The Government was given power to legislate by Order by the Emergency Powers Act. That power can be exercised when it is necessary in the opinion of the Government to operate it for the purpose of preserving the life of the community, either in the interests of national safety, the conservation of supplies or the preservation of services upon which the life of the community depends. The Emergency Powers Act was passed by the Dáil and the Seanad. It has a limited duration. To suggest that the passing of that Act, or the exercise by the Government of the powers conferred by that Act, has any element of dictatorship is, I think, completely unjustified. I know the Labour Party will protest against these Orders; they protest against most things but in fact the power of the Oireachtas to question and check the activities of the Executive is completely preserved. The very existence of this motion on the Order Paper proves that, because it is within the right of the Dáil or of this House to annul any Order made by the Government. Senator Sir John Keane proposes that Emergency Powers (No. 194) Order should be annulled and if the Senator's motion is carried here, the Order will be annulled. At no time have members of the Government hesitated to come to the Dáil or to the Seanad to explain and to justify the various Orders made. I hope to be able to convince this House that this Order should have been made and that it should not be annulled at this stage.
I think I should begin by saying most emphatically that the making of the Order did no injustice to anybody. It was designed solely for the purpose of solving a legal tangle which impeded the efforts that were being made to secure the restarting of the steel mills at Haulbowline. I am sure that even Labour Senators will not protest against any efforts of the Government to restart the mills at Haulbowline, the importance of which to the country, and to the workers of this country, will be recognised by everybody. It may be necessary, in order to help Senators to understand the position, to give a review of the history of that concern. It was started by a private company and financed by private money. There was no Government money put into it. The construction of the works began shortly before the war broke out. After the war began and before the works were completed, in September, 1939, a position had been reached in which the merchant mill was in operation, using imported steel billets as its raw material. The rest of the mill had not been completed. In particular, the furnaces which could be utilised for the smelting of ore or scrap steel had not been completed and were not in operation. The commencement of the war made it impossible to complete the construction of the mill. The equipment which was on order in continental countries could not be delivered and the company was unable to secure alternative equipment elsewhere at that time. Furthermore, the effect of the war upon the supply of raw material, and particularly on the price of raw material, created financial difficulties for the company, difficulties which were obviously accentuated by the fact that a large part of the capital was unremunerative. It was represented by half-built furnaces and by buildings which had been constructed to house machinery which had not been procured or installed.
The company, however, continued to operate, utilising imported steel billets procured, first, from Belgium and, afterwards, from the United States of America, but the financial difficulties accumulated. Finally, at the beginning of last year, a stage was reached at which the company was unable to pay the interest on its debentures. It had a loan secured by first mortgage debentures for £250,000. On its failing to pay the debenture interest, the debenture holders appointed a receiver. I want Senators to appreciate the position which then existed. The concern was in the hands of a receiver appointed by the debenture holders. There were a number of unsecured creditors who had no prospect of enforcing a claim on the assets of the concern until the claim of the debenture holders had been fully discharged. The receiver endeavoured to dispose of the property of the company as a going concern. He did not succeed. The only alternative to disposal of the property as a going concern was to sell the assets at a break-up sale. Nobody, who knows the circumstances, will suggest that in either event would the unsecured creditors of the company have been able to get anything. The circumstances were such that it was quite clear that the amount which might be realised by the receiver, either on the sale of the undertaking as a going concern or at a break-up sale, would probably be insufficient to discharge the claims of the debenture holders, much less leave a surplus from which any payment could be made to the other creditors. The Government was, of course, very perturbed about the closing of the concern, and while it is true that its value during the emergency depended upon the possibility of completing the construction of the furnaces so that scrap steel could be utilised, nevertheless efforts were made from time to time to facilitate the restarting of the enterprise, either by encouraging its purchase by other interests or by helping the existing company out of its difficulties. We appreciated that the supply of steel billets from the United States of America would eventually dry up, and although the concern was not working, the Government took the exceptional step of itself buying the steel billets in America and holding them against the possibility of this company restarting. Unfortunately, the ban upon the export of various commodities from America came down before all the quantity that had been purchased could be shipped here, but some of it was shipped here.
However, after it became clear that the efforts of the receiver to get the concern going again, or to sell it to somebody who would be prepared to operate it, were not going to succeed, the Government stepped in and offered to the company to guarantee a loan of £200,000 for the express purpose of completing the construction of the furnaces and getting the mill into the position in which scrap steel could be utilised in the construction of sheets and bars, on certain conditions. One of these conditions was that the company would get from its unsecured creditors an undertaking that they would accept a third debenture on the company's assets in full satisfaction of their claims. It was quite obvious that some such condition had to be imposed as otherwise the Government would put in money which would be immediately made the subject of claim by the unsecured creditors, and the only effect of the money put in by the Government being made the subject of such claims would be that the concern would be no nearer starting than before. We had to ensure that before money secured on a Government guaranteed loan was put in, it was, in fact, going to be available for the purpose intended, namely, to restart the works and complete the construction of the furnaces.
