Dáil Éireann debate -
Thursday, 12 Jul 1928

Vol. 25 No. 3

TRADE LOANS (GUARANTEE) (AMENDMENT) BILL, 1928—SECOND STAGE.

MINISTER for INDUSTRY and COMMERCE (Mr. McGilligan)

I move the Second Reading of this Bill. The Bill is very similar to the Act of 1924, upon which it is founded. I think the only clause that is actually new, outside the change of date, is the third clause, which states that in the period of a year for which the time is now further extended notice may be published in the "Iris Oifigiúil" stating that no applications for guarantees under Section 1 of the principal Act, as amended by this Act, or for loans or guarantees under Section 2 of the principal Act, as so amended, made after a date specified in that behalf in such notice will be entertained by the Minister. That, of course, will not be availed of unless it is seen that the apparent necessity for this Act has departed and consequently it is necessary to say that no applications after a certain date will be entertained. But when one comes to the renewal period next year, if it is to be renewed, and if it is discovered that the necessity is gone, there might then be transactions pending which would necessitate carrying the Bill over the further period. Under the 1924 Act, and further amending Acts, as between applications for the two types of loans that might be entertained, a sum of a million pounds was set aside, divided by an amendment of the first Act into a sum of £900,000 under Part 1 and £100,000 under Part 2. Nothing has been granted under the loans section. Of the other moneys, up to the 11th June, the latest date for which I have got accounts, £322,000 had actually been guaranteed, and in addition to that there were pending applications which covered an amount of £34,000, on which the committee had reported and on which the two Ministers had agreed, but where the legal formalities had not been completed. There are quite a number of other applications pending.

In connection with the Second Reading of this Bill Deputies will, no doubt, have in mind the reports of the Public Accounts Committee, and I will again state my position in regard to what the Public Accounts Committee have said on two occasions. They called attention to certain cases and made certain recommendations, and, I think, on each occasion I said that I regarded these cases as exceptional, but that I regarded them as good cases at the time of their inception. I say further that I did say, and I say again, that it was not my intention to accept the recommendations of the Public Accounts Committee on either of the two occasions on which they reported, and unless the Dáil brings in amendments and gets them passed making it obligatory on me to accept the findings of the Public Accounts Committee, I intend to operate this Act as it has been operated since the beginning. In other words, I do not entirely rule out the matter of reconstructed companies, and I do not entirely rule out the question of allowing a liability to be created in front of the State liability. I have stated that I would regard the type of case in which that would occur as being very exceptional. It would not be a practice that I would favour to any great extent, but I do believe that there are exceptional cases where that is bound to take place, and I do not want my hands tied in regard to that matter. If the Dáil thinks otherwise it will be for somebody to bring in an amendment. Left as it is the Act is sufficiently elastic to allow of very good help being given to firms desirous of extending existing businesses or of opening up new businesses, and that is the purpose of the Act.

Mr. LEMASS

I thought that the Minister, in introducing this Bill, to continue and to amend the Trade Loans (Guarantee) Act, would have availed of the opportunity for the purpose of giving us a general review of the working of the Act. I do not mean merely a statement as to the amount that has been guaranteed, or the number of firms which have got guarantees, but a review of the consequences which the existence and the operation of the Act has had upon the industrial life of the country. I think it will be generally admitted—it cannot be denied—that the Trade Loans (Guarantee) Act has not realised all the highest hopes which were based upon it when it was introduced. It cannot be said that the results which we were led to expect from it have materialised. It has not, in fact, led to any widespread revival of industry, or to the provision of steady and regular employment for the workers. In so far as this Act was intended to induce that revival and to provide that work it may be said to have had only a very partial success, and I would like to know from the Minister if it represents the maximum effort which the Government is prepared to make towards that end. If it is not their maximum effort, if they are prepared to recognise its limitations and to realise that something further must be done if industry is to be revived and put upon a proper basis, we would be glad if the Minister, during the course of the Second Reading debate upon the Bill, would tell us exactly what the Government have in mind. I think it had been hoped by the Government at one time that the result of the Banking Commission's deliberations would be such that an Act of this nature would be unnecessary, that arrangements would be made by which financial institutions in the country would be induced to offer to industry the loans which industry requires, and at suitable terms. That hope has been disappointed. The Banking Commission, in that respect, at any rate, proved to be a damp squib. We maintain, therefore, that it is up to the Government to face the question as to whether or not this Act is sufficient to meet the requirements of the country, and, if not, to tell us whether they have considered what future steps must be taken, and when it is hoped to take those steps.

Financial institutions in this country have shown no readiness to facilitate Irish industry with long-term credits, and as it will not be denied, I think, that Irish industry is in need of these credits, it is our contention that it is the duty of the State to intervene and to place State credit, if necessary, at the disposal of industry. This Act, of course, does not provide working capital in any way. There has been some doubt as to what exactly it does provide for, but the Minister has given us a practical demonstration of his interpretation of it by proceeding to guarantee loans in cases similar to those on which the Public Accounts Committee raised this question. On the strict interpretation of the Act of course it would only operate to facilitate the purchase of fixed assets.

