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The one great rule of composition is to speak the truth. THOREAU 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. Th e Texp , ,,,,Aerver , Ofte An Indepe ,,ety Newspaper Vol. 51 tINE 6, 1959 10c per copy No. 9 Senate May Pass Tax WASHINGTON Rep. Joe Kilgore of McAllen financed his purchase of his Washington home in 1955 with a $40,000 home loan at four percent from Bill Blakley, the Dallas multimillionaire who two years later was appointed to the Senate by retiring Gov. Allan Shivers. When Blakley opposed incumbent Sen. Ralph Yarborough in 1958, Rep. Kilgore sided with Blakley publicly, introducing him on a last-night statewide TV hookup. The Observer questioned Rep. Kilgore in Washington about this interesting political f o o t n o t e, and Kilgore readily provided details of the loan and said with some pride that he has never been late on a single payment. “The matter was filed in the public record at the time that the transaction was entered into,” he said. Kilgore said he stopped by to see Blakley in October, 1954, which was a few months after his first election to Congress. He was on his way to Washington to look for a house. “I mentioned to him I might buy a house, and he said, ‘Look, if you’re going to do that, I’ll be glad to do business with you’,” Kilgore said. Later, when Kilgore needed the financing, he called Blakley. Blakley extended him the $40,000 home loan on Aug. 25, 1955. The McAllen representative is now in his third term. “I had a contract of purchase on that house under which I had the financing all worked out,” Kilgore said. “The seller saw fit to want to change the terms. This made it necessary to change the basis of the financing.” Had Blakley I and ‘ he been friends? “We had been, for many years,” Kilgore replied. “It was a personal friendship. We had done legal work in connection with his properties in the Valley.” Kilgore had been a member of Ran `YOU NO TOM TOM,’ UNION IS ADVISED YOAKUM Unionized workers at the TexTan leather goods factory and tannery here cannot march or participate in the Yoakum Tom Tom Celebration to be held here Wednesday, although all other area groups are welcome. The celebration is the biggest community affair of the year for Yoakum. Queens and kings are crowned, there are dances and rodeos, and a big parade is the main event. It will be held on Thursday, June 11, with Attorney General Will Wilson as the parade marshal. The Chamber of Commerce and the parade committee have turned thumbs down on the re’ quest of Local 103, Amalgamated \(Continued on kin, Kilgore, and Cherry,. attorneys in Edinburg. He resigned from the firm when he went to Congress. “Mr. Blakley’s wife’s mother lived in Hidalgo County,” Kilgore continued. Her mother and father had lived near where he grew up, he said, and he had known them then. The terms of the loan were $200 a month due on the principal, plus the interest, and it has been “paid on that schedule, on or before the first day of each month. I’m kind of proud of that fact,” Kilgore said. He figures’ he has repaid $9,000 of the principal and has paid $5,406.67 in interest. The first payment was made October 1, 1955: $200 principal and $200 interest. The next payment was $200 principal and $132 interest, and the interest has been reduced 67 cents a month each month thereafter, as the principal is reduced. How did he feel the four percent interest rate stacked up against the Washington finance market? “The interest rate that I was quoted locally was four and oue-fourth percent,” he replied. He believed the four percent rate was “pretty close to normal for a shorter term mortgage like this one.” The terms of the loan call for its full repayment in 16 and two-thirds years. “It has the ordinary aspects of a property loan,” he said. He paid the closing costs himself, he added. A document on file at the Office of the Recorder of Deeds at the District of Columbia since 1955 records a trust between Joe M. Kilgore, et ux, and Harry J. Kane, Jr., et al, specifying that Kilgore owed Blakley $40,000 “for money loaned.” `Gilmer Road’ Work May Be AUSTIN The Observer first \(April 4, posed the plan of the Texas Highway Department to build ranch-to-market road 335 by the “Gilmer route” against the recommendation of its own engineer, who said a nearby ridge route would be a mile and a half shorter and $84,000 cheaper. The road would cross telephone lobbyist Claude Gilmer’s ranch and considerably enhance its value. This week eight Texas senators met with highway chairman Herb Petry and chief highway engineer DeWitt Greer and read them the riot act about the road, which they said would cost a third of a million dollars. Sen. Ray Roberts, McKinney, assured the Observer he was going to press for a rider prohibiting use of state funds to build the AUSTIN The Senate was expected late this week to have a tax bill of some kind on. the floor for debate Monday. “The team” has decided that some kind of bill must be passed by the Senate even if only in political self-defense, and the state affairs committee, assuming hearings were to be completed S a t u r d a y, was then to produce a bill converted from Gov. Daniel’s half-business, half-sales tax program into one more favorable to business. The question will then revert to how many votes Sen. Charles Herring, Austin, can muster on the Senate floor for the key parts of Daniel’s program, the severance beneficiary tax on natural gas, and the interstate allocation change which would increase state taxes on out-of-state corporations operating in Texas. On these two items the votes were to be close on the Senate floorturning, perhaps, on the decisions of a few freshmen ostensibly conservative. The Senate “team” may not wish to pass a bill the House can accept so that there will be a Chance for a i conference committee designate by conservatives Lt. Gov. Ben Ramsey and Speaker Waggoner Carr to re-write the measure and throw it down for acceptance or rejection in the closing hours of the session. Gov . Daniel evidently will take anything not too similar to a general sales tax, but there is considerable doubt that the House liberals would support a bill which fell more heavily on consumers than H. B. 7, which the House passed. Were they to leave