IN COMMITTEE ON FINANCE. - DUTY ON MARGARINE. – Dáil Éireann (6th Dáil) – Thursday, 20 Oct 1927

IN COMMITTEE ON FINANCE. - DUTY ON MARGARINE.

Mr. BLYTHE

I move:—

1. That a Customs duty at the rate of threepence on the pound shall be charged, levied, and paid on all margarine imported into Saorstát Eireann on or after the 22nd day of October, 1927.

2. That in this resolution the word "margarine" means any article of food, whether mixed with butter or not, which resembles butter and is not milk-blended butter.

3. It is hereby declared that it is expedient in the public interest that this resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1927 (No. 7 of 1927).

The definition which is used here for margarine is the definition which is in the Butter and Margarine Act, 1907, and which is part of the Food and Drugs Act. I presume it has served its purpose satisfactorily up to the present. The proposed tariff of threepence in the pound is intended to effect the exclusion of foreign-made margarine from the Saorstát and to give the entire Saorstát market for margarine to the home manufacturers. An application was made by Messrs. W. and C. McDonnell, of Waterford, Messers James Daly and Sons, Shandon Castle Margarine Factory, and Messrs. Dowdall, O'Mahoney and Co., Ltd., of Cork. Their application was for a duty of threepence per pound. The firm of Dowdall which had been associated with the application up to the present month and had given evidence withdrew their application on 8th October on the ground that their interest in this application was to preserve Messrs. W. and C. McDonnell's factory, which was then threatened with extinction. It has since been closed. However, the closing of Messrs. McDonnell's factory took place in February last; consequently the Tariff Commission went on with the consideration of the matter in the same way as if all the applicants still were desirous of having a tariff imposed.

In addition to hearing evidence at public sittings, the Commission visited the two margarine factories in Cork and the factory in Waterford. They also visited a number of margarine factories in London and in Liverpool. The opinion of the Commissioners is that as regards one, at any rate, of the factories "the premises, modern equipment and general outlay of the factory and the competence of the technical staff are satisfactory." They are of opinion that,

"judged by their ability to put on the market a product as cheap as that of outside firms, quality for quality, the manufacturers in the Saorstát appear to be able to hold their own so long as their output is maintained and they are not the victims of a trade war carried on by foreign corporations, whether these as rivals endeavour to oust each other from the world market in margarine by cutting the prices of the cheaper grades to a figure which yields no profit, or as allies unite and, by the pooling of their resources and continued price-cutting, seek to share the market between them to the exclusion of all other manufacturers."

The industry is confined, as Deputies are aware, to the cities of Cork and Waterford, and it cannot be regarded as of general importance. The capital involved is about £65,000. The number of persons employed by the firms has varied. In the case of McDonnell and Daly it has varied from 187 in 1921 down to 104 in 1926. I will just give the figures for these years. In 1921 the number was 187; in 1922 it was 151; in 1923 it was 132; in 1924 it was 114; in 1925 it was 111; in 1926 it was 104. Of course, since then the factory of Messrs. McDonnell has closed down. So far as Messrs. Dowdall, O'Mahoney is concerned, the employees have ranged from 112 in 1918 down to 37 in 1926. The cost of production as compared with the cost in other countries is higher. That is due very largely to the fact that the factories here are not producing up to their output. It will probably be always somewhat higher here because of the extra freight on raw materials and the cost of returning empty containers.

"It should be mentioned that the large scale concerns which are the chief rivals of the home factories in the Saorstát market have oil refining plant either on their own premises or operated in the same neighbourhood by companies associated with themselves. They are usually able to obtain their liquid oils either through pipes from the refining plant or as the result of prudent selection of sites from tank barges which have been loaded at the associated factory and brought alongside the margarine factory to be unloaded by pipes. In this way the handling of individual drums of oil is avoided and costs kept low. In the opinion of the Commissioners the demand by the Saorstát factories would not justify the installation of oil refining or seed crushing plant for their own service."

Apart from that, however, the opinion of the Commissioners is that the costs of production here need be very little higher than the costs of production of competing firms outside. If the tariff results, as the Commissioners anticipate, in securing to the Saorstát manufacturers the practical monopoly of the home market, the output of the factories will be immediately increased and will approximate to full capacity. The first effect of increased output should be to bring about the general improvement which is experienced when staffs which have been working only part time at a low pressure are restored to normal hours and a high rate of output.

The Commissioners believe that the effect of the tariff will be the re-opening of the Waterford factory and the employment, at least, of the 78 workers who were employed in 1926 in addition to the office staff. It is not possible to say to what extent there will be an increase on the existing staffs in Cork. The margarine produced in Saorstát Eireann in 1926 was value for £271,868. The margarine imported was value for £168,382 making a total of £440,250. From this must be deducted the margarine exported from Saorstát Eireann, £153,458. The consumption therefore in the Saorstát is value for £286,792. The consumption in the Saorstát is not greatly in excess of the output of last year, but if the home market can be secured for the existing firms and if the export trade which they have always had can be maintained the position of the industry will be substantially improved. At first, the Commissioners were of opinion that the general effect of protection would be to raise the retail price of the article.

"They then proceeded to inquire from retailers what classes of the community are purchasers of margarine and for what purposes they purchase it, and as a result of these inquiries ascertained that it is consumed by all classes—by the wealthy for cooking only and by the middle and poorer classes chiefly for eating, but also for cooking. As the Commissioners realised that any increase in price would bear most hardly on the poor and might in some cases deprive them of fats which they would not obtain in any other element in their diet they decided that any increase whatever would cancel the advantages to be expected from a tariff on margarine. Further, they considered that unless they could secure consumers in the Saorstát the benefit of every reduction in price, quality for quality, which consumers here would enjoy in the absence of a tariff, they would not be justified in recommending a tariff at all. For this reason they requested the applicants to formulate and submit a definite undertaking in regard to the price and quality of margarine made and offered for sale in Saorstát Eireann in the event of a tariff being imposed."

