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(U. S. Weather Bureau Forecast.) Fair, lowest temperature about 28 to night: tomorrow mostly cloudy and warm er; light variable winds, becoming gentle southerly. Temperatures today—High est, 40, at 3 p.m.; lowest, 30, at 6:30 a.m. Full report on page A-2. Closing New York Markets, Page 14 l Singk Copy \J\* Home Delivery by Carrier: The Gening Star.10c Wk., 45c Mo. The Evening & Sunday Star, 15c Wk., 65c Mo. fifif Vi VTT1 A I? XT„ Q/l ill r Entered as second class matter ODIII X -LJAit. -IN O. post office, Washington, D. C. WASHINGTON, D. C., MONDAY, JANUARY 3, 1938—THIRTY-FOUR PAGES. **** M>) Meant Associated Press. THREE CENTS. ROOSEVELT’S MESSAGE ASKS BIGGER DEFENSE AND HELP OF BUSINESS / Proclaims Faith in Democracies. Bills Pushed. BUDGET LEFT UNBALANCED Industrial Chiefs’ Co-Operation Is Urged. BACKGROUND— War clouds in Europe and the Far East formed a gloomy back ground for the swiftly changing business picture in this country as the Nation’s legislators assembled today for the opening of the sec ond session of the Seventy-sixth Congress. The expert handling of the crisis growing out of the sink ing of the U. S. S. Panay by the Japanese appears for the present to have eased the tenseness of the in ternational situation, but the recent attacks by administration leaders on alleged monopolistic practices of big business hate threatened to widen the breach between industry and the Government. This is a potentiality which many Democrats in Congress view with concern and which they have indicated they will resist to the extent of their ability. By G. GOULD LINCOLN. In an address of absorbing interest, President Roosevelt today told Con gress and the world this Nation must prepare to defend itself. Picturing a world of “high tension and disorder." where treaty obliga tions are disregarded, the President (aid: "We must keep ourselves adequately Strong in self-defense.” He proclaimed again his faith in j democratic forms of government and ; declared them the hope of the future. They will, he said, be restored in those nations “which today know them not.” Asks Business Co-operation. To meet the business recession and economic and social conditions in the United States the President proposed Government co-operation with busi ness, provided business will “abandon practices which do not belong to this day and age, and adopt price and pro duction policies appropriate to the times.” While declaring that the great mass of business men and bankers are sound, the President attacked a minority, j whom he charged with engaging in practices harmful to society. He named no names. He denied this criticism was an attack—as charged by enemies of the administration— upon all business and capital. The President laid down the propo- j sition that “we cannot conduct a na- ' tional government after the practice I of 1787, or 1837 or 1887, for the obvious reasons that human needs and human desires are infinitely greater, infinitely more difficult to meet than in any pre vious period in the life of our Re public." In 1787, the Constitution was written and Washington became President two years later. Andrew Jackson was con cluding his term of office in 1837 and his chosen successor, Martin Van Buren was taking over, and in 1887 Grover Cleveland was President. Attacks Monopoly. The President, attacking monopoly and monopolistic tendencies in this Country, said: "Capital is essential; reasonable earnings on capital are essential, but misuse of the powers -of capital or selfish suspension of the employment of capital mast end. or the capital istic system will destroy itself through its own abuses.” Intending apparently to clear up the mass of criticism that has arisen since Assistant Attorney General Robert H. Jackson and Secretary of Interior Harold L. Ickes delivered their attacks upon monopoly and concentrated wealth as the cause of the business recession, the President told the Con gress: "The overwhelming majority of business men and bankers intend to be good citizens. Only a small mi nority have displayed poor citizenship, by engaging in practices which are dishonest or definitely harmful to society. "This statement is straightforward and true. No person in any responsi ble place in the Government of the United States today has ever taken any position contrary to it.” Presses Legislative Program. The Chief Executive drove forward earnestly for the enactment of his major legislative recommendations to Congress—the wages and hours bill for labor and the crop control bill for the farmers. Because of the business recession and a falling off of revenue, and be cause of the probable need of relief appropriations, the President frankly told Congress that the budget he is to (See ROOSEVELT, Page A-5.) Poverty Amid Wealth The strange