Seanad Éireann debate -
Thursday, 13 Dec 1951

Vol. 40 No. 5

Supplies and Services (Temporary Provision) Act, 1946 (Continuance) Bill, 1951—Second Stage (resumed).

Mr. S. O'Donovan

I do not desire to detain the House very long. Furthermore, I hope I will keep that promise. Many Senators who promised they would not delay the House spoke at considerable length. I have read the White Paper, I have read the Central Bank Report and I have read some of the speeches delivered in the Dáil which were published in the Press. The whole problem resolves itself to one of having to restrict our expenditure and restrict our imports of materials from outside. Alternatively, we have got to work harder and produce more. Perhaps there is no alternative and that we may have to do both together. It seems to me that we were actually spending beyond our means. As any individual in a household knows, one cannot continue to do that indefinitely. If we have an accumulation of external assets and if we continue to draw on them, ultimately we will reach the stage of being a debtor instead of a creditor nation. In those circumstances, we would have to look for financial support from outside sources. That would be a bad situation in which to find ourselves.

There has been a reference to crisis. In medical parlance, the word "crisis" is capable of different interpretations. In describing a fever, it indicates the stage at which the highest point of temperature is reached. It seems to me that there is not much difference between the word "crisis" and the word "problem". We are depleting our external assets and we are in danger as a consequence of jeopardising the financial and economic position of our country. There is only one solution to this problem and that is to increase production, which means we have to work harder. The implementation of that policy, unfortunately, means asking a section of the community which has often been asked before to work harder to save the nation and produce goods for the rest of the community. I refer to the farming community.

Reference has been made to the difficulty of getting trade unions to give their fullest service. If increased production is to be provided by existing industries such as, for instance, the cement industry, on behalf of whom an advertisement appeared in the Press seeking capital towards that end, it will mean that considerable time will elapse before that extra production can be achieved. Likewise, in most other industries it is not easy, even with increased capital made available, to increase production unless you have co-operation between the management and employees.

Senator Douglas made a suggestion which appealed to me very much. In order to increase production, he suggested that a bonus should be paid. That would be admirable and would produce quick results from industry. If there are difficulties connected with such a project they could easily be overcome. As far as our agricultural industry is concerned, we can appeal to-night to the farming community to make an all-out effort to increase production and it could be carried out the following day. I think it is very wrong for a Senator to make an attack—as really it was an attack —on the farming community. Reference was made to the fact that they did not pay income-tax and that the income-tax laws were not applied to them in any way comparable with the way in which they were applied to the industrial community.

I refer to the remarks of Senator O'Donnell, who said he had to pay 10/- in the £ income-tax. That means that he is paying surtax. When an industrialist is in the position to pay 10/- in the £ income-tax, it comes very badly from him to make an accusation against the farming community that they are not paying their proper share of income-tax. Senator O'Donnell came originally from the country, and he should know quite well that there are very few farmers who could pay income-tax on a scale comparable to that paid by industrialists.

I am one who always supported Irish manufacture from the days of Sinn Féin. I am one of those who have been appealing to the people to support Irish industry and Irish manufacture. It does rattle a person a little to find industrialists who have got such support from the Fianna Fáil Government making such an accusation against the hardest-working section of the community.

However, the point I wish to make is that the farming community can be appealed to, and I am sure that they will respond immediately by the increased production of goods which are so necessary for the maintenance of the people of the country as well as for export. The unfortunate thing is that at present we do not produce enough wheat for ourselves, enough beet for our own sugar, or enough barley for our feeding stuffs and beers. We have not enough milk to be used as liquid milk and provide sufficient butter and other milk products. We have enough meat certainly, and we have growing exports of meat products as well as the dead meat trade.

Our farmers, therefore, have a guaranteed market for the majority of these products. They are guaranteed a better price this year for wheat. There is a guaranteed price for beet and the price of barley is secure. The price of oats is uncontrolled, but certainly there is a market. I would appeal to farmers to go all out to produce sufficient to saturate that home market which awaits them, and thereby prevent the importation of food for human beings as well as for animals. I hope to see sufficient foodstuffs grown here to produce concentrates for animal feeding. We would have enough protein and carbohydrates, although we might not have enough fat perhaps to give as much of it as the high fat content foreign feeding stuffs. That field awaits the farmers. I hope that they will improve their financial position, and in the future pay income-tax, as Senator O'Donnell said, and help the revenue of the State in that way.

Our beer and spirits are liquid assets which we could to a great extent export. Unfortunately, when on a previous occasion the Government imposed a restriction on their consumption by increasing the price of what necessarily are classified as luxuries that Government was put out of office. If every drop of the whiskey produced here were exported to America we would have an increased supply of dollars which would be very useful to us.

I do not wish to refer to any of the political arguments used in this debate but I would refer to Senator Douglas's remarks at the time of the imposition of the first rationing. I remember the anti-rationing parade through the City of Dublin and I also remember that Senator Douglas, speaking in the Mansion House and reported in the papers the following day, said: "We are not against rationing. We are against the rationing system as introduced." I take it, therefore, that he was only partially correct in his statements this evening. An organised procession was got up against the imposition of rationing at that time. Judging from the reports, Senator Douglas was the one man at that meeting who said that rationing was necessary, but who criticised the defects in the rationing system imposed at that time. The campaign was definitely against any rationing at all.

He also referred to government by one Party vis-á-vis inter-Party or Coalition Government, and he said that the Government Party had not a majority in the Dáil. I do not see how it could be a Government if it had not a majority. The Fianna Fáil Party exceeds in numbers the total of all other Parties. There are only—I will use the word—nondescript Independents to make up the rest of the membership of the Dáil. Certainly he is wrong in saying that a Government is functioning now without having a majority in the Dáil. It has a majority over all other Parties added together and, naturally, has the support of some Independents who give it a majority in the Dáil.

The farming community is the one section to which we can immediately appeal to increase production. It has, as industrialists have, a free and open market to consume all its surplus goods. Undoubtedly, things are favouring the farming community economically and financially at present. The export of dead meat which has been going on for practically only a few months seems to be an opening for a development which would be of immense benefit to the farming community. If we can produce sufficient feeding materials to feed our animals during winter and summer and to develop the trade to America which has been initiated, the country, I think, will be well on the way to getting these dollars and foreign assets which would be so useful to us for the further development of the country.

There is one disaster which could affect the country: the outbreak of foot-and-mouth disease. It would be a terrific disaster for the nation. I would appeal to the farmers' representatives here to convey to the people in the country that they must take every precaution—I do not say to prevent, because prevention is, as far as they are concerned, an absolute impossibility— but to ensure that if any symptom of this disease appears anywhere in the district it is immediately reported to the local authority, to some veterinary surgeon, or to the Guards. If it did come—if it be God's will it will not—it could strike very quickly, because it is an especially virulent type that has ravaged the east coast of Britain. It may happen to come here. It may strike a district on the east coast anywhere from north to south. Any farm may be the first to be affected.

An Cathaoirleach

The matter hardly arises on the Bill.

Mr. S. O'Donovan

It is a very serious matter.

Mr. P.F. O'Reilly

The discussion on the Bill has been very extensive and thorough That is as it should be. The Bill was discussed in the Dáil even more fully perhaps than here. There was every reason why the Bill should be discussed very fully in both Houses. At the time the Bill was introduced a state of panic or near panic existed in the country following certain pronouncements by Ministers, to which persons concerned with the finances of the country had to pay very serious attention. At the time the Bill was introduced in the Dáil people believed, and were entitled to think that the finances of the country were in a parlous state. They had been warned by responsible Ministers that a crisis had arrived. That was understood to mean that we might not be able to carry on and that our whole economy was about to break down. That was the state of affairs when the Bill was introduced in the Dáil.

The position was clarified in the Dáil. There was a retreat from certain decisions. The Minister for Industry and Commerce replying to the debate indicated that things were not as bad as they had seemed to be and quiet was restored So that when the Bill came to us we had not the feeling that things were so serious as we had been at first informed. Consequently we have not had to go so far or to take such a serious view of matters as was done in the Dáil.

Senator Hartnett in his speech to-day told us that the Central Bank had made reports in 1948, 1949 and 1950 and that nobody had paid any attention or that apparently nobody had paid any attention to them. Of course, attention was paid to the reports in those years, but nobody said, following perusal of the reports, that a state of crisis existed. Everything went quite satisfactorily then because people took a reasonable and sensible review of the reports.

The Report of the Central Bank which we are now discussing certainly did not warrant the comments that were made on it by Ministers. It has been shown now that things are not as bad as people said they were.

Undoubtedly, we must do something to try to settle our affairs. There is no doubt that we are spending more than we should. There is no doubt that there should be increased production. We have all appealed to the farmers to produce more. I think with others that increased production is the one great hope. We must do everything we can to encourage farmers to produce more.

