Irish Currency and Sterling—Motion.

Debate resumed on the following motion:—

That Seanad Eireann would welcome a statement of policy by the Government regarding the Irish Currency and its connection with sterling—(Mr. MacDermot).

Professor Johnston

As I moved, the adjournment of the debate on the last occasion, Sir, I take it that the position is that I should resume the discussion. In doing so, I want to make a few general remarks about some general principles which we should keep in mind in all considerations of currency policy. There has been a good deal of talk about the fact that our currency is based on sterling. Well, that might mean various things. Actually, our currency is based on sterling in the sense that our currency is supported at a parity with sterling on a £ for £ basis, but it would be perfectly possible to have our currency based on sterling and to have the Irish £ worth, say, 25/- English, or worth, say, 15/- English. In fact, the currency of the Dominions, New Zealand and Australia, is based on sterling, but as we all know, the Australian £ is only worth 15/- English, and the New Zealand £ is much the same. In any event, whatever parity we adopt in relation to sterling, if the basing of our currency on sterling is to have any real meaning there must be in this country some institution which maintains balances in terms of that foreign currency, sterling, on which our currency is based, and which is prepared to buy and sell our money in unlimited quantities at a fixed price in terms of that sterling currency.

That is the sense in which our currency is and must be based on sterling, and whether the £ is worth 15/- English, or 25/- English, it is essential that there should be some national institution which is prepared to buy and sell our currency at that fixed rate, and in no other way can a fixed value of our currency be maintained—a fixed value, that is, in terms of sterling. Of course there is another alternative, and that is that we should abandon the effort to maintain a fixed value of our currency in terms of sterling or any other foreign currency, but that is a policy which I hope will never have to be adopted and which is open to very grave objections, as every country, which has suffered from fluctuating foreign exchange values of its national currency has realised in the last 20 years.

Senator MacDermot, in the course of his remarks, mentioned as a point of interest that there was a time in our history when the national currency was cattle, and it might be true to say that even now there is a sense in which our national currency may be said to be based on cattle. After all, if the meaning of our currency being based on sterling is that we maintain important sterling assets or sterling balances in another country—if that is the meaning of that phrase—then the question of how we acquired those foreign assets becomes interesting and important. The only way in which we could have acquired those foreign external assets is by the export, on balance, of a greater volume of goods than we import and cattle, as you know, play a central part in the total volume of our exports of all kinds. Our currency, therefore, is based on the fact that we have sterling assets and that is due to the fact that we have export balances because we have exported more cattle and other goods than we imported. That is by the way.

It is sometimes argued that instead of basing our currency on sterling, we should base it on the national credit, whatever precisely that phrase may mean. Now, in my view, in basing our currency on sterling, as it is now based, it is in a true sense based on the national credit, for it is based on something which we, as a nation, have by way of credit or claim, on a neighbouring nation. Our currency represents, on the one side, a debt of our monetary authority to the people using that currency but, on the other side, it represents a claim possessed by that monetary authority against the resources of a neighbouring economy. Therefore, in a true sense, it is based on the national credit because it is based on a credit which we, as a nation possess, having the form of a claim on the economic resources of a neighbouring country. A currency not so related to a neighbouring currency and not so supported by external assets held abroad might be and would be nothing in its essence other than a form of national debt, a debt due by the State to the persons circulating and using the currency of that country. On the whole, I prefer that our currency should be based on the national credit in the sense in which it is so based rather than that it should be based on nothing but a national debt.

Now, the fact that we are one of the few European countries which enjoy a creditor position in international financial relations is a considerable national advantage. It gives us a strength in dealing, even with greater and more powerful neighbours, which other countries have not got and which other countries envy us for having. In that respect, the fact that we are to a substantial degree a creditor in terms of sterling of our neighbours, places us in a much more advantageous position in currency and other matters than, for example, New Zealand or Australia. As many of you probably know, in recent years New Zealand exhausted her sterling balance, or came very close to the point where her sterling balance was exhausted, and they had to walk the plank in their dealings with English financiers before they would obtain the accommodation necessary for them in order to continue their economic and financial life.

It might not be without interest to give a brief historical retrospect of the circumstances in which our currency came to be sterling or based on sterling. In that connection, I would remind the House that we have had no familiarity in present or recent generations at any time in the last 100 years or more, with those difficulties of currency and problems of fluctuating foreign exchanges which have been so familiar and so disastrous in other countries. We have also been fortunately free from any serious bankruptcies of any of our banks for the best part of a century.

But, if we look back over the long history of Irish currency, we find that the happy position we have enjoyed in recent generations was by no means characteristic of the history of our country in the centuries running from the 14th to the end of the 18th century. In fact there were many centuries during which Ireland did not enjoy a firm, stable exchange rate with England, centuries in which Ireland had no currency of her own, although she had her own monetary system, because she was deliberately prevented by British policy from having her own currency while at the same time she was prevented by British policy from using sterling. Henry VII forbade the export of sterling coins to Ireland, and this prohibition of this export was rigorously enforced, especially in the time of Elizabeth, though, in fact, it was evaded, because coins have a way of being exported in spite of regulations.

The only reputable coins circulated in Ireland for many centuries were foreign coins, sterling and others, because the country was forbidden by British policy to have a mint of its own, while at the same time difficulties were placed in the way of free circulation of English coins. Queen Elizabeth, as part of her policy for the destruction of the army and cause associated with Hugh O'Neill, deliberately imposed on Ireland a debased, or, as we now call it, an inflated currency, and the object of that issue of debased coin in Ireland was to deprive the Irish of the facilities they had of importing munitions of war by the use of coin of sterling character, whether foreign or sterling:

"In regard that the rebels drew to themselves a great part of the sterling coins that were in circulation, to buy munitions and provisions for the war."

So Queen Elizabeth, as a measure by no means friendly to the Irish people, deliberately depreciated our currency, and any section of the community to-day who sought deliberately to depreciate our currency would be acting in the spirit of Queen Elizabeth and would be producing somewhat similar effects on our economic structure. They would be giving us a currency of fluctuating and uncertain value in other countries, a currency with which we could not buy as much abroad as with our present currency and with reference to which we would be quite uncertain how much it would buy at any time at home or abroad. That would be the effect of a deliberate depreciation of the currency associated with a lack of parity with any other currency.