story of two aged sisters who lived on charity in a scene of great squalor while pos sessing a fortune was brought to light when the two were taken to Gallinger Hospital. Thousands of dollars, carefully catalogued, were found in neatly maintained envelopes reposing in a bureau drawer. The story and pictures of the pair will be found on Page B-l in today’s Evening Star. »-■ I Text of Roosevelt Message Expresses Thankfulness on Nation’s Remaining at Peace—Declares Legislative Program Is Necessary to Alleviate Suffering. The text of President Roosevelt's annual message, as read today before a joint session of the Senate and House, follows: To the Congress of the United States: In addressing the Congress on the state of the Union present facts and future hazards demand that I speak clearly and earnestly of the causes which underlie events of profound concern to all. In spite of the determination of this Nation for peace, it has become clear that acts and policies of nations in other parts of the world have far-reaching effects not only upon their immediate neighbors but also on us. I am thankful that I can tell you that our Nation is at peace. It has been kept at peace despite provocations which in other days, TAX RATES ARE SET FOR SMALL FIRMS Committee Agrees on 12V2 to 16 Pet. Up*to $25,000 Incomes. Bj tbf Associated Press. A House tax subcommittee agreed tentatively today to place on corpora tions with incomes of $25,000, or less, tax rates of 12'2 per cent on the first $5,000 of income. 14 per cent on the next 815,000 and 16 per cent on the remaining $5,000. Chairman Vinson said members had decided also that those rates should apply to all corporations in that in come category, including those in bankruptcy or receivership and in solvent firms. If the latter have income of more than $25,000, he said, the subcom mittee would plaoe on them a flat 16 per cent tax. Mutual investment company in stead of being given separate tax treatment as under present law, he asserted, would be taxed like other corporations. Previously the subcommittee had approved tentatively, for *25,000 cor porations. rates of 12Vz per cent on the first $5,000 of earnings and 14 per cent on all,between *5,000 and *25,000. The proposed revision of the present undistributed profits tax, Mr. Vinson said, will contain a provision for a one-year carryover of operating lasses which corporations could use as a credit against their undistributed profits. In determining operating loss, he said, tax exempt interest would be included in gross income. Corporations with income up to $25,000 would pay no undistributed profits tax. Bigger firms would pay, under a previous agreement, rates of 16 to 20 per cent, graduated accord ing to the percentages of income-dis tributed in dividends to stockholders. Corporations-in an intermediate in come class range would pay taxes higher than the *25.000 firms, but less than the 16 to 20 per cent rates on the larger companies. Southern Minister Dies. JOHNSTOWN, Fla., Jan. 3 </P).— The Rev. E. A. McDowell, 79, pastor of Baptist churches in South Carolina for many years before he came to Florida in 1921, died here yesterday. because of their seriousness, could well have engendered war. The people of the United States and the Government of the United States have shown capacity for re straint and a civilized approach to the purposes of peace, while at the same time we maintain the in tegrity inherent in the sovereignty of 130,000,000 people, lest we weaken or destroy our influence for peace and jeopardize the sovereignty itself. It is our traditional policy to live at peace with other nations. More than that, we have been among the leaders in advocating the use of pacific methods of discussion and conciliation in international differences. We have striven for the reduction of military forces. But. in a world of high tension (Continued on Page A-3.) WIDET.V.A.PROBE SOUGHT BY NORRIS Study Would Embrace Mat ters of Dissension and Injunction Suits. * By J. A. O’LEARY. A broad investigation of the Ten nessee Valley Authority to find out mainly whether it has been handi capped by internal dissension or by the activities of power companies was . asked in the Senate today by the I father of the T. V. A. law, Senator Norris, Independent, of Nebraska. His resolution, which must be acted on by both houses, would have the inquiry conducted by the Federal Trade Commission and $200,000 au thorized to cover the cost. The proposal was offered unex pectedly and was referred at the re qucet of Senator Norris to the Com mittee on Agriculture for report. The Nebraskan explained later, off the floor, that he made the move be cause of complaints and discussions in the press principally with regard to reports of dissension in the T. V. A. board. He added to the resolution the re quest for