I am asking the House to give a Second Reading to this Bill, and, if it is accorded Second Reading, I will later ask the House that all further stages be passed this evening. This is an ordinary amending Bill to the Principal Act of 1924 which has been brought forward yearly since 1924. The only change is, of course, to extend the date within which guarantees may be given. The old Act of 1924 limited that period to twelve months and since then legislation has been carried out by annual Acts such as this. Last year amending legislation was introduced which is carried forward in the Bill now before the House. Section 3 gives power within the yearly period by publication in "Irish Oifigiuil" to limit the time for making applications. I announced on the Vote for my own Estimate that in my view the Trade Loans (Guarantee) Acts had seemed to have outlived their utility. I based that view on the fact that no new applications were coming forward. I stated that had new applications come forward, or were likely to come forward, we would have brought in the usual legislation. Since I spoke, three applications, amounting to a sum of about £4,000, which had been approved by the two Ministers concerned but were waiting completion of official formalities, have taken on new life. It looked at one time as if one was going to be withdrawn, and we were told that it was very doubtful if the second one would be proceeded with. The third was in a peculiar position. We have now been informed that two are likely to be proceeded with. In addition, there was a very old application which had been received by the Advisory Committee and reported on favourably but it had not at that time been accepted by me. That was an application from the Limerick Harbour Board where there was considerable quarrelling over two projects they were bringing forward. Within the last few days a deputation has announced that they will proceed with both projects and that the application may be renewed in a new form. Consequently, for these four cases it will be necessary to have new legislation. I have had notice in regard to a few other cases. They are only in the preliminary stages and I cannot say whether they are promising or not. Of the three cases which seemed to be dead two have definitely been revived. One was reported on long ago and no action was taken, but we were informed last week that it is likely to be proceeded with. We have word of two others. Since there is a chance of these coming to something I am now asking for the usual legislation to be passed.
In Committee on Finance. - Trade Loans (Guarantee) (Amendment) Bill, 1929.—Second Stage.
When the Minister announced on the discussion of his Estimate that the Trade Loans (Guarantee) Acts in his opinion had outlived their utility we were inclined to agree because of the fact that, so far as we could see, no applications were being made, and of those that had been made none got to the stage of getting the actual guarantee. I think that the fact that the Acts appear to have outlasted their utility is very largely due to the method in which they were operated and to the mentality which the Minister and the Advisory Committee established under the Act brought to bear on the consideration of the applications that were made. Some time ago, on the 12th April last, I asked the Minister for Industry and Commerce for information concerning these applications and he informed us that a total of 732 applications were made to him under Section 1, of which 124 were referred to Advisory Committees. Forty-two cases passed the Advisory Committees and were recommended to the Minister to receive the guarantee from the Minister for Finance. In 18 of these 42 cases guarantees have been given.
In the discussion upon the merits of this legislation on his Estimate the Minister gave it as his view that one of the reasons that the Acts had not come up to the expectations formed in relation to them was owing to the fact that it had been discovered that the banks in this country were not unduly harsh in giving facilities to industrialists here and that consequently there was little or no need for legislation of this kind. I take it that he has modified that view somewhat when he comes forward now to continue the Act for another year after definitely announcing that he would not do so. I would like to know the reasons that induced him to change his mind. Presumably, the Advisory Committee that will consider applications now pending will operate on the same principle as those established heretofore, and that principle, as we found on the results, is practically the same as that which animates a board of bank directors when considering applications for loans from customers. I think that the reason that the Act has proved to be of such little value is that the Advisory Committees did, in fact, come to decisions in the spirit of a board of bank directors, whereas the main reason for their establishment and the reason for the enactment of this legislation was to provide some means by which industrialists, with propositions that were not likely to command the immediate attention of bank directors, would be able to secure capital for the purpose of fixed assets.
Personally, I think that the Minister's interpretation of the attitude of the banks of this country to industrial propositions is wrong. I think that the view which he held as to their attitude when he introduced the first Trade Loans Guarantee Act was the right one. I do not think that the experience of the working of the Act has given him any reason for changing his original view although he himself thinks it has. If the banks in the country are not, to use his own words, unduly restrictive in financing industry, and if the propositions, which it is now proposed to consider under the Acts, are of a sound nature and likely to prove remunerative, then there is no need for the continuing Act, because those interested in those propositions would have no difficulty in getting the accommodation they require from some banking institution here. It is because the Minister knows that such accommodation would not be easily given that he is again proposing to take advantage of the credit of the State to secure for these persons the capital they require. I think, however, in introducing this Bill to continue the existing Act for another period of twelve months, the Minister might have given us a review of the various types of cases that arose under it and the reactions of the Advisory Committee to each type of case.
It is, I think, rather extraordinary that out of 124 applications which were considered by the officials of the Minister's Department to be of such a nature as to merit the establishment of an Advisory Committee to consider them, only 42 actually have received recommendations from one of these committees. There must be available in the Minister's Department some data which would enable him to form general conclusions as to the type of case that secured the recommendation of the Committee and the type of case that was rejected. I think it would be of considerable value to Deputies, and to those outside the House who are interested in the question, if they could be given information as to the type of proposition which was covered by the applications which were not recommended for the receipt of the guarantee by the Advisory Committee.
