Deputy Corish was referring to labour unrest. Inflation is the source of labour unrest. As the value of money falls, the value of people's incomes falls, and they seek to compensate themselves for it. What a lot of people forget is that the trade unionist and others who are organised can, as Deputy Corish pointed out, with or without the consent of the Government get the compensation requisite to restore their financial position. But what we are all very liable to overlook in considering a Finance Bill of this kind is the progressive crucifixion of the defenceless. They are the sections of the community for which few people concern themselves, the pensioner, the old lady living on a fixed income, all of the individuals whom we here in this House have, down through the years, exhorted to invest their savings in national loans.
It concerns me to look back on the day when we urged our people as a patriotic duty to buy national loans bearing an interest rate of 3¾ per cent when I realise that, as a result of the subsequent machinations of the Governments in this country, not only have they received no return on the money they invested but they are suffering loss because the rate of inflation that has proceeded over the past seven or eight years is such that the interest on the money they lent their own country has been absorbed and part of the capital to boot.
What is wrong in this country at the present time is that we are moving steadily and relentlessly along the road of inflation. The question arises: at what stage are the people to be warned? I have always believed that the proper course was to tell the people the truth, however unpalatable it might be, at every stage and let them decide. I told them the truth about what was going to happen when I spoke in this House on Wednesday, 1st July, 1964. I want to tell them the truth now.
The Finance Bill is the annual device employed by any Government to raise revenue through taxation for the purpose of public services. But that is not the only instrument the Government employ to raise revenue. How many people know that the Government owe the banks £60 million in Treasury bills? How many people know that when the then Deputy Dr. Ryan, as Minister for Finance, began the issue of Treasury bills, these issues were accompanied by an assurance to any individual or bank holding an Irish Treasury bill who, for the purpose of its own business or the bank's business, wished it to be discounted, that the Central Bank could do so on request? How many people know the joint stock banks have been "requested" not to exercise that right and not to seek discounting by the Central Bank of the £60 million of Treasury bills which they hold for the Irish Government? How many people know that the last National Loan issued by this Government failed to fill? How many people know that when we are told the Government were taking up £4,500,000 of the last National Loan from Departmental Funds, that statement misled this House and the country? The fact was that the Government, finding that the loan did not fill by £4,500,000, announced the balance would be taken up by Government funds, but in fact it was taken up by the Government making a further issue of Treasury bills to joint stock banks, the proceeds thereof filling the loan.
How many people realise that when the unfortunate Minister for Local Government is bombarded from every part of this House by Deputies representing every constituency because he is unable to provide the money to carry on the essential service of house building and the provision of other public amenities, he has to face that bombardment with lips sealed because his problem is that he has no money and he cannot get it; and he cannot get it because the Minister for Finance has borrowed every penny that the joint stock banks are in a position to lend him? Furthermore, the Minister for Finance is unable to borrow in the United States of America and what he did borrow in Germany he spent before he got it to balance last year's Budget.
How many people know that the people dealing with the joint stock banks at the present time and depending on the traditional accommodation which they have for years secured, are now being informed that that accommodation is no longer available, and on asking in astonishment why, they are told: "Because we have not got it. The Government have taken it"? There is a limit to what the joint stock banks can lend. I am not going into the elaborate formula to establish what that limit is. It is all cod to be saying the banks are lending their customers money, et cetera. The banks are in this country the accepted channel through which the total credit of the country is provided for production and other purposes for which it may legitimately be used. However, that machinery works within certain defined limits unless it is to break down. The position now is that the banks are lending to the very extreme limit that what we call safety permits; that of that lending, £60 million is being made available to the Government and that of all the increased lending of the past 12 months, I think I am right in saying, over 90 per cent was absorbed by the Government.