In my view it is sheer nonsense to talk of endeavouring to compel farmers to pay income-tax. Any of us who is not a farmer would not exchange places with the farmer, take his work and be satisfied because we had not to pay income-tax. In my view, the farming community has not sufficient income to enable them to pay any income-tax or to make any substantial contribution by way of income-tax. Over the years they have merely struggled along. In many cases, until recently, they had a bare existence, nothing more. We must do everything to encourage farmers to increase production. To suggest or to let it go abroad that members of the Dáil or Seanad would expect farmers to pay income-tax would be very poor inducement to them to produce more and thereby possibly make more money.

Senators have referred to income-tax and the income-tax system. They spoke of the system as being difficult. In my opinion there is nothing whatever wrong with the income-tax system of this country. It is quite a fair system. People who make substantial incomes must pay income-tax. Those who earn very little pay considerably less. I do not think that there is any necessity whatever for interference with the income-tax laws as they are. They have existed for over 100 years and have stood the strains and stresses of wars and changes in the economic system. The system, as it operates to-day, is quite fair and no injustice is suffered by reason of its operation.

I would say, however, that certain claims for allowances might be more reasonably met. There are cases, perhaps, where the income-tax laws work relative hardships, but that is the only complaint that I have to make in regard to the income-tax system.

Another means whereby we might improve our position is the encouragement of savings. Successive Governments have paid very little attention to the value of savings. The people should be encouraged to save. I do not take the view that it would be difficult to get them to save. They should be encouraged by pronouncements by Ministers, particularly the Minister for Finance and perhaps the Minister for Posts and Telegraphs. They should be encouraged to invest their money, whether it is great or small, in the case of small amounts by weekly contributions. We have not any such system as prevails in other countries whereby at schools, factories and works there are savings committees. These committees do a great deal of good.

At least one Senator mentioned the question of encouraging outside capital investment, meaning thereby that people outside should be encouraged to invest money in securities issued by the Government or by companies in this country. That might be encouraged. I do not know. I have an open mind on that but it seems to me that the present Government will not encourage that because, rightly or wrongly, some years ago, they decided that they would not allow people to come to reside here unless they paid a 25 per cent. stamp duty on the houses they purchased. If the same view is to prevail in regard to cash from outside that is invested here, there will not be any encouragement to outsiders to invest money in our concerns.

Senator O'Donnell referred this evening to the Control of Manufactures Acts and to how these Acts could be evaded. I do not know of any cases in which the Acts have been successfully evaded with a view to defeating the intention of the Acts. I think it is incorrect to say that they have been evaded. The Acts have been operated to see that Irish people who wish to commence companies do so without any great interference or crowding out by non-nationals. I do not think Senator O'Donnell has any grievance because of the lack of provision in these Acts to meet the point he has in mind.

He referred this evening to attacks on Irish industries and Irish industrialists. Undoubtedly Irish industrialists and Irish industries have been attacked. They were attacked here this evening—and very unfairly, I think, and very foolishly from the point of view of the matters which we are discussing. It is wrong for us to let it go out that we take the view that the Irish industries are being exploited solely for the purpose of making money irrespective of the class or quality of the goods put on the market. Irish industrialists have done good for the country. If they have done reasonably well for themselves it is very unfair that they should be attacked. I was surprised indeed that they should have been singled out this evening for such an attack.

There is no doubt that a restriction of credit is operating in this country. Anybody who tells us or who seeks to tell us that banks have not restricted credit, and restricted it very severely within the last three months, is either trying to fool us or else he is merely fooling himself. I was very encouraged to note that the Minister for Industry and Commerce, after the completion of the discussion on this Bill in the Dáil, indicated that he thought that credit should not be restricted. In my profession we frequently have to do with banks, and we know the exact position.

I assert that banks have almost completely restricted credit. I ask the Minister for External Affairs, who is present now, to ask the Minister for Industry and Commerce to indicate again that there is no reason for a drastic restriction of credit—that there is no reason why we should follow the views expressed very strongly and vehemently by the Chancellor of the Exchequer in England who, on Saturday last, warned the Capital Issues Committee and the bankers in England that credit was not under any circumstances to be given except for one or two reasons, the principal of which was rearmament. It would be dreadful if we were to reach a stage here where banks would not give credit for normal development, for the purchase by local authorities of their requirements, for the purchase by private persons of houses or for the ordinary development by people of their businesses.

It is most important that that should be made clear to the bankers. Perhaps the Minister for Finance might consider whether we have not too many banks in the country. At one time it was said: "Well, let us have a number of banks because there will then be competition and we will be able in some cases to get better terms." But what is the position to-day in regard to competition among banks? There is no competition. The Minister might consider whether there are not too many banks and whether he might ask the banks to consider some kind of amalgamation. I do not suggest that we should have only one bank or perhaps only two banks. I think three would suffice. With only three banks a very considerable sum of money would be saved. I think it was brought home to the banks during a strike early this year that we could almost get along without banks, except perhaps one bank. It was made clear during that strike that we were not so dependent on banks as at one time professors of economy might have told us we were: that was in the years long ago. I make that suggestion in all seriousness.

I accept the views of those who state that increased production is perhaps the most important way of meeting our difficulty. I agree also that saving is an exceedingly important matter and that the Government should take special steps to encourage the people to save by the purchase of savings certificates, national loan securities, and so forth.

With regard to production, perhaps I might say that the workers might be encouraged to invest moneys in the companies by which they are employed. At first sight it may seem that that might not be so easy to achieve but they could do it by a scheme of weekly contributions towards the purchase of shares in the companies which employ them. Further, the trade unions which in a number of cases have quite substantial funds should be encouraged to invest money not merely in trustee securities but in ordinary commercial securities.

Mr. Burke

I was hoping to say something about the general picture of inflation as it affects the world but I think it would certainly be out of season to do so now. The one thing that seems to be unanimous in both this House and in the other House is that we have a problem. I believe that the rest of our time ought in some measure to be devoted to discovering how we can find remedies for that problem. It is true that O.E.E.C. have been given the task of seeking to solve the problem in Europe. As we are part of that entity, doubtless they will see how far it affects us. If things better themselves on the other side of the water and in Britain we, being part of the sterling area, are bound to benefit by the solution of the problem of inflation because our money is so readily interchangeable that any improvement in the situation on the other side of the water must naturally affect us. The present Administration in Britain has certainly taken that aspect very much to hand.

In a way we all owe a deep debt of gratitude to the Central Bank for the report which they produced this year. They are a body established by this State. They should be allowed to give their views whether they be in step with the Government or not. They are charged to give their views as they see them; whether we agree with them or whether the views are in step with the social policy of both the Government and the Opposition is another matter. Their responsibility is to give their views as they see them. Many of the suggestions which they make from time to time are useful and salutary.

Senator Hartnett referred to the Report of the Central Bank. I would remind him that, in 1949 and 1950, the then Government never panicked about several things that were said in these reports. If there has been panic, it has been caused to some extent by the statement made by Deputy Lemass—I presume after seeing the Central Bank Report before it was published generally. Deputy Costello strongly objected to Deputy Lemass's views in Cork and since then Deputy Lemass has, in the Dáil to a certain extent, disagreed with the report in his ministerial speeches.

We ought to try to find at least some part solution for some of our economic problems. Unless we are very sure, we should always try in matters of this sort to take a middle of the road course. The bankers are to-day adopting a very stringent policy, and I believe that if they pursue it they will finally do themselves and the country a great deal of harm. They should at least relax that policy with regard to a desirable type of development. There certainly must be a difference between lending money for cinemas and lounge bars and lending money for businesses engaged in the export of goods which are derived entirely from the soil, and which would bring in a large amount of the necessary dollars, to the advantage of our economy. I hope the banks are drawing a distinction between those two types of economy.

I must confess that I have read the Central Bank Reports every year for several years and I happened to find to-day among some of my papers the 1948 report, in which they speak about savings. I think that savings in a free economy are absolutely necessary. We are not rationed and restricted and compelled as they are in a directed economy. Therefore, we will have to solve the problem of making the people save so that we will have new development, whether it is social or economic. In the Central Bank Report for 1947-48, paragraph 19 on page 13, they say:—

"New savings to meet capital requirements in an adequate degree are urgently necessary, and as indicated in our last report it is also important that capital projects be undertaken with due regard to the financial limits imposed by the shortage of savings and the condition of the balance of payments. The budgetary position has an immediate bearing on this problem, heavy direct taxation being peculiarly prejudicial to the volume of saving."

That was their view in 1948 and apparently they referred to the fact that it was their view in 1947. In as far as they have recommended savings, they are certainly right and we owe them a debt of gratitude. I believe that in many other respects, particularly with regard to investing in the land here to make it produce more, they are too conservative. These are matters with which we all agree and we would be doing a bad service to the nation if our criticism of the Central Bank is such that we should try to destroy this institution.

Mr. Quirke

What is wrong with lounge bars?

Mr. Burke

It depends altogether on the company.

