Chapter 86. Taxing contracts for the sale of grain for future delivery, and options for such contracts, and providing for the regulation of boards of trade, and for other purposes
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CHAP. 86.— An Act Taxing contracts for the sale of grain for future delivery, and options for such contracts, and providing for the regulation of boards of trade, and for other purposes. August 24, 1921. [[H. R. 5676](/us/bill/67/hr/5676).] [[Public, No. 66](/us/pl/67/66).] *Be it be enacted by the Senate and House of Representatives of the United States of America in Congress assembled*, That this Act shall be knownFuture Trading Act. *Post*, p. 998. by the short title of “The Future Trading Act.
” Sec. 2. That for the purposes of this Act “contract of sale” shallTerms construed. be held to include sales, agreements of sale, and agreements to sell. That the word “person” shall be construed to import the plural or singular and shall include individuals, associations, partnerships, corporations, and trusts. That the word “grain” shall be construed to mean wheat, com, oats, barley, rye, flax, and sorghum. The term “future delivery,” as used herein, shall not include any sale of cash grain for deferred shipment or delivery.
The words “board of trade” shall be held to include and mean any exchange or association, whether incorporated or unincorporated, of persons who shall be engaged in the business of buying or selling grain or receiving the same for sale on consignment. The act, omission, or failure of anyPrincipals responsible for acts of agents. official, agent, or other person acting for any individual, association, partnership, corporation, or trust within the scope of his employment or office shall be deemed the act, omission, or failure of such individual, association, partnership, corporation, or trust, as well as of such official, agent, or other person.
Sec. 3. That in addition to the taxes now imposed by law there isAdditional tax on options for sale or purchase of grain. Vol. 40, p. 1136. hereby levied a tax amounting to 20 cents per bushel on each bushel involved therein, whether the actual commodity is intended to be delivered or only nominally referred to, upon each and every privilege or option for a contract either of purchase or sale of grain, intending hereby to tax only the transactions known to the trade as “privileges,” “bids,” “offers,” “puts and calls,” “indemnities,” or “ups and downs.
” Sec. 4. That in addition to the taxes now imposed by law there isOn contracts for future delivery. hereby levied a tax of 20 cents a bushel on every bushel involved therein, upon each contract of sale of grain for future delivery except—Exceptions.
(a)Where the seller is at the time of the making of such contractIf seller is owner, etc., of property. the owner of the actual physical property covered thereby, or is the grower thereof, or in case either party to the contract is the owner or renter of land on which the same is to be grown, or is an association of such owners, or growers of grain, or of such owners or renters of land; or
(b)Where such contracts are made by or through a member of aIf made through designated boards of trade board of trade which has been designated by the Secretary of AgricultureRequirements. as a “contract market,” as hereinafter provided, and if such contract is evidenced by a memorandum in writing which shows the date, the parties to such contract and their addresses, the property covered and its price, and the terms of delivery, and provided that each board member shall keep such memorandum for a period of three years from the date thereof, or for a longer period if the Secretary of Agriculture shall so direct, which record shall at all times be open to the inspection of any representative of the United States Department of Agriculture or the United States Department of Justice. 188 Sec. 5. Contract markets. Designation of boards of trade as. Conditions. That the Secretary of Agriculture is hereby authorized and directed to designate boards of trade as “contract markets” when, and only when, such boards of trade comply with the following conditions and requirements:
(a)Located at terminal markets, etc. When located at a terminal market upon which cash grain is sold in sufficient volumes and under such conditions as fairly to reflect the general value of the grain and the difference in value between the various grades of grain, and having recognized official weighing and inspection service.
(b)Conform to requirements for detailed accounting of transactions, etc. When the governing board thereof provides for the making and filing, by the board or any member thereof, as the Secretary of Agriculture may direct, of reports in accordance with the rules and regulations, and in such manner and form and at such times as may be prescribed by the Secretary of Agriculture, showing the details and terms of all transactions entered into by the board, or the members thereof, either in cash transactions consummated at, on, or in a board of trade, or transactions for future delivery, and when such governing board provides, in accordance with such rules and regulations, for the keeping of a record by the board or the members of the board of trade, as the Secretary of Agriculture may direct, showing the details and terms of all cash and future transactions entered into by them, consummated at, on, or in a board of trade, such record to be in permanent form, showing the parties to all such transactions, any assignments or transfers thereof, with the parties thereto, and the manner in which said transactions are fulfilled, Preservation, inspection, etc., of records.discharged, or terminated. Such record shall be required to be kept for a period of three years from the date thereof, or for a longer period if the Secretary of Agriculture shall so direct, and shall at all times be open to the inspection of any representative of the United States Department of Agriculture or United States Department of Justice.
(c)Prevent misleading reports of market prices, etc. When the governing board thereof prevents the dissemination, by the board or any member thereof, or false, misleading, or inaccurate report, concerning crop or market information or conditions that affect or tend to affect the price of commodities.
(d)Prevent price manipulation by operators. When the governing board thereof provides for the prevention of manipulation of prices, or the cornering of any gram, by the dealers or operators upon such board.
