Dáil Éireann debate -
Wednesday, 7 Nov 1951

Vol. 127 No. 2

Supplies and Services (Temporary Provisions) Act, 1946 (Continuance) Bill, 1951—Second Stage.

Minister for Industry and Commerce (Mr. Lemass)

I move that this Bill be now read a Second Time. As many Deputies know, this is a Bill to continue the Supplies and Services (Temporary Provisions) Act of 1946, and that it is under that Act that the Government now exercises power to control prices, to operate rationing schemes, to exercise control over imports and exports and exchange transactions, and to provide and operate cheap fuel schemes and other social welfare services. It is, I think, the general view in the Dáil that powers which are permanently required by the Government should be conferred by permanent legislation, and it is likely to be agreed that some of these functions to which I have referred, particularly price control, will need to be exercised upon a permanent basis.

There is a difficulty at present, however, in view of the uncertainty of the future, in framing permanent legislation dealing with these powers and functions, and there might be some danger in attempting it because, preoccupied as we are with present difficulties, the Government might be induced to press for powers greater than it would be advisable that it should possess in normal circumstances if we are ever going to see normal circumstances again. The wide powers which are still required should, I feel, be given for a limited period only and should be subjected to a periodic review by the Dáil. The powers given by the Supplies and Services Act are given for a period of one year only. If there is a view amongst Deputies that, because there is not likely to be any general change in the situation in the course of the next year or two the Bill should be enacted for a longer period, say two or three years, the Government would not object, but, clearly, there is need to limit the duration of the period for which the powers are conferred. I mention that fact because in 1947 I submitted to the Dáil proposals for legislation to set up a permanent price controlling organisation. In 1947 it seemed to us that the post-war problems were resolving themselves, and that it was possible for us to decide then upon the form that permanent legislation should take. The position deteriorated in the meantime, however, and in present circumstances we do not propose to submit a Bill on the lines of that discussed here in 1947, but to continue to operate under emergency powers for the time being.

I propose, on this Bill, to inform the Dáil about the present price position, to tell them how it developed, what has been done about it, and what is being done about it. There are on the Order Paper, however, two amendments —one in the name of Deputy Costello and the other in the name of Deputy MacBride. These amendments, if carried by the Dáil, would have the effect of depriving the Government of all its present powers to control prices, as well as bringinng to an end existing rationing arrangements, export restrictions, currency control, cheap fuel schemes and other social welfare services operated under the Supplies and Services Act. That would be a very drastic step for the Dáil to take and Deputies will, no doubt, consider very seriously whether the reasons given in these amendments would justify the taking of such a step.

I intend, before dealing with the position regarding prices, to discuss briefly the reasons which are advanced for doing so. I know that some Deputies opposite have been trying for the past two weeks or so to tie the Report of the Central Bank around the neck of the Government. We will not accept it.

Mr. Morrissey

You tied it around your own necks before it was published. You swallowed it hook, line and sinker.

Mr. Davin

It nearly choked you.

Mr. Lemass

Deputy Morrissey may not understand the difference in the statements that were made by me and other Ministers and those in the Central Bank Report. He would need to understand it. Certainly he, or some of his colleagues, have tried to ensure that the public will not understand the distinction. It is desirable to deal with the matter now, so that any ambiguities which arose will be cleared up. The Report of the Central Bank is not a statement of the Government's views or of the Government's intentions. It is a statement of the views of the Board of the Central Bank. That board and the Governor of the Central Bank are entitled to their views and are entitled to express them. There is, in fact, an obligation upon the board to publish its observations and suggestions on financial policy generally.

Mr. MacBride

Surely that is not correct?

Mr. Lemass

Yes, it is right.

Mr. MacBride

Look up the section.

An Leas-Cheann Comhairle

The Tánaiste should be allowed to make his speech. Deputies will have an opportunity of giving their views afterwards.

Mr. Lemass

Should there be any doubt about the powers or the duties of the Central Bank, it can be cleared up. As I understand it, they are under an obligation to comment upon matters of financial policy and have, in fact, been doing so in each year since the bank was established. There may be the view that the Governor of the Central Bank holds the wrong ideas on these matters, but we are under no obligation and never regarded ourselves as being under an obligation to conform to any views that the bank expressed or that the Governor held. Indeed, on many occasions in the past a line of policy was followed which was contrary to that recommended by the Board of the Bank. There may be the view that it is undesirable, in present circumstances, that there should be in the position of Governor of the Central Bank a person holding those views. If that is going to be argued by any Deputy opposite, I can only point out that the individual concerned holds that office because they appointed him to it. When I say that the views expressed by the Board of the Central Bank upon the financial situation here do not reflect the outlook, much less the intentions of the Government, I want, however, to make it clear that, in so far as they have attempted to analyse the economic and financial position now existing, they have done so with reasonable accuracy, I think. It may be that the solution which they propose for the difficulties inherent in that position are contrary to those which the Government intends to follow, but because they have emphasised the facts of the position and directed wide public notice to the fact that there is a problem there to be solved, I think they have done something very useful. I want to make it quite clear, however, that the line which the Government intends to follow in the solution of these problems is diametrically opposite to that which the Central Bank suggests.

Deputies

Hear, hear!

Mr. Morrissey

Full retreat.

Mr. Lemass

I do not mind Deputies applauding provided they understand the significance. I have emphasised that there is a serious problem and that this effort which they are making to induce the people of the country to believe that everything is all right and that there is no obligation upon us to do anything about the position is completely contrary to public interest.

Deputy Costello said over the last weekend that there is no crisis yet. In a strict sense that is true. Many Deputies know the story of the worker in a New York skyscraper who, looking out of a 20th storey window, saw his mate fall off the top of the building. As he hurtled down past the 20th storey window he shouted at him: "Are you all right, Bill?" And Bill replied: "All right so far." We have no crisis yet but we have a problem and the efforts which the Government has been making over the past three or four months have been to get the people of this country to realise that there is a problem. The fact that we have no crisis yet is no reason why we should do nothing about the position as it exists. If we are to avoid the possibility of a crisis ever arising, it is now that we have got to take action. We have been trying to instruct the people of this country upon the character of that problem, trying to inform them as to how it arose and as to the measures which we think must be taken to deal with it.

That problem was clearly stated by the Board of the Central Bank, as it was by various members of the Government in public statements, as arising from the fact that the present level of production in this country is not capable of supporting the present level of consumption.

Mr. Morrissey

Hear, hear!

Mr. Lemass

I do not want to be misunderstood or misrepresented when I make that statement. The present level of consumption is relatively high by European standards. We are aiming to keep it at least as high as it is now. We do not think that a solution of our problem should be sought along the lines of reducing the standard of living but when we emphasise that the aim must be to increase the level of production so as to make it possible for us to sustain the present level of consumption, the present standard of living, I want the House to realise that we are undertaking no small task.

I have said that our standard of living is relatively high. It is, of course, difficult to find completely accurate bases for comparing the standard of living of one people with another, but I have no doubt that Deputies noted recently published in the Press a table prepared by the Food and Agricultural Organisation of the United Nations which gave statistics of the average food consumption in 1950-51 by different countries in the world, and will have seen that according to that table the average food consumption of this country, reckoned by the number of calories per day, was the highest in the world except New Zealand. There are other respects in which it is possible to produce evidence that the statement I have made is accurate, that our standard of living here is high in comparison with other European countries.

If we are going to maintain that standard of living then we have got to get busy very quickly about the level of production, prepare plans and get them into operation quickly for increasing the level of production, because although there has been a considerable rise in the level of the consumption by our people in the post-war years as compared with pre-war, there has been no corresponding increase in national productivity.

It is true that our consumption has risen most steeply in relation to purely luxury goods. The withdrawal of tobacco from bond during the present year will be 60 per cent. higher than in the average pre-war year and the consumption of beer and spirits has increased in almost equal degree as compared with pre-war. But as I have said, to maintain these higher levels of consumption we have not got a corresponding increase in national output. It is true that industrial output has increased since before the war. The increase in industrial output, however, is by no means adequate to offset the higher standard of living now enjoyed by industrial workers and must be put against the fact that production in agriculture has not increased at all.

This is not the time to discuss the agricultural policy pursued during the past three years, but that time will come. I merely want to draw the attention of Deputies to the fact that, while in all Western European countries the level of agricultural production, as measured by the quantity of foodstuffs produced and marketed, according to a report published in the last few weeks by O.E.E.C., was 22 per cent. above pre-war, in this country it is 4 per cent. below pre-war. I am giving the House that information so that they will have it in mind when coming to consider the questions of policy that are involved in the amendments which are being proposed to this Bill.

We have that situation, the situation in which the level of production is incapable of sustaining indefinitely the present standard of living and the present level of consumption. The Central Bank says the solution is to cut down consumption. The Government believe that the solution is to increase the level of production. Every Department of the Government is trying to achieve that result, and in our efforts to get it we expect to obtain the co-operation of the Central Bank and the commercial banks. If necessary we are prepared to take steps to ensure that we will get that co-operation.

Deputies

Hear, hear!

Mr. Lemass

A statement was published during the course of the past week or so by the executive of the Irish Trade Union Congress commenting upon the Report of the Central Bank.

Deputies will, I am sure, have noted the synopsis of that statement which appeared in the daily newspapers. I want to say that I find myself in almost complete agreement with it. According to the text, I shall increase or decrease the emphasis on "almost" in that sentence. I want to say that I certainly agree with their advocacy of a policy of expansion of production in present circumstances and the adoption of measures to increase employment. It is along that road we have got to seek a solution of this problem. I agree also that if the work of the Government is not to be impeded then, as the Executive of the Trade Union Congress states, it is necessary to raise additional revenue by new taxes. It is perhaps a commentary on the demoralisation which has occurred in our political life during the past two or three years that when the Executive of the Trade Union Congress publishes a statement of that kind it is necessary to congratulate them upon their courage. I agree also that we must not allow our capital development to be impeded and I am going to try to bring before the House what that means in practice. I will agree that it is desirable that our imports should be restricted, that we should try to expand home production and particularly, as they state, to endeavour to replace imports of wheat and maize, but it is necessary perhaps to put in the qualification that, in present circumstances, restricting imports would only aggravate our price difficulties unless that restriction coincides with the successful operation of measures designed to increase our own production.

I do not agree with the Executive of the Trade Union Congress that the revenue which it will be necessary to secure in order to meet the present Budget deficit, much less provide for an expansion of State services can be secured by the particular taxes which the Trade Union Congress suggests. A heavy tax on luxuries will bring little revenue. Luxuries are, by definition, things that people can do without, and if we make them, by taxes, so expensive that people will not buy them, then not merely will there be no luxuries but there will be no revenue. I do not agree at all that a purchase tax on the British model is applicable to our circumstances.

We are far too disposed to think that because something has been done in Great Britain, we should try the same thing here. Our problem is fundamentally different from that of Britain. A luxury tax upon home-produced commodities of any kind would merely increase unemployment and we must always be on our guard against measures which might have that effect, because even though we might hold that expansion in other directions would off-set such unemployment and provide even greater opportunities for employment, any dislocation of employment in present circumstances would be likely to cause an increase in emigration.

In so far as imported luxury goods are concerned, most of them are subject to taxes already, and it is a far simpler method of securing revenue from them to make them subject to customs duties then to operate a difficult purchase tax arrangement. Neither do I agree with the Trade Union Congress that an increase in subsidies is any solution of our problems. There is a case for abolishing subsidies, although I recognise it would be a matter of considerable difficulty in the immediate future. The present food subsidies confer a benefit equivalent to 2/- per week per person. If the subsidies were abolished, then the subsidised rations could be purchased only at higher prices by an increased expenditure of 2/- per week per person. I think that if we could devise some method by which we could take the £12,000,000 or £13,000,000 we now expend on subsidies and use it to increase the cash income of everybody in the country by 2/- per week, at the same time making the rations available at their economic prices, then nobody would be worse off, and we would secure substantial advantage in other directions. While we have subsidies we must have rationing and all the restrictions that rationing involves. No system of rationing can be completely fair or can adjust supplies to the varying needs of families or of different localities. Everybody knows that the subsidised bread ration at present is far more than is needed to meet the reasonable requirements of city dwellers and is far less than is needed to meet the reasonable needs of dwellers in the congested areas. Similarly, personal taste and family circumstances will produce quite remarkable variations in the average consumption of tea, sugar and butter. If Deputies have any doubt about that, I invite them to study the reports of the nutritional surveys which were published some time ago.

If we could get rid of these restrictions, there would be considerable advantage to the public and considerable saving in administrative cost as well. I recognise, and every Deputy will see at once, that it would be a matter of considerable complexity so to arrange things that, simultaneously with a withdrawal of these food subsidies, everybody in the country would get an increased income of 2/- per week to off-set the higher costs of these foodstuffs, but I certainly would prefer to investigate possibilities in that direction than to seek to ease current problems by expanding subsidies at the cost of a further heavy increase in taxation.

However, my main criticism of the statement issued by the Trade Union Congress—and this applies also to the speech made over the week-end by Deputy Costello—is that it assumes that increased investment and increased production can be got by wishing for them. Can we get an honest and realistic examination of the problems involved in increasing production and in increasing employment? We cannot do it without increasing investment. That is clear. Our position is intensified by the fact that investment in Irish productive capacity has always been less than needed. Our ability to finance additional investment in new productive enterprise, instead of increasing, is declining. New capital formation in recent years has been altogether inadequate for an expanding economy but small as it was—and this is the point I want the House to grasp —small as the new capital formation was, it was not nearly covered by current savings. The level of personal savings in 1950 was 6 per cent. of the-national income. That is far too low a level of savings to admit of an expansionist policy. It will probably be lower still in 1951. There may even be a net dissaving in 1951.

Last year, because the level of savings was inadequate to finance the capital investment that was undertaken, we drew on our external assets to the extent of £30,000,000. These external assets represent savings which were made, involuntarily for the most part, in the past and which are now invested abroad. This year, according to present indications, we shall draw upon these past savings to finance investment activities and normal outgoings to the extent of about £70,000,000. I know there is room for differences of opinion as to the extent to which that heavy increase in the deficit in our external payments was due to stockpiling in the present year. The Statistics Office estimated that about £10,000,000 of the increased imports could be attributable to stockpiling. It may be that stockpiling would account for a higher proportion of our imports than that. We know, however, that no matter how much can be attributed to stockpiling and how much can be attributed to the procurement of capital equipment of any kind, the total of these two sums will still be far below the total deficit.

At the rate we are now proceeding, these external assets will be used up entirely in five or six years. We have no crisis yet but when that period has elapsed, if we do not do something about it now, we shall have a very real crisis indeed. If we reach that situation, in which the reserves upon which we are now drawing to finance our present level of consumption and our present level of new investment are exhausted, we shall be forced to cut down our standard of living whether we like it or not and to experience the unemployment and the other unpleasant consequences to which the Trade Union Congress Executive referred in their statement or else have to face the dubious proceeding of raising a foreign loan. I do not want to discuss all the implications that are associated with the prospect of being driven to foreign borrowing in order to maintain our standard of living or finance future expansion here. I am certain that there is no Deputy who would not regard as a retrograde step the putting of our country in pawn to outsiders, as something that we should not do except as a last resort. The efforts we have made to establish political freedom here will be unavailing if we cannot secure our financial freedom as well.

The fight for that is on now. That is what I want the House to understand. We have no crisis yet but we are facing a battle that we must win or else we will be driven quickly into a position in which we will either have to endure untold hardships here or be compelled to mortgage our political independence for the financial means with which to carry on.

Mr. Hickey

With a further devaluation of the £ will not we be still worse off?

Mr. Lemass

Certainly. What can we do about it? I will tell you what we can do. We can as quickly as possible translate these external assets into productive equipment here, productive capital here. That is what we are going to try to do.

Mr. MacBride

You will get the full support of the House for that.

Mr. Lemass

I want to see about that because I do not think the Deputies opposite have even begun to understand what is involved.

Mr. Morrissey

We were doing it.

Mr. Lemass

Do they accept that increased production is not possible without increased investment and that increased investment will not be possible unless we can get a higher level of savings and retain the residue of these external assets for that purpose?

I have said that the speeches which members of the Government have made in recent weeks have been intended to get the public to understand that that is what is needed. Deputy Costello, in his amendment, talks about taking steps "to restore public confidence in the economic situation." If the word "confidence" was replaced by the word "complacency" in that phrase it would, I think, far more closely represent the attitude of Deputy Costello and his colleagues. We are trying to disturb public complacency about the economic situation.

