Private Members' Business. - Central Bank Bill, 1969: Second Stage (Resumed). – Dáil Éireann (19th Dáil) – Wednesday, 17 Feb 1971

Private Members' Business. - Central Bank Bill, 1969: Second Stage (Resumed).

Question again proposed: "That the Bill be now read a Second Time."

Mr. Tully

The Minister referred to the bank strike in 1970 and the same expression was used by other speakers during the discussion before Private Members' time. Let me repeat for the 20th time that there was no bank strike in 1970; there was a bank lock-out. This bank lock-out was caused because the employers refused to negotiate reasonably with their employees. When the lock-out was settled and work was resumed the amount of money which the banks had to pay out as compensation was as much, if not more, than what would have been accepted by the workers prior to the lock-out.

While I do not believe in interference by the Government in industrial disputes, in a case like this where an employer causes untold harm not only to the employees but to the community at large the State is entitled to say that such a situation cannot continue. This may be considered a harsh thing to say but we all know that but for the fact that the non-associated banks were in existence and kept in circulation approximately £300 million during the period of the lock-out there would have been absolute chaos throughout industry and life generally.

During the period of the lock-out several things happened in the country and I am surprised that an effort was not made by the Minister when introducing this Bill to ensure that such things could not happen again. The remarkable fact during the dispute was that people who had no money spent more than those who had money. People who had no resources whatever were able to go into any stationery shop in this city and get a cheque book which they could use to draw a cheque and have it cashed. In this way many of them spent money they did not possess. An effort should be made to ensure that this does not happen again.

I am sure the Minister is aware that there was considerable difficulty in clearing those cheques when the dispute was over, even if there were funds available to meet them. In addition, we had the situation—although the Minister was not prepared to agree with Deputy O'Higgins today that this was so—that when the dispute was over, and even up to the present time, considerable distress was and is being caused. Numerous companies during the dispute cashed cheques for people or accepted cheques for goods, for which there appears to be no money. The Minister has stated that he is not aware of any such case but there have been cases of small businessmen and one or two large business people who told me that but for the fact that the banks agreed to hold off for a few weeks until an effort was made to see if the money could be raised in other ways their firms would be out of business. This situation has arisen simply because they trusted people and agreed to accept their cheques; when the dispute was over there was no money immediately forthcoming to meet them.

Mr. Colley

The Deputy would agree that in any such case the person concerned has not gone out of business?

Mr. Tully

I am aware of one case where the person concerned has gone out of business and in at least a dozen cases the firms are existing on the charity of the bank manager, something that a businessman does not like to do. This situation was created because the commercial banks were allowed, for what reason nobody knows, to drag on a dispute for many months. I do not think the Minister can reasonably say that in the case of the seven companies that went broke the same situation would have arisen had the banks been open. I know of one case where an employee of one of those companies had seven monthly cheques and was living on credit because he could not cash them. He was under the impression that when the dispute was over he could cash the cheques and pay his debts. The man still has the seven cheques; he can paper his drawing room with them if he wishes because they are quite worthless. This situation could not have arisen if the banks were open.

I know of other people who were a little luckier because they managed to cash some of the cheques, but they are still left with three or four worthless cheques. I would appeal to the Minister, if at all possible, to try to ensure that this kind of thing is not allowed to happen again. I know that people say "The bank officials went on strike". They did not go on strike and I am a little tired of hearing people referring to this as a strike when everyone should know that the banks closed their doors and locked the employees out. As Deputy O'Donovan has repeated on more than one occasion, they did this—and the Minister must be aware of this fact—without authority because by statute they are supposed to supply a service to the community which they were not providing.

Apparently the Minister intends to ensure that there is a tightening up of the non-associated banks. While some people may argue that there are enough banks in the country—as has been stated by the Minister—to carry on business, possibly a little more competition might not do any harm. I mentioned earlier that the Labour Party, in January 1969, and previous to that, had drawn up and published a policy. I complimented the Minister on the fact that quite a number of items in the Bill were contained in that policy. However, I wonder if the Minister could not have gone a little further. He states that an Irish money market should be established and this was suggested in our policy, particularly for short-term securities. We also suggested that a national investment trust should be set up for long-term investments. We suggested that interest on capital gains from foreign investments by Irish nationals should be taxed at a higher rate than normal. Another suggestion which may not have anything to do with this Bill, but I am sure the Minister will take it to heart, is that a commission of inquiry into the public debt should be set up immediately.

Deputy Dowling said earlier that members of his party studied the policy documents of the party in depth and, in order to get the atmosphere, they held their meetings to discuss it in an empty room on the corridor we occupy. I do not know whether the full documents have been considered by the Minister but some effort should be made by the Government to ensure that money would be available for various types of development in the country at a lower rate of interest than is normally charged. The Minister has said that he has to pay the going rate. This was referred to by Deputy O'Donovan. It is just too bad when we have reached the stage at which people who want to build houses for themselves and their families find the principal and interest repayments on a 35-year loan can be as high as 10 or 11 per cent. Would the Minister not consider that it should be possible, through the Central Bank, to ensure that money could be made available at a much lower rate of interest than that? When the Government float a loan the general public invest a certain amount in the loan and the Government agree to underwrite a certain amount of it and usually it is necessary to find a stated sum, in some cases £5 million, £6 million or maybe £10 million. Would the Minister like to say when he is replying whether or not it is fact that any money at present provided by the banks has no existence until it is made available for the purpose of investing in the loan? Is it true that such money is in many cases repaid with interest and that the commercial banks are getting quite a substantial amount of profit on money which they have created? Would the Minister say if it is true that people who invest money in commercial banks have that money loaned by the banks not once but several times? Is it not true that the amount of money which is actually held by the banks would never represent the amount of money which is loaned out, because they know that unless something very unusual occurred there would not be requests for the money at the one time? I would like if the Minister would comment on that when he is replying.

Giving more power to the Central Bank—and I believe the position is the same in most countries—is the responsibility of the Government. The Government should ensure that it will be a Government bank and that it should have the right to make capital available at low interest rates for social and national development. I also believe the Government should attempt to ensure that the control of that bank is in the hands of people who have the interest of the people at heart and not a particular group, and I am referring particularly to what I mentioned earlier, the question of the representation of the directors from the associated banks. The Minister suggests two; there were three. Deputy O'Higgins suggested the non-associated banks should have a director to bring it back again to three. I do not think they are entitled to have any directors on the board. As I said earlier, their only responsibility is to their banks and that responsibility would cut across the general good. Therefore the Government should insist that those who are on the Board of the Central Bank will be people who will be responsible only to the people of this country and not to a particular vested interest.

I said earlier that I have not much quarrel with the board who at the present time are doing reasonably well in the circumstances, doing much better indeed than the people who went before them and who had the audacity to put into a report which they issued that it was in the interest of the economy to have a pool of unemployed. We have gone away from those days. I hope they do not return, but I do not know whether or not the Minister believes it will be possible to continue under the present banking system. I do not know whether he believes it will be possible to prevent a recurrence of what happened last year.

