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\ 6711 Avenue-J-Hoastoo Tex**8. ! January--16-ionornble M.S .E Washington D.C. Dei~r Sir: In considering your letter of Jan.11 I find you have S "GROSS INCOME" for my "•*RECEIPTS OF MONEY". You rlso feil to include the elimination of existing local levies upon the things which every family must rnd consume pnd the INDIVIDUAL EXEMPTION to every INHABITANT, which would pre vent their PAYING A CENT, UND^R the b • ' TAX, until they ha a n^SERVKl* up to the $<:,000.00 v year, FOR FAMILY NEEDS. How could the CONSUMER or the poor be MORE HEAVILY BURDENED by e LEVY wnich eliminated .$350.00 BURDENS and also ayear of their PR^. prevented the TAXING of their FARMS. HOMES or PROPERTIES end their "RECEIPTS OF MONEY" until those actual CASH RECEIPTS, EXCEEDED $2,000.00 airing the yeor? To leave out the DIVISION among the STATES would of COURSE be JUST ANOTHER BURDEN UPOM CONSUMERS. ELIMINATE EXISTING The SOLE OBJECTIVE of the PLAN is to TAX BURDBIJ8 and INCREASE the PURCHASING P0..ER of the 60% of our FAMILIES who v.re not now aule to uuy the things they need. You write " What I am cjuocined with ia to see that no funuc withdrawn from the spending stream remain idle? The t is tne desire of every patriot. Y/hat I era trying to &¥oid, is the CONTINUED OFFLRING OF TAX EXEMPT SECURITIES for the ABSORBTION of ACCUMULATIONS or WITHDRAWALS from that STREAM, leaving ONLY CONTINUED GOVERME1IT SPENDING to MAINTAIN THE ROTATING FUND which maintains our activities. Unless permanent withdrawals ere .DALANCED by INCREASES IN THE MATERIAL WEALTH of the NATION, some ELEMENT must lose that amount. Then^ing you for your consideration, I PHI, Yours truly, c Moreil Tomlin. Dear Mr. Tomlin: I have your letter with regard to my reply to Senator Byrd, and I am much obliged to you for giving me your views. I see that your point of view and mine are in general accord, but there are a number of things on which we may not entirely agree. I should like particularly to say that I camiot agree with your proposalttic.fr\ taxation ^yiii F ii jn tihr form nf " 5 percent tafc on gross income. -p •£axes of thivS kind curtail the purchasing rower of consumers, which te g. the most undesirable incidence of taxation. They also fall with greater Torce on the poor than on the jmetes? U i *4 f I do not think you quite understand my position in regard to the Government's participation in the nation's expenditures, I mi not ama Vliwul the Government offering opportunities for corporations to find investment outlets. Whet I am concerned with is to see that no funds withdrawn from the spending stream remain idle. Money withdrawn and held idle obstructs the flow of income and results in depressions. What I am suggesting is that when investment by private concerns is not adequate to keep our resources employed it should be Government policy to contribute to the stream. I should also like to say that when you syje&k of the Government helping the banks and the insurance it nilLOH^y-^Ma^mii^ that this was done not fop 4Ufii,iuauri)o«n of mgf^v^ the investors and the capital of these institutions, but for the purpose of saving the depositors and policy holders, who represent a large proportion of our people. (A ^ k KUJM end. remain USu J *-fi>^vL**J& * *ft . • 4 January 11, 1939. . Captain Morell Tomlin, 6711 Avenue J, Houston, Texas. Dear Captain Tomlin: I have your letter with regard to my reply to Senator Byrd, and I am much obliged to you for giving me your views. I see that your point of view and mine are in general accord, but there are a number of things on which we may not entirely agree. I should like particularly to say that I cannot agree with your proposal of a 5 per cent tax on gross income. Taxes of this kind would curtail the purchasing power of consumers, which at this time would be the mot>t undesirable incidence of taxation. They also fall with greater force on the poor than on the well-to-do. I do not think you quite understand my position in regard to the Government's participation in the Nation's expenditures. I was not attempting to discuss the question of the Government's offering opportunities for corporations to find investment outlets, what I am concerned with is to see that no funds withdrawn from tne spending stream remain idle. Money withdrawn and held idle obstructs the flow of income and results in depressions. »hat I am suggesting is that, when investment by private concerns is not adequate to keep our resources employed, it should be government policy to contribute to the stream. I should also like to say that when you speak of the Government's helping the banks and the insurance companies, I think you should bear in mind that this was done not with the objective merely to save the investors and the capital of these institutions, but for the purpose of saving the depositors and policy holders, who represent a large proportion of our people. I was interested to have your views and 1 wanted you to know that I appreciated your interest and courtesy in writing. Sincerely yours, . M. S. Eccles, Chairman. ET:b TO * Dr. Goldenweiser "FROM A Mr. Thurston REMARKS: 1/9/39 Herefs another one on which I would like to have your opinion as to how it might be answered. http://fraser.stlouisfed.org/ Federal Reserve BankCHAIRMAN'S of St. Louis E.T. OFFICE 6711 Avenue-J-Houston Texas. 