The Charlotte News

Tuesday, February 26, 1952


Site Ed. Note: The front page reports, via Robert B. Tuckman, that in the Korean truce talks, the Communists this date rejected the allied proposal which would ban Russian supervision of the truce as part of the Communists' nominated three-nation neutral inspection team. The allies had proposed reduction from 6 to 4 neutral nations, two from each side, with the allies willing to waive Norway among its three nominated nations, provided the Communists would eliminate Russia from its list.

Staff officers remained deadlocked on the number of ports of entry to be subject to inspection, with the allies still proposing six while the Communists insisted on five, the latter stating that the offer was "final". Originally, the allies had demanded 12 ports of inspection while the Communists wanted only three.

The other group of staff officers devoted their entire session to minor differences in phraseology regarding arrangements for exchange of prisoners.

For the first time since Christmas, weather stopped all aerial strikes against enemy lines by the allies, with only weather reconnaissance planes taking to the air. Only 217 sorties, about a third of the normal complement, had been flown by the Fifth Air Force during daylight hours the prior day.

Eighth Army headquarters reported only a few light patrol actions and some artillery fire on the ground.

The Navy reported this date that 11 men had been wounded aboard the destroyer Shelton on February 22 by Communist shore fire off the northeast coast of Korea. Three of the 11 wounded were said to be in serious condition. On the same date, two other destroyers had received minor damage but without casualties.

Maj. General William Dean, imprisoned in North Korea since being captured July 21, 1950 shortly after the start of the war, has excerpts from a letter printed, dated in January, which had been turned over to the Associated Press by the Communist correspondent, Wilfred Burchett, in which the General stated that he regretted he was not the hero which the newspaper accounts had made him out to be, stating to the correspondent that he was grateful for the news that his aide, Arthur Clarke, had escaped and was still alive, taking a load from his mind, as Mr. Clarke, says the General, was the hero of the night of July 21, 1950, not he. He also appreciated the correspondent having written his wife and thanked him further for his interview with the General, which he found "extremely flattering".

In Lisbon, the Big Three Western powers and West German Chancellor Konrad Adenauer agreed that West Germany should provide the equivalent of 2.6 billion dollars for Western defense during the ensuing year. A copy of the agreement had been sent to the Bonn Government for final approval. The amount had been recommended by the top Allied planners based on West German capacity to pay.

In London, Prime Minister Churchill stated to Commons this date that the previous Labor Government had succeeded in building an atomic bomb for Britain but had failed to inform Parliament about it. This statement followed an attack on the Conservative Government's foreign policy by Laborite Herbert Morrison, former Foreign Secretary, accusing Mr. Churchill of making belligerent statements, endangering world peace and the chances of reaching a Korean truce. He accused the Prime Minister of speaking with different voices in Washington and London, in the former, giving the impression that Britain would support the U.S. in any extension of the Korean conflict to Communist China, whereas in London, he had said that there was no change in British policy in the Far East. Mr. Morrison described these statements as "woolly" and demanded to know whether there was in fact any change in British policy regarding China, to which the Prime Minister replied that he had made it plain a month earlier that he was opposed to any action which would involve Britain or its allies in war with China, had never departed from that view publicly or privately. It was at that point that Mr. Churchill imparted the news regarding the atomic bomb, stating that there was no reason why, in time of peace, the Parliament should not have been fully apprised of the development.

Senator Walter George of Georgia, chairman of the Senate Finance Committee which handled tax legislation, indicated his opposition to the President's plan for reorganization of the IRB. The plan would abolish the office of 64 collectors who were presently political appointees of the President and replace them with about 25 district collectors to be under the Civil Service system. The Senate had to act on the plan by March 14 or it would become law, the House having already refused disapproval.

After a two-hour floor fight by Senator Paul Douglas in an attempt to block the nomination of Harry McDonald as the new head of the RFC, the nomination was approved by a vote of 46 to 23 the previous day and Mr. McDonald took over the agency this date, leaving his former position as head of the SEC. He advised influence peddlers to stay away from the RFC as he knew how to handle that sort of thing. Senator Douglas had claimed that Mr. McDonald would be too "weak" to prevent influence peddling at the agency.

