Agricultural Credit Bill, 1946—Second Stage.

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

The Agricultural Credit Corporation was established following the passing of the Agricultural Credit Act, 1927, which implemented certain recommendations of the Banking Commission of 1926. The capital of the corporation was fixed at £500,000 and dividends at the rate of 5 per cent. per annum on the paid-up capital were guaranteed by the State. In addition the corporation was empowered to borrow money by issuing certificates of charge, that is a form of security backed by first mortgages on land and guaranteed as to principal and interest by the Minister for Finance, to an amount not exceeding £7,500,000, but subject to a maximum issue in any one year of £1,000,000. These provisions in relation to certificates of charge, as extended by the Act of 1929, are still in operation and are not altered by the proposals in the present Bill.

The corporation had only commenced to operate when it was found that the main security which farmers could offer was first mortgages on land. As a very large number of the farms in the country have been registered under the Registration of Title Act, 1891, subject to equities, many prospective borrowers could not show title to their lands without incurring undue expense and, accordingly, the Agricultural Credit Act of 1928, a short enactment, was passed, which solved this difficulty in the main by giving the corporation the right to register a priority charge for a principal sum not exceeding £400 against a farm without requiring the discharge by the borrower of the note as to equities. The provisions of the 1928 Act in this respect are in a slightly extended form continued by Chapter II of Part IV of the present Bill.

The Act of 1929 made certain changes in the capital structure of the corporation. The nominal capital was increased to £1,000,000 in 1,000,000 shares of £1 each, which are at present paid up to the extent of 10/- only, and are held in the manner described in the third paragraph of the White Paper which has been issued in connection with the present Bill. The balance of 10/- per share is payable only upon a winding-up. It is proposed to replace the present capital by a capital of £300,000, consisting of 600,000 shares of 10/- each, fully paid up, and all in the ownership of the Minister for Finance.

These provisions relating to reorganisation of capital will bring to an end a situation which is out of keeping with present-day monetary conditions, whereby a Government guaranteed security is yielding 5 per cent. interest to holders. The original provisions of the 1927 Act relating to capital were early seen to be unsuitable, as it was recognised that the corporation, set up without free resources, could not make loans at a reasonable interest rate and at the same time carry out the obligation imposed on it by the Act of paying 5 per cent. on all its capital. The only relief afforded to the corporation was that if its profits were insufficient to pay the 5 per cent. dividend, it could borrow the necessary moneys from the Exchequer at such rates of interest as might be fixed by the Minister for Finance. The 1929 Act tempered the position to some extent, by providing that any money obtained by the corporation from the Government for the purpose of paying dividends should rank not as a debt owing by the corporation to the State, but as a bonus right on the shares owned by the State. That Act also divided the shares into "A" and "B" shares, all the "B" shares and 109, 237 of the "A" shares being held by the State. By this device the Minister for Finance became, as it were, a deferred shareholder, the "A" shares being given priority of claim to dividend over the "B" shares.

This arrangement worked in accordance with anticipations for a few years but farmers' incomes were subsequently so reduced by the depression that for the time being at any rate, many borrowers were unable to meet their commitments to the corporation. Faced as it was with a heavy potential loss, the corporation decided to build up a substantial bad debts reserve. About 1936, it began by degrees to make contributions, small at first and gradually increasing, towards the statutory dividends on the "A" shares which had in the meantime been paid from the Exchequer. By 1942, the financial position of the corporation had so improved that it was able to pay the full 5 per cent. dividend on its "A" shares, other than those held by the State, having in the meantime built up adequate reserves.

The corporation had carried a further burden during these years in its mortgage bonds, of which it had issued £500,000 at 5 per cent. interest. Under the terms of issue, £250,000 of these were payable on 1st November, 1944, and the remainder not earlier than 1st May, 1946. Arrangements were made in 1942 to provide funds to meet the 5 per cent. mortgage bonds in anticipation of their maturity. Accordingly, £500,000 3 per cent. mortgage stock was issued and the proceeds temporarily invested, until the 5 per cent. bonds should mature, when they were duly paid off.

By 1942, it had become clear that the corporation's interest rate on loans was high by comparison with current interest rates and the directors decided to reduce the rate to 4½ per cent. As this reduction applied to existing as well as future loans, it involved a considerable sacrifice of revenue — about £10,000 a year — by the corporation. The 5 per cent. bonds having been paid off, however, the corporation is now in a reasonably good profit-earning position and should in the future be better able to fill a useful rôle in supplying farmers' long-term credit needs.

The proposed reduction in its paid-up share capital from £500,000 to £300,000 will simplify the capital structure and strengthen rather than weaken the corporation because it cannot at present invest its surplus resources at rates which will give a higher return than about 3 per cent. while the dividend on the "A" shares is 5 per cent. The savings resulting from this capital reorganisation will be at least £4,000 a year. To this can be added also the saving which will result from the reduction in the number of directors, at present seven, to a maximum of five. These savings will be a material advantage to this company, having regard to the level of its net profits which for the year to the 31st October, 1946, amounted to £16,222 only, when interest on the mortgage bonds had been met.

To strengthen the position further, there are the provisions of Section 13 which enable the Minister for Finance to advance to the corporation, from moneys voted by the Oireachtas for the purpose, up to £250,000 at a rate of interest not less than the rate on advances from the Central Fund to the Local Loans Fund, at present 2½ per cent., and also enable the corporation to borrow from credit institutions up to £250,000. The first of these provisions is designed to tide the corporation over a period of general financial difficulty when additional resources which might be required for the continuance of lending operations might not readily be obtainable otherwise.

