§ The Stamp Duties chargeable on marketable securities (other than Colonial Government securities) under paragraphs (1) (c), (3), and (4) of the heading "Marketable Security" in the First Schedule to the principal Act, and the Stamp Duty chargeable on marketable securities, share warrants, or stock certificates to bearer under Sub-section (1) of Section four of the Finance Act, 1899, shall be double those specified in the said Schedule or charged by the said Section, as the case may be.
§ Mr. ROWLAND HUNT moved to leave out the word "Government" ["Colonial Government securities "].
§ The object of the Amendment is that securities of municipalities should have the 624 same advantage as Colonial Government securities, and not be chargeable with double Stamp Duty. I understand that the Government are prepared to consider the matter.
§ The FINANCIAL SECRETARY to the TREASURY (Mr. Hobhouse)We think that the exception in favour of Colonial Government securities is a sufficiently wide extension of the exemptions, and I am afraid we could not accept this Amendment.
§ Sir F. BANBURYThe right hon. Gentleman has refused to accept this Amendment on the ground that my hon. Friend has not very clearly stated his arguments for its adoption. I differ from him. I think my hon. Friend has stated very clearly that he wishes the same facilities and advantages which are to be given to Colonial Government securities to be given to other Colonial securities, irrespective of the fact as to whether or not they are Government securities. The right hon. Gentleman says that he considers that the Government have gone far enough in giving exemptions under this Clause to Colonial Government securities. It is evident by that that the Government consider that Colonial Government securities ought to have some preference. If Colonial Government securities ought to have some preference I fail to see any reason why preference should not also be given to Colonial municipal securities. There is also the question of Colonial provincial Government securities. When this question was discussed upon the Resolution—if the Financial Secretary will refer to the Debate on that occasion he will see—there was an undertaking on the part of the Government to consider whether or not they should include Colonial provincial Government securities as well as Colonial Government securities.
§ Mr. HOBHOUSEI think there was some little misunderstanding during the Debate as to the position of the provincial Government securities. There is no question that under the existing law provincial Government securities are included in the Colonial Government securities, are exempt from the operation of this Clause, and will be exempt in the future, as in the past.
§ Mr. LEVERTON HARRISDoes that apply to Canada?
§ Mr. HOBHOUSEYes.
§ Sir WILLIAM BULLThe new provinces?
§ Mr. HOBHOUSEYes.
§ Sir F. BANBURYIt would be just as well then that the intentions of the Government should be defined. Of course, I accept the right hon. Gentleman's statement, which, no doubt, his advisers have given to him in good faith. But the words are not clear, and if a legal question was to arise it would be no argument to say that in the House of Commons the Financial Secretary told us that it was not the intention of the Government to do so and so. The answer of the judge, or whoever the question might be referred to, would be: "I have nothing to do with what took place in the House of Commons; all I have to do is to consider the Act of Parliament." Therefore I trust, on the Report stage if not now, the right hon. Gentleman will cause words to be inserted which will carry out his intention.
But the question of Colonial municipal securities is not touched, or other Colonial securities. If Colonial Government securities are excluded, other Colonial securities should be too. The object, or ostensible object, I presume, in excluding Colonial Government securities is to give encouragement to investors in this country to invest their money in the Colonies. If it is good to encourage investors to invest their money in Colonial Government securities, surely it is good, too, that their money should be invested in the municipalities, the railways and other enterprises in the Colonies. The right hon. Gentleman says the Government have gone far enough if they include Government securities and provincial securities. I do not wish to be cynical, but may I ask the hon. Gentleman: "Is the reason that he includes Colonial Government securities that the vast majority of them are not bonds to bearer, but are inscribed stock, and it therefore does not matter whether he includes them or not?" In the last 20 or 30 years a great change has come over the manner of issuing Colonial Government securities. Practically every issue is now inscribed stock—to the Bank of England, or the Bank of New Zealand, or any of the large banks in the City of London. Therefore they would not be touched by this Clause. You give the Colonies nothing, for it really does not matter whether or not they are exempt from this Clause. If I were of a cynical disposition, I should be inclined to believe that either the hon. Gentleman or his 626 advisers were laughing up their sleeves, knowing perfectly well that this concession, as a matter of fact, is no concession at all. Under these circumstances, I trust the hon. Gentleman will accept the Amendment to make this inclusion in the exemption of Colonial securities. I see no reason why one form of these securities should be included and not another. I do not now propose to argue the question—a very important one—of the advisability of increasing these duties. That had better be raised later.
§ 4.0 P.M.
§ Mr. T. M. HEALYI do not see when we are taxing ourselves at home why the Colonies should escape. That is the Birmingham policy, as I understand it. But I did not know that the Birmingham policy had been accepted by His Majesty's Government. Certainly I think it is discreditable to the House of Commons to put before us a Clause which, in order to attempt to understand, we should have to delve back for a number of years to former Statutes, and by a system of reference make out what a taxing Statute means. I think it is an insult to Parliament to print a Clause like this, which, without a very great deal of study, is absolutely unintelligible. I venture to say that there are not ten men in the House of Commons who understand it. I want to ask the Government if I rightly understand the meaning of the Clause to be this: That Canada, Australia, New Zealand, and the Cape, which do not contribute a single sixpence towards the upkeep of the Empire, shall escape from a duty that home companies, whether they be English or Irish, are compelled to pay? I want to know upon what ground we are indulging in this Colonial preference. As I understand it, the question of Colonial preference is an anathema on the Treasury Bench.
The CHAIRMANI do not see how this arises upon the Amendment. This is an Amendment to leave out the word "Government," and if that was done the Clause would read, "other than Colonial securities." The hon. Member seems to me to-be dealing with a different point, and to be raising the whole question of preference to the Colonies.
§ Mr. T. M. HEALYI am not surprised that you have taken the point of Order, because, as I understand the proposal, it is to leave out the word "Government," and if that was done it would then be "other than Colonial securities." My 627 objection is this. In order to understand the matter you have to go back to the Stamp Act of 1891. What the Government, as I understand it, are doing in this Section is this. They are making a further extension of the principle of exemption in favour of Colonial security.
The CHAIRMANI think I understand it rightly. The Amendment would extend the scope of the exemption, and therefore would extend what is extended to Colonial Government to municipal or other securities.
§ Mr. T. M. HEALYI am attacking the Amendment. I say it is most unjust to give to the Colonies the additional advantage which the Government Clause in the existing state of the law under the Act of 1891 already allows. I heard a great deal about encouraging the Colonies, but I want to encourage the people at home, who ought, I think, to be our first consideration. I think the Clause already goes entirely too far. The Colonies, in my judgment, are not entitled to get from the taxpayer at home, who pay so heavily for the running of the Army and Navy, an advantage which, so far as I understand it, the Colonies themselves have not asked for. I do not know what the Colonies do with regard to British securities. I know nothing of the legislation of the Cape, or of Canada, or of New Zealand, but if the Colonies have asked for this extraordinary preference it is new to me. Therefore I think it would be an extremely strong thing indeed to extend the principle of the Act of 1891.
§ Mr. J. D. REESI take it for granted that the words here, "Colonial Government securities," would not include Indian securities, yet I see no reason whatever why the words should not equally apply to Colonial and Indian. Indian securities would be then on precisely a similar footing, as I understand it. The hon. and learned Member opposite attacked the principle of making exemption on the ground that none of the Colonies contributed to the cost of the Army and Navy. I venture to think he is wrong. They do contribute. It may be that their contribution is inadequate, but they do contribute in one way or another towards the upkeep of the Army and Navy, and by direct contribution. Certainly India does more than her share. I submit, on a point of justice, that this advantage should be extended to India.
The CHAIRMANThe hon. Member can ask a question about bringing India in under this Clause; he may move an Amendment on that point if he wishes, but it does not arise upon this particular Amendment.
§ Mr. HOBHOUSEI will answer, if I may, directly, the question which was put to me by the hon. Member. India is dealt with under special Acts of her own, and in these Acts should enter into a composition for these Stamp Duties; she made her own bargain with the parties here, and pays her composition duties and is free.
§ Sir F. BANBURYThat is quite true with regard to the vast majority of Indian securities. I do not say they are an enormous number, but they are a considerable number, and it is very important to these securities that they should be free from heavy Stamp Duties. They are not negotiable. It would be a very small exemption from the point of view of the Revenue, but it would be very important for the parties concerned.
§ Mr. BONAR LAWThe right hon. Gentleman opposite has told us that India has her own arrangement by the composition which she entered into. But what about the future? Will the composition be on the basis of the double duty or on the old basis? That is the whole point.
§ Sir F. BANBURYThe vast majority of Indian loans are registered and inscribed, and therefore they do not come under this Clause at all.
§ Mr. HARMOOD-BANNERThe hon. Member for the City of London referred to me with reference to municipalities. I can only say that I find the English municipalities quite enough to take under my wing, without taking in the whole area of Colonial municipalities; but I would like to say, in reply to the observations that have fallen from the hon. and learned Member for North Louth (Mr. T. M. Healy) that whilst the Colonial and preferential loans are of value as cementing terms between England and her Colonies, these municipal loans are of the greatest value to the manufacturers in this country. It is by no means infrequent when a municipal loan is issued for terms of negotiations to be entered into as to the money to be found and the work to be done in this country. A Colonial municipality desires, for example, to start an electric lighting scheme, or an electric tram scheme, or 629 some other work of that kind in the Colony, and it is by no means unusual to send the order to this country. The terms and conditions generally are that the financing of the work is arranged for in this country and then the work is done by this country. That is a frequent and constant method of business in regard to this work, and, therefore, now when you are going to handicap these municipalities by taxes you are doing a great injury to the manufacturers of this country, and the workmen of this country. Take the case of works in Vancouver or waterworks in Montreal. All this work has been done upon English credit, obtained for the municipality, and the work has gone to the British manufacturers, and whilst we have at the present time no system of Colonial preference, there is no Colonial preference so great and so useful for the benefit of the State. The municipalities give the work to England: England finds the money. Now you are going to handicap them, and you are also going to injure the manufacturers of this country by making it more difficult for him to obtain the money. I hope the Chancellor of the Exchequer will consider this position quite as much as he considers the position of the Colonies and the provinces, and that subject to proper control the municipalities will be put in the same position in the Colonies to obtain money as they have been in.
§ Mr. HUNTIf these municipalities are hit they will go to America, which will have a considerable advantage in lending money. If the people are right who say that trade follows the loan, then America having this great advantage will probably get the trade of a great many people in the Colonies.
§ Major COATESI want to ask your ruling, Mr. Chairman, in regard to this discussion. Several Members have been discussing Colonial municipalities. I notice that lower down on the Paper there is an Amendment standing in the name of the hon. Member for Durham (Mr. Hills). That Amendment raises the question of the exemption of the municipalities. Would I be in order in discussing that question upon that Amendment when it is reached?
§ Sir F. BANBURYThe Amendment now before the House includes not only municipalities but several other forms of Colonial securities.
The CHAIRMANThe point is specifically made—Colonial municipal securities. That is the point raised in the Amendment of the hon. Member for Durham.
§ Mr. J. W. HILLSMy Amendment is limited to municipal securities or corporations. The present discussion is on a wider basis.
§ Mr. T. M. HEALYMay I reply to the hon. Member (Mr. Hunt) by saying that the Colonies will come here to borrow because this is the cheapest market in the world? You cannot borrow money in America for corporations under 5 per cent. or 6 per cent., and when the Colonies are provided with cheap money in London the least the Government should ask is that they should contribute something to the State for it. Gentlemen coming from Canada to London should be in exactly the same position as Irishmen coming to London.
The CHAIRMANIt seems to me, if we settle this matter on the Amendment which is now under discussion as to whether the word "Government" should or should not be taken out, the Amendment of the hon. Member for Durham, at any rate, in the form in which it is on the Paper, could not be moved.
§ Major COATESI will confine my remarks to the proposal made by my hon. Friend, because I understand that, so far as Colonial provincial Government is concerned, the Chancellor of the Exchequer has conceded my point. I will deal with the question of Colonial borrowings. I approach this matter from the point of view of a business man. I recognise that the Chancellor of the Exchequer must have the money, but I take it that he does not want to injure business in getting that money. Anyone who is cognisant with the banking facilities of this country must recognise that hundreds of thousands and millions of foreign money are sent to this country to be invested in first-class gilt-edged securities. London attracts borrowers from all over the world because she has such good credit. Other nations deposit their money here in order that they may trade through English institutions. The point I want to make is that the more securities you can attract to this country the better it is for the Chancellor of the Exchequer.
