Thursday, 11 December 1952
Dáil Éireann Debate
Mr. Rooney: When progress was reported on this Estimate I was referring to the fact that the policy being pursued by the present Government was reducing the value of money, that the purchasing power of the pound was falling and that in consequence a difficulty was being experienced by people of limited incomes. It has become obvious to anybody studying events in this country, and I am quite sure to the Minister and the Government, that we have reached a stage where overtaxation is obvious when it is related to our national income.
There is a limit to which we can go in the matter of taxation and the fact that revenue has fallen below expectations proves that we have reached a stage of overtaxation in relation to the national income. The law of diminishing returns has begun to apply with the result that the expectations of the Minister are not being realised. I understand that the revenue from beer, spirits and tobacco has fallen something like £2,000,000 below the expected revenue. Similarly, taxation from other sources will fall below expectations when we have reached the stage of overtaxation.
Down along the line that policy is having its effect because consumption is being deliberately reduced by the policy of the Government. People could eat more butter at 2/8 per lb. than they can eat now at 3/10, similarly, they were able to eat more bread at 6½d. a loaf than they can now eat at 9½d. a loaf. Again wage earners whose incomes have become taxable find themselves being hunted from pillar to post in an effort to collect from them income-tax. Particularly at the present time, before Christmas, it is an undesirable practice and the Minister should take some steps to  alleviate the position for many people, particularly in view of the fact that there is a very evident recession in trade and many traders look forward at this time of the year to gaining some advantage from the Christmas festival.
Evidence also of the policy being pursued by the Government, to the detriment of the nation, are the increasing hordes of unemployed. We heard to-day, in reply to a question, that the number has increased by 14,000 since this time two years ago when the inter-Party Government were in control.
The adverse trade balance was referred to by the Minister on many occasions. He tried particularly to blame the inter-Party Government for the unbalance in our trade for the year 1951. We remember, however, that the present Government held office for more than six months of the year 1951 and apparently no effort was made to put that balance right if they thought it was wrong. It was well known to the Government how trade stood because a White Paper was prepared in August which was made available to the country and it contained there a forecast of what the figures were likely to be at the end of the year. However, no action was taken if it was considered necessary to correct that position.
Mr. Rooney: £62,000,000. If we examine the figures we will see that for  the last six months of the year, beginning July, the unbalance amounted to £49,500,000, and it is obvious—you can see the difference between the £62,000,000 and the £49,500,000—that the unbalance really occurred during the period of the year when the present Government held office.
The floating this year of the national loan of £20,000,000 has probably upset the finances of this country for a very long time. It will probably result in a succession of difficulties which will be met through the years whilst this loan is having its effects. It is probable, for instance, that the local authorities will find it necessary in future to pay more dearly for the money that will be made available to them in connection with the building of cottages for labourers in the rural areas and for the working classes in the cities and towns. Already it is having its effects upon people desiring to build their own houses. People who are regarded as white-collar workers with limited incomes, incomes of £500 a year and less, some of them with £350 a year, now find those increased interest charges beyond their capacity. The result is that they are now prevented from making any effort themselves to improve their living conditions and to provide a home for themselves.
They must resign themselves to the conditions under which they are living now, however objectionable they may be. They must resign themselves to pay rent for a house they do not own or a room in some place rather than try to establish homes for themselves, owing to this increase in the interest rate. The increased offer of 5 per cent., of course, has reduced the market value of stocks in respect of which 3 per cent. to 3½ per cent. was payable.
All those things are having their effect, and the result is that we have unemployment and emigration. Increased numbers of people are leaving this country, and they are able to take up employment in England. Apparently there is plenty of work for people in England. The argument has been put forward that the position is much the same in other countries so far as trade is concerned and that  there are difficulties in trade outside Ireland, but that argument is scotched when we look across the water and see that there is a strong demand for labour there, and that our workers, if they become unemployed here, can emigrate from here and secure employment across the water. It is obvious that the policy of the present Government is not the right one. It appears to be based on the financial policy adopted by Great Britain. The financial policy adopted by Great Britain is that of a great industrial nation. A similar policy applied here is being applied to a nation that depends on agriculture and not on industry for its prosperity, its standard of living and its requirements in the matter of having an exportable surplus. The volume of manufactured goods which we have to export is not such as to offset the difficulties being caused. We have to depend on the expansion of agriculture and the export of an agricultural surplus for our economy, but, in the meantime, there is being applied here a financial policy designed for the needs of a great industrial nation and a great exporting nation.
The time has come when the Minister must change his attitude in relation to policy so that the measure of prosperity enjoyed by our people during the three and a half years in which the inter-Party Government was in office can be won back again and restored, and so that those who have lost their employment during the past 12 months and, indeed, since the present Government took office, will once again find themselves in productive work.
Mr. Gallagher: Listening to the Opposition Deputies and watching their antics since the by-election in Dublin North-West they give the impression that, because they succeeded in retaining the seat, all their sins should be forgiven them. One sees some of them wandering through the corridors like a dog with two tails. I do not think they should be let get away with this. I do not think we should forget their past. I believe it should be brought home to them very forcibly that the present  position is not all the doing of the present Government.
