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Mr. SMOOT. The Senator will not find seven grades of the Senator describes. He never takes one single bale of actual cotton in the same bale. In one fleece of wool, taken from one

cotton in that way, sheep, you may find seven grades of wool that have to be Mr. SMOOT. Because it is not on the exchange where he sorted.

buys the cotton. When he calls for it they have to deliver it. Mr. CARAWAY. Anyway, the sheep growers have kept Mr. GEORGE Then he settles on margins. away from the exchanges. They are able to pay their taxes,

Mr. NORRIS. He buys cotton on the exchange that he never while the cotton grower often is not.

gets. He buys his cotton somewhere else that he really uses. Mr. HEFLIN. But when we take into consideration the mat- The exchange transaction is really only a fictitious operation. ter of shrinkage, the buyer of wool or the manufacturer of The point I am trying to get at is this. I have listened to wool examines the wool. He is an expert and a master of the days of testimony on the subject, and I am still in doubt as subject. He tells the seller or the producer that he can not to what is right. pay more than a certain price for this and that. The producer

What is the necessity of this exchange, now-narrowing it can either accept it or refuse it.

down to a concrete case as applied to cotton--when there is not Mr. SMOOT. All my thought was to suggest that wool has any, and none seems to be necessary, as applied to wool? I still nothing whatever to do with stock exchanges in the United do not understand why one is necessary in one case and unStates.

necessary in the other. Mr. CARAWAY. Does not the Senator know that Chicago is

Mr. SMOOT. When you buy a bale of cotton you have 500 trying to set up a wool exchange?

pounds of cotton in it. Mr. SMOOT. They can not do it.

Mr. NORRIS. Why, of course. Mr. CARAWAY. They will do it if the Senator does not

Mr. SMOOT. But when you buy a bale of wool weighing watch them. They will be selling the Senator's sheep before 300 pounds there may be only 30 per cent or 90 per cent of the they are born.

300 pounds of a certain grade of wool, Mr. SMOOT. They buy the wool.

Mr. NORRIS. Do you not know what it is before you buy it? Mr. CARAWAY. No; they are setting up a future market. Mr. SMOOT. No; no living soul can tell about that. They voted to do it some time last fall.

Mr. NORRIS. Do you buy your bale of wool without knowMr. SMOOT. Nobody is going to buy wool unless he knows ing what its grade is or what its quality is? what he is doing.

Mr. SMOOT. No; you have to judge that. Mr. NORRIS. Mr. President, will the Senator from Alabama Mr. NORRIS. Well, you judge that pretty accurately, do you yield?

not? Mr. HEFLIN. I yield.

Mr. SMOOT. Those that are used to buying it do. Mr. NORRIS. It seems to me, from what the Senator from Mr, NORRIS. Why, of course. I should like to get rid of Utah said about wool as compared to cotton, that there is an everything that is not disputed. The man who buys wool is interesting situation. I am anxious to know what is the neces- an expert. He knows what kind of wool he is buying? sity for a cotton exchange if there is no necessity for a wool Mr. SMOOT. He never buys futures. He never hedges. exchange? From what the Senator said, it seems to me we Mr. NORRIS. That is what I am talking about. He buys could get along easier without a cotton exchange than we could

the actual wool? without a wool exchange, because there is no shrinkage in

Mr. SMOOT. Yes. cotton.

Mr. NORRIS. If it is true that the bale of wool is so unMr. SMOOT. In the manufacturing business—I am not say, certain that you can not tell anything about it, it seems to me ing now anything about the gambling business, but in the man- there is more reason for hedging on that kind of a transaction ufacturing business of cotton, cotton goods, like woolen goods, are than on cotton, where that doubt does not exist. I may be made in styles. Those styles change at least once in six months. wrong; but it looks to me, on the Senator's own illustration, The samples that are made by a woolen concern are of light that the necessity for a cotton exchange is less than the necesweight goods and heavy-weight goods. The light-weight goods sity for a wool exchange. are sold nine months before they are delivered. When they take Mr. SMOOT. We have no wool exchange. those first samples and go on the market with them they know Mr. NORRIS. I understand that. I know that. exactly that they have to have that grade of wool, and that it Mr. SMOOT. This is the way it is done: There is a grade of will cost so much.

wool that is purchased largely by the manufacturer himself. With the cotton business, the cotton man goes to work and That which is not purchased by the manufacturer is sent to gets his samples out six months ahead, or sometimes nine months Chicago or Boston or Philadelphia. Those are the three prinahead. Before any of the goods are made, except the samples, cipal places where it is sent. those samples are shown and the orders are taken from all over Mr. NORRIS. Other people buy it for investment, then, do the United States, or wherever the manufacturer's customers they not, outside of the manufacturer? In other words, there may be, whether outside or inside the United States. His is not any exchange gambling on wool? styles are made up. He knows exactly how many pieces of Mr. SMOOT. I will explain it to the Senator. It is congoods of this kind and that kind are sold, and he has the orders signed to the houses, and they charge so much for the storage, for them. The manufacturer then buys the cotton; that is, he and so much for the sorting, and so much for the handling of it. must know what the price of the cotton is.

