Dáil Éireann debate -
Tuesday, 20 Mar 1956

Vol. 155 No. 6

Committee on Finance. - Motion by Minister for Finance—(Resumed).

Mr. Childers

When the House adjourned last week, I was attempting to state as clearly as possible that the difficulty which we now face is due in no small measure to the political climate of this country, encouraged by the members of the present Government ever since 1948. They started a habit of mind among our people—or, should I say, among 50 per cent. of our people—which has never yet been arrested, a habit of mind of believing that everything could come relatively easily, so long as money was played around with and so long as the Government appeared to be making things easy for the people by taking action which, at the time, seemed very generous and helpful, but which, if examined carefully, would be seen to be of a temporary character.

I have been trying to look back through the records of the Dáil to see whether at any time a Minister of real importance understood the position of this country since 1948 and warned the people. I speak of a Minister of the Coalition Parties. I discovered a statement by Deputy McGilligan, which he made at the time of the 1951 Budget, and which remains the solitary and sole statement by a Coalition Minister, made at any time between 1948 and the present day, in which there was an element of realism about our trading position, about the care we should exercise in making promises to people that they could vote themselves better living standards. Deputy McGilligan, at column 1884, Volume 125, in the course of the Budget statement, said:—

"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 implication is obvious. We cannot have both consumption and capital development on the present scale unless we save more and produce more. Additional saving would ease the congestion that now exists and causes consumer demand to seek an outlet in imports. It would relieve the pressure on the balance of payments and help confine external disinvestment—or surplus imports —to what is needed for home development."

Since the time Deputy McGilligan made that speech, which was a very definite abbreviation of the Central Bank report, everyone on the Coalition side vilified the Central Bank and went as far as they could to deny the truth—the solitary truth—uttered by Deputy McGilligan in 1951, when exactly the same circumstances were occurring as are occurring now, and when everybody realised that the position would have to be extremely carefully watched from that time onwards, if we were to make quite sure that our trading position was secure and that our ability to buy imports, without borrowing from the British banks and without going on our knees to foreign trading interests, was to be safeguarded.

Two volumes later in the Dáil Report, Deputy McGilligan reverses his opinion—I do not know whether at the instigation of the Labour members of the Coalition or for what reason. In column 1717, Volume 127 of the Official Report, Deputy McGilligan said:—

"If people who have reserves want to spend them, why should they not do so? Have we not got at least to that degree of liberty in this country where a man, if he has a few hundred pounds and wants to buy a wireless set with it or improve his house by putting in a wash-basin or by putting in new carpets or furniture, is at liberty to do it? What is the merit in preventing him from doing it? We are getting completely authoritarian if we say that even the owner of savings who has reduced his consumption at an earlier period in order to get those savings cannot put those savings to some purpose which he considers advantageous if not profitable to himself."

I could go on repeating statement after statement made by the members of the Coalition Government repudiating what Deputy McGilligan said on that solitary occasion and clearly indicating that they were not prepared to tell the country the true position.

I have tried to summarise the things that the people have been taught since 1948 by Coalition members—the things that roughly one-half of the people of the country believed judging by election results. I am glad to say it was not the whole country, or we would be in a far graver position than we are in now. I should like to catalogue this collection of economic nonsense which has been our lot ever since then.

The first is that living costs are largely the responsibility of the Government; the second is that subsidies involve no taxation and come from the moon, and that no one need ever question the amount required for subsidies, or what the effects may be if the amount required in taxation for subsidies is excessive; the third is that, when costs go up, salaries and wages automatically go up. It does not matter how far they go up; that so long as they keep going up the country is well off and all will be well; the fourth is that, when you promise to bring the cost of living down with a bang and cannot do it, if you get wages raised, you have fulfilled your promise and your political conscience is at rest; and the fifth is that, if you have huge sums invested, there is no danger of their liquidation: that you do not need to worry about them: that the reserves are so large that you can completely disregard them.

We can use them to build up a stockpile out of your foreign investments and if you do not replace the foreign investments, it does not matter. Secondly, we can use them for the importation of raw materials to be used for current industrial production. If we import the raw materials in large amounts and do not replace the foreign investments, it does not matter and the nation is no worse off. Thirdly, we can import them for consumer goods. We can buy refrigerators. It does not matter. It is all putting money into circulation, helping the people and increasing the flow of trade. The consequences mean nothing.

I am not going to weary the House by quoting from statements made ever since 1951 in which members of Fine Gael and the Labour Party never could make up their mind quite how much of the appalling nonsense talked by Deputy MacBride on the subject of national credit and foreign investments they were prepared to believe. They dillied and dallied, some going a certain distance, others going the full distance.

Deputy Declan Costello is a young Deputy and one would like to regard him as likely to reach ministerial status some day. I have been reading his speeches, but he could not resist, with all his knowledge of economics, the statement that he believed in selling out our foreign investments for consumer goods. He thought, on the whole, it was a good thing and that, in some mysterious way, it would raise the permanent level of prosperity. If the result was that we could spend less money on fertilisers and agricultural machinery and less money on increased production, once these savings had gone, somehow or other everything would be all right, somewhere or other some cat would come out of the bag and once more we would see the country well off—a mysterious economic doctrine which has no following in any intelligent or well-known country in Northern Europe.

The members of the present Government will find none of their views since 1948 genuinely believed in either by socialist administrations or conservative administrations in Northern Europe. They will find that the only real philosophic originator of all this doctrine is Deputy MacBride and the Clann na Poblachta Party. He started the whole thing and the Coalition Government has been following him ever since.

The seventh doctrine that has been taught the people is the fact that, if you have some £400,000,000 invested abroad, you need never even speak about our liabilities abroad. The fact that we have anything up to £250,000,000 of liabilities abroad need never be mentioned. It is not convenient. It is much more convenient to give the people the idea that these foreign investments can be liquidated the moment anybody feels slightly uneasy, to relieve the situation. The people have been taught never to think of the liability. It does not exist. It is a shadow liability and no one need worry about it.

We often tried to stress it. It is a curious thing that in all the debates I have read during the past two years —I have been going through a lot of them—no serious Minister of the Coalition Government who really studied foreign finance has ever deliberately and actually contradicted the statements made by Deputy de Valera that the actual total public and private net balance of foreign investment is something between £100,000,000 and £125,000,000, involving less than one year's imports. Some of the lesser fry indulged in a lot of fantastic economic nonsense about what could be done, but I noticed that some of the more serious Ministers have not actually contested that statement, and whether they felt they could not go as far as denying it or conveniently forgot it, I do not know, but at all events the statement remains uncontradicted, even by the Minister for Finance in his speech dealing with the Vote on Account after Deputy de Valera had expressly stated that in the North Kerry by-election in an important speech which he made. As I have already stated, the balance is not as large as has been taught to the people by the Coalition Government. We can only count on the "get-atable" foreign investments of the commercial banks. We cannot touch the private assets which are of no use to anyone for immediate trading purposes.

The next statement made—No. 8 in this category of nonsense—is that bank advances are rising; that it does not matter how much they rise because it is always good for the country. It can only mean prosperity. It may not mean that some people are borrowing that much money and leaving too little money available which might assist in increasing production. The country's economic progress since 1948 has been judged glibly by the Coalition Government, among other things, simply on the basis of by how much the bank advances rose, without ever questioning whether it might not be that certain people were borrowing money at other people's expense.

The next doctrine, No. 9, was that so long as the amount of money in circulation goes on rising it must mean that the country is well off. If plenty of money is circulating, if the Central Bank announces that another £5,000,000 is in circulation, that automatically means prosperity, that automatically means we are paying our way, that automatically means that the country's financial position is sound.

The tenth doctrine is that it does not matter if exports fall or if there is a recession in trade or that money spent on every kind of venture that is not productive can continue to be spent. It does not matter if exports fall and it does not matter about our having to pay for all the materials which we must import for capital purposes. You can go ahead and, when you require money, you can ask the country to lend it to you. It is always good to go ahead with the programme: nothing can stop it.

The eleventh doctrine is that an increase in industrial production, however good it may be at giving employment, must automatically be a proof that the country is doing well. It does not matter if some of the production increase involves such heavy imports of materials that the actual nett good done by it, while excellent from the long-term point of view, is barely helping the country at a time when imports have become so important and so much a factor in our economy that you cannot just boast that our production has gone up and that, therefore, trading is all right. You can say that industrial production is excellent from a long-term point of view. New skills are brought into the country. Employment is provided in rural districts. They are a sign of good times in the future but one cannot say that an increase in production of that kind automatically helps us in relation to our capacity to pay our way. It may, later on, but not in the immediate sense.

Lastly, and perhaps the most important point, in the twelfth, we have heard the fraudulently dishonest doctrine that agricultural production has increased so much since the war that everything is all right—so long as Deputy Dillon remains Minister for Agriculture. I do not think I need repeat here all the figures that have been given many times about agricultural production or the fact that it remains, under our Government and under the Coalition Government, a most frighteningly serious problem. From the point of view of agricultural production, 1947 was the worst weather year in our history. When Deputy Dillon boasts of an increase in agricultural production he selects 1947 for the purpose of comparison. Why, for example, would he not take 1945, after the end of five years of war, or 1939 or 1926 or 1911? If he did, he would find that the increase in production has been very small indeed. He chooses to take 1947 when production had gone down in the previous two years by 12 per cent., as everybody knows, because of the appalling two years of weather that were the main feature of our agricultural life at that time.

When Deputy Dillon, the Minister for Agriculture, chooses to say that agricultural production has gone up by 24 per cent. since 1947, it is arrant nonsense to quote this as proof of how well the country is going and of how perfectly the Coalition Government policy has succeeded. Even Deputy Dillon's statement about the number of young cattle in the country is wholly fraudulent. On the figures, you will find about half a dozen occasions from 1926 onwards when there were 1,000,000 cattle under one year in this country. The figures for the last full year are in respect of 1955. In that year there were 1,044,000 in the country. That represents a very welcome increase but it is fractional. It is nothing to justify Deputy Dillon's saying that he has very nearly solved the agricultural problem. The people in the country have come to believe that. So long as the price of cattle went on going up, they felt that everything was all right.

Other Coalition Deputies have been comparing the costs of cattle in 1939 and now as if that were automatically bringing in some enormous gift of prosperity to the country, without counting any of the other items that make up the total balance—items such as increased wages and salaries and increased import costs. They speak as if we would never have to face any balance of payments difficulty. It is all a fraud and a delusion.

The Minister for Finance made a very gentle academic statement—very quiet and mild—about the balance of payments. I do not know whether he imagines that the ordinary man in the street understands these facts or whether it is possible to talk about the balance of payments in just one speech on the Vote on Account, after having defrauded the people for years about all these matters. Why does he not indulge in exactly the same sort of publicity as he did during the 1954 Election? The people who have received these millions of leaflets about 1951 and 1954 prices deserve to be treated by the Minister for Finance with another 1,000,000 leaflets in which the Minister should, in plain and simple language, print the dangers and difficulties we face and in which he should answer some of the questions he has not yet answered in his speech on the Vote on Account.

It is always easier to take the offensive by making easy promises than it is to defend a difficult policy. That was the position in which we were always placed by the Coalition. Offence— making easy promises—is much easier than defence—explaining the complicated pattern of a nation's economy. How much easier it is for Deputy Sean MacEoin, the Minister for Defence, to go down to Longford and talk about the £500,000,000 we have invested abroad than it is for me to go there and, off a platform, to people standing waiting after Mass, to explain to them the character of our economy—the huge imports from countries other than England to whom we sell practically nothing, the complicated pattern of our investments in Great Britain, our liabilities, the annual burden imposed upon our balance of payments, all the items that go to make the whole Budget.

Does the Minister for Finance imagine that, having had his colleagues talk this nonsense throughout the country for the past three years, he can now explain to the worker, to the machinist, to the small farmer who has much too much to do to study economics, that he is unsaying everything he said? We need another 1,000,000 leaflets with all these explanations.

I would repeat again what Deputy Lemass said here the other day. I ask the Minister for Finance to explain to the people in his closing speech the following matters, to give the answers to the following questions in language which every single person can understand. The first question is: why have imports increased so largely in 1955? What is the reason? Why have imports gone up, over and above any question of stock-taking or any other temporary thing? Why have they gone up, even allowing for any increase in the price of the commodity? What is the reason? I dare the Minister for Finance to be honest enough to tell the people specifically, in language they can understand, why imports have gone up. If he tells them, then we should at least have arrived at the position that everybody in Ireland will believe what is the truth. If we are forced ourselves to go around the country giving these answers, there will still be the difficulty that the whole people will not accept the position as it is. So, we challenge the Minister to give a clear and succinct answer to that question: why have imports increased? The Minister, I know, will be very embarrassed when he gives the answer if he gives it honestly, explains it in detail and makes perfectly clear to the people what the import of the answer is.

The second question we should like to ask the Minister is this: why is it that it is not easy to secure credit for industrial or productive ventures at the present time and that the rate of interest has gone up? Why is it that, in spite of all that the Minister for Finance said about rates of interest, in spite of all that the Minister for Agriculture said when he talked of banana republics, and although there is a desperate urgency to increase production, the Minister is unable to take any special steps to maintain an exclusively lower rate of interest for productive purposes even although he himself says that the demand for increased production is tremendous? What is holding him back? Will he explain to the people and give them a succinct answer to why it is impossible for him to discriminate between rates of interest for one purpose and another purpose? Will he justify his decision? Will he justify his failure to do the one thing that he could have done to live up to some of the frantic nonsense that has been talked in these last three years by saying: "Well, we have got to expand production; the emergency levies are only part of the answer. I will now make available £X million of capital to anyone who wants it at 3½ or 3 per cent. — some interest far lower than that available at the present time." I should like to ask the Minister that question.

I think the Minister should explain also to the people in very clear language what he considers to be the current balance of trade position, to go a little more into detail about it. It will not do any harm. The whole country has been very much shaken by these emergency levies. Everybody has started thinking about it. Now that we know that all the nonsense that was talked before is accepted as such, let the Minister for Finance turn over a new leaf and tell us how he regards our external reserves, what he considers to be the total amount of available liquid assets in Great Britain with which we have to carry on our day-to-day trade and finance our purchases from areas to whom we sell relatively nothing in return. Let the Minister for Finance take the people of the country into his confidence. Let him at last give what he considers to be the figure. He will quickly remove the £400,000,000 by itself — that large comfortable, fat sum will not emerge from the Minister's lips any further so long as this Government is alive — but he might perhaps go more into detail and explain to the man in the street just exactly what the position is.

Let him explain to the man in the street the answer to another question: Why it is that every time the Government spend money imports increase and that every time the Government borrows money imports increase and, no matter what they borrow it for, even if they borrowed it to spread on the land limestone made in this country, there would be some increase of imports, not enough to be worried about but there would be some. Let the Minister explain to the people in simple language how is it if a Government borrows money and spends it wholly in this country that, nevertheless, inevitably, imports will increase as a result of their spending.

We have heard nothing of that kind from Coalition Ministers up to now. We want to have them explain these difficult facts. It is much easier for the Coalition members to promise to reduce the cost of living from the 1954 to the 1951 level than it is to explain to the people why it is that every £ of Government money spent must result in some import and when there comes a point when you do not export enough to pay for the imports that we are then in severe economic trouble. We should like the Minister to answer that question too.

In conclusion, I should like to say a few words about the relation of the 1952 Budget to the present Vote on Account. A few Coalition speakers have dared to suggest that the 1952 Budget in some way has an effect on the present economic situation and even on the Vote on Account. We want to make it perfectly clear that the present emergency levies and any other measures that are taken by the Government are in addition to the 1952 Budget. When the Government came in, if they thought the 1952 Budget was wrong, they should have reversed it. There was nothing to stop them. We never heard any comment from any Coalition Minister——

Mr. S. Collins

You had broken down the whole economic structure.

Mr. Childers

— as to what they would like to reduce in the way of Government expenditure in order to overcome the difficulties of the 1952 Budget. They have not even told us the expenditure they would like to reduce but which they cannot for political reasons. That would be fair enough. If the members of the Coalition Government think that that Budget was wrong, well then, they can be frank and say that when a Government does certain things, engages in certain expenditure, it is impossible politically to reduce it later. Of course, we all know the reason. We know that two-thirds of the voted expenditure consists of social services, of education, of pensions, of superannuation and like items, the reversal of which or the reduction of which would be politically impossible to the present Government.

Indeed, in the course of their policy statements they have indicated that they will increase these services. The educational services are going up. Some of the pensions services have gone up. The Minister for Social Welfare has promised to increase the social welfare benefits. The health expenditure is going up, deliberately decided and approved by the present Government. All those items cover 60 per cent. of the Budget and if they felt that the expenditure was wrong they should tell the public; they should adjust the expenditure. The fact that they have not done so indicates that they know that our Budget of 1952 was inevitable under the circumstances. They have not been able to reduce any element of it by a penny piece. In the case of the remaining services not connected with social welfare, housing, health and allied services, they have not been able to find any extravagance, they have not been able to prove that some of that expenditure was unnecessary and so it is time that we heard a little less about the 1952 Budget. It is time that the ghost of the 1952 Budget was laid by the Coalition Government because, the longer they stay in office the more they justify it by each Budget since 1952. Where there is not any reversal of that expenditure, the more proof there is that the 1952 Budget was sound and right and entirely justified.

I do hope, once again, that the Minister for Finance will take the country into his confidence and will answer the questions as put down by myself and as put down by Deputy Lemass so that the country can proceed to reshape its policy, to reconsider all the fundamental problems of production and export that are involved, so that it will be possible for every single person in this community to think out honestly, unclouded by political nonsense and claptrap, what his part may be in the shaping of the nation.

We have reached a very serious position. I know the present Minister for Finance is utterly unable to promise during this year any marked recovery in that position. He knows very well that, however successful we are in our cattle exports, whatever may be any slight rebound in cattle prices to our advantage, the trade position of this country for the coming year will not be such that he can promise an easy time. He knows that these emergency levies indicate a serious trend which we can overcome with intelligence but he knows that it means that everyone in the country will have to be prepared to think and to reconsider economic policy and the position of this country from its foundation. We can only do that if at least we have all the facts admitted by all the Parties in this House. We have got the present Government to admit that we did not tax unnecessarily; to admit that we did not indulge in flagrant extravagance.

Deputies

No.

An Leas-Cheann Comhairle

Order!

Mr. Childers

We have got them to admit that the cost of living could not be brought down; to admit that the balance of payments problem was a serious one for the country which could at any time rear its head and require very special and rather drastic action. We have got them to admit all those facts and if we could get the Minister for Finance to answer the questions that I have posed and that Deputy Lemass has posed about the character of the crisis we would be going very far towards being able to have debates in this House conducted in an atmosphere of reality in which we of Fianna Fáil would not always be trying to drive away shadows.

If all the time spent in this House in talking about the cost of living had been spent in talking about savings or about production, or about where to get money for more fertilisers; if all the time taken in this House talking about the cost of living had been taken to talk about the reorganisation of the pig industry; if the Ministers of the present Government had acted as deputy-lieutenants for the Department of Agriculture and had gone around for themselves to see what was wrong with the pig industry we would be a very much happier people to-day. If the hundreds of millions of our savings lost in 1951 and 1955 had been spent on fertilisers we would not be worrying to-day about the cost of bread or the price of the pint or the price of the poor man's tobacco.

Minister for Industry and Commerce (Mr. Norton)

There are many temptations to follow Deputy Childers when, in 1956, he now attempts what I think the House can feel is a very halfhearted effort to explain the 1952 Budget. The views of the country on the 1952 Budget were adequately demonstrated in 1954. I think while Deputy Childers may say that he alone is right in his ascertainment of the need for and the correctness of that Budget, the collective judgment of the people has been given on that issue and it has been a rather harrowing experience for Deputy Childers to witness the consequences of that judgment. But I am not going to be tempted into following Deputy Childers along that course. In so far as he says the situation now demands a cold and realistic approach to the whole problem, I am all in favour of accepting that view of the situation as it is now presented to us.

The situation to-day demands hard thinking and cool thinking and both sides of the House will be the better of attempting to appraise the situation as critically as they can, because there are economic factors surrounding the whole position which will not be eliminated merely by endeavouring to discuss this Vote on Account or the balance of payments problem on a political basis. The fact remains that we have a balance of payments problem to-day.

A balance of payments problem in itself is not serious if we have the balance of payments problem for only one year or two years, if we can see the extent of it and the duration of it. The problem always is to ascertain whether a balance of payments deficit is explained by certain abnormal and nonrecurring considerations or whether it is an indication of a trend which if not arrested will, in the aggregate, present the country concerned with a problem the solution of which may involve a rather painful process of self-regulation by the people of that country.

It is desirable, therefore, I think, to examine the situation as we find it to-day. There has been, over the past 12 months, a fall in our exports. Nobody can deny that; the facts are there and they speak for themselves. The fall has been mainly in the agricultural sector of our economy where there has been a substantial drop under certain headings in that field of exports. I share the view of the Minister for Agriculture, as expressed in this House last week, that this nation is going to go through a painful process unless we can manage not only to avoid the drop in agricultural exports but unless also we can step up the volume of our agricultural exports and unless the whole nation can get from the land and from agriculture some return for the very substantial sum of money which has been spent in a whole variety of directions in the agricultural sector of our economy.

