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Dáil Éireann debate -
Wednesday, 4 Nov 1942

Vol. 88 No. 14

Private Deputies' Business. - Provision of Credit by the State.

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.

I formally second the motion.

I must admit that this is a better bid than the bid made by Deputy Cosgrave a fortnight ago, and nearly on a par with Captain Cowan's bid of £3 per week. This production of money is a very good thing. It is a great thing—wave your hand and create it. I should like to hear Deputy Dillon on it and on what the Government would do with the money it created. I can say frankly, on the eve of a general election, that I should like to be the Government which would create that money and give it out. I know who would be the next Government and I would not be sparing in lashing it out.

When are we going to have the election?

Wait and see.

You said we were on the eve of it.

We are waiting for the bids. "£3 per week"; "De Valera halved the annuities. We will put them on again to you—a free loan and the rest of the people pay the interest", and "I will create money for you and throw it out". It is a pity that there are not more Parties. Deputy Belton is a Party on his own and it is time we heard his bid. They are three pretty good bids, but this is the best I have yet heard—"I will create money for you and throw it out as you want it. If anybody wants a £5 note or a £10 note, I will go into the printing press and throw it out to him." That is the best I have heard yet.

That is your own idea.

I can remember the manner in which Deputies objected to Government control of anything. We were told about this being bought and that being bought, and of corrupt practices here and corrupt practices there. Deputy Cogan has now so much confidence in the Government that he is going to give them power to create money and dish it out to anyone who wants it.

Is it not better to give it to them than to the Bank of England?

At present we have food vouchers. There must be some basis for them. The money must be voted by the House. Then the Agricultural Credit Corporation dish out money. We have also a farm improvement scheme under which a farmer gets a free grant of 50 per cent. of the cost of the work. We have old age pensions and all the rest of it.

Where do we get that money?

It is voted by the House and provided by taxation. There is some base to it.

What is the base?

I admit that the bid is a good one. It is the best one I have heard yet. You have outbid Cosgrave. His Party is completely outbid by this. You can put £5 or £10 or £100 or £1,000 into anyone's pocket that wants it. There is nothing to do only dish it out. There is that bid on the one side and the other bid on the other: "I did my best to prevent any Government being in the position to lower the farmers' annuities, but since the Government have succeeded in reducing them by 50 per cent., well then I am prepared to drive them up. I will give the farmers loans free of interest repayable with the annuities." I admit that he bettered it the last time.

Is that relevant to this motion?

I fail to see it.

Absolutely. This motion is a bid. Surely the Ceann Comhairle realises that. It is a bid for the people's vote. It is the best bid I have heard in this House for many years. It wipes out the £3 a week of the Labour Party altogether. It beats it hollow.

Tell us what you are going to do.

I am waiting to hear the Deputies. Up to the present they have proposed £3 a week for everyone. Then we have another proposal for loans to be repaid by the annuities.

These matters are not relevant to the motion.

Now we have a third bid which is this motion. For the benefit of the people money is to be created on the security of the State and dished out. It is the best motion yet.

The Deputy should not repeat himself more than six times, even for the sake of emphasis.

I am only explaining exactly what it is, and comparing it with the other bids which have been made.

Political electioneering bids do not arise, and the Deputy is repeating himself ad nauseam.

At present any money that has to be provided in this country for any purpose has to be provided by the taxpayers. Under this motion I can imagine a condition of affairs being brought about where wheat, which is now 50/- per barrel, can be made 150/- by creating the difference between the 50/- and 150/- by issuing a bit of paper and giving it to the farmer. It is a great idea.

It does not say any such thing.

Where else is it to come from? You are going to create money without adding to the burden of the taxpayer or the consumer; without making the consumer to pay more and without asking the taxpayers for anything? Where are you going to get it? I want to have it explained to me where that money is to come from. It is not to come from the consumer, because he is not to be asked to pay anything extra for his bread or sugar. It is not to come out of the taxpayer's pocket in the shape of a subsidy, because he is not to be asked to pay anything either. It is to come out of the printing press.

That phrase is very worn out now.

Where else is it to come from? I have been listening to Deputy Cogan for threequarters of an hour explaining what he intended to do. What he intends to do is down here in black and white. He will give a remunerative price for farm produce without any burden on anybody. The money is not to come out of the consumer's pocket or to be provided by taxation. I want somebody to tell me where it is to come from. If the consumer is not to pay or if the taxpayer is not to pay, where is it to come from?

Where did Hitler get the money to conquer Europe?

