The DIRECTOR OF AGRICULTURE moved the adoption of the Report of the Agriculture and Land Mortgage Bank Committees. He further explained the proposals in his scheme to set up an Agricultural Loan Bank. The rate of interest and sinking fund charged would depend on the state of the money market for the time being.
Mr. D. KENT (Cork, East) supported the scheme.
Mr. J. MACBRIDE (Mayo, West) considered that a deposit of 25 per cent. of the purchase money by a prospective tenant was too high. They should advance up to 100 per cent.
Mr. W. SEARS (Mayo, South) supported the scheme. He was of opinion that the Republican Government should have a majority in the management of the Bank.
Mr. R.M. SWEETMAN (Wexford, North) inquired if the entire interest on the Indemnity Shares represented sinking fund?
The DIRECTOR OF AGRICULTURE explained that the accumulation of the Indemnity Shares which would bear interest at 3 per cent. per annum, was intended to amortise the debt. The Indemnity Shares were necessary to guard against loss by default of purchasers.
SEAN ETCHINGHAM (Wicklow, East) thought the scheme a good one, the Joint Stock Banks advanced only about 50 per cent. of the Purchase Money as against 75 per cent. to be advanced under the proposed scheme, and in most cases required collateral security for the money. He considered that £200,000, the amount of the Guarantee Stock, was not large enough.
Mr. J. MACDONAGH (Tipperary, North) approved of the scheme. There should be provision in it for annuities so as to enable the tenant purchasers to repay the interest and principal at the same time. This would provide better security for shareholders, and it would also provide a better incentive to people to subscribe. It would not be a wise proposition to advance 100 per cent. of the Purchase Money.
LIAM T. MAC COSGAIR (Kilkenny, North) expressed the view that the whole basis of the scheme depended for success on the good faith of purchasers, and on the number of people who would come forward as Shareholders. He would prefer if the Ordinary Shares were reduced to 5s., so as to induce a greater number of investors to come in.
SEAN MAC AN TSAOI (Monaghan, South) criticised the financial provisions of the scheme. He calculated that in the first year of the working of the Bank there would be practically no profit.
CATHAL BRUGHA (Waterford County) disagreed with the conclusions of the Teachta for South Monaghan. There would be a profit because in addition to the Indemnity Shares there would be the interest of at least 5½ per cent. payable by Societies to whom advances would have been made. And further. more, investment in this scheme would be a perfectly sound business proposition, and offer a good field to Irishmen who desire to invest their money in Ireland in a sound investment. The scheme offered an inducement to such men to sink their money at home. From a purely business point of view the proposition was a perfectly sound one.
Ald. T. KELLY (St. Stephen's Green) thought the scheme outlined a very good one, and that it provided a fair field for constructive effort. He asked (1) If object "E" was essential to the achievement of the purpose which the Bank had before it? He reminded the House that the Sinn Féin Bank was in existence. (2) What machinery was to be employed in forming the Bank? Did the promoter of the scheme propose using the machinery of British Law necessary in the formation and flotation of such companies? (3) Had the contingency of the seizure of the money by the English Government been provided for?
The DIRECTOR OF AGRICULTURE in the course of his reply stated that for every £100 advanced by the Bank £25 will be given back in shares, so that the Bank will only lend 75 per cent. of the value of the land. The Scheme should and could live on the good faith behind it. He was Chairman of a Cooperative Bank floated in 1908, which lent £1,000 per year on an average to people who were unable to pay their rent, and they had only one instance of a bad debt. As to object "E," that clause was inserted for the simple reason that they should not place a limit on the future activities of the Bank. It was to meet any contingency not contemplated at the moment. They could not commence operations at once. The £10,000 referred to was the amount estimated to meet the cost of premises and equipment, etc.
The price of land was undoubtedly high at the moment, but the ordinary sales were not reported in the Press It was the extraordinary cases were published. Furthermore, it was the comparatively small areas that were fetching high prices. He instanced the case of a farm of 1,300 acres in Meath which recently sold at £20 per acre, there being a valuable supply of timber on the land and a mansion that must have cost £20,000 to erect.
As to the financial proposals of the Scheme, on the Guarantee Stock of £200,000 they would receive £50,000 Indemnity Shares. The Bond Issue would bring in £200,000, which secures a further £50,000 in Indemnity Shares, making a total working capital of £500,000. Interest at 3 per cent. on the Guaranteed Stock, interest at 3 per cent. on the Indemnity Shares, and interest at 5 per cent. on the Bond Issue would make the gross liability of £19,000, and as against that they would have interest at 5½ per cent. on £500,000, or £27,500, which would leave a gross profit of £8,500 to the Bank. Administrative expenses might be more or less than 1 per cent. of the capital. In the case of Hungary, where there existed a somewhat similar institution, the expenses for the first few years amounted to 1 per cent.
The DIRECTOR asked that cricitisms, proposed alterations and amendments to the Scheme should be submitted to him by Deputies.
The Scheme in its present form was not final.
The motion that the Report be adopted was put and carried.