In connection with the other Bill which has been before us, the Minister very properly set up an advisory committee. This is a measure which may have very large developments. Yet, the Minister is going to act entirely on his own initiative. In view of the importance of the measure, would it not be well to have a consultative committee?
In Committee on Finance. - Industrial Credit Bill, 1933—Committee Stage.
SECTION 1.
Question proposed: "That Section 1 stand part of the Bill."
Under the other Bill the consideration will be whether certain stocks and shares are suitable for the investment of trust funds. That Bill has nothing to do with the question whether it is desirable that the Government should undertake, say, the financing of a sugar beet factory. For instance, the question might be whether stock issued by the Dublin Corporation would be suitable for the investment of certain funds under the control of the Government.
I am not at all sure that the issues here are not very much larger and of greater importance. It has been pointed out that the money involved may amount to £5,000,000. In none of the issues referred to by the Minister will that sum be involved.
Question put and agreed to.
Section 2 agreed to.
Question proposed: "That Section 3 stand part of the Bill."
Can the Minister tell us what is the relation between Section 3 and Section 6? Section 3 apparently limits the liability. The immediate limit is £15,000.
Flotation costs.
For flotation only.
The amount of the liability is, apparently, unlimited in Section 6. If there is a limitation, where does it come in?
In the Schedule.
It is in 2 (e) of the Schedule.
Suppose debentures are issued? As was pointed out on a recent Bill, debentures are not shares and a limitation of the share capital would not be a limitation of the whole liability.
There is a paragraph in the Schedule dealing with the issue of debentures but this section does not give the Minister any power to take up debentures.
Question put and agreed to.
Sections 4 and 5 agreed to.
SECTION 6.
Question proposed: "That Section 6 stand part of the Bill."
I notice that the Minister can only pay these moneys out of the Central Fund. Is that a desirable limitation? The cost must fall on the taxpayer.
That is the usual procedure and, in fact, that is the only fund out of which I can pay anything. There is only one fund—the Central Fund.
It means that the liability falls on the taxpayer.
And the plums under Section 7 fall to the taxpayer too.
Question put and agreed to.
Sections 7 to 10, inclusive, agreed to.
SECTION 11.
Question proposed: "That Section 11 stand part of the Bill."
I see a very great initial difficulty on the part of the company in issuing its first balance sheet. It will have taken shares in various companies, and its own balance sheet will be in a very peculiar position unless it estimates the value of its various holdings at par. Some of the undertakings will only have just started. Some of them will have committed themselves, in one way or another, to certain flotation expenses. I should say that a balance sheet drawn up by a conservative firm of auditors is bound to present a most unfavourable appearance in the first year. That may give rise to considerable apprehension. So far as I can judge, no provision is made for that in the Bill. If a large holder of shares should die during the year, the market value of the shares would be affected unless the Industrial Credit Company took them up. The Minister can see how difficult the position would be in that connection. The shares would be likely to fall. The company would be well advised to get them as cheaply as possible. If they buy them for 16/-, 17/- or 18/-, or at any figure under par, and their accounts are made up on a given date, obviously the remainder of the shares must be charged in the balance sheet at the same value. The Minister can get that information from the Revenue Commissioners. When a man dies, the market value of whatever shares he holds is taken into account. I do not expect that that eminently respectable method will be departed from when the auditor comes to make up the accounts. The first year —indeed the first three to five years— are likely to be very difficult in the life of this company. I do not know that there is any way out except one— that until earnings commence to come in, there should be a loss shown. I do not know whether the Minister has considered that point. Even if there are great expansions in certain directions, and if the company is interested in prosperous undertakings, in the normal course the companies will be in their beginning years.
There is no company in which they are likely to be interested in respect of which there will not be a beginning year. Some means ought to be found to deal with that position. I have not considered the matter other than in the course of the discussion here, but there may be a very serious presentation of affairs—possibly more severe than just, taking everything into account. The auditors must save themselves. They must give a truly accurate audited account, and, in consequence, I see very considerable difficulties in the initial years. You cannot have a reserve fund in the beginning in a case of this sort, but it does come down to this, that the bigger the sum involved the bigger the sum, it is more than likely, that will be shown on the wrong side of the balance sheet, and, even though the auditor represents a correcty audited account, it may not give a perfect picture of the whole situation. I want the Minister to understand that, when he said, to-night, his successor would be responsible, he is probably making an unfortunate bed for his successor to lie upon in that connection.
The Minister, when anwering my criticism earlier about the balance sheet, pointed to Section 11 and to the matters that would have to be disclosed, and he mentioned that anxiety would probably only be displayed in the balance sheet of the company if people thought there were some doubtful items, or that the company was not doing as well as it might. That is precisely the point to which I wish to call attention, because I am not clear if this company is to be a public company, under the Public Companies Acts, and if it will be incumbent on it to furnish and publish accounts to the shareholders. The Minister read out triumphantly Section 11 to me, but, when I read it, I see that it sets out:
"The company shall, within ninety days after the end of every accounting year, furnish to the Minister......"
