Seanad Éireann debate -
Wednesday, 29 May 1946

Vol. 31 No. 21

Imposition of Duties (Confirmation of Order) Bill, 1946,—(Certified Money Bill) Second and Subsequent Stages.

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

Minister for Industry and Commerce (Mr. Lemass)

Senators who became members of the House since the outbreak of war will not be as familiar with Bills of this type as those of longer membership. The Emergency (Imposition of Duties) Act, 1932, empowers the Government to impose duties of customs upon goods, subject to the Government Order being submitted for confirmation through a Bill of this kind to the Oireachtas within a period of eight months. The Order, to which this Bill relates, was made in October, 1945, and must, therefore, be confirmed by the enactment of this Bill before the 10th June. Otherwise, the duty to which it relates ceases to be operative. The Bill confirms an Order which imposed a duty upon glue, gelatine and size. The rate of duty fixed was 45 per cent., full rate, and 30 per cent. preferential rate. In our circumstances the preferential rate is the effective one so far as these goods are concerned.

The manufacture of glue, gelatine and size was fostered prior to the war. The raw materials used by this industry are the waste products of the tanning industry, and its development here was therefore a natural and desirable consequence of the growth of tanning. Prior to the war a company was formed which established a factory at Dungarvan for the manufacture of these commodities, but, with the development of scarcities, in consequence of the outbreak of the war, no question of the imposition of a customs duty, or other protective measure, arose at that stage. In fact, supplies of these commodities from abroad ceased altogether during the war, and the country was completely dependent upon the Dungarvan plant for these goods during the war years.

The industry is not one of major importance, but is, nevertheless, worthy of fostering. The total quantity, by weight, of glue, gelatine and size used here in a year is, roughly, about 500 tons. These goods are, in the main, required by industrial concerns—gelatine by manufacturers of table jellies and other confectionery items, and glue and size by a number of industrialists. The company at Dungarvan is at present working with what must be regarded as a temporary plant. The total output which the company has maintained up to the present has averaged about 200 tons per year. It is at present producing at the rate of about 250 tons in a year. New plant to permit of increase in output and more efficient production is on order, but it is not yet possible to state definitely when it will be delivered and installed.

Although the total capacity of the existing plant is only about half the pre-war requirements of these goods, there has been no evidence of inability to obtain supplies. It is probable that the present demand for the goods is less than the pre-war demand. During last year, however, substantial quantities were imported and imports were beginning to move in increasing volume. It is not quite clear why imported goods should be purchased, as the information available to me would indicate that, quality for quality, the prices of the goods produced at Dungarvan are below those of imported goods. The probability is, however, that the difficulty of obtaining adequate supplies has induced manufacturers to look elsewhere and various other considerations may operate to swell the import figure rather than expand the home-production figure. I have explained, however, that the total productive capacity of the firm's plant is limited and that it will not be in a position to meet the full requirements of the home market until new plant will have been installed. The company did, however, represent—and I think reasonably—that, having undertaken the considerable capital expenditure involved in the purchase and installation of new plant, they should be assured of protection, protection which had, of course, been promised them before the war but not operated, because unnecessary, in the intervening years.

At present, six grades of gelatine are produced, varying in price from £175 to £250 per ton. According to the import statistics, the average price of imported gelatine appears to be about £420 per ton. A similar situation exists in respect of glue. The company produces 10 grades of glue, varying in price from £77 to £154 per ton, as compared with an average price of £90 per ton for imported glue. It is stated that, quality for quality, the imported glue is similar to one of the lines produced by the Dungarvan company and sold at £77 per ton. The company also produces size. At present, owing to the plant difficulty, the price of size produced at Dungarvan appears to be somewhat higher than the average price of imported size. The size produced there varies from 1/- per lb. to 1/9 per lb. The present price of imported size is, roughly, 1/4½ per lb. and of a quality which is equivalent to the highest quality produced at Dungarvan.

It is intended that the position in respect of the suitability of the company's productive plant and machinery will be examined when the new equipment on order will have been installed. I cannot say that it will be necessary to maintain indefinitely the duty at the rate at which it was imposed. It is regarded as desirable at present to give the company encouragement to proceed with the installation of this plant by imposing the duty at this rate, and maintaining it at this rate, until it is clear that a revision is justifiable. I must make clear that, while I am referring to the existing factory, at Dungarvan, there is no reason why any other company which sees fit to engage in this industry should not do so. It is possible that some other manufacturers of gelatine and glue will commence business at a later stage, possibly using other raw materials than those employed at the Dungarvan plant.

As I have said, the industry cannot be described as an important one but it does give employment to 75 persons —all male—in the town of Dungarvan, and there is a weekly wage bill varying from £225 to £250, which must have an influence on the prosperity of the town. The indications are that the company is efficiently managed and that, subject to the limitations necessarily imposed by the inadequate plant at present installed, it has done well during the war years. The plant on order is, I am informed, the most modern and up to date that can be procured and, when in operation, should put the company in a position to compete satisfactorily with any similar concern anywhere. The increased output which the company contemplate when the new plant is in operation may create some difficulty in regard to the supply of raw materials. The total output of those waste products by the existing tanneries may be inadequate to meet the full requirements of the company, in which case it should be possible to add to the native supply by imports. On the other hand, developments in the tanning industry are also contemplated, which should increase the supply of those waste products.

