I move motion No. 1 on the Order Paper:—
That Dáil Eireann is of opinion that in relation to many essential commodities manufacturers and distributors are in the habit of charging exorbitant profits and that therefore the selling price of such commodities is excessive, and accordingly considers that the Government should forthwith introduce proposals for the purpose of securing effective control over profits and prices.
I move this motion, Sir, because I think the subject of price control in this country is a problem which affects each and every member of the community and, in particular, affects the large masses of the wage-earning classes and those who live on static incomes, as well as those who are dependent in a very high degree on the meagre and altogether inadequate assistance which they receive under our ill-developed code of social legislation. The rapid increase in prices and the continued maintenance of a high price level for the unfortunate persons in these categories means for each of them a consequential debasement of their standard of living, an impoverishment of their social conditions and results in forcing them to accept new low concepts of life and a low standard of living generally.
I do not want to approach this motion in a political way nor from a political standpoint. I do not want to make Party capital out of the motion, out of the problem, or out of its solution. I merely want to view the question of price control in its economic setting and to view it solely as an economic problem and as constituting a challenge to our legislative and economic policy to control prices in a manner which will give satisfaction to the community in the circumstances under which the community is compelled to live to-day. At the outset I think I can say that there is general agreement among all Parties in the House on one aspect of the matter— that is, that since 1939 prices have risen substantially in this country.
Nobody can deny that is a fact. The Minister for Industry and Commerce has been compelled to acknowledge it. Perhaps those of us who are not in the Minister's Party take a more serious view of the rise in price levels than does the Minister. He may endeavour to find a vicarious consolation in the fact that prices have risen to a greater extent elsewhere. But the fact remains that we are conditioned by circumstances in this country and our destiny is cast here. We, with the resources which we have at our disposal, have to fashion a life for ourselves here and, in the circumstances which we find ourselves, the problem is a serious one for our people.
The cost of living has risen by 70 per cent. over the 1939 level. I noticed that the Minister said in a recent speech that the cost of living had in fact risen less than the index figure indicated. He made that statement based on an examination of what it would cost a working class family to live on the basis of eating the quantity of foodstuffs made available by a rationing scheme calculated to restrict the quantity of foodstuffs and other commodities which go to make up the computation of a family budget. I do not think the Minister's conclusion in that respect is a sound one. Looking at the problem from a broad angle he might possibly draw a conclusion of that kind, but I frankly think it is not a sound conclusion and I do not think it will bear examination in the light of a fuller analysis of the whole problem of price control, the problem of consumption and the quality of the goods available.
It can be said and it can be proved that as a result of the inferior quality of the goods sold to-day it is now necessary for our people to buy those goods with a greater frequency than heretofore. While the percentage increase in the weighted averages, which constitute the cost-of-living index figure and which are used for the purpose of ascertaining the extent of the increase in that figure, may not be as high because of the rationing scheme and the non-availability of goods in their previous abundance, the fact remains that such goods as are available have to be bought much more frequently than was necessary when similar goods of better quality could be purchased heretofore.
I do not think anybody in this House or anybody in the country can deny that so far as the masses of the people are concerned they have now got to buy boots and shoes—certainly in respect of children—much more frequently than heretofore because of the poor quality of the material at present available for the manufacture of boots and shoes. Anybody who has experience of having boots and shoes repaired for growing boys and girls will recognise that, whilst you could expect the repaired boots and shoes to last a certain period before the emergency, they last for a much shorter period now. The same can be said of various articles of clothing. It can certainly be said in respect of many articles of male underwear. Therefore, if one says that the index figure has not risen as high as is actually indicated because of the imposition of a rationing scheme, that is more than counter balanced by the inferior quality of the goods now available and by the fact that the workers and others have to replace those goods with much greater frequency to-day.
Whatever may be my views on that matter vis-a-vis the views of the Minister, the fact remains that we have now to face the position where prices have risen by 70 per cent. over the 1939 level. What the Minister has got to bear in mind is that these prices have risen to that high level while the Government was claiming that it was implementing a policy of price control.
