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Dáil Éireann debate -
Thursday, 7 Apr 1927

Vol. 19 No. 11


I move the Second Reading of the Currency Bill, 1927. This Bill follows very closely the first interim report of the Banking Commission. In certain respects, the recommendations of the Commission are elaborated. The "i's" are dotted and the "t's" are crossed, but the main recommendations of the Commission, are adhered to. In only one respect of any importance does the Bill depart from the recommendations of the Commission and that is in regard to the limit on the legal-tender note-issue. The Commission recommended a limit of £6,000,000 on the legal-tender note-issue. We do not provide in the Bill for any limit. We received recommendations from a great many quarters that such a limit should not be imposed. With those recommendations we found ourselves in agreement. As the legal-tender notes will be backed, as recommended by the Commission, pound for pound with British securities, it is not regarded as necessary that any limitation should be fixed in the Bill.

Deputies will recall that the Banking Commission was appointed over a year ago. The appointment of that Commission followed a consideration of the position in regard to note issue and legal tender by the Government and it followed certain complaints in regard to the inadequacy of existing facilities for agricultural credit and for certain types of business credit. On consideration of this matter, the Government found that there were certain facts which necessitated action. There was the fact, for instance, that there was, and is, no legal tender in the Saorstát. British currency notes which were issued before the Treaty may be legal tender, but such notes are, perhaps, rare. They are certainly getting rarer in actual circulation and they cannot be identified. Even the least pretentious State might expect to have a legal tender. There was also the fact that British Treasury notes were circulating in this country and that the excess issue of bank notes here was backed by British legal tender. That meant that a certain substantial profit out of our currency was going to the British Government, while this State had as much need for that revenue as any country. Then, there was the position that the fiduciary issue of the banks here referred to the whole of Ireland. The Bank of Ireland had a fiduciary issue of £3,738,000 odd and other banks had amounts which Deputies may have seen. In each case, the fiduciary issue referred to the whole country.

The setting up of the Saorstát, and the establishment of a separate financial, fiscal and economic unit here meant that it was necessary to adjust the position to the new circumstances. We could not have hanks with no defined note issue—that is, defined with reference to the Free State. There was also the consideration that the banning system that existed here, which was simply a limb of the British banking system, had not been in any way adjusted to the requirements of this country for a very long period, and particularly that it had not been adjusted to the new circumstances arising from the setting up of the Saorstát. Other factors which called for action were those I have already referred to—the opinion which was, I think, universally held that the facilities for agricultural credit that existed were not adequate facilities, having regard to the position in the country and the needs of the country, and that the facilities for business credit did not cover the whole field.

While the Government felt that, because of all these circumstances, action was necessary, they felt that action in this matter involved danger. There is, in this country, a fairly general ignorance of everything relating to banking and currency and credit. Then there are, perhaps, more people in this country than in most countries who would be quite willing to create a panic where there was no need for panic. In all countries, at the present time, there is knowledge of the ill-effects that may follow an unsound currency policy. Happenings in certain European countries after the war hove brought home to people the fact that an unsound currency policy must produce very serious results. People here are aware of that, but there is no great knowledge of the principles that should be observed, or of the actual causes that produce damaging results in currency and credit. There is also the fact that we have Republican "die-hards" who might misrepresent any Government action in regard to these matters. There is also another group of "die-hards," of perhaps smaller numbers, who would be as vocal in certain circumstances, and who, because we were departing from the arrangements that had existed in the British time, might also misrepresent what was being done, and, by their propaganda, cause a panic.

Any panic in relation to these matters could cause the country a great deal of damage. You might, if certain ideas got abroad in regard to Government proposals about currency and banking, have a run on some of our banks. You might have people transferring deposits and accounts from banks in the Saorstát to banks outside the Saorstát. You might have even moneyed people transferring their residences from this area to other areas. You would probably, if any panic existed, have greater difficulty in getting money for investment in any kind of enterprise in the country. Because of these dangers which, it was felt, existed, and which might take the form of action which would be very detrimental to the interests of the country, the Government felt it was necessary to proceed quite cautiously. They felt that, in this matter of reform in regard to currency and note issue, it would be entirely unwise simply to conduct private investigations, come to certain conclusions, and then submit the result of those investigations in the form of legislation to the Dáil. It was felt that what we must do was proceed without the appearance of precipitation, give interests immediately concerned an opportunity of putting forward their views in the fullest possible way, and that, where reforms were being carried out, they should, if possible, be reforms that would meet with general acceptance. I do not mean by that that we hoped that the reforms which would be carried out would please everybody, but we hoped that they would be reforms which would not be seriously objected to by any section.

When we determined to move in this matter, we had meetings with representatives of the Banks Standing Committee. We told them what our views were. We explained to them the necessity for change and, I may say, they saw that there was a necessity for change. We asked for their co-operation in carrying out investigations which would precede any action on our part and they agreed to give that co-operation. They submitted to the Government a panel of names from which representatives of the banks might be chosen to sit on the Banking Commission. There was no disposition on the part of the banks to take up any kind of non-possumus attitude. It may be that the measures we are taking go further than the banks themselves would have agreed to. But they have, through their representatives on the Commission and since the Commission's report, accepted these recommendations. In addition to representatives of the banks here, we secured the services of certain people outside. In selecting representatives of the banks —I think I already explained this to the Dáil—we selected representatives of the different classes of banks here. There was one representative of banks having headquarters in the Saorstát and note-issue here. There was a representative of banks having headquarters in the Saorstát and no note-issue. There was a representative of a bank having its headquarters in Britain and note-issue here and there was a representative of a bank having headquarters in Northern Ireland. We appointed as Chairman of the Commission, as Deputies are aware. Professor Parker-Willis of Columbia University. Professor Parker-Willis is a man who has had a great deal of experience, who has had a very distinguished career and who is personally of high standing and repute. In addition to Professor Parker-Willis, we got Mr. Campion— an Irishman who had served in the Commonwealth Bank of Australia. Both Professor Parker-Willis and Mr. Campion had experience of the examination of problems relating to agricultural credit. We had also on the Commission Mr. Smith-Gordon who had done a good deal of research and who had written in an able way on agricultural credit in this country. As I have said, the Commission gave us a report which was practically unanimous. The majority report was signed by all the members of the Commission but one. The member who did not sign the report agreed, I think, with the most fundamental recommendations in it and disagreed on matters which, if not entirely matters of detail, were, at most, matters of somewhat minor importance. A great deal of credit is due to the Chairman and to the members of the Commission for such a degree of unanimity as was achieved in the circumstances. The report, in my view of the matter, is a wise and happy compromise and the Government is, and has been, since the issue of the report, prepared to stand over and give effect to it. The Bill, based on the report, does the things that are necessary to be done, and does them with the least possible disturbance of existing conditions.

The Bill, when it becomes an Act, will give us legal tender in this country. It will give us legal tender which will be backed by British security, pound for pound, and which will not lead to the creation of a visible rate of exchange with Great Britain, and the difficulties that follow from exchange variations. In addition, it will give us a profit which will be of importance to our exchequer. It will give us a profit, as compared with the revenue at present derived from the issue of bank notes, of something between £250,000 and £300,000. The revenue at present derived from the issue of bank notes comes from a tax of seven shillings per hundred pounds on all bank notes issued; at least, it was on all bank notes issued, but since the setting up of the Free State, the position has been that we have got a tax on bank notes which are issued in Dublin, the notes of the Bank of Ireland, the Provincial Bank, and the National Bank. The tax on the bank notes issued in the North by the Ulster Bank, the Northern Bank and the Belfast Bank goes to the Northern Government. The amount we have received heretofore as a result of the seven shillings per hundred pounds tax has been about £40,000 a year. Under the new arrangement we will receive as a profit on legal tender notes the sum of about £240,000. In addition to the issue of legal tender there is a provision in the Bill for the issue of consolidated bank note issue, and on that there will be a tax of thirty shillings per hundred pounds, and that will bring in about £90,000 a year. The total yield, therefore, including profit from legal tender and the yield of the tax on the consolidated bank note issue, will be about £330,000. To get the net profit we must deduct from that the £40,000 that we already get, so that the net-increase in revenue to the Exchequer will be about £290,000.

There will be deductions from that for the cost of working the scheme and the expenses of the Currency Commission. It may be taken that the increased yield to the Exchequer will be between £250,000 and £300,000. The proposals in the Bill do away with the position where there are notes in circulation which cannot be attributed either to the Saorstát or Northern Ireland. There will be Saorstát notes issued and circulated in the Saorstát. and they Will be issued subject to the laws and regulations of this country. In Northern Ireland they will be issued according to the law existing there. A distinct change will be made in the character of the bank note issue. Heretofore, the bank note issue has consisted of two sorts of notes. There was a fiduciary issue which was secured on the assets of the bank. These notes were ultimately charged to the individual shareholders of each bank. The remaining part of the bank note issue was in the form of secured notes, which had to be backed originally by gold or silver, but since the war, by British treasury notes or certificates. The fiduciary issue was fixed in 1845, and has remained as it was then. The secured notes could be issued to any amount provided the banks held backing for them.

The new arrangement differs from that. For the legal tender notes British securities will be held by the Currency Commission, and anyone can secure, through the London agency of the Currency Commission, British money for the legal tender notes he offers. No limit will be fixed to the amount of legal tender notes which may be issued. If the banks, or others, give British currency to the Currency Commission they can receive British notes in exchange up to any amount, and the amount which the Commission receive will be invested in British securities and will come to the Exchequer after deduction is made for the expenses of the Commission. The separate issue of bank notes by the various banks will come to an end. There will be issued a consolidated note issue, the amount of which in the initial period will be £6,000,000. That £6,000,000 will be apportioned to the various banks in the method set out in the Bill and in the Report of the Banking Commission. That £6,000,000 may, in practice, prove to be more or less than the requirements the country demand, but at the end of two years it will be possible for the Currency Commission, by a unanimous vote and with the consent of the Minister for Finance, to alter the maximum limit of the issue and re-distribute the bank note issue amongst the various banks. At the end of three years more it will again be possible, by a unanimous vote of the Commission and with the consent of the Minister for Finance, to alter the maximum limit and re-distribute, if necessary, the issue amongst the various banks. Thereafter, every three years it will be possible for the Commission, by a majority vote and with the consent of the Minister for Finance, to fix the limit and re-distribute the issue. The amount of the issue will depend for the future on the requirements of the country. It will be based on the sound liquid advances of the various banks. It will not, of course, be equal to the sound liquid advances, but it will expand and contract according to the credit requirements of the country.

In many countries there is a provision that the banks must hold certain proportions of cash or other specified assets against their bank note issue. That is not proposed here. It is proposed that there shall always be a rigid maximum limit which shall be altered from time to time as the requirements of the country indicate. But during each three-year period, and always in respect to the entire issue and the amount which each particular bank may issue, there will be a rigid maximum limit. This arrangement is one which will be of great benefit to the country, particularly if there is an expansion of industry and improvement of business and also if there is an increase in the credit requirements of the country. It will enable these requirements to be met adequately as they arise. If the amount of the maximum is raised above £6,000,000 the payment to the Government in respect of the proportion, of issue above £6,000,000 will be at the rate of two instead of one and a half per cent. Of course, the granting of additional issue to a bank gives that bank increased opportunities of making profit, and if the issue is increased beyond the amount set down in the recommendations of the report and the amount that represents, so far as can be found, the present requirements of the country, then it is not unreasonable that some additional sum should be paid into the Exchequer. It may be asked, and some people have asked, why the old arrangement for note issue should not have been allowed to remain, why we should simply have substituted a Saorstát legal tender, or treasury note, with certain backing and safeguards for the British treasury note and allow the existing position in regard to bank note issue to remain. I think it will be obvious to Deputies that once we disturbed the cobweb at all it was desirable that a sufficient change should be made to meet the new conditions, that if we were dealing with the matter at all we ought to deal with it in a way that would meet the requirements of the situation, and would obviate the necessity of returning to the matter at an early date.

The old arrangement meant that certain banks had a fiduciary notice issue rigidly fixed at figures which were determined in 1845 and that other banks had no note issue at all. In dealing with the matter it was not possible to leave it in that way. The arrangements in regard to bank notes in this country and in England have worked out differently. In England, the bank note issue—I am not talking of the Bank of England note issue— if it has not disappeared, has sunk into a matter of very little importance. Here the importance of the note issues has remained. I think the importance of the note issues will always remain here, at least it must remain for a very long time. In the conditions that exist here we are not likely to have the same use of the cheque book and the overdraft as in Great Britain, and the requirements of the country, which are met by overdrafts and the use of the cheque book in England, must be met by the bank note issue here. The importance of the banknote issue has remained here as such, and at the same time it was a privilege which was confined to certain of the banks. It was not possible, when we were dealing with the matter, to leave certain banks in a privileged position and to leave other banks without that privilege.

