Central Bank Bill, 1942—Committee (Resumed).
Question proposed: "That Section 8 stand part of the Bill."
There are one or two observations that I should like to make on this section. The section says:—
"It shall be lawful for the bank to do all or any of the following things on such occasions and to such extent as the board shall think proper, that is to say:—
(a) make provision for the collection and study of data relating to monetary and credit problems and publish informative material in regard thereto."
The explanatory leaflet accompanying the Bill says:—
"Expansion of the hire-purchase system involves an increase in the amount of funds that become locked up to finance firms which sell goods under this system; furthermore, those who buy goods under this system are, in effect, mortgaging part of their future income. Important financial and social questions are, therefore, involved and the Banking Commission Majority Report recommended that the growth of the system should be carefully followed. Section 58, accordingly, empowers the central bank to obtain from persons engaged in the hire-purchase business all such information as it may think necessary or desirable."
I think we all agree that it is very essential that a close watch should be kept on the development of the hire-purchase system in this country, and, while those of us who are interested in that matter welcome the powers given to the board under this Bill, we think it is not sufficient even that they be empowered to make those enquiries and to collect those data. With your permission, Sir, I should like to put before the Minister, the urgent necessity immediately to introduce a Bill, or an amendment to the present Bill, tightening up this whole hire-purchase system. I intended some time ago to put down a motion asking this House to give that matter careful consideration. I have here some extracts from speeches made in the British House of Commons on the introduction of a Bill dealing with hire-purchase. I do not wish to detain the House by going into the matter in detail; we all know the terrible effects brought about in many instances by this system of hire-purchase. It is not alone a matter which affects the workers in the towns; it also affects the agricultural community. If it were not for the war, a good deal of machinery, cars, and so on, would have been purchased under that system in recent years.
I should like to draw the Senator's attention to Section 64, which deals with hire-purchase.
If the House wishes, I will raise the matter on that section. I do not intend to delay the House very long.
As I say, I did intend putting down a motion to draw the attention of the Minister and the Government to the terrible abuses of this system. To make the position clear, perhaps I might quote some of the statements made in the British House of Commons, which apply equally to conditions in this country. Mr. Leslie, speaking on the introduction of the Hire-purchase Bill, said:
"A piece of furniture was bought by a man for £9 15s. After he had paid £8 17s. 6d., the article was seized and no compensation was allowed."
I could go even further than that and quote cases where, not alone was the article seized, but where possibly, when the last instalment fell due, under the terms of the agreement guarantors in certain cases had to pay up under what was known as the damage clause for alleged injuries to the furniture while it was in the possession of the hirer. Mr. Leslie went on to say:
"Then after it had been touched up, it was resold at the original price. I know also of a commercial traveller who got married and obtained furniture to the value of £100 on the hire-purchase system. He became unemployed. Although he had paid £60 on that furniture, within six weeks his home was cleared and his £60 was lost. Over 500 wireless sets were taken back in one week in a provincial city, and the average payments made on these wireless sets before seizure represented over 25 per cent. of their value. One trader confided to another that he had taken a set back no fewer than seven times and had sold it for the eighth time at the original price and he said that he had got his money back three times over."
I do not wish to delay the House unduly and I think I have directed sufficient attention to this matter. The manner in which the system was worked is within the knowledge of all members of the House. While it is very good and useful that the central bank board should, from a financial point of view, have powers to investigate and, as it were, to keep an eye on the development of this business, I submit that is not sufficient and that we must have a general tightening-up of the regulations governing hire-purchase and credit sales. There is another system growing up in this country known as credit sales. There is a branch of this organisation working in Galway. You are allowed, say, £5 worth of clothes or drapery goods, but you really get value only for £4 15s. as the first instalment of 5/- is deducted and you have also to get two guarantors to sign. Usually the people who are asked to sign are persuaded to do so by agents. We know how these agents work; they are very plausible before they get a client but having got their client, their attitude changes.
We have heard a good deal here about the amount of money that the banks make and in this connection I should like to refer to a statement also made in the House of Commons by Mr. Turton. He gave details of one company which, on a capital of £925,000, made a profit of £126,000 in one year and £155,000 in the next year on this hire-purchase system. I admit the system is not as largely worked in this country, but I do say that, in relation to the capital invested and the amount of services rendered, the profits are equally exorbitant. I avail of this occasion to put these facts before the Minister and the Government. I think it would be the wish of the House that immediate legislation should be introduced to deal with this whole problem of hire-purchase and credit sales.
Section put and agreed to.
Sections 9 to 15, inclusive, agreed to.
I move amendment No. 17:—
Before Section 16 to insert a new section as follows:—
16.—After the establishment of the bank all appointments to the service of the bank shall be made as a result of competitive examination, at which Irish shall be a compulsory subject, under regulations to be made and published by the bank.
This amendment is very far from being perfectly worded, but it was put down to ascertain what exactly the situation is with regard to posts under the central bank. Presumably the staff of the Currency Commission will be carried over to the central bank and there may, indeed, be very few vacancies. At the same time, I put down the amendment because I believe in the principle of competitive examination which has been adopted for Government posts and which has been applied to the great majority of posts under local bodies. The principal merit of that method is, I think, that the posts are filled on certain known principles. These principles have been applied, as I say, to Government posts and posts under local bodies. One of the ideals of the old Sinn Féin movement was a system of competition both for State posts and for posts under local bodies. There may be special posts which require to be filled by a particular method, but the Civil Service Regulation Acts provide for that and, at any rate, there is public knowledge of how these posts are filled, which, in my judgment, is the most important thing. I take it that certain staff, particularly the technical staff, will be transferred from the Currency Commission and there may be a small number of posts to be filled but, no matter how small or how great the number, I think the principle enshrined in this amendment should be adopted.
A great many of the ordinary commercial banks in recent years have adopted what is practically a system of competitive examination and, of course, the Minister, being Minister for Finance, knows that competitive examination does not necessarily mean a written examination alone. I believe in this principle and I put down this kind of amendment before to other Bills, such as the Tourist Bill, because I do not understand why, if the principle is applied to Government posts, it should not also apply to quasi-Government or semi-Government employment, such as posts under the central bank. One of the modern developments of Government is the creation of bodies like the Electricity Supply Board, the Tourist Board, the Agricultural Credit Corporation, and now the central bank. It seems to me that the principle of competitive examination, with whatever changes may be found necessary in practice for a particular type of institution, should be applied also to these bodies. I do not think it is necessary we should go into the merits of the examination method of recruitment or the question of having Irish as a compulsory subject, because that has been already recognised, further than to say that many excellent people have been brought into public service by the system of public examination. If you look at a Treasury note you will see the names of Mr. Joseph Brennan, Chairman of the Currency Commission, and Mr. J.J. McElligott, Secretary of the Department of Finance. They were both secured for the service of the public by the system of public examination. We know also that the present Chairman of the British Board of Inland Revenue, who was for a time in the service of this State and who was a contemporary of mine, also came into the public service by competitive examination. I do not think that any of these persons would have had an opportunity for the exercise of their talents in the same way but for the existence of that particular system.
I have introduced the question of Irish as a compulsory subject in this amendment, but I do not intend to discuss the question of compulsory Irish. I merely put the point that if the language is recognised as a compulsory subject in examinations for Government posts and appointments under local bodies, it should get similar recognition for appointments under this body. I do not advocate that people should be appointed to posts merely because they know the language if they are not otherwise fitted for the positions, but the language is a necessary qualification for all appointments in the service of the State, and I do think that the principles which apply to all other public appointments should apply to positions under the central bank. I feel that perhaps in arguing thus I am only pushing an open door, because the Minister, like myself, was a strong supporter of this particular principle in days when we did not think that we would ever have it in our power to enforce it in the public service of this country.
I quite agree with Senator Hayes. I think it is very desirable that the system of competitive examination should apply to all appointments to this staff. I am also very much interested in the clause dealing with Irish. There is no doubt that but for the system of competitive examination many of the brilliant men we have now in the public service would not be there. The system certainly eliminates jobbery or any danger of being pitchforked into positions because candidates can command influence of one type or another. With regard to Irish, many people object to Irish being essential for these positions. They say there is no necessity for it, that the business can be done just as expeditiously without a knowledge of Irish. I do not agree. This country is Ireland; it is not England or any other country; and a knowledge of the language of the country should be essential for those who seek positions in the public service. It is no argument to say that facilities for acquiring a knowledge of Irish do not exist. That is nonsense. In the past 20 years or so facilities have been available for the study of Irish, and there is no difficulty whatever in any person of average intelligence acquiring a sufficient knowledge of Irish to qualify for these positions. I have great pleasure in supporting the amendment.
