The Senator's Crusade

The U.S. collector of Internal Revenue for Brooklyn, N. Y., Joseph P. Marcelle, told a congressional investigating committee in Washington last week how he goes about filling out his own personal income tax returns.

To begin with, in the seven years since Franklin D. Roosevelt appointed him to office, he admitted that he has made more than $190,000 by outside work, in addition to his $10,500-a-year salary. In 1948 he had his best year and took in $135,776.

But that year, by the time he had taken his deductions, he reported only $66,981 as taxable. If this was wrong, it wasn't his fault, Marcelle said, because he had left everything to a tax "expert"--and had signed his return without checking it himself. And by sheer accident, he had filed his 1948 income tax return in his own office in Brooklyn instead of sending it along to Washington. There it lay unaudited for 2 years, until Treasury investigators dug it up and told him he had made mistakes in his own favor totaling $32,834.

These were just personal troubles. As far as his collecting from others went, said Marcelle. "I've enjoyed the most beautiful relationship with taxpayers." But just before Marcelle began his testimony, the Treasury Department announced that he had resigned "for the good of the service."

A Bad Day. Marcelle was the sixth collector of Internal Revenue (out of 64 in the U.S.) to resign or be fired or suspended since a certain spring day in 1948. That was the day when a freshman Republican Senator from Delaware, John James Williams, told the Senate in his whispering voice that he had dedicated himself to routing corruption out of the U.S. tax-collecting service.

Nobody paid much attention at the time, but John Williams knew what he was doing. In 1946 he and his wife filed returns totaling $22,500 with the collector in Wilmington. Through a tip (whose source he still guards), Williams learned that not a cent of the payment had been credited to his account. Right after his election, he started a one-man investigation that unearthed a $30.000 embezzlement and the juggling of 2,000 tax accounts at Wilmington. Williams was even more aroused by another discovery: the Internal Revenue Bureau in Washington had known about the embezzlements for months, but did nothing until Williams began prodding.

Tipsters' Man. The Delaware expose made John Williams a hero to honest bureau employees, and he began to receive tips on wrongdoing from all over the U.S. On one tip, he pored over the auditors' reports on the New York tax office, then introduced a resolution in the Senate demanding the removal of James W. Johnson, New York Third District collector, for inefficiency. Last August Johnson resigned.

Another confidential source provided Williams with photostats of secret Treasury reports on corruption in the St. Louis office of Collector Jim Finnegan. After being cleared by a grand jury, Finnegan resigned, and Treasury Secretary Snyder assured Williams that nothing was wrong in St. Louis. William disagreed. A week after the second grand jury investigation began, he flatly charged the Treasury Department with withholding secret reports. The reports were produced, and Finnegan was indicted on two counts of bribetaking and three of misconduct (TIME, Oct. 22). In a speech the following month, Williams announced to the Senate, with mild relish, that Commissioner George Schoeneman, boss of the Federal Bureau of Internal Revenue, "has turned in his resignation today." Then he added: "It is rather interesting to note that the collector of Internal Revenue in the Boston district was suspended this morning."

Collector Denis Delaney of Boston was fired three weeks later, then indicted on six counts of taking bribes in return for tax favors.

Needled by John Williams, Treasury investigators fanned out across the nation on other investigations. The chief field agent in charge of 32 bureau offices in northern California and the chief field agent in Nevada were indicted for conspiracy to defraud the Government. In

Manhattan, Congressman Cecil King's House investigating subcommittee forced the resignation of James B. E. Olson, supervisor of the New York alcohol tax unit, after Olson testified that he had sold liquor labels and truck bodies to, among others, liquor firms under his tax jurisdiction. King's committee also flushed five suspensions and one resignation in New York by asking 20 employees to fill out statements of their net worth. On the strength of such results, the bureau agreed to adopt an annual survey of employee income as part of its routine.

Truth or Consequences. The enormity of the record last week brought a weird squeak from Commissioner John B. Dunlap, new boss of the bureau. In a speech to the National Press Club, Dunlap warned investigators to lay off lest the public lose confidence in its tax collectors and stop paying taxes. The time has come, said he, "when all of us ... had better draw back and think of the consequences." When this statement brought some tart comments, Dunlap cried foul. He said that his speech should not have been quoted because it was made on an "off the record'' basis.

But John Williams, with hardly anybody listening, had given Dunlap a clue to the real truth & consequences last February. Said Williams: "It is my belief that in many cases . . . the morale, efficiency and even the honesty of some of those who collect our federal taxes are distressingly bad . . . The reason ... is that our system of tax collection is shot full of cheap, inexcusable political manipulation."

Around Washington the word was that the tax investigation started by quiet John Williams was due to become the gravest of all the Truman Administration scandals.

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