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Seanad Éireann debate -
Wednesday, 7 Oct 1942

Vol. 26 No. 26

Central Bank Bill, 1942—Committee Stage.

Sections 1 to 4, inclusive, agreed to.
SECTION 5.

I move amendment No. 1:—

In subsection (3), page 4, lines 39 and 40, to delete paragraph (b).

Section 5 provides for the establishment of the bank, and sub-section (3) provides that there should be five directors, to include, amongst others, three banking directors—that is, three nominees of the commercial banks. The purpose of the amendment is to eliminate all reference to banking directors. If this amendment were accepted, the Minister would be free to appoint any five persons he thought fit, including, of course, bankers. The amendment aims at removing the statutory obligation on the Minister to appoint three nominees of the commercial banks. We on these benches are of the opinion that there is no justification for the suggestion that the board would be improved by the inclusion of bankers. In our opinion, the bank should be above and beyond all sectional interest. If the members of the board at any time required technical advice or assistance, it would be open to the Minister to call upon and bring in bankers as consultants in regard to any matter that might come before the board for consideration.

We feel—and we say so in no offensive way—that the nominees of the commercial banks, having regard to the interests they represent, in any major matter that may come before the board, would have regard to their own personal considerations. I do not say that in any offensive way or to belittle bankers' representatives as such, but I think it is inevitable that they would have regard to those purely sectional interests and be more interested in preserving them. If at any time a conflict arose between those interests and the interests of the community as a whole, I think that, having regard to the ordinary operation of human nature, their weight would be thrown on the side of their own concerns. We think this is a bad principle to lay down statutorily in any Bill. A development of that principle would mean the bringing in of legislation to insist that, say, the Minister for Finance should be a banker, or the Minister for Justice a lawyer—and there might be a better case to be made there than there is for the inclusion of three bankers on this board.

We feel that the interests of the commercial banks would be in direct conflict with the interests of the nation as a whole, having regard to the sectional interests they are there to uphold. A further consideration would be, as The Economist pointed out with regard to the central bank as a whole, that it is in London and not in Dublin that questions on the expansion and contraction of credit would be settled. We on these benches think that the retention of the clause which requires that three of the banks directors should be nominees of the commercial banks is the visual and factual guarantee that the prophecy of The Economist shall be fulfilled in that respect. It is for that reason, therefore, that we are submitting this amendment. As I say, I do not want any of the banking interests here to believe that we are in any way trying to belittle their capacity to serve on this board, but there are other sections of the community, representing other interests, that might be equally able to represent the interests of the community as a whole. For instance, I think that there ought to be representatives of the industrial and agricultural communities on that banking board, and, having regard to the points I have put before the House, I think it might be in the interests of the bank itself that it should be left open to the Minister to nominate whomever he wished, and of course that would imply that he would also have power to appoint direct representatives of the commercial banks.

I take it that this is the Senator's opening gambit in a series of wild statements, and I hope that it is not an indication of the atmosphere in which this discussion will take place, but surely, when the Senator talks about the personal interest of the banks, is not the primary interest of the banks to safeguard the savings of the people? The banks' resources are the money that the people have entrusted to them, and their capital is an infinitesimal proportion of their resources. They hold, roughly, £250,000,000 of the deposits of the people, and the stability of the whole banking system depends upon the safeguarding of the moneys that have been entrusted to their care. When we come to this anonymous London "economist," I do not know to whom the Senator refers.

It is the paper.

Well, after all, we can read all kinds of extraordinary things in the newspapers. I have no doubt that the Senator himself does not believe in a lot of things that he reads, even in the papers over here. At any rate, it is not a fact that our currency is dependent upon any external forces. We are tied, by parity, to sterling, but as regards the expansion, that can take place altogether apart from any control or influence by the Bank of England or any outside power. As long as the banks have sterling assets, they can go on buying currency according to the needs of trade, and there is no limit to it, so long as you have the sterling assets. In England, there is a limit, as a matter of fact, and you have to go to Parliament to get power to do so, but here there is no limit, and so long as currency is wanted the banks can go on expanding.

I think that Senator Sir John Keane misunderstood my colleague. The banks, naturally, are obliged to look after the interests of their depositors, but the amendment does not refer to that in the least, and even if paragraph (b) of sub-section (3) were taken out, there is quite a large number of directors left afterwards to look after the interests of the central bank, and the interests of the central bank and of the general depositors could be quite well safeguarded by the people appointed by the Minister. What my colleague did suggest was that three directors, to be representatives of a certain particular personal interest, should not be put on, and I think it is quite beside the point to say that the interests of the general depositors throughout the country would not be equally safeguarded if that paragraph were taken out.

I do not propose to accept the amendment submitted in the names of Senators Foran and Campbell. Perhaps, if, in other circumstances and with a different history, we were establishing a central bank here, we might not have proposed to include representatives of any particular section; nor, in fact, do we propose to have actual representatives of any sectional interest here; but with the history that we have behind us here in this matter, and with the circumstances surrounding the foundation of the body that is now to be displaced by the new central bank, it has been thought wise to continue to have, as directors of the new central bank, directors who have a knowledge of our financial system here and of our financial requirements, which they have achieved through long experience.

Senator Sir John Keane pointed out that banking here, as far as the interests of the savings of the people of this country are concerned, has been successful. The banks have guarded the interests of our depositors to such an extent that there is hardly anything, in the history of finance in modern times, to equal the success of our banking system in regard to the safeguarding of the moneys of the ordinary people. So far as our banking institutions are concerned, we have a remarkably good record here. In times where, in some countries, according to the size of the country, dozens, or hundreds, or even thousands of banks have failed, and where the deposits and other finances—the savings of the people in these banks—have been completely lost to them, the history of our financial institutions has been such that our depositors' money has been saved, and certainly that is something that our bankers here have every reason to be proud of. They managed the banking affairs of the country well in the crises that happened elsewhere. These had effects here, and might have had repercussions here that would have lost very considerable sums—in proportion, naturally—to even small depositors in this country, but no money was lost. There is that much to be said in favour of those who control the banking system of this country. They have helped us since the foundation of the State—since the Currency Commission was founded. They have helped us to run that institution successfully and safely, to guard our interests and our people's interests, and our people's moneys, in a way that many other countries would like to have had their bankers do for them. For these reasons it has been thought wise that the system adopted when the Currency Commission was set up, of having banking directors appointed as part and parcel of the board of management of the Currency Commission, should be continued on the setting up of the new central bank. If, as I say, we were starting out anew, under different circumstances and perhaps with a different history behind us, that might not have been proposed.

It is true that in some countries that have set up central banks in the last 25 years or so there have been regulations prohibiting bankers from being members of the board of the central bank, but there may have been special reasons for that in the different countries. It may have been that in a number of these countries the bankers have not been so successful as our bankers have been in safeguarding the interests of their depositors. That may have been so. I do not know what the reasons or the motives were in the countries where these rules were put in force, but here, certainly, we can say that the interests of the depositors —and that means the interests of the people as a whole, generally speaking; most of the depositors are small depositors—have been safeguarded by the bankers in a way that it is most creditable.

Then, again, in a number of countries where central banks have been set up in recent times, it has been thought wise—especially where the bankers have, as they have here, close and intimate knowledge of the economic and financial affairs of the country—to associate the banks and the bankers with the setting up of the central bank, because it is essential that there should be friendly co-operation between the bankers and those managing the central bank. If there were not such friendly co-operation and helpful working, the central bank's operations might be impeded. I do not suggest that there would be any idea in the minds of the bankers here to do anything of that kind, even if the central bank were set up without their help or without their assistance in this intimate way. We considered the matter from a variety of aspects and, in the best interests of the country as a whole, in the interests of people with money and without money, in the best interests of the nation and its welfare, financially and economically, we thought it wise that, at any rate, the foundation of this bank and all its initial proceedings should be helped by the wise and prudent experience of these men who, so far, have successfully managed the finances of the people of this country, the depositors in the commercial banks, and that in the end it would be to the benefit and the welfare of the whole people that we should avail of their knowledge and experience.

The proposer of the amendment has said that, perhaps, it was not necessary to have this put into the statute. Well, if circumstances had been different, it might not have been done in that way but, in all the circumstances, we thought it was wise and proper and in the best interests of the country that the history of association between the commercial banks and the Currency Commission should be carried on at any rate for the opening years of the central bank and, perhaps, longer. Their knowledge and experience had been such and had worked with such advantage to the community as a whole that we thought it wise and proper to continue it.

I am of two minds, I may say, with regard to this amendment. I think there is a great deal to be said for it and I would like the Minister to tell us whether or not, if the amendment were accepted, he would thereby be prohibited from putting on the board of the new central bank all the very distinguished people who, he said, have so very well managed the country's financial affairs for so long. It seems to me that he would not be prohibited. It seems to me that if the paragraph which it is proposed to delete were not included in the section at all the Minister would be able to draw on this fund of information and knowledge and experience which he applauds. I think, too, that he would be more free—it is the line of argument I pursued on the last occasion—if he did not commit himself by putting it down in this particular way. In fact, when I look at the paragraph, I feel I have been rather remiss, having regard to amendments which I have put down farther on, in not having inserted an amendment to this particular paragraph. I confess I am rather surprised at the line of argument pursued by the Minister because I thought he, like myself and a great many others, wanted to break with the bad old traditions we have been so accustomed to for hundreds of years, to break with them as completely and as abruptly as was physically possible for us without causing considerable repercussions on our whole economic life. That is the line I thought he would pursue. I think the bankers of the country will accept the bouquets he has presented to them this evening as applauding all that they have ever done and as applauding them for much which they did not do and ought to have done.

I am not disputing the contention of Senator Sir John Keane that the directors of the commercial banks feel themselves obliged primarily to look after the money of their depositors. I think it would be very bad if any member of this House were to pursue the line of argument, or even to leave it open to doubt, that it was not the primary duty of the bank directors to look after the interests of the people who deposit their savings with them. I do not think anybody is suggesting anything of the kind. I think the Labour Senators who have put down this amendment are not too extravagant themselves. They are, probably, men who have accumulated some little savings—thrifty people, in other words —and if a man is thrifty he has not very much respect for the extravagance of another man. In that sense, I am quite certain the bankers have won the respect of a considerable number of people who may be styled labourers in this community of ours. They may not rank as high in their estimation as they do at the moment in the estimation of the Minister. I think there is a wider function to be pursued by the board of the new central bank than that which fell to the lot of the directors of the commercial banks in the past. While it is true that the Minister can say at the moment that they did their job faithfully and well because, as he says they have held the deposits of the thrifty people of this country and kept them safe, I hope it will be possible for the Minister to say that of these same bank directors in two years' time. Their savings may be safe at the moment, but there are a great many savings that the people cannot put their hands on and that the nation cannot put its hand on at the moment and I question if all the Minister says is true. I am not too satisfied about it myself and I wonder whether the Minister, in the silence of his own office, is as happy about our savings as we would all like to be. Therefore, I do not like to allow the Minister's statement to pass without, at least, putting in a note of interrogation, as far as I am concerned, with regard to the statements which have been made.

One is in a certain difficulty to know just exactly what the Minister is after in this particular paragraph. When I was speaking on the last occasion I had not had an opportunity of studying the debates in the other House on the Committee Stage. I had no chance of studying them even when I was putting in my own amendments—it was difficult to concentrate on the Central Bank Bill during harvesting operations —but I gather from what the Taoiseach said in the other House that his idea about associating bank directors with the board of the new central bank was to get that kind of technical knowledge which these people could make available. From what the Minister says, I take it that he is doing this for the sake of goodwill. He wants to associate the commercial banks, through their nominees, with the central bank, because he wants to secure the goodwill of the banking community. If the Taoiseach's statement represents the aim, the Minister is restricting his field of selection. I do not like to argue the matter too strongly with the Minister because he is responsible for the setting-up of the bank and, I suppose, bankers can be awkward customers. It is, however, important that we should have on record the exact purpose of the section in this form. The Minister spoke about setting out with a different history. I think that our history should induce us to start out in connection with our central bank in a different manner from what we are doing.

I do not know what Senator Baxter means when he says that the Minister should "break with the bad old tradition". I do not know what bad old tradition the Senator has in mind.

The Minister could give a guess.

It is a cliché which everybody uses.

So far as traditions are concerned, there is nothing bad about our banking system. I am anxious to make this Bill a useful and helpful instrument for the community and the nation. Our banking directors have an excellent record so far as the safeguarding of the money confided to their care is concerned. No country has a better record than this country in that respect. Deputy Cosgrave took occasion a dozen times in the Dáil to emphasise that. He went so far as to suggest—this may be a slight exaggeration—that he would have nobody but bankers on the board.

That is an exaggeration.

It may be an exaggeration but his argument would almost suggest that. That is a very different line from the line which Senator Baxter takes.

Better not interpret Deputy Cosgrave's mind.

You could push Deputy Cosgrave's view to that length if you read the arguments he advanced on a number of occasions and the stress he laid upon them. One could gather from his argument that we did not want a central bank, that we were doing very well with the Currency Commission and that we should be wise in leaving control of these matters solely to the bankers. That was Deputy Cosgrave's line, although it may be pushing his argument a little bit too far. We are not a wealthy people. Senator Keane, or some other banker, might be able to give us the amount of the average deposit in the Irish banks.

It is, I think, £250 in the Bank of Ireland.

The average deposit is, I think, less than £500. The depositors, therefore, are poor people. These moneys represent their life savings and mean a great deal to them. What would they say if they were to lose 50 per cent. of their savings, as they would have done if they had been in America in the last crisis? I mentioned in the Dáil that I had occasion to visit America frequently since the crisis. I have personal knowledge of individuals and families—Irish people —who lost every cent they had in some of these bank failures in the United States. Between 1929 and 1932, there were, I think, 4,000 bank failures in the United States. The average deposit there would be higher than in this country but, if it were only £250 or £500, we can get an idea of the total value of the deposits in the 4,000 banks concerned.

Our banks have not had one failure in 50 years. When setting up a central bank, it is prudent, when there are men with knowledge and experience available, to avail of that knowledge and experience. In the Dáil, I stated that this was not the last Bill dealing with central banking which would come before the Oireachtas. There will be many changes before we get what some people would regard as an ideal central bank. There will be changes as regard the powers of the bank, the directorate and in other respects. We have here a body of Irishmen with experience and knowledge to guide the board of the central bank and I think we are not asking too much when we seek in the initial years, while getting the central bank on its feet, to avail of that experience and knowledge. It is true, as Senator Campbell and Senator Baxter say, that we could do that without putting it in the statute. The fact that it is done in that way arises out of the history of the institution. We are not breaking radically with the foundations already laid. I think that it is a wise proposition and I recommend it to the Seanad.

Senator Baxter asked if I was happy in my own mind about our savings. Who is happy about his savings at present unless he has them in something solid, whether buildings or land? Even the value of buildings and land will change and may change very radically. The value of money is changing very radically. In the past 25 years, ten years or even three years, the value of money all over the world has changed. I know of no country in Europe where savings are safer at present than they are in our own country.

No member of this House has greater personal regard for Deputy Cosgrave than I have, but I do not propose to support the Government simply because of any opinions expressed by Deputy Cosgrave. It seems to me that the Minister almost made a case for doing what he said Deputy Cosgrave would do. He almost made a case for having none but bank directors.

I would not propose that.

It is a slight exaggeration, but it could be so argued. I am sure, however, that the Minister had no proposal of that kind in mind. I propose to support the Government because I believe it is common sense in establishing a bank of this kind to have a certain number of directors of experience. I look at the matter from the point of view of the position of the men who may be chosen to be first directors. The board will not have a majority of bank directors but it will have the benefit of the experience of three bank directors. I am perfectly certain that it will be to their advantage to have that experience. They are not bound to take their advice, but anybody who has served on a board knows perfectly well that there are many matters on which a minority would be slow not to take the advice of experienced directors. I am on more than one board myself and would be very slow indeed not to take their advice which is always of value. I believe the same will apply in the case of the central bank. I support the Government on this because it seems to me to be a matter of ordinary prudence and common sense in the experiment which is now being made.

I do not think the House would be wise in accepting the amendment moved by Senator Campbell and his colleagues. I do not intend to go over the ground that has already been covered because I think a good case has already been made for the rejection of the amendment. I want to point out that the number of bank directors is three out of a total of nine. In view of the interests concerned, and, above all, in view of the fact that the bank directors may be looked upon as the trustees of a great variety of depositors, these interests are certainly entitled to the representation assured to them under this Bill. There is the further point that there seems to be a certain amount of confusion as to the extent to which the banks are responsible for the placing of Irish moneys abroad. It is quite true that the banks have placed considerable funds abroad, but I think that most of these funds have been placed abroad at the instigation of the owners of them. If the owners of these funds have not themselves directly placed them abroad, they have issued instructions to the banks to do that for them. I make that statement because I do not think it is fair to blame the banks for sins for which they are not responsible. I think the House would be wise to reject the amendment.

