Concerns & Commencements

STATES & CITIES

(See front cover)

Silk hats shone as they were handed in at the cloak room. Shirt studs twinkled on the spotless expanse of many a broad political bosom. Legislators' ladies beamed right and left under their freshly marcelled hair. Round & round couples cumbrously revolved to music. Many a white-gloved hand was wrung enthusiastically. And the most smiles, the most handshakes, the most congratulations were reserved for one man. It was a fine thing to be a governor and attend your own inaugural ball --ten years ago.

Not so fine, not so blithe, not so bed-of-rosy will be the lot of the 34 "Honorables" who will be inaugurated Governors of 34 sovereign states in January 1935. Ten years ago they could have looked forward to the peaceful enjoyment of a reasonably good salary for the next two to four years while they devoted themselves to promoting good roads and state parks, to improving state universities and agricultural experiment stations, to making after-dinner speeches, conferring political favors, capitalizing on their political power to get into that Hall of Fame to which all good Governors aspire--the U. S. Senate.

But in 1935 the snows that used to lie on the lawns of executive mansions as unsullied as January white sales will be printed all over with the dark footsteps of the unemployed. To be inaugurated Governor in almost any state will mean but one thing: the burden of growing demands for relief, of falling revenues, of citizens' appeals for tax relief, of a bare treasury requiring more taxes.

The Governor of South Dakota faces the fact that some 35% of his constituents are on relief. The Governors of New Mexico, Florida, Arizona, Utah and North Dakota must provide relief for 20% to 25% of their people. The most fortunate of all Governors, in New Hampshire and Vermont, count more than one out of 20 of their people destitute. Yet the new year's grief for Governors will consist less of the magnitude of unemployment than the lack of means for providing relief.

Relief Bills, The Federal Government, which in 1933 shouldered 60% of the costs of relief and in 1934 shouldered approximately 70%, has definitely decided to reverse this trend in 1935. Federal Administrator Harry Hopkins is demanding that the states assume a larger share of the relief burden. The states, however, will not resume a burden they gave up; they will be asked to assume a much larger burden than they ever bore.

In 1931 only four states spent any of their money on relief. In 1932 ten states took part. Today 31 states are contributing money from their treasuries. In 1933 when the Federal Government paid 60% of the relief bill, the states spent $107,000,000 for the same purpose. In the first half of 1934, when the Federal Government assumed 70% of the relief burden, the states spent $113,000,000--more in six months than in all the previous twelve. In 1931, 88% of state relief expenditures were provided by general revenues. In the first half of 1934 the general revenue of the states was able to provide only 5% of their relief expenditures. When general revenues became in adequate other sources were tapped: special reserves, gasoline taxes, liquor taxes. Best relief money raiser among new taxes was the sales tax, which in 1933 paid 24% of the states' relief bill. But as expenditures increased the share they provided grew smaller. In the first half of 1934 sales taxes footed only 10% of the bill.

Taxes & Taxes. The 34 Governors who take office in January were, last week, all asking themselves one question: "Where are our bigger relief funds coming from in 1935?" Traditional source of local taxation is real estate. But real estate almost everywhere is heaped high with taxes necessitated by the bond issues of the logo's. Hence the trend of state taxation is to provide relief for property owners. In Ohio and Florida voters have forced reductions in the real estate tax rate. New revenue, therefore, must come from other sources. Most popular alter native nearly everywhere is the graduated income tax. But income taxes fail to raise any worthwhile revenue in states with low per capita wealth. The Inter state Commission on Conflicting Taxation figured that whereas New York raises $5.60 per capita by its income tax, Arkansas raises only 11-c- per capita. Similarly Delaware raises roughly seven times as much per capita by its personal income tax as Virginia raises with a tax that is about 20%. New Mexico gets less than $85,000 a year out of its income tax.

States which already have hefty income taxes--such as Iowa, where the head of a family with three dependents and $2,000 income pays $12--or which can expect little from that type of levy, turn reluctantly to sales taxes. Fortnight ago Ohio plumped for a 3% sales tax to make up for a 50% reduction in its real estate tax rate. Other states will probably follow when their Governors make tax recommendations to Legislatures convening in January. For sales taxes can raise substantial revenue generally within 30 days of passage. Although the revenue per capita from sales tax does not vary so sharply with per capita wealth as with in come taxes, the variation is, nevertheless, considerable.

