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Dáil Éireann debate -
Friday, 6 Mar 1925

Vol. 10 No. 9

COMMITTEE ON FINANCE. - SUPPLEMENTARY AND ADDITIONAL ESTIMATES. VOTE 65. (NATIONAL LAND BANK, LTD.)

I move:—

Go ndeontar Suim ná raghaidh thar £300,000 chun íoctha an Mhuirir a thiocfidh chun bheith iníoctha i rith na bliana dar críoch an 31adh láde Mhárta, 1925, mar gheall ar Roimh-íoc do dhéanamh le Banc Náisiúnta na Talmhan, Teoranta.

That a Sum not exceeding £300,000 be granted to defray the Charge which will come in course of pay ment during the year ending on the31st day of March, 1925, for pay ment of an Advance to the National Land Bank, Limited

The necessity for this Vote arises out of the situation in which we find ourselves in connection with the Trade Loans (Guarantee) Act. That Act was passed, I think, last August, but it has been impossible up to date to have any loan under that Act guaranteed. The very best Committee we could get was set up and went carefully into all applications that came before it. These applications were of a very varied character, and I think a considerable number of them were not recommended. Up to date some thirteen or fourteen applications have been recommended by the Committee and forwarded to the Department of Finance. The total amount of these loans is about £160,000. The usual period of repayment recommended by the Committee is about fifteen years, but, in some cases, the period was ten years. A difficulty arose, as the Act, so far as Part I. of it is concerned, did not propose to find money for these particular schemes. It proposed only to give a guarantee. Part II. of the Act, which dealt with the question of reducing the cost of the necessaries of life and the promotion of schemes which would reduce the cost of living, did provide that money might actually be lent by the Government. The main portion of the Act provided only that the Government might guarantee loans. The applicants have been unable to get the banks to give them loans on conditions conforming with the recommendation of the Committee. The Standing Committee of the Irish banks decided definitely, and so informed us when we approached them on the matter, that they would not give any loan, even under a guarantee, for a longer period than five years. That has made the Act, so far, inoperative. I do not wish to enter on a criticism, at the moment at any rate, of the policy of the banks in coming to that decision.

May I ask is that the only point on which the banks objected?

Yes. Their position is that they are dealing, not with their own moneys, but with their customers' moneys, and that it is not a banking business to put money into any sort of investment which will not be realisable for a period of fifteen years. It is obvious that any bank can only make a limited amount of such investment. There is no doubt that banks must have their assets liquid and must be able to keep cash to pay off customers, whose money they handle, at the shortest possible notice. It might well be argued, I think, having regard to the amount of the resources of the Irish banks, that a sum of one million—in fact, it was only three-quarters of a million—was not a sum that was likely, when spread over the banks, to cause any embarrassment whatever, because it would represent a very small percentage of the money they were handling. However, the position as it stands is that the banks have refused, even with a guarantee, to lend for a period longer than five years. The result is that certain firms which have gone through all the formalities, whose proposals were examined and passed by a committee of businessmen, and further examined in the Department of Industry and Commerce and the Department of Finance, have been informed that the Government guarantee will be given for their loans as soon as they have got anyone to lend to them.

I do not say that the Government can provide the money to finance these industries whose applications have been passed. I think some other system of dealing with the proposals will have to be devised. A suggestion has been made from various quarters, from quarters certainly to which attention should be paid, that a new type of finance institution is necessary in this country. The view has been taken that this work is not properly bankers' work. Certainly, if it is to be carried out to any extent, an industrial trust company or finance house of a different type, that would be handling rather its own money on long term loans, and that would be able to assist companies by accommodation that would not be recoverable for a long period, should be set up.

That is a matter that has been considered by the Government, and we certainly are prepared to facilitate and assist any group of people who will set up this new type of financial organisation in the country. Whatever may be done in the future, whether the immediate future or the distant future, in that matter, we have to consider the cases of the particular firms which have been depending for months past on ultimately being able to get money to carry on their industries under the Trade Loans (Guarantee) Act. If we were simply to say to them now: "The position is unfortunate. We are prepared to give a guarantee, but the banks won't lend.""You may close your doors," they would be able to say to us, that not merely had the Trade Loans (Guarantee) Act been no help to them, but it had been actually a trap into which they had been led. They might say that during the past four months if they had given the same attention to getting help in other quarters, or getting fresh capital, they might have been able to do so, and might have been able to carry on, whereas now, having wasted their time and being refused, any chances of getting capital are prejudiced. We feel that as far as the firms are concerned whose cases have been already passed, or at any rate some of them, where the applications are more urgent, we must take some steps to enable them to get money.

The National Land Bank is a bank in which the shares, or practically all the shares, are controlled by the Government, through the Minister for Finance, but it is a bank which has smaller resources than any of the other banks. It certainly could not proceed to put the money of its customers to any appreciable extent into this type of loan or investment, particularly when other banks with much greater resources have declined to put their customers' money into them. A bank with ten times or perhaps twenty times its resources will do practically nothing under this Trade Loans (Guarantee) Act, and perhaps if the directors were not given any of the facilities by the Government such as we propose under this particular Vote, they would not be able to touch more than one small loan, because they, like other banks, deal with their customers' money, and they must be prepared to pay back their customers' money on demand. It will not serve them when a customer comes to the bank and wants to withdraw his money if he is told, "It is safely invested under a Government guarantee, and we will be able to pay it back when it comes in again." The National Land Bank could not give these loans.

I have every hope that in a comparatively short time some new type of organisation will actually be set up which will deal with many such cases as are now coming forward under the Trade Loans (Guarantee) Act. I know myself steps have been taken by certain individuals. I do not know whether they will proceed or not, but I know many people of standing in the business world are thinking of such a matter and are discussing it. I have every belief that in a short time we will have a company established which will provide money for concerns that are guaranteed under the Trade Loans (Guarantee) Act. We propose, therefore, as a temporary measure to give a certain amount of money which will not be ordinary customers' money, that might be called on at a moment's notice, to the National Land Bank to enable it to deal with some of these cases, to give loans to some of these cases that have been guaranteed or are in a condition to be immediately guaranteed, under the Trade Loans (Guarantee) Act. As I say, I hope that will be a temporary thing, and that the loan will possibly be taken off its hands or be possible of transference to another type of institution within a very short time. I would not propose to say that the National Land Bank should take all or any particular case. I would simply allow them to use their discretion to take what cases they could or that they thought well to take. I do not know that I should go into particular cases of loans that have been guaranteed, or firms that have been passed for guarantee under the Trade Loans (Guarantee) Act, but there are companies which employ a considerable number of hands whose closing down would be serious, and concerns which an impartial and very competent committee of business men have described as sound and of good prospects. I certainly feel at any rate that the position is such that we cannot say to these people after making their case, attending before the Committee and waiting for weeks for a decision: "The thing is a fiasco and you cannot get your money." I feel we must take some steps to enable people in some of these cases where the need is urgent for actually giving the money, to do things that they propose to do. As a matter of fact, some of the firms, I understand, when they were informed that their cases had been passed and that sanction had been given, have actually undertaken certain expenditure in anticipation of getting the money. They would be most gravely embarrassed now if they could not get it. I think myself whatever might have been the opinion of the banks of the Trade Loans (Guarantee) Act, whether they thought it a wise or unwise measure, that so far as the £750,000 which may be guaranteed under the Act as it stands is concerned they might have agreed amongst themselves to divide it on some basis which would have involved no risks when spread over the banks and by that method enable cases which are being dealt with under the present Act to be put through. If they feel that no real facilities should be given along these lines perhaps it would have sufficed for their own purposes if they said they would not be prepared to facilitate the work if there was a renewal of the Act. At any rate they are their own masters. They are dealing with their own business and they are entitled to take whatever steps they think proper to safeguard their position and their customers' money, and the attitude they have taken is that they will not give any loan for a period exceeding five years.

