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Dáil Éireann debate -
Thursday, 20 Nov 1952

Vol. 134 No. 14

Committee on Finance. - Vote 6—Office of the Minister for Finance.

I move:—

That a supplementary sum not exceeding £10 be granted to defray the Charge which will come in course of payment during the year ending on the 31st day of March, 1953, for the Salaries and Expenses of the Office of the Minister for Finance, including the Paymaster-General's Office.

The House will realise that this is a token Vote for £10 and as I understand it the sole purpose of the Opposition in asking that it should be put down is that they might launch a grand indictment against the Minister for Finance.

On a point of order, surely this is discourtesy from the Government, especially in view of the fact that there was an honourable agreement between the Party Whips to expedite the adjournment of the summer session of the Dáil, that the Estimate for Finance would be given to the Minister and that for the purpose of the ordinary discussion the Minister would introduce a token Estimate for £10?

I suggest that is what I am doing and I am doing it in a way which will enable this debate to be conducted with more order than Deputy Mac Fheórais appears to be anxious to impart to it. I was saying that the reason, as I understand it, for putting down this token Estimate for £10 is to enable the Opposition to criticise certain aspects of Government policy for which they hold me responsible. I cannot see how the Opposition could address themselves rationally to that matter until at least they heard my exposition of the case as I see it.

The Minister was starting off on the old campaign.

The purpose of the debate is to indict the Minister for Finance. Now, that attack has been prepared after the grand manner. We have had preliminary skirmishes and forays. Deputy MacBride's motion, for instance, on the report of the Central Bank, was one of these. Deputy Dillon's motion on the White Paper—it was moved, if I may say so without offending anybody's susceptibilities, in terms of the most pretentious nonsense—was another. Then we had the still-born effort by Deputies Mulcahy and MacEoin — still-born because of the inept handling of the motion by its sponsors—on the terms of interest fixed by me in respect of advances from the Local Loans Fund.

He will drive you out of office in spite of yourselves. You could not possibly last out.

Let us hear the prisoner.

All this has been supplemented by various minor operations such as that which Deputy Mulcahy has been conducting in his zeal to politicalise the Civil Service. There has been a great deal of blowing of bugles, banging of drums and table thumping. We had an exhibition of that, I think——

On last Friday.

——this day week and tub thumping——

In the North-West constituency.

——in an endeavour to deflect the Government from the hard task which has been imposed on them of restoring financial and economic stability to the State. So far as one can sort them out from the pandemonium which the Opposition has been creating over the past three weeks, four issues seem to emerge for which the Opposition think I carry, as Minister for Finance, a particular responsibility.

These are, first, the White Paper forecasting the outturn of the year 1951 on our balance of payments; second, the report of the Central Bank; third, the terms which made the recent National Loan a success—a success which the Opposition apparently found very unpalatable, and fourth, the enforcement of the regulation that civil servants must not identify themselves with particular political candidatures. Perhaps I might add to all these the steps which have been taken to redress our balance of trade and to secure a balanced Budget.

There is one of these matters for which I have no direct responsibility. In fact, I may say one in respect of which I have no responsibility whatever, whether it be direct or indirect. I refer to the report of the Central Bank. That report—and it is well that we should keep this in mind—represents the independent, uncoerced and unintimidated view of the governor and directors of the Central Bank on the financial and economic position of the State.

It is a report which they present to the people on the management of our financial and economic affairs. It is a report not of politicians like Deputy Dillon and Deputy MacBride, who are concerned to cover up their own financial and economic errors, but a report of experienced, independent men, some of whom are business men, some farmers, some labour representatives, some bankers, some high civil servants and some expert economists—men who have considered and weighed the facts as they have emerged and as they have impressed themselves upon them and who, on the basis of these facts and in the exercise of their own good judgment, formulate their conclusions for the consideration of the Dáil.

Section 6 of the Central Bank Act constitutes the governor and board of directors of the Central Bank as the guardians of our currency, our currency which can be damaged by the things which our Governments may do, our credit which can be damaged by the things which our Governments may do and our credit which has been damaged by the things which our predecessors did. Section 6 of the Central Bank Act, a statute passed by this Oireachtas, imposes upon the governor and the directors of the Central Bank the primary duty of safeguarding the integrity of our currency.

Section 8 imposes on them the duty to put their views before the people. Common sense recommends to us all that we should study these facts, that we should consider them carefully and, of course, that we should be guided by them to the extent but only to the extent that they appear to us to be well founded. However, as I have said, I have no responsibility whatever for the report of the Central Bank but since the Dáil has been asked by Deputy MacBride and by Deputy Dillon —who apparently thinking discretion was the better part of valour withdrew a motion which he had earlier put down—to condemn the governor and the directors of the Central Bank, I may later in the debate deal with some of the more jejune statements to which Deputy MacBride committed himself when he was discussing this matter on a motion which he put down on the White Paper.

Before doing that, however, I should like to say something regarding Deputy Dillon's motion asking the Dáil to condemn the White Paper which was issued last October.

On a point of order. The Minister is now proposing to make a speech which he did not attempt to make last night on a motion which was disposed of by this House.

So long as what the Minister says is relevant to the Estimate I cannot prevent him.

Do I understand, Sir, that a motion to which this House allotted three hours for discussion and upon which the House took a decision can be reopened now?

I am not saying that discussion can be reopened on a particular motion.

That is the motion to which the Minister has referred.

If the matter to which the Minister is referring is relevant to the Estimate he is introducing I cannot prevent him dealing with it.

The White Paper was issued at my instance to forewarn the people regarding the adverse economic development which was taking place in our affairs. It is entirely a matter of administration and was issued by me during the year which ended on the 31st March, 1952. It is usual, I understand, in debating on the Estimates, to discuss the administration of the previous year. If, Sir, I had not an opportunity of dealing with this matter on the Private Member's motion, I am suggesting to you that I am entitled to deal with it now. There was, in fact, a concerted plan to foreclose, to shut me out and exclude me from the debate on the motion which stood in the name of Deputy Dillon.