The Order contains a licensing provision and the intention is that any manufacturer requiring gelatine or glue who is unable to get supplies from the Dungarvan company in the immediate future will be facilitated in obtaining supplies from abroad, under licence, free of duty. I think that I have dealt with all the points that arise in connection with the Bill. The measure is one which, as Senators will note, can usefully be discussed only on Second Reading.

There are no provisions in the Bill which would give scope for Committee Stage discussion. The sole purpose of the Bill is to confirm the Order made under the Emergency (Imposition of Duties) Act, 1932, and it is in standard form, the schedule being the operative part of the Bill and specifying the Order to which it relates.

Mr. Douglas

I know very little about glue or gelatine and I have received no representations from anybody with regard to this duty. I imagine that the duty has not caused any difficulty to other manufacturers up to the present. If it has, manufacturers have remained silent about it. For that reason, I am prepared to support the Bill. I support it, particularly, for one reason. I think that the Government will have to pay particular attention to the smaller industries which served us during the emergency and which, owing to plant or other difficulties, may not be able to attain to a full standard of efficiency within a reasonable period. Most of us in industry have plant or machinery on order but nobody has the remotest idea when it will be supplied. Some of us hope that it will arrive in six or nine months. In our less optimistic moments, we think that, if we get it within two or three years, we shall not be doing badly. I think the method adopted in this Bill is probably the right method. In connection with this measure in the other House, the Minister is reported—I have not read the Dáil Report—as having stated that it is definitely the Government's intention and policy not to continue duties for any industries which, in the Government's opinion, are not producing a highly efficient article of equal standard to that which could be imported and at a price similar, or practically the same, as that at which it could be imported. As far as the first question is concerned, that of standard, I do not imagine that the Minister or any large number of his officials are fully competent to judge what is a correct standard and that may create some difficulty. Every sane manufacturer—I say sane advisedly—is perfectly well aware that the future of Irish industry depends on the production of an article as good as can be obtained elsewhere. You cannot build up industry otherwise. In that statement, I should think we are all—I certainly am—behind the Minister but when it comes to a judgment on both price and standard you are up against considerable difficulties.

I know one industry which for quite a few years could not sell its goods here. It did not bother about it because it sold 75 per cent. of them in Great Britain. The Irish people seemed to have a superior idea with regard to value and they were not interested in an Irish product. I think we are very fast getting past that stage—I certainly hope we are—but we are not entirely past it. There are quite a number of people who have the idea that when you put the word "imported" on an article, you are adding to its quality or cheapness. At the same time, I am not at all happy at the prospect that all Irish industry may be, to some extent, at the mercy of the Department of Industry and Commerce. The Minister may feel, probably rightly, that he is a very good friend of Irish industry and that there is no particular danger while he is there. I am not at the moment attempting to talk Party politics and I certainly do not wish to make any attack on the Minister, but he will not be always here. Dear knows what complexion the next Government may have and there will be changes. I think it would be very unfortunate if the question of the removal of tariffs based on a standard on which we are all agreed—the ultimate standard would be that the quality should be essentially right and that the price should be comparable to that of similar articles produced abroad—should depend on the decision of the Department. If that should be the case, I see the question as to whether certain articles were or were not efficiently produced becoming almost a political issue. A candidate may get up and say, if he knew that the Government would take off such and such a tariff because the standard was not sufficiently high, that he did not believe it was. I think that that is a matter in which, if industry is not to feel that its vital prosperity is going to depend to some extent on politics, some way will have to be found by which you can get a non-political and reasonable understanding, both on the question of standard and price. I think it is the intention of the Minister to create a Bureau of Standards. That would probably help, but I put this point forward because the view has been expressed to me by certain industrialists that they are not at all happy if they are placed in the position that a tariff, on which they have built up an industry, can be suddenly removed on the ground that their price was said to be a little higher or somewhat higher than that of the foreign producer or that their standard was not all that it might be.

It has to be remembered—and I think it is very often forgotten by many critics of tariffs—that there is something radically wrong, if you have a 30 per cent. tariff and the price of the protected article is 30 per cent. above that of the imported article. Every reasonable person will see that there is something wrong if the price of the home-produced article shows the same increase over the price of the imported article as the amount of the tariff. Under normal conditions, the tariff margin has to be higher than the legitimate price which might be charged for the article. For instance, in certain industries we were paying a higher standard of wages here than were being paid for similar industries in Britain and in that case it was legitimate that the price of the article should be somewhat higher here than in Great Britain. It could be, and it would be, good national policy to pay more for the article than the price in the neighbouring country if we were quite certain that that resulted in the creation of better labour or other conditions for Irish nationals. All that makes the judgment of prices exceedingly difficult.

It is well known that exporting countries under normal conditions often found it good policy to sell what might be regarded as more or less the normal output at a certain price, showing a profit, on the home market. By increasing their production, they were able to sell the same article at a smaller profit and at a slightly lower price to outside countries. By that means they were sometimes able to reduce the price of the article even on the home market. I am not now referring to what is commonly called "dumping", which is mainly due to over-production. I do not think there is very much danger of dumping for a good many years to come but it is perfectly possible that an industry would find it wise to increase its production by 25 per cent. and to sell that output on the export market at a somewhat lower price than that charged on the home market for the same article. That has been done abroad and I think it will be done again. It is quite clear that a 30 per cent. tariff should not mean a 30 per cent. differential in the price or an admission that there should be a 30 per cent. differential. My main object in speaking was to support the Bill. I am also in favour of the method adopted by which Orders of this kind will be submitted for confirmation within a reasonable time, but I feel it right to express the view that there is some uneasiness as to the policy enunciated by the Minister, that every industry must have a standard as to price and quality. There is, as I say, a good deal of uneasiness as to how that is going to be worked out.