It is in warehouses. The whole of it goes to warehouses. You Mr. CARAWAY. I know that happens not to be the fact in can go to these three principal places, and they have great warethe cotton business.

houses, and this is the fine wool, this is the medium wool, and Mr. SMOOT. The Senator asked about the legitimate part this is the coarse wool. All of the grades are there, sorted cut. of the business. I am not talking about the gambling part. I Mr. NORRIS. Exactly; and the buyer knows just what he am talking about the legitimate part.

is getting? If he has sold goods that will require 100 bales of cotton or Mr. SMOOT. He knows just what he is getting. 1,000 bales of cotton or whatever number of bales of cotton it Mr. NORRIS. And he gets what he buys? would take, he immediately buys that cotton on the exchange. Mr. SMOOT. He does not do that with cotton. It is not delivered then, but they have to deliver it at the price Mr. NORRIS. He buys the actual material. In the cotton at which he buys it on the exchange.

business he does not do that, it seems. Mr. NORRIS. Suppose there was no exchange, where would Mr. SMOOT. That is right. he buy it?

Mr. CARAWAY. Mr. President, may I read two or three Mr. SMOOT. He would have to buy it from the producer letters? I shall not occupy the floor long. and put it somewhere, like the wool man.

In the first place, I want to say that the largest actual seller Mr. NORRIS. Why should he not do it then like the wool of spot cotton in New England wrote me I thought I had the man?

letter in my desk, but it is in my office--that he would be glad Mr. SMOOT. Because that practice has not been established if the futures market were abolished, because he is no longer and it is much easier the way it is. He is protected against able to hedge on the cotton future market because of the a rise in price. I am only speaking of the legitimate part. If manipulations. he did not buy it in that way and cotton went up, he would be I have just two letters here that I want to read among ruined, and he dare not take that chance. That is the legiti- dozens that I have picked up. One of them comes from the mate part of the business as far as the manufacturer is con- Charles E. Walters Co., bank stocks, Omaha, Nebr. Does the cerned. Outside of that, as I said, it is a gamble upon the Senator from Nebraska know the company? stock exchange, just as has been stated here to-day.

Mr. NORRIS. Yes; I know them. Mr. GEORGE. Mr. President, let me call the Senator's Mr. CARAWAY. I will read this letter, because it has so attention to the fact that not one single bale of cotton is ever often been said that the bankers would not finance the farm delivered to a cotton spinner that is bought on exchange, as development of the crop unless they had the futures :



The matter referred to is as follows:
Omaha, Nebr., March 7, 1928.

WALNUT HILL FARM, Senator CARAWAY, of Arkansas,

Memphis, Tenn., March 5, 1928. Washington, D. C. MY DEAR SENATOR: Local papers of March 3 print an article from Hon. T. H. CARAWAY,

United States Senate, Washington, D. c. their Washington correspondent referring to a bill you have introduced

DEAR SIR: I read with interest your proposed bill to regulate dealing prohibiting the speculation in grain and cotton futures on the market.

in cotton futures. 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

If we ever did have an example of the need of this legislation, we have

it now. In round figures, we produced 18,000,000 bales in 1926 and in you propose would do more to help the farmers of this country than would all of the other so-called agricultural-relief measures combined.

1927, 5,000,000 bales less. Notwithstanding the 1927 crop was 5,000,000 It is entirely fair and right that the law of supply and demand should bales under that of 1926, the price of cotton declined from October $35 control the market so long as it can operate uninfluenced by speculators, per bale within 90 days. but with considerable study given to the marketing condition of the The only argument that I have ever heard to justify trading in farmer-of which I am one by proxy--I am convinced that the greatest futures is that the cotton merchants who carry actual supplies of cotton, menace to the success of agriculture to-day is the speculator on the and the mill people, who spin it, need to protect their purchases of board of trade. I sincerely hope you will be successful in making your cotton by selling what is known as a hedge. The brief synopsis of your bill a law, for only after this speculation has been abolished will the bill seems to me to cover this admirably, in that the bona fide owner of full influence of this menace to the agricultural interests be felt. Con-cotton can hedge or sell futures against it, but it does prevent the specgratulations to you, Senator, and success to your efforts in this ulation that has been so hurtful. direction.

