Circus Taxes

One of the tightest little monopolies in the U. S. is Ringling Brothers Barnum & Bailey Combined Shows, Inc. It has even been sued, by Zack Miller's 101 Ranch when THE GREATEST SHOW ON EARTH grabbed off Tom Mix, for conspiracy in restraint of trade. Last week the Circus was again involved with the law, not for conspiracy in restraint of trade, but for conspiracy "against the peace and dignity of the U. S." in the form of income tax frauds. What was more, the U. S. charged, the frauds had been carried out with a showmanship which would have done credit to the late great Phineas Taylor Barnum.

The Government's peace and dignity had not been disturbed by the Circus itself, either in its present corporate form or in the Ringling partnership which preceded it. Nor was the integrity of its principal owner, John Ringling, at stake. So far as the Government could see, the alleged frauds had been perpetrated without the knowledge or consent of robustious old "Mr. John," the last of the seven Rungeling Brothers from Baraboo, Wis. whose name was changed by a typesetter and allowed to stand uncorrected. All six men indicted in Manhattan last week were agents--"Mr. John's" secretary and his lawyer, John M. Kelley, and four onetime Internal Revenue agents. All had had a hand in preparing or passing various Ringling income tax returns from 1918 through 1932, when the Circus was incorporated.

Though inspired by The Great Barnum, these tax experts did not take in an Internal Revenue agent in Miami named Charles Williamson Clarke, who spent nearly three years on the Ringling case. "Mr. John" says Revenuer Clarke now knows more about the circus business than he does. Since last year Assistant U. S. Attorney James Randall Creel in Manhattan has been preparing the 400 pages of indictments and the mass of evidence to be used when the case goes to trial. Prosecutor Creel has also become something of a circus expert, though at Harvard (Class of 1927) he won a prize for a thesis on "The Monism of William James As Contrasted with the Tychism of Other Modern Philosophers."

According to Messrs. Clarke & Creel, the Ringling partnership took in $53,400,000 from 1918 through 1932, an average of about $3,500,000 annually. It paid out about $42,600,000, leaving net profits of nearly $10,800.000, an average of about $720,000 annually. The Government's figures showed that in only four years were earnings less than $500,000, in two other years more than $1,000,000. However, the people who made out the Ringling tax returns claimed the picture was much darker, reporting net profits for the 15 years at $4,324,000, an annual average of less than $300,000. In either case the circus business obviously was not the big business it has been cracked up to be.

Many of the tax tricks charged were such routine items as failure to report in full income from ticket sales, concessions, dividends, stock deals, or "false, fictitious and fraudulent" deductions for interest, damages or bad debts, including one for $50,000 due from the late Promoter George L. ("Tex") Rickard which was allegedly deducted twice. But the mainstay of the Ringling tax experts, said the Government, was the circus inventory which they managed to persuade the Bureau of Internal Revenue to swallow whole. The bigger the inventory, the more depreciation may be charged against it.

"In one instance," said the Government, "the entire inventory of the Adam Forepaugh and Sells Bros. Circus was found to be 100% fictitious." A favorite circus write-off is "abandoned"' animals. The Ringlings claimed they had abandoned no less than 48 elephants. If all the other animals written off by the Ringlings were really abandoned, an official observed caustically last week, the U. S. would by this time be one of the world's finest big game preserves.

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