Arising out of the motion on the Order Paper in Senator Connolly's name, I am advised that the Minister for Finance is likely to be present, and perhaps the Senator would like to wait until he arrives.
I am more interested in what the Seanad thinks than in what the Minister for Finance may think. I have not a tremendous belief that anything the Seanad does is likely to influence the Minister.
The Minister has now arrived, and perhaps Deputy Connolly will proceed with his motion.
That, in view of the recent decision of the British Government to abandon the gold basis of currency and the reactions resulting from that decision on the currency and finances of the Saorstát, it is a matter of urgent public importance that a Joint Committee of both Houses of the Oireachtas be set up—
(a) to report on the position of our present currency, the basis of credit thereof and the securities at present held by the Currency Commission;
(b) to report on the position of the securities held by the banking institutions of the Saorstát on behalf of their depositors;
(c) to summon witnesses and to take evidence on all matters affecting the credit and the financial position of the Saorstát;
(d) to make recommendations for the protection of the economic stability of the State.
I felt when I was putting down this motion that it would draw attention to the real problem that is facing the country. Whatever the Minister for Finance, his financial advisers and other people may think to the contrary, I feel that here in this House to-day we are likely to discuss the real problem and that the red herring will be discussed in the other House. I have attempted to make the motion as comprehensive as possible. I think it will be generally conceded by all the intelligent members of the Seanad that the critical situation that has arisen will at least demand the attention of the Seanad and of the country. We are faced with a crisis no less than that which confronts the people on the other side. The crisis with which we are faced is the result of being tied almost completely to an economic outlook, a banking outlook, and a financial outlook that is entirely Imperial and that has ignored the potentialities of internal development in this country. We know that when the Currency Commission reported, certain recommendations were made and, as a result of these recommendations, we became attached to what was known as the pound sterling. When the Banking Commission, or what I preferred at the time to call a commission of bankers, sat, similar recommendations were made, and the result of all this was that we were tied to the basis of the British pound sterling. We know that to-day we are suffering from the devaluation of the pound and we know that that is inevitable as a result of the policy that has been pursued.
It may be argued that the position was difficult; it may be argued that there were certain economic reasons why we should be attached to the pound sterling. At various times criticism was offered regarding the line of policy that was being pursued. This criticism was in the main ridiculed, sneered at, treated with contempt; in any event it was ignored in actual practice. I am not going to try to argue that the world-wide financial crisis could have been entirely avoided in Ireland. I do argue, and I have argued, that many of its worst reactions could have been avoided if we had a definite line of Irish policy as distinct from the Imperial financial policy. At times in this House we have heard a good deal about the inferiority complex and the slave mind. If ever there was anything that exhibited our lack of courage in facing up to vital problems in this country it has been exhibited by the Department of Finance and by the Minister for Finance by reason of the slavish allegiance that has been paid to the system that has prevailed over there when we could have protected ourselves to a great extent. We know that responsible Ministers dealing with practically every phase of economic life have stressed the importance of our dependence upon the people on the other side. They seem to have been entirely unconscious, deliberately or otherwise, of what were the obvious trends, even to the elementary study of economics, that were inherent in the position on the other side.
For some years the economic stability of nearly every country has been under review. Criticisms in every country in the world have been applied to bankers' organisations, to the basis of credit, to the question of the gold basis and to all sorts of problems that are now finding expression in world conditions. We in this country who had difficult problems no doubt, but problems that could have been faced, tackled and solved, have been ignored completely and we have been allowed to pursue a policy of absolute drift. In England there were various factors which would show, even to the elementary student, the possible drift. We had a serious shrinkage of trade, a rapid increase of the adverse trading balance as far as Britain itself was concerned, even allowing for the invisible imports; we had steadily growing unemployment, increased taxation, and there was very serious criticism within Britain itself as regards the policy that was being pursued. To-day we find the same Britain absolutely rent asunder with regard to her internal problem, and we find this country approaching a period when it will be rent asunder with the same problem—an outcropping of the system which we have so slavishly adopted.
It cannot be argued that members of the Executive and others responsible have not been warned that the situation at least demanded close watching, careful analysis, and that there should be adequate provision made for what was coming. It is repugnant to me to have to refer to various analyses that have been made in this House on other occasions. But the situation is of such importance that I hope the Seanad will bear with me while I refer to several statements made in this House, some by myself and some by other Senators, which may explain how negligent the financial administration of this country has been during the past few years. As far back as April, 1929, the issue of the banks was discussed here. A discussion arose on the Bank of Ireland Bill. Speaking on that Bill on 10th April, 1929, I said:
Paragraph (p) deals with bullion. Bullion of course, and the freedom to operate in bullion, are essential to the banks, but it is a privilege or a power that should be carefully watched. At the moment I do not know how we stand as regards bullion and reserves of bullion. If, as I presume, our reserves, including bullion, are in the hands of English bankers in the Bank of England or elsewhere, I submit that the matter requires very grave consideration. After all, a crisis might develop in England, and the only security we have is to have reserves of bullion under our own control. That may be the case, but I do not think it is, I think that any powers that are granted to bankers in Ireland in regard to the control of bullion ought to be exercised under the direct guidance of the Minister for Finance of the time, and that the country ought to concentrate upon having control of its own reserves in that form.
That was submitted on the accepted basis of the time and since that we were operating on a gold basis. I would like to refer the House to the issue which was raised in the debate on the Irish bank rates. That matter was discussed here on 28th May, 1930, and the following is portion of a statement made on that day: "Even those who only take a layman's interest in questions of finance and trade know that at the moment bankers' systems are very much under suspicion, not only in Ireland but all over the world——"
By whom were these statements made?
They were made in this House.
I think probably by Senator Connolly.
Am I in order in quoting them?
Certainly. Even though they were not made by the Senator he would still be in order in quoting them.
The quotation continues: "I venture to say that in this country we are not going to have anything like economic, industrial or agricultural development, or anything tending towards the progress and prosperity of the ordinary people, of the ordinary business and producing community, until we get right down to what is the fundamental economic evil at the present time, namely, the stranglehold that bankers have got on industry and production." Now certain distinguished Senators, who are also bankers, disputed that statement, but if Senators will remember Dr. Addison, speaking with regard to the downfall of the Labour Government recently in England, accused the bankers of holding a pistol at the head of the Government. I think it is generally admitted by all people who are not wilfully blind to the situation that Governments are ceasing to have real power and that the financial interests are controlling Governments. At the same period we raised another issue here. I said then: "I think we ought to know what money is to the credit of the depositors and what is done with it—how much is operating here, and that we ought to have the fullest possible details. We do not want the bankers to disclose anything secret as regards individual transactions. We want a segregation of the accounts in such form that they will be an intelligent guide for the Minister for Finance and people generally as to where that money is and how it is being used." I quote that statement for a deliberate purpose, because later on I shall be raising a question as to the reserves and deposits held by the banks, what they have done with them and how they stand to-day in relative world values. Later, on the 26th November, 1930, we discussed here the Currency Amendment Bill. The discussion to some extent centred around the question of the gold basis. I think it will be illuminating if I give the views expressed from these benches and the views that were expressed on behalf of the Ministry. I said:
I should like to be advised, since the Minister is here, as to the real position as regards our security. Are we on a gold basis, or are we not? If we are on a gold basis, is there any security unless we have gold bullion or gold coin available within our own reserves? What security have we that the Note Issue will always be what it is, as far as currency in Great Britain is concerned, any more than we have as regards the position of the dollar standard? But if we are on a gold basis, what is the purpose of being on that basis when, as a matter of fact, we have no gold bullion or gold reserves in this country? I am not in favour of working on a gold basis. My belief is that the gold basis has outlived its usefulness. We are only pretending we have any gold security as regards note value if we have not a gold reserve within our own territory. Let us make no mistake about that. I should like to know, now that the Minister is here, why we have no gold reserve; why we are dependent entirely on the gold reserves kept by the Bank of England. That is the position that the Currency Commission occupies at present. I do not see any objection to going to the United States for our reserve of credit any more than going to Great Britain. I think they are both in exactly the same position. That position is reasonably good to-day, in spite of all the adverse factors that are working out in what one might call the higher economic thought. But that position may not be all right for an indefinite period. Another point arises on that; it is an economic point. There seems to be an instinctive dislike to trusting to your own securities within your own country, though these securities might, in the last analysis, be quite as good as British Government or United States securities.
