Vol. 16 No. 21
I ask the leave of the House to amend the motion that has been circulated by deleting the word "interim" in the second last line. The motion would then read:—
That the Dáil is of opinion that the proposed sale and transfer of the shares in the National Land Bank now standing in the name of the Minister for Finance to the Bank of Ireland should not be proceeded with pending publication of the Report of the Banking Commission.
We will take the motion in that form, with the word "interim" deleted.
I feel, and the members of the Farmers' Party feel, that we cannot leave the statement made by the Minister for Finance to-day in regard to the change which is taking place in the position of the Land Bank, without making a protest against the manner in which the matter has been brought before the House and against the manner in which the absorption of the Land Bank by the Bank of Ireland is about to take place. I do not say that the bargain made by the Minister and by the Government with the Bank of Ireland is not a good bargain; that it is not the best bargain that could be made. Quite possibly it is. I am inclined to think it is a good bargain, but, even so, I would go the length of saying that if we postponed this matter to a later date and made a bargain which was not so much to the advantage of the State as the present bargain is, we might be doing a thing which would be a service to the State.
My proposal is that the Dáil does not approve of the action of the Minister for Finance pending the report of the Banking Commission. I am referring to the final report and not the interim report which the Minister states has been presented and which favours the selling out of the Government's assets in the Land Bank to the Bank of Ireland. I believe the question of the status of the Land Bank ought not to be taken as an individual matter; it should be taken in conjunction with the whole matter of banking and credits. The Dáil is not in a position to give its support to the present transaction without having an opportunity of examining the whole system of banking and credits in this country in the light of the information which will be given to them by the report of the Banking Commission. Members of the Dáil, and the public generally, have no information as to the lines along which the report of the Banking Commission will be framed. We have heard rumours and suggestions and, possibly, we have our own ideas of the lines on which the report will be based; but we have no definite information. One thing is certain: some arrangement or recommendation ought to be made by the Banking Commission for the provision of better credit facilities for the agriculturists of this country. We had it from the Minister for Lands and Agriculture, in his statement on the Estimate for the Department of Agriculture, that he favours something in the nature of the provision of medium term credits.
Not as a banking transaction.
Possibly not as a banking transaction. I believe it will not be as a banking transaction. I have formed the opinion that something of that nature is required. The ordinary joint-stock banks are not at present meeting the full credit requirements of the agriculturists. Situated as they are, carrying on business according to the ideas by which ordinary banking transactions are governed in this country, it is not possible for them to meet the full credit requirements of the agricultural community. It is evident some change will have to be made in regard to the system on which the banks work in making advances, or otherwise there should be the provision of a new institution to meet the present-day credit requirements of farmers.
I have suggested that something in the nature of a mortgage institution of some kind should be formed for the purpose of making medium or long-term advances to farmers. There are possibilities in that direction which I do not intend to enlarge upon. It probably will be touched upon, or recommended by, the Banking Commission. It struck me that it is possible that the foundation which has been laid in this National Land Bank might be used in some way to act as a basis upon which such a financial institution could be built up.
The officials of the Bank and the directors of the bank have been in close touch with the farming community, and with the farming problem of the country, and they should be in a better position to deal with transactions of that kind and have a more intimate knowledge of the requirements of the country in regard to matters of that kind than any institution which might be built up as the Minister suggests. I do not suggest that it would be the best, but it might prove to be the best. We cannot say whether it would or not, but I say if a decision is taken to-day by the Dáil in support of the Minister in concluding this transaction with the Bank of Ireland the possibilities in the direction that I have indicated will have passed.
The Minister has suggested that matters of this kind cannot be dealt with by lengthy debates in the Dáil without doing serious harm to the credit of the Bank itself. In that statement I am not in agreement with the Minister. I think it would not do harm to the credit of the Bank itself. We have heard on many occasions in recent years of proposed amalgamations between banks in England. We have heard it mentioned in financial and other papers that certain banks were in negotiation with other banks for the purpose of one bank being amalgamated with the other. In these negotiations the banks that were amalgamated with the other banks were small banks which were taken up by the larger banks. We have never heard of any case where the credit of the small bank was injured through its being known to the public that these negotiations were going on. In fact very often the result was an improvement in the credit of the small bank, and we have seen that in these cases the shares of the small bank that was going to be amalgamated with the larger, went up on the Stock Exchange as a result of rumours of this kind getting abroad.
Everyone knows that the National Land Bank is the State Bank, that though it is not controlled by the State it is financed by the State, and that its financial integrity is morally if not actually guaranteed by the State.