The following undertaking was furnished by Messrs. W. and C. McDonnell, Ltd:—

If I were allowed to finish perhaps I would be able to clear up some of these matters. The Commissioners proceed to say:

The very specific undertaking given by Messrs. W. & C. McDonnell, Ltd., is acceptable to the Commissioners only because they are fully satisfied of the ability of the company to carry it out. The situation and lay-out of the premises at Waterford, the plant and general equipment, the efficiency of the staff, and certified costings which have been submitted to them, lead the Commissioners to believe that when the factory is running full time with a high rate of output it will be able to manufacture margarine cheaply enough to fulfil the undertaking. In the absence of such satisfactory conditions no undertaking, no matter how definite, would influence us in our recommendation, and we think it important that this should be fully understood in view of the possibility of undertakings as to price and quality being offered in connection with other applications.

The Commissioners recommend that it should be specifically stated, when proposing this tariff in the Dáil, that if the undertaking is not adhered to that steps will be taken to bring the tariff to an end. The Commissioners are satisfied that this industry can have its condition improved and can be kept going without any cost to the consumers if the manufacturers desire to do so, as they are being given practically a monopoly of the market, and that, on the other hand, if the manufacturers do not adhere to their undertaking they should be deprived of the benefit of the tariff.

Major COOPER

Can the Minister say if any recommendation has been made as to the length of time in which the tariff should be in force?

Mr. BLYTHE

In regard to this particular tariff the Commissioners think it should be permanent. They think that one way to meet the case of this industry is to give it a monopoly of the home market on the condition that the monopoly is not abused and that the costs are not put up against the consumers. With reference to what Deputy Byrne asked, no undertaking was given by the firm of Messrs. Dowdall, O'Mahoney and Co. It had, as I stated in the beginning, withdrawn from the application on the 8th of the present month.

Captain REDMOND

I welcome the somewhat belated report of the Commission. I desire to ask the Minister again if he can give the House any information as to the respective outputs of the Waterford and Cork factories. The question, I think, is pertinent and of extreme importance, considering that the guarantees given by two firms are of a different nature. If the output of the Waterford factory is greatly in excess of that produced in Cork, then there is a great deal to be said for the course that has been taken by the Commissioners. I think that Messrs. McDonnell are to be congratulated upon the specific and candid manner in which they have given this guarantee. I think, too, that the Commissioners are to be congratulated upon asking for such a guarantee before they recommended the imposition of a tariff upon an article which is so much used by the poorer classes. If the Minister can show—and I think, with all respect, it is the least he might do—to the House whether the output in Waterford is considerably larger than that in Cork, then I think the Commissioners are justified in the action they have taken. I cannot see why the factory in Cork could not have made the same offer, nor can I conceive that the Commissioners would have recommended this tariff if they did not believe that the Waterford factory was the main source of the supply of this article in the Saorstát. Again I desire to congratulate the Commissioners. I think they have shown great discretion and judgment in the matter in insisting upon this guarantee.

Mr. T.J. O'CONNELL

Naturally the Labour Party would support any proposal that makes for increased employment, but they must make this distinction of necessity, that they must look at a proposal to put a tariff on food in a somewhat different light from one to tax an ordinary article of manufacture. This is especially the case when the article to be taxed is one that is largely used by the very poorest class of the community. That is so in this case, and we have the admission from the Tariff Commissioners that there is a possibility in any case that the tax on margarine will hit hardest the very poor who use it and are not in a position to buy butter. I must say that, so far as it goes, the Tariff Commission seems to have taken precautions, and that the guarantee is satisfactory, but it is rather disturbing that the definite guarantee with regard to the matter comes from a factory that is, I understand, at present closed. I did not follow the Minister quite clearly as to whether there is a definite guarantee that this factory is to re-open.

Mr. BLYTHE

Yes.

Mr. O'CONNELL

That statement qualifies it and makes the matter more satisfactory. But I hope the Ministry will be very careful to see that the guarantee which has been given in the case of the Waterford factory will be carried out. When other tariffs were imposed here somewhat similar promises, though not so definite, I admit, were made. There were somewhat similar expression on the part of the Government and those who were urging the claim for a tariff, but I am afraid it cannot be said in connection with the tariffs that were imposed that it has been always the case that prices have not gone up. I am afraid that has occurred in many cases. Certainly I would be a very much stronger supporter of protection if we could get a similar guarantee to that given by Messrs. McDonnell in the case of other articles. I think if that guarantee could be carried out, and it ought to be our duty and the duty of the Ministry to see that it is carried out, then the tax is worthy of support.

Mr. LITTLE

I welcome this belated measure which will do something to relieve the very considerable amount of unemployment that exists. I cannot refrain from pointing out that whatever progress has been made in the matter of tariffs has been largely due to the Republican agitation. It brought such pressure to bear on public opinion that Ministers have been obliged to see the value of that agitation, and in the case of Waterford, perhaps, I cannot dissociate the recent results from this belated measure to relieve unemployment and to do something which is really of national benefit.

Mr. LEMASS

In view of this resolution, I would again like to comment on the delay which occurred between the making of the application and the presentation of the report. I think the Minister has informed the House that since the application was made one of the firms making it has ceased to produce margarine. I would suggest to him that one of the reasons why the Commission is going so slow is because they were not constituted to go fast; that they were designed to impede and not to facilitate the imposition of tariffs for the protection of Irish industries. The officials who compose the Commission have numerous other duties to perform, which must take up a very considerable portion of their time, and they cannot undertake the work of the Tariff Commission in a satisfactory manner unless they are whole time on their job. The Minister stated that the Commission hope, as a result of the imposition of this tariff, that they would secure a monopoly of the home market for the Irish manufacturer. That statement is a proof that, although they have taken a very considerable time to consider the application, they have not considered it well enough. They might just as well give a monopoly of the home market to a foreign combine and not to Irish manufacturers at all. There is nothing to prevent foreign combines establishing branch industries in this country which can sell for a period under cost of production and squeeze the Irish manufacturers out of the field altogether.

The imposition of a tariff of this nature is highly dangerous unless it is associated with the enactment of legislation that will make it impossible for these foreign combines to operate in the country to the detriment of Irish manufacturers. I would remind Deputies that only yesterday we debated at length the purchase, with State money, of a foreign interest in the creamery business. It is just possible that this day twelve months we will be discussing the utilisation of State money to buy out foreign interests in the margarine industry as well.