There was, as students of Irish history will remember, another famous occasion on which the currency was debased or inflated. That was in the reign of James II when he coined a lot of gun metal into current legal tender money of the realm and called four-pence worth of old gun metal "five pounds." It is on record that creditors who were paid £5 worth of debt with fourpence worth of metal were not at all satisfied with the transaction, and when the new monarch, King William, put an end to that particular form of debased currency, we had the origin of that slogan which is repeated to this day in Northern Ireland: "Here's to the glorious, pious and immortal memory of William III, who saved us from Pope and popery, brass money and wooden shoes." The brass money is the particular point germane to this discussion, and I would suggest that if we are going to emulate James II, and introduce a new form of brass money, we will not be contributing to that reunion of Ireland under a common Government which all of us have at heart.

On certain occasions, inflation of Irish currency has been disastrous to the nation, and fluctuation in its exchange value has been and was for centuries, a continuous cause of injury to Irish economy, but equally a deflation of Irish currency, that is a deliberate increase in the exchange value of the Irish currency unit has on one occasion proved disastrous. As I said before, although there was an Irish monetary system there was no Irish currency as such, but what happened was that coins, Spanish, Portuguese and English circulated in Ireland and were given a certain value in terms of what one might call an imaginary Irish monetary system. For example, the English guinea at one time circulated as 26/- Irish and at another time as 23/- Irish. The Moydore, a Portuguese coin had a value of £1 10s. Irish and at another time had a lesser value. In 1695, the English guinea was fixed at 26/- Irish and, by the same token, English shillings circulating in Ireland in those days, instead of being called 12 pence Irish, were called 13 pence or 14 pence Irish. We had the phenomenon of foreign coins circulating and being called by different denominational values in terms of Irish and in terms of the English system. The same coin would be called 13 pence in Ireland and 12 pence in England. The English guinea was fixed at 26/- Irish in 1695, but, for some reason or another which I have never been able to ascertain, the Irish Government changed the value of the English guinea to 23/-. That was an appreciation of the Irish monetary unit making it, so to speak, heavier in terms of gold than it had been before.

Before 1701, an Irish person exporting to Great Britain who sold a guinea's worth of goods had the means of paying a debt or remitting a rent having a value of 26/- Irish. When the change took place, by selling a guinea's worth of goods, after 1701, he could only pay a debt having the value of 23/- Irish, and, consequently, the effect of that change was to compel the export of a greater quantity of goods in payment of our liabilities, to "absentee landlords" and you like, than was the case before. By the appreciation of our monetary unit, which took place at that time, we imposed a burden on all our export industries, we depressed the export prices and, generally speaking, contributed in no small measure to that acute depression of Irish economic life which lasted for about three decades.

Most economic historians attribute the depression of the Irish economy in the early 18th century to the restriction on the woollen export; but, from what information I have obtained on the matter, I have come to the conclusion that the appreciation of the Irish currency unit was the primary cause which pushed our economy at that time into acute depression. That being so, it looks as if neither a violent depreciation nor a violent appreciation has been attended by happy consequences in the history of our currency.

However, I set out to explain as best I could the circumstances by which we attained to a sterling basis for our currency. Right down nearly to the end of the eighteenth century we were still suffering from the consequences of the British policy which refused to allow us to have a mint of our own, and which refused to allow the free circulation of English coins here. We did the best we could with all kinds of foreign coins, using those coins and whatever English coins we could illegitimately get hold of up to 1775. Then the situation improved considerably and more sterling coins were in fact coming in and were being more widely circulated by custom. In that year the Government of Ireland passed legislation to give to sterling coins the sole right of legal tender in the country, whereas before that the legal tender quality belonged to a whole list of foreign coins—Portuguese, Spanish, French, as well as sterling—so we may say that, in 1775, we changed for the first time to a sterling basis for our currency. At all events, sterling became the exclusive currency of the country and from that time we have, in one form or another, maintained the sterling basis. Actually, even when we achieved that result, we still called the English shilling 13 pence and Irish money was supposed to be on parity with English money when you had the relation of £13 Irish being exchanged for £12 English. It was only in 1825 that this difference in the denominational value of the two currencies disappeared and, since 1825 up to the present day, we have circulated coins in every respect similar to sterling; in fact, they were altogether sterling until the separation of the currencies in 1927.

The moral of that rather long history is that the sterling parity of our currency was not lightly achieved in the course of our long history and, in my view, it should not be lightly abandoned. Inflation and deflation of our currency in terms of sterling have been nationally injurious and, therefore, the whole rational attitude to the problem is that we should, as far as possible and unless very definite and unforeseen circumstances arise, adhere to a rigid sterling parity whereby the £ Irish will be exchangeable at par for the £ English. Certainly, under present conditions, if anyone wants inflation, he is quite likely to get enough of it from the inevitable degree of inflation that will probably come in spite of all efforts to prevent it. Any person desiring inflation should have no need to depart from sterling. On the other hand, in certain unforeseen circumstances it may become a matter for consideration whether the Irish £ should be appreciated in terms of sterling. If that situation arises, in consequence of some disaster threatening our neighbours, our whole outlook would be so gloomy in common with theirs that it would be of no use to try to save ourselves from that common disaster by any form of tinkering with currency. They would be dead and damned and we would be dead and damned along with them. Mainly as a matter of theory, it may be that we might give some consideration to the point whether and in what circumstances it would profit us to appreciate our currency in terms of sterling, or rather to try to prevent our currency unit suffering an excessive degree of depreciation in terms or sterling. Whether that was going too far or not, it would be a change which should not be made lightly either. If our currency is appreciated in terms of sterling, one can imagine the howl that would be raised by farmers. For example if a farmer were selling a bullock for £40 English and he were only going to get £30 Irish for it I think it would be extremely difficult—in fact, almost politically impossible—to maintain a state of affairs in which our currency would be allowed to appreciate.

Mr. Counihan

What about the reverse?

Professor Johnston

The reverse would be equally objectionable. on the other hand, if we deliberately depreciate our currency in terms of sterling—and I think there is no necessity whatever for that—even if it were contemplated, and if we did, then a situation would exist in which all those unpatriotic people who insisted on leaving their investments abroad in sterling securities would have the laugh over the others who brought them home in order to invest them in Irish industries. In that case, Irish securities would become less valuable pound for pound than if the money were left in English securities and people who took money out of sterling to invest it in Irish securities both industrial and national would get in the language of my Ulster fellow-countrymen, the "queer gunk."

Another objection to depreciation of our currency is that if it did take place prices, especially the prices of export and import products, would certainly rise. The rise in these prices would for the time being perhaps benefit especially farmers but, if I know anything about urban labour, I think it is highly probable that urban labour would exert itself to bring about an increase in the cost of urban products which would do its best to keep pace with the rise in the prices obtained by farmers for export products. If past experience is any guide, I think we might say that the probability is that while prices enjoyed by the farmers would rise for a time they would ultimately fall again, but the prices of urban goods and urban services having been once raised would remain high for all time, for, as you know, our whole economy has been distorted and many of our present misfortunes are due mainly to the fact that in the decade following the Great War, while agricultural prices and agricultural incomes rose and fell again, urban prices and urban incomes rose and did not fall again.

