I am not moving the amendment standing in my name:—
In sub-section (1), lines 22 and 23, to delete the words "immediately after the charge created by sub-section (4) of Section 1 of the Principal Act as amended by this Act."
DAIL IN COMMITTEE. - LAND BOND BILL, 1925.—COMMITTEE STAGE.
Question—"That Section 1 stand part of the Bill"—put and agreed to.
SECTION 2.
(1) In the event of any sum being issued out of the British Consolidated Fund or the growing produce thereof for fulfilling any guarantee given by the British Treasury for the payment of the principal and interest on any Land Bonds created for the purposes of the Principal Act, there shall be charged on and payable out of the Central Fund or the growing produce thereof immediately after the charge created by sub-section (4) of Section 1 of the Principal Act as amended by this Act, an amount sufficient to repay to the British Treasury any sum so issued as aforesaid together with interest thereon from the date of such issue at such rate as may be agreed between the Minister for Finance and the British Treasury or in default of such agreement at the rate of five per cent. per annum.
(2) All sums issued out of the Central Fund pursuant to the charge created by the foregoing sub-section shall be made good to that Fund out of the Guarantee Fund.
Question—"That Section 2 stand part of the Bill"—put and agreed to.
SECTION 3.
The Principal Act shall be construed and have effect and be deemed always to have had effect as if the following section were inserted therein in lieu of the section 1 now contained therein, that is to say:—
1.—(1) In order to provide for the payment of the sums which under this Act are to be paid in bonds, the Minister for Finance shall have power to create and issue, when and as required for the purpose, bonds to be called 4½ per cent. Land Bonds, of such denominations (not in any case less than one pound) as the Minister may determine.
(2) The bonds shall bear interest at the rate of 4½ per cent. per annum on the nominal amount thereof payable in British currency by equal half-yearly instalments at such times in each year as may be fixed by the Regulations under which they are issued.
(3) The bonds shall be redeemable at par in British currency together with the payment of all arrears of interest, and the Minister for Finance shall make arrangements for the redemption thereof within eighty years from the 18th day of December, 1924, by means of yearly or half-yearly drawings and the said Minister may make regulations for the drawing of such bonds. Such regulations shall provide for the immediate redemption of bonds transferred by order of the Judicial Commissioner in satisfaction of Death Duties, or in redemption of land purchase annuities charged on the lands acquired by the Land Commission under this Act:
Provided that any bonds may at any time after the expiration of thirty years from the issue thereof, if not previously redeemed be redeemed at par at such time and either by drawings or otherwise as the Minister for Finance may direct.
I beg to move Amendment 2:—
In lines 44 and 47-8, to delete the words "in British currency."
I do not intend to enter into any long discussion on this amendment. The proposal in the Bill to insure that the interest to be paid on these Bonds shall be paid in British currency is a departure from the provisions of the Land Act, and, I think, raises a big constitutional question. The Land Act passed by the Oireachtas provided for the issue of Land Bonds as compensation to the landholders on the compulsory acquisition of their lands. The interest on these Land Bonds, the number of the Land Bonds and the value of the Land Bonds was estimated to bring in a certain annual income, a definite proportion of the income that the owners of the land hitherto enjoyed. The whole conception, I maintain, was based upon the idea of an annual income to the landlords to replace the rentals. It is assumed, and rightly assumed, that we were legislating in respect of the land of the Saorstát held by persons citizens of the Saorstát, and that we were legislating, as we only can legislate, for people and property and land under the jurisdiction of the Saorstát. Consequently, we are right to assume that the legislation which is called the Land Act was for the citizens of the Saorstát in relation to property within the Saorstát.
We have a right to assume that the money, the interest on the bonds which we were proposing to give to those citizens of the Saorstát in respect of the land of the Saorstát, will be expended within the Saorstát. That is to say, we were legislating for the present and future in respect of Saorstát affairs and citizens, providing for incomes which had hitherto been drawn from residents of the Saorstát, citizens of the Saorstát, and that is more or less continued under the new conditions. Now we are asked to provide that whoever may hold these bonds in the future, whether residents or citizens of any other country, are to be paid annual sums, not in any currency of the Saorstát, that may be prevailing at the time, but in the currency of another country, the presumption being that these incomes are to be spent in another country and not in the Saorstát. Now, I think that is a presumption that we should not make. We should assume that the monies drawn from Irish land will be spent by the citizens in the Saorstát, and if they prefer to spend their income, which we provide, in other countries, then they ought to take whatever risks there may be in respect to differences in currency values. Surely it is not reasonable to ask us to provide for the values that may prevail in another country outside our jurisdiction, and beyond the area over which we have control.
It would not matter how Irish currency might depreciate so far as internal buying is affected, or it would matter very much less. It is only when we are dealing with international exchanges that the rate of international exchange between the currencies has much effect. I submit that we have to bear in mind when we are dealing with the Land Act which provided for the landlords who were being bought out compulsorily, an annual income, that annual income is provided out of Irish earnings, Irish production and Irish taxation, and it ought to be considered as the income which is provided primarily and normally for spending within the country. If there is any question as to where it shall be spent and if any choice is to be made, which I am not going to deny, that choice carries with it the normal risk of any other person having an income getting less value in another country than he would in his own country. When we are asked to bind ourselves to pay these annuities in the currency of another country, we are asked to do something which is contrary to the whole spirit of the Land Act.
