Seanad Éireann - Volume 6 - 03 March, 1926

COINAGE BILL, 1926—SECOND STAGE.

Question proposed—“That the Bill be read a Second Time.”

Mr. YEATS: I wish to take this opportunity to thank the Minister for Finance for the speech which he made in the Dáil promising to get together a competent, artistic committee to advise on the designs of our coinage. The official designs of the Government, especially its designs in connection with postage stamps and coinage, may be described, I think, as the silent ambassadors of national taste. The Government has now taken the right step. They may not get a beautiful coinage; it is difficult to get beauty of any kind. At any rate, the Government [502] has the right ambition. Two days ago I had a letter from an exceedingly famous decorative artist, in which he described the postage stamps of this country as at once the humblest and ugliest in the world. At any rate, our coinage design will, I hope, be such that even the humblest citizen will be proud of it.

Mr. JAMESON: I have been looking through the Coinage Bill to see whether at this stage in the proceedings, I should criticise it or point to anything that would require improvement. As to the Bill itself, its aim to bring Free State coinage into the Free State, is, I think, one that every citizen of the Free State ought to be proud of and should assist and help. I do not think there could be any word said against it. As regards the Free State, the trouble we have at present is that its citizens are not proud enough of it, and it is very hard to rouse their enthusiasm. If our Finance Minister thinks he can rouse the enthusiasm of the Free State citizens by giving them a coinage which will be peculiarly a Free State coinage, I should say every bit of that is to the good.

When we come to look at this matter from the money point of view, and how money is to be made out of it for the State, there are one or two points on which I would like to question the Minister for Finance. I take it for granted that in Section 4—and in both sub-sections of that section—the words “made or issued” merely apply to coins illegally made or issued. It is a question of the proper legal method of saying that no one is to make imitation coinage; that is, I think, quite clear. In Section 5 I notice that the maximum amount for legal tender in the case of silver coins is 40/-, and in the case of bronze coins the maximum amount is one shilling. We continue the present system which is the one we are accustomed to working, and that should make the matter quite easy and clear.

In Section 6 we come up against the method by which it is proposed to bring the Free State coinage into circulation. In Section 6 power is taken to make an order. It reads:—“The Executive Council may by order prescribe a date after which silver coins”—and so on. [503] All these coins shall cease to be legal tender either generally or for any particular purpose.

Section 5 leaves all the token coinage just as it is now, with free interchange. Of course, it is quite evident to anybody that if our Free State coinage is to become the token coinage, the coinage which is in circulation at present, the British coinage, will have, somehow or other, to be disposed of. It is no use endeavouring to pour out token coinage into a country which is already filled up with another coinage. There one sees difficulties, because when an order is made everybody who has the ordinary British token coinage will somehow or other have to get rid of it. I take it that the Government will give reasonable time to every individual to get rid of the present coinage. Then, I think, they will all push this coinage into the banks. It will be legal tender to the banks and each individual will pay it into his account. The Post Office, too, will have lots of it and, I dare say, they will also put it into the banks. As far as I can learn, there is something like one and a half millions of token coinage in the Free State.

Of course, the process will be easy enough. Those holding the British coins will be gradually getting rid of them, passing them into the North of Ireland or over to the other side of the Channel. I dare say a good deal of that may go on, but if the Free State Government is going to make £650,000 out of the coinage, they must get their one and a half million coins into circulation. A day will undoubtedly come when this order will be made, and a good deal of the silver and copper coinage at present in circulation will be held up. I do not think that the Government are likely to make an order without giving time to the ordinary individual; but, nevertheless, I think the Bill ought to give some assurance that nobody in the Free State is going to be at a loss.

It is really a Government matter. The Government is going to make the money. We are anxious that it should make money, but we do not want it to make money at the expense of citizens of the Saorstát. There ought to be a [504] section in the Bill providing that no citizen or institution, banking or otherwise, in the Saorstát, will be affected. Before making the order effective, the Government should make some arrangement by which those who hold the ordinary token currency at present in circulation, can get rid of it at its face value. That can only be carried out by the British Government. The British Government is the only authority that can re-issue the present currency at its face value. The difficulty of the situation is that the British manufactured token coinage thinking they were going to make a pile of money out of it. They have not been able to do so. It has taken years to manufacture all the coins that were necessary, and in the meantime, silver has fallen considerably in value. I do not think that they made as much out of coins as they expected they would make.

Unless our Government can make arrangements with the Treasury to take over the present currency at its face value, any profit there lies in the transaction will fall away. I would like to hear from the Minister for Finance how he proposes to deal with the situation. It is necessary that citizens and financial institutions in the Saorstát should be protected from any loss. The Government will authorise the manufacturing of the new coinage, and they ought to make suitable provision for any losses that may be incurred. Supposing half a million of the token coinage is absorbed and one million is left, then, once the order is effective, we will have that million locked up, and we can get no interest on it. You cannot pay any debts with it; you can do nothing with it. If it is placed in the hands of the bank they will be paying interest to the depositors for the money. It will spoil the credit of the country to the extent of one million. The Bill ought to deal with that situation.

