Seanad Éireann debate -
Wednesday, 18 Dec 1940

Vol. 24 No. 29

Imposition of Duties (Confirmation of Orders) (No.2) Bill, 1940—Second and Subsequent Stages.

Question proposed: "That the Bill be now read a Second Time."

Minister for Industry and Commerce (Mr. MacEntee)

The orders which this Bill seeks to confirm are seven in all. Four of these orders, Nos. 209 to 212, inclusive, are orders which were made arising out of the agreement which was arrived at between our cotton manufacturers here and cotton manufacturers in Great Britain, whereby the reference to the Prices Commission under the London Agreement of 1938 in respect of the protective and quantitative restrictions on the import of cotton goods was withdrawn. As result of this withdrawal an arrangement was made by which a certain portion of our market here, which formerly had been supplied by imported materials, was reserved to British cotton manufacturers, while, at the same time, our own cotton manufacturers received assurances in regard to supplies of raw materials which will be beneficial not only to them but to the community as a whole.

Some of the orders, notably Orders Nos. 209, 210 and 211, provide for a reduction in the preferential rates of duty, that is to say, in the effective rates of duty. The former duty in respect of these orders was, in general, at the rate of 40 per cent. ad valorem, with, in some cases, a specific duty of 4d. per square yard on articles covered by the order. In the case of Order No. 209, the duty falls upon bed ticken, bed mattress cloths, bed sheeting of a width not less than 48 inches, shirting and pyjama materials which were not less than four ounces in weight per squares yard and which were without pattern and colour, and cloth for the manufacture of dungarees and similar protective garments for men which is not less than four ounces in weight per square yard, all of these being woven piece goods containing not less than 60 per cent. cotton. The new duty in the case of these articles is at the general rate of 40 per cent. ad valorem, with a preferential rate of 20 per cent. in the case of products of the United Kingdom and Canada.

The same rates duly apply to the cloths covered by Order No. 210, which refers to woven piece goods containing more than 60 per cent. cotton and not exceeding ten ounces in weight per square yard. In the case of Order No. 211, there has been a modification in the duty, but, in the case of certain materials covered by this order, there was formerly no specific duty, that is to say, there was no minimum duty as in the other cases of 4d. per square yard. There was a duty of 40 per cent. ad valorem, on woven piece goods containing more than 60 per cent. cotton and again of a weight not less than four and not more than ten ounces per square yard, but, in these cases, the goods covered by the order had a pattern woven in colour and also were used in the manufacture of shirts and pyjamas. The new duty in the case of Order No. 211 will be at the rate of 40 per cent. ad valorem, with a preferential duty of 20 per cent. in the case of United Kingdom and Canadian products.

Order No. 212 imposes a duty of 45 per cent. ad valorem, with a preferential rate of 30 per cent. in the case of products from the United Kingdom and Canada on woven piece goods containing, as before, more than 60 per cent. of cotton and not exceeding ten ounces in weight per square yard. The articles concerned in this case are not chargeable with the duty imposed by Orders Nos. 209, 210 or 211. Order No. 213 imposes a duty of 60 per cent. ad valorem, with a preference rate of 40 per cent. in the case of the United Kingdom or Canada, on piece goods not chargeable with the duty imposed by any of the emergency orders I have cited—Orders Nos. 209, 210, 211 and 212. The goods covered by Order 213 are woven piece goods, cotton or union piece goods consisting of a combination of two or more fibres such as cotton, flax, jute and artificial silk. The materials covered by the order were formerly liable to a duty of 40 per cent. ad valorem. It will be seen that, so far as these orders are concerned, the effective duty remains the same but, in order to give a preference to goods of United Kingdom or Canadian origin, the general rate of duty is increased to 60 per cent.

