I am glad the debate lasted into the second day, because it is very undesirable that two professional economists should inflict their views on the House on the same day, and yet perhaps I am a professional economist with a difference, for, in fact, if I may make some personal explanation, I only came into this business by what Gilbert and Sullivan would call a set of curious chances. About 39 years ago, I became a member of the staff of Trinity College, Dublin, at a rather early age, and Dr. Mahaffy, who was then a very important person in the place, thought I was too young to be allowed to settle down in the academic groove, so he got me elected to an ecumenical travelling fellowship, the conditions of which were that I should travel around the world and observe the conditions of men and society in the various countries I visited—a very pleasant and agreeable kind of fellowship to hold. I made that journey around the world visiting, amongst other places, India, China and the United States of America, and the effect of it was to give me a profound interest in the social phenomena and economic conditions which I found existing in these far-away countries. In the result, I abandoned culture, as Dr. Mahaffy afterwards complained, and developed a keen interest in social philosophy, and especially in agricultural co-operation, so that perhaps I was somewhat of a disappointment to Dr. Mahaffy as well as to various others of my friends.
In that kind of way, I have always tended to look on national problems from what one might call the ecumenical point of view. I should like to consider our present economic problem in its world setting, but not at too great length, because what we have to do we must do as a responsible independent nation, responsible for our own national policies. The first thing we must realise is that nine-tenths of our economic troubles are the direct result of the impact on us of the present international tension which is reflected in the rearmament race which is disorganising the economy of countries with which we are connected and indirectly disorganising our own. It would be well if we had more international contacts so that we could pull our weight in the effort to lessen this international tension and perhaps bring back the rest of the world to a more rational and less quarrelsome frame of mind; but now that we are no longer a member of the Commonwealth, our international contacts are distinctly limited.
It might be possible that, if we made application, we would be allowed to join the Comintern, but I do not think we are likely to make that application and I do not think I would recommend it. It would certainly be possible, if we made application, that we could join the N.A.T.O. but I would equally deprecate and stoutly oppose any such step on our part. There remains only the one genuine world-wide, and, presumably, impartial, organisation, namely, U.N.O. It is worth while putting on record the facts with regard to our efforts to belong to U.N.O. When we originally made application—I think, in 1947—our application was vetoed by Russia, but, since then, Russia has altered her point of view and has agreed to the admission of Eire, provided that about a dozen other nations which are also candidates are allowed to join at the same time. That has been vetoed by America, so that the country which now keeps us out of U.N.O., as well as a dozen other nations along with us, is no longer Russia but America, and we have no impartial world-wide platform in which we may express our opinion about international matters.
That is a pity because U.N.O. embodies a great idea and there are various organisations connected with it which are doing very useful work and which in their way help to preserve and perhaps improve the conditions of humanity and lessen the dangers of a third world war. There is one organisation connected with U.N.O. to which I think we do belong—the F.A.O. In that connection I should like to draw the attention of the House to a book, The Geography of Hunger, written by the chairman of the F.A.O. which is of tremendous interest to everyone who is interested in the welfare of undeveloped and half-starved people in every part of the world. However, that is by the way.
Our refusal to join the other semi-international organisation, N.A.T.O., has led to the jibe that "They are all out of step except our Paddy." But we are not so completely out of step as all that, for there are other sane countries in the world, notably Sweden and Switzerland, which are members neither of the Comintern Pact nor of N.A.T.O., and we are in good company so long as we preserve our sanity with countries like Sweden and Switzerland in a world which is rapidly becoming utterly mad. In fact, I feel so strongly about the lunacy of the world in general that I think, from our national point of view, the only sane economics are the economics of Sinn Féin. We are surrounded for the most part by lunatic nations and what in a normal world I would regard as economic folly may in our present circumstances and from our point of view be the only wise economic procedure.
In the inter-war period I was a vigorous opponent of the self-sufficiency policies practised at that time by the Government in power, but I think under present conditions the only sound thing to do is to increase to the maximum extent—and that, unfortunately, is not very great—the degree of national self-sufficiency that we can have both in agriculture and in industry.