Do not mind Hitler. He did his job all right. There is no Hitler here yet. More power to his elbow; so long as he keeps away from us I do not mind.

What is the meaning of money?

What is the meaning of the interruptions?

He is provoking them.

Deputy Davin need not be so sour because his Party is outbid. I am still waiting for somebody to explain this to me. I am only a farmer and I may not understand these things like some of the geniuses of finance, such as Deputy Davin and company. I do not understand where this cash is to come from. If it was possible to do it, I can understand what that power, in the hands of what Deputy Dillon used to call an unscrupulous Government, would mean. I can understand that they would dish out £500 for an election fund in County Dublin to beat Deputy Belton, or £500 for an election fund in County Wicklow. It would be a good idea. There would be nothing to beat a Government with that power in their hands. They could outbid anyone. But it is not practicable. I should like to see it made practicable, this idea of dishing out money to everybody. But I have not heard where the money is to come from. The consumer is not to pay anything extra and the taxpayer is not to pay anything extra by way of taxation. It it is not to come out of the printing press, will somebody tell me where it is to come from?

It is a pity that a serious debate of this sort should be interrupted by the buffoonery—if that is not too strong a word—and by the comicalities we have just listened to. I think the House would be well rid of the Deputy. He is casting the shadow of coming events when he leaves the House, because he is going to be put out. I understand that Deputy Cogan put down this motion nearly two years ago, and if it were intended to be a pre-election bid, as has been suggested, I think it showed the greatest foresight on the part of Deputy Cogan, and I think he should be congratulated on his foresight rather than the gentleman who has just withdrawn from the House. I do not think, however, that this matter should be regarded as a bid for election purposes, because anybody talking about the question of the expansion or contraction of credit, in present circumstances, is likely to be regarded as one who should be put in a gallery of cranks.

The question of the expansion of credit is a dangerous matter at the moment, and I certainly hope that Deputy Cogan, or anybody else, will not regard this as just a matter of making a bid. I remember an advertisement which said that money meant industry, that more industry meant more money—that the more money there was the more industry there would be, and so on—and the advertisement ended up by asking why it should ever stop. That was a great bid, and I presume we will get a similar bid on the lines of that old, tattered plan—the improvement of agriculture, the development of industries, the bringing back of our people from abroad, and employment for everybody. It seems that we are approaching an election shortly, and I think I can say that Order No. 166 is now nearly burst. There has been a big change since last June, evidently, and people are now being allowed to distribute money, no matter where it comes from.

Deputy Cogan was right in calling attention to a piece of legislation that has been recently passed—the Central Bank Bill. Certainly, instead of showing ourselves to be a progressive country, we have to put ourselves very much in the discard, so far as that piece of legislation is concerned. I think it would have been better, from the national point of view, not to have budged from the position in which we were, than to bring in a piece of legislation such as that, which was reactionary and completely out of tune with the trend of modern thought on such matters. Deputy Corry has tried to bedevil this motion by saying that all this money must come from somewhere and that, eventually, it must come out of the pockets of the taxpayers. He is evidently still thinking of the old hide-bound traditions of the bankers of Victorian days, who always advanced the proposition that all money comes out of the taxpayers' pockets. All the money in the country exists only as a nominal matter. Nobody could count the amount of money that is required to run the country even for a week. There is not that amount of cash in the country, even if you were to conscript every available asset, including gold ornaments, to be converted into cash. The credit or money has to be manufactured somewhere, but it is not in the country, although Deputy Corry says that it comes out of the pockets of the taxpayers. That, of course, is what the bankers have been saying for years. The banker lives on the thesis that when he makes an advance to a customer, he has to get a loan from somebody else, and he makes a rapid calculation to the effect that nobody will make a loan to him except at about 5 per cent., and therefore he charges his customer 6 per cent. or 7½ per cent.

