Vol. 8 No. 5
I beg to move amendment 1:—
In Section 6, line 57, page 3, after the word "applied" to insert the words "and of the terms and conditions on which such loans were guaranteed or granted."
When the Bill was in Committee it was suggested that the statement to be laid before the Dáil should include not alone particulars of the loans, but also the particulars provided for in this amendment.
I think that satisfies my desire in the matter.
I beg to move amendment 2:—
In Section 8, line 14, page 4, after the words "Saorstát Eireann" to add the words—"and the expression `essential commodities' means the commodities taken into account by the Minister for Industry and Commerce for the purpose of the compilation of the periodical cost of living index number and such other commodities as may from time to time be declared by Orders made by the Minister for Industry and Commerce to be essential commodities for the purpose of this Act."
This amendment defines the words "essential commodities." It was asked on the Committee Stage that such a definition would be included in the Bill.
That will allow, of course, that porter will be capable of being brought into the list of essential commodities.
It could be so construed.
On that question, I want once again to press for some fuller information than has yet been made available in regard to Section 1. I have twice raised this matter, and on each occasion I have been met— I do not say this in any spirit of complaint—by debating points rather than by an answer to the case that I put. I asked the Minister for Industry and Commerce if it was the intention under Section 1 to eject the application in this country of the British Trade Facilities Act, and the answer that was made was that it was not intended to eject the application of that Act. I inferred from the answer made by the Minister that if any undertaking here were entitled to get the guarantee of the British Trade Facilities Act, the guarantee of the British Exchequer, that no objection would be taken to that course, but that it might even be welcomed. What surprised me still more was that Deputy Johnson, in referring to that point, said that he imagined that very little difficulty would occur, and that if an undertaking were to be established here, the building of which was to be erected in this country, and that the application of the present Trade Loan (Guarantee) Bill were to be sought for that building, machinery put into the building might be guaranteed under the Trade Facilities Act. I was greatly surprised at that answer from Deputy Johnson, and at his meeting the case in that way. I understood that in other matters he rather objected to any guarantees of the British Government in regard to the expenditure of moneys on undertakings in this country. I am not concerned with that at the moment, but what I am concerned with is this: either this Trade Loan Bill will, to a lesser or greater extent, eject the British Trade Facilities Act in its application to this country, and it is applicable in this country. It is not merely applicable in the ordinary way, but it is applicable in the sense that the British Exchequer have made it available for this country if anybody here desires to have it or to make use of it, and it is applicable in the sense that any gift is applicable if you care to take advantage of a gift so proffered.
But this Bill will either eject it or it will not. Let me take these two alternatives. If it does, then it means that the Government in this country will look askance at enterprises established here, the moneys for which have been guaranteed by the British Exchequer under the Trade Facilities Act. If that is to be the case I think a statement to that effect should be sought. I may say that I myself had rather anticipated that some such statement would be made. If that is the point of view to be adopted the statement ought to be made. In the alternative what happens? In the alternative, I suggest that there are one or two explanations due with regard to this Bill that have not yet been received, because the provisions of the Bill appear at once to be somewhat illusory. The sum of £750,000, is stated to be available under Section 1, under the guarantee of the Free State Exchequer. Let me address myself quite frankly and candidly to the facts of the case. The sum of £750,000, and no more within the next twelve months is guaranteed. The effect of that guarantee will be at the present rate of the National Loan; it will mean about 6¼ per cent. The British Government, as I mentioned before, offered to guarantee a large enterprise in Poland recently, the machinery for which was purchased in England. Guarantees were sought under the British Trade Facilities Act and were given under that Act, and a sum amounting at the present moment up to one hundred and ninety millions has been expended or guaranteed under that Act in contradistinction to our sum of £750,000.
Not only that but the market value of such guarantee is that you can get money so guaranteed for about 4¾ per cent. There is a market contrast between the two. All I am seeking to do now is to ask for some definite statement as to what is to be the effect in this country of two different sections of two different Bills, one our Bill and one somebody else's Bill, of which they have carefully studied the benefaction and of which they have received the benefits. That Bill is made applicable here. It is available in Canada, Poland and other places. There a large sum of money is available, and we are asked to enact here another Bill, every word section for section, the same as that in regard to which I am raising the question now. It is word by word, and sentence by sentence identical with the other, and here you have two identical provisions with two different sums of money available. I want to know exactly what purpose this new Bill is to serve unless it is that the Government has made up its mind, and there would be a good deal to be said in favour of such making up of mind that only enterprises to be established in this country should be guaranteed under this Bill rather than seeking guarantees from any other country's Bill. If that is the point of view I think it ought to be stated. I tried to get the Minister for Industry and Commerce to express a view one way or another before, and I failed. I hope some definite statement will be made now.
