I had not intended using the word merchants. I really meant manufacturers, excluding the others. I want to refer to some points in connection with the work of the Department. We will take, first of all, this matter of railways that has been so much debated, and so inaccurately debated, during the last few weeks. As far as the present storm can be traced to any source, it is said to have had its origin in a statement that I made in answer to a question put down by Deputy Alfred Byrne. The Deputy seemed to me to make certain insinuations, under the guise of a question, as to matters in the railway world, not so much since the Railways Act, as his question actually put it, but as a result of the Railways Act; that seemed to me to be an insinuation. My reply to that has been described in pretty well all the terms that varied vocabularies can put upon it. It was described as tart, very foolish, and absurd, and it was even almost stated to be untruthful. The "Irish Times" elevated the thing to the region of the leader, and wrote a comment on the 11th of this month, of which I will give the Dáil some excerpts. The article speaks about the Dublin Stock Exchange, and refers to a quotation of the previous day, and continues:
"The cause of this lamentable decline is obvious. Since the amalgamation the companies' receipts have fallen at the rate of £15,000 per week."
Later on it says:
"At the end of this year, if matters pursue their present course, the amalgamated company must exhaust the Compensation Fund in order to pay a full dividend on the Preference stocks, and there will be no dividend for the Ordinary shareholders."
The only clear-cut fact in any of the papers is:
"... the companies' receipts have fallen at the rate of £15,000 a week."
The editorial continues:
"... if matters pursue their present course, the amalgamated company must exhaust the Compensation Fund in order to pay a full dividend on the Preference stocks, and there will be no dividend for the Ordinary shareholders."
I am held up to scorn for having suggested that the collapse of the Great Southern Company's stock was the result of "adverse statements" by railway directors and politicians:
"The Stock Exchange knows nothing of politics or sentiment. It is influenced solely by facts and figures; and the present value of Free State Railway shares is an absolutely accurate reflection of the amalgamated company's present value as a financial concern."
Later on the "Irish Times" infers:
"the Government will make no statement on the railway prices until a full year of amalgamation has elapsed—until, in fact, the company stands publicly in default with its Ordinary shareholders."
Later on—this is put down to "tactics":
"the desire to put all responsibility for drastic reforms on the companies' shoulders has inspired the Government's policy of apparent indifference."
and the climax of the argument follows:
"apart from the fact that it was the Government's own action which put the companies into an untenable position, the crisis is far too serious to admit the luxury of tactics."
If you search that editorial right through, there is only the one fact:
"The companies' receipts have fallen at the rate of £15,000 a week."
Then you get all this extravagant deduction that is made there:—The Compensation Fund must be exhausted; the company will stand publicly in default with its ordinary shareholders, and then there is the statement made that it was the Government's own action which put the companies into an untenable position.
The "Independent," on the 13th June, went into much more detail and, as is usual with the "Independent," when it goes into detail, it went into much more inaccuracy:
"Interest and anxiety in the situation have been accentuated by the rather extraordinary and amazing statement made in the Dáil on Wednesday, by Mr. P. McGilligan, Minister for Industry and Commerce, who, when his attention was called to the position of the Great Southern stock on the market, said: ‘The share market is not a correct indication of the position; it is influenced by adverse statements made by directors and Deputies in this House.' The Minister also denied specifically that any loss that had occurred had been due to the Railway Tribunal set up by the Railways Act. Even a cursory examination of the returns and a short study of the events of the present year will prove the absurdity of Mr. McGilligan's statements."
Then follow certain traffic returns, and next we have:
"On January 1st this year, the Railways Act came into force, amalgamating all the railway services in the Saorstát into one combine, now known as the ‘Great Southern Railways.' The Act became law in July, 1924, and on October 15th the first meeting of the tribunal set up by the measure was held. The first business before the Court was an application by the Minister for Industry and Commerce for a reduction of the passenger and goods rates. The proposal was for a reduction of 27 1-3 per cent. on goods and 20 per cent. on passenger rates."
And then some statements of those who opposed the application are quoted. The paper says they "prove in the light of present conditions, to have been prophetic." A quotation then follows from Mr. S. Brown, K.C., acting for the companies. The quotation is:
"An all-round reduction of 20 per cent. would make it impossible not only for the railways to pay a dividend, but even to carry on at all."
Then they give other quotations, including a quotation from Mr. Keogh, the general manager:
"The decision of the tribunal was to give the following reductions:—
20 per cent. on goods,
25 per cent. on ordinary passenger fares,
15 per cent. on season tickets,
20 per cent. on traders' tickets."
I want that joined up with the statement above, that an all-round reduction of 20 per cent. would make it impossible not only for the railways to pay a dividend, but even to carry on at all. That was the statement that was shown to be prophetic. The whole point rests on the traffic returns week by week. I have spoken of inaccuracy. There was no decision of the Tribunal to give any of those reductions—nothing of the sort.
