Public Business. - Additional Financial Resolution No. 6—Report. – Dáil Éireann (6th Dáil) – Friday, 24 May 1929

Public Business. - Additional Financial Resolution No. 6—Report.

Mr. Blythe

I move:—

"That the Dáil agree with the Committee in Resolution No. 6."

Since this Resolution was before the House on Wednesday last, Deputies have had an opportunity of examining the report of the Tariff Commission with respect to the proposal which is contained in the Resolution. I am sure that Deputies who have read that report noticed that the application which the Tariff Commission met to consider from the Wholesale Clothing Manufacturers' Association, was one for an increase in the duty upon apparel by ten per cent. The Tariff Commissioners state that they consulted the Irish Woollen and Worsted Manufacturers' Association with respect to the application and received from them an intimation that they would have no objection to a temporary increase in the duty from five to seven and a half per cent. but, although the application was for an increase in duty on wearing apparel and although the body that might reasonably be expected to oppose the application did not oppose it, the Tariff Commission rejected it and substituted instead a proposal for which, apparently, nobody asked. The recommendation is, as has been announced to the House, that the exemption limit be raised from cloth at one and sixpence per yard to cloth at two and sixpence per yard and that in future clothing costing under two and sixpence per yard should be admitted free of duty.

This matter has, of course, been considered in the House before, when the main proposal was before us and on that occasion many Deputies pointed out that the Tariff Commission had apparently made a serious miscalculation and that, as a result of the proposal which they put forward, in addition to helping the woollen manufacturing trade they were, in fact, reducing considerably the amount of protection enjoyed by ready-made clothing manufacturers before that. As Deputies will remember, there was a lengthy discussion on the Report Stage of that Resolution in which that particular effect was emphasised by many speakers, all of whom in my recollection recommended that the obvious step to take to remedy the mistake of the Tariff Commission was to increase still further the tariff upon ready-made clothing. The Tariff Commission, apparently for some reason which they did not state, appeared to think that the other course was preferable and, accordingly, the recommendation now is to increase the exemption limit. The motives which led them to believe that the difficulty would be eased by increasing the exemption limit have not been placed before us. The Tariff Commission confine themselves to making one objection to the other proposal, but they give no argument good, bad or indifferent, in favour of the proposition which they recommend. That particular procedure is, of course, only in accordance with the procedure they adopted in the main proposal in regard to woollens in which there was another important recommendation that related to Imperial preference which was put forward without any argument being produced to support it. The same thing is done here. A recommendation is made which will have the effect of weakening the protection given to woollen manufacturers, and nothing is said concerning it except that the Tariff Commission believe that it is the most equitable method of meeting the difficulty.

What particular facts or what particular arguments they had to convince them that that was the most equitable method of meeting the difficulty we do not know. It was mentioned on the other occasion when this matter was under discussion, that the Census of Production of 1926 indicated that the average price of the cloth used by the ready-made clothing manufacturers in the Free State was about 4/3 per yard. This is a proposal to take off the tariff on cloth under 4/- per yard and to maintain it on cloth above that price. Its effect will obviously be to encourage the use of cheaper cloth. The protection which is being given to manufacturers of suits from imported cloth over 4/- per yard is reduced. The Tariff Commission themselves admit that their original proposal did operate to reduce the protection which the ready-made clothing manufacturers enjoyed. That reduced protection will still continue to operate in respect of suits made out of cloth costing more than 4/- per yard, but the amount of the protection imposed upon suits made out of cloth costing less than 4/- per yard is, of course, increased by the proposal which was before the House on the previous occasion to increase the duty in operation from 15 to 20 per cent. In other words, there is being created a much bigger gap than hitherto prevailed between suits made out of cloth costing 4/- per yard and suits made out of cloth costing more than 4/- per yard.

A simple calculation will show that the differences in the selling price between suits made out of cloth at 4/- per yard and suits made out of cloth at 4/6 per yard, firstly, before the woollen tariff was imposed, secondly under the previous arrangements, and thirdly under this arrangement, are 1/9, 2/5½ and 5/- respectively. In other words, for the difference of 1/9 a suit made out of the better cloth could have been secured before the woollen tariff was imposed. For a difference of 2/5½, after the woollen tariff had been imposed, and under the existing arrangements, a better suit could have been obtained, but now it will require an additional 5/- in order to purchase the better suit. In other words, the gap between the two classes of suits is being widened. Irish cloth is available, we understand, at 4/- per yard and upwards. Apparently it must be available at that price, as otherwise the Tariff Commission would have proposed to increase the exemption limit beyond 2/6. Because they have not done that, we must conclude that they are satisfied that an adequate supply of Irish cloth will be available at a price over 4/- per yard.

