Dáil Éireann debate -
Tuesday, 9 Jun 1925

Vol. 12 No. 5

DAIL IN COMMITTEE. - BEET SUGAR (SUBSIDY) BILL, 1925—SECOND STAGE.

MINISTER for FINANCE (Mr. Blythe)

I move that the Sugar Beet (Subsidy) Bill, 1925, be read a Second Time. The question of the encouragement of the initiation of a beet sugar industry in this country has been under consideration and under discussion for a very long period. The present Government have been examining the matter for a considerable time, and have given as much care to its consideration as, I think, any matter with which we have dealt. That degree of consideration is necessary by reason of the fact that it became apparent to us that the starting of the beet sugar industry would be very costly. Whatever we do now is, in a sense, experimental. It may possibly turn out that the beet sugar industry here, through climatic or other reasons, might scarcely ever take root in such a way as to carry on without a substantial subsidy. On the other hand, the indications we have are that this country is suitable for the cultivation of beet crops, and that a high sugar content can be obtained, but no firm will undertake the starting of a factory here, and the outlay and risk involved, without very substantial Government assistance. In Great Britain, very considerable assistance, assistance approximating to the amount of assistance which we will have to give, has been given. In countries where the sugar beet industry has been established, it is, in a sense, one of the actual props of their whole agricultural system. Benefits will accrue to this country from the establishment of the industry on a healthy basis, and these benefits will be very great indeed. It will put many thousands of acres of land under cultivation. It will increase the tillage area. Beet can only be grown in rotation, and for every acre of beet grown there will have to be one or two other acres also under cultivation. Its cultivation demands heavy manuring and very good tillage. The result of that will be found of benefit to farmers in the returns which they will get in the subsequent crops. The pulp which comes back when the sugar is extracted, or extracted as much as possible, will be available for stock, both for milk production and fattening. The industry, moreover, gives employment to a considerable number of men at the slack season of the year. It is in the late autumn that the manufacture of sugar from beet commences, and that goes on until the beginning of the new year. It gives employment when employment is most required in the countryside. It is clear that the manufacture of beet sugar can be carried on without substantial Government subsidy only when the farmers are able to grow crops with a high sugar content.

It will be a considerable period of years before the results that are necessary to make the industry a purely economic one can be achieved. We will have to discover the variety of beet best suited to this country, and we will have to have the farmers educated in the growing, tillage, cultivation, and manuring of beet; we will have to have the farmers understand the benefit of crops in rotation, and to get them to be willing to cultivate beet at the lowest profit consistent with the proper carrying on of their tillage operations. That will certainly require a certain period of years, and, in addition to the actual manufacturing side, the initial difficulties are considerable. In this country there are transport difficulties, and certain other disadvantages as compared with other countries. These disadvantages will be only very slowly overcome, and there will be the necessity for bringing in a considerable number of foreign workers in the beginning years. That will be a very expensive operation. Men are brought out of their country to another country that is unknown to them, they are separated from their families, and higher wages will have to be paid to them. You will have also all the difficulties incidental to dealing with the repair of the factory. In that respect it will probably be necessary to pay a higher subsidy than will be necessary at any-time in Great Britain. Great loss is incurred if there is any interruption in the process of extracting the sugar. If any breakdown of the plant occurs that cannot be immediately remedied the loss will be considerable, and consequently mechanics and a repair plant will have to be retained. In England, where you have big engineering shops spread all over the country, a lesser repair plant and lesser number of mechanics are necessary. Here you will have to make provision for dealing on the spot, by your own staff, with matters that in England would be dealt with by adjacent engineering firms. You have to have duplication in England even of certain items of plant and equipment. Here you may have to have triplication. Then, in this country you shall have, probably, in most cases to pay an appreciably higher price for the coal. Coal in the actual manufacture of sugar from beet is a very substantial item. The coal bill amounts to well over 50 per cent. in the cost of manufacture of sugar from beet. If these particular facts are had regard to, Deputies, I think, will realise that the subsidies we propose to pay compare favourably enough with the subsidies in Great Britain.

Mr. JOHNSON

Could the Minister say what amount, per ton, of sugar is the cost of manufacture? He speaks of 50 per cent. being for coal. What would be the quantity of coal per ton of sugar?

Mr. BLYTHE

I could not say.

Mr. P.J. EGAN

It will be a ton of coal for each ton of sugar.

Mr. BLYTHE

We are paying a rate of subsidy which over the ten years will work out at about an average of 23/- per cwt. The British average over the ten-year period works out at 15/8—that is at present. But, for the purposes of comparison, it is necessary to take into account the fact that we are paying no subsidy on molasses. The British are paying a subsidy of 8/7 a cwt. on molasses containing 70 per cent. or more of sweetening matter. The fact of our paying no subsidy on molasses will be that for the purposes of comparison 10d. might be added to the British subsidy, or 10d. deducted from our subsidy. That is, there is 10d. actually less in the difference over the ten-year period than appears simply in the figures of 23/- and 15/8½. Of course, we must bear in mind the fact that we are beginning. The experiment in Great Britain has been going on for some time. You have the Kelham factory and the Cantley factory, which started manufacturing in 1912.

If we compare what this first factory started by us will cost with the cost of Kelham, we will have a fairer idea of what the comparison is. A company called Home Grown Sugar, Ltd., was formed in 1920 for the purpose of carrying on the manufacture of sugar at Kelham. They issued capital amounting to £500,000. The British Government subscribed half and guaranteed a dividend of five per cent. over ten years on the 250,000 shares issued to the public. It was provided, moreover, that the capital subscribed by the Government should not begin to earn dividend until 31st March, 1930. Later on, the shares were written down from £1 to 5/-, involving a capital loss to the Government of £187,500. The Government also had to pay, under its guarantee, dividends amounting to £32,500, and there was a loss of dividends on its own capital which might be put down at £125,000 per annum.

Then, there was the fact that the Kelham factory had the assurance of a subsidy over 12 years, as against our ten years, and the average rate of subsidy for their first ten years amounted to 19/-. If we actually take the subsidy at 19/- for the first ten years, as compared with our first ten years at 23/-, and if we add to that this £125,000, loss of interest, £187,500, loss due to the writing down of capital, in addition to the £32,500 for dividends that it had to pay to the public, it will be seen that the actual variation, when all the factors are taken into account, between the British subsidy and our subsidy, is very small indeed. If the amount of sugar produced at Kelham over the period were to be somewhat low and not come up to the amount we estimate, it may be that their subsidy, taking into account the capital losses, will actually be higher than ours. We are estimating for the production of 86,000 tons of sugar over the ten-year period.

It is an extremely difficult thing to arrive at any basis on which to fix a subsidy. It was found very difficult in Great Britain, even up to the present, where they have more experience than we have. People have suggested that the rate of subsidy which we have agreed to pay this firm is excessive. It is true that if all goes well the company obtaining the concession may hope to make very substantial profits. But, anything may occur to reduce the amount of profits that are to be looked for. They may find it impossible to get the full quantity of beet that is looked for. A factory is being built which ultimately may be raised to the capacity of 15,000 tons of sugar per annum. It will begin with the production of about 5,000 tons of sugar per annum. If the extent of the area under sugar beet were not to expand as rapidly as it is hoped, there would be naturally less profits. Any sort of difficulty might arise which would be to the disadvantage of the company.

The way that we went about fixing the subsidy was something that was very nearly a matter of receiving tenders. We appointed an inter-Departmental Committee to examine the matter of starting a sugar beet industry here. It was known that the Government contemplated legislation enabling it to give subsidies for the carrying on of the manufacture of sugar beet. That inter-Departmental Committee interviewed anybody who had any sort of proposition to put up. In addition to that, it actually went to the Continent and interviewed people engaged in the manufacture of sugar beet there, with a view to their undertaking to start the industry here. The offer that was made by M. Lippens was the best offer that came in.