(e)Admit cooperative associations of producers to membership. When the governing board thereof admits to membership thereof and all privileges thereon on such boards of trade any duly authorized representative of any lawfully formed and conducted cooperative associations of producers having adequate financial *Proviso*. Distribution of earnings among.responsibility: *Provided*, That no rule of a contract market against rebating commissions shall apply to the distribution of earnings among the bona fide members of any such cooperative association.
(f)Refuse privileges to barred operators. When the governing board shall provide for making effective the final orders or decisions entered pursuant to the provisions of *Post*, p. 189.paragraph
(b)section 6 of this Act. Sec. 6. Contract markets. Applications for designation as. That any board of trade desiring to be designated a “contract market” shall make application to the Secretary of Agriculture for such designation and accompany the same with a showing that it complies with the above conditions, and with a sufficient assurance that it will continue to comply with the above requirements.
(a)Commission authorized to suspend, etc., boards violating requirements, etc. A commission composed of the Secretary of Agriculture, the Secretary of Commerce, and the Attorney General is authorized to suspend for a period not to exceed six months or to revoke the designation of any board of trade as a “contract market” upon a showing that such board of trade has failed or is failing to comply with the above requirements or is not enforcing its rules of government made a condition of its designation as set forth in section 5. Hearings, etc.Such suspension or revocation shall only be after a notice to the 189officers of the board of trade affected and upon a hearing: *Provided*,*Provisos.* Action conclusive unless petition be filed in circuit court of appeals to set order aside, etc. That such suspension or revocation shall be final and conclusive unless within fifteen days after such suspension or revocation by the said commission such board of trade appeals to the circuit court of appeals for the circuit in which it has its principal place of business by filing with the clerk of such court a written petition praying that the order of the said commission be set aside or modified in the manner stated in the petition, together with a bond in such sum as the court may determine, conditioned that such board of trade will pay the costs of the proceedings if the court so directs. The clerk ofRecords, etc., to be certified to court. the court in which such a petition is filed shall immediately cause a copy thereof to be delivered to the Secretary of Agriculture, chairman of said commission, or any member thereof, and the said commission shall forthwith prepare, certify, and file in the court a full and accurate transcript of the record in such proceedings, including the notice to the board of trade, a copy of the charges, the evidence, and the report and order. The testimony and evidence taken orAccepted as testimony. submitted before the said commission duly certified and filed as aforesaid as a part of the record, shall be considered by the court as the evidence in the case. The proceedings in such cases in theExpediting directed. circuit court of appeals shall be made a preferred cause and shall be expedited in every way. Such a court may affirm or set aside theAuthority to set aside, etc., orders, limited. order of the said commission or may direct it to modify its order. No such order of the said commission shall be modified or set aside by the circuit court of appeals unless it is shown by the board of trade that the order is unsupported by the weight of the evidence or was issued without due notice and a reasonable opportunity having been afforded to such board of trade for a hearing, or infringes the Constitution of the United States, or is beyond the jurisdiction of said commission: *Provided further*, That if the Secretary of AgricultureAppeal to commission if board of trade be refused designation as contract market. shall refuse to designate as a contract market any board of trade that has made application therefor, then such board of trade may appeal from such refusal to the commission described therein, consisting of the Secretary of Agriculture the Secretary of Commerce, and the Attorney General of the United States, with the right to appeal as provided for in other cases in this section, the decision onDecision final. such appeal to be final and binding on all parties interested.
(b)That if the Secretary of Agriculture has reason to believe thatComplaints against persons for violating provisions hereof. any person is violating any of the provisions of this Act, or is attempting to manipulate the market price of any grain in violation of the provisions of section 5 hereof, or of any of the rules or regulations made pursuant to its requirements, he may serve upon such person a complaint stating his charge in that respect, to which complaint shall be attached or contained therein a notice of hearing, specifying a day and place not less than three days after the service thereof, requiring such person to show cause why an order should not be made directing that all contract markets until further notice of the said commissionHearings by commission or referee. refuse all trading privileges thereon to such person. Said hearing may be held in Washington, District of Columbia, or elsewhere, before the said commission, or before a referee designated by the Secretary of Agriculture, who shall cause all evidence to be reduced to writing and forthwith transmit the same to the Secretary of Agriculture as chairman of the said commission. That for the purpose of securingJurisdiction for securing testimony, enforcement, etc. Vol. 26, p. 743. effective enforcement of the provisions of this Act the provisions, including penalties, of section 12 of the Interstate Commerce Act, as amended, relating to the attendance and testimony of witnesses, the production of documentary evidence, and the immunity of witnesses, are made applicable to the power, jurisdiction, and authority of the Secretary of Agriculture, the said commission, or said referee in proceedings under this Act, and to persons subject to its provisions. 