Later on I stated:
I should like to know from the Minister where exactly we stand. Are we on a gold basis or are we not? If we are working on a gold basis, I hold that we should have a gold reserve here and the word or bond of no other Government should have effect on our operation. A crisis may arise. Financial crises will arise.
What will the Minister for Finance say to that to-day? What did he say then? I am interested to know what he will say to-day. On that occasion the Minister for Finance, in reply, said:—
Personally, I think it would be most uneconomic for us to have gold in cellars here. There is nothing at all to be said for that, especially in the case of smaller countries which can get sufficient interest bearing Government securities of larger and financially stable countries. One of the great countries could not get the amount of securities that it would require, but a country like the Saorstát can get the required securities. They are as good for every purpose as gold, and interest is being earned on them. Gold would be lying idle in the cellars, and money would be spent keeping and guarding it. Generally I think that—I do not want to go into the larger question of the gold standard—as long as we have a gold exchange standard for all practical purposes in our circumstances, it is the same thing as a gold standard. It would be quite easy to get a great quantity of gold back here, gold value for about ten millions, or as much as we had before, but it would be a useless proceeding. Anybody with British securities can sell them and get gold. The gold could be kept here, but soldiers would have to be employed to guard it and it would not be of much use.
Now, that is an unpleasant job over, but I think we owe it to ourselves to remember the attitude of this House and of the Minister for Finance when certain suggestions, such as I have quoted, were made here. I want to know if the Seanad is now satisfied that the all-wise Minister knew what he was talking about then and if he knows what he is going to do to-day to meet the situation created by the policy then deliberately adopted. At the present time we read a lot in various economic journals. It is wearisome to read the stuff that very often is published by responsible people in this country. We are told that we have gone off the gold standard. I would like the Minister for Finance once and for all to tell us where we have gone, and what we have gone on to. We, on these benches, have been sneered at in this House—for constantly talking rubbish about banks and things that we knew nothing about. We only know a little about them, but what we do know is that the best minds and the best brains in the country ought to have been working on this for the last three years.
I am not going to say that we can solve the problem. What I do say is that no attention has been paid to it, and that the country is as it is to-day because of that. As I said earlier, we are dealing here in this House with the real problem that concerns the country while at the moment the smoke screen is being carried on in the other House. I do not want to labour that side of the question more than is necessary. The problem now is that we are in the soup. No matter what Party we belong to the thing for all of us is to try and see how we can face up to this. First of all, the question is: Can we get out of it? I do not think that we can. We can nurse a sick subject out of a delicate dilemma. That, I think, is the most we can do at present. That is why I have deliberately asked the House to recommend that a Joint Committee be set up, a Committee that will honestly try, from the Irish point of view, to face up to our difficulties and see how we can get out of them, how we can meet the problems that face us with as little loss as possible and adjust our position to our needs.
There is one thing in all fairness to the Minister I would like to mention. The last quotation that I gave on the question of the gold basis arose in the debate on the Currency Amendment Bill. That Bill, whilst somewhat belated, did give power to the Government and to the Currency Commission to alter its basis of investment. I would certainly welcome a statement from the Minister that the powers granted under that amending Bill were availed of, and that a considerable proportion of the securities are non-British and are not attached to the pound sterling. I hope the Minister will have that news for us because the amending Act did give the Government power to do what I have stated. These matters, in so far as they affect the Minister and the Currency Commission, are a mere detail in the whole economy of the country. There is a far more important phase of the issue, and that is the position as regards the investments made on behalf of Irish depositors—the investments made with the reserved savings, securities and deposits in the Irish banks. It has been raised by the chief Treasury official here in regard to the lack of information that is given in the bank balance-sheets.
In view of the crisis that is upon us, and in view of the terrible losses in which Irish creditors may be involved, I think it is absolutely essential that the Committee should have power to investigate what these investments are, what the depreciation has been and how the depositors are going to be safeguarded, if it is possible to safeguard them at all. We know that the operations of bankers in this country are carried on entirely on the basis of the Bank of England pound sterling and that they have no idea of other investments. In other words, they are hide-bound in the tradition of carrying on on the old orthodox basis. Now, I am not accusing any of the bankers of personal bad faith, but I do accuse them of this: that they have got into the rut of this tradition and have refused to budge out of it, even when it was in their own interests and the interests of their clients to do so. I submit that their attitude and their methods of carrying out their functions have left us subject to the effects of what I may call the new Norman Conquest of England, and that we are going to suffer severely as a result of that.
There is a question that I want to ask banker Senators here, or perhaps it would be more properly addressed to the Minister for Finance. Shortly after the crisis occurred in England it was published in the Press that the bank rate in this country would be left unchanged. That decision was altered a few days later. Apparently the decision was come to after a considerable consultation between the bankers and the Minister, or the Minister's Department. But then it appears as if some other influence got to work. That arrangement was upset and the bank rate was increased. At the time that the Bank of Ireland Bill was under discussion in this House I referred to the fact that it was outside alien influences that operated our banking machine here.
We have an example—at least I believe we have—of that in this matter. I have reasonably good authority for stating that the bankers of the Free State had willingly agreed to keep the bank rate at what it was, but that an external bank, that is, a bank outside the Twenty-six Counties, intervened and dictated what the bank rate here should be and what line of policy should be pursued. I believe it was a bank with its headquarters in Belfast as a branch institution of one of the big five that did that. Its action is symptomatic of what we pay for our loyalty, affection and allegiance in the matter of external association to the internal operations of the British financial machine in this country. That action justifies the fear that we have expressed consistently in this House with regard to the control of our financial machine. From what has occurred, it is quite obvious that bankers here, even the biggest of them, or even the Minister for Finance, were not able to withstand the attitude of this external bank, and it is the attitude of that bank that prevails in this country to-day. In it we have another example of the new Norman Conquest.
One may be pardoned for feeling a certain amount of despair when one reads some of the statements made throughout this country. I have here a statement made by a member of the Executive Council at Cong. The Minister for Justice, Mr. Fitzgerald-Kenney, speaking there, said:—
He would ask them to bear in mind when talking about the deflation of the pound that that meant that the pound had two values, one outside the country and another inside the country. Inside the country there was no need for retail prices to rise, and for some time at any rate there was no reason to anticipate that there would be any real advance in the retail prices of any commodities which they had to buy. On the other hand, this alteration in the value of the pound would be of very considerable service to them in selling their produce in the English market. It would be an advantage to them against all countries that were now on the gold standard.
That must be the newest economics yet. I do not know whether Mr. Fitzgerald-Kenney ever heard of such a thing as purchasing power. Does he think that it is only commodities that are sold from Ireland to England that are going to go up in price? Does he think that the de-valuated pound is going to buy as much English produce in Ireland as it did before? He cannot have it both ways. He overlooks the important factor that we have an adverse trade balance in our trading with England, and to the extent of that adverse trade balance just so much do we lose in the de-valuated pound. It is another example of the mentality that we get from the Minister for Justice. He also said on that occasion:
It was said that instead of having securities for something close on seven million pounds for their currency that they should have put it in gold. To his mind such a suggestion was very, very foolish indeed. If they had put seven million pounds in gold and had it lying idle earning no interest they would have lost 5 per cent. on close on seven million pounds for nearly four years.