The reorganisation of the corporation's share capital involves no effective reduction in its lending resources in view of the extent of its power to raise loan capital. Only £500,000 of mortgage bonds are at present in issue out of the statutory maximum of £7,500,000 available for creation, and it is unlikely that the demand for new loans will so seriously exceed repayments of loans already made as to require in the coming years the issue of more than part of the available balance of £7,000,000. At present many farmers have money in bank which they are unable to employ productively on their farms partly because of the acute shortage of materials.

The lending powers of the corporation are being widened because it has been found that the existing limitations are too restrictive. For example, the corporation cannot at present make a loan to a co-operative society which even as an incidental part of its business sells goods retail except these goods are produced by the society itself or by its members or are requisites of agricultural production or marketing. Many co-operative societies which are clearly agricultural in character cannot at present obtain loans from the corporation because they sell ordinary household requisites produced by industrial concerns even though such sales may form only a very small portion of their retail business and an infinitesimal part of their total business. It is now proposed to exclude only co-operative societies which, in the opinion of the directors of the corporation, engage in retail sales of nonagricultural goods as a substantial part of their business.

In general, it is proposed that loans may be made to the following:—

(a) individuals who are farmers; (b) bodies corporate which are farmers in the sense defined in the Bill, and (c) bodies corporate which have as their principal business the supplying of agricultural goods or services to farmers.

In Section 3 of the Bill, a "farmer" is defined as any person who carries on some form of agriculture or any body corporate which as its principal business carries on some form of agriculture. For this purpose the term "agriculture" is defined in the Bill as including, in addition to the activities covered by the definition in the 1927 Act under which the corporation is at present working, the processing, manufacture, preparation or completion for sale of any farm produce. Loans may accordingly be made to qualified persons for all purposes which, in the opinion of the directors, relate to agriculture.

These wide powers are qualified by certain restrictions and prohibitions contained in the Bill, of which the most important are:— (1) the limit of £10,000 in the amount of the maximum loan which the corporation may make to any person with the exception of a co-operative society; (2) that power is not given to make loans for the purchase of land, save for the purpose of realising a security held by the corporation, and (3) that the corporation cannot alter the lending powers as expressed in its memorandum and articles of association in accordance with the terms of the Bill without the consent of the Minister for Finance and the Minister for Agriculture.

Part III of the Bill deals with chattel mortgages, which were first introduced into this country by the Act of 1927. It is proposed to establish a system which will enable chattel mortgages to be taken by the corporation or by a bank from any borrower in the ordinary course of business, and such mortgages may relate to specific stock or to the floating stock from time to time on the borrower's land. The proposed system will have the effect of restricting severely the manner in which the owner of stock the subject of a specific chattel mortgage may deal with it without the consent of the mortgagee. It is hoped that these provisions will have the result of enabling farmers to borrow from the corporation and the banks by means of chattel mortgages to a greater extent than has been possible up to the present.

Part IV of the Bill codifies and amends the law relating to charges on land in favour of the corporation. The ten sections numbered 37 to 46 in Chapters I, II and III correspond to the provisions of the 1928 Act and Part III of the 1929 Act. To remove doubts, it is made clear by this Bill that the priority of corporation charges on land over the rights of equitable or puisne claimants covers not only principal but extends also to interest and to any expenses incurred in realising the security for the loan. The power given to an executor or administrator, by the Act of 1929, to charge lands with repayment of a loan not exceeding £400 obtained from the corporation for any purpose for which the corporation is entitled to make advances, is strengthened and clarified. The corporation is also being given statutory power to sell and convey lands registered under the Registration of Title Act, 1891, without discharging the note as to equities.

Part V deals with miscellaneous matters. Section 53 re-enacts Section 26 of the 1929 Act which provided that debts due to the corporation might be proved in the Circuit Court by sealed certificate, instead of by sworn affidavit. This provision is necessary in view of Circuit Court Rules made subsequent to the Act of 1929. Section 54 abrogates the powers of the Commissioners of Public Works to make loans for farm improvements under certain existing enactments. Section 55 was inserted on the Committee Stage in Dáil Éireann in implementation of the general policy regarding Irish in relation to appointments to State sponsored companies and organisations.

The principles on which the Bill has been drafted were not subjected to criticism in Dáil Éireann and on the whole its proposals were favourably received by Deputies of all Parties in that House.

It was possible for me to meet by amendments on the Report Stage a number of the points made by Deputies during the discussion in Committee. The paragraphs of Section 24 which gave the corporation and the banks the right to inspect chattel mortgage registers were criticised severely by several Deputies on the grounds that they militated against the secrecy of the registers and, although these provisions merely re-enacted existing law under the 1927 and 1929 Acts, an amendment was submitted in the name of the Minister for Finance on the Report Stage providing that the corporation or a bank cannot in future inspect a register of chattel mortgages directly but must do so through the county registrar. In addition, any request to the county registrar for information contained in the chattel mortgage register for his area must be made under seal, and must be specific and not general.

Section 28, under which it would have been possible — even though unlikely to occur — for the corporation or a bank to require immediate repayment of the full amount due on a floating chattel mortgage when the mortgagor sold any of the stock off his lands, was amended so that the obligation of repayment would not arise if the mortgagor within one month restored the value of the stock on the land to the value of the stock at the date on which the mortgage was made.

