They are very grave admonitions to mankind, not separate sections of them, but the whole encyclicals from beginning to end, and they provide themselves no detailed solution for either Governments or States to follow. They should be read in that kindly, paternal manner in which they were written. Now, we are here to discuss a motion and an amendment, both of them arising out of a very long report furnished by the Banking Commission. It is a very valuable report, exhaustive and very full of information, and it gives, to the best of their judgment and ability, the considered opinion of a number of experts. So far as this country is concerned, it owes a debt of gratitude to the gentlemen who gave so much of their time and industry to it; who made such an exhaustive survey of the whole field of our economy, considered probably every phase of the national life, and gave us their considered opinions. In nearly all cases in which they gave their opinions, they gave reasons for them. It would be only fair to them if we are criticising what they have said, at least to give them credit for the reasons they have put forward for whatever decisions they have come to.
Seldom has it been my fortune to read a report with which I was in such general agreement. There is, at least, one recommendation with which I am not in agreement. Generally speaking, it is a report which ought to command and receive from the Government of the country very careful consideration. Criticism has been expressed here in this House, and outside it, in connection with one proposal, that is the proposal to continue the link with sterling on a parity. I wonder if those who criticise that, read on page 4 paragraph 8, the following:—
"Firstly, it is important as an aim of monetary policy that the real wages of workers may be kept unimpaired, and that the value of accumulated savings shall be preserved, and that there may be a firm foundation for future contracts in matters of business, life insurance, etc. On the other hand, the burden of past debts should not be aggravated by an increase in the purchasing power of money. It is necessary to pursue a credit policy that will be favourable for the progress of agriculture and industry."
I take it that it was not merely because sterling was the British unit of value that the Commission decided to recommend the continuance of a link with sterling at a parity. Occasionally through the course of the report, in their examination of agriculture and of industry generally, they focus attention upon imports. In recent months, when there was a danger—in fact some people even thought a likelihood—of an outbreak of war, the importance of those imports seemed suddenly to seize the public imagination. If those who criticise the parity with sterling would consider for a moment what is the unit of value that they would recommend, and put forward what in their view should be the value of the Irish pound, it would be much easier to deal with their side of the case. Considering the care and attention—one might almost say the exhaustive care and attention— with which the commission dealt with this matter, it is only fair to the public that they should know whether the proposal is that our pound should be worth 15/-, and that we would have to pay a corresponding increase for the English pound if we wanted it. If we depreciate our own pound here, our imports —the raw materials which are necessary for industries in this country, whether they are new or old—will increase in cost. Wages at the present level would not be worth the face value of the payment that would be made for them. It is quite true that we would get more value for those goods which we would export.
We are entitled to hear upon what grounds this recommendation is going to be made, if it is going to be made at all. We are entitled to be able to tell any person who has money in the bank, or in the Post Office, or in Savings Certificates, what amount of discount this new proposal is going to occasion in the savings he has made. Let us once and for all clear our minds of the idea that the money which is at present in bank in this country belongs to the rich. The average value of a deposit in our banks is little over £200. There are very few large depositors; there are very many small depositors. One of the most disastrous of the consequences that beset at least one country on the Continent which had to depreciate currency during the last 20 years was the baneful effect upon the younger people of that country when they considered how many years it had taken their parents to put a few pounds in the bank, and how it had all gone in a few days, or a few weeks, or a few months, as the case may be, by reason of the change in the currency.
On the other hand, there is the danger of what is called a fluctuating currency. That is even worse, because it always hits the poorer section of the community. During the economic war it so happened that competent farmers with capital might survive, and might even do better during that period, with initiative and industry and business knowledge. I know one of them who did, but it would not have been possible for every one of them to have done it. So it would happen in the case of a fluctuating currency. The disadvantages are always on those least able to bear them, while the advantages are with those who are most competent to deal with a situation of that sort and have capital behind them. If one were to examine this report with a view to finding out what was the main theme running through it, my answer to that would be that it was on the balance of payments. There are people who affect not to understand what is meant by the balance of payments. In essence it means balancing the accounts of the country. You put on the one side all the moneys that are received either for goods or in respect of dividends for investments, tourist expenditure, pensions, and various other items. The receipts are on one side, and on the other the payments out for imports, in respect of tourists from this country who go abroad, dividends to people who have money invested in this country, and so on.