I doubt if these securities earn 5 per cent. If we take the position that the pound is at 15s. 9d. to-day we find that we will lose £1,487,500, but what is far more important is that the securities held by the banks on that basis are not to-day negotiable at anything like that price. There is a risk of further deflation. Unquestionably a movement of any such amount of securities would influence the pound sterling very severely. I leave the Minister for Justice at that. Whatever he may know about public safety he certainly knows very little about public security in financial matters.
To come back to the question of the banks' investments and the pound sterling. If we assume that these banks have exported capital by in vestment or otherwise, cash in hands to the Bank of England and so on, and that we have upwards of £150,000,000 —I do not know what the figure is— with the pound hovering about 16s. to-day, we must reckon that our depositors have lost already about £30,000,000. If the pound goes to 15s. then they will have lost 37½ millions. We have no security that the pound will be stabilised at any figure. It may be stabilised at 10s. I do not know, but certainly from all the visible signs that reflect the economic position the situation does not look good.
There is only one satisfactory thing about this and it is that at least it may awaken members of the Seanad and of the public to the realities of the situation: that they may get busy and take an interest in such things. So far I have only dealt with the problem on the accepted orthodox theory. I do not propose to do much else to-day. I have my own views with regard to various aspects of it, but I prefer to ask the Seanad to agree that a representative committee of both Houses should be set up to go into the problem and see how it should be handled. My own personal conviction is that the whole basis of credit is wrong. The bankers' system has created anomalies that have had disastrous results for Governments and peoples. Governments and peoples are very much at its mercy. The factors underlying it have resulted in a complete lack of harmony between credit, production and consumption.
It may be argued that none of the members of this or of the other House are competent to deal with this. I do not know, but what I do know is that the situation is not going to be solved simply by sitting down and folding your arms, accepting the thing as if it were immutable and saying that it could not be helped. I say that we are going to have to face more difficulties than we know at the present time. These difficulties are going to be economic and will have their reactions in politics and in political activity. On many occasions in this House I have pleaded that we here should try and face this problem from the point of view of Christian humanity. Our problems are difficult. Each country has its own particular problems, but I hold that we in this country have a reasonable chance of solving the problems within our own country. I could give various reasons in support of that, but one is the undeveloped state of the country. More than two years ago I stated that paradoxical as it may seem our poverty is our greatest asset. Anyone who looks at the position in the world to-day, the financial and commercial position and the methods of production and distribution, will realise that we have a chance of creating something like a decent Christian organism within the country and that very little will need to be destroyed to bring that about. That is the great advantage that we possess over other peoples. We have a certain amount of unemployment, much more than was admitted until the last census returns were published. I hold that even the figures given in these latest returns do not represent the total of unemployment.
The question for the Seanad and for the Oireachtas is whether we are going to face up to the problem that is before us or whether we are going to sit down and blindly let things drag on until other forces that some will condemn and others approve of will take steps to set up decent ordered Government. Senators come here and have to listen to abuse and attacks of all sorts. Are they responsible representatives of the people or are they not? Are they going to take steps to find out what the situation is and how it can be met before it is too late? I say that the social problem begins and ends with the economic problem here and that it will have its political reactions irrespective of what any one may say unless we deal with it. For that reason I make this appeal to the Seanad to vote for this motion, to have a joint Committee of the Oireachtas set up which will investigate the whole problem. If we are not competent to set up a Committee to deal with that then we are not competent to sit here as governors of the country.
I second the motion.
As a layman in financial matters, I should like to ask Senator Connolly a question. The banks may or may not be as black as they are painted, but suppose we had our own gold standard here, when the crash came in England, what would Senator Connolly do, realising that the Argentine had no gold standard and that at the moment of the crash Denmark went off the gold standard? Would the Senator insist on England sending us £1 for every sixteen shillings' worth of beef or bacon that we sent over, while they could get twenty shillings' worth of beef from the Argentine for their £1, or twenty shillings' worth of bacon, eggs or butter from Denmark for their £1?
I listened with great interest to what Senator Connolly said, because I agree with him that this constitutes a very vital, a very serious and a very far-reaching issue. One thing disappointed me very much — the absence of any suggestion or line of thought from Senator Connolly which would lead to a better or sounder system than that which at present prevails. He asks that a Committee of both Houses should be set up while, in his speech, nothing was so obvious as his utter disbelief in the capacity of the two Houses to arrive at a sane and reliable judgment on this subject. I do not urge this criticism from a Party point of view. I am completely non-Party in this matter. I do not know what the attitude of the Government is on this motion. I have not discussed it with any of my colleagues here or with a single member of the Government. As I looked for some intelligent direction from the proposer of the motion, so I look to the Minister for some intelligent direction when he comes to deal with this motion. There is no question of the seriousness of the matter.
Senator Connolly brings before us a specific motion, his object being to construct a Committee to deal with this problem. Our duty is to consider whether the construction of that Committee will lead us anywhere. If Senator Connolly is to be regarded as a guide in the matter, the setting up of this Committee is going to lead us nowhere. In the opening portion of his speech, he seemed to suggest that the other House was only capable of discussing red herrings, and he seemed to have a very poor idea of anything that might emanate from members of this House. That is the situation. If that is the material that is to comprise the Senator's tribunal, what is the use of proceeding further with the motion? I shall be much disinclined to support Senator Connolly unless some of those who will probably speak in favour of this motion adduce much sounder reasons for this proposal and bring forward much more cogent evidence to convince me that the members of the Oireachtas are more competent to handle questions such as this than Senator Connolly thinks they are. If I were to follow Senator Connolly's arguments and arrive at a conclusion based upon them, I should have to say that it would be absolutely useless to set up such a Committee as is proposed, because the members who would constitute it would be incompetent to deal with the matter. However, that is not my own opinion as to the capacity of the members of the Oireachtas. There are in this House members competent to deal with the weightiest matters that affect the nation. Some of those who, from their vocations in life, should stand out as portion of the personnel of this Committee, would be the very persons whose presence on the Committee would be objected to by Senator Connolly.
Not at all.
The opposite would be the case.
I am glad that that is disclaimed. I am sorry that a disclaimer was necessary. The tenor of the Senator's remarks suggested that the impression I got was the impression he wished to convey. I am glad that he thinks that there are representative citizens in this Assembly —citizens whose function in ordinary life is to deal with matters of this kind—who are competent to give a wise and sound judgment on the issue he has raised. I am glad to have that opinion recorded by Senator Connolly. But what is the object of this motion? Is it not an attempt to create an atmosphere of panic in the country and to suggest that we are up against a crisis which will mean imminent destruction if we do not grasp at any kind of solution? The whole tenor of the Senator's speech gave that impression. He said, I think, that the only thing we could do was to nurse a sickly subject out of a dangerous dilemma. That gives a very melancholy impression of the situation.
I am glad you are satisfied with it.
I beg to differ from Senator Connolly. I think the situation is not one that calls for panic solution. I think there are no grounds whatever for an iota of panic. That is my opinion, despite our difficulties, and they are many. These difficulties have not been diminished by the Party to which Senator Connolly is attached. I do not want to say anything of those difficulties lest I should give a tinge of Party politics to this discussion. Senators may smile if they like, but in spite of the difficulties we have had to face, the economic position of this State is outstandingly sound. Outside the country, the Free State is regarded as a sound field of investment. It is surprisingly so when compared with many other countries. Were it not for these persistent, periodic disturbances that scare credit, I venture to say that in a very short time this field of investment would be regarded as the soundest in the world. I am not under any great obligations to the banking system. My bank balance has never been very great. I only wish it were.
Is the speaker joking?
