We will hear about them when the Taoiseach gets more clear in his head. The £26,000,000 is gone. They were unprovided for. A Government provides for its own expenditure, either current or capital. The explanation was given to us that last July was not the proper time to go for a loan to the public because the conversion operations were on.
I have the feeling that the present Government are lucky that we had arranged the conversion operations before we left, otherwise they would not have been carried through. The conversion operations involved over £20,000,000, and that conversion operation was quite successful. If that £20,000,000 had been transferred to another loan it would have been £20,000,000 floating around looking for a home which it might have found eventually through expenditure on consumption goods or through some other kind of investment. The Government were lucky that it was carried through before the public received the impact of the whining which was just about starting at that time.
Why did not the Taoiseach and his merry men look for a loan later in the year? There were other circumstances. Possibly we will hear of these other circumstances, but I only know of one, and that was that the people who were so merry in getting back to Government became so despondent, when they found the tasks ahead of them, that they could not face up to their liabilities. They made the people believe that the situation was desperate, that finances were running low, and that there would be no money within a month with which to pay civil servants. When that clamour was going on, the people who were responsible for the clamour could not act with any confidence and could not go to the folk of this nation and ask for a loan. The time they were telling everybody that the community was sinking, that they faced bankruptcy and insolvency, was no time to make an appeal to the people for money for constructive purposes.
The Taoiseach did not go for a loan and he now complains that, in respect of the £17,000,000 capital expenditure, that the worst provision that could be provided for was the one that was adopted. Those American moneys were a very valuable addition to the resources of this country. Dollars were loaned to this country because this country could not change sterling into dollars. When the goods which the American dollars bought for us came to the country the sterling proceeds were collected and put into an account in the Central Bank. They served a useful purpose over two of the three years we were in power.
The Taoiseach says that the capital development programme that is ahead runs at about £30,000,000 a year and that between small savings and approaches to the people for a loan there was not more than £15,000,000 or £16,000,000 got each year.
The capital programme was nothing like at that height during these periods. The first loan that was looked for in the inter-Party period was completely filled. The second required aid of about £4,000,000 from departmental funds and the third, I think, required about the same. Do not forget that, although in our period of office we approached the people three times for loans, we approached the people under very definitely restricted conditions which we imposed ourselves. We got the two highest individual subscriptions that were ever received from the people of this country since the State was founded. The first of the three loans was filled entirely. That was the biggest individual subscription ever received from the public since this State was founded. From the third, which was the worst of the three loans, we got the second biggest individual subscription from the public in the history of this State.
It was no small thing to go to the public year after year, for three years in succession, and to receive such a response—and it was more particularly successful when one considers the circumstances. We asked the banks to keep away from the matter and certainly not, by overdraft, to make things easy for would-be borrowers. We told them we did not want things pushed too much and certainly not as far as external moneys were concerned. The second loan was taken at a time when the Korean War had broken out and when almost all the financial advice I could get was against the looking for a loan at the time. Notwithstanding the adverse world circumstances and the fact that three appeals were made, year after year in succession for three years —and with the restrictive conditions we imposed on the banks — we got moneys plentifully — and there were still moneys to be had if the country had been approached in the right way, and at the right time, for them. The Taoiseach has now to get the moneys. He speaks of the easy position of the waster who inherits money and who can have a good time while the inheritance lasts. For him that good time is over now. He succeeded to the inheritance of £26,000,000 Counterpart Funds, and the wastefulness of his period of so many months has ended. He stands now on whatever moneys he can draw from the public. He will find it a hard task, after the lamentations which he and his group have been guilty of over the past five or six or seven months.
I looked through the Book of Estimates and I read the speeches made in the course of this debate in an endeavour to discover where there was criticism of the borrowings which we made. I see that the one big cut in the items is that in respect of moneys under the Local Authorities (Works) Act. We have no explanation why these moneys have been cut so savagely except that when that legislation was passing through the Oireachtas the present Government Party, who were then in opposition, exhausted themselves in fighting it, delaying it in all sorts of ways and in bringing forward all sorts of futile objections. That Act was very severely contested here and I suggest that nothing but a spirit of revenge has marked out that item for the cut which it has received.
