asked the Minister for Finance whether any steps were taken on his behalf, or on behalf of his Department or the Central Bank, or any public body, to secure or attempt to secure that units of the stock of the recent loan would not be sold at a premium on the stock exchange; and, if so, what were those steps, and what was the purpose of such steps.
Ceisteanna—Questions. Oral Answers. - National Loan.
asked the Minister for Finance whether any units of the recent National Loan were purchased by or on his behalf, or on behalf of his Department, or on behalf of any other Minister, Department, board or other authority under his control; and, if so, whether any of such units have been sold, agreed to be sold, or otherwise disposed of, since the opening of the market on the stock exchange for the sale of units of the loan.
asked the Minister for Finance if he will state the amounts of any existing Irish Government stocks or securities (other than units of the recent loan) which were purchased by or on his behalf or on behalf of his Department, or any other Minister or Department or authority under his control, during the period from 1st July to 1st September of this year, and the 1st September and 26th September of this year, and the 26th September to 1st October, and the amounts of any such purchases.
asked the Minister for Finance if he will state how much of the recent loan was provided by persons or corporations subscribing sums between (a) £100 and over, but less than £1,000; (b) £1,000 and over, but less than £5,000; (c) £5,000 and over, but less than £20,000; (d) £20,000 and over, but less than £50,000; (e) £50,000 and upwards, and the gross total subscribed by persons or corporations subscribing sums of £5,000 and upwards.
asked the Minister for Finance if he will state whether any applications were received by his Department in accordance with the requirements of the exchange control Orders, to enable extern residents or corporations to invest in the recent loan.
asked the Minister for Finance if he will state in connection with the recent National Loan, what precautions or steps (if any) he took or caused to be taken with a view to securing investors in previous National Loans from depreciation of the saleable or capital values of their holdings.
asked the Minister for Finance whether in connection with the recent National Loan, he gave to the representatives of the Irish banks (a) any direction or (b) any indications of his opinions or views as to the desirability or otherwise of such banks affording to their customers facilities by way of overdraft, loan or otherwise, to obtain money for investment in the loan; and, if so, what was the nature and purpose of any such direction or indication.
asked the Minister for Finance whether he is aware that the Irish banks, in connection with the recent loan, provided extension facilities for their customers, by way of overdraft or loan, with a view to the provision of money for investment in the loan, and if he will state the estimated amount of the moneys provided by such facilities.
asked the Minister for Finance if he will state (a) the total cost of floating the National Loan of £20,000,000 in September, 1952; (b) the total amount paid in commission to the banks; (c) the total amount paid in commission to stockbrokers, and (d) the total cost of advertising the loan.
asked the Minister for Finance if he will state the amount of the expenses incurred or to be incurred in connection with the recent issue of National Loan, and to whom the amounts of such expenses were paid or are to be paid.
asked the Minister for Finance whether there was any underwriting or analogous agreement in connection with the recent issue of the National Loan, and if he will state the terms of such agreement and with whom made.
asked the Minister for Finance whether, prior to the recent issue of the National Loan, he or anyone on his behalf had discussions or negotiations with the Irish banks or other representatives; and, if so, whether he will indicate the nature of such negotiations, the result thereof and the terms of any agreement or understanding arrived at.
asked the Minister for Finance if he will state the estimated amount of realisation of British stocks, shares or securities by Irish nationals or Irish corporations for the purpose of investment in the recent National Loan.
asked the Minister for Finance if he will state (a) the aggregate of the amount of the recent loan applied for and allotted to persons not ordinarily resident in the State; (b) the number of such persons; (c) the number of such persons resident in Great Britain; and (d) the number of such persons resident elsewhere than in Great Britain.
asked the Minister for Finance if he will state, in respect of each county of the State, the estimated number of persons who subscribed to the recent loan and the estimated aggregate amounts of such subscriptions in each such county.
asked the Minister for Finance if he will state the amounts of the withdrawals from (a) the Post Office Savings Bank and (b) the Savings Certificates and (c) deposits with Irish banks in the period between 15th September, 1952, and 10th October, 1952.
asked the Minister for Finance if he will state the aggregate amount of the recent National Loan purchased by (a) citizens resident in the State; (b) residents in, but not citizens of, the State; (c) companies or corporations registered in the State; (d) extern companies or corporations; (e) persons registered in the six north eastern counties; and (f) companies or corporations registered in those counties.
asked the Minister for Finance if he will state (a) the number of companies or corporations registered in the State, and (b) the number of extern companies or corporations who subscribed to the recent National Loan.
asked the Minister for Finance if he will indicate the amounts subscribed to the recent loan by (a) Irish limited liability companies; (b) other liability companies; (c) Irish co-operative societies; (d) Irish building societies; (e) private individuals and (f) other classes; and, further, if he will state the amount subscribed from the Post Office Savings Fund.
asked the Minister for Finance if he will indicate the total amount contributed to the recent loan from countries outside the Republic, also the names of the countries in question and the amounts subscribed by each.