Why not have asked Deputy Briscoe to speak?

On a point of order. I want to be clear about this because the Minister is apparently determined to break all rules. The Minister has just deliberately announced that he now proposes to discuss the motion which was disposed of last night and make the speech which he should have made last night.

The motion has been dealt with. The motion that has been decided cannot be reopened as such but if the subject matter of the motion which was discussed last night is relevant to the introduction of this Estimate by the Minister and the administration of the Department I cannot object.

Do not take me as objecting to a free-for-all. I welcome it, so long as we know the defences are down.

The accused may proceed.

I propose, with the Deputy's kind permission, to do so. The Deputy, no doubt, will recall that recently I have not been permitted to participate in any of the debates in this House and he will remember how he foreclosed the motion in his and Deputy MacEoin's names dealing with the increase in interest rates.

I am not indicating that discussions on motions already decided may be reopened. I have only decided that if the matter discussed is relevant now to the administration of the Minister's Department and to the Estimate he is introducing, I am allowing him to proceed on these lines.

I think nothing could be more relevant for this reason. It has been necessary for me to take certain financial measures, and, in co-operation with the Minister for Industry and Commerce, to take certain other measures to redress the adverse trend in the balance of trade which was forecast by the White Paper. I think, with all due respect to you, Sir, that it is important that the validity of the conclusions reached in that White Paper should be substantiated, that the White Paper and the statistics in it should be shown to have been well-founded and that consequently the action taken on the basis of the White Paper was fully justified —justified in prospect as it has been justified by results.

I was saying in relation to this question of our balance of payments that, about this time last year, I issued a White Paper which was presented to the Oireachtas in, I think, October. According to Deputy Collins—and here I suggest to you, Sir, is where this matter becomes of the first relevance— this White Paper disqualified me from holding my present office. I do not particularly hanker after office. I have held it for so many years that for me it has very little savour and its sweets are indeed in some cases like dead sea fruit; but that I or my colleagues should relinquish office and hand over the concerns of this country to the unholy combination which, in three years, squandered our substance and plunged us into foreign debt is just unthinkable, and I should therefore like to try to recall to the House some of the forecasts which were made in that White Paper, not with any idea of reopening the debate on the motion which was decided last night, but to show that in fact the White Paper represented an objective approach to a very difficult problem.

As I have told the House, the title of the White Paper was: "The Trend of External Trade and Payments." I have never for a moment suggested that the conclusions which I arrived at and which were set out in that White Paper were infallible. They were merely forecasts and, as I have said already, I do not profess to have the gift of infallible prophecy. All I could do was to take the situation as it appeared to me to be developing at that particular period of the year and tell the people that, because of the end to which that trend would eventually bring us, it was necessary for us to take certain steps. Of course, in the discussion of my general policy and the general administration of my Department, the very title of this White Paper has been misrepresented or has never been adverted to. It has been assumed that it represented a firm prophecy, when in fact it merely tried to bring home to the people the direction in which we were going and the fact that, if we were to continue on this road for two or three years, we were heading for national bankruptcy.

That was the purpose of the White Paper. It was necessary to bring home to the people the seriousness of the situation and what I wish now to put before the House is a review of the facts as they have emerged. It is true that the White Paper forecast that unless things were to change radically in the last quarter of the year, we should have a deficit on our balance of payments of the order of £70,000,000. In fact, however, things were not so bad as that. They turned out not to be so bad as that, because—and let the Dáil realise why—we had already taken steps to try to mitigate the adverse factors which were operating against us. We had already taken steps to try to reduce the prospective adverse trade balance to more reasonable dimensions.

What were those steps?

We succeeded——

In frightening the life out of the people.

If Deputy Costello cares to put his question to me in the course of a speech, I shall have an opportunity of replying.

Why should the Minister not tell us in his speech?

I do not propose to be cross-examined by the Deputy. I know he is a very expert cross-examiner, but, at the same time, I have a serious statement to make to Dáil Éireann and perhaps the Leader of the Opposition will bear with me patiently.

And give the accused fair play.

I am going to remind the House of what I did say in regard to this adverse balance of payments in July of 1951 and I am quoting from the Dáil Debates, Volume 126, column 1896. I said then that the evidence available at that time suggested that the 1951 deficit in the balance of payments would be of the order of £60,000,000. That was quite a good long-term shot, as most Deputies will agree. If you were taking long odds on the night of the first call-over on the Manchester. November Handicap and were able to get as close to the mark, as I was in regard to the balance of payments deficit six months hence when I spoke in the Dáil in July, 1951, I think you would be clapping yourself on the back and saying that you had made a damned good bet.

But you would not lay it off three months later.

I am afraid I do not understand the language.

I cannot explain it.

There are some members of the House who could give you first-hand and very expert tuition. I was saying that in July of last year I warned the House and the country that if things continued to go on in the way in which they were then developing we would be faced at the end of the year with an adverse trade balance of £60,000,000. That would be an adverse trade balance of just twice the dimensions we had experienced in the year before. In 1950, as Deputies know, the adverse trade balance was £30,000,000. In the year 1951, following on the panic importation of a lot of manufactured goods, some of which we could have made here at home, it looked as if our adverse trade balance would be in the order of £60,000,000.

Panic importations such as wool and timber?

How was that modest forecast of mine received by the Leader of the Opposition? Deputy Costello described it as ludicrous. He went—I think it was to Cork, though I forget the exact venue—and he was reported in the Irish Times on August 28th of last year as stating:—

"I am prepared to describe as ludicrous the £60,000,000 estimate announced by Mr. MacEntee as his figure of the deficit on the balance of payments for the year."

That was in Mills' Hall in Merrion Row that I said that and not in Cork.