The provisions of Section 29 regarding the service of notices for the purpose of converting floating chattel mortgages into specific chattel mortgages were amended in the Dáil so as to provide that such notices must be delivered to the mortgagor or left at his residence or place of business with a member of his family or his agent, clerk or servant.

I might say a word about Sections 26 and 53 in regard to which there has been some misconception. These provisions are designed to mitigate legal expenses recoverable from defaulters and do not involve any new principle not enshrined in earlier legislation. Section 53 merely re-enacts Section 26 of the 1929 Act. The section does not deprive any person sued by the corporation of the protection which the law affords him against an unfounded claim. A certificate under the section is prima facie proof only and if a defence is entered and the correctness of the corporation's claim challenged, the corporation would find it necessary to prove the claim in the normal way.

The provisions of Section 26 of the Bill replace the provisions of Section 26 of the 1927 Act under which the mortgages has the right to seize the stock when any moneys due under a specific chattel mortgage are outstanding for more than seven days. Seizure and realisation will in future be carried out by the county registrar acting on the direction of the lending body and the period that moneys may be outstanding is extended to 14 days. I am quite satisfied that unless a lender of money on foot of a specific chattel is in a position to realise his security promptly when the need arises, there is no future at all for this means of credit for farmers.

Before concluding, the members of the House may desire that I should give some facts in relation to the financial position of the corporation and the service which it has rendered to farmers. The report and accounts for the year ended on the 31st October, 1946, show that up to that date it had made, since the commencement of business, 26,403 loans aggregating £2,716,000. The average loan was thus £103. The amount of loans outstanding at that date was £844,000, and the other main asset of the corporation consisted of trustee securities to the value of £328,000, the total of its assets being £1,181,000. The corporation's main liabilities consisted of £500,000 Three Per Cent. State-guaranteed Mortgage Stock and the paid-up capital of £500,000. Sundry creditors stood at just over £125,000, the great bulk of which consisted of reserves, including a reserve for bad debts of £110,000, approximately. This substantial reserve has been built up to the extent of almost one-half by the recovery in recent years of sums deemed irrecoverable during the period of agricultural economic depression. There was a bank overdraft of about £47,000. The total of these and other minor liabilities was £1,181,000.

Attention may be directed to the provisions of Section 19 of the Bill, which ensure that full annual statements of the financial and other aspects of the corporation's business will in future be presented to the Oireachtas.

It is proposed in this Bill to give the corporation a more flexible instrument than has hitherto been in their possession, so that they may be enabled to give financial assistance to farmers in need of it without imposing too great a burden on them; and also to include among its beneficiaries many classes of small holders who in the past were precluded from consideration on purely technical grounds.

I cannot say that this Bill, as the Parliamentary Secretary presents it, demands from me any considerable criticism. One might say that, to a large extent, it is a machinery Bill and an addition, in some respects, to existing legislation. However, there are certain radical changes. It is definitely a change of significance that private interests will cease to have any function in the corporation and that it will become a purely State institution on the passing of this measure. I shall not comment on that; I shall leave that to some of my colleagues. This measure is, in itself, very disappointing. It is even more disappointing inasmuch as the Parliamentary Secretary to the Minister for Finance came to both Houses of the Oireachtas with the measure. I have no desire that the Parliamentary Secretary should take any personal offence at what I am going to say but I fail completely to understand why a Bill dealing with agricultural credit should be handled in the Dáil and in the Seanad by the Parliamentary Secretary to the Minister for Finance when the Minister himself was present at the introduction of the measure in the other House and when, presumably, both the Minister for Finance and the Minister for Agriculture could be available here to-day.

So far as I know, the Parliamentary Secretary's duties in the past did not bring him into any very intimate contact with the problems of agricultural credit or the needs of the farmers. This was not the method adopted when the original Bill was introduced and I suggest that, if the Government were serious in facing up to this problem of agricultural credit, either the Minister for Finance or the Minister for Agriculture would be handling this Bill. The Parliamentary Secretary is given the task and I suggest that that is done because either of the Ministers would be expected to answer questions as to what was the Government's policy on agricultural credit. Because there is no policy to fit into the times and circumstances through which we are passing and which we shall have to face in the future, the Parliamentary Secretary is given this, perhaps to him, unwelcome task. The Government's approach to this vast problem can be only depressing to any of us who appreciates the necessity of credit for farmers both now and in the future.

I shall expect the Parliamentary Secretary to have something to say when replying on this question. Let us get some insight into the Government mind. Are we still living in the year 1927, when the original Bill was passed? Have any changes taken place in the world or in this country since then? If so, are they visible to the Parliamentary Secretary's colleagues? Are they doing anything to provide us with the instruments which we need to face the future?

When talking about agricultural credit, we have to ask ourselves what is the purpose of providing credit for agriculture. Perhaps we should, firstly, ask ourselves what is the purpose of agriculture at all. In the opening paragraph of the second minority report on agricultural policy by the committee of inquiry, we have briefly put, in my judgment, the purpose agricultural policy should be directed towards—"the maximum and most economic utilisation of the land in the interests of the farmer and of the community as a whole."

Any of us could accept that. If policy is to be directed towards the maximum economic utilisation of the land, the land must be properly equipped to have it fully utilised.

Senator Summerfield is not in the House, but if he were speaking on behalf of industry he would be definite and explicit that no industrial project in this country or anywhere else can be a success if it is under-capitalised. There is a minimum amount of capital requisite for economic production and if that is not available you cannot hope to have economic production. Has any thought been given to that by the Government? Is there any policy in regard to it? We have no sign of that in the Bill and no evidence of it from the Parliamentary Secretary. His Minister was in the House when this measure was debated. Why did he not speak?

