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Dáil Éireann debate -
Tuesday, 2 Jun 1925

Vol. 12 No. 1

DAIL IN COMMITTEE. - LAND BOND BILL, 1925—THIRD STAGE (resumed).

Consideration resumed of the following amendment to Section 3:—
"In lines 44 and 47-8 to delete the words ‘in British currency.'" (Mr. Johnson.)

There was some discussion on this amendment before. I do not know if it is necessary to repeat the arguments, but I was hoping that we might have the Minister's views on the case adduced before taking a vote.

I think I gave them on Friday, when the Bill was last before the Dáil.

Amendment put and declared lost.

I move:

In lines 50 and 51 to delete the words "within eighty years from the 18th day of December, 1924."

I have not heard any reasons given why these words should be inserted. There is nothing in the Land Act that would indicate the necessity for them. As far as I can read, no good reason has been put forward here or elsewhere why this provision should be inserted. Obviously, it is one of the conditions which the British authorities have laid down before they would agree to give this guarantee. Unless some reason is shown why there should be a limit of eighty years imposed, I think we ought not to agree to the insertion of these words.

As a matter of fact, I do not think these particular words will operate in any particular way. The position is more or less as Deputy Johnson stated, that the British guarantee will be given if, amongst other things, we provide for the establishment and regulation of a sinking fund for the purpose of redemption at par of the securities to be guaranteed within a period of eighty years. I think all the securities will actually, under the arrangement existing, be redeemed before eighty years. That does not appear distinctly on the face of the Bill. The period of the bonds is arrived at by making certain calculations, and these are complicated in certain respects when dealing with untenanted land and taking into account the period of the issue of the bonds. In order to secure the guarantee the bonds must be issued within a period of eighty years. If land purchase were not completed within eighty years, any bonds which might be issued might be bonds which could not obtain the British guarantee, and would be bonds which would be lesser in market value than those previously issued. It seems to me that we might possibly be able to convince the British Treasury when we were asking them to proceed to give their guarantee that the provisions of the Land Act as it stands mean that the bonds will be redeemed within eighty years. We want to put the matter beyond doubt, and we are specifically providing that the arrangement shall be that they shall be redeemed within eighty years.

Amendment put and declared lost.

I move:—

In sub-section (3) to delete the proviso, lines 5 to 9 inclusive, page 3, and substitute the words "Provided that any bonds may be redeemed at any time either by drawings or otherwise as the Minister for Finance may direct."

I do not know what Deputy Wilson's arguments would have been, but as far as I can see the principle proposed in the Bill is this, that thirty years must elapse after the issue of the bonds before the State has legal power to redeem them. Of course they may purchase them quietly in the market, but it will not be possible for them summarily to redeem the bonds before the expiration of thirty years, that is if the holders are inclined to hold them. Of course money may not always be quite so dear as it is at present; the time may come when money may be had for 3½ or 3¾ per cent. In fact, from the present tendency of the British Government it may be taken that within the next few years you will have conversion loans at a modified rate of interest. The five per cent. War Loans will automatically become due after 1927, I think, and the British Government, if it so wishes, can redeem them after 1925. But after 1927 they can offer to redeem them, and the holders must surrender them at the redemption value. I think, in view of this, that the Government would be well advised not to make this a thirty years' period, that it is rather too long in view of the approaching cheapness of money, and that it would be best not to lay down a specified time.

I do not know that I have anything to add to what has already been said in reference to this proposal of Deputy Wilson. A certain misunderstanding, I think, did occur in the previous discussion. I do not hold that we are in any way bound in honour as a State to take steps to secure the British guarantee for these bonds; I think that it is purely a matter of expediency and interest. But we are, in arrangements that concern ourselves, in things that are wholly within our own power, I hold, bound to endeavour, so far as we can, to see that our bonds are kept up as near to their face value as possible. I do not think that it is at all admissible for any Parliament or any Government to desire and to try to arrange for the depreciation of its own bonds. That would be exactly the same thing as arranging for the depreciation of your currency. These bonds are issued at a rate of interest that is certainly not unduly high. If we do not provide for their redemption at par, there is, of course, the first obvious point which arises in connection with the matter that we are now considering, that the British guarantee will not be available. There is also the further point that the reason why we were asked by Deputy Wilson to eliminate the provision for redemption at par was that he wished the bonds to fall in the market.

Can the Minister quote any statement of Deputy Wilson to that effect?

I think that that was certainly the whole tenor of his remarks. There was no sense at all in them if they did not mean that.

Does the Minister not realise that Deputy Wilson's idea was not to have the bonds artificially inflated?

