asked the Minister for Finance if he will state (a) on what date it was first open to the Government to draw on the American Loan Counterpart Fund to meet State expenditure, (b) what was the total amount of the Fund at that date, (c) what was the total amount of American dollars disposed of in the creation of the Fund, (d) in what securities the moneys in the Fund were invested, and what rates of interest were being earned thereon, (e) on what date, and for what purpose, the first drawing from the Fund was made, (f) what was the total amount drawn from the Fund by 31st March, 1951, (g) what was the further amount drawn between 31st March, 1951, and 13th June, 1951, and (h) what were the purposes for which the moneys drawn from the Fund up to 13th June, 1951 had been used.
Ceisteanna—Questions. Oral Answers. - American Loan Counterpart Fund.
Mr. de Valera
(a) The establishment of the American Loan Counterpart Fund was provided for in Section 4 of the Central Fund Act, 1949, which became law on 31st March, 1949. As from that date the proceeds of the Marshall Aid Loan could have been transferred at any time to the Counterpart Fund from the Account of the Minister for Finance with the Central Bank which had been established under Section 2 (4) of the Appropriation Act, 1948. Moneys so transferred were eligible for investment in Irish Government securities.
(b) The total amount in the Account established under Section 2 (4) of the Appropriation Act, 1948, was £1,961,515 on 31st March, 1949. Moneys were paid from this Account to the American Loan Counterpart Fund according as they were required for investment by the fund. The Account of the fund was not, in fact, opened until 17th December, 1949, and the first transfer, which was £500,000, was made to it on 21st December, 1949.
(c) The total amount of the Marshall Aid Loan was $128,000,000, the proceeds of which were carried into the American Loan Counterpart Fund over the years 1949 to 1951.
(d) The moneys in the fund, inclusive of accrued earnings, have been invested as to £40.5 million in Ways and Means Advances and as to £430,000 in Agricultural Credit Corporation 3 per cent. State Guaranteed Mortgage Stock, 1957-67, and £200,000 in Agricultural Credit Corporation 3½ per cent. State Guaranteed Mortgage Stock, 1966-76. For particulars of the rates of interest on Ways and Means Advances, I would refer the Deputy to my predecessor's reply to a question on 22nd October, 1953 (Dáil Debates, Volume 142, columns 336-339).
(e) The first investment by the fund was made on 21st December, 1949, and was one of £500,000 in Ways and Means Advances to the Exchequer.
(f) The total value of investments at cost held by the fund on 31st March, 1951, was £16,200,000.
(g) The amount invested in the period 1st April, 1951, to 13th June, 1951, inclusive, was £2,100,361.
(h) The only purposes for which the fund was used in the period in question were (a) investment in Ways and Means Advances which, at 13th June, 1951, totalled £18,000,000, and (b) investment in 3 per cent. State Guaranteed Mortgage Stock of the Agricultural Credit Corporation, 1957-67, which at 13th June, 1951, totalled £300,361.
Mr. de Valera
May I ask the Minister what compelling reasons induced the Government to invest, or to utilise, these moneys, seeing that the Minister complains that they were inflationary? They were being used at the rate of £1,000,000 a month during the period after they began to be used.
I was not Minister for Finance at that time and therefore I cannot answer the Deputy's question as I cannot answer for Deputy MacEntee in respect of the subsequent period. I can only comment on the effect.
The Minister supported his predecessor in office.
I think Deputy MacEntee would be wiser to wait until after the next question.
Mr. de Valera
What was the difference in the effect of the moneys used during the period 21st December to 13th June? What was the difference in effect of the use of these moneys and the use of them at a later period?
From April 1st, 1951, to June 13th, 1951, inclusive the amount so invested was £2,100,361.
Mr. de Valera
The whole period was——
If Deputy de Valera wishes me to give an answer, I will be prepared to give it, but I cannot give it if he keeps on interrupting me. Between 1st April and 13th June, 1951, the amount invested was £2,100,361, something less than £1,000,000 a month. As the Deputy will hear in a second when the next question is answered, in the six months from 13th June, 1951, to 13th December, 1951, the total was £22,000,000 or £3,600,000 a month, three and a half times as great.
Mr. de Valera
My supplementary question dealt with the period from the 21st December when the money first began to be used, until 13th June, during which period, the Minister's reply makes clear, over £18,000,000 was used which is at the rate of over £1,000,000 a month. My question was really this: what compelling reasons were there to induce the Government of that day to utilise these funds, seeing that they were inflationary, according to the Minister?
In one case, up to 13th June, 1951, they were utilised for the purpose of supplementing other more normal methods of financing the capital programme. After 13th June, 1951, they were used instead of the more normal methods.
Mr. de Valera
We will leave that to the next question when we will have some supplementaries on it. May I ask a further question as to what is the difference in inflationary effect in utilising these moneys and utilising bank loans, such as you get when you have an insufficient response from the public and you have to get the banks to underwrite?
If the Deputy reads my reply in this House to-day, approximately between 2 p.m. and 2.30 p.m., he will find that I dealt with that particular question then. It is one that would take far too long to answer now.