With regard to the amount of the actual loss it is very difficult to give a figure. It is very largely a matter of opinion. As I said, the aggregate amount of loans guaranteed in cases where difficulties emerged and the State exercisd its right to put in a receiver was £602,740. The aggregate amount obtained in cash from the disposal of the assets, where the assets were disposed of, was £157,500 so that on that basis you could calculate the loss as £445,000 That, however, would be a false picture. Included in that £445,000 would be, for example, the £200,000 paid in respect of the loan guaranteed to Irish Steel, Limited. There the State paid off the loan, took over the company and carried it on.
It is an undertaking now established without liability in respect of share capital, but with assets in excess of £1,000,000. In that one case alone, the actual benefits resulting from the giving of the loan would exceed the total loss on all the other undertakings.
The same thing applies to the peat fuel undertaking, and in other cases where the State did not become involved in the business. I will mention two or three which I think will illustrate my point. The original Irish Glass Bottle Company went into liquidation and the State had to make good its guarantee to the extent of £50,000 and then disposed of the assets to a new company which restarted the undertaking and is now operating one of the largest industries in Dublin. The same applied in respect of other companies like O'Brien Brothers of Cork and Mullan Mills of Monaghan where, even though the original company got into difficulties and it went into liquidation, the State ultimately disposed of the assets to a new firm which carried on the undertaking and made a success of it. There were a few cases where from the State point of view there was an absolute loss, such as Aylesbury Brothers, the Cloyne Clay Company and the Allihies Copper Mines.
Even amongst such cases, we had the case of the Irish Fresh Meat Company, which established an elaborate premises in Drogheda with the aid of a trade loan but never went into production, yet the premises themselves now house three or four manufacturing concerns of quite considerable importance. Any attempt, therefore, to assess the actual loss would be a difficult matter. There are cases involving a total of £127,000 where willingness to give a guarantee has already been intimated. Some of these cases may be in abeyance. The reason why they are still regarded as pending cases may be due to the fact that the persons seeking the guarantee for a loan either have decided not to proceed with the enterprise or have succeeded in raising the money otherwise and do not require the guarantee. I understand there are some cases pending involving substantial amounts. I am not saying they will be successful in their applications but unless this amending Bill is passed we would not be free to consider them.
With regard to the question I have been asked about the rate of interest, I would like to state the position. The Government guarantees repayment of the principal of the loan and payment of interest on it up to 2½ per cent. The person who gets that guarantee, that formal intimation from the Department of Industry and Commerce that the Government is prepared to guarantee the loan, goes out into the market to negotiate the loan on the best terms he can get. He goes to a bank, an insurance company or a private individual and tries to get his loan financed on the best terms possible. Whether he pays interest at 4, 5 or 6 per cent. the guarantee operates only in respect of 2½ per cent. The person making the loan stands to lose if interest is not paid to the extent of the difference between the interest contracted and 2½ per cent.
It is true, as was stated, that the Act makes no wide appeal to persons proposing to engage in new industries. It is not intended that it should. It is obviously desirable that anyone proposing to embark on an industrial enterprise should seek to finance it either out of his own resources or by capital subscribed at risk and not on the basis of a repayable loan. It is only in exceptional cases that they should be encouraged to seek capital on the basis of a repayable loan. These cases sometimes involve concerns which are operated on a family basis and where there is a desire to prevent it passing out of the hands of the family, which might be involved if money at risk were brought in from outside. There are other cases where some special consideration applies to make it desirable that the new capital should be repaid over a period of time. For example, for some time past we have been trying to get factories located in turf producing areas to use truf as their fuel, and in many cases we have been able to demonstrate—or at least Bord na Móna has been able to demonstrate, through its technical service branch—that it would pay the concerns they have approached to change over to turf instead of coal or fuel oil.
Occasionally they come up against the difficulty that the proprietors of the concerns say that while it is true it would ultimately pay them they would unfortunately have to incur the capital cost of new equipment. In such cases we would suggest the desirability of utilising the Trades Loans Guarantee Act, getting the guarantee for the additional capital required to effect the change over, intending to repay it over a period of years so that the total capital liability of the concern would not be permanently increased.
I do not know that it is possible to improve the procedure and I am not sure that it is desirable to streamline it. The tendency should be to discourage people from using this Act if they can get the money in other ways, but the procedure is not as cumbersome as someone has suggested. There is an advisory committee by which all applications are considered and in practice the decision of the advisory committee is nearly always final, even though it takes the form of recommendation to the Minister for Industry and Commerce which the Minister may or may not accept and whose decision has to be concurred in by the Minister for Finance. At the present time, consideration of the case by the advisory committee does not take very long. At one time it used to take more time because there were a number of these committees and it was not always easy to get members together for the purpose of considering applications. Now the members of the Industrial Development Authority are the advisory committee and that shortens the procedure at that stage very considerably.
When the committee has made its recommendation there is not much time lost between that stage and the final intimation of willingness to give the guarantee. It is at that stage that delays have occurred and they are delays which are not under the control of a Government Department but arise out of the whole method of raising the capital by this means. The borrower, having got his guarantee, goes off to get his loan and then a mortgage deed has to be prepared, which secures to the Minister for Industry and Commerce his right to take over the assets in the event of default on the loan. Deputies familiar with legal procedure know that it sometimes takes a considerable time before that deed is drawn up in a manner which is acceptable to the borrower, the lender and the Minister whose rights are to be secured. Nevertheless, I must say that in the few cases where I had complaint of delay and carried out investigations, I did not see what else could be done. In view of the desirability of maintaining safeguards where public money is involved, it did not seem to me possible to drop any of the stages which the present procedure involved. On the whole, I do not think that people whose circumstances require them to avail of this Act have been deterred from attempting it by reason of these delays.