That does not say that these matters shall be furnished to the shareholders. If he transferred this section into the articles of association in the Schedule, I could understand the matter, but it occurs to me that, if there is any doubt about the trading of this company, very considerable pressure will be put on the Minister not to hand out all the information for which he can ask under Section 11, and that that might have a very damaging effect on the company, or some of the subsidiary companies. Personally, I should like to know what details the shareholders are going to get, because it is quite clear by Section 11 that, apparently, the Minister can get practically any particulars he likes from the company, and the company directors, who are in default with their returns to the Minister, will be fined £5 for every day during which the default continues. This looks as if the company directors were going to have two masters, and I do not know which they are going to serve. It is, however, clear that they will have to serve the Minister, under Section 11, but what I want to know is whether it is equally clear that the shareholders are going to get the information that the Minister is going to get, or, if not, what particulars they are going to get. I should like to ask the Minister if he does not think that Section 11, or some of the powers conferred by that section, should be put into the articles of association, in order that shareholders might be in a position to appreciate what the balance sheet was and what their holding in the company was worth.
I think that it might possibly be better to deal first with the point raised by Deputy Dockrell. He asks if this company is to be a public company. I think the Deputy is under the impression that it is not going to be a public company floated under the Companies Acts. I think that that was really the hypothesis on which he based the statement which he has just made. If that be the case, I should like to refer him to Section 2 of the Bill, which states:
"Immediately upon the passing of this Act the Minister shall take all such steps as appear to him to be necessary or desirable to procure that a limited company (in this Act referred to as the company) conforming to the conditions laid down in the Schedule to this Act shall be formed and registered in Saorstát Eireann under the Companies Acts, 1908 to 1924."
Therefore, the shareholders in this company, irrespective of what may appear in the Schedule of the Bill, will be entitled to all the information that shareholders can procure at the general meetings, or at such extraordinary general meetings as may be called for the transaction of special business. They will be in exactly the same position as the shareholders in any other company, with all the rights and privileges that such shareholders may have, including, amongst other things, the consideration of the accounts and balance sheet, and the reports of the board made to them in the ordinary way at the ordinary general meetings of the company. It seems to me, therefore, that a great deal of what was said by Deputy Dockrell loses its point the moment that fact is appreciated.
On the question raised by Deputy Cosgrave, it may be, and I am quite prepared to admit that the probabilities are, that the early years of this company will be difficult ones, and that the balance sheet may present an unfavourable aspect and that the auditor, who will be a person of standing and a competent person, a person of honour and repute with a professional reputation to lose if he does not discharge his duty as an auditor properly, will present a true balance sheet. I think that is the sort of balance sheet he ought to present and that it should be clear from the balance sheet, which, under Section 11, has to be presented to the Dáil, what the exact position of this company, sound or unsound, favourable or unfavourable, happens to be from year to year. I think that, if Deputy Cosgrave will consider the matter, he will agree that, while it may be true that the balance sheet may, in its early years, be unfavourable, nevertheless, the House, which has accepted responsibility, or which has given to the Minister power to float this company, will appreciate the circumstances and that the general public will appreciate them also, and that, in any criticism which the House may make of the Minister, because of the actions of the persons for whom he has accepted responsibility, it will bear in mind the fact, to which Deputy Cosgrave has referred, that the early years of the company are bound to be difficult ones.
It may mean that the Minister will possibly have to stand a good deal of uninformed criticism, a good deal of unfair criticism, but I think that whatever disabilities the presentation of a fair—and by that I mean an accurate—balance sheet imposes on the Minister, and whatever reflections it may seem to cast on the directors, and will be cast on the directors by ill-considered persons, because of the condition of affairs manifest in the balance sheet, it is desirable, and I think that any other course would be unthinkable, that the Dáil and the general public should know, from year to year, the exact condition of the affairs of this company. It is for that reason we are taking no powers in the Bill. There are no provisions in the Bill that will enable us to cloak or conceal in any way what the result of the company's activities has been.
The Minister will recollect that on the occasion of the report of the engineers who were appointed to consider the plans in connection with the electrification works at Ardnacrusha, they made out a very detailed specification of the cost. They went further. They made provision for a normal gradual development and in their estimates they fixed upon a given year. I cannot exactly remember the time. I think it was five years from the start or three years from the inauguration of the general working of the plant. They made allowance for a certain expansion as from the date when the works would be taken over up to, I think, 1932. I am not exactly clear about the date but, anyway, it can be seen in the reports. These were engineers of very good reputation, and it is obvious from the presentation of the report and from the construction and the whole basis of their calculations and specifications that they foresaw that particular difficulty in the case of the electricity undertaking.
In this case we are asking certain citizens to subscribe to an Industrial Credit Corporation. The Minister has admitted, and any person with business experience will have to admit, that you are not going to start under-writing or taking up shares in new companies and expect in the first year to see results. Apart altogether from what one calls a flotation, the earlier years are not years in respect of which any result can be anticipated. Why not take into account all these characteristics that are bound to present themselves and make allowance, in respect of whatever capital is to be employed, for such sum in advance as will meet any deficiencies and let the presentation of the first balance sheet be as respectable as one would like to see in the case of a big corporation of this kind? We have had the precedent of the electrical undertaking and the recommendation of engineers who are, perhaps, as great businessmen as they are engineers. Endeavour to avoid the apprehension and the criticism that are bound to arise on the presentation of a poor balance sheet in the first year or the second year. I see very great difficulty in the presentation of a balance sheet in the first year. I presume it is unlikely that the whole of the capital will be invested in that time. They will have taken certain shares in a few cases and those only in the case of long established businesses where there have been a flotation and an appreciation within a short time on the shares.
