Thursday, 12 March 1942
Dáil Éireann Debate
Leave granted to introduce a Bill entitled an Act to apply certain sums out of the Central Fund to the service of the years ending on the thirty-first day of March, one thousand nine hundred and forty-two, and one thousand nine hundred and forty-three. —(Minister for Finance.)
Mr. O Ceallaigh: I move that the Bill be now read a Second Time. The Central Fund Bill is a routine feature of our financial system, and is required to implement the Ways and Means Resolutions just passed by Dáil Eireann. The present Bill is designed to authorise the issue from the Central  Fund of (a) the total amount of those supplementary and additional grants for the present financial year which were not covered by the Appropriation Act of 1941, and (b) the amount of the Vote on Account for the coming financial year. It also makes provision for borrowing by the Minister for Finance and for the issue by him of such securities as he thinks fit.
In the current financial year, 26 Supplementary and Additional Estimates, totalling £3,010,163, were presented to Dáil Eireann and passed. Six of these Estimates, totalling £1,458,225, were covered by the Appropriation Act, 1941, and, accordingly, Section 1 of the present Bill authorises the issue of the balance of £1,551,938 from the Central Fund.
The total of the Estimates for the Supply Services for 1942-43 is £39,112,301, of which £13,445,000 has been voted on account. Section 2 of the Bill authorises the issue from the Central Fund of this latter amount. The issue of the balance will be covered by the Appropriation Bill, which will be introduced after all the Estimates have been considered by the Dáil.
Sub-section (1) of this section empowers the Minister for Finance to borrow up to £14,996,938, which is the sum of the amounts mentioned in Sections 1 and 2, and to issue any such securities as he thinks fit for the purpose of such borrowing. It also provides that the Bank of Ireland may advance to the Minister any sum or sums not exceeding in the whole £14,996,938.
at the end of sub-section (1) to add the words “provided, however, that in the case of any sum or sums advanced  to the Minister for Finance by the Bank of Ireland or any other bank or banks the rate of interest shall not exceed one and one-eighth per cent., and in the case of any sum or sums otherwise borrowed by the Minister for Finance, the rate of interest paid shall not exceed three per cent.”
When the Minister for Finance announced to the House on 30th October last that he proposed to invite subscriptions to a loan of £8,000,000 in stock, to be issued at £99 per cent., and carrying interest at the rate of 3¼ per cent. per annum, payable half-yearly and redeemable from 1956 to 1961, I criticised the rate of 3¼ per cent., and the Minister thought I was criticising that rate entirely out of colossal ignorance of these matters. Whether that is so or not, I think we require some explanation as to why we should pay more for money than either the people of England pay for money in Great Britain, or our Irish banks get in Great Britain for the cash they have invested there.
A certain number of questions arise. The Minister indicated that there was no proper comparison to be made between the loan to be opened then and the loans offered on the market of England by the British Government at 2½ per cent. for the war period. The position in Great Britain is that they borrowed a very large sum of money and are likely to be borrowing more. Half the amount of money they are borrowing for the general conduct of the war and the carrying on of Government is borrowed on short term and they are paying slightly in excess of 1 per cent. for it. The other half of the money is being raised through medium-term securities to the public and is being borrowed by the British Government at from 2½ to 3.175 per cent., and the Defence Bonds most current at present are the 2½ per cent. National War Bonds repayable in 1949-51 which are being issued at £100 and the 3 per cent. Defence Bonds which are repayable ten years from the date of purchase at 101 per cent. and of which nobody can hold more than £1,000 worth.
 The object of the second amendment is to restrict the Minister in his borrowings in this way: that in so far as he is borrowing from the public, he will not pay more than 3 per cent., and, in so far as he is borrowing from the banks on short terms, will not pay more than 1? per cent. The general question which has to be asked is: why should we pay higher rates for money required by our Government than the British are paying for the money they are getting in such huge amounts and which is to be spent in such an unproductive way? I cannot believe that our credit is less and I cannot believe that, if in present circumstances the British people can lend huge amounts to their Government, the monetary situation here is not such that our people should be able to lend to the Government here in the same way at not more than 3 per cent.
If our Irish banks are lending some of the enormous additional sums they have accumulated in Great Britain at a little over 1 per cent. or 1? per cent., then I do not think we ought to be paying the banks here, for such moneys as they give the Government on short-term loans, more than they are getting in Great Britain. It not only affects our present situation in the emergency but our future position as well. I think it is more proper to raise this matter on the Central Fund Bill than to be going into the intricacies of these things when discussing the structure of, say, a central bank.