In the explanatory statement issued by the Department of Industry and Commerce concerning the Act, it was definitely pointed out that the Minister has no power to guarantee a loan which is used, in whole or in part, for the provision of working capital, or that he has no power to give a guarantee in respect of any loan which will be used, wholly or in part, for the purpose of extinguishing existing liabilities or commitments. The whole of the guaranteed loan, the statement says, must be used solely for the purpose of carrying out works of a capital nature. The difficulty that has arisen is really due to the various interpretations which can be put upon the phrase "works of a capital nature." It would be, for example, easy to imagine circumstances under which protection would be accorded to a certain industry in this country, and a firm engaged in that industry might be anxious to take immediate advantage of the fact that a tariff had been imposed for the purpose of extending their business. It would not perhaps require any additional fixed assets. It would not require anything except the means to provide for an increase in the staff and additional credit to its customers. A firm faced with that situation might have considerable difficulty in raising the capital required for that purpose without the backing of a State guarantee. I personally cannot say whether or not a case of that kind could be brought within the terms of the Act. Certainly, on a strict interpretation of the Act, it could not. It is in such a case that State credit should be made available, and there is no reason whatever why the Act should not be amended so as to cover cases of that nature.

There is a suspicion in my mind that the attitude of the Minister for Industry and Commerce in connection with the Report of the Public Accounts Committee is very largely one of stubbornness. He has made up his mind that he is not going to be browbeaten by the Committee, irrespective of whether the Committee is right or wrong, and irrespective of whether the question raised by the Committee did or did not require attention. It is our view that this Act should be amended so as to enable capital to be provided for the purpose of developing existing industries, whether or not that development would take the form of the purchase of additional fixed assets. The difficulty of drafting an amendment is considerable for a Party in the position in which we are, but the Minister, with a skilled draftsman at his disposal, could, if he thought fit, take the responsibility of introducing an amendment and letting it be discussed here.

In a previous debate we criticised the general policy of the Government as represented by this Act, on the grounds that it was inadequate to meet the situation in so far as it leaves the Government playing a passive and not an active part in relation to Irish industries. The Government attitude in connection with the Bill is, as we said from time to time, very similar to their attitude concerning tariffs. They say: State guarantees can be made available, but they will only be made available to such firms as overcome the difficulties which we place in their way; we set up machinery, we make that machinery as hard as possible to work, and we tell the firms that they must pass an endurance test to make the machinery work before they will be given what they require, whether their requirements are a tariff or a State guarantee for a loan. We think that it is up to the Government, in the peculiar needs of the country, to take an active and not a passive part in the furtherance of Irish industry; that they should be on the look out for directions in which they could provide help to industry, that they should devise some scheme which would enable them to interfere unasked for the purpose of furthering industrial development. This Bill does not do that. It leaves them playing a purely passive part, and in so far as that is the case, we maintain that it is utterly inadequate to deal with the needs of the situation. But it does some good; it has done some good; it has helped to establish a few new industries and to keep a number of industries in existence; because of that we intend to support it. But we certainly think that it is up to the Government to take further steps along the road which they started on when the original Bill was introduced in 1924. I hope the Minister will give us a general indication of the Government's policy in that connection when concluding the debate.

Mr. BRISCOE

I should like to draw the attention of the Minister to the speech he made when introducing a similar Bill in 1926 and to quote some extracts from that speech. In doing that, I should like to show the Minister that there was some just reason for the members of the Public Accounts Committee making the recommendations they did in their report, and at the same time to show that the Minister himself evidently was quite in accord with the view the Committee held. On that occasion the Minister said:

We have already appealed to the Banking Commission, and put up to it that the working of this Act has been disappointing in its results. The number of applications that have come before us under it, and that have to be withdrawn by reason of working expenses being a necessary item, as well as the big number of applications we have received. show the necessity for some provision by way of long-term credits for business or industries. In the last eventuality, if there does not proceed any suggestion from the Banking Commission, it might be taken up by financial houses here. Then, I believe, I would have to come later to the Dáil —possibly explaining it as the worst means of meeting it—but asking them, nevertheless, to grant some such liberty as would be given if Deputy Johnson's second amendment were carried. At the moment I would urge against that. I would have great hesitation at any time in asking for it, and I certainly do not want to ask for it this time, until, if I may put it without offence, the Banking Commission has failed me in this respect.

—[Official Report, June 23rd, 1926, column 1608.]

Further on in that speech, in reply to an interjection of ex-Deputy Hewat, he said:

I stated on the Second Reading that at about Christmas-time I had made up my mind that it should not even be extended to this year. Then I came to the conclusion, because a number of applications began to come in, and because it was seen that the applications already in hand could not be completed before the expiry of the present Act, that some extension was necessary, and inasmuch as the report from the Banking Commission, which may establish a new state of things, could not be expected before the expiry of the present Act, I decided to move forward for an extension to this year. I think that shows my mind. I did not by any means regard it as a thing to be continued from year to year.

Further on the Minister said:

It is only to meet an emergency that this type of legislation ever came about.

Again the Minister stated:

I hope we will get from the Banking Commission some suggestions, and that these suggestions, if adopted—there is another "if"— will relieve us from the necessity of having any type of legislation of this sort, even as a temporary measure continued from year to year. Looking at it, however, as a temporary measure to be continued for this year, we should neither enlarge nor restrict it in either of the ways suggested by Deputy Johnson.