If my interpretation of the report is correct, the members of the Banking Commission were rather impressed with the dangerous trend that has been evident during some of those past years. Those who are directing their criticism towards what is called the conservative mind of the Banking Commission should go further and deeper into the question, and see why it was that they committed themselves to what is called a conservative policy.
They would find that the main theme, the main idea at the back of the minds of the vast majority of the members of the Banking Commission was that we should balance our accounts. They made no objection to an increase in our imports. They made no objection to an increase in our industrial activity here. They stressed and emphasised the importance and the necessity—the absolute necessity—of increasing our exports. They took the line that it was upon the agricultural produce of this country that its success, its prosperity, its stability, its future, the happiness of its people and our standing as a State, were going to be determined. Right through the report, from one end to the other, however much they may have departed from it in detail, that was the guiding principle. It is unfortunate to my mind that there were not at least two farmers on that commission. There does not appear to me to have been one. There were two holders of land, very considerable holders of land, but they were on the Banking Commission one as a banker and the other in his capacity as a holder of some office to which he was appointed by the Government. I say that for this reason, that there does appear through some paragraphs of the report to have been a certain optimism at the back of the minds of the commission generally about the situation of agriculture, which, as far as the information which we could get from the available statistics is concerned, does not appear to have been justified. But a statement of that sort, coming from what has been described as, an ultra-conservative body, shows that at least they were not in any way pessimistic about the possibilities of the country.
In paragraph 88 they say:—
"An important alleviation was moreover given to certain charges to be borne by agriculture by the halving of the land annuities and by State grants towards relief of rates on agricultural land. On the other hand, the increased burden of State taxes has affected farmers as well as other classes.
"The establishment of home industries under the industrial programme has led to a higher price of many of the goods which the farmers have to buy than would have been the case with free imports; and this is not only felt by them in their capacity of consumer, but to some extent also as an element in their cost of production. Likewise the agricultural policy while conferring direct benefits on some farmers, has, in certain respects, affected the costs of other farmers, for, as mentioned above, the admixture of home-grown oats and barley to replace at least partly imported maize has led to an increase in the price of certain feeding stuffs required for animal production, including the feeding of poultry. As the export of live-stock products is a most important credit item in the balance of payments of the Free State, the possibility of agricultural production at a cost level which will permit reasonable remuneration to those engaged in agriculture is, of course, of predominant interest. From this point of view it may be emphasised that any serious increase in costs would be particularly harmful in a period when any advance in agricultural production must be expected chiefly from an increase in efficiency, which is only another name for reduction in costs per unit of output."
In the course of their report they give us exact figures regarding the money to the credit of agriculturists in the banks and the money owed by agriculturists. Something like one-half of those who are styled agriculturists in this country are indebted to the banks —the exact number is 125,000—and they owe approximately £14,000,000. The period of the economic conflict with Great Britain was a rather difficult time for farmers who were in that position, and the report says, in paragraph 93:
"But even apart from these special advantages, the farmers have shown themselves willing to tighten their belts, when their income went down. ... There has undoubtedly in many areas been a deterioration in farming methods, a decline in the use of fertilisers, and a slowing down in the acquisition and replacement of machinery and other agricultural implements.