Last week Deputy McGilligan, in the course of this debate, said that the difference between him and the present Minister for Finance was that he, Deputy McGilligan, when Minister for Finance in the inter-Party Government, did not listen to his departmental advisers and that Deputy MacEntee does. In making that statement I assume that Deputy McGilligan was referring to the events of May, 1951, when presumably against the advice of his departmental advisers he deliberately eliminated from his election Budget expenditure amounting to close on £12,000,000. Deputies in opposition should not overlook that fact now. For my part, I have every intention of making sure that it is not forgotten.
Presumably Deputy McGilligan took the advice of his colleagues in Government and not the advice of his departmental advisers. It has since been revealed that Deputy McGilligan's colleagues agreed to make heavy cuts in their Estimates so that he would be in a position to bring in a popular Budget. They were assured, however, that they would be allowed to bring in Supplementary Estimates in the autumn after the general election. Unfortunately for them their scheme did not work and they were caught out.
Mr. Gallagher: They were told that if they did not agree to this subterfuge the taxes on beer and cigarettes would have to be reimposed and that would be politically embarrassing when making speeches at election time. Their little scheme failed and they were caught out. During the short time I have been here I have never heard any Minister for Finance boast that he does not listen to the advice of his departmental advisers, and I think Deputy McGilligan would be well advised to refrain from drawing further public attention to that last disreputable transaction of the inter-Party Government, a transaction that has brought no credit to the State.
 Deputy Rooney and other Opposition Deputies make the point that the falling-off in private house-building is due to the increase in the rate of interest. The rate of interest only increased from the 5th October this year and the falling off in private house-building has been going on for the last 12 months or so. The blame for that cannot, therefore, be laid upon the Government because of the increase in the rate of interest.
Mr. Gallagher: I take it Deputy Hickey was here in 1929. Certainly some of his colleagues were. The rate of interest in 1929 was higher than it is now, but Fianna Fáil were not in power then. It is nothing new to have the rate of interest at that level. There is no use in talking about housing if the money is not there to build houses. Of the £20,000,000 loan floated by the Minister £12,000,000 will go into housing. One cannot have it both ways. Local authorities are clamouring for more houses. People making application under the Small Dwellings (Acquisition) Act are clamouring for houses. If we are to satisfy the demand for houses we must get the money and £12,000,000 of the recent loan will go into housing. That will certainly keep the building drive going. The building drive was initiated by Fianna Fáil and I give the inter-Party Government full credit for continuing that drive. It has been asked why, if the loan was such an attractive one, was it not subscribed immediately? It has been stated that it was not fully subscribed until the very last day. We know the record of the previous loans. They were flops. I take it in the case of the recent loan the Minister took the advice of his departmental advisers and other experts who knew the trend of the money market. Bearing in mind the previous flops experienced by the inter-Party Government——
Mr. Gallagher: I was talking of the £12,000,000 loan that was needed for housing, and I was paying a tribute to the Coalition Government for carrying on the good work of the housing programme started by Fianna Fáil.
Deputy Rooney is still waddling through the corridors like a dog with two tails, saying that I am looking for practice on the hustings. He might get the shock of his life on the hustings. He might find that he might not get in so comfortably in County Dublin as he thinks. The people realise that we now have a responsible Government in office. They realise that the rake's progress in the form of the Coalition Government was responsible for our present position. In our present Ministers we have men who do not shirk their responsibility, and who put the facts of the country's finances before the people in an honest manner. They would not attempt at any time to fake a Budget. They would not advise their colleagues in other Departments to cut down their departmental Estimates and tell them that they could bring in Supplementary Estimates later. That is not a Fianna Fáil practice, because it is not an honest practice. We claim, and rightly so, that the last disreputable transaction of the Coalition Government was bad, and we shall never follow such a line. It was a dishonest transaction and one which the people of this country now realise is the cause of our present position.
A great deal of ground has been covered on this Estimate as well as on the Supplies and Services Bill. I will conclude by congratulating the Minister on making a determined effort to bring the country's finances back to their proper state for the welfare of the people.
Mr. Hickey: I will not. We read in the newspaper last Sunday that this country is in pawn. I do not know of any country whose security is appreciated more by people outside it than this country. I will prove that by quoting some statements on the recent loan made by people who, Deputy Gallagher seems to think, count in this country. A Dublin stockbroker said that more British and Dominion interest was displayed in this loan than in any previous issue and that amongst the first subscribers was the National Mutual Life Assurance Company of Australia. Another important man said that never was a national loan offered at such magnificient security and remunerative rates. He went on to say—and the Irish Press did not print it—that the country had never before been so prosperous or had such a favourable future before it as it has at the present time, that they had become politically mature.
Mr. Hickey: The Irish Times of the 24th of September, 1952. I suggest to Deputy Allen that I am trying to approach this matter in an honest way and not for the purpose of comparing the policy of different Parties in this country. I can tell Deputy Allen that there are thousands of decent men, women and children living in slums and rooms that any country worthy of being called a Christian country should not tolerate. We read in the newspaper a short while ago that houses which were condemned in 1910 are still occupied by people in County Limerick. For goodness' sake let us stop Party politics and talk about how our people are faring under the present system.
Mr. Hickey: I am sure that any Coalition Government—no matter who might be in it—would have done a better job in 16 years than the Fianna Fáil Government did in that time. I will answer the Deputy who asked the question. In a village in County Limerick 198 families are living in houses which were condemned some years ago by the medical officer of health. There is no water service, except two pumps belonging to farmers, to supply water to the village. The local doctor says that every drop of the water must be boiled by the people so as to avoid sickness. Some of the houses in the village to which I have referred have been condemned since 1910.
