I move:—
Realising that our national resources are underdeveloped because of chronic underinvestment in our own country, and further realising that emigration and unemployment, which are destructive of family life and of the family unit, upon which Christian society is founded, flow from this underdevelopment of our resources, Dáil Éireann is of opinion that the financial policy hitherto pursued, whereby the major portion of the savings of the nation is invested in Britain, should be discontinued in order that credits adequate for the development of our resources and for the provision of housing and other necessary services for our people should be made available.
This motion was tabled some considerable time ago and we discussed a great many of the economic issues involved in the recent debate on the Supplies and Services Bill just before Christmas. I felt at first that possibly this motion might be unnecessary. However, I think we might now usefully discuss this motion in a somewhat different atmosphere from that in which we discussed the more immediate problems created by the Central Bank Report and the White Paper issued by the Department of Finance.
The debate which took place before the Recess was more or less centred on immediate problems. The intention of this motion is to induce a long-term view of the future economic development of the country. I think it might be useful if we could have now an objective discussion on these issues without necessarily adverting to the more immediate controversial topics or without covering the same ground that we covered in the discussions before the Dáil adjourned in December.
I feel we have never really sat down to examine the economic problems of the country in an effort to determine the line of economic development we should pursue since we first obtained control of our own affairs in 1921. In 1921, when, for the first time since the Act of Union, an Irish Government obtained control of the political and economic destinies of the country, we were handed over an economic structure that had been devised and deliberately built to meet the requirements of the English nation and not the needs of the Irish people.
In the centuries that have gone by it was not in Britain's interest to foster Irish development. It was not Britain's desire to see Ireland's economy expand in any direction. On the contrary, we were a convenient market for industrialised Britain and she was determined to keep us as a market. I think it is seldom sufficiently appreciated that probably one of the causes of Britain's anxiety to dominate this country in the past sprang from the fact that she was fearful in some respects of the strength this country might acquire. It should be borne in mind that at the beginning of the eighteenth century the population of Britain was in the neighbourhood of 7,000,000 and our population was about the same. I say, without being unfair to the successive British Governments that ruled this country, that it was definitely part of their policy to reduce the population of this country and to prevent the economic development of the country.
Side by side with the policy of preventing industrial development, preventing economic expansion here, a policy was pursued by the banking system here, which was largely controlled by England, to export Irish capital and invest it abroad. One of the results of that policy, one of the results aimed at, I would say, by the British Government of the day, was to ensure that there would be no capital in this country that might be utilised for development, that might be utilised to build industries that might cut across Britain's own industrial programme by supplying goods which we would otherwise have to purchase from Britain.
That is, roughly, the type of structure which we took over in 1921, a structure which was devised to prevent the development of this country, which was intended to prevent the growth of industries, which was intended to ensure that Irish capital would not be invested in Ireland but would instead be invested in Britain. We did not take over control of the country in normal circumstances. Apart from the fact that we were plunged in a civil war, we suffered from many other defects. We had very few people who were versed or experienced in government or in economic affairs. Any Irishman who had any experience in government and financial matters or in economic affairs were Irishmen who were usually in the service of Britain and had been employed by Britain here in order to maintain Ireland as a British possession. Many of them, all of them I should say, were probably steeped in the tradition that the British Treasury had created in regard to Ireland; in other words, that Ireland was not to be developed and that financial policy should aim at securing the investment of Irish capital in England.
The civil war, naturally, did not favour dispassionate examination of our requirements and, as I have just said, we lacked people of experience in government or economics who were capable really of undertaking the complete construction of a new economy and of a new economic policy. The result was that we took over more or less the economic structure that was handed down to us from the days of British rule. To a large extent, we have continued to follow the same financial policies.
I do not say that in derogation of any of the previous Governments. I do not think it would serve any purpose to seek to throw the blame on any particular Party or any particular Government in the course of the last 30 years for this fact. I think they all tried to promote industrial development but, in trying to develop the country, we have neglected the most essential factor, namely, the question of the utilisation of our capital resources for development. We have pursued a faltering, uncertain and often an uninformed economic policy, gone from side to side, used immediate economic issues as election catch-cries when it was thought they would be popular but without really any long-term planning.
