Amendments Nos. 22, 23, 25, 26 and 27. May I put No. 22 now?
Transport (No. 2) Bill, 1944—Committee (Resumed).
Debate resumed on amendment No. 22, as follows:—
In sub-section (1), lines 25 and 26, and 38 and 39, to delete the words "the amount set out in column (4) of the said Part I at the said reference number" and to substitute therefor the words "such amount".
—(Deputy McGilligan).
Do I understand that there will be a separate discussion on No. 22, and then on Nos. 23, 25 and 27?
Amendment No. 22 will govern Nos. 23, 25, 26 and 27.
If that is so, something will have to be said on amendment No. 22. A case was made by Deputy McGilligan, when he moved amendment No. 22, for allowing somebody, such as the High Court, to decide what equivalent amount of stock in the new company would be granted to holders of stock in the two dissolved companies. I put it in a different way previously, and the House, in considering this matter, should keep before it the fact that we are concerned in the first place with justice to the country as a whole, from the point of view of national economy, as well as the burdens that the upkeep of our transport system will impose upon it; and in the second place, we are concerned to do justice to people who already had capital in the companies. The proposal is to give an amount of stock in the new company of equivalent nominal value to what stockholders held in the old Great Southern Railways. From our point of view, we should not be asked to decide in the way suggested. I take it that Deputies have had before them the report of the inquiry into railway stocks. As pointed out that report showed how the Ministerial, and the Departmental view, and how the mind of the chairman was developing since February of last year. On page 25 of the report it is shown that the chairman of the Great Southern Railways in February, 1943, considered that a proposal might be made to form a statutory company with a capital of not more than £10,000,000, to take over the stock of the Great Southern Railways stockholders. A point arises on that on which we would like to get some information from the Minister. The White Paper circulated, and the facts before us, indicate that the stock being substituted in connection with the Great Southern Railways represents £11,547,290. That is what we infer from the statements published and from the figures given at the tribunal of inquiry into public transport in 1939. On page 25 and also on page 61 of the report of the inquiry into the stock there is a suggestion that the total amount of capital in the Great Southern Railways was £12,691,451.
It would be advisable to know that the explanation is, as to the difference between £11,547,290 and £12,691,451; whether the stockholders we are dealing with hold stock of the nominal value of £11,547,290 or £12,691,451 which the chairman said in February, 1943, should be purchased for £10,000,000. At the end of the month the Minister's outlook was that the £10,000,000 in the statutory company, formed in the way suggested, should buy up and take over not only the whole capital of the Great Southern Railways, but also the whole capital of the Dublin Transport Company. That is one point which shows that Departmentally there was an outlook which inevitably indicated compulsory conversion. The secretary of the Department went through the process of submitting to the Minister certain calculations based on market quotations designed to bring the new capital within the range of £10,000,000. In 1943 it was still Departmentally considered that £10,000,000 of the new statutory company should be utilised to buy up the shares of the Great Southern Railways, if not of the Dublin United Transport Company. From what appears on page 27 of the report, I think it was intended at the same time to take up the stock of the Dublin United Transport Company inside the amount mentioned. It was only in September that we came across the Minister's present proposal. It is not clear yet if the Government accepted that proposal wholeheartedly, or if they did not accept it, had no objection to it. The Minister has commented on that.
I think the picture given of what was in the Minister's mind warrants our getting a much more satisfactory explanation as to why the House is asked, without substantial details or plans being before it, to give the stockholders substituted capital of the full nominal value of that in the Great Southern Railways, and increased value for what is in the Dublin Transport Company. We are going to be asked to bear a big amount of the capital in this new company that we should not be asked to bear. We are going to be asked to bear it in a way that seems to suggest that the whole of it will be given in cash or in some other way to the stockholders by 1960. The matter has been brought before the House in such a way that an enormous amount of capital was to be repaid to holders of debentures, and to those who gave overdrafts as a result of the excessive charges that were taken from the users of Dublin transport in the last few years. The chairman of the company indicated to the Department, according to what appears on page 28 of the report of the tribunal into stock transactions, that he hoped to redeem the substituted stock out of revenue "as he had been able to do in the case of the Dublin United Transport Company owing to the economics effected by reorganisation." Whatever part the economics effected by reorganisation may have played in enabling the chairman to repay capital in the case of the Dublin Transport Company is not quite clear, but a picture is given of the way in which economics are going to be brought about in the general railway position, to enable the new company to repay £9,000,000 of substituted debentures between now and 1960.
This country has missed very substantial opportunities of getting a decent start since the last war. After the last war, instead of being able to settle down to our business and to organise the whole energies of our people and our industries with good administration we had a struggle against military oppression from 1918 to 1921. In 1922 and 1923 we had a struggle against internal strife and from that period until recent years the political situation was such that the energies of our people could not be concentrated in a unified way on the work of the country. In 1932, when the world was beginning to recover from the great depression of 1929-1932, we had again political difficulties of one kind or another which prevented us, in the first place, from making a proper start and, in the second place, from taking advantage of the rising condition of world economy from 1933 on.
The Deputy should really come to the amendment. It strikes me that, so far as I have heard him on these stocks and shares, he has made exactly the same speech at least twice already. The matters to which he is now referring are certainly outside the scope of these amendments.
I am putting in a few pithy phrases the fact that, through not properly facing our business, or through not being given a proper chance of facing our business, we did lose opportunities for putting the economy of our people as a whole on a correct basis at critical times.
Is not that more in the nature of a Second Reading speech than a speech on an amendment?
We are asked by this section to take the nominal capital of the Great Southern Railways and to give it full blooded life, to secure that the transport users of the country will pay interest on it between this and whatever time it is redeemed and that £9,000,000 odd of it will be recovered from the users of our transport system between now and 1960. We are asked to do that at a critical time in the world's economy and at a critical time in our own affairs, at a time when in so far as transport is concerned it should be the one thing which should be stripped in every possible way of overhead charges, so that our production and our distribution might proceed in a more effective way in relation to the cost of living here and our competitive position abroad.
I am simply stating that in a simple way in connection with the amendment which says that the House should not be asked, by acquiescence in the section, to give full-blooded life to the amount of stock in the Great Southern Railways at present. I think it shocking that we are asked to do business in this way. We had confusion and bad feeling here in connection with the use of certain expressions last week, but if the matter were dealt with in a simple businesslike way, the brains and the minds of every Party could be brought in a systematic way to understand what we are asked to do here and there would be no danger of our being at cross purposes. One does not find oneself at cross purposes when one is dealing with arithmetic, with the multiplication and division table, and here we are simply dealing with figures, with an estimate of what value ought to attach in particular circumstances to certain capital being used in a particular way.
I am making my case upon the only ground upon which the case is worth making and the only ground on which we have any business in dealing with it here. The only basis on which we have any business dealing with it is the basis of the national well-being, and the responsibilities we bear in relation to that national well-being, to ensure that no action of ours here will prejudice in any way, so far as our joint minds and understandings facing the facts which ought to be clearly and plainly before us can guide us, that national well-being and to ensure that we will take the best possible decision.
The submission in Deputy McGilligan's amendment is that this body, even with the facts definitely before it, is not necessarily the best body to take this decision, but that this body, without any of the facts before it, is incapable of doing what it has a responsibility for doing, that is, taking the best possible decision in the country's interest. Therefore, the suggestion is that a body such as that contemplated in a subsequent amendment by Deputy McGilligan should deal with the considerations with which we are now asked to deal blindfold.
This amendment was considered at considerable length in the Dáil last week, and I think it is only a waste of Parliamentary time to repeat in extenso the arguments then used. I want to repeat briefly the reasons for which I oppose the amendment. First, it is unfair. It amounts to something approaching confiscation. The proposal is to compel the shareholders of the Great Southern Railways by legislation to surrender their shares in return for stock in the new company on a basis related to the revenue earning capacity of that company at the worst period of its history. There could be no justification whatever for going back to the dates mentioned in the amendment for the purpose of determining the value to be given to stockholders of the company unless we had the intention of ensuring that the lowest possible amount of nominal value of stock in the new company is to be given to the shareholders in that company. I think it would be approaching dishonesty for the Dáil to adopt the amendment.
The second reason is that I think it desirable that we should proceed by way of agreement. Whatever case there may be for utilising the power of the Legislature to proceed without agreement with the shareholders of a company such as this, there are good reasons of public policy why we should proceed by agreement. We sought to obtain an agreement with the shareholders of these companies as to the basis upon which their existing holdings would be surrendered in return for stock in the new company. We got agreement, or at least a substantial measure of agreement, in each case, and the Government is committed to that agreement and will not consider any departure from it. The Government would be breaking a moral contract if it were at this stage to consider any other basis of action.
Deputy Mulcahy inquired as to the difference he found between certain figures representing the nominal value of the stock of the Great Southern Railways. I presume that Deputy Mulcahy has read the various documents presented to him with some care, but, if so, he has not succeeded in properly correlating the various items and information given to him. The lower figure he mentioned represents the nominal value of the four major stocks of the Great Southern Railways —debenture, guaranteed preference, preference and ordinary; but in addition to these major stocks, the company have a number of subsidiary stocks, or had a number of such stocks, because they have in large measure been redeemed for cash during the present year.
