Dáil Éireann díospóireacht -
Tuesday, 4 Jul 1933

Vol. 48 No. 12

In Committee on Finance. - Industrial Credit Bill, 1933—Second Stage.

Minister for Finance (Mr. MacEntee)

I move the Second Reading of the Industrial Credit Bill. The purpose of this Bill, as may be seen from the title, is to make provision for the formation and registration of a company having for its principal object the providing of industrial credit. Normally, there are three ways in which industrial credit—credit for the purpose of establishing new industries or manufactures—might be provided. The first, which relates to the ordinary short-term credit or accommodation which an industrial concern requires from day to day is provided by the banks in the form of an overdraft. The second is a guarantee which might be given by any corporation or organisation, including the State, in relation, generally, to a certain, specific form of share-issue and for a considerable period of years. So far, in this country, that has been more or less adequately covered by the existing Trade Loans (Guarantee) Acts. The third—the provision of capital which those who propose to initiate a new undertaking or a new industry have to secure—in countries where the existing financial organisation is adequate, is generally provided by underwriters or issuing houses or promoting syndicates, representing persons, or groups of persons, having considerable financial resources.

In this country, hitherto, for one reason or another, it has generally been, even under the most favourable circumstances, very difficult for new projects to secure adequate financial backing. That section of our people which had money to invest has hitherto generally fought shy of native enterprises. This Government realised, as our predecessors also did, that that was a considerable handicap in carrying out any proposals or any policy to develop this country industrially.

To meet that position, the former Government assisted the Industrial Trust Company. I do not propose to go into the history of that project. For one reason or another, it was not successful. I should say, in that connection, that the reason for its failure will not be found in a too-ready willingness to invest in native enterprise, that, rather, the cause of its failure will be found to be a readiness to invest in foreign enterprise. I merely mention that to emphasise that our predecessors were faced with the same difficulty which confronts us owing to the fact that, even under the most favourable circumstances, our people are not ready to chance their money in new Irish Industrial concerns. It is possibly because of this that the financial organisations which exist elsewhere—issuing houses and underwriting companies—are not to be found here. There might not be a fruitful field for them here. Consequently, the only agency to which those who propose to enter upon a new undertaking in this country can turn are the existing banks. The banks naturally fight shy of placing the funds with which depositors entrust them for short terms in undertakings the outcome of which is uncertain and the investment in respect of which would be, of its very nature—even if success were at last to attend them—be for a very considerable period, possibly as long as the company or undertaking might continue to operate. It is felt, however, that some Governmental action is necessary if this gap in our existing financial organisation is to be filled and that an undertaking having for its principal object the providing of industrial credit and amongst whose other activities will be, in the words of the memorandum:

"the acquisition, underwriting, holding, selling and otherwise dealing of, or with, shares, stocks, debentures and other securities issued by any company registered in Saorstát Eireann"

should be set on foot. This Bill proposes to give effect to the Government policy in that matter. As will be seen from the Bill, it is provided that the capital of the new Corporation shall be £5,000,000, which shall be divided into shares of £1 each, or of such other denomination or denominations as shall be specified in the memorandum, and be issued from time to time, as the Minister for Finance, after consultation with the Minister for Industry and Commerce, shall determine. Section 5 of the Bill confers on the Minister power to underwrite and take up such portion of the share capital of the company as is not subscribed by the public. It is clear from this, therefore, that the intention is to allow the public to participate in this company to the extent to which the public indicates its readiness to do so, and that, so far as possible, the functions of the Government will be confined to the initiation and launching of the project, and the control and management of it, until such time as the public show that they are ready to step in and relieve the Government of its duties and responsibilities in that regard. As I have already said, the Memorandum and Articles of Association of the Company, the leading provisions of which are set forth in the Schedule to the Bill, will make it clear that one of its principal objects will be the granting of loans to, and the acquisition, underwriting, holding, selling and otherwise dealing of or with shares, stocks, debentures, and other securities issued by any company, registered in Saorstát Eireann under the Companies Acts, 1908 to 1924 whose principal object is the carrying on in Saorstát Eireann of any trade or industry. I should like to make it clear, however, that because it is the desire of the Government that, ultimately, the control of this company should be taken over by the Irish investing public, the Memorandum and Articles of Association will endow the Corporation with very wide powers and with such powers as will enable them to fulfil all the functions with which a privately owned and controlled undertaking elsewhere might be charged.

Section 6 of the Bill proposes to make a charge upon the Central Fund of the moneys that, from time to time, may be required to meet the payments to be made by the Minister to the company. Sub-section 2 of that section gives to the Minister power to borrow for the purposes of providing these moneys. Sub-section (3) provides that the principal and interest of any securities issued under Section 6 and the expenses incurred in connection with such issue shall be charged on the Central Fund. Sub-section (4) makes it clear that any moneys raised by securities issued under the section shall be placed to the credit of the account of the Exchequer and shall form part of the Central Fund.

Section 7 provides that all dividends, bonus and other moneys received by the Minister in respect of shares of the company held by him shall be paid into the Exchequer. Section 8 gives to the Minister power, so long as he holds any of the shares of the company, to exercise all or any of the rights and powers from time to time exercisable by the holder of such shares. Section 9 gives power to the Minister, if at any time he sees fit—and he will only see fit when the public evince a willingness to take up the shares—to hold these shares for such length of time, and, when he sees fit in the circumstances indicated, as I have said, to sell these shares. Section 10 provides that no alteration in the Memorandum of Association or Articles of Association of the Company which is, while the Minister holds any shares of the company, made without the previous approval of the Minister after consultation by him with the Minister for Industry and Commerce, shall be valid and effective.

Section 11 imposes upon the company the obligation to furnish within 90 days after the end of every accounting year a balance sheet to the Minister for Finance for such accounting year duly audited by the auditor of the company, and also a profit and loss account for the same accounting year similarly audited. Sub-section (2) of that section provides that the balance sheet and profit and loss account shall be drawn up in accordance with the regulations to be prescribed by the Minister and contain, among other things, a summary of the capital, assets and liabilities of the company, together with such particulars as will disclose the nature of such assets and liabilities and the manner in which the value of the assets was arrived at.

Sub-section (3) provides that the company shall on demand furnish to the Minister such explanations as the Minister may think proper to require in respect of any balance sheet or profit and loss account furnished in accordance with the section. Sub-section (4) provides that a copy of every balance sheet and profit and loss account furnished to the Minister shall be laid by him before each House of the Oireachtas within one month after such balance sheet and profit and loss account are furnished to him. Sub-section (5) provides for penalties in the event of the failure of the company or any director, manager or other officer of the company to fulfil the obligations imposed by this section. Sub-section (6) gives the Minister general power to make regulations prescribing any matter referred to in the section as prescribed by regulations made under the section.

The Schedule provides, in paragraph (1), that the Memorandum and Articles of Association shall be subject to the approval of the Minister for Finance after consultation by him with the Minister for Industry and Commerce. Paragraph (2) provides that the Memorandum of Association shall provide, among other things, that the name of the company shall be the Industrial Credit Company, Limited, and that the registered office of the company shall be in Dublin. It sets forth the principal objects of the company, which, as I have already stated, shall include the acquisition, underwriting, holding, selling and otherwise dealing of or with shares, stocks, debentures and other securities issued by any company registered in Saorstát Eireann, under the Companies Acts, 1908 to 1924, whose principal object is the carrying on in Saorstát Eireann of any trade or industry, and shall also include the lending or advancing money upon such security as the directors of the company may think proper to any person engaged in or proposing to engage in Saorstát Eireann in any trade or industry for the purposes of establishing the carrying on, or extending such trade or industry. It also provides that the liability of the members of the company shall be limited, and that the amount of the share capital of the company shall be £5,000,000 which shall be divided into shares of £1 each, or such other denomination or denominations as shall be specified in the said memorandum.

