Saturday, April 30, 2011

Bank Check Tax Paid with 4 R162 Gray Half Cent Battleships

Dave Thompson has sent a recent barrage of interesting material to post on the site.  The most interesting is a check made out to a prominent maker of proprietary medicines, Gilbert Brothers & Company, based in Baltimore. 

Check front from November 22, 1899. 

The front of the check is unremarkable, though there might be an interesting story if I could make out the signature.  Whatever the case, the reverse side of the check is the special part:

R162 block of 4 to make up 2 cent check tax

Bob Hohertz, a co-blogger at this site, is an expert on checks of this period and beyond.  I would want to know what he could tell us about how scarce this usage might be.  Any help Bob?


Gilbert Brothers advertisement

At the time of the cancel above, the firm was located at 9 North Howard Street in Baltimore before moving to Lombard Street in 1913, as in the advertisement immediately above.  The company made a line of products named for someone named Yager, including Yager's Sarsaparilla, which was one it most popular products. 

Perhaps Malcolm might uncover an interesting story about this firm in a future On Beyond Holcombe post.

Friday, April 29, 2011

High Value Stocks with the Portrait Issues The $500 Alexander Hamilton Issue

We continue our review of high value stocks by considering ones bearing the $500 Alexander Hamilton Portrait Issue, Scott R180. I've always considered it to be the most attractive of the three portrait issues outshining the other two issues with its brillant red color.

Although I have a couple of R180 on-document usages, none are on stocks, so my thanks go to fellow collectors Bob Patetta, Mike Mahler, and Tim Kohler, each of whom have graciously provided material for prior blogs, for also providing the three R180 stock certificates shown today.

We are conducting a census of on-document usages for all three Portrait Issues, Scott R179, R180, and R181 so if readers either have, or know of, other examples of the $500 issue on-document, please contact us at 1898revenues@gmail.com.

Yesterday's blog about usages of the $100 issue brought news of three additional examples and, as all three of today's stocks also bear $100 stamps, the total number of stocks bearing $100 John Marshall stamps now stands at nine.


$1,690,650 Choctaw, Oklahoma, and Gulf Railroad Stock Certificate
Issued through Girard Trust, Philadelphia, Pennsylvania
July 5, 1900
Bob Patetta scan


Samuel Dickson, William Jenks, George Colket, Effingham Morris, and Charles Ingersoll, Voting Trustees are listed jointly as owners. The certificate was cancelled when the company came under the control of the Chicago, Rock Island, and Pacific Railroad in May 1902.




The $845.35 tax on the original sale was paid with one $500 Portrait Issue, three $100, one $30, one $10, and one $5 Commerce issues plus one 25-cent and one 10-cent Battleship stamps. An additional 25-cent Battleship pays the Power of Attorney tax for the September 25, 1900 transfer to Charles Hampreys. If that transfer did occur, the tax may have been paid, albeit improperly, via a separate memo or on the books of the company.


Detail showing July 5, 1900 pencancel


Mike Mahler provided a similar Choctaw, Oklahoma and Gulf certificate. This one curiously is dated May 6, 1902, the very day the CO &G was brought under the control of the Chicago, Rock Island and Pacific Railroad and just two days prior to its cancellation. The Watonga (Oklahoma) Construction Company is listed as the owner. There must be a good story here, but I'm not finding it. Anyone knowing the history of the CO & G is invited to contact us at 1898revenues@gmail.com


$1,027,500 Choctaw, Oklahoma and Gulf Railroad Stock Certificate
Issued through Girard Trust Company, Philadelphia, Pennsylvania
May 6, 1902
Mike Mahler scan



Mike Mahler scan


In this instance the original issue tax of $513.75 was paid, at left, with one $500 Portrait, one $10 Commerce, one $2 and one $1 gray overprinted Commerce, and three 25-cent Battleship stamps. The transfer tax of $205.50 was paid on the right side with two $100 Portrait, one $5 Commerce, and one 50-cent Battleship stamps. This certificate, too, was transferred to Charles E. Hamphreys via a Power of Attorney transaction, but the 25-cent tax POA tax appears not to have been paid.

The stamps paying the original issue tax bear a double ring C. O. & G. R. Y. Co. circular datestamp cancel of May 6, 1902. The stamps paying the transfer tax appear to also be dated May 6, 1902 handcancelled by W.(atonga) C.(onstruction) Co.


Closeup view of stamps
Mike Mahler scan


Tim Kohler's Chicago and Eastern Illinois Railroad stock is the only one clearly showing all the proper taxes were paid.



$1,237,000 Chicago and Eastern Illinois Railroad Stock Certificate
Issued through the Metropolitan Trust Company, New York, NY
February 16, 1900
Tim Kohler scan


Reverse showing all three taxes were paid
Tim Kohler scan


The certificate was issued jointly to the President and Treasurer of the C& EI Railroad with the original issue tax of $618.50 paid with one $500 and one $100 Portrait issues, one $10, one $5, and one $3 Commerce, plus a 50-cent Battleship stamp.