Take those figures:—20 per cent. on goods, 25 per cent. on ordinary passenger fares, 15 per cent. on season tickets, and 20 per cent. on traders' tickets. You would get there an all-round 20 per cent. reduction, and, further up in the article it was stated that an all-round reduction of 20 per cent. would make it impossible not merely to pay dividends but even to carry on at all. Towards the end of the article they get on rather more solid ground. They give a quotation with regard to the fall in stock and loss of revenue.
"The loss of revenue indicated above, as compared with 1924, may not be the result of amalgamation, but it may be correctly attributed to the action of the Railway Tribunal in reducing the rates, the high cost of labour, coupled, to some extent, with the general depression of trade."
That was what I was denying the whole time, and my statement was said to be absurd:—
"The loss of revenue ... may not be the result of amalgamation."
I think a fair reading of the article would be that amalgamation caused a demand to be put up for a reduction in rates and that has caused those other things I have mentioned. They are not apparently to be considered as of the same importance as a reduction in rates.
Two facts stand out. There has been a fall in the Stock Exchange, which knows nothing of politics or sentiment. The fact is stressed again that the receipts are falling off by £15,000 a week. Deputy Figgis wrote about the same matter in the "Sunday Times" and referred to a great crisis involving the financial credit of the State. I am not called "absurd" in this, but the adjective "tart" is used, and it is stated that I wish to fob off criticism at an awkward moment. The Deputy says:—
"It cannot indeed be longer postponed in the interest of the Free State. And as it is certain that it will be dealt with during the coming week the essential facts may now be briefly reviewed. The central fact about which all else hinges concerns the price of stock."
Certain material follows with regard to the stock and how it has fallen, and then it states:—
"It is unnecessary to enlarge on the gravity of this fall, for the gravity is only too evident... It is idle, not to say foolish, for the Minister to blink at the fall and to say that the share market is not a correct indication of the position. The fall is a fact; it has caused widespread loss."
Incidentally, a mere fall in the Stock Exchange quotation need not necessarily cause a widespread loss unless people are driven by panic statements like those to sell out. There would be a loss, but I do not know whether that would be attributable to statements of that kind or to people who tried to get a reduction in rates and fares. The article goes on:—
"What is the cause of this declension? The Minister vigorously denied that it was due to anything that had been done by the Railway Tribunal."
Then certain points are given, namely, that the stock of the largest railway company had fallen some twelve points, that the new amalgamated company took over under the Act concerns of admittedly lesser stability, and that the tribunal, on the application of the Minister's representative, reduced freight rates by 20 and passenger rates by 25 per cent. It did not. It did not reduce the fares by 20 or 25 per cent. Then it says:—
"There may be some other explanation in the Minister's position that has not yet been made public, but these facts are, on the face of them, sufficient to account for what has happened."
That is the technique. You get any collection of facts, and you can say that they are sufficient to account for the fall, but whether they are correct or not it does not matter. You can throw them in and say that these account for it and they have to be explained away. There are three points to be explained. I alluded to the phrase that people who opposed the application proved to be prophetic. Deputy Figgis continues in his effort:
"Moreover, the event was foretold before the Tribunal by counsel for the company, foretold with accuracy and prescience. An all-round reduction of 20 per cent. He said, in resisting the Minister's application, ‘it would make it impossible for the railways not only to pay a dividend but to carry on at all.'"
Then we get a paragraph which is headed by the caption "Losing £15,000 a week." The same solitary fact emerges—losing £15,000 a week.
"Of course, it is inconceivable that any State can allow its essential credit to collapse in this way, especially with considerable loan issues pending. Whatever is necessary to be done will have to be done soon or late. That goes almost without saying. But the accuracy of this forecast is worthy of note, for it shows that the behests of Government and of political convenience cannot cause short paths to be taken across plain economical calculations."
Then we get this warning, by an aside:—
"A consideration of some moment in other than purely railway matters also."
The Deputy gets back to what he calls the facts of the railway situation. He goes further than either of the two newspapers which I have quoted. He says:—
"At present the position is that the railways are losing money progressively at the rate of about £15,000 a week."
Not merely £15,000, but it is getting worse. I do not know whether he means that it started at £15,000 and that we got to an enormous figure, or that the progress has landed us at the figure £15,000. The similarity of these three articles must be noted.
"This means that at this rate there will be no dividend for the ordinary shareholders. Some question has arisen in regard to Preference stock." The Deputy's answer is:—
"But probably the Compensation Fund will be raided (and exhausted) to meet the full dividend here."
If I may go back to the Irish Times article, it says:—
"At the end of this year if matters pursue their present course, the amalgamated company must exhaust the Compensation Fund in order to pay a full dividend on the Preference stock, and there will be no dividend for the ordinary shareholder."
Deputy Figgis continues:—
"No one can contemplate either of these prospects without dismay. The first would cause much suffering and unsettle the foundations of investment. The second would deplete the railway exchequer while a weekly loss continues."
