Dáil Éireann debate -
Thursday, 23 Apr 1942

Vol. 86 No. 8

In Committee on Finance. - Central Bank Bill, 1942—Committee Stage (Resumed).

Debate resumed on amendment No. 2.

The Taoiseach

I was just saying, at the time it became necessary to report progress, that although the Second Reading debate should have decided, as far as we are concerned here, the major questions of this Bill, the questions of principle involved in it, at the same time it was inevitable that in the discussion of the amendments to it we should have these fundamental view points brought up and debated again and again. Now, in debating these points the first thing necessary is to be quite clear as to what the Government had in view in this Bill, what it purposes to achieve by it and why, in fact, it brought it in at all. The history of the Bill is something like this: that shortly after we came into office, in the carrying out of the programme that we had indicated, we thought it desirable that a central bank should be established, and that its powers should be considerably wider than the powers which are being exercised by the Currency Commission. When we proceeded to do that it was strongly suggested that we should not do it until there had been a public examination of our financial position and of the whole question of a central bank with it. I am half sorry that the period of time which elapsed since has passed, though I doubt very much, if we had proceeded at that time with our project for a central bank, it would, in effect, be very much different from the Bill before us. I think that the facts of the situation, when we had thoroughly examined them, as we would have examined them, would have led us almost inevitably to the point of this Bill.

When you start from the general theory on which central banks have been and are founded, you will very quickly realise that the circumstances in the different countries affect the general conclusions very seriously, and that the conditions here are in a way exceptionally peculiar: that the powers which they give to the board of a central bank in other countries would be ineffective in what would be one of its chief functions, apart from the maintenance of the soundness of the currency, that is the control—or if I might put it in a wider from—the influence on the volume of credit in the community. The methods by which that influence on can be exercised effectively in these other countries cannot apply here and would not work here. If you want to get quickly the reason for that you will find it in the fact that here our commercial banks have an exceptionally large volume of sterling assets in a liquid form immediately at their disposal, so that the methods which would be used in other countries, where their commercial banks were not in that position, would not be effective with us at all. I would suggest to the members of the Labour Party, and to all those who approach this question of a central bank from the point of view of effective control and of purchasing power available for the community, to study that fact and ask themselves, how they would get over that particular difficulty.

General Mulcahy

Would the Taoiseach mind restating the difficulty?

The Taoiseach

The difficulty is the volume of sterling assets in liquid form immediately available to be turned into cash by the commercial banks. We have not a money market, but even if we had, unless the volume of business that was being done by it was extraordinary in comparison with our other resources, it would not be effective. That is the central point as regards the difficulty of giving to the central bank the power of controlling the volume of credit here. I can assure members of the House that we have tried exceptionally hard to find an effective method by which our central bank can do the things that the Labour Party desire to be done, and have not found any really satisfactory method. The nearest we have gone to influence it is in Section 45, and that is not through for reasons which will be given when we come to discuss that particular section. So that, apart from any difference of opinion there may be about what we should set out to do, we have this practical fundamental difficulty which arises from the fact that our commercial banks have at their disposal a very large quantity of liquid assets which can be turned immediately into cash. That is the practical fundamental difficulty and members of the Labour Party, or other members of the House, who feel that it is essential to have this power of controlling the volume of credit and of purchasing power available for the community will have to apply themselves to that difficulty.

To put the attitude of the Government in this matter clearly, it is this: we accept generally the doctrine that as the volume of credit and of purchasing power available for the community has an immediate social influence it is of social importance, and, therefore, cannot be outside the control of the public authority. This Bill maintains that principle in general inasmuch as there are no limits to the powers of legislation of this Parliament. Therefore, we can legislate in regard to the banks just as we can legislate in regard to the farming community, the holding of land or any other business. It is wrong, therefore, to say that we are handing over our sovereignty on that particular vital social matter to another body. We are not. This Parliament has at any time the right and the power to bring in any laws affecting the banks, and the whole question of banking, just as it has in regard to any other business matter in the community.

Mr. Hurley

Why not do it in this Bill?

The Taoiseach

We will come to that. Let us see where we stand. I say that the Government are accepting, in general, the doctrine that the volume of credit in the community is of such importance to the well-being of the community that it is a matter of great concern for Parliament and for the Government. I say that there is nothing in this Bill, in fact in the nature of things, on account of the sovereignty of Parliament, there could not be anything which would deprive Parliament of the power of dealing with that business any more than any other. The power is always there. The question is at what point and to what degree you exercise it. With regard to the exercise of it, there are practical considerations which members of this House will, I am perfectly certain, be prepared to see the force of. The creation of credit, even for public purposes, would have, and could not fail to have, an influence on the whole question of prices, the whole question of the relative position of different prices to the community. The exercise of the powers affecting that credit from day to day is a work largely for experts, people who understand it and know it thoroughly, and who see all the implications of any particular proposed action. Therefore the Government, if they were directly and immediately to exercise it, would have to exercise it through a body of experts. They would in fact have to be, so to speak, civil servants if you wish. In the exercise of that particular power, there is always a danger that people who are in need of money, the Government just the same as private individuals, would resort to what would appear to be an easy way of getting over some of the difficulties we have to solve here year by year when we come to the Budget; in other words, that they would meet their financial yearly obligations by the convenient method of supplying themselves with credit.

Now, no matter how it works, this ultimately in its effect would be a form of taxation on the community. If it were to be exercised, it would have to be exercised with practically the same examination of it by the House as, for example, by the body of experts. But it is too ready and easy a way to have at the disposal of the Minister for Finance for settling difficulties, when he did not want to face the difficulty openly and directly of taxing the community for the services, and to have it there without a certain amount of restriction. In other words, there are the same difficulties attached to it that we have because our system is a Party system; the great difficulties caused by Parties being jealous of one another and different sections of the community being jealous of the power exercised in a democratic State, particularly when exercised by one political Party. You would get all those difficulties in that connection if you had the direct and immediate control that the Labour Party seem to desire for the Government.

Apart from any dangers of that sort, the Government, for example, do not appoint civil servants directly. We hand over the power of selecting the servants of the State to the Civil Service Commission. If the system is not working, or if we have reason for thinking that it is working otherwise than we intended—giving fair play and providing the best civil servants—we can interfere. But we do not ourselves take on the daily task of appointing these civil servants. In another direction we cut ourselves apart from the judiciary. We make the laws, but we do not sit down ourselves to interpret the laws. We give a certain amount of independence to our Judiciary and let them carry on. If we find the judicial branch is not working properly, there is nothing to prevent us—there are certain difficulties, of course—from coming in and changing the system or, in certain cases, removing individuals. So that, both from the point of view of keeping temptation away, so to speak, on the one hand, and, on the other hand, from the practical point of view of handing it over to experts and giving them a certain amount of latitude and liberty in carrying out the general instructions given to them, this method is just as good as the other method.

The Labour Party, of course, are quite right in saying you can set up a central bank and make it part of the Government organisation. You can go further and nationalise the whole banking system. I think that the Labour Party, if they want to be consistent in their views, would be driven almost inevitably, not merely to having a central bank of the type they are suggesting, but to the whole question of the nationalisation of banking as a general public utility.

