I move:—
That a sum not exceeding £2,814,124 be granted to complete the sum necessary to defray the Charge which will come in course of payment during the year ending the 31st day of March, 1945, for the Salaries and Expenses of the Office of the Minister for Supplies, including payment of certain Subsidies and Sundry Grants-in-Aid.
The Department of Supplies, as everybody knows, is an emergency Department set up solely to deal with problems arising out of the emergency, problems which we hope will end with the emergency, and, when they end, the Department of Supplies will also cease to function. It is charged with the duties of getting supplies of necessary goods from abroad, however, wherever and whenever possible, and transporting them to this country; with the organisation and the regulation to the best advantage of the distribution of available supplies, whether imported or home-produced. It was recently given additional functions in connection with turf production under the auspices of the Turf Development Board, and is at all times responsible in the very important and highly controversial matter of price control.
The function of regulating the distribution of available supplies is one which the Department of Supplies shares with the Department of Industry and Commerce. As I told the Dáil on the occasion of the discussion on the Vote for the Department of Industry and Commerce, the line of demarcation between the functions of the two Departments is not very clearly drawn, but roughly, it leaves the control of industrial materials in the hands of the Department of Industry and Commerce, and the control of consumers' goods in the hands of the Department of Supplies. There is, of course, a number of commodities, including most fuels and textiles, in which there is both an industrial and a consumers' interest. Where there is a consumers' interest, the regulation of the distribution of the goods concerned is the function of the Department of Supplies.
On previous occasions when moving the Vote for the Department of Supplies, I warned the Dáil, and, through the Dáil, the members of the public, that our supply difficulties would grow in intensity with the prolongation of the war. The problems which were discussed here on previous occasions when the activities of the Department were under review still exist, but many new problems have been added to them since this time last year. As I have on other occasions pointed out, we in this country are fighting a defensive action for the protection of the conditions of living of our people. We are fighting that action against forces which are so strong that we have frequently no alternative to retreating. Whatever victories have been won or may be won in the future are merely negative, a mere avoidance of defeat, and on that account have tended to pass unnoticed, certainly unsung. It is only when some new scarcity develops, when the public interest requires that some additional restriction should be imposed upon the sale or consumption of goods, that the members of the Dáil and the public take notice of what the Department of Supplies is doing, and then as a rule unfavourable notice. Nobody can say how bad the conditions in this country might have been if the policy of the Government had been less sound, or the administration of the Department of Supplies less effective. Anybody can contend that, with another policy or more effective administration, conditions might have been better, and it is, of course, impossible to prove them wrong. Even comparisons with other countries are unreliable, because conditions elsewhere are different from those prevailing here, and there is in any event a lack of authentic information. It is, however, my duty to say, on behalf of the staff of the Department of Supplies, that they did their job as well as possible under all the circumstances. No Minister charged with the responsibility of my office could have wished for a better organisation under his control. Whatever faults may be found with the administration of the Department are faults of policy, for which the Minister alone is responsible. Within the limits of the defined policy, the officers of the Department of Supplies have produced the best results possible.
