Resuming the debate on this motion at this stage is like recommencing a tale of "far off things and battles long ago." It is with the echoes only and not with the primary voices in the controversy that one has to engage, and it is difficult, if not impossible, to regather the threads and to reawaken interest in the arguments. However, the one recollection which I am sure is still fresh in the minds of most Deputies is the spirit of sweet reasonableness which informed the speeches not only of the Minister for Finance, but of the Minister for Lands and Agriculture. They were both protectionists, cautious but resolute protectionists, with scarcely a hint in their speeches of the old controversies that drove the former Minister for Posts and Telegraphs into open conflict with the Minister for Lands and Agriculture and with most of his colleagues on the present Government Benches, and almost split the Government Party in two—not a hint, not a word, not a whisper! In fact, as I listened to the speeches of the Minister for Lands and Agriculture and the Minister for Finance I was reminded of a cartoon I once saw—a gentleman bathing, while behind a near-by tree lurked a tramp waiting for a favourable opportunity to steal his clothes. The Government— and probably the Carlow-Kilkenny election had something to do with it—seem to be in the same psychological position as that tramp; in fact I would say that at the present moment almost the only members of the Government majority who are satisfied with their own clothes are Deputy Good and Deputy O'Hanlon. As for Deputy Heffernan and the members of the Farmers' Group, they do not seem to be quite certain which suit they are wearing; they seem to forget that four or five weeks ago they changed their coats on this question.
We do not mind whether the members of the Government steal our clothes or not, provided that they do something really effective to develop this country economically and industrially. But if they do steal our clothes, if they do commit the theft, for goodness sake let them clothe themselves decently and not be strutting around exhibiting their free trade nakedness, as the Minister for Lands and Agriculture and the Minister for Finance did on the opening day of this debate in endeavouring to impress upon the House the specious argument that tariffs increase the cost of living.
In a certain superficial way it may be argued that a tariff which so operates as to produce revenue does increase the cost of living, in so far as it takes from the producer and conveys to the Government a certain proportion of the fruits of production. But it does that because in such circumstances it has a dual nature and function; it is not only a tariff to protect native industries, but it is also a tax to produce revenue. But the total amount of taxation in any year is determined, not by the method of raising revenue, but by the estimated expenditure for that year. Tariffs on imports constitute one method of raising the revenue necessary to meet that expenditure.
Every tariff produces a certain revenue, which may be large or small according to circumstances. But if a tariff is not imposed, what then? The expenditure has still to be met, the revenue has still to be raised, and it must be raised by taxation in another form. Tariffs do not increase taxation; wasteful, extravagant expenditure on the part of the Government increases taxation and thereby increases the cost of living; but because a tariff on imports not only produces revenue but operates also to develop native industries, the advantage is, if anything, on the side of the tariff, as against most other expedients for raising revenue. Take the tariff on boots, to which Deputy Good referred. That tariff, the Deputy stated, produced a revenue of £272,228 in a certain year. He admitted also that its operation has provided employment for 700 hands. So far so good. But from these facts the Deputy proceeded to deduce the conclusion that every extra man, woman and child employed in the boot and shoe industry cost the State to-day £389 per annum. That is a very shallow argument. I do not believe that the Deputy himself seriously intended it or really believed it.
First of all, I would point out that it is not the tariff, nor the industry that it protects, nor the people engaged in that industry, which costs the State £272,228. Certain public services are responsible for that taxation, and those have to be paid for with money raised in one way or another. Suppose we decided to raise that money in any other way than by the imposition of tariffs on imports; suppose we decided to raise it by increasing, say, the income tax, would that appeal to Deputy Good or to Deputy O'Hanlon? I am fairly certain that it would not. But whether it appeals to those who are free traders or not, there is a more important question still: would such a tax provide, as an offset to the disabilities which all taxation necessarily imposes upon industry, any compensation in the form of increased employment? Would it at once create work and wealth for the community, and provide revenue for the State? A tariff will do that, but the income tax will not. Or, if we rule out increased income tax and decide on certain imports which do not happen to be manufactured here, such as tea, for instance, would a tax on tea increase the cost of living? I think most people will agree without any great hesitation that it would. But would it provide increased employment?
