THE
HONGKONG TELEGRAPH. MONDAY, JUNE 22, 1936.
Gigantic American Legal Battle Over
Richest Man's Income Tax Nears End
MELLON MILLIONS:
DID HE PAY TOO
MUCH OR TOO LITTLE?
Washington, June 10.
The long fight between Andrew W. Mellon, one of the world's richest men, and the federal government over the question of income taxes, in now in its final stages,
The government claims the former secretary of the United Mellan States treasury owes $3,075,103 in back Income taxes. sees the situation ns being quite reverse. He insists that he overpaid the government $139,045 in taxes and wants it back.
Opposing attorneys have filed briefs with the board of tax appeals. The government's case is set forth in six volumes com- prising approximately 1,000 pages of textual and tabulur matter. Mellon's counsel needed five volumes and more than 700 pages.
On Mellon's side, Frank J. before the board of tax appeals in Hogan, his attorney, said the of many of the transactions and could 1936) Paul Mellon is a beneflelary case against Mellon had 110 have thrown upon them light of a foundation, that it had been pro-young, alert mind. Whether he was secuted for "political Expedi- unwilling to initiate his business care- ency," that the commissioner offer by attempting to make lestimony which would fit with that which wr Internal Revenue had been so have heard, or whether It was feared uncertain of his claims that he that he might on cross examination had changed the amount on three fall to sustain his father's case, we, occasions.
do not know.
"These acts of evasions are not the
The controversy grew out of Mel blundering of an un-informed or mis- lon's return on his 1931 income. It informed man. Mr. Mellon's high 1933, the government made a claim of position in the taxing machinery of 32,060,000, charging Mellon with the United States forbids that 84. underpaying. Mellan promptly led asumption.
claim for a robate, claiming he had "This evasion is not the result of overpaid. The government alarged misdirected efforts or inexperience. that Mellon's not taxable income for Mr. Mellon's yenm in business and his 1981 had been $13,675,285 but that by tax activities deny that. a series of "wash sales" of securities
"It is not the accidental by-pruduct | through corporations owned wholly of a business transaction conducted or partly by himself or his children, for other ends. But the tax purpose he had reduced this net illegally. To is admitted to have been carefully its claim, the government added a 40 planned as an end in itself.
per cent penalty, or $1,095,034 for "It is not the work of overzealous alleged fud.
servanta civious to stand well in the oyes of the Master, Mr. Mellon own-
In his brief, Jackson said:
"Mr. Melion made a contribution to ed on the witness stand that he plans | the cost of the government that pro-nod and executed the Pittsburgh coul tected his for flung industries that transaction himself. could not be criticized tious,"
nstenta- "It is not the impulsive flight from
PERFECT PHYSIQUE
This team of life savers is typical of the distinctively Australian surf clubs, which perform excellent social service in safeguarding the less-accomplished or too-venturesome switomers. These physically, splendid specimens of manhood and womanhood perform a purely voluntary service and their weekly carnivals and contexts are a feature of Australia's surf beaches.
"PRINCE" WHO ROBBED WOMEN
Or
To Dust
Not To Dust
Mrs. Hannah Reid, pew opener!
cleaner nt St. Pancras and
TOLD THEM: "JUST A JOKE"
BUT THEY NEVER SAW THEIR
JEWELS AGAIN
NEW!
NEW!
NEW!
(Just arrived from U.S.A.)
LADIES' SUMMER HATS
IN ALL COLOURS
The Finest Range This Year At-
LE BEAU
The
Paris, June 8.
a suddenly realized dax liability Church, who was left £1,000, THE astonishing career of a man who, while posing as "Prince Jalida of Patiala," robbed French society women of many was deliberated upon. The machinery takes things philosophically and hundreds of pounds, was revealed here to-day following the arrest for it necmplishment was set up goes on dusting. over a long period of time with pre-
meditation, benefit of counsel, and Rachel Morgan, of Oakley Street, The bequest was made by Mrs.
great care.
ME
N.W.. who left £32,551 personalty £10,408).
in Geneva of Bacha Oured.
Oured went to Geneva and pretended to be the envoy of the
(net Negus. With the assistance of two accomplices, he was trying Mrs. Reid was hard at work in the Geneva when the police arrested him.
to establish "diplomatic relations" with the Italian delegation at church when a reporter saw her.
She said:
"I can't really understand it, i did not know Mre. Morgan very well. I used to see her regularly. but he never seemed to take any particular notice of me.