investigation of injunction suits by power companies, he said, be cause T. V. A. has been delayed and put to considerable loss by these legal1 moves. Senator Norris declared T. V. I A. has never lost a suit in the upper ’ courts, but that numerous injunctions have been filed in various places. His resolution seeks to have the F. T. C. investigate the following points: "Whether said Authority is carrying out with reasonable economy and ef ficiency the provisions of the Ten nessee Valley Authority Act. * * * "Whether the work of said Author ity has been handicapped or inter fered with in any way by any internal dissension among members of the board of said Tennessee Valley Au thority; if so, the cause, if any, of such dissension and what effect it has had upon the work of said Authority. "Whether any member of said board is holding office in violation of sub section H, section 2, of said act; and whether any member of such board has given aid or assistance, either di rectly or indirectly, to private power companies in suits for injunctions in stituted by said private power com panies.’’ Summary of Today's Star Page. Page. Amusements B-16 Radio B-8 Comics B-14-15 Serial Story B-2 Editorials A-8 Society B-3 Finance A-13 Sports A-16-17 Lost & Found B-12 Woman’s Pg. B-10 Obituary A-10 FOREIGN. Rebels assault loyalist flank on Teruel front. Page A-l Titulescu offers aid against Goga. Page A-2 Chinese training new army of 800.000 men. Page A-2 Wounds in Teruel battle are fatal to Neil. Page A-2 NATIONAL. Roosevelt says U. S. must prepare to defend itself. Page A-l Norris asks investigation of the T. V. A. Page A-l Tax rates for Arm incomes up to $25,000 proposed. Page A-l P. W. A. funds for municipal power systems ruled legal. Page A-l 2,000 apply for jobless compensation in two hours. Page A-l Lax accounting in U. 8. agencies scored by Elliott. Page A-l Administration leaders study jobless statistics. Page A-l Rooseveinconfers with leaders before delivering message. Page A-5 I. C. C. warns railroads against over optimism. Page B-l WASHINGTON AND VICINITY. War referendum bill assailed by Tyd ings in Town Hall. Page A-2 Reisinger court-martial opens at Quantico. Page A-7 Admiral Jones’ dying wish for a simple burial is granted. Page A-10 Two killed by autos in week end period. Page B-l Hundreds of motorists in rush for tags. Page B-l House District subcommittee person nel completed. Page B-l House group studies 1939 D. C. budget estimates. Page B-l Court refuses injunction against pain , ten’ pay ruling. page B-l Further parleys planned on group nealth controversy. Page B-l Court refuses injunction against paint ers’ pay ruling. Page B-l Acting controller criticizes D. C. ac counting system. Page B-l National Guard stronger than ever, Blanding reports. Page B-7 EDITORIAL AND COMMENT. Editorials. Page A-8 This and That. Page A-8 Answers to Questions. Page A-8 Washington Observations. Page A-8 David Lawrence. Page A-9 The Capital Parade. Page A-9 Dorothy Thompson. Page A-9 Constantine Brown. Page A-9 Lemuel Parton. Page A-9 SPORTS. California rated on grid par with Pitt, Fordham. Page A-16 Post-season football play lures huge throngs. Page A-16 West’s face saved by Bears* win over Alabama. Rage A-16 14,37 biggest oollege sports ymr since boom days. Age A-17 'Youthful boxers featured in ring show tonight. Page A-17 Star bowling tourney prize list being checked. Page A-17 G. W.’s crack basketers to play Buck eyes tonight. Page A-17 FINANCIAL. Federal bonds gain (table). PageA-13 Steel outlook improves. Page A-13 Stocks edge up after lag (table). Page'A-14 Curb utilities resistant (table). Page A-15 London silver advances. Page A-15 Business drop slows. Page A-15 MISCELLANY. Shipping News. PageA-18 Bedtime Story. Page B-6 Nature’s Children. Page B-8 City News in Brief. Page B-9 Dorothy Dix. Page B-l# Cross-word Puzzle. Page B-14 Letter-Out. Page B-14 Winning Contract. Page B-15 NEW DEAL VICTOR IN 2 POWER CASES BEFORE HIGH COURT Alabama and Duke Firms Denied Right to Attack P. W. A. Loans. DECISION CLEARS WAY FOR 52 ENTERPRISES “Prudent Investment1’ Basis for Setting Utility Rates Also Upheld in Ruling. By JOHN H. CLINE. The New Deal came through with flying colors in the Supreme Court today, winning a complete victory in its effort to use P. W. A. funds for construction of publicly owned electric systems and at least a partial victory in the endeavor by President Roose velt to compel the use of his "prudent investment" theory in valuing the property of utilities for rate-making purposes. In another important ruling, the court agreed to review a suit by the Electric Bond & Share Co. and 26 subsidiaries, challenging constitu tionality of the 1935 act regulating public utility holding companies. The act had been upheld in the lower courts. Solicitor General Reed an nounced