Dáil Éireann - Volume 97 - 20 July, 1945
Appropriation Bill, 1945—Second Stage (Resumed).
 Question again proposed: “That the Bill be now read a Second Time.”
Mr. McGilligan Mr. McGilligan
Mr. McGilligan: I was occupied last night when the House adjourned in endeavouring to get the House to realise that a certain difficulty which had arisen for the British as a result of the war was bound to have its repercussions here, that in fact we had already felt these repercussions and that, from what we had already experienced, we should try to find a way in which to form a judgment as to what was likely to happen in the near future and in fact possibly for a generation. In endeavouring to associate that with our own relatively small problem, but which to us is possibly as big a problem, I pointed out that the difficulty of Great Britian imposed a difficulty on us, that it raised an immediate problem and raised a problem for the next five, six, ten and possibly 15 years. I was moving on from that to point out what this country required if that problem was to be solved in a way which would be of benefit to the whole community.
To get the argument again in form, I had put to the House that it was quite clear from the British economists that the British situation was one which they represented as being of amazing difficulty. They were faced with the loss of all their old-time investments, with a decline in their supremacy at sea and with very definite competition of a most intense type with regard to all matters of insurance and other commercial matters that used to bring in moneys which bridged the gap in their visible balance of trade, which was generally against them as it was against this country. I pointed out that that difficulty had impressed itself so much upon English people that the Chancellor of the Exchequer had thought fit on recent occasions to go to various bodies and make the position clear beyond all doubt, using phrases about the country being terribly short of dollars, about the delicate balance of their economy and about how it might be completely destroyed and saying  that if they in Britain were not helped to get the post-war world on its feet, the post-war world was going to collapse.
I thought it necessary to stress that certain of these economists had used such phrases as this, that the debts they had accumulated would have to be funded—words which must have an ugly sound to our ears. I read from economic journals where politer phrases were used, to the effect that these debts of the British would have to be divided into three lots. So far as they were clearly inter-Allied war debts, there would have to be cancellation; in so far as they were debts somewhat off that line but still for war purposes, they would have to be treated as if on a lend-lease basis; and finally when they came to what might be described as ordinary commercial debts which still hung heavily on their shoulders, the gentle phrase was used that the economy of the British would have to be “insulated” against any bad effects from these commitments.
There is the situation: there is an enormous difficulty facing the British, a difficulty which they must meet by expanding exports to the point of doubling the old amount of £450,000,000 or £500,000,000 worth which they send abroad. They are reduced to a situation in which they are openly talking of the cancelling out of debts, or putting them on a lend-lease basis, which is a basis of very far deferred payments and then only payments of a percentage, and finally using phrases like “insulation” and at other times the ordinary term “funding”. It means that those who are owned money by England and who have old-time accumulated credits are not going to get payment at once. I do not want to impute any desire to the British to write down their £, but we must know that steadily over the last 15 or 20 years the £ has declined, and that if the repayment of what is owed by England is postponed for half a generation, the likelihood is that the £ will have depreciated to the point at which we will get in value about half what we sent out, and, as I say, we will get it late.
 In that connection, I had drawn attention to one definition which I think is a very valuable definition for those who talk about sterling assets, and particularly those who pride themselves on the accumulated sterling assets which this country has, to know just what the soundness or unsoundness of that particular accumulation is. The definition I quoted was in these terms, that the £ sterling was a promise by the chief cashier of the Bank of England to pay on such date as the British Parliament might determine such sum as the British Parliament would then decide upon. In other words, they gave us I.O.U.s with no date for repayment and no sum filled in as the amount which they will repay us.
Apparently some people in this country are pleased—the Minister for Local Government certainly was quite pleased—that we should go on hoarding up these I.O.U.s with no date on them and no really defined sum set out, and that our future is soundly built when built upon these. I pointed out that that raised two difficulties, two problems, for this country. We had the immediate problem and the other problem, which will possibly endure for five, ten, 15 and possibly 50 years. They both spring from the same point, that is, that just as Great Britain on visible trade always had an adverse balance, so had this country. That means—one must simplify these matters—that both this country and England used to import more in the way of goods than the value of the goods sent out. The British amount is about £450,000,000—it goes up and down with the years, but averages about £450,000,000 per annum.
In the years before there was any distortion by reason of the economic war or anything like that, the more quiet years of 1924 to 1932—I use the word “quiet” in inverted commas and simply leave it at that, without wanting to call attention to what caused disquiet in the country at that time—on an average we imported almost £16,000,000 worth of goods more than we sent out. The most important item confronting those who have to guide this country in the next half-dozen  or maybe 25 years is that fact. How did we achieve that surplus over so many years? One would think that if it were going on for so long, we were like the man living far beyond his means who would go bankrupt almost immediately. The situation, of course, was that we had enormous investments abroad— enormous from the point of view of the size of this country—and the dividends which we received from these enabled us to bridge the gap between the visible items of trade.
