That Seanad Éireann would welcome a statement of policy by the Government regarding the Irish currency and its connection with sterling.
As the Seanad is well aware, the Irish pound is interchangeable with the pound sterling, and our currency is backed by a mixture of gold and British securities. It must have occurred to many people since the war started to wonder what would happen to this country if the war went badly for Great Britain, and if anything developed in the course of time in Great Britain at all resembling the appalling inflation in Germany after the last war. I am very conscious of the advantages of keeping an exact parity with sterling, and I am also conscious of the economy of backing our currency to as large an extent as possible by interest-bearing securities rather than by gold, but, under present circumstances, one is tempted to wonder whether we ought not to go further than we have so far gone in reducing the amount of the sterling securities backing our currency, and either increasing the quantity of gold held or acquiring dollar securities. One is also tempted to wonder whether it is possible at all for the Government to plan in advance some means of extricating ourselves and our currency in case of emergency, an emergency that I hope will never arise, from the sort of collapse to which I have referred.
It may be looking very far ahead, for I am afraid this war will go on for a long time. I do not imagine that, actually during the war, anything fantastic is likely to happen to the British currency; but if, by misfortune, Britain were to suffer defeat, the question is whether to any extent at all we could get out from under, and whether there are any steps we can take now to make our position somewhat more secure. The arguments, it seems to me, are all against any hasty departure from sterling. We have, even in this war situation, the experience of Denmark, our principal competitor in the British market, to guide us. The Danes left the sterling group at the beginning of the war, and I do not say they could help doing so, but the results have been disastrous. None of the Scandinavian countries, and, in fact, none of the neutrals, has suffered as much economically from the present war as the Danes.
Their currency was allowed to appreciate only 10 per cent. above what it had been in relation to the pound, but, even so, the phenomena that have accompanied that change have been extremely discouraging to anybody who might be tempted to do likewise. Their bank rate, instead of being 3½ per cent., is now 5½ per cent. Owing to shipping difficulties, imports have not been made less expensive to the Danes as might be expected to happen on account of the currency appreciating. Their import prices have actually gone up by 45 per cent. between August and September. Their export prices, on the other hand, have risen only by 15 per cent. and the prices of all Danish securities have depreciated to a catastrophic extent. That is certainly a warning to us that even the very unusual circumstances of the war should not hurry us into any departure from sterling.
The main object of this motion was not really to make these remarks about the war situation, which could have been made in private, but to try to bring the Government face to face with the very active campaign in various quarters to popularise certain monetary conceptions which involve the overthrow of the present arrangements with regard to the Irish pound and sterling. What I want to do is not to deliver an economic lecture to the Seanad, a task for which I am not qualified, but to induce the Government to take proper note of what is going on. I am afraid that if all this propaganda is left unchecked and unanswered, a time will come when it will be impossible to settle the questions involved simply on grounds of reason and logic, that so much feeling, so much prejudice, will have been imported into the situation that it would be psychologically impossible to resist the demand for revolutionary changes in our system. This agitation is supported by the Labour Party, by various university professors, the most conspicuous of whom, I think, is Professor O'Rahilly, by the new movement started a few days ago in the Mansion House, which has distinguished itself by bringing together such men as Mr. Con Lehane and General O'Duffy, and by a very widely-circulated influential religious newspaper called The standard.
While I do not feel myself qualified to deliver a technical economic lecture to the Seanad—a task that, indeed, I think ought to be unnecessary for anybody to do in view of the immense amount of material that is accessible to every Senator in the report of the Banking Commission—I do feel myself capable of dealing with the arguments that are being used in the course of this popular campaign of which I have been talking, arguments that are unsound and mischievous and far more directed to the emotions than to the head. I might as an instance, refer to a speech that was made ten days ago by the Lord Mayor of Cork to the Galway branch of the Irish Transport and General Workers' Union. He said:—
"The characteristic of youth is that it should see visions of what should be. The old dream dreams of what has been. They are tempted to accept things as they are. We must be rebels—rebels against the worldly interpretation of life which conflicts so openly to-day with the law of God. We must rebel against the humbug and pretence of the world of money and credit. I am not now referring to those who are doing imprisonment for their gambling on the stock exchange. I am referring to those who are held in honour, the men of big business and big bankers. Many of them are good men, but they are blind—blind to the present and to the future. They are in possession of everything, and tell you that economic laws are so binding that they cannot help if you have nothing. These men have been warned by Pope Pius XI in his Encyclical."
And so forth, at great length. Now, Professor O'Rahilly, like the Lord Mayor of Cork, when discussing this matter, makes constant references to Papal Encyclicals, and so does The Standard, and the implication in all these speeches and articles is that they are preaching the cause of the Church and the doctrine that the Church has enunciated, to which cold and worldly men, either because they are bad at heart—perhaps, even Freemasons—or because they are just plain stupid, are shutting their eyes. I think that the first great truth that ought to be accepted by everybody in connection with this subject, is that the division of opinion is not between those who are indifferent to poverty, unemployment and suffering and those who want to cure them. We all want to cure these evils. I think that none of us is indifferent to them, but the conflict is as to the best way of reducing their proportions, and the assumption of a superior moral status by those who are advocating expedients which I believe to be unsound, fills me, I must say, with indignation and even with disgust.