I did not refer to the credit of the National Land Bank at all. I did not say that the credit of the Bank would be injured, but I said its business would be injured and that its value as a saleable asset would shrink.
I take it that means the same thing.
No.
I certainly do not anticipate that its business would shrink, because evidently from the statement made recently one would conclude that its business is not expanding at all, that it is practically at a standstill, that it has turned away of late from the particular form of transaction for which it was established to engage in ordinary banking transactions. Now we are in the dark to a large extent as to the position with regard to this Bank in many ways. We are certainly in no position to give a vote in support of any transaction in which we are supposed to understand the financial position of the Bank. We know that the sum of money which is being paid by the Bank of Ireland for the Bank is the exact paid-up share capital of the Bank. I presume from that the shares are all held by the Minister for Finance. At least I understand that the original capital was advanced from the Republican Bonds which were issued by the Dáil Eireann Government, which accepted responsibility for the payment of these Republican Bonds, and that in that regard the Government is really the one and only shareholder of the National Land Bank.
There are other points of view with regard to this matter to which I wish to refer. There is the point of view that certain people, particularly farmers, have received advances from the Bank. It is well known that these advances were made on a too generous scale at a time when advances of that kind were being made on a very generous scale by the other banks throughout the country, and perhaps it may be the fact that they were given on a still more generous scale by the National Land Bank, which was not bound to conduct its business according to the ordinary financial rules which apply to banks generally. There will, undoubtedly, be a feeling of semi-consternation amongst people who had advances of that kind from the National Land Bank when they find that it is being taken over by an ordinary financial institution, and there will be a feeling that perhaps undue pressure may be brought upon them to pay up their present indebtedness to the Land Bank. In that regard I believe the State has a problem in front of it and a problem which it must deal with sometime by other means than the ordinary means of taking advantage of the law as it stands, and forcing people into bankruptcy in order to get as much as they can out of them, people who were in fact pressed by the banks and by the National Land Bank in particular at one time to accept advances for the purpose of purchasing lands.
With regard to the details of the statement made by the Minister I have very little to say. These details were given in very brief outline, but there are one or two points which seem to be rather extraordinary. There is the point, so far as I can gather, that it is the intention to superannuate certain redundant officials by giving them per annum two-thirds of the salary which they had in the last year of their employment. While I think it is desirable that they should receive compensation, I think it is extraordinary that the suggestion should be made that men, who cannot have been in this employment longer than seven years, should get a permanent retiring allowance of two-thirds of their present salary. I see no reason why the bank which is taking over the National Land Bank should not retain the services of all those who are employed there. I think this continual payment of pensions to men who are found to be redundant, for one reason or another, both in regard to public services and now in regard to banking service, is becoming a scandal. The country is packed with superannuated officials. I see no reason why men who were found capable of doing the work of the National Land Bank should not be retained by the Bank of Ireland. Possibly the Bank of Ireland may not find immediate use for their services, but in the ordinary course a bank of that kind has from year to year to call on the youth of the country to fill vacancies that may occur. By stopping that call for a short time they could easily absorb every man now in the service of the National Land Bank. I feel that this matter has been rushed on the Dáil too precipitously, and that it ought to receive more consideration than it can receive to-night. I propose this motion so that the matter can be postponed until the House and the public will be in possession of the full report of the Banking Commission.
I second the motion. I confess that flinging this matter at our heads to-day without any notice puts Deputies in a difficult position to make a case against a Minister who has been associated with all matters and transactions connected with the Land Bank since it was called into existence. Is it an indication of policy on the part of the Executive Council that, so far as the State is concerned, its policy in the future is going to be different to that enunciated by the First Dáil and followed up to the present? Has the Executive Council made up its mind that, so far as the Government is concerned, it must remove itself out of the sphere of banking business, and that it intends to leave to these institutions the work of financing concerns which require accommodation, or new industries which may now, or in the future, demand assistance by way of credit, or otherwise, from these institutions? If that is to be the declared policy, following on the action of the Executive Council in selling their rights in the National Land Bank to the Bank of Ireland, I feel that the Dáil should be given an opportunity of examining it in the full light of all the facts that are available to the Executive. We are not in that position this evening. We are met by the statement of the Minister that the handing over of the National Land Bank is practically an accomplished fact. It is a decision of the Executive Council in which we are to acquiesce. That decision has been taken by the Executive Council because of the information which they have at their disposal, because of the recommendations which have been made to them in the interim reports of the Banking Commission, and we are expected to say "Yes, the Executive Council are doing right."
