(c) CIRCULATION OF INSOLVENT BANKS.

For exemption in case of insolvent banks, see section 3798.

SEC. 1902. RETURNS AND PAYMENT OF TAX.

(a) CIRCULATION OUTSTANDING.

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(1) TIME FOR MAKING RETURN.A true and complete return of the monthly amount of circulation as aforesaid for the previous six months shall be made and rendered in duplicate on the first day of December, and the first day of June, by each of such banks, associations, corporations, companies, or persons, with a declaration annexed thereto, under the oath of such person, or of the president or cashier of such bank, association, corporation, or company, in such form and manner as may be prescribed by the Commissioner, that the same contains a true and faithful statement of the amounts subject to tax, as aforesaid; and

(2) TO WHOM RETURN MADE. One copy shall be transmitted to the collector of the district in which any such bank, association, corporation, or company is situated, or in which such person has his place of business, and one copy to the Commissioner.

(3) CALCULATION AND TIME FOR PAYMENT OF TAX.-The taxes provided in section 1900 (a) shall be paid semi-annually, on the first day of January and the first day of July; but the same shall be calculated at the rate per month as prescribed by said section, so that the tax for six months shall not be less than the aggregate would be if such taxes were collected monthly.

(4) RETURN AND PAYMENT WHEN STATE BANK CONVERTED INTO NATIONAL BANK.-Whenever any State bank or banking association has been converted into a national banking association, and such national banking association has assumed the liabilities of such State bank or banking association, including the redemption of its bills, by any agreement or understanding whatever with the representatives of such State bank or banking association, such national banking association shall be held to make the required return and payment on the circulation outstanding, so long as such circulation shall exceed 5 per centum of the capital before such conversion of such State bank or banking association.

(b) CIRCULATION PAID OUT.-The amount of circulating notes referred to in section 1900 (b), and of the tax due thereon, shall be returned, and the tax paid at the same time, and in the same manner, and with like penalties for failure to return and pay the same, as provided by law for the return and payment of taxes on circulation imposed by subsection (a) of that section.

SEC. 1903. ESTIMATION OF OUTSTANDING CIRCULATION IN DEFAULT OF RETURN.

In default of the returns provided in section 1902, the amount of circulation and notes of persons, town, city, and municipal corporations, State banks, and State banking associations paid out, as aforesaid, shall be estimated by the Commissioner, upon the best information he can obtain.

SEC. 1904. PENALTY FOR REFUSAL OR NEGLECT TO MAKE RETURN OR PAYMENT.

For any refusal or neglect to make return and payment, any bank, association, corporation, company, or person in default as described in the preceding section shall pay a penalty of $200, besides the additional penalty and forfeitures provided in other cases.

SEC. 1905. DEFINITION OF BANK OR BANKER.

Every incorporated or other bank, and every person, firm, or company having a place of business where credits are opened by the deposit or collection of money or currency, subject to be paid or remitted upon draft, check, or order, or where money is advanced or loaned on stocks, bonds, bullion, bills of exchange, or promissory notes, or where stocks, bonds, bullion, bills of exchange, or promissory notes are received for discount or for sale, shall be regarded as a bank or as a banker.

SEC. 1906. APPLICATION OF CHAPTER TO NATIONAL BANKS.

The provisions of this chapter, relating to the tax on the circulation of banks, and to their returns, except as contained in sections 1900 (b) (2), 1901 (a) and (b), 1902 (a) (4), and such parts of sections 1902 (a) (1) and (2) and (b), 1903, and 1904 as relate to the tax of 10 per centum on certain notes, shall not apply to associations which are taxed as national banks.

[For tax on national bank circulation, see R. S. 5214-5218, as amended by acts of Mar. 3, 1883 (22 Stat. 488, § 1), and June 10, 1921 (42 Stat. 24, § 304), and the acts of Mar. 14, 1900 (31 Stat. 49, § 13), and Dec. 21, 1905 (34 Stat. 5, § 1; 12 U. S. C. 541-547).]

CHAPTER 14-COTTON FUTURES

SEC. 1920. TAX.

(a) RATE. Upon each contract of sale of any cotton for future delivery made at, on, or in any exchange, board of trade, or similar institution or place of business, there shall be levied a tax in the nature of an excise of 2 cents for each pound of the cotton involved in any such contract.

[For exemptions from the tax imposed by section 1920 (a), see sections 1922 (a), 1923 (a), and 1924 (a).]

(b) BY WHOM PAID.-The tax imposed by subsection (a) shall be paid by the seller of the cotton involved in the contract of sale.

(c) How PAID.-The tax imposed by subsection (a) shall be paid by means of stamps which shall be affixed to such contracts, or to the memoranda evidencing the same, and canceled in compliance with rules and regulations which shall be prescribed by the Secretary.1 (d) CROSS REFERENCE.

1

For authority of the Secretary to promulgate rules and regulations for the collection of the tax, see section 1928 (a).

SEC. 1921. EXEMPTION OF SPOT COTTON.

This chapter shall not be construed to impose a tax on any sale of spot cotton.

SEC. 1922. EXEMPTION OF BASIS 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 SECTION 1925 (a) AND REGULATIONS.— Conform to the requirements in section 1925 (a) of, and the rules and regulations made pursuant to, this chapter.

(2) SPECIFICATION OF GRADE, PRICE, DATES OF SALE AND SETTLEMENT.-Specify the basis grade for the cotton involved in the contract, which shall be one of the grades for which standards are established by the Secretary of Agriculture, except grades prohibited from being delivered on a contract made under this section by the fifth paragraph of this subsection, the price per pound at which the cotton of such basis grade is contracted to be bought or sold, the date when the purchase or sale was made, and the month or months in which the contract is to be fulfilled or settled: Provided, That middling shall be deemed the basis grade incorporated into the contract if no other basis grade be specified either in the contract or in the memorandum evidencing the same.