I think this Vote raises a question embodying a very important principle. I am not quite sure that it is not a matter that ought not to come under your ruling; but before I go into that I would like to say that I am not moved by any spirit of hostility whatever, either in regard to the Vote itself or the purposes of the Vote. When the Trade Loans (Guarantee) Act was a Bill, and was being considered by the Dáil, I supported it because I thought then, and I think now, that its purposes were right purposes, and that they would and could prove of very great benefit to the industries of this country. I held that view then and that view I continue to hold. What has since transpired, and what is it that brings this Vote definitely before us? It appears that owing to contingencies that would not and could not be foreseen, a certain part of that legislation became inoperative. I have not got the Trade Loans (Guarantee) Act before me, but my memory of it is fairly accurate and I think it will be accepted by the Dáil when I say that it was to the effect that certain loans put forward in respect of certain projects, when passed by an Advisory Committee, could be guaranteed as to principal and interest by this State.

The Minister has just informed us that, owing to the circumstances that he has related, which prove that that guarantee by the State of principal and interest becomes inoperative and ineffective, this Vote is being moved for in order to enable one particular Bank, which he has chosen, to do something— and this is the point that I wish to put before you—that was not contemplated in the Act. The Act set out that the principal and interest could be guaranteed by the State. It did not say that the State could itself loan the money either directly or through some other Bank. Consequently, I am putting it to you that if this Vote is to be justified, it should have been preceded, and would require to be preceded, by some legislation amending the Trade Loans (Guarantee) Act. As the matter now stands, we are being asked to vote a sum of money in respect of the operations of an Act when there is nothing within the provisions of that Act to allow of the expenditure of this money in this particular way.

This is an advance for the general purposes of the Bank.

As the Minister has expounded it now, it is, because it has been found that the Trade Loans (Guarantee) Act, by which the State could guarantee principal and interest on any loan that was made, could not be put into effect by reason of the circumstances he has related. Now, what has happened is because that has failed—and I agree it is lamentable that it should have failed because it would have been a better way to have done it—this Vote is being put forward, and I submit that it does clearly raise a matter of principle. That principle is that if the legislation of this Oireachtas has been found to have failed in one particular instance, the correct method to put that right is by further legislation and not by proceeding to give a Vote that is actually to implement an Act in a way not provided for within the ambit of that Act. That is what the Minister's explanation now means.

We are being asked to put this Vote forward in order to implement an Act in a manner not provided for in any one of the sections or in any part of the phrasing. I think it raises a matter of importance; the principle involved is really important. I am not raising this matter in any spirit of hostility to the money being granted. The Committee has decided that certain monies are required for helping on certain industries. The Minister has made it perfectly clear, to me at any rate, that these particular firms, or private or public companies, have been led to anticipate those monies. Therefore, having been led to anticipate them by legislation that was undertaken in this House, they should receive the monies they were led to anticipate. I think the method that should have been adopted is that prior to any such Vote as this, there should have been a short Act amending the Trade Loans (Guarantee) Act and empowering it to do what it has not had the power to do hitherto in any legislation. That power would be to vary the Act, substituting the definite loan of monies directly or through a bank for the guarantee of interest and capital that is provided for in the Act.

Is the Deputy putting to me that the motion now made for a sum not exceeding £300,000 for the payment of an advance to the National Land Bank, Ltd., is out of order?

Having regard to the Minister's explanation——

Now, I have nothing to do with the Minister's explanation. I have a motion here, and, if the Deputy asks me, I will decide whether that motion is or is not in order. Am I asked by the Deputy to decide now whether it is out of order? If so, on what grounds am I asked to so decide?

I am not putting it as a matter of order.

If it is not a matter of order, it is not a matter for me.

In view of the Minister's explanation, I am not putting it as a matter of order. I did not quite understand what the Vote meant when he said it was an advance for the general purposes of the bank. Of course you cannot take cognisance of anything other than what is on the Paper before us; but we cannot help taking cognisance of explanations given to us. The explanation that has been given to us—and I put this to the Minister—shows quite clearly that this is a matter of principle. I think that it is a matter of principle.

Suppose at some time in the future we were to find that we had it in this extreme form, and that a piece of legislation had been proved to be inoperative in one of its financial features because of the judgment of a Court, let us say, and suppose that in the Dáil we should be asked to implement that financial provision in some way other than is provided for in the Act itself, without bringing in an amending Act or without introducing a revision of the Act, that would, in my opinion, represent practically what this comes to, except, of course, that it is not any judgment of a Court that necessitates this Vote, but merely a decision taken by the Banks in pursuance of their ordinary business. I think that a matter of principle is involved. This Vote ought to have been preceded by a short Act amending the Trade Loans (Guarantee) Act. This Vote can only, in such circumstances, be effective; it could not implement the Act itself.

I think Deputy Figgis would be satisfied that his point had not the same amount of validity that he thinks if he recognised that the Land Bank was a State Bank, and that it is quite within the competence of this Committee to authorise the Minister for Finance to increase the State holding in that Bank. Being a State Bank, the Ministry having practically control of the Board, it is surely within the competence of the Ministry to add to the holding of the State in that Bank for the purpose of facilitating the business of the Bank for State purposes, having regard to the necessities and requirements of the State.

I think the one obvious deduction from the Minister's statement is that there should be a more definite and publicly-advertised announcement and avowal that the National Land Bank is, in practice, a State Bank, and that it has State guarantee behind it. And further, as a corollary, it might be set out that, in its ordinary business transactions, the Bank should have a greater proportion of the business of the State, business of financial and banking character.

I think if that were done, the National Land Bank should be enabled to enlarge its activities with a clear and definite understanding in the public mind that it is a State Bank. The Minister's statement is of the utmost possible importance. It raises some questions that will require a lot of consideration and action. It is practically an indictment of the banking institutions, that they have, in their private interests, attempted to frustrate the action of the Oireachtas. That is to say, that they have reference to what they allege or conceive to be the interests of their customers, but, clearly not proving that in any degree to the Ministry of Finance, they have designed by combined resolution to make it impossible to carry out what the Oireachtas intended when it passed the Trade Loans (Guarantee) Act. I welcome the Minister's statement on this Vote, particularly because it is an evidence that he is prepared to prove to the banks that the resources of the legislature are quite capable of meeting the obstructive tactics of the banking institutions. I think it ought to be an added reason why the National Land Bank should be encouraged and assisted in its work by positive action on the part of the Ministry, so that it will take a bigger place in the industrial and commercial life of the community than it has hitherto taken. I do not know to what extent the Ministry proposes to associate itself with any proposal for a new type of banking institution. I think the lines the Minister has indicated are probably sound, but I do not quite see why they cannot be associated with the existing National Land Bank as a National Land and Industrial Bank. That, however, is a matter which I am not competent to discuss. I hope that if the Ministry is invited and consents to be associated with such a new type of banking institution as was touched upon by the Minister it will be of such a type as will have a definite limit to the rate of profits to be earned. These private institutions called banks, which attempt to control the nation's economic activity, and to a large extent succeed in doing it, and which put themselves up in practice as greater in power in economic affairs than the State itself, have found it possible to pay dividends ranging from about 11 per cent. to 22 or 23 per cent. for a number of years. Yet they are not prepared to come to the assistance of industry in this country, and to supplement and back a measure enacted by the Oireachtas, having for its object this deliberate and quite carefully designed purpose. The Minister pointed out that the sum involved was only three-quarters of a million, that the scheme proposed was carefully examined by competent persons capable of finding any flaw, and these examinations were made, I understand, even before the banks were called upon to make any advances. In view of the assurances that such an examination would give, we find the banks refusing to facilitate the industrial development which was intended by the Oireachtas in passing the Trade Loans (Guarantee) Act. I therefore welcome the motion because it does indicate that the Minister is not going to allow the country to be thwarted in its development, and in its removal of the causes of unemployment by the acts of these institutions called banks. The Minister did not tell us whether Part II. of the Act is to be affected in any way by the Vote of this £300,000. It is desirable, I think, that we should know to what extent Part II. of the Act, which was designed to prevent profiteering, has been taken advantage of, whether the banks have thwarted that part of the Act as well as Part I., and whether the proposal to advance to the National Land Bank £300,000 will enable the National Land Bank to assist in this effort of the Oireachtas, through the Trade Loans (Guarantee) Act, to put a stop to what is called profiteering. Perhaps the Minister will give us some information on that point.

