Seanad Éireann debate -
Wednesday, 15 Dec 1954

Vol. 44 No. 6

Trade Loans (Guarantee) (Amendment) Bill, 1954—Second and Subsequent Stages.

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

Parliamentary Secretary to the Minister for Industry and Commerce (Mr. Crotty)

Since 1924 there has been legislation enabling the Minister for Industry and Commerce to provide guarantees for loans to assist in industrial development both for new industries and for established concerns wishing to expand their activities where the granting of guarantees was calculated to promote employment. The legislation also provided for the actual grant of loans for similar purposes although in fact this power has never been used.

As a preliminary to the guaranteeing or granting of any loan under the Trade Loans Acts it is necessary to consult an advisory committee and the sanction of the Minister for Finance is also required before facilities can be granted by the Minister for Industry and Commerce.

The first legislative provision was made in the Trade Loans (Guarantee) Act, 1924, which provided that guarantees or loans might be granted to companies and public authorities for the purpose of meeting expenditure to buildings, plant and machinery and other fixed assets. The operation of this Act was limited to one year but by a series of amending Acts from 1925 to 1932 inclusive the Minister's powers were continued.

In 1933 the scope of the trade loans scheme was extended by the Trade Loans (Guarantee) Act of that year which enabled loans to be guaranteed or granted for the provision of working capital in addition to the acquisition of fixed assets. At the same time individuals, as distinct from companies, became eligible for trade loan facilities.

The duration of the Trade Loans (Guarantee) Act, 1933, was limited to five years and, on its expiry, the Minister's powers in regard to trade loans were renewed for another five years by the Trade Loans (Guarantee) Act, 1939, which also fixed £1,000,000 as the total of guarantees and loans which might be granted under that Act. These powers were renewed for further periods of five years in 1944 and 1949.

The Trade Loans (Guarantee) (Amendment) Act, 1953, increased to £1,500,000 the total of guarantees and loans which might be granted, and also removed the limitation of the period during which grants or guarantees might be given.

Of the £1,500,000 provided under the Acts of 1939 and 1953 the Minister has given his guarantee or has indicated his willingness to give such guarantee to the extent of £1,241,000 and further applications in respect of substantial amounts are under consideration. Inquiries are constantly being received regarding the provision of financial assistance for industry by way of trade loan guarantees, and I am satisfied, therefore, that it is desirable, at this stage, to increase the existing limit of £1,500,000.

The purpose of this Bill is, therefore, to increase by £1,000,000 the aggregate capital amount of loans which may be granted or guaranteed.

It is very desirable that some machinery should continue to exist to enable me, with a view to the promotion of employment, to afford financial assistance for industrial development which might not in the ordinary way appeal to the banks or to other financial institutions, including the Industrial Credit Company, Limited. The advantage of the trade loans (guarantee) system, as compared with ordinary commercial banking facilities, is that it provides a fixed long term period of repayment for which industrialists can budget in their costings. Banks normally require loans to be repaid over a short period, usually less than five years, whilst the Industrial Credit Company affords financial assistance to industry mostly in cases of large amounts where public issues can be arranged.

Under the Trade Loans (Guarantee) Acts from 1924 to 1953 guarantees were given in the case of 117 undertakings amounting in the aggregate to £2,191,411. In addition guarantees have been promised to the extent of £202,000 in six cases in which certain legal and financial arrangements have yet to be completed by the firms concerned. In the case of 71 undertakings the loans totalling £761,411 were fully repaid by the borrowers, while 19 undertakings, two of them public authorities, are actively operating at present with the assistance of guarantees totalling £827,500. In the case of 27 undertakings involving guarantees totalling £602,740 it was necessary to appoint receivers and some of these companies ceased to operate. Repayments to the Exchequer in cases where receivers were appointed amounted to £157,500. Total losses to the Exchequer were £443,786 (including interest).

