Pittsburgh Collapse

"It is your duty to protect the accused from unjust or unfounded charges on the one hand and to protect the nation on the other. You shall present only those persons who have, in your judgment, committed an offense against the United States Government."

With these words a Federal judge in Pittsburgh last week addressed five laborers, two clerks, two farmers, two engineers, two mechanics, a bank clerk, a writer, a lumber dealer, a carpenter, a plumber and a banker. He was instructing them in their duties as grand jurors.

Promptly a U. S. attorney began informing them about notable items on the 1931 tax return of one Andrew William Mellon, Pittsburgh citizen:

Salary: $15,000 (as Secretary of the Treasury).

Interest on bank deposits, bonds, etc.: $1,188,000.

Taxable interest on Liberty Bonds: $2,000.

Dividends: $6,102,000.

Loss on rents & royalties: $139,000.

Loss on sale of real estate and securities: $553,000.

Interest paid: $672,000.

Taxes paid: $99,000.

Contributions: $340,000.

Five Government witnesses appeared and put it up to the jury: Did it not appear that Citizen Mellon had claimed a fake loss of $5,678,000 on Pittsburgh Coal Co. stock and of $402,000 on Western Public Service Co.? That his gross income was $9,213,000 and not $6,759,000 as reported? That his net income was $7,767,000 instead of $5,553,000? That he should have paid an income tax of $1,364,000 instead of $648,000? That he had "unlawfully, willfully, knowingly, feloniously and fraudulently attempted to defeat and evade an income tax upon his net income for the calendar year 1931?''

Next morning the Pittsburgh grand jury filed into the court room and handed to the judge the Government's charges with the words written across their face: "Not a True Bill." The jury's refusal to indict spared Andrew William Mellon the humiliation of having to defend himself in court on the charge that, as Secretary of the Treasury, he had brazenly and deliberately tried to cheat on his income tax return.

Thus in rank failure ended the first notable test of Attorney General Cummings' new policy of asking criminal indictments against all citizens, big and little, whose tax calculations disagree with those of the Government's tax auditors. Two months prior, amid a great blare of headlines, "General"' Cummings had announced that he would attempt to secure Mr. Mellon's indictment for tax crockery (TIME. March 19). So cocksure was he of his case that, in the public mind, the onetime Secretary of the Treasury, aged 79, was already behind the bars. In answer Mr. Mellon made two tart statements, one charging "politics of the crudest sort.'' the other declaring that he was being "railroaded" without the customary chance to refute the Government's tax claims. Last week he purred contentedly: "The fact that the grand jury reached a sound conclusion, notwithstanding the unusual methods pursued in my case, is proof of the good sense and fairness of the American people."

While Attorney General Cummings was not "disposed to challenge" the collapse of his prize case, he could not restrain a political instinct to take one parting crack at Mr. Mellon. Ignoring the fact that he had carried the tax charges into the headlines first, Mr. Cummings declared: "Very few people, I imagine, were seriously misled by Mr. Mellon's statements, which were evidently timed so as to be current while the grand jury had his case under consideration. There is no reason, however, to believe that these highly improper assertions affected the result. . . . The simple truth is that [Mellon] was treated like any one else in a similar situation."

The last statement did not go unchallenged. Republicans minced no words in charging dirty politics.

Senator Hastings: The submission of this matter to a grand jury was an outrage, inspired by partisan politics of the most vicious kind.

Senator Dickinson: I hold no brief for Mr. Mellon, but I do object to this sort of persecution. It makes a criminal proceeding out of what the law intends to be a civil one.

Senator Schall: This shows that the people of the United States do not intend to be fooled much longer. . . . This case should be almost as big a boomerang as the unconstitutional cancellation of air mail contracts.

Samuel Harden Church, president of Pittsburgh's Carnegie Institute: In seeking to justify his assault upon Mr. Mellon's character Attorney General Cummings made the announcement that it is his policy to present to each citizen the Government's tax claim, and if the full amount of that claim is not paid without any further discussion of the matter a criminal indictment will be demanded. The cool, calculating villainy of this statement has shocked America. ,

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