Mr. Norton

While we have the Ceann Comhairle or the Leas-Cheann Comhairle in the Chair, we cannot discuss that on the Committee Stage of this Bill.

The Taoiseach

I am trying to see where we stand, where the difference of opinion is between us. It is true that not merely the volume of credit, but the particular use that is made of it affects the well-being of the country. Therefore, in this Central Bank Bill we are approaching it from different points of view. I would say to the Labour Party that they could not get through this banking Bill the control which they think is necessary. I am not judging whether they are right or wrong in the policy which they think is necessary. We are not aiming at anything at all so complete and drastic in this as the Labour Party. As I have said, we are approaching it from the point of view that on the whole, so far as we can see, the commercial banking system as it existed, compared with other banking systems in the world, was perhaps one of the soundest from the pure point of view of the business that they were carrying on, the safeguarding of the deposits made with them by farmers and other depositors; that their work as bankers was done as efficiently as in any other country in the world, and perhaps more efficiently than in most. The question is asked: "Why have they so much of their investments outside the country?" Fundamentally they are not to be blamed for that.

Mr. McGilligan

Is "Blamed" the word? Surely not.

The Taoiseach

They are blamed. I do not know any other use of the word. One of the things brought up against them is that so much of their investments has been outside the country and that a very large volume of our assets is abroad. I say that was in the nature of our trade with Great Britain. It was our whole fundamental policy here—the fact that our economic and political position led inevitably to that.

Mr. Hickey

Of course the welfare of the people came second.

The Taoiseach

It was not the primary purpose of the banks as banks to look after the interests of the people.

The more we go on the more we will find that we are approaching those matters from certain similar fundamental viewpoints, differing only in practicality. It was the business of the banks to make their profits, to safeguard the moneys that were lodged with them, and to be in a position to give those moneys back at short notice. The fact is that the farmers and others who deposited their moneys with the Irish banks were not looking so much for high rates of interest; what they wanted was that the capital should be immediately available, and that it should be safeguarded. That was one of the reasons, amongst others, for banks having the assets which they had outside the country. I am going to talk about that in a moment. The fact that its immediate availability, and the liquidity, so to speak, of their capital, was the primary concern of our farmers, allowed the banks here to have a far higher degree of liquid assets than the banks in other countries. Personally, I believe that it was not necessary, and is not necessary now, to keep such a large quantity liquid. At any rate, they did it in response generally to the attitude of the community they were serving. How did they come by those assets abroad? The main way they came by them was by the excess of our exports over our imports. There were claims on Britain, and they could not be transferred here—that is the next point we have to get into our minds—except by the transfer here, in the main, of goods from the other side. There may be certain interchange of securities and so on. While it is true that we have certain claims on Britain which bring in something like £13,000,000 a year, there are claims on the British side, too, of, I think, about £6,000,000, and no doubt you can change one of those sets for the other; but on the whole the bringing home, the repatriation, as it is called, of our assets can in fact only be effected by the bringing over of goods, and the fact that those outside funds, which the banks have, remained outside is because we did not import more. Our policy in the development of industry was to try to bring back those assets to the greatest extent possible. The fact, at any rate, is that they have those liquid assets available; that they have enabled the banks to circumvent any of the ordinary measures taken by central banks to control the volume of credit, which is done by the amount of cash that is immediately available for the banks.

We approach it then from the point of view that, first of all, we acknowledge the fact that this control and influencing of the volume of credit on account of its effect upon the community is a social matter. We try to deal with that in this Bill by saying: "Very well. We cannot do it by the methods employed in other countries, by which the central bank can more or less effectively control the volume of credit. We will try to do it by co-operation between the commercial banks on the one hand, the central bank, which is watching out for the community interest, on the other hand, and the Government." The Government, it is true, in this Bill has no direct power of ordering, except the ultimate power which it has of saying: "This thing is not working, and we have got to change the whole system. The credit policy which you were following is obviously having detrimental effects on the community as a whole, and we cannot stand for that. That cannot happen. We are going to change it." It would be changed by coming to the Dáil. We have that power ultimately, but there is in this Bill no direct power by which the Government can order the bank to do any special thing. A number of people are set up with responsibility for trying to control the volume of credit in the general interests. That is their terms of reference—to control it in the general interests. By their fruits we shall know them, and, if it should appear to the Government that that control is not being exercised in the direction best calculated to secure the welfare of the community, then the Government will have to take action. Whatever Government is in power will have to take action in the way action can be taken through Parliament. Ordinarily, what we hope will happen is that there will be close contact between the Minister for Finance, the central bank, and ultimately the commercial banks. When the Minister for Finance seriously points out, with argument, that a certain condition obtains, and that in his opinion certain things ought to be done, they will consider it and give their views. They will point out, naturally, the difficulties there may be in pursuing the lines which he suggests, and consequences that may not have appeared to him will be shown up, but ultimately the hope is that there will be agreement in policy between the central bank and the Government in regard to this particular social matter.

The central bank, if it finds that the commercial banks are acting unreasonably, can come to the Minister for Finance and suggest to him that certain powers ought to be given to them by legislation, in order that the things that they consider vital for the community should be done. In the same way, if the board of the central bank should be found not to be acting in accordance with what would appear to the Government to be the general interests of the community, it has one final remedy, and that is to come to Parliament and change the system.

Mr. Davin

That might be too late.

The Taoiseach

There is no use in starting in advance and making provisions, when you have, as I pointed out, the practical difficulties that are here. Will Deputy Davin or anybody else point out to us how you can definitely affect the volume of credit through the central bank? Even if the Government take it over, unless they go further and nationalise the whole commercial banking system, they will not be able to do it. Why then should we, in advance of events, do a thing which it would be a pity if we had to do it at any time? It would be a pity if any Government had to do it. If they could get it done otherwise, it would be very much more effective. The commercial banks have an interest; they have a community interest. They serve a very large section of the community, and their interests are very largely along the lines of the well-being of the community as a whole. They would suffer through certain evils which would follow from a wrong credit policy. Therefore, there is a hope that we can get that co-operation, which is the ideal way of getting this work done —co-operation between the public authorities, represented by the Government and Parliament, and the central bank, which would be a body of experts. They would become expert anyway; I suppose we will have to start by getting whatever experts we have. One of the reasons I am sorry we wasted—not quite wasted, but lost—a number of years on this thing, and did not do it immediately without setting up a commission, is that we would now probably have a greater number of experienced people amongst us than we actually have at the moment.

We are fortunate in that, on the Currency Commission, there are a number of people who have been dealing, although not quite as fully as will be the case in regard to the central bank, with a number of problems that will have to be dealt with by the central bank. We shall have in the board of the central bank a body of people whose sole business, whose duty, it will be to influence in so far as they can the use of the volume of credit in the interests of the community. If we think in advance that they will not do this, we ought to show why we think so.

As I said in regard to this particular number of three banking directors, it is possible that if we were starting without a Currency Commission in existence, we would not have the number three. In fact, it is almost certain that if the Currency Commission had not been formed in the way in which it is formed, and if we were beginning de novo with a central bank idea. we would not have them here, even to the extent of allowing them to send up a panel from which the Minister can appoint.