The Banking Commission, in referring to the advisability and advantage of this country keeping its interest rates closely in touch with the rates in Great Britain, say on page 130, paragraph 209, in its main report:—
“The maintenance or improvement of the standard of comfort of the Free State population will entail the continuance of a large volume of external trade, and the link with sterling seems most appropriate as a currency arrangement designed to facilitate it.”
“The monetary objective agreed upon in Ottawa to cope with the difficulties of the existing situation included the pursuit of a policy of cheap and plentiful credits, of a recovery in prices and of excluding undue exchange fluctuations, with an ultimate objective of general stabilisation.... Through the attachment to sterling the maintenance of relatively favourable interest rates in the Free State should be facilitated. The London money market as the most important money market of the world is likely to be characterised by a continuation of relatively low interest rates as compared with other markets.”
“As the Free State, like the United Kingdom, is a creditor country, the balance of probabilities, in the absence of special disturbing factors, is that interest rates will approximate to the same level and follow the same course in the two countries. Considering the developments over the last 100 years, the London market, which, by reason of its peculiar advantages as a central money market, has attracted liquid funds from a wide area, has naturally enjoyed interest rates among the lowest in the world.”
I do not think that the disturbing factors which manifested themselves in the situation since that was written would be factors that would prejudice the credit of this country in the rates at which the Government would have to borrow, or the rates at which Great Britain would have to borrow. Again, it says:—
“In so far as interest rates in the Free State follow the rates in Great Britain, the likelihood is that they will be among the lowest in the world. Given an orderly continuance of business and the maintenance of sound financial conditions in the Free State, there should be no  reason to contemplate rates in the Free State rising above the British level.... The Commission regards it as natural that interest rates in the Free State should follow the movement of rates on the British market, and is of the opinion that such similarity of rates will, in the future, as in the past, be to the advantage of the Free State. The fact that the Irish banks' rates follow very closely the rates of similar institutions on the British market does not indicate any subservience to foreign financial policy, but is a natural development arising out of similar basic conditions. It is not to be expected that the establishment of a central bank in the Free State, quoting a discount rate and interest rates for advances, would involve any departure from this close association, at least so long as the financial and economic position of the Free State remained substantially unimpaired.”
Since September, 1939, the nine principal Irish banks have increased their holdings in British Government investments by £27,569,000, and have increased their investments here by £2,751,000. The circumstances in which the investments in Great Britain have been increased are perfectly understandable. They are the result of our export trade, but what I want to get an answer to is: why should the banks here get a higher rate of interest for the amount of money they have added to their Irish Government investments than they are getting from the British Government for what they have invested there?
A number of the leading financiers and economists in Great Britain have been directing their attention to the very important question of borrowing for the war, and how that borrowing is going to be paid for. They have drawn attention to the fact that the financial difficulties created in Great Britain after the last war arose from the fact that they had borrowed large sums of money at a high rate of interest, and had to repay this money at a time when the price level had fallen very substantially compared with the price level during the war, and during the period when the money was borrowed.
 For instance, it is pointed out that in 1916 wholesale prices were 60 per cent. above 1913; in 1917, 105 per cent.; in 1918, 135 per cent., and in 1919 they were 145 per cent. But, later on, when the bulk of this money was being repaid, the price level was only 50 per cent. above the pre-war figure. The people whose income was at a price level of say 156 were paying for money that had been borrowed in 1918 when the price level was 135 above the 1913 figure. Looking forward to the future, they seem to have decided that after this war the price level is not going to come down: that is, they are going to maintain the price level. One reason for that is that somebody has figured it out that it is going to cost Great Britain £10,000,000,000 to fight a four-year war; that they are getting that sum at an average of 2 per cent.; that they are getting it on the two legs I spoke of: half at 1? per cent. from the banks and the rest at round about 3 per cent. from the general public. When certain allowances are made for the payment of income-tax on dividends, they figure it out that it will take something like £147,000,000 to pay off that debt yearly, but that if the price level remains at, say, about one-sixth above the 1936 level, that automatically, at the 1936 level, income-tax at £150,000,000 more would come in, and that therefore the very fact that the price level remained at about one-sixth above 1936 level would mean that, at the 1936 rate of income-tax, they would be able to pay for the cost of this war. In considering their capacity to pay for the war, as well as the question of the price level, some of them have made up their minds that possibly even more important than the price level is the interest level. To the question: can they continue to finance the war at an average rate of 2 per cent., their answer is “Yes”. They ask what is going to happen after the war.
