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Mr. SMOOT. The Senator will not find seven grades of cotton in the same bale. In one fleece of wool, taken from one sheep, you may find seven grades of wool that have to be sorted.

Mr. CARAWAY. Anyway, the sheep growers have kept away from the exchanges. They are able to pay their taxes, while the cotton grower often is not

Mr. HEFMN. But when we take into consideration the matter of shrinkage, the buyer of wool or the manufacturer of wool examines the wool. He is an expert and a master of the subject. He tells the seller or the producer that he can not pay more than a certain price for this and that. The producer can either accept it or refuse It.

Mr. SMOOT. All my thought was to suggest that wool has nothing whatever to do with stock exchanges in the United States.

Mr. CARAWAY. Does not the Senator know that Chicago is trying to set up a wool exchange'/

Mr. SMOOT. They can not do it.

Mr. CARAWAY. They will do it if the Senator does not watch them. They will be selling the Senator's sheep before they are born.

Mr. SMOOT. They buy the wool.

Mr. CARAWAY. No; they are setting up a future market. They voted to do it some time last fall.

Mr. SMOOT. Nobody is going to buy wool unless he knows what he is doing.

Mr. NORRIS. Mr. President, will the Senator from Alabama yield?

Mr. HKFLIN. I yield.

Mr. NO1JIUS. It seems to me, from what the Senator from Utah said about wool as compared to cotton, that there is an interesting situation. I am anxious to know what is the necessity for a cotton exchange if there is no necessity for a wool exchange? From what the Senator said, it seems to me we could get along easier without a cotton exchange than we could without a wool exchange, because there is no shrinkage in cotton.

Mr. SMOOT. In the manufacturing business—I am not saying now anything about the gambling business, but in the manufacturing business of cotton, cotton goods, like woolen goods, are made in styles. Those styles change at least once in six months. The samples that are made by a woolen concern are of lightweight goods and heavy-weight goods. The light-weight goods are sold nine months before they are delivered. When they take those first samples and go on the market with them they know exactly that they have to have that grade of wool, and that it will cost so much.

With the cotton business, the cotton man goes to work and gets his samples out six months ahead, or sometimes nine months ahead. Before any of the goods are made, except the samples, those samples are shown and the orders are taken from all over the United States, or wherever the manufacturer's customers may be, whether outside or inside the United States. His styles are made up. He knows exactly how many pieces of goods of this kind and that kind are sold, and he has the orders for them. The manufacturer then buys the cotton; that is, he must know what the price of the cotton Is.

Mr. CARAWAY. I know that happens not to be the fact in the cotton business.

Mr. SMOOT. The Senator asked about the legitimate part of the business. I am not talking, about the gambling part. I am talking about the legitimate part

If he has sold goods that will require 100 bales of cotton or 1,000 bales of cotton or whatever number of bales of cotton it would take, he immediately buys that cotton on the exchange. It is not delivered then, hut they have to deliver it at the price at which he buys it on the exchange.

Mr. NORRIS. Suppose there was no exchange, where would he buy it?

Mr. SMOOT. He would have to buy it from the producer and put it somewhere, like the wool man.

Mr. NORRIS. Why should he not do it then like the wool man?

Mr. SMOOT. Because that practice has not been established and it is much easier the way it is. He is protected against a rise in price. I am only speaking of the legitimate part If he did not buy it in that way and cotton went up, he would be ruined, and he dare not take that chance. That is the legitimate part of the business as far as the manufacturer is concerned. Outside of that, as I said, it is a gamble upon the stock exchange, just as has been stated here to-day.

Mr. GEORGE. Mr. President, let me call the Senator's attention to the fact that not one single bale of cotton Is ever delivered to a cotton spinner that is bought on exchange, as

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the Senator describes. He never takes one single bale of actual cotton in that way.

Mr. SMOOT. Because it is not on the exchange where he buys the cotton. When he calls for it they have to deliver it

Mr. GEORGE. Then he settles on margins.

Mr. NORRIS. He buys cotton on the exchange that he never gets. He buys his cotton somewhere else that he really uses. The exchange transaction is really only a fictitious operation. The point 1 am trying to get at is this. I have listened to days of testimony on the subject, and I am still in doubt as to what is right.

What is the necessity of this exchange, now—narrowing it down to a concrete case as applied to cotton—when there is not any, and none seems to be necessary, as applied to wool? I still do not understand why one is necessary in one case and unnecessary in the other.

Mr. SMOOT. When you buy a bale of cotton you have 500 pounds of cotton in it.

Mr. NORRIS. Why, of course.

Mr. SMOOT. But when you buy a bale of wool weighing 300 pounds there may be only 30 per cent or 90 per cent of the 300 pounds of a certain grade of wool.

Mr. NORRIS. Do you not know what it is before you buy it?

Mr. SMOOT. No; no living soul can tell about that

Mr. NORRIS. Do you buy your bale of wool without knowing what its grade is or what its quality is?

