Treasury Retort

Secretary Mellon of the Treasury issued his annual report last month for use by the Ways & Means Committee of the House in preparing the tax bill. Secretary Mellon reported a $635,000,000 surplus for 1927; predicted surpluses of $455,000,000 and $274,000,000 for 1928 and 1929 respectively. With the U. S. debt still 18.5 billions big, and large Federal outlays in prospect, Secretary Mellon advised tax reduction of only $225,000,000. Other Republicans had hoped for a cut of 300 millions. Democrats had talked of cutting at least 350 millions. The U. S. Chamber of Commerce had demanded a cut of 400 millions.

After hearing many witnesses, the Ways & Means Committee prepared a bill which called for a $250,000,000 tax cut. This compromise figure was unlikely to be lowered by the Congress, nor raised much beyond $300, 000,000, if raised at all.

But still the Chamber of Commerce, which, representing Business, is supposedly loyal to the Coolidge Administration, cried out for a $400,000,000 reduction. Last fortnight President Coolidge burst out angrily and called the Chamber of Commerce "absurd" in its insistance (TIME, Dec. 5).

Besides demanding insistently, the Chambermen had criticized Secretary Mellon's figures in such a way as to make his caution seem like cruelty-to-taxpayers. So last week Secretary Mellon backed up President Coolidge's indigation with some of his own. Secretary Mellon wrote a "cudgelling,"

"thwacking," "rebuking," "assailing" letter (as headlines called it) to President Lewis Eugene Pierson of the U. S. Chamber of Commerce. He told Mr. Pierson, who is a banker, that he was surprised by the Chamber's "misconception of facts"; by its "generalizations" about the surplus, which it had no accurate means of estimating; by downright errors in its figures. "Such carelessness," said Secretary Mellon, "is perhaps excusable in a general discussion . . . Certainly it is hard to defend in a report which furnishes the basis for an at- tack on official estimates. . . . This is hardly worthy of a businessmen's report." Banker Pierson, unabashed, stuck to his guns. He intimated that the Chamber would reply in detail. He said: "The constituency of the Chamber is a cross section of the country. . . . After all, it is Congress which will pass the tax bill--not the Treasury Department, nor the National Chamber."