Mr. Quirke

The Senator refers to lounge bars as if they were a very serious evil. A lot of people in the country are interested in the licensed trade and I would like to hear the Senator develop the point.

Mr. Burke

If the Senator would like me to reply to him I will do so. I think it is very much more desirable to-day that the amount of savings available would be invested in increasing the productivity of the good land and the bad land, rather than that the banks would lend those savings for the development of greyhound tracks, race tracks, lounge bars, cinemas and that sort of thing, because the amount of money spent on luxury here is, I believe, higher than our economy can afford and I think there must be a desirable form of personal expenditure and an undesirable form of expenditure.

The pattern of our system of taxation has a very important effect on our industrial activity. If proper allowances were made to industry, there would be a great deal more encouragement and a far greater development in industry. I was interested to read in the Sunday Times of the 25th November last an article by the city editor. He said that a survey was made by the Federation of British Industries and they pointed out in that survey that during the period 1938 to 1949 they estimated that 80 companies required from £268,000,000 to £291,000,000 of new money simply to maintain their position, quite apart from any extension, and that between 1945 and 1949 the proportion distributed to total profits fell from 27 to 22½ per cent. Our system of taxation with regard to industry is almost identical with the British system. We have taken over their Finance Acts practically in toto with regard to these matters. I believe that industry here is finding itself in exactly the same position as it is in in Britain, that they are finding it difficult to carry on without recourse to the banks. If the banks adopt a very tight policy with regard to money, it will make it difficult for industry to get the necessary new capital that is required.

There is a disinclination on the part of the investing public here to invest their money directly in industry. We know that from the large deposits that the banks publish each year. If the banks investing the people's money are too conservative about giving it to industry, that will have a very slowing effect on our industries.

I have spoken of the need for saving and the desirability of framing our tax code in such a way as to encourage the proper type of industry and to allow that industry to keep sufficient of its profit to maintain its structure and plant up to date and to give valuable service to the people, and if it is engaged in the export trade, to compete in that export market, which would help in no small way to solve our own problems.

The second way in which we can deal with this matter is by effecting economies here. Everyone suggests that we should have increased production, and I always imagine farmers all through the country commencing to work actively when someone talks about increased production; but unfortunately it seems to mean that every other section of the community, particularly the bureaucracy and quasi-bureaucracy, should do nothing at all about it. I was shocked last week at a meeting of the South Tipperary County Council when I saw an order which had been sent down to us that part-time rate collectors in our county, and, I presume, in every other county, should be compulsorily retired at 65. In that area, the South Riding of Tipperary, it costs £10,000 per year to collect the rates, and when all our part-time rate collectors are superannuated, it will cost somewhere between £17,000 and £18,000 to collect the rates. Multiplying that by the number of other councils, the county boroughs, the urban councils and other bodies which employ part-time rate collectors, we find that it will probably mean that the pension scheme alone will cost over £300,000 and the collection of rates over £1,000,000 per year.

I asked at that meeting why the rates could not be collected in the same way as the land annuities, and I want to thank the Stationery Office for sending me a copy of the Book of Estimates, because there I was able to find that all the land annuities are collected for just under £70,000—to be precise, for £69,439. If we can collect the land annuities for that amount, we could save £1,000,000 a year on the collection of rates, if we rationalised that service. The reason I bring that up is that all the economies, all the talk about increased production and so on, are a sort of panacea which we are to sell to the farmer. The farmer is tired of being told these things. He is like many of us—he would like a bit of good example, and if the local bureaucrats in local government affairs and so on agreed to work an hour or two longer and to remain at work until 70 instead of 65, and if that happened all the way up to Merrion Street, the farmer would feel that he would like to compete with them and put his shoulder to the wheel; but these people merely shrug their shoulders and say that this is for the farmer and does not apply to anybody else. At the time the debate on this Bill was in progress in the other House with regard to the chaotic state of inflation and overspending in the country, we were making Orders—and I blame the officials more than anyone else, because these Orders were merely handed to the Minister—which had the effect of putting £300,000 or £400,000 of non-productive money on the country for the importation of more luxury goods. We will not make progress if that sort of approach is to continue.

Another matter to which I want to draw attention is the poor return from many of the State schemes. At a meeting of another public body of which I am a member, I noticed that the cheapest house that could be let to a person from an overcrowded area in my town was a house at 18/9 per week, but when they arrived at that figure of 18/9, that house had been the subject of a subsidy of two-thirds and the ratepayers had paid another subsidy. It transpired that the poorest person in the community who had to live in that little house had to pay 5/- a week rates. When that poor person has to carry a burden of 5/- per week in respect of rates, I think there is reason for economy in the administration of our local government affairs.

I have been nearly 20 years a member of public authorities, but we never got any report from the Department telling us that our roads were costing 25 per cent. more than the average of what they were costing, or that we had ten more on our staff than we should have. If we are paying millions of pounds per year for local government, the establishment officers in the Department should tell us when these services are costing too much, because there is so much to be done in local government to-day that the ordinary member has not the time to concern himself with the administration of the various bodies, and we have to rely on the Department and on other Departments for the information necessary for taking a decision in regard to putting our house in order, but, if we do not get that, we are not going to encourage the farmer and every other person who has to take off his coat to do this productive work that is wanted to feel that they are getting a fair deal.

With regard to our houses costing too much for poor people, I should like the Department of Local Government to try to provide some system whereby a subsidy would be paid in relation to a good return. What happens in local government affairs at present is that there is an agitation to get more from the Central Fund in order to make these houses cheap.

An Cathaoirleach

I am afraid that local government will not be in order on this Bill.

Mr. Burke

Does it not affect supplies and services?

An Cathaoirleach

Very remotely, I am afraid.

Mr. Burke

Briefly, then, the point is that the Department should give grants in relation to the efficiency of the local body in getting the work done well, rather than put up with the local authority seeking to get increased grants for work done badly. That will have to be done in the interests of our general economy. On this question of housing, I should like to refer to a book published some years ago by a very learned member of this Seanad, Senator O'Brien, entitled The Phantom of Plenty. In that book, Senator O'Brien quoted from The Times with regard to the building industry and said:

"The Times said recently that the building industry stands out among the nation's leading trades to-day for its poor output and general inefficiency.”

I and many others have asked several times in this House that we should have an inquiry into the whole cost of building from the time man takes the top off the sandpit until he finishes the house. I believe that the effect of the cost of building on our economy is very much greater than any of us realise. We have schools, hospitals, houses, public buildings, factories and workshops to be maintained. All of these institutes have to pay for building. As compared with other forms of production, the building industry is very in efficient. If something could be done to improve it, it would be of an enormous advantage not only to the economy of the country but to the Minister for Finance. I am sorry for having delayed the Seanad, but I feel that I suggested some remedies, most of which are not very popular, but it is well that someone should have suggested them.

Mr. Hartney

It is with a certain amount of timidity that I get to my feet for the first time in this Assembly to take part in a discussion which has covered such a wide field. It is with a certain amount of timidity that I get to my feet in an assembly in which we have experts in the fields of education, economics and finance. It is a very awkward position for an ordinary countryman to find himself in. It is very hard for him to find his feet, so to speak, for his taking-off ground. I will make the best endeavour I can, and I hope the Seanad will be patient with me. I shall not delay the Seanad any longer than I can possibly help.

With regard to the Central Bank and high finance, I am not going to enter into these matters at all. I would ask those people who are conversant with these matters to take their minds back to the time of the Banking Commission. Very able men were on that Banking Commission. There were majority and minority reports. One of the gentlemen who happened to come from the county that bore me was one of the signatories to a minority report which appeared afterwards in our local paper in Limerick. His name was Mr. John P. Colbert. He referred to banking and the banking methods employed at that time. He said they were like a good friend who lent an umbrella on a fine day, and when a dark cloud appeared overhead the friend said: "I want my umbrella back, please."

That was the impression made upon a gentleman who had given his years to the study of banking. He was subeditor of The Statist in London. His knowledge of finance could never be questioned. He holds a very important position in our country to-day. We will leave it to him and men like him to decide for us how right or wrong our banking systems are.

We can all go back to the first world war—I suppose we must call it a small war now. As the 1914 war progressed, money piled up in the banks and eventually the banks—they always have held a conservative idea how they should invest money—piled up their stocks and had to consider where they were going to put the surplus money which had piled up in their coffers. There was a possibility of their being a racket. I use the word "racket" because it was used here and I suppose it is not unparliamentary.

The banks in their wisdom or otherwise decided to advance all the money that would be looked for in the purchase of land. In the City of Dublin and in other cities, including Cork and Limerick—I do not know whether Galway came into it—the banks decided to advance all the money that would be looked for in these places for the purchase of publichouses. The money was advanced to men who had so much money in the bank and who were looked upon as being good to take a chance with. The bank managers said to these men: "Such and such a place is for sale. You have so much money to your credit. Why not have a go at purchasing the premises?" A lot of people fell for that.