The purpose of the Bill, as already indicated, is to increase by £1,000,000 to £2,500,000 the aggregate capital amount of loans which may be granted or guaranteed. I trust that the House will see its way to approve of the Bill as an agreed measure.

Liam Ó Buachalla

Níl aimhreas ar bith ná gur scéim ionmholta an scéim seo. Ceapadh an scéim chun cabhrú le gnóthaí go mbíonn riosc mór ag baint leo, riosc cómh mór sin nach bhfeileann sé do na gnáth hinstitiuidí airgeadais an t-airgead atá riachtanach a chur ar fáil dóibh. Is maith liom an ráiteas sin a rinneadh thar ceann an Aire, gur dóigh leis gur ceart go mbeadh slí ann le go bhféadfadh sé cabhair airgid a chur ar fáil le haghaidh gnóthaí nach féidir dóibh cabhair d'fháil sa ngnáth-shlí ó na gnáth-institiuidí airgeadais. Rinneadh a lán casaoide ins na blianta atá caite nuair a luaigh an tAire Tionscail agus Tráchtála a bhí ann san am an prionsabal seo ach tá cruthaithe ag an aimsir go raibh an ceart aige. Is maith liom go bhfuil an tAire atá anois ann ar an aigne leanúint do bheartas an Aire a bhí ann roimhe.

Ba cheart dom an tuairim seo a lua ina thaobh sin, gur dóigh liom go bhfuil gá le i bhfad níos mó cabhrach faoi scéim an Bhille seo ná mar a tugadh go dtí seo. Tá mé ag smaoineamh ar na ceantracha cúnga agus ar cheantracha na Gaeltachta go speisialta. Tá mé tagaithe ar an aigne nach foláir rud éigin as an gcoiteantacht a dhéanamh ar son na gceantracha sin. An tAcht um Limistéirí Neamhfhorbartha is Acht maith é; tá cuid mhaith déanta faoi agus níl aimhreas ar bith nach ndéanfar a thuille faoi. Ach, ag an am céanna, ní mheasaim go mbainfear an oiread leasa agus is gá as an Acht sin chun cuidiú leis na ceantracha cúnga, má tá muid, sa chéad áit, leis an imirce a stopadh agus caighdeán maireachtála na ndaoine a ardú mar ba chóir. Ar an ábhar sin, tá mé féin tagaithe ar an tuairim nach féidir bheith ag braith ar na banncana teacht isteach níos mó agus airgead a chur ar fáil i gcóir gnóithe ins na ceantracha sin, agus go mbeidh fós ar an Stát teacht isteach agus cuidiú le rathaíocht iasachtaí, ionas go bhféadfadh duine príobháideach agus an Stát teacht agus fiontraíochta a chur ar bun.

Is maith liom go bhfuil glactha ag an Aire leis an bprionsabal go mbíonn ócáideacha tábhachtacha ann nuair nach féidir le lucht gnótha agus lucht tionscail an chabhair atá riachtanach agus an t-airgead atá riachtanach d'fháil ó na banncana, ón gComhairle Creidmheasa Tionscail, agus mar sin de, agus go bhfuil an tAire féin sásta teacht i gcabhair orthu.

Tar éis a bhfuil luaite ag an Aire go raibh cailliúint ar an scéim sna blianta atá caite, sílim gur chruthaigh na figiúirí a tugadh sa Dáil agus atá tugaithe anseo trathnóna, gur éirigh go maith leis an scéim. Ceadaíodh cabhair do 117 gnóthaí nó fiontraíochta. Agus tá rathaíocht geallta do sé cinn eile. Bhféidir nach mór an méid sin, ach is fianaise é go bhféadfadh a leithéid do thionscail a bheith ann, agus gur fheil sé iad a chur ar bun; gur bhfiú iad a chur ar bun agus gur éirigh leis an oiread sin díobh a mbealach a íoc agus na hiasachtaí a aisíoc, agus gur éirigh le cuid eile díobh a mbealach a íoc agus go mbeidh siad ábalta na hiasachtaí a aisíoc. Is cruthú é ar thairbhe agus éifeacht na scéime seo agus ar riachtanas na scéime chomh maith. Cinnte, ní thaithníonn sé linn gur chlis ar 27 de na tionscail seo; is mór an truagh é gur gá deireadh a chur leo. Ní thaithníonn linn gur raibh cailliúint leath-mhilliún punt ar na tionscail sin, ach nuair a chuimhníos duine ar an achar aimsire a bhí ann ó tosaíodh ar chabhair a thabhairt do na tionscail seo agus nuair a chuimhníos duine go mór bhór ar na deacrachtaí speisialta a bhain le bunú tionscal i dtús ré na scéime, féadaimis a rá nach cailliúnt as bealach é an leath-mhilliún, nó fá bhun leath-mhilliún, atá i gceist.

