The amendment down in my name, to delete sub-section (4), is consequential on the amendment which I proposed yesterday. I think it would be best not to discuss it now but at a later stage. I understand the Minister is to make some other change.
ORDUITHE AN LAE. - AGRICULTURAL CREDIT BILL, 1927—THIRD STAGE (RESUMED ON SECTION 12).
I will introduce a change in sub-section (4), and we can discuss it on that.
This amendment endeavours to impose a liability on State funds which is not provided for by the Money Resolution. Therefore it cannot be moved.
While I cannot move the amendment, I can perhaps get the information which the amendment was put down to get. It seems to me that if we are guaranteeing the capital and the mortgage certificates to be issued it would only be in keeping with the whole tone of the Bill that the debentures should also have a State guarantee. Though I cannot move my amendment, there might, perhaps, be something in it which would be worth the consideration of the Minister. Would the Minister consider the question of guaranteeing debentures issued by the Corporation? Personally, I cannot well see what occasion would arise for the issue of debentures. I am not sure that such issue is necessary but, if issued, it ought to have some guarantee just as the other issues.
The Corporation will be financed by share capital and certificates. Debentures will be only useful to allow the Corporation to avail themselves of a loan for temporary accommodation. It is to provide a way for the Corporation for borrowing.
I quite understand that that is the intention, but the mortgage certificates are also only a means for borrowing. The Minister has not answered my question as to why debentures, like the other issues, should not be guaranteed.
It is not necessary.
The first charge will be the charge on the certificate holders. You cannot put a prior charge against those certificates.
It is not considered necessary to guarantee the debentures.
In this, as in the previous section, the term "limited companies" is used. That seems to be rather a shorthand method of describing limited liability companies in an Act of Parliament, and it is rather undesirable unless there is a description given in Section 1. I think it ought to be more formally defined.
There seems to be some point in that, and I will look into it.
I ask the Minister to give some further justification for issuing debentures. I cannot see the necessity for them. There are three means of providing funds. These are the ordinary share capital, the mortgage certificates, and the deposits. This is the fourth means for getting capital. I do not see the necessity for it, and I do not consider it advisable that there should be a means of this kind. Debentures have to be issued on the assets of the Corporation, so far as I can see. The first charge on the assets will be the certificate holders, and I cannot see how debenture charges could be put before them. Debentures are issued on the security of the assets of the Corporation only as a second charge, and they would not be a marketable security. It is inadvisable to provide security if it is not marketable. If the debentures are not guaranteed they will not be taken up by the public, and the credit of the Corporation will consequently be injured. I think we should have some explanation as regards the necessity for providing these debentures.
The certificates will be the first charge on the security set aside for that purpose. There will also be other securities set aside, but not in the pool against certificates. The Deputy asked me what particular case I have in mind in which it would be advisable for the company to issue debentures. I have no case in mind. I do not visualise a specific case in which it will be necessary for the company to issue debentures, but conceivably, it might arise. There will probably be a large amount of assets unpledged, and it may be more convenient to borrow from the bank on debentures. Why not give that right, especially when you limit the debentures to the paid-up capital? If the Deputy asked me to name a set of circumstances under which debentures will be issued for temporary accommodation, I could not do it. I know it is likely that there will be assets of the Corporation unpledged, so far as certificates are concerned. It may be that the Corporation might decide that they will avail of a loan temporarily on debentures, and why not give them the right to do it? We must assume that the directors will be competent men, and that they will exercise their discretion properly. If they do not do so, they might injure the Corporation unwisely. The Deputy wants me to justify the insertion of this section giving this power to the Corporation. I think the fair way to put it would be to ask the Deputy to justify the removal of that right from the Corporation.
In sub-section (4), page 7, line 14, to delete the word "shares" and substitute therefor the words "rights or powers."
That is a verbal amendment.
I take it that if the next amendment, which is to insert a new section, is passed Section 20 will consequently be deleted?
