THE CABINET: Millions

Many years ago, as one may well guess, Henry Ford had a dream with four wheels on it. In 1903 he began to manufacture it; he did not have any cash, so he cajoled some skeptical Detroiters into putting up $28,000 (the only moneys ever invested in the Ford Motor Co.). James Couzens, a Canadian by birth, who was working in a coal yard, scraped up $1,000, added his note for $1,500, bought 25 shares. Two automotive young Dodge brothers (John F. and Horace E.) invested $5,000 apiece. John Gray put up $10,000 but “didn’t think the stock would amount to anything and wouldn’t advise anybody to invest in it.” Horace H. Rackham had $5,000 that he hoped would grow. Mr. Couzens’ sister, Mrs. Rosetta V. Hauss placed $100 in the pie. These people and a few others had children and grandchildren who were born with silver spoons in their mouths. Today the living and the heirs of the dead are being sued by the U. S. Govern-ment for a thousand times the amount of their original invest-ment.

The suit is the climax of a long-standing antipathy between the two wealthiest men in U. S. political life. One of course, is Secretary of the Treasury Andrew W. Mellon, aluminum potentate and banker. The other is that onetime coal-yard-worker, James Couzens, who is now Senator from Michigan. They have been at swords’ points ever since 1924 when Senator Couzens expressed hearty disapproval of Secretary Mellon’s tax reduction program. A year later, Senator Couzens began poking into the affairs of the Bureau of Internal Revenue, made public a report, charged the Treasury Department with laxity in collecting certain income taxes. Secretary Mellon had a lusty counterattack ready, informed Mr. Couzens that he still owed the U. S. Government $10,909,588.08 in taxes on the Ford stock which he sold in 1919. For the last two years, Secretary Mellon and his colleagues in the Treasury Department have been preparing the suit against Mr. Couzens and other onetime Ford stockholders. Last week in the ballroom of the Hotel Statler in Detroit, before the U. S. Court of Tax Appeals, the battle of the proud giants began.

The Government contends that the profits from the sale of the (41½%) minority interests in the Ford Motor Co. to Henry and Edsel Ford in 1919 for $100,000,000 were underestimated by the Bureau of Internal Revenue in the Wilson Administration. Hence, the Government wants Mr. Couzens, the Dodge descendants and a half dozen others to dig into their pockets and send back $34,277,253.48 to the U. S. Treasury. The defense attorneys argue that the Government ought to keep its word, having once placed an estimate on their clients’ profits. The public will be deprived of some illuminating bits of finance by the agreement of both sides not to discuss the earnings of the Ford Motor Co. from its humble birth in 1903 until its prodigious manhood.

The greatest tax suit in U. S. chronicles is not a time to economize on legal talent. The defendants have hired an impressive force: Joseph E. Davies, onetime chairman of the Federal Trade Commission; John W. Davis, De-mocratic nominee for President in 1924; and others, perhaps Charles E. Hughes. Against these bigwigs, Secretary Mellon has sent a smart young man of 27—Alexander W. Gregg. Mr. Mellon has been accused of possessing many kinds of genius, and not the least of them is his ability to pick certain youths from among other youths, and lift them to fame. Mr. Gregg, son of a Democratic Congressman from Palestine, Tex., came as a clerk to the Treasury Department seven years ago. He plunged so deeply into tax lore that people began to refer to him as “that Texas tax wizard.” When Secretary Mellon needed a wiseman to explain his tax reduction plan to Congressional committees in 1924, he called for Mr. Gregg and said in effect: “Go, young man, to the Capitol and enlighten those grey-heads for me.” After the committee hearings, Mr. Gregg sat beside and advised Senator Reed Smoot (himself ranked as the greatest financial authority in Con-gress) while the tax bill was being debated in the Senate. The Coolidge Administration is proud of the 1924 tax law—and so is Mr. Gregg, no doubt. In 1925 he was made Solicitor in the Bureau of Internal Revenue. Now he is chief counsel for the Government in the Detroit suit, where Secretary Mellon and Senator Couzens are trying to effect a pride’s purge over a few million dollars.