Ar aon chaoi, tá mé fhéin go láidir ar an tuairim gur beartas ciallmhar an beartas seo. Tá mé an tsásta leis an gcabhair a tugadh go dtí seo do thionscail agus ní bheidh ionadh ar bith orm má bhíonn éileamh níos treise ar chabhair na scéime. Tá súil agam, má thagann a leithéid sin d'éileamh ar chuidiú do lucht tionscail in aon cheantar cúng, go mbeidh oiread cabhair le fáil ag lucht an bheartais sin agus is féidir a thabhairt dóibh. Táimid anseo an sásta go bhfuil an Bille ann agus tá súil againn go mbeidh tairbhe fónta air.

Mr. O'Donnell

I would say that industry generally will be glad to see an extension of the guarantees which it is proposed to give under this Bill. I think, however, that industrialists would be more pleased if the losses already sustained did not represent such a high percentage of the total amount lent. I should be glad if the Parliamentary Secretary, when replying, would tell me whether the Government have tried to underwrite these losses, or if there is any way whereby it would be possible to have them underwritten. The figure of £443,000 odd of a loss as against the total amount lent seems to me to be extraordinarily high. I do not want to pinpoint the blame, but it seems to me to be a very high risk amount in proportion to the total amount

This is the sort of Bill which could do small industries in this country a tremendous amount of good. It was designed and devised mainly for the purpose of helping small industries. I am sorry that it has not got a great deal more publicity than has been given to it, because we still have in the country many industries which could avail of the services provided by it if they were aware of them. In the very early years of this Parliament, industry generally had recourse to this method of getting loans under the Trade Loans (Guarantee) Acts, but for many years now industry seems to have found some other method of financing itself, so that the Trade Loans (Guarantee) Acts, have, to a certain extent, lapsed into abeyance. I wish that the Government would find some way of publicising the fact that the Trade Loans (Guarantee) Acts are still in operation, and that they are prepared to lend money to sound concerns, and sometimes to eoncerns not so sound, the establishment of which would be of advantage to our international trade.

In the early days of the Sinn Féin movement this was the sort of Bill which people like Senator Hayes, myself and others considered could be of great assistance to small industrialists—to those who would be coming along in the future seeking help to enable them to establish themselves. I think it was to a large extent due to our agitation in those days that the idea arose for the introduction and implementation of a Bill of this kind.

I should be glad if the Parliamentary Secretary could tell me what are the average lending rates. I understand that they compare more than favourably with the lending rates which are available from the ordinary financial institutions. I should also like to know how these rates compare with the ordinary bank rates? I understand that on long-term lending the rate of interest charged is very low. From information given in the newspapers recently in regard to recent lending, I was rather astonished to observe the low rate of interest that is charged in the case of this particular lending.

The only complaint which I have received as regards the operation of the Act is that the period of time which elapses between the making of an application for a guarantee and the date of sanction being given seems to be unnecessarily long. I can fully under stand, of course, in view of the losses which have been sustained that very careful inquiries must be made in regard to every proposal put forward for a loan under these Trade Loans (Guarantee) Acts. But even allowing for that and for the fact that there must be a careful review of the whole position in regard to applications put forward, I still think that the period of time that elapses is excessively long. I should be glad if the Parliamentary Secretary could tell me whether I am right in the statement that I have made and if my information is correct or otherwise. If my information is correct, then I think that something should be done to remedy the position to which I have adverted.

