IN COMMITTEE ON FINANCE. - AGRICULTURAL CREDIT BILL, 1927—REPORT (RESUMED).

I move amendment 1:—

In page 3, Section 7, to delete sub-sections (1) and (2) and substitute the following sub-sections:—

(1) The Corporation shall pay to its members dividends at the fixed rate of five per cent. per annum on the amount of its capital for the time being paid up and such dividends shall be paid by the Corporation half-yearly on such dates as shall be appointed for that purpose by the Directors with the approval of the Minister.

(2) If on any of the days appointed under this section for the payment of half-yearly dividends the Corporation have not any or sufficient moneys available for the payment of the dividend so payable on such day the Corporation shall forthwith certify to the Minister the sum which with the moneys (if any) so available is required to pay such dividend and upon receipt of such certificate the Minister shall advance to the Corporation the amount so certified by the Corporation and the moneys so advanced shall be forthwith applied by the Directors in or towards payment of such dividend.

The real difference between the amendment and sub-sections (1) and (2) of Section 7 is that it is set out that dividends are to be paid on such dates as shall be appointed for that purpose by the Directors, with the approval of the Minister, whereas Section 7, sub-section (1) states: "The Corporation shall not at any time pay to its members dividends at a rate exceeding 5 per cent. per annum on the amount of its capital for the time being paid-up." The amendment really inserts that the dividend shall be paid half-yearly.

Amendment put and agreed to.

Mr. HOGAN

I move amendment 2:

In page 4, line 58, Section 11, to delete the word "ten" and substitute therefor the word "seven" and to delete the word "four" and substitute therefor the word "three"; in lines 62 and 63 to delete the words "(in addition to the said four directors) by the Minister from time to time as occasion offers," and substitute therefor the words "from time to time as occasion offers by the Minister from amongst the three directors nominated by him."

This is a fairly important amendment. The section, if amended, would read as follows:—

"The Articles of Association of the Corporation shall provide that the number of directors (including the chairman) shall be seven, of whom three (not including the chairman) shall be nominated by the Minister from time to time as occasion requires, and that if and so long as the Minister holds more than two hundred thousand shares of the Corporation, the chairman of the Corporation shall be nominated from time to time as occasion offers by the Minister from amongst the three directors nominated by him."

The first change is that the maximum is reduced from ten to seven. There does not appear to be any sufficient reason why it should be essential to appoint ten directors; seven appears to be sufficient. Correspondingly, there is a change in the Minister's nominees from four to three, and it provides this change, that so long as the Minister holds more than two hundred thousand shares of the Corporation he shall nominate the chairman from these three. The position then will be that the Minister will have three nominees, and, in addition, any director he can elect or that his proxies can elect, as a result of any holding of shares he may have. It is considered that that will give him quite sufficient control of the operations of the Corporation. It is very hard to say what a State bank is, but I think it is undesirable that, in ordinary day to day administration, this bank should be completely controlled by the Minister. He does require, and should get, at any rate, control, in view of the fact that he is really liable for all shares as well as for the certificates. He guarantees both principal and interests, and for that reason he is entitled to have sufficient control, and should have sufficient control. It is, I think, the duty of the Minister to see that he has sufficient control over the operations of the Corporation, so as to ensure that the State will not be called on to honour these guarantees. I think it is clear enough he has that control in the Bill, but I do not think it is right to set out from the point of view that the operations of the Corporation, as carried out by the directors, will not be what they should. On the other hand, the Minister will always have at least three nominees there. If he has to take up more of the shares he will elect, of course, further directors, or will take his part in electing directors, in accordance with the number of shares he may have. Election is one thing, nomination is another. He has all the rights of election that he would be entitled to, so far as he holds any shares. In addition, he has the right to nominate three directors. Therefore, even if the Minister has no shares, he will have three nominees out of seven. On the other hand, no certificate can be issued until the Minister agrees to give his guarantee, and that guarantee will be given in blocks of, say, £100,000. Consequently, at any time he will be in a position to bring the operations of the Corporation to a standstill, if he considers, in the light of the knowledge which he can obtain from the minimum of three directors whom he will have, that the operations of the Corporation are not being properly conducted. Of course, it is not desirable that a position should arise in which the only way the Minister would exercise his influence would be by refusing to guarantee certificates. The fact that he can do that, in my opinion, will amply safeguard him. It will be just as much to the interest of the other directors as to the Minister to see that such a state of affairs does not arise as to make it necessary for the Minister to refuse his guarantee. Consequently I recommend that change to the Dáil, and I think it is sound.