he would file a motion to ad vance this case for an early hearing. In two unanimous decisions, the justices held the Alabama and Duke Power Cos. had no standing to at tack the legality of the P. W. A. loans and grants to municipalities for construction of their own power sys tems. This ruling came as a heavy blow to the private utility owners, who had contended it was unconsti tutional to permit the use of public funds for construction of municipal power systems to compete with and, perhaps, eventually destroy their busi nesses. Justice Black Concurs. The opinion in the power cases, de delivered by Associate Justice Suther land. carried the notation that As sociate Justice Black “concurred in the result.” This was construed as meaning he believed the court should have rendered an affirmative deci sion upholding the constitutionality of the loans and grants, as well as refusing to permit the power com panies to attack the law. In some respects the rate-making decision, was of greater importance, since It reverses a former ruling by the court and may point the way to abandonment of the “cost of repro duction" theory of valuation for rate making purposes. Involved In this case were gas rates fixed by the Railroad Commission of California for the Pacific Gas & Elec tric Co. The company contended the rates were unlawful, since the com mission had refused to base them on the cost of reproducing their plant, electing instead to fix the prices the company might charge by determin ing their relation to the prudent in vestment value of the concern. Action Was Reversed. A three-judge district court re versed the action of the commission on the theory the utility company had been denied due process of law in the hearing at which the rates were fixed. That ruling reached the Supreme Court last year and was upheld by an evenly divided court. Justice Suther land not participating. A rehearing was granted, however, and the court today reversed itself and the lower tribunal, sending the case back for a new hearing to determine whether the rates in question are confiscatory. Justice Sutherland again did not par ticipate, and the vote of Justice Black, replacing Justice Van Devanter, brought about the reversal by a vote of 6 to 2. Justices Butler and Mc Reynolds dissented. Chief Justice Hughes delivered the majority opinion in the rate case. In substance, he said the commission was not guilty of a denial of due process since it had considered evi dence as to the cost of reproduction, but had rejected this evidence as un satisfactory. Having reached that point, he continued, the commission was justified in basing the rates, pro vided they are not confiscatory, on the historical cost or prudent invest ment basis. He said “we have frequently held that historical cost is admissible evi dence of value” and that "the (Su preme) court has not decided that the cost of reproduction furnishes an ex clusive test.” . Not Arbitrary Finding. To these observations he added the assertion that “in the instant case we cannot say that the commission, in taking historical cost as the rate base, was making a finding without evi dence and, therefore, arbitrary.” This was construed as being tanta mount to an assertion that in the fu ture rate-making bodies, if they find cost of reproduction evidence to be unsatisfactory, may then fix rates based on the prudent investment val uation theory. This, in effect, sanctions the valua tion theory advanced by Justice Brandeis in 1923 and subsequently adopted by the President. While ap parently not reversing a ruling in 1898 that "consideration must be given” to the cost of reprpducing the property, today's ruling, it was be lieved, will lead to a much more ex tensive use of the prudent investment theory. Conference Pointed Out. It was pointed out that during the recent “peace negotiations” between the utilities and the President, Wen dell L. Willkie, president of the Com monwealth & Southern Corp., which controls companies affected by the T. V. A. competition, had suggested the utilities might agree to accept the prudent investment theory. The decisions in the Alabama and Duke Power cases clear the way for completion of 52 power projects for whleh P. W. A. has allotted $30, (See DOUBT, Pace A-3.) (Separate) \THES.Ey RATHELRTR.'f To BM-MCt ^ THE BUDGET/1 _ IN TERUEL BATTLE Rebels Report Thousands of Loyalists’ Bodies Found in Drifts. BACKGROUND— Spanish insurgents struggling to recover strategic city of Teruel in lower Aragon, captured by govern ment troops last week in drive to forestall opening of rebel grand offensive to conquer remaining ter ritory under control of Popular Front government. Announcement Saturday by insurgents that Teruel had been recaptured brought stout loyalist denials. More than 200.000 men engaged in battle, which may decide final result of Spanish civil war. By the Associated Press. HENDAYE. Franco-Spanish Fron tier, Jan. 3.