New-York tribune., 1902-02-14
WALL STREET ANXIOUS.
BROKERS FEAR RESULT OF COLLAT-
ERAL LOANS TAN

Wall Street is concerned and apprehensive as
TO the results which may follow the recent rul-
! ing of the Commissioner of Internal Revenue
regarding the tax collateral loans, and the
anxiety on this point had much to do with caus-
ing the severe decline in prices in the stock
market yesterday
Brokers We're Of the opinion that the strict
enforcement of the tax would drive many per-
sons out of business. 1t believed that the
onerous provisions Of the ruling would be made
clear TO the Washington officials. and that some
modification. if not absolute repeal, of the
measure would soon be ordered. II was admit
ted that tl.r Commissioner Of Internal Revenue
was not exceeding his authority in his inter
pretation Of the ruling. and that relief must
come from Congress.
The ruling is that concerns borrowers
rather than banks. but the banks customers
will have to pay about per cent for money
for three days under the new ruling tthe regular
rate for money plus the tax. II is thought that
the banks ought to show something In addi-
tion 20 sympathy over the question. According
10 a compilation made yesterday by The Wall
Street Journal" the tax loans will operate
follows. assuming a loan of 100000 10 be
made 10 a broker at per cent secured by 800
Steel preferred 800 Southern Pacific 300 Erie
200 Union Pacific and 100 st. Paul, 600 shares.
Interest at per cent would be Sll II a day:
The stamp tax is $40 on 1000 shares. The
cost OF the loan for one day would therefore
be S43 II. or nearly 16 per cent a year For
two days the cost would be sol 22 or close upon
10 per cent. For three days the cost would be
So 3-3, about per cent For six days the
cost would be SOS 66. or substantially i per
cent. and for one month the cost would be
S}85 SO. Az per cent. This Is the SUPPOSE
tion that there would be substltutions. What
ever substitutions made would add 81
hundred shares 10 the money cost.
f. G. Thompson internal revenue agent said
yesterday:
l have lust received instructions from the
Commissioner Of Internal Revenue In wash
ington that all certificates Of stock deposited
hypothecated with banks or trust companies
security for loans or for the future payment
Of money must be stamped at the rate of two
cents per 500 Of par value OF the stock Any
stock substituted for those first given as Sc
Curity must also be stamped.
Asked how he proposed proceeding 10 collect
the tax Mr. Thompson answered:
I shall go to brokerage firm. say. Smith &
have Hypothetical since July /. 1901 and when
ter to the COMMISSIONER Of Internal Revenue, rec
ommending that an assessment be made. The Col
a copy Of my report. and he will notify Smith &
money the e' commissoner viii order measures to
MAKE them 30 s9 % ne BEEN TnRg 6o 4f 5nf Go n
loans since July / 1901. under the agreement OF the
borrower. and lender must pay the tax. The tax
have made estimate as yet TO what the
Will aggregate. In the OF each substitution OF
stock I'm a loan the substituted stock Is also
able Substitutions very common. and there
heard OF loan the time OF the panic Of May
last where there eleven substituions of col
lateral made on tina, one day.
William A. Nash. chairman of the Clearing
House Committee. said:
At our meeting to-day the question of taxation
upon the collateral In loans was one OF the sub
iccts up While however, SYM
pathlze with the Stock Exchange in the matter.
think that II with that Exchange to take
siuner Of Internal Revenue intends to demand i'm
mediate payment of the tax, | suppose the matter
will into the courts at once; and do not
think that when IL into the courts the
missioner will be sustained. one should not
be allowed to be in position to disturb the
business OF the country. | suppose that an annie
able arrangement between the parties concerned
and the Commissioner of Internal Revenue ought
be arrived at. In order that the question can
have proper settlement On the eve of the repeal
of the law It 10 that II is very un-
necessary agitation Of this subject
Mr. Nash added that earlier in the day he had
discussed the subject with President keppler
of the Stock Exchange. When Mr.. Keppler
he fully indorsed Mr.. Nash's views.
He said:
| believe that Commissioner Yerkes will not at
this time insist upon the enforcement or MS
opinion. but that he will In all probability afford
us an opportunity to present statements and argu-
ments bearing the subject The matter Is so
missioner Yerkes or any other one man would care
TO take the responsibility of disturbing the entire
business OF the country by an attempted enforce
ment OF his opinion.