[1936 Ma. 31, 1:2]

Says Founder Has Deserted
Original  Plan  and  is
Sponsoring Another.

Leader Attacks Author of Con-
gress Bill as Dwindling Dues
Revenue is Revealed.
  WASHINGTON, March 30.—A sharp decline in revenue from dues to the Old Age Revolving Pensions, Ltd., the corporate name of the Townsend old-age pension plan, has been revealed by evidence obtained by the special House committee investigating t he movement. Whereas for the last quarter of 1935 the income of the organization from the "dime-a-month" dues paid by members of the Townsend clubs amounted to about $350,000, it shrunk to $180,000 for the first three months of 1936.
  Internal dissension over policies among some of its leaders has led to the resignation of two of the "key" men in the organization and this, coupled with the falling off in revenue, was interpreted by some observers here as indicating that the pro ject is definitely on the down grade.
  The latest resignation is that of Representative John S. McGroarty of California, who has been the organization's spokesman in Congress and who introduced legislation proposing to put the principles of the plan into effect. His retirement follows that of Robert E. Clements, co-founder of the plan, who announced last week his resignation as secretary, effective April 1.
McGroarty Accuses Dr. Townsend
  Dr. Townsend conferred here to today with Sheridan Downey, his personal attorney, and proceeded to New York, where he will confer with organization leaders in an effort to strengthen his fences and at the same time prepare for this appearance befo re the House investigating committee. He is ex-
[continued on Page Five]
pected to follow Mr. Clements as a witness when public hearings are resumed Wednesday.
  Confirmation of the break between Dr. Townsend and Representative McGroarty came first from a statement published today in The Townsend Weekly. This was followed by one from Mr. McGroarty in which he alleged that dr. Townsend had deserted the orig inal pension plan and is now supporting another and entirely different scheme, so far as the financing angle is concerned, sponsored by Mr. Downey.
  "I am not seeking any quarrel with Dr. Townsend," said Representative McGroarty, "but it is apparent that the millions of members of the Townsend Club must make a decision concerning the way they wish their Representatives in Congress to carry on the fight for an adequate, respectable old-age pension.
  "Dr. Townsend seems to have abandoned the original plan which was embodied in the McGroarty bills and which attracted the support of millions of persons in all parts of the United States. At least, he has endorsed a new idea advocated by Sheridan Downey, which contains none of the essential features of his original pension system. The Downey plan would involve the issuance of billions of dollars of additional tax-exempt bonds in lieu of the transactions tax which is the very foundation of the revo lving pension plan.
Won't Back McGroarty Politically
  "It seems to me that the Townsend clubs must make a decision as to whether they desire to have us continue to fight for the McGroarty bill, which I regard as thoroughly practicable and feasible, or to attempt to bring about enactment of the Downey plan, which I cannot believe is workable or desirable."
  Dr. Townsend, who signed the statement published in The Townsend Weekly, asserted that certain persons were seeking to make a political "football" of the Townsend movement. In California the Townsend followers were being asked to register as Democ rats. The organization would not endorse the "political ambitions" of Mr. McGroarty. Although he himself changed his registration from Democratic to republican, Dr. Townsend declared that his action was simply a protest against what he termed "unfair poli tical" practices in California.
  He warned all members of Townsend clubs to ignore any bulletin or letters bearing on political questions unless signed by a majority of the national board, "including my own signature."