But I was alarmed at the principle that this Government would ever want to collect taxes that are unjust, that we never intended to impose, just in order to get the money in. If we go to that point of view, I agree with the previous witness that we are going to kill the goose that laid the golden egg and, indeed, we will have undermined the American economy to such an extent that this $800 million we are talking about would be completely insignificant.

Mr. THOMSON. I am clearly in accord with your ideas and your principles.

Mr. CURTIS of Missouri. Thank you, sir.

The CHAIRMAN. Mr. Eberharter.

Mr. EBERHARTER. The Secretary of the Treasury suggested that we make a one-package deal, three propositions: Continue the corporation tax which is due to be reduced on April 1, 1954, continue for 6 months the excess profits tax, and also continue the present rate of excise taxes in this one bill.

Do you go along with him on that?

Mr. THOMSON. At the moment, that is not a matter we have dealt with, but our statement did not go along with that philosophy, and I would hope that the expenditures could be such that that decision could be reconsidered after the first of the year.

Mr. EBERHARTER. He definitely said, in answer to a question of mine, that we should put three propositions in this deal.

In considering that, do you want to say you agree with the Treasury on that at this time, or disagree with the Treasury at this time.

Mr. THOMSON. I would hope that you could do better than that indication, on the basis of further reduction in expenditures.

Mr. EBERHARTER. And not act at all right now on the repeal of the termination dates?

Mr. THOMSON. I hope you would be able to better and reconsider that position.

Mr. EBERHARTER. Then you disagree with the Secretary of the Treasury in those other two matters; is that right?

Mr. THOMSON. I am hoping you will do better than that; yes, sir. Mr. EBERHARTER. Thank you.

The CHAIRMAN. There is one subject that has been brought up on which we would be glad to get your opinion.

Do you figure that if there is an armistice in the Korean war within the next 2 or 3 weeks that that would make it possible to cut down expenditures by $2 billion?

Mr. THOMSON. All I see that anybody can do is to give an opinion, Mr. Chairman. And the information that I have is that it isn't going to cut down expenditures enough to warrant any radical change in your policy.

And when I read the papers and I see that Congress thinks that the cuts in the military, for instance, are too much now, I am inclined to think that that is not a practical thing for me to think about as a basis for getting further reduction in taxes.

Now, that is an opinion, and that is all I can give you.

The CHAIRMAN. În other words, your opinion and perhaps that of others, from what we have heard-and I should judge it was the opinion of the administration-is that it does not make any difference in the expenditures whether we continue at war, or stop the war?

35078-53--24

Mr. THOMSON. It make some difference, but not a material difference. And I am not able to place it at this time.

The CHAIRMAN. I would like to ask you a question about your

research here.

You have a secretary of your research policy committee named Robert F. Lenhart; have you not?

Mr. THOMSON. Yes, Mr. Chairman. I think he is in the room, by the way.

The CHAIRMAN. Mr. Lenhart, at any time after it was decided by the administration to extend this excess profits tax, were you requested to send out telegrams to the businessmen of this country, various corporations and so forth, to back the President in his proposal? Mr. LENHART. No, sir.

Mr. THOMSON. That would be definitely against CED's policies. The CHAIRMAN. That is what I want to know.

Mr. THOMSON. That is correct.

The CHAIRMAN. In order to keep the record perfectly straight, I would like to say I have the list here that was in your publication, your tax and expenditure policy for 1953. I have one of the pages here that I questioned you about, the composition of the research and policy committee, which I think is about 37 prominent firms, including your

own.

Mr. THOMSON. That is right.

The CHAIRMAN. I believe that in answer to my question you said that each one of these men was against the excess profits tax. And you qualified it, of course, to the extent that they approved the report which you presented. Is that right?

Mr. THOMSON. Yes.

I see it is indicated by the statement. I would go further and say that those gentlemen, as far as I know them individually and as members of this committee, are opposed to the excess profits tax.

The CHAIRMAN. Thank you very much. That is what I want to know.

And at this point, I would like, without objection, to insert the names of the members into the record.

(The material referred to follows):

RESEARCH AND POLICY COMMITTEE

Frazar B. Wilde, chairman, president, Connecticut General Life Insurance Co., Hartford, Conn.

J. Cameron Thomson, vice chairman, president, Northwest Bancorporation, Minneapolis, Minn.

Elliott V. Bell, chairman of the executive committee, McGraw-Hill Publishing Co.,
Inc., New York, N. Y.

John D. Biggers, president, Libbey-Owens-Ford Glass Co., Toledo, Ohio
James F. Brownlee partner, J. H. Whitney & Co., New York, N. Y.

