Indiana daily times. [volume] (Indianapolis [Ind.]) 1914-1922, 1921-05-16
VALUE BOOST
BY NATURE is
HELD PROFIT
Supreme Court Decision Will
Add Millions to Income
Tax.
DRY LAW DATE FIXED

WASHINGTON, May 16.-The Federal
Government by a decision of the Supreme
Court today won one Of the most impor-
tant tax suits in recent years when the
court held that the increased value Of
natural resources held by a corporation
is profit and therefore is taxable as In
come.
Justice Pitney read the decision Of the
court. The decision means that maHy
millions Of dollars viii be kept in the
! treasury, according to Government estl-
mates.
The suit was brought by the Labene
! Iron Works, a West Virginia corporation
when the commissioner Of internal rev.
enue imposed d tax on It of more than
! 81 100000 for the increased value Of ore
lands in the Mesabie range. This was
done on the ground that the value Of
lands, which originally cost $4,000, had
increased to $10,1O5 400. The increased
value was represented by a stock divi-
dend issued by the company increasing
its capitalization by $9,915.400
The increase, the company contended,
was not a profit. but an increase in in
vested capital
Charles E. Hughes, now Secretary Of
State, argued the case for the State.
"PRoHT" AMENDMENT
EFFECTIVE JAN. II. 1920
The court also held that the prohi-
bition amendment became effective on
Jan. IL, 1920 Wet attorneys asserted
that It was not law until Jan. 20. or one
year after the ratification Of thirty six
States was proclaimed by the Secretary
Of State. Jan, II was one year after the
thlrty-six States had ratified, the twelve
intervening days representing the time
required for official notices Of action TO
reach the State Department.
The decision disposed Of the unexpect-
ed attack made on the law by attorneys
for ]. j. Dillon, San Francisco dray
man. who was arrested on the day the
Volstead law became effective for trans
porting a cask of wine without a per-
nit.
In seeking a writ OF habeas corpus to
obtain freedom after being convicted. Dill
Ions defense was that the amendment
was invalid.
The decision IS victory for the Gov
ernment's woman assistant Attorney
General, Mrs. Annette Abbott Adams.
She argued the case for only five min
utes before the court, so confident was
she Of a favorable decision. She claimed
that even If the Harding amendment
we're invalid. it did not void the other
sections which are the vital parts.
DRY MEASURE
FULLY UPHELD.
The validity Of the prohibition act was
reaffirmed. All sections of the amend
ment have been upheld by the court,
thus. making 1t certain that future at
tacks win be futile.
Specifically the court held that the
proposal Of President Harding while
Senator, requiring that the States must
ratify the amendment within seven years
to make It operative does not void it.
Attorneys for the liquor interests had
contended that this requirement was un,
constitutional and therefore invalidated
the entire amendments.
The Harding proposal is section three
and the court last June specifically up
held the other two sections. Justice Van
Deventer again read the decision as he
did last June.
The Federal inheritance tax law
enacted in 1916 was held valid
The Federal Governments method OF
determining the tax was also sustained.
In computing the tax the Government
refused to allow deductions from the
amount taxable OF the payments that
were made by executors Of estates to
the various States.
NON-NIENIBER
BANKS TO PROFIT.
The Supreme Court declared invalid
the practice of the Federal Reserve
Banks in compelling State banks and
others not members of the Federal Re-
serve system to pay checks without de-
ductlon for exchange.
The decision will result In 4 big gain
to the member banks of the reserve
system, which previously obtained
portion of their revenue from deducting
as exchange" one-eighth Of 1 per cent.
of the face value Of all checks paid. Non
member banks in all parts OF the coun-
try backed the American Bank and Trust
Company of Atlanta and other Georgia
banks in their efforts to obtain an in
junction against the practice of the
Federal Reserve Banks.
The Supreme court Of the United
States today announced a recess until
Tuesday, May 81, and adjournment finally
for the present term on June 6.