Let us see why it is good for the Chancellor of the Exchequer. First of all because he gets his Stamp Duty on the issue; and, secondly, he gets the Income 631 Tax on the interest, dividend, or coupons issued upon those securities which happen to be domiciled in this country. It is common knowledge to us all that when a loan is issued in this country the practice is that the coupons and dividends are payable in this country. That being the case, it must be of immense value to any Chancellor of the Exchequer, because he can from those dividends and coupons abstract his tax. Thirdly, the benefit derived from having these securities here rather than in foreign countries is due to the fact that they are domiciled here, and therefore you may be perfectly certain they are dealt in here. If that is so, then the contract stamps are paid here on every deal. On every one of these deals dealt with on the Stock Exchange, the right hon. Gentleman obtains his contract stamp. Fourthly, when any country borrows money from Great Britain, that money is very often utilised in this country, and it is frequently sent away, not in money but in kind, and in that way our industries are benefited. Therefore, any legislation passed by this House should be directed to supporting the policy of encouraging first-class securities to come into this country rather than keeping them out. The Chancellor of the Exchequer, in the remarks he made on this Resolution, made a very significant statement. He was dealing with Amsterdam and Belgium, and he said:—
Really we cannot do that. It would give a preference in favour of the exportation of capital to foreign countries and the Colonies, instead of it being put into British industries.I wish to make my criticisms from a non-political point of view, but when it is a question of British industries I find from my own experience that a great deal more money is being invested in our Colonies and outside this country than is being invested in British industries. You cannot dictate the channel into which the investing capital should go. One of the most difficult things is to arrange investments, and no one can dictate how the public are to invest their money. In this matter they have their freedom now at any rate, and I hope they will always continue to have it. The investor will have the security he desires, whether it happens to be in this country or not. If a stamp is put on these transactions of such a nature as to prevent these securities coming into this country, the investor will go away and invest where he gets the security he wants rather than be compelled to take the stock which is on the counter before him.632 What is there to prevent capitalists, great and small, putting their capital together and forming themselves into a Canadian investment company, with their offices in Canada or America, utilising their capital there in order that they may find an investment for these very securities which this stamp may prevent coming into this country? They will create trust companies and other forms of capital banded together in order that they may go to Canada and invest in all these municipal and industrial bonds, which are competed for amongst Canadian capitalists, and the result is that those four points I have laid before the Committee will go by the wall, and this country will suffer, because we shall only then get the Income Tax upon the dividends which come here from those trust companies on the other side of the Atlantic; and there will be no Stamp Duty, and no chance of that money being spent in British industries. The result will be that you will only get the Income Tax from whatever money the directors of the company choose to send over to Great Britain. Those of us who recollect the time when the 10s. Stamp Duty was imposed on bonds will agree with me when I say that it proved a considerable check to business. I am thankful to say we have got over that, and we have adapted ourselves, so far as the City and financial institutions are concerned, to that stamp, but we are considerably handicapped, not only in London, but in other cities in this country in competing for these very bonds which it is so necessary to our prosperity should be kept in this country.
I am dealing now more with Canada, because Australia is bound to come here with those bonds. In Canada, our great Dominion, we have the international market with France, Belgium and America close upon the Canadian frontier line of country. Every year millions of money are required by those municipalities, and the result is that in every case I know of Canadian bonds are being put up for tender. Tenders are invited, and they are opened on a certain day, and the highest bidder gets them. Now, what is the position of the man in the London market as compared with a man in America? In this matter we must not sneer at America. America is immensely wealthy, and she has grown so large and is able to make so much money every year that she is compelled to form large trust funds and put enormous sums of money year by year into gilt-edged securities. A few years ago America could never 633 touch us at all in regard to these transactions and never attempted to tender against us. The fact is we were in absolute command of the money market of the world so far as Canadian securities were concerned. As years have gone by my experience shows me that America is a very keen competitor in these bonds. How are we handicapped against America? First of all, we have to decide upon the price as which we tender, which must be governed by the price we think the public are likely to pay for an issue of this description. I am now talking about the various groups who are accustomed to compete for these bonds. I am sure the Committee will believe me when I say that in tendering for hundreds and millions of these bonds in exchange for their risk of buying them and their chance of selling them again to the public the tenderers have been content in making up their figures to put aside a profit of anything from 7s. 6d. to 12s. 6d. per cent. Som3vimes they make 15s., and I have known them make £1. I have also known them make 5s. per cent., and in some cases they have made a loss. I did not like to make this statement without consulting one or two of the leading groups in the City of London. I have consulted with those groups who are competitors of my firm, and each group has agreed with me and they have authorised me to make this statement to the Committee. When any of these groups have got these bonds they issue them here. The Chancellor of the Exchequer, as I have stated, gets his 10s. per stamp on the bonds, and he gets the contract stamp; the industries of this country gain, and the groups make the small percentage of profit which I have enumerated. I have touched upon the question of our tendering; but how does America tender? In making up our figures we have to arrange outside the ordinary expenses of underwriting and issue, for freight, insurance and exchange, a figure which, as mentioned by the hon. Member for York in the Debate on the Resolution, has at times been as high as 8s. 9d. per cent. We have in addition to put on whatever stamp the Chancellor of the Exchequer chooses to insist upon. In this way we are considerably handicapped in our competition with America. I do not want British municipalities to be called upon to pay this tax, and if the Chancellor of the Exchequer desires to help us so far as our business with the Colonies is concerned, he should provide that British municipalities ought to 634 receive the same measure of leniency which he chooses to give to the Colonial securities, and he should recollect that one class of our securities is subject to foreign competition whereas our municipalities are simply subject to the home competition. My experience is, and I daresay it is the experience of many Gentlemen in this House who are in business, that the margin of profit in all our businesses, and especially in financial business, is growing smaller and smaller. The cable brings the money markets of the world in close touch—within a few moments—and competition is therefore keener. Where a man can borrow money cheap, he will borrow it. He is not going to look at the matter from the philanthropic point of view at all. A loan once issued by any municipality in a country always attracts loans to that country from the same borrower hereafter. If a new borrower, such as a new municipality, comes into this country, that borrower as a rule will always try and come and borrow here again. It does not follow they will get their loan, or that the conditions of the money market will suit them, but my experience is that they always try to borrow where they made their first loan. Towns like Toronto, Ottawa, Quebec, Victoria, in British Columbia, have recently gone with their loans to America, simply because we dare not tender high enough and risk a loss by having to cater for this extra 10s. Stamp Duty.
One hon. Member has mentioned that trade follows the loan, and that is my experience. Once you get a business in a groove it is very difficult to dislodge it. The business of lending money to our Canadian municipalities and others has got into a groove of competition between America and this country. If by making the tax too great upon the lender the loan business should get out of the English groove and into the American groove it will be difficult to get it back again to this country. I have heard it stated by some hon. Members, and I also know, that many large insurance companies, trust companies and others who have felt even the 10s. duty heavy enough, have bought their bonds and securities in other markets, and have left them in the place of origin and have allowed the coupons to be collected there and to be credited to them in that country. That is no good to me. I want to see the securities dealt with here, and anything that traverses that is a subject which I think I am justified in bringing before the Committee. I would say to the 635 Chancellor of the Exchequer, "Tax, but do not kill. Do not kill large financial industry which has been created in this great Metropolis of ours." Finance is a very delicate plant, and, if you meddle with it and begin to look at the roots, it will be a long time before that plant will get thoroughly embedded again. A great deal has been said about the Stamp Duties of other countries being very much heavier than they are here. Countries like Amsterdam, Belgium, and America have no Stamp Duties, but there is a Stamp Duty in Paris and Berlin. In the few remarks I made on the Resolution I mentioned that the Paris stamp was 2 per cent. I speak under correction, but I understand that it is not yet 2 per cent. It has been brought before the Chamber by the late Minister of Finance, but it has not yet become law. It may be a point raised that France has this 2 per cent. duty. When you increase the Stamp Duty, what effect do you think it has upon the securities to which the duty refers? The last time Berlin raised her Stamp Duty from 1 to 2 per cent. was in 1898–9. At that time the British Chancellor of the Exchequer received on our 10s. bond stamp £180,789. The result of Berlin putting the stamp up 1 per cent. was that, instead of the Chancellor of the Exchequer here receiving £180,000, all the bond business from Berlin had been driven to this side, and he received £358,000.
§ Mr. HOBHOUSEWhat year was that?
§ Major COATES1898–9 and 1899–1900. Take the case of a simultaneous issue. Very often when there is a large issue it is issued in various centres. A loan is issued in America, Canada, England, and, it may be, abroad. Suppose an issue is made of that description—we will say £1,000,000 or £2,000,000. A proportion is retained for this country, a proportion for America, and a proportion for Canada. The proportion which remains in this country is all we ever get, because, if the people in America and Canada desire to sell their proportion in this country, they have to consider before selling it whether they will pay the Stamp Duty plus the 8s. 9d. cost of freight. I have detained the Committee rather long on this matter. I apologise, and I am very grateful to them, but I should just like to mention short bonds. If the tax, as I maintain, is quite heavy enough now at 10s. per cent. on what we call long-dated bonds, bonds to run 30 or 40 years, how much heavier 636 must it be on the short-dated bonds. There are some Gentlemen who are thoroughly conversant with the way in which some of the American railways borrow money on short-dated bonds. Very often a railway has to make some large extension, costing many millions of money. It is no good borrowing those millions of money all at once, because many millions would be lying idle, and only be receiving deposit rate, whereas the borrower would possibly have to pay 4 per cent. in the meantime. One can, therefore, imagine these railway companies, if the extension is to take three or five years, issuing short-dated bonds all to become due at the time when they are able to make one large loan to pay for the extension when it is completed.
The CHAIRMANIt is hardly worth while interrupting the hon. Member in a speech of this character, but, of course, he is not on the Amendment. He is on the question of loans raised by American railroads, which would properly come on the question of the Clause standing part of the Bill.
§ Major COATESI apologise. I was on the question of the 10s. duty on the short-dated bonds. It is hard upon the three or four year bond to pay 10s. now. It will be much harder upon them to pay £1. If you borrow money, say at 3½ per cent., for four years, and you are charged £1 Stamp Duty, that makes 3¾ per cent. If there is one thing the Chancellor has not touched, it is bill stamps, and very properly so, too. I know, and the Chancellor may know, that a bill stamp covers more than one year, and it is only a shilling per cent. What is to prevent people, if they are overcharged, issuing bills with a 1s. stamp per cent.? You run the risk of that. I have myself seen bills running for more than one year which have had the 1s. bill stamp on them. I have tried in the few remarks I have made to bring out my own business experience, and the experience of others who have been good enough to let me discuss the matter over with them, and I have also tried to show the difficulties which may arise if the Chancellor of the Exchequer insists upon increasing the 10s. duty to £1. The question is, will it force away a certain amount of business which comes into this country? I have endeavoured, perfectly honestly, to show what I think, personally, may happen, and I make my statement because I have my past experience by which to go. I know the difficulties in obtaining these 637 bonds to-day. We lose them even now, but what shall we do if this £1 is to be put upon them? It is all very well for some people to say, "What does it matter, Canada gets her money, and as cheaply as she can?" That is Canada's point of view. I am trying to put it from the point of view of this country. We want to lend our money, and, in lending our money, we are doing good to the Chancellor of the Exchequer right away down to the small investor.