We might have done what has been done in various countries, created a central bank, and we might have given the entire right of note issue to that central bank. The Commission did not recommend that that should be done, for several reasons. It did not recommend it because the need for such an institution was not as great here as it was in other countries where such institutions have been set up, and there were not exactly the same facilities for successfully setting it up. Again, we had a banking system which, if it was conservative, was a sound and good system and one which had the confidence of the country, and the disturbance that would have been involved in the setting up of a central bank in opposition to the wishes of the existing institutions would have done more damage than it would have been worth while facing. The Commission did not propose, therefore, to deal with the anomalies in regard to note issue by taking from all the existing banks the right of note issue. On the other hand, it could not propose at this time of day to extend to the banks which had not the note issue the right of issue on the same terms as the banks which already had it. That would have been contrary to the whole trend of events throughout the world.

What was determined, therefore, as I have said, was to alter the character of the note issue, to make the amount of notes that might be issued by any bank depend on the advances, the business, of that bank, on the requirements of the community, meantime to fix the amount for a period of two years at this figure of two million pounds and to distribute that two million pounds amongst the various banks on an agreed basis. I believe that this new arrangement which is proposed, the establishment of the Currency Commission and the institution of a new type of note issue, will have effects additional to this of providing in a more scientific and more satisfactory way for the requirements of the country. I believe that there will be a psychological effect on the banks and those concerned with the working of the banks, and that there will be a greater tendency on their part to recognise not merely their duty to the shareholders and their duty to the depositors, but a duty to the community as a whole. I do not agree with the attacks on the Irish banks that one hears from time to time. The vast majority of them are unreasonable and without any proper basis. But I do think that it may be justly said that there has not been a recognition on the part of the banks that they are national institutions, with a duty not merely to their shareholders and their depositors, but to the community at large.

There are provisions in the Bill with regard to gold coinage. It is not anticipated that those provisions will be put into operation for a good many years, perhaps, but they are inserted so that no fresh measures may be necessary if and when the time comes that gold comes into circulation again, and there is a desire in this country that gold should ,be in circulation. There is one matter in the report that is somewhat vague—the speed with which the note reserve fund is to be built up. Deputies who have read the report will notice that there is a slight difference between the recommendation in it and the recommendation in the Note Currency Memorandum. I have not yet referred to this note reserve fund, but I presume that the majority of Deputies have read the report. It is proposed that a note reserve fund equal to one-tenth of the consolidated note issue should be built up. It is not likely that any need for that fund will be seen, but it will do no harm; it may assist in giving confidence to anybody who lacks confidence, and it is one of the recommendations in the report. So far as legal tender notes are concerned, I do not think that there is any possibility at all that the note reserve fund will be called upon, because these notes, as I have said, will be banked by British Government securities, and unless there were to be a collapse in Great Britain in which we did not share, there would be no need to call on the note reserve fund in respect of these particular notes.

In view of the traditionally conservative policy of the Irish banks I do not think that apart from the other safeguards, there is likely to be such an issue of bank notes or such methods of conducting business on the part of any bank that there would be a call on the note reserve fund in respect of the consolidated notes for which any of the banks are responsible. Nevertheless we are establishing a consolidated note issue with a variable maximum limit. The consent of the Commission and of the Minister will be necessary to increase the notes, but it might happen that for some reason a bank might not be able to meet its obligations in respect of its share of the consolidated bank note issue, and there is additional security, if it should ever be called upon, in the note reserve fund. The recommendations of the Commission in respect of the reserve fund might be read as requiring that all the profit on the note issue should be used for the first two or three years to build up the reserve fund to one-tenth of the consolidated note issue. That, however, is not definitely recommended, and I understand that the vagueness in the Commission's report is due to the fact that there was not unanimity amongst the members on the point. The matter has been under consideration right up to the present time, and it has been determined that the reserve fund shall be built up by taking one-fifth of the profits of the investments of the legal-tender note fund until this sum of one-tenth of the total of the consolidated note has been reached. I think that that provision is certainly sufficient. Having regard to the other safeguards in the Bill, I look on the provision of this reserve as a thing which it is good to have, but which is not strictly and urgently necessary.

The only other matter to which I desire to refer at the present juncture is the constitution of the Currency Commission. Its constitution will be criticised from different angles. There will be people who will say that the banks are too strongly represented, and there will be people who will say that the Government is too strongly represented. I think that the middle course which was adopted by the Commission in their recommendations is the best possible course for us to take. On the conduct of the banks the whole safety and success of our currency system, whatever it may be, will depend. It is necessary that the banks should be fully and strongly represented on the Currency Commission. On the other hand, it is necessary that there should be representation of the general community, and I think that that representation can only be got by Government nomination. There will be matters for decision by the Commission which may involve disputes between individual banks. On the question of the re-distribution of the note issue, for instance, acute differences may arise between individual banks, and I think that because of that fact it is necessary that the majority of the Commission should not be representative of the banks, but should consist of people who are not connected with the banks. It is proposed that three persons shall be nominated by the Minister for Finance. One of these always will be, I think—it certainly is the intention -in regard to the first nominees—an official of the Department of Finance. The two others will be people of good repute and standing who are engaged in trade or business in the country. These two nominated representatives will have a three years term of office, so that it will not be possible for any Government which finds itself in some particular kind of difficulty, or which is desirous temporarily, owing to budgetary or other exigencies, of pursuing a particular financial policy, to put anything like political pressure on the Commission or on any member of the Commission.

These nominated representatives will be independent in the exercise of their functions during the term they hold office, and it will not be possible for the Government at a given moment to make a change in, say, half the membership of the Commission. In addition to that, the chairman will be chosen by the ordinary members of the Commission. He will hold office for a period of five years, and will be re-eligible at the end of that period. I think that the provisions which have been recommended in regard to the constitution of the Currency Commission ensure that the views of the banks will have due weight, that the interests of the general public will be adequately represented, and that the Commission will be able to carry on its work in an independent and business-like way.

This particular Bill and the recommendations on which it has been based have been received with very general approval. To some extent they have been attacked from both the right and the left. Some people have made proposals which do not take into account the existing situation, or the difficulties here, and they recommend measures which would be all right perhaps in another country or at other times. There also have been people who have deprecated any change, who feared that the new system would not be worked in a satisfactory way, and that bad results would follow the change. I do not think there is the slightest danger of the system working in other than the most highly satisfactory way. The banks have shown a most praiseworthy readiness to recognise the need for adjustment, and to take their part in devising the changes which must be effected. I believe that for the future we will have the heartiest co-operation of the banks in making the new system work. Bearing in mind the conservative, sound and careful policy which the banks have pursued, we can rely on their seeing that the new system is worked in a safe and sound way.

The Government, or any government, I think, that follows it can be relied on, in so far as it makes nominations to the Commission, to nominate people who will see that the interests of the country are attended to, that no short views are taken, and that rash measures are not adopted in order to get speedy results with perhaps bad effects to follow at a later date. I believe that we have got now what the country requires. We have got a banking system which will meet all our needs, which, is adjusted to the requirements of this country and the requirements of the present day. We also have got immediately a certain revenue into the Exchequer which cannot be regarded as a negligible factor, though I would not recommend any changes of importance in regard to currency or banking merely for the sake of getting revenue. That has not been the primary consideration. What we have had in our minds all along, in moving for these changes and in considering the recommendations, was simply the national and economic requirements of the country.

At the outset I would like to express what, I think, are the views of many Deputies: that they have legitimate cause for complaint in being asked to consider three measures of first-class importance, such as we have before us at present, and to get them through the Dáil concurrently. That, I think, is the pretty general view of Deputies. I doubt the wisdom of the Government in trying to carry these three important measures concurrently through the Dáil. Of the three measures—the Electricity Supply Bill, the Agricultural Credit Bill and the Currency Bill—I think the one now under discussion is the one that there need be the least haste about, seeing that we have been able to carry on without it for a period of five years since the Treaty. There has not been any great outcry or demand for a change. At the same time, the setting up of our National Parliament and a sense of our Statehood demanded, as a necessary corollary, the establishment of a separate currency as the visible and outward sign of our nationality. In so far as this Bill proposes to do that, it is of course to be commended, but I am afraid it must be said that the setting up of an Irish currency is only an outward form: that there is nothing independent about this new Irish currency that is being set up, but that it is indissolubly linked up with British currency. It is anchored to British currency very definitely. While, no doubt, there may be sound reasons for that—I am not denying that there may be good reasons which compelled the Commission to recommend that that should be done and compelled the Government to adopt that course—it should at all events not be forgotten that that is the case, and that the needs of the country will be guided by British currency and British financial policy.

There is no doubt that our economic conditions will be very much affected by the currency policy adopted from time to time in Great Britain. In passing I might remark that it seems to be taken for granted—Britain no doubt has a stable currency and a stable financial system—that Great Britain is the only European country that has such a system. I believe that there are small countries like Switzerland, Sweden and others that have a stable system of currency equal to that of Great Britain and perhaps better. One, perhaps, would not have such qualms on this point of our being tied to Great Britain if one felt sure that Britain's financial policy was always dictated and working in the interests of British prosperity. I quite realise, and anybody willing to face up to realities most realise, that the prosperity of this country will depend to a very large extent on the prosperity of her best customer. I am not quite so sure that British financial policy is always operated in the interests of British prosperity. Within the past few years we have had several financiers of high repute who have expressed very grave doubt as to the wisdom of the British financial policy during late years, especially since the war. It has been asserted that the policy of rapid deflation is responsible for many of Britain's industrial ills at the present time.

Mr. Reginald McKenna, at one time Chancellor of the British Exchequer, holds very strong views on this point. There are others, too, who are of the opinion that the slump in Britain's industrial system and consequent unemployment, with its reactions in this country, was caused largely by the financial policy adopted in England, mainly by the banks in their desire to get back rapidly to the gold standard. If it can be shown that British financial policy does not always operate in the interests of British prosperity, there is certain reason to be uneasy as to whether it is quite the best thing that our financial policy should be so closely linked up with the British policy. To put it mildly, it is at least equal to doubt. I think it is too easily taken for granted that it should of necessity be linked up with the British system and that there is no possibility of exploring any other avenue except in that direction. Whatever may be said on that point, we may be quite sure that the financial policy of Britain will always be governed rather by British needs than by Irish needs. There is no doubt about that, and it is doubtful whether it has always even been operated in the interests of British prosperity itself and British needs.

It seems to me that in the Report of the Banking Commission it was too readily and easily taken for granted that there could under no circumstances be any question of a variation in the rate of exchange or the standard currency between this country and Great Britain. I think it would have been extremely desirable and especially useful for the man in the street—as the Minister said there is no doubt that there is a good deal of vagueness on this question in this country for the reason that it has never been very closely studied or looked into —if the Commission had gone into this question of the rates of exchange and explained at some length their reasons ior the conclusions they came to. They did not do that. They said right off: "Of course they must have the same standard as Britain," and no question seemed to arise in their minds whether that was right or not. They seemed to have no doubt whatsoever on it, and not only that, but that nobody else should have any doubt on it. I do not profess to have any great knowledge of these matters, but I am just wondering whether it is right that that should be taken as an axiom: that this question of the rate of exchange would be always bound to injure this country, that this country would always suffer if the rate of exchange was against it.

It seems to me in any case that even if the exchange were against us slightly, such violent evils would, not follow from it as many people anticipate. I do not know, for instance, that a farmer would object to getting £10 for £9 worth of butter—if he sold his butter in England and got £9 in English money which would be worth £10 here—or even a man who invested in British securities and was paid £9, which would be worth £10 here. Of course, it would work the other way, too. I am not quite ready to say which is the worse. If a man had to pay £10 in Saorstát money for £9 worth of British goods, he would be inclined to look round and see if Irish goods could not be got. It looks to me that it would have the effect, while increasing our exports, of decreasing our imports, and settling up that adverse balance of trade that we hear so much about. That may be nothing, more or less, than financial heresy, but I state it for what it is worth. If it is financial heresy, then I think it was the duty of the Commission to deal with these matters and point out to us wherein this great evil that we are told about exists. I am not so sure about those evils.

Of course it would undoubtedly affect our credit outside. Nobody has yet fully explained—I have never seen an explanation in any case—the case of France some time ago. We heard a lot about the terrible financial condition of France, but it has to be remembered that while France was in that desperate condition we heard so much about all her people were employed, and it was only when she proceeded to get back to a better standard that unemployment became rife. That is one of those mysteries of high finance that would be worthy of explanation by this Commission or somebody else. Undoubtedly outside credit would be affected, but we have been told that so far as we are concerned we could get all the money we want within the country, and that it is not necessary for us to borrow outside. I just raise these points because they seem to me to be of some importance and worthy of discussion in any, ease. I am not putting them forward as doctrines in opposition to those of the Commission or of the policy of the Ministry as exemplified in this Bill, but I do think they are worthy of some attention.