Our circumstances have worsened very materially since last year. There is a number of factors which limit our capacity to secure supplies of goods overseas, and which in the course of the past 12 months operated to restrict our imports to a minimum. The first of these factors is the shortage of oceangoing ships, and the second is the development in the restrictions on the release of materials imposed by foreign Governments. Those restrictions existed before, but they were far more stringently applied during the course of the past 12 months than they had been previously. During the financial year under review, no foreign ships imported goods from overseas to this country except petroleum products. The only means at our command for bringing in supplies from abroad were the ships operated by Irish Shipping Limited, and that was a very inadequate foundation for our security. Irish Shipping Limited has acquired 14 ships since it was established, of which there are 11 in service. One ship is under repair and two have been lost. The Dáil is aware of the circumstances attending the loss of the Irish Oak and the Irish Pine, but they may not fully appreciate that those two ships were the biggest in our fleet, and the loss of their services represented a reduction in the carrying capacity of the fleet which was very substantial, far more substantial than the proportion of ships lost to the total number acquired might represent. In fact, the carrying capacity of the ships at our disposal was reduced by almost 20 per cent. by the loss of those two vessels. I know there are a number of Deputies who believe that our shipping position might have been better if that company had been formed; or if ships had been purchased, at an earlier date than that was, in fact, done. That belief is based very largely on a misunderstanding. I do not think it is necessary to review now the considerations which led the Government to decide to rely upon neutral ships for the importation of goods, so long as they were available, or the considerations which induced us to avoid taking the risks associated with having ships carrying the Irish flag in belligerent waters. What ever criticism on that decision may be offered now in retrospect, I think history will record that upon it, as well as upon a number of other decisions, rested the success of the efforts made by the Government to preserve the neutrality of this country in the war. The misunderstanding of Deputies is, however, based upon the fact that they have not fully appreciated that the number of ships which, we, in this country, can operate—in fact, the number of ships which any neutral country can operate—in present circumstances is not determined by the number of ships which we can own or acquire, but by the facilities which the belligerent States are prepared to allow to us. In fact, there is a number of ships upon offer at the present time which could be acquired, but which have not been acquired, because difficulties exist which preclude the possibility of utilising them in the service of this country.
During the year which ended on the 31st May, the ships of Irish Shipping Limited carried to this country 204,000 tons of cargo. That tonnage represents only a small fraction of normal imports to this country, but, nevertheless, if we had not been able to procure the goods which it represents, our circumstances to-day would be very much worse than they are. The goods imported were all essential, the tonnage being utilised almost entirely for the importation of wheat, phosphates, newsprint, cotton and other textiles, agricultural seeds, metals and various industrial materials, such as paraffin wax. Wheat, of course, represents by far the most important item in the list, and, to the extent of two-thirds the carrying capacity of the ships was utilised for the importation of wheat.
The House is, I think, aware that the services operated by the smaller ships owned by Irish shipping companies to peninsular ports have been suspended. I cannot say when it may be possible to resume trade with the peninsular ports in our own ships again. The ships that were previously engaged in the peninsular trade are now engaged in the cross-Channel traffic from which British vessels were withdrawn under an order of the British Admiralty some time ago.
I think the House should be aware, however, of the exceptional success, from the commercial point of view, of Irish Shipping, Limited. The importance of the services provided by the ships of that company to the country is well known, but not so well known as the fact that the company has been run in a most efficient manner, a manner which has resulted in the realisation of profits on the enterprise, and which has so strengthened the financial basis of the organisation that its successful operation after the war is made more practicable than it might otherwise have been. I think that the Dáil, and the public, should know and appreciate the manner in which the company has been run, and should allow me to express, on their behalf, to the directors of that company our thanks for the services which they have rendered, which they have given voluntarily and which has been of inestimable value to the nation. In the second year of its existence, the company found it possible to reduce the freights charged for the transportation of goods by approximately 29 per cent. In July of last year the rates were again reduced by 10 per cent, and the reduction effected in July was increased to 20 per cent. in October. The company has also firmly established itself in the marine insurance business. It is now undertaking insurance for land-war risks on cargoes awaiting shipment which was the first type of business it engaged in. It is undertaking insurance for war risks on the hulls of Irish ships and on neutral vessels trading to Ireland. It undertook, at a later stage, war risks upon cargoes to this country, and has recently extended its business to include marine risks where only war risks were previously undertaken. The rates charged by the company for marine insurance business are fully competitive and conform to open market rates.
It would be impossible to give, in any detail, a picture of the difficulties which arose during the year by reason of the increasing restrictions imposed by other Governments upon the export of goods. In a very wide range of commodities, international organs of control have been established, and these international organs decide not merely the quantity of goods which we may import, but also the sources from which we may draw them. I think it is probable that these international organs, or a number of them, will remain in existence for some time after the duration of the war. In fact, in some quarters there have been suggestions that they may become a permanent feature in international trade. The existence of these international organs of control, and the regulations which they make concerning the acquisition of goods abroad, make it difficult, in fact, impossible for us to increase by any activity on our part the inflow of the essential commodities that we require.
