1936-06-22 — Page 15

· 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 aght between Andrew W. Mellon, one of the world's richest men, and the federal government over the question of income taxea, is now in its final stages...

The government claints the former secretary of the United States treasury owes $3,075,103 in back income taxes. Mellon sees the situation as being quite reverke, He insists that he overpaid the government $139,045 in taxes and wants it back.

Opposing glorneys have filed briefs with the board of toz appeals. The government's eise, is set forth in air rotumes com- -prising approximately 1,000 pages of textual and tabmilar matter. Mellon's counsel needed fire volumes and more than 700 pages.

:

On Mellon's side, Frank J. Hogan, his attorney, said the case against Mellon had no foundation, that it had been pro- secuted for "political Expedi- ency," that the commissioner of Internal Revenue had been so uncertain of his claims that he had changed the amount on three occasions.

before the board of tax appeals in 1945.) Paul Mellon is a beneficiary of many of the Transactions and could have thrown up them light of a young, alert mind. Whether he was unwilling to initiate his business care- or by attempting to make testimony. which would Nt with that which wej have heard, or whether it was feared: that he might on cross examination fail to sustain his father's case, we

do not know.

"Those neis of evasions are not the The controversy grew out of Mel-blundering of an un-informed or mis. Son's retum on his 1931-income in informed man dir Mellon's--Ligh 1933, the government mado a claim of position in the taxing machinery of $2,050,069, charging Melion with the United States forbids that as- underpaying. Mellon promptly filed a claim for a robate, claiming he hadumption.

"This evasion is not the result of overpaid. The government charged) inisitirected efforts or inexperience. that Melion's not taxable income for Mr. Mellon's years in busingas and his 1931 had been $18,675,285 but that by inx netivities deny that.

a series of "wash sales" of securities. "It is not the accidental by-product through corporations owned wholly of 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 planned as an end in itself. per cent milty, or $1,025,014 for} alleged frauð.

In his brief, Jackson said:

"It is not the work of overzealous: servants envious to stand well in the eyes of the Muster. Mr. Mellon own-

nod und executed the Pittsburgh coul transaction himself.

"Mr. Mellon made a contribution toled on the witness stand chit de plan- | she cost of the government that pro- sected his far thung industries that could not be criticized FLX ostenta. Llous,"

DEALS OUTLINED

PERFECT PHYSIQUE

This team of life savers is ty pleat of the distinctively Australian surf clube, which perform excellent social service in safeguarding the less accomplished or too-venturesome swimmers. These physically splendid specimens of manhood and womanhood perform a purely voluntary service and their weekly carnivals and contests are a feature of Australia's surf benches."

"PRINCE” WHO ROBBED WOMEN

To Dust Or Not

To Dust

Mrs. Hannah Reid, pew opener "It not the impulsive fight from and cleaner, at St.

£1.000.

a suddenly realized tax, liability, Church, who was left

Pancras

TOLD THEM: "JUST A JOKE"

BUT THEY NEVER SAW THEIR

JEWELS AGAIN

Paris, June 8.

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 The brief outlined the series

accomplishment was set up goes on dusting. for s deals in securities among Melton and over a long period of time with pre-

Oured went to Geneva and pretended to be the envoy of the Rachel Morgan, of Oakley Street, N.W.. who Jeft £32,551 Cnet Negus. With the assistance of two accomplices, he was trying personally £16,400),

to establish "diplomatic relations" with the Italian delegation at Mrs, Reid was hard at work in the Geneva when the police arrested him. church when a reperler saw her,

She said:

did

Mellon owned or dominated corporn-| meditation, benefit of counsel, and The bequest was made by Mesin Geneva of Bacha Oured. tions in the inst days 1931-the great care. transfer and sale of 123,022 shores of

