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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You write " What I am cjuocined with ia to see that no funuc withdrawn from the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

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end. remain

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.

•

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)