Amongst the conditions, therefore, upon which the loan was given was that to which I have referred: that the company's creditors, other than the debenture holders or secured creditors, should accept, in full satisfaction of their claims against the company, a debenture giving them a third charge on the company's property and assets. I should explain that the original debenture holders had a first charge. The Government insisted on a first charge for the loan guaranteed by them, and an arrangement was finally made under which the Government-guaranteed loan ranked as a first charge pari passu with portion of the original charge held by the original debenture holders, the remainder of the debenture holders' charge stepping down to second place. It was proposed to the others that they should accept a third charge, and that all claims based upon existing service contracts, following upon the closing down of the works, should be withdrawn. The company went out to get acceptance of these conditions, and succeeded in getting acceptance by all except a very small number of the unsecured creditors. A small number of the unsecured creditors were unwilling to accept these conditions, and therefore the position would have remained as it was unless this Order were made, and the enterprise could not have been restarted upon that basis.
There were, of course, other methods on which the Government could have operated. We could have established a new company to buy in the concern from the receiver. Such a company would have bought the concern at the lowest price it could. It could easily do so as there was no other competitor in the market, and it is almost certain that the result of that would have been that there would not have been enough to do anything except to satisfy the claims of the debenture holders, and there certainly would have been nothing for the other creditors. We could also have availed of the powers given under the Emergency Powers Act if it were considered necessary in the public interest that these powers should be availed of. In that event, the powers could have been availed of in order to requisition property, but in that case there might not have been anything for anybody, at any rate for the time being until the question of compensation was determined by a court. We felt that we should not let the position remain indefinitely as it was, with the mills closed, with the workers idle, with the skilled staff that had been accumulated being dispersed to employment in other countries, with the existing machinery going rusty, and with no effort being made to get the equipment to enable the construction to be completed, and so this arrangement was come to. It postpones the claims of these unsecured creditors who did not accept the offer of a third debenture and it prevents them from stepping in, when the receiver appointed by the debenture holders withdraws, and appointing a receiver of their own to get satisfaction of their claims, and it thus enables the new board of the company to proceed, if, in fact, it finds it possible to proceed with the operation of the enterprise and the completion of the works.
Now, whether it will be possible to complete the furnaces, I cannot say yet. There is, I think, some ground for optimism, but even if the equipment can be secured, it will take a good many months before it can be installed and the furnaces put into the condition in which billets can be produced here from the scrap steel that is available here. There is, however, available to the company some considerable number of tons of steel billets which were imported under the arrangement made by the Government, to which I have referred, and some which were there at the time the company ceased operation. I think there is also a smaller quantity which came fortuitously from a wreck off the Donegal coast. On the basis of the raw material which is available, the merchant mill which was in operation at the beginning of the war, and the only portion which was in operation, could be restarted for a time, but only for a time, because there is no possibility of being able to replenish the stock of steel billets by importation from abroad. In fact, the permanent —perhaps I should not say permanent —the operation of this mill for the duration of the war depends entirely upon the success of the efforts of the board to get the furnaces going.
I think very few people will say that we should have allowed the involved legal situation which had arisen to have prevented a start being made towards securing that result. It is obviously essential to the country at the present time that this mill should be got going if at all possible. There is practically no commodity in respect of which there is the same difficulty in securing supplies as in respect of steel, and steel is essential as a raw material for many other industries in the country. A great deal of employment depends on the availability of steel bars and sheets which this mill is capable of producing if the plans for the completion of the furnaces can be satisfactorily carried out.
If there is any other point, I shall be glad to answer it, but there is one point that I want to make clear, and that is, that with regard to these few unsecured creditors who were unwilling to accept the conditions of the Government, they have not been put in any worse position as a result of this Order. Senator Sir John Keane said that in normal times the step taken by this Order would have had to be done by legislation. I should say that in normal times this would not be done at all. Under normal conditions the receiver would be allowed to liquidate the whole concern, and then the efforts of the Government would be directed towards getting somebody else to restart the enterprise on a new basis and with new capital, and in such circumstances, of course, having regard to the conditions I have referred to, it is certain that these unsecured creditors would have got nothing at all.
I do not think it is a fair description of the situation to say that the Government did this by reason of the fact that their prestige was involved in the maintenance of this enterprise. I think the history of the events which I have given shows that the very reverse was the case. The Government let the concern go into liquidation, into the hands of the receiver, and let it be closed down rather than intervene, as they might have done, at that stage in order to bolster up the enterprise and enable it to be carried on. We felt, however, that, having regard to circumstances which it is not necessary to detail now, we would not be justified in doing so, that we should allow the debenture holders to appoint a receiver and allow him to investigate the possibility of disposing of the concern in the ordinary way of commerce.
When we did come back into the picture again and offered a guarantee for a loan, it was solely for the reason that the deterioration in the supply position made it essential in the national interest that this steel mill should, if possible, be got going again. I should like to make it clear that practically all the unsecured creditors, all the creditors for important amounts, accepted the Government's offer of a third debenture. The only creditors who were unwilling to do so were either creditors for small amounts or persons with service contracts which they thought gave them claims against the concern.
I should like to be able to give a fuller statement as to the prospects of the future concern, but I cannot do so. A new board has been appointed. It is only now getting down to a complete investigation of the possibilities of carrying out the purpose for which it was set up. The members tell me they have some reason for optimism that they will be able to do it, but they cannot yet say definitely that all their problems have been solved.