Here we have a different situation. Although the Minister will hold a block of shares in this country and although the company will hold blocks of shares in various other places, sometime or other, when it is least expected, blocks of these shares may go on the market. It is very undesirable to have big fluctuations in respect of business. We have had almost an act of contrition on the part of 60 nations in respect of the fluctuation of their currencies, which is much the same as fluctuations on the Stock Exchange. They all admit they have sinned, but very few are inclined to repent. In this case, from the beginning let us envisage whatever hard times there may be in front of us, and let us start from the beginning with the sure indication to the public that the concern is sound. It would be very much better for the Minister and for whoever comes after him to have such a state of affairs.
I would like to refer the Minister to Section 11, where it is set out that particulars shall be furnished to him. When he was speaking earlier on this matter he referred to the Dáil, as if these particulars are going to be given to the Dáil as well. In view of the importance of that statement I would like the Minister to be quite clear. I see, of course, that particulars have to be furnished to the Minister. What I want to know is, will the Dáil be given those particulars?
With regard to the point raised by Deputy Dockrell, under sub-section (3) of that section, the company shall furnish to the Minister such explanations as he may require from time to time. It does not inevitably follow from that that this information will be given to the Dáil. It may be given to the Dáil on demand. I assume when the Dáil demands it, if all the circumstances that have to be taken into consideration warrant it, that information will be given without hesitation. A case may arise where it may seem to be in the public interest to withhold information from the Dáil. I am only putting it that way—where it may seem to be. In that case the Minister may refuse. However, if the Minister does refuse, any member of the Dáil can put down a motion demanding that the information be given. We can debate that motion, and the Minister then will have to give sound reasons why the information should be withheld.
It seems to me that all the information the House might reasonably require would be given under the section without hesitation by the Minister. That, at any rate, is my conception of what the Ministerial attitude should be. It may be that circumstances might induce the Minister to depart from that attitude. If so, the Dáil has its remedy. If members of the Dáil are sufficiently interested in a particular matter in respect of which information is required they can put down a question and raise the matter on the adjournment. If that is not satisfactory they can put down a motion, the matter can be fully debated in the House, and the Minister will not merely have to justify himself to the House, which possibly is the least important aspect of it, but will have to justify himself to the country in refusing or withholding information which, in the reasonable judgment of the country, ought to be given to the Dáil.
Supposing the information is marked "Confidential" before it is sent to the Minister, what is the position?
If the information is marked "Confidential," presumably the Minister will discuss with the directors of the company the reasons which have induced them to mark it "Confidential." Nothing the company can do can debar the Minister from giving information to the Dáil.
We may rely on what I understood to be the undertaking of the Minister, that the Dáil would always receive as much information as the shareholder in an ordinary concern would be entitled to receive?
Yes. I should say that would be the minimum amount. I do not think the Dáil would regard it as in the public interest that very much more than that should be asked. If it has reason to suspect that the affairs of the company are not being properly conducted, or that any of the subsidiary companies in which this Industrial Credit Corporation has any interest are not being properly conducted, the Dáil can always get that information, and would be entitled to look for that information, from the Minister. The Dáil could eventually, I believe, compel him to give it.
Surely if the State had a majority of the shares of subsidiary companies——
If the State had a majority of the shares in the Industrial Credit Corporation, and if the Industrial Credit Corporation had a majority holding in any of the companies——
Not if it had not a majority.
I would not like even to commit myself to that, because the Minister must—if he is accepting responsibility for the actions of the Industrial Credit Corporation—accept responsibility for all its actions. If the directors make investments in any undertaking, I think the Dáil, whom the Minister represents in the matter, is entitled to get information in respect to any of these undertakings that any shareholder holding one share would get.
I understand that, but I thought the Minister was referring to special information—more than the ordinary shareholder would get. Surely it would not be fair to the ordinary private investor, who invested in a subsidiary company, if the State, because of a minority of the shares, was entitled to discuss internal and private affairs in the Dáil?
I am afraid that would have to be one of the disabilities under which those who go to this company looking for financial assistance will have to accept. If they do not like it there are other concerns from which they can get the financial assistance which they require. They can go to the ordinary banks, when the Dáil would have no right, so to speak, to inquire into any of these concerns. If public money is invested in these concerns then the Dáil has a right to all the information it requires, in order to assure himself that the investments have been properly made. At any rate, I am not going to be any party to denying the Dáil that right.
I am sorry to bother the Minister, but his remarks have given a totally new aspect to the measure. Is it intended that this company will seek investments, apart from what it may be advised to do by the Government? Is it intended that it will seek other investments? On the Second Reading Stage I asked whether, if it appeared to the directors of the company that a hire-purchase corporation could be financed in this country, and if it was likely to be a profitable enterprise, could the directors of the holding company agree to invest in it, apart from consultation with the Government? What the Minister said a while ago would seem to preclude such a possibility. The Minister stated that if the holding company took any shares in a subsidiary company, possibly it might be a condition that the private affairs of that company would have to be discussed in the Dáil.