Is mian liom cuidiú leis an Seanadóir Ó hAodha maidir le brí an leasuithe atá curtha aige os ár gcóir. Níl tada agam le cur leis an méid adubhairt sé. Chuir sé an chúis os ár gcóir go réasúnta agus go ciallmhar. Tá súil agam go mbéidh ar chumas an Aire glacadh leis an moladh. Is prinsiobal maith é prinsiobal an sgrúduithe agus, maidir le tábhacht agus riachtanacht na Gaedhilge, ní shéanfa duine ciallmhar ar bith iad.
Ba mhaith liom ar an ócáid seo, freisin, a iarraidh ar an Aire socrú a dhéanamh, nuair a thiocfas an t-am chuige, go gcuirfear na banc-nótaí nua amach i nGaedhilge amháin. Ní hamháin sin, ach tá súil agam, nuair a bhéas na nótaí á sighniú ag oifigigh cheannais an Bhainc, go gcuirfe siad an sighniúchán síos i nGaedhilge. Ba dheas an nidh é, agus ba chóir é, an leagan Gaedhilge de na sighniúcháin d'úsáid feasta ar na Banc-Nótaí.
Tá a fhios againn ar fad gur leagan Gaedhilge atá ar na buinn mhiotail nó na caghnacha atá á gcur amach ag an Stát le cúig bliana déag. Ní chuireann an Ghaedhilge ar na buinn isteach ná amach ar éinne, agus ar an gcaoi chéanna ní chuirfeadh an leagan Gaedhilge ar na nótaí nua as d'éinne. Ina áit sin, is amhlaidh a dhéanfadh sé maitheas mór.
Tá súil agan go mbeidh ar chumas an Aire glacadh le brí an leasuithe atá molta, agus go ndéanfa sé beart dá réir.
While I am in agreement with the general principle of Senator Hayes's amendment, I still think the Minister should not accept the amendment.
Should not accept the amendment?
Yes, should not accept the amendment. I think a statement from the Minister should satisfy Senator Hayes and that he should withdraw the amendment. The Senator stated that the same principle should apply as applies to the Agricultural Credit Corporation and to the Currency Commission. I am in through agreement with Senator Hayes that the same principle should apply, but, if we accept this amendment, the same principle will not apply. It will make it compulsory that whoever gets first place in the competitive examination must get any vacancy which occurs in the central bank. I think the object of the amendment is that we could not go behind that, but Senator Hayes's statement, I think, was that the same principle should be applied as has been adopted by the Currency Commission and other semi-Civil Service boards in the State.
Might I say that that is not what I said. What I said was that I think the principle which applies to Government posts should apply to the Currency Commission and to the central bank and other semi-Government institutions.
I thought the Senator would be satisfied if the same principle was applied as has been adopted by the Agricultural Credit Corporation.
I do not know what system has been adopted by the Agricultural Corporation. I merely want the principle which is applied to Government posts applied to semi-Government and quasi-Government posts.
My principal reason for objecting to this amendment is that I have had experience for some years on selection boards. We had some very competent candidates before us but, according to the terms of the appointment, the person with a knowledge of Irish had to get a certain number of marks which placed him before the person we wanted to appoint, and we had to recommend him because he had a knowledge of Irish. His knowledge of Irish was tested by the person putting the questions looking at the clock and saying: "Cad a' chlog é?" He would answer a few simple questions like that. In a good many cases one candidate would say he had a knowledge of Irish; but the people who were honest enough to say they had only a moderate knowledge of Irish had probably as much knowledge as the man who got 30 marks for his knowledge and who was placed first on the list for the appointment. I think you are carrying this Irish question too far so far as appointments are concerned, particularly in the case of the central bank. The selection should be left to the governor of the bank. For a confidential post like this, you would want a person with qualifications other than those necessary for passing an examination or even getting first place. I thoroughly agree with the principle of competitive examination for Civil Service posts, but there are exceptions to every rule, and I think Senator Hayes would not be wise in pressing his amendment.
I should like to support the amendment, or at least the principle of it, because it seems to me that when we take the responsibility of voting a sum of £40,000 to this bank we ought to regard it as the people's bank, and therefore the positions which will be available should be open to all the talents. The only way of securing that is by way of competitive examination in the terms defined by Senator Hayes; of course, other things must come into consideration, too. Senator Hayes stressed the fact that we have a most excellent Civil Service through this method of recruitment.
In other cases, such as the National Health Insurance Society, we adopted it and we found it gave excellent results and saved a great deal of trouble in this respect: that there could be no suspicion of political patronage or wire-pulling, which is most important in connection with this central bank. It is the people's bank and the people's money and it is not a matter of patronage. It is a question of getting the best people. We know that the system of competitive examination has proved itself capable of bringing forward the best people. That has been proved beyond question.
I am particularly interested, as a member of the National University, that the age limit should be such as would give an opportunity to the young women and young men—I put the women first, naturally—who have gone through the university of competing for these posts. We spend a great deal of money on producing our graduates but, alas, when they finish their course there is very little opportunity for them to serve their country. This central bank, from which we expect such great things, will give such an opportunity. I think that the university curriculum should be so designed as to provide for a proper study of monetary problems; not in the monetary sense we have associated, perhaps, with money up to this, but in the broadest way. This debate brought out the extraordinary social aspects of money. I was surprised when I heard Senator Sir John Keane declare that the Archbishop of Canterbury had no authority to speak on money any more than he (Senator Sir John Keane) would have to define the doctrine of the Trinity. The matter of money is not a question of professional knowledge at all. Its social aspects are so tremendous and are going to be so tremendous in time to come that everybody is interested in it. The study of monetary problems on the right lines in the universities would make a very important contribution to human progress. I think the adoption of the amendment, or at least the spirit of it, would help in that direction.
Ba mhaith liom cuidiú leis an rún seo. Sé an rud is fearr ná na daoine do chur i gcomórtas le na chéile. Tá an Stát so curtha ar bun ar feadh fiche bliadhan anois, agus tá an Ghaedilg riachtanach sa Stát Sheirbhís. Sílim gur ceart an rud céadna do dhéanamh i gceisteanna mar seo.
It is surprising to find anybody who says he approves of the policy that has been adopted here taking objection, as Senator Counihan has, to that policy now. This State was established 20 years ago and we should not forget how it was established. I submit that one of the principal reasons that actuated a great many of those who went to the trouble of establishing this State was in order that the Irish language should get fair play. I am not going into the question of the merits of the Irish language now. It has been the policy of both Governments to support the spread of Irish and I think that decision should be accepted now. The language was taught in the schools before this State was established. If it has been taught in the schools for the last 20 years, surely there should be no difficulty in that respect in the case of persons seeking admission to positions in banks. There is no reason why candidates for these positions should not have a competent knowledge of Irish. Any person who is now 26 years of age should find no difficulty about having a competent knowledge of Irish. Some 12 or 13 years ago a Bill was passed in Parliament making Irish an essential subject for persons who wished to enter the legal profession. There was a great deal of objection to the proposal at that time. It is extraordinary to find since then that there has been no dearth of candidates seeking entrance to the legal profession which, I believe, is very much overcrowded.
Since 1929, those seeking admission to that profession have had to have a competent knowledge of Irish, the reason being that law courts were established and judges appointed by the State. Undoubtedly, there is no reason why Irish should not now be a necessary subject for any examinations that may be held. I hope the Minister will accept the amendment or, at least, the principle introduced in it. I can assure the Minister that all Parties in this House, by a big majority, will be in favour of the principle of the amendment and I appeal to the Minister to accept it.
I do not want this debate to widen into a discussion on the whole question of the merits or demerits of Irish as an obligatory subject for all public appointments. Personally, I am a realist in this matter and I believe this proposal would detract from efficiency. Of course efficiency is a cold blooded thing in a world of poetry and mysticism, but I am perfectly satisfied that this step has produced a great deal of make-believe, and certainly has affected efficiency. I am loath to pursue this subject, but I should very much like to know how much Irish those barristers who have been five years at the Bar use.
Is féidir leo an ghnó ar fad do dhéanamh liomsa tré Ghaedilg. They can do all their business with me through Irish.
Even if the House wishes to accept the spirit of the amendment, generally speaking I think it would not be possible to do so 100 per cent., because it will certainly be necessary for the bank to take on a number of older and experienced people. Of course, it will expand and may be able to recruit itself entirely, but this amendment would debar the bank from taking anybody of experience in the more or less supervisory grades with experience of banking, persons who, from the nature of things, would not have a competent knowledge of Irish. If the general intention of the amendment be accepted by the House it should, at least, be modified.
I notice that the amendment states "after the establishment of the bank, Irish should be a compulsory subject". That would mean that the rule would not be rigidly enforced until the bank is some time established. I quite appreciate the reasons which urge us not to make it a compulsory subject in the initial stages. If the principle is adopted that, after some period—which may not be specified—and after the bank is well established, Irish should be a compulsory subject, I think it would meet the situation.
