On its face, I do not see anything harmful in this Bill. My complaint against the Bill is somewhat similar to the complaint of Deputy Dillon, namely, that it does not go far enough to deal with the problem which is assuming growing significance in our national life from day to day. One aspect of the Bill is rather puzzling to me. The Minister told us that the purpose of the Bill was to enable him to help the Dublin Corporation to redeem, by a State advance from the Local Loans Fund, stock which is about to fall in and that he proposes, therefore, to lend money to the Dublin Corporation from the Local Loans Fund to discharge that obligation. The Minister, however, did not tell us whether the corporation asked him to do this and, if they did not ask him to do it, why is he doing it. Has the corporation been consulted in the matter? What are the considerations which have prevented the Dublin Corporation from going into the open market for money, seeing that, apparently, they have had discussions with the Minister's Department and, presumably, with the Local Government Department to get agreement on the terms on which the new corporation loan would be floated?
Deputy O'Sullivan has averred that he is the Chairman of the Finance Committee of the Dublin Corporation, that he took an active part in all these negotiations, the last discussion with the Ministry being about three weeks ago, and that until the Minister spoke to-day he had no knowledge that the Government intended to come in to assist the corporation to repay the loan which is falling due, with a view to enabling the corporation in the course of a couple of months to float a fresh loan, the Minister being empowered in the meantime to take up the whole or portion of that loan by investing therein the funds which have accumulated in the Post Office Savings Bank. I think the Minister ought to pull the curtain aside further and tell us how and in what circumstances he came into this matter, apparently, of asking the corporation to defer the floating of its loan. If the corporation had made plans to float its loan, we ought to be told why it was prevented from doing so and, what considerations brought about the postponement of the floatation of the loan. The Minister has been particularly silent on that aspect of the matter and it is the only aspect of the matter which can be a justification for a Bill of this character.
However, I am assuming that the Minister will have some explanation to make of that rather obscure position and that we will get some enlightenment from him when he replies. But I should like to ask the Minister at what interest does he propose to lend the money to the corporation from the Local Loans Fund? Is it intended to make an advance to the corporation for a period of a few months, then let the corporation go into the open market to float a loan and, when the loan is floated—assuming it is successfully floated—the money is to be repaid to the Local Loans Fund and, in the meantime, the Minister is to employ for investment purposes the moneys which have accumulated in the Post Office Savings Bank?
I think in many respects it is a wise development to permit the Minister to utilise the accumulated funds of the Post Office Savings Bank for investment purposes so far as the local authorities are concerned. Firstly, it gives the local authorities access to a market, perhaps at a rate of interest lower than the market that would be available to them if they were to raise money through the ordinary channels. But, here again, the Minister might give us some indication as to what the rate of interest is to be; whether he proposes only to invest the Post Office Savings Bank money when a local authority decides to float a loan; and whether he has power to lend to a local authority a sum of money at an agreed rate of interest without that local authority going through the formality of actually floating a loan? In other words, if the Minister hears, for instance, that the Naas Urban Council want a loan of £10,000, has it to float a loan of £10,000 in which the Minister may invest Post Office Savings Bank funds; or can the Minister, on hearing of the Nass Urban Council's desire—perhaps through the Minister for Local Government—say to the council: "Look here, I will lend you that £10,000 at such-and-such a rate of interest"? Is that the manner in which the funds would be utilised, or can they be utilised only when there is a formal public flotation of a loan?
Seeing that the Minister is proposing to take power now to invest the accumulated funds of the Post Office Savings Bank, I think he might go further and examine the possible extension of the use of that bank as a method to enable local authorities to transact their business through State agency and on terms which might be advantageous to the local authority and advantageous to the State as well. I do not know whether the Minister has any personal experience of the arrangements concerned, but I can tell him there is a scheme known as the postal-cheque system by which persons deposit money in the Post Office Savings Bank and can operate by means of cheques on that bank, in virtually the same way as a person operates on an ordinary joint stock bank account to-day. There is this difference, that the transaction is carried out entirely through the Post Office and you can transact your business with every person who has a similar account. The machinery is operated through the Post Office under State auspices, so that the security of the transactions has never been in question.
In that way, the State has at its disposal very substantial sums of money which, placed at the disposal of joint stock banks, provide them with credit-creating facilities and bring those joint stock banks in very substantial sums of money, often because they lend to the Government of the country where those credits are available. I think it might well repay the Minister to have that whole question of the postal-cheque system examined. Having regard to the size of our local authorities, it appears to be a scheme which could very appropriately be applied as a method of enabling a municipal authority to transact its banking business through the medium of the State and operate it through the Department of Posts and Telegraphs. In that way, there would be greater facilities for co-operation between the State on the one hand, through the medium of its accumulated Post Office deposits, and the local authority on the other hand, than there would be in the rather detached scheme of organisation provided for in this Bill.
Deputy Dillon has gone through the labyrinthine paths of credits and credit-creating possibilities and the relationship of banking methods to the costs of providing ourselves with modern services. For once, I find myself almost in complete agreement with Deputy Dillon on the matter. Like myself and many others — I thought at one stage that the Minister was in our camp as well—he is beginning to realise that this mysticism which surrounds the issue of money by banks for high rates of interest, for schemes the credit-worthy character of which cannot be questioned, is something which has enriched the banks substantially but has made the providers of State and private enterprise much the poorer, because of the relationship of the banks.