The Minister was satisfied that in order to enable industry to take advantage of the idea in the introduction of this Bill that it could not be done to the full extent under the Act as it is or to the extent at least of the granting of working capital. The Minister in 1926 indicated this Bill was not a desirable piece of legislation to be introduced year by year and certainly it would convey to the minds of Deputies in the House at that time that it was intended if the Banking Commission failed that he himself would undertake to introduce legislation either by an Amending Act which would enable the sense of the amendments introduced by Mr. Johnson at that time to be embodied. I only want to refer the Minister to that in the hope of getting some indication from him as to whether he has yet received any suggestion from the Banking Commission or if he did get any, whether they were acceptable or workable and whether they are receiving consideration from the Minister and his Department. If not will he consider the matter when this Bill expires, so that we may in the next year look forward to something in the sense of at least an extension in the direction suggested by Mr. Johnson on that occasion. The Minister said on the introduction of the Second Reading of the present Bill that up to date £323,000 had been advanced on loans.

Mr. McGILLIGAN

Guaranteed.

Mr. BRISCOE

I mean guaranteed, but in 1926 the Minister indicated that roughly the same amount though not altogether had been guaranteed. He mentioned that £220,000 had been guaranteed and that a further £100,000 odd of guarantees were under consideration and awaiting the sanction of the Minister for Finance. So unless these other applications which in 1926 had been passed by the Advisory Committee had been rejected no fresh applications could have been accepted by the Minister's Department so that since 1926 up to the present time the balance of the £900,000 has not been availed of which in itself is sufficient proof that there is something wanting.

The Minister said in reply to the report of the Public Accounts Committee that he had no intention of in any way acceding to their request, and he said that the suggestions made by the Public Accounts Committee to the effect that it was not wise to allow the Government to retreat from its position with regard to its holdings in exchange for guarantees he considered it was not advisable to do in every case, but that he did not consider it was wrong. I ask the Minister if, under the Act as at present worded, he has no right to guarantee a loan where part of it might be used for working capital, can he explain to the House what he means by guaranteeing a loan, retreating from his position as mortgagor, as holding certain of the assets, and allowing the very firm that he must not give a guarantee to, to exchange that released for money which they can use as working capital. I contend that is just a long way round, but it means the same thing. I am not contending it was wrong to do it. I am not suggesting the Minister was wrong, but I say that in accordance with the Act, if it is to be continued from year to year in its present form, he is acting ultra vires to the Act itself.

I maintain that where the released assets of a concern to which he has given a guarantee for a loan are surrendered in exchange for money from outside sources that he is in fact allowing to use portion of the money of the guaranteed loan for working capital because ultimately the Minister is liable for the full loan they originally went in for. I do not wish to delay the House further. We discussed this matter in detail at the Public Accounts, and I would like the Minister to explain the position now. I may have have misunderstood him with regard to the figures. I would like the Minister to say definitely how much in loans have been guaranteed since 1926 outside those already under review and awaiting the sanction of the Minister for Finance. I would like also to ask the Minister if he is prepared to stand over what he stated on the Second Reading of the Bill in 1926 and if he is at the same time prepared to say that he will consider next year either an Amending Bill to make it possible to extend the loans under other terms, particularly those embodied in the amendment of Deputy Johnson, or if he intends to bring in a new Bill altogether to put this class of Government help for giving employment on the one hand and for extending the loans on the other on a different basis altogether.

Mr. MacENTEE

We are very anxious that this Act should be as successful as possible, and that it should fulfil the objects which I presume the Minister had in mind when he introduced his proposals, namely, doing something to develop industrial organisation in Ireland. It appears to us that one of the ways in which this Act has failed to fulfil anticipation has been that it has not really created very much interest in industrial development amongst the citizens generally. A number of firms have availed of the facilities under the Act, but I think a great deal of the return and benefit that might be expected from the operations of the Act have been lost because the public has not been generally aware of the facilities which exist for those who wish, upon their own initiative, to create new industries here. It seems that by a slight extension of the principle of the Act a good deal might be done towards making it easy for those who are interested in industrial projects and have a sound proposition to put before the public to secure public support for it and to attract public capital. We think that might be done if the Minister would consider whether he could not embody as a condition for a guarantee under the Act that a certain proportion of the capital which it was proposed to raise under Government guarantee must be submitted to the public. It has been argued, and I think there is a good deal of truth in it, that one of the drawbacks industry exists under is that there is no free market for shares in Ireland in any industrial project, and that there is great difficulty in creating public interest in these shares; that people feel that if they do invest money in Irish industry they will find it very difficult to realise it if they want to do so in a hurry. That is largely due to the fact that there is practically no stock exchange operation in the investments and shares in Irish concerns. If you read the ordinary returns from the Dublin Stock Exchange, with the exception of one or two big enterprises—the banks or Guinness's—they are mainly concerned with English companies. It seems to me, at any rate, that if the Minister would make it a condition that people who receive a Government guarantee under this Act should offer to the public a certain proportion of their shares, and if the public begin to realise that in Irish industry they had as good safeguards, as good a return, and at any rate that their capital will be returned to them intact and that they would be assured a reasonable return on it during the time that it was being utilised in Irish industry, they would be very much readier to invest their money in it. That would mean that machinery would have to be provided, I suppose, and that the ordinary general financial machinery would have to be developed. I think that difficulty would be got over if the Minister himself would consider, either as an amendment to this Bill or an addition—I suppose he would have to prescribe the rules under which the loan would be issued—making it compulsory upon the company or the persons—in most cases, I presume, it would be a limited liability company —to offer a certain portion of this guarantee capital to public subscription.

In that way you will create a market; at least, you will take the first step in creating a market in so far as you have something to sell to the public which would be an attractive proposition. The return on capital would be guaranteed and they would have the knowledge that they are investing their money in concerns at home, the operations of which are more or less under their own eyes. I suggest to the Minister that he might consider that as an amendment which he might introduce into the Bill.