Yes. I move—
To insert before Section 20 a new section as follows:—
(1) As soon as conveniently may be after the formation and registration of the Corporation a register of chattel mortgages shall be set up in every Circuit Court Office and shall be thenceforward there kept and maintained in accordance with this section and the regulations made thereunder.
(2) Subject to compliance with the conditions prescribed by or under this section for the registration of a chattel mortgage, every chattel mortgage shall be capable of being registered within seven days and no longer after its date in the register of chattel mortgages maintained under this section in the Circuit Court Office serving the area in which the farm of the mortgagor is situate or, where such farm is situate in two or more areas served by separate Circuit Court Offices, in each of the several registers of chattel mortgages maintained under this section in the said Circuit Court Offices respectively.
(3) Any person party to a chattel mortgage (whether as mortgagor, mortgagee, or surety) or the legal representative of any such person may register such chattel mortgage within seven days and no longer after its date in any register of chattel mortgages in which such chattel mortgage is capable of being registered under this section and such mortgagee or, with the consent in writing of the mortgagee, such mortgagor or surety or his legal representative may at any time remove such chattel mortgage from any such register.
(4) Whenever the principal moneys and interest secured by a chattel mortgage are fully repaid the mortgage shall forthwith remove such chattel mortgage from every register of chattel mortgages in which it is registered under this section.
(5) No chattel mortgage shall be of any force or effect unless or until it is duly registered in accordance with this section and the regulations made thereunder in the register or every register (as the case may be) of chattel mortgages in which it is capable of being registered under this section, and a chattel mortgage so registered shall cease to be of any force or effect if and when it ceases to be duly registered in such register or every such register (as the case may be).
(6) The contents of any register of chattel mortgages maintained under this section shall not be published or disclosed, nor shall any copies thereof or any part thereof be issued to any person save only and except—
(a) any person in the employment of the Corporation and duly authorised in writing in that behalf by the Corporation may at any time inspect and take copies of any such register or any part thereof; and
(b) any person in the employment of a recognised bank and duly authorised in writing in that behalf by such bank may at any time inspect and take copies of any such register or any part thereof; and
(c) an under-sheriff may at any time inspect the register of chattel mortgages maintained in a Circuit Court Office serving the area or any part of the area for which he is the under-sheriff; and
(d) an officer employed in a Circuit Court Office and performing duties formerly performed by the under-sheriff may at any time inspect the register of chattel mortgages maintained in such Circuit Court Office; and
(e) whenever the Supreme Court or any Judge of the High Court or the Circuit Court directs that a copy of the portion of any such register relating to any particular chattel mortgage or alleged chattel mortgage be furnished to them or him, such copy shall be so furnished accordingly, and such Court or Judge may disclose or publish such copy or the contents thereof to such extent and in such manner and subject to such conditions as in their or his opinion justice may require.
(7) The High Court or the Circuit Court or the Supreme Court on appeal from the High Court may at any time cause any register of chattel mortgages maintained under this section to be rectified (whether by variation, addition, or omission) in such manner as justice may require.
(8) The Minister for Justice may by order make regulations in relation to all or any of the following matters, that is to say:—
(a) the form and contents of the several registers of chattel mortgages maintained under this section;
(b) the keeping and maintenance generally of such registers;
(c) the mode of registering a chattel mortgage in such registers and the evidence to be produced for the purpose of such registration of the due execution of such chattel mortgage;
(d) with the consent of the Minister for Finance, the fees to be charged and taken in respect of the registration of chattel mortgages in such registers, the removal of chattel mortgages from such registers, the inspection of such registers and any other matter relating to such registers;
(e) the general preservation of the secrecy of such registers and in particular the evidence of authority to be produced by persons claiming to inspect or take copies of such registers:
(f) after consultation with the Minister for Finance, the persons who are to be deemed to be recognised banks for the purpose of the provisions of this section relating to the inspection and taking copies of such registers.