Finally, I would remind the House that a very wise man called Bishop Berkeley in a much quoted and very famous book called The Querist, said that money is only so far useful as it stirreth up industry enabling men to participate mutually the fruit of each other's labour. There is any amount of money available for all the industry now carried on and more industry if only we could arrange to carry it on. There is no obstacle preventing the banking system from lending money to people who have some project in view which commands a prospect of profit and which is associated with adequate security from the banking point of view. The banks are only too eager to increase their lending of money to persons and industries enjoying credit, but the banks have to remember that they can only lend to the extent that they are able to borrow from depositors. The ultimate real lenders are always the depositors and the banks are essentially trustees for these depositors and cannot, without violating their trust, use their financial power in such a way as to incur heavy losses which ultimately might injure their depositors.

It is not scarcity of money that restricts our economic activity. There is plenty of money-creating capacity in our banking system and there is plenty of legal tender money available through the machinery of the Currency Commission. If more legal tender money is needed for our legitimate purposes the Currency Commission is in such a strong financial position that it can easily add to the amount of legal tender currency that the nation may require for ordinary purposes. What limits our prosperity and prevents industry from being stirred up to the extent that it could be is not then the absence of money but it is something else: it is this disorder in the price structure, this lack of balance in the national economy which was created by the events of the last Great War and intensified by the events of the subsequent decades and especially by those of the great depression and by our so called economic war. The object of money, according to Berkeley, is to stir up industry, enabling men to participate mutually the fruit of each other's labour. This, as I say, depends on a suitable balance and relationship between the different elements in the price and income structure in the national economy. I would suggest that if agricultural incomes were £10,000,000 a year higher than they are then our agricultural producers— 600,000 of them—would participate more fully in the fruits of urban industry and, equally, I would suggest that if urban wages were lower than they are then perhaps far more people would be employed in urban occupations, the aggregate of urban incomes would be higher than it is, and they as a class would participate more fully than they now do in the fruits of agricultural production. So, get that balance right between the different sections of our economy and we will all participate mutually in the fruits of each other's labour but, so long as the national economy is distorted, no amount of tinkering with the monetary system will in any way solve our problem of unemployment.

Mr. Lynch

When this motion was placed on the Order Paper I do not think any of us anticipated that we would have such an interesting discussion as we have had. We have had reviewed in the course of the debate a number of matters from the days of good Queen Bess to the tribal wars in this country, and the interesting lecture which we have just listened to from Senator Professor Johnston must be of great value to all of us. I would not indeed intervene in this debate at all were we not challenged. The motion was for the purpose of securing a statement on policy by the Government regarding Irish currency and its connection with sterling, but that statement was given by the Minister for Finance last week and it is difficult for me to understand why the debate of last week should have been converted into a demand for a statement with regard to currency and kindred matters by the Irish Labour Party.

Mr. Douglas

There was a mix-up between them and the Government somehow.

Mr. Lynch

We, apparently, have been provoked to saying something in regard to this extremely difficult, intricate and involved question of currency. I do not know whether I can be more interesting than Senator Professor Johnston, but at all events we will endeavour to say something, not in regard to this motion, as that is not what we are called upon now to debate, but rather in regard to certain views which have been promulgated by our Party elsewhere. This, I may say, is a rather unprecedented attitude for the Seanad to take up, but perhaps they are interested in the theories of finance and economics such as may be propounded by Labour representatives through the country from time to time. Whether or not the Labour Party views are heterodox is entirely a matter for the Labour Party itself, and it is no more obliged to render an account in this House or to any member of it for its views than is any other Party in this House or any member of this House.

Senator MacDermot may catechise the Labour Party and say the views they express in their private documents are "unsound and mischievous." That is his view and he is entitled to it, but the Labour Party can readily retort that the orthodox financial and economic views of Senator MacDermot, being borrowed originally from Manchester—a place that will not be unknown to the Parliamentary Secretary—are entirely foreign to a Gaelic Ireland and this financial orthodoxy is now responsible for the horrible condition of slumdom, poverty and general misery which are all too prevalent throughout the length and breadth of Ireland.

Never in the history of this country, not even in the days of the Four Masters, to which Senator MacDermot adverted, was there such squalor and personal destitution. Never had Ireland 120,000 people capable of work and hungering in a terrible personal way for food, and that despite the advance in machinery, machinery which should come to the aid of man and enable him to gain more food. Yet, despite this mechanisation and mechanised aid, we have to-day worse squalor, more destitution, more poverty in this country than ever we had in the time when the North was protesting against Wood's pence or Queen Bess was endeavouring to debase our currency.

Professor Johnston

That is very questionable.

Mr. Lynch

To what then can we ascribe this misery for which no parallel can be found even in the Ireland of "foraying clans"? It is due entirely to the maintenance of the School of Manchester Economics of which Senators MacDermot and Johnston are such shining advocates. It is not at all surprising that the real Ireland is hidden to these people; the real Ireland of a once happy and contented people, the Ireland before it experienced the Manchester School of Economics. Reared apart from the real Ireland, and steeped in a school of foreign economics, these Senators have no remedy to propound to save this country from the disastrous consequences of Manchesterism but: "Support Adam Smith's ‘Wealth of Nations' and the Majority Report of the Banking Commission as the Old and New Testaments of national finance and hence national ruin."

But, is Senator MacDermot satisfied with the position despite his declaration that he desires no change? Listen to the doubting Thomas:—

"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... 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."

He says he wonders if we should not reduce our holding in sterling securities and increase our gold holding. Further he would, apparently, hedge on these holdings, for he asks whether it is possible for the Government to plan in advance some means of extricating our currency in the case of emergency. Could he get out in time before the ship sinks with our part of the cargo, is what he means in plain language. In regard to our securing of gold, perhaps he is not aware that at one time 1,000,000 gold sovereigns were collected in this country and automatically sent to the Bank of England "because it was not the policy of the Currency Commission to speculate in gold values." Recently that same gold was bought back for £2,000,000. That gold was sold when gold was 74/- per oz., and bought again when gold was 148/- per oz. Repatriating gold is, therefore, an operation to-day that is hardly a sound financial one, even if the British Government would agree, which is most unlikely.