Paragraph (3) provides that the Articles of Association of the Company shall specify the number of directors, including the chairman of the company, and that the number so specified shall be seven or five. Paragraph (4) provides that the Articles of Association shall provide also that, so long as the Minister holds not less than one-half, in nominal value, of the issued shares of the company, then in case the number of the directors is seven, four of them shall be nominated by the Minister from time to time as occasion requires, and that in case the number of directors is five, three of them shall be nominated by the Minister from time to time as occasion requires. It also provides that the chairman of the directors shall be nominated from time to time by the Minister. The purpose of this is to provide that, so long as the Minister holds the majority of the shares of the company, he shall have power to nominate the chairman and a majority of the board of the company. Paragraph (4) also provides that the company shall have power for the purposes of the company to raise money by means of debentures, subject to two conditions: (1) that the amounts so raised shall not exceed at any time the paid up share capital of the company, and (2) that debentures ought not to be issued without the consent of the Minister so long as the Minister at any time holds more than one-half of the nominal value of the issued shares of the company. Paragraph (c) provides that, "so long as the Minister holds any shares of the company, no person shall be capable of being appointed auditor of the company unless the approval of the Minister to the nomination of such person to the office of auditor has been given."

It will thus be seen that while the Memorandum and Articles, so far as they are outlined in this Bill, are intended to ensure that the company will be given very wide powers and great freedom of action in its operation, at the same time full provisions have been made to ensure that the Dáil will at any time be able, if it so thinks fit, to raise matters relating to the conduct of the company; that the Minister, since he has power to nominate a majority of the members of the board so long as he has a majority holding in the company, will be in a position to be held by the Dáil responsible for the general conduct of the company and for anything that has been done by the company; and that if the company for any reason is not successful, either due to the inefficiency of its directors, or to the unwisdom of the investing policy which it pursues, the Minister can be called to account here in the Dáil for such failure of the company to fulfil its proper functions, and, if necessary, any changes which such criticism of the Minister in the Dáil may show to be desirable can be secured by the pressure of public opinion.

As I have said, the Bill is designed to fulfil the function which our predecessors thought was not being fulfilled by the existing organisations in this country and for which they launched the Industrial Trust Company. This undertaking, as will be seen, is of much greater magnitude, though in essentials. its functions will be the same, and it is thought that its share capital should be fixed at the sum of £5,000,000. One of the reasons why a much larger undertaking than our predecessors launched is thought to be necessary is that the projects which this company may have to finance at the outset will be of much greater magnitude also. The Minister for Industry and Commerce, speaking on one of the stages. of the Finance Bill, indicated to the House that, in addition to proposals for the establishment of the cement-making industry here, for the extension of the beet sugar manufacturing industry—for the preliminary expenses of the formation of a company for which the House has already provided the sum of £15,000 by means of a supplementary vote and with regard to which it is proposed to lay detailed proposals before the Dáil before the House adjourns for the Summer Recess—there are under consideration proposals for the development of the mineral resources of the country, for the establishment of a paper-making industry, for investigation into the possibilities of the manufacture of power alcohol and for a considerable number of other projects, many of which may be of an experimental nature and most of which, because they are new and novel undertakings in this country, will not be likely to appeal to the general investing public, but which, nevertheless, it is the opinion of the Government, if anything is to be done to develop this country industrially, must be undertaken and carried out by some organisation.

It is the intention to offer for public subscription the shares of those undertakings which will be launched for the purpose of carrying out those new developments and it is necessary, in order that the necessary finances may be secured, and that the success or failure of the schemes should not be made dependent upon the somewhat uncertain taste of the Irish investing public in regard to native concerns, that provision should be made for underwriting any issues that may be made by the undertakings to which I have referred. One of the principal functions of the Credit Corporation to be established under this Bill will be to underwrite those issues. I should not, however, like the House or the country to understand that the operations of the new Corporation will be confined merely to Government projects. Proposals initiated by any private group or by any individual for the establishment of new industrial undertakings in this country will be considered, examined, and investigated by this company, and if it is decided that the financing of these undertakings should be carried out by the formation of a public company and an issue of shares then this company will step in to underwrite and take up such of those shares as might not be subscribed for by the general public.

It is the intention of the Government that the board of this company shall be manned by persons of the highest standing in the commercial and industrial life of this country, but they will be persons who will be required to devote a very large part of their time to the affairs of the company. It is also our intention to lay a specific obligation and responsibility upon every member of the board in regard to the affairs of the company. That intention is indicated in Section 11 (5) of the Bill, to which I have already referred, which makes every director, manager and other officer of the company responsible for any default in complying with any of the provisions of this section, including amongst other things the giving of such information and explanation to the Minister as may be required under sub-section (3).

At this stage I do not want to stress the necessity of placing this specific responsibility upon those charged with the conduct of the new Industrial Corporation. The magnitude of the enterprise which it will be called on to finance, the size of the resources which have been placed at its disposal, involve a proportionate personal responsibility upon those charged with the handling of it. Of one thing I would like to assure the House and the country that men will be placed on the board, not because of political affiliations, or anything else, but because of their proven capacity as businessmen, and as managers of industrial enterprises. I do not think I need say any more, except to emphasise again that the Corporation to be established under the Bill will fill a gap in our financial affairs which was recognised by our predecessors, and for the lack of which the Government has been greatly hampered in carrying out its industrial policy hitherto. We hope that the establishment of this company will complete the link in the chain; that what has been wanting in our existing organisation will be filled; that, as hitherto, the banks will be free to devote themselves to the provision of short-term accommodation; that the Government under the Trade Loans (Guarantee) Acts will be called upon, we hope, to a more limited extent than hitherto, to guarantee the capital raised by existing undertakings for the extension of plant, and that there will be now a source to which people who have sound propositions can turn for financial assistance, which will enable them to place these propositions in a satisfactory way before the Irish people, and enable the Irish people to have the opportunity of investing in sound and satisfactory Irish undertakings.

Mr. Cosgrave

I think it would have been better if the Minister had made the last part of his speech when introducing this measure. Even with the information we got in the latter part of the speech, it is obvious that the directorate of the new Industrial Credit Company will have a fairly stiff task. In interpreting the Minister's speech, and from reading the Bill, I take it that when an industry is started, if it has Ministerial backing, this Industrial Credit Corporation must furnish the capital, while somebody else keeps an eye on the public money invested.

Normally the position of an investment or industrial credit corporation, or an issuing house would be to appraise the value of undertakings, to see how far it was likely that the purpose of organisation was being carried out, whether a profit would be earned, and to see that there would be little risk in investing money in them. So far as this industrial credit corporation is concerned, is any discretion to be exercised in connection with what the Minister said regarding the Government's industrial policy? Looking back at the attempts made over the last ten years to help industry we find that a very considerable sum of money —a considerable sum for a relatively small country—was guaranteed by the State, without political interference of any sort, on the recommendation of a body of business men.

I was rather intrigued by the Minister's reference to the directorate of the new company. In the past, business men were employed, or were invited to undertake the examination of particular proposals put before them, and they did so while carrying on their own business, allocating as much time as possible for public purposes. In this Bill we are invited to consider a directorate of a company with a capital of £5,000,000—a very big sum of money —and we are told that we can get a directorate which will have to devote a considerable portion of their time to the business of this industrial institution, without having had any previous experience of that kind. It is idle to say that we have men with such experience. We have not, even amongst bankers. The banking system here is one which deals with banking in a strict banking sense. They simply give to their customers money that they get from depositors. That is banking, conservative banking. It can be condemned, in so far as the expansion of business is concerned, but, when it is examined, and when we look at what happened during the last couple of years in other countries—and, above all, perhaps, in the most progressive country in the world—when we see how safe the people's money with bankers here was, we are inclined to thank Providence or tradition or something else for the banking system we have got. At any rate, if the money was not used to the best advantage it was not lost. People can go and draw out what they put into the banks here, but in other countries they are unable to do so.