After the Minister's eulogy of the bankers, is it necessary to have a central bank at all? Apparently, the bank directors are, and have been, the saviours of the country.

Quite right.

On a former occasion here the Minister said that he found no difficulty whatever in getting loans for friends.

I never said that.

Political friends he meant.

A very slight exaggeration. We are not satisfied that bank directors, who for years have had the direction of banking and finance, are the right people to meet the new situation that is arising in this and in every other country in the world. The Minister says that they are safeguarding money and hoarding money—a marvellous achievement. I do not think that is the great thing that he claims it to be. I think that the exploitation of money to end misery and suffering throughout the country is a far nobler and grander achievement. The bankers have hoarded money and kept it there, while around the corner there are thousands of people living in one-roomed tenements. As well you have hungry people throughout the land. We do not feel that the people who encourage that condition of things are the right people to dominate our new experiment in banking in this country. That is the main reason why we object to having the names of three bankers enshrined in our legislation. If Senators look at the next amendment they will see that a deliberate attempt is being made on the part of the bankers to dominate, or almost dominate, the board. I wonder how the Minister will meet that amendment, in view of his eulogy of the bankers on this amendment. All that the Minister has said about the advice and help of bankers could be got by means of consultation. There was no need to put a halo around their heads, by placing them on this board. The point that I want to make clear is that I do not at all agree that the banking interests are deserving of the eulogy which the Minister has given them.

Amendment put and declared lost.

I move amendment No. 2:—

In sub-section (3) (c), page 4, line 41, to delete the word "five" and substitute the words "four during the period ending five years after the appointed day and thereafter five".

The object of this amendment is to try to mitigate the dangers that would, I feel, result, and that in the past have resulted, from undue Government control over the central bank. History has shown that the chief danger of inflation has come from Governments being able to control the policy of central banks, and, as the outcome of that, to borrow freely from them. We feel that the first five years of this new bank will be the critical years. Whatever may be the effect after that, we feel that if in the first five years we begin safely, it will be a great accomplishment. On the board to be constituted under the Bill, one may say that the Government will have six nominees. In view of that, I cannot see much danger coming from the reactionary people Senator Foran spoke of, the people who, he said, encourage poverty and misery.

I did not say that.

We will see the record. I heard the Senator speak of people who encourage, and have encouraged poverty and misery.

I said ignored.

Ignored is equally untrue. On the board to be set up under the Bill the Government will have six votes or six nominees, of whom two will be civil servants. They, of course, will have to act under instructions. That situation may be reasonable enough after five years, though it is one that is not at any time without danger. We feel, however, that during the first five years there should be some protection against the situation where—and this is the point I want to make—if the chairman, who, I assume, will be a person of outstanding experience, and the three banking directors agree, they cannot be overridden. Under the existing position, if the chairman and the three banking directors are in agreement, the other five can outvote them. Under the amendment that is proposed, if the chairman and the three banking directors are in agreement, there will be a tie and the chairman will have a casting vote. That is all I seek to secure by this amendment. Where the chairman and the three banking directors consider that some dangerous proposal is set on foot, their view should, in the last resort, prevail. That is the object of the amendment. That will be the position during the first five years if this amendment is passed. I believe it is a reasonable precaution to take with a new institution which has to find its feet.

I do not propose to accept Senator Keane's amendment. I imagine that in the early stages, the first five years to which the Senator refers, the wider the knowledge and experience you can get together on the board, the better it will be for the safe direction of the board. Once the initial stages have been passed, when the first five years are over, I hope the bank will have not alone learned to creep but to walk, and be able to stand well on its own feet. It is possible that it might be capable of having a lesser number after five years, but I think the number nine is not an unwise number, not too big and not too small.

Central banks in different parts of the world have a great many more directors, a greater number of directors than we propose to have on the board of our central bank. Of those that I have heard of, perhaps one or two have a smaller number, but the vast majority have at least that number and perhaps a great many more. Whatever might be said for reducing the number after the bank has got on its feet and is moderately certain of safe working in the future, I think it would be wise now to leave the number we propose to constitute the board of the central bank.

Every care will be taken to ensure that the men put on the board will be men of experience and prudence, men with a knowledge of the country. I suggest they will not be men who will be there representing sectional interests; they will be representing the people as a whole. My object is to secure that they will look after the interests of the country and not sectional interests. I do not think nine is too big a number and I do not think that any additional safeguard would be achieved by reducing the number of non-banking members as Senator Keane proposes.

As this amendment has been put down by Senator Keane, one can view it in two ways. It is a proposal to reduce the number of directors, but incidentally, it is also a proposal to change the ratio between two sections. Senator Keane indicated clearly that the purpose of the amendment is not related to the number of directors, but to the ratio and disposition of voting power as between two sections. The Minister's reply has been directed towards defending nine as the number of directors. Taking the bald proposal in the amendment, which is to reduce the number by one, I should like to have heard the Minister's case for having a position whereby Government nominees will have a perpetual out-voting power. I should be interested to hear the Minister's reply to that, but, strictly speaking, he has not replied to the case submitted by Senator Keane.

It would meet my case equally well if the Government were to increase the number to ten and have four banking directors. I think the Minister is quite clear as to what I am afraid of. If the chairman agrees with the banking directors on a point of principle, it should not be possible for that combination to be overridden, outvoted, by the lay members of the board, including two civil servants, who are not free as to how they shall act. That is the whole point.

It would seem to me that on this question of banking directors we are getting down to small, petty details. If there are directors appointed to a board of this sort, they will be experienced people in matters of finance. If that board is going to be efficient, it is not going to argue petty points, such as whether there is going to be a majority or not. They will pool their ideas in order to serve the people—that is what they are appointed to do. If it ever comes to the time that the chairman is to be considered completely infallible and he and a few directors are going to decide the whole issue on certain aspects of finance, then it will be time to abolish that board and set up a board on which people will pool their ideas in the best interests of all concerned.

I do not know that I can add anything to what I have already said; I think I have replied even to the points Senator Fitzgerald raised. I take it Senator Keane's main point is to secure, with a casting vote in the hands of the governor of the bank, that he, acting with the three banking directors, could not be outvoted by the other members of the board. I am going on the theory that the banking directors will not, any more than anybody else, have sectional interests in mind; that they will, as Senator McEllin properly suggests, with the other members of the board, have the interests of the people as a whole in mind; that the members of the board, including the civil servants, who, I suggest, will not necessarily be bound by instructions from anybody, will go in there free men. The ordinary citizens on the board, who are not banking directors will, I hope, just as the banking directors, act on the propositions put in front of them as free citizens, judging the propositions that are put before them as free men and voting according to their consciences, so that their votes will serve the best interests of the country as a whole. That is what I expect of them, and I think that with the laymen, not representing any interest, but drawn from different classes of the community, we will get a better indication of the mind of the country as a whole on the matters than we would with a smaller number. It would not always be to the best advantage of the country if a narrow, sectional view were taken—whether the bankers' section, or, if there were such, a farmers' section or industrialist or capitalist section—and it would be better that they should not take a narrow sectional view, but that they should judge the problems, financial and economic, which are put in front of them as citizens having the best interests of the country at heart and free to vote according to their consciences on these matters.

I quite agree with the Minister's point that we do not want sectional interests to prevail, but I cannot conceive the governor agreeing with the banking representatives if they were merely actuated by some sectional motive. The governor, I imagine, would only agree with the banking representatives on some wide question of financial policy. I do not think you could get a combination of the governor of the bank and the banking representatives to safeguard the sectional interests of the banks. I would not entirely agree with the Minister in the theory that civil servants on the board are free. Theoretically, perhaps, they are, but I cannot see civil servants, nominees of the Government on the board, voting against what they know to be the Government's wishes. It is only natural that they would have regard to the Government's wishes. That is why they are put there. There are several civil servants on boards at present, and of course they are agents of the Government for the carrying out of Government policy. I am not complaining about that, but it is a fact. Senator McEllin suggests that I envisage frequent disagreements on this board. I suggest that it will be very unusual, but when such a disagreement arises, it will be on a very important point. It might arise only once in the five years and the matter is so important that I think the governor's casting vote should prevail.

Amendment, by leave, withdrawn.

I move amendment No. 3:—

In sub-section (3), paragraph (c), after the word "determine" in line 44, to insert the words:

"but of whom one shall be a person representative of agriculture whose main source of income is derived from farming".

The Minister said that he does not want to have any sectional interest directly represented on the board, but the Bill definitely states that the banks are to be directly represented. Before putting down this amendment, I consulted some of my colleagues and others, and said that I intended to press for the appointment of two agricultural directors on the board. I was advised that if, instead of two, I asked for one, I would surely get that one appointed, and it would save much discussion if the Minister would indicate his acceptance of the amendment.

As the Minister will not accept it, I must develop my argument. Farming is our basic industry. It is, one might say, our only industry, or the only industry which counts. Farmers represent the biggest customers of the banks—bigger than all the others put together. Senator Sir John Keane might not agree with that.

No, I do not agree with it.

According to the Banking Commission Report, in Great Britain and America only 6 per cent. of the aggregate advances of the banking system were for agriculture, while, in Eire, more than 50 per cent. of the total advances of all the banks was taken by the farmers and wholesale or retail merchants connected with agriculture. A large percentage of the other advances was made to stockbrokers and others at from 2½ to 3½ per cent. while farmers were charged over 5 per cent. on the average for the advances made to them. These are facts which were supplied by representatives of the banks to the Banking Commission and it is an extraordinary position that there is not a single practical farmer on the board of any of the commercial banks in this country.

Senator Sir John Keane and Sir Walter Nugent would have a theoretical knowledge of farming, but I think that even Senator Sir John Keane will admit that his personal interests in other industries and in banking are much greater than his interest in farming.

It may be said that the principal business of a central bank would be with stocks and shares and currencies, and that the farmers know very little about stock exchange transactions. I admit that the class of agricultural director I should like to see appointed would know very little about stocks and shares or stock exchange transactions. He possibly would not know anything about bulls and bears, contangos or options, but he would know something about credit. He would know possibly more than any of the banks about the use of credit and the want of credit, and particularly for the farming community of this country. He would be a man of common-sense, with practical knowledge of farming, and when the Bill sets out that three representatives of the banks are to be appointed, I do not think that my amendment, asking that one person directly representing agriculture be named in the Bill, can be considered unreasonable. Section 6 sets out that in what pertains to the control of credit the constant and predominant aim of the board shall be the welfare of the people as a whole, and I say that that cannot be accomplished if you have not on the board a representative of the largest section of the community.

Senator Sir John Keane, if he supports this amendment, will be meeting the point which he raised in his own amendment, because I suppose he will admit that the farmers are the most conservative people in the country. I am not objecting to the bankers being represented. I think they are a useful section of the community, and are a common-sense lot of people, but what I object to is that they have no practical knowledge of farming. If they had, they would be more liberal to the farmers and agriculture would not be in the state it is at the present time, starved for want of credit. There is plenty of security, and the banks are bursting with money, but they think the farmers are dishonest so they will not give it to them. It would be a great advantage to have on the board of each of the commercial banks a practical farmer who knew the circumstances and was able to advise them on the matter.

This statement by Senator Counihan that the farmers are starved for credit will have to be answered some time and may as well be answered now. I am not at liberty to divulge all the proceedings of the conferences on credit; Senator Counihan was there. Not only the bankers but other sections agreed that there was ample credit for farmers. As a banker, I can say that we are not getting demands for credit from farmers. According to figures which I was given the other day, the bills in certain small offices, which normally at this time of the year would be about £3,000, were only £300. There is a demand for credit from certain people who are in difficulty, down-and-outs whose land has been neglected, who have no implements, or who have no able-bodied people in the family to work the land. A few of those undoubtedly want credit, but nobody can give it to them. The Agricultural Credit Corporation cannot give credit to those people, and neither can the banks. But to make a general statement at the present time that the farmers are starved for credit is to say something which is totally contrary to the facts, and I cannot believe that Senator Counihan himself does not know that.

On this point, I am not in a position to give away any State secrets any more than the Senator who has just spoken, but it is both true and untrue to say that there is an ample supply of credit for Irish agriculture. As Irish agriculture is carried on at present, doubtless the people carrying it on are not aware of any great advantage that would come to them if they were using millions of money more in their production than they are actually using, and it is possible that if credit were too liberally provided to agriculture many farmers would not make a wise use of it, but the fact remains that if Irish agriculture were modernised——

The Senator knows that to develop the subject of credit to farmers would not be quite relevant to this amendment.

I am merely trying to answer the point raised by Senator Counihan and Senator Sir John Keane.

The Senator may proceed.

In that case, there would be a demand for considerably increased credit in the service of Irish agriculture. Offhand, I would say that, in a normal state of affairs with no war on, £10,000,000 or £20,000,000 more could be usefully employed in Irish agriculture, and ought to be so employed in the course of the first few years after the war is over. But I do not find myself in agreement with this amendment moved by Senator Counihan, because I think that membership of this board implies certain characteristics which are not necessarily possessed by a person simply because he is a first-class practical farmer, mainly dependent on agriculture for a living, and I doubt whether it would be possible to find in all Eire any such person who would be a desirable member of this board. The qualities which are needed for membership of this board are very important, but they are technical, and are not directly related to the qualities of a successful practical farmer, although doubtlessly it would be desirable that a knowledge of agricultural conditions in some sort of way should be in the possession of members of that board.

I do not know whether the question of credit should be developed or not——

But in answer to Senator Sir John Keane, who raised the point, I think I should comment on it. A farmer on a bank board would be as useful as any other man, but I do not know that he could give to the farmers what some of them want. The farming community, in 1920 and 1921, got too much money advanced to them. They got money advanced to them too freely, almost without any security beyond the land they were buying. They bought land so freely and paid such extravagant prices for it that they have been crying for the last 20 years about frozen credit as a result of the collapse of prices and the collapse of things generally. I have been in this House for 15 years, and I have been continually listening to talk about the difficulties that were created for farmers by the bankers in 1920 and 1921 by giving them money too freely. Now that is all forgotten, and we had Deputy Cosgrave going down to Cork last Saturday giving half a million of money free of interest.

That is not in order.

What I want to get at is this, that putting an agricultural director on the banking board will not improve the position of the farmers one iota. The bankers were too liberal before, without any agricultural director. As far as I know, the position in the country to-day is summed up by the story an old woman told me the other day. She went into a shop to make some purchases, and, on finding that she could not get what she wanted, she said: "Asthore, there was one time when we had no money, and you would hardly give us any stuff; now we are rolling in money and you have no stuff to give us."

Is the money coming from England?

Is the Senator pressing the amendment?

We did not hear the Minister on it at all.

I think any man in this country would be very foolish, to say the least of him, if he denied the importance of agriculture in our economy. The most important part of the economy of this country is agriculture, and in saying that I am not decrying other interests. The big majority of our people are dependent on agriculture in one way or another, directly or indirectly. As I say, anybody who would deny the importance of that aspect of our economic life would be very blind or very foolish. I have never denied it at any time, speaking here or elsewhere, and I do not deny it now. I think that, if we had a central bank board which was not alive to the importance of agriculture in our economic life, that board could not be a success. I do not know a great number of farmers, but of those that I do know there are some whom I would be very happy to nominate as members of a board such as this, but I would not necessarily nominate them merely because they are farmers. I would nominate them because they are men of sound common-sense. Some of them, though farmers, differ from the type of farmer whom Senator Counihan has in mind but all of them are men to my knowledge who are most expert in their knowledge of stocks and shares in this country. They have an unrivalled knowledge of the prices of stocks and shares and the value of stocks and shares from week to week, but it is not because they are farmers, although they are farmers, making their living out of farming, with a little bit of "dry" money invested here and there, as so many of our farmers have, that I would nominate them.

There are millions and millions of pounds invested in this country and outside it by farmers. Some of them are the most expert men in watching the ups and downs of the values of stocks that I have ever met. As I say, I do not know so many agriculturists but I know a few and some of them I would be happy to put on the board, not necessarily because they are practical farmers who walk their fields and look at their cattle, sheep and crops every day of the week. It is not for that reason that I would put them on the board but for the reason that they are men of sound common-sense with a wide experience of the world, including agriculture. I said, speaking to another amendment, that I hope that this board will not look at matters from a sectional point of view. I hope the board will look at the country as a whole and certainly I would expect them to consider the interests of agriculture as a whole. As I say, the board of the bank could not be a success if it did not study agriculture and know the ups and downs of the agricultural industry. I do hope that, when the board is nominated, there will be found amongst its members some person who has an intimate knowledge of agriculture and who will be helpful to agriculture but it will not be merely because he is a farmer that he will be nominated. The members of the board will be appointed because they are men of experience, prudent men, in whom the Minister and the Government can have confidence that they will examine the needs of the country as a whole, including those of agriculture, and see that it, as well as every other sectional interest, is safeguarded so far as the board can do it.