I know of hard-working farmers, friends and neighbours of my own, who fell for it. This happened in Dublin as well and proof of it can be had if we go back far enough. If those people had turned a deaf ear to the manager how happy they would be now. The policy of the banks has always been shortsighted and conservative. Comparing that time with the present day, it is a good thing that a note of warning has been sounded because several people are going to be saved before they enter the lion's den. I think it is a very good thing that a warning was given and I am glad of it. Take the case of a man who has £100 who wishes to buy a place for £500. The bank manager says to him: "Go and buy that place and I will advance you £400." He does so and when the crash comes his hard-working savings disappear.

It has been said that the farming community are not inclined to put money into local enterprise; that they will invest money in other work and are prepared to put their money into the bank at 1 per cent. I think we should examine that position very clearly before giving a decision on it. As an investing people, it is wrong to take the farming community to book so soon. It is only a very short while since the farmer came into his own. That fact should be borne in mind. Due to the fact that the farmer established the ownership of the land, other people are in a happy position. The land was saved for the people of Ireland. The farmer may be conservative but he might have reasons for being conservative.

There is a very big number of farmers. Perhaps if all the money they have in the bank were totted up it would look big but divided over all these people it works out at a very small amount per capita. Everybody who comes from the country will realise that the farmer starts by trying to rear his family as best he can. Some of them may get professions and some may take a holier job but there will always be some to be provided for. If he is fortunate enough to be blessed with a couple of good years and at the end of them can put something into the bank even at 1 per cent. he knows that he can call upon it when he needs it. The day will come when he must be prepared to hand out dowries for one, two or three daughters or buy a place for a son who cannot always continue in the homestead Even a farmer who, because he will not invest, will be finally condemned to death is entitled to say those few words

We are all agreed on principle that increased production is the best way either to raise your standards of living or hold the standard of living you already have. A lot of things have been taken into account. I am sorry that Senator Baxter is not present because he spoke last evening about the great possibilities that existed for increased production on the land. He pointed out how much land had suffered and deteriorated. With that I agree and I make no apology because it deteriorated and suffered in the national interest.

He said that with extra fertilisers there could be 1,000,000 extra cattle in the country. They would be worth £50 each and that meant that there would be £50 per head on a 1,000,000 cattle to come into the country overnight. That was taking a short cut because cattle do not shoot up like mushrooms. We have a certain number of dairy cows which are the main stock in trade, but they cannot be increased overnight. Only in three years' time would there be any hope of having a number of extra cattle.

Senator Baxter said that we could have this £50,000,000, which would be a grand income for this little country of ours, but he never took the trouble of going into the position of the different farmers in the country. He never told us how many or how few people would share in this £50,000,000. It is all right to say that it would come into the State. That is a grand thing to say and we would all be pleased, but the Senator never addressed himself to the three, four, five or six cow man who is supposed to be a farmer. If he tries to put in for employment as a worker he is ruled out and told: "You are a farmer." He has not the benefit of any of the social services available to the worker although his income is far less than that of the workingman living next door to him.

The practice all down the years in this country has been—and I am speaking as a farmer—that the dairy farmer is the man who is always blamed because he is always looking for extras. Very good. Blame him as you will. He milks his cows and puts up with losses. In his yard the calves come into the world and he must put up with losses there. The small farmer often takes out his calves to dispose of them a week, a fortnight or a month after they are born because he does not consider them a good investment and they use up some of the milk which is worth so much a gallon at the nearest creamery, bad as the price may be. He often has to take a very bad price. At another time he feels that he could not take that price and holds the calves over. But in any case he will only bring them to a certain point when they are of value and then he passes them over to the rancher who employs no labour, who will not employ men even to save the hay. It would not be safe to mention tillage to him, and district justices admitted that during the emergency.

The dairy farmer may be fortunate enough to have a few winterages, and if he has he will pull away with them, but many who work actually under such conditions are working under slave conditions, and slave conditions are something that should have vanished from this country years ago. The dairy farmer is a slave unless he has sufficient land to keep his cows and raise his calves until they are two and a half year olds, when they are worth money, and pass them on then. That is one of the charges against the farmers, and I will leave it to you to decide on it.

A very interesting debate took place last evening. Senator Baxter spoke about tractors. Naturally that is a grand thing, because he schedules for the man with a three figure acreage. Senator Quirke said that we were taking a terrible risk if we discarded horses. I agree, because how is the small farmer with five cows to get in a tractor, even if Senator Baxter, who is all powerful in the I.A.O.S., said: "We will provide tractors to all creameries for small farmers who are not in the position to buy them for themselves."

The land rehabilitation scheme was greatly boosted. I come from County Limerick, in which, I am not going to deny, there is good land, but I will also declare that some of the worst land in Ireland is to be found there. There is that mixture. As far as the land rehabilitation scheme is concerned, I say without fear of contradiction that there is land on which money has been spent which would not realise 30 per cent. of it. When that scheme was discussed in the Dáil a case was made that the best way to speed up production and increase exports would be to do something for the good land. At that time the amount of fertilisers imported into the country was approximately 250,000 tons. If £4 per ton were given on that it would mean a cost of £1,000,000. Everybody would have his fertilisers at £4 per ton cheaper at the cost of only £1,000,000, some of which would be the grant which came under Marshall Aid. It would only be equivalent to the amount the former Government were fortunate enough to inherit from one of the Guinness family who had gone to his eternal reward, and we all, I suppose, contributed to that sum.

If they used that money in that way immediate results and better progress would have been obtained. I do not rule out for a minute the question of improving the poorer areas, but I say what the old woman said long ago: "You should not have all your eggs in one basket." I am still convinced that she was right. The way to get immediate results is to start on land that was naturally rich and that was able to bear more. Start with the land that is in the best shape. Then you could gradually take in other lands, even the land where fertility is down to zero.

As agriculture is our main industry, all the economists, bankers, business men should sit down around a table and decide what is an economic farm and what type of farming would be the greatest national asset. I would like very much if some of these gentlemen would go into that matter and we farmers would tender any evidence that we could possibly give them, even though we are the people who are always evading income-tax and everything else. I submit that the man who signs a cheque is not the man who is paying the income-tax. He is paying the income-tax out of moneys he has collected for the goods he has sold at such a margin of profit as enable him to have a profit which is excessive and gets him into trouble with the Revenue. In that way the farmers and farm workers pay a very high percentage of the income-tax that is paid in this country.

I want to say that I believe now, as I believed 30 years ago when Arthur Griffith first said it, that anything of Irish manufacture should be bought by the Irish people even if it costs more. I believed in that policy when I was only a gossoon. I believe in it still and will continue to believe in it. That would be all very fine if everybody else played their part as nobly as the consumers in the purchase of Irish goods.

There is a certain line of business that has become very popular in this country, that is, the motor trade. The motor is turned out by a certain firm. They have agents in certain big centres. My neighbour goes into the agent and says he would like to buy a Prefect or something better. He books it. The agent tells him he will have it at such a time, but the agent is not going to say: "I will take so much now and give me the rest another time." The purchaser has to go and deal with another firm, and that agent, despite the fact that he is getting 25 or 30 per cent. of the cost of the car, has no financial responsibility at all in the matter. His commission is absolutely net. That is a thing that should be taken into account.

Between the producer and the consumer there is a gap, and it would be very interesting to see if it could be narrowed. The producers in their tin-pot way produce the stuff, be they manufacturers or otherwise. The goods go to a wholesaler and pass on to the retailer. I maintain that there are too many handlers of goods in this country. If 25, 30 or 50 per cent. of the handlers became producers, we would be a wealthier country. I suggest that this is a matter for the industrialists rather than the farmers to remedy.

I hope I have not been hard on anybody. I am not going to take exception to anything that has been said for the betterment of the country because so and so says that he is opposed to it. I maintain that there are too many handlers. They are free because competition as an issue has ceased to exist. We are told it does not exist in the banks. It does not exist either in that great organisation that was referred to as "R.G. Data" because they have fixed prices. They will all charge the same price whether you buy from A, B or C. The day must come when some of these people will turn their energies to production instead of handling and, until they do, we cannot be expected to do the impossible thing of balancing our Budget, and until we balance our Budget we will not be happy. I say that any people who import more than they export and produce will eventually go down.

Mr. McGee

I have no orthodox speech prepared. When Senator O'Brien concluded yesterday, I felt that there was no necessity, that he had done an excellent job.

During the debate I thought it might be necessary for a farmer to say something in defence of his job. I cannot subscribe to the view that discord must exist between industry and agriculture. They both go hand in hand. If they do not, it is a bad day for Ireland. I have every confidence that they will go hand in hand.

Every citizen who has commonsense must realise that it is a magnificent thing to have our citizens contributing so successfully to industrial projects which are urgently required.