The steady rise in the cost of living had, at least temporarily, halted, with no change registered from mid-December through mid-January, after it had risen steadily since the previous August. An older version of the index, maintained on a different set of consumer items, showed, however, a .2 percent rise, enough for a three-cent pay increase for members of the UAW in the automobile, aircraft and farm equipment industries, whose contracts were tied to the old version of the index. The increase might be subject to formal approval by the Wage Stabilization Board.

Near Omaha, a four-engine B-50 bomber had crashed and burned while landing at Offutt Air Force Base, killing five and injuring the other 12 persons aboard. The cause of the crash was not immediately known, but a wing had fallen off the aircraft just before it plummeted to the ground.

In the Austrian Alps, an avalanche in the area of the Kaprun power station killed six workers and injured several others, bringing the total deaths to 46 in the Alps during the current winter.

An armed former convict accused of a $19,600 Los Angeles bank robbery had flown into New York this date and was arrested by the FBI within 15 hours following the crime, after having been trailed through "bait money" taken in the holdup. Special agent Edward Scheidt, formerly of the Charlotte FBI office, identified the suspect as John Richard Bayless, who had served time previously at Alcatraz for a bank robbery in Mansfield, Missouri. He had used money taken in the robbery to buy a TWA ticket to New York and the serial numbers had been recorded and traced back to the bank robbery. He had about $2,000 of this "bait money" in his possession when he was arrested, specifically designed to be traceable to a bank robber. The alleged robber stated that it was one time he should have stuck to his cooking, a reference to the FBI having found a neatly typed, 200-page cookbook in his luggage, which, he informed, he had prepared himself after learning to cook while serving time at Alcatraz. His recipes included "jelly roles, gun drops, and lady fingers".

Naturally, therefore, when you rob a bank, you ask the teller not to give you any of that there "bait money", that you are hip to their tricks and will double check the serial numbers against the master list which you have in your possession, all the while having the gun drops on them.

In Luenburg, Germany, a 300-pound pig had shot and wounded a butcher who was trying to kill it, according to local police. The butcher had been kneeling beside the pig and loading his bolt-action gun when the pig suddenly sprang up and struck the trigger with its hind leg, causing the butcher to be shot through the knee.

The News inaugurates a presidential preference poll, asking respondents to indicate their choice for the presidency in November, between General Eisenhower, Senator Estes Kefauver, Senator Robert Kerr, former Governor Harold Stassen, Governor Adlai Stevenson, Senator Robert Taft, the President, and Governor Earl Warren. The questionnaire also asks for indication of the candidate for whom the respondent had voted in 1948 and whether the respondent was a Democrat, Independent or Republican.

On the editorial page, "NATO Patches Quarrels and Plods Along" tells of the recently concluded Lisbon Foreign Ministers Council meeting of NATO, at which it was decided between the Big Three that in exchange for waiving objection to West Germany supplying a military force to the NATO army, France had received new pledges that England and the U.S. would not pull out of Europe. Overall, the confreres had agreed to a goal of 50 divisions and 4,000 planes for the European army and air force by the end of the year, with the goal of 80 to 100 divisions for the army to be established by the beginning of 1954. Presently, General Eisenhower had under his command less than 30 ready divisions and fewer than 1,000 planes.

All of these agreements first had to be ratified by each of the 14 NATO nations, now including Turkey and Greece, with the exception that the army plan needed only to be ratified by the parliaments of France, Britain, West Germany and the Benelux nations. Each of the parliaments had to approve the country's portion of the necessary expenditure and a tax increase in France would have to be increased from 10 percent to 15 percent to cover its costs. There were rumblings of discontent with the Government in West Germany of Chancellor Konrad Adenauer, such that if the Germans believed that they were being forced to rearm to sustain a military over which they had little direct control, the Government in Bonn would fall and increased German recalcitrance toward rearming would thereafter be expected.