Senator Johnston says that he cannot support the amendment because he does not think that a farmer would be competent to fill this post. I think it is a terrible reflection on the 350,000 Irish farmers that we cannot get one out of that number competent to be a director of the central bank.

I do not know of any myself.

The Senator does not know the whole of the country.

That is the usual attitude of the professors. They think that nobody is fit to give an opinion on anything except themselves. I do not mind Senator McEllin. Senator McEllin would tolerate anything directed against the farmers. He even supported the economic war, which cost our farmers——

I beg your pardon.

He says he did not.

The Minister has stated that the objects of the central bank will fail unless the interests of agriculture are taken into account. How can people who do not know the needs or the wants of agriculture deal with them unless there is a representative of agriculture on the central bank? When you are putting three bank directors on this board, a proposal to which I do not object, I think there is a case also for the proposition that one of the directors should be representative of agriculture. I intend to press this amendment to a division even if I am alone in supporting it.

I should like to make one or two remarks with reference to the possibility of putting a director on the board of the central bank who will understand the needs of a certain section of the farming community who alone find it difficult to get credit at the moment. Senator Sir John Keane has told us that credit is available for farmers at the present time. As a member of this House and as a member of the other House, I on very many occasions endeavoured to secure credit at a reasonable price for farmers who were in need of credit and I found the farming community who were really in need of credit could never obtain it. If a farmer with a holding of £5 to £20 valuation looks for credit what is the position? The Agricultural Corporation has been mentioned. I do not want to make any particular reference to it except to point out that, if a farmer is to succeed in getting credit from it, he must not alone have his annuities and rates paid to date, but he must have no shop debts and he must not have gone into a bank as security for anybody else, nor must he have anybody signing in the bank as security for him. In other words, he must be in the position that he does not want any money, that he can carry on without any money. If we could arrange to have a director on the board of the central bank who would realise the necessity of credit for people who really need it I would be very much in favour of such a proposal. If the appointment of such a director would have the effect of making these people credit-worthy—that hyphenated word of which we have heard so much in recent years—I would be very glad to support such an appointment.

I also should like to support this amendment. I know that in some parts of the country certain farmers have found it impossible to get credit. The position of affairs was so bad that they were unable to procure seeds for their tillage and they had to go into pawn until the harvest was in. It was a common practice in the old days for merchants in the West to supply seeds, manures and even feeding stuffs for pigs and fowl on credit until the harvest was in.

It is still the practice.

I do not think that farmers of that type are regarded as credit-worthy nowadays. I think the shopkeepers examine the position very carefully before they give any credit and I think something should be done to make credit more readily available for these people. This important section of the community should have a representative on the board of the central bank. It would be quite easy to find from amongst practical farmers some one who is in touch with all sections of the farmers in every part of the country, who would keep constantly in touch with them and who would understand their requirements. I think such a director would be a very valuable source of information to the other directors. He would be a man who would show a keen personal interest in the class of small farmers I have in mind who are very much in need of credit. It would be his business to go amongst them and actually to visit parts of the country where credit is desired. I think if a representative of that section of the community were appointed to the board, the directorate as a whole would be improved and I hope the Minister will accept the amendment.

Perhaps it is because my friend Senator Counihan has not had the advantage of being a professor that he missed altogether the significance of what the Minister said in his reply. The Minister pointed out to him what any agricultural representative should delight to hear, that, without exception, we recognise the fundamental character of agriculture in the national economy. Every one of us recognises fully that the interests of agriculture are our interests. The Minister pointed out very clearly that he knows of farmers, men whose main income is derived from agriculture, who are highly competent to do this work that is required from the board of the central bank. There was implicit in that statement a promise that among the five whom he is to nominate to the board there would be at least one of the type Senator Counihan requires. He would not be put there because he is a farmer; he would be there because he is competent to do the work of the central bank, and has the further qualification of being in constant contact with the requirements of the agricultural industry. Surely everything that the last two speakers require is met in that. If it is, as it ought to be, kept in mind that the central bank is not even in part or in any measure intended to determine sectional interests, but is a national bank in the best sense of the word, then it would be contrary to the whole idea that anyone should be nominated a director simply because he represents such-and-such a particular personal interest. It seems to me that Senator Counihan, having gained all that he requires by this answer wants to divide the House on what? Merely to show that he is not a professor.

It seems to me that there are obvious difficulties in this matter. I did not have the advantage of hearing Senator Counihan, but some of the speakers here this evening are supporting this amendment for motives which would not lead me to support it. I do not think the purpose of the amendment is to put an agriculturist on this board so that more and more and more credit will be given to farmers——

The Senator knows that the board will not have power to do that.

Exactly. It may not have the power at all. I should like to point out to Senator Counihan that there are considerable difficulties for the Minister if he were called upon to interpret this amendment, if it were inserted. One is that there are a great many different types of farmer. Senator Hogan indicated to us that he has in mind a particular type of farmer whom he would like to see represented on the board. At the same time, it seemed to me that, from Senator Counihan's point of view, the Minister was more helpful and came a greater distance to meet Senator Counihan than, for example, my friend Senator Johnston. Senator Johnston seemed to think that there should be nobody on the board except people who had technical qualifications. I know the great advantage of technical qualifications in this or any other sphere. But it seems to me that amongst the five directors whom the Minister can appoint he is bound to appoint somebody who, apart from technical skill or even without technical knowledge, has a considerable knowledge of a subject, like, for example, agriculture. It seemed to me that the Minister's statement clearly meant that he would appoint some such person. Indeed, without praising the Minister, I do not know that one could be a Minister for Finance envisaging this and taking upon himself this power without nominating that kind of person, that is to say, a farmer with certain other knowledge, on this kind of board. The suggestion that merely technical people should be appointed is apparently not the view of the Minister. To that extent, I think Senator Counihan has practically gained his point. But to restrict the choice, I think, would hardly satisfy all the farmers either, because I have heard over and over again small men who protested that a particular person on account of the amount of land he had did not represent them. From the point of view of an outsider who would tremble to say that he had any particular knowledge of the subject, it seems to me that Senator Counihan has been to a considerable extent met by what has happened.

I doubt if it would be wise for the House to accept or even for Senator Counihan to insist on the House accepting the amendment in the form in which it has been put down. Nevertheless, I think it is a good thing that he has put down the amendment, because it has given an opportunity for discussion and given the House a chance to hear what is in the Minister's mind on this particular point. I must say that I do not agree with any of the Senators who may have suggested—I do not say that they said it—that by merely talking about agriculture you are talking about a sectional interest. You are not. You cannot talk about Ireland without talking of agriculture, and when talking of agriculture you are talking about Ireland. The Minister made a point which I think is not quite correct. I got up mainly to raise this, because I should like the Minister to check up on what he said. I gathered that he said that the central bank will not have any power with regard to the matter of agricultural credit.

To individuals.

Even on that point, I should like the Minister just to examine it, because according to paragraph (f) of Section 7 the central bank will rediscount bills of exchange drawn for agricultural purposes.

It follows that when they rediscount bills drawn for agricultural purposes they are actually making loans to individual farmers indirectly. I want to raise that point because I think it would not be right that it should go without the Minister having a check-up. I think what is in Senator Counihan's mind is this, and Senator Counihan and people like him and people like myself must be pardoned if we cannot get it out of our minds until it is changed. We have had experience of the attitude of the banks in this country to agriculture in the past. I do not intend to go into a discussion on agricultural credit at this stage, but we have had experience of the attitude of the banks in this country to agriculture in the past. I should like to make this point in reply to a statement made by Senator McEllin, who told us about what the banks did in 1920 and 1921. He might have said from 1917 to 1921. Yes, the banks gave out money then. They almost took you in off the street to give out money to you. You might almost charge them with being rather immoral in the indiscriminate way in which they handed out money regardless of whether or not the money could be repaid.

The Senator's amendments deal with the same thing.

I will deal with them and I will not ask the Senator to deal with them only by way of opposition to me. The banks gave out the money when agricultural prices stood at a certain level and then, by certain manipulations with which I dealt on the last occasion here, they considerably reduced the value of the agricultural commodities which had to repay the loans which the banks gave. But the banks wanted their full pound of flesh. Had the banks and the people who managed money kept the price level of agricultural commodities at the point at which it was when they gave out the loans, there would be no trouble in repaying. In most of the cases they did not reduce the demands which they made on the debtor farmers when they went to repay the debts. I am making that point in reply to Senator McEllin, because I think it is not right that we as farmers should either misunderstand or not fully state exactly what the facts were.

I only pointed out the danger of giving too much credit.

I know there is a danger in giving out too much of anything, even too much good food. A lobsided menu is unhealthy. I know what Senator Counihan and myself and people like us think about the attitude of the banks over a considerable number of years. I know Senator Sir John Keane will tell me, probably with a degree of truth to a point, that credit-worthy farmers were not refused credit. But what we fear is this putting on the board of certain people. I think the Taoiseach in the other House referred to the type who might be put on the board of this bank. I think he indicated that there were on the boards of the commercial banks people who understood agriculture and industry and that they would bring that sort of knowledge to bear in discharging their duties on the board of the central bank. What we feel is that, in so far as the central bank is to influence agriculture in future, if it pursues the policy enunciated by the directors of these particular banks, we will not get anything more in future.

This is what is at the back of Senator Counihan's mind. He did not discuss it with me to any great extent. We want something different. I am not disputing that the directors of the banks know a fair amount about agriculture. From discussions which I have heard Senator Sir John Keane enter into, I know that he has a considerable knowledge of agriculture. But it is one thing to have a knowledge of agriculture at a distance, and a rather different thing to be striving with the elements and the soil and the difficulties of marketing and the people who raise and lower the value of your commodities in order to get a living out of the land. That is the sort of thing that Senator Counihan has in mind. I should like if the Minister could tell us that it is not his point of view that the interests of agriculture, in so far as the central bank is going to influence the future prosperity of agriculture, are not going actually to be met by saying that on the commercial banks there are people who may have some knowledge, in a remote way, of agriculture. We want something closer up, something more in touch with those who go to fairs, who not only mix and talk with farmers but, as the Minister said, who walk the land and see the horses, cattle and sheep—the man who gets up on his own reaper and binder or handles the plough.

And buys and sells his own cattle.

Yes. If that is the sort of person the Minister has in mind, someone interested in agriculture, the future of which must be, to a certain extent, entrusted to the central bank, I think Senator Counihan will be well satisfied.

The dreadful difficulty of any man in this House, even of Senator Counihan or Senator Baxter, would be to certify from any gathering of farmers that a man nominated to any committee or board was representative of farmers. Where would you get him? You will not get him. If I searched all County Cavan, with which Senator Baxter is connected, to get the best practical farmer—leaving Senator Baxter out—or even outside that county, and put a man up as a representative of County Cavan farmers, there would be the hell of a hullabaloo. First of all, he would be too small for some and too big for others. It would be said by some that "He has only 100 acres. What would he know about farming?" I have heard that statement over and over again.

There are not many like that.

That is what I hear. There is the difficulty. I should like to see a man there with an intimate practical knowledge of agriculture.

Senator Hayes stated that he could not see how the Minister could accept the amendment in this form. I am prepared to withdraw it and to consult my colleagues in order to put down an amendment in a form which will be acceptable to the Minister and to others.

Pardon me. Let there be no misunderstanding. I do not intend to put on the board anybody representative of any sectional interests.

Except the banks.

Anybody who will be put on will not represent any sectional interests. Whoever is put on will not be put there to represent sectional interests but will be put on as a sensible, prudent, experienced man having the interests of the community as a whole at heart.

Will the Minister say who will be put on the board representative of the agricultural industry?

The Minister said that he cannot avoid putting on the board a person who knows all about agriculture. Is not that right?

We could have people like Senator Johnston or Senator Sir John Keane and others who know something about agriculture but who have no intimate knowledge of the needs of ordinary farmers in County Cavan, County Kerry or County Dublin. I am talking of men who have practical knowledge of the industry, men who move amongst farmers, who are interested in the same class of work and whose principal interest will be farming. Others that the Minister spoke of might be very suitable men and might know all about stocks and shares. They might be very useful, but those I am concerned about are men who know the necessities of agriculture from time to time and who would be able to advise in that respect. It is not men who know all about contango, bulls and bears we want. If the Minister cannot see his way to having the type of men I indicated on the board I will consult my colleagues again to see about putting down another amendment for the Report Stage. Otherwise, I will have to test the feelings of the House on this matter.

Amendment, by leave, withdrawn.
Section 5 agreed to.
SECTION 6.

I move amendment No. 4:—

In sub-section (1), page 5, to delete all words after the word "addition" in line 21 to the end of the sub-section and to substitute the following words:—"to the functions, powers and duties vested, conferred or imposed on the bank by this Act the bank shall in particular have the general function and duty of taking such steps as the Minister may from time to time deem appropriate and advisable towards safeguarding the integrity of the currency and ensuring that currency and credit shall be issued in correct equation to the economic needs of maximum production and full employment.

There are two matters in connection with this measure upon which there seems to be a measure of unanimity, and these are, that the Bill cannot create credit or influence credit. These two very important functions will be attended to by an authority residing outside this State. Section 6 states:

(1) In addition and without prejudice to the functions, powers, and duties vested by law in the commission immediately before the appointed day and to such functions, powers, and duties as are specifically conferred or imposed by this Act on the bank, the bank shall have the general function and duty of taking (within the limit of the powers for the time being vested in it by law) such steps as the board may from time to time deem appropriate and advisable towards safeguarding the integrity of the currency and ensuring that, in what pertains to the control of credit, the constant and predominant aim shall be the welfare of the people as a whole...

That seems to me to be sentimental tosh. To put that kind of stuff into a section dealing with credit and money, and into the operative section of a Bill of this kind, is something that one cannot understand, because if there is anything we want to be exact about it is about credit and about money. If there was ever a Frankenstein created that Frankenstein is money, as can be understood from the way it is now operating in a great many places. This section like a great many sections of the Constitution is merely directive. A board can be set up and a person appointed on it but, of course, the Minister can disqualify him and send him about his business. No board can enforce the section. Nobody knows what is meant by these words:

"ensuring that, in what pertains to the control of credit, the constant and predominant aim shall be the welfare of the people as a whole."

You could get forty different methods in this House by which the welfare of the people could be secured. This is an attempt to reduce this verbiage to sense and condense it, so as to give it matter and form. It aims at giving the bank power to create and issue currency as the needs of the people demand and as the Minister for Finance may deem appropriate. Surely that should not be something that a central bank should not consider part of its concern.

We are told that there is no standard type of central bank. That may be so, but surely central banks accommodate themselves to the needs of the State in which they are set up. The extension of credit facilities in this State seems to be the greatest need of the moment. The control of our currency resides outside the State and, so long as that is the position, inflation and deflation must inevitably follow the state of affairs outside. We are told, of course, that other States have their link with sterling, and that it is not any degradation for them. That is so, but when we rivet our money to sterling, do we realise the publicity that will have to be given to our necessities before we can disentangle ourselves from that link, and the panic there may be created if it is necessary to bring into the two Houses of the Oireachtas measures to enable the link to be broken?

Senator Sir John Keane tells us there is plenty of money in the banks, that they never have been in want of money to lend where the demands for loans were justified. I made the point on the last amendment that we did not know the conditions under which those loans were to be met or the collateral or mortgage security necessary. The Taoiseach told us there was plenty of money. It would seem to be in a secluded lagoon where the motions of the sea of credit do not operate—that we have so much liquidity that the credit market does not influence us in this secluded lagoon at all. Let me quote some of the things said in the Dáil, as given in the Official Debates, volume 86, column 2553:—

"Mr. McGilligan: When it comes to expanding credit, if the Bank of England decided on a particular occasion by market operations to expand credit, does not that expansion of credit automatically flow over here?

The Taoiseach: It need not.

Mr. McGilligan: I am not talking about actual loans, but about the availability of credit. Are we not governed by the Bank of England? Why hesitate to agree to that?

The Taoiseach: It is not true.

Mr. McGilligan: I understood that you recognised it to be true.

The Taoiseach: With regard to the Irish banks, they are in a peculiar position in relation to liquidity. They preserve a higher liquidity. I think the figure is 22½ per cent. There may be some very good reason why the liquidity of the funds of the Irish banks is much higher than that of the English banks."