Mr. Norton

Could you not put them on the board in the exercise of your executive powers without accepting a statutory obligation to do so?

The Taoiseach

That is true. I see the Deputy's point. It is: if this Government wants to appoint these three directors, let them do it. But I say that to take them off would indicate the finding of some fault with the idea of bank directors on the Currency Commission.

Mr. Norton

You will throw out three in any case.

The Taoiseach

Three of the six put up, yes; but the point is that the banking business, as such, is naturally closely interested. It is a business we are going to affect and if we were, for instance, setting up some labour board, I imagine that the Labour Party and the trade unions would be anxious to have some representation on it, even though the matter would not be of vital public importance. The banking business is a very big business so far as the country is concerned and from the point of view of industry, if you like.

Mr. Davin

The biggest of all.

The Taoiseach

It is perhaps more fundamental in its effects than others and, therefore, is there anything unreasonable in putting these directors on the board? I quite agree that we could have left them off and, as I say, the chances are that if we were not taking over from the Currency Commission, where this system exists and with the members and constitution of which we cannot find fault, we might, not have put them on. We cannot, however, say: " You should not have done that. You have done it in the interests of the commercial banks and you have neglected the fundamental purpose for which you were set up, the welfare of the community as a whole, and have tried to use your position to assist the commercial banks." We cannot point to any such thing.

Mr. Hickey

The Dáil has no control over the board, when elected.

The Taoiseach

It has. It will observe its fruits. The Minister for Finance will be in constant contact with it—in the nature of things, he should and will be—and it is not necessary to set out in the Bill that it be so.

Mr. Davin

He will not answer questions about it here.

The Taoiseach

That is a different matter, but the Deputy, I am perfectly certain, will have many an opportunity for talking about it just as Deputy Hickey gets many an opportunity of talking about it. He seeks them out in all sorts of strange places.

Mr. Hickey

Because I have good reason.

The Taoiseach

The Deputy and every other member will have the same liberty to bring up the matter. If, for example, there was a lowering of prices and obvious deflation, Deputies could ask why such a policy was being pursued and whether the Government was in favour of it.

Mr. McGilligan

I could guess what the Chair would say to any such question. It would ask what Minister is responsible for it.

The Taoiseach

I would say that you can hold the Government as a whole at all times responsible for the public welfare. They are supposed to have that as their primary consideration, and anything that affects the public welfare is a matter in respect of which you can ask the Government what they are doing.

Mr. Hickey

We have been told by people here that the banks are almost public benefactors.

The Taoiseach

They are performing an extremely valuable social service.

Mr. Hickey

A very limited one.

The Taoiseach

The Deputy cannot have it both ways. He had better justify the complaints he makes by pointing to facts and not by making mere general statements. I have no brief for the banks, I can assure you, but I say that, in the circumstances of our country as they were and in the conditions prevailing here, the banks did their ordinary business and did not take on a wider business which was not theirs, namely, the whole question of managing credit in the interest of the community, except in so far as they found that it redounded to their benefit as well.

They were like any other business. They were confined to dealing with particular things and some of them were not even aware of the wider aspects of these matters. There is the point about which Deputy Dillon spoke. You find that one man like Walter Leaf, the Chairman of the Westminster Bank, notwithstanding all the arguments about the creation of credit, flatly denied to the end that any such thing could be done by the banks, while the other man, McKenna, took quite the opposite view and said that the banks do create credit. The point is that very often you find the banker who is doing his daily business, which is to give loans and so on to credit-worthy people, and, in giving these loans and advances, making his money, is not always conscious and has not been conscious of the wider effects on the welfare of the community of the policy adopted.

The banks adopted whatever policy was sent down from headquarters, and to a certain extent some of these headquarters were aware of the wider implications of what they were doing, but they considered the matter not so much from the point of view of the effect on the general welfare, which it was not their business to consider, but from the point of view of the effect on their own business. It was a private business, so to speak, and, on account of its importance, you have a group of people who will say that the whole of this public utility is such that it ought to be nationalised completely. If we were to argue nationalisation, we should be up against the same problems as arise in connection with the nationalisation of the railways, or of any other public service. The question has to be asked: Is the public interest going to be served by nationalisation, or by the system in existence at the moment?

Mr. Hickey

What does the Taoiseach himself think?

The Taoiseach

I am trying slowly——

Mr. Davin

To dodge the issue.

The Taoiseach

No—to tell you what our position is. I may say that it was a very difficult thing to find myself in the position in which I was convinced almost against my will. I had, however, to admit argument and reason. Being unable to find a hole in the argument, as a reasonable being, as a person governed, I hope, by reason as much as most people, I had to come to the conclusion that in our circumstances—and we must remember that circumstances may change and the position will change with them—you cannot by any central banking arrangement effectively control the volume of credit here. We are hoping to influence it by the action of the board of the bank, and by the action of the Government in consultation with the central bank; we are hoping to influence it in the direction which appears best for the community. We have not set out in this Bill to control it. I do not believe that even if the Labour Party took it over they could control it. Even if the Government had it in their hands they could not control it unless they put the commercial banks completely out of business.

Mr. Hickey

That is putting a small group of people and money before the mass of the people.

The Taoiseach

Now, the Deputy is fundamentally a reasonable man——

Mr. Hickey

The power of money is a wonderful thing, I must admit, atter the Taoiseach's statement.

The Taoiseach

There is no use in talking in general terms. I approached this matter from the point of view seeing that, in so far as the control of credit was going to influence and affect the well-being of the country, we would try to get that control, we would try to arrange that that control would be made available in the interests of the country. This is the best we can do in that direction. If you say that we should have brought in a full-blooded Bill, taking over and nationalising the whole financial system, that is another matter.

Let anyone who likes to do that do it, but I am not prepared to take up that attitude, because I do not think that at the present time it could be managed as efficiently as we could get it managed by proper co-operation. This is the only way left to us if we are going to get this thing done. So far as the Currency Commission is concerned, we could not point out things it should have done and did not do. We could not say that the Currency Commission had transacted its business in a way that meant that it put the interests of the banks, as such, above the interests of the public. We could not do that and we could not say that these people had been tried and found wanting and we were anxious to get rid of them.

After full consideration, we decided that there should be three representatives for the banks. We felt that the banks would get a better representation by that number than by any other number. These commercial banks are competing institutions. It is quite true they have a standing committee in which they try not to run counter to each others' interests, except in the ordinary competitive way. They try to have common policy in regard to certain matters, but of course they have different conflicting interests and if you want to give proper representation to them the number three appears, on examination, to be the appropriate number. I believe that if the circumstances were otherwise we would not have the association of the banks with us at all except from the point of view of trying to get co-operation. The only reason for having this panel chosen by the banks is that we are trying to proceed by way of co-operation and we are building to a certain extent on a foundation that already exists.