Whatever I may have thought about the proposal in itself—and in the face of it I had no objection to it, because I realised that it was an enlargement of the State holding in a banking institution which would lead the way to a State Bank having large associations with the industrial and commercial life of the country—when I learn from the Minister that it is an attempt to checkmate the obstructive activities of private banks, I am encouraged to give more whole-hearted support to the motion than even I intended at the beginning.

I think this is a very significant proposal which is put before us in the Supplementary Estimate. It seems to those who look at the situation in general as if we were now having some little explanation of the real condition of financial stress that exists all over the country. It seems to me as if these institutions, having now virtually turned down a Government guarantee and refused to act upon it, prove to demonstration that the real cause of the financial stress that we are up against is due to the parsimonious attitude which these financial institutions are adopting. This seems to have been a small sum of £160,000 for thirteen or fourteen proposals that have been sanctioned under an Act of Parliament, and in response to which the banks were called upon to fall into line. This they have declined to do, on the pretence that they could not consider the question of a longer term than five years. They have so little confidence in the permanency of affairs that they cannot view things beyond a period of five years. I feel that what the community requires from these financial institutions is not so much a system of long credits as a short-credit system. I think that a short-credit system must be put into operation in this country and that the Government must see that the resources of the State are placed behind it to such an extent as will enable the smaller trader and the smaller interests in agriculture to tide themselves over the period of stress and difficulty that exists at the moment. Besides, when we find these conditions being applied in the case of a Government guarantee, what is exactly the position with regard to local authorities? Where do they stand? Surely they are at a considerably greater disadvantage than must apply in the case of a State-ordered and law-enacted guarantee.

I do not altogether exonerate the Ministry or the Minister for Finance in this matter. I think that, by studying in advance and by inquiry in advance, they should have been aware that this condition of affairs would have arisen. After this Act has been passed and claimants have got their proposals sanctioned and have incurred expenditure, it is very curious, to say the least, that this proposal has to come before the House to rescue the position. Besides, I am in agreement with Deputy Johnson when he says—or insinuates, rather than says—that if the position were put before the banking institutions it should have been clear to them that their action, in turning down this proposal, would involve the establishment by the Government of a bank, which would largely take their place so far as the State finances are concerned. If they still adhere to the policy that has forced this Supplementary Vote and that we have to ordain this method of rescue, let it be understood that we will attach to it the conditions that the Land Bank, which is going to be the medium of enabling us to rescue the position, will get such Government and State sanction and such Government and State status, as will prove that if they continue to ignore their financial obligations towards the State, it will be at their own expense.

I have little more to say, beyond exhorting the Government to take action at once. In addition to providing this somewhat extended period of credit, I would ask them to make some arrangement for short credits. This arrangement could easily be made in connection with the Land Bank, and it would facilitate small farmers in the purchase of seeds, manures, farming implements and other things required by them. It would facilitate them in developing their industry, if they had the advantage of such an institution. As we all know, very little loss has ever been incurred, or will be incurred, by any financial institution that caters for this section of the community, because it is the honest section of the community and it is the section that we must facilitate. There will be no danger whatever to any financial institution in such an undertaking.

Why did the Deputy oppose them at the elections?

The banks have been blamed, to some extent, for the failure of the Trade Loans (Guarantee) Act. I am afraid that that blame has been attached to the banks from a want of knowledge of banking business. It has been pointed out here, on more than one occasion, that the bank is an institution which endeavours to make the most of the money at its disposal in the interests of its shareholders. If the bank has to lock up that money in places where it cannot recall it for a great number of years, it is obvious that a limit will be put to its enterprise and also that, in order to do any volume of business, it would want immense capital. The banks are, therefore, anxious to keep their capital alive by lending for short terms. It is well known to the commercial community that, while banks lend on these terms, that does not exactly mean that they will not extend the term at the termination of the original period. Supposing the original term was five years, the banks do not say to you, "At the end of that term we will want our money back and we will refuse to extend." They only want, as wise business men, to keep control of their own capital.

Before one could express any opinion on this proposal, one would like more information, because while it has its attractive side, it has, like all commercial problems, another side as well. One would like to know from the Minister if this money is to be handed over to the Land Bank unconditionally and if the Land Bank is to lend out this money to its customers on such terms as it may decide. While that may be an exceedingly attractive proposition, looked at from the point of view of the customer, it might be altogether different, looked at from the point of view of the Government or of the country. That bank may lend that capital to certain industries on such terms as may seriously affect the existence of other industries which have to pay larger sums for the necessary capital to carry them on. That is a point of view that the Minister ought to be exceedingly cautious about, that in his effort to do good he does not do a large amount of harm instead. I would like to know from the Minister if this is to be, first of all, an unconditional grant? If it be not an unconditional grant what terms will attach to it? These are very important questions that one would like to see answered before one expresses approval or disapproval of the principle.

Deputies, in discussing this matter, are apt to forget that there are other means of getting capital than through the banks. Banks are looked upon here as the only possible means of obtaining capital for the financing of the recommendations of this Committee of the Trade Loans (Guarantee) Act. The larger amounts of capital that finance the business of the country is not obtained through the banks at all. It is obtained from different sources altogether. It is obtained from what is called the ordinary liquid capital of the country. The difficulty in connection with obtaining capital for the financing of all these companies recommended by the Committee is not entirely due to the banks. That, I think, rather goes back on the Minister for Finance himself. He has really brought about the difficulty; he has created it by his high income tax. He has driven capital out of the country by the high rate of income tax.

It was always out of it.

He has driven capital out of this country, and that is the capital that would, in the ordinary course, have gone into these industries which are now anxious to get it. These industries want capital. By the action of the Minister for Finance capital is not there to finance these industries. That being so he calls upon the State to provide funds for capitalising these concerns. That would have been provided in the ordinary way if the capital had not been driven out of the country. I would ask the Minister seriously to consider whether that is a wise line to take in the financial problem that he is facing. If he starts to finance industry he will find that it will take a very large amount of money, and he will find, as those who have started to probe the housing problem have found, that there are limitations as to what the Government can do in the matter of finance. For that reason I would ask him seriously to consider and take a long view as to whether it would not be better in the interests of the country and in the interests of these industries, to make a serious reduction in his taxation, particularly in his income tax, and so attract back to this country that capital which has gone out of the country and which would come back and be invested here in these industries.

With reference to these thirteen or fourteen applications which the Minister in his opening speech stated that the Committee had advised favourably on, or approved of, making a total of £170,000, I would like to put a question, and it is this: What phases of the industrial life of the country do these applications represent? Are they for the benefit of industries, subsidiary to agriculture, on the one hand, or do they represent an attempt being made to lower the cost of living, by bringing the producer and the consumer into closer contact and eliminating the middle man and others? Of course, I realise very well it is a very difficult problem for the State to go on and finance industry. What is capital after all but re-invested savings? And, as Deputy Good has pointed out, the high taxation in this country, especially the high income tax as compared with Great Britain, with the Corporation tax really making 1/6 above the tax in Britain and Northern Ireland, is operating very injuriously against industry in the Saorstát. England and Northern Ireland, owing to their proximity and a common language and common political institutions——

Well, very largely. The difference between their political institutions and ours is very little to the average man. To the average man the conditions of life are much the same. He lives more or less under a common code of law. Now, these things are seriously depleting the capital of the country. The position has to be faced in that way, and I want to hear from the Minister how far this Trade Loans (Guarantee) Act can make towards an industrial revival. As far as I can see, the Committee is seriously handicapped by sub-section 4 of Section 1 of the Act, which will not allow working capital to be guaranteed by the State. That is invidious. It is curious and invidious that capital can be raised but not to provide working capital. There is no means of giving a man a short-term loan for carrying on his business and making purchases in the market which will have to be for a short period.

