In Committee on Finance. - Agricultural Co-operative Societies (Debentures) Bill, 1934—Committee Stage.

Sections 1 to 6, inclusive, were agreed to and added to the Bill.
SECTION 7.
(1) Whenever the Minister is satisfied, on the application of the Agricultural Credit Corporation, Limited,—
(a) that money is owing to the said Corporation by a society registered under the Industrial and Provident Societies Act, 1893, in respect of a loan made by the said Corporation to such society before the passing of this Act, and
(b) that when such loan was so made there was an arrangement or understanding between the said Corporation and such society that the amount of such loan and the interest thereon would be secured (in addition to any other security which may have been given) by a charge on the uncalled capital of such society, if and when such charge could lawfully be made....

Dr. Ryan

I move amendment No. 1:—

In sub-section (1) (b), page 5, lines 22 and 23 to delete the words "if and when such charge could lawfully be made."

The object of the amendment is to delete words that were found to be unnecessary, or, perhaps I should not say unnecessary, but rather that would defeat the effect of the clause. In this arrangement made by the Agricultural Credit Corporation with the societies concerned, it was explained by the Minister for Defence, in my absence, that there was an understanding between the Credit Corporation and the Minister for Agriculture that the position would be made right legally at a later date. The rules of the society enabled them to charge their uncalled capital, but the law did not, as it stands, enable the Agricultural Credit Corporation to take that charge. If these words were to remain in it was doubtful whether we might not have lost the whole effect of our Bill. In any case, they are not necessary. When the attention of the draftsman was called to the matter he agreed that they should be removed. It is really a legal matter whether the words would defeat that clause or not.

As I remember, the reason for the introduction of the Bill was to give the Agricultural Credit Corporation power to call unpaid capital up.

Dr. Ryan

That is one of its objects.

It is particularly that. The Minister was absent from the debate on Second Reading the other day. On that occasion, I wanted some information that I was not able to get in connection with this Bill.

The Deputy might make his point on the section.

But if the amendment goes his case would be gone too.

It was a power that I did not want to give them. The Bill was introduced to give the Agricultural Credit Corporation power to have unpaid-up capital at their disposal as a security. I think the whole matter is not to the best advantage of the creameries, because if a creamery is in a bad financial position like that it will not be in the position to carry on or to keep going.

I happen to be a member of a creamery society myself. I joined only a few years ago and the reason why it is not able to pay as much as other creameries is because of the fact that it has a certain amount of interest to pay. The Minister told me on one occasion that my creamery was a bad one. I know that even to-day the price we are paying is practically a halfpenny more than is required in other places. That is due to the fact that the overhead charge—the interest—was militating against that particular creamery.

The Minister wants to safeguard the Agricultural Credit Corporation by providing that the unpaid capital can be called on if the creamery is not in a sound position. Some other means should be adopted with these creameries than that. I am perfectly well aware, and the Minister himself knows, that it is creameries which are in a bad financial position which will look for credit. Some other means ought to be adopted than calling upon unpaid capital, which will not be much in any case. I put this point before in the absence of the Minister. I know the Minister wants to safeguard his own side.

I understood, when the Bill was being introduced, that it was an empowering Bill rather than a retrospective Bill. Unless I am mistaken, this particular clause as drafted is one that seeks to give to the Agricultural Credit Corporation certain powers in excess of anything they have at the moment. I had no objection to this Bill as an empowering Bill, but to copper-fasten or to control the conditions in respect of a lending corporation, giving them authority they had not got before, is certainly seeking an extension, the first intimation of which we have in the powers of this measure. As far as uncalled capital is concerned, it certainly is a very great power to give by a measure in respect of advances made some time previously. In these matters we would require to exercise something amounting to almost judicial discretion. If a lender advances money he does so on the security that is there; he gets no more. If a statute is introduced to strengthen his position he has much greater title to his money than before. I would like the Minister to leave this matter over till the Report Stage and look into it. The Bill, as I understand it, was not for the benefit of the Agricultural Credit Corporation but rather to give whatever help the statutes up to this had not provided for the co-operative societies. In other words, to go on the principle of raising debentures, and to give them an opportunity to get out of their immediate difficulties. But as I read this clause, if the particular phrase is taken out we certainly will be presenting a cheque to the Agricultural Credit Corporation unless I am mistaken. Unless the Minister can satisfy us about that, I think he should leave the matter over to the Report Stage.

Dr. Ryan

I should like to remind Deputies of the position at the time. The Government at the time—it was about 1929 this thing occurred—and the Minister for Agriculture in particular, were anxious to start creameries in certain areas. The way those creameries were financed was that there was a rather irregular way of assessing so many shares on each shareholder or supplier according to the number of cows he had. Suppliers only paid a very small amount of the share. I do not remember the exact amount, but it was only something like 1/- or 2/6. The remainder was advanced by the Agricultural Credit Corporation. I do not think that Deputy Cosgrave or any other Deputy would like to see the Agricultural Credit Corporation done out of that money. The Agricultural Credit Corporation at the time realised that it had not full powers to do that, but it was told that there was a Co-operative Bill in preparation and that things would be made right for it under the Bill. If it went to court it would be difficult for it to prove its full title.

How much money is involved?

Dr. Ryan

I could not say.

How many creameries?

Dr. Ryan

There are about four or five, but I do not see that that question much matters. It is all a question of whether this is just or not.

That is the point.

Dr. Ryan

The Agricultural Credit Corporation made the advance, and those creameries were to collect 2/6 per share per year and pay that to the Agricultural Credit Corporation. Some have done that. Others have not. Others say that they find it impossible to collect the money on the shares. They are not defying the Corporation. They say that they are doing their best. I do not know whether they are or not, but the point is that the Corporation feels it has not a proper title to this uncalled for capital. The point was in doubt, and it was made clear to the Corporation that it would be made right for them in future legislation. With regard to the amendment, an objection was made by the legal adviser to the Corporation that these particular words, "if and when such charge could be lawfully made," might destroy the whole effect of the Bill, as the courts might hold that it could not be lawfully made at the time. The draftsman agrees that the words should be removed.

The Minister should, I think, adopt my suggestion to leave the matter over until the Report Stage and look into it meanwhile. If the Corporation got that undertaking at the time, that brings a new element into the question, provided, of course, that these creameries also understood that.

Dr. Ryan

I think the creameries understood the position.

If that be so, I would not enter any objection to the amendment, but unless it be so, there is no doubt that we are giving powers to a lender which he had not got last week.

Dr. Ryan

As a matter of fact, I think I would be able to produce rules of the creameries to show that they realised the position, and that they actually inserted a rule to meet this.

That may be so, but yet the question remains whether we can justly give a lender a power which he had not got when he lent the money. If the Minister will look into the matter I shall be quite prepared to take his word for it on the next day.

Dr. Ryan

It is quite possible that some of the creameries may say that they did not realise it.

I understand that, but I may say that I have had no communication with them on the matter.

Amendment by leave withdrawn.
Sections 7 to 14 inclusive and the title ordered to stand part of the Bill.
Bill reported without amendment.
Report Stage ordered for Tuesday, 7th August, 1934.