In a very able analysis of the position by Deputy Hughes, which I would advise Senators to read if they are interested in the comparisons between here and elsewhere, the Deputy threw out a challenge, which no one saw fit to answer. It may be said that the Parliamentary Secretary answered it, but we will deal with that later.

Do farmers need credit? Where are we to get the answer? In the Report of the Commission of Inquiry on PostWar Agricultural Policy, set up by the Government, we find the views of specialists of considerable ability, who gave some years to the task of providing the Government with reports on which to work. What have they to say on this? Some Senators not directly interested in agriculture may be glad to get a glimpse of their viewpoint on this subject. There is a Majority Report, one of the signatories to which is the chairman of the Agricultural Credit Corporation himself. Briefly, they discuss capital and credit and their view is that while these can be met by existing institutions the rate at which long-term credit can be obtained is important. They say:

"We recommend that interest rates should be as low as possible and that every facility should be afforded to competent and enterprising farmers to obtain reasonable credit for permanent improvements calculated to increase production."

They continue:

"We also recommend that the possible requirements of our agriculture for borrowed capital should be borne in mind before large-scale commitments are made involving the expenditure of capital on non-agricultural projects."

That is given on page 89, paragraphs 302 and 303.

Is the Senator sure of that? I think it is paragraph 175 on page 58.

It is paragraph 303 in my copy.

Yes. It is in both places.

In the first Minority Report, given on page 151, they say:—

"Credit.—It is recommended that long-term loans on favourable terms be made available to farmers for the remodelling of old and the erection of new dwellings and farm buildings as well as for land reclamation and other farm improvements of a permanent character. All such loans should become a claim on the farm rather than on the borrower. We would particularly emphasise the necessity for a low rate of interest on loans in respect of both long and short-term borrowing in view of the poor returns from capital invested in land as pointed out in Parts IV and V of this report."

Then we go on to the Second Minority Report and we find reference to the question of credit. On page 207, the conclusion is reached, briefly, that to get the production outlined, additional capital of something of the order of £200,000,000 is necessary. There you have three views which were submitted to the Government more than 12 months ago. Senator Johnston, who was a member of the committee, can tell us just how long ago it was. On some portions of the report, White Papers have been issued already — on dairying, on the veterinary situation, on cattle breeding schemes and on poultry production. But on credit there has been no White Paper and no evidence of policy. We are doing practically the same thing as in 1927.

The beginning of everything is the money, the capital the farmers need to start the wheels turning. Unless the Government appreciates that, there is no use in getting commissions or committees of inquiry to plan agricultural policies for us. There is no use in the Government issuing White Papers about their policy unless the mechanism is provided to enable the farmers to operate the policy. The Parliamentary Secretary's own view appears to be that we are doing quite well and are better off than other countries — judging by something he said in the House the other day. I suggest that one small country with which comparison can be made is Denmark. According to Dr. Beddy, the amount of capital invested in agriculture in Denmark is £179,000,000. We are supposed to have £14,500,000 invested here. Denmark is two-thirds the size of Ireland and the national income is £66,500,000, or 45 per cent more than ours. In Denmark the net output per acre in 1937 was £10, while the net output here was £4

Is that due to inadequate capital?

We can only make our own deductions from the facts as they are. Some may make one deduction from them and others may make another. At any rate, we can only assess the value of the material presented, and then take our decision on policy. The net output per worker in Denmark in 1937 was £155. In Eire, it was £76. That is not anything to boast about, but there are reasons for it. There are certain other figures available. They were presented in the other House by Deputy Hughes and the Parliamentary Secretary. There is the national income per head of the population. Deputy Hughes gave a number of extracts, many of them from Dr. Beddy's paper which is a very valuable contribution to the whole subject of agricultural thought in this country. The Parliamentary Secretary, speaking on that, said:

"I do not propose to follow the bad example set by so many different speakers but I propose to deal with some criticisms which have been levelled at this Bill. The first speaker we had was Deputy Hughes. Deputy Hughes made a comparison between agricultural conditions in this country and in Denmark and by a most extraordinary system of reasoning, he suggested that the amount of money borrowed by farmers in Denmark should be regarded as assets. That is a new process of reasoning in my opinion. Other Deputies who followed made comparisons also with Denmark.

I do not propose to continue making comparisons between this country and Denmark but may I, once and for all, dispose of these arguments by quoting from a work written by a gentleman who can scarcely be accused of being pro-Fianna Fáil? I am referring to Conditions of Economic Progress by Colin Clarke, M.A., Director of Queensland Bureau of Industry, government statistician, financial adviser to the treasury and formerly university lecturer at Cambridge.

On page 40 of this book is given a table which compares the real income per head of the population in the various countries. We can cut out borrowing and compare the real income, as this writer has done. In Denmark, despite all the borrowing and all the lending and the various wonderful schemes that we are told are denied to the people of this country, what do we find by comparison of the real income? In Denmark, the real income per head of the population, as expressed in terms of dollars, is 680 dollars while here in Eire —(I ask Senators to note the way it is put) — it is 705 dollars despite the fact that in Denmark the farmers have been able to borrow according to Deputy Hughes to the extent of 170,000,000, whereas the amount which the Irish farmers, being far more conservative perhaps, have been borrowing is something in the nature of 12,000,000."

Now, I think my friend, Senator O'Dea, seems satisfied on that.

I am not.