In regard to transferring our British securities to dollars, to which he also refers, any reputable economist will tell him it makes no difference normally so long as the external assets are ample to meet our external obligations. But it is not a question of amplitude that disturbs the Senator's mind, but obviously the parlous position of those securities to-day in the present international war situation. These fears of Senator MacDermot show conclusively that he is mentally in the same condition as those who, he says, are concerned in "an unsound, mischievous campaign", to which he is so anxious to direct the attention of the Government. There is, however, this difference between the Senator and those he belabours, that whereas the so-called "campaigners" are concerned, in their advocacy of certain theories, with the best interests of the people as a whole, especially the destitute, the Senator is concerned primarily with the money interests of a privileged class.

The Senator is concerned to pay encomiums to our banking institutions. We have no disagreement with him on this score. As private concerns, the banks of this country deserve the greatest praise for the excellent manner in which they provide for the needs of their clients. Having, however, said that we must also remark that the banks are not meeting the new situation, and it is doubtful, constituted and directed as they are, if they could meet the situation. Banks, having reached a monopolistic position in modern society, are necessarily anxious to maintain undisturbed their monopoly.

Sir John Keane

Would the Senator explain how the banks have a monopoly? He himself can start a bank to-morrow if he likes.

Mr. Lynch

If I could bring the Lakes of Killarney to Purgatory, I would get a guinea a drop for them. Thus, while banks cannot and will not meet the needs of modern society, and provide the necessary fluid life to keep the wheels of industry revolving, they will fight against any other authority performing that necessary and vital work for the community. I must, therefore, digress from my main theme for a moment and read some expressions of opinions regarding financial institutions which will clearly indicate the power banks have and intend to hold—even in the face of Governments —so that the private provision of currency and credits shall be maintained intact in their hands. No less an authority than Mr. Gladstone said in reference to the growing power of banks:—

"From the time I took office as Chancellor, I began to learn that the State held, in the face of the banks of the city, an extremely false position as regards finance.... The hinge of the whole situation was this, the Government itself was not to be a substantive power in matters of finance, but was to leave the money power supreme and unquestioned. In the conditions of that situation I was reluctant to acquiesce, and I began to fight against it by financial self-assertion from the first. I was tenaciously opposed to the governor and deputy-governor of the bank, who had seats in Parliament, and I had the city for an antagonist on almost every occasion."

In a letter to the London Times, dated 3/3/23, Sir Josiah Stamp said:—

"The interdependence of the money policies of the U.S. and Great Britain, or—not to put too fine a point upon it—the dependence of the latter upon the former, has just been dramatically demonstrated. We are informed that the bank rate must certainly be raised from 4 to 5 per cent. next Thursday. There is nothing in the present position of British industry, which would in itself call for an increase in the rate.... The incident seems to show clearly who it is that cracks the whip and obeys the signal."

Now listen to how a banker threatened Mr. Snowden, Chancellor, in 1930, at the centenary meeting of the Union Bank of Scotland:—

"It was probably the banks alone who could effectively curb the extravagances of Governments by dealing with them as drastically as with the borrowing individual spendthrift.

"It was only the banks who, by limiting supplies, could curb lavishness of Governments and individuals, and control those doubtful credit schemes now being pressed upon them for acceptance at the instance of Ministers and their Departments.

"Fortunately the real power was still in the hands of the independent banks, when they liked to combine in the public interest."

Mr. Lloyd George had also some strange things to say about banks. Speaking in the House of Commons he said:—

"I want to urge the Chancellor again not to be too frightened of the City of London. Since the war the City of London has been invariably wrong in advising the Government.... Rapid deflation was a mistake, and it had an injurious effect.... The precipitate establishment of the gold standard was another thing which undoubtedly dealt a staggering blow at our export trade.

"They have been wrong every time.... Now there is no doubt at all that they are using the whole of their tremendous influence for the purpose of restricting the raising of money for national development. Take the cause of depression throughout the world at the present moment. There is not a man who has examined it who will not tell you that a very large part of it is due to the mishandling of monetary questions on the advice of the money barons.

"These men who have mishandled this monetary question not merely advise what to do, but establish a veto upon every proposal which is made for national development. We got rid of the veto of the House of Lords. Take care that you do not establish a more sordid one. If you go to the City of London what is their only remedy for depression? Their only remedy is by placing artificial barriers to prevent plenty from reaching want.

"The city is the stronghold of reaction. All the time when I was Chancellor of the Exchequer up to 1914, I had to fight the city. And then in 1914 the city had to come crawling to the Government for assistance. Talk about public control! It was that that saved the city in 1914. No Government will ever get a big programme through unless it is prepared to face up to the reactionary money interests in the City of London."

You will, therefore, see that while banks behave with great probity to their customers, they will fight against any alteration of the system whereby they have a private monopoly of credit facilities and general monetary provision. But we are concerned with something more than that. We are concerned with the provision of work for 120,000 idle persons and the decline in the trade of many others because of this colossal unemployment. The maintenance of all the citizens in an adequate standard of comfort, having regard to the capacity of wealth production in the country, is the paramount duty of the nation. If the private control of monetary machinery is incapable of performing this task, then that private machinery must be altered to meet this vital and pressing need of the people.

It is reassuring to hear Ministers say that if they cannot find a remedy for this condition of affairs within the system, they will have no hesitation in going outside the system. If they are concerned to save the country from disaster and consequential worse evils, they will not hesitate much longer, for the needs of the people cry aloud for redress. Will the advocates of "Do nothing" just pause and think of the terrible destitution and agony caused through unemployment? Why should man's inhumanity to man make countless thousands mourn for food, raiment and adequate shelter when the only thing we suffer from is a plethora of these things? What is the impossibility of placing these things in the hands of those who require them? The duty of Government is to do so, whether an outmoded system of finance says it cannot be done, and, because it says so, will make no endeavour.

Full and adequate provision for the needy must be made. If banks cannot do it, the State must. The State to-day provides an army, navy and police for the adequate protection of the citizens. Who proposes that we should place these services in the hands of private persons? The State also provides a system of justice and roads, electricity, education, public health, etc. What would we say if private monopoly half-provided these services? Yet, that is the position in relation to money. Surely the time has arrived when the partial function of banks in this regard must be taken over by the State itself, and an adequate system devised so that every citizen, anxious to maintain himself or herself, shall be provided with an opportunity of so doing.