As I am raising these points, which may be regarded by some people as heresy, there is one other point I should like to raise. I want to know why is it taken for granted that the banks must, of necessity, issue notes. Why should these profit-making institutions be given the privilege of issuing notes in this way? If the Government are to issue those legal currency notes and are to make a certain profit out of them, why, at the same time, do they allow the banks, which are profit-making institutions, to engage in the same work? What would be fundamentally wrong in the Government issuing all the notes necessary? Why should that right be given to the banks? Have they greater security to offer than would be at the disposal of the Government? We have heard or read a lot about the divine right of kings. I think there is something in the divine right of banks that wants looking into. Certainly it is a notable fact that no matter what the condition or the prosperity of the country may be, whether it is doing well or ill, the banks are always bound to make a profit, and they so arrange their affairs, and incidentally and indirectly, or possibly directly, the financial affairs of the country, that they will always come out on the right side.

There is another matter in this connection that deserves consideration, and I would like to know how far it is affected by the new proposals—that is. the right of banks to or their action in restricting credit at a time when such restriction is detrimental to the interest of the country. The policy of the Irish banks, and British banks too, seems to be that in bad times, when there is a slump, when prices are bad and all that, they put the greatest restriction on credit, whereas one would think that the opposite should be the case. I think that the country would have been better too if the opposite had been the case. We know what was done in the flush years of 1918-1919-1920, when there was no restriction so far as credit was concerned. Many people are suffering now for it. If the banks had been more cautious then, they could afford to be more generous now. I understand that a different system is adopted in America, where during the slump times the least restriction is imposed on credit. The banks, as it were, come to the aid of the country in such times. There is nothing in this Bill, or in the Beport of the Commission, that I can find which would indicate any departure from that system of restriction of credit at a time when credit is most necessary. There are a great many people in this country—small manufacturers, merchants, and farmers— who are undoubtedly beginning to ask themselves why this should be the case, and why banks should always be allowed to function in that way. At a time when people want credit the banks are in a position to say: "No, you shall not have the credit that you are looking for." I further ask why it should happen that no matter what the condition of the country is, the banks are always sure of their own profits. There is no slump for the banks—there are no bad times for the banks. I should like to know from the Minister whether the Government approve of that policy, or whether they propose to alter it in any way—if they approve of a system whereby, whether other industries are suffering or not, the banks are always bound to prosper.

With regard to the Bill itself, the Minister has pointed out that it follows very closely on the report of the Commission, and it sets up machinery in accordance with that report. There is one thing that is not very clear, which has not been mentioned by the Minister, and is not indicated in the Commission's report. I do not know whether there is similar machinery in any other country to that proposal here. I should like to know whether a commission of the kind that is proposed to be set up by this Bill has been, in fact, set up by any other country, and, if so, how it has worked. It seems to me that this Commission will be a kind of super-bank or super-government that will have a very great influence indeed on the economic welfare of the country. A very great deal will depend, to my mind, on the policy which they will adopt, and on the way they carry out their business. I venture to think that they will have very much more influence on the prosperity and welfare of the country than any Executive Council that may be charged with the Government of the country. Of course, there is one consideration, and it is, perhaps, the only one that will appeal to the man in the street as a reason for the introduction of this Bill, and that is the annual profit of £250,000 or £300,000. That is, of course, a consideration, but, as I say, it is the only consideration. The Bill, in so far as it does set up a separate currency and publishes to all and sundry that this is a separate State with a separate currency, even if it is anchored to the currency of a neighbouring State, is worthy of support.

We approach the discussion of this Bill ,under two disadvantages. The first is, if I may say so without offence, that there has never been a Bill of such great magnitude introduced by a less illuminating speech than that of the Minister for Finance on this issue. He overwhelmed us in technical, detail, but he gave us no broad survey of the field which this Bill is intended to cover. I hope I do not offend the Minister in that regard. The Minister is respected by everybody, except a section of his own constituents, and I am quite sure that when he replies he will deal with the matter with greater breadth. The only gleam of light I saw in his speech was when he actually condescended to indulge in a simile and talked about disturbing the cobweb. He is going to disturb the cobweb, and he must disturb the cobweb on a wholesale scale— so much we learn. But what is he going to do when he has disturbed the cobweb? Is he going to indulge in the sort of financial spring-cleaning advocated by Deputy O'Connell? Personally, I dislike spring-cleaning of any kind. and I would not urge him to that course. Is he going to create a new super-spider to spin a bigger cobweb? I think if he will approach the question on those lines we shall gain certain illumination. But while I complain of the Minister's lack of 'breadth and generalisation, I can make no such complaint against Deputy O'Connell. He covered not only the whole field of the Bill but the whole field of ten Bills. I think it is very desirable that he should have done so. If I am in order in following Deputy O'Connell, I would like to make a remark or two about deflation. Deputy O'Connell deprecated this Bill, because it tied us, to the financial policy of Great Britain. And the financial policy of Great Britain was deflation. I do not know how deeply Deputy O'Connell has studied this subject. He may easily have done so more deeply than I have.


I do not think I made those statements.

As far as I have been able to study the question of deflation and inflation, deflation, which is the policy of Great Britain, is not followed as an expedient to enable an employer to pay his employees trade union wages while charging double prices for the goods he puts out. Does Deputy O'Connell think that the workers should get the same wages, and that double prices should be charged for the products, including the products they themselves buy? I would be very interested to hear that. Again, Deputy O'Connell talked about the rate of exchange, with the intent to condemn the Banking Commission and the Minister because they did not create a rate of exchange. So far as I have been able to study the events of this country for the last six or seven years, it appears lo me there are only two national calamities that we have been saved from. One was an earthquake and the other a rate of exchange. Deputy O'Connell is anxious to inflict one of them on us.



Not the earthquake. but Deputy O'Connell did advocate an adverse rate of exchange, as compared with Great Britain. He quoted the example of France, and said there was no unemployment in France. There was no unemployment in France because the workmen were working for wages that were on the rate of exchange less than ten shillings a week of our money. We cannot buy all we want in the Saorstát. Deputy O'Connell himself will realise that a workman cannot satisfy himself wholly with Saorstát products. He may be able to buy flour, he may be able to bay meat, but lie will not be able to buy tea. The activities of the clothing factories and the boot factories have not risen to such an extent that he will be able to clothe himself and provide shoes for himself and his family entirely of our own manufacture. An adverse rate of exchange with Great Britain or the United States—it would be the same in both cases—would mean that the workman would have to pay more for all these things in comparison with his wages. I am very glad to see the Leader of the Labour Party in his place again, because he will be able to supplement Deputy O'Connell's argument—to fill up i he gaps which, no doubt, I was unable to perceive. Deputy O'Connell's argument was such that it did not impress me.

Now, to return to the Minister for Finance. We are all at a disadvantage in dealing with this Bill inasmuch as we are discussing it at very short notice. The Minister told us, when he moved the First Reading, that he hoped the Bill would be published on Friday evening or Saturday morning. It did not reach the hands of Deputies until Monday morning. There is a great difference between Saturday morning and Monday morning, because those Deputies who are corking hard have little leisure during the week to study Bills. They would have more time to consider Bills on Saturday afternoon and Sunday than on any other day. The summary of the Bill was not published in the Press till Tuesday morning. I am told that some of those concerned who are most interested—the banks—were not able to get copies of the Bill till yesterday evening. I am told that one bank of some importance not one copy of the Bill from a member of the Oireachtas. They sent out for other copies in order that they might study them, but they could not obtain them till yesterday afternoon. That being so, Deputies, on a very technical matter, are deprived of advice and assistance from those who are best acquainted with this question. The Minister said that this was merely putting into law the recommendations of the Banking Commission. I would suggest, with respect, to the Minister, that there is a great deal of difference between the abstract particulars of a report and, if I may borrow a word from the overflowing vocabulary of the Minister, the implementation of that report. There are points arising on this Bill that do not directly arise on the Report of the Banking Commission. One omission from the Minister's speech must have struck every Deputy. He gave no substantial reason why the Bill should have been introduced at all— at any rate why the Bill should have been introduced at the present time. Deputy O'Connell challenged him on that, and I agree with Deputy O'Connell. Is it in response to a passionate demand from his own Party—to packed benches behind him rousing him to passionate enthusiasm and cheering him on to this reform? Is it in response to an overwhelming demand in the country? In a country where passing resolutions has become not so much a habit as an epidemic, I have not seen a single resolution on this subject. Is it in response to the desires of the business community? The Minister has suggested it is.

A matter of course.

Deputy Hennessy says it is a matter of course. It is obviously the view of the Government Party that it is a mere formality. Only a few of them do it the reverence of their attendance. It is a more important matter than the Banking Commission, though I have great respect for the Banking Commission, and consider it a well-constituted Commission. It has not the last word in this matter. We would like the wisdom of Deputy Beamish and Deputy Shaughnessy and Deputy Dalton and Deputy Egan—substantial business men—in dealing with a matter of great business importance to the community. It is a matter that, the Government Party and every Party in this Dáil ought to consider as one of importance. Turning to the Bill, there are one or two features that I would like to discuss. I would like to preface my remarks by saying that I have not yet arrived at a final judgment on the Bill. In the circumstances in which we consider it—the small time we have had to devote to it—I am not going at this Sta-ge to deal fully with it. I shall have to raise other points on the Committee and Report Stages, and if I assent to the Second Reading it will be subject to that reservation. But there are one or two points that I wish to deal with.

A Currency Commission is to be set up. It is to be a body that will be entirely independent of the Government. It would be a very evil thing for the State if such a body as this was under direct Government influence. It is to be at least as independent as the Electricity Supply Board, but, unlike the Electricity Supply Board, its accounts are to be audited by the Comptroller and Auditor-General. We were told by the Minister for Industry and Commerce that this was impossible, that it would be dragging the Board into politics. I am very glad to see that the Minister for Finance has a sounder knowledge of the financial prospect than the Minister for Industry and Commerce and that he is not afraid because the accounts of the Currency Commission, whose work will be vital to the stability and security of the State, will be subject to the normal process.

Another section that will arouse some discussion is Section 35, providing that the banks are to divulge to the Commission such particulars as the Commission shall think necessary for their work, because the mere existence of this section has aroused some apprehension, that individual bank accounts would be inquired into and particulars contained in them might be published. I do not think that is the intention of the section, but I would suggest to the Minister that it might be wiser on Committee Stage to bring in some further amendment to that section to make it clear that it is not proposed to publish the details of individual accounts and also I think to make it clear that even the Comptroller and Auditor - General should not investigate the details of accounts. Otherwise, some controversy might arise on this if the Bill is passed. There is no doubt whatever that there is considerable and well-founded sensitiveness on this question of the publicity of bank accounts. The secrecy-of-banking accounts is one of the cardinal principles of business and I would suggest to the Minister that it would be very wise to introduce some modification so as to make it quite clear that the inquiries of the Currency Commission will not be directed to the position of individual investors or individual over-drawers, whichever they may be, but rather to the general, broad, financial position and stability of the bank.

Now I turn to the most important part of the Bill, at least from my point of view, and that is Part 7, the financial part. That is the part of the Bill which deals with legal tender note fund and the note reserve fund, and prescribes how these funds should be invested. I will deal first with the one thing which appears to govern the soundness of the scheme, that is the provision which we find in both Sections 58 and 59 that the Commission may borrow temporarily. I take it that means loans from the banks, loans, possibly, from some of the banks who are, in a sense, under the Commission. In any case, the existence of this power to borrow temporarily may vitiate the whole balance sheet and the whole audit. There is no restriction on "temporarily"; it may be, as the songs say, "for years or it may be for ever." It requires a more explicit and exact definition. "Temporarily" may only be a name for sudden emergency. It may, on the other hand, mean borrowing at low interest, and investing at higher interest in what is believed to be a better paying security. That is not a sound financial business. I think this provision about temporary loans requires more explanation and, I think, more definition.