I am quite sure the Minister is as well aware as I am that there is great disquiet among the people over what happened last year and that it is not outside the bounds of possibility that an effort will be made to adopt a different financial system. People do not like being left in the position that whatever money they have is locked up in a bank and they cannot get credit to buy what they want to buy if the bank is closed for many months to please some small group of directors. Do not forget it was not the general body of bank shareholders who locked the banks. It was the small group of bank directors who are quite well off themselves and who, I am quite sure, are not short of money. During the bank lock-out a group of Swedish bankers were in this country and as there were some parliamentarians with them they had luncheon with a group of us in Leinster House. They could not understand how a country could run for four or five months without a bank. It was something which they said could not happen in their country. The country seemed to be going along—as it turned out it was staggering along—with the banks closed. However, there was no doubt as to how the Government were going along. There was a certain amount of resentment when it was found that the Government had no difficulty in making available to themselves the necessary money to carry on, and they told me, as if I did not know, where the money came from.

What is sauce for the goose should be sauce for the gander. If banks are closed and no money is available for the general public, then the State and local authorities should be in the same position. The pressure would then build up to such an extent that the dispute would have to be settled. When the previous bank dispute took place four years ago there was a period of depression and the bank dispute helped the economy. Last year when it took place the very opposite was the case. The Government were under the impression that the closing of the banks for a period would help the economy. When they realised it was not doing that it was too late, in their view, to do anything about it. The result is that we had a very long-drawn-out dispute.

The Minister will not be doing his job if he allows this Bill to go through the House without making some effort to ensure that, if a bank dispute takes place again, let it be a bank strike or a bank lock-out as it was last year, it will be possible to keep the economy going and that at the end we will not have cheques bouncing all over the place and, as I said earlier, with those who had no money spending money freely and those who had money locked up unable to get it to do anything with it.

Reference was made earlier to the question of people who had accounts in the Six counties. I am aware, and I am sure the Minister is aware, that quite a number of business firms would not have been able to keep going but for the fact that they opened accounts in the Six counties and in Britain and, during the lock-out, succeeded in paying for their goods. One big manufacturer showed me a returned cheque for £32,000 with a covering letter saying how terribly sorry the firm were but they could not supply him with any more goods unless he was able to produce the money. They suggested that he might have to close down until the dispute was over. It is a miracle that that did not happen more often.

As was said by previous speakers, it is no thanks to the Government that they succeeded in keeping going. Nobody bothered about it. People were just left to struggle on in the hope that something would happen. I said earlier that we in the Labour Party heartily agree with quite a number of the Minister's proposals in the Bill. We do not believe he has gone far enough in some of the things he proposes to do. During the Committee Stage we propose to introduce amendments to improve the Bill. Even as it is, I am glad that this Bill has been introduced, but I would suggest to the Minister that there are many things he should do with it before he produces it for Committee Stage.

Mr. Enright

There are a few brief points I want to raise on this Bill. In the Explanatory Memorandum it is stated that one of the purposes of the Bill is "to facilitate the merging of banking businesses in the interest of more efficient banking". We have had a certain amount of merging of banks in the past few years. Provision should be made for reasonable competition among the different banks. At a time when there is a credit squeeze, people may find difficulty in obtaining loans. If there is amalgamation or merging of banks to the extent that there are only two groups, a person may not be able to obtain money to carry on his business. A farmer may not be able to obtain sufficient money to stock his land. A small businessman may not be able to obtain sufficient money to carry on his business. At present if you are dealing with one bank in a town and you wish to move to another that is possible although at this particular point of time, due to the bank strike, it is not possible to obtain terms in a different bank——

Mr. Tully

There was no bank strike.

Mr. Enright

At present no bank will grant you any facilities other than whatever you had arranged long before the bank lock-out took place. I would hope that we will continue to have a reasonable amount of competition between the banks.

Mr. Coughlan

And with no blackmail as was tried on us in the health authorities. Let that go on record.

Mr. Enright

Without reasonable competition it is absolutely impossible to carry on. Deputy Tully, and I believe Deputy O'Higgins, mentioned some of the effects of the bank lock-out last year. Prior to that there was a go-slow in the banks. Then, after the long industrial dispute, we reached the situation in which each person was his own bank manager.

As a rural Deputy, during the bank dispute I asked the Minister to mediate and try to arrange talks and, in fact, act as chairman at those talks. The Government took no action. They felt it was not wise to intervene in an industrial dispute and they did not get involved. I felt at the time that, in the interests of the economy, it was desirable that efforts should be made. The dispute dragged on unnecessarily and that should never have happened. There should have been some mediation to bring about a settlement. We are all aware that everybody engaged in the banking business had to be back to work by D-day and, in fact, everybody was. Enough effort was not made to bring to an end the dispute that dragged on for so long.

When I mentioned this recently the Minister felt there was no great problem and that the effects were not serious. I can say in all honesty and sincerity that I have seen the effects. I have met people who have had difficulties, not big business people. I have met people who were gravely affected by the dispute. I know numerous business people whose cheques bounced. Many people do not yet know whether they will be able to continue in business. It is very easy to stay aloof from that situation and say that they should have known what cheques they were issuing; that they should have known what money they had in the bank; they should have been in a position to say how exactly they were at any particular time. When speaking of farming and smaller businesses one is speaking about ordinary people. They may not have taken all the care they should have taken but I have seen people who never had a cheque sent back to them in their lives having this happen to them now. It may not seem a very serious thing to some people but to an ordinary person, living in rural Ireland, it is important to ensure that any cheque he writes is honoured.

It means a lot to a person in business to maintain his creditworthiness, to be able to guarantee that any cheque he writes will be honoured when it is brought to a bank. I know of thousands of cheques that have been sent back. The people concerned have been seriously affected by this. I read in the newspapers that Fay Tours of Drogheda stated when they were closing down that the bank strike was one of the causes of their not being able to carry on. Travelling around the country as a TD, I have met many people who have suffered seriously from the effects of that dispute. I honestly believe the staffs of the banks were not responsible for this. If the directors had been a little more approachable, this dispute would never have occurred. If this Bill is to have any real meaning it should contain provisions to ensure that such a situation will not occur again.

