I move:—
That, in order to promote the development of agriculture and industry and to provide employment for our workers and remunerative prices for farm produce without adding to the burden on the taxpayer or the consumer, Dáil Eireann is of opinion that the Government should promote legislation taking power to issue for the benefit of the people money and credit on the security of the State.
This motion has been on the Order Paper for more than 12 months, and I had hoped that when legislation was introduced by the Government purporting to set up a central bank, the purposes for which this motion was put down would be served, and that we would have established in this country a central bank which would undertake to provide for the financing of national development on the security of the community or the State. We find, however, that a central bank is being established by recent legislation which has practically no power whatever to discharge any of the functions which a central bank should undertake. It is quite obvious that, having regard to the fact that the agricultural industry is in decay, the population of rural Ireland is rapidly declining, that the output of the agricultural industry has been declining for years, that emigration is increasing, and that we have to maintain permanently in the country over 100,000 people completely unemployed, some machinery should have been set up by the Government to deal with that situation. The machinery provided by the recent legislation does not offer any hope of a solution for these problems, and, therefore, we are faced with the fact that it is still the obligation of the Government and of this House to promote the legislation which is required to solve these problems.
If anyone doubts whether recent legislation in the shape of the Central Bank Bill was of any use to the country in this regard, he has only to consider the views recently expressed by Deputy McGilligan. Deputy McGilligan said during the debate on, I think, the Fifth Stage of the Central Bank Bill that there were three marks by which a good central bank could be known. "One," he said, "is that they have some control over credit, its expansion and contraction; the second is that in some way or another—and the more immediately they can do it the better—they can affect interest rates, and the third thing is that they can control the exchange rate as between currency in the country and its value outside against whatever it is to be exchanged for. Judged by those three criteria this is not a central bank. It is the Currency Commission re-created." That is the view of one of the most prominent members of the Opposition, a view with which I entirely agree. We have, therefore, the position that we are still maintaining in this country an antiquated system of finance, a system which has been tried and found wanting in every progressive country, a system which offers no hope of an improvement in our agricultural industry or of any national development whatever.
It might be asked what we should seek to achieve. We have to consider whether or not it is desirable that the State has power—either directly or through a central bank under its control—to influence the creation of money and to influence the supply of money available to the community. There are many who hold that neither the Government nor a central bank controlled by it should have that power—that that power should be vested exclusively in private firms. We have to consider how that affects the community. The central authority in the State has the responsibility on its shoulders to see that every citizen has the means of livelihood. If it has no power to regulate the supply of money available to the community, then I say it has no real power to rule. If a private monopoly can exercise control over the amount of money available, it is the real government. If that private monopoly is affiliated to some concern outside the country, it follows that the real government is outside the country altogether. Therefore, until this Government takes into its hands complete control over the issue of money to the community, it has no real control, it cannot prevent unemployment and cannot ensure that those engaged in production will obtain a steady remunerative reward for their work.
The purpose of money has been defined: it is simply a medium of exchange by which one citizen may transfer goods to another. Obviously, it would be impossible, in a civilised community, to carry on business by the barter system which prevailed in primitive times, when a man could exchange a cow for food, clothing or implements. Money is a reasonable and easy method by which goods can be transferred from one citizen to another. For many years a metallic system was found suitable—it was found that silver offered a reasonable medium and later gold was found to be a useful and workable medium. A man could exchange any quantity of goods for gold and could utilise that gold afterwards to purchase anything he required. As the centuries passed, gold alone proved insufficient as a medium of exchange. Thus we had the banks, first of all as places of safety where gold could be stored, and later as institutions which could supply a medium of exchange in addition to gold, in the form of paper currency and bank credits, such as cheques and other securities. The question is whether the interests of the community are being safeguarded through having this supply of money controlled and regulated by this private monopoly which controls for profit. If so, there is no need to change, there is no need for anything more than the imitation central bank which is being set up at present.
