I move:—
That the Dáil is of opinion that agricultural interests in the Saorstát should have been given direct representation on the Banking Commission and that the Terms of Reference should have specifically provided for an examination of the agricultural credit problems of the Saorstát.
I do not intend to enter into a long or elaborate argument to show that the agricultural credit problem of the State requires careful and minute examination. I do suggest that the Commission appointed by the Government is not composed of men who are in a position to deal adequately with the credit problems of the Saorstát. So far as one can judge from the names of the gentlemen who have consented to act on the Commission, they are mostly identified with the banking profession or with business interests. There is not on the Commission any member who could be regarded as having a complete knowledge of the theory and technique of banking and at the same time a thorough practical knowledge of agricultural credit problems in the Saorstát. The only man on the Commission who might be said to have a knowledge of agricultural credit problems is Mr. Smith-Gordon. All I have to say about him is that although he may be an expert on theoretical agricultural problems, it is not possible that he could be regarded as an expert on the practical agricultural problems that exist in the country at the present time. When it was suggested from these benches that the banking system of this country required to be inquired into, particularly in view of the changes which have taken place in the Government of the country, we had in view a totally different kind of Commission. We were aware of the fact that agriculture is the main industry of the country, and that upon its prosperity must depend the prosperity of the whole State. We believe that the banking system in existence in the country must be modelled so as to suit the peculiar conditions that exist in this State. In the past the banking system in Ireland was modelled to a very large extent on the system existing in England. We do not believe that that system, in all its ramifications, is the one that is best suited to the conditions that exist in the Saorstát.
The Terms of Reference given to the Commission may be regarded as fairly wide. They are: "To consider and to report to the Minister for Finance what changes, if any, in the law relative to banking and note issue are necessary or desirable, regard being had to the altered circumstances arising from the establishment of Saorstát Eireann." The Minister may argue that these Terms of Reference can cover almost any matter which the Commission may see fit to inquire into. My idea of these Terms of Reference is that they point directly to an inquiry into a certain line of banking business rather than into general bank problems relating to the agricultural conditions existing in the country. I fear the inquiry will, to a large extent, apply itself to technical questions of banking, such as banking law, note issue, currency and matters of that kind. In my opinion the inquiry should be a comprehensive one into banking and credit conditions, having particular reference to the agricultural conditions peculiar to the Saorstát. It is not my intention to make an attack on the banks or on the banking system, because I have no desire or wish to make charges which I am not at this stage prepared to prove. It is my idea that this Commission should be set up for the purpose of making a full inquiry into all these problems, and that everyone who has a case to put forward in regard to this banking question should be in a position to call witnesses: that the Commission should be regarded as to a certain extent, judge and jury inquiring into the methods by which work is carried on by the banks at the present time.
There is a crying necessity for credit in the agricultural districts, and we hear day after day that some change will have to be made to provide the farmers of the country with a better and freer system of credit than exists at the present time. I need hardly point out that the agricultural conditions are not good; they are worse to-day than they have been for many years, and the financial position of agriculture is at a lower ebb to-day than it has been for a long time. Proofs are beginning to come forward, now, that the farmers of Ireland are living, and have been for some time past living, upon their capital, and are actually drawing upon their capital. The great increase in the adverse trade balance of the country represents, to a certain extent, the capital drawn from the banks of Ireland. Those who have deposits in the banks are withdrawing them, and evidently the effect of this is that the investments of our banks in England are being reduced, and it will be found on examination of the balance sheets of the banks last year that there has been a reduction of the sterling holdings in the banks in England. Now that is a very unsatisfactory state of affairs if it is coming into existence, and if it continues it will have the effect of bringing the affairs of the State into chaos and bankruptcy, that is if the rural community is existing on its capital as I maintain it is. The effect of that will be ruinous to the economic condition of the country if it is allowed to proceed. Now complaints are made that credit is not available to the farmers of the country as readily as it ought to be. Doubtless a case can be made in the opposite direction. Doubtless people will say credit is available for those worthy of credit. I doubt if that is the case. I am inclined to think that the present system of banking in Ireland is such that it is found too easy by the banks of this country to make their profits by taking deposits from Irish depositors, and mainly rural Irish depositors, and investing these deposits in England rather than using them for the purpose of providing credit in Ireland. We find, on examination of the bank balance sheets, that a very large proportion of our bank resources are invested in England. We find that only 46 per cent. of the bank resources are invested in Ireland, and in regard to some banks the percentage of investment in Ireland is very much less. Of that 46 per cent. in all probability, only comparatively a small proportion, perhaps not more than half is invested by means of loans to the rural community. Now I am aware of the fact that the first requirement and duty of banks is to see that the money of its depositors is safe. I believe that under modern conditions, and in view of the privileges which joint stock banks enjoy, this must not be regarded as the only duty that they owe to the people. They owe them other duties, and the question the Commission will have to inquire into, amongst other things, will be whether or not they are efficiently performing the duties which should be expected from them in the financial interests of the Free State.
