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Seanad Éireann debate -
Tuesday, 11 Jul 1939

Vol. 23 No. 3

Finance Bill, 1939 (Certified Money Bill)—Fifth Stage.

Question proposed: "That the Bill be returned to the Dáil."

I do not want to delay the progress of this Bill any further, except in adverting very briefly to what has been already said on the subject. The Minister came into office on a promise to reduce expenditure, to reduce taxation, to abolish unemployment and, inferentially, to abolish the greater part of the need for social services. In this Bill, apart altogether from the special circumstances of the moment, we can see the result of a policy which has increased expenditure, increased taxation, increased social services, and reduced the number of those working upon the land and produced more emigration. That result, which we see in this Bill, is not peculiar to this Bill, or to this particular year. It has been going on steadily since the Minister came into office. It is pleaded this year that the need is for money for armaments, but I think the figures disclose that, before any such crisis arose, the Minister was already increasing expenditure, and I think that, by this time 12 months, it will be found that the Minister will have succeeded in spending comparatively little on armaments.

The need for social services has apparently grown, but the increase in expenditure, generally, is by no means attributable entirely to the increase upon social services. The Minister appended to his Budget speech a list of social services, which, quite manifestly, was made out, not by a person looking on the matter with the objective impartiality of a civil servant, but by a politician anxious to justify his own mistakes. He gave us a number of instances of social services, many of which, I think, could not, by any stretch of the imagination, be deemed to be social services. The example which has become classic is the salary of the Parliamentary Secretary to the Minister for Local Government. To attribute that salary to social services, in the light of what we know of the Parliamentary Secretary's activities, is worse than a joke.

Apart from the costs which this Finance Bill imposes, following upon the higher costs imposed for the past six or seven years, we have still higher rates, higher cost of everything we buy, and, as was demonstrated here on the Committee Stage, a complete failure on the part of the Minister to do another thing which he said he would do, namely, to tax the rich to help the poor. Although he has increased the rate of income-tax, and, in a greater proportion still, increased the super-tax rates, he has not succeeded in getting any substantially increased sum of money from those who might be accepted as the rich, that is, those people who have incomes of over £1,500 a year. Naturally, therefore, he has not succeeded in increasing employment, or in abolishing unemployment, or in going any distance towards it, as he said he would. In the circumstances where you have increased expenditure, increased taxation, increased rates and increased cost of production, there is absolutely no possibility of an industrial policy succeeding. One does not need the report of any Banking Commission, or the advice of experts of any kind whatever to realise that in a country which, by its very nature, must have agricultural exports you cannot have industrial expansion which is accompanied by high taxation and high rates. The two things do not go together.

The Minister, in spite of all this expenditure, and subsidies to agriculture, has accomplished very little of what he set out to accomplish. His colleague, the Minister for Agriculture, told us here recently that between the policy of his predecessors and the policy pursued since 1932, there is very little difference with regard to tillage. Tillage, in spite of enormous subsidies, has not increased. There has been a certain increase in certain crops, but that has been mainly substitution, and I think that in the last few years the actual amount of increased tillage over 1932 has gone down to a couple of hundred thousand acres, a very insignificant figure at the price. Our export trade has not increased; our old industries are being hampered, and the Minister himself has been persistent in only one thing, that is, in increasing the imposition of taxes.

In his style of introducing Budgets and his general speech on finance matters, the Minister has changed substantially. He began—and I think I remember hearing him in the Dáil in 1932—in a very literary, high-faluting, rhetorical manner, as if he were proud of what he were doing, but recently he has changed his tune. He gives lip service now to what one might call orthodox finance, but, as we were taught long ago at school, faith without good works is dead. The Minister, no matter how calm he may be now, and no matter how orthodox his professions may be now, by his policy which has depressed agriculture and made it impossible for industrial revival really to take place, has brought us to the position where easy remedies, or so-called easy remedies, may very well be adopted. We have had advocacy even from the ranks of his own Party of a simple so-called remedy, that is to say, the printing off of banknotes. The Minister, I think, does not subscribe to that at all, but it may very well be that this policy which is enshrined in this Bill and which has been so persistently followed up may bring us to the position where that kind of thing will get a hold upon the country, and, after that, little would be left, either for the rich or for the poor, and certainly employment will not be increased.

The thing that strikes one about the Finance Bill is that, in spite of great expenditure, we have not an increased agriculture production, and we have, in our industrial position, a certain number of good things mixed with a certain number of bad. It is difficult for agriculture to prosper under this policy. In addition, not only will the bad industrial experiments fail, but, in failing, they may bring down sound industries, long established and with the prospect of permanency. That is a very bad picture, and I think the Minister will have to do something more than merely profess his devotion to orthodox finance. He will have to take some steps to see that the country is brought back to the course upon which he found it in 1932, and which did show increasing production and increasing employment. One can say that the situation is one which calls for careful examination and great courage, rather than constant debate, and we can only hope that the Minister will follow up his professions of faith— by some substantial acts.

I also do not want to delay the House very long, particularly as I feel, in a way, that, with the Minister for Finance here defending this Bill, there is not much good in our arguing, because, in one way, the Minister for Finance is the last Minister who should come in here to defend this Bill. We know the Cabinet system. Before the present Government came into power the Minister went around telling everybody of the marvellous economies that could be made in national finance. This Party came into power and he became Minister for Finance. How does that work? Each Minister is responsible for one Department. The Cabinet meets, and each individual Minister in charge of a spending Department urges further expenditure on his Department, and, as a matter of fact, one can almost form a judgment as to what happens at Cabinet meetings by seeing the way in which money is spent by different Departments. One will notice that the worst Departments for wasting money, if I may use that word, are those in charge of Ministers who—again, if I may use the term—have the habit of throwing their weight about very considerably. I have no doubt that the Minister in those secret gatherings of the Executive Council fights very hard against this scandalous expenditure which is disastrous for the country. What is his function? The Ministers for Industry and Commerce, for Agriculture, for Local Government, and all the others, come up and demand vast sums of money to be thrown broadcast by their Departments. The Minister for Finance, ultimately, has the aggregate of the bills presented by each of them before him. His function is merely to decide that all that money is to be extracted from the unfortunate people of this country. In the present situation everybody knows perfectly well— though Ministers make speeches denying it—that the country has been living upon its accumulated capital, that it has been living upon the savings accumulated in years of greater prosperity. These savings were an enormous asset to this country. It was by reason of these savings that the standard of living has gone up to what it is.

Under the present conditions the Minister is not able to say: "The taxable capacity of this country is so much; therefore, we must not, during this year, extract more than that." But as the matter stands the sum which he is to extract from the unfortunate taxpayers is fixed by the other Ministers and his business is to find the best, quickest, and most adequate means of getting in that money. The Minister for Finance is in reality the least guilty member of the Executive Council. The truth is that every representative of the spending Departments should be here present to defend the money which he proposes to get away with for the current year. I would like to suggest that the Cabinet system should be this:—That the Minister for Finance and his officials, who presumably are best qualified to consider the financial position of this country, should come before the Cabinet and say: "The maximum that we can legitimately gather from the people of this country during this year is £x." Then he could say to the other Ministers: "You can now decide amongst yourselves what proportion of that £x goes to each one of you." At present in determining the amount of money to he extracted in taxation and in considering the whole financial position no consideration whatever is given to the amount of taxation which the country can stand. The position is that each Department, because of certain sentimental ideas now prevalent in this country, has decided that it is to spend so much on such and such services.

When our annual national expenditure is calculated what happened normally is that each year is treated in this way—what is the amount that can be paid out of taxation? Everything else is treated as exceptional and therefore as capital expenditure. It is true that in our Government finances the method is this:—That as soon as the Government borrows it begins paying back. Because if it borrows £10,000,000 to-morrow, in its accounting it will immediately allow for interest and sinking fund to pay off that £10,000,000. If the Government spend £25,000,000 a calculation is made that say, £10,000,000 is borrowed for capital or abnormal expenditure. That capital borrowing involves paying back immediately interest and sinking fund. That is quite true as regards one year, but when you take this position of affairs over a number of years you will find that we are miscalculating. In the year 1932 there was clearly abnormal borrowing. So many millions were borrowed. In the year following more money was borrowed. If you take a series of years you must recognise that there is one type of expenditure which is recurrent every year. There are other types of expenditure which are not recurrent. Strictly speaking if one takes any period one likes in the last seven or ten years, one finds that every year we borrowed a certain amount and our national debt increased. There is no reason to believe that this was strictly for abnormal expenditure. There was nothing abnormal in relation to the business for which the money was borrowed. Every year we have to borrow before we pay back on previous debts and our national debt is accumulating because our calculations are wrong. We only regard as normal expenditure that which occurs every year and anything else is regarded as abnormal. We take no account of the fact that ever since the State existed money is being borrowed and the result is that our debt is accumulating all the more.

In the debate in the other House in relation to finances all sorts of specious arguments were put up. When the Opposition speaks of reducing taxation all sorts of propagandist organs are dragged in and immediately the interest of large sections of people in the country is being appealed to. We were told we can only reduce taxation by reducing social services. The greatest condemnation of this Government—and of the last Government of which I was a member—is that this country requires so many social services. Now, I am not blaming the Government for not working a miracle. We in the last Government did not work the miracle. What I would like to see is a movement towards a trend of affairs in which the necessity for so many social services would not be present. What the Government has to work towards is such a state of affairs that every man in this country willing and able to work will know there is work available for him and that he will have the right to the reward that is appropriate to the work he does.

For years past we are constantly increasing these social services, social service that are necessary because you cannot stand by and allow men to starve merely because a peculiar position exists in which a man is willing to work; in which he is capable of providing by his labour for himself and his family, while there is no opening there for him to do so. But the Government comes along and boasts of the growth of social services. That should be the one thing that they should conceal. They do this for propagandist purposes. They try to put the Opposition into the position of advocating a reduction of the social services. Now the great object of this and of any other Government in this country should be to abolish, in a proper way, this wasteful expenditure on a great many of these things that we call social services.