I suggest that the Dáil would be acting unwisely in approving of that action. We would be acting without being in possession of the facts that enabled the Executive Council to make up their minds. These facts have not been placed before us and, as I said earlier in the day, the wisdom of the action taken by the Ministry can only be judged in the light of the future, when we see the final recommendations of the Banking Commission, and when we see what the Commission recommends as the duty of the State in affording, where it can, facilities to those citizens for continuing, or extending, their business by obtaining credit which they are unable at present to obtain from the present banking institutions. The Minister tells us that they have received a number of interim reports from the Banking Commission. Inasmuch as the National Land Bank came into existence through the utilisation of funds subscribed to the Republican Loan, I would like to know whether the fact that that money is repayable next year has anything to do with the decision of the Executive Council. Is the Minister satisfied from the recommendations made by the Banking Commission up to the present that the State must remove itself entirely out of the sphere in which the credit of the State can be pledged to assist citizens desirous of extending their business and to come to their aid in times of stress? Has the outlook of the men who deemed it necessary to bring the Land Bank into existence in 1919 or 1920 changed? Has the Banking Commission, or have the representatives of the banks on that Commission, given an indication of a change of policy on the part of banking institutions? Is the Government satisfied that these institutions are going to come along to do the work that the National Land Bank was set up to perform for the citizens of the State?
Until we have evidence from the Minister that the possibilities point in that direction, we cannot be satisfied that the policy of the Ministry is wise, and we cannot be prepared to say that it is right that we should pass over to others this institution, brought into existence by money subscribed by the people of the country, and kept there in order that it might benefit the people in building up the State, and later find the State put into the position of having to bring into existence another institution practically similar to the one we have now. I feel from the facts placed before us this evening by the Minister—the very few facts—that we would not be justified in any such course, and, however good on the face of them the figures given and however good the bargain appears to be at the moment—from the Ministry's point of view it may appear good—as far as we can see we have not sufficient evidence to declare that he has made a good bargain. Certainly without some other facts being placed before the Dáil than those which the Minister has up to the present supplied, I urge that the Dáil would not be acting wisely in approving of the policy which the Minister asks us to accept.
I support the views expressed by Deputy Heffernan and Deputy Baxter in the main. I would like to draw attention to what was to me perhaps the most significant statement made by the Minister in view of the relations between the Land Bank and the State. That was the statement that the first steps in this proposed sale were initiated by the Bank of Ireland. It is rather an extraordinary course for a private banking institution to initiate the purchase of a State institution from the State without any preliminaries. I wonder had anything gone on before this alleged initiation by the Bank of Ireland? I wonder what would be thought if we said that a banking institution or some insurance society or some other private limited company, with big monetary reserves, came along and said: "We are going to buy out the Army" or "We are going to buy out the Post Office"——
Or the Navy.
"We make an offer for the Post Office, leaving us free to charge what we wish for that public service and to cut off the service wherever we desire. We will not continue to send letters for twopence into the hillsides. We will restrict our activities to the city where we can make a profit and pay off losses very easily." I wonder whether in the case of such an institution as the Post Office or the telephones, the telephones which promise to be profitable, if some banking institution were to come along and make an offer for the purchase of this State institution what would be thought and what would be said of the private company? I do not know what would be said, but I know what would be thought. It is difficult for me to believe that nothing had preceded the proposal to buy out the State Bank by the Bank of Ireland. I read occasionally the reports of statements of chairmen of banking companies when they are making their annual statements and for a long time I have heard of items of 15, 18 and 20 per cent., dividend, year after year. Whatever may be the state of the country the banks are always paying. One of these banks, the most prosperous probably, is offering to buy out the State. That may be a little exaggeration; perhaps they have bought out the State. They have gone a long way at any rate to buy out the State. They are able, one bank with another, to control the State by threats of one sort or another. That, of course, is not peculiar to the Free State.
It is, I think, a fairly sound statement to make that the banks do control the public activities of most of the countries in the world to-day. They are in a position to control them. They will only act perhaps when necessity— what they consider necessity—compels but they are in a position to control State action. I think very often they exercise their power of such control passively if not actively, and one means of having in reserve a check upon that control may lie in the existence of an institution of which the National Land Bank might well have been the nucleus. But this private company comes along and offers to buy out the State interest. I asked this afternoon whether there was any guarantee against the Bank of Ireland, which is buying out the State interest, being itself bought out by, say, the Bank of England. I do not know whether the Minister can give us any guarantee of that kind or whether he has any assurance of that sort, but I should be surprised if within the next two years the banking businesses of this country do not follow the tendency in Great Britain and other countries to amalgamate. There will happen with the existing banks here unless some kind of check is placed upon them, what has happened to some of the Northern banks that have become associated with and bound up with some of the English banks.
