Dáil Éireann díospóireacht -
Wednesday, 5 Nov 1958

Vol. 171 No. 4

National Loan, 1958—Statement by Minister for Finance.

Minister for Finance (Dr. Ryan)

I wish to inform the House that a new national loan to be known as Exchequer Stock will open for subscription on Monday next, the 10th November. The loan will be for £15,000,000 but, in my capacity as Minister for Finance, I am taking up £2,000,000 of the stock. The amount available for public subscription will, therefore, be £13,000,000, which will be fully underwritten by the Irish banks. The rate of interest will be 5½ per cent. per annum and the issue price £99 for each £100 of stock purchased. The stock will be redeemed at par not later than 1974 and may be redeemed at any time from October, 1971. As the issue is being made at a discount, those who hold the stock to redemption will obtain the benefit of a capital gain of £1 per £100 of stock held, and this gain will be tax-free to the ordinary investor.

To facilitate investors, there is, as usual, provision in the prospectus whereby only 10 per cent. of the purchase price need be paid on application, the remainder being paid in three further instalments over the months of December and January. On the other hand, those who wish to pay the full amount on application, or to complete their subscription on allotment, will be entitled to a discount equivalent to an interest rate of 5½ per cent. on the advance payments.

The tax privileges which have been a feature of recent loans are once again included. Interest will be paid without deduction of tax at source, though, of course, a holder ordinarily resident in the State will be assessed to tax at the rate appropriate to his income. Stock of the issue will be accepted at its nominal value as the equivalent of cash in satisfaction of death duties on properties of which it formed a part. The stock and the interest on it will be exempt from all Irish taxation, present and future, if owned by a person neither domiciled nor ordinarily resident in the State.

The issue is being made under the authority of the Appropriation Act, 1958, and other statutes. Both principal and interest will be a charge on the Central Fund. The market value of the stock will be upheld by its status as a trustee security, by the concession whereby it will be accepted in payment of death duties and by the substantial sinking fund allocations. A continuing and active market will be ensured by the arrangement under which the Government stockbroker will be prepared at all times to buy and sell blocks of the stock in reasonable amounts.

The 5½ per cent. National Loan, 1966, which was issued in October, 1956, carried a right of conversion into any public issue made by the Government within five years. This right will apply to this issue. Stock of the new loan issued under this conversion arrangement will be additional to the £15,000,000 of stock offered for cash subscription.

As you are all well aware, it is primarily to our own people we must look to provide the funds needed for national development. It is only by applying the maximum amount of resources to productive development at home that we can build up employment and living standards. Investors who subscribe to the new issue will be playing their part in ensuring that resources will continue to be available for the expansion of agricultural and industrial output, the provision of houses, schools and sanitary services, the development of fuel resources and afforestation and the other objectives of the State Capital programme.

Since the resources for national development must come in the main from the savings of our people, I should like to stress the continuing need for a large volume of savings. The amount saved in 1957 showed a gratifying increase on previous years, but it is necessary to maintain the improvement if we are to continue, without set-back, the development of our economy. All subscribers to the new loan will be helping to attain this objective as well as securing for themselves a safe investment and an attractive return on their capital.

The prospectus will be published in to-morrow morning's newspapers. Copies of the prospectus, with the application form for cash subscriptions appended, may also be obtained as from to-morrow from any bank, stockbroker or Post Office. The lists will close not later than Friday, 14th November.

I confidently ask for the full and active support of every Deputy in the House for the issue.

Mr. Sweetman

On behalf of the Fine Gael Party, I would like to join with the Minister in expressing the hope that the loan, the flotation of which he has just announced, will be a success. We are all clear that it is only by productive capital investment that there can be any permanent improvement in our economic progress or any permanent increase in our standard of living. There can be no better way in which the savings of our people can be invested than in such productive investment in Ireland, and the Minister in the statement he has just made has made it clear that this loan is required for that purpose. Every Irish man and woman who has the means at his disposal for investment is therefore fulfilling a patriotic duty by subscribing to this issue and thus helping the development of our country.

Apart from that, however, he or she is doing more. The terms of the loan are so attractive that investment in it can also be recommended purely as a matter of self-interest to investors.

It would seem possible that the trend of interest rates in the world or at any rate in the part of the world that affects us in Ireland is likely to be downwards and it may well be, therefore, that investors would not be able again in the immediate future to obtain as high a rate of interest as 5½ per cent. for a period of 15 years or so with capital appreciation at the same time. The financial position of the State is fundamentally sound and justifies, therefore, every confidence for investors.

Speaking, therefore, on behalf of Fine Gael, I would urge everyone who can possibly do so to invest in this loan and we hope that it will be oversubscribed at an early date.

Mr. Norton

I should like to welcome and commend this loan to the investing public. The terms of it offer a rewarding return to the rich investors, and to institutional establishments who find it necessary to invest their funds as part of their commercial activities, and also offer a source of encouragement and thrift for the small investor whose savings, in the matter of a national loan, can be vital from the point of view of the success of the loan, and for the encouragement of good citizenship as well.

What we have to recognise here, and what cannot be too often emphasised, is that the development and expansion which have taken place in other countries have, in the main, been financed by native savings. It was that road other highly developed countries had to travel in order to attain the measure of capital development which they desired. Whilst we here might be able, from time to time, to invite limited external investments in our economy, the inescapable fact is that, in the main, we must rely on native savings and native investment in order to promote national development. Every national loan is, in fact, a euphemism for national development and national expansion, because the proceeds of the loan are utilised for the purpose of undertaking large-scale schemes of capital development which would not be possible out of current revenue. Good citizens, therefore, must welcome national loans as an indication of the State's determination to pursue a policy which will enrich the nation's estate, which will provide civilised amenities for our people and which will offer rising living standards. They provide great opportunities also for well-paid employment.

There will, of course, be many persons who will be unable, from their slender resources, to subscribe to the loan, but nevertheless they are vitally affected by its success or failure. The success of every loan means more work. It means an extension of our national activities. It means the provision of great opportunities for employment and it means regular wages and rising living standards. It is because of that fact that even the poorest of our citizens must take an interest in the success of national loans which, in their own sphere, help to provide sustenance and economic security for those who must depend on their labour as a means of achieving that security. For these reasons, I welcome this loan on behalf of the Labour Party. I think it is the business of all good business persons to ensure the success of the loan and, whatever our political differences may be, I hope it will be an outstanding success.