Evening times-Republican. [volume] (Marshalltown, Iowa) 1890-1923, 1913-11-01
NEW LAW CAUSE OF MUCH CON.
FUSION IN FINANCIAL CEN.
TER OF NATION.
BANKERS AND OTHERS IN
STATE OF IRRITATION,
Portion Of Interest Coupons Hold Up
and Date Of Payment Uncertain
Only Accepted for coIIeetion-Num-
erous Suits to Have Law Declared
Invalid Threatened.

ton Of the income tax was the cause
of much confusion in the financial dis
trict today. Banking houses and In
stitutions which act as fiscal agents for
railroads and other corporations were
busy receiving and rejecting coupons.
the latter course being taken In cases
where certificates Of ownership were
lacking.
Wall stree az a whole is in state Of
irritation over the whole matter, 1t Ill
feeling resulting largely from the atti-
tude OF the treasury department,
which. according to the street. has sew
eral times reversed itself in its regu-
lations.
At the house Of ]. p. Morgan & Co..
the fiscal agents for many large corpo-
rations, coupons were being received in
large amounts subject to the latest
rules issued by Washington. A rep
resentative Of the firm said that 1t
would take at least a month to pay on
all coupons presented for payment.
AT the Chase National Bank. which
has several thousand out of town cor
respondents, it was said that coupons
are not being accepted for deposit but
only for collection. 1t was required
that certificates accompanying the
coupons state whether the bonds which
they represent were taxable or exempt.
Wall Street Confused.
For once in its career Wall street
did not know which way to turn. Some
Of the highest priced lawyers, bankers
and corporation officials In the world
confessed that they were completely at
sea as to Its meaning.
1t Is practically a foregone conclu-
sion that payment of q large part of the
$80,000.00O November interest pay
ments due in New York today will be
deferred pending q solution of the rid
die.
+ Whatever the outcome, 1t il predict
ed that many suits WIN be Instituted
against tho government to test the law.
Some of the leading insurance COM
panies. led by the New York Life. have
questioned that feature of the law
which imposes tax on corporate hold
ers of state or municipal bonds, OF
which they hold large amounts, while
exempting the individual.
Levy "At Source" Trouble.
The chief source of trouble is that
portion of the law which provides for
the collection "at the source" of the
tax on income derived from interest on
bonds. mortgages and certain other
obligations. Banks and corporations are
required to withhold this tax in maxi
ing payments Of interest due to hold
ers of securities.
The ruling In question has given rise
to endless confusion. In cases in which
bonds are not registered, the names of
their owners often are not known to
the banks or fiscal agents to whom
coupons are presented for payment
The identity Of the owners must be es-
tablished to determine whether the tax
is to be deducted.
Every lawyer and bank officer in
New York has had his life made a bur
den by clients who wish to know which
of the six forms of exemption apply to
their particular case. There are no
precedents to apply.
Explanations Only Confuse.
For the last two weeks Wall street
has been flooded with booklets, dia-
grams, charts and pamphlets purport-
ing to summarize and clarity the law.
The result has been to leave the av-
erage investor more confused than
ever. Appeals to lawyers avail naught,
as the lawyers themselves are in doubt
as to the Interpretation of the law.
The wires to Washington have been
kept busy for the last fortnight with
appeals to the internal revenue de-
partment for help. Last Saturday set
of instructions was issued. On Monday
1t was said the regulations would be
changed. On Tuesday 1t was said there
would be no further light. Since then
there was a deep-seated suspicion in
the quarters affected that Washington
was nearly as much in the dark re-
garding the new law as was Wall street
itself
The provisions of the law requiring
employers to withhold the tax on sal
aried employees receiving more than the
exempt amount and in respect to the
tax on rents to be withheld by tenants.
also will take effect tomorrow. but they
present few immediate problems. Ad-
ditional regulations covering this feat
ure Of the law are soon to be Issued by