(9) The expenses of carrying this section into effect shall, to such extent as shall be sanctioned by the Minister for Finance, be paid out of moneys to be provided by the Oireachtas.
As Section 20 stands, it provides for a chattel mortgage being registered in the central registry. The amended section makes only one change. It provides for registration in the Office of the Circuit Court. The idea is to provide against the following contingency. A sheriff gets a decree from a judgment creditor and proceeds to execute it. He then finds that there was a chattel mortgage against the stock and that he is open to an action for illegal seizure. That is a contingency that should not be allowed arise. The only way out of it is to have a register in each Circuit Court Office. Most sub-sheriffs are in the offices of the Circuit Court and, as I understand, all sub-sheriffs' work will gradually merge in that of the county registrar. Under this section if a decree reaches a sheriff, he will consult the register. He will then know whether he can seize as he will find out whether there is any mortgage on the stock. I think that that is absolutely necessary. Merely to give the sheriff the right to inspect the central register was not sufficient. It would take some days to do so and the sheriff might find, after a day or two had elapsed, that he was not in a position to make a seizure immediately.
A week later, however, he might make a seizure and find out that in the meantime a mortgage had been registered. Under this section he could consult the register and see whether there is a mortgage on the stock. This, no doubt affects the secrecy of the register to some extent but I do not see how that can be avoided. I think the real point about registering is that no entry on the register can appear in "Stubbs' " or other papers circulating in commercial circles and containing entries of judgments. So long as the entry does not appear in those gazettes and is not known to everybody who is willing to pay a fee of one shilling, secrecy to a great extent is maintained. I admit that a larger number of people will know that registration takes place in each county, but that cannot be avoided as we must protect the sheriff and make it easy to administer the section.
Would the Minister explain the order of carrying out the work of the Corporation? How will applications be made to the Corporation? I want to understand something about the machinery. If you are to have a separate register in each Circuit Court area will you also have a central register? If that were so, would it not be better to have a central register and a copy of the particular portion of that register for that particular area available to the sheriff in such area? I think you must have something like a central register. Otherwise, I think there must be difficulty with regard to the operations of the Corporation. If you are to have two registers, it seems to me it would be more advisable that the real register should be the central register and that there should be a copy of the portion of the register applicable to the particular area served by the Circuit Court available to the Circuit Court officer. The question of secrecy does arise to some extent. If the register is kept in the county town, the borrower will feel that the transaction is less secret than it would be if the register were kept centrally and part of it only made available, on requisition, to the court registrar or the sheriff of the county concerned. If there are to be two registers, I do not know how this scheme is going to work.
I am not sure of the Deputy's point. Is the Deputy advocating a register simpliciter or a central register and a register in each county?
I am not clear about that matter. In the operations of the Corporation, I presume the applications must come in to the Board of Directors.
Through the local bank.
Is the machinery to operate between the local banks and the sheriff's office—is a decision as to whether a mortgage will be given for the local bank to decide or for the directors of the Corporation to decide? Is it a question that will have to be referred from the local bank to the Board of Directors? If so, is there to be a central register kept by the Board of Directors in their office or is the decision merely with the bank outside as to whether a mortgage will be given or not? If given I presume an entry will then be made in the local register?
The bank will decide whether or not they will lend the money.
The local bank.
Certainly not. They will also decide what security they will require. If they decide that they will require the security of a chattel mortgage, then there are provisions here which make it necessary that the chattel mortgage shall be registered in the local registry. That is carried out by the solicitor, as a matter of course, with the county officer, in the same way as any other legal transaction is carried out. The view of the Department of Justice is that it is more expedient to have it done that way than to have a central register. There is no need for a central register if you have a local register. Of course, there will be a register in the banks of every mortgage they give.
I notice that in sub-section (3) a chattel mortgage is to be registered within seven days. I think that period is too short, and that it should be extended.
The legal people say that it is not too short, and if there is any difficulty it is a legal difficulty.