Whether the Deputy said it in Mills' Hall or in Cork does not matter. The fact is he described my very close forecast as being ludicrous. The Deputy is accustomed to use that type of barnstorming vocabulary.

In the circumstances in which it is applicable.

The fact of the matter is that at the end of the year when we had the out-turn for the year we found that the deficit in our balance of payments was not only £60,000,000, a figure which Deputy Costello described as ludicrous, but was, in fact, £61.6 million, or almost £62,000,000. That was the actual experience, the actual realised figure in so far as the Central Statistics Office could calculate it. I know, of course, that the Deputy will say that I had suggested in this White Paper, which has been the subject of so much controversy, or forecast or estimated that the figure would be £70,000,000. I am quite prepared to admit that that estimate was excessive. Thanks, as I have already said, to the measures we had already taken——

But which you would not tell us. The Minister would not tell us what the remedies were.

——the out-turn at the end of the year was not quite as bad as we had apprehended.

In September.

Am I to be condemned because instead of having an adverse trade balance of £70,000,000, as at one time looked likely, we succeeded by reason of the measures which we had taken in reducing it to something less than £62,000,000? I think that so far from being condemned the Government is rather to be commended for that fact. It does represent at least that we have £8,000,000 of external assets which are producing an income that is helping us to pay our way in the world. Unfortunately, for one reason or another, we are not able at the present moment to make ends meet on the basis of our visible and invisible trade. We are still in deficit. The problem is a very serious one for us because it represents an encroachment upon our income-producing capital resources which we can ill-afford. Therefore, as I have said at the beginning, the fact that we did not find it necessary to eat so deeply into our reserves, as I at one time apprehended, is something for which I should be commended rather than condemned.

Let us see again, if I may be permitted to try to tell it to the Dáil, what I attempted to do in August, 1951. In August, 1951, the position appeared to be very serious indeed. I said to myself: "These figures have been placed before me and I think it is my duty to set them before the public. I think it is my duty to put them to the people." After all, if I were to allow the year to run on and at the end of it we were faced with this enormous deficit, comparatively speaking, of almost £62,000,000, people might quite easily ask: "Why did not the Government let us know what the facts of the situation were?" Therefore, I published a White Paper which was drafted in most objective terms and on the most conservative basis. Now, when forecasting, we can only proceed on the basis of past experience. We were not gifted with far sight in regard to the future.

Hear, hear!

We had no prescience whatsoever. We were not like Deputy Dillon who, when after the Coalition under the leadership, I presume, of Deputy MacBride had decided not to break the link with sterling but to follow the £ down the course, came out and said that prices would not be affected in the foreseeable future. He had very long vision. Unfortunately that vision was not in fact very long because facts very quickly belied him. However, I have not the same gift of far sight as Deputy Dillon manifested when he came out in the latter end of 1949 and said that the devaluation of the £ would have no effect on prices in the foreseeable future.

I never said any such thing. Perhaps the Minister would like to quote what I did say.

Possibly that is because his nose is a little shorter than mine and he can just see to the tip of it.

The Minister is quite wrong. I said bread would not go up; tea would not go up; tobacco would not go up; and they did not go up until Fianna Fáil came into office. It was Fianna Fáil raised these commodities.

Is that not so? Prices did not go up until Fianna Fáil came into office.

The main purpose of the White Paper was to inform our people of the developing trend in our external trade and payments in the year 1951. That was its title. That was its purpose. It was to give the facts and the figures a wider circulation so that the public generally would be aware of the seriousness of the deficit that was being incurred at that time and in that year, and of the dissipation of our external resources which that deficit would largely, though not wholly, involve. Now, when we were dealing with this problem of a mounting deficit in our balance of payments we had to take into account that some part of the deficit could be attributed and was attributable to increased stocks of essential commodities and perhaps to some extent to increased home investments. That was stated by me. I brought that home to the people and I said that, taken all together, increased stockpiling and home investment would offset a fraction of the prospective £70,000,000 of external disinvestment. I think, in fact, the phrase I used was that, taking all together, increased stockpiling and home investment would offset only a fraction of the prospective £70,000,000 of external disinvestment. That conclusion. I think, has been substantiated by the national income and expenditure estimates prepared by the Central Statistics Office for the year 1951.

The balance of payments deficit for 1951 was published, as I have already informed the House, in June, 1952, in the Irish Trade Journal and was fixed and determined by the Central Statistics Office at £61.6 million. I think we are entitled to consider very seriously not the White Paper itself— not whether it is tendentious nonsense, as Deputy Dillon has suggested—but what, in fact, has emerged. The Central Statistics Office, for instance, has estimated that the gross domestic physical capital formation—I am sorry if I have to use these somewhat forbidding and formidable technical terms but these are terms of art and I have to worry the House with them— including the value of the physical change in stocks—the House will remember that there was a great deal of controversy about this particular aspect—amounted to £73,000,000 in 1941 as against £56.2 million in 1950— an increase, bear in mind, of only £17,000,000. When I was trying to inform the country about this situation in 1951. I said—and I have been challenged in regard to it—that we estimated that during the year 1951 the physical volume of stockpiling represented about £10,000,000. What has the Central Statistics Office said? Having pointed out their estimate, at any rate, for the year on the basis of detailed inquiries which they had been able to carry out and which it was beyond our resources to undertake, they estimated on the basis of these detailed inquiries that the value of the physical increase in stocks amounts to only £12,000,000 so that the difference between the estimate which I put to the people and which was published in October 1951— which was, in fact, prepared in August of that year—comes to £2,000,000. We said in the White Paper that £10,000,000 represented the physical increase in the value of stocks. The Central Statistics Office put the figure at £12,000,000.

Is that item 32 on page 47 to which the Minister refers?

I think that these figures——

Will the Minister tell us?

No, Sir, I am going to continue. The Deputy can put these questions later and I will deal with them when I am replying. I have a great deal of ground to cover. The Deputy has been protesting against my silence for several days. I am now trying to unfold the real position to him.