That means that from emigrants' remittances, from investments or from adventitious aids like the sweepstake at certain times—and now from the adventitious aids of new remittances from new emigrants—we bridged for years the gap in our trade of about £16,000,000. In those days, most of our trade went to England—not as much as Fianna Fáil succeeded in making go to England in later years, but always the greater part of it was with the United Kingdom. In the early days, it did not matter where our trade went, because, if you bought sterling, it was an international unit of currency. Sterling bought dollars, bought kroner, bought anything, and when you bought sterling, you bought, as I say, an international unit. You bought something which was certainly as valuable as will be the new unit, if any new unit of currency proceeds from the Bretton Woods Conference. We carried on trade, not merely bilaterally between ourselves and Great Britain, but multi-laterally. We traded with England for anything we got from her, but we got goods also from America, the Argentine and other places and we had a unit of currency which was as good as gold.
That situation has long since gone. This is where our difficulty links up with the British difficulty. The English are not now in the position in which they could rely on getting in the old £400,000,000 or more that they used to get as a result of their foreign investments. Their foreign investments are gone. They are transformed into debts now. In the days when they  were drawing in some £400,000,000 or £450,000,000 per annum, they could easily spare us what paid our £15,000,000 even if we were going to spend that in countries outside England. That could easily be done. The British had money in plenty and foreign currencies floated in at such a rate that they reinvested a certain amount of the money each year. That situation has gone and the British are going to find it hard, desperately hard, to meet the new position. In this situation, nobody in this country with any sanity can believe that, for many a long day ahead, we can see a situation in which the old easy position will be achieved. The British now talk in terms of cancellation, a wiping out of debts; sometimes it is phrased as a “loan” from America of £1,000,000,000. Sir John Anderson, Chancellor of the Exchequer, says they do not want a loan of £1,000,000,000, but rather a gift of that amount because a loan, bearing with it the obligation of repayment, would involve calculations as to rates of interest, amortisation, etc., and they do not want to complicate the situation further in that way.
They being in that position, will anyone believe that they are going to work to pay us over the next ten or 15 years anything on account of these old credits? Can we get away from these symbols? Money after all is only a symbol; it is a very valuable symbol, a symbol we cannot do without, but the background of this talk about money is work—the production of goods and the exchange of goods. England in order to keep up her standard of living to the point at which it stood before the war—they even talk of increasing it—has to import the goods she imported before. She has got to export more goods to procure the goods she used to buy before with dividends and investments. It is going to put them to the pin of their collar to produce all these goods to get in from any of these other countries new goods. Who are we to think that the British are going to stop work for one single week out of the 52 in order to give us goods, not in return for new  goods but in return for old accumulated debts owing to us by them for many years? I certainly I do not think it is same to ask them and I do no think it is sane to expect they are going to do it. We have had a number of signs and hints by various people which would indicate that much as they would like to get back to the old position their position is somewhat similar to that which obtained after the last war when Lord Balfour wrote, somewhere around 1922, that they were contemplating asking for a moratorium.
What is the reaction from that? What are we going to do about the £15,000,000 we used to get in without sending out visible goods in payment for it? The immediate problem is a very serious one. The Minister for Finance, in the course of an earlier debate last night, pointed out that if anybody thought that sterling balances were of no use for trading with the hard currency countries, he would like them to remember that we utilised sterling assets to purchase a large percentage of the goods we required in hard currency countries during the past few years. So we did, but how did we manage it? The British managed it for us. It was not due to any Minister here or to any management carried out on this side. The one thing that emerges from the table is that the British had through circumstances, particularly finance, shipping, import licences, etc., control of these matters. They so ruled the matter that although we did get goods, it was they who got them for us. We did to some extent get some goods ourselves from some of the hard currency countries but they got for us the bulk of our imports. What did they get in return? They took sometimes one-and-a-half times the value of the stuff, sometimes twice as much as what they sent back. They ruled that roost.
There is a mind behind the figures revealed by this table. For four years back the British have not allowed to come into this or any other outside country even as much as was sent out from these countries to them, let alone allowing us to cash-in in the way of goods on these old credits of ours which we have accumulated. In the  last four years, taking the trade from all over the world, whatever trade we were building up in the last four years, we were forced to send out something in the region of £3,000,000 worth of goods more than we were allowed to bring in. I understood from the Minister for Local Government in a recent debate that it was proposed with happiness to continue that system. The Taoiseach told us here the other night that he was not going, hat in hand, to any other country. He has been going to England hat in hand and with a terrific hatful of goods for the British for the £3,000,000 we have got in each year in the last four years and, apparently, he is going to continue that policy. Of course, there is a difference of view on the Government Benches. The Minister for Local Government feels with Churchill that everything will come right eventually. The Taoiseach says, no; he does not like the situation but what can we do? That is the immediate problem that confronts the Government to-day.
I notice the Minister for Supplies quoted in this morning's paper as saying that the supplies position is going to be normal after another four or five years. I think that is a developing view of the position. The immediate position is to extend over four or five years. Apparently for four or five years, even if we think that the supplies position is not developing properly, we are going to continue to give the British more goods than they give us. I do not think that is right. Certainly if I thought that we were to get about even in five years the prospect might not be too bad, but have we had any guarantee as to the payment that we might expect from Britain within five years? Have we had any guarantee about payment or have we made any inquiry from Britain as to the payment of that amount which after all is relatively small? I asked questions here before on which I hoped to found a debate in regard to this matter and I was told that no inquiry was made, that we were going on the assumption that goods would be forthcoming. I do not think that is a right assumption to make. I want to draw attention to this matter. Even if we have not got  any guarantee from England, if we have not entered into any conversations with them, if we have no arrangement as to the immediate future, I see no good whatever in giving the British one single pound's worth of stuff more than what she gives us. I see no good in international trade in giving a single pound's worth of goods to anybody surplus to what they give us.
