Great Falls tribune. [volume] (Great Falls, Mont.) 1921-current, 1922-10-23
FAv0RS
STANDARD OIL,
FREAR CHARGES
Wisconsin Congressman
Denounces Ruling on
Corporation Profits.
Secretary Of Treasury
Interested in Firms
Concerned, He Says.

Washington, Oct. %. - Secretary
Mellon was charged Sunday by Rep
resentative Frear, republican, Wis
consin with overthrowing the action
of congress by his ruling that section
22O Of the revenue law designed tc
reach large surpluses, accumulated by
corporations to prevent the payment
of individual surtaxes, was not ap-
plicable in the case of the projected
four hundred per cent stock dividend
of the Standard Oil company of New
Jersey.
The charge was made in a letter to
Mr.. Mellon, made public by the Wis
consin representative. The communi-
cation was in reply to Mr.. Mellon S
response to one written by Mr.. Frear
calling attention to the reported stock
dividend and urging that the penalty
provision be invoked. Mr.. Mellon
wrote that section 220 had no relation
to such stock dividends as that pro
posed BY the New Jersey Oil company
but added that there had been and
would be no laxity on the part of the
treasury in evoking that section
wherever there is any basis for so
doing
Your letter" replied Mr., Frear,
under date of Sunday, ignores and
misapprehends the plain reading and
purpose of the statute and your ruling
assumes the prerogatives Of the su-
Dreme court when it sets aside this
law.
Mellon Personally Interested?
II trust that you are not under a
misapprehension as to the question
squarely presented to you because the
press has been filled with announce
ments that the purpose of the stock
dividends to be issued by the Standard
Oil company and the proposed stock
dividend of $500, 100000 in United
States steel. in which you are supposed
to be interested, is for the purpose of
avoiding the surtaxes which you would
apply il these enormous amounts ag-
gregating over S1Wo,mO.oW were
distributed as cash dividends.
Naturally, as a man of great wealth
interested in sixty or more corpora
tions effected by the ruling on stock
your personal interest involved in any
decision. but ] assume in your posi-
ton as public office you will be
governed by the law and the interests
of the public rather than by any per
sonal consideration.
Hints Evasion of Question
ain your letter TO me you say the
corporation has paid its full tax. This
refers. I take it. to section 230, but
the penalty of . per cent is imposed
by congress in order to reach the un
warranted surpluses that are held by
corporations and not distributed as
cash dividends in order to evade the
tax payment under the individual sur
tax law That is the distinction 50
clearly made by congress that it can
not fairly be misunderstood. 1t is
another way of reaching the tax on
profits which nudoubted
~ was permitted under the law and
the decision of the supreme court in
the stock dividend case.
Your efforts to protect the govern
ment treasury in the past have been
not directed toward collecting a tax
upon large and powerful corporations,
and in the present emergency your
action in overruling the express act Of
will result in a loss to the
treasury of an amount reaching several
hundred million dollars annually.
Il trust that you will reconsider
your ruling"