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

Mr. Norton

When the debate was adjourned last Thursday, I was referring to the steps which this country must take if it is to strengthen its economic fabric in a manner that will ensure a good standard of life to our people and, at the same time, enable the nation to withstand the shocks from which a small country like this can never be insulated, having regard to its dependence on supplies from overseas.

I indicated last week that, so far as the Labour Party was concerned, we were prepared to support a policy of the fullest possible expansion of our industrial resources, that we would support a policy which aimed at the production here of every class of commodity which could be produced in reason and that in pursuance of that policy we would use tariffs, quotas and even exclusion Orders to give native industries an opportunity of growing and developing to a condition in which they could withstand outside competition. But I suggested that where the nation comes to the assistance of an industry, or where it comes to the assistance of a group of industrialists and imposes tariffs, quotas or other restrictions whereby the community stand between the industry and competition, fierce or unfair, from outside sources, then the community are entitled to ensure that these tariffs, quotas and restrictions are administered in such a way that the industry avails of them for the purpose of producing efficiently the commodities which the industry was established to manufacture, that these goods should be of high-class quality and that the industry should aim at supplying not 10, 20, 30 or 50 per cent. of the demand of the home market, but should have placed on it an obligation to produce the entire quantity of goods required by the home market and, if possible, find an export market for its commodities as well.

The weakness in our tariff policy over the past 30 years has been that we were content to put on a tariff or quota and see what happened. Those who took the trouble to see what happened will have found, in many cases, that the industry which was helped by a tariff or a quota was content to supply a fraction of the goods demanded by the home market and never took the necessary steps to energise itself sufficiently to supply the entire demands of the Irish market. Many people were content to say: "We are doing nicely, we are producing £20,000 or £50,000 worth of goods;" when the home market was capable of absorbing goods to the extent of £100,000 or £200,000.

Mr. Hickey

That has got us where we are to-day.

Mr. Norton

That is what we have to ensure, that the industry is not merely protected by tariffs and quotas but that the manufacturer must know that it is fundamental Government policy—and I would like to see agreement on government policy in this respect—that he cannot fall back with a feeling of inertia, thinking: "I am doing all right;" but that instead the industry must produce as much as it is possible to produce and the ceiling which they must aim at is to supply the entire home market.

We have not in the past imposed that obligation on the industries which were helped by tariffs. If we are to make any real progress in the way of curtailing imports of commodities which we can produce here, we must impose on the industrialist, protected as he is by the community against unfair competition from the outside, an obligation to produce sufficient goods for the entire home market. We must do something more than that. Where we are importing a substantial quantity of goods of a particular kind and where the home market for these commodities is such as to enable a native industry to manufacture the goods, then we must—through the aegis of the State, if necessary—establish factories here to manufacture these goods, not merely to curtail imports but primarily—and this is the vital approach to the problem—to provide employment for our people, wealth for the nation and to bring under control in the foreseeable future, with an eye to its ultimate eradication, the evil of emigration which is taking such a heavy toll of our people to-day.

Any policy which aims at strengthening the economic fabric of the nation by producing the maximum quantity of goods at home here, goods produced efficiently in decent factories where decent wages are paid and decent conditions are observed, will have the wholehearted support of this Party. But it is essential if we are to ensure the success of that policy that there must be constant supervision by the State of the manner in which the tariff is used by the industry. The tariff must not be regarded by industrialists as an armchair in which they can rest and count their profits. It must not be a buttress for inertia or laziness. It must be regarded as a springboard, as something available only for a limited period of time to enable the industry to get on its feet, to perfect its method of manufacture, to train its workers and ultimately to be able to supply the entire home market against competition from any outside concern.

If, well and good, any unfair competition should develop from outside, either through the utilisation of cheap labour or by a manipulation of currency or exchange regulations, such as might damage or undermine entirely the fabric of an Irish industry, then at all times the State must step in and protect the Irish industry against competition of that character.

If we are going to build an economy here that stands a reasonable prospect of insulating itself against the worst shocks produced by international crises, then we can do it only in three ways—by the fullest exploitation of our natural resources and our industrial possibilities, by the fullest exploitation of our agricultural potential and by the utilisation to the full of the credit resources which this country possesses in the form of sleeping money, so as to ensure the inauguration and the completion of schemes of national development which will enrich the national estate, provide employment and give our country the characteristics of a first-class nation.

I have dealt so far with the industrial approach. I now wish to refer to the potentialities which lie within the land, and indeed the climate also. At present approximately 50 per cent. of the people gainfully employed in this country get a livelihood in agriculture. Agriculture is our main source of employment and, in fact, our main and probably most enduring source of wealth production. This country is not a dust bowl. This country possesses some of the finest land in Europe to-day and it is simply criminal if with these possibilities of exploitation of the land before us we neglect the opportunity of exploiting that land for the benefit of the nation and of those who own the land. Agriculture to-day, while it is substantially better than it has ever been before—there is not an intelligent farmer who does not know that fact—is still capable of considerable expansion and of earning a better livelihood for the nation as a whole and for those engaged in the industry.

I think that nobody will attempt to deny that there is scope for improvement and scope for State assistance in every branch of agriculture. One thing, I think, upon which we can get agreement—and the old controversies can be relegated to the limbo of the past—is that a policy of encouraging tillage is not a policy which aims at the annihilation of the live-stock industry and similarly that it is possible for the nation to have a vigorous policy of live-stock production side by side with an extensive area of tillage, that, in other words, tillage is not the enemy of live-stock production and live-stock production is not the enemy of tillage.

In those countries where there is a balanced type of agricultural economy, we have seen that live-stock production has been mixed with tillage with the best possible results from the point of view of agricultural income and with the steadiest kind of employment from the standpoint of the agricultural worker and generally with a balanced policy which gives the nation a more stable agricultural structure. We must aim to-day at putting agriculture in an even better position than it is in so as to reap the rewards of a fully-developed agricultural economy. We must do that firstly to produce more wealth, to provide more employment and above all to provide more regular employment for the agricultural worker class, a class which, unfortunately, in the past and even now has to withstand the misery of long periods of idleness and interrupted employment.

If we are ever to put agriculture in the position which it can legitimately attain we can do that only by remedying the basic difficulty in agriculture to-day which is the fact that it is grossly undercapitalised. The land of this country is probably the most undercapitalised land of any country in Europe. When we compare with the capital employed here the capital employed in the land of those countries which compete with us in the British market we find that our agricultural industry starts in the production race severely handicapped because it has not invested in it the financial resources which have been poured into the land of other countries. What the Irish farmer must recognise—and he should recognise it to-day more than ever—is that the best place for his money is not in the bank but in his own land because he can get from his own land, by the investment there of his money, dividends which he can never get under a banking system. He has got, therefore, to be taught that he should put as much of his money as possible in his land because it will pay the best dividends in the long run. Where farmers are handicapped by lack of money the State should help the farmer, help him because he has it within his power to earn a substantial income for the whole nation and to strengthen the entire fabric of the nation.

There are many ways in which the farmer can be helped, but there are three ways in which he must be helped at the outset. If we are ever to give agriculture the place it should have in our national affairs and money earning capacity the farmer must be encouraged to utilise the land for the purpose for which land is intended, namely, tillage and the production of food for our people. That is the natural purpose of land and land should be utilised to the limit for that purpose. Not merely must we improve the areas under tillage but we must evolve a long-term tillage policy which will enable the farmer to foresee the future and to plan with some certainty about the remuneration he will get for the crops he produces.

We must do more than that. We must improve the grasslands of this country because the grasslands represent the fodder consumed by our live stock and the better our grasslands the better our live stock. It is impossible to imagine that you can develop live stock which will command the highest prices if that stock is fed on impoverished lands. An essential part of our programme for the expansion of agriculture must be to effect a substantial improvement in our grasslands. Deputy Dillon when he was Minister for Agriculture gave very considerable attention to that problem and commendable progress was made from the standpoint both of improving our grasslands and improving our land generally so that it could produce good pasture.

Over and above the increase in tillage and the improvement of our grasslands we must take steps and take them hurriedly to improve our live stock. The biggest blister on this country to-day in an agricultural sense and a financial sense is the 300-gallon hungry cow.

Mr. Dillon

Hear, hear!

Mr. Norton

Until we get rid of the hungry 300-gallon cow we will never make any real progress in agriculture or in our dairying industry. We have now, thanks to the 300-gallon cow, reached the situation in which this generation can boast that you could not sell Irish butter on any market in Europe. So long as we are content to see the 300-gallon cow roam the fields and produce milk at the cost of feeding this 300-gallon producer then we will produce milk and butter at a price which nobody in Europe will pay. You cannot sell Irish butter on any market in Europe because nobody will pay the price which the butter costs to produce from the 300-gallon cow. Much affection as we may have for live stock, we ought to recognise that the 300-gallon cow is uneconomic from the point of view of the farmer and from the point of view of the nation and that an effort should be made, with State aid, to eliminate the low-yielding cow so as to produce live stock which will again bring our dairying industry to the level it once occupied.

In the present and foreseeable world conditions, agriculture has a bright prospect before it. We are at the door of a country with a population of 50,000,000, while we have in this country a population in all of 4,500,000. We are at the door of a country which is a non-food-producing country, relatively. We have got a market there for the needs of 50,000,000 and we have overseas markets in Europe as well. If one studies the reports of the various United Nations organisations from the standpoint of the food potential and the requirements of Europe and the world, one sees clearly that, no matter in what other respect there may be depression or recession, there will be no depression from the point of view of a sustained demand for agricultural products and dairying products generally.

There is a bright future before the farming community in this country. We are economic imbeciles if we do not take advantage of these possibilities. We can take advantage of them only in one way—by recognising that the methods of yesterday and even of to-day will not be sufficient to energise the industry, to capture the markets which are there waiting for us if we will only reorganise and revitalise many limping sections of our agricultural and dairying industry. Efforts were made by the last Government with commendable success in that field within the past three years. It is work which requires patience, and even impatience with unsatisfactory methods of agricultural husbandry. But it is work which, properly tackled and brought to fruition, will yield substantial dividends to the nation in the long run.