Mr. Morrissey

You have disturbed public confidence very much.

Mr. Lemass

I do not know whether that is so or not. We think, anyway, that the situation does not call for complacency and that it is time we did something about it and that unless we do something about it, public confidence in the future of this country is bound to be undermined.

This idea, which has been fostered for Party political purposes, that we can go ahead upon the basis of everybody getting more money for less work, has got to be killed quickly and that does not apply merely to workers; it applies to farmers, to civil servants, to manufacturers, to every section of this community.

Mr. Morrissey

Nobody has ever said that. On the contrary.

Mr. Lemass

My assertion is that a large part of the political propaganda which, for Party purposes, was disseminated in this country in recent years has been designed to convince our people that it is possible for them to have it both ways, to have higher wages with lower prices, to have increased Government spending with lower taxes. If we can get agreement now that these things are not possible and can combine in the effort to convince our people that they are not possible, then we will have started a long way on the path back to the restoration of confidence in the future of the nation. But, if available savings, such as they are, are going to be invested, not in new factories or farm improvements or hospitals or houses or in the expansion of electricity generating capacity or other practical projects of that kind, but instead, in political cowardice, in budget deficits, in avoiding the unpleasantness of increasing tax rates, then the prospect of restoring confidence in the future of the country is nil.

Mr. O'Higgins

Or an increase in the price of butter.

Mr. Lemass

Or an increase in the price of butter.

Mr. O'Higgins

"Political cowardice."

Mr. Lemass

If Deputies will only agree with me that we cannot have everything at the same time, that we cannot have higher prices for farm produce and lower prices for foodstuffs, that we cannot have increased Government spending upon social welfare services or other desirable extensions of the activities of the State without higher taxes, that we cannot have higher wage rates for workers and lower prices for their products and that it is time that the people of this country were told that and made to realise it, then a large part of the differences which appear to exist between us will have been removed.

In the years before the war, some Deputies here will remember, the Germans were asked to choose between "guns and butter."

Deputy O'Higgins has been referring to butter. That was an effective propagandist phrase designed to bring home to the German people at that time that if they wanted to help their Government in financing the armaments expenditures on which they were embarking they had to be willing to accept a voluntary reduction in their standard of living so that resources could be allocated for that purpose. We have not got to make that choice. We hope we never will. But we have to make a choice nevertheless. We have to make a choice between letting things rip along as they are now or else getting a grip on ourselves and proceeding to plan our future on sounder lines. We have to make a choice between investment in factories, electricity generating stations, drainage schemes, houses and hospitals, or in Budget deficits and in the avoidance of tax increases. We are now planning, very actively, large-scale investments in electricity generating plants, based upon natural resources and other things. In the case of the electricity programme, a ten-year plan is being prepared. The disturbing feature of that plan, as it stands at present, is not so much our inability to finance it, as the fact that the maximum rate at which it is possible to adapt Irish peat or water power resources to electricity purposes does not appear to be fast enough to ensure that even at the end of ten years we will have enough electricity generating capacity to meet the estimated needs at that time. Our electricity generation will be short of our needs for all that period. We have got to strengthen that plan in some way not yet devised even to hope to get at the end of ten years into a position in which we shall have enough electricity to meet all the industrial and domestic needs of our people. As it stands, that programme nevertheless contemplates an investment of £40,000,000 or £50,000,000 over that period.

We have also planned large expenditures in turf development and a large investment in the expansion of the merchant shipping service. We are endeavouring to stimulate investments by private enterprise in the expansion of cement production, textile output, and various other industries. We contemplate the possibility of expanding the output of sugar. We have a Bill here for investment in industrial development in the congested areas, and other projects for these areas will be coming along later. There are substantial investments proceeding and further investments contemplated in agricultural efficiency. Over and above all that, we have the continuing need to find capital to maintain the housing programme, the extension of health services, the construction of hospitals, and the provision of water schemes and sewerage services, all of which are necessary.

Personally, I am in complete disagreement with the views expressed by the Board of the Central Bank in relation to these services. When a Fianna Fáil Government started the housing drive in 1932—when we came to the Dáil with the various Health Acts which are the basis of the present drive to improve our health services and to provide adequate hospital facilities for our people—we examined carefully, and thoroughly understood, the financial implications of these policies. At that time, just as now, the Board of the Central Bank was critical of these schemes. But we have, as a Government, to examine issues of national policy on a wider basis than that which is appropriate to a bank board. There is just as much need to invest money in the improvement of the health and well-being of our citizens as there is in factories and electricity stations.

Mr. MacBride

Hear, hear!

Mr. Lemass

The question is, can we do it? Here is where I hope I will get an equal number of "hear, hears!" from the Deputies sitting opposite. I am certain that we can. I do not want anyone to misunderstand our position in the matter. I do not want anybody to think that, because I am putting that question, I have any doubts as to the answer. Our financial difficulties, I believe, are internal, not external. I believe that what is wrong is not that we have been using up our external assets but that we have been using them for the wrong purposes—that the Government has not been paying its way at home. The deficit in our balance of payments is merely a symptom of the unbalanced Budgets of recent years. It can, I think, be shown to be a consequence and not a cause of the financial policy pursued by the Coalition Minister for Finance.

I do not think there is anything wrong with the idea of expanding considerably our capital investment in Irish productive enterprises or in meeting Irish social needs except that up to the present not enough of it has been financed on the "pay-as-you-earn" basis. The Central Bank certainly has not demonstrated to my satisfaction that the country is incapable of supporting a still larger capital investment programme than anything yet attempted. But they have shown, and their proof of this is, I think, unshakable, that we are not attempting to finance enough of it out of current savings. The sincerity of the protestations of the Deputies on the benches opposite to assist the Government in achieving the expansion of services which we intend to effect, and in proceeding with the capital investment programme which we believe to be necessary, will be put to the test when they are asked to vote for increased taxation for that purpose.

Deputies

Aha!

Mr. Lemass

The "Ahas" are coming now. Remember again what I have said. I believe that we have in this country the capacity to expand considerably our investment in productive activity, but that we are not using it for that purpose. We are using that capacity at the present time to maintain a level of consumption which our present productivity will not support. If we are to get out of that position we have got to get an increase in the national productivity by diverting to that purpose resources which are now being used to avoid tax increases, which are now being used to finance Budget deficits. We have not to choose between guns and butter, but we shall have to choose between the need for increased investment in productive capacity, in generating stations, in ships, in factories, or in the avoidance of increased tax rates. I do not know if it is practicable to contemplate a target of new investment per year by the State running at the level of £50,000,000 or more per year, but even if we were to reach a target of that size it would still be necessary to stimulate an almost equivalent investment on private account. In fact, investment on private account has been very restricted in recent years, at any rate, in so far as investment by the public in the expansion of private enterprise is concerned.

I believe that we can contemplate a capital investment of that scale, provided our people are prepared to allow a higher proportion of the national income to be used for that purpose and to cut down unnecessary spending to make it possible. It is no use our crying for the moon unless we are prepared to reach it. That, I think, is the lesson that must be emphasised in our approach to the people. These things can be done, but only if people have in them the capacity to organise themselves for the doing of them.

Reference is frequently made to our external assets. It has become a sort of magic catchword for people who want to avoid thinking about these financial problems of ours. Our financial assets are, I think, roughly divided 50-50 between securities held by financial institutions and securities held by private persons and business firms. There is no use talking about the repatriation of financial assets for any particular purpose unless we consider the practical steps that have to be taken in order to secure it. We are repatriating our financial assets now and will continue to do so so long as the gap in the balance of payments persists. If we are going to further divert the spending power of our people to capital equipment instead of luxury imports then we have got to do something more than talk cliches about repatriating our external assets. So far as the private individual and the private firm is concerned, it is a completely voluntary decision on their part. We cannot force him to sell his investments in British Government issues or in some commercial enterprise in Great Britain and to bring the money back and invest here unless we, first of all, create the opportunity for investment here and, secondly, create conditions so attractive that he will prefer to invest his money here than abroad, and, thirdly, unless we can make the future of our country appear more stable and secure to him than the future of some other country. It is a voluntary act by the individual. We can exhort him to do so on patriotic grounds but we must realise that our exhortations will not produce a very substantial result. We cannot get that voluntary repatriation of these assets by private individuals and business firms except our internal policy is such that it will attract them to that course.

It is true, of course, that any expenditure upon which we embark in the importation of goods from abroad in excess of what our exports would pay for involves the realisation and repatriation of some of the external assets held by the banks, but, in the long run, the repatriation of these external assets for national development purposes will depend upon the soundness of the policy that we prepare for national development.

The next point I want Deputies opposite to understand and which, I hope, they will not attempt to confuse, is that there are only two methods by which the Government can get money, one is by borrowing it and the other is through taxation. It is true that our predecessors were able to borrow with considerable ease because they had available to them the American Loan Counterpart Fund and whenever they ran short of cash they could borrow from that fund. That made it possible for them to maintain a level of investment by State organisations higher than the amount they were able to borrow from the public would have permitted. That fund is now exhausted and we are in a position that if we are going to finance capital investment by State organisations, Government Departments or statutory bodies, we have got to get the money from the public. The public have got to be willing to lend to us. We know that the issue of Exchequer bonds made by the Coalition Minister for Finance last year failed to fill with subscriptions from the public by several millions. We cannot hope to get money loaned to us voluntarily by individuals to the extent that we require, unless we can, first of all, convince them that the national finances are being prudently managed and, secondly, that there is reasonable security for their investment. If, however, we cannot get, through borrowing money, enough to finance all the developments we want to undertake, what are we going to do about it? The alternative then is either to abandon these developments, cut down our investment programme or to get the money by taxation.

That is, in fact, the issue that is before the Dáil on these amendments. It is a choice the Dáil will have to make at some time in the future. It is a choice which our people will have to make. Limited as we are to these two sources of raising money, we have got either to curtail our plans or finance them in whatever way it is necessary. To the extent that we cannot borrow the money, we think it is worth while to get the money, if necessary, by increased taxation.

Breanndán Mac Fheórais

Does all this mean that if we cannot get this unused money from the people voluntarily it will be raised from the taxpayers?

Mr. Lemass

Has the Deputy any suggestion to make? I do not think we should attempt to secure the money by means of forced loans. I think if the Deputy reasons that out he will realise that if we attempted that we would lose a lot more than we would gain. We have got tax inducements for people to invest in Irish enterprise. Anybody who invests his capital in an Irish industrial concern conforming to the definition in the Finance Act of 1934, I think, is entitled to a rebate of 20 per cent. of the tax payable on the dividends earned.

Mr. Sweetman

For new industry only.

Mr. Lemass

That is what I said, a company formed in accordance with the Finance Act of 1934.

Mr. MacBride

Would the Minister consider investing Government moneys in Ireland instead of in England for that purpose?

Mr. Lemass

The Deputy is trying to confuse the issue a bit further. It is true that there are Government funds holding British investments. It is true also that the Central Bank holds a number of British investments. To the extent that we think it is wise and necessary, these funds will be drawn on, but we must recognise that there is an overriding obligation upon those who are responsible for the managing of these funds to secure their liquidity. Anybody who has experience of buying and selling gilt edge stocks in the Irish market realises that an attempt to liquidate any substantial block of stocks in a short time would inevitably lead to a substantial depreciation in their price. It would, in fact, be difficult to do so. I, in another capacity, had the obligation of arranging for the investment of a substantial sum of money and was directed to invest it in Irish securities only.

It took me a period of many weeks to effect that investment in a manner which I thought was safe, and I realised that if I had to reconvert these investments into cash quickly, some loss would be involved. Yet the amount I was handling was insignificant in relation to the amounts involved in these Government funds to which Deputy MacBride refers. Because there is the possibility of sudden calls on these funds which must be met in cash, a substantial proportion of these assets must be held in easily realisable securities and that, for all practical purposes, means securities saleable upon the British Stock Exchange. I hope that some time we will develop here a more active financial market, a more active capital market, than we have, but it has not been done yet.

Mr. Hickey

Will the Minister admit that it is obvious, from his speech now, that those who control our money and our credit reign supreme over him and the Government?

Mr. Lemass

No.

Mr. Davin

He has just admitted it.

Mr. Lemass

I have said that in the fulfilment of the programme upon which we decide we expect to get and, I think, will get, the co-operation of the banks, the Central Bank and the commercial banks. If we do not get that co-operation then we will have to do something about it.

Breanndán Mac Fheórais

The Minister and the House agree that the members of the Central Bank should be sacked?

Mr. Lemass

Why did you appoint them?

Breanndán Mac Fheórais

Had the Minister no hand in it?

Mr. Davin

Come back to the pay-as-you-earn policy.

Mr. Norton

Quite clearly, they now ought to resign.

Mr. Lemass

Let me deal with this question of restriction of credit. I want to deal with that subject because I know that, apart from speeches made by some Deputies opposite, some bank managers are in fact telling their clients that they are refusing an increase in their overdrafts because the Government has ordered them to restrict credit.

I want to say in the most specific way that no advice or instruction of any kind was given privately by the Government or any member of it to the banks to restrict credit for any purpose.

Mr. Cosgrave

We had to say the same in 1948.

Mr. Davin

You will frighten your friend.

Mr. Lemass

I have said that no advice was given privately for that purpose, but some advice was given publicly for that purpose——

Mr. O'Higgins

The Minister for Finance made a speech in June.

Mr. Lemass

——by the Minister for Finance in the Coalition Government, Mr. McGilligan.

Mr. O'Higgins

What Coalition?

Mr. Davin

Is it the Coalition opposite the Minister refers to?

Mr. Lemass

I am going to read for the House what he said, and I presume he said it with the full agreement of Deputy MacBride, Deputy Costello and Deputy Norton, who were members of the Government in which he was Minister for Finance. Having reviewed the general position of the banks, the position of their advances and investments, he said:—

"In present circumstances it is desirable that the banks, while continuing to finance capital projects, the laying in of essential stocks and normal import requirements, should discourage any merely speculative and excessive borrowing."

Mr. Norton

Speculative?

Mr. Lemass

I am not disagreeing with that advice. I think it was good advice, but what I want to say is that it is the only advice given to the banks by any Minister in any Government concerning the restriction of credit.

Mr. O'Higgins

What about the present Minister for Finance in June?

Mr. Lemass

Did he say anything different from what I have just read out?

Mr. Cosgrave

He said the same and went a bit further.

Mr. Lemass

When we are talking about giving advice to the banks to restrict credit we are all saying the same thing.

Mr. Cosgrave

He went a bit further.

Mr. Lemass

I do not think so.

Mr. Cosgrave

Read what he said.

Mr. Sweetman

The fact is that the stockpiling overdrafts have been called in. That is what has caused the trouble.

Mr. Davin

Why is the Minister for Finance so silent?

Mr. Lemass

The next thing I want to emphasise is that, so far as the figures available to the Government are concerned, they would indicate that there has been no restriction of bank credit.

Mr. Morrissey

What!

Mr. Lemass

Bank loans and advances to customers in this country in June, 1950, were £95,000,000 and in September, 1951, £122,000,000. On the face of it——

Mr. Norton

So that what the traders say is all a joke.

Mr. Lemass

——these figures do not suggest any outright decision to restrict bank credit. I will put in a qualification.

Mr. Davin

Oh, yes.

Mr. Lemass

The expansion in the level of bank loans and advances between June, 1950, and September, 1951, was 28.4 per cent. During the same period, import prices, however, increased by 31.5 per cent., so that the increase in the level of advances was not out of line with the rise in the cost of materials and does not indicate therefore that there was any liberality in the provision of bank credit either.

Mr. Morrissey

The Minister gave us June, 1950, and September, 1951. Will he give us June, 1951, and, if possible, the figures since then?

Mr. Lemass

I think they were given in reply to a question.

Mr. Morrissey

I just wondered if the Minister had any particular reason for taking June and September.

Mr. Lemass

None whatever. I was merely taking a reasonably long period. It is true that the banks financed the stockpiling programme and I will have another opportunity of expressing my views on that stockpiling programme. In my view, a sensible stockpiling programme would have concentrated upon raw materials and not on finished products.

Mr. Cosgrave

Where would you get them?

