SS THE UNITED STATES DEPARTMENT OF AGRICULTURE 



The act imposes on all contracts of sale of cotton for 

 future delivery, made at, or on, any exchange or similar in- 

 stitution or place of business an excise tax of two cents on 

 each pound of cotton involved in such contracts. It then 

 provides for exemption from this tax of such contracts as 

 comply with the provisions of the act. 



Most of these conditions which relieve transactions from 

 the tax have to do with the form and terms of the contracts.' 

 The principal requirements are : ( i ) all contracts must con- 

 form to rules and regulations made pursuant to the act ; (2) 

 they must specify the basis grade for the cotton involved in 

 the transaction, which must be one of the grades for which 

 standards have been established by the Secretary of Agri- 

 culture and none other; (3) if cotton other than the basis 

 grade be tendered or delivered in settlement of a contract, 

 the difference above or below the contract price which the 

 receiver shall pay shall be the actual commercial difference 

 as determined by the Secretary of Agriculture; (4) the total 

 weight involved in a contract must be tendered and the per- 

 son making the tender shall furnish to the person receiving 

 the same a written notice or certificate stating the grade of 

 each individual bale to be delivered and, by means of marks 

 or numbers, identify each bale with its grade; (5) in case a 

 dispute arises between the parties to the contract, as to the 

 grade of any cotton tendered either party may refer the 

 question for determination by the Secretary of Agriculture, 

 his findings to be accepted in all courts of the United States 

 as prima facie evidence of the true classification of the cot- 

 ton involved; and, (6) that the delivery of cotton under the 

 contract shall not be effected by means of a " set-off " or 

 "ring" settlement, but only by the actual transfer of the 

 specified cotton mentioned in the contract. 



The administration of that part of the cotton futures act 

 which relates to what might be termed the technique of cot- 

 ton handling, marketing, and grading, and the settlement of 

 disputes between the parties to contracts, has been com- 

 mitted, by Congress, to the Secretary of Agriculture. That 



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