Mr. Hickey: The Minister's interruptions will not put me off my stride. I am talking of facts. We know that we are not in control of matters over which we should be in control and that that is what is wrong with the country. We have heard it said that money is coming into this country at a rate that would stagger the imagination. The same man said that if there was some hope of an early reduction in the bank rate money could be circulated more freely and that he felt that the success of the loan was already assured. Why, therefore, should any Irishman take it upon himself to go around the country talking about our insecurity? I have here the leading article in the Irish Press of the 24th September, 1952. It says, on the subject of the floating of the loan:—
I suggest to Deputy Gallagher and to every Deputy in the House, and even to the highest man in the country, that it is a shocking state of affairs that £61,000,000 are in the Post Office Savings Bank and that of that £61,000,000, £37,000,000 is invested  in British securities to-day. Over £6,000,000 of it is in British securities at 2½ per cent., £13,000,000 of it is in British securities at 3 per cent. and over £10,000,000 of it is in British securities at 4 per cent. Some of those investments in Britain are in war stock. A remarkable fact is that a large sum is invested in British transport and in British electricity—and yet we have to pay 5 per cent. here for bringing electricity to our people. I would expect any sensible man to try to find out what is wrong with the country rather than to waste his time trying to score Party points.
Mr. Hickey: The Minister for Finance stated, when the loan was floated, that it was a safe investment and that in these uncertain times there is, truthfully, no place like home. He said that investors would not only share in the national development created by the money so invested but would also secure a handsome return. He asked: “What investment in the world to-day offers such a handsome return coupled with security?”
I would ask the Minister for Finance how much of the money subscribed to the loan was subscribed by vested interests outside the country who will never devote an ounce of energy towards any national project here. We had one foreign insurance company applying, in the first instance, for £250,000 worth of an allotment and they doubled that later. We had another company applying for an  allotment of £150,000 and they also doubled that later. We are now being asked to increase the rate of money borrowed for housing by 2 per cent. We in Cork are building houses costing from £1,600 to £1,650 each. A 2 per cent. in the bank rate in the interest of a loan of £1,600 involves an increase of 12/4 per week in the rent. How, then, does Deputy Gallagher or anybody else expect us to swallow the assertion that the increase in the bank rate does not affect housing? Of course it does affect housing. I want to come to a more serious matter.
Mr. Hickey: What could be more serious, but we are not dealing with it in a serious manner. Anybody who suggests that the increase in the bank rate does not affect it is not making a serious contribution towards a solution of the problem.
I am trying to find out if that is so, and I am asking the Minister to hear what I have got to say. On the 13th November, 1949, the present Minister for Finance stated in an article in the Sunday Press, under the heading of “Diddlum Dandy”, that “in one 12 months devaluation had cost the people of this country at least £120,000,000.” Speaking here in this House on the 12th March, 1952, Deputy Dillon made the following statement: “Our sterling assets now, and there are nearly  £450,000,000 of them, have lost in the last 48 hours very nearly enough to meet the deficit of Deputy MacEntee's Budget.” What I am asking the House is whether these statements are correct? I am asking the Minister, when he is replying, to let us know did we lose £120,000,000 in 12 months as a result of devaluation? If so we should cease to be tied to the British £. If the statement that we lost £120,000,000 in one year because we are tied to the British £ is true, it is time that we broke adrift from a money system that is depreciating the value of our money to that extent.
There is a good deal of talk about the Central Bank. I have my own views about what is suggested in the Report of the Central Bank but I want to point out that the Central Bank has no power whatever. I should like to ask Deputy Gallagher what part did the Central Bank play in floating the loan of £20,000,000? Was it heard of at all and why was it so silent? Is it not obvious that it has no power? I know that some of the statements made by directors of the Central Bank were entirely contrary to the advice that we should get from such an institution. Will the Minister tell us whether the Central Bank can lend money to the State or to the public authorities? Can the Central Bank do what the Bank of England can do in England—control the rate of exchange? Has the Central Bank power to create credit or power to accept deposits from anybody? I suggest that they cannot. The Central Bank cannot accept £5 or £100 from anybody who has it to deposit. Why? What important change in our financial system has been brought about by the establishment of the Central Bank at all? These are matters that affect the country and that are used to keep us where we are and to prevent us from dealing with housing, drainage or with any of the national problems we desire to tackle. I think it is true to say that the Central Bank cannot in any effective way deal with our financial problems. Therefore we must bring in a Bill here to give the Central Bank the necessary power to deal with our money and credit.