I think there is certain confusion of thought in the Deputy's mind as to the manner in which the company will operate. So far as I am concerned, it is not intended that this company would go out to try to establish concerns mainly because there is a possibility of making money in them. If there is a possibility of making money in most of these concerns, I think the possibility should be left, in the first instance, to the general public. If there are industries which ought to be established here, the establishment of which would seem to carry with them, in the mind of the public, undue risks which the public was not willing to undertake, then if sound propositions are put up to the Government, this company, as part of its ordinary functions, will undertake the financing of these projects in the initial stage, until success has proven to the general public that they constitute sound investments.
I do not want to bind the activities of the company to the extent of saying that if a group of persons feel that a hire purchase corporation might be started in this country, with the idea of helping existing industrial concerns, or manufacturing articles here, and if the people who had that project in mind came to the Corporation and asked it to make an investment, the Corporation should turn it down or reject it. If persons come to the Corporation looking for financial assistance, they will have to bear in mind the possibility that people may come with wild cat schemes—that there is that possibility. Speaking for myself, I can say that if I were a director of the company I would not look with favour upon such investments in very special circumstances, that the wisdom of that investment, the implications of that investment and the consequences may always be questioned in the Dáil, and that the affairs of that particular undertaking may be brought under the public searchlight. I think I made my position clear, that if people want to start these things on their own they are quite entitled to start them, but, if they come looking for the investment of public money in concerns of that sort, they can only secure that investment on the understanding that, at any moment, the wisdom of it, and all the consequences of it, may be questioned in the Dáil; that the Minister may have to give an account of his stewardship to the Dáil in connection with the starting of the company. I do not think we could proceed on any other basis.
Will the Minister see when this company gets on a business footing that it publishes a quarterly report?
On that point I am not going to commit myself about what the company will or will not do. These are separate matters which will naturally arise. We are dealing with this particular corporation, and I do not want to be carried any further than I can see my way clear at the moment. On the question raised by Deputy Cosgrave, in which he mentioned the procedure followed in connection with the hydro-electric development of the Shannon, as an example of the type of procedure he thought should be followed here, I should like to say that I do not think there is any analogy at all between these two undertakings.
First of all, it is admittedly the usual practice when large constructional works are being undertaken, and when a company, a corporation or a syndicate has been floated to carry out these works, in order that after their construction they may become profit-earning concerns, where capital has been raised—and particularly where it has to be borrowed, as distinct from being raised in the ordinary way by a public subscription of ordinary shares—for those responsible for preparing estimates of the capital required to make provision in the estimates during the constructional period for interest upon the capital which has been raised, and to include the works out of the capital. That is the course which was followed in connection with the Shannon undertaking. I do not see how, if we were to follow the same procedure here, it would get over the difficulty which Deputy Cosgrave has in mind. We should still have to present a true balance sheet every year, still have to show the losses made by the company, and still have to endure the possibility of a public misapprehension of the true position of the company because of the losses which the balance sheet disclosed.
It would seem to me that the only practical suggestion which Deputy Cosgrave had in mind, as far as I could apprehend, was that during three or four years that this company might show losses, that we should make provision for paying dividends out of the capital of the company. Well, I think that that would be an unsound procedure. As I indicated at the beginning, it is our desire that this corporation should be regarded as an ordinary commercial venture. I think the first thing that would shake the confidence of any ordinary investor in any ordinary concern would be the suggestion that the dividends which that concern was declared to be paying from year to year were being paid out of capital. We could not set up any special reserve for the payment of dividends that would not be properly regarded by the House and by the ordinary people as a whole as making provision, in advance, for paying dividends out of capital. If we were to do that, I believe it would be an indication to the general public that the operations of this company were going to be conducted on principles that have not met with general acceptance as sound financial and commercial principles. While admittedly the difficulty to which Deputy Cosgrave has referred may arise, we have got to shoulder the consequences of that, and to carry the company through the difficult initial stages without having regard to special devices which, I think, would only cause more trouble than they would be likely to prevent.
Unless my recollection is very much at fault, I did not mention dividends at all in the whole course of my statement in connection with this Industrial Credit Corporation. The Minister's statement is that he anticipates these losses. Now, what are we at? This is not a commercial proposition in the normal sense. If it were, it would not require either this Act or the subscription of the Ministry to fund the company. It is not a commercial proposition. It is a proposition proposed by the Government, and the Government propose to take up most of the shares. As was said earlier, the Government expects this company to invest money in certain new industrial institutions that are going to be started. The Government expects, I presume, some attention on the part of the directors to the institutions into which their money is going to be invested in these new companies. There is not to be one company. There are to be several dealing with the sugar beet industry, a factory for the production of industrial alcohol, a paper factory, a cement factory and so on. So far as I have seen from any statement made by the Minister it is clear, I think, that the money put up by this corporation is going to have to enter into all the difficulties which any ordinary company meets with in its first year. The first charge, under the Money Resolution, will be one of £15,000. There is no earthly hope whatever of earning that in the first year. The other companies will be in the same position.