I am prepared to give the Minister credit for having a very considerable volume of energy, of having vision and a high degree of courage in matters of this kind but I am not prepared to give the Minister a certificate of infallibility in the matter of price control nor do I imagine that he would claim entitlement to such a certificate. I am driven to the conclusion that it is the fallibility of the Minister's methods and the course of action on which the Government has embarked that has produced the present price difficulties for our people.
Let us review the position, because some brief review of the position is essential to a proper appraisal of the difficulties which confront us. In 1940 we had a declaration from the then Minister for Finance that the Government was going to set its face against the efforts of any section of the community to get compensation because of the war conditions. That declaration was implemented in the following year, May, 1941, by the promulgation of Emergency Powers Order 83, the purpose of which was to stabilise wages by pegging them down to the then existing level and providing, further, that there could be no increase in wages whatever unless by an amendment of the Order, which could only be brought about by the initiative of the Minister. On the other hand, we had a declaration from the Government of its intention to control prices.
Looking back over the last six years it is now possible to review the position dispassionately, without any heat or rancour, and to see the consequences of that type of approach to the problem. In 1941, we had wages pegged down to the then existing level —there could be no increase whatever without the permission of the Minister —and, on the other hand, the counter-balancing assurance to the masses of the wage-earners that prices would be controlled. From 1941 until a later date wages were definitely controlled, pegged down to the 1941 level and kept at that level rigidly by the Government, in spite of many protestations from the workers that prices were rising. On the other hand, we found this situation developing—and it was a complete departure from the assurance given to the House and to the community—prices were allowed to rise and it was only when they had increased to an undeniable extent that the Government stepped in to control them. We had therefore two entirely dissimilar approaches to a problem which was interrelated. Wages were definitely fixed and prices were capable of rising and it was only after the rise that the Government intervened to endeavour to tie prices down to a particular level. I want the House to note, and I should like the Minister to review, the difference in approach to the problem so far as the wages aspect and the prices aspect were concerned.
We have had up to recently a continuance of that very same policy. We had prices moving upwards and it was only after there had been an upward movement that any attempt was made to apply a check and where the check was applied the usual function of it was to stabilise prices at the level to which they had risen before the intervention of the Government. That evil practice, of course, still persists and it is that practice which has caused and is causing our price difficulties. Our price difficulties will continue so long as we allow prices to rise and attempt to apply a remedy to the problem only after prices have risen.
I need take only two examples to prove the truth of my assertion. Recently the Government feared that the price of potatoes would rise and a Maximum Price Order for potatoes was made. At the time that Order was made potatoes were being sold in many cases at 1/5 and 1/6 per stone. Immediately the Maximum Price Order was made potatoes out of the very same sack as those that had been sold at 1/5 and 1/6 jumped to 1/8 per stone. The effect, therefore, of the Maximum Price Order was a ride-in by those who wanted to get rich quick, to take advantage of the Order to make a profit to which they had no moral right. I attribute that to an error in judgment and a far too generous approach to the problem of profit margins on the part of those responsible for fixing maximum prices in that respect.
There is another example. At the moment housewives are complaining about the recent increase in the price of meat in Dublin. The butchers have decided that they are going to get increased prices for their meat. The Press reported the fact that they were contemplating discussing the matter with the Government. The butchers, with the example before them of others who got rich quick, decided that there was no purpose in waiting for the Government's permission, that the thing to do was to jerk up the price immediately and then discuss it with the Government, not to wait until the Government made up its mind but just to shove up the price immediately, to salt the public and make them pay while the butchers talk to the Government. What happened? Meat prices have gone up by 2d. and 3d. per lb., withcut any approbation from the Government, without any approbation from the Minister, and without any public statement as to why the unofficial arrangement in respect of meat prices —what has been described in the Press as a gentlemen's agreement—has been departed from.