Mr. J.J. BYRNE

I think there will be complete agreement among all parties that if there is one thing we are anxious to do it is to facilitate and develop industries in this country. There will be no divergence of opinion on that point, whatever divergence there may be on the methods as to how that is to be accomplished. In the Act, which the Minister asks us to renew, very ample facilities have been given to industrialists to develop and build up new industries in which they may be interested. It is unfortunate that more advantage has not been taken of the facilities given to industrialists in that measure. As a member of the Committee on Public Accounts, I know that criticisms were passed on the working of the Act, but if anything could be said against the action of the Minister, the only thing that any fair-minded man could say is that he erred on the side of leniency in endeavouring to give Irish industry a chance in the particular instances in which criticism arose. The Minister previously pointed out that the circumstances were quite exceptional, and he has now been frank enough to say that it is his intention to work this Act in the coming year, if it is renewed, as he worked it in the past. I feel that if there is any reasonable amendment which the Opposition would like to see incorporated in this Bill, if there is any idea at the back of their minds which they think would lead to people availing themselves more largely of the facilities contained in the measure, it would be very sympathetically considered by us on these benches. There can be no party capital made out of efforts to develop Irish industry. We are just as anxious to have co-operation with Deputies opposite on a measure of this kind, as I am sure they are anxious for the development of Irish industry. I think, however, that the criticism offered was rather illogical, because Deputy Briscoe, on the one hand, pointed out that the Minister was inclined to forego his legal lien upon certain assets and that portion of the money, as the Deputy put it, could be used in a roundabout way as working capital. As against that, Deputy Lemass asked was the Act sufficiently wide in its scope to furnish capital for working expenses? It appears to me that one of these propositions destroys the other. If it is the opinion of Deputies opposite that greater facilities should be given, we on these benches would be anxious to consider that if a motion was put down.

Mr. DAVIN

Is that a definite promise?

Mr. J.J. BYRNE

I am not in a position to give a definite promise. The Minister is here to do that, but I say that such an amendment would have my support, and, I am sure, that of many Deputies on this side. I would like to ask one or two questions in regard to statements made by Deputies opposite in respect to the operations of the measure. Why has the Act failed? It has been suggested, I think, by Deputy MacEntee, that it was because people were not sufficiently aware of the facilities offered under the Act. In my capacity as a business man I have come into touch with several industrialists coming into this country who have been considering the proposition of establishing industries here. I know two cases where sites for premises had been taken and everything had practically been arranged, but at the eleventh hour their schemes were upset. I said to these people: "If you are prepared to set up industry here the Government is prepared to furnish money for the provision of plant. That is an inducement you will not get at the far side of the Channel." The one thing we have to bear in mind, so far as industry is concerned is, as I have pointed out on several occasions, the small turnover that exists in the various industries. This particular firm to which I refer have a working capital on the far side of over forty millions sterling. They did not want to avail of this Act as they have ample capital at their disposal, but the main thing which kept them from starting industries here was the fact that the turnover was too small and that they would not receive sufficient return on the money invested. I do not see how you could get rid of that difficulty by way of legislation. In my opinion—I trust this statement will not engender any heat—there are a great many holders of money, people who have control of capital, who have a feeling that there is still insecurity here.

Mr. MacENTEE

Yes, when this House passes resolutions about public peace and safety.

Mr. BYRNE

I do not want to raise anything contentious, but naturally I could reply that that resolution was not passed for nothing, but now that we are sitting down to work in a better frame of mind, I hope that this Act will be more largely availed of. I hope that the feeling of insecurity is passing away, and now that we are getting used to the existence of law and order we will have less politics and a little more economics.

Mr. DAVIN

While my name has been associated with reports of the Public Accounts Committee which dealt with certain aspects of the administration of the original Act, I am not going to have it said that I looked on the administration of the Act, or the Act itself, as a failure. I have listened attentively to the Deputies on the Fianna Fáil Benches who have taken part in the debates on the report of the Public Accounts Committee in the hope that I would hear something from them as an indication of the type of amendment which they were prepared to suggest on the Committee Stage of this Bill. I mention this matter because the Labour Party, as Deputy Briscoe mentioned, put forward amendments to the original Bill when it was going through in 1926. I was waiting and listening in the hope that I would get from Deputy Briscoe, who knows something about the administration of the original Act, some indication that his party were going to father the amendments we put forward in that year.

Mr. BRISCOE

I referred to amendments of the type introduced by Deputy Johnson here in 1926, and I, suggested to the Minister that if he introduced any amendments to the Bill they would be on the lines of those proposed by Deputy Johnson.

Mr. DAVIN

I want to know from Deputy Briscoe whether that means that either he or his party is going to take responsibility for putting forward the same amendments and arguing them here on the Committee Stage of this Bill?

Mr. BRISCOE

If the Minister answers our question satisfactorily it would save us doing so. If he does not, we may consider it.