§ Mr. HOBHOUSEIt is very refreshing indeed to hear a speech of the character to which we have just listened, and I am sure all the Members of the Committee who are present this afternoon will join with me in felicitating the hon. Gentleman who has just sat down, not only upon the character of his speech, but also upon the manner in which it was delivered. I am quite certain that the fears he expressed were genuine fears, and were not expressed on behalf of the trade in which he is concerned. He really was looking at the question from a national point of view, and expressing what he believed to be the fears for the prosperity of what is, after all, a national concern. In attempting to follow that speech, I labour under the great disadvantage of not having that technical knowledge and professional experience which in the course of many years' business the hon. Gentleman has admittedly acquired. But I do think there is a general case to be put on behalf of the proposals of the Chancellor of the Exchequer which is of such force, and in support of which such cogent arguments may be adduced, that the more particular reasons advanced by the hon. Gentleman to the Committee may be pushed on one side. The hon. Gentleman laid it down very truly that the credit of the City of London was a great national asset which we should do nothing at all to endanger, and he went on to say that the use of capital which was employed and owned by the City of London as representing the country would, if an extra duty of 10s. per cent. were laid upon it, seriously endanger our ability to lend to the Colonies and to other places abroad the sums which we do now lend. These amounts are undoubtedly of very great dimensions. I think in the course of last year we lent something like £40,000,000 to Canada, and not far short of £60,000,000 to America, and, of course, it is quite certain that anything which would really involve a stoppage of the use of that capital, either by this country or by any other country, 638 would be a very great impediment to the general trade—not merely to the money trade, but to the general trade of this country. The hon. Gentleman went on to say that America was becoming a very dangerous competitor with us in the loans which we make either to municipalities or to industrial concerns in the Colonies and elsewhere. He said that a few years ago this competition did not exist. That is quite true, but, from such information as I have been able to acquire, the reason why it did not exist was not because there was no Stamp Duty, but because there has been during the last 10 or 20 years the most enormous accumulation and growth of capital in America which has probably ever been witnessed in the history of the world. It is idle to suppose that the wealth accumulated in that country is not going to be employed in competition with us in other countries—in competition with us both in America and in Canada. It is quite certain, whether we remain in the exact position in which America is at the present moment, with no Stamp Duty at all, that the competition will be as keen as it is at the present moment. It is not a question, in my judgment, and in the judgment of those who advise my right hon. Friend—it is not so much a question whether there is or not a Stamp Duty.
I venture to offer a suggestion to the hon. Gentleman opposite. I do not think he can deny the general proposition which I have addressed to the Committee. In the course of his most admirable speech he made one or two admissions which I think will be of great value to many of my hon. Friends on this side of the House. He told us that it was impossible to dictate the channels in which capital should flow. That is a most admirable sentence, but how much more difficult is it to attempt to dictate the channels in which trade shall flow. Two points are inextricably mixed up. The loan which brings the trade is quite as responsible for that trade which follows that loan as any attempt to dictate to that trade by means of fiscal regulations and laws. The hon. Gentleman went on to say that the first imposition of the Stamp Duty seriously interfered with the flow of business in this country, but, having said that, he went on to make this further admission, that in the course of business they had entirely got over that difficulty. His words were, "We have entirely got over this by now, and trade has adjusted itself to the new conditions." I think it is just as well to remember that it was in the year 1899–1900 that the then Chancellor of the 639 Exchequer (Lord St. Aldwyn, at that time Sir Michael Hicks Beach) was responsible, if not for the original imposition of this tax, certainly for its wide extension, and I should like to point out in connection with that, that the transfer of this revenue which accrued to this country in the year 1899–1900 depended not so much on the transfer of German business here as upon the wider net which the Chancellor of the Exchequer spread in that year for transactions of the sort which we are now developing. It is just as well to realise this. I venture to suggest to the Committee that, while we have attempted in this Finance Bill to lay upon every class of the community the burden, after all it is a burden which will represent an adequate contribution to the sums which we have to raise in order to settle our national bill. We have not laid the business represented by the Stock Exchanges in London and other parts of the country under unnecessary or undue burdens. My right hon. Friend has made these proposals for the taxation of marketable securities, and, in accordance with the views of the Stock Exchange, he has moderated this burden so as to render it as little harsh and disagreeable as possible. The hon. Gentleman knows quite well that when this particular Stamp Duty to which I am referring was under discussion, my right hon. Friend said to those who represented the finances of this country that if it were possible, in some other way, to raise from the accumulated capital of this country and from the money markets of this country a sum corresponding to that raised by this tax, he would be only too glad if possible to accept such a suggestion. Our difficulty has been throughout that, while there are great sums of money in this country bringing in great wealth, the possessors of those wealthy accumulations have not been able to suggest—I do not blame them in any way for not doing it—any other plan than that which we are now proposing to the Committee for securing the revenue which it is essential we shall have for this year. I agree it is only a limited sum we are raising this year, but what other method can be suggested for raising this sum from this kind of transaction? Any other suggestion we should have welcomed and considered, and, if possible, accepted, but our difficulty has been that while members of the Stock Exchange and business men represented by the hon. Gentlemen opposite have complained, and reasonably complained, 640 of the burden laid upon them by this tax, they have not been able to make any proposals to us which would have been equally profitable to us and less burdensome to themselves.
If I may answer in a sentence or two the Amendment which, after all, is a peg upon which all this discussion rests, I would say this: The Mover of the Amendment has suggested that all securities and not only Colonial securities should be released from the pressure of this tax. I do not see why we should not gather from those who lend either to industrial concerns or municipal enterprises in Canada and other countries their money—I do not see why we should not levy upon them some slight return for the capital which is exported from this country, and which they put to this use. It is quite true that, in conformity with past practice, we have released Colonial Government securities from the Stamp Duty. In that we have followed the practice of the year 1891, but to exempt sums of money which are sent to the Colonies, sums amounting in the case of Canada to £40,000,000, and in the case of Australia to £8,000,000 or £10,000,000—to have exempted these from the demand which we have made in order to enable us to meet the expenses and necessities of this country, would, I think, be to give them an unfair preference to which the citizens of this country might reasonably object.
§ 5.0 P.M.
§ Mr. WALTER LONGThe right hon. Gentleman commenced by paying what I think the whole Committee will feel was a well-deserved tribute to my hon. Friend behind me for the speech that he made. The right hon. Gentleman, speaking on behalf of the Government, did not confine his commendation to the matter of the speech; but, also, speaking again I venture to say, with the full assent of the whole Committee, expressed what we recognise—that my hon. Friend had put an extremely difficult and technical case to the House, not only in the clearest possible way, but also in a manner which secured the sympathy of everybody who might not agree with his views. It was felt he put a very difficult case, representing, as he believed, and, as we believe, a great national issue to the House in away which was quite free from anything in the shape of party bias. I also remember that the right hon. Gentleman prayed the indulgence of the House in dealing with my hon. Friend's speech on the ground that he had none of that practical experience 641 of business to which this Amendment of the Clause specially refers, and which my hon. Friend enjoys in so full a measure. But the right hon. Gentleman has at his disposal great sources of information from experienced and highly trained officials, who have no superiors in the world; and he has the means of filling up gaps in the armour which many of us have not. But, however urgent hon. Gentlemen opposite may be in support of the Government on this Budget, they must have been struck by the extraordinary comparison between the two speeches to which we have just listened—the speech of my hon. Friend advocating this Amendment and putting to the Committee what he believed will be the result of the adoption of the Government policy, and the answer of the Government thereto. I confidently submit there has not been one word said by the right hon. Gentleman which justifies the resistance which the Government are offering to the Amendment. What has been the defence of the right hon. Gentleman on behalf of the Government? It has been, in the first place, the expression of a hope that the result in future will be the same as my hon. Friend said it had been with regard to this duty when it was first imposed. The right hon. Gentleman said he took note of a statement of my hon. Friend that you cannot force capital into any particular channel, and he dragged in—I might almost suggest he dragged it in by the heels—the question of Fiscal Reform. Right hon. Gentlemen opposite have got it on their brains just now, and they cannot help bringing it in whatever we are discussing; but the right hon. Gentleman himself made a remarkable statement with regard to this tax, in justifying his proposals, of which we take note, too, in regard to the bearing it has on the general defence offered by right hon. Gentlemen opposite for this Budget as a whole. The right hon. Gentleman referred to and placed considerable responsibility upon the action of a previous Chancellor of the Exchequer in the creation of this tax, and we hear now plainly that it is absurd to object to this tax, because it is so small and so little. We did not hear much except from one section of the party opposite about the power of increasing this tax at any particular moment, but we learn now that the Government defend this particular tax at this moment, increased as it is by 10s., by referring to the fact that it was created by a Chancellor of the Exchequer who was a Unionist.
The CHAIRMANIt is obvious that the right hon. Gentleman and the Secretary to the Treasury, and others, have been, and are, really discussing the tax as a whole. I only draw attention to that. I do not-object to it, provided that we are going to dispense with the second discussion on the same subject; but, really, this point with which the right hon. Gentleman is dealing now is quite a different point from the Amendment.
§ Mr. WALTER LONGI, of course, cannot say anything with regard to a future debate, but I do respectfully submit that in everything I have said so far I have only followed, as closely as I can, the argument addressed to the Committee by the Secretary to the Treasury. Everything I have said has had reference to the points and the arguments of the Secretary to the Treasury on resisting this Amendment of my hon. Friend.
The CHAIRMANI fully admit that. He was replying to the Secretary to the Treasury; but the Secretary to the Treasury went beyond the Amendment, and the hon. Member for Lewisham (Major Coates) went beyond it. We must do one thing or the other. We must keep to the Amendment, or else we must have a general discussion now which is to dispense with the general discussion on the Clause It need not prevent a Division later, but do not let us have a discussion now and then have a general discussion on the amount of the tax.
§ Mr. WALTER LONGI am not in a position to commit anybody but myself, but I am in a position to commit myself that in the remarks I make now I shall not repeat them in future, and I do venture to appear in the garb of a martyr on this particular occasion, because the two Gentlemen who preceded me have dealt with the question, and I was only endeavouring to deal with some of their remarks. I will endeavour to confine myself to one or two aspects of the case, and to avoid generalities as far as it is possible. I was pointing out that one justification for the tax is to be found in its smallness, but I pass from that. What was the argument used—I think this will be absolutely in order with reference to the Amendment itself—what was the argument used by my hon. Friend? What was the evidence adduced, and which impressed all those who beard him more than anything else? He did not indulge in vague anticipation, but he spoke on behalf of himself, with his own great experience 643 of this business—he spoke, as he told us, after careful inquiry amongst many other business houses, and he, speaking with their authority, said that he believed the adoption of this proposal would drive an immense amount of business away from this country. What was the appeal made by the Secretary to the Treasury at the end of his speech? I listened to it with the greatest regret. It was an appeal ad misericordiam for money, although, as my hon. Friend the Member for the City of London (Sir F. Banbury) pointed out, this tax only represents £150,000.
§ Mr. HOBHOUSEIt only represents £150,000 this year, but £350,000 in a full year.
§ Mr. WALTER LONGWe will put it at £350,000 in a full year, and the right hon. Gentleman went on to ask whether we were not justified in laying this particular tax upon Canada and our Colonies. Right hon. Gentlemen opposite find it easy to justify this tax by going to a far distant part of our Empire to find this revenue. What is the Amendment we are discussing? It is that this exemption which is now only applied to Government securities should be applied to others, and my hon. Friend the Member for the City advanced a very powerful argument in respect of his plea for its extension to Colonial municipalities, and we have not heard one word from the Government in answer to that, or in defence of the narrowness of their proposal. I do not know whether it is too late. I do not want to say anything which would introduce into this Debate any of those controversial topics which may possibly be kept out, but is it too late to appeal to the Government to meet a case of this kind? I have had no personal experience in this business, but I have had more than one interview with members of leading City firms, and they have assured me that not one of their criticisms
§ is in the smallest degree exaggerated. They believe the effect of this will be very serious indeed. This Amendment will diminish the serious character of the proposal. It has the support of the great, almost unrivalled, experience of my hon. Friend who has recommended its adoption in a speech of singular merit—a speech which we all listened to, and it was most convincing; and I think that the defence of the Government is most inadequate and I ask them, even at this eleventh hour, to consider whether they cannot mitigate the hardships of this Clause by accepting the Amendment, which does not involve very great loss to them, and which, at any rate, is regarded by those of authority in the City of London as being of considerable importance and value to them.
§ Mr. N. W. HELMEThe maintenance of the financial interests of this country and of London as the centre of its business is, of course, of supreme importance, and I venture to ask His Majesty's Government, although the exigencies of the present moment are so great in regard to the raising of additional revenue, to be most careful in carrying out the policy of taxation on the raising of loans in this country, so that we may at any rate avoid the risk of diminishing the volume of business which at the present moment centres here. It is well known that in the past London has been in a position of advantage in relation to the possibility of borrowers in foreign countries issuing loans, because we have had a Stamp Duty of 10s.
The CHAIRMANI really must have this matter settled one way or another. Would it not be better to deal with the Amendment which we have, and get that settled, and then we can go on to this question of amount and got that in order?
§ Question put, "That the word 'Government' stand part of the Clause."
§ The Committee divided: Ayes, 200; Noes, 69.
