Senator MCADOO. That was under the old Constitution. [Laughter.] But as a historical fact, it is a very interesting thing to examine, because it was a hopeless thing, and did not work out. Mr. MARSH. Well, Senator McAdoo, my professor of history at the Chicago University once told me that I had not quite studied my books, and I said that I was more interested in making history than in studying it, and I think that is the role of the present administration. Senator MCADOO. I think a little knowledge of history, however, helps you to make history. Mr. MARSH. And a knowledge of economics helps a lot more, in my judgment. Senator CONNALLY. You made the statement a while ago that the Constitution said something about the sanctity of contract or preserving contracts. Mr. MARSH. I think it was the State constitutions. Senator CONNALLY. There is a lot of confusion about that. There is nothing in the Federal Constitution which prohibits the impairment of a contract. Those clauses are all in the State constitutions, and so there is no inhibition on Congress passing a law that does impair an obligation of a contract. Senator MCÃDOO. Of a Federal contract. Senator CONNALLY. It says "a contract." That is the law. You know that, don't you? Mr. MARSH. Yes; it was the State constitutions. Senator BARKLEY. It is an inhibition in the Federal Constitution against the States doing it. Mr. MARSH. But no inhibition on the Federal Government itself doing whatever is necessary to have the Nation survive. Senator CONNALLY. I do not want to get off on that subject. But as to contracts, isn't all that is in there a clause that provides that no State might pass a law impairing the obligation of contract, and that is not a limitation on the Federal Government. There is so much confusion in the public mind about that supposed clause in the Constitution. Mr. MARSH. On contracts? Senator CONNALLY. Yes. Mr. MARSH. Yes, sir. Senator CONNALLY. You brought it in. I did not raise the point. Mr. MARSH. I am glad you raised the point. The CHAIRMAN. Proceed. Mr. MARSH. The Secretary of the Treasury estimates the total receipts this year at $3,260,000,000, expenditures at $9,891,000,000, and deficit at $6.357,000,000. His estimate that expenditures next year will be only $4,487,000,000, resulting in a deficit of only $512,000,000, is over-sanguine. They will probably be nearer $6,000,000,000. We cannot achieve prosperity by financing the Government through a small tax on large profits. The idea that we are to keep down the rate of taxation, whether it is on corporation profits, that is, excess profits or ordinary profits, or that we shall keep down the income-tax rate on individuals in the hope or expectation-and they are two very different thingsthat prices will go up so much that profits will be increased, and the Government can ever pay back any large proportion of the indebtedness which it now has the Federal Government-by taking a small part of those high profits which are due to high prices, is utterly contradictory. It cannot be done. I believe we are in for a consumers' strike today, because of the increase in prices. That is my judgment. After paying all income and surtaxes, the 20 persons who in 1932 had net incomes of over $1,000,000, had left an average of $985,261, the 80 with incomes of $500,000 to $1,000,000 had left $445,879, and the 136 with incomes of $300,000, to $500,000 had left $240,240. I would like at this point-I am not going to ask to read many figures, but to call your attention to the hearings of the House committee on the pending revenue bill, on page 239, where the clerk of the committee, or the expert of the committee, had prepared a table which is incorporated there, showing how much more are paid on incomes of $1,000, $2,000, $3,000, and up to $1,000,000 in Great Britain, France, and Germany, than in the United States. There is an exception when you get to the higher branches. It is peculiar that less is paid proportionately in the large incomes in all these countries than on the small incomes with the exception of the United States, where the small incomes-that is, $2,000 and $3,000 are not paying very much. I would like, Mr. Chairman, to read into the record a letter written me on the 20th of February by Mr. Nathan R. Margold, chairman of the Petroleum Administration Board, on the question of taxing gasoline, together with two photostats showing that gasoline taxes in 1931 amounted to $571,000,000 in round figures, and in 1932 to $549,000,000 in round figures. The CHAIRMAN. They may be put in the record. (The letter referred to is as follows:) UNITED STATES DEPARTMENT OF THE INTERIOR, Mr. BENJAMIN C. MARSH, PETROLEUM ADMINISTRATIVE BOARD, Executive Secretary the People's Lobby, Washington, D.C. MY DEAR MR. MARSH: This will acknowledge receipt of your letter of February 8 in which you request this board to send you the figures showing the total amount paid by consumers for gasoline in 1931, 1932, and 1933, the amount of Federal taxes on gasoline for each of the 3 years, and also the State and local taxes. The Bureau of Public Roads has prepared tables showing most of these figures and we are enclosing tables in considerable detail covering two of the years in question. The Bureau of Mines' figures covering gasoline consumed for the 3 years in question are as follows: 1931 (final) 1932 (final) 1933 (preliminary). Barrels 403, 418, 000 373, 900, 000 378, 143, 000 As for 1933, you will note that the Bureau of Mines' figures are preliminary. The Bureau of Public Roads has not yet completed their estimate, but the American Petroleum Institute, whose figures are unofficial, has prepared an estimate on the first 11 months with December omitted. These are tax figures and represent about 97 percent of the total gallonage of gasoline sold in the United States. It will be found that these figures are approximately 3 percent less than those of the Bureau of Mines due largely to the fact that some gasoline classified as motor fuel is used by cleaning establishments, paint and varnish furnishers and other technical users. You will observe that the Bureau of Mines' figures are in barrels of 42 United States gallons. The American Petroleum Institute has computed the number of gallons consumed during the first 11 months of 1933, basing their computation on the method followed by the Bureau of Mines with a total of 16,025,730,000 gallons. On June 21, 1932, a Federal tax of 1 cent per gallon on gasoline (4 cents per gallon on lubricating oil) was put into effect. On January 1, 1933, the Federal gasoline tax was raised to 12 cents per gallon, at which figure it remained until January 1, 1934, when it was reduced to 1 cent per gallon. There is no official Government figure on the retail price of gasoline. However, there is a computation by the Oil and Gas Journal, and by the American Petroleum Institute of the average price in 50 representative cities. This average is an arithmetical average of these cities rather than a weighted average. In other words, a large city like New York has no more weight than Peoria, Ill. Below is quoted the average retail price for gasoline as represented by these 50 cities, compiled by the Oil and Gas Journal, and the average State tax for a similar number of cities as compiled by the American Petroleum Institute: Theoretically one should be able to figure the total cost to the consumer by multiplying the total gallonage by the average sale-price figure in these 50 representative cities. It should be remembered that this is not the true figure and would require considerable discounting by reason of the prevalent practice of commercial discounts, cooperative rebates, and tank-car purchases by large consumers. Again, while no official figures are available on the quantity of gasoline moved through these discount channels, it is probably not far from the truth that approximately 65 percent has been discounted at least 2 cents per gallon. If we can be of any further service to you, please write us again. Sincerely yours, NATHAN R. MARGOLD, Chairman. (The two photostats referred to are as follows:) |