ORDUITHE AN LAE. - ORDERS OF THE DAY. AGRICULTURAL CREDIT BILL, 1927—SECOND STAGE.

This Bill follows fairly closely the lines of the Banking Commission Report. It provides for the establishment of what is called an Agricultural Credit Corporation with a capital of £500,000, half paid up. It provides that the capital and the dividends shall be guaranteed by the State; that capital shall be offered at least to the extent of £200,000 to the banks, and that the balance shall be offered to the public. The intention is that in the event of the capital not being subscribed by the public it shall be subscribed by the Minister for Finance. It is an ordinary limited liability company and the ten directors of the Corporation will be appointed by the shareholders. The banks will have the appointment of directors corresponding to £200,000; the other shareholders will appoint a certain number, and the Minister for Finance may make four appointments. The functions of the Corporation will be to give long term and intermediate term credits to agriculture. It is not intended and the organisation is such that it would not be possible for it, to give short term credits. There is an immediate distinction there between the function of this Corporation and the function of the ordinary joint stock banks. The division will lie along the lines of the joint stock banks performing their usual functions, which they are most suited for, which they have always been performing, and which their organisation enables them to perform, namely, the giving of short term credits.

It will be the duty of this Corporation to give this sort of credits that the joint stock banks have in the past, at times, attempted to give, and which they never found suitable for them, that is, long term and intermediate term credits. It is not intended that the banks should not even yet enter the field of long term credits if they wish to do so. That would be all the better for the Irish farmers. The more sources of credit which are provided, and the better credits that are given with due regard to the necessities of each case, the better for them. The banks may, in the future, enter the field of long term or intermediate term credits if they wish. There is no limitation to their functions so far as this Bill is concerned, but so far as the Agricultural Credit Corporation is concerned, its organisation is such that it will only effectively function in regard to long-term credits and intermediate term credits.

I am not in a position to define exactly what long term credits are, or what intermediate term credits are. I do not think I could be expected to attempt these definitions, because the Banking Commission, composed mainly of Irish bankers, was unable to do so. What I can do is that I can indicate certain general considerations that have a bearing upon the question. I think the paper of the banks, at present, is usually dated three months. The ordinary loan to a farmer is on a three months' or six months' bill. Certainly, except in very rare cases, a bill does not exceed in duration six months. Now, the sort of credit that agriculture needs depends entirely upon the particular requirement at the time. Some credits are needed for certain purposes for, say, ten or twelve years. For instance, credits to farmers' organisations for the purpose of erecting creameries, to be useful so as to be repaid easily and without making undue calls upon the shareholders, should be for periods of ten years. Credit for drainage might be for lesser periods. Credit for farm buildings should be somewhat longer, but, in addition, farmers want credit to enable them to hold cattle or crops for nine months or a year or thereabouts, and that is what is meant by intermediate term credits. It is these credits, and especially long term credits, that this organisation is expected to supply to the farmers. Now, the purposes are quite simple. They are defined in Section 9. They are, in short, to enable a man to become a farmer; that is, to buy land for the purpose of becoming a farmer, and after that to enable a farmer to perform any agricultural operation. C, D and E set out the purposes almost exactly.

(c) subject to the provisions of this Act, to lend to any individual, co-operative society, or other person moneys upon such security as the Directors may, subject to the provisions of this Act, think fit;

(d) subject to the provisions of this Act, to discount for or purchase from any individual, co-operative society, bank, or other person any promissory note, bill of exchange, or other negotiable instrument;

(e) to do all such things as may be incidental or ancillary to the due performance of all or any of the functions hereinbefore mentioned.

We should read that with Section 12 which sets out—

(1) The memorandum and articles of association of the Corporation shall be so framed and expressed that the Corporation shall be entitled and authorised to lend or advance money only to the persons. and for the purposes hereinafter stated, that is to say:—

(a) to any person for the purpose of purchasing land.

(b) to any farmer for the purpose of constructing buildings on his farm, or making on his farm improvements of a permanent character calculated to increase or facilitate or conduce to the increase of the productivity thereof or for the purpose of purchasing livestock, agricultural machinery or implements, manures, feeding stuffs, seeds, or other requisites of agricultural production or marketing;

(c) to any co-operative society (subject to the limitations hereinafter contained) for the purpose of establishing, carrying on, or extending its business;

(d) to any person engaged in or proposing to engage, in an enterprise designed for the service of farmers or of farming communities for the purpose of establishing, carrying on, or extending such enterprise;

(e) to any person (other than a co-operative society) for the purpose of paying off a loan which was originally made to him (whether before or after the passing of this Act) wholly or mainly for a purpose for which a loan could under this section be made to him under this section by the Corporation;

(f) to any co-operative society (being a co-operative society to which a loan could be made under this section by the Corporation) for the purpose of paying off a loan made to such society (whether before or after the passing of this Act) wholly or mainly for a purpose for which a loan could under this section be made to such society by the Corporation.

That is for the repaying of a loan made formerly for a purpose for which the Agricultural Corporation could now make loans. In that form the objects are expressed in a very wide way, and they cover all agricultural production and marketing, and for any purpose connected with either the one or the other. It would be very difficult to define, in a more limited way, the purposes of such a Corporation. On the other hand, we had to be very careful to see that this Corporation does not interfere with the ordinary operations of traders. Quite frankly, we think we can make a distinction that will be fair to the ordinary trader who is entitled to full fair play and will get it, and also which will meet the needs of the agricultural community, and for that purpose we attempt to define the functions of the Corporation by a limited proviso which is set out at the end of Section 12. It is sub-section (3):—

The Corporation shall not make any loan or advance any money to—

(a) any co-operative society the objects of which do not include at least one of the following objects, that is to say, the giving of agricultural credit, or the production or the marketing of agricultural produce, or the sale of agricultural machinery or implements or manures, feeding stuffs, seeds, or other requisites of agricultural production or marketing, or the production and distribution or the distribution only of power and light mainly to farmers, or

(b) any co-operative society which at the time of the making of the loan or advance carries on the business of selling by retail any goods which are neither agricultural produce nor requisites of agricultural production or marketing, or

(c) the Chairman or any director of the Corporation.

That proviso by defining what the Corporation shall not do makes the functions of the Corporation more precise than we could have made them by any positive definition except a general definition of what it could do. What it means is this: The Corporation shall lend to the farmer for farming purposes either productive or marketing. It shall lend to the farmers' organisation for farming purposes either productive or marketing. It shall not lend to a farmers' organisation which deals in the items that are included in the cost-of-living budget. It shall lend to farmers for the raw materials of their production, but it shall not lend to the farmer or his organisation for articles that enter into his cost of living as opposed to his cost of production. It goes a step further and it says in sub-section (4):

So long as any portion of a loan or advance made by the Corporation to a co-operative society remains owing to the Corporation, such society shall not give or continue financial assistance to any person engaged in or carrying on the business of selling by retail any goods which are neither agricultural produce nor requisites of agricultural production or marketing and shall not itself engage in or carry on any such business, and if any such society contravenes the provisions of this sub-section the whole of the loan or advance so made to it by the Corporation shall (notwithstanding any agreement to the contrary) forthwith become due and payable by it to the Corporation.

In other words, an agricultural society getting a loan from the Corporation for the purposes set out in this section shall not be in a position to lend money to another agricultural organisation which could not get a loan from the Corporation. That is specifically put in to meet a case like this: You have an agricultural creamery in a district and the shareholders are the farmers who reside there. The Committee is composed of A B C D and E. You have, in the same town, a co-operative store dealing in tea, sugar, groceries, drapery, etc.

And machinery.

Mr. HOGAN

Not agricultural machinery. I draw a distinction between the articles which a farmer requires in order to produce and the articles which he requires in order to live. Agricultural machinery is obviously one of the raw materials of agriculture. The co-operative store in the town would be engaged in the selling of tea, sugar, bacon, flour, eggs and so on. Its shareholders are the shareholders in the creamery, but the committee instead of being A B C D and E are F G H I and J, and obviously having made a distinction at all it would be absurd to lend money to the co-operative creamery, and then put it in the position of being able to lend money to a co-operative store. If we are to make this distinction between an agricultural organisation, the object of which is to further agricultural production and which deals in the raw materials of agriculture, and an organisation which exists to supply, the necessaries of life, then we might as well make it definite and not allow any loophole such as might and would occur in this country in the way of an agricultural organisation getting a loan to develop its business, and then making credits available to another organisation dealing in certain activities that this Bill could not finance under this section. I think that is entirely sound, not only from the point of view of the shopkeeper, but of the farmer. It may be when we are a lot better organised in this country than at present, that then farmers will be looking for fresh fields to conquer, but at the moment they have their hands quite full up. The societies that are doing best at present are those engaged in agricultural production, agricultural distribution and the necessities of agriculture, while those that are doing worst, and that have always done worst, are the ordinary retail stores.

Our agricultural policy on the one hand is to cheapen, as much as possible, the cost of the farmer's raw material, and to give it to him at wholesale prices, and on the other hand to improve his organisation and to enable him to turn out a better article—to increase his return as between the price of his raw material and the price of the finished article. That is the only possible form of protection that you can give the farmer in this country. The co-operative creamery, as opposed to the system of home butter-making, is an example of that. The creamery enables the farmer to get a better price for his milk and his butter than he could get if operating as an individual. It also helps him to cut down his overhead expenses by producing in bulk by machinery. The labour costs on the whole are smaller than they would be if spread over a number of small farmers. Therefore, through the function of the co-operative creamery you are on the one hand lowering the costs of production, and on the other increasing the value of the article which it turns out. You also enable him, by means of the co-operative creamery, to produce a better article than he could do if operating as an individual. You cannot stop there, and have too narrow a limit, such as that between milk and butter, and therefore my policy is to endeavour to give the farmer his raw materials as cheaply as possible, to enable him to buy them at wholesale prices, and under the best possible conditions, and help him to organise himself so that he will get the highest possible price for the superior quality of the article which he turns out. If that policy meets with the approval of the House, then we should agree that farmers' societies formed for the purchase and distribution of the raw materials of agriculture are proper societies to receive credits from a Corporation like this, and the provision in the Bill is to enable the Corporation to make loans to agricultural societies of the kind that I have mentioned. We cannot protect the farmer in any other way. We can only help him to protect himself. We cannot protect him by tariffs on agricultural imports, or in the way that we might help to protect other industries. The only way we can protect him is to help him to get his raw materials as cheaply as possible, and to enable him to turn out a better finished article. That has been the policy of the various Bills introduced within the last three or four years, and in furtherance of that policy this section is inserted in this Bill.

There is, however, a real problem there to be considered. The trader is entitled to full fair play. The man who owns his own shop is undoubtedly at a disadvantage as against the co-operative society, because of the large number of people who have a vested interest in it, and an interest in its success. When the State definitely decides to interfere on behalf of farmers' organisations, then the State must define the limits within which it will interfere. It must see that it will give fair play to both sides. So far as I have been able to consult them, this suggestion meets with the approval of non-agricultural traders throughout the country, and with the approval of the people most interested in co-operative organisations. This suggestion limits the farmer as regards the cost of his raw material of production. So far as other matters of distribution are concerned, the Bill gives the trader a free field. I think that meets the case. Of course, this puts the farmer in a much better position than he was in before. It provides him with the necessary credit for his organisation, and on the other hand the trader knows for the first time where he is. He has a clear field, to a certain extent, in a particular line of business.