It is provided in the Bill that all the officials of the Currency Commission will be taken over on the establishment of the bank. It is only to future positions that the amendment refers.
Níor mhaith liom cur isteach sa díospóireacht seo, ach is docha gur fearra dom rud éigin a rádh. I, too, agree with the sentiments which have been voiced here, and hope that the Minister will accept this amendment in the spirit if not in the actual letter. People who speak adversely, slightingly or in a derogatory manner of the Gaelic League, should not forget one fact. But for the Gaelic League and for the things enshrined, fostered and sponsored by it, those same gentlemen would not be sitting to-day in an Irish Parliament. That is a truism which should be remembered, so that we may not depart from first principles altogether. It is an ironic commentary on Irish mentality that a Senator, otherwise extremely reputable, and hailing from the County Kerry, should speak in any way slightingly of the language which, I presume, his forebears spoke extremely fluently, and in which, perhaps, he can indulge in a little conversation occasionally himself.
The principle of competitive examination has, I think, been so well established now, and has such obvious merits that, as pointed out by Senator Hayes, we should not be opposed in any way to its adoption here. Senator Hayes also pointed out that, everything else being equal, those with a knowledge of Irish should get the preference. Surely that is putting it very mildly, indeed. He does not want to appoint duds, he wants a man to get there on his own merits. If, in addition, that man has a knowledge of Irish, so much the better. This House stands for the Irish language, and, at the risk of being tiresome and platitudinous, I repeat that, if it were not for the Gaelic League, we would not be sitting to-day in the Parliament of a free country. Common gratitude demands that members of the Gaelic League and kindred associations should get preference in any position in the gift of the Government to-day. That is merely labouring an obvious fact.
Senator Hayes has pointed out that he simply wants this matter discussed on its merits. Senator Counihan appears to think that competitive examination is all we stand for pure and simple. But other things are taken into account—there is such a thing as personality, which is taken into account by a great many commercial institutions. I feel sure the Minister will accept the amendment in the spirit if not in the letter—and perhaps in the letter, too. It is seldom that a motion comes before this House and is received with perfect unanimity. That seems to have happened in the present case—with some slight and some extraordinary exceptions—and therefore, I would press the Minister to accept it.
Certainly, there is rather striking unanimity on this amendment by Senator Hayes. That is not so surprising, as the State has accepted the principle for Government appointment, and as other institutions in the country have adopted it also. I do not think Senator Hayes insists on the ipsissima verba of his amendment being accepted.
I said so in the beginning.
I realise that, as it would not be possible or wise for the central bank to adopt it. It might preclude certain technical appointments being made. As an individual, on my own personal history, I could not stand against the principle of competitive examination or against that of promoting Irish. These are two things on the promotion of which I have spent a great part of my life, as Senator Hayes has remarked. As applied in this particular case, this is hardly necessary. I have nothing to say against the principle, but the staff altogether does not amount to 50 people, ten of whom are men and the others are women. I do not know that there has been any examination so far, but in the case of the men, there has not been a new appointment for the past five years; nor, in the case of the women, for over two years.
Therefore, even if we adopted the principle, its implementation would not provide much employment. The staff of the Currency Commission will be taken over. Some others probably will be needed, but the whole staff will not be very large. I am prepared to accept the amendment in principle and to consider drafting an amendment which the House would accept. Senator Mrs. Concannon mentioned the university. Might I say one word, particularly in relation to University College, Dublin, with which Senator Hayes is associated with distinction.
Will the Minister not be out of order?
I would say a few words, if the Chair will permit me to do so.
I will hear the Minister.
I hope the Senator will help to get the staff of University College, Dublin, to follow this principle. There is not a place in the country which should show a higher standard in this respect but which has certainly done nothing to set a good example to the rest of the country in regard to that matter.
In regard to which matter?
In regard to the matter of appointments on its clerical and administrative staffs. We have done—and will, I hope, continue to do —a lot to promote this principle and to get employment for graduates turned out by the various Colleges of the University. One of the first places that should set a good headline in regard to competitive examinations for its own administrative staff and in regard to Irish, should be the University Colleges, and particularly University College, Dublin.
I think the Minister has fairly met what I want to do in this amendment. With regard to Senator Counihan, I do not know whether he refers to the Civil Service Commission or not.
When I was Chairman of the Civil Service Commission I insisted that anyone who had not a real knowledge of Irish should get no marks at all, and if anyone who was asked "Cad a' chlog é?" looked at the clock and could not answer, no marks were given at all. If they were, it was contrary to my views, if it happened in my time. With regard to make-believe, I think it has done a great deal of harm to the Irish language. I have no desire to debar the best staff from being appointed, whether they know Irish or not. As a matter of fact, the Civil Service gets experts who do not know Irish. On the staff of the Currency Commission and of this central bank, there will be ten men and 40 women. I take it that, by and large, the women are doing routine work and are not experts at all.
If that is so, I see no reason why the 40 of them should not have been recruited in the same way as clerical officers are recruited for the Civil Service. Seeing that it is a Government institution, I do not think anyone should enjoy the privilege of appointing them on his "say-so". They should be appointed in future by competitive examination, and under regulations similar to those which apply to ordinary examinations of a similar kind in the Civil Service.
I quite agree in regard to the question of experts, although sometimes some rather peculiar things happen. I remember inserting an advertisement for an aeronautical engineer in the English papers. The usual form and questionnaire was sent out. It included a query as to knowledge of Irish. The candidate recommended by a board which consisted of one Englishman, Mr. Dulanty and an Irish Army officer, stated that he was reared as an Irish speaker. As a matter of fact, he was the son of a customs official.
With regard to the Minister's highly irrelevant remarks about University College, Dublin, I may point out that I am merely a member of its staff, have no responsibility of any kind for its government, direct or indirect, and therefore am not in a position to make any statement about that, but I will say this for University College, Dublin: that I went into it as a person with no influence of any kind whatsoever, from a Christian Brothers' school, and the governing body of University College at that time—which was quite a number of years ago; somewhere about 1912—was composed of people who certainly had no sympathy with me or my political views. As a matter of fact, I think I was the only Sinn Féiner there at that time, but still, on my merits, they gave me a job, and I am grateful to them for that.
I think also that, in general, they do observe the principle of not appointing anybody but the best men, by what is, in effect, a competitive process. I may also say that, with regard to compulsory Irish, they have done a great deal more than a lot of people think. With regard to the administrative staff of the college, the Minister knows, as well as I do, that that was a matter exclusively under the control of—well, that is all.
Is the amendment being withdrawn?
Well, I understood the Minister to say that he would endeavour to meet the principle of the amendment.
Very good, I shall withdraw the amendment on that understanding.
Amendment, by leave, withdrawn.
Question—"That Section 16 stand part of the Bill"—put and agreed to.
Section 17 put and agreed to.
SECTION 18.
I move amendment No. 18, which stands in the names of Senator Foran and myself:—
In page 11, to delete sub-section (5).
Section 18 deals with the board of directors of the bank, and paragraph (b) of sub-section (4) of the section says that the governor of the bank shall, during his term of office, be ineligible for election as a director of any bank whatsoever. Then we come down to sub-section (5) which says:—
In the next preceding sub-section of this section the expression "any bank whatsoever" does not include an international bank formed wholly or mainly by banks which are the principal currency authority in their respective countries.
Now, it seems desirable that the directors of this bank should not be directors of any other bank, but it is hard to conceive why an exception is made in the case of an international bank, except that there is some particular reason or purpose for doing so. If a director could be a member of any bank whatsoever, then he might be a member or director of a bank in this country or, say, in Great Britain, and probably well known, but he is prohibited from being a director of banks in such countries, although he may be a director of an international bank, such as the Bank of International Settlements or, perhaps, the Federal Reserve Bank of America. It is difficult to understand why an exception is made in favour of an international bank, and we should like to know from the Minister why such an exception is made.
We had some discussion yesterday about the type of the Bank of International Settlements in Switzerland, and of our connection with it, and the power that we are giving in the Bill to have a certain association with that bank. Evidently, some Senators were under the impression that we might be giving power to the board of the central bank to join up with groups of international financiers whose names, certainly, have not been honoured by numbers of people—the type of mind that is suggested by some people when they talk about international finance controlling the world, and not controlling it for the world's good, and so on—but I think that I explained that this bank in Geneva is just a kind of a glorified central bank for arranging settlements largely between the banks of the world, and it may be convenient for us to be associated with that bank.
It might also be convenient even in such a remote circumstance as that a governor or one of the directors of our central bank might be asked to be a director of that bank. In any case, it is merely a bank for settlements between banks—a matter of financial and commercial convenience—and it does not mean joining up with any undesirable group of international financiers who might be going to do things which some Senators might think would not be helpful to this community or to peoples as a whole.