We have a situation in Cork at the moment in which we have an overdraft  of £750,000. That has been given to us at ½ per cent. less than the usual bank rate. The city manager says that he wants £1,000,000. Where are we to get it? I suggest that we are like so many children in this House that we have no power, and must accept the dictates of the bankers and moneylenders. I think it is a scandalous state of affairs to think that we have money in our savings banks and in the post office invested in English securities and war stock at a very low rate, while we have to pay over 5 per cent. for money to build houses. I happened to be at one time Lord Mayor of Cork when we floated a loan. We offered it at 4 per cent. at par on the security of Cork City, or the security of what is known as the city estate. What happened? No bank in the whole of the Twenty-Six Counties gave us one shilling. I came up here to Dublin, deputed by the Cork Corporation to interview the Credit Corporation, with a view to getting the money. We met the chairman of the board of that corporation and he told us that he would give us £100,000 at 4 per cent. if the loan were issued at 98½ per cent. We offered to take it at 4 per cent. at par, but he would not consent to that. The result was that we did not get a shilling. He told us that we would not succeed in floating the loan at that figure. I asked why, seeing that there was no safer investment than a loan of the Cork Corporation. What do you think the answer was I got from a man who was paid to look after our investments in this country? He said: “They are getting 7 per cent. for it in Abyssinia”. The result was that we did not get a shilling from the Credit Corporation to build houses for our people in 1939. In 1948 or 1949 a further loan was floated in Cork City. On that occasion we got only £80,000 from the banks, the insurance companies gave us £75,000, and the public contributed £75,000; the State had to make up the balance. That is how the banking system is dictating our policy in this country. I was surprised to hear Deputy Vivion de Valera state here that we were compelled to invest the money in the Post Office Savings Banks as it is invested at present. It is bad enough to know that the banks  have over £200,000,000 invested outside the country, but worse to learn that money which should be used here for housing and other productive undertakings, is invested by the Minister for Finance in British securities at 2½ and 3 per cent.
This is a matter which should seriously be discussed in this House. There is not much to be gained by arguing as to who is responsible for the present position, whether it is Fianna Fáil, Fine Gael or the inter-Party Government. The matter is one that demands serious attention. Why should the Electricity Supply Board be compelled to pay £1,125,000 in interest last year alone on the money it requires to give us electricity? In the five-year period up to 1946 the rate-payers of Cork have paid in interest charges £56,000 per year, while in each of the years from 1946 to 1951 they had to pay £70,540 in interest alone. The result of that is that there is a municipal debt of £21 10s. 2d. on every man, woman and child in Cork City. I can tell Deputy Gallagher that the municipal debt in the City of Dublin is £36 2s. per head of the population.
In the face of that situation are we to sit here and talk across the House without trying to root out the evil that is in our midst and the people who are responsible for it? I have seen people living in houses in Cork City and in the rural areas under shocking conditions. That is so to-day, even though we have had native Governments here for the last 30 years. I suggest that we had better do something to get rid of those evils and stop all this talk about Party politics across the floor of the House.
Mr. D. Costello: During the last few weeks the figures which have been made available to us demonstrate what has been occurring in the Irish economy over the last year and portion of this year. An examination of the statistics which are now available is necessary in order to understand what has been happening, firstly, over the last 18 months since the change of Government, and, secondly, as an indication of the future line of policy which has to be taken in order to  remedy the very difficult situation that presents itself to the Dáil at the present time.
These figures show that since the change of Government there has been a 15 per cent. reduction in industrial employment, that there has been an increase of 10,000 in the number unemployed and an increase of 13 per cent. in the cost of living. We had hoped that the Minister for Finance, when introducing this Supplementary Estimate, would have given us some idea of Government policy for dealing with the very serious matters which the country is facing at the present time. We hope that, when he is replying, we will get some indication of how the Government proposes to raise the employment level in the country, of how it proposes to deal with the trade recession and so bring back industrial production to what it was last year, and how it proposes, if it proposes at all, to maintain and, if possible, reduce the cost of living.
I think that these figures demonstrate that there has been a remarkable change in the economy since last year. I think it is more than a coincidence that the deterioration in our economy took place with the change of Government last year. I believe that the cause of the marked deterioration in our economy was due, firstly, to the violent attacks which the Minister and his colleagues made in the autumn of last year on the credit position of this State, and, secondly, that it is due to the restrictions which were put on that economy, due to the Minister's Budget in the spring of this year.
I think it is important to remember what the Minister and his colleagues were saying in the autumn of last year. I do not intend to weary the House with quotations, but the House and country are now well aware of how members of the Government were declaring that this State was on the verge of a great financial crisis. The work “bankruptcy” and the words “the country was in pawn” had been used previously. The whole credit position of the State, as well as confidence in the financial structure of the State, were being attacked by the Minister and his colleagues. The  country was being informed that very urgent measures were required in order to remedy the situation.
Those speeches were made in the early autumn of last year. They were continued throughout the winter and into the spring, and so it is well to look at the figures which demonstrate what was happening in the Irish economy last year. Last year in the Irish economy and over 1950, unemployment decreased; there was a 30 per cent. increase in gross domestic capital formation and there was a 7.2 per cent. increase in industrial production. It would appear from these figures that there was no need for any great concern as the country appeared to be developing very favourably. Unemployment was going down and industrial production was going up. The figures which seemed to give most concern to the Minister and his colleagues were those relating to the balance of payments. In giving an estimate of the deficit in that year the Minister merely gave the dark side of the picture and failed to give the picture which I have given now—a developed economy, increased domestic capital formation and reduced unemployment.
