Evening star., 1921-11-17
Tells Conferees of Views at
Meeting Held in White
House.
INTERVENES JUST PRIOR
TO VOTING IN HOUSE
1nsurgent Leader Predicts Last
Minute Bombshell Will Have
Little Effect.

revenue bill that a maximum surtax
rate of 40 per cent would be agree
! able to the administration.
The Presidents views were express
ed at conference at the White House
with Chairman Fordney of the House
ways and means committee and Rep
resentative Longworth of Ohio. who
with Mr.. Fordney and Representative
Green of Iowa, make up the republi
! can House conferees. The tax bill as
passed by the House provided for a
maximum income surtax of 80 per cent
but the Senate provided a maximum
| of so per cent. and what virtually
amounted to a deadlock ensued.
Arrangements were made at the
| conference for the President to send
letter to Chairman Fordney setting
forth his views.> Mr.. Harding was
represented as favoring the 80 per
! cent maximum. bat agreeable to the
| 40 per cent compromise in view of the
| Legislative situation.
Intervenex just Prior to Vote.
| The House conferees were summon
ed to the White House after Repre-
sentative Mondell of Wyoming. the
republican leader, had laid before the
| President the situation in the House
with respect to the surtax. The in
| tervention of the executive was
sought few hours before the time
set for the House to vote on the Sem
ate amendment.
The visit of Representative Mondell
to the President was said to have
| followed conferences between regular
i republican leaders and spokesmen
for the "insurgents" on the majority
! side. at which the latter were un-
| derstood to have refused to recede
from their demand for a so per cent
| maximum rate.
Both the leaders of the 'insurgents"
and the democrats had claimed there
was majority in the House for tn e
adoption of the Senate amendment.
The request that the President take a
hand In the tax revision fight did not
come as a surprise to these leaders.
| Such course was predicted when the
republican leaders insisted last week
that the tax bill go to conference with
| instruction to the House managers on
the surtax issue.
Text Of Letter.
ney under date of today follows:
MY Dear Mr.. Fordney:
I'm response to your inquiry as to
the wisest course in dealing with the
difference between the two houses
| of Congress in the matter of higher
surtax on incomes I can say only
! that in view of our earlier conference
on tax matters and the ultimate
adoption of the higher surtax rate of
| 80 per cent l still believe the rate
! nearer to a just levy and the more
promising one in returns to the pub
| lie Treasury.
I 'The responsible administration is
anxious. first of all. to lay the neces-
sary taxes to meet the demands of
| legation. however. in the party in
power to do everything possible to
keep faith with promises made to the
public.
I'VE have been collecting the high
est surtax on incomes ievied at this
| time in all the world. The effect has
| been the restriction of the easy flow
of capital in the channels most es-
| Sential to our normal and very neces-
sary activities. No one challenges the
| levy of the higher tax in the stress
| of war but now we are struggling for
| the readjustments of peace. :,
Approves 40 Per Cent Compromise.
Where there is so wide difference
| in the judgment of the two houses. l
| have thought it might be possible and
wholly desirable to reach an equita-
| Bile compromise, say, maximum sur
| tax levy of 40 per cent This would
| put the higher federal tax on income
at total of 48 per cent, which would
measurably meet the expectations OF
cerned with the return of hopeful In
vestment of capital and the applica-
| ton of our capital resources to profit
able productivity.
Il am wholly confident that the
| helpful results spreading therefrom
| industrial and economic life, from
management to every wage-earner,
| would be vastly more advantageous
to our people than the maintenance
| of wartime levies as peacetime
| penalties on capital, which are certain
activities for which we all SO much
| hope.
| vincing illustration. In seeking to
| hasten the railway settlements, grow
ing the period Of public belief in 81
! the cooperation of the War Finance
Corporation to convert salable secu-
rites into the cash needed for the set
! Elements in process of making. Dur
| ing the period of public belief in 81
| per cent surtax, as provided by the
House, the sale of the bills receivable
! was progressing in a most promising
| way. Indeed. we had converted more
| than 500, 100000 of railway notes into
| ready cash. The very moment the
| higher surtax became a likely levy
| these conversions ceased entirely.
! Seek Tax-Free Securities.
"Manifestly the prohibitive surtax
! tends to divert our available and
| much needed capital from employ
ment in our everyday activities to
investments in tax-free securities.
The records show that it Is making a
! continued diminution in our receipts
from income taxes, and it Is making
more difficult the normal financing Of
every sort of essential activity, and is
emphasizing the tendency to turn to
| the government for that paternalis-
tic relief Of both industry and agri-
culture which has no rightful place
| in a peacetime policy.
Il am well convinced that fair
compromise between the rates adopt
ed by either house will be the best
possible solution of the situation, and
an early decision will put an end to
existing anxiety. even though the
larger expectations of the country
are not fully met"
VIII Present Letter.
The Presidents views as set forth
in the letter to Representative Ford
CONTINUED on Fitlh faRe-l
u Z