You can redeem at par by drawings. If the price goes above par, of course drawings are not a factor. But the whole argument that Deputy Wilson put forward was that we should not do certain things, because if we did we would raise the price of our bonds above some depreciated price at which they otherwise would be. That is, he argued that we ought to take a certain line with the idea of letting our bonds sink below their face value. It seems to me that a State simply cannot carry on on that basis; a State cannot afford to do the shabby tricks to which some disreputable money-lender might resort. Any failure, in my view, to do things that we are competent to do, as far as our internal arrangements are concerned, with the object of having our bonds to sink below their face value, is entirely wrong. I might point out in this connection that the provision already exists in Section 1, I think, of the Land Act of 1923, for the redemption of bonds at par. It is now proposed in this amendment that we should strike out the provision. We have actually gone a certain length in the issue of bonds. So far they have not been allocated and issued to the individuals, but they have actually been created in the books of the Bank, with the provision that they shall be redeemable at par.

Deputy Wilson asks us to strike out the provision for redemption at par with the idea that by doing that, amongst other things, we should cause our bonds to depreciate. That sort of thing would certainly be in the nature of sharp and shabby practice. I have no belief that this House, or any other House likely to be elected, would agree to that proposal. Certainly if a Government is to use its powers for the purpose of escaping obligations that it has itself created and undertaken, you would have an atmosphere that would do very great injury. I do not know whether Deputy Wilson could put up any other kind of argument in favour of this or not if he were here, but he has spoken at length on this Bill on two or three occasions, and I have heard nothing else suggested by him. It is undoubtedly a fact that, as I say, apart altogether from the question of our inability to get a British guarantee if no provision is made for redemption at par, making a provision in the way that Deputy Wilson would desire would have the most prejudicial effect on the bonds, because the only thing then that would be certain about them would be that they were to bear interest at 4½ per cent., but from every other aspect they would be very undesirable as an investment, and they would go down even to a more serious extent than has been indicated in discussions here. We talked about the manner in which they would go down if there was no British guarantee, but if you add to the absence of a British guarantee such a provision as this regarding redemption, there is no doubt that the bonds would go down in the most serious way. I think that the whole attitude of Deputy Wilson in this matter is so grotesque that it hardly merits a serious answer or serious consideration.

There is just one part of this amendment that does not recommend itself; it is the part that provides for the exclusion of certain words. If you take out that and consider the rest of the amendment I think, perhaps, it would be acceptable. In conjunction with the other part the amendment is certainly objectionable. Without the other part it is not so objectionable, and, as a matter of fact, I think it would be very commendable. I can understand the price of those bonds when issued not reaching par, or anything near it. When they come on the market, provided the Government has money accruing from the Sinking Fund, would it not be good business for the Government to keep them as near par as possible, and would it not pay them to buy them in? Circumstances alter cases.

They would not dare to do so now in view of what they have said.

The British Government Bonds issued in connection with land stock fell to 47 in some cases, and they ranged about the price of 50 to 52 for a long time. Would anyone say in the ordinary course of affairs that the British Government would be doing wrong or be guilty of sharp practice if they went into the market and bought up these cheap bonds? It is quite possible that they did it. How does anyone know who bought them up? I think the same liberty should be taken by you. I think it would be good business from the State point of view to buy up bonds when they come on the market in order to keep up the price of bonds. I do not think such an action would be sharp practice or discreditable either to the State or the individual.

The Deputy overlooks the fact that the whole point of Deputy Wilson's amendment goes if you make arrangements for redemption. The Land Act provides that every penny of the Sinking Fund which becomes available will be used for redemption purposes. If the bonds were to sink below par in spite of any precautions we could take it certainly would be better for the Government to use any funds it has to buy them up on the market. That is a thing the Government will and can do. For instance, money that comes into the Savings Bank can be invested. We can invest that money. There are also other monies like teachers' pension funds and various departmental funds, all of which can be invested in any securities the Minister for Finance thinks are desirable. These funds will be invested, and will be used for the purpose, amongst other things, of supporting Government securities like those which temporarily are sinking below par.

Does the Minister appreciate the fact that the very minute you come to purchase stock it appreciates? That is an economic law.

Yes, that is why the Government purchases them. An individual purchases to make a profit. The Government purchases its own stock for the purpose of appreciating it.

