Article I provides:—
"The Contracting Parties agree to work in close co-operation in their economic relations with one another."
And the last paragraph of the article says:—
"Accordingly the Contracting Parties pledge themselves to carry out, by their efforts of self-help and in a spirit of mutual aid, the following General Obligations, and hereby set up an Organisation for European Economic Co-operation hereinafter referred to as the Organisation."
The next articles provide for the various obligations that the contracting parties undertake. They are in general accordance with the main aims set out in the preamble. Article 7 on page 23 provides that:—
"Each Contracting Party will, having due regard to the need for a high and stable level of trade and employment and for avoiding or countering the dangers of inflation, take such steps as lie within its power to achieve or maintain the stability of its currency and of its internal financial position, sound rates of exchange and, generally, confidence in its monetary system."
Article 8 provides that:
"The contracting parties will make the fullest and most effective use of their available man-power. They will endeavour to provide full employment for their own people and they may have recourse to man-power available in the territory of any other contracting party. In the latter case they will, in mutual agreement, take the necessary measures to facilitate the movement of workers and to ensure their establishment in conditions satisfactory from the economic and social point of view.
Generally, the contracting parties will co-operate in the progressive reduction of obstacles to the free movement of persons."
Part 2 deals with the setting up of the organisation, with the rules applicable to the organisation that is being created by the Convention.
I think I should draw the attention of the House to the provisions of Article 14. Article 14 provides:
"Unless the organisation otherwise agrees for special cases, decisions shall be taken by mutual agreement of all the members. The abstention of any members declaring themselves not to be interested in the subject under discussion shall not invalidate decisions which shall be binding for the other members."
In effect this article, therefore, provides that decisions may be unanimous, except in such cases where one country may indicate that it is not interested in a given issue and abstain from voting.
Now the organisation was set up immediately and proceeded to work. Its function was to collect the relevant data and set up machinery whereby the various programmes of the requirements of Europe could be co-related; so that some idea of the total requirements of the 16 participating countries could be ascertained from quarter to quarter; so that lists of the requirements could be made available to the United States; so that whatever goods were available would be distributed evenly and so as to obtain the best results possible. As in all these international organisations, a tremendous amount of documentation was made available. A great many forms and a great many regulations came into being. These were all necessary, but they all involved a tremendous amount of work, as far as a small country like ours was concerned. I think I would like to pay in this House a tribute to the work of the officials of the Department of External Affairs and the other Departments who have had to carry out this work both here and in Paris on our behalf. They have had to work extremely hard on the question; there were practically no week-ends during which the members of the staff have not had to work; they have had to work overtime at night and stay on until the late hours of the night to comply with all these requirements. So much for the Paris convention.
The convention merely deals, as I explained in the beginning, with the problem of achieving co-operation and with the problem of trying to secure the maximum self-help and mutual help possible between the nations of Europe. But that only skirts the immediate problem that faces Europe. The immediate problem that faces Europe is the question of obtaining the goods that Europe requires from the Western hemisphere. A country, like a family or an ordinary person, must pay for the goods it buys. During the war and during the years that immediately followed the war, gold, which is a medium of exchange, found its way entirely across the Atlantic, because the European countries were not producing and because they were running into debt. Accordingly Europe found itself faced with a position wherein it was unable to purchase from the Western hemisphere the goods that it required. To bring the problem nearer home for illustration purposes, I may take the case of Britain and this country. During the inter-war period, during the period between the two wars, Britain usually imported £400,000,000 worth of goods more than she exported. In other words, she was running an annual adverse trade balance of some £400,000,000. That adverse balance had to be found in hard cash, but at that time Britain had various resources outside its own shores. It had investments in Turkey, in Rumania, in the Argentine and all over the world and the income from these investments made up that £400,000,000 annually.
One of Britain's problems is that she no longer has these investments abroad and is, therefore, no longer able to make up that £400,000,000. But apart from that, the value of commodities has increased considerably and she has now to find a much higher figure, which she can only find by exporting increased quantities of goods. We, likewise, during the inter-war period had an adverse trade balance of £20,000,000 per year. We imported £20,000,000 worth of goods per year more than we exported. We made up the difference through our invisible exports. That was the position that prevailed between the two wars. This problem has greatly increased since.