We felt it was only right that the interests of the community should be preserved by having at least a two-to-one majority. The non-banking members, if the whole of that board is nominated, will number six; that is, those not directly associated with the commercial banks. Is it going to be suggested that, if it comes to a question of the public as against the private interests of the banks, those people who have not any immediate or private interest, so to speak, in the commercial banking system, will not follow the line of their duty and vote accordingly? It means that if you start with three for the banking system you almost inevitably are driven to have a considerable balance against them. I do not think the number is too great, when you view the importance of the decisions which are going to be arrived at. I think the proposal in the Bill is based on good grounds, though probably seven would have been the number we would have chosen were we not having this fundamental three. In other circumstances we probably would have chosen seven and then a variety of opinions would possibly be expressed.

In other countries, and for good reasons, they might want different types of industry represented. I can imagine you would have on the boards of these banks people who would be chosen because of their knowledge of various businesses which would be affected by the credit policy of the banking system. Coming back to the section, I may say that this number was chosen because of the foundations on which we were building and the general idea to try to get by co-operation something which we could not get by coercion—at the moment anyhow, the conditions being exactly what they are. There is no half-way house. If you want to get the power which the Labour Party apparently seek, you will have to go far beyond a central bank; you will have to nationalise the whole banking system.

There is another important consideration. Are we, by any chance, exaggerating the importance of money in the community? Money is very important, no doubt, but even important things can be exaggerated, and listening to some members of the Labour Party, as I do here from time to time, in my opinion they exaggerate what can be done by the exercise of control of credit.

Mr. Hickey

We do not exaggerate what money can prevent being done.

The Taoiseach

I do not know whether the positive or the negative way of looking at that differs very much; it would not matter much which way we look at it. Let us consider the position of other countries, America, for instance. For years past there has been an abundance of money there; a vast pyramid of money had been collected there, but yet you had the position that although money was available in plenty; and there was a sound basis of credit, because other things were not equal it could not be made effective use of. The position is that you must have other things besides money in order to make the money most effective. Take our own position with regard to turf. There is no doubt, if employment were the fundamental thing, that we could get that employment if we could take hold of people and say to them: "You must do this." In that case it would mean a complete regimentation of the community.

Mr. Davin

Why can you not get sufficient money to pay them a living wage?

The Taoiseach

It is all a question of service on the part of the community, one to the other. One section may refuse to give service although another section is prepared to pay for it. Ultimately the position boils down to this, that so far as employment is concerned there must be made available opportunities for giving certain service and there must be people prepared to give that service in return for what will be paid to them by other sections of the community. If one section of the community is prepared to pay for a definite service, a particular class in the community must be prepared to render that service.

You must have a foundation of raw materials and other things to work upon. When you have done all that you must have the power to take people from one section, saying: "There is no work to be done by you there; you must come down here where there is work, and if you do not, you will not get any help from the State to live where you are."

Mr. Hickey

Have we reached that position yet?

The Taoiseach

How many questions must there be?

Mr. Hickey

The Taoiseach knows well that there are plenty of jobs to be done which cannot be done.

The Taoiseach

Then let the Deputy give me a list of things to be done, of value to the community, which we are not doing, and which would return more good to the community than is expended on them.

Mr. Hickey

That just leaves us where we were.

The Taoiseach

There are many things leaving us where we are.

Mr. Hickey

I could give several instances of cases.

The Taoiseach

We have not been prevented as a Government from doing anything worth doing because of money. In fact, if you look, you will see where, under Trade Loan guarantees, a considerable amount of money was made available for things that might be regarded as useful, and the money has been lost, because the conditions under which they were working did not make it possible for them to give a return even equal to what was expended on them.

Mr. Hickey

I was one of a deputation, which included two members of the Fianna Fáil Party, to the Minister for Finance, less than 12 months ago, seeking £50,000 for work of national importance.

The Taoiseach

If the Minister refused the deputation, there must have been some mighty good reason. I am perfectly certain that, if the Deputy came with a good scheme, he would have been heard—and he would not have to come to the Minister for Finance. I can say, from my experience and knowledge, there has been no project of public value that has failed to be initiated here because of want of money, if it was deemed, by those who were able to judge, that it was something of value.

Mr. Hickey

Two of the most responsible members of the Taoiseach's Party were on that deputation.

The Taoiseach

I do not care who were there, if they had a good case. Very often members of Parties come along with cases that are not too good. I can only say that, as far as my experience goes, either from the point of view of the Government or from the point of view of any schemes brought to my notice as having difficulty in getting money, I have seen none of them failing if they seemed to be at all credit-worthy.

Mr. McGilligan

That is the point. Does credit-worthy mean a 5 per cent. return?

Mr. Davin

That is it.

The Taoiseach

I was about to come to that. The whole question is the rate. The rate depends very largely on what can be done. Is not that so? It depends on the use they can make of the money otherwise. What use can be made otherwise of the money, even if you go to the point of credit? I, for one, have not been happy at all about some of the rates that have had to be paid. In view of the fact that there are large liquid resouces available from the banks, and that there are opportunities here of using those moneys at a rate which would not be less than the current rate, I do believe it ought to be possible to get money here for national purposes at lower rates than we have been getting at present.

Mr. Davin

Hear, hear!

The Taoiseach

As long as we can come to a definite agreement in regard to it, we know where we are. That is a matter for argument on one side and the other. You cannot come to a conclusion in this matter on a general basis: you must see the whole of the circumstances. I have not got it personally, but I have been informed by persons who have no interest in telling me untruths, that the rates at which money is made available in this country—whether for private or public purposes—are far lower than the rates at which other countries have been able to get money.

General Mulcahy

Including for Government work and local authorities?

The Taoiseach

In general terms, this is the information, and I assure the Deputy that I have not had an opportunity to go into it myself, and am only taking it on the basis that those giving me the information are not telling, and have no reason to tell, a falsehood, and I do not think, on examination, the information would be found to be false. I have been informed by what I regard as authoritative sources, that the rates at which money has been available here, both for private and public purposes, compare favourably with—speaking in the weakest form or, in a much stronger form, are much lower than—the rates abroad. As I say, a general statement of that sort is difficult, and unless you get facts you have to take the information.

Mr. Childers

Up to the war or including the war?

The Taoiseach

I am not talking of the present war. This Bill would have been brought in under ordinary circumstances. It is long overdue. I wish we had our people actually using this central bank, because we would have a body of experts which would be able to give advice and deal with any crisis that might possibly occur as a result of the present situation, but the bank is not functioning. If we have to take any action to deal with any crisis that might result from the present situation I think it will have to be ad hoc legislation. No doubt, if we had this body set up and working, we could get their advice, but any action to be taken would have to be immediate and ad hoc. We hope that any such thing will not be necessary, but I am anxious to point out that this is not a Bill designed to meet an emergency situation. Its main character was long ago determined and so designed to set up a, central bank organisation here which would be able to give the Government expert advice with regard to monetary policy, and so on, and which would be in a position to give effect to that policy for the welfare of the community as a whole.

In the course of this debate, we will have various questions on various points—for instance, the extent to which banks can create credit. That question was raised by Deputy Dillon to-day in a special form. There is no doubt that we will have to deal with that question in some particular form. There is difference of opinion with regard to it. I told the House about the chairman of the Westminster Bank, who denied the point flatly. He denied it to the end, and I am told he was a practitioner in a very big way.