"A reduced income earned in agriculture not only affects the farmers, but has wider repercussions. When the farmers are in reduced circumstances they cannot to the same extent pay for the services of the professional classes or purchase the commodities produced by industry. World trade is in a large measure an exchange of commodities between industry and agriculture, and this is particularly true of Ireland. Indeed an industrial development programme has hardly a fair chance of succeeding at a time when a large section of the market for industrial goods is severely curtailed. Fortunately, world economic tendencies seem to be moving in a way more favourable to agriculture, and the Free State, noted for its output of important specialities, should be able to share in a period of renewed agricultural prosperity."
They go on to examine generally the industrial activity which has taken place here in recent years, and they inquired into what used to be described in this House as the change-over in agriculture. It transpires from their examination and from the facts—I must distinguish in this case between facts and arguments—that the change-over was responsible for but a marginal alteration in agricultural economy, and that it could be only that; that the main source of agricultural production in this country was, is, and will be the production of live stock and live-stock products. That is borne out even more conclusively by the returns furnished to us for the last year or two years. As to the extension of tillage, nobody is opposed to it so long as it is a policy pursued and operated by the farmers in a manner profitable to them and of benefit to the country. In 1935 we had 918,000 acres under corn crops; in 1936 it advanced to 946,000 acres; in 1937 it contracted to 926,000 acres; and in 1938 to 920,892 acres. Roots and green crops showed a reduction in those three or four years of about 30,000 acres. There has been a rise, not a considerable rise, possibly 10 per cent., during the last few years from the time when this policy was inaugurated.
The commission stress the fact that live stock and live-stock products are and will continue to be the main source of income for those engaged in agriculture. I have taken out the figures showing the exports of agricultural products, deducting from them the imports of agricultural products, for the last eight years. In 1931-32 there was a balance of net exports, deducting the net imports, of £13,425,257; in 1932, a balance of £6,062,816; in 1933, a balance of £4,585,311; in 1934, a balance of £3,417,444; in 1935, a balance of £6,401,463; in 1936, a balance of £8,079,290; in 1937, a balance of £6,454,513; and in 1938, a balance of £9,986,915, showing an average over these seven years of £6,426,822 as against £13,455,227 in 1931-32, or a drop of £7,000,000 over seven years.
It so happens during that period that consumption at home was fairly regular, there being scarcely any change. It may have varied a few hundred thousand or even as far as a million. I did not take out the complete figures for the whole period, but any I got showed no comparable alteration in the amount, which came to £49,000,000 less on the average over that period. Is it not inevitable that an industry having suffered such a loss would not be in a position to stand any extra strain? It is quite true that during these years, from 1933 up it had to pay half the annuities. There has been an increase in the rates, amounting in the warrant issued in the present year to something like £825,000, so that if that were to continue it has absorbed almost half of whatever advantage one could claim in respect to the reduction of the annuities. That is the industry we have to consider. That industry is now struggling in competition with highly efficient products from all parts of the world. That is the main reason and purpose for which the motion was put down:
(1) to reduce the burden of direct and indirect taxation;
(2) restrict the creation of further dead-weight public debt;
(3) and so order the administration of public finance and policy as to stimulate profitable production and abolish poverty within the State.
Looking over these seven years to see how we stand to-day, we find that we owe more, we can export less, we have fewer people, taxation is at the peak point, and production is far below the point of efficiency. Is it not only fair and right that the Government of this State should consider how it is possible to reduce overhead charges imposed upon industry and aid it by decreasing the costs that are falling upon it?
The commission's report is a very instructive one for many reasons. I think there are three reservations on the part of the signatories of the Majority Report, and that four or five of those who signed it put in addenda. In one of the minority reports reference is made to "turning Pat Murphy into a market." That is very reminiscent of some political slogans of seven or eight years ago, when efforts were made to turn Pat Murphy to agriculture. Agriculture has not been made any better off. Dealing with the attitude to the secondary industries in the State the report continues on page 62:—
"Net output per head fell from £304 in 1929 to £256 in 1936, or by 15.8 per cent. The figure of net output is not likely to have been affected greatly by changes in wholesale prices, but reflects more directly changes in wages. This is in accord with the fact that the recent industrial expansion has been most marked in those industries in which the net output per head and as a consequence the ability to pay a high wage is small.”