We find that the adverse balance of payments of Great Britain in 1946 had reached a sum of £380,000,000, whereof £360,000,000 was in reference to the Western hemisphere. But in 1947 the adverse balance of payment was in the region of £680,000,000. So far as Ireland is concerned, the position was that in 1946 our adverse balance of trade with the world at large was £34,000,000. In 1947 it rose to £92,000,000. In the first quarter of this year it has been some £26,500,000. In other words, if the present trend is maintained, our adverse balance of trade this year will run between £110,000,000 and £120,000,000. The problem that faces Great Britain and faces ourselves is to obtain goods from the Western hemisphere for which we have no gold or no dollars to pay. America's contribution to the Economic Recovery Plan has been to make available dollars or goods or credit for the purpose of enabling Western Europe to obtain the goods that it requires for its reconstruction.
In dealing with our own particular problem here in Ireland, in so far as it affects the economic recovery plan, we have to face up to the position that our financial and currency system has been linked with the sterling area. To a large extent, our savings and our money have been put in the bank round the corner. The bank round the corner is now in some grave difficulties so far as converting its assets into dollars or hard currency is concerned. The gold and dollar reserves of Great Britain were reduced in the year 1946 by some £226,000,000. It is expected that the provisional figures for 1947 will show a reduction by £963,000,000. I am quoting from the Economic Survey for 1948, page 15, where the position is set out as follows:—
"Our reserves at the beginning of 1948 were about £680,000,000, excluding the balance of the Canadian Loan, over and above our agreed drawing to the end of March, but including the whole of the South African gold loan. It will be seen from Table X that during the first half of 1948 they are estimated to be reduced by £222,000,000. This would leave reserves at the middle of the year of, say, £450,000,000. The rate of drain in January was greater than in December and above the average implied in a drain of £222,000,000 in the last half-year. This estimate of our reserves at mid-1948 represents, therefore, the maximum for which we can hope.
If the drain in the second half of 1948 was again of the order of £225,000,000, half of this remaining amount would be gone by the end of the year, and the remainder would be exhausted during 1949.
This clearly could not be contemplated. If it were to become clear that we must act on the assumption that aid under the European recovery programme might not be available to us, we should be obliged to make immediately further heavy cuts in our imports programmes from the Western hemisphere."
That is the position as set out in the Economic Survey published by the British Government. It is a serious position from Great Britain's point of view and it is a serious position from our point of view, because that is the bank in which we have put our savings. It may have been unwise to put all our savings into one bank. It might have been better had we accumulated our savings elsewhere in the last ten or 15 years. There is no use, however, in "crying over split milk." That is the position. We put all our eggs into one basket.
I have no wish in the course of this debate to introduce unnecessarily the question of Partition. I find, however, that it would be impossible to review the economic position of the country and the difficulty in which we find ourselves without adverting to the economic consequences which have resulted from the division of the country. The Six Counties which were cut off from the rest of Ireland contain the industrial potential of the country. A fact that very few people appreciate is that of the various political units that constitute the islands of Great Britain and of Ireland the one solvent economic unit is the area comprised in the Six Counties. Alone of these various political units it has a favourable trade balance. Its exports for the year amounted to £113,250,000, as against imports amounting to £107,000,000. In other words, it had a favourable trade balance, excluding all invisible exports, of more than £6,000,000. Those figures actually include the trade between the Six Counties and ourselves which showed a balance in our favour of £7,250,000 in 1945.
Accordingly, if you were to deduct from these figures the trade between ourselves and the Six Counties the resulting position would show a favourable trade balance for the Six Counties, that is, excluding the trade with ourselves, of some £13,172,000. It is an economic fact that this favourable trade balance, coupled with the fairly substantial exports which the Six Counties have, shows that the Six Counties would be an important economic asset to the economy of Ireland as a whole and that many of the difficulties which now confront us would not exist were it not for the fact that our country has been partitioned against the wishes of the vast majority of the people. Actually, a very large proportion of the exports from the Six Counties go to the hard-currency areas, go to the Western hemisphere. Linen, for instance, which forms one of those items of Britain's trade with the United States, comes largely from the Six Counties. Seventy-five per cent. of the linen produced in the Six Counties is exported and all but 5 per cent. of those exports go to the Western hemisphere and earn hard currency. Therefore, if we find ourselves in economic difficulties, if we find that we have such a heavy adverse balance of trade, if we find that we are unable to earn the hard currency that we require for the economy of the island as a whole, we also find that this is due practically entirely to the unnatural division of our country. I should like our friends both on the other side of the Atlantic and our friends on the other side of the Irish Sea to appreciate fully that if we are a drain on their resources for hard currency it is largely due to the fact that our country has been divided against the wishes of its inhabitants. That is an economic fact, and it is one which should be borne in mind. I am not utilising it for purposes of propaganda but I think it is well that the members of this House should realise the economic factors that are involved.