As stated in the transfer form on the reverse only 10,000 shares ($1,000,000) of the original issue was transferred to the Flower & Co. with the remaining 237 shares to be otherwise reissued, so the transfer tax was just $200, paid by two $100 Portrait issues. The transfer is dated December 15, 1900, but the two $100 Portrait stamps paying the tax are dated more than a month later, January 18, 1901.

The stamps paying the original tax are pen cancelled C & E I Rd. 2/16/00. The two $100 stamps paying the resale tax are pencancelled C & E I Rd. / F & I Co. with the date handstamped below.

The 25-cent Battleship paying the Power of Attorney tax is the only issue to bear a handstamp: C. & E.I.R.R. CO./DEC 15/1900, obviously a variable date boxed dater cancel. It is tied to the document so it wasn't precancelled, but clearly must have been applied by some functionary other than those applying the other stamps.

Wednesday, April 27, 2011

High Value Stocks with the Portrait Issues The $100 John Marshall Issue

To date only one 1898Revenues blog has referenced the Portrait Issues of 1899. It featured a $125,000 stock certificate for The Baldwin (Piano) Company submitted by Tim Kohler. It's such a great certificate with examples of the $5 and $10 gray overprinted Commerce issues of 1900 in addition to the $100 John Marshall Portrait stamp, we're picturing it again below to introduce the subject of high value stocks. For more details about it, read the original August 17, 2010 blog.

$125,000 Baldwin Company Stock Certificate #1
Issued December 31, 1901
Cincinnati, Ohio
Tim Kohler scan


As their availability at the beginning of the 1898 tax era wasn't deemed crucial, and usage was projected to be limited, the bi-colored $100, $500, and $1,000 Portraits weren't introduced until 1899 when the print demands on the BEP were diminished from the initial requirements placed upon them by passage of the War Revenue Law.

Most were used on high value stocks, but they also can be found on other highly taxed documents like conveyances of valuable property and mortgages underlying bond offerings. As we suspect extant examples are rather scarce we plan to conduct a census of on-document usages as we did for on-document usages of the 1/2 cent Orange documentary stamp.

If you possess any on-document usages of R179, R180, or R181, the $100, $500, or $1,000 Portrait Issues please send scans of the entire documents to 1898revenues@gmail.com.


$500,000 Schuylkill and Juniata Railroad Company Stock Certificate
Original Issue June 1, 1900
Philadelphia, PA


Properly taxed $250 with two $100 Portrait issues and a single R178 $50 Commerce Issue, the stock was issued to The Pennsylvania Railroad Company (PRR). Actually, The Schuylkill and Juniata Railroad Company was formed June 1, 1900 from the consolidation of five subsidiaries of the Pennsylvania Railroad. The predecessor component railroads were the Pennsylvania Schuylkill Valley; the Nescopec; North and West Branch; the Sunbury, Hazleton and Wilkes Barre; and the Sunbury and Lewistown. These lines all served the Coal Region of northeastern Pennsylvania. The company was absorbed into the PRR in 1902.


Detail showing straightline cancel:
Schuylkill & Juniata Railroad
June 1, 1900

$364,000 James S. Kirk Company Stock Certificate
Original Issue March 1, 1900
Chicago, Illinois


Properly taxed $182 with a single $100 John Marshall Portrait stamp, one $50, three $10, and two $1 Commerce stamps, the certificate was issued to James B. Kirk, Evanston, presumably a relative of the founder James S. Kirk. A third James, James A. Kirk, a son of James S. was president of the company at this time. Although the firm was located in Chicago, it was incorporated in New Jersey and this stock was issued through the firm's transfer agent, the Corportation Trust Company of New Jersey.

Originally founded in Utica, New York in 1839, James S. Kirk moved his soap manufacturing company to Chicago in 1859 where it competed with Proctor and Gamble who would eventually buy out Kirk's ancestors in the 1930s. The company however is again in business as Kirk's Natural Products Corporation.

I've seen period trade cards for Kirk's Jap Rose Soap. The firm also produced some perfumery products. Bob Mustacich's Battleship Desk Reference indicates they used the 3/8, 5/8, 1 1/4, 2 1/2, 3 3/4, and 5 cent proprietary issues. Perhaps we'll see more about James S. Kirk & Company in the future. For now we can enjoy the documentary stamps on its stock.


Cancellation Detail from James S. Kirk Stock:
Corporation Trust Co.
APR/27/1900
of N. J.


Bob Patetta again has provided a most interesting usage example for the $100 Portrait Issue.