Another Continental sugar manufacturer who is engaged in the industry in Great Britain was also prepared to start a factory here, but he was prepared to start on terms which worked out at an average of 24s. 2d. per cwt. over ten years. That is 1s. 2d. higher than M. Lippens. M. Lippens, with whom the Government proposes to enter into an agreement as soon as this Bill has been passed, is a man of as good standing as could be got to undertake this work. He is President and head of a large sugar-manufacturing firm in Belgium, a man of high reputation and is in every way competent to carry this new enterprise to success.

There has been a certain amount of discussion of another offer which was put before the inter-Departmental Committee and before Ministers. I do not know whether I need go into that other offer at any great length. It was an offer which the Government regarded as being entirely unacceptable and which did not deserve to be treated seriously. There were quite a number of factors which led the Government to take that view. In the first place there was a provision that the Government should put up £150,000 of capital, and that only a comparatively small sum should be put up by the concessionaires until after the factory had been completed. The Government were to take preference shares to the value of £150,000, and were to pay cash.

The concessionaires were to take £100,000 in preference shares, but they were only to pay up 2/6 per share on allotment, and the remainder was not to be paid until after the factory had been completed. In addition to this they were to take 100,000 shares of 1/- each, which they were to pay up, amounting to £5,000. Holding something like two-fifths of the capital, they were to have three-fifths of the voting power. They were to have three directors on the Board to the Government's two directors. They were also to have three-fifths of the profits. The position, as far as I see it, would have been that the Government would put up the money, £150,000, which substantially would have erected the factory. The other shareholders in it were to be a firm of manufacturers of plant, not sugar manufacturers, although it is true the Skoda works do maintain a staff of experts in the manufacture of sugar, who will show anyone who buys plant how to use it. Their interest in the industry is primarily the interest of the manufacturers of plant. Our position was to be that we would put up the money to erect the factory. After the £150,000 was spent we would then be in the position that, if the new company were to allege that the subsidy suggested in the beginning was insufficient, with our money sunk in the plant, we would have no alternative but to increase the subsidy or see our capital go to waste. That was the sort of proposition which the Government could not accept.

There was also the aspect of their offer concerning the price to be paid for beet. It will be obvious to Deputies that if this experiment is to be a success at all the first consideration is that farmers should be induced to grow beet, that they should be induced to embark on the cultivation of a new crop which they know nothing about, to which they have not been accustomed, and which will not fit in with their ordinary methods or ordinary rotation. If a sufficient price is not paid to the farmers, then the whole thing fails. If the experiment were to be made on the lines suggested, and if £150,000 of Government money had gone into the creation of a factory, we could not have allowed the £150,000 to go to waste, simply because the terms of the subsidy did not permit of a sufficient price being paid to farmers to induce them to grow the crop. We regarded it from that aspect as being wholly illusory.

Then there were provisions that the price to be paid to the farmers, which was low in the first instance, 42/- as against 50/- without a contract, and 54/- with a contract for three years, which will be paid by M. Lippens, should be reduced or increased by 1/- per ton for every shilling in the wholesale price of sugar above or below 45/- per cwt. That meant again that the proposal was not one to be seriously accepted, because a reduction such as we recently made in the Customs duty on sugar reduced the wholesale price of sugar, very naturally, by a very substantial amount, and would have meant a big reduction of the already too low price proposed in that scheme to be paid to the farmer.

As a matter of fact the agent that put forward that scheme was not himself a sugar expert. He was prepared to put forward a scheme about anything. He came first with a scheme for afforestation, and when he found nothing doing in afforestation he put up a scheme for the manufacture of sugar. No doubt, when sugar is off, we may have a scheme for other things. We did not regard that person as a responsible expert whose offer was one that we should go out of our way to discuss with him.

We simply let it come in as other offers came in. We took the best offer. Both in regard to the price paid for beet and in regard to the subsidy required, we regard the offer of Lippens as being satisfactory. It is higher than the subsidy that is being provided in England at present, but it is not higher than what Kelham would cost, having regard to the capital loss. It is a few shillings higher only, if we have regard to the subsidy, apart from the capital loss. There are those facts that I stated in the beginning that will tend to require a greater subsidy here than in Great Britain. First of all in regard to distance. It will probably be more expensive to bring workers here and keep them here; the price of coal will be higher, and then there is the question of engineering facilities. All these things will have their effect.

We may be asked why we should propose, as we do propose, for the present, to confine ourselves to one factory. It has been said that we could get great results in employment, could give a great fillip to tillage, by arranging for a number of factories each producing, say, 10,000 tons of sugar. We might have six, or seven, or eight of them if we were to supply our own sugar requirements. But the production of sugar on a large scale, on a scale to meet our requirements, at the cost at which it will be produced under this scheme would not really be a business proposition. What we are paying for now is the education of the public, of the farmer, or people who may adventure their money in sugar production. At the end of ten years I do not think that there will be any chance that the sugar industry will be on its feet sufficiently to carry on without any subsidy, but it is to be hoped that it will be in a position to carry on for some other period with a very much reduced subsidy. When things have advanced to the stage that we can get other factories started at a rate considerably below this it will become a proposition for the starting of other factories. If we can even get factories at something like the rate that will be paid in Great Britain henceforward it would be a proposition. But the way to look at this present subsidy when you are thinking of employment and of extension is: What would it mean per acre with a crop which would give, say, a ton of sugar to the acre—and that would not be a very heavy crop or a crop very rich in sugar? The subsidy will work out in the first year at £24 10s. per acre of cultivation. It will be obvious to anybody that if we are only thinking of employment, if we are only thinking of the present, that money at the rate of, I think, £122,500 for the first year, and increasing from that on, could be spent on other things to give greater employment, that is, if we were not thinking of the creation of a new industry, the education of the cultivators and the workers, we could not justify the setting-up of six or seven factories and paying for the cultivation that would result from the setting up of them a subsidy amounting to £24 an acre. It seems to me that under our conditions the only thing that we can justify is the beginning, getting the first steps taken.

When progress has been made, as it undoubtedly will be in a year or two, when it becomes apparent that farmers will grow beet, that farmers will be businesslike enough to realise that a valuable new asset is being created for them, and they will deal in a fair and businesslike way with the people undertaking the enterprise, when it becomes apparent to anybody who has an expert knowledge of this industry, not only apparent but proven, that labour will be reasonable and will carry on as labour in England is doing, and that there will not be holds-up which will make the conducting of the industry impossible, we may hope, I believe, in a very short time to have other people willing to take less than the subsidy now offered; perhaps not less than the first year, but less over the period. But after the most careful examination, after doing everything we could to get bona fide offers from people qualified to carry on the industry, this is the best offer we have been able to get. This is practically the result of our asking for tenders. We did not formally ask for tenders, but the thing operated exactly as if we had, and this is the best bona fide offer we have been able to get.

This is not extravagantly in excess of the subsidy that is being paid in Great Britain. Taking into account all the circumstances, it is a reasonable sum. It is a sum, as I have said, that gives a promise of good profits. It involves the investment, however, of very big sums of money. It is estimated that the complete equipment of the factory will run to the neighbourhood of £200,000 for the 10,000 tons. It also requires people who are skilled in the industry. It is not merely a question of money; you must have organisation and direction of knowledge. There are only a limited number of people who can be got. I have little doubt from what we have been able to learn, that the industry is one which will flourish here, that by the expenditure which we will undertake over these ten years— an expenditure running into nearly £2,000,000—we will have got an asset for our agriculture and also from the point of view of the economic life of the country, that would be worth a great deal more than that to us. We will have something that we had not before. In its own way, it will be something like the discovery of a coal or a gold mine; a new source of wealth will have been opened up. We gain nothing by waiting; it is a question not merely of soil and climate, although those come into it, but of psychology; it is a question of the readiness of our farmers to grow a crop and also to deal reasonably with the company which will be manufacturing the sugar, a question of the estimate of foreigners as to what the conditions are here.

