HC Deb 15 April 1902 vol 106 cc337-58

2. Motion made, and Question proposed, "That on and after July 1st, 1902, two pence shall be substituted for one penny as the Stamp Duty on Bills of Exchange payable on demand, or at sight, or on presentation, or within three days after date or sight."—(Mr. Chancellor of the Exchequer.)

(7.45.) MR LOUGH (Islington, W.)

said he wished to protest against the imposition of this tax. He thought the matter should receive a little more attention from the Chancellor of the Exchequer than it did in the Budget. The stamp duties were not progressive. The Chancellor of the Exchequer had to admit that he had realised £200,000 less last year than he had estimated they would produce. A great many of the stamp duties were levied on trade and commerce, and as trade was not particularly flourishing at the present moment, it was unfortunate that the Chancellor had elected to put on a burden of this kind, which would press heavily on every branch of industry throughout the country. This was a worrying and irritating tax on trade. It was a tax on financial transactions and conveniences which might have no profit attaching to them. If the Chancellor of the Exchequer persisted in the proposal to put a two penny stamp on cheques, he would be disappointed in the result of the tax, and if he were not, the burden on commerce would be out of all proportion to the advantage gained. He had no doubt the Chancellor of the Exchequer had made a calculation of the number of cheques used at present, but the great use which was made of cheques had grown up because the tax was 1d. If they made the tax 2d., the whole Custom of trade would be altered, and cheques would not be drawn for small amounts as at present. He cited one case of a small Co-operative Society in Ireland. The profits of the concern were not more than £200 or £300, and the Society now paid £90 a year for cheques. If this Resolution was passed, and The Society continued to use cheques, they would in future have to pay £180 a year. Of course the result would be that they would cease to use cheques altogether, and would fall back on coin, and the Chancellor of the Exchequer would get nothing, and would deserve to get nothing, because, not being satisfied with the substantial sum he was at present receiving, he proposed to double it, and in that way would lose all. In London and other commercial centres a practice had grown up of practically making the bank the accountant of the firm. Almost everything was paid by cheque, because the cheque book was a kind of check on the accuracy or the other books. At present the Chancellor of the Exchequer got a penny out of every transaction, but did the right hon. Gentleman suppose that cheques would continue to be issued for small sums of 1s., 2s., or 10s., if they were to cost 2d. each? The Chancellor of the Exchequer said that this would be a convenience to bankers, but he said respectfully that the right hon. Gentleman ought not to interfere in the matter. It was not his business to save the bankers trouble. The present arrangement was a great commercial convenience, out of which the Chancellor of the Exchequer received a good revenue, and it ought to be left alone. He held in his hand a telegram sent to the Chancellor of the Exchequer this day from the President of the Belfast Chamber of Commerce, which, he believed, supported the right hon. Gentleman loyally with reference to the war. But that telegram stated that the Belfast Chamber of Commerce very emphatically protested against the proposed additional 1d. stamp on cheques, which would constitute an unequal burden on small traders and retailers, would dislocate existing business methods, and create a great amount of delay and irritation out of all proportion to the yield of the tax. That was a very strong protest indeed, and the Chancellor of the Exchequer ought to pay attention to it. He would ask the Chancellor of the Exchequer to consider representations that would be made to him on the matter. The right hon. Gentleman could not be sure that he was not doing something which would be very worrying and very vexatious to business men. He hoped, therefore, that even if the Chancellor of the Exchequer insisted on having the Resolution passed tonight by a somewhat obedient majority, he would at least, in the interests of commerce, promise to give an attentive ear to the representations that would be made to him, and that, if he found the burden would be greater and the duty less productive than he expected, he would not press it.

(7.54.) MR. WILLIAM ALLAN (Gateshead)

said he wished to make a few remarks on the proposed additional stamp duty on cheques. He thought, as a business man, that the right hon. Gentleman had made a great mistake, and that when he saw the great amount of bother and trouble that would be given to many small retailers and dealers, he would be well advised to withdraw that part of the Budget. He would recommend to the Chancellor of the Exchequer a very simple way of getting the money without dislocating trade or bringing himself into odium with the country. It was that the Chancellor of the Exchequer could get the money he required if he would only put a tax of 1d. per pound on share certificates on issue. Let the Committee suppose that a company was formed with a capital of £100,000 in £1 shares. What was to hinder the Chancellor of the Exchequer putting a duty of a 1d. per pound on each share certificate? That would cause no dislocation and no irritation. He called it paltry to put a further 1d. on each cheque. Was he expected to put a postage stamp on each cheque he issued, or get another cheque book or what? It was not real business, and was a paltry way of raising money, and it was well worthy of the consideration of the Chancellor of the Exchequer whether he would not abandon his present position, and put a stamp on every certificate issued by a limited company. He was speaking entirely as a business man to a business man. Why should not the right hon. Gentleman put a tax on pig iron warrants? There again he could get the money with the least possible irritation. He spoke merely with a view of getting the Chancellor of the Exchequer into a right business frame of mind, and he was sure that if the right hon. Gentleman only substituted a penny on every share certificate for his present proposal he would get far more money.