We have had, as I said, a fall in our exports mainly in the agricultural sector; we have had an increase in imports, but some of these imports are easy to understand and are easily explained in so far, for example, as they involve the importation of increased quantities of tea, increased quantities of wool or in so far as they involve imports of machinery and railway vehicles, and they are not unhealthy imports. In some cases, they may represent stocking up from a position where stocks were allowed to run down, but when you get a combination of a fall in exports and an increase in imports, the whole thing spilling out into the financial arena in the form of a deficit of £29,000,000 in the balance of payments, then the nation must take stock and see what is to be done with a situation which discloses unhealthy features of that kind.

If this deficit of £29,000,000 were just a deficit which could be confined to one year or to a slightly extended period, the problem would not really be so difficult as if the deficit were likely to continue into the second year and its consequences likely to flow over into an even longer period. It is because the Government realises the necessity for dealing with this problem now while it is within manageable proportions that it has come to this House indicating the measures it proposes to take in order to deal with the problem as we see it to-day.

Deputy Lemass, when speaking here, said nobody would criticise the Government for the measures it has taken; in fact, he complained that the measures were not sufficient to deal with the problem as he saw it indicating, therefore, that he thought the Government should go further. But other speakers on the Fianna Fáil Benches complained that these measures were penal measures which would inflict great hardships on the people. If we were to follow the advice tendered by Deputy Lemass when speaking then we would give the people more of the hardships about which the other speakers on the Fianna Fáil Benches complained.

I think the proposals which we have brought to the House are proposals which will enable us to deal with the situation as we now see it. I think these proposals and other remedies will bring this problem within easily manageable proportions. In that respect we are in duty bound to the nation to take such other steps as may be necessary in order to right these infirmities in our balance of payments or general economic position. I think the nation ought to be told through a debate of this kind that we have an imports and exports position which, while basically healthy, has within it certain deficiencies. Our total imports in 1955 amounted to £204,000,000. Our total exports were valued at £110,000,000, so that there was a substantial gap in our physical balance of payments. That has always been the position.

That has been a characteristic of our imports and exports position over the past 30 years. We have been able to bring these into equilibrium by counting as an export such invisible items as emigrants' remittances, dividends on foreign investments — a substantial income estimated variously as being in the vicinity of £35,000,000 added to our export side. Thus we have been able to get over the past 30 years a balance in our balance of payments by bringing all these factors together and producing what was regarded as a fairly sound balance of payments position. It would of course have been much better for the nation, and it must ever be the object of the nation, to create a much better position in our balance of payments. Income from dividends, emigrants' remittances and income from tourism are all good but we must endeavour all the time to reduce the gap between the volume of our physical imports and our physical exports.

That can be done satisfactorily only in one way and that is by stepping up the volume of our exports both under the agricultural head and under the industrial head. As far as industrial exports are concerned, we have to remember that we must sell these products in markets which are highly industrialised, where there is a long tradition of industrial craftsmanship and where goods of high quality are made, but I do not think the results on the industrial front are disappointing. In fact in many respects they can be said to have, within a short time, developed encouraging features the further exploitation of which would lead to still more satisfactory industrial development.

If you take 1936 with a base index figure of 100, you find that in March, 1947, the volume of our industrial production was 104. In March, 1954, it was 177 and in March, 1955, it was 182. If you like to narrow the margin and look at the position since this Government came into office last, you will find that the figure in March, 1954, was 177. In December, 1954, it was 194. To-day the figure is at an all time high record, namely 201. When you remember, therefore, that it has moved from the 100 base of 1936 to 104 in March, 1947, and that it is now 201, the highest level of industrial production in those industries producing transportable goods, I think it can be claimed that in the industrial front there has been a progressive increase which has now reached a stage in which it is higher than ever before. There has been no fall back as far as industrial production is concerned. In fact there has been an acceleration of it during the past 18 or 20 months.

Similarly, if you look at the number of persons employed in transportable goods industries, you find that the number employed in March, 1954, taking them in round thousands, was 139,000. In December, 1954, it was 146,000 and in the last quarter of 1955 it had jumped to 153,000. These are substantial figures for an economy such as ours. These figures indicate continuous progress in the industrial field but it may well be that we have reached a situation in which one must be constantly restless about figures indicating increases in the volume of production because the demand to step up production is so urgent and the demand to export goods so imperative that we must, both in industry and agriculture, not merely intensify our production but by every means in our power endeavour to increase our exports.

The fact is, however, that we have to-day a deficit in our balance of payments. What are we to do about it? Fianna Fáil would say we were failing in our duty to do the things a Government should do in the set of circumstances which present themselves to us to-day. When we do something we are accused, as Deputy Aiken accused us here, of imposing hardships on the people by taking a course of action which makes it more difficult to import luxury or non-essential goods. Many of these goods can be said to be luxury goods in the highest concept of that term because many of them are commodities which the world went without up to as recently as 20 years ago, so that they cannot be deemed to be necessary in civilised life to-day. It is questionable indeed whether some of them have contributed to making life better, happier or more stable to-day than it was before these commodities came on the market.

We can take either of two courses. We can let things rest, let us watch with the statistician's mind the balance of payments position, let us work out these figures to our heart's content, draw whatever conclusions we like to draw according to our political views or the side of the House on which we sit, or we can do what intelligence demands we should do, namely, take steps to deal with the situation, a continued deterioration of which would pose for us much bigger and more difficult problems for solution, perhaps in circumstances where the solution would not be so easily found. If we fail to act in the situation now presenting itself to the country then we will be responsible for running down valuable external assets and the danger is that they will be run down for the purpose of importing consumer goods.

I do not mind running down external assets if they run down for the purpose of importing goods for productive or reproductive purposes. If we repatriate our assets in order to provide means of employment here, methods of creating new wealth or methods of finding new sources of wealth then that is all to the good. It is better that our assets should be invested in wealth-creating activities at home, but it is dangerous for us to allow these assets to dwindle merely for the purpose of using them to import non-essential or luxury goods; and it is because the Government does not want to see these assets dissipated on the importation of luxury or non-essential goods that we have taken the step of imposing this special levy on goods, the importation of which we are not anxious to encourage at present.

The plain economic fact is that, no matter what our political view may be, the simple issue confronting us to-day is that, whatever we import must be paid for. Now imports can be paid for in only two ways: by expanding our exports to pay for what we must import in order to sustain and expand the standard of life here, or by running down our external assets profitably invested abroad. If we have not sufficient exports under the category of either visible or invisible, then we can only pay for an excess in our imports by drawing on the credit balances we have abroad. To permit a policy to continue in which we would utilise profitably invested foreign assets on the importation of luxury goods not necessary to sustain life here or the importation of non-essential commodities made in any part of the world would, in my view, be an unwise and imprudent course for any Government to adopt or permit to operate in our economic circumstances, irrespective of what its political complexion might be.

If a stage is reached in which we so run down our investments abroad for the purpose of buying luxury and non-essential goods, then, as certainly as we are in this House to-day, if that policy is permitted to continue and steps are not taken to arrest that policy, we shall arrive at a stage at which, like every spendthrift, we will find there is no balance in the bank and no residue of foreign investments to pay for these luxury imports. If there ever is any danger of that situation being reached, we must quite clearly cut down on the importation of these luxury and non-essential goods, and, if we fail to do that at this stage, we may later on have to cut down on the importation of essential goods, with grievous consequences, for any such cutting down on the importation of such goods must mean a lowering of the standard of living of our people.

If we cannot finance our imports by exports and if we reach a situation in which we have not sufficient external assets on which to draw in order to pay for such imports, then clearly the only course left for us is to borrow; but, if we borrow in such circumstances, we borrow with our hands in financial handcuffs and with no bargaining power whatsoever. We put ourselves in a position in which terms can be dictated to us as to the rate of interest and conditions of repayment, with, all the time, the danger that there might be political tags on moneys borrowed in circumstances which give us no real bargaining power.

Both aspects of these possible courses, either financially or politically, would be dangerous for the country as a whole and I do not think anybody here would desire to see either the good name or the economic or political security of the country put into pawn, no matter what flag might hang over the pawnshop. I think national self-respect forbids us — indeed, forbids all Parties here — to contemplate with equanimity a situation developing in which we would permit our external assets to run down on the importation of luxury or non-essential goods, forcing us to borrow money on terms in the determination of which we would have little voice.

If a situation of that kind were reached, it would represent a frustration of all the ideals for which countless thousands of our people fought, in the belief that, having achieved national independence, they would enjoy and weave for themselves a pattern of economic and fiscal independence as well. I think it must be apparent to everybody who has given even perfunctory thought to this problem that the issue before us is clear. The choice is as obvious as it is possible to make it: we must pay for what we import. That means we must only import those commodities for which we can pay. We have decided, therefore, to cut down on luxuries and on non-essential articles. In that way, we believe it will be possible, with other measures which are in train or in contemplation, to reach a situation in which we will be able to pay by visible and invisible exports for those commodities which we must import. If we cannot pay for these, namely, the commodities which are not affected by the levies announced by the Minister for Finance, then the whole situation will have to be looked at again to see if it is necessary to go further.

I think all Parties will agree that the maintenance of our financial position is the primary consideration in this whole matter; in other words, the nation must realise that, if we cannot pay, then we must not buy. There ought to be no easy appeal to pawnshop economics in order to get away from that proven hard fact, a fact which cannot be blinked if we are properly to appraise the present position. The Government has, therefore, decided to impose special levies on what are described as needless imports in present circumstances. These special levies will continue until such time as we can afford to pay for non-essential goods by methods which will not undermine the economic structure of the nation or affect its financial solvency.

If one looks at the list of commodities affected, I think one will find it difficult to say that the non-importation of them would harm life in this country and the imposition of the levy in a number of instances should stimulate production in Ireland of similar commodities, commodities which are made here to-day but which Irish industrialists were probably finding it hard to sell against perhaps better advertised and better known foreign brands. So that, far from affecting the volume of employment of a worthwhile character here, I think the imposition of these levies in a number of directions will stimulate industrial production here and give our Irish firms an opportunity of getting a bigger grip on the Irish market where their supremacy is being challenged, probably by the supply here of better advertised or better known foreign commodities. It is true, of course, that many people will have to do without the embroideries of life represented by the importation of non-essential or luxury goods, but I do not think we ought to allow that type of individual or even collective vanity to deter us from doing what it is necessary to do in the national interest.

The plain fact of the matter is — as I said before in some debate in this House — that we here live on a rock off the coast of Western Europe. We have not got those immense natural resources which make other countries great in spite of themselves; we have not got the immense quantities of material which can be fabricated and for which there is a world demand. Our natural resources are limited. Probably our best and biggest and most enduring asset is the land of the country — and our proximity to a market which is capable of being used for the immense benefit of Irish agriculture.

So far as raw materials are concerned, our position does not stand comparison with many other countries which have immense resources and diversified resources in these particular fields. We have got limited resources and what we have got to do is to husband these carefully and trade these as carefully as we can in order to buy the essentials of life and the commodities which will give us our present standard of living and, if possible, a higher standard in time to come. The more care we exercise in husbanding our resources, the better life we can provide for our people and certainly the longer they will enjoy it, the more careful we are in the management of our economic and our financial resources.

It is because the Government believe that that course of action is desirable that they have taken the steps to impose these special levies. They are intended to be levies and not an addition to our present standards of protection for Irish industry. These levies will last as long as it is necessary to cut back on luxury and non-essential articles. When the time comes that we can resume payment for these articles in a way that does not endanger our economic or financial position, these levies can go; but until that time has been reached, I think we can momentarily forget our political differences and approach this matter from the economic angle.

Most Deputies will agree that what has been done represents an intelligent approach to a solution of a problem which, if not dealt with, will affect not a Government Party and not an Opposition Party alone, but will affect — and to their serious detriment — every section of the people of this country. Too many efforts have been made down through the centuries on behalf of the people to permit us at this stage to take a course of action which could undo in a few years much of the valuable work that has been done in nation-building for the past 34 years.

We have felt it necessary, too, in the field of hire-purchase to take steps to limit the spending of money in the purchase of articles on the principle of hire-purchase. I personally have no complaint whatever against the idea of purchasing capital goods by means of a deposit and regular instalments, subject to two conditions: (1) that the person does not commit himself to pay to a greater extent than his or her financial resources would enable him to do; and (2) that the person is not so avaricious to get the particular article that, with only a small deposit in his or her hand, he or she will pay an outrageously high price for an article which is shoddy, in which he does not get really good value and where the main temptation to purchase is either its glittering appearance or that other and still bigger danger which is expressed in the phrase "to be as good as the Joneses".

Hire-purchase, however, has in fact taken on a complexion in the past few years that demands that some attempt should be made to cut back, particularly in present circumstances. Hire-purchase, as I have said, is something to which I do not object in principle. Prudent people are enabled to secure goods through the medium of hire-purchase which they could not otherwise purchase. While I think it is legitimate that a person should pay his milk bill and his grocery bill every week, if he is going to keep solvent, it is not necessary that he should buy capital goods every week or stint himself every week in the purchase of capital goods in one instalment, if the domestic life will go on just as pleasantly and as securely by paying for these goods over a period; but I think it will be admitted — I think this is the experience of most of us—that the imprudent purchasing of goods, which is facilitated by hire-purchase methods, is something which is not only nationally bad, but socially undesirable and highly undesirable from a domestic point of view.

Deputies will understand this — a woman with just 10/- in her pocket goes into a firm which has an article priced at £50, but is willing to give it to the woman for the payment of a deposit of 10/-. That woman has just no bargaining power. Whether it is worth £50 or £30, she does not know. All she knows is that there is an article there that she wants. She is most anxious to get it. She contemplates to herself: "What will the neighbours think when they see what I have bought?" Whether it is worth £30 or £50 does not matter — she wants to get it home — and in any case she is not capable of appraising its value. But the £30 or £50 has to be paid back — paid back through a painful process — and one can easily see the domestic and social consequences flowing from the unrestricted development of tendencies of that kind.

But where such a development takes the form of the imprudent purchase of imported goods, it has nothing whatever to commend it. It is bad when the person imprudently buys at exorbitant prices a home-produced article, or commits himself above his ability to pay. What can be said in defence of an arrangement where this imprudent spending — this inability to evaluate goods which are purchased — relates to goods not made in this country? Clearly, there is a case for stepping in at that stage and saying: "Whatever about normal times, in present circumstances, that type of purchasing on the hire-purchase principle should be restricted as much as it is desirable to do so."

This Government has taken steps to ensure that hire-purchase will be brought under control, not by the complete elimination of it but by the regulation of it on a basis which I think will ensure that there must be more prudent buying in future and, in addition to compliance with the regulations for ensuring prudent buying, there will have to be prudent selling as well. The Order which I have made under the Supplies and Services Act, on the subject of hire-purchase, ensures that unless the person selling the goods complies with the provisions in regard to the deposit and the period of repayment, it will not be possible to enforce that contract — which must be in writing — against the person who hires the goods. That is an injection of reality into this whole proceeding which was long overdue and which I hope will remain long after the emergency with which we are now dealing has passed.

One of the problems which has confronted not merely the last Government but this Government, and which I think will be a problem for Governments for some time to come, is the necessity for financing schemes of capital development. If we are to indulge in capital expenditure, even on the basis undertaken in recent years, that can be done only so long as we can find the necessary money to finance this capital expenditure. But if we are going to find the necessary money, then clearly it can be got in the main from our own people only. It is evident, therefore, if we recognise the continual need for capital expenditure, that that must be matched on the other side with continual propaganda to induce people to save and lend to the community, so that the community, in turn, can undertake this capital development work and in that way improve the whole national stake. If, however, we are going to have a situation in which savings drop off, in which money which ought to be saved and prudently invested is spent on the importation of luxury and non-essential goods, then we will not have the necessary savings to finance capital expenditure and if we do not have the necessary capital expenditure we will cut back on highly desirable national undertakings with a consequent substantial fall in the volume of employment.

It is because savings are not now sufficient and, in fact, have not been sufficient for many years, that it is necessary for us, if we are to continue with our policy of capital development, to take stock to ascertain what measures are now necessary to deal with the problem of financing capital expenditure, on the one hand, and to deal with the problem presented by a deficit in the balance of payments, on the other hand. I think it is right and that it is wise and proper that we should say to the people — if possible in this field let us say it with one political voice — that it is nationally and socially desirable that they should save now and that they can do that best by avoiding needless expenditure. If they do that, then we can get all the money we need for the purpose of our capital expenditure projects. We can pay our way as well; we can preserve our financial independence and not be compelled to pay, as we were forced to do, exorbitant rates of interest for any money that it might be necessary to borrow. The Government's efforts, therefore, to encourage savings by the establishment of a National Savings Committee, by making available a new issue of savings certificates, are praiseworthy efforts from the point of view of conserving the national resources or directing those resources into channels which are capable, in turn, of satisfying our most urgent needs and undertaking our most valuable projects.

While these measures have been necessary and represent what it is desirable to do in the position in which we find ourselves, the solution of the problem does not he alone in taking these measures. These measures will arrest tendencies; they may, in fact, remedy a situation temporarily, but these measures represent no permanent solution of the problem which is posed before us to-day. If our people are to enjoy the standard of living which is available to them to-day, if they are to improve that standard of living, it can only be done by a substantial increase in production in the agricultural and industrial sectors of our economy. That increase in agricultural and industrial production must be directed, to a very large extent, with a view to exporting a greater volume of agricultural produce and industrial goods so as to ensure that we can pay for the commodities which we must import if we are to maintain our present standard of living.

We to-day are fated to live in a constantly changing world and in this field of imports and exports various countries have had to adopt various devices. Many countries refuse to make currency available for the import even of necessary articles while they completely refuse to make currency available for the import of luxury and non-essential articles. In other cases, countries have been driven to stimulate industrial exports by such devices as subsidies, by means of extended State guaranteed credits, by means of adjustments in profit margins. All these devices have been found necessary by various countries to deal with the problem of exports and imports as these particular countries saw that problem from their own viewpoint. I think we must be flexible, as flexible as it is prudent to be, in dealing with the problem of agricultural exports and industrial development. I do not think it is a virtue to say to-day that one has the same outlook on agricultural production or industrial production as one had 20 years ago.

Major de Valera

What about three?

Mr. Norton

Yes, three years ago or even three months ago. We live in a world in which, because of the constant changes over which we have no control whatever, it is desirable to be as flexible as one can be mentally in our approach to these problems and not to rule out ideas merely because they are a break with tradition or merely because they are new. We must not resist ideas and resist a new approach merely because the idea is new or the approach is new. We must mould our approach to the problems as we see them on the basis of what is best for our people. If we have been following practices which have given us dismal results in the past, there is no reason why a claim to steadfastness on our approach to these problems should rule out the consideration of a newer and a more intelligent approach to the difficulties confronting us.

In this situation I think that our immutability of view might be just synonymous with the approach of a period of industrial or agricultural decadence. I think, if we are going to increase exports, whether they be agricultural exports or industrial exports, we must be prepared to endeavour to stimulate that line of policy by the adoption of new methods, which are unknown to us to-day or unpractised by us to-day, and that we ought to be prepared to go the length of, possibly, even advantageous methods of taxation, if it is necessary to do that to stimulate industrial or agricultural exports.

There is one thing that we cannot do — we cannot continue to be satisfied with the present volume of exports under any heading. If we are nationally wise, we will refuse to be complacent with the present situation. We should endeavour to try to remedy it by any method which will give good results, by special consideration, by special reliefs, by anything which will stimulate our exports. The one thing that clearly comes out of all this is that we cannot survive unless there is going to be a substantial increase in the volume of our exports. If Deputies opposite think that they can make political capital out of that, they are welcome to go ahead and do it. I think that, even if they went out to make political capital of it against this Government, they would make it only for a short time and only with certain people. Whether Fianna Fáil or the present Government is in office the problem remains that, unless we can stimulate, and substantially stimulate, our exports, the present standard of living is in danger of falling. Not only is it in danger of falling but, if it does fall, the prospect of reviving it and expanding it may be a particularly difficult and painful process for us all.

In all this matter, there is one other way in which we could make a contribution to the solution of some of our difficulties, and the method available for making that contribution is easy of use and near at hand. In this country we produce — and this is to the credit of Irish manufacturers and Irish craftsmen—a large variety of Irish-made goods. At the same time, similar goods come in from outside, carrying with them a tariff. There are still too many people in this country who buy the imported commodity because they still hang on to the notion that, if it is made outside Ireland, it must necessarily, in their warped view, be better that the Irish-made commodity. Thirty-four years after the attainment of national independence is too long a period to see that type of mentality continue to blossom in this country.