I do not understand the relevancy of Senator Colonel Moore's remarks. If we are to face this question of national finance with a desire to evolve a better system and to secure the co-operation of those institutions responsible for the present system, I think it is a fatal mistake to approach those institutions in a spirit of hostility or to regard them as something that must be brushed aside before we can hope to make any progress. One would imagine that this banking system had been planted in the State by alien and hostile forces instead of being, as it is, the outgrowth of tradition, varied to meet the requirements of generations; it is more the outcome of circumstances than the direct creation of any set of individuals.
It is, of course, a direct plantation here. Does Senator Milroy suggest that it grew out of the conditions here?
I suggest that the banking system, as we know it, is not confined to Britain or to the Free State, that it is a world-wide system. Due to our geographical association and our long, historic connection with Britain, the British banking influence has been a powerful influence here, but I am speaking not of banking influence but of the banking system, which has grown up and adapted itself to the changing needs of generations in every country. It may be—I think it is the case—that the present basis of that system will have to be changed.
Do you admit that?
I am singularly ignorant on that point, but I think that before you discard one system you should have another prepared to take its place. The fundamental difficulty was not dealt with by Senator Connolly. It is not so much a question of a gold or sterling basis but the more vital question of the volume of currency in circulation and the grounds on which its circulation is regulated. That is not the same as the question of the gold standard, although Senator Connolly seems to think it is. I should like to indicate by way of simile what I mean. Take a community of ten persons. They produce all that is necessary for their requirements. The tokens that they exchange amongst themselves amount, say, to £5 per head per week. There would be, on that basis, £50 in circulation per week amongst that little community. The amount of that currency is regulated simply by the requirements of the community and not by something lying in a cellar. If that amount of currency is increased or decreased according to population, then that community will be able to purchase and consume its produce, but let us suppose that that community appoints one of its members to regulate the amount of the currency which will be circulated. This person gets a brain-wave and decides that the currency should be regulated not by what the community requires but by the amount of a peculiar metal. He lays down that in buying from and selling to some other community the amount of currency in this little community should be in accordance with the amount of this particular metal in stock. If that amount allows only a circulation of, say, £40, instead of the £50 previously in circulation, what is going to happen? There will be a surplus of some commodity on one side and on the other a certain section of that community will starve or, at all events, will not be able to keep up the former standard of living.
It is not the gold standard that is the factor, though it is a sort of complexity. It has ceased to be the factor, in form at all events, in Great Britain, and still the question of the amount of currency in circulation remains. No new criterion has been brought forward here upon which to establish the amount of currency in circulation. If you are going to arrive at the system at which Senator Connolly hopes to arrive—a system which will be influenced by the Christian view—some plan will have to be devised by which the amount of currency in circulation will be adequate to the requirements of the community.
I listened very carefully to ascertain whether Senator Connolly would bring any view of that nature to bear upon the subject. He gave certain lines of reference, but he made no attempt to deal with the matter to which I have drawn attention. I am sorry he made such a poor case for his resolution, because I looked forward with real interest to his statement. I have great respect for Senator Connolly's judgment in these matters, and I am sorry that he was such a disappointment in this case.
The speech of Senator Milroy was a very good argument in favour of Senator Connolly's motion, about which I feel very strongly and which I am going to support. I belong to a profession which is proverbially ignorant of financial matters. The fog of finance is much greater at times than the fog of war. It is not the pound or the position of the pound that we have to examine. It is the whole financial situation of the world. I feel that a strong Joint Committee, which would inquire into this question, would result in a feeling of security and confidence throughout the country.
After Senator Milroy's speech, I think it is necessary to ask Senators to read the motion on the Paper. They will note that it does not purport to provide a policy; it suggests inquiry into the desirability of a change of policy. In this connection, I should like to draw the attention of the House to the report of the Banking Commission. Senator Jameson, I am sure, will confirm what I am going to say. There was, I think, never any intention on the part of the Banking Commission that what they recommended should continue as the permanent state of affairs. Right through the report of the Commission the inviolability of sterling is assumed. Sterling was the immovable rock and, because of its immobility, the Commission recommended that Irish currency should be attached to sterling. Every paragraph of the report of the Banking Commission indicates that "for the present" a certain thing should happen and that "for the present" another thing should not happen. It is indicated, time and again in the report, that the recommendations made, which were ultimately adopted, were tentative and temporary and subject to re-examination within a reasonably short period. In fact, one of the members of the Commission, in a minority report, pointed out that, after a period of five years of smooth working, further inquiries should be made on the question of setting up a central bank. Five years have not yet elapsed, but surely the circumstances of the last two or three months make it reasonable that we should not wait for five years before further inquiry is made in accorddance with that particular member's recommendation. Take the majority report of the Commission (paragraph 5). It states: "To put our first and fundamental conclusion into plainer language, we may say that, in our opinion, whatever is done here should be done in such a way as to avoid, for the present, any serious breach with the currency, banking and trading system of Great Britain." Senators will notice the words "for the present." Paragraph 22, headed "The Irish Pound," states: "Ultimately, when the time is propitious and when the gold standard has been definitely restored in Great Britain, the actual coinage of an Irish pound sterling... is to be desired." Of course, the gold standard may have been restored in a kind of way in Great Britain, but it is now off. The indication there was that at some time in the near future Irish currency should be convertible into gold. Paragraph 39 states: "The question may, therefore, be asked whether the Saorstát ought not, in the reorganisation of its banking and currency system, to provide for the creation of a strong central banking institution.... The Commission has decided against recommending the establishment of any such organisation at the present moment, and for a variety of reasons."
I quote those extracts simply to show that the system that was adopted, following the recommendations of the Banking Commission, was not, in the minds of the Commission, intended to be permanent and inviolable. The Government indicated the possibility that at some date in the near future these recommendations would be re-reconsidered. It seems to me that Senator Connolly, in asking the House to approve this resolution, is making a request which is in conformity with the generally tentative note struck by the Banking Commission. Surely there is justification for saying that circumstances have so changed as to justify a re-inquiry as to whether any alteration in the system that was adopted is desirable? To do that would be quite in accord with the report of the Banking Commission. Senator Connolly may have his own views about banking and currency, but it seems to me that he deliberately and carefully avoided giving voice to those views because he wanted not to prejudice the decisions of the Committee which he proposes and to wait until information was gathered. I think that that is a perfectly sound and reasonable view for the Senator to take.
I, like Senator Milroy, confess to immense ignorance on this class of subject. I know enough about it to realise how little I do know. I have been reading some of the official documents published in recent times in regard to British banking, and also the Irish Banking Commission reports, and it seems to me that the people of the country ought to know more than is commonly known about the basis and practice of banking here. How far the present system should be altered, if it can be altered, is a matter which ought to be considered not from the point of view of the banker so much as from the point of view of the public—the working class public, the trading public and the agricultural public.
In my reading, for instance, I have been led to question the position of the banks in this country, which are fairly comparable with the position of the banks in England. There has been a good deal of talk, and I suppose there will be a good deal more talk about profiteering, and from my reading I have come to wonder whether the greatest profiteers of all are not the bankers. It seems to me that there is a greater public grievance against the banking system on the score of profiteering than there is against the private traders or any ordinary commercial institutions. Perhaps those who can speak with knowledge of the practice of banking will disillusion me on the matter, but I am led to this conclusion, if I may call it so, although it is very tentative, by reading the Banking Commission's Report and the report on the practice of banking that is made in the Macmillan Report on Finance and Industry. One need not quote them in full because the Irish Banking Commission's Report fairly well confirms the report of the Macmillan Commission on this point.