Surely, without going into technical details, the idea of our not being associated with international matters of finance is a false one. If there is to be any settlement, when this war is over, it must be an international one, and anything that this Government or any other Government can do to keep us in touch with international affairs is a good thing, and not a bad thing. This notion that you can stick your head in the sand and avoid what other peoples are doing in the monetary sense is a childish and absurd one, and I think we should be grateful for association with international banking.
I am glad to have the Minister's explanation, and I certainly would be against cutting our country off from international associations, and particularly international banking institutions.
Amendment, by leave, withdrawn.
Question—"That Section 18 stand part of the Bill"—put and agreed to.
Sections 19, 20 and 21 put and agreed to.
SECTION 22.
I understand that amendments Nos. 19, 24 and 27, in Senator Baxter's name, are not being moved on this stage of the Bill, but will be re-tabled for the Report Stage.
Amendments Nos. 19 and 20 not moved.
I move amendment No. 21:—
In sub-section (5), page 12, line 44, before the word "as" to insert the words "or to hold office".
Sub-section (5) of Section 22 says that every director shall be ordinarily resident within the State, and that a person who is not so resident shall not be eligible for appointment as a director. It is not quite clear what that means. Does it ensure that a man who fills the office of a director must be permanently resident in the State? It appears to me that if he is appointed as a director he may draw fees, whether residing in Belfast, Paris, or any other place. The purpose of the amendment is to ensure that a director must be resident in Eire if he draws fees as a director, and that does not seem to be quite clear from the wording of sub-section (5).
I think if the Senator looks at Section 24 (d) he will find that the point is definitely covered there.
Amendment, by leave, withdrawn.
Sections 22 to 24, inclusive, agreed to.
SECTION 25.
I move amendment No. 22:—
In sub-section (1), page 13, line 50, to delete all words after the word "election" to the end of the sub-section and substitute the following words:—"of the first three banking directors".
This amendment and certain consequential amendments that follow, raise the principle of how bank directors should be elected. Hitherto the banks have made their own arrangements. Banking members of the Currency Commission have been elected under a domestic arrangement within the banks themselves and this arrangement has worked quite satisfactorily. The banks do not see any reason why that method should not be continued. It is felt that the panel method is elaborate and unnecessary and the object of this and the following amendments is to ask the House to agree to allow the present method of election as applied to banking directors on the Currency Commission to remain. The panel method seems an unnecessary elaboration in view of the fact that we have experience of the present method which works quite satisfactorily.
I have nothing to say against the board of the bank being selected as it was under the Currency Commission except this—that the banks there were shareholders in the Currency Commission and they had therefore, as shareholders, certain rights and privileges that are common to shareholders of all banks but, under the new constitution of the central bank, the banks will not be shareholders. They are being given definite preference in having it laid down that there will be three banking directors on the board.
That is a definite preference given to them there for, I hold, very good reasons but as the State, acting through the Minister for Finance, will be the only shareholder in the central bank I think it is following the same principle that the shareholders should have the right to appoint their directors. There are certain concessions given to bankers there. The method of selection is, perhaps, complicated, if you like; it is elaborate, but I think it is not too much to ask that, at any rate, the final selection of the individuals to compose the directors of the bank should be made by the shareholders. In this case it happens that the shareholders will be represented by the Minister for Finance and it is not unreasonable to ask that he should have the final word in the selection of the board.
With all due respect to the Minister, I cannot see that the shareholding aspect really alters the position. Surely it cannot matter to the Minister what three directors the banks choose to nominate. I cannot see why he wants to pass them through a sort of fine sieve. I cannot see the purpose of getting six names and selecting three. It would seem more satisfactory if the banks put up three names.
I have a good deal of sympathy with the point of view of Senator Sir John Keane. It seems to me that, if you take the purely logical position of a shareholder, the bank directors need not be there at all. But the bank directors are there in order on the one hand, as the Minister said, to give the benefit of their experience—I think these are his words, or something like that—and on the other hand—I am not sure whether he said it or not, but I gathered it from his tone—in order to get the active and willing co-operation of the commercial banks. It seems to me that from both points of view, three people chosen by agreement amongst the banks would be the best and most effective way of getting that co-operation. Also, you will get men whom the banks, at any rate, consider the most experienced and the most likely to suit.
With very great respect to the Minister, I have a very shrewd suspicion that the directors of the various banks will know very much better than the Minister which of the men available are really suitable and have the necessary knowledge, experience and education to fit this job. I have a feeling that if I were the Minister—perhaps I cannot put myself in any such position —I would prefer that the responsibility was taken by the banks rather than that I should take the responsibility of selecting three out of six. The banks probably have a definite opinion. This is apart altogether from the merits of having banking directors or not. We have decided that there ought to be banking directors. It is a question of devising a practical method of getting three directors and the directors most likely to co-operate. In all probability it will be pretty well known who the three are that the banks would prefer and if the Minister changes from that I can see the matter getting around and being discussed, which would not be helpful. I believe, from a purely practical point of view, the amendment is a wise one.
Is the amendment being pressed?
I would like it put. I do not wish to press it to a division.
Amendment put and declared negatived.
Amendments Nos. 23, 25 and 26 seem to be consequential.
The principle has been negatived and therefore I do not propose to move them.
Amendments Nos. 23 to 27, inclusive, not moved.
Question—"That Section 25 stand part of the Bill"—put and agreed to.
Sections 26 to 29, inclusive, agreed to.
Amendment No. 28, in the name of Senator Baxter, is not being moved.
Sections 30 to 35, inclusive, agreed to.
SECTION 36.
I move the amendment standing in my name:—
29. In sub-section (1), paragraph (a), page 19, lines 2 and 3, to delete the words "the rate of not more than 2½ per cent. per annum" and substitute the words "such rate, not exceeding 2½ per cent. per annum, as shall from time to time be appointed in that behalf by the Minister."
I asked the Senator to put down this and other amendments in his name. They are meant to implement an amendment which I accepted in the Dáil, put down in the name of Deputy Mulcahy. There were consequential changes to be made in other sections that were not inserted at the time in the Dáil and these are fully implementing the amendment accepted in the Dáil from Deputy Mulcahy. These amendments also cover the point Senator Sir John Keane wanted to make in amendment No. 32 to Section 38.
Amendment agreed to.
The following Government amendments were agreed to:—
30. In sub-section (1), paragraph (b), page 19, lines 9 and 10, to delete the words "the rate of not more than 2½ per cent. per annum" and substitute the words "such rate, not exceeding 2½ per cent. per annum, as shall from time to time be appointed in that behalf by the Minister".
31. In sub-section (1), paragraph (c), page 19, lines 16 and 17, to delete the words "the rate of not more than 3 per cent. per annum" and substitute the words "such rate not exceeding 3 per cent. per annum, as shall from time to time be appointed in that behalf by the Minister".
Section 37 agreed to.
SECTION 38.
Amendment No. 32 not moved.
I move amendment No. 33:—
In sub-section (2), page 20, line 9, to delete the words "two and one-half per cent. per annum" and substitute the words "such rate, not exceeding two and one-half per cent. per annum, as shall from time to time be appointed by the Minister."
Amendment agreed to.
Section 38, as amended, agreed to.
SECTION 39.
I move amendment No. 34:—
In sub-section (2), page 20, to delete all words after the word "reserve" in line 29 to the end of the sub-section and substitute the following words: "such proportion of the amount so written off as may be agreed between the Minister and the associated bank."
Section 39 deals with notes of the old issue outstanding at the time of the Treaty. The number was considerable then but the notes have gradually come in and the number is of much smaller dimensions now. It has always been the hope of the banks and, I think, of the Minister that there should be a settlement of this question of the old note issue and the object of this section is to lay the foundation of a possible settlement in the future. As the section is drafted, any settlement seems unlikely. The procedure will be: the banks may ask to enter into consultation with the Minister with a view to settlement; but the Minister is to be the sole judge of what the settlement shall be. He can attach whatever conditions he likes to the settlement. If you are told that, once you open negotiations, you cannot withdraw, you are not going to open negotiations. Under the section, it seems unlikely that any settlement can be reached.
Under the section as drafted the banks will have to bear responsibility for any notes which may be presented after the settlement has been made. The most sensible settlement would be for the Minister to say to the banks that they will be allowed to write off some agreed proportion of the old issue and be responsible for whatever notes come in afterwards. It is not necessary, however, to go into that now. The door should be left open for a settlement and this section appears to negative the possibility of a settlement. I understand from the Minister that, if the banks do proceed to negotiate and do not like the terms, they can withdraw. That meets the position to some extent but that is only a Ministerial pledge and is not embodied in the Bill. It is a Government pledge and is quite satisfactory, so far as it goes, but it will not be a statutory obligation. I cannot see why the Minister will not accept this amendment, which makes the position quite clear from the statutory point of view.