I do trust that the Senators and Representatives from the South and Most sincerely yours,

West will give such support to the proposed investigation of cotton

ROBT, L. GOETHE, President. dealing that their eyes may be opened to the iniquity thereof heretofore I picked up this letter:

existing, and that your bill or something similar will be enacted into a M. F. JONES & Co.,

law so as to protect the producer. Oklahoma City, Okla., March 8, 1928. A few days ago I was talking to a man who is interested in cotton, Hon. Senator CARAWAY,

and he said that if a law was passed that limited trading in futures to Washington, D. C.

those people who actually had cotton to be protected by future selling, DEAR SENATOR : A straw vote was taken to-day in the Cotton Exchange it would mean that the cotton exchanges and futures brokers would Building, of Oklahoma City, to determine the attitude of those present have to go out of business. If by the passage of a good law they are on your bill pertaining to the sale of cotton and grain in the futures forced to go out of business, I trust they may find something else to do markets.

that will be just as profitable to them and less hurtful to the cotton The ballot was proposed and taken by a man who is an avowed producers. opponent of your bill. The result of the vote stood 13 to 5 in favor of The very fact that with 5,000,000 bales less of cotton there has been the bill, although 3 of those voting were paid employees of a futures

a decline of $35 per bale in 90 days seems to me to make it a very brokerage house.

opportune time to inquire carefully and in detail as to the wherefore Sentiment in Oklahoma City and this vicinity is strongly in favor thereof. of regulatory measures for the futures exchanges, and we consider this Yours very truly, poll as truly representative of the sentiment.

LEM Banks. We assume that it was the purpose of the person taking this pell to use it for the benefit of the opponents of your bill had the result

In the morning paper I see that Mr. Alfred Mash, a former president been satisfactory to them. While writing this letter we have been sub of the New York Cotton Exchange, states that Anderson, Clayton & Me

Fadden kept 185,000 bales of cotton in New York to depress prices. mitted, and asked to indorse, a petition requesting our representation in

When speculators fall out among themselves the producer may be able Congress to vote and work against your bill and the Vinson bill, this

to get his dues. I hope the committee will call on Mr. Mash, Mr. Hubby the representative of a futures brokerage house.

bard, and others, so as to go into this as fully as into the Teapot Dome Wishing you success for your measure, we are,

and Sinclair, Yours very truly,

W. C. CHISUM, Jr. These are the very folks who deal with these products.

C. G. FOUST LUMBER CO., There are innumerable letters. I have one written by the

Dublin, Tex., March 6, 1928. largest farmer in the State of Tennessee, Lem Banks, who Senator CARAWAY, of Arkansas, until 1920 was possibly the richest farmer in that country. He Senator SHEPPARD), of Texas, owns a large plantation in Mississippi ; he owns a large planta- | Senator MAYFIELD, of Texas, tion in Arkansas; he owns plantations in Tennessee. I will put

Washington, D. O. his letter in the RECORD. He says there is not any chance of the Sirs: Permit me, in a crude way, but the best I can, to urge upon cotton grower escaping until you abolish futures.

you the vital importance of the measure now before Congress either to Mr. NORRIS. Who is he?

emasculate or execute cotton exchanges. Mr. CARAWAY. His name is Lem Banks, of Banks & Co. If either one of you gentlemen could see his way clear to leave all They were for a number of years the largest producers of cotton the other active public service to your colleagues, only voting and perin Mississippi. They had the largest house dealing in cotton forming routine duties, and devote the rest of his active life in public in the city of Memphis. I have not the remotest idea of the service, if need be, or until accomplished, to the complete annihilation number of thousands of acres that at one time they controlled. of futures trading you would accomplish the greatest work of a lifeThey control very much less now, however. I shall include in time and go down in history as the greatest modern servant of the the RECORD his letter, written to me under date of March 5 of South. this year. I have known him intimately for a long time.

I urge that it can not be done by an evasive or conciliatory enactI have here a letter from the C. G. Foust Lumber Co., of ment. Such a measure must have teeth in it. Dublin, Tex. They write a highly intelligent letter, and say All such transactions now get by under the subterfuge that they that they can not prosper until they can get rid of the exchange. contemplate actual delivery. It's a blatant lie. Not one in a million

I have a letter from Waxahachie, Tex., from J. E. McDonald. contemplates actual delivery. Make it so each contract can be fol

I have one here from Fredericksburg, Tex., bearing out the lowed up to conclusion. If cotton is not delivered, it was not resame protest.

motely intended to be delivered. The South was never within my I could bring over here hundreds of letters from farmers, recollection victimized by• this pernicious system as it has been the most of them large farmers, and every one of them is opposed to present cotton season. the present system, Not a single farmer is in favor of it.