It is most undesirable to have a credit squeeze at one stage and some months later a situation where money is flowing again. I do not know if this is a planned procedure by the Government, whether they believe this is necessary for the economy, but I believe it is not a good thing. Some years ago when money was freely available in banks, money was obtained by people who would not get it at other times. Now money is utterly impossible to obtain. There is a green light at one stage and money is freely available and then a rigid situation when it is utterly impossible to obtain money. This is undesirable. At all times we should try to have money available so that people can obtain money for any business that a bank considers desirable—the setting up of industries, the servicing of industries, money for farmers, all types of credit. There should be a free flow of capital available for people to carry on their business. Farmers who wish to stock their land find themselves unable to obtain the necessary credit. Farmers who wish to expand their dairy business are unable to obtain the necessary capital. At present there is no money available to them from the banks. This is bad business and it leads to unease among the people. If they bring a project to a bank manager, which they believe is reasonable and workable, and are turned down they come out with a sense of unease that there is no money there. This is a bad thing. Credit squeezes, such as we are experiencing at present, are a bad thing for the peace of mind of the public. The Government should ensure that more money is made available to the public at present. I would ask the Minister to have discussions with the Central Bank and with the directors of banks with a view to remedying this situation. There are many people who, after the bank strike, are in financial difficulty but who, if they were granted further facilities or extension of facilities by the banks, would be able to carry on their business. I should like the Minister to bear in mind the point I have made in regard to making more money available to the public.

Mr. Coughlan

This Bill is not far reaching enough. We can now speak from experience of the financial tragedy resulting from the lock-out by the banks for a period of six months. If people who hire and trade and huckster with other people's money and invest it to their advantage lock the door on a whim on all employees, it is time the Minister responsible took the law into his own hands to ensure that these people who control the mighty pound cannot hold the country up to ransom and disorganise our whole financial system. Not alone have they done that but they have brought some of our best known industries to ruin. There is one in particular—the Hibernian Transport Company. Prior to the lock-out the bank knew to the last penny where the Hibernian Transport Company stood. They shut their eyes when they shut their doors. Our foreign assets have declined. Six hundred or 800 of our people were thrown out of employment. Cheques were hopping around the country like yo-yos. The people issuing the cheques were defrauding others. I do not know where the law stands with regard to such people. Cheques were cashed. Some people owed money to this company but they were asked for payment in cash. The company were issuing cheques which they knew would bounce. Most of us concerned with this particular company knew what had happened. Shopkeepers were cashing cheques for the employees of the company and these cheques have all bounced.

I am making this charge in order to be helpful and I state that the bank concerned, who handled the account, knew that this company was about to go bankrupt. This situation was allowed to develop for six months. The members of the firm could buy cheque books and write as many cheques as they liked. This is a matter for the Attorney General, in my opinion. I am making a serious charge because I know what I am talking about. I know the damage that has been done to unfortunate people in Limerick and elsewhere. Many are now in receipt of redundancy payments. Many have left the country. Men who have spent a lifetime in the service of the Hibernian Transport Company have left. One man who had spent over 40 years with the company had to clear out of the country because of the manner in which he was let down with regard to cheques he had issued and cheques he had received from the company. Surely this was a criminal act?

We all know what happened in the marts. Men issued cheques for very large sums in some instances. Where did all the money go? Why is there not a criminal investigation into this matter? Why were these people not made account for what they had done? We all want to see the banks controlled and to see the Central Bank with power and authority to control these transactions and the acts of the directors of the banks. I had to go to the Press last week because of the scavenging attempt by the banks to try to blackmail public representatives for an account with the various health authorities. I am a member of a health authority in Limerick. There were blackmailing tactics on the part of the banks to try to grab the account of our health authority. This account is in the region of £6 million or £7 million a year. Blackmailing tactics were directed by the directors on the principle that "If Coughlan owes you money, put the squeeze on him" but "If So-and-So does not owe you money tell him he can have his farm stocked very readily."

An Leas-Cheann Comhairle

The Deputy appreciates that individual transactions cannot be brought into the discussion on this Bill.

Mr. Coughlan

I want to see the Central Bank getting more authority. I want the Minister to go much farther than he is going on this issue. We all know what happened to the health authority in the west of Ireland and why they had to change their minds. I am sure the same thing has happened elsewhere. In the region which I represent we have had bank managers, their sons and daughters coming and saying "do this or". The day the public representatives bow and bend to the mighty £ the quicker we will get out of public life. I would rather die in the workhouse than bend to the rotten tactics of these banks. I went to the public Press and I will go again if necessary. If we are to hand over everything because of the mighty £ and its influence, all is lost. The people who put us here will never ask whether we owe £1 or have £1. We were sent here and to local authorities because the people have confidence in us. If we were directed by the banks, we would be told by them to vote for certain rate collectors and for certain teachers in the vocational education committees.

An Leas-Cheann Comhairle

The Deputy is getting away from discussion of the Central Bank Bill.

Mr. Coughlan

I want the Minister to take authority to stop this filthy work. This is filthy, scurrilous work which is being done by the directors of different banks. It is particularly directed at public representatives. I have strong views on these matters. My experience is that the ordinary man in the street with a bit of common sense and experience is much more effective on any board than the fellow who is tied up in the whirlpool of that particular business. We have them on the board now that the Minister intends to put two representaives from two different banks on the board and the further we keep clear of this huckstering the better. The banks will take your £1 and give 6d on it, but they make 5s on the money through hire-purchase and in other ways. The people are not getting a fair crack of the whip.

The bank workers are entitled to talk and to organise. The bank closure was caused by a lock-out. It came at, perhaps, 12 hours notice. The printing companies started work and cheques could be bought easily. People wrote cheques knowing that they could never be met. This situation should not have been allowed to develop. I know what I would do if I were unlucky enough to be in the Minister's position. I would nationalise the banking system in the morning. I would treat all these things on their merit. We have the Agricultural Credit Corporation. Are they not doing a good job? We have the ESB and other bodies. The Minister, who is amenable to suggestions, should realise that what was allowed to prevail for five, six or seven months was a completely irresponsible act and he has to accept responsibility. Somebody should have moved in. We all know that there was chaos and that cheques were yo-yoing all over the country. Any person with one eye closed and the other eye open could see that happening but nothing was done about it.

We need stability, not a see-saw affair, stop/go, up/down, describe it how you will. If this is to be allowed to continue, then let the Minister go ahead, but let me go on record as saying that the warning has been issued that this could happen again and the doors of the banks can be locked again and the employees can go to England or elsewhere and then what will happen afterwards? I have not come in here in any kind of belligerent or aggressive mood; I have come in to give the benefit of my experience, to let him know exactly what has happened. He is a busy man who is locked up in his office for five or six days a week and in a way I do not blame him but those of us who meet the people, who live among them, knew what was happening and knew that the Hibernian Transport Company was gone and the bank knew it before they closed their doors and they still let them off to the extent of the best part of £500,000. Not alone that, but there were the unfortunate employees whose cheques for salaries and wages were worth nothing. Every day one reads in the newspapers of businesses going into voluntary liquidation and then there is nothing more about them. Why? Because people were working away and if there is no check, no matter what you are at, you will keep going. For that reason I would appeal to the Minister to go a step further and give the Central Bank the statutory authority to move in and preserve the financial structure of the country.