Then we have, in column 2578, the Taoiseach saying:

"The point is this, whether the credits will be made available from savings or by the creation of credits in the way which has been indicated by some Deputies here. Surely, if there are savings that can be utilised, it is very much better to utilise those savings than to create credits, if it is proved to be unnecessary.

General Mulcahy: But those are savings already there.

The Taoiseach: But the point is you have got to get the schemes then.

General Mulcahy: That is what I say.

The Taoiseach: You have to get Government schemes for employing this money.

General Mulcahy: But the money is there.

The Taoiseach: Let us examine this. What are the schemes in which you can profitably employ it from the community point of view? In what directions? In housing, for example, you have a shortage of materials."

I would like to interpolate here that housing was the only thing he mentioned.

"There is a number of projects which, in ordinary times, we would be carrying out at full blast. We cannot do it now because there is a shortage of certain raw materials which are necessary. Your difficulty at the present time is not a shortage of cash; it is not a shortage of credit —credit, I would hope, at reasonable rates... With us, at the present time, the difficulty is not the unavailability, if I may use the word, of credit. The difficulty is to get schemes in which we can employ credit in such a way that the community as a whole will be better off after employment of the credit than it was before. When considering whether credit should or should not be employed, one must have regard to the question whether or not additional wealth can be got out of its employment. If you can create a much greater amount of wealth by its employment, you have a case for going ahead. Perhaps I should not narrow the matter down to the creation of wealth. It may be possible to improve amenities or to raise the standard of life and the well-being of the community. Improvement of well-being may be as worthy of expenditure as any other project but, in making your plans, you must provide that the well-being will not be that of the spendthrift, that it will not be merely for the time being, leaving those who come after us in an impossible situation. It should be a standard which it will be possible to continue, so that those who come after us will also benefit."

That is merely a statement which suggests that there is plenty of credit, but no schemes available. That position is worth examining. We find that the other ingredients towards carrying out schemes are there in plenty. We have 80,000 emigrants to Britain and at least 80,000 unemployed at home, and we have thousands of acres of land returning to the wild state for want of reclamation. There is plenty of credit, according to the Taoiseach and Senator Sir John Keane.

Sixteen years ago we were told something about schemes that required credit. There are two points of view here—the point of view that there are plenty of schemes but no credit, and the point of view that there is plenty of credit but no schemes. Speaking in respect of schemes which would require credit and the creation of credit, on May 16th, 1926, at La Scala Theatre, Dublin, the Taoiseach said:—

"The best of our people—the young men and women of vigour and enterprise, the foundation on which the whole future should be built— are daily being taken from us. We are being bled by an emigration worse to-day than almost at any time since the great exodus that followed the Famine. That must be stopped. And then go out into the city, or into one of our country towns, or even into the heart of the country itself, and see the conditions of the unemployed there. I have said it before, and I repeat here, and I believe most right-thinking men will agree with me, that it is a primary duty for any Government in any civilised country to see that men and women will not starve, and that little children will not starve, through opportunity for useful work being denied to the breadwinner. I, for one, would feel that I was not acting according to my best feelings, and to the lights of my reason, if I held back when I might take an effective part in the fight to make good that view. There is an opportunity immediately at our hand for doing great uplifting social work in Ireland. Had our nation secured its complete freedom it would, I believe, be now leading the way for the world in solving peacefully some of the problems that are likely to be solved elsewhere only by violent revolution. As a nation we have a wonderful opportunity, and as republicans we have a glorious mission, if only we will rise to it.

In 1921, when the negotiations in London were going on and I believed that there might be a successful issue to these negotiations in a treaty which we could accept, I set out, naturally, to plan for the future. The most urgent need obviously was to secure immediate employment for the large number of young men——"

On a point of order, Sir, the Senator has read out two speeches by the Taoiseach, a speech by Deputy Mulcahy and a speech by Deputy McGilligan, and I suggest that he should come back to the purpose of the amendment. Can we not come back to the subject of the amendment? We have read these speeches before, and may, perhaps, have enjoyed them, but I think it is time to come back to the amendment itself.

If the Senator objects to them, he knows that there is a remedy. I have pointed out that at one time we were told that there were plenty of schemes, but no credit available with which to finance them. Now we are told that there is plenty of credit available to carry out such schemes, but that there are no schemes. There is a statement by the Taoiseach that there is plenty of credit, but no schemes, and I am only pointing out that there still are schemes, just as there were at that time, and that they are just as necessary now as they were then.

Is the Senator asking us to say that the Fianna Fáil Party had a scheme in 1926? Even the Minister himself would not believe that.

I am saying that the necessity for these schemes, and for credit to finance these schemes, existed then just as it exists now, and I submit these two points: that at that time we were told that there were plenty of schemes, but no credit, and now we are told that there is plenty of credit, but no schemes.

Leas-Chathaoirleach

I think the Senator might come back to his amendment.

I cannot do so, if I am prevented from quoting the statement that there is no credit and plenty of schemes.

Leas-Chathaoirleach

But would the Senator develop his argument in his own words?

I cannot speak in Fianna Fáil words.

Mind you, Sir, the Senator can do it, because I have heard him doing so on other occasions.

Leas-Chathaoirleach

I think the Senator could deal with the point directly. Could he not paraphrase the quotations?

I am afraid I could not do that, because I have not got a sufficient command of English.

I could put the point in a few sentences, if I would be allowed.

Leas-Chathaoirleach

I think that Senator Hogan has made his point sufficiently clear, and that there is no necessity to elaborate it any further by quotation.

I think I am entitled to point out, Sir, that the present Head of the Government said—his ipsissima verba—that there were plenty of schemes but no credit, and that now we are told that there is plenty of credit but no schemes.

Leas-Chathaoirleach

The Senator has pointed that out already.

I think I am entitled to point out that fact.

Why not get down to the point?

I do not know what Senator McEllin wants.

Get down to the point.

I shall continue with the quotation, which is as follows:—

"In 1921, when the negotiations in London were going on and I believed that there might be a successful issue to these negotiations in a treaty which we could accept, I set out, naturally, to plan for the future."

Leas-Chathaoirleach

The Senator has already read that.

I know, Sir, but I was not allowed to proceed.

Leas-Chathaoirleach

I think the Senator ought now come to the subject matter of his own amendment.

The remainder of the quotation is as follows:—

"The most urgent need obviously was to secure immediate employment for the large number of young men who had obeyed the call to remain in the country and had given of their best towards the winning of freedom. There was no lack of useful national work to be done. Organisation and capital were all that was required to set it going. The whole question of transport was awaiting to be tackled comprehensively, and water, rail and roadways co-ordinated and improved so as best to serve the needs of the community. The remaking of the roads alone would have given immediate employment—and employment distributed throughout the country—to large numbers. Then there was the vast work of reafforestation—a work that would ultimately more than repay in actual cash value whatever initial capital expenditure was laid out upon it. Then there was the national work of reclamation and drainage, and the development of our water and fuel power. Again, there were our fisheries, which might be built up to be our second great industry— an industry entitled to our special care, inasmuch as it is the natural staple industry of our Irish-speaking seaboard."

Now, Sir, that was in 1926, and I want to ask if all that land has been reclaimed, if all the marshes have been drained, and all the roads made; has this great exodus—the greatest since the Famine—stopped, or have our fisheries or Gaeltacht industries been developed in the way that was suggested in that speech of 1926? This amendment endeavours to secure credit for these schemes, or to allow the central bank to make credit available so that these schemes may be carried out. The proposal, of course, was rejected in the Dáil, and may be rejected here, but I should like again, Sir, to give a quotation. I regret that I have not anything to quote of Senator Fitzgerald's remarks on the occasion to which I am going to refer, but he might quote from other people. It must be remembered, however, that this question of liquid sterling assets was opposed by some very distinguished people who, at one time, gave us some speeches, which were almost in blank verse, and I should like to quote what the then Deputy MacEntee said in 1927. I am quoting from column 808 of volume 21 of the Official Dáil Debates. The Minister for Finance, on the last occasion, informed us that France was one of the surest economic countries up to the time of the last disaster, but Deputy MacEntee, as he then was, in 1927, made the following remarks, which had reference to this matter of our link with sterling:—

"The position which has been stated by that informed and impartial observer is corroborated by every factor of economic significance that can be found, by the state of French trade, for instance, and the general lack of unemployment in France. We have been practically given to understand by the Minister for Industry and Commerce that unemployment must be always with us; that it is an incurable evil. Here are the conditions that prevailed in France during the period I have spoken of. France is a country with at least 40,000,000 of people. Here are the unemployment statistics from June, 1921, to December, 1926:—June, 1921, 47,331; December, 1921, 10,032; December, 1922, 2,221; December, 1923, 464; December, 1924, 509; December, 1925, 645; June, 1926, 489; December, 1926, 17,178."

Now, he quotes these figures to show what could have been done in this country were it not for the fact that we have been linked up with sterling. He went on to say:—

"These are the actual facts and figures, corroborated by the general impression and by the judgment formed by a commercial attaché in Paris on conditions in France. I ask Deputies to contrast these figures with the corresponding figures in Ireland, where 15 per cent. of our population are unemployed, and they will see what a native Government, resolutely concerned to grapple with this evil, could have done here if they had set about it in the same way. Not only has France reconstructed the devastated regions, but in doing so she has won for herself a place in the markets of the world. She has become one of the great exporting nations. We hear a great deal to-day about an adverse trade balance. I am not going to argue that in all circumstances an adverse trade balance is an unfortunate thing, but we, at any rate, have good reason, considering the condition of our workers, to regard it as an unfavourable indication of the general economic condition."

Leas-Chathaoirleach

The Senator has quoted sufficiently to make his point. I suggest also that the question of the link with sterling will come up on a later amendment.

With all respect, I submit I am perfectly in order.

I submit, Sir, you are the judge as to what is in order and what is not.

Leas-Chathaoirleach

I think so.

I am just as much entitled to submit I am in order as the Senator is entitled to submit that I am not.

Leas-Chathaoirleach

I am asking the Senator to relate his remarks to his amendment. He is taking up a great deal of time with long quotations and they are not relevant to the amendment we are discussing.

Of course, if you say they are not relevant that is an end of it. I hold that I am not getting fair play in respect of dealing with the amendment. I move the amendment formally and that is all.

I would suggest, in view of the kind of discussion which took place in the other House and in view of the difficulties of separating various aspects of this question, a certain latitude would be permitted to Senators. As the Leas-Chathaoirleach understands, this is a difficult question and it is difficult for Senators always to keep absolutely in order. I suggest that a certain latitude ought to be permitted.

Leas-Chathaoirleach

I appreciate that and I am quite willing to give latitude to Senators, but I do not think it is relevant to this amendment to have a long quotation from a speech delivered in 1927 about economic conditions in France.

You might have waited until I showed the relevancy at the end of Mr. MacEntee's statement.

Leas-Chathaoirleach

The whole point is the waiting.

Then, of course, I am not entitled to make any point.

Leas-Chathaoirleach

The Senator is entitled to make his points, but he must not take the whole day by way of roundabout quotations from speeches nearly 25 years old.

I submit I am entitled to speak the whole day if it is relevant.

If it is relevant.

I want to say, in respect of Senator Baxter's submission, that I do not want anything beyond the strict, rigid interpretation of the Standing Orders. I submit I am quite entitled to carry on as I am doing.

Leas-Chathaoirleach

The Senator's quotations are not relevant to this section or this amendment.

I think the Chair has met the Senator quite reasonably. There is no evidence that Senator Hogan is anxious to meet the Chair.

I prefer to take the Chair's ruling.

I think it is not fair that the Senator was not allowed to develop his argument. He began certain quotations and was not allowed to develop them.

Leas-Chathaoirleach

The Senator was not interrupted. Other Senators rose on a point of order and I ruled that the Senator's quotations were not relevant to the amendment which he is moving. That is the situation.

There were no interruptions from this side of the House. The matter arose on the Chairman's decision that the quotations were not relevant. It was relevant for some time, but when a matter is brought too far it ceases to be relevant and becomes merely wearisome.

Leas-Chathaoirleach

We cannot have a discussion like this, on the ruling of the Chair. We will proceed with the amendment. We will take the next speaker if Senator Hogan does not want to continue.

Would I be in order in saying we accept your ruling, but we do not agree with it?

Leas-Chathaoirleach

There is no objection to that.

I move the amendment.

I wish to say a few words on this amendment. I do not understand what it is all about. It is a lot of words. As the Senator himself says, it is an addendum to the pious platitudes of the Constitution. How is the central bank going to arrange that currency would be adequate to the needs of full employment and production? It is beginning at the wrong end. If this thing were embodied in a motion, outside this Bill altogether; if the Government in their policy took steps to ensure that there was sufficient employment for everybody in the country, I could understand it. But the banking system only comes into this matter indirectly. If the Senator were in power, how would he set to work? Surely this would be the sequence of events: He would say: "We want more afforestation; we want to drain the bogs; we want to make more roads"—I do not think that is a good example as there are too many roads already; he would say then: "The first step surely is a loan. If it is going to be on a sound financial basis, that loan has to come out of the savings of the people." The Senator seems to suggest that the loan should come from the central bank or, indirectly, through the central bank, from the commercial banks. That is all wrong. That is the high road to inflation. If this thing is going to be done at all, the Government in its policy will proceed to borrow and to start schemes. I personally agree with the Minister when he said that if he got credit he would not know what to do with it. I agree with that.

If he were to spend £24,000,000—I think the secretary to the Department of Finance has for some time past considered suitable schemes. It is very hard to devise schemes. Question of population and of transporting workers to the schemes and 101 practical difficulties would arise. If the Government has schemes, the first step is to borrow from the savings of the people and if the people put up the money the rest follows automatically. There is no question of external control. I have said before, apart from the question of whether it is sound or not, if the Government sees fit to take over financial responsibility, the currency will be forthcoming through the ordinary machinery to finance these schemes.

I do not understand at all how the central bank is going to work the amendment. It is only a platitude. It means nothing really, but how that thing is going to affect in any way the policy of the central bank, I do not know—it may affect the policy of the Government, if you like—but it is not the function of the central bank in any way to equate its currency with full production or employment.

The Senator moving this amendment described Section 6 (1), I think, as sentimental tosh. I do not exactly know what is sentimental tosh in relation to a Bill or to an Act of Parliament, but I am very much inclined to think that there is very great doubt as to whether that particular section adds anything at all to the actual powers of the bank and as to whether it would matter in the tiniest little bit whether Section 6 (1) was or was not in the Bill. For similar reasons, I think it is extremely probable that that would apply also to Section 6 (1) amended as suggested by Senator Hogan or as suggested in another amendment which I think it would be in order to discuss now which is to be proposed by Senator Baxter. At the same time, while that is my view, I think it would be a mistake to ignore the fact that these amendments are probably put down because of a certain point of view which a very large number of people hold. There seems to be an idea abroad that, by the printing of paper, by the creation of what is called credit, irrespective of whether that credit is going to create wealth or not, you can cure unemployment. If I believed that, I would print all the paper that we could find and, I believe, so would the Minister. Fundamentally, the question really is, would you create employment—would you solve the greatest problem in the world to-day, greater even than the problem of war—though I do not think now you can separate the two—by setting up a number of people and telling them to print paper to meet any scheme that came along? I believe it would have the reverse effect.

If you did not keep adequate control of the issue of paper credit you might have a few years of boom, as has happened elsewhere, followed by the worst unemployment which we have ever seen. To my mind it is of importance that we should consider amendments of this kind, not in any detail, but in relation to the question of principle involved. If you read speeches, which are not infrequent in other countries, arising to some extent out of the war and out of a growth of public conscience, which probably started from Rerum Novarum, which feeling has been intensified to a considerable extent during the war, you will probably come to the conclusion to which I have come, that you cannot separate fear and want, which are inevitable in unemployment, from the whole problem of war. It is the intention—I admit it is a tall order—to find some method by which every individual shall be enabled to work and earn enough to keep himself and his dependents, that being regarded as a natural right for which it is the duty of the State to provide. We may as well recognise that a large number of ordinary, common or garden people are extremely puzzled by the fact that it has been found possible to create unlimited armaments and to make unlimited provision for war needs and that it has not been found possible to find money to deal with unemployment. Senators may say that that expenditure on armaments is only temporary. I hope to God it is. Unemployment has disappeared in some parts of the world owing to war needs. A great many ordinary people are saying that, that being so, it must be possible to find the necessary money to make equal provision against unemployment, fear and want. When ordinary people think on those lines, they are supported by things like the Atlantic Charter in which there is a promise that, if certain nations are successful, they will bind themselves together, one of the aims being to combat fear and want in the case of the individual.

