§ (1) Any person who effects any sale or purchase of any stock or marketable security of the value of five pounds or upwards as a broker or agent, and any person who by way of business deals, or holds himself out as dealing, as a principal in any stock or marketable security, and buys or sells any such stock or marketable security of a value of five pounds or upwards, shall forthwith make and execute a contract note, and transmit the note to his principal, or to the vendor or purchaser of the stock or marketable security, as the case may be, and in default of so doing shall incur a fine of twenty pounds.
§ (2) If any person makes or executes any contract note chargeable with duty and not being duly stamped, he shall incur a fine of twenty pounds.
§ (3) No broker, agent, or other person shall have any legal claim to any charge for brokerage, commission, or agency, with reference to the sale or purchase of any stock or marketable security of the value of five pounds or upwards if he fails to comply with the provisions of this Section.
§ (4) All Stamp Duties on a contract note are to be denoted by an adhesive stamp appropriated to a contract note, and the stamp is to be effectively cancelled by the person by whom the note is executed by writing on or across the stamp his name or initials, or the name or initials of his firm, together with the true date of his so writing.
§ (5) Any Stamp Duty on a contract note may be added to the charge for brokerage or agency.
§ Mr. RIDSDALE moved, in Sub-section (1), to omit the words "and any person who by way of business deals, or holds himself out as dealing as a principal in any stock or marketable security of a value of £5 or upwards." 686 The effect of these words is to compel any principal who deals in any stock or marketable security to issue a contract note on each side of the transaction. Hitherto it has only been necessary to have one contract note, and the effect of these words must be to seriously restrict dealings in stocks. Take the case of the primary stock in this country, Consols. Any person who wishes to invest in Consols can send his broker into the market, and get business done on a very narrow margin. If the price is 83, he can sell at 83, and purchase at 83 1–16th, and the only charge is the broker's commission and the ordinary contract stamp. But by this Amendment the Government insist that the dealer on the Stock Exchange from whom the broker buys the stock shall himself deliver a contract note to the broker who deals with him. I should have thought that that was in conflict with the interests of business. If you are to compel the dealer in a security on which the profit is only 1s. 3d. to pay a 2s. stamp on the contract note on one side, and a 2s. stamp on a contract note on the other, you are taking away the whole of his profit. When he offers to buy at 83 on the one hand, and to sell at 83 1–16th on the other, his profit lies in the middle of these figures, and inasmuch as the profit is so small you are going by this Clause to make him pay away 4s. Can the Government suppose that under such conditions the market for Consols will remain in its present position? You will not be able to have dealings conducted on the same narrow margin as at present. I hope my right hon. Friend, after examination of this point, will see his way to abandon this proposal of the Government. I think it must have been put on the Paper without full consideration.
§ Mr. HOBHOUSE
I think my hon. Friend is labouring under a mistake, for this Sub-section of Clause 58 re-enacts 687 almost exactly Clause 53 of the principal Act. If the hon. Gentleman will look at that Act he will find that the only words introduced into this Clause which are not in the other Clause are these: "Any person who by way of business deals or holds himself out as dealing as a principal in any stock or marketable security," etc. These words are substituted for words in the original Act, "the broker or agent," and the purpose is to ensure that the bucket-shop keepers shall pay this Stamp Duty.
§ Major COATES
I have an Amendment down later on to insert words providing that this Section shall not apply in the case of transactions carried out in the course of their ordinary business relations between members of Stock Exchanges in the United Kingdom. May I ask if that is ruled out should the Amendment now before the Committee be carried?
§ Sir F. BANBURY
As that Amendment of my hon. Friend carries out the object aimed at by the hon. Member for Brighton, may I suggest to the latter that he withdraw his Amendment?
§ Amendment, by leave, withdrawn.
§ Mr. RENWICK moved, in Sub-section (1), to leave out the word "of" ["a fine of"], and to insert instead thereof the words "not exceeding twenty pounds."
