Evening star., 1933-06-05
INCOME TAX SNAG
IS HIT BY INQUIRY
Morgan Probe Committee
Frankly Puzzled by Legal
Question.
BY G.. GOULD LINCOLN.

BY G. GOULD LINCOLN.
The Senate Banking Committees in
vestigation of J. P. Morgan & Co. hit
snag today which slowed it down At
least temporarily.
The members of the committee ad-
mitted they were frankly puzzled as to
how far the committee was entitled
under the law to investigate and make
public the individual income tax re-
turns of the partners of the Morgan
company.
Another tough nut for the commit
tee lies in determining how far it
wishes to 60 in this whole matter OF
investigating income tax returns made
by bankers. Some members of the COM
mittee feel that II they start in on the
income tax returns of the Morgan part
ners they may be compelled to begin
on the Investigation of large and un-
limited number of other bankers-for
example, the members Of Kuhn, Loeb
& Co., Dillon, Reed g. Co. and other
banking concerns. They feel that such
an inquiry might be almost endless.
Act Suc8tlOH Aloe.
The Senate committee today. after
listening to John w. Davis, counsel for
the Morgan firm, and Ferdinand Pc
cora, counsel for the committee. on the
question of its rights and powers In
this matter of investigating and making
public the individual income tax re-
turns, voted 10 to 2 to let the question
ride until tomorrow morning. At that
time, the committee will meet again be-
hind closed doors to determine what
shall be done.
The details Of the vote in committee
by which decision regarding the investi-
ga alton of individual income tax returns
was postponed were not made public
except that the two votes cast in the
negative were those of Senator Fletcher
chairman, and Senator Couzens OF
Michigan, who is on his way to the
Economic Conference in London as q
delegate, but who left his proxy with
Senator Costigan Of Colorado. Senator
Costigan himself was reported to have
withheld his vote.
In the meantime. the members of the
committee will seek to inform them
selves more fully regarding the law,
which declares that individual income
tax returns shall be treated as conf
Dental It is the committees hope,
too, that counsel for the Morgan Co.
and the committee counsel will be able
to reach some agreement regarding the
facts in the income tax, return Of T. s.
Lamont, youthful member of the firm
Of Morgan, and of other members Of
that firm. without an actual public
hearing on the matter with these gen.
tiemen on the stand.
Will Relieve Committee.
II such q stipulation of facts can be
agreed to by counsel and submitted to
the committee, members of the COM
mittee will heave q sigh Of relief. Some
OF them are not at all satisfied that the
resolution under which they are con-
Quoting their investigation gives them
the right to 60 into individual income
tax returns. II John w. Davis, how
ever, stands out in his denial of the
right of the committee to make public
any Of these income tax returns. the
committee will have to make up its
mind one way or the other tomorrow
what shall be done
The contention OF counsel for the
committee-and counsel is supported by
Chairman Fletcher in its positions
that the committee is entirely justified
in exposing to public view the personal
income tax returns of the Morgan part
ners. 1t is pointed out that q partner
ship like that Of the Morgan company
files an income tax return only for in
formation and not for the purpose of
paying a tax. As the law now stands,
the individual partners file their indi-
vidual Ieturns for the purpose CT tax
alton. II the committee Is to get any,
thing out Of its investigation and make
recommendations for legislation dealing
with income taxes, then, it Is insisted, it
must go into the individual income tax
returns.
Senator Glass Stand.
Senator Carter Glass of virginia and
some of the other members of the
Banking Committee contend that the
Banking Committee has nothing to do
with the income tax laws anyway; that
any change in those laws must come
originally from the House Ways and
Means Committee, and when it reaches
the Senate must be handled by the
Senate Finance Committee, not the
Banking Committee.
Banking Committee members are
wondering, too whether they should
not leave this matter of investigating
income tax returns to the Bureau of
Internal Revenue, which has full juris-
diction in the matter. II the committee
believes that an inquiry by the Internal
Revenue Bureau is not sufficient, then
lawyer from the Department of
Justice could be assigned to check up
on such an inquiry. In this way, it
mittee today, that the Government
could save a lot of money since 1t
would cost far less than to have the
Senate committee carry on investiga-
tiOns of individual income tax returns
Didn't Go Into Mitchell Tax.
The present trial OF Charles T..
Mitchell, former president of the Ma
tional City Bank of New York, for eva
sion of his income taxes, grew out OF
the Senate Banking Committees In
vestigation, but 1t was instituted by the
authorities of the Internal Revenue Bu-
reau and the Department Of Justice.
The Banking Committee did not go into
Mitchells income tax itself. 1t was said
today by members of the committee. as
1t is now proposed to go into the inol-
vidual income tax returns OF the Nor
gan partners.
The Senate committee Is In . hot
spot. however If it determines not to
70 ahead with the investigation OF the
income tax returns of Mr. Lamont and
others at the public hearings there will
be a public clamor and perhaps charges
that 1t is favoring the Morgan partners.
Directs Complete Probe.
The resolution under which the COM
mittee is making It's present investiga-
ton directs the committee 70 make a
complete investigation of the operation
by any person. firm or corporation as
the business of banking, financing and
extending Of credit and the business of
issuing, offering or selling securities.
1t is also directed to make q complete
investigation of the business conduct Of
the Stock Exchange and members
thereof and of the practices of buying
-I IF