I am one of those who believe that we cannot go on merely talking about unemployment, that even if it means a change in standards for a large number of people here and elsewhere, an effort will have to be made to provide the means by which persons will be able to earn a decent livelihood. I say that to show that I am in sympathy with the growing feeling in this respect not only in Ireland but in many other parts of the world. But nothing could be worse than to translate that sympathy into the belief that you can provide for unemployment by printing paper or giving certain powers to a central bank or any other institution of that kind. I believe we shall have to face this problem before very long. It is, probably, impossible to face it at present. If it is not dealt with, I see the prospect of another war before very long. But do not think that we can deal with this problem by the insertion of pious expressions in a bank Bill or by printing paper. You cannot achieve that position without doing a great deal more than creating credit. If we concentrate our minds on the idea that it is this question of currency which is preventing employment, we may get our minds off the real problem. Currency and credit must serve the needs of the community, but do not think that, simply by adopting some system of money and credit, you will be able to meet all the needs of the community. You will have to get some scheme to do that and the best brains of the world will have to devote themselves to the formulation of that scheme. The credit and currency arrangements of this country and of the world may have to be altered to meet the demands of the altered conditions after the war.

I agree with the last speaker when he says that money and credit will have to meet the needs of the world. I think that we have epitomised in that phrase all that is necessary if we are to set ourselves on the right road to the doing of what is just to the people of this country and of the world. I quite agree with the Senator, too, when he says that it is not within the scope of this Bill that great social reforms will be brought about. The scope of this Bill is extremely limited. I am not one of those who believe that, by mere monetary reform, you are going to bring about beneficial changes in the economic order of society. Such beneficial changes will have to be brought about in the economic and not in the financial realm.

I hope that, in what I propose to say, I shall not be ruled out of order for irrelevancy. In dealing with either the sub-section or the amendment, it is difficult to be relevant and to keep to the point, having regard to the wide nature of the discussion which may be embarked upon. Sub-section (1) of Section 6 seems to be somewhat amorphous. I am not surprised that Senator Keane deemed it so, and it seemed to me that he went somewhat astray in discussing the section. The language which he condemned was, apparently, the language of the amendment. But if one closely reads the amendment, one will see that the general purport of the terminology employed is nowise different from that of the sub-section. What the sub-section endeavours to do it is difficult to say.

The amendment is distinctly different from the sub-section in so far as it makes direct reference to the Minister as the authority, as distinguished from the authority mentioned in the sub-section, which is the board. Before we come to debate the difference between the two authorities, I should like to say that, if one can glean anything from the purport of the sub-section, it is repugnant to Section 47 of the Currency Act, 1937. If the reference to the "predominant aim being the welfare of the people as a whole" were translated into financial language, might it not necessitate a repeal of Section 47 of the Currency Act?

Senator Sir John Keane tells us that there is unlimited credit. If there is, then, as Senator Hogan points out, there is unlimited labour.

I did not say that. I said that there was no restriction on the amount of currency which could come out of the ordinary machine.

Well, "no restriction" and "unlimited" seem to be exchangeable terms.

Currency and credit are not exchangeable terms.

The financial power resident in the banks to-day, according to Senator Sir John Keane, is apparently quite adequate to deal with, and to remove, the social problems mentioned by Senator Hogan.

I did not say that. The Senator may proceed. I will answer him later.

If that be not the case, then, certainly, there is a necessity to do something other than delude ourselves with the idea that the existing financial institutions of this country are capable of giving a full and adequate life to everybody in it. If there is any meaning to be extracted from the sub-section which speaks about the welfare of the people as a whole, that welfare, surely, is to give the full and adequate living that every human being is ordinarily entitled to. If the institutions that we are dealing with here will not do that, then, as Senator Douglas has said, there is a necessity to consider some other method of dealing with the problems which are besetting us.

During the Second Reading debate on the Bill in this House it was mentioned—I just merely refer to it as one of the peculiarities of our economic system to-day—that young men could go off to England, secure work there and send home the currency of that country which could buy goods here. That may be considered some form of inflation. I understand that is occurring to a very large degree even at the present time. To what exent it is affecting prices is another matter. Ordinarily, if the new system mentioned by Senator Douglas were brought into existence, it would contemplate giving to those young men a livelihood in their own country, and I imagine that is contemplated by everybody in the Oireachas. Perhaps, as the Minister has said, this is merely a Bill of a first-step character. If there is another Bill to follow it up, and if it is to be adequate, it should be such as will enable that very excellent Christian doctrine, of looking after everybody, to be put into practice.

The object of the amendment is to put in the Minister as such in place of the board which is mentioned in the sub-section. Under the sub-section as it stands it is the board which may from time to time do certain things which it considers "appropriate and advisable towards safeguarding the integrity of the currency and ensuring that, in what pertains to the control of credit, the constant and predominant aim shall be the welfare of the people as a whole." The amendment says that:

"the bank shall in particular have the general function and duty of taking such steps as the Minister may from time to time deem appropriate and advisable towards safeguarding the integrity of the currency and ensuring that currency and credit shall be issued in correct equation to the economic needs of maximum production and full employment."

The phrases used in the sub-section and in the amendment may seem to be rhetorical, and probably difficult to understand, but they ordinarily mean the same thing. It is one thing, however, to have the board, as instanced in this Bill, empowered to do these things, and another thing to have the Minister empowered to do them. The Minister is responsible to the Oireachtas and the Oireachtas to the people. It seems to us that the responsibility for fulfilling the sub-section should reside in the Minister. That is the fundamental difference between our amendment and the sub-section.

I do not know if, at this stage, I would be entitled to refer to the amendments appearing on the Order Paper immediately after the amendment in the names of Senator Campbell and Senator Hogan, but they are all of the same ilk. They do not mention any specified authority to fulfil the purpose of the section, and to that extent they are not as clear, definite or purposeful as the amendment which we are moving. We think that if sub-section (1) can be fulfilled at all it can better be done by the acceptance of our amendment, because it puts the direct authority for doing it on the Minister and not on the board as set out in the Bill.

I want to say at the beginning that I have been very disappointed indeed in the speeches that have come from the Labour Senators. The reason is this, that I am not convinced that I know all about banking and currency or, indeed, that I know very much about them. Because of that I was hoping, since these Senators expressed themselves so dissatisfied with this Bill and with the recommendations generally of the Banking Commission, that on this particular occasion, on their presentation of this amendment, they would have been able to give us some useful information and some enlightenment, and would have been able to show to what extent this Bill, in particular, and certain recommendations of the Banking Commission, are defective.

On a point of order, the Senator is now addressing himself to the Bill and not to the section. It seems to me that a Second Reading speech is not in order now.

Leas-Chathaoirleach

Senator O Buachalla.

I should like to ask whether I would be entitled to refer to some of the remarks made by some of the previous speakers, and whether I am entitled to deal with the functions of the bank as set out in the section under discussion.

Leas-Chathaoirleach

Certainly. The Senator is also entitled to quote anything that is relevant from previous speeches.

How far is the Senator entitled to go?

I will not take up as much of the time of the House in giving quotations as did some Senators who have already spoken. Senator Hogan prefaced his remarks by saying that credit is controlled by an authority outside this State. I think his parting shot was couched in very much the same terms. The House adjourned in the summer in order that Senators would have time to study carefully this Bill and all matters and literature relevant to it. We had a fairly long vacation, and one would have expected, especially if members were to table amendments, that they would have studied thoroughly all the information already available. I think they should have prepared something pretty definite and direct on this matter, that is, the extent to which credit is controlled by an authority outside this State. Merely to make that statement is not proof. One may repeat it and convince oneself of it, but we are entitled to proof that it contains fact.

I did not get time to do it.

The functions of the bank are set out in the section. Senator Hogan proceeded to describe these functions as "tosh". The words that he described as "tosh" are these: "Such steps as the board may from time to time deem appropriate and advisable towards safeguarding the integrity of the currency and ensuring that, in what pertains to the control of credit, the constant and predominant aim shall be the welfare of the people as a whole." These words the Senator described as "tosh". I wonder what very great difference exists between the words in that section and the words set down in the amendment: "...shall in particular have the general function and duty of taking such steps as the Minister may from time to time deem appropriate and advisable towards safeguarding the integrity of the currency and ensuring that currency and credit shall be issued in correct equation to the economic needs of maximum production and full employment." Surely if the central bank, as is set down for it in the section, is to have regard that its constant and predominant aim shall be the welfare of the people as a whole, there is nothing inconsistent with the statement here in the amendment proposed, that "currency and credit shall be issued in correct equation to the economic needs of maximum production and full employment". Surely the central bank, in its consideration of credit and currency, will have always in mind the idea of full employment and maximum production.

The question does arise, what exactly is meant by maximum production and full employment? One may say that when every man and woman is put into employment you then have full employment. That is quite true, but it is quite possible to have every man and woman working from dawn to dusk as slaves. You then have maximum production. You would have full employment and perhaps maximum production, but it is very much open to question whether you will be securing the well-being of the community. I suggest that if any statement is entitled to be described as tosh, it is the statement there: "That currency and credit shall be issued in correct equation to the economic needs of maximum production and full employment." It might have been all right if Senators had explained what they meant by that. If there is tosh in this matter we are discussing, I suggest it is contained in the words of the amendment.

One of the functions of the bank is to keep in mind, always, the integrity of the currency. I cannot see how the central bank can think of the integrity of the currency without having regard to external currencies and external values. Can anybody explain in what way the integrity of the currency can be thought of without thinking of it in terms of values or price levels outside? Because the bank will have to keep in mind British and other values, it is to be condemned. Will someone explain to us in what way that is defective, other than merely stating it is defective?

I do not think the Labour Senators really believe all they are saying. I believe they quite realise this Bill contains everything that is essential for a central bank, especially in so far as a central bank with the fullest powers can operate in this country.

The bank will, we hope, have a considerable influence over interest rates. You cannot think of interest rates without thinking of credit. The moment you think of interest rates, immediately you think of credit expansion or contraction. There is no use in running away with the idea that the central bank, merely by changing the rate of interest, will be able to work wonders. We know from experience that by increasing interest rates it will be possible for a central bank to exert a certain influence in curbing the expansion of credit. But it by no means follows, if a central bank operates to reduce interest rates, that consequently credit will expand. That is not mere speculation; that is something we have been watching and noticing very closely for years. Other countries have tried the experiment. I do not think it has worked in any case, and if it has not worked in other countries I do not see that we can come to the definite conclusion that, if interest rates are reduced through the operations of the central bank, credit is immediately going to be extensively demanded.

If a reduction of interest rates does not bring about a worth-while increase in credit expansion, what, then, is to be done? The truth is that if anybody knew, apart from suggesting public works schemes, what you would do in that case, then all our difficulties would be solved, because there we are up against what has been so far an insoluble problem. The central bank must do its best, if it believes by lowering interest rates credit will be demanded and production will get a fillip. But, as I say, it does not follow that because it reduces interest rates everything will be all right. That is something in regard to which there is great confusion in the minds of Senators and some members of the community, that a mere reduction of interest rates will bring about full employment and maximum production.

It has been stressed here that what we may expect from this central bank is mainly leadership and co-operation. The great hope I have of it is of co-operation with the existing financial institutions with a view to getting as full an expansion of production and employment as is possible in the country. One of the things I feel will result from this co-operation is that when projects are mooted calling for capital the central bank will be able to give a certain amount of confidence to people with money to invest and to the financial institutions of the country to support these projects.

It is quite natural and proper that the commercial banks should, when projects are put before them, exercise the utmost caution. There is no use in saying they are simply creating money by strokes of the pen and waxing fat on that. The fact is that they are custodians of the savings of the people. If a man goes to a bank and gets credit, the bank asks for security. Should anything happen that credit, then the security offered is foreclosed. Why should not the bank exercise the utmost caution, in regard to any project put before it, with reference to advising people to put their money into it or with reference to extending credit for that project? It is obviously in the general interest. Out of this co-operation and this mutual confidence which I feel will develop, the commercial banks, whose function it is to help in the provision of credit and whose function it is to provide credit—they are not there to provide capital, but they can aid in the provision of capital —will develop a confidence, and as a result of that confidence, the commercial banks and other institutions will feel quite safe in helping to have these projects got under way, but should anything unfortunate happen, at back of them will be the central bank to assist them.

Whether it worries them sincerely or not, I do not know, but what would seem to worry Labour Senators is that because a project may not appear to be a strictly commercial or economic proposition, it will fail to be promoted. It seems to me that that is what is troubling them—that the commercial institutions have the final say as to whether a project shall or shall not be promoted. I think the last ten years in this country provide ample evidence that that is not so, because, if we read the speeches of people who are not in sympathy with the Government, we find that one of the main charges levelled against it is that it has enabled projects to be undertaken which did not appeal to the commercial world.

That is not a fair statement.

Take the case of the project dealt with here the other evening by the Minister for Industry and Commerce—the refloating of the Haulbowline industry.

No exception was taken to that.

I can say this much, that very many of these projects did not have the support of many people out of sympathy generally with the Government. There is, for instance, wheat.

That was not a question in which capital was involved.

There is also the extension of the sugar factories, the setting up of the alcohol factories, and so on.

Leas-Chathaoirleach

The Senator should be allowed to proceed.

Did not the trade loans start in the regime of the last Government for the purpose of financing Irish industry in circumstances in which it could not perhaps have got a loan from the commercial banks? I want to make it clear to the Senator that Ireland did not begin ten years ago.

Leas-Chathaoirleach

All these points can be made by way of speeches. There is no necessity for interruptions while one Senator is making a speech. If Senators have points to make in reply to the Senator, they can make them in the form of speeches.

I am not at all unmindful of what was done for this country in the period previous to ten years ago. In this House as well as outside, I have paid my tribute to the efforts of the Ministers to do, according to their lights, everything they possibly could for the country, but I refer to the fact that, because projects were aided by the provision of capital through the present Government, the Government was assailed, and I am arguing that there is very little reason for uneasiness. Should any reasonable project be put up which does not appeal to the strictly commercial mind, it does not follow that that project will not be pushed ahead, because the Government is there, through its Trade Loans Act, the Industrial Credit Corporation and by other means, to provide the capital for it and to guarantee people who may put their money into it against loss.

That reminds me of another point which I think Senators would do well always to keep in mind. That is, that in any study of this particular section, or any study, for that matter, of the findings of the Banking Commission, regard should always be had to the views set out in Appendix 17 of that report. I think it is very unwise to read even one paragraph of that report without reference to the views contained in that appendix, because there it is expressly stated by two responsible members of the commission that, should a project come along which does not appeal to the strictly commercial mind, there is a way of providing capital for it, that is, by the State doing so, and by the State providing that money, if needs be, out of taxation.

I do not want to go back over everything that has been said, but there are a few further points to which I hope I shall be allowed to refer. There is a feeling that the present economic situation is a normal situation. There is no doubt that unemployment is rampant, but, as Senator Foran very aptly suggested here one evening, one would think that to solve some of our difficulties some Senators had in mind a committee or commission of magicians. What I feel about the present situation is that the work of development, which during the past ten years had scarcely got under way, has merely been interrupted, as I hope for only a short time. I hope it will not be very long until conditions will so change that we shall be able to proceed with development perhaps more quickly than has been the case in the last ten years. It is, I think, wrong for people to become panicky, to become "jittery," and to think that the present situation is a normal one. What has happened is that the process of development has been interrupted, and, whether we do or do not like the Government, we have to admit that, as a result of the development which did take place, very many thousands of people found employment who otherwise would not have found it.

Further, if the Senators who have sponsored this amendment had had due regard to sub-section 2 of Section 6, they would have had no cause whatever for uneasiness, because there is set down very much what they have in their amendment. "The Minister, may, on such occasions as he shall think proper, request the governor on behalf of the board or the board to consult and advise with him in regard to the execution and performance by the bank of the general function and duty imposed on the bank by the foregoing sub-section of this section and the board shall comply with every such request." Surely any reasonable person reading, firstly, sub-section 1 and then considering very carefully sub-section 2 will admit that everything that would seem to be desired by setting down this amendment is already covered in the Bill.

I want to refer to one point made by Senator Douglas. I do not propose to debate it, but to put my argument to him in the form of a poser. He referred to the ability of governments to obtain money for war, and asked why money can be obtained for war and full employment secured during the period of a war and why the same thing cannot be done in peace-time.

What I said was that a very large number of people were asking that question, which would have to be answered some day. I did not give it as my own statement.

I am sorry if I misinterpreted the Senator. Money for war is got, firstly, out of the savings of the people, and, when the government fails to secure all it wants out of the savings of the people, it puts the people and their property in pawn for years to come. When the war is over the people have to work and suffer to redeem that pledge.

Does it do any printing of paper?