I think the Minister might outline his ideas with regard to the practical working of this arrangement. On the Second Reading of the Bill, I think Deputy Good raised a point as to the effect on farmers' credit of the introduction of this system of chattel mortgages. The idea is a new one in this country, and it is impossible to forecast the actual working of the scheme. The introduction of chattel mortgages is going to make a very big change in the credit system of the country—perhaps a bigger change than we realise. The extent of that change will only be appreciated in the course of time. But we must try and foresee the possibilities, and deal with them to the best of our ability. In my opinion, the introduction of this system of chattel mortgages will mean that the shop-credit of farmers will be curtailed if not wiped out altogether. It is for us to consider whether that is advisable or not. Personally, I think it would be a good thing if a great deal of the shop-credit given to farmers were abolished. But if that is to be done, there must be an adequate substitution of credit. The farmer must be able to get credit from some other sources, because he requires credit. He will have to get credit through the joint stock banks or through the Agricultural Credit Corporation. If the Corporation fails them, some farmers will be placed in a worse position than that in which they are at present.
As regards secrecy in clause (b) of sub-section (6) the ordinary banks are entitled to get information with regard to chattel mortgages. In actual practice banks get information for their customers from other banks. I should like to know if it would be possible for the banks to impart the information they get about these chattel mortgages to their customers. That would ease the situation greatly, and the question is one of considerable importance to the farmers. I think the Minister should give us fuller information as to what, in his opinion, will happen in the working of the Corporation in connection with this section.
One of the first speeches I heard the Deputy make in this Dáil was in favour of chattel mortgages.
Not in this form.
The Deputy pointed out then that other countries had a system of chattel mortgages and that they provided additional security for the farmer. I agree with him there. Everybody knows the difficulties of establishing a suitable form of chattel mortgage. The Deputy has not peculiar knowledge on that subject at all. I tried to solve the difficulties. My solution is no ideal solution. But it is my way of dealing with the matter, and I am open to be shown how it can be dealt with in better fashion. There are certain considerations that have to be reconciled. On the one hand, you must have a certain amount of secrecy, and on the other hand you must try to protect the ordinary creditor. This is the best way I can think of doing that, and if there be a better way, I am open to consider it. I do not think for a moment that this scheme is going to remain in its present form for ever. I believe it will have to be amended— perhaps in a year or two years. If it has not to be amended, I shall not be disappointed, but I shall be surprised. My opinion is that the chattel mortgage has got sufficient discussion in this country, and in every other country, and that we will not get any further until we test it and discover how it works out in practice.
I have tried in this Bill to establish a chattel mortgage for the banks. We had to go into the question of who should have this chattel mortgage, and we decided that the banks and the Corporation should have it.
As regards the question of secrecy, we decided that it was necessary that there should be secrecy to the extent, at least, that the transaction would not get into "Stubbs," and would not be known to the public. But it is very hard to keep anything secret in this country. Without eviscerating the whole idea of chattel mortgage, we had to try and protect the ordinary creditor and this is the way we have done it. There may be a better way. I am open to suggestions. The banks will have access to the register of chattel mortgages—every one of them. Otherwise, they could not lend to people on mortgage themselves. I think nobody has denied that the particular body who can lend money on chattel mortgage should have access to the register. It is pointed out that the banks may publish to their own clients the contents of that register. I cannot help that. Banks are extraordinarily secretive. They do not publish my overdraft or Deputy Heffernan's deposits. When all is said and done, it cannot be charged against the banks that they publish other people's business. That is their golden rule. I do not think that the Deputy need fear that any investigations the bank will make will tend to make the register more open than it ordinarily will be.