Deputy O'Connell mentioned the possibility of a tariff on foodstuffs resulting in a rise in prices. We are told that the imposition of a tariff of 3d. per lb. will be, in effect, prohibition. Why not, therefore, make it prohibition? Why not prohibit the importation of margarine into this country altogether, with the proviso that under special circumstances a licence could be given for its importation? For example, the Waterford factory might through misfortune have a fire, and as a result the supply of margarine in the country might not be sufficient to meet the consumption. Consumers of margarine would then have to buy the imported margarine, tax and all. A much better system would be to prohibit the importation of margarine, except under special licence, and when it is admitted in that way, admit it tax free. In any case, as a temporary measure this resolution will have the support of Deputies on these benches, but, when any such legislation comes before the House, it is well that we should make it clear that we do not believe the Government is tackling the problem of protection for Irish industries in a serious manner.

Mr. A. BYRNE

I would like to ask the Minister if the recommendation of the Tariff Commission that quality will be maintained and that present prices will not be exceeded will be contained in the Bill that the Minister intends to bring before the House. As the Minister shakes his head I take it that that recommendation will not be contained in the Bill. Then I will oppose this measure, because if such a proviso is not contained in the Bill it will give other manufacturers who have given no guarantee an opportunity of coming into this country and availing of the protection to increase the cost of living to the working classes. That class will then be practically told to eat dry bread.

In the City of Dublin to-day there are many people who have bread and tea for breakfast, bread and tea for dinner and bread and tea for supper. That is what our people are living on, and I say that some of them who cannot afford margarine at a dear price must be protected against the manufacturer who may exploit protection. I say that as a Protectionist, one of the few who, in the early stages in this House, advocated protection on all kinds of luxuries. But I cannot welcome, as has been welcomed by very many Deputies, this resolution, without some further guarantee that the consumers will be protected from the class that I have just mentioned. All I am looking for is that such guarantees will be insisted upon, that both price and quality will be maintained, and that there will be no shortage of the commodity that would in any way lead to a scarcity in any part of the City of Dublin, because it is largely to the tenements and in the working-class areas of the City of Dublin that the products of the margarine manufacturers go. In country districts they can make their own butter, or buy butter very cheaply. But I certainly say that if this guarantee, recommended by the Minister's own Commission, is not inserted in the Bill the poor people of the City of Dublin will be the sufferers. Before supporting the motion I would like to have a little more information from the Minister.

Mr. FLINN

Who owned McDonnell's in Waterford? I am asking the Minister for Finance, but apparently he is too much engaged to answer. Do you know who owns McDonnell's in Waterford?

AN CEANN COMHAIRLE

Perhaps the Deputy would make his speech and get the answer later.

Mr. FLINN

Well, it is rather difficult, because the question of whether the Minister for Finance knows or does not know that is significant in this discussion. I am informed that McDonnell's of Waterford belonged to Messrs. Jurgen's. You are faced now by the fact that, fifteen months after intervention in this matter, certain very definite changes have been made in that time. There were three applications, and it is significant that the applications from Cork were for the benefit of somebody else and not for themselves. It is also significant that the neglect of the Government to meet that application has meant the shutting down of one of that firm's opponents in Cork. It is significant that when this meant the shutting down of one of their opponents Cork is no longer particularly interested in the application. That is why there is a difficulty now in getting the guarantee from Cork which could have been got fifteen months ago. This guarantee was signed in October; fifteen months and two general elections intervened between the time when they were prepared to give that guarantee, which would have kept one of their rivals in existence, and the time when they were asked to repeat it, when that rival had disappeared.

I do not intend to express any particular opinion at the moment on the subject of tariffs. I am in favour of every sort and kind of protection, and, above all, the protection for our industries of an educated national opinion, which I believe to be the most effective of all. But this particular tariff, and the circumstances surrounding it, raise problems in relation to tariffs which we might very well investigate. McDonnell's being Jurgen's and Jurgen's being one of the two big competing organisations, the other being Van Den Bergh's it was quite safe for Irish manufacturers to have a tariff, because if McDonnell's were used for the purpose of illicit price-cutting they would be up against an organisation as strong as themselves. But Van Den Bergh's and Jurgen's are not rivals, so far as I know at present. It is possible to get a condition now where you would have your Irish manufacturers inside the ringed fence of a tariff, and I want you to see what might happen. One of those organisations cuts prices until they shut down the Irish organisation. It is simply a question as to who has got the most capital, and there is no question as to who has the most capital, the foreign combination that is behind Messrs. McDonnell or the Irish capital that is behind the other institution. I have no hostility towards, and I am not saying one single word against, the factory in Waterford. I want to see the people employed there. But you have to face the fact that in these tariff cases, where you have largely capitalised organisations operating in this country, with the tariff alone and without some other safeguard, such as conditional prohibition or conditional licences, as has been suggested by Deputy Lemass, it is possible for these highly capitalised organisations to wipe out, without any loss to themselves, the competition of financially weaker organisations in this country, because remember that when they have wiped them out they will have the market to themselves and they will have taught to fools who dared to compete with these highly capitalised organisations the fate that is likely to come to enterprising manufacturers who dare to challenge the very complete monopoly of Irish manufacture to-day.

The important thing eventually and permanently in Ireland is that we must protect our own capital in the employment of Irish Labour in this country. Unless and until that is done all such things as prohibition, protection, licences, and the rest can be worked backwards and forwards by people who are prepared to lose a considerable amount of money for the purpose of getting possession of a market out of which they can eventually comfortably recoup their losses. The basis of sound economics, as far as our industries are concerned, is an Irish capital which is converted from an international outlook to an Irish inlook. That is first. The second point is that our industries, predominantly those industries the products of which are consumed by our own people, shall be capitalised by Irish capital having that inlook; thirdly, that there shall be behind Irish industries so capitalised and so producing a body of national public opinion which will guarantee and safeguard those industries during the period of their inception and development against unfair outside competition of very much larger financial interests.