645| Division No. 712.] | AYES. | [5.10 p.m. |
| Adkins, W. Ryland D. | Benn, W. (Tower Hamlets, St. Geo.) | Chance, Frederick W. |
| Agar-Robartes, Hon. T. C. R. | Berridge, T. H. D. | Channing, Sir Francis Allston |
| Agnew, George William | Bethell, Sir J. H. (Essex, Romford) | Churchill, Rt. Hon. Winston S. |
| Allen, Charles P. (Stroud) | Boulton, A. C. F. | Clough, William |
| Ambrose, Robert | Bowerman, C. W. | Cobbold, Felix Thornley |
| Ashton, Thomas Gair | Branch, James | Collins, Stephen (Lambeth) |
| Baring, Godfrey (Isle of Wight) | Brigg, John | Condon, Thomas Joseph |
| Barker, Sir John | Bright, J. A. | Corbett, C. H. (Sussex, E. Grinstead) |
| Barlow, Sir John E. (Somerset) | Burns, Rt. Hon. John | Cowan, W. H. |
| Barnard, E. B. | Burl, Rt. Hon. Thomas | Cox, Harold |
| Barnes, G. N. | Buxton, Rt. Hon. Sydney Charles | Craig, Herbert J. (Tynemouth) |
| Barran, Sir John Nicholson | Carr-Gomm, H. W. | Crosfield, A. H. |
| Barry, Redmond J. (Tyrone, N.) | Causton, Rt. Hon. Richard Knight | Cross, Alexander |
| Cullinan, J. | Jones, Leif (Appleby) | Rees, J. D. |
| Davies, Ellis William (Eifion) | Jones, William (Carnarvonshire) | Richards, T. F. (Wolverhampton, W.) |
| Davies, Timothy (Fulham) | Joyce, Michael | Roberts, Charles H. (Lincoln) |
| Devlin, Joseph | Keating, M. | Robertson, Sir G. Scott (Bradford) |
| Dewar, Sir J. A. (Inverness-shire) | Kekewich, Sir George | Robertson, J. M. (Tyneside) |
| Dobson, Thomas W. | Kelley, George D. | Robinson, S. |
| Duffy, William J. | Kilbride, Denis | Robson, Sir William Snowdon |
| Duncan, C. (Barrow-in-Furness) | Laidlaw, Robert | Roe, Sir Thomas |
| Duncan, J. Hastings (York, Otley) | Lamb, Edmund G. (Leominster) | Rogers, F. E. Newman |
| Dunne, Major E. Martin (Walsall) | Lamont, Norman | Rose, Sir Charles Day |
| Edwards, Sir Francis (Radnor) | Layland-Barratt, Sir Francis | Russell, Rt. Hon. T. W. |
| Elibank, Master of | Lea, Hugh Cecil (St. Pancras, E.) | Rutherford, V. H. (Brentford) |
| Erskine, David C. | Leese, Sir Joseph (Accrington) | Samuel, Rt. Hon. H. L. (Cleveland) |
| Essex, R. W. | Lehmann, R. C. | Seely, Colonel |
| Evans, Sir S. T. | Lever, A. Levy (Essex, Harwich) | Sheehy, David |
| Everett, R. Lacey | Levy, Sir Maurice | Sherwell, Arthur James |
| Faber, G. H. (Boston) | Lewis, John Herbert | Snowden, P. |
| Ferguson, R. C. Munro | Lloyd-George, Rt. Hon. David | Soares, Ernest J. |
| Fiennes, Hon. Eustace | Lundon, T. | Stanley, Hon. A. Lyulph (Cheshire) |
| Findlay, Alexander | Lynch, A. (Clare, W.) | Stewart, Halley (Greenock) |
| Fuller, John Michael F. | Macdonald, J. M. (Falkirk Burghs) | Stewart-Smith, D. (Kendal) |
| Fullerton, Hugh | Maclean, Donald | Strachey, Sir Edward |
| Gibb, James (Harrow) | MacVeagh, Jeremiah (Down, S.) | Straus, B. S. (Mile End) |
| Gibson, J. P. | MacVeigh, Charles (Donegal, E.) | Summerbell, T. |
| Gill, A. H. | M'Kean, John | Taylor, John W. (Durham) |
| Ginnell, L. | M'Laren, H. D. (Stafford, W.) | Thomas, Sir A. (Glamorgan, E.) |
| Glendinning, R. G. | Mallett, Charles E. | Thorne, G. R. (Wolverhampton) |
| Glover, Thomas | Markham, Arthur Basil | Thorne, William (West Ham) |
| Greenwood, G. (Peterborough) | Marnham, F. J. | Tomkinson, James |
| Gulland, John W. | Massie, J. | Toulmin, George |
| Gwynn, Stephen Lucius | Masterman, C. F. G. | Trevelyan, Charles Philips |
| Harcourt, Rt. Hon. L. (Rossendale) | Meagher, Michael | Walker, H. De R. (Leicester) |
| Harcourt, Robert V. (Montrose) | Menzies, Sir Walter | Walsh, Stephen |
| Hardie, J. Keir (Merthyr Tydvil) | Middlebrook, William | Walters, John Tudor |
| Harmsworth, Cecil B. (Worcester) | Molteno, Percy Alport | Wardle, George J. |
| Harmsworth, R. L. (Caithness-shire) | Montagu, Hon. E. S. | Waring, Walter |
| Haworth, Arthur A. | Mooney, J. J. | Warner, Thomas Courtenay T. |
| Hazleton, Richard | Muldoon, John | Wason, Rt. Hon. E. (Clackmannan) |
| Healy, Maurice (Cork) | Murphy, John (Kerry, East) | Mason, John Cathcart (Orkney) |
| Healy, Timothy Michael | Murray, Capt. Hon. A. C. (Kincard.) | Watt, Henry A. |
| Hedges, A. Paget | Myer, Horatio | White, Sir George (Norfolk) |
| Helme, Norval Watson | Nannetti, Joseph P. | White, J. Dundas (Dumbartonshire) |
| Henderson, Arthur (Durham) | Nussey, Sir Willans | White, Sir Luke (York, E. R.) |
| Henry, Charles S. | O'Connor, T. P. (Liverpool) | White, Patrick (Meath, North) |
| Herbert, Col. Sir Ivor (Mon. S.) | O'Donnell, C. J. (Walworth) | Whittaker, Rt. Hon. Sir Thomas P. |
| Hobhouse, Rt. Hon. Charles E. H. | O'Shaughnessy, P. J. | Wilkie, Alexander |
| Holt, Richard Durning | Parker, James (Halifax) | Williams, J. (Glamorgan) |
| Hooper, A. G. | Partington, Oswald | Williams, W. Llewelyn (Carmarthen) |
| Horniman, Emslie John | Pearson, W. H. M. (Suffolk, Eye) | Williamson, Sir A. |
| Howard, Hon. Geoffrey | Ponsonby, Arthur A. W. H. | Wilson, W. T. (Westhoughton) |
| Isaacs, Rufus Daniel | Power, Patrick Joseph | Yoxall, Sir James Henry |
| Jackson, R. S. | Priestley, Sir W. E. B. (Bradford, E.) | |
| Jenkins, J. | Radford, G. H. | TELLERS FOR THE AYES.—Mr. Joseph Pease and Captain Norton. |
| Johnson, W. (Nuneaton) | Raphael, Herbert H. | |
| Jones, Sir D. Brynmor (Swansea) | Rea, Rt. Hon. Russell (Gloucester) | |
| NOES. | ||
| Acland-Hood, Rt. Hon. Sir Alex. F. | Gardner, Ernest | Powell, Sir Francis Sharp |
| Arkwright, John Stanhope | Haddock, George B | Ratcliffe, Major R. F. |
| Banbury, Sir Frederick George | Hamilton, Marquess of | Remnant, James Farquharson |
| Banner, John S. Harmood | Harris, Frederick Leverton | Renwick, George |
| Baring, Captain Hon. G. (Winchester) | Harrison-Broadley, H. B. | Roberts, S. (Sheffield, Ecclesall) |
| Beckett, Hon. Gervase | Heaton, John Henniker | Ronaldshay, Earl of |
| Bottomley, Horatio | Hermon-Hodge, Sir Robert | Salter, Arthur Clavell |
| Bowles, G. Stewart | Hill, Sir Clement | Stanier, Beville |
| Brotherton, Edward Allen | Hills, J. W. | Stanley, Hon. Arthur (Ormskirk) |
| Campbell, Rt. Hon. J. H. M. | Hope, James Fitzalan (Sheffield) | Starkey, John R. |
| Carlile, E. Hildred | Hunt, Rowland | Stone, Sir Benjamin |
| Cecil, Evelyn (Aston Manor) | Joynson-Hicks, William | Talbot, Rt. Hon. J. G. (Oxford Univ.) |
| Cecil, Lord John P. Joicey- | Kennaway, Rt. Hon. Sir John H. | Thomson, W. Mitchell- (Lanark) |
| Cecil, Lord R. (Marylebone, E.) | Lambton, Hon. Frederick William | Tuke, Sir John Batty |
| Clyde, J. Avon | Long, Rt. Hon. Walter (Dublin, S.) | Valentia, Viscount |
| Corbett, T. L. (Down, North) | Lowe, Sir Francis William | Walker, Col. W. H. (Lancashire) |
| Craig, Captain James (Down, E.) | M'Arthur, Charles | Warde, Col. C. E. (Kent, Mid.) |
| Dickson, Rt. Hon. C. Scott | Mildmay, Francis Bingham | Willoughby de Eresby, Lord |
| Douglas, Rt. Hon. A. Akers- | Morpeth, Viscount | Winterton, Earl |
| Faber, George Denison (York) | Morrison-Bell, Captain | Wortley, Rt. Hon. C. B. Stuart- |
| Faber, Capt. W. V. (Hants, W.) | Nicholson, William G. (Petersfield) | Younger, George |
| Fell, Arthur | Parker, Sir Gilbert (Gravesend) | |
| Fletcher, J. S. | Pease, Herbert Pike (Darlington) | TELLERS FOR THE NOES.—Major |
| Forster, Henry William | Peel, Hon. W. R. W. | Coates and Sir W. Bull. |
§ Mr. J. D. REES moved, after the word "securities" ["other than Colonial Government securities"], to insert the words "Indian securities."
§ I have purposely phrased my Amendment in these terms because I did not know what was going to be the fate of the word "Government." If the Amendment took the form of "Indian securities" or "Indian Government securities," or "securities guaranteed by the Indian Government" it would equally well serve my purpose. I am aware that there are not now very many of the railway Debenture bonds which were issued at 5 per cent. by the Indian Government. Most of these have now been redeemed because the Government has bought the lines, but even in regard to lines which have been acquired by the Government Debenture Bonds are now issued, and presumably will be issued in future, and I should like to see them excluded. If the Indian loans have a composition Stamp Duty, the same applies equally in respect of Colonial Government securities, so that that does not appear on the face of it to be an argument against the small Amendment which I wish to bring about on behalf of Indian securities. Suppose a railway now wishes to raise money without a guarantee, as I believe will happen very frequently in future, it would raise its money subject to this extra Stamp Duty, which I think is to be somewhat deprecated. It would be just in the case of such loans that such exemption as I suggest should be made. Nor can I see any objection to giving a preference in this respect to India. The hon. and learned Member (Mr. T. M. Healy) asked why Ireland should not have a preference. I have sat here in vain now for four years if Ireland does not always get an enormous preference on every occasion, something compared with which the slight preference that I mention here is an absolutely negligible quantity. The insertion of the words which I suggest would not in any way affect securities which are always excluded. Therefore, the amount of the exemption will be very small. At a time when India is agitated by wanton opposition to the Government, it becomes a Member, on every occasion when he thinks that an exemption on her behalf should be entered, to get up and suggest it. The importation of British capital into India is, above all things, to be desired. It is the one thing necessary for her future development, and, at a time when the introduction of 648 British capital is being impeded by wanton agitation, often supported—to my deep regret—by those who should know better in this country, it is desirable that every opportunity should be taken of seeing that, in a small matter like this, justice should be done.
§ Mr. HOBHOUSEIn any case the actual words proposed would not be suitable even if I were disposed to accept the principle which is contained in them. Securities is a word of very wide and rather indefinite meaning. It will cover all sorts of things. It does not in any way specify whether the securities are to be raised in India, or whether they are to be in connection with loans raised in India, or with loans raised in this country and issued in India. But in any case, even if the words were more suitable than they are, I do not think it will be possible to make the concession in the case of Indian securities which we are prepared to make in the case of Colonial securities. The case of Indian Government securities is already met by the composition between the Indian Government and the Treasury. My own experience of the India Office was that the financial authorities there were as capable of making a good bargain on behalf of India as any people in this country. I do not think we can re-open the question, which has already been settled, and we cannot make the concession.