For the last two hours I have been abused for not attempting to raise more money by taxation for the necessities of the year. Now I make a humble proposal calculated to produce £500,000, and it is denounced by the very Gentlemen who just before complained that enough taxation was not being raised. Every tax which I have proposed in the last three years, except the increased income tax and the duties on beer and spirits, has been denounced by the Gentlemen who abuse me for not raising more by taxation. It is all very well to talk of this proposal as petty; but hon. Gentlemen do not realise what an enormous resource there is in penny taxation. All that hon. Members have said as to the delay and worry that will be caused by the twopenny stamp on cheques, is precisely what was said when the original proposal for a penny stamp was made. Now the revenue from that penny stamp amounts to £800,000 a year. I cannot see why the addition of a penny should cause any additional delay. The duty will not come in force until July 1st; and as to worry, what worry will there be? Whether you pay a penny, or whether you pay twopence, there is no more worry about it. What burden it will impose on givers of small cheques is another point, and is a point that has been enormously exaggerated by the hon. Member for West Islington. He told us that a Co-operative Society in Ireland paid to the Exchequer £90 a year on cheques. According to my calculation, the Society must be doing a large business, and issuing about eighty cheques in a week, and I think the hon. Member must have made a mistake in calculating the dealings of the Society. Where the payments required to be made are very small, why could not people make them by postal orders?


Why should you stop them?


Because I am informed by those who ought to know that I should increase the revenue by £500,000 a year.

MR. JOSEPH A. PHASE (Essex, Saffron Walden)

How much at present is raised by the penny on warrants and on cheques?


The whole produce of the penny duty on bills at sight is estimated at £800,000, but, of course, my proposal only applies to nine months of the present year. I can only; say that in dealing with these stamp duties, one has to act very often without being able to make much inquiry. I will be perfectly willing to receive from any quarter, any suggestions as to the inconvenience or difficulty that may be caused by the operation of this tax, but I must ask the Committee to vote it tonight. I cannot hold out any hope whatever that I am prepared to abandon the tax, but I will be prepared to consider any representations that may be made to me. (8.5.)


said the Chancellor of the Exchequer had taunted the Opposition with having from time to time criticised the Government for not taking enough money out of the taxpayer, and for leaving to posterity great liabilities in regard to loans in connection with the cost of a war for which posterity was in no sense responsible. The right hon. Gentleman then proceeded to criticise the Opposition, because they had denounced the proposal to raise money by an additional penny on cheques and dividend warrants. But the objections were quite consistent. There were many Members of the Opposition quite ready to condemn the Government, not only for the insufficiency of the amount they had raised from the taxpayer, but also for the method they had selected by which to raise even the small amount to be imposed during the current year. Many other methods, such as the imposition of additional burdens on royalty rents and ground values, might have been adopted. Personally, he thought everyone should pay according to his ability, but the ideal of a graduated income tax was somewhat difficult to carry out. Direct taxation certainly had some advantages over indirect taxation. It tended to economy. Persons who paid direct taxes realised how much they were paying for the services of the State, and they consequently exercised a very salutary cheek upon the Government of the day in regard to expenditure. But there were also one or two inconveniences connected with the system. Direct taxes were more easily evaded, and they encouraged attempts on the part of the public to circumvent the Government. That was one of the greatest objections in connection with the present proposal to impose another penny on cheques. The idea, however, had the merit of novelty. Nobody had expected the Government would make such a proposal, and it was difficult at a few hours notice accurately to say what would be its effect. One hon. Member had alluded to a Cooperative farm upon which an additional charge of £80 a year would he imposed by this tax. He had had placed in his hands a letter from the Secretary of an asylum for the blind, stating that the charge would place on that institution a burden of £40 a year if they sent out the same number of cheques as hitherto. Similarly, the proposal would prejudicially affect many worthy charitable institutions, such as hospitals and so forth, in which an enormous number of commodities were required. There would be a tax upon those bodies in every payment they made month by month or week by week. How did this proposal affect private persons? In future most business people would obtain postal orders for their small amounts which they had been in the habit of sending by cheque.


And the revenue will profit by it.


said that when the amount was a small one they would only obtain a half-penny Postal Order, and the result would be that the revenue would lose on the transaction. Many people wrote cheques for small amounts, but if the Government made it worth the while for people to obtain small Postal Orders instead of making out cheques the Government would lose by the transaction. He believed that the result of this change in the stamp duty would be a reduction in the amount yielded instead of an increase. He had served on the Finance Committee of a Corporation for ten years, and on the Finance Committee of the County Council for fourteen years, and he knew something about the way the finances of local bodies were conducted. Upon public bodies nearly every payment was made by cheque. The various Committees in connection with county I and boroughs councils required a large number of commodities, and they had to make a large number of small payments. Upon the two public bodies with which he was connected he should say that about 5,000 cheques per month were used. Therefore the county he referred to paid £250 per annum for cheques at the penny rate, but if they had to pay at the twopenny rate it would cost them an additional £250, and they would naturally devise some expedient for not issuing so many cheques. Take, as another instance, a borough of 40,000 people where a penny rate would produce about £500, and suppose they issued about 5,000 cheques per month. From such a borough the Government would expect to get £500 per annum. Surely a town realising that this stamp duty would mean one penny in the pound on the rates, would do its utmost to avoid drawing so many cheques. By this proposal they got the ludicrous position of the Treasury granting relief to local rates, and the ratepayers contributing to the Imperial funds out of the rates. This proposition would be an inducement to people to pay as much money as possible either in cash or in some other way. It was a very easy thing for the public body to pay in cash. Take for instance the county of Durham. There a large number of commodities were purchased from the city of Newcastle, and it would pay that county to send a clerk to the various trades people to pay their accounts rather than draw 400 or 500 cheques. This proposal would induce public bodies as well as private persons to evade as far as possible this new tax. As a person responsible for the drawing of a large number of cheques he could see his way to reduce the number drawn by 25 percent., and in the interests of the concerns with which he was identified he would do this. He thought that instead of anything like £500,000 being produced by this additional penny on cheques the Government would find that it would add very little to the total revenue. So far as he was able to judge he considered it would be a vexatious and irritating tax which was not calculated to serve the interests of the country.