Mr. Duffy

I find myself in agreement with the proposer of this Bill. It is a form of legislation with which we are familiar. It was designed in 1932 so that action might be taken in relation to particular industries which it was desired to foster and to seek legislative sanction afterwards for what the Government did. This is an example of the manner in which that process has been developed for the past ten or 15 years. I do not think it pertinent to this Bill to discuss the broad question which has been raised by Senator Douglas. It might be desirable at some stage to have a motion tabled here which would give an opportunity to this House to discuss the principle of protection and the manner in which it is applied in general terms. That opportunity is afforded in the Dáil on the occasion of the Estimate for the Minister's Department. No equivalent opportunity arises here unless we make one, and it might be considered desirable at some stage—I am sure the Minister himself would probably be glad of the opportunity—to inform the House generally as to the opinion of the Government under the new conditions regarding protection for various industries and the principle upon which that protection should be applied.

I think you will all agree that if there is to be an industry such as the one with which this Bill is concerned— the industry in Dungarvan—there must be protection of some kind in the initial stages at any rate. People who are invited to form an industry and who possibly borrow money for the purpose of equipping their factories, will not willingly accede to that invitation unless there is an assurance that they will be able to sell the products at a reasonable rate of profit in the early stages of the industry's life. That may not be possible and it is quite easy to see that in a case of this kind it would not be possible without some form of protection.

I gather from the Minister that the importation of these products amounts to something in the neighbourhood of 200 or 250 tons in the year. One could imagine, therefore, one importer importing 200 or 250 tons of these products in a single order if the goods were available. If they were not available the question of protection does not arise. If the goods are available on the foreign market it is quite conceivable that one importer could buy a three years' supply in one order and thus leave the new industry standing idle for three years. That sort of thing is inconceivable if there is to be industrial development at all.

I am uneasy about one or two matters and I want to illustrate them by referring to certain figures which have come out in this discussion. What I am uneasy about is the conception which manufacturers have of what is a reasonable rate of profit. I think some of them have the view—I do not think it refers to all, but to many cases—that the sky is the limit. The Minister will probably help us in this matter. I am not sure if there is not a very wide margin in the Dungarvan case. I have been trying to take the figures for what they are worth and I make this calculation: the number of persons employed is 75 and the wages are £225 per week. I take it that is the average weekly outlay on wages and that would amount to about £11,000 or £12,000 a year for wages. The value of the product amounts to £50,000 or £60,000 a year, and the raw material concerned, I gather, is waste. If the output is valued at £60,000 and wages cost £12,000 there is a margin of £48,000 to pay for raw materials and to provide profits. That seems to me to be a large figure but there may be a good explanation. It may be that the overhead costs are very high and that there are charges of various kinds which are not revealed in these figures. I draw attention to the matter, not for the purpose of criticising this industry about which I know nothing whatever, but merely to draw attention to the figures so that I might have an opportunity of indicating to the Minister that if there is to be protection for an industry which is being established here for the first time there must also be protection for the community to ensure that they are not going to be exploited.

Mr. Summerfield

I rise with pleasure to support this Bill, and I think the Minister selected a very happy example of what is by no means a unique case. There has been a considerable degree of uneasiness in the minds of small manufacturers and in the investors in these small industries as to what is to be the fate of some of these industries. They were established in all good faith with the blessing of the Minister, and it must be borne in mind that in the past few years they served a definite national need. During the past few years we did not hear anything much about these allegedly high profits and the allegedly bad conduct of certain manufacturers. It was a case of getting goods at any price, and frankly I deprecate the suggestion contained in the speech of Senator Duffy. He has taken as an example that out of a volume amounting to £60,000, you have a wage content of £12,000, and the raw material being waste, he asks where does the rest go. Did the Senator never hear that industrial waste costs money?

Mr. Duffy

I am aware of that. It is a question of the figures given.

Mr. Summerfield

Waste in one industry is a cost to another one. I am not going to go into this in detail, but I do want to stop the spread of this idea that waste from one particular industry does not mean a cost on another industry that uses it, that it costs the other industry nothing at all. That is far from being the fact. I know the Senator did not mean that but it is a meaning that might be read into what he has said.

Here we have the case of an industry supplying a very small need. £60,000 outlay every year is not a huge turnover in relation to the national income. I am somewhat uneasy myself, however, as to what will be the Minister's attitude now that we are apparently going to be confronted with a clamour to remove protection here. I can speak freely on this case because it does not affect any of my own particular activities. I am engaged in a trade where some of the people concerned with it did not want to have it brought in here at all. I was not one of them, and I am speaking of industry as a whole. Where we have small industries with relatively small plant capacity and a still untrained personnel, they are looking to the future with some degree of misgiving, and the Minister's speech will tend to reassure them.

There is, I am afraid, a tendency to overlook the fact that we are part of a community of only 3¼ million people, overwhelmingly agriculturally minded and that we are living right on the flank of a powerful industrial nation of 50 million people who are industrially minded and where they have a huge domestic market for the output of their industries. There also they have had over a long period the valuable raw materials in the shape of coal, iron and machine tools far more readily available to them than we have had.

Without making any apology for Irish manufactures the fact remains that there is a different position existing in the two countries and Irish industry is a very valuable part and parcel of our national economy and make-up. In recent years, the Minister for Industry and Commerce himself has done valuable work to foster the development of industry in its general sense. There are a number of industries where one would think there is barely room for one manufacturer in which there are actually three or four concerns engaged, and I think the best security the community can have for honest value is to see that there is sufficient competition within a particular industry so that each manufacturer will try to get the best share of the market he can.