It is the bank which will finally do the writing off but there cannot be any writing off unless the bank takes the initiative. I do not think that the Senator, or those particularly interested in this matter, may have any fear of entering into negotiations at any time they think it wise or proper to do so. They will not be compelled to complete the negotiations. Even under the section as it stands, they cannot be so compelled. Neither the central bank nor the Minister has the power to force a settlement upon them or even to make a final settlement with them without bringing in other interests.
I said in the Dáil—evidently the Senator has read what I said—that I did not think the commercial banks should have any fear that they would not be reasonably met by the central bank board or the Minister for Finance in any proceedings for a settlement in respect of which they took the initiative. I do not think that the insertion of the words the Senator suggests would give the banks any further advantage or place an extra £ in the treasury of any of them. When the time comes for the banks to take the initiative in respect of the settlement of this dead note issue, I feel confident that the settlement will be made on all sides by men of common sense and reason.
Amendment, by leave, withdrawn.
I move amendment No. 35:—
In sub-section (5), to add at the end of the sub-section the following words:—"but the same proportion of any sums expended by an associated bank in the discharge of such liability as the agreed proportion mentioned in sub-section (2) of this section shall be repaid by the bank to the associated bank".
The same considerations apply in this case. The banks are held liable for the redemption of all notes of former issues, irrespective of any settlement which may be made. The Minister may say: "You have got to hand over cover to the Minister for all the outstanding notes and, in spite of that, you have still to redeem all the notes that come in." I am sure that the Minister would never think of forcing a settlement of that kind and so I am prepared to withdraw the amendment.
Amendment, by leave, withdrawn.
Section 39 agreed to.
Sections 40 to 46 agreed to.
SECTION 47.
I move amendment No. 36, which is in the names of Senator Cummins and myself:—
In page 25, to delete sub-section (2).
Section 47 deals with the publication of financial statements by licensed bankers. Sub-section (2) provides that a certain provision of the Companies (Consolidation) Act, 1908, in relation to the publication of a certain financial statement by companies shall not apply or have effect in relation to a licensed banker. That provision, I think, relates to the publication of the articles of association of such companies. It seems to me that, in the interest of the public generally, all facts and data in relation to the commercial banks should be given to the public. It is difficult to understand why an exception is made in this case.
No exception is made. We take out a section of the Companies Act, but we make much more extensive provision in the next sub-section. We are taking power to get more detailed statements, if we require them, and we are giving away nothing.
Amendment, by leave, withdrawn.
Section 47 put and agreed to.
SECTION 48.
I move amendment No. 37:—
In sub-section (1), page 26, line 36, to delete the words "with the concurrence of the board".
This is the section that deals with the publication of balance sheets by licensed bankers. Sub-section (1) says that "the Minister may, with the concurrence of the board," make regulations, etc. Why should that be necessary? Why should not the Minister proceed directly himself, and do all that is necessary to be done without requiring him to get the concurrence of the board?
The board will probably have a more intimate detailed knowledge than the Minister is likely to have. I am prepared to meet the Senator's amendment and put in a phrase like this: "After consultation with the board." Does that meet his view?
Amendment, by leave, withdrawn.
Section 48 put and agreed to.
NEW SECTION.
I move amendment No. 38:—
Before Section 49 to insert a new section as follows:—
(1) If the board is of opinion—
(a) that any licensed banker is holding assets within the State which are insufficient in proportion to his liabilities within the State, and
(b) that sufficient additional assets within the State of a character appropriate to the liabilities and to the normal business of the licensed banker can be acquired by him at a reasonable cost and with reasonable security,
the board may notify the licensed banker of the additional assets within the State which can be so acquired and may recommend the licensed banker to acquire them.
(2) The licensed banker shall within one month notify the board whether he accepts the recommendations of the board.
(3) If the licensed banker fails to accept such recommendation or, having accepted, fails to act thereon within a period of three months the board may report such failure to the Minister.
(4) The Minister may, on any such report and after consultation with the licensed banker, by Order prescribe that the licensed banker shall deposit with the bank free of interest such sum as the Minister thinks fit not exceeding the amount by which, in the opinion of the board, the assets held within the State by the licensed banker are insufficient in proportion to his liabilities within the State.
(5) A licensed banker, the subject of an Order made by the Minister under sub-section (4) of this section, may from time to time apply to the board for a review of the last preceding recommendation of the board as to the acquisition by the licensed banker of additional assets within the State.
(6) The board shall report its conclusions on any such review to the Minister and the Minister may on any such report and after consultation with the licensed banker, by Order terminate or vary the terms of any Order then in operation and made by him under the provisions of sub-section (4) of this section.
(7) The board shall account separaately for any sum deposited with it under the section and shall not apply, either directly or indirectly, any sum so deposited to the acquisition of any assets other than such assets within the State as the bank is by this Act empowered to acquire."
On a point of procedure, I would like to have the ruling of the Chair on this amendment as there are a number of amendments to the section. There are two amendments to delete the section, one by Senator Johnston, and, I think, one by myself. Then there is a substitute amendment. I take it that the discussion on this amendment can cover it and amendment No. 41.
Leas-Chathaoirleach
The two can be discussed together. If amendment No. 38 is carried, amendment No. 41 follows consequentially.
With regard to this amendment, the banks consider this the most disquieting section in the whole Bill. The object of the section is to try to compel the banks to hold a larger proportion of Eire assets. I am not exactly clear about the procedure under it, but the board and the Minister together—the Minister ultimately—can say to a bank that it does not hold a sufficiently large proportion of Eire securities at a given time, and that if it does not correct that proportion it will have to make a compulsory deposit with the central bank.
At first sight this may seem not unreasonable provided satisfactory Irish assets can be procured, but when you come to examine it the thing is not workable. What I mean is that it is not workable within the whole banking system. It can work in the case of an individual bank, but the effect of it will be that if you correct the proportion in one bank you alter the proportion in some other bank, and therefore in the banks as a whole, and do not achieve your object to secure the holding of a larger proportion of home assets in the banking system as a whole. As I say, it cannot be worked because the banks and the Minister would be all the time correcting these proportions. If one bank acts, it throws the proportions of the other banks out.
That is one aspect of it. Another is that the banks as a whole cannot, of their own volition, alter the proportion. One bank can. There is only one way in which the banks, as a whole, could do that. They could do it if they were able to find extern holders of Irish assets who were prepared to sell to the banks. That, of course, would alter the proportion, but my submission is that every other method of altering it must be at the volition of the customer. He alone can do it. The matter was not made very clear when it was under discussion in the Dáil, but ultimately it was shown both by the Minister and the Taoiseach that the only effective way in which the proportion is going to be altered is by the importation of goods. As the debate in the Dáil went on, the Taoiseach, if I may say so with respect, changed his ground and, ultimately, said in effect that the only real benefit of this section will be to bring pressure on the banks to finance the importation of commodities from outside the country. In view of our desire for self-sufficiency, is that now to be our policy—that these imports should be increased? Of course, there are certain capital goods that we cannot produce and that must come in. Even within our policy of self-sufficiency, a certain amount of capital goods will be required. But when have the banks ever hesitated to finance the importation of capital goods when the security was satisfactory?
There is no necessity to bring any pressure whatever on the banks to finance the importation of capital goods because they have always been ready to do it if the security was satisfactory. In the eyes of those who know, this section rather holds the whole Bill up to ridicule because the thing cannot work, so that we are going to put on the Statute Book a section which, if I may say so, is largely eyewash. It may have some political value perhaps. The position would be different if the banks were recalcitrant and refused to finance the importation of capital goods, but is it suggested for a moment that they are going to do that? This section is a blemish on the Bill. It would be far better for our international reputation that it should not be there. A section of this kind is, so far as I know, unique in central bank legislation and being unworkable it should not disfigure our legislation.
Senator Sir John Keane knows that there are at least two opinions held with regard to this particular section, the view represented by the Senator, and the view that I, as proposer of the section, represent. I do not accept the description of this section as a blemish on the Central Bank Bill, I recommended it to the Dáil, and I recommend it to the Seanad, as a section that may be helpful. It gives a certain power to the board of the central bank, after due and proper examination and consideration, to be used in circumstances that they may deem appropriate.
This Government have for a long time, nearly 11 years, made great efforts to develop the resources of the country and they did not always meet with the enthusiastic backing and support that one would imagine such a line of policy should receive from all sections of the community, particularly all the sections represented in the Oireachtas. I think the minds of people in general, Senators and Deputies and probably bankers also, are more receptive to this kind of idea now than they were ten, five or even three years ago. That being so, it is quite probable that the power proposed to be given to the board of the central bank in this section may never be used. The Senator admits it is practicable in regard to one bank. I do not pretend to know as much about the technique of banking as the Senator does; I have no experience in that matter, but I have made inquiries from people who, I think, know something about the technique of banking and I suggest, from the knowledge I have got, that the section will be found practicable and workable, and may even be found valuable.