The total nominal value of these subsidiary stocks exceeded £1,000,000. There is an amendment, amendment No. 195, which deals with them. They represent various issues of shares made for the purpose of securing capital to finance various extensions—the North Wall extension, the New Ross and Waterford Extension Railways, the City of Dublin Junction Railways and certain other issues. The difference between the two figures quoted by the Deputy represents the difference between the nominal value of the major stocks and the nominal value of the total stocks issued in the name of the company.
Deputy Mulcahy is determined to refer to a figure of £10,000,000 which was mentioned provisionally during the early stages of the consideration of the proposals in this Bill. He apparently is determined to try to read into that figure a significance which its authors never gave it. It represented an indication, not of the arrangement which would be regarded as most equitable in relation to the shareholders of the existing companies, but the sum total of the capital liabilities which we think the new company should have. The intention under this Bill is to effect, by means of the redemption of stock, a reduction in the capital liability of the company to in or around that figure. That £10,000,000 represents the amount which we considered at one time could be substituted for the existing stocks of the two companies to be amalgamated, and contained no provision for the new capital which the new company will require to finance the reorganisation in contemplation. In fact, the proposals in the Bill, although somewhat in a different form, do not vary considerably in that respect from those originally in mind.
The Minister's remarks make it clear that the original capital of £10,000,000 was apparently intended to be substituted for the entire Great Southern Railways capital of £12,691,000 and the entire capital of the Dublin Transport Company of something over £2,000,000. I do not see the point in the Minister's remark that the new proposals are substantially the kind of proposals that were being made then. It emphasises very much the necessity for deciding that some body other than this House in Committee will decide the issue that is attempted to be decided here. The Minister has attempted to explain the undesirability of passing this amendment by pointing to a date in subsequent amendments—that is, 1st March, 1943—as making provision that the stockholders of the Great Southern Railways would be dealt with in the most equitable possible way.
The most inequitable possible way.
The most inequitable possible way. Deputy McGilligan said he accepted, to some extent, the Minister's statement of the conditions of the railway company at that particular time and he expressed himself quite satisfied to substitute another date for the date that was there. At any rate, whatever date can be substituted, or is put there, it is perfectly clear to me that the House is being asked to do something it ought not to be asked to do and that the users of transport will be asked to bear a burden they ought not to be asked to bear when they will be asked, under the Minister's proposal, to bear the cost of fully reinstating the capital of the Great Southern Railways as at its nominal value in the new company.
Question put:—"That the words proposed to be deleted, stand."
The Committee divided: Tá, 57; Níl, 31.
Tá
- Aiken, Frank.
- Allen, Denis.
- Beegan, Patrick.
- Boland, Gerald.
- Boland, Patrick.
- Bourke, Dan.
- Brady, Brian.
- Brady, Seán.
- Breathnach, Cormac.
- Breen, Daniel.
- Brennan, Thomas.
- Breslin, Cormac.
- Healy, John B.
- Hilliard, Michael.
- Kennedy, Michael J.
- Killilea, Mark.
- Kilroy, James.
- Kissane, Eamon.
- Lemass, Seán F.
- Little, Patrick J.
- Loughman, Frank.
- McCann, John.
- McCarthy, Seán.
- McEllistrim, Thomas.
- MacEntee, Seán.
- Morrissey, Michael.
- Moylan, Seán.
- O Briain, Donnchadh.
- O Ceallaigh, Seán T.
- Briscoe, Robert.
- Buckley, Seán.
- Burke, Patrick (Co. Dublin).
- Carter, Thomas.
- Colley, Harry.
- Corry, Martin J.
- Derrig, Thomas.
- Flynn, Stephen.
- Fogarty, Andrew.
- Fogarty, Patrick J.
- Gorry, Patrick J.
- Harris, Thomas.
- O'Connor, John S.
- O'Grady, Seán.
- O'Loghlen, Peter J.
- O'Reilly, Matthew.
- O'Rourke, Daniel.
- O'Sullivan, Ted.
- Rice, Bridget M.
- Ruttledge, Patrick J.
- Ryan, James.
- Ryan, Mary B.
- Ryan, Robert.
- Sheridan, Michael.
- Smith, Patrick.
- Traynor, Oscar.
- Walsh, Laurence.
- Ward, Conn.
Níl
- Beirne, John.
- Bennett, George C.
- Broderick, William J.
- Cafferky, Dominick.
- Coburn, James.
- Cogan, Patrick.
- Coogan, Eamonn.
- Corish, Richard.
- Cosgrave, Liam.
- Dockrell, Henry M.
- Dockrell, Maurice E.
- Donnellan, Michael.
- Doyle, Peadar S.
- Everett, James.
- Finucane, Patrick.
- Giles, Patrick.
- Halliden, Patrick J.
- Keating, John.
- Keyes, Michael.
- Larkin, James.
- Lynch, Finian.
- McFadden, Michael Og.
- McGilligan, Patrick.
- Mulcahy, Richard.
- O'Donnell, William F.
- O'Driscoll, Patrick F.
- O'Leary, John.
- O'Sullivan, Martin.
- Redmond, Bridget M.
- Sheldon, William A.W.
- Spring, Daniel.
Tellers:—Tá: Deputies Kissane and Kennedy; Níl: Deputies Doyle and Bennett.
Question declared carried.
Amendments Nos. 23, 24, 25 and 26 not moved.
I informed Deputy Cogan that he might get a decision on amendment No. 27a.
I was under the impression that we were not dealing with amendments Nos. 27 and 27a in the discussion which has taken place.
Until a later stage?
Yes. I understood that they were to be taken afterwards.
Very good. I shall now put Section 13.
Does not amendment No. 27 arise as a separate amendment?
I do not think so.
Amendment No. 27 is surely tied up with Section 13.
All these amendments are tied up with Section 13, but whether No. 27 has been debated already is the point. Under amendment No. 19, it would be possible for establishment date holders of stock to become the holders of stock in the new company—not any earlier date holders. Under amendment No. 32, the existing value of the stock should be as set out in the Schedule, not according to a High Court assessment. Amendment No. 27 surely brings in the High Court again?
But for a different purpose.
I will hear the Deputy on amendment No. 27, as I fail to see the difference.
You will see that the first amendment in my name is No. 18. Amendment No. 18 was to substitute two sub-sections (2) and (3), of which the sub-section in amendment No. 27 would be (3). That would, therefore, mean that Section 13 would hold, subject to amendment No. 27, if that amendment were carried. The framework which I was trying to get in was, first of all, to reinstate the dispossessed holders by putting down the date 1st March, 1943, for everybody. That has failed. The second point was in respect of those who were to get stock, that is those who were declared to be entitled—to see that that should be determined by a decision of the High Court. That also has failed. The third amendment was to take those who had come in since 1st March, 1943, and say with respect to those: if we cannot reinstate the dispossessed stockholders, we will see that those who have bought since 1st March, 1943, will not get the same terms as the rest, but only such terms as the High Court will give them. I suggest that this is a different amendment entirely.
I would not say "entirely". There is something new in it, but it strikes me that it is not of much consequence.
Except this: I divided the people into two classes, as far as I could; first, those who had been induced to sell after the 1st March, 1943, and who might desire to be reinstated as full proprietors of the stocks. That has failed, but I submit that does not necessarily carry with it the suggestions that we are not to be in a position to deal with those who came in since March, 1943, in a somewhat different way from that in which we are dealing with those who were previously stockholders.
There is some point in it.
I suggest that if you were the holder of stock bought since March, 1943, you would realise there is a great deal in it.
I will hear the Deputy on the point.
What are we discussing?
Amendment No. 27. I understand Deputy McGilligan's point to deal with establishment date stockholders other than post-March 1st, 1943, purchasers should be the owners, others being compensated.
It comes to that.
That is practically what the amendment means.
Amendment No. 27 is meaningless without amendment No. 26; in fact, there is a definite reference in No. 27 to No. 26.
Of course, it needs re-drafting but there is some point in Deputy McGilligan's submission.
Amendment No. 27 had to be put down for a special purpose. It was to apply first of all to all stockholders and secondly, if that failed, it was to apply at least to those who became stockholders only after 1st March, 1943. As No. 26 has failed and been negatived, if No. 27 were accepted, No. 26 would have to be reinstated as a sub-paragraph of No. 27.
It could not be reinstated as drafted.
It would have to be moved again as the machinery for operating No. 27. I propose to discuss whether or not there should be the same terms for those who bought after the 1st March, 1943.
The Deputy realises that this amendment really should be re-drafted. He may move the amendment, but I submit that the whole argument on the series No. 22 to No. 27 should not be repeated.