Despite these hurdles and problems ahead, NATO was moving forward, but yet required these approvals before the steps agreed at Lisbon could be implemented.

"It Still Looks Like a Loophole" tells of the letters column this date containing letters from the president of the Petroleum Club of Houston, R. E. Smith, and a Charlotte man, each being critical of a recent editorial in the newspaper which had criticized the oil percentage-depletion allowance in the tax laws, providing for a 27.5 percent deduction from gross income derived from oil wells throughout the life of the well, to compensate oil producers for unproductive drilling. Also in the column were letters from Senator Hubert Humphrey of Minnesota and Philip Stern, who had written a piece in The Reporter, to which the previous editorial had alluded, both criticizing the depletion allowance.

The piece thinks that the allowance provided unnecessary advantage to oil producers over persons who ran other businesses, who could only claim normal depreciation of equipment and structures. It favors preservation of the allowance only for the unsuccessful driller and elimination of it for the successful operator, thus rendering a more equitable distribution of the tax burden, eliminating this lucrative loophole.

"Playing Politics by Ear" finds that one of the biggest flaws in the City Government was the failure to plan public improvements on a long-range basis. The planning of city streets was being played by ear, whereas the City School Board had, much earlier, determined that it was advisable to call in professional consultants to map the expansion of the school system on the basis of future needs.

It advises that such planning of necessary facilities needed to be carried on from one administration to the next, regardless of politics. The City Council could resolve many of the community's problems and worries and provide the taxpayers a better break by looking to the future and not worrying so much about which administration did what.

"A Tragic Incident in High Point" tells of an accident occurring the previous Saturday afternoon in High Point, in which a four-year old girl had been seriously injured while crossing a street, had been rushed to the hospital within five minutes, but had to wait thereafter for 30 minutes before an emergency surgeon showed up at the hospital, by which point it was too late to save her.

It cites the incident as providing the rationale for the extra expense to Mecklenburg County for the Charlotte Memorial Hospital's 24-hour emergency service, which saved lives otherwise unnecessarily lost, as in the case of the little girl in High Point.

Drew Pearson tells of the President's decision to run or not for re-election being hinged to the fate of General Eisenhower as the Republican nominee. When the stock of the General had risen, the President tended toward not running, but as the organizational strength of the Taft forces began to appear as an insuperable obstacle to the General's nomination, despite his widespread popular appeal, the President was leaning more toward running again to seek to defeat Senator Taft.

Chief Justice Fred Vinson and Speaker of the House Sam Rayburn were counseling the President not to run again, the Chief Justice making the argument that he had solidified his place in history regarding foreign policy with the Truman Doctrine, the Marshall Plan, NATO and stopping of Communist aggression in Korea, and on the domestic side with his advocacy of civil rights, public housing, public health and generally a better break for the common man, but that if he were to run again, he would split the Democratic Party in two and jeopardize potentially his foreign policy and all else he had accomplished.

But the people immediately around the President were counseling him to run again, because their jobs depended on it. They had convinced him that Senator Estes Kefauver was not a friend to the White House, to the point where the President was almost determined to run again just to put the Senator in his place. Moreover, recently, when Governor Adlai Stevenson, whom the President liked, had made favorable comments regarding Senator Kefauver, the palace guard had convinced the President that the Governor had turned against him in favor of the Senator.

Joseph & Stewart Alsop regard the newly appointed Newbold Morris to become executive branch investigator of corruption and the pending Congressional determination of whether he would receive subpoena powers, considered by the Alsops to be sine qua non for accomplishing his job effectively. A lot of people, both in the Congress and the executive branch, had hoped that Mr. Morris would simply read a few reports, right an innocuous statement on corruption, and then go away. Judging by his start, that was not going to be the case. He had indicated that he was issuing a questionnaire to all members of the executive branch seeking each person's outside income beyond their Government salary, its origins and how many hours each person had worked to earn it. The President had put at his disposal a staff of 150 or more, with office space outside the Justice Department, and made him accountable directly to the President, at the request of Mr. Morris.

