The Ely miner. [volume] (Ely, Minn.) 1895-1986, 1939-02-02
Treasury

In 1884 congress gave President
Roosevelt two broad monetary pow
ers. Under one he could reduce
the dollars gold content by so per
cent, though since 1884 the rate has
been 5906 per cent. Under the
other power the President created
currency sterilization fund with
increment accruing from the gov
ernment's revaluation of gold hold
ings. Originally estimated at
1000, 900, 900, the fund is used to
protect the dollars value on inter-
national exchange, preventing undue
fluctuations.
Both powers expire June 80 and
the White House has already asked
that they be renewed until the cur
rent presidential term expires jan
uary Is, 1941. Although lawmakers
consider neither grant dangerous,
the mere fact that gold devaluation
and the sterilization fund are "pow-
ers" is enough to make this years
fiery-eyed congress balk.
Biggest opposition will grow out
of the treasury's refusal to divulge
even the size of the sterilization
fund, the o-billion-dollar figure be-
ing only a guess. Though softened
by well-substantiated reports that
the government made about $6,000,-
600 profit on the fund last year,
Michigan's Sen. Arthur Vandenburg
is expected to demand full public
accounting before voting to continue
the Presidents power.
Taxation
Two former U. S. treasury secre-
taries, Andrew w. Mellon and Og-
den l.. Mills, condemned the in
equity of tax exempt federal, state
and local bonds. Since his soak
the-rich" revenue proposal of 1885,
President Roosevelt has fought tax
exempt securities and one other un-
popular exemption, that on federal,
state and local employees salaries.
If these exemptions could be abol-
ished the U. S. government figures
it would net eventually $500, 1000, 900
annually from government securi-
ties, plus $16,0O0,0O0 from employ
ees' income taxes.
One day before the President Of
fered this program to congress in
special message, he sent Treas
ury Undersecretary John w. Hanes
to pave the way before special
senate committee. Said Mr.. Hanes:
''The time for action has come"
The Constitution Sixteenth
amendment gives congress power to
clay and collect taxes on incomes
from whatever source derived"
therefore the administra thinks
statutory enactment rather than
constitutional amendment will suf-
fee. Later, after congress has spo-
ken, the courts can decide whether
it's action is constitutional. Argued
Mr.. Hanes:
Tax exempt securities now per-
NIT many large-income persons to
escape income taxes entirely, there
fore they are unfair. The 65,000,-
100000 in tax exempt securities now
outstanding (of which some $50, 000,-
100000 would be taxable) is so for
midable that it discourages invest
ment in private enterprises involv-
ing risk. Thus industry cannot COM
pete. AS for income tax exemp-
tons, the U. S. Supreme court has
already set a precedent by ruling
that salaries of such quazi-public
agencies as the Port of New York
authority are subject to federal tax
alton.
AS might be expected, state and
local groups jumped into the fight
overnight. Argued the Conference
of State Defense: Tax yield would
not approach the immediate treas
ury estimate of $70,0O0,O0 a year.
Moreover it would work hardship on
states and municipalities by increas-
ing financing costs. The statutory
procedure would be unconstitution-
al. Most important, once congress
power to tax income of state and 10
cal securities has been established,
a situation could arise in which con-
OreSS would affop1nt ~ tav state