I do not intend to repeat it. I only wish to deal with the period since 1st March, 1943, which is somewhat different. The proposal in this amendment is that anybody who, immediately on the establishment date, is the holder of stock, but was not the registered holder of the same stock on 1st March, 1943, will not get the substitute stock set out in Section 13, but will have the value of his stock determined by the High Court and get a cash payment or its equivalent. Part of the case already has been made on behalf of those who were stockholders for a long time and who sold —on my argument—on account of the depressing statements made by the chairman and the Minister. I do not want to repeat that argument, but rather to deal with the people who did not hold any stock in the company —at least, did not hold this stock, for which they are to get compensation— and who only came in since the 1st March, 1943. With regard to these people, I ask the House to say there should be a different attitude, that we should tell those people they bought —according to the evidence before the inquiry—entirely on their own view as to what the stock would be worth, without any hint of a Government guarantee. Therefore, the Government is not pledged to them: they cannot say they had any knowledge of any Government undertaking.
The evidence of certain people before the inquiry was that they bought as investors and speculators. The whole matter is still in the control of the House and the House is not pledged to those who bought between the 1st March and the 25th October, who bought without any information whatever, simply because of their view of the way in which the railway was working and their judgment in regard to it. We should say to those people: "You will not get the terms, because you bought in ignorance of those terms." Take the other lot who bought since the 25th October. They bought merely on the statement that the Government had a proposal. The Government cannot bind this House. It was clear to those who bought then that these proposals would have to run the gauntlet of criticism in the House and they bought with that risk. I suggest that we should bring that risk home to them. There were some people selling out and others were coming in, but some came in on what I call the depressing statements made by the chairman and the Minister. One of those who came before the tribunal said he regarded those statements as a direct tip, but the tribunal has reported that they were "in the main gloomy and not regarded as encouraging" and as a result of the speeches certain stocks began to fall. If certain people pride themselves on ability to read between the lines and come to the conclusion that there is a good bargain, it is their look-out if the bargain turns out to be not so good as they thought. At any rate, I maintain we are not pledged to those people.
There is one point I wish to make with regard to one other matter, which arises on another amendment but which is appropriate to this. It is recognised from the evidence given before the judicial inquiry that only one-tenth of the entire stock changed hands but that there was pretty substantial purchasing and that some people put themselves in the way, if the measure went through, to make substantial profits. They have taken their place—and will do so in a stronger degree—amongst the new capitalists of this country. It is proposed at a later stage, on the financial fabric before us, to borrow but there is no statement as to what the rate of interest will be. It looks, however, as if some people will be able to make on the double. They have bought stock cheaply and they find it has now appreciated fairly heavily. They now have potentially or actually made large sums of money and are possessors of great credit with banks on account of the hold they have. Are they the people to whom we are to go later to borrow—possibly at 5 per cent., at a time when money is ranging between 1 and 1½ per cent.? Are they to become the strength of the new capitalist position? They are the people to whom we will have to go, so to speak, for a loan on which this whole Bill will be floated. I suggest that whatever point may be made about people who made money in any other wise, we should not give further plums to those who bought between the 1st March and the 27th October.
Deputy Cogan's amendment must stand or fall with No. 27.
It is just as sensible.
I should like to withdraw my amendment in favour of No. 27. I think the amendment proposed by Deputy McGilligan covers the point more effectively. He seeks to have the compensation to be awarded to those who purchased shares since the 1st March, 1943, decided by the High Court and I think that is a reasonable proposition. To fix a definite amount, an arbitrary amount, as is implied in my amendment, might be unfair to some of those shareholders, but I think nobody could object to the fixing of the amount of compensation by a tribunal. There is no doubt whatever that some people will make very large profits out of this entire transaction. It does not matter very much whether the information on which they acted was obtained inproperly or not. They certainly did have definite information.
Who did?
The people who purchased those shares since 1943.
Does the Deputy know that?
There is no doubt whatever but that these people did. First of all, let us take the position with regard to the judicial inquiry: they made it clear that there was abnormal dealing since 1st March, 1943, and particularly from August to October, 1943, thereby showing that something must have happened to influence people to purchase on a large scale. There is no doubt that these shares were purchased at a low price in the early stages and that very large profits were thus made. It is not our function as a democratic representative assembly to put easy profits into the pockets of any citizen of this State. It is our duty to see that whatever compensation is awarded, whether it is in the shape of shares or in cash, to any particular section affected by this Bill, is ascertained judicially and impartially by an entirely disinterested body. That is what the section proposed by Deputy McGilligan provides.
I can only say that Deputies opposite are bad losers. They fought an election campaign some months ago on the basis of a discreditable campaign directed against the characters of certain individuals. They knew that a judicial tribunal was investigating their allegations and their insinuations at that time, but they took advantage of the fact that the tribunal had not reported in order to try to get their stories across to the people. Deputy Cogan went around Wicklow spreading these insinuations and allegations at every election meeting. No doubt, there were people in Wicklow who believed him. When he was subsequently brought before the tribunal and put sitting in the witness chair, on oath, he remembers the ignominious performance he gave there and the fact that he was constrained to admit that he knew nothing whatever to justify any statement he had made. The tribunal has reported now, as a matter of fact, that there was no information available to anybody that was not available to everybody, that nobody used or disclosed improperly any information concerning the Government's proposals in relation to transport reorganisation. They have reported that there was no direct evidence of any disclosure of any information. They have reported that none of the Deputies who, in this House or outside this House, had made statements in the matter was able to produce one shred of evidence to justify those statements. They said, in relation to the circumstantial evidence, that the bulk of the circumstantial evidence available showed conclusively that there was no such disclosure of information.
Now that the tribunal has reported, I again want to draw the attention of the House to the fact that not one of the Deputies associated with that campaign, not one of the Deputies who made these allegations, has had the decency to apologise for having made them, has had the decency to withdraw any one of the allegations or insinuations he made. On the contrary, they are trying to keep these allegations alive by such amendments as this we are now discussing, proposed by Deputy McGilligan, and that which Deputy Cogan submitted before the tribunal had reported and which he now withdraws, after the tribunal's report is available.
The suggestion is that there are certain classes of Great Southern Railways Company stockholders who, for some reason, should be penalised by legislation. That is the suggestion. Whatever the proposals in the Bill in relation to the shareholders of the Great Southern Railways Company may be, the Deputies say that certain classes of shareholders should be taken out and treated on a worse basis, that they should get less value for their shares than other shareholders. What is the justification of that preposterous contention? Is the person who bought shares in any different position from the person who refused to sell shares? Whatever information there was available concerning the affairs of the Great Southern Railways Company or the legislative intentions of the Government, was there for everyone, for every shareholder of the company and for every member of the public who might have been at any time interested in the shares of that company. Nine out of ten of the shareholders of the company did not sell. Are they in any different position from the shareholders who bought? Some people made the right assumptions from the facts available to them and some people made the wrong assumptions. The proposal is that we compensate those who made the wrong assumptions and penalise those who made the right assumptions. Was there ever a more preposterous suggestion put before this House?
If we are going to deduct from the value given in exchange for their shares to those who acquired them since March, 1943, should we not treat those who refused to sell their shares since March, 1943, on precisely the same basis? If not, why not? Take all the people who became owners of shares in the Great Southern Railways Company since March, 1943. Are we going to treat them all alike? Some got them by inheritance. Are they going to be penalised also just in order to maintain in some form the campaign with which Deputies opposite were associated during the general election? Some got them by gift. Some got them, as I mentioned before, as security surrendered in respect of unpaid loans. Some bought them. For every person who bought shares, some other person sold. Nobody was compelled to sell. Every seller was a willing seller. Every seller thought he was doing the best thing by himself when he parted with his property for cash. Others thought it better business to buy that property for cash. These are the ordinary risks that people who engage in commercial enterprises take. So far as we are concerned, we know that every one of these individuals had precisely the same information, precisely the same opportunities of judging upon the facts, as any other and there is no reason, in justice or equity, why one should be treated differently from the other. So far as the Government is concerned, it will resist any such proposals to the last.
There is, of course, in Deputy McGilligan's remarks a suggestion that the fall in the value of the stocks of the Great Southern Railways Company in 1943 was in some way engineered. In fact, of course, there was a very small fall in the value of the stocks of the company during that period. There was also in his remarks a suggestion that nobody could have known that a Government guarantee in respect of capital to be invested in this company would be available. Anybody who took the slightest interest in the affairs of the Great Southern Railways Company or in the various actions that had been taken in the Dáil concerning that company could not but have known that the question of a Government guarantee was very much in the forefront. Not merely did the Transport Tribunal in 1939 report that any new capital to be provided for that company would have to be provided by Government guarantee, but those who read the report knew that the company's management had stated to that tribunal that there was no possibility of obtaining new capital except on Government guarantee. The speech of the chairman of the Great Southern Railways Company in March, 1943, to which Deputy McGilligan referred, made a very definite reference to the question of a guarantee.