We gain nothing by waiting; we only lose time. One of the curses of this country has been that time has always been lost, that opportunities were never seized, that the wrongs were never righted in time. The country simply lagged behind because things were not done. There would be no advantage in leaving this undone. If we did save £50,000 by leaving it undone for two or three years, we would lose a great deal more than £50,000. I think what has been a prop to agriculture in countries with similar climates, is most likely to be a prop here. Certainly, the advantage promised is so great that the speculation is the soundest possible speculation; it is a speculation that I think any sane and reasonable conception of national interests demands. I move the Second Reading of the Bill.

Mr. JOHNSON

I approached the consideration of this question with a distinct bias in its favour, but during the last week-end I spent some little time in getting together what material I could and very grave doubts arose as to the wisdom of this proposition but I was hopeful the Minister would be able to resolve those doubts and bring me back to my first thought in regard to this proposition. He has not done very much to remove those doubts. I rather think he has done something to confirm them. I want him to clear away one false impression or, if it is correct, I want to have it confirmed right from the beginning. It is in connection with what he had to say on it. The Minister said the cost of coal was fifty per cent. of the cost of production of sugar.

Mr. BLYTHE

No, I did not say that, but of the extraction of sugar from the beet.

Mr. JOHNSON

Of the extraction of the sugar from the beet. That is, if you get the beet free, the cost of coal is fifty per cent. of the cost of the extraction. Does that include the refining?

Professor MAGENNIS

Yes, in beet it does.

Mr. JOHNSON

Deputy Egan told us that a ton of coal was needed for the extraction of one ton of sugar. Assuming coal at fifty shillings or three pounds a ton inland—I think fifty shillings a ton, would not be an extravagant figure for large quantities—£5 a ton would be the cost of the production on the basis of coal being half the cost. If that is a fact it reveals a state of things much more damaging to this project than I had anticipated.

I find from the discussion in the British House of Commons when they were debating the Bill, a month or two ago, that one of the representatives of Lyle, Tate and Company, Sugar Refiners, said "The finished article costs about 24s. per cwt., or £24 per ton." There is a big margin between £5 and £24 and one would naturally say that margin is to cover the cost of raw material, risks, depreciation of machinery, and overhead charges. If raw material is delivered free, then the difference between £5 and £24 is to cover overhead charges, depreciation and profits. That is too great a margin. It suggests what I had already thought, that the proposition before us is that the first three years of the guarantee amounting to £441,000 on the estimated production will be enough to cover the cost of erection of a factory, and profits. That is to say, the first three years is intended to relieve the shareholders of any further liability and risks. Supposing, after the three years' contract with the farmers is completed, that the farmers refused to supply at the expected lower price for beets. There will be no risk to the shareholder because they will have already written off their investments in the first three years of working. The big margin between the working cost of production and the price, of sugar on the market, wholesale would require some explanation. I wish the Minister had been as careful to present to the Dáil on this proposal as much detail as has been given in regard to the Shannon Electricity Scheme. I wish we had examination by independent experts and the presentation of estimates, costs of production, prices, etc. Even though there may be greater variations it would have been calculated to give us more confidence in the proposal.

The case, as I understand it, is that it is worth two million pounds in ten years to stimulate new agricultural production and to improve agriculture in this country, that the sugar industry is quite subsidiary, and that the real value of this proposal is that it will stimulate better cultivation and improve farming. I think we ought to ask whether this is the best way to spend two million pounds in ten years to achieve the same end. Of course it is not by any means sure that we will be called upon to pay two million pounds. It is fairly certain that in the first three years we shall be called upon to pay £441,000, inasmuch as in those three years, an attractive price was guaranteed to the farmer for the production of beets. Contracts are expected to be three years contracts, at the price of 54/- per ton, for beets, "delivered at the factory"—that is a difference between the proposal here and that in England. After that period it rests with the company and the price of sugar as to whether they can afford to offer the farmers a price sufficiently attractive to encourage the farmers to continue producing beets.

The very clever, eloquent, and able advocate of beet sugar industry, Sir Alfred Wood, told us—this was sent by post to us, and I am sure every Deputy has received a copy—that in due course it was inevitable—he was speaking to English farmers, but the lesson is equally strong for Irish farmers—that farmers would be obliged to accept a beet price very much lower than the guaranteed price. He went on to suggest the possibility of not more than 30/- per ton for beet. I say it depends on the price of sugar, after the first three years. One might say everything depends on the price of sugar after the first three years, and whether the farmer can be induced to continue to grow beets. Perhaps it is worth while to look at the sugar position in the world. Before the war 46 per cent. of the world's sugar production was produced from beet. In 1923-24, only 26 per cent. of the world's production was produced from beet. There had been a considerable increase in cane sugar production. Plantations had increased rapidly both in Australia, West Indies, and East Indies. There is an increasing production of sugar in Europe. In 1912-13 the world's production was estimated at 18,187,000 tons. The war prevented production to a considerable extent; it certainly prevented the collection of statistics.

In 1919-20 the world production was down to 15,193,000 tons. It is worth noting, and it is important in view of the possible course of prices, that there has been a steady increase in the world production of sugar from 1919 to 1924-25. Last year the estimate was 22,633,000 tons, or four and a half million tons more than was produced in the year preceding the war. I do not know whether the demand has increased as rapidly as that, or is increasing more rapidly. It is difficult to say.

The fact that prices have varied so much as they have done in the last year or two, is a consideration which we must take into account. Perhaps it would be well if we endeavoured to arrive at some explanation of the rapid variations. In the two years 1923-24 the world price variations, apart from duties, were as much as from 22/- to 40/- per cwt., the pre-war price being about 15/- to 16/- per cwt. It is down again to about 22/- or 23/-; that was so about a month ago. These variations in the price of sugar suggest manipulation by market controllers and speculators. America and Holland are playing a strong game in this matter. While I do not pretend to understand anything about the manipulation of the markets, I can only say that where the course of production has been so steady in ten years, and where the consumption must be fairly steady, the rapid variations indicate to me more than anything else, a market manipulation.

We can contemplate, for the purposes of argument, that we may have, for the next three years, a production of sugar quite small in comparison with the world supply, and small even in comparison with the Irish demand. We can, however, only keep thinking of the next three years, the three years during which the farmers are guaranteed, inasmuch as after three years the price to the farmer is going to depend inevitably upon the world market price. We can only think of that period with certainty, and can only be comparatively sure in regard to that length of time. For that three years there is an estimated production of 18,000 tons of sugar, and the subsidy amounts to £441,000. During that time, provided the quantity and the quality of the beets are as such as may be counted upon to bring forth that quantity of sugar, the total sum payable under the guarantee to the farmers will be £405,000. That is to say, the State will hand to the factory £441,000, of which £405,000 will be paid to the farmers for beets. There will be £35,000 or £10,000 a year, of a margin over and above free raw material. I think we ought to have presented to us an estimate—not a binding estimate in this case, but a fair and reasonable estimate—of the normal costs of production in a factory which has been working. Then we can add a percentage, a reasonably ample percentage, to meet the novitiate stage, the risks of failure to supply beets in sufficient quantity and quality, or a failure of the man-power. We could add that if we had the basic price and the costs of production in a normally working factory.

For instance, if we can get from the Minister particulars of the cost of production in the existing British factories, not in the earliest years but say last year, it would help us to form our judgment on something like a sound foundation. The Minister quoted one of the factories, the Kelham factory, and to my amazement compared the subsidy paid over to the establishment of the Kelham factory, and likely to be paid over under the ten years proposal, with the amount likely to be paid over by this scheme, to the Irish factory. It is notorious that the whole Kelham scheme was a failure largely because of bad management. Certainly, it has not been looked upon as a fair test of a sugar factory, and to suggest that we must be prepared to go through a similar stage, like every child is supposed to go through measles, is asking us too much. I would have thought that that superstition had passed. On the question of experiments, the Kelham factory and the Cantley factory have been running for several years. These are the first experiments subsidised by the British Government and the amount of the subsidy was not unlike the amount of the subsidy proposed in this scheme.