It seems to me the case the Minister has made is rather a case for giving the Minister the right to nominate four instead of three, the chairman to be chosen from the four. He has pointed out that the Minister is ultimately responsible for whatever commitments the bank may undertake, and, notwithstanding that responsibility, he is relinquishing control of the policy of the bank. I think that is a mistake.

Mr. HOGAN

It is a very debatable point, but it appears to me like this: Giving the Minister the right in all circumstances, even though he has no holding in the company, to nominate four means that the Minister takes the responsibility from the date of operation from the bank and from the other directors. It would be open to them to say, "You took care that we would be an absolute minority, even though we are shareholders; you took care that we are a minority, and that we cannot have an effective voice in the running of this bank, and you take to yourself responsibility for the administration of the business of the bank." I do not think that would be a desirable state of affairs. On the other side, I think, that the interests of the Minister will be safeguarded by the fact that he has three directors there in any circumstances, with, of course, the opportunity of electing more if his holdings are bigger. In addition, no certificates can be issued without his guarantee, and he will have a full knowledge of all the relevant facts every time he is asked for a guarantee, because he will have whatever information his nominees think it right to give him.

Amendment agreed to.

I move amendment 3:—

In page 5, section 12, to insert before sub-section (2) a new sub-section as follows:—

"The Corporation before lending or advancing money to the persons and for the purposes stated in the foregoing sub-section shall have due regard to the desirability of promoting the purchase of articles manufactured in Saorstát Eireann."

The purpose of this amendment is to ensure that, as far as possible, the Corporation will not loan money to any persons or co-operative societies without being satisfied, on investigation, that the money so loaned will not be used in the direction of purchasing, in other countries, goods or commodities, agricultural or otherwise, which might and could be manufactured here in the Saorstát. At the moment we have these societies engaged in the importation of large quantities of foreign goods, flour and various other commodities as well as agricultural machinery, implements, etc. We know that numbers of these articles are produced here at home, and it is not desirable, as I think the House will agree, that we should loan the money of the State to such societies in order to assist them in exporting additional sums of money from this country for such articles. The amendment is a reasonable one and I hope the Minister and the House will accept it.

Mr. HOGAN

I believe that if the amendment were inserted it would make no change in the section. The amendment, as I read it, is not mandatory. It is merely a pious expression of opinion, and I say that although I am open to the question if I am right: "Why not insert it?" In my opinion an amendment like this would be a dead letter in a section such as this. I do not mean to say that it would not be the duty of the directors, so far as they could, to encourage Irish enterprise, but this amendment would be gratuitous in an Act dealing with credit. To insert it would be to presuppose that the directors nominated would not have due regard to the point of view set out in it. If you do insert it, well, there are a number of other aspirations that you might also insert, such as that the directors should have regard to this, that and the other. I daresay that when anyone makes an application for a loan, and when that comes before the directors, they will have regard to five or six considerations which may not be present to us at the moment. They will also have regard to many obvious considerations which are not inserted in the Bill.

I think it would be a wrong principle to begin inserting in an Act words such as are in the amendment, merely because one Deputy places a special value on them. If that were agreed to, it would lead to every other Deputy in the House facing legislation in the same manner, and inserting clauses to suit themselves, underlining some consideration in a general section which they might think should get special emphasis. Moreover, it depends to a great extent on the particular transaction as to what they should take into account. An amendment of this kind has no place, I submit, in a general section like this, and I ask the Deputy to withdraw it. It means nothing and would be completely out of place in a section like this.

Am I to take it that the Minister is rather anxious that this should be a mandatory clause?

Mr. HOGAN

No, that would be impossible.

Then the condemnation that the Minister has levelled at this particular amendment is a condemnation of the Trade Loans (Guarantee) Act. Am I to understand that the Minister is at loggerheads with his colleagues against the provisions of that Act? The financial facilities provided under that Act are for the purpose of encouraging not only an actual business concern, but businesses that are related within this country. I take it that that is the object of this amendment. I am not sure whether it is not taken holus-bolus from that Act. Perhaps Deputy Hennessy would tell us. I do say that the Minister, if he inquires from the Minister for Industry and Commerce or from the Minister for Finance, will find that the Trade Loans (Guarantee) Act is not very far from this Bill in its financial principles. It actually contains a provision of this kind, one of the purposes of which is the purpose that is sought for in this amendment. The Minister's condemnation of this amendment is a condemnation of the Trade Loans (Guarantee) Act.

Mr. HOGAN

I would ask the Deputy to remember that my condemnation of it was that it was out of place in this Bill. It might be a perfectly proper amendment in a Trade Loans (Guarantee) Act, but I suggest it is not a proper amendment to insert in an Act dealing with agricultural credit.

