We have an amendment. It reads:—"In line 3 after the word ‘time' to insert the words ‘and to modify the conditions.'" That amendment is intended to be a preliminary to certain amendments to the Bill itself, of which I have given notice. I think the question requires some fairly close examination in view of the declarations of the Minister and the action of the Departments of Finance and Industry and Commerce in respect to the carrying out of the Act. I would refer the Dáil to the Trade Loans (Guarantee) Act, 1924, Section 1, which is the operative section in respect of the larger portion of the present Bill, that is to say, the portion of it which deals with the larger sum. It has already been pointed out in another connection that this section, for the major part, was taken as a whole from the British Act known as the Trade Facilities Act, I think. There is one sub-section of this Act of ours which is not contained in the British Act. That is sub-section (4), which provides that no guarantee shall be given in respect of a loan, the proceeds, or part of the proceeds, of which are intended to be used as working capital. That sub-section is not in the British Act, but the rest of the section is taken as a whole from the British Act. I think it is reasonable if one wants to understand the meaning of the section to ascertain, if possible, the meaning of those who drafted the section. We may have our meaning for our own legislation. But when any question arises as to the meaning of a section in an Act, it is not unreasonable to consider the intentions of the people who drafted the section as a guide and as a help in interpreting it. With that in view I took the trouble yesterday to read the official reports of the discussion in the British House of Commons at the time of the introduction of their comparative Bill, the Trade Facilities Bill. I think it is important to have the minds of the people responsible for the introduction of that Bill which contained the very language of this section. There was a question raised as to the term "capital undertaking." It was explained by the Chancellor of the Exchequer, Sir Robert Horne, that "the phrase is taken from the Scottish Local Government Act, 1899." He said:
"Capital undertaking" in that Act "is intended to apply only to such large operations and works as County Councils and Parish Councils might happen to indulge in."
There was no idea in that Act that "capital undertaking"
"would cover anything that was concerned with ordinary trading purposes."
Right through the discussion it was evident to any reader that what was in mind there was creative works, undertakings which meant the production of something that did not exist already. Further than that, I would point out that the prevalent idea in the minds of the promoters of the Bill and all those who took part in the discussion was that the loans proposed to be raised were not to be loans by banks, but were to be public subscriptions. Public bodies overseas, in foreign countries, and in British Dominions, and local authorities and corporations who might be expected to go to the public for money rather than to banks, were uppermost in the minds of the promoters of the Bill and the framers of the section. Of course, questions of justification for the Bill were asked, and the explanation given on all hands was mainly that it was to facilitate borrowing at a lower rate with the Government guarantee than could be obtainable if there were no Government guarantee. It was said, for instance, by the Chancellor of the Exchequer:—
It is not because people have not gone to their ultimate credit to raise a loan that they do not need it, but they are not willing to raise a loan at the present time at the price at which money is now. They are waiting until the price is cheaper.
The Financial Secretary to the Treasury, Mr. Hilton Young, than whom there were not probably many higher authorities in regard to public finance, and who piloted the Bill through the Committee Stage and appears to have been an enthusiastic backer, said:—
The only financial assistance in the measure which can be given under this scheme if it be carefully examined, is the difference between the lower rate at which an undertaking will get its money with a guarantee, and the higher rate, at which it would have to get it without the guarantee. That is the limit of the help the State will give under the scheme.
Further on, he said:—
Here is an opportunity for the investing public in regard to an ascertained measure of industrial expansion and recuperation to join with other forces in that common effort which has been described as necessary in any true remedy for the great evils under which the country is suffering.
Those two quotations will show that the idea prevalent in the minds of the promoters was that with the Government guarantee money could be raised from the public at a lower rate than without the guarantee. It was even more insistently pointed out in answer to certain doubts that had been expressed, that there was no thought in the minds of the promoters of the Bill of going to the assistance of doubtful or shaky businesses. Mr. Hilton Young said:—
It cannot be said too clearly that nothing is more remote from the intention. Nothing, it is confidently anticipated, will be more remote from the manner in which this scheme will act than that it should be in any respect, or make any approach whatsoever towards being, a scheme for the bolstering up of undertakings which are approaching insolvency. So far from that being the intention of the scheme, of course the proposition is ridiculous, and so far from it being the effect of the scheme the reasonable thing to anticipate is that with a wide field of choice those undertakings which are accepted so far from being at the bottom of the scale of credit or verging to the bottom, they will be undertakings which are situated at the very summit.
