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chapter any contract in which, or in the settlement of or in respect to which, any device or arrangement whatever is resorted to, or any agreement is made, for the determination or adjustment of the price of the grade or grades tendered other than the basis grade specified in the contract by any "fixed difference" system, or by arbitration, or by any other method not provided for by this chapter.
SEC. 1924. EXEMPTION OF SPECIFIC GRADE CONTRACTS.
(a) CONDITIONS.-No tax shall be levied under this chapter on any contract of sale mentioned in section 1920 (a) if the contract comply with each of the following conditions:
(1) CONFORMITY WITH RULES AND REGULATIONS.-Conform to the rules and regulations made pursuant to this chapter. (2) SPECIFICATION OF GRADE, PRICE, DATES OF DELIVERY. Specify the grade, type, sample, or description of the cotton involved in the contract, the price per pound at which such cotton is contracted to be bought or sold, the date of the purchase or sale, and the time when shipment or delivery of such cotton is to be made.
(3) PROHIBITION OF DELIVERY OF OTHER THAN SPECIFIED GRADE.-Provide that cotton of or within the grade or of the type, or according to the sample or description, specified in the contract shall be delivered thereunder, and that no cotton which does not conform to the type, sample, or description, or which is not of or within the grade specified in the contract shall be tendered or delivered thereunder.
(4) PROVISION FOR SPECIFIC PERFORMANCE.-Provide that the delivery of cotton under the contract shall not be effected by means of "set-off" or "ring" settlement, but only by the actual transfer of the specified cotton mentioned in the contract.
(b) INCORPORATION OF CONDITIONS IN CONTRACT.-The provisions of the first, third, and fourth paragraphs of subsection (a) shall be deemed fully incorporated into any such contract if there be written or printed thereon, or on the document or memorandum evidencing the same, at or prior to the time the same is entered into, the words "subject to Internal Revenue Code, section 1924."
(c) APPLICATION OF SECTION.-This section shall not be construed to apply to any contract of sale made in compliance with section 1922 or section 1923.
SEC. 1925. FORM AND VALIDITY OF CONTRACTS.
(a) FORM. Each contract of sale of cotton for future delivery mentioned in section 1920 (a) of this chapter shall be in writing plainly stating, or evidenced by written memorandum showing, the terms of such contract, including the quantity of the cotton involved and the names and addresses of the seller and buyer in such contract, and shall be signed by the party to be charged, or by his agent in his behalf. If the contract or memorandum specify in bales the quantity of the cotton involved, without giving the weight, each bale shall, for the purposes of this chapter, be deemed to weigh five hundred pounds.
(b) VALIDITY.No contract of sale of cotton for future delivery mentioned in section 1920 (a) of this chapter, which does not con
form to the requirements of subsection (a) and has not the necessary stamps affixed thereto as required by section 1920 (c), shall be enforceable in any court of the United States by, or on behalf of, any party to such contract or his privies.
SEC. 1926. COTTON STANDARDS.
(a) SOURCE AND DESCRIPTION.-Subject to the provisions of section 6 of the act of March 4, 1923, 42 Stat. 1518 (U. S. C., Title 7, § 56) the Secretary of Agriculture is authorized, from time to time, to establish and promulgate standards of cotton by which its quality or value may be judged or determined, including its grade, length of staple, strength of staple, color, and such other qualities, properties, and conditions as may be standardized in practical form, which, for the purposes of this chapter, shall be known as the "Official cotton standards of the United States": Provided, 'That any standard of any cotton established and promulgated under this chapter by the Secretary of Agriculture shall not be changed or replaced within a period less than one year from and after the date of the promulgation thereof by the Secretary of Agriculture: Provided further, That no change or replacement of any standard of any cotton established and promulgated under this chapter by the Secretary of Agriculture shall become effective until after one year's public notice thereof, which notice shall specify the date when same is to become effective.
(b) PRACTICAL FORMS.-
(1) PREPARATION, CERTIFICATION, AND DISTRIBUTION.—The Secretary of Agriculture is authorized and directed to prepare practical forms of the official cotton standards which shall be established by him, and to furnish such practical forms from time to time, upon request, to any person, the cost thereof, as determined by the Secretary of Agriculture, to be paid by the person requesting the same, and to certify such practical forms under the seal of the Department of Agriculture and under the signature of the said Secretary, thereto affixed by himself or by some official or employee of the Department of Agriculture thereunto duly authorized by the said Secretary.
(2) DISPOSITION OF RECEIPTS FROM SALES.-All sums collected by the Secretary of Agriculture for furnishing practical forms under paragraph (1) shall be deposited and covered into the Treasury as miscellaneous receipts.
SEC. 1927. BONA FIDE SPOT MARKETS.
(a) DEFINITION.-For the purposes of this chapter, the only markets which shall be considered bona fide spot markets shall be those which the Secretary of Agriculture shall, from time to time, after investigation, determine and designate to be such, and of which he shall give public notice.