They have had their experiments. They have proved now profitable. They have overcome their early difficulties. They have learned that they can grow beets in England suitable for sugar production and that it can be produced in paying quantities and that the farmers will respond, given a price. But there are six or seven factories being started in other parts of Scotland and England. Is it suggested by anybody that because in Norfolk, it was found possible to grow beets, and to make a commercial success of a factory, that that is sufficient to prove the possibilities in the North of Scotland or in any other part of England? Is that the contention? If it is, then I say it is equally proved that beet can be grown in Ireland. I recognise that the farming conditions are different. I recognise that, but it should not require that we must go through the same process of experiment at the same cost as they have done in England and that we must never take advantage of the experience of other people.

It seems to me that if it is possible now to persuade sugar companies to start factories on a basis of 19/6 for the first four years, 13/- for the next three years, and 6/6 for the last three years, in Scotland and parts of England which have not yet been touched by sugar factories, then we should get very much nearer to that in Ireland. The difference as between our proposals and the proposals now being put into operation in England, would mean for the same quantities, in the ten years not less than £869,000. I am prepared to admit that the circumstances of Ireland might require that we should pay something extra for added risks, but I am not prepared to say that we should bind ourselves to a sum of £869,000.

I think that we ought to be able to take some advantage of the experience of other countries. While for the first three years, we provide £441,000 to the factory as a subsidy and they pay to the farmer £405,000 for beets, if the estimates of the Minister is fulfilled in the ten years we shall have paid to the factories £1,961,000. Provided that the factory maintains the same price for the remaining seven years, as they have proposed to do for the first three years, 54/- per ton for beets, then the total amount paid to the farmers for the whole ten years for all the beets produced and supplied to the factory would be £1,935,000, or £25,000 or £26,000 less than is paid in subsidy to the factory. That is on the assumption that they maintain the price during the succeeding seven years that they have fixed for the first three years which the advocate of sugar beet growing promises is most unlikely. That brings us to the position of the Company in relation to the Government. The Company has had produced 86,000 tons of sugar and has received in subsidy £1,961,000, in the ten years.

What is the position of the Company? The cost of the factory is, according to different estimates, to be between two hundred and three hundred thousand pounds. Perhaps the difference between the two hundred and the three hundred thousand pounds is intended to cover floating capital. But they have this very big margin between current prices of sugar on the market and the actual cost of production. That is to be used for paying off the capital and for providing a substantial profit. I propose to quote from a weekly journal of last week an extract from a letter which is alleged to have been written by a director of this company, M. Lippens. It is a circular which has been distributed with a view to raising capital in Ireland towards this company, and it says: "From M. Lippens' letter, it will be seen that the earnings of the factory, together with the Government subsidy, are expected to be sufficient to amortise the entire capital expenditure in ten years, in addition to the payment of substantial dividends."

Now, I have no particular fault to find with that except that it proposes to run no risks. I think the probabilities are that they are hoping to amortise the capital within three years, but the Government has, during this time, paid over nearly two million pounds. Has it any sort of control of the company, has it a share-holding in the company in that period? I am reminded of the play produced by the Ulster Players where the fisherman caught herring. The dealer played a trick upon his neighbours by pretending that there were found, in the gullet of the herring, as if by a miracle, one pound notes. The fisherman wanted to know: "Who owns the herring, and who owns the pound notes?"

We have paid over to the company £1,961,000, and the company has got its beet as a consequence for nothing. At the end of ten years the capital expenditure has been wiped out, but who owns the factory? Is it the company or the people who paid over the £2,000,000. Of course the proposal is that the company shall continue to own it as usual. I think that there ought seriously to be in any scheme of this kind, which involves the paying over of large sums of money to a company to assist the establishment of a new industry, a definite share in the control of that company, and that there ought to be a definite share in the possibilities of profit during this period of ten years. While I am not influenced, and have not been influenced, by any arguments that have appeared in newspapers in regard to this matter, I feel that the suggestion, so far as the terms on which it may have been proposed— I say nothing of the suggestion that the Government should become part proprietors—to pay 49 per cent. of the share capital is one which is certainly worth supporting, so that if there is an exhorbitant profit during the period of ten years of subsidy, a share of it will come to the Treasury.

I would like, if the Minister for Agriculture is to speak on this matter, that he will give us his views as to whether this is the most beneficial way of spending £2,000,000. I have said more than once here that I believe what is required for agriculture is to give a direct stimulus to tillage. I have no doubt that this will be a stimulus to tillage, but unfortunately it will be a stimulus to tillage in a very limited area. Thirty thousand acres or thereabouts will be the limit of the stimulus until there are new factories set up in other parts of the country. I think the stimulus ought to be more general, and should not be confined to the factory area. I think that is a fault in this scheme so far as giving a stimulus to the extension of tillage is concerned. I feel that another fault in this matter is that it is going to extend tillage perhaps in a tillage area. The probabilities are that the factory area which will be called upon will be the area where at present there is a great proportion of tillage. It may extend tillage. To that extent it would be of value, but if we were going into a country where there is at present no tillage, or at least only a very small proportion of tillage, then we would have more satisfaction. There may not be very much in that point, and it may be said that whatever area is chosen, if the proportion of tillage there be small, it must inevitably be extended.

But, I fear, examining these proposals with every care and with a desire to support them if possible, I fear that they are going to be too costly, that the two million is not being spent to the best advantage, that we have not been provided with sufficient details to warrant us in practically voting that this agreement, which is only in broad outlines presented to us, should be confirmed. We ought to have much more details. Experiments as to the possibilities of the country producing beet in large areas and in considerable quantities, shall I say, could be tested at a cost of a few thousand pounds per year, even supposing the beets as a whole were shipped to the factory in England or dropped into the sea. I think, as an experiment in the possibilities of beet production of the right quality, it is altogether too costly. If we had any assurance after tentative experiments that factories could be brought here, for a much smaller subsidy, I do not believe there would be much loss of time if the Board of Agriculture were to test beet production in various parts of the country on a fairly large scale, but not on a factory production scale, to prove that not merely demonstration plots but fields could produce beet root for sugar of a paying quality, and on a paying basis. I think that experiments could be tried at comparatively small cost. I think, if that were true, it should be sufficient to satisfy the sugar speculator or the sugar factory investing company that they would be fully justified in opening a factory in Ireland for the promise of very much smaller subsidy for ten years than is proposed in this scheme. It will depend upon the course of the discussion whether I can give my support to the Second Reading of this Bill. I have tried to examine the question fairly and with a bias in its favour, and I have come to the conclusion that so far a case has not yet been made for this scheme with a very high subsidy over a period of ten years.

Professor MAGENNIS

It is interesting to contrast the attitude of a Labour leader in Ireland on this matter of beet sugar production with the attitude of a leader of the Labour Party in Great Britain, who in his official capacity of Minister of Finance —or Chancellor of the Exchequer, to be correct—was called upon to reply officially to the overtures of those who advocated an extension of beet-growing and a further support by way of subsidy or grant of public money to the beet-growing industry in England. Mr. Snowdon, speaking in the House of Commons on the 30th July, 1924 during an unemployment debate, makes this confession—Deputy Johnson has made his confession. He said he approached the subject with a bias in its favour; he is now sceptical, or if not actually sceptical, he at least adopts an attitude of philosophic doubt—

Mr. Snowden said: "I approached the consideration of this question, I will not say with hostility, but certainly not in a favourable or sympathetic frame of mind. I have given very long consideration to it, and the more I see of its possibility the more enthusiastic I become. I believe it is one of the very biggest things that can be done for British agriculture. I believe it will revive British agriculture and restore rural England, and I am confident, so successfully were the early stages, the early experiments, that the areas devoted to sugar-producing purposes will extend until this country is in a position to produce a great part of the sugar it requires. I think it is necessary if the scheme we are going to propose is to be carried through, that it should be carried through, I will not say with the unanimous approval of the House of Commons, but at least with a certain measure of agreement among all parties."