"Morwyer, it was not planned or common stock of the Pittsburgh Coal carried out under the goad of neces company and -64,000 shares of the Kity as one who found himself faced common stock of Western Public Ser- with a large tax liability, with assets vice Corporation, to the Union Trust so impaired that it was ruinous. Mr. Company of Pittsburgh, for which his Mellon's, possessions have been esti- ax return showed a loss of $6,079.- mated by his counsel in the record at 966: and the transfer of perinin se-over $200,000,000 by the side of which curities to the Ascalot Company, the Hability which he evaded is but Which, with the Coalesced Carporn trine. The opportunities extended tion, figured in other transnetions, and by the government he short-changel | is owned by his children, Mrs.had left him above the need to be wouldn't be? But I haven't yet roade Ailsa Bruce and Paul Mellen, for peti which his return showed a loss of "There is no mitigating circumam a widow. I have no children, but up my mind what to do. You see #1 $445,308.

stance unless' success, wealth and I've got other relations, to must The government also sought to esta-power-accompanied with rising ava-think of them. blish that Mellon realized a laxable rice and waning ethics-ore them gain of $0,049,000 in the liquidation of selves in bulwark behind which tax The McClintle-Marshall Corporation, evasion

safe,"

and of $923,848. In the liquidation of Hogan, for Mellon, averred that the the Union Construction Company, three stack transactions which the The brief charged that the Ancalot government, said were wash sales Company and Coalesced Corporation were actually made, that they repre- were conduits 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 'ALLÉGED

"Upon these three transactions," "Fraud is established in this re- his brief stated, "and upon them alone, cord,' the brief stated. "Fraud is the frand charge based. To argue cannot le scon nog heard. the utter lack of foundation for that nor detected by nay MOUSE.

charge would be to elaborate the ob-

is seldom capable of proot by direct vious." evidence. It can be proved only by Continuing, he cited a recent deci-} showing clrcumstances in which, hu- sion of a high English Court which man reason may discern the fraud, "beefgnized that the subject, whether

"Paul Mellon found it expedient to poor and humble or wealthy, and no-j be absent at all times chiring the ble, has a legal right so to dispose of trial (lengthy hearings that were held

"BETTER TO HAVE BET AND LOST"

London, May 26. The Cambridge Union Society on Tuesday night debated the following motion:

"That this house, deploring the passing of the spirit of the gambler, from the English heritage, cunsiders

to himself the least amount of tax.

"I can't really understand it. I not know Mrs. Morgan very well. I used to see her regularly, but she never seemed to take any particular notice of me. "Happy? Of course i am, who

"Now you must not worry me any more, I'm late with my work as it la." Mrs. Morgan made numerous other bequests, leaving the readne of thes prisierty 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 Christ Church, Euston Road.

"INSANITY.

LIKE

of

'FLU"

London, June 8. his capital and income as to attract horror of insanity. The time may "In the old days there was a Hogan's brief contained an elabor come when it may be regarded a ate analysis of the mass of technical capable of treatment like any other testimony introduced during the infection, such as influenza." weeks of hearings in Pittsburgh and These remarks were unde by here. Ife charged that "political ex-Mr. Justice Mackinnon at the ate its clair and said that the trea after Norman Powell, aged 51, of pediency influenced the government to Wiltshire Assizes at Sallsbury, sary department's copy of its letter to Mellon demanding additional taxes Swindon, a schoolmaster, had been

GERMAN PRINCE

AS PACIFIC

AIR PILOT

Ilis netivities in the most fashionable centres of Paris anl at Deauville ad Monte Curls prove him to be a master in the art and a brilliant im- of disguise personator.

In Paris he was reen driving. about in a magnificent cream- coloured saloon car which bore the initials of the Diplomatic Corps,

Well-known Paris families were chanined with the company For this wealthy-foreign-Princo,

who seemed to tling money about with gay bandon."

If at any time he encounters diff- culties such as a few debts amounting to two or three hundred pounds, he waved an impressive-looking visiting card am casually referred the cred!- tor to his "equerries."

From time to time, when his in- cume" became diminished, he woul single out one of the ever-growing clrcle of women admirers and calm- ly remove a ring from her finger ar 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 say, "it is just a little joke I hare" Neither the handbag nor the money the Jewellery would be con ngain.

tor.

