2. That it is expedient to amend the Laws relating to the Stamp Duties.
§ MR. PHINN
said, he rose, in the absence of his hon. Friend the Member for Pontefract (Mr. Oliveira), to propose the Resolution of which that hon. Member had given notice—that upon every cheque drawn upon a banker there should be imposed a duty of one penny. He knew it was not a very popular thing to propose a new tax to that House, but, after the resolution which the House came to the other night on the subject of the newspaper stamps, it was, perhaps, desirable that some substitute for that impost should, as speedily as possible, be found. He had spoken to the Chancellor of the Exchequer upon the subject, and he deemed it a proper question to submit to the House, but, in the absence of the right hon. Gentleman, he (Mr. Phinn) would not press it at the present moment. Perhaps the Committee was not aware of the present state of the law with respect to the duty on cheques. As the Stamp Act now stood, all cheques on bankers would be subject to duty, were it not for an exemption made in favour of all cheques drawn within fifteen miles of the bank on which they are drawn. So that, if any one lived above fifteen miles from his bankers, he was liable to a penalty for every cheque that he drew without a stamp. Now, he would appeal to hon. Gentlemen in the House, if they were not in the constant habit of violating this law? ["No, no."] Hon. Gentlemen said "No, no," but he would appeal to his own experience. If they were in the country, and wanted to draw a cheque upon their banker, he asked them if they were not in the constant habit 641 of dating their cheques from London, and thereby violating the law? He thought that an anomaly so bad as this exemption ought to be done away with; but there was another reason why a cheque payable to bearer on demand ought to be subject to a tax. Persons who were in the habit of banking were now also in the habit of crossing their cheques, and getting their tradesmen, or the persons to whom they paid debts, to write their names on the back of the cheques, and, by thus using them as receipts, evading the stamp Act. In effect they made their bankers the custodians of their receipts. He thought his proposition would be rather a tempting bait to the Government. Some nights ago the House had agreed to a Resolution to the effect that the duty on newspapers required revision, and the Government then said that in a financial point of view that duty was a trumpery one, not realising more, he believed, than about 250,000l., which was collected with great trouble and expense. Some sanguine calculators had reckoned that the duty which he proposed to impose on cheques would realise as much as 500,000l., but those who had calculated the most closely were of opinion that it would produce at least 200,000l. or 250,000l. The tax would fall on those who were in the habit of dealing with bankers, it would prevent the evasion of the Stamp Act, and it would be easily collected; and he therefore hoped the Government would take the subject into their consideration.
Motion made, and Question proposed—
That all cheques upon Bankers in future be liable to the Penny Stamp.
§ MR. GLYN
said, he thought the hon. and learned Gentleman laboured under considerable misapprehension with regard to existing practices. Since the Bill passed last year for affixing the penny stamp to all receipts, the practice regarding cheques drawn at more than fifteen miles from London, and with regard to receipts, had entirely altered, and there was now no evasion of the law whatever. Though he himself would greatly benefit by the measure proposed, as it would reduce the labour in banking-houses to a great extent, yet he wished to call the attention of the Committee to the fact that it would impose a very heavy burden upon trade. He did not think that the hon. and learned Member had any idea of the vast number of cheques that passed through the City daily. He knew one banking-house that paid in one day no fewer than 20,000 checks. He 642 did not mean to say that this was an ordinary transaction; but the Committee would see what a tax they would impose upon tradesmen; and when they considered that the same tax was to be imposed upon banks in the country as in the town, he thought they would pause before they adopted it.
§ SIR JOHN TROLLOPE
said, he would suggest that in some of the public departments the introduction of a stamp upon checks would operate inconveniently. In the poor law department, for instance, every sum paid by Boards of Guardians was paid by check; and the greater part of the cheques were for very small sums. The moneys so paid were raised by taxation; and he put it to the Committee whether it would be right that cheques of such small amount should be burdened with a penny stamp. It was obvious that in such cases the effect would be to increase the taxes of the people, for after all the charge would fall upon the public.
§ MR. WILKINSON
said, he hoped the idea of stamping cheques would not be entertained by the Committee. No plan ever yet devised so economised the circulation as the system of drawing cheques, and he cautioned the Committee against doing anything to restrict a practice so useful and convenient. In the money market vast amounts changed hands every day, without the intervention of a single bank note, by means of cheques; and it was quite impossible but that the introduction of the stamp would injuriously affect this custom. It would entirely stop payment by means of small cheques.