I am perfectly satisfied that there is absolutely no necessity to attack industrialists. As Irishmen, I am sure they do a good job. There is even less need for very marked politics on one side or the other. I have been a long time in this House and, whether it was the inter-Party Government, which I favoured, or the Fianna Fáil Government, to which I was opposed, was in power I found nothing from the Ministers concerned or the Deputies or nine-tenths of their friends but the greatest co-operation and aid. I got just as much from them as I did from Deputy Dillon or any of the others.

Deputy Dillon did an excellent job and in the county from which I come, on the land which I own, he installed Donegal men who had been working in the Highlands of Scotland and who came home to do drainage work and who have done an excellent job. The name of Deputy Aiken will always be associated with the magnificent arterial drainage of the Erne, the Glyde and the Dee. I see no reason why we should lay such emphasis on what Government is in office. Will we not all work and subscribe our best efforts and be proud to help the country? In another 50 years we shall all be somewhere else. I hope that while we are here we will do our best for our country.

There has been a lot of unnecessary spot and bother since the last election in connection with the creation of a sense of fear in the country by prominent citizens who should know better. The greatest human emotion is fear. If a man is contemplating making an investment and then hears scare stories he will become afraid and he will not make the investment. I feel very strongly about this, so much so, that I was rather rude to Senator O'Donovan about it and I am sorry. Senator O'Donovan is one of our best veterinary surgeons. Evidently, unknown to Senator Loughman, there are actually 30 people in this country who are exporters of dead-meat carcases to the world to-day and they have been in operation for a considerable time. I do not know whether these people are to be deemed to have made excessive profits or otherwise, but it has been stated that this time last year some people made large profits on cattle.

I was rather surprised at Senator Loughman's remarks this evening when I remembered that I had got my bill of lading for 100 tons of potatoes to the Canary Islands. There is no reason why I should not send 1,000 tons of potatoes to Ceylon, where they may be starving for all I know. We are exporting potatoes by the hundreds of tons from the "Wee County". I am certain that if the citizens around Clonmel and other parts of the country would go out and take their coats off and do a bit of work they, too, would have potatoes to export. The price is roughly £12 a ton f.o.b. Dublin—which is different from f.o.b. Dundalk, and about which the Minister will hear something next Sunday. What person will tell us that there is not an export trade for the produce of Irish land? Just imagine making a statement like that while Guinness's barges are floating down the Liffey laden with the product of our Irish land. Within the past six months, Messrs. Guinness, at a social gathering in Louth, stated openly that their produce was consumed throughout the world, but that they had only one producer—the Irish farmer—and that they would stick to him. Please God, they will stick to him.

In my time I was politically opposed to the Minister. Nevertheless, I did what Senator Loughman said Deputy Dillon should have got his supporters to do. I would not have done it if I did not believe that it was an economic proposition. The Minister suggested from public platforms that the farmers should go in for the growing of wheat. I went in for it. I will do anything that any responsible Minister asks me to do. However, if Deputy Dillon came down and asked me to do something which I did not believe would be profitable I would tell him that I would not do it. Senator Loughman said that Deputy Dillon spoke and gave encouragement. He never did anything else. I now ask Senator Loughman to stop his leaders from frightening us. Large stocks of manures are lying to-day in sheds throughout the country and some are lying in my own sheds. They are lying there because the farmers are afraid to buy them. Why would they buy them when they are told that prices are too high? Will banks advance money if they fear that in six or eight or nine months hence prices will come down, wages will come down and everything else will come down? I say that so long as barley is £4 4s. 0d. a barrel and potatoes £12 a ton, there will be prosperity in Ireland no matter what any Minister may say.

Mr. Loughman

But you cannot get the wheat. You cannot eat the money.

Mr. McGee

I grew the wheat until it came out of my eyes and until it failed to come up on my soil. I will help any Administration that seeks to do good for the people of this country but I will not stand for hypocrisy no matter what personal gain it might mean for myself. Deputy Dillon may be a very good friend of mine. He advised us two years ago to lay in supplies of manures. Fortunately, I took his advice and purchased a two years' supply. However, the farmers are afraid to buy because of the scare which has been created by prominent members of this Government who should have more intelligence than to try to frighten the people.

The Central Bank Report was not in any way sympathetic to the farmers. Consideration has not been given to the fact that if the farmers could get accommodation for a year or two it would help to tide them over until the difficult period is over. Prominent men in control of this country should not tell the people that they must curtail spending and that they are living at too high a level because that type of talk is bound to affect the credit of the country. That is the root of the difficulty. You will find that without any boosting at all the farmers will rise. It is relevant to say here that the farmers have lost much of the kudos they possessed in the old days in this country. Everything is against them and nothing is with them. If you go to a bank you will probably be attended by a citizen of Dublin and it is almost a certainty that the director of the bank will be a Dublin man. These people have a city outlook. It is all very well to hand a case to a barrister and get his opinion here in Dublin, but to have to come up to a banking system run from the City of Dublin or go down to the Custom House in regard to local government is quite a different thing. Have we not seen where a measure of taxation is passed on to the unfortunate consumers, to keep the money from coming home to the consumers and prevent their efforts to get something fresh in their homes?

Some £14,000,000 has been put into Irish industry in the past 20 years—all honour to it—but the population of Ireland has not increased and I assume that the £14,000,000 has been giving employment in industrial occupations. Unfortunately, the agricultural community has kept on exporting its cattle more than ever and its Guinness' products more than ever—though formerly they were anti-Irish, they cannot be so to-day. We have also had the export of potatoes. What does Senator Loughman want us to export? If he comes up to us with schemes, I will encourage him in my county, if his schemes are better than those we possess.

The question of credit is affected by this. I am perfectly satisfied with the world situation and perfectly satisfied with the men behind me in business, that everyone will earn their livelihood in tillage and grazing, in the face of this world situation, if people in high status—for the time being, at all events—would only learn wisdom and commonsense. There is no necessity to throw slurs back always. Let us take whatever Government is in and go on and do better. In my opinion, the farmers will do better, even with all their difficulties, if they get the slightest chance and are not frightened out of their wits.

Mr. Tunney

I want to correct a statement made by Senator McGuire yesterday, to the effect that the workers had some "go slow" method or that the trade unions advised workers only to do so much. I was supposed to interrupt, but I do not like doing that, so I wish to say more clearly now that I think that statement is not true. As a member of a trade union for 34 years, I have no knowledge of it and I do not believe that any responsible trade unionist or responsible individual has told any worker or trade unionist to go slow. If individuals or certain tradesmen do go slow, that is a different matter. Personally, as one who believes in good wages and good conditions of service, if I were an employer of labour and felt that a man was going unreasonably slow, I would have no hesitation in dismissing him.

Another point he referred to was the recent "work according to rule" in the telephone exchange. I am afraid that the Senator—and perhaps other Senators, too—does not understand what caused that position. I wonder if the Senator is aware that there is no question of a "go slow" policy there. Those girls—I will not call them unfortunate, as they are in permanent employment and anyone who is in permanent employment is in a fortunate position—are one class of worker in the nation who, before they start work, must tie themselves to the job. They go in there and put on the headphones and then plug in and they dare not take them off until they are relieved.

They had a privilege, given to them by a native Government a quarter of a century ago—that was, that, after the offices and the industrial concerns closed down on a Saturday and the rush was not so great, they had a concession, on account of being on certain duties, that they were not asked to complete their day on Saturday but got an hour or an hour and a half off.

Recently, in July, officials—I am not accusing the Minister—decided that that little concession was to cease and that they were to work the full time. It was then that they decided to work according to rule. I am quite satisfied that if the Senator who referred to this matter had gone to the exchange and had seen the conditions under which those girls were working, he would have been prepared to give them not merely two hours off but a whole day off. These workers have been tied to the job, just like a horse that is put under a cart and is drawing all day.

Senator McGuire also referred to this question of the closed trades. I think that system is wrong and I do not see any reason for it. I say this despite the fact that as a trade unionist it may not be a popular thing to say. It is a terrible injustice that any section of trade unionists should say that no one will be allowed into their trade except their sons. I wonder what those tradesmen would think if others looked at it in that way also and said that those tradesmen's sons could not enter the teaching or the medical profession, or any other occupation, but would have to keep on as carpenters and bricklayers. That whole system is wrong and I hope to see it changed. I do not believe that any section of workers should have a right to dictate as to who should enter a certain trade. As one who believes in freedom—and we all did our part for our freedom—I hold that any child has a right to go into any occupation that his parents desire and consider suitable. On the other hand, it has occurred many times that the most suitable and most capable person has been debarred because of this closed trade policy and I hope to see it ended.

Senator O'Donovan made a very fine speech indeed, but he left one point out. He said the farmer had this and that, but he did not say that the farm labourer had a guaranteed wage. It was a pity he left that out. Like Senator O'Donovan, I believe that the farming community—whether large farmers or small farmers on small uneconomic holdings in Connacht—are the backbone of the nation. They are the people who count, and who will always count. But for their work this nation would be starved. No matter how big a job a person may have, and no matter how big the salary may be, were it not for the farmer and the farm labourer he would die of hunger. I believe the farm labourer should get a decent living. We hear a lot about the flight from the land. Give those Irish people reasonable wages in their own country and there will be no fear of a flight from the land.

