New-York tribune., 1902-04-16
THE COLLATERAL LOAN TAX.
COMMISSIONER YERKES SAYS He MUST EN-
FORCE THE LAW-ATTORNET GEN
ERALS OPINION ASKED.

Washington. April 15--John W. Yerkes. Commits
sioner of Internal Revenue, has made public his
letter TO Lewis Cass Ledyard. of New-York, at
torney for the New-York Stock Exchange. in reply
to Mr. Iedysrd's argument asking for 2 recon
siderstion and reversal of the ruling made by the
Commissioner in February last. By which 1t was
held that where certificates OF stock were used
as collateral for loans. and delivered by the
owner thereof to the lender inclosed in envelope
on which there printed memorandum setting
forth the name of the borrower. the name Of the
lender. the amount borrowed, date of the transac-
ton and the name and value of the securities in
closed in the envelope that such transaction was
subject the stamp tax imposed by the first clause
of Schedule A of the War Revenue acts of June,
1895 and March, 1901. The Commissioner is of the
opinion that, even without such memorandum, the
transaction is taxable. but in the case under con-
sideration there delivery Of the stock to Sc
cure the future payment of money. and further
mora the memorandum above referred to- The
Commissioner holds that the language Of Schedule
A does not require the memorandum stated TO be
signed by either party. that it must be intended
by the parties accepted by them as an effective
instrument of pledge.
The memorandum under consideration contained
a full statement Of the transaction between the
parties. 1t showed the amount Of the loan. to
whom the loan made, by whom it was made
the ra te Of interest date of the loan, the securi
ties delivered collateral and the value of these
after the passage of the act of 1883 both the
ternal Revenue had held that such transaction
taxable under what was called the mortgage
clause Of the law of 1898. which clause vas re
pealed under the provisions of the act of March 2
1851 that the taxes in question would be enforced
only and after July !, 1901.
He held that long the Mortgage law mad
been on the statute books his office had the right
TO assume that the revenue officials had enforced
the collection and the borrowers had paid the
taxes due under that section according to the
rulings Of the bureau, but from the date OF the
repeal the mortgage clause he considered it his
duty to enforce the collection Of the proper taxes
where stock used collateral and where any
memorandum made part OF the transaction.
The commissioner docs agree with Mr.. Led
yard that the amounts involved will be stupendous
or that unusual hardship will result to taxpayers
by the enforcement of the Law. But, regardless Of
the amounts he feels II his duty to enforce the
law whatever may be the result of that enforce
nent; that his duty to find the meaning Of
the law after careful consideration OF Its langua
and then enforce It
Mr. I1edyard had requested that If the commits
sioner could with him in his views of the
case under considerable the opinion Of the Attor-
ney General be asked The commissioner because
OF the large number of persons interested in this
case as well because of the amounts involved
has agreed TO comply with the request, and will
request the Secretary of the Treasury to submit
all the papers TO the Attorney General with
quest that he give his opinion the questions in
VolVed.