And as we know, the Subsidy Bill was carried through with the unanimous consent of all parties Now, this proposal of the Minister for Finance excites my imagination. It appeals to me. I have given very considerable thought and detailed study to this matter. In its own way, particularly to the agricultural industry, it is quite as big a thing as the Shannon scheme. I believe with one alteration the words Mr. Snowden used about England, can be used about Ireland. It is one of the very biggest things that could be done for Irish agriculture. I believe it will revive Irish agriculture and restore rural Ireland. Taking that view of the matter, the proposal of a subsidy in aid of this industry commends itself to me as really a State investment. What is it, after all? On closer investigation, it reveals itself to me as a State investment paid in instalments.

I probably inform Deputy Johnson of what he knows already as well as I do, if I quote what the Labour Minister for Agriculture said about these proposals.

There was a very big man, a very great man, now only a short time dead, who always took the big view of things—he had the courage to confess himself, though once the high priest of imperial federation, to be an advocate and apostle of the British Commonwealth of Nations and lent his support and his wide experience to the signing of the Treaty between Great Britain and Ireland, that is Lord Milner. Lord Milner, approached by the English Society for propaganda in aid of the sugar beet industry, said: "The question is whether for an object of this importance the subsidy, which is not a very large one, is not worth making. I have no doubt at all that the giving of the subsidy can be completely justified and it is not all a loss. I would like to impress these words not merely upon Deputy Johnson but upon members of the Executive Council as well as upon my own colleagues in the House.

"It is not all loss. Even what the Exchequer gives us is not all loss."

At that time he was speaking of relief from Excise Duties which were operative.

"There are very great compensating advantages. It is a great help to agriculture. It tends to improve agricultural profits, from which the State also derives benefit and which gives employment. It means a great deal of extra employment in agricultural districts—a matter of the greatest importance at the present time. It is a subsidy. All subsidies are objectionable but I would rather subsidise work than subsidise idleness."

That is really the alternative.

"I think, on national grounds, you have a strong case and I earnestly hope your effort will be successful."

This is, in the main, a question of subsidising the agricultural industry.

Mr. GOREY

Bosh!

Professor MAGENNIS

Deputy Gorey says that that is bosh. The experience of the world is on one side and Deputy Gorey is on the other side.

Mr. GOREY

I am satisfied.

Professor MAGENNIS

Athanasius contra Mundum, with Deputy Gorey in the part of Athanasius.

Major COOPER

I would remind Deputy Magennis that Athanasius was right.

Professor MAGENNIS

Athanasius was right in that controversy, but as Deputy Cooper is well aware, the phrase has got a much more extensive application since the days of Athanasius. It applies to him who sets himself against the current of experience and wisdom, as well as to him who was the sole upholder of the right view against the multitude. This is a subsidy in the interests of agriculture. It is that more than anything else. It would be a mistake to suppose that what is in question is merely the creation of one sugar factory, or one sugar factory, more or less. I shall take as an example a man who was as big in his own conception of himself as Deputy Gorey is—Napoleon Buonaparte. In 1811, it may interest Deputy Gorey to know, Napoleon, in his own Napoleonic way of doing things, ordered a huge sum to be set aside for the creation of schools of expert research and study in regard to sugar beet. In the following year he ordered students of medicine, pharmacy, and the various allied studies of chemistry to transfer themselves to these technical sugar schools, and he directed that 150,000 acres be immediately devoted to the cultivation of beet. There in he laid the foundation of the present prosperity of the agricultural industry in France. That was copied in Belgium. There is not a country in Europe at the present time—and this is true more particularly of Germany than of any other country—in which the growing of beet for sugar is not the backbone of the agricultural industry. Those who look around with parochial vision and see nothing except what is under their eyes, are unaware of what the big world beyond them has done and is doing. While they talk of a Greater Ireland and of devising all sorts of contrivances for the development of her prosperity, they refuse to learn from the experience of other people. Of course, the present speaker, Mr. Deputy Chairman, is a Professor. Therefore, all that he knows about anything is derived from books, and whatever knowledge you derive from books is inferior to that which you derive from the spoken voice. Why that is so, I do not know; but on those benches it is the prevalent superstition. If one is a Professor, one cannot see the obvious; one cannot travel in other lands and see what other people are doing and learn from their experience. One must be a member of the so-called Farmers' Party to be capable of illumination on any topic.

Deputy Johnson made a point, and at the risk of breaking in upon the continuity of my argument. I will deal with it now, because of Deputy Gorey's interruption. Deputy Johnson spoke of the variations in the price of sugar, and interpreted these, with their abrupt changes, as indicative of manipulation. I agree with him. I think there is manifest evidence of manipulation of the sugar market. This is a thing we should not forget: the world market price may, at a later stage, as he pointed out, become adverse to us in our production of sugar. There, also, I hold with him. But what is the answer? The answer is that in Germany the farmers find it worth while to grow beet and could afford to sell it practically for the cost of production because of the advantage they derive in the return from the dry pulp which remains over after the larger portion of the sugar has been extracted. That has been found to be a most valuable feeding material for cattle. Experiments both in Government research schools and in the actual practice of dairy farming, show enormous increase in the yield of milk in the case of cows fed upon this pulp. Between 45 and 60 per cent. increase are the official figures given in an English observer's report to the British Government—an official sent out to make a report on agriculture in Germany.

Mr. JOHNSON

Had selection anything to do with that?

Professor MAGENNIS

In what sense?

Mr. JOHNSON

Selection as regards the milking qualities of the cattle?

Professor MAGENNIS

Certainly it had. It was all part and parcel of scientifically conducted farming and dairying. That is the respect in which Germany led the world—the application of science to industries of every kind. German Universities built up what was a shattered people after Napoleon's wars. German Universities made Germany what it was at the outbreak of the Great Continental War in 1914. The point is that the value of the beet crop to the farmer would make it worth while, irrespective of the sugar. A member of the Farmers' Party told me some time ago that he understood the beet crop exhausted the soil. It cannot exhaust the soil. There is the best of all reasons for that The peculiar thing about the beet plant is that the leaves are the manufactory and the root is the warehouse. The leaves manufacture from the air and light the saccharine material—it is not sugar at that time—which it stores in the root. Furthermore, it has been proved by experience that the peculiar character of the growth of the beet aerates the soil. The Minister for Finance pointed out what at first sight would seem to be a strong argument against it—that it requires heavy manuring and deep digging. But then, in Holland, in Czecho-Slovakia, in Belgium, in France, and in Germany the one manuring has been found to do for the succeeding crops. It has the advantage of clearing the ground and making it fitter for the cereal crop to follow, so that it is economic in the long run. The answer that I would respectfully make to Deputy Johnson on this point is "Granted all these things with regard to sugar price fluctuations, still the stimulus to tillage which would be given by this subsidy would produce a result in farming that would be well worth the money expended." If you want to know where to get the money —well, instead of that £600,000, given as a grant-in-aid of agricultural rates which is only relief—a species of outdoor relief—give the money in the form of subsidies that will create, not one, but at least three factories—one in each of the provinces at present under the jurisdiction of the Saorstát and create something with a permanent yield. I speak of this subsidy as a State investment, paid in annual instalments. But what are the dividends for the State? A rejuvenated agricultural industry: a brighter countryside. Notice—I do not think the Farmers in the House will contradict this—what is wrong with the small farmer, the man with fifteen to thirty acres. He has an uncertain market. He must take, very often, the price that is forced upon him, because of the narrow circuit within which he sells. But here, with sugar factories planted in appropriate centres, the farmer, under the scheme which is set out in the Schedule to the Bill, has an assured market. If he has got carefully selected seed, that has been produced under the most careful scientific production, from the moment he puts this seed into his soil, he knows that there is a buyer waiting for the yield, and he knows, moreover, the exact price he is to get for it, as a minimum. If, by learning—it is, no doubt, a difficult art—how to thin at the proper moment and how to deal with his crop at the last moment, he is able to produce a bigger yield than 15½ per cent. of sugar—experiment shows that he can easily produce 17 to 18 per cent. —he will get a higher price. But the important point is this security or assurance. He might produce a greater tonnage per acre of mangolds, but where is he going to sell the crop? Can he be sure that anyone will buy it? Deputies who were in the Provisional Parliament will remember hearing about the luxuriant yield of potatoes in one year recently when there was no one to buy them. But in the prices in operation under the schedule to the Bill, the farmer has a guaranteed market and a guaranteed minimum price. He has the very incentive that a man needs for production. There is the dividend that will be yielded to the State: the money will be well spent. I cannot conceive of any better investment for the funds of the people than this upliftment of the people, firstly, in respect of the chief industry, and, secondly, in regard to the collateral advantages. You give hope and brightness, you give a rosy outlook on life to the man who is getting his feet firmly planted at last.

