I have it here. The Minister and myself stood on the same platform propounding that very policy. I could go into further detail if necessary, but I am sure the Minister will accept that. It is inherent in the Currency Act that the Minister has piloted through the House that Britain controls our money, that the Bank of England is the central bank of this country, and that bank so regulates affairs that a man ploughing a field or assembling a machine in Éire will get X pounds per week or X shillings per week, whereas where the Bank of England has direct control and interest, a man ploughing a field or assembling a machine will get three or four times that amount.
I do not want to discuss Currency Acts here, but, believing in the quantity theory of money, which I think is accepted by all bankers, I want to bring out that if we had an equal note issue, either per head of the population or per amount of business done in the country, we would have a note issue of about £80,000,000. The credit which could be superimposed on that note issue would give us ample money facilities and accommodation. I am very sceptical, and I am sure that the more the proposer of the motion considers the subject, the more sceptical he also will be, about giving Governments the power so to create money. I was amused more than impressed by the theories put forward by Deputy McGilligan when speaking on this motion.
It is extraordinary that Deputy McGilligan, who espoused and supported the Currency Act of 1927, should now run practically in step with Major Douglas. It is a very long step. As I understand the position, if something is not done to give us the note issue required to carry on business, in the present circumstances of the world and the present circumstances of the currency and banking system, of which we form a part, I can see nothing but the bankruptcy of this country. The Minister for Supplies and Minister for Industry and Commerce fears an economic collapse, and I am not surprised that anything he has a hand in should collapse, but I should be greatly surprised if the Minister for Finance will sit idle while this stranglehold is put on the country.
We in this country are asked to do a job, while our neighbour on the other side of the street—for that is all it is from Dublin to Manchester—is also asked to do a job, and the same money centre which administers the money policy both here and there says: "We will give more money for the same work in Manchester than in Dublin." The effort is the same and the remuneration should be the same. If we had the gold standard operating freely, without any corner being made, the exchange would be against Britain and in our favour, just as, in 1921 and 1922, the exchange was in our favour, because what we exported, plus our foreign investments, exceeded what we bought. Yet our currency was curtailed in sympathy with the general policy of Winston Churchill of getting back to the gold standard—the gold standard for Britain. But we had the essence of the gold standard ourselves at that time inasmuch as our incomings exceeded our outgoings.
I should like to know from the Minister what power he has now. According to the report of the Midleton Commission on Finance and Industry, there are four essentials which a State bank must have: The right to note issue; the right to hold the reserves of the commercial banks; the right to buy and sell securities; and the right to discount. When this war broke out, I asked the Minister in a Parliamentary Question whether he had been consulted with regard to the sudden jump in the discount rate here. He said he was not and that the first he knew of it was when he read it in the papers.
I should like the Minister to tell us has he any more power now, and, if he has, from where does he get it? Has he the right to hold the reserves of the commercial banks? Has he the right to buy and sell securities, the right to discount or the right of note issue? Does our note issue not still remain in the position that it must be convertible into sterling? Who decides whether it is convertible or not? Who decides the amount of credit which can be given which, in turn, will give rise to an increased or decreased note issue? If the note issue is to remain static, the giving of credit is attempting to put more water into an already filled bottle. You must increase your note issue. Increased credit will demand an increased note issue and if you do not hold the key—and I maintain that the Bank of England holds that key to-day—to increasing your note issue, your credit is going to hamstring the unfortunate man who gets it for either agricultural or industrial purposes.
Has the Minister considered the loss we suffer? The currency notes we issue are backed by British securities. There is no need to go into all the ramifications, but it works out something like this, that it represents a free loan to the British Government at our expense. The British Government has a free loan from the people of England of £900,000,000 for the note issue in Britain. What have we here? I think it is very little, perhaps nothing at all. We must take the bull by the horns and take complete control of our money and set up a central bank here absolutely independent of the British central bank, as independent of it as the Bank of France, the Bank of Berlin, or the other State banks of Europe. Their exchanges had to move in sympathy with the Bank of England and the Federal Reserve Bank of the United States, but that was because that movement helped the trade of these countries.
For instance, when Great Britain went off the gold standard in 1931, the Bank of Copenhagen went off the gold standard immediately. But it went further than Great Britain went, so that the British £ had an appreciation of 25 per cent. in Denmark. But did that operate on farming prices here? Every pig, or the product of a pig, that the Danes sent to Great Britain secured there 25 per cent. more than a pig from Ireland sold at the same price in Great Britain secured for the Irish farmer. The Irish farmer was cut out. While we were flag-waving here and shouting "Up the Republic," we were not getting the price for our pigs which we would have got if we had an intelligent business Government here.
The credit that a central bank can give in my opinion is the only credit that will be of lasting benefit to this country. On the 12th August, 1927, I made a somewhat similar speech here on the Final Stage of the Currency Bill of 1927. As reported in column 1655 of volume 20 of the Official Reports, I said:—
"As regards the point of deflation, I doubt if it has yet come down to £12,000,000. I speak subject to correction, but I think it is somewhere about £18,000,000 or £19,000,000. If currency in this country is reduced to £12,000,000 we are going to have more unemployment."
That was no prophecy. It is a mathematical certainty that if you reduce the money circulating in a country, you reduce the credit in that country; you reduce employment; you reduce prices; you go voluntarily into a period of depression. I do not think anybody will deny that we have suffered from depression, that we have suffered from low prices, that we have suffered from unemployment, and that we have suffered from emigration since 1927. That is 15 years ago. Fifteen years hence, if we are still tied to the Bank of England control, the same sad story will be told, if we are able to maintain a national Government in this country at all.