I do not think we offend against good taste — and we certainly do not offend against good economics — if we say to all our people in every sphere of life that there is a national obligation on them to buy Irish products in preference to the products of any and every other country. Every Irish article made here creates new wealth for the nation. Every article processed here provides employment for our people. Every Irish article bought in preference to a non-Irish article helps to cut back in our imports and helps in that way to make a substantial contribution to the rectification of the deficit in our balance of payments. We do not need now to sell Irish goods on the basis of any emotional appeal. We do not need to tell people: "It is not the best, but it is Irish, and buy it." These appeals have not to be made to-day as a means of recommending Irish goods to potential purchasers in Ireland. The quality of our goods, article for article and price for price, is, generally speaking, as good as anything they can get elsewhere. If those who purchase goods from outside would realise that, by buying the Irish article in greater volume than they do, or by not buying the imported article in preference to the Irish article, they could so expand production in the home factories as to conjure up the possibility of even being able to buy the Irish article at a esser price than would be the case where the Irish firm did not supply the entire requirements of the home market.

In any case, those who would buy Irish articles would have the satisfaction of knowing that, by doing so, they were giving employment in Ireland, perhaps to their own sons and daughters, perhaps to their own brothers and sisters. They would be making the employment for their sons and daughters or brothers and sisters in Irish industries more secure by expanding the demand for the products of these factories. They would be recognising that the purchase of Irish goods means more work in Ireland and that it could make a substantial contribution towards redressing our adverse balance of payments. Nobody now is asked to die for Ireland, but if they would even now go as far as—and it is not very far along the road of sacrifice—buying for Ireland, they would make a contribution which would be the counterpart of the struggle of many of those who died for Ireland, believing that they would create an economy in which buying for Ireland would give our people the standard of life that they contemplated.

A summary of the position might be put this way. Savings are vital in order to finance capital expenditure. No matter what are our political views, there ought to be a basic acceptance by all Parties of the necessity for savings in order to finance capital expenditure, to ensure that the capital expenditure programme is not arrested, and to ensure that it will continue not merely to enrich the national estate, develop the nation's resources, but provide valuable employment, which it would provide and which it does provide, for thousands of Irish workers. It should be further agreed that import restrictions in present circumstances on luxury goods and on non-essential goods are imperative in order to redress the adverse balance of payments, that greater production is necessary in order to maintain living standards, that exports must be encouraged and stimulated even by artificial methods, new though they be, and by incentives which are calculated to get the results which we have not been able to get so far. In the long run this country's standards of living will be determined, not by what we hope will happen, but by the measures we take to ensure that these things will happen. Merely wishing that disaster will not occur and that frustration will not crowd our path is not calculated to inoculate us against such difficulties and evils.

If we want to ensure that positive things are done, we have got to go out and do them, even though it may be that for the time being we have temporarily to dislocate our normal pattern of imports or activities in one field or another. The aim, and the constant aim, must be to ensure that whatever is done is done with the object of creating a healthy and enduring economic situation which is in the best interests of our people.

We do not pretend that there is any easy road out of the balance of payments position, but I do not think the road is one outside our competence to travel. I do not think it will require from our people sacrifices, if they are only steadfast in their approach to the problem. I believe that our people, once the dangers are alerted and once the remedies are shown to them, will rise to the occasion and that they will not be found wanting, as they have never been found wanting, in any crisis which threatened the nation. Personally, I do not mind if the Opposition make Party political propaganda out of the situation, but the country, in a situation such as we are dealing with now, will expect responsible leadership from the Opposition, as from the Government, and responsible leadership in the field of Opposition could pay the Opposition good dividends politically in a situation of this kind.

I think there are certain basic difficulties here which are the common problem of both the Government and the Opposition. I think the solution of them will come all the quicker, if there is a general acceptance of the need to take these special measures. I believe the measures which we have taken and the other measures which we contemplate, will, with the enthusiastic support of the people, give us the results that are so necessary economically.

I believe that a detailed examination of the February figures, and even the January trade figures, will show an improvement in certain directions, away from the tendencies emphasised in the trade returns of 1955. I hope the trade returns for the subsequent months will show a substantial improvement in the light of the measures now taken. I believe that the Government has the goodwill of the people in its efforts to apply remedies to the present situation. I would appeal for the widest measure of support from the people for the measures which the Government are now taking in the people's interest in order to safeguard their welfare. I believe we can ride this storm and not only ride the storm but create a situation in many fields of endeavour where we can bring a greater measure of stability into our economic life and a greater measure of development and expansion into our agricultural and industrial activities.

Mr. Colley

I must say that I am astounded by the speech of the Tánaiste. I remember sitting on the benches over there and listening to him speaking from the benches here in 1951, and at that time he did not talk about responsible leadership from the Opposition, although he was the leader of the second largest Party in it. He expressed a view quite the contrary to what he said to-day. While the position is difficult—we all admit it—for the Government and some action must be taken, it was twice as difficult at that time.

There was twice as big an adverse trade balance and it was not all the making of the Government of that day. It had come about through the action or inaction of the Government of which the Tánaiste was then a member. At that time, we were not told anything about savings; we were not told anything about the treachery of buying unnecessary consumer goods. Everything the Government preached at that time was exactly the same as the Tánaiste has put up now, but at that time it was all wrong. I do not know whether the Tánaiste was really expressing the views he had at the time, but certainly they were not the views he expressed to-day. If that means a genuine conversion, we will all be glad and the country will be immeasurably richer because the way the Opposition of that day treated the position in 1952 and the way they fooled the people cost this country a great deal of money. As Deputy Childers pointed out, in the years 1951 and 1955 alone, it cost this country practically £100,000,000 of wasted assets.

In so far as the measures the Government are taking are measures calculated to deal with the dangerous situation that exists, we certainly approve of them, but, to my mind, they have all the earmarks of every measure of the Coalition. They are a compromise and are not going to be sufficient to deal with this situation. The Tánaiste practically admitted twice in his speech that they did not expect them to deal with the situation and that further measures would be taken.

This situation is due to a large extent to the delay on the part of the Government in dealing with it. The Minister for Finance in his statement opening this debate pointed to the progressive increase in the adverse balance of payments over the whole of last year. Yet, no step was taken. On the contrary, in October last, when the motion of no confidence was put down from this side of the House, we were told that everything in the garden was lovely and, in a Government sponsored amendment to that motion, we were told that it was quite all right to increase wages to meet the rise in the cost of living.

The Taoiseach does not say that to-day; neither does the Minister for Finance. In fact, the Taoiseach at Cork in January spoke about the need to recognise the futility of seeking to offset rising prices by a rise in money wages, unaccompanied by a rise in output. He did not say that in October. We had Deputy Kyne waxing very eloquent to the effect that everything was all right so long as we got a rise in wages to meet a rise in the cost of living.

On page 12 of his statement, the Minister told us that, in the light of the experience of the past year or so, the direct connection between higher wages and still higher prices has been clearly revealed as well as the disturbing effects on the balance of payments of increased expenditure, not matched by increased production. It is my earnest hope that, at least until we have surmounted our present difficulties, there will be stability in money incomes.

Minister for Defence (General MacEoin)

From what is the Deputy quoting? Page 12 of what?

Mr. Briscoe

He is quoting from the statement of the Minister for Finance when he opened this debate.

Mr. Colley

This is a copy of the Minister's own statement.

General MacEoin

He did not say that.

Mr. Cunningham

Did the Minister for Defence not read it?

Mr. Colley

For the sake of the country, the action now being taken by the Government is all to the good —and, personally, I am delighted about it—but the Government are singing a tune to-day altogether different from that which they sang in October. Consider, however, what it has cost this country. When in 1951 and 1952 the Fianna Fáil Government tried to take measures to deal with a situation that was twice as difficult they were abused in this House and misuse was made of that situation throughout the country. The people were misled. I would remind the House that our people are only in their infancy, so far as the control of their own affairs is concerned. If we want to educate and rear up a proper democracy in this country then I suggest it was a crime of the first order to go out and mislead them as they were misled in that period. It is easy enough, now that the Government have reached this position themselves, to call for basic agreement. There is no question but of basic agreement. They were always our views. They are still our views. However, when we tried to deal with a similar situation we know how it was met.

We heard Deputy S. Collins speak here the other evening about how our economy worsened under Fanna Fáil from 1951. Deputy S. Collins is quite out of date in following his leader; that was the tune they were singing in 1951 but it is not the tune that either the Taoiseach or the Minister for Finance is singing to-day. In Cork, the Taoiseach pointed out that we had reasonable savings in 1952-53—when the people on the opposite benches were going around and deploring the state of the country as a result of the awful Budget of 1952. The Taoiseach pointed out that there were reasonable savings then. There were none last year. It is very nearly time that the people on the Government Benches wakened up and took some action of the kind they now propose to take. It is an outstanding fact, taken over the two Coalition periods, that there was a progressive increase in our adverse trade balance. In 1948, there was an adverse trade balance of £10,000,000. That is reasonable enough; nobody will say anything about that. In 1949, the adverse trade balance was £20,000,000. In 1950, it was £30,000,000 and in 1951 it was £62,000,000. If one likes to read over the Budget statements of the then Minister for Finance, it will be seen that he referred to these adverse trade balances but never took any steps to deal with them.

In this same statement by the present Minister for Finance, introducing this Vote on Account, we are told that in 1954 the adverse trade balance was £5,500,000—and, in the first full year of Coalition Government, it jumped to £35,000,000. Definitely, for the sake of the country, it is high time the people on the Government Benches examined their consciences about what they have been doing in that way, and went a bit further. It is high time they brought us back to the state in which the country was handed over to them on both occasions when Fianna Fáil were leaving office—a state in which the Budget was balanced and in which, within reasonable measurements, the balance of trade and the financial position were correct.

I took a note of something the Tánaiste said while he was speaking. He spoke of "the danger that the deficit would be increased for the purpose of importing consumer goods." The Tánaiste did not always think that way. Let me quote now from Volume 127, column 609, from a speech made by him, as Deputy Norton, on 8th November, 1951. He has been talking about the theories which he expounded himself—theories similar to those put forward from the Government Benches of that day. On that occasion, in 1951, Deputy Norton said:—

"If anybody believes in these theories on economics, he is welcome to them, but I think they are the economics of the mentally deficient."

The Tánaiste is now joining the ranks of the mentally deficient!

Major de Valera

No, the mentally elastic.

Mr. Colley

Deputy Norton continued, in 1951:

"So long as we want consumer goods or capital goods, we should use our sleeping money, which is being lent to Britain at practically no rate of interest so far, to buy goods, consumer and capital, for the use and benefit of our own people."

To-day he referred to the fact that our money is profitably invested abroad. He had no inhibitions about using any of our external assets for consumer goods then. I recollect quite distinctly that, in the course of that 1951 speech, he made the point that we should get them back because the £ was worth only 10/- and if we left our external assets there much longer the £ might be worth only 5/- and that it would be far better to get them back and spend them. No wonder, I say, I was astounded when I listened to his speech to-day.

The Tánaiste also spoke to us about savings. It is interesting to hear what the Minister for Finance in the last Coalition Government had to say on the question of savings—a matter which has been impressed on us to-day but one which would not be listened to when Fianna Fáil tried to impress it on our people. In Volume 127, column 1717, of the Official Debates, Deputy McGilligan, Minister for Finance in the last Coalition Government, on the question of savings, said:—

"If people who have reserves want to spend them, why should they not do so? Have we not got at least to that degree of liberty in this country where a man, if he has a few hundred pounds and wants to buy a wireless set with it or improve his house by putting in a wash-basin or by putting in new carpets or furniture, is at liberty to do it? What is the merit in preventing him from doing it?"

Do not forget that this same gentleman was referred to as the financial wizard. I wonder what the Government think to-day about that: "What is the merit in preventing him from doing it?" He went on to say:

"We are getting completely authoritarian if we say that even the owner of savings who has reduced his consumption at an earlier period in order to get those savings cannot put those savings to some purpose which he considers advantageous if not profitable to himself."

These are some of the views on savings expressed by the wizard of finance that we used to hear about. They are quite contrary to what we are hearing now from the Government or the present Minister for Finance or what we heard on the wireless last night from the chairman of the Savings Committee that was set up. It shows the lengths to which people on the opposite benches went to try to vilify and impede the Government of that day. Would Deputy McGilligan repeat that speech to-day? If so, I should like to see the reaction of the Government to it.

There is no question about it, in the last few months we on these benches have been completely vindicated—first in regard to the tea muddle, when the Government would not face up to the consequences of the increased price of tea and subsidised tea by loan for nine or ten months. Now the people are paying 2½d. on every lb. of tea they buy to pay for the loss incurred in not facing up to facts at the start. They have to pay, not only the increased price, but 2½d. additional to cover the loss incurred. I do not know for how long they will have to pay that but, presumably, it will be for some years.

Then we had the general rise in prices. We hear nothing now about the poor man's pint being increased and the tragedy that that is. We do not hear anything about the price of tobacco. We do not hear anything about even the ha'penny Budget or the ha'penny that was taken off then, which is more than this Government have been able to do, although they have all the taxation imposed by that so-called infamous Budget of 1952 and the increased taxation that has been imposed since that time. In addition to the £10,000,000 extra taxation then imposed, they had £8,000,000 increased taxation in this year's Budget and they want every penny of it. According to them it was all absolutely unnecessary then and, in spite of that, they were not able to take even a ha'penny off the price of the loaf.

We have been vindicated in that. We have been vindicated in the general rise of prices. Prices could not be kept down by Government action. I was boohed and hissed at the count after the election for telling them that it was not possible for them to do what they had promised. Events are proving that now. All the miracle workers that we had going around at that time claimed to be able to do things that it was not possible to do before but now, when they have the job of doing it, it is a different question and we over here are told we should not say anything about it.

There is to be a different standard of conduct for us when we are in opposition than there was for the people opposite when they were in opposition. We must not do or say any of the things that they did and said. We must not make political capital out of it. It is not a question of making political capital. It is a question of facts and a question of proving that we knew what we were talking about and that the people opposite did not, or else they deliberately fooled the people.

In addition to our vindication in all these matters, there is the complete change in financial outlook of the Government of the day. Thank God, for the country's sake, that that has come and let us hope that their financial mentality will be developed fully in the very near future, for the sake of the country.

Deputies on the opposite benches may say what they like but this is a Supplementary Budget. This will impose taxation. It may be necessary. I am not denying that but I do say that the Government themselves are responsible for a large share of it in allowing the situation to develop so long. It is taxation. It will take away a large slice of the £15,000,000 to £20,000,000 total increases in salaries and wages that the Taoiseach mentioned will have to be faced this year. There is no use in blinking it. I wonder how it was that, when that had to be done, we did not get some of the reductions that Deputy McGilligan promised, when he was speaking as the official spokesman for Fine Gael on the radio just before the election, and when he told us that there were £10,000,000 or up to £20,000,000 there for any Minister for Finance who knew how to go about it that could be saved in taxation. How is it that some of those millions were not used to avoid taking from the workers a large slice of the increases that they have just obtained?

There is another point to which I want to refer. The Tánaiste referred to the growing numbers employed in industry. I want to refer to one point in the last weekly list of unemployed that I have received. I had it here with me but it has disappeared. Perhaps we will get another one—this one shows the same thing and it illustrates the point I want to make. In 1954 the live register on 10th March was 76,278. In 1956 the figure was 70,610, that is, the total figure is down by roughly 5,600. Now when we come to the men on the stamps—mostly city workers, people on wages, excluding females— we find that on 10th March, 1954, the number was 29,797 and, in 1956, the number was 34,488. So that the number of men on stamps, put it that way —the ordinary working men of the towns and the cities—has grown by as much as the total unemployment has fallen.

I think that is a very serious state of affairs. It is all right to talk about unemployment going down, until you examine the details. When you find that it is all men, probably men with families, absolutely dependent on wages, who are suffering, and increasing in numbers, it is a different position altogether. That is a very serious aspect of the present situation as regards unemployment. It has been going on for some months now and continuing to grow, and I do not see anything being done about it.

I do not think I need say much more. I had rather a lot to say, but it will probably be said by others. I am glad that the Government has been converted to the view that a difficult position exists in this country. It has taken them 15 months—12 months from the time they knew it—to wake up to it and I am glad they have now done so. I hope that their education in that respect will progress and that they will deal effectively with the position as they see it developing and that some time they will have the courage to stand up and say mea culpa, mea culpa and admit the damage they did to this country by what they said in 1951 and 1952.

Parliamentary Secretary to the Government (Mr. O'Donovan)

This debate has ranged over considerable territory and I should like, for a few minutes at the start at any rate, to get back to the record of the two Governments in the matter of expenditure. We all know that certain newspapers in this city are continually crying for reductions in expenditure. I believe, personally, that political Parties, in their attitude to Government expenditure, do not change greatly through time. When the Fianna Fáil Party first became the Government of this country, the country was being run for a sum of £22,000,000 and at that time these very same newspapers were complaining that it was costing altogether too much. In fact, never was a campaign on expenditure carried out to the extent to which it was carried out during the years 1930 to 1931.

What happened? Within 12 months, the Fianna Fáil Party had put up expenditure 50 per cent. to £33,000,000 a year, and, before the war, they had pushed it up to £38,000,000 a year. There was no increase whatsoever during that period of six years in either the nominal income or the real income of the country. In fact, at one period—in the middle of it—there was a considerable reduction. The Fianna Fáil Party came back into office in 1951 and I should like to compare the expenditure then, as audited, and as it appears in the volume we have been supplied with, the Estimates for the coming year. Why do I take 1950-51? I take it for the simple reason that it was the last complete year in which Deputy McGilligan was in charge of the finances of this country. The expenditure as audited was £75,000,000 in that year. What had it become when Deputy MacEntee left office? In his last year of office, the audited expenditure for 1953-54—only three years later, remember—was just under £105,000,000, an increase of £30,000,000 a year.

Had any Government ever done that in this country previously? They have certainly not done it since. What is the position since? Let us take the first complete year of office which is to end shortly. The Estimates, including supplementaries—and of course the expenditure will not amount to that at all—total £110,900,000, nearly £111,000,000. It will probably be a couple of million pounds short of that. In a period of two years since this Government took over the expenditure of the State has gone up by a sum of about £4,000,000 or £5,000,000 a year. The Supply Services expenditure, as it appears in this volume, has gone up £4,000,000 or £5,000,000 a year. That does not tell the complete story because there is the Central Fund expenditure also but it gives the picture as no other figure could give it. I want to come back later on to that and I should like the House to bear in mind, when I do come back to it, certain figures about real costs, costs of imports and so on, and to compare that achievement—and it is a real achievement, this rise in expenditure of £4,000,000 in two years—with what? With £30,000,000 in three years.

Mr. Briscoe

It is going up.

Mr. O'Donovan

Surely, it is going up, and the value of money is going down, in case the Deputy does not know it—would that be right?

Mr. Briscoe

How long has it been going down?

Mr. O'Donovan

It did not go down as fast as to go down £30,000,000 on £75,000,000 in the period of three years. It did not lose three-sevenths of its value in the years 1950 to 1953.

Mr. Briscoe

When was the first devaluation?

Mr. O'Donovan

The first devaluation was in 1949 and I have read out the expenditure in the following year, which was £75,000,000. If Fianna Fáil were to go back into office again, what could the people expect? I am very glad to say they will not go back into office, but, supposing they did, the people could expect State expenditure to mount at an alarming rate. The people have had that experience already and they do not want it to happen again. What happened actually in this country during the period 1949 to 1953? What I intend dealing with now apertains to both adverse balance of trade and to expenditure. I have here a copy of the British Statistical Abstract and a digest of the statistics shows that, taking materials for the manufacturing industry with the exception of food and coal, the following is the summary of the index of prices; 1949 being taken as the base at 100: In 1950, it was 138.6; in 1951, 193; in 1952, 162; in 1953, 145.8; in 1954, 143.5; and in 1955, 152.4. During the years in which the Party opposite were in office, the prices of these materials went down, down, down.

Major de Valera

What are you trying to prove?

Mr. O'Donovan

What I am trying to prove——

Major de Valera

That is what we want to learn.

Mr. O'Donovan

——is that if you imported the same quantum of goods for manufacturing purposes, you got them at a much cheaper price.

Major de Valera

Leave out the "ifs" and leave out the "whats". At the moment we are dealing with the present.

Notice taken that 20 Deputies were not present; House counted, and 20 Deputies being present,

Mr. O'Donovan

I shall endeavour to answer the interesting point made by the Deputy. In the year 1955, the price index of manufacturing goods was 152.4. I have frequently heard it said on behalf of Fianna Fáil that they came into office in 1951 at a very difficult period. I deny that absolutely. The worst was over when the Party opposite came into office in 1951. The highest price for raw materials was reached in March and April of 1951. Of course, Deputy Lemass subsequently explained that he found on the desk in the Department of Industry and Commerce a large number of price orders. He did, and they were kept, and rightly so, because of what happened subsequently. He signed every one of those and never subsequently did he sign an order reducing those prices. What was the extent of the reduction in the price of raw materials? It was from 193 down to 143, a reduction of about 25 per cent. in the prices of those imported materials which formed roughly half of the total cost in manufacturing industry.