As far as this Party is concerned, we are prepared to back any forward policy in industry and in agriculture which will develop and strengthen the economic fabric of the nation, which will energise our agricultural industry, which will produce more wealth on the land and from the land, which will market the goods in the most efficient possible way and which will add to the national wealth by adding to the volume of production and by accelerating our standards of productivity. In the field of production and in the field of productivity in agriculture, there is an enormous lag to be made up. While the volume of our agricultural produce and our agricultural exports has increased, unfortunately we are still lagging behind in the volume of production which the land is capable of giving. We must insist that the trends and the methods which produced that condition of affairs shall be altered in order to give us a greater volume of production, a greater volume of agricultural wealth, and enable us to utilise the unique trading position which we have in order to capture external markets for our agricultural products and to buy with our surplus agricultural products the commodities which it is not possible for us to produce here.

In the course of this debate, the Central Bank has figured largely. I have already made some references to the Report of the Central Bank, but there are aspects of the Central Bank's activities or inactivity on which attention should be focussed. It has been revealed in the report of the bank that the income which is earned on £80,000,000 invested in Britain is only £400,000, approximately. In other words, our £80,000,000 invested in the British banking system yielded us an interest of ½ of 1 per cent. £80,000,000 of our money was handed over to Britain at ½ per cent. interest; that is what we earned on the £80,000,000 referred to in the Central Bank's Report. While we are satisfied to lend our money at ½ per cent. to British banking institutions, we charge our own people 4 and 5 per cent. if they seek to borrow money even for worth-while purposes. Does anybody know anything dafter than that—that you lend your own money to Britain at ½ of 1 per cent. interest and you charge your own people 4 or 5 per cent. for the money which they need to engage in worth-while national activities?

The Minister for Finance, who personally knows very little about finance or the Central Bank or any of these complicated activities, attempted to say that this was due to the necessity for maintaining a high degree of liquidity on the part of the Central Bank. But, if you look at the Central Bank's holdings now and then look at the Central Bank's holdings five or ten years ago, you will see that their investments of this high liquidity character have jumped enormously in recent years, jumped from, I think, about 5 per cent. to 20 per cent. of the money deposited with the bank. But if 5 per cent. at one time or 7½ per cent. at another time or 4 per cent. at another time was a sufficient holding, how does 20 per cent. become so essential now? Speaking for this Party in the matter, I believe that we have got to face up to the problem which reveals itself in lending £80,000,000 to British banks at ½ per cent. interest and charging our own people 4 to 5 per cent.

Mr. Dillon

It is to the British Government.

Mr. Norton

It is a banking transaction and the British Government gets its hands on it ultimately. However, either the banks or the British Government give us ½ per cent. on our money invested in Britain and we charge our own people 4 or 5 per cent. Why should we regard the British Government as a better target for the repayment of our money than our own people? A statement was made in the British House of Commons the other day by no less a person than the Chancellor of the Exchequer that the British position had now reached such a stage that their entire foreign investments would be exhausted at the present rate of imports and exports. He said that the gap in the balance of payments was approximately £1,000,000,000; that there was £1,000,000,000 in the kitty, which would stop the haemorrage for about 12 months, but if they went on spending as they were spending and importing and exporting as they were, at the end of 12 months the kitty would be empty and there would be nothing to stop the hæmorrhages which might be expected in the future.

To remedy that situation the British Government has decided to cut imports by £350,000,000 which at best can postpone the evil day for a further year and four months unless in the meantime Britain can persuade the United States of America to agree on the convertibility of sterling or unless the United States of America will again step in with Marshall Aid, mutual aid or some other financial injection of that kind.

Why do we imagine in these circumstances that it is better national policy for us to lend the British Government money at ½ per cent. interest, while, if a man wants to build a house in Dublin, in Longford or in any other part of the country we insist that he pay 4 per cent. or 5 per cent. for the money he borrows for that purpose? The present position in respect of housing is typical of what is happening in many other directions, but housing will illustrate the position for the purpose of my argument now.

At present no local authority can borrow money under 4 per cent. for housing. Some of them find it hard to get money at 4 per cent. While they cannot get it at less than 4 per cent. the Central Bank, the organisation created by us, is lending money at ½ per cent. to the British Government. I want to see that policy corrected. I want to see that policy reversed. I want to see us make up our minds definitely and deliberately, notwithstanding old tenets and old prejudices, that we should utilise our money for the purpose of producing in Ireland the services and the commodities we need for our own people.

Let us take the case of a house. At present, if a local authority borrows £1,000 to build a house, it pays approximately 5 per cent. or 4½ per cent. for that money and that local authority will ultimately repay £2,000 in respect of the £1,000 which it borrowed originally. The rent which the local authority has to charge has to make provision for the fact that interest has to be paid on the entire sum of money, and that sum of money must be raised and repaid in full with interest.

What is the position? If borrowing £1,000 necessitates repaying £2,000, then it is quite clear that half of the rent at present being charged for labourers' cottages and for houses for our workers in the city is a charge to repay the interest on the borrowed money. To-day, local authorities throughout the country are charging rents which could be halved if money were made available free of interest for building houses. The fact that rents to-day are double what they ought to be is due to the situation in which we find ourselves wherein those who have money to lend get 50 per cent. of the rent as repayment of that money which was borrowed and upon which the borrower has to pay a high rate of interest: in other words, the man who gives the land, the builder who provides the material, the carpenter, the plasterer, the tiler, the slater, the plumber and the labourer, all these people together who put up the house get 50 per cent. of the sum which is ultimately paid for that house. They get £1,000 of that £2,000 house and the institution which lends the money gets the other £1,000.

It is a good scheme from the point of view of the moneylender. It is a bad scheme from the point of view of the tenant and it is a bad scheme from the point of view of encouraging the erection of houses and settling in those houses tenants at a rent within their capacity to pay. The biggest blister on the tenant of a new house to-day is the rent which he or she has to pay. It may be that differential renting will make some contribution to the difficulty but, even it it does, it creates other problems as well.

A far better approach—I admit it is a radical approach—to the problem of housing finance would be for the State to direct the Central Bank to issue money at no rate of interest, or a very low rate of interest, for the purpose of building houses and let money so issued by the Central Bank be repaid in the form of the rents charged for these houses. I want to know why it is impossible in present circumstances to adopt that policy of lending money at ½ per cent. for the building of houses here instead of charging our local authorities 4 per cent. and sometimes even 5 per cent. by the time the money is procured, while we are lending money to Britain at ½ per cent.?

Britain is investing her money in warships, in planes, in submarines and in every other possible instrument of destruction. That is the only guarantee we have for our money, more planes, more submarines and other instruments of death and destruction. Would it not be far better to make that money available for investment here in bricks and mortar in an Irish town or an Irish village? Would there not be much more security in investing that money in houses in Ireland, in afforestation in Ireland or in electrical development in Ireland than there is in lending it to a Government which, in its present financial position, is not nearly as good a target for a loan as would the investment in house-building or the creation of valuable capital assets in our own country?

I think the time is long overdue when the whole approach in relation to the lending of money for essential schemes of national development should be reexamined. I do not believe that this mechanism requires for its efficient operation the continued payment of 5 per cent. interest to some body which has money to lend and which does nothing else. I do not believe it is necessary to continue the 5 per cent. racket in order decently to house our people. The question of housing our people decently at rents within their competence to pay should not be imperilled merely because up to the present we have been following a pattern of life in which those who have money to lend get 50 per cent. of the rent and that charge is as big a charge on the house of an Irish working-man and his family as all the other charges in respect of land, labour and material.

Whether this Government will face up to examining that problem and breaking with that tradition, which I have always felt was followed too long and in too docile a manner, remains to be seen. Any bank which will make money available at a low rate of interest, or no rate of interest, to this nation, money which is at present being lent to Britain at ½ per cent. interest, will have the support of this Party, so long as these moneys are utilised for schemes of national development, including the provision of hospitals, schools and houses for our people and the development of our electricity and afforestation potential.

In the speeches which have been made by the Minister for Finance and by the Minister for Industry and Commerce, both here and outside the House, there has been a reference to the capital Budget which was decided upon by the last Government, and suggestions have been made that the capital Budget was, in some way, a device to get money easily and quickly; that there was something shady about the whole transaction of introducing a capital Budget. In my view, the introduction of a capital Budget was a wise and a very carefully planned decision of the last Government, one which I then supported enthusiastically and still support enthusiastically, because I believe it is one line of policy in the sphere of national development which holds out the promise that we may make up the serious lag in national development which exists in this country to-day.

The obvious advantages of a capital Budget scheme were that it permitted the development and employment of schemes of development which were not possible under the former method of financing capital expenditure by budgetary allocations. We found money for large-scale schemes of development under the capital Budget scheme, and we provided for the payment of interest and the creation of a sinking fund in order to amortise the money so borrowed for those schemes of capital development. Judged even by the most orthodox capitalist financial standards, or by the criteria employed by the most Victorian of economists, the provision made for exterminating the loans raised by us under the scheme of capital Budget will fulfil the most rigid tests imposed by even the most conservative of financiers or economists.

Mr. Dillon

Hear, hear!

Mr. Norton

If I had any one complaint about it, it is that it was too prudent, far too prudent, and that we were making provision as if we were living in the early days of the last century; but, even the provision which was made, cannot, in any way, be criticised as being improvident, even from the standpoint of the most respectable of our economists or financiers to-day. As a matter of fact, it is worthy of note that no economist of standing has attempted to question either the introduction of the capital Budget or the financial provision made by the last Government to finance borrowing for that type of Budget on a most orthodox line. Why should they and why could they, one might well ask, because a capital Budget is already in operation in many progressive countries in the world. We were one of the few countries which had clung to the old method of financing our schemes of capital development. Fortunately, the last Government ended all that, and I do not think that, even this Government, would dare go back to the old method of financing capital development because the shock to our whole employment situation, and the economic gloom which would be caused in the homes of the people, as distinct from the gloom in the Central Bank, would be such that no Government would stand very long the test of the public criticism which would be generated by its actions.

