Deputy Hickey referred to the charge imposed on the weekly rent of a municipal house by the interest rate payable by a local authority for the money it cost to build it. I should like to hear anybody argue the justice or equity of the people, through their public representatives, being required to pay for the use of their own money. Eighty per cent of the money in circulation in this country and in every modern society is bank money. I should be grateful to somebody in this House who would expound for me the ethical or economic justification for asking the people to pay a limited group of persons, to wit, shareholders in joint stock banks, £35 a year for the right to use £1,000 of their own money.
A municipal house to-day may cost up to £1,500. Leave out altogether the annual allocation for the redemption of capital. If the municipality has to borrow that money at 4 per cent., the interest on the money required to build that house amounts to £60 per year which the tenant must pay, except in so far as the taxpayer pays it. If it is the tenant, a weekly rent of approximately 22/- is payable by the tenant for no other reason than that the normal banking system of the country is used to discharge the debt due to the contractor on completion of the house and his delivery of it to the municipal authority. There is no question of security and no question of any danger of the capital not being repaid.
It is merely the period of time over which the Legislature determines in its own wisdom that it is expedient to repay the capital. This strange fact is true that while it is regarded as axiomatic that money borrowed by a Government on which a municipality builds houses should be liable to this charge, from the moment that the three great societies of the world became involved in war and similar accommodation had to be procured in order to pay the armament manufacturer for the tanks and guns, no one contended that for an outlay of that kind the Government should be asked to pay—and none is paid. A management charge of something between I and 1? per cent is payable because there is no cheaper way of getting the accounts checked and that percentage meets the legitimate cost of the banking system in administering these loan accounts on Government account. The rate payable on such borrowing is ruled by the ascertained cost, as near as they can go, to the banking system for keeping the accounts.
Now, famous bankers of the 19th century have said that it was a dispensation of Providence that the average man could be depended upon never to unravel the mystery of money and credit and that, therefore, those who control it were in a position of absolute safety. They were mistaken in that belief. The average man does understand in very large degree the workings of money and credit. But here is our danger: the average man understands it in large degree but there is no subject on which the aphorism is more true, that "a little knowledge is a dangerous thing". The moment the problem of money and credit begins to appear simple and obvious to an average man, you may assume that he is either daft or stupid. The more this problem is studied and understood the more its infinite complexities confront the inquirer. I do not purport to follow the theory of money to its source. An attempt of that kind could not be encompassed in a book of less than 400 pages. For Deputy Hickey's information, I may mention that Geoffrey Crowther wrote a very good one, which the Deputy might with profit peruse.
I am simply applying my mind, and I am inviting the House to turn its mind, to one simple facet of the larger problem to-night. I urge the Minister for External Affairs to make the case, if it can be made, for requiring the community to pay 3½ or 4 per cent on its own money to provide essentials without which the community cannot properly function. When he has done that I ask him to enlighten my darkness on the issue of how it can be right, proper and orthodox to furnish the Government with money at 1? per cent to defend the public and the community from external aggression, but to forbid the community to avail of a similar amenity when the war is against disease and destitution. Let us make a note of this, for it goes to the heart of the matter that we are talking about, the borrowing of capital sums is an operation which predicates a redemption sinking fund to be raised annually from the revenue of the community. You cannot substitute credit for revenue, but if your revenue is sufficient to provide a redemption annuity for a capital borrowing there is no reason to make that annual charge more than that by adding to it an interest charge for the benefit of a few at the expense of the community to which that few owe their very existence and their opportunity of carrying on with the banking operation, the services of which the community proposes to avail of.
There is a last matter to which, I think, the Government might properly turn its mind. When the Central Bank Act was enacted I think a section was inserted therein providing that, in respect of the currency reserve, 100 per cent. cover in the form of British securities or British legal tender was to be maintained, subject to the proviso that if the board of the bank took the initiative in proposing to the Government that a proportion of that currency reserve should be invested in Irish securities, and if the Minister for Finance gave his approval, the board would be entitled so to invest. The very insertion of that section in the Central Bank Act demonstrates clearly that those who were responsible for it envisaged conditions in which such a departure might with propriety be made. In one long answer which the Minister for Finance gave to a question relating to that matter, he spoke of the Central Bank as the bank of the last resort. How you can have a bank of last resort without a money market such as functions in the City of London, in the sense of that term, is something that baffles me.