Wednesday, September 22, 2010

Checks Taxed At The Bank

The War Revenue Law required all checks processed on or after July 1, 1898 to be taxed 2-cents. The law didn't specify exactly what party should pay the tax, but if a document was left untaxed, BOTH parties were liable for a penalty. Usually, the owing party in a transaction paid the tax. So generally the person or firm drafting a payment paid the tax, however, as the checks shown below illustrate, that didn't always happen.

Although written on June 17, 1898, two weeks prior to the tax period effective date of July 1, 1898, this First National Bank, Columbus, Indiana check of Williams and Collins wasn't cashed until July 21. At that time, the Drovers' & Mechanics' National Bank of Baltimore required a 2-cent tax stamp be affixed as any check processed on or after July 1 was liable for the tax. The stamp wasn't dated and initialled as required, but the purple period bar cancel defacing the stamp matches the period bar ornamentation at the top of the Drovers' and Mechanics' endorsement on the back of the check, shows that the stamp was added when presented there for payment.

First National Bank, Columbus, Indiana
Williams & Collins Check, June 17, 1898
2 weeks prior to tax period

detail of endorsement on Williams & Collins check
with period bar ornamentation at top

Mary L. Hotchkin either didn't have a stamp available, or forgot to affix one to this October 4, 1898 Agricultural National Bank check written to W. R. Morton. Morton wisely cashed the check at the same bank, for in this instance the bank simply added the 2-cents due for the tax to the amount of the check and charged it against Hotchkin's account.
Agricultural National Bank, Pittsfield, Massachusetts
Mary L. Hotchkin Check, October 4, 1898


Detail Images of Hotchkin Check showing
stamp added and canceled by bank at left, and
"stamp .02" added to check amount at right

Most likely Edward A. Mitchell wasn't aware of the tax, or simply didn't have the obligatory tax stamps when he wrote this check on the Essex National Bank of Haverhill on July 2, 1898, the second day of the tax period. That the stamp was initialled W.J.H. and dated July 9, indicates the payee, Willard J. Heale, instead paid the 2-cents tax when he presented the check for payment on that day.
Essex National Bank of Haverhill, Massachusetts
Edward A. Mitchell Check, July 2, 1898
second day of tax period


Detail of Mitchell Check
stamp initialed and dated July 9
by Willard J. Heale, the payee

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