I will, Sir, in a moment. I continue:
Thus the causes of the inflation persist and its effects gather strength, until the time arrives when deficits appear in the balance of payments, gold begins to leave the country in consequence and the threat looms up of a possible devaluation of the currency. As it is known that such a step would be fatal, recourse has to be had to deflationary measures. These are never popular. In our social system they meet strong opposition and can generally only be applied for a limited period of time.
This quotation is from a lecture delivered by Maurice Frere, who was Governor of the Bank of Belgium and is reported in a publication of the Per Jacobasson Foundation under the title Economic Growth and Monetary Stability. The lectures were delivered on 9th November, 1964, at Basle, Switzerland, under the patronage of the Foundation to which I have referred.
Now I am going to trouble the House with another quotation:
Inflation—
and I am submitting to the House that the root of all the trouble with which we are strugging today is inflation—
is the prince of thieves, robbing the defenceless and passing by the experts in the manipulation of money. It is the broad high road so pleasant to travel until it reaches its destination of anarchy, begotten of the collapse of money as a store of value. Then, indeed, Fisher's equation operates to destroy the foundations of a free society until in the ensuing anarchy people turn to authoritarian forms of government to arrest the breaking up of society;
and
all too often the society discovers too late that inflation has destroyed freedom, and that the price paid politically to restore stability has been the surrender by free men of their birthright of freedom, with the prospect of generations of struggle and perhaps bloodshed to get it back.
Unless we had the potential to arrest this dialetic I warn the House, as I have done before, that it is not our economic sovereignty and independence that is at stake, but our political freedom.
There is a precedent for this in our own experience. I remember the case, and I have mentioned it in this House before, of Newfoundland. Newfoundland was a sovereign, independent State, as Ireland is, and the Irish made a great contribution to building up its sovereignty and independence. Just before the war, they engaged in the kind of insanity in which this Government have engaged and then we had the case history. There were large numbers of people in Newfoundland in the initial stages of inflation who said: "This is lovely. We never had so much money before. This can go on and on forever." Suddenly the time came when they could not finance their imports and gradually the Treasury ran dry. The remedy of the Newfoundland Government was to send for three commissioners from the British Treasury. I will remember them going to Saint John's. The Parliament of Newfoundland passed an Act passing over all executive authority to these three commissioners nominated by the Bank of England or the British Treasury and those three gentlemen took over the functions of the Government of Newfoundland and, I think, administered Newfoundland throughout the whole period of the war.
At the end of the war, the three commissioners were still there and they said to Newfoundland: "The British Treasury is not prepared to carry you any longer. Your fundamental finances are now restored and you can now choose financial independence and relative poverty or you can seek to be merged in the Federal State of Canada." There was a referendum and, by a relatively small majority, Newfoundland solemnly abrogated its sovereignty and announced it had no longer a desire to be free. It voted to be integrated as a constituent state of the Federation of Canada so that the Canadian Federal Treasury would take over the responsibilities they felt themselves no longer able to bear. It was an historical development when you had a sovereign state simply declaring that the burden was too heavy to bear, that they could not afford any longer to be free.
I want to ask the House: to whom are we going to make this surrender? There is nobody in the world to accept such surrender. When I hear some younger members of Fianna Fáil speaking, I can detect a kind of yearning for the fleshpots of Egypt: why we cannot have what they have in the United Kingdom? Is it not all cod to be talking about nationality and independence, and so on? What we want is progress and equality in affluence with our neighbours. There is even a suggestion that the decision of our Government to leave the Commonwealth of Nations, if it were reversed, would give us the kind of affluent life they think our people ought to yearn for. They do not understand perhaps, or perhaps they do not mean it, but it is not re-entry into the Commonwealth they yearn for; it is the re-enactment of the Act of Union. What in their hearts they are longing for is to creep back into the comfortable womb of the Union from which our people struggled for seven generations to get free.
