§ This completes the list of my proposals relating to stamp duties, with one important exception. The transfer duty upon stocks and shares is at the rate of 10s. per cent. ad valorem, leviable upon the conveyance by which the transfer is effected. There are, however, many transactions in securities which, for one reason or another, are never followed by an actual conveyance. A block of shares may be sold and resold several times in the course of passing from one permanent holder to another, and the whole of these transactions may be covered by a single transfer from the first seller to the final purchaser. In such cases the intermediate transactions escape taxation altogether, except for the stamp duty chargeable upon the broker's contract note—1d. upon transactions between £5 and £100, and 1s. upon larger transactions irrespective of amount, and they may, I think, reasonably be required to make a moderate contribution to the Exchequer.
§ Such transactions, being mainly of a speculative character, and worked upon 519 narrow margins, will clearly not bear a rate of duty in any way comparable with that charged upon an actual conveyance. Such an impost would, in the first place, from the point of view of the revenue, defeat its object by rendering the greater portion of such transactions impossible, while, in the second place, it would, in my opinion, be opposed to the public interest as calculated to curtail that free circulation of securities which is a necessary condition of steady prices and an open market. For, although these transactions are in the main speculative, and do, at times, like all speculative transactions, degenerate into mere gambling, it is a mistake to suppose that this is their essential or pervading characteristic. In their proper place they form part of the legitimate machinery for discounting fluctuations in value, necessary, not only to the Stock Exchange, but to every sphere of commercial activity, and the imposition of a penal tax designed to curtail the mischievous developments of the system could scarcely attain its object without inflicting irretrievable damage upon the marketability of securities as a whole.
§ The same objections do not, however, apply to a small ad valorem tax, which would operate to check business, if at all, only in the case of operations undertaken upon infinitesimal margins, in which, as a rule, the purely gambling element is most prominent, and which can be dispensed with without seriously endangering the stability of the market. I propose, therefore, that the rate between £5 and £100 should be 6d., instead of 1d.; from £100 to £500 1s. (as at present); from £500 to £1,000 2s., with a further 2s. for every additional £1,000 To prevent those rates affecting what are known as "carry-over" operations with undue severity, a single duty will be charged upon the two transactions involved therein, instead of, as now, the full duty upon each transaction.