Mr. DAVIN

From my observation and from the knowledge I have obtained of the working of the Act as a member of the Public Accounts Committee, I realise that the Minister, or whatever Minister would be charged with the administration of an Act of this kind, would have to proceed very cautiously. I know cases in which this Act prevented the closing down of large concerns in this country, but Deputies, when they come to consider either the amendment or extension of this Act, will have to say how far they are prepared to go in using the taxpayers' money for the purpose of preserving decaying industries or building up better ones. If we are confronted with the prospect of seeing industries closed down by the pressure of Joint Stock Banks it is for the House to say, on behalf of the State, whether they will guarantee so many thousand pounds and allow the banks to have a charge on that money in priority to the State guarantee. That is what Deputies will have to make up their minds upon and decide when they are considering a more generous interpretation of the original Act. The State has certainly, as far as I could see, from an examination of certain files, taken a very great risk in order to help to carry on particular industries that were certainly dying out at the time the applications were sent to the Minister. Deputy Briscoe knows that perfectly well. He has seen certain files in connection with loans guaranteed by the State. I hope the State guarantee will not have to be paid, but I do say that the Minister in certain cases has been very lenient—over-generous if you like— and I hope his action in taking risks, very serious risks, in order to carry on certain industries will be justified in the course of time. I hope that Deputy Briscoe or some member of his party will indicate whether he is prepared to father the amendments which were put forward when the original Act was in Committee and that he will let us know whether he will take the responsibility of presenting these amendments or amendments similar to them on the Committee Stage.

Mr. BRISCOE

Is Deputy Davin prepared to support the amendment put forward in 1926?

Mr. DAVIN

Certainly.

Mr. BRISCOE

I invited the Minister and the Dáil at some future date to amend the Bill if it cannot be done now and to embody the suggestions made by the Labour Party, and I made it clear that I would support such an amendment. I do not think anything could be clearer.

Mr. DAVIN

I think the Deputy should recognise the fact that the Labour Party is no longer the official Opposition and that the responsibility now falls on Deputy Briscoe's Party.

Mr. McGILLIGAN

I think I must agree with Deputy Davin's last remark when I consider what Deputy Lemass has said. Deputy Lemass apparently considers that it is the duty of the Opposition to ask the Government to criticise their own measures, to give evidence against their own measures, and to suggest amendments.

Mr. LEMASS

I suggested that the Government should regularise their own measures.

Mr. McGILLIGAN

Although the Deputy gave no reason why it should be done. He made no positive suggestion as to why any fault he pretended to find in the Act must be made good. He just wanted to know if the Government thought it satisfactory. He made no case against the Bill.

Mr. LEMASS

Do you consider it satisfactory?

Mr. McGILLIGAN

All that Deputy Lemass has committed himself to is, that he does not regard it as adequate. Deputy Lemass has advanced no constructive suggestion. He has not even advanced cases of industries which would be worth carrying on and which would be inclined to make application but for certain defects in the Act. He brought that forward as a reason for saying "There is a gap; close it," but he gave no evidence of that. He simply appealed to me to say that the Act was not adequate, and if it is not adequate to say what I would suggest myself. I do not think that the duty of the Opposition should be confined to that. The Deputy also made a remark that I countered on another occasion. It is only a matter of opinion. It was that the financial houses in this country have an attitude towards Irish industry which is not helpful to Irish industry. I confessed here on another occasion that I had made a remark of that sort myself, but after the first six or seven months which I spent in the Department of Industry and Commerce I had to change my view. I said that personally I had not been able to find a single case in which it could be proved that the banks —I think these were the main financial houses referred to—had shown an overrigid attitude towards Irish industrial concerns if one took into consideration the fact that the banks are merely the guardians of other people's money.

Mr. DAVIN

The statement that the Minister has now repeated has been, I think, very much misunderstood in the country. When the Minister made that statement before, he did not say that his statement referred only to the case of applications which had been made for loans. I think that statement has been taken to indicate that the banks have been over-generous in their dealings so far as some firms were concerned and they closed down some private concerns.

Mr. McGILLIGAN

It does not refer only to applications coming before me, applications for loans. I have often been asked to take up with the banks certain cases, and I think Deputy Davin was interested in one case. He was not interested as a party, but he was interested, I think, because that particular firm came from his own constituency. I think the Deputy, in the end, was quite convinced that in that particular transaction the banks—I will not say they have been over-generous, but that they had not been too rigid and that they had not been adverse to that application. I had other examples when I was interrupted.

Mr. DAVIN

I think it is very undesirable in the existing state of affairs in the country that the Minister should pat the joint stock banks on the back without being asked.

Mr. McGILLIGAN

Surely one could go midway between patting people on the back and saying that in his opinion they have not been hostile in their dealings with Irish concerns. I say no more than that they have taken up what could be regarded as a good banking attitude. I do not know of all the cases, but I say that of cases which have been brought to my notice in which it was alleged that hostility was shown by banks towards certain concerns I was unable to find a single case in which there was any evidence that the banks are actuated by hostility towards industrial development in the country.

Mr. DAVIN

Does the Minister remember that when the original Act was introduced the Government had to advance £300,000 to the National Land Bank?

Mr. McGILLIGAN

That is a different matter. I do not think that could be argued here on the basis of hostility.

Mr. LEMASS

What about the statement that you had more shots in your locker?

Mr. McGILLIGAN

I think I was the first to use that remark. I used that phrase during the period when I was first in office. I had certain suspicions, but after certain cases were brought to my notice, and when I had further examined them, I had definitely to change my attitude. That is all I say about it. I do not say that the banks are to be lauded for their attitude. I think if they took a more liberal attitude they might really do even better banking business. But it is hardly for people in this House to criticise them in the carrying out of their business.

Mr. DAVIN

I did not do it.