§ MR. BRIGHT
said, the hon. and learned Member for Bath (Mr. Phinn) did not propose that the Committee should now decide upon the question; he only desired to elicit discussion in order that the Chancellor of the Exchequer and the House might hear and consider whatever suggestions might be offered. It was quite true, as the hon. Member for Kendal (Mr. Glyn) had said, that on the daily payments and receipts of a banking-house by means of cheques the amount of the stamps would be very considerable. But if this was a valid objection against stamps on cheques, it was a valid objection against stamps on receipts. Now, he (Mr. Bright) could scarcely conceive a tax of any kind that would be more widely or more equally diffused than that now suggested; but if his bon. and learned Friend proposed it as au additional tax simply, he should say he was undertaking a duty which ought not 643 to devolve upon him, and the proposition ought to be opposed. But his hon. and learned Friend was not doing that, for he coupled the proposition with the suggestion thrown out in the debate on Tuesday, that it would be an admirable substitute for the newspaper stamp. The Resolution then moved was accepted unanimously both by the House and the Government. It was the opinion of the House of Commons that the newspaper stamp was a doomed tax. The hon. and learned Gentleman the Attorney General was sensible that the law, in its present state, could not be executed; and there was no person connected with the Board of Inland Revenue who would not admit that the newspaper tax could not be collected fairly, according to the existing law. It was, therefore, the feeling of the House, and of the public authorities, that it must be given up. Then arose the question, what should be substituted for it? The stamp on cheques it was thought might be advantageously adopted. It was quite clear that the public would gain enormously by the abolition of the newspaper stamp; and it was also clear that there would be some inconvenience in paying a certain number of pennies by the imposition of the proposed stamp. It was, therefore, a question between the two. So far as he had considered the question, he believed it to be well worthy of consideration, with a view to the adoption of this substitute. He was in the habit of drawing cheques; and regarding his own interest, and the interest of his partners in the manufacturing concerns with which he was connected, he should be extremely glad, so far as he could now see its effect, to exchange one tax for the other. He was satisfied that, in the long run, considering the advantages connected with the abolition of the newspaper stamp, that the change now proposed would be advantageous both to the commercial world and the public. This was his present opinion, but he was quite open to consider everything that could be urged on the other side. The proposition was one which, at any rate, was well worth consideration; and he hoped the Committee would not decide against it without first going into a full examination of its merits.
§ MR. V. SCULLY
said, he had no doubt that the authority of the hon. Member for Kendal (Mr. Glyn) was very high, but this was a matter of mere common sense. He had not heard one single good objection to 644 the tax, but he could see a great many advantages. The stamped cheque would acquire a new character in the country; it would become a receipt. He did not believe that the law was so extensively broken as the hon. and learned Member for Bath (Mr. Phinn) seemed to think. That hon. and learned Member thought that the stamp would have the effect of putting an end to drawing of cheques for very small amounts. He (Mr. Scully) should be glad to see that effect brought about and the nuisance of small cheques got rid of. He considered the tax would be beneficial in every way, and that it would be advantageous not only to the public, but to hankers themselves.
§ MR. W. BROWN
said, he regarded bankers' cheques as a most valuable agent in carrying on trade; and therefore he looked upon this proposition with considerable apprehension. He feared it would have a tendency to break up the existing practice, and that we might be reduced to the plan resorted to by tradesmen in France, of taking five franc pieces round in a wheelbarrow to pay their creditors. Cheques were a labour-saving instrument in the business of commerce; and to require them to be stamped would greatly fetter if not destroy their use.
§ MR. MASTERMAN
said, he totally disapproved of the proposition, not from any fear of the trouble or inconvenience it might cause to himself in his business as a banker, but because such a practice would be attended with great inconvenience to the public who kept banking accounts. The hon. and learned Member for Bath did not appear to him to have an adequate conception of the practical working of the system of payment by cheques in the City of London. Nothing else was used for the settlements of the Stock Exchange. Great inconvenience and risk would be thrown on every mercantile interest in the City, if, by any plan of this kind, people were driven to keep bank notes for their payments, instead of drawing cheques. Under these circumstances, he hoped the proposition would not he entertained.
§ MR. GEACH
said, if there were one thing which, more than another, promoted the convenience of commerce in this country, it was the habit of keeping bankers' accounts; the habit of using the bank, not only for the custody of money, but as a safeguard against fraud. He did not believe, with the hon. Member for South Lancashire (Mr. W. Brown), that we were 645 likely to adopt the system he had described in France, of keeping our own money and taking it round to our creditors in wheelbarrows, but he was certain that if a penny stamp had existed upon bankers' cheques in former times, the country would never have had its present amount of commercial convenience. The question was not one of payment or revenue; but whether upon the aggregate transactions of the country the evil inflicted by the proposal would not be greater than the benefit derived from it.