Emergency Imposition of Duties (No. 214) Order, 1940, imposes a duty on linen piece goods as follows—linen piece goods which are terry or are the type used in the manufacture of dungarees or similar protective garments for wear by men, bed sheets, ticken or mattresses. The duty imposed is at the rate of 40 per cent., or 4d. per square yard. All other linen piece goods carry a general duty at the rate of 40 per cent. without the specific duty of 4d. per square yard. There is in this case, as in the other cases, a preference in favour of goods produced in the United Kingdom or Canada to the extent of 20 per cent. Originally, the linen piece goods were liable to duty under Order No. 131 of 1937. This order also applied to cotton and union piece goods. The Revenue Commissioners have expressed the view that it would facilitate their administration of their duties if there were a separate order in respect of linen piece goods. Order No. 214, which we are now making, is merely in substitution of the remanent part of the original Order No. 131, which would remain after the modification of the duties on cotton piece goods to which I have referred. Order No. 215 imposes a duty at the rate of 37½ per cent. ad valorem, with a preferential rate of 25 per cent., on candles, tapers and night lights. There was formerly a duty of 30 per cent. ad valorem, with a preferential rate of 10 per cent. in the case of the United Kingdom and Canada and 20 per cent. in favour of other Commonwealth countries. In addition to the duty, there was a quantitative restriction, but that quantitative restriction has now been removed and the import of candles and night lights is no longer subject to quotas. Instead, as I have said, our home manufactures are being afforded the increased tariff protection for which Order No. 215 provides.

Mr. M. Hayes

Have they reduced their prices, as alleged in the other House?

Mr. MacEntee

That has been alleged, but I am not in a position to say anything regarding it.

Mr. M. Hayes

Before the Minister makes an arrangement, he should know whether they have been selling at an inordinate profit and are now reducing their prices. Is not that the business of his Department?

Mr. MacEntee

The Senator is, perhaps, unaware that the new duties, with the removal of the quantitative restriction, have been imposed in consequence of a decision made by the Prices Commission and that, under the statute and under Article 8 of the London Agreement, all we are empowered to do is to implement the decision of the Prices Commission in that regard. Whether I had made the necessary inquiries or not—I hope the Senator will not ascribe to me responsibility for investigating all the allegations, sometimes baseless, made by interested parties in either House in these matters——

Mr. M. Hayes

There are few innocent parties in either House.

Mr. MacEntee

Whether I had made an investigation or not, it would still remain for me to come here and ask the Oireachtas to give effect to the finding of the Prices Commission. That is all I have to say in relation to this Bill.

Sir John Keane

I should like to learn from the Minister what benefits he considers these modifications are likely to confer. He said that the implementation of this London Agreement was going to allow certain raw materials to come in on a new basis and that that would confer benefits on the public. I do not know how anybody, unless he was an expert in the trade, could assess the implications of all these duties. The code of regulations governing trade is now as complicated as the code governing income-tax. We have a very large and highly expert staff of officials operating these duties. I see, incidentally, that we are erecting a new palace of torment up the street in which a further lot of officials is to be housed. That is by the way. I ask the Minister to stand apart from the picture and not view it merely in the light of these current matters that come before him from day to day. Is he, or is his Government, satisfied with the general trend of this tariff policy? Almost the major test is the effect of this policy on the ordinary, humble consumer—the man who is having difficulty in making ends meet. If you relate that to any official figures, you get a growing increase in the cost of living. To put it in general terms, for some years the "spread" between Northern Ireland and Eire was about 12 per cent. That is the increase on the 1914 basis of account. Next year, so far as figures can be forecasted at all—because the cost of living is based on the average of the previous year— there is going to be a spread in the region of 20 per cent. That appears to be largely due to increases on nonfood products. The trend of food products, from the published figures, appears to be somewhere in the region of 180 to 183, whereas the total index figure is in the region of 206. It seems as if this country would be very fortunate if it escapes with less than a 16 per cent. rise in the cost-of-living figure.

All that is very serious and I ask the House to say that it calls for a general overhaul of the whole of our tariff policy. I am afraid we are drifting into a state of acquiescence and satisfaction in regard to the whole of these trends. Periodically Ministers do say that industry must show efficiency and those who do not show efficiency will be asked why, but the public see little or no definite move in that direction. I ask the Minister whether he would not consider a graduating and decreasing scale in the rates of protection afforded. The theory of the whole of this tariff policy was that high rates of protection were required to put these infant industries on their feet and as they got on their feet that they would be able to stand an increasing measure of outside competition and be able to do with less protection. There is no evidence of that, whatever, that I can see. I would ask the Minister whether he has considered the case of industries which are not taking full advantage of the rate of protection afforded, and industries which have not put up their prices to the full extent of the protection they are afforded? These are general remarks, I know, but the real seriousness of this matter is on general terms, not specific. I am profoundly dissatisfied with the whole trend of our tariff policy as it affects the consumer and the poor man. Large sections of capital have been placed in a privileged position and it is the duty of the Government to examine from time to time how those people discharge their responsibility to the public and, if necessary, to remove the protection that is afforded to inefficient industries. I am sorry to periodically raise this question in the House, but this is the only constitutional opportunity one has and, although I am very doubtful that anything will ever be done, I feel, as a public representative, that it is my duty on every occasion to call attention to the dangers that are involved in the whole of this reckless policy of protection.