So far as I can follow the Minister, in the rather serious, if not sensational, statement he has made in moving this vote, he only explained how the amount of £160,000 was likely to be used. I am prepared to vote for this amount, and, if necessary at a later date, a greater amount for the same purpose, provided I am satisfied that the amount that is now being asked for is only being voted for the purposes of the Trade Loans (Guarantee) Act. If the figure of £160,000 is only being asked for that purpose, I would like some explanation from the Minister as to what the difference represents. I say that because I am not prepared to allow the amount to go into a Vote of this kind under a general description in the Estimates. I do not want an amount slipped into that Vote which would prevent me getting a suitable opportunity of discussing in detail the reason for it, when, as a matter of fact, I do not know at the moment what the difference represents.

I really think that Deputy McGoldrick really hit the nail on the head when he said that we are faced with the position which the Minister has explained to the Dáil to-day because neither the Minister nor the Executive Council have had vision to see what was coming upon them. I am only an ordinary Deputy, and I have not by any means the information that is at the disposal of the members of the Executive Council and the Extern Ministers who are charged with the government of this country. I have had, however, an amount of information and a number of letters conveying to me for some time past the attitude of the banking institutions in this country, and the effect of their obstructive tactics in the development of the trade and commerce of the State. As a result of that information, and not drawing on my own imagination, I put down the following question on Thursday, the 11th December, 1924, addressed to the Minister for Finance—

"To ask the Minister for Finance if, in view of the restrictions on credit and the industrial depression resulting therefrom, he is prepared to set up a Commission to inquire into the operations of banking institutions in the country in respect to credit facilities."

The Minister was as usual evasive in his reply. This is the reply he gave me—

"In the absence of evidence on the contingencies put forward by the Deputy, namely, that industrial depression is the result of unreasonable restriction of credit by the banks, I am not at present prepared to adopt the Deputy's suggestion."

I am glad that the Minister has told us that, as a result of his experience— and the experience one gets is in a dear school—his view is quite different because he is confronted with the situation that he has admitted to the Dáil. He admits that what I conveyed on the 11th December last is a fact. He has produced evidence to convict himself. It is an extraordinary state of affairs in any State, and especially in a new State like the Free State, that the banking institutions will not have as much confidence in the Government of the country as would enable them to advance three-quarters of a million of money for the development of the industries of the country which help to a large extent the prosperity of the banks themselves. The prosperity of the people and the development of the country is very largely bound up, and helps, to a considerable extent, to make banking institutions more prosperous.

Personally I am not prepared to do anything for private banking institutions which would enable them to get a greater dividend than they are getting to-day. I think they are doing very well. I have always tried to realise that the development of this country does not and cannot depend on physical effort, or on the willingness of the individual to work. While we are faced with a situation such as the Minister has now explained, it must be obvious to the Minister and to the Executive Council that they must have a considered and definite financial policy, such a policy as will prevent the savings of the people from being diverted into institutions which will work against the development of the State itself. If the Minister's action will, and I believe it will, tend to counteract the effect of what I have stated, I am prepared to go further than the Minister has asked, and in addition to the Vote now asked for, at a later stage to vote for a larger sum for the National Land Bank to do for the people of this country what the banks holding the surplus savings of the people are unwilling to do. According to the returns, and I am not quite sure if they can be relied on, the savings of the people have been put into banking institutions—the most powerful of which is registered in England—to the extent of £195,000,000. It is a disgraceful and discreditable state of affairs that the directors of these banks, having the use of £195,000,000 of the savings of the Irish people, are not prepared to advance £750,000 for the purpose of finding work for the unemployed and developing the industries of the State. That calls for immediate action on the part of the Ministers, and the Executive Council should realise that until they have a well-considered, definite financial policy there is no use in talking about work and developing the industries of the country.

A Deputy, who is a supporter of the Government Party, said in a speech recently that it was proposed to look for a loan of £20,000,000 for the purpose of making roads good, carrying out the Shannon scheme and the drainage of the Barrow, and other things not mentioned, but that Deputy did not explain whether the money was to be borrowed externally or internally, and I think that was important. It is all very well going out on electioneering stunts and making ridiculous statements like that and, perhaps, misrepresenting the Minister for Finance when other and more important things should be considered. There is one thing which I think may result from the disclosure of the Minister to-day, and that is that those who are anxious, apart from political views or factions, to develop the State, its industries and its natural resources—if they are the patriotic citizens they claim to be— rather than that their money should be diverted into the institutions which refuse not only to assist the State but who obstruct the State, will put it into the National Land Bank to assist the State and stop this anti-State activity. I hope patriotic citizens will think the matter over seriously, and if necessary withdraw their savings from banking institutions whose headquarters are in England, and who are playing England's game to-day. I was speaking to a prominent man quite recently who claims to come into contact with a prominent Minister of the English Government, and in a conversation they had recently this prominent Minister, who had a good deal to do with the setting up of the Free State through signing the Treaty, said that it was within the power of the British Government at any time to cripple the finances of the Free State and thereby the Government itself. I have no doubt he was speaking the truth. Deputy Good, in endeavouring to drive home this great argument about no income tax, spoke of the money diverted outside the Free State by reason of the difference in income tax charges in Great Britain and the Free State. The Deputy knows quite well—better than anybody—that this money was diverted outside the Free State before the Treaty was ratified.

That is not so.

Whether that is so or not I am afraid that Deputy Good and Deputy Davin are far away from the question of the National Land Bank.

I always like to follow Deputy Good and see where he is going. I think that a great question of policy is involved in the Minister's proposal, and for that reason I claim a little latitude in following the explanation of the Minister. I have a certain amount of sympathy with this proposal, but that sympathy would not carry me to the extent of voting against the proposal that Deputy Figgis has put forward. In not pressing for a ruling on the point he has raised, I am sure Deputy Figgis was in reality anxious to assist people who are engaged in a life and death struggle for existence, or people who are anxious to open up factories in this country and give employment.

Deputy Figgis raised no point.

I think he hesitated for fear of the consequences.

If he had raised a point I would have dealt with it to the best of my ability. But he did not raise a point of order. I want to be quite clear on that.

Quite correct.

He might have had one in his mind but he did not raise one to me.

I am quite prepared to vote for the proposal of the Minister if he would give an explanation as to the difference of the £160,000 which he said was required for the purpose of the Trade Loans (Guarantee) Act, and the £300,000 which he asks us to vote, but I am not prepared to allow to go into a vote of this kind a sum which may prevent me or any other Deputy from having a discussion on what the difference represents either now or at a later date. I hope that the result of the Minister's experience in dealing with these private banking institutions will force himself and his colleagues, who are entrusted with the good government of the country, to recognise without further delay their attitude in these matters. They must realise that, until they decide to let the citizens of this country know what their financial policy is in regard to people who adopt anti-State activities of this kind, they will be only beating the air when they go out on electoral platforms and tell the people at large that not only will they be able to get employment for the unemployed but that they will send to America and get the Irish there to come home to fill jobs which they have not enough people here to fill.