§ I hope the right hon. Gentleman in charge of this Bill for the time being will accept this most reasonable Amendment, as has been done on other Clauses of the Finance Bill. This Clause provides that a person selling stock exceeding £5 in value shall forthwith execute a contract note, and that in default of so doing he shall incur a fine of £20. But it is not always possible to execute a contract note forthwith, and it may possibly be forgotten without any intention to defraud the revenue. It seems extraordinary that the penalty in every case should be £20, and that there should be no option whatever for the magistrate to take into account the circumstances. I do not think there ought to be such an arbitrary sum fixed. I trust the right hon. Gentleman will see the reasonableness of this Amendment, and 688 agree to do what has been done under similar circumstances in other Clauses.
§ Mr. HOBHOUSE
I can assure the right hon. Gentleman that this Amendment is really not necessary. Under the Customs and Inland Revenue Act, 1890, he will see the fines can be mitigated by the magistrates to any extent. In putting this fixed penalty as a maximum penalty, we are merely following the precedent of the principal Act, and I think it would be very undesirable to change the language of the penal provisions of that Act and to insert different words in the present Act. There really is no hardship. It has exactly the same effect.
§ 8.0 P.M.
§ Mr. RENWICK
May I point out that this particular Clause does not refer to any other Act, and it distinctly says that in default of executing this contract note he shall incur a fine of £20. There is no option whatever, and I think no magistrate would read it in any other way than that he must in the case of every omission impose a fine of £20. I think the Amendment is most reasonable.
§ Question, "That the word 'of' stand part of the Clause," put, and agreed to.
§ Major COATES moved, at the end of Sub-section (1), to insert the words "Provided that this Section shall not apply in the case of transactions carried out in the course of their ordinary business relations between members of stock exchanges in the United Kingdom."
§ I understand that the Government accept this Amendment.
§ Question, "That those words be there inserted," put, and agreed to.
§ Mr. RENWICK moved, in Sub-section (2), to leave out the word "of" ["He shall incur a fine of £20,"], and to insert instead thereof the words "not exceeding."
§ This is another matter, and different from the previous Amendment I moved. This Sub-section provides that "if any person makes or executes any contract note chargeable with duty, and not being duly stamped, he shall incur a fine of £20." I do put it to the right hon. Gentleman in charge of the Bill that he should meet us in regard to this matter, because it does seem to me very hard that if a man forgets to put on a stamp he should be liable to a penalty. A man may easily forget, and the Clause does not say that to commit an 689 offence he shall act "knowingly" or "wilfully." But it says in every case he shall pay a penalty of £20. I think it is reasonable that the Sub-section should be made to read "not exceeding £20."
§ Mr. HOBHOUSE
I can assure the hon. Member that an alteration such as he proposes may very possibly lead to a misreading of the principal Act of 1891, and may lead to a misinterpretation to that Act. The evil which the hon. Member sees looming before him is really provided for by the Inland Revenue Act of 1891, and the whole grievance is there met. The insertion of these words which he proposes would really make it necessary to have them set right by some later revenue enactment.
§ Sir F. BANBURY
I did not say anything on the former Amendment, because I anticipated the right hon. Gentleman would quote some authority, but he has
§ no legal authority present, and if he is right, even if we leave out "of" and put in "not exceeding," we do not alter the Act to which he has alluded. What we want to know is: Has the magistrate to inflict a fine of £20, or can he inflict a fine of a lesser amount? As the Bill stands he seems bound to inflict a fine of £20. We shall be satisfied if we get an assurance from the right hon. Gentleman that the Amendment of my hon. Friend is not necessary. If he cannot give us that assurance, we must divide.
§ Mr. RENWICK
Perhaps the difficulty would be met if we incorporated some reference to the previous Act in the present Clause
§ Question put, "That the word 'of' stand part of the Clause."