It may be said that that is not going to make very much difference; that at present they are practically bound to the policy which may be initiated by the English banks. If you take that view, then you may, of course, as well bow down and worship the banking institutions as the real governors of this island. It may be so, but at least let us not formally acknowledge by the acceptance of this proposition that a private bank can come along, buy out the State, and initiate such a proposal. I think it is well worth while trying to remind ourselves of the history of this National Land Bank and to consider the sudden turn of events that seems to have developed. Deputy Baxter has reminded us that this institution was founded in times of revolution. The Minister referred to it this afternoon. He said that it was founded with certain definite intentions, which were enlarged after a year or two. It has not grown to the extent that some of us would have liked, but I venture to say that the responsibility for that lies to a great extent with the Government.
The House at various times has been asked to agree to Bills and motions of one kind or another, with the object of regularising the work of the National Land Bank in every way and bringing it quite definitely into the region of a State-owned institution. We were informed that the Minister himself was on the board of directors, and that a nominee of his was also on the board. They have been given certain rights and, perhaps, privileges by the State to do certain duties which could not be, and were not, done by the other banks. I wonder whether if there had been a real desire on the part of the Ministry to give this institution a chance to develop and expand, and to some extent to supplant private banking institutions, it would not have been much more prosperous and very much more effectual from the point of view of assisting industry and commerce. Had there been a clear indication that this was a national institution backed and secured by the State, I think you could have had a very much greater support from private individuals. Certainly the bank's own business might have been much more prosperous if the State had given it more of its business. In view of the history of the bank and its association with the Government, it is reasonably claimed by Deputy Heffernan that the break should not come in this fashion, and should not have been announced to the Dáil in this manner. We were told some time ago that the Banking Commission was to be set up. We were informed later of the terms of reference and the composition of the Commission. I have not the terms of reference by me, but I imagine that incidental, at least, to the inquiry of the Banking Commission would be the relations of a national bank to the State, and, perhaps, even the relations of the National Land Bank to the State. That being the case, ought we not to have the inquiry completed before we decided to cut adrift this national banking institution from the control of the State?
It seems to me the decision that has been taken and announced so suddenly to the Dáil, presumably without any real opportunity to reconsider the matter, is dealing with the report of the Banking Commission piecemeal and without giving the Dáil any inkling of what is the general comprehensive policy of this Banking Commission. Is the Government entering upon a considered policy regarding banking credit, note issue, gold reserves, and the like? Has it yet formed any clear idea as to what its policy is to be in these matters, or is this only the beginning, taking the first step without knowing where the rest of the steps will lead? Has it any direction in its mind in regard to a policy on banking matters? One would have thought, at any rate, that we would have waited until the Banking Commission had reported and until we knew what the general line of policy would be, and that the Dáil would be informed of that before the first step was taken. I do not know whether as part of the agreement there is any guarantee to other people besides the employees. I wonder is there any guarantee that the depositors or the borrowers are going to be treated as well—perhaps I should ask are they going to be treated as generously as the employees? Are the depositors going to be dealt with by the new bank at least as satisfactorily as they had been dealt with by the National Land Bank? There is no guarantee of that. I suppose, therefore, the depositors will have the freedom of going into one of the other banks and dealing with another partner in the general association of banks. There was a chance that the National Land Bank would have been a check upon the rather rapacious activities of the banks.
This particular action seems to be a definite break from the policy that was outlined in the early stages of the National Land Bank and of the Governmental movement that led to the establishment of the bank, that is to say, we are abandoning, for all time, judging by this gesture, any thought that the State is to control banks and banking policy, or to direct or check banking policy. The banks henceforth are to be left to work their will on industry and agriculture. If it is announced that there is to be no check on the free play of the banks then we shall know where we are. This certainly seems to be the beginning of a policy of that kind. I think we ought to know from the Minister whether the Government has come to any decision regarding the privileges that banks at present enjoy—these private banks, and particularly the Bank of Ireland. Is there anything else besides handing over these Government rights in the National Land Bank being agreed upon, or rather are we to take it that this is merely an isolated act having no reference whatever to State policy regarding banks, credit, reserves, note issue and the like? It would have been much more decent if instead of coming to the Dáil on the last day but one of our meetings and announcing this very important departure from the policy that had been hitherto enunciated, the Minister would have waited until the Report of the Banking Commission had been made public. We would then have an opportunity to discuss the policy as a whole and not piecemeal. I hope the Deputies will press this motion to a division, and that we shall have the opportunity of registering our protest against this method of carrying on State work.