$6,999,200 Saint Paul and Northern Pacific Stock Certificate
Original Issue May 13, 1897 (pre-tax era)
Brainerd then St. Paul, Minnesota
Bob Patetta scan


Had the original issue taken place during the War Tax era the tax would have been a whopping $3,499.60! Even the .02/$100 tax on its transfer, which did occur during the War Tax period, amounted to $1,399.84. The colorful payment, shown below consists of 13 $100 R179 John Marshall Portrait Issues including two full strips of four of that issue. (We discuss how these stamps were issued in a future blog). The payment also includes one R178 $50 Commerce; four R188 $10 gray overprinted Commerce; one R175 $5 Commerce; four $1 gray overprinted Commerce, plus the following battleship stamps: one 1-cent, four 2-cent, one 25-cent, and one 50-cent.

The 13 copies of the $100 John Marshall stamp are stunning, but wouldn't a $1,000 James Madison in place of 10 of them have been even moreso!


NOR. PAC.
1901
Railway CO.
Bob Patetta scan


Again, we are conducting a on-document usage census of ALL three Portrait stamps, the $100, $500, and $1,000 issues. If you have other on-documnet examples please send scans of the entire document to 1898revenues@gmail.com

Imprint Plus Adhesive - Part 1

Frank Sente and I have been discussing the presence of adhesive stamps on checks or drafts already containing an imprinted revenue. Frank maintains that any check endorsed over to a third party before being cashed was subject to a second taxation at that time. This is based on an interpretation of the law, which reads, "Bank check, draft, or certificate of deposit not drawing interest, or order for the payment of any sum of money, drawn upon or issued by any bank, trust company, or any person or persons, companies, or corporations at sight or on demand, two cents," to require additional taxation each time there is such an order pertaining to a given document. This is plausible, but I have not been able to locate any decision or ruling by the IRS to that effect, while one would think there would be enough confusion on this issue to warrant one.

If any action other than simply cashing a check at the appropriate bank technically required taxation at the point of transfer, it stands to reason that either the requirement was being ignored in most instances, or the public simply did not know about it. However, we do find occasional checks with both an imprinted and an adhesive revenue, and it might be instructive to look at some of these.

The first example is a textbook case. Frank recently traded it to me, but it is best described in his words. "Here is a third party RN-X7 check with an R 164 added for the third party transfer. I call it 'Mrs. Cowles Goes to Washington.'




"Apparently Cowles Brothers writes a check dated September 14, 1899 to Mrs. C.D. Cowles so she has money for an excursion to Washington D.C.

"When in Washington on September 29 Mrs. Cowles presents the check for payment at the West End National Bank.



"The Bank required her to endorse the check so that it becomes payable to them (gives them recourse if a problem arises.) That technical third party transfer of funds via the check makes it taxable once again. Hence the added R 164.

"I'm sure the West End Bank made Mrs. Cowles pay the two cents.



"NOTE: The date info in the bank's handstamp cancel is ALL inverted so the circular wording 'WEST END NAT'L BANK/Washington D.C.' appears inverted. It's a bit blurred, but readable." (Scan enhanced to bring out the cancel - with a rather garish result.)

Frank goes on to mention that the Cowles Brothers firm was an insurance company (agent or broker?) in Statesville, NC.

*****

Not all additional adhesive stamps appear to have been applied for such a clear reason. For instance, the check below was cashed at the National Bank of Commerce in Kansas City rather than the State Bank of Narka, and it was endorsed by J.C. Dale at the time it was cashed. However, the additional stamp bears the initials of the writer, H.M. Hatch, rather than those of J.C. Dale. First, does the fact that it was cashed at a bank other than the one in which the writer had an account cause it to be considered a new "order to pay" and require an additional stamp? Second, it appears that Mr. Hatch simply did not recognize the imprint as paying the tax, so he added the adhesive when he wrote the check. Perhaps this is a case of two wrongs making a right? Or is it as it appears, an unnecessary payment?



The check below is similar. It was written by W.H. Wallace to R.F. Hennig, who then endorsed it over to D. Deutsch, who cashed it at the Sullivan County National Bank in Liberty, NY. It appears that it might have required two additional two-cent stamps, but it only has one, and that one is initialed by Mr. Wallace rather than either of the endorsers or the Sullivan County National Bank.



Frank has a theory which would account for the stamp being added by Mr. Wallace. "Perhaps from prior contact Wallace knew that Henning didn't have a bank account and thus would be unable to personally cash the check unless he presented it to the National Union Bank in Monticello. The check was cashed by Deutsch in Liberty, NY, fifteen miles away. If Hennig perhaps also lived in Liberty, could not have Henning sent him the check (rather than risk cash) by mail and, knowing that Henning would have to make it payable to a third party to cash it, have added, in advance, as a courtesy, an additional stamp to cover that situation? Considering that it appears to indeed by a third party check makes that scenario all the more plausible, at least to me."
An equally plausible scenario might be Henning, not used to having imprinted checks as early as October of 1898, simply put a stamp on it out of habit.

