Chicago Board of Trade Members: Young & Nichols

Young & Nichols.

JUL

25

1900

CHICAGO

Langlois scan

A. Nelson Young, CBOT #1769

George R. Nichols, CBOT #2433

The application of the new 1898 war taxes was not initially clear to some of those that were responsible for paying them.  In the case of the Chicago Board of Trade, a committee was created to discuss and analyze the issue soon after the taxes were passed.  George R. Nichols, of the CBOT firm Young & Nichols, was on that special committee.  From The New York Times, June 25, 1898:

Another Pacific States Telegraph Form

JW Palmer owns this example of a Pacific States Telephone Companies telegraph message form.  JW validates all of Frank's observations in the previous post.  The back of the form confirms this is a telegraph message. 

The message is a classic of the telegraph era:  "Come home immediately father is worse..."

Correction to the August 3 Post on the Telephone Tax: Frank Sente Keeps Us Honest

Last week it seems that I may have misinterepreted the guidance of Bob Patetta who submitted the forms below for publication on this site.  I characterized the forms as written phone messages to be delivered by hand.  Frank Sente, who has been off-line lately, responded with a rather healthy email explaining the error.  The email is a short lesson in tax philately, and deserves to be published.  So here it is, with a few edits: 

From Frank Sente:

1. If you read the fine print, both of these forms contain statements about the efficacy of having the receiving station "repeating a message back" to the sending station as being the only way of insuring against errors in transmission. This is standard classic telegraph jargon that appears, in one form or another, on the forms of all telegraph companies. And make no mistake Pacific States sent telegrams, it's real full name until after the 1984 Bell breakup was Pacific Telephone and Telegraph Company. 

2. Perhaps the most telling evidence however is how the payments are noted on each form. On the first one pictured (to Wellman Peck & Co.) the notation is 9 pd.; and on the one to the Well Fargo Express Agent, the notation reads 12 pd. These notations refer to the number of words in the respective messages which is how the cost of TELEGRAMS was computed. (NOTE: on the second message, the number "372 1/2" counts as four words as each integer had to be spelled out). The price of telephone calls was based upon the destination and duration of the call, not the number of words spoken.

3. The war law specifically required companies providing phone service to pay the tax month by direct remittance to their respective district collector of internal revenue. A sworn statement tallying the number of calls billed at 15 cents or more was required with each payment. I find no reference in any of the subsequent Commissioner Decisions altering this requirment or providing for any alternative method of payment of the phone tax.

At the risk of having you find an example before I do; here's what we should be looking for: Regular individual phone bills from the period July 1 1898 - June 30, 1902 that might itemized a long distance call costing more than 15 cents as I'm sure phone companies passed on the tax to their customers. I have some individual monthly telephone bills from that period, but can't find the right now either (I suspect when I do I'll find my Pacific States document as well). Anyway all the tlephone bills I have are for normal regular service. I'm hoping to find one that shows an an itemized long distance call of more than 15 cents, the taxation threshold, as I suspect there also will be a notation like "IR tax 1 cent" or "war tax 1 cent" appended to the bill.

4. So why do the forms read "Pacific States Telephone Companies"? I believe the firm did this as a means promoting its new-fangled phone service as a better alternative to old fashioned telerams. Why would they otherwise have included the promotional advertisement at the bottom of the form that reads,

"YOU HAD BETTER TALK OVER THE TELEPHONE THAN WRITE A MESSAGE. TALK IS MORE ACCURATE. AND YOU GET YOUR REPLY AT ONCE."

I can easily visualize customers now walking out of the Pacific States telegraph office with their telegraph despatch receipt in hand, muttering, "Hmm. Maybe I should look into getting one of them phone box things. At least then I'd know my message got delivered and I'd have a response as well."

Hope this makes sense. I do wish you were correct, but these are nothing more than telegraph despatch receipts.

 

 

Frank, thanks for letting me borrow your words without prior permission.

The IRS Website and 1898 Taxes

Everybody's favorite website, IRS.gov, has a series of webpages on Understanding Taxes for students.  Under the subject, the WHYS of TAXES, Theme 5: Impact of Taxes, Lesson 1: How Taxes Influence Behavior, there is an historical tax question on the first time telephones were taxed.  The question is phrased as follows:

Which of the following items was first taxed as a luxury in 1898, at the start of the Spanish-American War and continues to be taxed today?

A.  The phonograh

B.  The telephone

C.  The automobile

D.  The radio

The answer is B, the telephone.

IRS.gov webpage screen capture

I don't exactly know how these taxes were paid, but AT&T used many high value documentaries:

We all continue to pay telephone taxes with roots in the 1898 law.  It is hard to imagine today that phones could ever be considered a luxury, though their ubiquity has certainly taken their everyday use beyond essential.  Sexting is somewhere in the luxury, if not vice, category.  I don't know the law, but I wonder when, for tax purposes, the telephone tax ceased to be considered a luxury tax.

The Scranton Tax Collector

Penalty envelope addressed to G. R. Furman & Company of Russell Hill, Pennsylvania by the Treasury Department's Tax Collection office in Scranton.