The change in mentality with regard to the development of our resources, and the placing of as much as possible of our money in Irish assets rather than in external assets, is very noticeable. That mentality has developed considerably over the last 20 years, but it has not always been operative as and when required. I think that, in the future, power of this kind may not be necessary, but at the same time it is a wise power to have. I think there is nothing imprudent or improper about it, no derogation of the confidence that I have already expressed in the experience, knowledge and integrity of the bankers and the banking system here. In setting up this central bank, we are giving it the variety of powers that we think will be helpful to the community, and even to the banking system, in building up the happy and prosperous Ireland that we hope will emerge as a result of the legislation that the Oireachtas has been developing and passing since the State was founded.
I think the power sought here is not unusual. There are central banks that have powers of a type like this, some of them much stronger powers, powers to demand compulsory deposits from commercial banks. We have not proposed that here, though it is common to many central banks and was suggested many times to us by responsible people. We have not thought that necessary. This section does not go the same distance that some Parliaments have gone in giving certain powers to their central banks. The power which is proposed here is not revolutionary. It is not an imprudent suggestion. I think it is a practicable and a useful proposition that may be helpful to the State, and even to the banks, in time to come.
I object to a certain line the Minister has taken in quite a number of his replies. Yesterday he kept us for some time telling us about the houses that the Government have put up. I may be misrepresenting him, but it seemed to me that he has now taken the line of tending rather to condemn the banks. He tells us that his Party considers a certain policy suitable and beneficial for this country. He tells us that, as the governing authority, they have power to legislate in order to implement the policy that they think is good. He has tended to condemn the banks, not because the banks have refused to obey the law, but because they did not enthusiastically, as he said, come forward to support that policy. The Government, with their power of legislation, can impose legal duties on people and the people are bound to obey the law so made.
In the Minister's statement there is implied some form of turpitude in people who do not agree with what I, at any rate, consider to be the misguided policy of the Government. His attitude is that these people should give strong support to a Party policy. This has happened quite a number of times. We are quite prepared to have the Government state their case for the legislation they are proposing, but when the Minister begins condemning people, not because they disobey the law—I would support him if they did disobey the law—his attitude is open to question. To condemn any section of the community, and this section is the best part of half the community, who do not think the Government's policy is as wonderful as the Minister thinks it is, is uncalled for. I am quite prepared to hear a reasoned case against the amendment proposed by Senator Keane, but if it is going to be based on the assumption that people have to be made enthusiastic over any proposal the Government like to put forward, that is ridiculous.
I was rather puzzled by the line taken by the Minister. I read the section and amendment No. 38; I listened to Senator Keane, and the impression I got was that he, speaking more or less on behalf of the banks, was accepting the principle that the central bank was to have certain powers to regulate the quantity of Irish assets to be held by them. He did not very elaborately explain the difference in amendment No. 38. The Minister did not seem to deal with that amendment at all. He spoke generally as to the desirability of certain powers and left me rather uncomfortable because he gave me the impression that this proposal had something to do with a previous action of the banks, whereas I thought it was put forward as something that might be necessary, apart from any previous action of the banks, in the general national interest. I think the amendment is proposing a more detailed and a safer way of achieving the same thing. It looks to me as if the amendment is reasonable. The Minister simply argued for the retention of a section. The only question is whether the amendment is better than Section 49.
The attitude of the banks is that we do not like this at all, but if we have to have something of the kind, we prefer amendment No. 38. It really makes the thing more practicable and easier in operation. If one were a cynic, one might say: "Let it all go. It cannot work and it will be like many other provisions in Central Bank Acts which are on the Statute Book and which are not operated." But I do not like to be a cynic in this matter; I like to be a realist. As a last hope, would the Minister between now and Report Stage, if he must have this principle, consider the alternative amendment?
There are several aspects of this matter with which I do not want to weary the House, but there is one aspect which seems to be rather inequitable. If a bank fails to correct this proportion, it has to make a compulsory deposit. The central bank is almost certain to put that money into external assets, as the only way in which it can earn anything on the money. If an individual bank fails, as an individual bank could and might fail, to procure domestic assets, it is almost certain that the central bank will not be able to do so, and all that will happen is that a penalty will be put on the bank for failing to do what it cannot do. It is very hard to find any purposeful way of dealing with the matter on account of the entanglements around it, but I do hope that the Minister will reconsider, with his advisers, whether amendment No. 38 would not be preferable to the section. I do not see much purpose in wearying the House on a rather technical matter. The Minister seems to have his heart set on this particular principle, and we are in his hands, but if he wants to put the thing in a more workable or a more convincing form, he will reconsider amendment No. 38.
I think Senator Sir John Keane is not stating the whole case when he says that the importation of goods, as I understood him, is the only means of implementing the section. There are other means. If, for instance, the banks increase their loans at home, the ratio between the assets and liabilities within the State increases and that implements the section. With regard to the amendment, I suggest that action under the section would not be taken unless appropriate internal assets are available, or have been available, for acquisition by the licensed banker concerned. A reasonable time limit will be allowed to the banker within which to acquire such assets. The Senator suggests certain time limits, but the time limits may not necessarily be those in sub-sections (2) and (3) of his amendment, but time will be allowed. I take it the section will be operated by prudent and reasonable men, including bankers who will have had some experience of whatever difficulties might arise, and I take it that time will be allowed. Therefore, all that is aimed at in sub-sections (1) to (3) of the Senator's amendment are in practice covered by Section 49.
The main new feature in sub-section (4) of the amendment is that final action regarding the making of a compulsory deposit with the central bank will be taken by the Minister for Finance and the existing sections provide for regulations being made by the central bank board with the concurrence of the Minister for Finance. There is no very vital difference between the Senator's amendment and the section, and I suggest, therefore, that that part of the Senator's amendment is not necessary. Sub-section (5) of the amendment is not necessary either, as there is nothing in the exist ing section to prevent any bankers from requesting the central bank board to review any action taken which required the bankers to make a compulsory deposit. They can ask for that review and I am certain that there will be such harmony and co-operation between the commercial banks and the central bank that any request of that kind will be granted.
If, as a result of such a review, it is decided to take a specified proportion or to reduce the amount of the compulsory deposit, such action can be taken under Section 15 (3) of the Interpretation Act, 1937. Every power conferred by an Act of the Oireachtas to make regulations includes powers to revoke or amend such regulations. Hence, sub-sections (5) and (6) of the Senator's amendment are met. The board in all probability will account separately for any sums compulsorily deposited, or will at least show such sums separately in its balance sheet.
The second part of the Senator's sub-section (7) would prevent the bank from acquiring external assets with the sums compulsorily deposited. If that provision were adopted, it would be too restrictive and might operate to prevent the section being workable at all. A commercial bank has many more opportunities than the central bank for investing moneys and making advances. It could reasonably acquire internal assets by loans to commercial firms. Similar action could not appropriately be taken by the central bank. Also, a commercial bank could buy equities, which the central bank could not purchase. There are thus many kinds of internal assets which could be acquired by a commercial bank as part of its normal business which the central bank could not acquire.
That being so, I suggest it is reasonable that the central bank should, if it so desired, and if no suitable internal assets were available, acquire appropriate external assets in order to make use of the sums compulsorily deposited with it. In practice, it would probably happen that in any action taken under the section a block of British Government securities would be transferred by the commercial bank to the central bank. That would be the normal way of dealing with it. In such circumstances, I suggest it would be absurd that the central bank should be deprived of the interest accruing from such securities, while waiting, perhaps, to exchange these external assets for appropriate Irish assets, if such were available.
I suggest to the Senator that, in the section as proposed, we have met to a large extent the suggestions for amendment which he has put up. If the section requires to be operated, I do not think it will be unreasonably operated. Instead of being in any way hurtful or injurious, or restrictive on the commercial banks, if it is necessary to operate the section at all I think it will be found to be helpful. Certainly the intention is that it should be helpful to them, and helpful to the community as a whole.
I do not intend to pursue the matter any further. I take it the procedure is that, if I withdraw the amendment now, I can if necessary put it down for the Report Stage?
Leas-Chathaoirleach
Then I think that is the best course; perhaps the Minister may ponder on this matter in the meantime. With regard to equities, I should say that only in very exceptional cases do the banks hold equities.
Amendment, by leave, withdrawn.
Leas-Chathaoirleach
Amendment No. 41 goes with it, I take it?
Yes. I should like to move amendment No. 39:—
In sub-section (1), page 26, line 52, after the word "board" to insert the words "after consultation with the licensed banker and".
