The Waterbury Democrat., 1937-06-07

0CAAI- bO VI HE Ab uAVO tAAC Ok : The eminence and number of the big names involved will bs eye-popping. Not since the sen- sational Pecora banking investi- gation of 1883 has Washington seen anything as hot as the spec tacle being prepared behind the scenes in the tax probe.
 Nationally known bankers, in- dustrialists, publishers, and par ticularly lawyers will be haled before the joint congressional committee and confronted with charges that will make smashing headlines = but not the kind to bring them any cheers.
 One revelation that will defi- nitely and forcibly be brought out by the investigation is that fact that some of the harshest critics of the New Deal, and most zealous clamorers for economy, are among the worst offenders in evading the tax laws.
 Latest Phase
 Actually, the forthcoming probe is only the latest phase of the ad- ministration's offensive against wealthy taxpayers.
 It has been quietly gunning for them with considerable success for several years. In fact, only twenty-four hours before the president sent his blistering mes- sage to congress calling for an investigation, Secretary Henry Morgenthau laid a $20,000,000 scalp on his desk-one of the juiciest tax recovery prizes on record.
 The case involved the cstate of the late William Waldorf Astor, who left the U. s. and became . British viscOunt. When he died in 1919 the inter nal revenue bureau slapped $1O,0OO,OO0 assessment on $46,- 100000 worth of New York real estate, which three months be- fore, he had deeded over to his two sons, Waldorf, IT,, and John Jacob.
 The government contended that the transfer was made "in anticipation of death to escape inheritance taxes"
 The Astors paid the tax under protest, and then threw the mat ter into the courts. It was battled for ten years, until finally in 1880, a judge in the District of Colum- bia federal court decided in their favor. He held that the huge transfer of property had not been made "in anticipation of death," ordered the government to repay the tax. No Appeal
 The obvious next step for the government was to appeal the } case. But for some mysterious reason this was not done.
 {, Secretary of the treasury at the time was Andrew w. Mellon, who now has a $3,00O,0OO tax evasion suit pending against him. /.
 Nothing further happened until Morgenthau was installed in the treasury. With the active backing of Internal Revenue Collector Guy Helvering, he began vigorous drive to clean up the tax rolls. To the Astors' demand for re- payment of the $10,000,000 plus 6 per cent interest-a total of $20,- 000,000-he countered with suit charging tax evasion.
 The Astors employed John w. Davis, One-time democratic presidential nominee and lead- ing Liberty Leaguer, to handle their case. In the ensuing bat tic the government won in the circuit court. Davis then ap- pealed to the Supreme Court, which ordered the controversy back for a new trial.
 Because 1t had lost the first test before a judge, the government this time insisted on a jury trial. The decision was a wise one. A New York jury held for the gov- ernment, thus saving the treasury exactly $2O,00o,000.
 How to Do It
 The Astor trial brought to light some Illuminating details on how taxes are evaded.
 The government read into the record a deposition from Sir John Code-Adams, Astor's sec- retary, telling how Astor avoided paying stiff Italian export duties on valuable jewels.
 The gems were at Astor's villa at Sorrento, overlooking the famed Bay of Naples. Sir John went there personally with his daughter, who then wore the jew els on the return trip out of the country as personal adornments, thus escaping taxation. Upon their arrival in London her father handed the gems over to his titled employer. =
 NOTE--Viscoupt Astor was the father-in-laW of Lady Nancy Actor fINa Asea ao,.toa ,a I.~s.vt v,na,,,