Mr. SMOOT. No; you have to judge that.

Mr. NORRIS. Well, you judge that pretty accurately, do you not?

Mr. SMOOT. Those that are used to buying it do.

Mr. NORRIS. Why, of course. I should like to get rid of everything that is not disputed. The man who buys wool is an expert. He knows what kind of wool he Is buying?

Mr. SMOOT. He never buys futures. He never hedges.

Mr. NORRIS. That is what I am talking about. He buys the actual wool?

Mr. SMOOT. Yes.

Mr. NORRIS. If It is true that the bale of wool is so uncertain that you can not tell anything about it, it seems to me there is more reason for hedging on that kind of a transaction than on cotton, where that doubt does not exist. I may be wrong; but it looks to me, on the Senator's own illustration, that the necessity for a cotton exchange is less than the necessity for a wool exchange.

Mr. SMOOT. We have no wool exchange.

Mr. NORRIS. I understand that. I know that.

Mr. SMOOT. This is the way it is done: There is a grade of wool that is purchased largely by the manufacturer himself. That which is not purchased by the manufacturer is sent to Chicago or Boston or Philadelphia. Those are the three principal places where it is sent.

Mr. NORRIS. Other people buy it for investment, then, do they not, outside of the manufacturer? In other words, there is not any exchange gambling on wool?

Mr. SMOOT. I will explain it to the Senator. It is conidgned to the houses, and they charge so much for the storage, and so much for the sorting, and so much for the handling of it. It is in warehouses. The whole of it goes to warehouses. You can go to these three principal places, and they have great warehouses, and this is the fine wool, this is the medium wool, and this is the coarse wool. All of the grades are there, sorted out.

Mr. NOHRIS. Exactly; and the buyer knows just what he !s getting?

Mr. SMOOT. He knows just what he is getting.

Mr. NOUHIS. And he gets what he buys?

Mr. SMOOT. He does not do that with cotton.

Mr. NORRIS. He buys the actual material. In the cotton business he does not do that, it seems.

Mr. SMOOT. That is right.

Mr. CARAWAY. Mr. President, may I read two or three letters? I shall not occupy the floor long.

In the first place, I want to say that the largest actual seller of spot cotton in New England wrote me—I thought I had the letter in my desk, but it is in my office—that he would be glad if the futures market were abolished, because he is no longer able to hedge on the cotton future market because of the manipulations.

I have just two letters here that I want to read among dozens that. I have picked up. One of them conies from the Charles E. Walters Co., bank stocks. Omaha, Nebr. Does the Senator from Nebraska know the company?

Mr. NORRIS. Yes; I know them.

Mr. CARAWAY. I will read this letter, because it has so often been said that the bankers would not finance the farm development of the crop unless they had the futures:

Th« Charles E. Walters Co. (INC.),

Omalia, A'e&r, March 1, 19S8. Senator Caraway, of Arkansas,

Washington, D. C.

My. Dear Senator: Local papers of March 3 print an article from their Washington correspondent referring to a bill you have Introduced prohibiting the speculation in grain and cotton futures on the market.

If you are correctly quoted in this article, I want to congratulate you most heartily and express my sincere conviction that a bill such as you propose would do more to help the farmers of this country than would all of the other so-called agricultural-relief measures combined.

It Is entirely fair and right that the law of supply and demand should control tlie market so long as It can operate uninfluenced by speculators, but with considerable study given to the marketing condition of the farmer—of which I am one by proxy—I am convinced that the greatest menace to the success of agriculture to-day is the speculator on the board of trade. I sincerely hope you will be successful in making your bill a law. for only after this speculation has been abolished will the full influence of this menace to the agricultural interests be felt. Congratulations to you, Senator, and success to your efforts In this direction.

Most sincerely yours,

Robt. L. Goethe, Prcsiitnt.

I picked up this letter:

M. F. Jonks A CO., Oklahoma City, Okla., March 8, K2S. Hon. Senator Caraway,

Washington, D. C.

Hear Senator : A straw vote was taken to-day in the Cotton Exchange Building, of Oklahoma City, to determine the attitude of those present on your bill pertaining to the sale of cotton and grain In the futures markets.

The ballot wus proposed and taken by a man who is an avowed opponent of your bill. The result of the vote stood 13 to 5 in favor of the- bill, although 3 of those voting were paid employees of a futures brokerage bouse.

Sentiment in Oklahoma City and this vicinity Is strongly in favor of regulatory measures for the futures exchanges, and we consider this poll as truly representative of the sentiment.

We assume that it was the purpose of the person taking tills pell to use it for the benefit of the opponents of your bill had the result been satisfactory to them. While writing this letter we have been submitted, aod asked to indorse, a petition requesting our representation in Congress to vote and work against your bill and the Vinsou bill, this by the representative of a futures brokerage house. Wishing you success for your measure, we are, Yours very truly,

W. C'. Ciiisdm, Jr.

These are the very folks who tleal with these products.