As far as I can see, the method adopted by the Minister is perfectly illegal and unconstitutional. The Land Bank, as far as I remember, was the property of the Dáil and not of the Ministry or the Minister for Finance. The Land Bank was founded by the First Dáil. It was started out of the proceeds of the first Republican loan. I do not know but I believe that I am the only private member of this House who took part in the campaign for the recruitment of that loan in this country. With the exception of the Minister for Local Government, I am the only member of this House who took part in the campaign for subscriptions to that loan in the United States.
Deputy O'Mara, I think, is a member of the House.
I might be excused for forgetting about Deputy O'Mara.
He is only interested in economy.
At any rate, I do not think that anybody who subscribed to that loan either in Ireland or the United States, or who was interested in the success of that campaign, ever thought that they were contributing for the ultimate interests of the Bank of Ireland. I understand that, under the terms of the Dáil Eireann Loans and Funds Act, all the assets of the First and Second Dála are vested in the Minister for Finance. Apparently, under the provisions of that Act, the Minister claims the right to dispose irresponsibly of all the assets of the First and Second Dála. Since the passing of that Act, this Dáil has voted substantial sums to the Land Bank for general purposes. Consequently the assets represented by the Land Bank cannot be disposed of without the express permission of the Dáil, as at present constituted. If the Land Bank was solely the property of the First Dáil, the Minister might, perhaps, argue that, in virtue of the legislation which we have passed, he would be entitled to dispose of it at will, but since we have voted definite sums for general purposes to that State undertaking, I think he is not justified in his assumption that he can dispose of this State property without the direct and categorical sanction of the House.
Deputy Johnson referred to one matter vaguely, and other Deputies, also, referred to it—that is, the text of the agreement between the Minister for Finance, in his personal capacity as principal shareholder in the National Land Bank, and the Bank of Ireland. I think it is quite obvious that if there is any doubt as to who owns the Land Bank—whether it is the Minister or whether it is the Dáil—the Minister should lay before the Dáil the exact terms of the agreement or understanding between his Department and the Bank of Ireland. We have heard the Minister's statement, that the employees of the Land Bank are to be given two-thirds of their salaries as pension if they are found unnecessary by the Bank of Ireland. The Minister has not stated what the position is to be of the Directors of the National Land Bank. He has not said whether there is any undertaking that the directors of the National Land Bank, or any of them, shall be included in the directorate or Board of Governors of the Bank of Ireland. In view of the fact that, year after year, we have voted moneys for this Bank, we are entitled to know the exact terms of this undertaking with the Bank of Ireland and the implications of the undertakings.
There is one other matter, in connection with this transaction, which has not been adequately explained by the Minister. The Minister said, this afternoon, that it would be absurd to hawk round the National Land Bank and advertise for offers for purchase of it. What is the position of the Bank of Ireland which gives it the right to make a private offer to the Government for the purchase of this undertaking—a privilege which is denied to the other banking institutions of the country. What particular right does the Bank of Ireland enjoy in that respect? I do not see that there is any statutory obligation on the Minister to accept an offer by the Bank of Ireland—a secret offer, apparently, because the other financial institutions of the country were not informed that the Government were willing to sell the National Land Bank. Surely, from the point of view of the public accounts, if any State perquisite is to be sold, it should be sold to the highest bidder. I doubt if the successors to the present Committee of Public Accounts will not have to investigate as to whether the sale of the National Land Bank was conducted, in all the circumstances, in a manner calculated to produce the maximum return to the State. When being sold—particularly after periods of confusion and periods of revolution and warfare—a State's perquisites are generally sold to the highest bidder. I wonder whether the future Committee of Public Accounts will be able to stand over the secret sale of the National Land Bank to a private company without any attempt being made to find whether there would be a better offer forthcoming. This question may not arise this year, but I think it will probably arise next year, when the new Committee of Public Accounts comes to consider this extraordinary transaction.