I should like again to welcome the Bill. I think that this increase of £1,000,000 may, to some extent, recoup the losses under previous lending and I hope, too, that it will help a number of our small industries especially in the rural areas which are badly in need of help. I think that a great deal of good would accrue if the fact were publicised that these loans are available at low rates of interest, and if those who are operating the measure were prepared to make that fact known. They should not hide their offers under a bushel. I think the Parliamentary Secretary did tell us that money had been lend to 117 industries and that quite a number of applications are at present under review. The fact that an additional £1,000,000 is being made available under this Bill should enable industrialisation to go ahead, especially in the case of rural industries which could benefit to a great extent under a measure such as this. It is of great consequence that they should get every help. I hope that the House will give its approval to this Bill.

Dr. ffrench-O'Carroll

I am very glad indeed to see the Parliamentary Secretary coming back to the House looking for more money to continue these Trade Loans (Guarantee) Acts. I am sorry that he is not looking for very much more money. The first time that I became acquainted with legislation of this character, it struck me that there was behind it a splendid idea. A measure of this kind can be of enormous benefit to the country. The thing that surprised me most of all when I looked into the operation of these Acts was the point which has just been made by Senator O'Donnell, namely, that there seems to be such extraordinarily little use made of the advantages which they offer. People do not seem to know of these measures and consequently they are only availed of to a very limited extent. I would be rather interested to know what are the reasons for that because it seems to me there must be some reason for it. I do not think it is merely a matter of publicity. It may be that perhaps people look at this legislation from the wrong angle.

In my opinion legislation of this kind could be of enormous advantage to the country. We know that it is very difficult to get capital to develop a business. Perhaps I should not put the matter that way. It might be more correct to say that certain people and certain business groups can get money at any time or practically all the time, but that, as far as the ordinary business person is concerned, it is very difficult to raise capital. Perhaps I should put it this way, that when he does succeed in getting it the rate of interest is very high or the term of repayment may be very stiff. In this country we seem to have abundant confidence in those who have succeeded and, no matter what the amount may be, we are prepared to give it to them. On the other hand, the powers that be, the banks, the lending public and everybody else seem to have very little confidence in the young man or in the small industrialist, in the man who wants to make a start in business or to enlarge an already existing small business.

If his collateral is not very extensive he is not going to get the capital except on high terms of interest and repayment. It all comes back to the view that this is an old man's country in business as well as everything else. Then I suppose the younger people have not very much confidence in the older people either, so that I felt that legislation of this kind might be a great help because it might allow a far-seeing and progressive Minister in the interests of the country, employment and everybody concerned, to adopt a far less rigid attitude in regard to making capital available for new industries or for the extension of existing small industries. I wonder if that has not, in practice, turned out to be the position. I may say I have not had experience of many being successful. From the one or two I was interested in, I learned that when somebody went to the Minister for Industry and Commerce for a loan under the Trade Loans (Guarantee) Act it was just as difficult as going to the banks—in fact, I think the Department of Industry and Commerce required a much more searching inquiry in one respect than the banks. I got the impression that this Department went into the running of business much more fully than the banks.

I like Senator O'Donnell, would like to know what the rate of interest is and what the terms of repayment are. We have talked about the high rate of interest the banks charge and how enormous the security has to be. This is a question that rests in the Minister's hands—the encouragement of new industries or the extension of existing industries. We would like a much more progressive and liberal financial arrangement than, for example, the banks. I would like very much to see how big the discrepancy is between the financial attitude of the Minister in these things and the financial attitude of the banks if they were offered the same proposition. I do not agree with Senator O'Donnell about this being worth £400,000. If this is not a success, there are bound to be a certain number of losses on it. While I welcome this Bill, I would like to be satisfied that the fault of its not being more widely used does not lie with the Minister or his policy. Is the lack of initiative on the part of people due to the fact that they do not realise that such legislation is there? Perhaps the Parliamentary Secretary would be good enough to clear up some of these points.

