AGRICULTURAL CREDIT BILL, 1927—COMMITTEE STAGE.

The Seanad went into Committee.
Section 1 agreed to.
SECTION 2.

I move amendment 1:—

After the word "Corporation" in line 28 to insert the word "Limited."

In giving reasons for this amendment I am also giving reasons for amendment 2, which is practically consequential. Under the provisions of the Bill the shares of this Corporation are guaranteed, both as to payment of a dividend of 5 per cent. and as to the capital repayment in the event of liquidation by the State. Certificates of charge can also be issued, which are also guaranteed by the State. There will be, in addition, depositors and certain other creditors of the Corporation who have no guarantee. It seems to me, in view of the fact that these people—and quite properly—have no guarantee, that it is not wise to leave out the word "Limited." I may point out that banks, in many cases, are unlimited, at any rate as far as note issue is concerned. If you leave out the word "Limited," as this Bill does, you may legitimately make a depositor or creditor of this Corporation think, in view of the guarantee which the Government is giving as to the shares, that it is unlimited, and that he really has a State guarantee. For that reason I am strongly of the opinion— and I know that quite a number of Senators with whom I have discussed it are of the same opinion—that it is a mistake. I am satisfied it will not injure the Corporation in any way to have the word "Limited" after its name, as is usual in most companies.

Amendment agreed to.
Section 2, as amended, agreed to.
Section 3 agreed to.
SECTION 4.

I move amendment 2:—

Sub-section (1). To delete all from and including the words "and" in line 11 down to the end of the sub-section and to substitute therefor, within the inverted commas, the word "Limited."

Amendment agreed to.

I move amendment 3:

To add at the end of the section a new sub-section as follows:—

(3) A trustee may, unless expressly forbidden by the instrument (if any) creating the trust, invest any trust funds in his hands, whether at the time in a state of investment or not, in any shares of the Corporation which are at the time of investment fully paid-up as to capital.

The ordinary shares of the Corporation, where they are fully paid-up, will be entitled to a dividend of 5 per cent., and there is a Government guarantee of the capital and the dividend. Under these circumstances, they would be a proper trustee security, and the advantage of having them a trustee security will be very great, because trustees would be entitled to invest trust money in these funds.

CATHAOIRLEACH

I understand the amendment is accepted.

Amendment agreed to.

CATHAOIRLEACH

Amendment 4. in the name of Senator Kenny, is not in order. The incidence of income tax is fixed by the Finance Bill, and we have no power to alter it by an amendment on a non-financial Bill.

Section 4, as amended, agreed to.
Sections 5 and 6 agreed to.
SECTION 7.
(3) All moneys advanced to the Corporation by the Minister under this section shall be repayable by the Corporation to the Minister on demand with interest from the date of the advance at such rate as shall be fixed by the Minister.

I move amendment 5:—

Sub-section (3). To add at the end of the sub-section the words "and (except in the winding-up of the Corporation) shall be so repayable only out of moneys which are profits as ascertained in accordance with directions of the Minister and in the winding-up of the Corporation shall be so repayable after the creditors of the Corporation have been paid in full."

This is an important amendment which I had better explain as best I can. I have already pointed out on a previous amendment that creditors and depositors have no State guarantee for the moneys which the Corporation hold. The shareholders have a guarantee that 5 per cent. will be paid on their shares. The Bill provides that, if in any year the profits of the Corporation do not reach a sufficient sum to pay 5 per cent., the Minister for Finance, as soon as he is satisfied that these profits have not been made, will advance to the Corporation sufficient money to enable them to pay 5 per cent. to the shareholders. An ordinary limited company would not be allowed by law to pay a dividend unless it made profits—it could not pay a dividend out of its capital. This section, as it stands in the Bill, provides that the Minister, having made those various payments to make up the 5 per cent., may, nevertheless, claim on demand, at any time that he thinks fit, and with such interest as he wishes to charge, repayment of those moneys which he has advanced to the Corporation to pay the dividend. I submit that that is a perfectly proper procedure, if it is repaid out of their profits, but that it would not be a proper proceeding if it is repaid out of the assets of the Corporation. Further, in the event of liquidation, I do not think that the Minister should be entitled to get this money repaid to him until the depositors have been paid in full, because depositors and other creditors, not having any State guarantee, naturally believe that they have all the assets of the Corporation as their security, and it would, I think, be quite wrong if it should work out, in the event of the Corporation being liquidated, that the Minister should be repaid what he had advanced as dividends out of the moneys of the depositors or of the creditors.

I accept the amendment.

Amendment agreed to.
Section 7, as amended, agreed to.
Sections 8, 9 and 10 agreed to.
SECTION 11.

I move amendment 6:

To delete the section and to substitute the following new section therefor:—

11. The Articles of Association of the Corporation shall provide:-

(i) that the number of directors (including the Chairman) shall be seven, of whom four shall be elected by the shareholders with the usual provisions for co-option to casual vacancies and three shall be nominated by the Minister from time to time as occasion requires;

(ii) that so long as the Minister holds more than two hundred thousand shares of the Corporation the Chairman of the directors shall be nominated from time to time by the Minister from amongst the three directors nominated by him.

This is really a drafting amendment.

I accept the amendment.

Amendment agreed to.

I move amendment 7:

To add at the end of the section a new sub-section as follows:-

(2) At least one of the three directors to be nominated by the Minister under the preceding sub-section shall be so nominated by him after consultation with the General Council of County Councils.