The only point with which I felt inclined to quarrel in the speech of the Minister for Finance was when he spoke of "experiment" in this regard. Of course 90 per cent—perhaps 99 per cent.—of what he referred to in regard to experiment was correct, and my criticism may appear meticulous. Is beet, as a crop, experimental? I have already answered that. The world answers "No; it is long past that stage." Is it an industry that is suitable for our soil and climate? Deputy Johnson referred to the growth in England, and asked would that be typical of growth in Ireland. Unfortunately, beet was grown in the Victorian period, as a trial, in Ireland, and a factory even was put up. In my reading of the history of industry in what used to be called the "United Kingdom," I learned that Ireland was the first place in which the growing of sugar beet was attempted. The procuring of seed—which, by the way, hit the English industry very hard during the war—was very difficult at that time, and the growing of seed was not properly understood. The crop did not fail because it was unsuited to Ireland, but because there was no one with the requisite expert knowledge in the growing of it. It has been grown successfully in Ireland. It suits the soil and climate. In fact, we can get a better average yield of sugar—a bigger percentage of sugar—from Irish-grown beet than from beet grown in most other centres. What is very remarkable as regards the growing of beet in connection with the Norfolk factory, which is owned by Van Rossum, is the result of the experiment they had performed for them by Nature. The extraordinarily dry summer of 1921 was followed by a very wet season. Yet the yield of beet and its yield of sugar proved to be practically constant. Experiments in the North of Scotland have been also found to be successful. Although one would not expect anything of a sugary or saccharine nature there, on account of the climate, there was quite a respectable yield of 16 per cent. in sugar from the Cromarty beets in Scotland. The point to emphasise is that the growing of sugar beet in Ireland is in the experimental stage in this sense only: Will the farmers take it up and will they make it go? Will they be sufficiently enlightened to know that here is salvation?

Mr. GOREY

Nonsense.

Professor MAGENNIS

It would not be the first time in the history of a race that salvation came to it and that it turned its back upon the light and even crucified the reformer. These things have occurred in history before now. Ignorance may prevail again and prejudice may prevail again—the project is in the experimental stage in that sense—will the farmers take it up? Can sugar be manufactured from home-grown beet at a profit after paying an adequate price to the grower? That might appear to be experimental. All these experiments, as Deputy Johnson remarked, have been worked out for us in other countries. The plea that I would make here is that we should not disregard the experience we have ready to hand from Great Britain.

The Minister for Finance mentioned the criticism that was in "Irish Truth" alleging that the subsidy is excessive. It speaks here of very handsome profits. Perhaps, so that I may not be accused of quoting by paraphrase, which is a frequent allegation, I may be permitted to quote from the original. "There has just come into our hands a circular issued by a Dublin financial house which announces the formation of a company to start a beet sugar factory in the Free State ‘under the best Belgian auspices and with a handsome subsidy from the Free State Government,' as it naively puts it. Although one of the great recommendations of the Belgian offer was that it was to provide all the capital, it appears that it is now desired to raise one-third of it in Ireland. Not unnaturally, therefore, the full value and effect of the ‘handsome subsidy' has to be set forth. This is done by enclosing a copy of a letter from M. Lippens, late Governor of the Belgian Congo, Director of the Banque d'Outremer, President and Director of a large Belgian sugar factory. Let us quote the circular:—‘From M. Lippens' letter it will be seen that the earnings of the factory, together with the Government subsidy, are expected to be sufficient to amortise the entire capital expenditure in ten years, in addition to the payment of substantial dividends.' " Then the writer puts in, parenthetically (I suppose, knowing his readers' limitations) a note as follows: "‘amortise' signifies to redeem, extinguish, or replace." The writer then goes on to say:—"Why should the Free State dip so deep into the taxpayers' pockets in order to enable the Belgian or any other group, not merely to make ‘substantial profits,' but also to replace all its capital outlay in ten years?"

There is quite a number of fallacies involved in these simple sentences. There is one reason why we should dip into the taxpayers' pockets for this, in addition to the reasons which the Minister has already set out. The trouble in England was at first farmers would not grow beet until they saw the factory in being which would take beet from them. The capitalist would not set up a factory to extract sugar from the beet until he saw a sufficient number of acres of beet under cultivation. That meant a deadlock. I suppose most of us read in the days of what I may call our nursery-rhyme age, about the old woman who found a crooked sixpence and went to the fair to buy a pig. Prices seem to have been different in those days—she bought a pig and proceeded to drive it home. The pig, apparently, was the same as pigs now, and refused to budge, so she got a stick, but the stick refused to beat the pig. Thereupon she invoked in turn various natural agencies. But some inducement had to be provided. That was the function of the State and that function is being discharged now through the instrumentality of the Minister for Finance to get over this difficulty. The difficulty has to be surmounted. You must secure to the factory, or factories, an adequate supply, and not merely an adequate supply but a continuous supply throughout the hundred days which the Dutch speak of as their sugar campaign.

All the transforming of beet into sugar is done in one hundred days in one continuous process. That is why I answered Deputy Johnson when he asked if the production of sugar includes sugar refinery. There are not two stages in this industry as in the sugar cane process in which you first produce the raw material and then refine it. In beet sugar it is all one process. What comes out is fine white sugar. Molasses and pulp are residues. If there were a lightning strike, if there were anything that interfered with the continuity of the process in those momentous one hundred days, all the stuff in the factory is wasted, over and done with. Consequently, a great number of risks have to be incurred, and those who put their money into the setting up of a factory for the installation of costly and special machinery have to have some guarantee. On the other hand, the farmer has to have an inducement, and the important thing to remember is, that in the early years of his work as a sugar beet grower, while he is getting his experience, his yield will not be very considerable, but he must be paid all the same to induce him to put in the crop and persist. So his pertinacity is bought until the thing has righted itself, until he has become expert to produce the crop in the right way. So that phrase, "dipping into the taxpayers' pocket," insinuated there is something, at least, injudicious in this. What are we doing, after all, in voting Estimates but dipping into the taxpayers' pockets for this, that and the other public service, and giving aids in a variety of ways to different enterprises? Why is this thing, which is, to my mind, to be the salvation of our agricultural State, to be viewed with particular disfavour?

The difference between M. Lippens and the other tenderer referred to by the Minister for Finance, is not remarkable. The Minister told us that the method by which the Government proceeded was by way of tender, and that there was an inter-departmental committee set up to inquire into the relative merits of the tenders, and also to see the work of sugar beet production in Continental centres. The Minister has brushed to one side altogether the overtures made by one of the tenders, whose case was expounded in "Irish Truth" during one or two weeks. That is the case of the sugar factory plant makers of Czecho-Slovakia. The Minister spoke of another tenderer, and the Dutch group of Mr. Van Rossum. The further plea I am making now is, that, instead of making an experiment under conditions that will not be wholly and completely scientific and that will not be thorough, since the experiment is obviously worth making, to discover whether farmers could be induced to grow beet in sufficient quantities, and whether the factories can secure beet in sufficient quantities so that a subsidy would no longer be needed, and that the time would come when the Irish industry would be able to stand in competition with the world, at least, as suppliers of sugar to the Irish people. I suggest that if one alone is set up the experiment will take this form, the farmers in a certain area will supply beet, and they will have all the advantage of the payments guaranteed under the second schedule—50/- per ton for one year's contract, and 54/- per ton for three years' contract. If, by any mischance, as I hope will not be the case, anything goes wrong with the experiments there the public will pronounce finally against the industry, and the door is closed for the industry in this State, whereas the failure may be due to local circumstances, to something that is incidental to that particular case. Furthermore, Deputy Johnson spoke of what I might condense into less elegant phraseology as the bag of loot with which the shareholders, or dividend receivers, would go away after the period of subsidy. It might be possible that when the outlay had become amortised that the company, being foreigners, would quit and leave the thing there in our hands. That would be impossible if there were another firm in another locality in competition. I would ask the attention of the Minister to that consideration.