The House is aware that in the course of the past year our fuel difficulties became exceptionally acute. I do not propose now to give any detailed picture of the fuel situation, because I did so in a debate only a few weeks ago, and the situation has not materially changed since then. I informed the House that certain restrictions had been imposed on the use of coal and electricity. In fact, it is not by any means clear that the economies then enforced were adequate to cope with the situation. I stated on that occasion also that representations had been made to the British with a view to securing an increase in our supplies of fuel. I am not yet in a position to make any statement as to the result of those representations; but we all appreciate the problems which, in present circumstances, confront the British Government in the matter of fuel supplies. I have no doubt that they will be ready to make increased supplies available as soon as the conditions governing fuel supplies become easier.
Deputies will have noted some days ago in the Press an announcement that the tea ration of ¾ oz. per week per head would be reduced from July 1st to a ration of ½ oz. The position is that we receive from the tea control organisation established by the British Government supplies of tea which are roughly equivalent to ½ oz. per head per week. We were able to increase the ration, first of all, to one oz. per week and latterly to ¾ oz. per week, by reason of the fact that in 1941 a substantial quantity of tea, which was purchased in India by an organisation which we set up for that purpose, was imported into this country. With the development of the war situation in the Far East, the possibility of drawing additional supplies from India ceased, and since then no quantities of tea have been imported into this country, other than the periodic amounts allowed to us by the British authorities.
We have now reached a situation in which the reserve stock of tea available to us permits of the maintenance of the ¾ oz. ration for four more months in all. There is little prospect of obtaining increased supplies by direct imports. Subject to the maintenance of the present quota of tea from Great Britain, the situation is that, from now on until the end of the war, we can have a tea ration of ½ oz. per head per week, except in four months. For four months during that period, no matter how long it may be, we can have an extra ration of a ¼ oz., making ¾ oz. in all. I informed the Dáil earlier in the year of that situation and stated that the Government had decided to put aside that small reserve supply of tea, so as to permit of an increased ration being given during the winter months. At the time, that decision of the Government appeared to have received the approval of the Dáil; but if the matter is to be discussed further to-day, I would like the House to know precisely what the situation is. There is no means at our disposal by which we can maintain the present ¾ oz. ration for more than a total of four months.
In the case of other beverages, we have a supply of cocoa beans which will permit of the production of cocoa, at the maximum output of which the manufacturers in this country are capable, for about eight months. I do not want Deputies to pay any special significance to that figure, as there is a possibility of increased imports. The point I do wish to stress is that the maximum production capacity of all the manufacturing concerns in the country does not permit of the consumption of cocoa at a greater rate than about one-fifth of a pound per household per month. It would be obvious, therefore, that it is not possible to effect such a substantial increase in the supply of cocoa that the deficiency in the tea ration can be made good from that source.
There are, however, considerable stocks of coffee. Even at the present very much increased rate of consumption, the available supplies of coffee in the country are sufficient to last for 15 months and there is, of course, also the possibility of increased supplies being obtained, if necessary.
In the case of flour, the most important of the foodstuffs, the position is reasonably secure for this year. During the 12 months of the financial year 1943-44, we consumed 411,000 tons of wheat. As the House will remember, there was a change in the composition of the flour on sale during that period: we went back from the 100 per cent. flour to a new extraction and decided to utilise, in the production of flour, certain quantities of barley. If that situation remains unchanged during the present financial year, we will require, to meet the full needs of our people, 460,000 tons—an increase of 49,000 tons upon the actual consumption of last year. Unfortunately, the quantity of wheat from the native crop delivered to the Irish mills in 1943, was somewhat less than in 1942, and a very substantial tonnage of wheat had to be imported to maintain the supply.