(3) PROVISION FOR DELIVERY OF STANDARD GRADES ONLY.Provide that the cotton dealt with therein or delivered thereunder shall be of or within the grades for which standards are established by the Secretary of Agriculture except grades prohibited from

1 The words "of the Treasury" are omitted.

being delivered on a contract made under this section by the fifth paragraph of this subsection and no other grade or grades.

(4) PROVISION FOR SETTLEMENT ON BASIS OF ACTUAL COMMERCIAL DIFFERENCES.-Provide that in case cotton of grade other than the basis grade be tendered or delivered in settlement of such contract, the differences above or below the contract price which the receiver shall pay for such grades other than the basis grade shall be the actual commercial differences, determined as hereinafter provided.

(5) PROHIBITION OF DELIVERY OF INFERIOR COTTON.-Provide that cotton that, because of the presence of extraneous matter of any character, or irregularities or defects, is reduced in value below that of low middling, or cotton that is below the grade of low middling, or, if tinged, cotton that is below the grade of strict middling, or, if yellow stained, cotton that is below the grade of good middling, the grades mentioned being of the official cotton standards of the United States, or cotton that is less than seveneighths of an inch in length of staple, or cotton of perished staple, or of immature staple, or cotton that is "gin cut" or reginned, or cotton that is "repacked" or "false packed" or "mixed packed" or "water packed," shall not be delivered on, under, or in settlement of such contract.

(6) PROVISIONS FOR TENDER IN FULL, NOTICE OF DELIVERY DATE, AND CERTIFICATE of grade.-Provide that all tenders of cotton under such contract shall be the full number of bales involved therein, except that such variations of the number of bales may be permitted as is necessary to bring the total weight of the cotton tendered within the provisions of the contract as to weight; that, on the fifth business day prior to delivery, the person making the tender shall give to the person receiving the same written notice of the date of delivery, and that, on or prior to the date so fixed for delivery, and in advance of final settlement of the contract, the person making the tender shall furnish to the person receiving the same a written notice or certificate stating the grade of each individual bale to be delivered and, by means of marks or numbers, identifying each bale with its grade.

(7) PROVISION FOR TENDER AND SETTLEMENT IN ACCORDANCE WITH GOVERNMENT CLASSIFICATION.-Provide that all tenders of cotton and settlements therefor under such contract shall be in accordance with the classification thereof made under the regulations of the Secretary of Agriculture by such officer or officers of the Government as shall be designated for the purpose, and the costs of such classification shall be fixed, assessed, collected, and paid as provided in such regulations. All moneys collected as such costs may be used as a revolving fund for carrying out the purposes of this paragraph. The Secretary of Agriculture is authorized to prescribe regulations for carrying out the purposes of this paragraph, and the certificates of the officers of the Government as to the classification of any cotton for the purposes of this paragraph shall be accepted in the courts of the United States in all suits between the parties to such contract, or their privies, as prima facie evidence of the true classification of the cotton involved.

(b) INCORPORATION OF CONDITIONS IN CONTRACTS.-The provisions of the third, fourth, fifth, sixth, and seventh paragraphs of subsection (a) shall be deemed fully incorporated into any such contract if there be written or printed thereon, or on the memoranda evidencing the same, at or prior to the time the same is signed, the phrase "subject to Internal Revenue Code, section 1922."

(c) DELIVERY ALLOWANCES.-For the purposes of this section, the differences above or below the contract price which the receiver shall pay for cotton of grades above or below the basis grade in the settlement of a contract of sale for the future delivery of cotton shall be determined by the actual commercial differences in value thereof upon the sixth business day prior to the day fixed, in accordance with the sixth paragraph of subsection (a), for the delivery of cotton on the contract, established by the sale of spot cotton in the spot markets of not less than five places designated for the purpose from time to time by the Secretary of Agriculture, as such values were established by the sales of spot cotton, in such designated five or more markets: Provided, That for the purpose of this subsection such values in the said spot markets be based upon the standards for grades of cotton established by the Secretary of Agriculture: And provided further, That whenever the value of one grade is to be determined from the sale or sales of spot cotton of another grade or grades, such value shall be fixed in accordance with rules and regulations which shall be prescribed for the purpose by the Secretary of Agriculture. SEC. 1923. EXEMPTION OF TENDERED 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

(1) COMPLIANCE WITH SECTION 1922. Comply with all the terms and conditions of section 1922 not inconsistent with this section; and

(2) PROVISION FOR CONTINGENT SPECIFIC PERFORMANCE.Provide that, in case cotton of grade or grades other than the basis grade specified in the contract shall be tendered in performance of the contract, the parties to such contract may agree, at the time of the tender, as to the price of the grade or grades so tendered, and that if they shall not then agree as to such price, then, and in that event, the buyer of said contract shall have the right to demand the specific fulfillment of such contract by the actual delivery of cotton of the basis grade named therein and at the price specified for such basis grade in said contract.

(b) INCORPORATION OF CONDITIONS IN CONTRACT.-Contracts made in compliance with this section shall be known as "Section 1923 Contracts." The provisions of this section shall be deemed fully incorporated into any such contract if there be written or printed thereon, or on the memorandum evidencing the same, at or prior to the time the same is signed, the phrase "Subject to Internal Revenue Code, section 1923."

(c) APPLICATION OF SECTION.-Nothing in this section shall be so construed as to relieve from the tax levied by section 1920 (a) of this

1 The word "of" is omitted.