There are innumerable letters. I have one written by the largest farmer in the State of Tennessee, Lem Banks, who until 1920 was possibly the richest farmer in that country. He owns n large plantation in Mississippi; he owns a large plantation in Arkansas; he owns plantations in Tennessee. I will put his letter in the Record. He says there is not any chance of the cotton grower escaping until you abolish futures.

Mr. NORMS. Who is he?

Mr. CARAWAY. His name is Leni Banks, of Banks & Co. They were for a number of years the largest producers of cotton In Mississippi. They had the largest house dealing In cotton in the city of Memphis. I have not the remotest idea of the number of thousands of acres that at one time they controlled. They control very much less now, however. I shall include in the Record his letter, written to me under date of March 5 of this year. I have known him intimately for a long time.

I have here a letter from the C. G. Foust Lumber Co., of Dublin. Tex. They write a highly intelligent letter, and say that they can not prosper until they can get rid of the exchange.

I have a letter from Waxahachie, Tt-x., from .T. E. McDonald.

I have one here from Fredericksburg, Tex., bearing out the same protest.

I could bring over here hundreds of letters from farmers, most of them largo farmers, and every one of them is opposed to the present system. Not a single farmer is in favor of It.

I have a letter from the largest farmer—by the way, he is the president of the chamber of commerce in Lake Providence, La., the home city of the senior Senator from Louisiana [Mr. Ransijeij.i—saying that "they are ruining us farmers with their marketing machinery called the exchange." I shall put tills letter in the Record. I am going to bring a lot of them over. I will have an edition devoted to the farmers of America protesting against the gambling that Is ruining them.

I ask to have the letters to which I have referred inserted in the Record.

The PRESIDENT pro teuipore. Without objection, it is so ordered.

The matter referred to is as follows:

Walnut Hill Farm. Memphis, Tenn., March 5, 1S2S. Hon. T. H. Caraway,

United States Senate, Waxhinnton, D. C.

Dear Sm: I read with interest your proposed bill to regulate dealing In cotton futures.

If we ever did have an example of the need of thin legislation, we hare It now. In round figures, we produced 18.OOO.OOO bales in 11126 and in 1927, 5.000,000 bales less. Notwithstanding the 11I27 crop was 5.000.000 hales under that of 192G, the price of cotton declined from October $35 per bale within 00 days.

The only argument that I havo ever heard to Justify trading In futures is that :hc cotton merchants who carry actual supplies of cotton, and the mill people, who spin It. need to protect their purchases of cotton by selling what is known as a hedge. The brief synopsis of your bill seems to me to cover this admirably. In that the bona fldc owner of cotton can hedge or sell futures against it, but it does prevent the speculation that has been so hurtful.

I do trust that the Senators and Representatives from the South and West will give such support to the proposed Investigation of cotton dealing that their eyes may be opened to the iniquity thereof heretofore existing, and that your bill or something similar will be enacted into a law so as to protect the producer.

A few days ago I was talking to a man who Is interested in cotton, and he said that if a law was passed that limited trading in futures to those people who actually had cotton to be protected by future Belling, It would mean that the cotton exchanges and futures brokers would have to go out of business. If by the passage of a good law they are forced to go out of business, I trust they may find something else to do that will be just as profitable to them and less hurtful to the cotton producers.

The very fact that with 5.0110,000 bales less of cotton there bas been a decline of $35 per bale in 90 days seems to me to make it a very opportune time to inquire carefully and in detail as to the wherefore thereof.

yours very truly,

Leu Banks.

In the morning paper I se» that Mr. Alfred Mash, a former president of the New York Cotton Exchange, states that Anderson. Clayton & MeKadden kept 185,000 bales of cotton in New York to depriMS prices. When speculators fall out among themselves the producer mjiy be able to get his dues. I hope the committee will call on Mr. Mash. Mr. Hubbard, and others, so as to go into this as fully as into the Teapot Dome and Sinclair.

C. O. Foust Lumber Co.,

Dublin, Tex., March 6, MM. Senator Caraway, of Arkansas, Senator Shepi'aiid, of Texas, Senator Mayfield, of Texas,

Washington, D. C.

Sikh: Permit me, in a crude way, but the best I can, to urge upon you the vital importance of the measure now before Congress either to emasculate or execute cotton exchanges.

If either one of you gentlemen could see his way clear to leave all the other active public service to your colleagues, only voting and performing routine duties, and devote the rest of his active life In public service, if need be, or until accomplished, to the complete annihilation of futures tniding you would accomplish the greatest work of a lifetime and go down In history as the greatest modern servant of the Sooth.

I urge that It can not be done by an evasive or conciliatory enactmvnt. Such a measure must have teeth In it.

All such transactions now get by under the subterfuge that they contemplate actual delivery. It's a blatant He. Not one in a million contemplates actual delivery. Make it so each contract can be followed up to conclusion. If cotton is not delivered, it was not remotely intended to be delivered. The South was never within my recollection victimized by this pernicious system as It has been the present cotton season.