We are told about housing. Strictly speaking the fact that public bodies in this country are forced to build houses which must be let at uneconomic rents is really a condemnation of the Government. What should be the right condition in regard to housing? The right condition should be that a man who pursues his reproductive labour should be paid such a wage that he should be able to pay an economic rent for his house and be able to maintain his family. These social services are each year actually accumulating a fresh debt. There is a vast number of houses built by public bodies and we know that whatever rent comes in for these houses is nothing like sufficient to pay the debt, the interest on the debt, the up-keep of the house, the rates and so on. There is another argument put up when we talk about the economic position of this country at the present time. We are told that the country is now much better than in 1934. One might as well say that a man who finds that his overdraft has accumulated by over £1,000 one year can point to an improvement when he sees that his overdraft has gone up in the succeeding year by only £500. During the period when we are spending more than we are producing we are accumulating an actual debt. Now we are told to rejoice not because we are paying the old debt back but because the old debt is still growing but growing at a slower tempo than previously.

I would prefer that the Opposition and the Government would face up to this thing and cut out propagandist arguments. These propagandist arguments have been used against us. Government speakers have said when we are arguing for a reduction in taxation that what we are really arguing for is a reduction in social services. I believe in one way that a reduction in taxation will lead to a reduction in social services. The need for them will disappear. That is because the present enormous burden of taxation is putting this country slowly but continually out of production. We have less production and fewer people employed. In addition the more people who are employed at a rate which requires help through the social services such as housing, unemployment assistance and relief works, the more social services will be needed and the worse it will be for the country. The result is that you have taxation increased and, as a consequence, reduced production calling for still more social services which again require further increased taxation.

I do think that we ought to get away from the Party argument, face up to the situation and to any unpopularity which that may involve in certain quarters. The country was in a bad condition in 1934, so bad that even those who were responsible for it are ready to admit now that it was in a bad condition at that time. The Coal-Cattle Pact of 1935, the renewal of it in later years, and the Agreement with England last year were all calculated to relieve the situation, but there can be no real relief of the situation until we find our people are able to live, all of them, on a fair standard on what the country can produce. At the risk of being unpopular—I like being unpopular—I may say that one of the social services, of which we have heard so much, has provided for a reduction in the working hours of town workers and an increase in the holidays given to town workers. The necessary result of that, just as the necessary result of the policy of mad tariffs, was to increase the cost of production. It is no good saying that every agricultural worker shall have a 40-hour week, shall have a minimum wage of £3, and shall have a fortnight's holiday in the year. It simply is not possible and this country lives on agriculture.

Another argument is put up. We are told that 800 new factories have been established in this country, but we are not invited to examine that at all. I remember when Ministers were in opposition, and when periodically they read out the number of businesses that had gone bankrupt. It is a fact— though it may not be a popular thing say it—that it would be to the national benefit if a good number of the new factories were to make up their minds to become bankrupt. Just to illustrate how the imposition of tariffs, and the creation of industries thereby, may be wasteful we shall take an extreme case, a case in which, say, a tariff of 100 per cent. is imposed on any commodity, boots, for example. The price of boots is then increased by 100 per cent., so that what you got for £1 formerly now costs £2. What does that mean? It is quite obvious that there must be a certain amount of waste in material and so on. Inasmuch as the boots can be produced in England for £1 per pair, it is quite certain that the whole of the additional £1 does not go in wages to the workers. I take 100 per cent. because it gives a clearer picture than a fractional figure. It would be much better if you were to bring in all the boots you required from England, sell them at £1 per pair, and distribute the extra £1 amongst the poor people who require it. When you can buy the imported article for one-half the figure you have to pay when it is manufactured at home, it is quite obvious that there is absolute waste, that it would be really better to import the article and distribute that 100 per cent. amongst the people who have been making the article here and wasting their time.

It is true, of course, that when the Government slaps on a tariff of 70 per cent., as they have frequently done, automatically, factories will grow up, but does it follow that these factories are economic? You are paying for them by imposing taxation on the people. The Government, since it came into office, has increased taxation by £8,000,000 or £9,000,000. That is what you find in the Government accounts, but the fact is that the Government has also farmed out taxation. If the Government tell me that they will put a tariff of 100 per cent. on an article and that I undertake to make that article after such a tariff is imposed, it means that the unfortunate people of the country, every time they buy one of these articles, is paying 100 per cent. tax on them. That tariff, of course, is not going into the Exchequer. The Government only gets it if the article happens to be imported. Nobody has taken the trouble to ascertain how far the actual taxation on consumers in this country has been increased since 1932, but if you balance that with a real calculation as to what is the relative production of this country in 1939 as compared with 1931, you will find that production has diminished and taxation has increased and that it was perfectly natural that unemployment and the various other social evils should increase with it.

I do not want to delay the House in this matter but there is just one other aspect of the question to which I should like to refer. There is this argument that all additional taxation goes either in increased social services or is due to the present war scare in Europe. That is not true. When I took over the Army—I think it was in 1927—the cost of the Army was £2,300,000. I think when I handed it over to my successor—I cannot be exact about the figures—the figure had been reduced to £1,300,000. I may be wrong as to the exact figure but £100,000 either way does not much matter. That was roughly the figure at any rate. What happened when the Government came in? The Army is not a social service. There was then no war scare in Europe. Immediately following their advent to office, they sent even to the Antipodes for men who had taken part in the civil war against the National Army and appointed them to the Army with officer rank. It is to be presumed also that the police are not a social service. There was a party here one night and there was a fire. There were suggestions, at least it was rather hinted, that that fire was the result of sabotage and that therefore we required additional police. I never heard what was the cause of that fire but, at any rate, the police force was increased and so was the Army considerably at a time when there was no war scare. Now we are told that there has been an enormous increase in the cost of the Army as a result of the newspaper scare about war and people think that that is eminently justified.

Personally, I do not think—though I would not like to prophesy with any degree of confidence or to wager any large amount of money on it—that there is going to be a war in Europe. If there is going to be a war, I do not think the preparations which the Government is making for it have any relation to the situation which is likely to arise. I have seen articles suggesting that, in the event of a war between the western and the mid-European Powers, our western ports were likely to be attacked by mid-European aircraft. Surely we give these people credit for more common-sense than to think that they would face the barrage which would be directed against them from fortified centres in England, when crossing that country, and that they would pass over centres like London and Birmingham to come over and drop their bombs in Connemara? It might of course happen, but in all these matters one uses a certain amount of prudence and common-sense. What you see here is a country with production decreased, taxation increased, a country which had to face an economic war crisis and so on. We are going to spend additional millions, and on what are we spending them? I am satisfied that much of the money spent in regard to this defence ramp is a waste of public money. We are, as usual, following the English model. It does seem to me, and I have good reason for believing, that a great amount of what is being done so ostentatiously in England is done to placate public opinion in England and that it has not very much utility. What we are doing here with A.R.P. and all sorts of preparations with the Army has not even that justification, looking at the thing in a common-sense way. A certain amount of damage was done when the Government took over the ports. The British, as the Government must know, argued with me in 1928 that we would have to take over those ports. But, as they say in America, "I come from Missouri, and you will have to show me", so I wanted to know what the result would be. The British argued then that we would have to take over the ports within ten years. This Government came along and took over the ports. Then they came back and made an awful cry about the thing. There was talk to the effect that while the British were in those ports our neutrality and sovereignty were impinged upon. They were nothing of the sort. I myself think that the present position, with the Government wasting money in equipping those ports which the British equipped previously, and the Government taking responsibility, as I think it will have to do, for running those ports in time of war, endangers our neutrality much more than if we were simply able to say: "The British hold those ports, and we are not responsible for what they do." But that is only an aside.

We have taken over those ports. What is going to happen if there is a war? I am not in a better position to prophesy than anybody else, but we have got to use common sense. When people talk about a war, they talk about a war in which Great Britain will be involved, with certain other countries, as against certain European countries banded together. Are we going to be involved here in this country? Why should we be? People say: "We send food to England." Of course we do, and I have no doubt that a country fighting against England would like to see that stopped, but in every human activity you put first things first. In order to drop bombs on the docks in Dublin an enemy would have to come right over England, facing the barrages there, and if I were the enemy, having an economic sense, I would say: "We will drop bombs in London, and do a lot more damage, rather than risk losing planes and lives crossing over England first of all. Even if we do get across and drop bombs on the Dublin mountains, we have got to get back again." It does seem to me that, in the case of war, as long as Great Britain is not beaten, as long as the British fleet holds its position on the seas, no enemy will be in a position to come to this country and do any damage.

If that position is changed, if it does happen that we are involved in a war, and that the enemy of Great Britain declares us their enemy, and that they overcome the British fleet, what are we to do? We are increasing the Army. Last night I saw bands going around calling for recruits for the Volunteers. What Army can we put up—I realise that this is an unpopular thing to say —against, a combination of great powers that have overcome England, and are free to land their troops in this country without let or hindrance from Great Britain and its Navy and its Allies' Navy? I think—again this will be called unnational and unpatriotic and all the rest of it—as soon as you have the Central Powers, with England beaten, landing their troops in this country the best thing to do is to say: "What are the best terms you are offering us?" All this ramp about the situation in Europe and the special crisis which calls for additional expenditure in this country, which for years past has been spending and not producing, seems to me to be the sort of thing about which the newspapers make headings, but which has no basis of reality. When you are responsible for running a country you have to use your prudence. You have to run certain risks; you have to run the risk of a certain amount of unpopularity. When you are the Government that is your responsibility. The Opposition really ought to be in a position to get up and say the nice popular things all the time, while the Government, with its responsibility, ought to be fathering everything unpopular. But the Government gets me so upset that I have to get up and say unpopular things, while they go ramping around the country saying that everything is splendid, that there will be more doles and more social services, and nobody must ask where the money is to come from. I do think it would be much better if we had all the other members of the Cabinet in here, and dealt with them. We could put the Minister for Finance on a pedestal and say: "We know he did his best. We deem him innocent, but he is the only one who is innocent. All the others we mark down as very definitely guilty."

I do not think I would be prepared to exonerate the Minister for Finance to the same extent as Senator Fitzgerald apparently is prepared to do it.

Too bad.