Mr. Cox

I approve of this Bill. The only reason I want to speak is that I have had a certain amount of experience of the working of the Act. I think it has worked admirably and has been most useful. Senator O'Donnell has referred to certain losses that the Minister sustained. I think it is only natural that the Minister might have to take some losses because the trade loan is for new industries only. I think that the Minister is quite right in taking certain risks. From my own experience I know of one successful industry which would not have been established but for the existence of the Trade Loans (Guarantee) Act. I think that the successful industries which are established eventually more than repay the State for the losses that may occasionally be incurred in an unsuccessful venture.

Several Senators have referred to the amount of investigation that takes place. I must say that in my experience the investigation has never been unreasonable or unduly prolonged. I think it is only right that the Department should look very fully into a particular industry before it grants the loan. Several Senators have referred to how greater use is not being made of the Act. I would think that the reason for that is perhaps that the trade loan guarantees essentially provide for repayment over a comparatively short period, say, about 12 years. I do not see what alternative there is. It is, of course, a difficulty, particularly in a new industry which is starting up to look forward to providing both interest and capital to pay back the loan. I think that is a difficulty that is inherent in any system of trade loan guarantees but, personally, I do not see how it can be got over. I think another reason is that if an industry of this same type runs after five years probably then it is sufficiently on its feet to be able to obtain accommodation elsewhere. I support the Bill.

Mr. O'Donnell

On a point of explanation, I think that Senator Cox and Senator ffrench-O'Carroll misinterpreted what I said. What I spoke about was disproporitionate losses.

Professor Stanford

It was exactly on that point I want to make one or two remarks. I agree with Senator O'Donnell that the proportion of the losses is significantly high and as a taxpayer I would like to express some anxiety that £443,000 should have been lost out of a total of £1,500,000. I should like to ask the Parliamentary Secretary to clarify two points—I may have missed some of his opening remarks and if so would he be good enough to repeat them for me. I should like to ask him was this sum of £443,000 a total loss or will some of it be recovered eventually. I should also like to ask him was the total amount of the £1,500,000 expended or was some of it not applied for. I would like to support Senator O'Donnell's suggestion that it might be possible to insure against these losses. It would seem public policy is inclined to favour raising the subsidies. We are raising them now to £2,500,000; perhaps next year it will be £3,500,000. If our losses on each of these sums are to amount to almost one-third I think the taxpayer will view it with considerable anxiety, so I would like the Parliamentary Secretary to reassure us on these points.

Mr. Hickey

I was rather surprised to hear the Minister coming in with arguments for increased trade loan facilities while we have at the moment the Credit Corporation Company and the Agricultural Credit Corporation, Limited. Is it really necessary that we should have a third credit corporation in the country? Surely the Minister made a statement that the reason the Trade Loan Act was asked for was that the Credit Corporation Company was not prepared to give money unless it was paid off in a certain period. I understand that the money you are going to give to an individual or a group of individuals for the development of industry is money that will come eventually from the banks. If that is so, I think that the financing of industry has perhaps a lot of unreality about it. Here we have the Agricultural Credit Corporation, we have the Industrial Credit Corporation, we have trade loans and yet this House is not in a position to lend £100 to anybody in this country for development except they have recourse to the banks. Is not that the position? Is it not time for us to tell the people how helpless we are as a Government about the question of issuing money for the development of industry? I could not agree with Senator ffrench O'Carroll when he said that people do not seem to know about this facility. The fact that we have lost £602,000—

Mr. Crotty

I said the losses arising.

Mr. Hickey

We lent about £827,000 and we have a possible loss of £600,000.

Mr. Crotty

No, £400,000.

Mr. Hickey

Have we any indication why that loss was so severe?

Mr. Crotty

It shows the risk in giving money to businesses.