—The bodies of several thousand Spanish government soldiers were reported by insurgents today to have been gathered from snowdrlfted battlefields around Teruel. The struggle for the strategically lo cated provincial capital continued in below freezing weather as commu niques from each side claimed posses sion of the city. Salamanca dispatches said the in surgent left flank had wrested posi tions from the government north of Teruel. Those fortifications had been held by the government more than a year. Attack Rebel Right Flank. Government troops, in white coats to conceal themselves against the wintry landscape, attacked the insurgent right flank preceded by waves of tanks, but the insurgents asserted they were beaten back. Fighting knee-deep in snow the in surgents captured Villastar, about 5 miles south and slightly west of Teruel, a Salamanca communique said. Gov ernment reinforcements were power less to halt the attack, according to these advices. It was extremely difficult to learn the exact situation around Teruel, due to sharply conflicting reports issued by the opposing forces. The government flatly contradicted in surgent claims, saying all attacks launched by Gen. Francisco Franco's insurgent forces were repulsed. Despite -this variance of .eports. however, it was known that all or part of Teruel had been recaptured by the insurgents in their counter offensive, launched after the city was taken by government forces in |i sur prise attack two weeks ago. The action around Teruel has de veloped into one of the biggest battles of the Spanish civil war and, with clr se to 200,000 troops engaged, its outcome may have decisive effect on the final result of the bloody, 17 month-old conflict. The insurgents said they were con solidating their positions in southern sections of Teruel after recapturing this highly important city at the southernmost tip of the Aragon front. Loyalists Claim Recovery. MADRID, Jan. 3 UP).—Official Spanish government dispatches from the Teruel battle front declared to day the government was "more than holding its own” in the face of the Insurgent counter offensive. The government report said that in addition to holding their line protecting “all vital points closest to the city,” government troops “re covered some ground.” The several thousand insurgent gar rison troops and civilians trapped in Teruel when government troops took it were still stubbornly defending themselves in barricaded buildings. Teruel Loss Denied Here. By the Associated Press. The Spanish Embassy said last night Minister of Communications Giner had telephoned from Barcelona denial that the insurgents had captured Teruel. Embassy officials said they also were informed that the govern ment forces “had taken new positions north of Teruel.” Some of the copies of The Star are slit in the center fold of the paper by a pat ented process in printing. The Star is experimenting with this idea and if you, the reader, received one of these copies and find it is helpful in turning the pages, will you please write or tele phone your comments to the Circulation Manager, National 5000. "■HMHHUMUHaHMaaaaMaJ I Numbers Racket Is Diverting $100,000 a Day From Legal Sources of Trade in Capital (No. 2 of a Series.) By CARTER BROOKE JONES. WHEN Richard Roe, who works in a Government depart ment and is an exemplary citizen, wagers a quarter on number 671, taking a remote—a 1,000-to-l—chance on winning $150. he’s indulging in a relatively harmless form of gambling, but he’s also helping to support a racket which, it is estimated, diverts $100,000 a day from Washington’s legitimate sources of trade into a criminal racket. This is not The Star's estimate of the extent of Washington’s favorite gambling racket, but a figure computed by Federal officials from investigations which they have made. It is not, they say, a mere guess, but is estimated from actual disclosures of racket revenues in this and other cities. It's a criminal racket because it not only violates the District's anti-lottery law, but is an underworld enterprise which has encouraged crime in general and is blamed by the authorities for the present alarming spread of banditry and housebreaking. In tacitly tolerating the numbers racket, Washington is nurturing people who settle their frequent disputes with guns and who carry on their huge trade outside tne rules of a civilized society. So often have Washington gamblers enforced their demands and paid their debts with bullets that the first thing members of the homicide squad ask when they investigate an unexplained 5,000 D. C. MSS APPLY FOR HELP Compensation Office Opened Here and Staff Promises Speedy Action. BACKGROUND— District of Columbia Unemploy ment Compensation Act