Mr. Governey

During this debate it has been the procedure to refer to the bank lock-out, as it has been called. I suppose if any other section of the community was involved it would be called a strike. I want to refer to the Official Report for 28th January, 1971, at column 287, to Question No. 52 asked by Deputy Crotty, and to the supplementary question which I asked arising from the Minister's reply and I quote:

Will the Minister state what directives were given by the directors of the various banks to their managers prior to 15th January? Will the Minister also state the number of firms that have been placed in jeopardy by this directive?

And the Minister's reply was as follows:

I am not aware of the content of any directive which may have been issued by the directors to the managers of their branches other than the details I have given in the reply, which were details furnished to me by the banks about their general approach to this problem. Consequently, I am not in a position to say how many firms, as the Deputy said, have been placed in jeopardy as a result. I would repeat that any case I have investigated has not turned out to be in the category referred to by Deputy Tully and referred to frequently in newspaper reports.

I should like to say that since that date a lot more has come to the Minister's notice as a result of the bank lock-out. My personal opinion is that this lock-out should never have occurred. When it did take place neither the Minister nor the Government did anything about it. The whole procedure was immoral. There are firms which are in jeopardy today and the jobs of various employees are also in jeopardy because of the bank lock-out.

I accuse the Minister and the Government of doing nothing when the bank strike, or the bank lock-out which is the proper term, occurred to ensure that the matter would be settled within a reasonable time. It was common gossip around the country that it suited the Government to have this lock-out. The Government were too much engrossed with the divisions within their party and they allowed the economy to drift and the bank lock-out to continue. On their heads lies the responsibility for people who have found themselves in difficulty since this strike. I admit that certain people may have taken advantage of the situation but in the majority of cases people tried to carry on their business, to pay their way. The Minister, however, could not give me, on 28th January last, details of the directive given by the managers of the various banks.

This case is being investigated. The Deputy should not jump to any conclusions about this case.

Mr. Governey

I hope that the Minister will investigate the matter and that the workers will not find that they are left without their incomes. I did not intend to speak at such length but there were several matters in which I was very interested and it gave me an opportunity to bring them to the Minister's attention.

Dr. O'Connell

I do not know what was in the Minister's mind when he introduced this Bill. I am not too conversant with high finance but I gather there is some doubt in the Minister's mind, or in the minds of the staff of the Central Bank, that perhaps there are people operating here who are shady business people. It would suggest to me that companies have not got guarantees or collateral behind them to warrant their continuing in operation in this country. It is my impression that it is the intention of the Minister's Department that some kind of protection might be afforded to the public and I wonder why the Minister did not spell out this fact. The emphasis is on protecting the public against shady companies who have the facilities to set up as bankers without collateral or guarantees and thereby endanger the money of the public. If this is the case the onus is on the Minister to spell it out very quickly.

I have read the explanatory memorandum and the Minister's statement. Banking is a very old business. It is said that bankers control countries. They can also destroy countries and it is vital for a Government to have some kind of control over the banking system. However, despite what this Bill pretends to do, we have not control over our own currency or over the banks. The Minister is merely playing around with this.

The Minister knows nothing about what is happening in the country today. The Minister states:

The 1942 Act also gave the Central Bank the general function and duty of taking such steps as it deemed advisable from time to time to safeguard the integrity of our currency and ensure that in the regulation of credit the aim shall be the welfare of the whole community.

Who is the Minister trying to fool? "The aim shall be the welfare of the whole community." I am wondering how the Central Bank, since its establishment in 1942, indicated that in the regulation of credit the aim was the welfare of the whole community. In fact the Central Bank had no power whatsoever and the banks were allowed to operate as they themselves thought right. Money and credit was made available not in the interests and welfare of the whole community but in the interests of making profit for the banks. The profit motive was foremost in their minds and they did not take into account priority for social purposes. This was never the aim of the banks. They never took deeds; they never gave out loans for houses, which is what we mean when we talk about the welfare of the whole community.

I would like to see a Bill being introduced here that would really exercise control over these banks. I see in this Bill the aim of establishing a monopoly of the banks. This Bill authorises the creation of a monopoly in the banking business of this country. That is what the Central Bank Bill of 1969—it says here—proposes to do. That is another question I would like to ask the Minister: Why is it the Central Bank Bill of 1969?

It would be very wrong to permit a monopoly of banking business. Only through competition can people who avail of banking facilities get any kind of service. The Government are mainly in the hands of these bankers. They know that the banks completely control finance and they are dependent on the credit the banks make available to them. There is a certain amount of credit available in a year. If the Government take too much there is less for the private sector. If the Government take 70 per cent there is 30 per cent for private business. This is exactly what has created the credit squeeze in this country. Increased demand by the Government means less credit available for private enterprise. The Government are merely the tools of the banking service.

I do not think we should have any sympathy for these banks. We have allowed them to regulate our lives for too long. We need a Minister of vision, of ability, of courage and integrity who would come into this House with an imaginative Bill and would say: "We are going to regulate credit. We are going to see where the banks place their money. We are going to see that the banks disclose their real profits." There should be compulsion on them to disclose their real profits as is not being done today.

The Minister should spell out the powers of the bank and what their duties should be. The powers of the banks should be curtailed. A bank can literally destroy a business and put it out of action overnight. Complex as it may seem, a bank loan is merely an entry in a book, and it passes from one book to another; an entry in a ledger, that is all it is. The way the two banking groups, the Allied Banks and the Bank of Ireland, are operating at the moment there is no actual money being passed around; there is a movement from one ledger to another.

I am wondering if pressure has been put on the Government by these banks to stop competition from foreign banks. If this is so, the Minister should admit to this House that there is pressure. It seems to me that the Irish banks are concerned at the competition that is coming into this country from abroad. If there is competition, why not? What is the objection to it? The more competition there is the more facilities will be available to the public.

I am very much afraid there is pressure on the Government and that that is the purpose of this Bill. In Britain the Labour Government suffered at the hands of the city bankers. They fought and fought against devaluation but they had to admit that the banks put the pressure on them. Mr. Wilson realised that the bankers are more powerful than the Government of Britain, and if they are more powerful than the Government in Britain why would they not be more powerful than the Government here?

I am wondering why the Government allowed the monopoly of the giro system to go to the banks. The opportunity was there to make it available through the Post Office as happened in Britain. They allowed the banks to take it over completely. This is a service which could have entered into competition with the banks if the Post Office had been allowed to operate it.

The Minister for Finance by his inaction would allow the country to collapse.

Mr. T.J. Fitzpatrick

(Cavan): The Minister for Education intervened in the teachers' dispute before the strike began, but the Taoiseach or the Minister for Finance could not intervene in the bankers' strike.

Mr. Colley

The Deputy is wrong.

Mr. T.J. Fitzpatrick

(Cavan): I am not wrong.

Dr. O'Connell

It is a great pity a democratic system——

Mr. Colley

A democratic system of free collective bargaining does not visualise every strike being settled on demand, and the Deputy knows that as well as I do. There is another system under which there are no strikes but we do not want that system either.

