Dáil Éireann debate -
Thursday, 17 May 1934

Vol. 52 No. 9

Resolution No. 24—General (Resumed).

Debate resumed on Resolution No. 24:—

That it is expedient to amend the law relating to Customs and Inland Revenue (including Excise) and to make further provision in connection with finance.

Minister for Finance (Mr. MacEntee)

In speaking last night, and following Deputy McGilligan, I am afraid that I omitted to deal with a number of points of substance which were made by other speakers in the course of the debate. I propose, therefore, for the moment to leave Deputy McGilligan to one side and take up some points that were made by these others. I think that any one who has listened to this debate will agree with me when I say that from a critical point of view the best speech which was made in the course of it was made by a Deputy on the Government Benches. I refer to the speech which was made by Deputy Séamus Moore, who showed that he had, at any rate, studied the Budget: that he had studied it from the point of view of a person who was concerned about the national finances and so did not wish to make Party capital out of the result of his investigations either on one side or the other. His speech was in striking contrast to most of the other speeches made in the course of this debate which, according to Deputy McGilligan, were characterised by an absolute avoidance of ordinary facts in the discussion of this Budget, were far removed from reality, or any sort of appreciation of business methods in their application to the finances of the State. Deputy Moore's speech was not characterised by that absolute avoidance of ordinary facts, or by that want of appreciation of business finances of the State. On the contrary, it indicated that he had an acute appreciation of sound principles of public finance when he asked whether we were justified in borrowing to meet the cost of the bounties and subsidies because he assumed that if these were to be an annual item in our Budgets, then they would have to be met out of ordinary taxation. Well, we hope that these are not going to be a recurring item in our annual expenditure. "We hope," as Deputy McGilligan said, "that there will be a realisation on the part of our friends on the other side of the water that our relation to them is not merely one of geographical proximity, but that it is also one of great strategic importance to them in time of war."

The House will recollect that last night Deputy McGilligan said that

"We have our geographical position to bargain. That is not merely an asset, but it was recognised as an asset by the British Government. It will continue to be recognised as an asset by them so long as they are in the position in which they are now in the event of war. Would all the meat that Australia, Canada and New Zealand could have sent across the ocean in the days of the Great War have meant anything to Great Britain?"

We hope that the force of that statement will be appreciated not merely here in the Twenty-six Counties but elsewhere, and that the answer which will occur to the minds of all reasonable men both here and elsewhere is this: that if by restricting our imports certain people choose to strangle our cattle trade, then in times of national emergency they are going to suffer very much more than we are in consequence. I hope also there will be on the other side of the water a realisation —once more putting it in the words of Deputy McGilligan—that in a test as between ourselves, New Zealand, Canada or Australia we have many things to offer Britain in the way of trade relationship that none of those other countries can offer and that it will be seen, once more in the words of Deputy McGilligan, that these two facts are appreciated by the British themselves and that they will manifest that appreciation in a practical manner.

Therefore, because of these two facts: because we have trade advantages to offer Great Britain that other Dominions have not: because we can be of material assistance to them in times of national crises it would be from the point of view of their national security an unpardonable mistake, a mistake the consequences of which would be heavily visited upon their people, to strangle our cattle trade and to cripple our agricultural industry. We hope that through the ultimate realisation of these important facts by all parties concerned with them it will not be necessary for us to continue these export bounties and subsidies indefinitely. By a realisation of these facts, by taking the practical view of them, I am certain that in course of time—it may be sooner or later, but eventually and inevitably-a settlement of the present differences between the two countries will be arranged.

Deputy Moore also asked what was the position of the Deferred Annuities Fund and did it actually exist as a separate fund. My reply to that is that it has no separate existence as a fund but that the assets, in fact, do exist. The arrears of annuities which were not collected in the later part of 1932 or the whole of 1933, have been funded at the request of those from whom they were collectible and are now being repaid by those by whom they were originally due in a compounded annuity payable over a series of years. These annuities have become an Exchequer asset and we would be quite justified, should it be necessary to do so, to borrow against the asset which has thus been created. It has not been necessary so far to raise any money against that security. In fact, in the course of any negotiations which we have had in relation to Government borrowing, the question of offering it as Government security has never arisen and I have merely set it out in the Budget statement to show that when we do borrow to meet the cost of the export bounties and subsidies, we have already created, against that loan, an asset which in course of time will enable us, apart altogether from the ordinary sources of taxation, to repay whatever we may have to borrow now.

Then, Deputy Moore raised a point as to whether it was necessary to issue the Fourth National Loan or not in view of the fact that we had at 31st March last over £5,330,000 in the Exchequer. If the Deputy will consider the additional services which are envisaged this year, I think that he will satisfy himself that it was, if not essential, at any rate desirable, before undertaking these commitments that we should see our way quite clearly in the matter and be satisfied that we should have in our hands the finances which would enable us to carry them through. When the Loan was arranged last year preliminary estimates for the Local Loans Fund had come in. Final arrangements were being made to repay the Dáil Eireann External Loan. We knew we had commitments in regard to the sugar beet factory. We knew that an issue of debenture stock was contemplated by the directors of that concern. We knew that further moneys would possibly be required by the Industrial Credit Corporation. We also knew at that time that the obligations which fall on the Exchequer particularly about Christmas time would have to be met, and accordingly we had to choose as to whether we were going to raise the necessary money by means of an issue of short-term bills or whether we were going to issue a long-term loan. In every concern, whether it be a State enterprise or a private business, it is undesirable to enter into short-term commitments of considerable magnitude unless it is certain that one will be able to redeem those commitments once and for all and will not have to renew them as continuing commitments for an indefinite period.