I think it is a reasonable thing, even in your own domestic life, or in business or in commerce, to pay every week the expenses which are common to that week or to a particular year; but I think it is a perfectly legitimate thing, where you have non-recurrent expenditure, where you are doing something in the way of buying a commodity which has a value for ten or 20 years, to pay for that commodity in instalments. For instance, take the ordinary household. There is nothing wrong with a man who decides to pay his grocer every week because he eats what he gets from the grocer every week, or to pay the milkman or the butcher every week; but if he decides to buy a piano, which is probably the only one he will buy in his lifetime, there is no reason why he should pay for it in one week. It is perfectly legitimate for that man to decide that he will pay for it over two or three years, and nobody would question that method of running a household. That is precisely the kind of method which we employed in devising a capital Budget and planning it in such a way as to make moneys available for the undertaking of large-scale schemes of public works throughout the country.

In my view, the money borrowed for capital development has been fully justified and, both by practice and precept, it has been commended by enlightened economists in this and in other countries. If we are ever going to get rid of the under-development which is so characteristic of this State, then we can only do so by continuing to supply our national requirements through the medium of a capital Budget which will provide for us the necessary moneys to undertake these schemes of development and which are not possible if we try merely to get an annual allocation from the Budget, or if we try to finance them merely by taxation which, in our circumstances, may never yield anything like a fraction of the money which we need for a vigorous programme of capital development.

What we have to recognise is that we are a generation behind Europe, from the standpoint of our lack of industrial and national development, and, if we are ever going to make up that lag, then we can only do it by a vigorous expansionist policy in industry and agriculture, and in the field of creating valuable capital assets for the nation. If other nations can borrow money for guns, planes and battleships and to meet the gigantic cost of maintaining these instruments of destruction, once they have been bought or built, surely it is much more economically sound for us to borrow money not for battleships, planes or guns, but for such things as electrical development, turf development, land reclamation and drainage, housing, hospitals, the provision of schools, afforestation, and for many other capital works of that kind which create permanent assets, and which, at the same time, promise a return in money, in wealth, and in human happiness and social contentment. I see nothing wrong with a capital Budget scheme raising money for these things, but rather I see a thousand reasons for commending a Budget of that kind, particularly when I see the way in which money is being raised to-day for less enduring purposes in other countries in Europe.

When the Minister for Industry and Commerce was speaking last week, I understood him to plank for a policy of undertaking our capital development by means of taxation.

Mr. Dillon

He changed the report.

Mr. Davin

But he said it.

Mr. Norton

Deputy Mulcahy made a note of what the Minister said at that time. I made a similar note except that I made it in long-hand and Deputy Mulcahy made it in shorthand. It is rather a strange thing that both our notes coincided.

General Mulcahy

And the official reporter's.

Mr. Norton

The Minister has undergone a few transformations in the past few weeks. His tongue cannot keep up with his mind.

Mr. Dillon

But his pen can.

Mr. Norton

All these statements which are out of tune with his thoughts must apparently be corrected afterwards in the Official Report, but he ought to be able to say at the beginning of his speech: "This is not necessarily what I finally believe. What I finally believe," the Minister might say,"will appear in the Official Report after I have sub-edited the report."

General Mulcahy

We do not know yet what the Minister believes.

Mr. Dillon

We know what the boys will stand for.

Mr. Norton

My clear recollection is that the Minister stated that, in his view, we ought to finance our capital development schemes by taxation. We were told by the Minister that at one time the unlamented Adolf Hitler used to offer the German people a choice between butter and guns and that they had to do without the butter in order to get the guns. The Minister for Industry and Commerce said here: "It is not a choice of butter or guns but a choice between taxation and schemes of capital development." I think that is a complete misreading of the economic facts and the economic possibilities which are before our eyes to-day. I do not think it is necessary to impose taxes especially on the masses of the people in order to produce schemes of national development. Here in this country you may well impose taxes on luxuries, but I am not prepared to back a scheme taxing the very necessaries of life for our people in order to develop our national estate. I do not think it is necessary.

The Minister, when speaking on this subject the other day, said he planked for a policy of taxation as the only means by which we could embark upon a policy of capital development. I believe that is a wrong approach to the problem. By all means, let us tax luxuries, obvious luxuries. By all means, let us rake off whatever taxation can be got there, if it is necessary to raise taxes for the national well-being. But taxation on the clothes which the people wear, on the food which they consume, can be a savage form of taxation which would far outweigh any benefits which might accrue by financing the schemes of capital development with moneys raised in that manner.

I do not see why, in our circumstances, with £400,000,000 invested in Britain, with £80,000,000 lent by the Central Bank to Britain at ½ per cent. interest, we should impose crushing burdens on the masses of our own people to raise taxes to finance schemes of capital development, when all the money we want is under our eyes for the asking and for the taking.

I would like to hear from the Fianna Fáil Benches what is wrong with using that money for a scheme of capital development so long as, even from their point of view or the financier's point of view, we make adequate provision for repaying borrowed capital. I think it is the right line for us to pursue in the matter of capital development. We should use our own assets as we need them. We should also appeal to the people to invest their savings so that the State can utilise those savings for the purposes of national well-being. We can easily repay the money so borrowed by annual budgetary allocations, supplemented, if needs be or the occasion arises, by such income as is derived from the capital assets created under a capital Budget scheme.

Let this be said, that when the economic minds of E.C.A. applied themselves to an examination of how we used borrowed moneys, they admitted that we had used borrowed moneys so efficiently that we had been able to effect considerable transformation in the Irish economy and that we had probably made better use of our Marshall Aid moneys than had many other countries in Europe to-day. Therefore, whether you want the viewpoint of the staid economist looking back to the last century or the viewpoint of the Marshall Aid economic adviser as to our work during the past three and a half years, you can get testimony there that the work was wisely conceived, that it was courageously planned and that it yielded results which begot the admiration of those in an independent position to judge for themselves the utilisation of the moneys and the skill and direction behind our capital Budget programme.

We want to end unemployment, develop our industries, expand our agriculture. We want to provide houses, schools and hospitals, to drain and reclaim land, to electrify rural areas, to develop our peat resources and our forests. There is only one way in which that can be done and that is by a vigorous policy of national expansion through the medium of the capital Budget. There is no other way in which it can be done and it is an illusion to think that any other way will yield the same results which would follow the adoption of our capital Budget plans.

So far as the Labour Party is concerned in this House, I want to put on record that we will support policies which are based upon an approach of the kind I have indicated in the field of industry, agriculture and the capital development programme. We will support any vigorous expansionist policy to develop our resources and to develop the potentialities of the nation, but we will oppose relentlessly any reactionary policy such at that indicated in the Central Bank's Report, in the White Paper and in the recent gloomy speeches which have been made by Ministers.

The economic philosophy of the report and of the White Paper and all the gloomy ministerial speeches are the economics of a demented recluse who just wants to live in squalor, misery and penury while his money is wrapped in the miserable rags that hang from his body. Any policy of curtailing consumption, or of curtailing national development will inevitably lower the standard of living of our people. It is because of that that we are ruthlessly opposed to any such policy, believing that national regeneration can better be secured by a vigorous policy of expansion in industry, in agriculture and in schemes of national development. One does not know what the target of this Government is, because we have had confused speeches by Ministers, alterations in the Official Reports, and we do not know exactly what road this Government is going to travel. We do not even yet know what is the Government's policy. We do not know whether the Independents who support the Government are aware of its policy. Probably the Government's final policy will not be determined until the Taoiseach, the Minister for Finance and, perhaps, Deputy Cowan and Deputy Flynn from Kerry have X-rayed the nation's economic disabilities and have pronounced upon the remedies to be applied. Whatever policy this Government intends to pursue, I want to say that it will beget the opposition of the Labour Party if it is a policy of cutting down the standard of living of our people, if it is based upon an appeal to our people to eat less, to wear less and to consume less and if it is based upon a return to the free trade ranching policy to which the Central Bank's Report would lead us.

So far as we are concerned, we are prepared to support any reasonable policy based upon expansion, upon the fullest development of the nation's resources, upon the idea that this country has potentialities capable of beneficial development by and on behalf of the people—a policy that acknowledges that we have an abundance of financial resources to finance all our national activities, and that it only requires big minds with courage and vision to harness our needs to our assets in order to give us a full-blooded policy of national development. Any policy which is calculated to take that road, the road to expansion, the road to development will be supported by the Labour Party, but any policy calculated to lower the standard of living of our people will be strenuously opposed by the Labour Party with all its resources.

Mr. Sweetman

Would the Minister give the break-up of these figures over the years?

Mr. MacEntee

I suggest I might be allowed to make my speech without interruption.

General Mulcahy

His arithmetic is a bit crooked.

Mr. MacEntee

Not as crooked as was your Budget.

General Mulcahy

Try and add it up again.

Mr. S. Collins

It should not be too difficult.

Mr. MacEntee

Against all these items, amounting as I have said to over £10,000,000, Deputy McGilligan, in the optimism of his imagination, or in a belief in his magical powers, provided, but only notionally, a sum of £1,500,000.

During the General Election Deputy Dr. Browne made a reference to the writing down of Estimates. I do not know precisely what Deputy Dr. Browne had in mind but I do say that, having regard to the form in which the Budget was presented to the House, the information which was given to it, or the information rather which was withheld from it, by the then Minister for Finance, some such discreditable device as Deputy Dr. Browne had in mind was resorted to. In fact, we might say that Deputy McGilligan's Budget was well and truly cooked. It is no wonder, having regard to the facts which I have stated, that Deputy Costello dissolved the Dáil rather than submit the Budget of his own Minister for Finance to detailed discussion and debate in this House. With this false Budget, this cooked Budget before it, Deputy Costello chose to go to the country.

I want to say that we have not changed the main structure of the Budget. We are allowing the policy of our predecessors, as it was expressed in that Budget, to work itself out to its unholy end. It is necessary for us to do this in order that the people may realise fully all that was involved in our predecessors' policy because we wish their judgment upon the financial methods of our predecessors to be final and decisive.

Mr. S. Collins

You would not like it now.

Mr. MacEntee

Certain other items, however, will be required to be provided for for which our opponents have no responsibility. For these we shall accept responsibility.

By the way, some person has called my attention to the fact that the items which I have given do not tot up to £10,387,000. I beg the pardon of the House and apologise to Deputy Mulcahy. I compliment him on the accuracy of his addition. There was one item which I omitted and perhaps I may be permitted to repair the omission now. The item which I omitted was this: the amount required for increases in the remuneration of the civil servants, the Garda, the Army and the teachers consequent upon the Civil Service arbitration award, which amounts to £3,683,000. Now I hope Deputy Mulcahy will be able to reconcile the figures.