Senator Quirke says it is too bad. If the Senators on the right-hand side of the House, on this question or on other questions, had the courage to face the problems which this country has to face with the clarity of vision and the frankness which Senator Fitzgerald has displayed, we would have more hope for the country, and we might get a policy from the Minister for Finance that would give more heart and more courage to the country than the country has to-day. It may indeed be true, as Senator Fitzgerald says, that the Minister has the best intentions in the world, and that in the councils of his Cabinet he tells the Minister for Industry and Commerce: "You cannot do that because it is going to cost so much" and tells the Minister for Defence: "You cannot do that either," but they are too strong and powerful and succeed in getting their way. That may be so, but what can the Minister do when many Senators on the right come along behind the Minister for Industry and Commerce and possibly behind the Minister for Defence and drive them on, going down the country with all sorts of war-cries and demands which it is impossible for the Minister to resist. I feel that the Minister for Finance and his colleagues, having been for years cheering the people along the roads, have led them now into a position of utter darkness. There they are, afraid to put a foot out in either one direction or the other. They cannot retreat. They have burnt their boats, and they are afraid to go forward. It is that feeling of want of faith, that lack of courage, that sort of inertia which seems to have taken possession of them, which makes one so hopeless about the future.

The Minister has produced the most extravagant Budget which the country ever saw, except on one occasion. Senator Hayes put into the shortest possible speech all the arguments indicating the present plight of the country. The heaviest burden of taxation that we have ever borne is now being carried by fewer people, with a lower purchasing capacity, with a lower standard of living and with a lower productive capacity than we have had here for years. It is all right for the Minister to impose his burden of taxation if he has huge combines or trusts ready to shoulder it for him, and prepared not to pass it on. We have an instance of that in the tobacco tax. In three Budgets we had a tax on tobacco. In 1932 we had a tax of 1/2 per lb. In 1934 we had an extra 8d. and this year we have 8d. again. As far as one can see, we had no increase in the cost of cigarettes to the consumers until this year. Although the Minister has actually imposed a tax of 2/6 in the lb., until this year we had no increase in the price of cigarettes to the consumer. But this time the cigarette manufacturers have passed it on, and now the people are beginning to realise in every sphere of activity that the burdens which the Minister for Finance imposes have to be borne. I should like the Minister to address himself to that point later on, because, as far as I can see, all sorts of things are being alleged against the tobacco manufacturers. I should like the Minister to clarify the position somewhat. Are those the facts—that we have had a tobacco tax of 2/6 in the lb. imposed in three Budgets? Two lbs. of tobacco would produce 1,000 cigarettes, which means a 5/- tax on 1,000 cigarettes. Out of that, apparently, the tobacco manufacturers are getting 3/6 for the tax of 5/- which the Minister's Budgets have imposed. There has been an outcry against the manufacturers in the country, but it is better that this bird should come home to roost and that the responsibility should be laid where it truly belongs. My complaint is not about the burden of taxation which the Minister has imposed, but our incapacity to bear it and the inability of the Minister to do anything to make us more capable of bearing it.

Senator Fitzgerald addressed himself at some length to the extravagant expenditure on our policy of defence. It seems to me, after listening to the Minister for Defence last week, that it is very doubtful if there is any policy of defence whatever. I think that we will only realise the chaos and confusion in this policy if, unfortunately, the storm breaks over Europe. I put it to the Minister on the last day, and he took me to task for saying it, that the best defensive policy in which we could engage in this country and the best way in which we could spend money on a defensive policy would be to produce more food. The Minister wanted to know what I meant—were we not producing sufficient of the essential foods here at present? That is the difficulty that one is up against in dealing with a Minister who puts that sort of question, because one expects in a country like this, and in times like these, when we are up against a crisis as we really are—even members of the Minister's own Party as well as those on the other side of the House know we are coming up against a crisis—a sensible question from the Minister for Finance. He asked what is the connection between a policy of food production and a policy of defence. Suppose we have a war. I add my view to what Senator Fitzgerald said, that we might as well be spending £1,500,000 on an army for defensive purposes as £3,500,000 or £4,000,000. My view is that the position of our people would be very greatly altered if we adopted a policy which would make it possible for them to increase the production of food twofold, threefold, or fourfold.

During a war, obviously, money will not have the same value it has in times of peace. Goods, at any rate, would be much more valuable than money. If our standard of living is to be maintained at any reasonable level, that will only be possible by our having goods to exchange for goods from other countries which we require and cannot produce for ourselves. These goods will be more essential to our country and to our people here than arms. If the Minister wants to have stable, sensible conditions here in time of war, he would try to get our people to produce more and more food and give them the facilities for doing it. He has done nothing of the kind; he seems helpless and hopeless. I know nothing more discouraging than to try to address oneself to this problem in presence of the Minister. We heard him here last week and we listened to him for hours in the other House, when his words dropped one a minute, or one every two minutes, and nothing constructive came from him. Everything was lovely in the garden. What is the use of telling farmers that all is well with them, that the future is bright, and that they do not need any help, when three-quarters of the farmers know that they must get help and must get it from forces external to themselves. I have been talking here about credit for farmers and so have other Senators, like Senator Johnston and Senator Counihan. Everybody in the country is talking about it, but they are talking about credit for people other than farmers as well. Whether the Minister likes it or not, this is going to be a much more vital problem for him in the future than he is prepared to accept it as being.

My view is that if we want to prepare this country either for peace or for war, the country cannot hold together and bear the present burden of taxation unless we can increase production. I can only buy when I have sold something, or when I have something to sell. People in the towns will tell you that life in our towns, big towns as well as small, is stagnant and there is no business. The farmers are not coming in to buy because they have not a penny to spend. I have heard that in towns with populations ranging from 12,000 to 15,000 as well as in towns with populations of 2,000, 3,000 or 4,000. The farmers are not coming in to buy because, as I pointed out on the last day, a farmer has to have £170 to buy what was worth only £100 pre-war. When he sells stock at a fair, he can only get £113 for what he sells as compared with £100 pre-war. The Minister for Finance, with his scheme of taxation, expects a farmer to live and thrive, to buy and keep the new industrial policy going, keep our towns going, and keep our social services going when he has only £113 with which to buy £170 worth. I would love to see the Minister farming under these conditions. He would not smile the gracious smile he throws out here when he wants to try to disarm the Opposition. The Minister and his Party may as well take the country's problems seriously, because they are very serious and grave.

Last week I took a certain line with regard to this matter of credit. When I was addressing myself to the position with regard to deposits in the banks he stated,

"I do wish that we would try to get rid of the type of request I have referred to because the fact of the matter is this, that this cry for credit for this section or that section of the population is fast becoming, in the mouths of Senator Baxter and those others who follow him, a cry for confiscation and expropriation."

That is a statement the Minister should not make, even if it were true. It is not the kind of statement that a wise Minister for Finance ought to make in a country like this. Perhaps we have gone too close to confiscation and too close to expropriation to have too much talk like that from a Minister for Finance. If you want stability and confidence in the banking system, or in our Ministers or other public men, there is no use in trying to raise storms where there are no storms. There is no use in trying to put into the mouths of people like myself, who never believed in expropriation or confiscation of one kind or another and will not stand for them to-day, things that we never have said and do not want to say. Having said that, it is better that the Minister should recognise the fact that those of us who want to see stable conditions maintained, and progress and development, believe that these things can only be brought about by getting the people to work as hard as some of ourselves have worked and are working. We would like to see all the people do that, but, above all, the people on the land, either those who own land or who want to work on the land. These conditions are not present for two reasons: the Minister's policy of altering the whole balance and trend of trade; altering the whole position with regard to the relative income in towns and counties, by a system of tariffs and all the rest, and the additional fact that credits are not obtainable to-day for production in agriculture.

Somebody may come after me and talk about profitable agriculture. I put it to them now, that there is no use in talking about cow farming being profitable if a man has only six cows. That man cannot engage in profitable agriculture if he has a ten-cow farm, but only six cows. He can only be in agriculture profitably if he has ten good cows—not ten bad ones. If he has not the money and cannot get the security which, apparently, money demands at present by those engaged in money making, and cannot get the credit, that credit must be forthcoming, because he can only engage in agriculture profitably if his land is fully stocked. If that statement is untrue let some Senator in the Government Party stand up and contradict it. I go so far as to say that possibly 40 or 50 per cent. of our farmers want credit to enable them to bring their stock of six cows up to ten cows. Probably 25 per cent. of them have only got two cows, and there may be 10 per cent. who have no cow at all when they should have ten cows. How can we have production or have purchasing capacity under such circumstances? How could these people pay their relative share of taxation if that is their plight? That is their plight.

I put it to the Minister that a great many people here are quite convinced that the whole monetary policy of the Government will have to be changed, and that the one way to do it is to get our £ away from present parity with the British £. The Minister has heard that policy advocated. I presume that a number of people, as well as members of his Party, in town and country believe in that policy. If, in his responsible position as Minister for Finance, he cannot devise a scheme whereby credit can be made available for people who want credit, and who will wisely use credit on the basis of the savings that the people have stored to their credit as a result of their work in the past, what I am greatly afraid you are going to have them driven to is that credit must be made available on the work and earnings of people in the future. As between the two, the Minister may as well face up to the fact that that will frighten and terrify many people. It is going to destroy the work and the savings of half a generation that liked to think in terms of thrift and industry.

There may be losses to the Minister for Finance in securing that certain people will get credit, and that, ultimately, if that is so, the State will have responsibility. In my judgment it would be better to face up to that, and to take the responsibility, rather than run the risk of the other thing happening. I put it to the Minister, that if he only took the £600,000, plus the £45,000 yearly, that he is going to make available under the Tourist Bill, and handed that to the Agricultural Credit Corporation, it would be able to underwrite 90 per cent. of the loans that are necessary for agriculture. If, to these amounts, he added the £500,000 which the Minister for Defence asked for in a recent Bill, he would go very far indeed to solve this problem of agricultural credit. If he did that, it would keep boys and girls from running to England, as he would be giving more stable conditions to farming at home, by making it possible to produce, as a result of which people would be able to buy the products of our industries in towns and cities. In addition the Unemployment Bill and other schemes, for which he had to find £1,500,000 in the Budget, would not be so heavy, and the whole vicious circle which he by his policy has created, would be reversed. In my view that would be a wise policy for the Minister for Finance. I know that he is not prepared to take much advice. The Government have sown their wild oats and they know what the reaping has been like. The economic war is a case in point. Now we have a depopulated countryside as well as other consequences. Land that should be in full production is now lying waste, being neither stocked nor producing crops. Perhaps some Senators who are farmers, and who may disagree with my views, when replying, will tell the House when last they heard of a farmer's marriage.