§ MR. BROTHERTON
said, that the arguments urged against the proposition might, to a considerable extent, be applied to bills of exchange. The tax would not be a very heavy one. He perceived that all the bankers in the House who had hitherto spoken were against the plan; but he begged to say that he had had a conversation with a large London banker, who was decidedly in favour of the measure. It would certainly he an excellent substitute for the newspaper stamp. It must be admitted that great ameliorations had been made by the Chancellor of the Exchequer in respect to the scale of duties upon bills. of exchange; and he believed that the trade of the country would be disposed to accept the penny stamp on cheques in consideration of that relief.
§ MR. COBDEN
said, this was one of those cases on which a great deal might be said on both sides. It was merely a suggestion from an independent Member to the Government, it not being the province of private Members to propose taxes; but it appeared to him that, although a great deal had been said in its favour, much more might be said still. He was rather alarmed, he confessed, when he beard Gentlemen connected with banking and mercantile interests declare that certain and inevitable destruction would follow if the House laid a penny stamp upon cheques—that the consequence, according to his hon. Friend the Member for South Lancashire (Mr. W. Brown) would be that we should go to the system of France, where, in consequence of the great depreciation of paper money, tradesmen carried five-franc pieces round in wheelbarrows to pay their creditors. He had seen so many direful prognostications of this sort not verified, that he regarded all such arguments with perfect composure. Some hon. Gentlemen had talked of the difficulty of working this system. Now he considered that there was no difficulty at all in it. The system was already in operation.
646 Bankers already issued two kinds of cheques—one for the country, which were stamped, and the other for the town, which were not stamped. All that was now suggested was, that both should be Stamped. They might have their names embossed upon them, which would be an additional guarantee against forgery. Something had been said about the weight of the tax upon small sums. What would be its amount upon a cheque drawn by stockbroker to the parties who paid it? What was the ordinary amount of such cheques? He was not much acquainted with Stock Exchange business, but he imagined that stockbrokers did not generally draw cheques for less than 20l. [Mr. MASTERMAN: For less every day.] Then the transactions in Consols were smaller than he had thought them to be. He supposed, however, that not many cheques were drawn in respect to Stock Exchange business for less than 10l. [Mr. MASTERMAN: Yes, much lower.] Then the transactions were still smaller than he supposed; but take these cheques at 10l. each. One penny was the 1–2400th part of 10l. It was absurd to say that such a tax was a heavy burden. The right hon. Baronet (Sir J. Trollope) had made a difficulty with regard to the case of the payment of small cheques in the ordinary working. of the poor law. Such cases might be met by exceptions. The penny receipt stamp did not extend to sums below forty shillings, and some analogy of that sort. might be established. On the whole, looking at this stamp as a substitute for an injurious tax, that it would be no obstruction to business, while it promoted the diffusion of knowledge and advanced the revenue, it was clear that a great deal might be said in its favour. Let them inquire into the subject. Let them go down into Lombard-street, and ascertain the number and amount of the cheques presented there in any given day. He would undertake to do so himself as far as he could. By this means much practical information would be obtained; and he thought it would most probably be found that, like the case of the penny receipt stamp, when once put into application it would work with greater satisfaction than any other tax that could be proposed, and certainly with less injury to the community.
§ MR. GOULBURN
said this was not a novel proposition. He could answer for it that it had been propounded to every Gentleman who had filled the office of Chan- 647 cellor of the Exchequer for many antecedent years, and that it had, after due consideration of its consequences, and of the pressure it would create upon particular parties in the country, been by them condemned. This fact, he admitted, was no argument why, in an advanced state of knowledge, it should not now be adopted. But when the hon. Member for the West Riding argued the question as if it had only reference to the largest transactions upon the Stock Exchange, and to large concerns such as those with which the hon. Member for Manchester (Mr. Bright) was connected, he was mistaken. There were other persons in the country, also in business, upon whom the tax would operate with considerable severity, not in respect to its amount, but from the impediments which the stamping of cheques would produce. This class of persons were the minor tradesmen of the country—those classes who were in the habit of paying their money away by small cheques upon a neighbouring banker. On these classes a penny stamp would operate most injuriously. As to the stamp on bills of exchange, he did not consider the case analogous to the present proposal.
