COTTON FUTURES 
377 
Src. 5. That no tax shall be levied under this act on 
any contract of sale mentioned in section three hereof 
if the contract comply with each of the following condi- 
tions: 
First. Conform to the requirements of section four of 
and the rules and regulations made pursuant to, this act. 
Second. Specify the basis grade for the cotton in- 
volved 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 de- 
tivered on a contract made under this section by the fifth 
subdivision of this section, 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. 
Third. 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 Ag- 
riculture except grades prohibited from being delivered 
on a contract made under this section by the fifth subdi- 
vision of this section and no other grade or grades. 
Fourth. Provide that in case cotton of grade other 
than the basis grade be tendered or delivered in settle- 
ment of such contract, the differences above or below the 
contract price which the receiver shall pay for such 
orades other than the basis grade shall be the actual 
commercial differences. determined as hereinafter pro- 
vided. 
Fifth. [Amended by sec. 6, act of March }, 1919 (40  Deliveryofpro 
Stat., 1350).] Provide that cotton that, because of the us 
presence of extraneous matter of any character, or irregu- clusion modified 
larities or defects, is reduced in value below that of low 
middling, or cotton that is below the grade of low mid- 
dling, or, if tinged, cotton that is below the grade of strict 
middling, or, if yellow stained, cotton that is below the 
orade of good middling, the grades mentioned being of 
the official cotton standards of the United States, or cot- 
ton that is less than seven-eighths 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. 
Prior to the amendment of March 4. 1919, the fifth para- 
graph read as follows: 
Fifth. 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 Good Ordinary, 
or cotton that is below the grade of Good Ordinary, or, if 
Hneed cotton that is below the grade of Low Middling, 
735 
Tax not to be 
levied on con- 
tracts complying 
with conditions 
areseribed.