He always gets his figures wrong.

Silence. What silence?

The figures which have been published make nonsense, I suggest, of the Opposition contention that the 1951 deficit was a deliberate and desired result of a policy of stockpiling and increased home investment. We came to the conclusion and we published it—and this, Sir, touches very closely upon the question of my responsibility for the administration of the Department of Finance—that imports of consumer goods would have to be reduced in order to adjust the serious lack of balance in our external payments. That conclusion, I suggest, has borne the test of time. We did not call last August or at any time for a reduction in imports of capital goods.

Is the Minister speaking of the August before last?

August, 1951. I am grateful to the Deputy for his correction. His interjections are so seldom helpful that I am more than normally grateful to him. We did not call in August 1951 for a reduction in imports of capital goods. We emphasised—as Deputy Costello was at pains on many occasions to dilate upon —that the immediate need was for reduced spending on consumer goods and materials—many consumer goods which we could make for ourselves at home and which, since this Government took office, we are now making at home.

A 15 per cent. reduction.

Deputy Costello, speaking in the Dáil on the 7th November, 1951—I am quoting from Volume 127, column 351, of the Official Report—criticised us for saying:—

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

What are the facts? I had to suffer this sort of criticism all during last year because I had to support me only my own forecast and estimate of the situation. What has now emerged? In the first place we find that the balance of payments deficit, which was £30,000,000 in the year 1950, rose to £61.6 million in 1951. The net community saving fell to nothing in 1951 but personal consumption increased from £329,000,000 in 1950 to £360,000,000 in 1951—that is, by £31,000,000. I think that we were fully justified in pointing out to our people that we had, one way or another, to try to curtail spending, that we could not go on importing from abroad unless we were prepared to produce more and export more, and tried to bring the gap between what we were selling and what we were buying into closer accord with our real circumstances.

We have succeeded, perhaps by our exhortations, perhaps by the fiscal measures which we have taken, in closing that gap to some extent. It is true we have been substantially helped by the increase in the volume of our exports. That increase to date has been substantial and, I am glad to say and quite candidly admit, has exceeded my expectations, but then I am not one of those people who set my cap too high. I am not one of those people who indulge in undue optimism. I am one of those people who, in these matters, speak with reserve and speak only with an assurance that what I say in regard to financial expectations will in due course be realised.

Prove to be as daft as all your statements.

That is like what you told us when you said we were heading for bankruptcy.

We were heading for it, and every foreign commentary you read will tell you that we were heading for it. Every authority that looks at this problem objectively will tell you we were heading for it. Is that not why the Opposition have tried to muzzle the governor and the directors of the Central Bank, because they were telling the people the unpleasant truth —that if the Coalition policy were to continue for another few years, the stability of our currency and our whole economy would be endangered? That is why all this attack has been made upon these people who have no purpose except to put before the people their fair and objective judgment of the situation as they see it.

What were the foreign authorities?

Mr. Butler.

I want to be careful about this. I am not saying that such authorities are infallible, but they are honest and they are objective. They are much more honest and much more objective than Deputy Dillon or Deputy MacBride, who have preconceived notions about these problems.

Could the Minister say who are the foreign authorities?

Mr. Butler was good enough for him. One pull on the string from Mr. Butler put him in his place.

Deputy Dillon had better stop talking about strings being pulled by British Chancellors. I have no intention of entering into a competition with Deputy Dillon——

One pull on the string from Mr. Butler was enough.

The Minister is in possession and should be allowed to speak without interruption.

You incurred a foreign debt of £40,000,000 at the instance of a British Chancellor——

We accepted Marshall Aid by a resolution of Dáil Éireann.

We entered into no agreement——

Mr. Butler pulled the string.

I belong to a Party that has never been pulled by any external influences. We have always stood on our own feet under our own flag and we have not wrapped the flag of another country around us. We have not tried to hang on to the coat tails of any commonwealth or empire.

It was not for the want of trying.

We have not signed secret agreements which spanceled this country to Great Britain until the Fianna Fáil Government broke them in 1932. However, all this is beside the point.

Hear, hear!

I am sorry that I have been——

I am wondering if the red herrings are running out.

I am sorry that I have been drawn into the byways of political controversy by these untimely interruptions.

(Interruptions.)

The Minister must be allowed to proceed. Deputies will get an opportunity of making their own comments later.

I am really only saying that the Minister would have been spared this if he would mention what were the foreign authorities to which he was referring.

I am not so fond of the sound of my own voice as the Deputy as to attempt to enter into a competition in disorderly interruption with him. If he wants to take part in the debate, he will have an opportunity in due course, but I trust that he will have a little patience meanwhile. I have exercised considerable patience with him for some weeks past.

I am simply asking the Minister to answer a question.

You have not the remedy of the editor of the Irish Times.

I was saying that it is quite true that while I did not anticipate, nor indeed did the statisticians who advised me in these matters anticipate, that there would be a considerable increase either in the volume or in the price of exports in the immediate future, our experience during the current year has been a very pleasant surprise indeed. There has been a substantial increase during this year in our exports. I think we all have reason to be gratified at that.

Hear, hear!

The real point about that is that the increase in the volume of exports, though it has been substantial, would not by itself have completely rectified the 1951 situation. The increase in exports for the first ten months of 1952 as compared with the same period in 1951 is £18.9 million, a very gratifying increase indeed for which I think we can all thank the present Minister for Agriculture.

They became three-year-olds in less than 18 months.

On the other hand, the fall in imports in the same period is of equal importance and an equally weighty factor. The fall in imports in the same period, mainly of consumer goods and materials, was £23.9 million.

How did you do it?

Both of these factors, the expansion in our exports and the reduction in our imports, have contributed and have been essential in bringing our balance of payments closer to equilibrium.

One due to capital investment and the other to stockpiling.

Again let me try to defend myself. It is quite true that we did not foresee in August, 1951, that the year 1952 would be so favourable.