That is so much for the objects of the Corporation. The methods of finance in this are, I suppose, rather novel in this country, but it is quite a common form in other countries where attempts have been made to establish an organisation of this sort. First of all, there will be the share capital, half of which will be paid up. That will be the nucleus of the fund, and with that the bank will start and will make loans against the obligations incurred—in particular against obligations incurred on, the security of land. They will be in a position to issue certificates for the first £100,000. Land loans, which the bank makes, and certificates it issues, must have the approval of the Minister for Finance. These certificates shall have a maturity of not more than 40 years. The period may vary from perhaps five years to 40 years. It is only in very rare cases, I imagine, that they would go as far as 40 years. A long-term loan would be for 10 years. The certificate would cover 15 and the intermediate loan would cover two to three years.

Certificates will be issued when they are required, for varying terms which will suit the particular needs of the country, and of which only the directors of the Agricultural Credit Corporation who are actually administering the Act will be the judges. These certificates will be issued on the security of obligations already entered into in favour of the Agricultural Credit Corporation. The Act provides in the first section of the Schedule, page 12, that the certificates shall be only issued against mortgages on land:

"Whenever the Corporation holds as security for money advanced by it first mortgages on land to the nominal amount of not less than one hundred pounds, the directors may issue a series of certificates of charge against some or all of such mortgages."

I think that is not exactly the recommendations contained in the Report of the Banking Commission. I should say first that mortgages on land would include mortgages on buildings. While the Banking Commission Report is not quite specific on the question, I think they contemplated that certificates should be issued not only against security on land, but against other obligations incurred in favour of farmers and farmers' organisations. I think myself it will be necessary to enable the directors of this Corporation to issue certificates, of course, with the consent of the Department for Finance, guaranteeing them against other securities than merely land. It is rather difficult to make up one's mind on the question. It is in this country an experiment; it is new.

It may well be that land will be offered in sufficient quantity to enable this bank to be fully financed by certificates issued as against mortgages on land, but I doubt it, and I do not think it was intended by the Banking Commission. I think that the Corporation itself should get discretion to issue certificates with the consent of the Minister for Finance, on the strength of any other mortgages or any other securities which they may hold. That is a matter that can be discussed in Committee. Certificates may be issued up to the amount of £7,500,000. That is fifteen times the capital of the Corporation. It is considered that that will be sufficient. The Banking Commission Report made no suggestion that the amount of certificates to be issued by the Corporation should be limited in any way. The only limitation which they suggested was that the Corporation should not lend more than £1,000,000 on these certificates in any year. There was no total limitation, and this limitation of £7,500,000 set out in the Bill is inserted by ourselves. If it is found—I do not think it will— that that limitation is too narrow, it can be altered afterwards by legislation, but my own view is that it will be a long time before we will find it necessary to put the Corporation in a position to make bigger loans than are allowed under the Bill as it now stands.

These certificates will be guaranteed by the Minister for Finance both as regards interest and sinking fund and before they are issued—they will be issued in series—they must be submitted to the Minister for Finance for his approval. They will have as their security the general assets of the Corporation and also the specific assets lodged with trustees in that way—mortgages and other obligations owned by the Corporation and lodged with the trustees. I do not think there will be very much difficulty in finding money for the Corporation. The organisation of the Corporation is based, strictly based, on the Report of the Banking Commission. That Commission contained, I think, seven members, of whom five were directors of Irish banks. The Report itself sets out that it is the view of the Commission that these certificates would be entirely suitable security for their assets. Anybody who has read the Report will see that so far as the public do not take up the certificates or share capital, that the banks are willing to help, so I do not anticipate much difficulty in financing the Corporation. Certainly we have information as to what is going to happen in future. We have it straight from the horse's mouth, because the Commission was largely composed of Irish bankers.

The only difficulty I foresee in regard to financing the Corporation is the difficulty I have mentioned already, that certificates may only be issued as against mortgages on land. I do not think that was contemplated by the Commission itself and even if it were I do not think it would suit the particular conditions of this country. In America certificates of this sort, debentures, are issued only against mortgages on land, but America is one country and this is another. The conditions there are very different. Land is not found to be the very best security. Of course, it is an ideal security on a certificate with a date of ten years, but it is rather difficult to get suitable security on a loan that is to extend over 10 or 15 years. On the other hand, the general assets of the co-operative creamery would give a sounder security than any mortgage on land. I could suggest other more unsound securities than mortgages on land. I imagine myself that that particular section ought to be altered to give the Corporation a discretion as to securities they will wish to hold and securities they will issue certificates against. There will be very little danger of a shortage of capital

There is one very important innovation contained in Sections 19 to 25 of the Bill. These sections deal with chattel mortgages which is a very difficult question. It has been considered by Banking and Agricultural Commissions, not only in this country, but in America, England, Scotland and, I think, every country on the continent, and it has been always felt and in fact reported on by practically all these commissions that nothing would do more to extend the securities which the farmer has for the purposes of obtaining credit, than some system of chattel mortgage. A bill of sale is quite useless to him. We have atempted to deal with that question in those sections in which we follow quite closely the recommendations of the Banking Commission Report. A mortgage may be a general mortgage on chattels, a floating mortgage or a specific mortgage and the floating mortgage may, of course, in the course of its operations be made specific for the purpose of recovering this mortgage on the personal property of the farmer, his cattle, sheep and the live and dead stock generally of the farm. Obviously these chattel mortgages would be only suitable for short term credits and intermediate term credits. Consequently, it is a type of mortgage which is particularly suitable for the use of an ordinary joint stock bank which exists for the purpose of providing short term credit. The report suggests that the credit corporation should be enabled to take such mortgage, and it also suggests that the mortgage should be secret. In that the Banking Commission follows closely the lines of the report of the English Ministry in regard to agricultural credit. I believe that this particular type of mortgage would lose a lot of its usefulness and would not be as widely availed of as it should be, if it were in the open market. It is true in America and, I think, in England, and, if it is true in England, it is true in this country.

Would there be any registration?

Mr. HOGAN

In the event of a secret mortgage there would be a central register in Dublin available to the banks and the Credit Corporation. It is a difficult question, and one that has been considered by a number of commissions, not only in this country, but in other countries, and they all brought it to a certain point. They are unanimous that a chattel mortgage would be extremely useful to the farmer, and they all seem to be unanimous that it should be secret, but they leave it at that. The opinion set out in the report of the English Ministry has been definitely adopted by our Banking Commission, and we are following exactly the recommendations which they made. It is obvious that a mortgage of that sort, say, a mortgage on live stock is very hard to protect. The idea is that when a farmer gets a mortgage on live stock he should only sell his stock with the consent of the mortgagee or alternatively, that, after selling the live stock, he shall in accordance with the terms of the mortgage liquidate the debt and pay the money to the bank. That, of course, is essential, and must be provided for.

It is also provided that the purchaser of goods such as live stock, which are subject to a chattel mortgage in the open market, shall get a good title. In other words, the goods or chattels, such as live stock taken to a fair, which may be subject to a chattel mortgage, may be sold freely. That is a good title and any purchaser may buy them. That is also necessary. That simple section gets over any difficulty there may be by reason of doubt or hesitancy on the part of a possible purchaser of live stock. Stock, or anything like that, bought in the open market, bought bona fide without notice, carries with it good title, so that there is no difficulty on that head. On the other hand, there are provided criminal penalties against a mortgagor who obtains a chattel mortgage by false pretences or statements, or who, after obtaining the mortgage, breaks any of its conditions. These provisions are absolutely necessary, and without them a chattel mortgage would be useless. No institution would lend money on a mortgage unless it had such protection. The mortgage on land is all right as the land will always be there.

The mortgage on stock is different. If a man disposes of his stock the creditor would be in a difficult position. He has not any other security except it is made a criminal offence for a mortgagor to obtain a mortgage by false pretences or false statements, or after making it, break any of the terms of the mortgage. These are also the terms of the American Act which deals with agricultural and chattel mortgages. I regard these provisions as important. I do not say they are in their final form. They are in their final form so far as I and this Bill are concerned, but it is a subject about which we have very little experience. You have them in other countries, but the conditions existing there are very different, and it may be that when the Bill is passed, and the Act is in operation, other provisions will be found to be necessary or desirable. If that be so, the Dáil is always here and legislation can be introduced to give effect to such provisions, but we should make a beginning, and we are following strictly the provisions of the Banking Commission report in regard to this question of chattel mortgage. I think it is particularly useful in Ireland where, unfortunately, land is not a good security for the banks at present.

That is due purely and simply to the difficulty of selling land, the difficulty which a mortgagee has of selling land, and, moreover, a mortgage on land is troublesome to the small farmer who wants a loan for a year or so. The chattel mortgage is particularly suitable to him. In this country land changes hands often, and I think this system will make it easy for the congest or landless man who is getting land to get a certain amount of stock. It will obviate the shocking necessity he was under in the past of bringing in his neighbours to sign a bill, and repeating the process every three months. It will have other advantages. It will have the advantage that the transaction will be secret, and, having got the mortgage, it will not be necessary to renew the bills, as he had to do in the past every three months. He will have no further trouble until he sells the chattels. It was the view of the Agricultural Credit Commission of 1914, whose report is really a classic on the subject, that the chattel mortgage would be extremely useful to the small farmer. I hold, while there is a considerable difference of opinion about it, that it should be secret. There is an added reason in this country for it, and that is that while we have good land with clear titles, everything in fact that would go to make land mortgagable, land is not a good security with the banks.

If the farmer is short of credit now there are, of course, a good many reasons for it. Farmers everywhere are short of credit. Banks are unwilling to lend, but there is the additional reason in this country, and that is the unwillingness of a mortgagor who happens to be a farmer to let the mortgagee sell him out. If the ordinary decent farmer cannot get credit at present it is largely because he winks at other farmers trying to cod the banks and other mortgagees. Agriculture will never be able to get reasonable cheap credits in this country until the whole point of view in regard to the selling out of land, held as security, changes, and until it is looked on as a crime, as a dishonest act, to attempt by force to prevent a mortgagee from selling a farm on which he has a mortgage. It has got to be looked upon as robbery, just as we look on stealing money from banks, post offices, or individuals. Farmers must realise that it is dishonest, that there is nothing patriotic about it. It is selfish and dishonest, and injures farmers generally. Until you have a change of mind in that regard, until the farmers come off the ditch and make it clear that they do not stand for any attempt to cheat creditors and to make an exception, so far as land is concerned, compared with other form of mortgagable property, the farmers will be short of cheap credit and will only get dear credit. Land is not at present as good security as it might be, and these provisions for chattel mortgages will help. As I have said, we are following the report of the Banking Commission fairly closely.

I do not know any subject that has been so carefully thought out as agricultural credit. There have been commissions in the past, and quite recently, dealing with it in every country in Europe and in America. The English Ministry some time ago issued a report on the whole question of agricultural credit. Probably the most valuable report on the question in England, Ireland or Scotland is the report of the 1914 Commission, which is recognised everywhere as a classic on the subject of agricultural credit. All these reports were before the Banking Commission when they were considering this question, and they had the advantage of them. They also had the advantage of a chairman who had complete knowledge of the arrangements made in America, where agricultural credit has been highly developed. It was with all this knowledge that they issued their report which was published a few months ago. We have followed the report very carefully, and we think we can hardly be on firmer ground. If there is one subject more than another that has been fully thought out, it is agricultural credit, but it still requires further thinking out. My own view is we will not get very much further in the way of providing really suitable credits for agriculture in this country until we make a beginning, and see that in operation. As the special conditions of the country show themselves, it may be necessary, perhaps, to extend and modify the provisions in this Bill, but we cannot get any further until we see the scheme in operation.