But there is this distinction. Do you imagine Great Britain is going to commit the folly of attempting the political domination of this country again after the seven centuries of agony she went through when she has discovered that she can effect its conquest much more effectively under a Fianna Fáil Government with a cheque book than she ever could by fire and sword? This is the Government who have solved their problems up to the point at which we stand today by selling our substance for cash. This is the reason so many of the decent backbenchers of Fianna Fáil have not realised the straits to which we have been brought. This is the means by which we covered up the slow, inevitable, catastrophic decline to the position in which we are going hat in hand to the Bank of Newfoundland for £5 million to pay the civil servants. It is true that they successfully postponed that day and that they fooled a great many decent members of Fianna Fáil into believing that day would never come. They did it by selling for cash what most of the people thought was irrevocably purchased in blood. Does anybody realise the extent to which the mercantile life of the country is being purchased by Germans, British and anybody else who comes here with a cheque book and a long purse?
Do the Government aim to sell out? Perhaps they do. Do Fianna Fáil believe it is good to sell out? Mark you, you do not like it when you gradually see your neighbours disappear in rural Ireland and find yourself surrounded by aliens. You then wake up and say: "What has become of my neighbours? How is it I cannot pronounce the name of anybody living within a half mile of me?" Of course, they must have their names registered in the Land Registry, but when people are buying over the mercantile life of the country, they do not register anywhere: they call themselves the Ultra Hibernian Patriotic Distribution Company or The Round Tower and Greyhound Dog Co. It does not make any difference. We become servants in our own country of alien masters.
We can understate the significance of that when it is an evil, when this operation means that old-established Irish businesses whose profits were ordinarily redeployed in Ireland pass into the hands of aliens who continue to employ the people but who skim the profit off for investment abroad. I want to differentiate most emphatically between that kind of sell-out and the invitation in which we have all joined to foreign capital to come in here and inaugurate new industries designed to generate new exports which will finance whatever profits the external capital earns in this country. That is a very different thing and it may be very desirable. There is, however, a great difference between that and surrendering virtually the sovereignty of our own people in our own country to a cash group. We must never forget that those who went before us struggled resolutely to ensure that it would be ours to enjoy as a free, sovereign and independent people.
When the Taoiseach was speaking yesterday, he returned to an ancient theme. I do not believe, in the situation in which we stand at present, that it is very fruitful to talk about who did what in the years gone by. But the Taoiseach elected, for the edification of his own supporters, to ask them to learn a lesson from the situation in which we stand today as compared with that in which we stood ten years ago. He said:
It is very easy sitting in Opposition or on your fanny in a newspaper office to solve all the country's problems by a wave of the hand or by some glib phrase.
The Taoiseach was very much criticised for using language unbecoming to the Leader of the House. To be frank, I have a certain sympathy with him. He lost his temper. I do not blame the Taoiseach for losing his temper. He has a heavy burden to carry at the present time. He went on to say, speaking for his Government:
The Government had brought the country out of the deepest depression of the last ten years which the Deputies opposite ran away from, rather than deal with it. The Government were not going to do that because, having put their hand to the plough, they were going to take the furrow to the end.
I am quoting from the Fianna Fáil Pravda. the Irish Press of today, 16th June, 1966. I thought it fair to quote the Taoiseach's words from his own kept newspaper. I want to dwell on that for a moment.
Here, I think, is the very heart of the difference between the situation in which we stand today and that in which we stood ten years ago. I do not for a moment deny that we had acute economic and financial difficulties ten years ago. I want to boast that I do not think it was idealistic or wrong for us to go out and build houses, and to go on building houses, until a time came that, when our successors came into office in 1957, the Taoiseach sent for the Dublin Corporation and they said to him, in effect: "There is no need to build any more houses, Taoiseach. We have too many houses. Our problem at present is that we have houses on our hands." I think the proudest boast the inter-Party Government have to make is that we built too many houses.
I do not want to deny that, in the struggle to build houses, I remembered not only to build houses but to do other things also. I look back particularly on the Land Project. I remember the panic that spread through the corridors of the Department of Finance when, with Government authority, I announced in Mullingar that I would spend £40 million on draining the land of Ireland. Venerable figures were stumping up and down the Department of Finance saying, in effect: "He could not have said it; it must be a mistake." But I did say it and I said it with authority and I proceeded to do it.