As I indicated earlier on, one of the purposes of the Economic Recovery Plan is to enable European countries to acquire the goods they require from the Western hemisphere. The American Congress, on the proposition of the Administration of the United States, passed an Act setting up the machinery whereby the Economic Recovery Plan programmes would be financed. The Act makes provisions for a number of different contingencies. It provides inter alia for the conclusion of bilateral treaties between the United States and each of the 16 participating countries and it sets out in some detail the various provisions which are to be contained in these bilateral treaties. It sets up an Administrator who is given Cabinet rank and full powers to administer the help granted by Congress. He has under him an economic staff. He has advising him an economic advisory council. I should like the House to appreciate that when the American Government decided to make this money available to Europe they were laying in store for themselves a great many difficulties. They were laying in store for themselves difficulties with Europe. They were putting a cake on the table. That cake had to be divided. In the cutting up of that cake they were bound to make enemies. Apart from that they were laying difficulties for themselves with their own people.
I told you that the total sum which the American taxpayers will have to provide before this scheme is concluded will be in the neighbourhood of 17,000,000,000 dollars. That, of course, requires taxation. There are very few Governments who would not leave themselves open to criticism by their political opponents for raising such a big sum to expend outside their own shores. There has been a good deal of criticism. I merely mention these things so that the House will appreciate the great many difficulties that confronted the American Administration in putting through this proposal put forward by General Marshall and by the Economic Co-operation Organisation in Paris.
Briefly, the Act passed by Congress provided for the giving of aid in two ways, or possibly, I should say, in three ways. First of all, it provided machinery whereby the participating countries would receive priority in respect of the goods which were in short supply—machinery whereby the goods that Europe required for the reconstruction of Europe would be given priority over ordinary commercial transactions. That was a very necessary and a very important factor from the point of view of Europe. It then provided that aid would be granted either by way of loan or by way of grant outright; that where the aid was given by way of outright grant certain conditions as to the administration of the aid thus granted would have to be observed by the various countries in receipt of the aid; conditions as to how the money would be utilised, because one of the problems that confronted the American economists—and, indeed, the European economists—was that if vast sums of money on this scale were just brought into countries they would create inflation. Therefore, the Economic Recovery Act contains provisions to ensure that any money given by way of grant to a country should be used only for certain specified development purposes.
It also provided for the giving of aid by way of loan. It was left in the sole discretion of the Administrator, acting in consultation with the Economic Advisory Committee, as to whether money would be given by way of loan or grant to any given country. Certain criteria were laid down—laid down is possibly too strong an expression—certain criteria were suggested in the course of the various discussions that occurred in America as to the basis upon which the aid was to be given and as to whether it was to be given to a country by way of loan or by way of grant. The United States Senate Foreign Relations Committee report at page 48 contains the following information as a suggestion of the basis of the criterion which might be used:—
"To the fullest extent practicable within the above test payment should be made or loans used in order to finance imports of capital equipment and raw materials for use in capital development; and grants should be used to finance imports of supplies of food, fuel, fertilisers and raw materials not used for capital development."
In other words, the criterion suggested in that quotation was that in the case of consumer goods aid should be made available by way of grant whereas in the case of capital goods loans should be given. The matter is also dealt with in the White Paper which was issued by the American Government dealing with this question. At page 18 of that White Paper the various considerations applicable are set forth:
"The continuation of the provision and export of food, and even the maintenance of the existing levels of export, will be possible only if there are abnormally heavy imports of fertilisers and feeding stuffs from dollar sources. If dollars are not available imports of these essential items would have to be reduced, resulting almost immediately in a decline of output and exports as well as a lowering of the standard of living."
That was dealing with Ireland. The United States technicians, after evaluating Irish statements of requirements and production programmes in the light of the availability of material and other factors, believed that Ireland will need to import from the Western hemisphere to June 30th, 1949, approximately 190,000,000 dollars if a programme leading to self-support and expanded export is to be initiated. Nearly 60 per cent. of the imports will consist of food, fuel, fertilisers and feeding stuffs. Of the remainder, more than half would be raw materials, machinery and equipment.
At page 48 of the same White Paper the question of the nature of the assistance to be given to different countries is reviewed. It is stated:—
"It is clear that grants should not be made to countries which have the capacity to pay cash or repay loans. It is equally clear that it would be unrealistic to require a participating country to contract dollar debts now if it does not have the capacity to pay without jeopardising the purpose of the programme. However, to the fullest extent practicable within the above test, payments should be made or loans used in order to finance imports of capital equipment and raw materials for use in connection with capital developments; and grants should be used to finance the import of supplies of food, fuel, fertilisers and raw materials not used for capital development."