The Congress appeared reluctant to grant the President's request for Mr. Morris to have the power to provide immunity to witnesses as he chose, to aid in the investigative process, a power Mr. Morris had not sought. The President's eagerness to back Mr. Morris showed that the President, belatedly, was fed up with the way officials of his Administration had been selling him down the river and that the best approach would be to put the burden on the Congress of proving sincerity anent the corruption issue.

Senate Judiciary Committee chairman Pat McCarran would have a lot to say regarding whether Mr. Morris would receive subpoena powers, and the Alsops think it would not be surprising if the request were buried in committee. They also think it would not be surprising if the nonexistent Communist leanings attributed to Mr. Morris and the equally nonexistent profits he was supposed to have received from the war surplus shipping deal with the Government became the subject of more and more vociferous charges against him.

Robert C. Ruark discusses the detective genre, which had taken a beating after having revived under the pens of Dashiell Hammett and Raymond Chandler, a far cry from the tawdry Philo Vance of earlier days. But now the genre appeared to be doing an about-face, having been taken over by Mickey Spillane and his fictional detective, Mike Hammer, who appeared to enjoy killing people, as the police were entirely too slow for his pace. "[S]o he fans his big .45 and shoots everybody who ruffles him. Sometimes he shoots off their faces. If he dislikes them very much he shoots them through the belt buckle, so that they will have a painful little period of sinful contemplation."

Primarily, he liked to shoot "dames, although he professes a certain finicky distaste for dealing distaff death." He was always getting involved with women who needed killing and so his lack of hesitancy in "slapping a slug into their buxom chassis is probably an admirable trait, if a touch treasonous to the Southern school of chivalry."

Before shooting them, he fell in love with them or they with him, as Mr. Hammer had a set of morals "that might gag a goat". Between killing people and wrestling with girls, he was always tired and generally drunk, and at the end of the book, Mr. Ruark was even more tired than Mr. Hammer, wearied more by his "amours than by his manslaughters, murders, and self-appointed executions."

But the books about the exploits of Mike Hammer were selling in the millions and so, he guesses, the people who sought them out in the magazine stands of the stations and airports knew what they wanted—"a half-and-half blend of stark sex, solid sadism, and bum writing."

A letter from R. E. Smith, president of the Petroleum Club of Houston, as indicated in the above editorial, responds to the previous editorial in the newspaper critical of the oil depletion allowance, tells of about 50 percent of the membership of the Club being persons earning a salary in the oil business or in a business related to it. The original initiation fee of $500 had been raised to $750 and each member owned a share of the assets of the Club. He assures that the Club was breaking no laws and was only a social organization. He indicates that he was in the oil business and that it was a great country with opportunities available to all men, that he had made success in the oil business as an independent producer without initial capital. Many had been successful, but many had also failed. He says that he, too, was in the newspaper business in a small way, but had thus far been unable to make it profitable.

He stresses that the only way to take advantage of the depletion allowance was to put the profits from oil wells back into exploration for oil, while at the same time oil reserves were being depleted. Eventually, those who profited from the oil business would have to pay their taxes, either in a lump sum through inheritance taxes, or, if and when their oil exploration decreased, on the same tax percentage basis as everyone else. He suggests that the matter be looked at on the basis of averages through time, rather than selecting out individuals or incidents. He also indicates that 76 percent of all new oil discoveries were by independent producers who had no major oil company connections.

A letter from Senator Hubert Humphrey of Minnesota thanks the newspaper for the same editorial and indicates that there was no doubt in his mind that the newspaper's position was correct and in the public interest [cf. 44:00], as supported by the article the piece had referenced by Philip Stern. He indicates that the bonus represented by the percentage depletion allowance had nothing to do with the cost of oil production which the owner was entitled to recover but rather continued as long as the oil or gas well operated, enabling, theoretically, the owner to recover the cost of his investment 100 times over. The taxpayers were the losers through the loss of this source of revenue. The Treasury figures showed that in 1947 oil companies worth over $100 million had claimed percentage depletion allowances of more than 13 times their actual depletion on an original cost basis. It was the equivalent of allowing a businessman to recover the cost of his plant and equipment 13 times over. Moreover, special provisions allowed oil companies to deduct development costs, costs which could not currently be deducted by other businesses for tax purposes.