Mr. Hickey

You have to borrow before you give the money to individuals. Is not that so? The Parliamentary Secretary, representing the Minister for Finance, has to go to the banks to get credit and then he gives it to individuals.

Mr. Crotty

We guarantee in the bank.

Mr. Hickey

The State has to make good the loss. If we want to deal seriously with this matter of financing industry, the sooner we start telling the people what should be done, the better. We here are like children, depending on the banks to give us money. I am anxious to learn from the Parliamentary Secretary what we pay the banks for the money and what the individual who will get this money from the trade loans will be charged.

Mr. Murphy

I think that I, in common with most Senators, would welcome any measure which would facilitate the investment of more money in our country for the provision of employment. I have two regrets in regard to this particular measure. One is that the Parliamentary Secretary is not asking for an increase to something far higher than £2,500,000 and, secondly, that we were not given the benefit of some White Paper on the subject.

There seems to be wholesale confusion in the Seanad this afternoon about what we are doing. Quite frankly, I am as confused as some other Senators. It seems to me—I am open to correction—that the main purpose of this Bill is to increase the overall limit by which the Minister can guarantee loans to £2,500,000. And whilst the overall limit previously was £1,500,000, I have certainly not taken the impression that £1,500,000 was spent and that £443,000 of that was lost. It seems to me that the overall limitation to the guaranteeing of loans of £1,500,000 must have been exercised over and over again. The £1,500,000 would be the limit that would be guaranteed at any one particular time. It is not the spending of money. It was the overall guarantee. As £443,000 has been lost in the years, it seems to me to be quite insignificant —insignificant if we have by the previous Act set up industries which have provided employment here.

I hope that the Parliamentary Secretary will give me some correction and education on this matter which might also be of assistance to other Senators.

Éamon Ó Cíosáin

Ní mór ná go bhfuilim ar aon-aigne le cuid den méid adúirt an Seanadóir atá tar éis suí síos. Ar an gcéad dul síos, is mór an trua nach raibh an t-eolas a thug an Rúnaí Parlaiminte dúinn inniu againn sar a dtángamar isteach. Dá mbeadh, is fearr go mór d'fhéadfaimis breithniú a dhéanamh ar an gceist seo. Tá a lán figiúirí tábhachtacha i gceist maidir leis an mBille seo. Ba mhaith linn a fháil amach conas a cailleadh an méid airgid adeir an Rúnaí Parlaiminte atá caillte. Níl mé á rá gur mór ar fad an méid é nuair a cuimhnítear ar an méid blianta atá caite agus ar an bhfás atá ar thionscal na hÉireann i rith na mblianta sin.

Ach ba mhaith liom é seo a rá leis an Seanad: go bhfuilimid go léir ar thaobh a thuille tionscal do chur chun cinn sa tír ach mar sin féin ní mór don Aire agus don Rialtas, pé Rialtas atá i gcumhacht, a bheith an-chúramach i dtaobh conas a chaithtear airgead a mbeadh an tAire agus an Rialtas mar urrús leis. Táimid anois ag cur leis an méid airgid a bheidh le fáil fé gheallúint an Rialtais. Is mór an méadú é ceathracha faoin gcéad. Do bheadh áthas orainn go léir dá mbeadh fás agus leathnú dá reir ar thionscal na tíre seo agus ar an méid oibre a bheidh le fáil as. Fé mar adúirt mé, is mór an trua nach raibh an t-eolas a thug an Rúnaí Parlaiminte dúinn inniu againn agus sinn ag teacht isteach. Dá mbeadh, is fearr d'fhéadfaimis an scéal a bhreithniú. Táim i bhfábhar an Bhille agus do bheinn i bhfábhar an ruda adúirt an Seanadóir Ó Buachalla gur cheart dúinn, dá mb'fhéidir é, níos mó tionscailiú do dhéanamh sna ceanntracha cúnga. Timpeall Bhaile Átha Cliath is mó atá an tionscal ag fás.