The proposal which is before us will operate to reduce the available market for that Irish cloth and to encourage, as I have said, the importation of cheaper cloth, and the manufacture and sale of suits made out of that cheaper cloth. It is obvious that the consumer might be prepared to pay an extra 1/9 or thereabouts in order to get a better suit, but he would hesitate considerably before paying 5/- in order to get that suit. As a result of the operation of this Resolution it is very likely that the ready-made clothing manufacturers will confine themselves almost exclusively to the manufacture of clothes out of the cheaper cloth, which can be imported free of duty, except in so far as they can secure Irish cloth of better quality in the designs which they require. When the matter was under discussion on Wednesday last, the Minister for Industry and Commerce appeared to base his case for the proposal on the grounds that the other proposal made by us, the proposal to increase the duty on ready-made clothing, would increase the cost of living. Let us examine that and see whether or not it would increase the cost of living. The proposal we made was that the import duty upon imported suits should be increased. Obviously that import duty would only operate to increase the cost of imported suits, and would not have the effect of increasing the price of suits made in the country. It does appear that the bulk of the ready-made suits at present being sold here are made within the country. Whether that is so or not I cannot say, but if we are to judge the figures given in the Census of Production, and compare them with the figures given in the trade and shipping statistics for the years before 1924, before the duty went on, it would appear that the ready-made clothing manufacturers are now manufacturing something like 70 per cent. of the total imports of suits in 1924.

With an increased duty in operation it would still further develop that particular industry. It is an industry which can be easily developed. It is the type of industry which we should set out to help forthwith, because it does not require any considerable capital expenditure or any very high degree of technical skill in order to make it flourish. Of course, the operation of the tax upon cloth between 1/6 and 2/6 per square yard would tend to increase the cost of suits made out of such cloth when it is imported. But that is the situation that now exists, and it is to change that situation that this proposal is brought forward. The proposal, therefore, is one to reduce the price of suits made out of imported cloth at the expense of suits made out of native cloth. If the Tariff Commission, when the application of the woollen manufacturers originally came before them, had given it the consideration which they were subsequently forced to give it, we would, I am sure, have from them, not the proposal which is now before us, but the proposal which the woollen manufacturers were prepared to agree to, and which the ready-made clothing manufacturers asked for—that is, an increase of the duty on apparel of 10 per cent. The operation of the increased duty on wearing apparel which we propose, while increasing the market for the cloth produced in Irish mills, would also tend to discourage the use of suits made out of the cheaper shoddy cloth by lessening the margin between the suits made out of this cloth and the better class suits made out of Irish cloth. This proposal increases the margin; the proposal which we make would lessen it, and would encourage people to spend the very small additional amount required to get the much better suit that can be obtained made out of cloth from Irish mills.

There is a good case for increasing the duty on wearing apparel independent of the application for a tariff on woollen material. The duty was originally too low, and it is still too low. It can be increased with advantage. The advantage which will be secured by that increase can be utilised to case the difficulty which has arisen with respect to the Tariff Commission proposals relating to woollen cloth. I do not know what is operating to make the Minister reject the proposal which we put forward. The only argument advanced by the Tariff Commission is that it might operate to increase the cost of living. It is very difficult to see how it would. When I say that, I mean it is very difficult to see how it would operate to increase the cost of living over and above what it is in consequence of the original proposals introduced here. I agree that the person who wanted to buy an English suit made of cheap cloth between 1/6 and 2/6 per yard had to pay more for it after the Government's original proposals were adopted. But you cannot possibly increase the cost of living beyond that by increasing the duty on imported manufactured apparel. You will be increasing the amount of protection which the ready-made clothing manufacturers here enjoy; you will be increasing the margin available for Irish cloth, and you will be offering the people a better inducement to buy suits made out of a better class Irish cloth in preference to suits made out of poor quality imported shoddy.