The Minister was correct in saying that we have no machinery, no institution and no facilities such as other countries possess in connection with the development of industry. When the money was required and could be profitably employed here it was found, in almost every instance, for big industrial experiments. There are to be four sugar beet factories costing £300,000 each. Then there is the cement factory. I venture to say that it is unlikely that more than half a million will be invested out of the £1,750,000 required. The Minister mentioned other matters, which I do not think would absorb more than £2,500,000. Even the £5,000,000 for a corporation such as this, if put before the people, will stimulate advances from it. To be a success this Corporation has to keep in mind the necessity for regulation in connection with industrial agitation or industrial experiments. The powers in the Bill are very wide. I was astonished at their width when I read them:—

"The principal objects of the company shall include the acquisition, underwriting, holding, selling and otherwise dealing of or with shares, stocks, debenture and other securities issued by any company, registered in Saorstát Eireann under the Companies Act, 1908 to 1924, whose principal object is the carrying on in Saorstát Eireann of any trade or industry, and shall also include the lending or advancing money ... and so on."

That is the main purpose. That is the reservoir through which the streams of money must flow to all these industrial concerns in which the Government is interested. I have observed in connection with the expansion of industry in most countries that the most healthy expansion is that from small growth in large manufacturing companies, bodies, trusts or anything of that sort. I have seldom seen, in the last couple of decades, any great organisation starting out with its large plant and all the rest of it from a big start rather than from slow growth. Practically all the big industrial ventures in England have been of small growth, and some of them even within the lifetime of living persons. In America much the same thing took place. There were subsequent amalgamations and so on and the best results are usually to be found from expansion of the smaller institutions. Why? Because the personal touch is there. The larger a concern gets the less personal control and touch there is, and it is much easier to expand an existing institution than to lay the foundations of a big one. We had no better example here than the big electrical undertaking in respect of which it was necessary to found a big control with extensive works in all parts of the country. We have, as I say, a very big responsibility in this Bill placed on the directorate—a directorate without any previous experience of the extensive operations in which it will have to engage in connection with a matter of this magnitude.

We have, then, a push on them to make money available for all these industrial concerns. Is it to be part of the business or management to look after the money that has been invested in these particular places? Does it mean that if we have a director of the Industrial Credit Corporation investing money, say, in one of the sugar beet factories, that it must get a proportion of the directorate and have to look after that money? Does it mean that they have to go into the cement company and so on all round the various industries that are going to be established? If it does, I rather fear that the number of directors will not be equal to the demands that will be upon them. I sense, in the first instance, a very great difficulty in getting a directorate of five or seven persons in this new business, bearing in mind the huge responsibilities there are and the small pittance there must be for them. A company with £5,000,000 capital would, I should say, exceed the entire paid-up capital of all the banks that we have got. If it did not exceed it, it would possibly be only £1,000,000 short. Examine, for a moment, one board of seven directors running a business of that size. If it has to look after the channels into which it will put this money, the Minister must surely appreciate the enormous responsibility there is on the directorate in this case. That is a matter which may require further consideration. I very much fear that we have not got the men of experience, but they may learn as they go along. We have the talent, the adaptability and the suitability but experience counts in these matters and it is of very great importance indeed that there should be experience, not alone in ordinary industry, but in finance, and, even, in the giving of advice to those who are going to be interested in the industrial expansion of which the Minister has given us an outline this evening.

To come to the second portion, the Minister dealt with the details of this measure as they are rather than with the reasons as to why they are in the form they are in. Fifteen thousand pounds is to be made available to enable the flotation of this company to take place. That money may be repayable and I presume from sub-section (3) of Section 3, it is intended that the money will be repayable. Section 4 sets out:—

No issue of the share capital of the company (other than share capital issued to subscribers of the Memorandum of Association of the Company) shall be made at any time, unless the Minister, after consultation with the Minister for Industry and Commerce, has authorised such issue.

I do not understand what is meant by that. I cannot see for the life of me what necessity there is for either the Minister for Finance or the Minister for Industry and Commerce being approached on a matter of that sort. The capital is to be £5,000,000. I presume that those who will sign the Articles of Association will not take up the whole of it, and even if the Minister takes up some—let us assume that £2,000,000 were subscribed—£1,000,000 from the Minister and £1,000,000 from outside, which is an optimistic calculation—they have to go to the Minister every time they want half a million pounds or a quarter million pounds to get his sanction for a further issue. I do not know what were the particular reasons for introducing that section. I do say that if this company gets a very big subscription of capital, which I doubt—and I say that, now, without any political bias of any sort or kind—I think it would be a misfortune because, in the first place, people would be looking to them for a dividend. What is the position of the money market to-day? First-class paper is one quarter per cent.—I do not know what it is to-day, but in the last few weeks it has gone down from a half to a quarter—so that if they got a couple of million pounds they can employ it at only one quarter per cent. and that would not be a good investment.

The fifth section is quite understandable and provides that the portion of the shares not taken up will be taken up by the Minister. In regard to Section 9, if the Minister sells shares in this company, and he can, at any time, sell shares, what is the sense of having Section 11 with all the penalties on the directors that there are in connection with it? If the Minister is out of this business altogether and is not involved in any of the investments, why should he have any power over private people's money? What is the meaning of it? Is there a particular reason? Is it that he wants to keep close touch with an organisation of that sort, that it must be a semi-Government institution? If I had my way, I would have it as apart and separate from Ministerial control as it would be possible to have it. What is the position going to be? The Minister is going to ask, six months after this company is started, why this industrial investment corporation has delayed for three weeks in furnishing an answer to the Connemara Goldfields Company on the application by them for £50,000 share capital or something of the sort. It is going to hinder the whole business. I rather think that the directors of this company would resent any such exhibition of the business affairs of the company before Parliament. They are not in a position to reply. Three or four days before a question appears on the Order Paper here, there is a notice of it in the Saturday Herald, the Sunday Independent or some other paper in relation to Connemara, Lettermullen or the Rosses. Deputy Anthony might ask why it was money was not being put up for Rushbrooke, where there is plant and an opportunity of getting in some business right off, and where it will not cost a huge sum of money to put up the various lathes and other instruments necessary for shipbuilding, ship-repairing, or anything of the sort. There is nothing in this Bill, so far as I can judge, likely to benefit Rushbrooke and Deputy Anthony might ask that question. Is that going to lead towards a better handling of the affairs of the company?

At one time I made out the cost of preparing an answer to a question put to me in regard to a matter of this kind and the information at my disposal showed that it cost about £25. It was not a political question; it was a question in regard to a census of companies or something of that kind. The answer to such a question probably would be that the subject was under consideration and the local comment on that will be "Yes, everything is being considered but nothing is being done." I would suggest to the Minister that if the business of this company is to be dealt with by question and answer in this House, it will not be helped in that way. If the business of such an organisation is to have any chance of success, it should not be canvassed in this House. Year after year in this House on the Vote for the Minister's Department, all the sins of omission and commission, the cost of the staff and perhaps the interest on the moneys and so forth, will be threshed out. The Minister will remember, from his own experience, that about two years ago there was a financial collapse in Great Britain. There was a shortage of money and nobody knew what was going to happen next day or from day to day. Two years ago it was possible to employ money at almost any price but to-day one might say that it is almost dirt cheap. It can be had almost at one-quarter per cent. Surely in a situation like that, it would be far better to start on a small scale and to let the directorate grow with the company.

