I move that the Bill be now read a Second Time. The object of this Bill, as the title indicates, is to amend and extend the Control of Manufactures Act, 1932. The type of businesses to which the new Act will apply will be the same as those mentioned in the 1932 Act, namely, the making, altering, repairing, ornamenting, finishing or adapting for sale any article, material or substance or part of any article, material or substance. It is not proposed to interfere with any business whether owned by an individual or a body corporate which is at present carrying on business legally under the existing law. The new provisions embodied in this Bill will apply only to businesses carried on after 1st July, 1934. Individuals and companies holding new manufactures licences at the present time will retain their rights under that Act. A new provision is inserted defining a qualified person. A qualified person is a person born in Saorstát Eireann or a person who has been resident in Saorstát Eireann for five years prior to 1st July, 1934. The difference between a qualified person as defined in this Bill and a national of Saorstát Eireann as defined for the purposes of the original Act is one of residence. A national, under the original Act was a person born in Saorstát Eireann or a person who had been resident for five years in Saorstát Eireann. That five years, however, dated from the time the question of his nationality arose; whereas a qualified person, in accordance with the definition in this Bill, is a person resident for the particular five years which preceded 1st July, 1934, and not other years.
The principal section of the Bill is, of course, Section 9, which replaces Section 2 of the original Act. Section 2 of the original Act will be repealed by this Bill. In explaining the significance of that section, I again want to draw attention to the fact that the position of existing businesses is in every case safeguarded with this qualification that the business must in each case have been carried on continuously. Under the terms of the Principal Act a business can be interrupted and resumed at a later date, but the terms of this Bill require the business to be carried on continuously in order to comply with its terms. In other words, if a business were owned by a person who was not qualified but who was entitled to operate here without a licence because of the fact that it was in operation before January, 1932, should it cease operation, it could not resume business without a licence under this Bill.
The safeguards for existing businesses are provided as follows:—
Paragraph (a) preserves the rights of a business owned by one individual who is carrying on business at present on the grounds that he is a national under the 1932 Act.
Paragraph (h) preserves the rights of an individual who is carrying on business on the grounds that that business was carried on on the 1st June, 1932.
Paragraph (j) preserves the rights of an individual holding a licence under the 1932 Act.
Paragraph (c) preserves the rights of two or more individuals who are carrying on business, the capital of which is held to an extent exceeding 50 per cent. by nationals.
Paragraph (h) preserves the rights of two or more individuals who carried on business on the 1st June, 1932.
Paragraph (j) preserves the rights of two or more individuals who hold a licence under the 1932 Act.
Paragraph (e) preserves the rights of the existing businesses owned by bodies corporate of which the capital was held to an extent exceeding 50 per cent. by nationals.
Paragraphs (g) and (i) preserve the rights of businesses owned by bodies corporate carried on on the 1st June, 1932.
Paragraph (j) preserves the rights of bodies corporate holding a licence under the 1932 Act.
For all future businesses carried on by individuals all these individuals must be qualified persons. Otherwise licences will be required. Paragraph (b) makes provision for the case of one individual and paragraph (d) for two or more individuals.
In the case of bodies corporate if the business is to be carried on without a licence over 50 per cent. of all classes of shares must be held by qualified persons and at least two-thirds (in nominal value) of every class of shares carrying voting rights must be held by qualified persons.
Paragraph (f) contains the required provision.
Further and consequential provisions with regard to businesses carried on in succession to a deceased person and by a bankrupt also are contained in Section 9. It is proposed to take power in future licences to impose a statutory condition that the business shall be started within a specified time. One of the defects found in the operation of the 1932 Act was that no power to require the starting of a business within a specified time was provided. An application for a licence might be made on behalf of a firm, and the licence issued to that firm. The firm might then decide not to take advantage of the licence for the time being, or to hold the licence against some future development, with the intention of taking advantage of it only in certain circumstances. That situation was obviously undesirable, in so far as licences to external firms to engage in any manufacturing enterprise in the Saorstát are issued only having regard to the extent to which the existing businesses in the Saorstát or businesses likely to be established by Saorstát citizens, are incapable of supplying the requirements of the country. There is, consequently, in relation to any industry only a limited scope for the issue of licences to external corporations or external persons, and the fact that any such external firms secure licences and then do not avail of them might cause a considerable upset in the industrial development plan. For that reason we take power to impose that condition upon licences already issued, where the persons who received the licences have not availed of them— have not started the industry to which the licence applied.