The Minister will see that there is more than that in it. The business of agricultural credit is to enable agriculture to get an advantage for the purpose of promoting its prosperity and, incidentally, to promote the prosperity of other industries auxiliary to agriculture. One of the ways to do that is that the people lending money will have regard as to the purposes and the method whereby that money is being expended. Let us take an instance. Money may be loaned to any farmer for the purpose of erecting buildings on his farm or for the purpose of purchasing agricultural machinery or implements. If you take the building of a hay-barn, we know that there are hay-barns built in Ireland, and it is not an unreasonable thing to ask that the people lending the money for the building of a hay-barn should require that hay-barn to be built by Irish labour, let us say, from Dublin, Wexford or Cork rather than from Scotland. That is not an unreasonable proposition.

Mr. HOGAN

Certainly not.

It is not unreasonable, I suggest, that it should be inserted in the Bill.

Mr. HOGAN

Who said that the directors would not have "due regard to the desirability of promoting the purchase of articles manufactured in Saorstát Eireann"?

Who said that they will?

Mr. HOGAN

Will this make them?

The Minister really wants it to be mandatory.

Mr. HOGAN

Would the Deputy suggest how it could be made mandatory?

It is not my amendment, but I will undertake to do that if the Minister agrees to the principle that it should be made mandatory. If he wishes I will endeavour, before the end of the sitting, to provide an amendment to accommodate him.

Mr. HOGAN

My answer to that is that once you made it mandatory and had it before you in a mandatory form that then everyone would be agreed that it would be quite impossible to insert it in the Bill.

Mr. HENNESSY

If the Minister would like to have the amendment redrafted, I would be quite agreeable to have it considered on the next stage.

Mr. HOGAN

There is no objection as regards the drafting of it.

Mr. HENNESSY

I think it is essential that it should be made mandatory. In this particular instance, where, if you like, you are collecting the taxpayers' money and handing it over to a bank to be advanced to co-operative societies on loan——

Mr. HOGAN

It is not the taxpayers' money.

Mr. HENNESSY

I do not know that there is any point in that. We are loaning this money to co-operative societies for the purpose of assisting agriculture, and I think that the Dáil, before finally passing this Bill, should ensure that the money will be spent, as far as possible, in the interests of the State—that as little of this money as possible will go outside the State for agricultural or other articles which might be got at home. There is unfortunately the desire on the part of many people to-day to go abroad for many things which are manufactured here. They will not go to the trouble to satisfy themselves that such goods are manufactured here. It is as necessary in this Bill as it has been in other Bills that we have passed here to ensure that the interests of the State are protected. I contend that a sub-section of this kind should be inserted in the Bill.

Before the Minister agrees to the principle contained in this amendment I think it is desirable that the public should have some safeguards. The amendment refers to the "desirability of promoting the purchase of articles manufactured in Saorstát Eireann." Would it not be necessary to add to that: "articles of equal quality and utility"?

Mr. HENNESSY

That is understood.

It is not what is understood in practice, that they are not as good. We do not want protection for inferior articles. If the goods are of equal utility and quality, then we should certainly promote their sale, but we do not want to promote the sale of articles that are not of equal quality to others that are available.

Mr. HOGAN

The right way to see that the directors do their duty, not only in regard to this, but in regard to all their other functions, is to appoint the right sort of directors.

The Minister has foregone his liability to appoint a majority of directors. He has thrown that overboard, and, consequently, there only remains the formulated declaration of the will of the Oireachtas in the Bill. It is undoubtedly only a declaration of the intentions of the Dáil. The intentions of the Dáil incorporated in a Bill of this kind will surely have some weight with the directorate, the chairman of which may be appointed by the Minister, and three of which will be appointed by the Minister. I think a declaration of that kind inserted in the Bill would certainly have a distinct weight with the directors. Now, I can imagine that the definite feeling amongst members of the House is that this agricultural credit should be provided for the purpose of promoting agriculture in the first place, and, secondly, assisting other auxiliary industries which supply the agriculturists.

If that is the view of the House, I think it is a very good thing to have it incorporated in the Bill as an indication to this body of directors that it is the Legislature's intention that they should put it into operation to the best of their judgement. If it is not put in it is open to the directors to say that the view of the Legislature is that these articles, which are to be provided out of the State guaranteed credit, may be bought in Belgium, Germany, England, Japan, or wherever they may be got at the lowest possible price. It is a reasonable thing to argue, in this House at any rate, that the State guaranteed credit should be, so far as the directors think, reasonably and practicably used for the promotion of auxiliary industries in Ireland.

Mr. HOGAN

That is covered by "due regard."