How many people know that we stand at a point at which the Government can borrow no money from the banking system, for it has no more to lend? How many people know the Government stand at a point at which they are unable to raise a loan in the American financial market or the British financial market for the reasons which I pointed out to them on 1st July, 1964? At column 1364, volume 211 of the Dáil debates, I said:
The plain truth is, to anybody who studies these matters, that on the right of us and on the left of us, pretty brisk inflations exist at present in the USA and in Great Britain. We know perfectly well the reasons for these inflations: both countries have general elections pending at the end of the year and both are quite resolved that in no circumstances will there be any restrictions on the expansive tendencies which have been so sedulously promoted for electoral purposes. In that atmosphere, our capacity to compete is made all the greater by the relative inflation which is proceeding in our two principal markets. If, as is highly likely, at the conclusion of the general election in Great Britain, a different atmosphere obtains, unless we can control the rising cost of living and the tendency for our industrial costs to rise, our competitive capacity in our principal market, in Britain, is likely to disappear. If it does, Nemesis will come upon this country.
We are now faced with the fact that these events have transpired and, over and above the contractions which occurred in this country, there have been strict limitations placed, not only by the United States of America but by Great Britain as well, on exports of capital. We find ourselves in the condition which I have described, that this country is a country gone bust. We cannot get the revenue to do the things we need to do. When you say a country has gone bust or bankrupt, you do not mean the country is going to sink under the surface of the sea. A country cannot go bankrupt for the simple reason that its assets are not available to its creditors for realisation. What happens when a country goes bust is you do not house the poor. When a country goes bust, it means you do not provide the educational facilities your people ought to have; what happens when a country goes bust is that in a city like Dublin you find that instead of having a large surplus of houses over and above the demand which exists for them, you have a situation in which nobody who has less than four children will even be considered for housing but is told: "You must go on living in a tenement room or wherever you can find a roof to cover you."
That is what going bust means and that is what is happening in this country at the present time. It means that when a young married couple go to a local authority for a Small Dwellings Acquisition Act loan, they are told that the local authority has no money to give such a loan. They go thence to the bank and the bank says: "We have no money to lend you because the Government have taken it all." They go then to the building society and the building society says: "We have no money either." The young married couple must move into their parents-in-law on one side or the other with all the social disruption that involves. That is what going bankrupt means. Going bankrupt means that I am told by a constituent of mine: "I have an afflicted child who has been two, three or four years in our family, who has been certified as requiring institutional treatment not only for its own sake but for the sake of all the other children in the house but the country council tells us all the institutions are full, that they cannot provide any more.
I am not pretending that the Minister for Finance is coldly, savagely and brutally indifferent to these problems. I have no doubt that floods of correspondence pour in on him, too. I have said more than once in this House that the only indignation of Deputies seems to me to impinge the Minister for Local Government. Why slag him; he has not got the money; he cannot do it and he has not got the sleeky, oily approach of the Minister for Health who publishes a White Paper saying he is going to do the devil and all some fine day, who has not the slightest intention of doing anything but provides himself with an alibi, when he is providing nothing—as all of us know—in the acute crisis which exists all over the country.
Let us not forget that we have a diagnosis of the reasons for this situation. It was not provided by me, although God knows, I have spoken on this subject often enough. Let it be known it was provided by a Minister for Finance of the Fianna Fáil Party who asked leave to speak in the Irish Times of Saturday, March 12th, 1966, for the reason that he had introduced himself 11 Budgets in this House. He wrote:
In your editorial criticising the new Budget you ask how we got into the mess that ties Mr. Lynch's hands so firmly.
We are all sympathising with Mr. Lynch, the Minister for Finance, sitting beyond with his hands tied firmly—so Deputy MacEntee says about this deplorable condition. Deputy MacEntee goes on to say:
May I, who was Minister for Finance from 1932 to 1939 and from 1951 to 1954, and have been responsible for eleven Budgets, answer that question?
Yes, I think he is entitled to speak with some authority on this matter. He knows; he is a member of the present Minister's Party and he knows his agony in bearing the handcuffs which Deputy MacEntee says so harshly chafe his wrists. Deputy MacEntee goes on in his letter:
Outstanding among the chief culprits, I place the economic astrologers and soothsayers who deluded our people with fantasies of the affluence which awaited when they got to the end of the rainbow some years hence. Unfortunately we converted that roseate future into an opulent but fleeting present and spent prematurely the wealth which we had not produced and, even today, are not beginning to produce.
They are interesting words. They were not prophetic words, for I spoke in July which was by way of promise of what was about to come and what might be done then to stop the things happening which have subsequently happened. These words are not the words of prophecy. Deputy MacEntee's words are the words of Jeremiad, though he sat silently basking in the sunshine of the inflation his colleague was promoting, according to his own letter, knowing full well that his colleague had no better ground to stand on than that of the soothsayers and astrologers.