This does not permit of a big debate, but I will refer to a statement which has been made at the Federation of Irish Manufacturers, a body with which I am very closely connected, and the statement is this: that the attitude of the Federation of Irish Manufacturers is simply this: it has never advocated protection to a greater degree than is necessary to protect the home manufacturer from unfair competition from outside.

That is a simple exposition of its policy and I think that the Minister's attitude is to be welcomed. I would like to say that I give my personal blessing to the Minister, and I sincerely hope that his attitude in this matter is a happy augury of the attitude he will take in the future in regard to particular industries which, perhaps, have a somewhat bigger influence in our national life than the industry we are considering to-day.

Mr. S. O'Donovan

It has been mentioned in this debate that these substances are mainly produced from waste. That is, of course, correct, but I would like to point out that the collection of waste is often more costly than the production of a product from raw materials. I think the whole difficulty is that of collection and the proper utilisation of these waste products, and I am sure the existence of this Waterford factory has been a very important asset to the country during the emergency. Two of these products are inedible and one of them is edible, which means it is a further refined product of glue and size, and I think I would be lacking in my duty if I did not point out to the Minister that the refined product should be put on the market in a suitable condition. I do not want for a moment to criticise any Irish product, but I want to say that during the emergency there was a gelatine or jelly put on the market about which there were some complaints. That product may have been imported or it may have been of native origin. I was glad to hear the Minister say that new machinery is to be installed and that all these products will be able to compare more than favourably with anything that is imported, but I want especially to stress this matter in connection with the production of gelatine. That is entirely used for human food. It is in sweets and it is used in the canning industry and in several of the processes in the preparation of food for human consumption. It is important, therefore, that the gelatine produced should be of the highest standard. I am glad to have an opportunity of calling attention to the fact that some of the gelatine produced during the war was not of the highest standard. I am not saying that it was an Irish production but I would like that the question of standards should be kept carefully in mind. In conclusion, I would like to say that the greater the quantity of waste products utilised in this manner in edible and inedible commodities, the better it will be for the farming community and those who produce the live animals.

Mr. Baxter

I would like to say that I never approach propositions like those embodied in this Bill without having certain misgivings about the decisions I have to take. I have felt like that right along the years since I came into the other House more than 20 years ago. This Bill, we may say, deals with only a trifling matter. This is only a very small industry giving employment with limited possibilities, but this proposition by the Minister embodies the whole principle of the application of tariffs. I am not going into a wide discussion of the application of that principle in our economic life, but certain references have been made by various speakers in the debate which necessitate a comment or two from someone with my point of view. This industry is in existence. It is true that it is there because it has been given protection, and, so far as I am concerned, perhaps I might be permitted to express my feelings to a certain extent, without, I hope, appearing to be divided against myself. There are very good reasons for such a reaction as mine to the Minister's proposition, because on the one hand, we find that the bulk of us approach such questions with the feeling that most of us belong to farming stock. More than half the total population of the country comes from farming stock, as Senator Summerfield reminded us, and that explains why we are so overwhelmingly agricultural-minded. In the main, our farming people are the people for whom industrial products are being provided. They are the consumers. I do not know whether sufficient account is taken of that fact by our industrialists and do not know if in the application of this policy of tariffs the capacity of the consuming public has been sufficiently taken into account.

Whatever the industrialists may have felt about the recent statements of the Minister for Industry and Commerce, when he indicated that industries in this country would have to undergo an efficiency test, I think the consuming public in this country welcomed the Minister's outlook. I think that statement goes for the consuming public in the town as well as in the country.

I do not know whether the Minister would be prepared to admit it or not, but I do not want to take anything from him with regard to his efforts for an increase in our industrial activity, and an increase in industrial efficiency, in so far as efforts are made to improve it, but I think a great deal of our industrial effort up to the present has been somewhat slap-dash. That may not be the exact word, but what I feel about industry is this: you must have a plan. It is the same in agriculture, or in education and in all of the other great activities of our national life. I do think that we have attempted an industrial revival without studying exactly the reactions of the introduction of new industries and the application of a tariff policy and the effect of both on our national life generally. Somehow, I feel that a great deal of our industrial activity has been partly political—based on a political conception. The Minister's views seem to me to indicate that he is getting back to a sounder basis, the basis from which we should have started originally. Perhaps, as a result of the Minister's principles, some industries may pass out. That would be a rather unhappy sight to see, but I am convinced that the aim of every Irish industrialist should be greater efficiency. I do not want to be misunderstood when I talk of efficiency in industry. I am not talking of industry only—our farmers should also be efficient, as efficient as they can be made, but industrialists, whether they are on the right or the left side of the House, should pursue efficiency in the interests of the nation. They may not be prepared to admit that they need to pursue efficiency, but I remember reading an article in the Economist two years ago. This article went on to argue how unwise it would be for the British people to imagine the employment of greater numbers in agriculture in the future than were there pre-war. They asked why a man should be employed in agriculture when for a portion, perhaps a third, of a day's labour in industry he could buy the products of a whole day's labour in agriculture. These were the facts in the past and they were true also in this country since the effort was made to industrialise it. I do not know how many days' labour you would have to give in agriculture here to buy a fraction of the daily output of the industrial workers. However, I am not going into that at any greater length here to-day, but, like Senator Duffy, I would welcome an opportunity for a discussion on it.