I do not agree with Deputy McGilligan in regard to that worn-out theory about banks creating money to the lavish extent he mentioned, and that we should get some of the profits which are going to the banks. Every man who is not in business thinks huge profits are made by men in business. If business offers such a field for reward, why do not these theoretical armchair business men get into business and get the same reward? It is not all sunshine in business. In business you have to work and apply your talents, if you have any. If not, you very soon come to an end. The same is true of banking. I do not believe in the theory that if a man deposits £1,000 in a bank, one-tenth of that is kept as a proportion and that the other nine-tenths are lent; that one-tenth of that again is kept by somebody else and another nine-tenths is lent, and so on until a huge castle is built on top of that £1,000, and that the State should handle it.
Why does not the State take its banking system from under the control of another nation and control it itself? That is the step I am interested in. I do not advocate any particular type of control, but we should not mistake the type of control of the banking and money system that we have for Irish control, be that Government or private control. I would be quite satisfied if we had Irish control. Whether it be State control, which I do not advocate, or whether it be private control, or a mixture of both, let us have it anyway. If it must be State control, I would prefer Irish State control to Bank of England control. What did the proclamation of the Republic visualise if it did not visualise Irish control of some kind or another of our money? Supposing on Easter Monday, 1916, the British Government said: "Here is your Republic, get on with it," would the Minister for Finance, if he were offered the portfolio then, go on his knees to the Bank of England and say: "Thank you for so much, but we want you to control our money?" I wonder how long he would survive if he made such a proposal in 1916. I remember the scathing comment made by the late Arthur Griffith, when in connection with the Home Rule Bill a very prominent public man at that time, when people adversely criticised the Bill and said it did not give us control of finance, said:——
"Let us have freedom first and control of finance afterwards."
To that the late Arthur Griffith replied:—
"We cannot have freedom without finance, for finance is the essence of freedom, and until we take control of our finances we are refusing to exercise the freedom that we should be enjoying."
There is no doubt that something must be done to provide credit if we are to have business expanded. Some explanation is required, particularly from the Minister for Finance, as to how he expects the business of this country to be done to-day with £22,000,000 of a note issue while Britain has £900,000,000 of a note issue, whereas, in the last war, the same portion of Ireland had over £40,000,000 of a note issue—taking into account Irish bank notes and Treasury notes—at a time when the maximum British note issue was £559,000,000. Why the disparity? I put it to the Minister that he must also accept or refute the proposition that the more money there is in circulation, the more employment can be given and the more business can be done. Why does not our allowance of money at least equate with the British system, of which we form a part? If it does not, it means that we are being tied down, by the voluntary act of our own Government, to work and do business for the benefit of Britain at a price that Britain would not dare to ask her own citizens to accept.
I support the demand for credit, but I do not accept the idea that what is contained in this motion would be a cure. I would be terribly afraid of credit of this kind, because, where it comes to the handling of more money and more credit, we have to go through the bottle-neck of a small note issue, and that cannot be done. If the Minister does not see his way to work within the freedom that we have—particularly the money freedom and the control of our banking—then I cannot see any hope for this country. I cannot see any reason why we should not control our money here, just as every other British Dominion controls its money. Some people will acquiesce in money control of this country by the Bank of England, but they feel offended if we call ourselves a Dominion. We are the only Dominion in the British Commonwealth of Nations that has not control of its own money, or rather that is not exercising full and independent control of its own money, and the workers here are paid less because of that manipulation of our currency. Farmers in this country get a worse price for their produce because of that. There is less purchasing power to buy the products of agriculture and industry here and, consequently, there is less money to buy the raw materials for industry from abroad and we have to give our good, appreciated £ in exchange for the British depreciated £.
We are told that there is no inflation. I should be very much interested to see the Minister applying himself to this subject of credit. Of course, he knows pretty well that, in agriculture, there is very little credit to-day. That is due to a variety of causes which the Minister could not directly cure, and for which neither he nor his Government are directly responsible, but they are responsible for the restriction of credit. Contrast the case of practically all of Europe, that is fighting to-day, with our case. We are not fighting here. We have a chance to work but we have not the credit to undertake big schemes of work and that is what is ham-stringing us. What will be the position when this war is over, and when the millions of people who are fighting to-day, and destroying wealth, will start creating wealth? Amongst the peoples of the world to-day, we have almost a monopoly of creating wealth, and yet we are not able to produce our own requirements.
How will we stand when these people, who are now fighting, will start producing again? Will we not be wiped off the map completely? I say that the only lever to save this country is the money lever, which has been handed over to the Bank of England, and I would strongly advise Deputy Cogan to consider the question of credit on those lines—getting Irish control of credit: not the Douglas system or any other new-fangled system. Let it be the old system—the gold standard system, if you like—so long as we have Irish control here, and then we can fight it out as to which is the best system for us.
I do support the motion to the extent that we require credit for agriculture and industry here, but I do not support it in so far as it means that the creation of that credit should be handed over to the Government. I am not saying that the present Minister for Finance is needy for money, nationally, but I do say that it is a dangerous thing to put such power in the hands of Ministers for Finance, Chancellors of the Exchequer, Secretaries of the Treasury, or whatever you like to call them, who might be anxious to get money, because it would be a terrible instrument to put in their hands and it might be abused. We do want credit, however, and it is for our Minister for Finance to devise the best methods of finding it.