I heard Deputy Johnson say that this money should be provided for helping auxiliary industries. I go a step further, and I say that it should not be provided to injure any other man's way of living. There should be a provision in the Bill to prevent anything of that sort happening. I have that little contribution to add to Deputy Johnson's remarks.

The Minister for Land and Agriculture says this is not mandatory. There is one thing imperative in it, "shall have due regard." The Minister makes that a debating society point—"due regard to the desirability" is to vague, too wide, not determinate enough. Would the Minister accept the amendment if it read:—

"The Corporation before lending or advancing money to the persons and for the purposes stated in the foregoing sub-section shall give preference, ceteris paribus, to the purchase of articles manufactured in Saorstát Eireann"?

That lays down the doctrine to which he has assented just now so readily, that undoubtedly priority should be given to implements, machinery, and other articles, part of the equipment of the farmer, where these are as good as are needed for the purpose, that are of Irish manufacture, and can be procured readily.

Who is to be the judge?

I do not quite understand the interruption of Deputy Gorey. Who is to be the judge in any matter?

The buyer.

The commonsense, practical experience and ability of the people charged with the responsibility—they are to be combined in the judgment. It is not proposed in the amendment that a body of engineers or machine experts should be called in to determine the matter. Life would be unlivable if Deputy Gorey's ideal had to be lived up to.

I asked who were proposed to be the judges. In my opinion the best judge of articles of machinery for agricultural purposes is the person who uses the articles. I have no doubt about that.

Mr. HOGAN

You would have something made mandatory in the form Deputy Magennis mentions. But why was not that done first? If someone came along with such an amendment, nobody would vote for it. We realise at once it would be impossible. Look at the position the directors of the bank would be in. Let us suppose that in the lending of money they were to give the preference to persons who were dealing in Irish manufacture, other things being equal. They get an application for a loan. They have to inquire whether the particular articles the intending borrower is dealing in are as good as similar articles produced in other countries. They have to hold an inquisition in regard to every loan if they are to carry out the terms of the section. They have to see whether the Irish article is as good as the English article, and, having examined the article—and this would be a very difficult task—they are then to give the perference to enterprises of that sort and to the person looking for a loan on that basis. No bank could do that. It is not the function of the bank directors. That is the reason you have a pious aspiration here; but it really means nothing. The directors will, of course, take these things into account. They should. That is what they are there for. That is the best guarantee you have.

Why then include so many items in the Memorandum and Articles of Association if we can always trust to the wisdom, discretion, and good-will of the directors?

Amendment put.
The Committee divided: Tá, 11; Níl, 31.

  • John Conlan.
  • John Daly.
  • Séamus Mac Cosgair.
  • Tomás Mac Eoin.
  • Liam Mag Aonghusa.
  • Mícheál O hAonghusa.
  • Tomás O Conaill.
  • Eamon O Dubhghaill.
  • Tadhg O Murchadha.
  • Andrew O'Shaughnessy.
  • Nicholas Wall.

Níl

  • Earnán de Blaghd.
  • Séamus Breathnach.
  • Seoirse de Bhulbh.
  • Próinsias Bulfin.
  • Sir James Craig.
  • Máighréad Ní Choileáin Bean Uí Dhrisceóil.
  • Desmond Fitzgerald.
  • John Hennigan.
  • Connor Hogan.
  • Donnchadh Mac Con Uladh.
  • Liam Mac Cosgair.
  • Pádraig Mac Fadáin.
  • Patrick McGilligan.
  • Seoirse Mac Niocaill.
  • Pádraig Mag Ualghairg.
  • John T. Nolan.
  • Michael K. Noonan.
  • Peadar O hAodha.
  • Seán O Bruadair.
  • Parthalán O Conchubhair.
  • Máirtín O Conalláin. Séamus O Dóláin.
  • Pádraig O Dubhthaigh.
  • Donnchadh O Guaire.
  • Aindriú O Láimhín.
  • Fionán O Loingsigh.
  • Pádraig O hOgáin (Gaillimh).
  • Máirtín O Rodaigh.
  • Mícheál O Tighearnaigh.
  • Caoimhghín O hUigín.
  • Liam Thrift.
Tellers:—Tá: Deputies T.J. O'Connell and T. Murphy; Níl: Deputies Dolan and Nicholls.
Amendment declared negatived.

I desire to move amendment 4:—

In page 5, line 55, Section 12 (3), before paragraph (a) to insert a new paragraph as follows:—

"(a) any person applying under clause (e) of sub-section (1) for an advance to pay off a loan made by a bank and expended in the purchase of land, where dispute has arisen and agreement has subsequently been reached between the parties as to the amount properly to be repaid in view of the circumstances of the original transaction, unless and until the Corporation is satisfied that the amount so agreed upon is a reasonable and equitable determination of the applicant's indebtedness to the said Bank."