Deputy McGilligan is, of course, trying to keep alive the flickering embers of this campaign that he engaged in, but all decent members of the Dáil and all decent members of the Opposition in the Dáil will surely accept as the end of that episode, that discreditable episode in our public life, the publication of the tribunal's report and let the matter rest at that. We have got to deal with this body of individuals whose interests we are affecting by the terms of this Bill as a body. To attempt to discriminate between one and the other of them, just because of political reasons, would bring this House into contempt and into justifiable contempt. I hope there will be found in the Opposition Parties some members who will have the courage to stand up and say they will not be associated with it.
I suggest that the House ought not to have any red herrings drawn across the track of the particular matter we are at present discussing. The Minister considers that the report issued by the tribunal that inquired into dealing in Great Southern Railways stocks should settle all the so-called slanders. The Minister is entitled to misrepresent any statements that are made either inside or outside the House in any way he likes but when we are dealing with serious matters affecting the economy of the country the House is entitled, calmly and clearly, to take everything that comes before it in an official way, and in an unofficial way, into fullest possible consideration. Let me direct the attention of the House to the report of the tribunal of inquiry into dealings in railway stocks, at pages 49 and 50.
On those pages the report deals with a case where businessmen, having been advised, on the 27th May of last year, that certain privileged freight rates hitherto enjoyed by their firms were going to be withdrawn and having made a calculation that the withdrawal of these privileges would cost their firms, between them, an extra £5,200 a year, and a further calculation that if only 35 firms had to pay as much as their firms, the company would have profits sufficient to pay a dividend on certain stocks, and feeling that business generally in the country was going to be hit in this particular way, invested money, up to a nominal value of £30,000 in railway stock. They did that on the grounds that business in the country was going to be made pay through the nose by whatever scheme had been arranged between the Minister and the chairman of the Great Southern Railways Company. The proposed buying was so big that it took about a month to complete, and then, later on, an order for the sale of them was given on the 7th October, before the pot had completely boiled over, but the idea of the giving of the order to sell that nominal £30,000 worth of stock was that the purchasers wanted to make their profit. Now, we are in days, and we are going to be in days, when the Government, handling industry in one way or another, or the impact of Government regulations on industry in general, in one way or another, is likely to affect the fortunes of individuals, groups of individuals, or companies; and, in fact, in this particular case, the fortunes of a large number of individuals have been adversely affected while, on the other hand, a large number of individuals, through their cleverness in watching the situation, have made money at the expense of the people who lost.
If this Parliament is going to pass over the extraordinary happenings arising out of the Government's handling of the present situation, and if, in the future, we should allow things like this to happen, whereby, as a result of the Government's mishandling of the situation, clever people, reading the signs of the times in a clever way, are enabled to make money at the expense of others, then we are going to have unnecessary hardships and losses caused to ordinary, honourable people, as a result of transactions by rather clever people, although perhaps ordinarily honourable people, on the stock exchange. I think that such a situation would be highly undesirable, and I do not think that the proposal made, either by Deputy McGilligan or Deputy Cogan, should be treated in the way in which the Minister just now has treated it. The Minister may have his own fight to make over certain aspects of the criticism that was made against his handling of the situation in the past, but we are dealing with a different thing, and we are dealing with it in a systematic way, as a result of which the House has been given an opportunity of examining the facts, particularly with regard to their bearing on the conduct of future business in this country, and I think that it is in that spirit, Sir, that we should approach the question now.
The Minister, while stating that he wanted to deal with this amendment on its merits, sought to bring in other matters which, in my opinion, he would have been better advised to leave out. He sought to bring in, in connection with the case he was making against this amendment, the evidence that was given at the Railway Stocks Tribunal, and he definitely stated that I made an ignominious withdrawal before that tribunal. I withdrew nothing, and the Minister knows that. I withdrew nothing before that tribunal. I made no withdrawal, either ignominious or otherwise, and the Minister knows that. I made no apology of any kind, as the Minister knows. I pointed out to the tribunal that a statement that I was alleged to have made in a local newspaper was incorrect inasmuch as it was abbreviated and an important point in that statement was omitted. I had pointed out, in the course of my various speeches in Wicklow, that the tribunal was inquiring into certain charges, but I myself made no charges, either inside this House or outside it. All I did was to point out that the tribunal was investigating certain charges that had been made.
I have what the Deputy said here in front of me.
At any rate, I know that if the Minister will read my evidence before the tribunal, he will find that I made no withdrawal whatever.
On that, I think that while the House may relevantly quote from the report of the tribunal, it should not go into evidence given but which is not in the report.
I agree, Sir, but I have got to make it clear that the Minister's statement, that I made an ignominious withdrawal before the tribunal, is incorrect. I made no withdrawal whatever, and I think that, if the Minister reads my evidence, he will find that that is correct. There is, definitely, a case for this amendment being fairly and reasonably considered on its merits. It seeks to ensure, not that anybody will be victimised or penalised in any way, but merely to see that justice will be done, and that that justice will be done through the medium of the High Court.
The Minister repeated on this amendment the statement that he made but did not substantiate on a previous amendment of mine, and that is that I suggested that the fall in Great Southern Railways stock was engineered. If the Minister can produce any phrase of mine to substantiate that allegation, I shall be glad to hear it. It was found that, after various speeches made both by the chairman of the company and the Minister, there was a depression—sometimes a sharp depression and, at other times, what might be described as an ordinary depression— but certainly the fact was brought out that, as a result of those speeches, there was a depression that would not induce people to buy these stocks.
Now, I want it to be understood that I am approaching this question in a purely objective way. I have not said one word here about the falling-off being engineered, but there is, undoubtedly, the fact that certain falls took place and, as I suggest, these falls were due to the discouraging statements made by the Minister and the chairman of the company. Then, other people went into buying transactions, described in the judicial report as "hectic", "absolutely abnormal", "exceptional", "inexplicable".
Now, it is the people who came into what the Minister described as "the boom" that we want to deal with. We want to deal with the type of buying that was described as "hectic", "absolutely abnormal", "exceptional", "inexplicable". There is no question here of deliberately setting out to penalise people who were investing in the ordinary way. If that abnormal buying had been the result of a leakage of information, then the stock would have been taken from these people; they would have been penalised, possibly, to the full extent of the stocks they had got as a result of that leakage of information. I am simply dealing with the fact that certain persons bought in circumstances of feverish activity, as it was described by the tribunal, although that activity took place, as the tribunal pointed out, in an inexplicable way, after the statements made by the Minister and the chairman of the company, which were described as gloomy. I do not think you are dealing fairly with an amendment of this sort, which has been put down seriously to deal with people who have suffered as a result of these transactions, by referring to those who, from 1943, inherited shares or got them by gift or otherwise, because these would be only a very small fraction of the people whom we are endeavouring to cover by this amendment. I am aiming, mainly, at the people who bought during that particular period, and I am sure that it should be possible to remove from the scope of this amendment, those who received stocks through the ordinary process of law—such as inheritance or in other ways—other than by purchase in the market.
I do not understand the Minister's attempt to confuse the argument about those who refused to sell and those who bought. I tried to compensate those who had been induced to sell. I wanted to put them back and make them proprietors of the railways as they had been. That has failed. I now take the other point of view, and am tackling those who became the new proprietors of the stock as from the date on which, say, the buying started and on which the discouraging remarks were made. I am taking account of two classes. The first, those who, I think, would not have sold in the ordinary way had it not been for the depressing statements made. Notwithstanding those depressing statements they found somebody who was going to lift the shares which had given them some small profit. They were anxious to take that small profit at the time. They were more anxious to take it because of the discouraging statements made. Those people were not protected by any note from the chairman which stock exchange witnesses before the tribunal said would be a proper and usual thing seeing that movements and negotiations were on with regard to a State guarantee. In view of that they should have been encouraged to hang on to their shares. The shares were issued on the market for those who wanted to buy and people did buy in the circumstances. I do not seek to penalise those people. I do not ask that they should be deprived of their stock. I do ask that the High Court should assess the value that those people should pay back in cash: that they should not become proprietors of the railway or holders of the substitute debenture stock. I am simply asking that the High Court should find out what is the fair value of the property that they bought and hand back that amount in cash.
It must have been known that reorganisation was on foot. The matter was being canvassed. The vivid phrase was used by a stock exchange witness before the tribunal that reorganisation, from the point of view of Great Southern Railways stockholders, was a word of very unhappy memories. Reorganisation to those who had been holders of that stock, and who knew how the stock was slashed in 1933 must have contemplated that their stock was going to be cut down. The debenture stock had not been very heavily cut in 1933, but people thought that it would be the stock that would be slashed this time. People's minds ranged over these matters in a variety of ways. In regard to stock in which there was very little movement earlier, there was considerable movement between March and August, 1943. I do not think that the new proprietors who bought in that period should get the same terms as the people who held on to their stock through thick and thin. I doubt if anybody, fairly judging the matter and keeping his mind clear of the red herrings that have been drawn across the matter by the Minister, would say that the two lots of people on any consideration should be put on a footing of equality. I am asking that this new group of people should be given the conditions which the High Court, after full advertence to the facts, would say represented the value of their stock.