I do not consider it my bounden duty to take up the cudgels for Deputy Wilson, but I think he has been done a great injustice by the comments made on his speech in this matter here, and particularly in the public Press. So far as I can understand Deputy Wilson's argument, it is that the practice which the Minister now confesses has been carried on for some time might be continued in respect of this particular stock as well as any other stock. I think it is unjust to charge him with having said he desired deliberately to set about a scheme for depreciating the value of those bonds. I think I am correct in saying that he did no such thing. Are we to understand, apart from this question of redemption at par out of the land bonds fund, that the State is not going to buy any? We might have understood that twenty minutes ago, but we know now that other funds under the control of the Government may be used to purchase land bonds to have the same effect that Deputy Wilson argued would arise from the adoption of the argument he used. But indignation was expressed the other day when it was suggested—that most horrible thought—that the benefit of the market for land bonds if there were a depreciation should be availed of for the interests of the farmer purchaser. That is bad presumably, but it is all right when the State for other purposes comes and purchases at a low price.

I maintain, in the absence of Deputy Wilson, so far as I have understood Deputy Wilson, that he made no suggestion of any kind that would warrant the statement that he desired that State ingenuity should be used to depreciate land bonds so that they could be bought in cheaply. He did suggest that in the absence of artificial means of sustenance such as is provided for in this Bill, they might be purchased at the market price. The Minister proposes to sustain those bonds by artificial means and make it difficult to purchase them even through those subsidiary State funds. As I said in the beginning, I think Deputy Wilson's case has been misstated. He has been charged with having advocated that the State should scheme for the purpose of reducing the value of the bonds in the market and buy them in cheaply. I think that is unjust to Deputy Wilson.

I hope it is, and I would be very glad to hear it too.

Amendment put and declared lost.
SECTION 4
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 3 now contained therein, that is to say:—
"3. (1) Every claim against the purchase money shall be paid and discharged, so far as the land bonds representing the purchase money are sufficient for the purpose, by transferring to the claimant out of the land bonds representing the purchase money land bonds to such amount in nominal value as, with the addition of any interest accrued but not paid thereon at the date of the order of the Judicial Commissioner allowing the claim, shall (after deducting the amount of any interest on such land bonds which may be receivable by the Land Commission after that date) be equivalent to the amount of the claim or (as the case may require) to that fraction of the claim which bears the same proportion to the whole claim as the amount in nominal value of the land bonds available for the partial discharge of the claim bears to the amount in nominal value of the land bonds which would be required to discharge in accordance with this section the full amount of the claim.
"(2) Payment of a claim against the purchase money in accordance with this section shall be deemed to be a satisfaction of the claim to the extent of the amount of the nominal value of the land bonds transferred to the claimant in payment thereof with the addition of the accrued interest mentioned in the foregoing sub-section, and the deduction of the interest deductible under the foregoing sub-section.
"(3) In fixing the redemption price of superior interests the Judicial Commissioner shall have regard to the price received by the vendor for the lands out of which such superior interests issue.
"(4) In this section the expression ‘claim against the purchase money' includes the following things so far as the same are respectively payable out of the purchase money, that is to say:—
(a) the redemption price of all superior and intervening interests, incumbrances, and other claims attaching to purchase money paid by means of 4½ per cent. land bonds or payable out of such interests, incumbrances, and claims, and
(b) all arrears of and interest on such interests, incumbrances, and claims, and
(c) the costs of making title to such interests, incumbrances, and claims, and
(d) the vendor's costs of sale.
and the person entitled to receive the amount of a claim against the purchase money is referred to as the claimant."

I move:—

To delete all from the word "to," line 12, to the word "claim," line 24, inclusive, and substitute the words "equal in nominal value to the amount of the claim, and in every such case the claimant shall be entitled to the interest accrued since the appointed day on the land bonds so transferred to him."

This provides for a very considerable simplification of the Bill as originally drafted. It is followed by one or two other amendments. It means that where there is a charge against an estate a certain amount of bonds shall be allocated to meet that claim, and that interest shall cease to be payable against that claim from the date of vesting, and that the person shall be entitled ultimately when he gets his bonds to get the interest that accrued on them from the date of vesting. As a matter of fact, the original Act was rather obscure on that point, but what we now provide is in accordance with the decision that has been given by the judicial commissioner, but we want to put the matter entirely beyond doubt for the future as well as for the present by making this particular provision in Section 4.

Amendment put and agreed to.

I beg to move the following amendment:—

In sub-section 5, page 3, line 46, to delete the word "in" and substitute the words "at the close of."

This is a consequential amendment.

Amendment put and agreed to.

I beg to move:

In sub-section 5 (g), page 3, to delete lines 60, 61 and 62, and substitute the words "the last day of the previous half-year and before the dividend day accruing in the first-mentioned half-year to the period between such issue and such dividend day."

