The Lancaster news. [volume] (Lancaster, S.C.) 1905-current, 1915-10-15
HOLDS LEVER LAW
UNCONSTITUTIONAL
Federal Judge HOugh Declares
Cotton Futures Act Started
Out Wrong.
ORIGINATED IN SENATE.
says Ii Should Have Been Intro
duced First in the Lower
House.


the law known as the Cotton Futures
Act. He rendered judgment in favor
of Daniel T. Hubbard and others in
suit to recover damages for assess
ments made and collected by the col
lector of internal revenue.
Judge Hough in lengthy opinion
said the Cotton Futures Act was
technically unconstitutional because
the law originated in the senate in
stead OF the house of representatives.
This is one of the legislative pro-
Jects which to be a law must origi-
nate in the house OF representatives. ;"
said Judge Hough.
The constitution of the United
States provides that all revenue bills
shall originate in the lower house.
This bill, L find was introduced in the
senate. and as it is bill for raising
revenue, it is, therefore, unconstitu-
tional
1T is most unsatisfactory to have
to ground a decision upon so techni-
cal point, but such as it is, this de-
cision disposes of the case"
EFFECT ON EXCHANGE.
Announcement of the decision
caused sharp break in prices on the
New York cotton exchange, but in
formation that the decision would not
change the status Of existing con-
tracts caused partial rallies.
Judge Hough sustained the first
contention, but gave no finding on the
second. He said:
The bill known as the Cotton Flu
lures Act, approved August 1S, 1914.
never was. and is not now, a law of
the United States, and, therefore, as
proposition it is no longer open to
discussion.
This is one of the legislative pro-
jects which. to be law. must originate
in the lower house. The Constitution
provides that all bills for revenue
must originate in the House of Rep
resentatives. 1t is not seen how this
Court can regard information furn-
ished by Congress itself.
1t Is most unsatisfactory to
ground decision upon so technical q
point, but such as it is, this finding
disposes of the case, and must leave
undiscussed the arguments equally
able and instructiev upon the Other
and permanent branch of the litiga-
ton"
INTENT IMMATERIAL.
Concerning the Governments con
tention that the Act was designed
primarily to prevent speculation in
cotton futures. Judge Hough said it
was immaterial what intent was be-
hind the Act so long as Congress had
labelled 1t a tax measure.
Shortly after reports of the decision
reached cotton traders there was a
sharp break in the market. Until
then the market had been firm, with
January contracts up to 1880. more
than S1.5O bale over Mondays clos
ing. But news of the decision car.
ried prices down almost to MONDAYS
levels.
Later the opinion was expressed
about the Cotton Exchange that the
decision would not have any effect
upon existing contracts, and there
were rallies OF from 10 to Is points.
The close. however. and opinions up
on the effect of the decision were
The Act becomes operative Febru-
ary 18, and IL the higher Courts sus-
tain Judge Hough, or II the Govern
ment does not appeal the case, all
money collected under the law must
be refunded.
Although the Act placed a tax OF
two cents pound upon all transac
lions OF cotton for future delivery, IL
was openly avowed by its sponsors as
being a measure designed to prevent
speculation I'm cotton futures. This
form of trading formed a consider
able portion of the business done be.
tween cotton brokerage firms in the
United States and Liverpool. When
1T became operative trading in futures
was Immediately curtailed. The
business done by two or three large
New York and New Orleans firms
rapidly dwindied and several promi.
rent cotton brokers prepared to re-
tire.