A question had been raised as to the effect of a financial operation of this kind—the sum in question was £25,000,000—and the effect of an issue of credit to that extent upon prices, and Mr. Hilton Young answered that criticism in these words:—
It may be argued that any scheme of this sort must tend to keep up prices by increasing the supply of credit. Against that you must set this—
and I would ask the Dáil to note the terms of this statement
—that any scheme such as this to increase the means of transport and the means of production will increase the supply of goods available, will tend to cheapen the cost of production and transport, and so will tend to counteract on the one hand what is undoubtedly the effect of increasing the supply of credit on the other.
The point I emphasise there is that in the minds of the promoters of that British Bill and the framers of the section, the idea was to increase the means of transport and the means of production. On that point, too, I would quote the same gentleman, Mr. Hilton Young. A question had been raised as to the insertion of two words which finally were inserted in the Bill and which are reproduced in our Act. The words are "or produced"—"or in connection with the purchase of articles manufactured or produced in Saorstát Eireann," or, in the British Bill, "in Great Britain." He said:—
We are only dealing in this Bill with capital works, and I do not think that the inclusion of the words "or produced" would really have very much effect, because articles needed in connection with capital work are manufactured.
I have made these quotations because I want to emphasise the fact that the idea underlying the promoters of that Bill and the framers of the section, which we have copied, was that a capital undertaking would be an undertaking for the creation of something which does not at present exist—the undertaking of new works. While that was, I suggest, undoubtedly the intention of the framers of the section, it is not the present intention of our Minister. I think it may have been the intention of the Minister when introducing the first Bill. If one looks up the discussions, I think it will be found that the intentions of the Bill were to encourage the carrying out of new industrial operations. In fact, the Minister has pointed out that the expectations of that time have not been fulfilled, and some modifications have had to be entered upon. I do not think that it is an unfair statement. My point is that if it is the present intention, as it has been the past action of the Minister, to guarantee loans in circumstances which are not absolutely clearly intended by the section as it stands, we ought to modify the terms of the section and we ought to make it clearly possible under the section to guarantee loans for undertakings which are not necessarily works of this new capital nature of the kind which I have attempted to describe.
The amendment which I have put down to this section would enlarge the powers of the Minister, and I have done that because I think it is the Minister's desire, and that that desire has been shown by the experience which we discussed the other day. The proposal I have on the paper with regard to the amendment of the section would allow the loan to be guaranteed for a purpose wider than the carrying out of a capital undertaking, defining a capital undertaking in the narrower sense as the creation of a new productive asset, and it would allow the Minister to guarantee a loan which was to be used towards, or in connection with, the carrying on of any manufacturing industry.
I know that it will be charged against this proposal to enlarge the powers of the Minister that it is very risky finance, that it is not a wise thing to give the Minister power to guarantee loans of this kind. But it is also said that it is unwise to give trade loans even for the purpose of new capital undertakings. As I said the other day, if the Minister can come along and say that an industry is in the position of, perhaps, having to dismiss hundreds of workmen, or to go out of existence because of some temporary failure, or that an industry or business exists which is capable of meeting a demand that is confidently expected to be created by a new tariff proposal, I am prepared to say that the Minister should have the power to guarantee such a loan within the limits defined by the Dáil. If he comes along and says that the circumstances of the country are such, the industrial prospects are such, as would require that these businesses should be assisted in this direct fashion by the State, then I am prepared to support the proposition and to advocate that within the limits of sums fixed by the Dáil, he should be given the discretion to grant these loans. I am assuming that in the selection of the loans which would be guaranteed all the checks that are necessary—the check of the Advisory Committee, the check of the Minister for Industry and Commerce, and the final check of the Minister for Finance —will be applied as to the prospects of ultimate success and the security of the loan.
While I am advocating that, and prepared to support that, I think that it is quite wrong to guarantee a loan in respect of an existing business which is not to be used for reconstructive purposes, or for the creation of new works, or an extension of existing works under the powers of an Act with these limitations contained in it. I do not want, unless it is necessary, to go into the question as to whether or not the section itself has been strictly applied, but I am putting at this stage, at any rate, the proposal that the Minister's powers in regard to the guarantee of loans should be increased—that is to say, the conditions should be modified—and it is with the intention that it will be possible to alter the Bill itself, and incidentally alter the existing Act, that I am moving this amendment to the financial motion. If such an amendment is not carried, then I understand it will be impossible to do as I suggest on the Bill itself.
Progress ordered to be reported.