With that object in view I contributed certain articles to a paper which is probably read by some of you but not read by all of you, namely, the Irish Press, and because those articles appeared only in one paper, the etiquette of the other papers was such that they could make no reference to them. However, with your permission, I hope to refer to some of the points I made in the course of those articles, so as to give the papers generally no excuse for remaining silent about these points if they think they are of public interest. This may lead to the national aspects of my contribution to this debate.
Senator O'Brien had something to say yesterday about the whole matter of food subsidies. I may say, without developing the point at any length, that I am altogether opposed to preserving those subsidies in any shape or form. I want to see the whole £15,000,000 that we are spending on food subsidies saved for the Exchequer and the whole community brought back to economic reality so that everybody, everywhere, pays the full economic cost of all the food that he eats and nobody anywhere can have any economic interest in feeding wheaten products to the greyhounds or the pigs.
That is a somewhat heroic measure and, if done at all, as I hope it will be done, it will require to be qualified by important concessions to the poorer classes in the community who would find the burden of dearer food very heavy. But, even so, I would hope it would lead to a substantial improvement in the financial position.
My objection to subsidies is not only that they produce an atmosphere of unreality in our fundamental economic relations but that in some aspects of their effects they act as a positive discouragement to desirable economic activity. Take the subsidy on butter for example. That operates to give to the creamery milk supplier a price for milk which corresponds to a price for butter of about 4/- a lb., but the consumer pays for his butter a subsidised price of only 3/- per lb. and in the result the important section of the community who make farmers' butter at home in the non-creamery districts have to compete with the subsidised butter in their efforts to sell theirs. They find the price that they can get for their farmers' butter artificially reduced by the operation of the subsidy so that it is no longer worth their while to exert themselves to produce and to sell a surplus of farmers' butter in the non-creamery district.
The proportion of our total butter supply which is normally produced on farms in areas where there are no creameries is quite considerable. Normally, something like two-fifths of our total butter supply is the produce of farmers' home-dairy operations, and one result of this undesirable working of the subsidy principle in connection with butter is that farmers have diminished the number of cows that they keep in the non-creamery districts and have diminshed the output of butter whch they make for themselves or for sale in the local markets.
The figures for that are quite interesting and are readily available. You will find them in the appropriate number of the Irish Trade Journal. It appears that total butter production increased from 1,024,000 cwt. in 1948 to 1,190,000 cwt. in 1950, that is including farmers' butter and creamery butter. But, in the same interval the production of farmers' butter diminished from 417,000 cwt. to 369,000 cwt. In other words, the increase in butter, which was the object that it was desired to bring about by raising the price of milk supplied to the creameries, was negatived by the reduction in the output of farmers' butter.
Even more significant is the number of cows on farms not sending milk to the creameries. In 1948 there were 542,000 cows on such farms. In other words, nearly half the cows in the country were on farms not in creamery districts at all. In 1950 the number was 509,000. In 1951 it was 491,000 and that downward trend is probably still continuing. That is a reduction of about 50,000 cows in the course of a very few years on non-creamery farms.
You might ask what would happen if you simply wiped out the butter subsidy and established a free market in butter. My guess is that in a free market the price of creamery and first-class farmer's butter would settle down somewhere in the region of 3/6 to 4/-, and the total production of butter would rapidly increase. We would no longer need to import New Zealand butter because at that price it would be worth the while of farmers in the non-creamery districts to produce and sell all the butter they could conveniently manage to produce. We would then reach the point where we would have a surplus of butter available for export and then we would have to negotiate with our neighbours to find out at what price they would take that butter.
For years, Britain has been exploiting the monopoly position she enjoyed during the war in order to buy butter on a long-term basis from countries like New Zealand and Australia at a price which favoured the buyer but which turned out in the long run to be anything but encouraging to the Dominions producer, and the effect of that, in Australia at any rate, has been that the whole Australian economy has tended to go over more and more to industrialisation and to get out of agricultural production of butter or otherwise to an increasing extent, so that the output of Australian butter is diminishing, and even in Australia itself there is sometimes a shortage of butter. I have read in some responsible journal that in the black market for butter in Sydney the price rose as high as 10/6 a pound.