We are hopeful that this Bill will be a very great success, and therefore there should not be in the conditions attached to the administration or otherwise anything that would militate against it. The General Council of County Councils had the draft Bill under discussion, and in order to ensure the public good-will that we hope will be behind the measure and the confidence and support of those who are directly to benefit by it, they are disposed to think that the personnel of the Board should be very closely looked into. They are afraid that the agricultural industry will scarcely find due representation on the Board. Their suspicions in that direction have been aroused by the tone of the report of the Banking Commission and certain references made therein, and also the proposition as to the method of administration in connection with the Irish Agricultural Organisation Society. The administration of that society was not a very popular one. With all the merits of the scheme under which it operated, it did not succeed in distributing its benefits over a very wide area. After thirty years or so of existence it only succeeded in establishing 34 parish credit societies.

Many members of the General Council of County Councils had experience of the working of those credit societies in their localities, and, because of the personnel, and a certain attitude taken up by members of that body, those who might have benefited were rather slow to accept the advantages offered to them. The Executive of the General Council had this matter under consideration. They thought that the Minister would be well advised, in the absence of an advisory council of agriculture, to make one concession to the agricultural community through this General Council, which is about the only body I suppose that can claim to be thoroughly representative of the agricultural industry in the country at the moment. They hoped the Minister would take them into counsel, so far as one of his nominations to the Board is concerned.

The General Council of County Councils is a very old establishment, and has received statutory recognition under various Acts of Parliament. It has received such a recognition under the University Act, and under the Acts of 1902 and 1925, there are certain authorisations given to the General Council, so that in a sense it is a statutory body. The Minister would be well advised to take that body into consultation, in so far at least as one of his nominations is concerned. There is a precedent for that in connection with another Department of State. The Minister for Local Government and Public Health consulted the General Council in connection with the setting up of the Roads Advisory Board. They nominated five members and the Minister accepted four. I think a body of that sort is useful to the Minister, and would get him more backing through the country if he worked in with it, and would give an impetus in a matter like this. It would also make for more harmony and good-will and better understanding, because it would bring the Minister into closer touch with the very people that he wants to avail of the benefits of a measure like this.

I do not want to go into the general question raised, but I would point out to the Senator that, as the Bill stands, the Minister may consult with anybody he wishes, and that is all the amendment means.

There is no direction in the amendment except to consult.

All the amendment says is that one of the three directors to be nominated shall be so nominated by him after consultation with the General Council.

I am pointing out that the Minister may consult with anybody he wishes. He will have to exercise discretion, I presume, but as the Bill stands he can consult with anybody he wishes. He may consult if he so thinks fit with the General Council, with the Department of Agriculture, or the I.A.O.S., or any other body.

I think it would be very foolish for the Minister if he went for a public discussion with a public council before he received a nomination.

I did not raise that point. I only pointed out that the Minister can go into consultation with anybody.

I can hardly bring that back as an answer. Will the Minister undertake to consult the Council?

The Senator will understand I could not give any such undertaking.

I ask leave to withdraw the amendment.

Amendment, by leave, withdrawn. New Section 11 ordered to stand part of the Bill.

SECTION 12.

(1) The Memorandum and Articles of Association of the Corporation shall be so framed and expressed that the Corporation shall be entitled and authorised to lend or advance money only to the persons and for the purposes hereinafter stated, that is to say:-

(a) to any person for the purpose of purchasing land for agricultural purposes;

(b) to any farmer for the purpose of constructing buildings on his farm, or making on his farm improvements of a permanent character calculated to increase or facilitate or conduce to the increase of the productivity thereof or for the purpose of purchasing live stock.

I move amendment No. 8:-

In sub-section (1), paragraph (a), to delete lines 57 and 58.

The House will remember that in speaking on the Bill yesterday I brought forward an objection to the power contained in paragraph (a) of this sub-section, which gives the new Corporation power to lend money to any person for the purchase of land for agricultural purposes. I pointed out that that was giving a power to which the Banking Commission, on which I served, had strongly objected. They gave it as their opinion that there was no reason whatever for any new plan or provision designed to furnish the buyer or the owner of land with credit for or as a means of financing such purchase. This is almost the only instance in which there is a direct conflict between the Bill, as now introduced, and the report of the Commission. I also said that from my experience of banking, especially in the last ten years, it would be a very injudicious thing indeed to give a new Corporation, endowed with State funds, any power to lend a farmer or anybody wishing to purchase land money for the purpose of new purchases.

Every bank in the Free State, as far as my experience goes, has been only too willing to lend money to people who propose to purchase land, provided they have got some money themselves. The result has been that when times were good and people were eager to get farms offered for sale, several intending purchasers went to the auctioneer's room, each of them probably backed by a bank. Keen bidding followed, with the result that the price of farms was forced up to a figure making them a very bad purchase for those eventually getting them. The price may be all right at the time of the purchase, but in view of what we know now as regards the fall that has taken place in the prices for agricultural produce, such a practice as that is a very dangeous one for the buyer and the banks and everyone connected with the transaction. The reason why I have put down this amendment is that I think it would be better for this new Corporation not to meddle with such cases. They will have enough to deal with the purchase of land in other ways: to facilitate purchases in connection with their own banking business. I think it would be better if, in dealing with this amendment, we were also to take amendments 10 and 12, because they are all part and parcel of the same thing.

CATHAOIRLEACH

I think so. Amendments 10 and 12 would be consequential on the Senator's present amendment being accepted.