Charles S. Cheston, Philadelphia, Pa.

S. Bayard Colgate, honorary chairman of the board, Colgate-Palmolive-Peet Co., New York, N. Y.

S. Sloan Colt, president, Bankers Trust Co., New York, N. Y.

Gardner Cowles, president, Des Moines Register and Tribune and Cowles Magazines, Inc., New York, N. Y.

Jay E. Crane, vice president, Standard Oil Co. (New Jersey), New York, N. Y. Harlow H. Curtice, president, General Motors Corp., Detroit, Mich.

D. W. Figgis, director and former chairman of the board, American Can Co., New York, N. Y.

Clarence Francis, chairman of the board, General Foods Corp., New York, N. Y.

Philip L. Graham, president and publisher, the Washington Post, Washington, D. C.

Robert Heller, president, Robert Heller & Associates, Inc., Cleveland, Ohio Amory Houghton, chairman of the board, Corning Glass Works, Corning, N. Y. Thomas Roy Jones, president, Daystrom, Inc., Elizabeth, N. J.

Ernest Kanzler, chairman of the board, Universal C. I. T. Credit Corp., Detroit, Mich.

Meyer Kestnbaum, president, Hart Schaffner & Marx, Chicago, Ill.

Sigurd S. Larmon, president, Young & Rubicam, Inc., New York, N. Y.

Roy E. Larsen, president, Time, Inc., New York, N. Y.

Fred Lazarus, Jr., president, Federated Department Stores, Inc., Cincinnati, Ohio Leroy A. Lincoln, chairman of the board, Metropolitan Life Insurance Co., New York, N. Y.

Thomas B. McCabe, president, Scott Paper Co., Chester, Pa.

Fowler McCormick, Scottsdale, Ariz.

Don G. Mitchell, president, Sylvania Electric Products, Inc., New York, N. Y. George L. Morrison, chairman of the board and president, General Baking Co., New York, N. Y.

Howard C. Petersen, president, Fidelity Philadelphia Trust Co., Philadelphia, Pa. Philip D. Reed, chairman of the board, General Electric Co., New York, N. Y. Nelson A. Rockefeller, New York, N. Y.

Beardsley Ruml, New York, N. Y.

Harry Scherman, chairman of the board, Book-of-the-Month Club, Inc., New York, N. Y.

S. Abbot Smith, president, Thomas Strahan Co., Chelsea, Mass.

H. Christian Sonn, chairman of the board, Amsinck, Sonne & Co., New York, N. Y. Alan H. Temple, executive vice president, the National City Bank of New York, New York, N. Y.

Theodore O. Yntema, vice president, finance, Ford Motor Co., Dearborn, Mich. J. D. Zellerbach, president, Crown Zellerbach Corp., San Francisco, Calif.

The CHAIRMAN. Do you have any questions, Mr. Simpson?

Mr. SIMPSON. Mr. Chairman, I have 1 or 2 questions with respect to the names on that list.

I have gone over them, and certain ones of them have spoken to me personally. Some others, through their attorneys or through lesser officers of their corporations, have appealed for assistance in connection with amendments to the excess profits tax law to have the effect of giving them relief by removing certain inequities, what they consider inequities as applied to their corporations.

Can you tell me whether those individuals would like to have relief provisions included in ths bill, if it were extended?

Mr. THOMSON. I don't know what they asked for, Mr. Congressman, and I can't judge as to the merit of what they did ask.

I would not have any opinion on that.

Mr. SIMPSON. Did they not comment, in your various meetings, with respect to the wisdom of passing the law, including relief provisions? Mr. THOMSON. I am not sure that that point was discussed. I wouldn't be able to tie that down to any individual and the statement did not take that into account and did not make a recommendation on that point.

Mr. SIMPSON. The committee did not make a recommendation on that point; is that what you are saying?

Mr. THOMSON. That is correct.

Mr. SIMPSON. Thank you, sir.

The CHAIRMAN. Does that conclude your statement?

Mr. THOMSON. Yes.

Thank you, sir, with best wishes to you and your committee.

The CHAIRMAN. Thank you very much, both of you, for appearing here.

The next witness will be Mr. Henry C. Fechtmeyer, who will speak on behalf of the Federal Taxation Committee of the Wisconsin State Chamber of Commerce, of Madison, Wis.

If you will just give your name and capacity in which you appear, for the record, sir, we will be delighted to hear from you.