§ Sir F. BANBURYThe Amendment only deals with short-dated bonds which are issued occasionally by the Indian Government, but very often by Indian railway companies, guaranteed by the Indian Government, and now when the vast majority of the Indian railways have been bought by the Indian Government these short bonds are issued generally with from three to five years to run. These are bearer bonds passing from hand to hand. They are the only Indian form of security, as far as I remember, which is issued in that form. Am I to gather that they will not be included in this particular Clause? As far as I can read the Clause and the Stamp Act of 1899, they will be included. If they will not be included the hon. Member has no reason to move the Amendment, but we should know for certain whether or not these particular bonds would be included in this Section. The bonds are issued at a low price—probably money borrowed at 3 or 3½ per cent. or even less—and it is evident that if you put upon them a tax 649 of £1 it adds 4s., if it is a five-year bond, to the interest, and if it is a three years' bond it adds 6s. 8d. per year.
§ Mr. HOBHOUSEThe hon. Baronet has raised a question of great difficulty. The companies which work the railways pay rent to the Indian Government, and have control over the policy of working, but there is practically no connection at all with the State.
§ Sir F. BANBURYThey have this connection, that the Indian State is responsible for principal and interest.
§ Mr. HOBHOUSEThat is true. They are guaranteed, or some of them are, but by no means all. The connection of the State is therefore a very difficult and a very anomalous one. I do not think these securities are recognised in any sense as a Government security, though in many cases the guarantee of the Government is behind the company, but it is not a Government security in the strict sense of the word. The Government could not really accept the Amendment.
§ Sir F. BANBURYIt is evident from the speech of the right hon. Gentleman that these particular securities would be covered by this Clause, and I hope my hon. Friend will go to a Division.
§ Mr. REESI do not want to be contentious about the matter, or I might argue that, I was willing to accept the words "Indian Government securities" and such words can be no more indefinite than the word's "Colonial Government securities." However, I readily subscribe to what the hon. Baronet said about the position of Indian railway boards which manage these companies, and if he would look into the matter, in case he should find there is more in my contention than he thinks, I will withdraw.
§ Amendment, by leave, withdrawn.
§ Mr. B. S. STRAUSI beg to move the addition of the following words to the Clause: "The above increased duties only to apply to securities issued after the first day of November, nineteen hundred and nine." My reason for moving this Amendment is that in the replies given to two questions on this subject it was stated that the duty on bonds to bearer should not be retrospective. If that is so, there must be something put in this Clause to prevent the duty from being retrospective. I am not particularly enamoured of the words I propose, and I will accept any form of 650 words which will have the effect of carrying out what I understand to be the intention of the Government. It is manifestly unfair that a person who has at present a large holding of bonds to bearer should if he suddenly sells these bonds in London, be mulcted in 10s. per cent. duty in order that they may become legal tender. That would mean a serious loss, particularly if that person happened to be the owner of a large parcel of bonds. If this duty were to apply to such bonds he would desire not to sell them in London, but to export them to Amsterdam, New York, or elsewhere to be sold, and in that way the commission to the London banker would be lost, while at the same time the money would go out of the country. I am not one of those who are opposed to capital leaving the country. I agree with the hon. Member for Lewisham (Major Coates), who said that trade follows capital, and that if you lend capital to a foreign country it means trade to this country. Consequently I say it is our duty to do everything we can to encourage capital going out of the country. I desire to ask the Government whether they are willing to accept this Amendment so that the duty on bonds to bearer will not be retrospective. I earnestly hope that they will be able to accept this Amendment or something similar.
§ Sir F. BANBURYI hope the Government will accept this Amendment, which is extremely important. When the matter was last dealt with, in the Finance Act of 1899, it was carefully provided by Section (1) of Clause 4 that bonds of this description should not be liable to increased duty. As I understand, increased duty was not put upon bonds which had already been made liable to duty. Bonds issued before 1899 always passed, provided that they were stamped with the stamp due up to 1899. Therefore, we have a precedent in favour of the Amendment moved by the hon. Member for Mile End (Mr. Straus). Under this Clause the increased duty will apply not only to bonds or shares issued after the passing of this Bill into law, but to every bond or share at whatever time issued. That is a very great change in the custom under the Stamp Acts. It is a change which will have this effect: People who hold these bonds or shares will take every means in their power to avoid paying the duty when they find that the securities are subject to this additional Stamp Duty. Where they are transferable or negotiable in other countries, the 651 probability is that, instead of being negotiated here, they will be negotiated in other countries, and nothing will accrue to the revenue.
§ Mr. HOBHOUSEI do not think the words as they stand in the Clause will have the effect which the hon. Members who have spoken think they will have. It is certainly not the intention of the Government that the new duty should be charged on these bonds. Before I accept the words of the Amendment I would like to consider the matter. If it is necessary to make an alteration, I will bring up words which can be inserted on Report.
§ Mr. STRAUSI beg leave to withdraw the Amendment.
§ Amendment, by leave, withdrawn.
§ Question put, "That the Clause stand part of the Bill."
§ Earl WINTERTONIn this discussion scrupulous care has been taken not to drag in any reference to controversial politics. At the same time I do not think it is right that this Clause should be allowed to pass without any reference to the effect of the policy contained in it and to the general policy of the Government. During the last four or five years—in fact ever since the fiscal question was first brought before the country—we have had repeated declarations by Members of His Majesty's Government that one of the great dangers, in fact the greatest danger, of Tariff Reform was that it would interfere with financial business being done in London. We have been told over and over again that finance is a most delicate plant, and yet what do we find the Government trying to do? They propose to double the tax on the financial operations of this country. I think it is most important that that should be taken into consideration in connection with the general policy of the Government. I do not think that Free Trade is very fortunate in the way it is supported. When we come to consider what effect this tax will have upon financial operations, I think, looking to the statements which have been made by leading financial authorities in the country, and to what has been said here this afternoon, there is not the slightest doubt that the enormous operations going on in the City of London will be jeopardised. It is harder every year to get financial business in this country. The struggle going on in that department of 652 commerce is like the struggle which is going on in everything else. The effect of the increased tax in Paris has been to drive an enormous amount of business away to Brussels. When in Brussels recently I talked to a leading financier, who told me that he had read with delight of the proposal of the British Government in regard to the Stamp Duty. He said he believed that the financial business of Brussels would increase enormously when the new duty came into operation. Having regard to the delicate state of the financial market, I do not think that the Financial Secretary to the Treasury has gone so far as to say that this tax may not have a serious and injurious effect. The Government do not deny that this increase of the tax will have a bad effect, but apparently they have only included this in the Bill because, as the Chancellor of the Exchequer has told us, it is necessary to get money somewhere. He thinks it necessary to get it by increasing the duty on financial operations instead of taxes on motor cars imported, and certain luxuries which we import from foreign countries. That is what the Liberal party call defending the citadel of Free Trade. [Laughter.] Hon. Members opposite may laugh, but, if it were not that I should be out of order now in going into details, I would endeavour to show that the policy of taxing imports would be better than that now proposed. I make this protest against imposing a duty which will hamper one of the really flourishing businesses of the country.
§ Mr. BOTTOMLEYI desire to say a word on this Clause in order to justify the vote I reel compelled to give against it. I listened attentively to the reply of the Secretary to the Treasury, who only gave one justification for the tax. He did not attempt any other. He said in effect: "I admit that the tax proposed by this Clause is an undesirable one. I admit the impeachment of the hon. and gallant Member for Lewisham. I have no technical experience in this matter, and I am not in a position to traverse the arguments he brought forward, but nobody has been able to suggest any other method of getting this money." If the Secretary to the Treasury puts the case in that way, he necessarily invites suggestions from Members of the Committee as to how he can get the money without imposing this tax. I venture to put forward that if the Secretary to the Treasury would only put upon gambling operations the same 653 penalty which falls upon legitimate investments, which I will endeavour to explain later on, he will find all the money he requires. I, for one, protest against the suggestion that this tax can do any good whatever, and it must of necessity do an immense amount of harm and disturb the whole Stock Exchange of this country to the advantage of the opponents of the Government. Under those circumstances I would venture to ask the Secretary to keep his mind open until we get to the next Clause, so as to see if there is not some other way of getting the money.
§ Sir F. BANBURYI do not propose to suggest to the right hon. Gentleman any way by which he can obtain £150,000 this year and £350,000 next year, the amount which he hopes to get out of this tax. It is not my business to suggest to the right hon. Gentleman how to obtain money. I would like to add my tribute to the speech of my hon. and gallant Friend (Major Coates). He pointed out that this particular tax handicaps the negotiation of Canadian bonds in this country, because, as he said, in the country on the frontiers of Canada the people paid no tax either on bonds or shares to bearer, and consequently American financiers were able to compete much more successfully with the Canadian bondholder than the English people over here, who are handicapped by the tax of £1 per cent. That does not apply only to Canada, but to all the foreign countries of the world who are desirous of raising money, and used to come to this country and used to consider that this country was the chief money market of the world. The hon. Member for Louth (Mr. T. M. Healy) early in the afternoon stated the reason why other countries came to London to borrow money was because London was the cheapest market in the world. That was so 15 or 20 years ago, but it is not so now. As will be seen from the statement which the right hon. Gentleman made only yesterday, in reply to a question addressed to him by some Members on this side of the House, he had to admit that during the last year—a period of very cheap money, which has always' a very great effect in enhancing securities—while every foreign Government security had gone up, Consols had fallen.
§ Mr. HOBHOUSECertain selected securities had gone up.
§ Mr. T. M. HEALYI was dealing with the Canadian investor in what I said.
§ Sir F. BANBURYYou can get money as cheaply at the present moment in the United States as in England. You will find that in the last few years large parcels of bonds, which in the old days would have been dealt in here, have been dealt in in the United States, as it was impossible to find a market for them here.
§ Mr. T. M. HEALYAt what rate of interest?
§ Sir F. BANBURYThe same rate of interest. Of course, the people who desired to borrow money found that they borrow it more cheaper in America than here. I do not want to exaggerate the effect of this tax—I think it a great mistake to do so—but I believe that it will be to drive out of this country a large quantity of bonds which come over here. That is to say, the person who desires to borrow the money will be able to borrow without coming to this country; therefore the financial business of this country will be dislocated. It must not be forgotten that the placing of bonds every year is not the only advantage which this country derives from the fact that these securities can be negotiated here. There are other things which follow the negotiation of money over here. Take a Canadian railway which raises its money here. The object of that line is to do certain things for the advantage and use of the country. The money being over here they naturally say, "We must see if we cannot buy the materials for our railway in this country." If they go to some other country they will try to buy their materials in the country where they have their money. This covers a great many other things besides Stock Exchange transactions. I have the pleasure of seeing the hon. and learned Member for Reading (Mr. Rufus Isaacs) opposite me. He is a great authority in these matters, and I am inclined to think that he will not disagree with the remarks which I have made as to the results which would arise from the increase of this tax, the tax being already ½ per cent. Of course, it does not affect private individuals. A private individual desires to buy a security which is subject to this tax, and he must go to a broker or a bank and buy, and he has got to pay the tax whatever happens; but the man who knows his way about the City, the rich firm or the big bank, who really accounts for the greater part of the transactions in these securities, can buy them abroad. There is no necessity for them to buy them here in England, and having bought them 655 abroad they do not particularly desire to have their security over here in their own hands. The private individual likes to see his bond and look at it, and know he has got it, and he has got to do it through a broker or a banker, and therefore Somerset House can compel him to pay the extra stamp on these bonds. His broker is bound to see that it is done when he delivers it. I see the hon. Member for Newmarket (Sir C. D. Rose) is present. He is also a great authority on this matter. I venture to make the statement that if the hon. Baronet the Member for Newmarket was now in the City, and he saw any reason to desire to invest £100,000 in an American railway, he would not send the order to the London Stock Exchange, because he would have to pay the stamp unless he could happen to buy the bonds already stamped; and if the answer came back, "You will have to give 1 per cent. more because we shall have to buy the bonds in America," the hon. Baronet would say, "That will not do; I shall send over to New York and buy them there." He can contradict me if I am wrong. But the hon. Baronet being a man of resource and great intelligence, besides being a man of capital, would evade the duty, while the ordinary investor would be caught.