This is really a drafting amendment to provide for transactions done on the last day of the half-year.

Amendment put and agreed to.
Question: "That Section 3, as amended, stand part of the Bill"—put and agreed to.
SECTION 4.
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 3 now contained therein, that is to say:—
"3. (1) Every claim against the purchase money shall be paid and discharged, so far as the land bonds representing the purchase money are sufficient for the purpose, by transferring to the claimant out of the land bonds representing the purchase money land bonds to such amount in nominal value as, with the addition of any interest accrued but not paid thereon, at the date of the order of the Judicial Commissioner allowing the claim, shall (after deducting the amount of any interest on such land bonds which may be receivable by the Land Commission after that date) be equivalent to the amount of the claim or (as the case may require) to that fraction of the claim which bears the same proportion to the whole claim as the amount in nominal value of the land bonds available for the partial discharge of the claim bears to the amount in nominal value of the land bonds which would be required to discharge in accordance with this section the full amount of the claim.
"(2) Payment of a claim against the purchase money in accordance with this section shall be deemed to be a satisfaction of the claim to the extent of the amount of the nominal value of the land bonds transferred to the claimant in payment thereof with the addition of the accrued interest mentioned in the foregoing sub-section, and the deduction of the interest deductible under the foregoing sub-section.
"(3) In fixing the redemption price of superior interests the Judicial Commissioner shall have regard to the price received by the vendor for the lands out of which such superior interests issue.
"(4) In this section the expression ‘claim against the purchase money' includes the following things so far as the same are respectively payable out of the purchase money, that is to say:—
(a) the redemption price of all superior and intervening interests, incumbrances, and other claims attaching to purchase money paid by means of 4½ per cent. land bonds or payable out of such interests, incumbrances, and claims, and
(b) all arrears of an interest on such interests, incumbrances, and claims, and
(c) the costs of making title to such interests, incumbrances, and claims, and
(d) the vendor's costs of sale.
and the person entitled to receive the amount of a claim against the purchase money is referred to as the claimant."

I beg to move:—

To insert after line 31 and before the clause numbered (3) commencing on line 32, the following:—

"(3) Notwithstanding the provisions of this section, the Judicial Commissioner may, in any particular case in which justice appears to him so to require, make such order inconsistent with the foregoing provisions of this section as appears to him to be proper in regard to any claim against the purchase money or the land bonds transferable in payment thereof or the interest on such land bonds."

Amendment put and agreed to.

I move:—

To delete all from the including the word "with" line 29, to the word "sub-section," line 31.

This is a consequential amendment.

Amendment put and agreed to.

I beg to move:—

To delete all from the word "to," line 12, to the word "claim," line 24, inclusive, and substitute the words "equal in nominal value to the amount of the claim, and in every such case the claimant shall be entitled to the interest accrued since the appointed day on the land bonds so transferred to him."

This provides for cases such as the payment of income tax where interest would not run and where the bonds would be given apart from any interest payable on them.

Amendment put and agreed to.
Question—"That Section 4, as amended, stand part of the Bill"— put and agreed to.
SECTION 5.
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 27 now contained therein, that is to say:—
"27.—(1) Where land is vested in the Land Commission by virtue of this Act, the dividends on the land bonds representing the purchase money shall, pending distribution thereof, be paid to the Land Commission and the Land Commission shall pay interest on so much of the purchase money as is for the time being undistributed at the rate of 4½ per cent. per annum to the vendor, or such other person or persons as shall appear to the Land Commission to be entitled thereto.
"(2) The interest payable by the Land Commission section shall be paid in money, save that where in pursuance of an order of the Judicial Commissioner on the distribution of purchase money land bonds are transferred on such a date that the transferee becomes entitled to the dividend which was accruing thereon at the date of the said order, the interest for the period from the dividend day next preceding the date of the order up to the date of the order on so much of the purchase money as is represented by the land bonds so transferred shall be paid—
(a) where the transfer was made in payment (whether in whole or in part) of a claim against the purchase money, by the transfer of land bonds equivalent in nominal amount to the nearest pound to the interest to be paid, and
(b) where the transfer was made in payment of the residue of the purchase money after the satisfaction of all claims thereon, by the transfer of the residue of the land bonds representing the purchase money."

I beg to move:—

To delete all after the word "if," line 53, page 4, to the end of the section, line 19, page 5, and substitute the words "Section 27 now contained therein were omitted therefrom."

Amendment put and agreed to.
Question—"That Section 5, as amended, stand part of the Bill"— put and agreed to.
Sections 6, 7, 8 and 9 and the title ordered to stand part of the Bill.
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