Mr. Briscoe

Those are English.

Mr. O'Donovan

The bulk of our raw materials come from England, if the Deputy wants to know.

General MacEoin

He would not want to know.

Mr. O'Donovan

Of course, he knows it. He is only pretending.

General MacEoin

Nobody knows it better.

Mr. O'Donovan

I quite agree with the Minister for Defence. That was the situation when Deputy MacEntee projected himself on the scene. What did he find? He found this, according to the Leader of the Opposition who was back to it again in Kerry, that there were too many lawyers in this Government and that Fianna Fáil were faced with a deficit of £15,000,000 which had to be dealt with as a result of the last Budget of our making. I pointed out in the Budget debate last year that when the present Minister for Finance started to prepare last year's Budget, he found a deficit of £7,000,000 or £8,000,000. What did he do? Did he start out like a bull in a china shop to put on taxation and take off the benefits of food subsidies which the people had got? He did not. He did not put any additional taxation on. A few moments ago Deputy Colley pointed out that we had taken off no taxation. Perhaps we did not, but we did the equivalent; we did not put up taxation, although the people's incomes had increased.

Mr. Moran

What are we doing now?

Mr. O'Donovan

The Exchequer does not need the money that will come in as a result of this.

Mr. Moran

To whom does it go? To Santa Claus?

Mr. O'Donovan

It is not required for the purpose of carrying on the ordinary current State services and, if the Deputy looks at the Exchequer returns, he will see that.

Mr. Moran

The capital Budget.

Mr. O'Donovan

I shall say a few words about the capital Budget later. In connection with Deputy Colley's reference to the adverse trade balance, I should like to ask Deputies opposite a question. What did the present Government do in the past two years to worsen the adverse trade balance?

Mr. Briscoe

Does the Parliamentary Secretary want an answer?

Mr. O'Donovan

Certainly.

Mr. Briscoe

You increased the imports of wheat and maize.

Mr. O'Donovan

I can answer that one quite easily. The imports of wheat went up at the beginning of last year, because of the unfavourable weather in 1954. Because of that, a considerable amount of foreign wheat had to be added.

Mr. Briscoe

Was the Parliamentary Secretary not against the growing of wheat until five minutes ago?

Mr. O'Donovan

If you examine the position, you will find that the imports of wheat went up at the beginning of the year.

Mr. Briscoe

Maize as well.

Mr. O'Donovan

I am not going to chase every hare the Deputy raises for me.

Mr. Cunningham

You have enough of your own to chase.

An Leas-Cheann Comhairle

Order! The Parliamentary Secretary must be allowed to continue his statement without these interruptions.

Mr. O'Donovan

I would not mind making a bet with the Deputy that wheat imports and maize imports will go down in the coming year. As far as I can see, the steps taken by the Government have had favourable reactions and there is an increased area under the plough this spring.

Major de Valera

I hope there is.

General MacEoin

Any wheat we brought in was good wheat, not the Argentinian product.

Mr. O'Donovan

There is not the slightest doubt that anybody could solve the balance of payments problem in the way Deputy MacEntee did in 1952.

Mr. Cunningham

He solved it, and you kept the same solution and are adding to it.

Mr. O'Donovan

And the people on that side of the House are complaining because we did not dive in when this thing happened last summer. The present Government wanted to have a look at the problem, and they were quite right. If anybody else adopted the kind of measures that Deputy MacEntee adopted in 1952, would "foolhardy" be too harsh a term to describe them?

Mr. S. Collins

Sheer, downright stupidity.

Mr. O'Donovan

I might, perhaps, add a further word of personal explanation. It has been suggested that I held that there was no balance of payments problem. I did not.

Mr. Cunningham

The Parliamentary Secretary said that somewhere in the Midlands.

Mr. O'Donovan

Over a period of years I have analysed the deficits which have been thrown up in the statistics and I gave what appeared to me to be cogent reasons as to why I thought these deficits were misleading. I have never held there is not a balance of payments problem. There is one at the moment, but it may well be that, when all the figures are known, the extent of it may not be as great as we think it is at the moment.

Mr. Moran

Why not withdraw these taxes, so?

Mr. A. Barry

These are not taxes.

Mr. Cunningham

They are purchase taxes.

Mr. O'Donovan

The Deputy will understand that in bridging a gap, to one extent or another, there is a balance of payments problem to which this Government has to attend. I think the Government has attended to that in a way which will create least difficulty for our people here.

Mr. Moran

The Tánaiste and Minister for Industry and Commerce says it is a storm and not a problem.

An Leas-Cheann Comhairle

The Parliamentary Secretary is in possession. He might be allowed to make his speech.

General MacEoin

A little bit of friendly help does no harm.

Mr. O'Donovan

Deputy Colley made a comment to-day. He said there was a complete turn-over in the financial outlook of this side of the House. What would we have had to face if the Party opposite happened to be on this side of the House now? We would have had two things we have not got at the moment—complete abolition of the remainder of the food subsidies and the bank rate would at the moment be 7½ per cent. Deputy Briscoe may laugh, but that is the truth.

Mr. Briscoe

I am laughing at the appeal the Tánaiste made.

An Leas-Cheann Comhairle

Order!

Mr. O'Donovan

Would these two propositions have been much good? Would the abolition of the remainder of the food subsidies help the poorer sections and would a 7½ per cent. bank rate help the other people?

Mr. Cunningham

Make it 8 per cent.

Major de Valera

Round it off.

An Leas-Cheann Comhairle

Order!

Mr. O'Donovan

Deputy O'Malley made a fair enough point in relation to myself and I promised to reply to it. He said I had been strongly in favour of money for private enterprise and that I was anxious to help on private enterprise. He said that I had said that many times. Perhaps, as often happens, nothing ever comes out in exactly the way one hopes it will. Quite frankly, I had hoped we might have had a big number of flotations of private companies here. That has not happened. Deputy MacEntee's famous 5 per cent. loan in 1952 killed the possibility of that for a very long time.

Mr. Briscoe

How?

Mr. O'Donovan

We have done this much in the last 12 months—the amount of money made available by the commercial banks went up and the amount of advances went up from October, 1954, to October, 1955, by £24,000,000.

Mr. Briscoe

Advances to whom?

Mr. O'Donovan

I will read them out. I was going to read them out when the Deputy interrupted.

Mr. Briscoe

Read them out, and read them out correctly.

Mr. O'Donovan

First of all, to farmers and agriculturists, from £14,900,000 to £16,400,000; to cooperative trading concerns, societies and creameries—listen to this one— from £1,800,000 to £3,000,000; to mining and manufacturing—the bulk of these figures would, of course, be to manufacturers—from just under £16,000,000 to £22,200,000. Mark you, that is not bad to private enterprise, my particular little pet, though I would have allocated the money in a different way. To continue: to finance bodies, including stockbrokers and so forth, from £3,500,000 to just over £4,000,000; to wholesale merchants, from £17,800,000 to £21,500,000; to retailers, from £18,000,000 to £19,000,000; to shipping and transport companies and so on, from £684,000 to £4,000,000; to builders and contractors, from £4,200,000 to £4,800,000; to other businesses of all sorts, from £10,000,000 to £12,000,000—an increase of £2,000,000; to public bodies, from £8,000,000 to £12,000,000—remember, they are the public authorities, and that included the Dublin Corporation; to personal and professional overdrafts, from £18,000,000 to £21,000,000; schools, charities, churches and so on, from £6,700,000 to £8,000,000; to the Government—and here we come to a reduction—from £17,500,000 down to £13,000,000. Does not that add the last piece of enamel to the picture I have been painting?

Major de Valera

From what is the Parliamentary Secretary quoting?

Mr. A. Barry

Does it agree with the Deputy's list?

Mr. Briscoe

No.

Mr. O'Donovan

I am quoting from the Quarterly Statistical Bulletin of the Central Bank of Ireland, January, 1956. The total increases were about £28,000,000 and, if one knocks off the £4,000,000 by which the Government reduced its borrowings, the net increase is £24,000,000.

Mr. Briscoe

Is the Parliamentary Secretary seriously saying that the Government reduced its borrowing?

Mr. O'Donovan

Those are the figures.

Mr. A. Barry

They are not the same as Deputy Briscoe's figures.

Mr. Briscoe

The Government owes £20,000,000.

An Leas-Cheann Comhairle

The Parliamentary Secretary, please.

Mr. O'Donovan

I am quoting from Table 6. This was not after the loan. This was on 18th October last. I did not compile these figures.

Major de Valera

From what table is the Parliamentary Secretary quoting?

Mr. O'Donovan

It is on page 8 of the journal to which I referred. On the question as to what the Government did, we all know what the Government has attempted to do. The Government has attempted to solve the present problem in a way that will create least difficulty for the community as a whole. Now, I do not like making moral judgments, particularly on things economic, because very often one may be proved wrong, but at least the measures which the Government have taken are reasonable measures both in relation to hire-purchase and in relation to the importation of non-essentials; and, judging by the comments of the Deputies on the opposite side of the House, they do not feel the Government is far off the mark in the measures they have adopted and the manner in which they propose to implement them.

Deputy O'Malley raised a question as to whether this levy had been put on felt hats. He had some interest in raising that matter. Actually felt hats are included in Item 21 of the list.

He also referred to criticism by the former Deputy Dr. Browne on the manner in which Deputy McGilligan prepared his last Budget. At the time, I read this criticism by Dr. Browne. The quotation by Deputy O'Malley is given in column 519 from a speech made on 28th May, 1951, in which Deputy Dr. Browne suggested he was asked to alter his Estimates. If Deputies on the far side of the House believe that, they will believe anything. Time and again, when I was an official in the Department of Finance, without any personal instructions from the Minister, I wrote to other Departments saying: "Dear So-and-so: I do not think you will spend as much money as that next year"—it might have been a new service or something of that kind—"and, if you will reduce your Estimate, we will raise no objection to your having a Supplementary Estimate at the end of the year." When Deputy Dr. Browne was approached in relation to the new health scheme to do that, he flew right up in the air and said: "You are asking me to fake my Estimates; you are asking me to behave dishonourably to help out Deputy McGilligan." It was not only when Deputy McGilligan was Minister—there are hundreds of precedents every year for that procedure in the Department of Finance. There is a stock formula for it.

Major de Valera

Does the stock formula include an indication that you will get a supplementary later?

Mr. O'Donovan

Yes, absolutely. I have signed stock letters of that kind myself time and again. I can give the Deputy references to numbers of them. It is a regular feature, particularly in relation to new services, because it is a matter of opinion, when you are starting a big new service, what it will cost. The other Departments want to get as much money as they can for the service—they do not want to be caught short of money—and naturally the Department of Finance want to keep down the Estimates volume as much as possible, and, to get agreement on a figure, the Department of Finance very often say: "We will give you the money at the end of the year, if you find that you want it."

Major de Valera

Does that not usually involve cutting down the projects in the original Estimate?

Mr. O'Donovan

No. What it means is that a new scheme which is of a large size may take a considerable time to get into operation and there may be differences of opinion on the probable cost. The Department concerned may naturally feel that they will be able to push the new service ahead rapidly——

Major de Valera

So they estimate only for part of the scheme then?

Mr. O'Donovan

No. They make an estimate of how much money they will require and decide on the parts of the country where it can be put into operation, and so there will be a difference of opinion on it, but, between them, the Departments get the best estimate they can. There is not the slightest doubt that was the meaning of what happened in the instance mentioned by Deputy Dr. Browne.

Major de Valera

For instance, in the case of the Defence Estimates, if there was some purchase item in them, which was not allowed, it would be completely written off in the Estimate?

Mr. O'Donovan

No; that is not the way. The particular scheme to which this relates is a good one to take—a vast new scheme. There can be a difference of opinion as to how much can be put into operation. For instance, the Land Project took years to get going properly, but this is a complete misconception——

Mr. McQuillan

The only difference is that everyone was in favour of the Land Project, and all were not in favour of the health scheme.

Mr. O'Donovan

That has as much to do with the matter as the sole of my boot.

Mr. McQuillan

You were not an elected representative then and knew nothing about it, except as a small boy official. Let the Parliamentary Secretary not use his official capacity here.

An Leas-Cheann Comhairle

The Parliamentary Secretary on the motion.

Mr. McQuillan

Let him keep to the facts.

Mr. O'Donovan

I did not see Deputy McQuillan in the House until this moment, but certainly if Deputy McQuillan's contribution to this debate was as bad as that contribution, I would have a few words to say on it.

Mr. McQuillan

We know you are here under false pretences.

Mr. O'Donovan

I am here under false pretences? That is good.

Mr. Donegan

Is Deputy McQuillan in order in saying that a Deputy is here under false pretences?

An Leas-Cheann Comhairle

Such a statement is not in order.

Mr. McQuillan

What I want to suggest is that Dr. Browne should be here instead of the Parliamentary Secretary, but for the——

Mr. O'Donovan

Is the Deputy entitled to make a speech?

An Leas-Cheann Comhairle

I take it the Deputy is withdrawing his comment?

Mr. McQuillan

I did not mean anything in a personal sense against the Parliamentary Secretary.

Mr. O'Donovan

I appreciate that. The truth of the matter is that Deputy McQuillan is very concerned about his seat and, if he could forget the safety of the seat, he would be one of the best Deputies in the House. He can deal with that particular piece of advice as he thinks fit.

Mr. McQuillan

That is like choking the cat with butter.

An Leas-Cheann Comhairle

Deputies must come back to the Vote on Account.

Mr. O'Donovan

I want now to come to the remarks of the Central Bank of Ireland in the opening pages of the last two numbers of the bulletin. They concern themselves, rightly, with what the Central Bank considers to be a major financial problem. Mind you, it is a serious enough economic problem, but it is a more serious financial problem because of technical difficulties. I particularly want to refer to one paragraph of what they had to say, on page 3 of the January bulletin. They say this:—

"Of the total reduction in net external holdings of the Associated Banks during the last nine years (1947-1955) amounting to £73.8 million, almost half, i.e. £35.6 million—roughly the same as the external payments deficit—occurred in 1955."

Then it goes on to say:—

"In view of the close connection that has emerged in 1955 between the increase in the excess of imports, on the one hand, and the reduction in the net external holdings of the banks, on the other, the following additional comparison may be of interest."

I do not take any particular pride in the fact that I noticed this particular coincidence many months ago. The fact of the matter is that it is purely a coincidence. When the famous £62,000,000 deficit occurred, the banks, to the best of my recollection, lost £17,000,000. In other years, when there were deficits, as Deputies know there were, the banks added to their holdings. If you got a statistician on the job and asked him to calculate the coefficient of correlation between the loss of external assets by the banks and our external balance of payments deficit, he would be very lucky if he got a coefficient of point one. There must be some little coefficient, but the statistical maximum is plus one, and he would be very lucky if he got a point one coefficient.

Major de Valera

I do not quite know what the Deputy means by coefficient in this case, but does it not point to certain buffers being exhausted?

Mr. O'Donovan

You mean the pockets of money that were around? That is possible.

Major de Valera

And is it not a danger signal if it does go together, because the buffers are exhausted?

Mr. O'Donovan

We do not know if the buffers are exhausted or not. I will come back to that in a moment.

Major de Valera

I am interested in this, quite seriously.

Mr. O'Donovan

Do not let me forget it, as I might do. The purpose of my reading that passage from the bulletin —and the same applies to the third page comment in the October issue—is this: nowhere in these three or four pages is it suggested that the Central Bank of Ireland had anything whatever to do with this. Would it interest Deputies to know this, that if you subtract £35,000,000—the deficit of last year—from £73,000,000, you get £38,000,000 that the commercial banks have lost in external assets? Where did that £38,000,000 go? Would anyone chance an answer? It went into the Central Bank of Ireland, the whole £38,000,000 of it. If the Central Bank of Ireland do not like that comment, they can pull their hats pretty close over their ears. It happens to be true.

Mr. Briscoe

Did their holdings go up by £38,000,000?

Mr. O'Donovan

Yes, they got cash for the legal tender notes which are really till money, the ordinary money in circulation in the community and they turned that into British Government securities.

Major de Valera

Where is the reference to that as such?

Mr. O'Donovan

You will get it in the table related to the Legal Tender Note Fund, but it only goes back to the year 1951 in this publication. If you go back to 1947 you will find that I am right.

Major de Valera

Maybe I misunderstood the Parliamentary Secretary. Did I understand him to say there was a net increase of £38,000,000?

Mr. O'Donovan

Yes, exactly £38,000,000.

Major de Valera

Will the Parliamentary Secretary help us by precisely defining the nature of that increase?

Mr. O'Donovan

The Deputy will find the information in relation to the years since 1951 on page 4 of the bulletin.

Major de Valera

How is it to be read, an increase in what?

Mr. O'Donovan

It is a decrease in the external holdings of the commercial banks, which is the subject we are discussing, and an increase in the external holdings of the Central Bank.

Mr. Briscoe

The external holdings of the Central Bank?

Mr. O'Donovan

Yes. As it happens I have telescoped it a little but it is true all the same.

Major de Valera

Then there is no deficit? The deficit has not been accounted for.

Mr. O'Donovan

If anywhere in these two numbers the Central Bank, in their commentary, had said this, even devoted one sentence to it, I would not have mentioned it at all in this House but they point the finger at the politicians as much as to say: "They are not doing their job. Look at what they are allowing to happen." They do not say one word at all about the particular part of the job the Central Bank is doing.

Mr. Allen

Then they are all wrong, the Central Bank?

Mr. O'Donovan

Now, Deputy.

Mr. Allen

We just want to know.

Major de Valera

That £38,000,000 will show as a net increase in the external holdings of the Central Bank?

Mr. O'Donovan

Of course it will. I would like now to say a few words about buffers.

Mr. Allen

Tell us more about the Central Bank assets.

Mr. S. Collins

The Deputy would not understand it anyway.

Mr. O'Donovan

I am speaking about financial buffers.

An Leas-Cheann Comhairle

Deputies must cease interrupting.

Mr. O'Donovan

Some little while ago I became interested in an effort to see how our external holdings had gone in the last eight or nine years. I had some calculations made; I did not make them myself, but I asked them to be made, and I want to say I take responsibility for them. This was the answer provisionally which came out of the calculations which were made. The figures I will give are the current cash values of our external holdings. In the middle of 1947, £450,000,000; that did not change seriously in the immediately following years. It increased in the year 1951 when it amounted to £460,000,000. It dropped to £400,000,000 in 1952. Since then it has increased steadily and it amounted to £500,000,000 in the middle of the year 1955.

Mr. Cunningham

Gross not net?

Mr. O'Donovan

Yes, gross. Deputies will, of course, appreciate that there has been a change in the current market value of some of the assets but that has cut both ways because certain Government securities held have gone down in value but, on the other hand, the industrial shares have tended to go up. It does not prove there has been no realisation of the assets, but it does prove that until the middle of last year there was no serious drain on the gross assets. On the contrary, if you take nominal values, you will see they had increased.

Major de Valera

That would mean there is no balance of payments problem?

Mr. O'Donovan

If the Deputy would only understand, the balance of payments problem which we are discussing blew up since the middle of last year.

Major de Valera

Is there an ascertainable deficit in that period?

Mr. O'Donovan

I would be inclined to think it is probably since the middle of last year of the order of £25,000,000 to £35,000,000. It is hard to be sure.

Major de Valera

In other words, there is a deficit there. Where is it covered?

Mr. O'Donovan

There is a good deal of evidence it was financed from the commercial banks. It is like every other problem; you cannot answer it absolutely.

Major de Valera

The Deputy said earlier £38,000,000 was simply transferred from the commercial banks to the Central Bank, and that would leave no net change in the external field. If that was so, simpliciter, I am asking the Deputy where was the deficit in the balance of payments covered?

Mr. O'Donovan

Could I refer the Deputy to page 3 of the document he has in front of him and to the paragraph which says that the net total reduction in the external holdings of the Associated Banks was £73,000,000 over a period of nine years. If the Deputy considers that, he will probably agree that £38,000,000 is what is left.

There is perhaps one other proof about these buffers. Our balance of payments shows that the income from our investments abroad went up from £17,500,000 in 1947 to £24.2 million in 1954. That certainly does not suggest any serious running down up to that.

Mr. Briscoe

What about 1955?

Mr. O'Donovan

I understand it will show some increase again in 1955. Again I am not suggesting that we have not been realising external securities in recent months. I am just saying it is a proof that we have not drawn yet to any great extent on our external assets. As the Deputy will know, there is the Marshall Aid loan which, of course, was an indebtedness. That increases our indebtedness to foreign countries and there have been, I take it, investments by foreigners here. But certainly, so far as our gross figures go, any reduction in the nominal value has come about in the last six or eight months. Will anybody suggest that, in such circumstances, the Government should have waded in the moment a deficit appeared?