We could have quite easily arranged the finances for the last year by the issue of Exchequer bills which would have enabled us to discharge the Exchequer obligations round about the end of the year, but it would have meant that we should have had to carry them on into this year and, when we came to face the Dáil here to point out that we were going to have to raise £4,200,000 for the Local Loans Fund and the moneys for the other services to which I have referred in the Budget statement, we would be obliged to say that we had not those moneys then at our disposal, but should have to go to the money market for them. I think it was a prudent thing, therefore, to float the Loan. Furthermore, most of these potential commitments would be long-term commitments. In connection with the Local Loans Fund, I think that the period of advancement is 25 years. The Dáil Eireann External Loan is paid once and for all. We shall never recover any part of the £1,000,000 which will be expended upon it, and the export bounties and subsidies will be given once and for all also. There was no possibility that any one of these commitments would liquidate itself within the ensuing 12 months. Accordingly, as they were all long-term commitments, the proper thing to do was to provide for these payments by long-term borrowing. Therefore, if we had to go to the money market here in Dublin for that money it was essential that we should go on the basis of a long-term loan.

The Deputy also raised a question with regard to the funds which we have invested in respect to the Savings Certificates Interest Equalisation Fund and the money which we have in the National Loan Sinking Fund and he asked us would it not be possible to utilise those for the constructive purposes to which the Fourth Loan is to be applied. The answer to that is that Savings Certificates constitute an obligation which is liable to be paid on demand. Any person who has a Savings Certificates can go into a Post Office and cash it there and receive both the principal and some portion of the accrued interest. I think it would be a very shady practice-at the very best, it would be a misleading practice-if we were to say that we have provided £1,600,000 for the Savings Certificates Interest Equalisation Fund and then invest it in long-term securities. That money is only invested, as far as it possibly can be, in short-term securities, or in securities which can be realised without depressing the market to any undue extent. It is not easy to find such securities here; in fact, it is very difficult. It is one of the problems which have always confronted those who are charged with the management of funds in this country. At any rate, it is an essential requirement that, if funds of this sort are to be invested, they can be quite easily realised, in case those who have invested in securities such as Savings Certificates want suddenly to realise their money and so that the Exchequer will be able to meet all its obligations in regard to them, as far as they are foreseeable, on demand. Accordingly, we should not be justified in investing the great bulk of the Savings Certificates Interest Equalisation Fund in either the Third or Fourth National Loans.

Mr. MacDermot

Has the Minister got the total amount of Savings Certificates outstanding?

Mr. MacEntee

I was going to deal with the point the Deputy raised. The total amount, with accrued interest, is £9,598,000. That can be offset to the extent of £1,800,000. Deputy Moore pointed to the fact that we had over £890,000 of the National Loan Sinking Fund unapplied and asked if we were not going to use the Sinking Fund to finance outstanding commitments. It is one of the conditions of the issues of National Loan that the Sinking Fund be applied to the purchase of the actual stock in respect of which the Sinking Fund has accrued. It is a testimony to the standard of credit of the Government that it is exceedingly difficult for us to purchase a sufficient amount of that stock in the open market to fulfil our Sinking Fund requirements. On that account, the amount of the Sinking Fund unapplied has increased from year to year. I may say that that has been particularly noticeable since we came into office. These, I think, were the three principal points raised by Deputy Moore. The mere fact that he did raise them indicates that he, at any rate, has not approached the discussion of this Budget with any lack of appreciation of business methods in their application to the finances of the State.

I am sorry I cannot say the same of the other Deputies who participated in the debate. I think, in fact, that only two speeches from the Opposition require serious attention-the speech of the Parliamentary Leader of the Opposition, Deputy Cosgrave, and the speech of Deputy MacDermot. I propose to deal with a few of the points which they raised. Deputy Cosgrave said there was increased taxation this year of £100,000. Of course, he said, the sum of £400,000 was ascribable to the customs duties on foreign-manufactured sugar which was imposed in February of this year. That is the sort of assertion in substantiation of which I should like to have some facts adduced. If Deputy Cosgrave had taken the trouble to refer to the White Paper he would have seen that so far from the receipts from customs and excise, in which, of course, sugar duties are included, being estimated at £400.000 more this year than they yielded last year, on balance there is a decrease of £450,000—a decrease of £733,000 in the customs side and an increase of £270,000 odd budgeted for on the excise side, due to the fact that next year, when the Carlow sugar concern is working, the burden of taxation which was formerly borne by all imported sugar will be transferred, to a large extent, to the native product, and any increase in sugar price will be attributable, not to expenditure upon the ordinary services of the State, but to the provision for the farmers, who grow the beet, of a reasonable price for their product, and in providing farmers' sons and other workers in country towns— Carlow, Thurles, Mallow and Tuam —with the wages that were formerly paid to foreign firms who made the sugar which was consumed here. I anticipate that, when the year closes, it will be found that the total yield from sugar in customs and excise duties will not greatly exceed the total yield which we got from sugar last year. There is no substance in the statement made by Deputy Cosgrave that, on the whole, we are taking an extra £400,000 out of sugar this year.

Deputy Cosgrave challenged the allowance I had made for over-estimation. He started out by eliminating from the calculation those items for which we had borrowed, and for which we propose to borrow, and also by eliminating the new items, and came to the conclusion that it would be necessary to apply the figure 5.7 per cent. to obtain the amount we allowed for over-estimation on Supply Services next year. He wished the House to conclude from that that our allowance was, in fact, excessive. As to the first point, I should like to remind the Deputy, if he were here, that it was the invariable practice of his Government, and of Mr. Blythe when he was Minister for Finance, to calculate the allowance for over-estimation upon the same basis—the Supply Estimates included in the volume of Estimates—and that we have merely proceeded on the same basis, and have taken the figure, 4 per cent.

The question arises whether experience would indicate that, in taking the figure in that way, we are making an excessive allowance for over-estimation. I have had the actual figures got out for me, and I find that while, in most years, the actual percentage saving, due to over-estimation, was of the order of six, in only one case in ten years did it fall below five, and that was an exceptional year. So that in taking the figure 4 per cent. for over-estimation, I am working upon a conservative basis. There is no reason, therefore, to believe—and I presume this is the point Deputy Cosgrave really wished to make-that the budgetary position is in any way unsound because I have taken the figure 4 per cent. for over-estimation. As I pointed out, I have a considerable margin in that figure, a margin from past experience of about 20 per cent.