I propose, with the permission of the Ceann Comhairle, to take together Questions Nos. 41 to 60, inclusive, all of which relate to the recent National Loan.
Where the State credit is concerned, it is necessary to decide how far the public interest is served by the publication of detailed information which is liable to misuse in uninformed quarters. I am prepared to give as much information as was supplied in relation to the last three National Loans, and, indeed, to go further in certain respects. In some of the queries addressed to me, however, information is sought on points of detail, such as the number of applicants in each county, the amount applied for by Irish co-operative societies, etc. Statistics of this sort have no obvious value and I would not consider it justifiable to impose on the taxpayer the expense of assembling them. The State, indeed, has no duty either to the Dáil or to the public to identify subscribers by reference to their status, residence or amounts applied for.
The Irish commercial banks agreed to underwrite the loan jointly with the Government. But in contrast with September, 1950, when an underwriting arrangement covering £10,000,000 of the 3½ per cent. Exchequer Bonds issue was made with the banks, neither the banks nor the Government were called upon on this occasion to put any money in the loan, as it was oversubscribed by the public.
As is usual and prudent, discussions took place with the Irish banks and with other interests prior to the issue of the loan.
No direction or request was conveyed to the banks regarding the desirability of providing facilities by way of overdraft, loan or otherwise for subscribers to the loan.
Although my predecessor as Minister for Finance categorically refused on March 23rd, 1949 (Volume 114, columns 1453 and 1454) to give me similar information in reply to a parliamentary question relating to the second issue of 3 per cent. Exchequer Bonds, I am prepared to supply the following details in regard to the recent issue:-
|
Category |
Number of Applications |
Amount Allotted |
|
£ |
||
|
Up to £500 |
14,535 |
4,042,160 |
|
Over £500 and up to £1,000 |
4,570 |
4,031,590 |
|
,, £1,000 ,,,,£5,000 |
2,352 |
5,569,640 |
|
,, £5,000 ,,,,£10,000 |
169 |
1,307,040 |
|
,, £10,000 |
143 |
5,049,570 |
|
TOTAL |
21,769 |
20,000,000 |
It will be observed that applications for amounts up to £5,000, inclusive, numbered 21,457 and totalled £13,643,390. The corresponding figures for the 3½ per cent. Exchequer Bonds issue were 8,227 and £5,393,230, respectively.
Allotments to addresses in Ireland totalled £17,665,590 and allotments to addresses outside Ireland £2,334,410.
Withdrawals of Savings Bank deposits and Savings Certificates for investment in the loan are estimated to be in the region of £2,000,000. The effect of subscriptions on bank deposits and on holdings of extern securities will be reflected in due course in published accounts and in the Balance of Payments Statement.
Accounts in respect of the expenses of the issue have not been completed but the following is an approximate and provisional estimate:-
|
£ |
|
|
Underwriting commission |
75,000 |
|
Brokerage |
50,000 |
|
Other expenses, including advertising |
11,700 |
|
£136,700 |
|
This represents 1.64d. for each £1 obtained as against 1.85d. for each £1 obtained through the September, 1950, issue of 3½ per cent. Exchequer Bonds.
The question relating to the market depreciation in certain existing stocks appears to be based on a misunderstanding of the basis on which all Government loans are floated. Such transactions are for lengthy periods, in the case of our loans the period being generally 20 years. The original lender contracts to let the Government have the use of his money for that period on the undertaking of the Government to repay him in full at the end of it. In return for this long-term loan the Government covenants to pay the lender over the period a fixed rate of interest, higher than if the loan were for a short term. The loan stock issued to the lender becomes his property and he is free to dispose of it on the market if he wishes or to hold it until redemption date. To enable it the more conveniently to meet its obligation to repay the loan at the end of the loan period, the Government establishes a sinking fund on a basis set out in the prospectus of the loan. Generally this sinking fund is applied in accordance with the prospectus to purchase stock for cancellation at or under the issue price. The establishment of the sinking fund ensures that there will usually be a ready buyer available for a substantial but limited amount of the stock to which it relates. It cannot do more than this and does not purport to do more and the extent of its operations are fully realised by those who invest in public securities.
In brief, therefore, the general obligations assumed by the Government in relation to a National Loan are (1), to repay the principal in full at the due date; (2), to pay a fixed rate of interest per annum and (3), to set aside a sinking fund which will be available for the purchase of stock for cancellation. If, as some people seem to expect, the Government were to stand ready at all times to buy at par any amounts of National Loan stock offered for sale, this would be to convert a long-term loan into a demand liability, with disastrous effects on the national finances and on the terms of private credit.