I believe the company is far too big to start with. It would be far better to start in a small way than to push the money out to anybody who wants it and to think the more that is pushed out the better the results will be. I cannot understand, if the Minister sells his interest in this Corporation, what right or title he has to anything in it. I say that no matter what Government happens to be in office it would be a deplorable business, to have the affairs of a great corporation such as this made the sport of politics or criticism in this House. The management of the Corporation will be a source of considerable difficulty to the directors.

I do not see what there is in the Articles of Association which would give what we might call autonomy to the outside subscribers in the event of the Minister selling his shares. Under Section 9 he can sell all or any of the shares. There are seven directors, four of them, including the chairman, being nominees of the Minister. What is going to happen if the Minister sells his shares? I should say that the shareholders themselves would have the right of coming in and of keeping on the four directors nominated by the Minister if they so desired. Personally, I do not like changes in directors, but if the company is to continue, at any rate, those who are paying the piper have the right to call the tune. If they pay their money there is no justification in the Minister's retaining the right of nomination. One of these directors might die or, to use the elegant expression of the draftsman, by the effluxion of time, he might go out. Does the Minister nominate other directors then? Under the section, as it stands, the Minister is bound to nominate, but surely it would not be held to be good business that in these circumstances he should continue to have the right of nomination.

I think that in the first place £5,000,000 is too much to invest in an undertaking of this kind. The trouble is that I do not see the likelihood of a big public subscription, and then the undertaking starts off badly. Secondly, there will be enormous difficulties in the management of this Corporation. Even if there were only a million and a half involved, this is new work. It is, in essence, a sort of specialised work. Taking into account how a businessman's time is taken up at the moment, you would be asking far too much if you asked him to devote much more than a couple of hours a week to work of this kind unless there was very generous remuneration given to him. May I say that it is unlikely there will be any great desire on the part of business men for a position such as this with all the responsibilities and the criticism which it will entail? Thirdly, I do not think that this Corporation should be bound to invest money unless there is a substantial investment on the part of outside people in an undertaking. I would regard a substantial investment in one of the new companies as almost equivalent to the growth of the industry into a very much bigger concern. I forget the exact phrase in the Gospel—the Minister is very adept in these quotations—but I think it is that "where one's treasure is there one's heart lies." Much the same thing might be said in regard to financiers and industrialists who undertake to establish new business. I would prefer to see these companies grow from small beginnings. Our experience in the past has been that a big undertaking is less likely to succeed than a small undertaking which has the elements of growth within it. To that end I would suggest a smaller directorate, who will make a study of all phases of industry and make it a whole-time work.

I see a difficulty in expecting any businessman to leave what he has already got to take up something which is very largely an experiment. If it succeeds nobody will be better pleased than I. I should like to see business and industry in this country expanding enormously, but I doubt very much if an institution such as this will be very successful in this country. We have had only two examples of conducting industry—firstly, by private enterprise, and, secondly, on the Russian model. We have also had experience of municipalities engaging in business, and in these cases they had advantages which private enterprise had not. They had to supply something to a market in which nobody could compete against them, but even with that big advantage, it has not been found that municipalities who engaged in business were particularly successful. There were gaps of one kind or another. To ensure the success of this undertaking there should be freedom from blemishes or infirmities of this nature at this early stage. We should not in the early stages of the undertaking let these matters be discussed here. A short time ago, when we were discussing the Bill to extend the Trades Loan Acts, objections were put forward to having balance sheets published, but any shareholder of this company can get them. He is entitled to them. As a matter of fact, quite a number of them are published in the Press, particularly balance sheets of such institutions as banks. If there is to be that reticence on the part of the Minister in connection with ordinary companies, why should we have a single item of all this business exposed here? I do not think it is sound.

Mr. Dockrell

I should like to raise a couple of points that are not quite clear in the Minister's statement. Does he propose to float this £5,000,000 company, raise the capital, and then proceed to go out for something to invest the money in, or does he propose merely to get recommendations for this company, that they should assist certain industries, and then, as they require money, float their own capital? The Minister has mentioned how hard the directors will be required to work, and the close attention they would have to give to the business, under sub-section (5) of Section 11. Section 11 deals, apparently, with the obligations to furnish balance sheets to the Minister, and I do not think there will be very much labour involved for the directors in the furnishing of the balance sheets. I should like to ask what type of director the Minister has in view. Is he somebody who would be employed whole-time? If so, I take it he is going to be remunerated adequately. He has made no mention of what idea of remuneration he has in mind. There appears to be a certain number of undesirable features about this Bill, or at least features that might become very undesirable. Apparently this company will practically be required to undertake the underwriting on promotion of Irish industrial concerns that are brought to their notice. Some of those may be very big concerns, such as the cement industry. We are all familiar with the discussion that ensued on the cement industry, and I think it is perfectly plain that whatever happens the public are not going to get cheaper cement than they got heretofore. This Industrial Credit Corporation, or whatever title will be given it, will be practically a promoting company, or, as some people might describe it, a share-pushing company. Will the position be something like this, that a company will come along to this Industrial Credit Corporation, or whatever you like to call it, and the Industrial Credit Corporation will float their shares on the market? The company that they have promoted will possibly be manufacturing some type of goods which can be imported into this country, and to which the Minister will have been induced to give some measure of protection. I am assuming that this company goes on for some time, and has not been doing very well. It occurs to the Industrial Credit Corporation that this particular company that they have promoted must receive some fillip and they will accordingly apply to the Minister for a fillip in the shape of an additional tariff. When that additional protection is granted the company will commence to do well. Will the Industrial Credit Corporation unload its shares on the market, and will the additional protection that they got be withdrawn by the Minister at a convenient season? I suggest that that is one of what I might describe as the undesirable features of the too close association of the Minister for Finance and the Minister for Industry and Commerce with industries, where they have practically the making or the breaking of them in their hands.

There is another feature of this corporation's activities that I should like to suggest to the Minister. How far would this provide cheap and easy money in order to enable companies to be formed to compete with old-established institutions, or old-established companies that are operating in this country? I have not very much fear, in an equal contest, as to who will survive, but I do not know who is to be the judge as to whether the services rendered to this country by a particular branch of industry are adequate, or whether there will be cheap and easy Government funds available in order to compete with those industries that are already established. If it is going to be open to people to appeal to the Minister to start a particular industry in their particular section of the country I am afraid that the Minister, possibly against his better judgment, will be forced into a number of enterprises which he might be better advised to keep out of. There is another phase of this industrial activity that I do not know how far the Minister and the Government are taking note of. With all these tariffs, some of them desirable, some of them undesirable, some of them possibly necessary, some of them unnecessary, the cost of production along all lines is being forced up, and they are only increasing the difficulties of companies that will be started in the near future to manufacture successfully during the present difficult times. I should like to put that aspect seriously before the Government, as to how far they are increasing recklessly the cost of production of new enterprises, and also of the old ones, by the present policy that they are pursuing.

Mr. Moore

The question I am interested in has been touched upon by Deputy Dockrell, the question as to how far the new company will have responsibility for the creation of industries. Will it be expected to create companies for the development of particular industries which will become subsidiary to it? If I interpret the purpose of the Bill correctly the company will have that function. Wherever the Government sees an opening for an industry, particularly an industry of national importance that is not being engaged in by private enterprise, the Credit Corporation will have the function of seeing that such an industry gets under way. It will follow the line of endeavouring to promote a company to engage in that industry, and such a company may become subsidiary —not necessarily—to it through the investment by the Credit Corporation of a portion or perhaps all of the capital required. It would look to me as if such a function were a necessity, if the Credit Corporation is to fulfil the purposes it is expected to fulfil.

