Last night in my few preliminary remarks I endeavoured to point out the beneficial effect already felt by the tabling of the two amendments, one in the name of Deputy Costello and the other in the name of Deputy MacBride. We started off this debate in an atmosphere of crisis, a crisis indeed which was going to endanger the whole economy of the country. The mere tabling of the amendments drove the Tánaiste to change his mind and to say that there was no crisis but merely a problem. I think there has been a further decline as regards these surrounding circumstances. In the meantime, what we are now faced with is: will it be possible to struggle through without increased taxation? That will be the last point with which we will have to deal in this important matter. I hope the cry and the order will go forth from the Dáil that there is no necessity for any increased taxation for the country and certainly the Deputies who compose the inter-Party Government will strenuously resist any attempt to impose fresh taxation on an already overburdened community. Let me, however, get the frame of mind of the Deputies, and also of the Minister, who were putting forward their views when the debate opened. Quite early before the change of Government had taken place the man who was later to become Minister for Finance said that the country's finances had been irreparably damaged. He said that there had taken place in this country a distortion of money values such as had never been experienced before in the history of the State. He continued:—
"Irreparable damage had been done to the finances of the country by the Government's policy of borrowing, and whether the cost of the Supply Services comes from taxation or inflation it is money taken out of the pockets of the people."
After that there was a period of quietude when, presumably, the irreparable damage to the country's finances was being pondered on by the present Minister for Finance and his colleagues. After that the apprentice to the undertakers' mutes' procession, the Minister for Posts and Telegraphs, was sent out in September. He made a round of the country's post offices and he stopped some place on the way to say that the country had been very badly fooled by every type of wild promise, by the misinterpretation of appeals for annual subsidies for certain schemes, by the launching of improperly planned schemes and by the reckless use of American money, so that the people had been led to think that schemes need not be paid for and that money could be printed ad lib. In October, the Tánaiste took up the running. In the Irish Independent of 8th October the Tánaiste is reported as saying at the annual dinner of the Irish Conference of the Professional and Services Organisation:—
"So great was their need to increase total production that it was no exaggeration to say that failure to achieve it within a comparatively short space of time would create a major economic crisis."
Later on in the speech he said:—
"When the Minister for Finance had the financial position disentangled and could give a full picture to the public there would be many who would get a severe shock. As matters now stand, before the end of the present year the Exchequer will be in difficulties in finding the cash to meet even normal outgoings."
Further on in his speech he said:—
"The amount of money which could be borrowed, in the ordinary way, by different public loans would not be enough to cover the Government's capital programme, much less to meet a large Budget deficit as well. The nation, therefore, had to face either the cutting down of Government spending or the raising of the tax revenue. Either course was unpleasant for any Government to contemplate."
Later he patted himself on the back, as he is in the habit of doing on such occasions, saying:—
"These things may not be the recognised route to public popularity but somebody has to say them, and responsibility rests on the members of the Government."
Four days later he was at it again. At the Publicity Club of Ireland, he made a speech reported on the 12th October which made the Irish Independent put the headline: “Nation's Economy Endangered.” His narrative ran this way:—
"If we did not soon get into a position to maintain our standard of living without drawing on our financial reserves, the painful process of lowering living standards would sooner or later be forced on us....
The time to give serious notice to that situation was overdue....
We are able to do so for the time being because the external assets accumulated in the past are not yet exhausted; they are, however, rapidly nearing the point of exhaustion.
That is £400,000,000 worth. Later he said, warning the people:—
"If we did not soon get into a position to maintain our standard of living without drawing on these financial reserves to keep up the present level of consumption, then not merely would these capital reserves be wasted, but the painful process of lowering living standards would sooner or later be forced on us.
Whether that took the form of rising unemployment or increasing emigration, higher prices or higher taxation, it would represent the defeat of all our hopes for the future of our country.
The simple facts tells us what has to be done. We must reduce imports. The current output figures for our normal exports rule out the possibility of any large increase in the volume of exports in the near future."
Later he said that one of the things that would operate against us was that this was a high-cost country compared with other suppliers of the European market. In the end, he wound up this particularly gloomy statement by saying:—
"This is a real crisis which we are facing and it will not be easy for us to escape it."
He gave himself a ten days' respite and then, speaking on the 25th anniversary of the founding of Fianna Fáil, he warned:—
"Unless there was in the very near future either an expansion of our exports or a contraction of imports the country would be facing an economic crisis for which we would pay heavily by rising unemployment, rising emigration or a very serious lowering of the standard of living."
A day later he said:—
"The result was that the provision made in the Budget for the money to meet anticipated expenditure was so inadequate that in a couple of months' time there would be no money at all left in the Exchequer, even to pay Civil Service salaries, unless the Exchequer is replenished by borrowing or otherwise."
That was from the man who said there was no crisis, only a problem. The Irish Times of 13th October took up the running.
"There is no other way. Mr. Lemass foresees a day when, if the present rot is not stopped, the Government may be compelled to borrow money abroad with which to pay for those imports without which the national economy cannot continue to exist; and, in this respect, he makes a point which ought to be pondered by every thoughtful member of the community. ‘Should the Government have to seek foreign loans,' he says, ‘it might find political conditions attached. A small country dependent on foreign loans rarely is free to follow an independent line.' This point of view is far too often ignored in this country."