Listening to the speeches from the opposite benches one could only come to the conclusion that this country is rapidly going to destruction. I do not hold that view at all. Speaking as an Irishman, I very much regretted having to listen to Senator Fitzgerald and Senator Baxter decrying the credit of this nation. I wonder what would happen Senators in other small countries like Belgium or Switzerland if they talked in that way?

Hear, hear!

What would happen if they told their people that they were not to defend their country?

We did not say that at all.

It was tantamount to that. They decried expenditure by the Government on defence. Senator Fitzgerald said, in effect, that it would have been better to leave the defence of this nation to the British than to spend money on defence ourselves. That is no way for Irishmen to talk. When we started out to work this country in 1916, and in subsequent years, we held the view that Ireland was worth defending, and that it should not depend on fountain pens for its defence. For that reason it is a terrible thing at this time to see men standing up and decrying the defence of their own country. We are spending money on defence and we are justified in spending it. When attacks are made in this or in the other House I say that we must strive to defend this country in every way so as to resist attack.

The general policy of the Government has been criticised. Many years ago Irishmen preached the doctrine that we should not be dependent on foreigners. The greatest industry we have is agriculture. I hold that this Government has done its best and has, at least, gone a long way to defend that industry. One would imagine from the speeches that have been made that nothing had been done for it, and that Irish farmers were in a worse position than farmers in any other country. I wonder would English farmers or American farmers agree with that. In both of these countries, as we know from reading the newspapers, there have been strong agitations by agricultural interests against these Governments on account of the position of the agricultural industry. Here we have done as much, if not more, than any other country to defend agriculture.

Senator Baxter spoke of the credit of the farming community. Credit has been given on the best possible terms to farmers. It should be remembered that credit is a thing that has to be dealt with very delicately. Senator Baxter must remember there are other people in this country besides farmers. The Government cannot concentrate on one particular section of the people. The Senator must realise there are other people who may need help, and the funds at the disposal of the Government have to be so arranged that no section of the people will suffer unduly. It is unfair and unjust to say that practically nothing has been done for the farmers. Quite a lot has been done. Were the farmers given what many of them apparently want, were they given free markets, free imports, free exports, and if they had to sell many of their products in the world market at world prices, would their position have been any better? Were it not for the support given by the Government to milk and milk products, and to other items of farming, I hold that the farmers would be far worse off. Although I agree that more should be done for them if it were possible to do it, I do not agree with the statement that nothing has been done for the farming community. I would be glad, and I am sure we all would be glad, to do everything we possibly could to help the farmers more than we are helping them. If any feasible scheme is put up, I am sure the Government would be only glad to consider it, consistent with being careful to see that the other sections of the people are not unduly interfered with.

A considerable amount of money has been spent on housing. If there is anything that this Government can be proud of it is the money they spent on housing. They found this country in a very bad way as regards housing. Many of our people were living under terrible conditions in the larger towns and cities. Many of the farmers were living in what are known as rural slums. If one travels through Ireland to-day one will observe the change that has taken place in a period of five years. I hold, and I believe that any reasonable man will hold, that the expenditure on housing sanctioned by this Government has been a justifiable expenditure. If that money had not been expended on improving the housing position, no doubt the Government would be considered worthy of the greatest condemnation. I hold that, wherever the money may be got, housing subsidies should not stop until every family needing a house is provided with a decent one.

This is a young country, comparatively speaking. The Government of this country was placed in our hands only a few years ago. The initial expenditure in organising and developing the country is bound to be heavy. When reference is made to the so-called economic war, one must realise that such a thing as the economic war is a type of investment for the future. I may be told that it was a very expensive investment and an unwise investment. I do not hold it was. I think the sacrifices made by the Irish farmers during the economic war were justified and, in the end, it will prove to have been a very good war for this country. The hardships suffered during the period of that struggle were undoubtedly severe, but you get nothing in this world without sacrifices. The people of this nation made many sacrifices in the past for what they considered right and justice, and I am sure that if ever they were called upon again, the Irish people, not alone the farmers but the people as a whole, will be prepared to make any sacrifice that may be required to put this nation where it should be.

We have heard a lot of talk about social services. We on this side of the House speak of them in order to justify the action of the Government. Senators on the other side more or less decry them. They hold that they are uneconomic and that any money we are spending on social services might be better expended in other ways. I am not charging the men on the other side with entirely decrying social services. They claim to be as anxious to improve the social conditions of the people as we are. But when we improve social services, when we increase them and do all we possibly can for the underdog, we are accused of extravagance. You cannot do these things without expenditure. I am a taxpayer and I am aware that any taxpayer would be glad to see taxation reduced. But you cannot have it both ways. If you want to develop and defend your country, and improve the social conditions of your people, you have to spend money, and in order to get that money you have to tax your people.

Many arguments could be brought forward to prove that the policy of the Government is wrong. I am not going to stand here and say that everything the Government have done is right. This Government, as other Governments, have made mistakes, and possibly they will make more mistakes, but, on the whole, the Government have acted as well and as fairly as any Government could be expected to do under the circumstances.

I did not intend to speak in this debate, but I have been stung into saying a few words by some of the speeches that have already been made. We seem inevitably, whenever we talk of finance, to get back in some degree to a discussion of the economic war and its consequences. I do not think, at this time of day, there is much to be gained by thrashing out again the pros and cons of the economic war. I would just remind Senator Goulding of one thing, and that is that in the view of some of us, the financial settlement by which that dispute was ended could have been made in 1932 instead of when it was made, but for the fact that our Government wished to go on with the policy of removing every Commonwealth taint from our Constitution and getting the King out of our Constitution.

And rightly.

And, in the Senator's view, rightly. But now, having accomplished all that, we start a tearing, raging campaign on the subject of Partition. If we really, in our hearts, cared as deeply about that subject as we ought to, we would not have got the Commonwealth taint out of the Constitution and we would not have got the King out of the Constitution either. If we are to get rid of Partition we will have to go laboriously back and undo much of what was done in these matters during the last few years.

Is this a speech against the Constitution? We have established a Constitution and the Senator now asks us to go back on it.

The point I wish to make is that the Irish farmers, in the course of the so-called economic war, were paying the price, not of a financial dispute really; they were paying the price of the constitutional advances or regressions, according to the point of view from which you look at them, that the present Government chose to make, and the price of what Deputy Goulding would call our new won liberties and our new won glories has been paid by the Irish farmers and by the Irish farmers almost solely. That is a fact that ought to be borne in mind when we are considering their needs. I do not think that the economic condition of the Irish farmers is satisfactory. I admit the condition of farmers is pretty bad everywhere, but I maintain that the economic condition of the Irish farmers would be enormously better than it is were it not for the destruction of so much of their capital during what is called the economic war, by Government policy.

While I say that, at the same time I must admit that what really called me to my feet was not the speech by Senator Goulding, but some of the observations made by those who were criticising the Government. I do not know if there are many who feel like me, but, at any rate, I, for one, am filled with weariness when, in discussions on Finance Bills and Budgets, year after year, I hear terrific onslaughts being made on the Government for alleged extravagance. I have never seen any opportunities availed of throughout the year to enforce or advocate economy by the very people who make those attacks. During the six years or so when I was in the Dáil, I saw many expensive measures brought in. I am not going to stop and argue as to whether those measures were good or bad measures, but, at any rate, there were a great many expensive measures brought in— Unemployment Assistance Acts, pensions for widows and orphans, enlargement of old age pensions, more and more military pensions and, within my recollection, the Opposition have never criticised any Government schemes for social services involving expense, except on the ground that they were too mean and too niggardly and that much more ought to have been spent.

We have had lately, it is true, a Tourist Traffic Bill, involving expense, which has been criticised by some individual members of the Opposition in this House, but has not been opposed officially by the Opposition in the other House; and it is not really a good illustration of opposing extravagance, because, whether the Government are right or wrong, they look upon the money that is proposed to be spent on the Tourist Bill as a sprat to catch a whale. They do not expect it to impoverish the country. They expect it, rightly or wrongly, to bring wealth into the country, to create new invisible exports of which we stand badly in need, and, incidentally, to bring money into the country that would be of benefit to the farming class among other classes. Speaking in general, however, those who attack the Government at Budget time for its wild extravagance are themselves, during the year, egging on the Government to more and more expenditure. When, as I pointed out at an earlier stage of this Bill, the Minister brought in a Bill for temporary economies, they opposed that most fiercely, and when we had an opportunity, a little while ago, of giving the country an example of that sort of self-abnegation, which we now want the people of the country as a whole to have—the spirit of asking as little as possible from the public funds, and so on—we did not take that opportunity and the Opposition did not advocate that we should take that opportunity. Instead of that, we laid ourselves open, in fact, to the retort that if we wanted to preach self-sacrifice to the people, we might have set an example of it ourselves in relation to our own persons, and we did not do it. Consequently, I find that the discrepancy between these sweeping attacks on the Government at Budget times and what is done during the rest of the year on individual measures is a discrepancy that is really too wide to be endured with any patience.

The other point on which I wish to touch is what Senator Fitzgerald said in regard to defence. I do not agree with him. To this extent I agree with him—I wish we were told more about our defence arrangements—that I suspect that a lot of this money that is going to be spent on anti-aircraft measures is going to be thrown away. I strongly suspect it, and I am extremely sceptical as to the probability of any air raid taking place on this country during a European war. Moreover, I should like to know whether we have got the best technical talent working on our defence schemes that is to be got. I should like to have more assurance that the money that is being spent on defence is not being misspent.