For instance, with regard to the production of minerals in the country, it is not likely that private enterprise will engage in that line of business. At the same time it might appear to the directors of the credit corporation that the opportunities, for instance, for sulphur mining in the country are sufficient to justify the existence of an industry of that kind, and that it would be both desirable and useful to create a company for sulphur mining and for the mining of some of the other minerals that are known to exist in the country. Questions of that kind will be asked by great numbers of people who are interested in the mineral development of the country, and by many who are interested in this Bill because of its potentialities for good. Another question that Deputy Dockrell, and, I think, Deputy Cosgrave touched upon that seems to me to be of importance was this: the difficulty that the directors of the company will be in, those who are businessmen, in regard to their relations to the Government. Take, for instance, such a question as that of financing a hire purchase business. It is known that there is an opening at present here for a company to engage in the business of hire purchase finance. I do not think there is any company at present engaged in that business. I can see difficulties arising there as between the direct representatives of the Government and the people who would be independent of the Government for the reason that the development of a hire purchase business in the country, the raising of money for it, would involve questions which really should be settled by this Dáil, and which should be matters for discussion by it. I would like to know whether the Minister can say, with regard to a question like that, whether the company would be entitled to consider such an investment on its merits without regard to its social reactions. It is obvious that you could have a finance corporation here for the development of hire purchase which would be a most attractive opening purely as an investment, but which the public might consider, or at least the best informed sections of the public might consider, would not be a desirable innovation from other points of view.

I can see difficulties of that kind facing the directors and I can see other difficulties as well—in this way: that the Government, I think, will have to take the directors into its confidence with regard to its intentions on such questions as tariffs. The directorate will naturally have to know when faced with the prospect that a particular industry would be successful, provided it was given fair protection, whether it can be taken that the Government will grant such protection and what degree of protection it will grant, in the event of the proposal receiving general approval. These are difficulties that are bound to arise with regard to any proposal, but in my opinion they will be small compared to the great advantages that the promotion of such a corporation as this must mean to the country.

Mr. Minch

This Bill—this piece of green paper—is really a Parliamentary prospectus that is being presented to us. It is a prospectus seeking a sum of £5,000,000 from the country. There is nothing in the prospectus to indicate, except in a very obscure form, what all this money is to be used for. If this prospectus was put on the public market it would be called "a bucketshop prospectus", but the fact is, that the Minister for Finance being behind it it escapes that name. There is no information presented to us. In the background there will be the Minister for Finance. He will be in an unassailable position. It matters not whether he controls half the shares in this huge undertaking or whether he only has a £1 share, for the simple reason that if he controls more than half the shares he can appoint four directors, while if he only owns a £1 share the four directors may not be appointed without his approval. Therefore, the Minister will be in a very strong position indeed.

This is really a big investment-holding company, and it requires tremendous expert training to carry on an institution of the kind. We have seen, during the big crises on the exchanges of the world in the last three years, that some of the most cleverly run and most shrewdly administered concerns have gone down simply because they went into a business much bigger than they had previous experience of handling. From this £5,000,000 company, of which the Minister in the background will be in complete control, numerous offshoots are to take place, interlocking with this holding company. Directors are to be appointed. I presume they will walk in for a couple of hours in the afternoon on two or three days a week, or perhaps on every day of the week. They will look into, investigate and govern the decisions taken by this huge show. The Minister for Finance will be in his office, and he will have to be approached and asked whether he approves of this, that or the other, because the company will not be able to do anything without his approval. There is nothing before the Dáil to show what is going to be done with this £5,000,000—as to whether, say, the cement industry would require a capital of £350,000 or £500,000; whether technical experts would be engaged, whether the board of directors in connection with that particular undertaking would be men of long experience, men whose training and experience would be an assurance that the interests of the shareholders would be well looked after, and that the balance sheet published was prepared on conservative lines, and that an honest dividend was paid. If the Dáil had such information before it, it would be for Deputies to say whether it was worth considering and whether it was worth voting money for this holding-company.

We could come along and then go into the question of the £1,250,000 for sugar beet. But we have nothing to go on in the case of sugar beet for the simple reason that the £400,000 capital to produce 20,000 tons of sugar in Carlow is and has been nothing of a business nature whatever. We could take each separate item under which this huge industrial or commercial undertaking of £5,000,000 would reasonably be able to get the confidence of the House for this money if we had, as close as possible, the facts and figures potentially in the business which this company is to carry out. I do not know much about this Bill. There is nothing here which can give ground on which one could get up and make a constructive effort at criticism. It is just so many paragraphs in print, each of which works in towards the Minister for Finance. I have no objection to this working-in towards the Minister for Finance, for it is an important thing if £5,000,000 is to be floated that the representatives of the people who are in possession for the time being should naturally have a watchful brief on behalf of this House. I say that because there is always the danger here that when this flotation is made a big lot of it will have to be taken over by the Minister for Finance. It may not be so but at the same time it may, and therefore there may be a deficit of a very big nature.

Underwriting is a big business in itself. Now £5,000,000 is to be underwritten by this new company. I may be wrong but that is how I read it. I am not sure. The flotation will be fully taken care of by the Government if the money is not fully subscribed. Then there will be other items. Will these be written down as preliminary expenses? The next matter is the underwriting of the other or subsidiary companies which may be floated, and not only these but the holding company. If the Minister is not able to get the financial support that he wants, will he not give an opportunity to others at any rate for the subsidiary companies that may be floated? It is very hard to quite understand a huge thing like this, without any real sound statement. I am only feeling and groping my way. I hope when the Minister comes to reply he will go more fully into details. It is essential that we should know where this enormous sum of £5,000,000, which may not be required, is to be raised. Perhaps only £1,500,000 may be required; for the board of directors and those behind them may think that the majority of the companies to be started are not feasible. However, in the meantime, large sums of money may be required. What are they to be used for?

Mr. MacDermot

I only saw this Bill for the first time a few minutes ago, and I have not the advantage of having heard the observations of the Minister for Finance on it this afternoon. I will confine my comments on it to a very few words. In principle I am glad to see that something is being done to make it easier for Irishmen to invest in Irish industrial enterprises. We know that there has not been for the Irishman who genuinely wishes to invest money in Irish enterprises a sufficient range of such enterprises in which to invest. We know that there is a particular need for small industries in this country, and these are the industries which cannot float capital issues successfully. It is in such cases that this Bill may be of the greatest advantage.

I should like to see the shares of this company held, as far as possible, by the public and not by the Government. I should like instead of the shares being held by the Government to see them held by individuals. What I really wish to point out is that the prospects of the company are very much impaired by the existence of the economic war. If the Minister for Finance really wishes to make this scheme a success, both as regards getting capital into it at the start and also as regards getting industries that are going to be helped to succeed, the first thing to which he should devote his attention is to induce his colleagues in the Executive Council to make a settlement of the economic war. Another matter to which he might also attend with advantage is the very considerable alarm which is being caused in the country at present to people with any experience of business or with anything to lose by the kind of propaganda—ignorant, stupid and violent propaganda going on throughout the country with regard to our banking system. I am perfectly certain that the Government do not believe in this propaganda or approve of it. It is receiving some encouragement however from irresponsible elements in their Party and is a serious obstacle to raising money from individual citizens for this company and to the success of such enterprises as this Bill may bring into existence.

