MARKET METHODS AND PROBLEMS 511 



spinners, merchants, and all other persons in the United States could 

 freely send orders abroad for the making of future contracts in 

 cotton on foreign exchanges, as hedges in connection with their actual 

 spot transactions, without any liability to taxation under the act. 

 Furthermore, under the bill, if enacted, all orders from the United 

 States for the making of future contracts on any foreign exchange, 

 including those for purely speculative purposes, would be exempt from 

 taxation thereunder if such exchange should adopt the Official Cotton 

 Standards of the United States and substantially comply with the 

 other conditions specified in the first to the sixth subdivisions of 

 section 5. 



Section nA of the bill is framed so as to tax orders received from 

 a foreign country for the making of future contracts on cotton 

 exchanges in the United States to the same extent as orders from the 

 United States to such foreign country for the making of future con- 

 tracts on exchanges therein are taxed under the act, provided the 

 exchanges in such foreign country do not comply with the conditions 

 specified in section n for exemption from the tax of orders sent from 

 the United States. The object of this provision apparently is to give 

 persons in a foreign country no greater privileges of dealing in future 

 transactions on cotton exchanges in the United States involving 

 American-grown cotton. than are afforded to persons in the United 

 States of dealing in such transactions on exchanges in the foreign 

 country. 



NOTE. The act as finally passed (Public Act No. 190, approved 

 August n, 1916) did not include the provisions of section nA of the 

 bill (H.R. 11861) discussed above by the Secretary of Agriculture. 

 Nor did it contain section n of the old act (see pp. 508-9). Instead, 

 section n of the new law provides "that the tax imposed by 

 section three of this Act shall be paid by the seller of the cotton 

 involved . . . . , by means of stamps which shall be affixed to such 



contracts " There was added also a section 6A exempting 



from taxation any contract which provides that if grades other than 

 the basis grade specified in the contract shall be tendered, the parties 

 to the contract may agree, at the time of the tender, as to the price 

 of the grade or grades so tendered, and that if they cannot so agree 

 the buyer may demand delivery of cotton of the basis grade at 

 the price named in the contract. 



Otherwise the provisions of the old act given above are embodied 

 also in the new act. EDITOR. 