It is only in recent years that it has become universally recognised that when a banker is advancing money to customers he is not advancing other people's money except in the relation of £1,000 to £10,000. He has, of course, something in the way of cash in the background, but he certainly manufactures the additional £9,000 and makes use of it. The thing that I never could understand, when discussing the Central Bank Bill, and that I still fail to understand, is why the bankers should present themselves as lending the money of other people and having to be careful about it, while, at the same time, they are lending only about £1,000 out of every £9,000 that they have got from the people. In that connection, one must remember the interest they get on their investments and the interest they charge to those to whom they make advances. Evidently, 5 per cent. or 6 per cent. is all right when they are bidding up for other people's services, and perhaps not a usurious sum, but then they could charge 6½ or 7 per cent. on the £1,000 that they advanced and get their own percentage on the £9,000. That is the point to inquire into—a point to be inquired into very cautiously and with very much suspicion as against the banking institutions of this country, particularly if we say that in this country we now need a central bank, set up that institution, and then do not give it a single, solitary power with regard to that matter. Deputy Corry seems to think that there is a terrific danger that a Government, with so much temptation to arrogate to itself the control of money, might use it wastefully. It is an amazing abnegation of control to say here that we shall not press our Government to control the money wisely and that we should allow six self-constituted institutions to deal with the manufacture of credit and how they will use it. I am not attempting to put this on the basis of national discredit. We may go much further in this country, but we must recognise the fact that, so far as the expansion or contraction of credit is concerned, our joint stock banks or our central bank here are nothing as compared with the Bank of England, and I say that, so far as our present circumstances are concerned, the directors or governors of these banks might as well be the directors or governors of the Bank of England. I do not think that that is a parody of the situation. The governing body of the Bank of England has been given much more control over the expansion or contraction of credit in this country than our own people.

The Bank of England is our central bank.

Yes, of course. It was even admitted here. We are setting up a kind of small sub-station of the Bank of England, so to speak, but we cannot take that sub-station out of their control. The only thing that was said in that regard, when we were discussing the Central Bank Bill, was that nothing you could do would prevent the inextricable relationships of trade and the amount of money that we had piled up abroad, and that all these things made it inexpedient, if not impossible, to take complete control ourselves. That is the situation, as we were told, but, in any event, in our legislation we have stereotyped that kind of thing for some time to come. We have so far accepted the situation, even though it may be distasteful to us. In doing that, I say we are going against all modern progress. Most countries have accepted it as axiomatic that the control of credit is a matter for the Central Government of the State. That is almost axiomatical, I think; it is accepted as an axiom in every country. The only thing there is any doubt, about is, how is that to be given practical effect to. Is it to be done by an institution which is under the control of Government? Is it by an institution which is under the control of Parliament? Is it by an institution over which Parliament will say its say in so far as general policy is concerned, but will leave the details and practical working out to the experts appointed? But no country has done what we have deliberately done— handed over the control of her finances to an outside body. That we have done. In doing that we have not parted with any control over exchange rate. In fact, it has been said in this House that it would be dangerous to allow the bank, even when the occasion arose, to have any power to interfere with the rate of exchange between this country and England. We are told that it is easy to pass legislation here and when that danger comes we will meet it. In any event, it was said in the House—and that Party voted all other Parties down on this point—that we could not interfere; we could not even go to the remote point of interference of enabling the bank, when the occasion demanded it, to state the rate at which the exchange would be effected. We do not, as I said before, allow expansion or contraction of credit to be under our own control and we set up a bank with no effect upon interest rates. That is the situation.

I do not think we will get to any conclusion in debate in this House, even if pressed to a vote. I think Deputy Cogan has done a useful service in putting this motion down because the one thing that has to be done is to get education of public opinion in this matter because, undoubtedly, if people were to advance along the lines of that resolution with public opinion moulded as it is at the moment, you would probably have a smash in the institutions which control credit in the country. It is a very delicate matter and has to be approached with great caution. I think Deputy Cogan has done a service in putting this motion down. An eminent publicist in this country, who has written a book on this matter that most of us have read but nobody has attempted to hint at or refer to in this House, has done a very useful piece of work in breaking down old-time prejudices associated with this subject and trying to bring us to some point of appreciation of the modern view on this subject. But, as I said, nobody has referred to it. It is not a question of timidity. It is just a question of not wanting to have your argument unbalanced in a House such as this by any reference to that particular gentleman. I think, undoubtedly, reference to him would mean you would be regarded as having joined the ranks of the credit cranks and therefore any argument has to be discarded. A useful service has been done by him for which this country may in a very short period of years find occasion to thank him.

While saying all that generally on behalf of this motion—I do not intend to argue this matter in detail—I want to put in one warning. I do not think that this matter will be advanced to any extent at all by what I consider to be ill-advised references to the British situation. I often read in newspapers complaints from people who— I think it is in a confused state of mind—say: "If Britain can get all the money she requires, and much more than she has in actual cash, for the war she is waging at the moment, why cannot this country get some fraction of that for the other wars that we might wage on such things as poverty, unemployment, housing, and a variety of things?" Of course, there is no comparison. I do not think the people who ask these things ever stop to think what they are asking.