In other words, the whole world butter market is in a state of chaos, largely on account of the over-control and over-regulation and uneconomic price fixing and, sooner or later, the world butter market will have to be freed. In a free world butter market we have nothing to fear about the future price at which we can sell surplus Irish butter if and when such a surplus emerges. Meanwhile, I hope we will take a chance and abolish the butter subsidy and free the whole butter market at home and do the best we can to get the best price we can if and when a butter surplus emerges.
There are other points that I made in the course of those articles which may or may not be worth while emphasising now. Talking about capital expenditure and savings, I did, I think, make the point that if we indulge in capital expenditure at home, whether on public account or private account, or both, in excess of national savings, that is bound to stimulate the total of imports and is likely to have a prejudicial effect on the balance of payments.
I think Senator O'Brien made the same point yesterday and there is no need for me to dwell on it at undue length but, obviously, the money that is spent on producing capital goods at home becomes almost immediately consumer income so far as the people employed in producing those goods are concerned and is spent on consumer goods very largely, either of domestic or foreign origin. There is a temporary pressure on available supplies of consumer goods. That is not a case for abolishing or cutting down capital expenditure entirely, but it is a case for giving a high priority to such forms of capital expenditure as will lead to a greater degree of production and a desirable increase in the supply of goods available on the home market.
In that connection the claims of agriculture for a high priority are well founded because in the past agriculture, which is one of the greatest of our national assets, has been one of the most neglected, and therefore there is a wider margin for increasing the value of the national income by an expansion of our agricultural output. There are forms of capital expenditure in connection with agriculture which can give a remarkably quick return. The effect of the application of some fertilisers will be noticed in the same year, and will give a return in that year. Some other fertilisers will give their return over a period of years. One of the most desirable improvements which could be made to the land would be an improvement in the grass produced on pasture land. That applies particularly to cases of worn out pasture fields which would need reseeding. That is an expensive operation, but it must be remembered that grass laid down in that way will give an immediate return within a few months. Grass laid down in May will give a return in July or August as feed for animals. That is a type of expenditure which gives a quick and good return, and therefore is one that should receive every encouragement from the powers that be.
I would like to say a few words in regard to the former Minister for Agriculture. I regard him with mixed feelings. In some aspects he is a person who says more than he should in many things and his general attitude on international affairs would lead us into an Anglo-American alliance which, if certain wild men had their way, might bring us into a third world war. On account of his international attitude I have no use for the former Minister for Agriculture but as a Minister for Agriculture he was a distinct success. I think one of the things that saved the inter-Party Government from complete disaster in the last election was the fact that the country people liked the former Minister for Agriculture more than the city people liked the inter-Party Government; they were saved from complete defeat by the fact that the country people liked the policy of the former Minister for Agriculture.
I also agree with Senator O'Brien about the desirability of encouraging financial savings. Unfortunately one of the most necessary requisites for achieving this encouragement is an increase in the rate of interest which people can get for putting by some of their money and not consuming it all. That is something of which borrowers do not entirely approve. I would like to dissipate the idea that the banks, as such, have a completely one-sided interest in money being as dear as possible. One result of the recent increases, especially in the long-term rate of interest in London and elsewhere, has been that the capital value of the long-term securities has fallen appreciably. As we all know, the banks, both here and in Britain, have very large portfolios of long-term securities which they regard as amongst their most important long-term assets. When the value of these assets falls, as they have done, it means that the banks have to write down the value of that important part of their total assets, and the fact that they make further loans at a higher rate is negatived by the losses they have incurred in writing down the value of those large portfolios of long-term securities. Even if it is true that it is a bookkeeping loss from the point of view of the banks, they have no single interest in making money as dear as possible.