If the House accepts this amendment and relieves the Corporation from what I look on as a very great responsibility, namely, the right to lend money to new purchasers to buy land, I think it would be desirable. Of course in their ordinary banking business they will need to have the right and the power to deal in land, and this is a matter that is dealt with in the other two amendments. Amendment 10, which I also move, reads:-

Section 12, sub-section (1). Before paragraph (e) to insert a new paragraph as follows:-

(e) to any person (other than a co-operative society) for the purpose of purchasing for agricultural purposes land which was immediately before the purchase comprised in a security held by the Corporation from the vendor of such land.

When the Corporation take over a loan they will very likely take over the land of the man making the application as security. Supposing that individual does not succeed in his business, and that the Corporation have to realise their security then they will have to sell this land that they hold as security. They may have an excellent new client who will be quite willing to purchase the land, and he probably will have some money to help him in making the purchase. They will have to lend to him the balance of money that he will need to clear their debt and to realise their security. That is a thing a bank frequently has to do: to lend money to a new client in order to realise their security. Amendment 12, which I am moving with the other two, reads:-

Section 12, sub-section (1). Before paragraph (f) to insert a new paragraph as follows:-

"(f) to any person (other than a co-operative society) for the purpose of paying off a loan which was originally made to him before the passing of this Act wholly or mainly for the purpose of purchasing land for agricultural purposes."

The Coropration, in the course of their business, will have undoubtedly to take over loans from other banks. Let us take the case where they take over a loan. Supposing a bank has got security on land and that they have as much money advanced on that land as they ought to lend, then the Corporation may see that under this new arrangement which the Bill gives that they could lend more. For instance, they might take a chattel mortgage, but they would not lend on a chattel mortgage unless they got the security of the land which the bank has. They will be in the position that they must lend their clients enough money to clear off the existing claims on the land so that they may be able to take over the land themselves. That is a necessary part of the carrying on of their ordinary business. In neither of these cases would the Corporation come in. The Banking Commission, in their report, objected to the lending of money to new purchasers as a single transaction so as to increase the number of bidders at a sale of land. That is a thing that should not be done. It is a bad thing to have competitors for a client forcing up the price of land, because then the buyer will undoubtedly get a bad bargain. I hope that the Seanad will adopt the three amendments that I have moved.

I take it that the House is agreed to discuss the three amendments together. I am in agreement with the first and second amendment but the third amendment to my mind is of an altogether different nature. In my opinion it would enable to be done what Senator Jameson deliberately said on the Second Reading of the Bill he did not wish to be done. He did not wish to have transferred to this Corporation what one may call debts which have been incurred by banks, debts which they knew themselves from the circumstances that have arisen to be more or less bad debts. That is my point of view, even though it may be a completely wrong point of view.

Perhaps I might explain. A Minister, I understand, has not the right to put in an amendment on the Committee Stage, and I asked Senator Jameson to put down that amendment, and for this reason: I think it is useful that the Corporation should be enabled to make a loan to liquidate another loan already made. That is one state of affairs. It is another state of affairs to make a loan to liquidate a bad debt, and as far as I know it was never suggested that the Corporation should do anything of the kind.

Paragraph (e) of Section 12 states that an advance of money may be made "to any person ...for the purpose of paying off a loan which was originally made to him (whether before or after the passing of this Act) wholly or mainly for a purpose for which a loan could under this section be made to him under this section by the Corporation." Assume that a man in the year 1922 borrowed from a joint stock bank a sum of £3,000, £2,000 or £1,000 for the purpose of purchasing land. I submit that this clause would make it possible for that person to raise a loan for the purpose of liquidating the loan that he had in the joint stock bank.

That is so.

I think that should not be done. To my mind that is transferring to the Corporation a debt which is now held by a joint stock bank and it may result in a number of commitments through the country. I do not say that it will, because Senator Jameson assured us that the banks had no desire to do it. I think it would be possible under that sub-section, in the case of loans obtained in connection with a number of farms which had been bought at large prices, to pass these loans held by the joint stock banks on to the Corporation. I think that is possible under the section and I think it is wrong and for that reason I oppose that amendment.

The views expressed by Senator Jameson on this are mine. From the banking point of view it does not matter whether this particular section is inserted or not, because if you have a competent Board, which we assume they will not take over, unless they are extraordinarily foolish, any of the class of loans to which Senator Bennett has referred.

I would point out another class which I think is in the mind of the Minister. A man has borrowed a certain sum of money for which he has given his land as security. That sum of money was a very much smaller amount than the total value of the land, or he has repaid a very considerable amount of it, but in view of the fact that the particular bank with whom he is dealing, does not consider that they can get a prompt repayment if they were to advance any further substantial sum, they in many cases decline to increase further the amount of his loan. This man, if he is a farmer, will probably want additional money, and will come to the Credit Corporation for that money. He will give them a chattel mortgage, but if he wants a large amount, the chattel mortgage may not be sufficient, and they may ask for the deeds of the lands which he holds. He will say, "I would be delighted to give them, but, unfortunately, they are deposited in another bank as security for a comparatively small amount." The bank, naturally, will not give up the deeds unless he can repay the small loan. If you do not give the Agricultural Credit Corporation this power there is just a danger that the farming community may find that the Agricultural Credit Corporation is not able to give the facilities which they want. I think that is the case for the amendment.

I think Senator Jameson left out of account altogether the case of those new owners of land amongst whom large farms were divided and who became failures. It would be of advantage to the country if the Agricultural Credit Corporation could come in and make a loan to an enterprising farmer's son to enable him to acquire land which has hitherto been in very inefficient hands. I think it would be fairer to give owners of land, whose land has not been acquired by the Land Commission, the right to offer their lands for sale. The Minister must recollect the many experiments made in that direction before the Act of 1923, in fact, before any legislation which gave the Commission power to take land.