Then came the time in 1956 when we were in trouble, the kind of trouble I was proud to be in. It was a kind of trouble that the late Deputy Norton and Deputy Everett and Deputy Corish were proud to be in, too, because they felt they had spent—if we had spent— too much on providing the houses and on doing other things and improving the social services that they had joined the Government with us to do. Now, the day that crisis broke in the Government of which we were members, our position was that the balance of payments had gone against us. It was grave. We did not go to the joint stock banks of this country. The general reserve of the Central Bank was intact: we had not drawn a penny on it. The currency reserves to cover the currency consisted entirely of sterling securities, dollars and gold. We had not one penny of foreign debt. Now, the questions we had to ask ourselves were: "Will we drift on? Will we start borrowing? The balance of payments, up to a point in this crisis, will become so acute that we shall have to put on quantitative restrictions. We shall have to limit the imports of timber and building materials, cars and everything, with consequent mass unemployment. Alternatively, will we put on a damper until such time as the payments come right so that we can resume the programme to which we set our hands, and stimulate employment again?"
It was quite open to the late Deputy Norton, to Deputy Corish and to Deputy Everett to say: "We shall not stay in the Government. We are not prepared to face the music. We shall break up the Government and we shall say that you are putting on the screws and that we, as Labour Deputies, will not have anything to do with it." But they were too big men to do that. They believed, as we believed, that that course meant mass unemployment. Mass unemployment in this country has one peculiar feature. It never appears in the statistics. It appears on the B & I boat or on the Cunard ship or on the passenger statistics of Aer Lingus. Mass unemployment in this country means mass emigration.
We put on the levy. We did not prohibit imports. We said that anyone who urgently required timber or some such import could bring it in but that anybody not urgently in need of it would naturally postpone the importation for a year or two. I remember saying from that Front Bench opposite: "We do not want anyone to pay any levy. Our ideal situation would be that nobody would import anything on which the levy is payable. The purpose of the levy is to dampen down imports but, if there is an urgent case and somebody's family life will be disrupted, and so on, let him pay the levy and get on with the job". Twelve months after we had imposed the levy, we turned an adverse balance of payments of nearly £40 million into a favourable balance of payments of £12 million.
I am bound to confess, and I do confess, that perhaps we were too scrupulous. Perhaps we ought to have spread it over two years instead of one, so that it would be easier to get the people to understand the matter and to make it more difficult for our opponents to misrepresent us. But we were determined to get the country back on an even keel and we were also determined to see that no unforeseen crisis would be superimposed on the crisis from which we were suffering at the time. We were determined to see that there must be room for manoeuvre, that we must have reserves available.
This Government, however, scraped the bottom of the barrel. Today they owe £60 million to the joint stock banks. Today they have used up every penny of the Central Bank reserves and I do not know what proportion of our currency reserves is now represented by Irish securities because the figure is not given in the Central Bank report. Today they have borrowed £7 million from Bonn, which they spent before they got it, to balance last year's Budget and they have now gone to the Bank of Nova Scotia to borrow £5 million. When the bad late spring increased their difficulties, they had nothing with which to meet these difficulties and signs on it, we have this Budget here today, this Budget which is going to impose £7 million more taxation in a full financial year on top of a Budget which imposed £12 million extra taxation per annum not more than ten weeks ago.
I ask any sensible Deputy what is he thinking today of a Government who brought in a Budget ten weeks ago and could not go within £7 million of forecasting what they were likely to require and who now bring in a second Budget and do so with a warning that there is hanging over them the ghost of further claims which are as yet undetermined and in respect of which they do not know of any resources to meet them? If that is not a picture of a country gone bust, I do not know what it is.