They explain for instance that the depositors in the banks, that is the actual customers who deposit their own money, actually new cash, may deposit, say, £1,000, and on the strength of long practice and long experience the banks are confident that not more than 10 or 11 per cent. of that will be called for at the same time. Therefore they can play with 90 per cent., that is to say they can hand out by way of loans, advances, overdrafts, etc., nine times that which they have of other people's money to keep in reserve. In other words they will pay, say 3 per cent. to the trader or farmer or householder who may deposit money, say £100, and they can let out nine or ten times that at 5 or 6 or 7 per cent. Of course there are drawbacks, there are risks and all the rest of it, but that is the banker's side of the case. So far as the public are concerned there is a pretty considerable margin for profiteering in the practice as I see it outlined and described in these Official Reports.
Paragraph 34 of the Banking Commission Report describes the function of deposits. It explains how the borrower "goes to the bank with a request for accommodation and succeeds in discounting his own note there. This note may be secured or unsecured —whether the one or the other is not now in question. It is, at all events, the vehicle upon which the bank moves to extend credit. Suppose that the note is for £1,000 sterling advanced at ninety days, subject to an interest charge of 6 per cent. per annum. What is known as the proceeds of this loan will be £1,000 sterling, less the discount, or about £985 sterling, and that sum will usually be placed to the credit of the borrower subject to drawings by cheque. This is a deposit of the modern variety. It does not represent anything deposited or left with the bank, unless the customer's own discounted note, which serves as the basis of the loan, is to be so regarded. An ‘overdraft' would have given rise to the ‘deposit' in precisely the same way."
The Macmillan Report describes the same process with a further conclusion (par. 74) that "the banks can carry on the process of lending, or purchasing investments, until such time as the credits created or investments purchased represent nine times the amount of the original deposit of £1,000 in cash." Here the exact proportion differs from what I believe is English banking practice. Even on that particular point there is a very good reason for an inquiry of such a nature as would go to illuminate these things for the public information, particularly these deposits which are merely book-keeping items representing money that has already been spent on the securities which are held against the deposits, also how far those have relation to the amount of currency in circulation. I confess that I have no very definite opinions or views upon these questions but I am satisfied that there is very good reason for inquiry, for the public examination of witnesses and for a report of a body of people who are not acting solely as bankers dealing with the technicalities of banking.
I think a commission which has only to deal with currency and banking from the point of view of the technique of the science is one thing, but some body is also required to give information to the public as to these banking institutions. If it was only to reassure the public that they are getting a fair deal from the banking system it would be very well worth while. I am not entirely satisfied that a Committee of both Houses is enough. I think a commission of the kind indicated would probably be better if it were open to have included in it other members of the House, but that is a minor matter. I think the report of the Banking Commission itself and the development of affairs in recent times make it very reasonable that there should be a new inquiry into the questions that are indicated in the motion of Senator Connolly, and that the House ought to support the motion.
I agree with Senator Milroy in welcoming the motion at this particular time when so many other subjects are being discussed with heat, and will say that Senator Connolly has brought forward a motion of the greatest importance to-day. I welcome his motion and his statement on behalf of the Party of which he is an adornment, that this country is fiscally absolutely independent, that it can of its own free will decide the best financial policy for itself. That I believe to be absolutely true in so far as it is politically possible, and I am glad to have it emphasised in this House. Having stated that I regard that we are absolutely independent politically, I am going to state that financially I do not believe we are independent, and the reason, to my mind, is, not as was stated by Senator Connolly, because of the decision of the Currency Commission to tie the Irish pound to the pound sterling, but because of the fact that 90 per cent. of our customers are in Great Britain. The real reason I rose to-day is not because I do not want to go into many of the issues involved. I do not want to show my ignorance; I do not want to show my mind is not fully informed on many things.
But I want to point out that one of the greatest and most important factors, and one which we cannot ignore, is that our trade is over 90 per cent. with Great Britain, and so long as that is a fact, I suggest that no particular policy that would be adopted—that no Party in power could adopt a policy which would leave us high and dry of the financial crisis in the sister country. Although politically we have absolute power, in the financial sense we do not have it because of the close commercial associations. If this state of things is to be changed at all it can only be changed after a long period when our trade can be built up in Europe and elsewhere, but I see no immediate prospect of that eventuality. Reference was made to Denmark, and the fact that that country went off the gold standard. I happened to be on a Dutch ship and was talking to a Dane. I was on that ship when England went off the gold standard and it was very interesting, listening to the views of people of different nations. I was interested in my Danish friend, and he stated quite frankly that the volume of trade done by his country with Great Britain was so great that they were not financially independent of England. Senator Johnson said that the Banking Commission did not make a report for all time, and I am sure we will agree. He stated that the Irish pound was tied to sterling because of their absolute belief in it. I was not a member of that Commission, but Senator Jameson is here and he was.
I have not read the Commission's Report for some years, but my recollection is that there is an emphasis on the trade between the two countries and the great inconvenience that would be caused by a difference in the two currencies. I think Senator Staines really touched the real difficulty in this matter. Supposing, for instance, that it had been possible that our policy had been different; supposing we had been on a different gold basis, on our own gold here, how long could we have retained it? I do not know the answer to that question, but I do suggest that it would have been found that our trade was almost entirely with Great Britain. No matter what our political views may be, and no matter how we express them, it would be absolutely foolish to ignore that fact. The reason I do not propose to vote for the motion is not because I want to suggest that this is not an important question. I have no idea what the mind of the Minister is in the matter, nor have I any idea as to the mind of the bankers, but I think it is obvious that this question is giving them considerable concern, and will for some time be a matter of continuous inquiry and concern. The Senator's proposal is that we should in fact substitute for the present Currency Commission a Committee of the two Houses. I honestly believe that this is not the best and wisest course. Ultimately such policy must be decided by these Houses as to what the effect of a change in currency would amount to. First of all, you have got to get a Committee or Commission—on the one hand, a certain number of experts, bankers or businessmen who have given their attention to this problem, and who would consider it apart from any Party issues. It might be a splendid thing, and no one would welcome it more than I would if we reached a stage when a Committee of the two Houses could discuss a problem like this with no regard to party issues or prejudices, but I doubt if anyone thinks we can get a committee of members with individual views.
Senator Colonel Moore wants to know why not. I do not think putting bankers on the Committee would help it. I do not suggest that the bankers would go into it with other than a non-party view. I am opposing the resolution because I believe that that is not the way it can be best tackled, and if you get two or three reports from a committee of this kind you would only create uncertainty and a certain amount of doubt in the country, and you would not get any further.
The question at issue has occupied the minds of a great many people and has occupied the minds of the Senators since this motion was tabled. I am against the motion and not in favour of it. It is entirely unuseful, and I will give my reasons why the motion is not acceptable to me. It is a motion amounting to lack of confidence in the ability of the Minister for Finance and the Currency Commission to protect the economic stability of the State. Senator Connolly has disclaimed any deep knowledge of high finance; nevertheless, he makes it quite clear that he considers the Minister for Finance and the Currency Commissioners and the bankers as a class to be on the wrong road and likely to lead the country over the cliff or, at all events, he alleges that they are not taking the steps which they ought to take—in short, that he has no confidence in them.
For my part I do know, or at all events I assume, that the Minister for Finance and the Currency Commissioners have got a very great deal of knowledge, and I also know that they do their work in the limelight. Now a Committee of the two Houses would first have to educate themselves to deal with a subject of this kind. If you had a Committee representative of both Houses in the general sense of the word, it would involve people who would not be experts at all. They would first have to educate themselves before they would be able to deal with the problem. At the end of the time the question would be: Would the Committee be better than the Minister for Finance and the Currency Commission? I therefore think that the Senator has no reason to exhibit such a lack of confidence in those persons. If the Seanad passes this motion, I think it would look as if this House had grave doubts that the national interests were not being adequately looked after. It would tend to create a general lack of confidence, and I would personally consider it a great waste of time. It would tend to do harm rather than good.