I have been waiting to hear the hosts behind the Minister on this and other subjects which we have been discussing during the past week. I have not noticed any particular eagerness to occupy the time of the House on the part of those Deputies who have been in the past deprived of an audience by the Opposition Benches. We were told on Friday last by the Minister's colleague that the reason why different matters had not been discussed from the Ministerial Benches was because the Opposition Deputies had so hypnotised the supporters of the Government that they were afraid to call on the Ceann Comhairle for a hearing. Now, it appears that other factors have intervened and that it is not the Opposition Benches which are the cause of the great distress of the Deputies on the Government Benches. Currency, Finance and other Bills of that kind of equal importance to this have been allowed to pass through and the Opposition Benches have not occupied an immense amount of time; yet the Government Benches have not shown any particular eagerness to discuss, and enlighten the House on, the merits of the respective Bills.
The Minister has introduced an entirely new section with an entirely new idea. On the last reading he told us with emphasis how important it was to maintain secrecy if this chattel mortgage idea was to have a fair opportunity and be successful. He has now introduced a new provision which admittedly is lessening the expectation of secrecy. I do not understand what the real objection is in the minds of people to letting the public know how much they have borrowed, but undoubtedly there is an objection, and the Minister has pointed out how important it is that this general psychological factor should be recognised if this proposal is to be given a fair trial. The under-sheriff in every county is to have access to the information, and, I think, if there is any value in the case made by the Minister before, it is very much lessened by this new provision. The Corporation might well be trusted to keep within its archives any information that may be obtained, and so in respect to a bank. But can you rely in the same way upon the under-sheriff? The under-sheriff will work, very likely, through his clerks, and if there is to be any importance attached to the idea of secrecy, there is something more required than this particular provision.
The sub-section reads:—"The contents of any register shall not be published nor shall any copies...be issued." Let us assume the possibility that the under-sheriff who inspects the register does, in fact, disclose the contents. What follows? Nothing at all. There is no obligation of secrecy in this section. There is no penalty for breach of secrecy or publication. Nothing follows except, perhaps, a note of the fact that the under-sheriff has published the contents; of course, there is the possibility that he will not be given an opportunity to publish such information again.
There is an insufficient prohibition here, if it is desired to prohibit at all. There surely ought to be some obligation on the under-sheriff to keep to himself any information that he may obtain from the inspection of this register. If the public, and particularly the borrowing public, are to have very great regard for this secrecy provision in this Bill, the under-sheriff ought to be prohibited, and the banks, too, from publishing the contents of these registers. Such information as they obtain should be only for their own use.
Deputy Heffernan suggests that the banks may pass over the information to a neighbouring bank. If they may do that, they may pass it over to another neighbour who is not connected with a bank, a shopkeeper, and the facts may spread by that means unless there is an obligation placed on the banks and on the sub-sheriff, but that obligation does not yet appear in the Bill. I am assuming it is a very desirable thing to protect the secrecy of this register, and if that is desirable —I do not know why it should be— then this section does not assure that secrecy shall be maintained by the people authorised to inspect the register.
I am not clear whether the Deputy is in favour of the section or of the amendment.
I have no choice in the matter. I do not know anything about the value of secrecy in this matter. I am taking the word of the Minister on the last occasion that it is a very important thing that there should be secrecy. I think the secrecy is less under the new provision than under the old.
I am giving it as my own opinion that as much secrecy as possible is desirable. I agree that this register system is not as secret as the system under which there is only one register; but I think the disadvantages of one register are sufficiently important to justify dropping a little of the secrecy, and going to this system.
The Deputy suggested there should be some penal sanctions attached to this section against the under-sheriff in the event of the wrongful disclosure of the contents of the register. It is quite clear what the under-sheriff may or may not do. It is quite clear what he is legally bound to do and what he must not do. The section sets out that the contents of the register shall not be published except to any person in the employment of the Corporation, any person in the employment of a recognised bank, the under-sheriff and officers of the Supreme Court, the High Court or the Circuit Court. In other words, the person in charge of the register cannot publish except to these people. That is the law.