I know I will be asked immediately, as if it were the only alternative, am I going back to slaughtering calves. I never slaughtered calves. That was one of the fine points of folly of the Fianna Fáil Party, and I was rather glad to notice from the speech of the Minister for Local Government the other day that he has now realised what consummate folly that was. There are other ways of dealing with calves than slaughtering them to throw them out. They may be slaughtered and made into foodstuffs for the people of this country. They may even be slaughtered and made into foodstuffs for the people of this country which the people of this country could buy if the people of this country were put into some sort of production. Nobody can say—I mentioned the phrase last night—that this country is either overfed or overworked. We have idle men, we have idle resources, and, very often, hunger through the country. Notwithstanding that, it is thought a desirable position that we have reached—that we are giving England, or countries other than England, more goods than they send us or than they promise to send us.
The bigger problem, of course, is the one that is not associated with this odd million or two that we are giving to England more than we get back from them. The big problem is: What are we going to do about the £15,000,000? In the old days we imported a certain amount of goods. As to £15,000,000 of that, we did not balance on a payment for goods we got in from investments. I suggest— of course if I am wrong in this the whole basis of my argument is destroyed—that nobody can with  assurance say there is any hope that we will be allowed to get those investments going again. If we are not, what are we going to do? We used to bring in a certain amount of goods. It is possible to say that we brought in too much, and, therefore, that we could live, even at our present standard of living, without bringing in as much as we did before. I do not know anybody who will say that our standard of living was so high that we could do without those altogether and that we could live as if we never had that £15,000,000 worth of goods coming in as a result of old-time investments.
Certainly, when one examines this table, one can see how amazing the trend of Fianna Fáil economics has been. They used to talk, No. 1: as if there was no necessity for imports; No. 2: as if we could get big business done in industrial exports; and No. 3: as if they had markets for their produce other than England. This table, which was given to me in reply to a question on 4th July, denies all those old views of Fianna Fáil, and shows how they have been denied by circumstances and facts. As far as the exports to countries other than the United Kingdom in the years 1924 to 1932 are concerned, there is an average export of £2,000,000. Since that time, in 1933 to 1938—I leave out the war years; I can add them in if necessary, but they do not really, to any great extent, affect the picture—Fianna Fáil reduced that export to countries other than the United Kingdom to about £1,500,000. That is not a very big difference, but it shows the tendency. The tendency was to develop trade more and more with the United Kingdom, more and more to the exclusion of those other countries. As far as exports other than live animals, food and drink, are concerned—and that was a figure given to me in reply to a question about exports of industrial products—the situation is that in the years from 1924 to 1932 there was an average export of those industrial products of £6,000,000 per annum. Since 1933 up to the war years that has been reduced from £6,000,000 to £2,500,000.
Apart from platform talk, the reality is that Fianna Fáil has developed trade  more and more with Great Britain to the exclusion of other countries, and has developed trade more and more in agricultural products to the temporary eclipse of industrial products. We have now at last, according to the statements of three Ministers, arrived at the conclusion that we must have these imports—that they are necessary for our standard of living. I ask myself then: what are we going to do? We have got to the point of trading in the main with Great Britain; we have got to the point of trading almost entirely in agricultural products; and we have got to the point of recognising that imports are necessary for the maintenance of our standard of living. What are we going to do to get the old £15,000,000 worth of goods? I hold that we cannot rely on the credits being there for us. I hold that Britain has not enough of other currency to go round to allow us to get hard currency, and I do not believe that Britain, even in connection with the sterling area, is going to work hard for us for a week or two to provide us, in her extremity, with goods, except we send goods to her in return. It seems to me that the whole tendency of Fianna Fáil has shown only one thing, that all we can hope to do is to export more goods to England, to export more agricultural goods. If we have got to get that old £15,000,000 worth of stuff in to-day, and cannot pay for it by dividends on investments, we have to pay for it by goods. That is a considerable task. We have to increase our exportable surplus, which, in the main has to be agricultural goods, by £15,000,000. In fact, we have to increase it by more. We have to increase it by whatever volume of goods would, about 1930, have brought us in £15,000,000. Of course that means a great deal more at the moment.
I should point out that trade in this country, which the Minister for Finance seems to think is on the upgrade, is, of course, declining. In 1943, we were supposed to have an import trade of £26,000,000, which, valued at 1930 prices, means only £13,000,000. In comparison to the old days of, say, £56,000,000 imports, our trade is down to £13,000,000. I do not think anybody is foolish enough to  believe that we could go on living and maintaining a proper standard of living with the imports just as we have them at the moment. Accordingly, we must get exports. We either have to get exports or else tighten our belts and live on in the present narrow circumstances for many years to come. Which is it proposed to do? I do not think anybody can seriously contemplate a future in which we will live as we are. Therefore, the only thing we can hope to do is bend our backs, and see can we get more production in this country on the agricultural side, and, finally, when we have got it, will the British take it from us and at what price and when will they pay us for it? I am no believer in giving the British goods merely with the idea that some day, sooner or later, they will pay us some sum of money, whatever they may determine. I am not a believer in that policy at all. I would believe in giving them immediate trade, even increased trade, when they give us increased imports from that country in return.
