Daily Kennebec journal. [microfilm reel] (Augusta, Me.) 1870-1975, 1924-02-29
A SERIOUS ACCUSATION

Charges and counter charges,
rimor and counter rumor, fingers
of suspicion multiplying on both
sides of the political lineup in
Washington. There arc times
when 1t seems tho industry OF
fabrlcating rumors exceeds the in
dustry shown in getting at the real
truth. As time goes on, 1t also APP
pears that neither political party
viii be able To make much
CAPITAL out of the situation de-
spite frenzied efforts to do so.
Here IL new phase OF the situa-
ton brought out In the last issue
of tho National Republican. a ser
ious accusation against prominent
Democrats:
scores Of millions Of dollars
were vrUngfully diverted from the
Federal Treasury to the Golfers OF
private oil companies through III
terprCtatiuus of the Discovery act
by "A special Treasury Department
board. constituted by Secretary
McAdoo, all three members OF
Nihtli. UPON Ai''iA sNNia '''NhN' SNNes
ed lucrative employment with oil
interests. ono in New York. one III
Los Angeles and one in Washington,
as did the two legal advisers of
this board, one in New York and
one III Washin&tun.N not to mention
secretary McAduo himself.
wv hilc this was going on Demo-
cratic Senators who are now
screaming about one real and u
thousand imaginary scandals save
consent by their silence and their
failure IL correct the law under
which abuses were being practiced
many times more costly to the
American people than Teapot Dome
at its worst Interpretation.
The OH Discovery clause of the
Revenue law was passed by a
Demo. Congress i'll 1913. The
clause provided that Il company
which brought in producing OH
property might within thirty days
after the discovery ST up Il valtta-
ton upon the b asis of which de-
auctions from taxable 0come for
depletion might be made. This
was retroactive il 1918.
Active in bringing about the en-
actnent of this Discovery clause
was Senator Gore OF Oklahoma, one
OF the Progressive group in the
Senate. Upon his retirement lie
took emplosment rs lobbyist Ter
oil interests, as lie has publicly I'D
Nestigation began.
THE rulings OF this board cut
from 800 to 400 million dollars II
year of the taxable income of oil
companies. oil companies we're
permitted to set up original Valua-
lions, and consequently allowances
for depletion so excessive that oil
profits were wiped out. Many of
the companies became so en-
thusiastic that they hitched onto
the original properties subsidiaries
whose profits, too, were wiped out
Ivy the depletion claims of the
original concerns.
some suggestion of the magni-
tude of the impositions practiced Is
found in the fact that while allow =
ances for depletion are ia per cent.
To coal mines. , per cent. to clay de-
posts, to IL per cent. To metal
mines and 10 per cent. TO timber
lands. the depletion allowances t.
oil properties were 40 per cent. OF
the total value of the deposits, al
whatever fictitious figure they may
originally have been estimated.
"A Republican Congress in 1928
took the first step toward the cor
rection of this situation. Depletion
claims were limited In amount t.
the net income of the discover.
properties. The next, step wal
taken by Secretary Mellon, when he
submitted to Congress his tax plan
in which he limited claims for de.
pletton under the discovery law e
so per cent. of the net income.
in this, as in every other case
where scandal or the. suspicion OF
scandal has been developed. the
roots of the evil lie deep buried in
the last Democratic Administrator
since the retirement of which there
has been an Unreasonable height.
ssaanS Of the standards Of officia