Hear, hear!

For instance we were not in a position to forecast the fact that we would have such an abnormally fine summer as that with which the Almighty has blessed us. Perhaps Deputy Dillon might have been so prescient as to have done that. So far as I am concerned, I would merely have said that 1952 was likely to be much the same as 1951.

And that the cattle would shrink in the rain.

Mind you, in regard to that I made no secret of this——

Or that the curl would come out of the pigs' tails.

When I was making my forecast towards the end of 1951 I was careful to emphasise that the basis of these forecasts was actual realised experience, the experience which we had in the past. Of course, while my forecast was based on the trade figures which had been published for the first eight months of the year, we had only provisional figures for September of 1951 to go on. These became available to us when my forecast was already in proof, and they were dealt with in addenda. Despite this fact, however, I am again going to be bold enough to suggest that the forecast which I made for the out-turn of the year 1951 was, on the whole, substantially accurate.

I know, of course, that an attempt is being made by the people in the Opposition to deceive the public as to the nature of these Estimates. They want to impress them with the idea that an estimate is a firm contract, something which you bind yourself to in the sense that you will be subject to penalties if you do not fulfil it. Everybody knows, of course, at least we do here in this House, what estimates are. We know that they are subject to margins of error and that, in fact, over very short periods of time, the big factor in these estimates, that of external trade, changes in all sorts of unexpected and unforeseen ways.

We have only to think of what happened, for instance, in regard to a commodity which was mentioned here in the course of an interruption from Deputy Dillon, that the price of wool soared to unprecedented heights early in 1950 only to collapse in a slump within a few months, of people rushing in to buy wool at the height of the wool market even though they were already overstocked. You had the same with regard to textiles and boots and a great many manufactured articles in respect of which there was considerable overstocking because people went in to buy on a rising market. Then, as the culmination of it all, there came, towards the end of 1951, the extraordinary measures which were taken by great trading nations like Great Britain, France and others to curtail and drastically restrict the import of all sorts of commodities.

These were the factors with which we had to contend in August and September, 1951, when we were framing our forecasts of the out-turn of the year. I want to repeat again that, despite everything that has been said, there has not been a single figure in that forecast challenged. Deputy Dillon had a motion down here in which he described the White Paper as "tendentious nonsense", but he did not once address himself to the White Paper. Like the babe in the wood, he got lost talking about the timber which was exported across the Border. His one and three-quarter hours' speech confined itself solely to that. Not once did he come back to the White Paper except to mention the figure of £31.7 million.

The Minister was not listening. He was shouting all the time.

I quite concede to the Deputy that it was impossible for me to hear a great deal of what Deputy Dillon was saying because he was pounding and thumping the desk so hard that I had to warn him that mahogany was much more expensive than soft-wood.

And I reminded you that the wood was going to Belfast for the making of mahogany desks there.

I was saying, and I want to come back to it again, that our forecast for the year 1951 was, on the whole——

Haywire.

——a close and accurate assessment of the position. Deputy Dillon has described it as haywire. Let us see what we did say. We forecast that the imports for the year 1951 were likely to be of the order of £212,000,000. The actual figure turned out to be £205,000,000. I think that is very close estimating. Deputy Dillon, no doubt, in his business transactions, could go much closer than that, but myself, as an ordinary man not gifted with superhuman foresight, I think the fact that we had an actual realised figure of £205,000,000 of imports for the year 1951 as compared with an estimate——

Made in September.

No, in August. What we said in regard to September was this, that the figures for it made no appreciable difference to what we regarded as being the final figure. The Deputy is anxious to get away from the fact that our forecast, made in August, was that the value of goods imported into this country would be of the order of £212,000,000. We were less than 5 per cent. out.

20 per cent. per annum for three months.

Again, we estimated that our exports over the whole year would be of the order of £83,000,000. There, once again, we erred on the other side. When estimating our imports we erred in so far as we made an overestimate. Again, we made an overestimate in regard to our exports because, while we estimated that our exports would be of the order of £83,000,000, in fact they were of the order of £82,000,000. We estimated that our net invisible receipts would be about £60,000,000 as compared with the final figure of £61,000,000. I think that one could not get, through ordinary human foresight and prescience, anything closer than those figures. If one could, then I think human life would be a great deal easier, and we would not be subject to these fluctuations up and down which confound all our expectations when we experience them.

What have we to say about the people who criticised the forecast which we made in 1951 on the basis of the 1952 results? I think we should have little patience with these people. What has been the basis of the criticism which we have heard repeated so often from the Opposition Benches? When they blame us what they are trying to say is: "Things have been so good in 1952 that you had no right to make that forecast of the position in 1951."

You were told in 1951 that you were wrong.

Were we told that?

Not at all.

You will hear about it again and with emphasis.

That is not what we were being told in 1951. We were told in 1951 by Deputy Costello in his earlier speech—I have not got the quotation at hand and I am quoting from memory; if I am misquoting the Deputy he will forgive me and I will accept his correction—that the balance of payments deficit would not be of the order of £50,000,000.

You said £70,000,000.

Deputy Costello said when he was challenging that estimate that he did not believe that the balance of payments deficit would be even of the order of £50,000,000. When I talked about the balance of payments deficit being of the order of £60,000,000 in July, 1951, Deputy Costello, in August, described that figure as ludicrous. They were telling people that our forecast of the balance of payments deficit was completely excessive and that, therefore, there was no need to take any of the measures which we had to take to redress it. Now that we have taken these measures——

A Deputy

You did not take them.

We did take them.

What were they?

We have been trying to get what they were.

We took strict control over the allocation of foreign currency. For instance, foreign currency is no longer being dished out and thrown out as it was by Deputy MacBride on buying pop-corn machines.

And raisins and prunes from California.

Does the Deputy suggest that the raisins and prunes imported under his Government were not paid for in foreign currency?

What ones?

The ones brought in from Turkey and Persia.