Princo Ferdinand, Grandson of the

had stamped across its face: "Case found guilty but insane, charged ex-Kaiser, who has joined Pan-Ameri has not been considered on its me-with wounding his wife with intentan Airways as one of the pilots for rits."

He gave special attention to the

Internal Revenue as to the amount

it is better to have bet and lost uncertainty of the commissioner

than never to have bet at all."

to murder her.

of

Mr. G. W. Guthrie Jones, Sthe considerul Mellon still owed after U.S. Bonus-Payments John's College, recalling that the paying his 1911 tax. The original late, Lord Salisbury, speaking long diim," he said, was for $1,319,080.00. ago of the Eastern question, said It was increased three times to reach tlint England had backed the the sam the government now claims. wrong horse, added, "Nowadays He cited a ruling of the United States we do not back any horse at all said:

| Circuit Court at Philadelphia which That is why British prestige is deplorably low." The motion was lost by 26 votos to 44.1

Mother Gives

3 Year-Old Son Alcohol

MERGER?

"The commissioner of internal re- venue having repudinted his own claim, by changing his position from Elme to time as to the

The contemplated trans-Pacific Service.

MINIATURE SPENDING BOOM PREDICTED

New York, June 15.

amount of 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.

tax due, any presumption of correct- ness that attaches to his formal doter- mination hah disappeared."

The liquidation of the McClintic Marshall Corporation was a merger with the Bethlehem Steel Corporation, -tax, as it would have had it been a

which does not ninke Mollon liable for

morgor, he said.

"The "rush" was expected to be in the "trickle" stage for the next week or two as mailing of the bonus bends 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.

to make him sleep

Federal coupts throughout the coun-

Even Wall. Street has looked, from unemployed veterans who had | try and the board of tax appenta it- London, June 10. nel have upheld repeatedly, Hogan's forward to the anticipated been forced to neglect their percent A three-year-old boy's beer and brief sald, that the principle upon "spending spree. Automobile wardrobes for the last few years.

| which Mellon based his deductions was

Women's shops, shoo shops, cok bread for dinner and "glass of in accordance with law that the law stocks enjoyed a small boom in metics dealers, hairdressers. and whisky to make him sleep" were that made his security sale

pro-recent months because of the others catering to personal needs ex- mentioned at Bishop Auckland, its 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 brief are being studied by motorcars to bonus beneficiaries second-hand, probably will increase Margaret Natrass, Hving in n

Summer is usually the so-called as much as 50 per cent., according to Judges Ernest II. Van Foxsan and Bo- caravan colony, were sentenced to on, B. Turner of the board of tax slack" season for business here. 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 litigation began. He now Clothing merchants are prepared the purchase of new automobiles by ball allowed.

is an resistant general.--United Press. to meet heavy demand, particularly soldiers at an army base near New

CHAMPAGNE SUPPERS

When police called to ask questions, out would come the impressive diplo matic visiting-card and all would be: forgotten.

Often he gave expensive champagne ruppers to his victims. Evt when they had been robbed of costly jewel- Bery, they found it extremely diffent to believe that the debonair prince could be responsible,

York created a parking problem in the camp..

NEW!

NEW!

NEW!

(Just arrived from U.S.A.)

LADIES' SUMMER HATS

JN ALL COLOURS

The Finest Range. This Year At -

LE BEAU

The

D'AGUILAR STREET

era

Gee

The Joe-Louis-Max Schmeling fight | at Yankee stadium on the night of June 18 is expected to attract con. siderable share of bonus money.

The major league baseball parka undoubtedly will benefit, as well as other amusement enterprises,

Not all the money, however, will be spent on pleasures,. Some of it will go toward paying mortgages on homes, toward furniture and toward liquidating debts incurred during periods of financial stress.

Nevertheless, a well known op. ponent of the veterans' bonus wan sceptical. He said:

"The only results I can see from the bonus payments are a slight out break of alcoholism, an acute attack. of automobilism, 裁 considerable

amount of absenteeism from work, and the sudden appearance of n larga number of: fanision platos,' United Press.

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