"Now you must not worry me any,
Mrs. Morgan mude numerous other beques, leaving the residue of her i property equally between the St. Paneras Almshouses, St. Pancras Association of the London Diocesan Council for rescue work, vicar and churchwardens of St. Pancras Church and vicar and churchwardens of Christ Church, Euston Road.
DEALS OUTLINED The brief outlined the scrier ofi deals in securities among Mellen and Mellon awned or donnsted corpora tions in the last days of the transfer and sale of 123,622 shures of
"Jarcover, it was not planned or common stock of the Pittsburgh Coal carried out under the goal of necess company and 54,000 shares of the sity as one who found himself faced common stock of Western Public Sor with a large tax liability, with assets vice Corporation, to the Union Trust so impaired that it was ruinous. Company of Pittsburgh, for which is Mellon's possessions have been esti- tax return showed a loss of $8,079.-minted by his counsel in the record at 956; and the transfer of certatti sesjover $200,000,000 by the ride of which curities to the Asenlot Company, the liability which lie evaded is but which, with the Coalesced Corpora a trifle. The opportunities extended tion, figured in other transactions, and by the government he short-changel, "Happy? Of course 1 am, who is owned by his children. Mrs. had left him above the need to be wouldn't be But I haven't yet made Ailsa Brace and Paul Mellon, for petty.
up my mind what to do. You see I "There is no mitigating circum-arn a widow. I have no children, but which his return showed a loss of $445,308.
stance unless success, wealth and I've got other relations, su I must The government also sought to esta-power-accompanied with rising ava-think of them. blish ant Mellon realized a taxable rice and waning ethics are
them- gain of $6,549,900 in the liquidation of selves a butwnek behind, which tax more, I'm late with my work as it is." the McClintic-Marshall Corporation, evasion is safe,” and of $993,848. in the liquidation of Hogan, for Molion, aterrad that the. the Union Construction Company, three stock transactions, which the
The brief charged that the Aslut government said were "wash sales Company and Conlesced Corporation were actually made, that they repres were conduit through which Mellon sented real losses, and that the federal transferred millions in property to his law expressly allows deductions. children without paying tax,
ENGLISH LAW CITED FRAUD ALLEGED
"Upon these three transactions," "Fraud is established in this re- his brief stated, "and upon then alone, cord," the brief stated. "Fraud is the fraud charge based. To argue
be seen
heard, the utter lack of foundation for that por detected by my sease. It charge would be to elaborate the ob is seldom capable of proof by direct vious." evidence. It can be proved only by Continuing, he cited a recent decl- showing circumstances in which hu- sion of a high English Court which man reason may discern the fraud. "recognized that the subject, whether "Paul Mellon found it expedient toj poor and humble or wealthy and no- be absent at all times, during the ble, has a legal right so to dispose of
"In the old days there was a trial (lengthy hearings that were helt his capital and income as to attract horror of insanity. The time may to himself the least amount of tax."
Hogan's brief contained an elabor- come when it may be regarded as other "BETTER TO HAVE BET ate analysis of the mass of technical capable of treatment like any Lestimony Introduced during the infection, such as influenza,” weeks of hearings in Pittsburgh_amd These remarks were made by herz. London, May 26.
He charged that "political ex-Mr. Justice Mackinnon at the pediency influenced the government to The Cambridge Union Societye its clain and said that the tres-Wiltshire Assizes at Salisbury, on Tuesday night debated the sury department's copy of its letter to after Norman Powell, aged 51, of following motion:
Mellon demanding additional taxes Swindon, a schoolmaster, had been had stumped across its face: "Case found guilty "but Insune charged "That this house, deploring the has not been considered on its me- with wounding his wife with intent passing of the spirit of the gambler is."
to murder her. from the English heritage, considers.
to He gave special attention thei
of
cannot
For
AND LOST"
it is better to have bet and lost uncertainty of the commissioner than never to have bet at all." Mr. G. W. Guthrie Jones, St. Internal Revenue as to the amount
"INSANITY:
LIKE
'FLU"
London, June 8.
he considered Mellon still owed after U.S. Bonus Payments John's College, recalling that the paying his 101 tax. The original lato Lord Salisbury, speaking long claim," he said, was for $1,319,080.90. ago of the Eastern question, said It was increased three times to reach that England had backed the the sum the government now claims. wrong horse, added, "Nowadays He cited a ruling of the United States Circuit Court at Philadelphia which we do not back any horse at all. said: That is why British prestige is deplorably low." The motion was lost by 26 votes to 44.
Mother Gives 3 Year-Old Son Alcohol
MERGER?