§ MR. WILSON
said, he had listened with great attention to all the arguments just urged for and against this proposal; and it was now his duty to inform the Committee that his right hon. Friend the Chancellor of the Exchequer had given the greatest possible consideration to the subject during the last six months. The decision at which his right hon. Friend had arrived, he had arrived at from reasons and considerations altogether different from any stated in the course of the present debate, and his conclusion was, that it would be highly impolitic and injurious to impose the proposed tax. He was not going to place much stress upon the argument of the danger and injury it might produce in the case of large traders. There was no doubt at all, as the hon. Member for Kendall (Mr. Glynn) had stated, that it would entirely alter the greater number of transactions in the City of London, and especially those connected with the Stock Exchange, in respect to which a large amount of payments were made every day. He repeated that it would alter the ordinary course of transactions, and that, though with some inconvenience, the tax might be evaded. But the real considerations which had weighed with the Government in arriving at their conclusion that it would be im- 648 politic to propose this tax, were those which he would now state, and he believed they would deserve the serious attention of the Committee. The Committee would have observed that during the last twenty years there had been no greater development in any branch of commerce than in the banking interests of the country. If hon. Members would consider the state of the country with regard to banking accommodation in small towns before the establishment of the joint-stock bank system, they would remember that there was then a state of things extremely inconvenient, compared with the present system, and a system the reverse of comfortable to all concerned. Joint-stock banks were established in Scotland many years before they were introduced into England. In every village branches were established, and the mystery always was—the secret which English bankers could never understand—how it was that the Scotch banks could afford to open branches in such small villages and towns in a comparatively poor country. In one small village, with not 1,000 inhabitants, there were three branch banks. How were they maintained? Why, upon a close investigation before a Committee of that House, it became evident, at last, that the secret was really the economy of capital which was accomplished in consequence of these banks holding out to the small capitalists of the locality the temptation of interest from day to day upon their customers. It came out that, in consequence of this system, the deposits in the Scotch banks—he was speaking of fifteen years ago—were upwards of 33,000,000l. sterling, all bearing interest, while the currency of the country in notes, which was economised by the use of cheques and the keeping of banking accounts was, in fact, barely 3,000,000l. The Government had watched with the greatest interest the development of the same principles in England. They have seen joint-stock banks established in the large towns of England, with branches in small towns; they had seen small tradesmen who, twenty years ago, never thought of keeping a banking account, invariably send all their spare money to the bank, and pay their bills by cheques. The result had been most satisfactory. Instead of keeping considerable sums of money in their possession, these tradesmen sent it to the bank, and the effect had been to increase the aggregate amount of capital at the disposal of the bank for ordinary commercial pur- 649 poses. Now, if a stamp were imposed upon cheques drawn upon bankers, the inevitable consequence would be that small shopkeepers, farmers, and large traders, instead of drawing a single cheque for each transaction as they did now, would draw one for a sufficient amount to carry them through the week. The consequence would be a return to the state of things as it existed some years ago, when large amounts of capital lay idle in individual hands, the aggregate of which, if placed in bankers' hands, would have been of the greatest use to the community. Taking, then, the widest view of the case, and after the fullest consideration, the Government could not give their assent to the proposition. It was said, however, that it would yield a very large amount of revenue. From inquiries which the Government had made, they could not at the utmost expect it to produce more than 100,000l. a year. Under all the circumstances, if his right hon. Friend the Chancellor of the Exchequer were present, he would state, he knew, in strong terms, his objection to the imposition of such a tax. He (Mr. Wilson) entertained the same opinion upon similar grounds. He believed it would be the means of wasting capital by its dispersion in small portions.
§ MR. PHINN
said, that after the explanation of the hon. Gentleman he would withdraw the Resolution; but he could not do so without stating that he considered the estimated produce of the proposed stamp—100,000l.—as very much below the real amount. This stamp was an instrument by which the great and wealthy might contribute a large annual sum to the revenue without perceiving it, and he considered that it might also be accomplished without the slightest injury to trade. The question had made great advances in public estimation, and he believed it would continue to make way until its adoption.
§ MR. THOMSON HANKEY
said, if this tax was imposed, and he believed it would be imposed by some Chancellor of the Exchequer before very long, though it might be opposed by the Chancellor of the Exchequer now, he was of opinion that it would be attended with most advantageous results to the public. He believed that, though it was now opposed by Gentlemen connected with many London banking houses, whose views were supported by the Chancellor of the Exchequer, it would be an advantageous mode of collecting public revenue, and that it would not be found to 650 interpose any impediment to the general spread and increase of banking in this country.
§ Motion, by leave, withdrawn; the House resumed, Resolutions to be reported on Monday.