* (8.50.) MR. DAVID MORGAN (Essex, Walthamstow)

, said that in a charitable institution with which he was connected they were in the habit of drawing every month a large number of cheques, and it was more convenient for them to draw cheques than to obtain postal orders. Their object ought to be to make business easy and not difficult. If a man had to pay a large number of small amounts he could draw cheques with very little trouble and without any waste of time, but if he had to get postal orders a good deal of time would be wasted in the process. He had received from a large number of small traders in his constituency already a large number of protests against this tax, which they stated would cause them much extra expense in their businesses. The small trader had, at the present time, great difficulty in making both ends meet, and this tax would reduce still further his margin of profit. The Chancellor of the Exchequer had said that it they voted this tax now he would consider later on any proposition which might be made upon the subject. If the Chancellor of the Exchequer was determined to adhere to this proposal he would ask him to put the extra penny only upon cheques of £100 or upwards. This would prove a great saving in the case of charitable institutions. There seemed to be only one class of people who were pleased with this tax and they were the bankers. One banker had told him that this was a splendid thing, because he would now have to keep less clerks.

(8.55.) MR. FIELD (Dublin, St. Patrick)

said he did not think this tax was worth the irritation it would cause, for it was a tax upon the small transactions of traders. A Liverpool salesman had told him that this tax would be a burden upon him of £2 per week, and he stated that he would certainly devise some other method of payment instead of by cheques. He did not think the right bon. Gentleman realised how much this tax would strike at their home trade. He was the chairman of the Blackrock Technical School Committee and it was his duty every month to sign a number of small cheques for the salaries of their officials, and occasionally he had to sign as many as forty cheques at a time. If this tax was agreed to, it would be the duty of that school to devise some other means of paying those officials instead of using cheques, and the Exchequer would lose by the transaction. At the present time a penny stamp had to be paid upon a receipt of £2 and upwards, and if the payment was made by cheque in the future it would mean that an ordinary business transaction would cost threepence. In small businesses now there was some keen competition that it was very doubtful whether these small transactions could bear this additional expense. In all transactions for over £1 it was very convenient to pay by cheque, because they were able so keep a record, and the cheque itself was a receipt and this simplified business very much. That process would not be possible in transactions where postal orders were remitted. Without considering the question of expense the cheque system was preferable to business men, and he could not quite understand why this proposal had been made in such a hurry. Instead of the right hon. Gentleman trying to rush this question he thought it ought to be postponed. The Chamber of Commerce, the mercantile associations and business men all over the three kingdoms had a right to be consulted before a proposal of this sort was rushed through the House of Commons. He therefore trusted that the right hon. Gentleman would reconsider the proposal, and postpone the question until the opinion of the country had been ascertained. This was a tax upon home trade. The charge for the transfer of foreign securities was 2s. 6d. per cent., and yet it was proposed to charge 2d. for cheques. The ratio of expense was not equal at all. He held that it ought to be the duty of the House to protect and develop home trade. If no one else divided the House on the question he would certainly do so.

(9.3.) MR. BARTLEY (Islington, N.)

said he desired to join in the protest against the proposed additional tax on cheques. It seemed to him a most irritating tax, which would throw a certain amount of grit into the mercantile machinery of the country. There was no doubt that the cheque system had developed enormously on account of the facility it afforded for the making of payments. The irritation which the change would produce would be most objectionable. The penny stamp was a very good one, because it made the cheque a recognised document with a legal stamp on it. It seemed to him that the maximum of inconvenience would be produced for the very small amount of benefit to be obtained. He thought the Chancellor of the Exchequer would find, if the tax were persisted in, that he had made a great miscalculation as to the amount it would produce, because the tax would be resented by a great many people in trade, and some other mode of paying accounts than by cheque would be devised. He was sorry to oppose the Budget in any way, but he could not support the present Resolution.