The Deputy questioned the propriety of raising, by borrowing, £1,500,000 for the payment of export bounties and subsidies. He also referred to the figure £300,000 which we propose to raise in order to make advances to the Guarantee Fund. As to the £300,000, I should like to point out that the actual amount of the funded annuities against which this advance has been made, is about £500,000 or £550,000. It is very difficult to calculate the amount exactly because of the overlapping between one year and another which took place over a period of ten years. The sum is between £500,000 and £550,000, and we are taking £300,000 of that this year. It is not being given as a free grant. It is an advance to the Guarantee Fund and it will be paid out of the Guarantee Fund to the county councils in anticipation of the collection of those arrears which, undoubtedly, will be collected in the course of time. It will enable the Guarantee Fund to refund to the county councils the sum of £300,000, withheld from them, which sum would, in the normal course, not have been available to them from the operation of the Guarantee Fund this year, owing largely, as I pointed out, to the failure of a comparatively small, but well organised, section of tenant purchasers to meet their obligations to the Land Commission in respect of the lands which they have purchased from the State. This advance to the Guarantee Fund will, we believe, be repaid in time because one thing is certain—that the great mass of honest people in this country are not going to permit any man to remain in possession of the lands of this country unless he discharges his obligations to the people of this country. Those who are taking up the attitude of refusing to pay their annuities must also contemplate that, if they maintain that attitude over a period, the time will come when they will be asked not to pay their annuities but to give up their lands. As we hold the security of the land of this country for that advance, I think that we are quite entitled to borrow against it.

The other aspect of the borrowing which Deputy Cosgrave questioned was the raising of the £1,500,000 for payment of the export bounties and subsidies. He said that we had against that an asset which he valued at £2,500,000. In fact, the total amount of the funded arrears in respect of the last half of 1932 and the whole of 1933 is £4,445,000. On the principle that the £300,000 we are advancing to the Guarantee Fund will be ultimately repaid, there is no doubt whatsoever that, over a period of 30 or 40 years, the whole of that sum of £4,445,000 will be repaid to the Exchequer. It is a good asset, and I think we are justified, on the soundest principles of public finances, in raising, if necessary, £1,500,000 against it. The Deputy questioned the propriety of including the sum of £1,511,000 in respect of the Road Fund in the statement of our assets. His words were: "These advances do not appear to me to be a justifiable asset." That is rather an extraordinary statement from a Deputy who was once head of the Administration here and who stood in this House and, every year from 1928 to 1931 defended Budgets in which the advances to the Road Fund were presented as an asset of the State which could be set off against the outstanding National Debt. I do not consider that that practice was unsound. Every year we are collecting in respect of the Road Fund a considerable sum in motor licence duties. It does not follow that we are bound to apply that money solely to the upkeep of the roads. Elsewhere it has long been regarded as an anomaly that taxation which, in most cases, is levied upon a luxury service should be earmarked for expenditure upon roads. In the early days, when the roads of the State were not adapted to motor traffic, it was, I admit, quite justifiable and wise to earmark the duties which were collected in this way for that particular purpose. If the proceeds of the motor duties were, over a period of years, to be much in excess of the sum required for the proper upkeep of the roads, I should not accept the principle that road licence duties should, therefore, be reduced and that the ordinary taxpayer should not reap some benefit from the collection of those duties and from the growth of motor transport generally. Apart altogether from that, any moneys expended from the Road Fund up to the present have been expended entirely upon maintenance and improvement of roads. Therefore, these advances are a proper charge upon the Road Fund and, if the general account of the Exchequer has had to make advances to the Road Fund to carry out these works, the Exchequer is quite entitled to regard those advances as a sound and secure asset, the value of which will ultimately be realised to the full. That was the attitude our predecessors took up with regard to advances to the Road Fund and I am following that practice.

Deputy Cosgrave also alleged that there was a mistake in relation to the tea duty on page five of the Budget statement. If the Deputy will take the trouble to read my speech again, he will find that I was dealing there with the yield from the customs duties generally. If he will compare the figures which will be published in the Finance Accounts in due course with the statement which I made on the Budget he will see that what I have already stated in that regard is quite true; that there was an increase in the yield from customs duties or that it exceeded the Estimate by £77,000 and that it was £126,000 more than last year. I do think that the Deputy has taken the yield for customs and excise and presented those figures. If he reads my speech again he will see that I was referring to the yield from customs duties alone.

Deputy MacDermot raised a couple of points in relation to the position of the Savings Certificates and the Post Office Savings Bank. I have already pointed out in my Budget statement that we have made full provision to cover the interest which has accrued to date on the Savings Certificates issued. It is not the practice anywhere to set up a sinking fund in respect of Savings Certificates. These certificates are a much more liquid form of investment than any that I know of. As I say, they are payable on demand. The practice is to allow the certificates to be self-liquidated and that the redemption of outstanding certificates is, in general, made out of the proceeds of the issue of certificates which are current at the time. I am not sure that in certain eventualities that is not a very dangerous practice. It could become a very dangerous practice if, offering an unduly generous rate of interest on the Savings Certificates, the amount in issue was becoming so high that a very large uncovered position would be built up which would become top heavy and which, in times of public uneasiness, might lead to a financial crisis if people rushed in and presented their Savings Certificates for simultaneous redemption.

We have endeavoured to meet that position by reducing the rate of interest which hitherto was allowed on those Saving Certificates so as to slow down subscriptions to them just to that amount which will enable us to balance the repayment of certificates with fresh issues and to keep the total amount of issue of Savings Certificates around the neighbourhood of £10,000,000. I do not think it is necessary to go any further than that. I do feel, as was pointed out before when this matter was under investigation by the Public Accounts Committee, that we were paying far too high a price for the money which we were getting on these Savings Certificates. We have now reduced the interest payable on those to a figure comparable to that which the British authorities are giving in respect of the Savings Certificates issued by them. I am satisfied that the present position in regard to Savings Certificates is such that we could handle it without any great difficulty and that we have sufficient liquid resources to meet not merely the demand for the £10,000,000 but for a much greater sum if such demand happened to be made upon us. Accordingly, following the general practice not to create a specific sinking fund for Savings Certificates, and as we are in a position to meet any demand which could be made upon us at any time up to the maximum amount of the certificates issued, I do not think it necessary to do anything more.

