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Dáil Éireann debate -
Tuesday, 25 Mar 1969

Vol. 239 No. 6

Committee on Finance. - Bretton Woods Agreements (Amendment) Bill, 1968 : Committee and Final Stages.

Bill put through Committee, reported without amendment, and received for final consideration.
Question proposed: "That the Bill do now pass".

We are now, of course, passing this Bill. We have heard the Minister replying to the Second Stage and he has rightly said, quite apart from the broad issues which I raised in the context of our Second Stage discussion, that in the present state of the world and the expanding physical volume of international trade it is a good thing to add to international reserves in order to finance expanding international trade which is to the advantage of everybody. But I think, in saying that, the Minister unintentionally created an illusory sense of reassurance, where I think he overlooks the inescapable character of Gresham's Law. It does not matter what quantity of reserves of gold or any other reserve of undoubted, unquestioned value you create, without confidence the bad money will drive out the good; the good money will go under the bed and the bad money will proceed to circulate.

Then comes into operation—I am not trying to be technical merely to sound technical—an equally inescapable economic law expressed by Fisher's equation. It is one which too many people forget, that on the lefthand side of Fisher's equation stand the symbols M and V, the quantity of money and the velocity of its circulation. If confidence declines, not only does the value of money deteriorate and the quantity grow but the velocity of its circulation rises which exacerbates the rise in prices which expedites the process of inflation. The point I am trying to make is this: There is no increase in the basis of international currency which will adequately and effectively finance the growing volume of international trade except the restoration of confidence. There is no means of restoring confidence so long as inflation is allowed to continue.

We all know in our daily lives that once the public get it into their heads that the value of money this day 12 months is going to be less than it is today the velocity of the circulation of that money will begin to rise. That is what is happening. The way it is expressed in an ordinary person's life is the cost of living is going up and if you want a washing machine you buy it now. It will cost £60 today but will cost £70 this day twelve months. Everybody goes out and buys a washing machine they cannot afford. They tie around their neck that lodestone of debt until ultimately the weekly wage will not meet the weekly payments that require to be made. They apply for higher wages not to grow richer but to maintain the standard of living they enjoyed 12 months ago.

It is that increase in the demand of the stockbroker for increased dividends, the demand of the worker for increased pay, the demand of the professional man for increased fees that creates the increase in the cost of living, that creates instability, that creates an increase in the velocity of the circulation of currency which completes the vicious circle which in the last analysis ceases to be an economic question; it becomes a vital and diabolical political question.

I referred here to Deputy Sir Anthony Esmonde speaking about two inflations. I am thinking of the involuntary inflation, the end product of which was not an economic event, it was a political event because it was discovered that no democratic Government could control the monster they had suffered to grow and so was called into existence in the country of Goethe, Haydn, Beethoven, Schubert and all the arts, a monster called Schickelgruber. That is what people closed their eyes to. I do not give two damns what happens to the bankers, the land speculators or the bucks building office blocks or flats. I do not give a damn if in the morning their flats and their office buildings fell down and they lost their money. They have plenty more where that came from and they put their money into them for no other purpose but to make money for themselves. What I am concerned with is that my son will live in freedom and there will be no Schickelgruber here.

I hate the Fianna Fáil Government for their economic inequities in the last ten years they have been in office but it is a free Government, freely chosen by our people and it is a Government under which any free man can live in dignity and peace. I do not want to see it replaced by a Schickelgruber but as sure as we are in this room the creation of additional monetary reserves is utterly irrelevant to the real danger unless confidence is restored. I cannot dissent from what the Minister for Finance says with regard to the contribution this small country can make in the restoration of confidence in the great and influential countries of the world being economically speaking miniscule.

Let us not forget Switzerland is a very small country. When I was young people spoke of something being as sound as the Bank of England but nobody speaks of that now. There is no more unstable organisation in the world than the Bank of England. It is in a perpetual state of wild and frantic oscillation of every tempest that blows on the international money market. But standing in the middle of Europe is a tiny country with no natural resources but everybody thinks of it as being the epitome of security for your savings and that is Switzerland. Why? It is because the stability of the currency of Switzerland is beyond doubt. Why is it that the Germany of today is one of the, if not the only European country with a massive trade and payment surplus? Because, as we all know, written on the hearts of the German people is: "We will never have a Schickelgruber again." The end product of inflation is Schickelgruber. That is the point. I think the Minister for Finance of any Irish Government has a duty to his people to make it clear that there is no substitute for the correction of the political menace of inflation except the restoration of confidence in the currency. Only too many people completely fail to understand that.

I will not be talking much more in this House but if I could carry even a glimmer of understanding to the bulk of my colleagues in this House of the political significance of inflation then my time here would not have been spent in vain. I am trying to make our people awake to the fact that this is not a question of money, this is not a question of being rich or poor or any matter of that kind. This is a question of being free. I believe the only force that could destroy freedom in this country is inflation.

I want to state that I was not making a political crack when I spoke of Cork and Kildare. I know what happened in Cork and Kildare. Whatever discussions took place, an atmosphere was created overnight for the purpose of winning those two by-elections— after the Fianna Fáil reverse, consequent on the purchase tax, in North East Dublin—that there was plenty for everybody and that the sky was the limit. That was a political decision. That is six years ago. There is no use crying about it now. We had a general election since. I know the difficulty and the feeling of futility one experiences when one tries to go out to the country and speak of inflation because to try to explain to any gathering of reasonable citizens all that means is a virtually impossible task, as the Minister for Finance well knows. Therefore, I want to impress again and again on the Minister and on this House that when we are talking of Bretton Woods, when we are talking of inflation, when we are talking of international currency, when we are talking of monetary reserves, we are not talking about getting rich or poor, we are talking about being free or slaves. I want no Schickelgruber in this country. Schickelgruber was the child of inflation. Nothing could have set the ovens burning in the land of Goethe, Schiller, Beethoven and Mozart except inflation. Inflation did, and left that great nation that stood in the forefront of human culture split and divided today, half of it a communist desert, inhabited by permanent convicts and the other half forever suspect by mankind. People who are capable of suffering those things to happen in their midst can they ever be trusted again?

Do not let that happen in Ireland. It is perfectly true that despite our best endeavour if the world goes down we must go down with it, but if we must let us go down with our flag flying and clean. Let us not be a miserable limpet at the bottom of the rotting hulk of a failed civilisation.

I have nothing to say in conclusion except that Deputy Dillon will be a loss to this House. Perhaps my colleague on my left might persuade him to change his mind.

I am grateful to the House for the facility in giving me all Stages of the Bill.

Question put and agreed to.

I have two Supplementary Estimates which are ordered for later on. Perhaps, as I am in the House, it might be agreed to take them now.

I do not know what the position is. It is not my neck of the woods. The Shipping Investment Grants Bill is ordered for now.

Here is Deputy T.F. O'Higgins.

Perhaps we could do them now.