I do not know whether I ought to say anything at all because I was on the Banking Commission and I happen to belong to the profession of banking which Senator Connolly considers disgracefully managed at the present time. Listening to the whole debate, I have been trying hard to see what the difficulties of this motion had behind it. Senator Connolly rather bothered me because I could not make out whether he wanted the Free State to be on the gold standard or not. He mentioned that he believed we would be better if we had never got on the gold standard. Now when he tells us that the Free State should have gold in its coffers to be able to say that we were going to remain on the gold standard for our pound when Great Britain went off it——
I did not say that. I do think that when we claimed to be on the gold standard there was only one way of having it, and that was to have gold. Let me set the mind of the Senator at rest at once. I stated here that I was not a believer in the gold standard, and everything I have seen since has justified this belief. You had no gold when you pretended to be on a gold basis.
The Senator is really explaining his views. He can hardly have it both ways.
I am not trying to have it both ways.
The Senator's view is that we are off the gold standard because we have no gold. If we are following Great Britain by going off the gold standard, he says we are doing right. The question of whether we are to remain on the gold standard is really not what the Currency Commission said at all. What they did say was that the countries were so tied together that we should be tied to sterling, and that we dare not have a rate of exchange between Great Britain and the Free State. At present we are having many difficulties with every country that is staying on the gold standard. If the Free State were on the gold standard to-day, and Great Britain had left the gold standard, the trade between the two countries would be in such a position that we would lose an immense amount of money. If anyone wanted at the present moment to send money to America or Canada they would have to find what the rate of exchange was in either country, and if that applied to the whole of the trade between Great Britain and Ireland anyone could see that if we had not a parity of exchange between Great Britain and Ireland our business transactions could hardly be carried out at all, and it would mean a tax on the country that would be perfectly unbearable. That is the real reason why we said it is necessary that our pound should be based on the pound sterling. As regards a lot of remarks that Senator Connolly made, it showed undoubtedly he had no confidence in our Currency Commission, our Finance Minister, or our bankers. You know it is quite easy to get up and abuse people and things, but I doubt very much if the ordinary population of the Free State entertain these views. I have been banking in this country for over forty years, and moving about amongst the people, and have never found that they consider we are a rapacious lot of people or profiteers, as one Senator thinks we are. We attend to our customers' requirements and generally try to meet them. I think the ordinary belief is that we are ordinary Irishmen who manage our affairs to the best of our ability and do the best we can. As to the appointment of committees recommended under this resolution, and that they should be brought into being at the present time, when the whole financial system of the world is in a state of liquidity——
In liquidity! Chaos-bankers' chaos.
I am applying liquidity in a sense that we do not know where it is going to be.
That is quite true.
I do say that to appoint any member in this House to consider with Senator Sir William Hickie the financial problems of the world, at this time is about the worst possible thing. I assure you that the people who are connected with finance at the present moment are studying and watching the problem and have the most difficult situations to solve day by day, and to think any committee of our would consider what is the best thing to be done at the moment seems to be absolutely impossible. Another thing is that part of the resolution deals with the question of depositors. Suppose a Committee of both Houses make a pronouncement that, in the opinion of a majority of the House, there is such a condition of affairs in the banking world that the depositors are not safe and that it is necessary for a Committee of the two Houses to look into the securities behind them, and they are going to protect the interests of the depositors of Ireland. If you once get that proposition put before the country, and if the depositors really think there is no assurance that their money is safe you will have no difficulty in disposing of the banking problem.
Your bankers will cease to be bankers and all their customers will cease to get accommodation, overdrafts, or anything else for all purposes from the bank, and if the depositors once get confirmation of the remarks that we heard to-day to the effect that there is a doubt that the bankers are not trustworthy, then you are going to have a problem that will wreck the Free State without any delay whatever. Further, at the present moment, there is such a state of affairs in the financial world that no set of men can work on any sound conclusion as to what is right to be done. It would not be judicious at the moment and would serve no very great purpose to appoint a Committee of both Houses.
The Currency Commission always recognised that it was necessary to make enquiries from time to time. I have not the slightest doubt about that. The important thing is to choose your time. There have been no arguments put forward by those who supported this motion which would be calculated to impress one. No suggestions have been made with a view to improving our position. Senator Connolly told us that we were in the soup and that we had reached the depths of degradation—in fact, that we had lost everything.
Quote accurately, please.
That is the impression the Senator conveyed to my mind.
If the Senator wishes to quote he should quote accurately.
That is what I understood the Senator to say.
I certainly said that we were in the soup, but the Senator's other statements are quite wrong.
Senator Connolly's remark to the effect that we are in the soup means that we are in a very bad way and that our condition is indeed serious.
And so we are in a bad way. We are on the slippery slope.
The Senator believes that we are in a bad condition, but he does not produce any arguments to show that we are in a bad condition. He does not say what sort of soup we are in either. Even if we are in the soup, Senator Connolly has offered no suggestion as to how we are to get out of it. Without some useful suggestion as to how we can better our position, I think the Seanad would be very wrong to adopt a resolution like this. As Senator Bagwell has put it, the motion amounts to an expression of no faith in our Minister for Finance who has conducted our financial affairs for several years in a manner that has brought the credit of the Free State, so to speak, up to the top of the tree. As far as the Currency Commission is concerned, I may say that I have never met a more sensible body of men. I know they are working day by day and they are watching affairs very closely. Of course they could not control the condition of things in England.
That is just it.
If in this country we had attempted to do anything other than what we did do we would have been wrong and we would have done a great injury to the Free State. These are the things that occurred to me as reasons why this is an inopportune and a bad time to do what Senator Connolly asks the House to do.
Ever since I came into the Seanad Senator Jameson has always considered it inopportune to do anything at all other than exactly what the Minister likes us to do. He always tells us that the time is inopportune and we should wait for some other time. The reason I would like to have this motion adopted is because I disagree with the Minister's policy of keeping everything in the dark and doing things behind people's backs. I disagree with the policy of handing over money to Britain without telling anybody; keeping the whole thing secret for months, and then coming forward to tell us that it has been done and that we can do no more. I think all these things ought to be made known to the public.
It is desirable to have some Committee set up. The public knows nothing about what is going on, and it is only right that they should be informed. It is only right that they should be told what remedies can be introduced, if any. Senator Jameson objects to the remark about being in the soup. The Senator must admit that everybody in England and America admits that they, too, are in the soup. He says we are not in the soup at all. I do not know how he can say that, because the fact is that we are bound up with other countries that are in the soup, and if we are bound up with them and they are in the soup, well, it stands to reason that we also are in the soup. All these matters should be made public.
I think Senator Connolly must be very highly complimented by the discussion that has taken place, because I do not think his motion merited being taken so seriously as it has been taken. The vagueness and the indefiniteness of his remarks were not due to any lack of power to express himself; they were due simply to the fact that he has not really a definite idea in his head about this matter. His only hope is to have a committee set up, of which, presumably, he would be a member and on which he would have further opportunities of talking in a pompous and vague way about matters that he does not understand. For the purposes of any inquiry that might be necessary, I do not think you could get a worse body than a committee composed of members of the two Houses of the Oireachtas. Such a committee would have to be formed, and would be inevitably formed, on a political basis. You might have one or two members who would have special qualifications for considering the matter, but you might not find such members appointed; they might be ousted by the Senator Connollys, who would wish to get on the committee so as to have an opportunity of a little advertisement.
It might easily happen, if a Committee of members of the two Houses were appointed, that the few people who had special qualifications for dealing with the question would not be selected. Even if they were put on the Committee they would be completely swamped by members who would not have any ideas, who would not have given any thought and who could not find time to give the necessary thought to the matter. I am quite satisfied that some of the terms of reference could not be carried out even if you had such a committee as has been suggested. I am quite certain that numbers of people would refuse, and would rightly refuse, to give evidence before what would be, to some extent, a committee of busybodies. You will always find that the people who volunteer for such committees will be busybodies who have no qualifications and who will not be prepared to put any solid work into the matters that are placed before them for consideration. In any case, such a committee could not possibly conduct a satisfactory or a useful examination. Such a committee would spend hours, and perhaps weeks, according to circumstances, on desultory and useless deliberation and nothing would emerge from their sittings.