They were not paid for with dollars.

That does not matter. They were paid for in foreign currency which had to be got out of the sterling pool.

Were they sold as mince meat for sterling abroad?

The Deputy can make that point——

The only person to suffer was King Farouk who did not get as much out of the sterling pool to play baccarat in Monte Carlo.

These interruptions should cease.

Deputy Dillon must imagine he is on a flying carpet transporting him to Baghdad or wherever King Farouk may be at the moment.

The Minister was the first to go to Turkey to-night.

What other measures did the Minister take to control imports as well as the control of foreign currency?

I should like Deputy Costello to refresh his memory on these matters. It would be a very good thing if he would read my speech——

On the Budget and your Estimate.

I am not asking Deputy Costello to read my speech on the Budget. He is still sore about it. After all, he did commit himself to one absurd suggestion that I was underestimating the yield of the taxes by no less than £10,000,000.

We will deal with that and you will hear quite a lot about it.

Of course we will.

Tell us the other measures which you took to control imports.

I told the House in my Budget speech and in the debates on the Budget that we had tried to estimate as closely as we possibly could the yield which we would get from taxation this year.

That is not what was said before the arbitration tribunal.

You told the people that we were underestimating by £10,000,000 in order that we might defray out of taxation expenditure which should be properly met by borrowing.

Your scheme went awry.

The Deputy is a sound lawyer and he should not try to heel-tap a bad case.

A sound lawyer never heel-taps a bad case. Tell us the measures you took to control imports besides the control of foreign currency.

I am only dealing with one of the things charged against me. I know I am keeping the House an intolerable length.

We are enjoying every word of it.

We are only helping you to drag out until 10.30.

The Minister will be fresher in the morning.

The Minister is entitled to be heard without interruption.

If the Minister persists in talking about the measures and the steps taken to control imports, surely it is relevant for me to ask a serious question in order to get information. What were those steps and what were the measures? So far I have only got one—stricter control of foreign currency.

One of the measures comes very clearly to my mind. I was very much interested in the production of knitwear in Donegal.

The Minister is in possession.

I put down a question in regard to that and the answer was that £3,000,000 worth of knitwear was imported into this country during the 12 months ending in June, 1951. The first action of the present Government was to preclude the importation of knitwear in July, 1951.

The Minister for Finance is in possession.

That is an indication of the Minister's changed status in the Party. Up to this he would not suffer an interruption like that from any back bencher.

He is on his last chance.

One thing about the Ministers in this Government is that they are always accessible to Deputies of all Parties and they give ear to everybody who comes to discuss problems with them.

(Interruptions.)

The Deputies might allow the Minister to make his speech without interruption. They will get an opportunity to make their own contributions later on. It is usual to hear the Minister's opening statement without interruption.

I want to hear the Minister.

I was saying that we had taken certain measures to deal with this situation. Deputy Costello asked me what these measures were. I recommend Deputy Costello to read the speech which I made in introducing the Vote on Account, when I quite clearly forecast what we were going to do and implied also that when I came to present the Budget to Dáil Éireann it would be clear that we were taking further steps to deal with the situation then.

What steps did you in fact take? That is what I want to know.

I do not wish to ascribe to myself or to the Government all the credit for the improvement in the situation which has in fact taken place. Our forecasts of the position in 1951 were intended to awaken the public to an appreciation of the gravity of the problem confronting the nation and I am glad to say that the public reacted to our advice.

They did, all right.

The public reacted to our advice in a very striking manner——

Oh, very.

——a very striking manner indeed.

Two to one against.

We did not, of course, employ political mendicants to try to capture votes for us.

Do not annoy Deputy Cowan too much.

We are not like the Fine Gael Party in that respect. We did not send people out with placards saying: "Pity the poor Byrnes, this is all they have to live on."

That is a disgusting, despicable, dirty remark by a little blackguard. Is he going to be made withdraw that blackguardly remark?

It is true.

It is unjust to 13,000 people in one constituency in the City of Dublin.

The remark should not have been made.

I said that we did not say that on placards or elsewhere.

Is the Minister going to withdraw the remark he made?

I submit that your ruling is that the Minister should withdraw the remark he made.

Falls Road tactics.

I have already indicated that the Minister should not have made that remark. The remark should be withdrawn.

Withdraw if you have any decency.

He will withdraw the charges five years afterwards as he did another infamous remark.

Any remark the Chair considers objectionable I am always prepared to withdraw.

You do withdraw, then?

On a point of order. Is the Minister unequivocally withdrawing the remark he made?

The Chair understands that the remark has been withdrawn by the Minister.

Deputy General Mulcahy takes his place behind Deputy Byrne.

Deputy Cowan would be surer of his own seat if he took his place behind Deputy Byrne.

We are very glad to take our place anywhere with Deputy Alfie Byrne.

Has Deputy Allen withdrawn the remark he made?

What remark are you talking about?

You gave a very bad example.

The Deputy should withdraw. It was disgraceful. He should withdraw also. He was associated with that personal, vituperative, dirty remark and should withdraw it.

Deputy McGilligan should allow the Minister who is in possession to carry on.

Deputy Allen made the same remark.

He made that remark.

He does not deny that he made it.

What remark?

Why should he withdraw it if he did not make it? Why should he deny it?

Of course he made it. He is escaping because he was not heard. Would you not be man enough to say that you did make it and withdraw?

Would Deputy McGilligan allow the Minister to conclude?

Deputies should not be allowed to make remarks and then cower down and say that they did not say it.

Deputy McGilligan is a good example of the man who cowers down.

He can get away by silence.

The Deputy traduced a member of this Oireachtas and then outside this House took a brief to defend the slanderer member and refused to give evidence to substantiate the charges which he himself had made.

This is his contribution to decency and unity.

I am talking of people running away.

More of the Falls Road.

That is not fair to the Falls Road.

If this conversation would cease perhaps the Minister might be allowed to continue.