§ The Committee divided: Ayes, 179; Noes, 57.691
|Division No. 715.]||AYES.||[8.7 p.m.|
|Abraham, W. (Cork, N. E.)||Findlay, Alexander||M'Callum, John M.|
|Adkins, W. Ryland D.||Fuller, John Michael F.||McKenna, Rt. Hon. Reginald|
|Agnew, George William||Gibb, James (Harrow)||M'Laren, H. D. (Stafford, W.)|
|Alden, Percy||Gibson, J. P.||Mallet, Charles E.|
|Allen, A. Acland (Christchurch)||Gill, A. H.||Markham, Arthur Basil|
|Allen, Charles P. (Stroud)||Glover, Thomas||Marnham, F. J.|
|Ambrose, Robert||Grey, Rt. Hon. Sir Edward||Massie, J.|
|Ashton, Thomas Gair||Gulland, John W.||Masterman, C. F. G.|
|Asquith, Rt. Hon. Herbert Henry||Gwynn, Stephen Lucius||Meagher, Michael|
|Balfour, Robert (Lanark)||Harcourt, Rt. Hon. L. (Rossendale)||Menzies, Sir Walter|
|Barlow, Sir John E. (Somerset)||Harcourt, Robert V. (Montrose)||Middlebrook, William|
|Barnard E. B.||Harmsworth, Cecil B. (Worcester)||Molteno, Percy Alport|
|Barnes, G. N.||Harmsworth, R. L. (Caithness-shire)||Montagu, Hon. E. S.|
|Barran, Sir John Nicholson||Haworth, Arthur A.||Myer, Horatio|
|Bell, Richard||Hedges, A. Paget||Nannetti, Joseph P.|
|Benn, W. (Tower Hamlets, St. Geo.)||Helme, Norval Watson||Newnes, F. (Notts, Bassetlaw)|
|Berridge, T. H. D.||Henderson, Arthur (Durham)||Norman, Sir Henry|
|Bethell, Sir J. H. (Essex, Romford)||Henderson, J. M. (Aberdeen, W.)||Nussey, Sir Willans|
|Boulton, A. C. F.||Henry, Charles S.||Nuttall, Harry|
|Brigg, John||Hobhouse, Rt. Hon. Charles E. H.||O'Brien, Patrick (Kilkenny)|
|Bright, J. A.||Holt, Richard Durning||O'Donnell, C. J. (Walworth)|
|Burns, Rt. Hon. John||Hooper, A. G.||O'Malley, William|
|Burt, Rt. Hon. Thomas||Horniman, Emslie John||Parker, James (Halifax)|
|Carr-Gomm, H. W.||Howard, Hon. Geoffrey||Partington, Oswald|
|Chance, Frederick William||Isaacs, Rufus Daniel||Pearce, Robert (Staffs, Leek)|
|Clough, William||Jackson, R. S.||Philipps, Col. Ivor (Southampton)|
|Collins, Stephen (Lambeth)||Jenkins, J.||Pickersgill, Edward Hare|
|Corbett, A. Cameron (Glasgow)||Jones, Leif (Appleby)||Pirie, Duncan V.|
|Corbett, C. H. (Sussex, E. Grinstead)||Jones, William (Carnarvonshire)||Pointer, J.|
|Cornwall, Sir Edwin A.||Joyce, Michael||Ponsonby, Arthur A. W. H.|
|Cory, Sir Clifford John||Kelley, George D.||Priestley, Arthur (Grantham)|
|Cox, Harold||King, Alfred John (Knutsford)||Raphael, Herbert H.|
|Cross, Alexander||Laidlaw, Robert||Rea, Rt. Hon. Russell (Gloucester)|
|Dalziel, Sir James Henry||Lamb, Edmund G. (Leominster)||Reddy, M.|
|Davies, Ellis William (Eifion)||Lamb, Ernest H. (Rochester)||Rees, J. D.|
|Davies, Sir W. Howell (Bristol, S.)||Lamont, Norman||Richards, T. F. (Wolvarhampton, W.)|
|Dewar, Sir J. A. (Inverness-shire)||Layland-Barratt, Sir Francis||Ridsdale, E. A.|
|Dobson, Thomas W.||Lehmann, R. C.||Roberts, Charles H. (Lincoln)|
|Duffy, William J.||Lever, A. Levy (Essex, Harwich)||Robertson, Sir G. Scott (Bradford)|
|Duncan, C. (Barrow-in-Furness)||Levy, Sir Maurice||Robertson, J. M. (Tyneside)|
|Duncan, J. Hastings (York, Otley)||Lewis, John Herbert||Robinson, S.|