This third example was endorsed by the payee, James Glen, to be paid through the Continental National Bank, Chicago Clearing House on December 7, 1898, but the additional stamp was applied by the writer, David Baker, on December 3. Not only that, but the check specifies that it is payable through the Chicago Clearing House, so it isn't at all clear that there was a second "order to pay" involved. The additional stamp was likely added in error.



At the other end of the spectrum we find the check below with an endorsement rather like that on the Cowles check, but no additional stamp. It was written on Nelson L. Robinson's account in the National City Bank, payable to T. Milton Taylor, Esq. Taylor apparently cashed it at the First National Bank, giving it a specific endorsement, "Pay to the order of First National Bank." There is no extra stamp to pay a tax on this order to pay.

There is one difference between the Cowles check and any of these others. The endorsement on the Cowles check was specifically guaranteed by the bank. Could that have caused it to be a taxable event in some way that does not apply to these other third party checks?



In a similar instance, Joseph Shaw wrote a check to W.S. Mead, who then endorsed it over to Studebaker Brothers. Admittedly, it was not endorsed in favor of a bank, so perhaps nobody thought about any additional tax. And the endorsement was not guaranteed by a bank.



I have far more imprinted checks involving an endorsement to a third party in my collection which do not bear an additional stamp than ones which do. In several subsequent posts I'll show a few more with and without in the hope they will shed some light on the matter.

It is not at all clear that the simple act of cashing a check at a bank other than the one on which it was drawn created a taxable event. An endorsement such as Mrs. Cowles made to a particular bank, who then guaranteed it, may have done that, but I would still like to see an IRS opinion on the subject. How could it have been so clear at the time and so puzzling now?

To be continued.

Tuesday, April 26, 2011

On Beyond Holcombe: T. Sisson & Company, Wholesaler and Retailer



Editors Note: Malcolm A. Goldstein is a new contributing blogger for 1898 Revenues. This post is part of a continuing column on the companies that used proprietary battleships.



T. Sisson & Co was a prominent wholesale and retail establishment in Hartford, CT for a century. It existed as a variety of partnerships until 1874, when it became known by that name, and it incorporated in 1907 as Sisson Drug Co. Thomas Sisson began work as a clerk for the predecessor firm of Lee & Butler in 1843 at age fifteen, became a partner in that firm in 1858, and maintained his establishment in the same Hartford location for sixty-four years until his death in 1907. A canny businessman, he served as a member of the Board of Directors of the First National Bank in Hartford as well as the Connecticut Mutual Life Insurance Co. He traveled in the highest circles of Hartford society, for his son-law, also raised in Hartford, later bragged of being a friend and neighbor of Mark Twain, then a prominent resident of Hartford. The firm was the proprietor of Hartford Smelling Salts and the distributor of Griswold’s Family Salve, a concoction originated by Chauncey G. Griswold, another pharmacist and physician in Hartford whose recipe was sold to Sisson in 1892 after Griswold’s death by Griswold’s son-in-law.




Every story about patent medicine contains the obligatory story of the lone genius sweating over a hot fire in quest of the perfect formula, while his ceaseless endeavors potentially threaten the economic stability and well-being of his family. In this case it was Griswold, originally a schoolteacher by training, not Sisson, who struggled to perfect the blend of secret, exotic ingredients for the Family Salve and whose tribulations were later memorialized by his grandson (recounted on a local museum’s website). While the American Medical Association never denounced this compound, perhaps because it was applied externally, in 1934 the Food and Drug Administration seized a lot of Griswold’s Family Salve as misbranded and asserting fraudulent claims. Navigating this setback, Sisson Drug Co. apparently continued to market the salve until 1955, when a principal ingredient, oleate of lead, was determined to be a potential toxin. Despite its hidden danger, Griswold’s Family Salve was a popularly marketed salve for about seventy five years. Even now requests appear on the Internet for its formula, which many fondly recall was greatly helpful in removing splinters. One inquirer claimed to still have a stick handy for use as recently as 1998. Sisson Drug Co itself ultimately evolved into the Hartford Wholesale Drug Co. sometime in the latter part of the Twentieth Century.



One other mention of the T. Sisson & Co. is noteworthy as an illustration of the infighting that existed in the drug industry in the Spanish-American War era. In 1901, the company was named one of many defendants in a lawsuit brought by a Brookline, MA retail druggist asserting that it participated in a conspiracy to block plaintiff retailer from purchasing pharmaceutical goods unless it adhered to rules and regulations essentially dictating plaintiff retailer’s resale price. Price fixing and competitive edge were on-going subjects of concern, discussion and litigation in an era which was just beginning to grapple with the implications of trusts and monopolies. The contemporary news reports discuss only a pre¬liminary decision which actually favored the retailer. The case then disappears from the records. Whether it was later settled by an unreported agreement made out of court (as most law cases ultimately are), or whether it dragged on indefinitely while the retailer’s finances declined, the only known certainty is the challenging retail firm went bust in 1904! One way or the other, price control seems ultimately to have won out in this instance.