The whole matter of national saving is a difficult one. I have been looking at White Papers recently and have found that the national savings are recorded at something like £20,000,000 in the years 1948 and 1949. I wonder if that is a reliable estimate, and if it is could we not get a more recent figure, say, for the year 1951 and the current year. I have not the slightest idea of what is the true amount of the internal savings or what it is likely to be in the course of the current year and I would like if we had some system whereby a reliable estimate could be made.
To the extent that we finance the production of capital goods either on private or on public account out of currently realised national savings within the economy there is no need or occasion for the repatriation of external assets, but if we attempted to develop our economy beyond the measure of currently made available national savings then we could only do so to the extent we disinvested or, as the phrase goes, repatriated our external assets. "Repatriation of external assets" is a mouth-filling phrase but it implies perhaps more than it says. It means selling securities of some kind by somebody, either on public or private account, and it is very undesirable to sell now for £77 war loan that you bought for £100 only three or four years ago. That situation must apply in thousands and thousands of personal cases and must apply even to State Departments or other organisations which hold large quantities of these British securities. One would hesitate therefore for a long time before advising either private or public interests to sell any large quantity of British securities at the present disastrous price level.
We must hope and pray that that present disastrous price level is only a temporary phenomenon and that in a very few years those securities will get back to something like par. If we had to sell any large quantity of those securities, not only would we have lost about 20 per cent. of the money value which we acquired when they were bought some years ago but also incur loss by their diminished buying power because, as we know, the £1 now buys considerably less than it bought five years ago. There would be therefore a double national loss in any policy which involved large-scale repatriation of securities. That, therefore, is a reason why we should be extremely conservative about our general policy in the production of capital goods and should try as far as possible to keep it within the measure of national savings and confine it as far as possible to such objects as would give an immediate realisable return in the form of an addition to the total consumer goods available in our economy.
Further, in the course of those articles I pointed out the desirability of a financial policy keeping in mind the economic reactions of the financial policy practised. It should be aimed, not only at solving an immediate financial problem but at producing the right economic reaction and, above all, at bringing about a desirable increase of production and export capacity. Senators have been very eloquent about the failure of agricultural output to expand in recent years. We are all aware of what is called the inelasticity of agricultural output, but let me say at once that there was a substantial and desirable tendency for agricultural output as a whole to increase in the years 1948, 1949 and 1950. That, I think, was due to the fact that for the first time since 1932 we got a square deal in our price relations with the British buyer and that also for the first time in many years our agriculture as a whole appeared to be established with a reasonable balance between large, medium and small farms. Unfortunately, however, that situation did not continue.
During the inter-war years and especially during the economic war period I was probably considered to be a champion of the large farmers and was even looked upon in certain quarters as the friend of the ranchers. That, perhaps, was rather unfair, but there was an element of truth in it, because at that time I considered that the large-scale farmers were getting a raw deal and that it would be in the national interest, in the interest of the agricultural economy as a whole, that they should get back to the possibility of expanding production. On the other hand, in those years the small-scale farmers also had a bad time but it was possible to do something for them while it was not possible to do much for people who depended mainly on cattle.
The boot is now on the other foot. Ever since the outbreak of the second world war people with farms of 50 to 100 acres and more were able to do pretty well for themselves because crop production and cattle production have been highly profitable, whereas people with 50 acres or less have had rather a raw deal because their particular kind of farming has been definitely unprofitable. Every person who knows Irish agriculture knows that the small farmer is primarily a processor of raw materials, many of which he must acquire from sources outside his own farm. Those sources are not necessarily foreign sources, but they are outside his own farm, and his only hope of increasing production and making a tolerable living for himself and his family is, if he can, to expand the purchase of raw materals which he uses, and which he has to buy, and make a profit on the margin between the price he pays for the raw materials and the price he gets for the finished article. All through the second world war the margin between the price of cereal raw materials and the finished egg and bacon products was altogether unsatisfactory. In fact, in that period it was nearly impossible for the small farmer to get any raw materials at all —certainly he could not get any Indian meal—and therefore he had rather a bad time. It was a physical impossibility for the small farmer to increase the production of his characteristic produce. He did, of course, increase the production of cash crops for sale, but in the nature of his work the small farmer can never make a livelihood solely on the production of cash crops for sale.