There are a few points in connection with this "hot-gospelling," quasi-religious handling of an economic question that ought to be borne in mind by any man of common sense. First of all, it must be remembered that poverty and unemployment are not new; that they are not the invention of the present day or even a result of the 19th Century industrial movement or of the form of capitalism that developed as a result of that industrial movement. Secondly, the ideas of social justice that are embodied in Papal Encyclicals are not just recent discoveries of the Church. The Church, during all the years of its existence, has had the same fundamental principles in regard to social justice that it has to-day, and the Papal Encyclicals merely sought to set forth those principles in a manner that was applicable to the particular disorders of our present time. The principles themselves are not new, any more than poverty and suffering are new, and if it merely required a good heart and the acceptance of the Catholic Faith and of Catholic sociological views in order to wipe out poverty and unemployment from the world, then those things would have been wiped out a very long time ago. There was a time when the Popes themselves were the rulers of temporal dominions. In certain cases the Papal States were often unjustly abused, and naturally enough, by the enemies of the Papacy, but this much at any rate anyone with a knowledge of history must realise—that even in the Papal States poverty and unemployment and the hardships of life were not abolished. That was because these things were very difficult to abolish, and not because the Popes were blind to the principles of social justice then any more than they are to-day.
When you take the Papal Encyclicals and extract a number of passages from them, as The Standard or, let us say, Professor O'Rahilly does, and say that if these ideals have not been attained, your present financial system must be all wrong, I believe that that is faulty reasoning. These are aims set forth for us to struggle towards, but it does not follow that, because we have not attained these aims, we should plunge into wild and dangerous experiments, even though some people have convinced themselves and would endeavour to convince you that the adoption of these ideas would have miraculous effects. The question is whether they would have better or worse effects than the economic policies that obtain at present. If one is to proceed by the method of quoting extracts from Papal Encyclicals, divorced from their context, and unbalanced by other quotations, one arrives at absurd results. Here for example, is an extract from a famous Encyclical, Rerum Novarum:—
"To suffer and to endure, therefore, is the lot of humanity; let them strive as they may, no strength and no artifice will ever succeed in banishing from human life the ills and troubles which beset it. If any there are who pretend differently...
I omit some words here;
"...they delude the people and impose upon them, and their lying promises will only one day bring evils worse than the present."
Now, if one were to pick out a sentence like that and nothing else, it would perhaps discourage anyone from making any attempt to improve things. I am far from wishing to discourage any such attempt, but I do say that the quoting of selected passages can be very misleading.
After all, mankind in all its efforts for social betterment is necessarily limited by physical conditions. If you took, shall we say, Professor O'Rahilly, and handed him 100,000 unemployed and sent him off on an expedition to the Aran Islands; if you gave him possession of the Aran Islands and told him to get on with the work on the basis of his economic ideas, fortified by the Papal Encyclicals and the assurance they gave him that economic conditions might be made ideal by their proper application, he would necessarily fail. There is a limit to the resources of any country, and it is absurd to argue—as these people constantly do— as if there were no limit at all to what can be attained provided you are prepared to stimulate the people living in the country with immense doses of Government credit. The doses of Government credit may be absolutely monumental, yet they will be of no use if the national resources are not there.
It was pointed out in an appendix to the Majority Report of the Banking Commission by the Bishop of Raphoe and Mr. George O'Brien that humility is needed in approaching the interpretation and application of the Papal Encyclicals, and that it is undesirable that individuals, however learned, should take upon themselves to dogmatise confidently about them and abuse other people for not taking the same view as they take. The Bishop of Raphoe and Mr. George O'Brien pointed out that, if anyone were asked to name the country in Europe which had founded its whole policy for years past most consciously, consistently and loyally on the Papal Encyclicals, one would probably name Portugal; and the financial policy of Portugal, which, incidentally has proved very successful, has been ultra-conservative.
Far from increasing their public debt, they proceeded on the basis of reducing it; they have been paying all the expenses of the State out of revenue and balancing their Budget. Surely, that is a very obvious warning to people who interpret the Encyclicals as imposing upon us the duty of doing something revolutionary. So much for what I may call the quasi-religious side of the propaganda being pressed upon the people, and especially upon the young people, of the country at the present time.
There is another side, one which I find less objectionable and more natural, but not any wiser. It is what I may call the nationalist side. It is alleged to be beneath our national dignity to have our currency connected with any foreign currency. The new movement of which I have spoken has announced that what we have got to do is to get back to Gaelic economics. What are Gaelic economics, especially in relation to currency? I looked up the question and found that the unit of value in Gaelic times was the cow, and when it was not the cow it was the female slave. That does not seem to help us to find the solution.