If I understand Deputy Mulcahy correctly, he apparently regards it as a sound principle that the State, by legislation, should protect those who engage in stock exchange transactions and lose thereby. Now, since joint stock companies were first formed people have dealt in the stocks of those companies. They have bought and sold them, thinking they would secure a profit from such transactions. Some people bought well and made profits. Other people were less lucky and less skilful, and lost. That process will go on so long as there are joint stock companies in existence, and so long as there are markets in which shares in those companies are available for buying and selling. I think it would be a very wrong principle to establish that there is any obligation on the Government or the Legislature to protect those who engage in these transactions and lose money. People have lost money on such transactions before, and will lose money again. The only interest they can harm is their own. I do not see that there is any reason, on grounds of public policy, why they should be protected from their folly.
Deputy Mulcahy quoted a particular reference in the tribunal's report to the shares bought by two Dublin businessmen, but I think the Deputy himself has missed the very obvious significance of that particular transaction. In the first place, those two men bought the shares because of certain deductions which they had made from facts which had become available to them concerning changes in the freight charges of the Great Southern Railways Company. I think they made wrong deductions. No doubt they still got the right result. I must confess that the logic employed by those two individuals was particularly bad. There was no reason to assume that the alteration upwards of the freight charges, with which they were acquainted, was not due to the higher operating costs being experienced by the company rather than to a situation which would enable the company to pay dividends on its shares. The particular fact that I want to draw attention to is that these two individuals, who were referred to in the tribunal's report, are not affected by this amendment at all. These individuals were not buying Great Southern Railways shares as an investment. Most of those who bought shares during that period bought them as an investment and still hold them. The two individuals, on whose case Deputy Mulcahy is relying, did not buy as an investment. They were concerned only with a possible capital appreciation, and when they got that they sold out.
I am simply indicating the fact that a thing like that could happen.
And has happened before. People have bought shares at 2d. and sold them at £5; other people have bought shares at £5 and sold them for 2d. That has happened in the case of various companies. I know an individual who owns shares in the Dublin United Transport Company, one of the companies affected by this Bill. He bought one lot of £1 shares in that company at £2 per share and another lot at 7/- each. Fluctuations occurred in the value of shares between two wide extremes. When this individual purchased the shares originally at £2 he thought they were good value. Subsequently the shares fell on the market to 7/-. He bought a second lot of the shares at 7/- in order to average out the cost of all the shares which he held. Those who sold the shares at £2 thought they were doing well, while those who sold at 7/- subsequently discovered that they had made a mistake. People will make errors of judgment of that kind, and there is no obligation on the Government, or the State, to protect them from the consequences of their errors.
I submit in all seriousness to Deputy McGilligan that there is no essential difference between those who bought shares and those who owned shares and did not sell them, and, therefore, whatever treatment is fair for one class of person is equally fair for the other. Those who held Great Southern Railways shares in March, 1943, at the prices then recorded, and held them against the possibility of the shares going up in value, had the opportunity of selling, and are in precisely the same position as those who bought shares at that time in the expectation of a rise in the market. I want to point out that, during the whole period up to August, 1943, there was no fall worth talking about in the market value of Great Southern Railways shares. Deputy McGilligan repeatedly uses words of doubtful meaning, such as the word "induced", in the phrase that people were induced to part with their shares.
By the gloomy statements made.
That is to say that people were tricked into——
That is not my word. The word I used was "induced".
People sold their shares because they thought it was good business for them to sell them. I want to emphasise that, during that period, there was no catastrophic fall in the value of the shares. There was no reason for those who held shares in 1942 to assume that the market quotation, or the situation, in 1943, would be any worse than it had been in the previous year. The average values of the shares during the period of 1943 up to August were very little different from the average values during the whole of 1942.
Deputy Cogan does not like my referring to statements made by him before the tribunal. I shall not do so but, during the course of the Second Reading debate on this Bill, he said: "The type of treatment which the House may decide to mete out to the railway shareholders will be influenced, to a great extent, by the report of the tribunal." We have now got the report. I want the Deputy to refer me to the paragraph of that report which, he suggests, should influence us into segregating the railway shareholders into two classes, one class to be treated much less favourably than the other. Surely there is nothing in the report which would justify such a course. The fact is that Deputy Cogan put down his amendment before the report was available and when he hoped the report would be different. He now finds that his hopes have not been realised and he has not the moral courage to admit it. If the report had disclosed that people had secured shares by reason of the improper use of information or by reason of the improper disclosure of information, the Dáil could not fail to take note of the fact. I indicated on a previous occasion that we would take note of such a fact. But we have had a very unambiguous report from the tribunal. At one time I had thought that it would not be possible for the tribunal to submit so unambiguous a report. I submit that, in that report, we do not find justification for any attempt to differentiate between those who had railway shares prior to 1943 and those who subsequently acquired them.
What about the case of the director specially mentioned in the report?
That does not arise on this amendment.
It arises on the statement you have made.
The Minister has constantly referred to the conclusions of the tribunal, which are based on the evidence of Mr. O'Donohoe and Mr. Murphy. He says that the logic of the attitude of these gentlemen and their buying of shares, consequent on the views they had formed, was rather odd. That strikes at the root of the tribunal's report. Its whole foundation is acceptance of the views of Mr. O'Donohoe and Mr. Murphy. They eventually say that the buying of the stocks was caused by the purchases made by those gentlemen, on the lines to which the Minister has referred.
There is no suggestion that the tribunal did not accept the reasons given by those gentlemen.
The Minister thinks it very funny that they should have acted in this way.
I think that their logic was weak.
The tribunal accepted their action as logical.
The tribunal did not offer any opinion on that matter—as to whether their reason was good or bad.
Quite obviously, they treated this transaction as the pivotal matter in the whole affair and the Minister says that it was quite an illogical business. I pass from his view on that. It may be possible to deal with it at another time. The Minister said that Deputy Mulcahy, backing my amendment, said that this House should interfere to correct the mistakes made by those who speculate on the stock exchange. I did not hear Deputy Mulcahy say anything of the sort. I heard Deputy Mulcahy advance a certain argument which I, myself, endeavoured to make. Nobody holds that this House should be dragged in to recoup those who lost through investment or speculation on the stock exchange or to take from those who have succeeded either in investment or speculation on the stock exchange the fruits of their activities. But I say—and I think this is what Deputy Mulcahy says, too—that if people have been swayed—I use that word rather than the word "induced" which seems to cause the Minister so much trouble—into parting with their property because of statements made by Ministers responsible to this House, the House should take cognisance of that and attempt to do something to secure greater justice for people who would not have acted, as I suggest those people would not have acted, as they did but for the statements which were made. If a Government nominee makes statements and, as a result of those statements, proprietors of railway stocks are induced to sell, we should provide a remedy for what was thus inadvertently done—I do not say deliberately.
Coming on to page ten of this report, the chairman made a speech at the annual general meeting in March, 1943. The speech was "generally regarded as gloomy and had a very depressing effect on the market. Some holders proceeded to get rid of their stocks and this occasioned some activity and a sharp fall in prices." A question was put by Deputy Davin in March and the tribunal says that, "following the Minister's reply, which was non-committal, prices again fell slightly." The people who were anxious about their position waited to get some encouragement from the reply by the Minister to Deputy Davin and, not getting it, they joined in and sold and prices again fell. Prices had fallen sharply before that. "On the 26th May, the Minister spoke on the Estimate for his Department and, following his speech, which was not regarded as encouraging"—the sober phrase of the tribunal—"prices fell again". The speech made by the Minister in June at Inchicore, which could not be regarded as encouraging, is omitted. On the next page they say that dealings in the company's stocks were described to them as "absolutely abnormal", "a boom", "absolutely hectic" and "inexplicable". If the Minister would only put himself in the position of the people who were dispossessed because of this "inexplicable" buying, who had their minds influenced by the gloomy statements by the Minister and the chairman, he would adopt a more reasonable attitude and endeavour to secure that those who stepped into the shoes of those folk would not get the same treatment as those who remained owners all the time.
There is a principle involved—not the principle the Minister endeavoured to shove over on Deputy Mulcahy. If Ministers of nominees of theirs in responsible positions use words which cause people to sell their shares and it is found that those people sold seriously to their detriment and that other people, because they took another reading of the words—that is the only reason given at the moment for the purchases—are found in possession of property which has considerably appreciated since it was parted with by the others, the House should do something to rectify the mistake. I ask them to do it in this way.
The Minister, in his last statement, endeavoured to persuade the House that the tribunal found that nobody had been guilty of making use of improper information. I ask the Minister to read pages 51 and 52 of the report of the tribunal in which they deal with the action of a certain director of the company. On page 52, their conclusion was——
I submit that the Deputy is misquoting my remarks in order to introduce an irrelevancy. The reference in the report has nothing to do with this amendment.
I have not taken part in the discussion up to the present because I have my own opinion.
There is a section of the Bill on which the Deputy can make the statement he wants to make. I do not want to stop him from making it, but I want him to make it in the right place.