In every case of tariffs we must watch that we do not become turned into merely the wage slaves—I withdraw the word slaves, because I do not like using strong language of that kind—merely the wage earners of foreign capital, because there is no stability in such employment. Where you have Irish industries—and this has been largely the tendency of development under the tariffs imposed by the present Government—merely branch houses or branch manufacturers of larger outside concerns, two things happen. First, the Minister for Finance does not get any more income tax than they choose to give him. It is a matter merely of book-keeping, and of perfectly legitimate and honest book-keeping, to keep the income tax of any subsidiary company paid in whichever country those who control the lot choose. Secondly, it is important to see that you do not get the diversity factor of industry always working against yourself. There will be ups and downs in industry, bad times and good. Where you have two factories, one in your own country where you are anxious to employ your own people, and another established merely temporarily for the purpose of getting over a tariff in a foreign country, such as Ireland, it is natural and it is right that the owners of the factory should concentrate to give the load factor of production to the factory in their own country and to leave the swings to the other country.

The outstanding difficulty we have in this country is that economically we are controlled from outside. I do honestly believe that the Treasury Bench does not understand that or their measures would be of an entirely different character. I say to you deliberately that England could have quite freely, easily and safely conceded, if I may use that impertinent term, to this country the whole of its political demand and more; could have conceded that with ease and with safety to herself, so long as she could keep the absolute economic grip she has upon us to-day. I am afraid I am wandering into rather larger economic considerations than those that are immediate, but in this particular case of a tariff, this case in which a patriotic and a good Irish manufacturing firm like Dowdall's have withdrawn, you are up against very significant things. If Deputies will understand fully and examine fully the national and economic implications of what is going on in relation to this tariff, I believe it will revolutionise the outlook of this House. At the present moment we have one single industry, we have one single consumer. In this House at the proper time I will contend that the logical and the inevitable outcome of such an economic condition, except in so far as in the past the operation of that economic law has been mitigated by violence, by the shooting of landlords, by firing into houses, by boycotting, by neglecting farms, by the degradation of education —I am going to contend in this House that the logical result of that doctrine and of the conditions which were brought about under that doctrine is that you cannot get for production in Ireland anything but the bare cost of production; that the poverty, the depopulation, the emigration from this country are the logical outcome, and that every bit of prosperity, every bit of decency that we have in our lives, every bit of hope we have for the future is purely an accident. The logical outcome of the economic policy for which the Government stands, and in accordance with which, I believe, they set up a Tariff Commission which was not intended to operate until it was shown as the result of electoral changes that it ought to operate—the logical outcome of the economic policy for which the Government stand is depopulation, is poverty and is that whatever the amount of agricultural wealth you may produce in this country, your customer can demand it from you at the net cost of production, which expressed in terms of population and standard of comfort, means that there shall be maintained in Ireland the smallest possible population upon the lowest standard of comfort that will produce and will continue to produce the product which that single customer requires from you.

AN CEANN COMHAIRLE

I did not like to interrupt Deputy Flinn's first speech in the Dáil, but he was really speaking, in parts of his speech, to a general resolution rather than to the particular resolution before us. I would like that Deputy Flinn would not initiate a general debate at this particular stage. Provision is made under the general resolution for a field as wide or even wider, if that were possible, as was covered by Deputy Flinn. It would be better to keep to this particular resolution now and dispose of it; then we could by arrangement to-day, or on some other day, take all these questions on the general resolution. I think Deputies will see that that is a more practical scheme of getting a general discussion.

Mr. O'HANLON

I do not propose to go into the general topic of free trade or protection as the last speaker did. I have got two illuminating instances of the point of view of those who are whole-hog protectionists. I am sorry to see Deputy Lemass leaving the House. There were one or two points in his speech that I would like to deal with. Dealing with this question of margarine, Deputy Lemass went so far as to say that we should prohibit the importation of any margarine. I wonder will Deputy Lemass go a step further and prohibit the raw materials from which margarine is made? Would he not allow even one drop of oil to percolate through the tariff wall which he would put up around this country?

This margarine question, according to the figures read out by the Minister for Finance, affects 104 workers, and according to the output and consumption in this country—even assuming that we did prohibit the importation of margarine—we could not hope under any circumstances to do any better than double the number of workers. Nevertheless, we must import all our raw material, and until some economic policy is adopted in this country which has some semblance of sense behind it, we will be fooling at this question and peddling at it, as has been done by both sides of the House, until the cost of living to the poor people will be such that it will become unendurable. Deputy Flinn mentioned about foreigners taking up factories in this country. Is it possible under any circumstances to stop foreigners from taking up factories in this country? I do not think so. There are Irishmen who will always link themselves up with foreign capital and do the part for foreigners in this country. There is another question which arises on the question of guarantees given by the two firms, or, should I say, by one firm only. The guarantee is with regard to the price. There is no guarantee with regard to the quality.

Mr. BLYTHE

There is, quality for quality.

Mr. O'HANLON

Who is to be the judge of the quality? The poor consumer. I will not go any further into this question of tariffs at the moment, but when Deputy Flinn develops it later on and when the House comes to deal with the larger question I will have a word to say on it. I oppose the motion.

Mr. HAZLETT

I cannot hope to swallow all the theory that was advanced by Deputy Flinn a few minutes ago in regard to the doctrine of protection, nor do I think that anyone will take him seriously in this House when he says he is in favour of any and every protection. To a countryman looking at the question from what one might call a sensible standpoint, surely the acid test of any impost would be—will it ultimately benefit the country? When reading some time ago that a tariff was to be put on boots I found that the argument was used that as we make only one pair in ten there was big room for development. In regard to the figures that the Minister for Finance read out, I would point out that they show that whilst we import margarine we also export some. The margin between what is consumed and what is imported is very small. The figure also that the Minister gave us as to the number of persons employed in the margarine business is very small. I remember that I heard him state that 204 is the maximum. Our experience of tariffs in this country has been that they have not been in the direction of a reduction in the price of the article. The benefit that has accrued has been along the line of the labour employed and the wages earned by the workers. These wages, of course, circulate to other people, to the shopkeepers and to all those who supply them with goods. To my mind, however, the tax on this margarine is not going to be helpful to the country. There is not room for that larger development that would help the country, seeing that only a small number of hands can be employed in it. Another aspect of the question is that we are now nearing the time of the cold winter days, and I do not think any of the people of this country will welcome this tariff on margarine as a Christmas gift. We know that in very many cases margarine is an alternative to butter. Cattle, through many causes, are diminishing in the country, and we cannot hope to have very cheap butter. Margarine is an alternative to butter. The question is, in protecting this industry will we be doing the poorer people of the country a good turn at a time when they need all the help they can get, at a time when people are crying out for food? Why at such a time should we put such a tax on foodstuffs? As one who comes from the country, as one who has been in touch with the dairying industry, though I did not inflict a speech on the House on that matter yesterday, I must say that I am convinced this tariff will not benefit the country, and I am satisfied that we ought not to put a tax on an article in the manufacture of which there is not much prospect of development and the raw material for which we cannot get here.