Have any inquiries been set on foot in regard to that? I have asked about that, and been told “No”. I even asked about a question which I thought was definitely tending towards what would be called capital goods, and got a not very satisfactory answer. At the start of the war the Minister who was then in charge of Industry and Commerce said that the only thing that was likely to be interfered with in this country if a European war broke out was supplies of raw and partly-finished materials, fuel, machinery, mechanical replacements and stores. For a self-sufficient country it was a pretty tall order that there was going to be interruption in those things. I went back to that old statement of his, and asked him what forward arrangements had been made for the importation into this country of—then I quoted the various items—raw or partly-finished materials, fuel, machinery, mechanical replacements and stores. I was told it was not clear what I meant, and that industrial firms were endeavouring to make contracts for supplies of these things and would be  assisted by the Government in whatever manner was possible.
In other words, the Government has done nothing. If the Government has not done anything, what then about the great plans that we have for the future? Two at least have been mentioned. One is rural electrification, and the other is not so much a plan as a statement of fact with regard to housing. For housing, one requires timber, and for rural electrification there is a need for electrical equipment. Where is the electrical equipment to come from? There is only one country outside the sterling area that can supply it. Have we made any arrangements to get it from that country? Again, I asked in that connection a very pertinent question. Recently an arrangement has been made between England and Sweden, in which both countries have agreed to trade without there being any passage of gold between them, which was the old system. The idea is to allow a debt of something in or about £100,000,000 to be run up, but until that limit is reached no gold will be demanded, and kroner will be exchanged freely against sterling. The agreement is framed in terms of sterling against kroner. It is not stated in whose hands the sterling is. I asked whether it was thought that the agreement covered the sterling in our hands, and whether we could use it for the importation of electrical equipment, if we desired to import that equipment from Sweden. I was told that it was presumed it was.
That was the answer I got, but I suggest that the Ministry are not so stupid as all that, and must know that the Swedes themselves hold that it does not cover it. I think that the Ministry are aware of what the situation with regard to the importation of timber into this country from Sweden is, and that we are not going to get any unless we are able to pay in kroner. If we have no kroner we cannot buy much timber, and if we cannot get either electrical machinery or timber, where are we going to get the supplies that we require? I may mention, incidentally, that there is a well-authenticated story that Russia  has decided that there will be no trade in timber done with this country, and that she has put a definite veto on that. As I have said, I have that as a fairly well-authenticated story. If the Minister were to make inquiries from the Timber Trade Association in England he would probably be able to get advice on that.
By the autumn it should be possible to ask the various Ministers what goods have been got into this country from the hard currency countries, or what goods that we require in the nature of capital goods, such as raw materials, partly finished materials, stores and machinery have come in. Possibly, when another four or five months have rolled by, and when the Ministry have had time to place their complacency in opposition to facts, then probably they will have got a better realisation of what the true situation is. I suggest that it is extremely serious and that our needs are not going to be given any very definite priority over the needs of the war-scarred countries and that we certainly are not going to ask people to let us get goods on the old accumulated balances of many years ago. Therefore, we must go back to increased production in agriculture. I see no hope for it except increased production in agriculture, and in a bigger exportable surplus directed to Great Britain. Before commencing on a programme like that there would have to be arrangements made with England. I understand that there has not even been an inquiry made from England to see what the situation is likely to be. I do not believe anyone thinks that we can go on as we are talking in terms of keeping up the old standard of living. If we cannot have the old £15,000,000 worth of imports, then we are going to have a lower level than we ever had before, and we all know that the old level was not anything to be proud of.
On a previous occasion I quoted, from the Report of the Inquiry into the Housing of the Working Classess in Dublin, the significant paragraph 133, and the reference in appendix 17. In that appendix there is set out a summary of 10,500 families in and around Dublin as a sample of 33,000 working-class  families, previously the subject of an inquiry in 1939, when the committee reported. It appeared that of the 10,500 families which were taken as a sample, 20 per cent. of them had incomes of from 5/- to £1 a week: almost 26 per cent. had family incomes of from 20/- to 40/- and something short of 50 per cent. of the 10,500 families, which were regarded as a good example of the total of 33,000 families, had family incomes somewhere about £2 a week. Now £2 a week in these days is the equivalent of in or about 23/- and by taking 23/- one is putting the figure high. To think of the standard of living that used to be maintained in the way that I talk of is not, of course, to say that the old standard of living was very much, but still there it was. People had to pay something out of their income in those days to meet rent, if they wanted to live any sort of a decent life at all they had to pay something in the way of insurance, they had to buy books for children attending school, and they had to buy clothes, fuel and food. In regard to 50 per cent. of the families that I have been speaking of, all that had to be done out a family wage of £2 a week, the present purchasing power of which is something less than 23/-. That is part of the situation.
In another debate in the House I read a series of extracts from statements made by doctors when we were speaking here mainly in connection with disease.
An Ceann Comhairle Frank Fahy
An Ceann Comhairle: I would remind the Deputy that the subject given for discussion on this Bill by the Fine Gael Party was “trade”.