The next question is, can it be enforced and will there be leakages? I am clear that there will be leakages; even with the central register there will be leakages, but not quite as many. The next question is how to reduce the leakages to the minimum. I do not know that there is very much in the suggestion that we ought to add a clause to the effect that if the person in charge of the register discloses its contents to anybody other than the person entitled, or if the person to whom it is disclosed makes a wrongful use of the information, that person should be liable to some criminal penalty. These are all public officials and, if they misconduct themselves, they may be dismissed. The main con sideration is that, from the point of view of the Minister for Finance, it would be a very serious offence to disclose the contents of the register and there would be a feeling that any disclosure would be followed by serious disciplinary action. I suggest that is a more effective sanction than any sanction we could insert in the Bill by way of imposing a penalty for disclosing information.
At the moment I consider it would not strengthen the section to include any sanction other than what I have mentioned. I will consider the matter, however, between this and the Report Stage. It would be absurd to insert in any Act of Parliament some provision to the effect that the bank shall not disclose information. That would be totally unnecessary.
As regards setting up a register in the offices of the Circuit Court, my feeling is that it will not be looked upon as being at all as secretive as a central register.
Of course it is not.
The influence on the minds of borrowers will be very considerable. The difficulties will be, perhaps, much greater than one can see at the moment. The officials of the county registrar's office must do the work; subordinate officials must do it. This information will undoubtedly be in the hands of very considerable numbers of people. It would not be right to suggest that the information will filter through indiscriminately, but people who know conditions with regard to the administration of these offices will be more suspicious of what is likely to happen, and what is likely to be told than they would be in regard to a central office about which they knew nothing. In fact, because of their ignorance they would accept it that from the point of view of secrecy the central office would be more effective than would the offices of which they had knowledge. There are difficulties on both sides. I feel that the keeping of the register in the offices of the Circuit Court will make many intending borrowers doubt whether or not their neighbours will know. Borrowers will consider they are safer with the central office. I certainly favour the central register as against the register kept in the offices of the Circuit Court.
I think it would be a great mistake and a great blot on the Bill if it goes out that there is not real secrecy in regard to the borrowings that may take place. It is one of the most important matters in the Bill. I do not think it could be too strongly stressed that borrowing should be quite a secret business. When a man borrows money he does not like it noised abroad all over the district that he had to get money to improve his land, and that he was hard up. If the feeling of secrecy is lessened it will have a very bad effect. Of course, the under-sheriff must be protected. He cannot be laid open to an action. I do not think it is impossible to work out some system to prevent unauthorised people out of pure curiosity finding out particulars about their neighbour's affairs that they have no right to know. Over-curiosity on the part of people should be punished or restrained by some penalty. Something should be done to make it quite clear that enquiry into matters they have no right to know will not be allowed, and that any borrowing that is carried out will be as secret as it possibly can be. Only the sub-sheriff and people connected with the Corporation and the banks should know anything about these borrowings.
All this is not so helpful. Are we to go back to the one register and if so, what about the sheriff's position? I believe a secret register is necessary, but I think there is a tendency to overdo that. I know the more secret it is the better, but I do not agree that people will not borrow unless they are absolutely satisfied that there is the very closest, the greatest, secrecy. People know perfectly well whether or not the mortgage or the loan becomes known they will borrow. As we are on this question of secrecy, of course it is something that is rather peculiar to this country and, I think, to the farmers of England and Scotland. It is not found in other countries at all, notably in America. This dislike of publication of the fact that a man in a certain business is borrowing money for the purposes of his business is simply an indication that our commercial education has not advanced. Whether we are to blame for that or not is another matter. But we should try to get back to the point of view that is normal in every commercial country. An enterprising man would have all his money invested in his business and whenever he gets a reasonable opportunity of borrowing money at a rate of interest that would enable him to make a profit he seizes it. He does that as a matter of course. I think that we should get to the point of view in this country that borrowing money for commercial purposes or agricultural purposes is a legitimate, normal function. However, there is no use preaching on this question because there is undoubtedly a dislike of publication at present. When a man is short of money and can get money without going into "Stubbs' " he ought to be satisfied enough. I think he will. I adopted this as a compromise between a secret and an absolutely open register. It is the best I can do. I have heard no better proposal.