He knows there is a snag in it somewhere. The Parliamentary Secretary said: "While here in Eire it is 705 dollars" having said that it was 680 dollars in Denmark. When asked: "In what year was that?" he replied: "From 1925 to 1934." I wonder who will suggest that, here in Éire in 1947, the figures are exactly as stated by the Parliamentary Secretary. I would like to draw the attention of the House and of the Parliamentary Secretary to this, that we have got to face the facts of the situation as they are. We have to find a way out of this situation, and we can only do that by critical and impartial examination of the facts. In that way we will see the light if we want to see it. What are the facts? According to the Report of the Banking Commission, the figures in 1935 were earnings per head of the population in Eire, £50, and in Denmark, £58. It is interesting to note that the Parliamentary Secretary was able to select the period, "1925 to 1934"— during which his mark and that of his colleagues was being left on agriculture and on agricultural incomes in this country.

As I have said, the earning per head of the population of Éire in 1935 was £50, and in Denmark, £58. There is additional information which is of importance from the point of view of the Parliamentary Secretary in the figures which he quoted from Colin Clarke, to this extent that when they are further examined they reveal the fact that Colin Clarke was quoting the earnings of the employed population in both countries. We have a practice in this country—it does not obtain in Denmark —which gives this result: that probably 40,000 of our recorded unemployed are amongst the agricultural community—small farmers and so on. Now, if you take these out of the "earnings", it is easy to advance the "earnings." As most of us know, these people are actually working. That is so in my county and in other counties. As we say, they are working "awhile of the day anyhow" for somebody. There are the figures for what they are worth. I would ask the Parliamentary Secretary to examine them again, because there is not any use in trying to pretend that this country is so much better off than other countries.

If the Parliamentary Secretary was correct in his argument in the other House it would, I take it, be right to assume that the standard of living was higher in Denmark than it was here. I have not been to Denmark, and I do not know whether the Parliamentary Secretary has ever been there. But here is what Dr. Beddy says with regard to living standards — in the last analysis the test is the income which the people have — and I should like to have it on record:—

"Despite substantial payments by so large a part of the Danish community for interest and amortisation charges, there is a higher standard of living than in Eire as indeed is suggested by the respective national income of both countries. While available statistics do not admit of precise measurement in this matter, a few facts will serve to support the point. In Denmark, in 1938, there was a telephone to every 10 or 11 persons; in Eire there was not quite one to every 100 persons. So also, nearly one out of five persons had a wireless set as compared with a little over one to every 20 persons in Eire. These and other amenities are not confined to urban districts. Unlike Eire, in nearly all rural houses there is electric light; in many there is central heating, a bathroom and a telephone; while in even the smallest house there is usually a wireless set. In addition, Denmark had over two and a quarter times more automobiles than Eire in 1938."

That is the position in a country two-thirds the size of this. We are all familiar, of course, with the story of how much higher the standard of living is here as compared to Denmark. We used to hear it said that, while the Danes exported their butter, we eat ours. Here is what Dr. Beddy says on that with regard to tea, coffee, sugar, and tobacco. He gives the following figures:

"In the case of tea, the figure for Denmark is 0.3 lb. and for Eire, 8.6 lb.; coffee, Denmark, 16.5 lb. and Eire, 0.2 lb.; sugar, Denmark, 7.9 stones; Eire, 5.4 stones; tobacco, Denmark, 4.9 lb., and Eire 3.2 lb. These figures relate to the consumption per head per annum in 1937."

He goes on to say:

"While we are among the heavy tea-drinking nations, Denmark, as a consumer of coffee, drinks about one-third more per head than the United States of America and is also one of the world's heaviest consumers of sugar. In butter and milk she falls far short of Eire, some figures regarding this being: Butter, Eire, 32 lb.; Denmark, 12 lb.; milk, Eire, 31 gallons; Denmark, 19 gallons; milk equivalent of butter and milk (gallons), Eire, 111; Denmark, 50 (increased greatly after 1931)."

"This, however, is no indication of a higher standard of living, since the figures in the final column compare with 65 for Great Britain and 82 for U.S.A."

That is milk consumption, and I do not know if anyone will challenge the standard of living here as against these countries. The figures signify that we use butter and milk as alternative foods to a greater extent than other countries. In meat, however, which is a dearer commodity and one which must usually be purchased in shops, our consumption is substantially lower than that of Denmark. Per head of the population, we eat about 40 per cent. less bacon and only about half as much fresh meat. So also in cheese, our consumption is trifling, while that of Denmark is, in weight, over 75 per cent. of her butter consumption. Finally, Denmark's consumption of fish in 1938 was 36 lbs. per head of population, which contrasts with approximately 12½ lbs. in Éire.

The Minister can examine these figures, the standard of output and income; output per man and output per 100 acres and income per head of the population, to see if he will, once and for all, dispense with the argument. Now I could continue on these lines for a long period. I could quote from other countries, like New Zealand, to indicate what has been done there, but we all have the evidence of our eyes and we all know the backward conditions in agriculture. We all know that agricultural output in this country, far from increasing in the last 25 or 30 years, is on the decline and actually declined during the war despite all the talk. Great Britain increased her production by 70 per cent. I just do not know what the full drop in production here might be. It might be in the region of 10 per cent. I have figures here regarding output and if we take the position in 1929-30 as 100, we find that in 1938-39 it was 97, in 1942-43, 87.1, in 1943-44, 88.3, and in 1944-45, 93.6, showing a net decrease of 6.4 since 1929-30. Can we be satisfied with this position? Clearly we cannot, and we have got to discover where the fault in our economy lies and how we will improve that situation.