If you take the British situation at the moment, they have so closed down on their people that they just allow them to get enough consumers' goods to keep them alive and to keep them sufficiently distracted to enable them to do their work well. I do not think anybody in this country would like that we would have our people reduced, under central government supervision, to that particular state. It may be that it will have to be done hereafter, on the occasion of a great slump, but people should know what they are asking to be imposed upon them before they ask that that should be brought in. I put that point particularly to those who speak for Labour in this country.

I have often heard the English situation compared with the position here. In brief, it may be exemplified in this way—it is only a formula and misses many of the points that will be missed in any generalisation. Taking a place like Bradford, where the workers were in enjoyment of a week of 44 hours, and nothing more, the position was like this: You went to these people and said to them: "In order to get your assistance and the assistance of other towns like Bradford, we want you to work your 44-hour week and an additional 16 hours, and for these 16 hours we will pay you nothing—that will be your contribution to the war effort." Multiply that all over England, and, in fact, raise the hours of working much above that, and you will get the situation prevailing in England. Of course, they are paid, but they are not allowed to spend what they are paid, and there is doubt occurring in many people's minds as to whether they will ever be allowed to spend what they have made at the moment. Eventually, when this war is over, the situation in England will be that a vast number of the English community will have worked and earned wages which they have not been allowed to spend but which have been put in some form of investment, and hereafter the English public will find themselves in the amazing position of having to tax themselves for the purpose of paying the vast majority of themselves as investment holders in the country. It is a painful process to extract money from your left-hand pocket, as a taxpayer, in order to pass it over to your right-hand pocket and, when you get it into your right-hand pocket, as an investor, to be faced with administrative expenses—and in the end the whole thing cleared up—as happened before—by consolidation of loans and reduction of interest rates. In the end, the situation may emerge in which many people had been let work many hours' overtime for money they could not spend and may never be allowed to spend.

Possibly, Labour, in this country, on a crusade for a laudable object, would agree that they would work many hours' overtime. They certainly would be helped in that if the Minister for Finance in this State would see that those who make big moneys in other fields in, say, industry and other places, were not allowed to make big moneys during the progress of that crusade or the war. The effort, in any event, in England is widespread and is equalised. That is not the situation that obtains here. There are so very many points of difference as between the situation we have here in peace and the situation that there is in England in time of war, where immense sacrifices are borne because it is a life and death matter with them, that I do not think comparison leads us very far. I would like to avoid the comparison because there is no need to go to that point of extravagance to get some distance along the road this resolution wants us to go.

Deputy Corry has talked here about this money coming out of the taxpayers' pocket. Deputy Corry must be an amazing bed fellow for some of the people who find him alongside them. He now snugs in close beside the conservative bankers of the country—and the whole Fianna Fáil Party are in it with them. We had one glaring example of a misuse of this power of extending credit. It came out here during the course of the debates on the Central Bank Bill that the local authorities had been charged interest, and heavy interest, on the advance payments they had to make in connection with turf schemes. I think the bill all over the country was something short of £1,000,000. They were charged 9 per cent. on that. Look at that for a situation. The local authorities were asked to help in getting turf won and turf transported to different places. Men had to be put to work. There was no remuneration—nothing earned, so to speak, by the local authorities—and they had not the money in their coffers to pay the workers that were put on to this job. It was a gilt-edged piece of work if ever there was one because, at the far end, the Government had guaranteed that the turf would be sold at a price which would cover every penny of the expenditure. All that was required was that somebody would give the first or the second or the third week's wages until some money began to come back.

This was an amazing example, where credit should have been loosened up at once. The banks operated in their usual way. The banks really dealt with them as if they were going to X, Y and Z citizens who had money ready for investment and as if they said to those people: "Do not put your money in that 7 per cent. investment that is staring you in the face. Give it to us. We will have to pay you that money and charge these local authorities a bit more." Everyone knows that they did not divert a penny from other investments for that purpose. They manufactured money. We allowed them to manufacture money—I do not know whether it was "allowance", whether that is the correct word for what happened, or not—but the various members of the Government who were interested in the development of the turf scheme allowed the local authorities to be mulcted in that particular rate of interest for that very ordinary advance which was required for a gilt-edged scheme—I mean, gilt-edged in so far as the return was absolutely guaranteed.

A six months' loan.