I wanted to make certain comparisons in regard to the capital Budget, a matter to which one of the Deputies opposite referred. The subscriptions to public loans increased up to the middle of Deputy MacEntee's term of office: £20,000,000 in 1950, £20,000,000 in 1952, £33,000,000 in 1953, £25,000,000 in 1954 and £20,000,000 in 1955. Notice the gradual drawing down again, although State expenditure on capital was much the same as it was in the middle of Deputy MacEntee's period of office. It has varied only marginally in recent years. It has been somewhere in the region of £33,000,000 or so. I am talking now about the capital expenditure that comes out, not the expenditure that is outlined in the Budget. It has been in the region of £33,000,000 ever since 1951.

There is one other point, as a comment on the way the present Government has been managing the finances of the State. I took the total debt outstanding and subtracted from it the liquid assets, meaning the moneys there in liquid form, funds easily realised and so on, and I found that the increase in the net—that is, the difference between the gross debt and the liquid assets—in 1951/52 was £36.7 million; in 1952/53, £29,000,000; in 1953/54, £32,000,000; and in 1954/55, £28.6 million. In other words, we must have financed in 1954/55 some of the capital expenditure from revenue otherwise obtained than from the creation of debt.

Mr. Briscoe

What are these liquid assets?

Mr. O'Donovan

I can give you the figures. Perhaps if I take one, it will explain what I mean. On 31st March, 1951, the gross national debt was £173.7 million and the liquid assets were £34.2 million. The bulk of that was moneys in Marshall Aid Counterpart Fund, actually moneys in the Central Bank. That was well down the following year! They are moneys of various kinds which are easily realised.

Mr. Briscoe

What are the liquid assets of last year?

Mr. O'Donovan

On 31st March, 1955, £9.3 million.

Mr. Briscoe

I thought the Parliamentary Secretary said £29,000,000 before.

Mr. O'Donovan

I said that the net debt outstanding had increased by £28.6 millions.

Mr. Briscoe

That the liquid assets have also increased?

Mr. O'Donovan

If we are going to talk about liquid assets, I have just one comment on them. They were £34.2 million on the 31st March, 1951, and £8.3 million on 31st March, 1952. We all know how that came about, I think.

Mr. Briscoe

Let us keep——

Mr. S. Collins

The shaking of the bags in Fermoy.

Mr. O'Donovan

I feel that the Minister for Finance deserves the commendation of all for the manner in which he has been working in recent months on that problem, and there is not the slightest doubt, from the absence of criticism with any punch in it on the far side of the House, that he has, in fact, got the commendation of not alone this side of the House, but the other side of the House also, even though they cannot say it in public.

Mr. Moran

I was rather amazed to hear the speech of the Tánaiste here to-night. It is quite obvious to me that something happened to him on his recent American visit. Not only is he the same man with different clothes, but he is a changed man with a different mentality. Svengali never had such an effect on Trilby. Nobody having listened to the Tánaiste over the years gone past, could really believe they were listening to the same person here to-night. I think that he still imagines he is strolling down Times Square, New York, with the leader of Local 109. He devoted most of his speech here to-night to appealing to the country to buy Irish goods in the year 1956 as his contribution, as Tánaiste of this Government, to solve our national problem here. He appealed to all sides of the House to deal with, what he terms, this storm that the nation must weather, but anybody listening for the past 15 or 20 minutes to the Parliamentary Secretary to the Taoiseach, who seems to think there is no storm and who has devoted his time in this House to an argument suggesting there is no problem——

Parliamentary Secretary to the Taoiseach (Mr. O'Sullivan)

Just for the record, I have not spoken at all yet.

Mr. Moran

I beg the Parliamentary Secretary's pardon. I refer to the gentleman sitting behind him who is, I understand, Parliamentary Secretary to the Government. At all events, one would have thought that the Tánaiste in this Government would have informed the Parliamentary Secretary to the Government that there is a national problem—a problem to meet which the Tánaiste feels that he should appeal to the whole nation, whereas the Parliamentary Secretary thinks the whole thing is eyewash, that everything is being exaggerated, and that in a short time we will see that there was no such thing as a problem at all.

Mr. O'Donovan

On a point of order, the Deputy was in the House when I spoke and is he entitled to pretend that he did not understand my speech in that fashion? There ought to be a limit.

Mr. Moran

I have listened patiently to the Parliamentary Secretary. He stated time and again——

Mr. O'Donovan

Could I be put on record that——

An Leas-Cheann Comhairle

Deputy Moran is in possession.

Mr. O'Donovan

On a point of order, is it not the custom of this House, when a Deputy states that he did say a certain thing, that his word is accepted? It is only a few minutes since I made these statements.

Mr. Moran

I listened to the Parliamentary Secretary endeavouring to prove that there was not such a problem, endeavouring to suggest, and he did in fact state—and the records of this House will show it—that time will prove that what we consider a problem is completely exaggerated; whereas, just before him, the Tánaiste was appealing to the nation, telling us that we were facing a national crisis and calling for the co-operation of all the people. I do not know whether it is true that the Taoiseach, a couple of days ago in New York, when he was presented with a green donkey by the Democratic Party, told them to save their breath because he had one at home in his office.

When the Tánaiste appeals to the nation and to every member in this House to look upon this as a national problem, and when the Parliamentary Secretary to the Government takes a completely different line, I wonder how is any Deputy to make up his mind as to whether there is a problem or whether there is what the Tánaiste calls a national financial storm. It is quite obvious that, not alone is there a problem, but that there is a storm; it is quite obvious that, although the Government realised that it was there for a very considerable time, they did what the Parliamentary Secretary to the Government stated a few minutes ago. They stopped, they looked and they listened; and they come in here now with a Supplementary Budget in what they say is an endeavour to meet this problem.

Everybody—even those with a most rudimentary grasp of finance—knows that the problem facing the British and the problem facing us is fundamentally this. The economic problem in both countries is different and applying the same solutions which this Government proposes to apply here as are being applied by the British is fundamentally unsound. The solutions enshrined in these measures are too small, too late and misconceived.

We all know that to stop the working man buying a bicycle or an autocycle will not solve this nation's problems. Stopping a woman, who was promised that when she got rural electrification she would be saved from all the drudgery, from buying a washing machine will not solve the nation's problems. Anyone listening to the Tánaiste, who purports to be an Irish Labour leader, the man who signed his name to these Orders, would never realise that he is the same man we heard preaching up and down the country some years ago. When Deputies opposite go down to meet the bog workers in Offaly, who will now have to buy an extra pair of Wellingtons because the Labour Tánaiste has prevented them from getting a bicycle, they will get their answer.

I suggest to those Deputies who are fooling themselves and misleading the nation that these half-baked measures will not solve our balance of payments problem and that they are doing a disservice to the public. There is only one way of dealing with this problem and that is by increasing output and exporting more. It is strange that we have the Tánaiste appealing to Irish industrialists to produce more because these were the people who, a couple of short years ago, were held up by the Tánaiste as the robbers of the Irish community. A gospel was preached from one end of the country to the other that firms that made more than 10 per cent. profit were to be treated as national parasites. That doctrine was preached for consumption by the people up and down this country.

The people who were manufacturing goods were held up to public odium, ridicule and contempt. These are now the very people with whom the Tánaiste is wining and dining, and to whom an appeal is made to increase output. It is perhaps late now to talk about the time gone by. It is late now to talk about the way the people were misled. It is late now, when we have gone a long way in a national crisis without taking any proper measures to meet it, to regret what happened in the past but it behoves all of us to see what we can do to solve the problem that confronts us. I want to make it quite clear that I consider the measures introduced as being useless from that point of view.

One of the first things the nation must tackle is to take some particular branch of agriculture, endeavour to increase output and increase the agricultural exports of the nation. I often wondered that there was not an agreed national policy on agriculture just the same as in other countries where you have an agreed foreign policy as between different Parties. I often regretted that we had not a system like the Dutch where the Government can call in a particular expert to take charge of a particular Department and have an agreed policy for that particular line from the point of view of the nation.

I should like, as briefly as I can, to deal with one aspect of our exports in agriculture which has declined and is steadily declining. It is an export, the volume and value of which we could increase very many times what they are at the present time. I refer to the export of pigs and bacon. Let us see how far we have gone downhill in this matter. If we take the percentage decreases in the industry between January, 1954, and January, 1955, we will see that breeding sows decreased by 15.5 per cent. and other pigs decreased by 14.4 per cent. In January, 1956, breeding sows decreased 9.6 per cent. and in our total pig population we have the astounding decrease of 16.9 per cent.; we are now down to a total pig population of 672,000.

These are figures in respect of an industry which used to be the second largest exporting industry in this country. There is no reason why, if the proper policy is adopted, in six or nine months the exports in connection with that particular industry could not be very substantially increased. These exports would contribute in a very substantial way towards reducing our adverse trade balance.

The whole question of the bacon industry is tied to the price of feeding stuffs. It was announced yesterday, I think, by the Minister for Agriculture that 235/- would now be paid for grade A bacon.

Mr. O'Sullivan

It is a minimum price.

Mr. Moran

That price is, in my view, useless in view of the cost of feeding stuffs at the present time which is approximately £32 per ton. In dealing with bacon exports we have got to look at what our competitors are getting. They get whatever price they might get in a free British market less 10 per cent. but their costs are far below ours. Their costings are approximately £23 per ton for feed, plus an export subsidy to the bacon exporters, plus an individual subsidy to the farmers who produce bacon for export. Accordingly, it is the height of absurdity to suggest that we can compete with these people in the British market, people who have their feed at the price they have it and special inducements towards production.

The whole question of succeeding in that market against our competitors boils down to whether we can give pig feed to our producers at an economic price. Otherwise, it does not matter what price is fixed for bacon, because our producers will not produce unless it is economic for them. It cannot be economic for them at present having regard to the present price of feeding stuffs.

Deputies on the opposite side of the House may not like to be reminded that we have a Minister for Agriculture who stated publicly, in his own flamboyant way, that while he was Minister for Agriculture, Indian meal would not cost more than £26 per ton. Those days seem to be far off now but pig producers remember that in January, 1944, their produce was commanding 244/6d. per cwt. Since 1944 not only have their costings not gone down, they have gone up. Our present price —about which, I am sure, our Minister for Agriculture will start waving flags —is 235/-, which is considerably less than the price commanded for pigs in this country approximately two years ago. So here we have it.

What are we going to do about that? How are we going to gear our industry which, as I have said, we can increase in a very short time? It is one of the industries we can expand in a short time and in relation to which we can very substantially increase our exports. To my view, there must be essentially a long-term planning on this matter. There is the need for guaranteed prices over a minimum period of five years. Then there must also be continuity of supply in the market to which we are exporting. It is the height of absurdity to do in the bacon industry what has been done over the past few years, that is, to export one month, then to have no exports for two or three months and then to start exporting again for another month or two and, furthermore, exporting when there is already a surplus on the market. Irish bacon has become known on the British market for its nuisance value. The people in Smithfield market who could build up a trade in Irish bacon find that having got some supplies and sold them to their customers and created a liking for Irish bacon then, perhaps for a month or two months, there are no further supplies.

Apart altogether from the quality of our product, it is clear that in the selling of bacon as in the selling of other things such as, for instance, cigarettes, the question of taste arises to a great degree. Take as an example a man who is selling Sweet Afton cigarettes. His customers come in to him day after day and buy Sweet Afton cigarettes from him. Then, for a period, he has no further supplies of Sweet Afton cigarettes and he starts to supply his customers with, say, Player's cigarettes. The next thing that happens is that the customer gets used to the Player's cigarettes and will not take Sweet Afton cigarettes any more. It is obvious, therefore, that we must have continuity in our bacon supplies. If we establish a trade for Irish bacon and then if we cease to supply it for a period so that it cannot be obtained regularly and at a competitive price the position will be that Danish bacon and other bacon will be stocked in the shops and the customers will get into the habit of buying the other bacon and will stick to it.

I have been emphasising that in this branch of our agricultural industry we must plan ahead and ensure a continuity of supply. We must announce the price at least 12 months ahead so that the farmer will know what he will have to pay for his pig feeding. The farmer must know how he will be able to produce at the fixed price for which he has got to sell his pig. If the farmer is not given these particulars then we shall not get the production or the supplies. There are different ways in which that might be done. I believe that the bacon industry could, themselves, deliver feeding at first cost to certain centres, to farmers, if the scheme were worked out in that way. We must produce more barley for pig feeding. There is an obvious way of doing that, namely, by price inducement and other inducements.

A very obvious method would be this. Since the emergency days, the Government have the percentage of arable land on every holding in this country. If, in the morning, the Government wanted to do it, every acre over a certain minimum percentage of that arable percentage on each holding could be derated. In that way we would get more tillage. In that way we would be able to till double the amount because we would be producing here the cereals we import from the far ends of the earth and we could export from here at first cost and compete with our competitors, in the British market at all events, very fully and favourably in the bacon industry. If there is some realistic thinking about this whole matter, I think something can be done in relation to bacon.

I urge that industry particularly because pigs are animals the production of which you can increase in a very short period of time, and time is very urgent so far as our adverse trade balance problem is concerned. To meet the urgency of that problem by in-increasing very substantially and in a comparatively short time part of our exports, I think one of the quickest results we might get would be obtained by stepping up our bacon exports as a whole and I urge the Government to think along such lines. It is true that we shall have to make a couple of changes before we get realistic thinking on this matter. It is not so long ago since our present Minister for Agriculture was threatening to drown the British in eggs and to choke them with butter. I believe that many of the farming community at the present time are convinced that one of the prerequisites to stability in the Irish agricultural industry would be to drown the Minister for Agriculture—at all events, it might be the cheapest way of getting rid of him—and to put somebody in his stead who will not be as blinded by personal prejudice as he is, who will think of the necessities of the nation and ensure that we shall have increased agricultural exports and that the Irish farmer will be given a chance. I believe that, if given a chance and if given a lead and encouragement, we will get results quickly from our agricultural industry in particular.

If we take the complete change that we have had in Government mentality, as expressed by the Tánaiste in this House to-night, we can see and examine some of the very curious results we have had on the financial policy of the present Government. It is only about two or three short years ago since we had to listen, time and time again, to lectures from the Tánaiste and members of the Government about the sacred cow of sterling. I was sick and tired of sitting here and listening to speeches on the awful admiration that we, in Fianna Fáil, were supposed to have had for the sacred cow of sterling. We were told we were putting up the price of money at the behest of the British Government. We were told we were accepting dictation from the British Chancellor of the Exchequer.

I would like Deputies to examine now the sacred cow of sterling. In particular, I should like Deputies to examine the financial result of the artificial insemination of the sacred cow of sterling as a result of Coalition policy—and then observe the Tánaiste coming in here and telling the nation not that the plutocrat must not ride in his car, not that the millionaire must not ride in the airplane, but that the poor bog worker cannot buy a bicycle and the poor countrywoman cannot buy the pram or the washing-machine.

I can see a very good reason why the Minister put a tax on razor blades. He has a far-seeing mind. I am quite sure he is afraid that many of his former supporters would cut his throat if they got him down the country with the same blades in view of his past promises to the workers and his present performance. We were told that there were financial buffers, but it was disproved by the Parliamentary Secretary to the Government. We have listened to some financial buffers in this House for quite a long time. If the people on the opposite benches think they can convince the Irish public that these tax measures are for any purpose other than the getting of revenue—that they are going to solve our present ugly problem abroad from the point of view of our balance of payments—I can tell them that the people of the country will not fall for that now. Listening to the Parliamentary Secretary to the Government, one would come to the conclusion that these measures are a fraud and a sham. He seems to think that they are a fraud and a sham and that there is no necessity for them. Listening to the Tánaiste, if he could shake off the effects of the New York air, we would be led to believe that we are facing a national storm. The Taoiseach, before he went to America, I think, referred to it as a problem. I wonder what is it?

I wonder why the Government thought fit to bring in all these tax Orders if they themselves cannot make up their minds whether it is a problem or a financial storm, as they are saying, with different voices.

There is one thing clear in the Estimates before the House and it is that when we come to the question of capital expenditure and what these people will do about it, the doubts expressed by the Parliamentary Secretary to the Government, as to what will happen, are justified because in the Estimates before the House the provision of £1,000,000 for hospitals is left out. Last week a deputation from my county looked for money for our hospitals from the Government and we were told by the officials of the Minister for Health that there was no money to deal with us. At the same time £1,000,000 that went towards solving that problem is being removed from the Estimates here. That is one way to control Government spending, but not the way, I suggest, that would meet with the wishes of the vast majority of the people.

When the people have digested the present measures advanced by the Minister and when he returns with the next Budget, in five or six weeks' time, to tell them that not alone will they have to meet Deputy MacEntee's cruel imposts, as he described them, plus all the taxes that are being imposed this week plus the taxes he is going to put on cigarettes, tobacco and the working man's pint that he talked about a couple of years ago, let the public then judge the Minister and this Government.

I hope the balance of payments problem will last this Government out for at least another twelve months. They are entitled to it. They have got away with it so far and they will never get the opportunity again when the Irish public have a chance of casting their votes.

Mr. Finlay

Deputy Childers, when speaking in this debate to-day, suggested that this discussion should be conducted or continued in an air of realism. That is probably a very sound suggestion but I greatly doubt that even the contribution of Deputy Childers himself or the contributions of many of his colleagues to this debate do add an air of realism to the discussion of this problem. A very great number of Deputies opposite devoted their contributions or a large proportion of their contributions to this debate to an over-persistent or over-strenuous attempt to prove once more that the Budget of 1952 was a justified Budget. The very fact, even to a very impartial observer, that so much energy and so much excitement is now brought in to the strenuous defence of that Budget at this stage is a fairly clear indication that it probably was not sound and that anything that required so much defending for so long after it was done is unlikely to have been good on its own merits. But, whether it was sound or not sound, I do not think a re-fighting of that particular battle is likely to bring an air of realism to a discussion of the problem which arises on this Vote on Account or on the measures which have been brought in to meet it.

With regard to those measures, and that, after all, is what we are discussing, that is, the action which we will take or which we ought not to take, according to the Deputies' views, what view has been put forward by the Deputies opposite? There have been two entirely separate views put forward. I think, probably, the Front Bench view is that the measures are correct. Some people are—may I put it this way?—kicking for touch by saying that they are correct but not sufficiently drastic. We then have the view of Deputies, such as Deputy Moran, who suggests that it is a drastic imposition on the people of this country and that it is a new hardship brought on to them by this Government.

Let us take the first view, namely, that the measures are correct but not sufficiently harsh. All through this debate one thing largely unsaid has become more and more apparent—that the real division of this House on this problem and on the measures needed now to cure it is that if the Deputies opposite were now in control of the financial policy of this country we would have a re-imposition of their previous policy. I believe that the real key to the view of the Fianna Fáil Party on these measures and this problem is to be found, not, strangely enough, in any of the speeches that have been made on this Vote, but in a speech made by Deputy Childers about a week ago on the Supplies and Services Bill. In that speech he referred to the sordid dispute about the cost of living. I believe that attitude of the Fianna Fáil Party, in which the business of the cost of living is sordid and the question of the balance of payments is on a slightly higher level, is the real difference between the Deputies opposite and the Deputies on this side of the House.

It has been put forward here on a number of occasions in the last few days that the problem which now exists is somewhat similar to that which existed in 1952. We do not accept that. Deputy Lemass has said that the problem which now exists is much more serious, "more threatening" were his words, than that which existed in 1952. We do not accept that. But it is quite clear that if the Fianna Fáil Party were now on this side of the House they would apply the same remedy, in greater or lesser degree, as they applied to what they considered to be the problem in 1952. The basic differences between that remedy and the remedy now being proposed by the Minister to the House is that, whereas it is reasonable to assume that these remedies will not result in any substantial disturbance in the employment conditions in this country, the remedies which were proposed and put into effect in 1952 shattered the employment situation in this country. I think that is the real division between the members supporting the Government and those opposing the Government on this Vote.

There are more ways of curing blood poisoning than amputation and I believe there are more ways of curing a problem of the balance of payments than anything which will throw some twenty-odd thousand people out of employment. Of course, if you bring in measures resulting in the disemployment of twenty-odd thousand people in this country you will cure your balance of payments problem overnight. We, on this side of the House do not believe that is necessary, do not believe it is justified, and we do not believe that sacrifice should or need be made. We have been twitted here with imposing taxes on bicycles and autocycles. Deputy Moran has just said that stopping the working man from buying a bicycle or an autocycle is not going to solve this country's problem, but those on the far side of the House believed and still believe that, while the working man should not be stopped from buying autocycles, his country's problems could be solved by stopping him from buying bread, butter, flour, sugar and tea.

That is the real difference between the two approaches to this problem. I think the Minister for Finance, in selecting the 68 objects the import of which he desires to restrict, had one supervening and all-important standard of measurement to apply to them, and that was that, in so far as it was at all possible, he was going to avoid affecting what are ordinary necessaries of ordinary working-class families. The same approach never came, and in my view never will come, from the far side of the House and I think that is where we must part on this issue.