On the question of the position of the Post Office Savings Bank, to which Deputy MacDermot also referred—I am at particular pains to give the information I am giving in respect of these matters in view of the speeches which have been made, not by the Deputy but by certain members of the organisation to which the Deputy belongs, and notably by the leader of that organisation who quite recently has been doing everything he possibly could to destroy the credit of the State and to create public uneasiness as to the way the resources of the State have been managed by us.

In regard to the position of the Post Office Savings Bank the last figures I have were those for the 31st December, 1932. The last account was presented to the Oireachtas on 11th August, 1933. At that date the balance due to the depositors, including accrued interest, was £4,171,000. The total amount of the securities held by the Post Office Savings Bank authorities against that figure was £4,913,200. Of these securities the sum of £841,542 were advances on the securities of the annuities to be provided by the annual Vote of the Oireachtas. The rest consists of £944,000 in cash and the balance in securities mainly of this type:-5 per cent. Second NAtional Loan; 4½ per cent. Third National Loan; 5 per cent. Compensation Bonds; 4½ per cent. Land Bonds; 3½ per cent. War Stock; 5 per cent. Treasury Bonds; 4 per cent. Funding Stock; 4 per cent. Consolidated Stock; 4½ per cent. Conversion Stock and 3½ per cent. Conversion Stock. There was a very insignificant holding of £20,000 in Guaranteed 3 per cent. Stock. The investments in the Second and Third National Loan were comparatively small; they did not amount to more than £250,000. So that the total of the assets, amounting to £4,913,000, held by the Post Office Savings Bank, with the exception of the annuities, is held in the most liquid form. There would not be the slightest difficulty in realising any of them at their full face value. For that reason the Post Office Savings Bank is in a particularly liquid position.

The Deputy, in a general criticism of the Budget, stated that he regarded the Budget as being fundamentally unsound because of its magnitude and he went on to point out the criticisms which, I think 25 years ago or so, were advanced by leading public men in Ireland with regard to the Budgets introduced by the British Chancellor of the Exchequer. It is quite true that budgeting for a large amount may be a great calamity. It is quite true that such a Budget may be eventually unsound, even though it may be made to balance. It will depend, however, upon the purpose to which the moneys that are being raised under it are to be applied. But the days when the mere magnitude of the Budget could be cited as an objection and as a proof of the unsoundness of the financial position have long gone, because when Gladstone and his contemporaries were laying down mid-Victorian principles of finance the element of social service was almost wholly absent from the Budget. The sums which were being taken from the taxpayer then were being expended mainly in maintaining armies and navies, diplomatic services and the paraphernalia of courts and royalty. It was largely exhaustive expenditure, expenditure which, in many cases, never yielded any return to the Exchequer, expenditure for purposes which created a further burden on the Exchequer, such as the building of warships, with the consequent imposition of a secondary burden on the taxpayer for their munitionment.

These were the things which represented the greater portion of budgetary expenditure in the old days. But the whole position has been changed. Expenditure now on public services is no longer mainly exhaustive, as it used to be. It is mainly transfer expenditure at the present moment, expenditure upon social services, upon the payment of old age pensions, upon the provision of maintenance and assistance for the unemployed, upon the provision of public works, upon the encouragement of housing and upon one hundred and one things which represent the transfer of unused purchasing power in the great majority of cases to individuals who will be in a position to use that purchasing power, first of all, to maintain life in themselves and to create a demand for goods and services from other people. It is not, therefore, as I have often said, the size of the Budget that should be called in question, but the purpose to which the expenditure which the Budget contemplates is going to be applied.

Mr. MacDermot

If I may interrupt. I wonder if the Minister realises that the principles which he is now laying down would have justified to the full the Labour Budgets in 1930 and 1931 in England which nearly brought England to bankruptcy? Might I also ask him whether he bears in mind the statement made by his own leader, President de Valera, in 1929, when he said that social services could reach a figure and, he believed, had reached a figure in this State, where they did damage to the community instead of giving advantage to it?

Mr. MacEntee

I do not think the Deputy is going to ask me to accept as correct his statement that the Labour Budgets of 1930 and 1931 were responsible for the position in Great Britain. On the contrary, what was mainly responsible for the position in Great Britain was the unwise speculation in Great Britain on the part of the British inhabitants, in the first instance, and in America largely also on the part of the British citizens, in the second instance. Those two factors contributed to build up a speculative condition in the United States which had its repercussion in Great Britain in 1930 and 1931. The budgetary difficulties in Great Britain then were not primarily due to a failure to maintain speculative incomes there.

Mr. MacDermot

I may say I utterly disagree with the Minister's analysis.

Mr. MacEntee

It might have been quite true to say that in 1929 if we were to continue to make the payments to Great Britain which were a feature of the Budgets of that, the preceding and succeeding years, if we were to continue to take out of this country £5,000,000 a year and send it over to Great Britain and get nothing in return for it, if 25 per cent. of our budgetary expenditure was to be of an exhaustive nature as that £5,000,000 was, then it is quite true, I believe, that the limit of our expenditure upon social services had been reached.

Mr. MacDermot

That is not what the President said. That is what the Minister wishes he had said.

Mr. Corry

The Deputy ought to stand as a Labour candidate.