There is one other amazing item. The Minister for Finance said that he was reverting to the earlier practice by which the money paid to the Electricity Supply Board to meet the cost of rural electrification was now being met by a payment of the full amount of the deficiency in the year in which that deficiency arose. He submitted here for criticism the practice of paying that annuity spread, as he said, over 50 years. He felt that if he could not attack the item as such he had something of value in saying that it should not be amortised over a period as long as 50 years. I cannot understand why there is any objection to that annuity payment. The finances of the Electricity Supply Board are, to a certain degree, under Government control. The Electricity Supply Board have been asked to take on the burden of rural electrification. They represented that it would not pay —and it was admitted that rural electrification, in the main, would not pay. The board were told that 50 per cent. of the deficiency between return and expenditure would be met by the State. The Electricity Supply Board asked and were permitted to fund their payment for their half of the deficiency over 50 years. Therefore, the State allows the Electricity Supply Board to amortise over 50 years their half of the deficiency, yet the State considers it bad finance for the State itself to amortise the equivalent payment over the same period of years as that allowed to the Electricity Supply Board. I should have thought that if any payment was marked out as good finance, it was that. One must ask how the payment arises. It arises in connection with the bringing of cables, poles, and certain items of apparatus which will be consumed in time but which are fairly durable, between certain points in local areas. The State steps back and looks at the Electricity Supply Board, and tells the board that it is good finance for them to meet the deficiency by an annuity payment over 50 years—and then it says that it, itself, will meet the payment each year. Possibly, before the debate concludes or at Budget time, we shall be told why the difference is made between finance that is regarded as proper for the Electricity Supply Board and finance that is thought proper for the State.
Some day the present Government will make up its mind on which of our capital schemes it considers unsuitable for borrowing. Some day they will tell us that they have either to cut out the expenditure on them or else mark some of them as not proper for borrowing and then put them on the taxpayer's back. We provided money for houses, schoolhouses, electricity, harbours, telephones, afforestation, fishery development, tourism and the improvement of the land. Which of these items is not a good capital item? Which of these items is the Government going to cut out as something that it will either drop or else transfer to the shoulders of the taxpayer? I have asked that question many times during the general election, but since I have not received an answer I have asked the Government to take out a pencil and to cross out whichever of these items it has an objection to as a developmental activity not proper for the process of borrowing, but I have not got an answer to that question yet. I suppose we shall not get an answer to it.
I had understood that the great trouble with regard to the expenditure by the State, particularly on the capital side, was that it had its reaction on the famous balance of payments. The deficiency on this year's balance of payments is said to be likely to be about £50,000,000. Let us ask ourselves, with regard to that £50,000,000 deficiency, if we regard it as a proper figure and if we contemplate it with equanimity. Let us ask ourselves if we regard that figure as a defect in the balance of payments this year and whether we can contemplate with equanimity, or less than equanimity, the continuance of the same figure, or a figure like it, in the balance of payments over a number of years in the future. Finally, we are asked if it is possible to get the money. All these matters arose for consideration on the Supply and Services Bill, but they are, apparently, not supposed to have been dealt with satisfactorily yet.
However, the Minister for Finance, with the Tánaiste, recently travelled to London. They went to London with a great whoop from the Sunday Press. The Sunday Press, the day before the Minister for Finance went away, said:—
"At stake over a conference table in London will be your security, the real value of your wage packet, and your standard of living. Going there on behalf of the people of Ireland will be Finance Minister Mr. Seán MacEntee. On the other side of the table will be Britain's Chancellor of the Exchequer, Mr. R.A. Butler. These finance chiefs of the sterling area meet on uncertain ground."
Some of the measures that were to be taken to protect sterling were already known, and there was speculation as to what was to follow. The Sunday Press said:—
"The initiative from these talks came from the British, who are up against it. Mr. MacEntee will certainly give them a careful hearing, but he will undoubtedly tell Mr. Butler that, as far as he is concerned—however much he sympathises with them in their dilemma— the interests of the Irish people come first.
"He will probably ask Britain bluntly whether she can supply all the machinery and equipment that Ireland needs. He will probably also demand that we be given adequate supplies of raw materials for industry and agriculture. And he has some top-rate cards to play."
Then three are given. The first is:—
"Ireland voluntarily gave up her right to her full share of the sterling areas dollar pool in 1948. We agreed to take Marshall Aid loans and grants instead. Now they have ended, and we can demand that Britain take these accumulated dollar ‘credits' into account."
