The Ely miner. [volume] (Ely, Minn.) 1895-1986, 1937-10-07


rindIng well known indi-
the Goat viduals before a
joint congression-
al tax committee, 1 discussed
the purposes of the investiga-
ton and reached the conclusion
that the whole affair was staged. If
remember correctly, I called it a
vaudeville stunt, designed by the
Treasury to save its face for having
made bad guesses as to tax collec-
tons. The tax collections, as ev-
eryone knows, were much below
New Deal estimates and somebody
had to be the goat. So, it was nat
ural to make rich men the goat by
calling them tax evaders.
At the same time, reported to
you the fact that there was differ
ence of opinion among Treasury
subordinates. Some of them wanted
to make great show of names of
individuals who had reSorted to
practices not prohibited by law in
order to reduce their taxes.
did not know at that time how
serious the disagreement was with
in the Treasury. 1t has only lately
come out into the open. AS result,
two important Treasury officials
have quit their jobs and have gone
back to private life. I refer to Nor
rison Shafroth and Russell I. Ryan,
chief counsel and assistant chief
counsel, respectively, of the bureau
of internal revenue. These two men
know more about tax evaders and
tax avoiders than anybody else in
the Treasury but they had one
grievous fault. They wanted to be
honest about the whole situation.
That was fault because being hon.
est did not make possible a fam
boyant display of hatred for taxpay-
ers who had employed legitimate
means to pay as little tax as the
law permitted.
AS far as can ascertain, Messrs.
Shafroth and Ryan wanted to CO.
operate fully with the higherups in
the Treasury in so far as tax in
vestigation by a joint congressional
committee would point the way for
improvement of the law. They
knew, as many others know, that
the internal revenue laws have
holes in them. The smart lawyers
and smart taxpayers naturally have
taken advantage of these holes in
the law because they are human
despite the fact they are rich. So,
he 1Liof D4,,D-al ov.I bic
proposed to Secretary Morgenthau
and Treasury General Counsel Her
man Oliphant that the investigation
be made along lines of scientific
character, that close study be given
to some of the methods that had
been employed to avoid taxes. In
other words, Shafroth and Ryan
were anxious to develop legislation
on the basis of the experiences
which they had had and loopholes
they had found to be in common
use. But their fault was honesty,
as government officials would not
be denied the vaudeville perform
ance and the columns upon columns
of publicity which Mr.. Morgenthau
and Mr.. Oliphant, not to mention
President Roosevelt, desired to see.
stayed through all of the hear
ings before the joint congressional
committee. They
StooPlng ran for fourteen
Lou days. Each day
the Treasury trOt-
ted out another official as the wit
ness before the committee and he
was armed with a prepared state
ment which he read for some two
hours to a committee that sat back
in easy chairs and smoked cigars in
comfort-while newspaper men
avidly wrote stories about rich men,
some good and some bad, who had
committed the heinous sin of paying
as little tax as the law permitted.
The designations of Shafroth and
Ryan rather convince me that the
Treasury stopped to about the low
est level it has reached in recent
years. OF course, it was not the
first time in our history that income
tax has been used for political in
timidation. Reprisal is strong
word to use about government Of
ficials but ! cannot escape the feel
ing that the Treasury used that in
vestigation as a method of reprisal
against many men who had opposed
the New Deal.
I reach that conclusion on the
basis of a review of the names
which Messrs. Shafroth and Ryan
refused to parade before the COM
mittee but which the Treasury itself
used as the principal actors.
can add to this a statement of
the fact that Under-Secretary
Magil, who had charge of present.
ing the so-called evidence before the
committee at the capitol, believed
the Treasury was not following an
entirely wise course in the methods
it employed. But Mr.. Magill went
along with the scheme and there
were many of the correspondents
covering that hearing who felt he
tried to do the job fairly.
So now Morrison Shafroth and
Russell Ryan are back in private
life and in their places are men
picked by Mr.. Oliphant, men who
are likely to obey orders regardless
of the whims of Mr.. Oiphant and
Secretary Morgenthau.
Another instance of official &C
ton that seems to indicate a bad
:. trend in govern