Mr. Douglas

The matters which are covered by these orders are practically the same as those with which I dealt at considerable length a few weeks ago. I do not propose, therefore, to follow on the lines on which I spoke then, but there are one or two points made by Senator Sir John Keane to which I would like to refer. In the first place, it is not my function here to defend the Minister or to defend the Government, but I do not think there is anyone engaged in the manufacturing industry who would for one moment agree with Senator Sir John Keane when he says that nothing is being done with regard to keeping prices as low as possible. If there were any complaint it would be rather that too much is being done and that some of it is not being done in the wisest or the best way. As the Minister pointed out, all these orders may be taken together except the last one, because the two that are not specifically part of the agreement are simply re-enacting the position as it was before in regard to linen goods which were combined with cotton previously. As to the benefit to the community, I would say, with a good deal of intimate knowledge, that there is a very definite benefit. In the first place a larger quantity of a lesser number of goods will be made here with, I think, in that case every probability of an easement in price. I have had occasion during the past six months to compare cotton goods with Manchester and—I think it may be to some extent due to war conditions— the fact is that the margin by which the prices are higher here is very much less than it was 12 months ago. Prices are higher in both places because of war conditions, but the margin is definitely less. I say that after pretty careful examination and with certainty that I know what I am talking about.

Senator Sir John Keane also pleaded for a general revision. It is not easy, without speaking for possibly two or three hours on every detail, to satisfy the House in respect to a rather complicated agreement, but the fact is that it is a simplification of what existed before, and it does represent a general revision in consultation between all the cotton manufacturers here and representatives of cotton manufacturers on the other side who were very much concerned to see that their interest was looked after and that they would get a fair share of the trade. But the principle was accepted that where goods could be made here and could be made at a reasonable price and according to a standard, it was the essence of the Eire-British Trade Agreement that the goods should be made here, but equally it was the essence of that agreement that in the case of goods not being made here, there should be a British preference for goods of this character. This was an attempt—I think a successful attempt—on the part of two groups of manufacturers to carry out what they believed to be the spirit of the agreement in a way which would be mutually beneficial. The public were also benefited. This is a matter on which I do not feel free to speak with too much detail in public for pretty obvious reasons, but the arrangements which were made with regard to supplies have enabled an industry employing about 3,000 people here to continue up to the present and, as far as we can see, for a considerable distance ahead, with adequate supplies. Anyone in industry knows how extremely difficult it is at the present time for some manufacturers to obtain supplies. They realise that to maintain an industry of that kind with supplies is of considerable benefit to the industry and also to the public. If you had a number of persons, even half that number, suddenly thrown on the labour market at the moment, it would be a very serious matter indeed.

Mr. Goulding

Senator Sir John Keane, I am afraid, has such an inveterate horror of tariffs that it blinds him to the real national advantage of the tariff policy. It would be absolutely impossible for this country to remain in industry at all were it not for tariffs.

Sir John Keane

Even tariffs as high as 50 per cent.?

Mr. Goulding

Even that. For a country such as this, beginning industrial life, with practically no experience, it is absolutely essential to have even a prohibitive tariff.

Sir John Keane

Some of these industries have had experience. Some of these industries have had at least eight years' experience now.

Mr. Goulding

Eight years' experience now, admittedly, but even eight years' experience is nothing compared with the experience of the competing countries. Let us look at the national advantage. Senator Douglas has just told us that these industries engaged in the cotton trade are giving employment to probably 3,000 people. We, in common with other countries, have a vast unemployment problem and anything that keeps 3,000 of our people at work is surely worth a sacrifice on the part of the people as a whole. If we ask the people of this country to pay what Senator Douglas has told us is, after all, a comparatively small difference in price, it is well worth it to the Irish people. Then we should realise that we have a body watching these people. We have the Prices Commission. That surely will see that there is no chance of any industry profiteering at the expense of the people. I think, on the whole, we should be satisfied that every effort is being made to safeguard the people from being overcharged while protecting what are only infant industries.