Taken without the amendment the section would empower, by the Memorandum and Articles of Association, the new Credit Corporation to advance money to a farmer to pay off a loan or advance made to him by a bank for the purchase of a farm, and grievous difficulties might arise for the farmer in connection with a transaction of that sort. The aim of the amendment is to provide in some degree some small measure of defence for the farmer. Those who have studied the Second Interim Report of the Banking Commission on agricultural credit will have noticed the admissions that are made in it with regard to advances made at a certain period for the purchase of farms. Most of us will remember that in the first seven years after the great European war wholesale inflation took place; there was the most extraordinary debasement of the currency in history. There had been, as we are all aware, a gold basis for the currency, and an obvious limitation existed upon the issue of bank notes as representative money. But once the stage in the war was reached at which these restrictions were removed, there was wholesale debasement of currency, there was an unlimited issue of bank notes, and, furthermore, one of the evils of the banking system which will yet have to be challenged if society is to be saved from being a slave altogether to the monied interests, was in operation, that is, the issue of overdrafts by banks to persons, merely honouring the cheques that these persons are empowered to write and sign against some security, or with nothing at all except what the mere ipse dixit of the bank directors allows them to draw.

In that period of inflation everyone who thought he saw a good thing, as it is called, everyone who thought he saw a means of making money if he had capital, got advances of this representative and flat money—mere paper. Amongst the other victims of this inflation were Irish farmers, who, seeing prices high, cattle selling at double the price they used to fetch normally, were induced to buy other farmer in the hope of making wealth. In those transactions the banks participated. That is not a mere allegation; the Banking Commission itself admits it. I should by right quote largely from pages 9 and 10 of the report, but for brevity sake I will confine myself to this one passage:—

Irish banks, like banks in other countries, undoubtedly made unduly heavy loans to farmers and farm interest. At that time land values were high and rising, and there was a prevailing belief all over the world that they would be maintained. Since then they have in many cases shrunk by 50 per cent., and bank loans which in 1920 appeared to be protected by ample margins are now of questionable value.

That is, bad debts.

Certainly many such loans can be paid off only slowly, or, in other words, they have assumed a "frozen" character. That banks in such cases should be reluctant to increase their commitments on land or the security thereof is natural.

About 1920 or 1921 the order came from the financial heads, great banking interests, the chiefs of the moneyed interests in Wall Street and in London, to deflate, and these loans were called in, credits curtailed, and notes cancelled. No one here in this island, remote from all these centres of operations, seemed to be aware of what was happening until they suddenly discovered that they were getting only half the prices that in that period of apparent wealth they were receiving for their produce and their cattle. What that means is that a farm bought with low value money has to be paid for in terms of a high value money, money twice the value, so that while the farmer and the workman are being exhorted to more and fuller production, really to meet these liabilities in the ordinary way would require more than double ordinary production.

Many small farmers, and some large farmers, are in a bad way on account of these transactions into which they were induced to enter. I will read out, with a few permissible disguises, details of two or three typical transactions of the kind to which I am referring. This is one case, where a farmer—A—living in a western county borrowed from the Bank of Ireland in his town in the autumn of 1920 a sum of £15,000 to pay for a farm. The rent was pretty high. I cannot give the details, because it might be possible for some Sherlock Holmes to identify the borrower, but it was over £300. The area was about 600 acres and the rent works out at something like £25 an acre. Interest paid to the bank is £4,236, and amount now owing to the bank is £15,000—that is, the original advance and one year's interest. The position of the purchaser at the date of purchase was an overdraft in the bank of close on £2,000. Security, nature and amount of, held by the bank—all the security of any use that the bank holds are the deeds of a near relative's place, on which there was an incumbrance. Now, the bank advanced to this man, who is in this peculiar financial position, and with that type of security, £15,000, and that is still owing. I submit that the bank was a participant in a speculation at a particular moment; furthermore, the money advanced was representative money, paper, not a gold basis, and no gold equivalent or security therefor.

I take as a second example farmer B, this time in the Midlands and with another bank. In the summer of 1921 he bought a farm, the price of which was £1,900. He borrowed from the bank a sum slightly below that amount. The farm is free of rent, the area a little over twenty acres. That was a pretty stiff price. He has paid nearly £1,000 in interest to the bank, but still owes the bank the original advance, plus twelve months' interest. At the date of purchase his position was that he owned a very small farm of what he describes as fair land. He is a married man with four children. He had four guarantors, I should add, one of them solvent. I will take another case. I have several, but this one will suffice. It is the case of Mr. C, again in the Midlands, the same bank but not the same branch. The farm was bought early in 1920, the price paid £6,000, amount borrowed from the bank £4,500, interest paid to the bank about £2,000, amount now owing £4,500, the original amount borrowed. At the date of purchase the purchaser was employed on the farm of a relative. The security held by the bank was another relative's comparatively small farm.