Mr. Lemass

While it would have been a complete gain for this country to have had these stocks here if a war had developed or some other international emergency of a major kind arose, we have to recognise that, if there is no such emergency, at some time the liquidation of these stocks of manufactured goods is going to cause difficulty in a number of industries. It is causing difficulties at the moment in the clothing trades. The banks, however, financed that import programme liberally. We know they did. I know that my predecessor asked the manufacturers and traders bringing in these stocks to report if they found any difficulty in getting bank accommodation for the purpose. I want to say this, that, if we are going to put the emphasis on expanding home production rather than stockpiling imported materials, I expect to get the same liberal accommodation from the Irish banks as was afforded for the import programme early this year.

If there has been any change of policy by the banks, if there has been a decision by bank boards to curtail credit for any purposes other than merely "speculative or excessive borrowing," then I think I am entitled to express resentment at the fact that they have made that change of policy without consulting the Government.

Mr. Davin

Did the federation not tell you?

Mr. Lemass

I cannot say that there has been such a change of policy.

Mr. Davin

Did you ask the federation?

Mr. Lemass

I do know, second-hand, that individual bank managers have excused themselves from giving increased accommodation required by customers on the ground that there was a Government direction to curtail credit. I have made it clear here and now that there was no such direction, that the only advice the banks got was given in public and was an advice to cut down upon speculative borrowing. I hope that we will get from the banks the same support to finance increased production under a Fianna Fáil Government as they gave to finance increased imports under the Coalition.

Mr. Hickey

Why should any Government be applying to the banks for credit to develop the resources of the country? I do not care what Government it is. It is a hopeless position.

Mr. Lemass

You cannot develop the resources of a country without cash. You cannot employ men to build a power station or develop a turf bog or build a factory and pay them in I.O.Us.: you must pay them in £ notes and shillings.

Mr. Hickey

Cannot the Government of the country do that as well as the banks?

Mr. Lemass

Of course they can, and it is the problem of doing that that I am discussing now.

Mr. O'Higgins

Would the Minister agree that you cannot extend the amount of money that you can borrow if you say that you are broke.

Mr. Lemass

We are not broke.

Mr. O'Higgins

We are not, but you are saying that we are.

Mr. Lemass

It is quite obvious that my attempts here to try to get some clear approach to the problem are doomed to failure. Any argument we try to put forward is misrepresented. I wish to emphasise my personal conviction that this country is not merely capable of financing increase production but can also increase the extension of Government services provided we understand what is involved. It is not a choice between "guns and butter" but between factories and power stations, and Budget deficits and the avoidance of taxation.

Mr. Hickey

If the Minister wants co-operation, can he not tell the truth?

Mr. Davin

Did you consult the federation about the restriction of credit?

Mr. Lemass

What federation?

Mr. Davin

The Federation of Irish Manufacturers.

Mr. Lemass

Indeed I did not.

Mr. Davin

Do they tell you anything?

Mr. Lemass

Not usually.

Mr. Davin

The Minister is not talking to a lot of school boys.

Mr. Lemass

The Deputy is always looking for something mysterious. So far as the Government is concerned all the cards are on the table.

Mr. D.J. O'Sullivan

Where is the joker?

Mr. Davin

On the Minister's left.

Mr. Lemass

Let me turn for a short while to the question of prices. Deputies opposite have been attempting to convince the public that the increase in prices began with the change of Government, was due to the change of Government, and that they, if in office, could have prevented it. I want to discredit that statement. It is a thoroughly dishonest one, and I use that word because many of the Deputies making it know it to be untrue.

Mr. Morrissey

I hope the Minister remembers the speeches he made just 12 months ago in this House.

Mr. MacBride

Will the Minister remember the Fianna Fáil advertisements during the elections, about borrowing?

Mr. Lemass

The only politicians who ever said in the past five years that it was possible to pull down prices by Government action are over there now. They made that assertion and promised to achieve that result in 1948, and in 1948 they got a majority. It is because they proved they were talking utter nonsense that they are back over there again. Let us get some of the facts on this issue of prices.

Mr. O'Higgins

Apparently our prices were not high enough.

An Leas-Cheann Comhairle

Deputies will get an opportunity in due course of saying what they have to say. The Minister must be allowed to proceed.

Mr. Davin

Deputy Cowan was not listening.

Mr. Lemass

The principal factor causing a rise in prices was the increase in international prices that followed the devaluation of the pound and subsequently the outbreak of the Korean war.

Mr. Morrissey

Which you denied 12 months ago—most emphatically.

Mr. Lemass

On the contrary, when Deputy McGilligan went to the microphone on the occasion of the devaluation of the pound, he said it would not cause any increase in prices. Deputy Dillon said there would not be any increase in prices in the foreseeable future. I said they were talking nonsense—and may I say Deputy Morrissey agreed, judging by the departmental records.

Mr. Cosgrave

When I said that last year I was laughed at. I said that exactly 12 months ago.

Mr. Lemass

This first jump in prices occurred with the outbreak of the Korean war. Up to December, 1950, there had been an increase in the cost of imported materials of 21 per cent., just about the time that Deputy Cosgrave said that the prices position was stable.

Mr. Cosgrave

You know that is untrue. The Minister knows it is untrue.

Mr. Lemass

I only said that to annoy the Deputy.

Mr. Morrissey

Give the honest man a chance.

Mr. Lemass

By the end of December there was an average increase in the cost of imported materials of 21 per cent. and by the end of June that increase had risen to 42 per cent. There was a very substantial jump in the cost of imported materials during the first six months of this year. That increase has eased off. Against the increase from 21 per cent. to 42 per cent. in the first six months of this year the increase by the end of August was only another 4.5 per cent. I am not claiming any credit for that. It was due to international causes which the Government of this country cannot control.

Mr. Davin

The Minister is taking it for granted that he is entitled to the credit.

Mr. Lemass

It was that increase in prices which had begun with devaluation in 1950, which got a spurt in June, 1950, and continued steadily through the Autumn, to December, reaching 21 per cent. above pre-devaluation level then. It had its effect upon internal price levels and it was in December that the Coalition Government decided to do something about it. On 6th December—as Deputy Norton will remember, because it was rather a historic speech—he announced to the Dáil that the Government had decided to introduce a "price freeze." He said that it would be the most extensive and practical freeze that could be devised and he added, in reply to an interjection by Deputy Alfred Byrne, that the Deputy would be tired counting the commodities that would be affected by it.

I was interested in the origin of the Price Freeze Order and naturally I turned to the departmental files to discover it. There was no departmental file. The origin of the Order, so far as the Department of Industry and Commerce is concerned, is shrouded in mystery. The only departmental file that exists begins with a record of a meeting of officials, held here in Leinster House after Deputy Norton had made his speech, to consider what could be done to give effect to it. There was obviously no prior consideration of the problem, no attempt to draft an Order, no examination of the administrative problems involved in it. The Government rushed, or were rushed, into making that Order, without any preliminary consideration whatsoever. Of course, the inevitable result was that the immediate introduction of a price freeze, which Deputy Norton announced on December 6th, did not take place. There was a great deal of coming and going, a great deal of examination of the administrative problems involved, and perhaps some consideration given to a memorandum prepared by my immediate predecessor, advising the Government that they were making a colossal mistake, that a Standstill Order of the kind announced by Deputy Norton was impracticable and that if it were attempted it would lead to considerable difficulties to traders importing stocks and might involve some discouragement to the importation of necessary stocks and some unemployment. May I say that there was no evidence on the departmental records that the memorandum was ever considered and certainly no record of any decision. Eventually, the Order was made in January, 1951, and when made, with all the publicity that was possible— and may I pay tribute to our predecessors for their skill at publicity—it applied to 92 commodities or groups of commodities. Deputy Norton said on 6th December that Deputies would be tired counting the commodities that would be affected by it. That Prices Standstill Order applied to 92 commodities and 62 revocation Orders exempting the commodities from its scope were made between January and 31st March.

Mr. MacBride

Does the Minister say 92 commodities or 92 groups of commodities?

Mr. Lemass

Commodities or groups. I have tried to diminish the number.

Mr. MacBride

Groups.

Mr. Lemass

But of the commodities or groups of commodities to which the Order applied in December, 62 had been the subject of revocation Orders and were taken outside the scope of the standstill before the end of March. Deputies might not be tired counting the commodities that might be affected, but they would certainly be tired counting the revocation Orders which my predecessor signed at the average rate of one per day. Twelve further revocation Orders were made between that and June but by then, of course, the Government had decided on an election and certain funny business had started. I do not want to go over in any detail certain facts which I published in a speech yesterday, but I do want to say that if any Deputy again ever suggests in public that the increases in prices which I had to sanction arose solely because of the change of Government and that the increases need not have occurred if there had not been a change of Government——

Breanndán Mac Fheórais

What does the Minister mean when he says that he "had to sanction"?

Mr. Lemass

I will deal with that. I will tell you in a minute. If any Deputy suggests that these increases would not have been sanctioned except for the change in Government then I am prepared to give the history of price control at that time a little attention.

Mr. MacBride

Deal with butter.

Mr. Lemass

Yes, I will deal with it in a minute but if the Deputy does not mind I should like first to deal with meat. I was deeply interested in the Department's record with regard to meat because I was the first to fix the price of meat. I fixed it on a formula which related it to the price of cattle in the Dublin market and because the price of cattle on the Dublin market had increased the butchers came to my predecessor last February for authority to increase their prices and for an amendment of the prices Order. My predecessor referred their application to the Prices Advisory Body and the Prices Advisory Body considered it at a public hearing on the 8th March and, having considered it, recommended to my predecessor that the price of beef should be increased by 3d. per lb. My predecessor met the butchers and said that he would not deserve to be in politics if he were prepared to agree to make an Order increasing the price of meat with an election in prospect. He therefore said that he was not going to order the increase but that they could nevertheless increase their prices, that no consequences would be suffered by them. On the 12th April he gave directions at a Departmental conference that all routine inspections by Departmental officers of the prices charged for meat were to cease. May I say that I am not going to control prices now or ever on that basis. I will try to fix them on a realistic basis and, having fixed them, I will see that they are observed to the maximum extent to which it is possible to secure that result through the operation of an official organisation.

I do not know what the explanation is of the delay in increasing the transport charges. I know that the board of Córas Iompair Éireann last January met and decided to increase its rates and fares forthwith. On the 3rd February the chairman of Córas Iompair Éireann wrote to the Secretary of the Department of Industry and Commerce to inform him of that decision. He said that the board had decided that the increased costs in wages and materials should be immediately transferred to the public by increases in rates and fares. He did not say the exact date upon which the increases would come into operation but obviously from the reference to the unlikelihood that the increased charges would bring a higher revenue in that financial year it was intended to effect them before the 31st March.

In fact it looked as if the decision of the board had secured the approval of the Government long before then because on the 12th February Deputy McGilligan wrote to the Minister for Industry and Commerce complaining that the increase in fares and charges upon which Córas Iompair Éireann had decided was not enough, and that they should increase them still further, not merely to offset the higher costs of wages and materials that the board was meeting, but also so as to reduce the substantial "hard core" of £1,000,000, so that it could be finally eliminated in a short time, and he said that on the basis of their assurance that they would so in fact increase their charges within that financial year and so as to have the full benefit of the increase in the ensuing financial year he had decided to omit any provision for 1951 losses from the Estimates for 1951-52. On the 14th February, Deputy Cosgrave, in reply to a parliamentary question put by Deputy Derrig, now Minister for Lands, announced that Córas Iompair Éireann were going to increase their charges. What happened? Why were they not increased?

Mr. Cosgrave

We did not prevent them. Will the Minister produce evidence?

Mr. Lemass

I cannot produce any evidence. I just know that for some mysterious reason the board of Córas Iompair Éireann, which decided in January to increase their charges immediately, the board which had given such assurances to the Minister for Finance that he made no provision for a subsidy for Córas Iompair Éireann in the Estimate for this year, did not in fact increase those charges. I insist on relating that fact to the fact that a general election was held in May.

Mr. Davin

That is a good one.

Mr. Lemass

The Electricity Supply Board wanted to increase its charges in April. It also was put back. An increase in Electricity Supply Board charges would be equally unpopular during April.

Mr. Cosgrave

That was not put back.

Mr. Lemass

Was it not? It was decided to leave it lying there. I do not say that it was put back. It was forgotten until the election was over.

I want to tell the Dáil a story which I told elsewhere about petrol, because there was a headline on a newspaper last week to the effect that the people of this country were paying extra for petrol to offset the price of industrial alcohol. That is entirely true. I want to explain, however, how the higher cost arose. Deputy Dillon had 10,000 tons of potatoes which the British would not take from him because they said that they were unfit for human or animal food. Mark that description of the potatoes. An approach was made to Ceimicí Teoranta to know if they would take them to make industrial alcohol. Ceimicí Teoranta had a look at the potatoes and said O.K., they would give £4 a ton for them. That would have been sorely embarrssing to Deputy Dillon during the election so the Government directed Ceimicí Teoranta to go against the economic considerations by which they conduct their policy and instructed them to pay £8 per ton. Unfortunately that £8 per ton for the potatoes involved an increase of 4d. per gallon on industrial alcohol this year. That may have been a good decision or a bad decision, but the point I want the Dáil to understand is that the petrol people were asked to carry the cost for the time being. They did carry it for the time, but they have refused to carry it any longer and an increase in the cost of petrol has now been authorised to make up to the petrol people retrospectively for that increase in the cost of industrial alcohol resultant on the Government's decision last April to pay an uneconomic price for rotten potatoes.

Mr. Coburn

Deputy Aiken said that they were good potatoes.

Mr. Davin

Were they from Cooley?

Mr. Coburn

He said that they were the best.

Mr. Lemass

There are many illustrations which I could give of the way in which the prices problem was handled by my predecessor but I have no wish to do so.

Of the prices which have been increased since the change of Government by my authority, a substantial number arose from applications which were lodged in the Department of Industry and Commerce before the change of Government some as long as three months ago.

Mr. Davin

Does that apply to cement?

Mr. Lemass

No.

Mr. Davin

Tell us the story about that.

Mr. Lemass

The increase in the price of cement is due to the fact that, because of the failure of the Coalition to take measures to increase cement output here, we have got to import one-third of our requirements and we had to import it this year at a price which necessitates our imposing a levy of £1 2s. 6d. per ton on Irish cement in order to put it on sale at the same price as the imported cement, the proceeds of that levy being used to subsidise the imported cement.

Mr. Davin

You put the profits of the cement company up by 2 per cent. Is that right or not?

Mr. Lemass

Let me say that if we succeed in getting the whole of our requirements of cement manufactured here through an extension of the existing factories, irrespective of what profit the company makes, whether 15 per cent. or 20 per cent., the price of cement to our people will still be from 8/- to 10/- per ton lower than it is now. Does the Deputy know what profit the manufacturers of imported cement get?

Mr. Davin

You gave them a concession of an increased profit of 2 per cent. on 8 per cent. You are not denying that.

Mr. Lemass

I said that the primary cause of the increased prices is the cost of imported materials. There were increases in wage rates as well. According to the Central Statistics Office, industrial earnings in June last were 12 per cent. higher than in June, 1950. I am not objecting to that. The only thing I am objecting to is anybody trying to tell the public that if material costs increased by 40 per cent. and industrial earnings by 12 per cent. it is still possible to avoid an increase in the retail prices of manufactured goods. It is not.

Mr. Sweetman

Why did you say that on the 23rd November, 1950, as reported in column 1306 of the Official Reports?

Mr. Lemass

I did not.

Mr. Sweetman

You did. I will quote it for you.

Mr. Lemass

What we have to consider in this regard is the desirability of trying to maintain existing wage rates without prejudicing existing employment. I think it is no harm to have it said that, according to the International Labour Office, our wage rates are high, and they are high in relation to the prevailing cost of living. The real wages payable in Dublin in 1951— it is only the Dublin figures that the International Labour Office used in their publication—that is the amount of cash related to the quantity of goods that it would buy, according to the International Labour Office Review, are 9 per cent. higher than the average real wages in seven English cities, are 15 per cent. higher than the wages in Sweden, almost 50 per cent. higher than the wages in Belgium and no less than 65 per cent. higher than the wages in Paris.

I am not objecting to that situation, but I think that we should learn from the position now existing in the clothing trade that there comes a point at which rising prices cause unemployment; and the reason that it is necessary for us to strengthen and operate the machinery for controlling prices here is because we do not want to have reproduced in other trades the buyers' strike which has to some extent affected employment in the clothing industry. Mark you, that trade recession in the clothing industry has been greatly exaggerated in some statements.