Deputy Davin has just asked a question which his own leader answered for him. I do not know whether the answer given by Deputy Johnson is going to be accepted by the Minister for Finance. I rather gravely question that it is. At all events, the answer was provided by Deputy Johnson. Deputy Davin asked, seeing that £300,000 has been asked for in this Vote, of which details for £160,000 have been given, what about the remaining £140,000, and for what purpose is it being required? Deputy Johnson's answer is that not only the £140,000, but the £160,000, are all being asked for, for the comfort and sustenance of what is in fact a State institution. That is the answer that Deputy Johnson has given. If that is the answer that the Minister for Finance is going to accept, and as I say I have certain doubts as to whether he will accept it with enthusiasm, we ought to know further about this State institution, and we ought to have it recognised as a State institution. Still I put it to the Minister that that does not dispose of the point I put originally, because by giving it directly or by giving it through a private institution or a State institution we, nevertheless, are now being asked to do something that we have not thought of doing before—we are being asked to vary an Act without an amendment to that Act. If the original Trade Loans (Guarantee) Act when it came here as a Bill was put before us as a Bill requiring moneys for the support of certain industries in this country, and that those moneys were to be directly given, not merely that the principal and interest of these moneys should be guaranteed by the State, which would not mean the actual and definite parting with money which would have to be provided for out of the State Exchequer and be provided for by some form of taxation, but merely that the principal and interest should be paid— that was the point that was put before us in that Bill—if that Bill had come before us, asking not that a guarantee should be given, but that actual moneys should be paid out of the Exchequer, I for one would have supported that Bill then in those terms. I want to be quite candid about it, because I think the purpose of the Bill was a right and proper purpose, but it certainly would have been a different Bill from that which we did pass. Therefore, I put it that this is really in effect varying the original Act that was passed by the Oireachtas according to the explanation that the Minister for Finance has given to us.

In any case, I think it is desirable that the House should have fuller information on the lines that Deputy Good has indicated as to what protection the State has over this money that will be passed over to the coffers of the National Land Bank. Deputy Good stated what, I think, is the correct position, that no bank whether we dislike it or like it in this country or in any other country will part with its money for a long term of years without control over it. The State I take it, in passing this money over to the National Land Bank, will have some such governing principle in it, and I imagine they will have some effectual control over the money passed over under this Vote. How long it will be passed over, what supervision will be claimed in respect to its administration —all these items, I think, ought to have been given in explanation of this Vote. I recur to my original point which, A Chinn Comhairle, I did not put before you as a point of order, because you drew my attention to the fact that the White Paper we have before us merely says that advances are being made for the general purposes of the bank. In addition to that the Minister has given us certain information that goes to show that this money is required owing to contingencies that were not and could not have been foreseen and that a certain Act has broken down. I put it to the Minister that in that event the course that ought to have been taken was to pass some amendment to that original Act authorising what has not hitherto been authorised by any legislation, and that is the passing over of definite moneys rather than the guaranteeing of the principal and interest of these moneys.

I want to know if the Minister for Finance would make available, for the information of Deputies, a list of the applications for loans recommended by the Advisory Committee, as well as a list of those whose applications were refused. The information would be of much use to Deputies. It would enable them to tell their constituents whether they were likely to have any chance of going before the Advisory Committee. I know some cases in which the Advisory Committee turned down applications without sufficient investigation. I do not think it is fair to take up the time of applicants by bringing them before the Committee without giving them some reason for refusing to guarantee a loan or to recommend one. Many of these men are in a position to carry on their business, whether they are guaranteed a loan or not, and they are men who have good sound business propositions to put before the Committee.

I realise what Deputy Davin has stated, that this is a very important matter and that very great latitude should be allowed, but we will have to be clear as to the scope of the discussion. We are not discussing the Committee set up under the Trade Loans (Guarantee) Act. We are discussing an advance of money for certain purposes owing to circumstances which have arisen. The Committee which Deputy Colohan speaks about has made certain recommendations, but I think we cannot go back to that Committee. Clearly also we could hardly go as far away as to discuss the question of income tax and its effects on capital, nor could we get into a general discussion as to the effects which the policy of the banks may have upon credit in general in the country. Provision could be made for such a discussion, but I do not think this is the time for it.

I think it would be very useful if we could have such a discussion.

I do not think there is very much to add to what has already been said in the course of this discussion, except that individual Deputies who take certain views should express them as far as their ability permits them to do so. This Supplementary Estimate comes to us for an advance to the State Bank of £300,000. The first thing that naturally occurs to me in this connection is: where is the Government going to get the capital to finance an enterprise for a State Bank or otherwise? It does not seem to me that the operations of the Government as a Government, or of the Dáil as a whole, lend themselves to the providing of capital. Our principal duty is first to examine the estimates submitted to us from time to time for expenditure for the particular years that come under review.

The finances of the Government, as far as I understand them, are limited to the provisions made within the year. The Minister for Finance tells us the reason this £300,000 is required for the Land Bank is owing to the refusal of the private banks to issue loans that were required under the Loans (Guarantee) Act on terms of fifteen years, the State guaranteeing principal and interest. It seems to me that that has been presented to the House in the light of the banks not doing something that they were justly called upon to do by the Government. I think that is an unfortunate frame of mind for the Minister for Finance to have got into, following upon his recently declared policy or determination to appoint a Government stockbroker, where in the past the Stock Exchange members operated in the way they had for a number of years on a certain fixed principle. It seems to me, therefore, that this, following upon the determination of the Government to appoint a stockbroker, is raising an issue as between the financial houses and the Government which may lead to very far-reaching results. The importance of this transaction in the initial stage is in the implication conveyed by the attitude of the Government in this matter. It is, therefore, necessary, and I think desirable, that we should recognise that a large amount of cooperation did previously exist between these institutions and the Government. We see now that the last loan the Government issued was received in a ready and good spirit by the mercantile community as a whole, including the bankers and the Stock Exchange, and that that harmonious state of affairs should now come to an issue of this sort seems unfortunate. It has been stated, and stated very fully, that banks require to have control of their assets. In reply to Deputy Johnson, when he says that banks pay enormous dividends, I would like to impress upon the Dáil that the dividends paid by the banks are not paid on the original capital. If you take most of the banks, and look at the different balance sheets, you will find in many cases that reserves that have been created over long periods of years greatly exceed the amount of capital on which they are nominally working.

What do you deduce from that? Is it that they should pay bigger dividends than what they are showing?

No, I say the rate of dividend is not to be calculated on the amount of the normal capital, because the amount of capital involved in the discharge of the operations is very often ten and twenty or forty times more than that represented by the normal capital.

That is a nice admission.

It seems to me that some members of this House do not appreciate the enormous importance that attaches to banks being in a sound financial position. The essential feature of banking is that whatever their profits may be in the earlier years, if they do not provide a reserve and provision for contingencies they run grave risks. All the banks in this country have built up reserves over very many years, and that is to the public interest, because the securities of banks in Great Britain, and equally in Ireland, enabled them to come through a crisis safely which has ruined other countries, for the time being at all events. In the matter of handling financial enterprises they act on a conservative basis. It does not follow that the banks would not give the Government all the accommodation they require, but to ask a bank to say, at the start, that they are either to finance individuals or that they are to finance the State—because, after all, that is the thin end of the wedge—is a different matter. This principle adopted by the banks as applied to this £300,000 is nothing. If it was an isolated transaction the banks would accept it right away. But what are you doing here? You are asking the banks to tie up £300,000 of capital, with the natural inference that accumulated amounts and continuing amounts will be treated on the same basis. In other words, you are asking the banks to establish a principle which, in my judgment, would be unsound for them to adopt, and which would undermine the security attaching to deposits in the banks by investors generally in the country.

I hope the House will not make any mistake about it, that in entering upon this they are entering upon a very dangerous subject as regards security and the general principles that have in the past controlled the operations of the banking business in this country. The fact that this money is wanted is another unfortunate aspect in my judgment, in so far as the Government are now coming in, although in a very laudable way, in a way that really means interference with the ordinary flow of business, because they are adopting the principle of going outside the range of guarantee for particular industries, and they are going to the point of advancing money for industries, or, in other words, they are engaging in the operation of various businesses, and that will have a very far-reaching effect. In other words, these industries that are to have money lent to them at the present time will, I am sure, bear all examination as to the merits and as to lending them the money. But once you begin that operation where are you going to lead to? We have heard already to-day from the benches opposite a political claim put in, and we have heard a question asked. "Who is going to get this money? Is any of it coming to my constituency?"