Mr. McGilligan Mr. McGilligan
Mr. McGilligan: I am pointing out that if we do not get a better trade, based on more production, we are going to have a lower standard of living than that which we used to have. I am not going to go very far on this, but talking on the standard of living here recently—the reference will be found in the Official Debates for the 31st January last—I referred to the reports of various medical authorities in this country some months  previously. I referred to one very striking comment which was made by a medical officer of health at a meeting of Muintir na Tíre in St. Kieran's Colleage, Ardee, on the 20th August, 1944, in which he said:—
“The stark, naked, cruel truth appears to be that half of our people are in varying degrees starving. Since the war their standard of feeding had gone down very considerably. Present wage and price levels prevented almost half their people from having access to adequate food supplies.”
This doctor said that there was a marked failure in the stamina, energy and fertility of the people, and that the low marriage rate and falling birth rate were in themselves symptoms of decay. Later he said:—
“Malnutrition is just a polite word for starvation. No amount of providence or thrift would enable the average wage earner in this country to-day to feed, house and clothe properly an average family.”
An Ceann Comhairle Frank Fahy
An Ceann Comhairle: The Deputy will admit, I am sure, that he is now getting very far away from the question of trade, and is opening up a debate on the whole social position.
Mr. McGilligan Mr. McGilligan
Mr. McGilligan: My thesis is that if we cannot meet the old-time deficit in our balance of trade and cannot have the old £15,000,000 of imports, we are in a bad way. If we did meet it and reached that standard of living, I am pointing out that this is the position we have arrived at. I ask the indulgence of the Chair to give one more quotation. One medical gentleman that I quoted said that:—
“Investigations which he had made last year into the living conditions of 100 Dublin working-class families showed them to be in a very disquieting economic state. It would cost 77/- a week, at the prevailing Dublin prices, to provide a family of father, mother and three children under 14 with the necessities of life, according to the British Medical  Association diet scale, which, he said, was too low. No allowance was made for sickness, old age, savings, burial, holidays, tobacco, drink, renewals of linen, etc.”
He went on to say that out of a total of 684 persons, only 170—98 adults and 72 children—were above that minimum standard; 27 adults and 28 children were border-line, while below the standard needs were 459 persons. That is the old standard that we will achieve, even if we get the old-time imports coming in. What is our situation going to be if we do not get them and then, how are we going to get them?
Look at the situation we have reached practically at this moment. I have heard Minister after Minister asking in exaggerated tones of surprise, whether anybody would ever think that we would ever succumb to the totalitarian idea of restraining people, and yet here in the last fortnight we have decided that we must give the Government power to make it a criminal offence for people to leave this country. They are leaving it so fast, in such numbers, that we have now got to the point where the Government must have power to make it a criminal offence in order to keep them at home. What are we going to keep them at home for? Once we tell the people: “We will not allow you to go abroad to get better conditions,” are we going to say to them: “We will make you work here on whatever conditions we like to establish”? I do not know what the Minister's view of all that is going to be. We think of the flight from the country itself, that old heritage that we had in our time from the days of the famine, that flight which was stopped and which started again in the time of the present Government and now has got to the point where, as a Deputy put it the other day, we have got to make the country a prison house from which those who go out go on a ticket-of-leave. We have got to the point where there is malnutrition where tuberculosis has become one of the social scandals of the country and we have got to the point revealed by  the Housing of the Working Classes Report.
As against all that there is a new policy that is accepted pretty nearly everywhere except in this country— the policy that I mentioned in the last debate, as put in very picturesque language by Mr. Vinson, who was then in charge of War Economy and has more recently become Secretary of State in America. He told the American people that they were in what he called the happy predicament that they had to live on a 50 per cent. higher standard of living than they ever had to before and, if they did not achieve that ideal, then they were down and out, but if they did achieve that ideal, not merely were they going to be on easy terms but they would help the rest of the world to be on easy terms.
There is that mood abraod of trying out this new theory, developing from Lord Keynes' theory with regard to unemployment, that unemployment in the main was due to what he called deficiency of demand, and that if you gave people purchasing power with which to make bigger demands, particularly if you put people into productive industries and gave them bigger purchasing power, they demanded and demanded more from their fellows in productive industry, and you got ultimately to a higher standard of living. It is in a sense only a swerve from the old-time theories of production and expansion which depended on a growing population. If you had more mouths brought into the world, afterwards to be fed, then you had an expanding area. But, once populations began to decline or got on the downgrade, it was thought that system had lost its principle, and, therefore, had lost its power. Then it was suddenly realised that possibly you did not require more mouths to feed if there was not enough going into the mouths that were already there, and that if you could increase the amount that you gave to those who were already in existence, then you could get to the same position as if you had suddenly multiplied your population by a big number.
That is the new theory, and on that  policy all countries are setting their house in order to go in for larger and larger measures of production. All countries except this. We have no plan revealed by any Minister in this country with regard to production. We have one plan that can really be called a plan, for rural electrification, and that was not prepared by the Government. We have, as I said, a statement of a problem in connection with housing. We had a Bill passed into law here with regard to drainage. We were told it is going to cost £7,000,000, and then suddenly the Parliamentary Secretary lobbed into the House and said, lest we might be afraid of this tremendous expenditure, that it was going to take 28 years to do, at the rate of £250,000 a year. But none of these—the statement of the problem about housing, the legislation about drainage—on which very little has been done yet—and the plan for rural electrification prepared by an outside body—none of these, except indirectly, is productive. Housing is not at all to be related to production. It is very, very remotely related, because you might say that if people were better housed there would be better work got out of them, but, of direct impact upon production, we have none, and no idea of a plan. What bewilders me more is that we have not even got any statement from the Minister indicating that there is proper appreciation of the fact that there are idle resources here, both in men and materials, that the only thing that is required to join those is this mysterious thing we call money, and that we also have plenty of that. We have all the three conditions making for new production in this country, and yet we have, certainly as far as I can make out, no appreciation from any member of the Government that these three things are there to be got into a decent connection from which we could get what we desire.
