The purpose of this Bill, as I stated on the First Reading, is mainly to enable us to avail of the proffered guarantee by the British Government of the bonds to be issued under the Land Bill of 1923. I do not know whether it is necessary to dilate on the advantages of having these bonds guaranteed. There will be an issue of something like £30,000,000 of Land Bonds bearing a rate of interest of 4½ per cent. Those bonds will be in process of issue over a number of years. If we were not to have this guarantee and the bonds were to be backed solely by the credit of this State, I have no doubt that in the circumstances they would sink to a very considerable discount. The result of one particular issue of ours sinking to a considerable discount would be that our National Loan would be dragged down, and would stand at a price very much below the price at which it stands at present. The price at which the National Loan might stand at any particular moment is regulated almost automatically by the issue price of any further National Loan. So that I have no doubt at all that failure to avail of this British guarantee would result in our paying considerably increased sums in interest for any borrowings that we may have to make. No point of principle is involved; it simply puts the fag-end of land purchase on the same plane as the main portion. We undertake no responsibility in connection with the matter to which there can be any objection. We undertake to make this a charge on the Central Fund, giving priority over any other charges that did not previously exist to the repayment of any sum that may have to be paid out of the British Exchequer.
The history of this particular matter dates back to before the establishment of this State. When the Act of 1920 was being passed, certain pledges were given by the British Government with regard to land purchase. Ever since that time they have in various forms undertaken that they would guarantee or assist any issue of bonds that might be necessary for the completion of land purchase. It is, I suppose, certain that the British Government's interest in doing that was the interest of the landlords who are being bought out. There is no doubt that the guarantee will be of great advantage to those whose lands have been bought under the Act of 1923. It will mean that their bonds can be put on the market and can raise a price considerably greater than any price they could get without this guarantee. But it means that not merely the landlords will benefit, but other people who had charges on lands and who would be paid off, not in cash, but in bonds, will be able to get on the market by sale substantial sums which they would not get if there were no British guarantee. There will be a benefit on our own borrowings. I might say that bonds issued to the extent of £30,000,000 without any British guarantee would be very largely confined to the Irish stock market, or would tend to come into the Irish market to a very large degree, and would lead to the absorption of loose capital available for investment to an extent that might have a very deleterious effect on industrial development here. You would have stock without a Government guarantee getting a fair rate of interest, having regard to the discount at which the bonds would be sold. Money available for investment would tend more and more to go into this stock, and would not be available for industrial activity of various kinds.
The Bill before the Dáil provides specifically that payment of principal and interest shall be made in British currency. Deputies will see at once that that is an arrangement which must of necessity exist if the British Government are to guarantee the bonds. I have little doubt that very long before the eighty years over which these bonds will be in process of redemption we will have a national currency, but it would be impossible for any guarantee to be given in terms of a currency that does not exist. When we come to have a Free State pound, or dollar or franc, or whatever we might decide on having, the value of the pound that we adopt might be considerably less or greater than that of the British pound. At any rate it might be different at times from the British pound. It would mean then if it were not specifically laid down that these bonds were issued and were repayable in terms of British currency the British guarantee might easily be a snare and a delusion for people who buy bonds. One of the values of it is that people know exactly what they are to get in interest, and they will be able to realise according to the interest that they will get.
There are various minor points in the Bill which I do not think I need deal with at the present stage. We have made specific arrangements for redeeming the entire bond issue within a period of eighty years, and certain small adjustments are being made in regard to interest and Sinking Fund. They are minor matters. The main provision in the Bill is that which enables us to take advantage of the offer of the British Government. I do not know what arguments may be put up against it, but I think that there can be no substantial argument against our agreeing in the first instance when we are issuing bonds to charge against the Central Fund the payments that have to be made in connection with these bonds; and, secondly, if the guaranteeing party is to make any payment on our behalf that we should charge against the Central Fund any amount that should be necessary to repay the sums that they may pay on our behalf, and to repay them at a rate of interest which may be fixed or, in default of being fixed by agreement, at a rate of five per cent. per annum.
