Moral Victory

The late Andrew William Mellon spent the last years of his long life at two related labors. One was completed before his death last August. Then Franklin D. Roosevelt graciously accepted his $50,000,000 art donations as the nucleus of a National Art Gallery. The other and more difficult was to clear his name of the charge made by the U. S. Treasury in March

1934, that he had misrepresented his dealings in Old Masters and securities, had filed a fraudulent 1931 income tax return. Andrew Mellon was not alive to see the second labor completed by the Board of Tax Appeals in Washington last week.

Because the Treasury thought Mr. Mellon had a larger 1931 income than he reported, it asked $3,075,103 in additional taxes and penalties. Among the important issues that this brought up was the many million dollars worth of pictures which he had given to his Andrew W. Mellon Educational & Charitable Trust, and which the Treasury did not consider bona fide. Mr. Mellon retorted that he had overpaid the Treasury some $139,000 and charged political persecution. A Pittsburgh grand jury refused to indict him. During the three years the case dragged along before the 15-man Board of Tax Appeals, eight changes in membership occurred and 10,350 pages of testimony were presented. Mr. Mellon, who spent five days on the stand in Washington in the spring of

1935, seemed so languid that reporters asked him whether he was bored by so many figures. Replied the onetime Secretary of the Treasury, then in his 80th year: "Well, it gives you lots of time to think about something else."

Last week the Board cleared dead Andrew Mellon completely by finding "no doubt" that "the record before us does not sustain the charge of fraud," found the trust that received his pictures was a "valid organization." Dealing with the other disputed transactions one by one, the Board ruled for Mr. Mellon in six of them, against him on three. It found that the sale to Bethlehem Steel Corp. of the McClintic-Marshall Construction Corp., of which he was one of four stockholders, was not a reorganization as he claimed and that his estimated $6,549,000 profits from the deal therefore represented an actual taxable gain. Net result of the Board's decision, although it allowed many of the deductions and was hailed by his executors as "another victory for Mr. Mellon," was to make them liable to an estimated $600,000 in additional taxes. These they promptly announced would be appealed to the Circuit Court.

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