I think only half an hour is left to finish this debate and, as probably the mover of the motion would like some time to reply, and others might want to join in the debate, I do not propose to take up much more of the time of the House. There are, however, a few figures for which Deputy Belton and some other Deputies asked, and which I tried to get since the matter was last under discussion. I should like to take this opportunity of giving them to the House, as they might be useful in other debates on this subject. I am not quite sure whether, when speaking on the last occasion, I gave figures of the total money in circulation, including coins and notes of all kinds, in the month of June in each of the years from 1938 to 1942. The figure for June, 1938, was £16,745,000.
Private Deputies' Business. - Provision of Credit by the State—Motion (Resumed).
These figures were given already.
I need not repeat them then. The agricultural price index figure in 1938 was 111.9; in 1939, 120.7; in 1940, 147.3; in 1941, 162.3, and in 1942, 176.0.
These, too, have been given already.
You cannot give a good thing too often.
If we had time to spare, it would be all right.
That did not take very long. As regards farm improvement schemes, on which considerable sums have been spent, it may interest Deputy Cogan to hear that the amount spent in each of the financial years since the scheme was started are as follows:—in 1940-41, £54,448; in 1941-42, £154,272, and for the year 1942-43 it is estimated that the amount will be £230,000. The number of grantees in 1940-41 was 11,969; in 1941-42, 18,244, and for the year 1942-43, the estimated number is 30,000. I think everybody agrees that that is a good and useful scheme and that, perhaps, it could be still further extended with advantage to the farming community.
Deputy Belton was very interested in making a comparison between the moneys in circulation in Britain and here for certain purposes. He said:—
"There is no doubt that something must be done to provide credit if we are to have business expanded. Some explanation is required as to how the Minister for Finance 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."
I do not waste the time of the House in reading that extract. He asks why we have not expanded our note circulation at least in proportion to what the British have done. He said also that if there were more money in circulation there would be more employment. Deputy Belton went back into the last war and quoted the figures for note circulation in existence in the United Kingdom then. He made an estimate of the amount that was in circulation here. I tried to get the figures in the meantime for his benefit and here they are. In the four years 1914 to 1918, the note circulation of the then United Kingdom reached its peak in December, 1918. The total in that month, including Bank of England notes, currency notes and notes of Irish and Scottish banks, amounted to £420,515,000. Deputy Belton quoted another figure—£559,000,000—but did not tell us where he got it. The total amount of notes of Irish banks in circulation in the four weeks ended 28th December, 1918, was £31,922,000. In addition to this of course, there was in circulation here a certain number of Bank of England notes, but we have no means of knowing the number or value of them. The total actual note circulation is not known, as the only figure available is in respect of the whole United Kingdom; and, of course, there is no way of sub-dividing it.
Deputy Belton quoted a figure of £40,000,000 as being in circulation here —I think he said in the Twenty-Six Counties—but he did not tell us how he got it. I have tried to get a calculation made as to the amount. We have looked up the Banking Commission Report. They made an estimate that, at the time of that report, the total amount of British currency notes in circulation and held as till money in all Ireland was approximately £3,000,000. That is the surest figure we can get. Though it is probably a bit exaggerated, if we take it that in December, 1918, there was £6,000,000 in circulation in all Ireland, then the total amount of notes in circulation in all Ireland in that month was £37,922,000 or, say, £37,950,000. It could be assumed that 70 per cent. of these notes were in circulation and held as till money in the Twenty-Six Counties in that year. That gives us a figure of £26,565,000, which is 70 per cent. of the total £37,950,000. That compares with the figure of £40,000,000 that Deputy Belton quoted the other day. Wherever Deputy Belton got that figure, it would look as if it is an exaggeration.
The note circulation for Éire in August, 1939, was £15,035,000, which includes legal tender notes and consolidated bank notes. The corresponding figure in August, 1942, was £25,050,000, which is an increase of two-thirds or 66.6 per cent. Deputy Belton quoted the figures for circulation as £22,000,000. Evidently he was not looking at the latest figure, and probably omitted the consolidated bank notes. In August, 1939, in the United Kingdom, the total amount of notes outstanding was £580,000,000. In August, 1942, the total was £940,000,000, which shows an increase of 62 per cent. We show an increase of 66.6 per cent. Therefore it would look as if we were keeping step fairly well, despite what Deputy Belton said as to the shortage of currency in circulation here.
The Deputy then went on to say that we should have more money in circulation, as it would give more employment. I cannot accept his theory. There will be as much currency in circulation as the business of the community demands. Probably in 1918, when there was a big rise at the end of the last war in the amount of money in circulation here and in Britain, the fact that it rose to such an extent was due to the fact that the value of all goods and services in the community had risen very steeply during the war. Deputies will remember what the prices for cattle were then: they are not anything comparable to those now.