Mr. Fitzgerald-Kenney

I have got some little trouble in quite understanding the finances of this Bill. I see, of course, in the Bill that there can be a capital of £5,000,000 for what I would call the ordinary shares, and that there can be debentures up to, as far as I can gather, another £5,000,000. Therefore, in fact, there may be altogether £10,000,000 at the disposal of this body. I do not see anything in the Bill, nor do I gather from the opening statement of the Minister, how much of this £5,000,000 is to be floated originally. Are we to have a flotation of the whole £5,000,000, or is it to be by smaller sums, and when is that flotation to take place? A company is to be formed and £15,000 is to be expended in the formation of the company. I see that certain persons are to float a company, but I am at a loss to understand how it is to be done. Who will they be? Will they be nominees of the Minister? Who will take the original work of flotation, and for how much is the original flotation to be? I presume the Minister has all that information. Of course it would be very difficult for the Minister or anybody to know how much the public will take? Suppose there is a flotation. Is the Minister to outline how a large company like the sugar beet company and such companies that are practically public are to be entirely financed by this company? The first issue will have to be probably very large, and I would like to know if that is not taken up, is the Minister going to get the sum of money necessary to float the company and to have it invested there by him in ordinary shares? On what terms does he expect to get that money? I have read Section 6, and I see by that section that any money that the Minister wants shall be charged upon the Central Fund. It must be borrowed from the Minister in some way. The Minister is to produce out of the coffers of the State probably one or two million pounds. There is the power in the Minister to appoint directors. Then the Minister envisages that at some time the State will have considerably more than two or probably three million pounds invested in that company. From where is that money to come? That money cannot be saved out of the ordinary revenue. Is it the intention of the Minister to float a loan. I see that he may bargain with the Bank of Ireland, and the Bank may advance money to him; but at what rate and on what terms is he to borrow? We have not been told any of these things by the Minister. It may involve the State in a very serious loss. Suppose you put up this £5,000,000, or a large proportion of it, the Minister will have to borrow it at a very considerable rate of interest, because it will be a long term loan. Suppose there is not a demand for the money which the corporation may anticipate there will be. Suppose some of their investments do not turn out happily, and there is money lying on their hands, how are they then going to invest it? At what rate of interest are they going to advance their money to various companies?

As regards the underwriting, there may be a very considerable loss. Underwriting is one of the biggest gambles in finance. You undertake to underwrite a company, getting a certain percentage profit on your underwriting undertaking. If what is underwritten is all taken by the public, everything goes well, but you may underwrite a flotation which the public do not like and you may have these shares on your hands and, instead of a considerable profit from underwriting, you will find that the underwriting has been a loss. It requires persons very skilled in these matters to undertake these financial arrangements. As the Minister stated, there are practically no underwriters in this country. There are very few persons with experience of how underwriting should be done, what risks a skilful underwriter will run and what risks he will not run. It seems to me that if this starts off with an immediate £5,000,000 you will have more money than you will want for a considerable time. I hope that will not be the case, but that is my belief. That money will be on your hands and, though you will not be completely prevented from investing it outside, at the same time I think you are likely to have the bulk of it lying on your hands with nothing else to do except to put it on deposit receipt in a bank.

Seemingly your principal object will be buying shares. Of course, you can invest it in other ventures if you like. I have no doubt there will be subsidiary objects. It seems to me this business may turn out very unprofitably indeed, unless it is worked very gently and very quietly at the start. It will require to become a great success from the start, taking no risks. I presume the object of the Minister will be that the ordinary Irishman, or woman, who desires to invest money in Irish industry will not make a choice individually but will say: "Here is the Industrial Trust Company." If it has a board of directors in which the investor has confidence, the investor will decide to lodge his money with that company. He will come to the conclusion that the company has experts who would know much better than he would how money ought to be invested. Suppose this board makes mistakes in the beginning and money is lost, and suppose it does not pay a good dividend to the shareholders, the public may lose confidence in it. If the Industrial Trust Company does not pay a substantial rate to the shareholders, they will be very annoyed. If there is a poor rate of interest you may be certain that will do a great deal of harm to the promotion of Irish industries.

This is a two-edged sword. If it is successful it will be a help to Irish industry, an enormous help; but if it is a failure, or not an outstanding success, it will do a tremendous amount of harm to Irish industry. If a great investment company with Government backing is not able, by its investments in Irish industry, to make a profit, the man in the street will say: "If that body is not able to make a profit, there is not much hope for me if I invest my money in Irish industrial enterprise." I hope the Minister will succeed in getting a board of really competent men in whom the public will have complete trust. I hope the board will go on very slowly at the commencement, taking no risks. It will have heavy responsibilities upon its shoulders, and it will have the possibility of doing harm as well as good to Irish industry. I hope when it is established it will work in such a manner that it will do good and not harm to Irish industry.

Mr. MacEntee

One thing has emerged clearly from the debate, and that is that the need for a company such as it is proposed to take power under this Bill to establish is widely and generally recognised. It is to the details of the project which we are submitting to the House that criticism has been principally directed. I think in that connection I had better deal with the points raised by Deputy Cosgrave. The criticism might be reduced to two heads, first as to the figure at which the capital of the company has been placed, and, secondly, as to the provisions in the Bill which will, to some extent at any rate, subject the operations of the company and the conduct of its directors to the scrutiny of the House. On the question of the capital of the company, this has been placed at £5,000,000. It has been clearly foreseen that the undertakings which the company, even in its initial stages, will be called upon to finance, are of considerable magnitude. I referred to some of them. There is the new sugar beet undertaking; possibly, though not probably, a new cement undertaking; possibly, also, but not probably, proposals for the reestablishment of the paper-making industry; possibly, and probably, the establishment of an undertaking to manufacture industrial alcohol from vegetable produce, and probably, also, an undertaking to develop the mineral resources of this country. Now, whether the company will be called on probably, or possibly, to undertake the financing of any one of those projects, they are all contingencies for which we must, in submitting the Bill to the House, make provision.

The new sugar beet undertaking will possibly be floated for something like £2,000,000. The cement manufacture will require about three-quarters of a million; the paper undertaking about half a million; industrial alcohol about half a million, and mining about £1,000,000, making up something like £4,500,000 projects which the company might have to undertake. And this by no means exhausts the possibility of industrial development in this country. We must leave a considerable margin, therefore, for new projects which may, from time to time, be submitted to the Government, and by the Government submitted to this House, and for the underwriting of which, in due course, the Industrial Credit Company may have to undertake responsibility. Therefore, I suggest, that in all the circumstances, the figure of £5,000,000 which has been taken as the ultimate capital of the company is not excessive. Because the capital of the company has been fixed at £5,000,000 it is not to be assumed, as Deputy Fitzgerald-Kenney and some of the other speakers have assumed, that the whole of the £5,000,000 will be offered to the Irish public immediately. Deputy Fitzgerald-Kenney himself has given us some very sound reasons why that should not be done: that it may be somebody would have to take responsibility for the loss of interest which those who might subscribe that money might suffer during the period it was lying idle and unused in the account of the company. Accordingly it is not the intention of the new company to ask the Irish public to subscribe this capital at once. The issue of shares will be made, as I think I clearly indicated in my speech in introducing the Bill, from time to time as they are required by the company for the use of the company.