The recession in trade has not been, I think, more than 10 per cent., and I am quite certain myself that it is only of a very temporary character. I am quite certain that, even though it was accentuated by the stock - piling measures taken earlier this year, the counter measures which have now been adopted will quickly create a situation in which the prevailing demand will still be large enough to secure the fullest utilisation of existing productive capacity here. We may have some diminution of imports, but we can arrange that while still keeping existing capacity here fully employed.

Mr. Hickey

Could not the millions of yards of cloth which came in be produced here?

Mr. Lemass

A number of projects for the extension of weaving capacity are in progress at the moment, but it will be some time before they are in operation, and there may be, in present circumstances, some difficulty in getting expeditious delivery of the equipment required.

Mr. Hickey

In view of the protection they have, it should have been here long ago.

Mr. Lemass

It is fair to say that the easier type of development has been completed and the cloths now being imported represent a more difficult type of product for which different equipment and a higher degree of skill will be required.

I do not know whether it is possible to forecast the future trend of prices. I have pointed out that the very rapid increase in the price of imported materials more or less ended about June and that increases since then have been comparatively small, although there have been increases. I think I can say now that, in so far as revisions of retail prices were necessitated by the higher cost of imported materials in the first half of the year and the higher wages that became operative then, in the main these revisions have been completed.

There is only one major application at present before the Department of Industry and Commerce, and that is the application of the brewers for a revision of their prices consequent on the rise in the price of malting barley. When that revision will be considered, or what the recommendation of the Prices Advisory Body may be on it, I do not know. But I am aware that some of our smaller breweries are already in grave difficulties and that, unless relief comes to them soon, some of them at least may have to cease operations. Others have temporarily eased their difficulties by developing an export trade. But there is in the brewing trade, as in the cigarette trade, the problem of keeping in operation the smaller concerns operating against the competition of the large firms and the difficulty is enhanced by the fact that it is impossible for these small firms to increase their prices, even though smaller brewers have got authority from me to do so in advance of any increase by the larger firms.

Mr. W. Murphy

What about the publicans who have to sell whiskey now at 7/- a dozen less than they got heretofore?

Mr. Lemass

Under the benign rule of my predecessor, publicans got 4d. a glass extra profit on whiskey during the past year and they should be satisfied with that.

Mr. W. Murphy

Would you consider reducing their licence money?

Mr. Lemass

The point I want to make is that there seems to be a possibility of price stability being secured. Some international products are still fluctuating. I mentioned that the world price of sugar—and we have to import about 40 per cent. of our requirements of sugar—increased by September, as against the first quarter of this year, by 43 per cent., and there is no escape from that situation except to extend our own production of sugar, and that is a matter which is having attention.

Other raw materials have, however, fallen in price and, having regard to the experience in the clothing trades, I do not wish to mention them because any announcement of a fall in price appears to be the prelude to a decision by the people to wait until the fall in raw material costs is reflected in retail prices. Building materials and constructional equipment of all kinds have increased enormously in price. Steel is costing 100 per cent. more than last year. Non-ferrous metals are costing 200 to 300 per cent. more. Timber has risen and is still rising. To-day I made an Order sanctioning a higher price for imported timber. I considered whether or not it was desirable to make that Order and I realised that, if I did not make it, there was no means open to me by which I could compel people to continue importing timber; that, if the higher costs were not reflected in a higher permitted price under control Orders, there was a danger that imports would decline and, coupled with that, output and employment in the building and other trades.

These are difficulties which we cannot escape. In respect of some materials we may be able to minimise the effect of rising costs by instituting bulk-buying arrangements. Where that is practicable it will be done. I know that the Government has to carry a political burden because of the rise in prices. Deputies opposite do not have to tell me that the public, the average man and the average woman, are concerned only with the fact that the cost of living has gone up and that it is now more difficult to make ends meet, and that they will probably never hear the explanations of the rises which are given here and, even if they do hear them, they will not be very interested in them.

I have a keen appreciation of the political problems which are involved for the Government by reason of the necessity to sanction these higher prices. But the public do not appreciate what would have happened had that sanction not been given. They would then be complaining about increasing unemployment and increasing emigration. In my view, it is far better for us to direct our price control policy so as to avoid creating unnecessary unemployment.

I have gone back again and again over every price increase that I have sanctioned and I am satisfied as a result of that re-examination that these increases have been fully justified by higher costs thoroughly proven. Every increase, with the exception of the increases in the charges of statutory companies and two or three which were taken on a policy basis, was recommended by the Prices Advisory Body after full examination of the position. Undoubtedly we could have refused in some cases to sanction higher prices recognising that that would mean a withdrawal or a curtailment of supplies in relation to the goods concerned. We decided against that.

Let me give the House a case in point. My predecessor had a theory, which seemed reasonably sound on paper, that it was possible to get the manufacturers of cocoa to produce and sell cocoa at a loss and to recover that loss by increasing their profits on chocolate. Cocoa is nearly always made by manufacturers of chocolate. Now that idea was sound in theory only; in practice it simply did not work out. In practice, the manufacturer of chocolates who did not produce cocoa had an advantage over the manufacturer who did and those who were obliged by that particular price Order to produce and sell cocoa at a loss were faced with a disadvantage vis-à-vis other manufacturers. They were naturally anxious to minimise the loss. There was no means by which they could be compelled to keep on producing cocoa.

There was no inducement to them to maintain sales knowing that every tin they sold meant a higher loss to them. At the time when I resumed office only one manufacturer of cocoa was left in the business. The others had all gone out of it, and lying on my desk there was a letter from the one remaining manufacturer telling me that he, too, was going out of business. I decided then it was better for us to have cocoa at a higher price rather than have no cocoa at all with a lower price still officially in operation.

I invite Deputies to discuss these problems of price control seriously. I ask them to take the list of goods contained in the reply to a Parliamentary question last week, goods for which increased prices have been sanctioned, and tell me which of these goods they think could be produced and sold at a lower price than that now fixed. I ask them to indicate those prices they think were increased unnecessarily and those prices which they think should now be reduced. I am prepared to consider any such indication that Deputies give me in relation to these goods.

It is true we increased the price of butter by Government Order. We had increased the price of creamery milk to an extent that involved an increase of 4d. per lb. in the price of butter. We decided to carry half that increase upon the subsidy and charge the other half to consumers, just as our predecessors did earlier in the present year. It is our policy to maintain price control. It is our policy to maintain control on the basis, where possible, of fixing actual prices related to quantities ordinarily used in commerce and to publicise those prices. A long experience of administering price control has convinced me that no official organisation, no matter how extensive or how active, can be effective in enforcing controlled prices unless there is at the same time wholehearted and widespread public co-operation. That is why I got away from the policy of the standstill Order. In any event, the standstill Order—

Mr. O'Leary

That was on wages.

Mr. Lemass

—was operative only for a limited period. By September, when I revoked it, it was impossible to attempt to regulate prices upon the basis of prices actually charged in the previous December. Even the officers of the Department of Industry and Commerce could not tell what those prices were. How, then, could the public? When that Order was repealed there was made for every commodity which could by any stretch of the imagination be called a necessity, which was scarce or likely to become scarce or in relation to which there was any circumstance that might restrict competition in that commodity a new Order fixing the actual price and these prices have been publicised.

I have announced already that the Government is preparing legislation which I hope to have ready for the Dáil very soon for the regulation of agreements between groups of manufacturers and traders to maintain minimum retail prices and thus ensure that, where possible, competition will be effective. I believe that effective competition is a far more efficient regulator of prices than any machine which the Department of Industry and Commerce can build up.

Mr. Hickey

In how many important commodities is there competition?

Mr. Lemass

In quite a number.

Mr. Hickey

It is a make-believe competition.

Mr. Lemass

In conclusion, if any Deputy has any practical suggestion to make in order to increase the efficiency of price control or its extension in any direction where it is thought necessary, I will undertake to consider that suggestion and apply it if, on examination, it proves to be worthwhile.

Mr. Hickey

We want control over monopolies.

Mr. O'Leary

Control over prices.

Mr. J.A. Costello

I move:

To delete all the words after "That" and substitute the following:—

"Dáil Éireann declines to give a Second Reading to the Bill until the Government has taken effective steps to restore public confidence in the economic situation unnecessarily and irresponsibly disturbed by Ministerial statements and by the distorted and misleading picture published in the White Paper on the "Trend of External Trade and Payments, 1951".

One of the most remarkable omissions, and there were many omissions, from the speech we have just listened to by the Tánaiste is that throughout the entire speech he did not once refer to this White Paper issued by the Department of Finance, a White Paper which has caused so much public disturbance. There was not a word said by him in relation to that.

Now he has thrown over the Central Bank Report.

I should like to give the House the sequence of events which have brought about a situation of grave public uneasiness, and which bordered on panic within the last few months. During the period of the inter-Party Government, the Tánaiste and his colleagues, the present Minister for Finance, and other colleagues of his in the Fianna Fáil Party which was then on this side of the House, spent themselves in efforts at criticism of the policy of productive capital investment which was initiated and devised by that Government. Throughout all that period they were asked to formulate and make precise their particular objections to any item in that productive programme. Deputy Lemass, as he then was on this side of the House, was questioned from the far side of the House as to whether he objected to investment in capital projects in this country, and, if so, which. He was asked which particular one of the projects which were under consideration by the then Government did he object to. He was asked and his leader was asked that by me in speech after speech. In speech after speech during the general election campaign, they were asked by me if they were abandoning this programme of productive capital investment, and, if not, how did they intend to finance it.

We have got some hint to-day. That was prior to the change of Government. Almost immediately after the change of Government, Deputy MacEntee who had become Minister for Finance, made a speech in this House last July in which he distorted the financial situation of this country, a speech in which he expressly stated and emphasised that there was too much money being spent both on current expenses and on capital development. I answered that, to the best of my ability, in a speech which, I think, I made outside of this House on the 27th August. That was the start of it. Then the Tánaiste went around to various functions and, on different occasions, raised the red flag —the danger flag—and told the people of this country that they were living beyond their means. He used expressions time after time, and in speech after speech, which had the effect, whether he intended it or not, of causing grave disquiet and public uneasiness, and which, ultimately, brought the country to the verge, as I have said, of panic.

I made three speeches in an endeavour to bring the real facts before the people. The first was on the 27th of August, the next was sometime in October and the third was on last Saturday night. I flatter myself that I have converted the Tánaiste.

At least, I believe that I did something to stop the rot initiated by the Tánaiste and his colleague, the present Minister for Finance. I assert here that that campaign was started after the change of Government, in continuation of the campaign that had been initiated against us here for political purposes when they were in opposition. It was then—before the change of Government—and it is now their effort to try and persuade the people of this country that I and my colleagues in the last Government refused to adopt the advice of the finance officials, that we were profligate with public moneys, and that we were spending moneys that were borrowed on matters that ought to have been financed out of current expenditure. That has been their policy all the time. I assert that was at the back of all those speeches of the Tánaiste during the last two or three months since the Adjournment of this House in July.

I am glad that the Tánaiste has now accepted the diagnosis of the situation which I gave last Saturday night, that there is now no crisis. In speech after speech, he endeavoured to create the atmosphere that there was a very serious crisis in this country. The plain people do not understand the theories of economists, but they know what it means to be told that they are living beyond their means. A lot of them know what that phrase means since Fianna Fáil came into power, but they knew that it was a charge against the last Government—that it had been dissipating the public finances.

I am glad to know that the Tánaiste has, at last, been converted to what I asserted was a fact—I still assert it is a fact—that there is no crisis, but that there is a problem. That is what I said on Saturday night, and that is what he did not say until to-day. There was a sequence of speeches before the change of Government. There were speeches immediately after by the Minister for Finance, and then a continuance of panic-stricken speeches by the Tánaiste in the interval between the Adjournment of the Dáil and its reassembly. There then followed the publication of the Central Bank Report and, later, the publication of the White Paper by the Department of Finance on The Trend of External Trade and Payments. It was not until to-day that we heard any single suggestion from either the Tánaiste or the Minister for Finance that he refused to accept the suggestions made by the Governor of the Central Bank in the Central Bank Report. I assert, again, that he did so to-day, because he has felt the pressure of public opinion.

The Tánaiste gave himself a certificate, and I endorse it, that he has a keen appreciation—I think these were the words he used—of the political problems involved in certain actions of his. There is nobody who has a keener appreciation of politics than the Tánaiste. One of the greatest jokes in the political history of this country was furnished by the Tánaiste during the adjournment in one of the speeches which he made when he was painting this gloomy picture and presaging woe, and the bringing about of panic, and certainly a lack of public confidence: in one of the pictures which he painted of himself he was clothed in the mantle of heavy statesmanship, walking down the road of political unpopularity, and, if necessary, to the doom of the political martyr in order to see that we would not live beyond our means. The crisis was so bad that the arch-politician was prepared to walk down the road of political unpopularity in order to save the people of this country from the dangers of the crisis which was threatening at that time. There is no parallel to that that I know of except that of Bunthorne in Gilbert and Sullivan's opera "Patience": "But everybody would say what a most particularly pure young man this pure young man must be."

That is the picture which he presented of himself during the vacation. What is the picture presented to us in his speech to-day? The sequence was this. We had a speech initiated by the Minister for Finance telling everybody that we were spending too much governmentally, through private individuals and by local authorities, and then the scare speeches by the Minister for Industry and Commerce. Now the suggestions in the Report of the Central Bank are overthrown and repudiated—they do not represent Government policy, and certainly not the policy of the Tánaiste. We are told now that there is no crisis, but that there is a problem. I will have some comments to make on what the Tánaiste proposes to do, but we know, whether the Minister for Finance agrees with him or not, that what the Tánaiste proposes to do now is to spend more and more money. We were accused of being profligates. We were accused of being a Government that spent too much money.

The only conclusion to be drawn from the statements made by the Tánaiste to-day is that he is accepting the programme of productive capital expenditure created by me and my colleagues in the last Government. They are trying to copy it, except that they have got themselves into a strait jacket by their speeches.

Now, he hints, without saying it, that he is going to finance this investment programme of a very wide and ambitious character—most of which we started—which he outlined to-day, not from borrowed moneys, not from the savings of the people, but, to a very large extent, by taxation. Everybody will adumbrate, everybody will advocate the imposition of fresh taxation and fresh expenditure provided it does not hurt their own pockets, provided someone else is taxed. I have spoken again and again and declared my views, and I think those of my colleagues, at least of the Fine Gael Party, that we are against the policy of additional taxation in the present circumstances and at the present time. That is the picture now.

The Tánaiste did not say a single word about this White Paper, about which I will have comments to make in the course of this speech to-night. Every single word that is in that paper contradicts his policy, such as it is, even to the extent of what is to be financed out of current taxation.

I presume this is the child, legitimate or otherwise, of the Minister for Finance and that he will have to stand over its parentage. In the course of this debate the child will be, I think, a very disreputable object by the time I am finished with it.

In the course of my thoughts upon the volte face of the Tánaiste in this matter I remembered what he had said of Deputy McGilligan on the 9th March, 1948, Deputy McGilligan then being Minister for Finance. He gave the then Minister for Finance a word of warning to beware of the Department of Finance. He said, at col. 253 of the Official Debates of the 9th March, 1948:

"Now let me give the Deputies opposite a word of warning, in conclusion. Beware of the Department of Finance. It has always been restrictive of development. Under the Fianna Fáil Administration it was not successful because Fianna Fáil had its own policy and they went ahead with that policy and were undeterred by any impediments. With a Minister for Finance who has got the outlook of Mr. McGilligan, the Deputies opposite should beware. They will find that any plans for development which they may have had in their minds in coming into the Dáil will be lost, and lost for ever, in the dim recesses of the Department of Finance."

That is the Tánaiste's real attitude. He throws aside the Department of Finance and I have no doubt that he does not believe a single word of this production from the Department of Finance. Everything that he intends to do is contrary to the policy which is a logical conclusion from the Report of the Central Bank. Stop expenditure, increase taxation, decrease wages, stop housing—that is the policy adumbrated in the Central Bank Report. It is inherent in that document issued by the Department of Finance. Which document, if any, is going to be stood over? Although these two documents were published some time ago it was not until to-day that the Tánaiste saw fit to repudiate the Chairman of the Central Bank. The Tánaiste taunted us with having appointed the Chairman of the Central Bank.