MR. KEARLEY (Devonport)

said that on this occasion at all events, they had heard a great deal of fault expressed from all quarters of the House in regard to the proposed additional tax on cheques. It was undoubtedly an unpopular and unwise tax, and would not realise anything like the amount anticipated. There seemed to be a strange fatality about Chancellors of the Exchequer, who at some time in their careers seemed impelled to introduce a species of tax which was thoroughly unpopular, and had to be withdrawn. Mr. Lowe made that error when he endeavoured to introduce the match tax, and one of his successors, Mr. Goschen, also made a similar mistake, when he tried to put a tax upon the wheels of certain vehicles. The present Chancellor of the Exchequer, after a brilliant career, was proposing a tax that the country would object to, not because they objected to pay the amount of the tax, but because it was irritating in its character, and would probably result in the defeat of the object which the right hon. Gentleman had in view, namely, that of increasing the revenue. It had been said that probably bankers would view this additional impost of a penny upon the cheque with favour. No doubt, because it would cause a less number of entries to go through their books At the same time it would impose a great amount of harassment upon business men, and would be hurtful to those persons who dealt with small sums, and who would feel the irksome-ness of the tax. It had become a habit of people, not only the small but the largest business firms and traders, to pay by cheque, because this ensured good accountancy, which was of the first importance. If they wanted to keep their books right and save peculation from petty cash, the sure way was to pay by cheque. Then the transaction was entered in their journals, and everything was testified to in an accurate manner. It used to be the custom to draw a cheque for £20, £30, or £50, and pay out the small amounts in cash. That was no longer the habit in large business houses. They drew cheques for 5s. or 6s. sooner than expose their employees to the risk of temptation. He was afraid the Chancellor of the Exchequer would find that he would be grasping at the shadow and running the risk of losing the substance. He now got for every hundred cheques drawn 8s. 4d. He anticipated that he would get for every hundred 16s. 8d. The hon. Member very much doubted whether if he persisted in that tax he would get the original amount of 8s. 4d. He had occasion this morning to invite opinions from some of those with whom he worked in his business, and they assured him that the proposed tax had induced them to make an investigation into the amount of money that was being paid by cheque, and they were perfectly certain that there would be a great diminution in that: direction. The lavishness now-exercised in paying by the penny cheque would be brought to an end. The tax could be avoided in many ways. The money order system would be taken advantage of to a very great extent, because they could obtain a 10s. 6d. postal order for a penny. Then, again, customers who wanted to remit money to their wholesale houses, instead of paying the 2d tax as the Chancellor of the Exchequer expected they would do, would be induced by the wholesale merchants to use the numerous branches of banks now existing in every part of the country, and the transaction would be completed through the ordinary banking account in connection with the particular business house concerned. To the commercial classes of this country such a tax would be oppressive. If the Chancellor of the Exchequer wanted more money, Jet him obtain it in a bold way, let him put another penny on to the income tax. The right hon. Gentleman would be, well advised to withdraw this proposal, just as last year he was advised to withdraw the proposed tax on contracts, and thus save the mercantile community from a matter which was more or less trumpery, but which at the same time would be strenuously resisted.

MR. FLYNN (Cork County. N.)

said a suggestion was thrown out by the hon. Member opposite that a limit might be placed on the tax, and that 2d. might be charged on cheques of £100 and upwards. The tax as proposed embodied the maximum of inconvenience and harassment with the minimum of result. The objections to the proposal with regard to small commercial transactions in England would apply with much more force in Ireland, where a system had grown up for settling by cheque small transactions between town and country, in poultry, butter, and eggs. The revenue really got 3d. for each of these transactions when over £2–1d. for the cheque, 1d. for the receipt, and 1d. for postage. He thought this tax would be a most tin-popular one, while it would produce very small results, and he hoped there would be some indication given from the Treasury Bench that the Chancellor of the Exchequer would reconsider the matter.

(9.18.) MR. ALEXANDER CROSS (Glasgow, Camlachie)

said he entirely sympathised with the Chancellor of the Exchequer in the difficult task which he had to face, but what he wanted to point out was that the right hon. Gentleman had not succeeded in this tax in finding a new class of persons to bear it. The persons who would pay this £500,000, if the tux was carried, would be the people who were already paying income tax, the death duties, and all those taxes which had been heaped upon their shoulders. This was not a tax which would be paid by the great consumers of the country, and by putting this 1d. on cheques, the right hon. Gentleman was practically putting a 1d. on the income tax, instead of taxing an entirely new class of persons. He objected to the tax on the ground that it was an unnecessary interference with trade. He excused the right hon. Gentleman for the unintentional blunder that he had made, because he could not be expected to know much of the realms of trade. The right hon. Gentleman had taken the advice of bankers. Such advice with regard to towns might be good enough, but when the right hon. Gentleman came to talk of the customs of trade, of the method in which we paid our accounts and servants, of our dealings in country markets with our farmers, it was an entirely different matter. What happened in Scotland? In olden days men went to the markets of Edinburgh and other places with their pockets full of money, and had, in the course of their dealings, to resort to public houses. Why? Because there alone could change be obtained. What happened now was that men wrote cheques, and all these adjournments to public houses had been done away with. They had been got rid of largely by the facility of the 1d. cheques. Did the right hon. Gentleman know what the Scotsman was? Did he suppose he was going to pay 2d. when 1d. would do? The success of his countrymen had been largely due to the care they took of their pence, and the right hon. Gentleman had no conception of the trouble they would take to evade an impost of this sort. He, himself, since the debate had been in progress, had begun to consider how much he had spent in cheques, and he found that he had spent in 1d. cheques £300 in a. very short time. A Scotsman did not spend £50 unless he had previously found out a way of saving it, and he was perfectly certain that the result of such an impost as this would be that men would take the opportunity of looking into the money which they spent in this way, and would discover a way by which they might evade this 2d. duty. He had always observed that when a new tax was imposed, that tax was apt to become permanent. Loans had been spoken about, and the Committee had been told that those loans would be paid by somebody else. That might be so, but whether that was so or not with regard to loans, if this tax was passed it would remain, and he trusted under the circumstances that the right hon. Gentleman would find some other means of attaining the end he had in view.