Mr. MORRISSEY

As far as we are concerned, we approach this matter from two aspects. There is the question as to the increase of employment and whether there will be any undue increase in the price of margarine to the consumer. I am not going to say that if there is to be a slight increase in the article as a result of the tariff, that for that reason the tariff in itself is bad. But to those who are afraid of this tariff leaning so much upon the poor, and particularly when statements as to how hard it will lean on the poor come from those who are employers, I would say that the best way to insure that the tariff upon margarine will not lean unduly on the poor is that they should pay a wage sufficient for the workers, such a wage as would place the poor in a position to buy, not margarine, but Irish butter. It struck me, when Deputy Byrne was speaking, and telling us in tones of anguish about the unfortunate poor in Dublin, that we would not have heard that type of speech from Deputy Byrne if there was a margarine factory in Dublin City North. I must say that I cannot at all agree with the statements made either by Deputy Lemass or Deputy Hugo Flinn. Deputy Flinn objects to Irish workers drawing their wages from factories which are run by foreign capital. My objection, and our great trouble in the labour movement is that there are thousands of workers in this country who cannot draw wages at all.

So far as I am personally concerned, I do not care whether it is foreign or Irish capital once the wages are drawn here. I would remind Deputy Flinn what the position is to-day, and that, while he objects to Irish workers drawing wages in Ireland from foreign capital, workers are being forced out of the country at the rate of 30,000 a year, and they go away and draw money from industries run elsewhere with foreign capital. If we are to wait until industries are run and floated in Ireland on Irish capital, then God help the unemployed. Some of our friends here want not only tariffs to help Irish industries, but also want an embargo on foreign capital. I suggest that it be put the other way, and I say, put an embargo on the export of Irish capital. There is, however, no use in going into that question, because I can see that the Ceann Comhairle has an idea that it will all be repeated. I agree with Deputy Lemass, that after nine or ten months the Commission has come forward with proposals which, if they are successful, will give employment to about 200 people out of about 8,000 or 9,000. If that is the best which the Tariff Commission can do for Irish industry and for workless people, the sooner it is abolished the better.

Dr. WHITE

I wish first to congratulate the Executive Council and the Tariff Commission upon giving us a decision. That decision was, no doubt, some time in coming, and I may say that the question of a tariff on margarine is one in which I have taken an interest for nearly five years. For reasons which I need not go into, I had temporarily to suspend that interest five years ago. I have no hesitation in saying that Waterford, in particular, and the Saorstát in general, regard this tariff, though a small beginning, as a very excellent one. There have always been very friendly relations between Cork and Waterford, and I am sure that in the course of time people in Cork or else where with Irish capital can take advantage of this tariff. The bright spot about the tariff is that it gives employment. When the factory in Waterford closed down in February last there were about 80 people employed. That meant that there were about 400 people dependent on that industry. Winter is coming, and these workpeople are in a very bad way, but, happily, this tariff will give them employment. Some Deputies seem to be perturbed about the price and quality of the margarine, but, as the Minister has said, guarantees have been given on that point. The fact that such guarantees were given knocks the bottom out of any argument that could be put up against the imposition of the tariff. I am not going to endeavour to give a dissertation on protection or free trade. I am at one with the Government in what has been described, I think, by some of our friends on the Opposition Benches, as a milk and water policy. I am out for protection with discrimination. I think that certain factories which are in existence should be protected. I can say for Waterford that this tariff will be very welcome to the people there.

Mr. CARNEY

We heard so much about creameries and milk yesterday, and as we are dealing with margarine to-day, I am afraid that we will not be able to look a cow in the face in future. There is something to be said for prohibition in this case, as advocated by Deputy Lemass, in spite of what other Deputies seem to think. We do not, for example, know from the Minister if there were any special recommendations made by the Tariff Commission as to whether there should be discrimination between the different classes of margarine. There is a very important aspect of the matter, namely, that this threepence in the lb. duty may not be sufficient protection, because there is a wide difference between the various qualities of margarine. There is, first of all, the cheap kind made from vegetable oil. It contains powdered nickel, which remains in the margarine until it is eaten, and it is held by many authorities to be inimical to public health. There is the better-class margarine which is vegetable oil churned with a proportion of milk to ensure that there is a proportion of butter in the margarine to give a butter flavour. The firms in England who can get the vegetable oil in Liverpool are in a better position to produce the cheaper class of margarine than we are, because the oil has to be imported here first. We in this country are in a particularly happy position to be able to produce the better-class margarine, because we have the milk and the butter in conjunction with the vegetable oil. As I say, this threepenny duty may not be sufficient to ensure that the cheaper class margarine will not be imported and sold here because there is nothing to tell the man in the street, the ordinary consumer, whether that margarine is a poorer class, made from vegetable oil plus powdered nickel, or whether it is made from vegetable oil plus butter. If you had prohibition, and not this threepenny duty, there would be no difficulty in distinguishing, because the cheap and foreign article, which is held by some authorities to be inimical to public health, would not come into the country at all.

Mr. SHAW

I know that this is not the time to discuss tariffs, but I was sorry to hear from leading Deputies of one of the large Parties suggestions in regard to prohibition. I think at this stage it is only right to say that two can play at that game. Ninety-eight per cent. of our exports are taken by England and Northern Ireland, and if you prohibit the importation of margarine or other articles later on it is quite on the cards that England may prohibit the importation of butter from Ireland. The result would be a very serious one to this country, and, while I am in agreement with selective tariffs on goods that could be manufactured in Ireland, I think it is high time that the word "prohibition" should be very carefully used.