There are others who will deny it and others who will say that, while theoretically the power exists, the exercise in fact of that power would have such immediate consequences that they would not dare continue it, and they point to the experience of the present war. They would say that their powers in practice are very limited indeed. If you point to the increase in the last war and in the present war, they say: "Well, look at the immediate consequences; see what happens the community where this thing occurs. If they did that to any large extent, it would immediately show itself, either by depreciation of money or by unemployment, or by inflation, with the other results to follow." If you say to them: "Look at the war at present and how they are financing it," they would reply: "All right; is the community prepared, in order to offset the effects of this increase in the volume of credit, to put up with privations that the community at the other side have to suffer? Are they prepared to be rationed, to have their wages impounded, so as to lower the effectiveness it otherwise would have of an increase in purchasing power and sending prices sky-rocketing, and all the rest of it?"

Before this is done, we must take these questions and discuss them—the extent to which the banks can, in fact, create credit and influence the volume of credit. We will also have to deal with the question of parity. All these questions are fundamental and are exercising the minds of a large number of people who have no interest but the public good. There are the two schools of opinion, the two extremes, with views held honestly by people who have no interest but the public good. My own attempts, over a long period, to try to understand this, have led me, I must say, to a much more central position than I would have occupied before.

This has been one of the questions—social credit, and so on—from an early stage. I believe that a lot of the foundation of it is unsound: that is my final opinion. It is not easy to argue that in a conclusive way, where you could get the net two points and say that one is right and the other is wrong; because all this is fairly complicated, and the effects and reactions of all the various proposed steps are so many that it is not easy to assure yourself and be confident that you have seen the whole series of reactions and taken them into purview.

However, this Bill is not put forward as a Bill that will enable the bank or the Government effectively to control the volume of credit. It may influence it, and if there is co-operation it can influence it tremendously, but it is not designed to effect it by coercive measures. It is based on an attempt to get co-operation between the three bodies interested, the Government, as representing the community, the central bank as being the body that has to manage it from day to day, and the commercial banks. The sole purpose held out in front of it is to serve the public interest without fear, without favour, without Party bias or anything else, and then the commercial banks doing their business will have to co-operate if the three are to work in harmony.

Mr. Hurley

Will the central bank affect the rate of interest of commercial banks?

The Taoiseach

To a certain extent, it can affect it, but again it will practically have to be limited by all the conditions surrounding the particular rates it will make. I hope the circumstances of the present time will help, and that banking institutions will place more reliance upon investments in this country. Therefore, there is a possibility of closer co-operation in the circumstances between the three bodies which will be affected than might have been the case in the past. Their interests will allow them to run parallel or to converge more. I am sorry I had to go outside the immediate section, but I think it will lead to our understanding each other more clearly for the rest of the way than if I had not done so.

In regard to the number, I gave the basis. It is given as the number that was handed to us, so to speak. Undoubtedly, we can throw it aside and have no banking directors. If we were beginning, in all probability it would not be found in the Bill. In the past, there was no fault. There is nothing wrong that I can attribute to that system. We are looking for co-operation, and as a mark of good will and co-operation we are putting these three in. The moment you put three in, if they are not to have an overbalancing influence, you want others who might not have any such bias as perhaps these would have. That goes to show, I think, the necessity of having no smaller number. Other Deputies may have less belief than I have in the public consequences on the volume of credit and may say: "Oh, we might as well throw our hat at this business and let the banks carry on as they carried on in the past." I do not think that is so. In my opinion, that is the other extreme. In this particular matter, I think that the Government will stand mid-way between the two extremes: those who would favour the nationalising of banking and complete control in the Party or in the elected Government of the day, with the consequences that would have—the initial consequences would be very serious—and to others, those who are so conservative, and believe that as everything was done in the best possible way in the past, it would be vain to try to improve things. That is the Government's position in regard to it.

Mr. McGilligan

The speech we have listened to will have cleared the air a bit, even though I do not think the Taoiseach answered many of the questions that were put to him in the form of interruptions from this neighbourhood. The general tone of the speech ought to have done this: it ought to have discharged the emanations of people who believe the sort of rubbish that Deputy Norton read out to-night, and the type of thing that emanated from the present struggling Minister for Finance under the Taoiseach. I still have to deal with one or two points in relation to which the Taoiseach, if he could not give a definite answer, might show the tendency of the Government. He talked about the sovereignty of the Dáil and the sovereignty of the State. We are all agreed on that.

I submit that the worst shock that could be given to the sovereignty of the State and of the people is, that the board of the central bank should be tied hand and foot by a section in the draft of the Bill. I do not know yet whether the Taoiseach believes that the central bank can do anything to extend or to restrict credit; in other words, whether when it gets a certain basis, it can build up a superstructure. He has not answered that. I do not see how the central bank can do it or if it is possible for any bank to do it. When the Currency Act of 1927 was introduced, the then Minister for Finance said:

"We are adopting a new form of note issue, which is elastic, which is based on credit requirements, and, primarily, on the advances of the banks, but not on them only.... In this Bill we make no provision for having the reserves of the bank bear a particular proportion to the note issue...."

The situation under the Currency Act, 1927, was that there were legal tender and consolidated bank notes. The legal tender was a secured issue backed £ for £ by sterling, and the consolidated bank note issue was made a matter to be taken into consider ation on the amount of the liquid sound advances made to the people. As far as I understand, the liquid sound advances have gone and we are hereafter entirely dependent on sterling. If that is not the situation, I should like to hear what it is. If it is the situation, it means that under the Act of 1927 this country thought it advisable to allow for elasticity in note issue in the currency available, based on the liquid sound advances made to the people. Of course, these liquid advances had to be verified in a particular way. In 1942, for some reason, the Government decided that this was an appropriate time to introduce this Bill and we are supposed to be independent of circumstances at the moment. We are building not for the immediate opportunity, as this Bill may last for a good while, but we are taking away the elasticity of the note issue which is £ for £ with sterling and certain other things. Why that change? The Taoiseach spoke of the abundance of sterling assets. Do we give the central bank any power? Have we given it any power to stop a further superabundance of sterling assets flowing in? Do we give it the slightest control over a variable rate of exchange? Can one prophesy that parity will be always reached? Do we give the central bank any opportunity to vary it? I think not.

The Taoiseach

Will the Deputy follow that up about Irish domestic assets?

Mr. McGilligan

Amendment No. 45, in the name of Deputy Cosgrave, asks that there should be paid to each associated bank a proportion to the extent of 25 per cent. of the total issue of legal tender notes, based on the security of liquid sound advances, and that amendment struck the Chair as being so contrary to the principle of the measure for discussion on Second Reading that he was inclined to rule it out. That is the situation, that the Bill is so completely rooted to sterling and so completely divorced from the resources in this country that on the Second Reading, the Chair thought it necessary to rule out the proposal that up to 25 per cent. should be considered sound advances. There is such an abundance of sterling it may be necessary to say that it would be foolish to add anything less. Is that always going to be the situation? I remember when the Minister for Finance introduced the Currency Act of 1927, he threw in a phrase like this, that if they saw the slightest danger of an inflationary tendency in Great Britain, we would have to take steps——

The Taoiseach

He may still.