I take it the Minister has given no approval to the increased price. If he has given approval, we ought to hear the reasons. The butchers have decided and, whether the Minister likes it or not, meat prices have gone up and, so far as the butchers can ensure it, they will stay up. If our price-fixing policy runs true to form, what will happen is, that there will be a talk with the butchers and, when the talk is over, meat prices will be stabilised at their new levels. That has been the previous form of the horse known as price control. Probably that is what will be done on this occasion, and the public will bear the consequences.
Another weakness in our original price control structure was the fact that there were inadequate inspections and inadequate supervision by the Department. I make all due allowance for the problem of the Department faced with the task of the gigantic magnitude of price control, a problem in which it was unversed, having regard to the circumstances existing here. I can well see that it underestimated the problem and that it thought the solution was easier than it ultimately proved to be.
The inadequate inspections, in the first instance, the easy-going approach to the problem of overcharging, the long delays in carrying out investigations and the adoption of a policy which crystallised itself in trying to get customers who were overcharged refunded the amount of the overcharge —all displayed a leisurely policy towards price control and overcharging which gave us many of the high price levels with which we have to deal. I do not say that all the faults of our early efforts are attributable to the Government. There is no doubt whatever that, in the early days, profiteering and black-marketing was aided and abetted deliberately by the absurdly inadequate sentences imposed by the courts on people found guilty of notorious black-marketing and gross profiteering at the expense of the community in a time of crisis.
Ultimately, on the basis of trial and error, conditions improved somewhat. There was an increase in the inspectorate staff of the Department and when the machine worked vigorously and adequately, as it did in the latter days and as I think it is doing now, there was a change for the better, but it came too late to undo the real harm. The effort to fix minimum sentences in relation to profiteering helped in its own way, but not until a considerable amount of harm had been done. I believe—and my views are based on consultation with all classes of the community—that the early hesitation in dealing vigorously with rising prices, profiteering and black—marketing produced a lack of public confidence in the price control policy. Undoubtedly, a goodly number of our price control difficulties are due to the apathy of the public, but it was an apathy which our early policy helped to create, and by a continued reliance on that policy, helped to keep alive.
If we are to have effective price control, we must convince the public that the new methods will be much more vigorous. The public saw manufacturers and retailers increasing their prices, they saw the Department belatedly step in, they heard later, through the Press, that prices had been fixed behind the closed doors of the Department, they got no information as to the basis on which they were fixed, they simply felt the consequences of the increase. By constant suffering they felt that their function was to suffer the unpleasant consequences. Public goodwill is essential before any price control policy can be effective. Even now, notwithstanding the many errors in the past, public goodwill can be won, but that is a matter to which I shall return in the course of my remarks.
In the Seanad last week, the Minister made a lengthy speech in defence of his Government's policy of price control. I agree at once that it was an able speech, that it was a comprehensive review of all the developments of the past six years and of the factors which affect price control. Having read the speech very carefully, however, I was forced to the conclusion that it resembled the examination of a very sick patient by a doctor who, after skilfully applying his talents and having unerringly diagnosed the patient's complaint, then eloquently and with a feeling of pleasant hopelessness tells the unfortunate patient that the disability has gone so far and for so long that, much as he would like to do it, nothing really can be done for him at this stage. When the Minister's comprehensive review was over and the Seanad adjourned that night, we were left with the fact that prices are still 70 per cent above the 1939 level. That is the problem we have to face to-day.
Whatever was behind the Government's taxation policy in its early stages or whatever it was capable of achieving, it deliberately aided the policy of high prices. As a matter of fact, there is no more convincing evidence of that than the statement of the present Minister for Finance, that he was now abolishing the Government's taxation policy in respect of profits in the hope that prices would come down. That was the clearest possible admission, in his Budget statement last year, that he realised that the Government's policy of taxation, in the manner in which it was applied, was directly responsible for increasing prices. I can scarcely credit and I will be astonished to hear that the purpose of excess profits tax was to increase prices, but there is no doubt it had that effect.
The mistake the Government made in the imposition of excess corporation profits tax was that in many cases there was no ceiling to profits, though there was a ceiling in some industries. The Government was perfectly satisfied that substantial profits be made, so long as they got 75 per cent. of the excess profits, from those who were exploiting the community for their own enrichment. Not merely was the Government getting the corporation profits tax—which yielded approximately one-third of the total of ordinary corporation profits tax and excess profits tax —but it was getting 75 per cent. of the excess corporation profits tax.