General Mulcahy

At any rate, the arithmetic is improving.

Mr. MacEntee

As I was saying, there are some items for which the then Government and the present Opposition have no responsibility. There is, for instance, an item of £700,000 which is the additional amount which will be required for the provision of the increased old age pensions. The House will remember that when Deputy Norton as Minister for Social Welfare submitted social security proposals to this House and when it looked as if they were going to be rejected because of the fact that they had failed to make proper provision for certain sections in the population, he indicated that the Government was prepared to give a promise that these elements in the population would be provided for, but at the same time refused to honour the promise as promptly as could have been done. We, on the other hand, said that, as the plight of these people is urgent, it must be relieved and we proposed, as a first step in this direction, to increase the old age pensions. For that we shall have in due course to ask the House to vote a further sum of £700,000.

Then there will be an additional sum of £600,000 in respect of an increase in the amount required for the subsidisation of butter. There will also be an increase of £200,000 in respect of the amount required for the subsidisation of bread and flour. There will be a couple of small items like £4,300 for the Abbey Theatre and £4,140 for Oifig na Gaeltachta agus na gCeanntracha gCúng.

There will be in addition some other items. That precious child of the former Minister for External Affairs, the Irish News Agency, is turning out to be a very expensive baby indeed, and for it I think in due course we shall have to ask the Dáil to provide further money in addition to the £25,000 which has already been voted for that particular pet.

Let me say here why it has been necessary for us to make increased provision for the butter subsidy. The reason is that, in order to induce our farmers to remain in the dairying industry, in order to enable our people to secure supplies of butter from home sources, we have had to offer an increased price for milk to our farmers. The need for that arises, not merely because of the general policy of Fianna Fáil, which has always been to give the maximum encouragement possible to our farming industry. There is also another reason, a reason which is manifested in the White Paper dealing with the balance of payments, and that is, that we cannot afford to buy foreign butter. The same applies in the case of the additional amount required for the flour and bread subsidy. Having regard to the parlous rate at which the deficit on our visible balance of trade has increased, we must grow our own wheat and produce our own bread. In short, from now on, we cannot base our economy on imported foods, whether for man or beast. The White Paper shows that; and one of the reasons why the White Paper has been so virulently attacked in this House or outside this House by Deputy Dillon and those who are associated with him, is that the White Paper and the Report of the Central Bank between them sound the death knell of Dillonism in this country.

What are the grounds upon which this White Paper has been attacked? I think they could be enumerated under six heads: First, that the deterioration in our balance-of-payments position has been exaggerated in the White Paper; secondly, that in so far as there is a deficit in the balance of payments it is due to increased home investment and stockpiling; thirdly, that our gross sterling assets determine the degree of permissible external disinvestment and have not declined; fourthly, that there has been a gradual improvement in our external trade position in recent months; fifthly, that the present value of our gross external assets is underestimated and that emphasis on the lack of balance in our external trade is misleading, as quite a large part of our gross tourist income can be regarded as exports.

Deputy Costello has suggested that the size of the deficit has been exaggerated. He suggested that. He declared it with all the emphasis of a thundering fist. What basis did he give for it? What basis has he for challenging these figures? He admits, or did admit, that, so far as he can see, with the limited resources at his command—and I am not saying that as any reflection upon him except to the extent that it may reflect upon his modesty in drawing conclusions which he in fact is not able with the material at his disposal to formulate——

Mr. S. Collins

Modesty is not a disability that the Minister suffers from.

On the question of stockpiling, Deputy Costello referred, among other things, to the reserve stocks and supplies for hospitals and dispensaries which had been procured. There was a certain degree of hardihood in that remark, because Deputy Costello was not responsible, so far as I can gather from my papers, for any portion of the reserve stocks of medical and surgical supplies that had been laid in. I gather that the person to whom the credit for that is due is his predecessor as Minister for Health—but there are indications that the action of his predecessor in laying in these stocks was not greatly appreciated by the then Taoiseach, Deputy Costello.

Mr. Costello

That is quite untrue.

General Mulcahy

Deputy Dr. Browne is in the House and he can say whether the Minister's statement is true.

The Minister agrees that the supplies were stockpiled?

Mr. MacEntee

Certainly, but by the then Minister for Health, Deputy Dr. Browne. I am not suggesting—I am perfectly certain that Dr. Browne would not suggest either—that the £70,000,000 or the £30,000,000 of last year's deficit was spent on providing medical and surgical supplies only.

Mr. Dillon

This is the first tooth to be extracted from your jaw. We will start on the others when the time comes.

Mr. MacEntee

Deputy Dillon would be well advised not to mention the word "jaw." He has much too much of it.

Mr. Morrissey

You are a good judge.

An Ceann Comhairle

The Minister for Finance on the Bill.

Mr. MacEntee

I come now to deal with the question of the balance of payments, the external assets. Deputy Costello referred time and time again in his speech to our gross external assets. He stated that they had increased by £25,000,000. He did not mention to the House the fact that this increase represented the proceeds of the external debt, the American debt which he had incurred, nor did he disclose to the House that our net investment position—our position as a creditor nation—had been undermined to the extent of which that external debt had been contracted. He appears, in short, to regard any balance of payments deficit and any realisation of assets arising therefrom as being of no consequence whatever so long as we can have what he calls our external assets. This attitude is completely irresponsible.

——account regarding sterling assets when external disinvestment is really the significant factor, Deputy Costello tries to support his assertion by quoting figures— selected figures—from the balance of payments statement published in the Irish Trade Journal and Statistical Bulletin. He quotes item (15) which shows an increase from £17.5 million in 1946 to £20.2 million in 1950, for income from investments abroad, external profits, etc.

Admittedly. Our statistical resources in that matter are meagre and limited but, such as they are, they reflect the much larger volume of business that is done through outside stockbrokers. I think we are entitled to say that, so far as it can be ascertained from the sources at our disposal, there has been a net realisation of securities over the two years, 1949 and 1950. I merely mention that fact, neither by way of regret nor by way of congratulation, in order to indicate to the House how, by withholding information from it or by presenting information in a certain way, Deputy Costello endeavoured to convey to the House a misleading picture of what the situation really is.

In his dissertation on the difference between net and gross sterling assets, Deputy Costello omitted to refer to one important fact, the most important fact from the point of view of the general position of this country in the international financial and economic sphere, that it is the net figure of our external holdings that really determines our creditor status. If the present rate of external disinvestment continues, it seems very probable—I am not a prophet; I cannot put it any further than that—that we shall have lost our creditor status by the year 1954. I do not know whether that will be regarded as a desirable consummation or not. I think that those countries are more independent, politically and economically, who have no net obligations to outside Powers.

The next point upon which this White Paper was challenged by Deputy Costello was that there had been an improvement in external trade in recent months, a gradual improvement in the trade position, he alleged, since last May. The only favourable feature of the recent trade returns is the decline in both volume and value of imports from the abnormally high levels reached in the months of April, May and June; but it must be remembered in this connection that imports are always seasonally low in the third quarter of the year and, furthermore, that we had the general dislocation of trade occasioned by the shipping and dock strike at the Port of Dublin to which I have referred. This factor, a very large factor, must always be borne in mind when we are considering the figures for the third quarter.

The Blue Shirts were a real Irish production. They did a real Irish job in an Irish way.

What I want to make clear is that Deputy MacBride, who is to-day suggesting that the Government should be given the power to manipulate currency in whatever way it wants, was a member of a Government, the last Government, which accepted the position as it found it under the Central Bank Act of 1942 and made no attempt to ask the Oireachtas to amend that Statute in any way.

I was saying that the bank is independent of the Government. It is able under the Act of 1942 to function in freedom. It is free to judge the policies of the politicians. That is, perhaps, the ground upon which some people criticise it. It is free to express its unfettered opinion on these policies and on the developments which in its view may affect the purchasing power of the currency and endanger its stability. The Board of the Central Bank is constituted by Act of Parliament. It is broadly representative of the main sections of our people and of their occupational and other interests. I do not think, however, that it is blessed with the services of a lawyer.

There is a farmer on it. There is on it a man who has given a lifetime of service to the national cause and to the cause of the working classes. There is a person who is an economist. There are two civil servants on it and three representatives of the banks whose occupations are not solely confined to banking but who are engaged in industry and commerce in this country. Then there is the Governor. None of these persons are engaged in politics. They are all of them responsible men. They sit and meet as responsible citizens and they are charged by the Statute with the supreme public duty of doing everything which they may deem advisable towards safeguarding the integrity of the currency and ensuring that in what pertains to the control of credit, the constant and predominant aim shall be the welfare of the people as a whole. These men are, in a sense, the watchdogs of the people. But Deputy MacBride indicated in the course of his speech on Thursday last that he would make them otherwise. He wants them to be the mere mouthpiece of the Government, to tell the people that all is well, no matter what the Government of the day may do. In his speech he indicated how the Government of which he was a member endeavoured to browbeat the Governor and board to bring in the sort of report which the Government wanted. I am going to prove that assertion by a quotation.

Mr. Dillon

That you cannot do.

Mr. MacEntee

Deputy MacBride—I am quoting Volume 127, columns 529-30 —said:

You do not take their advice.

Mr. MacEntee

——we do not, on the other hand, limit our freedom to accept or reject that advice as we, in our judgment, see fit.

As I have said, the Board of the Central Bank is a board with certain duties. It is charged to take such measures as it may deem advisable to safeguard the integrity of the currency. That is a comparatively narrow function, narrower than ours. We are charged with responsibility for the conduct of the whole nation's affairs. Naturally, we must give careful consideration to what the Board of the Central Bank states in its report, but we cannot be completely dominated or guided in our approach to the various social and political problems which present themselves to us and for the solution of which we are responsible, by the views of the Governor of the Central Bank. They have their responsibility and we have ours.