That is one cause of the trouble. Senator Lynch referred to the danger of inflation. We all realise that that danger is there, and not alone that the danger is there but that we are actually suffering from inflation. But I would ask Senator Lynch and other Senators to remember that this curbing or checking of inflation is something which is very difficult to bring about. I just want to refer to the most recent economic pronouncements by the Premier of Portugal, who is so often referred to in this country on that matter. He has addressed his Government recently and has pointed out to them that, notwithstanding all the steps which he has taken, notwithstanding that Portugal is a very large country, notwithstanding the fact that Portugal controls a large empire and has a large mercantile marine, and that he has all the wide powers which he has, he has been unable to curb inflation. Dangers are threatening them and difficulties are being experienced there which, if I have read his speech aright, are as serious or perhaps for more serious than we are experiencing in this country. I am afraid that with many of us our quoting of the achievements of some foreign leaders and governments is a case of "bionn adharca fada ar buaibh thar Iear".

Business suspended at 6.5 p.m. and resumed at 7 p.m.

I have an amendment on the Order Paper which rather closely resembles the amendment under discussion.

Does the Senator wish to have it considered in conjunction with amendment No. 4?

Yes, with your permission, Sir.

The Senator may discuss the amendments together. The questions will be put separately.

The amendment in my name reads:

5. In lines 25 and 26 to delete the words in brackets and also all words after the word "ensuring" in line 28 to the end of the section and insert instead the following words:—"that currency and credit shall be issued in such volume as will meet the demands of full production and employment thereby securing that the constant and predominant aim shall be the welfare of the people as a whole."

The general principle underlying the two amendments is somewhat similar but I might point out that there is this difference in my amendment. It accepts the position that the bank has to do certain things. I was rather swayed by the arguments of people who urged that the bank should be independent, and, instead of putting control in the hands of the Minister, I propose to leave these powers to the bank. I notice of course that the section states that "the bank shall have the general function and duty", etc. Apparently the bank shall do all these things "towards safeguarding the integrity of the currency and ensuring that, in what pertains to the control of credit, the constant and predominant aim shall be the welfare of the people as a whole." Apparently that is the bank's duty, and I take it that is the interpretation we are seeking to put on that clause, that it is the duty of the bank to do these things normally and that its constant and predominant aim shall be the welfare of the people as a whole. I was trying, therefore, to fit in my amendment to the section in such a way as would leave power to the bank to issue currency and credit in such volume "as will meet the demands of full production and employment". Senator Ua Buachalla, who spoke last, indicated that in his view there need be no fear that there is going to be any shortage of credit for any worth-while scheme. It must be noted that the section itself contains the words within brackets "within the limit of the powers for the time being vested in it by law". That is very definite and specific. There is no use in reading the section in such a way as to indicate one's belief that the bank will have power to do unlimited things in order to safeguard the welfare of the people as a whole and to safeguard the integrity of the currency. It can only do these things "within the limit of the powers for the time being vested in it by law." We then see how these powers are controlled.

Might I intervene at this point to inform Senators who were not present earlier that amendments Nos. 4 and 5 are being discussed together? They will be put separately of course.

We come down then to Section 7, to see how these powers are to be operated and how you are to reach your end. I expressed my opinion about that on the last occasion here. I cannot accept the point of view of Senator O Buachalla that you can manage this through the commercial banks. I do not accept the position stated repeatedly by Senator Sir John Keane that, if progress and development are not taking place here, it is not for want of capital but for other reasons. I know that within a period of 18 months or two years, and just at the moment, a situation has developed inside our banking system which makes it much more difficult for the banks to utilise their money.

Goods and services are in great demand; but the goods are unprocurable and people are in the very strange position that they are piling up money because they cannot spend the money either on goods or on services, which they are very anxious to obtain if it were possible. But this also can be said, and said with truth, that there would be a much greater quantity of goods available to-day if the banks for the last ten years had done more intelligent banking from the point of view of production in this country. I have no hesitation in saying that.

I do not want it to be assumed by anybody in this House, or made the basis for a case against what I am saying that the argument which I am making will lead inevitably to unlimited inflation. I do not want any such situation to develop here. I am a very conservative individual indeed. I have no patience with waste. I do not want to waste time in this House, and I would not waste my time if I were at home. I do not want to see waste of the land, waste of our soil, waste of our people or of their labours or our nation's resources. Above all, I do not want to see the people of this generation waste the chances which are coming to them to make better provision for the generations that are to come, and I am afraid we are doing it.

As I say, I am conservative. I will not argue that we can start out on a policy of producing credit or money without having a pretty close idea of what we will do with the money and what will accrue from the fruits of our labour. I believe that better banking, the kind of banking which would be patriotic in the really national sense, that would have looked more after and tried to envisage what sort of future they were making for the people of this island for the last ten or 20 years, would have given at this moment a much more fertile soil than we have, a bigger population and a population that would not inevitably be turning its eyes to Great Britain or America or anywhere beyond its own shores, its own fields, towns, bogs and forests.

I am not blaming the people who managed the banking business of the country in the past. I do not think it was physically or humanly possible for these people to have a different outlook, taking into account their upbringing and the kind of picture they had about the world. They were, perhaps, more citizens of the world than citizens of this country. I do not believe in our people being insular in any sense; I do not stand for that either. But I do stand for this generation laying the foundations which would enable us to bring up here a more vigorous, healthy race, with a certain pride in our own nation that would make us feel there was nothing degrading in being citizens of this island and that we were just as good men and citizens of the world as the people of Great Britain, America, or any continental country. I think we can best make our contribution to the future of a civilised life on the habitable globe, if indeed it will be possible for a civilised people to live on it after a little while, by building up our own State here in every way; by having pride of race and strengthening the whole economic fabric of the State.

I say that we are rather debilitated in many ways because we have not in the past used money in the way it ought to be used. We have accumulated a great deal of savings. We did not put them back into the land from whence they were taken. I concede that it is something we can be proud of that we have accumulated money. But you can see two or three old bachelors with a couple of farms of 200 or 300 acres, with broken-down buildings, whom you know to have £2,000 or £3,000. They may have some of that in the bank, but a great deal of it would be in British securities. We have a fair number like that in the country. While you may have the savings, I would rather have the money spent and four or five or ten poor families with four or five or six or seven or ten children in each family living on these few hundred acres. I would have much more confidence in the future of the nation where these conditions would exist. I think it would be something we could boast about with much more national sincerity and pride than we can about savings. I say that we have not that situation.

I believe that there are all sorts of things we can do here; but they are things about which certain risks have to be taken. There is not much profit in draining a river or in draining a bog or in afforesting a hillside. I can assure you that it would be a very long time, if I could afford to spend money, before I would get a profit from the drainage of my own fields. It means sinking capital and it would be a considerable time before there is a return from it. Looking at it from the national point of view and particularly from the point of view of this particular paragraph in this section, which I believe the Minister means— I do not accept the point of view expressed that it is a pious platitude; I believe it is put down honestly with the intention and desire to make this scheme workable for that purpose, because that is the main, and I believe fundamental, purpose of the Bill— there are all sorts of things that want to be done here and can be done. But if Senator O Buachalla puts it to me that they can be achieved under the powers taken for the central bank in this Bill and that the money is procurable in the present money market and from the commercial banks, I have to express my doubts and fears that the money will not be forthcoming unless there is a complete change of policy on the part of our commercial banks.

I pointed out that if it does not come from the commercial banks it can be made available through another source. I pointed out that very carefully.

I am anxious to get it clearly from Senator Buckley because I feel, so to speak, that we should be as clear as crystal on this question. I concede that it is not very easy to make it clear. Perhaps, I have more difficulty than other Senators in making myself understood, and that we do not yet understand the position. The Senator stated that if it does not come from the commercial banks it can come some other way. Apparently, the Minister hopes that it is going to go directly from the commercial banks, either to the Government or to local authorities. What are the commercial banks going to say when asked to put up the money? What have they been saying in every country? On this I feel that there are two viewpoints and they are contradictory. I wonder how the Minister is going to reconcile them? The aim of commercial banks is to protect the interests of depositors, people who perhaps have been glorified by all of us, and rightly praised because they have been thrifty. If these interests at all times must be safeguarded in such a way, from the point of view of commercial bankers, that no risks whatever can be taken, that on schemes there must be full and ample security, and such profit earned on the money advanced that the carrying out of any such schemes will justify the undertaking, so to speak, then I am afraid that money and credit are not going to be made available for worth-while schemes. I cannot see how it is going to be made available.

I want to return now to the idea that I was trying to convey to the House that, as far as I am concerned, I am not out for any foolhardy ventures. I am conservative. I should like, in the first place, that the schemes propounded were schemes on which people could be employed, schemes that would benefit the country generally by increasing its wealth and productive capacity, and that in the effort made to give employment men were engaged on work of such a character as would leave something of immediate value, by adding to the national wealth in such a way that our productive possibilities would in time be considerably increased. I believe that can be done and, in so far as there is going to be an effort like that, any credit made available is not going to create an inflationary position here. Where worth-while goods are made against the money spent on them, I cannot see where the danger of inflation comes in.

When talking about the way in which credit could be utilised, I am thinking, not only of afforesting our hillsides, draining our rivers and fields but of doing all the things that agriculture, which comes first, needs. I believe there are immense possibilities for the employment of additional people in the agricultural industry, and on the fringes of it, by protecting its operations in various ways from wind and weather, and making it a much more profitable venture for people who are going to put money into it. It is easy for Senator Sir John Keane to ask me if I would advise bankers to put money into a farm for any particular type of activity, without being quite certain that there was going to be a profit on the working of that farm which would enable the loan to be repaid. I realise quite well that agriculture must be made a profitable industry. That is essential. There are all sorts of things we have to do in order to claim that we are making real progress. But there is no use in getting the best conceivable plan and then, when ready to go ahead, be up against a situation when money is not available at the right price. From the experience people had in the past, and the tradition, not only here but in Britain and other countries, of the way money was used by the commercial banks, I am not at all satisfied that national progress is possible on these lines.

I am convinced that the technique of farming has to be improved. I believe there are vast possibilities there, but there is no use in talking of improving farming technique, if machines are not available to utilise the knowledge that comes from employing that higher technique. As an example I might mention that when travelling up in the train I looked out the window and saw fields of corn not yet cut. I saw one field on the border of Cavan and Westmeath in which there were three or four men with a mowing machine. There were several acres in the field, but it was hard to know if oats had been growing there. I formed the impression that the men in the field were wondering whether it was worth while cutting the crop at all. I saw other fields where the corn was in stocks, but it would be hard to know whether they would be worth taking in. In other fields the corn was cut and in sheaves, but was not tied. In my area there was only one reaper and binder for hire. I would have my corn cut only that I was depending on the coming of a reaper and binder. I am making the point that there is no use in talking to farmers about improved technique or about increasing the area under tillage, so as to ensure that next year we would have a much larger area under tillage, and still more the year after, to feed increased flocks and herds and to replace feeding-stuffs that were previously imported from America, unless capital is available and that farmers are so credit-worthy that they will be able to repay the banks and people who have money or stocks in Britain or some other country.

If better use had been made of that credit in the pre-war years, when we pleaded in this House that we might have our farms fully equipped, and if we had been able to get the use of that money for that purpose, better progress might have been made. The commercial banking institutions say they were taking risks and that they could advance money only on the security of their depositors. I thought that gaff had been blown. We know now that they did more than that. I suggest their aim was to get the highest possible penny they could on the money they advanced, and that they were not concerned as to the country in which they advanced the money so long as the earnings were high. We cannot progress here on that basis. Undoubtedly, we are suffering the handicaps and drawbacks which have come from the policy pursued in the past. At the moment, we are looking to the future, and our central bank is being asked to take powers— in my amendment and in the Labour amendment—to make credit available so that our people may be fully employed. That will not be done by the commercial banks—unless they do something they have not done in the past.

Money has a function to perform in the community entirely different from that which has been our concept of it heretofore. We are now probably the only orthodox financiers in the world. Some people think we are following Britain still in our banking policy, but I suggest that, under the leadership of J.M. Keynes, Britain long ago finished with orthodoxy. Very many people in Britain are thinking along lines which could profitably be studied here. I am certain Senator Sir John Keane and the Minister read the very remarkable words spoken by the Anglican Archbishop of Canterbury and reported in the Sunday Times more than a week ago. I do not know if he is regarded as being orthodox or not, in monetary matters, but he hardly would be charged with supporting inflation and all sorts of other movements detrimental to society as a whole. He is reported as follows:

"It should not be expected that men would guide their conduct always by the motive of service instead of by self-interest, but life should be organised so that self-interest would prompt actions of greatest social service.

In the case of money, with the amalgamation of the banks, we had now reached a stage where something universally needed—namely, money, or the credit which does duty for money, had become in effect a monopoly. It was a primary political principle that, wherever you have something which is universally needed, but is governed as a monopoly, that monopoly should be taken over by the State. The banks should be limited in lending power to the amount deposited by their clients, while the issue of new credit should be the function of a public authority.

Let it never be supposed," continued Dr. Temple, "that by any external rearrangement of the ordering of life we can establish either justice or goodwill. The sin which now expresses itself in unlimited acquisitiveness for wealth can just as easily express itself in grasping and manipulating the levers of power in a collectivised society."

That approach made in Britain by a very responsible Churchman is very different from the approach which must inevitably be made by the people in charge of our commercial banks. Some of us feel that powers are being given to the commercial banks under this Bill which really ought to be taken over by the central bank. On thinking over it since, I regret I did not put down an amendment to this section on the terms of the clause in the Bank of Ireland Act, 1929, and may do so on the Report Stage. In this amendment we are asking something equivalent to what the Bank of Ireland got in that Act.

The arguments made by the Minister in the other House and by some Senators here, lead one to think that we must wait for years to develop an institution in this country which can function in such a way as to enable us to do the things which we ask it should be in a position to do immediately. We cannot wait so long: the most dangerous period for this country, and probably for most other countries, will be the next two or three years. It is tragic that, while there are things to be done here, boys and girls, men and women, should leave our country. We could increase the quantity of goods considerably and employ the services available here, with a better use of money. That cannot be done by giving money such a privilege that the profit it will earn on investment is out of all proportion to that earned by the services of people in other capacities. The policy enunciated in this section makes the commercial banks superior to the central bank itself. Such a position is inconsistent with the position which a central bank should occupy.

Looking at the achievements of our commercial banks in the past, I feel we cannot have faith in the argument that they have money and will make it available to do the things we want. There is not enough immediate profit in these activities to encourage commercial banking institutions to put money into them. There is profit in these activities only for the State, for the community as a whole, and for future generations. Because of that, it should be the function of the State to give such powers to this central bank as will make possible the issue of credit direct through the Government or through such other bodies as the Government may deem advisable. It may be necessary to set up bodies like the Electricity Supply Board, to carry out certain activities, and the central bank should have power to pass over directly to such bodies such credit as would make it possible for them to go on with their work without having to look to any of the commercial banking institutions at all. In the absence of such powers as we are asking for, I think that the section, as it stands, is very faulty and that it is going to delay for a period of years—the most critical times, perhaps, that we may ever pass through—the effort at rebuilding the nation which the future of the nation demands.

I do not pretend to be an expert either in the matter of currency or credit, nor do I propose to draw on the glibness with which people, equally inexpert, can expound their views, knowing that what they say can have practically no influence on life, generally, and that the limitations of life cannot be removed by external or mechanical devices. Senator Baxter, for instance, was very eloquent about the fact that when you want grain or other products of the land multiplied it can only be done by providing capital—which is the savings of other people. I would suggest that if food production is going to be increased by making available the accumulated savings which belong to individuals, then those individuals should have a part-ownership in all that is produced. Now, that is a thing that must be recognised immediately. Secondly, if it is proposed that the accumulated savings of A, B and C are going, under the authority and sanction of Government, to be directed, under the decision of this bank or other banks, and not by the decision of the individual owners, to the providing of capital for the farmer in the interest of the general good—that interest to be adjudged by the State—that might be one thing, but if the Government says, in effect: "Your labour and your land must be devoted to what we determine, and if there is any loss, you must suffer it," I do not think the farmers would jump at the idea. I have noted that when the Government says, for instance, to the farmers: "Your labour must be devoted to the growing of wheat," the Government step in and make some provision for its achievement. Consequently, if a worker saves £100 and puts it into the bank, and if the Government then says that that £100 must be made available for the farmers, then that worker is a part owner of what is produced on that land. Consequently, if the farmer fails, either through his own ineptitude or through a bad season—or whatever might be the cause—then the Government must see that the loss on that farm will be provided for, or, alternatively, when the Government operates in the same way in regard to labour, then the loss which may incidentally occur from that action must be borne by the farmer, and he has no more complaint than the man who saves £100 or £1,000 and sees it being used for the purpose of the farmer.

