Page 8


The one great rule of composition is to speak the truth. THOREAU The Observer We will serve no group or party but will hew hard to the truth as we find it and the right as we see it. .5,.`\( ,,endent-Liberal Weekly Newspaper Vol. 51 TEXAS, MAY 23, 1959 10c per copy No. ‘7 A Junket To Tennessee Four Senators, A Well-Gassed Plane, And A Hushed Epilogue AUSTIN The mid-week disclosure by Scripps-Howard reporter Ernest Bailey of the “junketing Senators” a n d the Texas Eastern Gas Transmission Co m p a n y holiday plane trip to Tennessee came at an awkward time for conservative big business tax forces. This latest Austin indiscretion splashed across the front pages of the Houston Press, Fort Worth Press and El Paso Herald Post involved Lyndon Johnson, politically conscious gas magnates George and Herman Brown, veteran Austin gas lobbyist Ed Clark and the four ranking members of the state Senate, Dorsey Hardeman, William Fly, Wardlow Lane, and R. A. Weinert. It came at a moment when the natural gas lobbyists found themselves on the defensive for the first time this spring as a result of Governor Daniel’s blunt attack on the Third House in his message to the joint session of the new legislature. In his scoop, reporter Bailey drew parallels concerning the possibility of natural gas taxation and the fact that the four most influential members of the Senate were taking a free trip on a gas company plane. Bailey reported: “Ironically, while the four Texas Senators were flying to Tennessee, the Texas Legislature was hearing Gov. Price Daniel point out that Texas Eastern had a net profit of some $24,918,376 for 1958 on which it paid a mere $222,864 franchise tax … Reports f r o m Memphis say that Sen. Dorsey Hardeman and his three Texas colleagues were adverse to having their pictures made next to the Texas Gas Transmission plane …Yet those four senators, along with 178 members of the legislaturewill be voting soon on Gov. Daniel’s proposal whether the natural gas AUSTIN The first week of the special session gave the Governor a two for three batting average in the House on his deficit financing p r o g r am and the desks were substantially cleared for the impending fight over the Big One, his package plan to underwrite the next biennium. The tax committee gave quick approval to the bookkeeping bill and the temporary franchise tax hike and the House followed up with passage both by margins of 104-20 and 117-9. The third and most controversial part of Gov. Daniel’s deficit pr o g r a m, the abandoned bank accounts bill, remained in the tax committee after efforts to report it to the flqor failed by a vote of 7-12. ‘ The bookkeeping measure will slice the $65 million deficit by $28 million and the one year 75 cent hike in the franchise rate tax should be revised to call for a five per cent of value ‘severance beneficiary’ tax. Natural gas lobbyists including those for Texas Easternwon’t be happy if this bill becomes law… The host on the palatial plane for the four junketing solons was Attorney Ed Clark, considered by many as Austin’s No. 1 lobbyist,” reported Bailey. Senator Johnson, also flew into Memphison a rro ther Texas Eastern planefor the occasion which was designed, reported Bailey, as a celebration for N. B. Hardeman, father of Sen. Hardeman. Ramsey Irritated Lt. Governor Ben Ramsey, as sensitive as any man in Austin to the political winds that blow in the caDital, was irritated by the whole affair. Bailey’s story noted that Ramsey was “obviously disgusted” when Senator Crawford Martin of Hillsboro rose Monday afternoon to ask that the four Senators be excused “on account of important business.” When the four had not returned in time for Senate roll call, Tuesday, Senator Louis Crump of San Saba asked they be excused. Bailey quoted Ramsey as saying, “I thought that ocasion was ended last night.” Ramsey himself is not unfamiliar with the political sorties of Clark and the Brown brothers, all of whom have been helpful in his past campaigns for Lt. Gov. \(See Observer issue on Meanwhile, depending on their attitude toward a natural gas tax, Austin politicos were grinning or groaning over a series of post-mortem “explanations” will raise another $17 million. The bank bill, if it is sprung from the tax committee or added to another bill by amendment on the house floor, would close the remaining $20 million gap in the deficit. At week’s end, the tax committee ran through rapid preliminaries to the main event, the Governor’s $160 million package plan to finance added state expenditures over the next two years. The committee Thursday heard .17 witnesses voice opposition to various sections of the half business tax-half selective sales tax plan, sponsored in the House by Rep. GGeorge Hinson of Mineola, Chairman Bo Ramsey said he thought his committee would have a version of the bill ready Monday for consideration. The conservation tax panel undoubtedly will rewrite portions of Daniel’s package pertaining to with which the Houston Press staff backstopped Bailey’s story: “George Brown, board chairman of Texas Eastern Gas Transmission Co., said: ‘I don’t know a thing about this trip, but I don’t see anything wrong with it. I’m sure if those fellows rode on one of our planes, it must have been going in that direction anyway and they just hitched a ride. Our planes are for company use by our employees, and we don’t have them for use by public officials.” “R. J. Fitzpatrick, public relations director for Texas Eastern, said: ‘All I know is that a company plane was checked out in Austin yesterday by Mr. Edward Clark, one of our attorneys. I do not know any of the passengers who rode in the plane.’ ” An Invitation “A spokesman for Sen. Lyndon Johnson said the senator first held commercial reservations but he was talking with `Mr. Brown’ who said he had a plane coming up to Vv’ashington and invited the senator to fly in it as it went back home. It was going to stop in Memphis anyway for gas. The spokesman said commercial time schedules were pretty tight so Johnson accepted the ride. The spokesman said Senator Johnson didn’t know whether it was a Texas Eastern plane or not. The spokesman did not identify ‘Mr. Brown.’ ” Bailey quoted Senator Fly as saying he merely went along to help Hardeman’s father celebrate his 85th birthday and that he did not know the plane was operated by Texas Eastern. Back in Austin, Clark told the Observer he checked out the company plane, took his wife, business taxation before reporting it to the floor. Due for tough sledding in the Carr appointed t a x committee are the severance beneficiary natural gas plan and the new allocation formula for computing corporate franchise taxes. As submitted by Daniel, the revised gas tax calls for a two per cent reduction in the levy on producers and a new five per cent “severance beneficiary” tax on the long-line gas transmission companies. This ran into stout criticism by Lee Hill, chairman of the legal committee of MidContinent Oil and Gas Association, the trade association of the major oil companies; F. L. Kuykendall, lobbyist for Lone Star Gas Company; Harry W. Whittington, Austin lawyer representing the Goliad Corporation, a natural gas processing company; and James T. Cox of the Schlumberger Oil Well Survey Sen. Hardeman’s wife and children and the three other Senators. “I have use of it if somebody else doesn’t requisition it, the company has eight or nine planes for executives and attorneys,” Clark said. He said he did not know how Sen. Johnson had gotten to Memphis from Washington until he got back. He said it was a common practice for state officials to ride in oil company planes. “Why a couple of weeks ago, I went up to Dallas in a Magnolia plane with Gov. Daniel when they opened the Sheraton Hotel.” ‘Like Anybody Else’ Clark said he wasn’t “bothered” by the story. “I wouldn’t walk across the street to put it in or keep it out of the paper. I don’t bother about anything that is a fact. Now when they get something wrong, that’s different. That story said something about the senators not wanting to be photographed, why there weren’t any photographers there at all. We got off the plane and hired a cab, just like anybody else,” he said. Clark added the testimonial dinner honoring Sen. Hardeman’s father on his 85th birthday was a “fine thing for a grand old: man. The Governor of Tennessee spoke, Senator Gore spoke and so did Senator Johnson. There were largely preachers and civic leaders at the dinner,” Clark said. Bailey noted that the Brown boys of Houston were principals in the founding of Texas Eastern Transmission Campany having purchased one of the major pipelines built by the U.S. government in World War II. Sen. Johnson has long been a personal friend of the Browns and suffered his heart attack at a home George Brown owns near Washington. But the Texas Senators were not so willing as Sen. Johnson to be identified with the Browns and Texas Eastern.” ing Corporation of H o u s t o n. Their comments were substantially a re-run of previous appearances before the same committee during the regular session. The interstate allocation formula portion of the franchise tax, a casualty of tax committee cuts in the regular session, again was closely scrutinized. George W. Lafferty, Houston accountant, opposed the corporate tax hike on grounds “the best way to get it is direct and let the first impact be the last impacta broadbased tax.” On the sales tax side, a liquor lobbyist opposed the liquor hike, a tobacco lobbyist oppcsed the cigarette raise and a car dealer opposed the auto sales tax. Assuming the committtee substitute on the package plan is reported Monday, the showdown House floor fight may begin on Tuesday. L. G. PRICE OFFERS SAME PLAN, NEW GAS TAX AUSTIN In an aggressive defense of his tax program, Governor Price Daniel advanced upon out o f state corporations, long line natural gas transmission companies and their lobbyists in an hour long speech that called for a brand new gas tax reducing levies on Texas producers and raising them on interstate pipeline companies. Addressing the opening of the special legislative session, Daniel delivered his hardest hitting speech as Governor and sat down to applause from about half the legislature and to no applause at all from a retinue of gas lobbyists in the left side of the House gallery. To lobbyists he said h a d boasted they could get a sales tax “if they wear down the Governor and sweat out the legislature with two or three special sessions,” Daniel replied he was “feeling fine, the members of the legislature look good to me, and I believe we can stay here just -as long as it is necessary to write a tax bill which is fairly distributed upon the people and the corporations in proportion to their ability to pay. Highlights of the Governor’s address, which is excerpted on page two: 1.Producers have been bearing the heaviest portion of the natural gas tax load in this State long enough … Is there any reason why Texas should continue to be such easy pickings for the gas pipeline companies?” 2.”Of course you will hear the argument that any further tax on gas will increase the price of the product and reduce sales and production. That is pure bunk … we raise more tax money each year from cigarettes than we do from gas. More tobacco can be grown and more cigarettes can be made, but when the pipelines take away our natural gas, it is gone forever. 3.I remind you that … a majority of the families in 205 of your counties have total earnings of less than $3500 per year … nearly 200,000 people without any jobs at all and 225,000 oldage pensioners who receive not more than $60 per month. Family incomes are not going up in the same proportion as corporate incomes and profits from natural gas. They have no paid lobby to constantly look after their interests and defend themselves 4.Under the present law some foreign corporations have … a real tax haven here and a discrimination in their favor which exists in no other States except Texas and Washington …. How long will we permit our corporate structure to discriminate in favor of the 7,000 foreign and interstate corporations and against our own 33,000 companies doing b u sin es s wholly within this state?” THE FIRST WEEK House Starts On The Tax Solution