That, however, is not to say that I consider that we should not spend any money on defence at all. The logical consequence of what Senator Fitzgerald said was, certainly, that we should not have an army at all—a police force, yes, to deal with internal order, but an army, no. The basis of his contention seemed to be the theory that the British Navy would keep any prospective enemy from getting through at all, or else that the enemies would get through in such overwhelming numbers that it would be no use our trying to defend ourselves against them. Now, that basis seems to me to be unsound. It is possible that the British Navy will not be supreme in another European War. It is possible that the British Navy will have to fight for its life. It is possible that sea power will be a great deal more balanced than it was in the last war. At the same time, while that may be so, it does not follow that enormous invading armies may be able to make their way to this country. We may get a situation such as we had in the 18th century when it was possible for a small force or a moderate force to make its way to this country. Even though the British Navy was the most powerful navy in Europe at the time, it was possible for a force to get here. Now, if that should happen, ought we not be able to deal with it? I think we ought. I would even go so far as to favour the general principle of universal military training for the youth of this country, because I regard it as the proper democratic principle everywhere—and I regard it, indeed, as a pacifist measure and not a jingo measure—so that everyone may feel a responsibility in regard to war and the stirring up of the kind of hatred that brings war. I think we are perfectly right to have an army in this country, and my feeling is, in fact, that we could usefully spend less than we are proposing to spend on measures against air-raids and more than we are proposing to spend on our Army as a whole.

The question has been raised about the ports. Senator Fitzgerald says that we made a mistake in taking them over. Well, now, that all depends on your point of view. I, being a believer in the Commonwealth and our membership of it, regard the British Navy as my navy—as our navy —but how many people in this country do feel that? How many people in this House do feel that: How many people in Senator Fitzgerald's Party do feel that? That is the question; and if we do not feel that, well, then, it appears to me that national prestige, national honour, national pride, do demand the taking over of our own ports and the defence of them by ourselves, and I do not think that anyone who has the fashionable point of view about what our nationality involves can be heard to complain of the expense entailed. If you hold certain principles and ideals, you have got to pay the expenses that they involve. I think we would be in a contemptible position if we went on regarding the British Navy as a foreign navy, regarding England as a foreign Power, regarding ourselves as in no way bound up with the general welfare or general foreign policy of the Commonwealth, and yet refusing to look after our own defences. Obviously, if we take that line, it is our job to look after our own defences and I do not think anyone has the right to complain of money being spent in that way.

Like the last speaker, I have been stung into taking part in this debate and that is largely due to the people who call themselves the Opposition in this House. Lest we might be accused of agreeing with the people who call themselves the Opposition in this House, I want to try and put our views on this Bill. When Senator Fitzgerald was speaking I was wondering if I was in Ireland or in a foreign country dominated by what is known as a dictator. I wondered why this man should take up the attitude he did on this Bill. I pondered for a long time, and then a blue shirt came into my vision and I immediately understood. I remember a time in this House when this man, representing the Government, came in here and deprived the old age pensioners of a shilling a week in their pensions. At the same time, or about that period the unemployed people happened to be in credit in the Unemployment Fund and the attitude of these people was to reduce the employers' contribution to this Fund and thereby deprive the unfortunate unemployed people of their rights through the Unemployment Fund. Apparently, many people in the country saw that as well as I, and at the election the then Government got short shrift. Consequently, we had Senator Fitzgerald in this House advising the present Government to take the same line as they had taken with the democracy, the working class people, of this country. I give the Government credit for having sufficient sense to see the horrible example of the people who wore the blue shirts and who were prepared to persecute the common people of this country. They are in the wilderness now, and so long as they advocate that policy they will remain in the wilderness and no Government with any common sense is going to imitate their policy with the people of this country.

There is a sinister atmosphere about the whole discussion here. Senator Baxter and Senator Fitzgerald concentrated on reducing the social services in this country and every time they advocated that a certain representative in this House of the Bank of Ireland was very audible with a "hear, hear"! That makes me very apprehensive of the line-up of the financial interests with certain other interests in this country. As an example of that line up the Corporation of Dublin, the capital city of Ireland, recently went for a loan of, I think, £1,500,000. The Government guaranteed the loan; the banks did nothing to make the loan a success. The amount subscribed was in or about £1,000,000 or something less. The object of the loan was housing. It is very easy to see what is happening there. The banks are going to make the Government toe the line if they can. It happened in a neighbouring country not so many years ago when a Labour Government were in power. They were determined to give the common people of the country a fair deal. The banks stepped in and sabotaged them. I merely mention that so that the Government will take a strong line with the financial interests in this country.

Senator Baxter deplored the condition of the farmers and regretted that the Government were allocating £40,000 to tourist development. He regarded that as wasted money. I have very little hope for the mentality that considers that as wasted money. If there is any direct way of helping the farmers it is to a great extent through the tourist development. I want to explain for Senator Baxter's benefit. We have tourists coming in here and consuming the products of the farmer, thereby improving his market and his price. That is very easy to understand, at least to me it is.

Regarding defence, Senator Fitzgerald says it is futile, hopeless, for Ireland to think of defending herself. Irishmen are regarded as being somewhat foolish but that is an old-standing folly. Centuries ago Irish people thought it was worth while defending the country and I think as long as the country lasts they will go on defending it and I believe it is very well worth while. Possibly there is some connection between the blue and the black shirt and those who wore the blue shirt may have something in common with some of the people who are disturbing the peace of the world at the present time and, consequently, may not be in favour of defending the country.

Senator Fitzgerald deplored tariffs. I do not regard tariffs in themselves as an evil in the country. I have a commonsense way of looking at tariffs. If we produce our requirements in this country they may cost £2 but the £2 is kept in the country. If we buy a foreign article which costs £1 we are exporting money to the extent of £1. The country is at that much loss.

Does the Senator really believe that?

Go back to the infant school.

Maybe in the minds of modern financiers that is all wrong.

And of ancient ones, too.

And Labour ones, also.

I do not think so. When tariffs are put on there ought to be more consideration given to the amount of employment that is going to result from those tariffs. I have in mind flour milling. It is well worth the Government's while to invest the amount of money the people are paying so that they may have the benefit of making their own flour.

Now you are talking.

I thought I was talking. I am only saying something when some of the people here on this side agree with me.

I do not know that there is very much more for me to say except that the housing problem in this country is a cancer. The Government must insist on money being provided to ensure that the housing problem in this country is very substantially improved. Until the slums are eliminated, they should accept no dictation from the financiers or the bankers. We cannot have prosperity so long as we have a big slum problem, and so long as we have unemployment standing at the figure at which we know it to-day. So long as we have that unemployment the resources of the country must be made available for those people.

I am perhaps rather fortunate that I only gave the last Senator the opportunity of a sort of anticipatory back-handry to draw conclusions from reactions of mine to certain remarks made by other speakers. I really cannot remember now whether I approved of all they said or not, but, in so far as they said that we had to live within our means I certainly approve of that. I have no recollection of applauding any remarks that were made about social services. I do say that if, in order to live within our means, we have to reduce the social services, in conjunction with other services, then I say that has got to be done or else we have got to embark on financial methods, some of which were referred to in the other House last week: methods of which we hear a great deal from amateurs on the Labour Benches. One may say that such methods have brought disaster on every other country in which they have been employed and will bring disaster on this country if employed here.

What about New Zealand?

I will deal with that later. I am sorry that the Minister should have to suffer this fortnight of financial fire. He had a long dose of it in the Dáil, ending up last week with the debate on the Adjournment. But Senators get so few opportunities of discussing these matters that I feel sure the Minister will forbear with me and with the others in the remarks that we have to make. I rise chiefly for the purpose of commenting further on certain remarks made by the Minister in his reply in the Second Reading debate on the Finance Bill in this House. I do not for a moment imagine that the Minister's remarks were made intentionally, but it is a very favourite method for people of responsibility to accuse their critics of making remarks calculated, perhaps unwittingly, to destroy public credit. Of course, nobody who has to live in the country and pay taxes here wants to destroy public credit, but a public representative, seeing certain things staring him in the face, has to say them even if they may be held to be a criticism of public finance and public credit. The Minister contended—he actually mentioned Senator MacDermot and myself —that certain adjectives used in our remarks on the Second Reading, such as "grave" and "serious," in relation to our finances were not justified.

I would like to say why I consider those statements well justified. Some four or five years ago the Government appointed a body of experts, not all bankers, to carry out an investigation into our whole position. In passing, I may say that the mention of bankers here seems to have much the same effect on some members of the House as the use of a red rag to a bull. But this body of experts, on which there was a minority of bankers, was set up to examine, as I have said, our whole position. The commission is wrongly called a Banking Commission. The commission investigated a very wide range of subjects, banking being, incidentally, one of them. One of the conclusions arrived at by this body— it is prefaced by a long series of statistical statements, and may I express the hope that Senator Foran has read it and that, having read it, he understands it—was this:—

"The figures here reviewed indicate that there has been a marked deterioration in recent years in the state of the public finances. That this deterioration should be checked is, in our view, a matter of urgent necessity. We are of opinion that as the main resources of the country are still comparatively intact it is the trend, and not the absolute impairment already suffered, that chiefly calls for criticism."

If any remarks could be said to be calculated to injure public credit you have them there in that reasoned opinion of a body of Irishmen drawn from all Parties. That statement has behind it the support of an overwhelming majority of the members of that commission. It is because of the reactions of the Government to that report that I feel the matter is really serious. I know, of course, that there must be a time lag. The Minister dealt with that aspect of the question in the Dáil. One could not reasonably expect a Government to have remedies ready to deal with all the matters that come up for review in a comprehensive report of that kind. What I do feel is that if the Government were serious in dealing with this report, they would have done something to give effect to its recommendations. Instead, what do we find? A record Budget and a number of schemes involving further expenditure of a revenue and capital character.

I do not intend to enter into any defence of the banking system. I could not very well do so without indirectly disclosing matters which are confidential. I do want to say this to Senator Foran that, apart from any views that he may hold about the banking system, he was utterly misinformed on the matters to which he made reference a short time ago. There seems to be the idea in this country that banks are there to give out money for every kind of enterprise, productive or unproductive. It seems to be a foregone conclusion that it is the business of the banks to find from £5,000,000 to £7,000,000 to finance housing schemes. I wonder does Senator Foran ever ask himself the question: whose money is it that the banks are handling? The Senator talked as if the money in the custody of the banks belonged to a lot of rich men. I think that if an examination were made of the capital of the banks, it would be found that a very small percentage belongs to really rich men, and that the people who really own it are comparatively small men. In fact, I should not be surprised if some of them were members of the Labour Party. The bulk of this money, which Senator Foran wants to give out, represents, to a very large extent, I would venture to say, the hard earned savings of the small farmers of the country, the men of whom Senator Baxter speaks so frequently in this House. The banks are simply holding their money on trust, but, according to Senator Foran, this is money that the banks should give out with a lavish hand for every kind of scheme of what they call social reform and community amelioration that they choose to think about. Who is holding up the public? Now, I want to come to that. Senator Foran and the citizens are holding up the public. Why, if there is such great confidence, do the public not find the money themselves? Nobody seems to deal with that. Why is it so difficult for the corporation to find money? It is because the people of the country, the investors, for some reason or other are not forthcoming with the money. Why is that? I leave others to draw their own conclusions, but I do not suggest for a moment that there is any anti-social or anti-national spirit among the investors.