In connection with the original clause, I may say that I do not exactly accept what the Archbishop of Canterbury says with regard to the control of credit. The Archbishop says, in effect, that money, or the credit which does duty for money, has become in effect a monopoly—which I do not accept— and then he goes on to say, in effect, that all monopolies are necessarily taken over by the State, or should be taken over by the State. Then, from that statement, which is obviously incomplete, and therefore cannot be exactly true, he draws a conclusion, to the effect that the banks should be limited in lending power to the amount deposited by their clients, while the issue of new credit should be the function of a public authority. That is the opinion of the Archbishop of Canterbury, but I can still claim to be a theoretical Christian, even if I disagree about the banks.

Now, in the winding-up part of the original clause, it says "that the bank shall have the general function and duties of taking such steps as the board may from time to time deem appropriate and advisable towards safeguarding the integrity of the currency and ensuring that, in what pertains to the control of credit, the constant and predominant aim shall be the welfare of the people as a whole." Now, of course, if the Government is setting up this institution, it is quite clear that it must be directed towards the welfare of the people as a whole, and therefore I suggest that it is only a kind of pious aspiration that is put in here. The board is to provide for the common good, but the final arbiter as to whether or not that fits into its perfect niche is necessarily a matter for Government decision as to whether it does provide for the common good or not. When we come to the amendments, Nos. 4 and 5, the first amendment— the Labour amendment—speaks about "the safeguarding of the integrity of the currency and ensuring that currency and credit shall be issued in correct equation to the economic needs of maximum production and full employment."

Supposing that, actually, the integrity of the currency was divergent from maximum production and full employment, how is the Minister going to act, if this is put in? According to this proposal, the Minister is ordered to act with two aims in view, namely, the integrity of the currency and maximum employment, but supposing there is a divergency there? There might easily be such a divergency. One Labour Senator gave us a somewhat incomplete picture of the condition of France in 1936 or 1937—or rather, he was quoting from what a Deputy then said about the condition of France. What was the position in France then? At an earlier stage, the French people had been hardworking and thrifty. They were thrifty to almost an exaggerated extent, but in or about that time, by an arbitrary act of their Government, for every franc that they had, they were robbed of four-fifths of it. In other words, the ordinary French person was robbed of 8d. and was allowed to retain 2d., and that was only by virtue of the fact that their Government had that enormous power. The Fianna Fáil Minister then went on to point out a wonderful picture with regard to the abnormal production in France, but it must be remembered that the owners of every franc had been robbed of 8d. by the Government and were left only 2d. out of every franc. What is happening here is that the maximum production, as suggested by a Fianna Fáil Minister in 1926, is only to be achieved by robbing the people—by taking four-fifths of the money earned by the people.

Now, when we come to the other amendment, in Senator Baxter's name, which says "that currency and credit shall be issued in such volume as will meet the demands of full production and employment thereby securing that the constant and predominant aim shall be the welfare of the people as a whole," it seems to me to be merely an attempt to get enshrined in a Bill a fallacious doctrine by people whose ineptitude on this subject is only equalled by their enormous verbosity and glibness.

We are going to affirm here in an Act that the meeting of the demands of full production and employment automatically, of necessity, secures the welfare of the people as a whole. At the present moment in certain countries of the world this full production and maximum employment is achieved. It is enormously achieved. I have had a certain close observation of it. There is at least one country in the world where a criminal employee who has more money than he can spend knows, when he does not care to turn up, that his employer cannot do anything about it because, if he speaks a cross word to him, he has only to tell him to go somewhere, and there are 100 other employers ready to welcome him with open arms and, possibly, to give him a higher wage. You have maximum employment and production. In this instance, they have been produced by a condition of total war. I wonder if there is that automatic and necessary relationship and fullness of relationship between full production and employment and the welfare of a people as a whole. One may say that whoever was the party— I will not say guilty—but worthy of having produced this condition of total war, has, by the definition in this proposed amendment, secured the welfare of the people as a whole.

I do wish people would always say "I believe" or "I affirm" rather than say "A great many people believe." On the one hand, if the thing is blown skyhigh he can always say: "I only said a great many people believe," and if it is not blown skyhigh, he has put that forward as an argument. People talk about how extraordinary it is that this thing can be done for a war. The peculiar thing about war is that we always necessarily regard it as an abnormal condition, and eminently so in what is now, representing a tendency rather than a fact, called total war. Nobody can tell you how long this war is going to last, but everybody knows that it is necessarily temporary. If you think of this war going on exactly as it is for X years, or XY years or X to the power of "n" years, you know perfectly well it cannot happen. What has happened, as has been already pointed out, is that at the moment a government, in case of war justified as it is not in other cases, when the whole life of that society is threatened, does take possession of people's savings which really belong primarily to the people; and the government, at the end of the war, should use all its power to pay back what it has taken. It is spending the savings of the present generation and of previous generations.

Now, if all during the 19th century, this money or wealth, as it is called— it is really a combination of what nature produces plus the application of human labour to it—had been immediately consumed instead of being conserved, would the position be just as it is now? Would this small peninsula attached to the Continent of Asia, that we call Europe, be maintaining the enormous number of millions of people that it does? Would, during that time, the Continents of North and South America, the Continent of Australasia, and the Continent of Africa have been exploited as they have been? If that had happened, would it merely mean that things would be just as they are now? Was the fact that that money was not expended in warfare at that time no positive good? It was a positive good and now we are told, inasmuch as the money can be spent that way, therefore, it can be spent the other way, and no harm done. What I want to say is, that, if during the 19th century, the money had been spent that way, you might not have been aware of the evil that was done. Now, when it was not spent that way, and you can see the position of the world as it is to-day, evil as you may think it, you can say, I think, reasonably, that if that money had been spent at that time, Europe would not now support its population; the Continents of America, of Africa, of large sections of Asia and of the rest of the world would not have been exploited and made to support the multitudes of people in the conditions in which they do support them now.

Therefore, when you say: "You can spend so many millions a day on war, why not spend it on the other thing?" well, we are doing evil by spending it on the war—we are injuring the peoples of to-day and, still more, the peoples of to-morrow. Consequently, the judgment you have to make is whether by spending these masses of millions on the social services and all the things you want to do, while doing an obvious good, are you not possibly preventing another and possibly a greater good by that expenditure?

I remember that just before the last war, in remote villages in France, when you went into a little pub or something like that, and you had a gold piece of Holland, of Belgium, of Italy, of England, of Switzerland, you tendered it across the counter; the bar tender came round and looked at a calendar from which he saw exactly the value of the gold in France, and he gave you the change as it was, and he did not stipulate that he must be paid in the currency of his own country. It was gold, and it was a universal currency. The result was that, even when you used a bank note, it carried with it a guarantee that at any time you took it to the bank you could demand its value in gold. What was the Government's function in regard to gold?

Is this the Seanad, Sir?

The Government's function was that it put a certain form on that gold without charge. Now, at that time, instead of having the Government butting in and taking people's money—because, it is taking the people's money, merely to multiply production, not saying production must follow certain forms and to have maximum employment, not insisting that employment must be employment in something which is permanently beneficial—at that time the people could not be robbed so well—you had an equivalent value in gold. Now, since the Government has taken to this arbitrary control of credit, so much so that you can go printing notes indefinitely, because it does not carry with it the commitment that the equivalent value must be given in gold, it is rather remarkable, and I am not saying it naturally flows as effect from cause, that the enormous disasters in the way of economic crises and financial crises that we associate with it belong rather to the period after a war than before it.

I am not an expert, and others know more about it than I do, but my own observation is that government control has led to the maximum robbery and injustice against the people. In one great European country, if a man had had £10,000,000 on one day, the government arbitrarily reduced the alleged value of that to 1/90th part of a farthing, and if a man had earned £100 it became so microscopic as a fraction of a farthing. That was government action. Now, when you have these arbitrary monopolistic banks acting, you have at least this fact, that if any bank with regard to its depositors had wiped out in that way their savings, there was a higher power, the juridical entity of the State, to whom the aggrieved party could appeal, and that higher power could apply sanctions and punishment upon these guilty people.

But now what we are told is that we must commit ourselves to that institution, the State, which, for the last 20 years, all over the world, has been marked by its activity in robbing the people of their savings, and we must commit ourselves to that because, when they treat us unjustly, as nearly every government has done for the last twenty years, by robbing people of what belonged to them, they are so powerful you have nothing to do but sit down and obey them. I am not going to say that there is not anything right with the present system, but I do say, so far as these two amendments are concerned, they seek to affirm as a fact something which is not proved, but quite the contrary. In so far as this Bill is agreeable to me, it is in respect of the limitations it places on the power of the Government. The whole development of government has been towards seizing greater and greater power and, in my view, that is largely answerable for the disastrous condition of the world to-day. My ordinary, human prudence teaches me that it is better to leave this matter to organisations to which people will voluntarily commit their savings who will be responsible to those people. If they do not act according to that responsibility, they can be indicted before the juridical entity of the State and sanctions can be applied to compel them to act in an honest way— unlike the way in which governments act.

If the Government were bringing this Bill in again, I think that they would have left out this sub-section. It is merely a platitude, but it has given rise to a great deal of wild talk. I should not like to lose this opportunity of getting into closer contact with Senator Baxter. He says that the banks are responsible for all sorts of disasters. He described his coming up in the train in bad weather. I hope he does not hold the banks were responsible for the weather. He saw only one binder and he thinks that, if the banks had done their duty, there would have been binders everywhere. Is not that a fanciful sort of suggestion? I take it that there are plenty of farmers' deposits in that area. Does he suggest that the farmers would not have been able to get binders if they wanted them? Does he suggest that they could not create a co-operative society for so doing? In Cavan, there are some prosperous co-operative societies, with plenty of money wherewith to buy binders. The Senator was merely throwing dust in the eyes of the people. That was unjust, because the banks have not created this fanciful state of distress which he suggests they have.

The banks have the duty of lending money to people who are prepared to repay it. In other words, they transmute people's capital into liquid money for the time being. I may have resources which I do not want to sell out in order to get money. I go to a lending body and ask them to lend me money on the strength of the resources which I do not want to liquefy. It would be better if the phrase, "lending money", were substituted for "creating credit", which leads to all sorts of absurdities and nonsense. I knew that we would not get very far without bringing in the Archbishop of Canterbury. If I were to lay down the law about the Trinity or the Immaculate Conception, Senators would think that I was going beyond my province. Yet, the Archbishop of Canterbury deals with technical and abstruse points in banking— just as abstruse and as technical as theological points. The banks do not lend a penny more than they get from their depositors. I know that other people do not agree with that. Mr. Walter Leaf said that and I am prepared to prove it to demonstration. All the resources the banks get, they get in the form of deposits. They can lend no more than they get in the form of deposits. A bank may have £1,000,000 in deposits. If you look at the supporting assets, you will find that they have half of that in readily available cash and half in loans. That is the empirical method banks have adopted. Banks would have 10 per cent. in cash, 15 per cent. in the form of call money— available within 24 hours in many cases—25 per cent. in investments of a liquid character, which could be quickly sold, and the remaining 50 per cent. in the form of loans of different kinds—rather long-term loans in this country. In a highly developed commercial country a larger proportion of the loans would be readily available. If all those loans were drawn at the same time, the bank has got nothing but its advances with which to pay the depositors. All the cash is gone. The bank is left in the position that it has to depend on advances to repay depositors. No bank could repay all its depositors at once. Although a bank in want of cash might have to put up its shutters for a time, it might still be solvent. In due course, the advances would be repaid or, if not, the collateral security would be realised. This talk about creating credit out of the void is all nonsense. It is not done. I challenge anybody who says it is done to prove it. To create loans, banks must have cash deposits. A bank cannot lend a penny more than is deposited by its customers. Reinforcing its cash, a bank may have reserves and it may have some liquid capital.

Is that happening at the present time in England?

If you look at the statement of assets of the British banks, you will find that 50 per cent. is in loans and that the remainder is as I have stated. Some of these loans are of a very liquid character, such as treasury bills and treasury deposit receipts, which are practically Government money, which, on demand, you can get from the Government or the money market. They differ to a great extent from the loans here. If a bank had to call in its loans here, it might have to wait for years to get in its agricultural loans. It is necessary to make this point clear —that banks do not create money out of the void. We shall come to the ten-to-one point later—the point which was dealt with by Deputy Dillon in the other House.

I was interested in what Senator O Buachalla had to say about the bank-rate. Modern thought is, I think, working along the lines he suggested. The bank-rate seems to have very little effect in stimulating the demand for money. The bank-rate has largely lost its character as a lever for credit since countries have gone off the gold standard. In the gold standard days, when the bank-rate was used to attract or repel gold, according to whether the rate was raised or lowered, it was effective. The bank-rate has not changed now for about ten years. Nobody is going to borrow unless there is an opportunity of making a profit. You may make money as cheap as you like, as, I think, happened in America, but, if there is not the prospect of making a profit, people will not borrow.

They ought not.

They do not, if they have got any sense. There is another factor, the recent tendency of big business and amalgamations to build up a large number of big companies, like Imperial Chemicals, with very large liquid resources. They do not want to borrow. They have ample resources, and, naturally, are much less dependent than smaller concerns were in the past on banking credit. They can work within their own resources. I wish Senator Baxter would be more precise about what he wants the banks to do. Does he want the banks to go out and have regard to public policy in their lending? The demand for bank money comes from people who want to borrow. According to the Senator, one would think that the banks were in business themselves, that they owned farms and undertook drainage work, and that they were like productive corporations.

The banks must have regard to the security offered and to the prospect of their money being repaid. If the Government or the country wished— it is a question of public policy—that all kinds of schemes that are not reproductive or only semi-reproductive should be undertaken, one could see the Senator's point of view. You cannot make all these schemes reproductive. I was in the Aran Islands recently and saw there schemes which are the result of great human industry. They certainly would not be reproductive on a cash basis. I do not know that the banks were very much concerned there one way or the other, but I saw there land that had been made as a result of great human endurance and hard work. If one were to charge any rate at all on the labour employed on it, it would not give any return on the expenditure incurred. To make that land in the Aran Islands must have cost a fantastic price. If the Government want uneconomic schemes in the public interest, I think it is the business of the Government, within limits, to encourage them, and that it is not the business of private corporations to do it. Cannot the Senator see the distinction between the two?

I agree.

How are the banks to blame then? The banks have always, as far as their resources permitted, supported Government schemes when a public appeal was made. There is no record, since the State was formed, where the banks failed to do that.

At a price?

Yes. Does the Senator consider that the market price for the recent loan at 3¼ per cent. was an extravagant one?

It was too high.

If it were a quarter per cent. less would that, in the Senator's opinion, make all the difference?

1¼ per cent.

For a long-term loan?

I will try to answer the Senator later.

I want to get this clear. The banks are underwriters, not lenders. Would Senator Baxter and his friends who have any money saved be prepared to give it to the Government at 1¼ per cent.? That is the test. It is not the function of the banks to lend money to the Government. The banks can assist the Government in underwriting their loans and can, perhaps, within a limited extent, support their loans. The position of the Senator is that the Government are going to rely entirely on the banks for their loans at 1¼ per cent. The banks could not support borrowing to more than a limited extent. After all, banks are business bodies. Does the Senator suggest that the banks, as regards the amount of their resources in gilt-edged investments at 3 per cent., should make a loss of 2 per cent. in interest by lending that money to the Government? The whole thing is fantastic. It is not done in any country. The only course for the State, if it wants to commandeer all the savings of the people, is to have forced loans, and do away virtually with all private property.

If it is the Senator's idea that either the joint stock banks or the central bank should finance the Government in that way, then I would be sorry for the Government and for all those whose savings are entrusted to any of the institutions in the country. The Senator says that he is going to suggest an amendment to the Bill on the lines of a section in the Bank of Ireland Act to this effect:—

to take, or concur in taking, all such steps and proceedings (including the undertaking of any obligation, monetary or otherwise) as may seem best calculated to uphold and support the credit of the bank or to obtain, maintain, or restore public confidence, and to avert or minimise financial crises or disturbances which might directly or indirectly affect the bank or the business of banking generally.

I do not think a section of that kind would harm the Bill, but I do want to say that if you put it in, and want to implement it, you cannot do it on the lines the Senator has suggested.

May I ask Senator Sir John Keane whether I heard him correctly when he seemed to me to state that Walter Leaf's theory of the relation between deposits and bank loans is one which he personally accepts?

Walter Leaf to his dying day—the Taoiseach said—always contended that the banks do not lend more than they get from their depositors. That is all I attributed to Leaf.