The Prime Minister told us the other day it was a very good thing the money went abroad. The Prime Minister, not having the resources of the hon. Member for Newmarket, could be compelled to pay the extra 1 per cent. Possibly if he were here he might back me up, and divide against the Clause, or put sufficient pressure on the Secretary to the Treasury to drop the Clause. If that is to be the effect of the tax—and I believe it will be—the Treasury will get nothing. The result will be as in the case of the Spirit Duty. When you put a tax on an article which is more than it can bear the only result is that it drives out the particular commodity, that you destroy its use, and prevent it circulating as it would have done if the tax had been lighter. I had two quotations, one from the President of the Board of Trade, in support of this contention, which were handed to me by an hon. Friend of mine just now. It is taken from "Hansard" of May, 1902:—
If ever in this country the incidences of taxation falls so as to make this country not a good country for capital, so as to displace it from its position as the clearing house of the world, then, indeed, the whole of the vast structure of our credit and authority will come clattering down, and the only choice we shall be able to offer the manufacturing multitude in England will be to emigrate or starve.656 I have another quotation from a little book edited by the hon. Member for Blackburn (Mr. Snowden) from an article headed "The Socialist Ideal Budget." He has met the point of the right hon. Gentleman, and has offered another alternative-In this ideal Budget he omits stamps altogether, and the reason he gives for doing that is to relieve business of the Stamp Tax on commercial transactions. There are two great authorities, the right hon. Gentleman the President of the Board of Trade and the hon. Member for Blackburn, who would desire to relieve commercial transactions of stamps. But the right hon. Gentleman is doing absolutely the reverse, because, instead of relieving commercial transactions of stamps, he is doubling their incidence. As I have pointed out, this tax will have a bad effect on commercial transactions, and at the same time it will not bring any very great increase to the Treasury, and for those reasons I shall vote against it.
§ Mr. HOBHOUSEThe hon. Baronet who has just sat down quoted, in concluding, some observations of my right hon. Friend the President of the Board of Trade. Those observations, if I remember aright, were made when he was in sympathy with the hon. Baronet opposite, but he has now proceeded on a wiser path. But there was one serious argument produced by the hon. Baronet. It was to the effect that foreign countries used to come here, but that now they have given up.
§ Sir F. BANBURYNot altogether.
§ Mr. HOBHOUSEThat they are diminishing, and that if we impose this tax they will still further give up the practice which obtained in former times and go somewhere else to seek their capital. The investor will go to the market in which he finds he can get what he wants. Last year, as I pointed out in previous remarks made to the Committee, we lent to Canada something like £40,000,000 of money on terms which were mutually agreeable to the vendor and the borrower. That was done in spite of the fact that there was a Stamp Duty of 10s. per cent. upon the transaction.
§ Major COATES2s. 6d. on some.
§ 6.0 P.M.
§ Mr. HOBHOUSEIt is a question of proportion between the two, but what would be £1 now was 10s. previously. At the same time that the hon. Baronet pointed out this state of things he and his Friends 657 had been for some time lamenting the exportation of capital from this country to some other countries. I should have thought if the tax had the result which he hints it will have, but which I confess I cannot admit, and must deny, the hon. Baronet ought to be pleased with the result, because the exportation would cease under the operation, and his desire would be gratified. I do not wish to press that point too far.
§ Sir F. BANBURYI gather from the right hon. Gentleman that we ought to be pleased with this tax, because it would prevent the exportation of capital abroad, That is because people will buy straight from abroad instead of buying here, but at would prevent the Government from getting Stamp Duty.
§ Mr. HOBHOUSEThat is an extension of the hon. Baronet's argument. I think the case that he put originally was what I suggested. It has been said that I have admitted that this particular tax is undesirable. I admit that; but I go very much further, and I say that all taxes are undesirable in themselves, and they are only imposed with great reluctance. To the extent to which they exist every single tax is a hindrance of capital, is a burden upon the person who pays the tax, and is in itself undesirable, I do not care under what form or under what system it is imposed. I make hon. Members a present of that observation, which I believe is shared by hon. Gentlemen on both sides of the House. I do not propose to address the Committee at any greater length, because we have had a very considerable discussion in the earlier part of the afternoon on the merits of this Clause, and the arguments of the Government have already been put before the Committee. I repeat again, that it is regrettable that taxation should have to be placed upon this or any form of capital, yet I do not think that this tax will have the injurious or disastrous effect that is predicted by hon. and right hon. Gentlemen opposite.
§ Mr. WALTER LONGI shall most certainly vote for the omission of this Clause from the Bill, and I shall give that vote with complete satisfaction and in the very firm belief that it is in the interests of good finance and good Government that the Clause should be rejected. I look upon it as one of the very worst illustrations to be found in this Bill of the attempt on the part of the Government to obtain the minimum of revenue in the shape of an arrangement which will impose the 658 maximum of inconvenience and disturbance. The right hon. Gentleman said he did not wish to repeat arguments which had been previously used by the Government in defence of this Clause. I venture to say that neither in the speech to which we have just listened, nor in the speech delivered earlier in the afternoon, has there been one single argument advanced in justification of this particular form of taxation. We have been told by the right hon. Gentleman that all taxation is objectionable, and so on. We hear that about once in every three speeches made from the Government Bench. Everybody knows it. While all taxation is objectionable, and all the rest of it, some taxation is especially objectionable, and some of it imposes a specially objectionable burden. It has been pointed out by my hon. Friend that the Secretary to the Treasury has, admitted the badness of this particular proposal. I indulge in this surmise, that hon. Gentlemen, who have been in the House to-day, and who have listened to this Debate, if they could vote regardless of the fate of the Government and of their political proclivities, would do so with a majority that would be overwhelming. Where have been its defences? We have had two speeches from the Front Bench containing no argument—I say it with no, disrespect to the right hon. Gentleman. I do not think there has been any argument advanced in support of this proposal except those generalisations in which the right hon. Gentleman indulged in his last speech. We have had condemnation of, the proposal from all quarters of the House, and we have had concessions made by the Government in deference to the irresistible case put forward; but we have had no argument in defence of the proposal itself. The Secretary to the Treasury, dealing with the speech made by my hon. Friend behind me, said, in his first speech, that finance is a delicate plant. I am informed that so delicate is the nature of these transactions that a very small tax placed upon them has the effect of becoming in some cases absolutely prohibitive. I am assured by those who know, who have no interest other than to place the facts of the case before the Committee and the country, and who are engaged in these transactions every day, that this particular form of tax will be destructive in its effect on a large class of business. I was assured only the other day that in one case on a whole series of these transactions—I am sorry to say I have little personal experience of these matters, I wish I had more, 659 but I assume that the figures they showed me are correct—the increased burden of taxation would prevent some of this business from being carried out. The remarks which fell from the Secretary to the Treasury with regard to that branch of the question seemed to me altogether irrelevant, and hardly worthy of serious debate. The Secretary to the Treasury says we have no alternative proposal. It is not our business to make alternative proposals; but I must say I should have thought that, so far as the Rules of this House permit, every sort of alternative suggestion has been made at one time or another in the course of the Debate. I understand what the right hon. Gentleman means is that these City representatives who brought the case before the Government and pressed it upon them ought to have produced an alternative suggestion, and, having failed to do so, this tax must stand. We have it admitted that you are interfering with the business, not only of the City of London but with business which enormously concerns many of our Colonies. That is admitted; nobody has attempted to deny it. I wish to protest against this Clause, because I believe it to be one of the strongest illustrations out of many of the badness of the foundation on which the Budget rests, that it will do a vast amount of harm, producing the maximum of inconvenience with the minimum of revenue, and that it has been introduced in opposition to the best expert opinion which has been brought to the consideration of the question.
§ Mr. HELMEI earnestly trust that the Government will, at the earliest possible moment, consider the question of reducing this tax if it is found to interfere with the great financial transactions which have hitherto centred in London, because of the advantage which freedom from taxation—10s. per cent. being the amount of the stamp—allows here. One point of danger in the future, in my opinion, is America, which has been free from Stamp Duty in the past, and has not had capital available for the taking of these great loans. But that is rapidly passing away, and consequently we shall find that America in future will more readily and more rapidly enter into competition for the placing of these issues. As a Free Trader I object to putting a tax upon a market—whether on financial transactions or goods—as far as the interests of our revenue will allow. When we remember the great Colonial loans, I should have 660 been glad if, by Amendment, exemption from the increase could have been made applicable to the municipalities of the Colonies, because from time to time, and there will be in increasing amounts, money required for municipal purposes by all the great cities of our Colonies, and we naturally would hope that such loans would find their home in the London market. If a Colonial municipality desires to float a loan, say, of half a million of money, they come to London and ask for quotations. Financiers sit down and calculate, as the hon. Member for Lewisham put so clearly a few minutes ago, that there is a charge of 8s. 9d. for incidentals and a charge of 10s., and they make their estimate and underwrite the loan for a given sum. Now you are narrowing the margin by the increased amount with which it is to be weighted. Supposing that in future America enters the list without a Stamp Duty, it will, of course, have a greater power to undersell us. Whilst we have had 10s. in the past, and Berlin 12s. 6d., Berlin is now increasing that rate, France has levied a £2 Stamp Duty, now being increased; therefore, we have been in a position of advantage. I should have been glad if the Government could have given a 15s. per cent. Stamp Duty for the municipalities; but as the exigencies of the moment are so great the Committee can pass this in the hope that the time will soon come when the £350,000 will not be a matter of such great moment as it is to-day, and I trust that the great financial interests of London will be made freer, because Free Trade principles shall be applied to finance as well as to imports.
§ Mr. RUFUS ISAACSI listened with the greatest interest to the speeches which have been made, especially that of the hon. and gallant Member for Lewisham, who contributed so much to our stock of information and knowledge of this subject, and to whom this Committee is very much indebted. But, while agreeing with nine-tenths of what he said in respect of this matter, I differ from him in the conclusions at which he arrived.
I desire to address myself for a moment to some of the observations made in reference to the policy of this Clause, because it seems to me that the whole of his argument was based on showing that in respect of the Colonial and municipal loans the margin of profit was not sufficient to allow our great financial houses here to cope with the extra duty which will be imposed. Let me point out that what we are discussing 661 is not that issue, but the far broader and more general proposition of an increased duty on the bearer bonds, which would apply to all foreign securities, and that there has not been one word said in the argument in this House which in the slightest degree bears upon that proposition. What the Government intends to do by these duties is to raise the stamp upon bearer bonds of all foreign Governments, not of Colonial Governments or Colonial Provincial Governments, which are exempted by what has been said to-day. It is very remarkable with the great authorities on finance which we have on the other side, and I know the hon. Member for the City (Sir F. Banbury) and the hon. and gallant Member for Lewisham are great authorities, that not one word has been adduced against this tax in so far as it will operate upon the securities of foreign Governments. It is those Governments which, in the main, will be responsible for the taxation which is imposed by this Clause. Therefore, dealing with the more general proposition which has been put forward, I venture to submit to the Committee that there has not been a single argument adduced in the whole of the discussion against the Government proposals.
In reference to what was said by the hon. and gallant Member for Lewisham as to the effect on Colonial municipal bonds, I confess I thought there was a great deal more to be said in respect of that point. After listening to him most carefully, I think it seemed to be the echo of an argument which is used often here in respect of other proposals of increased taxation, of any increased burden upon trade. That is a kind of argument which is used over and over again, and I am perfectly certain by the hon. and gallant Member with absolute honesty and sincerity. It is said that trade will be destroyed when we impose this further taxation. I am sure everybody is familiar with that kind of argument in reference to another department of taxation which has been discussed in this House on many occasions. Again and again we have been told that trade would be destroyed, and the same observation applies to what has been said by the hon. and gallant Member. I do not profess to have anything like the knowledge and experience of the finance of the City that either of the hon. Members to whom I refer must have, but I have sufficient to know this, that I am quite certain that the resources of the hon. and gallant Member and also of those great 662 financial issuing houses in the City will be quite equal to coping with the increased strain put upon them by further taxation in the shape of this Stamp Duty, and that we shall not lose this business any more than the trade or business will be destroyed, which we have heard so often in another connection.
I do venture to submit to the Committee that we need not at any rate fear in this respect that there will be any great loss to the revenue, because if all we have heard from the hon. and gallant Member for Lewisham is true, and if all the argument-was based on his own personal knowledge and experience with reference to these Colonial municipal bonds, and if it involved this that there would be no means of in the slightest degree meeting the extra taxation, still the loss which would be incurred by the country in respect of those matters is comparatively small. And again, so far as the revenue goes compared with the loss that would be incurred by omitting this Clause altogether, and thus losing the great benefit of the increased burdens in respect of all the other foreign Government securities, of which we have heard nothing throughout the whole course of this discussion, I submit that this Clause is one which really imposes no very great burden upon the finances of this country, and is one which will produce, as we understand from the Financial Secretary, £50,000 this year and £350,000 in the years to come. The argument which has been addressed with reference to the Colonial municipal bonds would only really affect a very small portion of that, and therefore I submit that this Clause is eminently desirable.