1 January 3 1939. Honorable Marriner S. Eccles, Washington B.C. Dear Sirr In rending your reply to Senator Byrd, it impressed me with the FAILURE by both of you to consider the ACTUAL CAUSES which made it necessary for the U.S. to replace PRIVATE SOURCES. The truth is not going to pemanentl] establish PROSPERITY. Whpt have we profited when neither the GOVERMENT SPENDII or their AIDS to CORPORATIONS increases PURCHASING POrfER to where PRODUCTION* cnn be increased, to where a larger proportion of our employables can be gain fully working? If it 1B BENEFICIAL to reduce INTEREST PAYMENTS, why should i1 not be MORE BENEFICIAL to eliminate them entirely? Is it the DUTY OF GOVERHEir to provide profitable INVESTMENTS for those who have accumulations? Have we unconsciously substituted CORPORATION EARNINGS for FAMILY WELFARE? While recognizing the soundness of your statements, I can not help but reeliz< existing conditions which most of our LEADERS appear to ignore. Should the welfare of the U.S. depend upon the ability of FINANCIERS to float loans? Is there a lnw which prohibits those having accumulations, from using them for improvements, industries, businesses and operations which would increase the wealth of the nation pnd provide employment and use raw material and commodities? Apparently our FINANCIAL and ECONOMICAL SYSTEMS now make it less profitable for them to do so. Insurance COMPANIES, Lifeinsurance alone has ACCUMULATED 110 billions from its policy holders, fire insurance may have more. Individuals can neither support their families or spend the EARNINGS they have turned over to insurance companies. If we figure tnat even 60# of thse would hpve purchased commodities or made improvements, and that each dollar spent turned over 4 times before being IMPOUNDED by finacial interests; there would have been no RECESSION, DEPRESSION or PANIC* We clrim p. desire for farm pnd home vwnershpa oy the actual users and then PENALIZE every individual who attempts to own one. We desire PROPERLY RAISED and TRAINED WORKERS and have DEVELOPED A SYSTEM which enables (a) only IAKGE CORPORATIONS to profititaoly use them. Those who profit from the use of any FACILITY, should pay the cost of its CREATION. ECONOMICALLY this ia as true of PROVIDING EMPLOYES as it is of other necessary equipments* Are we striving for PERMANENT PROSPERITY? I? SO, in VISIONING SUCH A CONDI TION, it would INCLUDE PAYMENTS thru WAGES, SERVICES and payments for raw mpterials CASH TO BALANCE every t«x and license oorne Dy the employes and farmers, their home nnd farm maintenances pnd the ENTIRE COST of RAISING rnd EDUCTAIITG THEIR CHILDREN end p SAVING to provide for old age. OUR ECONOMIST agree tnat it would R.JIN GJ* ACTIVITIES to pay such a wage nt the present time. This is the CONDITION which we must find a way to change. In studying this condition, we know that it was not a LACK OP FAGILI TIES, CAPITAL STOCKS, MACHINERY or even TAXATIONS, which caused our previous depressions. We know that the supporters of families gradually mortgaged theii holdings to buy the ukMI LUXURIES which we PROUDLY CONSIDER AS OUR HIGH STAND A R D UJJ1 Liv£.NG. naving exnpustea t m s source, tney were maucea oy niun *\>Wj&tiU SALESMEN and EXCESSIVE ADVERTISINGS, to buy on the installment plan and PLEDOi THEIR FUTURE EARNINGS. Economically, this ACTUALLY REDUCED THE PURCHASING POV/ER, of our families, just as much as if their EARNINGS had been reduced the same amount s PB they had pledged their FUTURE EARNINGS. IN ADDITION to this, the STATES, LOCAL GOVERMENTAL AGENCIES, CORPORATIONS and even individual neve INCREASED their OBLIGATIONS in order to co-operate with the NE7/ DEAL MEASURES. This spend to CREATE PROSPERITY, has cpuaed PYRAMIDINGS of STATE end LOCAL TAXES and LICENSES, 670# in Texas witnin the lest 30 years. In order to secure INDUSTRIES and -bUSINiSSSiiiS, many sections have FAVORED THEM in their TAXATIONS. CORPORATIONS now dominpte the LEGISLATURES of most states and are usually the ones which are heard oefore our