While I am on that point, I might possibly go a little further and deal with some of the criticisms which, I think, were made by Deputy Dockrell. He asked whether the company would be required to undertake the underwriting of all concerns brought to its notice. The first point that arises there is: brought to its notice by whom? If it is an undertaking which is brought to its notice by the Government under the provisions of a statute passed by this House, the Government would naturally have to be responsible for the underwriting of any shares in that company which the Government felt should be offered to the Irish public. I want to make that point clear, and I also want to make this clear, that with that reservation the company is going to be in an absolutely independent position to deal with, and to consider on its merits, any project that may be submitted to it. Therefore it will not be bound to undertake the underwriting of all concerns brought to its notice. I said the company would be bound to undertake responsibility for underwriting of certain undertakings that might be brought to its notice by a statute of this House. One of these, for instance, would be the sugar beet undertaking. I do not wish to commit myself, definitely, to a statement at the moment in relation to the proposed sugar beet concern. But this is how I contemplate the financing of that concern should be undertaken. An issue of shares will be made to the public. The amount, first of all, will be very much as already indicated. The issue of shares will be made, and of that issue the Minister for Finance, under powers conferred on him by statute of the Oireachtas, will take up a certain proportion. The balance will then be submitted to the public, but as it will then be the definite policy, not merely of the Government but of the Oireachtas which passed the Act, to establish a sugar beet industry in this country, the Industrial Credit Company, to be floated under this Bill, would then be bound to underwrite that portion of the issue which was offered to the general public. Now, I do not think there can be any objection to that. Bearing in mind that the Minister for Finance has provided, in the first instance, portion of the capital that will be required for this new undertaking, the general public will be asked to subscribe. The public who subscribe to the new undertaking will have that fact in mind. When they do subscribe they will take the risk, equally with the Minister for Finance and the Government, involved in such an undertaking. Bearing in mind that the Government feels that the new project is one necessary and desirable in the best interests of the country, the directors of the sugar company will naturally be concerned to make the new undertaking as great a success as may be, and, therefore, the new undertaking will have every possible opportunity of succeeding. That fact will, I think, to some extent, counteract the hesitation that investors might normally feel if asked to assist in underwriting an issue of a general investment house which would have as one of its chief functions the underwriting of issues made in the circumstances that I have indicated.

Deputy Dockrell also asked will a company come along to the new corporation, and will they put shares on the market. Naturally, any person who thinks he has a feasible project, if he cannot secure proper backing for that project in any other way, will come to the company and the company will consider that proposition on its merits, and on its merits only, unless it is one of the particular type to which I have already referred. Whether it be one of the particular type to which I have already referred or whether it be a project initiated purely by private enterprise, it will be the general policy of the company, in accordance with what Deputy MacDermot has already said, to place, so far as it possibly can, the issues of any undertakings which it may underwrite in the hands of the general public so that as large a section of the general public as possible may be interested in securing the success of the new ventures.

If any one of these ventures is not panning out exactly as it was hoped it would, Deputy Dockrell asked would it be possible for the Industrial Credit Company, in order to give a fillip to its own bantling, to go to the Minister for Finance or the Minister for Industry and Commerce, as the case might be, and ask for a tariff, so that the subsidiary company might get the necessary fillip and that the Industrial Credit Company might have an opportunity of unloading its shares on a guileless public. I can assure Deputy Dockrell that any proposal of that sort would receive very short shrift from any member of the Executive Council and, particularly, from the Minister for Finance. Let the Deputy throw his mind back to the debates that took place in regard to the imposition even of the most innocuous tariffs—tariffs that everybody admitted would be good and beneficial because of the new industries which might be easily established or the existing industries which might be easily preserved and developed with their aid. Let Deputy Dockrell consider the amount of Parliamentary time necessary to get the simplest tariff through this House, apart altogether from the stream of criticism it has to withstand, and he will realise, as everybody will realise, that no Minister for Finance would place himself in the position in which he would be placed if, in addition to all the criticism on normal grounds which he might be subjected to, he would also have to face criticism on the hypothesis to which Deputy Dockrell has given utterance. How could any Minister for Finance face the Dáil if he felt he was to be subjected to charges of that sort, that he was, in the phrase of Deputy Minch—a very ill-applied and ill-chosen phrase—going to assist the Industrial Credit Company in performing what would be virtually the functions of a bucket shop. No Government would venture to do that and remain in office for 12 months, because public opinion would be outraged by it. No matter how rigid Party discipline might be, I feel that there would be a sufficient number of honest, public-spirited men in any Party to overthrow the Government or the Minister responsible for so outrageous a proposal as Deputy Dockrell outlined.

On the question of the definite control which the Minister for Finance proposes to exercise in the initial stages of this company and the limited control which, under Sections 10 and 11, he will continue to exercise even after he has divested himself of a majority holding in the company, I should like to say a few words. This is a problem of extreme difficulty. I referred, in introducing the Bill, to a previous venture by our predecessors— the Industrial Trust Company of Ireland, an undertaking in which a not inconsiderable sum of public money was invested. In the flotation of that company, the Government of the day divested itself, so far as it could divest itself, of all but the barest responsibility for ensuring that the duties of the directors to itself as a shareholder in the company would be fulfilled. There, you had a company in which the directors were given the fullest possible autonomy. Yet, looking at its history, nobody can say that that experiment was a success. Those of us who have studied the inner history of it might be driven to the conclusion that one of the reasons that company failed was that so great and far-reaching a measure of autonomy was conferred on the directors and that an opportunity was not given in this House to scrutinise, from time to time, the operations of the company. Accordingly, it seems to me that experience here shows us that it is unwise—even if it were expedient, I do not think it would be justifiable where so large a sum ultimately is involved as five million pounds or, as Deputy Fitzgerald-Kenney suggested, possibly ten million pounds, with debentures —that we should take up the same attitude towards the Industrial Credit Company as was taken up towards the Industrial Trust Company of Ireland. Therefore, we feel that since the Minister for Finance must, in the early stages at any rate, subscribe almost all the issued capital of the company, there should be given to the Dáil, from time to time, on the Vote of the Minister, an opportunity, if it so desires, to call the Minister to account for the actions of his nominees on the board of this company and that those who accept the responsibility—admittedly, heavy responsibility, carrying with it, of course, commensurate remuneration—should be made to feel that as they, possibly, will not be much subject to that great controlling influence which Deputy Cosgrave referred to when he said: "Where one's treasure is there one's heart is also," at any rate, they will know that what they do will be subjected to scrutiny, possibly of the most searching kind. As we are entrusting to individuals large sums of public money to administer, those individuals must be made to feel their full responsibility for the administration of these moneys. That is why we have provided here in Section 11 that the company shall furnish not merely a balance sheet and a profit and loss account, but also, under subsection (3), shall furnish to the Minister on demand such explanations as the Minister shall think proper to require in respect of any balance sheet or profit and loss account. Naturally, the explanations which the Minister might require might extend to every activity of the company which was reflected in the balance sheet or in the profit and loss account presented by the company. On the other hand, it is not intended that the Minister will exercise a day-to-day supervision over the board. The board will be given the fullest discretion and, as I have said, full responsibility will be placed on them and they will have to accept full responsibility for the results of their action, with the knowledge that what they do or what they do not do may be criticised here in the House, and that the Minister will have to defend or condemn in the House what they do or do not do. I do not think there is any provision or any principle which we could substitute other than that of compelling the members of the board themselves to make heavy investments in this company.

Deputy Moore asked will the new company be responsible for the creation of new industries, and he went on to say that, in his opinion, the creation of new industries should be an essential object of the company. I should like to make it quite clear that that is not the function of the company. Its function is to finance new undertakings, when they are submitted to it, or existing industrial undertakings, but only if it is satisfied that the undertakings have a reasonable prospect of success and if it is satisfied that they will, if given a fair chance, show that they are suited and necessary to the needs of our people. But the creation of new industries, as apart altogether from the establishment of industrial undertakings to carry on existing industries is, I submit, first of all, something for private enterprise and, if private enterprise fails, then, as has so often been stated by the President and other members of the Executive Council, it is for the Government. But this new Industrial Credit Company will be what its name implies—a credit corporation, something which will provide long-term credit for industrial undertakings. It is not contemplated that it should have at its disposal all the specialised knowledge that would be necessary to start new enterprises in this country. That specialised knowledge would have to be provided, in the first place, by private enterprise and, if private enterprise does not rise to the occasion, then the Government will have to step in, as it is stepping in with regard to the beet sugar manufacturing industry.

Mr. MacDermot

If I may be permitted to interrupt the Minister for a moment, may we take it that this company will only assist undertakings which, in addition to other qualifications, can be relied upon to be thoroughly well-managed? The question of management is, of course, enormously important.