I don't know how it was done, but I know it was done. I knew all I have a letter from the largest farmer-by the way, he is the season that some powerful agency was at work (effectively) to hold the president of the chamber of commerce in Lake Providence, down the price of cotton. At every report put out, with one or two La., the home city of the senior Senator from Louisiana [Mr. minor exceptions, the price flashed up, beginning with the September RANSDELL)---saying that "they are ruining us farmers with report, when 30 cents was freely predicted. But after every one of their marketing machinery called the exchange." I shall put these advances it was plainly evident that some powerful agency was this letter in the RECORD. I am going to bring a lot of them over. systematically hammering it down. You gentlemen are in position to I will have an edition devoted to the farmers of America pro- get the facts. testing against the gambling that is ruining them.

I am told that one favorite method is by what are termed "wish I ask to have the letters to which I have referred inserted sales "---that is, by throwing huge offerings out but seeing to it that in the RECORD.

only the initiated inside few get these offerings. Thus none of the The PRESIDENT pro tempore. Without objection, it is so insiders suffer ; there is no expense except a small brokerage and conordered.

tingent fee, and the brokerage probably on a favored basis.

*Carthago est delenda” were the relentless words that old Cato, the Congressmen of America, can not this be stopped? There is a way Roman senator, closed every peroration, every conversation, with. And and every Congressman knows it. It is but a case of action. Prohibit Carthage was destroyed.

short selling or pass a farm relief bill, Yours very truly,


The PRESIDENT pro tempore. The question is on agreeing

to the amendment proposed by the committee. WAXAHACHIE, Thx., March 2, 1928. Mr. CARAWAY. There is an amendment to the amendment, Senator CARAWAY, of Arkansas,

to raise the tax to 10 cents instead of 1 cent. Washington, D. C.

The PRESIDENT pro tempore. No; the amendment is secDEAR SENATOR : It was with great pleasure that I noted the approvaltion 441, a proposal by the committee to strike out. of your antispeculative futures bill by the Senate Agricultural Com- Mr. SMOOT. That is the amendment. I will tell the Senator mittee last Saturday.

what he can do: He can strike this out, and then that will leave This measure, if it becomes a law, will prove one of the most con- the present law at 1 cent. structive pieces of legislation and the greatest benefactor to agriculture Mr. CARAWAY. Before you strike it out it is always perand commerce in a decade,

missible to perfect the text as it stood, providing for a tax of It is deplorable that the destiny of millions is influenced by the 1 cent. The committee moves to strike that out; and I move, reckless speculation of a few “gamblers” that neither "toil nor instead, to increase it to 10 cents. spin."

Mr. NORRIS. Mr. President, I should like to make an inYour bill and your untiring efforts are being watched an lauded by quiry in the nature of a parliamentary inquiry. As I undermen that have the best interest of our country at heart.

stand, the present law provides a tax of 1 cent. I trust that your measure as now written becomes a law; it is Mr. SMOOT. Yes. worthy and commendable of you to wage so determined a fight for the Mr. NORRIS. The House struck that out? welfare of your people.

Mr. SMOOT. It struck it out. Wishing you success, I am, with kindest regards,

Mr. NORRIS. This amendment is an amendment by the comJ. E. MCDONALD. mittee to restore it?

Mr. SMOOT. Yes; to disagree to the action of the House. FREDERICKSBURG, TEX., March 5, 1928.

Mr. NORRIS. In other words, it is a disagreement with IIon. T. H. CARAWAY,

what the House strikes out?

Mr. SMOOT, No; just the reverse, Mr. President.
Washington, D. C.
DEAR SIR : I notice in the papers of to-day that your antifutures

Mr. MAYFIELD. That is right. If you agree to the amendgambling bill has been favorably acted on by the Agricultural Commitment, the 1 cent will go back. tee. Will you be so kind as to send me a copy of your bill and give me

Mr. NORRIS. I understand the situation now.

Mr. SMOOT. We ask that the Senate disagree to the House your opinion as to possibility of final passage?

provision. 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

Mr. NORRIS. In other words, the House proposes an amendoperation, and effect of grain and cotton futures gambling. The only

ment to the existing law by striking out a certain tax. We are purpose I had in making announcement for the Senate was to carry on

now called upon in the committee amendment to disagree to an educational campaign. My idea is that the people must be educated

that proposition,

Mr. SMOOT. That is right. to work united and direct for the kind of legislation you have intro

Mr. NORRIS. And the 1 cent will go back in the law if the duced. Unless something drastic is done, and done without too much

committee recommendation prevails. delay, agriculture is doomed, both in the grain and cotton sections. Thanking you in advance for your compliance with this request and

Mr. CARAWAY. Mr. President, I desire to propound a par

liamentary inquiry. assuring you of my hearty accord and my willingness to render any

The PRESIDENT pro tempore. Th Senator from Arkansas service I can, I am,

will state it. Respectfully,

Mr. CARAWAY. As I understand, the House struck out of Don H, BIGGERS.

the old law the provision for a tax of 1 cent. The committee

proposes to resubstitute the old law, and that is the amendment BEE BRANCH, ARK., March 5, 1928. now before the Senate? Hon. T. H. CARAWAY,