In one respect the Bill is slightly different from the report. It provides in Section 9 that the banks shall take deposits from individuals. The report sets out that the agricultural societies shall be compelled by law to deposit a major portion of their funds with the Corporation. We have not inserted that provision in the Bill. We think the proper place for that would be in a co-operative Act. In any event, I do not think it is likely that the spare funds of an agricultural society will be very great. Of course if credit societies increase, as I think they will, I regard that as particularly suitable for poor districts, especially in the West, and on the Western Coast. There will always be a certain amount of funds in hands which will be circulating, and this bank will act as a clearing house. In the co-operative societies there are not much deposits. Such societies should keep ample reserves and no more, and not attempt to make a profit, or to have anything in the way of big funds lying idle. I think it is necessary that the bank should be in a position to take deposits from individuals to a limited extent, and we have inserted a provision covering that. This bank will be financed first of all by the share capital; secondly, by share certificates; and thirdly, by right of issue of debentures, which the bank may issue up to the amount of its paid-up capital. If the bank is to have specially cheap money I think it is desirable, at least to some extent, that it should be able to take deposits from individuals.

I see no objection to that, and the only objection that could be raised if it takes deposits from individuals is that it would be competing with joint stock banks. That is far-fetched. If there is any danger of that, it could be met. As the Bill stands, I do not think the Corporation could be a serious competitor with the joint stock banks, who have on deposit £125,000,000. The total capital of this bank will be only £7,000,000, and it cannot make a profit over and above five per cent. The total funds that by any stretch of imagination it would be able to handle at any time, would be between £7,000,000 and £8,000,000. This will be found by share capital, certificates and deposits. In that state of affairs it is impossible they would be able to handle, as an extreme amount, £5,000,000 on deposits, and on that amount they could not compete, seriously, with banks having a capital of £125,000,000.

What is the governing factor in the way of deposit interests?

Mr. HOGAN

In my opinion the bank would not be able to get deposits, in view of the fact that it does not do ordinary current business, unless it offers better conditions than the joint stock banks. The point is, as I have explained, that it could not compete in any serious way with the joint stock banks, seeing that it would not handle more than £7,000,000.

What is there to prevent them from handling more?

Mr. HOGAN

They cannot make a profit of more than five per cent.

Supposing they pay a higher rate of interest on deposits, and limit the amount of profit and thereby attract deposits. Cannot they deal in that money under the Bill?

Mr. HOGAN

Yes, up to £7,000,000. That is the limit. This bank would be merely making short term credits, and only a small proportion of any deposits they get could be used for long term credits. Taking the organisation of the bank as it stands, it is out of the question that they could usefully handle any large amount of deposits. At the same time my view is, that it would be able to help the banks to get deposits. They will have to pay five per cent. on their share capital, and presumably the same on deposits, and if they want cheap money there should be a certain amount on deposit. It would be absurd to prevent them, simply because they might compete with banks who, at the moment, handle £125,000,000 on deposit. If there is any fear of that it would be quite easy to insert a limitation.

Is that £7,000,000 provision in the Bill?

Mr. HOGAN

It is.

That is the amount guaranteed by the Minister?

Mr. HOGAN

Yes.

But the Minister does not guarantee the amount of profit in the joint stock banks? There is nothing, as far as I can see to prevent this bank doing the business of joint stock banks over and above the £7,000,000, provided there is no charge on the Minister.

Mr. HOGAN

This Corporation is to make no profits. Supposing it does that business, what will it do with the money? This Corporation can only pay five per cent. and, as I have stated, make no profits. That limits materially the amount of money it can handle. I think it is perfectly plain that the directors cannot possibly take more than £7,000,000 or £8,000,000, to give them reserves on the organisation of tins bank, but if there is any doubt about it, it is easily remedied in Committee.

I do not want the Minister to limit it.

Mr. HOGAN

All I am concerned to point out is that, in my opinion, it is important that the bank should be put in a position to take some deposits.

I approve of the principle of this Bill and of the idea in bringing forward the Bill. As the Minister points out, the Bill follows the report of the Banking Commission on agricultural credits. This is a new form of credit, based largely on the systems prevailing in other countries. As the Minister points out, conditions are not altogether the same, and we cannot say at this stage whether the Bill will meet with all the requirements of agricultural credit here. Personally, I think it will not. Anyhow, it is a beginning, and, as far as it goes, I think it is sound. I do not regard the report of the Banking Commission on agricultural credit as deserving a great deal of praise. The ground was all broken for them before. The report was largely based on the much superior report of the Commission on Agricultural Credit which sat in 1914. I can claim that I forecasted in this Dáil roughly what would be the main provisions of this agricultural credit report. I outlined the formation of an agricultural institution of this kind, and I also outlined the possibility of allowing an institution of this kind to lend money on a certain class of mortgage. I can claim credit that my ideas in that regard have been carried out. I do not say the Commission adopted my ideas, but their views happened to coincide with mine. The Commission does not deserve a great deal of credit for the production. From start to finish, it is an apologia for the failure of the joint stock banks to meet the agricultural requirements of this country.

No doubt, some improved system of agricultural credit is absolutely essential. There has been a tightening up of credit all round at a time when credit is most required, when there is a steady fall in agricultural prices, and when existing institutions should come to the rescue of the farmer. Instead, we find them tightening up the strings of their purses, and not giving credit of any kind. That is quite understandable. The banks were not established to provide agricultural credit, but to meet the credit requirements of the commercial and trading community. On account of their organisation, perhaps, they are not altogether to blame for failure to meet the credit requirements of the farming industry. In my opinion, they have not gone as far as they ought to have gone in that connection. They have not endeavoured to keep in touch with farmers in the way in which they might. From a practical experience of banking in two countries, I know that in America and Canada the existing joint stock banks go to more trouble to keep in touch with the agricultural community and to get accurate information as to the desirability of lending money to particular people. In that regard I fear that the banks of this country, despite the fact that they are rich institutions, have, to a certain extent, failed. In Canada, for instance, a bank manager has to travel through the country, go to a farm, see the conditions of the farmer—the number of his stock, etc.—and make a report of his visits. I have never heard of that being done here. I am not sure that it would be acceptable work to the bank managers here.

I think it is not possible to forecast how far this Bill is going to meet the credit requirements of the farmers. The requirements for credit at present are intense and the workings of this Bill will be slow. As far as I can see, we will have a single Corporation established, but that Corporation will not have any branches. The effect of that will be that it will not come into direct touch with the people at all. It can only come into touch with them indirectly through the existing co-operative societies, the agricultural societies to be established, or the existing joint stock banks. I cannot see how this is going to meet individual requirements, which cannot be dealt with except personally. I think there is a weakness there. Perhaps it will be explained on the Committee Stage, because in a large part of the country they have not got co-operative societies.

Mr. HOGAN

What about branches of the joint stock banks?

Are they prepared to do the work?

Mr. HOGAN

Read the report. They will do it, of course, for a consideration.

It may be in the report, but it seems to me it will not be practicable, because the joint stock banks will pass on those loans they feel they cannot handle with safety to the Agricultural Credit Corporation.

Mr. HOGAN

Will they take them?

The possibility is there. Having skimmed the cream of the agricultural credit requirements of the country, they will pass on the skimmed milk to the Agricultural Credit Corporation. However, I am only putting forward that view tentatively. The Minister rightly emphasised the fact that credits to farmers are, to a certain extent, being injured by the farmers themselves, and that the difficulty in selling land because of the foreclosure of mortgages has made it more difficult for the farmer to get credit. That is so, but I think it is not fair to lay too much blame on farmers because of those conditions. Those conditions exist, but they are due to the conditions of the past, and it is only another indication of the fact that we always pay the penalty for the evil things we do some time or another.

In the old days, and up to quite recently, those mortgages were held by people like gombeen men, who got farmers into their clutches by means of shop and other credits. From the beginning they intended to foreclose on the land. There was also another difficulty with regard to the land agitation, so that it became an honourable thing to object to the sale of land. Those things have to be taken into account, and until all the causes for those feelings have been removed, and until we give the farmer a reasonable chance of getting credit at a proper rate of interest we cannot blame him in connection with his existing feelings as to the sale of land.

There is a point as to the composition of the board of directors to which attention might be directed. It is not the intention that this institution should be a Government bank. It is intended that it shall be a free institution—not controlled by the Government. There are certain possibilities that it may, in fact, be controlled by the Government, because the directors are to be appointed in accordance with the number of shares issued. The Government will be entitled to four directors out of ten. They will be entitled to appoint the chairman, while they hold these 200,000 shares. Also the Government will be entitled to apply for shares not bought up by the bank or public. It is quite possible, therefore, that the directors nominated by the Government may be in the majority. In such a case, this institution will become really a Government bank. I am not going to say, at this stage, whether a State Agricultural Bank is advisable or not, but you have to look to the fact that it is possible that this will become a State Agricultural Bank.

With regard to the Minister's statement regarding loans to the co-operative societies engaged in trading, to my mind there is a certain amount of doubt as to the advisability of accepting a section dealing with that. While the Minister and the Government may desire not to interfere with the ordinary business people, who are not trading in direct requirements for agricultural production, there are many agricultural co-operative societies the greater part of whose business consists in selling the requirements for agricultural production—who are engaged in selling articles that are required in order that the farmer may live. Agricultural societies may sell seeds and manures, but they may also sell boots, clothes, tea, sugar and other goods. As I read this section, it means that any co-operative society which, as part of its business, sells articles of that kind will not be entitled to get a loan under this Bill. The effect of that will be to restrict a great number of agricultural co-operative societies. I am not sure that the principle is a sound one. If we are helping the farmer to reduce his costs of production, I think we must include in that his cost of living. There is no reason why we should not help him to reduce his cost of living. However, that can be discussed on Committee.

I want to refer the Minister to paragraph 9, sub-section (10) of the report, which provides that the institution to be established under this Bill should make direct loans in individual cases to farmers, and that it should take over loans which are unsatisfactorily placed. I take it that the intention of the report is that this Credit Corporation shall take over what are referred to in another portion of it as "frozen loans."

Mr. HOGAN

Read the last paragraph on page 13.

That is not definite enough.

Mr. HOGAN

"The new institution can obviously not undertake to assume any responsibility for losses possibly resulting from unwise loans heretofore made."

I read that. I want the Minister to state more specifically than that what his intentions are as to the workings of the Corporation in that respect. It is a very important matter. The Minister referred to it here and spoke of an organisation supporting farmers who claimed that they did not intend to pay back loans they got from the banks. That is not so. No organisation I belong to has said or done so. I have not done so, but I say that the enforcement of the claims of the banks with regard to those loans, made during the peak prices of land, if carried to their ultimate extreme are going to have a very detrimental effect upon the farming community in this country. Not only will there be whole families affected, but whole clans will be wiped out of existence if the banks carry their legal powers to their ultimate end. I believe those people are, in the great majority of cases, anxious to meet the demands made on them. In this report there is a way out, but it is not made very clear. It would be bad business for the Agricultural Credit Corporation to take over those loans at their face value. In many cases they are only worth 50 per cent., and sometimes 60 per cent., of their face value. The great majority of those loans made on land during the high prices prevailing at the end of the war are not worth their face value. My idea is that a valuation should be made, that the loans be handed over and that the responsibility of the banks then should cease.

The idea of having two parties responsible at the same time, the banks and the Agricultural Credit Corporation, for the overseeing of one class of loan is an impossible thing from the business point of view. There will be a contingent liability on the banks or some institution of that kind all the time, and from the business point of view that is not the right way to deal with that form of loan. The way to deal with it is, these loans should be valued in some way and the banks should face up to the losses which they must face eventually. They should accept composition. Then the Agricultural Credit Corporation would take over these loans at their actual worth. We take it the present Corporation will have the power to make a long-term loan.

Mr. HOGAN

Who will be at the loss?