I now turn from that minor point to the most substantial point as to the investments in which the money involved in these funds is to be lodged. Gold bullion, gold coins, and money which is legal tender, of course, do not require discussion, nor does sterling balances on current or deposit account, but "British Government securities" is a very wide term. "British Government securities" and "securities guaranteed by the British Government" may conceivably expose this fund to certain risk. Deputies will remember that not a great many years ago—I think about 40 or 50 years ago —the conversion of Consuls, by which the value of British Government securities—Consols which were invested at something like 120 for par— fell first of all to 90, then to 80, and finally during the war to something like 50. That may involve a very considerable loss in which the Currency Commission and ultimately the credit of the State would be involved. I think the term "British Government securities" is too vague, and that we ought to tie our Currency Commission investments so tightly to British investments that, even if the British Government was as Machiavelian as Deputy Magennis sometimes suggests, they could not injure us. I do not suggest any intention, to injure us. I do not believe that the British Government thinks of us more than about once a fortnight. Even if they did not they might injure us unconsciously, and either consciously or unconsciously our interest should be so closely allied with theirs that in this particular financial matter they could not injure us without injuring themselves. I would ask the Minister before the Committee Stage to consider whether the term "British Government securities" is not too wide, whether it should not be more closely and decisively limited either to the term "securities" or to securities actually involving the credit of the Bank of England. There is no great question of interest here. These investments are not to procure the best interest in the world; they are to procure the finest security in the world. Therefore, we should disregard questions of getting good interest and good returns on our money. It would be much better for us to get a half per cent. less and have absolute stability and absolute security, because unless there is stability and security this Bill will be a dangerous Step into the dark.

I would like, first of all, to state that I am in complete accord with the objects of this Bill, taking it, as I do, that they are to embody the general principles contained in the report of the Banking Commission. But as to the mode and the time of the introduction of the Bill, there, I fear, I differ with the Minister. As has been stated by the two previous speakers, I think it is very questionable whether the introduction of a measure such as this is either timely or opportune. We have been engaged since Christmas in discussing at least three measures of first-class importance, and to expect full consideration and discussion of a measure such as this, dealing, as it does, with probably one of the gravest and most serious of problems that we have to deal with, is, I think, very unreasonable, especially having regard to the financial and economic circumstances in which the country is placed.

We cannot blind ourselves to the fact that there is at the moment a considerable adverse trade balance against the Free State. What the exact amount of that adverse balance is, having regard to the invisible exports and imports, it is not, perhaps, possible accurately to determine; but that the adverse balance is not inconsiderable is beyond dispute. These proposals must certainly be brought forward, and carried out after the most minute and careful consideration. I submit there would be more opportunity for that consideration in the opening session of a new Dáil than there is now in the concluding stages of a dying one, and that this Bill might, at least, have been postponed until after the General Election.

The General Election, we are told by the Government, will be held about nine weeks hence, and we are asked at the tail-end of a dying Dáil to pass a measure which is fraught with the very gravest consequences to the future of this country. If anything is done by means of this Bill which shall in any way interfere with the existing credit of the county, it will be laid at the doors—at least it should be and must be laid at the doors—of the members of this Dáil, and of the Government in particular.

I do not see where the immediate, urgent, or pressing, necessity is for the introduction of this Bill now. It is true, as the Minister has said, that we will make some substantial profit, perhaps a quarter of a million, which is not to be despised, especially by us, if these proposals are carried into effect. My complaint is that this quarter of a million was not secured long ago for this country. I submit that it could have been secured either by way of a special statute passed through the Oireachtas, by, perhaps, mutual agreement between Great Britain and ourselves, or even by being included in the terms of the latest agreement, which is known as the final financial adjustment between the two States.

To say that the Bill should be proceeded with now in order that we may secure this profit is, I think, no argument against the postponement of the Bill for, say, two or three months for consideration in a new Dáil which will be newly representative of the country. I do not say that the Minister himself has suggested that it is because of this profit alone he is introducing the Bill. I think, as a matter of fact, he went out of his way to say it was not purely for revenue-producing purposes; but at the same time that seems to be the only cogent reason for the introduction of the Bill to-day.

I ask Deputies and the Government seriously to consider whether it is necessary for us to proceed now with this Bill, in view of the amount of important work that will have to be taken up and disposed of before the General Election. We shall have the Budget introduced shortly after Easter; there are various other measures which shall have to be passed, and some of them, perhaps, will be received back from the Seanad and deliberated upon again. It, only stands to reason that a measure such as this, which shall affect the whole financial security of this country in the future, should not be presented in the last stages of a dying Parliament.

I do not know if Deputies generally realise the gravity of this Bill. To alter the whole system of currency of a country is no small decision, in the first place, and no small matter of execution in the second place. I believe, as I have said, that we are going on the right lines, on the lines laid down by the Banking Commission. I believe that they have provided, so far as can be provided, for every possible security for our currency. I believe that it serves no purpose, either for our immediate credit or for our future financial stability, that we should proceed with a measure such as this at this particular period of the existence of this Parliament, and, above all, in the lamentable economic state that we find ourselves in to-day.

Why not let this Bill further stand over so as to give plenty of time for its consideration both to the public and to the public representatives in the Dáil? I venture to say that neither the one class nor the other have really seriously considered it, and in many respects that is not their fault. As has been stated even we. Deputies, have not had an opportunity of studying the details of this Bill except during the last few days, and certainly the public at large, bankers included, have been in an equally disadvantageous position. I see no necessity for haste about this Bill. I only hope that if the Government persist in it they will be in a position to be confident that the action they are taking is in no way going to disturb the credit of the State.

While I am talking of the credit of the State I want it to be understood that nothing that I am saying is intended—the very contrary being the case—to injure the credit of the State, and that so far as I am personally concerned I shall give any assistance—and that may be only by means of voting— that lies within my power to put a Bill such as this, based, as I am glad to say it is, principally upon the lines of the Banking Commission Report, into operation; but I do deprecate its introduction now. I do not think that either the occasion calls for it or the circumstances demand it; that the general bulk of the people of the country have asked for it, or that the business community, and in particular the bankers themselves, have in any way brought pressure to bear upon the Government to introduce it now. I desire to say that in its main principles the Bill has my support, but I regret its introduction at the present moment.

I desire to join with the other Deputies who have taken exception to the method of introduction of this Bill. Complaint was made by Deputy Cooper that he received the Bill only on Monday. The Bill came into my hands this morning. That is not the fault of the staff of this House; it is due to the fact that I was away. Still, a measure of the importance of this measure should have been in our hands at an earlier date. I feel that it would have been better if this measure had been postponed until after the General Election or, if it could not be postponed, that it should have been substituted for some of the other Bills which are not absolutely necessary for the credit of the State but which have been dealt with by the present Dáil. As one of these measures, I might mention the Intoxicating Liquor Bill. A general complaint ought to be made by Deputies as regards the method of rushing legislation of the utmost importance on the Dáil at the last moment. Not one of the measures which we have been dealing with or which we will have to deal with between now and the General Election should be dealt with hastily or without thorough examination. They are all measures of the greatest importance. I defy any Deputy who is not a superman to get a thorough grasp of the matters dealt with in this Bill in the time permitted. Currency itself is a subject of vast ramifications. It is a subject on which there are the greatest possible differences of opinion on the part of men regarded as leaders in the financial and economic life of other countries. It is a subject to deal adequately with which we should know the methods in operation in countries like the United States, Canada, Australia and France. It was not possible for Deputies to get that information in the time allowed, and they are, therefore, not in a position adequately to examine and criticise this Bill.

There is a measure of much greater importance which should have come before this House before this Bill, particularly as the Commission's interim report dealing with it was issued to the public before the currency report. I refer to the Agricultural Credit Corporation Bill. I do not see that the Agricultural Credit Corporation Bill depends in any way on the passing of this measure. It seems to me that the Agricultural Credit Bill could stand on its own legs. It should not be necessary to point to the imperative necessity that exists for the early introduction of that Bill and its passing into law.

It has been introduced.

It has been introduced to-day but it might have been introduced earlier in view of the economic condition of the agricultural community. The Bill is based on the report of the Banking Commission. I believe that the report of the Banking Commission in regard to currency is, generally speaking, sound; but I feel, on reading the Bill, that my demurrer originally in regard to the appointments of that Commission was justified. I complained then that agriculture was not directly represented on the Commission and that complaint has been justified by the reports which have emanated from the Commission. The reports reveal on their face that they are bankers' reports. The report dealing with the Bill with which we are now concerned is largely taken up with a devious form of argument between one member of the Commission and the others. Apparently, that member of the Commission was thinking of the interests of the institution he represented rather than of the interests of the community. From that point of view, I think the effect of the report is, to a certain extent, spoiled. The objection which I am making applies rather to the second and third interim reports than to the report in this case. I think the Minister would have been well advised if he had taken advantage of the suggestions we made at the time —that there should be a direct agricultural representative on this Commission, which was dealing with a subject of essential importance to the agricultural industry.

I do not propose to enter into an exhaustive examination of this Bill. The statements which have been made on the measure have not been in any way illuminating. I have not got any information which would be of real use to me from the statements made by Deputies. I attribute that largely to the fact that, owing to the short time permitted, Deputies had not an opportunity of getting a thorough grasp of the essential provisions of the Bill. I agree that the Minister was wise in anchoring our monetary standard of value to the English pound sterling, because in the conditions that exist in this country—a certain lack of stability and lack of confidence in ourselves and in our Government—it is advisable, for the present, at least, that we should maintain confidence in our monetary standard, by keeping it at par with the English pound sterling. I agree with Deputy O'Connell, to a certain extent, that we should not regard this Bill as final. There are possibilities with regard to the anchorage of our pound to the pound sterling, which must be taken into account. There is the possibility of happenings which would be detrimental to the interests of this country. Personally, I am not of opinion that anything can be gained for the people of this country by depreciation or appreciation of the monetary standard. I feel that between units in a particular State there may be gain or loss, but as between one State and another the rate of exchange, whether it goes up or down, has very little influence as regards advantage or disadvantage. We pay for the goods we buy by goods. The monetary unit is only a token of value, and is not of value in itself. I agree with the Minister when he says that there is comparatively little knowledge of banking, finance or currency in this country. This Bill will fulfil a useful purpose if it gets the people to study financial and economic conditions. There is an immense amount of ignorance on the question of money. People seem to confuse money and value. They seem to think that money in itself, regardless of how it is produced—whether by the printing press or otherwise—possesses intrinsic value, whereas we know that money is only of value in so far as it represents goods of some kind. The statement by the Minister that, since we have interfered with this question, we have got to wipe out all the cobwebs which cover the monetary and economic situation, is one with which I agree. It is up to us, in our new situation, to deal boldly with the economic and financial problems which confront us. We should not allow ourselves to be hampered with any ultra-conservatism on the part of the banks. I agree with one remark of the Minister in regard to the banks—that we ought to regard them and that they ought to regard themselves as national institutions, and that not only do they owe a duty to the shareholders and depositors, but that they owe a duty to the community at large. It must be remembered that institutions of the type to which banks belong owe not only a duty to their owners, but that they owe a duty to the nation. The banks must be awakened to an appreciation of that fact. The banks of this country are not, I feel, awake to the duty that they owe to the public. They have failed, to a certain extent, to meet the credit requirements of the agricultural community. I think it is time that we, as representatives of the people, told the banks that they have got to take some action which will keep them in touch with developments in the country, and particularly with agricultural developments. I say that without any desire to make an unfair or unreasonable attack on the banks. I recognise that they have, within limits, performed useful duties, that they have preserved the integrity of their depositors' money and, in certain respects, have done pretty well. But I believe their outlook is too narrow, and that they do not realise the relation that national institutions of their class should have to national development. On the general principles of the Bill, in so far as I have been able to study them, I cannot withhold my approval. But I believe a Bill of this kind should not have been introduced on such short notice and should not be dealt with at the time that this Bill is being dealt with.

One item of detail strikes me. It is in regard to the reserve fund. I want to get information from the Minister with regard to the reserve fund. So far as I can see, the reserve fund is to be made up of a percentage of the profits to be derived from the investment of the money which is used as a backing to the legal tender issue. This fund is also a reserve fund for the consolidated bank note issue as well as for the legal tender issue. If that be so, it ought to be derived in some way from the banks themselves. There is no reason why we should use legal tender to build up a fund which will operate as a guarantee fund for the consolidated issue, which will be of advantage to the banks and be a profit-making business for them. If we are to build up reserves for the consolidated note issue it should be done either through that issue itself or by way of some form of contribution from the banks. At present the shareholders are responsible in the final degree for the payment of the bank note issue.