The other point made by the Tariff Commission relating to the difficulty of imposing a duty on apparel that would not apply to other articles not manufactured in quantity in the Saorstát is one that they had to take into consideration when the main question was before them. They proposed certain exemptions. Other exemptions are proposed in this Resolution. The advancement of that difficulty as an argument against the proposition to increase the duty on apparel is quite childish. I am satisfied, if the Government were not afraid to utilise the tariff weapon properly, that they would have done the right thing in this case. But they appear to be very hesitant whenever any proposition for increasing protective duties comes before them. They appear to be afraid of the weapon in their hands, and because of their fear, and the consequent timorous use they are making of the tariff weapon, they are doing much more harm than the vigorous use of that weapon could possibly do. In addition, they are giving arguments to those who do not want to see Irish industry fostered.

Deputies will remember when this matter was under discussion here previously the daily papers and other organs in this State which represent the importing community were gloating over the spectacle of avowed supporters of tariffs finding objection to tariff proposals. We did find objection to the particular tariff proposals before us, because these proposals had obviously not been properly considered. The fact that they were not so considered is now evident by reason of the additional report before us. If the Tariff Commission, which took two years to consider the application for a duty on woollen cloth, had during that time given the matter the consideration which it required, we would not have this additional proposal here, because they would have been able to visualise all the difficulties that might have arisen from the granting of the application and they might have taken steps to meet them. They did not do so, and consequently we have this arrangement of introducing additional resolutions to hide and remedy their mistakes. I ask the Government to request the Tariff Commission to give concrete arguments against the proposition which we are putting forward—the proposition that the proper way to meet this difficulty is to increase the duty on woollen cloth. I ask the Government to request the Tariff Commission to advance at least one argument in favour of the recommendation they have made. They have not advanced any such argument in this report, nor has any such argument been advanced by a member of the Ministerial Party.

Mr. H. Broderick

I desire to say a few words in support of the motion before the House. Last February, when the tariff was imposed on woollen and worsted goods, I knew that the Saorstát mills would not manufacture the cheap class of material that is utilised in the cheaper type of ready-mades. I knew well then, and I know now, that they would not be prepared to manufacture that class of material. They gave evidence before the Commission that they would be prepared to manufacture material up to 3/- per yard. The article that they would manufacture at 3/- would be a good article, but it would be without design; there would be no pattern in that article, and there would not be the same demand for it as the material coming from the foreign mills would receive from the ready-made manufacturers. When he was introducing this Resolution the Minister mentioned that the members of the Tariff Commission had visited some mills in the Saorstát, and in one or two of those mills they had what he called a rag-pulling machine for reclaiming wool. I have heard of that machine, but I do not know where it is installed. I know several important mills in the Saorstát have not got such a machine. I know that such machines are used for teasing old socks and cardigan jackets, and things of that kind, which can be used for the cheaper classes of clothing. I expect that is what the Commissioners had in mind when they mentioned this matter and put it in printed form.

I know that the Athlone and the Cork woollen mills and the mills in Dublin do not use this class of teasing machine at all. I would not like it to be broadcasted that we have machines in this country that tear up this class of old cloth for manufacturing into shoddy. I do not believe that this is used in scarcely any of the mills. I do not believe there is such a machine in the principal mills. Indeed, I do not believe that there are more than one or two such machines in the Saorstát. These machines are common enough in Bradford and in other mills across the Channel. I am aware that consignments of rags from this country are sent to those mills for the purpose of being torn up and made into a cheap shoddy cloth.

We were approached here last February by the wholesale ready-made clothing people making an appeal to us to have cloths up to the value of four shillings a yard exempted from the tariff, or alternatively to have an additional tariff of ten per cent. imposed on wearing apparel. In view of the evidence that these people put before us, and in view of the number of people who have gone into that particular end of the clothing industry from the handicraft trade, I thought it was necessary and wise to give support and consideration to the appeal made by these people in the ready-made tailoring industry. Large numbers of people in the city have gone into these factories in Dublin. The same thing prevails in Cork, Limerick, and in the other large cities and towns. For that reason I think it is very desirable to do what the Minister and the Commissioners are doing, and it is very wise to exempt this clothing coming into the Saorstát up to the value of 2/6 per square yard. For this reason, and for this reason alone—consideration for the ready-made clothing and tailoring industry —I am supporting the motion.