It is obvious that there has been a very considerable increase in the acreage sown with wheat in this year; but what the effects of the unfavourable weather conditions will be upon the yield of the crop it is difficult to see. We are hoping that it will result in a substantial addition to the quantity of wheat coming from home sources. We had to import more than 150,000 tons of wheat last year. If we could save the shipping space represented by that tonnage, we could ease the conditions of our people in many respects. I hope, therefore, that the yield from the native crop in this year, and the proportion of that crop sold to millers, will be such as to permit of a substantial reduction in the imports of wheat, if not their entire elimination. If we get that result, we will release shipping space which can be utilised for the importation of other necessary materials; and the difficulties of our people, including the maintenance of employment, will be minimised to that extent.
There have been complaints from some quarters concerning the quality of the new flour. It took the millers in this country some time to adjust their machinery to the production of the best type of flour from the new grist. I may say that it took the millers here a substantially shorter time to effect that adjustment than it did the millers in Great Britain, the explanation being that the millers here had the advantage of the experience of the British millers in making the change. I think it is possible to say that the initial difficulties have now been overcome and that the millers are now producing flour of uniformly good quality.
In respect of other important rationed goods, such as butter, clothing, and soap, I have nothing particular to say. There has been no material alteration in the position since we discussed it last year.
Since last year, we effected the second issue of ration books. That issue was an unqualified success. The number of people who failed to receive ration books was very much less than on the occasion of the first issue and represented an insignificant fraction of the total number of people in the country. On this occasion, we decided to issue a special householder's folder, which will permit of the rationing of goods on a household basis, if that should become necessary or be considered desirable. I think I should pay tribute to the work done by Hospitals Trust Limited, who undertook the writing of the books on a contract basis and who carried through their contract with remarkable efficiency. I should also pay a tribute to the Gárdaí, to the Post Office authorities and to other Departments, all of which co-operated in the very big task of effecting that issue of ration books in accordance with the time schedule which was prepared.
I would like on the occasion of the introduction of this Estimate to make special reference to matters affecting the price control policy of the Government. We have had many discussions in the Dáil on the question of price control in the past, but I never felt satisfied that the Dáil gave it the serious consideration to which it is entitled. I know that a number of Deputies made speeches criticising the Government for the rise in prices, urging that prices should be kept down, Deputies who frequently made speeches urging that higher prices should be paid for farm produce, or that wage control regulations should be removed or that the Government should intervene directly to secure an increase in wages for workers. On many occasions since the outbreak of the emergency in bringing in the Estimate for the Department of Supplies, I have spoken at length on the importance of price control, and endeavoured to outline the policy upon which the Department was working, inviting Deputies to criticise that policy or to offer their suggestions for its amendment. I never felt that the Dáil gave that co-operation that was desired. Many Deputies who spoke on the matter confined themselves merely to expressing their wishes that prices should not be allowed to rise or criticising the Government for not having kept prices down. Deputies, quite obviously, had not adverted to the consequences that would follow on the adoption of their suggestions, as the consequences of any change in price control policy might be very considerable both in respect of social and economic conditions as well as in our financial administration.
The causes of the rise in prices are well known to Deputies. First of all, there is the increased cost of imports of the very essential goods that we purchase abroad, and that have to be obtained at whatever price they can be purchased at. As they are not under our control, the only alternative is to take the goods at the price at which we can get them, or not to take them at all. The second of the causes is the rise in prices paid for agricultural products. The prices of agricultural products have been regulated, in so far as the Government interfered with them at all, with direct advertence to the possible effect on the maintenance or the increase of agricultural output, and only in a secondary way with regard to the very definite effect upon price control policy. The third cause is the increased cost of production of manufactured goods, due to increased manufacturing costs, both absolute and relative to the decline of the volume of turnover; and the fourth is the increased cost of distribution, due to the higher costs operating in the distributive trades, and the reduced volume of goods being distributed. Of these two factors the first, the cost of imports and the prices paid for agricultural products is by far the more important. Any system of price control represents an effort to replace the automatic mechanism of price balance which operates in normal times by artificial measures and expedients. That automatic mechanism is very easily disrupted, and was decisively disrupted at the outbreak of the war.
