It was very interesting to hear our two Ministers for Finance—the Minister of former days and the Minister of to-day—discussing these matters together. I think we have all great reason to congratulate ourselves on the present state of affairs, especially when we see a former Minister for Finance and the present Minister comparing such friendly notes. Senator Blythe, in his day, had to face a very difficult situation. We can all remember how things were then. A new State had been set up here, and when that First National Loan was floated we can all remember what he had to do in order to get the people to back him up then. The same considerations do not apply to-day. From the point of view of ordinary financial considerations, this loan, in my opinion, can be recommended to investors. The Minister, I have no doubt, had very considerable trouble in deciding as to the rate of interest that he should fix. As the guardian of the finances of the country, it is his duty, of course, to get money at as cheap a rate as he can. The position was made difficult for him by the European situation. Due to it, publication with regard to loans and investments had pretty well ceased about the time when it was necessary for him to be moving in connection with his loan. The situation in Europe must have given him quite a considerable amount of serious thought. He was faced with the position of having to float his loan as if there was no disturbance in the European situation, but actually, of course, he had to act in the circumstances that prevail to-day throughout Europe. I think it was very wise to take full account of that and to give a rate which made it an absolute certainty that the loan would be worth buying and would be a success. The investor has, I think, got to thank our friends, the Abyssinians and the Italians, to some extent, for the terms which were offered. We have to give them a little credit. There is no question that, in view of what has happened, the Minister arrived at a wise judgment and fixed the rate at a sound figure.
Since we are on this subject, it is worth while to examine the public indebtedness of the Free State and to see what our funds are worth. I do not believe that anybody who has invested in our Free State loans has lost money. The Minister had a difficult situation to deal with because he knew, when he was offering 4 per cent., while the interest on the last loan was only 3½ per cent., that there would be grumblers who would say that the 3½ per cent. loan would be depressed. It looks as if that fear is not going to be realised. I think it is the opinion of the buying public that this 4 per cent. loan will go to a premium. The credit of the Free State is good, and a 4 per cent. loan, guaranteed by the Free State Government, ought to be a first-class security. If there are no adverse European developments, this loan should go to a premium and the 3½ per cent. loan should rise accordingly. Anybody can work out the extent to which the 3½ per cent. loan will have to rise to keep pace with the 4 per cent. loan if it goes to a premium. The prospects of the two loans, so far as the investing public are concerned, ought to be quite good. Looking at the amount of money for which the Free State has pledged itself in the loans which it has issued, we have not at all transgressed the bounds of what would be called our solvency. Our loans are not heavy when judged by the capacity of the people to pay the interest and sinking fund.
Our loans ought to be good investments, but there is one difficulty which, so far as I can see, must confront a Finance Minister of the Free State at the present time. He has to deal with a very small market. The loans of all the other Dominions—New Zealand, Canada, South Africa and the others— are freely quoted on our markets. We are all buying and dealing in these loans. No place outside the Free State is freely dealing in our loans, if they are quoted at all. If our Finance Minister had some big project on hands which required the issue of a big loan, he would have to take all the little considerations of the Free State market into consideration. That must cramp his style enormously. If these loans were spread and were freely quoted and bought outside the Free State, our Finance Minister would be able to issue his loans on much more marketable lines than at present. Our people are not greatly addicted to investment. They like bank deposits and similar deposits by which they are certain to get their money when they want it. The Minister, no doubt, knows that it is very hard to get the ordinary citizen to invest his money in loans or similar issues. Consultations have, therefore, to take place between the Minister and the banks as to how much money is available, while the Stock Exchange has also to be taken into account because of the very small market with which the Minister is dealing. The banks and the Government must work together. It is impossible to think of what would happen the country if we had a Government which made impossible demands on the banks, or banks which would not listen to and accede to all reasonable demands of the Government of the day. If we were to have that sort of thing, this country would not last. The banks and the Government must work together for the good of the country. So far as I know, we have always had good relations between the Government and the banks, and I have not the slightest doubt that we shall always have those relations. The banks come back to the same source for their supplies. They can deal only with a certain amount of their money and, in the event of a really big financial operation, I believe that our Government would, in the future, have to try to get access to bigger markets.
Senator Blythe will remember how he issued part of one of his loans in America. At that time, he evidently felt the same difficulty and tried to spread his market. The Government ought to bear that point in mind. They should try to see if access cannot be got to the money markets of the world, since other nations like ours are able to issue their loans on these markets. Some day we may be in need of a good deal of money which cannot be raised by taxation. However, the Minister did an excellent thing and a brave thing when he issued the conditions of this Conversion Loan.
There is only one other point with which I should like to deal. That is in reference to this sum of £1,150,000 of the present sinking fund. I thought at first that the Minister should have said what he proposed to do with it. I tried to think of what I would say in similar circumstances and I was utterly unable to arrive at a conclusion. The Minister was perfectly right in being guarded. I do, however, suggest to him that he should remember that this is sinking fund money and that it was raised by taxation for that purpose. When he comes finally to deal with it, he should bear that fact in mind and he should do nothing which would lead future buyers of our stocks to think that money raised for sinking fund would be appropriated to other purposes. One can easily understand the criticism there would be if that were done. I think it would be better that the Minister, if he has to deal with this question, should deal with it in his Budget and get Parliamentary consent for whatever he does. I do not wish to say anything of a controversial nature, but this is a matter to which economists all over the world will give serious attention. The Minister has to deal with a difficult problem. I do not know of any case in which a surplus arose, as in our case, by the redemption of a loan. The Minister, in dealing with this surplus, will be creating a precedent which will be watched. I have no doubt that he will take care of the good name of the Free State, but this is a matter which will require very careful consideration. I should like to think that it will not be dealt with privately by the Executive Council, but that the Dáil will have a voice in it. I do not want to be dogmatic about the matter, but I am sure the Minister is giving it serious consideration and that he will bring forward some proposal now that he knows the figures with which he has to deal. The sanctity of sinking fund money should be thought of in whatever is done. That, however, has nothing to do with the loan which we are now congratulating the Minister on having so successfully launched. I think that we Free State citizens ought to be very proud of the standing we have got for our funds. There has never been the slightest fear that anybody who put his money in Free State loans would suffer any loss connected either with the principal or the interest. Many of my friends have done right well by investing in previous Free State loans and I have no doubt that they will do the same thing in connection with this loan.