Then follows a phrase against which I must protest:—
"Mr. McGilligan vaguely suggested that a half-yearly statement might convey some new information; but as it is the habit of many Ministers to think much more of scoring debating points for the cheers of their followers than of speaking always by the book, it is impossible to say what this might mean, or if it means anything at all."
If that phrase means anything it means that I made a misuse of information which was to my hand, and that I either suppressed or distorted it in some way. That is a suggestion which I would resent from anybody in this House, but I resent it particularly from Deputy Figgis, and I would remark for his information that when the Dáil has considered me worthy of a Special Committee and the Stationery Office has erected to my memory a monument such as he has, I will consider myself a fair target for his arrows, but not before that. Then we get the summing up, "The Prodigal's Way," and the article ends:
"In the meantime the Irish railways will probably not pay a dividend to their Ordinary stockholders."
I want these things considered. One fact is stated —£15,000 loss on traffic receipts—and the editor of the Irish Times, some special correspondent of the Irish Independent, and Deputy Figgis, the special correspondent of the Sunday Times, think fit, on seeing a calculation on one side of the account, without adverting to any other side of that account, simply to give this definite statement that the railways are bankrupt, and that there will be no dividend for the ordinary stockholders. You get a further deduction, peculiarly enough running through all the three articles, and in two instances the words are the same:
"The Compensation Fund will have to be raided and exhausted for the payment of dividends to the preference stockholders, leaving nothing for the ordinary shareholders."
You get the misleading comment made in two articles in the Independent and by Deputy Figgis, to the effect that the tribunal gave a reduction on freight rates of 20 per cent. and on passenger rates of 25 per cent. If that is going to be the sort of business acumen brought to bear on problems in this country by two leading newspapers, then I say we are in a very bad way. You are going to have deductions drawn simply because on one side of the account a fall is shown, and there is no examination whatever as to whether there is any reduction on the other side of the account. You simply see a fall in the Stock Exchange, and you put this one item of £15,000 a week reduction in the traffic receipts, and on that you get all this comment. I am not quite clear how far it is for me to do for the stockholders in the Great Southern Railways what, apparently, they have not been able to do for themselves, that is, to get information from their own directors as to how their affairs stand. I am asked by Deputy Byrne a question which, I think, has a certain implication. I deny the implication, and say that it is harmful in this House for Deputies through the Press, or directors of any big company to make remarks that are despondent, and which are bound to have a depressing effect on the Stock Exchange, in so far as they adversely influence the sellers and purchasers of stock.
If the Irish Times is correct in its comments there would be no harm in my getting up and making the most astounding remarks about railways. I may be as irresponsible as the newspapers, and say all sorts of defeatist things about the railway position. That would have no effect on the Stock Exchange. It is above all these matters. Stockbrokers may not be people very full of politics and sentiment, but the buying-and-selling public lends an ear to what is said by the directors about a concern, and certainly lend an ear to what is said in this House to Deputies who are put up to ask questions about the same concern. If shareholders in this company want to get the fullest possible information as to the position of the company, I suggest the best way of getting it is to go to the directors. The shareholders are the proprietors of the company, and they can get any information they please from the directors. If I might give a line to them in their cross-examination of the directors, let them put the simple question: “How far has the 10 per cent. or 12 per cent. reduction”— that is the average reduction—“in rates and fares been met by economies which are even in the first year already shown as a result of the amalgamation?” Just let them ask that question, and then when they have got the information asked for they can set off the losses in the reduction of fares as against the economies in administration, which are definitely the result of the Railways Act.
I fear if I go into too much detail in this matter that certain shareholders will be accusing me hereafter of having said too much about the railway concerns, and having made a revelation to the public, which is only made by the directors to their shareholders. But I think I can go a little further. I have the traffic returns for a certain period of weeks. I can make comparison between the Great Southern Railways, as an amalgamated concern, and the Great Northern Railway, which is not amalgamated. I find there is a percentage decrease in the Great Southern Railways of 14 for the 22 weeks to the 29th May, as compared with the corresponding period last year. The rates have been reduced owing to the case made before the Railway Tribunal by certainly not 20 per cent., but something between 10 and 12 per cent. There is a factor which is still hidden, in the sense that if I have figures they are not figures I can publish to the House, but it is a factor which has to be taken into consideration: what economies have taken place that will set off the whole or any part of that decreasd? Let me make this statement, that it will be found that the economies estimated to take place within this year will be found to balance the estimated loss owing to the compulsory reduction of rates and fares in the year. Put the reduction at the higher figure, 12 per cent., and you, therefore, have the Great Southern Railways with a reduction of about 2 per cent., as compared with the corresponding period last year, which is not to be attributed to the reduction of rates and fares. The 2 per cent., which is the difference between 14 and 12, is due to some cause other than the compulsory reduction of rates and fares, and that is due to the falling off of traffic.