Generally speaking, from the mass of documentation which emanated from the United States on this particular question, the criterion laid down as to whether a country should receive a loan or a grant seems to have been fairly consistently that, in the case of consumer goods or in the case of goods that are referred to as incentive goods, or goods essential for the viability of a State, the assistance should be made available by way of grant and that, in the case of capital goods, assistance would be made available by way of loan. I merely mention these matters to indicate the background more or less from which this question was approached here.
Since the Act was passed allocations have been made only in respect of the quarter that ends on the 30th June. The allocations which were made ending 30th June provided that Portugal, Switzerland and Sweden would not receive any aid at all either by grant or loan; that in the case of Iceland and Ireland aid would be made available by way of loan only and not by way of grant.
Having regard to the various criteria suggested as to the basis upon which aid would be made available, it may be somewhat difficult to understand why in the case of Ireland aid by way of grant was not forthcoming. I wish to make this quite clear, that we do not complain of it. This is a scheme that is being administered very generously and very ably by the authorities set up under this Act of the American Congress. They are administering the American taxpayers' money. We have no claim on it. It is a matter entirely for them. Having regard to the criteria to which I have referred, it may well be suggested—and it is open to the suggestion—that considerations other than economic ones could apply. I do not know about that and I do not complain. I should like to say this: that whether we receive any aid at all from the United States, or whether such aid is by way of loan or grant, we admire the help that is being given by the United States to Europe whether we benefit by it or not. I think we should give them full credit for their action and, in the course of these discussions, I would like that this matter was not dealt with very much or dealt with in such a way as to detract from the assistance the United States are giving to Europe.
One matter that may have militated possibly against us is the somewhat exaggerated idea that prevails abroad of our standard of living. Both from newspaper reports and also from conversations that I had in America and in Britain I found there was a completely erroneous impression as to the standard of living of our people. I found Ireland had been described as a land flowing with milk and honey, a land in which there were no shortages. In fact, it was described as a country in which the people ate far too much. That impression in many respects has been very damaging to us. The inference has been drawn that while the rest of Europe was on the border of starvation and was undergoing severe shortages, the Irish people were living in the lap of luxury and comfort. In a way, I can well sympathise with the animosity that such an impression would arouse in the minds of people undergoing severe hardship.
On examination, I found that those erroneous impressions were derived from two sources. They were derived from newspaper reports and from the impressions of visitors who at best may be a day or two days in this country. In most cases they were the impressions of people who had stopped maybe for a couple of hours at the Shannon airport, who had obtained a meal and had dined well but possibly not too wisely. I found it necessary to explain that in order to attract visitors and out of a sense of friendliness to those who came to our shores we sought to provide the best conditions possible in our hotels and in our restaurants, and that we always made a point of ensuring that there were more than ample supplies at places like the Shannon airport and at luxury hotels throughout the country. But I must say I found it somewhat unfortunate that our attempts at providing hospitality should be misconstrued as an indication that our country was wealthier, practically, than any other country in Europe.
The second cause for this impression arises possibly through the desire—I was going to say mania—for statistics. Various statistics have been compiled as to the quantity of calories per head of the population consumed in different countries. Some of these statistics seem to indicate that we receive a higher number of calories per head than some other countries. These statistics vary in a great many respects, but it would appear to me, on examination, that the statistics are arrived at on a completely fallacious basis. An estimate of our total production of food is taken. From it is deducted our total exports. To the sum left is added the total imports of food from abroad. That is then divided by the population.
These estimates do not take into account, firstly, close on 1,000,000 tourists and transit visitors that pass through this country every year. It is very difficult to estimate the amount of food that they consume, but I think I may say that in most cases the average visitor consumes anything from two to four times more than the average inhabitant. It is so, in the first place, because he is very often on holidays, and it is so because he very often comes from a country where there are greater shortages; he comes here for the purpose of eating. Secondly these figures do not take into account the very considerable exports of food that occur through food parcels sent out or taken by visitors.
Anybody familiar with the Border area—towns such as Dundalk, Monaghan and Clones—will know that every day of the week these towns are crowded by people who come from the Six Counties in order to purchase supplies and bring them home. In addition to that, practically every tourist or visitor returns with very large food parcels. Thirdly, there is a good deal of unofficial export of food. There is, we all know, a good deal of smuggling of cattle, poultry, eggs, butter and farm produce generally. Only a few weeks ago, I think, as Deputies may have seen in the papers, a consignment of something like 30,000 chickens was found in Belfast which had been smuggled from this side of the Border, so that that traffic is by no means inconsiderable.