I want to turn back for a moment. I can tell those stories which are pictures of the experiences of our own Government in office to prove to Deputies opposite that it is because they failed to do two years ago, when there was still time to do them, the unpopular things we did in 1956 that we find ourselves in the disastrous position we are in at the present time. I do not want to rub it in to the members of the Government because they know it themselves. They purchased the by-elections in Kildare and Cork at a fearful price.
I think they made in good faith, a genuine but disastrous mistake when they had recourse to the turnover tax which started the crucial spiral of inflation which is now frustrating us all. That happens to everybody who wants to spend money lavishly under the mistaken impression that there is a limitless Golconda which can pour money into the Exchequer. They forget that the money is levied off the necessaries of the poor. When that spiral began, they were afraid of losing Cork and Kildare. They knew that the adjustment of the 12 per cent increase constituted a grave danger to the whole economic stability of the State. I think the Labour Party and the trade union movement wished for this. They asserted their claim to it and the result was that with the Cork and Kildare by-elections in the offing, the Government gave the green light, announced that the national economy was expanding and that it was time everyone had their share of the cake.
From that time, we have gone into a steady, uncontrollable spiral of inflation. Today the Minister for Agriculture reacted in the House in a manner in which I never saw him react before: he was irritated when Deputy Clinton asked him about the price of fertilisers. He did not realise that he was giving the perfect portrait of the agonising dilemma into which the Government have got themselves, an ever increasing spiral of inflation. They tried to hold down the cost of fertilisers but the costs of production of these fertilisers keep the prices going up and eliminate the margin of profit of the manufacturers.
Ultimately, the entrepreneur says that if he has not got profits, he will have to close down, that if he does not make profit, he cannot pay wages. Then the Minister for Industry and Commerce has to give way and allow an increase in the price of fertilisers. Then the farmers are back again to the Government saying that their costs have gone up and already the Sugar Company have conceded another 6/4d per ton in the price of beet in pursuance of their own undertaking to meet the cost of production. That is the spiral of inflation.
The Minister for Industry and Commerce and the Minister for Agriculture are two reasonable and intelligent men who must be in weekly consultation with their colleague, the Minister for Finance, another decent and intelligent man. What is wrong with these two men that they do not seem to understand what is happening to themselves? If they do not understand what is happening to themselves, they cannot be expected to understand what is happening to the country. Those of us who are living in the country, seeing the consequences to the country, are faced with these inescapable facts and are stating them, out of our duty to the people, here in the Dáil and in the country.
That is my indictment of this Government, that they have dragged the country step by step into this. I am obliged to say I think there are some members of the Government who agreed to this, believing it to be wrong, including Deputy MacEntee. Let us not forget that when Deputy MacEntee wrote his slanderous letter to the papers denouncing the economic soothsayers and astrologers—incidentally, stabbing his colleague, the Minister for Finance, in the back—he overlooked that for the successive years when the mess was being made by Senator Dr. Ryan, the former Minister for Finance, which he bequeathed to the present Minister, who was a party to it, Deputy MacEntee was the then Minister for Health. Every economic soothsayer and astrologer, who according to him was leading us into the desperate situation that he sympathised about his poor colleague, the present Minister for Finance, being in today—every one of them was advising a Government of which Deputy MacEntee was a member.
I once had to resign from a Party, come out into the wilderness alone and face a general election within 12 months of doing so. I never had a cross word with my colleagues. They knew I believed what I was doing was right and I knew they believed what they were doing was right. What held Deputy MacEntee in the Government? If he believed they had abdicated to economic soothsayers and astrologers, am I right or wrong in saying that not only everyone in the country but every individual member of the Fianna Fáil Party was entitled to look down at Deputy MacEntee and at Deputy Aiken, the Minister for External Affairs, sitting in the Front Bench and say that so long as they say it is right, we will assume it is? Was it not the greatest breach of trust a public man ever confessed to when he said that he was party to all that was done, that he knew it was wrong, that he knew it was being done on the advice of economic soothsayers and astrologers who had no responsible regard to the character of the advice they were giving, but yet he endorsed it and commended it to Dáil Éireann? I challenge the Minister for External Affairs to intervene in the debate and tell me——