This Bill has reached the Report Stage at a gallop, and I would like to enter a protest against the want of time, not so far as I am concerned, but so far as the general public are able to get information about it, and take whatever steps they may consider necessary to protect business interests and otherwise. In this Bill I think there is a very distinct need, and more than in the Bill, in the discussions that have taken place on the Bill, there is more need for definiteness of purpose. In other words, the Government have given us very little information, if any, as to the purpose the Bill is going to be put to, in other words what sort of undertaking or what lines are to be adopted, when the Bill is passed. In the discussions that have taken place on the Bill something has been said about co-operative societies. That would lead one to believe that the Minister has in the back of his mind the using of, at all events, part of the money in connection with co-operative efforts. Now, that may or may not be right. It depends altogether on the purpose for which the co-operation has been secured. I would like to make a protest if it is the intention of the Ministry to use Government money in connection with any form of co-operation that enters into competition with ordinary private enterprise. The ordinary co-operative society occupies a privileged position, irrespective of any moneys that may be concerned in this Bill. It has, of course, freedom from payment of Income tax or Corporation tax to a very considerable extent, and it has other inducements that ought, as far as they are concerned, put them in a preferential position, which at this stage I am not going to question. I question very distinctly the right of the Government to expend Government money to the detriment of individual traders. That is a position which is not very clear in the Bill. Altogether, the Bill, when one looks at it, may seem an innocent, useful and proper Bill. It altogether depends upon the use to be made of the Bill in connection with the advance of money, which I think has not been made very clear. On the other hand, it does not outline any of the suggested dangers as being part of the programme. In that way it is perfectly negative, being neither one side nor the other.
I had not the slightest intention of saying anything at this stage of the Bill but I was surprised at the statements of Deputy Hewat, and his position as regards the co-operative movement. Surely he does not wish to have re-hashed again the question of the co-operative societies paying Income tax. I think that has been thoroughly threshed out in the other House, and I think the decision arrived at was that there is no reason and justice in asking co-operative societies to pay Income tax. Deputy Hewat must know that business concerns do not pay Income tax. As companies they pay Income tax on behalf of their shareholders, and the shareholders have a right to get a refund of the Income tax paid if the particular amount taken from them is greater than should have been taken having regard to their total income. Similarly with regard to co-operative societies. Deputy Hewat must know that they are not there for the purpose of making profits. They are there for the benefit of the members of the society and if any profits are made the members get them.
The Deputy must remember we cannot discuss co-operative societies.
They can be discussed under the Bill before the House.
With regard to the Bill, anyhow the intention of the second section of the Bill is to advance money for the purpose of reducing the cost of living and one of the great ways, in my opinion, of reducing the cost of living would be by eliminating middlemen and a great many other traders about whom Deputy Hewat is so anxious. This country is absolutely flooded out with an excess of go-betweens who are making profits and adding considerably to the selling price of all articles between the farmer and the consumer, and surely if anything is to be gained by this Bill it will be to put money into the hands of the producers, acting, as they will have to act, in most cases on a co-operative basis, and allowing them to place their produce in the hands of the consumers at a lower cost to the consumer, and it is to be hoped at a somewhat higher price to the producer.
Why do they not do that with their own money?
Why do not traders do that with their own money? I do not see why the co-operative societies are not as much entitled to this as the trader, and I think Deputy Hewat should be ashamed to get up in this House and support traders, because it is my own opinion that the high cost of living and of products in this country is due to the large number of unnecessary traders and middlemen.
This Bill is going to increase that number.
I said the whole trend of modern society and legislation is to encourage that.
Is this the Second Reading or the Report Stage?
The Report Stage.
On a point of order, surely one is entitled to discuss the Bill as passed up-to-date in all its provisions, and this section which I refer to specially deals with corporations, corporate or incorporate, which includes co-operative societies.
The Deputy is entitled to discuss the Bill as a whole, but he is not entitled to make a Second Reading speech on the Report Stage.
Who is to decide whether it is a Second Reading speech or not?
I am supposed to be the judge of that.
