Evening star., 1936-04-05
New Deal Financial
Legerdemain
By Owen L. Scott.

ITleuoS ana MS opponents by the ease
with which he pulls one money and tax
rabbit after another out Of the Treasury
hat.
The mystery of his method is height
ened by the latest plan to draw so 900 900
new dollars out Of industrial earnings in
politically painless fashion. The plan,
In fact, is dubbed by Congressman as
the answer to politicians prayer" It
seems to offer basis for getting revenue
and votes at one and the same time.
Down through the last three years
the Presidents financial moves have in
volved one amazement after another.
There was the interesting experiment
In gold buying. Then came dollar de-
valuation when a simple twist of the
presidential wrist gave the Treasury
nearly three billions of dollars in profit.
The strange venture into silver buying
followed.
When taxes were required Mr.. Roose-
velt dug up processing taxes, then new
style inheritance taxes, followed by q
graduated tax on corporation income.
There were pay roll taxes, and now, to
get another big chunk Of revenue, the
President offers Q new-fangled tax on
undistributed corporation earnings.
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Where lies the explanation Of this
financial venturesomeness? Searchers
for an answer think that they have
found 1t. Their conclusion is that q
remarkable shift in Treasury control
from big city financiers to smaller town
culturalists-provides the solution.
Oficials trained in farm economics and
with the background of rural thought
suddenly are turned loose in the fertile
fields Of Government finance. What
they discovered opened their eyes to the
nature of the harvest and whetted the
zeal for active reform and experiment.
Along with sudden realization of the
concentrated character of financial con-
trolls, which the new group said it found,
went power to attempt to bring about
something Of a change through money
tinkering and taxation.
Experiments, ground out one after an
other over the course of the months
since March, 1888, reveal how that power
was used.
And who has been backstage, figuring
out the experiments and applying them,
once President Roosevelt or Congress
gives approval? An answer to that ques-
Will SOCo 4dl W CARAdl1l Wllab lldS &ldps
pened. It shows how the Treasury has
slipped from control Of high finance and
how far 1t has gone under the control
of an opposing group.
At the top Of the Governments finan-
cial set-up. just under the President, is
Henry Morgenthau, jr, Secretary of the
Treasury. Mr.. Morgenthau was a gen.
tleman farmer and publisher of farm
paper before serving as commissioner of
agriculture in New York State under
former Gov. Roosevelt. He wanted to
be the New Deal Secretary of Agricul-
ture, but political considerations shunted
him into the Farm Credit Administra-
ton, where he wrestled with the problem
of farm finance.
From that point Mr.. Morgenthau
jumped into the secretaryship of the
Treasury, when President Roosevelt
made clean sweep Of those who opposed
financial experiments.
With the new Secretary came the man
who now is referred to inside the Treas
ury as the super r-Undersecretary. He is
Herman Oliphant, general counsel to the
Secretary and the power behind the
throne. And who is Herman Oliphant?
He is a former counsel for Herbert
Hoover's Federal Farm Board and for
mer general counsel of the Farm Credit
Administration. His big interest is eco
nomic and financial reform. i.
When these two men entered the pic
ture, and President Roosevelt was look
ing for some dramatic and quick way to
initiate prices, Mr.. Morgenthau and Mr..
Oliphant sold him a man with a plan
for doing what he wanted. That man
was Prof. George F. Warren Of Cornell
University. And his background? He
was a teacher Of agricultural economics,
who had had Henry Morgenthau as
student in the Cornell College of Agri-
culture.
Prof. Warren had the idea that, if this
Government would buy gold at steadily
rising prices, commodity prices would
increase in proportion. He gave the
country its interesting experiment in
gold buying and in dollar devaluation.
He came near to selling a commodity
dollar.
During this period, Mr.. Oliphant was
in the background. educating" newspa-
per men into the mysteries Of the expert
ment. When results were less speedy
than anticipated the money specialist
left the field. and he has not been in
vited back. He had. however, tried out
money theory strongly held by some
agricultural economists.
~ ~
AS an aide on confidential matters and
as the man to advise him on public rela-
tions, Mr.. Morgenthau brought into the
Treasury with him Herbert CASTOR. Mr..
CASTOR had been a leader in the Nom
partisan League movement in North Da-
kota during the early 1920's-the first Of
the real rural uprisings of the postwar
period-before moving into broader fields
Of newspaper work. He came into the
Federal Government as an assistant to
Mr.. Morgenthau in the Farm Credit
Administration. His influence is sub
Stantial
In shaping new Treasury policy a
factor of vital importance was that of
research and statistics.
To pry into the wealth of material in
the hands of the Government. involving
the only authoritative source material
available on the subject Of wealth con-
centration, the officials chose George G.
Haas an agricultural economist and
statistician. MIR. Haas had worked for
the Farm Board under Mr.. Hoover and
then for the Farm Credit Administra-
ton before transferring his activities to