Mr. McGilligan

——to prevent the evil effects of that coming here. So far from taking them, I do not think the central bank is given any power.

The Taoiseach

I suggest that if the Deputy is thinking of the present situation, and of a possible development of anything of that sort, it will be of such a character that it will have to be dealt with, and undoubtedly the board will be taken into consultation. It would immediately approach the Government with regard to the measures it felt to be necessary. There would be immediate action taken by the Government to deal with a situation of that sort. If the Deputy is dealing with a general situation, he has answered himself.

Mr. McGilligan

If the central bank cannot do all these things, I suggest that it might be wise to give them the power. It can deal with legal tender note issue, gold bullion, gold coins, money in any form, British Government securities, sterling balances, and deposits from any banks in Great Britain and Northern Ireland but not in Éire. We are tied as far as that is concerned. It may be that circumstances make that necessary. I approach this in a spirit of inquiry. These are questions one is asked by people who are inquiring and we should get the answers here. We are tied to these things and if an inflationary tendency starts in Great Britain, we are subject to whatever its repercussions are. We are subject to them as far as this measure is concerned, and the central bank can do nothing to prevent it. The Taoiseach says that it can go to the Government. Why stop at the central bank?

The Taoiseach

Because in ordinary circumstances that power was not necessary.

Mr. McGilligan

Is it not a situation which demands a wealth of decisive argument? If we are driven to the position that we must accept as the basis for legal tender "all and every or any sterling——"

The Taoiseach

Surely the bank is not compelled to take any security it does not think right to take.

Mr. McGilligan

That is not so stated. The Taoiseach will get a chance of following up that argument and telling me where the reins can be pulled. I do not see it here. I hope it is here somewhere. There is talk about expansion of credit. There is no doubt that in England the banks at one time, when there was a deflationary movement, held out against it. Has our central bank power to hold out against deflation or inflation, if it started in England? I think not. I want to be shown that that is impossible.

Two other points were touched upon to which I think answers should be given. Apart from the expansion of credit, there is another concern of people in many countries as to what direction credit is to take. Is it thought that the Government should have any say in such matters and that credit should be made easy in respect of certain developments? Supposing one takes some difficult and costly financial reconstruction of a growing industry in this country, should the Government, through the central bank, have some say in the direction of credit in respect of such a matter?

Can the central bank do anything, on the functions given to them in this measure, in such a matter? I think not. The question of an interest rate is another important thing. The Minister for Finance on the Second Reading of this Bill used a phrase which he could have got from some of the older debates in the Dáil, about 1927. He said that no sound scheme had been held up for lack of money. Another phrase used was "no worth-while scheme". The Taoiseach himself talked of "no credit-worthy scheme". A lot depends upon the idea in the background. A sound scheme may mean one which pays 5 per cent. "Credit-worthy scheme" may have the same idea behind it.

Mr. O Ceallaigh

Housing is not asked to pay 5 per cent.

Mr. McGilligan

Possibly, but are the community entirely relieved of the 5 per cent. burden? They are not. Somebody pays it.

The Taoiseach

Materials and so on have to be got from somewhere. They have to be provided.

Mr. McGilligan

Undoubtedly.

The Taoiseach

And, when given over, are the equivalent of credit.

Mr. McGilligan

Undoubtedly. I think we must start off with the theory that for anything you get in the world some payment has to be made, but you come to a particular point. People will argue about this pyramiding effect that there is in connection with banks, and that there is a possibility of raising a very big superstructure on a rather narrow basis of cash, say, or some sort of security. I think there is no doubt about that. What people's minds are exercised about is this. Let us take a period in which the ordinary bank rate for money they lend is about 4 or 5 per cent., that is 4 or 5 per cent. in ordinary circumstances, on the ordinary amount of money they loan out, the money that appears as advances in their books. They have got 5 per cent. on that and, of course, a smaller rate of interest on short term loans and better securities. But, eventually, supposing there is an expansion of credit and that so much more money is in a particular way being put into circulation, and, say, an extra million of credit is erected on some solid basis of cash, people's minds are exercised just with this: is it right to allow the financial houses to get the ordinary 5 per cent. rate on that volume of credit and, if it is not right to let them have that, and if it is possible to have a volume of credit erected on some basis of cash, then what is the rate of interest going to be and who is going to control it? Is it the central bank? I suggest not.

I do not know whether the questions I am putting here have an answer in the affirmative in respect of this measure, but I have searched through the measure, backward and forward, and I cannot find that the central bank is given any of these powers. Somebody should have them. If the Taoiseach agrees that credit can be expanded, is it their function? Is it a matter for the bank or for the Government? If it is a matter for the Government, can the Government do it without the bank? If they can, how will they operate on the bank? Are they going to have this independent body and throw them there and let them operate as they like? Again, I do not think that is sound policy. I have no settled view at the moment because I can see all sorts of objections to the Government being in full control of any banking institution whatever. The type of thing Deputy Norton apparently regards as desirable is of some abhorrence to me, as at present advised. There is no certainty about this matter; the whole thing is in flux and we must argue it to a conclusion, but I think it would be absurd to tempt a hard-pressed Minister for Finance with the possibility of having so much money when it came to Budget considerations. We should avoid that at all costs. I think there should be some intermediate position in which the bank would be made independent in its day-to-day administration but that the Government would have some say in the direction of general policy. We have not it here.

The Taoiseach

Except as a directive. Certainly, from the point of view of a general directive, I would be all in favour of it.

Mr. McGilligan

It is not here.

The Taoiseach

I am sure there would not be any objection to a general directive in that direction.

Mr. McGilligan

The Minister, having the power to put on two service directors and take them off from time to time, could have two minds, so to speak, reflecting his own viewpoint on this board of nine.

Mr. O Ceallaigh

Does he not appoint the other four as well?

Mr. Cosgrave

He appoints the whole lot.

Mr. McGilligan

As a matter of fact, he appoints six out of nine.

Mr. Cosgrave

The whole nine.

Mr. O Ceallaigh

The whole nine.

Mr. McGilligan

That is nominally. As far as three are concerned, he selects three from six. As far as the others are concerned, once the Minister appoints a director, that man is on for seven years. Suppose he takes a new viewpoint after he is put on? Supposing the Minister for Finance puts on somebody who represents his viewpoint and another Minister for Finance comes in in the seven year period, what is going to happen? Has the whole legislation to be messed up again in order to get a new viewpoint?

The Taoiseach

Will the Deputy suggest an amendment?

Mr. McGilligan

I am suggesting it, in a very tentative way, because I would like to see the conservative people putting up their line against it. I am suggesting that you should have a smaller body of people of more expert type, have them elected for a longer period of years, but having some touch with Government action, if only such as there is in connection with the Electricity Supply Board, so that the Government could come in at any time and, for cause stated, get rid of them, and that cause stated might be disagreement with policy. It comes back to what I said in an early stage: Is the provision of credit a public service or is it not? If it is, it ought to be under some sort of public control. It is not under any sort of public control here.