The second card was:—
"Ireland is one of Britain's most important suppliers of food. If we do not get the supplies we require, we will automatically be forced to sell elsewhere."
That is reminiscent of the days when the British market was gone, and gone forever, and it was only childish—like a child crying for the moon—to hope it would ever come back. Notwithstanding all that, the Taoiseach to-day can tell us that the only areas with which we are trading advantageously are Britain and the Six Counties—the market that had gone forever. The third card was:—
"Ireland, although a ‘soft currency' country, is an important export market for Britain, and there are many non-essential goods we could cut from our import lists if Britain does not co-operate."
They went across with the three strong cards in their hands to play and they came back; and there has been a pretty definite silence since then as to what happened over there.
Conan Doyle wrote a detective story which he called The Story of the Dog that Did Not Bark. That was the clue—the dog that should have barked and did not, and that led to an examination and to the discovery of certain dirty work that was on. Our dogs have not barked since they came back. There has been a certain amount of tail wagging by one of them, but there has been no great vociferation as to what happened on the other side. We do hear, however, that we are going to cut certain items on the dollar side. We are told to-day the items are oils—probably including petrol—and tobacco, fats and sugar. Coal also has been cut, but it is only a temporary purchase.
If petrol is going to be cut, the question immediately arises as to whether we are in for new rationing or whether we will ration by price, as the British have done in the last Budget proposals. Regarding tobacco, are the Government pleased to find themselves with almost two years' supply of tobacco in the country, so that they could at least temporarily refrain from making any demand on the British pool of dollars for the purchase of Virginia leaf this year?
In any event, our Minister went over. Their presence was heralded by the Chancellor of the Exchequer when he spoke on Budget day in England. He said he had come to the conclusion that the whole sterling area must set its sights appreciably higher. He spoke of the striking manner in which the fellow members of the Commonwealth had answered his further appeals. He said it reminded him of the moving response in war time. Then he itemised them. He said that South Africa's response was immediate and cordial and then the items of that response were given. Over the week-end, the voice of Australia had rung clear, he said, and added that the United Kingdom must suffer from "the drastic effects of Australia's severe and timely action to save an economy swollen by the recent boom in wool prices." Regret was expressed by Mr. Menzies, said the Chancellor, that it was necessary temporarily to restrict imports from the United Kingdom. Then he went on to say that he had had stirring answers from "that stalwart leader, the Prime Minister of New Zealand" and from "my friends the Finance Ministers of India, Pakistan, Ceylon and Southern Rhodesia." Each had told the Chancellor of the Exchequer of their special difficulties. Then, with a paragraph to segregate the sterling area leaders of the Commonwealth from the Republic, he said:—
"I have also received a message from the Minister for Finance of the Irish Republic, indicating his Government's appreciation of the gravity of the situation and its determination to play its parts in resolving it. He will, I understand, be making a statement in his Parliament to-morrow, as I understand some of my colleagues will be making statements in their own time and place."
The only note we had about that—I again take this as a Cabinet leakage —came from the Minister for Posts and Telegraphs. He addressed a meeting and got himself the heading: "The Irish Aid in the Fight for the £". He told us Britain could not remain in a condition approaching bankruptcy and Ireland would have to contribute to the solution of those difficulties. I wish he would get talkative again and tell us what was Ireland's contribution to the solution of the difficulties.
It is amazing that people who are very voluble on platforms in the country become stricken dumb when asked a question in the House. There was to be a contribution from Ireland to the solution of the sterling area difficulties and we were welcomed with cheers and applause in the British House of Commons—and all we know about it is that we are going to have certain import cuts.
The Minister for Finance asked about the other conferences in England. There was one which took place in November, 1947. The Taoiseach was present at it. It appears as if the British lack imagination and they go back on the same old things when crises recur. It was suggested to the Irish representatives on that occasion that they should cut their expenditure from dollar sources to £8,000,000—that was, £8,000,000 over and above their own earnings. The earnings were about £7,000,000 in those days and the suggestions that came from the then British Chancellor of the Exchequer were, that we should suspend the purchase of tobacco, that we should restrict the purchase of petrol and that we should impose a stricter control of the home consumption of textiles. After some little talk, our then Finance Minister offered that we would economise in petrol and foreign travel and that we would stop any dollar expenditure on coal and tobacco. That was in 1947, in November, 1947. Here we are back again in 1952 and the Government have already announced, as one of their big contributions to the solution of this immediate difficulty, the cutting of foreign travel; and to-day, in answer to Deputy Declan Costello, we are told that tobacco and oils—which I take to mean petrol—are to be restricted; so that the same mentality pervades 10 Downing Street as it did in November, 1947. I suppose that if some day we do get the terms of this promissory note that the Minister for Finance sent the Chancellor of the Exchequer, we will find that it probably contains the same promises as were given in November, 1947.