There are two things to be considered. In the first place there is alarm, in my opinion, at remarks and utterances like those which I have read out of the Banking Commission's report, taken in conjunction with the expanding expenditure and the further schemes for borrowing money. Furthermore, the measure of borrowing is outstripping and going ahead of the measure of saving. There was a heavy loan raised—and I think everybody will agree that it was generously supported by the public—last year to find money for the Financial Agreement. You cannot go on expecting £10,000,000 a year out of public savings. I am not in a position, and I do not suppose that anybody in the House is in a position, to say what the amount of public savings is, that one can expect a new investment every year. They are certainly not that amount, and I believe that they are less, and certainly not sufficient for the schemes that the Government is so lightheartedly embarking upon. I welcome the recommendations of the Banking Commission Report that there should be some body like a debt and investment council to examine these matters and advise the Government as to how far they can go and expect public response.

Let it be clearly understood that it is not the business of the Government or of the banks to find money for every sort of scheme put up, whether by the Government or by local authorities or by the Labour Party, for expenditure, a lot of which has been proved in the past to be unproductive. Even housing and the very admirable and necessary social services must be conditioned by our means. We see to-day that, in spite of two-thirds of the debt charges on houses being borne by the State there is a deficit on the ratepayers of 16/- per flat per week. In the face of that there has been a recent substantial rise, I think, of about £200 in the cost of building a flat, of which 17 per cent. is a result of the increased demand of labour. Senator Foran speaks as if labour had no responsibility in this matter, as if investors, banks, and others are to issue the money and labour is to make whatever demands it chooses. In this matter of social services, and especially that of housing, labour has every bit as great a responsibility on its shoulders as any other section of the community.

This is again a matter of opinion: a lot of us, and probably the majority in the country, feel that this expenditure can go on for ever; but finance is the acid test, and there are vested interests, people who have the money, who have got to be persuaded that the finances of the country are economically and soundly managed; and they believe that we have reached the limit in expenditure and that we are borrowing beyond our saving power and investing capacity. What is to be done about it? Senator Baxter has adumbrated the opinion that we can go into some reform by which we can try to produce new money. We hear that policy also from a Deputy in the Dáil. It is really the policy of the printing press—of bringing money into being without an equivalent in production. That cannot be done. We know what has been experienced all over the world by that policy and what disastrous effects it has had. There is the other method which, I submit, has always been the only method, that is the policy of living within our means.

That policy is applied to the individual and it has some analogy when applied also to the State. Of course, the State has wider resources and can go on much longer, but it has been going to the limit of its powers. It is now felt that the time has come for a parting of the ways. We have got to retrench, stop borrowing—however estimable the services may be—and give up the talk of unlimited social services and houses for everybody, until we can see that they can be soundly financed. That is the acid test. We can print paper money but it means inflation, it means rising prices; it means that there will be houses built, but that the cost of labour will be running after the housing costs and the costs of the houses will be running higher and higher in consequence, until eventually we find ourselves in an economic desert.

The difficulty that I see is the political one. As far as I can see, any Party would run considerable risks in going to the country on this question of sound finance, because it means the stopping of the rake's progress, it means the reduction of expenditure and the cessation of borrowing. I do feel, however, that the country and the Government should be serious about it; it is a crisis which should be faced by the united Parties of the country. I feel that, if there ever was a time for some form of united action, that time is now. A National Government could go to the country and tell the truth and give up the dangerous line of least resistance. If we all do it together that would be a safeguard, but no Party could run the risk of doing it alone. It is an unpopular thing to do and any Party would have to face the loss of its reputation, which is an important factor in a democracy. Even that does not alter the facts, because the country does not understand that the arithmetic tables remain the same.

This system is repeating what has happened in Australia. We know—I have not got the exact figures—that about seven or eight years ago the Australian people were in the same difficulties. The situation there was somewhat different in its structure to the situation here: there were several State Governments and there was also a Central Government. They were all borrowing in the manner in which Senator Foran thinks that borrowing is possible everywhere. But they found that it was absolutely impossible, that there was the risk of repudiation and disaster. In this country, a responsible Deputy here in the Dáil the other day said that our people come first and our credit afterwards. These are the people who ruin our national credit. Australia at that time faced the reality of the situation. One man— whose name is not generally known— was responsible for the action taken, and that man was the Attorney-General of one State. The salaries of the civil servants were cut by 20 per cent. That had to be done. I see not so much by his remarks as by his facial expression, that Senator Foran considers that it is dreadful that anybody's salary should be cut 20 per cent., but surely it is better to have one's salary cut by 20 per cent. than to get the sack altogether, and have the whole show closed down. The doctrine of inflation reached the point where it could go no further and the Australians came back to orthodox finance and got right again.

Senator Foran will say that New Zealand has gone right. New Zealand, I know, has been reaping the first fruits of a new monetary policy, of those doctrines that control of credit and currency by the State will result in the stimulation of production. It has only been going on in New Zealand for about two years, however, and we see already that they are full of anxiety there about discharging their obligations. He thinks that we should be light-hearted about dis- charging our obligations. If we are going to discharge them we are not going to do it except on the basis of sound finance. Does he wish to have rising prices, followed by rising demands, going the whole vicious circle until we reach the point where the pound would be worth a shilling, where you could buy, as you could in Germany some time ago, 5,000 pound notes for a penny, when people papered their walls with repudiated notes. It may be that that is the course that is recommended to-day.

Australia is all right now, on the basis of sound economics. It is too soon yet to say anything about New Zealand, but it is a matter of anxiety there for those people who are in a position to judge. I suggest to the Government to follow the example of Australia by getting back to the orthodox method of paying its debts and putting its house in order.

I rise to put some questions to the Minister with regard to the tobacco tax. I understand that the tax imposed here is 8d. per lb., while the tax on the other side is 2/- per lb., and yet the increase in the price of tobacco and cigarettes is the same here as in England. I gather that this question is before the Prices Commission and that leads me to another question. In the case of a firm or manufacturer brought before the Prices Commission and found to have charged an exorbitant price, where does the money go? Are the people who charge that extra price allowed to get away with it? I think that is a matter which should be examined and that steps should be taken to rectify a position of that kind. We can all see a position arising in which the Prices Commission would be asked to investigate the price of an article, and that investigation taking probably six or eight months. While the investigation was proceeding, the people would be paying the extra price, and if it is found that they have been overcharged, the Minister, I think, should seek power to recoup them. Undoubtedly, he is blamed for it, and when he is blamed, I think he should also have the gain.

We have heard much criticism from the other side because of exorbitant taxation, but the only suggestion which I have heard from the Opposition as to economies is in relation to social services, and also the argument that the Parliamentary Secretary to the Minister for Local Government should not be set down as a social service. These are the only suggestions I heard offered. I should like to ask the Opposition whether they propose to economise on old age pensions, widows' and orphans' pensions, unemployment assistance, or any of these schemes?

Yes, a little off all of them.

I think it was Senator Fitzgerald who criticised the idea of building houses for the working classes who cannot pay an economic rent, but I think the least said about any proposal to suspend such housing schemes the better. What are we going to do with these people? Is the taking of these people out of the slums not one of the greatest social services we can have? If they cannot pay an economic rent, there is a solution—pay them a proper wage. Then they will be able to pay an economic rent.

Hear, hear! Provide the work.

Yes, provide the work, and, if we are asked to provide the work, we shall have to ask for more money, if we are to continue the present financial policy, or adopt some of the proposals which we have heard expounded here and in the other House.

Senator Fitzgerald stated that the British Government at one time offered him the ports, and that he had refused to take them over. I should like to ask the Senator if that offer is on record in his Department. I think it should have been recorded, because it is such a big item that it should not be passed over lightly or left unrecorded. Senator MacDermot, of course, says that the reason we had to pay over £10,000,000 to England was that we abandoned the King and made changes in the Constitution, and that, on account of that, we can never hope to end Partition.

I did not say that that was the reason we had to pay over £10,000,000 to England.

I understood the Senator to say that it was one of the chief reasons for the continuance of the war.

Yes. I said that it could have been ended in 1932, but for that.

My answer to that is that if the enacting of a new Constitution and the removal of the King is one of the reasons for our being unable to end Partition and for the failure of the Northern people to come in, the King was here for ten years, from 1922 to 1932, and there was very little move made.

Is he not here yet?

No, unless the Senator replaces him.

He is here yet.

Has there ever been a time since the Free State was founded when the King could have paid a visit to this country and be cordially received by all Parties? Is that not the test?

If Senator MacDermot's statement is correct and if the economic war was continued from 1932 or 1933, just because the Irish people willed it and desired to establish a State of their own here and to enact a new Constitution, and that the farmers may be said to have been fleeced on that account, I say that the farmers were, as they always were, in the vanguard for freedom, and were very glad to be able to make such a noble stand to assert Ireland's rights to any form of independence she wished.

With regard to the plea of the Senator who is now leaving the House that more money should be spent on food production, I am in thorough accord with it. That plea has been put forward many a time, and, if the country is to be defended, its defence and that of other countries who may possibly be allied with this country in that defence, will be largely based on food supplies. I believe it is necessary for the Government to take time by the forelock and to see that the foundation for meeting that situation should be laid, and laid immediately, and I think that some of the moneys voted for defence should be spent in this direction. A part of our physical defence training might be the inculcation of agricultural and food production principles in a food production army, a supplies army, with our workers placed on the land, and that food production of such a nature that it could be conserved, either by tilling or by preserving, in some such way as is operated in other countries, should be embarked upon. There should be a large scheme of food production and if there was not a market for beef in England and Germany, there are ways of conserving beef which could be profitably employed.