Dr. O'Connell

The democratic system permits the election and appointment of Ministers who are not necessarily the most competent or able men. Perhaps that is one of the greatest flaws in democracy, but it is there. Anyone, be he a grocer, or a shoemaker, can become Minister for Finance. He is chosen more on whether he is liked than on how well he is prepared to handle his Department or is able to handle his Department. I am saying—and I have said it in this House before—that the Minister had a duty and an obligation to put the interests of the country before everything else. We have not even begun to feel the repercussions of the bank strike.

Dr. O'Connell

Nobody will put me off. What I have to say about the banks I will say it.

Mr. Colley

The Deputy is very brave, very courageous, very inspiring.

Dr. O'Connell

I want to see the Minister becoming a little brave. He is under their control. He is afraid to act against them.

Mr. Colley

In fear and trepidation.

That is how the Deputy is describing the Labour Party policy, according to Deputy Tully. Of course that is the Deputy's business.

When will we be in a position to have a statement from the banks and from the Central Bank on the exact repercussions of the strike? It has been said that they would be able to make a statement within a month or two. Much will depend on this. If we have to restore confidence in the economy we must get this point straightened out first. It is imperative that a statement be made. Money has poured into this country over the years. With the present uncertainty about the state of finance I can see this money going out of the country rapidly. Britain had a reserve of £73 million in December last. The Bank rate there has remained unchanged and money is certainly flowing into Britain. It is said that sterling is the most sought-after currency in Europe at the present time because of this fact. We could have availed of this were it not for the unfortunate and chaotic situation produced by the bank strike. I cannot see how we can hold money which has come in from abroad in our present uncertain state. Within the next few months there will be an outflow of capital at an alarming rate. The Minister is aware of this fact. There are no guarantees that the foreign money coming in will be secured in this country. We will all suffer because of this. Nothing encourages the withdrawal of money more than economic uncertainty. When Stubbs' Gazette lists many companies going into liquidation, this gathers momentum. It is like a snowball and has repercussions in every sphere of business. The Minister has not acted wisely in the financial affairs of this country.

The Irish banks have been very jealous of foreign banks coming into this country. They have refused to allow the foreign banks to avail of the banks' clearinghouse for clearing cheques. The Bank of Nova Scotia was refused the facilities of the banks' clearinghouse here. Because of this, they could not accept current accounts in Ireland. I would like the Minister to contradict me on this, but I made a point of inquiring on this matter and asked if they were offered the same services as the Irish banks. They admitted they were being handicapped by the action taken by the Irish banks. Because of the provision in the Bill, I am glad to say, there is protection for any bank coming in here. They will not be handicapped or at a disadvantage. We have no right to restrict their activities where they are in the public interest.

The Minister says:

Provisions are included in the Bill to facilitate the transfer and merger of banking businesses. I hope these provisions, which are basically similar to those of the National Bank Transfer Act, 1966, will be availed of to rationalise our banking system in a way that will make for greater efficiency and more economic use of banking resources. The two major banking groups have rationalisation schemes in progress and I trust that these will contribute to the general improvement of the banking structure. At the same time, I should add that the Government are fully alive to the dangers that might arise from too great a concentration of banking.

No.1, the Minister wants them facilitated, and No.2, he is aware of the dangers of it. If the Government are alive to the dangers that might arise from too great a concentration of banking, why is the Minister for Finance facilitating the transfer and merger of banking businesses? That is a contradiction. There are only two major banking businesses. The Minister is facilitating mergers here, despite the fact that the Government are fully alive to the dangers that might arise from too great a concentration of banking.

Some months ago Deputy O'Donovan asked about gold and the answer was that we did sell gold, that the Minister for Finance authorised the sale of gold because gold was not earning any interest. If it is not earning interest why is he keeping the rest of the gold and why is it not sold? The provision about fixed parity between the Irish pound and the pound sterling is difficult to understand. The Minister says that despite the decision to change over we need not necessarily remain on a par with sterling. He said that the Government had no intention of changing the existing parity and that the policies we are committed to will ensure that no such eventuality will arise. If such is the case, what is the purpose of this clause?

Is the purpose of the provisions in this Bill to prepare us for entry into the EEC and if so what aspects of the Bill are relevant to that? The onus is on the Minister to explain this. I would have thought that where the Government had no control over the banks they would have, through the post offices, engaged in the banking business. It would have been an imaginative idea for the Government to extend the facilities available in the post offices. If this were done people with money on deposit in the post offices could be issued with books similar to cheque books so that they could sign cheques. This would be a banking business conducted through the post offices. In such a way they would be in competition with the banks. If this had been done it would have brought a considerable amount of money into the Exchequer. I see no reason why this could not have been done. The day the Government go into competition with the banks, the country will benefit.

I am somewhat puzzled about the disabilities suffered by the Bank of Ireland Group. The Minister said that the group suffer from some disabilities as compared with the other banks to which the Companies Act applies. He also said that shareholders in the Bank of Ireland may be in the same position as shareholders of the other banks in regard to the management of the business. That further suggests that a merger is in sight between these two banks, that they are trying to rectify the disability before merging. I gather from the Minister's speech that he is not terribly well informed. There is one paragraph about the Moneylenders Acts and he said that he wanted to ensure that the Acts would not apply to banking. He should have been somewhat more explicit on this so as to enable us to be fully informed as to how the Acts applied to forms of banking up to now. He also referred to the function and duty ascribed to the Central Bank by the 1942 Act and I wonder how successful was the Central Bank in the general functions and duties ascribed to it. He said:

the general function and duty ascribed to the Central Bank by the 1942 Act which are to take "such steps as the board may from time to time deem appropriate and advisable towards safeguarding the integrity of the currency"

That is the first part. I wonder how successful they were in:

ensuring that, in what pertains to the control of credit, the constant and predominant aim shall be the welfare of the people as a whole.

I doubt if it has been successful at all in regard to that. He also stated:

This statutory function of the bank in relation to monetary policy does not, of course, diminish the ultimate responsibility of the Government in that sphere.

The suggestion that the bank will take over a lot of the functions of the Department of Finance is puzzling and worrying. The Minister said that the bank would have complete independence in the carrying out of its functions and he also said that the independence possessed by almost every Central Bank throughout the world had emphasised this very desirable provision but while it has independence the extent of the independence is a puzzling thing. Not every Central Bank in every country is being granted the independence that the Central Bank is being granted here.

The Minister also said that it is desirable to have a special institution differing in constitution from and enjoying more independence than a Government Department charged with the immediate responsibility for monetary policy. If the bank will have this immediate responsibility for monetary policy I wonder if the Central Bank should have that and what is the purpose of the Department of Finance. I cannot understand this and perhaps the Minister would explain it. He also said that the ultimate authority of the Government, even though it may not be expressly defined, is nonetheless undisputed. This dichotomy is very difficult to understand. The Minister at the moment is perhaps lost in the vision of the coming weekend conference and this might try to bring him back to the present situation.