One of the principal weaknesses in the 1932 Act resulted from the alteration of Section 2 (4) while the Act was passing through the Oireachtas. Under that section the onus lay upon the defendants of proving that restrictions did not apply. It has been found practically impossible to sustain a prosecution against a company in view of the provisions of that sub-section as it finally passed. It is now proposed to reinsert the old provision to deal with companies registered outside Saorstát Eireann. The effect of the provisions of Section 10 is that the onus will be upon the outside company of proving the various matters set out in Section 7. The certificate provided for in Section 10 (2) should facilitate such a company in making its defence. As regards companies registered in Saorstát Eireann, additional powers are being taken in Section 13 to secure information. The Minister for Industry and Commerce was empowered in Section 11 of the 1932 Act to get information by means of a notice served on an individual or body corporate. That section is now being repealed, and it has been replaced by Section 13 of the present Bill. Sub-section (1) contains the information which may be obtained from individuals, and sub-sections (2), (3), (4) and (5) set out the particulars which may be obtained from bodies corporate. Under sub-section (2) paragraph (a) information may be obtained as to whether the business was carried on continuously from the 1st July, 1934— whether or not it is an existing business. Under sub-section (2) (b), information can be obtained as to whether the business was carried on on the 1st June, 1932, or whether it is owned at the specified date by the same body corporate which owned it on the 1st June, 1932. Under sub-section (2) (c) information can be obtained as to whether the business has been carried on continuously since the 1st June, 1932, and is owned at the specified date by a body corporate, and whether half the issued shares are owned by the individual or individuals who owned the business on 1st June, 1932. Sub-section (3) enables information to be obtained from a body corporate as regards any date specified in the notice in respect of the number of shares, the value of the shares, the voting rights attached to the shares, the number of shares held by each shareholder, and the name and address of each shareholder. All this information can be obtained from the company's own register, whilst it cannot be always obtained from the Register of Companies. As regards the nationality of shareholders, the companies cannot give the information, and accordingly sub-section (4) is inserted so as to enable the information to be got from the beneficial owner of shares. Sub-section (5) enables the Department to get the information from the last-mentioned beneficial owner.
Section 14 enables the Minister through one of his officials to enter premises and make investigations. Part III of the Bill, as Deputies have probably noticed, is based entirely upon the provisions of the Cement Act. It is, in fact, identical with the relevant sections of the Cement Act, with this difference, that the word "cement" wherever it occurred was deleted and the word "restricted commodity" inserted. I do not think, therefore, it is necessary to explain the purport of that part of the Bill, although something might have to be said as to the necessity for it. Deputies will ask why it has become necessary to strengthen the powers of the Government in the matter of regulating the operation of external firms in Irish industry. When the Control of Manufactures Bill, 1932, was submitted to the Dáil, I said that it represented, in my opinion, the barest minimum which any Government starting on a protective policy in a country like this would have to undertake. That opinion was based upon the fact that industrial development in the Saorstát had been late in coming. Consequently, there was not in existence here any substantial number of persons with the technical competence to undertake the establishment of many of the industries which we hoped to bring into existence. There would, consequently, be a very direct tendency to seek aid from outside the country in the establishment of those industries. There was, secondly, the fact that those engaged in the distribution of manufactured commodities in this country obtained those commodities almost entirely from British manufacturers, with whom their relations were most close, and to whom they would naturally turn when any question arose in regard to the production in this country of the commodities which they were distributing. There was the fact that the language most frequently spoken here is the same as the language spoken in Great Britain, which would facilitate the introduction of British firms into Irish industry. More particularly there was the fact that our close geographical proximity, our close commercial relationship, and a number of other ties with Great Britain, would make it inevitable that British manufacturers, possessing as they do large capital resources, and being accustomed to pioneering in the matter of industrial development in countries outside their own, would endeavour to secure, by establishing branch factories here, the continuance of their connection with this market, despite the erection of tariff walls for the