I am perfectly willing to bow to your ruling, but I would suggest in all fairness that certain charges have been made against certain associations, and one has a right to reply to them. I am not accustomed to taking up a great deal of the time of the Dáil, and when I get up to speak I think I am entitled to a reasonable hearing when I have something to speak about. I wish to protest against these statements to which I have referred, and I wish to protest against the form of the resolution which has been circulated to the Deputies. I am afraid Deputy Hewat has been inoculated with the virus contained in this resolution from the Dublin Mercantile Association. I would suggest to that association in their corporate capacity——
The Deputy can reply to the resolution without replying to it here.
I think I will come to a dead stop. But with regard to the Bill. I say I sincerely trust that the moneys the Government will place at the disposal of the co-operative bodies under this Bill will be available, for it is only on these lines that development may be expected, and that the cost of the commodities can be reduced.
I would claim the right on the Report Stage to deal with the Bill as it has come to us from the Committee, its principles and its details, and the principles and the details of any clause or section of the Bill. I am not going to do that, but I claim that one would be entitled to do that under the Standing Orders and the Rules of Debate of the Dáil. I want to call attention to a matter which was raised in the course of Deputy Hewat's speech in this matter, which reminded one of the fair and reasonable contention put forward by Deputy Figgis that the Advisory Committee to be appointed under Section 1 ought to be a different Committee from that appointed under Section 2. Deputy Hewat's speech rather added to the weight of that argument. One could quite understand that a gentlemen of the experience and interests of Deputy Hewat might be appointed upon an Advisory Committee under Section 1, but such a person with such an experience and outlook would not be a desirable acquisition to the Committee under Section 2, because the bias of his interests and outlook would militate against the proper working of Section 2.
I think, therefore, that the question of the constitution of the Advisory Committee might well receive further consideration in the Seanad. But I want to raise another question that is involved in this whole Bill, and to point out to the Dáil the way it strikes me as to the effect the Bill is going to have and what it is we are actually doing by passing it. I am glad we are passing it, and I hope it will become law immediately, and that it will not be the last of similar Bills that will also become law. We are, by this Bill, authorising the Ministry to inflate currency to the extent of £1,000,000, authorising them, as a matter of fact, to do the work of banking institutions, and to determine the direction which industry to the extent of this advance will take. I think it is a pity that this is not to be done direct, although it is quite conceivable that within the scheme of the Bill it might be done direct, but I rather anticipate that it will be done through the banking institutions, and they will give credit on the backing of the State. I would rather these credits were given through a State Bank. I hope, to some extent, that will be done. The issue of £1,000,000 worth of credit, which is in the greater part to be expended to promote employment, and presumably for reproductive purposes, will, no doubt, bring a quick reward, and to the extent that moneys of this kind are advanced, which, in their effect, cause inflation, inflation for quickly reproductive purposes, is not harmful but good. It will promote employment and will bring immediate benefit to the community.
I am following in this contention no less an authority than the Chairman of the Midland Counties and Westminster Bank—I mean Mr. Reginald McKenna —and as a matter of fact there can be no question that if the State banks were to loan in this way, and were in effect to advance money on the future tax-paying capacity of the community, and if they were going to do that to the extent of £1,000,000 for directly productive purposes, without great harm and, as I think, probably with great good, I hope the lesson will be borne in mind, and that we might use the same method to an even greater extent and advantage. We shall be using this money for capital expenditue, which will be slowly reproductive. We might use large sums of money by the same method, advancing State credit for the production of wealth which might be recovered within the year, I mean agricultural wealth. I suggest that the method adopted by this scheme, if applied to the payment of wages for the production of food, would be quickly reproductive and would be entirely beneficial.
There is another point that I want to make in this connection, and it is this. If, as I contend, the granting of loans of this character, backed by the State, based upon potential taxable capacity, in effect inflates currency, the effect may be to raise prices generally. The raising of those prices in reality means that the community is paying for the capital that is sunk. Unfortunately, when this financial operation is done through a bank the community is not only paying for the capital expended in increasing prices through inflation, but is also paying over and over again through interest on the capital which is being apparently lent by bankers but which is in reality lent by the State on the real credit of the country, which is based upon future potential production. I may say that I am glad the Bill is passing, and I hope the lesson to be drawn from it will be learned and repeated.
In the interesting speech which Deputy Johnson has just made, he led one to infer that the causes of bad trade, and the bad trade which required a certain artificial stimulus of this kind were brought about by the absence of capital.
Expenditure of capital.
The absence of capital was, he said, restricting trade. Is that really so? We here in the Dáil are men of the world, and I ask, what is the position of capital to-day in the different banks? Are the different banks overloaded from their returns with useless capital? I do not call capital useless in the ordinary way, but I use the word "useless" from the point of view of not being operative In other words, there is more capital available to-day than there is trade to employ that capital. That is the position.