Cuireadh Acht i bhfeidhm tamall gearr ó shoin chun an scéal do leigheas. B'fhéidir go dtiocfaidh tairbhe éigin as an Acht sin. Tá súil agam go dtiocaidh. Sin a bhfuil le rá agam.

Mr. Crotty

There were a few points raised in regard to clarification. Except for that everybody seems to be quite satisfied with the Bill. Senator Ó Buachalla seems to be under a misapprehension about this Bill.

He thinks that it came in in the 1930s. The Bill was originally introduced in 1924. The Senator also suggests that the terms of this Bill should be extended still further to the under developed areas. Fóras Tionscail have been dealing with that matter as far as possible. They give quite considerable advances by way of free grants to industries in the undeveloped areas. However, in certain cases where Fóras Tionscail have given an advance, the industry can also get the benefit of a trade loan guarantee. Therefore, as far as the Trade Loans (Guarantee) Act is concerned, I think it could be used, plus the other grant which is also given.

Senator O'Donnell suggests that we might get some other way of underwriting these losses. Under this Bill, the Government, actually, are underwriting the losses which occur. It is because nobody could be got to underwrite certain losses that, originally, the Government had to step in and introduce the first Trade Loans (Guarantee) Act.

There was general discussion on the rate of interest. I might point out that the Government do not raise this money in the banks and hand it to certain industrialists. They guarantee the industrialist in the bank.

Mr. Hickey

What does the bank charge?

Mr. Crotty

The rate is 4 per cent. when the Government give the guarantee but the bank rate is 5 per cent. The term of repayment is spread over a period of from ten to 20 years and it is done by way of annuity. Therefore, the promoters of the industry for which a trade loan is given know the actual amount repayable over every period in that 20 years and they can make provision accordingly in their costings. If, on the other hand, they get a loan from a bank, repayable over five years, they could not possibly cover it in their costings over that period.

I should also like to assure Senator O'Donnell that the purpose of this Bill is not to recoup the losses of £446,000 which have occurred over a period of 30 years. The purpose of this Bill is not to recoup the losses but to extend the facilities. At the present time, trade loan guarantees to the extent of £1,241,000 are in existence. In addition, the Minister has promised guarantees for another £202,000 and these guarantees are awaiting final arrangements. That would bring the total amount guaranteed to £1,443,000. That is practically the whole amount at present. The purpose of this Bill is to extend the facilities so that the Minister does not have to close down on these trade loan guarantees.

Mr. Hickey

In other words, the credit of the nation is backing them?

Mr. Crotty

Yes.

Mr. Hickey

Why charge 4 per cent.?

Mr. Crotty

Senator ffrench-O'Carroll spoke of a small person developing an industry who has not collateral security. This is really what the Trade Loans (Guarantee) Act is there for. If the Minister and his Department can see that there is a prospect of progress and development—especially as regards employment—in an industry, then the Minister is very anxious to facilitate that industry. If a person approaches the bank for a loan he must have guaranteed security but the Minister is prepared to take a risk in the type of case I have just mentioned, that is, for extending an industry, especially where there is a hope of increased employment.

It is necessary that there should be a full inquiry before a person gets a trade loan. The average person will first go to a bank for a trade loan. It is only as a last resort that he will come to my Department and look for a loan. This is the people's money and the Minister is the guardian of the people's money. It is, therefore, essential that we should have a very minute research before we give sanction. However, that does not mean that because the research is detailed the sanction will not be given. As I have said, the Minister is anxious to help if there is a reasonable prospect of success in the business and a reasonable prospect of more employment.

Senator Stanford remarked that we have had one-third losses. In point of fact, the losses were one-fifth, or 20 per cent. The total amount guaranteed is £2,191,411 and, I think, the losses are something about £446,000. That proportion of losses, spread over 30 years, is very small. We are aware that, when industries started, various proposals were made and it was only as things went on that they could be studied and gone into in a more severe manner.