The Minister is showing contempt of this House.

Is this a point of order?

It is. The Minister should be ruled out of order.

It was a dirty filthy remark. You should be ashamed.

The cause of all this uproar was a remark of mine, and, I think, a well-substantiated remark of mine.

He is saying the same thing again.

Am I to understand that he asserts that the cause of all this disturbance was a well-founded remark of his?

Certainly.

May I draw your attention, Sir, on a point of order to the fact that the Minister now reiterates in that particular kind of way the statement you have asked him to withdraw and which he has pretended to withdraw?

I might be allowed to speak. It seems to me that there was an organised barrage last night to prevent Deputy Briscoe from talking. The great weapon in the armoury of Fine Gael has always been disorder as we know, disorder in the Dáil and disorder in the country, and apparently they are endeavouring to create disorder here to-night.

On a point of order. The Minister has expressly stated with regard to the remark he alleged he withdrew that it was a well-substantiated remark and, I submit to you, he has repeated in that form the objectionable statement which he already made and which you asked him to withdraw. On a point of order I ask whether you are going to make him withdraw the remark again?

I wish to repeat that this uproar has arisen because of a remark which is well-founded and which has been substantiated by the facts. I said that we warned the country in 1951 and that the country had responded because the public did appreciate the need to take measures to deal with this grave problem that we had inherited from our predecessors. The people did appreciate the truth which we were telling them: that if we did not deal with this balance of payments difficulty we were heading for bankruptcy. That is the remark which produced all this uproar from the Opposition. We had a response from the public. We had that response in the shape of increased saving and reduced spending. The change, of course, in the world situation, particularly with regard to raw material prices, and the action which we took, the fiscal measures which we took and the import restrictions which we imposed have, in fact, made 1952 a much better year from the point of view of both external and internal financial and economic stability than 1951. We have had a great deal of criticism levelled at us because we did have the courage and the candour to tell the people what the position really was. Now that the position has been so enormously improved we are criticised because of the improvement we have brought about. These after-event criticisms are of little value and I think that the only reason they are now expressed is in order to cloud the issue, to conceal the fact from the people that the policy of this Government has been in large measure successful in re-establishing financial and economic stability. It is, I suggest, unfair to attribute to us something which we have never expressed. We never said that the conclusions in the White Paper would be the sole foundation of Government policy. That Government policy has been fully explained and was carefully outlined in the Budget speech.

Again I want to be quite candid with the people. It would be mere pretence to allege that the budgetary proposals were decided upon primarily in the interests of the country's balance of payments. The first and most important cause was the unbalanced Budget which we inherited from our predecessors and the lack of balance in our accounts as we had to present them to the nation at the beginning of the present financial year.

There was a surplus on the Budget presented for the year ended 31st March, 1951.

We were in the position that, by reason of the social security measures to which we had already given effect or which we then envisaged, we had not got and we could not get at the existing rates of taxation enough cash to meet our current outgoings. That was a factor which was entirely independent of the balance of payments situation. It was a factor which clamoured to be dealt with in its own right. But in so far as it reduced the heavy deficit which was allowed to emerge on the 1951 Budget——

There was no deficit on the 1951 Budget.

——it had the secondary effect, and no less welcome because it was secondary, of alleviating pressure on the balance of payments. The main features of the 1951 economic situation were summarised in this year's Budget statement. The review contained in that statement, however, was foreshadowed not only in the White Paper but also by my predecessor when he was introducing his Budget in 1951. He, like myself, was very seriously perturbed about the position which was developing in regard to our balance of payments. Deputy McGilligan, who introduced the Budget on the 2nd May, 1951, was no less perturbed than I was when I came to succeed him in June, 1951, and found the position which he had left behind. Here is what Deputy McGilligan said in his Budget statement in regard to this matter. At column 1883, Volume 125, of the Official Debates of 2nd May, 1951, he said:—

"The present position on external account is by no means satisfactory, and if it continues to develop unfavourably the application of corrective measures will be called for.... It is, however, also desirable that the public should transfer to the State for the purposes of its capital development programme a greater share of the purchasing power now being expended on the less essential consumer goods."

Of course, Deputy McGilligan was not as forthright as his successor.

He did not say we were bankrupt.

Deputy McGilligan was not as resolute as his successor.

He was not as irresponsible.

Deputy McGilligan was not as free as his successor was to deal with that almost impracticable problem. All he could do was bleat about it. All he could do was to warn the people, to say in those mild and gentle tones, in the tones which we seldom hear from him in this House: "It is desirable that the public should transfer to the State for the purposes of a capital development programme a greater share of the purchasing power now being expended on the less essential consumer goods."

In other words, increase saving.

Stop buying.

Deputies

No.

We are being condemned because we have asked the public to increase savings and I am glad to say that the public have hearkened to us. Since this Government came in small and large savings have been increasing. We have also been able—and I will deal with it later if I am allowed to without interruption—to raise the greatest loan in the history of the State.

Hear, hear! If you paid 10 per cent. you should do twice as well.

We have got a wider measure of response from our own people than ever was experienced before. We had a much larger proportion of subscriptions from small investors in that loan, and concomitant with that we have also had increased savings through the Post Office Savings Bank and the sales of Savings Certificates. The main point is that we have given the thrifty, industrious people of this country confidence in the Government of this country——

Measured by 5 per cent.

——confidence which they had lost during the three years of the Coalition. I have referred to Deputy McGilligan's statement as Minister for Finance on the 2nd May, 1951. I have pointed out his mild expostulations which were addressed to, I assume, his wilder colleagues in the Government. The main trouble about Deputy McGilligan's pronouncement is this: that he did not do anything to make his warnings effective. He did not act upon his own forebodings of the situation.

He did not cut the subsidies.

We were left with this unbalanced Budget, a Budget which he knew when he introduced it would wind up with a deficit.

We did not wind up with a deficit. We wound up with a surplus.

