On the Second Stage of this Bill I said that I looked on it as a method whereby the Government could take a positive part in the development of industrial activity through holding shares in such a company to which this Bill refers were placed in the Library. Yesterday I had an opportunity of looking through these Articles of Association, and I must say that, having read them, they modified somewhat my view of the wisdom of this Bill. The idea that was suggested to me on reading the Bill and hearing the President's speech— and I do not know whether other Deputies got the same suggestion—was that there was a clear control in some way or other, a check or some kind of a veto exercisable by the Government by virtue of the holding of one-third of the share capital. But I find that that is very far from being the fact. I want to suggest that the Bill in its present form is somewhat dangerous, and that it can only be made safe and really and permanently valuable if the provisions of the Bill were enforced to this effect, that the share capital held by the Government should be, say, 50 per cent. of the total capital invested.
The company takes power under the Articles of Association to enter into any industrial undertaking, certainly almost any financial undertaking connected with industry except the conduct of the business of insurance. Practically everything else is covered. The capital is £250,000, and £150,000 appear to have been subscribed, one-third in the United States, one-third by the banks in Ireland, and one-third by the Government. The Bill speaks of the Ministry having power to nominate two directors out of a minimum of five, I think, but a possible ten. There is nothing, of course, in the Articles of Association that gives any authority to the Ministry, by virtue of the shares held, to have any control over the directorate, but it appears by the Bill that there has been an agreement entered into between the company on the one hand and the Ministry on the other hand for that Ministry to have a right to nominate two directors. The two directors that have been nominated by the Ministry are already directors of the company with whom the agreement was made, so that the nomination of these two directors is really not a nomination of outside directors to enter into a board but is simply indicating that two persons who are already on the board are satisfactory to the Government.
Now, my criticism of this position does not want to reflect at all upon the purpose, intentions or desires of the present board, and if we could be sure that the Board of this company in the future would be animated solely with the purpose of promoting the general well-being, then my criticism would fall. But expressions, and desires and intentions of good-will in January, 1926, as I have so often said, do not ensure that in 1936 the same intentions and purposes will prevail among the directorate of that time. There is no limitation in these Articles of the dividends or profits. It may be that a company of this kind will be very successful, and the extent of its success will measure its power over the economic future of the country. One can see possibilities that a company of this kind may extend so rapidly and so greatly as, actually, to control the country. It is starting, as the President says, with the added credit that a Government backing and share capital would give. When it gets on its feet and is actually successful the Government is free to get rid of its share capital, and, presumably, of its partial control and influence upon the policy of the company through its nominated directors.
There is nothing whatever to prevent the control of this company being secured by American shareholders through an increase in their holding, or, on the other hand, through an increase in the holding of Irish banks. I think that there is a distinct danger in floating this company in its present form with a limit to the holding by the Government of £50,000. I believe that the right policy for the Government to adopt in this matter would be either to have no holding in the company at all, or to have a controlling interest. I think the latter would be very much preferable. I think if the Government maintained a controlling interest so that there would be an assurance that the public well-being would be the primary consideration, everything would be satisfactory, and the future of the country would be saved from the possibility of finance sharks. whether in Ireland, England or America, getting control of a company of this kind and running it, and, through it, the industries of the country, for purposes which are not of the highest character. I am speaking now from the point of view of social well-being.
It is set out that the holders of three-fourths of the shares, if they agree, may commute or abrogate the rights or privileges of the other shareholders. I take it that it is under that section the company is able to enter into an agreement with the Ministry so that the Ministry should nominate two of the directors out of five. That may or may not be; I do not know. It is clear, however, that if, for any reason whatever, the Government disposes of one-twelfth of its present holding, if one could conceive a combination of the remaining shareholders, then the Government's power, rights and authority in the company would go to the wall. I do not think that that is at all a satisfactory position for the Government of the country to allow itself to be in. I have no reason at all to fear that anything of this kind will take place; but I see the possibility, when one knows from public notoriety that financial interests in all parts of the world are very glad to get hold of a good thing, or to get control of a country which may offer good things of a financial character, and use them not in the interests of the country, but in the interests of whatever financial control is at stake.
I see that dividends may be paid wholly or in part by the distribution of specific assets and, in particular, could be paid by the shares, debentures or debenture stock of any other company. That may be just a safeguard, one of the regular provisions in such companies, but one can see in it possibility of a company of this kind getting control of the stock of a variety of industrial undertakings and, by market manipulations of one kind or another, redistributing the stock of this company by way of dividend, and that the Government would become part holders of all kinds of stock of all kinds of companies.
The general purposes and intentions of the promoters of the company, I have no doubt whatever, are good and in good faith, but we know that trust companies have been known to get control of the economic keys in different countries and use those powers not always for the best interests of the country which they, in effect, own. We read a good deal about American investments in oil and British investments in ore and oil and manures and such like things, and we know how the country, to which the investors and stockholders belong, becomes closely interested in the affairs of the country where undertakings are carried on, and I fear that there are possibilities within this scheme of outside interests getting control to an unreasonable extent through financial manipulation of big industrial undertakings in the future that may develop in Ireland. A check upon that, and I think an effective check which would remove all my fears, would be that the Government should secure a controlling interest in such a trust company—that it should have half the shares. That has been done by other Governments in other matters, and it does not involve an active and direct share in the management or directorate, but it does involve a veto upon what may be an undesirable development of a financial character in the future industrial affairs of the country.
As I said, on the Second Reading, I thought the general intention and purpose of this are very good and satisfactory and I thought it was also intended to supplant the liability that the Government at present undertakes in respect of loans under the Trade Loans (Guarantee) Act. That, as was explained, was not the case and we have this position: that the new company is to make loans for a long term; the Government is to be a shareholder to the extent of one-third of the holdings and the share capital of this Trust Company, but the Government is to be finally responsible for the repayment of all the loans, that is to say, for the main immediate purpose of the Trust Company, which is to make loans under the Trade Loans (Guarantee) Act. That puts this company in the very advantageous position of making a start with its financial operations and, as I say, if the Government is to take the risk of those loans it should also take the larger share and then one-third of the profits would accrue to this company. I think the general proposition I make is sufficient to cover my objection, that is to say, when you have only fifty thousand pounds worth of the share capital you have no guarantee that the Government's partial control of the directorships shall remain in their hands. Therefore you are assisting in the formation of a company which you really do not and cannot control, which is illimitable almost in its possibilities, and which will wield a power which should, to a very great extent, be retained in the hands of the Government. I make the definite proposition to the Ministry that instead of limiting their holdings to fifty thousand pounds' worth they should enter into this, if they enter into it at all, with the idea of obtaining half the share capital of the company so as to have always a controlling interest in the operations of the company.