Too little consumption.
In other words, trade is so bad that it cannot absorb the capital that is available. Now, in the Government's desire to improve trade it offers to provide capital. That is the proposal. But I think the question which ought to be considered when we are talking of capital, particularly in this country, is really what is the cause of bad trade. The proposal of the Government is to try to stimulate bad trade by offering capital. The cause of bad trade in this country is a two-fold one. On one side you have the State levying burdens on trade that the trade of the country is unable to carry. The heaviest burdens in Europe are levied to-day on trade in the Free State by our own home Government. In addition to trade being handicapped and hindered by this burden of taxes, you have on the other side of the House here, Deputies representing Labour. Labour demands from trade to-day the highest wages obtained in Europe. The costs of production are entirely affected by wages. So that you have the two real causes of bad trade represented on the two sides in the House, and neither side anxious to do anything to remove these burdens. We might as well, when we get to questions of this kind, be honest with ourselves and with one another. There is no doubt about it, bad trade arises from the two causes I have mentioned, and if, instead of trying to pacify and satisfy ourselves with artificial stimulants of this kind, we were to devote a little energy on both sides of the Dáil to remove these burdens, we would do more to stimulate trade than we can do by passing Bills of this character. There is only one other point that I would like to mention. Deputy Johnson said when one is discussing a Bill on the Report Stage, one has a right to discuss all the points of that Bill. I will not yield my rights in this matter in discussing this Bill, and I want, in discussing the question, to deal with co-operative societies and the effect of the opposition of co-operative societies in trade.
On a point of order is not this the second speech the Deputy has made on the subject?
This subject of co-operation was discussed at another Reading of the Bill.
Not by me. I did not get the opportunity of speaking.
His twin brother.
Whatever I may be I have just as much right in the Dáil as any other member of the Dáil even though he may be very eminent in the profession he represents. I may be more humble-minded but I have the same rights. In regard to the question of trading by co-operative societies I am afraid that is a matter that is not exactly understood here. Co-operative societies are not subject to income tax or Corporation Tax. Now, that may seem a small matter, but it effects profits to the extent of 30 per cent. In other words, the Government take 30 per cent. of the profits of the ordinary trading concerns for the carrying on of the Government of the country. Where trade is carried on by a co-operative society it makes profits in a different way. It distributes them in a different way. Instead of amassing profits on which income tax would be paid the same as in ordinary concerns, a co-operative society reduces prices to the consumer, and thereby does not carry any of the burdens at all of the government of the country. Now, ordinary trade is compelled to carry these burdens. Further, I say that the trade done by co-operative societies when they come into competition with the ordinary trade is not fair, because both should be subject to the same burdens. We object to the monies under this Bill being used to provide capital for co-operative societies such as this. A considerable portion of the monies in the hands of the Government are provided from taxes and burdens which they levy on industry, and is it fair to take those monies from industry and to hand those monies over to the competitors of industry? I think Deputies will see that point and see the fairness and equity of the point. The money is taken from the trading community. The trading community is bearing its share of the burdens of the State. Is it fair to take such monies from that community and hand them over to co-operative societies which come into competition with that trading community for the ordinary trade of the community and bear none of the burdens? Therefore, I say we are justified in objecting to these monies being utilised by co-operative societies and thereby taking trade from the ordinary trading community which support the Government of the country.
Deputy Figgis wishes to know whether, if an individual gets a loan from the British Government, guaranteed by that Government under their Trade Facilities Act, we will prevent them taking that loan. That is not a question that arises on this Bill. This is not a Bill that repeals any other legislation that may apply to any other country.
I do not think that is exactly as I put it. With the adoption of the exact form of words of the British Act, in which country a large sum of money is available, and the substitution of a smaller sum of money with the same form of words, is it intended to evince from the Government an objection to the importation of such money?
This Bill empowers the Irish Government to give certain guarantees. It does not profess to repeal any other guarantee that any other Government may be in a position to give. To Deputy Figgis's specific question as to whether it is the intention of the Government to prevent an individual taking advantage of the guarantee that he may be offered for a specific purpose by another Government, the answer is that it will be considered when it arises. That would undoubtedly depend on a number of surrounding circumstances which we cannot discuss in the abstract.
A perfect Governmental reply.
