Evening star., 1933-06-02

makes out all their income tax returns,
Leonard Keyes, have told the Senate
committee that the firm sustained huge
capital losses and, under the income
tax law, were entitled to write of these
losses against their income. This has
been the practice Of big. business men
and small business men. 1t just hap
pens that the Morgan partners are big
business men, men OF great wealth, and
their failure to pay income taxes When
a lot of men Of moderate and small
means have been paying through the
nose, caused roar.
Paid S51,53s,00 Taxes.
The Morgan partners, however, have
now finally placed In evidence state
ment Of the amount of income taxes
paid by them when days were prosper
ous During the years beginning with
1917 and ending with 1929 the Morgan
partners paid the Federal Government
a total Of $5l ,538 900. A great deal OF
this huge sum was the tax levied on
seven years. Indeed, in 1929, the in
come tax paid by the partners reached
the high mark, total Of $11 100000.
1t Is quite clear that in flush times,
under the income tax laws as they have
existed, the Morgan partners were hit
harder by the capital issues" provisions
Of the laws and compelled to pay larger
and larger income taxes. When times
became hard, these capital gains fell
of and capital losses took their place,
first scaling down their income tax pay
ments and finally wiping them out en-
tirely, although, of course, Mr.. Morgan
and his partners continued to own and
to receive a lot of money from various
sources.
Now, as Senator Carter Glass Of Vir-
ginia has pointed out, the question Is
whether 1t is more to the advantage OF
the Government to wipe out the capital
issues provision Of the income tax laws
or to retain 1t. The Government, Sena-
tor Glass said, has collected the huge
total of SLOTS, ,440,0 under this pro-
vision of the law, to which the Morgan
firm partners have materially con-
tributed. The House already since the
Morgan revelations has undertaken to
repeal In large part the capital issues
provision Of the income tax law.
Issue Before Senate Soon.
Senator Glass pointed out that in-
veStment bankers all over the country
have opposed the capital issues pro-
vision OF the income tax law for years
And he brought from Mr. Keyes a rec
ommendation that It be repealed now,
although 1t was through this provision
that the Morgan partners had escaped
income taxes in 1881 and 1892.
This is an issue which the Senate,
which has soon to pass on the tax pro-
visions Of the administrations public
works and industries bill, must tackle
within q few days.
Four lists Of preferred clients" as
the critics of the Morgan firm call
them, and Of selected clients" as the
Morgans referred to them, have been
made public. Despite the fact that
these lists include several hundred
names, the members of Congress in
cluded are practically nil. Two Sem
ators and no members of the House
have been turned up on these lists.
Senator McAdoo of California, Demo-
crat, was one, and Senator Kean OF
New Jersey, Republican, was the other.
When McAdoo was on the lists he was
not q member of the Senate. Senator
Kean was not individually on the lists,
but his firm, Kean, Taylor & Co., was.
The lists include the names Of more
important Democrats than Republicans,
of more Democrats now in public Of
fee than Republicans. Indeed, 1t has
been bit embarrassing for the investi-
gators, who have sought to find as
many Republicans as possible. Whether
by design or not, the Morgan lists have
included few men actually holding pub
lie ONCE at the time they were given
the opportunity to get in ION the
ground floor" with the Morgan firm.
This may explain the reason there are
so many Democrats of prominence
among them. The Democratic party in
1929 was "out" and at as low an ebb
politically as the G. o. P. Is today.
Take q look at these comparative po-
Iitical lists of Morgan clients:
Democrats-Senator McAdoo Of Cali