Mr. MacEntee

But if, as has since been demonstrated, that exhaustive expenditure were to cease and, instead, the money were to be spent in providing additional social services in this country, then the community as a whole would benefit from it, as the experience of last year showed, when every possible tax showed a yield in excess of the Estimate and, in most cases, in excess of the yield secured in 1931-32. That brings me to a criticism made by Deputy O'Sullivan, that we had underestimated the yield from Customs duties. It is quite true that we had, because we were unable to gauge the limits to which people in this country would go in order to be able to say to their neighbours that the clothes or the boots which they wore were made in Paris or London. And while it is quite true that the duties on wearing apparel exceeded the Estimate by £330,000, and the duties on boots exceeded the Estimate by £150,000, that is due mainly to the fact that people who can afford to pay for their clothes are prepared to pay almost twice as much as they are worth in order to be able to say that they were made in some place other than in this country. While as a moralist one may bewail the fact that people should be so vain, nevertheless, as Minister for Finance, whenever I see a lady wearing a gown that cost her twice as much as it ought to have, because she would not have her clothes made here, I always console myself with the knowledge that she is keeping an old age pensioner for 13, 14 or 15 weeks of the year, and that other people, who are prepared to wear Irish clothes and Irish boots and shoes, are in consequence relieved of the burden.

One of the points that has been made most frequently, made by Deputy MacDermot, I think, amongst others, was that this Government should not assume to itself all the credit for the strong, financial position of the country. In my speech on the Budget last year, as well as in my speech on the Budget for this year, I made it quite clear that we claimed no credit for that. I pointed out that the fact that this country was financially and economically as strong as it has shown itself to be was almost as great a surprise to us as to other observers. Deputy MacDermot went on to say that this strength was largely due to the operation of land purchase in this country and that when we regarded the British National Debt we ought to remember that certain assets were created by that debt and that we were enjoying the benefit and advantages of it.

One thing that strikes me about Deputy MacDermot's speeches is that always in them, here and there, there seems to be a hiatus in his knowledge of the events which took place here over the last 20 or 30 years. He knows all about land purchase, but he does not seem to know anything about the Great War. We are told that we are now enjoying in the British market for Irish produce a lower price relatively speaking than the Irish farmer ever enjoyed before-that is a much lower price than the world price. If the Deputy were in Ireland during the period from 1914 to 1920, he would remember that all farm prices in this country were strictly controlled and, if he were to compare the prices which were paid at that time in Great Britain for Irish butter and eggs, for Irish bacon and Irish cattle, with the prices that were being paid for Danish produce, for instance, he would have seen that we were not getting one-third of the world prices. He would see that if the British financed land purchase-and they had to do it in order to compensate the people whom they had planted on the land——

Mr. Donnelly

Hear, hear!

Mr. MacEntee

——and who had constituted themselves the British garrison in this country for generations-they had to do it out of loyalty to them and not out of affection for the common Irish-if they did that they would have recouped themselves to the full during the World War years here. If it took £112,000,000 to complete land purchase in this country, they secured that in one year by compelling our farmers to grow the produce and to sell it at the price they fixed themselves, which was at least one-third of the world price at that period.

We are told that this is a debt of honour. That is one thing, at least, that we can set off against it, even assuming-which we do not-that there is any legal or moral foundation for the British claim. The fact that they compelled our farmers during the World War years to sell at the prices they fixed, when they held control of the land of this country, is sufficient to wipe out any claim they could otherwise sustain against us for land purchase. When Deputy McGilligan is telling us about the prices we might secure in the British market if only they were now able to enforce their will upon us he should remember the moral of the War years. At that time, because we were tied to them, for the reason that those who led us at the time took up exactly the same attitude towards Great Britain as Deputy MacDermot and his colleagues are taking up to-day, they were able to fix the price, and not we. Once we allow them to feel that the British market is so essential that we cannot do without it and that we are not prepared to make such sacrifices as may be necessary to secure our economic freedom-for that is what is at stake in this-they will be able to regard us as serfs willing to work for the wages they fix.

We were told by Deputy McGilligan and the others about this great British market. We were told that, because of our geographical position, that market is open to us—if only we will say the word and be loyal members of the Commonwealth and forget all about the political aspirations of our own people and make up our minds to fall in with the other States which, at Ottawa, signed certain agreements. How are the States which went to Ottawa, which had no quarrel with Great Britain upon political issues-how are they feeling about the matter to-day? I have a copy here of the Manchester Guardian of to-day's date. On the principal news page there is an article with this heading: “New Zealand Under the Quota.” I shall read a few extracts from this article to the House. The despatch is from Wellington, New Zealand, and dated April. It runs as follows:—

"People in England can scarcely realise the change in the outlook in New Zealand which has followed the growing conviction that within less than 18 months the market for the Dominion's cheif export, dairy produce, must undergo, if Britain means business with the quota, a serious restriction."

Then, the correspondent, referring to the fact that from the New Zealander's point of view England should be a much richer country, agriculturally, than New Zealand, and that, therefore, there is ample scope for the development of agriculture in Great Britain, goes on to say:—

"But what is to become of New Zealand under the quota? That is what is exercising people's minds now. Every other issue in politics is eclipsed by this new portent."

That is to say, by the fact that New Zealand is going to be shut out of the British market. The article continues:—

"Comical, if it were not so tragic, would be the spectacle of leading politicians and prominent personages rushing about wringing their hands in despair..."

So that they have their Deputy Beltons in New Zealand also.

"...ready to sacrifice the secondary industries built up by years of high protection and give Britain Free Trade or anything, if only this frightful quota is dropped."

The article goes on to say lower down:—

"As it is, there is a respite till the summer of 1935... New Zealand has so long to put her house in order and adjust her rural economy to the limitation of her only important market, for practically 90 per cent. of the Dominion's exports go to Britain. How is it to be done?"

Then, listen to the plight of the New Zealand dairy farmer in face of the possible quota restriction:

"How is this to be done? From the authorities so far there is no sign of a plan. The recent dairy conference produced nothing for publication except talk of a subsidy to the industry-£2,000,000 was suggested-to bring prices up to a paying figure. Not even the present Government would dare to add that burden on the taxpayer to the bounty the farmers are getting through the arbitrary fixation of exchange at £125 to £100 sterling."

Mr. Belton

So there is no room for Deputy MacEntees in New Zealand.

