Evening star., 1934-01-13
SENATE AbANDONS
FORD TAX INQUIRY
Supreme Court Decision Seen
Upho|ding Legality of
Transactions.
By the Associated Press.

BY the Associated Press.
Senate investigators disclosed today
they had abandoned their inquiry INTO
tax payments by the Ford Motor Co,
largely because of two Supreme Court
decisions upholding EdSel Fords con-
tention that there had been no tax
avoidance.
The inquiry was suddenly dropped
Yesterday despite the fact a tax ON
cial from Detroit had been summoned
under subpoena to testify and was wait
Zig In the committee room. He was re-
ipased with the explanation the COM
caittee did not consider the tax case
within the Jurisdiction of the investl-
cation.
The day previous however, Ferdi-
nand PecOra, counsel for the Banking
Committee. had caused stir by plac-
ing in the record evidence that the
motor company bought S1500O0O0 OF
Government securities on the last Gay
of 1882 and sold them back TOUR days
later.
No one raised any question OF the
committees jurisdiction as PeIora mtl-
mated one of the purposes OF the trans
action was to avoid payment OF taxes
under the Michigan property tax law
Michigan Law Cited.
EdSel Ford. on the stand at the time
denied the tax question entered into
the transaction. He said the company
had ar opinion from the attorney gen.
eral of the State to that effect. Later
he told Pecora the Michigan law did
not apply to the Ford Co., because II
was incorporated in Delaware.
Members of the committee sald To-
day Pecoras staff had studied the
law in the light Of this contention and
found two Supreme Court decisions
upholding it.
Senator Couzens. republican OF
Michigc :. a member OF the committee,
pointed out today the Ford tax case
was different from the other taxation
evidence received by the committee In
that it was a question OF State rather
than Federal taxes.
We were being criticized for going
into something that was none OF our
business" CouZenS said. The State
Of Michigan can act on what We nave
developed if it wants to-
Chairman Fletcher said the COM
mittee had taken no formal action i'll
connection with dropping the case.
Committee in Recess.
''I suppose the lawyers found Ford S
construction of the law was night,
Fletcher said.
The committee was in recess today
for the week end. but meanwhile a
new light was thrown on Edsel Ford 5
personal losses III the Guardian group
banking venture.
From a source close to the motor
magnate. 1t was learned that the
$4,000 shares of group stock he held
when the bank holiday was declared
last year represented an actual IN
vestment of S3,OO0.OO0 on his part.
Later this stock had a market value
In excess of $4,000 900, but is now
worthless, because the company is in
receivership and claims are being made
against the stockholders under the
double liability provision OF the law.
In addition to this loss, the Ford
group had deposits OF $50, 100000 In the
Guardian group and the Detroit Bank
ers Co. group OF banks.
Furthermore credit advances OF about
$12,0O0000 were made to the Guardian
Banks to help them out before the hol-
iday, none Of which has been repaid.
r. F. C. Aided Bank.
But in spite of his experience,
the youthful-appearing nlulti-million-
aire was reluctant to condemn group
banking as a system. He said it had
merits and faults, but that he was not
inclined to abolish 1t.