protection of Irish industry. It is, I think, to be noted, that the expectation of that development was based not merely upon our own experience of the conditions in operation before 1932, but, also, on the experience of every other country in which similar, or almost similar, conditions prevailed. It was considered to be undesirable, for many reasons, that that situation should be allowed to develop without taking power to deal with it. Firstly, because there are many reasons why it is desirable that the control of industry, in the Saorstát, should be in the hands of our own citizens, and not exclusively, or almost exclusively, in the hands of foreigners; and, secondly, because it was exceedingly unlikely that any Saorstát citizen would take the risk of investing his money in industrial development here, unless he could be given some guarantee that having done so, and having developed a market for his products here, he was not to be faced with competition of a much stronger, more highly developed and more highly capitalised external company, particularly after experience had taught him that that competition was not likely to be fair competition. We felt, therefore, that if we were to get industry developed here, on lines that we desired, it was necessary, not merely to propose protective tariffs in order to give factories established in this country a chance, but also, that we should protect the ownership in these factories so that Saorstát citizens might be encouraged to invest their money in establishing and developing industry with the confidence that an adequate return would be forthcoming and that their capital investment would be secure. At the same time we were not anxious to take powers of regulation in relation to industrial development, except where obviously it was necessary to do so, and then only to the barest minimum.
The Act of 1932 was framed with a view to taking only those powers, the existence of which we felt was essential. Since then there has been a fairly substantial development of industry here, and, in addition, there has been development in the number of devices adopted in order to avoid the provisions of the Act of 1932. I think 37 licences under that Act were issued altogether. Out of a number of applications, running into some hundreds—I have not got the exact figures—I think nine applicants were refused. In each of the other cases either the applications were withdrawn or the applicants found some means of establishing their industry in a manner which avoided the necessity for a licence. That situation by itself was not necessarily undesirable. Some portion of the objective of the Act of 1932 was being secured. Opportunities for investment in industry were being offered to our citizens, and, so long as that development did not interfere or undermine the willingness of Saorstát citizens to engage directly in commercial enterprise, it was not deemed necessary to go further than the Act of 1932, having regard to other powers in the possession of the Department which could be utilised for the purpose of securing that Government policy was not being defeated by any trick. However, it became clear to us, 12 months ago or so, that it was necessary to go beyond the Act of 1932 and to take powers of regulation in excess of those provided by that Act.
This Bill is not a Bill designed to prevent foreign companies establishing industries here. It is necessary to emphasise that, because misunderstandings already as to its effect have arisen similar to those about the Act of 1932. This Bill secures that foreign companies will not establish themselves in industry here except with the authority of the Department of Industry and Commerce. In other words, we take powers, not to prevent those foreign firms coming in, but merely to regulate their entry, to secure that they will not come in except it is clear that their advent will be an advantage to this country and result in an increase in its industrial equipment and production. The general policy which has been operating since the Act of 1932, and will be operated in connection with this Act, has been first to refuse licences where it is clear that the existing concerns established in Saorstát Eireann, or likely to be established in Saorstát Eireann, are capable of supplying our requirements of the goods concerned. In some cases, where the existing concerns were not supplying all the requirements, and were slow in developing, or where it was clear that the maximum rate of development would mean that considerable delay would take place before the full production of our needs would be reached; foreign firms would be licensed to engage in the industry concerned, sometimes with conditions attached to the licence, fixing the limit of the maximum output of the goods which they could undertake in any one year. The idea was to secure that their introduction into the country would not mean either the development of a monopoly or the prejudicing of the interests of the existing concerns. In other cases where industries were established to work certain patents, or where technical competence of a high degree was required in order to enable the industry to carry on, or other considerations of that kind arose, licences were issued to foreign firms to engage in the industry concerned without conditions.