I suggest that the State should take this matter in hand and should use the Army as one of the channels through which this process could be worked out. There is undoubtedly food going to waste in the country at the moment. Rich grass lands are lying derelict because the farmers are not in the position to stock them. We have heard about the six much cows on lands on which ten could profitably be used, and the same applies to stock of all descriptions. The farmers at present cannot stock their lands and the best food factory we have, the land, is standing idle. That should be worked, and not alone would it place us in a secure position in time of war, if the war clouds should break upon us, but it would bring our people back to the land. I believe that the food conserved on the land by tilling processes could be used and would be found to be a valuable asset in time of difficulty.

I was astonished at the attitude of Senator Fitzgerald in this matter. He was once Minister for War in this country. Surely, if he were in similar position to-day, he would not adopt the pacific attitude to which he has given expression here to-day. I think it would be contrary to our people's record and history to suggest that we have reached the stage at which we lie quiescent when danger threatens from any quarter, when we should at least do everything possible within our means, and exert the last ounce of strength physically, financially and otherwise. It can never be said that Irishmen at this stage of their history are no longer prepared to do their duty towards the protection of their country. These are some of the things to which the Minister should apply himself.

With regard to the moneys to be devoted for the tourist business, I am not altogether so convinced that these will bring the promised results. Certainly they will not bring them this year and they will not bring them next year. I believe that the money could be more profitably used in some other way. Whether certain things happen or do not happen in the next few years, I believe that the tourist trade will not bring the relief to the farmers that was suggested by some of the speakers to-day. I support the Senator who drew the attention of the Minister to the rise in the price of tobacco. Tobacco can hardly any longer be regarded as a luxury——

I might exempt the ladies; but as far as the ordinary workingman is concerned, in order to soothe his wracked nerves, he needs tobacco. I think that this question of one halfpenny an ounce increase in the tax should be investigated. That halfpenny an ounce has no justification for its imposition.

Senator Sir John Keane was, I think, very unfair to New Zealand. It is not true that New Zealand has not been given a fair test. The Labour Government there have been much longer in power than Senator Sir John Keane stated. They were re-elected last year, after three periods of office, and by a very large majority too. They did not bring about the resuscitation of their country by cutting salaries by 20 per cent. I do not know what Australia does, but it was a standard measure there to cut down salaries all round. Railwaymen, old age pensioners, school teachers and professors, all had their salaries cut. The late Government in this country tried this. The Cumann na nGaedheal Government in this country tried it, and where did it leave us? Very well stranded. They have lost their powers of government, and if they come back again they will probably try the same experiment and end where they began.

I am not one of those people who are pessimistic about the country. There is a future before it. The right methods are being pursued, and though the question of tariffs is not sufficiently examined or enforced with due care, I admit that on general lines an effort has been made for a balanced policy between industrial and agricultural life in this country. New Zealand has not got justice from the speakers here to-day. In 1935 New Zealand was bankrupt. The farmers could not embark upon any productive course of agriculture. They could not pay wages. The wages of civil servants were cut to the last penny, and a reduction of social services had been embarked on for a number of years by a Government similar to the Government in England, consisting of Unionists and Liberals. That Government was tried for years. If New Zealand is now in trouble, it is in trouble by reason of the fact that its predecessors embarked upon borrowing very big loans from England, and paid millions and millions of pounds in interest and sinking fund in respect of these loans. If anything is wrong to-day in New Zealand, it is the predecessors of the present Government who should be blamed. I would ask the Senators who have spoken to-day and the Minister himself to be fair to New Zealand, and I suggest that if he studies their methods he will in due time be converted to following the policy that has been followed there. That policy will get this country out of the financial state to which the present policy has brought it.

I will not detain the House very long. Before I speak on general lines there are three matters on which I want to speak. These were somewhat irrelevantly raised here, and with these I must express my dissent. I am amazed to find that tobacco is a luxury for women and not for men. I am amazed to find that it is only men who are entitled to have their nerves soothed, and that women are not so entitled. That is a policy from which I dissent. I also dissent from what Senator MacDermot said. As one who believes in the Association of the British Commonwealth of Nations, I dissent from him when he speaks of the British Navy as our navy.

I think he said it was his navy; he did not assume that it was our navy.

I do not believe he said that; at least, he did not mean it. I believe that the present position in the British Commonwealth is that defence is universally under the control of each Government, and that there is co-operation between the different Governments.

May I infer from that, that if the Senator's son proposes to join the British Navy to-morrow, he would regard him as going into a foreign navy, or would he consider it necessary, in order to satisfy his national aspirations, to send him down to one of our few boats in Cobh?

I am afraid I am still an unconverted pacifist and I hope my son will not join any navy. That is the only honest answer I can give to the Senator. The third point to which I would like to refer is the look of complete horror on the face of Senator O'Donovan when somebody suggested that there might be a change in the Constitution. We started here with a Constitution and we amended that Constitution nineteen times. It is quite in order to further amend that Constitution. Still it is the law. It is constitutional law and I think we are bound by it just as we are bound by any other law.

My principal reason for speaking is the question of the general policy. It seems to me that a great deal of wild, loose talk was indulged in with regard to our financial position. If it is to be the policy of this State to try the experiment of inflation by printing money let it be the national policy, sponsored by the Government, and let us try it and take the consequences, whether good or bad. Do not let us mix up what I conceive to be the general policy of the present Government—together with the policy of their predecessors—which is to live within our means, or at any rate, try to do so. Do not mix that up with the policy which would have to be a very carefully thought out State policy and which would have to be sanctioned by the people as a deliberate policy.

It seems to me that you cannot do all the things that have been advocated here within the widest limits of the present Government's policy. Many Senators have advocated an extended defence policy; others have said that our social services should be increased, that we should provide more money for capital enterprises and that we ought not to reduce any salaries. You cannot do all of these things. The world, in my opinion, cannot go on increasing social services, increasing employment and piling up defence expenditure at the present rate. We, as a small country, cannot do it either. I am probably the only Senator who would advocate for small nations, such as ours, a policy of non-defence. I do not believe that it is possible for us to spend enough money, within our means, to provide what would be regarded as an adequate military defence. For my part, I would much prefer that we should take courage and simply say that we would be a nation of non-resisters. I do not agree with those who believe that the strength of our national position depends on the times at which we are prepared to defend our position by violence. I believe the strength of Irish nationhood lay in the fact that the Irish people stuck to it, because that strength was displayed even in times of peace, and that, though our country had in a measure to accept government by an outside people, the country never actually accepted it. I do not think you can successfully defend this country simply by military means. We have to make up our minds either to do without social services or, if you like, to increase defence because we cannot do both. To my mind, it is not much use discussing finances, in the present state of the world, from a Party point of view.

We had the technique of unreasoning opposition from some members of the present Government when they were in opposition. Everything was wrong; every expenditure could be less. We have certain persons now in opposition who would like to take exactly the same point of view, but I do not think it is the point of view of the more responsible members of this House or of the Dáil. There must be differences of opinion as to how and where you should spend money. As far as I can gauge the position— and I am not here to defend the Government; in any case, the Minister is here for that purpose—our national policy at the moment is to endeavour to live within our means. If that is so, while there may be differences as to the way in which money can be spent, we can be united about it. As I think I said on the Second Reading of the Bill, we ought to be in the same position as I and others had to face in business. We would like to do many things, but we have to look at our resources. We have to take a certain element of risk, but we have to be careful that when that risk is past we shall be able to get back to living within our income. There should be, and I think there can be, a very considerable amount of national unity on that question. I should like to see a tacit agreement between the more responsible leaders on that question. Criticism we may have, and healthy criticism is a good thing in democracy; but there should be a measure of agreement that, in telling the people you cannot do all the things they want, the Government will be supported by all sections in this House and in the Dáil. I think that is necessary, because any alternative Government would be in exactly the same position. I repeat that you cannot do all the things you would like to have done; but that does not prevent me from advocating certain measures which, within our resources, I think might be adopted with advantage.

I do not like the attitude which seems to look upon social services as a virtue. They are, in my opinion, only a regrettable necessity, a necessity because financial conditions do not permit of our undertaking other measures. They are not something which should be permanently continued or something about which we should speak with pride. If we could get to the stage, which most of us would like to see, in which there would be no necessity for old age pensions, because people would be able to save sufficient during early life to provide for their old age, a thing they cannot do at present, that would be the ideal state. In present conditions you must have social services, and no sane person proposes to abolish them, but the aim should be to get rid of them or, at any rate, to get rid of as many of them as you can, by providing sufficient production in the country to give a decent livelihood to everyone. That, I admit, is rather vague talk, and it does not seem possible that we can reach that desirable state in my lifetime, but it is the aim of one side just as much as the other. I, personally, believe you cannot reach it simply by printing money. That is being tried elsewhere, and I do not believe that anybody who believes in that method will ever be convinced that it will not work until it is proved unworkable. However, if that method is to be tried, let some Party come along with that specifically as its programme. Let it be put to the people and let the people decide upon it.

I do not intend to take up the time of the House for a prolonged period, but on an important question such as this I venture to submit some observations, particularly in view of the criticisms that have been put forward from the other side, and particularly in view of the fact that on this occasion some Senators have referred to Senators on this side of the House as "those people on the right."

Because they are in the right.

Mr. Johnston

We have heard a lot of criticism from these Senators, not alone on this Bill but on almost every Bill that has come before the House. Senators on the other side seem to have a whole stock-in-trade of arguments about tariffs, and we hear frequent references to squandermania and wild-cat schemes. I feel, honestly speaking, that they should be ashamed of persisting in the use of these remarks, because they have been using the same terms for quite a long number of years. They used them in 1934, in 1935, in 1936, 1937 and 1938, and they are still using them in 1939. They will, I presume, continue using them until the next general election and until the country gives the same decision as it gave in 1937 and 1938. It is a mystery to me that some of these people who seemingly sympathise so much with the taxpayers at the present time, cannot submit something to the people, or something to this House or the other House, to justify their statements. We can all criticise. It is much easier to criticise than to offer something of a constructive nature. We have heard much to-day about the price paid for the Constitution. I think we might go further back than the enactment of the Constitution. As far as I am concerned, I will go back to the old Sinn Féin policy. The first occasion on which I got an explanation of it was in a statement by the late Arthur Griffith in 1908 or 1907, when he outlined the policy of Sinn Féin at that time. The policy which the Sinn Féin organisation pursued then is the policy which Fianna Fáil is pursuing at the present time, and it is the policy, I think, which is best and will be best for the people of this country. It is the policy of which the people of this country approved when they got an opportunity of expressing their opinion, without threats of any description.

