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Dáil Éireann debate -
Wednesday, 15 Nov 1961

Vol. 192 No. 2

National Loan, 1961. - Statement by Minister for Finance.

I wish to inform the House that a new National Loan to be known as Exchequer Stock will open for subscription on Monday next, 20th November. The Loan will be for £17½ million, but £3½ million of the stock is being allotted to certain life assurance offices so that the amount available for public subscription will be £14 million which will be underwritten jointly by the Banks and the Government.

The rate of interest will be 6 per cent. per annum and the price £97 for each £100 of stock purchased, so that the annual return on each £100 of cash invested in the Stock will be £6 3s. 8d. The Stock will be redeemed at par not later than 1985 and may be redeemed at any time from December, 1980. As the issue is being made at a discount, there will be a capital gain of £3 per cent. on redemption and this will be tax-free to the ordinary investor. The yield of the Stock to final redemption in 1985, taking this capital gain into account, will be £6 4s. 9d. per cent.

As the Loan will carry the same terms as to interest and redemption as the 6 per cent. Exchequer Stock issued last year, it will be amalgamated with last year's issue after the first interest payment is made next June.

The usual provision is made in the Prospectus whereby only 10 per cent. of the purchase price need be paid on application, the remainder being paid in three further instalments spread over the period until late January. This should facilitate investors in taking up stock. On the other hand, those who wish to pay the full amount on application next week, or to complete their subscription on allotment in December, will be entitled to discount equivalent to an interest rate of 6 per cent. on the advance payments.

The tax privileges attached to recent National Loans are again included. Interest will be paid without deduction of income tax at source, but, of course, holders will, if ordinarily resident in the State, be liable for whatever tax on the interest is appropriate to their respective incomes. Stock of the issue will be accepted at its nominal value as the equivalent of cash in satisfaction of death duties on properties of which it formed a part. The stock and the interest on it will be exempt from all Irish taxation, present and future, if owned by a person neither domiciled nor ordinarily resident in the State.

The issue is being made under the authority of the Appropriation Act, 1961, and other statutes. Both principal and interest will be a charge on the Central Fund. The attractive interest rate it carries, its status as a trustee security, the concession whereby it will be accepted in payment of death duties and the substantial sinking fund allocations should ensure that the stock will always have a high market value. The Government stockbroker will at all times be prepared to buy and sell reasonable amounts of the stock, and this will help to maintain an active market in it.

The 3¼% National Security Loan, 1956-61, is due for redemption on 1st December next. There is £4.7 million of that stock outstanding and I am giving holders an option of converting into the present issue. This is a very attractive offer and I hope it will be availed of to a large extent. Stock of the new loan issued under this conversion arrangement will be additional to the stock issued for cash.

£2½ million of the stock will also be issued to Departmental Funds in conversion of Ways and Means Advances.

The Loan is required to assist in the financing of State capital outlay on agriculture and industry; on housing, sanitary services and schools; on afforestation and fuel resources; on transport and on other development schemes in pursuance of the Programme for Economic Expansion outlined in the Government White Paper published in November, 1958.

As Deputies are well aware, the main source of capital for economic expansion must continue to be the people's savings. It is only by applying the maximum amount of resources to productive purposes at home that we can increase employment and raise living standards. I should like, therefore, to emphasise once again the importance of a high level of savings. The new Loan gives an excellent opportunity for the investment of savings and subscribers to it will be doing their part to promote the development of the national economy while at the same time securing for themselves a safe investment and a very attractive return on their capital.

The Prospectus of the issue will be published in tomorrow morning's newspapers. Copies of the Prospectus with the application form for cash subscriptions attached will also be available as from tomorrow from any bank, stockbroker or post office. The lists will close not later than Friday, 24th November.

I confidently ask for the full and active support of every Deputy in the House for the issue.

The issue of a National Loan is a matter of national importance and one, therefore, which, no matter what differences there may be between the various Parties, should not be considered on a Party basis. Certainly we shall not so consider it on this occasion nor, indeed, have we ever done so on any occasion. We support wholeheartedly the appeal of the Minister for Finance for support for this loan.

As I understand the Minister's statement, the loan is in fact an issue of £20 million with £2½ million being taken up by Departmental Funds leaving £17½ million for the public, of which some portion is being taken up otherwise, so that about £14 million is the amount which the public is being asked to subscribe. That subscription is being requested at a rate which, if not the highest, is one of the highest that ever has been offered. Six per cent at 97 is a very generous return even with present day market returns and certainly is one that should draw very substantial support from those who have funds to invest. The effective yield as it is at £6 3s. 8d. for income purposes with £3 capital redemption is one that everyone must appreciate is well worth while. We support the loan seeing, as the Minister has said, that it is for productive purposes.

On many occasions before we have made it clear from this side of the House that we are in favour of a high capital productive programme, in fact, in the words I think we used on many occasions before, the highest capital productive programme that the people will support. This is one of the occasions upon which the people, therefore, are being asked to support a capital development programme for purposes which the Minister has outlined, which capital programme, no matter by what Government it is introduced, is the only method by which we can improve living standards for the community as a whole. We will have to depend on our own efforts, on our own exertions and on our own development based on and supported by, as we in Fine Gael have said on many occasions and are glad to say again, the response of our own people from their savings to national productive loans when they are announced by whoever may be Minister at the time.

On behalf of the Labour Party I want to welcome this loan and to commend its terms to potential investors. The terms of the loan are attractive, not merely to large investors but to small investors as well and I trust their collective sense of acumen and their degree of sagacity will ensure that the loan will be fully subscribed.

It is a truism to say that the best way of financing national development is by reliance on the savings of our own people and every country that has attained a commendable status in the world has had to travel that road and has travelled it profitably. A national loan financed by the savings of our own people promotes national morale and it helps to develop in our own people a sturdy sense of independence and security. It does something more than that. It avoids the undesirable complications which can arise from time to time in the case of countries which engage in heavy overseas borrowing. If we are to attain and maintain here the standards of a first-class nation then national development must go on to the uttermost limits of the capacity of the people and the nation generally.

I think all Parties in the House will vie with one another in commending schemes of capital development which will enrich the national estate, on the one hand, and raise the living standards of the people on the other hand. Therefore whatever political differences there may be between Parties in this House or on the hustings, there is no difference when it comes to recognising the fundamental necessity for continued national development on the highest possible scale. I commend this loan to potential investors and I hope it will be fully subscribed very shortly after the subscription lists have been opened.

On a previous occasion when a loan was floated I heard quite a number of complaints from small investors in distant parts of the country that they did not have a chance to subscribe to the loan. Very often their applications are turned down because the list is over subscribed by the time their applications are received. While giving support to the Minister in the floating of this loan, particularly having regard to the objects he has outlined, I would ask him to make some provision for the smaller investors and also to take account of the fact that people in distant parts of the country may not be able to make arrangements with the banks where they have their savings lodged to have them transferred into the loan as quickly as those near the bigger centres of population such as Dublin and other cities.

I should also like to suggest to the Minister and the Government that they should utilise this loan for the purpose of giving employment in the poorer areas where there is a good deal of emigration because there is no employment to fill in the spare time of the small farmers. A lot of development work could be undertaken. I did notice the Minister omitted to mention that this money would be used for drainage. Perhaps the Government would reconsider that and give some employment in these areas.

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