Mr. Douglas

There is just one point I omitted which is of considerable importance. It is this: except where there is quantitative restriction, any industry here which makes a practice of charging the full British price or the price at which a thing could be bought outside, plus the tariff, is bound to fall. You cannot do it. If it is continued it means you will be beaten because from time to time there will be cheap lines, clearance lines, and various quantities offered and actually the goods will come from outside and the public will buy them in preference. I know that from being a member of the Federation of Irish Manufacturers, and I can speak of the general experience. The price must be well below the price for which it can be bought outside, together with the tariff, if they are going to carry on.

Mr. Fitzgerald

I hesitate to butt in on this matter, because I have no expert knowledge, but my own experience satisfies me that wide, general statements, such as those made by Senator Goulding, can be very misleading—and I think even Senator Douglas's statement is. My own experience has relation to a number of things manufactured in this country and I suggest that it would be more economical to pay the tariff on an imported article. I am not now generalising; I am merely giving instances of which I have personal experience. I find that after buying a certain article made here, making every allowance for the fact that in this country industries are just being established, and so on, one is constantly obliged to renew it. In such circumstances it is practically impossible to compare prices with imported articles. One knows that if the two prices are, roughly, the same, by buying the imported article, on which a tariff has been imposed, one is giving money to the Government and reducing taxation generally. If there are 3,000 people employed in a business, Senator Goulding assumes that there is a complete gain, and the alternative is that the 3,000 will be unemployed and thrown on the dole.

This whole question requires much more careful examination than we can give it here. Senator Goulding says that after eight years, in which a tariff has been applied, it is quite right and natural, and to be expected, that a tariff at the rate of 60 per cent. or 80 per cent. must be maintained. We have to consider that when men are working their first concern is to maintain themselves and their families. But the value of their work is that they are producing something useful. I think that in a number of these industries it would have been better to give men the dole. I do not want to be taken as making too wide a statement, but I do suggest that it would have been better to give them the dole and import the articles. I should like to give my experience in regard to certain small things. I could not, I admit, compare the prices. When the tariffs first came on there was one article that we had to buy once every 18 months. We bought that article, and if it turned out to be unsatisfactory we notified the shopkeeper and he took it back and supplied another, because he could return it to the British manufacturer. I do not want to generalise too much. Under the new system we bought the same type of article in the same shop. It was broken within a week, but we could not return it and the shopkeeper would not supply another article because the Irish manufacturer would not make the same arrangement as the British manufacturer.

Mr. Goulding

These cases are exceptional.

Mr. Fitzgerald

Yes, but they are widespread; I could give a dozen other experiences. There was another article of household necessity and I remember when it was manufactured here how often we had to replace what had been worn out. There is no use talking about relative prices because that would require a very exact examination. You have to take into consideration the period of usefulness of the manufactured article. Senator Douglas says that if you put the price of the home-manufactured article up to the full price of the imported article, which is the British price plus the tariff, the firm would then go out of business because of job lots which would come in periodically. When a thing is manufactured in this country and the Irish manufacturer intends to hold the market, the shopkeepers, whose time is valuable to them, take the line of least resistance and it is much easier for them to get the Irish manufactured article. In the beginning I think they erred on the other side. Their buyers went to Bradford. They were used to going there and to some extent they resisted having to change their methods. Once you have the system established here, the ordinary Irish dealer is not going to be so alert that he will be on the look-out to see when a job lot is available on the English market.

This matter requires much more careful examination. If 3,000 people are employed and, as a result of that number being employed in the manufacture of a certain article, the cost to the consumers is put up, you have a complicated sum as to whether nationally we gain or lose. We could, if we liked, grow all the tea we require in Ireland under glass. But no one suggests we should do that. We import it. It is cultivated by poorly paid people in India and China. No one is so mad as to talk about growing tea under glass here, because the increased cost of the tea would be much more than any value that would be obtained from growing it here. I give that extreme instance because Senator Goulding and so many other people talk about the great national advantage of having things manufactured here. That may apply in some cases. In many cases there would be a national advantage in not manufacturing things here when it can only be done with a tariff of 60 or 80 per cent.