Regarding the "go slow" policy, I defy contradiction when I say that Irish workers were forced to go all over the civilised world, and even into the uncivilised parts, and they always acquitted themselves well and gave an honest return for their wages. There is an equal obligation on the employer to give good wages and there is the same responsibility on the worker to give an honest return. I am satisfied that 99 out of every 100 Irish workers have always done that and I am sorry to hear any Senator say there was any idea of going slow.

Senator Quirke said yesterday that the cause of this statement by the Central Bank was the activities of the previous Government. There is not a man in this country more competent than Senator Quirke himself to know that that statement was wrong. He knows better than I do, because he is a clever and intelligent man, that the position of this country was never better than it is to-day. Take just County Dublin, this Christmas time.

Not many years ago we gave some relief work each Christmas and we used to have 4,000 people seeking to get employment on a fortnight's relief work at £2 a week. This time when we put up the scheme only 280 applied —and the wage was £4 15s.—out of the huge population we have in County Dublin. Let these Senators not fool themselves by saying it was the previous Government that caused unemployment. The previous Government did wonderfully well and if the present Government follow on the lines of the previous Government they can do well also. I heard Senator Noel Hartnett condemning us and speaking about those "on this side of the House" and those "on that side of the House". When we come in here, there is no "side of the House". One would think from what he said that we were all capitalists over here.

Mr. Hartnett

It was said by Senator McGuire to me. It is a pity that the Senator does not listen.

Mr. Tunney

Anybody listening to Senator Hartnett would think that all the capitalists were on this side and all the socialists on the other side. That may be so, but remember that there are some of us on this side who have given everything we possess for Ireland and the betterment of the worker. Make no mistake about that.

With regard to Senator McGuire, though I disagree with those two statements of his, I should like to say that I heard the best compliment paid to him that I ever heard paid to anybody. Recently somebody was seeking employment in one of the concerns with which Senator McGuire is associated and he was told: "You have no business coming here because there is no chance of a vacancy, unless somebody dies or resigns." That is the greatest compliment that can be paid to any employer.

While I may disagree with what a man says with regard to particular matters, I realise that his statements may be well-intentioned, and I go so far as to say that Senator McGuire's statement, so far as the particular trade union he referred to is concerned, may have been true, but, if it is, I want the matter brought to light and the responsibility for telling any section of our people to go slow put on the proper shoulders. I feel as an Irishman, as a man who believes in Ireland and in an Irish-Ireland policy, that there is a good future for this country, and I believe that were it not for the statement of the Central Bank and the statements made by other responsible people who should have known better, we would not have even the 285 unemployed in County Dublin this Christmas.

Mr. Aiken

Senator Hayes opened this debate on a very good note, after he had shot a few poisoned shafts for a couple of seconds. He said that we should do our utmost to get the highest common measure of agreement rather than disagreement in facing our problem, and he called it a real problem. I should like to do that, if I can. It is interesting to look back and to see how far a number of people in this House have come to meet views which were diametrically opposed to the views they held many years ago. Senator O'Brien spoke here at great length and one Senator after the other has agreed that his speech was most interesting. I found it very interesting too, not that I agreed with all he said and not that I think he covered the whole fundamental framework of the problem which faces us. The Senator was a member of that famous Banking Commission and he summarised here, on 29th March, 1950, what was the essential feature of the report of that commission. At column 1210 of Volume 37 (10) of the Seanad Debates he said:—

"Possibly the central warning of the Banking Commission Report was that the then dissipation of external assets must be brought to an end, that equilibrium must be restored in the balance of payments. The urgency of that operation was postponed by the outbreak of war."

Just keep that in mind: "the dissipation of external assets must be brought to an end". That was not just a remark which he made by mistake, because in another debate here he said exactly the same thing. I want to commence by marking where we start on the road to get an agreement. On 21st June, 1950, a few weeks after the speech to which I have referred, at column 367 of the Seanad Debates he said:—

"In the spring of 1938, at the time that report was signed, the country had been suffering for six years from the campaign referred to this afternoon as the economic war.... We were rapidly losing our external assets during those years. It therefore became a matter of extreme urgency at that time... to restore the equilibrium."

What exactly was the situation at that time? By how much were our external assets being dissipated that it became a matter of "extreme urgency to restore the equilibrium" in the balance of payments? The fact is that during those years, the years in which the Banking Commission was hearing evidence and drafting its report, the position was that, in 1935—we had certain changes in the external assets as shown in the balance of payments statements—there was a credit surplus of £.6 million; in 1936, a credit surplus of £2.5 million and, in 1937, a deficit of £2.1 million. In other words, in the three years during which the Banking Commission was sitting, we had added £1,000,000 to our external assets, instead of subtracting that sum.

Taking the whole of the period from 1933 to 1939, all we subtracted from our external assets was £5.5 million, leaving out of account the fact that we paid the British £10,000,000 during that period and got rid of a debt of £100,000,000. In fact, if we make the calculation, we will find that we had added effectively £95,000,000 to our net external assets during that time and that was the period in respect of which Senator O'Brien now justifies himself for the Banking Commission Report which alluded to the "dissipation of our external assets". During the past couple of years, we have dissipated external assets to the amount of £30,000,000 in 1947; £20,000,000 the next year; £10,000,000 the next year; and £30,000,000 last year. This year, it is estimated that £60,000,000 or £70,000,000 will be what the Banking Commission and Senator O'Brien describe as dissipated.

The Senator talked about the dissipation of our external assets and the grave need to make ends meet, to live within our means, when we were effectively adding £95,000,000 to our net external assets by getting rid of the land annuity payments.

It was a matter of "extreme urgency" at that time he said to restore the equilibrium but he did not think it a matter of extreme urgency in 1950 when he spoke in this House and urged the then Government to carry on investing right, left and centre and not only to invest in things like the land project, which cost from £60 to £100 an acre to drain very poor land, but also to meet the ordinary capital current expenditure which the State normally undertakes by way of building schools, subsidising houses and so on. He seemed to be in favour at that time of borrowing that money. I want to get clear from Senator O'Brien whether he would approve, in an inflationary situation, of the Government borrowing and inflating the supply of money for things like schools, houses and so on, or, as has happened, to add to the national debt in order to pay the old age pensions and other things which the last Government paid out of their increased national debt.

Another thing that worried the Central Bank very much was what they called the dead weight debt. The dead weight debt was crushing the life and soul out of the country at that time according to the Banking Commission Report. Indeed, Senator O'Brien was one of the most enthusiastic supporters of the theory that the dead weight debt incurred by Fianna Fáil, coupled with the awful dissipation of our external assets, was going to bring this country to ruin. Let us have a look at the dead weight debt situation.

At the end of March 1932, it is calculated that the dead weight debt was £18,000,000 odd. The calculation was made in this way. These figures are that part of the gross debt the servicing of which has on average to be met out of taxation. It is hard to divide up the State debt. The State pays portion of the service charges. Some other investments made by the State return more than the service charge which the Central Fund has to pay out in respect of it. In March, 1948, the dead weight debt had risen to £66,000,000. Three years afterwards, in March, 1951, it stood at £115,940,000. The dead weight debt, in the 26 years since we got a Government in this part of the country, stood at £66,910,000. Three years later it was almost twice that at £115,000,000 odd.

In March, 1950, Senator O'Brien appeared to have ceased to worry about the dead weight debt or about the dissipation of external assets. He encouraged the Minister for Finance—I will read the quotations if anybody desires to hear them—to go on spending and dissipating the external assets and increasing the dead weight debt. I should like to know exactly where Senator O'Brien stands on this matter. He could not have been right on those two occasions. He could not have been right on the Central Bank Report and in urging the Central Bank Report to denounce the dissipation of external assets which from 1932 to 1939 amounted to a deficit of £5,000,000 if you leave out of account the economic war and the increasing of our net external assets by £100,000,000. He cannot have been right then and right in 1950 when he was asking the then Minister for Finance to go ahead and dissipate the external assets as quickly as he could. He patted him on the back for the dodge which the then Minister for Finance took of increasing the dead weight debt rather than facing the people and telling them the truth that they were living beyond their means and that if they wanted to consume they would have—as some of the Senators said here—either to work harder or more efficiently to produce more.

I am glad that generally there seems a recognition of the fact that we are lucky to have some assets outside the country upon which we can draw to increase our capital investment here. I am glad also there seems to be general agreement that our people as a whole, should, if they want to keep their existing standard or improve it, work a little harder and work a little more efficiently. Nobody I think wants to make our people devote all their lives just to producing consumer goods instead of capital goods. I think we all desire them to live a reasonable life having regard to their resources and their income. As a people, we have got to live within our income or nearly within our income when we have some external assets to cash or the day will come when we will have no external assets and we will have to live within our income or go crawling to somebody for loans.

