The times., 1901-03-31
THE TAX ON BUCKET SHOPS
New War Revenue Law to Go JntC
Effect Tomorrow.
Many Local Firms Interested-Must
Pay Heavy Extra Assessments and
Also File Sworn Statements as to
the Nature of Their business.

! Pay Heavy Extra Assesssaents and
Also File sworn Statements as TO
the Nature of Their Business
The provisions of the new revenue law
relative to special taxes on bucket shops
| Will go into effect tomorrow, April /, and
the local banking and brokerage fra
ternity generally is very much interested
| in the way that the Government will con-
strue the law, and in It's effect on this
usually frowned on of-shoot of the
| brokerage business.
There are large number of stock
! brokerage offices in Washington. Some of
I them are simply branch Offices of New
York Stock Exchange firms. and are sup
! posed to do a strictly commission business
| of buying and selling stocks on the stock
| exchange Others are correspondents
| of New York firms that have no member
ship on the New York Stock Exchange
n third class OF local brokerage firms do
not pretend to have correspondents any
| where, but themselves do a bucketshOp
! business. Many questions are arising
among the brokers' and also al the office
of the Internal Revenue Commissioner, as
TO the status Of these various firms. The
District Attorneys S office is said also to
/ be considering the question if the new law
will make it possible to convict the
bucket shops and drive them out of busi-
ness.
The interests involved are very large.
The number Of offices of ali kinds i'm the
city is perhaps twenty-five. Their volume
of business varies greatly, both as TO diff
ferent firms and as to the same firms at
different seasons of the year. It is esti-
mated that In an active stock market
such as the present the volume of bust
ness daily is from 5000 to o, $50 shares of
stock. This represents the use of perhaps
$4,000 daily of margins" for customers
and a very much greater fixed amount of
capital employed by the brokers. 1t is
said that the customers of the local
brokerage offices generally lose in the
long rum and it is estimated that their
losses probably aggregate S1oO0,0c0 to
81, 900, ,0c0 a year. The same conditions ex-
list in every other city in the country, so
that the aggregate of money involved in
the construction of the new law is very
great
1t is said by some of the people familiar
with the way that the bucket shop pro-
vision Of the new law was originated that
its object is simply and solely to kill the
bucket shops. One statement made by
friends of the law is that it was cham
pioned zealously by New York Stock Ex-
change interests from the beginning The
Stock Exchange and other exchanges and
boards of trade throughout the country
have been fighting the bucket shops for
many years without much success, but up
to the present time they have never in
voked the aid of the Federal Government
The new measure is, of course, ostensibIy
simply new method of raising revenue.
1t is provided that bucket shops shall
pay a special yearly license and that in
addition they shall psy a separate tax on
every transaction they conduct, the latter
being double the tax imposed on the regu-
lar commission brokers. A considera BILE
additional revenue will be realized in this
way it is thought, though there are some
skeptics regarding this poiaC.
But il is not in the mattel Of additional
revenues TO be derived from these places
that the measure is particularly interest
ing. 1t is at this point that the alleged
war on the whole bucket shop industry is
supposed to crop out. The law provides
that every bucket shop must declare itself
as such. Il also provides that the books
of all brokerage offices snail be opened
to the inspection of the Government in
spectors, so that there shall be no ques-
tion as TO the facts in this regard. There
are laws in nearly all. if not all, States
against gambling. In some there are spe-
cial acts against bucket shops as such
Up to the present time 1t has been almost
impossible to convict the places, because
Of the inability of the authorities TO prove
the nature of their business. IT is said
now, however, that If, in obeying the
Federal law, the bucket shops put them
selves on record as such they viii give
the local authorities all the evidence that
they will need that the State laws are
being broken.
The new law is, in part, as follows:
From and after the first day of April, |
1901, every person, association. copartner- |
ship, or corporation who or which shall !
in his, it's. or their own behalf or as
agents engage in the business of making |
or offering to make contracts, agree |
ments, trades, or transactions respecting !
the purchase or sale, or purchase and !
sale, OF any grain, provisions raw or un- |
manufactured cotton, stock, bonds. or !
other securities wherein both parties |
thereto, or such person, association. CO. |
partnership, or corporation above named, |
contemplate or intend chat such con- |
tracts, agreements, trades, or transac- |
tions shall be or may be closed, adjusted, |
or settled according or with reference to |
the public market quotations of prices |
made on any board of trade or exchange |
upon which the commodities or securities |
referred to in said contracts, agreements, |
trades, or transactions are dealt in, and |
without bona fide transaction on such |
board of trade or exchange, or wherein |
both parties. or such person. association,
copartnership, or corporation above |
named, shall contemplate or intend that |
such contracts, agreements, trades, or
transactions shall be or may be
deemed closed or terminated when the
public market quotations of prices made
on such board of trade ar exchange for
the articles or securities named in such
contracts, agreements, trades. or trans
actions shall reach a certain figure, and /,
every person, association, copartnerShip,
and corporation who or which shall in his
or it's own behalf, or as agent conduct
what is commonly known as a bucket !
shop shall pay a stamp tax of 2 cents
on each 500 in value or fraction thereof,
of the merchandise covered or pretended
to be covered, and also tax of 2 cents
on each 500 on the face value or fraction
thereof, OF all stocks, bonds. or other Sc
cufltles covered or pretended to be COW
cred by each and all of such contracts.
agreements, trades, or transa ctions.
Provided, however, That the payment
of any tax imposed by this paragraph
shall not be held or construed to exempt
ship or corporation from any penalty or |
punishment provided by the laws of any
state Tor carrying on such business, or |
the making or such contracts, agreements, |
trades, or transactions within such State,
or IN any manner to authorize the com |
or continuance of such bust
ness or the making of any such contracts, |
agreements, trades, or transactions con- /