Under the Bill, it seems to me that the liability of shareholders has been taken away and that such liability will fall on the assets of the banks and not on the personal assets of the shareholders. That is a matter which I am not prepared to say is of advantage or disadvantage at the moment, but it is one which I would like to have cleared up. Another point which I would like to make, and one which I put forward tentatively, is in regard to the Currency Commission which is to control the issue of currency. Again, I complain that with regard to all these matters of currency, finance and credit, the importance of the predominant industry of the country has been ignored and, while bankers and business men are represented on the Banking Commission and on the Currency Commission, we find no representatives of agriculture upon them. Surely, if financial and currency questions are of importance to the State they must also be of importance to agriculture. There is, I think, a tendency to regard agriculture as an industry which is incapable of producing men of sufficient education and knowledge to sit on commissions of this kind. If that is the view that prevails in the Ministry it ought to be strongly objected to. I think we can produce agriculturalists who are fit to take their places on any board or commission, side by side, with bankers and business men. I protest against the continued exclusion of agricultural interests on this Commission which was appointed to examine matters of currency, and also on the Currency Commission which will carry out the recommendations conveyed in the report.

I would like just to touch on a point raised by Deputy O'Connell. The consolidated bank note issue and its distribution to the banks, amounting approximately to £6,000,000, will confer a great privilege on the banks. If they get the issue at one and a half per cent. we can well imagine the possibility of their making a profit on that issue to the extent of three per cent. It means that between them the banks are being presented with a privilege probably worth £180,000 a year. It seems to me that as we are starting off with our own currency, and as we are giving this great privilege to the banks we should have a statement as to the ground on which such privilege is given, and we should have some realisation of what we are going to get from the banks in return. So far as the Minister's explanation, either by suggestion or otherwise, goes, we understand that this privilege is to be given to eight banks simply because it was already enjoyed by some of them, particularly by the Bank of Ireland and the National Bank. I feel that the Minister should give us a statement as to the conditions and principles on which the Bank of Ireland and the National Bank were granted their present fiduciary issue, and as to what particular return we may expect to get from that.

Facing the question anew from our own standpoint, we ought to have a statement as to what principles we are starting on and as to what return we may expect for the privileges referred to. One of the principal features which seem to characterise our banking returns is that there is general complaint as to the rates charged on loans and the rather high dividends which practically all of the banks are able to declare. We ought to face the question as to whether these banks are private money-making concerns, or whether they are to be regarded as public utility concerns. If they are private money-making concerns, the question of granting them State privileges scarcely arises. If, on the other hand, they are public utility concerns, and I feel we must regard them as such, we find ourselves offering them privileges which tend to create competition amongst them, because if the ratio of distribution of the consolidated issue is going to be examined every three years and a redistribution is to be made, if necessary, according to the needs of the different banks, there would appear to be an invitation to competition of a cut-throat kind between the different banks. That is being done at a time when we have prevented it occurring in the matter of railways and communications generally, and also in regard to power supply.

There is necessity to see that our credit possibilities will not be jeopardised by the setting up of too expensive a system of banking. I fear that we probably will have a continuation of the Banks Standing Committee, which will work as a kind of trust to keep up the bank rate to a level that will suit the weakest banks. That, I think, is a matter that requires serious consideration. The Minister committed himself to the statement that there has not been recognition on the part of the banks that they are national institutions with duties to the community at large. That statement has been reechoed by Deputy Heffernan and other Deputies who have actual experience of banking methods. I do not think that we can simply indulge in pious expressions of hope in regard to the banks when we have been driven to legislate very definitely in the matter of railways and electrical power. Further, there is the point that some of our banks are, I understand, giving very valuable concessions to the British Government in the matter of loans. If the banks get the concessions proposed in this Bill, I think we should know whether they are going to continue to give concessions to the British Government and whether they are going to give any concessions to our own Government.

This Bill is of great importance, and I feel, as a representative of the commercial community, that it is necessary to say a word or two upon it. The Bill is, of course, based on the report of the Commission, which has been before business-men for some time, and the principles that are laid down in that report have been accepted generally as wise and prudent, and upon which the Government might safely act. In so far as this Bill puts into legal phraseology the principles that underlie that report, the business community, although regarded generally as very conservative and not inclined to startling changes, will accept the Bill as one that does not indulge in any very revolutionary change. As the position of currency has to be regulated, the Bill minimises the risk of the changes which are about to be put into operation. While I say that, I also say that the technicalities of the Bill are difficult to understand at a moment's notice, and I would like an assurance from the Minister that, when we have given the Bill its Second Reading, reasonable time will be allowed for everybody who wishes to study its provisions, so that, when we come to examine the Bill in Committee, anybody who is interested in it will not be able to say that he has not had full opportunity of examining the proposals contained in it.

Deputy O'Connell, in criticising the Bill, rather touched on the surface of such matters as rates of exchange, and inflationary or deflationary policy so far as the State is concerned. I would like to make an emphatic statement which, I think, will get general acceptance from the business community. It is this, that anything that will create a rate of exchange as between Great Britain and this country would be a most disastrous thing for this country, and would have far-reaching reactions on our national life. Deputy O'Connell may say that that is arguable. He has a right to have a different opinion, and as this is not the time nor the place to go into the matter in detail I only make the emphatic statement that, at all events in the opinion—I might almost go so far as to say the unanimous opinion—of the business community, any tinkering or play-acting with the stability of the currency or with the rate of exchange which would be brought about by inflationary methods would be immediately condemned.

I do not think I stated that I had a different opinion. I did say that neither the Banking Commission nor business people who make these statements do more than make mere assertions, and that they do not seem to give any good reasons for the assertions.

I take the opportunity of saying that I am only expressing the views of the business community in saying that without going into details. Capital is a very shy bird, and if it became generally known, or even if there was the slightest hint that such a thing was likely to be the policy of the State, I think Deputies would be very considerably surprised at the rapidity with which capital would leave the country. I think you would find that it would not be many hours before you began to see the effect of that policy. Deputy O'Connell has criticised the banks. It is the habit to criticise banks here. Deputy Heffernan laid great stress on the fact that the banks were not liberal enough, and all that sort of thing, and Deputy Mulcahy wanted to know if banks were national institutions, or if they were considered business propositions from a national standpoint.

I would like to correct the Deputy. I asked whether we were to regard them as private money-making concerns or as public utility services.

I do not know what the difference is. The banks are business concerns, and every business concern is a public utility.

Even a publichouse?

I say that a publichouse is there for the convenience of the people, and it would not be there at all unless it was patronised by the people. The complaint is made that the banks, in times of good trade, are willing to advance considerable sums, and that in times of bad trade they adopt an opposite policy. Do people understand on what basis the banks deal with money? If a farmer wants an advance from the bank——

He does not get it.

Well, perhaps in that the banks show their good sense. But in such a case the first question the manager will ask is: "What is your security?" During what is now referred to as the period of prosperity, when farmers were making so much money that they did not know what to do with it——

What was really a time of inflation.

Yes, if you like to put it that way. Obviously, the security that was being offered to the banks for advances of money during that time was security on which the banks might rightly and properly advance the money of the depositors and clients. But with the change of things, which we all hear so much about from the Farmers' Benches, does any farmer go into a bank to-day, ask for the same advance on the security of his land and expect that the bank, having full regard to the value of that security, would be anything but a reckless institution if it entertained the proposition on that basis? It is not the banks that make money; it is the people of the country, who build up the prosperity of the country, and banks must depend on the value of the security they are offered. There is no use in making broad and foolish statements that banks ought to do something that is not in accordance with sound banking principles. There is no use in saying that the fact that a man is hard up is a reason why he has a claim against somebody else for an advance of money to carry on. If a bank were to carry on business on that basis I think its credit and the interests of its shareholders would soon suffer. Banks should be open to criticism in the same way as any other business concern, but when criticism is advanced it should be based on some intelligent appreciation of the functions of banks, having in mind that they have not money of their own, except to a limited extent as far as their reserve funds are concerned, and that the money they hold must be held with a due sense of security and with the idea in view of its being repaid. The banks cannot use the bulk of their funds in trade ventures which could not reasonably be expected to liquidate their obligations to the banks within a reasonable time. The financing of business must rest in the hands of capitalists who can take shares or an interest in an undertaking, with the knowledge that they cannot get their money back except, under certain conditions, being able to sell their interests.

I do not think there is very much to be said in criticism of the Bill at this stage. Not only individuals but groups will have to sit down and consider the whole question with a view to seeing if the Bill is a satisfactory measure, and if it is drawn up in the best way to carry out the recommendations of the Banking Commission. If that is accepted and if people recognise it as a good measure, many of the difficulties that will be created by the changeover in the currency will be overcome with the minimum of dislocation. But if the Bill is rushed you run grave risk of not being able to carry the people with you—because every individual in the country is concerned with this measure—to co-operate, or at all events to recognise that the measure is a good one, and you will find extraordinary difficulties in the way of carping criticism to be dealt with. Sentiment is a poor thing in a way. I do not think in this House we are sentimental, but sentiment occupies a very large place even in commercial operations. It is astonishing how sensitive commercial transactions are to sentiment. While wishing well to the Bill I would hope that this question of the attitude of the banks towards their own business will be left out of the question. If you have any accusations to make against the banks they should not be made on this Bill, except in so far as the banks are participating in the creation of the national currency. But as to criticism as to what the banks as a whole are doing, I would like to emphasise the fact that the invested funds of the banks are funds that can be taken out of the country. If you could get the banks to recognise the importance of encouraging home industries in every possible way it would be a good thing, but you will not get that done by saying that the banks must advance money on what they do not consider is proper security. I do not think it can be said that the banks have not done well the work that they are called upon to do.

You are going into it now.

I am going only in a small way into the criticisms that have already been advanced. The Bill does seem to be on the lines of the Commission's Report. In so far as it is I think it will obtain general aceptance, and I think there will be no obstacles to its passage so far as the business community or the banks are concerned.

I was hoping that I would be able to resist the temptation to join in this discussion, but Deputy Hewat has made one or two points that tempt me to add something to what has been said. He has pointed out that the banks have a certain function regarding the money at their disposal for carrying on their business, that is to say, the individual citizen deposits his savings or securities with the bank and the bank lends money and charges a certain rate for that service.

They charge such a rate as will ensure, as far as the experience of recent years has gone, that the shareholders will get the 15 to 25 per cent. dividend per annum. That is one service, but, as Deputy Mulcahy has pointed out, this is another proposition—to enable the banks to provide a good currency for the ordinary exchange operations of the country, might I say, the retail exchange operations of the country, and to establish, as the Bill proposes to do, a definite standard. I do not think I have ever been led into saying that if the banks were to be confined, as other public utility organisations are confined, to a stated maximum dividend for their shareholders it is going to make very much difference to the average business man. I do not think it is, but I do urge, what has been urged by one or two other Deputies, that the new situation in which the banking institutions now find themselves—I do not mean the new situation created by the Treaty—in this society, in this organised community, by virtue of the development of industry and commerce, has placed them in a position different from that which they occupied when they originated, of mere private business concerns, and they have become, in fact, social utility organisations, upon whose operations the economic welfare of the country depends. That places upon these banking institutions, as I understand it, a very much greater responsibility to the community, and to the community's welfare, than mere private trading organisations usually take upon themselves.

We have to consider this matter, therefore, in the light of these organisations as public utility organisations, institutions which have been incorporated by special Parliamentary sanction to serve the public and to provide a means of exchange in the most reasonable fashion possible, to facilitate the work of production and exchange, the work of feeding, clothing and housing the people. If we were discussing banks in general, I think this is the test we would have to apply: Has their conduct of affairs facilitated the better clothing, feeding and housing of the people? It comes to that in the long run; an exchange of commodities which enables people to live better. The Minister said, and it is this that has led me to say what I am saying, that the banks had a duty not only to the shareholders, not only a duty to the depositors, but also a duty to the country as a whole. I am making the suggestion that there should be an inversion of those conditions; that the country as a whole comes first, not the duty to the shareholders first, or even the duty to the depositors. We are discussing banking institutions and public organisations with special endowment from the community through the statutes. They have to take into account their attitude to the community as a whole, and I do not think it is going very far beyond precedents or asking anything very extravagant if such institutions as banking institutions were placed in a category similar to that, let us say, of a gas supply company, where there is a limit to the rate of profit it may make out of its public utility service. But I am not attacking or criticising the banks now adversely. They have not arrived at that stage of public service consciousness perhaps that Deputy Cooper, if he were here, representing in this House as I have no doubt he does, the Rotary Club, would say was the duty of bankers.