It is found in the country districts that credit of a kind which is very urgently required by the farmers is not available. The only credit available is what is known as short-term credit. That credit is granted only when the farmers are prepared to provide good personal security in addition to their own security; otherwise the banks will not make those credits. It is well known to anybody connected with agriculture that short-term credits do not meet requirements. What really is required is a system of medium or long-term credits. Such credits would be more useful to the agricultural community than short-term credits.
The banking system in this country is such that the banks must keep their resources readily realisable; they must keep their assets in a liquid condition and must not lend out money that they would not be likely to get back within a reasonable time. They have to see that a very large proportion of the money lent is readily realisable. The bank investments in England can be regarded as actual cash, because they can be turned into cash on a few days' notice. With banks in Ireland it is quite different. It is evident, if there is a rush on the banks—if the banks are forced to make a demand—that people to whom they have lent money will not be able to produce the cash at the moment of demand. Such being the position of the banks, they endeavour to keep as large a proportion of their capital as possible in a readily realisable form. It would appear that the amount available for making advances to agriculturists forms a comparatively small proportion of the total resources of the bank.
I believe there will have to be some new institutions devised and established in this country. There is a real need for the establishment of some form of institution, either directly or indirectly connected with the banks or disconnected from the banks altogether, which would provide loans for the farmers on medium or long terms. That there are such institutions in existence in other countries must be known to the Government. The Commonwealth of Australia has established a bank which is providing long-term credits for the farmers and great hopes are expressed as to the advantage which will result to the farmers in the Commonwealth through the work being done by this bank. In Germany the German Government is making arrangements whereby money can be advanced to farmers. The money is provided by means of bonds issued to the public. The bonds are regarded as almost gilt-edged securities. The land in itself is reregarded as the best possible form of security, and on that account the bonds have not to bear a very high rate of interest; the rate is about seven per cent. Some system will have to be instituted in this country whereby credits of this kind will be made available for the farmers.
The whole system of credits was examined with great care in this country in the past. There was a commission which examined the system of agricultural credits and which made a very valuable report some years ago. There was also an examination into the matter by the Agricultural Commission. I regret that the Government has not seen fit to carry out the recommendation of the Agricultural Commission. It is my opinion that, somewhat along the lines suggested by the Agricultural Commission, credits can be devised which will meet the requirements of farmers. If credits are to be provided they will have to be provided through existing institutions, or institutions of a similar kind, rather than that some attempt should be made by the Government to provide credits.
I have endeavoured to show that there is an urgent necessity for an examination into the credit problem in Ireland. There is a still more urgent necessity for an examination into the credit system as applied to agriculture. Agricultural conditions at the present time are not at all as satisfactory as we would like them to be. There is a demand from the farmers for more credit than is available. It is stated that the ordinary farmer is not able to get sufficient credit to carry on his everyday business. I have tried to show that the banking system as it exists does not provide for anything but the short-term system of credit for farmers and that medium or long-term loans are not available.
I have tried to show that the personnel of this Commission is such that it is more likely to deal with the technical details of banking than with the broad general problems peculiar to an agricultural country, and that the personnel is such that we have not on this Commission any man whose knowledge of agriculture is such that we, the farmers, are prepared to rely with confidence upon its findings. I have endeavoured to show that the Terms of Reference are such that the inquiry of the Commission will be diverted rather away from the lines of agriculture and credit problems and into the technical details of banking. If that is the intention of the Minister in setting up this Commission I would say to him that he is wasting the time of the Commission, and that he is appointing a Commission which will not have the confidence of the Farmers' Party in the Dáil nor the confidence of the people of this country. I would, therefore, ask the Minister to reconsider the personnel of this Commission, and to meet us by agreeing to appoint some further members on the Commission who will have possibly a knowledge of banking and at the same time a knowledge of practical farming problems.