Now, if this is not a regular commercial proposition, why not make the provision that is obviously necessary? I think if I were a director of this company or of any company like it, I would not stand for the payment of a dividend from the company for ten years. I do not believe it will earn one inside the first seven years, with the best luck in the world. If it is an investment, let it be an investment on the part of the people. If you want the people's association with this show them a proposition in which at least they will not see their money disappearing. In the normal course of events, one cannot look forward to seeing a dividend inside the first five or seven years and, then, possibly only 5 per cent. Would the Minister, as a business man himself, invest in a concern of that sort? I am afraid that with the amount of money at my disposal it would not permit me to indulge in such a luxurious proposition as that.
The whole world to-day is looking for sound industrial concerns. You want to make this Industrial Credit Bill a success from the start. Do not shake public confidence in it. Let provision be made for whatever difficulties there are. We know they are going to be there, and then why not make provision for them? If the Minister wishes he may be relieved from paying any dividend in the first three or five years, but that does not mean that the people who invest are going to lose their dividends. If money is earned it will strengthen the reserves, and make more certain for the future any dividend-earning capacity that there is in the concern. I am sure the Minister does not expect people to invest in this in order to get immediate dividends out of it during the next few years. Very good. Then there is no loss in keeping the capital of the company intact, and it can be kept intact if the necessary calculations and anticipations are made to provide for that. I put this to the Minister: do not have the shares of this company quoted on the exchanges of the world at a big discount in its initial years.
Section 11 agreed to.
Section 12 agreed to.
THE SCHEDULE.
I move amendment 1:—
Before paragraph (d) (that the liability of the members of the Company shall be limited) to insert a new paragraph (d) as follows:—
that the total commitment of the Company, whether by loan or investment or both, in any one concern shall not exceed one hundred thousand pounds.
The effect of this amendment would change very radically the character of the company which the Minister is proposing to establish, but I think it would make it a company in which private investors would be far more likely to invest. Deputy Cosgrave has just remarked that the company, as it now stands, is not an ordinary commercial proposition, and in that I thoroughly agree with him, though the Minister himself, about 20 minutes ago, used those very words himself, and said it was being started as an ordinary commercial proposition. It certainly is not, for various reasons. In the first place, it is an immense undertaking. The mere size of it makes it something other than an ordinary commercial proposition. In the second place, the Government is tremendously mixed up in it, too much mixed up in it, for any business man to be happy about it as an ordinary commercial proposition. In the third place, there is considerable confusion of mind as to what the company really is, as to whether it is out to make money or as to whether it is a sort of benevolent institution. I was rather taken aback when the Minister said just now, in reply to Deputy Moore, that the company would decline to invest in undertakings so attractive that the general public might have them left to them. That is what I understood him to say. I had assumed that this company would invest not only in the shares of the new undertakings, but perhaps in the shares of old undertakings, especially undertakings that might wish to extend their activities and to raise new capital.
Putting money into new undertakings is always highly speculative. There is no use shutting our eyes to that. Even testators who allow trustees to invest in any type of security— ordinary shares as well as debentures or gilt-edged stock—will very often make a special proviso that there shall not be an investment in new enterprises. New enterprises are the most speculative thing that one could invest in. One would certainly like to feel that a company of this sort was not going to be confined to new issues, but that it could invest in propositions that had some history behind them as well.
One of the features that an ordinary investor would most insist upon, in putting money into a holding company or an investment trust, would be diversification. The very first thing to see is that the investment company sticks firmly to the principle of spreading its risks over a large number of different concerns and that it should not put too much money in any one thing. This company is proceeding on the very reverse of that. It is to put £2,000,000 into sugar beet to start with. It is to put £500,000 into industrial alcohol. It is to put £1,000,000 into mining projects of some kind—we do not know quite what. It is possibly to put £750,000 into cement and to put £500,000 into a paper undertaking, whatever it is.
All these are very large propositions. There is not that wide diversification of risks that one would like, and they are all new propositions. Take the sugar beet proposition; to invest two-fifths of the company's capital in one proposition is enough to make the whole affair lop-sided. I suggest that the sugar beet enterprise should be dealt with in an entirely separate Bill, and that a company be created for that purpose and no other. The Minister has objected to any comparison between what we are doing now and the Shannon Scheme. I am not familiar with a great many of the facts about the Shannon Scheme, but I would say that his beet proposition is certainly one that merits his former description of the Shannon Scheme, as a white elephant, because the beet company, whatever its merits, will be certainly a white elephant in the sense that it will be definitely an expense to the State. A white elephant may have such merits as to make it worth keeping, but it will be, nevertheless, a white elephant. I do feel that this is something which, from the very start, makes this company lop-sided, something which should be dealt with by a separate company altogether.
