Thursday, October 18, 2007
M & M, Wells Fargo Spar Over One-Cent Stamp Tax
By ROGER M. GRACE
Green trading stamps were not the only type of stamp that raised the ire of the Merchants’ and Manufacturers’ Assn. of Los Angeles in 1898. The M & M was upset in connection with a blue Internal Revenue stamp, designed to raise funds for fighting the Spanish American War. It wasn’t the stamp itself that riled them...it was the insistence of Wells, Fargo & Co. that customers furnish the 1-cent stamps which the company was obliged to affix to receipts for goods it shipped.
The War Revenue Act of June 13, 1898, the M & M thundered, contemplated that the carriers, not the customers, would bear the cost of the stamps. Railroads and steamship companies, the group pointed out, understood that.
The episode, like Beethoven’s posthumously published Opus 129, might be dubbed a “Rage Over a Lost Penny.”
Felix Zeehandelaar, secretary of the M & M, was indeed enraged over an encounter with the assistant United States district attorney, James R. Finlayson, who responded with opprobrious words when Finlayson came to see him on July 25, insisting that a Wells Fargo clerk be arrested.
The clerk had refused the day before to accept a package from him for shipping to San Francisco. Zeehandalaar was willing to pay the cost of the shipping—25 cents—but would neither give the clerk a stamp nor a penny to cover the cost.
Finlayson not only cussed at the M & M’s secretary but told him to go away. This was a bold move given that the federal district attorney for this district, Frank P. Flint, had wired Finlayson from San Francisco, where he was visiting, directing him to get an arrest warrant.
(Finlayson, a former state assemblyman, was appointed in 1896 to his post—the title of which then included the word “district” and Los Angeles then being in the state’s “southern district.” He resigned four years later. At the time of his death in 1904, he was the law partner of his son, Frank G. Finlayson, who went on to become a member of the California Supreme Court.)
The Los Angeles Times’ edition of July 29 contains this playful rendition of happenings:
“The association held a council of war, executed a war dance and things, and vowed to tack Finlayson’s scalp in the sacred precincts of the inner temple. But Finlayson smoked his after-dinner cigar as usual and seemed to forget that there was any such thing in the world as a Merchants’ and Manufacturers’ Association.”
Finlayson was feeling pleased with himself. A wire had arrived from James E. Boyd, acting attorney general of the United States, sustaining his position. The telegram read:
“It was not a violation of the revenue act for a carrier to refuse to accept merchandise for shipping....It is criminal offense if carrier issues bill of lading or manifest without the stamp....”
Although criminal charges weren’t brought, an action for a $50 civil penalty was already pending in federal court. It was filed against Wells Fargo by the U.S. District Attorney’s Office on July 14, at the insistence of the M & M, to determine the intent of the act.
That action stemmed from a July 11 refusal of a Wells Fargo clerk to accept a package Zeehandelaar sought to have transported to San Pedro, without payment by him of the penny tax, to Fred L. Baker, a Los Angeles city councilman and president of the M & M.
Next week, I’ll tell you how the U.S. District Court judge decided the matter, and how the California Supreme Court, in an unrelated case, addressed the same issue.
It might strike you that a single cent was too paltry an amount to justify all the to-do that was made of it by the M & M. Well, the issue did not merely rouse that group; it stirred merchants’ organizations and others nationally. Tea wasn’t dumped in any harbor over the tax, but the stance of the express companies was regarded as a big deal…so big, in fact, that the issue ultimately was decided by the U.S. Supreme Court.
This controversy related to only one aspect of the act. It had other aspects. Stamps, in various denominations and hues, had to be stack on telegrams, legal documents, bank checks, and certain products such as patent medicines. In columns on Coca-Cola last year, I noted that efforts were made to impose the stamp tax on Coke on the theory that it was a medicine…efforts which failed.
Copyright 2007, Metropolitan News Company