When the Act as a Bill was before the House and Deputy Dillon, Deputy Costello and Deputy Mulcahy were sitting over there in the same seats they are occupying to-day, they took up the attitude that the Central Bank was not being given sufficiently wide powers. They took up the attitude that the Central Bank should be given much greater powers of control and, according to column 23 of Volume 87 of the Official Reports, Deputy Mulcahy put down an official amendment on the part of the Opposition asking that the Central Bank should be given the power of "creating and controlling credit and ensuring that in these matters the constant and predominant aim shall be the welfare of the people as whole." Deputy Mulcahy, of course, voted for that amendment, so did Deputy Costello and so did Deputy Norton. They all voted to confer on the board of this institution, whose members have been held up to public obloquy by Deputies opposite, the power of creating and controlling credit. How is it possible that men who had proposed to give to this institution supreme control over our financial and economic system could have expressed themselves in the terms in relation to that report which they have used in this House? The reason for their criticism undoubtedly lies in the exposure which the bank's report contains of the Administration which was headed by Deputy Costello and of which Deputy MacBride and Deputy Dillon were leading members.

Mr. Hickey

Who has that power now?

Mr. MacEntee

Throughout this debate, the link with sterling and the value of external assets held by individual citizens of our State and public institutions have obtruded themselves. They have been brought forward designedly, I submit, to confuse the issue. Deputy MacBride was particularly active in his references to these matters. Let us see why it is necessary for us to fix some parity for our currency. To facilitate them in their transactions, every State whose citizens engage in export trade should fix the parity of its currency, should declare rates at which that currency will be exchangeable either for other currencies or for some commodity in general use. One may say that perhaps the United States is the only State whose currency can be described as absolutely hard in that it is based on what is taken theoretically as an absolute measure of value—the price per ounce of gold. If such a declaration of parity were not made, international trade would scarcely be possible.

Mr. Dillon

What is the parity of the French franc?

Mr. MacEntee

Parity in general is established by declaring the relationship with that country with which the trade is most extensive. We should have, unless Deputy Dillon wants me to believe otherwise, a parity for the purpose of external trade. This is necessary in order that the persons from whom we purchase will have an assurance that the currency with which we buy from them will be exchangeable for goods which they may desire to purchase otherwise than from us. If we are going to establish a parity, what parity would be more convenient than parity with the currency of the country with which our trade is largest? Naturally, therefore, when we declare the value of our currency we do so in terms of sterling. That in no way detracts from the value of the Irish pound, any more than the French do in regard to their currency, or the Dutch, or the numerous other countries which have related the parity of their currencies to sterling.

We say, in short, that the Irish pound is as good as the pound sterling, would buy as much as the pound sterling, and is no worse than the pound sterling. We do that merely because it is the most convenient way of stating the relationship we desire to maintain. We could say, in other terms, that 1,000 francs, each franc a little less than a farthing, would be equal to the pound. The French approximate to that when they say that the official parity of the franc to the pound is 980 francs. But it is more convenient for us to talk on both sides in terms of pounds.

As I have said, when we declare our parity, we must maintain it. Here is where the balance of payments problem enters. For the stability of currencies a correct balance of payments is imperative. A currency is not threatened so long as the debits and credits are properly balanced. But, as soon as the balance loses its equilibrium, currency problems arise. The reason for this is very clear. Every currency must have an acceptable backing, must be acceptable to the foreign sellers and suppliers, and that is the basis of our currency problem: to try to maintain that our Irish pound will be acceptable to those from whom we buy in such disproportionately greater measure than we are able to sell to them. In fact, we buy so much that those from whom we buy must be satisfied that the money in which we pay them will purchase what they want.

Mr. Davin

They fix the value of our money also.

Mr. MacEntee

That is why our pound must be readily convertible into sterling. So long as we import so much and export so little that will remain our inescapable problem. That is why, if called upon, we have to be ready to give sterling for our currency immediately on demand, and that is why our legal tender notes must be heavily backed with sterling securities under our present conditions of trade. I want to emphasise that—under our present conditions of trade. I hope that Deputy Dillon will take that in, because Deputy Dillon is a gentleman who has claimed the greatest personal credit for having created our present conditions of trade.

If we could change the trend of that trade, if we could sell more to the United States of America, more to Germany, to Holland, to Belgium and to France, much more to these countries and less to Great Britain, we could have a more diversified backing for our currency and we could establish a parity for our currency in terms other than that of sterling. We would also tend to have the surplus assets available invested elsewhere than in Great Britain; instead of sterling assets only we could have dollar assets or guilder assets or kroner assets.

Mr. Dillon

You have a dollar currency reserve. Probably you do not know about it.

Mr. MacEntee

I do know about it and I know that it is much smaller than it ought to be. That is the fundamental problem and these are the fundamental truths which underlie our relationship with the British financial system.

Mr. Davin

On a point of order. Would the Minister say how long ago it is since the late Montagu Norman delivered the speech from which the Minister is quoting?

An Ceann Comhairle

That is not a point of order.

Minister for Lands (Mr. Derrig)

What about Philip Snowden's speech? The Deputy ought to go and read it.

Mr. S. Collins

Do not tell me dopey "Tom" has wakened up.

Mr. MacEntee

Some years ago when world conditions generally appeared to be favourable to a development in our trading trends which would have enabled us to reduce our dependency on the British market, and to have opened up new avenues of trade and to have secured a different backing for our currency, the gentlemen who are now talking about the depreciation of our sterling assets and about our dependence upon British currency as a backing for our own deliberately turned their backs upon that opportunity.

Mr. Dillon

What?

Mr. MacEntee

In 1948 these gentlemen went over to Great Britain— Deputy Dillon, Deputy Costello and Deputy MacBride—and they made there a trade pact with that Government which included this proviso:—

"The Government of Ireland undertake that they will limit their exports of live cattle to countries other than the United Kingdom to 50,000 head in the 1948 season and to a number in subsequent seasons which shall not exceed 10 per cent. of their total exports of live cattle to all countries. They further undertake that, in the 1948 season, 20 per cent. and in each subsequent season 25 per cent. of their total exports to all countries other than the United Kingdom shall consist of second-class cattle."

These are the gentlemen who tell us now that they want to break the link with sterling, that they want to sever the economic relationship which they fostered and built up and which they copper-fastened.

People will recall that when that agreement was being negotiated, the then Minister for Agriculture distinguished himself by a highly philanthropic gesture. He told the British people: "We would rather sell to you than sell to anybody else. We may get more money from continental buyers, but we will have nothing to do with those fly-by-nights." He came back here then and, having made that agreement under which he fettered and limited and restricted our right to develop our continental trade and our trade with the United States of America——

Mr. Dillon

Who shipped live cattle to the United States? It is like what you would do.

Mr. Morrissey

That is what the Constellations were for.

Mr. MacEntee

He came back here and handed that agreement to this House and he was supported, let me repeat it again, by the gentleman who was so concerned about our link with sterling and our sterling assets, Deputy MacBride. When that agreement was before the House I ventured to criticise it. I think it is relevant to this debate to repeat now what I said then:

"Under this agreement, let us be clear about it, we link our economy more closely than ever before with that of Great Britain."

Profitable?

Mr. MacEntee

Why were they withdrawn from that profitable investment and again reinvested in sterling securities? We got the dollars to buy the Constellations. The last Government sold them and invested the proceeds in sterling securities. And they tell us to-day they are anxious to repatriate sterling assets.

Why was the chassis factory shut down, and why were the machine tools, which had been purchased out of sterling assets, sold at knock-down, at bargain prices to whatever outsider might come in and buy them?

Mr. Dillon

Who bought them?

Mr. MacEntee

Why was the mineral exploration programme terminated, and why was cement development arrested? Each and every one of these projects afforded excellent and profitable opportunities for the repatriation of our external assets.

Mr. Dillon

We did more mineral exploration than Fianna Fáil did in 15 years.

Mr. MacEntee

Each and every one of these projects was sabotaged. There were many other projects of a similar type in which our sterling assets could have been profitably invested, in which they could have been invested reproductively, and so would have placed us in a much better position to face the future than we are to-day.

Let me come to another aspect of the matter. We have borrowed from the U.S.A. a considerable sum of money which amounts to, I think, £46,000,000 or £47,000,000, more or less. The agreement under which we borrowed that money was signed in Washington by the then Minister for External Affairs, Deputy MacBride. If we had to borrow, why was it necessary for us to borrow the equivalent of £45,000,000 when we had, according to Deputy Costello, no less than £400,000,000 invested in sterling assets? If the idea was to repatriate sterling assets, why did we not realise £45,000,000 worth of sterling and bring it back here, and why mortgage the country to the extent to which it has been mortgaged?

Mr. S. Collins

You do not understand it.

Mr. MacEntee

I know that this is very unpleasant, but we have heard a lot about the repatriation of sterling assets. It is very unpleasant, and perhaps one of the reasons why the Board of the Central Bank has been so strongly criticised in the course of this debate is——

Mr. Davin

By the Minister for Industry and Commerce.

Mr. MacEntee

——that it ventured to suggest that the proceedings of Deputy MacBride in Washington might not, ultimately, be to the advantage of this country. Here is what the Central Bank said in its report for the year ended 31st March, 1948, in reference to the then projected borrowings from the U.S.A.:

"The chronic heavy deficit position in the Irish balance of payments with the U.S. precludes any easy assumption that this country is likely as a consequence of the loan to be in a position within a measurable period to find dollars to cover the service of the loan."

Now, I hope that the significance of that will be borne in mind. The report goes on:

"The raising of a loan in a foreign currency to secure supplies of consumption goods is an expedient to be adopted only under pressure of extreme necessity and within the narrowest limits dictated by that necessity."

Where was the necessity in this case? We had, according to Deputy Costello, £400,000,000 sterling to play with.

Especially in view of the existing world currency situation the report goes on:—

"A loan contract of this kind is a gamble on uncertain future exchange relations of the Irish pound, the pound sterling and the American dollar. The implications of the contract are less predictable according as the term of the loan is longer. The high credit status of this country in the past affords no warrant of future credit worthiness in terms of American dollars. The borrower in these circumstances has to accept an undue risk, and it is not altogether a sufficient answer that the lender is prepared to take it."

And yet, notwithstanding these admonitions and these warnings, Deputy MacBride, the then Minister for External Affairs, the gentleman who talks about repatriating our external assets, went off to America and signed the loan. With what consequences? These, too, are stated in the Report of the Central Bank for the year ended 31st March, 1949. Having referred to the fact that Deputy MacBride, then Minister for External Affairs, put his signature to the agreement of the 28th October, 1948, an agreement for an authorised loan of 60,000,000 dollars, and having referred also to the fact that this loan was increased to £89,000,000 by a similar agreement of the 23rd February, 1949——

Mr. Dillon

£89,000,000?