We ought to know the amount of liability the Government is taking on itself. I think it is perfectly right to make the coins better than those we have in circulation now. I am sure that we will have, as Senator Yeats points out, a coin of which we will all be proud. Before the Bill passes, I think we should have more information [505] on the subject of how the present token coinage of the country is to be got rid of. In making room for our new token coinage, which is expected, incidentally, to make money for the Government, I hope care will be taken that no citizens lose money on the transaction.

Section 10 points out: “Every order made by the Executive Council or the Minister under this Act, shall be published...” The Minister is not allowing much time for discussion of those orders. I suppose, in the matter of token coinage, he is probably right. I take it that nothing will be done that will call for a debate. At the same time, I would call attention to the fact that with the publication of the order the matter is concluded, and there is no time given for discussion. I dare say the Minister will be able to explain how the whole transaction will be carried out.

Mr. O'FARRELL: I would like to know from the Minister why it has been considered necessary to produce nickel coins instead of the present silver sixpenny and threepenny pieces. I think that changing these coins from silver to nickel will be unpopular. One result will be that the new sixpenny piece will be nearly as large as the present shilling and the threepenny piece will be almost as large as the present sixpenny piece. I think the threepenny piece is an unnecessary coin; it is really an unpopular coin, and is so small that it is easily lost. In making new coinage the Government might consider getting rid of that particular coin altogether. The five shilling piece was always considered a big, awkward piece of money, and I do not think it is being coined now. I certainly do not like that aspect of the case. I know there will be a disposition particularly among small farmers of the country to look with suspicion for a considerable time, upon those coins as depreciated metal. While that may not be the case with the commercial community, it will be the case in the country, and will cause a lot of hesitation on the part of small farmers who will think they are getting bad or inferior coins in nickel instead of in silver. The decision to issue bronze instead of copper coinage will also cause some dissatisfaction, [506] although there the depreciation is not so very much. In Sections 5 and 6 of the Bill it is foreshadowed that on a certain date the existing coinage will no longer be legal tender, for any purpose in the Free State. I take it that that will mean that Free State coin will not be legal tender across the Border, or in Great Britain, and that persons crossing the Border will have to provide themselves with gold or paper money if they want to do business. I would like to know from the Minister is it not possible to have some sort of reciprocal arrangement by which that inconvenience might be overcome?

I do not know whether it is possible, now that we are to have a coinage of our own, to have such a reciprocal arrangement, but without it there will be a good deal of inconvenience. I agree with Senator Yeats in his suggestion that when we get the new coinage an effort should be made to make it more artistic than what has been accomplished in regard to the humble postage stamp. The general opinion of people is that if those responsible had tried to make the face of the postage stamp ugly and inartistic, they could not be more successful than they have been.

Mr. GUINNESS: I wish to support this Bill and to make a suggestion to the Minister in connection with it, that possibly may be considered somewhat unorthodox. It is this: We are going to coin, approximately, one million pounds sterling in token coins. The Minister, in bringing forward this Bill in the Dáil, anticipated that there would be a profit of about £640,000 on that transaction. That profit was to be derived from the coinage of a certain amount of precious metal amalgamated with a certain amount of base metal, the proportion of base metal being about 75 per cent. to precious metal. The suggestion I make to the Minister is that, in the new coinage, there should be no silver and no precious metal whatsoever, but that it should be all nickel. If he did that, instead of £640,000 profit he would make a profit of from £800,000 to £900,000. It may be urged that that is not orthodox. There are many countries in Europe where silver coinage is not used.

[507] Take France: they have no precious metal in their coinage, gold having been withdrawn from circulation. When you come to think of it, all the coinage, with the exception of gold, whether in the form of coins or notes, are tokens. The Bank of England £5 note is, after all, only a piece of paper. Of course, you can go to the Bank of England and get five sovereigns for it, and, of course, sovereigns are not merely tokens. But it is not altogether unorthodox to say that it would be reasonable to consider the suggestion that instead of having silver, which is a precious metal, in our token coins, this coinage should be made of the harder and more wearable metal, nickel. It would be very easy by design to get the differentiation between the coins that is necessary in ordinary circulation. I regard this transaction as a money-making transaction for the Government, but there is no doubt that underlying the whole thing is the question whether the British Government will give the face value for the present currency of this country.

In reply to a question in the Dáil on the subject the Minister said that he hoped the British Government would do so and would honour their cheque. I hope so, too. And I think there are good reasons why they should do so. The same thing happened, not to the same amount, but the same exchange took place in regard to South Africa. Possibly the Minister has other cards in his pack that he may be able to bring into the game that he will undoubtedly have to play at some time or other with the British Treasury in regard to this matter. I beg to support the Bill.

