Daily Kennebec journal. [microfilm reel] (Augusta, Me.) 1870-1975, 1922-10-23
TAKES ISSUE WITH
TREASURY HEAD ON
OIL co. Dividend

| Washington. Oct a2-Secrctary
Mellon was charged today by Rep
resentative Frear, Republican. Wis
consin. with overthrowing the action
of Congress by his ruling that sec
| ton 230 of the Revenue law designed
to reach large SURPRISES accumulated
by corporations to prevent the pay
ment of individual surtaxes, was not
applicable in the case of the projected
400 per cent stock dividend of tie
| STANDARD Oil Company Of New Jcr-
sey.
| Charge was made in a letter. TO
! Mr.. Mellon made public by the Wis
consin representative. The commun
| ication was in reply to a letter from
! Mr.. Mellon in response to one writ
! ten by Mr.. Frear early in the week.
calling attention to the reported
! stock dividend and ursing that the
| penalty provisions be invoked. Mr.,
Mellon wrote that section go had no
| relation to such stock dividends as
that proposed by the New Jersey Oil
| company, but added that there had
beer, and would be no laXity on the
! part of the treasury in evOkirg that
section wherever there is any basis
| for SO doing"
your letter." replied Mr.. Frear,
under date of today, ignored and
misapprehended the plain reading
and purport of the statute and your
ruling assumes the prcrQgatives of
the Supreme court when it sets a
side this law.
II trust that you are not under a
misrepresentation as to the question
sQuarely presented to you because
| the press has been filled with an
nouncementS that the purpose of the
stock dividends to be issued by the
Standard Oil company and the pro-
posed stock dividend of 100000
in United States Steel in which you
are supposed to be interested. is for
| the purpose of avoiding the surtaXeS
which would apply if these enormous
amounts. aggregating over $1,000,
100000 were distributed as cash div
| idcnds.
Naturally as a man OF great
wealth, interested in sixty or more
corporations affected by the ruling
| on stock dividends, and taxation, you
will find you personal interest in
volved in any decision, but l assume
| in your position as a public officer
you will be governed by the law and
the interests of the public rather
| than Aby any personal consideration.
| "In your letter to me you say the
corporation has paid its full tax.
| This refers, take it, to section $50,
f! but the penalty of e5 per cent is i'm
posed by Congress in order TO reach
the unwarrantcd surpluses that are
held by corporations and not distri-
buted as cash divscends in order to
| evade the tax payment under the
| individual surtaX law. That is the
, distinction 50 clearly made by Con
, gress that it can not fairly be mis-
| understood. 1t is another way of
reaching the tax on undistrlbuted
profits which is undoubtedly permit
ted under the law and the decision
OF the Supreme Court in the stock
dividend case.
"Your efforts to protect the gov
VI ilIieiIt 'itetoGlH III 'HS s'o' nov
not been directed toward collecting
tax upon large and powerful cor
pora tions. and in the present emcr
goncy, your action in overruling the
express act of Congress will result
in a loss to the treasury Of an am
cunt reaching several hundred mil
lion dollars annually.
II trust that you will reconsider
your ruling"