The two will be at a loss.

Mr. HOGAN

I think a moment ago the Deputy said he never advised people not to pay their debts to the banks. Now he admits the banks will be at a loss.

The fact is that the banks will be at a loss in any case. They cannot recover the full value of any of these debts. The people who owe the loans cannot pay the full amount. By no legal method can they be made pay the full amount of the loans. If there is any attempt made to make them pay even a considerable proportion of the loans in cash, I do not believe it could be successful; in my opinion it would be quite impossible. If the Agricultural Credit Corporation takes them and extends them over a long period, with the interest and sinking fund combined, that will be the easiest way out for all parties.

Mr. HOGAN

What about composition?

If the banks think they will get their full pound of flesh they are mistaken, because it is not there. If the banks think they can exterminate financially and actually whole clans who have securities on bills for which the banks were partly responsible—in which the banks were not free from responsibility— they cannot do it.

Mr. HOGAN

I am anxious to understand what the Deputy means. I have not got his proposal.

Perhaps the Minister will be able to make clear what he would like to do in the matter. Although this measure has my approval and the approval of Deputies on these Benches, I do not think it will meet all the credit requirements of the present time. It will not meet the conditions that exist arising from the losses of cattle through disease. It will be too slow, I think, to meet the immediate requirements with regard to the re-stocking of land due to the recent development in the cattle trade. I think this Bill will not meet these requirements. In so far as it goes it is, generally speaking, a step in the right direction. I believe if we pass this Bill we will be taking a step which will materially help the agricultural community, who fully appreciate the bringing forward of this measure.

I would like to take up a point Deputy Heffernan has made which, I rather suspect, from the Minister's interjection, he would like to reassure the House upon. I hope that may be the case. Deputy Heffernan has pointed to the Banking Commission's report on agricultural credit, and has referred to the proposition in paragraph 9 (d) about the new Corporation taking over loans which at the present time are unsatisfactorily placed; and he has further made reference to paragraph (e) which speaks of some basis of adjustment which could be found, and which would make it possible to effect a release. The Minister drew attention to the next sentence, which states that the new institution could obviously not undertake to assume any responsibility for losses possibly resulting from unwise loans heretofore made. I would like to know whether the Minister sat in conference with the banks in regard to the possible basis of adjustment.

I think the Deputy is quite sound in saying that the proposed credit corporation is one which should be protected from the banks. It is not reasonable, I think, that this corporation, financed by the State and guaranteed in this way by the State, should allow banks to get rid of a liability for which they are, at least, half responsible, and which, I think, from all the evidences, they are not likely to get out of very easily at par. I think all the evidences go to show that here you have a case for either a moratorium or an arrangement—some basis of adjustment was the term used by the Commission.

Mr. HOGAN

What is the quotation from the report?

The quotation is: "It should be carefully observed that in the event of such a transfer"—from the existing banks to the credit corporation—"the new institution would expect those who are already responsible for the loan to continue to guarantee it, unless, of course, some basis of adjustment could be found which would make it possible to effect a release." From the tone of the Minister's interjection—the question he put to Deputy Heffernan—I suspected an opening for him to make an announcement to the House that the banks were prepared to meet the debtors in such cases. I hope I shall not be disappointed. If it is not the case, then I think we ought to face the facts of the existing circumstances and make clear our view, at any rate, that the new corporation ought not to be used to enable banks to relieve themselves of a liability of which they may be very glad to relieve themselves.

Under Sections 9 and 12 (e) it is contemplated, apparently, that the new corporation may deal with any person for the purpose of paying off a loan which was originally made to him, whether before or after the passing of the Act, wholly or mainly for a purpose for which a loan under this section could be made, and that includes the purchasing of land. I shall come to that again. I now refer to the Banking Commission's report, page 10, in which they refer to the position of the banks in this matter. They say:

"They"—the banks—"are moreover concerned with the shareholders' demand for a profit, and, like other private enterprises, they naturally feel it a duty to promote the interests of their owners to the utmost degree that is honourably possible. Irish banks, like banks in other countries, undoubtedly made unduly heavy loans to farmers and farm interests during the inflation period after the war. At that time land values were high and rising, and there was a prevailing belief all over the world that they would be maintained. Since then they have, in many cases, shrunk by fifty per cent., and bank loans which, in 1920, appeared to be protected by ample margin are now of questionable value."

Now that is a report drawn up by bankers, and they tell us that unduly heavy loans were made to farmers at the time of the inflation; that the prevailing belief all over the world was that land values were high and rising and that they would be maintained.

What paper is the Deputy reading from?

This is the Report of the Banking Commission. It seems to me that the proposal in the Bill and in the latter paragraph of the report that the Corporation should relieve the banks is one that should be guarded against. Bankers are not, quite clearly, very reliable prophets as to the course of industry and the course of values. One wonders, looking back at the Bill, that the bankers all over the world would have imagined that land values would continue to rise and maintain the position of 1920, when there had been such immense inflation in most countries, and that land values depending as they are, to so great an extent on the demand for foodstuffs of the higher qualities, should continue to rise after the killing off of millions of men, particularly men of the wheat-eating countries, and the consequent reduction of population. To imagine that that kind of situation could happen in Europe and that land values would continue to rise, and maintain the figure that they then reached, is somewhat extraordinary, and throws a good deal of discredit upon the quality of their advice as to the course of economic affairs. They took the risks with their clients and quite clearly those risks were bad ones. I think it is wrong to suggest that the new Corporation should take over from those banks this liability. Deputy Heffernan's point is that the only way to meet this is through the banks being relieved from this kind of risk in the future, and that in consideration of that they should face the loss and meet by a composition those particular debtors, as the State has had to do in regard to similar transactions.

The banks in this case are responsible and it would certainly ease the economic situation, as far as I can gather, if there was an arrangement entered into by these debtors who borrowed, and that the new corporation should be protected against having to take over those liabilities. I say protected against having to take over these liabilities, because there is a possibility, under this scheme, that the bankers on the Board may predominate and they may decide that the terms of the take-over would be such as to favour the existing banks. I think that there should be some protection for the new Corporation in this matter.

I would like to put one or two points to the Minister and ask him to answer them in the course of his reply, and these are on matters of detail. The Memorandum and Articles of Association propose that the Corporation should be authorised to lend money to any person for the purpose of purchasing land. There is no restriction, whether it should be land in towns, building land or land anywhere. It does not specify agricultural land or farming land. This money may be advanced for the purpose of purchasing land. That, I think, is not the intention of the Bill. There is another question which might be faced, though I see the difficulty in putting any restriction in the Bill. It largely depends upon the policy of the Board, but one could hope that the moneys to be lent would be not for the purpose of adding field to field by the grazier, but rather that it should be biassed in favour of the farmer who is going to till his land. The difficulty I see is too great, I think, satisfactorily to put it into the Bill. I think there should be some clear understanding that the Corporation's money should not be used for aiding the addition, by the grazier, of farm to farm and field to field.

The Minister has not told us whether he intends that there should be a restriction on these moneys for agricultural purposes; that this proposition that the Corporation may advance money for the purchase of land would clearly include the purchase of land in towns. I am sure the Minister's statement regarding the restrictions on societies which are dealing in articles of production is going to be very difficult for him to maintain. I do not think it is desirable to make such restrictions. I think the effect of it is going to divide up, to make two societies where one exists at present, perhaps on the same premises—a creamery society and a general purposes society perhaps, run by the same manager, in the same building, but nominally two different schemes of organisation. I think it is an undesirable and unnecessary restriction and I point out the difficulty of definition. The Minister has used the term in the Bill "agricultural produce." Is bacon agricultural produce?

Bacon is agricultural produce. The society that deals in bacon, say American bacon purchased by the society to sell to the farmer is precluded, but if it is Irish bacon bought for sale, wholesale, then it is not precluded. I see a very great difficulty in determining how you are going to restrict and determine the end of a particular purchase, whether it is going to be sold in the market for export, or whether it is going to be sent to Dublin or Cork, or sold to the farmers in the neighbourhood. Similarly, in regard to many of these items which enter into the cost of living, there will be a difficulty. That was the phrase used by the Minister. Many of these items which enter into the cost of living are items of agricultural produce, and you will have to get a sounder definition. In fact, you have no definition whatever in the definition clause of "agricultural produce." But under that clause you can allow any society to engage in the sale of foodstuffs, because it is agricultural produce.

Similarly, in regard to sub-section (4), I suggest that the giving of financial assistance does not mean merely handing over money. I think there is a clear loophole there for the society to deal on credit terms with the customer who is a farmer, supplying milk, let us say, and, at the same time, dealing in some way with the sale of articles, whether through a shop or on the road, as quite frequently happens. I think it will be found that the clause is not as water-tight as the Minister assures us. I think it is impossible to make it water-tight, and I think it is quite impossible and undesirable to try to do so. As far as I understand the Bill, and its likely general effect, I think it is a good one, and should be given the fullest possible trial. I think it will be good, but I think it is a mistake to try to make these restrictions, whatever the agents of the new banks may do as a matter of business policy. I will give hearty support to the Second Reading.

I welcome this as one of the most important and necessary Bills introduced into this House for some years. I am sorry to say one of the counties in my constituency is in the second worst position in the Free State —Meath occupying the premier position in that respect. I would say that about 25 per cent. of the land in Westmeath is half stocked, and another 25 per cent. unstocked. The reason is, of course, obvious, because the banks have for some time practically ceased making advances to farmers. Land cannot be sold, cannot be let, and as a security is valueless. As a result hundreds of thousands of acres are derelict. Neither rates, rent nor interest due to banks have been paid. Nothing is being done on the lands, which are simply lying waste—a prairie. Persons who received allotments of lands when the ranches were divided are in a similar position. They cannot purchase stock and they cannot let the land. I know several cases where people who received allotments of land sub-let them and are now receiving lesser amounts than the annuities they have to pay. I hope these people will be taken into account so that they may be in a position to receive the advantages of this money, and have an opportunity of stocking the land that was given them.

I would like to advocate small advances for people who would purchase pigs. At present a greater profit can be made from pigs than any other side of farming. It is not my intention to go into the further details of the Bill to-day, as I will have an opportunity of doing so on the Committee Stage. I hope the progress of the Bill will be speeded up so that it may be put into operation as soon as possible. I am sorry to see that there is a certain amount of opposition coming from persons who should know better. The suggestion is that the Bill should not be put into operation for six months. If the Bill is adjourned or deferred for six months, in my opinion, the majority of farmers will then be out of business. For that reason I hope it will be put into operation immediately.

Things are bad in the country and I am pessimistic at times, but I hope the position is not so bad as Deputy Shaw says it is. I may say that I welcome the Bill, and I hope that it will be put into operation at an early date. I regret this Bill was not introduced two years ago. If the plea that other Deputies, as well as I made then had been listened to Deputy Shaw would not be so pessimistic to-day. I cannot see how the Bill is going to change things within six months.

The Deputy does not contradict the statement I made as far as Westmeath is concerned.

I recognise the fact that conditions are bad. With regard to the Bill itself, we wanted credit facilities for agriculture years ago. The Minister has taken the step now, and we approve of it. At the same time it would be very unwise to herald this Bill as a great triumph, or as an instrument which would give such a hope to our people that with its passing everything will be all right for the farmer. Such is not the case. Everything will not be all right. The best credit facilities cannot be a panacea for the ills of agriculture. No matter what money farmers get, if that money is not well handled and used to the best advantage, it may have an effect contrary to that intended by the operation of the measure. With falling prices, keen competition and many other difficulties with which farmers have to contend, unlimited credit will not do everything. But better credit facilities for the farmers have been required and are very much required to-day. I feel that the Bill goes quite a long way towards meeting the situation, but I also feel that on its administration— certainly more on its administration than on the administration of any other Act that the Dáil has passed—will depend the success or the failure of the effort the Minister is making now.