went into effect January 1, 1936, when em ployers began paying 1 per cent on employes’ wages. During 1937 employers paid a 2 per cent tax on salaries, the money going into a trust fund. From this fund, which now aggregates $6,000,000, benefits will be paid eligible workers who lose jobs. Payments also began in 21 States with the new year. (Picture on page B-l.) By JOHN H. CASSADY, Jr. Hundreds of unemployed District workers converged on the District of Columbia Employment Center today to make application for benefits under the District Unemployment Compensa tion Act. A temporary office has been set up at 928 Fifth street N.W. to take care of the registration of workers eligible to receive unemployment compensa tion checks. A handful was waiting outside when the office was opened at 7 a.m., and the number increased hourly. Almost 5,000 had called to make application by shortly after the noon hour, according to C. E. Lamson, di rector of the District Employment Service. The office was to be open until 4:30 p.m. By 9:15 a.m. Mr, Lamson esti mated approximately 2.000 had called to make application. To avoid con fusion and eliminate the necessity for applicants to wait, however, each one was handed an envelope contain ing instructions and applications for benefits and for new jobs. Each en velope specified what time the jobless worker should return to file his formal application. A staff of 40 workers from the employment office were interviewing those who could be taken care of immediately. Twenty of the Inter viewers were receiving applications for unemployment benefits, while the (See REGISTRATION, Page A-12.) —i WINSHIP DELAYED Plane Trouble Prevents Arrival In D. C. Before Tonight. B» the Associated Press. Eastern Air Line officials said to day mechanical trouble on a trans port plane would necessitate a 12 hour delay in the arrival here of Gov. Blanton Winship of Puerto Rico. Officials said a plane from Miami, due here at 6:40 a.m., developed trouble in one motor and made an unscheduled landing at Maxton, N. C “All passengers were transferred to a Seaboard Airline train for Rich mond, Va., from where they will take a plana arriving In Washington at 1 o’clock tonight,” airline officials said. killing is: ‘‘Was this fellow in the num bers game or bookmaking or what?” On an autumn evening young Allen D. Wilson was delivering newspapers (See NUMBE^.Tage XT)~ Census to Form Basis of Decisions on Future of Federal Relief. (Table showing jobless by States Is on page A-2.) By the Associated Press.T Administration leaders surveyed the unemployment problem anew today in the light of census figures that between 7,822,912 and 10,870.000 Americans were out of work in November. John D. Biggers, Ohio glass manu facturer who supervised a voluntary registration of the unemployed, said the number out of work had increased since the count was made. The District of Columbia reported 37,600 unemployed and wanting work, divided: 19.073 men and 18.527 women. On Federal emergency works, the total was 9,765, divided 6,960 men and 2,805 women. Maryland reported 41.518 unem ployed men and 16.670 women, and 11,237 men and 1,710 women on emergency work. In Virginia. 53.373 men and 31.115 women reported they were out of work, while the emergency workers in the respective categories were 20,329 and 7,783. The Biggers census and surveys made by the Works Progress Admin istration and other agencies will form the basis of decisions on the future of Federal relief. Mr. Biggers said 7.822.912 persons, returning cards distributed by post men, signified they were out of work and wanting employment. A house to->house canvas of certain “test” areas showed this report to be 72 per cent complete, and thus the higher figure of 10,870,000 persons actually unemployed was projected. State totals showed, in general, that unemployment was less in the Middle West than elsewhere. Although census officials did not attempt an immediate analysis of the figures, one said informally that oc currence of larger numbers of jobless in the South was affected by a large percentage of unemployment among the colored. “Many people consider themselves unemployed who are financially not compelled to work,” said Mr. Biggers. Irrespeticve of their need, when they seek employment, they enter the la bor market and compete with others who have jobs or vitally need Jobs. They are therefore a factor in the unemployment problem though they may never seek relief.” In giving out his results, Mr. Big gers said, “The present report reflects the decline during the earlier stages of the current business recession, but not the subsequent trend.” Some Government economists said unemployment probably would be most pronounced in January and Feb ruary because of a seasonal "slack period,”, but that jobs might increase in the spring. Mr. Biggers