We said last year that there would be a very great deficit in the balance of payments. We said that it would be an extraordinary deficit, but that it was nothing to worry about because it would be unusual. We pointed to three facts which we repeated time and again and which were denied time and again by the Minister and his colleagues. We said, first of all, that the deficit in the balance of payments last year was being inflated, firstly, because the terms of trade had moved against this country, and that, due to the post-Korean inflation, there was a very great rise in import prices. We pointed to the fact that the decline was already commencing when we spoke in the autumn of last year. We said that the decline would continue and that it was unnecessary to panic about it. Secondly, we attributed the large deficit, which we all knew would occur in the balance of payments, to the fact that there was large scale stockpiling last year. We were laughed at and told that there was no such thing as  stockpiling going on last year. The third matter we pointed to was the fact that agricultural exports would expand, given time, and that there was no urgency in the situation—that the circumstances of the situation last year were exceptional and would right themselves in the course of time.
What is happening? The figures are now available and they are incontrovertible. These figures show that last year there was in increase in import prices by no less than 22 per cent. There was an increase in export prices of only 14 per cent. In other words, the terms of trade moved heavily against us last year. The figures now available show that the trend is now reversing itself and there is a marked decline in import prices.
We also said last year that there was a certain amount of stockpiling going on which would inflate the import requirements of this country last year. It is interesting to look at page 13 of the Irish Statistical Survey which bears out what we said. At the bottom of the page it says:—
I should have said that this particular quotation demonstrates the first argument we made, that the rise in import prices last year was the chief reason for the large trade deficit in our balance of payments, and that is borne out in what the statistical survey says. We also said that there was stockpiling, and even the Central Bank Report, at page ten of the recent report, grudgingly admits that it went on to a significant extent to the spring and summer of 1951.
Deputies will recall that one particular line which the Government took in the autumn of last year was that the country was going on a consumer spree, that the country was living too well, that it was living beyond its means. The figures now show that, in spite of the great increase in imports last year of £123,000,000, that great increase was due primarily to import prices. There was only, in fact, 4.9 per cent. increase in imports last year over the year  before. In view of the fact that the Government said that this country was living too well and consuming too much, it is interesting to see the figures for consumption last year, which show that it went up by 2 per cent. and no more over 1950.
Probably the most interesting and important figures, however, have been made available to us in the capital account of the balance of payments, for there we see how the deficit of £61.6 million was made up. The Minister has been accused, and I think rightly, and certainly it is right to level the accusation at many of his colleagues and many back benchers of his Party, of equating the deficit in the balance of payments with a reduction of our external assets. We have had many speeches from the Government Benches pointing to the great deficits in the balance of payments over a number of years, equating these deficits with a drop in our external holdings, when, in fact, nothing of the sort occurred. The Minister, in his Budget speech, at column 1123, Volume 130, says as follows:—
“This deficit is no isolated phenomenon. We have had deficits every year since 1947, and the cumulative total is now roughly £150,000,000, thus virtually offsetting the external assets built up during the war years. We cannot say, however, that having, in effect, used up our war-time accumulation, and reduced our gross external reserves to less than two year's purchase of imports on the present scale, we shall now automatically settle down to living within our means. There is, unfortunately, no reason to think so, nor for believing that the balance of payments will right itself spontaneously. The opening months of this year showed virtually no improvement. Therefore, the necessary corrective measures for dealing with this urgent situation cannot be postponed...”
The charge that we make against the Government is that they did take urgent measures in their Budget and did ensure that the deficit in the balance of payments would be corrected  as much as it was possible by Government policy to correct it by reducing the purchasing power of the State; that they did take these measures in their Budget, but that they were unnecessary and that they brought about a great deal of hardship and the decline in our economy that I have indicated. The Minister appears at any rate by his remarks to be equating that £150,000,000 deficit in our balance of payments which he estimated to take place over those four years with the drop in our external holdings of that amount and the figures demonstrate quite clearly that that is not correct.
It is rather interesting to see the recent report of the American experts who would appear to have accepted the Government's line in this particular aspect of our balance of payments, because at page 17 of that report, after dealing with the amount of investments available for what they call repatriation, they go on to say:—
“The remaining £150,000,000 that might be considered as available for repatriation threatens to be soon exhausted at anything like the current rates of withdrawal which are estimated at over £30,000,000 in 1950 and at almost £70,000,000 for 1951.”
In fact, there was no withdrawal of £30,000,000 in 1950 and no withdrawal of £70,000,000 last year. It is clear that there have been deficits in the balance of payments for 1947, 1948, 1949 and 1950. They amounted in all to £88.9 million. Let me repeat that those deficits were not financed by a drawing down of our external holdings. In fact, these deficits were financed as to £36.9 million by drawing on the American Loan account, and as to £51,000,000 by the inflow of foreign funds into this State and the total reduction of our external assets, that is to say the external assets of the banking system, of private individuals and of the Government, were only reduced at most by £1,000,000 in these four years.
Last year this deficit of £61.6 million was not financed by a drawing down of our external reserve by £61.6 million. It was financed as to £8.7 million of it by American Aid, as to £15,000,000 of  it through the inflow of foreign funds into this country, and the drop in our external holdings of the banking system, private individuals and the Government amounted to £37.9 million.