MINISTER for FINANCE (Mr. Blythe): I appreciate the importance of what Senator Yeats said in having coins that will be creditable to the country. I realise, moreover, that in the case of coins it is necessary to be more careful than in the case of postage stamps, because it would be cheaper to change postage stamps. I hope to get the very best possible opinion that can be got, and I am prepared to see that whatever expense is necessary in getting suitable [508] designs is incurred, and I hope we will have coins that cannot be cavilled at. Senator Jameson is, I think, perhaps afraid that the banks might be left “holding the baby,” as the saying is. I say that would be entirely unfair, and there is not the slightest intention on the part of the Government to simply make an order stating that the existing British token coinage, after a certain date, will be no longer legal tender, and to let it go into the banks as it would go into the banks from the public, and then let the banks dispose of it. It will be, and must be, an obligation on the Government to see that the existing coinage is disposed of, and that the citizens are not at a loss. Whether any further provision should be made in the Bill, in that respect, is a matter that I would want to examine further. In the first place there will be negotiations with the British Treasury. I have already said in the Dáil that I could not see how they could, at this point, refuse to take back the coinage at its face value. It was issued here and it was accepted for a certain value. Now that the Free State has set up housekeeping on its own account, and now that the various funds that were joint funds are being apportioned, and that there is a general settlement between parties who were previously partners in a concern, I do not see how the British Government could refuse to take back these coins for the value for which they were issued.

As Senator Guinness said, and I do not wish to go further into it, even if we are met with that difficulty there are other means of disposing of the coins. I do not want to deal with the matter in detail at this stage. I feel that, perhaps, it is better not to go into alternatives. I hold, at any rate, that the British Government are morally bound to take back these coins for the value at which they were issued. I do not feel that it is expedient at the moment to discuss alternatives to that, but there are alternatives, and even although, perhaps, more time might have to be spent, and a little more trouble taken in getting rid of the coins otherwise, the matter can be arranged, and the full profit that I indicated when the Bill was before the Dáil can and will be [509] realised. As I have said, there is absolutely no intention, and it would be a thing that would be entirely unjust and immoral, simply to declare the coins no longer legal tender, and let them drift into the banks from the date notice was given, and the order became effective, and then let the banks deal with the problem whatever way they thought fit. That will not be done. I will consider whether in respect of that particular order we might not have it laid on the Table of the two Houses. Some of the other Orders will deal with very routine matters that, perhaps, are not so suitable for laying, but I would consider that matter. Senator O'Farrell deprecated the introduction of nickel coinage, and then said that the threepenny bit was an unpopular coin as it was so small and easily lost.

The reason why we are proposing to have nickel coinage at all is that we consider the present threepenny bit not a suitable coin. On the other hand, we do not want to have no coin between one penny and the sixpenny piece. We feel that the unpopularity of the present threepenny bit might be removed by making it larger, bigger and thicker, so that it would not be so easily lost and would be easier to handle, but that brought the threepenny bit too near to the sixpenny piece, and to prevent the possibility of mistake we thought the sixpence should be enlarged somewhat. To have kept the threepenny bit and the sixpenny bit silver, and to enlarge them both, would have eaten into the profits, and it would have meant a substantial figure, so we thought it was desirable to make the coin of nickel. Senator Guinness goes to the other extreme. In reality there is no reason why we should not issue the coinage in all nickel; even with silver it is not of its face value. There is no reason but feeling in the country against this change, and a change like this is always objectionable to some people. There are people who always think that somehow or other our coins would not be as good as the ones we are replacing, and we do not want to arouse their suspicion further by banishing silver coins. One of our reasons for getting coins with a greater percentage of silver is partly to assure people, and to be able [510] to point out definitely to them that here is a coin intrinsically better than the coin it is replacing. It would be always possible at a later stage to replace the coinage. Coins wear out, and it would be necessary to replace them. New coins have to be issued, and by that time people would be used to the idea of a Free State coinage. It would not be possible at the moment to arrange for reciprocal circulation. If we had our coins out, then the question of a reciprocal arrangement for the acceptance of coins both here, and the other side of the Border, and in England, could be entered into, but at present the British coins are in possession, and without having the power to declare them no longer legal tender we could not get our coins out, or it would be difficult. As a matter of fact, I think it is known that there is too much silver token coinage in the country at present. Without any action on our part I understand the banks are, to some extent, holding coins for which they have no use, and which they would be glad to get rid of, as big sums are not now required as they were, say, three years ago when there was more prosperity and more money in circulation, and there was surplus token coinage in the country. With that position it would not be possible to issue fresh coinage and get it into circulation without taking steps for declaring that at a certain date the British token coinage would be no longer legal tender here, and arranging for getting that out of the country at its face value.

Motion put and agreed to.