Deputy MacEntee's letter continues:
Next in order of malign influences I rate those who were responsible for what has been euphemistically styled a National Wage Agreement. It is true that this instrument did not initiate the inflationary trend—that was done by a long series of deficit Budgets—
Note the words. He is writing after seven years of Fianna Fáil government, and he says:
It is true that this instrument did not initiate the inflationary trend— that was done by a long series of deficit Budgets—but it accelerated it enormously. The agreement—or in view of the differences which arose in regard to its interpretation, should it be disagreement?—injected an enormous quantum of new purchasing power, uncovered by production, into the consumption sector of the economy. Moreover, far from encouraging an increase in production it retarded one. Tied up as the workers felt themselves to be, it led to demands for shorter hours and for uncovenanted, sometimes even previously unthought of, benefits of one sort and another, resulting in prolonged strikes in essential industries.
That is the ex post facto lamentation of the man who professes to be the Fianna Fáil expert on matters relating to Finance but this was ex post facto. Where is he now, because we have taken another step since then? Remember, next in order of malign influences he rated those who were responsible for what had been euphemistically styled a national wage agreement which he went on to describe. Since then we have had another one.
Now the Taoiseach, the Minister for Finance, and all the members of the Government came into this House and said that, fortified by their astrologers and soothsayers, they were now informing this Dáil, the country, and the people at large, that the economic foundations of the State were in imminent jeopardy if there was any general increase in wages in excess of three or 3½ per cent. Within a fortnight, the Trade Union Congress had said that they were looking for an increase of £1 a week for everyone. Shortly afterwards the Labour Court in a rather remarkable document endorsed that. We have on record what the soothsayers and the astrologers told the Government, and we have on public record the acceptance by the Government of the advice and counsel of the soothsayers and astrologers, and we have a solemn declaration on record in the Taoiseach's warning to everyone that the Government were the protectors of the economic foundations of the State and that 3½ per cent was the extreme maximum. Lo and behold, three days after the Labour Court announcement, all engines are reversed, and we are told that for precisely the same reasons as the National Wage Agreement was fixed at 12 per cent two years ago, it is now desirable to fix it at six or seven per cent, whichever you estimate £1 per head for everyone to be.
I suggest to the House that a Government who allow themselves to get into that kind of chaotic confusion, flanked on the one side by the soothsayers and astrologers, and on the other side, by ex-Ministers for Finance who present a picture to us of the present Minister for Finance handcuffed and helpless, are in a pretty desperate plight. I want to say that in my considered opinion we are cheerfully tramping along the road to inflation which leads eventually to devaluation of currency. What appals me is that that solves nothing. It simply starts an appalling dialectic in which we rob the defenceless—so long as they have anything left to rob—and ultimately shuffle incompetently down the hill to economic confusion and chaos. Remember, we have object lessons before us all over the world.
When I first entered this House, a characteristic term of obloquy was to compare our circumstances with those of the banana republics of the South American continent. I think the economic conditions of the banana republics at present are a great deal sounder than the economic conditions of this country. I am glad to observe that the trade figures for the past four months, at great cost, have been made to show better results. I do not know what the balance of payments figures are over that period. I do not know where people other than those in the Department of Finance can have access to them. It is manifestly true that you can cut down imports by stopping building, that you can cut down imports by the imposition of levies, but you cannot cut down imports effectively if you are to allow demand to rise in excess of our capacity to supply, and controlling or attempting to control prices will do nothing to help.
It makes one almost despair when one realises the complexities of these problems and the slowness of the public at large to understand them. It horrifies me to think that our own Government are misleading the people, as Deputy MacEntee manifestly thinks our Government have done during the past five or six years, with his help and support in this House, because if the Government will not tell the people the truth, it is very hard for anyone else to communicate it to them.