Mr. Colley

Would the Deputy really like to know what I am thinking?

Dr. O'Connell

I hope it is not your overdraft.

Mr. Colley

I am debating whether the Deputy is a consummate actor or whether we are getting a fascinating view of his fantasies about banks. It is pretty interesting.

Dr. O'Connell

Well, Minister, the banks have controlled our economy for too long and I should like to see the Minister exerting more control over them.

Mr. Desmond

After all, the former Minister had no difficulty in having fantasies about £100,000 so you must excuse our side as well.

An Leas-Ceann Comhairle

This is irrelevant.

(Interruptions.)

Mr. T.J. Fitzpatrick

(Cavan): Any Bill dealing with banking and finance presents an opportunity to Members of this House to review the bank strike which afflicted this country for most of last year. It gives them an opportunity to deal with the hardships that were imposed on the general public and the inconvenience it caused. It enables them to express the wish that steps should be taken to ensure that chaos of this kind does not affect the country in the future.

At the beginning of last May the Associated Banks closed as a result of a dispute with their staffs and thereby deprived the people of the country of banking facilities. The banks strike was something much more than a withdrawal of services or a refusal to provide goods or services to the general public. It was really a confiscation of people's property. It was an action which deprived people of their money on deposit, and deprived them of valuables which had been placed in the bank for safe keeping.

The Minister and the Government should have intervened in that strike early on and taken some steps to bring it to an end. Several appeals were made in this House to the Taoiseach and the Minister for Labour but they took the view—and apparently the Minister for Finance, from interjections in this debate since I came into the House this evening still takes the view—that it is no part of their business to do that, that collective bargaining has to be allowed to continue.

I disagree with that. When the national economy is at stake it is up to the Government to do something about it. There are many precedents for it, as I pointed out to the Minister by way of intervention. The Minister for Education has seen fit to intervene in the secondary teachers' dispute. Before the strike began he saw fit to go and see the people concerned, to meet the Congress of Trade Unions and discuss the problems with those concerned. As a result the teachers' strike has at least been postponed for a fortnight. Why did the Minister for Finance or the Taoiseach or the Minister for Labour or somebody else not adopt a similar attitude last May? It is difficult to understand, and it would seem the Government welcomed the strike. Whether they did or not it was their duty, in my opinion, to have taken active steps early on to meet the people concerned and to try to iron out their difficulties with a view to preventing the country being held up to ransom.

It cannot be good for the country, especially when we are seriously considering joining the EEC, that we should be held up as a sort of irresponsible island where the banking system is likely to break down at any time, where commerce might be brought to a standstill, according to continental and worldwide ideas. The Government are to be censured and censured very strongly for having tolerated the bank strike and for having done nothing to try to prevent it or bring it to an end.

There have been many results from the bank strike. The state of credit seems to be very indefinite. No bank manager seems to be able to say what banking policy is in regard to credit. He says that each case must be assessed on its own merits. He cannot say whether there is money to buy land or businesses. Everything has to be referred to directors. I think myself that the banks are acutely embarrassed because they have not got funds to lend to people they believe are creditworthy for a sound economic proposition. A great part of the trouble is that the Government are eating up any credit that is available for themselves and for the public sector and as a result there is no credit left for the rest of the community. There is general confusion following the bank strike and the Government think they can get away with blaming the uncertainty on the bank strike.

Another result from the bank strike has been that some very large undertakings were put out of business and left in their wake a trail of worthless cheques which were cashed in the cities in this country during the bank strike by these firms, who, prior to the bank strike, were regarded as creditworthy, respectable and solvent undertakings. These firms paid their wage bills for the most part of last year at the expense of citizens in this State and at the expense of other firms. The Government must take responsibility for that because they did nothing to try to end the bank strike.

The time has come when the Government or the Central Bank, or some other body should clarify the position of our credit. Nobody seems to know what the position is and least of all the bank managers up and down the country. They are helpless and hopeless, unable to guide people and unable to give any indication as to what is the policy on credit.

In relation to credit in the context of this Bill, the Government seem to have decided on a policy of foreign borrowing. They seem to have decided that if they cannot get money at home they should borrow it abroad and borrow it on a more extensive scale. On this Bill we are entitled to have regard to inflation and we would expect the Government to cure it or to curb it.

I remember Dr. Whitaker of the Central Bank appearing on television towards the end of last year and dealing with the question of inflation. He said one of the factors which encouraged inflation and brought it about was foreign borrowing. If I understood that television appearance and speech correctly, Dr. Whitaker seemed to be advising the Government to cease from borrowing because he said it was simply injecting into the economy a lot of unearned money, which had to be paid back and that that was what inflation was all about.

(Cavan): I am putting it at its mildest. It is the first time a Bill has been introduced into this House to facilitate foreign borrowing by State sponsored bodies.

Mr. L'Estrange

And by the Government.

Mr. T.J. Fitzpatrick

(Cavan): The Government have already set the example by borrowing abroad any time they think fit, when they cannot get enough at home. According to Dr. Whitaker, that encourages inflation. We have the Taoiseach coming into the House now and again speaking against inflation and appealing to people to do everything they can to strengthen the economy.

I do not hold myself out as a financial expert, but I always thought that a policy of borrowing abroad was a bad policy. I know other people thought differently. I have reason to believe that Dr. Whitaker, the Governor of the Central Bank, is a man whose views on financial matters command respect. I did not think his appearance on television on that occasion was a mere coincidence, or a mere accident, because it was shortly before the Minister announced his wage freeze and price freeze effort. It seemed to be an effort to build up the importance of and the danger to the financial and economic situation. He certainly denounced foreign borrowing on that occasion. In the light of that, it seems to me that the Government must know that there is no more money left at home to borrow, that they have exhausted the home credit and, not only do they propose themselves to continue borrowing abroad against the advice of the governor of the Central Bank whom they build up in this Bill, but they are also introducing, as the Minister says in his sophisticated way, an enabling Bill to encourage and facilitate borrowing abroad by State sponsored bodies. I should like to hear a lot more from the Minister about this policy of borrowing abroad.

In so far as giving a supervisory role to the Central Bank is concerned that is in accordance with Fine Gael policy, published in 1965. I should like to ask the Minister, if he has not already told us, to tell us what is the position regarding banks in general in this country at present. I ask him that in the light of Part II of this Bill. Has he reason to suspect that there are any banking institutions in this country which are in an unsound position?

Mr. Colley

No, I have not. The Deputy will notice that I drew a distinction between what is commonly understood to be a bank and what may technically be a bank. I should like it to be quite clear that I have no doubts whatever about what is commonly understood to be a bank, none whatever.

