This Bill follows fairly closely the lines of the Banking Commission Report. It provides for the establishment of what is called an Agricultural Credit Corporation with a capital of £500,000, half paid up. It provides that the capital and the dividends shall be guaranteed by the State; that capital shall be offered at least to the extent of £200,000 to the banks, and that the balance shall be offered to the public. The intention is that in the event of the capital not being subscribed by the public it shall be subscribed by the Minister for Finance. It is an ordinary limited liability company and the ten directors of the Corporation will be appointed by the shareholders. The banks will have the appointment of directors corresponding to £200,000; the other shareholders will appoint a certain number, and the Minister for Finance may make four appointments. The functions of the Corporation will be to give long term and intermediate term credits to agriculture. It is not intended and the organisation is such that it would not be possible for it, to give short term credits. There is an immediate distinction there between the function of this Corporation and the function of the ordinary joint stock banks. The division will lie along the lines of the joint stock banks performing their usual functions, which they are most suited for, which they have always been performing, and which their organisation enables them to perform, namely, the giving of short term credits.
It will be the duty of this Corporation to give this sort of credits that the joint stock banks have in the past, at times, attempted to give, and which they never found suitable for them, that is, long term and intermediate term credits. It is not intended that the banks should not even yet enter the field of long term credits if they wish to do so. That would be all the better for the Irish farmers. The more sources of credit which are provided, and the better credits that are given with due regard to the necessities of each case, the better for them. The banks may, in the future, enter the field of long term or intermediate term credits if they wish. There is no limitation to their functions so far as this Bill is concerned, but so far as the Agricultural Credit Corporation is concerned, its organisation is such that it will only effectively function in regard to long-term credits and intermediate term credits.
I am not in a position to define exactly what long term credits are, or what intermediate term credits are. I do not think I could be expected to attempt these definitions, because the Banking Commission, composed mainly of Irish bankers, was unable to do so. What I can do is that I can indicate certain general considerations that have a bearing upon the question. I think the paper of the banks, at present, is usually dated three months. The ordinary loan to a farmer is on a three months' or six months' bill. Certainly, except in very rare cases, a bill does not exceed in duration six months. Now, the sort of credit that agriculture needs depends entirely upon the particular requirement at the time. Some credits are needed for certain purposes for, say, ten or twelve years. For instance, credits to farmers' organisations for the purpose of erecting creameries, to be useful so as to be repaid easily and without making undue calls upon the shareholders, should be for periods of ten years. Credit for drainage might be for lesser periods. Credit for farm buildings should be somewhat longer, but, in addition, farmers want credit to enable them to hold cattle or crops for nine months or a year or thereabouts, and that is what is meant by intermediate term credits. It is these credits, and especially long term credits, that this organisation is expected to supply to the farmers. Now, the purposes are quite simple. They are defined in Section 9. They are, in short, to enable a man to become a farmer; that is, to buy land for the purpose of becoming a farmer, and after that to enable a farmer to perform any agricultural operation. C, D and E set out the purposes almost exactly.
(c) subject to the provisions of this Act, to lend to any individual, co-operative society, or other person moneys upon such security as the Directors may, subject to the provisions of this Act, think fit;
(d) subject to the provisions of this Act, to discount for or purchase from any individual, co-operative society, bank, or other person any promissory note, bill of exchange, or other negotiable instrument;
(e) to do all such things as may be incidental or ancillary to the due performance of all or any of the functions hereinbefore mentioned.
We should read that with Section 12 which sets out—
(1) The memorandum and articles of association of the Corporation shall be so framed and expressed that the Corporation shall be entitled and authorised to lend or advance money only to the persons. and for the purposes hereinafter stated, that is to say:—
(a) to any person for the purpose of purchasing land.
(b) to any farmer for the purpose of constructing buildings on his farm, or making on his farm improvements of a permanent character calculated to increase or facilitate or conduce to the increase of the productivity thereof or for the purpose of purchasing livestock, agricultural machinery or implements, manures, feeding stuffs, seeds, or other requisites of agricultural production or marketing;
(c) to any co-operative society (subject to the limitations hereinafter contained) for the purpose of establishing, carrying on, or extending its business;
(d) to any person engaged in or proposing to engage, in an enterprise designed for the service of farmers or of farming communities for the purpose of establishing, carrying on, or extending such enterprise;
(e) to any person (other than a co-operative society) for the purpose of paying off a loan which was originally made to him (whether before or after the passing of this Act) wholly or mainly for a purpose for which a loan could under this section be made to him under this section by the Corporation;
(f) to any co-operative society (being a co-operative society to which a loan could be made under this section by the Corporation) for the purpose of paying off a loan made to such society (whether before or after the passing of this Act) wholly or mainly for a purpose for which a loan could under this section be made to such society by the Corporation.
That is for the repaying of a loan made formerly for a purpose for which the Agricultural Corporation could now make loans. In that form the objects are expressed in a very wide way, and they cover all agricultural production and marketing, and for any purpose connected with either the one or the other. It would be very difficult to define, in a more limited way, the purposes of such a Corporation. On the other hand, we had to be very careful to see that this Corporation does not interfere with the ordinary operations of traders. Quite frankly, we think we can make a distinction that will be fair to the ordinary trader who is entitled to full fair play and will get it, and also which will meet the needs of the agricultural community, and for that purpose we attempt to define the functions of the Corporation by a limited proviso which is set out at the end of Section 12. It is sub-section (3):—
The Corporation shall not make any loan or advance any money to—
(a) any co-operative society the objects of which do not include at least one of the following objects, that is to say, the giving of agricultural credit, or the production or the marketing of agricultural produce, or the sale of agricultural machinery or implements or manures, feeding stuffs, seeds, or other requisites of agricultural production or marketing, or the production and distribution or the distribution only of power and light mainly to farmers, or
(b) any co-operative society which at the time of the making of the loan or advance carries on the business of selling by retail any goods which are neither agricultural produce nor requisites of agricultural production or marketing, or
(c) the Chairman or any director of the Corporation.
That proviso by defining what the Corporation shall not do makes the functions of the Corporation more precise than we could have made them by any positive definition except a general definition of what it could do. What it means is this: The Corporation shall lend to the farmer for farming purposes either productive or marketing. It shall lend to the farmers' organisation for farming purposes either productive or marketing. It shall not lend to a farmers' organisation which deals in the items that are included in the cost-of-living budget. It shall lend to farmers for the raw materials of their production, but it shall not lend to the farmer or his organisation for articles that enter into his cost of living as opposed to his cost of production. It goes a step further and it says in sub-section (4):
So long as any portion of a loan or advance made by the Corporation to a co-operative society remains owing to the Corporation, such society shall not give or continue financial assistance to any person engaged in or carrying on the business of selling by retail any goods which are neither agricultural produce nor requisites of agricultural production or marketing and shall not itself engage in or carry on any such business, and if any such society contravenes the provisions of this sub-section the whole of the loan or advance so made to it by the Corporation shall (notwithstanding any agreement to the contrary) forthwith become due and payable by it to the Corporation.
In other words, an agricultural society getting a loan from the Corporation for the purposes set out in this section shall not be in a position to lend money to another agricultural organisation which could not get a loan from the Corporation. That is specifically put in to meet a case like this: You have an agricultural creamery in a district and the shareholders are the farmers who reside there. The Committee is composed of A B C D and E. You have, in the same town, a co-operative store dealing in tea, sugar, groceries, drapery, etc.