Mr. Lemass

I did not taunt you. I merely recorded the fact.

Mr. Costello

I take it as a fact if not a taunt. I stand over that appointment. As far as I was concerned that appointment was made with full advertence to the fact that in previous years reports of a precisely, or nearly precisely, similar character had been issued by the Chairman of the Central Bank. I take the view that every point of view must be brought to bear upon the solution of the problem, even such archaic, out-of-date and absurd points of view as are stated in the Reports of the Central Bank. I also take the view that the Department of Finance has a function to fulfil. I think it is a good thing that we hear the extreme right of the case as well as the extreme left so that we get some kind of balanced judgment. We may get the extreme reactionary view of the Central Bank; we may get, perhaps, the familiar wail of the Department of Finance to which we have been accustomed for so many years. We will get some sort of balanced view as a result.

I have the greatest admiration for the officials of the Department of Finance who have stood rock-like against the assaults of all sorts of queer characters in the shape of Ministers since 1922. They have had their point of view. They have, I emphasise this, a very distinct, a very valuable function to fulfil in the machinery of government of this State. They are the watchdogs of public finance. It is their duty to point out certain dangers but it is not their function to create economic policy. It is their function to work within the framework of a policy, economic and financial, devised by a Government. It is their function to point out what they think are dangers but, having done so, it is their function loyally to carry out the policy of the Government. I believe that the Department of Finance have done that. They have stuck to their wails and their woes and pointed to the fact that the country is going to become bankrupt. They come up smiling with Government after Government, Minister for Finance after Minister for Finance, who do not take their advice and do not bring the country down into bankruptcy.

So, too, with the Chairman of the Central Bank. We do not agree with his economics which are dated back to around about the 1900's, but at least he is entitled to his point of view and we are entitled to laugh at it as we did and as we do. Nevertheless he is a responsible official and even though we do not agree with his views it is well to have them, but they should not be put out as they were in this context, saying we are spending too much, living beyond our means, that there was a crisis upon us. When the Central Bank Report came out with all these wails and woes and was followed by these very tendentious statements of the Department of Finance, they certainly made a bad impression on the public and increased the atmosphere of crisis and panic.

The Tánaiste has accepted my description of the present situation as described by me last Saturday night because although I made three speeches mostly of an economic character, he has not made one single criticism of them; I think the only thing he said was something to the effect that the word "complacency" should be put in instead of the word "confidence" that was in the amendment—to restore public confidence.

Mr. MacEntee

The Deputy should not be running away from his motion.

Mr. Costello

I want to read out what I said to justify the amendment. I have put down: "An atmosphere of crisis has been created and maintained to the point where real damage might be done to their people and to their economy unless immediate steps were taken to restore public confidence and accelerate the machinery of trade which had become dangerously slowed down. Credit restriction was stopping trade—there were few customers in the shops because there was a fall in purchasing power and prices were mounting. Traders and shopkeepers who had ample stocks and who had always prided themselves on their creditworthiness were being ordered to pay forthwith what they owed, though, given time and credit, they were more than solvent."

I believe that to be not merely a concise statement, but rather an understatement of the position. There has been in existence here for months past an atmosphere of crisis, a feeling that there was some impending financial disaster, waiting every moment for the people of this country. Any travellers will tell the Tánaiste or his colleagues that throughout the length and breadth of the country at the present time they are unable to get orders for spring goods.

Mr. Lemass

Because of stock.

Mr. Costello

That has nothing to do with it. The stocks are on the shelves, but they cannot be sold.

Mr. Lemass

Imported goods.

Mr. Costello

I will deal with that if the Tánaiste will keep himself quiet for a while.

The traders are overwhelmed with goods. They cannot sell those goods and they cannot order a fresh supply of goods for next spring, and yet the Tánaiste tells the House to-day that he was unaware of the fact that the banks have been restricting credit. There is not a shadow of doubt that, as I have already said, the Tánaiste has conveniently muffled himself to the extent that he cannot hear what is being said or cannot see what everybody sees. There are traders throughout the country who are solvent and who have always held their heads high with their own bank managers. They are now being pressed by their own bank managers and by the associated banks to pay up their overdrafts. Some traders are even being 'phoned every day. One trader whom I know is 'phoned three times a day in connection with paying off his overdraft. As Deputy Sweetman said by way of interruption, I think to-day that overdraft is in respect of the stocks the traders hold at present—the overdraft which they got last year so that they would be in a position, in the difficult situation which faced this country then, to buy in the goods that were so essential for our economy, and for the needs of our people. Now, the banks are saying: "We know that the prices have gone up in the last few months. We are aware that you need more capital to meet the situation. But we will only give you credit equivalent to that available to you before the prices went up. You must pay the balance immediately, although you cannot sell your goods because of the difficult situation that has arisen. We appreciate that if you were given credit by the banks you would be in a position to sell them." I know that such a situation exists, and that is why I made those three speeches to which I already referred. I deliberately couched those speeches in understatement. I deliberately made it clear in every one of them that I was fully alive, as were my colleagues in the last Government, to the dangers which were attendant on the conditions facing any Government dealing with the finances of this country. We knew the dangers and took every step and every precaution we could to safeguard the people against them. We asked the traders last year to get in more stocks. We were told by the Fianna Fáil Party here that we would not have sufficient resources to do what we intended. We achieved our objective nevertheless. I told the Irish newspapers they could write anything they liked about the situation which had arisen, but I reminded them that if they wrote of the steps we were taking to secure essential supplies for the country they might create an atmosphere of panic and might be responsible for increasing prices. We asked the traders to assist us, also the Government Departments, local authorities, private traders and industrialists, so as to ensure that this country would not be deprived, in what looked at that time to be a very menacing future, of the essential supplies which our people needed and which were necessary to keep them in employment. We got in stocks for hospitals and for housing, and now we are told in the famous White Paper that these are consumer goods and that we are living beyond our means. Such is the taunt that has been put out to frighten the people of this country. I want to recall that when it was announced in the course of the Budget debate last year that it was the policy of the then Government to stockpile so far as essential goods were concerned, and nothing but essential goods, the Tánaiste when he was over here questioned it. Further, we were able to import them at a time when it was almost impossible to get them and that was due to the prudence and the foresight of my colleagues at that time. The Minister, however, said we could get in those goods and not a single reproach would be made from this side of the House. We make no political capital out of it. The Minister, however, is making political capital out of it.

Mr. Lemass

We will hear more about that. What was Deputy MacEoin doing in Tullamore?

Mr. Costello

I want to direct the Tánaiste's attention to the situation that he, particularly, has created in this country in the last few months. He agrees with me that there is no crisis now. That is what I said during the course of the last few months, and that is what I repeated last Saturday night. Having said what I have just repeated here to-day and having outlined in a brief and, I think, restrained manner the conditions that exist in the country, I then went on to advert to the fact that we appreciated that there were very grave problems to be solved requiring very serious consideration for their solution. This is what I said:—

"There are grave problems requiring serious consideration and solution, some of them graver because of the decline in the reputation and credit of British finance than they were before; some of them not so grave because of the efforts of the people to solve them; some of them not referred to or mentioned by the Central Bank or by the Ministers concerned, but there is no real crisis."

Nothing certain economic facts which have not been controverted, I went on to say this:—

"The real danger in the domestic situation was that a proper balance in the economic activities of the citizens might not be struck between activities directed at the production of goods and services for home consumption and those for export. From a long-term point of view it is most important that the chain of income generation should be well hung, and that out of the nation's expenditures were not being poured incomes which the nation's ultimate capacity to export could not justify. The matter was not critical.... The atmosphere of crisis should be dispelled. In the ordinary way the crisis would not be upon us for many years and certainly we must reject the Government's policy of anticipating the unpleasantness of the real crisis by having an unnecessary one now."

I then went on to give a number of suggestions as to how that crisis might be dealt with if proper steps were taken. These suggestions were partly printed in the public Press. I said that there was a real problem but no real crisis. The hysterical speeches and the documents following those speeches of the Minister for Finance and the Tánaiste are creating the danger of a real crisis and a real panic in this country. When they are added to the atmosphere created by the banks in their effort to throttle the traders, there is grave danger to the economy and to the finance of the country. That is why that motion is put down here. I feel I have dealt with the first part of my amendment sufficiently well, for the moment, at all events, to show that we approached the grave problems of the country in a responsible spirit, derived from our acquaintance with the machinery of government from the inception of the capital development programme.

We have offered—I have offered it publicly—co-operation in matters of importance and in matters in which we can agree. We did not get that cooperation when we were in office. We got nothing but the destructive criticism for which the country is now paying, and perhaps will have to pay in the future. All these speeches of the last few months, the tendentious White Paper and the Central Bank Report, are part of an effort to justify Fianna Fáil Ministers, and are doing, and will do, irreparable damage to the economy of the country.

The second part of my amendment deals with the White Paper. I do not in this amendment deal with the Report of the Central Bank. I think the White Paper is more important. My colleague, Deputy MacBride, has an amendment down dealing with the Central Bank Report which will give adequate opportunity for the discussion of that report. To-night I do not intend to deal with the report for the reason that my outlook towards it is that I should like to hear every point of view about the problem——

Mr. MacEntee

Will the Deputy excuse me for a moment? I want to know, on a point of order, are we discussing all the amendments together? I should like to clarify that since the Deputy has stated that he does not intend to deal with the Report of the Central Bank to-night.

Mr. Costello

There is no importance to be attached to the word "to-night." I do not intend to deal with it to-night or in any other speech I make.

Mr. MacEntee

I want to be clear that the debate will take in all the amendments.

An Ceann Comhairle

The motion for Second Reading and the two amendments are before the House.

Mr. Costello

That is the way I took it, that the Second Reading and the two amendments were open for debate. With that understanding I was informing the House that while I had not overlooked the Report—I have not in the remotest degree overlooked it—I am not dealing with it now but am concentrating all my fire on the Minister and on the White Paper he has produced.

Mr. MacEntee

If the Deputy is concentrating all his fire on me, it does not seem to be well directed.

Mr. Costello

It remains to be seen if it is well directed or not. It is certainly, so far as I am concerned, aimed well and truly and, I believe, with very good effect. It will reach its objective and cause the necessary destruction.

Mr. Morrissey

He is so very vulnerable he does not want to hear anything about it.

Mr. Costello

This White Paper, as I said, was issued in a very significant sequence — Ministerial speeches, the Central Bank Report and the White Paper from the Department of Finance on the trend of external trade and payments. There is no necessity for me to indulge in any hyperbolic adjectives to deal with and to completely torpedo this extraordinary production from the Department of Finance in so-called justification of the crisis created by Ministerial speeches. It is so bad, it is so tendentious, that all I have to do is to recite here, even at the expense of wearying Deputies, a whole series of facts and figures, and I think when I have done—I shall not give all the details I could give or make all the criticisms that could be made—there will not be a single person, even in the Department of Finance, who will believe a single word in any of the assertions made in that White Paper.

I have repeatedly stated inside this House and outside it—and I shall take the opportunity again, even at the risk of wearying Deputies, to repeat certain portions of speeches I have made on the policy of the last Government as regards the programme of productive capital expenditure—that we were well aware of and alive to the dangers inherent in that. We knew perfectly well that there were dangers of increased consumption arising from the capital investment programme. We guarded against that. Knowing all the dangers, we took precautions against them. I assert here to-night that there should have been published, if honesty dictated the publication of that White Paper, the table or memorandum that was prepared for me and for my colleagues, Deputy McGilligan and Deputy Dillon, some time about last March, when we caused to be undertaken by the officials of the Department of Finance a close, careful and critical scrutiny of all the items of imports into this country. We wished to be assured that we were not spending the people's money, either borrowed or taken from them by taxation, on unnecessary consumer goods or on luxuries.

The Minister has stated to-day, and I think he informed his gleeful colleagues at the Fianna Fáil Ard Fheis yesterday, that he could not tax luxuries, that there are not any luxuries coming into this country of any worthwhile account. I think the present Minister for Finance gave the explanation to some of the people at the Fianna Fáil Ard Fheis yesterday, which was the official view of his own Department, and I think of his predecessor, Deputy McGilligan, as regard luxuries. There are very little luxuries being allowed in here at the present moment. So far as luxury goods are being allowed in at all, they are heavily taxed. The revenue from them is of no importance. The tax is put on to prevent them coming in and to achieve the result that it is only people who have plenty of money that can afford them, and, by allowing them to spend their surplus upon these luxury goods to a very small extent, that excess purchasing power, which would otherwise increase the pressure of inflation, is diverted on to these luxury goods.

But, here in this White Paper, although the Department of Finance knew that that memorandum or that table was prepared at the express request of myself, as Taoiseach, and of Deputy McGilligan and Deputy Dillion, and that the whole of these import goods were gone through with a fine comb, there is not a word about that. It was established at that time that the goods that were being imported then were not of a character that required any further drastic cutting down, that they were all essential commodities either for the use of manufacturing industry or agricultural industry, that they were raw materials for these industries, and that they were brought in for that purpose or else that they were of such a kind that they were essential in the circumstances for the economy and finances of the country. There was not anything in that list of import commodities that we would not have been prepared to delete if we had been advised by the experts in the Department of Finance that they were something in the nature of luxury goods, consumer goods of an improper type or of a kind that we could do without or ought to do without in the particular circumstances that then existed. Why is not that referred to in this White Paper? I say that that is evidence that that White Paper, to say the least of it, is prepared for a purpose other than to give the real facts and the truth, and all the truth and all the facts, to the people of this country so that they can know the facts and form their own judgment from them without that judgment being coloured by the gloomy speeches and tendentious utterances of the Tánaiste and his colleague, the Minister for Finance.

Here at the very outset of this White Paper is to be found the key to the purpose for which the White Paper was issued. At paragraph 4 we find the statement that, owing to the enormous expansion in the trade deficit in the current year, the deficit in the balance of payments, even allowing for a net increase in tourist income, is likely to be in the region of £70,000,000. We find in paragraph I that deficit referred to as "a huge increase". We find in paragraph 5 the statement that the increase in the trade deficit has been due predominantly to heavier imports of consumer goods and of raw materials intended for the manufacture of consumer goods.

What is the meaning of that emphasis on the word "consumer goods" that runs right throughout the length and breadth of this White Paper? "Consumer goods" is used in this phrase that I have just quoted in close proximity to the phrase "raw materials intended for the manufacture of consumer goods". "Consumer goods" is iterated and reiterated throughout the length of this paper and it has the effect, and was intended to have the effect, of putting into the minds of the people of this country that the last Government was a profligate Government, spending the people's money on luxury goods. "Consumer goods" is used there and it has had the effect of making people believe that we have been bringing into this country luxury goods which have brought about what is called the huge deficit in our balance of international payments. Then we have this phrase used in paragraph 5, which again colours the outlook and is intended to colour the outlook of the people who read this paper, and is intended to deceive them into the belief that the last Government was profligate, was dissipating our external assets on luxury goods:

"It is evident that the dissipation of external resources represented by the incurring of balance of payments deficits merely to boost current consumption is proceeding this year on a much larger scale than in 1950."

Note the phrases used there: "Consumer goods,""dissipation of external resources,""payments deficits merely to boost current consumption". Is not that intended, and deliberately intended, to give the impression to the people that these deficits in the balance of payments were caused and occasioned by the use of our external assets and other moneys, the property of our people and extern people who lent them to us, for useless purposes, luxury goods. The very phrase is used, "to boost current consumption". Then this conclusion is reached, that substantial relief to the balance of payments can only be achieved by reduced spending on consumer goods and materials. That is the conclusion that the people of this country are supposed to reach from a perusal of this precious document: the only way you can get relief from this frightful financial disease that we are supposed to be suffering from is by reduced spending on consumer goods and materials.

