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IF YOU BUY A CAR, A HOUSE; If any of your policies expire-CALL Bow Williams Automobile and General insurance 624 Lamar GR 2-0545 AUSTIN, TEXAS Standard Stock Companies tErs ABOLISH THE POLL TAX’ THE BROWN BUILDING RIDER \(Continued from Page He said his agency needs new office space different in design from that available in the Brown Building, in any event. The state headquarters is scattered out in seven offices and three warehouses in Austin. Maurice Acers, Brown’s comember on the commission, asked by the Observer if the commission has taken a position on the rider this session, replied abruptly: “The lease lasts two more years-that’s it, period.” TEC Administrator W. H. Farmer added: “When the legislature puts in something affecting us, we leave it alone.” Although the TEC has pitid total rents of about $1.5 milliorV on the building, county record;; show Brown Securities Corp. borrowed $300,000 from Prudential Insurance Co. to finance it in return for a first lien in 1938. Even at present-day inflated prices the laud, building, and improvements are worth about $1.85 million. They are carried’ on the 1956 county tax rolls at $369,700, and it is customary to assess such property at one-fifth its: actual value. State Anditor C. H. Coyness has stated that at the going rental rates the state could own a TEC building “in a Very few years.” The cash at stake-to use a distinction cited to by Auditor Cavness-is not “state funds,” but is “state money” contributed by Texas employers. Governor Daniel’s staff apparently was not advised of the import of the proviso. Jake’ Jacobsen, his administrative assistant, said no statement would be forthcoming from him about it At the same time, at a meeting of the State Building Commission Jan. 28, the Observer understands, Daniel said he was interested in a new building or office space in state buildings for TEC and the Department of Public Welfare because it was possible to secure financial aid from the federal government. Who Done It? THE MYSTERY RIDER wasn’t anywhere to be found in the original House or Senate money bills last session. It didn’t come up in the regular committees Each chamber passed its version, of the spending program without anybody mentioning the Brown Building. But in the final bill reported out by the conference committee of the House and Senate, the TEC got its appropriation, “provided, however, that none of the moneys appropriated herein. from the Unemployment Compensation Special Administration Fund or from other funds of the Texas Eimployment Commission may be used for the purpose of buying land or constructing buildings in ‘ Travis County.” Farmer told the Observer last week: “We didn’t know anything about it until the appropriation bill was out and passed.” None of the members of the conference committee contacted at random could remember who sponsored it. Farmer said the commission did not ask for it and that he has told inquiring legislators he doesn’t know who did. Lt. Gov. Ben Ramsey is very close to Ed Clark, lobbyist for the Browns. When the Observer asked Ramsey about the Brown brothers in San Augustine \(Ob”You mean George and Herman Brown? Yeah, they been my friends.” Ramsey appointed the five Senate members of the conference committee. Members of the 1955 conference committee were not able to recall who presented the proviso for inclusion in the bill. Sen. Ottis Lock, Lufkin, didn’t remember. “I’m sorry I can’t help you on it,” he said. Rep. Jesse M. Osborn, Muleshoe, said: “No, sir, I don’t remember.” Sen. William Fly, Victoria, responded: “I . just don’t remember. You know we put so many things in there, when something specific comes up, sometimes I don’t remember.” ,Sen. Crawford Martin, Hillsboro, had “a faint, hazy recollection” about it. “It seemed the and that it was in there on and off several years.” However, Farmer, the administrator, said it was not in the law before 1955 and that the commission definitely had not asked for it. One of the members of the conference committee said: “That’s one of the many things that probably got by me in conference committee. I hate to admit that I didn’t know that was in. there. We worked seven to nine weeks and went over the bill line by line, 400, pages of it. It’s a hard, fast proposition, and you come out hoping the bill is in good shape.” There were five members of each chamber on the committee. The others, apart from those named, were Sen. A. M. Aikin, Paris, Sen. William Shirernan, and Reps. Max Smith, New Braunfels, Floyd Bradshaw, WeaFrates Seeligson, San Antonio, and Scott Sayers, Fort Worth. \(no Smith, chairman of the House appropriations committee, had this to say: “We have generally prohibited the purchase of any lands by the agency without authorization of the legislature. “The TEC is still figuring on -they have funds they can build a building with.” Farmer, asked if the TEC felt it can build buildings as a general matter, replied: “We have authority to build local office buildings.” Acers, asked if the TEC is submitting plans to the legislature to erect its own building here, replied in the negative. A Good Dividend THROUGH BROWN SECURI-TIES Corp., the Browns entered into a lease contract with the Texas Unemployment Compensation Commission in 1937-before their building was financed or built. Deed records at the Travis County courthouse show the Browns’ corporation signed a contract with the agency leasing one and a half floors of the building “to be constructed” at the intersection of Colorado and West 3th St. for a period of five years at $1.37 per square foot per year for 34,609 square feet. \(This came to an. option to lease another half floor. Brown Securities Corp. then assigned this lease contract with the state agency as “additional security” on a $300,000 loan from Prudential Insurance Co. of America, in return for which Prudential got “a valid first lien” on the premises. The mortgage deed with Prudential was executed Dec. 30, 1938. Brown Securities Corp. paid a dividend of $844,000 in 1951 out of earnings from an initial investment of $208,000. It was formed in 1932 by Brown & Root, Inc., and three incidental co-incorporators. Brown & Root provided $207,348.11 of the $207,648.11 capital for the firm, actually putting up paving. certificates received in payment of $183,891.21 for “paving actually done,” plus notes receivable and municipal warrants for the balance. On Dec. 28, 1951, Powell, Wirtz, and