A six months' loan and the money guaranteed at the end. The banks were allowed to do that and that is ordinary banking practice, and that, I suppose, is what Deputy Corry, in his ignorance, believes is taking money out of the taxpayers' pocket. That was a gláring example of what the banks do and will continue to do and what we, apparently, are going to enable them to do under the central bank legislation we passed. There was an illuminating reference to credit in the course of the debate on the Central Bank Bill which should have made people scrutinise the whole attitude of the banks in this matter. We passed the Central Bank Act and we set out, amongst other things, to limit currency, the amount of cash in different guises, but we never bothered our heads to think about cheques. There is no limitation put upon the amount of cheques under control of the banks. We left them that control. They can decrease or expand that particular type of money which they allow into circulation. We thought it right to let them have that power. In enacting legislation, we gave power to control that vital matter of credit to institutions self-constituted and entirely away from any control by this House or by Government. I stated previously that many countries found themselves in a dilemma as to how to tackle that problem, but not one failed to establish it as a principle that it is the State governs in that matter. I do not think more than one argument is required to establish that principle.

It is now generally recognised that banks lend out far more money than the money they have in their strongrooms or anywhere about their establishments in order to meet those who might demand it. If a critical occasion arose on which more than one-tenth was demanded they would have to come crawling immediately to the Government to declare a moratorium. They know that it would not do for the Government to allow the credit of the country to collapse. That only means that the banks know that the State is really behind them. I never yet knew of a State being behind any group without there being some consideration. What consideration did we get? The consideration is the acceptance of control and the extension of the control of credit.

A central Government has a great deal to say to rates of interest and has something to say as to rates of exchange between a particular country and others. We have deprived ourselves of the opportunity which offered, but I think the terms of this motion would lead to a revulsion of public feeling and the fear that we are setting ourselves on a wide course of inflation and that money would be produced by printing presses. That is an argument we are bound to have again. It would be trotted out. Public opinion is not yet educated to the point of seeing a motion such as this given effect. I fear that there is a bigger need in this completely undeveloped country for some movement in the way of control of credit than there is in many other countries to which we look. I should hope, if there is any movement made along the lines of the motion—I do not suppose it will be accepted—that it would be done cautiously, by way of educating the people so as to show that you can do this without running into inflation of any type, that it is a useful thing to do, and a thing that must be done if certain wheels are to be given momentum at all, the hope being that, once you get certain wheels moving, they will drag other industries in. You may get some question in the nature of the fatuous, old advertisement of 1932:

"Why should it ever stop?" You can start a little bit of movement and hope that it will go on.

Inflation is the great bogey in this matter. If you get any extra amount of money in circulation than—inflation! Inflation is a thing of which people were very terrified up to 25 years ago. There is a far better appreciation now of what money is, and how the whole matter can be controlled. Money is very definitely under control in England. It is not so much under control here, because there is not the same threat of inflation. This whole business of inflation was a terrific bogey long ago. It has been shown since that rapid expansion of money can be accomplished without inflation. Inflation should be relegated to the realms of the bogey man. So long as a country is merely getting things going, there is no danger of inflation. There may be a time lag, but once you get people into employment and producing a certain amount of goods you get the balance once more—a certain amount of money against a certain flow of goods. Inflation only occurs when you have a vast expansion of money and only a steady production of goods. If people have more money than they should have, and are fighting for a limited quantity of goods, you get something of an inflationary effect. In this House, except in so far as we have to argue against members of the public, we should leave behind us as a bogey this idea of inflation. Money can be controlled, and, I think, can be controlled in this country. If we could get things going without scaring the timid public, and, particularly, the very timid investing public, we would be doing a good thing for this country. Anything I have said on this subject I have said as an individual. I do not wish to commit anybody else by what I have said. I am trying to help the educative effort of Deputy Cogan along what I think are good lines.

I should like to put a few questions to the proposer and seconder of this motion. I should like to know what are the potential sources in agriculture and industry that could be tapped. I should also like to know if under present circumstances we have the implements at hand for the tapping of these resources. Do the proposers of this motion admit the principle of repayment of the loans, and in how far do they admit the principle of payment of interest? The motion speaks of remunerative prices for farm produce. I should like to know how those responsible for the motion arrive at the costings, and how they decide what would be a remunerative price. These are questions which arise out of the motion, and it would be educative to me to be enlightened upon them.

I am sorry that Deputy Corry was not listening to the speech made by Deputy McGilligan. It was interesting to have a Deputy with the master mind of Deputy McGilligan making the statement he made about money. I should like to know if Deputy Corry has ever taken the trouble to read any books on the subject. Has he read what Professor O'Rahilly has written about money? If not, I recommend him to give some time to reading up the subject and not go on talking of the printing press in this connection. Deputy Corry knows, as a member of one of the boards in Cork, that £17,000 was borrowed to build 40 houses in his own constituency. That loan, given by the banks, is repayable in 35 years. At the end of 35 years, the board of health of which Deputy Corry is a member will have paid back £35,925 to the banks for the £17,000 it borrowed.