An interested reader of this site sent in this envelope, likely from December 1898.  The letter is addressed to GR Furman, our reader's wife's great great grandfather.  Furman ran a general store and the post office in Russell Hill.  This envelope contained a handful of rouletted proprietary battleships.  Presumable these stamps were for Furman's use.  The stamps were overlooked and never redeemed at the end of the tax period.

Accident Insurance Policy with R161 Usage

Preferred Accident Insurance Company

Three month renewal policy

September 3, 1898 - December 3, 1898

stamps tied by a light double-ring handstamp cancel

Accident, fidelity, and guarantee insurance policies, including renewal policies, were taxed at the rate of 1/2-cent per dollar of premium paid or fraction thereof. The 2 1/2-cent tax on the $5 premium for the renewal of The Preferred Accident Insurance Company of New York personal accident policy shown above was properly paid by two 1-cent provisional I.R. overprints and a single R161, 1/2-cent orange documentary all tied by an indistinguishable light blue, double-ring hand stamp cancel.

Because its color closely resembled that of the 3/8-cent proprietary issue, the Bureau of Engraving and Printing discontinued printings of the 1/2-cent orange after just two days and changed its color to gray. The exact number printed and distributed is unknown.

Most of the copies available are badly off-center. Used copies in very-fine condition are uncommon and any examples used on-document are scarce. Because they are so scarce, we'd like to conduct a usage census. We'll show another example of on-document usage in a future blog and Bob Mustacich shows a nice single-copy usage on a travel insurance policy near the bottom of his homepage. I've also seen a block of four used on a check. That's four known usages. If you have, or know of, other on-document examples, please let us know. We'd like to show, and make a permanent record of them.

Scant information about The Preferred Accident Insurance Company appears online. Although the company may have been formed earlier, it did not incorporate until 1893. The firm apparently ran into financial difficulty in the late 1940s as it was voluntarily taken over by the Superintendent of Insurance of the State of New York in 1949. The company's remaining assets were liquidated as of April 30, 1951.

Ocean Passage Ticket

Steerage embarkation ticket for the S/S Pennland

Philadelphia to Bremen via Liverpool March 4, 1900

The tax on passenger tickets by any vessel from a port in the United States to a foreign port was:

$1 for a ticket up to $30
$3 for a ticket more than $30 to $60
$5 for a ticket more than $60


A $1 Commerce issue pays the proper tax for a $27 embarkation ticket to Bremen via Liverpool aboard the American Line steamer S/S Pennland. The endorsement penned at left in red by the International Navagation Company, who sold the ticket, reads, "not good only Government Stamp attached by Company".

Originally christened the Algeria when first launched in 1870 by the Cunard Line, the ship was renamed Pennland when purchased by the Red Star Line in 1881. It was chartered by the American Line in 1895. This so-called emigrant ship was near the end of its service when this ticket was purchased in 1900 as it was scrapped in 1903. For an image of the ship, a brief history, and a partial record of voyages go here.

Can anyone offer an example of a $3, or a $5 ticket?

Illinois Central Parlor Car Ticket

Illinois Central Railroad

Parlor Car Ticket

Chicago to St. Louis





Reverse side of ticket
Purchased at the ICRR Chicago City Office
April 25, 1900

Most of the Spanish American War taxes were patterned after those enacted by the Union during the Civil War. The tax for seats in railroad parlor cars and sleeping berths was new and appears to have been added at the last moment as it does not appear in the normal schedule of documentary taxes contained in the act. As demonstarted by the 1-cent stamp affixed to the ticket above the rate was 1-cent per parlor car seat. 1-cent was also charged for each sleeping berth ticketed.

Illinois Central Route Map circa 1892

The Illinois Central Railroad (IC) has been called the Mainline of Mid-America because its major routes connected Chicago in the North with New Orleans and Birmingham in the South. Now owned and operated by the Canadian National Railroad the line still operates as the Illinois Central as it mostly has since its founding in 1851. As the parlor car ticket shows, the IC also, at one time, was a major passenger carrier between Chicago and St. Louis.

Power of Attorney and Stock Transfer Taxes: The Mexican Telephone Company

Fellow collector Rick Lokos sent in scans of a couple of stock certificates from The Mexican Telephone Company, a firm in which J. P. Morgan was on the Board of Directors by 1886.  Rick sent in the scans to inquire about the nature of the taxes paid on the transfer of these certificates.

I am still learning about these types of transactions and the likely taxes that were paid on them.  So I called in an expert instead of relying on myself and sent the scans to Frank Sente, who happens to have his own Mexican Telephone Company stock certificate, which can be found as the third set of images below.

Frank's explanations regarding the nature of the transfer taxes follow:

Certificate #1, front

from Rick Lokos

Certificate #1, back

from Rick Lokos

Howard Temple sold his 100 shares in the Mexican Telephone Company ($1,000) on March 17, 1899, during the tax period. Because the sale was transacted via a POWER of ATTORNEY, TWO separate taxes applied. 20 cents was charged for the sale of stock at 2c per $100 in original value or fraction thereof AND 25 cents was charged for the tax on a power of attorney. Hence a total of 45 cents was affixed. The usage of the 40 cent documentary is unusual. Not exactly rare, but uncommon. Attached is a similar stock from my collection showing a similar taxation [this is certificate #3 below]. Mine perhaps shows the 2 taxes more clearly with a 25 cent documentary for the power of attorney and a nice line pair of the 10 cent documentary paying for the 100 share stock sale.