There is an obvious safeguard. Either we perform this experiment or we do not. I think it would be a terrible mistake not to make the experiment, and if we make it why not make it as every experiment is made, namely, under the most exact conditions, nothing overlooked, every contingency provided for? What was the proposal made by the other tenderer, and what was his position? Practically all the pioneer work in England, over and above what was done by the propaganda society of which Mr. Wood is Secretary, was, for all practical purposes, done by the Dutch group. One of that group was for over 20 years a chief instructor in the State School for sugar production in Holland, and Holland, by the way, has the extraordinary pre-eminence of being the one Free-trade country in the world which has made sugar a success, although preference, tariffs, and subsidies are given in aid of it in other countries. The Canley factory in Norfolk, is worked by the Van Rossum group. Struggling through inimical conditions it had to close during the war. Eventually, when the Coalition Government came to the aid of the industry it got on its feet. It is now thoroughly successful, so successful that this firm was begged by England to set up other factories. There are now three factories in England actually in full blast, and there are six others on the stocks. England has found the experiment very successful, and it is not going to lose any time about profiting from it. On that topic I might quote what the Minister for Finance said that the history of this country is a history of opportunities not seized. In effect, we are really like the Royal Carbineers in Offenbach's opera, "always too late." England has seized her opportunities. Through the instrumentality of an Irishman, the Van Rossum group were interested in this country, and they made proposals here. I quite agree that the Minister has given a very accurate account as regards the difference between the three tenders. But if the experiment is to be properly conducted, we should have at least three factories, one in each of the provinces. At any rate there is the possibility and the opportunity to have two, because this group does not ask for money. They propose to put up £400,000. Three hundred thousand pounds, or thereabouts, represents the installation of the factory, and the rest working capital, the money available to give an inducement to farmers, to pay them in anticipation of the delivery of their crops and so on. An alternative proposal also was to put up £300,000, and if Irishmen like to provide £100,000, then the Government will be provided with founders' shares, on which dividends would be paid when the dividend on the ordinary shares rose to a certain point. I may be a faddist in this respect, but I may repeat, perhaps, what I took the liberty of saying on a former occasion, not so long ago, that while our expenditure continues to be so high, necessarily high, and the amount of taxation that we dare impose so exceedingly limited, the Government must get busy in earning. The proposal to make the State a joint taker of dividend from an industry that has met with success, and which, in fact, has been made possible by State subsidy, seems to me not merely an interesting but a very practical proposal. Perhaps, instead of repeating in my words what the offer was, if I were to quote portion of the tender and argument in favour of it, it would make the situation clearer. It was feared by the Minister for Finance, I understand, and possibly by some of his colleagues, that this company was merely going to exploit Ireland, and to go away with all the money it would acquire in the years of subsidy—when I branched off a few moments ago to deal with the remark of the Minister for Finance about opportunities not seized, I had begun to sketch what the Van Rossum Company had done in England; how with tremendous persistence and pertinacity it held on in England. The Company did not let the English people down, and it is not likely to do in Ireland what it has not done there. What are the likely gains? See how the thing could work for a tenderer of this type. The Irishman who induced the Dutch group to turn its attention to our country submitted certain figures to the Government. He gave two calculations, one on the absurd supposition of a yield on production of 100,000 tons of beet—I say absurd, because it was only in 1924, in the ninth year of the work, that the Company's factory has been able to get 124,000 tons of beet to deal with. It would be very excellent progress if, during the first two years, we could get a district that would provide what would give a yield of 3,000 to 5,000 tons of sugar. Therefore, I prefer to read out the figures submitted with regard to a smaller production. Some of these figures, of course, would require alteration now, I should say parenthetically, because the price of coal is different, and, furthermore, the duty has been taken off sugar altogether in the Saorstát.

Mr. HEWAT

Not altogether.

Professor MAGENNIS

Not altogether, but there has been a very considerable reduction—in fact it is altogether for the purpose of these figures. "Fifty thousand tons of beet at 53/6 per ton"—that is the price that the Van Rossum group proposed to pay.

Mr. JOHNSON

At the factory?

Professor MAGENNIS

Yes, delivered, topped and washed at the factory with an addition of 1/7, as in England, for a three-year contract. The fifty thousand tons of beet would require "five thousand tons of coal." The Shannon electricity would not, it appears, be available in lieu of coal. The process requires a type of heat that coal produces. "Two thousand, five hundred tons of limestone"—that is also, if I might diverge for a moment, an interesting thing. Here is an important collateral industry developed. For the precipitation of the sugar, limestone is necessary, and so limestone quarrying would get its filip too, incidentally. "Unskilled labour, 8,400."

Mr. JOHNSON

Is that pounds?

Professor MAGENNIS

Yes. I am afraid I forgot to read out those figures as pounds. "Fifty thousand tons at 53/6 per ton, £133,750. Five thousand tons of coal"—I think coal in this was calculated to be bought in large quantities and delivered in bulk at 37/6 per ton. At any rate, the total down here is "£9,250.""Two thousand five hundred tons of limestone, £1,250; unskilled labour, £8,400; skilled labour (which, a note remarks, cannot be seriously reduced) £25,000." The significance of that note is that this item of skilled labour is put down at £35,000, when there was question of one hundred thousand tons of beet being dealt with. The skilled labour is. of course, the important item, not merely as regards expenditure, but as regards the whole industry of sugar production, because the expert must be engineer as well as chemist, chemist as well as engineer. That is the reason why there are always in those countries, where beet sugar is a stable product, technical schools devoted exclusively to the production of experts. The amount "for depreciation" is pretty much the same as in the larger estimate, because again it is the same factory and machinery installation awaiting the development which will provide the greater quantity of beet to work with. "Depreciation, £22,500." That is, of course, on the £300,000 installation. "Stores about £5,000." These are various chemicals, oils, etc., required in the working of the machinery. "Sundry charges—which cover a variety of things—£7,000. Contingencies, £12,500"—providing for the unforeseen.

Receipts:—Out of the fifty thousand tons of beet it was hoped to produce five thousand tons of sugar, i.e., one-tenth. By the way, I note that in the case of inexperienced growers, 7½ tons to the acre with about 15½ per cent. of sugar yield would be the general result, as against 15 tons to the acre with 18 per cent. of sugar yield where experienced growers are in question. The figure here is "5,000 tons of sugar at £50 per ton"—that was the price in the market at the time those figures were compiled: 19th January, 1925—"less commission on sales, freight, and bagging, £237,500. Sale of pulp, £12,500." The calculation was that in England the farmer would be glad to buy back as much as he would be permitted to buy of the dried pulp, and the price was to be fixed at £5 per ton, or 5/- per cwt. So the sale of pulp works out in this case at £12,500. "Total receipts: £249,000."