I suggest that its administration will be very difficult indeed, and while it may be said that the Bill is sufficiently clear and precise in its intentions with regard to the powers of the Credit Corporation, when the men in charge of it are up against the problems which the farmers have to solve, is when the measure will be put to the test. I am wondering how far the Bill, as drafted, will go to meet the situation that Deputy Shaw has in mind, and I am waiting for further light from the Minister before being clear as to the usefulness of the measure.

Very many farmers, over a very wide area, were, as Deputy Shaw said, affected, and while it is true that you may, through the instrumentality of a credit society, confer benefits on a number of farmers, through the operations of a co-operative society, and help them in the production and marketing of their produce, to my mind the men who are in the greatest need of help, the men who require credit most but whose credit requirements are most difficult to satisfy, are the thousands of farmers whose lands have been depleted of stock, who may be said to have very little credit and who may be able to give very little security indeed. My difficulty in examining this measure is in trying to see how far it offers a solution of the problem that has been debated here on more than one occasion. How far will it help to restock waste lands in Westmeath and Meath, lands in my own county and in other counties where disease carried off the stock? How far will it serve as an instrument to put farmers in those areas into a position to carry on their normal work, enable them to produce more, so that they will have more to sell and thereby be able to live? In the administration of this measure the greatest difficulties will be met in connection with re-stocking waste lands. Honest farmers will find it difficult to give security. If security is not forthcoming will they get credit?

Mr. HOGAN

No.

Then I fear that for very many men indeed this Bill will, and can, bring no relief. The Minister may suggest as a way out that these men should come together in a credit society and that the necessary capital will be forthcoming on their collective security. That is possible. I would like to see such an attitude of mind on the part of farmers as would make it possible for them to work through such an organisation, but I have doubts if it will be possible. If that cannot be done and if the necessary security is not available, because in fact hundreds of farmers in the same locality are affected in exactly the same way and the credit of all of them is lowered to such an extent that the security they offer is of very little value, what are we doing for them in this measure?

Mr. HOGAN

They have the security of the land.

I wanted to know that. That will clear up the point.

Mr. HOGAN

The Deputy spoke of no credit.

What I would like to stress in this regard is this: It has to do particularly with the chattel mortgage, but whether it has to do with the chattel mortgage or with land, I feel that we have very many farmers requiring credit who will have to be dealt with individually. In doing that there is the other side of the case. I believe that the man responsible for determining whether a particular farmer should get a loan or not will find that, through no cause which such a man could prevent, he is also in arrears with his rates and with his annuity, perhaps, for twelve months, and the sheriff may be ready to come upon his land and take stock if stock is put there. What is to be done in such a case? It would not be an isolated case; there would be thousands of them, thousands of honest, industrious farmers in that position, and in dealing with the question of agricultural credit the people whose position we must particularly consider are the people whose problems are most difficult and whose cases we find it hardest to meet. How are we to meet cases like that, which are to be encountered everywhere? I want the Minister to tell me how such cases are to be met, and I hope that he will for my point of view, make the measure more valuable by meeting such cases without prejudicing the position of the Corporation in giving loans which may be used for purposes of production on the farm, but which loans would be in danger because of some debt incurred by the farmer through causes beyond his control.

The Minister has mentioned the question of chattel mortgages. In my view, undoubtedly, the chattel mortgage register must be secret. It would be better if our people were prepared to understand that it was neither discreditable nor humiliating to borrow money for productive purposes. The whole question of credit would be much simpler than it is if our people were prepared to go out openly and declare that they required money, that they were going to utilise it to the best advantage, and that they were prepared to honour their bonds. Many of our people have feelings which make it difficult for them to declare that they are in such needy circumstances that they have to borrow money, and some of them would prefer to remain in want, utilising their holdings only to half their extent, rather than to declare openly that they required capital for the working of these holdings. The number of farmers who would be prepared to make such an admission would be few. I admit that credit would be greatly restricted if farmers have to go out into the open and admit that they require capital, and I say that the success of the chattel mortgage will entirely depend on the secrecy that is maintained in the administration of the section dealing with it. I want further particulars as to how it is proposed to administer the Bill. Will it be through all the joint stock banks in a town? Will any inspectors be put on direct from the Corporation, or will the banks deal with it, just as they deal with their ordinary business?

With regard to the question raised by Deputy Heffernan and stressed by Deputy Johnson, which is dealt with in page 13 of the report of the Banking Commission, as to persons who bought land at peak prices, I think there is a problem here which the Minister will have to face up to. I have not been brought very closely into touch with very many people who are in the position which I know farmers in southern counties to be in, particularly in Deputy Heffernan's constituency. I have met a few in my own constituency, but they are not to be met with there to the same extent as elsewhere. I refer to men who, perhaps foolishly, borrowed money and bought land at a very high price—industrious men with honest intentions who, because of the terrible depression which has since come about, have not been able to honour their bonds. There is a great number of such farmers in some of the southern counties. The question is, can anything be done for them, or is the problem of such magnitude and importance as to warrant the Minister or the Dáil taking notice of it? In my view it is. I do not for a moment suggest that men should shirk responsibilities which they have undertaken, but men can only discharge their obligations so far as it is humanly possible to do so. The Minister is as conscious of that fact as anybody else. He has already recognised the necessity for his Department helping co-operative societies out of difficulties. I feel that that action was taken because it was recognised by the Government that if it were not taken consequences would result which would be bad for the farmers, bad for the agricultural industry, and dangerous to the stability and credit of the State.

The conditions referred to by Deputy Heffernan are not unlike other conditions where the good graces of the Minister were responsible for an arrangement satisfactory not only to banks, but to farmers' organisations which found themselves in difficulties. I wonder whether the Minister would not be able to take action now, or perhaps after the General Election, if and when he comes back, which is necessary, and which would undoubtedly have good results from the point of view of benefit to farmers, and I believe even better results to the banks concerned than the alternative which they may have to face up to if the present position is allowed to continue for long. We know it is necessary at times for banks to face disagreeable things in connection with debts due to them, and to ask themselves whether an arrangement could not be made which would not be too bad for themselves and would not put the debtors down and out. In my opinion that is the position at present of many farmers, who are affected by the very liberal policy of the banks at one time and the very foolish policy of the farmers at another.

If the banks could not foresee what the future held it was difficult for the farmers, who were enjoying the prosperity of the war, with banks almost pressing money on them, to realise that the slump would come which we have all experienced since. Would it not be better from the point of view of the banks concerned that they should act sensibly and recognise that they cannot bring disaster on a wide stretch of country, or a considerable number of the citizens of a State, without also running the risk of creating instability and even worse? You cannot drive a farmer owning 200 or 300 acres from his home without creating a very bad spirit indeed in the district —a spirit almost one might say bordering on revolution. When men are faced with the fact that they are not able to meet their liabilities no matter what efforts they make, and of having to leave their farms, I think the situation is sufficiently serious to warrant action being taken by the Minister similar to that which has already met with success.

The Minister knows as much and probably more about this problem than I do. I have met a few men who are intimately concerned. They want to do what they can and to make an honest effort. If the banks recognise that these men are anxious to do their best, I think the spirit of reasonableness is the best way out for all. I do not know that this Bill will meet the situation in cases like that, if someone does not intervene to clear up the position and make it more satisfactory before this measure becomes operative. If the situation is unsatisfactory when this Bill becomes law, and if the Bill does not provide a solution for the difficulties of those people, and enable them to get the credit facilities which they require, the measure will fail to bring that satisfaction to the agricultural community for which we all wish.

I think that most of us who represent the rural constituencies and have been addressing audiences during the last week must have been struck by the feeling, of nervous interest, I might almost say, with which the Bill was regarded. I agree with the Deputy who stated that this Bill affects two or three sections of the farming community very vitally. One section comprises those who, about 1920, bought land and paid exorbitant rates when prices were extremely high. The pressure of paying off the debts then incurred is felt very severely at present by that class. There is also another class who suffered severely in losses of their stock during the 1924-25 period when the fluke epidemic and other diseases were prevalent throughout the country. The results of that can be seen to-day in the understocked lands all over the country. I think it is quite apparent that lands are very much understocked.

There is also another class of farmers feeling the pressure, that is those who under the Act of 1923 got land or additions of land, and who are in a worse condition now even than the other classes. These people have no capital of any sort and are just hanging on trusting that something may turn up. If something is not done there will very soon be an end of them. Their only hope lies in a Bill of this kind, which will put them on their legs and enable them to go forward and in fact, live.

There is one matter about this Bill which I think is very good. It is evident that the names of those who find it necessary to borrow money for the purpose of freeing themselves from liabilities to the banks will not be made public, or published from the housetops, as has been the case in the matter of borrowing from the Board of Works, where every particular in connection with the loan is published and is known all over the place. It may be a very foolish feeling, and probably it is but there are a very large number of people who do not like their neighbours to know all about their affairs: I think that is one reason that the Board of Works has not been availed of in the past as it ought to have been. People do not like their private concerns to be known or to have it known that they are in difficulties or supposed to be in difficulties, and I think this matter of secrecy is very important and will induce many people to look after their own interests much better than they have been doing heretofore. I am glad the Bill gives a chance to purchase machinery and all matters necessary for agriculture throughout the country, because there is a lamentable want of hay barns and machinery of all kinds.

Everybody who lives in the country knows that farm implements are more frequently with their neighbours than with their owners during a great part of the year. This Bill will give people a better opportunity of providing themselves with machinery and things of that sort, so that matters will be better for them and for everybody near them.

There was one question that I was asked last week, and which seemed to trouble a great many farmers, and that is in what way is this money to be lent and what will be the rate of interest? It was not possible for me to answer that question, and I should like to know a little more about the Bill before attempting to do so. A good many wanted to know if the money would be lent with a sinking fund so that principal and interest would be repaid in a certain number of years, or would they have to pay back the money in one lump? It does not appear, from the Bill, how it is to be done. Perhaps the Minister, in reply, would say something about that. It would make a considerable difference as to the rate of interest whether it would be for a considerable number of years or only for a comparatively short period. It is supposed, because this is called a more or less long-term Act, that the number of years would be considerable. It will not relieve the financial difficulty of those who want to borrow unless the loans are for considerable periods.

For buying cattle.

I do not say for buying cattle, but for paying for land. Of course we would have to consider the particular matter that the money was wanted for. At any rate I think that the general feeling is that there should be more consideration and, shall we say, more mercy shown by the Corporation, which is not looking for money for great dividends, than has been, perhaps, of necessity, shown by the banks, which had to consider the interest of the large number of people they represent. I think this is one of the great hopes that people have at the back of their minds, that there will be this consideration and that finance will not press so heavily upon them in consequence. I think there is a very general feeling of hope that out of this Bill may be evolved an improvement of the situation in the farming community which undoubtedly, everywhere, is very serious at the moment. That there is going to be a very great and successful effort through the operations of this measure is, I think, the hope held by everyone throughout the country.

It is not often that I agree with Bills introduced in this House since I became a member of it, but I do agree with this one. It is a well-known fact that a very large number of small-class farmers are in a deplorable condition and are not able to meet their demands. I hold that this Bill is going to give them great help. I know it will enable a person, who is able to give substantial security, to borrow so that he may improve his holdings. The Minister said that the Bill would enable farmers to purchase their raw materials at wholesale price and to get the best possible prices for what they produce on their land. The Bill will certainly improve the position of the farming class. Every Bill that has been introduced since the Dáil was set up has had the object of spoon-feeding the farmers, and the next thing the Minister will be introducing is a Bill to supply feeding-bottles with milk in them, so that the representatives of the farmers may be able to have some refreshments before they leave the House.

