The daily worker. [volume] (Chicago, Ill.) 1924-1958, 1927-01-16
FORD TAX TRIAL
BARES TALE OF
HUGE PROFITS
Trial Linked With Ford
Newberry Contest

DETROIT, Mich, Jan. A. Every
500 invested in the Ford company in
1908 became" over $4,000 by 1918.
This piece of startling money magic"
came out today in the proceedings of
the "country's greatest tax suit" in
which the federal government is at
tempting to collect some more taxes
from some former stockholders in the
Ford Motor company because of alleg-
ed irregular valuations.
"Money Magic"
Ford workers who worry over what
happens to all they produce over and
above their meager wages can find
out by examining the information as
to the financial history of the Ford
company as brought out in this trial.
In the same magic decade"--1903-
191S-the Ford company paid out
$2S,000,000 in dividends and amassed
$22,000,000 in property. Onward from
1913 the company earned" 1876 per
cent on every dollar invested.
The case Of Mrs. Hauss, the sister
of Senator Couzens, illustrates very
well how big fortunes are built up
thru hard work aand saving. In 1903
Mrs. Hauss lent 500 to her brother
to invest in Ford's. In the ten years
that followed Mrs. Hauss received
$4,000 in dividends, rather below the
average. When the Ford Motor com
pany was recapitalized in 1915 she re-
ceived $4,000 in stock. She saw her
$4,000 stock grow to $260000 four
years later and in the meantime her
dividends reached 100000. Thus the
500 grew to nearly a million.
irregular" Valuations.
All this information, which should
provoke some thot in the Ford work
ers and in all other workers, was brot
to light in a general statement on the
history Of the Ford concern read to.
day by Joseph e. Davies, senior coun-
sci for the stockholders. 1t appears
that round about 1919 Henry Ford
decided to get rid of the minority
stockholders who held about Al per
cent of the stock outstanding because
they disagreed with his policy as to
the disposition of the earnings of the
company. Ford's threat to start a
new company lead to negotiations for
the sale of the minority stock. The
minority stockholders expressed them
selves willing to sell out IL they were
definitely assured OF their income tax
liability. In order to obtain this valu-
alton, A. G.. Gregg, the general coun-
sci of the treasury department says,
Henry Ford made special trip to
Washington and saw Commissioner
Roper who fixed the valuation al
$4,000 a share by negotiations which
Mr.. Gregg asserts were irregular"
The treasury department subsequent
ly discovered" the incorrectness and
the irregularity of Commissioner
Roper's valuation and is now claim
ing SS1,000,000 more in addition to
the 2O,OOO,OOO already paid by the
minority stockholders ON the basis of
the Roper valuation.
Political implications.
Gossip as to the political implica-
lions of the trial is floating around in
DStAOlL anu w dSAlhStOu. MUCH VI IL
has to do with a memorandum" sent
by an undisclosed outside party to the
internal revenue bureau in 1922 relat-
ing to the sale of the Ford stock in
1919. 1t suggested the line of action
the treasury department has taken.
This memorandum" dates back to the
Ford-Newberry contest for the sena-
torship of Michigan in 1922. 1t was
during this struggle or Immediately
after that the mysterious memoran-
dunn appeared in the treasury depart
ment The question now arises, as
Senator Couzens asked on the floor
Of the senate some time ago why this
memorandum was held up between
1922 and 1925 when the treasury de-
partment suddenly discovered the old
"irregularity."
This trial has many lessons for the
watchful worker who can dig out its
economic and political Implications.