I think we may accept the sale of this Bank as the beginning of a new departure by the Government—a departure from the policy which was at one time mapped out. While I do not say that the sale is not a good one or that the assets are not well disposed of, I think that, in view of the fact that the Banking Commission has not yet reported finally and in view of the position in connection with banking, generally, in the State, it is rather unfortunate that the sale of this institution should take place at present. The banks of the country are practically one. They have some kind of secret council by which the same terms are offered to all customers. Sixty per cent or seventy per cent. of the assets of the banks here are invested in another country. I had hoped that something would emerge from the report of the Banking Commission by which the Land Bank might have been used to counter, what I may call, the monstrous charges which the combined banking institutions of this country are imposing upon citizens. There is no business carried on in this country which is paying as well as the banking business. The banks are paying dividends of from 18 to 20 per cent., while at the same time, industry is said to be depressed and agriculture is struggling. The gombeen banks seem to be the only institutions which are making money at present in this country. I think Deputy Esmonde is quite right in his view of the sale. It is distinctly stated in Article 11 of the Constitution that any proposal for sale of the assets of this State should be brought before the Oireachtas. The Deputy has dealt with that aspect of the case.
I am concerned, particularly, with the case of the customers of the bank. Many of them are farmers and many of them are creamery societies which have, perhaps, too much money on overdraft. I am concerned to know if the Minister has made any attempt to safeguard the interests of those borrowers. I looked upon this institution as a means by which we might be able to reduce the rate of interest charged by the combined banking institutions. While, as it was functioning lately, there was not very much use for the Land Bank, I thought that, as a result of the report of the Banking Commission, it might be utilised to provide better credit facilities for the people.
I want to add a word of protest to the protest made by other Deputies against the proposed sale of the National Land Bank to the Bank of Ireland. I think the most amazing feature of the whole proceeding is the casual manner in which the Minister for Finance intimated to the Dáil this afternoon that it was proposed to sell the State interest in this bank to the Bank of Ireland. One would think, from the casual manner in which the Minister made this intimation, that he was dealing with an old war-horse. We are asked to agree to the sale of the State's interest in the Land Bank without having an opportunity of perusing the conditions of sale, without having an opportunity of seeing the interim report of the Banking Commission, and without having any idea of the form the final report of the Banking Commission will take. We are asked to take a step in the dark. We are asked to take a step not knowing whether, when the final report of the Banking Commission is given us, that step will be in the right direction or whether it will be a false step and inimical to the interests of the nation.
The Minister this evening made a case which might in substance be said to be that he saw no future whatever for the National Land Bank, that it was an institution dwarfed in stature, that he saw no prospect of its growing up, that it was in the category of small banks and that he saw no immediate prospect of its getting out of that category. If that is so and this institution is a State bank, then surely the State is responsible for the bank being in that position? Surely if the State desires it, it could get it out of that category of small banks and into that of big banks? Those of us who hoped to see the National Land Bank developed into a great State-owned bank must feel profoundly dissatisfied at the proposal of the Minister. We have heard here on many occasions that the present policy of banks is one not in sympathy with agriculture or the nation's aspirations or with industries. In short, the banking policy is dictated by what they can make out of their transactions—whether there is going to be a profit, regardless altogether of what an advance to industry, agriculture or a local authority may mean to the national well-being.
It is a well-known fact that the banks' policy at present towards agriculture and towards farmers who invested money in land is one that is a negation of everything that a banking institution with any regard to the welfare of the nation ought to have. It is well known to the local authorities that they cannot get money for public health works, for schemes of reconstruction and housing, and, as Deputy Wilson said, there must be some secret council influencing the movements of all the banks. That is clearly indicated by the decision of the Standing Committee of the Irish Banks which was taken some time ago to charge a fixed rate of interest on loans. I am of opinion that that Standing Committee has decided that no bank will lend money to a local authority for more than 15 years. Otherwise it would be possible surely for some bank to break through the 15 year limit to lend to any local authority. Let any local authority endeavour to get through the 15-year limit and it will find the attitude of the banks is the same whether they be small or large.
That brings us to the point that so far as the banking institutions in the country are concerned they are all united in getting a fixed rate of interest and in a determination not to lend the local authority money for a period of more than 15 years. They desire to get whatever profit they can without incurring any risks in connection with it. I had hoped that the National Land Bank, with the aid of the Dáil, which realised the need for a State-owned bank, would become an institution which would be an effective curb on the activities of the banks as we know them. To-day, I think, this action of the Minister is retrogressive and does not indicate that the Government have any sympathy with the idea of a State-owned bank. Rather does it indicate that the Government are satisfied with the present policy of the banks in their relation to the national well-being. I had hoped that the National Land Bank, owned by the State, reflecting the sympathies of the State for industry, for agriculture and for the national well-being generally would be an instrument of banking that this country could well afford to equip itself with. But the proposal of the Minister for Finance indicates that in industry or agriculture the country need not expect any better help from the banks in the future than they are getting in the present or have got in the past.