Revenue has to be raised: decide not to impose tariffs on imports such as boots and other commodities which we can manufacture here, but to impose a tax on tea instead. Which would be more beneficial to the State? A tax on tea would increase the cost of living. Would it have any compensating offset to that disadvantage? Would it provide increased employment? Because it would not provide increased employment you rule out a tax on tea and suggest instead a tax on something which we do not import but which we manufacture —porter, for instance. Would a tax on beer increase the cost of living, say, to the dock labourer, and would it, as a compensation for that increased cost of living, provide him with increased employment? Or, if we rule out the tax on porter, rule out taxes on articles which we do not import but do manufacture, and suggest instead a tax on something that we neither import nor manufacture—land, for instance— would such a tax increase the cost of living for the farmer, would it make it easier for him to hold his place in the English markets and to find employment for his sons at home on the land? The fundamental fact is that every tax, no matter what, increases the cost of living, but that some forms of taxation carry with them certain compensating advantages to offset their primary disadvantages. The form of taxation which provides that compensation in the greatest measure is a properly considered tax on imports.
The tax on boots not only provided money for the public services, but it provided employment for 700 additional hands. These 700 hands would have had to be maintained by the State, either at work or in idleness. To have maintained them in idleness, to have maintained them on the poverty line, would have cost the community immediately and directly £54,600, and there would also have been a secondary expenditure on public health and prison services, arising directly out of that, which would mean a sum which I do not propose even to guess at. Therefore, not only has the tariff on boots produced a revenue of £272,000, but it has saved to the State £54,600 worth of consumable wealth annually. That represents in interest and sinking fund, at 5 per cent. over 25 years, a sum of £682,000, which would almost provide two additional sugar beet factories— one for the President in Cork—and build 1,000 five-roomed houses. But that is not all. That tariff on boots produced a secondary revenue for the State in the form of income tax on the profit derived from the expanding industry. As well, those profits remained in the industry to provide not only for its expansion, but for the development of associated industries.
That brings me to the point made by Deputy O'Hanlon, and in a more comprehensive way by the Minister for Finance. Deputy O'Hanlon professes to be an authority on the economics of the Stone Age. It is a pity that his economic reading did not extend to a somewhat later date. Then, instead of aspiring to be the leader of the lost cause of Free Trade in this House, he might become a valuable ally of the progressive economists here. The Deputy and the Minister made the point, that because the cost to the consumer of a protected article may be higher than an unprotected one—and I do not admit it must necessarily be so —then the general cost of living must also be higher in consequence. That is a variant of Deputy Good's argument. To illustrate his point, Deputy O'Hanlon contrasted the price which the consumer would have to pay for a pair of boots, of which the declared value on import was £1, and upon which there had been imposed a tariff of 15 per cent., or 3/- in the £1. He contrasted the retail price of that pair of boots with the price which the same consumer would have to pay for the same quality boots if a tariff had not been imposed, and he found that there was an apparent difference of 4/5 in favour of the non-tariff boots. From this the Deputy proceeded to argue that the cost of living to every individual consumer of a pair of such boots has been increased in that year by 4/5.
Let us examine that proposition further, particularly in its relation to the general cost of living. First of all, it is necessary to emphasise that the example given by Deputy O'Hanlon is not a truly representative one. The average value of boots imported is nothing like £1 per pair, and, consequently, the actual average increase in the retail price of tariff boots is nothing like 4/5 per pair. According to the Trade and Shipping Statistics for 1926-27, the quantity of boots and shoes imported into the Twenty-Six Counties during that year was 4,811,232 pairs, of which the total value was £1,792,394, or an average value of 7/5½ per pair. Duty amounting to 15 per cent. of the declared value was imposed on those boots, making their prime cost to the wholesaler, £2,061,253. To that £2,061,253 we will first add ten per cent. on the £1,792,394 to cover handling, storage and other distribution charges and then add another ten per cent. to cover the wholesalers' profit, making the total cost of the boots to the retailers, £2,464,542. To this we also add 33? per cent. to cover retailers' profit, and the cost of all imported boots to the people who are misguided enough to buy them is £3,286,000.