In speaking of human wastage caused through unemployment, let me give some statistics which were taken of 50 families recently in Dublin. The total weekly income of this group of 50 families, comprising 264 persons, was £39 18s. 2d., after making deductions for rent, insurance, fuel and light. This amount, let us say, was spent on food. It amounts to 3/- per person per week. No wonder, then, there is destitution, malnutrition and scores of other ailments. I ask, are we prepared to continue this misery to maintain an archaic system of economics? Are we prepared to shoulder the responsibility of adequately catering for these people rendered destitute through no fault of their own? That is the problem. These thousands ask you for bread and you hand them a stone labelled "Manchester economics." Whether, therefore, our economics are "unsound or mischievous", we are concerned with this mass misery and we propose, here and elsewhere, to call attention to it until the demand for its elimination reaches a crescendo which shall not be denied.

When Senator MacDermot had the floor, it is a pity he did not make more valuable use of his time by asking the Minister for information more germane to the motion before the House. That would have been more logical and useful than sneering at the Labour Party and others whose social consciousness is offended by the mass and preventable misery we see around us. If Senator MacDermot suffered less from prejudices, he might have done a useful service with his motion. He might have asked the Minister many relevant questions rather than rambling away into the realms of Gaelic tribal forays.

In his statement, the Minister admits that there is a campaign in regard to financial changes. Now we should ask ourselves why a campaign arises if everything is normal. Is it not just because things are not normal that there is this so-called campaign? The Minister, in his statement, would seem to imply that there was an intention on the part of some to root out the existing system and to supplant it by another. We are not advocating a a change of that character. The views expressed in the document to which reference has been made merely advocate a scheme of development credit to get into motion certain stagnant industrial and commercial operations. It is purely supplemental and not supplanting. Its heterodoxy lies solely in asking the State to provide itself with "developmental credit."

We are not quite alone in our advocacy of this demand. The Economist speaking of “a consistent plan of mobolising the financial resources of the community in its struggle for the community survival” says:

"These considerations seem to point to something in the nature of long-term wages and means advances by the joint stock banks to the State with an average life of, say, 20 years.... There would be no justification whatever for the payment of so high a rate as 3 per cent. on created credit.... In the circumstances here envisaged, it would be the community's credit that would be liquefied; and the community represented by the Exchequer would be entitled to require that the rate of interest should be no more than the cost of handling the funds—say ½ per cent. per annum. The bank's legitimate profits would not be damaged by such a rate since these advances to the State would be a net addition to their normal volume of business. Indeed, the resulting inflation would tend to increase their normal turnover. These advances should not in fact rank as part of the ordinary business of the banks but as a special supernumerary service that they render to the community."

Mr. MacDermot

May I take it from the last sentence that the Senator is definitely in favour of inflation?

Mr. Lynch

I did not interrupt the Senator when he was speaking. He can take what he likes from my statement when I have finished. The Economist, in asking the joint stock banks to make this provision to the State at ½ per cent as a special supernumerary service is not far removed from what Labour in its pamphlet advocates.

Perhaps Senator MacDermot would consider the attitude of the Economist also, “unsound and mischievous”. It at least indicates that there is a crying need to do something which the orthodox methods of the banks cannot do. No wonder then that there is a campaign when people are crushed between the upper millstone of orthodox finance and the nether millstone of economic destitution. It is obvious to-day that the paramount interests of the community demand some extra provision in our financial arrangements. Without being dogmatic it appears that there should be a volume of credit available at any time, and as the banks in their own interests cannot make this volume available to non-credit worthy people, the State is the sole authority that can.

The Economist says that this may be done within the realms of the existing system and at a minimum price. Others demur and say that this is now the function of the State. It is no answer to say that this volume of credit is available to-day. It may be, but it cannot emerge into activity having regard to the accepted methods of profit-seeking activities. It can emerge under the control of the State and for useful social purposes. I need not go into the minutiæ of how this volume of credit would emerge under a State “developmental authority”. That is merely machinery and I need hardly say that extreme caution and prudence would be exercised in its use. It is no answer to say that this means inflation—the bogey of the finance experts who say, “do nothing”. Doing nothing is incompetence, and that way lies disaster. Resultant goods and services will correct the balance, and limited inflation need not be feared.

The needs of a large portion of our people to-day necessitate some "development credit", and with due care and caution we can get the finance chariot out of its present-day rut into which it has fallen, if the effort is made by the State—the sole authority that can now get the wheels of economic activity once more into motion. It will be urged that this theory brings us up against the "sterling link", having regard to the statutory manner in which the volume of our present-day currency and credit is regulated. In his opening remarks Senator MacDermot, obviously, did not seem too happy about the stability of sterling in the future, so perhaps relating the possible position of sterling to the internal necessity for expanded credits in this country, the present time may be the most propitious for the discussion of these problems. Neither is the Minister adamant, nor apparently, does he feel himself committed irrevocably to sterling for, while he definitely advocates staying bound thereto at present, the Minister goes on to say:—

"The Government would only consider proposing an amendment of it if a change of circumstances were to occur of such a nature as to render the preservation of the present parity between our currency and British clearly disadvantageous to Ireland".

Perhaps our finance experts, if they will not do anything to relieve the financial distress of a large number of people in this country, will keep a watchful eye on sterling assets and consider repatriation of some of those directly under public control—if that is still possible, and not too great a sacrifice for the development of industry in this country before these assets seriously depreciate, which they may do as the result of the present international situation. Already, the following gilt-edged industrial shares have fallen: £1,000 worth in September, 1938, would be worth in September, 1939, in the case of 2½ per cent. Consols, £850; J.P. Coats', £700; Imperial Chemicals, £900; Imperial Tobacco, £740; Uni.-Lever, £820. This shows that our external investment position was not improving between September, 1938, and September, 1939. It would be interesting to know what its present position is like.

I do not propose to embark on a discussion on the several points raised in the statement of the Minister. The resolution is not the property of the Labour Party. Perhaps Senator MacDermot, being the primarily interested party, might like to take up with the Minister the interesting subject of "parity" to which the Minister referred in detail. If he does, he will find that not one of the British Commonwealth countries maintains parity with sterling. Australia and New Zealand attempted to do so but abandoned it in 1931. These countries send much more agricultural produce to the British market than this country does, and yet the dire consequences which the Minister says would flow and follow if this country abandons "parity" have neither flowed nor followed where other countries have not maintained it.

However, it is not my purpose in intervening in this debate to discuss such issues at this juncture. Senators have expressed themselves very satisfied with the Ministerial statement. If I were in a discursive mood and had plenty of time, there are many questions germane to the financial arrangements of this country that I would like to ask, not least of which would be why we do not get the British to repatriate their silver coinage, which creeps into this country, the same as they take back such coinage from other countries. Why should this country be selected for this exceptional treatment with its consequent financial loss to us?