* (9.27.) MR. CORRIE GRANT (Warwickshire, Rugby)

thought there was a good deal to be said for the suggestion that this tax should not be imposed upon cheques below a certain limit. A limit of £100 had been suggested, but in his opinion it would be sufficient if the limit was made £20. If that limit was fixed there would be this advantage, that bankers would refuse to issue these 2d. cheques except to customers whose, means were undoubted, and as a result business men would at last have a cheque with a certain guarantee, or, at any rate, a cheque with a greater guarantee than there was at the present time. That would certainly be an advantage to those; who had large dealings with cheques coming from persons of whom they knew nothing but their signature. Then there was the other point of view, the position of the small professional man who had great difficulty in making both ends meet. The person who had a small banking account had a constant check upon himself, because if he overdrew his account the bank did not treat him in the same way as they would treat a large customer; he would be at once asked to close his account. Again, a great many people now used their banking account as a cash account. They paid in everything and they paid everything by cheque, and relied on their pass-books to see how they were going on. He thought if this tax was passed the right hon. Gentleman would find at once that an endeavour would be made on the part of the public at large to See, he would not say how to evade it, but, to see how they could avoid drawing so many cheques. Another reason why the present system should not be interfered with was that a cheque was primâ facie evidence of payment to the person to whom it was drawn. One of the greatest difficulties which traders experienced when they came to the Law Courts was not the validity of their case, but the nature of the evidence required to prove it. It frequently happened that a case to recover £ 10s. involved a cost of £5 for the evidence necessary to prove the case, but a cheque was primâ facie evidence. The temptation to the right hon. Gentleman was apparent. Here was at least £500,000 which it seemed he could easily collect. No doubt he had some figures which justified the assumption that 120,000,000 cheques were drawn annually, and one could easily understand the temptation to put an extra penny stamp upon those cheques. If the argument was sound, one could justify the action of the Chancellor of the Exchequer in asking for £500,000 in this way, which would be something towards making up his deficit. He, however, thought that the number of cheques he should draw at 2d. a cheque would be much less than the number he drew at 1d. He had always paid by cheques since he had had a banking account, and he now drew perhaps 200 cheques a year, but if this tax passed, instead of drawing a cheque for each amount he would draw a cheque for the whole sum and distribute the cash among his tradesmen afterwards. That, he believed, would be the way this tax would affect everybody who had to pay small sums, and as a result the revenue of the Chancellor of Exchequer would be reduced instead of being increased.

MR. BANBURY (Camberwell, Peekham)

hoped the Government would reconsider this tax as far as it referred to cheques. So far as it concerned bills at sight and dividend warrants he had no objection to it, but he believed, so far as it concerned cheques, even if the right hon. Gentleman imposed it he would gain nothing by it. His objection to it was two-fold. In the first place it would fall very unequally upon the tax-payer. Certain men drew few cheques in the year. Others, who might be poorer men, drew many more. One man had told him that he drew on the average sixty cheques a day for small sums. A difference would be made to him of over £75 a year. That in itself seemed to show that the tax would be unfairly imposed. In the second place, it would not be an advantage to bankers, but a loss. It would destroy banking facilities, and people would go back to the old custom of keeping money in their houses. He had been told by a banker of his acquaintance that it would entail great loss on the banks, because it would diminish deposits. People would draw cheques once a month or once in two months, and pay their accounts with the money they had drawn. Thus the people would hoard gold, which it was not desirable that they should do. He was of opinion that the tax, if passed, would not only not increase the revenue, but would go a great way towards destroying the banking facilities of the country.

(9.37.) MR. GIBSON BOWLES (Lynn Regis)