190 Order requiring contract markets to refuse privileges to such persons.Upon evidence received the said commission may require all contract markets to refuse such person all trading privileges thereon for such period as may be specified in said order. Notice of such order shall be sent forthwith by registered mail or delivered to the offending Petition to circuit court of appeals to set aside order.person and to the governing boards of said contract markets. After the issuance of the order by the commission, as aforesaid, the person against whom it is issued may obtain a review of such order or such other equitable relief as to the court may seem just by filing in the United States circuit court of appeals of the circuit in which the petitioner is doing business a written petition praying that the order Procedure.of the commission be set aside. A copy of such petition shall be forthwith served upon the commission by delivering such copy to its chairman, or to any member thereof, and thereupon the commission shall forthwith certify and file in the court a transcript of the record Jurisdiction of court.theretofore made, including evidence received. Upon the filing of the transcript the court shall have jurisdiction to affirm, to set aside, or modify the order of the commission, and the findings of the commission as to the facts, if supported by the weight of evidence, shall in like manner be conclusive. In proceedings under paragraphs
(a)Review by Supreme Court allowed. Vol. 36, p. 1157.and
(b)the judgment and decree of the court shall be final, except that the same shall be subject to review by the Supreme Court upon certiorari, as provided in section 240 of the Judicial Code. Sec. 7. Collection of tax. That the tax provided for herein shall be paid by the seller, and such tax shall be collected either by the affixing of stamps or by such other method as may have been prescribed by the Secretary of the Treasury by regulations, and such regulations shall be published at such times and in such manner as shall be determined by the Secretary of the Treasury. Sec. 8. Vacation of designation as contract market on application. That any board of trade that has been designated a contract market, in the manner herein provided, may have such designation vacated and set aside by giving notice in writing to the Secretary of Agriculture requesting that its designation as a contract market be vacated, which notice shall be served as least ninety days prior to the date named therein, as the date when the vacation of designation shall take effect. Upon receipt of such notice the Secretary of Agriculture shall forthwith order the vacation of the designation of such board of trade as a contract market, effective upon the day named in the notice, and shall forthwith send a copy of the notice and his Renewal authorized on application therefor.order to all other contract markets. From and after the date upon which the vacation became effective, the said board of trade can thereafter be designated again a contract market by making application to the Secretary of Agriculture in the manner herein provided for an original application. Sec. 9. Investigations, etc., of operations of boards of trade. That the Secretary of Agriculture may make such investigations as he may deem necessary to ascertain the facts regarding Publication of results.the operations of boards of trade and may publish from time to time, in his discretion, the result of such investigation, and such statistical information gathered therefrom, as he may deem of interest to the public, except data and information which would separately disclose the business transactions of any person, and trade secrets or *Provisos*. Issuing of reports.names of customers: *Provided*, That nothing in this section shall be construed to prohibit the Secretary of Agriculture from making or issuing such reports as he may deem necessary, relative to the conduct of any board of trade, or of the transactions of any person found guilty of violating the provisions of this Act under the proceedings Statement of facts.prescribed in section 6 of this Act: *Provided further*, That the Secretary of Agriculture in any report may include the facts as to any Cooperative investigations of marketing conditions, etc.actual transaction. The Secretary of Agriculture, upon his own initiative or in cooperation with existing governmental agencies, shall investigate marketing conditions of grain and grain products, and by-products, including supply and demand for these commodities, 191cost to the consumer, and handling and transportation charges. HeDissemination of information. shall likewise compile and furnish to producers, consumers, and distributors, by means of regular or special reports, or by such methods as he may deem most effective, information respecting the grain markets, together with information on supply, demand, prices, and other conditions, in this and other countries that affect the markets. Sec. 10. That any person who shall fail to evidence any such contractAdditional tax for designated violations. by a memorandum in writing, or to keep the record, or make a report, or who shall fail to pay the tax, as provided in sections 4 and 5 hereof, or who shall fail to pay the tax required in section 3 hereof, shall pay in addition to the tax a penalty equal to 50 per centum of the tax levied against him under this Act and shall be guilty of aPunishment on conviction. misdemeanor, and upon conviction thereof, be fined not more than $10,000 or imprisoned for not more than one year, or both, together with the costs of prosecution. Sec. 11. That if any provision of this Act or the applicationInvalidity of any provision, etc., not to affect remainder of Act. thereof to any person or circumstances is held invalid, the validity of the remainder of the Act and of the application of such provision to other persons and circumstances shall not be affected thereby. Sec. 12. That no tax shall be imposed by this Act within fourPenalties not enforced until four months. months after its passage, and no fine, imprisonment, or other penalty shall be enforced for any violation of this Act occurring within four months after its passage. Sec. 13. The Secretary of Agriculture may cooperate with anyCooperation with Government, State, etc., agencies. department or agency of the Government, any State, Territory, District, or possession, or department, agency or political subdivision thereof, or any person; and shall have the power to appoint, remove,Authority for employees, expenses, etc. and fix the compensation of such officers and employees, not in conflict with existing law, and make such expenditures for rent outside the District of Columbia, printing, telegrams, telephones, law books, books of reference, periodicals, furniture, stationery, office equipment, travel, and other supplies and expenses as shall be necessary to the administration of this Act in the District of Columbia and elsewhere, and there is hereby authorized to be appropriated, out of anyAppropriations authorized. moneys in the Treasury not otherwise appropriated, such sums as may be necessary for such purposes. Approved, August 24, 1921.