Mr. MacEntee

——89,000,000 dollars.

Mr. Dillon

It is unfortunate that you have to amend the record again.

Mr. MacEntee

——goes on to say:—

"The actual borrowing under this arrangement made slow progress in the early stages owing to administrative complications."

That is not the point. It is this:—

"By reason of the devaluation which has since taken place, repayment obligations have on the present basis increased in terms of Irish currency by about 44 per cent."

We borrow, first of all, 60,000,000 dollars when we have £400,000,000 sterling available, and we increase our borrowing to the tune of 89,000,000 dollars a few months later, having still £400,000,000 of sterling available, then "by reason of the devaluation" which Deputy MacBride accepted, which Deputy Dillon accepted and which Deputy Costello accepted, we read that the "repayment obligations have on the present basis increased in terms of Irish currency by about 44 per cent." There is the judgement which the Central Bank expressed upon Deputy MacBride's activities as a financial expert.

Mr. Dillon

Have we not yet patience with him?

Mr. MacEntee

And, what is more, when they borrowed the 89,000,000 dollars, what did Deputy MacBride, Deputy Costello and Deputy Dillon do, except invest the 89,000,000 dollars in sterling securities.

Mr. Dillon

That is not true.

Mr. Morrissey

That will not stop him from saying it.

——by submitting the full facts to the people and telling them that we want to do things and that we are prepared to pay for them. If we take up that attitude, if they see that our Budgets are balanced, if they see that we are prepared to meet our obligations and that we are not going to squander and dissipate our assets merely for the sake of creating a fictitious appearance of prosperity in the country, then their confidence in the finances of this State will be restored —the confidence which they manifested from 1934 to 1949. It was in 1949 that the weakness first became apparent. We should be able on the basis of an honest Budget, on the basis of honest dealing with our people, to persuade them that it is worth saving in order to build up industry in this country, that it is worth investing in this country in order that our people will be able to get employment and that every section of them will be honestly dealt with. That is why, so far as we are concerned, the people will know the truth. That is why we will not attempt to influence any authority which is charged with a public duty, such as the Board of the Central Bank is, particularly that we will not attempt to influence its judgement or the free expression of its opinions on the manner in which we conduct public affairs. We are not necessarily bound to accept its judgment, but at least we will give the public an opportunity of deciding between the judgment of this unbiased mind and that of those who are responsible for the policies of which certain financial facts are the reflection. That is the way in which we are prepared to face the people. And I am certain that when the people know that they have men who are prepared to approach them in that open way they will respond and help us. Fianna Fáil wants to make this country a place in which a high standard of living should be afforded to the greatest possible number of the Irish people.

They began by one of the early speeches of the Minister for Industry and Commerce in which he dealt with prices. He excused himself by saying that he was left a foot-high pile of recommendations, that he had inherited these, and that whatever responsibility for these increases was to be apportioned should be laid on his predecessors. I will come to that later. Having succeeded in that technique in the first fortnight or month the Government apparently came to the conclusion that it was good political tactics to create a panic and scare, and, having created that panic and that scare, to attempt to apportion responsibility to the previous Government and to seek to lay the responsibility for the situation which has resulted at the feet of the previous Government.

In company with the other Deputies who have spoken during the course of this debate, I want to refute these worthless allegations, and to refute them by the recitation of a few simple facts. This Government took office at a time when, during the preceding month, prices had been rising. That situation started, according to Fianna Fáil, in August or September last year. It was caused by two factors, by devaluation and by the stockpiling which had occurred as a result of the Korean war. I remember, this time last year, saying the same thing. Fianna Fáil then denied it, but it may be that contact with the facts and realisation that what I said then was the truth has made them alter their opinion. That situation was tackled by the Government in the only way in which it could be tackled. It may be that our efforts were not as successful as we imagined. We thought that it would have been possible by controls to influence prices. Faced with that situation we set out to do two things, to have available here sufficient supplies of goods, so that if the supply position deteriorated we would be capable of meeting whatever difficulties the country might have to face, and, in addition, to control as effectively as possible within the limits of price control machinery, and to offset in whatever way it was possible to do it, the effect of rising prices.

This Government inherited conditions in which the rise had to a considerable extent exhausted itself, or certainly, over a wide range of commodities, was at any rate on the point of exhaustion and the earlier steep rise had lessened in most of the other commodities. When the Government came in the policy, as announced by the Minister for Industry and Commerce and followed by the Minister for Finance, was to create a scare and a panic. The result of that scare and panic was not foreseen by the Government because if it were foreseen they must have realised that the scare and crisis atmosphere which had been fomented by their speeches would react unfavourably if they were to seek to float a public loan. It is obvious from the policy that had been announced by the inter-Party Government that in order to finance the capital development programme another loan would have been required in the autumn of this year. It was the intention of the previous Minister for Finance to float such a loan but the present Minister for Finance initiated a campaign designed to create an atmosphere of crisis. The result of these speeches, if not foreseen by him at the time, was to create circumstances in which the Government could not go to the public and ask for a public subscription, and instead of that they drew on the Counterpart Fund.

We have heard a great deal about the money that has been wasted by the inter-Party Government. Last week I asked a question to find out the total proceeds of the Counterpart Fund and Deputy Declan Costello asked a more detailed question inquiring the date on which the proceeds of dollars allocated to Ireland under Marshall Aid were first received: (b) the amount of expenditure out of such funds up to the 13th June, 1951; and (c) the amount of such expenditure from 13th June, 1951, to 25th October, 1951. The Minister, in reply, said:

"(b) Of the proceeds of dollar borrowings from the United States Government £18.1 million had been expended at 13th June, 1951.

So that in the short space of four months the present Government spent more out of Marshall Aid than the previous Government had spent since the fund was first opened in January, 1949. We had better have less talk about the dissipation of our American assets, because this Government created a panic and a crisis which precluded them from going to the public to borrow money, and which would, as was announced by the Minister for Finance in his Budget, have been used to finance the Counterpart Fund but which would also have had the very valuable function of lessening the inflationary effect.

The Central Bank Report has commented at length on the inflationary effect in relation to a number of commodities. One of the methods of dealing with an inflationary situation and of lessening its incidence is to siphon off excessive money in the hands of the community. That can be done, as has been done in Britain, by imposing a very high rate of taxation or it can be done by a combination of taxation and of asking the people to lend to the Government for productive purposes. We endeavoured to achieve, and succeeded in achieving, that result by borrowing and by keeping the burden of taxation as light as possible, but the present Government, instead of withdrawing this money, which was available, by floating a loan, damaged the credit of the country and the prospect of securing a loan. Faced, however, with the need of funds to carry on the various development schemes that were in progress, they borrowed from the Counterpart Fund, thereby themselves participating in creating, and in making more acute, the inflationary position which had already been commented upon by the Central Bank. Not merely was that situation dangerous and bad from the point of view of public finance, but an even more serious aspect of it has been the noticeable deterioration in trade. It may be that this recession, as it is euphemistically called, is not peculiar to this country, but however we may be affected by outside influences, the present Government, with a number of speeches calculated to frighten the public and to create financial uneasiness, succeeded in influencing the banks to restrict credit. The result has been that, despite a somewhat higher level of advances, as is shown from the banking returns—and that is only up to September and is not an actual criterion—a whole variety of smaller operators have found themselves restricted in credit.

The position has now deteriorated to the extent that, for the first time since the end of the war, certainly for the first time in the last three or four years, there is evidence of rising unemployment. That position is one which should not have arisen, and that would not have arisen, if the Government had acted in the way in which the previous Minister for Finance had announced it was proposed to finance the capital development programme and if, instead of seeking to damage public credit for political purposes, they had gone to the public and said that they believed in the capital development programme, in an expansion of the resources of the country, and that they favoured the utilisation of national credit to the maximum extent and were prepared to initiate, and ask the public to subscribe to, a development loan for the purpose.

Instead of that, the position was allowed to deteriorate and the Government, faced with that situation, then decided to blame the inter-Party Government for the position in order to divert attention from their own inability to deal with the problem and to provide the solution which they asserted they had before the change of Government.

I think nobody who has spoken in this debate has attempted to deny that the present balance of payments position is one which requires some attention and that the gap should be closed or reduced. Deputies must, however, throw their minds back to the position as it obtained say in June, 1950, and particularly between June and December of last year. At that time, when the Korean war broke out, it was obvious that every country in the world was engaged either in an armaments race or in trying to stockpile raw materials. The previous Government in these circumstances decided in the national interest that it was essential to stockpile against that situation. At that time, day in and day out, during the autumn and winter sessions of the Dáil, and on every possible occasion, we had the then Opposition criticising the then Government because we were alleged not to be guarding against the position that was likely to arise, and urging us to stockpile and to buy up materials, whenever and wherever possible.

The Government recognised its responsibility in that regard and succeeded in importing large quantities of goods. It may be that we did not get all the goods we required or that in the course of that operation somewhat minor quantities of non-essentials were imported but, in the main, the goods that we imported were goods that were essential either for capital development or in order to guard against any deterioration in the supply position. I invite Deputies to examine the import list given in Table V of the paper on the trend of external trade and payments. With the possible exception of a few items—we are all familiar with the circumstances which required the importation of butter—there is scarcely a single item on that list that could be deleted. Most of them refer to equipment or machinery or goods for capital use, or essential supplies such as tea, tobacco and coal. I do not think there has been any suggestion in the course of the debate that it is proposed to limit the importation of these goods. It is on that aspect that I want to try to find out what Government policy is and what they propose to do.

The Central Bank Report is very critical of the present high rate of consumption and it says on page 14, dealing with subsidies:

"It is true that removal of subsidy might tend somewhat to increase the cost of living but some inconvenience in this respect must be weighed against the compensating gains, including especially the reduction of consumption."

I do not know what the Central Bank meant by that statement. Nobody with any degree of regard for the necessity of providing our people with a high standard of living would suggest that we should restrict consumption only to commodities that are subsidised.