expressed regret that the right hon. Gentleman the Chancellor of the Exchequer could not have been in his place during the whole of this debate. If he had been, he would have found that on this occasion not one defender of the Government could be found. There was not one ewe lamb even from the Inns of Court. Every Member who had spoken upon it had spoken against this tax. He could not conceive how the tax had ever got into the head of the Chancellor of the Exchequer. He could only suppose that there must have been some re-consideration of the Budget at the last moment, and something withdrawn which left a deficit of half a million, and that the Chancellor of the Exchequer had put in this tax to fill up the gap. Of course, when the Chancellor of the Exchequer brought in a new tax of this kind he could not always command expert advice as to the effect of the tax and its merits, but surely on this occasion he must have been in a position to obtain good advice. Sitting near the right hon. Gentleman was the President of the Board of Trade, who, no doubt, was extremely conversant with all these matters, who had both private and official knowledge of them; and if the Chancellor of the Exchequer had not sought the advice of the President of the Board of Trade on this occasion, he had missed an opportunity which he ought to have taken. He entirely agreed with every hon. Member who had spoken as to the extraordinary demerits of this tax. He thought the device was a most unfortunate, inadvisable, irritating, and foolish one. What was the genesis of the cheque? Originally mankind carried out their commercial transactions by a brutal system of barter. They then evolved a system of currency, and eventually elaborated a system of credit. The cheque was the crown and summit of the modern system of credit. It was that which marked the great difference between the highly civilised and commercialised man and the savage. And it was largely because of the increased reliance upon the system of credit which we knew as "the cheque" that we had such an enormous increase in the commerce of the country. The Chancellor of the Exchequer really seemed to desire, so far as his tax could do it, to put an end to that system of credit, and to drive us back to the methods of barbarism, to force us to leave our money no longer with the banker, by whom it would be lent to others and left to fructify, but to withdraw it from our bankers and keep it in drawers in our private houses. This tax was mischievous in every way; it would be mischievous in its effect on the banking system; it would diminish the capital available in the country for commercial purposes, and would have every sort of pernicious effect. The Chancellor of the Exchequer seemed to think that this extra tax would not make much difference. It would make all the difference in the world. Nobody minded paving a penny; everybody minded paying twopence. It seemed strange, but everybody who knew human nature knew that it was so. Between the penny and the twopence there was a wide chasm fixed, which nothing could bridge, in the imagination of man. It was so. Let the House take the example of the Post Office. The Post Office earned its enormous revenue entirely by virtue of the penny. It was the magic virtue of the penny postage which enabled the Post Office to earn its revenue, and not to only earn its own revenue but to carry on its shoulders the loss of the higher tariffs of the telegraphs and the telephones, all of which it was responsible for, and which were carried on at a loss. Would either the Chancellor of the Exchequer or the Postmaster General dare to raise the postage to 2d.?

The Chancellor of the Exchequer recognised, as did everybody else, that in the case of small cheques the extra charge would be enormous, but his argument was that in the case of large cheques it would make no difference at all, and for the transmission of smaller amounts the right hon. Gentleman suggested that the Post Office might be utilised, and instead of sending a cheque a money order might be sent. In the first place, to send an amount not exceeding £1 by means of a money order cost 2d., and between £1 and £3 it cost 3d., and there were other restrictions. You had to put your name and write it carefully, and it there was a mistake the Post Office would not recognise it. If one wanted to "stop" it, then it cost 4d. more. And, last of all, the Post Office took no responsibility. There was no banker or merchant—no man who dealt in cheques or transmission of money—who could cover himself with such a mantle of irresponsibility. To suggest the use of the Post Office was little less than a mockery. As a substitute for a cheque, one would have to send and sign for a money order, which was all time and trouble. What one had to do when one wanted to send money to the other end of the town or the other end of the Kingdom, or to some other Kingdom, was to write a cheque and cross it and one felt perfectly at ease as to the safety of that cheque. Would the Chancellor of the Exchequer apply this system to the £150,000,000 of the savings of the people which the Post Office had in its charge? Every halfpenny of that could be drawn out without a stamp at all. If we required a stamp for 2d. when we drew out money from the bank, why not apply the system to the Post Office? Why should the Post Office perform its business—and very badly it did it, as a rule—under such circumstances as these? It was not fair to leave that establishment entirely free from the fiscal charges laid upon other banks. As had already been pointed out, this tax in effect amounted to an other in come tax. Cheques were used as a rule by those who paid in come tax; those who did not pay income tax did not as a rule use cheques. If in times to come some more liberal Chancellor of the Exchequer took a halfpenny off this tax, then probably cheques would be used by those who had small incomes and who read the Daily Mail. This tax was an addition to the daily expenses of those who used cheques, and practically amounted to an addition to the income tax. He did not know how many cheques people drew as a rule. He personally drew perhaps 300 cheques in the course of the year, and so there would be no considerable addition to his payments upon these transactions. But it would be putting an additional shackle on trade, and he begged the Chancellor of the Exchequer to abandon a proposal which had caused considerable irritation and alarm.


I am surprised at the extraordinary importance that appears to be attached to this small additional charge by hon. Members, not on behalf of those who use cheques to a very large extent, but on account of their own personal convenience. The hon. Member for Rugby spoke of drawing 300 cheques a year, and said that this tax would make him consider how he could reduce them. Was the addition of 300 pence an insupportable burden to him? The hon. Member for King's Lynn spoke as if the additional penny would very seriously

affect the banking business, and induce people to keep their money in a stocking. He, it appears, draws 300 cheques annually, and will he give up the convenience of the banking system for 25s.? I appeal to the Committee to treat this as a business matter. I have not been able to be present throughout the entire debate, but I have heard a great deal of it, and will make myself acquainted with all the objections urged. I have already promised to look into these objections and any communications I receive. I admit that there is something to be said in favour of differential treatment of cheques for small amounts, and it may be possible to modify my proposal, though I cannot now say anything definite upon that. I hope the Committee will now agree to close this preliminary discussion and take the Resolution.

(9.56.) Question put.

The Committee divided:—Ayes, 186; Noes, 119. (Division List No. 111.)

