Brimstone Taxes

"During 1936 your company was confronted with a serious obstacle in the form of increased severance taxes in both Louisiana and Texas," wrote Freeport Sulphur Co.'s young President Langbourne M. Williams Jr. in his report to stockholders last week. Those two States account for 99% of all sulphur mined in the U. S.. and nearly all of it is produced by two companies, Texas Gulf Sulphur and President Williams' Freeport. Both companies are making money in spite of the fact that Louisiana upped the sulphur tax from 27-c- per ton to 60-c- in 1934, upped it again last summer to $2. In Texas the tax went from 55-c- per ton to 75-c- in 1931, then to $1.03 last autumn.

"The management of your company is glad to report, however," concluded President Williams last week, "that there are indications of a growing realization on the part of the people of Texas and Louisiana that the future growth of the sulphur industry in these States depends upon the ability of the American companies to compete on a favorable basis with foreign producers."

President Williams, whose board chair-man and biggest stockholder is John Hay ("Jock") Whitney, was apparently expressing no more than a pious hope. Only a few days before he released his report the people of Texas in the persons of the committee on revenue & taxation in the lower house of the Texas Legislature voted 11-to-6 to boost the sulphur tax from $1.03 to $2. To the dismay of Freeport and Texas Gulf witnesses and pleaders on the scene, the committee came within one vote of amending the bill to make the tax $2.50.

Texas needs money for a $15,000,000 deficit and increased running expenses. Moreover, a number of Texas legislators have it in for the sulphur companies, particularly for Texas Gulf, whose $46,000-per-year director of public relations, Roy Miller, was Texas finance chairman for the Democratic National Committee in the last campaign. Sulphur and other big Texas industries spent a deal of effort on their favorite candidates for the Legislature, many of whom were defeated in the primaries. This fact has not been forgotten by the winners, notably by San Antonio's quick-tongued little State Senator J. Franklin Spears and Georgetown's reforming Representative Harry Newton Graves. Some of Mr. Spears's colleagues got the scare of their lives a few weeks ago when his supporters very nearly succeeded in jamming through a resolution requiring all Texas Senators to report their income from retainer fees. From Texas Gulf records it had been learned that Democrat Miller's expense account was large and vague, hotel and traveling expenses having footed up to more than $5,000 in a single month.

At the tax hearings last week Representative Graves got a Texas Gulf man to admit that sulphur could be mined for $8 per ton, whereas the price for years has been between $16 and $18 per ton. The sulphur companies argue that high taxes put them at a disadvantage in competition with foreign producers. Said a Texas Gulf man in Austin last week: "We have lost half our world trade in recent years." How much of this loss was directly traceable to a rigid price structure of their own making the U. S. sulphur producers have never volunteered.

When Louisiana jumped its sulphur tax to $2, the sulphur companies threatened to move out of the State. If the Texas Legislature passes the $2 tax recommended by the tax committee, as most observers think it will, the sulphur companies will have nowhere to go. As Texan Graves drawled last week: "Only God can make sulphur and he is making it mighty slow."

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