What we are really concerned with is the fact that, in the year 1948, this question of the deficit on our balance of payments was causing, as I have said and must repeat again, the greatest possible dismay to the Government of the day. It caused them dismay but they took no steps to deal with that problem, so that three years later, in 1951, the then Minister for Finance, Deputy McGilligan, had to come into this House and say:—
"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."
But these corrective measures ought to have been taken much earlier. They ought to have been taken in the year 1948 when, according to the then Taoiseach, the deficit on the balance of payments was causing the Government of the day the utmost dismay.
However, that ends one sorry chapter. This problem was foreseen in 1948 and nothing was done about it through the year 1949-50. Therefore, in 1951, the Coalition's Minister for Finance had again to come to this House and express the concern of the Government of which he was a member at the fact that the deficit on our balance of payments still continued.
The situation was bad in 1948. We had had an adverse trade balance of £30,000,000 in 1947, I think, and it was bad in 1950 when we had an adverse trade balance of £30,000,000. What was the position with which we were faced in June of 1951? The White Paper which has been attacked disclosed the position to the people so far as we were able to forecast it. We estimated on the basis of the figures and facts then available to us that at the end of the year 1951 the deficit would have risen from £30,000,000 to £70,000,000. That was, thank God, an overestimate because in actual fact the realised deficit was of the order of £62,000,000—£61,600,000 to be exact. In less than 12 months the rate at which that deficit was accruing had doubled. That was the reason, when Deputy Dillon was talking about wood and timber, playing the babe in the wood and trying to shatter the timber, in the debate upon his motion condemning the White Paper as tendentious nonsense, I said that the position had been largely created by, that the problem had been certainly aggravated by, the panic importations which had taken place for which our predecessors had been responsible.
Since we have had to face criticism because of the fact that the Government has had to take measures to deal with this very acute problem, perhaps I will be allowed to show how the problem was, in fact, aggravated for us by the policy which had been pursued by our predecessors. In order to do that I must begin with a quotation from the then Taoiseach, Deputy Costello, in July, 1950. I am quoting from Volume 122, column 2008. Speaking in the debate on the Estimate for his own Department, the then Taoiseach, Deputy Costello, said this:—
"Peace and order have since the change of Government reigned over the land and we earnestly hope that they will continue to do so."
That is a prayer in which we can all join. I wish, however, there were more substance in the statement that peace and order had in 1948 "since the change of Government resigned over the land." You can have apparent peace and order if you are prepared to wink at law-breaking and disorder. The then Taoiseach went on:—
"Abroad the war clouds are lowering over the world. Nevertheless the Government has decided that it must base its plans on the hypothesis of peace."
I should explain that I think there is a misprint in the text I am reading because the phrase "it must base its plans on the hypothesis of peace" is printed as "it must face its plans on the hypothesis of peace."
"Otherwise, we would be stultifying our efforts and putting a brake on the economic progress that the country so much desires, and which the Government is confident of achieving."
Mark that this statement of Government policy was made by the head of the Government on 14th July, 1950, and it expressed the policy which the Government had been pursuing during the whole of the period that it had been in office. It was basing its plans on the hypothesis of peace, notwithstanding the fact that the then Taoiseach himself was constrained to admit that abroad the war clouds were lowering over the world. Therefore, we have here in this phrase of Deputy Costello's the justification and the explanation for the policy which our predecessors pursued.
Every one of us knows that during that period they were concerned to liquidate the reserve stocks of essential materials which had been so carefully built up by the Fianna Fáil Government. They were squandering the capital resources of this State. They were contracting crushing foreign debts at such a rate indeed that they had doubled the net burden of the national debt in three years. They were discouraging the tillage policy of the previous Government; they had sold out the transatlantic aircraft; they had shut down the chassis factory and stifled the development of a heavy engineering industry, all projects which the Fianna Fáil Government had adopted and were pushing forward because they knew that peace had not yet been firmly established in the world and that there was a grave danger that we might find ourselves once again in the midst of a world war.
These projects and these undertakings which we had embarked upon as a result of the sorry and dreadful experience which we had undergone during the six years that the world war had lasted were, every one of them, stifled and liquidated by our predecessors, because, notwithstanding the fact that the international situation was as threatening as the then Taoiseach himself admitted, they were planning on the hypothesis of peace. That was their policy. That was the hypothesis on which they based their policy in 1948. That was the hypothesis on which they had persisted in that policy, notwithstanding the fact that international tension was mounting, so that even in July 1950 the then Taoiseach was still maundering in these terms. They were basing their planning on the hypothesis of peace when war had already broken out in Korea, basing their planning on the hypothesis of peace even when the Communist hordes were besieging Pusan.
When it looked as if this hypothesis of peace was no longer a tenable one, however, when the cold reality of the situation struck them and drove them out of that spirit of complacency which has created such grievous problems for this nation, then they were no longer planning on the hypothesis of peace, they were subjected to a mental hurricane, and in this brainstorm they were thrown from one extreme to another, the fatuous complacency engendered by the hypothesis of peace was swept away in an equally unreasonable panic, and when prices were soaring on the world market these men who had depleted the national reserve, these men who had denuded this country of essential materials, went into the markets of the world, started to buy, and enjoined upon everybody to go in and buy, even when prices were soaring. The consequence was that we had to replace at inflated prices the reserves which should have been carefully husbanded but which were frittered away during the three years of the Coalition.
That was the primary reason why we were faced with this doubled deficit on our balance of payments in 1951. Remember, as I pointed out yesterday, that, in so far as any increase was manifested in the physical volume of stocks, it amounted to about £12,000,000 worth and that the rest of the increase represented panic buying at inflated prices in order to make good the mistakes, in order to redress the situation, which had been created by this misguided policy of basing the Government's plans on the hypothesis of peace. We are still very far from peace. Indeed, we may be even nearer war than when General MacArthur drove the Chinese to the Yalu River or when Berlin was isolated.