I was interested to-day, when the Minister concluded the part of his speech which dealt with policy in connection with future development in this country, to know that he did not believe in that. He did not say he believed in it and I know perfectly well that he does not believe in it. He said, in fact, that whatever is to be said about restricting imports, he is not going to do it; he is going to go along in his merry way with all this expenditure, far in excess, he would have the people believe, of what we ever thought of spending, but getting it out of their pockets through taxation. But he does not believe that the only way you will close the gap in the balance of payments is by restricting imports, stopping the repatriation of external assets which, it is alleged in this document, was brought about for the purpose of boosting consumer goods. That is an effort, I suggest, to misrepresent the situation to the people. They have been deceived by it. You can start a lie and when a lie is started it is very difficult to catch up on it. I doubt if we will ever be able to get it out of the heads of the people that this gap in the balance of payments, about which very few people really have any understanding but they think it is an awful thing because Ministers are talking so much about it, has been brought about by some sort of profligacy and unnecessary spending on luxury goods by the last Government. That is what the Fianna Fáil Government want to achieve. That is what we are going to prevent. We are going to show, and I hope to establish here to-night, that that conclusion that is reached there is a false conclusion and that the suggestions and tendentious information, or misinformation I should call it, contained in this White Paper are utterly without foundation.

I have referred to the figure that was given in the early part of this White Paper that the deficit in the balance of payments in the year 1951 is likely to be in the region of £70,000,000. I have repeatedly stated in the course of the speeches that I made in the last few months that I do not accept that figure and do not believe in that figure.

Mr. MacEntee

That is a matter of faith, of course.

Mr. Costello

I propose to show that to-night by facts. The figures that I will give here to-night, I will give them, I hope, slowly, deliberately and coldly. They can be checked and counter-checked by the Minister for Finance and by his statisticians and experts, and they will not be found to be wrong, and Deputies can draw their own conclusions and, above all, the people outside can draw their own conclusions, from the facts that I will give, as to whether they should place the slightest reliance on that White Paper and the information that is supposed to be given to the people to justify the policy of austerity and heavy taxation that is going to be imposed, apparently, now, having heard the speech of the Minister to-night, on the people of this country. I do not believe in that £70,000,000 deficit. I do not believe that taxation is necessary. We left behind us nearly £2,000,000 as a reserve in the Exchequer. The people were not told about that. We had that reserve of £2,000,000 the previous year and we did not use it. We went through the financial year which ended on the 5th April, 1951. The then Minister for Finance, Deputy McGilligan, was able to pay not merely over £1,500,000 deficit in Coras Iompair Éireann's finances but he was able to pay in addition something over £500,000 supplementary estimates out of taxation in that year.

Mr. MacEntee

Borrowed money.

Mr. Costello

It was done out of taxation. I repeat that. The Minister for Finance will not get away with any more lies of that kind—lies which were repeated this afternoon by the Minister when he spoke about Budget deficits and profligate spending. I insist, and I shall continue to insist, that our policy was that so far as current expenditure was concerned we balanced our Budget and that the Budget must be balanced. We always balanced our Budget. We counselled prudence in current expenditure. Every Budget prepared by Deputy McGilligan when he was Minister for Finance can be balanced and can be submitted to any impartial experts with a view to finding whether any of these Budgets was balanced or not. On the 5th April, 1951, Deputy McGilligan, as Minister for Finance, had ended his financial year in this way. He had reduced taxation by a certain amount. At the end of that period he was faced with a demand for something over £1,500,000 in respect of the Córas Iompair Éireann deficit. I think the figure was £1,600,000. He was faced, also, with Supplementary Estimates for over £500,000. He paid every penny of that out of revenue at the end of that year. There was a bank strike in January. The result of the bank strike was that between £400,000 and £500,000 was not collected from the taxpayers last year. The present Minister for Finance will benefit from that. Nearly £500,000 was passed on to him and a surplus on the Budget expenditure of £300,000. Therefore, over £2,000,000 was paid in respect of Córas Iompair Éireann losses and Supplementary Estimates. There was left for the present Minister for Finance a Budget surplus of over £300,000. There was left for the present Minister for Finance to collect this year, because it was not collected last year on account of the bank strike, a sum of £500,000 and there was also left to him £1.9 million, nearly £2,000,000 of a reserve. He did not tell the people about that. Why?

Mr. MacEntee

The ordinary petty cash of the Exchequer. The ordinary till money.

Mr. Costello

It was not. It was a reserve in respect of 1948-49 and we left that to the present Minister for Finance. I challenge the Minister for Finance to deny that he has got a certain reserve of £1.9 millions, which he has not spoken a word about to the people of the country and which is not mentioned here.

General Mulcahy

Let the Minister for Finance deny it again.

Mr. Morrissey

He considers that it is only pin money.

An Leas-Cheann Comhairle

Order Deputy Costello.

Mr. Costello

We left the finances of this country in a sound, healthy and buoyant condition. I have given the particulars to the House and I hope that the people will realise what we did last year. Having decreased taxation, we left the finances of this country healthy and sound. We had strengthened the economic fabric of the country. We are told that we were profligate and living, beyond our means. Let the people realise some of these facts I have mentioned and which are not in the White Paper. They ought to have been in the White Paper if it was honest and if it was intended to present a true picture of the financial condition of this country.

The national debt of Ireland is exceptionally low. Relating it to income, the British are proportionately five times more in debt than we are, and the interest charge on the national debt amounts to half the English rate, being only 2 per cent. of the national income. Is that evidence that there is a crisis upon us or that there is something wrong with our finances?

Mr. MacEntee

Will Deputy Costello tell us what is wrong with the White Paper?

Mr. Costello

All that information should have been in the White Paper. These facts should have been brought to the attention of the people. The next thing is the great increase in the national income, particulars of which can be found in the Irish Statistical Survey, 1949-50, published since this Government took office. That is evidence of a healthy and economic situation left by us as a result of our three years of work. The last loan floated by Deputy McGilligan last year, when he was Minister for Finance, was the greatest success in the history of this country. The first loan which Deputy McGilligan floated in 1948 was expended in paying the debts left behind by the previous Fianna Fáil Minister for Finance, before the formation of the inter-Party Government.

Mr. Davin

£4,000,000 for Córas Iompair Éireann.

Mr. Costello

The last loan obtained by Deputy McGilligan when he was Minister for Finance was obtained in difficult circumstances, at a time when the economic machinery of the world was dislocated. The Korean war had brought the menace of war nearer to people's imaginations and to reality. Realising that that loan was given to him by the people and institutions of this country, it was used as the people who were asked to subscribe to it were told it would be used—and not to fund debts of the type which were left to us by the Fianna Fáil Minister for Finance. The moneys obtained through that loan were used for development purposes in this country and also to bring about a great reconversion which resulted in considerable easement to the amount of money paying the national debt.

In addition to what I have already told the House, we left behind us in the dollar loan something, I believe, like £20,000,000. Where is all that money now?

Mr. Hickey

Deputy John Lynch says that it was recklessly dissipated.

Mr. Costello

I shall give more facts later on. I shall give the particulars which are not given in the White Paper. We got money through the generosity and bounty of the American people. That money was used and would have been utilised for the Irish people, for the development of our economy, had we remained in office. Personally, I have always expressed the view that I hope we will pay back every farthing of that money to the United States Government and that they will not give it as a grant. I believe that our national pride would be stimulated if we paid that money back.

Look at the assets we have got as a result of the development achieved by our policy of productive capital investment against the money owing to the United States, and other debtors in the sterling area, perhaps, who have invested money in capital development in Ireland.

Mr. MacEntee

Enumerate the assets.

Mr. Costello

These points, favourable to the national economy, are not mentioned in the White Paper. The people had to be frightened. A crisis had to be artificially created for the political purposes of the present Government. I am quite sure, knowing the officials as I know them, that they must have had their consciences unduly strained in order to bring about the compilation and publication of that precious document.

There is a point I want to make before I come to the details. That £70,000,000 is referred to in the White Paper as if it were a figure that was definite, precise and ascertained. In passing, I may comment that in paragraph 4 of the White Paper the gap in our deficit of payments is stated to be, and I quote, "in the region of £70,000,000". At the end of the White Paper there is a gloomy looking picture, and it says the gap is £69,000,000, a small point. I suppose a £1,000,000 does not matter to the Department of Finance in a document of this kind. It is like the hat that is sold for 5½ guineas; people do not think it is £5 15s. 6d. when they are buying it. £70,000,000 is more impressive than £69,000,000, and that has passed into current public discussion bearing on the financial crisis that we are supposed to be in and which it is suggested is imminent. That is not a precise figure. It is not an accurate figure. The estimate of the deficit in the balance of payments is never an accurate figure. It is never anything but an estimate very closely approximating in this particular case to a guess, but a guess which suits the purpose of the present Minister for Finance and his colleague, the Tánaiste. That figure of £70,000,000 has been taken automatically by those people who are commenting on it in articles, speeches and elsewhere as if it were certain, established and precise.

That figure, as we all know, consists merely of an estimate and this is a very significant fact to which I will have to direct repeated attention in the course of the remarks I have to make on this White Paper. It is not an estimate for all the months of the year. It is not a figure obtained by the expert statisticians of the Central Statistics Office with full and detailed information before them. It is a guess and nothing but a guess. They have not any of the information that would enable them to make such an estimate as is made six months after the close of the year by the Central Statistics Office. There is not a single reference or advertence to the effect of the amount of money that we earn from our tourist receipts as affecting this gap that is supposed to be £70,000,000. Even at the end of six months after the close of the year when the experienced and expert statisticians of the Central Statistics Office have all the available information before them, even then they, experts as they are, are not able to give anything other than what is an approximate estimate. Yet it is only a guess for eight months, not for 12 months. It takes no account of the effects of the balance of payments. This country is asked to base its financial policy on that guess and also upon the trend of trade and imports in a period of only eight months.

I have no doubt that the deficit in the balance of payments for this year will be very high. If I were polite I would call it an estimate, but being realistic I call it a guess. I do not think it will be much below £50,000,000 after allowing for dollar receipts from the U.S.A. and import of capital of the magnitude of the last few years. We must expect a realisation of sterling of something like £30,000,000. That does not merely appal me, it does not surprise me, because it was deliberately brought about to a very large extent. Even with that deficit in our balance of payments our sterling resources will then be very high indeed, not far off £400,000,000.

We have numbers of foreigners investing their money in this country. That fact and the increased investment of foreign money in our country does impose a certain obligation to keep some of our sterling assets or foreign reserves available in the very unlikely case of there being a draw on those foreign investments. We had only £250,000,000 in sterling assets before the war. It is well known how the increase arose. We were not able to buy anything during the war. We were not able to get essential materials. We could not get raw materials for manufacture. We could not even get fertilisers for our land. There was a striking incapacity during those years for us to import anything. For agricultural and industrial produce to Great Britain, which was then practically our only marketing source, we got nothing but pound notes and our sterling assets accumulated to the extent of £160,000,000. Even in the gloomiest view of the gloomiest economist attached to the Central Bank, we have not come within a very long way yet of realising the moneys that were accumulated during that period in a forced fashion because we could not get goods which we required so much.

What this White Paper does and what the Minister for Finance and his colleagues are endeavouring to do is to found a policy for the future in a very mistaken fashion, and a very dangerous fashion, on the very particular and special circumstances appropriate to this year. I have directed attention to the fact that this White Paper frequently uses the expression "consumer goods" and the expression "boosting consumer goods" and in close connection with these the expression: "tending to show that we were dissipating our external assets on luxuries and unnecessary imports".

I have, I think, earlier said that when we initiated and put into operation this programme of productive capital investment we knew that inherent in the programme was an increase in consumer goods. As I have pointed out, in speech after speech, both in this House and outside, when you take account of what liabilities have been incurred in connection with this development programme you also have to take into account the other side, the assets that have been created.

One business man would take a poor view of another business man who looked only at the liability side of his balance sheet and failed to look at the other side where assets had been created as a result of capital expenditure. But that is what is being endeavoured to be done by the Minister for Finance and his colleagues and it is the machine by which he is trying to delude the people of this country to accept the false case made by this White Paper. We have not frittered away our assets as suggested in the White Paper and elsewhere. Look at the national balance sheet for 1949 and 1950 as contained in the Irish Statistical Survey, published by the Central Statistics Office, and you will find that in 1949 and 1950 we had a deficit in our balance of payments of £40,000,000. In other words, we bought £40,000,000. more goods and services than we sold, but we did not realise that £40,000,000 sterling. We received something like £36,000,000 from the United States. That £36,000,000 may have to be examined or adjusted because of devaluation. For the purpose of the argument, it makes no difference. We received £36,000,000 from the United States and £28,000,000 from British private investors, so that, instead of realising sterling, we actually added to our sterling reserves to the extent of £24,000,000 in that period. Of course, we did add, in the course of these years, to our liabilities to the United States of America for dollars and to private individuals who invested money in this country to the extent of something like £64,000,000.

Mr. MacEntee

They do not matter apparently.

Mr. Costello

No, they do not, as I am going to show the Minister. We have to look at the domestic picture, and, against that liability of £64,000,000, there must be set not merely the £24,000,000 additional accumulated sterling but the fact that, according to this Irish statistical survey, published under the auspices of the present Government, we created in these years of the inter-Party Government new domestic capital, excluding all increases in stock, to the extent of £84,500,000. There is not a word about that in the gloomy picture painted by this White Paper. Not a bit of light is brought into the gloom of that document. The net result of all this is that our capital assets were as follows in these two years: £84,500,000 of capital assets which we created by our development during these years which has been established by our statisticians, expert and independent, and set forth in this statistical survey; and an added £24,000,000 of accumulated sterling. Deducting the £64,000,000, liabilities from that, we get, on the credit side of the account,£44,500,000, and that is the economic background which the Government suggests will be the justification for the fundamental change in financial policy which they are now planning. There is not a word of all that in the White Paper. The facts are kept from the people deliberately.

Mr. MacEntee

Because it is all nonsense. We do not publish nonsense.

Mr. Costello

That additional sum of £44,500,000 is the result of the capital development programme initiated, devised and carried into effect by the inter-Party Government, as a result of which we now have houses, hospitals, additional trees planted, schools, electricity development—all the matters that were adumbrated to-day by the Minister as his development policy and which we were carrying into effect for the two years before we went out of office. In addition to all that, our stocks of goods have been added to and I will deal in a few short sentences at the end of my speech with the general results and effects of that policy.

I want to give some more facts for the information of those people who are honest and who want to know the facts. The Minister took great pride in the fact that he intended to tell the people the facts, unpopular though they might be, but there are certain facts he did not tell them. Perhaps he did not know; I hesitate to say that he or his colleagues deliberately concealed these facts—I think they are fundamentally ignorant and that that is why they did not tell them. In the three years, 1948, 1949 and 1950, £40,000,000 were invested in Ireland by foreign investors.

That is a very substantial sum. Does anybody think that these people who brought the £40,000,000 over here to spend and invest in this country did it for the benefit of their health or because they wanted to give charity to this country? They brought it here because they thought it good business, as it was, but we are now to be told by an Irish Government that an Irish Government ought not to invest its capital or the capital of the Irish people in the development of its own resources or in its own country. Apparently any capital can come in from outside financial institutions or persons without criticism even from the Central Bank, and I may interpolate here that neither the Central Bank report nor this White Paper draws attention to the inflationary influence, or alleged inflationary influence, which that excessive capital coming into this country may have upon our economy.

I want to come now to the next point. That amount of £70,000,000 about which I have been speaking as being the forecast of the deficit or gap in our balance of payments is based upon certain assumptions which are set forth in paragraph 28 of this White Paper. The assumptions set forth in that paragraph are belied in the White Paper itself, in the addendum placed in it when certain figures were obtained in reference to the September trade returns. That addendum giving the figures for the month of September itself immediately disproves the correctness of the assumptions made in the forecast contained in paragraph 28. In that paragraph it is assumed that the imports for the months of September, October, November and December, the last four months of the year 1951, would amount to £73.9 million, or £18.475 million per month on an average, and that exports would be £36.4 million for the four months or £9.1 million for each month. The assumptions, therefore, in paragraph 28 are that, in each of the four months, there would probably be imports of the order of £18.475 million and exports of the order of £9.375 million. In the event, for the month of September, as shown in the addendum, it was £5.8 million, or as it was corrected after the addendum was put in, £5.6 million, according to the trade statistics which have since been published. In other words, the assumptions were almost £4,000,000 per month wrong. If these assumptions are demonstrably wrong to that extent, on the basis of their own White Paper, what credence can be given to this figure of £70,000,000 with which they have frightened the people of this country for the past few months? If that order of deviation is there in respect of the remaining three months, if they are as wrong in respect of those months as they were in respect of the first month, the estimate will then be wrong, even on their own calculation and assumptions, by something like £16,000,000, so that on this figure of £70,000,000, taking even their own figures, they will be wrong by £16,000,000.