People reading that might not be aware that the four items that are subsidised are butter, tea, bread and sugar—in the case of sugar the subsidy is no longer applicable. These are essential foodstuffs. I do not think that anybody with any sense would suggest that the subsidy should be removed or that any steps should be taken, as long as the goods are available, either from home production or imports, that would reduce the amount which is available at the present time for consumption.

The Minister for Industry and Commerce, at column 302, Volume 127, said:

"The Central Bank says the solution is to cut down consumption. The Government believe that the solution is to increase the level of production."

With that statement everybody will agree, but will the Government point out any practical step which will achieve a substantial rise in production or any rise that is capable in the immediate future of reducing the gap in our balance of payments? It is quite obvious that there is not any immediate step that can be taken, and that the only steps capable of expanding our production were the steps that had been taken by the previous Government to develop our resources, to put land that was not in production or was not up to the optimum fertility into that condition, to expand industry, to develop our power resources, to provide increased opportunities for employment, to drain rivers, and so forth.

One of the most significant features of our economy has been the static output from agriculture. It may be that the measures which we took in recent years had not an opportunity of showing results. It is a reasonable assumption that the steps which were taken, the incentives that were provided, the opportunities that were made available to farmers for increased production could not show results in the short space of three years. Some of them had already shown results. Our exports of live stock—the increased numbers under a number of headings—were showing the proper trend but, taking it over the years, the most disappointing feature of our economy has been the static condition of agricultural output.

In recent years there has been a very remarkable expansion of industrial output and, despite that substantial rise, it is obvious that if we are to make any headway in reducing the gap between imports and exports, the only real solution lies in a substantial increase in agricultural output. It is true that our agricultural and industrial exports showed satisfactory rises in recent years, but there is not any indication that the tendency which was there will increase sufficiently rapidly to enable the gap to be closed. Therefore, we are entitled to ask the Government what remedies they propose, and what steps they contemplate.

There is, of course, the other aspect of the gap that we had under consideration and which could show, and I believe would show, a reasonable result if the proper methods were applied, that is, the development of tourism and the development of exports to the dollar area but, in order to export, we must first produce.

The previous Government invited to this country a team of experts from the United States to advise on tourism. Having got their report, we prepared legislation. When the change of Government took place, that legislation was ready, and the Bill had actually been introduced. The Bill lapsed at the dissolution, and the present Minister reintroduced it. I cannot understand the reason for the delay in the introduction or circulation of the Tourist Traffic (Amendment) Bill. The only step taken in connection with tourism has been the establishment of a third body to deal with the tourist policy.

I do not want to enlarge to-night on any question dealing with tourism except to say that it does not appear to be the line likely to achieve the most rapid results merely to set up a third body instead of proceeding with the implementation of the recommendations that have been based on expert examination, acknowledged by all who came in contact either with the report or the investigators to be an examination of competent persons. The present Government has not announced any policy to bridge the gap.

It is true that we have heard from the Ministry for Industry and Commerce that it is proposed to increase taxation, proposed to raise, by means of additional taxation, additional revenue in order to bridge some of the gap, part of which was created by the present Government. I do not know whether Deputies realise that one of the most effective methods of increasing the cost of living is higher taxation. We all remember that Fianna Fáil in the past believed in a policy of high taxation. They brought in a Budget in the autumn of 1947 and imposed additional taxation amounting to £7,000,000 in order to increase the subsidy on certain commodities and in order to prevent deterioration in the situation which then confronted them. In the short space of a few months after the change of Government that taxation had been remitted without any reduction in subsidy and at the same time an increase was granted in respect of social services for old age pensioners, widows and orphans and blind pensioners.

Now, with the return of the Fianna Fáil Government, we have been told that it is the policy to increase taxation. I do not know how they expect to get the increase in output or the expansion in industrial development, which are accepted as being necessary, if taxation is increased, because, as most Deputies realise, there are only a few sources from which additional revenue can readily be got. We endeavoured to lighten the burden as much as possible, and in the course of our period of office we reduced taxation on a number of occasions. The present Government has announced that it proposes to increase it.

There were, of course, two objects of their tax policy in the past, tobacco and beer and spirits. It is true that additional revenue can be got by raising the tax on these two commodities. It is possible that some small addition could be got from an increase in income-tax but it is nothing in comparison with a tax on these other commodities and it would have the additional disadvantage of reducing the incentive to business, of imposing additional burdens on industrialists, and of limiting the expansionist policy which is essential if the present situation is to be tackled effectively.

Almost every Minister for Industry and Commerce and every Minister for Finance in recent years has been subjected to a good deal of criticism and comment from various bodies of industrialists, manufacturers and traders in general. They have been complaining about the high level of taxation, criticising the burdens that have been placed upon them, commenting on the method of taxation. From that point of view there is a good deal to be said because the present tax system is to a considerable extent outmoded but, up to the present, they have failed to convince the Ministers dealing with it that the problem was one which merited any substantial alteration. It may be that pressure of other business prevented Ministers from devoting time to a full examination of the position. However that may be, the one predominant feature which characterised all these reports and all the representations made to the Ministers for Finance and Industry and Commerce was the burden which taxation placed on any possibility of an expansion in business.

Apparently, the present Government propose to increase taxation. In the whole course of this debate we have not heard a single instance of any remedy which the Government proposed to adopt—with the exception of the references by the Minister for Industry and Commerce to increased taxation. There has been no suggestion that it is proposed to cut down imports. There has been no suggestion that there is any immediate method by which we can expand substantially exports or increase our other earnings either by an expansion of the tourist business or by an increase in emigrants' remittances. The Government has attempted to create a crisis —although the Minister for Industry and Commerce said last week that we have no crisis yet.

They have attempted to create a crisis and—as they themselves must recognise—the result is that for the first time in three years there is rising unemployment and an absolute stagnation in trade. To meet that situation which was created by themselves, the Government have offered no suggestion of any step which should be taken or which they believe they must take except the prospect of higher taxation next year. Because of this situation that has been created, the Government seek to put the blame on the inter-Party Government. In order to prevent the public from recognising that the deterioration that has occurred has been created and fomented by themselves, the present Government seek to confuse the public, and the atmosphere of crisis which has persisted over the last two or three months was designed to damage the record of the inter-Party Government. But the Government fails to recognise that their policy would engulf themselves in difficulties which they now seek to evade.

I do not propose to go over the ground which Deputies on this side of the House have already covered. Time and again, we have expressed the view that as import prices rise the increase must be reflected in the cost of commodities here. That position has been recognised only recently by the present Government. I want to deal with three commodities whose price has been increased as a result of deliberate Government action and which was uninfluenced by any outside consideration. The price of butter was increased. When the inter-Party Government increased the price of butter by 2d. a lb. earlier this year we recognised that it was right and proper that that increase should be met by the consumer and that it would be wrong, with the high level of subsidies, to raise the subsidies still further. The present Government increased the price of butter by 2d. a lb. but they omitted to say that they added an additional burden of £400,000 to the subsidy as well. It was obvious that that increase could be compared with the increase granted by the inter-Party Government and it was easy for them to say: "We did no worse than our predecessor." They omitted to tell the public that there is a burden that will have to be met and paid for before the end of the financial year.

General Mulcahy

£600,000.

Mr. Cosgrave

The present Government also increased the price of eggs and milk. Probably the heaviest burden which had been imposed on any section of the community was that which was imposed in the past few weeks upon the section of the community least able to bear it. We decided early this year to increase the old age pensions. We did so because we recognised that the weakest sections of the community were least able to bear any increase that had occurred. We decided to give an additional 2/6— and that undertaking was honoured by the present Government when it assumed office. However, in the past fortnight or three weeks the price of cheap fuel vouchers, which formerly cost 6d. to people in the boroughs, was increased to 1/6—thereby reducing, in one single blow, almost the whole effect of the increase we had granted earlier this year in respect of old age pensions.

I am amazed at the silence of the members of the present Government in respect of the rise in prices that has occurred, and I am amazed at the lack of interest they are displaying in this debate. This time last year every Deputy that could be got to go to the House was supplied with notes, facts, figures and information to enable him to make a speech criticising the then Government. The price increases that occurred in the first few months of this year, and last year, pale into insignificance beside the price increases that have taken place recently in respect of butter, eggs and milk. The present Government decided to give these increased prices for political purposes. They did so in order to placate some of their own followers and because of the lesson which they learned during the course of the election. The prices of these three essential foodstuffs affect the working-man's budget. The increased prices of these foodstuffs affect the old age pensioners and the widows and orphans far more than any of the price increases that occured during the previous five or six months. On top of all that, in the past fortnight or three weeks, the price of the fuel voucher has been increased.

I do not know whether the present Government or their supporters realise that they misled the public during the course of the last election. I do not know whether they are ashamed of their attitude during the course of that election and are afraid now to come in and express the same criticism—with the same vigour and over a similarly protracted period—as they did during the course of this debate last year. If they have any shame left, they should apologise to, and sympathise with, those on whom they have placed burdens in the past three or four months.

During the course of this debate, the Minister for Industry and Commerce purported to deal with price control. He attempted to give an account of the manner in which price control had been operated by his predecessor. He purported to say that when he came into office—maybe this is a phrase which he used earlier—there was a pile of applications a foot high. I assert now that there were only three major applications before the Department of Industry and Commerce when the change of Government took place and if the thickness is to be measured by the size of the files it would not amount to an inch.

I want to deal with one or two items. The Minister mentioned the question of meat and said that his predecessor had received a recommendation from the Prices Advisory Body for an increase of 3d. per lb. in respect of meat; that he had deferred action, and that, in addition, he had decided no prosecutions could take place while the consideration of the proposed increase was deferred. First of all, when we got the recommendation from the Prices Advisory Body we did not automatically accept it. It is obvious that the present Government has either accepted it or, where it is a difficult case such as the price of meat, which would involve a rise of 3d. per lb., they decided to decontrol it.

Last April, the Minister for Industry and Commerce got a recommendation from the Prices Advisory Body advising him that meat should be raised by 3d. per lb. He decided not to assent to that recommendation and he asked that the question be further examined to see if any change in the price cuts which it was proposed to fix would enable a lower increase to be sanctioned. It was while they were reinvestigating or while these inquiries were being made that it was decided to postpone taking any action in respect of breaches of the Order, but the matter was only under consideration and it was not decided to take any action because the Minister had refused to sanction an increase in price.