Mr. BRISCOE

Deputy Lemass and Deputy Flinn have covered the views I hold with regard to protection, taking into consideration that they are for the purpose of stimulating home industry and keeping down at the same time the price of the commodity to the consumer. In the event of this proposal going through, I ask the Minister is he prepared to consider the idea of a tariff such as exists in Austria? Where a duty is imposed on foodstuffs imported into Austria if it is found that the internal manufacturers use this tariff for the purpose of increasing the prices, the tariff is immediately reduced or suspended, or put out of operation altogether. Is the Minister prepared to consider some proposal in that regard which would react unfavourably on those who take advantage of a tariff for the purpose of making the consumers pay an excessive price?

Mr. J.J. BYRNE

I think if the policy of the Government was ever justified on any particular question their policy has been eminently justified by the course this debate has taken. The whole question of a tariff is so difficult and complex that it seems almost impossible to arrive at a logical conclusion on it. We have had placed before us to-day two plain facts. The first is that we are going to tax margarine, which is the main food of the poor, for the benefit of 187 hands. Before any tariff can possibly be justified, according to the rule of economic science, we must have a result giving us greater advantages than the benefits it takes away. A question we ought to ask ourselves in considering this matter is, are the people of Ireland, whose staple food, margarine, is going to be subject to a tariff which amounts to an additional 3d. in the lb. to the consumer, to receive greater benefits from this tariff than the advantage they had without it? It has been shown here that as far as guarantees are concerned they are of a most unsatisfactory nature. We had one guarantee from Messrs. McDonnell, and it has been said on the other side that they belong to the foreign firm of Jurgens, but whether that be true or not I cannot say. They gave a guarantee both as to price and quality. The second firm that appeared before the Commission, Messrs. Daly, would only give a guarantee as to quality and not as to price. The third firm, Messrs. Dowdall, have entirely withdrawn from the bargain. Was there ever anything like such a commentary on the whole net effect of tariffs? I thought it was rather unworthy on the part of a Deputy on the Labour Benches to suggest that my colleague, Deputy A. Byrne, with whom I am not always in agreement, would oppose this tariff because there was no factory in the north side of the city. I also come from the North City. We want some information from the Minister before we can accept the tariffs as now formulated and introduced. The Minister clearly said, in his opening statement, that the cost of Irish production is higher, and probably always will be higher, than that of the imported article. Here is positive proof, in my opinion, that the imposition of this tax is a tax on the poor for the benefit of 140 or 180 hands engaged in the business.

When we consider the policy of tariffs we seem to think that this country is a continent and not an island. We forget the smallness of the home market, and we forget that unless we have a market of some considerable size the imposition of a tariff is practically valueless. Some time ago I was approached with regard to a soap factory that has been opened here. I had a conversation with one of the heads of the firm, Lever's, and I suggested that possibly in the future we would be making "Sunlight" and "Rinso" in this country. He said no, because the cost of setting up machinery for that purpose was high and the market small, and it would never pay to set up that machinery. What we should aim at is to do the least possible harm to the country and the greatest possible amount of good. I suggest that it is very doubtful if this tariff will be of benefit to the country, and certainly it will not be of benefit to the unfortunate poor. The tariff with regard to rosary beads is not so important. It is limited to a period of five years, but with regard to margarine we are giving permanent protection, and to a firm which we are told is a foreign firm. We do not know whether or not that is true. This whole question is very difficult and needs the most careful consideration of the House. I should say to our friends on the opposite side that I think that as far as tariffs are concerned their action has not hastened the action of the Government in a particular way.

Captain REDMOND

Would the Deputy explain what he means by the "opposite side"?

Mr. LEMASS

Would the Deputy say how he can use the word "hasten" in connection with the action of the Government at all?

Mr. J.J. BYRNE

I was endeavouring to say that our friends, the official Opposition, suggested in the course of this debate that the particular action taken on margarine was due to the efforts of their party. In reply to that I have only to say that fifty per cent. of the commodities outside agriculture are already taxed.

Mr. HEFFERNAN

I would like to avoid a general dissertation on the question of tariffs on this particular item, but I do not want to allow these resolutions to pass without expressing the opinions I hold on these particular tariffs, with perhaps slight reference to the general question of tariffs. I am rather surprised Deputy Davin did not inform the House that I had opposed the appointment of a Tariff Commission. Doubtless he would if I do not do it now. I did oppose the appointment of a Tariff Commission, but when a democratic Assembly of this kind takes a decision I think it is the duty of the members of the Assembly to accept it. I opposed the Tariff Commission as a protest against the general ramp which was going on through the country at the time in an endeavour to stampede the people into a policy of general protection. I have never held any idea other than that once we decide to impose tariffs the only way to have them examined and imposed is by means of a Commission. It is quite out of the question for a deliberative Assembly of this kind to examine into and decide whether a particular article is entitled to a tariff or not. The cardinal principle on which we based our opposition to tariffs was that they have a general tendency to increase the cost of living and thereby increase the cost of production.

I have never said otherwise than that if a tariff could be shown not to increase the cost of living I would not be opposed to it. It seems to me that there are cases—isolated cases perhaps— where tariffs can be shown not to increase the cost of living, and there are cases in this country where tariffs have not increased the cost of the article tariffed. There is no good in closing one's eyes to facts, and the fact has been impressed upon me that certain tariffs have not increased the price of the articles tariffed. I have in mind a particular tariff, which was perhaps accidental, but was no less a tariff— the tariff on tobacco and cigarettes— which has not increased the cost of these articles. It does seem that there are concrete examples of articles being tariffed without increasing the cost of the articles, and, therefore, not increasing the cost of living and the cost of production by increasing the cost of labour.

We in the Farmers' Group are prepared to give our support to these tariffs because they do not increase the cost of living. We have definite guarantees that the tariff on margarine would not increase the cost of living. I have more than once put up to those who are demanding tariffs the question: Would they give absolute and binding guarantees that the tariff would not increase the cost of the product if the tariff was used to a certain extent as a prohibition of imports; that quality for quality, and price for price, there would not be any change to the disadvantage of the Irish consumer? This is the first case that I have seen of a definite tangible guarantee to that effect being given. If any guarantee of that kind can be given in regard to any tariff which it is decided to impose, and if precautions were taken to see that the guarantee was carried out, I cannot see how a tariff of that kind could do harm to the country, whereas it might do good.