I don't know how it was done, but I know it was done. I knew all the season that some powerful agency was at work (effectively) to hold down the price of cotton. At every report put out, with one or two minor exceptions, the price flashed up, beginning with the September report, when 30 cents was freely predicted. But after every one of these advances It was plainly evident that some powerful agency was systematically hammering it down. You gentlemen are In position to get the facts.

I am told that one favorite method Is by what are termed "wvh sales"—that is, by throwing huge offerings out hut seeing to It tuat only tlie initiated inside few get these offerings. Thus none of tlie Insiders suffer: there is no expense except a small brokerage and contingent fee, and the brokerage probably on a favored basis.

"Carthago est deltnda" were the relentless words that old Cato, the Roman senator, closed every peroration, every conversation, with. And Carthage was destroyed. Yours very truly,

C. G. Foubt.

Waxahaciiie, Tex., March I, P28. Senator Caraway, of Arkansas,

Wellington, T). C.

Hear Senator: It was with great pleasure that I noted the approval of your antlcpeculative futures bill by the Senate Agricultural Committei> last Saturday.

This measure, if It becomes a law, will prove one of the most constructive pieces of legislation and the greatest benefactor to agriculture and commerce in a decade.

It Is deplorable that the destiny of millions is influenced by the reckless speculation of a few "gamblers" that neither "toil nor spin."

Your bill and your untiring efforts are being watched and lauded by men that have the best interest of our country at heart.

I trust that your measure as now written becomes a law; it is worthy and commendable of you to wage so determined a fight for the welfare of your people.

Wishing you success, I am, with kindest regards,

J. E. Mcdonald.

Fiiederickkbcro, Tkt., March S, 1IH8. Hon. T. H. Caraway,

Washington, D. C.

Dkar Sir: I notice In the papers of to-day that your antifutures gambling bill has been favorably acted on by the Agricultural Committee. Will you be so kind as to send me. a copy of your bill and give me your opinion as to possibility of final passage?

I'nder separate cover I am sending you copy of circular I am now distributing, this circular going Into details as to history, methods of operation, and effect of grain and cotton futures gambling. The only purpose I had in making announcement for the Senate wns to carry on an educational campaign. My idea is that the people must be educated to work united and direct for the kind of legislation you have introduced. Unless something drastic is done, and done without too much delay, agriculture is doomed, both In the grain and cotton sections.

Thanking you in advance for your compliance with this request and assuring you of my hearty accord and my willingness to render any service I can, I am,

Respectfully, *

Don II. Biocers.

Bee Branch, Ark., March S, 1918. Hon. T. H. Caraway,

Washington, D. C.

My Dear Sir: I see your bill to prohibit dealing in options In futures is reported out from the committee. It is Just what the country needs. Options In futures are 1 cent per pound cheaper in cotton than spots. When it conies to a vote have a roll call. Put the opposition on record. The bankers and all gamblers will be against your bill. Perhaps It will never pass both Houses; but stay with them: it's the best bill ever introduced In Congress for the producers of the real wealth of the Nation. Farm products Is the real wealth. All must live from the soil. Your friend,



Trrus Cofnty, T«x.

Farm And Branch: An item In the financial news Bald: "Cotton declined on account of Palm Bench Belling." What does this mean to the world In general and the South In particular? It means that a group of millionaires spending the winter In some magnificent hotel In Florida meet every day around a mahogany table and by pooling their millions offer blocks of cotton In such quantities that the trade can not absorb them, and down goes the market till the fell lug ceases. What are they really selling and why? They are selling the cotton (now in the seed) to be raised this year; gambling on the seasons, the flood, the drought, the sunshine, and the storm. They are selling the labor, the sweat, and the toll of farmers and their wives, of little children kept from school, working beneath a blazing sun to raise this cotton for these soulless gamblers to depress. They are selling the standard of living of over 20,000,000 human beings, trying to reduce their wages to that of n slave and make peons out of a race of free men. All for the almighty dolliir.

Palm Beach selling—selling the blood, the manhood, and womanhood of the descendants of that grand arm; that followed Lee and Jackson and Forrest and Johnston.

Congressmen of America, can not this be stopped? There is a way and every Congressman knows It. It is but a ease of action. Prohibit short selling or puss a farm relief bill.

B. I. Lazarus.

The PRESIDENT pro tempore. The question is on agreeing to the amendment proposed by the committee.

Sir. CARAWAY. There is an amendment to the amendment, to raise the tax to 10 cents instead of 1 cent.

The PRESIDENT pro tempore. No; the amendment is section 441. a proposal by the committee to strike out.

Air. SMOOT. That is the amendment. I will tell the Senator what he can do: He can strike this out, and then that will leave the present law at 1 cent.