Milk would be of no use to the Deputy.

I wonder why is it that in Bills of this kind we do not try and give some help to the people who are really down and out, the people who cannot pay their way because of the high cost of living, high taxation, and want of employment. I am not going to criticise the Minister for introducing this Bill but I do say that under other Bills introduced here the big men were given protection. The Dáil is now going to guarantee a sum of £7,500,000 for the purpose of relieving the situation that prevails amongst the farming community. In other words, you are going to give them a guarantee that they can obtain long-term loans on reasonable terms. There is no provision in the Bill, however, that the people who obtain these loans will be compelled to provide employment for those who are out of work at the moment, many of them because the far mer has not the money to utilise his land to the best advantage. Loans are to be granted to the man who can offer sufficient security for the purpose of buying machinery, acquiring additional land or the construction of buildings, but the man who has no security to offer except his labour is offered nothing. In my opinion, those who are now being put in the position, under this Bill, of obtaining loans on easy terms should be obliged to employ one or two extra men and at a wage that could support these men and their families. Prior to 1920 we had an Agricultural Wages Board in this country. I think the Minister should see that it is set up again. Under that Board the agricultural labourers, were entitled to a certain wage. At the present time the agricultural labourers throughout the Saorstát are employed at a wage that I would be ashamed to mention in this, the assembly of the Irish people. Everything introduced here is in the interests of a certain class, let it be the farming community or the capitalists of some description or other. The demands of the ordinary workers who are the backbone of the country are ignored and forgotten in our legislation. I think the Minister ought to consider whether some kind of works ought not to be started to relieve the poverty that prevails at the present time. I do not want to be taken as saying that the Government is not doing its best to start, works. I know it has done a great deal. It is not in this House alone, but elsewhere, that I have made this statement. The Government has done a fairly good share in the way of providing funds to relieve distress, but what I do say is that it has not done sufficient.

Is this some other coalition we are going to have?

So far as I am concerned there will be no coalition either with the Deputy's party or with the Government. I think, however, that it should be possible, under a Bill of this kind, that where people are being granted long-term loans at reasonable rates some provision should be made whereby those obtaining the loans would be obliged to give extra employment and pay a wage capable of supporting a man and his family. I would like to know from the Minister whether it is his intention to have the Agricultural Wages Board re-established. I know that every farmer in the country would be delighted if it were re-established.

The Deputy must confine himself to the terms of the Bill.

I am confining myself to the terms of the Bill as far as loans are concerned, but I hold that people who are guaranteed loans under this Bill should be obliged to give extra employment and to pay a fixed wage. I give the Minister credit for introducing this Bill, but I say that it is not now but in 1923 it should have been brought in. It is possible that people in some places, in Galway, for instance, may look on it now as an election stunt, but if it had been introduced in 1923 the people would say what a hero the Minister was and how he realised the necessity of improving the position of people on the land. I fear that Deputy Baxter's prophecy may not come true: that probably we may have some other Minister when the new Dáil meets.

Is this in the Bill?

I am afraid it is not.

When that time comes we may fully realise the necessity of giving the agricultural worker some chance of living in this country. I would like to refer for a moment to the statement made by Deputy Shaw concerning the number of people who got land under the 1923 Act in Westmeath. Deputy Shaw's statement in regard to those tenants is an absolute fact. I do not know of three people who succeeded in getting extra portions of land under the Act of 1923 who are in a position to-day to pay the annuities. Even if they were allowed to set the land under the 11 months system, they would not get 10/- an acre. The rent of that land is from £2 to £2 2s. 0d. per acre.

I am pleased that these people will be enabled to get some help under this Bill. I received a large number of queries from Longford-Westmeath in reference to drainage and I would like to ask the Minister whether people who wish to improve their lands by starting drainage systems, will be allowed to borrow money for that purpose. There are several old-established drainage boards in Longford-Westmeath at present but people are not able to pay the rates required to carry out drainage, with the result that a very large acreage is flooded for six or eight months of the year. If these people were enabled to borrow under this Bill for drainage purposes that would relieve the situation immensely and would improve at least 40 per cent. of the land. I welcome the Bill, and I sincerely hope that if, on the Committee Stage, amendments are moved which would give a guaranteed wage and constant employment to agricultural workers the Minister will accept them.

I would like in a few words to congratulate the Minister on this further evidence of his desire to help the agricultural industry. There is no doubt in the mind of anyone who goes through the country that the agricultural industry is in a poor way. The proposal of the Minister to grant chattel mortgages is a distinct advance. I approve very highly of that, and I further approve of the fact that any breach of these agreements is to be regarded as criminal. I also agree that it is necessary that secrecy should be maintained with regard to the borrowing of money. The Minister has stated here that land is not a good security. That to a large extent is true. Deputy Baxter has raised the point, however, that in many cases people are so poor that they will be unable to raise any security at all He did not mention what I thought he might possibly have mentioned, that already in many cases land is mortgaged. In many cases farmers will find great difficulty in raising any security whatsoever. I do not quite see how the Minister could meet these cases. It is a very difficult problem to say, where a man has already a mortgage on his farm and where perhaps he is considerably in debt, how it is possible for him to raise a mortgage even on his chattels.

I admire the small lecture the Minister gave the farmers on the morality of their attitude towards men who get in arrears and who must meet the consequences of being unable to meet their debts. There is no question that in this country we have got into a serious state, and that neighbouring farmers look with great annoyance at any creditor who attempts to enforce the law or to get money that is properly due to him. On the whole, I think this Bill is a distinct advance. As I say, it will surely meet a great many cases, although difficulties may arise. I rather agree with the Minister that there will not be any trouble about the maximum amount, which is here fixed at £7,500,000. I do not think there will be any great trouble about this Corporation interfering with the other ordinary joint stock banks. Perhaps there may be some more valid reason raised than has been raised in regard to that point, but up to the present I have not heard anything that convinced me that there is going to be any great competition between the joint stock banks and this Corporation. On the whole, I congratulate the Minister on the advance he has made.

There are just two questions with which I would like the Minister to deal a little more fully in his reply. The first of these deal with the inspection of the Register of Loans. I agree to a certain extent with the expressions that have fallen from previous speakers that a certain amount of secrecy should be maintained with regard to these registers. On the other hand, if a farmer is anxious to get credit. I am afraid those who are forbidden to see these registers will be somewhat slow in future to extend that credit, so that this secrecy will, I am afraid, prove to be a somewhat double-edged sword. The information, apparently, is only to be divulged to the banks or to the courts and I do not know that it is available at all for creditors under ordinary circumstances. That is a point with which I would like the Minister to deal a little more fully, because I am afraid from my knowledge of the trading community that the effect of clauses like this will be to limit the extension of credit. The whole object of this Bill is to extend credit to enable the farmer to get more credit in the future than he has got in the past.

The second point with which I would like the Minister to deal is possibly more serious. I read from the report of the Banking Commission, Clause 10:

"An institution such as has been recommended on the lines of the Agricultural Credit Corporation should not in any undue way be permitted to compete with existing banks. On the contrary it should endeavour to strengthen the banks and to make their operations more secure and more liquid. The fact of its existence, if successful, should be a material aid to the banking system and should promote the prosperity of the banking institutions. The proposed institution should undoubtedly have the power of buying in open market bills and notes, and selling same, but only to the extent that is incidental to its agricultural business. It should not undertake to interfere with the commercial business of the banks."

Then the paragraph proceeds lower down:

"We do not think of it as a competitor of the banks in any sense, although it is doubtless true that many loans of a long-term nature which are now being carried by the banks will and ought to be transferred to the new enterprise, such transfer being in the interests of the banks quite as much as in that of the farmer."

Bearing that strong recommendation of the Commission in mind. I must confess that I was a little surprised when the Minister told us that this Corporation was going to take money by way of deposit and, incidentally, to put a limit of £7,000,000 on that deposit. Though the Minister mentioned it, I fail to find that the amount on deposit is limited in the Bill.

Mr. HOGAN

There is no mention of the deposit.

That is the question which I put to the Minister, and I inferred from his reply that there was a limit of £7,000,000. Under the Bill I do not think that there is any limit to the amount on deposit, but that is not the point with which I am concerned at the moment. I asked the Minister if there was any regulation with regard to the rate of interest to be offered for money on deposit. Deputies will remember the important reply he gave. It was to the effect that, naturally, the Corporation would have to offer a higher rate than that of the banks in order to secure these deposits. That, to my mind is a feature that is contrary to the recommendations of the Commission. In their report, the Banking Commission clearly set out that this Corporation was in no sense to be a competitor, but I understand from the reply which I got from the Minister that this Corporation will be a competitor with the banks for deposits and will be at liberty to offer a higher rate of interest. That is a factor which I would like the Minister to explain more fully, as it is a rather serious departure in my opinion from the recommendations of the Banking Commission, which met with such general approval from the commercial and banking community.

I look on tins Bill as carrying out a great idea. It has been said on these benches that if something like this had been done two years ago, or even a year ago, it would have been a better method than that which has been adopted in regard to credit societies. One must, however, recognise that institutions of this description cannot be set up overnight, cannot spring up in a day. We know now, beyond all doubt, that credit societies have not been able to deal with a certain class of borrower, because of the amount of money he would need, and with another class of borrower because, for one reason or another, he would not join a credit society. To my mind this Bill ought to be able to get over the whole difficulty. What else can be done, in addition to this, I fail to see.

I believe that the whole difficulty of want of credit could, and should, be met by this proposition. There is one thing I take some interest in and that is the question with regard to the amount of money. It has been dealt with by Deputy Baxter, Deputy Heffernan and Deputy Johnson, and I take the view of Deputy Heffernan and Deputy Johnson. This is not the first time that we have had a war, and, in consequence of all wars, land values jump up during the period of war. The magnitude of the recent war was far in excess of any previous one, and the amount of gambling that took place in land values was, I think, equally in excess of any that took place in any previous war. A certain class of people paid huge sums of money for land, and in that respect there is a very live question, especially in parts of Tipperary, where the residents have floated into other counties and created a big problem in Kildare, Dublin and elsewhere. They all came from Tipperary.

It is a long way to Tipperary.

It is, but it is not a long way to get out of it. These people found a way out quickly enough. I have stated here on several occasions that a wave of madness set over the country and affected not only individuals but also the banks. If people went mad. it is no reason why the banks should go mad. The banks went into this as a business proposition, as a speculation, and at one period they were quite safe. The prices paid for land in 1915, 1916, 1917, and even up to 1918, proved a good investment for the banks, and up to 1921 people who borrowed money were able to make good and, in almost every case, they were able to pay their way. The people, however, who came along in 1921 went down with the crash which came in the autumn of that year. The banks also went down with it. They entered on the gamble the same as anyone else, and I say that they should be made to toe the line. I also say that the banks should realise their securities as best they can at present, for, in two or three years' time they will realise much less as the market value will be much lower. Things will have to come down to something approaching their real value in that time, or, at the outside, five years, and if the banks wait until then instead of realising 50 per cent. of their securities, as they could do to-day they will not be able to realise 25 per cent.

The Deputy paints a gloomy picture of the future.