I am sure a good deal has been heard of the division of lands in Telltown. A rich philanthropist bought land and his ambition was to form a colony of industrious small farmers. He did so, and some of them turned out a success while others turned out to be rank failures. The result was that the original tenants practically all left and the land is now in the hands of most capable men. They had a little money and they were able eventually to become the owners under the Act. Many of them are succeeding very well, but unless they found the money somewhere they could not pay this small amount for whatever was done on the land, which certainly was not very much. I think it would be an advantage to have a little freer sale than there is at present, because I think it is generally admitted that the sale of land is practically restricted to the Land Commission. The power the Land Commission have of taking any land anywhere means that a man who desires to acquire more land cannot buy a farm because it may be wanted for division amongst congests or people in the district. I think from the point of view of the owner and from the point of view of the country it would be an advantage if the Agricultural Credit Corporation could advance money for the purchase of land.

So far as the first amendment is concerned, I have no decided views anyway. If the Agricultural Credit Corporation were empowered to give money de novo for the purchase of land I would not complain. I think possibly it would be an advantage. I have no decided views on the matter. On the other hand, there is this definitely to be said: that the report of the Banking Commission is against that. Senator Jameson's views may be expressed in a word, that it is the business of the Corporation to provide credit for farmers —not to create new ones. It is a distinction which I am not prepared to quarrel with. So far as Senator Bennett's views are concerned, I want to say that I would like to see amendment No. 3 inserted. I think it is vital that the Corporation, if it wishes to give a loan for £1,000 to liquidate a loan originally made for the purchase of land, notwithstanding that the land now, in a free, open market, is only worth £500, can do that if it is foolish enough. Equally, the directors of the Corporation could make a loan to put up a building or a creamery on security worth only £200. The only way to guard against that is to appoint competent directors, and I think you can rely upon the shareholders to have sufficient interest in the money they have invested to nominate competent directors.

On the other hand, it is vital that the Corporation should be in a position to meet a case like this: A farmer has a loan of £1,000 from an existing bank, originally made for the purchase of land. The security is quite good, but he is not in a position to pay it for three or four or five years, or alternatively he may want extra money and the bank is not in a position to give it. This Corporation would be in a position to give long-term credit and could afford to remain out of their money for three or four years. The original borrower approaches the Credit Corporation and says: "If I am able to offer you the deeds of this farm as security for a loan of £1,000, are you prepared to lend me £1,000?" They should be in a position to say "Yes" if they think the security is sufficient.

I feel great difficulty in accepting the first amendment from the fact that the Corporation is being established with the object of giving long-term credits in connection with land. The Commission reported against advancing money for the direct purchase of land, and Senator Jameson has said that the banks are there to do that work. I know for a fact that the banks object, and have always objected, to lending money on long terms for the purchase of land. I believe this Corporation is being established for the purpose of assisting in that direction, and I think that the absolute deletion of this particular clause would prevent them from advancing any money for the purchase of land.

If the Corporation is approached by an individual who is anxious to purchase a farm, and he is prepared to put up proper security, I cannot see why it is wrong for the Corporation not to advance the money. The probabilities are that it will not be repaid for several years. That, of course, is quite contrary to the ordinary principles of banking, but it is not contrary to the principles of a corporation such as this. It is asking the Corporation to do something for which it was established. I have difficulty in accepting the deletion of the clause. The strongest point in favour of deletion is that it has been recommended by the Banking Commission, but, so far as I know, the Commission have given no reasons why it should be so.

I think if Senator Guinness reads the Commission's report he will find a great many reasons given. To put it quite shortly, they consider that for the ordinary purposes of agriculture there are any amount of institutions ready to advance all the money that should be legitimately applied to the direct purchase of land. They did not think that a new association provided with money from the State ought to enter into this kind of business. They thought that that was the duty of commercial banks, and that, in the case of a man who wants to purchase land, but who cannot persuade any bank to lend him money, besides what he has got to pay for the farm, the State would be wrong in financing an institution which would step in and lend money under such circumstances to such individuals.

Amendment put and agreed to.

CATHAOIRLEACH

I shall now put the two consequential amendments to the amendment which has just been carried.

Section 12, sub-section (1). Before paragraph (e) to insert a new paragraph as follows:—

"(e) to any person (other than a co-operative society) for the purpose of purchasing for agricultural purposes land which was immediately before the purchase comprised in a security held by the Corporation from the vendor of such land."

Amendment put and agreed to.
Section 12, sub-section (1). Before paragraph (f) to insert a new paragraph as follows:-
"(f) to any person (other than a co-operative society) for the purpose of paying off a loan which was originally made to him before the passing of this Act wholly or mainly for the purpose of purchasing land for agricultural purposes."
Amendment put and agreed to.

I move:—

Section 12, sub-section (1). After the word "marketing" in line 3 to insert the words "or for the purpose of holding over live stock or farm produce for a better market."

I spoke on this subject on the Second Stage of the Bill. I think this amendment is essential. Small farmers are being pressed to sell their produce on a falling market in order to meet shop bills and other liabilities, but I think they should be given facilities for holding over their stock or farm produce for a better market. I think the Minister, when speaking, either on the Bill or in one of the constituencies, mentioned that one of the objects of the Bill was to enable farmers to hold over their stock and produce to get a better price.

I think that that point is covered indirectly. A man may want money, and thinks he can get it by selling his stock. If he wants the money for agricultural purposes he can get a loan as set out in Section 7, but if he wants it, for instance, to buy a motor car, he will not get it.

As the Minister has given us his assurance that this point is covered, I desire to withdraw the amendment.