Mr. CARAWAY. Before you strike it out it is always permissible to perfect the text as it stood, providing for a tax of 1 cent. The committee moves to strike that out; and I move, instead, to increase it to 10 cents.

Mr. NORRIS. Mr. President, I should like to make an inquiry in the nature of a parliamentary inquiry. As I understand, the present law provides a tax of 1 cent.

Mr. SMOOT. Yes.

Mr. NORRIS. The House struck that out?

Mr. SMOOT. It struck it out.

Mr. NORRIS. This amendment is an amendment by the committee to restore It?

Mr. SMOOT. Yes; to disagree to the action of the House.

Mr. NORRIS. In other words, it is a disagreement with what the House strikes out?

Mr. SMOOT. No; just the reverse, Mr. President.

Mr. MAY FIELD. That is right. If you agree to the amendment, the 1 cent will go back.

Mr. NORRIS. I understand the situation now.

Mr. SMOOT. We ask that the Senate disagree to the House provision.

Mr. NORRIS. In other words, the House proposes an amendment to the existing law by striking out a certain tax. We are now called upon In the committee amendment to disagree to that proposition.

Mr. SMOOT. That is right.

Mr. NORRIS. And the 1 cent will go back in the law if the committee recommendation prevails.

Mr. CARAWAY. Mr. President, I desire to propound a parliamentary inquiry.

The PRESIDENT pro tempore. The Senator from Arkansas will state it.

Mr. CARAWAY. As I understand, the House struck out of the old law the provision for a tax of 1 cent. The committee proposes to resubstitute the old law, and that is the amendment now before the Senate?

Mr. SMOOT. Yes. In other words, the question will be, Will the Senate agree to the committee amendment?

Mr. CARAWAY. That is what I thought. Then I want to move to increase it to 10 cents; and that would be the first vote.

Mr. HARRISON. Mr. President, I ask unanimous consent that the first vote be taken on this motion, which shall be a substitute for the pending motion:

Upon each sale, agreement of sale, or agreement to sell (not including so-called transferred or scratch sales) any products or merchandise at, or under the rules or usages of, any exchange, or board of trade, or other similar place, for future delivery, for each $100 in value of the merchandise covered by said sale or agreement of sale or agreement to sell, 10 cents, and for each additional $100 or fractional part thereof In excess of $100, 10 cents.

That carries out the idea.

Mr. SMOOT. That can only be done by unanimous consent. I have no objection to tliat.

Mr. NORRIS. I should like to make a suggestion that I think will meet with the Senator's view.

For several years at different times this proposition has been before the Agricultural Committee. I happen to know that the cotton men of the South are not In agreement on these exchanges. I notice that the Senator from Louisiana [Mr. Ransdell] and the Senator from South Carolina [Mr. Smith] are both absent this afternoon. I hardly think it would be fair to vote on this matter in their absence.

Mr. CARAWAY. Does the Senator want It to go over until to-morrow morning?

Mr. NORRIS. 1 was going to say that I think it ought to go over until those two Senators are present.

Mr. CAHAWAY. I have no objection to that.

Mr. SMOOT. I hope if tills goes over we are not going to have all of this discussion over again.

Mr. NORRIS. I realize that we are likely to have it. and I have a great deal of sympathy with the Senator's view; but these Senators did not know that thin mutter was coming up. I (Jo not know why they are absent, but ut least they are not present, and they are Ix>th very much interested in this proiKwition—as much as any Members of this body. I know that from my contact with them for a great many years, both of them being on the committee.

Mr. CARAWAY. I have no objection.

Mr. SMOOT. Mr. President, I have no objection; but I am going now to appeal to the Senate that we be allowed tomorrow to take up the bill, and not have any other matters intervene.

Mr. CURTIS. Let us take it up at 12 o'clock and go ahead with it.

Mr. NORRIS. I sincerely sympathize with the Senator from Utah in that proposition.

Mr. CURTIS. I hope the Senator from Utah will not yield to anybody else to-morrow.

Mr. SMOOT. This is the third day that, we have made no headway at all with the bill. We have not even had a vote to-day.

Mr. NORRIS. Most of the time to-day was taken up with the conference report on the flood control bill. The Senator from Utah did not have to yield for that. I would not have cared, as far as I was concerned, whether he did or not; but it would have taken up just so much time anyway. It does not make any difference whether it was to-day or some other day. The del>ate on the conference report was not wasted, in my judgment, although there was no real opposition to the report.

Mr. SMOOT. No; I am not criticizing the Senator or anyone else. The day before, the whole day was taken up with other matters.

Mr. NORRIS. Yes.

Mr. SMOOT. All I shall do now is to appeal to the Senate that to-morrow we shall begin at 12 o'clock and keep the bill before the Senate so that we may get some action on it.

Mr. BROUSSARD. Mr. President, inasmuch as reference was made to uiy colleague [Mr. Ransdell], I wish to say that at 4 o'clock he went into a conference, I think, on the shipping bill. That accounts for his absence.