I have another amendment down which, perhaps, I might deal with simultaneously, because it is very closely connected with this. That is, that the total capital of the concern should be £2,000,000 instead of £5,000,000. If there were such a limitation as I suggest of £100,000 for any one concern, £2,000,000 capital should be ample, and it should allow us to do what I think we ought to set out to do, and that is to encourage small industries all over the country. On various occasions in the Dáil I have advocated the creation of a sort of investment trust, similar to that which is now proposed here, always with the idea that it would enable Irish investors to do what they cannot do at present—to put their money into a wide range of Irish industries, to enable industries to be started that do not require so much capital as to justify them floating a separate issue on the market. If the amendments I put down are accepted they would enable us to create such an investment trust as that. It might do a tremendous amount to fertilise Irish industry all over the country. Instead of that, we have this extremely peculiar, lop-sided measure which does not provide diversification, which leaves the investor with the feeling that ordinary commercial interests may have to give way to Government requirements or to political requirements of some sort or kind. He does not feel any security in going into a thing like this unless he knows that commercial considerations will always hold first place, and that he will have a reasonable chance of making a satisfactory investment. The Minister will not get people to come forward and put their capital into what they know is simply a benevolent institution, but he may get them to come forward and put their capital into a concern, even if it is a risky concern, provided that there is a reasonable prospect of it turning out well, and that business principles are really going to be followed.
In rising to support these amendments, I must say that I think Deputy MacDermot has scarcely stressed sufficiently the effects which would be produced if his amendments were accepted. The present proposal of the Minister practically means that there is to be a gigantic—because it would be gigantic for this country— underwriting corporation created which would stand or fall on the success of underwriting about four concerns. At first sight, Deputy MacDermot's proposal appears alongside that proposal to be almost too small, but certainly the question of spreading the risk is one that should not be lightly overlooked. We are all familiar with the principles of insurance. No insurance company would conceive taking on a risk which would imperil two-fifths of its capital, because that is really what the sugar beet industry is. They are talking about £2,000,000 and underwriting it. That would be two-fifths of the entire capital of the company. We are all familiar with gigantic insurance companies that would not think of holding more than a few thousand pounds risk upon particular properties. I think that Deputy MacDermot's proposal is an eminently reasonable one. In the face of our present finances, and the fact that we have to establish ourselves before our own investing public, this appeals to me as a proposition which ought to command the serious consideration of the Government. Then, if after a few years it was found that the companies that have undertaken the underwriting in the earlier stages are successful, they can then proceed to bigger things. But obviously the acceptance of this amendment, to my mind, would introduce a very desirable element. It would bring in in association with this company other interests that would be invaluable in securing the success of the various undertakings which were being underwritten. I have therefore great pleasure in urging the acceptance of the amendment on the Dáil.
I would be disposed to support the amendment, too, but from somewhat different reasons. From the debate we have had it strikes me what the Minister and the Executive Council possibly had in mind is that these industries, which they propose under this Bill, shall be established either entirely with publicly-subscribed capital or, on the other hand, with capital subscribed by the State. In no clause of this Bill that I have read does it seem to me there is any encouragement at all given to any existing company, any existing syndicate, or any existing individual that may be engaged in the same branch of that industry, who would like possibly to start a similar industry in another part of the country or to extend an existing industry, or to encourage an outsider with special knowledge of any particular industry, to come in here and put a certain amount of money into that industry. There is no encouragement at all, so far as I can see, for the Minister to open negotiations with such class of persons. The public will much more readily subscribe to extending an existing established industry rather than subscribe to the establishment of an entirely new industry. I think there can be no doubt about that. Therefore I think it would be desirable, if we are anxious to get money from the public, that encouragement should be given to those people already engaged in industry to come forward with proposals. Let me illustrate one of the difficulties I see. Take the establishment of a cement industry here. We have no knowledge or experience whatever, that I know of, of the modern manufacture of cement. We have not a modern cement manufactory within the whole of the State. We have no people who have modern knowledge of that particular industry.
What about Dolphin's Barn?
There is no such industry at Dolphin's Barn.
Mr. Kelly
I thought they were making cement pipes there.
Yes, from imported cement. We are talking here of the establishment of a cement industry. There was a cement industry near Dolphin's Barn, 20 years ago, which failed because it could not make a uniform cement. In that connection, our history in the past dealing with the manufacture of cement was not at all a satisfactory one.
Mr. Kelly
In Wexford it was.
If Wexford was successfully manufacturing cement, it would be in existence to-day. The difficulty is this: we are now going to start in a large way in an industry of which we have no experience whatever. Consequently, the ordinary investor will be slow to provide the money. On the other hand, I do not think it desirable for the State to provide the money in the circumstances. I think the proper thing to do would be to follow some of the lines adopted when we were starting the sugar beet industry. We got that into the hands of people with a thorough knowledge of the industry. I said when I spoke before that capital is only one of the essentials of successful industry. A knowledge of the industry, to my mind, is very much more essential. In this Bill I see stress is laid only on capital and none on knowledge. The knowledge is assumed. Any industry so based has a very doubtful future before it. I would encourage the Minister not to jump into ventures too large, but to limit the amount he would put into any one industry. It may be the amount proposed here by Deputy MacDermot, but I agree with the principle as laid down and that on the part of the State we should limit the amount to be put into any one industry. From that point of view I think the amendment is one that should carry weight with Deputies in this House.