In the case of all the principal industries, every effort is being made by the Department of Industry and Commerce to secure that they will be established in a manner which will keep as far as possible their effective control in the hands of the Saorstát citizens.
The only substantial difference between the powers taken under the Principal Act and the powers proposed to be taken under this Bill is the requirement that not merely shall 51 per cent. in nominal value of the total shares of a company be held by Saorstát citizens but that two-thirds of the shares carrying voting rights shall be also so held. That provision is necessary because of the practice which has developed of securing the 51 per cent. Saorstát capital required under the 1932 Act by issuing preference shares only, these preference shares carrying a fixed rate of interest and having no voting rights. A number of companies were established without a licence under the 1932 Act by that device and, as it was obviously the intention of the Government and of the Oireachtas when dealing with the Act of 1932 that the ownership of the shares should signify proportionate control of the company concerned, this additional power is being taken. The effect of it will be to secure that only those companies which are bona fide Saorstát companies will be able to engage in any industrial process without a licence. In the case of other companies, there will be a licence required, so that considerations of policy can determine whether or not the firm concerned will be allowed to proceed.
At this stage, I should perhaps deal with some of the matters raised when the Act of 1932 was under discussion. When that measure was before the Oireachtas, fears were expressed by members of the Dáil, but more particularly by members of the Seanad, and by persons outside the Oireachtas that onerous conditions would be attached to licences and, also, that there might be discrimination against certain firms. Deputies will remember that certain amendments having a bearing on these points, which were inserted in the Seanad, were the subject of dispute between the two Houses and, at one stage, it looked as if the Bill might be held up under the Constitutional clause because of the difficulty of getting agreement. Finally, the Government decided that the better course was to accept the Seanad amendments and allow the Bill to operate. The amendments related to this question of the conditions that might be attached to licences and the element of discretion that would be allowed to the Minister for Industry and Commerce in dealing with applications. There was also an amendment dealing with a matter to which I have referred—the proving of the facts relating to any company. The amendment inserted in that connection had the effect of practically defeating the purpose of the Bill, inasmuch as it made it almost impossible to sustain a prosecution under it. I have referred to that matter and I shall have no need to refer to it again. In accordance with the amendments inserted in the Seanad, it became necessary to table regulations indicating the type of conditions which might be attached to any licence. These regulations were tabled. In fact, they had to be drafted in terms so general that they gave very little additional information to that already conveyed by the Bill. In no case has there been a condition attached to a licence in respect of which any complaint has been received. I shall qualify that in one respect in a moment.
The ordinary conditions attached to a licence are—first, a condition requiring the person getting the licence to use in connection with the process licensed, materials of Saorstát origin. There is, of course, power taken to exempt the licensee from that provision wherever he proves to the satisfaction of the Minister for Industry and Commerce that materials of Saorstát origin are not available. Secondly, there is a condition which requires that all materials used for the construction of works, machinery and so forth, must be produced or made in Saorstát Eireann, with, again, a provision granting exemption from that requirement where it is proved that it could not be complied with. Thirdly, there is a condition requiring that all articles used for the advertising, sale or distribution of the products be made in Saorstát Eireann. Fourthly, there is a condition requiring that the persons to be employed by the licensee be nationals of Saorstát Eireann, with power to exempt from that condition in respect of named persons where it is shown that they possess certain qualifications or for any reason are essential to the carrying on of the business. The only case in respect of which any question in this connection arose was where a condition was imposed limiting the output of a particular factory. That has only been done in a few cases where it became clear that the limitation was necessary to protect the position of existing Saorstát firms—that is to say, in cases where external firms were allowed to come in and engage in some industry which was already being largely catered for by Saorstát Eireann firms, even though those Saorstát firms were not in a position to supply the whole of the requirements of the Saorstát market.