Daniel, he would be in a tight, and so would H. B. 7. As Sen. Herring said Friday, “We can’t tell” what will happen. The Senate is worried about the risk of the defeat of conservative members by a sales tax Is Attacked; Prohibited road. This would be added in the conference committee on appropriations. The senators pointed out the road would serve only six cars a day and four ranches. Sen. Floyd Bradshaw wanted to know, “How many cases are there like this over the state?” He said he knew of roads serving 300 to 400 cars a day that could not get ranchto-market improvements. Roberts said Gilmer was his friend but “apparently this is a political road.” Sen. Hubert Hudson, Brownsville, said, “I’m tired of going to San Antonio and elsewhere in the state and being embarassed by being asked why this road is being built.” Petry said they would build the road unless they were told not to. Gilmer collapsed of an apparent heart attack while waiting to testify on the tax ,bill in l ike Senate. He was taken to the hospital and reported “doing all right.” program or no tax bill at all; the issue is very much, in doubt. Sen. R. A. Weinert, Seguin, dean of the Senate, conferred at length with Lt. Gov. Ben Ramsey, reportedly persuading him that the Senate had to pass some kind of tax bill. Were the senators to follow the advice of the business executives wl;to testified before them several days this week, they would emasculate the business taxes in Daniel’s program and pass a general sales tax or a bill made up almost entirely of selective sales taxes. Fred Husbands, vice president of the West Texas Chamber of Commerce; H. M. Fugate, Jr., Reynolds Metals Co.; Bill Sedberry, Marshall manager of Southwestern Electric; Major Bell, Gulf States Utilities; Jeff Neely, Amarillo chamber of commerce president; Harold Stone, Foremost Dairie s; and Ben Sloane, area manager for Alcoa, all advocated a general sales tax. Sloane was saying Alcoa’s workers average $5,000 a year when Sen. Grady Hazlewood, Amarillo, asked him if it is “barely possible that some of those $5,000 a year men could pay some taxes.” Sen. Abraham Kazen, Laredo, said his constituents earn an average of $800 a year, and how could he vote for a sales tax? “That would be hard to do, senator,” Sloane replied, “but those people in your district receive the same state ‘services …” TIPRO spokesmen denied they advocate a tax increase on gas but said if one is inevitable they AUSTIN In one of the rare appearances of a Texas governor before a legislative committee, Price Daniel this week opened Senate hearings on his tax bill with an hour-and45-minute explanation to the state affairs committee. The Governor, who talked tough to lobbyists and soothingly to representatives in steering his tax package through the House, followed the same pattern in his remarks to an audience comprised roughly of 30 legislators, 20 newsmen, and 100 lobbyists. Daniel, flanked by his secretary of state Zollie Steakley, his budget director Jess Irwin, and his tax advisor, Col. J. T. Ellis, was well armed with charts, graphs, and supporting documents but referred to them only infrequently. “I have been living with this problem for a year,” he explained as he rattled off from memory comparative figures of taxes in Texas and other states. He concentrated most of his remarks on the two areas of his tax program most offensive to big business interests, the allocation formula in his franchise tax that falls on. interstate corporations and the severance beneficiary feature of his natural gas tax that is aimed at long line gas transmission companies. Anticipating the oil industry charge that his severance bene ficiary tax would ultimately be declared unconstitutional a n d fall on producers, Daniel said, favor the severance beneficiary tax proposed by Daniel. Sen. Doyle Willis, Fort Worth, repeatedly pressed business witnesses for their opinions on what taxes should be passed. Afterwards Willis warned that “the lobby and the sales-tax forces are making an all-out effort to pass a general sales tax this session.” Sen. George Moffett, Chillicothe, said he believes a bill will pass this session, but he would not predict its contents. The tax-lobby question was sidetracked in the House this week when Rep. Zeke Zbranek’s resolution requiring public reports be made of legislators traveling via free, non-public transportation was referred to the House state affairs committee. The resolution grew out of the free trip to Tennessee by four Texas senators aboard a Texas Eastern Gas Transmission Company plane. Approved by the House jurisprudence committee, the resolution ran into stout opposition on the of floor. Rep. R. H. Cory of Victoria told Zbranek, “You’ve gone to meddling in the Senate’s affairs. They should examine tlieir own morals.” Rep. Jerry Sadler charged that a majority of the resolution’s sidonsuis had taken similar Irce trips aboard corporation planes. The decision on re-referring the bill to the state affairs committee was made by voice vote after the sponsors had lost an earlier test vote, 71-52. tracts that any additional taxes will be paid by the purchaser; making the constitutional question irrelevant as it applies to ficiaries buy their own gas and would pay the tax regardless of court decisions point to the conclusion that the tax, as now drawn, is constitutional. As to objections from some manufacturing concerns as to the increased cost of gas they purchase, Daniel, noting that most of the protests were coming from corporations in the Corpus Christi area, said, “The chemical companies are not paying their fair share of taxes in Texas, as is well known. Maybe we should tax them. I tried to stay away from a processing tax. I didn’t want to recommend it because my program of natural gas taxes hit chemical companies and I didn’t want to single them out for any special tax. These companies now say the gas tax will cost them $800,000 a year. There is no way to tell whether $800,000 is too much without comparative ‘statements of company profits. I have figures showing that profits of industries in that area total $214 million.” As for the franchise tax formula hitting interstate corporations, Daniel, as he had done in his speech to the joint session, again reminded the ‘senators that $40,000 at