty, fearing that without an agreement with California it would be unsafe for her (Arizona) to consent to a division of the waters between the upper and the lower basins unless simultaneously a treaty were enacted between California and Arizona giving Arizona protection against the immediate appropriation by the Sunset State of more than her share of the flowage into the lower basin States. California's ratification is conditional only and is to be made effective if the United States creates a huge storage reservoir on the lower river.

The upper basin States demand ratification without reservations. The cost of placing water in the Imperial Valley of California is probably not over half the cost of delivery to the high table lands of Arizona, and until there is a division of the water to which the lower basin States are entitled Arizona will probably refuse to ratify the treaty. Both Arizona and the upper basin States fear that Mexico will put to prior use much of the water that otherwise might be used on United States land. Water is the lifeblood of these States and each State fears that Mexico or some other State will deprive it of a part of the water that it might otherwise use and doom a portion of its territory to perpetual desert.

In the canyon section of the river 6,000,000 horsepower can be developed on a 60 per cent load factor. This exceeds the energy that can be developed on the St. Lawrence River or at Niagara Falls. To-day there is little market for this potential power, as the territory is very sparsely settled with no industry and no local use. Only the lower section of the river lies within transmission distance of the large electrical market of southern California, but to anyone who visualizes the phenomenal engineering and industrial progress of the last 50 years it is not difficult to imagine that the entire potential power of the stream may be used within the next half century.

The danger of a break of the river into the Imperial Valley is ever present and the homes of 60,000 people with a taxable value exceeding $100,000,000 will be in constant danger until the Federal Government takes adequate steps to open a new and proper channel for the sea. Storage on the main Colorado River would, of course, reduce the flood menace to this valley, but the threat of floods from the Gila will still exist and the valley will never be safe, storage or no storage, until a new and adequate channel is cut to the Gulf.

Competent engineers affirm that if the United States and Mexico execute a proper treaty a new channel can be cut at a cost not exceeding $5,000,000 substantially parallel to the original channel of the