That normal price balance, perfect or imperfect as it may be, results from every factor in our economy, including the volumes of imports, exports, production, wages, profit levels, the distribution system, conditions in foreign markets, conditions in the home market, the extent to which production or distribution is influenced by existing monopolies, by the development of competition, by a thousand and one factors, including the monetary medium, in which the total price structure forms itself with the usual manifold complexities of that medium.
It follows from what I said that artificial measures or expedients adopted in the system of price control will be effective or ineffective according as they take account of all or only some of the factors to which I referred. Viewed in that light, a system of price control which is only partial control operating in place of normal price balance which, even before the outbreak of war, was for many economic and social reasons imperfect, cannot be relied upon to provide an infallible and equitable price structure. At best it can only operate to prevent gross excesses and inequalities. The Dáil, no doubt, will urge that we should do more than we have attempted to do. Deputies, in my opinion, have urged that before taking into full account all the consequences of a more stringent system. To do more than we are attempting would require not only price control in the case of every single commodity and service, but a reorganisation of our whole economy, of which the price structure is merely one element of many, and the monetary system in which it is constructed, another element. The system of price control now in force cannot be effective to bring about results for which so comprehensive an undertaking would be necessary.
It may be conceded, as many Deputies contended from time to time, that the system could be applied more rigidly. We could do that if we altogether abandoned democratic methods and practice, and operated by completely autocratic methods, by steam-rolling opposition, liquidating those who were unwilling to co-operate, and having resourse to unlimited bureaucratic machinery. By these means and methods the price control system we have adopted might be made more efficient, and even more equitable from the point of view of immediate results. If we have decided not to adopt these means. we have done so deliberately, and the shortcomings of the present method of control must be regarded as the cost of that choice. Apart altogether from the question of more stringent application of the system of price control which we consider suitable to our circumstances, there have been suggestions put forward by Deputies that a more comprehensive system should be adopted, that we should change the present system of price control for another, but these contentions have never been followed up by an attempt on the part of the Deputies concerned to illustrate the consequences that would follow from the adoption of their suggestions.
At the beginning of the war, I informed the Dáil of the decisions which the Government had taken in the matter of price control, and I asked the Dáil whether or not it agreed with those decisions. So far as possible, I endeavoured to secure that the Government would be proceeding in accordance with a policy that was agreed upon by all sections, but I have never yet been able to get from any other Party a clear indication as to whether they had approved or disapproved of the decisions the Government then took. On that occasion, the Government had two courses open to it. It could have decided that the essential consideration was the keeping of prices at the lowest possible level, and it could have made arrangements to secure that result irrespective of the consequences on the employment of workers or the social conditions in the country generally. In respect of a wide range of goods, we could, even now, effect a substantial reduction in prevailing prices—but at the cost of putting a very large number of people out of employment and of closing down a number of manufacturing concerns which are surplus to our present manufacturing requirements. However, I told the Dáil at the time that the Government had decided that the maintenance of employment and of the social conditions in the country generally was more important than merely having the lowest possible level of prices. I asked the Dáil if it agreed with that decision, and so far as any indication at all was given of the attitude of the various Parties, it seemed to me that they did agree. Yet, on many occasions since, Deputies have criticised the rise in prices, and have blamed the Government for that rise in prices without adverting to the fact that they had voluntarily acquiesced in a policy which was designed to permit prices to rise rather than put people out of employment.