Mr. SMOOT. Yes. In other words, the question will be, Will Washington, D. O.

the Senate agree to the committee amendment? MY DEAR SIR: I see your bill to prohibit dealing in options in Mr. CARAWAY. That is what I thought. Then I want to futures is reported out from the committee. It is just what the move to increase it to 10 cents; and that would be the first vote. country needs. Options in futures are 1 cent per pound cheaper Mr. HARRISON. Mr. President, I ask unanimous consent in cotton than spots. When it comes to a vote have a roll call. that the first vote be taken on this motion, which shall be a Put the opposition on record. The bankers and all gamblers will be substitute for the pending motion : against your bill. Perhaps it will never pass both Houses ; but stay

Upon each sale, agreement of sale, or agreement to sell (not includwith them; it's the best bill ever introduced in Congress for the proing so-called transferred or scratch sales) any products or merchandise ducers of the real wealth of the Nation. Farm products is the real

at, or under the rules or usages of, any exchange, or board of trade, wealth. All must live from the soil.

or other similar place, for future delivery, for each $100 in value of Your friend,

the merchandise covered by said sale or agreement of sale or agreement J. E. SCANLAN.

to sell, 10 cents, and for each additional $100 or fractional part thereof in excess of $100, 10 cents.

That carries out the idea.

TITUS COUNTY, TEX. Mr. SMOOT. That can only be done by unanimous consent. FARM AND BRANCH: An item in the financial news said: “Cotton I have no objection to that. deelined on account of Palm Beach selling." What does this mean to Mr. NORRIS. I should like to make a suggestion that I the world in general and the South in particular? It means that a think will meet with the Senator's view. group of millionaires spending the winter in some magnificent hotel in For several years at different times this proposition has been Florida meet every day around a mahogany table and by pooling their before the Agricultural Committee. I happen to know that millions offer blocks of cotton in such quantities that the trade can not the cotton men of the South are not in agreement on these absorb them, and down goes the market till the selling ceases. What exchanges. I notice that the Senator from Louisiana [Mr. are they really selling and why? They are selling the cotton (now in | RANSDELL] and the Senator from South Carolina [Mr. SMITH) the seed) to be raised this year; gambling on the seasons, the flood,

are both absent this afternoon. I hardly think it would be the drought, the sunshine, and the storm. They are selling the labor, fair to vote on this matter in their absence. the sweat, and the toil of farmers and their wives, of little children Mr. CARAWAY. Does the Senator want it to go over until kept from school, working beneath a blazing sun to raise this cotton for to-morrow morning? these soulless gamblers to depress. They are selling the standard of Mr. NORRIS. I was going to say that I think it ought to living of over 20,000,000 human beings, trying to reduce their wages go over until those two Senators are present. to that of a slave and make peons out of race of free men. All for Mr. CARAWAY. I have no objection to that. the almighty dollar,

Mr. SMOOT. I hope if this goes over we are not going to Palm Beach selling--selling the blood, the manhood, and womanhood have all of this discussion over again. of the descendants of that grand army that followed Lee and Jackson Mr. NORRIS. I realize that we are likely to have it, and I and Forrest and Johnston.

have a great deal of sympathy with the Senator's view; but


these Senators did not know that this matter was coming up. of stock. Ordinarily the resources of the pioneer miner are limited. I do not know why they are absent, but at least they are Consequently, he quite generally is obliged to depend upon the sale not present, and they are both very much interested in this of stock. proposition-as much as any Members of this body. I know In other industries the issuance of shares of stock, each reprethat from my contact with them for a great many years, both senting $100, is quite generally the rule, but the custom of nearly 75 of them being on the committee.

years has been to issue shares of mining stock with a smaller par Mr. CARAWAY. I have no objection.

value, occasionally as small a value as 10 cents a share.

This cusMr. SMOOT. Mr. President, I have no objection ; but I am tom allows small investors to acquire stock in mining properties which, going now to appeal to the Senate that we be allowed to- in their opinion, would prove of value. This difference between the morrow to take up the bill, and not have any other matters custom connected with the issuance of stock in mining companies and intervene.

those of other industries has never been fully recognized in the law Mr. CURTIS. Let us take it up at 12 o'clock and go ahead imposing stamp taxes. For instance, Schedule A-2 of the stamp tax with it.

of the act of 1926 reads, in part, as follows: Mr. NORRIS. I sincerely sympathize with the Senator from “ Capital stock issued : On each original issue, whether on organiUtah in that proposition.

zation or reorganization, of certificates of stock, or of profits, or of Mr. CURTIS. I hope the Senator from Utah will not yield interest in property or accumulations, by any corporation, on each to anybody else to-morrow.