In the three years 1948, 1949 and 1950 that relationship between the price of Indian meal and the price of bacon and eggs was restored, which enabled the small farmer to get back into production and expand his output. It looked as if we were to have a period of agricultural improvement, but there came along, in 1949, the devaluation of sterling, and one result of that was that the price of Indian meal shot up to 30/- and more per cwt., while the price of eggs and bacon was rigidly controlled at the level determined by the British Ministry of Food. It no longer paid the small farmer, therefore, to specialise in increasing the production of poultry and pig products. In fact, he would have been a born idiot if he did make any attempt in the only direction in which, in the ordinary way, he could increase production; he would have been simply inviting bankruptcy.
The dimensions of that problem are considerable, because, on looking up the statistics, one finds that, in 1936, there were 386,000 males engaged on farms under 50 acres in size. Therefore, the total number of persons engaged on farms of all sizes being only somewhere between 500,000 and 600,000 at that time, more than half of the total manpower engaged in Irish agriculture is engaged on farms under 50 acres; that means that, owing to circumstances which are largely beyond our control, about 300,000 of these people were inhibited from increasing production in the only possible way in which it was possible for them to increase it, because it was no longer financially wise for them to do so.
We cannot blame Deputy James Dillon for that unfortunate circumstance, except to the extent that some people may regard him as responsible for devaluation; and I do not think it would be fair to regard him as responsible for that, because he was not really responsible for the devaluation of sterling. There, one was faced with the case of external circumstances suddenly making it unprofitable for all small and medium-sized farmers to expand agricultural production in the only way in which they would normally find it possible to do so.
As I see it, the central problem that we have to face now is how to put back at least half the manpower occupied on Irish farms into a situation in which they can profitably expand production. We must get rid of our traditional dependence on Indian meal as one of our major raw materials for animal product production and substitute for it a home-grown cereal, such a cereal as has definitely come along in recent years, namely, Ymer barley, which has all or nearly all the merits of Indian meal as a feeding-stuff and has, too, the great advantage of being capable of production in our own soil.
Those who grow and sell Ymer barley under present circumstances are able to get for it a price which is closely equivalent to the price of Indian meal but which certainly would not be conducive to the egg specialist or pig producer regarding it as a cheap food in relation to the present price of eggs and pigs. Therefore, in one way or another the price at which the small farmer can buy Ymer barley must be made cheap enough to make it worth his while to buy it, while at the same time the price at which the possible grower of that barley can sell it must be made attractive enough to bring about a substantial increase in the total acreage.
We must not forget, however, that we shall have to considerably extend the area under wheat at the same time in the national interest because wheat is another dollar product for which we can no longer afford to pay dollars. I am told by my farmer friends that the same kind of cultivation and the same kind of land are needed for the production of Ymer barley as for the production of wheat and that, in fact, Ymer barley is a fertility demanding cereal requiring richer land for good results than does the ordinary malting barley. I see no reason, therefore, why one should not guarantee a price for Ymer barley exactly the same as the price guaranteed for the growing of wheat, and I see every reason why the farmers generally should aim at producing at least 200,000 to 300,000 acres more of both Ymer barley and wheat in the current crop year.
My idea is that if barley is grown at all it must be grown by the larger farmers, the men with fifty acres of land and more, who can grow more grain than they need to use themselves on their own farms and are, therefore, in a position to sell a substantial proportion of it to other farmers who cannot grow enough for their own requirements. I suggested that there should be a subsidy of £10 per ton paid in respect of Ymer barley sold off the farm. The person growing it should get a price of the order of £30 per ton, and the person buying it as feed on his own farm should be able to buy it at something like £20 per ton. That price would then bring it into such a relationship to the price of bacon and eggs as would make it possible for the smaller farmers to develop considerably the production of those important animal products.