We have now reached a stage at which we have got to reconsider that general policy. We have got to decide whether the upward pressure of prices should be allowed to continue unabated or whether there is not a limit beyond which prices must not be allowed to go. That question has been forced upon our attention by developments which have occurred in the course of the past couple of months—the extremely critical situation which has arisen in regard to the shortage of fuel supplies and the resulting imminence of a further serious decline in the volume of production and in the volume of turnover in the distributive trades, with the possibility of a rise in manufacturing and distributing costs. Before considering that question, the Dáil should bear in mind that it touches every section of the community and that the conditions which force it upon us—the upward pressure on already high price levels—are strongly marked with the symptoms of that economic plague which is called inflation.
When inflation sets in, nobody is immune from its consequences, least of all the workers and the fixed-income classes. The accumulated profits of the past and the savings of all sections of the community are swept away. Its aftermath is collapse of values, unemployment, social chaos and economic inertia which may destroy all prospects of future progress. If inflation deals out any justice at all, it is that, in its passing, it sweeps away the profits accumulated by those individuals and business concerns who benefit temporarily by it, who pursue their own selfish ends and set out as deliberate carriers of the plague. Nobody should have any illusions about the urgency of this question for every one of us. I do not know if it is agreed that any further rise in the price-level must be prevented even at the cost of disimproving economic and social conditions for many sections of our people. I do not know if it is agreed that there is a limit beyond which prices must not be allowed to go and that we are now perilously close to that limit. I do not know if it is agreed that not only must excessive profits be eliminated but that the maintenance of reasonable profits can no longer be permitted at the cost of continually higher prices during the acute phase of the crisis which looms ahead of us.
Recently, the Government announced the making of a standstill Order. That Order attempted to fix the prices of all classes of goods and services at the levels which prevailed in May last. That Order was, apparently, welcomed by the Press and by the various political sections of our people. Many of the Press commentators expressed the view that the Order had been made too late. It was quite apparent that they had not recognised that the making of that Order represented a change in policy—a change in policy the significance of which the Dáil is now asked to consider. The Government did not make that Order with the intention of effecting a change in permanent policy. It is hoped that the exceptionally difficult economic conditions which arose from the fuel scarcity will pass. Ordinarily, the Government would have contemplated the repeal of that standstill Order and reversion to the original system of price control if such should happen. The welcome given to the standstill Order appears, however, to indicate that the Press and public would prefer, as a permanent arrangement, the system of price control which it visualises—one which ensures that there will be no increase in prices no matter what the consequences may be to individuals; one which involves that, if we cannot obtain abroad goods which can be sold at the prices at which they were sold previously, we shall do without those goods; one which involves that, if any factory cannot continue to manufacture and sell goods except at a loss, then that factory may close; one which involves that if any employer finds that he can work to those prices only by disemploying a considerable number of his workers, that disemployment will be allowed to happen. We consider that it is possible to maintain that policy without serious economic or social consequences for a temporary period, but if it is to be continued as a permanent policy, which would appear to be the wish expressed in the newspapers by those who commented upon it, we want that to be determined with full knowledge of what the consequences will be.
In the view of the Government, if this fuel crisis should prove to be only temporary, it would be the wiser course to place maintenance of employment and social conditions generally in priority to the maintenance of a low price-level. If, however, the Dáil is of opinion that we should make the restriction of prices and the avoidance of further increases in price the predominant consideration, I want it to take that decision with its eyes open. I think, however, there will be no disagreement upon the desirability of maintaining the policy represented in that standstill Order as a temporary measure during this temporary crisis —I hope, at any rate, the crisis will be temporary. The need for the Order during that period will not be mistaken and the degree of co-operation and, if necessary, of sacrifice which it calls for from every member of the community, whether he is a trader in a big way or in a small way, will equally be clear.