Mr. NORRIS. I should like to ask the Senator from Louisiana if he does not think these Senators ought to be here when this mutter is voted on.

Mr. BKOt'SSAKI). Yes; I think so.

Mr. SIMMONS. Mr. President. I should like to inquire of the Chair upon what this proposition of the Senator from Arkansas will be hinged? The committee has done nothing except to disagree to the House amendment, and it seems to me we will have to vote upon that question flrst.

Mr. SMOOT. It can be done only by unanimous consent

Mr. SIMMONS. Only by unanimous consent.

Mr. SMOOT. And I am i>erfectl.v willing that that shall be granted. I think it ought to be granted. The suggestion of the Senator from Mississippi [Mr. Harrison], I think, is a wise one; that by unanimous consent we allow the Senator's amendment to be voted on first.

Mr. SIMMONS. Let us see if that unanimous consent is given.

Mr. SMOOT. I have no objection.

The PRESIDENT pro tempore. Is there objection to the unanimous-consent agreement proposed by the Senator from Mississippi'!

Mr. IIEFLIN. I do not think there will be any objection.

Mr. BROUSSARD. .It will not be voted upon until tomorrow?

Mr. SMOOT. No; the vote will be to-morrow.

The PRESIDENT pro tempore. Is there objection? The Clviir hears none, and that order is entered.

Mr. ODDIE. Mr. President, I ask unanimous consent to have placed in the Rkcobd a statement of the views expressed by the American Mining Congress on the tax on sales or transfers of capital stock, section 442, which will come up next. It expresses views in which I concur.

The PRESIDENT pro tempore. Without objection, it is so ordered.

The matter referred to is as follows:

Many of the States of the Union have ceased to have any pioneer mining, while others still need the pioneer miner for their necessary development. Any form of mining containing a shaft or a tunnel Is an expensive proposition and tlie majority of metal mines contain one or the other. They naturally require financing, and as In the initial stages the extent of the body of ore to he tupped by the shaft or tunnel is problematical—although comparatively inexpensive tests may have shown the presence of some ore—there Is nothing definite on which a representation can ordinarily be made on which a bond issue can be based. In other words, the pioneer miner for the sinking of his shaft has to depend either on his own resources or on the sale

of stork. Ordinarily the resources of the pioneer miner are limited. Consequently, he quite generally is obliged to depend upon the sale of stock.

In other Industries the Issuance of shares of stock, each representing $1(10, Is quite generally the rule, but the custom of nearly 75 years has been to issue shares of mining stock with a smaller par value, occasionally as small a value as 1O cents a share. This custom allows small investors to acquire stock in mining properties which, in their opinion, would prove of value. This difference between the custom connected with the issuance of stock in mining companies and those of other industries has never been fully recognized in the law imposing stamp taxes. For instance. Schedule A- 2 of the stamp tax of the act of 11)26 reads, in part, as follows:

"Capital stock Issued: On each original Issue, whether on organization or reorganization, of certificates of stock, or of profits, or of Interest In property or accumulations, by any corporation, on each $100 of face value or fraction thereof, 5 cents."

It will be seen from this that If a corporation Issues a stock the face value of which is $100, and another corporation Issues a stock the face value of which Is $1, each corporation pays a tax of 5 cents per share. In other words, the corporation issuing $1 stock pays proportionately one hundred times as much as the corporation issuing the $100 share. The Injustice of this is obvious and can not be defended. As to stock issue without any face value at all, the provision Is as follows:

"Prorideil. That where a certificate is issued without face value, the tax shull be i> cents per share, unless the actual value is in excess of $100 per share, in which case, the tax shall be a cents on each $100 of actual value or fraction thereof, or unless the actual value is leas than $100 per share, in which case the tax shall be 1 cent on each $20 of actual value or fraction thereof."

This Is a trifle more fair to no par value stock, but using the same Illustration, the stock with no par value stated, but an acnial value of $1, would still be paying proportionately twenty times the tax of the stock with no par value, but an actual value of $1OO per share.

As to transfers of capital stock, the situation is even worse. The law as contained In schedule A-3 of the act of 1920 so far as applicable is as follows:

"Capital stock, sales or transfers: On all sales, or agreements to sell, or memoranda of sales or deliveries of, or transfers of legal title to shares or certificates of stock or of profits or of interest In property or accumulations in any corporation, or to rights to subscribe for or to receive such shares or certificates, whether made upon or shown by the books of the corporation, or by any assignment in blank, or by any delivery, or by any paper or agreement or memorandum or other evidence of transfer or sale, whether entitling tUt holder in any manner to the beuetlt of such stock, Intercut, or rights, or not. on each $10(1 of face value or fraction thereof, 2 cents; and where such shares are without par or face value, the tax shall be 2 ceuts on the transfer or sale or agreement to sell on each share."

