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Seanad Éireann debate -
Tuesday, 4 Jul 1944

Vol. 28 No. 20

Public Business. - Trade Loans (Guarantee) (Amendment) (No. 2) Bill, 1944—Second and Subsequent Stages.

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

The Trade Loans (Guarantee) Act of 1924 was passed subject to a limitation on the period of its operation. At various stages, when the Act expired, it has been renewed since and the most recent renewal was in 1939 when the Act was amended and continued for a further five years. That period of five years has now ended—in fact it ended on the 22nd March last—and it is desired to have the Act continued for another period of five years. The operations of the Act have been in abeyance for some years past, since the beginning of the emergency in fact, but it is considered desirable, nevertheless, that the power of guaranteeing loans for the purposes stated in the Act should be maintained. The whole question of the financing of industrial development in the post-war period will have to be considered separately, but I think it would be undesirable that this Act should be allowed to lapse at this stage, even though it may be unlikely that the facilities afforded by it will be availed of during the emergency. The sole purpose of this Trade Loans (Guarantee) Bill is to continue the operation of the Act over a further period of five years.

I wonder would the Minister take this opportunity of explaining to the House exactly why this Act has lapsed during the emergency, and what facilities can be given to industries in this country, through this Bill, that are not given by the ordinary banking institutions of the country?

In that connection I should like to know whether the Minister has the figures of the loans guaranteed under this Bill and the amount of guarantees paid up to the moment. I should like to know whether, if manufacturers have availed of the benefits provided by the Act, they have also fulfilled their obligations under the Act, generally speaking.

Would the Minister inform the House what rate of interest is charged to the manufacturers in connection with those loans?

Of course that also applies to farmers.

The reason why the Bill has lapsed is because the time provided in the original Act has expired. It expired, as I explained, on the 22nd March last. I was asked by Senator Crosbie why the Act has been inoperative for some years past. It has been inoperative for some years because, due to prevailing conditions, people have not made applications for loans under it. It is not difficult to understand why industrialists, in general, did not avail of the facilities provided by this measure, in preference to facilities that are provided by the ordinary financial institutions of the country—except on the assumption that the machinery involved is rather elaborate. In fact, the people who have applied for guarantees of loans under this measure are those who cannot get these facilities in any other way. I think it is a fair assumption that if these firms could have got the accommodation in any other way, they would not accept the conditions or the procedure adopted in connection with the Trade Loans (Guarantee) Act.

There is, however, a number of enterprises which, because of their novel character or some other characteristic, cannot get guarantees through the ordinary financial channels without State assistance, and the purpose of this Bill is to give such firms State assistance. Of course, elaborate machinery is provided to deal with such cases, which makes the business of getting a trade loan guarantee a very slow one. First of all, the application has to be considered by an advisory committee which was set up under the original Act. Then, when that advisory committee makes its report, the report has to be considered by the Minister for Industry and Commerce and, subsequently, by the Minister for Finance. If, after those various stages have been gone through, it is decided that a guarantee should be given, further formalities have to be complied with. So elaborate is the procedure, in fact, that most firms prefer to avail of other methods, if they can, of securing accommodation, than those provided for here. Nevertheless, it is a fact that a number of firms has availed of the facilities provided for here, and the results, on the whole, have not been unsatisfactory. There were 98 cases in which loans were guaranteed. The number of loans that actually were given was 113—some of the firms concerned having got more than one loan—and the total capital involved was £1,160,440. In 43 of these cases the loans were repaid in full, amounting to £411,271, but there were 24 cases in which it was necessary to appoint receivers—the companies concerned having ceased to operate—and in the remaining cases they are carrying on with the assistance of trade loans and paying the interest when due. The rate of interest, of course, is a matter to be arranged between the borrower and the lender. The State's liability is only 2½ per cent., although, of course, the borrower may have to pay more.

Have there been any cases in which the State loan has not been repaid?

Yes, there were 24 such cases.

And these were companies which were not any longer in existence?

Yes. They were cases where the State appointed a receiver to wind up the company and realise its assets with a view to meeting the liability of the company to the State.

It would appear to me that the percentage of loss has been rather low. It has not exceeded 5 per cent., I think.

The fact that the Act has been in operation for 20 years, and that failures of companies arose in the earlier years of its operation, which were difficult years, I think would go to show that the percentage of losses was small, and I think that in any event the employment given should be a compensatory feature which is not out of proportion to the amount of money involved.

Might I again ask the Minister why the Act is inoperative?

Because people are not applying for loans under the Act.

If the Act has achieved certain defined objects, why should it be continued, if it is no longer operative?

What I mean is that no applications are coming forward at the present time, due, I should imagine, to present industrial conditions.

Question put and agreed to.
Agreed to take the remaining stages now.
Bill put through Committee, without amendment, received for final consideration, and passed.
Ordered that the Bill be returned to the Dáil.

It has been agreed to take No. 6 on the Order Paper now.

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