Rauhut-the law firm recently joined by former Secretary of State Tom Reavley-filed an amendment for Brown Securities Corp. converting its 2500 nopar value shares to 10,000 par value shares at $100 each. This made it a firm with a capital stock of $1 million. Three days after the capital stock increase one stock dividend was declared in an amount equal to the firm’s treasury stock account of $52,000, and’t a second stock dividend of $792 ;351.89 was declared out of the then-present earned surplus of the corporation. The balance surplus Jan. 1, 1951, had been $1,362.000. Profit for the period ending Sept. 30 that year was $66,000, making the surplus $1,428,000 or $1,409,000 after provision for 1951 income taxes. Herman Brown, George R. Brown, and Edgar Monteith constituted the entire board of directors of the firm at the time of the stock amendment, Monteith as trustee for three trusts. Herman Brown owned 2500 shares at $250,000 and George Brown owned the some portion, while the Nancy Nelson Brown Trust owned ,1,666 condo Brown Trust, 1,667 shares King Brown Trust, also 1,667 The firm’s balance sheet as of Sept. 1, 1951, included as an asset “Construction in progress, addition . to Brown Building, $174,324”; “notes receivable real estate, $95,914, and other real estate, $34,212; and, under permanent assets, real estate, $74,719, buildings, $511,901, and furniture and fixtures, $912, less allowance for depreciation, $226,513; for total permanent assets of $286,300. \(The statement, incidentally, also showed that Brown Securities Corp. owned stocks as follows: Armco Steel Co., $53,000; Eastern Gas & Fuel Assn., $35,000; Frost Lumber Industries, Inc., $1,000; Humble Oil & Refining Co., $66,000; Lone Star Steel Co., $137,000; Missouri-Kansas-Texas Railroad, $82,000; Standard Oil of New Jersey, $28,000: Texas Eastern Transmission, $84,000; Tidelands Marine Services, Inc., $1,500; treasury stock, Brown Securities Tor Enterprise’ COL. BROWN, chairman of the commission, told the Observer: “It would be cheaper. for the legislature to tell us to use the money the federal government gives us for buildings … because ultimately the state would own the building. As it is, we pay the rent but are not getting the building.” Brown said further he thinks the ‘TEC needs better quarters than it has. “We told the committees of the House and Senate we are gonna have to find better quarters. They are to tell us what to do. We don’t know. But it’s overcrowded here, and this building was not designed for our needs. You ought to see those elevw ,tars41414yLpeo ple carrying papers up and down. We need a floor where we can work on the same level.” Brown was not on the commission when the rider was adopted. “I don’t know who sponsored it,” he said. It was inserted in the bill “the last few minutes” of the conference committee, he observed. As Brown understood it, “Herman and George Brown” built the building in 1938 “for the TEC.” He thinks the $2.21 per square foot per year the TEC now pays is “pretty law rent.” “The only time we build,” said Col. Brown, “is when we couldn’t find a location within the rent we Wanted to pay … The federal government would pay for the whole thing-and the state owns the building. But the policy of the state was not to rent a building where private enterprise had facilities available.” Did this mean, Brown was asked, that the TEC is opposed to the state owning buildings? “No,” he said. “We are for private enterprise. We are not against the state owning buildings.” He explained that since stateowned buildings do not have to pay local taxes, local people haVe to “carry that building without a single tax-streets in front of it, water, and so on.” The TEC operates under federal and state laws which require employers of four or more people to pay 3 percent of their payrolls on the average into the unemployment compensation program. Ninety percent of the money goes to the TEC and thence into a fund pay Texas unemployment claims. The other ten percent is paid to the federal government \(via intive costs, but most of this is usually returned to the states. For 1956, for example, of $13 million that was sent Washington by Texas employers for these administrative costs, about $9 million will be returned to the TEC. This constitutes the so-called “Reed money,” and it can be spent for “rent allowances” which can be applied on the purchase price of buildings for the state employment commission. If it is not so spent within five years it also goes into the state’s compensation fund. Auditor’s Advice SINCE 1938 the TEC has signed four five-year lease agreements . WASHINGTON General Ernest 0. Thompson of the Texas Railroad Commission asked a House Commerce committee, “If Texas produced more oil, what would we do with it? The pipelines couldn’t take much more,” he said. The railroad commission veteran of 25 years’ service testified that there is a “more than adequate” supply of oil in this country. He said the problem was getting it where it is needed. Thompson said that “anything the President asks for in the form of national security will be , answered immediately up to the extent of our pipeline capacity.” He pointed but that the Texas oil allowable has been increased every month since October. The current allowable is 3,543,672 barrels a day, an increase of 241,459 barrels a day over the February permits. Thompson was introduced by House Speaker Sam Rayburn as a “man who knows more about oil than any man in -the world with Brown Securities Cox?. Adthinistrator Farmer states they were for about 48,000 square feet the first three times at rates of was for $2.21 and $2.22; since then the agency has added about 12,000 more feet to its Brown Building rentals. The $1.5 million rental estimate for the 18-year period is based on these agreements. The exact payment for 1956 was $136,999. The Corpus Christi building was completed and accepted by the commission June, 1951, at total cost of $104,275. The commission’s minutes for June 19, 1951, show the federal government granted .TEC $992 for ten years for “rental” of the Corpus Christi building-a total of $119,-000, which would repay the fund for the cost of the Corpug structure. The June 14, 1954, minutes show the government granted TEC $3,447 per month for 10 years, $413,695 for the period, for purchase of the Fort Worth land and building. The State Auditor, in his 1956 report on the TEC, offered this suggestion: “The headquarters of the cornMission, is the Brown Building …