The position is, naturally, that those who are struggling in these days of adversity to meet these liabilities find that they cannot meet them, and they are told that it is owing to economic law that they are hit so hard. Just as we used to hear a good deal about the iron law of wages we are asked to believe that this pressure and this hopeless condition of the farmers, of which these examples are typical, are like the cases of the men where the Mississippi has overflowed its banks, what the lawyers call the act of God. But what I want to draw attention to is that this is not the act of God; it is the act of the banking firms, it is the work of the moneyed interests, the inflation brought about by them and the sudden deflation brought about by them. The order went forth from the headquarters of the banking interests, deflation began, and this unhappy position has been created. If it were proposed that a bank should be able to shift its losses by forcing upon a farmer an agreement as to the amount at which the indebtedness should be fixed and so enable the farmer to come to the Credit Corporation and ask for an advance, it is quite easy to see how pressure, undue and unfair, could be put upon the farmer to call it an agreement, whereas in reality it was a one-sided case.

I daresay the Minister will reply that the Credit Corporation may be trusted to do what is right and to exercise wisdom and discretion as in the other case. The important thing is that the public have a right to know whether or not a State body is being set up, with State guarantees, in order to enable banks to get free of difficulties into which they have themselves entered and into which they induced others to enter, when everyone believed that great profits were to be made out of agricultural produce. The important thing to note is that the Banking Commission, which was made up largely of bankers, were fair enough and frank enough to point out the real character of a joint stock bank, and to point out that it has no bowels of compassion—in Biblical language— and no heart of mercy. I am quoting from page 10, on which, after making a number of comments, they say:—

"All this is no necessary criticism upon the banks themselves, but is merely a statement that since they are organised as deposit banks they are charged with a certain kind of responsibility; and it is their primary duty to discharge that responsibility. They are, moreover, concerned with the shareholders' demand for a profit, and, like private enterprises, they naturally feel it a duty to promote the interests of their owners to the utmost degree that is honourably possible."

In that apologia for the joint stock banks there is an admission which is followed up later:—

"That banks in such cases should be reluctant to increase their commitments on land or the security thereof is natural. That in such cases the farmer who desires to borrow upon what he considers good security should feel that the banks are unduly conservative or restrictive, is equally natural."

The difficulty, therefore, for a farmer to carry on with his bank, to which he owes money already, is that the bank takes the same view as the Minister for Agriculture expressed here the other day, that land is a very poor security. Deputy Sir James Craig followed him almost immediately with the remark that farming was in a very bad way.

That being the view the banks have, they will be very naturally anxious to get their accounts settled up and they could put pressure upon a farmer to agree by saying to him: "The amount of the indebtedness is so-and-so, now go along and get from the Credit Corporation the amount to clear that off and all will be well between us, and you may get a further advance from us if you need it, or, at any rate, you will have your credit restored." It is to prevent transactions of that kind in the interest of the farmer who is hit that the amendment is proposed.

Mr. HOGAN

This is the old suggestion that the banks should write off part of the debts due to them—that is to say, the overdrafts. In my opinion, that is possible on one condition only. It is at least logical to ask the banks to write off a part of the debts due to them if you couple it with the proviso that they shall also write off a part of the debts due by them, namely, the deposits. That has at least the merit of being logical and could be done. That is called in plain English national bankruptcy. That is to say, if we reach the stage that the banks of the country are to write off a part of the debts due to them and if, as it must be, as a corollary to that they are also to write off a part of the debts due by them, namely, deposits and securities which they hold, then, as I say, that could be done. It would be quite logical, but it is known as national bankruptcy. It is bankruptcy, and bankruptcy is a well-recognised way out of difficulties. I do suggest, however, that you cannot debate such a question as the desirability of going bankrupt as a nation— and that is what it would amount to if all the banks were to be taken in—on an amendment on the Report Stage of a Bill.