I am supporting the amendment for other than the reasons given up to this. This is one of the biggest proposals put before the Dáil in connection with public money. The sum involved is £5,000,000. On a previous occasion, when the ex-Minister for Industry and Commerce was putting before the Dáil his proposals in connection with the electrification of the Shannon, he gave a very elaborate explanation of the whole scheme, elucidating it, I should say, for something over an hour, and exhausting the subject in every possible way.
Here we are invited to consider the expenditure of £5,000,000 of public money. What are the assets we are getting in respect of employment in this connection? How many people are to be put into continuous employment by reason of the expenditure of this money? If we take the estimate given by the Minister in respect of the Sugar Beet Industry, the figure I think mentioned was £2,000,000. The capital of the Carlow Sugar Factory is, I think, £400,000. So that, we have as an estimate, in respect of two out of these five million pounds, five sugar beet factories like the one in Carlow. We were told by the Minister for Industry and Commerce that in respect of that portion of the investment which would deal with sugar beet there were three methods which he proposed to employ in making it easy on the taxpayer. He proposed in the first place, he said, to save money in expenses. I calculated from the statement he made and from subsequent observations which fell from him that the £400,000 factory which had been established in Carlow would be likely to be installed there for a sum of £300,000 and that the four factories consequently would cost £1,200,000. He stated that machinery was cheaper. Obviously, we are not going to have four factories dearer than the one in Carlow. I presume that the Minister for Finance will admit that. If he denies that they are going to be cheaper than the one in Carlow, then the Minister for Industry and Commerce is wrong when he says that they are going to save something in expenses, unless he meant the running expenses. What amount of employment is going to be given in respect of the costs of the sugar beet industry or in respect of the cement industry? We had an estimate by Deputy Good, who has some experience in connection with building materials and so on. I remember the time when the cement factory was put up at Crumlin—at least it was called Crumlin, though it was not exactly Crumlin: it was on the canal bank. It afforded at that time the worst paid employment in Dublin.
Surely, the amount of employment to be given scarcely arises on this Bill. It will arise on the sugar beet question admittedly.
We are asked to spend £5,000,000, and we are told, when we try to discuss what advantage the country will gain in the amount of employment to be given as a result of the expenditure of that money: "Oh, no. That will come up at a later stage." We are handing the money out now. Is it to be said that we are not to discuss the question of the advantage to be derived as a result of the expenditure of this money? That kind of thing is not done.
If it had any relevancy at all it would be on the Second Stage of this Bill.
We are voting it now, and this is the relevant stage of this Bill. Every stage in the whole Bill depends on this £5,000,000, and I am entitled, on the discussion of the expenditure of that money, to see what advantages we are going to get from it. The Minister simply told us what the sums were. I can take him on the question of the cost of a single factory, and he has a Deputy beside him who sits for that constituency in which the present factory is. Will he deny that the capital cost of the factory is £400,000? The Minister says that we are going to spend £2,000,000 on sugar beet. Then we are going to have five factories and not four. Where does the £2,000,000 for sugar beet factories arise in connection with the provision of four sugar beet factories?
Wait and see.
We heard that before, and we were not very well satisfied with what we waited for or what we saw. That was the unhappy observation of a great man, and the results were eminently unsatisfactory for the speakers and for the hearers. In this case £5,000,000 is the sum that is asked for and one of the items making that up is £2,000,000 for sugar beet factories. How is that going to be expended and where? It is to cost £500,000 notwithstanding the statement of the Minister that they were going to save money on expenses. We will go on to the other items. £750,000 are for a cement factory. How many people is that going to employ in view of the amount of money that is involved? We are entitled to ask ourselves in connection with the whole scheme whether or not it has been thought out at all.
I submit in this connection that the House is perfectly entitled to assume that £1,200,000 is quite enough as an estimate for sugar beet, assuming for the moment that the Industrial Credit Company has to put up all the money. Is it to put up all the money? Does the Minister expect any money from outside? It would be a very small estimate to assume that 33? per cent. should be put into industrial activities. We can leave over the amount of public subscription until we see what is the amount involved. Say, £1,000,000 for sugar beet, and £750,000 for cement. £750,000 is a very costly estimate for cement. Then there is the question of industrial alcohol. I must admit that my knowledge of the costs of industrial alcohol manufacture is very limited. I cannot remember what sum the Minister stated would be required in that connection, but £500,000 seem to me to be a very exaggerated estimate of the cost. We have now arrived at £2,000,000. For paper-making let us say £500,000. That, too, I would regard as an overestimate. I think £250,000 would be quite enough in that case. That is £2,250,000, and I find that I have just about half the Minister's estimate of £4,500,000. Let us assume for a moment that we add on a little more, and make it £3,000,000—£1,000,000 to be provided by public subscription and £2,000,000 to be provided by this Bill. That is about as large a sum of money as an indulgent Dáil, in its most optimistic mood, bearing in mind the difficulties of collecting that money and, perhaps, of paying interest on it, is entitled in these very difficult times to risk, having regard to the very small amount of information we have got as regards the amount of employment that is likely to be given, the success that is likely to be achieved and the results likely to accrue from the investment of such a huge sum of money as that. It is most unlikely that, within the next twelve months, more than the plants for two sugar beet factories are going to be laid down. How many people, well versed in that particular business—and it is a highly technical business—are to be employed in finding out the suitable sites with all the necessaries that are essential for a successful campaign and for making it an economic proposition? How many people are going to be engaged in finding out these places, in getting the plant and doing all the other things that are necessary?