The fact is, however, that no private institution, no matter how well conducted, can keep the interests of the community before it always. Every Deputy will acknowledge that our banking institutions have been very well conducted. They have set a very high standard of efficiency in the transaction of their business and in the management of the affairs of their clients. However, the supply of money to the community must vary according to the needs of the community, and there must be a central authority which has before it one consideration, and one only—the needs of the community —and that central authority must have control over the issue of money. If money is issued only by a private institution which is mainly interested in making profits for its shareholders, the interests of the community cannot be served. It would be a remarkable coincidence if the interests of the entire community coincided with those of a small monopoly out to make profits. The fact of the matter is that they do not coincide, except, perhaps, when a nation is at war.
We know that, when a great nation is engaged in war, the needs of the community require that money should be issued and made available freely to that nation, so as to conduct the war to its successful conclusion. It is in the interests of the banks of such a nation that that war should be conducted to a successful conclusion; and in that case the interests of the community coincide with those of banking institutions. For that reason money is made freely available in war time, and at present we know that one Government is receiving over £1,000,000,000 every three months to finance the war. In the last war, money was made available freely also, through the banking institutions. However, it is not, and apparently never has been, in the interests of private banking institutions that money should be made available for works of development and reconstruction in peace time. As we observed after the last war, when it had been brought to a successful conclusion, the provision of money to the community was restricted immediately, with the result that prices collapsed and the agricultural section of the community was plunged into hardship and loss. That condition extended later to the entire masses of the people, particularly to the working classes, and in trade and industry a very low standard of poverty prevailed. That condition prevailed practically up to the eve of the present war.
The necessity for providing armaments for another war and the carrying on of that war led to the free issue of money once more, with the result that prices again began to rise. That is a condition which we have observed in two wars and in the short period of peace between those two wars. We have found that money is freely available for the production of armaments, the production of weapons of destruction, the production of munitions— things which are completely destroyed in the course of a war and which add nothing to the happiness of a community. No money can be provided in time of peace for the construction of permanent assets which would make the people of this and every other country happier. No money can be provided, except at a very high rate of interest, for housing, road-making or any of those things which we know will add to the welfare and happiness of the community. Therefore it is not inopportune that a demand should be made now for legislation of the right kind which will enable the State to take into its own hands the functions that are being monopolised by private institutions, institutions which are to a very large extent bound up with similar institutions outside this country.
We cannot attempt to solve the problem of providing a decent and permanent remuneration for agriculture, we cannot provide work for the unemployed, for drainage, for the improvement of our land, or for the afforestation of our mountains—we cannot do those things effectively under the present system. So far as housing is concerned, the rates of interest make it impossible to build houses for our working people, particularly for the people in rural Ireland, except at a prohibitive cost, a cost which would involve a heavy burden on the taxpayers. Whenever suggestions are put forward with regard to works of national development, whether afforestation, drainage, the improvement of land or roads or adding to the amenities of our towns, the question is always asked, where is the money to come from? The fact of the matter is that permanent assets created in this country are real wealth in themselves, even more so than would be gold if it were mined out of the earth in this country. Being permanent assets, real wealth, they should be, therefore, ample security for any money in circulation.
My view of the situation is that we cannot hope to have in this country a condition of permanent prosperity unless we can assure for our most important producers an adequate reward for their work; in other words, what we have to establish is what is advocated by all orthodox financiers, an honest pound. We want to ensure that the pound to-day will buy the same amount to-morrow and the same amount a number of years hence. We want to ensure that prices will remain more or less stable, and you cannot do that unless you have a central authority which will arrange the amount of money issued to the community in accordance with the prices prevailing within the country. That is what should be the primary function of a central monetary authority.
We all know the arguments used against any extension of those powers being vested in the State. We are told that if more money were issued we would have inflation. Now, inflation occurs only when a large number of people in the country have more money than they require for their needs. If new money put into circulation were to find its way into the hands of those who have not enough to satisfy their needs, there would be no inflation— everybody will admit that. If we were to add to the amount of money in circulation, and if that money were to be utilised for the purpose of providing employment for the unemployed, the result would be that those people would have a purchasing power which would enable them to purchase the necessities of life. They would not be competing for luxuries and the result would be that prices would remain stable. There would be no effect on prices, provided, of course, that the necessities of life which those people require are available; that is to say, provided the money was issued to purchase goods according to the increase in the production of goods.