Are they going to be able to keep the interest level down to what it was? They say: So far as the money they borrowed from the public is concerned, since 1932 the public in Great Britain has been accustomed to a low rate of interest and there is no reason at all why that should not continue.
“It is true that the securities being issued in this war are of comparatively short date and it may be thought desirable to convert them into longer term or even completely funded issues. But if the right moment is chosen, it ought to be possible to do this without paying much more than 3 per cent.”
So they are deciding to continue to finance this war largely on the War Bonds issued to the people and a restricted issue of 3 per cent. Bonds, together with the very large amount of money they are getting from the banks. They are saying that they intend to keep the interest rates as they are, at 2½ per cent. or 3 per cent., and say they can bridge the war period without paying any higher interest. There is a question then of what they are to do with the large amount of money which has been provided by the banks at a rate of approximately 1? per cent. The same writer says that “the future of the other half is more questionable.” He maintains that it is at least as big in size as the amount of money they have got from the public. As a matter of fact, the balance sheet issued on the 31st December, 1941, for the Westminster Bank Limited shows that that bank holds Treasury deposit receipts to the extent of £109,500,000. The writer in the Economist goes on to say:—
“The future of the other half is more questionable. There are three main categories of holders of the floating debt. The first is Government Departments and Treasury Funds: no question of refusing to renew their holding or to accept a low rate of interest arises in their case. The second is overseas Governments and Central Banks: in their case too the difficulties are not insuperable... There remain the holdings of the banks. The Joint Stock Banks will, no doubt, be very unwilling to see a substantial proportion of their assets permanently invested in loans to the Government  at 1 or 1? per cent. They will urge that it is contrary to their traditions either to lend so much to one borrower or to put out so large a fraction of their resources at so low a rate. These arguments should, however be resisted. Commercial banking is changing its nature—not only in Great Britain and not only since the outbreak of the war. Traditionally, a bank was an institution which borrowed the savings of the community and lent them at short-term to commerce and industry. But nowadays the deposits of the banks represent, not the public's savings but its current cash. And a long-term tendency has exhibited itself for the demand for bank credit to decline. Industry and commerce, in so far as they are not self financing, increasingly prefer to raise their finance by methods other than the short-term bank advance. A bank is to an increasing extent becoming an institution which holds the current cash of the public and lends it to the Government. The Joint Stock Banks are approaching the state from which the Bank of England started: their main liability is the circulating medium of the public and their main asset is a fixed loan to the Treasury. That being so, the time is approaching when a recasting of the traditional structure of interest rates will be necessary.
“If it is argued that the rate of interest paid by the Treasury to the banks should be increased, because otherwise the banks will not be able to afford the costs that the holding of deposits involves, that amounts to a claim that the State should subsidise the depositor. It would be far more reasonable to require him to pay the cost of the services he enjoys. There may possibly be a case for funding part of the huge mass of floating debt that the banks will hold at the end of the war—that is, for converting it to longer term paper and avoiding the necessity for renewal two or four times a year. But there is no visible necessity for raising the rate of interest that is payable on it.”
 It seems clear that, as far as the Economist is concerned, and as far as bankers and administrators generally are facing both the present position and the future in Great Britain, they are determined that they can run the war on interest rates of 2½ per cent. and 3 per cent. as far as ordinary people are concerned and 1? per cent. or even less than that as far as money they get from the banks is concerned. In facing the future, they are relying, I suppose, on the experience after the last war, in regard to the new money that was created during the last war and could not be withdrawn from circulation. I think there was something like £1,200,000,000 additional currency issued during the last war, and they found that they could withdraw only 2/10½d. out of every £1. The new money issued during the present war is not likely to be required, therefore there is no likelihood of any great difficulty in converting the short-term loans that the banks have issued to the British Government.
There is the determination that they are not going to be crushed economically by the task of paying for the present war which, in four years, they consider will run to the colossal figure of £10,000,000,000. That shows that a definite financial policy is being pursued there, on the part of a nation that is engaged in a gigantic struggle and suffering enormous losses. We are shouldering a very considerable burden here, and I do not think that even the Minister or his Party, for all the assertions in his speech to-night, thinks that we are getting value from it in a way that has consolidated the real roots from which our people's economy can and will grow in this world and maintain them in the way we would all like to see.