Part III of this Bill is designed, mainly, to prevent the necessity arising for having, in relation to certain other industries, the legislation we have at present in relation to cement. One of the difficulties we have experienced in securing the establishment of certain industries in the Saorstát is the fact that the size of the market here, having regard to the number of our population, is barely sufficient to maintain one economic unit of production, working full time for the 12 months. There are industries which require the investment of substantial capital before they can be established, either because of the nature of the buildings required or the nature of the machinery required and in the case of which the investment of that capital would be entirely uneconomic unless the whole of the market in the Saorstát were available for the absorption of the produce. People are naturally reluctant to invest money in the establishment of such industries here if there is any prospect of a second concern of the same kind being established, so that neither of the concerns could hope to keep up economic production unless the market here were to expand very considerably. It is, therefore, proposed to take power to declare the product of any such industry to be a "reserved commodity." That is a commodity the manufacture of which, in Saorstát Eireann, cannot be undertaken by anybody except under licence issued in accordance with the terms of the Bill. That power can only be exercised, in accordance with Section 16, in respect of a commodity which is not being manufactured in Saorstát Eireann at the time the order is made. That power cannot be used in relation to any commodity which is being manufactured here either at the present time or at the time at which it is proposed to make the order.
There is the qualifying phrase "or manufactured to any substantial extent." That is necessary, because some person in a purely experimental way as a hobby may be engaged in the production of certain goods, but the intention is that Orders should not be made except where the industry concerned is one entirely new to this country. Where an Order is made it does not come into effect until it has been ratified by the Dáil. In other words, the Dáil, in effect, makes the Order, and the result is really this: that legislation in respect of any commodity—of the type of legislation already passed in relation to cement—can be enacted by the process of making an Order and having a resolution approving of that Order passed by the Dáil and not by the more lengthy process which had to be adopted in relation to cement.
The terms of Part 3 are in every respect identical with the terms of the Cement Act. Section 22 sets out the conditions which may be attached to a licence issued under this part of the Bill: that is, a licence to engage in the manufacture of reserved commodities, and in particular power is taken to fix the maximum price at which an article may be sold and to fix the maximum and minimum quantities of the articles which may be produced, the nature and the quality of the articles, the mode of manufacture, the location of the factories and so forth. It is not, of course, contemplated that in every case there will be one factory only, but whether there are one or more factories for the production of any commodity that may be declared to be a reserved commodity, the position will be such that it will be necessary to have these powers in order to safeguard the interests of the consumers. There are a very large number of conditions mentioned in the various paragraphs of Section 22. They are all designed to enable conditions to be imposed on the licence issued under this Bill for the protection of consumers of articles in Saorstát Eireann.
I do not know that it is necessary for me to say more at this stage. I presume that the necessity for this legislation has been borne in upon most of the members of the Dáil arising out of our experience since the Act of 1932 was passed. It may be that Deputies would think that certain sections of this Bill might have been framed differently, or that the power proposed to be taken might have been obtained in some different way, but as to the necessity for legislation I do not think there is much room for a difference of opinion. In fact, the various indications which have been received by me for many months past, from persons associated with all parties that have been giving attention to this matter, is that the legislation is required and should be enacted without delay. The Bill is framed so that it will become effective as from the 1st July, 1934. The Bill itself will not, of course, become law by the 1st of July, 1934, but when it does become law it will operate in respect of any business started after the 1st of July. Persons who are contemplating establishing a business in the Saorstát during the month of July can of course, do so in accordance with the existing law, but they should have regard to the provisions of this Bill which will, presumably, become law at some time and which, when it does become law, will operate in respect of such businesses as may be established after the 1st of July next. I think it is necessary that a date should be inserted, because otherwise the intentions of the Oireachtas in relation to this Bill might be defeated in respect of different industries, particularly if there was any considerable delay in securing the enactment of the measure. I move: "That the Bill be now read a Second Time."