Some time ago the total amount of our external assets was estimated at about £400,000,000. That estimate is from an authoritative source, from an authoritative spokesman of the Department of Finance. The only criticism I have seen of that estimate of £400,000,000 which was then the estimate for external holdings in 1947, was that it was too low and various estimates have been given that our holdings were as much as £450,000,000 in 1947 and maybe £500,000,000. The interesting thing is that they certainly were not below £400,000,000, inasmuch as the experts to a certain extent got a rough idea of what these external holdings were. That was the position in 1947. Since then there have been deficits in the balance of payments which, from 1947 to 1951, amounted to £150.5 million. On the Minister's arguments, as stated in his Budget, on his arguments as stated in the House last year and throughout the country, he appeared to state and I think believed erroneously that because there were these deficits our external holdings were down by £150.5 million and, therefore, this country appeared to be on the verge of losing all its external assets. In fact, the capital account of the balance of payments showed that these deficits for five years were financed as to £45.6 million by American Aid, as to £66,000,000 through the inflow of capital into this country, and there was a total drop in our external holdings for these five years of £38.9 million.
Therefore, as far as we can judge, our external holdings are now certainly over £350,000,000 and probably well over £400,000,000. That is the country that is facing bankruptcy; that is the country that has to take drastic steps to reduce consumption; that is the country that is living beyond its means. That was the interpretation of the figures erroneously made by the Minister and the reason for the fierce impositions that he put on in his recent Budget.
It is quite clear from the Minister's  statements, inasmuch as there is any logic in the Government's case, that the last Budget was aimed at reducing the balance of payments. If the Minister believed, as he appeared to believe, that this country was in this parlous state, he would have had a duty to do something by means of the fiscal machinery under his control to bring about a lesser deficit if possible this year. Our complaint with the Minister and his policy is that he has carried out a financial policy aimed to reduce consumption in this State so as to relieve the balance of payments situation which we believed did not require the drastic attention which the Minister's policy gave it in his Budget.
I believe that the difference between the policy of the present Government and the policy of the Opposition is the different values it puts on the problems which face the State. We have, at the present time, a very urgent unemployment and emigration problem; we have a grave long-term problem of endeavouring to raise agricultural and industrial production; we have the grave problem of trying to develop and increase the capital assets of this State; and we also have—and we have always admitted it—a balance of payments problem. But we have not subordinated all these problems to endeavouring to right our balance of payments.
We believe that the increasing of capital formation in this State, the reduction of unemployment, the cessation of emigration, were things which should primarily be aimed at before the balance of payments required any urgent attention. We believed that we could afford to run deficits in the balance of payments for many years because we had this very large accumulation of external assets which we were entitled to use up to develop our country, having been forced to save these assets during the scarcity of the war years.
It does seem to me that the Minister and his Party have treated the deficits on the balance of payments as the visitation of an evil god whose wrath can only be appeased by bringing offerings of more unemployed, a  greater number of emigrants, lower production and higher costs. I think we can say to the Minister that no matter how much the high priests of this strange new cult may rend their garments and tell the populace they are endeavouring to keep them from further sacrifices in appeasing the further wrath of the gods, the populace now sign for a new dispensation and the high priests will soon be looking for a job.
I said that I believe that the trade recession, unemployment, increased emigration, the drop in industrial production and the other symptoms of the decline in our economy have been the result of the Government's policy over the last 18 months. I should have said they were only partly the result of Government policy or largely the result of Government policy. Another factor has played an important part in bringing about the trade recession which this country is now experiencing. It is interesting to see the magnitude of that trade recession which has shown itself in the drop in agricultural production, which has shown itself in the drop in the number of employed persons and which now has shown itself, more strikingly, perhaps, in the figures which have recently been published by the Central Bank. Those figures show a decline in loans and advances over the last few months and whereas loans and advances from the commercial banks in this State stood at £120.9 million on the 31st December last year, they declined to £118.6 million on the 15th July this year; they declined further to £115.7 million on the 19th August of this year; and they declined still further to £113.8 million on 16th September this year. I do not think it would be wrong to say that the decline will continue and will show itself in the figures when they are published of the loans and advances in the last few months.
As I say, the attack on the credit position of the State, the attack on the confidence in our whole financial structure which the Government made last year, and the Budget which was introduced this year played a large part in creating the circumstances which these  figures demonstrate exist. Another factor which must be taken into account was the rise in the bank rate which occurred in the last few months. It does appear to me not to be unreasonable to suggest that an item such as credit should be every bit as much subject to the vigilance of the Prices Advisory Board as, say, an item such as motor insurance. I would like to see the rise in the bank rate demonstrated before this advisory board as being necessary in the circumstances of this country.
I agree fully with Deputy McGilligan in his remarks on this Estimate of a few weeks ago when he commented on the role that the Central Bank must play in helping to develop the capital formation of this State. I believe also that the commercial banks themselves should assist in developing capital formation in Ireland and that the holdings in Irish Government securities should be greatly increased in order to help us to develop our land, our industries and to give employment in the manner which this country requires.
We, I think, have made it quite clear to this House and to the country that we are opposed to the restrictionist policy of the present Government, that we believe in the expansionist policy which was carried on over the three and a half years of the inter-Party Government. We believe we should have the co-operation of the banking system in the development of our country and that the private sector of this community should be encouraged as much as possible, if necessary by amending our tax code, to develop the capital assets of this State.
We also believe that our requirements are so great and so urgent that that private sector of our community is not sufficient in itself to give us the capital formation that the country requires. We believe the State itself should undertake, in a manner in which it has done so during the last three or four years, large-scale capital formation. It must be appreciated that with that policy goes the necessity for a large-scale campaign to increase savings. It must be appreciated that the only way in which that large-scale policy of capital formation can be carried out is  either through current savings or through disinvestment abroad.