All the problems affecting currency and the financial position of the State in general are, as some Senators have stated, being reviewed from week to week by the Currency Commission. It seems to me, if we are to have only our own citizens considering the matter, that it would be impossible to get a better constituted body than the Currency Commission. It consists of an independent whole-time chairman, a very capable and well-qualified man, who is giving his constant attention to matters of this kind; he has, in fact, for years been devoting his attention to such matters. In addition to the chairman, we have the secretary of the Department of Finance, who has many sources of information at his disposal and whose work brings him daily in contact with these problems. Next we have two business men from the City of Dublin, one in ordinary commercial business and the other in a business which has a close relation to our great fundamental industry, agriculture. Along with these, we have three representatives of the Irish banks. If we wanted a committee to consider financial matters I do not think it would be possible to get a committee more soundly constituted, and I do not think it would be possible to strengthen such a committee in any way other than by bringing in outsiders. If the Currency Commission desires at any time to have outside advice it can get it. If there is any question of expense involved no difficulty will be placed in the way of the Commission getting any additional assistance it requires.
This discussion seems to me to have gone a little outside the scope of the motion set down by Senator Connolly, because the motion does not seem to me to relate practically to the question of the gold standard. The Senator dwelt upon the decision of the British Government to abandon the gold basis, and he spent a good deal of his time talking about the gold standard. Some of the matters in regard to which he took a wrong view have been set right by other Senators. It was made quite clear that the decision to tie the pound to sterling was made because of the close trade and other relations between the two countries, and not because sterling was based on gold. The Senator quoted certain remarks of mine. I see no reason to modify those remarks. I think there would have been no sense in our getting gold. It was evident for a week or two before the British came off gold that they were very likely to come off it, and the Currency Commission considered whether or not they would purchase gold. They could easily have done so, but they decided, and rightly decided, not to have it. If we had large quantities of gold we would have been forced off it, as Senator Staines and others have pointed out.
The trading relations between this country and Great Britain would have made it impossible for us, if we were to have any regard for the economic interests of the country, to remain on a gold standard if Britain went off it. We would have had our gold stored in a bank, or somewhere else with soldiers guarding it, and it would be really of no use to us. There are very evident reasons why in a country like this, and trading conditions being as they are, we should remain on a parity with the pound in Britain. If, when the British went off gold, we arranged to remain on a gold basis, we would immediately raise a tariff against ourselves in the British market. The Danes were forced to go off gold. If we remained on a gold basis we would have great difficulty in maintaining our place in the British market. We could not possibly maintain our position there if we raised what would be in effect a tariff against ourselves. You also have to consider the position of people living here who receive incomes from England. People who get £100 a year would be getting less because of the exchange in this country. You would have these people, who receive incomes from outside and spend them here, leaving the country, just as you had English people returning from France when the exchange went against them there. The fact is that considerable loss would be sustained.
You would also have to consider the position of bank investments. The banks have no option in present circumstances—whatever may happen in ten, fifteen, or twenty years—but to place a very large proportion of their resources in British securities; there are no other securities available for them. They must, in order to earn income so as to keep going and to have a sufficient proportion of their assets in a reasonably liquid form, invest in British securities. If we clung to the gold standard the greatest confusion would be created in the banking system, and you would have, I think, panics resulting. At any time, when, for instance, the pound was becoming steadily more valuable during the period of the price fall, if we attempted to stabilise prices, and if we decided to go off the gold standard when the British were on the gold standard, great losses would have ensued. Undoubtedly any suggestion that we would go off the gold standard, and that we were going on to an arbitrary paper currency when the British were on the gold standard, would have meant a flight of the deposits in our banks; it would have meant a flight of capital from the country that would not be recovered for a very long time indeed. You would not have an influx of people to live here because of cheapness.
In a new State, and particularly in a State with all the difficulties that surround us here, nobody would believe that a proper currency could remain at any stable level. I believe it would be impossible for a State like ours, with all the difficulties that surround us and with the inexperience of our people in the responsibility of government, to maintain and work an arbitrary paper currency. I do not know whether any Government can do it for long. Most people say that the only advantage of the gold standard is that it does not put the strain on Governments that a purely paper currency would put on them; that there are few Governments that could withstand the temptation to get out of their difficulties by putting the printing presses to work. It is fairly clear to anybody that there would be great difficulties arising for the country if we detached from the British pound; it is clear that great losses would follow. If we had reason to believe that the British pound was going to follow the mark, there would then be a situation which would have to be met, however difficult it might be.
When it could not be met.
It could be met.
I do not think I need deal with the great variety of points that have been raised. The whole position of the currency and the finances of the country are under constant review. They are under review by a body which is, I think, the strongest body that could be established here. It is the most representative and the most competent body that could be established. No good could follow the appointment of a joint committee such as is suggested by Senator Connolly. It is not the business of the Oireachtas to appoint a committee to write an elementary treatise on banking—something such as Senator Johnson might desire. It is not their business to explain some of these matters that trouble Senators. The people who will explain these matters are economists. The Senator can buy lots of books on banking and, if he will study them, he will get as much enlightenment as he would get if he were vis-a-vis Senator Connolly arguing for weeks about the currency position in this country.
I do not want to say that the banks here are perfect or that the banking system is perfect. I would like to say that in the criticism of the banking system here that there is a great deal of humbug. Senator Jameson pointed out that the banks work with the money of their customers. They lend out the money of their customers and are under an obligation to return the money to them on demand or after specified notice. They cannot deal with that money as if it were some spare money of their own that they could throw around any way they liked, that it would not matter whether they lost it or not. A great many people who complain about the banks are really incompetent business men whose difficulties are due frequently to their own faults. Any one who is in politics must have had some experience of that. Frequently I have had people coming to me complaining that the banks would not give them credit, and on occasion I have the case of a young man beginning something to whom it did seem to me the banks might have been a little bit more generous, a young man who had not yet established himself but who seemed likely to make good. Occasionally I have thought that the banks could have stretched a point for him, but in the main the complaints I have heard were from people who had let their business go to rack and ruin through incompetence or want of brains, through betting on horses or through drink or playing too much golf or doing anything but what they ought to have done. Then they get terribly annoyed because the banks will not give them the money of decent hard-working people to throw it into the abyss after what they have already lost themselves.
Following up on the note on which the Minister has just finished, I would like to segregate in the minds of Senators the difference between the system that I am attacking and the bankers. I happen to be one of the unfortunate people that the banks were too kind to, and I have been suffering ever since for that. That is a matter of individual experience and has got nothing whatever to do with the fundamental principle that we are discussing. I am surprised at a man of the Minister's experience bringing in such a trivial point.
I propose to deal with the points that were raised in the order in which they came up. Senator Staines asked what we would have done if we had the gold standard. It will be remembered, as was explained by Senator Johnson, that what I argued for was a Committee. I have very definite views on a number of problems that arise in connection with finance, banking, the gold basis and the rest. I think there is ample justification in asking for this Joint Committee. There is one thing that might have been possible arising out of the various speeches that we have had on these economic issues in connection with finance and banking, namely, that there would have been a wider distribution of the assets of the country both by the Currency Commission and the bankers themselves. If we assume that we had a purchasing power and credit on U.S.A. exchange, in the French market and in Amsterdam, is anyone going to tell me that both the Currency Commission and the bankers would not be in a much better position than they are in to-day?