There is one last question touched on by the Taoiseach. The thing that I think is the greatest nonsense in the Bill is Section 45, this repatriation of assets. In the course of his speech the Taoiseach said the chief way in which that could be done was by purchase of goods from abroad.

The Taoiseach

We would have to argue Section 45 here now if the Deputy goes into it. I made only a passing reference to it.

Mr. McGilligan

I only make this passing reference to it. Mind you, Section 45 is the hook that has caught a lot of the people who have still some of the hopes Deputy Norton read out from statements of the then Deputy MacEntee. That is the hook that has caught some of them. The Taoiseach here to-night says that the effective way of repatriating assets is by goods from abroad.

The Taoiseach

To a large extent you can influence a bank which is asked on the one hand for credits for home purposes which, if given, would have the effect of getting imports. If they neglect giving credit at home, which would have the tendency of bringing in goods, they can be punished by a fine.

Mr. McGilligan

I hope that will be understood. That brings in Section 45 with a viewpoint for the future only, not in regard to present piled up assets.

The Taoiseach

If they were presented with opportunities of giving credits which would enable imports to come to us and they neglect that and wilfully hold out, that particular weapon is there and that particular method of punishment by means of a fine.

Mr. McGilligan

I think the Taoiseach will agree with me that nobody reading Section 45 could have understood that to be the policy behind it. Anybody who reads Section 45 looks on it as an unwilling bending of the knee to a lot of people who are shouting outside about the vast amount of money abroad. The Taoiseach himself said the blame was not to be put on the banks.

The Taoiseach

Exactly.

Mr. McGilligan

The Minister for Finance in his Second Reading speech agreed with the bank representation that it is not bank business, that it is the business of traders and investors, and yet we put in that nonsense and now we minimise the harm done. There are a lot of functions that we do not ask them to do, but we are asking them to do what is not a banking function at all.

The Taoiseach

It is. I would refrain from arguing it out with the Deputy. We must try to deal with the present section.

Mr. McGilligan

We were told by the Taoiseach that he regretted that this Bill was not introduced some time ago, that it was overdue, and that if it had been introduced some time ago we might have more experienced people. He missed an obvious chance of having more experienced people. For a long time, there has been a vacancy on the Currency Commission.

The Taoiseach

Legislation would have to be brought in. It would be ridiculous to bring it in when this Bill was in the offing.

Mr. McGilligan

You could have one extra man more experienced by appointing him to the vacancy.

The Taoiseach

You could not do it without legislation.

Mr. McGilligan

It is a small point.

The Taoiseach

It is a small point.

Mr. McGilligan

I want to say this about it. We have a fair enough experience in regard to the functions of the Currency Commission. We could have made that experience a little greater by widening the circle. The central bank is merely going to do in one way what the Currency Commission has been doing up to this. I do not know why the Government should bring in a measure, call it a Central Bank Bill and pretend that this bank will have all the functions which a central bank in other countries ordinarily has. The Taoiseach told us in that connection that the banks did what they did, and that as a result of what they did, a lot of our assets were placed abroad. My suggestion is that we are now setting up a central bank and in one way giving it banking business, but that we are not giving it any of the things that might be described as Government business. Worse than that, we are making no bridge, so far as legislation is concerned, by which the Government can cross over to the bank or the bank to the Government. I think the Taoiseach is right in telling us that we are setting up this board but that we are giving them none of the powers that a lot of people thought they might have——

The Taoiseach

Let the Deputy put down his proposals for these powers and we can have them discussed.

Mr. McGilligan

The Taoiseach was not in the House when the debate started. Three of these matters were referred to in an amendment, but the Ceann Comhairle thought them so radical in regard to the Bill that he thought he would have to rule them out.

Mr. Norton

We listened to a very long and interesting speech from the Taoiseach on this group of amendments. It seemed to me, listening very carefully to what the Taoiseach said, that he was willing to give an approbation to, and expressed himself in agreement with, a very noble sentiment but that when it came to honouring this sentiment he proceeded in exactly the opposite direction to that in which the sentiment pointed. That is an old characteristic of the Taoiseach in political matters. For instance, when he was recommending the £7,000,000 loan to the nation, he expressed himself in these words and the words are quoted now in relation to this Bill because they indicate that while the Taoiseach is prepared to defend the introduction of the Bill, he has no faith whatever in the Bill and no belief whatever that it is going to relieve any of our problems. The Taoiseach said on that occasion, using words that appear prophetic now in the light of the terms of this Bill:

"I am a believer in the right of the public authority to control credit. Yet I am very doubtful whether the public authority in its control of credit can do a great deal better than is being done at present. I do believe the Government will establish a central bank but when that is done I do not think we shall, by any means, have discovered the philosopher's stone. We shall have to face the same difficulties we are facing now."

The Taoiseach says in effect that, while he believes in public control of credit, he does not believe that it would bring any great improvement in present conditions. The Government can bring in a Central Bank Bill that will be recommended to the country by the Minister for Finance but the Taoiseach who believes in the public control of credit will not provide for that in the Bill. He also does not believe that a Central Bank Bill is going to have any effect in regard to relieving our difficulties.

The Taoiseach

Which shows the fundamental difference between our Party and the Deputy's. The Deputy's Party believes that by a financial wand of some kind they can cure all these evils. I believe that is a fundamental fallacy.

Mr. Norton

I do not know whether that statement of the Taoiseach should not be put in as a preamble to the Central Bank Bill or put on a tombstone over the central bank. In any case, it is well worthy of repetition because it indicates something more important than may be merely said in the cut and thrust of debate, that the Taoiseach has no use for a central bank and, in fact, committed himself to a declaration that all our difficulties will remain after it has been established.

The Taoiseach

Of course, they will remain.

Mr. Norton

He sees no necessity for a central bank, but on a Central Bank Bill we are necessarily constrained to discuss the question of a central bank and its relations to public policy from a monetary standpoint. Whatever merit might be in a Central Bank Bill which had for its object the conservation of the country's assets, of course such a Bill had not a dog's chance of being introduced in present circumstances. We could discuss the question of the repatriation of capital, and we could say that we are going to achieve that by a transfer of goods from the country in which the capital is invested; but what is the use of discussing these things when your assets in these countries are completely frozen, when you cannot repatriate a single note and when your £300,000,000 invested abroad would not buy a bunch of bananas in the present circumstances? That is the cold fact you are up against. What is the use of talking about repatriation of assets in present circumstances?

The Taoiseach

I should like to get a present of them.

Mr. Norton

When the war is over you may not think that present is so valuable. To talk about repatriation of capital in present circumstances is to discuss an economic issue which has no reality for the people. The fact is that you are exporting more goods to Britain than you are importing. Britain can chalk up credits in London in respect of these goods, but these credits are so frozen that we cannot repatriate the assets which they represent. If Britain happens to lose the war, these foreign assets of ours will be just worthless, as other countries found to their cost after the last war.