If we embark on a policy, as I believe we should, of large-scale capital development, and if our home savings prove to be insufficient for that purpose, then the only way by which that large-scale capital investment can be financed is by disinvestment abroad. We are prepared to face that. We are prepared to face deficits in the balance of payments in order to develop the capital assets of the State at home.
In my opinion these are the matters urgently requiring our attention. These are the matters to which the attention of the Government should be directed. The stress that has been put on the deficits in the balance of payments has, in fact, blinded the Government to our real and urgent problems. It is the problems of unemployment, of low production and emigration that are of graver urgency than that of merely balancing our external payments.
Deputy Hickey adverted to the situation that exists in Limerick in regard to housing. It is advisable very frequently to get the clear picture that lies behind the cold figures given in the statistical statements available to us. It is important to realise what a 15 per cent. reduction in industrial production means. It is important to realise what a 10 per cent. increase in unemployment means. We who have had to deal with many people—young men and middle-aged men and young girls who were in good employment up to last year and who are now because of the deterioration in our economy out of employment—feel that the unemployment situation calls for drastic remedies. We can but hope that the Minister and his colleagues will realise that these are the really urgent matters requiring Government attention.
I believe these problems call for courage and foresight; above all they call for an understanding of the economic affairs of the country, qualities that I believe are sadly lacking in the present occupants of the ministerial benches.
Mr. Cogan: I agree with Deputy Hickey that this is a very important  debate. A survey of our financial position and of our financial prospects is the most important survey a Parliament can undertake. Because I agree this is an important debate I would say to Deputy Hickey and to those who think like him that they should endeavour to define a policy of their own instead of blindly following in the footsteps of the chief Opposition Party. If the Labour Party has a policy capable of solving our economic and financial ills and if they think, as Deputy Hickey appears to think, that there is some solution to these problems, let them go out on their own now, revolt against Fine Gael and become an independent Labour Party and not merely a small pink patch on the tail of a blue shirt. Let them follow the example of Clann na Talmhan. Stung by the views of Dr. Ó Briain they revolted against Fine Gael and walked into the Division Lobby to-day against it. Let others show their independence in the same way as I have always tried to display my independence here.
This is a serious debate. Because it is a serious debate it should be treated seriously. The Minister came in here determined to lay before us the true facts of our financial and economic position. When he opened the debate what had we on the front bench of the Opposition? We had a complete formation of all the shadow Ministers —some of them shadowy enough— mobilised together to heckle and shout down the Minister instead of listening to what he had to say and subsequently meeting his arguments in a responsible and reasonable way. I was shocked at the reception accorded to the Minister's statement by those who claim to be responsible members of the Opposition front bench. I noted in the Official Report the interruptions recorded, although the number recorded does not give the completed picture. I took a note of the barrage put up against the Minister with a view to preventing him making his case.
Mr. Cogan: It will be a long time before Deputy O'Sullivan reaches the stage when he can be regarded as even a juvenile delinquent because he is nothing more than a helpless infant, and if he has mislaid his bottle I hope that somebody will go and get it for him. The Minister was interrupted close on 250 times in the course of his speech. On 250 occasions attempts were made to shout him down. Those do not represent all the interruptions by which the Opposition sought to prevent him making his case. I was struck by one particular interruption that came, I think, from Deputy Morrissey.
Deputy Morrissey was one of the leaders in the campaign though one would imagine that he has been long enough in this House to have a little more sense. The Opposition may have thought they were doing a fine job of work but, if they could see themselves as others see them, they would have been ashamed of themselves. They looked like nothing but a little bunch of grey-headed schoolboys who had made up their minds to be unduly naughty. In the course of this campaign of interruption Deputy Morrissey sought to shout down the Minister when the Minister referred in respectful terms to the head of the Government. I do not know on what ground Deputy Morrissey claims the right to prevent a Minister from referring to the head of his Government and attributing to him the very high motives that have always inspired him. I assume an attempt is being made by the Opposition to claim that, because they know the head of the Government is universally respected, the economic and financial policy of the present Government is not the policy of Eamon de Valera, the present Taoiseach. I think that anybody who studies this matter carefully will acknowledge that the whole financial and economic policy of the Government since 1951 bears on its face the imprint of the mind and the character of a man whom I can only describe as the greatest national leader that Ireland has ever known.
Mr. Cogan: He is responsible, in the main, for the fact that we have for this nation to-day an economic policy designed not only to maintain this nation's freedom but to ensure that it will never again be in danger. It is clear to every thoughtful citizen of this country that the ship of State is being directed on a sound course——
Mr. Cogan: It was very nearly on the rocks. I am coming to that. In the course of his speech, the Minister referred to a Budget statement that was made by Deputy McGilligan when he was on the point of leaving office. Deputy McGilligan introduced a Budget which everybody knows was faked and based on Estimates which everybody knows were cooked. He made that Budget statement at a time when the Government had come to a decision to dissolve. They had come to the conclusion that, with Marshall Aid cut off, they could not any longer hope to maintain the pretence of having an economic, social or financial policy. While the Minister was delivering his Budget statement in the House his colleagues were actually getting out through the back window and heading for the country. In the course of that Budget statement Deputy McGilligan indicated that the position of this nation in regard to our external balance of payments was very grave and that, in the interests of the nation, it was desirable that corrective measures should be taken. It was noticeable that when the present Minister for Finance proceeded to quote the statement of the former Minister for Finance, Deputy McGilligan, the barrage of interruptions rose to its highest pitch. The front bench of the Opposition may not have been willing to hear the present Minister but they  were even more unwilling to hear the words of his immediate predecessor quoted in this House. I think that it would be well if they could hear a little more of the statements made by Deputy McGilligan before he left office. These statements have been quoted in this House, some of them by me.