Mr. T.J. Fitzpatrick

(Cavan): In the light of Part II of the Bill, the Minister should put the position beyond doubt, because it would appear to a person perusing Part II of the Bill that the Minister either suspects that there are some institutions in the State making available banking facilities under one guise or another which are not sound, or that he anticipates or fears an influx of such institutions, or the incorporation of such institutions within the State. Section 13 imposes on the registrar of companies the obligation to notify the Central Bank of any new banks that are formed, or any bodies that are formed which might sound like new banks. Section 11 of the Bill enables the Central Bank to withdraw licences issued in the case of undertakings unable to meet their obligations, or if they fail to make the required deposit, or if they are convicted on indictment of certain offences, or if their circumstances have changed.

Section 28 seems to anticipate or fear the necessity for a creditor to obtain judgment against a bank. It seems to anticipate that a customer might have to sue a bank for money which he had deposited with them. Section 29 seems to deal with the case of a defaulting bank also. I think it would be a fair summary on Second Reading to say that Part II seems to deal with defaulting banks, or banks which take deposits from people and do not repay them, or banks which have become bankrupt, or banks which have had a judgment given against them. I should like the Minister to put the minds of the people at ease in this regard if he feels he is justified in doing so or, on the other hand, to warn them, even under the privilege of this House, against any banks or institutions masquerading as banks.

Mr. Colley

May I refer the Deputy to my speech introducing the Bill? I tried to distinguish between the two. I said:

The business of dealing in money is no longer the preserve of the banks as that term is commonly understood by the general public.

I was explaining what the Deputy is talking about in that context.

Mr. T.J. Fitzpatrick

(Cavan): I know but in that very context if the Minister thinks that there are such institutions in the country he should warn the people because during the bank strike people were driven, perhaps that is too strong a word but they were certainly encouraged, to place money with finance houses, so-called, other than the ordinary, orthodox, recognised banks and in some of these they were getting better interest rates. Part II of the Bill seems to me to suggest that there is some necessity for the type of precautions that are to be taken in Part II of the Bill. I know we would all be shocked to hear that any of the traditional banks or recognised banks are in any danger but if the Minister knows of any other institutions extending banking facilities, particularly by way of accepting deposits, then there is a bounden obligation on him to warn the people about it. He must have more knowledge of this than anyone else.

While I say it is a good thing to give the Central Bank certain supervisory functions over credit, I would not like to see the position here where we would only have one bank in the State and no competition whatever. Two things in the Bill seem to suggest that —the provisions to facilitate mergers between banks and the transfer from the Bank of Ireland to the Central Bank of the Exchequer account. That seems to be a move in the direction of, perhaps, making the Central Bank an all powerful bank. I would not be inclined to go that far. It is proposed to give the Minister more control over the Central Bank by reducing the directors known as the Associated Banks directors from three to two and by giving the Minister for Finance absolute power and jurisdiction to appoint these two directors himself from among the directors admittedly of the Associated Banks but heretofore he had to appoint them from a panel submitted to him by the Associated Banks. That is gone now and he can appoint anyone he likes. That is a pity because for political as well as other reasons, the Minister has been given power to appoint his political friends to the board. The system which prevailed to date apparently was that the Associated Banks submitted a number of names to the Minister and he was obliged to appoint the three bank directors from this panel. That panel is to go. I should like the Minister to say exactly why he wants to do that, why he wants to do away with the discretion given to the Associated Banks to say: "Here are six people and the Minister can select three directors from these six." The Minister can now say he is not satisfied. Unless he is able to put forward a very good case, I will be forced to the conclusion that the Minister is doing this to create yet more patronage and to give positions to people for political purposes and that cannot be calculated to gain respect for the banking systems in the country.

When dealing with mergers I should have dealt with section 42 which exempts from stamp duty agreements and other instruments transferring a banking business to another bank under a scheme approved by the Minister. It seems to be putting big business in a privileged position, to completely exempt the transfer of perhaps millions of pounds worth of property from one company to another, whereas a young married couple who are buying a second-hand house at £4,000 or £5,000 are expected to pay stamp duty. There may be some explanation for it but it sounds a bit unjust to me.

I have nothing more to say about this. I rose for the specific purpose of dealing with the bank strike which crippled the country last year and to express my views on the policy of the Government on foreign borrowing which I think is very much against the national interest. I availed of the opportunity to query the Minister on Part II of the Bill dealing with doubtful banking undertakings whether they are of the recognised, old and respected type or of the new mushroom type.

Mr. Desmond

May I congratulate the Minister on the introduction of this overdue but most progressive piece of legislation? The best thanks of the House are due to his Department and, indeed, to the Central Bank for its advice to the Government in relation to this Bill.

The Minister has had the benefit of the collective wisdom of several of my collegaues in the Labour Party in relation to this Bill. My own view is that, by any political criterion, by any general assessment of the role of the State in the issue and the protection of Irish currency, this Bill is in accordance generally with Labour Party policy as I know it and as I interpret it and as, indeed, it has been advanced in Dáil debates down through the decades. Without question this is the most progressive and necessary piece of banking legislation we have had introduced in the Dáil during the past 30 years. Indeed, one wonders what Fianna Fáil have been doing for the past 30 years having regard to its failure to bring in this legislation long before now. It is certainly more than overdue. It manifestly strengthens the functions, operations and various mechanics of the Central Bank. As such, it is very much in accordance with the views of the Labour movement generally in this country, which are that there has devolved on the State the basic obligation, in the national interest within the statutory power of Dáil Éireann, to lay down elementary monetary pre-conditions to State licensing, and general supervisory controls of bank operations within the country itself. I am very conscious that we in Ireland have not got as great a measure of control over our monetary situation as we would wish. What limited control we have should be and is enshrined in increasing measure in this Bill before the House.

It is a source of encouragement that at a time when we are legitimately and quite correctly giving increasing powers to the Central Bank and expanding and developing its role in the Irish economy, we have, in my opinion, the best governor we have ever yet had in the history of the bank itself. Dr. Whitaker is far superior to the vast majority of the economists in this country. The Minister has strengthened the board of the bank with the presence of Dr. Louden Ryan. It is a matter of encouragement to Dáil Éireann that we have, within the setting of this legislation, a Central Bank in which we can have a great measure of trust and goodwill. No nation's monetary or economic policy can ever evolve around one individual, nor should it do so. The Central Bank have a most distinguished and capable governor and also growing expertise among its advisory and economic staff. This is an area in which there has been very sparse advice to the State generally in the 1940s, 1950s, and 1960s.

I am glad to note the ever-increasing measure of potential and benefit to the nation of the economic advisory work available to the Government. It highlights one fact—and I am not making this remark in a snide manner—that while the Central Bank have grown in power and function and improved their personnel and expertise the current Cabinet have, in ever-increasing measure, developed into a position of what one might call general economic fifth-rate mediocrity. It is not unfair to say that about the role of the Irish Government. If the work of Dáil Éireann was on a parallel with that of the Central Bank most certainly we would be in a better position. This is not the time to develop that line. I welcome this Bill. It is closing a situation which was quite farcical, whereby we were in the general banking world a unique nation where if the Revenue Commissioners were mad enough, it was legally possible for anybody to obtain a licence. It was possible to take deposits from the public provided that one was issued with a licence by the Revenue Commissioners and had paid the fee of £1. Such a person could take £20,000 lodgments. The miracle is that in the 1960s, in particular, and in the recent past, with the very limited supervisory and controlling function open to the Central Bank, we, in Ireland, have not had a banking catastrophe such as has happened in other countries.