Finally, the Irish Times, accepting this point of view, says the Government has every right to insist on a policy of austerity in order to bring these matters under control. Some days later there followed another wail. The Irish Times published the famous article headed “Ancestral Voices” in which they joined up the Tánaiste's statements with the Central Bank Report. They spoke of the Report of the Central Bank which explains to some extent the gloomy speeches made recently by Mr. Seán Lemass. They talked about those external assets of ours and wound up by saying:—
"They can go on as they are going, enjoying a false standard of living while, as it were, the going is good, and end up in the national bankruptey court. That way madness lies. The alternative is to pull in their financial horns, and settle down to a period of relative ‘austerity'."
Later, the Times was at it again. In regard to the new British Government they said:—
"Under the new Government, the British Cassius probably will continue to have a lean and hungry look for some little time to come. His Irish counterpart is still waxing fat in his fool's paradise."
The Evening Mail followed with an article headed: “The Rake's Progress,” and even Dublin Opinion was moved to make the joke of the month out of all this gloom—a picture of the secretary looking in at the Tánaiste and saying: “It is the wolf, sir. He's called again.”
A correspondent of the Sunday Times, who, I understand, is also correspondent of the Irish Times, was so much enamoured of the Tánaiste that he wrote in these terms:—
"An unexpected ally has come to the help of Government spokesmen in their efforts to make our flesh creep. The warnings were ridiculed by the former Premier, Mr. Costello, who claimed that they were no more than a ruse to hide the Cabinet's blushes at its own mismanagement.
Last week, however, the Central Bank issued a report on the economic situation by contrast with which even the ministerial moans sounded cheerful. The Central Bank is a State-sponsored concern set up a few years ago to act as a financial watchdog for the community. Securely chained by the sterling link, it has little power to do more than issue an occasional melancholy bark.
Its report covers all-too-familiar ground. The nation, it suggests, is spending more than it earns and inflationary habits are becoming ingrained. To reverse these trends it suggests reduction or removal of food subsidies, restriction of credit and rejection of new wage claims. Even purchase tax, as yet shunned in Budgets, receives a favourable nod."
He continues, and this I would like you to ponder over:—
"The only immediate repercussion from the report was a slight improvement on the stock exchange. This was not an impolite thumb-to-nose gesture by the brokers, but simply a reflection of their belief that such reports do not make a ha'porth of difference. So long as Ireland's financial hub remains in Threadneedle Street they bear as little relevancy as the croak of Edgar Allan Poe's raven."
The result of all this gloom and these scares for which the Tánaiste, helped by the Minister for Finance and the Minister for Posts and Telegraphs is responsible, has been to cause unnecessary suffering to people in this country. They caused a restriction of credit and a calling in of reserves. They have caused something in the nature of recession if not a slump in trade. They have caused a set-back in our whole economy and when the damage is done, the Minister can slip in here and say to us that there was no real crisis, that there was just a problem. What is the problem?
Before I come on to that, let me say that it is no new thing for the Tánaiste to preach in the way he did for the last three months. For three years back, he has been the guest of honour at an insurance dinner that takes place each year, somewhere between Christmas and the New Year. The only thing he ever did at these dinners was to change the metaphors in which he pictured the condition of the country. For two or three years he has been going up dark roads but Prosperity Corner was always just ahead. One day the clouds of gloom were lowering upon him but there was always the little break that let the light through and once he inevitably moved to the darkest hour before the dawn. He told us after the war that some day he would have to pull aside the curtain and the country would then realise the almost hairbreadth escape it had from disaster. All this was his method of excusing himself for the growth of the restrictive policies in regard to wages and wage conditions generally.
He was joined by the Minister for Finance who, on one occasion in University College at a meeting of the Commerce Society, proved to his own satisfaction that full employment could never exist in any country because under conditions of full employment, the workers would have the whip-hand and they could demand such excessive wages that the products they had achieved would be so dear that people could not buy them and there would be no export market for their goods. He was also joined by the Minister for Posts and Telegraphs who on one occasion privately circulated a stereograph in which he said that one thing that was required was a stern scrutiny of the wages and salaries of all those engaged in industries catering for the export business.
There is a problem and there are four points facing the Government. One is that they say the present Budget will not balance and that that is my fault. The second is that they have told us that these schemes in regard to what we call national development, which were financed partly out of the savings of the people and partly by moneys out of the counterpart loan, were not proper schemes for that type of financing. The Minister for Finance has called them his predecessor's folly. The Tánaiste will enumerate how many occasions we attempted schemes that can be described as folly. The third point is that the conditions under which we had to finance these particular measures of borrowing are causing danger to the community, as, for instance, by what is called the gap in the balance of payments. Finally there is another difficulty, the Government say. Even if these schemes are worth while and even if they are proper to be met by borrowing and not out of year to year taxation, how is the money to be found for them? I want to deal particularly with these four points.