If the Minister had not made his concluding statement I would not have intervened at this stage. I submit that it was quite relevant when it was discussed for two days. The findings in the report of the tribunal were:—
"Although Mr. So.-and-So's action was in no way unlawful, we are of opinion that the mere giving of the order to purchase the stock before the issue of the circular was an improper use of information concerning the proposals for the reorganisation of the capital of the company within the meaning of our terms of reference."
It would be better to leave that.
I am not going to quote any more, but I submit that it is relevant to this discussion.
If the Deputy were permitted to continue it would be taken as a precedent. I rule it out. The question before the House concerns the amendment.
The question is whether any person who made use of improper information made money as a result, and if he is also going to get the compensation fixed in a particular section.
Is that concerned with this amendment at all?
Not only is this particular director going to profit by having made use of the information he had, but under another section he is going to get two years' compensation.
Is it not the position that the person to whom the Deputy refers would be penalised if the amendment is passed? He bought since March 1st.
My information from reading the report is that if the whole case for the amendment is based on the trifling transaction mentioned, the tribunal attached no importance to it.
The Minister said that it was irrelevant to the amendment. A vast number of other cases are inside this as well.
Will the Chair read the report?
I read it. I think it would be better not to discuss this matter further.
As it has been referred to, I want to read the formal decision of the tribunal:
"There has been no improper use of information concerning the proposals for the capital reorganisation of the Great Southern Railways except the instances we have specifically mentioned, which we consider unimportant, and to which no other dealings can be attributed."
Is not this gentleman definitely inside the amendment?
Of course he is, and he is going to get away with it and to get compensation.
It can be met inside the terms of an amendment that was said to be irrelevant.
Put down an amendment with the name of one individual.
The remarks made by the Minister with regard to my statement go to show the way in which he is trifling with the House. If anything has been put before the House regarding the Minister's proposals, it is that justice should not be done to people who had their money sunk in the maintenance of the railway company. That is the note on which he is trying to press these costly proposals on the House. When speaking on an amendment like this the Minister says that we want to protect speculators. We moved in this matter in order to warn the Government and the speculators that in times like these, when Government action is likely to have an impact on commercial and industrial life, and to affect the stock exchange, careless handling of the situation by the Government should not be allowed and speculators would not be allowed to reap the harvest.
Will the Deputy admit that "speculators" cover those who sold as well as those who bought?
That may be so. We are not concerned with anything but the general situation which was so fully dealt with by Deputy McGilligan and by other Deputies, as a result of the speech by the Government appointed chairman of the company, at a time when definite Government proposals were being formulated dealing with its financial affairs. Considerable and irregular sales of stock arose, which inflicted hardship at a time when we suggest people had, for a long period, been holding stock. That put substantial amounts, as a result of such speculation, into the pockets of others. The proposal in the amendment would establish the principle that speculators were not going to get away with substantial profits, simply because of mishandling of Government proposals at any time, either in industrial or commercial life and, in view of what has happened, it would be a necessary warning. The Minister wants more or less to blur over the particular type of case mentioned, which indicated why it was necessary to take action. The fact that persons were able to come in, and to get out with profit, emphasises the type of situation that could arise. This is not mentioned here because it is the type of case that would be caught by this amendment or as the most striking case mentioned in the report of dealings in stocks, but it would point to the fact that the Government should have prevented dealing in these stocks until their proposals were known, or they should have warned those with stocks who were tempted to sell to be careful about doing so.
Let us be candid in this matter. Does the Minister admit that the director referred to got the benefit of appreciation in the value of the shares as a result of the information that came to him?
I know no more about the matter than the Deputy, who got his information from the report, which states:
"There has been no improper disclosure of such information except in the one case we have mentioned, which we consider unimportant...."
It states that this man was guilty of making improper use of information.
The report considers it unimportant and makes it clear that no other dealings could be attributed to it.
If I am not allowed to read that part of the report will the Minister read it?
Question put.
The Committee divided: Tá, 32; Níl, 62.
Tá
- Bennett, George C.
- Broderick, William J.
- Browne, Patrick.
- Cafferky, Dominick.
- Coburn, James.
- Cogan, Patrick.
- Coogan, Eamonn.
- Corish, Richard.
- Costello, John A.
- Davin, William.
- Dockrell, Henry M.
- Donnellan, Michael.
- Doyle, Peadar S.
- Everett, James.
- Finucane, Patrick.
- Giles, Patrick.
- Halliden, Patrick J.
- Keating, John.
- Keyes, Michael.
- Larkin, James.
- Lynch, Finian.
- McGilligan, Patrick.
- Mongan, Joseph W.
- Mulcahy, Richard.
- Murphy, Timothy J.
- Norton, William.
- O'Donnell, William F.
- O'Driscoll, Patrick F.
- O'Leary, John.
- O'Reilly, Patrick.
- Sheldon, William A.W.
- Spring, Daniel.
Níl
- Aiken, Frank.
- Allen, Denis.
- Beegan, Patrick.
- Boland, Gerald.
- Boland, Patrick.
- Bourke, Dan.
- Brady, Brian.
- Brady, Seán.
- Breathnach, Cormac.
- Breen, Daniel.
- Brennan, Thomas.
- Breslin, Cormac.
- Briscoe, Robert.
- Buckley, Seán.
- Burke, Patrick (Co. Dublin).
- Butler, Bernard.
- Carter, Thomas.
- Childers, Erskine H.
- Colbert, Michael.
- Colley, Harry.
- Corry, Martin J.
- Crowley, Fred H.
- Derrig, Thomas.
- Flynn, Stephen.
- Fogarty, Andrew.
- Gorry, Patrick J.
- Harris, Thomas.
- Healy, John B.
- Hilliard, Michael.
- Humphreys, Francis.
- Kennedy, Michael J.
- Killilea, Mark.
- Kilroy, James.
- Kissane, Eamon.
- Lemass, Seán F.
- Little, Patrick J.
- Loughman, Frank.
- Lydon, Michael F.
- Lynch, James B.
- McCann, John.
- McCarthy, Seán.
- McEllistrim, Thomas.
- MacEntee, Seán.
- Morrissey, Michael.
- Moylan, Seán.
- O Briain, Donnchadh.
- O Ceallaigh, Seán T.
- O'Connor, John S.
- O'Grady, Seán.
- O'Loghlen, Peter J.
- O'Rourke, Daniel.
- O'Sullivan, Ted.
- Rice, Bridget M.
- Ryan, James.
- Ryan, Mary B.
- Ryan, Robert.
- Sheridan, Michael.
- Smith, Patrick.
- Traynor, Oscar.
- Walsh, Laurence.
- Walsh, Richard.
- Ward, Conn.
Tellers:—Tá: Deputies Doyle and Bennett; Níl: Deputies Kissane and Kennedy.
Question declared negatived.
Do I understand that you have ruled that it is undesirable to quote sections of the tribunal report in support of an argument for or against an amendment or a section of the Bill?
I did not rule in that way.
I should like your ruling made more clear.
I asked Deputies to deal with general principles rather than rely on the evidence of particular persons, and not to name the persons; I asked them to confine themselves to the general principles enunciated in the Bill.
If this tribunal report is a public document, I contend that we are entitled to use it so long as it is relevant to the argument, just in the same way as the Minister is entitled to use it in support of his argument. I was prevented by you from quoting a section of the tribunal report in favour of my argument, while the Minister was allowed to quote another section against me, dealing with the same matter.
I am concerned that particular persons should not be identified or named.
But they have been identified by name.
I am putting it as a matter of order that every word in that document is intended for the information of the public and for the representatives of the public, and we are entitled to quote it in this House.
When it is relevant.
Irrelevancy is the only thing that should prevent us from quoting it here. I suggest we are entitled to quote from that document, and mention every name and point to any figure.
If the passages are relevant, they may be quoted.
I do not think I used a name, but I submit, as a matter of order, that I am entitled to do so, once it is in that document—I am entitled to give names, figures and everything else. Is it your ruling that I am not entitled to quote here from that report?
I think it would be better to leave out the names. If the matter is relevant, it will be easy for the House to follow the Deputy's argument.
But the name has been given in the public Press.
I quite understand.
Amendment No. 27a not moved.
Section 13 put and agreed to.
SECTION 14.
I move amendment No. 28:—
In sub-section (2), line 29, to delete the word "any" where it occurs for the second time and substitute therefor the word "either".
This is merely a drafting amendment. I assume that the dissolved companies are the only companies meant in the section. The section as it stands might be interpreted as applying to a company which had been dissolved prior to this legislation, a company mentioned under earlier Acts. I merely move the amendment so that the dissolved companies shall mean either the Dublin United Transport Company or the railway company.
The Parliamentary draftsman says that the form in which the original Bill was prepared was better. This is the form used in the whole Bill, not merely in this section. In the definition section, the expression "dissolved company" means any company being either the Great Southern Railways Company or the Dublin United Transport Company— the two named companies. I do not pretend to be familiar with the niceties of the drafting of legislation, but as the Parliamentary draftsman has considered the point of making the change and has advised against it, I prefer to leave the section as it stands.