General MacEoin

Pin money.

Mr. Costello

The next point I want to make is that this document conceals, and, I believe, deliberately conceals, the change for the better which has appeared in the past few months, a change which we always believed and which I said in my speeches would automatically come about. That change does not appear in the figures in the White Paper. There is no suggestion of it in that White Paper and Deputies can look at these facts and can see that they will prove the truth of the assertions I am now making. The volume of imports reached their peak in the month of April this year. Since that month, there has been in each and every month, with the exception of June, when there was a very slight increase, a progressive decline in the volume of imports. That fact is not brought out in the White Paper, and because it is not brought out in the White Paper those people who have had to examine the document for the purpose of arriving at the truth have had to work the facts out for themselves not merely from the tables in this precious document but from the tables in the yellow paper prepared by the Statistics Office and known as the Irish Statistical Survey.

Table la at page 4 of the White Paper gives the actual value of imports and Table III gives the import prices. There is no table showing the volume of imports per month, though there is a table, Table II at page 6, which shows the volume of imports for the eight months specially selected as being most favourable to the thesis propounded by the White Paper. This White Paper gives statistics relating to volume of imports where it suits it or where it would appear favourable to its thesis, but omits them where they would be against it, and one has to work out—one cannot get it from the totals in the White Paper—from these tables and from other tables the monthly average.

I have said that there has been a progressive decline in the volume of imports in recent months. Having reached their peak in April of this year, imports have been steadily declining since. I repeat—and it is only by repetition that the ordinary people who do not understand economics can get to know it—that there has been a steady decline in the volume of imports, as we anticipated there would be. In the month of August of this year, the volume of imports declined by 7 per cent. as compared with the corresponding figure for August, 1950. If we were to have maintained the same volume of imports in August of this year as was secured in August of last year, £2,000,000 extra in value of imports would have had to be imported. These figures are concealed in this White Paper.

I have already adverted to the September figures in one context. These figures show a dramatic drop in the volume of imports, which were 25 per cent. below the figure for the corresponding month in 1950, but that is not brought out in the White Paper. What is brought out in it is something which is dangerously near fraud—certainly something which can very nearly be described very charitably as cheating. This is what they say in the addendum:

"It would be unsafe to draw any firm conclusions from the fact that the import surplus in this month..."

—that is, the month of September—

"was only slightly above the figure for September, 1950."

"Only slightly over the figure for September, 1950."

Mr. MacEntee

Would the Deputy be good enough to read the reference to the dock strike?

Mr. Costello

In fact, the volume of imports was 25 per cent. below the figure for the corresponding month in 1950 and that, again, shows a strong continuance of the trend which has been demonstrable since the month of April of this year, a downward trend. I took the precaution of saying in the speech I made at the end of August that very frequently politicians painted a gloomy picture, knowing that matters are going to improve, so that they will be in a position to claim credit for the improvement. I notice that the Irish Press is already claiming credit for the fact that the month of September shows the lowest adverse trade balance for the year. A gloomy picture has been painted and the facts have been misrepresented by the Minister for Finance and his colleagues for the purpose of misleading the people in order that when what we believed would come about, namely, this improvement in the later months of 1951, they could try to take credit for it, for what we knew was going to come about in any event—this trend towards a reduction in the volume of imports. There has been a steady decline, as I have already said, in the rate at which we have been running a balance of payments account. That is suppressed in the White Paper.

Mr. MacEntee

No, it is not.

Mr. Costello

The next suppression is that with an import surplus of £73.5 million for the first six months of this year and even accepting the estimate of £60,000,000 in respect of invisible returns, the deficit then anticipated, if matters did not change, was £87,000,000. In July, it was £85,000,000 and, in August, £80,000,000. In September, taking no account of the new trend to which I have called attention, it fell to £73,000,000. I think Deputies are entitled to expect and the people are entitled to expect more frankness in a paper of this kind and that this downward trend which has been continuing now for months ought to have been shown and not suppressed, as it undoubtedly was. Let me give some more facts. The average import surplus for the first six months of the year was £12.25 million per month. The average import surplus for the months of July, August and September was £7.9 million and that has taken place, notwithstanding the fact that import prices have gone up by almost 20 per cent. since the beginning of the year. These facts are not brought out in the White Paper.

Even more striking, even more coercive proof of the fact I am demonstrating—how misleading this White Paper is—are the matters to which I am now about to refer. Paragraph 2 of this White Paper states that merchandise exports now pay for only one-third of imports as against three-quarters in 1930 and three-fifths in the immediate pre-war years.

"Merchandise exports now pay for only one-third of imports as against three-quarters in 1930 and three-fifths in the immediate pre-war years. This lack of balance in external trade is unique in Europe."

Now let us see the little bit of cheating in that. That is an endeavour to put over on the people, an effort to suggest to the people of the country, that we pay for only one-third of our imports by our exports. That conclusion is reached, of course, by ignoring all the receipts from such matters as tourism and other invisible items. That is put in for the purpose of creating the impression stated in the words I have already quoted from this White Paper that we are making these imports of consumer goods merely to boost consumer consumption and to dissipate our external assets.

The first comment I wish to make upon that suggestion is that it deals only with a portion of the year. It deals only with the portions of the year when exports are not at their highest and takes no account of the fact that the last four or five months of the year are always the best for the export of goods and services from this country. But those exports of goods and services in those months are deliberately excluded in making comparison. The fact that that statement is made is misleading because it bases its judgement on the first eight months of the year and excludes the best export months in the later part of the year. Of course it does not say anything at all about the fact that we earn, and through earning pay for our imports to a considerable extent by our tourist income.

Strangely enough the Report of the Central Bank is fairer and gives a clearer picture, a truer picture than this White Paper. The Report of the Central Bank gives figures for this matter for the year 1928 when the percentage was 77.3; 1938, when the percentage was 58.5; 1950, when the percentage is given as 45.4. These figures are taken from the Central Bank Report, paragraph 10, page 7. If tourist receipts are added—and I do not suppose that even the authors of the White Paper will presume to say that tourist receipts are not something that the people of this country earn—the percentage for the year 1950 becomes 65 per cent. or in other words, for that year 1950 the nation is paying for a very much higher percentage of its imports by its work and earnings than pre-war. We have not yet got to the figure of 1928 before Fianna Fáil came into office.

The use of the words "merchanise exports" there is misleading also. The true figure is the figure for our exports of goods and services. That fact is not brought out by the White Paper nor by any of the numerous speeches, the fact that we did in fact in the year 1950 earn a higher proportion of the goods we are importing by our own work and our own services than ever before.

Another fact: in paragraph 3 of the White Paper the increase in imports is set forth, but the appropriate deduction from the figure given is not drawn. It is stated there that £27,500,000 of the increase in imports is due to increased prices and that only £8,500,000 in imports is due to increases in volume. Over three-quarters is due to causes outside our own control, external causes, and a quarter to home pressures. Yet, in paragraph 16 of this document the White Paper again contradicts itself by saying that the increases in the trade deficit for 1951 was due for the major part to a continued rise in the volume of imports at a time of rising prices. Paragraph 3 admits the preponderant weight to be given to increased prices, but paragraph 16 tries to suggest that the increases in our trade deficit are due to the volume of imports.

Mr. MacEntee

At a time of rising prices.

Mr. Costello

I have already quoted that. I have already dealt with the use of the expression "consumption" imports throughout this document and the colouring it gives to the case it endeavours to make. The actual fact, the remarkable fact, that emerges from the available figures in comparison with pre-war figures is that there has been a reduction in the proportion of consumer imports and an increase in the production of consumer capital goods ready for use. I would refer Deputies to table 6 in this White Paper. It is in two parts. It is entitled: "Distribution of Imports according to Main Uses," the first headed "Producers' capital goods." Those figures and that table are published in the White Paper for the purpose of endeavouring to support an argument that there has been a steady decline in producer capital goods, but the White Paper fails to bring out the fact that the percentage increase in the proportion borne by producer capital goods in 1948 was over 50 per cent. up on the proportion borne in 1938. In 1938 31.3 per cent. of the total of imported goods consisted of consumer goods. Last year, 1950, it was only 25.6 per cent., and in the first six months of this year, 1951, with all the abnormalities which we know were in existence, including stockpiling, only 27.9 per cent. of the total imports consisted of consumer goods. The true facts, therefore, are that in 1938 we were consuming a higher proportion of consumer goods and a lower proportion of capital goods than in 1950 or even in the first six months of the year 1951.

I want again to refer to Table 6. In Table 6 the authors of this document have segregated, separated into categories, all the imports. Having found that 18 per cent. or less consisted of capital goods, they concluded that the balance of payments was employed, to use the expression earlier in the paper, "to boost consumer goods".

If Deputies, as a corrective to this tendentious document, the White Paper, will use the Irish Statistical Survey and look at page 37 they will find the corrective to these figures. Table D, page 37, says that for the two years, 1949 and 1950, £28.953 million of producer capital goods ready for use were imported. In the same book, in Table 4 on page 8, there will be found the domestic capital formation. Figures are there given which exclude as the table shows, increased land fertility privately paid for, and also increases in stocks. The figures for 1949 in the second last column show a depreciation of £8.4 million and net domestic capital formation £39.5 million; for 1950 a depreciation of £9,000,000 and net domestic capital formation £45,000,000. The figures of £47.9 million and £54,000,000, totalling together £101,000,000 for the two years, are the figures to be set against the deficits for the years 1949 and 1950, amounting to £40,000,000. So that, even providing for depreciation and foreign disinvestment there was a net addition to the capital of the community, excluding stocks, amounting to £45,000,000. These facts, which can be checked and verified, or disproved if the Minister can do it, clearly demonstrate that the White Paper is useless as a guide in informing public opinion on this point. As I stated, it is misleading and tendentious, suppresses facts, and does not give the true-picture. As I said at the outset, the whole purpose was to try to distort the picture, and to disparage the efforts of the last Government in its policy of productive capital investment.

The Tánaiste said that he was going on with capital development, but indicated that he was going to do it out of taxation, if he gave any indication at all about the matter. It is part of the fundamental basis of that policy and programme of capital development that it should be paid for out of borrowed money. There we part company with the Tánaiste. He borrows our programme but tries to do it in a different way, or to suggest that he will do it in a different way. The people gave their savings to us, but they would not give them to the Minister for Finance this year, or at least the Minister for Finance had not the courage this year to go to the people for a loan as Deputy McGilligan did last year.

I certainly repudiate, and I think my colleagues will repudiate, the idea of a necessity for taxation. We believe that there is no need for increased taxation at present. We believe that there is a bouyant revenue from an expanding national income. When we started our career as an inter-Party Government, we endeavoured to diagnose the economic ills of this country and we did diagnose them. We came to the conclusion that what was wrong with this country was not over-investment but under-investment in land and men. We set out to remedy that ill and we did it by means of the capital development programme. As I have stated, we were fully alive to the danger inherent in that and took the necessary precautions. We achieved the purpose by means of the capital Budget. It was necessary for Fianna Fáil to criticise us and they said: "You should not do it by means of borrowing". During the course of the general election they never said how they were going to finance these capital projects which the Minister said he is now going on with. He says he will do it out of taxation.

We repudiate the notion of putting an additional burden of wholly unnecessary taxation on the people. The instrument by which we financed the programme of productive capital expenditure was the double Budget. I assert again, as I asserted this afternoon, that when we were in Government we stood for the balancing of our current Budget, the balancing of our Budget year by year for items of ordinary current expenditure and we designed the capital Budget as part of the Estimates for the purpose of our programme and we financed that by borrowed moneys which the Irish people freely gave to us.

I directed attention earlier to the suggestion made in this White Paper that the only remedy for what the Tánaiste says is wrong with us now is, in effect, the restriction of imports. I noticed that the Tánaiste did not agree with that. I do not agree with that. I have already indicated in speeches outside the steps which can be taken to remedy it. As was indicated last year by Deputy McGilligan, when Minister for Finance, and by my colleagues in the different parties in the inter-Party Government at that time, there is no necessity for additional taxation. With the increase in the national income, there is bound to be an expanding revenue. That is what we brought about. With borrowed moneys repaid on principles of strict financial rectitude and with a balanced current Budget this country can face any financial crisis in the future. We adopted the instrument of the double Budget.

May I just put on record a quotation from a document emanating from the International Labour Office on the relation of public debt to needs? This is the quotation:—

"An expanding community will have expanding needs. It will need new schools, new streets and sewers, increased fire and police protection and so forth. If it has permitted the policy of not incurring debt and so forth, and is able to expand its total expenditures only at the rate at which current revenue increases, it will be unable to provide for those needs since the expenditures required in any one year to provide the needed facilities will far exceed the current revenue of that year. Borrowing is a means of spreading the money cost of these needs over a number of years, while making the actual outlay in a single year."

Let me quote another economist dealing with the history of the "double Budget" in Sweden. The first country to attempt to adjust its budgetary methods to a systematic economic policy was Sweden.

"The Swedish budgetary reform of 1938 has attracted so much attention that it is necessary to examine it briefly in order to grasp its purpose and to assess its applicability to the British problem. We have seen that in essence the traditional Budget (in Britain and in most other countries, many of which deliberately copied the British method) was based on ideas proper to a personal account— an extension of the idea of the King's private and personal account. As is natural in a personal account no attention was paid to questions of profit and loss, and no distinction of capital account attempted. The Swedish double Budget is an attempt to regard the public sector not as a person but as a firm or business concern. Accordingly the account is divided into a ‘current Budget', corresponding to the profit and loss account of the firm, and a ‘capital Budget' which is parallel to the capital account of a firm."

That was our policy when we initiated the capital development programme which has brought such great benefits to the country. I repeat again that there is no need for additional taxation except for the purpose of justifying the statements of the present Government from a purely political point of view. Taxation is wrong in existing circumstances. It will cripple, injure and ultimately destroy all personal initiative.

I know that the present Tánaiste is fond of taxation. On the 5th May, 1948, when Deputy McGilligan introduced his Budget the present Tánaiste, then Deputy Lemass, said it was better that people should be persuaded that instead of giving 5/4 out of every £ to the Government they should give 6/6 or 7/-; and that they should be persuaded that it is better for themselves that they should spend less at their own discretion and let the Government do the spending for them.

So far as I am concerned I will not permit this Government to do my spending for me and I will do everything in my power to prevent the Government spending the savings of the people, because this Government is profligate and unwise and because this Government is taking the wrong course in endeavouring to persuade the people that it will be possible for them to finance the huge volume of expenditure adumbrated by the Tánaiste this afternoon on capital projects out of the current savings of the people and out of taxation. It cannot be done. One can, of course, increase taxation. I know that is what the Tánaiste would like. That is the easiest way. It is a way that the Department of Finance dearly loves. It is not a way I like and it is not a way in which we will do anything to assist.

Taxation increases the cost of living: let there be no mistake about that. The Tánaiste may have found some justification for himself to-day in his speech on rising prices. I have no time to deal with that now, but I do direct his attention and the attention of the people to the appalling affect increased taxation will have by further increasing the cost of living and thereby increasing the heavy burdens the people have to bear at the present time.

I am prepared to admit that there have been certain increases in the cost of living which neither the Tánaiste nor any of his colleagues, nor I nor any of my colleagues could have stopped. This time 12 months, when we were suffering from the effects of the Korean war and the consequential dislocation of the economic fabric of the world, we were accused and castigated by the Fianna Fáil Party for not having taken steps to decrease the cost of living. Indeed we were accused by other people, too, who ought to have known better, of doing something which ought not to have been done. I was glad, therefore, to be told by the Tánaiste to-day that we actually did hold the line and did hold the cost of living down. Be that as it may, irrespective of whether or not the Tánaiste can make a case against further increases, he can make no case against a further huge increase in the cost of living by the impost of increased taxation. We repudiate the idea that there must be increased taxation. We repudiate the idea that there is any necessity for increased taxation.

We would stand behind the Tánaiste if he came here and made the case that honesty required that there should be additional taxation for the purpose of balancing the budget, and we would co-operate with him in that. But neither he nor any of his colleagues will get any co-operation from us in the expenditure of £40,000,000 on development projects to be financed out of taxation. I assert that that cannot be done. The Tánaiste knows it cannot be done. The only way in which the country can be developed, and the country must be developed, is by the method devised by us. If the Tánaiste has any spark of patriotism in him he will openly adopt that policy —the plan, the project and the machinery that we adopted for the purpose of development so successfully.