§ Sir CHARLES ROSEI agree that the case of the hon. and gallant Member for Lewisham (Major Coates) is an entirely hard one, and that it was a very proper case to bring before the House. The margin on that class of business is undoubtedly very very small. I do not agree with a great deal of what has been said by the hon. Member for the City (Sir F. Banbury). I think the hon. and gallant Member for Lewisham will bear me out that municipal securities in which there is such a small margin are not considerable, and very often, although they may not be secured here in the first instance, they nearly always come back here in smaller amounts. I can assure the hon. Members that the margin of profit on negotiations from foreign loans is not a fine one, and there is ample margin to pay this extra 663 stamp, and give them all a very large profit; indeed, I do not fear that this will interfere with the circulation of securities. I call the attention of the Secretary to the Treasury to what the hon. Baronet (Sir F. Banbury) said as to evasions, and I hope he will bear it in mind and have the Stamp Act altered so as to protect the country against the gross evasion of the taxes as they go on now, and which I do not suggest hon. Members are responsible for. In the case principally of American railway securities, if they are purchased by a stockbroker here, they have to pay the Stamp Duty, but the broker may say, "I can get them for you in New York without any stamp in a different form." They are rendered as if "secured" instead of purchased. Those bonds come over from New York, and have no stamp. Hundreds and thousands of pounds might have been obtained if the Act had been different. As to short date bonds, speaking not as a party politician, I do not believe, although there may be cases where the margin of profit is very small, that it does not affect the country or its prospects. On the great, large loans of foreign countries which are negotiated here there is an ample margin to bear the additional stamp.
§ Sir F. BANBURYThe hon. Baronet (Sir C. Rose) has drawn attention to the great manner in which evasions are carried out, and that was only confirming the statement I made that I thought the result would be that evasions would take place, and the Government would not gain anything. I understood him to say he had bonds in his own possession, and was breaking the law himself.
§ Sir C. ROSEIt is not an evasion of the law at present. I wished that the Stamp Act would be altered to bring them within the law.
§ Sir F. BANBURYI will leave that point. The hon. and learned Member for Reading (Mr. Rufus Isaacs) said that the only argument that had been brought forward was as to Colonial securities, and that the enormous amount of foreign securities dealt with had been left out. There is a vast mass of American bonds and shares that would be tremendously affected. The hon. Baronet the Member for Newmarket (Sir C. Rose) admitted that the Act is not retrospective, and would only affect new issues. I never attempted to deny that in the issue of a large foreign 664 loan in all probability there would be sufficient margin to allow 1 per cent. Stamp Duty being paid; but it must not be forgotten that now, for the first time, or rather within the last ten years, other countries are competing with us for the issue of those large foreign loans. Take the Russian and Japanese loans, the two largest issues in that time, and remember both those issues were placed in other countries They were placed in Paris, in Brussels, in America. It must not be forgotten we gave preferential treatment for our own loans during the Boer War, showing that this country is no longer the money market of the world. There can be no doubt if 1 per cent. is added the Dutch, Belgian, and Americans will be able to compete on better terms. When once those securities-are issued you cannot deal with any part of the loan in London which has been issued abroad unless you pay Stamp Duties. Therefore you are limiting the market in London. It is a very bad thing to introduce any limitation, and it is against the interests of the people to prevent a free share market. The best possible thing is to have as free a market as possible in shares and bonds. Therefore, I say that the speeches of hon. Members opposite have tended to show that the Clause is a bad one, and that if they followed the bent of their own minds they would vote against it.
§ Mr. B. S. STRAUSNotwithstanding what has been said on the other side, although I have heard every word of the Debate I shall support the Government. I do not take that course because I like the tax. I know as well as any man in the House that a tax or duty on any article must tend to hamper the market. That is one of the reasons why I am a Free Trader. But the object of this Budget is to put upon the shoulders of the different classes of the community their fair share of the burden of the extra millions which it is necessary to raise. Therefore, the Stock Exchange ought to bear its share, and I do not think that this is an unfair share to ask them to take. I wish particularly to refer, however, to the remarks of those hon. Members who seem to think that a tax of this kind on securities must kill he market altogether, and that there is no precedent for it. In France there is a 1 per cent. or 2 per cent. duty, but it has neither spoilt nor even hampered the market in these bonds. In Berlin they have a heavy stamp duty, but although the 665 same arguments were used when it was adopted, those arguments have not fructified, and I maintain that the arguments which are being used to-day will equally fail to be confirmed by experience. This Clause does not relate to securities in general, but to bonds to bearer or bearer bonds. The bulk of these refer to either Colonial securities, which are largely exempt, or to foreign securities. I cannot understand how hon. Members opposite, who think it is so bad for the interests of this country to export capital abroad, can vote against this Clause which they say will tend to prevent our capital going to foreign countries. If they are right in their contention that it is a bad thing for English capital to go to foreign countries, they ought to support this Clause. If, on the other hand, they believe, as the hon. Member for Lewisham (Major Coates) so ably explained, that trade goes with the loan, as, of course, it does, they must know that their apprehensions have really no foundation. I do not believe that we are going to lose business through this Stamp Duty. I agree that it will tend to hamper business, and anything which does that is bad. At the same time we have to find this money, and those who will have to pay this extra sum must not object to bearing their fair share of the burden. Amsterdam has no stamp duty on bonds; therefore, if a stamp duty kills business, the whole of the trade in these bonds ought to go to Amsterdam. But it does not. The trade in these bonds has increased in London to a greater extent than in Amsterdam. The trade in these matters must always go where the money is, and money goes where confidence is. [OPPOSITION cheers.] Yes; I say chat confidence goes where trade is; trade goes where there are fewer taxes and greater facilities for inter-communication and exchange of goods; where there is the best choice of goods there trade goes; and as long as we keep our markets open for foreign goods for which we pay in manufactured English goods, we shall retain this very valuable market. Confidence must be lost to some extent when people in responsible positions continually cry that we are suffering from want of confidence, that we are going to the dogs, and that other countries are beating us. They repeat it so often that they believe it themselves. That is the kind of thing we are suffering from to-day. As far as our stability is concerned, there can be no question that we are still second to none. I am sufficiently 666 an imperialist or a Big Englander to believe that we are still as good as anybody else, and a great deal better than most. I shall with confidence support the Government on this Clause, and I trust that those who vote against it will remember that they are voting against their own arguments, namely, that it is a bad thing for British capital to go abroad and that this Clause will tend to prevent British capital going to foreign countries.
§ Mr. HARMOOD-BANNERIn reference to remarks of the hon. Member opposite (Mr. Straus), I would say that the fewer hindrances to trade there are the better. So far as foreign loan business is concerned, a short time ago there was a loan issued by the city of Copenhagen, and the French, although they had a heavier duty to pay, were able to beat the British tender by a sum of £2,000, and they obtained the loan. If we had had to pay this extra ½ per cent. the difference would have been still greater. As to the inadvisability of putting hindrances in the way of the issue of foreign loans of this country, I would refer to one or two loans which have been issued lately. The City of Moscow Loan recently was taken up by British capital. What was the result? Orders to the extent of many hundreds of thousands of pounds came to this country to electrical manufacturers, the builders of railway waggons, the makers of rails and all sorts of appliances for the trams which were to be constructed in Moscow. Had it not been that British capital had been able to acquire that loan those large orders would never have been secured. Similarly a short time ago there was another Russian loan issued by a place near the Black Sea. After considerable negotiation and trouble, that loan was obtained by England, and I would like to bear testimony to the fact that the President of the Board of Trade used his best endeavours in assisting the English party to obtain that loan against the competition of foreigners. This extra ½ per cent. would probably have meant the loss of the loan. In that loan there was a condition that as far as possible English work should be employed, and an English director was put on to see that that condition was carried out. By imposing this extra ½ per cent. we are going to throw away the advantage by which we are able to get extra work for this country. I could give the names of half a dozen loans which have been secured by the French, notwithstanding their higher rate of duty. This extra ½ per cent. will mean that we shall lose far more than 667 we do at present. That is a very serious matter. Personally, I am not much interested in the financial part of the transaction; but the considerations of finance and work for British people are so intermingled that you cannot separate them. If you find the money you get the work; if you do not find the money you do not get the work. If you want to build engines or to sell rails, electrical appliances, or materials of any sort, you must be ready to assist in the finance. Germany have their representatives at every commercial centre to push their business and to assist their manufacturers wherever they can. As I say, the President of the Board of Trade did that in the instance to which I have referred, but, as a rule, very little assistance is obtained from the British Government for British manufacturers in this way, and the present opportunity of mixing our finance with our work is to be taken away by the reduction in our relative superiority in the matter of these Stamp Duties. It is an enormous advantage to have the low Stamp Duty of only ½ per cent., but the Government now propose to take that away. It means very little to the Government, but it will cost the manufacturers and labourers in this country far more by preventing them getting their fair share of work for foreign countries.
§ Mr. H. BOTTOMLEYI think that the hon. Member for Reading (Mr. Rufus Isaacs), in his desire to come to the rescue of the Government, did not do either his case or himself that justice which we expect from his unique reputation in his profession. His argument came to this: That the case which the hon. Member for Lewisham (Major Coates) had made out might be good in regard to Colonial stock, but there was nothing much in it as regards the larger subject of foreign loans. In other words, the hon. Member said, "Tell the Colonies when they want money they must go to foreign countries for it, and not to the Mother Country." That, to my mind, is not a very attractive alternative to the baits which are being held out by other countries for the trade of the Colonies, and it strengthens my determination to vote against the Clause.
§ Mr. RUFUS ISAACSColonial Government securities are exempt from the Clause.
§ Mr. BOTTOMLEYThey are exempted from the Clause, but the hon. and learned Member's point was that there might be a 668 very narrow margin of profit in regard to Colonial loans and securities, but that did not much matter, because there was plenty of profit on foreign loans and securities.
§ Major COATESI wish to thank the Financial Secretary for his courteous reply to my few remarks, and I would like to make an appeal to him. He mentioned in his speech that during last year some £40,000,000 had gone from this country to Canada. It is true that probably more than that amount has gone to Canada, and a far, far greater percentage to Colonial Governments and Colonial Provincial Governments on which the half crown duty was payable, but a very small portion to Colonial municipalities. I possibly should have directed my attention more to foreign Governments, and should have been very glad to do so, only I felt that other hon. Gentlemen would take up that matter. I directed my few remarks to Colonial municipal bonds. When the bankers came to the Government I understand that there was a 'suggestion to increase the bill stamp. They brought before the Government cogent reasons against putting a very small percentage on the 1s. per cent. duty on bill stamps. They said that it would be ruinous to put it on a business dealing in bills of exchange, and that very much business might be lost. On that the Government gave up the idea of the duty. I appeal to the Chancellor of the Exchequer or to the Financial Secretary to say whether or not the Government could not do something for us in this present matter. Half a loaf is better than no bread. Even if the Government could make some concession it would be acceptable. The hon. Gentleman mentioned in his speech that £350,000 per year was budgetted for.
§ Mr. HOBHOUSEOn the full year.
§ Major COATESYes, the Stamp Duty for the full year. I have not had the opportunity of seeing the Returns for last year. I have seen those for 1907–8, and the return from bond stamps, according to the Blue Book, was £417,000. The presumption is that a similar sum has possibly come to the Chancellor of the Exchequer during last year. But I have put £30,000 to £40,000 as the increment. A 5 per cent. increase would yield £450,000. The right hon. Gentleman the Chancellor of the Exchequer would then have £100,000 more than he budgetted for. Might I suggest that out of that money, as he has exempted Colonial Government securities 669 and Colonial Provincial Government securities, that he should go one step further and exempt Colonial municipal securities? It is a small concession, from the point of view of finance, but it is a great concession to our Colonies. Our Colonies will appreciate it. By doing this I feel that the Government are not giving away any of their Free Trade policy. It would be an act of justice, not only to the business men of this country, who desire to grant their money to Canada, but it would also be doing an act of justice to the Colonies themselves.
