Red Year's End

(See front cover)

From the Treasury basement, where gold is stored, to the east wing of the White House runs a dark little tunnel under East Executive Avenue. Many times through this tunnel last week passed a thickset, youngish man with a big nose and eyes of clearest blue. He wore a linen suit. His teeth bit hard into a Benson & Hedges cigar. He walked fast. Out of the tunnel he skirted the rear portico of the White House (where the presidential kennels are), paced down the west colonnade, marched unannounced by a back door into the offices of the President of the U. S. Nobody barred his way because he was Ogden ("Oggie") Livingston Mills, the rich and high-born Undersecretary of the Treasury, now acting as the Department's chief in the absence of Secretary Andrew William Mellon. The President, many a time last week, wanted to see him in a hurry.

Mr. Mills was one of Washington's three busiest and most publicized men. The other two--President Hoover and Acting Secretary of State William Richards Castle Jr.--awaited him inside the air-cooled White House office. What engaged their joint attention there were the international negotiations incident to Mr. Hoover's proposed debt holiday (see p. 16). Undersecretary Mills was the President's statistical expert in whose head were all the facts and figures needed to deal with France. Two, three, sometimes four times a day President Hoover would summon him for conferences from his great oblong office on the second floor of the Treasury overlooking statues of Alexander Hamilton and William Tecumseh Sherman, with the Potomac beyond. So preoccupied was the Treasury's Undersecretary with the debt negotiations that he cancelled his usual Friday-to-Monday holiday at his summer home in Westbury, L. I. Miss Beatrice Todd, Mr. Mills's admiring secretary, has rarely worked harder or later at the Treasury than she did last week.

In the midst of this exciting activity over international affairs Undersecretary Mills paused briefly last week to wind up the fiscal year of 1931, balance the Treasury's books. And a red year it was for the Government. For the first time since the War, expenditures had, as everyone well knew they would, exceeded receipts, thereby producing a thumping big deficit. Perhaps it was just as well that Secretary Mellon, who had piled up ten annual surpluses in a row, .was away in Paris when the Treasury had to make its dismal accounting to the country. A depression far beyond his darkest estimates had hit the Government's pocketbook and now to his chief assistant fell the unpleasant task of making explanations.

Undersecretary Mills gathered together his fiscal statistics, added, subtracted, arrived at his totals. He found that the 1931 deficit was $903,000,000. The Government had had to go out and borrow $616,000,000 to keep functioning during the year and this sum was therefore added to the public debt. Every source of revenue had been affected by the drying-up process of hard times whereas expenditures had climbed to a new peacetime record. Mr. Mills's figures produced the following tables:

Revenue (in millions of dollars)

Source 1931 Decrease from 1930

Income tax 1,860 551

Customs 378 209

Internal Revenue (Tobacco, stamp and estate taxes, etc.. etc.) 569 59

Other Receipts (Foreign debt payments, Panama Canal tolls, property sales, etc.. etc.) 510 42

Total 3,317 861

Expenditures (in millions of dollars)

1931 Increase over 1930

Total 4,220 226

Increases over 1930

River & Harbor and Flood Control 25

Drought relief and road construction 119

Farm Board 41

Commerce Department 7

Postal Deficit 54

Bonus loans 112

Total 358

Decreases under 1930

Navy 20

Interest on public debt 48

Tax Refunds 64

Total 132

Increased expenditures ($358.000,000) less the Government's economies ($132,000,000) gave Mr. Mills his net increase in 1931 outlay ($226,000.000). Said he: "The increase was largely due to agricultural aid and relief, additional benefits to War veterans and the accelerated governmental construction activities which more than offset other reductions."

Deficit (in millions of dollars)

Increase of Expenditures 226

Decrease in Receipts 861

Total 1,087

Less surplus carried over from 1930 184

Net 1931 Deficit 903

Public Debt (in millions of dollars)

June 30. 1930 16,185

Retirements 440

Total 15,745

Borrowings 1,056

June 30, 1931 16,801

Net increase 616

What Undersecretary Mills had the most difficulty in explaining was the differences between Secretary Mellon's estimates of the Treasury condition and the actual figures. Last December Mr. Mellon set the deficit at $180,000,000, an error of $723,000.000. He missed his guess on receipts by $518,000,000, on expenditures by $205,000.000. Frankly declared Undersecretary Mills: "The discrepancy was due to the difficulty [last autumn] of measuring the severity and duration of the business depression. . . . The Treasury underestimated the effects which the fall in prices and the reduction in volume of business operations would have on taxable incomes.... At the time the estimates were made in the autumn it seemed not unlikely that the turn of the year would witness some business improvement."