Mr. DAVIN

Could the Deputy say how many farmers' groups there are in the Cumann na nGaedheal Party?

Mr. HEFFERNAN

We are not dealing with farmers' groups. I listened to the argument of Deputy Hugo Flinn, speaking, I presume, on behalf of Messrs. Dowdall of Cork.

AN CEANN COMHAIRLE

No. Deputy Hugo Flinn was speaking for himself as a Deputy. The Deputy must withdraw the statement that he was speaking for anyone outside the House.

Mr. HEFFERNAN

If that is regarded as unparliamentary by you, sir, and a statement that I should not make, I withdraw it. Deputy Flinn, having in mind the interests of the Cork manufacturers of margarine, to my mind, elaborated a most extraordinary argument in regard to the principles of protection, with particular reference to the protection of margarine. So far as I could gather, his idea is that no manufacturer who applies for a tariff should be granted a tariff unless he is, in the first place, an Irishman, and, in the second place, prepared to use no capital but Irish capital in his business. If I understand his words, that, in a nutshell, is what the Deputy put before the House. If that is a sound argument we ought to take steps immediately to see that the Imperial Tobacco Company is taken out of Ireland—the Imperial Tobacco Company has no business here; any company which is financed by outside capital has no business in this country. If that is a sound argument, the great Continent of America, and other great countries which have built up their industries from outside capital, have been following an unsound principle from the start and have built on an unsound foundation. My belief is altogether different.

I believe that if we are to have industries here we must encourage capital from all sources and we should be glad to get capital whether foreign capital or Irish capital. It seems to me, in many cases, that it is much easier to get foreign than Irish capital. Irish capital is timid in regard to the exploitation of Irish industries—much more timid than foreign capital. If that is the argument put forward from the Benches upon which Deputy Flinn sits, I think it is not an argument that is likely to lead to the industrial development of the country.

While I am giving my approval to this tariff, it is practically altogether on the guarantee given that the price of the article will not be increased. I want to see the Government in control of the economic affairs of the country going slowly and very slowly in the direction of tariffs. We have heard already that fifty per cent. of the articles of a tariffable nature which we import are tariffed, and I think that anything in the nature of a general development of protective tariffs must have the effect, unless guarded as this particular tariff is guarded, and as other tariffs are not guarded, of increasing the cost of production. Anyone who has the interests of the agricultural community at heart must know that they are being almost crushed out of existence by the high cost of production, the non-decrease in cost of production, while their prices are going down. That industry is competing in an outside market, as it must compete, and it is in such a position that its main articles of production are incapable of being protected. We have no means at our disposal for increasing the prices of these articles. We must avoid every possibility, therefore, of increasing the cost of production and the cost of living of those who are engaged in that industry. It is for that reason that I urge on the Government the advisability of going very slowly on the tariff question at present. Otherwise I believe it would be ruinous to the main industry of the country. We are not a self-contained country, and we cannot become a self-contained country within any reasonable time. Anybody can see that we must continue to find a market for our agricultural produce in outside countries, and if we, in a foolish endeavour to bolster up a variety of industries, many of which may be quite unsuited to the conditions in this country, and many of which may never have a chance of flourishing or continuing to exist except purely on the home market, we will run the danger of killing the goose that lays the golden egg by killing the agricultural industry through increasing its cost of production. For that reason I believe that the method of careful selection of tariffs, and only imposing tariffs which do not increase the cost of living, is the only justifiable one, once you start to put on tariffs. I believe these tariffs which are being introduced to-day will not have any appreciable effect on increasing the cost of living on the farming community, and, therefore, we do not oppose them.

Mr. LEMASS

There were some points mentioned in the course of the debate by Deputies that I would like to refer to before it concludes. While out of the Chamber, I am informed, Deputy O'Hanlon was inquiring whether we would also advocate a prohibition on the importation of the raw materials used in the manufacture of margarine in the country. The note of his observations was taken by Deputy Fahy, and I can hardly think he got it right, because it appears so very nonsensical. Of course we would not prohibit the importation of raw materials. What Deputy O'Hanlon is perhaps not aware of is that these raw materials are no more native to England or Holland than they are to this country, and that the manufacturing concerns in England and Holland must also import these raw materials. What is a fact is that according to the figures the Minister gave we did import into this country these raw materials from which we manufactured £153,000 worth of Irish margarine, which we exported and sold at competitive prices in the markets of the world. That fact is the best guarantee that Deputies can have against any decrease in quality or increase of the price of margarine because of its protection.

Deputy Shaw raised a point which causes me considerable doubt as to whether he knows what we are discussing. He wished to know whether England would not retaliate in consequence of the imposition of a tariff for the protection of the Irish margarine industry by prohibition. I would remind Deputy Shaw that we are discussing the imposition of a tariff of 3d. per lb. on margarine, which the Minister has assured us is practically the same as prohibition. Therefore I shall leave it to the Minister to reply to Deputy Shaw, knowing that he is likely to have more influence with him that I can have.

As to the points raised by Deputy Heffernan, I am afraid I would have to wait until the Official Report is published before it would be possible to cover them all. But I assure him there will be no need for him to urge upon the Ministry the advisability of hastening slowly. In fact it appears to me Deputy Heffernan is moving much faster in the matter of tariff than the Ministry.

Mr. SHAW

The remarks I made in connection with prohibition were not confined to margarine. I said I was sorry to hear from a large Party the suggestion of the prohibition of any article that could be made in this country. I stated I was in agreement with selected tariffs on goods that could be manufactured here, but that I did not like to hear the suggestion that there should be the prohibition of any article at present imported into the country.

Professor THRIFT

Would the Minister say whether he anticipates any appreciable increase administratively from the imposition of these tariffs? There is a considerable volume of imported margarine, for instance. Does the Minister anticipate that the preventative action will not entail any appreciable addition to the administrative cost?

Mr. DAVIN

May I ask the Minister if he is prepared to accept the suggestion contained in the speeches of Deputy Byrne and Deputy Heffernan that there should be control of the prices in the industries that sought and obtained protection?