said the census should prove worthwhile, "not only because it provides new facts and figures „U9m jom —. Pag* A-6.) ELLIOTT CHARGES Accuses Treasury Itself of Failing to Help Safeguard Operations. CITES NEW DEAL UNITS AS CHIEF OFFENDERS Asks Congress for Legislation to Withhold Funds From These Establishments. BACKGROUND— The office of controller general was established under the Budget and Accounting Act of 1921, which set up the General Accounting Office as a congressional watch dog over expenditures. As a re sult, there have been recurrent controversies with the administra tive agencies of the Government. Legislation now pending would de stroy the present form of the or ganization. By J. A. FOX. Charging that hundreds of millions of dollars are being received and ex pended by Government agencies with out a proper check on the transactions, and that accounting laws together with regulations promulgated by rresident Roosevelt are being widely flouted. Acting Controller General Richard N. Elliott today called on Congress for corrective legislation that would go so far as to withhold appropriations of offending establishments. The indictment of the acting con troller general, singling out a number of groups, Including the District gov ernment, as being guilty of lax ac counting methods, was included in his annual report in which he took ex ception also to the administration sponsored reorganization bill to dis member the General Accounting Office and vest its major powers in the Treasury. Mr. Elliott decried con tinued efforts “to secure for the spending agencies legislation making further surrender by the legislative branch of its right and authority to direct by law the uses of public funds." Charges Lack of Co-operation. The Treasury itself was accused by Mr. Elliott of failing to co-operate to the end that the fiscal operations of the Government might be safe guarded adequately. He also named the War, Navy and Justice Depart ments and a number of Federal organized corporations as getting out of line. He was particularly critical of the Home Owners’ Loan Corp., whose expenditure of approximately $40,000 for a medical car,, plan he recently declared illegal, but this activity was not mentioned in the report. The unusually blunt language of the General Accounting Office head, who has occupied that post since Controller General J. R. McCarl ended his 15 year term a year and a half ago, coupled with the disclosures as to the attitude being displayed toward the office in many quarters, are expected to furnish new' ammunition for op ponents of the accounting split-up when Congress resumes consideration of the reorganization plan. Six Agencies Specified. Mr. Elliott specified six agencies in charging that millions are being handled “without proper accounting and audit.” They are Electric Home and Farm Authority, Federal Deposit Insurance Corp., Federal Farm Mort gage Corp., Federal Savings and Loan Insurance Corp., Home Owners' Loan Corp. and the Virgin Islands Co. These, he said, hold themselves above the general law requiring all Federal receipts to be covered into the Treasury to be reallocated to their re spective functions. To the contrary, (See ELLIOTT, Page A-6.) CLIPPER IS POISED AT KINGMAN REEF Samoan Plane Ready to Hop Off on Last Leg of Australia Honolulu Flight. By the Associated Press. KINGMAN REEF, Equatorial Pa cific, Jan. 3.—The Samoan Clipper was ready to hop off at dawn today (about noon E. S. T.) on the last leg of its Auckland. New Zealand-Hono lulu flight to inaugurate commercial air service between Australia and the United States. The Pan American Airways’ flying boat, which left Auckland Saturday morning with a cargo of mail and express, arrived last night from Pago Pago, American Samoa, first stop on its epochal flight. The distance from Auckland to Pago Pago is 1.806 miles and from Pago Pago to Kingman Reef 1,561 miles. The 19-ton flying boat, with the veteran sea flyer, Capt. Edwin C. Musick, in command, is expected to complete its 1,085-mile jump to Hono lulu late today. There, mail and express is to be transferred to the Philippine Clipper, due in the Hawaii metropolis from Manila Wednesday. The Philippine Clipper, under present plants, will ar rive at Alameda, Calif., Friday morn ing to complete flying the first com mercial load from New Zealand to the United States. At this tiny atoll. Pan American’s four-masted schooner Trade Wind is serving as a base of operations until the company erects buildings. With weather bureau and radio direction finding facilities aboard, the boat will guide air liners in and out of King man Reef and furnish them supplies. Retired Manufacturer Dies. PHILADELPHIA, Jan. 3 <*>).—Harry Weiler, 81, retired textile manu facturer, died last night at his hotel apartment. He wae a native of Cin cinnati.