It is a very far-reaching claim for any Deputy who hears that a certain sum of money is to be provided by the Government to say: "I want my share of it for my constituency." It undermines the usefulness of the Trade Loans Act altogether. The money that goes into business for capitalising it has, in recent years, gone into limited liability companies. Deputy Davin says that people down the country who have money in the banks think that the banks should go and develop the industries in the country. Their main consideration is security for that money, and if they knew that the banks were going to tinker with speculations, a large proportion of the people would begin to have doubts as to the safety of their money in the banks, and they would begin to take it out. The whole thing bristles with difficulty. When you come to review the commercial situation, the banks are at the back of the finances of the country. You cannot ignore that. According to Deputy Johnson, a State bank is to be subsidised to do the banking business of the country. If you want to start a conflict of that kind, where is it going to bring you? Be sure it will not bring the State down, or, at all events, greatly hamper the operation of the State in other ways. It is a very serious subject, because you are entering on a road as a new State which no other State has attempted.

The United States of America.

Has the United States ever gone to the banks?

Yes, they founded a National State Bank, and had the very same problem.

Deputy Magennis is a well-informed man on most subjects, and I would not like to contradict him, but he does not shake my belief in this matter and the principles underlying it. The Government representing this State is like a man who was going to war who weighs the issues carefully in the balance. To-day what we want most in the country is confidence. With confidence, a little more hope and a little less taxation, industry would get a fillip that would carry us further than £300,000 on the road to prosperity. I would ask the Government, even when they pass this, to reconsider the whole question in its broad aspect. If they come to a decision, let it come before the House to be discussed fully, and we will all have our say in the matter. I cannot allow this occasion to pass without expressing my view that the Government's interference with the operation of ordinary commercial business is a profound subject for consideration. As far as this particular issue is concerned, I do not know anything about the amounts advanced to the concerns, but I do say that I would rather see the Government guarantee being given to those people and those people going to the Stock Exchange and raising capital out of the money which the people themselves have in the bank. Let the people show the confidence they have in the future prosperity of industry by taking up the shares of that industry; it would be a sounder proposition than the advance of £300,000 to the Land Bank or any other bank.

What attitude have the banks taken up to-day in facilitating those prepared to promote industry in the country? That is a question we ought seriously to consider. The banks undoubtedly have formed rings. If you go to a bank, no matter what security you have, if you do not agree with that bank and if you go into the next bank which has a different name, you will find that they will want exactly the same terms. Is such action on the part of the banks going to promote industry in the country? Is it going to promote anything that is going to absorb the great number of unemployed there is in the country? The object of the proposal put forward by the Minister is one that every man with an interest in the welfare of the country should support. The banks undoubtedly are standing in the way of promoting industry and it is time that such banks should be handled by the people in their own Parliament.

I think it is quite within the Ceann Comhairle's ruling to discuss the qualifications and the merits of the institution which it is proposed to vote this money to assist. Deputy Good has, as he so kindly does frequently, explained the position in a very few words. He said the banks of the country are institutions which deal in the money of their customers in the interests of their shareholders. The difference between the National Land Bank and the other banking institutions, all of them, no doubt, following out that process which Deputy Good explained, is that the shareholders of the National Land Bank are the State representing the people, and it is the general common interest that the National Land Bank is organised to promote. Also its profits are limited. The other institutions which commerce and industry have relied on and are relying on almost wholly for financing industry and assisting commerce, as Deputy Hewat said, are the mainsprings of industry and commerce. Those are institutions which will use the money of their depositors and their customers, not for the interests of industry and commerce, not for the general common interests, only incidentally for those things, but in the interests of their shareholders.

If, in the view of the bankers, the interests of the shareholders are going to be better served by confining industry and commerce, then, as private institutions, they are bound to restrict industry and commerce. That is what is happening. Simply because they are acting in the interests of their shareholders, the industry and commerce of the country and the financial obligations of the country, to a large extent, are to be subordinated to the interests of bank shareholders. There is a difference in the institution which we are now asked to vote this money to, as its shareholders comprise all the people of the country—the State itself—and it is in the interests of the people that this money is going to be used. I think it is well we had the relative position of the various banks to the State indicated so clearly by Deputy Good. I hope the lesson which he has taught will be taken to heart by the individuals composing the State, and that they will realise that it is not in the interests of the community, trade or commerce, or to serve the community, that a banking institution exists, but that the shareholders' interest is the primary interest, and that if that interest is going to be assisted by restricting trade or commerce, or restricting the flow of credit, then trade and commerce will be restricted.

The deduction that I draw at once is that the Dáil should agree to facilitate the working of the National Land Bank in every possible way, and should use the National Land Bank to facilitate these trade loans which have been examined carefully, I have no doubt, by competent persons.

I do not agree with the suggestion that such loans and such inquiry should be made directly under the authority of the Minister himself. I think the danger that has been hinted at by Deputy Hewat would grow, and would become a very definite one if such propositions were to be examined by officials of the Ministry, or if loans were to be handled by officials of the Ministry. An independent institution of this kind, which is financed by the State, whose shareholders are the State, and whose profit is limited, acting independent of the State, is the best kind of institution to ensure that there will be no such thing as graft, no such thing as political preference given in the conduct of banking business.

Notwithstanding the warnings that have come to us from Deputy Hewat and Deputy Good as to the dangers which might arise to the State if we annoyed the banking companies, I think we are in a position, if we are resolute and determined, to resist that kind of internal attack. Internal attacks may come from many quarters; even the most violent attack on the security of the State may well come from the financiers. I think if we are resolute and far-seeing, as we have been warned to be, we ought to tackle this problem immediately and let it be known that the State is greater than the banking institutions.

I am glad to take advantage of this opportunity to support the National Land Bank. I do not agree with Deputy Hewat's contention that the bank, in carrying out the proposals for which this Supplementary Estimate is intended, will interfere with the natural flow of business. It is because there was no flow that the Minister had to ask for this estimate. It is because the banks have frozen up the natural channels and prevented a flow. I did not agree with one thing that Deputy Good said. He said that this action of the Ministry raised a very important question. It has not been raised altogether by the Minister. It has been deliberately raised by the banking institutions of this country. In a critical moment of the State's need abnormal action was necessary, and the Government was forced to take this course to try and encourage industry. No one knows better than the banking authorities that this country is passing through a period of great depression. They know very well the urgent need that forced the Government to take this action under the Trade Loans (Guarantee) Act. They deliberately met and challenged the action of the State and the Dáil with regard to that.

Deputy Hewat suggested that this Government is doing an unprecedented thing in asking for this grant. The history of other countries shows that it is not unprecedented. The Commonwealth of Australia founded a National Bank, and I remember seeing by its balance sheet that it had deposits of over 13 millions. Canada also went into the question of limited liability banks, and took such serious notice that a committee of the Parliament was set up to inquire into the entire banking system. I agree with Deputy Hewat that a grave question has been raised, and I am very glad that it has been raised. The banks are thriving in this country on Irish money and on Irish credit. They are spending hundreds of millions out of the country to finance enterprises and industries outside it, on the credit of the Irish people. These millions were raised, not on the capital of the banks, not even on the reserves, but on the credit of the Irish people. The banks are making huge sums of money on credit in which the people do not share. That is an extraordinary state of affairs, and calls for inquiry.