This is a comparatively trifling matter, and perhaps the Minister will see his way to allow this amendment. Before the central bank takes action with regard to compelling an individual bank to correct its proportion, that bank should be consulted, because there may be very good reasons why it holds the proportion it does hold of domestic and external assets. I think it is reasonable to ask that there should be prior consultation, so that the reasons why the banks do not see fit to act in the manner required may be explained.
I think the amendment is hardly necessary. I cannot imagine the board of the central bank not making its views known to a commercial bank if it had any intention of making this section operative with regard to that bank. The bank board. I take it, want the co-operation of the commercial banks. They want to work in harmony with them. They want to be in close contact with them. I really cannot imagine the board of the central bank sending an urgent letter to a commercial bank, without any previous reference to the subject, demanding that those powers of investigation be operated, and that that particular commercial bank should do the things provided for under this section. I cannot imagine their being so unwise and imprudent, and acting in such an unfriendly way towards the commercial banks. I do not think that is likely to happen.
In ordinary practice, I agree with the Minister that that would be the human method. Now that we have got the Minister's statement to that effect, I must be satisfied.
Amendment, by leave, withdrawn.
I move amendment No. 40:—
After sub-section (3), page 27, to add a new sub-section as follows:—
A licensed banker the subject of a regulation made by the board under sub-section (1) of this section, may from time to time apply to the board for a review of such regulation made by the board as to the specified proportion of assets to be held by him within the State in relation to his liabilities within the State.
Would the Minister say whether this power of review is contained in some other Act?
This question arose in relation to some other currency matter, and we understood that there was no power to review the proportion.
There is power of review.
Amendment, by leave, withdrawn.
Amendment No. 41 not moved.
Section 49 put and agreed to.
SECTION 50.
I move amendment No. 42:—
In sub-section (1), page 27, line 20, to delete all words after the word "bank" to the end of the sub-section.
This is a new section which was put in after the Bill was introduced. It gives to the central bank power to settle the domestic clearances of the associated banks. I need not go into what happens; the banks settle their accounts between one another; and those clearances have to be settled in some central institution. The central bank is being given that power. The banks do not demur to that power because I think it is common to many central banks, but it does seem unnecessary to impose this condition with regard to a compulsory deposit. The banks must settle in cash. The banks must—unless the central bank chooses to lend, which of course it is not bound to do—have cash ready to effect their settlements. The money must be there. Why make the deposit compulsory? It seems to be quite possible that the central bank might fix a far larger deposit than is necessary. This provision imposes a condition of rigidity on the associated banks which is unnecessary, and of course causes expense. I cannot see any necessity for that condition. The banks will keep the cash necessary for the purpose, without any obligation to maintain a prescribed deposit.
I know that Senator Sir John Keane is not in love with this section, any more than he was with the last one we were discussing. In this amendment, and one or two other amendments which he has down here, he makes an effort to throw all the spanners he can into the works to prevent the section on clearances from operating.
Oh, no. That is not fair to me. I am quite prepared to accept the principle of clearances. I do not think it is fair to describe my amendments as obstructive. The banks are quite prepared to accept the principle of clearances; they quarrel only with the method by which the settlements are effected.
I do not think there will be any rigidity about the amount of the deposit. Under this section, the clearances are done here rather than outside the country, and I am sure that the regulations will be made by the central bank after full consideration and consultation with the commercial banks. I do not know when this section will be operated; I am sure the bank board will be slow to make any radical change unless they are satisfied that it is going to be helpful and beneficial. At the same time, I think it is only right that the central bank should have power to do all that central banks elsewhere do as bankers' banks. In most countries they act as the clearing house for the commercial banks of their State or nation. Why should our central bank not be given that power? I do not think there are any grounds for the fear that Senator Keane has, and the fear which he suggests that the bankers may have at the backs of their minds, that this section will be operated by the central bank in such a way as to make their present business arrangements more difficult for them under the new scheme of things. I do not think that is likely to arise.
At present, as the Senator very well knows, the commercial banks keep very large balances with the Currency Commission. I think the amount they have at present lodged, between them, with the Currency Commission is nearly £2,000,000. No sum of that amount would be necessary, I need not tell Senator Sir John Keane, to deal with ordinary clearances. They do at present, for reasons which seem good and proper to themselves, keep a large amount readily available in that way. They are not getting any interest on it. When they are able to do that now with such a large amount, if it were necessary to have a proportion of that amount put aside for clearances, I am sure the bankers would be quite ready to do it. It is not necessary at present and it may not be necessary in future, but I do not think there should be any rigidity about the amount. This scheme will be carried out in co-operation with the banks, certainly in the fullest consultation with them. I do not know when it will be operated. The central bank board will have the power to operate it but if, after examination of all the circumstances, they find it will not be helpful to the central bank, the associated banks or the community as a whole, they will not attempt to operate it at all, probably.
I fully concede the Minister the point in regard to co-operation, but I cannot help feeling that compulsory deposits are inconsistent with co-operation. I think it must be pretty obvious that you should not have this threat of compulsion in the background if there is to be co-operation. I do not think the reference to the balances which the banks hold with the Currency Commission quite sustains the Minister's contention —rather the reverse. These balances with the Currency Commission are entirely free and they can be withdrawn at any time.
They are there for the purposes of an emergency so that notes can be immediately issued if the emergency requires it. Very different conditions will apply to these compulsory deposits. They will be frozen. They will not be available for an emergency. They have to be kept there whether they are wanted or not. Even if they are higher than the amount which the banks need for this purpose, they will still be kept there and they cannot be used for any other purpose. I do not think that the comparison which the Minister tries to make with the balances held by the Currency Commission applies to any degree. It is rather the contrary in fact. However, there is no use in my prolonging the discussion. I withdraw the amendment so that if necessary I can raise the matter on Report Stage again.
Amendment, by leave, withdrawn.
I move amendment No. 43:
To delete sub-section (2).
This sub-section introduces a new and rather novel provision. The first sub-section referred to domestic clearances. So far as I know the proposal contained in this sub-section does not appear in any Central Bank Act. Power is taken here to compel the associated banks to lodge with the central bank cheques that are going for clearance outside the State. These are not domestic clearances. In the ordinary course of business, the banks receive in payment for the country's exports large numbers of English cheques. These cheques are lodged by people who hold them and then they go in the ordinary course of business to the English agents of the various banks who hold them here and they are afterwards cleared in England. That is an ordinary banking operation. Now it is proposed that there should be an intermediate authority introduced, namely, the central bank, and instead of the cheques going direct to agents in England, that they should go through the central bank. That is going to mean a considerable delay because all these documents, not only cheques but dividend warrants, drafts and documents of that kind, have got to be listed by the individual banks and records have to be kept of them in case they are lost.
The ordinary method of keeping records is to photograph them and then they are made up in packets and sent across. If they have to go through this new and, I submit, totally unnecessary channel we are presumably going to duplicate the work done by the banks. The central bank cannot take over these things at their face value in packets. They have got to undo the packets, to verify all these documents and to take a record of them, presumably by photography. All that can happen in the long run is that they forward them in due course and then they will be cleared in England in the ordinary way. That is going to mean, naturally, very considerable delay and the effect of the delay, of course, will be that the customer is going to be penalised. As you know, if a customer's account is overdrawn, he does not, in effect, get credit for his lodgments until his cheques are cleared. If his lodgment includes English cheques —at present it takes three to five days to clear them; I cannot remember exactly how long they are held before credit is given for them—and if the introduction of this new body is going to add a further number of days to the period of delay before the customer receives credit for his cheques it is going to impose an indirect tax on the business community which seems to me quite unnecessary. The central bank will not be able to make use of these credits they will get by the lodgment of the money because the banks will want the money at once. Those English cheques going to the central bank will, for the moment, mean that a certain amount of money will flow into the central bank but then the money will be wanted as soon as possible to meet debits arising out of payment for imports. As I say, this proposal is quite unprecedented. I know the power is only permissive and that the central bank need not operate it, but is it really necessary to have this power in the Bill at all?
I rise just to get some information on the point raised by Senator Sir John Keane. He has mentioned that the fact that cheques will have to pass through the central bank as a clearing house will create a lot of delay. I know in some cases that if I sell cattle to an English buyer, and I am not quite sure about his cheque, I go to my bank and tell them I want that cleared in the shortest possible time. I think in some cases they sent out directly to the bank on which it is drawn.
I would often prepay a telegram to see that it is cleared. If the fact that these cheques would have to pass through the central bank is going to prevent a speedy clearance, it would seriously hamper people carrying on trade with England. I should like to have some explanation from the Minister on this matter.