State officials have long been campaigning for an agreed division of tax sources among Federal, state and local governments. Part of the question of division depends on which taxes yield the most net revenue for which governments. Obviously the Federal Government can much more cheaply collect a gasoline tax (by imposing it at 100 refineries) than state governments can collect a similar tax (by watching every filling station and patrol ling borders for gas bootleggers). And the Federal Government can better collect income taxes because wealthy men cannot move out of a district where the local rate is high. Hence there was considerable sentiment that the Federal Government should collect such taxes, and refund at least part to the states, just as some states collect income taxes and refund part to local governments. Yet state tax officials are inclined to oppose such a scheme be cause it would give the Federal Government still more power over them. Other Topics last week on the minds of Governors and Governors-elect included:

P: Enactment of laws to enable banks, mortgage companies, etc., to buy insured mortgages under the terms of the Federal Housing Act. President Roosevelt last week sent letters to 44 Governors pointing out that Administrator Moffett had found that their state laws hampered, if they did not totally forbid, financial institutions from joining in the Federal Government's housing drive.

P: Revamping of many a state's liquor laws, hastily passed after Repeal. A round dozen Governors were planning new state liquor laws.

P: Old age pensions and unemployment insurance, brought to the fore by New Deal proposals.

Among the 34 Governors taking office in January, three are going in for their third term, 12 for their second, 19 for their first. Of these: New York's Herbert H, Lehman comes first in point of time, because he takes office on New Year's Day; in point of importance, because he heads not only the most populous state in the Union but the government which is financially the third biggest in the land;* in point of fame, because as Governor he is Franklin Roosevelt's successor, personal friend and model supporter. When "Herbert" first took office on Jan. 1, 1933, his friend "Franklin" was there to wish him well at his inauguration. Friend Franklin was invited to be present again for Herbert's second inauguration but had to decline because the opening of Congress kept him in Washington.

With his $25,000 a year salary (biggest of any Governor), with a $390,000,000 State debt (biggest of any state), but with the State credit boastfully asserted to be better than that of the U. S. Government, Governor Lehman may well be the envy of his 47 colleagues. But he is not short on State worries. The number of people on relief in New York is around 2,000,000, more people than there are in Connecticut or Kansas, or Florida or Nebraska. In 1935 Governor Lehman will need about $100,000,000 of new taxes to balance his budget, enough money to run half a dozen good sized states.

Son of a Montgomery, Ala. cotton merchant who went to New York after the Civil War and founded a private banking house, Governor Lehman has spent most of his adult life in finance, as a partner in Lehman Bros. Politically he is not a misfit but an anomaly. Following two-- such bright political lights as Alfred E. Smith and Franklin D. Roosevelt at Albany he is wholly out of place, yet thoroughly successful. He has the whole hearted support not only of Messrs. Smith and Roosevelt but of a vast section of the New York Press. He is not the public idol Al Smith was, for in public appear ance he is a conservative little man. Not handshaking, not backslapping, not silver-tongued oratory, not radical promises, are his. He lacks nearly all the tools of the political trade but his State trusts him as a decent, well-behaved, hard-working executive who is doing his level best for some 12,000,000 citizens.

Texas' James V. Allred, who takes command of the biggest State in the Union, is only 35, youngest of the 34 Governors to be inaugurated next month -- younger than 37-year-old Phil La Follette of Wisconsin, younger than 38-year-old Olin Johnston of South Carolina. Last week Governor-elect Allred was in Washington trying to find out how much money Texas would have to raise for relief on top of its expected $14,000,000 deficit.

Jim Allred began politics at 24 when Governor Neff made him District Attorney of Wichita Falls. He made his mark by convicting the Mayor of Wichita Falls and his wife of murdering their son-in-law. Two years later young Allred was clamoring for the job of Attorney General. Dan Moody, candidate for Governor, backed Claude Pollard and Allred lost. In 1929 Pollard resigned and Allred demanded that he be appointed. Governor Moody refused.

"All right. Go ahead and name some body else. I don't care who. But," said Allred shaking his finger under the Governor's nose, "I'll beat the man you ap point, whoever he is."

In 1930 Allred fulfilled his prophecy. In 1932 he was reelected. His career as Attorney General made news in Texas. For years Texas Gulf Sulphur Co. had succeeded in avoiding all efforts to raise its taxes because the county commissioners who assessed its property obligingly postponed hearings whenever the Attorney General came to protest, held the hearings when no protester was at hand. Night be fore a scheduled hearing, Allred drove to the neighborhood of the county seat, slept in his car, drove into town just as the hear ing opened in the morning, made himself heard.

With this record, the young Attorney General marched into last summer's Dem ocratic primaries for Governor. One of seven candidates, he ran first with Tom F. Hunter, a wealthy lawyer and oilman, second. In the runoff, three of the defeated candidates, including one backed by Pa & Ma Ferguson, promptly lined up behind Hunter. Jim Ferguson described Allred as "just a boy." Hunter described him as "a little boy with big breeches on." Allred retorted: "I'm old enough to run for Governor in my own name and that's something Jim Ferguson can't do. . . .* Old enough to go to War while Hunter stayed at home profiteering on $3.50 a barrel oil."