STATEMENT OF HENRY C. FECHTMEYER, COMPTROLLER, AMPCO METAL, INC., REPRESENTING THE FEDERAL TAXATION COMMITTEE OF THE WISCONSIN STATE CHAMBER OF COMMERCE

Mr. FECHTMEYER. My name is Henry C. Fechtmeyer. I am comptroller of the AMPCO Metal, Inc., and a member of and representing the Federal Taxation Committee of the Wisconsin State Chamber of Commerce.

The members of the taxation committee are representative of business, agriculture, and commerce in the State of Wisconsin.

Chairman Reed and members of the committee, we have prepared a formal statement which was submitted to this committee this morning.

Unfortunately, most of it repeats what you have been hearing in these meetings all week, and rather than take further time in that regard, I would just like to give you a summary statement of our position.

At the outset, let me state that the committee has authorized me to appear in opposition to the extension of the excess profits tax beyond June 30, 1953, the date on which it is presently scheduled to expire.

The Taxation Committee of the Wisconsin State Chamber, like my company, has taken this position only after careful study of all of the pertinent factors at hand.

We realize that the extension of the excess profits tax for 6 months would produce approximately $800 million.

We are also mindful that the administration is working hard to achieve a balanced cash position in the Federal budget.

We are heartily in accord with this action and believe they should be given all possible support by the Congress. Yet we ask that you let the excess-profits tax die on June 30 and bury it forever.

In explaining this position, it is hardly necessary to point out the vicious nature of this tax.

The CHAIRMAN. In other words, that reminds me of a story. Somebody asked if So and So had died and wanted to know what the complaint was. The answer was, "No complaint at all."

Mr. FECHTMEYER. We have plenty of complaints, sir.
The CHAIRMAN. No complaint about the death.

Mr. FECHTMEYER. It has been attacked and thoroughly discredited by members of the past administration, by all known tax authorities. And even during these current hearings, the very men who have appeared here asking for its extension have at the same time condemned this form of taxation.

Just one issue has been raised in support of a 6-month extension. It was pointed out on Monday and today by Mr. Humphrey, Secretary of the Treasury, that the revenue was necessary and that it would be unfair to give tax relief to the small percentage of corporations affected by this tax.

We contend that for 3 long years this small percentage of corporations has been forced to bear a prohibitive tax burden. The expiration of the excess-profits tax would more nearly equalize the tax position of competing companies.

In the case of the excess-profits tax, tax relief will mean relief from wholesale discrimination and should not be delayed by so much as a day.

If it is proved that the revenue is actually needed, and there is some doubt in this matter, it should not be secured by a confiscatory tax on a few corporations.

Lastly, we submit that an early end to the excess-profits tax is in the best interests of the Government itself. It is an expensive act to administer, directly and indirectly, to the point of diminishing returns. Furthermore, the proposed extension of the excess-profits tax would double the Government's contingent liability for refund under the carryback provisions of the act.

In our judgment, this is a real and material consideration.
That is all, gentlemen.

The CHAIRMAN. Does that conclude your statement?

Mr. FECHTMEYER. That concludes my statement.

The CHAIRMAN. We certainly appreciate your appearance here, and I just want to say that you are very ably represented here on this committee by Mr. Byrnes of Wisconsin.

Mr. FECHTMEYER. We really appreciate that fact, sir.

STATEMENT OF WILLIAM L. DOLLE, PRESIDENT, LODGE & SHIPLEY CO., CINCINNATI, OHIO, ON BEHALF OF THE TAX POLICY SUBCOMMITTEE, NATIONAL MACHINE TOOL BUILDERS ASSOCIATION The CHAIRMAN. The next witness will be Mr. William L. Dolle, president of the Lodge & Shipley Co., of Cincinnati, speaking on behalf of the tax policy subcommittee of the National Machine Tool Builders Association.

Mr. Dolle, if you will give your name and the capacity of your appearance to the reporter, we will be glad to hear you, sir.

Mr. DOLLE. My name is William L. Dolle. I am president and general manager of the Lodge & Shipley Co. in Cincinnati, Ohio. Our company makes machine tools, but we confine ourselves to a particular machine known as a lathe.

We employ approximately 550 people, to give you an idea.

Before starting on this, I want to say that I am ordinarily opposed to making a statement or reading a speech. Usually I like to work from notes.

But what I have prepared here I think is sufficiently important and there are points in here that even though it is not the way I would like to do it, I think it is better that I do read it, because it has been organized in a proper sequence.

The CHAIRMAN. Thank you, Mr. Dolle. We can follow you very well that way.

Mr. DOLLE. The reason I brought that out is that if you do see that I deviate slightly from the wording in here, that it is not because I am changing my opinion, or anything. It is just because when I read it over myself out loud it sounded better with a few additions