Is there not reason in that paragraph, simple as it is, for lessening the costs? Is there any industry that can possibly escape the effects of high taxation? If it has the good fortune to do so in one form it would meet the impact in some other form. The Report states on page 94:—
"Non-agricultural imports are more likely to advance than decline if the standard of living is maintained or improved, that is, if the real incomes of the workers are preserved or increased. As indicated elsewhere in this Report, wages in a number of important occupations show an upward trend, but the state of the balance of payments shows that such a trend cannot be continued with safety or prospect of permanence if it is not correlated with favourable conditions for the cheap and efficient production of agricultural commodities for export on an unsubsidised basis."
Is there anything very conservative about that? Throughout the Report it is the desire of the members sitting on it to see wages maintained and to see value got for wages when paid. I wonder what would happen in the event of this country going off what is called "the peg to sterling". Nobody in this or any other country would support the peg to sterling because it is British. The British Government has made many efforts during the last 15 or 20 years to arrive at some degree of stability with regard to currency generally, and when the last agreement was come to, `three or four years ago, between the French, British and American Governments, it was with a view to ensuring that stability in their currencies would be maintained. The remarkable terms of the agreement were that every effort would be made to prevent any one of the three countries depreciating its currency so as to get a trading advantage over the other. The Report proceeds at page 111, paragraph 181:—
"In the first place, it is almost impossible that the export trade will remain uninfluenced by higher costs and prices on the domestic market. It has been explained in earlier sections of this report that smaller countries especially have found it advantageous to pursue a policy of comparatively low tariffs which has enabled them to build up strong export industries."
The next paragraph states:—
"In the second place, a system which involves widespread regulation of costs and prices introduces an element of rigidity into the country's whole economy. It tends to reduce the effect of changing prices, and is therefore apt to be less effective in the elimination of uneconomic enterprise, and a less sure guide for the direction of economic activities towards remunerative employment. Danish agriculture, it may be noted in this connection, has been conspicuous for the rapidity with which it adapted itself to changes in relative prices."
Is there not there an indication of the desire of the commission to ensure remunerative employment? In paragraph 187 the report states:—
"Once a dangerous development of costs and prices has occurred a correction may prove very difficult, and it is therefore of the greatest importance that full consideration should be given to the possible effects of any proposed measures affecting the cost and price structure, and that, moreover, some general views should be taken as to what price movements may be considered justifiable for a country in the position of the Free State.
"It is impossible not to be struck by the multiplicity of agencies through which prices may at present be fixed. The price of wheat is fixed by the Minister for Agriculture; the price of sugar is a matter for determination by the directors of the Irish Sugar Company, which has a statutory monopoly of this trade; the price of pigs is fixed by a statutory board, and the price of bacon by another board; the price of butter is also fixed by the Minister for Agriculture, who, in this way and through participation in the dairying industry by means of the Dairy Disposal Company, largely determines also the price which the farmer obtains for milk from a creamery.
"It would seem to be in the public interest to establish a greater coordination of so much of the work of the different price-fixing agencies as it may be necessary to retain. More attention ought also to be paid to the monetary repercussions of all the measures taken affecting the level of costs and prices, a question to which we shall revert in later sections of this Report."
While it is quite true there was no representative of the farming industry on this commission, they say in paragraph 328:—
"There is another aspect of the subject of bank loans for agriculture to which it is necessary to make reference. The Banking Commission of 1926, in its Second Interim Report, commented in strong terms on the moral risk of loans for Irish agriculture, and urged the need of a more reasonable and businesslike view of the collection of debts secured on land or incurred by farmers. It is to be feared that, so far from any improvement having taken place in this matter during the past ten years, there has been a further deterioration of the position. A contributing factor to this result has been the extension, from time to time, by legislation, of the discretion conferred on the Land Commission to acquire land by compulsion and to re-allot it to new occupiers."