A notable change has come over "Oggie" Mills since he entered the Treasury four years ago as the dictatorial, rather supercilious scion of a wealthy old family. Born 46 years ago at Newport, R. I. at the height of the social season, he inherited a background and outlook by no means favorable for a political career. His grandfather was Darius Ogden Mills who left a Buffalo bank for the 1849 gold rush, not as a prospector but as a hardheaded merchant and trader. Grandfather's first year's profit in California was $40,000. The Comstock Lode in Nevada made him rich. He doubled his money in railroad stock and timber land, returned to New York 30 years later to take his place near the top of Society. When he died in 1910 he left an estate of $41.000,000 in New York Central, Atchison, Topeka & Santa Fe, International Paper. Shredded Wheat, Tidewater Oil, Black Diamond Coal, Seaboard Air Line, et al. His daughter became the late great Mrs. Whitelaw Reid. His son Ogden collected works of art, married Ruth Livingston, great-great-great-granddaughter of Robert Livingston whose statue New York put into the U. S. Capitol as one of its two most illustrious citizens.*

Of the elder Ogden's three children, Gladys married Banker Henry Carnegie Phipps. When the eighth Earl of Granard took Beatrice to wife in 1909, the New York Times gave the story front-page display. Ogden Jr. went to Harvard and upon his graduation (1904), much to the surprise of his family, took a law course at Cambridge. Even more surprised was his family when he began to practice his profession in New York. When he went into Republican ward politics in New York City, his kin threw up their hands in social horror. Later he explained: "I was possessed of a fortune but I wanted to put myself, as a matter of personal pride, in a position where I was not dependent upon the income I had inherited. I tackled politics because I concluded that a man with money should justify his existence and take a turn at the oars to propel the civic boat,"

After years of door-bell-pulling and poll-watching, he ran for Congress in 1912, surprised his family not a bit by being roundly beaten. Two years later, however, he did get himself elected to the New York State Senate, served two terms. He was with the A. E. F. as a captain. The Harding landslide of 1920 carried him into a seat in Congress from Manhattan's "blue stocking" district (upper Fifth and Park Avenues, the seat now held by Oil Widow Ruth Pratt).

In the House where he served for the next six years he developed a marked flair for fiscal affairs. Possessed of an excellent memory, he absorbed figures quickly, used them shrewdly in debate. As a member of the Ways & Means Committee he became Secretary Mellon's chief advocate in the House, fought many a fierce floor battle for him and his tax plans. But Congressman Mills, for all his knowledge and dexterity with figures, had a manner that got him into ill favor with his colleagues, antagonized those with whom he had to work. He treated them with intellectual and social contempt, scorned their arguments-- a legislative snob. Though his good friend Speaker Longworth declared he had "the best knowledge of national taxation of anyone in either house of Congress" his superciliousness in using that knowledge made him many a good enemy.

In 1926 he quit the House to run as the Republican nominee for Governor of New York against Alfred Emanuel Smith. Assertive and hard-hitting, he lost all chance of victory when he declared: "There is no truth in the man [Smith] in private or public life." That gave Democrat Smith his chance to stage a highly effective scene with his wife about his private life. Nominee Mills went under by 250,000 votes. Four months later President Coolidge rewarded him with the Undersecretaryship of the Treasury.

Today Ogden Mills is no longer the aggressive, arrogant young man who tried to bulldoze his House colleagues with scorching sarcasm delivered with a high nasal drawl. He has grown affable, friendly, almost democratic. He listens politely to other people's views and opinions, is ready to accept their suggestions. Age has mellowed him, changed enemies to friends.

As the Treasury's No. 2 man, his major achievement has been the enactment of legislation for the issuance of short-term bills bearing no specific interest but bid for under par by investors.* This new and more flexible device for Treasury loans has been of great value to the Department in financing itself through the Depression. Undersecretary Mills, because of his knowledge of the money market, managed virtually single-handed the two big bond issues put out this year. With his Congressional contacts, he replaces Secretary Mellon before House and Senate committees, hurries in to serve as a quick-witted buffer when the Press starts to press the shy old gentleman too hard.

Mr. Mills's first wife was Margaret Rutherfurd. After their divorce she married Sir Paul Dukes and later Prince Charles Michael Joachim Napoleon Murat. The second Mrs. Mills, whom the Undersecretary married in 1924, was Mrs. Dorothy Randolph Fell, who divorced John R. Fell in 1923 for drunkenness. Mrs. Mills has three children--Dorothy who made her debut last year; John, 21, who works with Mergenthaler Linotype Co. in Brooklyn; and Philip, called "Tiny," aged 11.

In Washington the Mills family lives in a big house on 18th Street rented from Walter Evans Edge, the asparagus-loving U. S. Ambassador to France. Before breakfast each morning to the house comes H. C. Langmak, physical trainer, to box, skip rope, do setting up exercises with Mr. Mills before he hustles away to his office by 9:15 a. m. In slack times the Undersecretary slips out to Burning Tree Club where he plays an 85-10-90 game of golf. In Manhattan the Mills home is just off Fifth Avenue on 6gth Street. There is also a Newport villa. Two chauffeurs are kept busy with four cars, one of them a handsome Isotta Fraschini. Last spring at the Pusey & Jones shipyards in Wilmington, Mrs. Mills christened her husband's new 160-ft. yacht Avalon.

Between Secretary and Undersecretary of the Treasury there is almost a father-- and -- son relationship. Mr. Mills calls his chief "the old man." So active is the younger man's control of all Treasury affairs, so complete is "the old man's" confidence in his judgment that Mr. Mellon has become a sort of Secretary-emeritus. Undersecretary Mills is politically ambitious. He yearns to sit in the U. S. Senate from New York, provided of course he is not elevated from the sub-Cabinet in the meantime upon Mr. Mellon's retirement. His new geniality is political. His slant on public questions is political. The angle of his cigar is political. But the cigar, and the social product behind it, are still perfecto.

*The other was George Clinton, revolutionary soldier, seven times Governor of his State, twice Vice President of the U. S.

*Last week the Treasury sold $100,000,000 worth of these bills at the low rate of 5/8%.

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