In these circumstances, my complaint with the Minister's rate of 3¼ per cent. was that when he was fixing a rate of 3¼ per cent. for his loan in October last, it was unnecessarily throwing away £20,000 a year. We had to borrow last year and it is likely we may have to borrow this year. If the emergency continues, it is likely we will have to borrow next year. Even though we are borrowing, I think our  credit will be able to keep abreast with the credit of the British Government or any Government engaged in this disastrous war. I do not think we should be asked to pay for the money that we are borrowing, from the banks or from private people, more than the British Government is asked to pay by its people and its banks—more than they seem to be promised after the war, or than our banks, in handling the money that comes into their hands in Great Britain, get from the British Government, to whom I suppose a very large part of that additional £27,000,000 that has been invested in British Government securities between September, 1939, and the 31st December, 1941, would find its way.
It is because of these considerations, and because I think these things require to be discussed and that we require to know what exactly we are doing and why we are doing it, that I propose to move, on the Committee Stage of this Bill, the amendments I have indicated.
Mr. O Ceallaigh: Far from objecting to Deputy Mulcahy's criticism of this loan or of any other loan, I must say I welcome it. There has never been a discussion before at any time when a loan was announced in the Dáil. The Minister just made his announcement and usually the Opposition stood up and wished the loan success and that was all. Deputy Mulcahy took an unusual course.
Mr. O Ceallaigh: I did not think the Deputy's remarks on that occasion were helpful. But, at a time like this, and on a Bill of this kind, remarks or criticisms from Deputy Mulcahy or anybody else about our loans and rates of interest are welcome. I welcome them. The remarks offered now by Deputy Mulcahy are certainly more helpful than anything else to me and would assist me in any efforts I might  have again to make to get loans at what I hope would be a reasonable rate from the bankers. I do not at all object, but it occurs to me that there is a time and place for everything and I thought that was not the time for that type of speech that Deputy Mulcahy made. The major part of Deputy Mulcahy's speech this evening dealt with the position in England during war conditions. We cannot compare the position in England during the war with our position. Undoubtedly, we are affected by the war and we are under heavy additional expenditure by reason of the war that is raging all around us and that prevents us leading a normal life. But the banks in England are now controlled almost in their every act by the Government. There is no obvious law, no power in law that the British Government have, but they have the power in fact and are using it.
Mr. O Ceallaigh: War is war and the British are fighting with their backs to the wall. Never in their history were they in such a dangerous position, and where would the bankers and the banks and their money be if they did not throw all they have into the fight? They will not haggle over 1 per cent. or 1/8 per cent. or any other per cent. They will act like sensible businessmen, calculate what they want and how much it is going to cost them. They look to the future, as Deputy Mulcahy indicated, and they are calculating how they will be able to bear the enormous, the colossal, debt that will arise out of the war. There is no knowing yet what that sum will amount to. At the moment it has reached a colossal figure, a figure that gets beyond the imagination, thousands and thousands of millions. There is no comparison between the colossal figures they are dealing with and the figures that we have to deal with.
Mr. O Ceallaigh: No, I do not think so. If I were in business and if I went to a wholesale shop and asked for 100 gross of shoes or collars or pipes— anything you like—the manufacturer would be able to quote me a certain price for that quantity. But if I were to ask for 5,000 or 10,000, I would probably be quoted a lower figure.
Mr. O Ceallaigh: The banks in England are being asked for thousands of millions. They know their future is wrapped up in the outcome of the war, and what is more, they know that the Government traditionally have power over the Bank of England. The Bank of England has no power over other banks, great or small, but it passes the word around. That is the tradition in England. The Chancellor of the Exchequer would meet the Governor of the Bank of England, tell him what he wanted, and they discussed the matter in an amicable way and got what they wanted. That was the custom, but now the Government direct; they direct the banks every week or every month to hand over their deposits and there is no further question about it. It is the custom here for the Minister to ask the banks to meet him and to discuss in a business way getting a loan. They are now under war conditions in England and the Chancellor of the Exchequer says to the banks: “We want your deposits.”
Mr. O Ceallaigh: We are not at war, first of all, and secondly, we have never reached that position yet. We may be obliged to do that. God only knows before the end of the emergency what we will be obliged to do.
