Republican farmer., 1920-07-09
MERCHANTSMAY
 NOT PROFITEER IN NECESSARlES
U. $. Attorney Smith Gives Opinion On Lever Act
 Provision !

Hartford, July s-W. F. whitmore, Connecticut, has obtained an opinion from United States District Attorney Edward L. Smith as to the scope of the Lever act, the opinion being asked for by MT. Whittmore be- cause Of questions raised by some re- tail merchants. The Lever act con- cerns itself with the supply, distriv button and movement of foods, feeds, wearing apparel, containers designed feeds, fertilizers and fuel, in cluding fuel oil and other things, which in the act are described as necessaries. There is another Unit ed States law under which certain articles named in the Lever act are taxed as luxuries. As for instance, women's silk waists, retailing for over $15 are taxed as luxuries at 10 per cent. on the amount over $15. Simil- arly, hosiery retailing at over $2 and mems hosiery, retailing at over $2 are c1assed as 1uxurieS and are subject to the luxury tax. Inasmuch as the United States had taxed certain of the articles as luxuries, the question was whether merchants were~liable for profteering in these same articles de- scribed as necessaries in the provis- ions of the Lever act.
 United States Attorney Smith in his opinion to Commissioner Whit more holds they are if they charge an excess profit. Judge Smith in answer to the question submitted says | under the Lever act, as amended Oc- tober 22, 1919, in Section 1, it is to be carefully noted that the word 'necessaries'' therein appearing is not the generic necessaries. Section 1 concerns itself with the supply, dis l tribution and movement of foods, feeds, wearing apparel, etc, and the act says, thereinafter in this act call ed necessaries.'' In other words. l the opinion says, the word necessaries 1 in the lever act is technical word, I m eaning under the very provisions of l the act, the catalogue of things nam | ed in Section 1. Inasmuch as it is
 contained in that list, wearing ap- parel is a necessary under the Lever 1 act whether or not it bears a aNtax as
 a Luxury. Consequently the mer- chant is liable to prosecution if he 1 profteers in the sale of articles named in the Lever act as necessar- ] les.
 | MT. Whittmore also asked the dis l trict attorney whether in deternin- 1 Ing the cost or an dIl1Cl6 to a. Qedl- | CT, the invoice price should be con-
 sidered, disregarding any reasonable l cash discount which may have been | allowed and taken for prompt pay | ment. He said that many mer- l chants consider cash discounts as an l offset to the interest cost of borrow
 ed money which permits them to dis I count their bills. On the contrary says the commissioner, the interest l paid on borrowed money is usually
 carried as an item of expense as 8 part of the regular overhead cost of doing business and as such is pre-
 sunab1y allowed for in the rather
 large percentages of profits, ordinar- fly considered reasonable for the re- l taller to charge.
 Judge Smith in giving an opinion as to this question says he believes 1t
 is fair to consider the invoice as an
 element in determining cost without
 regard to any reasonable discount for
 cash. he may actually take in the or
 derly nrov ve1nent of trade, and tha
 commissioner has ruled that discount
 up to 8 per cent. may be considered
 as within the reasonable limit.
 Another question on which Judge
 Smith ruled was as to whether it U
 proper for the retailer of ready to
 wear clothing, who makes no tndfvad-
 uaI charge for alterations to add to
 the cost of his clothing, the average cost of his alterations.