New-York tribune., 1922-05-16
Part of Grain
Trading Act Is
Held Invalid
Drandcis Dissents in SUI
prcme Court Ruling That
Section Four of Law
Cannot Be Enforced d
yirtually Destroys Its Ef.
fectiveness, Declares the
Author of Legislation
WASHINGTON. May 1s.-section 4

y WASHINGTON, May 15.-Section 4
i Of the grain futures trading act and
i ,h,se parts of the act which arc regu-
E ,.sions affected by the so-called tax
imposed by that section were TO-DAY
I aid unenforeeable by the Supreme
r Court, in an opinion delivered bv Chief
s, ID ,tice Taft, te which Justice Brandeis
Ths sec. was held unenforcibl.
A4csuss it as not a valid exercise ~
sAc taxing over of the Federal row
y .rrmsst II hat it attempted to reru-
l7!jats tran etions over which the
Federal &c 5ernment had no constjtu
tioaal eon :ol and was an invasion of
1nths polie, power Of the state.
! SECTION imposed tax of 20 cents q
husheE anon future trades in grain
rr wAsn sot made upon exchanges not dos.
igna.ed as contract" markets, subject
"a Federal control, or when not made
" is actual owners of the grain to be
=. p While the decision stated tha+ =.
y aaeper OF the sections of the act wcrc
saiid, Senator Capper. Republican. Of
4 Kansas, ore OF its authors declared the
9 derisien "a knock kout,' which "prac-
I tically destroyed the effectiveness of
the act" The purpose of the statute
was primarily to regulate future trad
4 iHk in grain so as to compel the larger
!. exchanges to admit to membership CO.
y operative farmers organizations. This
was done by providing that the heavy
!. tax would be imposed upon all such
: exchanges which did not become CON
!. tract markets, required the exchanges
y 70 amerd their rules and admit the
!. farmers co oreratIve organizations to
= membership.
: Certain Sections Valid
: Trading in grain was declared bv the
y court not to come within the scope of
interstate commerce. Section II OF the
act provided that should any section be
declared invalid that should not affect
!. the validity OF the remaining sections.
Chief Justice Taft declared Section IL
d did not intend the court to dissect an
: unconstitutional measure and reframe
q valid one out of it by inserting
!, limitations it does not contain."
!, This is legislative work beyond the
y power and function of the court," he
said
!. The court found, however, that there
were sections of the act which must
! bs held valid, such as Section Q, au-
!, thorizing Investigations by the Secre-
fsry OF Agriculture and his publication
OF results
. Section 3 also was declared valid
& That section imposed tax of 20 cents
!. bushel on transactions known to the
. trade as privileges" "bids," "offers, -
puts and calls" "indemnites' or cups
and downs Such a tax was held to
i be Clearly within the Congressional
i power as il was not Regulatory"
: While the court stated it "may sus-
9eet that it was intended by Congress
sstppreas such transactions We cam
nor ''ndyl aui psevious decisions treat
3 the s-etloN as other than what it pur-
ports to be, tax"
Evasion Penalties Stand
y The provisions of Sections and 10
q ard other parts of the act defining the
methods of collecting the tax under
+. section g. with penalties for cvadng
b II ma limitations upon its application,
: NJ stand with Section 3, the Chief
Justice stated.
Chief Justice Taft announced that
I. 1nJunctIons against the Board of Trade
q Chicago and its officers and against
81 ne Collector OF Internal Revenue and
y mo United States District Attorney
!, speuld De granted so as to prevent the
enforce nent of Section and those
parts the act and the regulations
interT ven with il. The suit was
orouc by John Hill jr. and other
memba of the Chicago Board OF
Trade prevent that exchange from
eompi ag with the act.