Aside from all question of repatriation of capital, is it not a fact that the most vital thing for our people to-day is the control of credit? There is no more vital issue before the people. There is no activity in our national life which more intimately affects the lives of our people than the issue of credit, the expansion or the restriction of credit, and that is so because of the fact that the wages envelope is still the passport to food, to clothes and to shelter. If credit, its expansion and restriction, plays such an important part in the lives of our people, surely it is highly desirable that there should be some State control over the issue of credit, over the regulation of credit and the equation of credit to economic needs? We have a declaration from the Taoiseach that he believes in public control of credit, but there is no provision for public control of credit in this Bill. The Government, as Deputy Davin pointed out, have created a central bank and are giving wide powers to a directorate of nine, but so far as the interpretation of the Bill is concerned, the Government have no power whatever to influence the policy of that bank except in so far as it might be influenced by Section 6 or by Section 45. It seems to me that the second portion of Section 6 is completely vitiated by the conditions governing the exercise of the powers directed towards promoting the welfare of the public. Section 45, which might perhaps have caused some little stir amongst the banks in the early stages, must by now, after they have heard the Taoiseach's view of the matter, have lost all its terrors for them.

If we criticise banking it is not because we wish to criticise the directors of banks. They may all be estimable people. They may be all highly desirable citizens. Nobody desires to make any reflection upon them personally. Our criticism is directed, not to bankers as such, not to directors of banks as such, but to the method which is operated under our present system of joint stock banks in this country, and so long as credit is a vital necessity to the people of this country it seems to me that an unanswerable case can be made for the nationalisation of credit and for the nationalisation of banking in this country. Nobody need be alarmed at that. The State in this country nationalised the supply of electricity, and while the supply of electricity is an important activity in our national life it is not as valuable or as important in our national life as the issue and control of credit.

The State has virtually nationalised sugar production. It even went so far as to nationalise the production of industrial alcohol. If the State can enter into the manufacture of alcohol from old potatoes and regard that as a beneficent State activity, surely it is still more vital to nationalise banking credit and the provision of banking facilities in this country. Nobody can question that the State can buy out the assets of the existing banks or that it can operate a national bank in which the depositors will be given all the security that the State can give, and if the State itself, acting through the Government, is not capable of ensuring the safety of deposits, then there is no other authority within the State that is capable of ensuring the safety of deposits. Nobody, therefore, ought to be alarmed at a proposal to nationalise banking in this country, and it is only through its complete nationalisation and its operation as a Government agency—perhaps, not necessarily, as a Government agency, but as a Parliamentary agency—that you can get effective control over banking in this country. I do not blame bankers if they pursue a conservative policy in respect of the lending of other people's money. Their functions do not lie in the direction in which some people imagine these functions do lie, but the plain fact of the matter to-day is that if any person wants credit he inevitably has to go to the bank for it. He goes, therefore, to a private institution which is concerned, primarily, with selling money at the highest price, and that is the only place where he can get credit facilities.

The Taoiseach

Have we not the Industrial Credit Company and the Agricultural Credit Corporation? I think the general opinion is that the ordinary banking facilities are much more satisfactory.

Mr. Norton

Well, let us examine these two. I do not know whether the Taoiseach ever made an application to the Agricultural Credit Corporation for a loan.

The Taoiseach

My only purpose in intervening was so that the Deputy might understand my point. My point is this: What great advantage does he see that is going to arise from nationalisation? The same need will be there for securing loans, and so on, as there would be in other cases, and would the private individuals, who wish to borrow, be much better off?

Mr. Norton

We shall come to that in a moment. Everybody who has had any experience of the Agricultural Credit Corporation knows that it is almost impossible to get a loan from them unless you are in fairly well-to-do circumstances. You must not owe any rates or any annuities, and you must not have grocers' or traders' accounts outstanding; in other words, you must start off by being pretty well in funds, and then you have to have security, but that is not the type of facility which meets the needs of farmers, as we know farmers in this country. With regard to the Industrial Credit Company, while, I think, it is a kind of a State underwriting house, nevertheless it acts in such a way as if it were really a privately financed house because, there again, while it is created through State money and while its directors are State nominees, its main concern all the time is to ensure that there is a substantial return in respect of its investments.

Let us, however, get back to the position of the banks. A bank's main concern is to lend money to a person at the highest possible price. Its main concern is to lend money at that high price, provided that it can get reasonable security, and I suggest to the Taoiseach that if he and I were to go into any branch of a bank in Dublin— he to go in with a proposal to erect a casino, to which fancy prices of admission would be charged, and which, because of the craze of people for betting and gambling, was likely to pay a dividend of 20 per cent., and associated with the board of which there would probably be a number of people who had the reputation of being able to put over "quick ones" on the public from the point of view of earning profits; and I to go into the same bank with the belief, fortified by geological reports and borings, that there was coal to be found in a certain portion of the country, and that coal was a vital necessity for our people in present circumstances since we could get no coal into the country, but that my project had the drawback that I could not offer very much security, that I could not be sure of paying a dividend for five years, except, perhaps, a fragmentary dividend, but that my project was granted to be a worth-while national activity, faced though it might be with a period of hard work before we would see any substantial results—I think that when we both came out from the bank the Taoiseach would be able to tell me that he got away with his application for a loan for his casino, whereas I—and he would probably commiserate with me on the fact that my proposition was not as attractive as his, and, therefore, I had been refused—would not have got away with my application.

The Taoiseach

If the Deputy will examine that down to its foundation he will get a lot of useful information on it. Why is it that the casino is going to pay and, therefore, give a return? It is because the individuals in the community are prepared to give what they have earned—in other words, their labour—in order to get these particular amusements, and if the State thinks that these things are not desirable and that they should not be done, its way of dealing with the matter should be the direct way of closing the casinos.

Mr. McGilligan

Oh, no, surely not? Is that the only resort?

Mr. Norton

The important thing there is not what will happen to the casino, but what will happen to the coal. At any rate, I take it that we accept the position that the Taoiseach thinks he would have a better chance of getting away with the loan for the casino scheme than I would have for my coal project. I take it that we agree that if the proposal looks attractive from the point of view of the banks, the loan will be granted, whereas the coal proposal would look just as black as the substance itself.

The Taoiseach

Just the same as the casino.

Mr. Norton

But the Taoiseach says that the only way to deal with the matter would be to close down the casino. I do not think it is, and that remark of the Taoiseach indicates the difference between us. I think that the development of coal deposits is vital to the nation.

The Taoiseach

And it is the Government's duty to do it?

Mr. Norton

Yes.

The Taoiseach

And no project of that sort, if we had it, has ever been held up by us for want of money.

Mr. Norton

Well, all I say is that the Taoiseach should read some of the letters I have had from his Minister for Industry and Commerce.

The Taoiseach

About what?

Mr. Norton

About my efforts to try to get a coal mine developed.

The Taoiseach

I am sure the Minister did not say that if people with capital were interested in the matter, and if it could be proved that the coal deposits were there, the money would not be provided.

Mr. Norton

No.

The Taoiseach

But that is the Deputy's argument.

Mr. Norton

I think, Sir, I shall move to report progress, and we can discuss the Taoiseach's casino on the next occasion.

Progress reported; the Committee to sit again.