What is going to happen after we restrict our imports of these things? Coal does not matter; as I said, it was only a temporary business. What is going to happen if there is merely a policy here of physical restriction of imports? Does it mean we are going to have rationing of petrol, rationing of tobacco and a narrower rationing of sugar than there is at the moment—or does it mean that the sugar required for the export of chocolate crumb is going to be cut and we will lose the value of that as an export item in our list?
If there is going to be only a physical control of imports, what is going to happen to the price situation? This year it is proposed to pour out £35,000,000 on development schemes, where at best we invested £28,000,000. If there is £7,000,000 extra going to be let loose in the hands of the purchasing part of the community this year and imports are going physically to be restricted, who is going to control the upsurge in price that is bound to arise if that extra £7,000,000 is sent chasing the smaller volume of goods that the physical control of these imports will certainly bring about?
I had understood all the time that the great objection to the investments in this development programme of ours was that it sent so much money into the hands of the people, that when the ports were opened they called for more goods, and that these goods caused this gap in the balance of payments.
There is another interesting move on since our two watchdogs of finance came home. The last speech the Tánaiste made indicated that, at this stage of his life, he is not very happy about existing legislation in regard to our currency or to the business of banking. He feels now that it will be necessary to get capital. If we have to get capital from outside we had better get such capital in the hands of our own people. Apparently he does not even shudder at the thought of getting foreign capital—capital that is not owned by our own nationals.
That is a tremendous change for a man who imposed the controls through the Control of Manufactures Act and who shut out foreign capital from freely percolating in this community and the benefits that we might have got from that. He is apparently now out to have foreign capital, even, introduced here to aid us even although, in the calculations that were made at the time of the White Paper, if we do get so much capital in, that is equivalent, according to the White Paper, of wiping out so much of the capital that we own abroad. We were told that it was the net figure that had to be taken and not the gross. If foreign capital is brought in, and brought in to any quantity, we will probably find ourselves bemoaning the situation, as it will be predicted to us by the British journals on finance that we have on the other side, as meaning the complete dissolution, the disappearance, of our sterling holdings.
It appears to me that, although it was a brief visit to London, our Ministers did learn something. What they learnt was something that taught them not any longer to have such amazing faith in the stability of the sterling assets that they used to have. I wonder did they get any assurance from the British with regard to these reserves, or is it possible that, so far from getting any assurance, they got revealed to them such a state of weakness with regard to these marvellous assets that they decided that maybe it was better spending them than to save? Maybe that is the new line, and may be that is what drove the Tánaiste to say that he is not at all happy about existing legislation in regard to the currency or the business of banking.
I have introduced into these debates before the name of Mr. Schwartz, who writes every Sunday on certain finance matters. In February of this year he wrote an article. The moral to be drawn from it possibly is not the one that I am going to draw immediately, but he did use this phrase in regard to certain items of British expenditure. He said they bought coffee from Western Africa. They could not pay for it, but they felt that the niggers of Western Africa ought to be satisfied to have sterling balances. They said, "No," they wanted bicycles instead because that was the need they had at the time. He said "No" again. Instead of getting bicycles for coffee they are going to get sterling balances, and the bright idea is that they should hold these balances until the money that would now buy a complete bicycle will only buy a mudguard.
That is the situation that we have been facing for many years. It was recognised that the value of these sterling assets was on the decline. We preached that in this House as far back as 1942. It was preached again here very specially in 1945, and I will read the response we got on that occasion. All the time from this side of the House we have been probing and probing away at the folly of piling up so much of our resources in that particular currency, seeing that that particular currency was wasting and showed signs still further of wasting.
Apparently, the Taoiseach, as far as his speech to-day is concerned, is going to continue with the same old policy—keep the sterling assets to a certain point. As they are going down in value, you will have to increase them in volume in order to get even anything like the same value as to-day, but we must break ourselves, if necessary, here in order to get that, and if we do not do that we are going to be held out as being the wasters who are profligately spending the inheritance our fathers piled up for us.