There has been something said about inflation and deflation and the danger that would arise to the business community and the community as a whole if there was a rate of exchange as between England and the Free State. Some comment was made on what Deputy O'Connell said on this matter, but we are dealing with currency rather than credit problems, and I think there is some difference between the two. Deputy Cooper did point out what was very nearly what Deputy O'Connell pointed out. He pointed out that in this Bill there is a reference to the security of legal tender notes, and he questioned whether the British Government securities in that form were sufficiently definite, sufficiently strong and sufficiently secure for the purposes of backing all these legal tender notes. The Deputy pointed out that there had been a great fall in the values of certain British stocks following the Goschen Act, changing the value of certain stock. If that could happen, I say that there is a very close connection between the possibilities of a fall in value of securities and a rate of exchange. Are we to assume that the financial policy and the currency policy of an industrial community, depending to a very great extent, as it does, upon finding markets for its industrial commodities abroad, is and must be always identical with that of an agricultural country which is not exporting, to any great degree, manufactured commodities and may, as I hope, be to a much greater extent in the near future more self-contained than it has been up to now, that it will consume very much more of its own agricultural produce, relying less rather than more on the international trade between England and Ireland? I say that we should not assume that for ever there is going to be this necessity: that the two financial policies and the two currencies of the several countries must be identical.

I think it is right to say, and I have no doubt it will be the position for quite a considerable time, that we should not attempt to interfere at this stage of our history with that position. I think it would be dangerous and unwise. I may be doubtful whether there is wisdom in introducing this Bill at this stage. I have a notion that when we are going to deal with matters of this kind that we should do it in times of prosperity, when we could risk a great deal more, and not in times of slump, bad trade and depression. I feel some gratitude, shall I say, is due from myself to Deputy Hewat for his assurances that the business community, speaking for the moneyed community, is quite prepared to accept this Bill, with its consequences, without any fear that it is going to have any adverse effects. That is some satisfaction. I had some doubt, which is to a great degree removed by the Deputy's statement, that the introduction of this Bill, at a time of very severe depression, might even worsen things than better them. I have no evidence whatever that this Bill is going to do one halfpenny worth of good to the country except save £300,000. Outside of that particular saving, I cannot see that it is going to do much more than changing the colour on the letter-boxes did. The sovereign will be exactly the same. There is no change in fact. There is a change in form, in design, in lettering and so on, but there is no change in fact, and perhaps that is a very good thing. I am quite satisfied that at this stage in our economic development it is a very good thing that there is no change in fact taking place.

The Minister has told us that, in the main, this Bill intends to give effect to the recommendations of the Banking Commission. I have been trying to read the discussions on the Electricity (Supply) Bill during the last 48 hours. I have been rather amused and interested in trying to understand the mental process of the single entity, the Executive Council. Two Bills are under discussion at the same time, each dealing with vital public services, one the electricity supply, which will be a necessity to the life of this community within a few years, and the other, the Currency Bill, which is a necessity for commerce to-day. I am amused at the difference in, as I say, the mental process of this single entity, the Executive Council. Supposing the Minister for Industry and Commerce had set up a Commission to advise him how best to set into operation a scheme to distribute electrical power for the benefit of the community, and appointed on that Commission representatives of the municipal electrical supply organisations, of the private electrical supply organisations and of the electric fitting establishments, what kind of a report would he have got? Would he have got a Bill out of it such as he has been arguing for? I rather think not. He would have got a Bill which would have consolidated and bolstered up the interests of those particular trading organisations, just as the Minister who made inquiry into the banking and currency questions, having appointed bankers to dominate that Commission, got a report which was going to serve the interests of the banks. As I say, I cannot understand how, in dealing with more or less parallel cases, so different a process should be adopted, with an inevitable difference of result.

In this report which the Minister has embodied in a Bill, I find certain recommendations which the Minister says he is not following. I think we should have a little more light upon the reasons why he is not following the advice of the Commission regarding the limits to be placed upon legal-tender note-issue. I, like others, am not able to approach this question with very definite views or very great confidence in my ability to understand the technicalities of the problem. But the report of the Commission says:—

"It is evident that the amount of the legal tender notes to be issued upon the basis thus indicated, or upon any other basis, is a matter of fundamental importance.... Apparently, then, the fundamental step to be taken is to ensure the placing in circulation of a body of legal tender notes approximately equal to the present secured issue, plus the British currency notes which are now in circulation, and which presumably will be superseded under the new system. Accordingly this Commission recommends that the new Currency Commission shall issue legal tenders as they are applied for, and upon demand for them, as already explained, without any effort to restrict or limit the issue until such time as the amount outstanding has reached a figure which shall fully take into account or cover the present secured issue plus the British currency notes in circulation in the Saorstát.... The important question, whether there might not be an effort to take out legal tender notes in excess of the amount so specified in order to obtain British sterling, might arise during the period of transition to this new system, and because of the possibility that an element of danger might thus present itself, we recommend that the Currency Commission have the power to suspend issue of legal tender notes whenever the figure already referred to shall have teen reached. This would place upon the Commission the injunction that it considers the whole subject of volume or amount of issue with the utmost care, with a view to avoiding an excess which might possibly result from the development of some inflationary movement in Great Britain."

So in the view of this Commission there are at least possibilities of an inflationary movement in Great Britain. In view of those possibilities, which these bankers warn us about, they make certain recommendations about a limit to be placed upon the amount of legal tender issue. But the Minister says he has departed from that recommendation, and unless I was neglectful in listening, I do not think he justified that departure. He came to certain conclusions which differ from the conclusions of the Commission, and I think it is very desirable that the Dáil should be satisfied that such a departure in this particular is justified when he has claimed virtue for the fact that he is following implicitly the recommendations of the Commission in almost every other respect.

Did the Deputy notice that the Report of the Commission states "during the period of transition"?

We are dealing with the period of transition. There will be a period of transition. As has been pointed out, this is not the last Parliament, and this is not the last Act, which will be passed dealing with banking and currency. I may say that my feeling in regard to this Bill is that when prosperity comes to this country it is likely that banking practices will have developed to such a degree that this Currency Commission will be in fact the nucleus of a national note-issuing bank, not merely an association of private banks. That is one reason which enables me to look with satisfaction upon this Bill, but which I thought might have raised the ire of Deputy Hewat—that it does point the way to a more formal ensurance that the banking services of the country will at some future time be conducted in the first instance with a view to the general well-being of the community, rather than in the first instance to the benefit of the shareholders. I think that that does point the way to such an inevitable development. These are matters that I do not want to deal with in discussing this Bill. But I feel that when this Commission has laid down as a matter of fundamental importance this question of a limit to the legal tender note issue, we should have some clear justification why such a recommendation should be departed from in the Bill which is intended to give effect to the recommendations of the Commission.

took the Chair.

I think the majority of Deputies are prone to forget that the banks are trading institutions, and that not alone have they to be careful of the money of their shareholders and to guard it, but they have also to be very careful of the money of their depositors. When any Deputy or any other person speaks of the excessive profits earned or dividends paid by the banks, he must remember that the banks trade on their shareholders' money, on the depositors' money, and on their reserve funds. The profits are made from these accumulated funds, but the dividend is only payable on the subscribed capital, which is a very small proportion. That is very often forgotten. While a bank may pay fifteen or twenty per cent. dividend, that really may only amount to 4 per cent. on the amount of money employed. The economic prosperity of any institution depends upon the economic prosperity of the country in general, and a bank cannot run counter to the general run of trade in the country. It would be bad business for it to do so. Banking institutions in this country are based upon the banking institutions in England, which are considerably more elastic and more progressive than those in any other portion of Europe or in the United States. The banks have been blamed for the mad speculation in land that took place a few years ago. Why should the banks be blamed for that? Farmers, came into the banks accompanied by two persons who were good security for the money required. The money was advanced. Two or three years afterwards there was a big slump in live stock, and the farmers found it very difficult to meet their engagements, and blamed the banks for lending them the money. I do not see why the banks should be blamed.

Sitting adjourned at 6.20 and resumed at 7 p.m.,


In common with other Deputies, from various parts of the House, who have spoken on this measure, I would like to make a protest against the manner in which this Bill is being rushed. There is no Bill of such great importance to the community as the measure that is now before us, and I say it is rather treating the House lightly—it is not taking an adequate sense of its responsibilities to the country and the whole financial stability of the State—that the Government should rush this measure. This Bill was only circulated on Monday, and as the House has been sitting continuously since, it is very difficult for Deputies to grasp the proposals. It is difficult as well for Deputies to compare the proposals in the Bill with the proposals recommended by the Banking Commission. In addition, the ordinary Deputy in this House is, I may say, quite incapable of criticising the proposals. One might offer observations, but, for my part at least, I should hesitate to go into serious criticism of the details of this Bill. There are some points, however, that stand out. The first point is with regard to the consolidated bank note issue. How is this sum of six millions—divided amongst several banks—arrived at by the Banking Commission. We know that they told us that the sum for all Ireland was six millions three hundred thousand odd. We know, too, that those banks took no stock of the notes that they held in their vaults, and that this sum of six millions three hundred thousand odd should only cover the notes actually in circulation, actually out of their reach. What we require in this country is to preserve a happy mean, that there shall not be too much currency in circulation or that there shall not be a shortage of it. The immediate effect of an excess currency in circulation is to put up the cost of living because its own weight brings it down, the purchasing power of money declines, and of course the prices of goods must advance in accordance with the decline in the purchasing power of the currency. That, I submit, is a very serious consideration for us. We have no definite knowledge of why this sum of six millions was fixed upon by the Banking Commission. The figure seems to be an arbitrary figure. Yet, on the other hand, if the sum of six millions plus the legal tender, and that too is definitely specified, should prove to be inadequate, the result will be that the prices of commodities will go up because money has a higher purchasing power. I submit that that would be a very serious matter for an agricultural community. It would have the gravest reactions amongst the agricultural population. I hold that the Government should tell us on what basis this six millions was laid down by the Banking Commission.

There is a further question as to the position of the banks outside Ireland. We turn to the third schedule and we see that they are allowed to take a certain amount of this six millions in consolidated bank notes. Three of these banks, at least, have their headquarters outside Ireland. In giving any bank the right to circulate this consolidated bank note we confer a very great privilege indeed. It is true that they pay us 30/- annually per £100 in circulation. Even so, let us realise that the bank note is but a promise to pay. It is a negotiable security and the man who accepts it gives accommodation to a bank because he takes its bond. There can be no two questions about that point of view. He takes it at its face value and the gain for the bank must necessarily depend upon the length of time that that note is in circulation. If it is for a year then you can estimate the percentage of profit on it. It naturally corresponds with the discount rate on money. I think that for a considerable time back that has amounted, in the case of Irish banks, to six or six and a half per cent. They give 30/- per cent. per annum to the State. You are not giving it alone to your Irish banks over which you have some control—banks with their headquarters definitely established in this country—but you propose to give it to three other banks, two with their headquarters in Northern Ireland and one with its headquarters in London. You are giving those people the privilege of circulating their share of the consolidated note issue amongst your people. And what check have you? Merely, as the Bill provides, a local register of shareholders resident in the Saorstát. In my opinion, that is not enough. If the State is giving this very great privilege it should have corresponding securities. The State certainly will have some sort of a supervisory power over the banks. Yet, to a large extent, those banks are remote and removed from your control and that is hardly a fit and proper thing. In addition to this question, if we are to prevent deflation or inflation the very closest scrutiny must be kept upon the issue. There must be a volume of goods equal in value to the amount of currency in circulation, if prices are to be maintained stable. As I say, I have not expert opinion upon this Bill to determine whether that principle will be recognised and adequately safeguarded. I say the next stage of this Bill might be held over until the banking and commercial opinion of this country has made itself articulate on the matter.

But there is another great departure from the old-established custom of the British banks. We have a method now largely, in my opinion, upon the lines of the federal reserve banks of America. The Currency Commission is somewhat analogous to these federal reserve banks. These federal reserve banks control the currency and in controlling the currency they naturally control the volume of credit. The Currency Commission here does something similar. These federal reserve banks do not engage in or compete with the established banks. The Bank of England does to some extent; the Bank of Ireland, of course, as we know, competes with other banks although it is the bank where the Government deposits are contained. In Germany you have a State bank which is practically like the Bank of Ireland. The principle of unrestricted competition with the other banks for public business is not the case; it is the exception in the case of the Bank of Ireland.

That brings me to another point. Why should we allow a bank note for a pound? It seems to me the sum is too small. I believe in the British system which has evolved itself out of a recognition of what ought to be fundamental in currency that the effect of a note is to drive out specie, to dispossess it, and usurp its place. As I said at the beginning, a bank note is but a promise to pay; it is not money really and it is taken at its face value. There is no discount whatever on it. I believe that the lowest consolidated bank note allowed to circulate ought to be for five pounds. I see no reason to depart from the Bank of England note of which the lowest issue is for five pounds. Deputy Cooper raised the point about British Government securities and British Government guarantees. Remember, it is the case that nearly every bank in the country has to make an allowance at the end of every half-year for depreciation of securities. Your Currency Commission, I think, should hold most of its securities really liquid or hold a considerable part of its securities really liquid. It should exercise a wise discrimination in the purchase of securities which while being quoted in the public market are liable to fluctuation. As I have already pointed out, I am not in a position now to criticise this Bill. I can only offer a few observations on it and these are the salient points which seem to me to need attention.