GERMAN PRINCE AS PACIFIC
AIR PILOT
Prince Ferdinand, Grandson of the ex-Kaiser, who has joined Pan-Ameri can Airways as one of the pilots for the contemplated trans-Pacific Service,
MINIATURE SPENDING BOOM PREDICTED
New York, June 15.
Businessmen, merchants and, purveyors of amusement in the nation's largest city eagerly awaited the start of the war veterans' bonus "gold rush" to-day,
The "rush" was expected to be in the "trickle" stage for the next week or two as mailing of the bonus bonds and cash voted by Congress over the President's veto does not begin until: to-day, However, the rate of spending is expected to accelerate rapidly after that and the peak probably will be reaching mid-July,
"The commissioner of internal re venue, having repudiated his own claim, by ebanging his position from time to time as to the amount of tax due, any presumption correct ness that attaches to his formal deter- mination has disappeared."
McClintic The quidation of the Marshall Corporation was a merger with the Bethlehem Steel Corporation, which does not make Mellon Unble for tax, as it would have had it been a mergar, he said...
Federal courts throughout the coun
Even Wall Street has looked, from unemployed veterans who had try and the board of tax appenda It- self have upheld repeatedly, Hogan's forward to the anticipated been forced to neglect their personal A three-year-old boy's beer and which Mellon based his deductions was stocks enjoyed a small boom in metics dealers, hairdressers, and
brief said, that the principle upon "spending spree." Automobile wardrobes for the last few years.
Women's shops, shoo shopa, cos bread for dinner and "glass of in accordance with lay--that the law whisky to make him sleep" were that made his security salo pro recent months because of the others catering to personal needs ex- moditioned
at Bishop Auckland, fits taxable made his security sale expected increase in the sale of pected to profit. when his parents, Robert and losses deductible..
The sale of automobiles, new and motorcars to bonus beneficiaries, Margaret Natrass, living in a Judges Ernest H. Vans Fossar and Bos The briefa are being-studled by
|| second-hand, probably will increase Summer is usually the so-called as much as 560 por cent., according to caravan colony, were sentenced to on. B.. Turner of the board of tax"alack" season for business hero, some automotive interests. It was -one month's imprisonment for appeals. Jackson was a member of but this year it is expected to wit- recalled that on the occasion of the
cruelty.
the treasury general counsel's staff ness unprecedented revival,
payment of the last bonus in 1931, Notice of appeal was given and when the ligation began, le now Clothing merchants are prepared the purchase of new automobiles, by ball allowed.
lis an assistant general.--United Press, to meat heavy demand, particularly soldiers at an army base near New
to make him sleep
London, June 10.
F
His activities in the most inshionable centres of Paris and at Deauville and Monte Carlo prove him to be a master in the art of disguise and a brilliant im-: personator.
In Paris he was seen driving about in a magnificent Cream- coloured saloon car which bore the initials of the Diplomatic Corpe,
Well-known Paris families -woro-charmed with the company of, this wealthy foreign Prince," who seemed to fling money about with gay bundon.
If at any time he encounters diffi culties such as a fer debts amounting to two or three hundred pounds, he waved an impressive-looking visiting eard and casually referred the cred!- tors to his "oquerries."
From time to time, when his "in- come" became diminished, he would single out one of the ever-growing circle of women admirers and calm. ly remove a ring from her Anger or walk away with her handbag (pro- viding It was well filled with valu- ables).
When the woman protested, the "Prince" would raise his hands and, Bay, "it is just a little Joke I have." Neither the handbag nor the money nor the jewellery would be sen again.
CHAMPAGNE SUPPERS
When police called to ask questions, out would come the impressive diplo matic visiting card and ell would be forgotten..
་|
Often he gave expensive clumpagne suppers to his victims, Even when they and been robbed of costly Jowel. lery, they found it extremely diment to believe that, the debonair prince could be responsible.
York created a parking problem in the comp.
The Joe-Louls-Max Schmeling fight at Yanked stadium on the night of Juno 18 I expected to attract con Isiderable share of bonus money.
The major league baseball parks undoubtedly will benefit, as well as other amusement entèrprises.
D'AGUILAR STREET
Gee
Not all the money, however, will be spent on pleasures. Some of It will go toward paying mortgages on homes, toward furniture and toward i liquidating debts incurred during || periods of financial stress,
Novertheless, a well known up- ponent of the, veterans' bonus was aceptical. He said:
"The only results I can see from the bonus payments are a slight out- break of alcoholism, an acute attack automobilism, A considerable amqunt of absenteeism from work, and the sudden appearance of a large number of fashion plates. | United Press.
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