I agree with Deputy McGilligan that this is really a question of educating the public. It was rather annoying to hear Deputy Corry trifling with a serious matter in the way he did. No later than last Friday, I went to the post office in Cork to send a 12/- money order to New York as my annual subscription to a paper published there. I could not send out that 12/- to New York until I had filled two green forms. That shows what control we have over money and credit in this country. I am a member of a public board which is trying to get money to do work of national importance in the port of Cork. We approached the Government and were turned down. We approached the banks. They told us that they would give the money to us if we got State security, and they suggested how it could be done—by getting the Minister for Industry and Commerce to make an Order earmarking any credits we have as security for what they would give us. It is about time that every member of the House realised what a fiction this money business is. Herr Hitler was told: "You have no money to enter a war." He said: "Very well, we can do without it"— and he did without it. President Roosevelt advised that the question of tokens and dollars should be forgotten and that they should have no more of this nonsense about finance. The war is going on and weapons of destruction are being forged on the credit of the nations concerned. I want to say to the Minister for Finance that it is a fearful injustice to the people that a small group should look upon the credit of this nation as theirs. Some of these institutions which have an economic grip on this country are not paying income-tax here and they get over £22,000,000 in profits out of a paid-up capital of £9,000,000. They have us in pawn.

Deputy Kennedy asked some questions about the repayment of loans. I did not hear Deputy Cogan mention loans. He said that the State should take control of money and credit. We have not sufficient supplies for our people of milk, butter, or bacon. Does Deputy Corry suggest that idle men should not be put to work to produce the goods we need? I was glad to hear Deputy McGilligan dealing in the able way he did with this bogey of inflation. So long as goods are being produced by men who were previously idle, there can never be inflation. Deputy Cogan has performed a useful service if he did nothing else but educate people's minds on this subject. I hope that Deputy Corry will read Professor O'Rahilly's book and not be indulging in balderdash about the printing press. I travelled up in the train with crowds of men who were going to Belfast and to England. What were they going there to do? To manufacture weapons of destruction and send back the money they earned to Cork and other places to buy the things needed by their families. These men could have been set working here in the production of food and in preparing for the post-war period. We could pay them the money they would earn better than the English people can at the moment.

The time has come when we must think on serious lines. We had an opportunity of doing something effective on the Central Bank Bill, but we did not avail of it. I was disappointed to hear Deputy Corry talk as he did, and to hear Deputy Kennedy putting the questions he did. Why should we have to borrow from people who do not render any service to the community? In Cork, we have houses rented at 13/- and 6/10 of that represents interest. We know that the chairman of the Electricity Supply Board stated that if he had got the money borrowed for the development of electricity at 3¼ per cent. instead of 5 per cent., he would have saved £225,000 a year. Will the Minister deny that the consumers of electricity are, for four months of the year, paying off the interest on these loans? Why should we have to go to any group for credit to develop a scheme such as the electricity scheme? Why should we have to go begging to the banks for credit to build houses or to develop agriculture or to produce food? The sooner we think along these lines the sooner will this country be governed as it should be governed.

Like Deputy Hickey, I was interested in the remarks of Deputy McGilligan, and I was amazed at the remarks of both Deputy Corry and Deputy Kennedy. I remember when Deputy Kennedy was very interested in currency matters and in the establishment of a State bank. So was his Party. It was the foremost plank in the Fianna Fáil platform in the general election of 1927. On the resumption of this debate, I hope to produce a copy of the programme of Fianna Fáil for that election. A State bank, with control of note issue, was the principal item of that programme. I am not keen on Government control of money. Government control of money frequently helps out a needy Finance Minister. It is the most insidious and dangerous form of taxation when unscrupulously used by a needy Finance Minister. I remember well the day 15 years ago when I stood alone in this House in opposition to the final passing of the Currency Bill of 1927. If ever a nation was put in pawn, this nation was put in pawn then. That pawning process has been repeated in the recent nicknamed Central Bank Act. The Act is not really a Central Bank Act because it does not establish a central bank. I move the adjournment of the debate.

Debate adjourned.
The Dáil adjourned at 9.30 p.m. until 3 p.m. Thursday, 5th November.
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