Coming to the amendment itself, there is a misconception. The Corporation when applied to for a loan by any applicant will not take into account whether the money is required in order to finance a reasonable and equitable liquidation of some other loan. That is not their business. Their business, apart from special considerations about the objects for which the loan is required, which are set out in the Bill, is to see whether the applicant can offer security for it, and whether he is the sort of person who should get a loan. That is their primary function. It is not their function to see whether the particular amount applied for represents an equitable or reasonable liquidation of another loan. It might be a perfectly equitable and reasonable liquidation of another loan, from Deputy Magennis's point of view, and at the same time the Corporation might have to refuse to advance the money for the purpose, because the applicant had no security, either of a personal character if you like, or a property security. On the other hand, it might be—I am again speaking from the Deputy's point of view—an inequitable liquidation of an old debt, and yet the Corporation might be in a position to advance the money, because there was ample security forthcoming. So that the amendment is, I suggest, due to a misconception of the functions of this Corporation.

It seems to me that an amendment largely to ensure what Deputy Magennis appears to require is needed in the Bill. The Banking Commission made a recommendation that

"in order that any outstanding conditions of friction or dissatisfaction as between the banker and the farmer may be brought to a close by enabling the latter to transfer his loan if he so desires; and, secondly in order to enable any bank which so desires to obtain liquidation of long-term loans,"

the proposed institution should be specially authorised to take over or rediscount loans which have already been made to farmers or farm interests. That is the proposal in Section 12 (1) (e). But the Commission go further and they say:

"It should be carefully observed that, in the event of such transfer, the new institution would expect those who are already responsible for the loan to continue to guarantee it, unless, of course, some basis of adjustment could be found which would make it possible to effect a release. The new institution could obviously not undertake to assume any responsibility for losses possibly resulting from unwise loans heretofore made."

I think it is generally admitted that many of the loans were unwise. The instances that Deputy Magennis read out seem to suggest that they were of a kind that would not be granted to-day or at any time other than the period of war inflation. There is a possibility that a Board which may be manned by a majority of banking directors will stress the desirability, as expressed by the Banking Commission, to transfer these loans, and by such means remove the friction or dissatisfaction that exists as between the banks and the farmers—to transfer the dissatisfaction and friction to the Credit Corporation. The Corporation may well be wise and require that the present or other guarantors should again guarantee, but unless there is an agreement regarding composition, I think it is very unlikely that a banking firm acting on its own would do that. But a group of representatives of banking firms, who wanted to transfer the liability, might be induced to do this thing, and, as I gather, the object of the amendment is a fair one—to make it an obligation upon the Corporation to examine into the circumstances of the original loan and to see whether the transfer to them of the responsibility is one which is likely to be equitable to all sides, and whether in fact it is not possible to arrive at this basis of adjustment which the Banking Commission have put forward.

The Minister speaks about national bankruptcy, and suggests that the idea behind the amendment is one which foretells national bankruptcy. Does the Minister say that the present liabilities on these loans must be met in full, otherwise it is national bankruptcy?

Mr. HOGAN

No.

That seems to be the logical outcome of his statement.

Mr. HOGAN

Why?

The proposition is that there should be some general agreement between the farmers and the banks who have lent this money before the transfer is made over to the Corporation, and the Minister seems to say that once there is any talk about making a composition in respect of those loans it is a confession of national bankruptcy. I think the statement of the Minister is very widely drawn, and not by any means consequent upon the proposition of Deputy Magennis. I think it is desirable that the Corporation should be in a position, before the making of any loans of this kind to an individual in respect of land purchase, to bring pressure on the banks, to effect a composition, a basis of adjustment between the original borrower and the original lender, before they come to the aid of the banks in the manner suggested in the Bill. I see clearly enough that the assumption behind the amendment, and behind what I am now saying, is the possibility that the Corporation will be interested primarily in relieving the banks, and it is because I believe that that is a possibility I think there should be some kind of moderate check which would bring pressure upon the existing banks to enter into accommodation with their present debtors. I do not know whether the amendment, taken right through, will meet the case, but I think it will go some way towards it, and, at least, ensure that the Corporation has had a full account of the whole transaction and is satisfied as to the applicant's indebtedness to the bank.

Does not the Deputy think that that will happen in any case?

In this particular case it is the Corporation which may consider its purpose is to relieve the banks of certain liabilities. It is not an unreasonable proposition.

Mr. HOGAN

It is because I do not conceive this Corporation as an institution for relieving banks that I object to the amendment. Incidentally, it may suit the banks to have a corporation of this sort that could afford to take long term credit by means of properly secured loans from them. It would give them liquid assets at once. On the other hand, the position of the Corporation would be quite sound, as it is financed to give long term credits. You would have a transaction which would suit the banks on one side and which would be quite normal, so far as the Corporation is concerned, on the other side. I do not conceive for a moment that one of the functions of the Corporation would be to act as a sort of relieving agent for the banks. That is not, and should not be, its function. When it takes over a loan from the banks its first consideration is to see how it is secured. It is not for the Corporation to see how the amount is arrived at, as that is a matter between the bank and the original creditor. The Deputy's amendment is one thing and the Deputy's speech is another thing. In speaking to the amendment he referred to the general position of the country as a result of deflation since 1920, and pointed out that certain things should be done.