I have no doubt whatever in the world but that our first essential is capital. I am in agreement with Dr. Kennedy's viewpoint that we want hundreds of millions of capital put into agriculture to increase the productive effort of the people on the land if we are going to raise the living standards for the whole community and ensure that the nation is strong, nationally, politically, spiritually and economically. I am convinced that nothing that has been given us by way of machinery or agricultural credit, even from the beginning, can be regarded as satisfactory. I had the privilege of being one of the original directors of the Agricultural Credit Corporation. A number of my colleagues of these days have passed to their reward. One of the first decisions of the original board was to go to the Minister for Finance, before, I think, we had even two chairs, and to tell him frankly that in our judgment the scheme was not really workable as an inducement for providing the kind of credit farmers needed. I cannot say that we made a hasty exit, but at any rate we did not take any more money away with us than we had when we were going in. The position to-day is only slightly better and I am not surprised that the progress is so slow. I have complained at the beginning that neither of the Ministers who should deal with this question has put in an appearance. We have had many discussions in this House, as there were in the other House, on this problem and we were always met with the same attitude. There are a number of Senators here now who were here when I raised this question before the war. We had a debate in this House on March 15th, 1939, when the then Minister for Finance spoke, and I would like to refresh his colleagues' minds of his attitude then, so that they can draw their own conclusions about the kind of crops we have been reaping as a consequence of his attitude in these years. I had spoken first and then Mr. MacEntee spoke. He was Minister for Finance then. I think the present Minister is the third since. Mr. MacEntee on that occasion said:—

"It is all very well to say: ‘Give the farmer money and let him produce the things that he can produce.' After all, he does not produce these goods for himself alone. He produces them for sale and if there is no ready market for these goods then his increased production represents a dead loss to himself, and, accordingly, in these circumstances, production may be foolish and may be harmful."

I wonder are there amongst the Minister's colleagues in his Party any one who can recall that statement from him in March, 1939. He went on further and said:

"I think that in the present circumstances the best thing for our people is to try to work ahead here as best they can. If they have capital at their disposal and they think that with their own money they can exploit the present situation, by all means let them go ahead and do it. They do it at their own risk, and if their speculation happens to turn out right, well for them — they will get the whole gain."

That was Mr. MacEntee's attitude then. No encouragement whatever! If the farmers liked to take the risk, they could. Look at the encouragement he is giving them to produce. Is it any wonder that to-day these goods are short?

The Irish market was reserved for the Irish farmer at that time. He was protected by tariffs.

It was not a question of tariffs. It was a question of credit, and he went on to say:

"There is £35,000,000 of farmers' deposits in the Irish banks and my contention is that if there was such an opportunity of putting a couple of these millions into agriculture, as Deputies and Senators tell us about, it would be better employed in agriculture than in lying in any bank in this country earning 1 or 1½ per cent."

There you have the mentality of the Minister for Finance in 1939. I wonder if the Parliamentary Secretary can tell us if there has been any change, or when can we hope for a change. There is no change so far as this measure reveals the attitude of mind of the Government to agricultural credit, and in so far as we are still practically in the 1927 position, we are not facing up to the problem of agricultural development at all. I do not know whether the Government appreciate the fact that we have land here of which we could make much more, if we had the equipment. Had we had the equipment — Senator McEllin may glibly or light-heartedly, jocosely or perhaps seriously, interrupt me——

I object to the suggestion that I say anything light-heartedly in this House.

Seriously, then. He may seriously interrupt me and say that the Minister had another policy then. We were trying to press on the Minister then what we regarded as a wise policy, a policy which would enable the country to get equipped for greater production, but he would not listen, and we were not equipped. We had nothing when we entered the war years and then we could not get the equipment. It is a fact that the potentialities for increased production here are immense. The Committee on Post-Emergency Agricultural Planning have attempted to measure them. I have given a good deal of consideration to this, but it is time we were beginning this task. We need not be afraid of putting money into agriculture for the purpose of increasing production. Specialists have told us it can be done. We need not be too much afraid of the competition of the others because the fact is that never in human history was there enough food for all the peoples of the world. We cannot hope to live in the world side by side with people whose production is increasing steadily, even if only fractionally, year after year, while ours is going down.

I have said that our production fell during the war, but something else fell to an extent which it is impossible to measure — the fertility of our soil. The Post-Emergency Committee suggest that we have somewhere over 9,000,000 acres of arable land, although we used to think we had 11,000,000 or 12,000,000 arable acres. We have been tilling now since 1939, and I suggest that, on at least 6,000,000 of those acres over which our ploughs have gone, we have cashed in practically all the phosphates, nitrogen and potash that were in them. I should like some of the specialists to attempt a measurement and an evaluation of what that means to future production, how long it will take us to restore that fertility and what capital will be necessary for its restoration. It is a frightening task for anybody who wants to see it accomplished, and who, at the same time, sees a position in which no effort is being made to tackle it.

We come then to the method adopted to provide this capital on this very limited scale, with this small piece of mechanism in which savings of hundreds and thousands have to be calculated when we ought to be thinking of a scheme involving hundreds of millions. What do we find? The scheme lions. What do we find? The scheme appears to be that money is to be provided by the State for the Credit Corporation at 2½ per cent. It is to be handed over to the corporation at that price. What will it be when the farmer gets it? From my experience, 1 per cent. additional will barely cover the costs, which makes it 3½ per cent., and the borrower has to defray certain expenses, such as mortgage charges and such things, which will probably bring the cost of the loan into the region of 4 per cent.