Mr. Lemass

What did he tell the butchers?

Mr. J.A. Costello

I spoke to Dr. O'Higgins in hospital about the matter.

Mr. Lemass

The butchers came in and said they were delighted.

Mr. J.A. Costello

Dr. O'Higgins will deal with you.

Mr. Cosgrave

The other case was an application from a brewer and because there was only one application from an individual brewer it was decided to defer it until the Brewers' Association made an application. We have not yet heard the effect of that. I understand it is still under consideration. There were about a dozen other cases from the Gas Company. These could be regarded as one particular form of application although there might be an application from each individual gas company in the country.

Mr. Lemass

Although they might be a foot high.

Mr. Cosgrave

Although they might be a foot high, otherwise there was no volume of price applications awaiting sanction. Since the change of Government, the public have felt the effect of the impact of the changed approach by the Government to price control policy.

I now want to ask if it is possible to get from the Government an indication of what is Government policy. As far as this debate is concerned, it started with the Tánaiste repudiating the Central Bank because he said he wanted to make it quite clear that the line which the Government intended to follow to the solution of these problems is diametrically opposite to that which the Central Bank suggests. That statement was made on 7th November. The Irish Press did not know when they wrote their leading article on 24th October that there was going to be a change of front because in that leading article they deal with the report of the directors of the Central Bank and go on to say:—

"They do not speak as politicians; they are bankers, professional economists, leaders of commerce, agriculture, labour, etc., and, presumably, hold different political views."

They had been referring to a speech made by Deputy Costello. It goes on to say:—

"If Mr. Costello is consistent he will accuse them of trying to raise a scare, though no reasonable person could regard their report as anything but sober and objective."

It would be difficult to describe it as objective and it is sober to the point of stagnation. At that time, the Irish Press did not know that there was going to be a change of front in the Government. We have yet to see the leading article that will follow this debate or the leading article that the leader writer will be capable of writing when he decides which Minister is to be followed.

The Minister for Finance talked a good deal of nonsense this evening but he did not indicate any line of Government policy. The Minister for Industry and Commerce said that they were diametrically opposed to the Central Bank approach. It is quite obvious that if the developmental schemes the Government initiated— some of which were only partly completed and some of which were only about to begin—are to be carried to fruition money must be spent. If the development programme of the Electricity Supply Board, land reclamation, turf development, drainage, local authorities' works, housing, hospitalisation and all the other gigantic schemes that were stipulated by the inter-Party Government are to progress money must be made available and the money must be got. The Department that will seek to get it as vigorously as any other Department or probably more vigorously than most will be the Department of Industry and Commerce. Apparently the sober, objective Report of the Central Bank suggests that restriction should be imposed on the various development schemes, such as housing, hospitalisation, electricity generating development and so forth. We have not yet heard from the Government how these schemes will be financed. They have dissipated more of the American Loan in the course of four months than the previous Government spent on productive purposes during the previous two and a half years since the loan was first started. £18.1 million were spent in two years, and in four months the present Government spent £18.5 million.

I know that they have sought to create this atmosphere of crisis in order to divert public attention from the serious position that has resulted because of the rise in the cost of living. They recognise that, because of the rise in the cost of living, their policy has been proved a failure. The most notable feature of this debate has been the silence of the Government spokesmen, and even more significant has been the silence of some of those who were critical during the course of the debate last year. Some of those Deputies were removed by the electorate. I do not know why others have been so silent, but it may be an indication that they appreciate that the present Government and those who supported them misled the public, and that at the first available opportunity, whenever an election comes, the public will deal with them as they dealt in the past with this Government when they misrepresented them, and alleged it was possible to control the cost of living, to keep prices from rising, when they recognised that the situation which had resulted was entirely outside our control and entirely due to external prices rises.

In regard to the four items I have mentioned—butter, eggs, milk and the cheap fuel voucher—prices have been increased by direct Government action for political purposes in order to placate or allay the criticism that was manifest in the speeches made by a number of their supporters.

We want to see the development programme that was initiated by the inter-Party Government brought to a successful conclusion. We recognise that the programme entails borrowing. We believe it is better to borrow the money from the people than to impose taxation on them. We can get the money by borrowing. You can get people who have surplus money and who have confidence in the future of the country, and who are prepared to put that money in use for development purposes who will subscribe to these loans, but because of the atmosphere of crisis and the crippling effect of these speeches upon trade and commerce, and because of the resulting rise in unemployment created by that atmosphere of crisis the present Government cannot face the public, and in order to carry on the finances of the nation they borrowed from the American Counterpart Fund. If it is proposed to finance these gigantic schemes and if it is proposed to keep these schemes going at the rate at which it was expected when the schemes were started they would be carried on, it is essential that money should be made available, and the only way in which money can be made available is by borrowing from the public, because no increase in taxation that the public would be capable of bearing can provide sufficient funds to meet that capital development programme.

It has been alleged during this debate and in speeches made by Government spokesmen over the past few months that the ordinary domestic Budget did not balance. The Leader of the Opposition has pointed out that that allegation is untrue and that not alone was the Budget balanced but there was a surplus left to pay for the increases sanctioned by the previous Government for State servants, for the Army and for the Garda and, at the same time, to finance the proposed mother and child health service. Not only was the Budget balanced but a surplus was available to meet the commitments which it was anticipated would arise before the end of the financial year.

This debate has had one salutary effect. It has shown the country that the atmosphere of crisis and the stampeding effect of ministerial speeches, the gloom and all the circumstances associated with the gloomy speeches were unnecessary and uncalled for. It is recognised and accepted by the Opposition that the gap in our balance of payments requires to be remedied— that we must expand our output, must expand exports and increase our other earnings—but that cannot be done by spreading gloom, by creating conditions in which business men are afraid to invest either in industry or in agriculture, afraid to invest in public loans or private enterprise development.

It cannot be done by creating a situation in which, not merely are business men afraid to invest, but the banks, by a restrictionist policy, and business executives, by a restrictionist policy, are bringing about conditions in which there is more unemployment at present than at any time since the end of the second world war.

For remedying such a situation, we had designed a policy, a policy which succeeded—a policy of developing the country, of expanding our economy, of providing increased employment, bringing about increased exports, better housing, better hospitalisation and better social services, while at the same time lightening the burden of taxation, because wherever capital schemes are concerned, as Deputy Norton said earlier, it is nothing short of madness to expect to pay for capital development out of one year's earning or to pay for a capital development programme out of the current Budget by heavy additional taxation. I do not know whether this debate will succeed in effecting a change of heart or a change of outlook on the part of the Government. If it does, it will have done probably the best thing we could have expected from it, because we recognise that, so long as the present Government is in office, we cannot have the progress we would expect or the progress that would have been possible under the inter-Party Government. Anybody who looks at the present Ministry could not but be gloomy, and it may be that when the Minister for Industry and Commerce and the Minister for Finance started making these gloomy speeches, they were more affected by their colleagues than by the financial circumstances of the country.

We want the House and the country to recognise that there is no reason for the crisis atmosphere, no reason for gloom and no reason for the trade recession which has been caused mainly by Government speeches, but that there is a situation which requires remedying, a situation which must be remedied by the application of the appropriate methods applied at the right time and in proper sequence. If that enlightened financial policy which was carried on by the previous Minister for Finance were allowed to proceed, and if the confidence which had been generated in the resources of the country were stimulated instead of being stifled by the present Government, this debate on the various gloomy speeches and on the crisis atmosphere would never have come about and the people who are now out of employment and faced with the price rises which I have mentioned would not be faced with these problems.

Those responsible for it will have to answer for it either in this House or whenever the election comes, and some of those who, by their action, succeeded in establishing this Government in office, will have more to answer for than they have as yet anticipated.

Mr. Briscoe

This debate concerns, first of all the Supplies and Services Bill, and, secondly, the amendment by Deputy MacBride with reference to the Central Bank Report, but it has roamed from election speeches and supposed election promises to all kinds of references to economic matters, national and international and, in the case of many speakers, in a manner which clearly shows that they have very little knowledge of what they are talking about or that they are deliberately and maliciously attempting to mislead and confuse the public as to the real situation.

We have heard references to the banks and we have been told that the banks have considerable assets which they operate in a certain way and that they sometimes act on behalf of the Government in the restriction of credit to their clients. I should like to approach this whole subject from the point of view of trying to get the ordinary individual, the ordinary man in the street, to understand the exact circumstances within which we must operate, so long as we subscribe to the principle of the rights of private property, or, as some people might say, so long as we are working within this particular system, which is not an extreme Socialist system. We have a Constitution which protects private property and private enterprise and also every single type of individual that goes to make up the State.

Mr. Hickey

And our Constitution directs our credit to be controlled.

Mr. Briscoe

Yes, I am coming to that. It is true that our banks have moneys which come to them from their clients on the one hand. People deposit money in the banks or have credit balances in current accounts and the banks are trustees for the people to whom that money belongs. But they are commercial concerns and they operate also with a profit motive. They have to be careful, in the carrying out of their business operations, that all of their depositors or all of those who have credit balances can demand their money whenever they need it or whenever they want it. It would be ridiculous for us in discussing banks to suggest that the banks would become not only the custodians of their clients' money but that they would be entitled to lend out all this money on long-term loans and deprive their clients of their money whenever they call for it.

Mr. Hickey

Nobody suggested that.

Mr. Briscoe

I want first of all to approach this matter from the point of view of trying to understand what we are talking about. It must be admitted, therefore, that the banks have an obligation to their clients first and when they lend money they must be sure that they lend or invest it in a fashion which enables them to pay it to their clients when they demand it. Consequently, they have to use their wisdom and their judgment, as a result of long experience, as to how they will carry on their business and not have the situation created where the banks would have to close their doors if there were demands for money which could not be met. I think that must be accepted by all of us as the position.

Mr. Rooney

The Deputy boasted of his prosperity during those three years. He boasted that he had never prospered as he did then.

Mr. Briscoe

I never said anything of the kind.

Mr. Rooney

He certainly did.

Mr. Briscoe

That suggestion is as false as the falsehood to which I referred which was published in the Evening Mail a few days ago and for which they had to apologise. If the Deputy has any manliness in him he will go out and search for that record, bring it in and make me eat my words.

Dáil Éireann debate - Wednesday, 14 Nov 1951