You, sir, would not permit me to reply to the Minister, and why do you allow the Minister to reply to Deputy Johnson? Surely there is one law for a Minister and another for a Deputy.

Can I move that the House go into Committee to consider this amendment?

Mr. HOGAN

I did not realise the position at the moment, otherwise I would not have spoken at all.

Is it in order to propose that the House go into Committee to consider this amendment?

You could have done so in the beginning, but not at this stage.

I could quite understand, and to a certain extent appreciate, the position of Deputy Magennis in moving his amendment if I were sure that the assumption of liabilities of a very doubtful character would not take place, and that State funds would not be placed in jeopardy to meet doubtful debts. The Deputy's speech was directed to another point of view, and that was, the deflation with its consequences since 1920. Unfortunately, however, we must take things as we find them. It is no use at this time of day trying to fix responsibility for those advances to purchase lands which were made in 1920, 1921, and even in earlier years. We find a very difficult situation confronting us. and our object must be to aim at finding how best to relieve it. The banks have the whip hand. They cannot be forced, and we cannot coerce them, to effect a composition. If we did that, the first result would be to restrict credit, not alone for the moment, but to make that kind of credit not available in future. That is a serious responsibility which we would have to assume if we accepted this amendment. I do not think that that is desirable.

Let us understand what the legal powers of the banks are. They can refuse a composition. They can sell out a defaulting creditor and turn him adrift in the world. That is not a very desirable state of affairs, but I have no doubt that it is the actual position. They have complete machinery for executing decrees of the courts. They can sell out any person who is a defaulting creditor, and they can also come down on his sureties. I believe that while we must do justice to the banks, we must also be as sympathetic as possible with unfortunate people who bought land at inflated values. I believe that we have got to stabilise loans by means of long term credit at a fixed rate of interest which would not be dependent on the fluctuation of the money market. In my opinion something in the nature of the Board of Works' system would best meet the situation, namely, a fixed rate of interest for a number of years, plus a certain sum estimated by actuarial methods to determine at what period a loan would be extinguished.

I do not see that under the amendment any lasting benefit would be conferred on unfortunate farmers who are in difficulties with the banks which are equipped with full machinery to sell out both themselves and their sureties. It is a hard thing at this stage to think that State money may be involved in liquidating the position, but it is the only reasonable solution. One cannot, on the one hand, scrap all credit, and, on the other hand, allow a position to be created by which these men would be sold out. If the banks do sell them out, I am afraid that there would be very few instances in which the capital advances would be realised. A system of long term loan is the only solution of the problem, and I do not see why unreasonable difficulties should be placed in the way, as would undoubtedly be the case if this amendment were accepted.

Amendment put and negatived.

Mr. HOGAN

I move:—

In page 6, before Section 15, to insert a new section as follows:—

The Corporation shall keep all such books of accounts and other records and in such form as may be prescribed by regulations made by the Minister under this section.

I think the amendment speaks for itself.

Amendment put and agreed to.

Mr. HOGAN

I move:—

In page 7, before Section 16, to insert a new section as follows:—

(1) A copy of every joint order made under this Act by the Minister and the Minister for Lands and Agriculture in relation to the persons to whom and the purposes for which the Corporation shall be entitled and authorised to lend or advance money or the class or classes of securities against which certificates of charge may be issued by the Corporation shall, within fifteen days from the date on which such order has come into force, be printed and forwarded to the registrar of companies, who shall record the same.

(2) A copy of every order to which the foregoing section applies and which is for the time being in force shall be embodied in or annexed to every copy of the Articles of Association of the Corporation issued after the date on which such order has come into force.

This amendment imposes some extra duties on the Corporation over and above what it should do under the Companies Act.

Amendment put and agreed to.

Mr. HOGAN

I move:—

In page 13, Schedule, paragraph 7, (a), lines 25 and 26, to delete all from the word "the" to the end of the sub-paragraph and substitute the words "such period of twelve months commencing not earlier than fifteen months before the issue of the certificates as shall be appointed by regulations made in that behalf by the Minister."

This is an amendment to the seventh paragraph of the Schedule. It would be awkward to have to calculate the interest back from the very day on which the certificates are issued. A period of fifteen months is inserted to give the Minister a clear period of twelve months within the time prescribed here, namely, fifteen months.

Amendment put and agreed to.
Question—"That the Bill with further amendments be received for final consideration"—put and agreed to.
Final Stage ordered for Friday, the 13th May, 1927.