I beg to move, "That the Clause be read a Second time."
The effect of this Clause would be to reduce the Stamp Duty from 2d. to 1d. This is a reform long overdue, the desirability of which is frequently lost sight of owing to our familiarity with the stamp as it exists to-day. The revenue from the Stamp Duty on cheques is £3,050,000. In reply to a question which I addressed to the Chancellor of the Exchequer, he informed me that if the Stamp Duty were reduced to 1d. the revenue would suffer to the extent of £1,500,000. I think he is unduly pessimistic, and leaves out of account the largely increased number of cheques that would be drawn if the duty were reduced. In 1902, when Sir Michael Hicks-Beach proposed to increase the Stamp Duty from 1d. to 2d., he was met by the urgent representations of the bankers that this should not be done, and he yielded to those representations. The arguments then, in the main, were based upon the fact, as the bankers showed, that the duty would militate against the keeping of small bank accounts.
Those arguments which were used in 1902 are as cogent to-day as they were then, indeed more so. The reduction of the duty would not only promote the keeping of small banking accounts among that section of the community which has not yet contracted the habit, but there is the further point in these days when we are striving to encourage trade in every possible way as to the real need of our banking resources being marshalled and utilised to the fullest possible extent. I have been at some trouble to get statistics in regard to the Stamp Duty, and I find that of the total number of cheques drawn no fewer than 55 per cent. were cheques under £10. If that fact be taken in conjunction with the total of the cheque clearances, it will be found that the drawer of small cheques has to pay a tax of 2s. 6d. per cent. as against one half pence per cent. paid by the drawer of large cheques. Therefore, this Stamp Duty presses too hardly upon the drawer of small cheques and is a discouragement to the keeping of small banking accounts. That argument in itself ought to be sufficient to justify the Chancellor of the Exchequer in accepting the new Clause.
I will mention another matter and that is the currency economy that would result from an extended use of cheques consequent upon the reduction of the Stamp Duty from 2d. to 1d. I am sure the Chancellor of the Exchequer will agree with me that in the cheque we have an instrument so valuable that it is the finest piece of mechanism in exchange that the ingenuity of man has ever devised. We in this country have brought it to a fine art. In America they have gone still further. They have realised how unwise it is in any way to hamper the development of the cheque, by sweeping away the tax on the cheque altogether. In all movements for industrial progress in the past, the development of banking and the economy of our legal tender have been inseparable features from our industrial progress. For that reason, especially at this juncture, it is desirable that we should encourage an extended use of cheques by reducing the Duty.
The restricted use of cheques due to this extra Stamp Duty is having the reverse result from that which our monetary policy should have as its aim. It is making for the demobilisation of currency and credit in this country in so far as it makes for the retention in the tills of our traders and in the pockets of our people of currency notes that ought to be in the coffers of the banks. If we remove or reduce this tax we shall drive this superfluous currency from the tills and pockets of the people into the coffers of the banks, where it can be used for the purpose of fructifying trade. In pre-War days, currency stood at £2 per head, while to-day it stands at from £6 to £7 per head, so that even if we allow for the cost of living having doubled we still have a surplus currency of £2 to£3 which is idle and unproductive in the tills and the pockets of our people. Therefore, I contend that, roughly, the estimate that has been made by that well-known authority Sir Drummond Fraser is the correct one, that there is at the present time something like £100,000,000 of currency notes in this country idle and unproductive in the tills and pockets of our people.
That has the further effect that the bank balances are being unduly depleted. If these notes were forced back into the banks they would be able to increase their loans from the fact that their balances would be increased. It would have the further desirable financial effect which the hon. Member for Farnham (Mr. A. M. Samuel) has at heart, in that it would make for the centralisation of our currency note issue into the hands of the Bank of England as against the Government. In so far as economy is effected we shall be strengthening the value of the £1 sterling, and that tendency would help towards a further desirable thing, namely, the return to the gold standard. I appeal to the Chancellor of the Exchequer to give us this concession which not only the bankers would welcome, but big business wholesale business, the retailers, the small trader and the private individual also desire. The London Chamber of Commerce have advocated it.
It would have the effect of encouraging the unknown many who up to the present time have not had banking accounts to open banking accounts if the Chancellor can see his way to make this concession. I ask him not to resist a suggestion which would have such widespread consequences to the community. The effect of the concession as far as he is concerned and as far as the revenue is concerned will be very small, but the importance to the trading community and to our currency will be great.