The New York herald., 1922-10-23
FREAR SAYS MELLON
TRIES TO UPSET LAW
Accuses Secretary of Blocking
Tax Collections in St0ek
Dividend Ruling.
SELF INTEREST HINTED
Wisconsin Man Declares Treas.
ury Head Has Favored Large
Corporations.
Special Dispatch to THE NEW YORK HBEA,p
New York Herald Rurca, /

Special Dispatch to THE New York HpR.,p.
New York Herald Bureau.
Washington. ID. G.. Oct. e2.
Representative James A. Frear (Wis)
sent a letter to Secretary Mellon to-
night declaring that he feared the
Treasury chief was aiding in a gigantic
fraud upon the Government in approx
Ing as legal the billion dollar stock divi-
dend of the Standard Oil Company Of
New Jersey.
In asserting that Mr.. Mellon misap-
pretended the law, Mr.. Frear said the
Treasury Department would lose sew
eral hundred million dollars in taxes
by The decision. which he bitterly con-
demned, at the same time making a
series Of statements about Mr.. Melons
interests, which he declared also were
involved.
Mr.. Frears letter is in response to
one received from Mr.. Mellon approving
the dividend after Mr.. Frear had ques-
toned its legality and exemption from
taxes. The issue has been attracting
attention in Washington for the last
week
I'm your ruling you go beyond any
holding of the Supreme Court ana over
throw the action of both Houses Of Con-
gress approved by the President and
passed for the purpose of compelling
large profits, accumulated in the form OF
surplus by big business. to be taxed
either through penalties enforced by you
or by cash distribution which would
then be subject to the provision of the
lazy affecting surtaxes," said Mr.. Frear.
He continued in part:
Il trust you are not under a misap-
prehension, Mr.. Secretary. as to the
question squarely presented to you be-
cause the press has been filed with an
nouncements that the purpose OF the
stock dividends to be issued by the
Standard Oil Company and the proposed
stock dividend Of $500, 900, 900 in United
States Steel in which you are supposed
to be interested is for the purpose of
avoiding the surtaxes that would apply
if these enormous amounts. aggregating
over $1,000, 100000 were distributed as
cash dividends
''As great financieEand public officer
Of large responsibilities you certainly
understand that the Standard Oil sur
plus reaching in the aggregate upward
of a billion dollars, according to reports,
II permitted to be distributed as stock
dividend without enforcement OF law
will rob the Government treasury OF
which you are guardian OF possibly sew
eral hundred million dollars, depending
upon the rate of surtax or OF penalties
which you are directed by law to impose.
when that time arrives and 1t would
seem to be almost here. II such decisions
as yours are to become substituted as
the law of the land for those covered
by Congress. we may well believe that
the people Of the country will lose con-
fidence in their officers. their courts and
their form Of government.
I'm the Language of President Harri-
son, Lincoln's startling declaration that
this country could not continue to exist
half slave and half free may be para
phrased to-day by saying this country
cannot continue to exist half taxed and
half tax free.
When enormous aggregations OF
wealth escape taxation through the ex-
tortion of unconscionable profits, there
by creating enormous surpluses, which
ore to be used as stock dividends for the
purpose of escaping taxation, I submit
that the situation presented by Presi-
dent Harrison Is one OF deep concern
to the country.
I'm addition to all this Of course the
country has a right to place in position
high officials who will enforce the laws
already on the statute books, and /
trust. Mr.. Secretary. that you will re-
main among this number and that you
will reconsider your ruling which will
cause a loss of hundreds of millions of
dollars of taxation to the Treasury with
out any possibility OF recovering the
same"