THE WESTERN CANADIAN LUMBER WORKER

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Editorial

“SOCIALISM. Kennedy's New Tax Programme

AT ITS BEST

TE Tennessee Valley Authority, President Roosevelt's

great socialist experiment in public power, will cele-.

brate its 30th anniversary this month.

This is a monumental achievement considering how
the powerful opponents of public power fought to kill
the project in infancy, and are still fighting to prevent
public recognition of its worth.

They are having a measure of success too. By means
of a nation-wide propaganda campaign, they have so
convinced the people that public ownership of power
by the state is socialism, that even TVA’s staunchest
supporters deny the project is socialist in principle.

__ But it is socialism at its best and all the propaganda
in the world can’t stay this fact.

What has TVA accomplished? Simply this. The gov-
ernment’s venture into the field of public power made
possible the construction of an intricate system of dams
and locks that improved and reduced electrical service
for 1,500,000 customers in an 80,000 square mile radius
covering seven states.

The project also changed the desolate Tennessee
Valley into one of the finest inland recreation areas in
America. The Tennessee River which once flooded the
area for hundreds of miles each year is now, through
TVA’s hydro system, controlled as easily as turning off
a fap.

TVA‘s critics refuse to recognize the tremendous
contribution the project has made to the welfare of the
people living in the 900-mile-long valley, despite the
fact there is no evidence that nearby private utilities
have been hurt.

Most of the companies did, in fact, benefit when
they lowered their rates to compete with TVA. The latest
studies show their common stock earnings are twice as
- high as the U.S. average.

TVA’s critics also fail to credit the vast amount of
new industries that have followed in the project's foot-
steps. The navigation locks alone created a water
traffic industry which last year shipped 13,100,000 tons
of goods. This water traffic industry has also stimulated
the investment of some $875 million in shoreline industry
in the valley.

Other by-products of the massive hydro complex,
putting money into the pockets of the people, are a flour-
ishing fishing industry which last year yielded 10,-
000,000 pounds of fish and a $500 million private forest
products industry.

The health of the inhabitants living along the river
has also improved. Malaria, which plagued the valley
before TVA was developed, has now been entirely
eliminated.

And what has it cost the U.S. taxpayers to turn this
desert into a prosperous and productive area? A little
more than the total U.S. aid to Franco’s Spain since 1945.

LUMBER INDUSTRY AFFECTED

To Plug Companies Loophole

By JULIUS DUSCHA
WASHINGTON—A little-noticed provision in President
Kennedy’s tax program would plug a loophole that has pro-
vided big timber, lumber and paper companies with hundreds
of millions of dollars in benefits for nearly 20 years.

The loophole was placed in
the law to encourage good
forestry practices, but for the
most part it has had the op-
posite effect.

Since 1944 all profits from
the sale of timber have been
treated as capital gains and
taxed at the low capital gains
rate of 25 per cent.

When the capital gains rate
was applied to all timber
sales it was argued that small
timber operators would bene-
fit the most and that the
change would foster good
timber practices.

But large corporations have
been the big beneficiaries. Ac-
cording to a Treasury Depart-
ment study, they have used
the provision to speed up the

_cutting of their timber hold-

ings in a manner not con-
ducive to the good forestry
practices of selective cutting
and reforestation.

Here are some examples
from the Treasury study of
the effects of the timber loop-
hole in 1959, the latest year
for which complete figures
are available:

@ In the timber industry
three companies received 42
per cent of the $44 million in
tax benefits given timber op-
erators, while 12 companies
out of a total of 2,427 in the
industry got more than half of
the benefits.

@ In the plywocd industry
two companies got more than
90 per cent of the $11 million
in timber capital gains bene-
fits received by the industry,
four firms got all but 5 per
cent of the benefits and the
other 1,400 firms in this in-
dustry received less than
ae in capital gains bene-

Ss

; @ Of the 3,464 companies
in the paper industry, the 35

Metal Industry Scored
On Labour Aititude

QUEBEC. — Quebec's Na-
tural Resources Minister
Rene Levesque warned that
the attitude of the province’s
non-ferrous metals industry
in refusing union security ‘to
itt employees must be
changed.

The industry, like its coun-
terpart in Northern Ontario,
has consistently refused to
grant the checkoff of union
dues in bargaining with trade
unions,

Levesque’s comment was
prompted by a strike of 200
workers at Solbec Copper
Mines in Stratford, Quebec,
where a Local of the United
Steelworkers of America has
been seeking a new contract.
Union ‘security has been a
key issue in the walkout.

“For a long time,’ Leves-
que noted, “this security in
the form of a_ voluntary
checkoff has been admitted in
all big industry except in the
non-ferrous mines, which find
themselves in the orbit of the
powerful empire of Noranda

Mines. There, no matter
what the length or cost of
numerous conflicts and the
permanent uneasiness which
results, union security has al-
ways been systematically re-
fused.”

The outspoken resources
minister declared it would be
betraying the workers of
Quebec and even the pro-
gram of the government “if I
did not say that such an atti-
tude is socially retrograde,
economically dangerous and
that one way or another it
must be ended.”

Levesque’s remarks may
indicate action by the Quebec
government to make the vol-
untary checkoff of union dues
obligatory in industry — a
proposal the mine unions
have been pressing.

In Ontario, a select commit-
tee of the Legislature recom-
mended the voluntary revoc-
able checkoff four years ago,
but it has never been intro-
duced by the province’s Con-
servative administration.

largest ones got more than 82°

per cent of the timber capital
gains benefits given that in-

dustry.

Before 1944 a farmer or
timber grower who own
timber and cut it for his own
business or who had some-
one harvest the timber under
a cutting’ contract could not
treat his profits as capital
gains. To get capital gains
treatment the timber and the
land had to be sold outright.

Under the best timber-cut-
ting practices timber is har-

vested selectively and the land _

is carefully reforested so that
over a period of years timber
can become an annual crop.

But before 1944, the tax
laws encouraged the outright
sale of timber, which gener-
ally means the denuding of
timberland, and penalized the
careful cutting and reforest-
ation practices.

A treasury Department an-
alysis of the timber capital
gains provision points out that
lumber, pulp and paper com-
panies buy timberlands to as-
sure themselves a permanent
supply of timber.

“For these buyers,” the de-
partment said, “capital gains
treatment on a portion of their
profit margin ... is an es-
sentially fortuitous tax ad-
vantage . . . this advantage
bears little or no relationship
to conservation and good
forestry management.”

CBC Gets
Praise,
Blame

The Canadian Broadcasting
Corporation, easily the most
controversial institution in
Canada, came in for both
praise and blame in the latest
volume of the Glassco Royal
Commission report on gov-
ernment efficiency.

The Commission said that
the CBC’s programming was
admirably balanced, but that
there was confusion in the
upper management of the
corporation.

It recommended higher pay
for top CBC officials and
clear-cut lines of authority to
help develop the ‘positive
goals” which were sometimes
lacking.

Enough to Make One Cry

The owner of an electrical firm in the States reported to
the National Labour Relations Board the reason he cancelled
out his union contract was he “either had to go non-union
or lose his wife.”

The Board we are pleased to note, took a dim view of his
excuse. So do we. After all, too few husbands are fortunate
enough to get an offer like this.

Publication date of the next issue of the WESTERN CANADIAN
LUMBER WORKER is May 16. Deadline for ad copy is May 2,

and for news copy May
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