The greatest difficulty in any system of total price control under a democratic system of Government is the difficulty of enforcement, of securing universal compliance with the regulations, and of preventing evasion through unavoidable loopholes and the tricks of interpretation that make use of the maze of complexities in modern trade and commence. To pursue that maze through all its intricacies is a drafting and administrative impossibility. And yet that difficulty is the easiest to overcome, granted only one condition, and that condition is that there should be good will and co-operation amongst all legitimate traders and business men; that they should act in accordance with the intention unmistakably behind the regulations and that they should join with the general public in bringing the moral force of their actions and opinions to bear upon those amongst them who seek to profit out of the distress of the times. Granted that condition, self-interest alone—putting it on no higher level— requires that inflation should be avoided at all costs. There is no reason why a wide measure of success should not be accomplished by the present effort to limit the upward movement of prices before present conditions force it to develop further, because that is the aim of the present prices standstill Order.
There is one other matter affecting price control to which I would like to refer. In limiting the profit-making activities of manufacturing and trading companies, there were two possible courses which the Government could adopt. We adopted one at the beginning of the war and subsequently changed to the other. At the beginning we endeavoured to limit the profits earned by manufacturing concerns by reference to the capital employed in their businesses.
The effect of limiting the profits of manufacturing concerns by reference to the capital employed meant that the profit taken on individual articles produced was not controlled and within the limit of profit laid down a company could still continue to operate—and operate profitably—even if the output was reduced considerably. There was in that system no particular inducement to the individual manufacturer to increase or even to maintain his output, because the total profit he was permitted to earn was related to the capital invested and not to the output.
We decided at a later stage that it was desirable to change the system of control so as to sanction a prescribed margin of profit upon production costs. That system of control encouraged output. It permitted the individual manufacturer to make an increased profit if, and only if, he increased his output, and it was considered that was a more desirable method because it had the effect of stimulating the efforts of manufacturers to obtain additional supplies of material, to overcome the emergency production difficulties and keep up the output and, consequently, employment in all their concerns. That system of control did not operate to limit the total profit which a manufacturer could earn. The profit fluctuated with the output of the concern, and the more successful manufacturer, the individual who succeeded in overcoming production and supply difficulties, could make more than his less enterprising colleague.
Over and above both systems of control operated the excess profits tax. That tax is limited to pre-war profit standards. Where a concern makes a profit over and above the standard profit, it is liable to a very heavy rate of tax. The enactment, however, which imposed that tax contains one clause which is having an effect somewhat different from what was intended. Deputies will remember that in the early stages of the war it was urged by Deputy Dillon and other Deputies that traders and others should be permitted to accumulate certain reserves during a period of rising prices, when such accumulation would be possible, to enable them to meet the period of difficulty which will develop after the war when prices will fall. I intimated that the Government were not prepared to agree to that course, expecting to be able to assist traders and manufacturers in the difficulties of the post-war period by ad hoc measures taken then.
The Finance Act, which imposed the excess profits taxes, permitted a certain amount to be held to the credit of a concern, so that if, after the war, that firm operated at a loss, some repayment would be possible to offset that loss. Certain manufacturers have seen the possibilities of that device. They realise that if they earn excessive profits and pay them to the Exchequer, they are putting themselves in the position in which they will have some competitive advantages over other firms in the same business after the war, visualising a situation in which they may sell goods in a competitive market at a loss and recover that loss from the Exchequer and thus re-establish themselves in the post-war market. We have given consideration to that device and, while it is obvious that the provisions of the Finance Act cannot be altered in that respect without a breach of contract, we have decided that it is desirable to consider the possibility of enacting legislation which will secure the complete surrender to the Exchequer of all profits earned by any concern, whether manufacturing or trading, over and above what are deemed to be reasonable profits.
That idea will, no doubt, commend itself in theory to Deputies, but in practice it means giving to the Minister for Supplies, or some other Minister, rather drastic powers, because the determination of what is a reasonable profit for any undertaking will have to be a responsibility of his, a responsibility which he will arbitrarily execute in an arrangement in which his decision will not be open to question. If the Dáil is prepared to contemplate the giving of these powers to any Minister —powers to determine what is a reasonable profit under any circumstances for any concern; powers to require the surrender to the Exchequer of any profit over and above a reasonable profit—then I think we would not merely make our system of control more effective, but we would take a very effective step in reversing the inflationary tendencies now evident.
