The times., 1901-06-20

send II to his correspondents in New York.
Hn0 frequently must give it to a ''spe-
SiaiiSt on the hoor of the exchange 1t
mas been impossible during the recent
great boom in stocks for brokers to exc
cute an the orders given them personally,
2nd they have turned over large part OF
certain stocks dnlJ. In such a case one
specialist might be too busy himself to
execute the order and might turn it over
to a second specialist. This would make
four transactions. according to the con-
tentlon OF the Baltimore collector now
under discussion, and it would require the
payment of IS on the complete series.
such tax would be found prohibitive, it
is claimed by brokers'
The specialists are paid for executing
orders only 81 hundred shares. In their
case the additional tax would take their
entire commission. The Washington
broker divides the commission for exc
cutting the order with his New York cor
respondent. This commission is x of / per
cent, or $3.50 every 100 shares. The
local broker gets of this $685. and If an
additional tax were imposed he would re-
ceive only S425 as commission on every
100 share transaction. The tax would
thus cut a third off the income of all COM
mission brokers' 1t is claimed that the
customer could not be forced to pay the
extra tax and that the broker would have
TO. This claim is made on the theory
that customer would rather send his or
ders direct to New York and pay only
one tax than have them executed through
local broker and pay the double amount
The rulings of the Commissioner of In
ternal Revenue under which the District
of Columbia collector is acting in the
present case are those numbered 345 and
351, volume 4, dated, respectively, May q
and June G. The first of these reads as
follows:
''Memorandum-Stamp Taxa person
engaged in the business described in the
third paragraph of section of the act OF
March q 1901. must tunder pain of fine or
imprisonment for failure to do sol, at the
time of taking an order from a customer,
issue a memorandum thereof and aff1x
thereto a stamp representing the tax or
2 cents on every 500 (or fraction) of the
value; and, when he transmits this order
to another person in the same business,
the latter must issue memorandum
thereof also, and affix thereto the requl-
site stamp"
In this case a transaction in grain was
involved and the Commissioner held that
both the broker making the purchase or
sale on the exchange, and his correSpon-
dent in another city, who sent the order
to him, should pay a tax on the trans
action. In this ruling the Commissioners
specifies "a person engaged in the busl-
ness described in the third paragraph of
section S of the act of March 2, 1901,
which is generally construed to mean only
bucketshops.
sioner answers number of questions sent
him by f. G.. Thompson, revenue agent,
of New York. The portion of the letter
which is supposed to refer especially TO
cases like that of Mr.. Hibbs is fol-
lows:
Question: Is it necessary that the
memorandum of sale given to a, Gus
toner, by B, broker, not a member of
any exchange, who transmits the order TO
c, member of an exchange, for execu-
ton, be stamped in addition to the stamp
ed memorandum given by the party with
whom executes the order?
Answer: The reply to this is in the az
firmative."
Another question and answer thought
to be somewhat analogous to that of Mr.
Hibbs are given in the same ruling. The |
question Is as follows:
rs il necessary for a broker not oper-
ating a branch office to qualify as brok-
er No. (the double tax peoplet, who
transmits his orders to a broker on an
exchange. board of trade, or similar place
for execution"
The answer to this questions is as fol- |
lows:
1T is. If he is not an agent of the mem
Der of the exchange to whom he transmits |
his orders but is acting independently.
Mr.. Hibbs called on Secretary Gage |
when he received his notification from the |
collector. The Secretary gave him let !
ter to the Commissioner. Mr.. Yerkes sug- !
gested that a letter be written to the coll !
uty collector for the District is acting |
Mr.. Hibbs wrote his letter. stating that |
he is doing commission stock brokerage |
business. and that but one transaction |
occurs when stocks are bought or SOLD |
for his customers.
Mr. Hibbs, when seen yesterday regard |
Ing the matter, stated that he believed the |
Commissioner will decide the matter in |
his favor, without doubt. but that If he |
does not a test of the decision in the |
courts will be made He stated that the |
internal revenue people seem not to be |
very clear as to the difference between |
the bucketshop business and the COM
mission brokerage business.