The Executive Council have on many occasions declared their desire and anxiety to develop industry in this State, and to see that a fillip is given to industrial expansion. It can be overdone. Much damage can be done if unwise investments are made. Is it likely that four separate and distinct sugar prospectors are going to come here within the next twelve months, or is there to be a single company? In the case of the other activities envisaged in connection with this proposal, has there been due advertence to the present economic position of the country, and whether the strain will not be too much for the main industry of the country in view of the costs that are falling on it and the costs that are bound to be entailed by different things, and that the advantages which may be derived in providing employment in one direction may not be counter-balanced by the losses sustained in another direction? We have not got in respect of these proposals before us a single report from a single expert or technician recommending the inauguration of these particular things. I know the Ministers have taken it up with the best will in the world, and have made a study of it and all the rest of it. But, I venture to say, without disrespect to any person, that the commitments that the Ministers themselves will be involved in in connection with this will be with due regard to their own resources. I say that, realising the difficulties of the present situation, the whole world position, the economy of this State at present, and the desirability of conserving whatever resources we have, we are not entitled to take risks which would possibly entail costs on those who come after us and impose a burden on them in future difficult years which would be almost impossible to bear. I am just as anxious as anybody else to see industry developed here, but what man, if he were going to run a business, would not employ the best experts to advise him, would not go beyond whatever resources were immediately at his hand to ensure that whatever money he put into the business would be money well spent and give good results?
How does that arise on this?
Because there is £5,000,000 in jeopardy.
Has there been any statement by the Government that they will not employ the best technical skill that will be procurable?
I have not heard anything about it from the Minister.
It does not arise on this Bill.
The Minister is well paid. What is his statement with regard to the £2,000,000 for sugar beet? How many factories are there to be? Four. What are they to cost? Half a million each. What did we pay for the one which was described as a white elephant? £400,000. Here we have the apostles of economy and the critics——
Plus £3,000,000.
What is the Minister going to spend on them?
Wait and see.
We heard that before and I am not sure that it is worth repeating. I am not going to wait and see the money of the people disappear without making sure that, as far as my responsibility is concerned, there is a good case made for the expenditure of public money, and taking just as much a care as I would take in the case of my own money. I am not entitled to do anything else. Will the Minister say that the country is as well able to undertake the risk in this connection to-day as it was this day 12 months? Will he say the country is as prosperous as it was 12 months ago? Will he deny what the Minister for Agriculture said in Claremorris last week that he knows the times are bad, that the farmers are getting poor prices, that labourers find it difficult to get employment, that shop keepers are being hard hit? It is on these people and no others that the ultimate cost of this, if it is not a success, is going to fall. I wonder whether, in all the circumstances, having regard to the money involved, we are going to get compensating advantages in connection with the expenditure of such a huge sum. I am certainly not satisfied from the figures presented by the Minister. This is the last grip that this House has got in connection with this £5,000,000 other than the other stages which this measure must go through. This is the last opportunity they have of limiting it and of ensuring that it is a properly thought-out, well-planned undertaking from beginning to end.
As I said on the Second Stage I do not consider that it is good finance to embark upon a scheme estimated to cost £5,000,000. I consider that it would be much better business to make it £2,000,000 and to come to the Dáil in six months, nine months or 12 months and ask for more money. The Minister is sure of 76 votes in the Dáil and there is no danger that he will not get it. In all the circumstances, what does he want? Does he not want to secure stabilisation here, and to secure confidence on the part of the people, in respect of any proposals that come up here; that when a business proposition comes up here it will receive fair examination and be presented in better order than this was on this day week? This is a proposal which vitally concerns the Minister for Agriculture and he is not here. Ought he not to be here? Is there any reason why he should not? Two-fifths of the £5,000,000 is to be spent in connection with one branch of that industry which he is supposed to protect and ought to protect. Why should he not be here to explain in detail all the items that go to make that up? Two-fifths of the whole sum and the Minister is not here! The Acting-Minister for Industry and Commerce is here and I presume he will be able to explain.
The Deputy will get an opportunity next week on the beet sugar question.
The Bill is in hands then.
Is it because the Deputy has brought his bantam here that he is looking for fight just now?
I do not know what the Minister means.
He has succeeded in getting him into the ring.
I do not know what the Minister means by bantam.
After being absent for the last two months.
The Minister was absent for a very considerable time this year, and the President has been absent for a longer period since he took office than I was in the whole of my ten years. It ill becomes any member of the Executive Council to speak about absence. We have just as good a conception of our responsibilities to the people and of our duties here as any of the Ministers, and we are entitled to get all the information we ask for, because it is the people's money that we are dealing with at present. We have had no intimation whatever—
The Deputy has made a fine speech, if he only believes it himself. That is the trouble.
I move to report progress.
Progress reported; the Committee to sit again to-morrow.