I merely wish to make a similar remark. If this arrangement is to apply to the ordinary cheque transactions between this country and England it will complicate business very considerably. It is not only in the matter of cattle it arises; it arises more or less continuously with those engaged in trade. I can hardly conceive anybody doing it, even though it is in the Bill. I cannot see the occasion for it. They may have some larger transactions of a different type in view, but I cannot understand how it could apply to the ordinary day-to-day transactions which some of us have with Great Britain and Northern Ireland.
I am satisfied that the board of the central bank would not operate this section unless there were convincing reasons given to them that it would be helpful and beneficial. But occasions might arise—they have arisen pretty frequently in recent years in troubled times—when it might be necessary to have the power of control of all finances. That is not actually stated here, but there is a certain element of that power sought in this particular section. In case of necessity it might be helpful to the country as a whole and to the banks that the power should exist which we are asking for in this section. I am satisfied that it will not be used to hinder business, commerce, trade, the sale of our goods, or the sale of our exports of any kind, cattle or other types of export, that Senator Douglas has in mind. Surely the board of the central bank would not be so foolish as to attempt to use this power to hinder trade. The whole object is to help trade, to improve trade, and the methods of trading. At the same time, there is a certain protection for the whole financial structure of the State that may be necessary in times of stress and difficulty. It is merely providing for what you might call difficult times or the rainy day that the power is sought. I think the board of the bank, whoever they may be, including the three bankers who will have a knowledge of these matters, will not operate any of these sections to the detriment of the community—the banks, traders or anybody else.
I withdraw the amendment, but still I cannot see the purpose of having powers of this kind in the Bill.
Amendment, by leave, withdrawn.
Amendments Nos. 44 and 45 not moved.
Section put and agreed to.
Sections 51, 52 and 53 agreed to.
SECTION 54.
Question proposed: "That Section 54 stand part of the Bill."
I should like to ask the Minister if the penalty provided for in this section would apply to a new form of fraud with which I have come in contact in the occupied part of our territory where some of the occupying forces split tender notes and hand one part of them folded up to an unsuspecting trader. In that way they make two 10/- notes out of one. When folded up the trader does not suspect that there is anything wrong with it. Will the terms of this section cover such a fraud, if it were attempted here, or can anything be done to check that?
That would be regarded as a forged bank note. It would not be proper legal tender and it is covered in the Bill.
Question put and agreed to.
SECTION 55.
I move amendment No. 46:—
In sub-section (5), page 29, before line 28, to insert a new sub-paragraph as follows:—
(i) issued or provided by a co-operative society for the use of its members and which are exchanged only between the members of such society or between the members of such society and the members of similar societies having an arrangement for the redemption of such tallies with the issuing society; or
Section 55 deals with the prohibition of unauthorised money and the fifth sub-section of the section makes certain exclusions. I want to refer to paragraph (g) of the sub-section, which deals with the tallies of a certain type of club or association. The club or association instanced in paragraph (g) which may issue tallies is composed of unemployed persons.
There are various other types of co-operative societies and clubs other than those composed exclusively of unemployed persons and the amendment asks that such types of co-operative societies of a productive or distributive character, which are not composed of members who are ordinarily unemployed, should have the same privilege extended to them as is extended to the club or association mentioned in paragraph (g) of sub-section (5) of the section. It seems only reasonable that as a type of co-operative society is mentioned and instanced in the Bill, the type of co-operative society instanced and mentioned in the amendment should have the privilege of having tallies which would be excluded as the tallies of this other co-operative society are excluded in paragraph (g) of sub-section (5).
The Senator and other members of the House probably realise that that sub-section was put in to meet the case of one particular club which we all know has done good work for the unemployed of the City of Dublin. There are similar clubs in Cork and Waterford and they would also be covered. This Bill has been before the public for more than six months and not one co-operative society has approached us in this matter. We have never been asked to include them, so that they probably would not find it helpful or useful. If they did think it would be helpful we would have heard from some of them before now. Secondly, we did give some consideration to the matter without being asked, but we would not allow these tallies to be operated outside the particular creamery, and therefore any value they might have to a co-operative society would probably be lost. So far as we are aware, they do not find anything of this kind necessary. If they did, we would have heard from them. If they did get a concession like that given to the Mount Street Club or similar clubs, it would be of such a restrictive character, in order to protect our currency, that they could not find it of any use to them.
Amendment, by leave, withdrawn.
Section put and agreed to.
Remaining sections put and agreed to.
FIRST SCHEDULE.
I move amendment No. 47:—
In Part I, page 34, opposite the reference to Section 47 in the first column, to delete all the words in the second column and substitute the words "the whole section"; and in the third column to delete all words and substitute the words "the passing of this Act".
The object of the amendment is to repeal Section 47 of the Currency Act, 1927, but in view of the general discussions that have taken place on the subject in the course of the debate, I do not think there is much use going very extensively into this matter now. If I might say so, Section 6 of the Bill is a peculiar section, and having regard to the general aspect of the question as a whole, might be considered somewhat anomalous. The amendment has been put down for a very good purpose and it is hoped, I am sure by all, that the section will be operated by the monetary authority for the welfare and advantage of the people as a whole. It would seem that except Section 47 of the Currency Act, 1927, were repealed in toto there would be a limit to the possibility of operating Section 6. For that reason it is proposed that Section 47 of the Act should be repealed so that the powers being taken in Section 6 should have free and ample scope. Except there is such repeal of Section 47 there would be a limitation on the operation of Section 6 (1).
We will probably have the subject underlying this amendment at considerable length on the final stages, as we had it on other stages of the discussions, and I do not propose, especially as I am tired, to go into the matter at length to-day. I do not want to run away from the subject at all, no more than the Seanad. I am prepared to stand over our present arrangement as a wise and prudent arrangement, one entered into with good will and full knowledge of what we were doing, believing it to be the best possible business arrangement we could make at the time. We are not tied to the extent that we cannot break it at any time we like, and that the Government here, speaking for the Oireachtas and the people, imagine it is going to be beneficial to do so and, if necessary, tie up somewhere or be without any tie. That tie represented by the section in the Currency Act to which the Senator referred is solely a plain matter of business, a plain matter of arrangement between two peoples, who have quite a lot of business to do, and who have very close economic and financial connections lasting over a long time. We find them beneficial. We find the arrangement we have at present, parity with sterling, helpful to our trade and to our people generally and, so long as that is so, we do not want to interfere with it. It might happen, and it is not an unlikely thing at all in the way the world is moving, that sometime in the not remote future, we might find it was not so helpful; that we could make a better bargain elsewhere. That might be so. I am not saying it will be necessary. I do not know. Nobody knows. But if we found that it was not helpful and not a good business bargain, then we would not be slow about coming to the Oireachtas and saying: "We think that arrangement ought to go and we propose something else in its stead." That would be very quickly done in the interest of the State and of the community as a whole.
Mr. Lynch
Then the Minister feels that the section in the Act of 1927 will not be a limitation on the powers contained in Section 6. We had a lengthy and learned dissertation from Senator Johnston on the control of inflation. Personally I do not know what control of inflation is. I do not understand the necessity of control in that connection referred to by Senator Johnston. The question of parity has been debated for a long time. I am not one of those wedded to the idea. I am prepared to accept suitable and satisfactory advice as to whether it should still be adhered to. At all events, it is satisfactory to hear the Minister state that, if in the interests of the welfare of the country it was considered necessary to make some other arrangement, that other arrangement would be made forthwith. I think that was a good enough guarantee for those who want a change, but who do not want a change merely for change's sake.
I think the way this problem has been dealt with by Senator Lynch and by the Minister is the correct method. If the debate in the Dáil, and anything that could be said here, can do something to correct what is a very unfortunate approach to this problem, which has taken place in clubs, at meetings and in discussions all over the country, it may do some good. One hears criticism of the link with sterling, but it is only on the very rarest occasion that one hears any argument as to whether or not we benefit by that link. One is always hearing that we are not able to change it, that we are under the heel of England, and attempts are made to turn what should be an economic problem into a semi-political problem with all kinds—I will not say of poison gas, but, if not poison gas—of gas that obscure and make it impossible to see the issue. If parties in this country agree to accept the position, whether it is a good thing or a bad thing, that there is no question whatever as to the power of the Oireachtas to change it if it thinks fit, we should unite in making that as clear as we can, and then we can debate it, like most other things that we debate here on their merits, from the point of view of the interest of the country.
On account of some things which have been said outside and which were not stopped in the debate in the Dáil and in the debate here, I would like to say that it would be better if the supporters of all the political Parties—whether they agree with the Government or not —would agree on one thing, that we are independent in matters of finance and that we have the right to change them if we think fit. If this question were judged on that basis, it would benefit everybody.
Amendment, by leave, withdrawn.
Schedules 1 to 3, inclusive, and Title, agreed to.
Bill reported with amendments.
Report Stage ordered for Wednesday, 14th October.