Amendment, by leave, withdrawn.

On behalf of Senator Sir John Keane, I move:-

Section 12, sub-section (1). To delete lines 7 to 10.

I will again ask the Minister to tell us the result of his conversation with Senator Sir John Keane. Perhaps he would advise us what to do under the circumstances.

I suggested to Senator Sir John Keane that we could meet the matter in this way. We should insert after the word "enterprise" the words "primarily designed." That would meet his point.

Very well, instead, I accordingly move to insert the words "primarily designed" after the word "enterprise."

Amendment put and agreed to.

I move:—

In Section 12, sub-section (1), to delete in lines 15-16 the words "under this section."

That is a verbal correction.

Amendment put and agreed to.

I move:-

In Section 12, sub-section (3), after the word "society" in line 67 to insert the words "or its members."

This amendment has been put down at the request of the Minister. It is feared that the sub-section would be too restricted if the words "or its members" were not inserted.

Amendment put and agreed to.

I move:-

In Section 12, sub-section (4), after the word "or" in line 8 to insert the words "its members or by that."

The same remark applies to this amendment.

Amendment put and agreed to.

I move:-

Section 12. Before sub-section (5) to insert a new sub-section as follows:-

"(5) Where the goods sold by a co-operative society are mainly goods produced by that society or its members, any similar goods occasionally sold by such society may for the purposes of this section be deemed to have been so produced although in fact produced by, and purchased by the society from other persons."

Section 12 prohibits loans to co-operative societies which have retail shops in which they sell goods other than those they produce. That is quite right, because in this country co-operation has been a failure in distribution though it has been a success in production, and wherever a creamery, which produced good butter and cream, had a retail shop in which it sold other goods the shop brought down the creamery. At the same time the section, as it stands, ought to be mitigated to some extent. Creameries cannot sometimes supply all their customers with butter all the year round, and it may be necessary for them to sell Australian or New Zealand butter. The amendment is for the purpose of enabling them to do that at particular times of the year.

CATHAOIRLEACH

Is this amendment accepted by the Government?

Amendment put and agreed to.

Consequential on that amendment I now move:-

In Section 12, sub-section (3), to delete in lines 66-67 the words "actually or usually."

Amendment put and agreed to.

I move:—

In Section 12, sub-section (4), to delete in line 7 the words "actually or usually."

This is a further consequential amendment.

Amendment put and agreed to.

I move:—

Sub-section (5). To add at the end of the sub-section the words:- "but this sub-section shall not apply to or prevent the investment of moneys in the purchase of bills, notes or other negotiable instruments made by the Minister for Finance or by the British Treasury."

This amendment was put down at the request of the Minister. Its object, I think, is fairly clear. There is just a danger that the Bill as amended might restrict the Corporation from advantageously using any surplus money which it had from time to time, either through deposits or during the period when with its capital fully subscribed it has not got customers to use the money. It is essential they should invest their money in some useful way, as otherwise the Corporation would be at a loss. There is a danger this particular section might preclude them from purchasing either Irish or English Government bills, which are the most lucrative form of security, and could be repaid from day to day. The next amendment is put down because legal opinion fears the provision that loans should only be made for purposes of agriculture might prevent this body taking up debentures for the purpose of temporarily using their surplus moneys, or dealing with deposits they might have.

Amendment put and agreed to.

I move:—

To add at the end of the section a new sub-section as follows:-

"(6) References in this section to the lending or advancing of moneys shall not be construed as including the investment of moneys in the purchase of stocks, shares, bonds or debentures quoted on the Stock Exchange in Dublin or on the Stock Exchange in London or the subscription for stocks, shares, bonds or debentures intended to be so quoted."

Amendment put and agreed to.
Question—"That Section 12, as amended, stand part of the Bill"— put and agreed to.
Sections 13 to 16, inclusive, put and agreed to.
SECTION 17.
The Corporation shall keep all such books of accounts and other records and in such form as may be prescribed by regulations made by the Minister under this section.

I move:—

To delete in line 22 the words "books of."

This is a verbal amendment.

Amendment put an agreed to.
Question—"That Section 17, as amended, stand part of the Bill"—put and agreed to.
Section 18 put and agreed to.
SECTION 19.
Sub-section (2) A copy of every order to which the foregoing section applies and which is for the time being in force shall be embodied in or annexed to every copy of the Articles of Association of the Corporation issued after the date on which such order has come into force.

I move:-

Sub-section (2). Before the word "articles" in line 39 to insert the words "memorandum and."

This is also a verbal amendment.

Amendment put and agreed to.
Question—"That Section 19, as amended, stand part of the Bill"— put and agreed to.
Sections 20, 21 and 22 put and agreed to.
SECTION 23.
PART III.
Chattel Mortgages.
(1) In this Act—
the expression "chattel mortgage" means an instrument under seal made between a farmer of the one part and the Corporation or a bank of the other part whereby the farmer in consideration of moneys advanced to him by the mortgagee covenants with the mortgagee to repay such moneys with interest and charges in favour of the mortgagee either specific farming stock or (by way of floating charge) the farming stock from time to time on his farm or both specific farming stock and the farming stock from time to time on his farm with the repayment of the said moneys and interest;
the expression "specific chattel mortgage" means a chattel mortgage whereby a charge on specific farming stock is created;
the expression "floating chattel mortgage" means a chattel mortgage whereby a floating charge on the farming stock from time to time on a farm is created;
a chattel mortgage whereby both a charge on specific farming stock and a floating charge on the farming stock from time to time on a farm are created is included in the expression "specific chattel mortgage" in so far as a charge on specific farming stock is thereby created and is included in the expression "floating chattel mortgage" in so far as such floating charge is thereby created;
the expression "farming stock" means and includes animals and birds of every kind reared or kept for profit, the produce of such animals and birds, draught animals of every kind, agricultural machinery and implements, and agricultural crops whether growing in or severed from the land;
the words "mortgagor" and "mortgagees" when used in relation to a chattel mortgage means respectively the farmer by whom and the Corporation or bank to whom such chattel mortgage is made.