I shall not detain the House very long. As a matter of fact, I rise with a good deal of hesitation as I hardly feel myself at the moment in a position to discuss this matter adequately. I do not accuse the Minister at all of rushing the Bill. We have had this Banking Commission report in our hands for two or three months, at any rate, and I, for one, have made it a matter of study and have tried to understand it and to get some knowledge of the problems with which it deals. But the Bill with which we are particularly concerned to-day came into our hands only on Monday, and since Monday I have had very little time to compare the Bill with the report to see to what extent it differs, if at all, from the report. I have discovered one thing, and I think that was confirmed by the Minister to-day, and in that respect I think the Bill is a decided advance upon the report. In this respect I differ very much from Deputy Johnson. Perhaps the House will allow me, when I mention Deputy Johnson, to say with what pleasure I heard him addressing us again, and how glad I am to see him back in his accustomed place. I am sure every Deputy will agree with me in expressing that sentiment.

I think this Bill, in so far as it has removed the limit which was placed by the Commission upon the amount of notes to be issued, has made a distinct advance, because it seemed to me, in studying the report, that on that point there was a distinct weakness. The system proposed by the Commission lacked just that elasticity which was essential for any scheme of the kind. It is true, admittedly true, that note issue follows trade. In this respect I think Deputy Johnson made a very valuable remark when he said that if it were not for the fact that the change does bring us an increase in revenue of about a quarter of a million a year, this would not be a good time to make the change. A time of prosperity rather than a time of depression would be a better time. This being a time of depression, the limit fixed by the Commission in its report was a limit corresponding to a time of depressed trade, and if that had been taken as the upper limit there would have been lacking just that element of elasticity which would have been required to meet an improvement in trade. Therefore, it seems to me, the Government have made a distinct improvement in the Bill over the report of the Commission in removing that upper limit which was fixed by the Commission.

In another respect I would like to express my agreement, to a very large extent at any rate, with what Deputy Johnson said, and that was when, without exactly committing himself to saying that it was a good point, he said that really this was not a change in fact, but a change in form. I think, in so far as that is true, it arises from the Commission putting in the very forefront of their report their conviction that no change should be made which would lead to the possibility of fluctuation in the rate of exchange. I take that as the premise on which this whole discussion is based. I think, in so far as that is the case, there is a great deal of truth in Deputy Johnson's statement that this is a change in form rather than a change in fact. That being the premise, the Minister was perfectly right in treating the Bill in the way he did without introducing reference to wide questions of deflation and so on, questions such as those to which Deputy O'Connell referred. I agree with the Minister that the change of circumstances necessitated change in this respect, that the Free State is entitled to this change of revenue which is to be brought about by the Bill, and that other changes were also necessary.

I cannot help thinking, after studying this report as carefully as I could, that all the desirable objects which are gained by the Bill as based on the report, could have been gained in a simpler way. I am merely expressing that as my own view. I hold no brief for banks either in the whole or individually. I have not even discussed this matter with any bank direct. I speak purely as an individual. I think questions and possibilities are raised by the change which is being made, which might have been avoided. I do not think it is very useful to go into that more deeply, because we have this Bill, and the Government were put in a position in which they could do little else except carry out the report of the Commission, mainly on the lines laid down by the Commission. I think the Government's choice was very much limited by the report of the Commission.

Therefore, I am not opposing this Bill at all—quite the reverse; but I cannot help expressing my individual feeling that the desirable objects could have been secured without entailing at least two things which are, to my mind, somewhat objectionable. One of these things is, in the first place, the taking of steps which cannot fail to have reactions upon the working of what we may pride ourselves on as being valuable institutions that have been a credit to this country in the past. I base my remarks there on the statement made by the members of the Commission, and I think they pay a just and well-deserved tribute to the condition of the Free State banks, and the way in which they have established themselves as creditable institutions. I cannot help feeling that these proposals will have reactions upon these banks which it is quite hard and difficult to estimate fully at the present moment. In the second place the proposals of the Commission involve the setting up of the Currency Commission which is bound to be an expensive institution. I do not propose to argue further in the matter, but I feel constrained to express my individual view that those are two objectionable features in the report and in the Bill, which, so far as I can see the situation, might have been avoided.

I feel obliged to say that and nevertheless, as I have said, I am going to support the Bill because I think it introduces changes which are necessary. One of the chief reasons I rose was that in the time at my disposal I have not been able to satisfy myself that I understand fully the meaning of certain things in the Bill. I would like the Minister to inform me upon at least two points. One, which is one of what may be called the minor reactions of this Bill upon the banks, is really introduced in one of the definitions in page 3 of the Bill. The Minister there defines the term "in circulation" as meaning notes taken by the bank or held by the bank in so far as those notes are not contained in the coffers or tills of the bank. I think that is the phrase used. That is to say, notes are in circulation only after they have been given out by the banks to customers; but so long as they are in the coffers or tills of the banks they are not in circulation. I fail to find in the Bill so far any place in which that is really put into operative practice.

So far as I can understand the Bill, it means that any bank, when once it has taken over the note, whether it is put into circulation or held as a kind of reserve by the bank, is treated by the Currency Commission in precisely the same way. That is to say, one sphere of operations of the bank, namely, through its branches to a large extent, will be very seriously curtailed. If the operations of the banks through their branches in the country districts are to be curtailed it will be bound to have a more or less serious effect on the way in which the banks can carry out their functions with reference to the trade of the country in country districts. So far as I have been able to understand the matter, a branch bank keeps a certain number of notes as a kind of reserve. It does not know whether it will want them; whether there will be a sudden call for them or not; but at present those notes are merely paper. They cost the bank nothing for their production. They are not issuing notes. They are there to meet an emergency which may, or may not, arise any day. The bank has not to pay any commission to the Government on those notes until they are actually put into circulation. If I understand this Bill aright, it will mean that power of holding notes in reserve will be completely checked because the bank could not afford to hold considerable sums and pay for them and at the same time make no serious use of them. If that is a true interpretation of the Bill it will seriously interfere with the powers of the banks in country districts.

There is a second point I would like information about. So far as I understand the position at present, banks pay a certain commission—seven shillings per hundred, I think it is—on all the notes which they have in circulation.

No, not all—not for the excess issue.

I think it is on all the notes they have in circulation.

Yes, on all.

I believe that is the case. The Minister appears to propose to charge them thirty shillings per cent. for the consolidated note issue and nothing for the other notes. The other notes are paid for because pound for pound is deposited when any other note is obtained by the bank. Is that right?

That is correct.

Then I think the change to the thirty shillings per cent. from the seven shillings per cent. does not appear to be at all so important as it might appear at first sight. Taking the present figures, the total notes in circulation would be anything from fourteen to seventeen millions, and, on about six millions of those, grouping all the banks together, in future thirty shillings per cent. will be paid, whereas in the past only seven shillings per cent. was paid upon the whole fourteen to seventeen millions. Perhaps the Minister will tell me again if I am right?

It is something like that.

I raise that point because I want information about it; I want to be quite clear as to the existing state of things. Remarks have been made by various speakers in this debate with reference to the position of the banks and the actual dealings of the banks. A suggestion has been put forward by two or three Deputies which seems to me to carry the implication that this Bill is proposing to treat the banks more favourably than would correspond with their existing conditions. If you individualise the banks—which I do not propose to do, because, as I stated, I am not interested in any particular bank—that might be true, but if you take the banks as a whole, which is what we are doing here, I think it is very far from being true. The banks, as a whole, will have this six million pounds consolidated note issue supplied to them by the Currency Commission at 30s. per cent. That will agree more or less with present conditions. They will be able to get what has been called —I mention the term just to correct it —"excess issue." It is not really excess issue. The Minister used a much more correct term when he spoke of "secured issue." In addition to that six million pounds, they will be able to get secured issue—that is issue in which £ for £ is deposited—up to the demands of trade at the time. So far, the conditions for the banks as a whole will not be very different from what they are at present.

It is quite a mistake to say that this Bill is conferring benefits upon the banks. Owing to the way in which banks have grown up, we must look back and consider what happened, and how they were able to claim what has been called a "privilege," but which really was only one of the ways of performing their functions—this privilege, so-called, of issuing notes. When the banks were started they had to put up a certain amount of capital. Seven million pounds—I think that was the amount—had to be put up by shareholders. On the strength of that capital being used, the banks got from the Government permission to issue notes and get certain benefits from those notes. By means of these notes, they were able to meet the demands of the country with reference to trade. It is quite a mistake to imagine that that is a gratuitous concession given to the banks. It was only because of the use of this seven million pounds of capital that they got the right to issue notes. It is not to be believed that such a concession would be given without some such consideration to a set of private persons. I mention that point in order to correct what appeared to me to be a misapprehension on the part of speakers when referring to this note issue as a "privilege" or "concession" given to the banks.


Would the Deputy say who got the benefit of that seven million pounds? Did I understand the Deputy to state that the banks gave that seven million pounds to the Government or to whom did they give it?

The seven million pounds was the lien on which the notes were issued. Part of it, I believe, was handed over to the Government of the time at a low rate of interest—I think I am correct in saying that. Part of it was used as working capital. But it was simply because that capital was put up by the shareholders that the possibility arose of the banks acting as institutions to enable the trade and business of the country to be carried on.

When gold was current, they avoided the necessity of having gold in their coffers.

Only to a partial extent. Beyond the £6,000,000, which was less than the amount of their paid up capital, they got the privilege of issuing further notes, but only if they deposited pound for pound, so that they were not able to make use of that as fluid currency any further. So far as the £6,000,000 is concerned, that is now taken over by the Minister for the consolidated note issue.


Does the Deputy say that the banks are continuing that accommodation to the Government which they gave in the early years— lending money at a specially low rate of interest?

I am not in a position to make a statement about that. I have now disburdened myself of some of the matters that were in my mind. I am not going to oppose the Bill, but I did believe that it was my duty to place before the Dáil the views that I was enabled to form at the time at my disposal for studying this matter. It is a very intricate and a very involved matter. In concluding, I would like to remind Deputy Johnson that the point to which he drew attention—that there is at the basis of this whole Bill and this whole report an endeavour to avoid fluctuations in the rate of exchange—secured for the Bill in my opinion the support of the great bulk of the community.

I think I should congratulate Deputy Thrift on having studied the report and on having taken a great deal of care to understand it. I did not think it was necessary, in speaking to the Second Reading of the Bill, to go over completely the ground that was covered by the report. In speaking, I assumed that the majority of Deputies had read the report. To a large extent it would have been a waste of time to go over the ground covered by the report, paragraph by paragraph.

Dealing with Deputy Thrift's first point, I think the definition of "notes in circulation," as found in the definition section of the Bill, is probably for the purpose of only one clause—clause 53—to secure that a bank will not have an over-issue of notes when its issue here and outside the Saorstát is taken into account. Ordinarily speaking, the banks will no longer have the privilege of free till-money. The position up to this was that the banks printed their notes and sent them down to the branches, and as long as they remained in the branches, they were simply stationary. Undoubtedly, that was of benefit to the banks. It would not be possible, in the new arrangements, to continue that privilege, but the loss of that privilege has been taken into account in fixing the amount—it is only being fixed for a period—of the consolidated note issue. It should not be taken, however, that the loss that banks will incur through the loss of the privilege of free till-money will be so serious as would at first appear. What will happen is: they will be able to have consolidated banks notes in their tills and the cost of the consolidated banks notes to them will be 1½ per cent. I do not think Deputy Thrift quite saw the full effect of the change that is proposed when he said there was a consolidated note issue of six million pounds and that, thereafter, the banks might get the additional notes required in the form of legal tender notes in the same way as they got the excess or secured notes in the past. The position will be in future that, through changes in the maximum limit of consolidated note issue at intervals, the additional currency required for the country will be got in the form of consolidated note issues, and if the amount of legal tender notes in circulation keep at six million, it is unlikely they will go above that. The increase, when increase is demanded, will not take the form of secured notes, but of consolidated bank notes.