§ Mr. HOBHOUSEIn answer to the appeal of the hon. Gentleman, may I venture to remind the Committee of a fact—which I believe the hon. Gentleman knows very well indeed—and that is that in this competition to obtain loans or issues from Canada or elsewhere, the main competitors are not Germany, Prance, or America. It is very largely a case of competition of the gentlemen engaged, like himself, in this particular class of business, and thus the profits of this kind of transaction are kept, as the hon. Gentleman has said, to a low point. Any concession which the Chancellor of the Exchequer made would not necessarily be to Colonial municipalities,
§ but really to the gentlemen who are engaged in this kind of business in this or any other country and the Colonies.
§ Major COATESThe point I raised in my remarks on the discussion of the Amendment was that we in England, the groups in England, lost this business because it was taken from us by America; not that another firm competing with me or my firm took the business. The whole point of the remarks I made, or the point I wanted to make was, that Canada does not come over here with her bonds. Canada publishes a notice in the papers in Canada, in Montreal and Quebec, not in this country, that she wants money, and that on a certain day tenders for £300,000, £400,000, or half a million will be opened. The argument I wanted to bring forward was that America gets these bonds from us. Let us have the bonds here. We can compete amongst ourselves. What we want to do is to prevent America taking the bonds from the English market.
§ Question put, "That the Clause stand part of the Bill."
§ The Committee divided: Ayes, 216; Noes, 84.
671| Division No. 713.] | AYES. | [6.55 p.m. |
| Abraham, W. (Cork, N. E.) | Cornwall, Sir Edwin A. | Haworth, Arthur A. |
| Adkins, W. Ryland D. | Cory, Sir Clifford John | Hazleton, Richard |
| Agnew, George William | Cowan, W. H. | Healy, Maurice (Cork) |
| Alden, Percy | Cox, Harold | Healy, Timothy Michael |
| Allen, A. Acland (Christchurch) | Craig, Herbert J. (Tynemouth) | Hedges, A. Paget |
| Allen, Charles P. (Stroud) | Crosfield, A. H. | Helme, Norval Watson |
| Ambrose, Robert | Cross, Alexander | Henderson, Arthur (Durham) |
| Ashton, Thomas Gair | Cullinan, J. | Henderson, J. McD. (Aberdeen, W.) |
| Asquith, Rt. Hon. Herbert Henry | Davies, Ellis William (Eifion) | Henry, Charles S. |
| Balfour, Robert (Lanark) | Davies, Timothy (Fulham) | Herbert, Col. Sir Ivor (Mon. S.) |
| Baring, Godfrey (Isle of Wight) | Dewar, Sir J. A. (Inverness-sh.) | Hobhouse, Rt. Hon. Charles E. H. |
| Barker, Sir John | Dobson, Thomas W. | Holland, Sir William Henry |
| Barlow, Sir John E. (Somerset) | Duffy, William J. | Hooper, A. G. |
| Barnard, E. B. | Duncan, C. (Barrow-in-Furness) | Horniman, Emslie John |
| Barnes, G. N. | Duncan, J. Hastings (York, Otley) | Howard, Hon. Geoffrey |
| Barran, Sir John Nicholson | Dunne, Major E. Martin (Walsall) | Isaacs, Rufus Daniel |
| Benn, W. (Tower Hamlets, St. Geo.) | Edwards, Sir Francis (Radnor) | Jackson, R. S. |
| Bennett, E. N. | Erskine, David C. | Jenkins, J. |
| Berridge, T. H. D. | Essex, R. W. | Jones, Sir D. Brynmor (Swansea) |
| Bethell, Sir J. H. (Essex, Romford) | Evans, Sir S. T. | Jones, Leif (Appleby) |
| Boland, John | Everett, R. Lacey | Jones, William (Carnarvonshire) |
| Boulton, A. C. F. | Falconer, J. | Joyce, Michael |
| Brigg, John | Findlay, Alexander | Kekewich, Sir George |
| Bright, J. A. | Fuller, John Michael F. | Kelley, George D. |
| Burns, Rt. Hon. John | Fullerton, Hugh | Kilbride, Denis |
| Burt, Rt. Hon. Thomas | Gibb, James (Harrow) | King, Alfred John (Knutsford) |
| Buxton, Rt. Hon. Sydney Charles | Gill, A. H. | Laidlaw, Robert |
| Carr-Gomm, H. W. | Glendinning, R. G. | Lamb, Edmund G. (Leominster) |
| Causton, Rt. Hon. Richard Knight | Glover, Thomas | Lamb, Ernest H. (Rochester) |
| Chance, Frederick William | Grey, Rt. Hon. Sir Edward | Lamont, Norman |
| Channing, Sir Francis Allston | Guest, Hon. Ivor Churchill | Layland-Barratt, Sir Francis |
| Clough, William | Gulland, John W. | Lehmann, R. C. |
| Cobbold, Felix Thornley | Gwynn, Stephen Lucius | Lever, A. Levy (Essex, Harwich) |
| Collins, Stephen (Lambeth) | Harcourt, Rt. Hon. L. (Rossendale) | Levy, Sir Maurice |
| Collins, Sir Wm. J. (St. Pancras, W.) | Harcourt, Robert V. (Montrose) | Lewis, John Herbert |
| Condon, Thomas Joseph | Harmsworth, Cecil B. (Worcester) | Lloyd-George, Rt. Hon. David |
| Corbett, A. Cameron (Glasgow) | Harmsworth, R. L. (Caithness-shire) | Lough, Rt. Hon. Thomas |
| Corbett, C. H. (Sussex, E. Grinstead) | Harwood, George | Lynch, A. (Clare, W.) |
| Macdonald, J. M. (Falkirk Burghs) | Pearce, Robert (Staffs, Leek) | Stewart, Halley (Greenock) |
| Mackarness, Frederic C. | Philipps, Col. Ivor (Southampton) | Stewart-Smith, D. (Kendal) |
| Maclean, Donald | Pickersgill, Edward Hare | Strachey, Sir Edward |
| Macpherson, J. T. | Pirie, Duncan V. | Straus, B. S. (Mile End) |
| MacVeagh, Jeremiah (Down, S.) | Pointer, J. | Summerbell, T. |
| MacVeigh, Charles (Donegal, E.) | Ponsonby, Arthur A. W. H. | Taylor, John W. (Durham) |
| M'Callum, John M. | Raphael, Herbert H. | Thomas, Sir A. (Glamorgan, E.) |
| M'Kean, John | Rea, Rt. Hon. Russell (Gloucester) | Thorne, G. R. (Wolverhampton) |
| McKenna, Rt. Hon. Reginald | Roddy, M. | Thorne, William (West Ham) |
| M'Laren, H. D. (Stafford, W.) | Rees, J. D. | Tillett, Louis John |
| Mallett, Charles E. | Richards, T. F. (Wolverhampton, W.) | Tomkinson, James |
| Markham, Arthur Basil | Ridsdale, E. A. | Toulmin, George |
| Marnham, F. J. | Roberts, Charles H. (Lincoln) | Trevelyan, Charles Philips |
| Massie, J. | Robertson, Sir G. Scott (Bradford) | Walker, H. De R. (Leicester) |
| Masterman, C. F. G. | Robertson, J. M. (Tyneside) | Walsh, Stephen |
| Menzies, Sir Walter | Robinson, S. | Wardle, George J. |
| Middlebrook, William | Robson, Sir William Snowdon | Warner, Thomas Courtenay T. |
| Molteno, Percy Alport | Roch, Walter F. (Pembroke) | Wason, Rt. Hon. E. (Clackmannan) |
| Montagu, Hon. E. S. | Roe, Sir Thomas | Wason, John Cathcart (Orkney) |
| Muldoon, John | Rose, Sir Charles Day | Watt, Henry A. |
| Murphy, John (Kerry, E.) | Russell, Rt. Hon. T. W. | White, Sir George (Norfolk) |
| Myer, Horatio | Rutherford, V. H. (Brentford) | White, J. Dundas (Dumbartonshire) |
| Nannetti, Joseph P. | Samuel, Rt. Hon. H. L. (Cleveland) | White, Sir Luke (York, E. R.) |
| Newnes, F. (Notts, Bassetlaw) | Samuel, S. M. (Whitechapel) | Whittaker, Rt. Hon. Sir Thomas P. |
| Nolan, Joseph | Scarisbrick, Sir T. T. L. | Williams, J. (Glamorgan) |
| Nussey, Sir Willans | Schwann, Sir C. E. (Manchester) | Williams, W. Llewelyn (Carmarthen) |
| Nuttall, Harry | Seely, Colonel | Williamson, Sir A. |
| O'Brien, Patrick (Kilkenny) | Shaw, Sir Charles E. (Stafford) | Wilson, P. W. (St. Pancras, S.) |
| O'Connor, John (Kildare, N.) | Sheehy, David | Wilson, W. T. (Westhoughton) |
| O'Connor, T. P. (Liverpool) | Sherwell, Arthur James | Wood, T. M'Kinnon |
| O'Donnell, C. J. (Walworth) | Shipman, Dr. John G. | Yoxall, Sir James Henry |
| O'Malley, William | Snowden, P. | |
| O'Shaughnessy, P. J. | Soares, Ernest J. | TELLERS FOR THE AYES.—Mr. Joseph Pease and Captain Norton. |
| Parker, James (Halifax) | Stanley, Hon. A. Lyulph (Cheshire) | |
| Partington, Oswald | Steadman, W. C. | |
| NOES. | ||
| Acland-Hood, Rt. Hon. Sir Alex, F. | Fletcher, J. S. | Pease, Herbert Pike (Darlington) |
| Anson, Sir William Reynell | Forster, Henry William | Powell, Sir Francis Sharp |
| Balcarres, Lord | Foster, P. S. | Ratcliff, Major R. F. |
| Banbury, Sir Frederick George | Gardner, Ernest | Remnant, James Farquharson |
| Banner, John S. Harmood- | Goulding, Edward Alfred | Renton, Leslie |
| Baring, Capt. Hon. G. (Winchester) | Guinness, Hon. R. (Haggerston) | Renwick, George |
| Beckett, Hon. Gervase | Haddock, George B. | Roberts, S. (Sheffield, Ecclesall) |
| Bottomley, Horatio | Hamilton, Marquess of | Ronaldshay, Earl of |
| Bowles, G. Stewart | Harris, Frederick Leverton | Rutherford, John (Lancashire) |
| Brotherton, Edward Allen | Harrison-Broadley, H. B. | Rutherford, Watson (Liverpool) |
| Burdett-Coutts, W. | Hill, Sir Clement | Salter, Arthur Clavell |
| Butcher, Samuel Henry | Hills, J. W. | Smith, Abel H. (Hertford, E.) |
| Campbell, Rt. Hon. J. H. M. | Hope, James Fitzalan (Sheffield) | Starkey, John R. |
| Carlile, E. Hildred | Hunt, Rowland | Staveley-Hill, Henry (Staffordshire) |
| Castlereagh, Viscount | Joynson-Hicks, William | Stone, Sir Benjamin |
| Cecil, Evelyn (Aston Manor) | Kimber, Sir Henry | Talbot, Rt. Hon. J. G. (Oxford Univ.) |
| Cecil, Lord R. (Marylebone, E.) | King, Sir Henry Seymour (Hull) | Thomson, W. Mitchell- (Lanark) |
| Clive, Percy Archer | Lambton, Hon. Frederick William | Tuke, Sir John Batty |
| Clyde, J. Avon | Lockwood, Rt. Hon. Lt.-Col. A. R. | Valentia, Viscount |
| Cochrane, Hon. Thomas H. A. E. | Long, Col. Charles W. (Evesham) | Walker, Col. W. H. (Lancashire) |
| Corbett, T. L. (Down, North) | Long, Rt. Hon. Walter (Dublin, S.) | Warde, Col. C. E. (Kent, Mid) |
| Courthope, G. Loyd | MacCaw, Wm. J. MacGeagh | Willoughby de Eresby, Lord |
| Craig, Captain James (Down, E.) | M'Arthur, Charles | Winterton, Earl |
| Craik, Sir Henry | Mason, James F. (Windsor) | Wortley, Rt. Hon. C. B. Stuart- |
| Dickson, Rt. Hon. C. Scott | Mildmay, Francis Bingham | Younger, George |
| Douglas, Rt. Hon. A. Akers- | Morpeth, Viscount | |
| Faber, George Denison (York) | Morrison-Bell, Captain | TELLERS FOR THE NOES.—Major |
| Faber, Captain W. V. (Hants, W.) | Newdegate, F. A. | Coates and Sir W. Bull. |
| Fell, Arthur | Nicholson, William G. (Petersfield) |