Governor-elect Allred's program includes: laws to prevent lobbying; publicity on the sources of income of all State Legislators; new revenue without a sales tax.

Nebraska's Roy L. Cochran, on his way to the Governorship, was last week also on his way to Washington to consult about relief. Reserved, tall, grey, portly, he tackles his problems like the engineer that he is and his relief problem is not like that of most Governors. His State has no debt whatever; its pay-as-you-go policy has paid for all State highways and for the $10,000,000 State Capitol. Nebraska's freedom from debt is due, however, to statutory restrictions on the issue of bonds. Nebraska has had to leave her problems entirely to her local govern ments. Sales taxes, income taxes or some other new taxes are necessary both to save the schools and finance relief. Engineer Cochran insists on one thing : the gasoline tax shall not be diverted from the care of roads.

Meantime the Governor-elect has an other problem, to make ready for the winding up of Nebraska's bicameral Legislature. An amendment to the State Constitution advocated by Senator Norris and adopted at the last election will do away with Nebraska's House and Senate, pre sent her in 1937 with one House of 30 to 50 members -- the first unicameral Legislature in the U. S. since Vermont gave up hers in 1836.

Michigan's Frank D, Fitzgerald has the distinction of being one of seven Republicans to take command of a State in 1934. He began his career as a page in the Michigan Legislature. Later he became a 32 degree Mason, a Shriner, an Odd Fellow, a Maccabee. an Eagle, and finally Secretary of State. One vice he has: coffee, which he drinks all day long from a vacuum bottle. Last week his vacuum bottle had to be refilled many times a day as he sat in his home at Grand Ledge, twelve miles from Lansing.

Governor-elect Fitzgerald had already been unfortunate. On Nov. 6 the voters honored him with a Republican State Senate, a State House equally divided between Republicans and Democrats. Then the fire in the Kerns Hotel at Lansing killed off three House Republicans-elect, only one Democrat-elect, leaving him a Democratic House (TIME, Dec. 24). With this setback his job grows harder for he has promised to exempt food from the State's 3% sales tax. That will knock $10,000,000 off the State's revenue and $12,000,000 is what the State has been spending for relief.

New Jersey's Harold Giles Hoffman, at 38, will be the youngest Governor his State ever had. At 21 he was a captain in the A. E. F. At 26 his Legionary friends sent him to the State Legislature. At 31 they sent him to Congress. At 35 he left Congress to become New Jersey's Commissioner of Motor Vehicles. How. despite a Democratic landslide elsewhere, he captured New Jersey for the Republicans in an off year election for the first time since 1907 is no secret. In his first three months as Motor Vehicle Commissioner he voided 500 licenses for drunken driving. He made speeches every day. In the last campaign alone he rolled up a total of over 600 speeches.

Alabama's Bibb Graves got a law degree at Yale in 1896, but he has remained a man of the people. When he was Governor of Alabama from 1927 to 1931 he proposed installing public radio sets in every town so that Alabamans could hear music. He favors good old-fashioned political oratory and haberdashery, and by their means he induced Alabama to favor him with the first re-election given any of its Governors in 33 years. He did it by promising a referendum on State Repeal, promising tax exemption on homesteads up to $3,500 value, promising to make the state toll bridges free, promising to reduce the cost of automobile licenses, promising $3,500,000 to keep the schools open, promising that the State would bear its share of relief ($24,000,000 a year), and promising not to impose a sales tax to pay for all he promised.

Maryland's Harry Whinna Nice is the fat man of Maryland Republican politics. Fifteen years ago he lost an election for Governor to one Albert Cabell Ritchie by 165 votes. He devoted himself to the pleasures of politics, to being jolly with many people, to joining clubs and lodges, to his law practice. As one of Maryland's noted criminal attorneys, he saved many a notorious gentleman from jail. But last autumn when Albert Ritchie came up for election for a fifth consecutive time, jolly, likeable Crook-Defender Nice was waiting at the polls to take back the election he lost in 1919. Now he has the job of running Maryland with a depleted treasury and a Democratic General Assembly.

New Mexico's Clyde Tingley, Mayor of Albuquerque, will have his friend Douglas Fairbanks on hand on New Year's day to help inaugurate him Governor. Born in a log cabin near London. Ohio, he failed to graduate from high school, worked on a railroad section gang. Later he worked for the Wright Brothers who were experimenting with flying machines, finally went to New Mexico and turned his talents to politics. Last May Albuquerque voted on recalling him as Mayor, decided against it, 6 to 1. His winning campaign slogan: "I ain't going to quit saying ain't when I'm elected Governor."

*No. 1, the Federal Government; No. 2, the Government of New York City. Impeached and ousted from office in 1917, Ferguson is disqualified by law from holding public office again.

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