It is estimated that in 1945 we had net external assets of £220,000,000. We went through those pretty rapidly since—£30,000,000 in 1947, £20,000,000 in 1948, £10,000,000 in 1949, and another £30,000,000 in 1950. It is estimated somewhere between £60,000,000 and £70,000,000 this year. We cannot go on very long like that until we come to the bottom of the bag.

It is true that, apart from the sterling assets held by the Central Bank, by the commercial banks and by Government funds there are other external assets held in England and elsewhere by our citizens. I expect that we could get hold of some of those if we started in time and introduced the system the British have in regard to dollar investments held by British citizens. We could make them register and make them sell those investments to a Government authority, the Central Bank, an exchange equalisation fund or something of the kind in exchange for Irish pounds. Having spent all the external assets held by the Central Bank, the commercial banks and Government funds we could get hold of a few more external assets to spend.

While I think that the attitude of Senator O'Brien in 1938 was a foolish attitude, while I think that the Government which was in office from 1932 had the right attitude to our external assets: to spend as much of them as we could invest reproductively here or as much of them as was necessary to do the great social job of rehousing, drainage and things of that kind, I do not think we should regard them as something to be got rid of as quickly as possible.

However, when the last Government were adding to the dead-weight debt and were dissipating our external assets very rapidly Senator O'Brien patted them on the back. In his speech here yesterday he seemed to be giving another pat on the back and sending the fool further—that is to the people who say that because we have some external assets that fact detracts in some way from our ability to increase our domestic assets. The Senator said that we should examine the possibility of empowering the Central Bank to invest 20 per cent. of its note fund here in Irish securities rather than in sterling securities.

Senator O'Brien must know enough about finance to know that if the law were that the Central Bank could invest 20 per cent. of their sterling assets in Irish securities and they carried out that operation the first effect of it would be to increase the external assets of the commercial banks by 20 per cent. Nobody can deny that. That is the first effect of it. If you take Ireland as a unit it does not change the situation regarding the total of her external assets but merely changes the holder of them.

Senator O'Donnell being one of those who talk a lot about finance and know very little about it naturally took up this idea which was promoted by Senator O'Brien and said: "Why stop at 20 per cent., why not realise the whole of the external assets in the hands of the Central Bank and invest them here?" Senator O'Donnell is one of these people, I think, who think that while we have external assets in England we cannot make investments here or that we must realise them in order to make investments here. It would be as true to say that we could not increase our internal assets if we had the couple of hundred million pounds external assets in the hands of the Central Bank, Government funds and the commercial banks in the form of a couple of hundred million pounds' worth of gold. If we had a couple of hundred million pounds' worth of gold down in the Bank of Ireland there is nobody who would say that that in any way detracted from our ability to increase our credit in the country and our capital investment.

There is this crazy idea knocking around that because we have these external assets in England it is detracting from our ability to produce capital development here. Senator O'Brien should have a duty as a professor because he cannot speak here altogether as a politician. You must remember that the people to whom he is responsible might read his speeches and take his statements as a politician for those of a technician. He should have pointed out the fallacy of that argument which is current throughout the country and that has been "plugged," as the Americans say, from many platforms. He should get our people to realise the facts of that situation so that we can discuss our finances and economy without having that fallacy cutting across and upsetting our discussions. I hope that Senator O'Brien will take an early opportunity of expressing to the country and to the people whom he might have deceived that it would not make very much difference whether the Central Bank held our external assets or the commercial banks or whether in fact a portion of the note fund of the Central Bank was invested in Irish securities rather than in British securities.

While we have any external assets left somebody here must hold them, some organisation, some individual or group of individuals. We can bring them back only in the form of goods or services. If I have a £1,000 invested in British securities and I want to take it home what is the operation? I tell my broker to sell it in London. He passes me a cheque. I lodge it in the bank here. I draw £1,000 in Irish pounds and my bank has increased its external assets by £1,000. I have diminished mine by £1,000 but the bank has increased its external assets. We cannot repatriate our external assets unless we take them back in the form of goods and services or give them away.

When we have no other agency, I think it is just as well that the Central Bank should hold some of our external assets rather than the commercial banks should hold them all. Indeed if the commercial banks did not hold so much, if they refused to do it, we might have set up some agency other than the Central Bank like an exchange equalisation account or something of that kind.

Professor Johnston

Surely the commercial banks hold a lot of sterling assets as well as the Central Bank?

Mr. Aiken

They do. They hold more than the Central Bank. I was merely dealing with the point suggested by Senator O'Brien that one way out of our difficulties would be that the Central Bank should invest 20 per cent. in Irish securities. I was pointing out that that would not change the situation in regard to our external assets.

Professor Johnston

Senator Professor O'Brien is not here, but if he were, I am sure he would give an explanation of that point. It seems fairly obvious.

Mr. Quirke

It is Senator O'Brien's fault that he is not here.

Mr. O'Donnell

As the Minister has referred to the possibility of conversion, might I ask him why it has not been done if it can be done?

Mr. Aiken

I have so much to say here to-night in the short time that I am not going to try to bring Senator O'Donnell any further along the line. He will have to read a little bit himself.

Senator O'Brien said that "we cannot expect drastic rectitude from a Government". I think he would have been expecting rectitude in vain from the last Government but I think he is entitled to expect rectitude from any Government. It does not always pay politically. In 1947, I thought there was an inflationary situation staring us and recommended to the Government that we should deal with that situation before it got out of hand.

In an inflationary situation, we tried to withdraw some money that was creating damage. When the next Government came along, when they got as far as 1949, when they saw that the budget was not going to balance unless they increased taxes, even though they admitted that there was an inflationary situation, they adopted the expedient of cutting the supplies and services into two sections, calling one capital and the other the ordinary services. They borrowed for the £12,000,000 capital items in the supply services. They borrowed other millions in the couple of years they were in and the result is, as I have said, that they drove the dead weight debt from March, 1948, to March, 1951, from £66,900,000 up to £115,000,000—almost doubled it.

At that time Deputy McGilligan was boasting about his investments, all the great investments they were making for the country. I pointed out to Deputy McGilligan at that time—I will quote if anybody wants it—"That is all right, but you are passing the cheque to the next Government to pay it." That increase of £51,000,000 in a couple of years in the dead weight debt has increased the annual charge for the service of debt from £4,800,000 to £7,247,000 at the end of March this year. When we have this year's addition—we have no money in the kitty to meet the bills that Deputy McGilligan left behind him—it will go over £8,000,000. It is no wonder that Deputy McGilligan, when I pressed him, said it was going to be "a bit of a headache," if the result of this increase of dead weight debt— almost double inside a couple of years —did not produce an annual revenue to meet the service of the debt. I may say truly that it is a bit of a headache and he was quite a prophet.

A number of the Opposition Teachtaí and some of the Senators who at one time before they entered this august assembly were associated with the Opposition are like the tyrant that Dean Swift spoke of: who when he put a man on the rack did not allow him the right to complain. I think we have a right to complain and it is not causing a panic to complain that our dead weight debt was in fact put up by the previous Government by the amount of millions that I have said, that the service of debt has gone up by £3,000,000 or £4,000,000 inside a couple of years. The fact of the matter is that the last Government had the spree and they left us both the headache and the unpaid bills and we have to pay them.

I think it is only reasonable rectitude on the part of a Government that they should explain that financial situation to the people and tell them that there is no way out of that difficulty in the present situation—if we are not to continue the spree—other than sobering up, facing the facts and trying to make the finances of the country fit the physical facts of the country.

There are a lot of people who misread one of the modern economists, Keynes, who said that "anything that was physically possible was financially possible". There are a lot of crackpots who misread that and revise that particular dictum of Lord Keynes and put it this way, that whatever is physically desirable is financially possible.

We all have plenty of desires and if mere wishing would make this country a country flowing with milk and honey and everybody in it a millionaire, I and my Government could wish as strongly as well as anybody else.

The fact of the matter is that if we are going to have an increased standard of life or maintain even the present standard of life, we have to work a little harder and more efficiently and a lot of the practices that Senator Tunney, Senator McGuire and other Senators referred to, restrictive practices of all kinds, and holding down of production of all kinds, whether by employer or employees, will have to go by the board. They each will have to work a little harder and a bit more efficiently. That does not go for the farmers or industrialists alone. It also goes for the shopkeeper, the clerk, the civil servant and everybody else.