We cannot put industry on a sound basis until we get a clear conception of the purpose our industries are to serve, how the people are to work in them, how they are to be managed and what profits should be got out of them. That is the first approach we should make. Our people must organise their lives so as to enable a greater exchange of goods and services amongst our own people than we had in the past. That is absolutely essential and is very desirable from every point of view, to strengthen the nation and keep our people at home. That concept cannot be brought about by raising up within our own community two sections, one of which will give service enabling that section, for a portion of a day's labour, to buy the product of one or two days' labour in the other section. If our industrial development is to go ahead, it must go ahead on the basis that the people in industry must give service. The people managing it must be competent to manage and must be prepared to work hard; they must not wish to take too much out or distribute too much in profits. Also, the men working in that industry must be prepared to give good, honest labour. A labourer in a factory must not expect that the labourer on the farm will have to work two or three days to pay for what he produces in the factory in one day. The sooner our industrialists get clear on that point the better, as we cannot hope to build peace in our economic life until that principle is accepted by those who desire increased industrialisation.

This Bill is a relatively unimportant measure, but it asks this House to accept a principle which, of course, we have accepted here previously. We must be prepared to face the future, not only with courage but with realism and we must be prepared to look at it with the eyes and mind of truth. The building up of Irish industry can be brought about only by honest service and hard work. As I said on another measure the other day, the people here are able to give as good service as people in any other country and, in some ways, better service. If we set our minds to this task, if the industrialists are prepared to stretch themselves to the utmost and to get others to do the same, there will be success. There are certain disadvantages at present, as some raw materials are lacking, but we should be able to make up for that in other ways once we set our minds to the job.

If we try to build up an industry here on the basis that the people must pay a higher price for the products than they would have to pay for products of equal merit purchased outside this country, the people must come to the obvious conclusion that the people outside are better and have organised their lives and their production better, that they are superior to us in some way. If that occurs, the people will be naturally drawn and attracted to those countries. There is no easy, lazy way to build up our industries. The Minister has given many people here who would like to see Ireland industrially strong as well as agriculturally strong a new view about this matter. He has impressed on industrialists here that they must be efficient. His words probably have helped to make many people here who were unsympathetic to Irish industry look on it now with more friendly eyes.

Senator Summerfield enunciated a principle which, I think he said, represented the mind of the industrialist. I suggest to him to go back to his industrialists and get them to be more definite as to what exactly they mean when they say that they never ask for a tariff higher than is necessary to protect the home market against the outsider.

Mr. Summerfield

Unfair competition.

Mr. Baxter

Well, that is something which needs clarification, as I do not know at what height it would be necessary to fix a tariff which would be satisfactory from the industrialist's point of view. On the other hand, Senator Douglas raised considerations regarding this matter to which the Minister must attend also. I am not prepared to make any definite propositions about it, but I feel that the Minister must organise some plan so that the obligation will not be absolutely on him and his Department to determine whether a tariff should or should not be imposed, whether an industry is or is not efficient and decide certain other considerations which must enter into this whole question. The Minister must so organise that there will be a group of people with whom he can take counsel. One feels all along, as an agriculturist, that he is taking counsel with the industrialists and that the consumers have not got his ear at all. Something else will have to be devised in the future.

Finally, when I am asked to subscribe to the application of a tariff to any particular industry, while I am anxious to see industry developed here, I have always to ask myself what price the consumers will have to pay and whether it means that the application of the tariff will impose an obligation on the agricultural community to give three days' service in agriculture for the product of, perhaps, one day's service in industry.

Mr. P.J. O'Reilly

I would like to say, in the first place, that I fully agree with the policy indicated by the Minister. There must be some consideration given to the questions of efficiency and price, and unless such consideration is given, and given very soon, public opinion is going in a direction which will ultimately insist upon some sort of an inquiry being made into the whole position. Now, I am sure that Senator Summerfield, and many other men of his type, would like to carry on industries in such a way as to supply products at a reasonable price, but unless we detach ourselves completely, or suppose ourselves detached completely from mother earth, we cannot help realising that in many cases what might be described as fabulous profits are being made, and that these can only be made by charging what can only be regarded as fabulous prices. We had the excess profits tax according to which 75 per cent. of the profits went to the Government and 25 per cent. to the manufacturers. To my mind, that was a sort of encouragement to manufacturers to charge the highest possible price. One manufacturer actually told me that there was a tacit understanding that manufacturers would charge the highest possible price, and that, so far from any obstacle being put in their way, they were encouraged to do so. Now, there are several cases to my knowledge where manufacturers have erected very large buildings, and by a curious coincidence they are erecting these buildings by direct labour, and not by contract. In that way a lot of the fabulous profits that have been made during the emergency are, as it were, being ploughed in, and there is a certain amount of evasion of their responsibility with respect to income-tax on the part of these manufacturers. The rest of the community have to shoulder a burden, in the form of increased prices, in order that these things should come about. As I say, in the event of the present system being continued, the public will undoubtedly demand an inquiry. Inquiries have been made into many subjects, and I would suggest that an inquiry into the whole question of prices is one of the most urgent needs of the day.

