The sun. [volume] (New York [N.Y.]) 1833-1916, 1902-02-14
TAX ON LOANS CHILLS STREET
DEFINITE STEPS TO COLLECT 1T
TAKEN YESTERDAY.
Gov Agent Here Calls for Hack
Taxes on the Enormous loans on
Collateral Made since July ., 1901
Clearing House Committee Confer.


Wall Street shivered yesterday. j. W.
Yerkes. United States Commissioner Of
Internal Revenue. was responsible for the
shiver and 1t resulted in lower prices all
around in the stock market.
In brief, the Internal Revenue Bureau
has sent men into Wall Street 10 demand Of
brokers and other borrowers Of money a
list of the stocks hypothecated by them
for loans since July /, 1901, SO hat the Gov
m may collect on all evidence Of
stock delivered "a security for the future
payment Of money" the war tax Of two cents
on each 500 of par value Of the stock.
That the heads OF the Internal Revenue
Bureau have been Of the opinion that this
tax was imposed by the wal tax law has
been known in Wall Street, but in view OF the
fact that the payment OF such a tax upon
call loans, which may be said to form
the framework of Wall Streets financial
machinery, would add SO much TO the cost
Of carrying stocks as to be practically pro-
hibitive of speculation as at present con-
Quoted, II has been the general opinion
that some method Of getting around the
law might be arranged.
II has been supposed that such a method
had been found in the system that has
been generally followed by the banks and
other large lenders Of money Of having So
called continuous agreements" with those
accustomed TO borrow from them.
Wal Street has heard with rather languid
interest M has not paid much attention
TO various reports of official rulings and
opinions on the loan tax question. 1t
has rested secure in the belief that, after
all. the matter would be ARRANGED In some
way and there would be no trouble.
The latest ruling was one given ON Tnes-
dov ios, b,, cnruissionar vorLo. -
ua9 nn. ny ~ ,eineS ooh-
any memorandum evidencing the delivery
of stock as security for a loan requires
a stann mr. the rate ~ two cen,s for eaoh
500 Of bar value of stock desoTibed tberein'
No sneoial attention was paid 10 this mi.
inc Iv Wall street men until tbis NOTICE
az ny 1asto,day On ho+h tha val ST..
Ill aaa5cias.
49, ~
=, " isa NNesean 80, ~, hompsoh
i%owiinUg. 81 have inst reoeIvaS ins,tnc,inn,
from the COMMISSIONS Of internal Revenue
in Washin gton that. all certificates Of stock
deposited or hypothecated with banks or
trust companies as security Tor loans or for
me future pay hent OF money nus pe Stsnped
u, ~ raiv - y, ,he s,ocS pei nv s,ncS a nh
tuted for those frst given az security must
also be stamped"
Col. Thomson. who IA the Internsl Raw
enue agent for the Division Of New York
and the Fifth Division OF New jersey. FOL-
lowed nm this notice bv sanding down into
the financial district deputv internal rev
enie collectors. who. under HIS direction
visited brokerapp houses and other large
borrowers of money and asked them for
statements as to the amounts Of stocks
bvpothecated by them In loans since July
- iaoI. when the amended internal revenue
law went into effect. Col Thompeon.
when seen Mt his Office. $50 Nassau street.
said that be was going right ahead TO COL
lect such evidence preparatory to the
0overnment demanding back ymen OF
the IN of two cents per SiOO par value OF the
stool, He was asked as 10 the method he
purposed following In collecting the tax,
and replied:
sI yrill 90 n. sav n brokerag e firm
Smith a ZONES. and ASCERTAIN how MANY
shares of stock thew ave Intoxicated
eince Julv ipOI and when I ha w that data
I will make a report OF the matter TO the
Commissioner al Internal Revenue. reoom-
that an Assessment hal be made
TLa CoiIactor ~ Internal Revenue for this
dist riot gets a copy OF NV report. and he
rr;i mott 10 Smith 4 ,Jones 10 nav IN and
than ~ thev don't nav the money the Com
missioner will order measures 20 make them
a. so I-nder The ruling of the Commis-
siorar oil stock that has been hvnothe-
800 for loans since July 1 iaoi Under
on ssrcement bet ween the borrower and
Iandar must pavthe tax of TWO cents ON each
s,no nov vnlne ~ the stock 7 have made
Sto nnota ne yet "a 10 what the tar will
~ Tn The case ~ each suhs,itn-
aassSS' q s,ocL in n Ian tho substituteJ stock
~ aso ,oyahie ubst;,utio are yerv
- m n ard ,hara ore sonetinas seyarsI
I'll ~ opa day 7 baya baa ri 81 ono Iosn
q, the time ~ The manic of Nav O last wbere
,Lara we're eleven constitutions OF coll
inene MJ on tbat ona day wv
"tII TLor,Dson a,nIainaJ that I, mn.
~ tboso IT, bad occordina
,n 49, Commi ssinner's ruling svsded nav
80, 80 ,he iay 10 nav tba 5onev in,d ~.
Traasurv 1'Ion ;ftLsv Wished tbey could
trv =" rocoyer tba money NV endeavoring
10 have the courts oyerturn the Commits,
sioner's Tuling. The princinle of which has.
howeyer he says' been upheld In an opinion
~ he General. The assessment
.ca,no, no an ioined The internal revenue
agent can force borrowers To make state
ments of the amount of stocks that have been
hyDothecated by thom as collateral In loans.
Ne can. also. If he 1nds IL necessary. obtain
records from the UNDERGRADUATES and trust
,comnanics and other interests.
That the sit uation was regarded a. serious
bv the important interests in the financial
district was evinced by the fact that il