If the prices for all our produce and services were at the same money value, now as then, probably there would be a still further big increase in the currency in circulation. Another thing that may account for the fact that there is not as much proportionately in circulation now—though there is not much difference—as at the end of 1918, is that cheques are more commonly used now. There has been a great increase in the use of the cheque compared with the use of currency notes. I think there has been a considerable increase in note circulation since the banks put on the extra charge a year or so ago.
With regard to the question of putting more money in circulation in order to provide more employment, the mere fact of putting currency in circulation —if it could be done, if the banks could pump out more money—does not mean that there would be more employment, as you have to get people to use the money. At present the banks have very considerably increased sums at their disposal in the way of deposits that they would be glad to hand out and glad to find people to use.
At a price.
Yes, of course, at a price. Why should not the banks be paid for their services as well as anyone else?
Is it the contention of the Minister that there is not work to be done in the country if the credit were available?
That is not Deputy Belton's statement. If Deputy Hickey has another statement to make, I will answer it at another time, I hope. The banks have very considerably increased deposits at their disposal and they cannot get people to use them. It would mean extra profit for them if they could.
And if the goods are not produced, the deposits are no good in the bank.
Admittedly, they are no use under present conditions. It is not the banks' fault, and not businessmen's fault either, as it largely arises through the absence of raw materials for industry. That is the reason why so much additional money is lying idle in the banks.
Even though we are short of oatmeal.
Everybody would be happy to see all that extra deposit money used in industry and commerce, but it is not possible to use it in that way at present. It is not true, in present conditions, to say, as Deputy Belton suggested, that if more money were in circulation, there would be more employment. In other conditions that might be true.
Mr. Cosgrave rose.
Deputy Cogan has only a quarter of an hour in which to reply.
The Minister should have remembered that.
The question must be put at 8.40.
The Minister having spoken the last night, also spoke to-night. My name was mentioned a couple of times by the Minister, and other Deputies mentioned that there were bids in respect of these matters. It is unfortunate that, on a motion of this sort, we should have only three hours and that most of the time should be taken up with figures which were given twice. Deputy Corry said that some bidding was going on and that this was a bigger bid than that which had been made by the Fine Gael Party. The programme in connection with the development of agriculture, as outlined by me, was one which sought to improve the gainful production of the agricultural industry, generally. Comparisons have been made between this country and Great Britain. In Great Britain, the advances to agriculture amount to about 6.5 per cent. Up to 1936, the advances in this country amounted to about 25 per cent. It is obvious that agriculture here is in a very different position from agriculture in Great Britain. The objection I have to this motion is that it is a proposal, so far as one can judge from its face, to issue money without backing. It has been stated in the course of this debate that we have an arrangement or bargain with the Bank of England. If such a bargain ever took place, it escaped my attention. I knew nothing of such a bargain in 1927 and I have not heard of it since. If you lodge your money, it is not necessary to bargain with the bank as to taking it out when you wish. We were as independent of the Bank of England in 1927 as we are to-day. There has been no improvement in our relations with the Bank of England since 1927. There is a disimprovement so far as our currency is concerned, inasmuch as we have it backed exclusively by sterling. That is beside the first part of this motion, which is concerned with employment and production.
So far as the proposals we have put forward for increasing the production of agriculture are concerned, we believe that agriculture is not likely to be in a position to pay the ordinary interest rates charged here. Those interest rates compare favourably with interest rates in other parts of the world, even taking much richer countries than ours into consideration. They compare favourably with British and general American rates, though perhaps not with New York rates, as was stated in the Banking Commission report. The figures given by the Minister deal with negligible numbers. Assuming that there was no repetition of advances to any farmer in any of those years, it means that 20 per cent. of the farmers have got improvement loans. That is not the way to develop agriculture. It must be developed on a scientific and sound basis. So far as that is concerned, money should be advanced to agriculturists at the earliest possible moment at negligible rates of interest—if it is not possible to advance it free of interest. The war has given us an increase in prices, but nobody has ever suggested that the agricultural industry, as such, is in a prosperous condition—prosperous in the sense of increasing its production. That is the main consideration. Pigs are practically out of production. Butter production has diminished. Poultry production is diminishing and there are rumours that even the number of sheep is going down.
That is not so.
I am speaking of what is a fact—that there is a rumour that the number of sheep is going down.
It is not so.
It is not true that the rumour is circulating that the numbers are going down? The Minister took long enough holding up this debate without interrupting other members. I said that it was rumoured—and rumoured by people who know—that the number of sheep is going down. While there is an increase in the index price in respect of agriculture, that does not establish that the industry is in a healthy, productive state. We want to ensure that it will be in that condition after the war. While disagreeing with the pumping of money from the printing press, I think that the State should provide money free of interest to ensure the necessary production.
I deeply regret that there is no time for me to reply to the many matters raised in this debate. I am also sorry that the Leader of the Opposition had not a little more time to develop the points he raised. His contribution to the debate would be very useful, although I must say I profoundly disagree with him on most points in regard to public finance.