It has been said that as a result of this exemption on cloth coming into the Saorstát up to 2/6 per square yard that more shoddy will be coming into the Saorstát. I do not think that will be the case. That shoddy would come in in any case whether the tariff was on or not. We know that that particular class of clothing is used by the majority of working people in Cork and Dublin, and in every large town in Ireland. I dare say that is so. As Deputy Lemass says, I wish we could induce the people of this country to buy a better class of ready-made clothes than they buy. I wish they would be patriotic enough not to buy any ready-made clothing that was not manufactured out of Irish material. I wish we could induce them to look at the matter in that way.

It would be a great pleasure to me and to everybody here to know that the people were patriotic enough to wear clothing manufactured in their own country. I was in a shop the other day and I demanded Irish-manufactured cloth. There was a traveller in the shop selling ready-made clothes and he wondered at me and said I was a fool. He said that the Minister for Finance was another fool for putting on a tariff on woollens at all. I said: "What do you mean—do you not think that I am doing the right thing?" I said: "I know where this stuff is manufactured. It is manufactured in the City Woollen Mills, Dublin." He said: "You would be better off wearing an English suit; it would be material of better finish." I laughed and I said: "You are mad." If we could induce the people to do what I and a good many more have done in this matter it would be a great thing for the woollen mills in the Saorstát and for the tailoring industry as well. For the reasons I have given I am supporting this motion.

Mr. Blythe

Deputy Lemass has talked a good deal about the length of time that the original application was before the Tariff Commission. He indicated that, of course, it was a very simple matter, and that if the Tariff Commission had only taken his point of view they need not have examined anything and they would have gone on all right. That point of view is one that does not commend itself to me. The whole proposition was a very complex one, and like all tariff proposals was very difficult on examination, because, without wishing to reflect unnecessarily on any applicants for a tariff, I think it must be admitted that they cannot be believed in practically any case without certainly making allowances. The ordinary applicant for a tariff stands to gain tremendously if a tariff is granted. In some cases he is a man whose factory is, for instance, making no profit at all. If the tariff were granted he sees himself able to make a profit of £1,000 or £2,000 or £3,000 a year without any difficulty. The granting of a tariff to him is equivalent to the getting of a gift of £20,000, £30,000, or £60,000. Consequently he will use everything that can be used in favour of that application, and he will, generally speaking, tend to suppress a good deal of what may be said against his application.

It has been the experience of everybody and it was my experience dealing with these cases before the Tariff Commission was set up at all, that before a tariff was granted we found that the applicant will promise everything. He will promise to instal new equipment and to make a class of goods that he never made before. He will give you signed contracts of all sorts. Then when he has got the tariff he comes to you and tells you of difficulties that he did not mention before, difficulties which will prevent him from carrying out his promises. The same sort of difficulty faced the Tariff Commission. If the woollen manufacturers had said with the same plainness before the original recommendation was made that they were not prepared to develop this side of their business, then the original recommendation would have contained the exemption limit that is now proposed.

It was because of the lack of candour, which I suppose one must always expect, but which you cannot be sure is existing in any particular instance in advance, that the change now is proposed to be made. As a matter of fact, I understand that the Tariff Commission were in great doubts as to whether they should not put the exemption limit at 2s. 6d. as now proposed, when they were making the original report. The reason they did not do so was because various manufacturers indicated that they were going to develop this side of the business, and it was because the Tariff Commission wished to give them that opportunity to develop this side of their business that the exemption limit was fixed as low as 1s. 6d. I do not regret myself that they did fix the limit so low, even though it involves amending legislation. I say that because it was worth while to give the woollen manufacturers as a body a fair opportunity, to give them, as it were, a pressing invitation to develop this cheap line of business.

When it is now seen that they are not prepared to do it for some considerable time, at any rate, then there is nothing for it but to relieve the clothing manufacturers of the disadvantage which the change would have subjected them to. I think a great deal of the argument that Deputy Lemass put forward was illogical, because he seemed to assume that in all grades of cloth made here—and I do not think he will admit this—the Irish manufacturers' price was going to be the full 15 per cent. above the price of corresponding cloth made on the other side. This industry is one of the well-rooted industries of the country. It is an industry which has done in the past, and which still does, a considerable export trade. It is one of the industries in which, given just the stimulus that the reservation of the biggest part of the home market will give, Irish manufacturers can hope to compete on absolutely even terms with the people on the other side. For the ranges of cloth which they have made successfully in the past the Irish manufacturers will be able to do just as well as their competitors on the other side. They will be able to make cloths of as good quality, and of as good design, and they will be able to sell them as cheaply. It is very hard to say whether 4/- per trade yard represents the exact point at which Irish manufacturers can begin to compete successfully, but that is the nearest the Tariff Commission could get to it.