I also made another suggestion which, I am sure, will be rather unpopular in certain quarters, namely, that in order to get the money to subsidise the price of barley one should put a tax of £5 per head on all cattle exported on the hoof. The net result of that would be to raise about £3,000,000 for a fund for subsidising Ymer barley. But it would also achieve other objects. It would give a boost, if I may be permitted to use that word, to the rapidly developing dead meat trade, which is something I think ought to be developed from the point of view of the long-term general requirements of our economy. More important still, it would be in the long-term interests of our live-stock industry as a whole, though from the short-term point of view it might perhaps be unpopular with certain farmers.
At present there is a lack of a desirable relationship between the price of milk and the price of beef. The milk interests want that relationship improved by hook or by crook by an increase in the price of milk. I personally would like to see that relationship improved by a decrease in the national price of beef. In either event one would restore a desirable relationship but, from the point of view of the cost of living and from the point of view of the national revenue, it would be a good idea to bring that desirable relationship back by reducing the price of beef cattle in the home market rather than by increasing the price of milk and butter in that market.
One side of the present unsatisfactory relationship between the price of milk and the price of beef is that if a farmer had a two-year-old heifer last autumn and wanted to sell that animal, the prospective buyer would probably ask him if she was in calf. If the seller said she was he would have got perhaps £5 less than the price he would have got if she had been without a calf and was capable of being turned into a beef animal for sale the following year. In other words, the present excessive price for beef cattle is tempting farmers, for the sake of a quick financial gain, to turn into beef animals that should in the long run be turned into cows and used to develop the breeding capacity of the live stock population as a whole. I regard that as a disastrous trend in the present situation for nothing is more important than that we should increase the numbers of well-fed cattle, especially breeding stock, in the country.
If we turn an excessive number of heifers of the type that should be made into cows, in the long run, into beef animals we will reduce our total cattle population and impoverish our agricultural economy as a whole. Another Senator has already drawn attention to the statistics and I compliment him on having realised their great importance. If you look at the Irish Trade Journal you will find that in June, 1951, the number of milch cows as a whole was less by 19,000 than in 1950 but, much more sinister and more menacing still, heifers in calf in 1951 were less by 34,000 than in 1950. That is the trend which I would like at all costs to reverse. One way of reversing it would be to make beef cattle cheap, if necessary by taxing the export of beef cattle so as to make it less attractive for farmers generally to sacrifice good cow heifers to the beef trade.
That more or less finishes what I have said in the course of these articles except that I ended up by making a suggestion which I hope the Minister will consider very seriously with reference to the losses of Córas Iompair Eireann. The annual loss to the taxpayer in the running of the public transport services is something like £1,500,000. In general it is a sound idea in finance to create such conditions as will induce citizens to do for their own interest what is in the public interest anyhow. People are much more likely to follow a policy which is in the public interest if it is also in their own interests to follow that policy. By suitably devised taxation procedures you can get people to behave in a way which is socially advantageous, because it is to their personal interest to do so.
The great problem that Córas Iompáir Éireann has hitherto found insoluble is how to deal with the fact that more and more private businesses find it convenient to own and run their own transport and use the public transport system only on the few rare occasions when it suits them to do so. To remedy that I suggest that any owner of a lorry or a goods vehicle should be let off with a comparatively nominal rate of tax, say, £5 a vehicle, provided that he uses it only within a radius of a few miles of his own place of business, that few miles being so arranged that it will bring him to the nearest railhead or the nearest station on Córas Iompair Éireann and also to the nearest market town. If lorry owners found that by paying only £5 a vehicle they could have the convenience of their own transport in limited but important ways instead of having to pay £20 or £30, which is the full tax rate, it is amazing how soon they would discover that it was to their interest to use their own transport only for doing messages to the local Córas Iompair Éireann station or goods depot, and how quickly they would find it to their interest to work in with the public transport system instead of completely ignoring it as they do at present. Some scheme along those lines might go far to solve a hitherto insoluble problem which Córas Iompair Éireann have found, and without any serious loss to the public revenue it might eliminate that substantial drain on the public revenue which we suffer through having to subsidise Córas Iompair Éireann to the extent of about £1,500,000 a year.
These are my final remarks, and I am sorry if I have taken longer to express them than I had intended to take when I rose to speak.