Amendment, by leave, withdrawn.
Section 14 put and agreed to.
SECTION 15.
I move amendment No. 29:—
In line 56, to insert after the words "debenture stock" the words "or for the purposes of the acquisition, by means of the exchange of debenture stock, of any transport undertaking which the company is authorised to acquire".
The section authorises the company to issue debenture stock for the purposes of providing money or paying off or redeeming any debenture stock. I think it is desirable that we should permit the issue of debenture stock for the purpose of the acquisition by means of exchange of stock of any transport undertaking which the company may be authorised to acquire. If such words were not inserted the company could not proceed with such acquisition except for cash. They should be given a discretion in the event of an agreement with regard to the acquisition of another transport undertaking to acquire it by means of an exchange of stock.
Amendment put and agreed to.
Question proposed: "That Section 15, as amended, stand part of the Bill".
I should like to speak on the section. When we come to Section 17, which deals with the State guarantee of debenture stock, the Minister for Finance is the ruling authority. In this section it is the Minister for Industry and Commerce. Why is that? Generally, it is the Minister for Finance who rules in financial matters.
The Minister for Finance comes in with reference to the terms on which the debenture stock will be issued. In Section 15 we propose to authorise the creation of stock and provide that stock with the consent of the Minister for Industry and Commerce, after consultation with the Minister for Finance. I should say that the difference is this: in Section 15 the question at issue is one of transport policy, whereas in Section 17 the main question relates to finance policy. That is why the ultimate power of deciding whether or not debenture stocks should be issued for specific purposes is given to the Minister for Industry and Commerce in Section 15.
The Minister for Finance will determine the terms under which debenture stock will be issued. The Minister for Industry and Commerce is given the primary responsibility of determining how much will be issued. Surely that is ordinarily regarded as the function of the Minister for Finance?
The primary question is whether considerations of transport policy require that the stocks should be issued with the Government guarantee attached, and that is a matter for consideration, in the first instance, by the Minister for Industry and Commerce.
That may be, but when you come to the financial side of it, surely it is the concern of the Minister for Finance. As we have things at the moment, the Finance Department has a grip over everything in connection with finance. I do not know that there is any other measure in which the Finance Minister is so dealt with. This incidentally concerns not merely substituted debenture stock, but any debenture stock. The amendment seeks to insert the words "or for the purposes of the acquisition, by means of the exchange of debenture stock, of any transport undertaking which the company is authorised to acquire." They are authorised to acquire pretty nearly all transport undertakings. The Minister for Finance will indicate the terms and the conditions under which he will allow debentures to be issued, but the Minister will determine the volume.
The main question will be one of transport policy, which should properly be decided by the Minister for Industry and Commerce, in the first instance. It is precisely the same procedure as in relation to capital issued to the Electricity Supply Board. Again, the proposal comes to the Minister for Industry and Commerce, in the first instance. The decision as to the terms upon which capital will be made available to the Electricity Supply Board is taken by the Minister for Finance, but only after the Minister for Industry and Commerce has decided that it should be authorised.
If it be a matter of transport policy to decide how much debenture stock should from time to time be created and issued——
The question that arises here is whether a specific scheme involving the issue of stock should be approved.
No, it is how much stock will be created and issued from time to time, and it is not in connection with the substitution of stock but with any future debenture stock. If it is a matter of transport policy to say how much stock should be issued, then you might as well indicate the rate of interest that borrowing should bear. The whole thing will eventually react on transport.
That is why both Ministers names are in, but the primary function is given to the Minister for Industry and Commerce under this section. The Minister for Finance comes in because he must be satisfied that the purpose for which the stock is being issued is one contemplated when the Bill was being framed. It is for the Minister for Industry and Commerce in the first instance to decide whether this is a type of capital expenditure which would be approved having regard to the general transport policy of the Government. It is only at that stage, when the question of policy has been decided and the decision has to be taken as to the issue of stock, that the Minister for Finance comes in on the finance question, which is his primary concern in view of the extent to which the State credit is involved.
It is the directors of the company who issue and create?
That is true. If there were no State guarantee this would be the function of the directors acting on their own initiative.
It has all to be guaranteed.
It is because there is a Government guarantee that the Government comes into it.
Does the Minister tell me that it is the Minister for Industry and Commerce who takes the initiative? Does not the Minister for Finance rule all capital matters in connection with electricity?
No. The Deputy will remember that there was a change following the original Act of 1927. Subsequently, there was an amending Act which required proposals for capital expenditure to be separately approved. The Minister for Industry and Commerce does that. When he has approved the programme submitted by the board, the Minister for Finance comes in and lays down the terms on which the money will be advanced.
Does he not also rule the amount?
He rules the amount to this extent, that he can, and often does, express the view that certain proposals are unnecessary, or that certain schemes could be dropped or amended. But the primary power of decision in that regard is with the Minister for Industry and Commerce and not with the Minister for Finance.
I am only raising it here because it seems to me that an amazing distinction is being drawn. Personally, I do not feel that the old scheme of having the Department of Finance gripping all the expenditure is the correct one in modern times, but I think it would be better to have the Minister for Finance enshrined here than any other Minister until we change that system.
We could give the board power to go to the public for its capital, but we could not do it where there is a Government guarantee. The Government must clearly have power to ensure that the public credit is not utilised unwisely or to an extent that would be unduly prejudicial to the stability of the national finance.
Having heard all about the Minister for Finance and the Minister for Industry and Commerce, I think on this section here we ought to hear something about the people. The thing that appears important from the people's point of view is this question of temporary capital. I think this is the section upon which we might hear something about why such an enormous amount of the capital of this company is to be temporary capital.
This is hardly the appropriate section. Section 16 is the section which provides for the redemption of substituted debenture stock.
We deal here with Section 15, where the Minister is asked, for the purpose of providing money, to create and issue debenture stock, and I think, on the general principle of temporary capital in relation to this scheme, we could not have a more appropriate section on which to discuss it.
It is quite clear that you could alter the provisions of the Bill relating to the repayment of the substituted debenture stock without changing this section. Therefore, it is clearly not on this section that that question arises. I should say that the question which arises here is the total amount of debenture stock which may be issued.
Would the Minister leave substituted stock aside for the moment, and just consider this: the capital of the company is to consist of not more than £4,000,000 common stock and not more than £16,000,000 redeemable debentures? Now, we are considering that, as far as we know, with £9,875,556 in redeemable debenture stock, this section here under the words "for the purposes of providing money" would be the power I take it that would govern the creating of the additional debentures to the extent of £6,124,444.
That is right.
I want to know, particularly with the large amount of debenture stock that is held in the company, what this money is wanted for, and, if this money is wanted, why it should be provided by way of redeemable debentures rather than additional common stock? What is the policy?
The ultimate intention is that the capital liability of the undertaking should be reduced from the limit of £20,000,000, at which it is notionally fixed at the beginning, to something in or about half that sum. We consider that sound financial policy would require that the unproductive items on the credit side of the balance sheet should be eventually disposed of, and that would appear to involve that the full capital liability with which the company will start off or which it may acquire under the Bill should eventually be reduced. We are proposing to put upon the company the obligation to redeem its substituted debenture stock by a specific date, 1960. Other stock will be redeemable stock, but the redemption terms will be fixed in relation to each issue at the time of issue; they will be fixed by the Minister for Finance under the provisions of Section 17.
The idea is that, if the circumstances of the company warrant it, this capital liability should be got rid of, because only to some extent will the issue of this capital be represented by an improvement in the actual assets held by the company. Debenture stock, as Deputies know, is not as a rule represented by fixed assets. It is frequently secured on fixed assets but the company's assets should, in fact, be represented by perpetual stock such as ordinary stock or preference stock. It is desirable, therefore, in so far as the capital liability which the company will create after the war would represent the replacement assets which are already represented by capital liability embodied in the substituted debenture stock, that it should be at some stage amortised. That is the reason why the provision is that the substituted debenture stock should be redeemed by 1960.
There is obviously another reason. It is proposed that the State will guarantee the interest on this stock. It is desirable that the State's contingent liability should be limited not merely in amount but also in time. It is hoped that at some stage it will be possible for the State to contemplate withdrawing that assistance to this company, enabling the company to proceed as an ordinary commercial enterprise, securing money upon debentures or the issue of stock, without the aid of a Government guarantee. I think we must at this stage contemplate that the contingent liability accepted by the State will cease to operate; that, therefore, the stock carrying Government guarantee should be redeemable stock, and that there should be placed upon the company at the time that stock is issued the obligation to provide at some subsequent date for its cancellation. I doubt very much if anybody will regard it as being sound financial practice to have a perpetual stock bearing a State guarantee.
That could happen, under this Bill.
I do not think so.
Could not the Minister take over the whole responsibility of this under Section 17, a month after the Bill is passed, and pay off all the debentures?
No.
Surely yes, under Section 17? By 1955 he could.