Certificate #2, front

from Rick Lokos

Certificate #2, back

from Rick Lokos

I find Sarah Wood's 120 share document to be the more interesting of the two. When she sold her 120 shares she too did so via a power of attorney, but note that her sale transaction is dated June 30, 1898, the day BEFORE the War Tax took effect. As such no taxes on either the power of attorney or the sale of the stock applied to Sarah's sale.

So why the 24 cents in tax on the back of this one??? I can think of two possible explanations. But first note that the stamps were cancelled by Estabrook of Boston on March 14, 1899 during the tax period. So.....

1. I suspect there was a SUBSEQUENT direct sale (with no power of attorney involved) by Estabrook on March 14, 1899 and that sale was properly taxed 24 cents at 2c per $100 in original value or fraction thereof. This presumes that Estabrook Co. somehow had acquired the 50 shares Sarah had sold to R.L. Day & Company as she had split her sale on June 30 only selling 70 shares to Estabrook, not all 120.

2. Less likely, during an internal audition in March 1899 some Estabrook employee may have thought the stock should have been taxed previously and added the stamps then.

NB: When I researched my 1998 AP article on documentary usages I recall a writeup in the NY Times about the NYC courts being overwhelmed with transactions on June 30, 1898 by realtors and other businesses trying to get paperwork done that day in advance of having to pay taxes on July 1, 1898. Sarah was either lucky or prudent to have her sale accomplished on June 30, 1898.

Certificate #3, front

from Frank Sente

Certificate #3, back

from Frank Sente

Thanks to Frank for his guest appearance today!

Express Cancels: Wetherell's Express

Wetherell's Express handstamp on American Express 1900 printed cancel.
One cent hyphen hole with right-side guideline.

Back on May 14, the tax provision was reviewed that required express companies to pay documentary taxes. As a reminder, taxed a one cent were bills of lading, manifests, or other memorandum of shipment for goods shipped by railroad or steamboat company, carrier, express company, or corporation.

1898 Revenues: Documentary Taxes Valued at One Cent

According to the Revenue Act of 1898, the following taxes were levied at a rate of one cent and demanded documentary tax stamps:

1. Upon each sale, agreement of sale, or agreement to sell, any products or merchandise at any exchange,or board of trade, or other similar place, either for present or future delivery, for each $100 in value or fraction thereof;

The 1 cent block of four cancelled by JP Morgan in a previous post is likely example of payment of this tax requirement.

2. Bills of lading, manifests, or other memorandum of shipment for goods shipped by railroad or steamboat company, carrier, express company, or corporation;

The Chicago, Burlington and Quincy printed cancel on a previous post is a likely example of stamp removed from on of these types of railroad documents. The AMEX cancel probably represents a stamp used for this tax as well.

3. Sworn statements to be filed within the first 15 days of each month by persons, firms, corporations owning or operating any telephone line or lines for which there was a charge imposed of 15 cents or more for the previous month;

4. Any telegraphic dispatch or message.

2 Cent Documentary Taxes

Bank check with 2 cent documentary stamp paying required tax.

Bill of foreign exchange. Tax stamps, both US and French, are on the back.

The Revenue Act for the funding of the Spanish-American War required taxes on certain documents representing business transactions. Hence the term "documentary tax": Tax stamps were applied directly to the documents representing the transaction, such as bank checks and stock transfer receipts. Specific to the current concern of this blog for the 2 cent documentary stamp, the following transactions were taxed at the rate of 2 cents:

1. Stock Transfers: All sales, or agreements to sell, or memoranda of sales or deliveries or transfers of shares of certificates of stock for each $100 in face value or fraction thereof;

2. Bank Checks: For each 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;

3. Bills of exchange (inland), draft, certificate of deposit drawing interest, order for the payment of any sum of money, otherwise than at sight or demand, or any promissory note except bank notes issued for circulation, and for renewal of the same, for each $100 in value or fraction thereof;

4. Foreign bills of exchange or letters of credit (including orders by telegraph or otherwise for the payment of money issued by express or other companies or any person or persons), drawn in but payable out of the U.S., if drawn drawn in sets of two or more, according to the customs of merchants or bankers, for each $100 or fraction thereof for each instrument;

5. Certificates of profits (e.g., certificates of deposit, interest-bearing notes, bills of exchange, money orders), for each $100 face value or fraction thereof.

Of course, 2 cent stamps might have been used to pay multiples or fractions of other tax rates. but these were the uses of single 2 cent stamp.

**Note: This is the first instance of "virtual collecting" I've done on this blog. The images of the documents above were taken from sellers' images available on eBay. As I've written before, I currently live in Nairobi, Kenya, and do not have my collection with me. I work with scans of my collection. It is easy though, to borrow images of the web to demonstrate my point on occasion.