We have had statements during the recent by-elections about the Government proposing to spend £100,000,000 on housing. We have only to think of that sum to see the ransom which will be got for housing our people properly. If that £100,000,000 is not going to be put up by the State in the form of State bonds which will be extinguished when the rents come in for the houses which will be erected, then the nation is going to have the thrilling pleasure of paying £5,000,000 per year for a period of 35 years to those who lend the State that £100,000,000. The ordinary citizen wants to see our people decently housed and will be prepared to say that it should be done by the expenditure of £100,000,000. At present that can be done only if all the citizens are prepared to tax themselves to the tune of £5,000,000 at 5 per cent. or £4,000,000 at 4 per cent. in a scheme for the provision of decent houses for our people.
As Deputy Dillon very rightly points out, there is no danger or risk whatever in the State issuing the necessary moneys for the erection of houses. Every house erected to-day can be let or sold. Its lifetime will be 50 to 80 years and it will be occupied during that time. What difficulty is there in saying: "Let us put up a house for £1,000; let us assume its life is 50, 60 or 80 years; and let us charge a rent sufficient to wipe out the State bond of £1,000 which was created in order to provide the necessary lubricant in the form of cash to finance the erection of the house". Instead of doing that, the State apparently is satisfied to continue to pursue a policy which means that the citizens are held to ransom by those who live on selling money at the highest price.
Sums of money in interest charges have an appalling effect on the rents charged on the houses occupied, in the main, by working-class families here. In 1924, Mr. John Wheatley, an Irishman from Waterford, and then British Minister for Health, introduced in Britain what was known as the Wheatley Housing Act, generally recognised to be the best Housing Act which ever found its way to the Statute Book in Britain or, indeed, elsewhere at that time. Wheatley, in the course of his examination of housing finance, said clearly that, if the man who gave land for the erection of a house gave it for nothing, and if the slater, the carpenter, the plasterer and the tiler worked for nothing, and if all the elements which went to the erection of that house gave their labour free, it would not have the same effect in reducing the rent as if the lender of the money lent the money free. That is to say, when you come to consider a single house erected on interest charges such as operated then, the position was that the person who lent the money got more for the house over the period of 35 years than the person, or the variety of persons, responsible for erecting the house, including the person from whom the land was purchased.
If you go to the trouble of examining ordinary housing finance in this city or in rural areas, you find that, taking the economic rent of a house as the test, the rents to-day are almost 50 per cent. higher than they need be, because of the ransom which has to be paid in the form of interest charges. Every poor person living in these new houses to-day—and particularly persons living under economic conditions which are not ideal, in the new areas which have been created in the vicinity of the City of Dublin—could to-day be living in those houses at approximately 50 per cent. of their present rents, were it not for the fact that rates of interest, which amounts almost to unsury in the circumstances, have to be paid for the loan of the money with which those houses were erected.
It looked to me, while Deputy Dillon was speaking, that Deputy Cosgrave was inclined to doubt the basis on which the whole British banking system was operating. If Deputy Cosgrave would care to read, as apparently Deputy Dillon did, the Macmillan Report, which was published as the result of a commission of inquiry set up by the British Government, he will realise that banker after banker testified to the stability of the British banking system, notwithstanding the fact that they admitted that the banks kept only 10 per cent. of their deposits as liquid assets and released 90 per cent. of the deposits for the purpose of loans to customers. In other words, when the banks received a deposit of £1,000,000 they built a pyramid of credit on that worth £10,000,000. It is in that direction that the banks make money; they make it, in the main, by lending it to people who are compelled to pay substantial rates of interest for such facilities, irrespective of how praiseworthy the schemes which they undertake may be in the national interest.
I do not want to discuss interest charges at any length on this Bill. My complaint is that the Bill does not go far enough. If we are to have these large-scale schemes of public work such as we hear about at election times and such as we read about in the Press, then I think we must have a new approach to the question of interest charges. It seems to be nothing short of a scandal and an insult to our intelligence when, every time a house is erected for a working man, 50 per cent. of the rent charged him, 50 per cent. of what is got in the form of rent from his low wages, must go to the people who lend the money for the erection of a piece of property of that kind which is there all the time as security for whatever body gave the necessary credit to erect that house in the first instance.
I suggest to the Minister who, rumour has it, was a disciple of Major Douglas on one occasion, that he ought to examine the extent to which the State can help local authorities in the erection of houses and in the carrying out of various other schemes which make for the public weal. If, for instance, local authorities are to spend £20,000,000 on houses, which £20,000,000 has to be paid by the tenants of these houses, ordinary persons depending on work when they can get it or unemployment insurance or unemployment assistance when they cannot get work —out of what they receive in that way they have to pay the rent for these houses—and if the State, because of their weak economic position, has to subsidise the erection of these houses, surely we ought to make sure, when the State throws in its resources and when the ordinary wage earner has to pay a high rent, that we will not permit any other element to swell the rents to such an extent as to impose hardship on tenants economically circumstanced as are the mass of the tenants who occupy labourers' cottages or artisans' dwellings.