Our present situation is alarming, and no one wants to believe alarming news. If you issue a note of warning, everyone looks around to find someone to say a consoling word, to say: "The situation is not as bad as he says it is." If it comes from the Government themselves, who will blame the trade unions, or who will blame anyone for saying: "Ah, it is all phantasmagoria. It will all come right in the end." I wonder has the Minister for Finance in his ivory tower in Merrion Street ever thought in terms of the individual case. I often heard it said that the only time banks are prepared to lend you money is when you do not want it. If you have large assets and an expanding business and you go into a bank, they are pressing money on you. If you have a bad patch, you cease to be the honoured guest and become the poor relation.
I know a man in rural Ireland—I do not know the details of his business—who had a business, a grocery shop, and who sold seeds and manure as well. He went to his bank about 18 months ago and was told that they wanted him to reduce his overdraft by £6,500. He said he could not do it. They said: "It is not a question of whether you can or cannot. It has got to be done." The man said: "Very well; I will sell the grocery shop. That is all I can do. I will keep the seed and manure business and carry on." He then went to an auctioneer and sold the grocery shop. He went back to the bank and paid off the overdraft. The bank manager received him and said: "That is very nice. There is a document here we would like you to sign with regard to the balance of your overdraft. It is a debenture." In fact what they really meant was: "You blooming well better sign it." The poor man signed that debenture.
About two months ago, this man got a letter to say they wanted the balance of his overdraft. He received the letter on Monday morning and they wanted the money before Wednesday at noon. He went to the bank manager and said that he was amazed at being given only 48 hours to pay the overdraft. The bank manager said that it was not his doing and that it was not his signature on the letter. He said it had come from head office. The man said it was nonsense and it could not be done. The bank manager said it would have to be done.
That man went home. On Wednesday morning a respectable gentleman with bowler hat, umbrella, dark tie, well-designed suit walked in the door and addressed himself to that man's staff. He said: "I am the receiver appointed by the bank under the debenture deed signed by Mr. X. I fix you with notice, you will not take your instructions from anybody but me." He said: "Mr. X now understands that all the property in this establishment is now under my control." This man addressed letters to all the creditors and to everybody else to the effect that credit would not be given without instructions from him. He told the members of the staff that he would now proceed to liquidate the property and that anything over and above what was due to the bank Mr. X would get. He closed the premises, put a padlock on the door and proceeded with the liquidation.
It may be that the financial history of Mr. X was pretty rocky but I believe that was substantially due to the fact that the bank was acting on the directive of the Government who when they went to them and told them that they must provide the £60 million which the Government now wanted were told by the banks: "We have not got the money." They were then told by the Department of Finance: "If you have not got it, go and get it from your customers." They then went and got it from their customers.
I always remember a former Taoiseach sitting over there in the seat in which the present Minister is now sitting, shaking down a lock of his hair, which he used to do when he got real tough, and saying: "You cannot have omelettes without breaking eggs." I was then sitting in my seat in the front bench where I used to sit at that time and I said: "That is a beautiful doctrine, provided you are not the egg." I do not know whether I am peculiar in this House. I am a long time here, nearly 30 years, but I have never been able to dissociate myself from the individuals of the country. The longer I listen to people who sit in Government, the more impressed I am by the fact that they deal in generalities and how fundamentally their thinking is dominated by the concept that you cannot have omelettes without breaking eggs.
I always think of the man who has a few children in secondary schools. He may have a daughter in a convent and a couple of boys in Clongowes, Rockwell or some other secondary school. He suddenly goes home to his wife and says: "Take the children home. We are poor. The business has gone and I will have to go out and look for a job. I cannot pay the children's school fees. They will have to come home and look for jobs themselves. We will want all they can earn." That is a ghastly situation. I know what I am speaking about. There are hundreds of small businessmen up and down the country at the present time who are suffering the agony of that crucifixion. Not one of them will utter a word that they are under pressure of the most ferocious blackmail that can cross any man. If they breathe a word that they are under pressure by their bank managers, they will find every commercial traveller who supplies them forming a queue outside their door presenting their bills.
There are hundreds and hundreds of small businessmen in this country who have no asset at all but their credit as creditworthy men. When they are given credit, they get on. When their credit is stopped, they have nothing. They then become unemployable. They are unemployed. Nobody seems to give a damn about them. I would ask the House to consider a man of 40 to 45 years of age who at the present moment cannot get a night's sleep because he is thinking: "Did the bank manager mean what he said to me when he said if I did not pay the overdraft, I would be closed up in the morning? Did he mean what he said when he said he had got instructions from headquarters to close on the overdraft? Have the banks got no money because the Government took it?"