The £16,000,000 is the limit in the aggregate of all the issues of stock that can be made. It is not possible to issue £16,000,000 and then borrow £16,000,000 to redeem that £16,000,000.
Why not?
The Bill is not framed in that way. There is a limit of £16,000,000, which represents the total value of all the stock. If it is necessary to exceed that limit, fresh legislation would be required. This fixes the limit of the liability which the State is accepting. It is desirable also that that liability should be redeemed in time. That is why it is proposed that the stock be redeemable stock, and also that the company is to redeem it out of its revenue at some stage, so that the State's liability will be cancelled.
Is it contemplated continuing the State's liability in respect of the stock issued in compensation, or issued in connection with a new undertaking?
Up to £16,000,000, yes.
And beyond 1960?
The 1960 only applies to the substituted stock. On the 1st January next—or when the various processes involved in the exchange of stock are completed—the company will have stock described as substituted debenture stock to the value of £9,800,000. That stock will bear interest at the rate of 3 per cent., guaranteed by the Government, and the company will be obliged to make provision which will enable it to repay the full amount of the nominal value of the stock by 1960. If in the meantime the company wants capital for any other purpose, it will issue debenture stock, not substituted debenture stock, upon terms and conditions which will be fixed at the time in relation to the circumstances of the time—except this, that one of the conditions must be that the stock will be redeemable, that at some stage it will be repaid and the amount of the State's liability wiped out with that repayment.
The Minister contemplated a situation in which the substituted debenture stock will be redeemed by the company by 1960. Between now and then the Minister may, with the approval of the Minister for Finance, authorise the issue of fresh debenture stock, and that may be guaranteed stock and guaranteed beyond 1960. In that way the company might, from time to time, after 1960, issue fresh stock for the purposes indicated in the previous section.
Subject to this limitation—that the aggregate value of all the issues cannot exceed £16,000,000.
At any time.
No, in total.
But also, from the point of view of the community, it is guaranteed beyond 1960?
Yes.
Does the Minister contemplate that this company will be able to redeem the debentures by 1960?
Yes.
If that is plain, I suggest we should reach a decision regarding the £16,000,000, and I want the Minister to write that into the records, so that we will have a look at the position in 1960.
I am more in a fog than ever after hearing the Minister. Section 15 puts this limitation on the total amount of debenture stock, including substituted debenture stock created and issued—it is not to exceed £16,000,000. When I go on to this other section, I take it to be possible that the Minister for Finance, using blocks of £2,000,000, could issue one block of £2,000,000 and redeem it by substituted debenture stock. He would have wiped out £2,000,000 worth of stock and substituted another. As long as he keeps under the limit of £16,000,000, I suggest he could buy up any fresh blocks of £2,000,000 a short time after this measure becomes law and so become the proprietor instead of the substituted debenture holders and could make entirely new terms which would have nothing to do with 1960.
No.
He could substitute all the debentures.
No. On the date on which the transfer is effected, the company will have a debenture liability of £9,800,000. That means that the total value of the new debenture stock that may be created and issued is the difference between £9,800,000 and £16,000,000, which is the total that can be issued. There may not be any more than that issued and, if any of that stock is issued and repaid, it cannot be reissued. The total value of the debenture stock that may be created is £16,000,000. If that is not clear in the Bill, it will be necessary to make it clear.
The position seems to be that £4,000,000 may be issued for the purpose of substituting £4,000,000 of the £9,000,000.
No.
If £4,000,000 is issued for the purpose of redeeming £4,000,000 of the £9,000,000, the total stock that would be there would be £5,875,000 substituted stock and £4,000,000 of the new debenture stock. I take it that, on top of that, £6,000,000 more debenture stock could be issued.
No, not under this wording. If £4,000,000 of new debenture stock were issued to pay off any of the substituted debenture stock, the company's power to create and issue new stock would be limited to £2,000,000.
If you substituted £9,000,000 by £6,500,000?
Yes, but if that were done, the company would no longer have any power to borrow capital on debentures, except the £500,000 of the common stock.
Section 12 says:—
"The capital of the company, which shall be created and issued in accordance with this part, shall not exceed £20,000,000 of which (a) not more than £16,000,000 shall consist of debenture stock...."
There is no qualification there with regard to substituted debenture stock.
It is down further.
You may have £16,000,000 debenture stock, so that £9,000,000 could have been created but redeemed by the substituted debentures and the rest could be created as fresh debentures.
No.
Then, the £16,000,000 in Section 12 means nothing.
If the company, after formation, decided that they wanted another £6,000,000 in cash right away they could issue a fresh £6,000,000 right away. It would then have reached the limit of £16,000,000 and they could not issue any more. If it chose to issue the £500,000 of common stock in addition, it would have exhausted its borrowing powers. The total of the debentures that can be issued in the aggregate is £16,000,000, in successive issues.
If something happens that, immediately this company is created, they have to create £6,124,000 debenture stock and then find themselves on the day of the creation of the company with their £16,000,000——
Then their borrowing powers are exhausted.
Could they then create debenture stock to substitute?
No, they could not.
What is going to happen when it comes to 1960?
At 1960, the company will have paid off its substituted debenture stock. Its capital liability then will consist of the common stock, plus whatever new debenture stock has been issued in the meantime, if any. That would be its total liability and it cannot exceed that, without fresh legislation. I contemplate, at some stage after 1960—it may conceivably be possible to secure this by agreement with any debenture holders there may be at that time—that a situation will arise in which the company will only have common stock and that any existing debentures will be replaced by agreement by common stock and the legislation changed to permit of that. The ideal situation at which the company should aim—though we may not live to see it—is that the company would only have common stock capital and have no capital liabilities other than common stock and no obligation to pay interest or dividends unless the company earned them.
The phrase the Minister is relying on in this interpretation is the last three lines of Section 15:—
"....the total amount of the debenture stock (including substituted debenture stock) created and issued does not exceed £16,000,000".
Supposing the company starts off with £9,000,000 substituted debenture stock and creates and issues £2,000,000 extra. That is £11,000,000 for a particular time. Supposing they repay £2,000,000. What is at that point created and issued? Is it £11,000,000?
£11,000,000.
£2,000,000 has been wiped out. It is not that it has been "issued" but that it has been "created and issued".
Even though it has been redeemed, it counts in calculating the £16,000,000.
That is what I am asking an interpretation of. It says "created and issued". If it said only "created", the point might be covered, but we have to consider it at a particular time. Does the "created and issued" refer to a particular time?
The intention is that there would be a definite upper limit to the liability the State can undertake in respect of these debentures.
The other point I make—and I think the Minister agrees —is that even on his interpretation, it is possible, within some short period after the establishment date, that the Minister for Finance may have swung, to the extent of £6,500,000, into the place of the substituted debenture holders and his stock might be issued on such terms of redemption as did not involve the wiping out of that stock.
It could, conceivably so, but it would be an obviously bad step to take.
If the Minister's answer to the Deputy is correct—this may be purely academic—apparently, the company could not issue between this and 1960 the £9,000,000 debenture stock to replace by ordinary debenture the substituted debenture stock?
They could not.
Take for example the present position of the company in respect of debentures, that is approximately £9,800,000. It may issue, say, £2,000,000 within the next ten or 15 years for any purpose. The situation will then be that it will have created and issued about £11,000,000 debentures. Is it possible for the company to issue a further £5,000,000 for the purpose of redeeming substituted stock and postpone the redemption date of the 1960 debenture stock?
Yes, I suppose it would.
Do I understand the Minister to say it would?
I suppose so. Of course, that would create a situation for the company that it could then at no future time borrow any more money.
That is true, but it creates this situation also that, if the company knows it has power to create and issue debenture stock for the purpose of redeeming substituted debenture stock, it can carry the State's guarantee, which is the people's cheque-book, beyond 1960?
Certainly. It is intended that the State guarantee should be carried beyond 1960 in respect of the new debenture stock that may be issued on the basis of 40 or 50 years.
I think Deputy Norton now grasps the fact that the carrying forward of the nation's cheque-book beyond 1960 may apply to quite an amount of new stock issued to redeem substituted debenture stock.
It cannot apply to more than £16,000,000.
The company will have power, nevertheless, to create new debenture stock for the purpose of extending the redemption date of the substituted stock provided in this Bill, so long as it does not exceed £16,000,000.
If the company were to act in that way, it would create a situation for itself in which it would have no more borrowing power.
And then it could resort to the Dáil.
Is the Minister satisfied that that is the legal interpretation of this phrase, "create and issue"?
Yes, so I understand.
It seems to me to be desirable to clarify that. If the company has £9,000,000 debentures, then issues £2,000,000—that is £11,000,000—and then pays off £2,000,000, it seems strange to regard that as an issue of £11,000,000.
That is what it is intended to do, and one of the justifications for having a Government chairman is to ensure that the intentions of the Bill are given effect to.
Could a situation arise that there would be £16,000,000 debentures in respect of which there was a Government guarantee?
Yes.
Progress reported; Committee to sit again at 7 o'clock.