Economics are not a particularly good or interesting subject politically. There are a great many more attractive issues for the election platforms. Besides which, the public generally are not interested in economics; they regard it as a rather mysterious secret science.
I would like to urge upon the House that the economic structure and the economic policies that are suitable for Britain are not necessarily suitable for this country. Britain is a big industrial country. We are a small agricultural country. Britain is a debtor nation. We are a creditor nation. Britain is over populated. We are under populated. The population of Britain is close on 50,000,000 now. At the beginning of the 18th century it was somewhat over 7,000,000. In the same period of time our population has been halved—I would venture to say—largely as a result of the economic policies which were foisted on this country by our rulers. Britain is the nerve centre and the economic centre of a vast colonial empire. We have no colonies.
It seems to me that these factors in themselves should immediately put us on inquiry as to whether the financial system and the economic system of Britain are necessarily suitable to our needs and requirements. Yet, we seldom seem to examine economic issues from that point of view. We have blindly followed the same policy that was handed down to us in 1921. We have kept on investing our money in England systematically, investing the savings of this nation in England, very often at low rates of interest, very often at rates of interest much lower than can be secured here. I am prepared to concede that possibly up to 1931, up to the 21st September, 1931, that policy was capable of defence.
So long as Britain was tied to the gold standard until 21st September, 1931, those who favoured that policy had the argument that Britain was a very powerful financial and economic power but her currency was tied to gold and was a stable currency. Indeed, those are the very arguments that were raised by the Banking Commission and the Currency Commission when those policies were endorsed by them. In 1927, when we anchored our currency to sterling, sterling was on the gold standard. That position subsisted until 1931, but after 21st September, 1931, when Britain went off the gold standard, was there any justification for maintaining the same policy? Was there any justification for maintaining the same policy after the 3rd September, 1939, when there was a further devaluation? Was there justification for pursuing the same policy after the 18th December, 1949, when there was another devaluation? Is there a justification to-day, when we are probably on the eve of another devaluation, for still pursuing the same policy? Are we going to wait until the earnings and the savings of this nation have been wasted away by devaluation, by loss of purchasing power? Are we going to wait until then to change our policy?
We have been told by a recent statement that was issued after the meeting of the Commonwealth Finance Ministers that steps were about to be taken to ensure the convertibility of sterling by the second half of 1952—in other words, within the next few months. It is quite obvious, from the sterling area's balance of payments position, that that cannot be done by normal means. Is the true meaning of the statement issued that sterling will be devalued again and allowed to find its own level and thus become convertible? It appears to me to be the only rational explanation that can be placed upon the statement that was issued following the recent meeting of the British Commonwealth Finance Ministers.
The only other solution for the sterling area's difficulty would depend upon the willingness of the United States to put her whole financial resources at the disposal of the sterling area. So far, there is no indication that the United States, despite the very generous contribution they have made, are prepared, in effect, to open their banking account to the sterling area. Therefore, I am inclined to the view that the statement made by the Finance Ministers concerning convertibility is an indication that the £ sterling will be what is termed, or what will be termed "free"; in other words, allowed to find its own level. These are serious matters for us. We have vast sums invested in Britain.
In a question I asked in this House a short time ago I ascertained that £1,000,000 in 1939 was worth last August £274,000 in terms of import prices; in other words, for every shilling we had in England in 1939 we now have 3d. as far as import prices are concerned, and, of course, import prices is the only thing that matters in regard to external assets. Are we now going to find that in another couple of months' time that will be down to, maybe, 1d. or 2d.?
As I have said before, I can understand the arguments that were put forward in favour of maintaining the existing position, that is, maintaining a large portion of our savings in England, so long as England was the economic nerve centre, if you like, of the world or a large part of it. But anybody who examines the position realistically must now admit that England has ceased to occupy that position and has ceased to occupy it irretrievably. I am not saying it in any condemnation; I see no reason why she should be blamed or feel ashamed of the fact that she has ceased to occupy that position, but we have to face realities.