I wonder would it be possible for the Minister to leave the section as it stands if he cannot find some machinery to make it simpler. I feel, knowing the machinery that will have to operate in this matter, that a great many people will undoubtedly be suspicious and perhaps with some justification. You cannot possibly carry on the work of keeping a central register in the Circuit Court Registry without subordinate officials having to do the work. It goes on then to the office of the sub-sheriff. There again subordinate officials will have to do a considerable amount of the work— typists and others—and I feel strongly that the attitude of mind of our people would be very different if their feeling was that the central register was a document kept in the office of the Corporation, away from local knowledge. I think it should be possible for the Minister to adhere to his original proposition to keep a central register. Around that he can get some simpler machinery. I emphatically say again that it is not at all going to be satisfactory. There will be complaints.
I think Deputy Baxter is right. I think the Minister could provide machinery.
Will you tell me what it is?
You could provide a central register and on application by letter by the sub-sheriff he could get a statement with regard to any particular man. The difficulty, as pointed out by Deputy Baxter, is that the register will be there in the office and will be open to inspection undoubtedly by a number of subordinate officials. The information will be available to a number of officials. My point of view is that we ought to have this thing as secret as we can or else have no secrecy at all. I believe the day will come when we will have to abolish secrecy with regard to it. I think it is a mistake to have this secrecy but the conditions in the country are such that if this thing is to work at all we believe and the Minister believes we will have to have secrecy.
All right, I will let the section stand.
Will the Minister consider between this and the Report Stage whether he cannot improve on that?
There you are!
I move amendment 18:
In sub-section (1), (f), line 40, to delete all words after the word "farm" to the end of the paragraph.
This amendment deals with the question of insurance with regard to stock which are the subject of chattel mortgage. The mortgagee has power to insist if he wishes, that the mortgagor shall insure his stock before he will advance money. I have heard many people complain that it is an injurious provision and one that will prevent the working of this arrangement at all. The cost of insurance in such a case would be very excessive. The insurance of live stock in this country is a very high charge and particularly if it goes as far as insuring against all kinds of mortalities and fire and matters of that kind. There is not very much that I can say on the matter except that it is considered that it will add considerably to the charges to the mortgagor and such a provision should be left out of the Bill altogether.
Perhaps Deputy Heffernan would explain what would be the effect of deleting this. The mortgagor, if he wishes, would require that the cattle should be insured whether this was there or not.
I presume he could insist on it if it were not here, but this is calling special attention to it.
I will suggest a compromise:—"and if so required by the chattel mortgage or the mortgagee to insure and keep insured such farming stock in accordance with such requisition"—take out the words "or the mortgagee." It shall be with the chattel mortgagee whether he shall insure the stock or not. I foresee the real uses of this in the case of pedigree stock.
That is right.
It would be an excellent security.
Of course, the Minister recognises on the other hand that if you borrow money at 5½ per cent. you will not insure stock for much less than 5 per cent.
No one suggests that. You must give the right to the bank to insist on insuring where they think it necessary. You must give them discretion to exercise that right.
Is the Minister prepared to say that it will be only applicable in the case of valuable stock?
Take the case of a farmer who has a big lot of stock, and who is looking for £200 or £300. He has a couple of thousand pounds worth of stock. Yet the bank says: "We agree, provided you insure so many." If the bank insists on insurance, what good will your statement be in the matter? It is for the bank to exercise its discretion each time an application is made for a loan. If you were to ask my opinion I could say that the bank would very often insist on insurance in the case where the security was pedigree stock. I certainly could not say that they would never insist on insurance in any other case. Meantime you must give them the right.
took the Chair.
My point is that it is redundant. They can insist on the right if they like. The amendment suggested by the Minister seems to me to be dealing with words. The acceptance of the Minister's compromise would not affect the actual state of things. They do not have to advance money unless the mortgagor complies with the conditions they require.