The total estimated profit during the first five years is here computed as £24,350 per annum, from which has to be deducted income tax—and of course it was deducted at the rate of 5/- in the £—leaving a net profit of £18,264 per annum for the first five years." The figures for the second five years are the same as in the former estimate. What is meant is that the Van Rossum group propose that after the first five years the subsidy should be reduced per cwt. per year, until practically the subsidy was done away with altogether. The duty or subsidy would be reduced "by 1/- per cwt. in the sixth year; 2/- in the seventh year; 3/- in the eighth year; 4/- in the ninth year and by 5/- in the tenth year." Therefore, there would be an average net profit on this showing of "£38,082 per annum, which might admit of a distribution of 7 per cent. free of tax." From the investors' point of view, taking into account the uncertainties attached to the establishment of the industry in a country where it has never existed, these estimates do not show a very alluring prospect. In actual practice it is unlikely that there could be any dividend for the first couple of years. There is bound to be a loss in the first couple of years. Taking the average at 50,000 tons of beet for the first five years does not mean that 50,000 tons of beets per annum would be secured in each of the first two years. Moreover, the ordinary investor would take into account the uncertainty of the position at the end of the ten years. "Mr. Van Rossum, nevertheless, is prepared to take these risks because he is convinced that he can establish the industry on a sound basis within ten years. It should, however, be evident that Mr. Van Rossum does not stand to make any exorbitant profit. Such profit as he is at all likely to make is hardly commensurate with the risks." I must really ask the indulgence of the Dáil in going into these details.

Mr. HOGAN

Might I interrupt the Deputy to get the figures verified. Am I right in saying that out of the total cost, according to the Deputy's figures of £226,000, beets cost £133,750? The balance of costs is about £93,000, of which coal represents about 15 per cent.

Professor MAGENNIS

Yes, so that really the farmer—the grower—gets the lion's share of the distribution of the money, £133,750 out of a total expenditure of £224,650.

My excuse for going into all these details is my profound belief in the enormous national importance of this matter. The Government are fully aware of that. They have taken the matter up and produced this Bill. All that is between us at the present moment is merely whether there should be only one factory in the beginning or more—all my argument is, so far as I can contrive, centreing around that one point, although I may appear at times to be very far away from it. The replies of the Government to these offers were communicated to Mr. Van Rossum, and I would like to quote from some of his comments, because they provide a reply to the criticism which seems so plausible, that the Government are giving away money. This circular that an issuing house has put out, speaks of the handsome allowance and the handsome profit. Is the Government really being extravagant in the subsidy it is paying? It is nothing of the kind. I am going to quote in support of the Government as really exercising a very strict and rigid economy in this enterprise, the comment of the man who is, I may say without exaggeration, the biggest man in the sugar world at the present moment, head of the great sugar factory of Holland, and the man who has organised the sugar industry with success in England. He says, in reply to my Irish friend who was doing so much to get the advantage for this country of Dutch brains, Dutch experience, Dutch experts and Dutch capital:

"I have considered very carefully your letter of the 10th inst., in which you set out the lines upon which the special Departmental Committee are prepared to make a recommendation to the Irish Free State Government for State assistance to establish and work a beet sugar factory in the Irish Free State. It might be well at the outset to explain that the subsidy proposals announced by the British Chancellor of the Exchequer on July 30th, 1924, in the House of Commons during the unemployment debate, were made after a most searching inquiry into the condition and needs of this infant industry in England at the present stage of its progress—"

We hear repeatedly quoted in this House the adage of the old theologian, that circumstances alter cases. We must always keep circumstances before our mind in these comparisons. The British subsidy of 1924 is in aid of an industry that had already got on its feet, and that, after the perilous earlier years of infancy, is now quite a sturdy youngster—

"In all such State inquiries, involving a charge upon public funds, the principle, as you are aware, is to arrive at the minimum amount of such charge, having regard to the purpose for which it is to be made. The net result is the provision of State assistance considered sufficient from this date onwards. It would have been absolutely of no value ten years ago, when the industry was started."

That is a most important consideration that must not be overlooked, that the State subsidy in Great Britain in 1924, accepted as of enormous value and thoroughly satisfactory to the industry in England, would have been no use ten years earlier at the initial stage, and that is the justification of the Minister for Finance. I mention it in support of the statement he has already made, that the subsidy in this country must be larger than in 1925 and 1926 and so on, as compared with the subsidy in England, because of this special difference between the two countries. We are beginning, figuratively and literally, from the sod. Mr. Van Rossum goes on:—

"Even with this proposed assistance the industry in England would not have developed were it not for the fact that those already engaged in it were prepared to extend their existing enterprise and build new factories, drawing thereby from their existing experience and existing organisation. Even under these proposals, in my opinion, too great a risk is imposed upon any newly-formed group who have to go to the public for their capital and to the continent for their technical assistance. Both in the training of English labour and in the education of the farmer, they must necessarily start almost from the point at which I started in England ten years ago."

That is a point to which, with your permission, I shall return presently, that the new factories, the other six that I mentioned, must start from scratch, where the Canley factory in Norfolk started ten years ago. That, here. The Minister for Finance talks about later on looking round to set up new factories. He sees in his mind's eye the altered state of things in the district where the further factory is to be set up, whereas it will be the very same situation in which the one present proposed factory will be set up. I return to the Van Rossum letter: "Several new groups, on the strength of the subsidy proposals, have formulated and published particulars of new factory schemes in England. Within a few weeks they have been abandoned. This has brought me to the conclusion that only those who have had the experience already secured in England would venture upon an enterprise of this kind, involving so large a capital outlay, except with the courage which is born of ignorance." That is an anticipatory criticism, I presume, of M. Lippens. "The above important considerations prevent my entertaining the responsibility for a beet sugar factory scheme in Ireland unless——." Now here are the personal considerations which appeal, to me at any rate as an individual, with enormous force, because I am a firm believer in prestige, and in a man's own sense of the value of reputation, and prestige to him in his trade or profession——"(a) I felt I could make it succeed." Surely that is the type of assistance that we should like to have, a man who feels his honour bound up in this enterprise and will not come into it unless he can be assured from the conditions granted to him that he can make it a success—"(b) I ran no risk to my reputation as a Continental beet sugar expert." He is loath to have his record spoiled by the black mark that he failed in Ireland. "(c) I offer no more than ordinary business risk to capital drawn from your country or elsewhere, that is to say, it must be free from any taint of what is known as company promotion," and if he had known about what the Minister for Finance has dealt with so ably it would be free also from any attempt to exploit a new country in this, that, or the other, novelty department. "(d) There must be no possibility of the Irish farmers being exploited for sugar beet cultivation and finding themselves ultimately let down." There are two important considerations: That those who put their money into the factories shall not be let down by the farmer, and that the farmer shall not be let down. These are the guiding considerations in the formation of prices all through his estimates. "The following are briefly the matters which make it impossible to effect the purpose we have in view on the same terms as offered in England"—He proceeds to corroborate what the Minister for Finance said in the opening part of his speech: "It is quite clear that the work in Ireland as compared with the work in England is ‘prairie' pioneer work. The subject must be examined ab initio, from the technical side, the agricultural side, and from the economic standpoint. Organisation, working costs, and rates of income from products must be reviewed under entirely new conditions. This pioneer work will be costly. In an English factory the manager, the principal chemists, the charge hands at every post, must be foreign; and this must continue for some years. The labour working under them is English and also semi-trained. As in England at the beginning, so in Ireland, a much greater proportion than this must be foreign, probably one to every five or six, although their work is applied to the training of unskilled labour acting under their direction. Irish dilution will be slow as in England.” I see that it is now 10.30, and I will therefore move the adjournment.

Mr. BLYTHE

I should like to say one word with reference to the figure I gave of the proportion of the cost of coal to the total cost of production. That had reference to information that I had of a factory four times the size of this factory, that is, a factory of 20,000 tons. It also had reference to the ordinary working costs, and had no reference to depreciation. Where you have a small factory the cost, for instance, of your skilled workers and all these things, is always out of proportion to the whole. It also had reference to wage conditions in another country, which may be very different from those prevailing in this country.

Mr. JOHNSON

I was going to invite the Minister to make the correction, because it was obvious from the figures Deputy Magennis gave that the Minister's statement could not apply to a 5,000 ton factory.

Mr. BLYTHE

This had reference to a 20,000 ton factory in Belgium.

Debate adjourned until Friday, 12th, June.

Mr. BAXTER

Would the Minister for Agriculture be prepared to take Vote 61 to-morrow?

The PRESIDENT

It is not proposed to take that Vote this week; it may be taken next week.

The Dáil adjourned at 10.30 p.m. until 3 p.m., Wednesday, June 10th.