The Birmingham age-herald., 1915-10-14
Decision Based on Fact That Measure Originated in the Senate Instead of House of Representatives
NEWS CAUSES SHARP BREAK IN COTTON
 FUTURE QUOTATIONS
Federal Court Decision, However, May Not Affect Existing Contracts-Mar- ket Rallies Toward Close

New York. October 13.-The. cotton
 utures act of August IS, 1914, also
 Known as the Lever law, was today
 ecIared unconstftutfonal by Federal
 District Judge Hough because. as a
 revenue measure. 1t originated i'm the
 Senate, instead of the House of Repre-
 ion.
 The decision was rendered in test
 Euit brought by Samuel T. Hubbard of
 he cotton brokerage firm of Hubbard
 Brothers. and others to recover 5000
 paid under protest to John z. Lowe, Jr.,
 collector of internal revenue, under the
 provisions of the law. Judgment was
 rendered. in favor of the plaintiffs.
 The suit alleged the act was uncon- +titutional, first, because it originated n the Senate Instead of the lower
 House, and. second, because the law
 axed the manner of performing the Transaction instead of the transaction l |tself
 Judge Hough sustained the first con
 ention. but gave no finding on the sec +nd. He said:
 ! ct approved August IS. 1914, never Fas and is not law of the United Itates. and therefore as a proposition |t is no longer open to discussion. Should Come From Lower House Id. -...1.. tects, which. to be law. must originate [n the lower House. The constitution provides that all bills for revenue must Sriginate in the House of Representa-. lives. It Is not seen how this court can Disregard information furnished by Congress itself.
 Tt is most satisfactory to ground der |ision upon so technical point but Euch as it is, this finding disposes of he arguments equally able and instruc- live upon the other and permanent branch of the litigation"
 Concerning the government conten- lion that the act was designed pri- harily to prevent speculation in cotton futures, Judge Hough said it was imma- |erial what intent was behind the act To long as Congress had labeled it lax measure
 Shortly after reports of the decision |eached cotton traders there was a harp break in the market. Until then The market had been firm, with Janu- Try contracts selling up to 13.S0c, more han $1.50 a bale over Mondays closing. But news of the decision carried prices own almost to Mondays levels Existing Contracts May Be Unaffected Later the opinion was expressed about The cotton exchange that the decision would not have any effect upon existing |ontracts, and there were rallies of from 10 to 15 points The market remained unsteady until the close however, and opinions upon the effect of the decis- lon were widely divergent. The act became operative February Is. and if the higher courts sustain Judge Hough. or if the government does hot appeal the case all money collected |nder the law must be refunded. Although the act placed tax of ? Tents pound upon all transactions in lotion for future delivery, it was open y avowed by it's sponsors as being measure designed to prevent specula- ion in cotton futures. This form of trading formed considerable portion
 If the business done between cotton brokerage firms in the United States Ind Liverpool. When it became oper- htive trading in futures was immediate y curtailed. The business done by two pr three large New York and New Or eans firms rapidly dwnd1ed and sew sral prominent cotton brokers prepared O retire