My own sympathies are entirely with home manufacturers, but I certainly strongly protest against some of the prices that have been charged and that are being charged, and against some of the methods that are being adopted. I fully agree, therefore, with the Minister when he states that the question of efficiency, and the question of price, must be considered. The Minister is expected to do that, in virtue of his position on behalf of the general public. I would say that, in doing so, he is ultimately working on behalf of the manufacturers themselves, because the whole question of tariffs and protection will, sooner or later, have to be reviewed. If the information which will then become available shows that an unfair advantage is being taken of the tariffs and protection given, it is the manufacturers themselves who will suffer for it. I should also like to say that I agree fully with the remarks made by Senator Duffy and, to a large extent, with those made by Senator Baxter regarding the present position.

As regards the Bill itself, it has been stated that the industry is a small one and in its infancy. So far as I am concerned, I am not going to oppose it in the slightest degree. There was some talk at an earlier stage about the advantage of a motion being put down in the Seanad in order that the general question of tariffs should be discussed, but without that motion an opportunity has rather unexpectedly been given for this discussion. If members had known that such an opportunity would be available, they would have come here to-day prepared with facts which would make the discussion, perhaps, a still more useful one.

Mr. Honan

I intend to support this Bill and every other Bill of its kind. I, like most other members of the House, have been a supporter of Irish industries and of the Irish revival movement. I know well that the Minister will always try to relate the price of the home manufactured article to the price at which it can be procured from any other source. I do not mind paying a greater price, relatively, for the home manufactured article if the money is kept at home and employment is given in the country; but, sometimes, the discrepancy is so much that you doubt if the public are getting value for their money. I had occasion some time ago to enquire for a certain article, shall we say glassware, in a southern city. In one house, the price for this article was 20/- per dozen. In another house, which was approximately 50 yards away, the same article of glassware, or so it appeared to the untrained eye, was 9/- a dozen, while 100 yards further on, a similar article was selling at 6/- a dozen. Well, somebody must be robbing somebody in that particular case, because for the same article you had the discrepancy in price of 20/-, 9/- and 6/-. The discrepancy was so much that one felt there was something wrong. I am quite prepared at all times to support all Irish industries and to give a reasonable increase in price for the home manufactured article in consideration, as I have said, of the fact that the money is kept at home, and that employment is provided for our people here. But, as has been suggested by my friend Senator O'Reilly and by other members of the House, it is the duty of the Minister to see that the price charged for the home manufactured article is related, in a reasonable way, to the price at which the same article can be procured from any other source, and that the margin of profit allowed is such that nobody can make extortionate profits out of the people as a whole.

Mr. O'Dea

I think Senator Honan has proved by his statement that it was not the manufacturer who charged the higher price in the case to which he referred, because I presume the man who sold the article at 6/- per dozen got it from the same place as the person who charged 9/- per dozen, or the person who charged 20/- per dozen. If the Senator was able to tell us that one man got the article from a manufacturer elsewhere than in Ireland, and if he could also tell us the price which the Irish manufacturer got for the article, then we would know if the latter was charging too much.

I know that the Minister takes a particular interest in the cost of manufacture, and that he relates the price of Irish goods not so much to the cost of English goods but rather to what would be a reasonable profit for the Irish manufacturer to get. I know that he will not allow him any more, whether it is more or less, than the cost of the goods manufactured elsewhere. I know that he also keeps a very strict eye on manufacturers and takes very good care that they will not make the huge profits about which we hear. If prices are high, it is not the fault of the manufacturer; it is the fault of the wholesaler or retailer and they are the people who should be controlled.

Mr. Quirke

I should like to join with those who congratulated the Minister on the Bill. Needless to say, I support the Bill. I have the greatest sympathy in the world with some of the speakers who, because of their attitude towards Irish industry in the past, felt that, while they must throw bouquets with one hand, they must take them back with the other hand. I am slightly hard of hearing and I found it somewhat difficult to follow Senator O'Reilly's arguments. His suggestion, so far as I could follow it, was that Irish industrialists, because of E.P.D. or the demands being made upon them by the Revenue Commissioners, were working overtime not only to pay the Revenue Commissioners but to increase their prices. I do not think that that makes sense. I can assure Senator O'Reilly that nothing of the kind could possibly happen. The two things just do not tot up.

To listen to Senator Baxter, one would think that he had just come back from an extended tour of the world, that he was caught out at the beginning of the war and had only succeeded in reaching home now. He delivered a lecture to Irish industrialists and told them that they should avail of every opportunity to use the raw materials available in the country and the waste materials of other industries—as if that had not been consistently done over the years. It might be no harm to keep on reminding industrialists that they should continue this practice but what I object to is the Senator's suggestion that, so far, our industrial effort has been slap-dash.

I think that that is a definite reflection on the people who put their money, brains and energy into the development of Irish industry in very difficult years. It is also a reflection on our Irish workers who, with very little experience and practically no factory tradition, threw themselves heart and soul into this new development. It is no exaggeration to say that the results achieved have been absolutely extraordinary. Not alone have our efforts not been slap-dash but they have surprised even the greatest experts who have come here from outside countries. Rather than criticise the people who have achieved these results, we should take our hats off and thank them for having saved us during very difficult years. It is, I suppose, quite to be expected that we should keep on complaining. Even during the war, it was quite usual to find people expressing their opinions about this and that article produced in the country. I believe that criticism is very healthy, but unjust criticism can be very harmful. Lest Senator Baxter should think that I was directing all my attention to the side of the House which I happen to be facing at the moment, I should like to make a slight reference to a statement made by Senator O'Donovan. Senator O'Donovan referred to the products of the Dungarvan factory and directed the attention of the Minister to the importance of ensuring that the products were all right. He said that he heard some complaints about the products during the war.

Mr. Baxter

No, he did not.