Mr. MacEntee

Well, at any rate, there is one thing certain, that there is no prospect for a Butter (Prices Stabilisation) Bill in New Zealand, or of getting £1,100,000 out of the consumer for unemployment assistance, or of £2,250,000 for export bounties and subsidies, or of £470,000 of increased relief of the rates on agricultural land, but there is this fact staring the New Zealander straight in British market is going to be closed to him just as it is closed to us, and there is this further fact on the face been said so often in this House is being realised by every intelligent man in the Commonwealth, that there is no longer going to be free import into Great Britain for any sort of agricultural produce as long as the British farm lands themselves remain undeveloped, that there has been a complete change in the attitude of the British Government towards the British agricultural producer, and that every other Dominion, whether as loyal as New Zealand or whether Canada, Australia or South Africa or ourselves, if we are still in the Commonwealth, will have to reorganise its agriculture to meet the changed conditions. The only difference between them and us is that while they have not started to do it, we began to do it two years ago and we are now nearly at the end of our job.

Mr. Belton

Near the end of our agriculture.

Mr. MacDermot

The Minister is forgetting that, at the beginning of his own speech, he took pains to point out that Ireland was in a special position and that we had bargaining assets that no other Dominion had.

Mr. S. Brady

Who is making the speech?

Mr. MacEntee

Precisely, and I hope that other people as well as ourselves will awaken to that fact, because in the realisation of that fact, the ultimate hope of a settlement of this dispute lies, and not in soft talk or in protesting our loyalty, or pretending to be anything other than what we are -a people who wish to be completely free.

Mr. MacDermot

We are completely free.

Mr. MacEntee

Unfortunately, that was not the attitude taken up by other people. The one thing that made it impossible to discuss this issue on a business basis from the very beginning was the attempt to bring into it political considerations which did not belong to it, and it is only when those are put altogether to one side that there will be any hope of a settlement of the difference between ourselves and our neighbours, a settlement which I devoutly hope, and, I am sure, every good Irishman hopes to see, both for their sake and for ours. There is no reason why the two peoples should not live in the most friendly and amicable relations.

Mr. Belton

Does the Minister not recognise that, so far as England is concerned, the matter is settled? She is getting her money.

Mr. MacEntee

She is not getting her money.

Mr. Belton

She is getting her money. Will the Minister contradict the statement of the British Chancellor——

Mr. MacEntee

Certainly.

Mr. Belton

——that he had got £4,500,000?

Mr. MacEntee

The one thing the British Chancellor did not say was that we were paying the entire tax. That is what the Deputy says.

Mr. Belton

He said that they got £4,552,000. Will the Minister contradict that?

Mr. MacEntee

And the Deputy's colleagues get up here and say, every time we put on an import duty, that it is the consumer pays for it.

Mr. Fitzgerald

Hear, hear!

Mr. MacEntee

And that every time the British put on an import duty it is the producer pays for it.

Mr. Fitzgerald

Hear, hear!

Mr. Belton

Will the Minister——

An Ceann Comhairle

The Minister is in possession.

Mr. Belton

He was cornered on an awkward point. We will let him go on.

Mr. Corry

The Deputy is well cornered.

Mr. MacEntee

He is always turning them, anyhow. There is just one other point I wish to refer to before I conclude and that is the matter of the statements which were made by Deputy McGilligan in regard to the success of certain loans and what he said was the comparative failure of others. He pointed with a great deal of pride to the excellent record of certain Commonwealth States in regard to recent public issues and he asked us how it was that we did not do as well as they did. I say that in those States, at any rate, the Opposition Party had responsible statesmen at the head of its affairs. I said, in the course of my Budget speech, that the Fourth National Loan was issued in somewhat unpropitious circumstances, and that has been applied to the correspondence which took place between the President of the Executive Council and the British Secretary for the Dominions at that time.

Mr. Fitzgerald

Hear, hear!

Mr. MacEntee

That is not what was in my mind. What was in my mind was this type of statement, made on the 2nd December, when the first official announcement that the loan was going to be floated appeared in the Press:

"Referring to the loan, General O'Duffy said... but the people would want some guarantee that the money would not be used for vote-catching and Communist policy purposes. He knew that they had one of the arch-Communists of the Free State residing at Cobh."

That speech was made by the leader of the Opposition Party-by the "someone." as Deputy Cosgrave referred to him, in the course of his statement-on the very evening of the day upon which the announcement that the new loan was to be issued was first made. It was an indication at once of the attitude which this gentleman, at any rate, who, I presume, spoke also for Deputy Cosgrave, for Senator Blythe, for Deputy MacDermot, Deputy Fitzgerald, Deputy Mulcahy, and the other members of the Opposition Party who sit in this House, was prepared to take in regard to the loan.

General MacEoin

Might I ask the Minister if he would read for us now the proclamation issued by the Dáil of which Deputy de Valera was President in 1923, in opposition to the first loan that was floated by the Government then in office?

Mr. Donnelly

Leave records out. Take my advice.

Mr. MacEntee

Deputy Seán MacEoin will recollect that he was a member of the National Army at that period.

General MacEoin

I was a Deputy at that period.

Mr. MacEntee

In 1923?

General MacEoin

Yes.

Mr. MacEntee

When the present President of the Executive Council was a prisoner in Arbour Hill?

General MacEoin

No. When the present President of the Executive Council, as leader of the Government of the Republic of this State, warned all persons who wished, or were about, to subscribe to the First National Loan floated by the Government of this State, that he repudiated the right of the Government to float it, and that they would repudiate it when they came into office.

Mr. MacEntee

Would the Deputy give me the date of the First National Loan?

General MacEoin

I will get it for the Minister.

Mr. MacEntee

Would the Deputy give the date of the First National Loan, because the fact of the matter is that President de Valera was a prisoner in Arbour Hill when that First National Loan was floated and, so far as I am aware, Deputy MacEoin was then in the National Army. As I have said, President de Valera was then a prisoner, and Deputy MacEoin has got up in this House and asked me to read a statement which he said was signed by President de Valera repudiating the First National Loan. Such a statement was never issued over the name of President de Valera and never issued on his behalf or with his consent.

Mr. Fitzgerald

Or approval?