Of course I know the contention; I know what is behind this. We are not supposed to have exchanged rentals for an annual State contribution in the place of rentals. It is a Stock Exchange idea that is prevailing in the mind of the Minister, that the bonds are something to market, not to provide an income for the holder. It is a Stock Exchange conception and a degradation of land legislation to the level of the Stock Exchange and Stock Exchange purposes and sales. It is preferred that we should consider the Land Bonds as something to gamble with rather than as a means of providing an income in lieu of rent, and this provision, to insist that any amount paid shall be payable in British currency, is in deference to the desire that Land Bonds shall be considered as something to gamble with on the Stock Exchange. Leave out the word gamble for fear it might be invidious, but take it that Land Bonds are something to buy and sell on the Stock Exchange. Now, I maintain that the essence of this proposal is that the Land Act provides an income in lieu of rent, and if any holder of a bond wants to consider the bond as being something else than a legitimate claim upon the Irish Free State of 4½ per cent. as interest annually, if he wants to consider it as something else, something to go into the market with to buy and sell, then that is a risk he ought to take, and we are not to bind ourselves perpetually, as long as these bonds are running, to a British currency any more than we should bind ourselves to American or French or any other currency. That is my case in favour of the amendment, to delete the words "in British currency."
You cannot be thinking in this matter of the landlords. The thing we have to think of is the position and the needs of the State. Now we know that these Bonds will go to the market. They will go on to the market immediately that they are allocated by the Judicial Commissioner and any theories we may have about their being looked upon as a means of providing income will not prevent that. We will get, as a result of the British guarantee, certain of the advantages of borrowing abroad and there are always advantages in borrowing abroad. In our case, particularly, there are always advantages in borrowing abroad. It means that this big sum will not be thrown on our local Stock Exchanges. It means that we will be able in another type of borrowing to borrow at home, and while we are getting the advantages of borrowing abroad through having this money placed outside the country we have the advantages of a loan ourselves here in the matter of income tax. We will get income tax off all this. If we borrowed abroad we would only get income tax from the Irish holders of it. I think it is incorrect to suggest that there was any idea of providing income primarily and normally for spending within the country. I think the rents for which these dividends have been substituted were not so much spent within the country. At any rate, the position is that I do not see how we could possibly have the advantages of the British guarantee without specifying that the bonds—interest and principal—should be repaid in British currency. The British Government must know in guaranteeing that it is making itself responsible to the bond holders, present and future, for some definite thing. People will buy and pay a price for these bonds on the strength of the British guarantee. They will believe that these bonds will be as good value to them, when they come to sell again, as any bonds of the British Government at a similar rate of interest. But if the British were to give us a guarantee and it were to be open to us to alter our currency arrangements, so that £1 here was worth 2s. in British currency, it would mean that the British Government had been put in the position of making themselves a party to a fraud on investors. Either that, or they would have to make up the difference between the interest that people would get at our rates and the interest they were entitled to expect to get on the British basis. We simply could not have this guarantee unless we specified clearly that the interest and sinking fund would be in terms of British currency. I do not anticipate that any particular question can arise on this point for a very long time. I think that a country like this—a country still up against the difficulties that we are up against—cannot afford to enter upon currency changes. I think that a very considerable period of years must elapse before any Government will take up the question which, I believe, must eventually be taken up.
As many as eighty years?
Not nearly as many as eighty; that is, in my view. We will be in no position of difficulty when that day comes. As I pointed out, the other night, all sorts of countries have foreign borrowings and they pay in the currency of the country in which they borrow. We are certain of the advantages of having borrowed in the British market and also the advantages of having borrowed in our own market: that is in the matter of income tax, death duties, etc. We are getting those advantages of having borrowed in the British market and the price we must pay for those advantages is, I submit, that we specify that we repay in British currency.
The Minister has now made clear that there were certain conditions attached to this guarantee.
They are shown on the face of the British Act.
They were quite open conditions. I am not making any suggestion to the contrary. I maintain that this is one of the conditions that are not involved and not implied in the Land Act and that we are certainly not bound in any way. The Land Act was passed at the end of a very long series of agitations. This country went through a great deal of trial, trouble and suffering in consequence of the land system—the system of tenure and so on. I think it will be admitted by anybody who has gone through any of the phases of those agitations, or by any reader of Irish social history, that the central evil of the land system was absenteeism. Landlords drew their rentals and spent them across the water. There was no sense of responsibility to the land from which they drew their rentals or to the tenants from whom they drew their rentals. The essence of all the agitation and turmoil and strife was absenteeism. This Bill contemplates a continuance of absenteeism. It contemplates the payment, as long as the bonds are unredeemed, of interest in British currency so that—and this is the sole purpose—the persons obtaining the benefit will be enabled to spend the proceeds in England or in some country other than Ireland, on the basis of British currency. There is the implication that the persons who are going to draw this amount of money per year will spend that outside the country. I say that we ought not to bind ourselves in this Bill, which is supplementary to the Land Act, to any such implication at all. We are failing in our duty to the people by accepting any proposition of the kind. We are inviting the ex-landlords—as they will be—to continue the practice of spending their incomes from land in other countries than Ireland. Therefore, I think we ought to refuse to accept the Bill as it stands and accept the amendment.
I move to report progress.