He had plenty of opportunity if he wanted to come in and avail of it.
He has, I think, more or less, established a case for this motion by admitting that agriculture cannot at the present time pay interest on the credit which is available. Agriculture is the foundation of this country. It is the one and only real industry. It is the industry upon which the entire nation must depend. If that industry cannot pay the rates of interest demanded, there must be something wrong. There would, certainly, be a case for the proposal of Deputy Cosgrave to provide money out of the taxpayer's pocket to relieve agriculture if there were no alternative. But I might point out that to provide money out of the taxpayer's pocket for this purpose would be very poor relief inasmuch as the farmer is, in the main, the taxpayer. To whom are those rates of interest paid but a small monopoly who control the issue of money to which they have no right. Credit is the property of the State inasmuch as it is based upon the productive capacity of the people. There is no gold at the back of the currency in circulation. There is nothing behind it but the productive capacity of the people. We may be told that there is behind every note issued here the credit of the Bank of England inasmuch as every note is backed by a Bank of England note. But what is behind the Bank of England note? Nothing but the credit of the British community. There we have a position which is somewhat similar to a belief held in the early ages, that the earth rested upon an elephant's back, but that the elephant stood upon nothing. We have the security of the British note behind our currency, but there is nothing behind British currency but the belief of the British people in their own Government and in their own empire. I submit that the Irish nation is as good a security in this insecure world as any other nation, large or small, and that for that reason our currency and credit should be based upon the productive capacity of the Irish people. If it were, it would be possible for the Government, or for the central bank, to provide the money which is required for the development of agriculture and the relief of unemployment without imposing the burden of interest-rates upon the community.
The Minister, when speaking on this motion, appeared to adopt an irresponsible attitude. He seemed to try to befog the issues completely by producing a huge volume of figures which have no bearing on the motion. Deputy Corry, as the first official spokesman in this House for the Bank of England and the upholding of orthodox finance, made a much better case. He trotted out the old argument which is the last resource of all those who try to prevent economic reform in this country. He said:—
"This is a proposal to issue money with a wave of the hand; to turn the printing press and print an unlimited volume of money."
There is no suggestion of that kind in the motion. Those who have studied this question are convinced that the issue of money should be in scientific relation to the economic needs of the community, that that issue should not be in the hands of a Party Minister for Finance, but in the hands of a body which would have a definite statutory duty to perform, namely, to finance production and to ensure that every available man in this country is in permanent employment.
As the time is limited, I should like the opportunity of expressing my gratitude to Deputy McGilligan for the stand which he took on this motion. He made a very useful and very important contribution to this debate and one which I think will bear fruit in this country. When we find a man of his outstanding ability prepared to come forward and advocate a reform such as is outlined here, it ought to impress people like Deputy Corry who are inclined just to take a Party view of the matter. Deputy McGilligan did not view the matter from a Party angle; he viewed it from the point of view of the welfare of the nation.
Three questions were asked by Deputy Kennedy which, in my opinion, demand a straightforward answer, as they were proper and straightforward questions. He asked: have we the means to expand agricultural production in this country? I am sure Deputy Kennedy cannot but be aware of the fact that essential supplies of agricultural products such as butter, bacon and oatmeal—and I believe in a very short time a number of others—as well as feeding stuffs for livestock are in short supply. Surely there is room for increasing the output in these particular branches of agriculture. There is also need for the employment of men in the improvement of the land by drainage and reclamation. Is not that a useful purpose to which money, provided as outlined in this motion, could be used? The Deputy also asked: how are the loans to be repaid? There is no mention of loans in this motion. This motion seeks to utilise the credit of the State for the purpose of expanding the volume of money so as to provide for the relief of unemployment and for improved prices for agricultural produce.
We know that the volume of money has increased from year to year. We know that the volume of money in this country at present is far in excess of what it was 30 years ago; that it has probably doubled or more than doubled. How was that increase brought about? Simply by the printing and issuing of money. The difference was that the issue of money on the security of the State was in the hands of a small private monopoly who utilised that increased issue of money for profit-making. This motion proposes that that increase in the volume of money should be revenue to the State, should be non-repayable and free of interest. Since there is an increase in the volume of money provided, surely it should be regarded as revenue.
Then the Deputy asked a third question: how are remunerative prices to be fixed? Surely anyone who has any knowledge of economics will know that a remunerative price is a price which will cover the cost of production and at least leave a margin of profit. That, I think, would answer that question. It may be asked: how are we under this motion to provide for economic prices? The proposition is that we must guarantee to the Irish producer remunerative prices and, if the consumer is unable to pay to the farmer a price which will cover the cost of production, it is the duty of the State, as outlined in this motion, to close the gap between the remunerative price and the price which the consumer can pay. There is not time to deal with all the matters raised, but I think this motion has served a useful purpose.