I move:—

Sub-section (1). After the word "a" in line 51 to insert the word "recognised."

In order to make this amendment clear it is necessary to explain amendments 22, 23, 24 and 26, and 24a which appear on the White Paper. They are all part and parcel of the same amendment. As the Bill stands the Minister for Justice shall set out the banks which are to be regarded as recognised banks for the purpose of having the right to inspect the register of chattel mortgages, which is otherwise secret. In conversation with the Minister he agreed that the Minister for Finance is the proper person and not the Minister for Justice to authorise that. In addition to the amendments dealing with that amendment 24a on the White Paper gives to the Minister for Finance the power to make out a list of recognised banks. The Minister will, no doubt at once make out a list of all the recognised banks. Anyone could do that, but it is important that in case any new bank might open, or that in the case of any body or person having a bank for the purpose of making loans doing a bona-fide business there should be a right to inspect the register, and that they should be placed on the list by the Minister. It is equally important the Minister should have some discretion in the matter, because there are what some of us might describe as money-lenders, but who might describe themselves as bankers, and who should not have that right.

Amendment put and agreed to.

I move—

Sub-section (1). After the word "or" in line 13 to insert the word "recognised."

Amendment put and agreed to.

I move:—

Sub-section (1). To add at the end of the sub-section the words: "the expression ‘recognised bank' means a bank which is for the time being appointed by the Minister to be a recognised bank for the purposes of this part of this Act."

Amendment put and agreed to.
Section 23, as amended, put and agreed to.
NEW SECTION.

I move:—

Before Section 24 to insert a new section as follows:—

24. The Minister may if he so thinks fit on the application of any bank appoint such bank to be a recognised bank for the purposes of this part of this Act and whenever the Minister so appoints a bank to be a recognised bank he shall forthwith give to the Minister for Justice notice of such appointment.

Amendment put and agreed to.
SECTION 24.
(6) The contents of any register of chattel mortgages maintained under this section shall not be published or disclosed nor shall any copies thereof or any part thereof be issued to any person save only and except—
(a) any person in the employment of the Corporation and duly authorised in writing in that behalf by the Corporation may at any time inspect and take copies of any such register or any part thereof; and
(b) any person in the employment of a recognised bank and duly authorised in writing in that behalf by such bank may at any time inspect and take copies of any such register or any part thereof; and
(c) an under-sheriff may at any time inspect the register of chattel mortgages maintained in a Circuit Court Office serving the area or any part of the area for which he is the under-sheriff; and
(d) any person in the service of the State and duly authorised in writing in that behalf by the Minister or the Minister for Lands and Agriculture may at any time inspect and take copies of any such register or any part thereof; and
(e) an officer employed in a Circuit Court Office and performing duties formerly performed by the under-sheriff may at any time inspect the register of chattel mortgages maintained in such Circuit Court Office; and
(f) whenever the Supreme Court or any Judge of the High Court or the Circuit Court directs that a copy of the portion of any such register relating to any particular chattel mortgage or alleged chattel mortgage be furnished to them or him, such copy shall be so furnished accordingly and such Court or Judge may disclose or publish such copy or the contents thereof to such extent and in such manner and subject to such conditions as in their or his opinion justice may require.
(8) The Minister for Justice may by order make regulations in relation to all or any of the following matters, that is to say:—
(a) the form and contents of the several registers of chattel mortgages maintained under this section;
(b) the keeping and maintenance generally of such registers;
(c) the mode of registering a chattel mortgage in such registers and the evidence to be produced for the purpose of such registration of the due execution and stamping of such chattel mortgage.
(d) with the consent of the Minister for Finance the fees to be charged and taken in respect of the registration of chattel mortgages in such registers, the removal of chattel mortgages from such registers, the inspection of such registers and any other matter relating to such registers;
(e) the general preservation of the secrecy of such registers and in particular the evidence of authority to be produced by persons claiming to inspect or take copies of such registers;
(f) after consultation with the Minister for Finance, the persons who are to be deemed to be recognised banks for the purpose of the provisions of this section relating to the inspection and taking copies of such registers.

I move:—

Sub-section (6). After the word "except" in line 62 to insert the word "that."

Amendment put and agreed to.

I move:— Sub-section (8). To delete paragraph (f).

Amendment put and agreed to.
Section 24, as amended, and Section 25 put and agreed to.
NEW SECTIONS.

On behalf of Sir John Keane I move:

Before Section 26 to insert a new section as follows:—

"26. It shall be an obligation on any person who has received or seeks to obtain credit to disclose to the actual or prospective creditor, if he so requires, particulars of any existing chattel mortgage. Any person who gives information under this section which he knows to be untrue shall be liable on conviction to a penalty not exceeding twenty pounds."