Quite frankly, that is beyond the capacity of agriculture, unless food prices are to rise to a very exorbitant level. You cannot have it both ways. The people who want low food prices must make up their minds that farming costs must be reduced to the lowest possible level. There are certain costs which will have to be raised. Costs of labour will have to be raised, and machine costs are going up. Other charges like rates are rising year after year. If human wages are to cost us more and machines are to cost us more, the wages of money must cost us less. Will the Parliamentary Secretary tell me what is the justification for making money available to a local authority to build a house for a labourer which will cost the local authority 2½ per cent., while, if the farmer wants to borrow to build a house for himself, the money will cost him 4 per cent.? Why must you always differentiate against the countryman? The only reason is that there is, as yet, no proper approach to the rebuilding of our countryside.

Somebody will tell me — perhaps Senator Sir John Keane, though I hope he will have more sense—that you cannot expect money to be cheap. One of the difficulties, I know, with which the Government are confronted in this matter is that they are undertaking to find money. There are various ways of finding it, and I suggest to the Government that the time has come for them to amend their Central Bank Act in such a way as will make it possible for the Central Bank to provide the credits for the Credit Corporation which will go out to the farmer to rehabilitate the land, the farmhouses and the farmyards of the country. I am not going into a discussion of amendments suggested to another Bill on this measure, but I suggest that the Parliamentary Secretary might do some "stewing" over that.

I should like to see Government policy in this matter much more courageous and unorthodox than it is. I should like to see them, if they are making a State organisation of this Credit Corporation, providing them not only with the capital which would be attractive to men who wanted to make greener fields, pleasanter farmyards and better and more economically managed homes than we have but with the equipment to do something else. In my time on the board, a certain problem very frequently presented itself for the directors' consideration. They made loans which did not turn out fruitful. They made loans in instances in which they were not able to collect the interest, much less get the principal repaid. I cannot say from memory what the reasons were — there were various reasons — but one perhaps naturally was that they were limited to 50 per cent. of the value, and it very frequently happened, I am sure, that it would have required a loan 60 or 70 per cent. of the value of the assets being mortgaged adequately to capitalise a farm.

You have either got to have sufficient capital or you are, as we say, pulling the devil by the tail. We had in my time various discussions about the possibilities of doing something about these farms — doing something to rehabilitate them — and in my view there are thousands and thousands in this country that are very badly in need of rehabilitation. Nobody is bothering about them. They are supposed to be carrying rents and rates. They are supposed to be giving output and a reasonable and decent standard of living to their owners. They are not doing that. They are doing none of these things, and somehow or other the community is having to bear the burden. Somehow or other—I have not tried to think out and it is not my problem from beginning to end but I am quite sure that somehow or other not alone should much more capital be made available but it should be made available to reach the farmer as Deputy Hughes said in the other House at a rate of interest at 2 per cent. In addition, there should be some organisation constructed somehow or other — not to be the equivalent of the T.V.A., the Tennessee Valley Association — but there is necessity all over the country for an organisation that would reestablish a man properly on his farm. It would take nurturing and advice, and a proper, careful investigation of capital, advice about productive efforts and so on along the lines on which no one in the country to-day is attempting to provide. But the necessity is there and we are not going to get the best out of the land of this country until we provide some machinery like that because these people to-day are no man's children.

I suggest that this Bill — it is a machinery measure and some of the things the Parliamentary Secretary is attempting to do I heard discussed in my own period of office ten years ago — is not getting us very much forward in attempting to solve the whole problem that faces this country with regard to more capital for agriculture and more and better productivity from the land, higher living standards for the people on the land and for the people in the cities and towns who are dependent on our productive efforts for what they get to eat.

I do not propose at this late hour to follow Senator Baxter into his high flights in rural economy, but I do want to join issue with him on one general principle which he stressed and emphasised. That is that ample capital is the solution of our agricultural difficulties. I totally disagree with him. He talks about Denmark and their higher standard of living and higher standard of production, all of which I admit. Then he makes a totally unwarranted assumption when he says that these are due to the fact that Danish farmers have had, and use effectively, more capital than the Irish farmer. I say it is due, as far as it can be due to any one main cause, to the long and well-established co-operative movement in Denmark which has been established for well over 100 years. It is a movement very far wider than mere agriculture — a spiritual movement. Is it known that the Danish co-operative movement was established by a bishop and that it had a spiritual urge behind it? It had a moral purpose—the betterment of the people — and it has built up a system of agricultural organisation which is I suppose the most efficient in the world. And connected with that there is a highly-developed standard of agricultural organisation, and so we see in Denmark the most orderly marketing, the most highly-developed methods of production, and that in my opinion is the reason for Denmark's outstanding position as an agriculturally-producing country. And that explains why it has been able to use so effectively and to such good purpose the large amount of capital it has. I accept those figures which Senator Baxter says it has been able to use.

And what does Senator Baxter propose? He talks of £200,000,000. Is somebody going to go out and proclaim: "Here is £200,000,000, come along boys and help yourselves." That is not the way it works. It works from the individual below. The farmer by education is out to improve himself if he can. He finds he will want more capital and he goes out to see where he can get it. I say there is no difficulty in farmers getting capital to-day if they are credit-worthy and in a position to use it. The difficulty is, a lot of farmers do not want capital. You cannot make a man take capital who does not want it. It may be defective education but it may be good sense. The farmer himself is the best judge of his own case and this £200,000,000 if it were let loose would be a most profligate procedure and would cause unwarranted inflation at the present time.