Later on, on page 315, paragraph 509, it is stated:—
"Great importance attaches to the question of security of tenure."
They go on, in the course of their observations in connection with the question of the compulsory acquisition of land by the Land Commission, to direct attention to the fact that a man in the occupation of land cannot have the interest or the heart in it that he should have, nor would he be advised to put his capital into lands which were likely to be acquired by the Land Commission; nor, as they say, in another part which I cannot remember just now, is it likely that the farmer as such will be able easily to acquire capital for the working of his lands.
As I have said in the beginning, right through the whole report there runs the one warning, the balance of payments. It is almost a direct admonition to the country that they have to improve and extend their agricultural production and their exports. Bear in mind the very small incomes and the very large inroads that have been the result of the events of the last few years—the large inroads upon what farmers were able to earn. This is obviously the time when efforts should be made to assist them. No greater assistance is asked in this motion than to reduce the burden of direct and indirect taxation and to restrict the creation of further dead-weight public debt.
The commission points out many ways in which the question of public debt could be dealt with. I do not propose to go into the matter at this late hour, having regard to the long time this discussion has taken, or rather to the long time that has been occupied by some of the speakers. I have looked up returns showing the Post Office deposits and Savings Certificates, and I find that in 1931 the sum total of the two amounted to £1,340,000; in 1933, it was £1,000,000; in 1934, £525,000; in 1935, £685,000; in 1936, £975,000; in 1937, £940,000, and in 1938, £574,000. There is a reduction there; it may be a temporary reduction, and there may be reasons for it. But the position does not appear on its face to be improving. The country must advance. The success and prosperity of the more stable countries have depended upon the capacity of the people to save. According to that figure, we do not seem, in respect of those who use the Post Office Savings Bank and the Savings Certificates, to be able to do it.
We have been asked, in the course of this discussion, to give some information to the Government as to where they can effect savings. I gave it here on a former occasion. I cited something like 24 services in which the expenditure has gone up since 1931-1932. They are not social services. The first one is the Prime Minister's Department; the second is the Department of the Comptroller and Auditor-General, and the list goes on to the Minister for Finance, the Revenue Commissioners, Commissions and Special Inquiries, the Public Works Office, the State Laboratory, the Civil Service Commission, Rates on Government Property, Secret Service, Miscellaneous Expenses, Stationery and Printing, Law Charges, the Department of the Minister for Justice, the Gárda, the Supreme Court and High Courts of Justice, the Minister for Education, Science and Art, National Gallery, Industry and Commerce, Marine Services, the Army, External Affairs and the League of Nations, taking out the salaries of Local Government and Public Health, National Health Insurance, Forestry, and the Land Commission.
I estimate those represent a sum of approximately £3,000,000 over what they were in 1931-32. Has the country been run so much more efficiently during that period that we can afford to spend that extra money? Perhaps I should not say "afford to spend", because the calculations are from estimates in both cases. In the Budget discussion I disputed the claim of the Minister for Finance that the social services were responsible for the great increase that has taken place in public expenditure. Last night the Minister compared the expenditure for 1931-32 with the expenditure for 1938-39. I must refuse to take part in a discussion of that kind. If we are dealing with the taxation for this year, we have to talk about the expenditure for this year. If we are dealing with last year, we can deal with the taxation and expenditure for last year as such. But we ought to be up to date about those matters.
In the course of the criticism of the Budget I went to the trouble of taking out the figures relating to civil servants, the Guards and others over and above those employed in 1931-32, and I found there were 5,000 extra. It may be there is one section in this House anxious to see the policy in operation during the last seven years carried out successfully, as distinct from those in another part, on the Government side of the House, those who want to continue with that policy.
