1927-28

HEARINGS

BEFORE THE

COMMITTEE ON WAYS AND MEANS

HOUSE OF REPRESENTATIVES

INTERIM, 69TH-70TH CONGRESSES

OCTOBER 31 TO NOVEMBER 10, 1927
Including briefs, memoranda, and letters received up to November 26, 1927

PREFACE

Shortly before the close of the Sixty-ninth Congress it became apparent that some changes in the Revenue Act of 1926 were necessary to clarify the law and the administration thereof. It also appeared likely that there would be substantial surpluses in the fiscal years 1927 and 1928, and that a further reduction in taxes could be made without impairing the Treasury.

In order to expedite such legislation, a provision was inserted in the second deficiency bill authorizing those members of the Committee on Ways and Means who are Members elect to the Seventieth Congress to sit as a committee for the purpose of formulating a bill. When it became apparent that the deficiency bill would fail, House Joint Resolution 373, containing the identical language used in the second deficiency bill, was introduced and passed the House. The resolution was as follows:

Resolved, etc., That after March 4, 1927, those members of the Committee on Ways and Means of the House of Representatives who are Members elect to the Seventieth Congress, or a majority of them, until the meeting of the first session of the Seventieth Congress, are authorized, by subcommittee or otherwise, to hold such hearings and to sit at such times and places within the United States, to employ such expert, clerical, and stenographic services, and to gather such information, through Government agents or otherwise, as to them may seem fit in the preparation of a bill or bills for the revision of the revenue act of 1926 and internal revenue laws, and of the laws relating to the administration of the customs, including the compensation of officers and employees of the customs service; and they are authorized to have such printing and binding done (notwithstanding any limitation in existing law as to number of copies of any document), and to incur such other expenses as may be deemed necessary; all such expenses (except for printing and binding, which shall be charged to the appropriation for printing and binding for Congress), not to exceed $5,000, to be paid out of the contingent fund of the House on the usual vouchers approved as now provided by law.

The resolution went to the Senate on the morning of March 4, 1927; was called up by Senator Curtis, and passed. A few minutes after this action Senator Harrison, of Mississippi, entered the Senate Chamber and moved to reconsider the vote by which the resolution passed. That motion was pending when Congress adjourned at noon, which prevented the enactment of the resolution into law. The colloquy in the Senate was as follows:

(Cong. Rec., Vol. 68, pt. 5, p. 5887)

The VICE PRESIDENT. Is there objection to the immediate consideration of the joint resolution?

There being no objection, the Senate, as in Committee of the Whole, proceeded to consider the joint resolution.

The joint resolution was reported to the Senate without amendment, ordered. to a third reading, read the third time, and passed.

Mr. HARRISON subsequently said: I enter a motion to reconsider the vote by which House Joint Resolution 373 was passed. It was passed before I came into the Chamber. It is with reference to the House Ways and Means Committee sitting in vacation, through subcommittees, etc.

Mr. CURTIS. Of course, the Senator realizes that that committee wants to meet in order to carry out practically the instructions of the Congress.

Mr. HARRISON. I have only entered the motion to reconsider. It may be that I will withdraw it before 12 o'clock, but I do not know.

The VICE PRESIDENT. The motion to reconsider will be entered.

Mr. WADSWORTH. Mr. President, a parliamentary inquiry.

The VICE PRESIDENT. The Senator will state it.

Mr. WADSWORTH. I inquire of the Chair if it is not true that the pending question is the motion of the Senator from Mississippi to reconsider the vote by which the House joint resolution was passed.

The VICE PRESIDENT. The Senator from Mississippi has merely entered his motion.

Mr. WADSWORTH. Has he the privilege of entering a motion and not having it the pending question?

The VICE PRESIDENT. He has that privilege for two days.

The authority sought by the above resolution was similar to that granted to the committee in connection with the Revenue Act of 1926 (Public Law No. 631, Sixty-eighth Congress), as well as at other times when Congress, in order to speed up the public business, has constituted the Committee on Ways and Means of one Congress a select committee for the purpose of preparing legislation to be introduced in the next Congress.

In view of the precedents and the fact that the intent of Congress was clear, even though the authorization failed through a technicality, the chairman, upon consultation with the members of the committee, and upon the advice that the committee could function informally through the cooperation of the Clerk of the House, the Committee on Accounts, the Joint Committee on Printing, and the committee stenographers, gave notice in July, through the newspapers, that the committee would meet in October to consider revenue revision.

Accordingly, a schedule of hearings was arranged, interested parties notified, and public notice given through the newspapers on September 19, 1927, that hearings would be held beginning October 31, 1927. The notice was as follows:

In contemplation of a revision of the revenue act of 1926, the Committee on Ways and Means of the House of Representatives announces to all concerned that it will hold hearings at Washington, D. C., beginning Monday, October 31, 1927, at 2 o'clock p. m., and continuing for a period of 10 days. A tentative schedule of hearings has been arranged, as follows:

Hearings will be conducted in the hearing room of the committee, room 321, House Office Building, Washington, D. C. Sessions will begin at 10 a. m. and 2 p. m., unless otherwise ordered by the committee.

Persons desiring to be heard should apply to the clerk of the committee at least one day prior to the date of the hearing in order to be assigned time on: the calendar for that day. In making such application, the following information should be given: Name; business address; temporary address in Washington; business or occupation; and the person, firm, corporation, or association represented; subject concerning which testimony will be given; number of the section of the revenue act of 1926 to which it relates; and the amount of time desired.

In order to avoid duplication of arguments or suggestions, it is requested that persons having the same problems to present will agree upon one representative to present their views. So far as practicable, the committee will seek to recognize witnesses who are qualified to give first-hand information.

Briefs may be submitted in lieu of, or to augment, oral testimony; but if such papers are printed on both sides of the sheet, two copies must be filed with the clerk for printing in the record.

In accordance with the foregoing notice and by subsequent action of the committee the hearings were held continuously from October 31 to November 10, 1927. Stenographic minutes of each day's proceedings were printed in unrevised committee prints for the immediate use of the committee. As far as it was possible so to do, these prints were distributed daily to those requesting same. Copies were sent to each witness, with the request that the witness make any necessary corrections for clearness in his statement and return the copy to the clerk. Such corrections have been observed in preparing this revised edition of the hearings.

In this revision of these daily hearings the chronological order of the statements has been disregarded and the testimony and papers submitted have been grouped according to the order of the provisions of the Revenue Act of 1926. The frequency with which witnesses digressed from the general subject of their appearance to discuss interrelated or different phases of revenue legislation has made it almost impossible to divide the testimony without destroying the text. The complete testimony of each witness, therefore, has been included under the heading to which the witness first addressed himself and the subject matter has been carefully indexed for ready reference.

CLAYTON F. MOORE, Clerk.