It will also be understood that a new loan must be more attractive than existing stocks if subscriptions on a large scale are to be forthcoming. Naturally, the market values of existing stocks are affected when a more attractive stock is introduced. Prices are directly influenced by sales on the part of those wishing to switch to the new loan. Before the 3½ per cent. Exchequer Bonds were issued at 99 in September, 1950, the 3 per cent. Exchequer Bonds stood at £95 per cent. They declined to £93-£93¼ per cent. immediately afterwards. The second issue of 3 per cent. bonds itself knocked 1¼ points off the market price of the first issue. The success of the new loan has been all the more gratifying because it has not affected any more seriously the market prices of existing Irish Government stocks. A week before the terms were announced the 3 per cent. Exchequer Bonds stood at £80 per cent.; they were dealt in after the issue at £78½ per cent. and £78 per cent. The 3½ per cent. Exchequer Bonds stood at £86¾ per cent. prior to the issue and have been quoted regularly since at £85 per cent. In both cases present prices are about the same as they were some months ago.
The fall over the past few years in the market value of existing stocks is a reflection of the depreciation in giltedge securities which has been worldwide and has extended to the securities even of such Governments as the United States of America. No ultimate loss will, however, be suffered by any subscriber to an Irish Government loan who holds his stock firmly as £100 cash will be repaid in respect of each £100 stock at the redemption date. Moreover, within the limit of the resources available to it, it has always been the policy of my Department to try to support the market and to control erratic and disturbing movements.
Arising out of the Minister's failure to reply to my 18 questions and two by Deputy Rooney, I should like in the first place to ask if the Minister has even purported to reply to Question No. 41.
Certainly. If the Deputy studies the answer he will see that it is covered.
As I was unable to gather it from his verbose avoidance of giving any information to the House, I should like to ask the Minister, if in fact any effort was made on his behalf or on behalf of any of the bodies mentioned in the question to prevent the new loan from going to a premium. That is a simple question which the Minister should answer.
I referred at the beginning of my comprehensive reply to all the questions put down by Deputy Costello, to the fact that where the State credit is concerned it is necessary to decide how far the public interest is served by the publication of detailed information which is liable to misuse in uninformed quarters and a reply to a number of the questions put down by Deputy Costello, if answered in the form in which he requires them to be answered, would be, I think, liable to misuse in uninformed quarters and would be detrimental to public credit.
As I have already pointed out, I have an excellent precedent for dealing with Deputy Costello's question. I refer to the answer which was given to a Deputy by the then Minister for Finance on the 23rd March, 1949.
Answer Question No. 41.
In it he was asked to state in each case:
"The total amount subscribed to the recent loan (i) from funds under ministerial or departmental control; (ii) by the joint stock banks; (iii) by other applicants for amounts in excess of £100,000; (iv) by applicants for amounts in excess of £10,000 but not exceeding £100,000; (v) by applicants for amounts in excess of £1,000 but not exceeding £10,000, and (vi) by all other applicants for amounts not in excess of £1,000".
The reply was given by the then Minister for Finance, Deputy Costello's colleague, Deputy McGilligan on 23rd March, 1949.
Is this reply a purported reply to the question I put? I put a specific query as regards Question No. 41 by way of a supplementary question to the Minister, arising out of the purported reply to my 18 questions. I respectfully argue that you rule that this reply, which was verbose and irrelevant, is in no degree relevant to the supplementary question I have put.
It is relevant to the questions.
But not to the supplementary.
I am dealing with Deputy Costello's supplementary and it is obvious to everybody that he does not want that supplementary to be dealt with——
I am trying to force the Minister to give me an answer.
In the terms in which his colleague the Minister for Finance dealt with the question.
You have not answered Question No. 41.
The then Minister for Finance replied to my parliamentary question in these terms:—
"As I told the Dail on the 2nd March, when announcing the recent issue of £12,000,000 of 3 per cent. Exchequer Bonds, the amount allocated for public subscription was £8,000,000, the balance of £4,000,000 representing applications on behalf of departmental funds. Public subscriptions amounted to £7,697,000 and the actual investment on behalf of departmental funds came to £4,303,000. By arrangement with the joint stock banks none of them subscribed to the issue."
And then, here is the point:—
"It has not been the practice to give details of the kind asked for by Deputy MacEntee in the concluding part of the question."
What was the question?
The details I asked for were very simple; in fact, I gave some of them here, but I certainly would not have had the hardihood to put down such questions as Deputy Costello put down, knowing very well that it would be quite impossible for any Minister with any sense of responsibility to answer them in the detail for which he has asked.
Arising out of the Minister's purported reply, I want to repeat the question, whether the Minister has answered or is prepared to answer the question whether any steps were taken to prevent the new National Loan, when it came for sale upon the stock exchange market here in Dublin, from going to a premium; if so, what were those steps and, if not, does he consider that he is under any responsibility to the holder of previous National Loans to see that the purchasers of the present National Loan do not get a present of £200,000 at the expense of the taxpayer for every point premium the new stock rises.
Apparently the Deputy is, as they say in Northern Ireland, gregged at the success of the loan.
You could have an even more successful loan if you made it 7½ per cent.
Arising out of the Minister's reply, did I understand him to say that he had paid £75,000 of the taxpayers' money for the ludicrous performance of getting the banks to underwrite a 5 per cent. issue that any child would have known would have been oversubscribed?
I propose, with your permission, to raise on the adjournment the failure of the Minister to answer the 18 questions that I have put down.