The Seanad will remember that these are chattel mortgages. The Corporation and the banks, by the Bill as it stands, are the only association, institutions or individuals entitled to know about a chattel mortgage before it is given. Senator Sir John Keane's object in putting down this amendment is to try and make it possible for ordinary traders, shopkeepers, and others to get this information. This means that if an individual applies to a shopkeeper for credit or to any other individual for the loan of money, the shopkeeper or person concerned may ask him if he has a chattel mortgage on his property, and if he replies wrongly he will be liable to a penalty. He is not, however, compelled to answer. If he does not answer, the other man can form his own conclusions. If he answers wrongly, he will render himself liable to a penalty. I think it is quite a reasonable amendment. It would meet a great many of the complaints that there is some sort of conspiracy between the association and the banks to keep all the information to themselves. I do not know what the Minister's opinion is, but my personal opinion and the opinion of Sir John Keane is that it would be a sensible addition to the Bill.

If Senator Sir John Keane wants to brighten village life the privacy of business life should not be subjected to this test. This is a needless procedure and I do not think it should be introduced, having regard to the fact that the Bill is drafted so widely as regards "proper banks." I was going to suggest that building societies should be allowed the right of inspection, because many leases are given subject to the right to build. Such societies could not be called "banks," but they might require to see if there was a chattel mortgage existing.

I have had the following drafted to meet the points in Senator Sir John Keane's amendment:—

New section. Before Section 28 a new section inserted as follows:—

"28.—(1) It shall be an obligation on every person (hereinafter called the debtor) who seeks from another person (hereinafter called the creditor) the grant or continuance of credit to disclose in writing to the creditor (if required in writing by the creditor so to do) whether there is or is not a chattel mortgage subsisting in respect of any of the debtor's farming stock and the particulars of every (if any) such chattel mortgage.

(2) No creditor shall disclose any information furnished to him by the debtor in pursuance of this section save in so far as such disclosure may be necessary or proper for the purposes of a prosecution under this section or for the institution or conduct of legal proceedings for the recovery of money due by the debtor to the creditor.

(3) Every person who shall make in writing a statement in pursuance of this section which is to his knowledge false or misleading in any material respect and every person who shall in contravention of this section disclose any information furnished to him in pursuance of this section shall be guilty of an offence under this section and shall be liable on summary conviction thereof to a penalty not exceeding twenty pounds.

What the provision really means is this: If a customer who is on the books of a shopkeeper is asked in writing by the shopkeeper, "Have you got a chattel mortgage at present on your stock?" he is entitled to answer the question. If the customer answers, he must tell the truth, under a penalty. I think that is sound enough. It does not interfere with the secrecy of the chattel mortgage to any great extent. The reason that impelled me to agree to this provision was this: A shopkeeper has on his books a man who owes £100. He is going on every day and increasing that £100. Finally, the shopkeeper has to cease giving him credit. He asks himself, "Shall I issue a process or a writ?" as the case may be. He is in the unfortunate position that until he gets a decree he does not know that there is a chattel mortgage. If he had known there was a chattel mortgage, he might not act as he did. It is only right that the creditor should know before he goes to the expense of issuing a writ and getting a decree whether there is a chattel mortgage or not.

Amendment by Sir John Keane withdrawn. Amendment as tabled by the Minister agreed to.
New section ordered to be there inserted.

I move amendment 27:—

New Section. Before Section 28 a new section inserted as follows:— 28.—(1) Whenever a farmer (hereinafter referred to as the intending mortgagor) agrees to make and the Corporation or a recognised bank (hereinafter referred to as the intending mortgagee) agrees to take a chattel mortgage (hereinafter referred to as the proposed chattel mortgage) the intending mortgagor shall furnish to the intending mortgagee a statement in writing stating whether he is or is not then indebted to the Corporation or any recognised bank (hereinafter referred to as the existing creditor) and, if he is so indebted, the name of the existing creditor.

(2) If in such statement the intending mortgagor states that he is so indebted the intending mortgagee shall send by post to the existing creditor a notice in writing stating the intention of the intending mortgagee to take a chattel mortgage from the intending mortgagor, and if either the intending mortgagee fails so to send such notice or the proposed chattel mortgage is made within seven days after the day on which such notice is so sent the proposed chattel mortgage shall be deemed to be fraudulent and void as against the existing creditor.

(3) If a chattel mortgage is made without such statement being furnished by the intending mortgagor to the intending mortgagee and the mortgagor was at the date of such chattel mortgage indebted to the Corporation or a recognised bank such chattel mortgage shall if the intending mortgagor was so indebted to the Corporation and the Corporation is not the mortgagee be deemed to be fraudulent and void as against the Corporation and shall if the intending mortgagor was so indebted to any recognised bank be deemed to be fraudulent and void as against every recognised bank (other than the mortgagee) to which the intending mortgagor was so indebted.

(4) Every person who shall make a statement in writing in pursuance of this section which is to his knowledge false or misleading in any material respect shall be guilty of a misdemeanour and be liable on conviction thereof to a fine not exceeding two hundred pounds, or at the discretion of the court, to penal servitude for three years or imprisonment for any term not exceeding two years.

This amendment is one of some importance and I need hardly say it has been put down after consultation with the Minister. The object of the amendment is to deal with a situation which might otherwise be serious from the point of view of the banks and from the point of view of the Corporation. As the Bill stands, the register of chattel mortgages is secret. There is the danger that a man applying to the Corporation for a loan and offering a chattel mortgage might owe a considerable sum of money to somebody else. We dealt with the case of the shopkeeper in the previous amendment. In the case of banks, another bank would not know that a chattel mortgage was being agreed to by the Agricultural Credit Corporation. Conceivably, they might lend money to the individual knowing he had various assets in the form of stock which could be made the subject of chattel mortgage. This amendment provides that a person who owes money to a bank shall disclose the fact to the Agricultural Credit Corporation and that if the Agricultural Credit Corporation decides they will lend him money on a chattel mortgage they shall give seven days' notice to the bank or other body concerned before they complete the transaction. That may seem to be solely in the interests of the banks. In a sense it is. But it is also in the interests of the farming community, because if it were not so provided the banks which lend money at present on the assets which a man is known to possess, would be forced, in order to safeguard themselves, immediately to ask most of their customers for a chattel mortgage. If they know that the individual to whom they are lending money cannot give a chattel mortgage elsewhere before they get notice there will be no necessity for them to take the action I have indicated.