Mr. BLYTHE

Deputy Redmond asked was the Waterford output of margarine larger than that of Cork. It is much larger. I am not in a position to give the comparative figures, but comparative figures were submitted to the Commission—I mean the actual figures of output—and a great deal of detail was given, but it is not information that I have at present. However, the Waterford plant is very much larger than either of the other two and larger than both combined.

Deputy O'Connell indicated that certain promises given in the past by people looking for tariffs had not been kept. That is so, but there is a difference between a promise made by McDonnell's of Waterford and promises made by, shall we say, the Glass Bottle Works. McDonnell's plant was inspected by people who also had inspected other plants. A great deal of inquiry took place as to whether McDonnell's could fulfil their promise. In the other cases no machinery was set up and no particular steps were taken to inquire into the ability of the firms to fulfil the promises they gave.

The Tariff Commission specifically states it will pay no attention to a guarantee given by a firm unless satisfied by examination that that firm was in a position because of the type of plant, suitability of the premises, and so forth, to carry out the guarantee in full. I do not think this is the time to discuss the question as to whether there should be prohibition in certain cases rather than tariffs. I just content myself with saying that, in my opinion, when we are considering the best means of fostering industry here, the number of cases in which prohibition would be suitable would be very small, whereas tariffs would be suitable in the great majority of cases. There might be a few cases in which neither tariffs nor prohibition would be suitable and where some sort of direct subsidy would be necessary, as in the case of sugar beet, but I do not want to argue the matter at length at the present moment.

The tariff on margarine will not be expensive to administer. It will practically eliminate the importation of margarine and, consequently, no additional customs staff will be required. Deputy Byrne asked whether there would be certain provisions in the Bill. I do not know whether he meant provisions enabling the tariff to be immediately removed if the prices were higher than British prices or whether he meant provisions to impose penalties on firms if they made their prices higher than prices in Great Britain. I would not be in favour, at any rate at present, of taking any power to remove tariffs without coming to the Dáil. So far, there is no power, as our law stands, to impose or increase tariffs by any sort of Executive action, and I would not be in favour of taking power to remove a tariff by Executive action. Consequently, I could only undertake that a definite scheme of supervision will be set up and that the prices quoted by the Irish firms will be compared with the prices quoted for similar qualities by outside firms, say in Great Britain, and that there will be tests of quality regularly. I can undertake no more than that. If the checks and these tests indicate that promises made by the firms are not kept, then the matter will be brought to the attention of the Dáil with a view to the tariff being removed if necessary. But I do not think the power should be taken to enable the Executive, for instance, to determine that the guarantee is not being kept and to remove the tariff immediately.

I could not quite follow Deputy Flinn. I am not quite sure whether he was arguing in favour of the Douglas credit scheme or in favour of the abolition of the income tax. His remarks did not seem to me to relate very closely to the subject we were discussing.

Various Deputies have talked about the question of enterprises here being owned by foreign capital. I do not think that the coming in of foreign capital is an evil. On the other hand it is better to have our enterprises owned by Irish capital. I do not want to say that there is very much difference between Irish capital and foreign capital, but there is just this about it, that I think a firm controlled by foreign capital, an undertaking which is merely a branch of a foreign undertaking, will not expand except to a limited extent. If, for instance, Jacobs had been an English firm originally, and had set up a branch here, I believe that the branch would never have done more than was sufficient to meet the trade here. If Guinness's brewery had been originally a British undertaking and had set up a branch here, the branch here would never have done more than supply the trade here. Consequently enterprises which are controlled from outside and are really branches of outside undertakings, will not expand and will not give us the export trade which we might otherwise get. Apart from that, I do not think there is very much difference. I do not think any evils are likely to grow up that cannot be easily met when they manifest themselves, and I think we would do a great deal more harm than good by taking precautions which nothing at the present time indicates as necessary and which would discourage the opening of an enterprise here. I think the great thing here is to get these productive undertakings established, to have plant and premises suitable here, to have workers skilled and trained and have the organisations brought into being. That is the main thing. If any abuses manifest themselves, as I have already stated, they can be rectified if necessary.

Mr. LEMASS

By buying them out?

Mr. BLYTHE

No. I do not know what the Deputy is referring to. If he is talking about the creameries, the fact that a firm was an English firm has nothing to do with the matter. It is proposed to buy out the Irish-owned concerns just the same. What had to be decided was whether these creameries should be run by the proprietary interests or by co-operative organisations. It was decided that the best interests of the industry dictated that they should be controlled co-operatively and consequently the proprietary organisations are being bought out. The biggest one happened to be under outside control, and it was bought out first, but the fact that it was foreign had nothing to do with the matter at all. I do not know that there is anything else I could refer to.

Deputy Briscoe, I think, only asked in another form the question asked by Deputy Byrne, and I can only say, as I said to Deputy Byrne, that we are setting up a definite scheme for watching prices and quality, and that the House will be communicated with if there is any departure from the undertaking given by the firm.

Resolution put.

A division was challenged.

AN CEANN COMHAIRLE

How many Deputies desire a division?

Deputies O'Hanlon and Cole rose in their places.

AN CEANN COMHAIRLE

Deputy O'Hanlon and Deputy Cole will be recorded as against the motion. The call for a division requires the assent of five Deputies.

Resolution declared carried.

And the fact of offering to postpone it now constitutes notice. When is it proposed to take this?

Mr. BLYTHE

I would suggest Wednesday week.

AN CEANN COMHAIRLE

There is another question of order. We will have a debate on unemployment next Wednesday. Such a debate has never been known to exclude tariffs, but we will deal with that when it arises.

Ordered: That the General Resolution be taken on Wednesday week.

Mr. GOOD

I understood when we were discussing this matter to-day that the discussion of details was more or less out of order because the whole matter was to come up on Report Stage. For that reason I did not enter into any details, seeing that it would come up again, and that in the mean-time we would be given an opportunity of studying the different features of the proposals before us.

Dáil Éireann díospóireacht - Thursday, 20 Oct 1927

IN COMMITTEE ON FINANCE. - DUTY ON MARGARINE.

Mr. O'CONNELL

Dáil Éireann díospóireacht -
Thursday, 20 Oct 1927