By a continuance of that policy over a number of years the Government was able to accumulate a very substantial sum of money from excess profits tax. One may say it was wise to take those excess profits away from those who had accumulated them. My suggestion is that it would have been much wiser to compel the manufacturers and retailers to plough back those excess profits into prices, so as to maintain prices at a low level and not compel the community to pay exorbitant prices for goods out of the meagre incomes on which they were compelled to exist during the war years.
In reply to a parliamentary question yesterday, the Minister for Finance told me that the estimated return of corporation profits tax this year was £4,600,000 and that, of that sum, approximately £3,500,000 was in respect of excess corporation profits tax. A sum of £3,500,000 will be yielded during the current financial year in excess corporation profits tax—a tax on excess profits which have been obtained by permitting people to charge for goods a price which is quite exorbitant in relation to the cost of production. This sum of £3,500,000 is derived from excess corporation profits tax only. When we probe the question, we find that that tax is paid only by registered limited companies. It is not paid by private companies or by partnerships. When we remember that the registered limited companies were compelled to yield up £3,500,000 in excess corporation profits tax this year and when we remember that the private company and the private partnership were excluded from that tax, we get some picture of the amount the manufacturers and wealthy distributors have made at the expense of large sections of the people who have been tied down during the emergency to the pre-emergency wages, with the trifling increases which they obtained in the form of emergency bonuses.
Whoever conceived the scheme for applying excess profits tax to manufacturers and wealthy distributors who are organised as registered limited companies had a very generous heart, so far as that fraternity was concerned. Look at what we did. If a firm had a capital of £5,000, we said that they were allowed to earn a standard profit of £2,500 before paying any excess corporation profits tax. They were allowed to earn a standard profit equal to half the capital of the firm. In addition, as everybody knows, they charge quite substantial fees as remuneration for directors and the limited number of people directing the activities of the firm. When you think that firms were allowed to get away with these allowances of ordinary profits before a levy was made for excess corporation profits tax, you get some picture of the generosity with which this whole problem was treated so far as the imposition of tax was concerned. Now, we are told by the Minister for Finance that excess corporation profits tax is to go—that, in fact, it has gone. I wonder what the Government's policy will be, with the abolition of the excess corporation profits tax. The Minister made a lengthy speech in the Seanad but he was singularly silent as to what the Government's policy would be in that respect. The only information we have got from the Government, since the Budget introduced last May, was an expression of hope by the Minister for Finance that the abolition of excess corporation profits tax would lead to reduction in prices. How far that hope will be falsified, the next few months or weeks should tell. I should like to learn what the Government now intend to do, following the abolition of the excess corporation profits tax. Are all these firms to be allowed to put into thier own coffers the profits which in the past, they were compelled to yield up under the game—and it has all the appearance of a game because it is not restrictive or rigid legislation? They got away with a certain amount of swag and yielded up a proportion of that swag to the Government, which legalised the arrangement. I hope the Minister will be able to tell the House —he did not tell the Seanad—what the Government proposes to do to ensure that the abolition of the excess corporation profits tax will not make well-todo people richer at the expense of the mass of the people who are finding it hard to exist on their present income levels.