If you go down to the poorest town in Ireland, even in this year of depression, you will see huge buildings being built for banks. There are three or four banks in every town, with three or four staffs, while the whole business could be done by one bank across a six-foot counter. Instead of private people sharing in the profits the banks are hiding their money by putting it into huge edifices. Their wealth is made out of the Irish State. The banks have raised this question themselves. Deputy Davin made a suggestion some time ago that I was greatly attracted by. He suggested that an inquiry should be made into the banking system in this country. The Deputy made the same suggestion to-day. It is well worthy of the consideration of the Government, particularly now that the State has been challenged by the private banks, that the challenge should be taken up and the entire position gone into. I think the Minister is right, as a first step, in using the bank set up by the State, and I trust this Estimate will only be the first of a series of similar ones.

If the statement of Deputy Good is absolutely correct, that the responsibility of a bank is to its shareholders, and that in the exercise of that responsibility the bank finds that it is not in the interest of its shareholders to finance developments here, that are certified by our State authorities as projects that will be prosperous and successful, and that instead of helping these projects the money must go elsewhere, I suggest a very serious problem arises for this House.

I had thought I spoke in moderate terms and that I could not be accused of desiring to discuss this question in any spirit of antagonism to anybody, or with any desire to make matters more difficult for co-operation than in the past. I tried simply to state the facts, and to suggest action that was necessary in view of the facts. We advisedly did not introduce a Bill to amend the Trade Loans (Guarantee) Act for the reasons that Deputy Johnson and other Deputies have indicated. I do not think it is desirable that this matter should be dealt with by Government officials alone without the intervention of a bank. I think it must also be clear that the Government cannot provide capital for industries even in a limited way. We do not want to get into the practice of actually providing capital directly. We acted advisedly in setting down this estimate rather than proposing an amendment of the Trade Loans (Guarantee) Act. There is also the fact that the amending legislation would have taken a great deal longer in time, and that there is a certain measure of urgency about this Act.

With regard to Part II. of the Act, I think only one proposition has been passed under that part. That was passed by the Committee as a loan to be guaranteed, although they might have passed it as a loan to be actually made under Part II. It was held up, as the others were. I trust if this motion is passed that it will be possible to give a loan within a day or so.

What amount does that cover?

It is about £11,000 or something like that, but I could not say exactly at the moment. I recognise that the position of the National Land Bank, in its relation to the Government, will later on have to be defined more clearly by legislation than it is at the moment. However, I have not taken any steps towards preparing legislation that would do that, for this reason: that undoubtedly the whole banking law of the State does require examination. If it were nothing else, the change of Government, the separation of this State from the United Kingdom, has made many laws and regulations that existed inapplicable, and it is necessary that at no distant date a general examination of the whole position should be undertaken with the assistance, if necessary—and I think it would be necessary—of some outstanding people from other countries. I do not think it would be desirable to legislate in regard to the position of the National Land Bank before such an examination has been made.

One Deputy said that the Minister might have anticipated the state of affairs that has arisen. Perhaps, but there was the fact that a similar Act in Great Britain had worked, and that borrowers did not find difficulty in getting money once they had the guarantee. I also say, as I have said from the beginning, that I am not here proposing to criticise the banks or to deal with their attitude, but I did think we had no reason to anticipate the degree of rigidity with which we were met. It might be that a bank that would give a loan for only five years would be prepared at the end of five years to extend the term, but I think before the State gives its guarantee it must know what the term is that the bank is prepared to lend for. If the end of the five years were reached and the bank decided not to extend the term and decided to call in its money, the State has guaranteed the principal and interest, and the business might be sold out or the State might be called in to provide money in that way. At any rate the State would be in a position in regard to the bank and the industry it ought not to be in.

It could consider the situation.

I think that is not a desirable way of doing it. We should see where we are and where we are going, at the present moment.

It might be an advantage to the State.

I do not think so.

The interest might be lower.

The interest may be at a fixed rate. The interest may be 1 per cent. over the bank rate or under the bank rate or you may have a fixed rate. When we guarantee interest, we need not guarantee at a fixed rate. We may guarantee interest fixed with reference to some standard, and that really applies to some of Deputy Good's remarks about the terms on which the National Land Bank would lend. The ordinary procedure of the guarantee will, of course, be gone through, and that guarantee will prescribe what the interest is to be, and the person going to the Land Bank will, of course, get his loan on these particular terms. This Vote will not affect the matter at all.

Will there be any conditions attaching to this Vote?

No, there will be no conditions attaching to the Vote but the conditions shown on the paper. The Land Bank is not bound, and will not be bound, to give any particular loan. It will be able to discriminate between loans if it thinks it is desirable. The money is given to enable the bank to give these advances, but the directors will exercise their discretion in the ordinary way. We are ask ing for a sum of £300,000 because the Act has still some considerable time to run. It is to be anticipated there will be more loans passed for guarantee. I mentioned £160,000 as the sum which has already been passed for guarantee. Presumably further sums will be passed, and the National Land Bank might feel it desirable to take up a considerable sum in addition to what has been already passed, or it might consider some of them were not of an urgent character, and that attempts might be made by people to get their capital in some other way. I agree it is better that industries should get investments if they can do so rather than that they should borrow from the banks. It is not, however, at all easy for industries to get loans from individuals, even with a guarantee, because the individual, if he is a person of limited means, will understand the difficulty about realising his money or disposing of his interest.

The reluctance that exists in the country in regard to putting money into any sort of industry has been apparent. I realise as well as anyone that a continuance of income tax at a rate higher than the income tax in other countries adjacent to us would be bound, in the long run, to have very serious effects. I do not believe the shortage of capital for industrial and other concerns can justly be ascribed to that cause. It is to be ascribed more to the reluctance of people to invest in anything in this country. It is a relic——

Of old decency.

Of the past, at any rate. It is something that has come down to us. Deputy Connor Hogan asked what phases of industrial life were represented by the loans that have been passed for guarantee. They represent a very varied selection of industries. They represent the quarrying, confectionery, bakery, creamery, textile and woodworking industries. Those are only a few. I have not the actual names of other industries here, but I can tell the Deputy that the selection is very varied.

May we take it that the full amount being asked for is only for the operation of the Trade Loans (Guarantee) Act?

You may not take it that way, because that is not what is stated. There may, for instance, be calls on the bank that it might be desirous of meeting, calls such as cash calls as a result of giving the loan. Where a bank gave a guaranteed loan for a particular amount, it might be desirable and necessary that certain additional accommodation within the discretion of the directors might be given to the particular company concerned. In any case it would be a varying of the terms of the Vote to bind the directors. The directors are most anxious to facilitate the firms that have applied under the Trade Loans (Guarantee) Act and that have been passed for guarantee; but I am not prepared to tie them up. They might well decline to undertake the business if they were to be absolutely tied up and bound to take anybody sent to them. They might refuse to go to the trouble that would necessarily be involved.

I have no doubt the main portion of the money will go for that purpose, but there can easily be a fraction that would be available to enable the bank to meet additional cash demands that would fall on it through the taking up of new business and through associating itself with new firms. No bank can afford to lend people a certain sum of money and in no circumstances be prepared to lend anything more. There must be an element of give and take. The condition of things I have outlined could not be imposed upon them. It would be like imposing upon them the duty of giving additional overdrafts. Overdrafts are given against deposits and you could not simply say to them: "You must undertake all this business and you must use every penny of the money we give you for one particular type of business only although that business may give rise to other demands."

Will any percentage be ear-marked for the purposes of the Trade Facilities Act?

No. I am not prepared to make it in the form of a percentage. The main portion of it will undoubtedly be utilised: it might nearly all be. For all I know, it might all be so used; but that is a matter that will only be determined in the working of it.

Will there be any scrutiny at all by Government Departments of the distribution of the money, whether that distribution be approved or disapproved?

The bank will be ultimately responsible to the Minister for Finance. He has no direct control. Although he may appoint or remove directors at the stated period in each year, steps could be taken to remove them at other periods. They are not responsible to him directly, he cannot dictate their policy, and I think it would be a most undesirable position if he could. At the same time, I think there is no danger that there will be any such thing as bad faith.