Monday, April 25, 2011

Cancel for April 25: E. R. Fay & Sons

E. R. FAY & SONS,
APR
25
1900
AUBURN, N. Y.


E. R. Fay & Sons ran a bank, safe deposit, and investment business in Auburn, New York. 

Sunday, April 24, 2011

On Beyond Holcombe: The Cheney Medicine Company

Editors Note: Malcolm A. Goldstein is a new contributing blogger for 1898 Revenues. This post is part of a continuing column on the companies that used proprietary battleships.  


Advert from Cosmopolitan Magazine


Frank J. Cheney’s usual ad for his Hall’s Catarrh Cure was a sworn affidavit, dated 1886, promising to pay $100 to any person whose catarrh wasn’t cured by his product. Cheney’s Toledo, Ohio manufacturing establishment, Frank J. Cheney & Co., operating as the Cheney Medicine Company by the time of the Spanish-American War, is identified with a variety of C.M. Co. hand stamped cancels. His medicine was a perennial best seller. Over time, Cheney’s affidavit, or a similar promise, appeared in a wide variety of publications in fields ranging from the Public School Journal, through American Kitchen Magazine, the Bee Keeper’s Journal, the North American Horticulturist, the Confederate Veteran, the trade magazines of all the railroad unions, to St. Andrew’s Cross (devoted to “the spread of Christ’s kingdom among young men,”) and The Menorah, the newsletter of the Jewish Chautauqua Society. Its popularity is attested by the regularity with which philatelists see the battleship cancels, and the frequency with which bottle collectors are offered the vast number of surviving empties. Bottle collectors have often told Cheney’s story: philatelists have not.



Like all proprietary medicine makers, Cheney regarded his formula as secret, or “proprietary.” Yet as early as 1890, in a book entitled Secret Nostrums And Systems of Medicine, a physician named Charles W. Oleson of Chicago printed an analysis of the concoction done by Frederick Stearns & Co of Detroit, another drug manufacturer:

Gentian root in coarse powder .............................................. 1 1/4 oz.
Bitter orange peel in coarse powder...................................... 5 dr.
Cardamom seeds in coarse powder....................................... 100 gr.
Potassium Iodide................................................................... 1 oz.
Dilute Alcohol....................................................................... sufficient.

together with the directions for mixing them:

Macerate the crude drugs in 12 ounces of dilute alcohol for 48 hours; then transfer to a percolator and allow to percolate slowly; when the liquid has ceased to percolate, pass enough menstruum through the percolator to make the finished product measure 16 ounces. In this dissolve the potassium iodide.

Dr. A. Dale Covey of Detroit repeated the same formula, also quoting Stearns as the source of the analysis, in his 1903 book, Secrets of Specialists, published by the Physicians Supply Co. of Detroit. While both Frederick Stearns & Co and Physicians Supply Co paid the Spanish-American War tax on their products using distinctive battleship cancels - and themselves are subject to scrutiny in a future columns - it is enough to say now, that the authors of these books believed they were contributing to the general welfare by publishing their versions of Cheney’s ingredients. Although there is a suggestion that the publication of the formula is meant to “enlighten” in the preface to Oleson’s compilation, the wording does not make it entirely clear whether exposure of the formula was meant to discourage its use by showing the lack of established medicinal qualities of the ingredients, or simply just to make it easier for local pharmacists to compound their own competing house brands. Dr Covey’s preface states his intent to reveal and root out quackery, but, at the same time notes its intention to commend meritorious treatments. However, he too does not indicate which of the various formulae disclosed he places into which category.

The American Medical Association showed no such equivocation when it denounced Cheney’s ads in a long article published in 1918 demonstrating that Cheney never paid the advertised sum, and documenting his rejection of claims of those who had averred continued illness after consumption of up to thirty bottles with such pronouncements as the claimant had not given the Cure enough chance to work, or actually suffered from some disease other than catarrh, or needed to take larger doses of the Cure. Of course, Cheney could always technically (or legally) disqualify all claimants: he never precisely defined the term “catarrh.” Today it is regarded as a fancy and outdated name for an overgenerous flow of mucous, a symptom that any number of different ailments might cause. One can visit any drugstore to locate a shelf full of products claiming to deal with it. Most, at least, talk only of relieving the symptoms of “mucous congestion” and do not promise any kind of a miraculous cure. They too are perennial best sellers. (In light of the recent disasters in Japan, while picking up these preparations at the drugstore, one can also secure potassium iodide pills to forestall radiation sickness, a currently unnecessary (depending upon one’s level of trepidation) legitimate use for one of Cheney’s ingredients.



