Daily Kennebec journal. [microfilm reel] (Augusta, Me.) 1870-1975, 1922-03-07
Case Before u. S.
Supreme Court to Test
Taxing Power Govt.

the government is at issue in the SUI
preme Court in an attack brought by
eight members of the Chicago Board
of Trade upon the Future Trading
Act. The case. with three others in
volving the Child Labor law, presents,
from the viewpoint Of the govern
ment, one of the most vital consti-
tutional questions to reach the court
in recent years.
The government won the Future
Trading case in the United States
District Court at Chicago before
Judge Lands, but lost in the Child
Labor cases in the lower Federal
courts in North Carolina. The two
acts bring before the Court. on some
W ha different facts. sub
stantlally similar contentious. Op-
ponents challenged the right of the
Federal government in the exercise
OF lts taxing power. to accomplish by
what they term "subterfuge' regu-
latory control of matters within the
f--~N JSA AoNASliOIl VI tlS states. he
government contended that the Flu
ture Trading act imposed an excise
| tax which Congress, under the con-
stltutlon, is authorized to lay and col
| Iect not only Ito pay the debts and
provide for the common defense"
but also for the general welfare of
the United States"
Contracts for the future" delivery
OF grain amounts in some years, the
government in the arguments before
the supreme Court asserted, to more
than 10000, 100000 bushels, or three
tlmes the quantity of grain produced
III all countries although the amount
OF grain actually changing hands in
chicago, where five iXths of the "fu-
lure trading is done, being small
fraction of one per cent. of the total.
Future transactions in Chicago in
1919 amount it was stated to 81
times the amount of wheat produced
in the United States.
The Future Trading act imposes
among other provisions a tax of 20
cents bushel upon all transactions
known as puts" and "calls' where
ever made, the object being to pro-
hibit such trading. and a similar tax
upon all contracts for future deliv-
erles except those made upon CON
tract" market or by the owner or
grower of grain. Certain admins
tratlve provisions for the keeping of
records and the making of reports,
ana Tor governmental supervision are
also embodied in the law. Designat-
ed grain centers. to become CON
tract markets, must, among other
conditions, admit to membership rep
resentatives of agricultural coopera-
tive associations.
The government in defending the
act took the position that the only
! constitutional limitation upon the
power of Congress to levy excise tax
es IS their uniform distribution geo
graphically. Congress being free to
select the subject for taxation. Con-
gress may use the taxing power, the
government further contended, for
social, economic and moral purposes
The purpose of the tax levied in the
act in question, as explained by the
| government, was to correct grain
marketing evils such as manipulation
| by large operators, promiscuous and
| unrestricted speculation in foodstuffs,
dissemination of false crop inform
alton, gambling in puts" and "calls",
and other arbitrary interference with
the law of supply and demand. 1t
was NOT punitive law, the Solicitor
General asserted, imposing a tax to
enforce regulatory measure which
| Congress could NOT legally control
by fine and Imprisonment, but was
intended to terminate what he called
wild orgies upon grain exchanges.
Among the objections urged by the
members of the exchange bringing
the case were that grain traded in
upon the Chicago Board of Trade had
lost It's interstate character, and
therefore was not within the control
of Federal legislation; that the gov
eminent, through it's taxing powers.
was attempting to exercise police ju-
risdlctlon properly belonging to the
States; that membership upon the ex-
change was a valuable property
right, which could not legally be I'M
| paired by compelling the admission
to membership of representatives of
| agricultural cooperative associations,
| and that the exchange rule prohibit
ing the rebating Of commissions
should not be abrogated by permit
ting agricultural cooperative asso-
Citations represented upon the ex-
| change to distribute among their
| members profits made upon exchange
transactions. 1t was also alleged
that the keeping of records and the
furnishing of reports, with Federal
| supervision required by the law,
would be unduly burdensome and in
valid. The Chicago Board of Trade
has valuable real estate belonging to
its members, it was asserted, and to
compel the exchange to admit repre-
sentatives of cooperative associations
to membership would be the taking
of property without due process of
law.
In replying to these objections the
government contended that an ex-
change which buys and sells more
grain than the whole world produces
must have very real relation to in
terstate and foreign commerce." that
the State is free to legislate with ref
erence to future" trading: that the
tax was NOT prohibitive; that men,
bers of corporations heretofore ad-
fnI {o