I am pleased that this Bill will give an added impetus to the creation of a general money market, in a very limited sense admittedly, in the Republic of Ireland. It is a matter of pride that arrangements have been made for the acceptance by the Central Bank of a very wide range of short-term deposits from banks and finance houses generally, for active dealing by the banks in short-term Government securities and for the issue of Exchequer Bill at regular and more frequent intervals. Money which was being placed in the foreign houses, particularly in London, will now be placed at home in our own rather limited small, native money market. This money market will play a role of increasing importance.

The Minister became worried about the devaluation question and if he keeps on raising this question someone might ultimately say that he is going to believe it, and then something might happen. I welcome this statement but we should bury it for 1971. We should disregard the perpetual question of devaluation of our currency in relation to sterling. It is a non-issue. We should not even raise it generally. We do not need such off-repeated assurances from the Minister that the Government have no intention of changing the existing parity with sterling. While undoubtedly questioning the policy of the Government at the moment in relation to the inflationary situation, I am pleased to note that the Minister's denial is again emphasised.

The Minister has had to listen to some appalling nonsense in relation to this Bill, but he has the consolation of being paid a substantial salary for this. I welcome the introduction of the Bill and hope that it will have a speedy passage through the House.

Sir Anthony Esmonde

I am particularly interested in the last part of the Minister's speech where he refers to the bank strike and says that he is making arrangements to ensure that this disruption of our finances shall not occur in the future. Am I being unduly inquisitive when I ask the Minister why he or the Government did not take action to avert the strike when it was about to take place? When the banks did close why did the Government remain inert over that long period? Many Deputies, both from these benches and also from the Labour benches, suggested to the Minister for Labour, principally, as he was the Minister concerned, that he should have intervened to try to get the banks reopened. I am not, therefore, being inquisitive when I ask the Minister for Finance to explain this reference in which he has indicated that no further bank strikes will occur or that if they do occur this Bill will place the Government in a position to deal with the situation.

Mr. Colley

Could I ask the Deputy to quote the statement which he says amounts to that?

Sir Anthony Esmonde

Yes, with the greatest of pleasure. This erudite statement commences as follows:

Before I finish, I wish to refer to the bank closure which suspended the country's main banking services for many months and caused widespread trouble and inconvenience to the business community and private persons alike.

A fair interpretation of that would be that the Government were worried about the strike while it lasted and one would have expected there would have been some intervention from official quarters, of which I am unaware. I quote:

It must be the aim of all concerned to avoid any recurrence. As the House is aware, the Minister for Labour has arranged for Professor M.P. Gogarty to investigate the causes of the dispute and to make recommendations as to what action might be taken to avoid any further similar experience.

It seems to me to be rather like closing the stable door after the horse has bolted. However, I will read on as I want to be absolutely fair to the Minister:

The Central Bank and the Economic and Social Research Institute are conducting inquiries to ascertain how firms and individuals managed their finances during the bank closure.

You can see from that that out of evil sometimes comes good. The Government have awakened to the fact that the entire economy was disrupted for seven or eight months without any intervention whatever. It is only fair to say that the Minister was not in the office he is now in during all that time but even for the considerable period for which he was I do not recollect his having done anything.

The information provided by all these inquiries will be of assistance in deciding future action.

That is where I was a little inquisitive. I want to know what will be the future action of the Government if we are faced with a further bank closure. He then said:

Meantime, the powers proposed in the Bill will put the Central Bank in a strong position in various ways to deal with banking problems, whether arising from a bank closure or otherwise.

Am I to take it that the one branch of the Central Bank, in the heart of Dublin, is going to deal with the banking problems of everybody concerned if the banks close again? Of course this is just eye-wash. It is necessary for the Minister, when introducing a banking Bill such as this, to refer to one of the most difficult things that happened in financial circles here probably since the inception of the State. I am happy that the Minister realises the inconvenience that was caused to the people with money in the banks and the unnecessary delay in the reopening of the banks due to the total ineptitude of the Minister and possibly his advisers also.

This is not a very revolutionary Bill; it proposes to do only about two or three things. It proposes to give directors appointed by the Government greater control over the lives of the people. All these things are always dished up with a sugar-coated pill. The argument in the Minister's speech is that all the banks will be required to have a deposit of not less than £20,000 in the Central Bank. This is to safeguard the private investor who may have lost confidence in the banks, as indeed a great many people have. It is only natural that they should have, as over a period of three years we have had two closures of the Associated Banks. This is the sugar-coated pill dished up to the public, that the Minister will be able to appoint directors to the Central Bank and a certain quantity of the money which is deposited, to whomever it belongs, will be deposited in the Central Bank with the idea of protecting the public. In addition, they will have control over credit.

At present the Minister or the Government may not have complete control, legal control shall we say, over the restriction or otherwise of credit but it is a well-known fact that there is a certain amount of money available, invested money—fluidity I think is the great financial term—for loans. When the Government borrow they utilise a certain amount of the money for their so-called programme of economic expansion which I think is giving us about a 2 per cent increase in our national income. This leaves a very limited amount of money available for the rest of the community.

I am not aware that the Government ever had difficulty getting money from the banks for two reasons: first of all, the banks want to keep in with the Government and the Minister for Finance, and secondly, it is perfectly safe for the banks to lend any money they like to the Government because they are aware that the rate of interest is procurable simply by the Government taxing the people. Therefore in a way this Bill is something of a myth. This Bill says that it is giving the Government control over the credit facilities but I would like the Minister to tell us what lack of control has he had or what difficulty has he had in procuring the fullest co-operation of the banks to get all the money he wants for the so-called programme of economic expansion.

The Bill also gives him the right to control credit. It is recognised that the word "credit" at the moment, as far as credit goes to the ordinary individual, is a complete misnomer. The banks, far from giving credit to anybody, are trying to rake in all the money they can and to get business people, who were very hard hit, factories and individuals, to settle their overdrafts. They are only interested in trying to get people to pay back as much money as they can into their accounts if they got into the red. I am not too strong financially myself as a result of the strike and I do not suppose anybody else is either—but the banks are more concerned with trying to get money in than anything else. Even the Government found when the strike was over that they were in a very unhappy position.

Debate adjourned.

The Dáil adjourned at 10.30 p.m. until 10.30 a.m. on Thursday, 18th February, 1971.

Dáil Éireann díospóireacht - Wednesday, 17 Feb 1971

Private Members' Business. - Central Bank Bill, 1969: Second Stage (Resumed).

An Leas-Ceann Comhairle

Dáil Éireann díospóireacht -
Wednesday, 17 Feb 1971