Mr. O Ceallaigh: We have introduced a Central Bank Bill that will bring a certain measure of control, and I hope the Deputy will help all he can  to put that Bill on the Statute Book and secure for us the control that we ask. That Bill, if passed into law, will put us in a very much stronger position than we are in now vis-á-vis the banks. Deputy Mulcahy suggests there is no reason in the world why we should pay any more to the Irish Banks for loans than the British are at present paying. In England they are at war; we are at peace. Secondly, it has always been the custom. It was the custom when the Free State was established in 1922, and during the term of office of the last Government, to pay 1 per cent. more than the rate quoted in the Bank of England. It was a very wrong custom so far as those who had to borrow were concerned, but that custom grew up here.
You can get large amounts more cheaply, but then it is not a question of what you can get them at: It is merely what the Government decides, and the banks think that is all right. It would be a very pleasant thing for us to be in the same position, and profitable as well as pleasant to be able to say: “There is our price, we want the money and we will take it, whether  willingly or unwillingly.” Then, another thing is that you pay more for long-term loans than for short-term loans.
Mr. O Ceallaigh: That is not altogether true, because this Oireachtas is the master, and what this Oireachtas decides will have to be adopted, and put into operation, by the banks as well as by everybody else. The Deputy has often said that we are not master financially; we are master financially as well as in every other way, when we want to use that power and when it is wise to use it, but we have got along, and since the Dáil was established we have not gone on jumping by revolutionary methods: we have gone on quietly, and I am sure the Deputy would not want us to go jumping by revolutionary methods.
Mr. O Ceallaigh: I certainly would be only too happy to be able to get our loans at a cheaper rate. Although there is no comparison between the £8,000,000 for which we have asked and the £8,000,000,000 that have to be raised in England, I should like to be able to get our loans at a cheaper rate—it would be a help to everybody—but I met the bankers many times before the last loan, as I did before the previous loan—the two loans that I had anything to do with—and they are hard bargainers. I was a pretty hard bargainer also, and I got the best terms I could. Deputy Mulcahy, in his opening remarks on the last day, said that I was paying 3½ per cent. That is not correct. It is what is in the Official Report, but it was probably a slip of the tongue.
Mr. O Ceallaigh: Yes, it is high enough, but I do not think the Deputy was quite happy in the way he raised the point. I should be glad if it could be a lower figure, and if the House is of opinion that the Minister for Finance has paid too high a price, then an expression of that opinion would not be unhelpful.
(1) The Minister for Finance may borrow from any person and the Bank of Ireland may advance to the Minister for Finance any sum or sums not exceeding in the whole Fourteen Million Nine Hundred and Ninety-six Thousand Nine Hundred and Thirty-eight Pounds and for the purpose of such borrowing the Minister for Finance may create and issue any securities bearing such rate of interest, and subject to such conditions as to repayment, redemption or otherwise as he thinks fit.
I quite understand that it has been decided to finish the business this evening so that the House will not have to sit next week, and that we have agreed not to deal with any matter in an opposition way, since no vote can be taken at this hour, but I think it is a  pity that we are dealing with this particular matter in such a way that we cannot ask the House to divide on it, because, as I understand the Minister's remarks, there is no reason in the world why we should pay more for our loans now than the British Government is paying, except some kind of tradition by which 1 per cent. has always been paid by a certain class of people, and the Minister suggests that the Government has been in that particular class.
General Mulcahy: Well, yes, but the reason I should like to divide the House on amendment No. 1 is that if the Bank of Ireland refused to give this money at the rate that we suggested was a proper rate to be given for the money, I think we should be able to go to other banks in the country.
To add at the end of sub-section (1) the words “Provided, however, that in the case of any sum or sums advanced to the Minister for Finance by the Bank of Ireland or any other bank or banks the rate of interest shall not exceed one and one-eighth per cent., and in the case of any sum or sums otherwise borrowed by the Minister for Finance, the rate of interest paid shall not exceed three per cent.”.
