The sun. [volume] (New York [N.Y.]) 1833-1916, 1915-10-14
COTTON FUTURE ACT
UNCONSTITUTIONAL
Judge lIOugh Decides Measure
Originated in Senate and
Never Was L. $. Law.
APPEAL THOUGHT LIKELY

The decision handed dow yesterday
by Judge Hough IN the United States
District Court. hat the cotton futures
act WAS unconstitutional. came as a
distinct surprise to many In the cotton
trade. Although tits believed that the
Government will soon file an appeal. the
Impression In legal circles was that the
plaintifr, \. r. Hubbard OF the cotton
brokerage house Of Hubbard Bros. 4
Co. had scored AN important victory.
Judge Hough In giving his opinion
said THE cotton futures act, which
originated IN the Senate. In not and
never was a law OF the United States.
II IL one OF those Legislative products
which to be Il law must originate In
the Lower House. ~ should all meas
urcs bearing upon revenue"
The plaintiff In recent testimony not
only contcnded that the act was un-
constitutional on account OF its origin In
the Senate. but because 1t taxed the
nature Of the transaction rather han
the transaction itself. The suit was
based on the fact that Hubbard Bros.
& Co. sold 100 bales OF cotton on the
New York Cotton Exchange to Weld
q Co, and IN due course the collector
OF internal revenue J.. u. Lowe, eNacted
a tax OF $1,000 rs a penalty for vio-
tation of the cotton futures act. which
is the outgrowth of the Smith-Lever
bill.
The New York Cotton Exchange
adopted the provisions of the cotton flu
lures act in February. 1915. Important
sections OF the at Included the mandate
that cotton dealt in on the exchanges
,ent tyne. and ,h,t a - ~, , con,. a
n,,,nd ,,o,,,J IA, ui,.,J ~ na,,.a,, IL
rrsnuor.n,. , . nis, n, ,-,d., n,,d, ,,,,,
soreign cx,h,n,as ,hn, 10 nat ,..o,n.a
Inc Au.rirnn cn,,nn s,,nda ,hs Tte
sct f,r,har nr,yiJos iva, All disnu,as
and ar,,t ,tions ma ha Gale, hasor,
no pen,r,n,on, Of Irrio,u"rn '-'
Mr,l, Jissatisf,rtion US ,xnrossa,
FOR , finn. h.,,uso NJ ,ha i,naIsni,,,,'
NJ tradin, Ia tho ,,,n,i ,n.rra, 80
cent with tho n,ymer, ~ :, nrohth, 49,
tar m. sn,,n - IT. 49,. ~
war conditions b,ya Ur,oj he. h,,r1an
pf this clause t.n,,or.r,,,. =, ra.
uhown bovaycr ,h,, u,har Lo,, .
mainaI for coyarnua,, ,rh;.-,,io, or,
barra ssinp DELAYS q, +ho s.,,,ina -, a.,
aculti,s we're exnariancod I'VE outcome
uas Tho los, trad. in,o,yina II,nhnn J
Rrps a. "a and w..id g e. .nn,har
suit hrouph, bv V.ld G No,i,,a a,a,n.,
Collector 1--we is nanjiny I, ,n,n,,as
the r..fuuding of n 5000 ray iu,snsad on
a trade snyoly-lnp Weld G E.,,,,Ia ,nd =
IJ>ayno,i co,carr ]'' "
Those who have been notify. in
batting In. cotton futurcs ,,, ,yar.
greatly pleased with ,ss,e-day's r,,,rr
Webb FLOYD a n,.,nhar of Weld G. r.
sail: The Government will do,h,l..s
appsal the decision. h,,, a. 4. mo, ,L.Iy
that power VIII he vested in the I,sJora,
Government To cont no, intr,s,o,. til.
The cotton futures ACT nj nras.,t A.
des,pn.d M ,ontro, tho daai,,ns -.
into by citizans of New YORK Stato ,nd
II there is to lie regulation bv ofacj,l
bodies it should in this case he s,nnb cd
by the state authorities"
Judge Graham. attorney Tor ,,,
Government i'm cotton futures ac,
matters. said he had been semi-nfeciau,
Informed that An appeal IN rho S,,nrerns
Court was being prepared In sow
quarters there were remarks tina, In ,bs
event of the Supreme Colr, unhoIdinv
yesterdays ruling another ,pe,s,r. -, q
more drastic nature regulating the de.i,
ings In cotton futures might no intro.
duced in the House of R.prcsentatives
il was recalled that tho original co,,o,
futures bills were worded so as virtual,
10 abolish trading in cotton futures n,
forbiddinC the ransmissiop NJ nrders an,
market information over tho wires OF n.
telegram comnanics ana ,hrour, 49,
mails. "
These apn,rcp,ly dis,,isaa ,hroo,.
however uora mn, tho - -. -.
atrro in ,r,nor,an, y. u'9'o'1,
M. .,ia ,ha, 49, an 49, va Se'..o"s. !,
ag.ins, ax.h, en"r :" !. ~,
ooodioo, aa ~" s.eatls
nor,anaa. ,'o' VI ie'rh' eN
'",.''u'"''F "h'h inc out
49, '""vp'", war .'tess''a'et
Wv .,oS''s '" inc new 10Th co'toi
"'.N'''
80 'p,'",l 'S'N reac'eu more IMAM s
""'ihr +" "a'e yesterday, partly because
OF 'he uncertainty caused by the de
cision' reaf was prevalent among som'
timld interests that there might have T.
ne an carry roadJustment OF contract:
and that this process would take from
cotton values Authorities explained
however, that even IL a change wer,
ultimately ordered n years notice woul,
he given. Late yesterday a memoran
dun was posted on the bulletin boar,
of the local exchange stating that tn.
BOARD or managers contemplated n,
change in the by-laWS or the rule
'''N