I was very interested to read in today's paper the statement made by Mr. Butler, British Chancellor of the Exchequer, in which he pointed out that the present difficulties of Britain were not new, but that Britain had been increasingly in economic difficulties since the beginning of this century. It is the first time, I think, that any British Chancellor has made that admission. It is a view which I certainly have held for a long time, and a great many people who have examined the position objectively have come to that conclusion. It is erroneous to think that Britain's present economic difficulties are due to any abnormal set of circumstances. The abnormal set of circumstances may have increased the difficulties, but the fundamental defect in Britain's economy has become apparent since 1900. Between the two wars, 1914 and the last war, Britain was running an annual deficit on her trade of £500,000,000. That deficit was, to a certain extent, concealed by reason of Britain's investments abroad.
Such investments were large. She owned oil wells in Roumania, railways in Turkey and in the Argentine, and various properties right through the world, and the income from these properties to a certain extent covered the trade deficit. When these incomes ceased to conceal the trade deficits, the investments were sold and the capital helped to balance Britain's trade. In a great many cases, of course, a number of the investments Britain held abroad were lost completely. These investments, which helped to tide her over her difficulties between two world wars, have now disappeared, and she is faced with the same trade deficit, which is increasing.
Britain is over-populated and cannot maintain her present population. The economy upon which she was industrialised was built upon the fact that she had a vast empire. She obtained her raw materials at cheap prices, converted them into manufactured goods and exported them to the colonies. However, the colonies are gone. She is no longer able to obtain raw materials at low prices, or to sell manufactured goods to the colonies because they have grown into independent states. In most cases they supply their own needs and not only that but, in many instances, they are competing with Britain in the world markets.
The fact which we fail to realise is that Europe has no particular natural advantages over the rest of the world, but was a growth resulting from a number of historical accidents in which the civilised population of the world became located. If one were to plan a new world to-morrow, one would not plan the centre of it in Europe. One would choose countries possessing better natural resources, a better climate, and so forth. In fact, as a result of the development of transport, of civilisation generally and of the colonial spirit, if you like, other countries have been developed to the extent that they are now competing with Europe.
Britain has lost her colonies and cannot retrieve them. All these matters are relevant to us in so far as we have chosen to pursue a policy of relying upon Britain to be our banker —a policy which involves investing our money in Britain. I would disagree with such policy even if Britain were in a strong position because it seems to me that it compels us to accept an economic structure, an economic policy which is not suited to our needs. However, I am prepared to see the point of view of the man who says: "So long as Britain is in a strong position there is a great deal to be said for keeping our money there—as safe as the Bank of England." That is no longer the position; we have had three devaluations. As I said a minute ago, £1,000,000 in 1939 was only worth £274,000 in 1951 so that our banker no longer keeps our money safe. Mind you, devaluation simply amounts to this. Your banker comes along and says: "Sorry, boys, but I can only pay you 3/- for every pound invested." If in the ordinary course of your business life that happened, would you leave your money with him? No, you would have no hesitation in taking it out and putting it some place else.
The purpose of this motion is to urge that we should utilise, as fast as we can, as much as possible of our money for development at home. The pursuit of the policy I have outlined finds no parallel in any other country of the world as far as I am aware. Some countries may have a permanently surplus population, but such is not the case with us but rather are we underpopulated having regard to the standards of other European countries. Our population is 111 people to the square mile, while the population of Belgium is in the neighbourhood of 900 people to the square mile, the population of Britain is 600 people to the square mile, and the population of the Six Counties, which is not dissimilar to us from the point of view of climate or soil, is 260 people to the square mile. It cannot, therefore, be said that we are overpopulated and yet we export a higher percentage of our people than any other country of the world. Other countries may have a surplus amount of wealth and when they have reached saturation point, or the point of overdevelopment, they can no longer find an outlet for their capital at home and must export it. Britain was an example of such a country until the beginning of this century. To-day America is looking for an outlet for her capital, but no country in the world, except this country, is mad enough to export both its capital and its people—the two most important ingredients in the production of wealth, call it capital goods if you like. As I said before, I am not blaming any particular Government or any particular Party for pursuing this policy because I feel it comes largely from the fact that we have never examined our economy deliberately, dispassionately or objectively.
I have discussed the matter with outsiders—economists from other countries —and they think we are stark mad and assure me that one would not find a parallel for our actions in this regard in any other country. I would like the House to examine objectively the position I have outlined. In examining it let the members not blame any particular Party or the Government of yesterday, to-day or to-morrow. Let them rather examine the position so that we might endeavour to create a national investment policy for our capital resources in Ireland which would provide for the repatriation of our external assets.