Deputy Thrift said very fairly that he did not allege this Bill was being rushed. I am at a loss to understand some of the references which Deputies have made in this connection. The Bill is not being rushed. There is no reason why it should not be introduced at this particular stage. Consideration of the matters which this Bill deals with was taken up by the Government about two years ago. Following consideration by the Government, a Commission was set up to examine the question. A certain amount of time was spent in finding the personnel for that Commission. More than a year ago the Commission was appointed. The particular report of the Commission on which this Bill is based was issued over three months ago. Although the Bill has only been in the hands of Deputies for three days, in view of the fact that it follows closely on the lines of a report which has been in their hands for three months, I think it is not recognising the facts to allege that there is any rushing. We are not rushing the Bill in any way. We are not asking the Dáil to hurry over it. We are not asking the Dáil to give less time to the consideration of the Bill than the Dáil wants to give. When a matter which has been under consideration is ripe for attention, there is no reason why the Dáil should not deal with it, even though this be the last year of the life of the Dáil. If we were to give any weight to the arguments employed by people who say this Bill is being rushed at this stage, I think we might conclude that the Dáil, in the last year of its life, should do no work at all, that even if it foresaw a dissolution—though not in the last year of its life—it should cease to do any work. I could not agree with that at all. When people talk in an easy way about there being no need for hurry and suggest that the question of the gain that will come to the Exchequer through the passage of this Bill should be ignored, I think there is a lack of perspective. We would not be justified in interfering with the currency arrangements of the country for the sake of such a gain as is going to come into the Exchequer under this Bill. But if, on other grounds, we find it necessary to make changes, and if those changes have been carefully considered and approved by, shall I say, a very conservative Commission, it seems to me that the fact that a sum of nearly one thousand pounds a day is involved is quite a good argument in a country like this for going ahead with the proposals.

I do not want to follow Deputy O'Connell in his discussion of inflation and deflation. Undoubtedly, this country suffered as a result of the very rapid deflation that took place in Great Britain. I think that will not be denied. If we had had an entirely separate system, while we might have deflated, we probably would have tried to deflate more slowly. But that is not an argument against the present Bill. It is certainly not an argument of any strength against the present Bill, because I do not think we can make our arrangements at present on the supposition that there is going to be such an alteration of inflation and deflation again in Great Britain in our time. If a great war broke out and if we saw a policy of inflation being inaugurated in Great Britain, then we might decide to alter these arrangements. But it is perfectly safe for us, at the present time, to assume that there is not going to be a policy of inflation in Great Britain, to be followed by a policy of deflation such as we have experienced.

It is quite safe for us to conclude that the policy that has been pursued in Great Britain, a policy that has had the support of all parties there, will be continued. Even if we were not sure of that, at any rate the arrangement we are making does not tie us closer to Great Britain than we were. If I might use a simile, I think at present we are not welded to Great Britain. Under the new arrangements our currency may be a chain to the British currency but it will not be welded to it. There is a possibility that certain fluctuations might take place in Great Britain; but that is not an argument for our making the change which it is proposed to make. It has been asked why we should allow the banks to issue notes and why the Government should not issue all the notes. The issue of bank notes, as proposed here, is simply a form of giving credit, and I do not think that the Government could handle the whole question of giving credit even so far as it could be done by the issue of bank notes. Banks were originally free, I think, to issue notes.

I am not very positive about the exact state of the law prior to 1844 and 1845 but, in general, banks might issue notes as they liked. That, as a result of various disasters and abuses, was taken away in a peculiar fashion, namely, by restricting the amount and the issue to banks that had a right of issue. That was not a very logical or scientific way of dealing with the problem. Because the matter was dealt with in that way some people have, I think, got the idea that that particular arrangement had virtues which it actually had not. In spite of the fact that it was necessary to limit the issue of notes and that they were limited in that very rigid way, Deputies should not forget that there is no essential difference between the issue of a bank note and the giving of an overdraft. If we had a community in which everybody had his own bank account and his own cheque book, the note issue would be of little importance. I think bankers would say that one of the reasons that bank notes do not play the part here that they play in England is because of the difference in conditions.

Abolish the stamp duty on cheques.

I do not know that that would be beneficial. The issue of notes is really a form of giving credit. It is a form of credit which is necessary in a country like this and, if it were done away with, while it might in the first instance injure the banks, it would certainly, in the second instance, injure the whole commercial community, particularly the agricultural portion. We are, to some extent, going back on what was done when the note issue was rigidly limited and the right of issue limited to particular banks. We are now allowing any bank that complies with certain conditions to get its share of the consolidated note issue, but everything will be done under supervision. The limit can only be increased with the consent of the Minister for Finance and with the consent of the Currency Commission, which will represent the general body of bankers and also, through the nominees of the Minister for Finance, the general public interests. We are giving an element of flexibility to the system which it had not before and we are doing that without risk, because the banks have been conservative, will, in the matter of note issue as in other matters, continue to be conservative, and will realise that each note is an obligation which they have to meet. I do not believe that any of the existing banks would over-issue. if they were allowed to do so. They will not be able to do so, because there will be a double check. There is no real need for this reserve fund provided for; but, perhaps, it is a good thing to make doubly sure.

I believe that a new element of flexibility has been introduced which did not exist before. I also believe that the new system will prove to be of considerable benefit to the country, but there is no use, at this stage, in going into the realms of prophecy. Deputy Cooper referred to the fact that the Comptroller and Auditor-General is to audit the accounts of the Currency Commission and is not to audit the accounts of another board. The conditions are not parallel. We are not really aiming to bring a bank book into every house. In any case, the accounts with which he will be dealing are accounts of a much simpler character. He mentioned paragraph 35 of the report and asked whether private accounts were going to be scrutinised. I think it is unnecessary to say that there is no intention of scrutinising private accounts. I do not agree with Deputy Cooper that it is necessary to restrict the Commission in its choice of securities further than proposed in the Bill. I think it is quite sufficient to say "British Government securities." After all, we will have a Commission of competent people watching the securities from day to day, and I am satisfied that it is quite sufficient to lay down the provisions as in the Bill and that it is unnecessary to do more. It will be for the Commission to decide how they will invest their securities.

Personally, I do not think that there will be any need to invest even in short-dated securities. They will naturally invest in securities in which they will get the highest rate of interest. I think it will only be to meet sudden demands that there will be investment in short-dated securities. With reference to Deputy Redmond's statement that the £250,000, which this Bill will give us could have been secured by a special statute, I really do not know what the Deputy meant, if he meant anything. This is a special statute. The Deputy went on to suggest, by way of standing over a statement which, I think, he made rashly at a political meeting, that by mutual agreement with Great Britain we could get £250,000. The position is, we are using British currency, and have used it heretofore, for our own convenience. I would like to know who would make the British Government pay for the fact that we are using their currency for our own convenience. Deputy Heffernan said that the reserve fund, because it would be for the consolidated note issue, should be contributed by the banks. Theoretically, the fund will be for both the legal tender fund and the consolidated note issue fund, but I do not think it will be required for either.

I do not think that there is any chance of its being required for legal tender, or even for consolidated note issue, but, as Deputy Thrift pointed out, we are, for the present at any rate, imposing certain burdens on the banks which they had not to bear before, and the reserve fund, when it has been built up will yield a revenue which will come into the Exchequer, so that I think there is no real objection to the reserve fund being built up out of the profits of the Legal Tender Notes Investment Fund. I am not sure that I would take as narrow a view of the words in the Bill with reference to the representatives of trade and industry as Deputy Heffernan thinks I would. I believe that an agriculturist of a particular type—I do not say that I would like to appoint a small farmer—could be covered by that phrase. I think I have dealt with some of the points raised by Deputy Mulcahy. I referred to the origin of the fiduciary issue, and I pointed out that it is not quite correct to regard the right of note issue as a privilege which we are conferring. After all, bank notes are merely promises to pay. They need not be accepted by anybody. The position really was that the banks, because of abuses, had been under restrictions in the matter of the issue of these promises to pay.

These notes are not the sort of notes that could be issued by the State. State notes would certainly have to be full legal tender. I am not sure exactly what Deputy Mulcahy meant about concessions which the banks give to the British Government. There is some sort of a loan which the Bank of Ireland at its foundation, or shortly afterwards, gave to the British Government. I do not know whether they could recover that money from the British Government. Judging by the way in which the figure appears in the British Government accounts, it would seem that the British view is that it is no more repayable than consols. It is a matter, for the present, at any rate, between the Bank of Ireland and the British Government. If the Bank of Ireland were able to get it back, I would try to see the Governor about it.

With what object?

Public interest. Deputy Johnson and other Deputies have spoken on the point as to whether the banks are public utility services or private money-making concerns. There is no doubt that the character of the banks has changed with the change of times, and that the responsibility of banks has changed. At the same time, however, they are concerns which must be carried on in a business-like way. Above all, I think the banks must safeguard the interests of their depositors. The persons who put their money into the banks have, I think, the first claim to have it safeguarded and repaid to them on demand.

But the note-holder has the first claim?

I am not analysing the thing down to the last detail. Deputy Hogan asked how the amount of the issue was arrived at. I have really nothing to add to what is in the report. Deputy Hogan need not be afraid that there will be too much money in circulation, because the banks will not pay pound for pound to get legal tender that is not required. The question may be raised as to whether there is enough or not. They can get more always, as they could in the old days, by paying pound for pound. In the old days the fiduciary issue was rigidly fixed, and they had to pay pound for pound to get more notes. For the first two years, as Deputy Thrift did indicate, the position will be something like this: There will be this £6,000,000 of consolidated note issue. If anything in excess of that, and the amount of legal tender outstanding, is required, more legal tender will have to be provided by the banks in the old way. If it is found at the end of the two years that the £12,000,000 laid down in the report is too little, the Commission, with the assent of the Minister, can fix the maximum limit. Therefore, I do not think there is any danger that there will be too much or too little. The amount of the consolidated note issue was allocated between the banks on the Report of a Commission on which, I think, all the banks were represented, and the factors upon which they came to their decision are set out in the report. They were the advances, the reserves, and the capital of the various banks——

Will the Minister say whether that allows for the normal fluctuations that take place every autumn?

I think so. This provision in regard to the setting up of a local register has nothing to do with giving us a hold over the banks. It is part of that old question which I have mentioned several times in Budget statements in connection with the Corporation Profits Tax. It is a fact that where a company is registered outside this country an undue share of Death Duty goes to the British Government, and in certain circumstances all of it may go to them. If a company like the National Bank had no local register, and a shareholder resident in Great Britain died, the position would be that the British Government would get the whole of the Death Duty, although the passage of the shares on the death of the person would represent the passage of a certain amount of property actually situated here. On the other hand, if a Saorstát resident died here the British Government would get half the tax and we would get half of it. But if a local register is set up, when a shareholder resident in the Saorstát dies, we would get the whole of the Death Duty. The National Bank has already set up its local register. I understand that the Provincial Bank has either set up a register or has agreed to do so, and this will compel other banks to fall into line, so that so far as their Saorstát shareholders are concerned in the future we will get the whole of the death duties. It has nothing to do with getting control over the banks.

Deputy Thrift and Deputy Johnson have said that the change is a change in form, not a change in fact. I believe there is more of a change in fact than these Deputies believe. I indicated that already when I said that an element of elasticity is introduced which did not exist before. I think these are the only points to which it is necesary for me to refer.

Will the Minister consider the abolition of the stamp duty on cheques?

That should be raised on the Budget.

I am sorry that I am not able to indicate to the Minister where I got the impression, but I got it somewhere—that the banks with their headquarters in the North of Ireland will be limited in issue to 10 per cent. of their sound liquid advances, while there will be no such limit in the case of the Free State banks.

There is a provision to that effect.

Why is that? Is that fair?

I want to say with reference to that that I may have to reconsider the figure of 10 per cent., because we are inclined to think that that figure is too low. It applies to all the banks which have issue outside the Free State as well as in it. The Hibernian Bank, the Munster and Leinster Bank and the other banks that will be given a note issue now for the first time had no note issue before except their issue in the Free State, and the banks that already have an issue will have an issue outside the Free State as well as in the Free State. The note issue outside the Free State is not within our control and consequently we must take some steps to see that the total note issue is not greater than we would approve of.

But you have given a ratio of note issue in your schedule. I take it that this applies to the business of these banks of the Free State. Therefore, why should you limit it to 10 per cent. of their ordinary sound advances?

I do not want to stand on the 10 per cent. at the moment, but we must have a limit, because in addition to what we provide for in the Bill there is an issue outside the Free State over which we will have no control except by saying; "If your outside note issue exceeds so much we will give you no note issue here, but if it does not quite reach ten per cent then we will only give you as much of the amount that is provided for here as would bring you up to it." All the notes, no matter where they are issued, are a charge against the assets of the bank, and we must see that they do not avail of the Border to get a note issue beyond what they should.

You should leave that to the other side of the Border.

The position is that the assets that may be lodged with the Currency Commission are not real securities. The whole assets of the bank are the security.

Well, you will be getting the assets?

I think that is a Committee point.

Will the individual shareholder be personally responsible still?

Yes, the same responsibility as before will fall to the share holder.

Question put and agreed to.
Committee Stage ordered for Tuesday, April 26th.