That is, I think, the answer to those who talk about inflation. Inflation could occur under the present banking system. It has occurred, and in some countries it has been deliberately occasioned. It would not occur if the issue of money were restricted to a scientific relationship with prices prevailing. If, for example, the central bank, or whatever authority would have the issue of money, were to have before it an index of prevailing prices, when it would find prices rising to a dangerous degree it could then restrict the issue of money, and in that way maintain prices at a stable level. That seems to be quite apparent to anyone who will give the matter a moment's consideration. The danger of inflation will not exist provided there is fair and proper control over the issue of money.
Considering the many economic problems we have to solve, the number of people we have permanently employed, even during this time of emergency, the desperate problem which we have to face when our very much enlarged army is demobilised, and when our workers in Great Britain are forced to return, and the enormous problems we shall have to face, it ought to be obvious to us that we should be preparing to meet these problems by a huge scheme of national development similar in extent and magnitude to what this nation would have to embark upon if it were actually engaged in war. If we were engaged in war, we probably would have to consider an expansion of credit in this country, in proportion to the size and the wealth of our country, on lines similar to the expansion which has taken place in Great Britain.
We know that as a result of war the entire British nation has been aroused into a condition of activity on a scale which could not be considered in time of peace. There is not only the production of enormous quantities of armaments, but also production in agriculture on an enormously, expanded scale, all of which is due to an expansion of credit necessitated by the war condition. If a nation fighting for its life, with all the preoccupations of war, can achieve these things—and I think a great deal has been achieved in industrial and agricultural production in Great Britain, while faced with the awful peril of war—a nation such as ours, which is, to a great extent, immune from immediate danger, should be able to achieve them to an even greater extent.
We know that there is apparent prosperity in England. Everybody can earn good money and there is none of the hopelessness and discontent we have in this country. There is no suggestion in Great Britain of offering 5/- per week to men to remain idle for the winter so that they will be available for turf production in the summer. Everybody is working full time and producing at the very highest rate. We here, immune from the war for the moment, but faced with an emergency as serious as war, an emergency which entails danger to the very existence of our country, should be able to tackle our problems on the same scale in proportion to the extent and resources of our country as Great Britain has tackled her problems, provided we had the control over our own finance which is exercised in Great Britain by the banking system working, as it works at the moment, in the British national interest.
We can never hope to have the problems of peace, the problems of the construction of permanent assets which will add to our productive capacity of consumable goods, until we get the same control of finance as the British enjoy during this war. I, therefore, think that I am not asking for any thing beyond the capacity of this Parliament, or beyond the capacity of the Irish nation, when I ask that legislation be introduced giving the State real control over money.
There is nothing new in these proposals. Many years ago, Abraham Lincoln, perhaps one of the most clear-thinking of democratic statesmen, at least in the last century, said:—
"Money is the creature of law and the creation of the original issue of money should be maintained as an exclusive monopoly of national government. The monetary needs of increasing numbers of people advancing towards higher standards of living can and should be met by the Government. The circulation of a medium of exchange issued and backed by the Government can be properly regulated and redundancy of issue avoided by withdrawing from circulation such amounts as may be necessary by taxation, redeposit and otherwise. The privilege of creating and issuing money is not only the supreme prerogative of the Government, but it is the Government's greatest creative opportunity. Money will cease to be master and become the servant of humanity. Democracy will arise superior to money power."
These words were spoken many years ago, but they are as true to-day as when they were spoken. The experience of the last war and of the present war has clearly demonstrated that money can be created, and, when created, can increase enormously the productive capacity of the community and the prosperity of the community. Since that can be done in war, there is no reason why it cannot be done in peace, and no reason why this country should not do it.