(b) DETERMINATION.-In determining, pursuant to the provisions of this chapter, what markets are bona fide spot markets, the Secretary of Agriculture is directed to consider only markets in which spot cotton is sold in such volume and under such conditions as customarily to reflect accurately the value of middling cotton and the differences between the prices or values of middling cotton and of other grades of cotton for which standards shall have been established by
the Secretary of Agriculture: Provided, That if there be not sufficient places, in the markets of which are made bona fide sales of spot cotton of grades for which standards are established by the Secretary of Agriculture, to enable him to designate at least five spot markets in accordance with section 1922 (c) of this chapter, he shall, from data as to spot sales collected by him, make rules and regulations for determining the actual commercial differences in the value of spot cotton of the grades established by him as reflected by bona fide sales of spot cotton, of the same or different grades, in the markets selected and designated by him, from time to time, for that purpose, and in that event differences in value of cotton of various grades involved in contracts made pursuant to section 1922 (a) and (b) shall be determined in compliance with such rules and regulations: Provided further, That it shall be the duty of any person engaged in the business of dealing in cotton, when requested by the Secretary of Agriculture or any agent acting under his instructions, to answer correctly to the best of his knowledge, under oath or otherwise, all questions touching his knowledge of the number of bales, the classification, the price or bona fide price offered, and other terms of purchase or sale, of any cotton involved in any transaction participated in by him, or to produce all books, letters, papers, or documents in his possession or under his control relating to such matter.
SEC. 1928. COLLECTION AND ENFORCEMENT.
(a) RULES AND REGULATIONS.-The Secretary of the Treasury is authorized to make and promulgate such rules and regulations as he may deem necessary to collect the tax imposed by this chapter and otherwise to enforce its provisions.
(b) RECORDS AND RETURNS. Further to effect the purpose of subsection (a), the Secretary shall require all persons coming within its provisions to keep such records and statements of account, and may require such persons to make such returns verified under oath or otherwise, as will fully and correctly disclose all transactions mentioned in section 1920 (a) of this chapter, including the making, execution, settlement, and fulfillment thereof; he may require all persons who act in the capacity of a clearing house, clearing association, or similar institution for the purpose of clearing, settling, or adjusting transactions mentioned in section 1920 (a) of this chapter to keep such records and to make such returns as will fully and correctly disclose all facts in their possession relating to such transactions; and (c) EMPLOYMENT OF AGENTS.-He may appoint agents to conduct the inspection necessary to collect said tax and otherwise to enforce this chapter and all rules and regulations made by him in pursuance hereof, and may fix the compensation of such agents.
SEC. 1929. PENALTIES.
(a) IN GENERAL.
(1) NONPAYMENT OR EVASION OF TAX.-Any person liable to the payment of any tax imposed by this chapter who fails to pay, or evades, or attempts to evade the payment of such tax; and
(2) OTHER VIOLATIONS. Any person who otherwise violates any provision of this chapter, or any rule or regulation made in pursuance hereof, upon conviction thereof, shall be fined not less
than $100 nor more than $20,000, in the discretion of the court; and, in case of natural persons, may, in addition, be punished by imprisonment for not less than 60 days nor more than three years, in the discretion of the court.
(b) ADDITIONAL.-In addition to the foregoing punishment there shall be imposed, on account of each violation of this chapter, a penalty of $2,000, to be recovered in an action founded on this chapter in the name of the United States as plaintiff, and when so recovered one-half of said amount shall be paid over to the person giving the information upon which such recovery was based. It shall be the duty of United States attorneys, to whom satisfactory evidence of violations of this chapter is furnished, to institute and prosecute actions for the recovery of the penalties prescribed by this subsection.
(c) WITHHOLDING INFORMATION.-Any person engaged in the business of dealing in cotton who shall, within a reasonable time prescribed by the Secretary of Agriculture or any agent acting under his instructions, willfully fail or refuse to answer questions or to produce books, letters, papers, or documents, as required under section 1927 (b), or who shall willfully give any answer that is false or misleading, shall be guilty of a misdemeanor, and upon conviction thereof shall be punished by a fine not exceeding $500.
SEC. 1930. IMMUNITY OF WITNESSES.
No person whose evidence is deemed material by the officer prosecuting on behalf of the United States in any case brought under any provision of this chapter shall withhold his testimony because of complicity by him in any violation of this chapter or of any regulation made pursuant to this chapter, but any such person called by such officer who testifies in such case shall be exempt from prosecution for any offense to which his testimony relates.
SEC. 1931. DEFINITIONS.
(a) CONTRACT OF SALE. For the purposes of this chapter, the term "contract of sale" shall be held to include sales, agreements of sale, and agreements to sell.
(b) PERSON.-The word "person," wherever used in this chapter, shall be construed to import the plural or singular, as the case demands, and shall include individuals, associations, partnerships, and corporations.
SEC. 1932. LIABILITY OF PRINCIPAL FOR ACTS OF AGENT.
When construing and enforcing the provisions of this chapter, the act, omission, or failure of any official, agent, or other person acting for or employed by any association, partnership, or corporation within the scope of his employment or office shall, in every case, also be deemed the act, omission, or failure of such association, partnership, or corporation, as well as that of the person.
SEC. 1933. REPORTS OF SECRETARY OF AGRICULTURE.
The Secretary of Agriculture is directed to publish from time to time the results of investigations made in pursuance of this chapter.
SEC. 1934. OTHER LAWS APPLICABLE.
The provisions of the internal revenue laws of the United States, so far as applicable, including section 3615 of this title, shall be extended, and made to apply, to this chapter.
SEC. 1935. OPERATION OF STATE LAWS.
The payment of any tax levied by this chapter shall not exempt any person from any penalty or punishment now or hereafter provided by the laws of any State for entering into contracts of sale of cotton for future delivery, nor shall the payment of any tax imposed by this chapter be held to prohibit any State or municipality from imposing a tax on the same transaction.