Mr. Quirke

I understood that that was what he said. In any event, we had complaints about everything during the war. We had people complaining about the wheat produced here and suggesting that it was impossible to make bread out of it, knowing, at the same time, that only a few loaves were between us and starvation. That being over, we should look back and, rather than criticise people who threw themselves heart and soul into the work, we should compliment them on having achieved wonderful results. I should like to know from Senator Baxter what he meant by saying that the whole background to this industrial effort was political——

Mr. Baxter

The Senator is too innocent.

Mr. Quirke

If he means that those industries which saved us during the war were the suggestion of the Fianna Fáil Party and were part of Fianna Fáil policy, I suppose that is political. But there is nothing wrong in it, and I should like to be amongst the people who are to be condemned for having introduced it. I think that the Minister is to be complimented on the Bill and I have the greatest sympathy in the world with those who, because of their political attitude in the past, must now come along and throw an odd spanner into the works, though they have not the slightest hope that the spanner will have the desired effect.

Mr. Lemass

Senator Douglas referred to a number of industries established during the course of the war for the purpose of making goods which were previously imported but could not be obtained during the war. There are a number of such concerns and they were encouraged, and assisted in getting going, to meet deficiencies in our supplies. They will require special help and assistance at this stage, when they are adapting themselves to normal conditions and endeavouring to get proper plant and equipment to substitute the make-shift equipment they have been using heretofore. Those circumstances do not completely apply to the case of the Dungarvan company affected by this Bill. That company was planned before the war. If it did not get into production until the war had begun, many of the preliminary steps to that end had been taken. It had difficulty in obtaining the full equipment required and, only latterly, did it succeed in getting an order for that equipment accepted in the United States.

The statement I made as to the standards to which Irish industry will be expected to conform did not refer to the price at which goods could be imported here. I think that it would be wrong to apply that standard. If we were to require manufacturers here to make and sell their products at prices as low as similar products could be imported, we should be asking them to compete with whatever exporting country had the lowest production cost. We should also be putting them into competition on an unfair basis, because, as Senator Douglas pointed out, it would be normal practice for any firm engaged in industry to recover the whole of its overhead expenses on its home trade and sell abroad at the factory cost of production. That would not be "dumping" in the ordinary sense; it would be ordinary and normal commercial practice. The statement I made as to the standards by which Irish manufacture would be judged referred to the price at which similar products were sold in Great Britain. It will be appreciated that is a somewhat different standard. I do not say that, in all circumstances, British standards will necessarily be the most efficient, but they are, at any rate, easily known to us and it is on the basis of comparison with British prices that the efficiency of Irish industry, will be judged by our own people. If any industry can produce and sell its goods here at prices equivalent to those at which similar goods are produced and sold in Great Britain, then there is reasonable ground to assume that it is working on an efficient basis.

It may be that exceptional circumstances will prevail in Britain or here to invalidate that comparison in individual cases but the Government would regard it as necessary to investigate the circumstances of the industry where prices over any period of time were higher than the prices of corresponding goods in the neighbouring country.

Senator Douglas referred to the fact that we have no means of testing the quality of goods offered for sale. That is true but I think we may have these means at our disposal in the near future. Reference was made by him to the Institute of Research and Standards which it is proposed to establish under legislation to be introduced. One of the functions of that institute, as we now conceive them, will be to take any article offered for sale in commerce and subject it to an analytical examination and publish the result of the analysis, if it considers it necessary to do so in the public interest. It will certainly be equipped to carry out any tests of quality which we require. The reference to standards in the title of that body does not, however, relate to standards of quality of industrial products. It is contemplated that its functions will be to prepare and publish standard specifications of industrial commodities which will facilitate commercial contracts and permit of the public protecting themselves in the matter of the quality of the products which they purchase. If there has to be an investigation of the efficiency of an industry it must be done by another organisation. I informed the Dáil last week that the establishment of an organisation for that purpose is intended. I stated that the Prices Commission which was established under the Control of Prices Act operated before the war, will have its functions extended. The Prices Commission was not really empowered under the pre-war legislation to investigate prices. It was empowered to investigate profits. I think its power should extend to the costs of production which determine prices and that it should have special obligations and powers to examine the efficiency with which an industry is operated in so far as its efficiency reflects on the quality and the price of the goods produced.

I certainly agree that it is not desirable that an industry should have to face the possibility of tariffs being removed arbitrarily and suddenly. I think before there is any removal of customs duties or any substantial change in the level of such duties, there should be an examination at some stage by some body assisted by expert advisers and a report to the Government. When I indicated in public speeches outside and in the Dáil that the maintenance of protection for industry would be conditional on the maintenance of efficiency in an industry and on the price at which its goods would be sold, I was not holding out a threat of an arbitrary decision taken by the Minister and implemented without further notice. It is necessary that I should state the policy of the Government but I cannot attempt to forecast the policy of the next Government. I indicated that the present Government was determined to utilise the powers it possesses to enforce the maximum degree of efficiency in industry. We contemplate, however, that the use of these powers should follow on an inquiry by a reorganised Prices Commission which would explore fully the circumstances of each industry and which would endeavour by discussion and advice to secure improvement before making an adverse report which would justify action by the Government. That legislation will come before the Seanad at some stage in the near future. Perhaps a general discussion upon industrial policy and the application of protection to industry, which some Senators appeared to wish, could best take place on the Second Reading of that Bill. It would, I think, be more satisfactory to have such a debate related to the actual proposals of the Government than to a general motion.