Senator Goulding says we are at a disadvantage because we are only beginning industrial production. I am not going to dogmatise about history, but in a way we may assume that the fact that we got so little advantage out of the industrial development of the nineteenth century was partly due to political causes, but some element of natural causes probably entered into it. We produce from the surface of the soil and, as far as discoveries have gone, there is not much to be produced from under the surface. We have not supplies of coal, iron or steel in any commercial quantity. We are making a beginning if you like. Senator Goulding's statement seemed to be an eminent justification for the tariff policy before the present Government came into power here. I am not now comparing the two Governments. It seems that the fact that a thing was not manufactured here was not ipso facto clear proof that nature intended it should not be manufactured here. At the same time the system then established was a careful and rigid examination of the pros and cons, a strictly limited tariff to be put on, with an understanding that even that tariff was at its maximum then and, as the industry became established, so the manufacturer must recognise that equity and justice to the consumer would require that the tariff would be periodically reduced until, if it did not get down to the level of no tariff at all, it would be so small that it would not have any really adverse effect on the conditions of life in this country.

Then the present Government came into power and went ahead with a full tariff policy. I should like to give instances from my experience. I remember one time at an election meeting telling people that even if we were elected we would have to maintain these tariffs after election. A minister of the Government said we were running away from our previous position. It was nothing of the sort. When the tariffs were not on, there was one condition, but when they went on, and people put capital into factories, there was a new situation and it would have been against justice if people under one régime were induced to put their savings into industry and another régime could wipe out everything and ruin them. Even accepting the present policy of beginning with enormous tariffs, it certainly had the effect of giving employment in certain directions. On the other hand, I think it had the effect of creating unemployment in certain other directions. It had an adverse effect on the agricultural producer, who had to bear the increased cost of the tariffs while he was competing in a world market and nobody would give him the same facilities as were given to the manufacturers.

Now, one can always say, during a period of experiment, that it is reasonable that people might be asked to suffer for a time in order to produce a permanently better condition thereafter, but if we are going to get up after eight years, and talk about an 80 per cent. tariff as a reasonable tariff, then I think it is time that some of us protested. You might begin with an 80 per cent. tariff and, after a number of years bring it down to 60 per cent. or even 40 per cent., but if commodities are to be produced in this country for the mere purpose of their production without any special point—in some countries, for instance, it happens that they require to produce armaments— and if, after eight years, we are still to have an 80 per cent. tariff, then failing expert examination of all the pros and cons of the case, I say that, prima facie, that tariff is a complete failure, and instead of being a national advantage it is, and is likely to continue to be, a national disadvantage. I want that point made clear. The Minister possibly going through each individual case, which would take a very long time, could show that weighing everything for and against, the balance is in favour of the tariff as it stands. I am not arguing that but I do say that generalisations to the effect that 3,000 people have been employed and that, therefore, the tariff is a national advantage do not follow at all. I think that sort of doctrine has done, and is likely to do, a great deal of harm. It has misled people. We see them scrambling for whatever local benefit may accrue by a little industry established in a small town without adverting to the fact that the satisfaction of these demands might lead, and I think to some extent is bound to lead, to economic disadvantage for the whole people of the country.

Mr. Hawkins

As this debate has developed into a discussion of the general tariff policy of the Government, perhaps I might be allowed to say a word or two in regard to that policy.

Leas-Chathaoirleach

I do not want to interrupt the Senator, but I think it is not advisable that the debate should develop very much further into a general discussion on tariffs.

Mr. Hawkins

I think that, after the able explanation of Senator Douglas, the House is quite satisfied in giving the Minister the powers he asks for in this Bill. As a worker, I certainly say that workers throughout the country, particularly those in districts where industries have been established, are very grateful for the tariff policy in general. The conditions under which workers are employed in most of these industries are entirely Christian and Catholic. Senator Fitzgerald, referring to the fact that 3,000 people had been employed, said that if we could import the article which these people produced more cheaply than it can be produced here, it would probably be as good, if not better, if we put these people on the dole and imported the article.

Mr. Fitzgerald

That is not an exact repetition of what I said, but carry on.