Nobody cares about all that suffering and human misery which will be created in the homes of the decentest people in this country just because, in the words of Deputy MacEntee: "It is the soothsayers and astrologers who led us where we are." I want to say again that I believe the root of all this horror is the accursed turnover tax which the soothsayers and astrologers sold to this country. It created in the minds of the Fianna Fáil Government the illusion that here was a new Golconda which was open to them and this resulted in the sky being the limit. It leaves us at the mercy of the wealthy entrepreneurs from Great Britain and abroad who can watch their neighbours gradually perish as they carry the losses of what they call “developing the market.” I have seen many small businessmen wiped out by large foreign combines who came in here and avowedly sold below cost as part of their steady programme for acquiring the market, writing that off cold-bloodedly against the profits of the future to be derived from the obliteration of the small businessmen, their competitors, my neighbours. They are the anonymous money barons of the world who are doing nothing illegal but who do not give a damn as long as the net rate for the capital invested does not fall below seven per cent in the long-term.
The question has been raised on many previous occasions as to whether anything could be done to assist the families of those who meet heavy hospital bills and sickness costs in any given year. I have heard the Minister for Finance on more than one occasion explain the difficulties of dealing with that specific problem. If it is insoluble by way of income tax relief, may I suggest to the Minister that in this context he may have a special obligation to direct the attention of the middle income taxpayer to the possibility of providing that protection for himself through the medium of the Voluntary Health Insurance Board and to the fact that under existing legislation full allowance is made for subscriptions to that association by the income tax authorities?
It is a source of astonishment to me how frequently I come across cases of people who are crippled by uncovenanted commitments of that kind and who have not made any provision and who feel a deep sense of grievance that their outlay is not a permitted expense for the purpose of the income tax code. I see the problem but I think the Minister for Finance would do a great deal to help that situation if he charged himself with the special responsibility of making more widely known the availability of the services of the Voluntary Health Insurance Board and the readiness of the Department of Finance to make the appropriate allowance as an income tax deduction for subscriptions made thereto.
I wish to direct the attention of the House again to a fact that people are turning their backs on. I believe in individual liberty, in democracy and in a free enterprise system. I reject socialism not because I have not sympathy with many of its objectives but because I believe it does not work. I believe the most precious thing we can have is individual liberty; then I believe in democratic institutions, and thirdly, I believe in free enterprise because experience has taught me that the free enterprise system generates the national income that makes it possible to provide the kind of social climate that a Christian society should aspire to. I have been told that somebody said that to Lenin. Lenin looked at him cynically and said: "Free from what?" I know what I want freedom for. I want freedom to think, freedom to speak. I want freedom to protest against injustice within the law.
I am told by some of my Labour friends that I should look about Europe and there I will find many socialist societies providing a higher standard of living than any of the affluent free enterprise societies. That kind of affirmation very often serves to deceive. Sweden is produced as one of the classical socialist States which have acquired the highest standard of living in Europe. How many people in the House know that Sweden calls itself a socialist State without a single nationalised industry in existence in the country? One of the facts of life with which we have to live is that the Communists twist words, that a Communist tyranny is always described as "the democratic socialist republic of so-and-so". It means that everybody has a ball and chain around his ankle and a noose around his neck.
The most conservative, ruthless capitalist society in Europe is operated by the Social Democratic Party of Sweden because there they have discovered that it is by operating a tough, ruthless capitalist society that you can generate the immense national income off which you can skim a very high standard of social services. But we get into the fantastic position that by attaching arbitrary labels to a special situation the whole public mind becomes hopelessly confused. If our Labour colleagues mean by a socialist establishment something corresponding to Sweden, my answer is that Sweden is much too Tory a country for me. I think the Parliamentary control of money power in Sweden is not sufficiently effective but I acknowledge that in Sweden it has produced a flood of gold which the money power there is wise enough to see can be made most useful by pretty general redistribution in a system of social services about which we could have an interesting discussion if permitted.
I much more admire the United States of America which does not claim to be a socialist society. It has power in Parliament to control the abuse of capital which the Swedes have never dreamt of——