I would like also if the Minister would inform us as to the four applications which were stated to have received a recommendation from the Advisory Committee and to have been under consideration, presumably by the Minister for Finance, on the 17th of April last. Are these four cases identical with the four which the Minister mentioned now, or do they represent other applications which have been since vetoed by the Minister? I think also he might give us information, if he has it immediately available, as to the five cases which were recommended for the guarantee by Advisory Committees but rejected by the Minister, and why the Minister thought it necessary to reverse the decision of the Advisory Committee that had presumably gone with great care and detail into the merits of the applications. I do not know if it is the view of the Minister that there is any likelihood of a revival of applications under these Acts during the coming year, or whether it is his intention in introducing this continuing Bill merely to provide for the four or five applications that are at the moment in the hands of his Department. Personally, I think that it is no harm to have the machinery established by the Act in existence, even if it is not availed of, in default of some better system. It is not objectionable that the Minister should be empowered to pledge the credit of the State to secure capital for any industry which for some special reason was unable to get the capital in any other way.
The Minister informed us that as the result of the operation of these Acts some 2,000 additional persons secured employment in the Twenty-six Counties. I would like if the Minister could add to that information, information as to the number of hands actually engaged in concerns which received guarantees. In other words we would like to know not merely the number of additional hands who were employed as the result of the operations of the Act, but the number of hands in employment who are retained in employment in consequence of the facilities given by the Act.
I do not know if I would be in order in raising another question on this Act in relation to the Industrial Trust Company of Ireland. The State invested £50,000 in that Company for the purpose of facilitating the working of these Acts. Some months ago I asked the Minister for Finance if the State had received any payment in respect of interest upon that investment during the financial year which concluded in March last. He informed me that no such payment had been received because the Company had changed the date for closing its books from the 31st December to the 31st March. The payment, if any, should therefore have accrued to the Exchequer by this. I would like to be informed what it was and the actual dividend received upon the shares. There has been a considerable number of rumours in circulation relating to the operations of that Company. It is quite obvious from the figures published in relation to its business during the first year of its operations, that the bulk of its profits were not derived from the giving of loans guaranteed by the Minister under this Section. In fact it appears that a considerable portion of its subscribed capital, together with a considerable sum borrowed from the National Land Bank out of money made available by the Minister for Finance, was used for the purposes of speculation on the Stock Exchange in London. That rumour has been freely in circulation and the profits of the Company in the first balance sheet would appear to indicate that it was very successful in these speculations. It is rumoured that it has not been so successful in its second year and that that was one reason why the accounting period was extended—in order to have an additional three months to try to recover losses.
If there is any foundation for the rumours a very serious situation exists, because it is undesirable that State funds should be made available for this purpose. Such funds would appear to be made available not merely directly by the investment of the £50,000 in the Company but indirectly by the loan given to the National Land Bank for the purpose of financing the activities of concerns under these Acts. It would, I think, be in the public interest if the Minister could make a statement on the matter now so that rumours would be either definitely scotched or we would know exactly where we stand.
Mr. Byrne
I think that the House generally will express satisfaction that this Act is not being brought to a final conclusion, as the Minister originally stated when dealing with the Estimates a short time ago. The new applications that have come in are a symptom that the Act may still be of some service to the development of industry here. Perhaps the fact that the Act is about to expire has brought some people to realise that there were some advantages to be obtained for particular industries under the Act. I think that we are all very sorry that this Act has not proved to be the great success which it was originally anticipated it would be. It seems an extraordinary thing to ordinary people that there should be such a large sum of money at the service of Irish industrialists which has never been properly availed of. Even though the Act has not been a complete success, the fact, as the Minister told us, that it found employment for 2,000 extra hands is not a negligible factor, considering the state of unemployment in this country at present. The only thing that I should like to say to the Minister is, that if he finally determines that this Act is not to remain upon the Statute Book after the period mentioned in this Bill, I hope it will be replaced, by that time, with some other method that will provide ways and means for the setting up and development of Irish industries. The Minister has told us, of course, that if anything should arise he would come to the Dáil for long-term loans. But there is not much inducement for industrialists to come to the Dáil on conditions such as these. In speaking on the Estimates, I suggested to the Minister the consideration of certain methods that were adopted by other countries for the development of industries with very great success, and I hope that in the time that will elapse between the passing of this Bill and its expiration the Minister will be able to give consideration to the particular ways and means which have proved a success elsewhere and see if it is not possible to adopt them with equal success here.