Consider the position if the boots had not been tariffed. The prime cost to the wholesaler would be £1,792,394. We will have to add a sum of ten per cent. for handling, ten per cent. for profit, and 33? per cent. to cover the retailers' charges, and we get a total cost of all imported boots, not tariffed, of £2,891,720. There is then a difference of £394,326 between the cost of the non-tariffed boots to the purchasers and the cost of the tariffed boots to the purchasers to be accounted for. From that £394,326 the State first of all takes £268,859 for revenue purposes. That leaves us then with a sum of £125,467. Let me emphasise again that if the State had not derived that revenue of £268,859 from the tariff, it would have had to secure the revenue in some other way, either by a tax upon tea or sugar or bread or land, or an increase in the income tax. Some other expedient must be devised to raise that £268,859, if it is not raised by way of the tariff. Therefore, the fact that the money is raised in this way by a tariff, and that if it is not raised in this way it must be raised in some other way, shows at least that so far as the £268,000 is concerned, the tariff did not increase the cost of living to that extent, at any rate. The only item that we have to consider, therefore, is the balance of £125,000.
What has been the effect of the tariff? First of all it has provided employment for 700 hands. Taking into account the skilled hands and the charges for supervision, etc., I am not putting it very high when I say that the rate of wages paid to these 700 hands must be about £2 10s. per week, or £130 per year. Seven hundred hands at £130 per year accounts for £91,000, and that leaves us a balance to account for of £34,464. From this sum of £34,464, which we will concede, if you like, as the extra profit which the wholesalers and retailers secure upon these boots—and which amounts, not to 4s. 5d. a pair, as Deputy O'Hanlon wished to impress upon us, but to something like 1¾d. per pair—amounts in fact to something like 1.05 per cent. additional profit to the wholesaler and retailer—the State takes at least £2,500 by way of income tax. That leaves us with £32,000 to account for. Of that £32,000, the greater portion, most likely, is immediately expended in maintaining the wholesaler and retailer of boots and shoes. Part of the expenditure is insurance against certain members of these trades going out of business and becoming a burden upon the community. Furthermore, in helping to maintain the wholesale and retail distributors of boots and shoes, the £32,000 is providing a similar insurance in respect of other sections of the community, and a considerable portion of it is immediately absorbed by these sections who return some of it to the Government by way of income tax and utilise most of the remainder of it in maintaining other sections of the community. Thus the process goes on. The purchase of the necessaries of life puts a sum of money in circulation and tends to provide employment for other sections of the community and to maintain them, while these sections in turn create the same reactions in others, and so on to an infinite series, so that every penny piece in circulation in the community is a rolling stone that, contrary to the proverb, does gather moss.
It may be argued that not all the £32,000 is used in the way I have suggested, and that some portion of it is saved and invested. Even so, in that case, some will be invested at home and some abroad. Probably most of it will be invested at home, because the tendency is, in protectionist countries, in the earlier stages of development at least, to import capital and not to export it. The part so invested at home will create immediate employment, and so make a general return to the whole community. The part invested abroad, which, it is as well to remember now, is practically an insignificant portion of the whole, will, also, make a general return to the whole community secondarily in the form of interest on the investment, thus constituting an invisible export, which will help to redress our unfavourable trade balance. I think, also, in this connection, the reactions of tariffs upon such balances are among the most important and the most advantageous to the community as a whole, but I am not going into that now. It is a much wider and bigger question than we could adequately discuss in this debate, but I shall conclude this part of the argument with this: we find the whole of the difference between the amount of the selling price of the non-tariffed and tariffed boots has been either returned directly to the State, and has, therefore, obviated the necessity of raising revenue by other forms of taxation, or has been expended within the community for the ultimate benefit of the community as a whole.
With these facts before us, I cannot see how it can be argued that any tariff which does not exceed the rate which is essential for the proper protection of the industry increases the cost of living to the community. Before passing from this case, I would like to deal with the more general case made by the Minister for Finance. In the course of his speech he said that the tariff on boots is not at present throwing any great burden upon the people, simply because, so far, it has only been to a limited extent successful, but, as it becomes successful, a point will be reached where it will throw a substantial burden upon the people. These are the Minister's own words. In endeavouring to prove that contention the Minister asks us to assume that when the tariff has been successful and all the boots used here are manufactured here, so that the tariff will produce no revenue, it will still be maintained at 15 per cent.