I would suggest that these figures are not a reliable index of the standard of living of our people. Possibly a better index of our standard of living would be provided by the relationship between the number of dwellings and the number of people in the country. Taking the countries of Belgium, Britain, Denmark, France, the Netherlands, Sweden and the United States, and comparing their figures with ours, we find that we have fewer dwellings per head of the population than any of these countries. Or, if you like, you can also, to take another comparison, compare the number of motor cars in relation to the population and you find that we have fewer motor cars per head of the population than any of these countries.
Again our consumption of electricity per head of the population is very far below that of any of these countries. Our consumption per head of the population was, in 1947, 200 kilowatt hours, whereas in Belgium it was 800, Britain 860, Denmark 425, France 643, Netherlands 444, Sweden 2,240 and the United States 1,510. Perhaps a better criterion still would be the health tables and the mortality rate of our people. With respect, I would urge on these eminent statisticians to study all these tables, as I think they would provide a much better index of our true economic position than some of the statistics they have evolved. Our mortality rate is higher than that of most European countries—vastly higher than that of the United States, considerably higher than that of Britain and much higher than that of Holland, Belgium, France, Italy, Sweden or Switzerland. Our infant mortality rate is double that of the United States, double that of Holland, double that of Sweden, and 50 per cent. over that of Britain. Those figures might provide the dieticians and economic experts with a truer index of the economic condition of this country.
I have dealt with this at some length —I hope I have not tired the House— because I felt it was necessary as such a false impression existed abroad that this was a wealthy and over-fed country. The medical health tables indicate that the majority of the population of this country bears all the signs —I am not speaking of the upper classes or the middle classes—of undernourishment.
Now, as to the part Ireland can play and as to the help that can be given in assisting Ireland to produce more food, the problem in Ireland is principally an agricultural problem. During the war years the country was starved of fertilisers. It was also short of feeding stuffs and its cattle population diminished, partially by reason of the shortage of feeding stuffs and partially because of the need to increase the production of wheat, which reduced the area available for the production of meat, etc. The extent of the fertiliser starvation of the soil is shown glaringly by the reduced output per acre of various grains. For instance, if you compare the tables of production between 1938 and 1947, you find that in respect of wheat in 1938 the average acre produced 17.2 cwts., whereas in 1947 production had fallen to 10.8 cwts. In the case of barley, a production of 19.6 cwts. in 1938 had fallen to 15.8 cwts. in 1947. In the case of turnips, a production of 17.5 cwts. in 1938 was down to 14.9 cwts. in 1947. In practically every range of root and grain crops, the production has been falling steadily in the last ten years owing to the lack of fertilisers. We believe, therefore, that, given a sufficient quantity of fertilisers and a sufficient quantity of feeding stuffs, the output of food can be increased rapidly so as to enable us to make available to other countries some of the foods in respect of which shortages now exist and are expected to continue.
I do not know whether the House would like me to go through in detail the various provisions of the bilateral economic co-operative agreement signed between the United States and Ireland. By and large, it follows strictly the pattern provided by the Economic Co-operation Act of the American Congress. In many respects it duplicates some of the provisions contained in the Economic Co-operation Convention signed in Paris. Some portions of it are only applicable to countries which are in receipt of aid by way of an outright grant. It provides, in these cases, for a local currency fund and for the administration of the local currency fund; it provides certain conditions that would attach to it, to ensure that it would be safeguarded and that American assets would be safeguarded as far as possible. By and large, I do not think that there was anything unexpected in the bilateral treaty. It conforms, very often word for word, with the Act which renders this treaty essential. Negotiations took place between the 16 countries and the United States relative to the contents of the treaty and the contents in its present form were generally agreed to a few days before it was signed.
I think I have covered in general the main points to which I felt it was necessary to refer, but I would like to say this before concluding: to a large extent, our ability to contribute as usefully as we might will be limited unless we receive aid by way of grant, because it will preclude us from being able to utilise the local currency fund for development purposes, for purposes of injecting the necessary fertilisers and foodstuffs into the agricultural economy of the country. To that extent, I think that we may not be able to obtain as good results as we would if we had received a grant. The question of whether we will receive grants in future is not decided. The matter is decided from quarter to quarter by the Administrator on the advice of the Economic Advisory Council. It was made very clear to us that for the present quarter and the coming quarter the aid given to Ireland would be by way of a loan, but that it was not to be taken as a precedent for future quarters. It was merely a decision reached for the current quarter, but various conditions might affect that in the next and subsequent quarters.