It should be noted that Senator Humphrey had sought to reduce the oil depletion allowance from 27.5 to 15 percent in 1950 and it was defeated in the Senate in 1951 by a vote of 71 to 9. The effort was revived again in 1958 by two competing amendments, one from Senator John Williams of Delaware, whose amendment was identical to the prior amendment offered by Senator Humphrey, and another, more moderate graduated reduction, regressive to income, preserving the 27.5 percent rate for oil producers earning less than a million dollars per year in gross income, while reducing the allowance to 21 percent for those earning between a million and five million dollars per year, and 15 percent for those earning more than five million, offered by Senator William Proxmire of Wisconsin. The former amendment was defeated by a vote of 63 to 26, and the latter, by a vote of 58 to 31. Incidentally, Senator John F. Kennedy's vote against the Williams amendment and in favor of the Proxmire amendment was explained in a position memo during the 1960 presidential campaign, that passage of the Williams amendment would have foredoomed passage of the bill and would have precluded consideration of the Proxmire amendment, which had a chance of passage in the full bill.

With a top tax bracket of 91 percent in 1960, it does not take much figuring to understand the difference in a 27.5 percent depletion allowance, shielding that percentage of gross income from taxation, and a 21 percent or 15 percent allowance, when the major oil companies were earning net profits in 1960 of 691 million for Esso, 354 million for Texaco, 291 million for Gulf, and 164 million for Mobil, to name the top four.

According to the tables set forth in the above-linked Congressional Record for August 11, 1958, Humble Oil took a depletion allowance of 88.5 million dollars for tax year 1952, paying 30.5 million in taxes on net income of 145.3 million, Standard Oil of California took 64.3 million in depletion allowance, paying 40.7 million in taxes on net income of 174 million, Socony-Vacuum took 45.1 million in depletion allowance, paying 51 million in taxes on net income of 171 million, and Phillips Petroleum took 33 million in depletion allowance, paying 16.5 million in taxes on net income of 75.2 million.

A letter writer comments on the same editorial, noting that the percentage depletion allowance had been in existence in the tax law since 1926 and had remained unchanged since. He suggests that it had been carefully reviewed by Congress during its history and repeatedly sustained. He does not believe that the depletion allowance amounted to a loophole in the tax law or subsidized oil developers, but rather had the rationale of taxing the natural resource industries in a fair way based on the fact that their production became valuable only through destruction of the raw materials.

A letter from Philip Stern, who had written the article critical of the depletion allowance in The Reporter, as also indicated in the above editorial, and as mentioned in the earlier editorial, states that his article had been the subject of great criticism from the petroleum industry, primarily via a newsletter published by the Independent Petroleum Association. He indicates that the foregoing letter writer had been correct in asserting that the percentage depletion allowance had been in the tax laws since 1926, largely unchanged. But the 1951 tax bill had added some 20 new minerals to those previously qualifying, including sand, gravel, oyster shells and clam shells. It also doubled the depletion allowance from 5 to 10 percent for coal, despite the fact that the U.S. had coal reserves which ought last for 2,000 years. Many of the minerals added to the list were based on the fact that the allowance already existed for other minerals and it was considered discriminatory to deny it to those added to the list. Thus the loophole which had been created was multiplying on itself.

He indicates that he was not certain that the foregoing letter writer was correct in saying that the depletion allowance had been carefully reviewed by Congress for the previous 25 years. Everyone understood the risks of oil development resulting from dry holes, which could be fully written off against income before taxes. No one disputed the correctness of that write-off. But the depletion allowance came on top of that.

He thinks that the allowance ought be in the form of a subsidy, and thus above board and subject to review by the taxpayers.

Framed Edition
[Return to Links
Page by Subject] [Return to Links-Page by Date] [Return to News<i><i><i>—</i></i></i>Framed Edition]
Links-Date Links-Subj.