I appreciate, in so far as some of these objects are by no means necessaries but matters of common purchase in all strata of society, that there will be a certain amount of sacrifice and a certain amount of cutting down in purchasing by every section of the public. I think that is necessary and justified, but I do not think that cutting down the power of the ordinary people to purchase the necessaries of life is any justifiable alternative to preventing the import of razor blades and auto-cycles. That belief sets me apart from the Deputies opposite and makes the real division between us.

The other measure that has been taken is that concerning hire purchase. Before I go on to that, I make one appeal to the Minister for Finance in regard to putting these measures into effect. He himself emphasised, when introducing the Bill, that the protection which will necessarily be afforded by the imposition of these duties is incidental and not intended, and he has emphasised that the Government will take very active steps to ensure that there will be no priceraising by manufacturers or distributors of Irish-made goods of the type on this list as a result of this incidental or by-product protection. I appeal to the Minister to try to ensure that, apart from any rise in prices, no conscious lowering in standard of Irish-produced goods takes place under the umbrella of this protection. It is quite clear that, for the purpose of restricting imports of a kind which are not essential and of a kind which form a substantial part of our import trade, protection will be given to manufacturers and distributors of Irish-produced goods who up to this moment have been fighting a very tough battle with imported competitors. That is no harm in itself, but I appeal strongly to the Minister and to the Government to ensure that none of these people takes advantage of that incidental protection to lower the quality of his goods.

It is utterly reasonable that a man going to purchase say, cutlery, or some of the gadgets or apparatus for photography or something of the sort mentioned here, if there is available an Irish equivalent at its ordinary reasonable price, should have to pay more under present circumstances if he wants to go in for fancy, imported articles, but it would be unfair, however, if next week, when he goes to purchase the Irish equivalent, he found that the quality had been lowered, while the price remained the same, by reason of the protection afforded.

With regard to hire-purchase restrictions, here again, it seems to me that a lot of the comments that have been made have moved away from the reality of the problem and from the intention of the cure. It has been suggested here—I think, by Deputy Briscoe—that a more desirable and a more urgent thing would be the provision under the hire-purchase code of some means of preventing the repossession of articles bought after a certain amount of payments have been made. I do not think that is a problem at all. The problem is as has been shortly stated here— people buying who have not got any part of the way towards saving the cost of the article. The actual figures shown for deposits and for the period of repayment are moderate. I can well envisage the circumstances under which more drastic figures than those would be justified, but the present figures should have the effect of preventing people who have made no attempt to save up any proportion of the cost of a new article from embarking on its purchase and tying themselves down for a considerable period to its purchase.

A circumstance which has arisen in many cases, I think, is that of a man who goes in to buy what is quite an ordinary purchase under the hire-purchase system, a wireless set. He is asked to put down a minimum deposit, at present a very small amount. He is asked to pay 5/- a week for a 14-guinea set, but for a 20-, 22- or 25-guinea set, he is asked to pay only another 1/- or 1/3. That is where it seems to me the great temptation arises and I do think the measures mentioned by the Minister should have the effect, without unnecessarily damping down the trade and without unnecessarily restricting the purchasing power of people who have not got the opportunity of running an overdraft in the bank, without unnecessarily doing any of that, of putting more reality into the system of hire purchase.

It has been suggested by Deputies here that the whole system of hire purchase is somewhat repugnant. I for one would not subscribe to that view. In effect, hire purchase very often provides the same facilities for a man on a weekly wage as others with businesses or land can get by raising an overdraft in the bank. If you seek to inquire into the number of people purchasing, in effect, on the hire-purchase system, that is, by paying the £20 cash price down now and raising an overdraft over a period in the bank, it would be quite large. Unnecessarily to restrict hire purchase is to hit one section of the people without hitting the other and would be unjust and unfair.

Shortly, therefore, I should like to congratulate the Minister on the measures he has taken. I do not believe, in regard to the existing problem, that they are insufficiently drastic. I think they are flexible; I think it is a mistake to make a slash at the problem now and impose very drastic measures which may turn out to be unnecessary. These measures do not carry with them any guarantee, and they should not carry with them any guarantee, that further measures may not be necessary. I believe, above all else, that they are aimed in the right direction.

I believe the public are freed, or largely freed, from the penal consequences of the measures which the Deputies opposite imposed on a somewhat similar opportunity before. I believe the measures will not have the same effect on the employment situation in this country. I think that is the real difference which separates us, one side from the other, and the Minister and the Government are being logical in their attitude and consistent, if that is such a valuable virtue. In taking these measures rather than the ones which had been imposed before, and which the Deputies opposite would impose again if given an opportunity, the Government have avoided the imposition of a general depression on the economy of the country. While we must look with seriousness upon this problem of the balance of payments, it is right to say that it is undoubtedly the outcome of an expansion of our economy. I believe that any methods, whether designed or not, of depressing that economy, which would have the effect of a large increase in unemployment are not the answer, and are neither necessary nor justified.

Mr. MacEntee

It is rather intriguing to see that Deputy Finlay is at odds with the Minister for Finance because Deputy Finlay has just told us that this deficit in the balance of payments, which is causing so much concern to the Government, may be, according to him, an indication of an expanding economy. That would of course mean that the deficit in the balance of payments had been largely occasioned by an undue amount of imports of capital goods. I would recommend Deputy Finlay in this matter to read the speech of the Minister for Finance in which he told the House plainly and fairly that the deficit had been largely occasioned by the importation of goods for consumption and that he would not have been so concerned if, in fact, the statement of Deputy Finlay had any substance—that is, that the growing deficit was an indication of an expanding economy.

On the contrary, though the Minister did not say so in so many words, it is an indication of a wasting economy, of an economy which has been struck with pernicious anaemia. The Deputy also complained that certain speakers on this side of the House were concerned to defend the 1952 Budget. The 1952 Budget requires no defence. It has become the foundation of the Coalition's financial policy; it has been fully justified by them and by the fact that not one tax imposed by that Budget has been repealed, that not one subsidy reduced by it has been restored to its former level.

However, in Ireland of to-day we have to be grateful for small mercies. A couple of weeks ago I heard the policy of the present Government aptly expressed in a rhyming couplet which I think I should inflict on the House. It goes something like this:

While our cost of living soars How our Coalition snores.

Now I will confess the rhyme is no longer entirely apt. It is now only half true. The cost of living is still going up so it is still true to say that the cost of living soars. On the other hand, even we in the Opposition benches are constrained to admit that, since Monday last, the country has some reason to thank providence that the Government have stopped snoring. It would be just and fair to the public to say that within the last few days the Government appear to have become half awake. They now have one eye open to the danger that menaces our whole economy and the nation must be grateful for small mercies.

It is something to be thankful for that the Government are half alive to the hard facts of the situation and now admit that the deficit in the balance of payments has become a matter of grave concern to them and to all of us who have to live under them. The Government have been long forewarned as to the inevitable consequences of the policy which hitherto they pursued. The Central Bank has warned them, the responsible heads of financial institutions have warned them, experts in the realms of economics and finance have warned them, and during a debate here on the Government's policy on the 26th and 27th of October last we warned them what the results of their actions would be.

However, the members of the Government, and with them the Minister for Finance, have turned deaf ears to these warnings. They have shut their eyes to the unblinkable facts and, with the stubbornness usually associated with Coalitions as with other quadrupeds of mixed ancestry, they have brought the country to the verge of crisis. We should be grateful that at least they are so concerned with the financial and economic jeopardy in which they have placed our people that they are now proposing to take what they describe as entirely exceptional measures to deal with them. Various terms have been used by those supporting the Government to impress us with the idea that the Government are making strenuous efforts to grapple with the menace which their own policy has created.

I am glad to see that Deputy Finlay does not appear to be one of those who have been misled by that pretence. He realises that, far from these efforts being strenuous and heroic, "feeble" and "futile" are the only adjectives which can be applied to them. The Government are only half awake to the gravity of the situation. They have been able to screw themselves up to take only half measures. My view— and I feel sure time will confirm it—is that the steps which the Government are taking will prove to be quite ineffective in retrieving the situation which the procrastination of the Coalition has created.

I have no doubt whatever, and I think a number of people will agree with me, that if the measures which the Minister has outlined constitute the whole of the Government's plan to deal with the threat to our economy, then the deterioration in our balance of trade and in the value of our currency will continue and at an accelerated rate. It will in fact be the story of a repetition of the previous failures of the Coalition —the story of the tea prices all over again. We shall have a repetition of the bank rate fiasco, of the biscuit flour flop and of the five per cent. loan fiasco. It might be well to recall some of the statements made by the Minister on the balance of payments position for 1955 when he spoke in the House last Tuesday. As reported at Col. 325 of the Official Report, Vol. 155, the Minister said:—

"If we assume invisables at the same net figure as in 1954, as indeed we must in the absence of clear evidence of a variation, then the balance of payments deficit for 1955 was of the order of £35,000,000. A deficit of such magnitude would, in any circumstances, give cause for concern, arising as it did, not from the import of capital goods, but goods for consumption."

I regret Deputy Finlay is not here to hear the words of the Minister which contradict the reasons which he advanced. The Minister continued:—

"In addition, when we see it, as we must in the present instance, not in isolation but as part of a developing trend, it is one we cannot allow to continue."

Having said that, the Minister proceeded to examine the prospect for the coming year and stated that his survey—

"must rest on the basis of last year's probable £35,000,000 deficit, not as an isolated deficit, but as one likely to continue this year and even to grow unless other factors supervene."

By implication, two important admissions may be discerned in that statement. The first is that the inevitable consequence of continuing the inflationary policy which the Government has hitherto pursued would give rise to annually recurring deficits of dangerous dimensions on our balance of payments; and the secoond is that such deficits would tend to grow.

Those who are familiar with the history of our balance of payments over the past few years will realise that when the Minister contented himself with saying that the balance of payments deficits would be likely to grow unless measures were taken to curb them the Minister considerably understated the probabilities. Now, there are many Deputies who are new to this House and for the benefit of those who may be in that position and, therefore, not likely to be acquainted with the facts which support the Minister's case, as I am supporting it, in regard to the tendency and the trend of the deficit in our balance of payments, it may be well to recall the precise figures.

The deficits in our balance of payments in recent years ran something as follows—I am giving the figures to the nearest £1,000,000: for 1949 we had a deficit of £10,000,000. In 1950, when Deputy MacBride, Minister for External Affairs, took over control of the Department of Finance, the balance of payments deficit was trebled and rose to £30,000,000. In 1951, when the course had been already set by the Coalition, the deficit in the balance of payments was twice as much as it was in 1950, and stood at £62,000,000. Following the introduction of the 1952 Budget and the steps which we took to deal with that calamitous situation, the deficit in our balance of payments fell to £9,000,000. In 1953 it fell further, to £7,000,000. In 1954—during the first half of which we were in office—the deficit in the balance of payments stood at £6,000,000. In 1955 the balance of payments deficit suddenly jumped to nearly six times that figure, namely, £35,000,000. The total in round figures for the seven years I have enumerated is £159,000,000.

Let us revert now to the Minister's statement. Last year's probable £35,000,000 could not be taken as an isolated deficit but as one likely even to grow unless other factors supervene. It will be seen from the figures which I have given to the House that in the economic history of the last seven years, certain years are outstanding in their sinister significance. These years are, first, 1950 for which the balance of payments deficit was £30,000,000; 1951, for which it was £62,000,000—more than double, as I have said, what it was in the previous year; and, thirdly, 1955, in which it was £35,000,000—not so great as 1951, but greater than 1950, in fact, the second highest on record.

Mr. Fagan

The Deputy may thank the bullock for that.

Mr. MacEntee

We may ask ourselves, in the light of past experience, what might the deficit be in this year, 1956, if a really serious endeavour is not made to redress the situation. The statistical records show that a deficit of £30,000,000 in 1950 was more than doubled in 1951. Will the deficit for 1956 be £70,000,000—that is, double what it was in 1955? The trend would appear to be that way.

Mr. Fagan

The whole thing depends on the price of the cattle.

Mr. MacEntee

The Deputy had better read the Minister's speech and take it to himself; and let the House take to itself what the Minister is saying about the probable future price for cattle.

Mr. Fagan

The whole thing depends on that.

Mr. MacEntee

As I was saying, the trend would appear to be in the direction that the deficit for 1955 will be doubled for 1956. Indeed, the Minister himself went very close, I think, to admitting that when he said on Tuesday last:—

"From what I have said, Deputies will realise that the forces operating on our balance of payments this year are adverse and in the absence of countervailing influences and controlling measures would enlarge further this year the deficit of last year, estimated approximately at £35 million. That is a situation no Government could allow, for, if it did, a point would ultimately be reached—and that sooner than some would care to realise—at which our available external resources would be exhausted."

One does not require to be exceptionally perspicacious to discern between the lines of that statement the gravest warning that this Dáil has ever heard from a Minister for Finance. It must be repeated to-night and I trust it will be listened to, even by the financial charlatans within the Dáil, and outside it, with which our country has been plagued in recent years.

On Tuesday last, the Minister for Finance told us that if the present trend in our balance of payments deficit continued:—

"a point would ultimately be reached—and that sooner than some would care to realise—at which our available external assets would be exhausted."

The full significance of that warning will be brought home to us if we turn to page 2 of the Central Bank Bulletin for January, 1956, and study the figures which are given in the table in paragraph 3. Those figures show the changes which took place in our banking system during the year 1955. They are all of the gravest import and they all tell the same story. They all point the same moral. However, the figures which are most pertinent in the present context, are those which show the changes in the external assets of our associated banks.

At 31st December, last, the net external assets of the banks were valued at £85,710,000. The previous year, at 31st December, 1954, they were valued at £121,331,000. Thus, in one year, the external resources of the community were reduced by £35,621,000. It is not a mere coincidence that the deficit on our balance of payments over the same period should also amount to £35,000,000. There is a close causal relationship between these two facts— a relationship which must not be lost sight of. Where has that £35,621,000, by which the net external assets of our banks have been reduced, gone? The Minister for Finance has told us that it has gone like last year's snow, that it has gone with the wind. It has been consumed and we have nothing in the year 1956, virtually nothing, to show for this £35,000,000.

It is necessary, however, to come back to that figure of £85,710,000 of the net external assets of the banks, which I have referred to. It is necessary because of the important warning which the Central Bank of Ireland gives in regard to it in the following terms—I am quoting again from the January Bulletin of the Central Bank:—

"Here it must be pointed out that the banks' true capacity to sustain domestic credit cannot be estimated by reference to all the net external assets, since a large part of such assets cannot be realised or called in in the ordinary course of banking business (e.g. loans and advances, working cash and money at call, premises, etc.). In fact, out of the total net external assets held by the Associated Banks in December last amounting to £85.7 million, only slightly more than one-half represented items available to meet drafts on banking resources."

From that passage, one may safely conclude, without being unjustifiably pessimistic, that, by 31st December last, the true capacity of our banks to sustain domestic credit had been reduced to little more than, say, £50,000,000. It would be proper also, and lamentably it would be proper, to take the view that to-day the capacity of the banks to sustain the present rate of community spending is appreciably less. The view that the capacity of our banks to extend credit has been sensibly diminished, even since the opening of this year, is substantiated by figures given by the Minister in his statement found in column 326 of the Official Report. These show that, as he said:—

"The deficit was built up over the year at an accelerating rate. In the first quarter of 1955 it was £3.8 million, in the second £5.4 million, in the third £9.7 million and in the last quarter £10.3 million."

How, in the light of these figures and in the light of the trend to which the Minister himself has referred, has the position developed so far this year? In January last, the Minister told us it was nearly £5,000,000 worse than the preceding January and in February something more than £2,000,000 worse, so that in the first two months of this year the position deteriorated by around £7,000,000 as compared with the first two months of last year. The deterioration, then, in our trading position—in our balance of payments position—has been developing at a rate of about £42,000,000 per 12 months. Therefore, if this trend were to continue, the deficit on our balance of payments would be about £40,000,000 greater than last year; that is to say, it would be of the order of £75,000,000. The experience, in short, of the years 1950 and 1951 would thus be repeated in 1955 and 1956, with the added complication that our available external reserves would be virtually exhausted.

Now, when we take these considerations in mind, the full significance of the phrase used by the Minister for Finance becomes clear. We now know where we are going—we now know the disaster towards which we are heading—the time when, as the Minister said, our available external resources will be exhausted, the time which will come "sooner than some would care to realise," the time when—and this is the important fact—because of the exhaustion of the resources, our Irish £ will no longer be able to maintain its parity with sterling. Then we shall see and experience the ill consequences of the fact that the link with sterling will be broken indeed and we shall have to devalue the Irish £. It is this menace which has moved the Government to the appearance of action. I use the phrase "appearance of action" deliberately.

It is opportune, perhaps, to ask what has produced this situation. There is only one answer: the deliberately inflationary policy the Government has pursued since it took office. On 26th October last the Dáil debated a motion to which the Government moved an amendment, an amendment in terms which, to those who grasped the implications of it, conveyed but one thing —that the Government had agreed to pursue an openly inflationary policy. The evils that would certainly ensue from such a policy were pointed out from this side of the House, but the Government disregarded the warning.

Now, less than six months later, the Minister for Finance comes to the Dáil and points out that "in the light of the experience of the past year or so which clearly reveals both the direct connection between high wages and still higher prices and the disturbing effect on the balance of payments of increased expenditure not matched by increased production, it is my earnest hope that at least until we surmount our present difficulties, there will be stability in money incomes."

Earlier in the same column, he told us: "In 1955, the high level of imports arose because we were consuming more than we were producing at home and therefore brought in imports to fill the gap."

I do not question either of these statements. On the contrary, I endorse them and hope the Minister for Finance, in the councils of the Government, will stand firm upon them. But there is nothing new in them—nothing that the Minister might not have learned had he listened, in October last, to the arguments addressed to him from this side of the House. But even more significant than the admissions to which I have referred—the statement is in the same column—the Minister declares:—

"A further increase in money incomes not matched by improvement in production and productivity could only at this juncture drive up domestic prices by causing an internal inflation or increase still further the volume of our imports for consumption purposes or effect, perhaps, a mixture of both."

That passage is the most momentous, carries the greatest weight of anything the Minister said in his statement. If the Minister means what he says and if—and I grant that the supposition is a large one—if he is authorised to speak for every element in the Government, it means that the whole disastrous policy, as enunciated in October last, the whole distastrous inflationary policy, has been abandoned by the Coalition.

The policy has been abandoned, but in the meantime how great is the damage done to our economy? How near have the whole of us—the community and every individual in it—been brought to the verge of collapse? In my belief, it has been brought to the point at which, if the present trend had been allowed to continue, we should have in a year or so been face to face with the urgent problem of a currency devaluation.

Now, we know how grave the situation is. Let us see how the Government proposes to deal with it. I heartily wish I could, in all honesty, commend the measures the Minister for Finance has announced. But I am convinced that, so far as the deficit on our balance of payments is concerned. they will prove to be little better than futile gestures—take the goods on which the special import levy has been imposed. The Minister has described them as the less essential consumer imports. Many of them—indeed, the great majority—can be described as less essential, but some of them, under modern conditions of life and with the present level of costs for certain services, have become essential to those who can no longer afford domestic help.

In every home, in every middle-class home at least, where there are young children and where appearances have to be maintained, a washing-machine can scarcely be done without. The lack of domestic help and the high cost of laundry services have compelled people, and will continue to compel people, to buy them. With the need, which high prices have enforced on everyone, to cheese-pare and save on every scrap of food, the same might be said of refrigerators. Neither can blanks for razor blades be described as less essential unless it is the aim of the Government to convert all gay bachelors into "hairy mollies." Fountain pens, ball-point pens and refills for them are certainly essential to the greater part of our people including every element from the schoolchild to the President.

Let us be frank about it, the special levy will have little effect on the importation of any of these articles. They will continue to be imported, perhaps in slightly reduced volume but not so reduced as to have any appreciable effect on our balance-of-payments deficit. The Minister for Finance will collect the import levy on them. They will substantially increase the revenue from Customs and that, I suspect, is the true purpose for which they have been imposed. The Minister will get 25 per cent. on this wide range of essentials but they will be that much, and more, dearer to those who cannot do without them. The items I have mentioned cannot be described as less essential.

Now let us turn to some of those which undeniably come within that category, like precious and semiprecious stones and pearls, pearls such as the Minister might cast before swine at a country cross-road meeting.

Mr. Sweetman

I would leave that to the Deputy.

Mr. MacEntee

Precious metals, jewellery, certain types of watches, furs, radio-gramophones, pianos, record-players and music rolls. No one is likely to contend that these are essential articles, the importation of which could not be forgone without occasioning anything more than inconvenience or annoyance to the would-be purchaser. But that the importation of articles of this kind will be appreciably cut down by the new duties is, I submit, extremely doubtful. These are articles which are bought mainly by the well-to-do, to whom 25 per cent. or so means little if they desire to possess them. The wife who has screwed her husband up to the point at which he would like to see her in a mink coat is not going to be baulked because he may have to pay the Minister 25 per cent. on its cost. As well as that, we have to consider that the margin of profit on these articles is so great that, if need be, the trader will pay some part of the levy, so that the luxuries will continue to flow in—to the benefit of the Minister for Finance without any doubt, but to the continung detriment of the balance of payments.