Upon his death in 1919, a drug trade journal recalled that Cheney was an “attractive man, personally, and made and held friends, of whom there are hundreds who will ever hold him in affectionate remembrance.” As a wealthy businessman, Cheney published a book of short stories, was a patron of the Toledo Art Museum, and maintained a box at the Toledo opera house. He used his success to act as an incorporator of the Lake Erie & Youngstown Railroad and the financier and President of the Maumee Cycle Co, apparently a less successful enterprise. Not everything was a bed of roses: a drug trade publication reported that he was expelled from his Masonic lodge in 1897, and a contemporaneous lawsuit indicates that his social club attempted unsuccessfully to expel him for conduct unbecoming a gentleman apparently involving an indiscretion with the wife of another member. A thumbnail sketch of the Cheney Medicine Co could end at this point, with the portrait of Cheney created no less contradictory than those of the other rugged individuals whose sharp practices in business led them to amass great fortunes which were then plowed back into monuments to civic virtue. However, Cheney’s real significance lies far beyond the ghostly shadow he now casts in Toledo’s annals.

It was on the national level that Cheney left an indelible mark, because his name is forever linked to the infamous “Red Clause.” That clause was simple and powerful, but requires some historical background. To sell their products, the proprietary medicine companies needed to advertise them widely and insistently. In turn, to provide the necessary advertising space, these companies found it convenient to underwrite the establishment of local newspapers in rural communities - sometimes supplying the printing presses - and keep them afloat with their advertising. Typically each separate proprietary company negotiated a one page contract with each newspaper stipulating that the newspaper would print advertising in the form the companies supplied in each issue of the paper. As the local newsmen mailed their papers into the companies to demonstrate publication of the ad, each company remitted a steady and reliable stream of cash to each of its contracted newspapers.

In 1881, realizing that there was strength in numbers, these companies decided to form the Proprietary Medicine Association of America. Cheney became a lynchpin in the organization from its beginning. With scientists beginning to seriously investigate the composition of patent medicines and question whether or not they were beneficial, political pressure was building to force the manufacturers to disclose their sometimes dubious secret ingredients. Cheney realized the contracts between the patent medicine companies and the newspapers could be wielded as a weapon to fight this growing political pressure. In private meetings of the Association, he proposed adding a clause to each contract stating if any legislation passed in the jurisdiction where the newspaper was published restricting or prohibiting the manufacture of patent medicines, the remainder of the contract was immediately voided. The clause quickly became the industry standard and was featured in every subsequent contract the companies issued, printed in red ink, as a reminder. Thus it became known as the “Red Clause.” Thereafter, whenever the federal or any state legislature began to discuss passing legislation in a manner that the patent medicine industry felt infringed upon its rights, each company simply sent a letter to each of the newspapers with which it had a contract reminding that newspaper of the Red Clause and warning that if it did not editorialize against the offending legislation, it risked the loss of revenue which would follow the passage of the legislation. Since each local newspapers had contracts with multiple patent medicine companies to fill its many columns with advertising, one can imagine the barrage of mail each editor received every time a legislature took up the subject of patent medicines, and can further imagine the burst of negative editorials that followed in the next issue against such legislation. By using Cheney’s “Red Clause,” the Association made itself an enormously powerful lobbying organization on both the national and state levels of government. When secret minutes of the Proprietary Association meetings were later revealed, they showed that Cheney used to brag about the efficacy of the Red Clause in defeating state disclosure laws.

Representing Collier’s Weekly, a national magazine whose editorial board had determined to refuse patent medicine advertising, Samuel Hopkins Adams cultivated a few principled, local newspaper editors who leaked to him copies of their contracts with the patent medicine companies. In 1905, using these documents, he finally exposed the existence of the “Red Clause” to public scrutiny. The revelation was more stunning because at that time Cheney was serving as the president and principal spokesman for the Association. Cheney was held up to public ridicule briefly, and, while the uproar that followed the revelation of the “Red Clause” led to the passage of the Pure Food and Drug Act in 1906, in 1919, when Cheney died, his 1886 affidavit was still running as the advertisement for Hall’s Catarrh Cure in local newspapers.

Enough history! Now hurry out to get your supply of potassium iodide pills!










Cancel for April 24: Central Trust Company of New York

CENTRAL TRUST CO. OF NEW YORK
APR
24
1899


The Central Trust Company of New York was established in New York in 1873.   By 1918 it became the Central Union Trust Company, and then again after a 1929 merger with Hanover Bank it became the Central Hanover Bank and Trust Company.  Eventually, after another merger, the bank would become Manufacturers Hanover.  After becoming a part of Chase Manhattan it would then, by 2004, be a part of JP Morgan Chase.  Phew...

Saturday, April 23, 2011

Stock Transfer + Power of Attorney by Separate Memorandum + The Panic of 1901

General trade practice at the end of the 19th Century held that stock could be transferred in three ways. The War Revenue Law of 1898 describes the three modes of transfer in detail and specifies how the $.02/$100 stock resale tax was to be paid in each instance. In stark contrast the Law otherwise is particularly mum on how the the $.05/$100 tax on original stock issues was to be paid. Students of the War Revenue Law are often frustrated by its cloudy definitions and sometimes ambiguous language. But that's a subject for another blog.