I regret that I have taken more time than I intended. It is not easy to deal with such a subject adequately in a short statement. The challenge which was hurled down to us last Wednesday was, in our opinion, quite unnecessary. We trust we have adequately discharged the obligation imposed on us.

Mr. Campbell

Senator MacDermot, in the course of his speech last week, in moving:

"That Seanad Eireann would welcome a statement of policy by the Government regarding the Irish currency and its connection with sterling",

waxed eloquent in dealing with what he described as

"this ‘hot-gospelling', quasi-religious handling of an economic question".

Professor O'Rahilly, my colleague the Lord Mayor of Cork, and what he described as a religious newspaper, The Standard, in turn came under the lash of his tongue in dealing with the motion he was submitting to the House. He even went so far as to say that:—

"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."

Realising how the learned Senator must have suffered as a result of all this nausea, I have determined, out of sheer sympathy, not to add to his torture in this respect. In the course of the few remarks I have to make to the House I will not make even one reference to the Papal Encyclicals, but rather will I depend entirely on the views of those whom he would, I am sure, regard as being completely orthodox.

I will not even attempt to reply to what I consider his unfair references to that distinguished sociologist, my friend Professor O'Rahilly. I will leave that to the Professor himself. I imagine he will be able to defend himself with vigour and clarity, without any puny efforts on my part to assist him or come to his rescue. Nor will I even go to the trouble of defending my colleague the Lord Mayor of Cork. The views held and expressed by both these gentlemen are views that are held and approved of by hundreds of thousands of our people. They are closer to the hearts, and more nearly reflect the views of the people of this country than Senator MacDermot can ever hope to do. And, so far as The Standard is concerned, I think it may be trusted to deal effectively with my colleague's remarks. That journal, I am glad to learn, is growing in influence, prestige and circulation each week, and may safely be left to speak for, and to defend itself against the charge of using “arguments that are unsound and mischievous and more directed to the emotions than to the head”.

Senator Johnston, if I read his few remarks aright last week, expressed a little fear that we in this group might have been tempted to remain silent on this subject—a subject of such vital importance, and so vitally affecting the lives of those whom we have the duty and the honour to represent in this House. I can assure him he need not have entertained any such fears in that respect. Our position is a clear and simple one. We take our stand on the fundamental fact that this country has all the material resources necessary to feed, to clothe and to house all our people, and to maintain them not only in a state of "frugal comfort", but, also, in a condition of simple luxury.

Sir John Keane

Question.

Mr. Campbell

That is a fact that not all the eloquence of the professors in economics and the advocates of orthodoxy in finance can controvert, or will have the hardihood to deny. All their gloomy prognostications and prophecies of the dire consequences that are likely to ensue if certain measures are taken to provide employment for that vast army of 120,000 potential producers, so that they can enjoy such a condition of life, do not impress us.

Now, not being an economist or a financier, I have neither the desire nor the competence to indulge in a bout of mystifying jargon. Experts can always floor an opponent by a copious discharge of vocabulary; the status quo never lacks learned defenders. I would, however, remind my colleagues that this attitude of standing fast by the status quo is neither as impressive nor as convincing as it used to be. The world has grown somewhat sceptical of financial experts who have made such colossal blunders, and the people for whom we speak are convinced that a continuance of our present anomalous financial system will fail to solve our major social problems. The ordinary man is incurably of the opinion that where there is a will there is generally a way, and that the experts' job is not to tell us what to do but to show us how to do what we want to do.

We are not discussing an abstract academic question of interest only to bankers and the well-off. In this country we have great undeveloped resources and great potentialities of food-production. On the other hand we have that 120,000 unemployed besides thousands of under-employed and under-nourished. We have men able and willing to work and yet having no work to do; and at the time there is an enormous amount of constructive and productive work which needs doing and is not being done. The man in the street or on the land sees undrained, untilled, or half-tilled fields; yet he himself and others have insufficient food and clothing. Learned economists try to persuade him that the lack of something called money is responsible for poverty amid potential wealth. And when he objects, he is called a monetary crank.

The ordinary man is a realist; he knows that it is a question of physics plus organised human effort. He refuses to believe that a man-made money-mechanism should be allowed to mock God's handiwork, and he believes that like other contrivances it must be made to subserve rather than dominate moral and social ends. And no amount of technical terminology will shake him from this conviction. I entirely agree and sympathise with the man-in-the-street in his conviction; though after hearing the Minister's speech last week I am very much afraid there is little hope of influencing the present Government. And when I say that, I cannot help recollecting that An Taoiseach himself has said on more than one occasion, I think, that if a solution for our social problems could not be found inside the system, then, he would have no hesitation in going outside the system to find one. Even so recently as a few weeks ago the Minister for Supplies reiterated that statement. In the course of a speech at a Dublin function he went on to say:

"The existence or otherwise of a large number of men unemployed through no fault of their own for long periods is the acid test of any system of government, commerce, or finance. If within the limits of the present system they could not cope with unemployment, then the system must be changed."

The Minister more than hinted on that occasion, too, that private financial institutions would not be permitted to stand in the way should they persist in an attitude of obstruction to the Government's plans, for he went on to say:

"An unduly conservative policy on the part of the banks might make the effects of the war on their economy much more serious than they need be."

"Banking policy," he continued, "was a vital factor in their national plans ... and must be subordinated to the Government's general plans for dealing with it." Here, I submit, we have a profound difference of opinion on the part of the Ministry in their attitude towards this problem, and as to the methods that ought to be taken to remedy these social evils that so vitally affect the lives of our people, retard the prosperity of the country, and so seriously threaten even the stability of the State itself. I suggest with all respect, Sir, that the situation demands a clear and unequivocal statement from the Ministry as a whole as to their immediate intentions. Pusillanimity in this matter will be fatal. To do nothing but merely maintain the status quo will, in my opinion, have the ultimate effect of driving these 120,000 potential producers to despair of the efficiency of Parliamentary methods to solve the problem of clothing, feeding, and housing themselves.

However, I believe that a drastic reform will have to come, and I sincerely hope it will come by peaceful, orderly methods. While appreciating the need for prudence and the advisability of gradualness, I also think that we have to consider the vital human needs of the propertyless. I for one cannot acquiesce in the pessimistic conclusion that we should do nothing at all for fear of disturbing vested interests. The day may come, and come soon, when these same interests will be rudely disturbed by other forces. Many conservatives may yet travel farther than the Labour Party, and, perhaps, fare worse!