Not only, therefore, will these articles come in as before—it is odds on they will come in in even greater volume. That may seem to be a paradox but it is not so paradoxical as appears at first sight, if we remember that these articles—precious stones, pearls, goldsmiths' and silversmiths' wares—are, in themselves, possessions which become stores of value. Precious stones, precious metals, jewellery, and such like, are articles in which people invest to save in security when inflation is open—as it has been in this country under the Coalition—and when the currency is weakening. The feeble pretence which the Government is making that the serious position in which the country finds itself is being tackled seriously will, in itself, ensure that the Minister for Finance will get substantial and, I think, an increasing revenue from imports such as these. And with these increasing imports and with the Minister's increasing revenue, let us not forget that the deficit in our balance of payments will continue to grow—and they are not capital goods, nor are they consumer goods; they are, as I have said, stores of value.

The Minister's new taxes will be levied upon no less than 68 categories of articles, including almost everything required for the home. They range from hot-water bottles, quilts and coverlets to engagement rings and even wedding rings. It is ironical that the Government which was returned to reduce taxation is now imposing additional taxation upon practically everything that comes into the country. Naturally in these conditions the gain to the revenue at the expense of the taxpayer will be considerable, but the effect upon the balance of payments deficit will be very small indeed. The Minister in his own statement admitted that. His own estimate—and, in my opinion, it is an under-estimate—is that the new import levy of 25 per cent. will be collected on about £18,000,000 worth of imports. This will give him £4,500,000 additional revenue, but the deficit on our balance of payments will not be reduced by more than £7,000,000 or £8,000,000. On his own statement, that is what he expects from this import levy. That is what he expects to be the reaction of this import levy on the balance of payments' deficit.

When it is understood that since the beginning of this year the deficit has been running at the level of about £75,000,000 per annum, it will be realised at once how inadequate to deal with the situation this import levy will be. Under this Coalition, it would be true to say that in the last 18 months our life substance has been flowing away like blood from an artery and now the Minister for Finance is trying to stop the haemorrhage with a postage stamp. The more one considers the Minister's levy, the more one is coerced to the conclusion that the main purpose of these new duties is not to redress the balance of payments' situation but to raise more revenue for the Government. Having studied the matter and approached it with a great deal of sympathy for the Minister's position and with every desire to be fair to him, I believe that the new taxes have been brought in to bolster up the coming Budget, to bolster up a shaky Budget.

Mr. O'Leary

That is what you are afraid of.

Mr. MacEntee

It is to be a sort of a push upon it to enable the Minister to secure more revenue while pretending not to increase taxation. It is imposing upon the ignorance and the gullibility of the people to make this pretence at dealing with a situation which is rapidly becoming critical. I say that the situation is already becoming critical because the Minister himself has admitted that our external resources are being dissipated at an alarming rate. He has warned us that if they become exhausted

"those from whom we have to purchase supplies of essential goods, not merely for direct consumption but also as raw materials for industry and for capital purposes, would be able to enforce their terms for granting us credits before delivering such supplies."

He told us also on Tuesday last that

"the Government is determined that this will not happen and that there will not be such a drain on our reserves for consumption purposes."

I could believe that, if the Government did something to show that it was in earnest, but, unfortunately, the Minister's proposals do not show that. It is true that the newspapers which support the Coalition are trying to put some appearance of strength on the Government's weakness. They are pretending that heroic measures are being taken to deal with the situation. One organ has even found a name for the Government's policy. It is calling it "The Sweetman squeeze." A soft and tender squeeze indeed is "The Sweetman squeeze."

Dr. Esmonde

You got squeezed out.

Mr. MacEntee

Like a squeeze which a lover might give to his lass.

Mr. Sweetman

He must have been looking at Dublin Opinion.

Mr. MacEntee

If this is indeed the Minister's approach to the balance of payments' problem that is threatening our whole economy, if this represents the full content of the Government's plan to deal with our precarious situation, then I would say that "The Sweetman squeeze" is more likely to be the kiss of death to the Irish £.

Mr. O'Donovan

You would bludgeon it to death, would you not?

Mr. MacEntee

Is the Government as concerned about the situation as the Minister's statement would imply? I doubt it. I have no doubt whatever that the Minister himself is concerned with it. He could not honestly hold the portfolio he does, have the knowledge he has and be otherwise than gravely concerned, but are all his colleagues concerned? Are those who have extracted from him sanction for the expenditure included in the Estimates for the coming year so concerned? Those Estimates express much more accurately the real policy of the Government than anything the Minister has told us. That policy remains what it was under the first Coalition and remains what it has been hitherto under the second Coalition—to take more and more from those who have less and less to spare.

Despite his warnings about the dangerous unbalance that exists between consumption and production, between our standard of living and the work we do to sustain it, despite his warning that nothing should be done to aggravate the present inflation, what contribution has the Government made to rectify this situation? None whatever, except to endeavour to make it worse. Into this highly inflationary situation, which the Minister himself has described, the Government proposes to throw, like nitro-glycerine, a chunk of highly inflationary additional expenditure. That, in fact, is some measure of how lightly regarded the Minister's warning has been and how little his colleagues are concerned about the situation which they have created.

The total of the Estimates, as introduced in March, 1955, for services not regarded as capital services, was £92,750,000. The total of the Estimates for these services for the next year is given as £97,500,000—an increase in round figures of about £4,750,000. There is a striking coincidence between that £4,750,000 in the demand for non-capital services and the £4,500,000 which the Minister is expecting to obtain from the new import duty. There is, in fact, a coincidence so striking that it might strengthen our doubt as to whether the true purpose of this new levy is to raise revenue for a shaky Budget rather than to ease our balance of payments.

Mr. O'Donovan

There are limits——

Mr. MacEntee

There are, and you have exceeded them. The Minister has told us that he proposes to make provision in the Central Fund Bill to ensure that the proceeds of his new levy will be used to finance the State capital programme. I have just two remarks to make in passing on that statement. The first is that it is a first class example of what our friends in America so graphically describe as "hokum"—the financial "hokum" which has been the outstanding characteristic of the Coalition's policy. Just as the Minister has been compelled in the circumstances to throw over the policy which was formally enunciated by the Coalition last October, so also, on Tuesday last, he abandoned what has hitherto been one of the fundamental factors of all Coalition Budgets and he is now compelled to meet future expenditure out of current revenue. There is a financial reverse turn of great significance. No one will doubt that it is being taken unwillingly. Even members of the Coalition do not like swallowing their words in public.

But the question which must be posed is: why has the Government been compelled to act in this way, throwing over their chief budgetary principle upon which they have stood heretofore? The answer is simple, but if it is simple it is also significant and alarming. The Government has lost and has forfeited the confidence of the thrifty and provident elements in our population. It has reduced the credit of the State to the lowest level it has reached since the days of the civil war. People who save habitually—and under the Coalition the number is rapidly decreasing—are no longer prepared to entrust their savings to the State or to save them in short loans. Nothing, from the point of view of the future of our economy, is more startling or more significant than the deterioration which has taken place in the public credit since the Coalition took office.

The second Coalition was formed on 2nd June, 1954. On the 4th of that month, two days after the formation of the present Government, Government loans were quoted on the Dublin Stock Exchange at the following prices: 5 per cent. National Loan, £105 to £105?—that is how we left our stock; 4½ per cent. National Loan, 100? to 100½;; 4 per cent. National Loan, 100? to 100½. On yesterday 19th March, 1956, the Government issues were rated by the investing public as follows: 5 per cent. National Loan, £98—a fall of about 7 per cent., as between the 4th June, 1954 and the 19th March, 1956; 4½ per cent. National Loan, which stood at 100? on the 4th June, 1954, 91?—a fall of about 9 per cent., 4½ per cent. National Loan—the one which the Minister for Finance floated with such a flourish of trumpets in October, 1954 —£89 per 100, a fall of over 7 per cent.; 5 per cent Savings Bonds, which were issued at 98½ per cent. on the 13th of last month, were quoted yesterday at 96?, a fall of 2 per cent. within six weeks. It is in these circumstances, when the public credit is no longer in a position to sustain the Government's spending programme, that the Minister is imposing an import levy to tax the people more heavily still.

Now, we may turn to another aspect of the Government's programme. According to the Volume of Estimates, the expenditure on non-capital voted services in the coming year will not be less than £97,500,000. That is, it will be £4,750,000 more than was estimated this time last year. Practically the whole of this increased expenditure is to be devoted to increasing money incomes. What increase in production does the Minister hope to secure in return for that £4,750,000? Will anyone start five minutes earlier in a Government office? Will anyone stop five minutes later in a Government office? Yet the Minister warned us that a further increase in money incomes, not matched by an improvement in production and productivity, would only drive up prices and cause internal inflation. On the Minister's own admission, this increase in Government expenditure is going to contribute to internal inflation against which the Government has made some gesture—some futile gesture—shaking, so to speak, its fiscal fist at the deficit on the balance of payments.

What excuse has the Minister to offer to those upon whom the consequences of this inflation will fall most heavily, those taxpayers who cannot compensate themselves or be compensated for the rise in prices of which the Government's policy is the main cause? How will the Minister for Finance and the Coalition recompense the farmer who over the past few months has seen cattle prices go steadily downwards? Over the past few months, the primary producers of Ireland have seen not only their profits and the fruits of their toil but their capital melting away with every day that has passed. They have had to sell and will have to sell their only product in a competitive market.

The Minister told us that this market is likely to be even more competitive, that the terms of trade have worsened and are likely to worsen still further against them. Our farmers will have to withstand those worsened conditions.

Mr. Sweetman

I did not say that.

Mr. MacEntee

What does the Minister propose to do for them? Rates are rising, costs are rising and taxes are certainly not coming down. How does the Minister intend to put the farmers of Ireland in a position to export more in the face of increasing competition? What about the country shopkeepers? Their shops have been empty and trade has been stagnant over the past month—stagnant since the first chill blast of Dillonism struck our Irish agriculture. What relief has he in store for the country shopkeepers? What about the self-employed person, the tradesmen, the retired civil servants, the superannuated employee of a private concern and the elderly folk living on the fruit of their small savings?

(Interruptions)

Mr. MacEntee

I am addressing the Minister and I am not dealing with the gnats and mosquitoes. I am asking the responsible Minister what he intends to do for the farmers of this country, the shopkeepers of this country, the self-employed people and all those who are eking out a precarious livelihood and who cannot exploit the present situation by bringing political pressure to bear upon the Minister. What does the Minister propose to do for them?

The Minister will be replying in another three or four minutes and I hope he will have an answer to that. Every day the real value of the incomes of these unprotected classes is declining. Every day they find it harder and harder to keep body and soul together. Every day they have less and less to spend. What does the Minister propose to do about their problem? The answer is in the Book of Estimates—out of less and less that these people have to spare, the Minister and the Coalition of which he is a member are proposing to take more and more.

It just cannot go on. A halt will have to be called. If it is not, we will head for a crisis which will require, indeed, extraordinary efforts and sacrifices to overcome. Somehow responsibility will have to begin to reign in the councils of the Government of this country. We cannot go on spending and spending until, as I have said, the primary producers of this country, the people who are bearing the whole burden, are crushed closer and closer to the earth. There is no answer to that problem or those difficulties in the measures which the Minister has enunciated so far. I do not know what he has in mind in regard to the coming Budget. If he is going to do his duty it will not be an easier Budget than the Budget of 1952 but it may be a necessary Budget because of the policy which the Government has pursued.

Minister for Finance (Mr. Sweetman)

I must confess that at times the temerity of Deputy MacEntee completely astounds me. Deputy MacEntee finished his statement to-night with a reference to the Book of Estimates and to the increases in those Estimates in so far as current services were concerned. One would imagine that Deputy MacEntee made that speech as the outstanding example of a Minister for Finance who in his day ensured that the Volume of Estimates presented to the Dáil year in year out by him as Minister for Finance was one that showed some reduction.

In fact, of course, the position was entirely the reverse. Every year Deputy MacEntee came into the House with much more serious impositions than the year previous. Let me take just one example, that to which Deputy MacEntee himself referred— the spring of 1952, when his Volume of Estimates was no less than £11,000,000 odd more than the Volume of Estimates of the preceding year.

Let us look at this year's Volume of Estimates. Deputy MacEntee is quite correct when he says that current services are somewhat £4,750,000 in excess. How is that made up? It would, in my view, be entirely inequitable that alone in the community, civil servants, Gardaí and the Army should be singled out for punishment and that they should not receive increases similar to those received by other wage earners and salaried people. The Book of Estimates contains approximately £3,500,000 to cover the increases for public servants commensurate in a more or less equivalent way with a fifth round of increases in the commercial community at large.

I do not think any Deputy on this side of the House would subscribe to the view that it would be fair or just or proper or in the national interest that public servants of that sort— whether the postman in rural Ireland, the civil servant, the Guard or the member of the Defence Force—should be singled out and prohibited from receiving the equivalent increase that has been granted outside. That increase accounts for approximately £3,500,000.

In addition, the Book of Estimates includes a sum of approximately £1,000,000—£971,000 to be exact—in respect of the increased contribution the State must make towards the cost of health services. That is a statutory position following from the 1947 Act. It is a position which we had to honour and it was one, therefore, that it was clearly necessary should be met. These two figures alone more or less cover the increase to which Deputy MacEntee has referred. Furthermore, there is the additional £250,000 included in this year's estimate for increased Agricultural Grant. These are the things for which it was necessary to provide. They are things which had to be met and, taking them side by side with the Estimates, we see a situation easily understandable as to how the increase in the volume is made up.

I want to put quite clearly to the House that the fact that the Book of Estimates has been limited to its existing figure and the fact that the figures included in it do not amount to more than the total that is involved is a clear indication of the manner in which the Government, in presenting this volume to the House, has given to the House and to the public clear and unmistakable signs of the manner in which avoidable expenditure has not been included in the Estimate for the coming year. I do not think it is perhaps necessary or desirable that I should discuss in very much greater detail the actual services that are included in the Volume of Estimates. One Minister in the previous Government, Deputy Traynor, devoted a very substantial part of his speech to complaints about reductions that had been effected in that Volume of Estimates. Deputy Traynor complained about the reductions. Deputy MacEntee complained that there were not adequate reductions. That, I would suggest, is further clear evidence of the manner in which the Deputies opposite, and particularly the leaders of the Fianna Fáil Party, are unable themselves to agree on any line to take in respect of any debate we have had in this House.

Mr. Traynor

Deputy Traynor only complained about specific——

Mr. Sweetman

Let me not be taken to misunderstand the Deputy. Any Minister for Finance is always glad of assistance in any criticism of the amount of the Estimates. I welcome my predecessor's criticism, therefore, in that respect.

It was natural enough that the debate on the whole should range round the general economic situation and the measures that I announced on behalf of the Government to deal with that situation rather than round the Book of Estimates itself and the services provided for therein. I think one could fairly say in that respect that the debates more or less went into four different channels. We had some comparison with the position of 1951-1952 compared with 1955-1956. We had criticism from the Opposition that the measures the Government adopted and announced were too late. The third channel comprised the detailed points-dealt with by various Deputies in relation to matters before them. Finally, the fourth channel was, as I might describe it, whether or not the measures were adequate, were going to be effective. Let me take these channels in that order.

Let us go back to the 1951-1952 position. I am going back to it purely for the purpose of seeing (1) whether there is justification for the charge levelled against me and the Government by the Opposition that we have been too late in acting, and (2) exactly how, for the sake of consideration of the future, the deficit then arose and how it was dealt with. In 1951, as the House is aware, thanks to the defection of five Deputies of this House who were elected to support an inter-Party Government and who decided to cross the House and support a Fianna Fáil Government in defiance of their pledge to the elecorate—on the 13th June of that year—Fianna Fáil became the Government of the country. My predecessor, Deputy MacEntee, came into the Department of Finance. He came to this House approximately one month after he had been appointed— on the 18th July, 1951. At that time he then proceeded to wail and wring his hands about the deficit he foresaw in the balance of payments. He felt there was a problem at that moment. He painted it in the strong and violent and vitriolic language of which only Deputy MacEntee in this House, as we all know, is capable. Having painted the picture in July, 1951, the picture as he then saw it, what did he do? Precisely nothing.

Time went on. July passed, August passed, September passed, October came. In October, what did Deputy MacEntee do? Did he take any measure to alleviate the problem which he and his Government then said they saw? He brought in a White Paper— no action—a White Paper. The White Paper which was introduced included, let me say at once, statistical material and, in relation to that, may I take up Deputy Derrig on this point? Deputy Derrig suggested here the other day that we on this side of the House had said that the statistical information in that paper was not trustworthy and that we had suggested that the officials who prepared the statistical returns were not trustworthy. We never said any such thing. What we did say was that the White Paper which was produced in October, 1951, was produced, not for economic purposes but for political purposes and for nothing else and that, in so far as it contained political inference and political prophecy, as apart from statistical data collected over a period, it was entirely unjustified politically and it was brought in for a political purpose and nothing else.

Looking back now in retrospect on that White Paper and on the facts as they subsequently emerged, looking back, as I say, not for the purpose of criticism but for the purpose of seeing where we are at the present time, what do we find? We find that the charges that were made then by the Parties on this side of the House, then in opposition, in two vital respects were entirely justified by the out turn of events after that. The Parties that were then in opposition made it clear that one of the vital objections that they had to the political complexity of that White Paper was that it took no adequate account of the fact that there had been in the early months of 1951 deliberate stockpiling because of the Korean crisis. We turn to the events that happened afterwards and we find that that charge has been absolutely and completely borne out by the facts.

In 1952, there were substantial decreases in imports, decreases which arose from the fact that the 1951 imports were to a large extent stockpiling imports, as this Party and the Parties now forming this Government had then alleged. The actual amount by which, for example, materials fell was some £23,000,000, merely by drawing down stocks which had been built up during the Korean spending phase in 1951. The volume of stocks fell by £10.4 million in 1952, following the rise of £12.9 million in 1951, an over-all change, as I have said, of some £23,000,000, thereby clearly showing, in retrospect, that the criticism that was made in that respect by us when we were on that side of the House of the political complexity of that document was fully and completely justified.

The second criticism that was made by us when we were in opposition of this political document was that it did not take adequate account of a pending increase in production, that it did not take adequate account of an increase which we might expect in the following year from exports because of the wise policy that had been adopted in building up production for those exports. Again we find, turning to the facts in retrospect, that that charge was completely borne out by the facts, that in the following year there was an increase of some £20,000,000 in exports notwithstanding the fact that the political document in October, 1951, did not allow for any such increase.

As I said, those were the charges, political charges, that the White Paper was brought in for political purposes, and clearly it was. Those were the charges that were then made. But the White Paper was brought in and the Fianna Fáil Government, that is now charging me with acting too tardily, sat down in the council chamber and the months rolled on— November, December, January, February, March. Remember, all these months rolled by notwithstanding the fact that the Minister for Finance of that day, on 18th July, 1951, came into this House and then said that there was a situation which demanded immediate attention. This is the same Party that now make the charge against us to which I have referred.

It was not only that. I want to refer to one matter at this stage which was slightly touched on by Deputy Rooney. Any inflationary tendencies that were there in the end of 1951 were magnified and built up by the deliberately inflationary policy that was adopted by the then Government. That Government could not say that they were unaware that what they proposed to do would magnify the inflationary problem because Deputy MacEntee himself, when speaking as Minister for Finance on 18th July, 1951, made it perfectly clear that he accepted the view. From the time that they came in, on 13th June, 1951, to the end of 1951, they deliberately increased the inflationary pressure that was here existing by deliberately, of their own voluntary act, dishing out, expending, the whole balance of £22,000,000 that was then in the Marshall Aid Loan Counterpart Fund. £22,000,000 of new money was deliberately put into circulation by Deputy MacEntee in the last six months of 1951, an event which most certainly then increased the inflationary pressures and that was done by him notwithstanding the fact that he had recognised clearly, when he was speaking in July of that year, that such a policy would be disastrous. That, as I say, was their record in regard to that problem.

Let us look at the position so far as it has occurred since we came over on this side of the House and since we on this side of the House have had the responsibility for dealing with these matters. Deputy Aiken, when he was speaking here last week, quoted a speech that I had made in November, 1954, when I indicated that at that time I was not unduly worried about the balance of payments for 1954. Deputy Aiken implied, others too implied, that anyone—I was almost going to say that Deputy Aiken implied that any fool would have realised that there was then imminent danger. I want to ask the House and Deputy Aiken, through you, Sir, in the Chair, if he, Deputy Aiken, then recognised that there was a danger, why did he not do his public duty by getting up in this House and adverting to that fact? Why did he, as an ex-Minister for Finance, not then make it clear that he did not agree with the view then expressed, that he believed that we were setting for a different course? The answer is perfectly obvious. Deputy Aiken had then no such mind and it is politically dishonest of him to suggest now that that was his belief in November, 1954.

