The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
663 X-1023 OFFICE OF CO.~ISSIONER OF nmmtW. REVENUE TR3ASURY DEPARTMENT VIASHING'r~, June 21, 1918. ·Hon. M. c. Elliott, Federal Reserve Board, Ylashington ~ D. C. My dear Mr. Elliott: Referring to your letter of Juno 5 Dl1d my .:1Cknowlcclgt:1ont of June 10, it soci:lS from IJr. Curtis' letter that under crodi t o.grcci.ilOnts cont'or~1ing with tho. roguln.tions of the FcdoraJ..Roscrvo Boord p~kcrs my dr3.w· bills of exchc.."lgo on do::Jostic bo.nlts ag::'.inst ~ales of goods to tho Allied Purc~sing Comnission, such bills runnine for a period of time oovoring o.pproxirnr.tcly the trm1si t of tho sh:l.Jmont frora tho interior point to tho soaboo.rd, vrhere tho goods are taken on bOc".l'd ship for tho occv.n voya.go at tho convenience of tho Allied Purchasing Commission~ In Wm. E. Peck & Co. ( IP.c. ) v. Lowe, doc idod in tho United States Supremo Court !J'ay 20, 1918, v1hich held tho.t the income tn.x of 1913 was valid o.s applied to net income derived from sales in forci~ commerce, tho court bad occo.sion to discuss the effect of tho constitutional prohibition against tD.Xing articles exported, and it referred to t;nd distinguished ccrtr..in of its former floc~sions on tho subject. It concluded that when the tt:..."C is .~ot laid on tho articles themselves Yrhilc in co ursa of ex.portc.tion, the true tost of its validity is \7hother it so directly and closely bears on tho :prbeees of exporting c.s to .be in substc.nco. ·o. tcx on tho oxportction. In tho present cir.curastr'.nccs it co.n probcbly fa.iriy be· sa.id 'th..;.t the tc.x on tho drafts, eltho~h they arc to be paid before tho actuc.l ococ.n voyngo begins, bears so directly :md closely on the process of exporting··~ to be in substtmce a tax on it.. Tho goods aro doubtless "in course of exportation", free tho tioc the first carrier receives thom. Tho so.tJC principle would seem to apply cs in tho c3.Sc of the trc.nsportation t<:!JC •. In Al'ticlc 31 of Regulations ,No. 42, rules for de .... tormining when proport~ cay be deemed to be in the course of exportntion ere lc.id dovm, end apparently tho present situation is vnthin their scope. It is accordingly hcl4 'that the stc.mp tn.x imposed by subdivision 6 o£ Schedule A ·Of Title VIII of the Act of October 3, 1917, docs not attach to drafts on domestic banks in connection with the shipL~nt of articles from the interior ""to tho so~bonrd, whc:rc such nrticlc.s ho.vo boon sold to the United States {'.gent of ~ foreign purchn.scr for export under circumstcnccs entitling the trnnsport~tion within tho· United St~tes to eXemption from·thc transportation tax. · Yours sinccroly, (Signed} Dr'.lliel C. Roper, OllJ Cocmissioncr • ..