I want to take issue with another couple of phrases Senator O'Brien used because they are going to mislead a lot of people and it is just as well to try to straighten them out. He said that "investment should not be financed out of taxation". He also talked about "the undesirability of forced savings for capital development". The way I regard the finances of the country—the analogy cannot be brought too far—the way I look upon the economy and the finances of the country is: take a farmer with 50 acres of land and £200 in the bank and who is able to make a couple of hundred pounds a year. That farmer has, as far as his standard of life and leisure is concerned, a few options. He has £200 in the bank. He is making £200 a year. He can live at twice his standard of life for one year by realising his savings in the bank. He can live at 50 per cent. higher than he can afford for two years, realising £100 a year. If he wants to increase his standard of life permanently he may realise £200 in the bank, put it into extra manures, better seed, drainage or capital equipment of any kind in the hope that he will get extra production in order to pay him for the few pounds' interest he would have got from the bank.

Like the farmer we, as a people, have a couple of hundred million pounds abroad. If we like to have a good time and go on a spree and live at twice our standard for a year or so we can realise all our foreign assets but we will not have any left at the end of that time. We can live at a 50 per cent. higher standard for a couple of years. If we take the capital home for consumption which does not result in increased production or the building up of capital assets here, we are going to dissipate in truth these external assets without increasing the wealth or the wealth-producing capacity of the Irish people. We should be very careful when we realise our external assets to ensure that they are spent directly either on the purchase of capital equipment or in ways such as Senator Johnston referred to, namely, to buy consumer goods which would go to feed the people engaged in productive capital development work of various kinds.

Another statement made by Senator O'Brien was that "investments should not be financed out of taxation." From my point of view the question, whether investment should be financed out of taxation, or the reverse whether a lot of the Government spending should be met out of credit or borrowing or increase of debt or increase of Government money of any kind, is a question as to the level of money there is within the country before you start the operations. In truth, it cannot be said that from a technical, a political, a social or any other view "capital development should not be met out of taxation". I do not know whether the situation next May will be such that capital should be met out of taxation or not and I do not think Senator O'Brien can know it. However, he certainly cannot state it as an unvarying, truth from the technical point of view that under no circumstances—and he did not qualify his statement—should capital development be met out of taxation, because there are circumstances when there is too much money in the country and when it is necessary from a social or a national point of view to have capital development.

If you are going to do it without creating social chaos you must take money back out of the stream and the only way you can do it is by taxation. It is not quite true to say that it is the only way. There was one occasion on which it was done by the Russians—a very interesting one which I should not like to try here. Everybody had to bring in his roubles and they got half a rouble in exchange for each. Certainly a lot of currency was gathered in that way. However, the normal way a Government acts if there is too much money floating around is to have it withdrawn by taxation. If there is too little money, the stream should be added to by Government debt, bank loans or any other way that any Government wants to increase the stream of money. Therefore, I say that it is a very dangerous doctrine for Senator Professor O'Brien to lay down "that investment should not be met out of taxation".

Professor Johnston

Will the Minister agree that as a general rule that principle is sound, though subject to exceptions? The Minister has mentioned some special circumstances in which it might be a sound idea.

Mr. Aiken

That statement might be all right for a politician but not for a technician. I think it is wrong in itself. I am simply denying that it is technically correct. There were other points in Senator Professor O'Brien's speech that would give certain crackpots the idea that you can get out of your difficulties if only you have an enlightened Government here which would start to pump out notes in some way.

Professor Hayes

He did not say that.

Mr. Aiken

I am saying that he would encourage the crack-pot to think so. I did not say he would do it. I gave an instance in regard to the note fund and the realisation of the 20 per cent. of the note fund and the investing of it here. I want to tell Senator O'Donnell that——

Professor Hayes

I thought the Minister had given him up:

Mr. Aiken

I had.

Mr. O'Donnell

I am glad the Minister has been converted.

Mr. Aiken

——money is the easiest think in the world to create. One of the difficulties is that there has been a lot of hokey-pokey and hush-hush about the creation of money by banks and other institutions. The banks, when they make an advance, create a credit. They create money. The difficulty is that it is we who have to pay. They are issuing money which is an order for the people to pay. Instead of urging them, as some people say, to throw it all out, expand, we should tell them to be very careful—as, indeed, Senator Professor O'Brien did and also Senator Professor Johnson—as to the ways in which they use the powers to create credit which we are good enough to give them.

I want to say a focal scur to Senator O'Donnell. Money is a very useful thing but, just as strychnine is a very useful thing in certain medical cases, too much of it will poison the patient.

Mr. O'Donnell

We are getting too much strychnine and we want an antidote. It is important to know how to use the strychnine properly.

Mr. Aiken

Another thing Senator Johnson said to which I want to object strongly was that excess imports are a positive disinflationary process.

Professor Johnston

I said that excess imports, as far as they went, were a disinflationary factor in the price level of the country.

Mr. Aiken

Yes, but the Senator will need to be very careful. The fact is that excess imports, or the repatriation of our external assets, or whatever you like to call it, while it does keep down the price rise is, in fact, a symptom of inflation.

Senator O'Brien talked about the use of emotive words like "inflation" and "deflation" and "repatriation of external assets", but he himself, in another portion of his speech, although condemning the use of those words, said in describing the process that there were three "inflations". In the modern world, if we are discussing finance, we cannot avoid using "deflation" or "inflation" if we want to do the job and get on with the work.

Professor Johnston

I think I would agree that excess imports are a symptom of an excessive rate of capital creation and possibly of an unbalanced budget.

Mr. Aiken

I think the Senator should go a little further than that and say that they are a sympton of an excess capital creation or of an unbalanced budget or of the fact that for some reason there is more active money going around the country than there are goods to meet it.

There were a couple of points made by Senator Johnston with which I would like to deal in the few minutes we have left. He spoke about America and he urged us to throw our weight in on the side of peace. I am all for throwing our weight in on the side of peace. One of the best ways in which peace could be kept in the world—if there is any chance of keeping it—is by the Western Powers showing that the world they were arming to protect and defend was going to be a very good world indeed. I think that would be attractive, even to people on the other side of the Iron Curtain, who are feeling the way of life they are undergoing bearing very heavily upon them.

It is important in the modern world— just as it was in the time of Napoleon or the time of Hannibal—to increase the morale of the peoples who might have to fight or the people who might be attacked. "Morale is to materials as three is to one," as Napoleon said. I would go this part of the road with Senator Johnston; if some portion of the energy devoted to rearmament were devoted to securing the class of world in which each nation would be allowed to look after its own affairs, it might reduce the possibility of war. If it did not stop the war, at least the war might result in leaving some bit of the world that could be organised by the people who were left, so that they could be reasonably happy.

I do not agree with the Senator, however, when he says that the rearmament in America is in any way due to the machinations of big capitalists or armament manufacturers. The fact of the matter is that Americans believe that if preparations for war stopped in the morning they could turn the 60 billion dollars—they are not yet up to the 60 billion and will not reach it until 1953—but could turn say, 20 billion they are spending on rearmament to-day into producing consumer goods for their own people or for export.

They did a remarkable job after the last war. It was anticipated that it would take American industry from 18 months to two years to get back into gear to produce consumer goods, just as it took them 14 to 18 months to get into gear to make aeroplanes. Yet within six months after the war the factories which had been turning out aeroplanes and tanks were turning out motor cars, radio sets, refrigerators and so on.

I think the modern "cold war" is much too oppressive on the American economy and much too oppressive on the manufacturers for anyone to be in any way influenced in his view of war by the amount of profits he is making out of armaments. He will say to himself that he could make much more otherwise. I must agree, of course, that we should not return evil for evil. Senator Johnston may advise the Americans not to return evil with the atomic bomb, but what they are afraid of is that the "erring children" may start a blitzkrieg or give them the atomic bomb first.

Until we can get the sort of world in which we have some organisation on top that will control the individual nations and keep the peace between them, we will always have that danger. I am afraid the world is in very grave danger. That is my opinion—and I wish it were otherwise. I can only hope that out of UNO or something else will come a system whereby countries will agree that disputes between them will be settled in a peaceful way and on a basis of justice. It has to be on a basis of justice. If that happens all will be well, but if it does not I am afraid we are in for more trouble and the sort of world that will be left after the war will not be very much better than the present.

Finally, I want to say that the Government did not try to create a panic. They tried to get the people to realise that if we wanted permanently to maintain or to increase our standard of life we would have to work—as many Senators agreed here to-day and yesterday—a little bit harder and more efficiently. The alternative is that, sooner or later, we will be compelled to consume less.

Question put and agreed to.

An Leas-Chathaoirleach

Is it agreed to take the remaining stages now?

Professor Hayes

The Bill is not really an opposed measure and I see no objection to taking the next stage now. The Minister listened for two days to the debate and made a solid attempt to make a serious reply. I do not agree with everything he said. He gave evidence that more people than Senator O'Brien have changed their views in the years that have passed. I see no objection to taking all stages now.

Agreed to take the remaining stages now.

Bill passed through Committee without amendment, reported, received for final consideration and passed.

Ordered: That the Bill be returned to the Dáil.

The Seanad adjourned at 10 p.m. until 3 p.m. on Wednesday, 19th December.