Mr. MacEntee

Yes. That point was covered, I think, by the remark I made when I said "undertakings which had a reasonable prospect of success." I do not think that any undertaking, no matter what the other circumstances might be, would have any prospect of success unless it were well managed. Deputy Moore also said that the company will have to know what is the Government's policy in regard to tariffs. It is not the intention of the Government to take this concern or any other concern into its confidence in regard to tariffs. The company, when enterprises are put up to it for consideration, will have to examine them and consider them and determine its course of action in the light of the facts as it sees them at the moment. For instance, in a case like that of the beet sugar industry a Bill will quite clearly set out the intentions of the Government in regard to a tariff upon imported sugar. Possibly, in the case of industries which could not succeed unless a tariff were guaranteed for a definite time, the promoters of the industry, before they approach the Industrial Credit Company at all, will have gone to the Minister for Industry and Commerce. He will have consulted his colleagues and made up his mind, first of all, as to whether the industry is one which could be assisted by a tariff and as to whether a tariff should, in all the circumstances, be imposed. Having secured the assent of the Executive Council to it, he will have informed the original undertaker in the matter what his intentions are. Armed with that information, the undertaker will go to the Credit Company, if he must, and secure from them the financial assistance he requires. In that way, possibly, the Industrial Credit Company might be aware of the intentions of the Government in regard to tariffs, but there will be no formal communication by the Government of its intentions to the Industrial Credit Company except in so far as it is expressed by a statute of the Oireachtas. I should not like it to go out to the public, however, that if the new Credit Corporation makes an issue of the shares of any company, no matter what, that ipso facto because the issue has been made the public are to assume that a tariff either will be granted in regard to this particular industry or maintained in regard to the industry. Obviously, neither a government which, at most, is in power for five years or for the period from one Dáil to another, nor an industrial credit corporation with no responsibility whatsoever to the Dáil except in the indirect way I have indicated, would be able to give an undertaking with regard to the future fiscal policy of the country.

I was rather sorry to hear the speech of Deputy Minch. I think I would not be unfair if I were to say that of all the speeches which have been made on the Bill it is the one which has the least justification and the one which has been the least helpful. I think it would be a terrible thing if it were to go out to the public that the proposals submitted here in this Bill, which the Deputy quite erroneously described as a prospectus, were to be called a bucket-shop prospectus. We are very anxious to attract the money of private investors into this company. We are anxious, as I indicated in my opening statement, as soon as the Irish public show that they are prepared to shoulder the responsibilities and the risks involved in an undertaking of this kind, to transfer that undertaking to them. I think that one of the things which would defeat that very desirable object, an object to which Deputy MacDermot gave his benediction in what he said on the Bill, one of the things that would impede us in doing what we think, with possibly every other section of the House, ought to be done in this matter, would be a statement such as was made by Deputy Minch. I should like people to realise that this is not a bucket-shop enterprise; not a catch-penny enterprise; that the Government are prepared, if necessary, to put every pennypiece of the £5,000,000 into it, because somebody must accept the initial risks in an undertaking of this sort, so that the deficiency which has hitherto existed, and which has been universally admitted in this House to have hitherto existed, in our financial organisation, will be repaired, and that Irish industrialists will have here for new Irish enterprises, or for the extension of existing Irish enterprises, the same facilities as are enjoyed by industrialists elsewhere.

Mr. Fitzgerald-Kenney

May I just put two questions to the Minister? I should like to know how the Minister proposes to raise this £5,000,000 or whatever may be necessary? Is it to be done by Treasury bills or how? It seems to me to be a rather difficult problem. I do not see how it can be raised by Treasury bills or short term loans, if you are going to make a permanent investment. Another thing I should like to know is this. The Minister said that if any Act was passed in this House establishing a scheme then it would be absolutely essential for the company to invest in the scheme. Take the one item which the Minister says must be financed by this company, that is the scheme for the sugar beet industry. It is admitted on all sides that the sugar beet industry cannot be carried on profitably unless it is heavily subsidised, it must be heavily subsidised. Suppose the company came to the conclusion that the Government were not subsidising sufficiently the beet undertaking and that, therefore, it must be a failure, will the company still be compelled to invest in it? Remember, they are not investing merely Government money; they will be also investing for private persons.

Mr. MacEntee

As to the question how the money is to be provided, I do not think that it is necessary for me to commit myself to raising this money in any particular form. Naturally, as the Deputy says, since the investment will be a long-term one, if the money has to be borrowed it will have to be borrowed upon long-term conditions.

Mr. Fitzgerald-Kenney

Can you do that without another statute?

Mr. MacEntee

Normally it would not be raised on Treasury bills, but I do not wish to commit myself to an undertaking if the company required money from time to time, and it was not opportune to float a loan, that I should not provide money by Treasury bills, if necessary. You cannot be issuing loans in dribs or drabs of a quarter of a million, a half a million or one million, as required for temporary short-time financing. If it is necessary Treasury bills will be used, but, ultimately, however the money is provided, it will be provided by long-term loan. As to the other question, as to what this company will be expected to do in regard to undertakings established by any statute of this House, I do not anticipate that any of the very great difficulties which the Deputy suggested would arise in that connection at all, because, naturally, when the Bill establishing a new undertaking is submitted to the House the Minister responsible for it in the first instance will have to disclose to the House what he anticipates will be the total sum required for the new undertaking; will have to disclose the amount which he proposes to invest in the new undertaking, and the House will have an opportunity of saying what amount of the capital it is anticipated will have to be taken up either by the general public or the underwriting house. That matter will be discussed and debated here, and the House will probably have to come to an agreement as to what will be a fair proportion in all the circumstances. The issue will then be floated. As I have indicated, the general public will have been made aware of the fact that the Government intend to establish this industry and the industry will have to be established upon such conditions as in the judgment of this House, which is fairly well representative of the general public, will give it a fair or reasonable opportunity of success.

Mr. Fitzgerald-Kenney

In the judgment of the majority of this House, which is sometimes wrong.

Mr. MacEntee

In that case, in the judgment of the majority of the country——

Mr. Fitzgerald-Kenney

Which is sometimes wrong also.

Mr. MacEntee

——will give the particular company a fair opportunity for success. Therefore the new Industrial Credit Company will only be asked to undertake what would be a fair commercial underwriting risk for any company asked to underwrite the shares of such an undertaking. There is nothing in this Bill guaranteeing anything in regard to the shares of this undertaking; it is not intended that there should be. It is not intended to relieve investors who desire to participate in a venture of this sort from any of the risks which would normally attend such a venture. So that, as I said, if we are asking them to undertake what would be a fair commercial underwriting risk, we are not imposing any undue obligation upon private investors in a concern of this sort.

Mr. Minch

On a point of personal explanation. The Minister for Finance said that I called this a bucket-shop prospectus. I did not. I did imply that if the issue was made by a financial house that perhaps it would be looked upon as a bucket-shop issue. I simply and solely expressed that opinion without implying that I looked upon this as a bucket-shop issue. I should like to ask the Minister will it be the policy of the new company to help in the decentralisation of industry, so as not to have all the new industries that may be helped established in Dublin and in Cork, and none in the country.

Mr. MacEntee

I am not prepared to commit myself to a statement as to what the policy of the new company will be, but those who will be the directors are well aware of the general desire, not merely of the Government, but of the House and of the Oireachtas, to decentralise and distribute industry in this country.

Mr. MacDermot

Is the Minister considering the possibility of enticing investors to invest in this company by giving special relief in the matter of income tax and sur-tax?

Mr. MacEntee

I do not know if the Deputy remembers that in the Finance Act of 1932 there is a provision which would naturally apply to this matter.

Mr. MacDermot

I meant something much more solid than that.

Mr. MacEntee

That is solid enough.

Question put and agreed to.

Committee Stage ordered for Tuesday, July 11th.