There is a curious delusion widespread among us that what is nowadays admittedly orthodox finance in all other countries would be rank heresy if applied here in Ireland. What I fail and have failed entirely to find is some real proof of our unique bad pre-eminence. It cannot be our dependence on British trade, for that argument would apply much more strongly to debtor countries like New Zealand and Australia. And, in this connection, perhaps I could not do better—even at the risk of boring the members of the House for a few mniutes—than to indicate by quotations and by opinions how these countries regard this all-important matter. On the 19th February, 1931, Sir Otto Niemeyer—whom nobody, I think, is likely to call a credit crank—issued a report, in which he advocated a central reserve bank for New Zealand. Let me quote him. He said:—

"In order that the bank may effectively discharge its functions in regulating the credit conditions of the country, it should hold both the banking balances of the Government and the reserve balances of the trading banks. Trading banks are bound to hold liquid reserves, and it is no hardship to them that these reserves should be concentrated in a reserve bank. In fact it is usual that either by law or by custom they should be required to keep a certain percentage of their reserves with the reserve bank. In the case of New Zealand, I would suggest that the requirement should be 7 per cent. of demand liabilities and 3 per cent. of time liabilities."

Again he says that internal need for payment in gold or sterling has ceased to exist for countries—

"in which the central bank is responsible for the maintenance of the currency and must always be prepared to provide against proper securities legal tender for internal obligations."

In other words, this very conservative director of the Bank of England advised New Zealand to establish a central institution for regulating credit and providing money. As is well known, this was carried out by a Conservative Government and has been elaborated by a Labour Government. Incidentally, I may remark that people like myself do not so much blame our existing trading banks but rather the Government for not providing a central institution to co-ordinate them and to do what no private bank of itself can do. But, as I am not Sir Otto Niemeyer, I shall, perhaps, be called a credit crank for advocating that we should do in Ireland what he advised should be done in New Zealand. It is very puzzling!

But, as suspicion may be aroused, owing to the fact that a strong Labour Government rules in New Zealand, I will turn to Australia. Let me quote for you a sentence from the Budget speech which the Commonwealth Treasurer made in September, 1933:—

"Whatever the United Kingdom may decide to do in this respect, it is important that we should retain our own right to fix our monetary unit at the point which is consistent with our own price level at the appropriate time."

Douglas Copland is a well-known economist; he is professor of commerce in the University of Melbourne. Let me give you a quotation from his book, Australia in the World Crisis, 1934, page 160:—

"The freedom of the Commonwealth Bank from some of the restrictions placed on central banks by recent legislation in other countries has been a valuable asset to Australia in the crisis. The simple expedient of a controlled expansion of central bank credit for public spending has proved to be a more effective weapon for expanding credit and increasing spending than the more technical method of expansion through purchase of long-term securities; for no central bank has carried the latter method far enough to stimulate spending on a scale that would relieve the depression."

This, of course, is merely a learned way to describe what has been called developmental credit for our own chronically-depressed country. The difference between economics in Melbourne and in Dublin is very puzzling!

Let me quote you some some further facts about Australia. According to The Economist of 18th February, 1939, a Commonwealth loan of £72.6 million (Australian) was floated; and, as is usual in Australia, it was underwritten by the Commonwealth Bank, which accordingly took up £6,000,000. To cite The Economist:—

"The Commonwealth Bank took up the whole portion which remained unsubscribed, thus expanding central bank credit to this extent. As the cash reserves of the trading banks had been falling steadily during the greater part of 1938, some expansion of bank credit was necessary, if restriction were to be avoided."

This description is dignified, but the result of the operation was, in plain language, and to use Professor Copland's expression, the creation of "a weapon for expanding credit and increasing spending".

Goodness knows, we want to increase spending here, to stimulate production by enlarging purchasing power. But it is very puzzling to know why it should be right to do so in Australia and quite wrong to do so here in Ireland.

So much for Australia. Let me now move nearer home. I propose to quote from an article called "A Three Per Cent. War" published in that eminently respectable journal, The Economist, on 20th January, 1940. The very title is interesting. The war in question is, of course, the present conflict, involving enormous devastation and destruction. But I, and the people we represent here are also interested in a war—a constructive war, a war against poverty and disease. We would not much object to a three per cent. war against our bad housing conditions! This is how The Economist sums up its proposals, for the technical details of which I refer my learned colleagues to the article itself:—

"The main outlines of a borrowing policy can be summarised in three propositions:—

(1) The genuine savings of the people should be increased by every available means, including the severe restriction of all expenditure;

(2) Their genuine savings should be borrowed at low rates of interest;

(3) Any balance of the Government's requirements should be recognised as being obtainable only by inflationary means and dealt with accordingly."

Let me make a few remarks on the first two points. It is here advocated that genuine savings should be mobilised and made available to the State at low rates of interest. This presupposes that the British Government can prevent foreign investments and can eliminate socially undesirable expenditure and imports; also that, through the Bank of England, it can bring down the rate of interest. Now I think that we also should be engaged in a war, a very different war, a war against misery and the causes of just discontent. Could we take any similar —even much milder—steps to carry on this war? No; we could not. For we have no central bank, no autonomous currency. A man can export cattle— raised by the sweat and toil of Irishmen—and he can invest the proceeds in British War Loan. That is, he can completely evade the primary reason for allowing exports at all, namely, the provision of socially needful imports. He can invest his savings outside the country altogether. There is no control and no means of control. Neither can our Government bring or keep down the rate of interest. On the 25th November, 1939, The Economist insisted “on a firm undertaking by the Government to force the rate of interest down with the utmost ruthlessness. The city may not like it; but the city should not be allowed to say that it is impossible.” Thus, in England, do they talk to financial vested interests, when there is a war on. Lacking a national reserve bank, lacking an autonomous currency, lacking any control over foreign investments, we here are devoid of all equipment for pursuing a social crusade, a war of construction and development.

Our banks here keep telling us that they are disinterested business undertakings, not concerned with such fancy items as social or national considerations.

Sir John Keane

When did they say that?

Mr. Campbell

We lack any central institution for imposing on them social co-ordination and a unified national policy. Not so in England. The Economist, on 27th January, 1940, said:—

"The banks, acting with a cohesion which clearly indicates official prompting, have in recent months subjected their advances to a selective test and have terminated many facilities which were obviously out of tune with a war economy."

And Mr. Reginald McKenna said at the recent general meeting of the Midland Bank: "We feel bound to examine applications with first regard to national needs." That would be rank heresy and mere faddism to the director of an Irish bank.

Sir John Keane

It is not true.

Mr. Campbell

It is, indeed, very puzzling to observe the discrepancy between British economists and bankers and those in Ireland.