Mr. MacEntee

Or approval.

General MacEoin

Will the Minister deny that it was issued by the Party which then claimed to be the Government of the Republic, of which Deputy de Valera was then the President?

Mr. MacEntee

Many statements have been issued by many people in this country claiming themselves to be a Government of one sort or another at one time and another.

Mr. Fitzgerald

Hear, hear!

Mr. Rice

Does the Minister remember the speeches made by two of his colleagues, the Minister for Industry and Commerce and the Vice-President, on the day before President Cosgrave issued his First National Loan? One of them used the expression on Sunday, the loan being floated on the following day, that this country was sinking into the bog of bankruptcy.

Mr. MacEntee

Evidently the Opposition believe that two wrongs make a right in this matter.

Mr. Rice

Then you admit there was a wrong?

Mr. MacEntee

There is a tendency to try to evade the real issue.

General MacEoin

This work of destroying the credit of the State seems to have been the practice of some people in this country for a considerable time.

Mr. Donnelly rose.

An Ceann Comhairle

Order.

Mr. Belton

Give us the real reason for its failure now.

Mr. MacEntee

First of all it did not fail. If the Deputy takes the trouble to study the Exchequer returns from week to week he will find that we got £6,000,000, the amount we wanted to raise, in the Fourth National Loan.

Mr. Belton

I have had a terrible lot to study since the Minister became Minister, and have had to pay for studying it too.

Mr. MacEntee

I have pointed out that on the 8th December this statement was made by General O'Duffy, the leader of the Party opposite. I should like to remind the House of the manner in which this statement of mine in the Budget speech was dealt with by the Opposition. It was quite clear to whom I referred. Deputy Cosgrave referred to it in this way: "‘Somebody in the Opposition,' he said, but he did not mention who it was, ‘made a certain statement.'" Then he said that if somebody in the Opposition made that statement, that was not the reason why the underwriters had to take up a certain portion of the loan. What I am anxious to get at is this: if the Opposition spokesmen in this House do not feel guilty in the matter why is it that they have not referred to that statement of their leader, but rather have endeavoured so far as they possibly could-by saying that Mr. de Valera said this thing one year and a Minister for Industry and Commerce said something else later-to get away from it altogether.

Mr. Fitzgerald

The Minister, I presume, is trying to make out that statements by the Opposition necessarily destroy the prospects of a loan. What was pointed out to him was that notwithstanding the extraordinary statements made by his own leaders when they were in opposition our loans were successful.

Mr. MacEntee

We will deal with that later. That is another aspect of it. Do I understand that Deputy Fitzgerald endorses what General O'Duffy said on the 8th December?

Mr. Fitzgerald

I have not seen it.

Mr. MacEntee

You do not mean to tell me that you do not read the speeches of your own leader?

Mr. Donnelly

I can quite believe that.

Mr. Fitzgerald

I do not even read the Minister's speeches.

Mr. MacDermot

Will the Minister deny this——

An Ceann Comhairle

The Minister may give way if he so pleases. Until he does, he is in possession.

Mr. MacDermot

He has given way.

An Ceann Comhairle

Very good.

Mr. MacDermot

I wish to express my appreciation of the courtesy with which he has given way so often. I think it is fair to put this question to him. Does he remember that I, for instance, put a question down some time before the National Loan was floated; that he asked me to come and see him; that he represented to me that that question might injure the prospects of the National Loan and that I accordingly withdrew it? Is it not just as fair to quote that as representing the attitude of the Opposition?

Mr. MacEntee

I rather take it that that represents the personal attitude of Deputy MacDermot: I agree that in those matters he has a greater sense of responsibility than many of the people associated with him. What I am asking now on the point at issue is this: did the Opposition as a whole, and did the responsible leaders of the Opposition, endorse this statement of General O'Duffy:—

"I am afraid that that £6,000,000 is going to be spent in bribes for votes. In the middle of that bribery a general election will be called and county surveyors will be sent out to give work and arrangements made for free supplies of milk to get Mr. de Valera back."

The implication of that was this, that that £6,000,000 was to be spent as bribes for voters and to start works and give free supplies of milk in order to get Mr. de Valera back. The question at issue is this: was that statement made by the selected leader of the Opposition Party, the person who is president of the United Ireland Party, with the full cognisance and with the full assent of the Deputies who sit in this House and who are vice-presidents and members of the Executive Committee of that Party?

Mr. Donnelly

Perhaps not.

Mr. MacEntee

I presume that it was not, because one thing that was remarkable here in the course of the debate, particularly in relation to that statement, was the fact that everyone was anxious to disclaim any responsibility for it, to minimise its consequences, and to say that if there was any reduction in the rate at which subscriptions were being made to the Fourth National Loan it was due to something other than that. What is the position? The National Loan was issued and the lists were opened on the 4th December and it was arranged that they should close on the 12th, eight days afterwards. Notwithstanding anything that has been said here about the correspondence which took place between the President of the Executive Council and the British Secretary for the Dominions, the subscriptions to that loan came in at a very satisfactory rate indeed until the 10th day of December. On the morning of the 10th day of December we had subscriptions for £2,200,000-that was inside of six days. Up to the close of business on the 10th day, when General O'Duffy's statement was getting around in the country, we had £2,377,000, and we closed with £2,900,000. We closed because we decided beforehand to close.