In other words, the tax on the transfer of a share of stock of which either the face value In the one case, or the actual value in the other Is tt dollar, is the same as the transfer of a share of stock worth $0.000. In other words. In those particular cases, the owner of the $1 share pays proportionately five thousand times as much as the owner of the $0.000 share.

This situation has received the attention of the American Mining Congress. Through its officers it appeared and was heard before the. Ways and Means Committee of the House of Representatives when the act of 11*24 was in preparation, and at Its twenty-seventh annual convention held at Sacramento, Calif., September 29 to October 4, 1924, the following resolution urging repeal of this tax was approved by the fourth annual conference on mine taxation and unanimously adopted by the delegates assembled In the convention:

"Whereas the stamp tax on stock of any par value Is now computed on such par value, and is therefore the same on the speculative shares of a development company as on the share of the richest corporation whose surplus may be several times Its capital, while as to no par value shares the stamp tux Is computed on the actual value, but is so adjusted as to be grossly unfair and oppressive on no par value shares of small actual value, which in some cases are thus taxed one hundred times us much for transfer as par vulue shares worth many times their par value; nnd

"Whereas the stamp tax is a special tribute exacted from stockholders of corporations, justified only by the existence at the time of similar taxes which were rej)taled at the last session of Congress, and the stamp tax should also be repealed: It Is therefore

"Rcxolrrd, That the law fixing a stamp tux on stock certificates should be Immediately repealed."

The foregoing resolution clearly defines the issue. It Is becoming more and more difficult for the smalt prospector and mine owner to obtain capital with which to carry on the exploration and development work that in the past has been responsible for the growth and maintenance of the several branches of the American mining industry. The opportunities for obtaining capital with which to pioneer in an undeveloped or uunroveu urea through the usual methods and channel* of finance are necessarily limited, ami only by securing needed capital In small amounts from persons who were willing to take certain chances has it been possible for the pioneers of the raining industry to create1 independent enterprises and avoid bowing to monopoly. The manner in which small mining enterprises arc In effect penalized by the etamp tax is ably Illustrated in the following statement of Mr. 11. D. Lechoy, of Seattle, Wash., made at tbe Twenty-seventh Annual Convention of the American Mining Congress. He said:

"The stamp tax on stock certificates is still in force, although it hns been repealed as to bank drafts, notes, telegrams, beverages, etc. And that stamp tax is Just the same on the speculative par value shares of the small mining company as on shares of the richest bank in America. I now refer to shares having par value, bnt the stamp tax is still more oppressive on no-par value shares under the ruling of the Internal Revenue Bureau. That ruling makes the issuance tax on no-par value shares of the actual value of $1 just twenty times as much, and the transfer tax just one hundred times as much as on the par value shares of the Ford Motor Co. or the United States Steel Corporation. For instance, the stamp tax on an issue of 100,000 shares of the par value of $100.000 is SfiiO, regardless of the actual value, which may be a million, while that tax on an issue of 100,000 no-par value shares of the actual value of $100,000 is $1,000. The stamp tax on the transfer of that same $100,000 par value shares Is $20, and on 100,000 no-par value shares of the actual value of $1 each, as represented by the selling price, it is $2,000, or one hundred times larger.

"We all know that a development company must issue small shares, because it must attract capital on the hope of an increased value In its shares after a few years, rather than the promise of prompt dividends. It is grossly unjust, therefore, to compel a mine-development company to pay the same stamp tax on its small shares of speculative value as paid by the richest corporation in the United Stales whose surplus is many times its capital.

"The relief suggested is the repeal of the stamp tax on corporation shares. It Is a special tax on corporation stockholders. It discriminates against that one class more than did the stamp tax on bank drafts, notes, telegrams, telephone messages, beverages, and candy. Those taxes were more general in their application, but have been repealed, and the taxes on stock certificates should have been repealed at the same time. If, however, its repeal is not possible at this time, then amend the stamp tax law as to all shares, both of par and no par value, so a.s to compute the tax 'on each $100 of actual value or fraction thereof.' These are the very same words the present law uses In fixing the stamp tax on par value shares changing only tbe words 'face value' to read 'actual value.' This amendment would fix the stamp tux on nil shares according to actual value. Simple justice requires it if the stamp tax is not promptly repealed, as it should be."

Everyone knows that the mining industry is In need at this time of every possible assistance. This fact was recognized by the Ways and Means Committee of this Congress to a certain extent. By section 442 of H. R. 1 they recommended a 50 per cent reduction in the 2-ccnt tax on stock transfers, and their recommendation was adopted by the House of Representatives and Is contained in the pending bill. It does not go as far as it should. At least there should have been a similar reduction in the tax on issues of capital stock, but the House left this provision of 5 cents a share untouched.