If the Deputy has any intention of living by land he will not pay an exorbitant price for it. Another question is: what will be the claim of people who bought this class of land out of their private capital if the banks are to be considered on a ratio of 100 per cent.? This raises a big problem. I contend that the private individual is entitled to as much consideration as the banks or the people to whom the banks lent money. As far as I understand the suggestion, it is that the banks are to come off 100 per cent. to the good after embarking on a speculation as a simple business proposition, and I do not see why that should be so. If there is going to be a taking over at all it should be written down at the present market value. No influence was more responsible for creating and fostering the wave of land madness that reached its height about 1920 than the banks. They are more responsible than the individuals concerned. I would like to know if the British Government, or any government in any country, compensate their banks for any losses they meet in home or foreign investments. If they do, I do not grumble at this proposal, but in my opinion there is no parallel in any other country for what is proposed here. It is a bad policy to act upon that the State must make good any mistake made in business, and the sooner it is departed from the better. I have very little to quarrel with regarding the questions asked by Deputy Good. They are material questions. I would like to know with regard to advances made by the banks to farmers, who will have the prior claim?

Mr. HOGAN

Annuities will have the prior claim.

To any mortgage?

Mr. HOGAN

Yes.

I rather agree with Deputy Good that secrecy beyond a certain point would be undesirable. I think it would be found that business firms would be very slow in the future to give credit to people if they are precluded from making investigations and getting information in a reasonable way. As a layman I have nothing to say on the question as to whether the bank should take money on deposit or not, but I do not agree altogether with Deputy Good's attitude, which is purely a banker's attitude. While wishing to treat the banks fairly well, I will not take up a banker's attitude, and I prefer to look at it in a broader way than that. The banks, in my opinion, should get credit for the value of their investments up to date, and the State should take no more liability than that.

Every farmer recognises the need of future credit. The administration of future credit will depend on the success of the Agricultural Credit Corporation. If the interest charged in the first place is too high it will be nearly impossible for the farmers to recognise their liabilities, but on the other hand if there is a reasonable interest an honest attempt should be made to do so. I agree to a great extent with Deputy Heffernan that the Bill will not meet the demand for credit by farmers, but it would be very hard to supply all the credit required. If the farmers adopt the policy recently adopted by the Farmers' Defence League in Tipperary I am afraid no banking system will be able to meet their credit needs, for where is the agricultural creditor to get money from but the depositors? The adoption of the Tipperary policy would mean depositors would get scared and immediately withdraw their money from the fund. That policy is the payment of only 25 per cent. of your liabilities. After all, depositors are just as fond of their cash as any other class of people, and I am astonished deposits have not been reduced more than they have during the last twelve months. It was my opinion when I first learned of the policy of the Farmers' Defence League in Tipperary that there would be a withdrawal of deposits from the banks, and I expect that policy is responsible for the reduction that has taken place. Deputy Heffernan, apparently, is not satisfied with the report of the Banking Commission. The Deputy's attitude, I think, with regard to that Commission was to ignore it, and he advised the farmers to keep away from it. I think the proper course for the farmers would have been to go into the Banking Commission and give evidence, and see whether they could get the Commission to approve of their views. As I have said, if farmers are not inclined to meet their liabilities they cannot get much credit. We had Deputy Heffernan's views during the Land Bill discussion regarding the seizing of stock of defaulting annuitants. The Land Commission have the first claim on the land, and if they are not able to seize the stock or chattels on these lands in lieu of payment of annuities I do not see how the bank will be able to do it. I can understand the farmers being in a bad way in Tipperary occasionally, but when you have an organisation of repudiation it is difficult to get credit.

The Deputy has referred to an organisation of repudiation. I do not belong to that organisation, but I have read a statement by its chairman in which he said that they did not repudiate their debts, and that they would pay them when they were able to do so. It is a mistake to describe that as an organisation of repudiation.

Mr. HOGAN

What else is it?

You can make them that if you like, but they are not.

As far as I understand these farmers in Tipperary who borrowed money six years ago and paid interest on it now claim that the interest is to come off the principal, and that they will pay 25 per cent. of the balance. Is that repudiation?

Where did the Deputy see that statement? I never saw it.

In the Press.

I think the Deputy should produce some real evidence.

The object of the Bill is one that will commend itself to every Deputy. I have examined the Bill fairly carefully, and the speeches of Deputies have thrown some light on the dark places in it. I do not think anybody has put a question as to who the trustees are who are referred to in the Schedule—the trustees who are to take charge of the securities held against the certificate of charge. Does the Minister propose to establish a Board of Trustees for this particular purpose? Those trustees will have responsible duties. To some extent, they will have to estimate the value of the mortgage securities they hold. I should like if the Minister would throw some light on that question in his reply.

I recognise that this Bill represents a new phase of agricultural development in this country. This is one of the few States in which farmers have got no special banking facilities. The present Bill is designed to remedy that defect. I should have liked the Minister to have gone a little further in certain directions, but I realise that, in a matter of this kind, involving a large amount of State finance, one must proceed warily. The Minister must wait until he sees in what direction agricultural development will take place. I agree with Deputy Baxter that the Bill is not going to cure all the farmer's ills. It is not going to serve as a general panacea. But if the farmer accepts the Bill in the spirit in which it is offered, and if he adopts the methods employed by his competitors in the English market, by cheapening the process of production and improving his marketing organisations, then he will benefit much by this measure.

It is not quite clear from the Bill what the exact relationship will be in the future between the agricultural credit societies and the Agricultural Credit Corporation. Does the Minister contemplate the utilisation of the agricultural credit societies in the rural areas as agencies for disbursing the loans to small farmers, or will that responsibility be thrown entirely on the joint stock banks in the towns and cities? It is not quite clear from the Bill what function the agricultural credit societies are to fulfil in the future, or what their relationship is to be to the Agricultural Credit Corporation. I should like if the Minister would give us some information on that point in his reply, and if he would state whether he contemplates continuing the agricultural credit societies on their present lines.

Deputy Wolfe stated that the farmers did not avail of the long-term loans given by the Board of Works because of the publication they involved. There is another reason why small farmers did not avail more extensively of these loans. The buildings specified by the Board of Works were too elaborate and too costly, and were entirely unsuited to the needs of the small farmers. The form of security required—a mortgage security—was apparently another reason why the small farmers did not avail themselves as extensively as they should have done of these loans. I assume that under this Bill it will be possible for the farmers to get loans of this kind without being under the necessity of giving mortgage security. I hope it will be possible to get loans on personal security or on some form of security simpler than mortgage security. I hope, too, that the small farmers will not be asked to erect such elaborate structures as they were required to erect in order to obtain loans from the Board of Works.

There is, after all, something in the nature of a problem in connection with the farmers who borrowed money from the banks, primarily for the purchase of land, during the war period. This problem exists in other countries, but it was aggravated here, not only because of the Great War, but because of the civil troubles which followed. The problem is there. In every county in the Saorstát there are farmers who find themselves in an unfortunate position, not through their own fault. There are many farmers, who, heretofore, were most industrious, in this unfortunate position at the moment. I do not think that one can blame them for speculating in, at that time, what has since transpired to be, reckless fashion. The temptation was there, and it was very difficult to resist the temptation to speculate, in the hope of making big profits. I do not know what the exact extent of the problem is, but from what I know of the conditions in my own constituency, and from inquiries made. I am aware that there are quite a number of farmers in this unfortunate position. I think something should be done to deal with the problem. I am anxious to know if the Minister has given any special thought to the question, and if it is intended to deal with it under this Bill in any way. It is suggested in the Banking Commission's report, as quoted by Deputy Johnson, that some understanding in connection with this matter should be reached between the banks and the Minister. I am anxious to know whether the Minister has given consideration to the problem, and how he proposes to deal with it.

Some Deputies seem to be under the impression that this Corporation will take over bankrupt loans from the banks. That is not the intention. There is no warranty for that point of view in the Bill. There is nothing in the Bill that would lead anyone to conclude that it is the intention of the Agricultural Credit Corporation to take over bankrupt loans from the banks. If such a course were to be taken, obviously it should be set out specifically in the Bill. Obviously, if it is not set out specifically in the Bill, the new Corporation is not going to do as suggested. Deputy Johnson asked—quite rightly—what guarantee had we that this Corporation will not be so much under the influence of the joint stock banks that they will be able to unload on it some of their worst loans. The answer to that is clear enough.

The joint stock banks get 200,000 shares and a sufficient number of directors to correspond with that 200,000, out of 500,000 shares. Therefore they must be in a minority. In any event, even though the Minister for Finance may not be under the necessity of taking up the balance of the share capital because it has already been taken up by the public, he will be entitled to four directors. If he takes up more than 200,000 shares he will be entitled to a fifth, who will be chairman. That is a sufficient guarantee, from the point of view of the Minister for Finance, that unwise loans shall not be taken over by the Corporation and that the interest of the Corporation shall not be sacrificed to the interest of the joint stock banks. I entirely agree with Deputy Johnson, that the Agricultural Credit Corporation should have protection, as he put it, from the banks in this respect. I entirely agree that it should not be asked to take over unwise loans or loans that are not liquid.

Does the Minister realise that four is a minority of ten.

Mr. HOGAN

I do.

The banks may have the remainder of the directorate.

Mr. HOGAN

No. I do not think it is intended by the Bill.

I am sure it is not intended, but it is possible.

Mr. HOGAN

Section 11 is as follows:—

The Articles of Association of the Corporation shall provide that the number of directors (including the chairman) shall be ten, of whom four (not including the chairman) shall be nominated by the Minister from time to time as occasion requires and that if and so long as the Minister holds more than two hundred thousand shares of the Corporation the chairman of the Corporation shall be nominated (in addition to the said four directors) by the Minister from time to time as occasion offers.

You have to read that in connection with the provision as to the number of shares to be allotted to the public. Section 5 says:

Two hundred thousand shares of the Corporation shall be offered at the one time for subscription only by banks carrying on business either wholly or partly in Saorstát Eireann and as soon as may be after the expiration of the time limited with the approval of the Minister for such subscription the remaining three hundred thousand shares of the Corporation and such if any of the said two hundred thousand shares as shall not have been subscribed for by such banks shall be offered at the one time for subscription by members of the general public.

(2) All shares of the Corporation offered for subscription by the general public and not so subscribed for shall at the expiration of the time limited with the approval of the Minister for such subscription be subscribed for by the Minister.

My point is that these shares will be offered to the public. If the banks, or banks' friends, take up all the shares except those held by the Minister, they may have a majority of the directors. The banks may constitute the public and may, as a result, obtain a majority on the directorate.

Mr. HOGAN

That is possible, but is it not most unlikely? Is not the likelihood that the banks will take up 200,000 shares and that the Minister for Finance shall have to take up more than 200,000?

I suggest that there is a possibility of doing as I have explained.

Mr. HOGAN

The Deputy suggests that the banks might take up 200,000 shares and then get their directors in their individual capacities to take up more. It is absolutely essential to see that the directors of the Corporation shall be in a position to judge, without bias and without intimidation of any kind, what loans they will take over and what loans they will not take over. If it is necessary to make the matter clearer on Committee Stage I am quite willing to do it.

Could not the banks take over that extra stock in their corporate capacity as well? If they subscribe £200,000 as banks could they not come forward again as banks for the balance of the stock?

Mr. HOGAN

I do not think so. It is not so intended.

Who will allot the remaining 100,000 shares?

Mr. HOGAN

That will be provided by the Articles of Association. However, we are not concerned with details here, but with the principle of the Bill. I agree with Deputy Johnson that it is necessary to make it quite clear that the Corporation shall be in an independent position to judge as to what loans they shall take over and what loans they shall not. I cannot see the directors of the Corporation taking over any loans that are bankrupt.

Not quite bankrupt.