If the kind of cloth which sells at 4/6 is the sort of cloth Irish manufacturers have been making successfully, then they can make that quality of cloth as cheaply, and as satisfactorily, as manufacturers in Great Britain. If we call that sort of cloth wide, then the cloth of wide quality which can be bought at 4/6 here cannot be bought cheaper than 4/6 on the other side. Therefore there will not be this wide divergence that Deputy Lemass suggested there is likely to be in the future. The position will be that, when a certain quality of cloth which can be bought in England—call it "X"— and which cost 3/9, will be admitted in free, 3/9 will be the price that the manufacturer will pay. A certain other quality of cloth, which may be called "Y" cloth, which can be made at home, and at a cost of 4/6, can be bought also in England, but if bought in England at 4/6 the manufacturer will have to pay duty. Consequently he will buy here. I do not anticipate that the change is going to rob the Irish manufacturers of any part of the market they had in the past. It will simply have this effect, that it will permit manufacturers of clothing here to use the quality of cloth which they need in order to sell their suits in competition, and which they could not have got if we did not make this change. If we had not made the change now proposed, the "X" quality cloth, which would cost 3/9, and which could not be got here, would have to pay duty, and a manufacturer would have either to put up the price of the suits or else to use Irish-manufactured cloth of another quality. Assuming that 4/6 represents the point at which Irish manufacturers can make cloth to compete in all respects with cloth made on the other side, then we are going to rob them of no market at all.

Deputy Lemass said that the increase in the tax on ready-made clothing would not increase the cost to the consumer. I could not accept that at all. The clothing manufacturers are in an entirely different position from the woollen manufacturers. They have not yet the capacity to meet the requirements of the country. This is not an old-established industry with an export market which it must hold in competition with outside firms. The price of the home-made suits is really based on the price of imported suits, duty paid, and I am satisfied of this, that as we have put up the tax on imported suits by five per cent., the price of the home-made suits will go up by something very near five per cent. It may go up immediately by an actual rise in price, it may go up by some changes in quality, or it may go up by not responding to downward fluctuations when they take place in competing suits. Undoubtedly the Irish manufacturers, broadly speaking, not having control of the home market, not having any export trade, except a specialised sort of contract export trade, the position will be that every increase on the imported suits will increase the price to every purchaser of ready-made suits here.

There is another argument against it. The increased tax of 20 per cent. on apparel will apply to apparel which contains woollen or worsted material. But the only wool in some of the apparel which will pay that extra tax may be wool valued for less than 1s. 6d. per yard, or may be wool that is lighter in weight than the wool that is subject to the tax. It would follow that the only practicable method of administering the apparel tax was to charge the increased duty on all apparel which contained wool or worsted, and we would have to take samples of the particular wool or worsted cloth in a garment and decide whether that garment should pay 15 per cent. because of the type of wool or worsted in it, and was not liable to pay 20 per cent.

That is what the Second Report refers to when it states that apparel would be subject to the increased duties although the material in it might be free from woollen duty. There are only two mills that have specialised at all in the use of reclaimed wool, and they are two of the smallest mills in the country. Another mill, a big one, which does something in it, devotes only a part of its capacity to the manufacture of cheaper cloths. No undertakings could be obtained from the woollen manufacturers to give the Tariff Commission or the Department of Industry and Commerce any hope that the requirements of the clothing manufacturers would be met in the near future. If the woollen manufacturers change their minds, or if any of them who have capital or mills which would enable them to have a fairly large output and to meet some substantial portion of the requirements of the clothing manufacturers, then, a case put forward by them for some alteration in the tariff could be very speedily determined by the Tariff Commission. The attitude of the Tariff Commission, as I have indicated, is one of anxiety to have as much cloth made in this country as possible and to have the scope of the protection as wide as is reasonable and fair, considering the other interests that are involved. If there is a change in the position, if we reach a point where the woollen mills, as a whole, or a group of them which have a considerable capacity, make up their minds to develop this cheap end, then the protection which would enable them to get ahead with that work and that development could very easily be afforded. Meantime, if we leave the matter as it was by the original report there is no doubt that certain ends of the making-up trade would be very substantially hit and their development hindered, even if no collapse were actually caused. On the other hand, if we followed Deputy Lemass's recommendation we would have an increase in the apparel on the section of the community which can certainly least afford it.