I am moving this amendment for the consideration of the House, and I should like to hear if anybody else in the House, besides the Minister, knows of any reason why, when Irish banks lend money to our Government, they should be paid more for it than when they lend it to the British Government. As I say, our banks have increased their investments in Government securities here in this country, between September, 1939 and the 31st December, 1941, by £2,751,000. They have increased their investments in British Government securities in the same time by £27,569,000. Now, I suppose it costs them as much to hold the liabilities that are reflected by the increased holdings in Government securities here as it costs them to hold the liabilities that are reflected by the increased investments under the British Government, and I, at any rate, do not see any reason why they should be paid more. I do not see any reason why ordinary people who are lending money to this Government should be paid more than 3 per cent., when we see a war of a colossal type being carried on, on the people's money, at an average rate of between 2 per cent. and 3 per cent. Surely, in the rate of money we are borrowing we are building up something here that is a developing thing, a strengthening thing, and something that is adding to the strength and capacity of our people to make more and more use of the resources of this country. It strikes me that to pay more for the money that our Government is borrowing here than the British Government is paying for the moneys they are borrowing in order to fight a war would suggest that we have  no belief that we are adding to, or even maintaining, the financial credit of this country.
Mr. Hickey: I should like to support the amendment and endorse what Deputy Mulcahy has said, but I should like to add that I think we should not be in this unfortunate position at all, of having to beg from the banks for social services here. I do not see why we should pay such high interest at all, particularly as the rate in England is so low as it is. I remember reading a statement recently by the Chairman of the Electricity Supply Board, where he pointed out that they were having to pay 5 per cent. on £13,000,000, and that if they had got that money at 3¼ per cent., the rate of interest on the loan that was floated recently, it would have meant a saving to them of £225,000 a year in interest alone. Having read some of the statements of the Banking Commission, where they told us there was £216,000,000 in the banks and no place where it could be invested, I think we might have a practical one and a reasonable one. While supporting 3½ per cent., or 3¼ per cent., I have my own very definite views as to what we should pay.
Mr. O Ceallaigh: One reason is that there are not securities here in which they could invest it. They are clamouring for Irish securities at present. There are millions in savings lying idle in the Irish banks and they cannot get investments.
Mr. O Ceallaigh: They are not all so very well covered, and the British themselves—as I see on looking over the list of their own loans of recent years—have paid frequently as much as we have paid for our loans. It is only since the war started that the unheard-of rates of interest of 1 per cent. and 1? per cent. have come into operation. I have here a list showing what the British are paying. It shows: Funding, 4 per cent., 1960 to 1990; 4 per cent. Consols; 3½ per cent. War; 3½ per cent. Conversion. These are recent loans, and our 3¼ per cent. loan bears, from the citizen's point of view —the yield of that loan—a good ratio towards British loans generally and the amount of interest they are paying. I have a list here of all our own loans, showing the yield, but it is a bit late to read it now, and there will be other opportunities.
Mr. O Ceallaigh: I will give the flat yield, not the yield to redemption. After all, people going to buy loans are interested in what they will get immediately and not what they may get 20 years hence when it comes to redemption. This is the list: 5 per cent. National Loan, £4 7s.; 4½ per cent. Third National Loan, £4 1s. 9d.; 3½ per cent. 4th National Loan, £3 6s. 6d.; 4 per cent. Conversion Loan, £3 14s.; 3¾ per cent. Agreement Loan, £3 10s. 6d.; 4 per cent. Exchequer Bonds, £3 14s. 3d.; 3¼ per cent. Security Loan—the last one— £3 5s. 8d. That is the flat yield—the one that anybody investing nowadays, particularly when rates and taxes are  so high, is especially interested in. I have others—Land Bonds and so on— but I will not go into them now. Though I would be happy if we could do better still, I maintain that, in the circumstances, and even comparing them with the British Loans, the 3¼ per cent. Loan was certainly not a bad investment for either the citizen or the State.
General Mulcahy: I am concerned with the present situation and, in present circumstances, with keeping a very close watch on the situation—to see where we are going. In the last war, the British found that, in order to meet the war debt, they had to pay more than the whole pre-war Budget put together. If we are put in that position, it may be a very difficult one, especially if we are to continue accumulating debts in this country. In the meantime, with the difficult economic situation we are likely to have, and the uncertainty of the economic position we are likely to see in the reasonable days of peace, it would be very disastrous if we found ourselves—simply through our rates of interest—saddled with a burden that was too much for us. While the price level has something to do with it, what seems to be regarded as of the greatest importance by those watching the financial position in Great Britain is the rate of interest. It would be a very great mistake on our part to depart from their rate of interest. If we depart from it in any way, or at any time, we should only do it when it has been fully and completely explained in this House.
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