$100 of face value or fraction thereof, 5 cents." Mr. SMOOT. This is the third day that we have made no It will be seen from this that if a corporation issues a stock the headway at all with the bill. We have not even had a vote face value of which is $100, and another corporation issues a stock to-day.

the face value of which is $1, each corporation pays a tax of 5 cents Mr. NORRIS. Most of the time to-day was taken up with the per share. In other words, the corporation issuing $1 stock pays conference report on the flood control bill. The Senator from proportionately one hundred times as much as the corporation issuing Utah did not have to yield for that. I would not have cared, the $100 share. The injustice of this is obvious and can not be as far as I was concerned, whether he did or not; but it would defended. As to stock issue without any face value at all, the prohave taken up just so much time anyway. It does not make vision is as follows: any difference whether it was to-day or some other day. The Provided, That where a certificate is issued without face value, debate on the conference report was not wasted, in my judg- | the tax shall be 5 cents per share, unless the actual value is in excess ment, although there was no real opposition to the report. of $100 per share, in which case, the tax shall be 5 cents on each $100

Mr. SMOOT. No; I am not criticizing the Senator or anyone of actual value or fraction thereof, or unless the actual value is less else. The day before, the whole day was taken up with other than $100 per share, in which case the tax shall be 1 cent on cach $20 matters,

of actual value or fraction thereof." Mr. NORRIS. Yes.

This is a trifle more fair to no par value stock, but using the same Mr. SMOOT. All I shall do now is to appeal to the Senate illustration, the stock with no par value stated, but an actual value of that to-morrow we shall begin at 12 o'clock and keep the bill $1, would still be paying proportionately twenty times the tax of the before the Senate so that we may get some action on it.

stock with no par value, but an actual value of $100 per share. Mr. BROUSSARD. Mr. President, inasmuch as reference As to transfers of capital stock, the situation is even worse. The was made to my colleague [Mr. RANSDELL), I wish to say that law as contained in schedule A-3 of the act of 1926 so far as appliat 4 o'clock he went into a conference, I think, on the shipping cable is as follows: bill. That accounts for his absence.

“ Capital stock, sales or transfers : On all sales, or agreements to sell, Mr. NORRIS. I should like to ask the Senator from Louisi- or memoranda of sales or deliveries of, or transfers of legal title to ana if he does not think these Senators ought to be here when shares or certificates of stock or of profits or of interest in property or this matter is voted on.

accumulations in any corporation, or to rights to subscribe for or to Mr. BROI'SSARD. Yes, I think so.

receive such shares or certificates, whether made upon or shown by the Mr. SIMMONS. Mr. President, I should like to inquire of books of the corporation, or by any assignment in blank, or by any the Chair upon what this proposition of the Senator from delivery, or by any paper or agreement or memorandum or other eviArkansas will be hinged? The committee has done nothing dence of transfer or sale, whether entitling the holder in any manner except to disagree to the House amendment, and it seems to to the benefit of such stock, interest, or rights, or not, on each $100 of me we will have to vote upon that question first.

face value or fraction thereof, 2 cents; and where such shares are withMr. SMOOT. It can be done only by unanimous consent- out par or face value, the tax shall be 2 cents on the transfer or sale Mr. SIMMONS. Only by unanimous consent.

or agreement to sell on each share." Mr. SMOOT. And I am perfectly willing that that shall be In other words, the tax on the transfer of a share of stock of which granted. I think it ought to be granted. The suggestion of either the face value in the one case or the actual value in the other the Senator from Mississippi [Mr. HARRISON], I think, is a is a dollar, is the same as the transfer of a share of stock worth $5,000. wise one; that by unanimous consent we allow the Senator's In other words, in those particular cases, the owner of the $1 share amendment to be voted on first.

pays proportionately five thousand times as much as the owner of the Mr. SIMMONS. Let us see if that unanimous consent is $5,000 share. given.

This situation has received the attention of the American Mining Mr, SMOOT. I have no objection.

Congress. Through its officers it appeared and was heard before the The PRESIDENT pro tempore. Is there objection to the Ways and Means Committee of the House of Representatives when the act unanimous-consent agreement proposed by the Senator from of 1924 was in preparation, and at its twenty-seventh annual convenMississippi?

tion held at Sacramento, Calif., September 29 to October 4, 1924, the Mr. HEFLIN. I do not think there will be any objection. | following resolution urging repeal of this tax was approved by the

Mr. BROUSSARD. . It will not be voted upon until to- fourth annual conference on mine taxation and unanimously adopted by morrow?

the delegates assembled in the convention : Mr. SMOOT. No; the vote will be to-morrow.