I have on other occasions—I am not going to go through the full details now—laboured this matter here. We had revealed last night, in a casual answer to a question, at a time when the war in England is being run on the basis of something less than 1½ per  cent. interest rate for money, and when we are tied up in that particular economy too, and when our banks are freely disposing of some of the resources they get here to the British for use in the war, at 1½ per cent., that notwithstanding all that, when people look for loans in this country, they still have the old medieval, antiquated rate of 4½, 4¼ or 5 per cent. And that in this country, where there never was as much money as there is at the moment. There is a dangerous amount of money in the country. But, apart from the sort of money that is coming into existence through emigrants' remittances—all that overflow here of the surplus purchasing power manufactured in England — apart from that, remember, we have good credits in the country. We have had them for years.
I have, on a number of occasions, drawn attention to the savings banks, the savings certificates and the trustee banks. In those funds there are £23,000,000 and the people who put their money into those things, certainly do not demand more and do not get more than 2 per cent. on the average of the whole three. Yet, we had the amazing situation in which a very eminent citizen in this country found it necessary to broadcast to the people of the country that those who were the propagandists for the Central Savings Fund had been told to stop any further propaganda, to remit all the references, that the Government did not want cheap money and that that situation is to last. When I ask about it, I am given a whole lot of medievalism about rates of interest and how you must think of the lender as well as thinking of the borrower. But the lender in these cases was quite satisfied to get 2 per cent. and, for some reason or another, the Government decided that they would stop down on that because they wanted to raise a 5 per cent. loan at the time and they did not want people to be shoving their money into even Government-sponsored matters which only brought them 2 per cent. as long as there was a good 5 per cent. investment in the loan the Government was going to issue. That seems to me the most  arrant nonsense, and I do not see how we could tolerate it at this stage.
If we are going to enter into new production, one of the things to be considered is how that production is going to be financed. There is plenty of money available in the country for the financing of production but apparently our Government the whole time decides that they would rather go to the owners of money, the people who have got a fair amount of money in peculiar ways in the last four or five years. They are going to throw open to those people loans at 4 or 5 per cent., rather than get, by a very simple change, the full use of this £23,000,000 which is invested in British funds.
I suggest that the Government must pay attention to new production and they cannot do anything about new production unless they pay attention to the financing of the new production. I suggest that they have at hand abundant resources to provide plenty of new production in this country at an easy rate. The background of that is that there is no use in producing more agricultural goods than we can consume ourselves, even under a system of expansion, unless we know we are going to export them, unless we know the terms on which we can export them, and unless we know whether we are going to be paid in goods for the things we export. Up to date, however, no arrangement has been made. I understood that schemes had already been submitted to the Government along these lines, by outside bodies, which show it would pay the Government to give money at a very low rate of interest to the farmers, and even to offer to remit all interest to any farmers who take money from them if they guarantee a certain percentage increase in their production. Although I understand the Government has not been able to find any flaw in the argument, for some reason or other the Government has not found it possible to adopt the scheme.
Although I have no personal experience of the matter myself, one can see that the development of farm buildings, of everything except the land, stopped about 70 years ago, and there  has been no real improvement in the matters that are affecting the land for the last 70 or 80 years. It is certainly a fact that there has been very little increase in the volume of production from the land in the last 60 years. It rose for a bit and then the present Minister for Agriculture sent it back again. The volume of production in agriculture has been declining even during the war, but there is plenty of slack to be gathered in and plenty of opportunities. People are anxious and willing to work and there are many people to buy the products of the land, if they can obtain the purchasing power. The Government has apparently resigned itself to not doing anything in the way of production, to enable people to stay in this country and apparently is going to rely on the new powers to stop people from leaving by making it a criminal offence and adopting the totalitarian systems of countries they so often despise. That is the extremity to which we have been brought.
I suggest to the Government that, without any frantic rejoinders about doing this country harm or causing mischief, what I have been speaking of for the last couple of days shows a problem that requires examination, that requires to be taken quietly, a problem on which detailed statistics can be produced, and which can be laid bare. The people are entitled to have their Ministers tell them what the problem is, and, when they have studied it fairly and squarely, and revealed the seriousness of the situation, they should be able to tell them what they are going to do to find a solution. People are getting tired of this method of treating a serious debate by frantically endeavouring to talk about malice and mischief. People are getting tired of that system of meeting the very definite problems ahead of us. I would ask the present Minister for Finance, newly come to his post, to take the problem seriously. It comes back in the end to the question as to how we manipulate whatever resources we have in the country in the way of production. As I see it, the problem departs from the Minister for Finance at one point and goes to  other Ministers, who are in touch with those with whom we must do our trade, to find out the terms on which we can do that trade. Anyone would think, from the policy we have, that we have nothing to do but simply give away goods to the extent of £3,000,000, over four years, more than we have got in, and then we are amassing £15,000,000 that has to be filled in some way or another.