Mr. McGILLIGAN

I am sorry if I cannot even look at the Deputy. A very serious charge has been made against all the financial houses in one group in the country. These charges should not have been made without some evidence having been brought forward. These are delicate transactions. The Deputy may have cases which will show the attitude that he has referred to but that should not be applied to all the houses in a group. I would be glad to be informed in confidence of any matters of that sort. I believe certain persuasion can be used with the banks to get them to take another attitude if it can be proved that this is not bad banking business. This Act was intended to get outside business transactions that could not be regarded as normal business of the type that a bank does in the country. It does not go the whole way; it goes a certain way. It does meet the case to a certain extent by my keeping strictly within the terms of the Act, having possibly widened the administration of the Act. It does not deal with a bigger type of case that I do not want to deal with at this particular moment. That is to say, a type of firm which finds itself short of working capital. My view there is that whether originally or by reconstruction a firm finds itself unable to get working capital from the shareholders or subscribers, then there is a very bad case for that business. I think that is prima facie a good point. I would not like to give money for working capital without being fully aware of the regulations with regard to the conditions under which money for working capital will be met. The Public Accounts Committee has, to my mind, taken up a rigid attitude with regard to the administration of this Act. I would not like to be faced with their attitude hereafter with regard to the supply of money by way of working capital. I could see voluminous reports proceeding from the Public Accounts Committee in view of what they have already written about the two cases which have come under their notice. If there are regulations which the Executive Council think will safeguard the taxpayers' money, then there may be some approach to this very big difficulty of working capital. It will not help business if people interested and who know the business—people living in the locality who know those who are running the business—will not help by way of providing working capital when the State in fact takes the burden of the other charges on its shoulders. The Public Accounts Committee has been referred to. I referred to it myself, and Deputy Davin, Deputy Byrne and Deputy Lemass referred to it.

Mr. DAVIN

I did not discuss it here at all to-day.

Mr. McGILLIGAN

I withdraw Deputy Davin's name from this whole matter.

Mr. DAVIN

I know what you think of the Public Accounts Committee, all right.

Mr. McGILLIGAN

Deputy Lemass thinks that I have taken a stubborn attitude towards the Committee, but I have not. They do not understand. They get two or three transactions, and they get them always a year or two after the particular date on which the loan or guarantee was given, and they cannot possibly get back to the circumstances. They write reports and produce recommendations which from the point of view of good banking and the purest of pure finance are admirable, but they do not fit in with the circumstances at the moment. I cannot understand people sitting in that critical attitude on the Public Accounts Committee and then coming here and adopting the other view-point that money should be lavished on Irish industry—given out hand over first under no conditions, just to help any decent Irish industry. There is a divergent attitude between the members of the Public Accounts Committee when they are there and their attitude when they come here and speak from the benches over there, that I would be fearful indeed of having any working capital provision put into this Bill——

Mr. DAVIN

May I explain?

AN CEANN COMHAIRLE

If the Minister gives way.

Mr. DAVIN

I want to explain to the Minister—and I think he understands it in this way—that the Public Accounts Committee have not gone out of their way in any way to criticise the administration of the Act. They were merely asked to give an expression of their opinion about certain matters brought under their notice by the Comptroller and Auditor-General. That is what gave rise to their report.

Mr. BRISCOE

The Minister has not given a fair criticism of the work in connection with this matter of the Public Accounts Committee when he makes the statement that the members who sit on the Public Accounts Committee are of two minds—that they have one point of view when on the Public Accounts Committee and another and a different point of view on these benches. That is not the case. The Minister must understand that when the members of that Committee have to go through the items of expenditure that they are committed to the examination of that expenditure under certain terms, and that is as to how that money should be spent. When the Public Accounts Committee finds that that money, in their opinion, is not spent as it should have been spent they would be lacking in their duty or in the discharge of that business if they did not refer to it. They look upon it as their duty to do so. In this particular case under review we have sympathy with the extension of the powers of the Minister with regard to the Trade Loans Guarantee Act, but at the same time we maintain that under the Act as at present provided the Minister has not power to do what he has been doing. We approve of what he is doing and we ask him to amend the Act so that what he is doing will come within the terms of the Act from a purely book-keeping point of view.

Mr. BYRNE

As one who signed this report of the Public Accounts Committee I want to know how was it that the Committee did request the Comptroller and Auditor-General to report in future similar cases to the ones referred to. They ask the Comptroller and Auditor-General to report them. What does that mean?

Mr. McGILLIGAN

Exactly.

AN CEANN COMHAIRLE

We are not called upon in this debate either to criticise or defend the Public Accounts Committee. We have not to go into their motives. Deputies must be content with what was said by the Committee.

Mr. McGILLIGAN

I am only talking of what they said. Deputy Davin is quite right. The Public Accounts Committee never on their own initiative asked for things to be brought before them except when previously the Auditor-General had called their attention to them. They have asked that similar cases be brought up in future. When the Comptroller and Auditor-General brought these cases to the notice of the Public Accounts Committee, there were two points at issue: First, the legality of the loan, and secondly, the advisability of continuing in the future what I had done in the past. Deputy Briscoe joined the great army of amateur judges who go contrary to the high legal opinion that this action which the Public Accounts Committee are criticising was quite legal. This was the opinion of one Attorney-General who is now Chief Justice; a second Attorney-General who is now a Judge of the High Court and the present Attorney-General. They have given their opinion on this matter.