“Whereas the stamp tax on stock of any par value is now computed The PRESIDENT pro tempore. Is there objection? The on such par value, and is therefore the same on the speculative shares Chair hears none, and that order is entered.

of a development company as on the share of the richest corporation Mr. ODDIE. Mr. President, I ask unanimous consent to whose surplus may be several times its capital, while as to no par value have placed in the RECORD a statement of the views expressed shares the stamp tax is computed on the actual value, but is so by the American Mining Congress on the tax on sales or trans-adjusted as to be grossly unfair and oppressive on no par value shares fers of capital stock, section 442, which will come up next. It of small actual value, which in some cases are thus taxed one hundred expresses views in which I concur.

times as much for transfer as par value shares worth many times their The PRESIDENT pro tempore. Without objection, it is so par value; and ordered.

* Whereas the stamp tax is a special tribute exacted from stockholdThe matter referred to is as follows:

ers of corporations, justified only by the existence at the time of Many of the States of the Union have ceased to have any pioneer similar taxes which were repealed at the last session of Congress, and mining, while others still need the pioneer miner for their necessary the stamp tax should also be repealed: It is therefore

Resolred, That the law fixing a stamp tax on stock certificates an expensive proposition and the majority of metal mines contain should be immediately repealed." one or the other. They naturally require financing, and as in the The foregoing resolution clearly defines the issue. It is becoming initial stages the extent of the body of ore to be tapped by the shaft

more and more difficult for the small prospector and mine owner to or tunnel is problematical--although comparatively inexpensive tests obtain capital with which to carry on the exploration and developmay have shown the presence of some ore--there is nothing definite on ment work that in the past has been responsible for the growth and which a representation can ordinarily be made on wbich a bond issue maintenance of the several branches of the American mining industry. can be based. In other words, the pioneer miner for the sinking of The opportunities for obtaining capital with which to pioneer in an his shaft has to depend either on his own resources or on the sale undeveloped or unproven area through the usual methods and channels

dewelopment. Any form of mining containing a shaft trein tunnel is

of finance are necessarily limited, and only by securing needed capital | the action of the House of Representatives and thus compelling owners in small amounts from persons who were willing to take certain of mining stock, with the small face or actual value per share, to chances has it been possible for the pioneers of the mining industry continue to pay a tax at a ratio of anywhere from one hundred to to create independent enterprises and avoid bowing to monopoly. The five thousand times as great as are paid by the owners of stock in other manner in which small mining enterprises are in effect penalized by corporations. the stamp tax is ably illustrated in the following statement of Mr. M. D. In addition, this is a nuisance tax. There are in the United Ststes Leehey, of Seattle, Wash., made at the Twenty-seventh Annual Con- over 425,000 corporations. Every one of these corporations, especially vention of the American Mining Congress. He said:

those in the small communities where documental stamps are hard to “ The stamp tax on stock certificates is still in force, although it get, are put to the trouble of obtaining and affixing these stamps Every has been repealed as to bank drafts, notes, telegrams, beverages, etc. time a stockholder transfers a single share of stock. In addition, at And that stamp tax is just the same on the speculative par value stated intervals the representatives of the Government visit each corshares of the small mining company as on shares of the richest bank poration in the United States, inspect its books, and if the luckless in America. I now refer to shares having par value, but the stamp officers have made the slightest mistake, either in omitting to affix the tax is still more oppressive on no-par value shares under the ruling necessary 2-cent stamps or in affixing a lesser amount than the corof the Internal Revenue Bureau. That ruling makes the issuance ernment official thinks proper, a fine is collected. Usually this fine tax on no-par value shares of the actual value of $1 just twenty times as is not large, but its imposition and collection involves usually a relamuch, and the transfer tax just one hundred times as much as on the tively large expenditure of time, and sometimes attorney's fees. While par value shares of the Ford Motor Co. or the United States Steel the action of the House does not go as far as it should, the extent Corporation. For instance, the stamp tax on an issue of 100,000 to which it does go should be sustained, and the amendment seeking to shares of the par value of $100,000 is $50, regardless of the actual | strike out section 442 of H. R. 1 from the bill should be defeated. value, which may be a million, while that tax on an issue of 100,000

SALLY MATTIE MACREADY 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

Mr. THOMAS. Mr. President, on last night House bill $20, and on 100,000 no-par value shares of the actual value of $1 7992, for the relief of Sally Mattie Macready, widow of Edeach, as represented by the selling price, it is $2,000, or one hundred

ward Daniel Macready, was reached on the calendar, The times larger.

bill has an adverse report; and, by order of the presiding offi“We all know that a development company must issue small shares, cer, the bill was indefinitely postponed. because it must attract capital on the hope of an increased value in

I now aşk unanimous consent that that order be vacated, its shares after a few years, rather than the promise of prompt divi- and that the bill be rereferred to the Committee on Military

Affairs for further consideration. dends. It is grossly unjust, therefore, to compel a mine-development company to pay the same stamp tax on its small shares of speculative Chair hears none, and it is so ordered.