In regard to that assumption, the first point to be considered is that if a tariff of 15 per cent. produces the results which the Minister asked us to consider—and he holds it will—there is no necessity for the tariff to remain at 15 per cent., because the increased output in the factories will enable these factories to produce more cheaply and to meet the more intense competition from the foreigners. Consequently, the tariff can, without any diminution in its effectiveness, be reduced to 10 per cent. or less. Suppose we take it at 10 per cent., then the total price of all the boots sold in the Saorstát might be enhanced. And it is only a "might." I am not admitting for a moment that a tariff of 10 per cent. will increase the cost of boots sold in the Saorstát by 10 per cent., but conceding the Minister's point and assuming that it does entail the consequential increase of 10 per cent., then the total price of the boots to the purchasers will only have been appreciated by £200,000. What have we to set off against that? In the circumstances he foreshadowed, the Minister suggested that between 7,500 and 10,000 people would be engaged in the manufacture of boots. Immediately before the tariff was imposed, I do not suppose there were 500 hands actively and continuously employed in the industry here. The difference between 500 and 9,000—I am taking the middle and the round figure for convenience— represents the amount of employment a wholly successful tariff would provide, while stopping all imports and producing no revenue. If there was no tariff, 8,500 additional persons who have been in employment consequent on the tariff would either have to be maintained by the community or would have to emigrate. There is no other course. If the Minister is correct in his argument, if the tariff provides employment for those people, then there is no alternative employment that they can find inside these shores, and if they want to remain here they must be maintained by the community as a whole. In the first place, if they are maintained by the community as a whole, then to maintain them even on the verge of destitution will cost £663,000, and the State will have to provide additional revenue for the Public Health and Police services. If they emigrate, then there is a loss to the community by the emigration of those persons of a capital sum which I suggest is almost incalculable, but as I want to deal in terms of figures I will put the loss at no less than £5,000,000. Offset this figure of £663,000 against the £200,000 by which the Minister considers the price of boots would be increased here and you have the net gain to the community and the gross reduction in the cost of living—not an increase but a reduction in the cost of living—which has ensued as a consequence of the imposition of a tariff on boots. So again it is clear that even a wholly successful tariff does not increase the cost of living.
I have dealt with the arguments of the Minister for Finance and the arguments of Deputy O'Hanlon. I am going to say a word about Deputy Cooper. Deputy Cooper, I think, has already proclaimed himself in this House as a protectionist in a peculiar sort of way. I think he is really in the position of the members of the Farmers' group, that he does not know which suit of clothes he is wearing. I remember when the Deputy was engaged on the hustings in the County Dublin in June last he proclaimed himself an anti-protectionist, and one of the most extraordinary arguments that he adduced in support of that attitude was that if protection were imposed it would make it more difficult to procure tropical fruit here. In fact, it seemed to me that what the Deputy chiefly feared was that when one day he would go into a fruit shop he might find the shopkeeper singing "Yes, we have no bananas to-day." The Deputy made a point—and I really cannot see the force of it in this debate—that highly protected countries sold less per head to Great Britain than we do. Well, naturally the country which sells practically all of its produce to one consumer should buy more and sell more per head to that consumer than other countries whose trade is more widely dispersed. I do not see that that furnishes any argument against protection. The fact of the matter is, as Deputy Lemass pointed out, that the protected countries of Europe sell much more to Great Britain than they purchase from Great Britain, and that they appear to be able to make much better terms—to have a much better part of any business contract or bargain that they enter into with Great Britain than we do. Therefore, if there is any argument for the Irish farmer to gather from this discussion, or from the point which Deputy Cooper made in his speech, it is that if he wants to increase his trade with Great Britain, that if he wants to sell more to Great Britain, one of the ways in which that may best be done, judging by the position of the trade of Denmark, New Zealand, of the Netherlands, of France, and the United States of America as regards Great Britain, is to protect our native industries against foreign competition as every one of the countries I have mentioned do.
Now I come, I suppose, to the strongest champion of free trade in this House. We all know that Deputy J.J. Byrne is opposed to protection——
