MARKET METHODS AND PROBLEMS 509 



levied an excise tax at the rate of 2 cents for each pound of the cotton 

 so ordered to be bought or sold under such contract: Provided, That 

 no tax shall be levied under this Act on any such order if the contract 

 made in pursuance thereof comply either with the conditions specified 

 in the first, second, third, fourth, fifth, and sixth subdivisions of sec- 

 tion five, or with all the conditions specified in section ten of this 



Act 



[SECS. 12 to 21, inclusive, provisions for administration, penalties, 

 etc.] 



NOTE. This act was approved August 18, 1914. Suits were 

 shortly brought to test its validity, and the following year it was 

 declared unconstitutional. The basis of this decision, however, was 

 technical in character and, upon the reconvening of Congress, a new 

 bill, similar in form and intent, was introduced. Concerning the inter- 

 pretation of the old act and the changes introduced in this new 

 bill Secretary Houston writes as follows: 1 



Section 3 of the United States Cotton Futures Act of August 18, 

 1914 (38 Stat, 693), imposes a tax, at the rate of 2 cents for each 

 pound of cotton involved, on all contracts of sale of cotton for future 

 delivery made at, on, or in any exchange, board of trade, or similar 

 institution or place of business. Section 5 prescribes a form of future 

 contract which may be made on any exchange, board of trade, or 

 similar institution or place of business without liability to the tax 

 imposed by section 3. 



Section n of the act imposes a tax, at the rate of 2 cents for each 

 pound of the cotton involved, on each order sent from the United 

 States for the making of a contract of sale of cotton grown in the 

 United States for future delivery at, on, or in any exchange, board of 

 trade, or similar institution or place of business in a foreign country, 

 but further provides that the order shall be exempt from such tax if 

 the contract made in pursuance thereof comply with the conditions 

 specified in the first six subdivisions of section 5. Thus, if any 

 foreign exchange adopt a form of contract that complies with the 

 conditions specified in the first six subdivisions of section 5 of the act, 

 orders for the making of such contracts thereon may be sent from the 

 United States without any liability to the tax imposed by the United 

 States Cotton Futures Act. 



1 Service and Regulatory Announcements No. p, United States Department of 

 Agriculture, pp. 98-99. 