According to the Law, if the "...evidence of transfer is shown only on the books of the company the (tax) stamp shall be placed on such books." If, as was the case with The Katy railroad stock we previously discussed, "...the change of ownership is by transfer (of the stock) certificate the stamp shall be placed on the certificate." Finally, "...in cases of an agreement to sell or where the transfer is by delivery of the certificate assigned in blank there shall be made and delivered by the seller to the buyer a bill or memorandum of such sale, to which the stamp shall be affixed." The Law goes on to detail the information required to be included.


$500 Chicago, Burlington, and Quincy Railroad Company Stock Certificate
Originally Issued November 4, 1899
Transferred by Memorandum of Sale May 4, 1901


Issued to Charles L. Walker, not by the Burlington railroad itself, but rather through The National Bank of Commerce in New York, the original issue tax would have been 25-cents; 5-cents per each $100 in value or fraction thereof. As the 25 cent original issue tax obviously wasn't affixed to the certificate, it presumably was paid on the books of the company as maintained by the bank; although no mention of exactly how the original issue tax was to be paid appears in the War Revenue Law.

Not only was the stock issued through the National Bank of Commerce, it's also signed by one of the Bank's Cashiers, J.S. Alexander (lower right), and the Bank's Transfer Clerk, Perry Townsend (lower left). As we'll see below, Mr. Townsend played a prominent role in the stock's subsequent transfer.


Reverse side of Burlington stock with boxed handstamp
SURRENDERED/JUL 18 1901/AND CANCELLED


Note the preprinted form for transferring the stock has been left blank. As such its transfer, if otherwise not done on the books of the company, necessitated a separate memorandum of sale.



Memorandum of Sale
Signed by Charles L. Walker
May 4, 1901


As specified in the Law the $.02/$100 resale tax of 10-cents was paid by two 5-cent battleship revenue stamps affixed to the memorandum. As the memorandum also named a third party to act as an attorney to effect the transfer an addition 25-cent tax for that power of attorney appointment was due, paid here by a single 25-cent battleship revenue.

But this is no general memorandum of sale, and the seller, Charles L. Walker didn't initiate it, nor was the transfer attorney a disinterested functionary. No, this stock sale was linked to a serious financial crisis that led to the Panic of 1901, Wall Street's first crash. Mr. Walker was most fortunate to sell this stock on May 4, 1901 as The Panic started May 17, 1901, less than two weeks later.

Essentially this memorandum was a offer to buy Charles Walker's Burlington stock tendered by the Northern Pacific Railway Company, listed on the memorandum as the buyer, through Perry Townsend, the National Bank of Commerce Transfer Agent. Ah, if paper could talk what a tale this memorandum might spew!

We're all too familar with the dot.com and housing bubbles of the 21st Century; this early 20th Century bubble was driven by speculation in railroad stocks. And it was the Burlington's stock that started the market decline that day.

I don't pretend to be an expert and leave the fine points regarding the origin of the Panic of 1901 to those who are, however, the problem seems to have begun with a struggle between the Union Pacific Railroad and the Northern Pacific for control over the Chicago, Burlington & Quincy (Burlington) line. When the Northern Pacific won that battle, the Union Pacific's President, E. H. Harriman, tried to gain control of the Northern Pacific itself further fueling the speculative bubble in railroad stocks. To fend off Harriman's attack on the Northern Pacific, it joined forces with the Great Northern railroad through even more stock purchases and the formation of a holding company, Northern Securities Company, which merger fell afoul of US Antitrust laws. For more information visit the links provided.

And Mr. Walker? According to some sources he may have gotten as much as $200 per share for his five shares, double what he paid for them. All this has me wondering if I should be filling my gas tanks tomarrow, or if I should stay home instead and buy oil stocks.

Friday, April 22, 2011

Another Congregational Church Bill of Lading

Another Congregational Church bill of lading has surfaced. Like the bill of lading previously shown on 1898Revenues, this one too was issued by the American Express Company in Boston on June 30, 1900. It refers to "Minutes of" rather than "Report of Cong. Church", but both likely were for shipment of copies of the Report of the Second International Council of the Congregational Churches.

American Express Bill of Lading
Boston, Massachusetts
June 30, 1900
scan saved from eBay by Bob Patetta

Bob Patetta, who has provided us with numerous interesting documents, saved this scan from an October 2002 eBay auction. Unfortunately he was not the winning bidder so we don't know the current whereabouts of it, but thanks go to Bob who thoughtfully saved the image for future reference.

4,448 packages are listed, 1,744 of which presumably were turned over to the Post Office for mailing. The remaining 2,704 reports must have been shipped to different addressees as a total of $27.04 in tax was paid, 1-cent per each package to a different destination. The tax was paid by a combination of two $10, one $5, and two $1 Commerce Issues plus two 2-cent Battleship revenues.