Question put.

The Dáil divided: Tá, 77; Níl, 48.

Tá

Aird, William P.
Anthony, Richard.
Beckett, James Walter.
Bennett, George Cecil.
Blythe, Ernest.
Brennan, Michael.
Broderick, Henry.
Brodrick, Seán.
Carey, Edmund.
Clancy, Patrick.
Cole, John James.
Collins-O'Driscoll, Mrs. Margt.
Colohan, Hugh.
Conlon, Martin.
Connolly, Michael P.
Cosgrave, William T.
Craig, Sir James.
Crowley, James.
Daly, John.
Davin, William.
Davis, Michael.
De Loughrey, Peter.
Doherty, Eugene.
Dolan, James N.
Doyle, Edward.
Doyle, Peadar Seán.
Duggan, Edmund John.
Dwyer, James.
Egan, Barry M.
Esmonde, Osmond Thos. Grattan.
Everett, James.
Fitzgerald, Desmond.
Fitzgerald-Kenney, James.
Gorey, Denis J.
Hassett, John J.
Hennessy, Michael Joseph.
Hennigan, John.
Henry, Mark.
Hogan, Patrick (Clare).
Hogan, Patrick (Galway).
Holohan, Richard.
Jordan, Michael.
Kelly, Patrick Michael.
Law, Hugh Alexander.
Leonard, Patrick.
Lynch, Finian.
Mathews, Arthur Patrick.
McDonogh, Martin.
McGilligan, Patrick.
Mongan, Joseph W.
Morrissey, Daniel.
Mulcahy, Richard.
Murphy, James E.
Murphy, Joseph Xavier.
Murphy, Timothy Joseph.
Myles, James Sproule.
Nally, Martin Michael.
Nolan, John Thomas.
O'Connell, Richard.
O'Connell, Thomas J.
O'Hanlon, John F.
O'Higgins, Thomas.
O'Leary, Daniel.
O'Mahony, Dermot Gun.
O'Reilly, John J.
O'Sullivan, Gearoid.
Reynolds, Patrick.
Rice, Vincent.
Roddy, Martin.
Shaw, Patrick W.
Sheehy, Timothy (West Cork).
Thrift, William Edward.
Tierney, Michael.
Vaughan, Daniel.
White, John.
White, Vincent Joseph.
Wolfe, George.

Níl

Aiken, Frank.
Allen, Denis.
Blaney, Neal.
Boland, Gerald.
Boland, Patrick.
Bourke, Daniel.
Brady, Seán.
Briscoe, Robert.
Buckley, Daniel.
Carney, Frank.
Clery, Michael.
Colbert, James.
Cooney, Eamon.
Corkery, Dan.
Corry, Martin John.
Crowley, Fred. Hugh.
Crowley, Tadhg.
Derrig, Thomas.
Moore, Séamus.
O'Dowd, Patrick Joseph.
O'Reilly, Matthew.
O'Reilly, Thomas.
Powell, Thomas P.
Ruttledge, Patrick J.
De Valera, Eamon.
Fahy, Frank.
Flinn, Hugo.
Fogarty, Andrew.
French, Seán.
Gorry, Patrick J.
Goulding, John.
Hayes, Seán.
Houlihan, Patrick.
Jordan, Stephen.
Kennedy, Michael Joseph.
Kent, William R.
Kerlin, Frank.
Killilea, Mark.
Kilroy, Michael.
Lemass, Seán F.
Little, Patrick John.
MacEntee, Seán.
Ryan, James.
Sheehy, Timothy (Tipp.).
Smith, Patrick.
Tubridy, John.
Walsh, Richard.
Ward, Francis C.

Tellers:—Tá: Deputies Duggan and P.S. Doyle; Níl: Deputies G. Boland and Allen.

Motion declared carried.

Dáil Éireann debate -
Friday, 24 May 1929