Senator Duffy, I think, was leading himself into difficulties in making a comparison between the total sale price of the products of the company and its wages bill. The difference between these figures covers much more than the profits to the proprietors of the company. They cover all the costs of manufacture, excluding labour costs. In this particular case, they would cover the costs of the collection and the preservation of the raw material, which, although described as waste, is a valuable industrial product. It is waste in the sense that the material utilised represents portion of the hide of the beast which cannot be usefully manipulated in a tannery. The fleshings and the trimmings of the hide are subjected to a number of boiling processes, each of which produces a different grade of product. The cost of the materials, the cost of the fuel, which in the case of this industry would be fairly considerable, the wear and tear of the plant, would all represent working costs. Over and above these working costs the difference between the wages bill and the total amount realised on sales would also have to cover rents, rates and taxes, selling expenses, costs of management and other overhead charges.

I should like to say, however, that in the case of an enterprise of this sort which is carried on by one concern within the country, a reasonable standard of profit must be maintained, if protection is to be continued. In competitive industry, where the total productive capacity of existing, concerns is in excess of the requirements of the market, where no difficulties limiting output apply and where there is bona fide competition between the different undertakings, I would regard capacity to make profit as proof of efficiency. In the case of an industry not protected by tariff at all and selling in competition with other producers, there would be no question but that capacity to make profits would be proof of efficiency. Where there is only one concern, where there are circumstances such as effectively eliminated competition, then the concern must be prepared to work to reasonable profits. If the profits prove to be excessive, the tariff protection must be revised. If the industry can operate without tariff protection, then of course it should do so and in such circumstances there would be no suggestion that the Government should seek to limit its profits in any arbitrary manner.

The question of what is a reasonable profit for an industry is not easy to answer. It varies widely according to the nature of the industry and I do not think that we should attempt to define reasonable profits except in the case of concerns which are either in law or in fact operating on a monopoly basis or something approaching to it. In their case, there must be a clear and precise understanding as to the reasonableness of the profit to be earned. I can assure Senator O'Reilly that there is no foundation for the suggestion that manufacturers were encouraged to make high profits so that the Minister for Finance could get high taxes from them.

Mr. Baxter

They do not have to be encouraged.

Mr. Lemass

At any rate, I can assure him that the Department of Industry and Commerce, exercising its emergency prices control, worked on entirely different lines. We never considered the interests of the Minister for Finance as a tax-gatherer in regulating and limiting the profits made by manufacturers. The articles of glassware to which Senator Honan refers must be either electric light bulbs, bottles or glasses. There is a considerable difference between each of these products.

Mr. Honan

They were glasses.

Mr. Lemass

In that case there is no tariff. In fact that issue was debated in the Dáil yesterday and in so far as they are drinking glasses there is no tariff in operation, and consequently the price at which the articles were offered for sale is not due to any restriction on imports. It is possible that glasses offered for sale by different traders in Cork were the product of different manufacturers in different countries. At the present time supplies are coming in irregular deliveries and from any country from which they can be obtained, but any variations in price would not be due to any limitation on imports.

I do not think there is any other point to which I want to refer. Some statements made by Senators were of a general character relating to the whole question of industrial development and the means to promote it. I think it is true to say that in present circumstances—post-war—the differences of opinion that were so violently contested before in the Dáil and Seanad do not really operate at all. In the years before the war, while everybody professed to desire industrial development the main issue between the Parties and the members of the Oireachtas concerned the need for protection at the high rate or in the drastic form which was applied in those years. I think there was need for high protection and drastic restrictions on imports in the circumstances then prevailing, but these circumstances do not apply now, and at the present time it is a fact worth noting that many of the proposals for new industrial activities here which are being submitted to the Department of Industry and Commerce are not associated with any request for protection at all, except against the future possibility of unfair trading activities, that is to say, the sale of goods here at prices not related to the economic cost of production or below the price at which they are ordinarily sold in the countries of origin. Of course, many concerns cannot hope to establish themselves here without some assistance in their initial stages at least. There will be many persons with trading interests anxious to maintain their position in business who will be expediting imports from abroad and who can delay for a considerable time by reason of such imports the commencement of manufacturing activities here on an adequate scale.

This is an industry of an exceptional character. The total quantity of goods produced is small by weight. The market for all these commodities is restricted to about 500 tons weight. The cost of the commodity is very high. The prices range somewhere between £100 and £400 per ton, and it will be obvious, as Senator Duffy pointed out, that one ship-load of these commodities could ensure the existence here of a year's supply or more and it would make it very difficult for a new concern to establish itself on the market. It is, therefore, necessary in such cases to maintain some restriction on imports almost irrespective of the manufacturing circumstances here. That would not apply in other cases, but in relation to the majority of new industrial propositions it will be necessary to give the promoters that security in the initial stages which a restriction on imports and a reservation of the home market for them does in fact represent. It would be unreasonable to expect people to invest substantial sums in new buildings, equipment and in the general organisation of new undertakings without giving them the assurance of a fair start even though we may say that the maintenance of that protection is subject to their manufacturing efficiently and economically and that at some other date it may be decided that they can carry on without protection or with a much lower rate of protection. As a general principle the first tariff should be the highest tariff, and the tendency should be for the protection required to diminish and for customs duties to be modified. I think these are the only comments I require to make at this stage.

Question put and agreed to.

Agreed to take remaining stages now.

Bill passed through Committee without recommendation; received for final consideration; and passed.

Ordered: That the Bill be returned to the Dáil.