The weakness of his Budget was that, contrary to actual experience up to that date and to all reasonable expectations, the Government of that time advised the people that voluntary savings would permit a capital programme to proceed without risk to the economy. They neglected, as I have already emphasised, even to provide the revenue to meet prospective current expenditure. If we had continued on the lines that our predecessors had mapped out for themselves, if we were to continue financing current and capital outlay largely by some variant or other of the printing press, the dissipation of our external sources would continue, and while we might enjoy false standards of comfort and living, they would have been followed by inevitable and unavoidable collapse.

When and how was recourse had to the printing press?

Again let me come back to Deputy McGilligan.

On a point of order. Is it proper for the Minister for Finance to state in public that recourse was had to the printing press to balance the Budget when he knows the statement to be untrue?

Is that a point of order?

Oh, yes, because it is very gravely injurious to the credit of this State that the Minister for Finance should state in the House that recourse was had to the printing press to balance the Budget. He knows that is untrue but he said it and hopes to get away with it. I challenge him now, is that true?

That is not a point of order.

Some of us believe that——

It does not matter what Deputy Cowan believes.

He is in the right camp for that.

So does Deputy McGilligan.

Believe what?

He believes in monetary reorganisation.

When was recourse had to the printing press?

Deputies should cease carrying on this conversation.

If the Government were to continue the course which it was taking and were to finance its expenditure, by some variant—I think I said—or other, of the printing press, collapse would have been inevitable.

No; you said it had been done.

He missed a line.

That is what I said and that is what I stand over.

You said it had been done.

I did not say it had been done.

Do you now say you did not say that. I want to check it with the Official Report.

The Minister is in possession.

I do not know whether Deputy Dillon is trying to make this speech or whether I am attempting to address the House on an important subject.

You are reading somebody else's speech.

I caught you out.

I have a few more pearls to cast before you. If you listen patiently you may hear them. They are pearls garnered from Deputy McGilligan.

By a recent performance, the pearls should be cast from this side because those before whom they should be cast appear to be on the far side.

I was saying that if the expedients that had been adopted by our predecessors were to continue, we should inevitably face financial collapse here. But, mind you, that is not merely my opinion; it is the opinion of other people——

Foreign experts.

——who had the temerity to criticise certain financial procedures in this State. There are many people who share that view with me. There were so many people to share it in May of 1951 that there has been a different Government in this country since. I want to get back to this Budget statement—the last Budget statement submitted to the House by my predecessor.

I thought you were going to get back to Mr. Butler.

What about Mr. Churchill—our friend?

Mr. O'Higgins

Where is Mr. Churchill?

His good friend, Mr. Churchill.

And our bad friend, General Eisenhower.

And our good friend, Mr. Butler.

The Minister on the Estimate.

A pretty triumvirate.

It is quite clear that the Opposition do not want to hear this gem from Deputy McGilligan. Here it is.

We would like to hear the gem from Mr. Butler.

Shut up.

Mr. O'Higgins

What said that?

In 1951 Deputy McGilligan conveyed this very serious——

(Interruptions.)

I have reasonably good lungs but I cannot shout down the Opposition in this organised barracking.

We are dazzled by the Minister's reflected glory.

Deputies might allow the Minister to make his statement.

I was saying that Deputy McGilligan first warned the people of the seriousness of the situation. I have already quoted one passage from his Budget speech in which he did that. He went on to use even stronger language—certainly very strong language for Deputy McGilligan when he comes to addressing himself to an unpleasant task. He said:—

"...there still continues to be a substantial use of past savings merely to lever up standards of consumption. Making all allowance for the exceptional conditions now obtaining it is to be feared that we are not producing and earning enough to pay our way."

The quotation is from the Dáil Reports. Volume 125, column 1884. Let us dwell on that passage—

"... there still continues to be a substantial use of past savings merely to use of past savings merely to lever up standards of consumption."

What does that imply except that we were enjoying a factitious prosperity, that we were living upon our capital——

On past savings.

That we were living on our capital——

On past savings.

——living on our past savings, which constitute our capital, and not adding to them, that, in fact, we were running down the productive capacity of the country——

It has nothing to do with production.

——that we were enjoying a merry spree for which we were going to have to pay when there was no more money in the bank and the bailiffs—the foreign bailiffs in this case—were at the door?

It would be dreadful.

It would be. And, to the extent to which we were using up these past savings merely in order to lever up standards of consumption, to that extent, our ability to meet the liabilities and obligations which had been imposed upon this nation by the last Government when it contracted a foreign loan would become more onerous. Is not that a fact? That is what Deputy McGilligan as Minister for Finance was trying to say to the people. He did not say it in the same forthright way as I am saying it.

He did not tell them that it was essential, if we were to retain our economic and political independence, that we should stop eating into the reserves——

Because I did not believe it.

Stop eating into it now.

——that we should refrain from saddling this nation with foreign obligations.

You did that. You spent £24,000,000 out of the counterpart moneys.

We saved this country from the onerous terms of the secret agreement of 1923.

£24,000,000 you spent out of the counterpart money.

Our people are enjoying the benefit of what we did. We are no longer shipping out money in order to pay British pensions.

We are shipping out men and women.

We are no longer shipping out annuities from this country——

Mr. O'Higgins

Men and women.

——in order to enable the British Government to meet its obligations on the land bonds. Our farmers are no longer being harried, as they were being harried, by the tax collector and the land annuity collector in the year 1931 in order to collect those annuities and ship them to Britain. On the contrary, the annuities payable by our tenant purchasers have now been reduced by 50 per cent., and our farmers are reaping the benefits of the fact that we did free them from the financial obligations which you imposed upon them. That is to some extent a digression. I was going to pay a tribute to Deputy McGilligan.

Would you move to report progress, before you reduce the proceedings to a riot? While you are still laughing at yourself——

I am laughing at Deputy Dillon. I move to report progress.

Progress reported; Committee to sit again.
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