The Minister indicated that under the terms of the sale the Exchequer would benefit to the extent of £203,000. That may be a very big sum, but I think it is small when we consider the asset we are going to give away, and, what is worst of all, give away to a banking institution that has shown in common with other banks that it has very little sympathy with the national well-being and is not disposed to look at problems and requests for loans or advances from any standpoint other than that of its own profit. I suggest to the Dáil that we are not in immediate need of £203,000. We could do with it if it were a matter of a gift or grant. There is no need to sell the Land Bank to pay any debt, and we should not, unless we are satisfied that we are doing a wise thing, sell the National Land Bank. The Dáil, above all, should not allow the National Land Bank to be sold in the dark. We ought to know what the terms of the sale are and what the interim and final report of the Banking Commission are. We should see the final report on the question of banking before the National Land Bank is sold to a private institution.
The Minister, in reply to Deputy Cooper, stated that the Bank of Ireland is taking over all the liabilities of the National Land Bank. I should like to know if it is taking over the liabilities incurred owing to the high prices paid for land for expediency sake. It is well known that the Land Bank was established in order to get over the land trouble, but instead of getting over that trouble it created greater trouble by inflating the value of the land. The other banks had to follow suit in order to keep their customers, with the result that the price of land increased to five times its original value. They had the example of the Government of the day advancing money on the value of the land. They believed that the land was going to be a gold mine. The Minister says that the State will benefit to the extent of £203,000. If the State will benefit to that extent it will lose to the extent of about £500,000 by reason of the Land Commission taking over the liabilities for the foolish investments made by the Land Bank some years ago. I think if the Bank of Ireland is taking over the Land Bank with all its trade, custom and branches through the country, it ought to take over the liabilities also for those purchases. I should also like to ask the Minister whether it is the Bank of Ireland or the State which is going to pay the salaries for the redundant officials?
The State will pay £13,000.
The Minister has paid a tribute to the banking officials for the way they stood up against the Tans. I regret I cannot pay that tribute. Some of the officials that are being pensioned were often opposed and, instead of being helpful to the State, were inclined to give information. If a good bargain is made I think it is on the side of the Bank of Ireland. I think it is proved when the Bank of Ireland stock went up 15 to 20 points within the last ten days. I think the stock went up because it is a good bargain.
I should like to ask if the Minister proposes to introduce legislation to cover the deal with the Bank of Ireland or whether he considers legislation unnecessary? I should also like to know, in view of the statement that this deal with the Bank of Ireland is about to take place and in view of the long adjournment of the Dáil, whether he is in a position to state now that the final report of the Banking Commission will be issued before next November, and whether he can say now that it is the intention that no action will be taken on the report of the Banking Commission until it is before the House, or whether it is likely that any action will be taken on the report of the Banking Commission before the Dáil reassembles?
A great deal of emphasis has been laid on the fact that the interim report of the Banking Commission is not in the hands of Deputies. It has been stated that we propose to take this action because of the interim report of the Banking Commission. That is not correct. We are not taking action because there was a positive recommendation that the Land Bank should not be continued. We are taking it because there is no recommendation of any function to be given it which would justify its continuance. We have been quite clear for a long time that we could not justify the continuance of the Land Bank on the present basis. Its continuance could only be justified if new functions were assigned to it, or suggested for it. These new functions have not been suggested. That is the main thing, and would have been sufficient without positive recommendation that the Land Bank should be continued. As a matter of fact, although we have not got the final report of the Banking Commission, I think all the ground has been covered, and that the final report will be something in the nature of a resumé, a linking together of the various recommendations contained in the interim reports. There will be nothing in any report which would cause us to hesitate in concluding the bargain which it is now possible for us to conclude. Certainly we do not desire a big State Bank organised on anything like the lines of the National Land Bank. I have no hesitation at all in saying that whatever might be the fact at some other time in this country, or in some other country, a State Bank organised on the lines of the National Land Bank could not be satisfactorily carried on. When a person goes to an ordinary bank and applies for an advance, if he does not get it he may go somewhere else, or make whatever protest he likes to the manager or directors, but he does not attempt to use political pressure. We have people who did not get the accommodation that they thought they should get from the National Land Bank continually coming to Ministers and attempting to exercise political pressure. If the institution had been a big institution that evil would have been increased enormously, and to such an extent that I believe the position of directors and Ministers would have been made impossible. As a matter of fact a recommendation of the League of Nations Committee in connection with central banking is that it should not be subject to political control.