Mr. BRISCOE

They have taken a lesson from the book of the Executive Council. They drew up the Constitution and now proceed——

AN CEANN COMHAIRLE

Now, now, that is getting very far away from the question.

Mr. BRISCOE

It is just as relevant——

Mr. McGILLIGAN

It is such a valuable point that it should be availed of and debated. This is a matter on which no political passion is aroused, a mere matter of interpretation, and three Attorneys-General have decided that I am right, and if anybody thinks that is not so there is a way of testing it in the courts.

Mr. BRISCOE

You do not suggest that the Public Accounts Committee are to test it in the courts?

Mr. McGILLIGAN

No, but some person who is more pure in finance even than the Public Accounts Committee might challenge some of the cases. There are some people in business who are aggrieved by what was done on two occasions under consideration. But there is a second and a bigger thing in question—should this be continued for the future? There is in the Report of the Public Accounts Committee a phrase which sets out that they are of opinion that the creation of a liability in front of a State liability is undesirable and that it should not occur in further cases. If the Dáil wants that to be imposed on me, then, somebody should father a resolution dealing with that. I do not agree with it. It would tie my hands more tightly and it would, in fact, destroy three or four cases that are pending.

Mr. BRISCOE

Why not amend the Act?

Mr. McGILLIGAN

That is the reason I want to test the feeling of the Dáil with regard to that. There is no question of where there was merely an Act there and that the money had been guaranteed illegally under it. The Public Accounts Committee gave the opinion that it was undesirable that certain things should be done. And the very people who held at the Public Accounts Committee that it was undesirable are the very people who have come here and criticised in the Dáil the Government's attitude towards helping industry as inadequate. One of the reasons why the Government's attitude is inadequate is that there is not a way of providing working capital. They ask how will you provide working capital and get any security for the money you provide. You have people there of two minds. They do not think that the State guarantee should be prejudiced by having a liability in front of the State liability, though there is the same security for it, and on the other hand they would like some money to be given out and they want that it be given out without any security at all. Deputy Lemass confined himself to the statesmanlike utterance that the Government should devise some scheme. That is very helpful.

Mr. LEMASS

If you cannot do it, then get out and let someone else do it.

Mr. McGILLIGAN

The Deputy has not stated what scheme it is and he does not give any indication how that particular scheme is to be devised to meet the cases he has in mind. He merely contents himself with the statement that the Government should devise some scheme. He might stereotype that phrase in the future, and instead of making long statements he could say "The Government should devise some scheme." But that does not help those who are trying to face up to the realities of the situation, and trying to get all the parties in the House to come into one group and help to meet the wants of these industries—you do not get any further by saying: "There is something to be done, there is inadequate provision, and you should devise something better."

Mr. LEMASS

Do you agree that it is adequate provision to deal with the situation?

Mr. McGILLIGAN

It is as adequate a provision as any Trade Loans Guarantee type of legislation can give.

Mr. LEMASS

Answer the question.

Mr. McGILLIGAN

The proper time to challenge me as to the attitude of the Department of Industry and Commerce was when that Vote was going through, but if on matters relating to the Trade Loans (Guarantee) Act or any other piece of legislation I am challenged about the whole policy, the thing will never end.

I cannot answer one question that Deputy Briscoe put to me. That is the matter of a further guarantee since 1926. I pointed out that there was a certain amount then and a certain amount to-day. I know that in the 1926 statement there was included a loan of £150,000 which was then passed under certain circumstances. The circumstances have since changed and the loan has been held up. There was another loan of £50,000, which could not have been included in the 1926 statement. If those two were included, that would mean £200,000 odd in regard to which guarantees have not been given. The Deputy can easily find out what moneys have been guaranteed in any year, because I publish every three months a statement of the moneys guaranteed. Deputy Briscoe has referred to the way around the Alesbury case and the Glass Bottle case.

Mr. BRISCOE

I mentioned no names.

Mr. McGILLIGAN

What is the good of observing secrecy when everybody knows that the Public Accounts Committee have criticised the matter on two occasions?

Mr. BRISCOE

As far as my knowledge goes, that particular item does not convey to me the identity of any individual firm. I do not know which firm it refers to.

Mr. McGILLIGAN

There are two cases under review, and the same two cases were under review when the recommendations of the Committee were signed. At any rate, whether it is described as a way round or whatever it may be described as, there is a particular type of administration legally possible under the Act. I think it is a good power to have, and there may be certain cases in which, by reconstruction, money may be free for working capital although it is not, in fact, Government money. I think it is good to have that power, although I agree it is not a power that ought to be used frequently.

Mr. BRISCOE

I referred to the inception of the loan, and I referred to the time subsequently when the loan was guaranteed. If the firm subsequently found itself in difficulties, and the Minister allowed that firm to realise on certain assets, I said that in that case it was a way round, and the Minister was there giving the working capital.

Mr. McGILLIGAN

I feel bound to say that I cannot give working capital. I do not believe that I have ever given it. The Deputy knows quite well what has been done under the Act. I say there is not a case that has been dealt with that I would regard as an undesirable precedent for myself. The Dáil ought to take cognisance of the fact that I intend to act in this matter as I previously did. I disregarded the report of the Public Accounts Committee where it seeks to tie me in the administration of this Act, and I ask the Dáil to support me in that policy. I do not think that anything was done that was undesirable, and certainly nothing was done that is wrong. I intend to follow my own precedents, and I think it is a useful thing to have precedents.