Any other Deputy than Deputy Lemass might have spoken in the terms which he used regarding either the method of procedure under this type of legislation or the mentality of the Ministers or the Committee who advised them, but he had the advantage during the sittings of the Economic Committee of listening to the history of the cases that had been given a guarantee of money by the Advisory Committee or, at a later stage, by the two Ministers concerned. I am not going to go into that further, except to say that I am going to hold what the Deputy has said in storage for him against the time when I may be coming with certain of these Trade Loans cases to this House and asking that some further help should be given, or that certain other action should be taken with regard to them. I still remain of the opinion that I expressed on the last day about the banks. It could not possibly be shaken by such a statement as that made by Deputy Lemass, that he thinks that my interpretation of the banks' attitude is wrong, notwithstanding that I have the information to go on, and that the Deputy obviously has not, arising out of all the cases which were put up to the Advisory Committee and were refused by them, and the knowledge we had as to how many previous applications to the banks had either been refused or sympathetically treated by them. The Deputy believed that the main reason that the Act has proved to be of little value is that the Advisory Committee deals with the applications in the spirit of a board of directors. If he means that they deal with applications in the spirit in which he imagines boards of directors of Irish banks deal with applications, then he is entirely wrong. If he means that they deal with them as any body of directors, thinking about the expenditure of other people's money, weighing the chances, and taking the chances which they have to, in the recommendations that they put up to Ministers behind them, and who accept full responsibility for what the Committee does, he is wrong in both statements. They do not deal with them in the spirit of directors, as he interprets the word "directors," because directors have not people to fall back upon to take the responsibility off their shoulders. I am not blaming the Advisory Committee in saying that. They are only set up for the purposes of making recommendations. The responsibility has to be shared equally between the Minister for Finance and myself.
As to the type of cases rejected, I have not an analysis here at the moment. I had a very complete analysis prepared at one time when the matter seemed to be relevant, but I have not it here at the moment. I can say, however, that, leaving out the working capital cases, the outstanding examples of rejection were based mainly upon the previous history of the applicant. One might say that in nearly every case, outside the working capital cases, the main reason for rejection was the fact that the applicants did not commend themselves to the Advisory Committee as being people likely to run a successful business. The conclusion to be drawn from the whole thing is, what I have often stated here, that industries are not going to be started by merely scattering money around or providing money. One has to wait until some sort of industrial tradition, one might almost say, grows up, certainly until a little more industrial enterprise appears in the country. Industries do not crop up by having money lavishly flowing round and hoping that people who have been in business before will be successful at a second attempt.
The list quoted by the Deputy is an old list. The list I have before me up to the 1st July of this year shows that three applications recommended by the Advisory Committee and approved by the two Ministers are awaiting the completion of legal formalities. Some cases were passed by the Advisory Committee, but did not pass one or other of the Ministers. I have four cases where recommendations have been made by the Advisory Committee, but the recommendations were not accepted by myself. I do not want to identify these cases, but I can say that, very often, the Advisory Committee sends me up applications which are provisional, or which, at any rate, are founded upon something being done, and when I approach the applicant company or individual to see if they will accept what, for my safeguarding, the Committee recommends to be put in, they refuse to accept it, and the matter lies there. That certainly is the case with at least one of the four. In another case, the application was founded, and was passed by the Advisory Committee because it was so founded, on a special piece of business which seemed likely to accrue to a particular firm. The season for that particular piece of business passed, and the firm's ordinary business would not have stood the imposition of further capital liabilities upon it, and there was no chance of our recovering the money, and it would only have driven the firm deeper into the mire. The other two were for small amounts, and the reason for their being held up does not immediately present itself to my mind.
The two thousand extra hands would cover most of the people employed. In eighteen cases guarantees were given, and in one of these the loan was repaid, and I am not counting it at the moment in the tot of people employed. Of the other seventeen it can be said that eleven or twelve were either places that had closed down completely and were reopened, and, therefore, the full tot of employees comes under the heading of extra hands employed, or else had got to the point where they were closed down and were only holding a few men to keep the machinery and plant going. In three or four cases there was experimental work going on. It looked as if there was danger ahead to the firms, but the situation was righted by the guarantee. Of the two cases that were prominently before the public, Alesbury Bros. would be one where employment was still going on and the people were retained. The case of the Irish Glass Bottle Company was complicated by the fact that there were previously two or three firms engaged, and all but one closed down as there was an amalgamation of work. I cannot give a statement as to the number of people kept in employment, as well as those counted as extra hands.
I do not intend to make any comment about the Irish Investing Corporation at present, as it is not relevant to this Bill. I am not dealing with that, and I do not intend to say anything about it. I am merely asking for the passage of this Bill, not because I have changed my mind about the banks, and because I think there are four cases which the banks, being more harshly disposed than I have previously thought they would be, would not finance and that then I am coming in. I did say on the Estimate that, in the main, the cases financed were cases a bank would be ready to finance, and the cases which a bank would turn down were, in the main, cases which my Committee would turn down. There are exceptions. Notably, I should say the Alesbury Brothers case was a very definite exception. Although I believe, from my knowledge of the first three cases to which I referred, that the banks would have come in in two at any rate, and would have come in, to a certain extent, in the Limerick Harbour Commissioners' case; nevertheless, I think, just because of there being a little added difficulty which a bank might not face, and will face once there is a Government guarantee, it is well to have this Act. The applications that I speak of as showing signs of revival may not come to anything, but, as long as they are there, I would not care to have them lapse, simply because there is no legislation to deal with them, and no money to apply to them. Inasmuch as the Dáil, year after year, voted this sum of round about one million and made it available for this purpose, I think the Dáil is not being asked to do very much in passing this Bill.