The leaders of the Labour Party, and the Labour Party generally, would seem to be wedded to this policy of high expenditure and, possibly high taxation. Some speaker here, in the course of this discussion, said that expenditure scarcely mattered if it were well spent. I should like to know who has discovered any Government method of spending money well. It is all extravagant. It must be extravagant. It costs money to collect it and it costs money to spend it. The more that is taken from the pockets of the people, no matter in what walk of life they may be, the less there is for those people to spend, and they generally manage, in the ordinary course, in most countries, to spend their money better than the Government can afford to spend it.
The Minister disputed a figure, which I took from the Estimates under his name, of 6,000 Guards. That is the number that is in this year's Estimate and in last year's Estimate. In 1931-32 the number was 5,443. The Minister, in the course of his remarks, said that he had phoned up the Guards and discovered that there were not 195 more than in 1931-32. It does not appear to be easy to see how public business can be conducted if the documents can present one figure and the Minister presents another. Apart from that, however, I take out the sum of money collected in tariffs only in the last year in which the Public Accounts were furnished. That would be the year 1937-38, since the accounts for last year are not yet published. I find that the Government collected, approximately, £500,000 in tariffs over and above what was collected in 1931-32. Then, on looking up the Revenue Commissioners' Estimate, one finds that the extra costs involved amounted to £200,000. Now, that is very considerable. One page is taken up in the Report of the Public Accounts of 1931-32, and seven pages are taken up in the report for 1937-38 by customs duties. I am speaking now of Estimate as against Estimate, and yet one Department is up £200,000. That is very expensive and it bears out what we have said: that the more money a Government collects the more extravagantly the money is collected; and the more money it collects to spend-well, the more extravagantly it is spent.
Looking over what are called social services in this country, one is struck by the very large figure that is down for unemployment insurance and for unemployment relief. In a country which had a sound agricultural economy, which had the expansion which we have been told has been marked here during these last six or seven years, it is extraordinary that two such sums of money should be required. It is no credit to us that we have social services of such a magnitude and that our control of the business of the country and of the national economy is such that the industries we have got, whether the primary industry of agriculture or the secondary industries, are incapable of employing all these people. Then, when one considers what sum of money each individual gets from that fairly large distribution, one gets rather appalled. There are something like 46,000 persons who get employment on relief schemes, and dividing that 46,000—if the number be correct—into £1,290,000, I think it gives a figure of about £28 a year, or less than 11/- a week. Of course, there is more than 11/- a week paid, but there would be only 11/- a week for the year, or £28 for the year in any case. That does not appear to be remunerative employment, and it is a question whether it is good business to employ people and give them such small sums as to give them no great hope of being able to rehabilitate themselves or get into an economic condition. I do not think there is much hope of a man being able to rehabilitate himself if that is all he can earn.
However, the sum and substance of the efforts that have been made to industrialise the country and improve its agriculture show a large emigration from the land, large numbers of people in the cities, unbalanced Budgets, and high taxation. Was it not well, and was it not time, that some such report was made to this House and this country as is there? Is it not obvious that, if we are going to try to get employment for these 46,000 people, who have to be assisted annually by means of Government grants, some effort must be made to make industry profitable, whether the primary industry of agriculture or the secondary industries? It is for that purpose we have put down the resolution. My opinion, for what it is worth, is that this country is living beyond its means in so far as public and local expenditure is concerned.
Whatever may be said in condemnation of other countries for pursuing an inflationary policy, the policy that has been pursued here, and that is now continuing, leads only in that direction, and leads in a direction in which the people are denied even whatever satisfaction there might be involved in an inflationary movement, as such.
The Minister went to great pains to deal with this inflationary policy, or rather the line that is in the amendment proposed by the Labour Party— to utilise the credit of the nation. Of course, it may have very many meanings, and I think we ought to have the meaning explained. The nation as such would not refuse to lend its credit to proper spending. Nobody has put forward any spending scheme. We heard many years ago the great schemes that there were for putting thousands of people into employment, but only a few months ago we were told that there were none, and the Labour Party have none.