Mr. HOGAN

Loans that are not liquid. It was never intended that this should be a means of relieving the joint stock banks of their liabilities. The sort of loan, I think, they must take over is this the loan quite secured but that should be a long-term instead of a short-term loan. That will be of very great advantage to the farmer who has a big loan—a loan fully secured which he could pay off if he could get reasonable time. This bank will take it over and change it from a short to a long-term loan. It will become a long or an intermediate-term instead of a short-term loan. It is only in that way that this particular institution will come to the rescue of existing obligations. That is the main way in which I can see it coming to the aid of existing obligations.

Now, there seems to be some confusion about the position of the joint stock banks in connection with loans which they have made. People say that the banks should make sacrifices also. The land is not worth anything like what it was when they bought it, and the bank should make sacrifices. If the security is not worth the amount borrowed on it the bank must make sacrifices. Let us examine the question. If the bank lends £2,000 on land which is only worth £1,000 in the open market, they have suffered a loss of £1,000. That is not the point. What is complained of is that the bank holds securities worth £2,000 and are asked to take £1,000. I see no justification for that. The problem is widespread. It applies not only to farmers, but to professional men and shopkeepers and even to labourers in their own way. It applies all over the world to every profession.

Does the Minister mean to say that he knows places that are security at present for the advances of the bank? Does that imply that where a farm cost £5,000, £3,000 of which was found by the individual and £2,000 advanced by the bank, the bank should get the £2,000?

Mr. HOGAN

Of course. A bank lent money on security which was then worth £5,000. It was a business transaction. They measured their security and found it worth £5,000. Now, it is worth £3,000. All they lent was £2,000. Why should they not get the £2,000?

The unfortunate buyer suffered the whole loss of the gamble.

Mr. HOGAN

How does he? It was a business transaction with the bank, which was covered by the security. If you make an exception in the case of the farmer, must you not make an exception for the shopkeeper? If you make an exception for the farmer in that direction you must make it in every other direction also. Supposing the farmer put £1,000 on deposit in the bank in 1920 and has it still. There must be some such cases. Of the £130,000,000 deposit in the Irish joint stock banks there must be a very big proportion of agricultural deposits which have remained there since the war. There must be ten, twelve or fifteen millions at the very least. Supposing a man deposited £200 in 1920. The bank which had to write down a security from £2,000 to £1,000, notwithstanding that the property is still worth £2,000, could go to any farmer and say, "You put in £200 in 1920, and you got all the advantages of the inflated money in 1920. You should only get £150 now." One side of the picture is that you borrowed £200 in 1920. Now you are only able to pay £100. The bank manager will say, "You put in £200 in 1920. Money was inflated then. You cannot have it both ways. You must take £100 for that." If you want to draw the 1920 line and start your deductions from there, you must accept the consequences, whether they are for or against the farmer. Undoubtedly banks would have a perfect case for saying, "Why should we pay back £200 deposited when money was inflated if you say we should not get the full amount of the money we lent you in 1920?"

I only wanted to have made clear, if the banks advanced the whole money and if there was to be any policy of compensating them 100 per cent. what the position would be of the farmer who partly or wholly bought the place himself.

Mr. HOGAN

I want to make it clear that there is no question of compensating the banks, none whatever. This institution is not going to take over bankrupt or unsound loans. It is only going to take over sound loans. It is going to relieve the farmer by making them long-term or intermediate instead of short-term loans, but there is going to be no question about compensation. Now, as to the other point. A number of Deputies pointed out that it was a serious problem, but they seem to be under a wrong impression as to the whole matter. For instance the expression was used that the banks are to make sacrifices. They do. Take the case of a bank that lent £2,000 on a security that is now worth £1,000, That bank loses the difference. But it is a different matter if a bank lends on a security that is still worth the amount of the loan. The bank is entitled to recover the money it lent. If not you re-open a bigger question than most Deputies seem to realise. We cannot do it.

Take the case of a man who had £5,000 and borrowed £12,000 from the bank and with the £17,000 bought a farm. The bank would probably realise a considerable proportion of that now, but it would only do it by selling out a number of other people, or perhaps attempting to sell them out. With him it will sell out probably nine or ten other people as a consequence. What can be done in a number of cases like that by intervention to try and clear up the position? I recognise the difficulty, but there is no good in the borrowers saying "we will not pay," or "we will pay so much." That policy is impossible, but I suggest there is an alternative.

Mr. HOGAN

My answer is that I cannot do anything, and I do not believe that any member of the Government or any Government official can do anything in the matter. But the banks, as a rule, face up to the position themselves. They take into account what their securities are worth. If they believe that their securities are not worth the full value of the loan they are willing to compromise. They go into the question of what it will cost them to liquidate the debt. In the ordinary way they cannot liquidate a debt without a certain amount of expense. Then they come to a voluntary settlement and if they think it is better business to come to a voluntary settlement they settle it voluntarily. But no government can do anything in a matter like that. What I am concerned to point out is that if there are compositions then those compositions must be between the banks and the creditors, and it is open to this bank after a composition has been come to to take over the compounded debt and change it from a short-term loan into a long-term loan. A certain amount of that alteration will be done, but it must be done as a business proposition.

I agree with Deputy Johnson that some limit should be put in before "purchase." The words "purchasing land" should be "purchasing agricultural land." It was a mistake to omit that limitation. It is quite impossible to make any discrimination in favour of a man who is tilling a certain portion of his land. But that question does arise. It arises when the man is asking for a loan. Any bank manager will take into account what sort the man is who is asking for the loan. The first question he will ask is: "Is he a thrifty farmer?" and the answer to that lies in how much land he tills. You cannot generalise about it.

What does that prove?

Mr. HOGAN

Take the small farmer. The man who is tilling an extra bit of land is generally a better man and he will get more money. It ought to be clear also that this Corporation is not going to lend money without security. Deputy Baxter asked: "What about the man who has no security?" The man who has no security gets no money. But there are different kinds of securities. There is the security that property gives and there is the security of character. There are very few farmers in Ireland who have not some little property to give as security. There is no doubt about it that a very small property security together with a considerable security, such as the character of the farmer, would be regarded as good security. A farmer of good character would go a long way in getting security from a bank. If the banks get a really honest farmer with a small property they will give him more than they would give the other sort of man who has a great deal more property. There are, in practice, very few farmers who cannot offer some security. Deputy Baxter asked me what would be the position of a man who owed his rent and rates and a couple of hundred pounds besides, how was he going to be taken out of his position? That man is not going to be benefited. That man is bankrupt and nothing can take him out of it. That man has reached a point when debts exceed assets, and he has little hope except there is a windfall.

Suppose he did not owe a couple of hundred pounds but that he owed rent and rates?

Mr. HOGAN

It depends on the special circumstances of the case. A man who owes rent and rates and who has no stock on his land is in a very different position from the man who has his land stocked and owes rent and rates but nothing else. That man is solvent and can always get money.

Mr. HOGAN

Deputy Gorey shakes his head. He can always get money from a bank of this sort. I was asked by Deputy Roddy about credit societies. Will this Corporation deal with the ordinary farmer through credit societies exclusively? Of course it will not. It will be necessary for the Corporation to have agents, and the most suitable agents are the joint stock banks in every town. I do not expect there will be any difficulty in getting these banks as agents. Again, of course, that is a commercial proposition. To my mind it is quite a suitable method. So far as the credit societies are concerned these will be found particularly useful along the western seaboard where the average man wants to borrow anything from £10 to £40. They are particularly suitable in these districts along the western seaboard and for the poorer districts all over the country. This Corporation will deal with the farmers of these districts through their credit societies.

Deputy Good asked me two questions. He pointed out that a secret register has advantages and disadvantages. A secret register, he mentioned, is going to limit credit from other sources. That is the rock on which this question has split on many occasions. That is a matter on which the Commission deliberated carefully. It is quite evident the moment you begin to consider chattel mortgages that secrecy is necessary, but, on the other hand, secrecy will limit credit from any other source. That is the particular problem that has come up for consideration very often. You have to consider the greater of two evils. My view is it is more important for the small farmer to get reasonable credit from banks than from any other source. It might be an advantage to have some of the other credits dried up or limited. The important thing is that he can get reasonable credits at reasonable rates of interest from the bodies that exist for that purpose, and, outside that, that he does a cash business so far as possible.

Probably the farmer does not know what a cash business is.

Mr. HOGAN

He will know in good time. As regards deposits, I stated before that the Banking Commission did not recommend that this bank should take deposits. We followed the Banking Commission report very closely. It is a very sound report, but it is not gospel and was not intended to be. I think that if the proposition I have already put were made to the most of the banks they would agree to it—that some deposits should be taken by this Corporation. Deposits can be got more cheaply than money on certificates or share capital, and it is an advantage to this bank to have a certain amount of cheap money. Deposits are not suitable for lending on long terms, but there will be a certain amount of intermediate term business and a certain amount of deposits will undoubtedly help.

There are no limits to deposits mentioned in the Bill.

Mr. HOGAN

No, but I suggest that that matter will be met in Committee, and if that is met there is no disadvantage to joint stock banks if a higher rate of interest is offered for it; even if the limit were five millions it could not be said to be competing with the joint stock banks.

Does the Minister think there should be any safeguard for depositors? Would it be a matter for administration? Could deposits be payable on demand?

Mr. HOGAN

If a deposit was payable on demand it would be useless for the purpose of lending again. Deputy Alton asked me about trustees. I understand it is common form when debentures are issued that the security is placed in the name of trustees. I think that is more or less to impress the public. Rather big names are put up as trustees, and people are, therefore, more likely to lend money. That is not necessary in this case, because the real guarantee is the Minister for Finance. The trustees will be required, so far as you have them, in order to secure the Minister for Finance, and his real trustees are the directors.

They can substitute mortgages. The schedule sets out that the trustees shall have power at any time at the request of the directors to release to the Corporation any of such mortgages in exchange for an equal amount of similar mortgages.

Mr. HOGAN

The trustees are the people who hold securities. The securities on which debentures are issued are usually handed to trustees and, to impress the public, rather well-known names are selected. I think it was on this analogy that this section of the schedule was drafted. Of course there will have to be some machinery to do what the Deputy has in mind.

Is it the intention to have any Committee Stage of this Bill? It sounds as if we were taking all the stages together.

When will this Corporation be set up?

Mr. HOGAN

It must be in operation before 31st December.

When will anything be done?

Mr. HOGAN

The Act has to be passed and somebody must tackle it.

Will anything be done during 1927?

Mr. HOGAN

The Corporation must be set up before 31st December.

What about the loans societies?

Mr. HOGAN

That is a matter for Committee Stage.

The Committee Stage will be on Friday. We have very little information. There is a great deal we cannot see in this Bill and we are trying to get a grasp of its meaning.

Mr. HOGAN

I think I have answered every question raised by Deputies. The Deputy has asked me another question, and the answer to that is the 31st December, 1927.

Deputy Baxter is quite right. This is an extraordinary Bill, and in order to be in a position to put down amendments we want to get information. The report recommends that loans fund societies be converted into co-operative credit societies.

Mr. HOGAN

The proper place to deal with that question would be the Co-operative Act. There were some other matters, but on consideration I thought the Co-operative Act was the proper measure on which to discuss them.

I should like the Minister to consider the question of inserting a schedule of such things as co-operative stores may or may not sell in order to obtain credits. Would that be possible?

Mr. HOGAN

Not by way of schedule. I think the objection can be met by way of definition.

I take it credit societies are co-operative societies and are, therefore, covered in Section 9?

Mr. HOGAN

Yes.

Question—"That the Agricultural Credit Bill, 1927, be read a second time"—put and agreed to.
Committee Stage ordered for Friday, 29th April.
Sitting suspended at 6.50 p.m. and resumed at 7.30 p.m.,AN LEAS-CHEANN COMHAIRLE in the Chair.