Acland-Hood, Capt. Sir Alex. F. Clive, Captain Percy A. Goulding, Edward Alfred
Agg-Gardner, James Tynte Cohen, Benjamin Louis Green, Walford D. (Wed'bury
Anson, Sir William Reynell Collings, Rt. Hon. Jesse Gretton, John
Archdale, Edward Mervyn Colston, Chas. Edw. H. Athole Gordon, Sir W. Brampton
Arkwright, John Stanhope Corbett, T. L. (Down, North) Hall, Edward Marshall
Arnold-Forster, Hugh O. Cranborne, Lord Hambro, Charles Eric
Arrol, Sir William Cripps, Charles Alfred Hamilton, Rt Hn Lord G. (Mid'x
Bagot, Capt. Josceline Fitz Roy Cross, Alexander (Glasgow) Hamilton, Marq. of (L'nd'derry
Bailey, James (Walworth) Crossley, Sir Savile Hanbury, Rt. Hn. Robert Wm.
Bain, Colonel James Robert Dalkeith, Earl of Hare, Thomas Leigh
Baird, John George Alexander Dalrymple, Sir Charles Haslam, Sir Alfred S.
Balcarres, Lord Davenport, William Bromley- Hatch, Ernest Frederick Geo.
Baliour, Rt. Hon. A. J. (Manch'r Davies, Sir Horatio D (Chatham Heath, James (Staffords. N. W.
Balfonr, Rt Hn Gerald W (Leeds Davies, M. Vaughan-(Cardigan Heaton, John Henniker
Balfour, Kenneth R. (Christen. Dickinson, Robert Edmond Helder, Augustus
Banbury, Frederick George Dickson, Charles Scott Hermon-Hodge, Robt. Trotter
Beach, Rt Hn. Sir Michael Hicks Doughty, George Hickman, Sir Alfred
Bhownaggree, Sir M. M. Douglas, Rt. Hon. A. Akers- Hoare, Sir Samuel
Bignold, Arthur Doxford, Sir William Theodore Hobhouse, Henry (Somerset. E.
Bigwood, James Duke, Henry Edward Hogg, Lindsay
Black, Alexander William Durning-Lawrence, Sir Edwin Hope, J. F. (Sheffi'd, Brightside
Blundell, Colonel Henry Evans, Sir Francis H (Maidstone Hoult, Joseph
Bond, Edward Fellowes, Hon. Ailwyn Edward Houston, Robert Paterson
Boscawen, Arthur Griffith- Fielden, Edward Brocklehurst Jebb, Sir Richard Claverhouse
Brassey, Albert Finch, George H. Johnston, William (Belfast)
Brookfield, Colonel Montagu Finlay, Sir Robert Bannatyne Kennaway, Rt. Hn. Sir Jn. H.
Brotberton, Edward Allen Fisher, William Hayes Kenyon, James (Lancs. Bury)
Butcher, John George Flower, Ernest Kenyon-Slaney, Col. W. (Salop.
Carson, Rt. Hon. Sir Edw. H. Forster, Henry William Keswick, William
Cavendish, V. C W. (Derby shire Foster, Sir Michael (Lon. Univ. Knowles, Lees
Cecil, Evelyn (Aston Manor) Foster, Phil. S. (Warwick, S. W. Lambton, Hon. Frederick Wm.
Chamberlain, Rt. Hn. J. (Birm. Foster, Sir Walter (Derby Co.) Laurie, Lieut.-General
Chamberlain, J. Austen (Worc'r Gardner, Ernest Lawson, John Grant
Chamberlayne, T. (S'thampton Gibbs, Hn. A. G. H. (City of Lon. Lee, A. H. (Hants, Fareham)
Chapman, Edward Gordon, Hn. J. E (Elgin & Nairn) Legge, Col. Hon. Heneage
Charrington, Spencer Gore, Hn. S. F. Ormsby-(Linc) Leveson-Gower, Fred. N. S.
Clare, Octavius Leigh Gorst, Rt. Hon. Sir John Eldon Llewellyn, Evan Henry
Long, Rt Hn Walter (Bristol, S) Powell, Sir Francis Sharp Stanley, Lord (Lancs.)
Lowe, Francis William Pryce-Jones, Lt.-Col. Edward Stewart, Sir Mark. J. M Taggart
Lucas, Reginald J. (Portsm'th. Purvis, Robert Stone, Sir Benjamin
Lyttleton, Hon. Alfred Pym, C. Guy Sturt, Hon. Humphry Napier
Macdona, John Cumming Randles, John S. Thomas, J A (Glamorgan, Gower
MacIver, David (Liverpool) Rankin, Sir James Thornton, Percy M.
Maconochie, A. W. Rattigan, Sir William Henry Tomlinson, Wm. Edw. Murray
M'Arthur, Charles (Liverpool) Rea, Russell Take, Sir John Batty
Majendie, James A. H. Reid, James (Greenock) Valentia, Viscount
Malcolm, Ian Remnant, James Farquharson Warde, Colonel C. E.
Maxwell, Rt Hn Sir H. E. (Wig'n Ridley, Hn. M. W. (Stalybridge Warr, Augustus Frederick
Maxwell, W. J. H. (Dumfriessh) Ritchie, Rt. Hn. Chas. Thomson Wason, John Cathcart (Orkney)
Mitchell, William Roberts, John Bryn (Eifion) Williams, Osmond (Merioneth)