In the month of July, 1945, on the Vote for the Department of the Taoiseach, I personally raised the question of the sterling assets and asked whether it would not be a better thing to do as certain finance journalists in England were then suggesting, that was, to get some independent steering gear financially of our own, and I was subjected in the closing speech to a tirade from the present Minister for Finance, who was then Minister for Local Government. I cannot read all of this but Deputies who are interested will find it in Volume 97, at column about 2035 onwards. We got a lecture about Mr. Churchill. We were told that Mr. Churchill declared that if the people gave him a majority in England one of the first aims of his Government would be to enhance considerably the purchasing power of the £ sterling. There were then a few remarks about myself in contrast to Mr. Churchill. The Minister went on to say that whether Mr. Churchill would succeed in his undertaking to the British, or not, there was one thing certain and one thing of which we might be assured, and that was, that he could not permit sterling or sterling assets to be depreciated by 50 per cent. in value.
A little lower down the Dáil was asked to accept Mr. Churchill as speaking with far greater authority than I could speak. The Minister announced his view that Mr. Churchill would do his utmost to secure that the purchasing value of sterling would appreciate.
He spoke later of freedom in exchange and that freedom in exchange must be substantial. He talked to such an extent about it that he was eventually brought to an end by Deputy Dillon asking: "Will somebody strike up Rule Britannia now and we will all bow.”
That was the mood of 1945 and that is the mood, apparently, in which the present Minister for Finance went across to London to meet the Chancellor of the Exchequer, and all we have got by way of reply to our repeated questions is that we merely had an exchange of views—that there were no commitments. Yet we find that we have agreed to cut certain imports and that £16,000,000 is our aim with regard to dollar imports and the aim with regard to imports from the non-sterling countries.
The British have not changed much, it was said, with regard to the demands they put on our people. Our people have not changed much as between 1947 and 1952 in their responsibilities. Possibly the Minister would enlighten us before we leave this debate as to what is going to happen. We have had all through these months the repetition of statements as to the terrible state of the national finances. We are on the verge of desperation. Irretrievable harm, according to the present Minister, has been done to the country's finances. He and the Tánaiste spoke week-end after week-end, each reminding the other that there was no time to be lost, that the situation was so bad. We come here, the last fortnight in the financial year, and the only two pointers we have to any recognition even of urgency is the cut in the travelling allowance from £50 to £25 and the promotion of Budget Day by a month from the month of May to the month of April. That is the beginning and end of the efforts of the Government. That, and the spending of the £26,000,000 that we left them which could have been used for many years to aid whatever deficiencies there might be in the national financing or the national needs in the way of development. That is all we have got from the Government to date.
Apparently the £25 cut in the travel allowance was part of the proposals discussed in England. There may be other matters in regard to the cost of petrol and other things. The Minister may have a pretty heavy job ahead of him trying to meet new requirements which he has piled up himself. He may find it very hard to get money, although it is not going to be anything like as hard as he imagines, and it would not be at all so hard if he had only shown a little bit of caution and reserve in his language. Well, he has made his bed and, if it is going to be hard, he is responsible for that himself. While he has these difficulties ahead of him, the one thing of which I do not see any appreciation as yet is that the situation cannot be mended by a mere physical control of imports. If it is, then this country will wake up to regret the day when it was able to stop such a gap in our balance of trade because that gap enabled it to keep prices under control. If we stop the gap of £16,000,000 or £17,000,000, and the purchasing power is still left in the hands of the people, then this country will be faced with the greatest tornado it has ever known in the way of an upsurge of prices. The immediate reaction of the Taoiseach and the Minister is that you must absorb that purchasing power by heavy taxation. That, as Deputy Cosgrave pointed out, will in itself be a cause of inflation and will only add still further to costs.
I would ask the Minister, when he is replying, to spare time to deal with the matter on which I opened, namely, the matter of the civil servants. Whether he deals with it here or not, I hope he will deal with it outside the House in a way that will enable civil servants to look forward to that security which we brought into their lives when we were in governmental control, and that he will not try to disturb the excellent scheme which had the goodwill of the vast majority of civil servants. I hope he will again recognise that scheme even though it may cost, from time to time heavy commitments to the State.