There is one matter to which I want to draw particular attention. Some Senators on the other side, who never tire of talking about the economic war, should stop and ask themselves: Who was the cause of the economic war? They should put themselves in the position of the people in any other civilised country, who had an ideal of nationality, and who found the Government of their country up in arms against the most powerful Empire in the world. Is there any Party in any civilised country in the world who would at that time have supported the enemies of their own country, who would have encouraged them, and pointed out that such and such a thing should be done? Is there any Party in any other country who would have pointed out to the enemy of that country that if they taxed the country's products and put so much per head on their cattle they would soon bring them to their senses? It is shameful. If they had a spark of decency, or if they had a drop of Irish blood in their veins, they would be ashamed to talk about the economic war, when they brought it on and carried it on. It was brought to a fairly successful conclusion in spite of them. That is all I have to say on this matter.

Does the Senator seriously believe that the economic war was brought on by the Opposition?


I think it has very little to do with this Bill.

I think those who have participated in this debate will agree as readily as those who have listened to it, as I have done during the last two or three hours, that it has not been a very satisfactory one. It seemed to be a sort of free-for-all, in which every range of the Government's activity and the Government's inactivity was passed under review. There are, however, one or two statements with which I desire to deal before you, Sir, put the Motion to the House. The first point is quite a simple one. A question was raised by Senator Hawkins as to what were the Minister's powers should the Prices Commission find that the present price of cigarettes and tobacco is unduly high. He wanted to know what powers the Minister had to compel the tobacco manufacturers to code to someone—he did not say to whom— the undue profits which they had earned. Unfortunately, as far as I know, there are no powers in the Control of Prices Act, under which the commission operates, which would enable the Minister to recover— whether for the public or for the State —the undue profits which any manufacturer might have secured for himself by reason of the high prices which he had charged.

I should, however, like to point out to Senators, who may be under some misunderstanding with regard to this matter, that the comparisons which are generally made between the rate of tax on tobacco in Great Britain and the rate of tax on that commodity here are based largely upon a misunderstanding of the real position. I understand that the nominal rate of tax on tobacco in Great Britain is 11/6 in the lb., but they have a very extensive range of preferences in Great Britain which reduces to about 10/10 what may be described as the average rate of duty paid on the commodity there. Here, the position is that our rate is about 10/6, I think.

It also happens that on the last occasion upon which the tax on tobacco was increased the tobacco manufacturers, particularly the manufacturers of cigarettes, did not make any corresponding increase in the price to the public. Perhaps they were able to recoup themselves in some other way. In any event, I think the nominal rate to the public was not increased. It happens that on this occasion they have made such an increase. It should not be forgotten either that a certain amount of the criticism which has been levelled against tobacco manufacturers, because they have increased the price of cigarettes to the public, is not entirely disinterested. It might happen that some of the larger firms would have been able to shoulder the burden of this tax for some time without passing it on to the public. They would do that perhaps in the hope that they might crush out some of the smaller manufacturers, and then, when they had the market and the public at their mercy, no doubt they would have taken steps to recompense themselves for their former generosity.

Might I ask the Minister whether this is the second or the third tax which has been imposed without any increase? I understand it is the third.

On one occasion it was not passed on.

On only one?

On other occasions I think it was passed on by reducing the size or the density of the cigarette. I am only dealing in terms of nominal price. Two other statements were made here, one of which was quite a surprise to me, and that is the statement made by Senator MacDermot that the dispute with Great Britain regarding the land annuities could have been settled for a payment of £10,000,000 in 1932. I do not know of any justification for that statement. I was engaged in the negotiations which took place in October, 1932, and I think I can say, as the Taoiseach has said on other occasions when this matter was under discussion, that the furthest we were able to get on that occasion was that, provided we were prepared to accept the point of view of the British Government in regard to the Oath of Allegiance—the Oath of Allegiance at that time was in our Constitution—they might consider some mitigation of the Agreements of 1923 and 1926. That was the utmost concession which, in my opinion, would have been made at that time to our point of view on that matter. I certainly am not aware of any fact which would justify Senator MacDermot in making the statement which he has made here to-day. He may have more knowledge on this matter than I have, but I am giving the House, for what it may be worth, such information as I have in regard to it.

The other statement to which I want to refer is the statement by Senator Fitzgerald that the Treaty ports were offered to him when he was Minister for Defence; that he could have had them for the asking, but he would not take them. A statement in similar terms was made in the Dáil during the course of the discussion, I think, on the Agreement with Great Britain. It was then pointed out that, although the records had been carefully searched, there was no record of such an offer being made, and that as far as could be seen from the records the position would seem to be that, although the British Government might have been prepared to entrust us with the custody of the ports, it was on the understanding that the ports would be at their disposal in time of war or strained relations, and that all the other provisos relating to facilities for defence which occur in certain Articles of the Treaty were to subsist and were to become operative should the British Government at any time so desire. The position now is quite different.

The ports were handed over to us unconditionally and, of course, since we have full sovereignty over the whole of the Twenty-Six Counties, there now rests upon us the natural obligation of defending that territory and seeing, not merely that we ourselves will not be attacked in it, but that it will not be used as a base of attack on, or as a potential menace to any other Power. Accordingly, for what it may be worth, since we have to that extent secured the complete acceptance of the claims which we have been making to be a free country and a free people, we have also to accept with that what I may describe as the natural obligation of free men; we have got to put ourselves in a position to defend this country from attack.

It might be said that such criticisms as have been directed against the Government on account of their defence policy in the course of this debate have been based upon the assumption that we are not likely to be attacked. It would be very consoling if we had such an assurance in that regard that we could refrain from spending any money upon defence, that we could arrive at the logical conclusion and disband the Army and return to the taxpayers such money as we may be taking from them in order to maintain that Army. But unfortunately, that is not exactly the position. Senator Baxter says, of course, that our best defence policy would be to go on and increase our production of food; I think Senator Cummins took the same point of view. But what are we going to produce the food for? When the dispute with Great Britain was in its initial stages I remember we had a very careful survey made of our agricultural production, particularly so far as our live-stock industry was concerned, and it was found, I think, that we were exporting about 800,000 head of cattle per annum.

As a result of that examination, it was pointed out that, even if we were to give every man, woman and child in this country, I think, about 8 ounces of meat additional per day, we could not consume more than one-fourth of our exportable surplus. So, quite obviously, if we are going to produce more food in this country, we are not going to produce it for the purpose of consuming it here, but for the purpose of exporting it abroad and getting in return for it such commodities as we ourselves do not produce and of which we are in need. To whom are we going to export it? I presume that in time of war we could only export it to our nearest customer. We have no navy to keep the seas. Therefore, we could not undertake the risk, and I should like to listen to Deputy Baxter's speech in the Seanad if we announced here that we were going to entrust the produce of Irish farmers to some sort of freighter which is going to try to deliver it in Hamburg or some of the Baltic ports, without a navy to defend it. Therefore, it comes to this, that in time of war we have only practically one customer, and that for that customer our food supply is likely to be a very vital element.

I remember reading some articles which appeared in an authoritative publication here about 18 months or two years ago, in which an analysis of the position which arose during the latter stages of the last world war was made, and there it was pointed out that during one period of the submarine campaign, if only the Irish food supplies could be cut off from Great Britain for an appreciable period of time, it looked as if Great Britain was going to be reduced simply by the process of starvation. Accordingly, we may take it that this question of our food supplies to Great Britain will become one of vital necessity to Great Britain in time of war, and to those who are at war with Great Britain, and will be so recognised. Accordingly, the time may come when, notwithstanding what Senator Fitzgerald has said here, they may say to themselves: "It would pay us much better to try to attack Dublin rather than attack London, because we know that London is in a state of perfect defence." The British have immense resources; they are able to provide all the equipment and all the man-power, and it does not impose an undue strain upon their economic system to try to defend London or any of their chief centres.

When a body of raiders set off they may have one definite objective in mind, but they are also opportunists, and if they find that they cannot get through to London they are not going to turn back for want of looking for a target. They may go on to Liverpool: naturally they will try to hit the target nearest to their point of departure; but if these and other cities are so heavily defended that they cannot be attacked, they are going to go on until they get some objective, and our cities as objectives might, as I have tried to point out to Senators, in certain circumstances be just as important to them as the City of London. Are we going, then, in face of that possibility, to do nothing to defend this country?

Senator Fitzgerald said, of course, that the Government have to be prudent in regard to matters of expenditure, and that the Government should take risks. But it is not the Government that is going to be at risk in a matter of this sort, nor is it going to be Senators like Senator Baxter and some of the others who spoke in regard to our defensive policy and of our position here. They might be up in Cavan or down in Kerry or over in Galway. It is this densely populated area of Dublin and other densely populated areas like Cork, Waterford and Wexford—all our eastern sea-ports—which are going to take the risk. I do not think that those people would feel very safe and very secure if they were relying simply upon the scepticism of Senator Fitzgerald and Senator Baxter in order to safeguard them against attack in the event of a great war. While we might like to be able to take up the position that Senator Baxter and Senator Fitzgerald have taken up in this House, nevertheless we have to think of our people and we have to go to them and say to them, "It is an unpleasant thing to have to do, but we feel that, in these circumstances, with your lives and your interests depending upon it, with all your productive machinery at stake, with all your economic organisation at stake, we must ask you to tax yourselves, and when we feel that the limits of your taxable capacity in this regard during this one year have been exhausted, we have to ask you to give us authority to borrow money in your name, bearing in mind every circumstance and every factor, our resources, the risks of attack, and all these other things, to put the Government in the best possible position they can be in to defend you against the risks of attack, for whatever they may be worth."

There is no person in Ireland at this day who is going to exaggerate the risks of attack, but certainly no person is justified in going to the people and saying that there is no risk of attack and in telling the people that the money that is now being spent upon defence is money that is wasted. I hope and pray it may never be used, but we have got to take these precautions. We have to have this machine ready in case we might be called upon to use it. I do not think there is anything more I need say on this Bill.

Question put and agreed to.