CONGRESSIONAL COMMITTEES. The average sized family which secures sufficient to properly feed, house and clothe its memebers, now pays DIRECTLY AND INDIRECTLY for taxes and licena e 3 $450.00 p year. TECHNICALLY, NO CORPORATION now pays any TAXES. That ia t http://fraser.stlouisfed.org/ payments their Federal Reserve Bank of St. Louis must be BALANCES ct the EXPENSE of some individuals in the (3) ^ final analysis. We can not FORCE the PAYMENT of the $4,000.00 annual wage, which the AFL now considers p LIVING WAGE. CONGRESS can provide a saving for every family which will AFFECT their WELFARE and increase the TOTAL PURCHASING POWER of the U.S. by adopting a NEW TAX BASE, adequate for all PURPOSES ana thru prorations to STATES, enable the elimination of pt least $350^00 of the taxed now paid by the average siaed family. We knww that AN AUTOMOBILE usea for pleasure does not PROVIDE FUNDS to pay LICENSE OR GASOLINE TAX. We know thut e BUJLUING USED FOR A HOME,brings in no revenue, «e know that it is not the speculative v^lue of a FARM which CREATES ITS FUNDS but the actual "REC1IP1 OF MONEY" thru sales of its products. The EliPLOYES salary or wages pays ell his expenditures, and his ABILITY TO PAY, depends SOLELY UPON his RECEIPTS EXCEEDING LIVING COSTS. We claim p DESIRE to tax in proportion to ability to pay. THERE IS ONLY ONE SOURCE OF CONTINUED ABILITY TO PAY, and that is ACTUAL RECEIPTS OF MONEY. We can never have an EQUITABLE and ADE UATE TAX SYSTEM until we SHIFT OUR TAX BASE to "RECEIPTS OF MONEY" in excess of family needs. ONLY CONGRESS can now adequately and equitably tax our CENTRALIZED ACTIVITIES. A LEVY which requires payments, without regard to ukGElPTS OF MONEY, creates inequalities among our LEGITIMATE ACTIVITIES. When every raw material and comm< dity used, processed, manafactured or distributed by an ectivity increases b% no one is injured. We even heil it as pn indication of prosperity. If we can eliminate our DISCRIMINATORY LEVIES and substitute a single b% LEVY upon "RECE "RECEIPTS OF MONEY" regardless of how secured, by whom, for what purposes or thru what egencies, our ACTIVITIES will be on an even FOOTING so far as taxes ere concerned. GOVi&tMENTAL MEASURES increased values 100 billion and the GOVERHENT secure no pprt of the increase. The U.S. saved the INSURANCE COMPAN IES nnd the BANKS from ruin pnd received no pprt of the INCREASES IN THEIR ASSETS. If the U.S. TREASURY hpd bought the stocks and bonds In the open market and spent hplf of the amount of our BOND"INCREASES, it would have restored their value and CREATED A NET PROFIT of 50 billions instead of a DEBT http://fraser.stlouisfed.org/billions. of 20 Federal Reserve Bank of St. Louis , ; Having obligated the INHABITANTS of the ENTIRE NATION, to MAINTAIN OUR LARGE INSTITUTIONS, it is now necessary to go to the aid of our FAMILIES. Me have everything necessary except an EqUITAdLE SYSTEM of TAXATION end a COMPLETE CONTROL of the EXPLOITATIONS. It taices no more to operate the NATION ,STATES, COUNTIES and SCHOOLS, thru a SINGLE CONGRESSIONAL LEVY than under our MULTIPLICITY OF UNJUST, OVERLAPPING and DI. CRIMINATORY TAXES and LICENSES, Those now securing less that living costs, can not pay any pert of it. We must provide employment at wsges which will enable them to HAVE AN ABILITY TO PAY. WAGES, PRICES and LIVING STANDARDS are comprrative. If we can not FORCE V/AGE INCREASES to BALANCE OUR LIVING STANDARDS, we can eliminate the LEVIES which makes our LIVING STANDARDS *cost so much. We have been led to consider it NONE OF OUR BUSINESS, how the CORPORATIONS waste their FUNDS* CONSIDERED COLLECTIVELY, every USELESS EXPENDITURE in eny ACTIVITY, effects the LIVING COST just as much as if it were a tax by a govermental agency. ONLY CONGRESS can not REGULATE OUR CORPORATIONS. The St- tee now oppose many measures for FEAR of having ASSESSED VALUES REDUCED. Only by providing the states with ample CASH for nil STATE, COUNTY end SCHOOL PURPOSES, can this OPPOSITION be changed to co-operation. The division of 40^ of e i>% TAX upon RECEIPTS OF MONJ would provide the STATES with emple funds to care for their own aged, aestitue nnc afflicted end thru probations eliminate ail the existing levies upon the things which every family must use or consume. The 60/£ retained by CONGRESS or the U.S. would ACTUALLY BALANCE the oUDGET ond leave ample CASH to continu the PROJECTS now deemed worthy end provide employment at LIVING IAQ28 for ell surplus employables. If there is a LEGITIMATELY COMPETITIVE ACTIVITY which woi would be injured by this SUBSTITUTION, I neve been unable to locate it. Yours truly, dr^/oryi 6711 Ave-J-Houston Texas. MORKLL TOULIN, Capt. U.S.P.A. (retired)