The PRESIDENT pro tempore. Is there objection? The value as paid by the richest corporation in the United States whose surplus is many times its capital.

COTTON PRICE PREDICTIONS “The relief suggested is the repeal of the stamp tax on corporation Mr. HEFLIN, Mr. President, last night I was unable to be shares. It is a special tax on corporation stockholders. It discrimi- present. Having spoken nearly three hours yesterday, and nates against that one class more than did the stamp tax on bank having to go over my remarks, I was not able to attend the drafts, notes, telegrams, telephone messages, beverages, and candy. / night session. Those taxes were more general in their application, but have been I ask unanimous consent for the present consideration of repealed, and the taxes on stock certificates should have been repealed my bill to prevent price predictions on cotton, Senate bill 3845, at the same time. If, however, its repeal is not possible at this time, Order of Business 866. then amend the stamp tax law as to all shares, both of par and no The PRESIDENT pro tempore. Is there objection? par value, so as to compute the tax on each $100 of actual value or Mr. SHORTRIDGE. I object. fraction thereof." These are the very same words the present law The PRESIDENT pro tempore. Objection is made. uses in fixing the stamp tax on par value shares changing only the

RECESS words 'face value' to read .actual value.' This amendment would fix the stamp tax on all shares according to actual value. Simple

Mr. CURTIS, I move that the Senate take a recess until justice requires it if the stamp tax is not promptly repealed, as it to-morrow at 12 o'clock noon. should be."

The motion was agreed to; and (at 5 o'clock and 38 minutes Everyone knows that the mining industry is in need at this time p. m.), the Senate took a recess until tomorrow, Thursday, of every possible assistance. This fact was recognized by the Ways

May 10, 1928, at 12 o'clock meridian. 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-cent tax on stock transfers, and their recommendation was adopted

HOUSE OF REPRESENTATIVES by the House of Representatives and is contained in the pending bill.

WEDNESDAY, May 9, 1928 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 The House met at 12 o'clock noon. left this provision of 5 cents a share untouched.

The Chaplain, Rev. James Shera Montgomery, D. D., offered The Finance Committee of the Senate proposes to strike out this the following prayer: action of the House, and to leave the tax of 2 cents a share untouched, thus operating to the full the injustice on the mining corporations

Almighty God, the Father of our Lord and Saviour, Jesus situated largely in the Western and far Western States. It is stated

Christ, who art the glory of day and the master of night, let privately that the reason for this is that this provision also covers

the light of Thy truth and wisdom illuminate our minds, and the transfers of stock on stock exchanges. The entire tax on the

may it clear away all prejudice, misconception, and ignorance. transfers of stock of all corporations, both on the exchanges and else

May we humbly appreciate the great honor which has been where, for the fiscal year 1927 amounted to $16,674,102.83. A 50 per

assigned to us in the service of the Republic, and to labor for cent reduction would have amounted to about $8,337,000, but it is also

the welfare of our fellows. In every relationship may we stated that on account of the activities on the various stock exchanges

be wise men and beneficent servants of the country. Allow of the country since July 1, 1927, the income from these sources will, nothing to stand between our convictions and obedience. Be for the fiscal year ending June 30, 1928, amount to nearly $44,000,000. Thou the security of our best desires and purest loves. Amen. If this is correct, a 50 per cent reduction will still leave a collection The Journal of the proceedings of yesterday was read and from this source of $22,000,000, or $6,000,000 more than the collec

approved. tions for the fiscal year 1927.

MESSAGE FROM THE SENATE 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 A message from the Senate, by Mr. Craven, its principal clerk, taxpayers be increased over 250 per cent? Yet, if the information is announced that the Senate had passed without amendment bills correct and the collections from this source at the 2-cent rate will and a joint resolution of the House of the following titles: amount to $44,000,000 for 1928, it will be a 250 per cent increase over H. R. 21. An act to provide for date of precedence of certain the 1927 figures. Even if this tax is reduced from 2 cents to 1 cent, | officers of the staff corps of the Navy; the resulting $6,000,000 increase will still be a 40 per cent increase H. R. 239. An act to amend section 110 of the national defense over 1927. The buying and selling of stocks on exchanges or elsewhere act by repealing and striking therefrom certain provisions preis an entirely legitimate proposition in which those who so buy and scribing additional qualifications for National Guard State staff sell have a perfect right to take part. While the owners of the small officers, and for other purposes; metal mines of the Western States are not to any great extent inter- H. R. 244. An act to enable members of the Reserve Officers' ested in these stock-exchange sales, they see no reason why the fact Training Corps who have interrupted the course of training that the increased sales on the stock exchanges are going to result in prescribed in the act of June 4, 1920, to resume such training greater revenue to the Government should be a reason for reversing and amending accordingly section 47c of that act:

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