The Finance Committee of the Senate proposes to strike out this action of the House, and to leave the tax of 2 cents a share untouchrd, thus operating to the full the Injustice on the mining corporations situated largely in the Western and far Western States. It is stated privately that the reason for this is that this provision also covers the transfers of stock on stock exchanges. The entire tax on the transfers of stock of all corporations, both on the exchanges and c'sewhere, for the fiscal year 1927 amounted to $16,674,102.83. A T>0 per cent reduction would have amounted to about $8,337,000, but it Is also stated that on account of the activities on the various stock exchanges of the country since July 1, 1927, the Income from these sources will, for the fiscal year ending June 30, 1928, amount to nearly $44.000,000. If this is correct, a 50 per cent reduction will still leave a collection from this source of $22,000,000, or $6,000,000 more than the collections for the fiscal year 1927.

None of these taxes are paid by brokers; all are paid by customers. In a tax reduction bill why should the amount paid by any class of taxpayers be Increased over 250 per cent? Yet, if the information is correct and the collections from this source at the 2-ceut rate will amount to $44,000,000 for 1928, it will be a 2oO per cent Increase over the 1927 figures. Even If this tax is reduced from 2 cents to 1 cent, the resulting $(i,000,000 Increase will still be a 40 per cent increase over 1927. The buying and selling of stocks on exchanges or elsewhere Is an entirely legitimate proposition in which those who so buy and sell have a perfect right to take part. While the owners of the small metal mines of the Western States are not to any great extent Interested in these stock-exchange sales, they see no reason why the fict that the increased sales on the stock exchanges are going to result in greater revenue to the Government should be a reason for reversing

the action of the House of Representatives and thus compelling owners of mining stock, with the small face or actual value per share, to continue to pay a tax at a ratio of anywhere from one hundred to five thousand times as great as are paid by the owners of stock In otlier corporations.

In addition, this Is a nuisance tax. There are in the United Suites over 425.000 corporations. Every one of these corporations, especially those in the small communities where documental stamps are hard to get, are put to the trouble of obtaining and affixing these stamps tvery time a stockholder transfers a single share of stock. In addition, at stated Intervals the representatives of the Government visit each corporation In the United States, Inspect its books, and if the luckless officers have made the slightest mistake, either in omitting to affix the necessary 2-cent stamps or in affixing a lesser amount than the ijovernment official thinks proper, a fine Is collected. Usually this fine is not large, but its imposition and collection involves usually a relatively large expenditure of time, and sometimes attorney's fees. While the action of the House does not go as far as it should, the extent to which it does go should be sustained, and the amendment seeking to strike out section 442 of H. E. 1 from the bill should be defeated.


Mr. THOMAS. Mr. President, on last night House bill 7992, for the relief of Sally Muttie Mat-ready, widow of Edward Daniel Macready, was reached on the calendar. The bill has an adverse report; and, by order of the presiding officer, the hill was indefinitely postponed.

I now ask unanimous consent that that order be vacated, and thnt the bill be rereferred to the Committee on Military Affairs for further consideration.

The PRESIDENT pro tempore. Is there objection? The Chair hears none, and it is so ordered.


Mr. HEFLIN. Mr. President, last night I was unable to be present. Having spoken nearly three hours yesterday, and baring to go over my remarks, I was not able to attend the night session.

I ask unanimous consent for the present consideration of my bill to prevent price predictions on cotton, Senate bill 3845, Order of Business 866.

The PRESIDENT pro tempore. Is there objection?

Mr. SHORTRIDGE. I object.

The PRESIDENT pro tempore. Objection is made.


Mr. CURTIS. I move that the Senate take a recess until to-morrow at 12 o'clock noon.

The motion was agreed to; and (at 5 o'clock and 38 minutes p. m.) the Senate took a recess until to-morrow, Thursday, May 10, 1928, at 12 o'clock meridian.


Wednesday, May 9,1928

The House met at 12 o'clock noon.

The Chaplain, Rev. James Shera Montgomery, D. D., offered the following prayer:

Almighty God, the Father of our Lord and Saviour, Jesus Christ, who art the glory of day and the master of night, let tbe light of Thy truth and wisdom illuminate our minds, and may it clear away all prejudice, misconception, and ignorance. May we humbly appreciate the great honor which has l)een assigned to us in tie service of the Republic, and to labor for the welfare of our fellows. In every relationship may we be wise men and beneficent servants of the country. Allow nothing to stand between our convictions and obedience. Be Thou the security of our best desires and purest loves. Amen.

The Journal of the proceedings of yesterday was read and approved.


A message from the Senate, by Mr. Craven, its principal clerk, announced that tbe Senate had passed without amendment bills and a joint resolution of the House of the following titles:

H. R. 21. An act to provide for date of precedence of certain officers of the staff corps of the Navy:

H. R. 239. An act to amend section 110 of the national defense act by repealing and striking therefrom certain provisions prescribing additional qualifications for National Guard State staff officers, and for other purposes;

H. K. 244. An act to enable members of the Reserve Officers' Training Corps who have interrupted the course of training prescribed in the act of June 4, 1920, to resume such training and amending accordingly section 47c of that act:

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