The Minister will understand what I mean. Under the Trade Loans (Guarantee) Act, a special committee has been appointed that scrutinises each claim and makes recommendations. As a result of these recommendations, the bank makes advances. Now, the Minister has pointed out that, apart from these recommendations by the Advisory Committee, the bank will make other advances.

No. It may, in a particular case, be virtually obliged by business considerations to do so.

Will they deal only with cases arising out of these recommendations or will they have discretionary power to deal with ordinary applications?

Yes. The reason we bring this Vote forward is because it is necessary and that the directors desire to deal with these particular loan (guarantee) cases. We do not tie up every penny of the money for the purpose of giving these particular loans, because a good many people may come for a guaranteed loan and may get that loan. They may later put up a case that, for some particular reason, they require an advance for a fortnight or so, and it would not be reasonable to put the bank in the position of saying: "Go off to some other bank and deal with them for that; we only do one particular thing." We do not desire that the bank should be obliged to find, out of its ordinary resources, money for dealing with business that will certainly come to it from some of the cases that have been guaranteed, or that it should be obliged to turn away the ordinary business of the customer and simply deal with the guaranteed loan.

Will the Minister say whether the Advisory Committee, which was set up to deal with proposed loans, will continue to function as heretofore and whether, in addition, the bank directors or managers will continue, in the ordinary way of persons holding such positions, to examine each proposition on its own merits?

That is precisely the position. There might be a loan that would be guaranteed by the State, following a recommendation of the Committee, and that might not be a loan that it would be very desirable for the bank to take, because it might lead to enormous pressure from the people who got it for other moneys to enable them to carry on. In these circumstances, the directors ought to be in a position to exercise their discretion. I do not think we could put them in any other position and hold them responsible, ultimately, for the success and general efficiency of the bank. If we tie them up or interfere with them too much or force business on them that might force them into other commitments, which we did not provide for by any margin of reserve, we would be dealing with them unfairly and in a manner which would not be in the interests of the bank.

Deputy Davin mentioned the question of industrial depression and the unreasonable restriction of credit. I gave him an answer which was not evasive. I think that the Deputy himself is aware that there is another side to the question. It may be a vicious circle, but there is the fact that industrial depression will bring restriction of credit. I would not like to be responsible at any time for an inquiry directly along the lines suggested by Deputy Davin.

I did not suggest any particular lines.

I mean the lines suggested in that particular question, which would be very limited. It would not deal with the system. Institutions may have to take a particular line because of the system on which they are working. Simply to suggest an inquiry into the conduct of institutions, would be to suggest something that would not get us far and might, perhaps, mislead us. I was quite careful in answering the Deputy's question and was not giving him an evasive answer, as he suggested.

Deputy Colahan asked whether a list of those cases in which guarantees were sought and refused would be made available. The Act prescribes that a list shall be available in cases in which guarantees have been given. I do not think it would be desirable to give the names in cases where guarantees have been refused. That might be taken to mean that the Committee thought that the business concerned was a bad business, and the publication of such a list might inflict injury. If people have been refused guarantees, and if they want the refusal to be made known, they can make it known themselves, but I do not think it should be any part of our duty to say that certain concerns complied with the formalities for a guarantee but were refused it.

I have already dealt with some of the points raised by Deputy Hewat. I spoke in no antagonistic spirit to anybody. I simply suggested that here were people who had taken a great deal of trouble to prove their cases before the Committee, who had been, for a considerable time, expecting they would get the required money as a result of the Government guarantee, and that the money then was not available. If we left the matter there, they could justly say that the Trade Loans (Guarantee) Act had been a snare for them, and had involved them in greater difficulties than they would have been in if they had never thought of it. I certainly made perfectly clear that we could not possibly leave the matter as it stood.

Deputy Hewat talked of conflict. I am the last person who would desire conflict. I would take any possible means to prevent conflict. But anybody who is thinking along those lines had better understand that if conflict did come, the State has a good many shots in its locker, and that anybody who wanted to fight would probably get the worst of it. I only say that, because Deputy Hewat, to my mind, unnecessarily introduced a question which was not justified by anything I said in my statement.

I put one question to the Minister to which he has not replied. I asked him if any applications had been received for guarantees under the Trade Loans (Guarantee) Act from societies, such as co-operative societies, to enable them to bring the producer and the consumer more closely together, and to provide some of those commodities of life in which there is so much profiteering in Dublin?

No applications of that sort have come through to me. I am so to speak, the lowest sieve. The application comes through the Committee to the Minister for Industry and Commerce, and it only reaches the Minister for Finance in the last stage. No such application as the Deputy mentions has come to me. One application came for the building of a bakery. It was shown, in that case, that the building of this bakery would, undoubtedly, lower the price of bread in the particular district and reduce the cost of living. Another application came from a co-operative society for the construction of a creamery. But those applications were not from the particular type of co-operative society that the Deputy refers to.

When I spoke, I was following the general trend of the discussion before An Ceann Comhairle drew attention to the fact that this was really a Vote to give an advance to the National Land Bank. I did not in any way deal with the position of the bank. I think we should know what is the position and what is the policy of this bank, and what lines its development will probably take. Am I to understand from the Minister that notwithstanding the fact that the Advisory Committee recommend grants to be made, and though these loans are sanctioned by the Minister for Industry and Commerce, the National Land Bank will still have a veto on the advance of the money? I would like to have an answer from the Minister on that point.

I will speak when the Deputy has finished.

If the Minister would answer "Yes" or "No" it would remove the difficulty. I want to point out that there is no risk to the bank. The loan is guaranteed by the Government. The interest on the money is guaranteed by the Minister for Industry with the previous sanction of the Minister for Finance. If in effect the risk is by the bank, there is a serious departure from the letter and spirit of the Act. We should know what has been the policy of this bank for the past four or five years, and in what financial condition it stands to-day. Is this advance of £300,000 required, on the one hand, to expand the development of the bank and to give a larger extension of its benefits, or is it more or less to repair the ravages of bad investment or unsound financial policy? These things have not been put before us. I, for one, with the consciousness of what we owe to the taxpayers, do not like to take a leap in the dark. We have a right to see the balance sheets. I have not seen the balance sheet for the half-year ended 31st December, 1924, though I have been looking out for it.

You do not read the farming papers.

My reading is necessarily limited. Business does not give me many opportunities to go into things in that respect. We have a right to know how the funds of this Bank are invested, whether the value represents the actual original investment, whether there has been a depreciation in its security, whether, if the bank were in liquidation to-morrow, it could realise its nominal capital, or whether there would be a very serious loss to its shareholders. I would not like to advance this £300,000 until all these points are elucidated.

The balance sheet of the bank has been published, and I can send the Deputy a copy. It has been published every half-year, and if the Deputy failed to see it, I cannot help it. I tried to explain the reason why the bank should not be obliged to take every loan that was passed for guarantee by the Committee. Some of these loans will involve other demands. There may be temporary demands in respect of which the bank should have a choice. They should have an opportunity of choosing the most desirable of these applications in preference to those which, because of the other demands which would follow, would be in some way unprofitable to them. In the alternative, there should be some margin of this money in the hands of the bank to enable it to call on existing resources to meet such demands. It might well be that the directors might see fit to take all the proposals that came along up to the amount of £300,000. They might take up the position that everybody with a guarantee will get his money, but not one penny more by way of temporary accommodation. They might, on the other hand, feel it was desirable to exercise some discrimination. I think it is fair that they should be allowed a reasonable degree of discrimination, but they could not at all be in a position of refusing to take good cases which come along—that is, good cases not differing in security from others, because they all have the security of the Government guarantee. They are all absolutely equal, but some of them might be cases which would, perhaps, bring a good deal of business to the bank and might be preferable to others. Some of them might be bad cases, because the position would be unsatisfactory if other sums were not provided for them. I feel that there is absolutely nothing wrong in asking that there should be some margin of discrimination allowed to the directors.

Question put and agreed to.
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