|Dunn, A. Edward (Camborne)||Lloyd-George, Rt. Hon. David||Robson, Sir William Snowdon|
|Edwards, Sir Francis (Radnor)||Lundon, T.||Roch, Walter F. (Pembroke)|
|Erskine, David C.||Lynch, A. (Clare, W.)||Rogers, F. E. Newman|
|Essex, R. W.||Macdonald, J. M. (Falkirk Burghs)||Rose, Sir Charles Day|
|Evans, Sir S. T.||Maclean, Donald||Russell, Rt. Hon. T. W.|
|Everett, R. Lacey||MacNeill, John Gordon Swift||Samuel, Rt. Hon. H. L. (Cleveland)|
|Falconer, J.||MacVeigh, Charles (Donegal, E.)||Samuel, S. M. (Whitechapel)|
|Schwann, Sir C. E. (Manchester)||Thorne, G. R. (Wolverhampton)||White, Sir Luke (York, E. R.)|
|Seely, Colonel||Thorne, William (West Ham)||Whittaker, Rt. Hon. Sir Thomas P.|
|Shaw, Sir Charles E.||Tomkinson, James||Williams, J. (Glamorgan)|
|Shipman, Dr. John G.||Trevelyan, Charles Philips||Williams, W. Llewelyn (Carmarthen)|
|Snowden, P.||Verney, F. W.||Williamson, Sir A.|
|Soares, Ernest J.||Walker, H. De R. (Leicester)||Wilson, Hon. G. G. (Hull, W.)|
|Steadman, W. C.||Walsh, Stephen||Wilson, W. T. (Westhoughton)|
|Stewart, Halley (Greenock)||Waring, Walter||Wood, T. McKinnon|
|Stewart-Smith, D. (Kendal)||Wason, Rt. Hon. E. (Clackmannan)||Yoxall, Sir James Henry|
|Straus, B. S. (Mile End)||Wason, John Cathcart (Orkney)|
|Summerbell, T.||Watt, Henry A.||TELLERS FOR THE AYES.—Mr. Joseph Pease and Sir E. Strachey.|
|Taylor, John W. (Durham)||White, Sir George (Norfolk)|
|Thomas, Sir A. (Glamorgan, E.)||White, J. Dundas (Dumbartonshire)|
|Acland-Hood, Rt. Hon. Sir Alex. F.||Fell, Arthur||Morrison-Bell, Captain|
|Anson, Sir William Reynell||Fletcher, J. S.||Nicholson, Wm. G. (Petersfield)|
|Balcarres, Lord||Forster, Henry William||Pease, Herbert Pike (Darlington)|
|Banbury, Sir Frederick George||Fullerton, Hugh||Powell, Sir Francis Sharp|
|Baring, Capt. Hon. G. (Winchester)||Gardner, Ernest||Rawlinson, John Frederick Peel|
|Brotherton, Edward Allen||Goulding, Edward Alfred||Roberts, S. (Sheffield, Ecclesall)|
|Bull, Sir William James||Gretton, John||Rutherford, John (Lancashire)|
|Burdett-Coutts, W.||Haddock, George B.||Rutherford, Watson (Liverpool)|
|Butcher, Samuel Henry||Hamilton, Marquess of||Salter, Arthur Clavell|
|Campbell, Rt. Hon. J. H. M.||Harrison-Broadley, H. B.||Smith, Abel H. (Hertford, E.)|
|Carlile, E. Hildred||Hills, J. W.||Stone, Sir Benjamin|
|Cecil, Lord R. (Marylebone, E.)||Hope, James Fitzalan (Sheffield)||Thomson, W. Mitchell- (Lanark)|
|Clyde, J. Avon||Joynson-Hicks, William||Tuke, Sir John Batty|
|Coates, Major E. F. (Lewisham)||Kimber, Sir Henry||Valentia, Viscount|
|Corbett, T. L. (Down, North)||King, Sir Henry Seymour (Hull)||Warde, Col. C. E. (Kent, Mid)|
|Courthope, G. Loyd||Law, Andrew Bonar (Dulwich)||Wortley, Rt. Hon. C. B. Stuart-|
|Craig, Captain James (Down, E.)||Lockwood, Rt. Hon. Lt.-Col. A. R.||Younger, George|
|Douglas, Rt. Hon. A. Akers-||MacCaw, Wm. J. MacGeagh|
|Duncan, Robert (Lanark, Govan)||Mason, James F. (Windsor)||TELLERS FOR THE NOES.—Mr. Renwick and Col. Hall Walker.|
|Faber, George Denison (York)||Morpeth, Viscount|
Question, "That the Clause, as amended, stand part of the Bill," put, and agreed to.