These copies were consigned by A. Mudge & Co. More specifically, Alfred A. Mudge & Son Co., a well known Boston printer, although the Press of Samuel Usher is identified as the publisher in the report.

It's a great 1898 document and we'd like to know its current whereabouts. Hopefully, the owner is an 1898Revenues reader!

Wednesday, April 20, 2011

Stock Sales via Power of Attorney

As explained in prior blogs, the tax on an initial sale of stock was .05/$100 in face value or fraction thereof; and the tax on a resale of stock was .02/$100 in face value or fraction thereof. If, however, an owner appointed a third party to sell the stock then an additional tax of 25-cents was due. The War Revenue Law levied a 25-cent tax on all power of attorney appointments that involved financial transactions.


Actually we've blogged previously about the power of attorney tax on a stock sale. Before becoming a regular guest on 1898revenues, I helped answer a reader's query about the tax on some Mexican Telephone Company stocks.


Now I'm the one needing help. The $1,000 stock certificate for the Kansas, Missouri, and Texas Railway Company (The Katy) shown below was initally issued October 31, 1890 well before the Spanish American War tax era. So its initial sale to the English Association of American Bond and Shareholders Ltd. (EAAB&S) wasn't taxed, but a resale was taxed in the US on January 12, 1901 and that resale included a power of attorney transaction. It's what transpired between those two events that's hazy.




$1,000 Stock Certificate Kansas, Missouri, and Texas Railway Company
Originally issued 31 October 1890


A single Great Britain Transfer Duty 2 shilling revenue stamp appears in the upper right corner. Presumably it paid the tax on the transfer of this stock to P. J. O'Brien on 17 November 1900, just 17 days after EAAB&S purchased it. I'm guessing P. J. O'Brien was an EAAB&S member who requested registration of this certificate in his personal name, an EAAB&S option as described in their advertisments appearing in The Railway News and Joint-Stock Journal.




Great Britain Transfer Duty 2 Shilling Blue


An undated circular handstamp cancel depicting the heraldic lion and crown from The Netherlands coat of arms flanked on the left by the numerals "7,50" and on the right by the letters "Gl" with the letter "l" underlined also appears on the front of the certificate.


Can anyone identify and explain the exact significance of this handstamp?
It likely is related to Boissevain & Co. as described below.
UPDATE April 21: Mike Mahler advises the handstamp is from the Netherlands province of "Noord Holland", and that's the wording appearing at the top of the handstamp. He, too, believes it to document a tax payment there of 7.50 guilders. Amsterdam, home office of Boissevain & Co., is located in Noord (North) Holland.



Completed transfer form on reverse side

As with this stock certificate, a preprinted transfer form often appears on the reverse side. EAAB&S used it to effect the aforementioned transfer to P. J. O'Brien on 17 November 1900. Deveremy Toler is faintly handstamped in the space provided for naming the transfer attorney. Both the Director and Secretary of the EAAB&S, along with one witness, signed the transfer authority. Those signatures are tied with a raised impression of the EAAB&S corporate seal. The address of the EAAB&S, 5, Great Winchester Street, London, E.C. is handstamped below the seal toward the left side.


So what's with the battleship revenues in the bottom left corner straddling the handstamped address of the EAAB&S? Well.....I'm not exactly certain, but obviously this certificate was returned and cancelled at some point as it was pasted back into the railroad's original stock stub book. When that occurred is unclear, but most likely on or around January 12, 1901, the date the battleship stamps were cancelled.




Cancellation Detail of Boissevain & Co.
Jan/12/1901
New York
and impression of the EAAB&S seal


Boissevain & Co., a Dutch firm with offices in Amsterdam, New York and London presumably was responsible for the curious 7,50 Gl handstamp on the front.


Further, as their New York CDS appears on the battleship stamps, they appear to have effected the return/repurchase/redemption/cancellation of this certificate by "The Katy", although the specific reason for its return is not identified.


Did Boissevain hold the certificate in trust for Mr. O'Brien on behalf of the EAAB&S ever since 1890? Or did Mr. O'Brien hold the certificate and simply use Boissevain to effect its eventual return/resale to The Katy?


Obviously, Boissevain felt obligated to pay both a resale tax of 20cents represented by the two 10-cent battleship stamps, as well as a power of attorney tax of 25 cents represented by the 25-cent battleship stamp. Numerous pinholes suggest additional instructions may have been attached at some point, but they are now lost to time.


My explanation, like the document itself, is a bit hazy, but it does illustrate payment of the resale and power of attorney tax during the Spanish American War Tax era.


This certificate demonstrates a multiply taxed doument by three national taxing authorities: Great Britain, The Netherlands province of Noord Holland, and the United States.


"The Katy" was first organized in 1865 and mostly provided passenger and freight service to Texas from the middle America market, eventually providing access to the Texas port of Galveston. Today it is part of the Union Pacific Railroad.