Thus, we see how New Zealand, on the advice of a director of the Bank of England, established a central institution for regulating its own credit and providing money; and how the Australian Commonwealth Treasurer regarded the retention of their own right to fix their monetary unit at the point consistent with their own price level at the appropriate time. And, finally, we observe the essential outline of the plan put forward by a reputable British economic journal, of what it calls "a consistent plan of mobilising the financial resources of the community in a struggle for the community's survival." One rubs one's eyes in astonishment. Was the plan denounced by the financiers and economists who read this journal? Not at all. Was it derided as the concoction of some crackbrained amateurs? Not a bit of it. But when the Irish Labour Party puts forward similar ideas, expressed doubtless in less technical language, it is treated as ignorant and irresponsible by our financial pundits. But it will be said: England is engaged in a war. Precisely; and we say that Ireland too should be engaged in a war or, if the phrase is preferred, a crusade against poverty and misery. Great Britain is determined that the national savings should be available for the vital needs of the nation at a low rate of interest, say, 3 per cent. And we say that our Government should have the same determination and should be equipped with the means of effecting it. Furthermore, it is proposed that the extra money required—martial credit so to speak—should be created at handling cost, say ½ per cent. per annum and we say that developmental credit should similarly be available in this country.

In this country we have great resources capable of both long-term and short-term development for the satisfaction of basic human needs. Side by side with this we have the enormous total of 29 out of every 74 adults over 14 years of age unoccupied or unemployed, equal to 39 per cent. of the adult population. We have all the human and physical factors for a great social and economic advance. According to the principles of these distinguished economists and financiers, all we need is proper monetary management, a credit expansion leading to greater output rather than to an increase in prices. But our own learned men tell us that it would be dangerous folly for us even to equip ourselves with such powers much less exercise them. This is another contradiction which I find very puzzling.

It used to be indignantly denied that our monetary system was under foreign control. This extraordinary assertion is contradicted by the simple fact that our present currency is in every real sense identical with that of Great Britain, whose central bank manages for us as well as for them. In any case we have recently had two of our Ministers publicly thanking the British authorities for their kindness and consideration in allowing us to manage our financial affairs. In plain language, we have been caught out by the war. We took the advice of our pundits, and we now find ourselves completely entangled in the British system. But that is no reason why we should not even at this late hour take the necessary steps to effect our freedom. We must not permit ourselves to be dragged up and down as the divergent interests of Britain dictate. We are neither impressed nor intimidated by all the learned jargon of our economic pundits. The dire plight of our 120,000 unemployed countrymen and countrywomen insistently calls for an adaptation of the monetary and credit policy of the nation so as to enable them to live a free, a full and a Christian life.

Mr. Counihan

I have listened very attentively to the speeches delivered by the Senators who advocate the retention of our present system of currency and credit, and I have also heard two very interesting speeches from the two Senators who advocate a drastic change. I am over-impressed by the speeches which have been delivered, but I am rather disappointed that the Senators who advocate the retention of our present monetary system did not put forward some proposal by which the farmers could get more credit or working capital at the present time.

Professor Johnston

Might I interrupt to say that I would gladly advocate that, if I thought it was germane to the discussion?

Mr. Counihan

Credit and currency always go together and have been discussed by all the Senators who spoke. I cannot see that we can dissociate them. I know very little about currency, but I do know something about credit and I am convinced, from my knowledge of the country, that something should be done to extend credit to farmers. It is for the Government and for the banks to devise some means by which that can be done. And it can be done without interfering with our monetary system.

Professor Johnston

Hear, hear!

Mr. Counihan

A scheme I proposed seven or eight months ago in the Seanad would meet the situation. That scheme was approved of by the best brains in the country, including Senator Professor Johnston, Deputy Dillon and members of practically all Parties. It got a limited approval of the banks and it got the unanimous approval of this House in so far as recommending the scheme to be sent for consideration to the Agricultural Commission. Still there was nothing done. There was nothing revolutionary in the scheme. It simply meant that the farmers would get an instrument from the Land Commission on the security of their land.

Leas-Chathaoirleach

I hope the Senator is not going to discuss that whole matter all over again.

Mr. Counihan

I am discussing, a Leas-Chathaoirligh, credit for the farmers.

Leas-Chathaoirleach

I must point out that there is nothing about credit in the motion.

Mr. Counihan

I am discussing means of providing credit for farmers and this was one of the suggestions of providing credit for them. If they could get that instrument they could go to the bank and borrow money at a reasonable rate of interest. According to the Banking Commission Report the Government are spending hundreds of thousands of pounds every year in creating new farmers. Would it not be more practical commonsense to try and put the existing farmers on their feet? In some cases it costs £1,124 to establish an individual new farmer and £900 of that amount is a free gift. But still the existing farmers who have practical knowledge and experience of the working of land have now got neither credit nor capital owing to the economic war.

Leas-Chathaoirleach

I am afraid I cannot allow the Senator to proceed to make a long speech on credit for farmers. It has nothing to do with the motion before the Seanad.

Mr. Counihan

Very well, I will keep off that. I agree with Senator MacDermot that there is great danger that those fantastic schemes of currency and credit might get a considerable amount of support at the present time when the majority of our farmers are gasping for credit, when there is so much unemployment and unrest in the country. We all know that you can get a considerable amount of support if you promise the people something for nothing. It is human nature and this is not the only country in which that policy would succeed. We have the example of an election not so very long ago in the State of Alberta when the Party who promised to put the Douglas Credit Scheme into operation got 100 per cent. of their candidates returned. We had the example at home when the Fianna Fáil Party were elected in 1932 on the promises of derating, no annuities, reduction of taxes, full employment and good wages for all. We can see how they succeeded and how those promises were fulfilled. The Party which Senator MacDermot refers to, can, I am sure, put up as plausible a case for the change of our monetary system as the Fianna Fáil Party did in 1932 and unless something is done to restore prosperity and give security to the producers of this country, the farming community, I am afraid that that Party will succeed in coming in and forming a Government in the course of a few short years. More unlikely things have happened. If that does happen the position in the country will be more disastrous even than that which Fianna Fáil created. As most of what I had to say, refers to farming and farming credits and as you, Sir, have ruled these matters out of order, I shall conclude by making an appeal to Senator Sir John Keane, Senator Professor Johnston and Senator MacDermot to try to avert this catastrophe. The only way to do that is to get the Government to call a conference of representatives of the banks, representatives of the Government itself, and representatives of the farmers to devise some means to produce credit, a more extended form of credit, particularly for the farming community. If you do that you will save us from the disastrous situation which will otherwise possibly arise, judging by the speeches made by the Senators of the Labour Party, who advocate a revision of our monetary system.

Seanad Éireann debate - Wednesday, 13 Mar 1940