As I say, any farmer who wants capital to-day and is credit-worthy and can show that he is a deserving person can get it. He can get it from the Agricultural Credit Corporation and he can get it from the banks. I do not want to develop that matter any further because it is a very big question but I do want to make my few remarks as a curtain-raiser to the debate which I hope will take place to-morrow or next day as to the proper activities of the Government or State on the motion in Senator Sweetman's name. In that you have a startling example in the whole of this attempt on agricultural credit of how not to do it.

When I was on the Agricultural Credit Commission in 1923 this question of credit for farmers came up and a recommendation — not a minority recommendation but a majority recommendation — was made that the machinery of the banks should be used for the purpose of credit for smaller farmers. The difficulty at the time was— and it still appertains to a certain extent in theory but much less in practice —that the banks will not make long-term loans, and it seemed to be necessary to set up some machinery for that purpose. It is true the banks do not advisedly like long-term loans — much over ten years—but they frequently make them. If you were to take the record of agricultural loans in the banks you will find many of them have run a great deal longer than ten years. What we suggested then was that we should use the credit and organisation of the banks and ask the banks to set up an organisation somewhat similar to the Agricultural Credit Corporation. The suggestion was to earmark a sum— £1,000,000 as a start—to set up an organisation among the banks combined in association with the Government and let that organisation cater for long-term credit and for rather smaller and less credit-worthy farmers, with the class of assets that the banks might not be alone satisfied with.

The suggestion was that there should be a member of the Government on the board of this body and that the advances should be in the nature of trade loans; that where a bank, as a bank, did not want to accommodate a certain person, that person could go to this special body and there, in association with the Government, a guarantee might possibly be given and the loan could be made for any agreed term at a lower rate than would ordinarily be the case inasmuch as the loan would carry a Government guarantee. That seemed to be a good business proposition. But were the banks ever approached? Was the recommendation of that commission ever given consideration? Whatever consideration it was given, the matter never came before the banks. I say that the Government of that day—it was not the present Government which was responsible— suffered from lack of vision when they ignored that recommendation and embarked on a State organisation where no State organisation was necessary to achieve the purpose desired. In England, I may say in passing, an organisation of the type I have suggested was set up and has worked satisfactorily.

What is the record of this body, with its complicated capital structure, its certificates of charge and financial mumbo-jumbo? In fact, it has cost the State about £350,000 to meet interest on the capital—interest which could not be provided out of the profits of the organisation. Roughly, £350,000 of the ratepayers' money has been spent to provide an organisation which could have been supplied in association with the banks, who have the resources of credit necessary to meet all the purposes required. Look at the difference between the banks and this organisation. Here, you have set up an organisation in Kildare Street, with no organisation throughout the country, which has to use the Garda Síochána in some cases to give reports on the status of borrowers.

The trouble is that, once the Government start this sort of thing, you cannot stop it. It takes a revolution to stop these things. If the Government really had the courage, they would go to the banks to-morrow and say: "This organisation is quite unnecessary; you can do the work; come into consultation with us and see whether you cannot do all the work even at cheaper rates than we are charging." Ample resources would be available and the services of the bank agents all over the country would be at the disposal of such a body. A first-class information service would thus be available. If that had been done, the country would have been saved £356,000. But once you set up a State organisation, you cannot go back. If this had been a private organisation and if it had the record of this body, it would have been bankrupt. Then, it would have started on a proper basis. You may be sure that, as time goes on, more subventions will be required for one reason or another.

I shall not go into the details of this measure. I know that the organisation is going to stay and that, by some means or another, it is going to widen its powers. It has so stretched the definition of "agriculture" as to enable it to make a loan to anybody remotely connected with industries ancillary to agriculture. It is going to be a burden round the neck of the country for years to come. The work could be far better done at no higher cost by the banks. I cannot speak for the banks but I am sure they could put up a scheme to-morrow which would do this work far more efficiently than it is being done. They have ample funds for legitimate credit — not the astronomical and absurd figures which Senator Baxter mentioned.

Over a long period of years — not in one year or ten years.

Is this money to remain out for all time? Is this sum of £200,000,000 never to circulate? Is this debt of £200,000,000 to lie out indefinitely on farm lands to keep agriculture on its feet? I think that that would be wild inflation. That is all that I can see in it. I feel that this is a warning. You have got to have this Bill. I do not know that it is any worse or any better than the one which went before. Senator Baxter says that it is a machinery Bill. It is a thing of shreds and patches and an example of how not to do it. Even at this late hour, if the Government had vision, it would say: "Let us get out of this whole thing." The former Government did get out of an early land bank. There was a Minister with vision in those days and there was a thing called a land bank. The Government went to the banks and said: "We are bothered about this thing; all sorts of political opportunists are coming to us for one thing or another; we want to get rid of it." They got rid of it and it remains a small, successful institution.

If the Government were wise, they would go to-morrow to the banks and say: "Can you meet us in doing all the work we want done even at rates cheaper than we are doing it?" We can do all the work. We shall co-operate with you, take members of the Government on whatever new body is set up and provide a banking service suitable to the small agriculturist, with long-term loans and all the rest. That is my contribution to the debate on this Bill.

As I hope to be in the House to-morrow at 3 o'clock, and as I know that I shall have to leave at 3.30, may I have the privilege of moving the adjournment of the debate?

Debate adjourned.
The Seanad adjourned at 10 p.m. until 3 p.m. on Wednesday, 12th March.