I want to refer, particularly, to the drapery trade and its associated activity, the household-goods trade. Those two trades are, in the main, amalgamated into a single activity. The Minister was at some pains not merely in the Seanad but here on previous occasions to explain the profit margins on which prices were based. He explained that these margins were only reasonable. I put this to the Minister not in any acrimonious way but as a subject for reflection: does he not think that there was something seriously wrong with his margins in the drapery trade when he was compelled to intervene on two occasions and reduce the margins which he had at first fixed? The Minister fixed a margin. Then under pressure by the public, he went in and cut that margin. A new margin was fixed. That held the field but still the public complained that it was too high. The Minister went in again and cut the margin. Having been compelled, by force of circumstances, to cut the margin twice, without, so far as anybody can see, public protest or violent indignation by the drapers or any threat to close their business, does he not now think that, when he was fixing the profit margin in the first instance, he very much overshot the mark and gave to the trade a much more generous allowance from profits than the facts and the circumstances warranted? Does not everybody know what is happening in the drapery trade? I should have thought that that trade would be one with which the Minister, because of his specialised knowledge, would be particularly familiar, but the fact of the matter is—and nobody in this House can gainsay it or deny it and the speeches we make will not deceive the people—the drapery firms are richer than they ever dreamed they would be. Anybody who takes the trouble to go to Dublin Castle, look at their balance sheets—they can be got, I think for 6d. —and compare their profits from 1936 to 1939 with their profits to-day will be astounded as to how wealthy they have got.
For them the war has been a godsend and the emergency a Klondyke. They have got richer than they ever dreamed and are getting richer still, while the masses of the people get poorer. Those engaged in the drapery trade in a big way, either as wholesalers or distributors, are getting rich in spite of themselves. Take, as an example, the way in which money was spent on advertisements during the war by drapery firms that could not afford an advertisement before the war. You had many of them shoaling out money on advertisements. Why? Because it was cheaper to put advertisements in the newspapers to keep their names before the public than to have the Government taking 75 per cent. of it in the form of excess profits tax. You had advertisers queueing up in every newspaper office in the country. If one asked to have a large advertisement inserted, one had to take his place in the queue. When you inquired as to the source of those advertisements you found that they were from people who had done well during the war, as their balance sheets revealed.
There was no tightening of the belt so far as they were concerned. There was more and more going into their purses at the expense of the people, even after the Minister first started off to restrict their profit margins. He had to come back and have a splash at them, and had to come back a second time. These are the folk who are doing well. You have only to look at the advertisements in the newspapers to realise that. You find drapery firms advertising in the newspapers saying that the controlled price of this or that article is so much, but that their price is so much less. One can see a reduction made between the maximum controlled price and the selling price. In some cases it was as much as 30 per cent.
Firms are not just in business from motives of philanthropy or charity. These drapery firms did not put advertisements in the newspapers, with advertising costs what they are to-day, merely to tell the public that they wanted to give an article away without profit, nor were they going to meet the expense of telling the public that the article was available without profit. All that has been done because there is still a good margin there, a good embroidery of profits, and it is on that margin that the drapery firms are getting wealthy to-day.
So long as you have a situation in the country in which after two reductions in price margins in the drapery trade, you can still get firms to say: "The controlled price is so much—do not mind the Minister who fixed it— we will sell it to you at so much less," how can you create public confidence in a price-fixing machinery or in a price-fixing policy in which crystallises itself in happenings of that kind to-day when the people are protesting against the high cost of living? I want to say deliberately that every draper and manufacturer of drapery goods in this country as well as other firms engaged in the production of household goods, continue to make and have made enormous profits out of the war. If anybody cares to examine their balance sheets he will find that to be a fact. Not only have they made enormous profits during the war but they did so in the main by buying a lesser quantity of goods and on the sale of inferior articles when compared with 1939 standards, at 1946 prices. Many of those firms in the normal halcyon days of peace could not pay dividents. A meeting of their shareholders was like a wake. There were long plaintive lamentations from the directors who were not able to indicate that any profit had been made, and who could only say that the profits available for distribution were so small that an investment in the business was a dead loss.
Anybody who cares to read what used to be the annual wails of chairmen of drapery firms can find that fact confirmed in abundance. That was the position in the pease days when you had normal prices and the normal clash of competition. It look a war and the sacrifices of millions and millions of human lives, with scenes of devastation that are incomprehensible to the human mind, scenes of slaughter and desolation, to enable those people to lift their businesses out of a bankrupt position into the position in which they are now. They are doing very well as the stock exchange value of their shares clearly indicates.
In the Seanad the Minister said, and I was rather surprised at this statement from him, that "quality for quality clothing was not dearer here than in Britain".