If we were to continue the National Land Bank and if we intended to expand it, it would be necessary to dispose of the sort of interest we have in it, and the control we have over it. If we did not do that I have no doubt that one time or another, under some body, the powers vested in the hands of people with political responsibility would be bound to be misused, either through the exigencies of the State or political pressure. I do not believe that banking business is a business that could be conducted by people who have political responsibilities, who must, more or less, be subject to pressure which can be put on people with political responsibility. Deputy Johnson suggested that the tendency of banks to amalgamate would cause the different banking institutions in the Free State to be swallowed up by banking institutions outside it. As a matter of fact, one bank which is controlled outside disposed of all its branches in the Free State because its policy was not to have branches in a place which was separated politically from Great Britain. There is certainly a counter tendency. There is no intention of cutting ourselves off from any idea of helping industry or of concerning ourselves with credit. I believe that before very long, as a result of the Banking Commission, we will be able to make proposals to the Dáil both for agricultural credit, long credit and credit for manufacturers and for industry. We do not get anything by keeping the National Land Bank. The National Land Bank was not able to do anything for credit because it could not get the resources. Very little public money ever came into the National Land Bank. At one stage of its existence it could have hardly carried on if the White Cross money had not become available. Since the White Cross money became less, in order to keep the bank in cash every sort of attempt has to be made to transfer Government funds which we were not bound by law to keep at the Bank of Ireland. We had to endeavour to transfer them to the National Land Bank to keep it in funds. It was always a difficult thing to have the money available when wanted.
The position in regard to the National Land Bank was simply this, that people who wanted credit and perhaps who had a fairly good proposition went to it, but people who could make deposits did not go to it in any number. The existence of the National Land Bank did nothing towards providing competition or towards making it possible that there should be competition for reducing the rates of interest. It was simply a very small bank which had to carry on just the way the other banks carried on. It had not the germs of growth in it. It served the immediate purpose for which it was set up. It has not been able to serve any other purpose. It did something towards preventing the national struggle developing into a land war. Beyond that it has not been able to do anything but mark time.
Deputies have referred to the interests of the customers. I think the interests of the customers are safeguarded and also the interests of the staff. The present directors will be continued in office for another year and they will deal with the customers of the bank as heretofore. Thereafter, the engagements entered into with customers by the National Land Bank will be continued and people will be given the accommodation from the Bank of Ireland that they have had, and will not be subject to any pressure that they would not have been subject to if the change had not been made. No people with one or two years' service will get two-thirds compensation. The people it will be difficult to fit in, and who may not be taken over by the Bank of Ireland, are people in fairly high positions. People lower down the scale can easily be taken in, and will, I should say, all be taken in. The people higher up it may not be possible to find a place for, but they will be protected by the provision in regard to compensation. I think it is only fair that they should be protected. If all the staff in the branches were to be discharged and get two-thirds compensation the capital cost would be about £60,000. Our liability in the matter is limited to £13,000. I do not think it will amount to £13,000. It is not contemplated that there will be very many for whom places will not be found. There is power under the Dáil Eireann Loans and Funds Act for the Minister for Finance to dispose of the shares held in his name in the National Land Bank so that legislation is not necessary. The Report of the Banking Commission will be submitted to the Dáil before it re-assembles in November. No action for the carrying out of the Report will be possible. I have not yet had an opportunity of examining the interim reports that have come in, but so far as I have looked through them, it seems to me that in all cases legislation will be necessary to give effect to the recommendations. I would like to deny the allegation of Deputy Nolan that the Land Bank was responsible for inflating the value of land. As far as I know the Land Bank was more conservative than many of the Joint Stock Banks. While it was not as prudent, as events show, as it ought to have been, it, at any rate, did take a good deal of care and in many cases, as I know, greater care than was taken by the other banks. As for the suggestion of Deputy Norton that it is a valuable asset, greater than the price paid by the Bank of Ireland, that is nonsense. I doubt if we have ever had as much as half a million in deposits from the public. The country branches, I think, involved a loss, greater or less.
I move the adjournment of the debate.
I move:—"That the question be now put."
I am accepting the motion "That the question be now put."