I know one distinguished banker in this city who holds the view that the only hope for this country is to get out of British securities and into something else. The Minister for Finance has not attempted to answer the question that I put to him as to what the Currency Commission had done under the amending Act that was passed last November. Why was that Act passed, and was any use made of it? Was the introduction of that measure symptomatic of the fact that the Currency Commission was uneasy in its mind that British securities were not as good as they thought they would have been? The Minister talked about approaching this in a pompous way. I did not approach it in a pompous way. I put all my cards on the table, and I now state my belief that the Minister who made the statement last November that I have quoted is not fit to be Minister for Finance. Senator Milroy gave a simple analysis of the Douglas theory of social credit. I am not going to enter into that. I will leave it to Senator Jameson to study calmly the Douglas theory. There are all sorts of problems involved in this issue. I am not going to be dogmatic. It is only a fool who would be dogmatic on it. I leave all the pomposities to the Minister and his colleagues. I am not going to be pompous, but one can surely approach the question from the broad, human, national point of view. The pomposities belong to the Minister and his friends.
I was glad to see Senator Sir William Hickie, like a lot of other lay intelligent people, had apparently woken up to some of the realities of the situation. The only people who are hardboiled and tough in the hide in the environment into which they have got are, as we know, the people operating the machine and getting the benefit out of it. They are afraid to think in new terms, but they are going to have to think in new terms. They will be forced to do it because of the play of external circumstances, even if they will not do it in this House. Senator Douglas referred to the fact that we are physically independent. No member of our Party ever disputed that. What we do complain about is that our physical independence was not availed of. Our people have the power to be economically independent as regards the financial basis of credit and the creation of credit in foreign countries, but that has not been availed of. What happened here was that those in authority carried on slavishly in the old routine, and to-day we are in exactly the position we were in in 1910, 1912, and 1914 from the economic and financial point of view.
I defy the Minister for Finance to say that there is any fundamental difference between the machine as it exists to-day and as it was when it was administered by the British Government. We have been told about our export trade with England, that we were sending to her produce to the value of thirty millions per annum. That is simply one side of the story, as if we were buying nothing in return. What about the eleven and a half millions of an import balance against us? Senators should waken up to that. They talk as if this export trade were a benefit to us. What about the balance of trade that is against us? The pound has gone down to sixteen shillings so that we have lost four shillings on every pound on the adverse balance that operates against this country. The Minister for Finance may try to throw a smoke-screen over that, but the facts are there.
A good deal of criticism has been offered as regards the possibility of a Joint Committee of both Houses doing anything useful in connection with this. From what I have seen of the Seanad, I have not any higher appreciation of its capacity or competence than anybody else, but it is only when it suits their purpose that this argument is put forward by Ministers. The argument is then advanced that members of the House are not fit to make up their minds on a question like this. We have had experts on this question. The Minister's advice is to have more experts. We have shown that the experts were all wrong. They have been wrong not only as regards this country but other countries, yet the Minister's advice is to have more experts. What about the Macmillan Report and the Report of our own Currency Commission that were prepared by experts, as well as statements by Ministers in this House made on the advice of experts? I say that no case has been made nor could a case be made against the motion that I have moved. I do not say that in any pompous way. I say it from my heart. I am really tired of listening to all that kind of tripe.
Senator Bagwell talked about this motion being a vote of no confidence in the Minister. Of course it is. If the advice that we had been given in this House had been acted on, and if an intelligent interest had been taken in the position of this country, instead of the present position we would have had something in this ratio to-day: 25 per cent. of our money in British securities, 25 per cent. in U.S.A. securities, and 25 per cent. in Parisian or other securities. We would not have had all our eggs in the one basket as we have to-day. In the Agricultural Credit Corporation that had to be floated in this country there was an available place in which to put some of our money. It is hard to understand the psychology of the banking system here, whereby we invest seven millions of our money outside the country instead of putting it into one of our own organisations. All that is due, I believe, to the tradition of playing the bankers' game. When I speak of the bankers' game I mean the bankers' unconscious game, because there are only about three of these men in this country who understand the machine they are operating. If they did understand it the institutions with which they are connected would have made a huge pot of money out of this, because if they had operated it properly we could now be an importing medium for goods from America and Great Britain. We had the power to be that, but instead we are sinking to the extent of four or five shillings in the pound. Whether Senators believe it or not, in my opinion the pound will be stabilised at a lower rate than it is to-day.
Senator Jameson referred to my attitude about the gold standard. I have tried to keep him right on that. I am not a believer in the gold standard. When the Currency (Amendment) Bill was before the House what I did object to was the Minister for Finance trying to put over on us—he did it successfully—that we were on the gold basis when we were really on nothing of the sort. Even to-day he will not admit that we are not on a gold basis. His statement then was not true. Even in November, 1930, we were not on the gold basis, and the result is that our currency to-day has suffered to the extent of four shillings per nominal pound. If the Minister had £3,500,000 of that money bought into dollars at that time it would not have depreciated to the extent that it has. Is that a fact, or is it not?
Then I know nothing about the rates of exchange, and I submit that none of us do. I submit that my statement is true. Senator Jameson thinks that this is the worst time that you could select to make any changes, and that members of both Houses are not the people to do it. Well, I am willing to admit that. Will Senator Jameson tell us who are the people who are going to guide us? What is responsible government? Is it a dictator, a Soviet, or what? Will the Senator tell us what form of government he wants, and what the functions of government are? We will be less happy in this country if sterling goes any lower. Senator Jameson may be able to suggest some Heaven-sent Moses who will take us out of the wilderness that he and his friends have put us in. The Minister stated that there was no alternative to British securities. That means, I take it, that there was no alternative to the system of working through British finance and the orthodox method. If that is the case, and that there is no real alternative, what is the sense in having the Currency Commission, what is the sense in having a note issue, and what is the sense in trying to deceive people that there is some purpose in currency and in notes?
Because we are gaining £250,000 a year by issuing our own notes.
And it has to be linked eternally to the British financial machine? What was the sense in bringing in in November last an amending Bill to the Currency Act? Was that only window-dressing, or were we only pretending that we were going to invest elsewhere? I submit that we have put our argument before the House and that we have a perfectly good case for an investigation by a Joint Committee of the Oireachtas. I am willing to hear any alternative suggestion as regards a Committee or a Commission, but I submit the position is such that it demands immediate attention. I see no alternative, except the one I have pointed out, in this alleged democratic country with its elected representatives. I feel it is their responsibility and their duty, and I ask the House to consider the motion from that point of view with the object of ensuring that the very most that can be made out of the circumstances will be made, and that the very minimum of loss may ensue.
- Chléirigh, Uí Bean Caitlín.
- Comyn, Michael, K.C.
- Connolly, Joseph.
- Dillon, James.
- Duffy, Michael.
- Farren, Thomas.
- Foran, Thomas.
- Hickie, Major-General Sir William.
- Johnson, Thomas.
- Linehan, Thomas.
- MacEllin, Seán E.
- Moore, Colonel.
- O'Doherty, Joseph.
- Robinson, Séumas.
- Bagwell, John.
- Barrington, William.
- Bigger, Sir Edward Coey.
- Brown, Samuel L., K.C.
- Browne, Miss Kathleen.
- Byrne, Right Hon. Alfred.
- Costello, Mrs.
- Counihan, John C.
- Douglas, James G.
- Esmonde, Sir Thomas Grattan.
- Fanning, Michael.
- Griffith, Sir John Purser.
- Guinness, Henry S.
- Jameson, Right Hon. Andrew.
- Keane, Sir John.
- Kennedy, Cornelius.
- MacKean, James.
- MacLoughlin, John.
- Milroy, Seán.
- Molloy, William John.
- Moran, James.
- Nugent, Sir Walter.
- O'Connor, Joseph.
- O'Hanlon, M. F.
- O'Neill, L.
- O'Rourke, Bernard.
- O'Sullivan, Dr. William.
- Staines, Michael.
- Toal, Thomas.
- Vincent, A. R.
- Wilson, Richard.