An Ceann Comhairle Frank Fahy
An Ceann Comhairle: I would like to remind the House that only the Second Stage of this Bill is ever discussed, so if Deputies want to intervene, they should intervene on this stage.
Mr. Cogan Mr. Cogan
Mr. Cogan: It is my intention on this Bill, with you permission, to say a few words on the weather. It is a sobering thought that, even in an Irish Republic, the sun does not always shine. During the past few months of what is supposed to be the summer, we have had the heaviest rainfall probably for a great number of years. This raises a very serious problem in regard to our food and fuel supplies. We know that, in our turf bogs, men are struggling, nearly submerged in water, to produce turf. The position may not be as bad in all counties as it is in the constituency I represent, but I can say that, in the fairly extensive bogs of County Wicklow, practically no turf has been saved so far and the prospects, with the year now far advanced, are that very little will be saved.
The question naturally arises as to what provision the Government is making to meet that alarming situation. I do not know exactly what our fuel resources are at present, but I know that they must have been very much reduced in the last couple of years and that we must be dependent on a big output during the present year—which, I am afraid, will not be available. We can easily understand the problem that arises in all the counties that depend on turf and the problem that arises in the cities, too, in that respect. If we have a big falling off in turf production this year, the only remedies are to increase our imports of coal by every possible means and make a big effort to increase our output of firewood. It is  the duty of the Government to go to whatever extremes may be necessary to bring in a larger quantity of coal, but if the prospects are not good in that direction, then urgent and immediate measures should be adopted to increase the output of firewood, by the felling of suitable timber and by the setting up of plant, without delay, for its conversion into firewood. Under no circumstances should we leave our people to endure the hardships which would inevitably ensue from a shortage of fuel.
What is true in regard to fuel is true, to a certain extent, in regard to food supplies. Those of us old enough to remember 1930 will remember the conditions that prevailed during the harvest of that year. It was an abnormally wet summer and the corn crop was beaten to the ground, the reapers and binders were bogged in the fields and the common mowers which had to be substituted were also bogged down. Even the men with the scythes, who had to be called in, were bogged in the mud, in trying to reap the harvest. Every encouragement that can be given to the saving of the harvest should be given now.
This raises a question as to what assurance the farmer is being given that, after having struggled with the harvest and saved it, he will not be robbed in regard to price.
An Ceann Comhairle Frank Fahy
An Ceann Comhairle: The Deputy's remarks might be considered as being outside the scope of this Bill, but it being in the nature, on this occasion, as it has been on others, of an Adjournment debate, a certain latitude is allowed. However, the matters the Deputy is now discussing are obviously matters for the Minister for Agriculture and were discussed on that Minister's Vote. If anybody tried to contend that whatever was raised on the Estimates was legitimate on this Bill, the position would be an utterly impossible one.
Mr. Cogan Mr. Cogan
Mr. Cogan: A very abnormal position has arisen, particularly owing to the weather. The saving of the harvest is infinitely cheaper in a dry year than in a wet year. Costs are increased owing to the necessity, perhaps,  of employing additional labour and spending a longer period in grappling with the harvest. For that reason, I think that some attempt, at least, should be made by the Government to ensure that there would not be exploitation of the producers by those who are not engaged in production. However, I shall not deal further with that matter.
Deputy McGilligan spoke at some length about the difficulties in regard to exports in the next few years. I think that in that connection it is on the farmers that the Government will have to rely to a great extent. I think that the farmer is capable of meeting the problem of expanding production by £15,000,000 a year, which Deputy McGilligan says is necessary. Here again, however, it is essential that the farmer's costs should be reduced, mainly by providing him with capital at the lowest possible rate of interest, so as to enable him to get proper farm buildings, equipment, and so on, and all the various improvements which are necessary to enable him to carry on. If that is done by the Government, I have no doubt that the agricultural community can expand production to such an extent as to make up our trade balance.
In this connection also, it is essential that in regard to exports and imports we should not have a sort of economic war with other nations. Our export policy, or our external relations policy, should not be based on unfriendly relations, or a sort of economic war, with other nations. We should try to base our economy on the needs of other nations. We should try to meet the representatives of Great Britain and make a long-term trade policy with them so as to ensure that our export trade will not interfere with their economy, and their export trade will not interfere with our economy. We should try to have a mutual exchange of goods which will be of benefit to both countries. Having achieved a policy of that kind with Great Britain, I think we could then achieve a similar policy with other nations. There are other countries than Great Britain which would require some of our produce.  South America, for instance, has always required to import seed potatoes, and other commodities, which we can produce. These countries also might be able to send us things that we require, and I think that we might be able to come to some arrangement with those countries. That is the only basis of an external trade—a basis that will be mutually beneficial to both exports and imports.