In 1954, the balance of payments was not giving us as a Government or giving the country or giving responsible thought in the country any urgent or pressing anxiety. If the case from the opposite benches has been made that there should have been in 1954 or early in 1955 a prescience that the problem was about to descend upon us, I may be forgiven for suggesting that I erred in the company of those whom many of the Deputies opposite quoted time after time in this debate. None of us on any side of the House, whether we agree or disagree with the material that from time to time emanates from the Central Bank, will ever accuse it of being wild or being other than ultraconservative, and if members of the House care to look at the report of the Central Bank that was made on 22nd May, 1955, they will see that it was then accepted that there was not any urgent or pressing problem at that moment about our balance of payments. I do not want to be unfair to the Central Bank: I am not going to suggest at all that I agree with everything it has written, but none of us could suggest at any stage that it has ever erred on any side other than the conservative side. I think that anyone who looks at that report and who studies paragraph 33 in it will agree with me when I say that there was not there the same urgent suggestion of difficulty in regard to our balance of payments which Deputy Aiken would have us believe was generally accepted throughout the community, by leaders of thought in the country, and throughout commercial centres generally last year. The fact is that the difficulty in this problem arose much later. If we study the figures and the trends month after month last year we find that, perhaps, the trade returns for August last gave the first indication. These trade returns were published in September and gave the first indication that there was a problem beginning to loom up.

The trend in the August trade statistics continued in the months that followed and Deputies are aware that following the publication of the November trade returns—that is to say, four months afterwards—action was taken in regard to interest rates. The trend continued, and we in this Government came into the House in March as soon as the January figures were available and we were able to see that trend continuing. It was on the basis of that continuing trend that I prepared the measures and the proposals I made known last Tuesday.

I want to make the case, one on which I can stand with complete and absolute conviction, that not merely has there been no tardiness, no delay, by this Government in dealing with the trend when it became apparent but that, on the contrary, we have faced the situation that arose in a far clearer and quicker way—whether one agrees with the method or not—than was ever adopted by our predecessors in office. Deputies on the far side of the House have been going round the country suggesting, advocating and stating at every cross-roads, everywhere they got the opportunity outside this House and particularly where they could not be contradicted, that we in this Government were not united on the measures that it was necessary or desirable to take. The facts that I have related, the manner in which the trend was built up this year and the action which we took in relation to that trend with such celerity, when we were sure the trend was there, completely refutes any arguments that may have been put forward by the Opposition on that score.

There was no doubt in the mind of any one of the Ministers who comprise this Government when we saw a trend such as that which developed over the latter months of last year that we would take, as I indicated last Tuesday, such measures as we considered necessary to deal with that problem and that we would take them immediately they became necessary, but that we should not be panicked into taking measures before we deemed them necessary because of any taunts or gibes thrown at us by the Opposition. It would be a crime for any Government to act in relation to a problem like that, before it was satisfied that the action it was going to take was necessary. As I said when I was introducing this Vote on Account last week, the trend was there at the end of last year, and, when we saw it was accelerating at the beginning of this year, we determined to take the appropriate measures. None of us felt, when I came in here on behalf of the Government last Tuesday, that the measures I was advocating would be popular measures; no member of the Government was under any illusion that the special import levy on the articles that are included in the Order was something likely to bring popularity. Nobody likes having to do without something which he could otherwise have, be it luxury or nonessential or anything else; nobody likes any propensity or wish he might have to anticipate his income or to anticipate production to be curbed by means of the hire-purchase restrictions which we have introduced. We took that action because we believed it was desirable and the best course that could be adopted in the face of the balance of payments trend to which I have referred.

If I may pass now to some of the details mentioned during the debate and come back to the main problem later, Deputy Aiken when speaking, referred to an alleged increase in unemployment and when I heard him speaking I was reminded at once of a statement reported in the Irish Press, occasionally described in other terms by the Minister for Agriculture, on 28th February last by Deputy Seán Ormonde. He is reported as having said that under Deputy Norton industrial production and industrial employment had decreased. Of course the facts are, and Deputy Aiken must be aware of them as should Deputy Ormonde, that the statement is not true. Deputy Ormonde could have got the true facts from the Fianna Fáil propaganda office. In fact the over-all unemployment position does not show the increase to which Deputy Aiken referred.

Mr. Aiken

I did not refer to an over-all increase. I referred to those drawing benefits.

Mr. Morrissey

Only a half lie.

Mr. Derrig

Is that a parliamentary statement? Is it not unparliamentary to say that a Deputy had uttered a lie?

An Leas-Cheann Comhairle

Deputy Morrissey must withdraw.

Mr. Morrissey

I said only that it was a half lie. The statement that something was a whole lie made by Deputy Aiken last week was allowed to pass. However, in deference to the Chair, I will withdraw it.

Mr. Aiken

The Minister for Finance has said that I made a statement to the effect that there was an over-all increase in the unemployment position. I referred specifically to the most important part of the unemployment section, those drawing current benefits and I said that they had increased by 5,000.

Mr. Sweetman

Deputy Aiken quite deliberately tried to give the impression that the register of unemployed at this time of the year was higher than it was at the same period when he was in office.

Mr. Aiken

That is not true.

Mr. Sweetman

If he did not try to give that impression he certainly succeeded in giving it. If that was not what he intended he should have phrased his remarks more carefully. More than that I may not go and keep within the Rules of Order. Deputy Aiken should have been much more careful. He made the statement recklessly for the purpose of giving the impression outside that unemployment had risen. Deputy Ormonde must have known, or at any rate should have known, that the volume of industrial production to which he referred was substantially up since the Tánaiste became Minister for Industry and Commerce and that not merely the volume of industrial production was up but that employment in industry had also increased. From quarter to quarter, year by year, the figures are there for anyone to see and the Fianna Fáil propaganda machine would be doing a much better service if it turned to ensuring that there would be some truth in the information it passes out to back-bench Deputies like Deputy Ormonde before they are sent down the country.

I acquit Deputy Ormonde of deliberately misquoting figures. I believe he got that information from Upper Mount Street and that it was deliberately disseminated by that organisation knowing it to be untrue.

There was a suggestion by Deputy Briscoe, when he was dealing with certain articles subjected to the special import levy, that I should have dealt otherwise in regard to certain woollen goods. I noticed in the newspapers a similar comment made by an industrialist in the South of Ireland. He referred to these duties as did Deputy Briscoe as if they were deliberately protective duties. I made it quite clear in my opening statement that they are not protective duties, that they are duties imposed for the purpose of deterring imports because of our balance of payments position.

I said that if these duties have some protective effect that is entirely incidental. Notwithstanding that statement by me I saw this comment dealing with woollen and worsted cloths. From the protective angle the imports are under quota and the amount imported last year was what was required to make up the home deficiency mainly in variety. If the industrialist concerned would help to make up that deficiency in home production he would be doing an excellent day's work and one which would have due effect on the balance of payments situation.

Mr. Briscoe

The Minister is not suggesting that I said that?

Mr. Sweetman

I am not. As far as Deputy Briscoe's point is concerned it seems entirely a matter for consideration not under a balance of payments head but under the ordinary Industry and Commerce Department discussions that we have here. In his contribution to the debate Deputy Derrig attacked the view expressed by the Minister for Agriculture throughout the country that we might hope for some improvement in cattle prices in the coming months. Deputy Derrig queried the accuracy and correctness of the Minister's forecast. At this stage I do not propose to go back over all the ground covered and covered correctly by the Minister for Agriculture when he related again to the House how a campaign that is being carried on and which was carried on outside to the effect that the bottom was about to fall out of the cattle export market damaged the national economy.

Deputy Derrig will, I feel sure, be glad to hear and will have been glad to learn of the 12/2 increase per live cwt. announced by the British last week for their cattle prices. Deputy Derrig will, I know, be glad also to realise and understand that thanks to the foresight of Deputy Dillon as Minister for Agriculture in 1948 when he wrote into the Trade Agreement with Britain that the prices for our exports would be linked to the prices paid to the British people for there own produce there is an assurance to our farmers. Deputy Walsh followed on that line and I find it rather difficult to understand some of his comments on our agricultural position. It does not, however, seem strange that I find difficulty in following some of his comments when we realise that he, an ex-Minister for Agriculture, though corrected on the spot, proceeded to talk of the differentiation that there is in the 1948 Agreement as being 4/6, now reduced to 3/6, per beast instead of per cwt. At the time it seemed to me quite extraordinary how any ex-Minister could make such a mistake.

Certain Deputies during the course of this debate, and Deputy Cunningham by way of parliamentary question, raised with me the question of the effect of the import levy on newspapers coming in here. In relation to newspapers, the list of import levies covers two articles. It covers, first of all, a duty on newsprint imported here and utilised here in the production of newspapers. I want to make it quite clear, particularly in view of what has been said otherwise, that that duty is imposed not for revenue purposes but in relation to the general pattern of deterring imports. We hope this duty will have the effect of the public accepting during this period of difficulty in our balance of payments position newspapers of a slightly smaller size than they would otherwise get. It is for that purpose the duty is imposed, namely, to bring about so to speak a shrinkage in the volume of newsprint utilised. Whether that shrinkage is brought about by contracting somewhat the size of the papers or by providing a system of no returns, which would eliminate wastage in newsprint to some degree, is of course a matter entirely for the concerns involved; but the duty is introduced for the purpose of arriving at that shrinkage.

Having asked the publishers of newspapers within the State to co-operate in such a necessary shrinkage at the present time, it would obviously be grossly unfair to them if we did not contemporaneously with that impose a levy on newspapers which are published outside the State and imported into the State—we all regret that when talking of the State we are not speaking of our island as a whole; the position is a factual one and we must accept it—and, if I were to exempt, as Deputy Cunningham has suggested to me, newspapers published in the Six Counties from import duty, then, in fact, what I would be doing would be giving such publishers a preference over the papers that are produced within the State because the papers coming in from outside will not have to bear the newsprint levy which those published within the State will. It is essential, therefore, that I should keep a fair balance by ensuring that newspapers published outside the State, irrespective of how much we regret and we all do regret that the State does not cover our whole island, should be subject to levy.

The Minister for Agriculture, when he was speaking, dealt to a very considerable extent with the speech made here by Deputy Walsh. Let me stress just a couple of points, because I interrupted the Deputy and it is only fair that I should give the particulars, having interrupted him in the matter.

First of all, let me deal with wheat. The amount of wheat imported in 1955 had a direct bearing not on the 1955 production but on the 1954 production. We had to carry over into the 1955 cereal year a very large part of the wheat grown in 1954, because in the appalling weather circumstances of that year the 1954 wheat was not millable into flour in the same proportion as it would have been if the weather in 1954 had not been so unpropitious. We had to ensure, as had not to be ensured in other years, that at the beginning of the cereal year last year—that is to say 1955—wheat could be turned into bread; we were carrying a substantial amount of the 1954 wheat harvest into 1955 and we had to dilute that harvest with imported wheat in order to make palatable bread in the early part of 1955—a factor which arose because of the weather conditions in which the 1954 harvest was saved and from no other reason. We had to do that. On the assumption that we will have, in 1956, a wheat harvest equivalent to 1955, when, incidentally, as near as makes no difference, we hit the target mentioned by the Minister for Agriculture, a target set not merely by the former Minister for Agriculture but by the former Government as a whole, of 300,000 tons of dried native wheat in their decision on 22nd February, 1954, then there will be some saving for us from a balance of payments point of view in wheat imports in the current year.

Deputy Walsh, too, referred to feeding barley and to grains generally. He said that he had left a nice little present behind him, referring to the balance that there was in the Coarse Grains Account. When I heard the Deputy I really thought he must have taken leave of his memory altogether because there were two separate decisions of the last Government, one on 22nd December, 1953, and one on 9th March, 1954, that the balance in the Coarse Grains Account was not to be utilised in the manner indicated by Deputy Walsh but was to be thrown into the general Exchequer subsidy for bread and flour.

When I was introducing these measures last week I tried to make it clear—I thought I had done so—to the House what we intended to do. In case there may be any doubt in the mind of any Deputy let me repeat now what I wanted then to put clearly to the House. The long-term view of any Government must be in relation to any balance of payments problem that there may be in this, or indeed in any other country, that it must be met by expanding production—expanding production over the needs of home consumption, so that surplus will be available for export. It is in pursuance of our acceptance of that policy that the Minister for Agriculture announced last week that there will be next year, for the next 12 months, a guaranteed minimum price of 235/- per cwt. for grade A pigs. There will be, in addition, a scheme, the details of which the Minister has agreed with the bacon curers, by which we will be enabled to ensure that that amount of 235/- can be paid to producers for grade A pigs and that we will be able to iron out one of the real difficulties that there always has been in endeavouring to expand our pig production.

That difficulty of course—as Deputies who understand and appreciate the problem are well aware—is that there always has been hitherto a fluctuating price in relation to pigs. The farmer always felt that, immediately he increased pig production, the price would flop on him overnight. Now, by means of putting in this floor —235/—in the price, the pig producer can be expected to receive, and know that he will receive over the next 12 months, that guaranteed price. We are enabling him to get out of that difficulty and know that, when he steps up his production, he is not going to run the risk of a flop in his market, such as previously he had to experience.

Deputy Childers put some questions to me. He indicated when he was putting these questions that he thought I might be embarrassed by answering them. Not a bit. I am never the slightest bit embarrassed by telling the truth. The first question he asked was: why had imports gone up in 1955? I made it clear in several speeches throughout the country, made it clear last week in introducing this measure, and the Tánaiste made it clear when speaking to-day, that imports last year went up because the volume of home production was not sufficient to meet purchasing power and accordingly additional things were brought in from outside with that purchasing power. He asked me to tell the people plainly. I think it would be hard to find plainer words than that.

Deputy Lemass and Deputy Childers both asked: why is capital scarce and dear? Capital is scarce and dear here for two reasons. One is a world trend. Deputy MacEntee, when speaking, gave certain figures of the market price of Irish investments at the date June, 1954, and at present. I wonder would Deputy MacEntee have given, or why did he not give, comparative figures for the value of Irish investments in June, 1954, compared to similar investments through the world in June, 1954, and in March, 1956. If he did give these figures, he would find that in June of 1954 our position for Irish investments was very much worse by comparison with similar investments in Britain and other countries than the comparative figures are to-day.

I quoted in this House before what the position was in June, 1954. Then Irish 3 per cent. Exchequer bonds gave a yield of £4 6s. 6d., and British similar bonds £3 11s. 5d.—15/- of a difference in yield in those items. If the Deputy cares to work out the figures at the present time, he will find that that gap between the comparative value of our investments here and the same investments across the water has narrowed gradually all the time this Government has been in office, and now stands at a very much lower figure.

Why is capital scarce and dear here? It is scarce and dear for the reason I mentioned in my opening speech— because savings are not adequate to meet the capital investment we would like to make and because, on that account, it is necessary to induce savings to a greater degree. That carries me to the final point with which I am able to deal in the time that is allowed to me.

I have been asked do I and the Government think these measures will be effective? Whether they are effective or not depends on the people themselves. The real measure of effectiveness is not going to be action by the Government alone—special import levies or anything else. The real measure of effectiveness is whether the people accept the view of this Government that it is necessary and desirable that we should so distribute what we have, that we would put towards real productive capital investment—that in the years ahead will increase our real earnings, our standard of living—a sufficient amount in the time that is immediately before us.

Whether these measures are effective or whether they are not will depend in the last analysis on whether the people accept our view that it is desirable there should be increased savings for increased productive investment, to secure by greater production—more efficiently at lesser cost—a rising standard of living. That will be the test.

We all hope that the public will react in that way. But let me say quite clearly and unmistakably that if it should unfortunately transpire that it is necessary to take further measures to ensure that we do not go into the national position to which I referred when opening this debate, if it is necessary to take further measures, this Government will take those measures with resolve, with resolution, if and when they may be necessary. We all trust they will not be necessary, but let there be no doubt that just as we approached the problem of the present time, as I said in the very beginning, with far more resoluteness and celerity than the problem which the previous Government pointed out as being there —and have approached it in a more realistic way that is going to mean less of the bull in the china shop than their methods did—so also we shall proceed along that road.

Before I sit down may I just refer to one other matter. Last Thursday Deputy Blaney made a dirty and foul charge against a Minister of the Government. I gave him the opportunity of withdrawing it in toto. I gave the Opposition as a whole the opportunity, if they felt that it was necessary or desirable to stand over his allegation, of having a full and complete investigation or inquiry into that charge. He ran away from the charge himself. None of either his responsible or irresponsible colleagues who spoke to-day substantiated it. I think that in honour and fairness they would have done more to contribute to the decency in public life of which we have heard somewhat lately from Deputy de Valera, if they had not sung dumb but repudiated Deputy Blaney instead.

Mr. Cunningham

May I ask the Minister a question about the Six-County papers? The Minister will appreciate that in the case of, say, a 3d. paper, only 2d. of that goes back to the cost of production in the Six Counties and that therefore a ld. increase will mean a 50 per cent. increase on the cost of production. Would the Minister, in the light of that, correlate a tax on imported papers from the Six Counties to make it equal to the tax on newsprint coming in?

Mr. Sweetman

I would answer that by saying quite simply that we all look forward to the day when a Minister for Finance down here will be able to deal with manufactures, with business in every shape and form in the Six Counties. If I had that power it would be easy for me to deal with the matter.

Vote put.

The Committee divided:— Tá, 67; Níl, 59.

Tá

• Barry, Anthony.
• Barry, Richard
• Beirne, John.
• Belton, Jack.
• Blowick, Joseph.
• Burke, James J.
• Byrne, Thomas.
• Carew, John.
• Coburn, George.
• Collins, Seán.
• Coogan, Fintan.
• Corish, Brendan.
• Cosgrave, Liam.
• Costello, Declan.
• Crotty, Patrick J.
• Crowe, Patrick.
• Deering, Mark.
• Desmond, Daniel.
• Dillon, James M.
• Dockrell, Henry P.
• Dockrell, Maurice E.
• Donegan, Patrick S.
• Donnellan, Michael.
• Doyle, Peadar S.
• Everett, James.
• Fagan, Charles.
• Finlay, Thomas A.
• Flanagan, Oliver J.
• Giles, Patrick.
• Glynn, Brendan M.
• Hession, James M.
• Hughes, Joseph.
• Kenny, Henry.
• Keyes, Michael.
• Kyne, Thomas A.
• Larkin, James.
• Leary, Johnny.
• Lindsay, Patrick J.
• Lynch, Thaddeus.
• McAuliffe, Patrick.
• MacEoin, Seán.
• McGilligan, Patrick.
• McMenamin, Daniel.
• Manley, Timothy.
• Morrissey, Dan.
• Mulcahy, Richard.
• Murphy, William.
• Norton, William.
• O'Carroll, Maureen.
• O'Connor, Kathleen.
• O'Donnell, Patrick.
• O'Donovan, John.
• O'Hara, Thomas.
• O'Higgins, Michael J.
• O'Higgins, Thomas F.
• O'Reilly, Patrick.
• O'Sullivan, Denis J.
• Palmer, Patrick W.
• Pattison, James P.
• Reynolds, Mary.
• Roddy, Joseph.
• Rooney, Eamonn.
• Sheldon, William A. W.
• Spring, Dan.
• Sweetman, Gerard.
• Tully, James.
• Tully, John.

Níl

• Aiken, Frank.
• Allen, Denis.
• Bartley, Gerald.
• Beegan, Patrick.
• Blaney, Neil T.
• Boland, Gerald.
• Brady, Seán.
• Breen, Dan.
• Brennan, Paudge.
• Briscoe, Robert.
• Burke, Patrick J.
• Butler, Bernard.
• Calleary, Phelim A.
• Carter, Frank.
• Childers, Erskine H.
• Colbert, Michael.
• Colley, Harry.
• Collins, James J.
• Corry, Martin J.
• Crowley, Honor M.
• Cunningham, Liam.
• Davern, Michael J.
• Derrig, Thomas.
• de Valera, Eamon.
• de Valera, Vivion.
• Egan, Nicholas.
• Fanning, John.
• Flanagan, Seán.
• Flynn, John.
• Flynn, Stephen.
• Geoghegan, John.
• Gilbride, Eugene.
• Gogan, Richard.
• Harris, Thomas.
• Hillery, Patrick J.
• Hilliard, Michael.
• Kelly, Edward.
• Kenneally, William.
• Kennedy, Michael J.
• Killilea, Mark.
• Lemass, Seán.
• Lynch, Celia.
• McEllistrim, Thomas.
• MacEntee, Seán.
• McQuillan, John.
• Moher, Peadar.
• Moher, John W.
• Mooney, Patrick.
• Moran, Michael.
• Moylan, Seán.
• O'Briain, Donnchadh.
• O'Malley, Donough.
• Ormonde, John.
• Ryan, James.
• Ryan, Mary B.
• Sheridan, Michael.
• Smith, Patrick.
• Traynor, Oscar.
• Walsh, Thomas.

Tellers:— Tá: Deputies Doyle and Mrs. O'Carroll; Níl: Deputies Ó Briain. and Hilliard.

Vote declared carried.

Vote reported and agreed to.