Mr. BRISCOE

Does the Minister deny that on a single occasion assets were realised in order to enable them to establish working capital?

Mr. McGILLIGAN

I deny that I allowed Government money to be used as working capital.

Mr. BRISCOE

I would like to remind the Minister that on one occasion he retreated from the position he held as mortgagee in order to enable a firm to get further working capital.

Mr. McGILLIGAN

If I did so, it was within the Act, and if it was not so, I did not do it. Anything I did before I will do again.

Mr. MacENTEE

It amounts to this, that the Minister does not know what he did.

Mr. McGILLIGAN

Not certainly from the explanation given by the back-benchers opposite. I have been asked if I stood for what was done. I may say that I do. As regards the provision of money for working capital, there is a less case to be made for it than in the year 1926. I would have to take into consideration the attitude of the Public Accounts Committee in the past and adopt a very narrow, rigid and conservative attitude regarding the provision of working capital unless there was something that would prevent absurd criticism here afterwards as to the method in which that particular matter was dealt with.

I do not know that I understood Deputy MacEntee's point. If I did understand him, I do not know if he understands what happened under most of these applications for moneys to be guaranteed. The Deputy wanted that I should insist on offering to the public some portion of the guaranteed capital. People come along with a business proposition and that is considered by an advisory committee. One of the points is the payment of interest and the repayment of capital. It is when one can see at what rate money can be borrowed from a bank, and the committee has a good proposition before it, that it can make up its mind whether the future of the firm will give such reasonable hope that the security can be given. Supposing there is an offer to the public, how is that to be done? It would be done first of all by asking a bank to take on a portion, say three-fourths, and then the rest could be offered. The only one or two cases in which, apart from any necessity, appeals have been made to the public have resulted in this, that the appeal to the public having failed the bank rate of interest rose and the firm was faced with a heavier burden by reason of the fact that there was failure. I do not think in the type of case that comes before the Department you are going to get the public interested; I think, on the whole, the suggestion would be unwise, because it would mean going for some portion of the issue to the public. In that case it would mean that you would have either the danger of failure or that the bank would refuse to take up the issue at all.

Mr. MacENTEE

Would not that be safeguarded by this? I thought the Industrial Trust Company was going to act as an issuing house and was going to underwrite these issues and then offer them to the public. I admit that in a number of cases there has been failure. I think it is due to the fact that the public have not been accustomed to do it; they have not learned to invest in Irish enterprises. In those circumstances very few industrial enterprises take the risk of going to the public, finding that they have to get their capital more expensively if they fail. If the Industrial Trust Company were to undertake the functions of an issuing house and underwrite most of those issues, then the difficulty the Minister referred to in connection with past instances at any rate would be overcome.

Mr. McGILLIGAN

I agree with the Deputy that there is not what you call an investing public here in the ordinary sense of the term, that people are not used to invest, but I believe that the worst way to induce them into the habit of investing is the promulgation of this particular type of case that comes before the Department. It does not work well. I can promise the Deputy this: where a case comes up and it seems to me to be one which the people can be interested in and brought into it, it would not be right to insist on it, but we would make the suggestion to the people concerned to look for some portion of the money to be put up by the people instead of through the banks in the ordinary way.

Mr. LEMASS

Does the Minister consider that the Act gives him power to guarantee loans which will be used for the purpose of extinguishing existing liabilities?

Mr. McGILLIGAN

It depends on the details of the case. I do not think that is entirely ruled out. That is the most I can say.

Mr. LEMASS

Is it not important that the Act should be studied for the purpose of finding out whether or not the Minister has that power?

Mr. McGILLIGAN

I think I have done what amounted to that in one case.

Mr. LEMASS

The Minister has, in fact, guaranteed a loan that was used for the purpose of extinguishing an existing liability.

Mr. McGILLIGAN

I do not want this to be quoted against me, but I may say with a certain amount of reservation that that has been done, and done properly.

Mr. LEMASS

Obviously the Minister and his Department are as confused as anyone else with regard to the interpretation of the Act. In the explanatory circular issued by the Department it is expressly stated that the Minister has no power to guarantee a loan that is to be used for the purpose of extinguishing any existing liability. He also points out that he has no power to do what he discussed with Deputy MacEntee—that is, to guarantee ordinary and preference shares. If the Department takes that interpretation and the Minister takes another, I think there is a strong case made out for the purpose of amending this Act so that there will be no doubt in anyone's mind as to the legality of the action.

Mr. McGILLIGAN

You might consult Deputy MacEntee as to what he asked me.

Mr. BRISCOE

The Minister in his speech of April, 1926, said that this was undesirable as a continuing Act from year to year. Has the Minister the same opinion now?

Mr. McGILLIGAN

The Deputy has entirely misread that speech. I indicated that it was going to drop; nothing was to come. It was when ex-Deputy Hewat was present; he was pressing that this was an undersirable type of legislation to have. I said, "Certainly I agree, in normal times," but normal times did not come; and I also said, on an amendment of Deputy Johnson, that though arguing against it I was not going to argue too vehemently because, I said, the emergency might increase to such a point that I would be forced to come here and ask for that power. I indicated I regarded it to be a dangerous power to be entrusted to a State Department, and only to be asked for in exceptional circumstances.

Mr. BRISCOE

What about the Banking Commission?

Mr. McGILLIGAN

If you will read the report you will find out what they said.

Question—"That the Bill be now read a Second Time"—put and agreed to.

Committee Stage ordered for Tuesday, the 17th July.