That is true.
This might be regarded as a direction.
It is not a direction. You must give the directors credit for some common sense.
It has been looked upon as such.
My attention has been called to it by several persons already.
It is not worth arguing about. I will take it out.
I move amendment 21, which is an important one. It reads:
In page 12, before paragraph 2, to insert a new paragraph as follows:—
"The Minister and the Minister for Lands and Agriculture may if and whenever they so think fit by order made by them jointly authorise certificates of charge to be issued against any class or classes of securities specified in such order and may by such order impose such restrictions as they think fit as to the proportion or amount of any particular class of security (including first mortgages on land) to be included in the securities against which a series of certificates of charge may be issued, and may also by such order authorise certificates of charge to be issued although the Corporation does not hold as security for money advanced by it first mortgages on land to the nominal amount of one hundred thousand pounds."
Section 3 of the Schedule reads:—
"Before issuing a series of certificates of charge the directors shall place under the control of trustees, in such manner by transfer, sub-mortgage, deposit, or otherwise as shall be approved by the Minister, good and sound first mortgages on land held by the Corporation as security for advances made by it to a nominal amount not less than the nominal amount of such series of certificates."
The proposal is that the securities against which certificates are to be issued shall be placed in the custody of trustees. I believe that is common with every other company. The idea is that the trustees will manage and watch over the stock of the certificate holders. These trustees will be mainly banks or a body like the Currency Commission. They will have very important functions to perform. They will have to see that the pool of securities is always kept quite sufficient to meet the amount of certificates issued against the pool. I can conceive that the pool will be composed of all sorts of securities: mortgages on land, charges against, say, the general assets of a creamery, and even a certain amount of joint and several securities, and, perhaps, some chattel mortgages. Even though the certificates are long-term documents, I can conceive that it would be quite safe to issue certificates against a pool containing all sorts of securities, provided the certificates were well covered by the pool. It would be the duty of the trustees to keep the pool always up to the mark and see to it that it was not depleted; that when short term securities were liquidated that they were replaced by equally good securities of the same or a different kind or by cash invested. I have not the slightest doubt that that is not only perfectly safe, but even conservative finance. It will be seen that the duties of the trustees in connection with this Corporation will be very important. There will be no difficulty whatever in getting trustees. I should say that the ordinary banks would be always glad, for the usual fees, to manage securities of that sort, or a body, say, like the Currency Commission.
I move amendment 22:—
In paragraph 6, page 13, to delete sub-paragraph (b).
This sub-paragraph reads:—
(b) to bind the Corporation in every year of the period within which the principal of the certificates is payable to draw and pay off such fixed number of the certificates that the whole of such certificates are thereby drawn and paid off by the end of the said period.
That would mean that the certificates would not be used as trustee securities at all. It is considered unsound, and I move its deletion.
Does the Minister propose to introduce any new section in connection with Section 20?
The Deputy cannot have it both ways, but I will consider it. At the moment I do not see that there can be any compromise, for the register must be there and available to the sheriff, or the sheriff must be allowed to seize and take his chance. I know that the Deputy will make the obvious point about the writing of a letter. A letter might come back in two days, and by that time the sheriff might not be in a position to seize. He cannot arrange his programme that way. He may perhaps have to seize on two hours' notice. That sort of an arrangement would not work at all. If the work of the sheriff's office was regular, then you could write a week beforehand, but he cannot arrange his programme in that way.
Does the Minister recognise the principle that the cases in which the sheriff would really want information might not be one-fortieth of the total number on the register?
That is one of the saving graces of it.
I understood that the Minister withdrew his amendment to the section, and that he was going to introduce a further amendment allowing the sub-sheriff to apply to Dublin or some central registry to get the information. As the law stands with regard to the sheriff's position, the sheriff may seize, and he will not be liable for an action.
The matter cannot be discussed now. As a matter of fact, I may come back with my original amendment.
Then I will introduce another amendment on the Report Stage.