I am glad to have that testimonial from the Deputy. It is the first I have got. There have been some complaints that this Bill has been rushed through. I do not think those complaints are well founded. I would like to remind Deputy Hewat, if he were here, that this Bill went through in accordance with the normal timetable under which other Bills go through. Though perhaps we were anxious to get the Bill through rather quickly in the beginning, as a result of representations from different quarters in the Dáil we did not go so quickly; we had to yield to representations, and the Bill is taking the ordinary normal course that any Bill of its sort would take. Deputies want to know the real purpose of this Bill, and they profess to see all sorts of hidden dangers and meanings in its sections. I cannot see them, and I think that Sections 1 and 2, which are the operative sections, are perfectly clear. Section 1 permits the Government to guarantee money to an enterprise which is likely to lead to employment. Section 2 permits the Government to make a loan or grant to any association, corporate or unincorporate, of producers or consumers, or producers and consumers, so long as it is calculated to promote a reduction in the retail prices of essential commodities. I think that is as plain as the English language could make it.
With regard to co-operation versus private enterprise, I do not know the position Deputies desire to take up. We deal with associations of producers or consumers, or joint associations of both. Deputies want to know if it is intended to make loans to co-operative societies to the exclusion of other sorts of organisations which would come under the section. The answer is that in the section there is no such intention. No such intention can be read into the section. I do not know whether it is contended the Government should make loans to one form of organisation which would come within that section, and at the same time deliberately exclude co-operative societies, which would be an association of producers or consumers, and which would also come within the section. If that is the contention, I absolutely disagree with it, and I do not think it is a contention that can be defended.
It is the contention, I am sure.
It appears to be, but it is not put specifically. That contention cannot be defended. A co-operative organisation, the operations of which are likely to lead to a reduction in the prices of essential commodities, is entitled to a loan and will get it on the same terms as any other form of organisation. The question as to whether a co-operative society should or should not pay Income tax does not arise now, and this is not the time to go into it. I agree with Deputy Johnson that you require two distinct committees. The same advisory body would not be suitable under Sections 1 and 2. That is the intention of the Bill. Deputy Good rightly pointed out that the present position is that there is more capital available than trade can absorb. That is the position. He went on to give an explanation for that state of affairs, the fact that you seem to have a glut of capital and very little trade, and he put the blame entirely on the Labour Party.
No, no; the Government is the more largely responsible of the too.
I will put half the blame on the Government.
I am glad you accept half; you would not do so a moment ago.
I will make a decent bargain with you and put half the blame on the Government and half on Labour.
A Coalition.
Better still, I will divide it into thirds. We will drop the contention, if Deputy Good agrees, that the people he represents must take at least one-third. I want to be perfectly fair.
We supply all the parts.
I will tell Deputy Good the reason you have not more trade. While admitting all our own sins, and on behalf of the Labour Party while admitting their sins, I will tell you that one of the real reasons you have not more trade in the country is that it is not worth while to produce. The people who are really to blame for that are the people who call themselves business men, but who are really dealers in what is being produced by the farmers and the labourers in the country. That is certainly one of the principal reasons why you have not more trade. It is not worth while to produce because the business men and the dealers go in for too much profit. I am taking one-third of the blame, and Labour and Deputy Good must also carry a third.
I would like to say a few words before the debate finishes.
I have no objection.
Deputy Good would like to have the co-operative societies paying Income tax both collectively and individually. That would be satisfactory from his point of view, but it certainly would not be either satisfactory or fair from the co-operative societies' point of view. Last night we had an intelligent and a high debate on education. The debate, I think, dealt very largely with the question arising out of this Bill. Deputies expressed the hope that the agricultural community would get an education to fit them to do the best in agriculture, to fit them to get the most out of their profession, and it is to be hoped, incidentally, that that education will also enable them to protect the fruits of their industry, will give them sufficient education to be able to protect themselves from the swarm of non-producers, or parasites, in the industrial community. An education that will enable them only to produce is of very little use to them. They must have an education that will enable them to protect what they produce. I think this Bill is a step in the right direction towards laying the foundation of a very desirable state of affairs. When developed, as the idea can be developed, with proper co-operation and a proper point of view on the part of both the consumer and the producer, I think that, perhaps, in the near future a more desirable state of affairs may be anticipated. It is extraordinary that at the moment agricultural produce is being sold for practically nothing in the country as compared with the price that it brings in the City of Dublin. The two poorer sections of the community—the producers and consumers —must be brought closer together. This Bill aims at that, and we welcome it for that reason. Those swarms of non-producers, to describe them by a very mild name, must be made producers if they want to live in this country. They must live on their own fat, and not on the fat of the unfortunate people whom they have hitherto been feasting on.