We were not going to do what our predecessors had done in regard to the Third National Loan. We were not going to drag it out for 15 days; the position in that regard being that on the 12th day the subscriptions to the Third National Loan amounted to £4,067,000. We could have kept our lists open. We could have kept on, but we made up our minds that we would only keep the lists open for eight days, because we had already arranged that the loan should be fully subscribed and taken up. We wanted a substantial amount from the public if we could get it, but we were better satisfied to have the loan placed in good hands and firmly held. When we became aware of the attitude which General O'Duffy was taking up, that that was the sort of campaign which was going to be launched through the country, and that the mind of every small investor would be made uneasy by statements like that, we decided that in the national interests it was better that we should close the lists. We did not want to allow that uneasiness to be created, with possibly a very difficult financial reaction. Therefore, we closed the loan on the eighth day. I pointed out to you that our predecessors kept the list of the Third National Loan open for 15 days, and that 12 days after the lists were opened they had only received £4,067,000. Then on the thirteenth day the subscriptions went up to £6,387,000 and they say now that the underwriters and the Government Departments did not take up a large portion of that loan. I say they did. It has been the practice, and there is no reason why it should not be the practice. It is the practice in Great Britain and everywhere else. The ordinary public very seldom subscribe fully the amount of a loan. The position from our point of view is that the terms which we offered to the public were, as I have already said, £1 4s. 9d. per cent. less favourable to the public and more favourable to the taxpayer than the terms of the Third National Loan, and we did not attach to the Fourth National Loan any of the adventitious aids, such as making it tenderable for death duties, or any of the other things which have characterised the First, Second and Third National Loans issued by our predecessors. It was a straight issue at the lowest rate of interest of any Government issue made in this State; issued at a rate more than 33? per cent. more favourable to the taxpayer than the most favourable issue by our predecessors. It did equally well so far as the ordinary subscriber was concerned, and we have no reason to be ashamed of it. Now that the shallowness and the silliness, if I might put it that way, of the statement that was made by General O'Duffy have been fully exposed, when even his own Party disown him, and when it is quite clear that he does not speak for any responsible man in this State, if we have to make a public issue again before we leave office, I have no doubt that whatever issue we do make will be considered by the people sufficiently sound and sufficiently atractive to secure a full and adequate subscription.

Mr. Belton

Will the Minister give us the relative rates of bank interest when the two loans were floated?

Mr. MacEntee

That has nothing to do with the matter.

Mr. Belton

That is the whole test.

Mr. MacEntee

The fact of the matter is that our issue, for the first time in the history of this State, was made at a rate of interest almost equal to the British rate—only 1/1 per cent., I think, higher than the British were offering.

Mr. Belton

Is not the position this——

Mr. MacEntee

Will the Deputy sit down?

Mr. Belton

The Minister does not like it.

Mr. MacEntee

One can suffer fools gladly, but one cannot suffer them continually.

Mr. Belton

That is the Minister. It redounds to his credit when he is cornered.

Mr. MacEntee

I have dealt with this loan for the reason that people outside and here in the House have said that we are going to borrow £7,000,000 during the coming year. I should like to make this prophecy: that we can, during this year, finance all the services which we forecasted in the Budget and that we will not have to go to the public for one penny piece. We are in a position to carry through the programme that we set before the people and, while our Estimates of revenue are made on a conservative basis, and I believe that the Budget for this year will have a conclusion as satisfactory as the Budget of last year.

Question put.

The Committee divided: Tá, 61; Níl, 38.

Tá

• Aiken, Frank.
• Bartley, Gerald.
• Beegan, Patrick.
• Blaney, Neal.
• Boland, Gerald.
• Boland, Patrick.
• Brady, Brian.
• Brady, Seán.
• Breen, Daniel.
• Browne, William Frazer.
• Concannon, Helena.
• Corry, Martin John.
• Crowley, Timothy.
• Derrig, Thomas.
• De Valera, Eamon.
• Doherty, Hugh.
• Donnelly, Eamon.
• Dowdall, Thomas P.
• Everett, James.
• Flinn, Hugo V.
• Flynn, Stephen.
• Fogarty, Andrew.
• Geoghegan, James.
• Gibbons, Seán.
• Goulding, John.
• O'Reilly, Matthew.
• Pattison, James P.
• Pearse, Margaret Mary.
• Rice, Edward.
• Ruttledge, Patrick Joseph.
• Ryan, James.
• Hales, Thomas.
• Harris, Thomas.
• Hayes, Seán.
• Hogan, Patrick (Clare).
• Jordan, Stephen.
• Keely, Séamus P.
• Kehoe, Patrick.
• Kelly, James Patrick.
• Kelly, Thomas.
• Kennedy, Michael Joseph.
• Keyes, Michael.
• Kissane, Eamonn.
• Lemass, Seán F.
• Little, Patrick John.
• MacEntee, Seán.
• Maguire, Ben.
• Maguire, Conor Alexander.
• Moane, Edward.
• Moore, Séamus.
• Moylan, Seán.
• O'Brianin, Donnchadh.
• O'Doherty, Joseph.
• O'Dowd, Patrick.
• O'Grady, Seán.
• O Ceallaigh, Seán T.
• Sheridan, Michael.
• Smith, Patrick.
• Traynor, Oscar.
• Walsh, Richard.
• Ward, Francis C.

Níl

• Beckett, James Walter.
• Bennett, George Cecil.
• Broderick, William Joseph.
• Brodrick, Seán.
• Burke, James Michael.
• Cosgrave, William T.
• Costello, John Aloysius.
• Davis, Michael.
• Dockrell, Henry Morgan.
• Doyle, Peadar S.
• Esmonde, Osmond Grattan.
• Fagan, Charles.
• Finlay, John.
• Fitzgerald, Desmond.
• Fitzgerald-Kenney, James.
• Haslett, Alexander.
• Keating, John.
• Lynch, Finian.
• MacDermot, Frank.
• McDonogh, Martin.
• MacEoin, Seán.
• McFadden, Michael Og.
• McGovern, Patrick.
• McGuire, James Ivan.
• McMenamin, Daniel.
• Morrisroe, James.
• Mulcahy, Richard.
• Murphy, James Edward.
• Nally, Martin.
• O'Donovan, Timthy Joseph.
• O'Mahonly, The.
• O'Reilly, John Joseph.
• O'Sullivan, John Marcus.
• Redmond, Bridget Mary.
• Rice, Vincent.
• Roddy, Martin.
• Rogers, Patrick James.
• Wall, Nicholas.

Tellers:—Tá: Deputies Little and Tray nor; Níl: Deputies Doyle and Bennett.

Question declared carried.

Resolutions reported. Report Stage ordered to be taken on Wednesday, 23rd May, 1934.