I want to put it on record that his theory of the relation between deposits and bank loans is one that is not now generally accepted by serious students of these matters. Of course, there is a relation between deposits and banks' assets and between loans and investments. From the point of view of the banking system as a whole, in so far as you are working within what is called a concentric system, there is a tendency for bank deposits to increase in proportion to the activity of the banks in lending and investing. It is true, I think, to say that the banks can only continue that process of lending or investing to the extent that they are able automatically by the same process to continue the process of piling up deposit liabilities.

That expansive process would come rapidly to an end if, for any reason, the depositors suddenly elected to withdraw their deposits and transform them into legal tender cash. What is constantly forgotten is that if the banks are lending they are not lending their own money, but money which, in the act of lending, they proceed to owe to depositors. The amount of money which the banks really own is very small. The amount which they owe is very big, and they are probably about the only institutions whose wealth is measured in the public estimation by the amount of their debts rather than by the amount of their assets. People talk about the terrific amount of money that is in the banks, meaning the amount of money that the banks owe. That is not necessarily a reason why the banks should increase their lending. In fact it may be a reason why they should diminish it. I think it is not possible to overemphasise the distinction that there is between the money in the banks, from the point of view of the depositor who owns that money, and from the point of view of the banking system which owes that money.

I think that the proper way to look at all these amendments is to say that they were conceived with a view to improving the Bill. If ever a Bill cast less on Party lines was brought before Parliament, this Bill is the one. Therefore, we ought to be very patient with every effort that is made in the casting of amendments and of their presentation. We ought to feel they are conceived solely with a view to improving the Bill. I think that is the spirit in which the Minister has approached all these amendments. I listened carefully to the debates in the Dáil, and I think the same could be said for the Taoiseach whenever he had occasion to speak—that there was a genuine desire to see if there was anything in the amendments or speeches that would be of help in improving the Bill.

I agree that when Senator Baxter prepared this amendment he meant to do all he could to improve the Bill, but I contend that he has failed. He took up a good deal of time in developing a philosophy with regard to life, to agriculture, to things that are, in a remote way, connected with the Bill but that are not really directly concerned with the amendment which he set out to discuss. I agree with him to a great extent with regard to his philosophy, but I am not going to discuss that now. What I am more concerned about is that he has asked for my view on a certain matter on which I commented earlier in the evening; I am afraid he misunderstood me. I pointed out that two types of schemes are from time to time suggested as being worthy of support, schemes that will, in the opinion of their sponsors, lead to the wellbeing of the community.

One type of scheme we look upon as a commercially sound scheme. When such a scheme is proposed people who have saved money have little hesitation in putting that money into it; that is, they advance the capital for it. Sometimes they go to the bank and say to the manager: "What do you think of this? Should I do such-and-such with my money? Should I invest it in this undertaking?" I have a good deal of sympathy with the bank manager who has to consider such matters very carefully and who may on occasion say to people: "Do as you please, but I would not support it." People have asked me, when a prospectus came out, "What do you think of that—should I put something into it?" It is a very serious responsibility when someone asks you would you advise them whether to put their savings into a proposition about which you may have a doubt. I can quite sympathise with the bank manager or director who is cautious in that regard.

The second type of scheme is one that does not appeal to the commercial element, but there is no reason why that scheme should not be promoted. Many such schemes have not failed for want of help, because the Government have provided the help. These are what we would call "socially desirable" schemes.

For instance?

You yourself mentioned some of them.

The Shannon scheme.

Or afforestation.

We have not attempted afforestation.

We have. We may say we have not attempted it on as large a scale as the Senator would like, but we have attempted it. When a scheme like that comes along the Government can, by public borrowing, direct the savings of the people into that particular channel, and the Government have done that and similar things. They have done it also in another way, by the subsidy method. There is no reason why that policy should not continue, should conditions as a result of the war so develop, that people would fight shy of different types of projects. There is no earthly reason why the Government should not go more and more into the support of such schemes, and I believe such will come about; as a matter of fact, I have no doubt that that is exercising the Government at the present time as part of their post-war reconstruction plans. They will have to find the wherewithal for the promotion of schemes which the ordinary commercial public will fight shy of, because they will be in doubt as to their possible success.

The thing that struck me about Senator Baxter's speech was not the amount of help that was to be had out of it, but what appeared to me to be very glaring inconsistencies. Take a statement like this, that the Senator was very conservative, but at the same time he proceeded to hit out at anybody who was orthodox. There is the greatest inconsistency there.

Quote what I said in order to prove that.

I leave it to the record to prove it. If I am doing the Senator an injustice, I shall apologise. The banks, he said, did not help agriculture in the past. God knows they did help agriculture in the past.

Or agriculture helped the banks—which?

Yes, it did help the banks—they worked in co-operation. If Senator Baxter had said that the banks did not help some agriculturists, then the statement would be true; but to say that the banks did not help agriculture is certainly far from the truth. When the banks found that, for a variety of reasons, they could not go on helping agriculture as freely as they did before, another institution stepped in, namely, the State, and it proceeded to do for agriculture what the banks were unable to do for it. There is one thing that Senator Baxter or anyone else might say—it would be just an opinion—and that is that the State did not go far enough in helping agriculture. He might argue that, but it is not true to say that the banks did not help agriculture and, later, when the banks did not find themselves in a position to help as freely as before, that the other institution did not lend a hand. If it had not done so agriculture would be in a sorry plight to-day. There was a statement made that the banks have no right to hold on to the savings of depositors.

Who said that?

I understand you have said so.

I have said nothing of the kind—I said quite the contrary.

The statement was made that the banks having got in this money held on to it and did not let it out. The whole idea of saving is to spend. There is no inconsistency there. When banks get in money they proceed to spend it. The difference between present and past conditions is that in the past the banks were able to get opportunities for passing on these savings, but at the moment, because of war conditions, because of lack of supplies and a certain lack of confidence, the opportunity is not there for passing out savings for development. The statement was made that the banks are having difficulties at the present time owing to the amount of money held. What was the point of making that statement? The banks are having difficulties—agreed—owing to the amount of money that is being passed on to them for safe keeping. Would not the banks gladly avail of an opportunity for getting rid of their difficulty by passing out the money? There must be some grave reason why the money is not passing out, and that is one of the things I should like to see examined and answered. If someone could clear that up for us it would help us very much.

Again, there is the statement that the spending of money on a variety of schemes would not lead to inflation. There is the difficulty of selecting just those schemes which, in the ordinary course, will not lead to inflation. What we should remember is that the mere spending of money, the mere production of a commodity, does not create wealth. You may spend money on schemes of different kinds, but the mere spending of the money, the mere creating of the commodity, the mere making available of that commodity, does not create wealth. How often have we seen crystallised in the form of turf-ricks the sweat and labour of the turf workers and because of difficulties that turf could not reach the community.

The wealth was there.

It was not wealth if the people could not have it. If it was incapable of being made available to them it was not wealth.

If the Senator will excuse me—a question of that kind simply reveals that he does not quite understand the problem he is examining.

Your statement is incomplete. You should explain why it has not reached them and why it cannot be turned into cash.

We are all agreed that if it is humanly possible schemes of afforestation and drainage should be proceeded with to a greater extent and with greater speed, but there are great difficulties involved. Take, for instance, a matter which is being considered by every Senator who is thinking of how to get over post-war difficulties—the question of drainage. What is that going to imply? Just where the drainage is to be done, I am sure that the labour is not available. It was so in the case of turf production. Where some turf was economically available, the labour was not available, and we had to organise workers and bring them to the spot. The same thing will have to be faced in regard to these schemes of afforestation, drainage and so on, and the organisation of these schemes will mean, if they are to be proceeded with on an extended scale, a considerable break with the methods of production and organisation with which we have been familiar.

Why not have the change?

If the Senator will aid the Government and everybody else who is thinking on these lines to create that attitude of mind, that approach which is necessary, he will certainly render a service. It may have to be done. When you bring large numbers of men together, there is a certain need for discipline—indeed there is undoubtedly a need for discipline—and there will be a tremendous amount of organisation to be done. Owing to the peculiar nature of the task and owing to the fact that it will not be a strictly economic proposition, that is to say, our ship will not come home inside 21 years or more, it may be necessary to approach that scheme through an organisation something like our present Construction Corps. I do not know, but it is something I am trying to think out—how we are to get these things done and get them done within our means.

Senator Baxter, as usual, treated us to a speech on the difficulties of certain farmers. There are unfortunate farmers who have suffered, but they are not the rule. I might occupy the time of the House for quite a long period in telling them of the last few evenings I spent listening to farmers comparing their very successful yields.

In South Louth.

Senator McGee will tell you about his yields.

I am coming to that. I can give the Senator the names of men who told me they were very happy and surprised by their results, but I also know of a man in the same area who had a bad stroke of luck with his harvest, not alone with regard to his grain but in regard to his binder which went out of order, and his stock, amongst which he had a few casualties, but he is not typical. We want some kind of formula for helping such a man.

Will we get it through the co-operative system? Will, as Senator Johnston suggested, we try an experiment in the nature of a collective, breaking up these farms, consolidating and pooling them, so that if losses occur here and there they will be wiped out through successes elsewhere? What formula is going to be suggested? What formula will be satisfactory? If I were to argue the thing on purely economic grounds, somehow I feel that in my present state of knowledge, I should have to plump for the collective; but I think there are things higher than economics and if our small holdings system cannot be justified on economic grounds, it has to be justified on national and social grounds. The idea, however, is to get a formula that will enable us to help the individual farmer in cases where difficulties arise for him.

When people talk about a rate of interest of 1¼ per cent.—I wish I could have loans free of interest altogether, but I know that is impossible—it has often struck me as very strange why some of these very able people, knowing the accumulation of savings in the banks belonging to the agricultural community, did not ask for these savings and proceed to found a bank which would give loans at these very low rates, or free of interest altogether. I can assure you that if they took their courage in their hands and did that, they would not fail for lack of clients.

I have no strong convictions on this question of finance. I cannot say that I am conservative with regard to it, but I do not feel that I should be entitled to adopt some other system of finance and rush headlong into some new system without making sure of exactly where it led. All things considered, I feel that for a person like me, who has not made any great study of the subject, as have the economists to whom we have been listening this evening, the safest line, the Minister for Finance having pointed out this evening that our average deposits are from £250 to £500, is to follow the thriftiness of these people and to encourage them in that thrift by a continuation of the system which brought about that thriftiness. I would rather stand by that system for the time being until we have some other scheme which is not going to create a revolution in the country, because finance is a very delicate subject, and, when you mess about with it, the first people who are injured are the poor people. They are the least able to bear any dislocation of industry or trade or commerce, or general distribution of supplies. Under the existing system in this country so far, there is nobody short of a mouthful; in any case there is a smaller number short of something to eat here than there is in any other country in Europe, owing to our social services, charitable societies and so on.

I listened with great interest to Senator Baxter, who was certainly very sincere in his point of view. In this country and outside it at the present time there are many people arguing this whole question of currency. The majority of them do not know the first thing about it, but they lay down the most dogmatic theories as to a solution for all our ills. When we look round about us in Europe we have ample evidence that those monetary reformers have something to work on. I am sorry that Senator Sir John Keane brought up the question of England's economics to-day, because he had no argument to work on. They are spending money to-day, but they have absorbed their unemployed——

And some of ours, too.

There is ample work there, and money is being spent in the most extravagant manner. In addition to the extravagance of spending, we have all over Europe a complete abandonment of all trade and commerce. In such circumstances, it is natural for people here to argue: "Why cannot we absorb our unemployed here as they have done in other countries?" In central Europe, we have seen a different form of extravagance. You can absorb the unemployed and create work and credit by two different systems, but one thing is perfectly obvious, and it is that people must be prepared to submit themselves to rigid discipline, to be ordered about without any regard to their own opinions, to be transferred from one district to another as is being done to-day all over Europe, to be put into different forms of employment, to do the work they are told to do, and be thankful for what they get. If we want that kind of monetary reform, I do not know that it is going to improve our present position. In the last analysis, their standard of living must be far lower than ours is at the moment. In addition, you spoil the initiative of private enterprise which exists under our present system. The greatest incentive to work hard is the possibility of being able to have a little bit more comfort, or being able to put a little bit aside for a rainy day. Once that is destroyed, you will have chaos; you will have a general laxity and laziness and everything that is rotten in society.

We have often heard it argued that if you undertake a large drainage scheme and put an amount of money into it you will not get it back. But we must put some value on the amount of comfort brought into a man's home through the work he gets there. That is a capital asset in itself. I have not the slightest doubt that the Minister for Finance, who has been a great revolutionary all his life, would not have the slightest hesitation in being a revolutionary in finance to-morrow if occasion should demand it, once ways and means were found to preserve the stability and security which exist in the State to-day. We could then make progress on the lines which some of the monetary reformers have suggested. "Credit" in itself is a very loose form of expression.

The ordinary businessman, for example, in tackling a proposition, will look at it from a point of view entirely different to that of the bank director. The commercial man starting a business enterprise assesses the facts for himself. To him, a great part of it is a gamble, which the bank director never takes. The bank director must have everything absolutely cut and dried. He must be sure of getting his money back.

How, then, does the Senator account for all the banks' bad debts? They are quite considerable.

I suppose they are due to the stupidity of the directors of the banks. In any case, trade and commerce are a gamble. Prices go up and down, and conditions vary. Generally, from the agricultural point of view, I think the best form of credit that the Government could give the farmers to-day would be a long-term stabilisation of agricultural prices. That security would mean more to the industrious farmer than all the free money you could give him. What has killed the farmer in the past and what is likely to kill him in the future is the buoyancy of the market at one period and the complete collapse of agricultural prices at another. This country has an enormous amount of agricultural exports, and if by any means the position to which I have referred could be brought about the farmer could plan over, say, a five-year period. I do not ask for very high prices; I suggest reasonably average prices, prices which would not alone be reasonable for our townspeople at home but which would be sufficiently tempting for people in England or elsewhere to continue to purchase Irish agricultural produce, and at the same time give the farmer a decent standard of living. That security would be of more advantage to the farmer than all the free money you could give him.

On the question of credit generally, I think I mentioned in this House before, the fact that we are very new to the art of government here. The State has been in existence only 20 years or so. When we got control of our own affairs, this little country was in a relatively impoverished condition as compared with other wealthy and prosperous countries in Europe who had abundant resources, mineral and otherwise. This State was established at a time when there was a complete set-back in industry and commerce following the last great war. Ever since that period there has been a progressive decline in employment, and a general stagnation of trade and commerce. If we had been in the fortunate position of enjoying self-government away back in the 90's, when prosperity ruled the world, when there was a tremendous impetus to trade everywhere, when year after year the turnover in business was increasing, and more and more people were being put into employment—the conditions of employment might not have reached the standard we know to-day, but the fact remains more people were working— we should have been better able to weather the storm when the decline set in. Those States who were independent at that time were able to build up a considerable amount of internal wealth in goods as well as in capital, and they were better equipped to withstand the rainy days when they came later. They were in a position to make use of their accumulated resources, to provide for their workers and to organise better social services. We in this country had not these advantages. We had not this accumulated wealth to fall back upon in those lean years, and in the last 20 years it was a case of living from hand to mouth. A country in that position, living from hand to mouth, has to be very much more careful in handling the finances of the State.

Have we not £300,000,000 in sterling?

£300,000,000 in sterling could be spent in a very short time if people had the mind to do it.

Hear, hear!

It takes a long time to organise the resources of the country to such an extent as to be able to maintain even the present standard of living. As I have already pointed out to Senator Baxter, we had a grim example after 1920 of the evils of too free credit. There is no greater menace to anybody than the possession of too much money if he has not the ability to know how to use it. It is an old saying that money get easily goes easily, and credit ad lib can have serious dangers.

I do not want to detain the House at any great length, but I do feel that difficult as the times may be at the moment, it would not be wise to dislocate trade and commerce by any tampering with the currency. It would be very unwise to create a feeling of uneasiness amongst the ordinary small farmers and small merchants who have deposits in our banks. Those are the people who are the backbone of the country, because they are industrious and hard-working. To create uneasiness amongst them by giving the impression that you are taking money from the banks would have very serious results, because if there is a run on the banks, panic must ensue and you will have general insecurity and a complete breakdown of all national services. I think, generally speaking, our Ministers, present and past, and our Department of Finance, have done remarkably well in very difficult times. There is no use in adopting these new monetary reforms, holus bolus, without giving the matter mature consideration. I believe that the establishment of this new bank is the forerunner of further development such as the needs of the future may indicate. The directors of this bank will make a life study of all aspects of the financial situation, for the common good of the people, as it is expressed in the Bill. It is far better to depend on them than to adopt a policy of whole-hog monetary and social reform and rush our people into all sorts of foolish extravagances.

Progress reported: Committee to sit again to-morrow.
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