New-York tribune., 1902-02-16
YERKES SUSPENDS ACTION.
WILL AWAIT JUDICIAL DECISION ON
COLLATERAL LOANS TAN
REQUEST OF NETWORK STOCK EXCHANGE
OFFICERS GRANTED BY THE COM
MISSIONER OF INTERNAL
RFEENT-F
tBr TELEGRAPH TO THE rR1BrxE.l

REVENUE
tBY TELEGRAPH TO THE TR1BrNEl
Washington, Feb. 15.-Rudolph Keppler, pres.
ident and H. X. Pomroy. vice-president of the
New-York Stock Exchange, had conference
to-day with Commissioner Yerkes of the Inter
nal Revenue Bureau, in regard to his recent de-
cison to the effect that the memorandum which
accompanies stock deposited as collateral Sc
curlty for loans is subject to stamp tax. The
Commissioner was requested to suspend opera
tions under the ruling until the legal questions
involved in the case could be determined by
judicial authority. Mr.. Yerkes granted the re-
quest, and will go to New-York in a day or two
10 investigate the matter.
The ruling made by the Commissioner on
Fcbruary was given on a single case presented
by the NewYork city revenue agent. II was
held that the memorandum was subject TO
stamp tax, following a similar ruling made on
october /, and a ruling made in a case where
the Pennsylvania Railroad desired to pledge
certificates OF stock the Girard Trust Com
pany. 10 secure loan of $4,000 aaO The
ruling in the latter case was submitted TO the
Attorney General for opinion and he In
January decided that the tax would apply
Following this. decision was rendered by the
Circuit Court for the Southern District of New
York, sustaining the consttuuonallty of the law
so far as it required stamp tax to be affixed
in transfers of stock.
Mr., Keppler said that the officials OF the
Stock Exchange desired to be heard fully. as
the transactions involving the borrowing Of
money with stock pledged collateral We're so
various that fl was impossible. In his judgment.
70 reach right conclusion that would cover
all the cases by "A decision rendered in a single
case. The Commissioners office does not rerule
except specific cases when presented so the
Commissioner agreed TO give the protestants
time in which to present their case. While he
in way indicated his belief that the law was
not as has been ruled, he was perfectly willing
to examine into the whole matter. as it was
of great Importance and affected large class
Of people, both borrowers and lenders.
1t is possible that the question may be finally
submitted TO the Attorney General for opinion,
or an agreed statement of facts may be pre-
sented for judicial consideration and decision.
The statement that the ruling of the Commits
sioner was in variance with or overruled de
cisions of his predecessor is absolutely er
roneous.
The letter Of Internal Revenue Commissioner
Yerkes to Colonel F. G. Thompson, internal rev.
enue agent in this city. in which the latter was
instructed to collect war tax on securities hy-
pothecated for loans, was confirmed yesterday
by publication in The Treasury Decision the
official organ Of the Treasury Department
Five of Colonel Thompsons deputies are al
ready at work on the books of bankers and
brokers in the financial district, for the purpose
of ascertaining the arrears from the five years
during which the law has been dead letter, on
which, under the new ruling, assessments are
TO be made and collected.
Colonel Thompson said yesterday that he
would forward his report to Washington, and
send copies to Collector Treat
Colonel Thompsons letter of instruction was
received on February II, in reply to one he sent
to Commissioner Yerkes January .. Prior
TO the sending Of this, Colonel Thompson had
fully informed himself regarding the methods
and conditions surrounding the making of col
lateral loans in Wall Street. He fully explained
these methods and conditions in the letter.
Commissioner Yerkes wrote in part. as follows;
In replv YOU are advised that, in my opinion,
the above instrument is such memorandum as
would be liable to stamp tax under the PROVISION
of part / Schedule A. Act of March . 1901, as
evidence of stock delivered security for the
future payment of money, at the rate or TWO
cents for 500 of par value or STOCK, descrloeu
therein MY ruling would be the same If this
memorandum were printed on any other Pape'
than an envelope, and any similar memorah-
dunn, evidencing the delivery OF STOCK ass as sc
Curity for loan. would require the same stamp
a memorandum of the delivery of stock mace
on continuous agreement between the pleuSet
and the pledgee, regulating the deposit ana ols-
position of stock pledged as security or such
memorandum made in promssory note, would
also be liable to tax in the same manner as 'he
instrument above set forth.
When stock is withdrawn from the p,ed5ea on
payment of the loan for which it was pledged
and afterward redevered security for an
other loan another tax will accrue, the mem
orandum of the same, and the memorandum or
delivery OF any stock is substitution for STOCK
already delivered as security is also taXaeie.
Stock. however, remaining IN the possession cf
the Pledge may be retained after the payment
of the original loan as security for new loan
without additional taxation.
Colonel Thompson emphatically denied that
there was any friction between himself and
Collector Treat. Their views on the Commits
soners ruling. however. are entirely az va
Rance