§ Major COATES moved, in Sub-section (4), to leave out the words "appropriated to a contract note." ["All Stamp Duties on a contract note are to be denoted by an adhesive stamp appropriated to a contract note."]
§ The object of this Amendment is to raise the question of the necessity imposed by Sub-section (4) of the Clause on stockbrokers to keep special stamps for contract notes in their office. Under the provisions of the law as they stand the requirements as to stamping may be met by ordinary stamps, but if Clause 57 is passed in its present form there will be a very considerable variety of contract stamps required, and stockbrokers will have to have special stamps. I find on looking at Clause 57 that there are 10 different kinds of stamps which the stockbroker will have to have in his till, and only one of those 10 stamps reaches the amount of £1. He would have to have in his office special stamps for 2s., 4s., 6s., 8s., and so on up to 18s. and £1, and it is putting an unnecessary strain upon a small man's capital to have all these stamps in stock. A man may have a great number of contracts during the day, but he never knows from day to day what orders are coming in, and he cannot always be provided with the exact amount of stamps. I suggest that as long as a man pays the duty, whether in 692 one class of stamp or another, and the Government gets the tax, surely the convenience of the broker might be considered, and he might be allowed to put on three, four, or 20 shilling stamps, and not have one special stamp appropriate to each amount.
§ Mr. HOBHOUSE
The lowest stamp a stockbroker will have to keep in his office is a 6d. stamp in the future. That has not been so in the past. To a great extent he only had to keep one class of stamp in stock. It is rather important from the point of view of revenue that we should have some statistics available which would enable us to know what is happening with regard to these notes, and it is much more important that we should know, in view of the objections which have been urged by hon. Gentlemen opposite, as to the effect upon the revenue and upon business of the increase in Stamp Duties.
§ Major COATES
Do I understand 40 6d. stamps on a contract note, if they can be got on, will carry out the desire of the Government, or is there to be a £1 stamp? That is the only point I raise.
§ Mr. HOBHOUSE
I cannot answer that off-hand, but I will consider the point, and if it meets the statistical difficulty I see no objection to accepting it.
§ Sir F. BANBURY
The reason my hon. Friend has moved this Amendment is that there might be considerable difficulty if a contract note for £20,000 stock was obliged to be stamped with one particular stamp of £1. Up to the present we have always been able to put on a sufficient number of stamps to make up the amount.
§ Sir F. BANBURY
That is not in the Bill. Will the right hon. Gentleman give an undertaking to introduce words which will carry out his intention on the Report stage?
§ Amendment, by leave, withdrawn.
§ Sir F. BANBURY moved, at the end of Sub-section (5), to insert the words "and shall be recoverable as part of such charge."
§ Sub-section (5) says, "Any Stamp Duty on a contract note may be added to the charge for brokerage or agency." It is a permissive Clause. Some cantankerous person may say, "It is a permissive Clause and I shall not pay," and a great deal of trouble might arise.
§ Amendment agreed to.