General Mulcahy General Mulcahy
General Mulcahy: I want to confine myself to a net matter, but a very important one. When we were dealing with the Central Fund Bill, on the 14th March last, I drew the attention of the then Minister for Finance to certain matters, particularly in regard to the financing of housing and some aspects of the report on housing conditions in the City of Dublin, made by the Banking Commission, on the one hand, and, on the other hand, I drew his attention to a report which was prepared after examination, by some of the principal officers of the Local Government Department, assisted by a principal officer of the Department of Finance. After a discussion on some of the details in connection with the actual matters that had taken place there, I stepped aside into a most detached atmosphere and asked to have examined one particular point, and from one particular point alone, which was the purely arithmetical aspect of it. In column 1366 of the Official Debates, I asked the Minister to examine the case.
An Ceann Comhairle Frank Fahy
An Ceann Comhairle: Would the Deputy, please, give the volume?
General Mulcahy General Mulcahy
General Mulcahy: It is column 1366, of volume 96, 14th March, 1945. I asked the Minister what effect, so far as the banking system was concerned, the loan of £1,000,000 by private persons to the State or to local authorities, for the purposes of housing, would have, where one-third of the money is spent on imported materials, and what, on the other hand, would be the effect if the banks, under the banking system, themselves lent £1,000,000 for the same purpose, on the assumption that the money was being used for housing purposes and that in the one case one-third of the money subscribed  was spent on the import of materials required for housing from abroad. I asked the Minister if he would examine the figures, but he threw some doubt on the figures I gave him, as showing what would happen. I then asked him if he would examine the case further, and he said that he would. Then, later on, in column 1638, I said: “Therefore, that requires to be examined and I ask the Minister to examine the case”. And Mr. O Ceallaigh, who was the then Minister for Finance, answered: “I will”. Later on, I was asked was I pressing the amendment, and I said that I was —in order to get a reply, at any rate— and the amendment that I had put was defeated. The amendment dealt with the rate of interest on money when borrowed, but Mr. O Ceallaigh then repeated what he had already said. He said:—
“I will have examined the supposed facts which the Deputy has given us.”
Now, I think it is a very regrettable thing that we have not had the undertaking given by the Minister, that the matter would be examined, carried out. In the first place, I think it is one of the main functions of the Department of Finance to keep us right in connection with all of those matters that affect in any way the financing of Public Works, and I feel that the Department of Finance, for one reason or another, are deliberately endeavouring to avoid carrying out the examination that I suggested was necessary, and are deliberately denying to this House their services in the matter of that examination. However, I do not desire to press that unnecessarily, because I want, because of the importance and the urgency of the matter, to keep the argument I am putting to the Minister in a detached and isolated atmosphere. I do not even want to examine the effects in various ways. I say that, when the public lend £1,000,000 to the Government and one-third of that is exported for the import of goods, a certain thing takes place affecting the balance sheets and the income of the banking system. When the banks lend money, there is a different effect. I want to  be assisted in learning whether I and those who argue on the same lines are right in their conclusions. It is important that that should be fixed. For that reason, I again put the matter to the Minister and ask his co-operation in having the facts examined.
I say that, when £1,000,000 is lent by the public to the Government and one-third of that is exported, the following things happen: that there is withdrawn from the banking system, in order to pay for the exports, £333,333 of British Government securities. Those are handed over to some other banking system or some other persons to pay for those exports. While they held those securities, the banking system here was earning on them an average rate of 2 per cent. That is my assumption. Therefore, when it parted with that amount of securities, the banking system lost an income of £6,666 a year. They lost that sum in respect of that side of the transaction. As well as that, that amount of money went out of circulation here. According to the report of the Banking Commission, money in actual circulation here is held in three ways, the proportions being very constant: one-sixth of the money is held in cash, one-sixth is held on current account in the banks and four-sixths is held in deposit account. When one-sixth of that sum of £333,333 went out of circulation here, £55,555 in cash was withdrawn from circulation and it costs the banks 2 per cent. to keep cash in circulation. Therefore, when that cash was withdrawn in respect of that part of the transaction, the banks saved at the rate of £1,111 per year. The money drawn off current account did not affect in any way the profits of the banks, but £222,232 was taken off deposit. The banks, which were paying 1 per cent. on these deposits, saved £2,222, so that the net effect on banking income, as a result of £1,000,000 being lent by the public to the Government, one-third of which went abroad for payment of imports, was that they had, on one side, on parting with securities to pay for the goods, a loss of £6,666 a year and that they were saved by a reduction of the  cash in circulation and by a reduction of the amount of money on deposit a sum of £3,333, so that their net loss over the whole of that transaction was a figure of £3,333.
If, on the other hand, the loan was made by the banks to the Government or to the Dublin Corporation, in respect of the payment for goods brought in from abroad and the consequent surrender of securities by the banks there would be a loss of £6,666 in the same way as there was when the public lent the money. So far as the banks were concerned, there was then £666,666 of new money in circulation and that new money in circulation fell under the three heads I mentioned: one-sixth was held in extra cash in the country; one-sixth was represented by extra money on current account and four-sixths by extra deposits in the banks. To maintain the additional cash to the extent of £111,111 in circulation cost the banks 2 per cent. That comes off their £2,222. The additional deposits, £444,444, cost them 1 per cent., which was paid to the people who held those deposits. They paid out annually £4,444, so that the banks lost annually, due to this transaction, £6,666 in respect of the securities parted with for the payment of imports, £2,222 to keep the additional cash in circulation and £4,444 for the additional deposits brought into existence, the total loss being £13,332.
Dáil Éireann 97 Appropriation Bill, 1945—Second Stage (Resumed).