I accept the amendment.

Amendment agreed to.
Sections 27, 28 and 29 agreed to.
SCHEDULE.
4. Before issuing a series of certificates of charge the directors shall place under the control of trustees, in such manner by transfer, sub-mortgage, deposit, or otherwise as shall be approved by the Minister, good and sound first mortgages on land held by the Corporation as security for advances made by it to a nominal amount not less than the nominal amount of such series of certificates.
6. The said first mortgages shall be so placed under the control of the trustees that the trustees shall hold the same upon trust for the Minister and the holder of the certificates issued against such mortgages and that the trustees shall have all necessary and proper powers for raising for the Minister and such holders by means of such mortgages the amount of the principle and interest of such certificates and also power when any such certificates are paid off in full by the Corporation to release to the Corporation so much of such mortgages as shall be equal in nominal amount to the amount of the certificates so paid off and also power at any time at the request of the directors to release to the Corporation any of such mortgages in exchange for an equal amount of similar mortgages.
7. Every certificate of charge shall be expressed and shall operate—
(a) to bind the Corporation to pay to the holder of the certificate the principal amount thereof within a period of years (not exceeding forty) named therein and to pay interest on such principal amount at the rate named therein with the consent of the Minister but not exceeding by more than three per cent. per annum the average (ascertained in accordance with regulations made in that behalf by the Minister) rate of interest paid by the leading banks in Saorstát Eireann on moneys held by them on deposit account during such period of twelve months commencing not earlier than fifteen months before the issue of the certificates as shall be appointed by regulations made in that behalf by the Minister;
(b) to confer on the holder of the certificate the full benefit of the trusts on which the said mortgages are placed under the control of the trustees;
(c) to confer on the holder of the certificate the benefit of the guarantee given by the Minister in respect thereof under this Act.
10. A series of certificates of charge shall as against the mortgages held by the trustees as security therefor rank in priority to any debentures or debenture stock issued by the Corporation and to all other debts and liabilities of the Corporation but as against any other assets of the Corporation shall rank as simple contract debts.

I move amendment 30:—

Paragraph 4. To delete in line 25 the words "good and sound first mortgages on land" and substitute therefor the words "securities (in this Schedule referred to as authorised securities) against which certificates of charge may be issued by the Corporation under or by virtue of paragraphs 1 or 2 of this Schedule."

The Schedule deals with the conditions and mode of issue of these certificates of charge, which are certificates issued to the public in the denominations of, I think, £10. They are secured by first mortgages and other securities specified in paragraphs 1 and 2 of the Schedule. When you come to paragraph 4, which deals with the securities to be given to the trustees, the words used are "good and sound first mortgages on land." That is the only form of security to be given to trustees. That is not correct, because there are other forms of securities. Those words ought to be struck out and the words suggested in the amendment substituted.

Amendment agreed to.

I move amendments 31, 32, 33 and 34. These amendments are as follows:—

31. Paragraph-6. To delete the words "first mortgages" in line 35 and to substitute therefor the words "authorised securities."

32. Paragraph 6. To delete the word "mortgages" in lines 38, 40, 43, 46 and 47 wherever the same occurs and to substitute therefor the words "authorised securities."

33. Paragraph 7. To delete the word "mortgages" in line 65 and to substitute therefor the words "authorised securities."

34. Paragraph 10. To delete the word "mortgages" in lines 15 and 16 and to substitute therefor the words "authorised securities."

These are all verbal alterations consequential on amendments inserted in the Dáil. The alterations should have been made in the Dáil.

Amendments agreed to.

In connection with the rate of interest to be paid on these certificates of charge and set out in paragraph 7 of the Schedule, these certificates are guaranteed by the Government and interest is also guaranteed. The capital of the Corporation is to be £500,000, carrying 5 per cent. interest. Capital and interest are guaranteed by the Government. Why is it necessary, where you have another form of security somewhat similar, to have an interest rate of this complicated nature and different from the rate in connection with the capital of the company? As the Bill stands at present, the rate of interest on these certificates is not to exceed by more than 3 per cent. per annum, the average rate of interest paid by the leading banks on moneys held by them on deposit account. That is a complicated system, and if the Bill were in operation at the present time it would mean that the Government would be paying 5 per cent. on capital and 5½ per cent. on these charge certificates.

Not necessarily.

Not necessarily, but I do not think you would get money out unless you gave 5 per cent. I cannot see that this process is necessary. It may be a means whereby the Government hope to get money out cheaply. I do not think it will succeed, and I think it would be better to give the same rate of interest on these certificates as on the capital of the company.

There is a difference between the two matters. In one case you have a definite issue now. The certificates will be issued next year and the year after and the year after that. We do not know in what way rates of interest are going to fluctuate. We are no judges of what our security will be in a couple of years, and we must leave a little elasticity.

The plan is ingenious. A parallel case is that of the Land Mortgage Bank in the Argentine Republic where large sums of money are advanced on land. In that case the interest is guaranteed by the Government, but there is always a fixed rate of interest.

I think the Minister is preparing for another war.

Schedule, as amended, agreed to.
The Seanad went out of Committee.
Bill reported.