More, Robt. Jasper (Shropshire Roberts, Samuel (Sheffield) Williams, Rt Hn J Powell-(Birm
Morrison, James Archibald Robertson, Herbert (Hackney) Wills, Sir Frederick
Mount, William Arthur Rolleston, Sir John F. L. Wilson, A. Stanley (York, E. R.)
Mowbray, Sir Robert Gray C. Russell, T. W. Wilson, John (Falkirk)
Murray, Rt Hn A. Graham (Bute Rutherford, John Wilson, John (Glasgow)
Murray, Charles J. (Coventry) Sackville, Col. S. G. Stopford- Wilson, J. W. (Worcestersh. N.)
Murray, Col. Wyndham (Bath) Seely, Maj. J. E. B. (Isle of Wight Worsley-Taylor, Henry Wilson
Myers, William Henry Sharpe, William Edward T. Wylie, Alexander
Orr-Ewing, Charles Lindsay Skewes-Cox, Thomas Wyndham, Rt. Hon. George
Palmer, Walter (Salisbury) Smith, Abel H. (Hertford, East) Yerburgh, Robert Armstrong
Parkes, Ebenezer Smith, H C (North'mb. Tyneside TELLERS FOR THE AYES—Sir William Walrond and Mr. Anstruther.
Pemberton, John S. G. Smith, James Parker (Lanarks.
Platt-Higgins, Frederick Spear, John Ward
Abraham, William (Cork, N. E.) Jordan, Jeremiah O'Malley, William
Allan, William (Gateshead) Joyce, Michael O'Mara, James
Allen, Charles P. (Glouc., Stroud Kinloch, Sir John George Smyth O'Shaughnessy, P. J.
Bartley, George C. T. Kitson, Sir James Pease, J. A. (Saffron Walden)
Blake, Edward Langley, Batty Power, Patrick Joseph
Bowles T. Gibson (King's Lynn) Leese, Sir Joseph F. (Accrington) Priestley, Arthur
Brigg, John Leigh, Sir Joseph Reddy, M.
Burke, E. Haviland- Levy, Maurice Redmond, John E. (Waterford)
Burns, John Lewis, John Herbert Rickett, J. Compton
Caldwell, James Lough, Thomas Roberts, John H. (Denbighs.)
Campbell, John (Armagh, S.) Lundon, W. Robertson, Edmund (Dundee)
Cawley, Frederick MacDonnell, Dr. Mark A. Roche, John
Charming, Francis Allston Macneill, John Gordon Swift Roe, Sir Thomas
Cogan, Denis J. MacVeagh, Jeremiah Samuel, S. M. (Whitechapel)
Coghill, Douglas Harry M'Cann, James Schwann, Charles E.
Condon, Thomas Joseph M'Crae, George Shaw, Charles Edw. (Stafford)
Craig, Robert Hunter M'Govern, T. Sheehan, Daniel Daniel
Crean, Eugene M'Kean, John Sinclair, John (Forfarshire)
Cremer, William Randal M'Killop, James (Stirlingshire) Soames, Arthur Wellesley
Davies, Alfred (Carmarthen) M'Killop, W. (Sligo, North) Spencer, Rt Hn. C. R. (Northants
Delany, William M'Laren, Charles Benjamin Sullivan, Donal
Dillon, John Mansfield, Horace Rendall Thomas, Alfred (Glamorgan, E.)
Donelan, Captain A. Markham, Arthur Basil Thomas, David Alfred (Merthyr
Doogan, P. C. Minch, Matthew Thomson, F. W. (York W. R.)
Duncan, J. Hastings Mooney, John J. Thorburn, Sir Walter
Fvans, Samuel T. (Glamorgan) Morgan, David J. (W' lthamstow Tomkinson, James
Fenwick, Charles Moss, Samuel Trevelyan, Charles Philips
Ffrench, Peter Moulton, John Fletcher Warner, Thomas Courtenay T.
Field, William Murphy, John White, George (Norfolk)
Flynn, James Christopher Nannetti, Joseph P. White, Luke (York, E. R.)
Gilhooly, James Nolan, Col. John P. (Galway, N.) White, Patrick (Meath, North)
Goddard, Daniel Ford Nolan, Joseph (Louth, South) Whitley, J. H. (Halifax)
Grant, Corrie Norman, Henry Wilson, Henry J. (York. W. R.)
Griffith, Ellis J. Nussey, Thomas Willans Wilson, John (Durham. Mid.)
Hammond, John O'Brien, James F. X. (Cork) Woodhouse, Sir J T. (Huddersf'd
Harmsworth, R. Leicester O'Brien, Patrick (Kilkenny) Young, Samuel
Harrington, Timothy O'Brien, P. J. (Tipperary, N.) Yoxall, James Henry
Hayden, John Patrick O'Connor, James (Wicklow, W.)
Hobhouse, C. E. H. (Bristol, E.) O'Donnell, T. (Kerry, W.) TELLERS FOR THE NOES—Mr. Kearley and Mr. Holland.
Hope, John Deans (Fife, West) O'Dowd, John
Jones, William (Carnarvonshire O'Kelly, James (Roscommon, N
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