Development projects cannot be implemented out of taxation without crippling the people by gravely increasing the cost of living. When replying, will the Tánaiste tell the House how he proposes to raise this £40,000,000 which he intends to spend upon these vast projects out of taxation? There is no justification for that policy which the Tánaiste said he favoured, of mopping up the excess purchasing power and taking away from the people the right to spend their own savings and putting those savings into the hands of a profligate Government to dissipate.

We assert that the only way in which the country can be developed is by means of the capital development programme we established by means of borrowed moneys. We knew at the time that we would create a temporary deficit in the balance of payments, and part of the present deficit is undoubtedly due to that deliberate policy. We are glad of it. We are proud of it and we stand over it. Part of the present deficit is due to our deliberate policy of repatriating our external assets for the purpose of land reclamation, increasing the fertility of our soil, increasing production from our land, rural electrification, afforestation and all the other projects, including houses, schools and hospitals. We make no apology for the fact that included in that capital development programme was expenditure on housing and schools and hospitals. There is no material benefit to be gained from building houses, schools or hospitals. But there is a tremendous social benefit and all our projects were planned upon two principles: no money would be spent on any project of development unless it either yielded a minimum return, or a return in production, or gave what I describe as a social return such as houses, schools and hospitals do. The programme was given quite proper examination and priorities were established.

Steps were taken to see that inflationary tendencies were curbed, and that where there was a tendency towards consumer goods that at least domestic capital assets were increased at the same time as those consumer goods were being consumed.

We say that you can test our policy by the results of that policy. That is the best test. If, as the Tánaiste has stated to-day, he intends to continue that programme of capital development—if he is let by his colleague the Minister for Finance and if he does not ride roughshod over the Department of Finance as he has frequently done in the past—and if he is let go on with that policy, the best way to pursue that policy is the way that we did, to pursue a policy of the development of the national estate and resources at a rate in excess of what the current revenue of the citizens could sustain by taxation. Can you do that? You can only do it the way we did it, by borrowed money and not out of the current income of the people.

The Tánaiste to-day talked about savings and production. We have been talking about savings and production for some time past. This year, Deputy McGilligan, the then Minister for Finance, stated that we were going to go out on an active campaign, a nation-wide campaign for savings. There has not been a single suggestion in the last four months that the present Government are going to adopt that policy, an active campaign to acquire the savings of the people for the purpose of developing Irish industry and the land, soil and resources of Ireland. Last Saturday night I gave that as one of my concrete proposals which, if put into operation with the other proposals, would stave off any possible crisis, which, if it does not exist now, may menace us in the near or distant future.

Let us examine some of the results of our policy, and then ask the Minister to judge us by those results. If he and his colleagues judge us by those results, there is only one conclusion to come to, and that is that we were justified in our policy by those results, and that is the policy which should be carried on by the present Government. In the year 1950, exports amounted to 47 per cent. more than the 1947 exports. The proportion of our imports paid for by earnings out of exports of goods and services increased from 58 per cent. in 1938 to 65 per cent. in 1950. Our industrial production was 65 per cent. greater than pre-war. We built 20,000 houses while 1,000 people every month got new jobs in industrial employment for every month of the inter-Party Government with lower rates of tax and higher yields of revenue which flowed to the benefit of the Exchequer. In addition, the volume of domestic capital formed in 1950 was, as I have already indicated by the figures I gave earlier, 60 per cent. greater than that formed in 1938. From such capital will flow either increased revenue for those who own the capital or the rewards, immaterial though they may be, which hospitals and houses will give to the people.

There is no doubt that that capital development programme of ours ran into heavy weather last year. We were not responsible for the world prices or for the Korean war, or for the dislocation of the economic machinery caused by the sudden change-over from industrial production to wartime, or almost wartime, measures masquerading under the title of defensive measures. That storm was caused by a wind blowing from outside our shores. I believe that the causes of that trouble are temporary ones, and that there is no necessity for the lugubrious utterances of present Ministers or for the gloomy picture presented to the people in the White Paper. If we had not sustained that deficit in our balance of payments about which such clamant complaint is now made by Ministers of the present Government, would not the loss to our economy by the savage rise in import prices, through devaluation, have been all the greater? If inflation exists at the present time in this country it is not inflation of the ordinary kind. It is an inflation of our economy that has been imported from abroad. It is a cost inflation, largely, and it is only to a very insignificant extent a profit or monetary inflation.

I drew attention earlier this afternoon to the millions of money that had been invested in this country by outsiders. Is not that one of the best tributes to our economy that we could get? Over £40,000,000 came into this country in three years. As I have already said, we do not hear any gloomy utterances from either the Central Bank Report or the Minister's own document about the inflationary pressure of the foreigners' money upon our economy. It is only when we are asked to spend our own people's savings and our own money that we hear the gloomy utterances that the country is spending too much on central or local services. When we do that, the Minister for Finance, as he did last July, goes around and says "that is inflationary" and "you are living beyond your means".

What has happened about the sterling that we did not withdraw? Has not that depreciated to a very considerable extent—that sterling which we did not withdraw and which we might have withdrawn for the purpose of developing our own country, our industry and agriculture? That has depreciated by 44 per cent. since 1949. It is this, and not internal difficulties, that has been the main source of the weakening of our position in so far as our external assets are concerned.

I have never agreed, and I doubt if the present Tánaiste would, with the policy of over-liquidity practised by the Central Bank or by the commercial banks. We do not think that the level of 1939 as regards our sterling resources or sterling assets is in any way sacrosanct. I think that the present Government, or any Government which may succeed them, should take the most energetic steps to avoid further depreciation in our external assets, and if the Minister wants any statutory authority for that, and makes proper proposals in that regard, he will get co-operation from this side of the House.

There have been many queer proposals put forward by so-called financiers from time to time. The attacks made on the commercial banks, and the policy of the present Government and its tactics in connection with the White Paper, gives strength to those people who wish to press forward some outlandish financial proposals. The policy of the commercial banks in strangling trade and in restricting credit gives colour to the suggestion that they do not recognise the fact that they are not merely profit-making concerns, but that they owe a duty to the public and to the people of Ireland. They lay themselves open to attack by the policy which they are adopting at the present time.

We have faith and confidence in the future, and in the people of this country.

We took every possible advantage of every moment of the uneasy peace that existed in the three years during which we held office in order to build up the financial, industrial and agricultural economy of this country. We still believe that policy to be the best one for our people. We see no reason for the gloom. Rather, do we see reason for action and for foresight. Courage and foresight can exist side by side even in matters of financial or economic policy. This country is suffering not from over-investment, or over-expenditure, but from under-investment in profitable capital projects and from under-expenditure on increasing the fertility of the land of Ireland.

I do not think that the Tánaiste agrees that the only method, as is suggested in the White Paper, of dealing with the gap in the balance of trade is by restricting imports. That will further exacerbate the position here. The best method by which we can deal with that situation and by which we can forestall and avert another crisis, financial or otherwise, is by getting our people to save more and to increase the agricultural and industrial development of the country.

The Tánaiste, in the course of one of his speeches during the summer, said that it was hardly possible for us to achieve very much in the way of industrial exports because we were a high-cost country, from the point of view of industry. The policy of the present Government, in so far as I can see it with regard to agriculture, is to make this country a high-cost agricultural country. We have got to decrease costs and to increase exports, both industrial and agricultural.

We have got to increase agricultural exports and this is the best and the quickest method of solving the deficit in our balance of payments. We have not satisfactory results in the matter of agricultural production although, in the period during which the inter-Party Government held office, agricultural export went up 30 per cent. over what it was in the previous Government's régime. We are not satisfied that the best has been got out of the land of Ireland. We are not satisfied that we cannot increase production more and more. We have unlimited markets at the present moment for our agricultural produce if only we had such produce. Such is the way to prosperity for this country and such is the way to close the gap in our balance of payments. We will not close it as a result of the gloomy utterances made by the Central Bank or by moans and wails. However, the gap can be closed in a way that will bring greater benefit to the people of this country and in a manner that will bring about conditions of full employment. It can be closed only by savings, by hard work and, in addition, by increasing agricultural production. That can only be done by means of the policy that was adopted and put into operation, with such successful results, by the inter-Party Government—by the policy of the double Budget and by the policy of borrowing for industrial and agricultural capital purposes, which will increase production, increase employment and increase the national income of this country. Such is the policy that we recommend to the Government to-day, and such is the policy that will give confidence to the people of this country to face the future.

Mr. MacBride

I move amendment No. 12:—

To delete all words after "That" and substitute the following:—

"Dáil Éireann declines to give a Second Reading to the Bill until such time as:—

(1) The Government have taken steps to instruct the Central Bank and to advise all the commercial banks carrying on business in the State that notwithstanding ministerial pronouncements or private directives or advice issued to them through the Department of Finance or the Central Bank, the curtailment of credit by the banking system is disrupting business, causing unemployment and is contrary to the national interest and to the Government policy;

(ii) the Government inform the Governor and Directors of the Central Bank that in so far as their report dated the 25th September, 1951, directs or urges all or any of the following steps:—

(a) the banks to restrict credit, or

(b) a reduction in investments in Ireland, or

(c) a reduction in capital development projects and public works approved by Dáil Éireann, or

(d) the accumulation of sterling assets, or

(e) a reduction in real wages and earnings, or

(f) the abolition of subsidies of essential foods and fertilisers, or

(g) the imposition of additional taxation, or

(h) measures to offset what it terms ‘the unusually favourable state of employment', or

(i) the ‘sterilisation' or the investment of E.C.A. Grant or Loan Counterpart Funds in Britain or elsewhere, or

(j) measures to prevent or retard the development of our land and industrial resources, or

(k) measures to prevent or retard the provision of houses and hospitals for the Irish people, or

(l) measures that will produce unemployment, promote emigration or reduce the economic conditions of the Irish people,

the said report is contrary to the national interest."

I put down this amendment largely because the Government had refused to make time available for the discussion of the Central Bank Report. I must say that I find it difficult to reconcile the startling statement we heard to-day from the spokesman of the Government, the Tánaiste—when he repudiated the Central Bank and all its works and pomps, and quite rightly— with the refusal of the Government to give this House an opportunity of discussing the Central Bank Report. Indeed I find it difficult to reconcile that statement with the speeches made by the Tánaiste himself in the course of recent weeks, with the speeches made by the Minister for Finance and with the White Paper published by the Minister for Finance. In fact, it is somewhat difficult to reconcile the attitude of the Tánaiste in this House this evening with regard to the Central Bank, and its Governor and Directors, with the statements appearing in to-day's Irish Press alleged to have been made by the Minister for Finance when speaking at the Fianna Fáil Ard-Fheis in the Mansion House yesterday. I quote:—

"They had the problem of budgeting to maintain services and defend our shores. Their predecessors deliberately budgeted for a deficit this year and how that was to be overcome, he could not now say. There was the problem of the balance of payments and the currency problem..."

I would ask the House to listen to the next sentence carefully:—

"It was putting the Government to the pin of its collar to preserve the value of the Irish £ on a parity with the British £."

For utter nonsense, it is difficult to beat that statement. It is sheer, complete nonsense, devoid of any foundation in fact. However, I can well see that a statement of that kind might be accepted by people who did not know any better and that it would undoubtedly, cause panic. I hope that the Tánaiste, when he replies, will throw over that nonsensical statement just as he threw over to-day the nonsensical statements of the Central Bank Report.

Before proceeding to deal in greater detail with the Central Bank Report and with the various statements that have been made by members of the Government recently, I would like to correct one or two statements that the Tánaiste made in opening this debate. In the first place, he said that if my amendment, or if either amendment, were accepted it would deprive the Government of the power to control prices. The amendment which I have set down would in no way deprive the Government of the right to make orders or to control prices. I merely asked that the House should postpone the Second Reading of this Bill until the Government instructed the Central Bank and advised the commercial banks that, notwithstanding the various pronouncements that have been made, the curtailment of credit by the banking system is dislocating business, is causing unemployment and is contrary to Government policy.

The Tánaiste could make that statement in this House to-night if he wished. If he makes that statement and if he indicates that he repudiates the various recommendations of the Central Bank, one by one, I am quite prepared to withdraw my amendment and he can have the Second Reading of his Bill to-night as far as I am concerned.

The next statement I would like to correct is one which the Tánaiste made to the effect that the Central Bank was bound by law to publish its views and observations. That is not in accordance with the facts and, indeed, it is one of the matters of which I complain in regard to the Central Bank. This report, which was used originally as a spearhead by the Tánaiste and by the Minister for Finance in order to create this panic in the country, is presented to this House by virtue of Section 36 (1) of the Currency Act, 1927. It is by the authority of that section that it is presented to this House. Section 36 (1) of the Currency Act, 1927, provides:

The Commission shall, within six months after the expiration of every year, prepare and send to the Minister a report of its proceedings during such year and the Minister shall present every such report to each House of the Oireachtas immediately after receiving the same.

All that the Central Bank is required to do under that section is to produce a report of its proceedings, namely, a report of how often it met, who attended its meetings, what its financial position was. There is nothing in that section requiring the Governor or any of the directors of the Central Bank to put forward their views. Far from this report being a report of its proceedings, it does not even give the names of the directors; it does not even state whether they ever met during the year or, if they met, which of them attended, what they did at their meetings, or what were their decisions. It is silent on that. It is silent on a great many other things of a different nature as well.

The Tánaiste has indicated this evening—I was glad he did so—that he had given no instructions to the banks to restrict credit and that the Government had not done so. I naturally accept the statement of the Tánaiste as far as he is concerned and as far as the Government is concerned. I take it he would not have made a statement of that kind without getting the authority of the Government to make it. I am not satisfied, however, that officials of the Department of Finance did not convey such instructions to the banks. I am quite satisfied that the Central Bank, in fact, did convey such directions to the banks and they said so in their report. They give their advice in the report on page 16, paragraph 20: "Rigorous restriction of bank credit for nonessential and less urgent purposes is now imperative." That is a clear direction to the banks to restrict credit.

Mr. Lemass

It is no different from what Deputy McGilligan said in his Budget with which the Deputy agreed.

Mr. MacBride

I am not entering into what Deputy McGilligan said in his Budget. He did not create a panic but the Central Bank and the Tánaiste have succeeded in creating a panic and dislocating trade, thus causing unemployment throughout the country. That can be rectified now if the Minister will ask the Central Bank to issue a statement to the banks that it is not in accordance with Government policy to restrict credit. Unless he is prepared to do that, the assurances which he gave the House to-day do not count for very much. The position can be rectified by a clear direction from the Government to the Central Bank that it is contrary to Government policy to restrict credit.

There is another matter upon which I would like to join issue with the Tánaiste in regard to the statement he made to-day. It is a question of fact. The Tánaiste talked about sterling assets and indicated that the Government had no means of compelling firms or persons to repatriate their assets. They could only do so by creating favourable conditions here. He also said that the Central Bank had some sterling assets but they had to retain them. The Central Bank have sterling assets to the extent of £80,600,000, but quite apart from the assets held by the Central Bank the Government has under its control somewhere in the neighbourhood of between £70,000,000 and £100,000,000 invested in England, mostly in British Government securities. That is money directly under the control of the Government. It cannot be argued that all that money, the £80,600,000 in the Central Bank and the £70,000,000 to £100,000,000 of Government money, invested in England must be maintained in a liquid condition. There is no reason why at least a portion of that money should not be invested here.

Mr. Lemass

None whatever.

Mr. MacBride

Why could it not be invested in the Electricity Supply Board? Why should not this capital development proposal which the Tánaiste mentioned to-day, amounting to £40,000,000 for the construction of new power stations in the country over the next ten years, be financed from these moneys?

Mr. Lemass

No reason whatever, but you cannot use it for that purpose and Budget deficits as well.

Mr. MacBride

The Tánaiste is now trying to ride away from that. There is no question of using it for Budget deficits.

Mr. Lemass

That is what it has been used for.

Mr. MacBride

Of course if the Tánaiste intends to limit his capital development to capital development which he can finance out of additional taxation then it is good-bye to national development.

Mr. Lemass

Nobody is suggesting it.

Mr. MacBride

It will inevitably lead, as it is already doing now, to increased unemployment and emigration. I move the adjournment of the debate.

Debate adjourned.