Senator Hickey has very many suggestions to make. I think, however, that if he wants to avoid all these losses in industry the only way to do so would be to refuse altogether to sanction these loans—and I do not think any Senator would say that that should be done.

Mr. Hickey

I did not suggest any such thing.

Mr. Crotty

If you want to extend your business you must use your money and you must take the risk of losing it.

Question put and agreed to.

Professor Hayes

As this Bill is a Money Bill, could all stages be taken to-day?

Agreed to take the remaining stages now.

Bill considered in Committee.

Section 1 put and agreed to.

SECTION 2.

Question proposed: "That Section 2 stand part of the Bill."

Mr. O'Donnell

In his reply, the Parliamentary Secretary said that the bank charge to-day is 5 per cent. and that the rate under this Bill is 4 per cent. Recently, I saw a certain trade loan guarantee on the Table of the House and the rate of interest was as low as 2½ per cent. I do not know when it was granted. It was a 20 years' trade loan at 2½ per cent. I was very interested in the Parliamentary Secretary's reply on the Second Stage and I hope his remarks will get all possible publicity because, if they do, there need be no bank strike: we shall all go for trade loans, if we can get them. Why should anybody pay 5 per cent. if he can get the money at 4 per cent. or 2½ per cent., spread over a period of 20 years? Is it the position that the rate of interest is always 1 per cent. below the bank rate? May I say, in this connection, that a 20 per cent. loss is the type of loss that would drive bankers to commit suicide? I do not think a Government should commit suicide any more than bankers should.

Éamon Ó Cíosáin

What is the actual rate of interest on these losses? Senator O'Donnell has mentioned 2½ per cent. I understood the Parliamentary Secretary to mention 4 per cent. as the rate of interest chargeable on these loans.

Liam Ó Buachalla

Has the Minister granted any loans at all?

Mr. O'Donnell

Guaranteed.

Mr. Crotty

The rate chargeable to the borrower in respect of a loan of this nature is 4 per cent. However, if the undertaking fails and the Minister has to pay back the loan to the bank, then any interest on that loan is charged to the Minister at 2½ per cent.

Éamon Ó Cíosáin

But who pays the balance?

Mr. Crotty

The bank forgives it.

Mr. O'Donnell

That is not my point. Last week I saw on the Table of the House particulars of a guarantee in respect of a 20 years' trade loan at a rate of 2½ per cent. If the Parliamentary Secretary wants any further details I shall give them privately to him because I do not want to discuss anybody's affairs in public.

Mr. Crotty

Where the undertaking fails and the Minister has to repay the loan, the rate of interest charged to the Minister on that loan is 2½ per cent., but as regards getting an ordinary loan at 2½ per cent. I do not know where you will get that.

Liam Ó Buachalla

Is it not a fact that the Minister has not granted any loans at all in the strict sense of the word?

Mr. Crotty

He has guaranteed the loans—there is no question of granting.

Liam Ó Buachalla

He is not liable for any interest, unless in the case of a failure, and then he is liable for part of the interest?

Mr. Crotty

He is liable for 2½ per cent.

Mr. Murphy

And the banks charge 4 per cent. where there is no risk involved, where the credit of the State is the guarantee in respect of the main loan?

Mr. Crotty

That is right.

Mr. Hickey

And you pay only 2½ per cent., if there is a failure?

Mr. Crotty

Yes.

Mr. Hickey

I hope everybody will draw the proper moral from that.

Question put and agreed to.

Sections 3 and 4 and the Title agreed to.

Bill reported without amendment and received for final consideration.

Question proposed: "That the Bill be returned to the Dáil."

Mr. Hickey

I want to correct any misunderstanding which may have arisen in the mind of the Parliamentary Secretary from what I said. I am saying that it is he, as representing the Minister for Finance, who should be in a position to lend money to people who want to develop industries. He should be in a position to do so, and I hope this House and the Dáil will ensure that the Government will be in a position to enable the Central Bank to do the work it should be doing in this country.

Question put and agreed to.