Mr. Hawkins

It is very near it.

Mr. Fitzgerald

There is a difference between "probably" and "possibly".

Mr. Hawkins

When we hear all this talk about higher prices, we forget the point that the Government had to take into consideration the fact that many of the articles formerly imported were not produced under normal conditions but were surplus goods that were dumped in this country. We have all heard of instances where large quantities of goods were dumped here from Japan. These goods were not made under the ideal conditions which our workers enjoy here. Even the worst conditions known here are much better than the conditions under which the vast majority of these goods were made. As regards a comparison in prices, what I personally would like to see— and I think it would meet Senator Sir John Keane's point—is some standard established which our manufacturers should work up to, rather than a price to work down to. I think if there were some method by which an article could be examined on its merits, or if some standard were established to which that article would have to conform, we should be doing much more good for the country than by trying to compel our manufacturers to compete with manufactured articles abroad in relation to price.

Mr. MacEntee

I do not know whether I should really embark upon the general discussion which you, Sir, have already indicated would not be quite in order on this debate. I do think that Senator Sir John Keane has been under a misapprehension as to what exactly is being proposed here and what, in fact, is involved in the Orders which are now before the Seanad.

Sir John Keane

I was not really concerned with what was in the Orders. I may have been out of order but I was dealing with the general trend of the tariff policy.

Mr. MacEntee

Of course if the Senator has any doubt as to whether he was in order, perhaps he will forgive me if I err on the side of order and do not follow him into the very general discussion which his remarks have opened. I should like to say that in this case what we are concerned with is not the question whether we shall be able to secure home-manufactured products at a price equivalent to, or even at a price higher than we might be able to get similar products abroad, but whether we are going to be able to get these products at all, whether of home or of foreign manufacture. The duties which are now before the Oireachtas for confirmation are duties which are imposed as part of the arrangement whereby our native cotton manufacturers will be reasonably assured of a supply of raw materials which will enable them to meet the requirements of our people in cotton piece goods. If they are not able to get that supply of raw materials, I do not think there would be easily available to us a supply of such materials from any other source and that is really what is involved in these Orders. I think that the arrangement is, from the point of view of the general public interest, a very valuable one to the community as a whole. It was because of that that my predecessor approved of it in the first instance and that I am now giving practical effect to that approval. I do not think it would be wise or fair in view of the condition of the Order Paper, that I should venture into the wider field which has been opened up for us by the remarks of Senator Sir John Keane.

Question put and agreed to.

Agreed to take the remaining stages forthwith.

Bill put through Committee and reported without amendment.

Question proposed: "That the Bill be received for final consideration".

Sir John Keane

In one of these orders there is a definite increase of duty provided for, and I wish to avail myself of my constitutional opportunity to reply, within the ambit of that order, to certain remarks which were made earlier. It has been suggested, I think by Senator Douglas, that the public secured adequate protection from the Prices Commission.

Mr. Douglas

I did not say that. It was some Senator on the other side.

Sir John Keane

It has been stated during the debate—I am sorry that I attributed it wrongly to Senator Douglas—that the Prices Commission reviewed the charges of these protective firms. But there is one element which the Prices Commission cannot deal with. My remarks really hang on to what Senator Goulding stated. He said that the Prices Commission was there to prevent profiteering. There may be excessive profits made and distributed in dividends, and the Prices Commission can exercise a certain very effective control. But how is the Prices Commission going to test efficiency in production? There is the point. If an industry is sheltered, it can by all kinds of inefficient methods of production unduly enhance prices, and no Prices Commission can ever detect that flaw. The only way in which you can get efficiency in production is to have competition, and the only way to get effective competition is gradually to narrow the margin of protection afforded.

I am entirely in sympathy with the remark made by a previous Senator with regard to quality. Several times in this House I have suggested that the Government should set up a bureau of standards in order that the public would be informed as to the quality of articles produced. In the case of candles, for instance, I have no doubt that there are quite large quantities of candles. But it is quite possible that, while maintaining the price, they depreciate the quality, and nobody except experts examining the matter technically can ever exercise an effective control in that respect. It is one of the great dangers in any policy of protection that the price may be maintained, but the quality may be depreciated.

Question put and agreed to.

Question—"That the Bill be returned to the Dáil"—put and agreed to.