Mr. Cogan: I can well understand Deputy Giles' reluctance to hear the statement made by his own Minister for Finance before he left office. His speech in introducing the Budget of 1951 was a gloomy speech. Certainly it was gloomier than anything that was heard after he left office from the Ministers who succeeded him. That was not, however, an isolated expression of opinion on Deputy McGilligan's part. We remember that, in introducing the Vote on Account in 1951, he opened what later turned out to be a very prolonged debate with a doleful picture of the economic and financial position of the country at that time. In Volume 124 of the Official Report, column 789, Deputy McGilligan, the then Minister for Finance, said:—
“The disturbing feature, of course, is the deficit in the balance of payments, particularly when that is marked by the great increase in consumption here, especially when that great increase in consumption is attached to the non-essential goods.”
“The continuance of such a situation for any period would be highly dangerous. It would jeopardise the policy, popularly I think, approved of, to repatriate sterling assets but repatriation of sterling assets is only of use if they are used solely or mainly for investment and development. If the development policy must be continued, that policy can only be continued without danger if the savings of the community are increased. They can be increased if people refrain from expenditure on non-essential goods. There is a  tremendous margin over what was spent in 1938. There is plenty of slack to be gathered in.”
Who, then, was the first Minister to stand up in this House and say that the people of Ireland were eating too much, were drinking too much and were consuming too much? Was it not the Minister for austerity, Deputy McGilligan, of the Fine Gael Party? Those words are on the records of the House and fortunately they cannot be effaced.
Mr. Cogan: As far back as 1949 the then Minister for Finance, Deputy McGilligan, was gravely alarmed about the economic and financial position. He realised—I suppose it was only natural for him to realise it: he was in a position to be well-informed in regard to financial and economic matters—that the position was dangerous even as far back as 1949. Speaking in the Seanad in March, 1950, on a motion on the monetary policy of the State, Deputy McGilligan said, as is reported in the 25th September, 1951, be rejected, put 143:—
“But sending that money into circulation, through the hands of the community, into which the money must get when expended, has, of course, a very definite inflationary effect. Unless it were to lead to an immediate production of goods—and very little of this money as expended in this way is to lead to an immediate production of goods—there is bound to be inflation. So, at once, while I  am pursuing this desirable course of making a tremendous increase in capital development, do not forget the other side, that I may be weakening the value of the Irish £ and, with the high rate at which Government expenditure is running, our capital account and current account, and with our situation in respect of balance of payments, I am not too sure. We are not too strong, possibly, to present ourselves to the outside world and claim that our £ is better than the £ English.”
“Senator O'Brien has said he agrees that one may take the risk and, even though in the short run what you do may have an inflationary effect, it may be necessary to take the risk in order to get certain desirable objectives achieved. We have weighed that risk and have taken the risk but it is not a very happy side of our situation and it may be that the investing public has surveyed the position and come to its own conclusion and maybe that was why subscriptions did not roll in for the last loan in such volume as they might have.”
There you have a realistic exposition of the position as it existed under the inter-Party Government. I think it is necessary to dwell upon this because the whole case which the Opposition Party have been trying to build up over the last 18 months is that there was unprecedented prosperity in this country when they were in office and that the position was absolutely secure from that point of view. They were seeking to convey to the Irish people in April, 1951, that the whole country was flowing with milk or honey or, at least, oozing with milk and money but Deputy McGilligan's statements are on record and they show that no such happy position prevails. They show that there was in the minds of those on whom the financial responsibility rested a feeling of grave anxiety, a feeling that culminated in the sudden termination of the inter-Party Government and in the decision, when Marshall Aid was cut off, to go to the country in the hope  that they would be relieved of the responsibility of office or else would have a sufficient majority to be able to face the difficulties that they knew were upon them—the retribution that followed on such a reckless and wild policy.
It must be remembered that the inter-Party policy had never any basis or any sound guiding principles. The inter-Party Government came into power or, at least the largest Party in that Government came into power, with a policy clearly stated of cutting down taxation and at the same time cutting down expenditure. We heard a great deal in the early stages of the inter-Party Government about the McGilligan axe and about retrenchment but after some months that policy was discarded.
The McGilligan axe was taken out and quietly buried in the garden and the views and the wilder expedients of Deputy MacBride and Deputy Norton were put into action. That policy which was substituted for the coherent policy of cutting down taxation and expenditure at the same time was a policy of cutting down taxation as far as possible but of increasing expenditure by every possible means and of seeking to use the aid that was given to us so generously by the United States to finance that policy.
The plan of action, as we know, was to spend as much as possible with a view to buying popularity and to raise every penny that could be raised by every conceivable form of borrowing. Thus we had the borrowing of $130,000,000 from the United States and the raising of three National Loans within a very short period. It is significant that confidence in the then Government was so weak that two of these National Loans collapsed. The point I am making now is that there was a deliberate policy of meeting current expenditure by borrowing.
Mr. Cogan: Deputy McGilligan remitted taxation to the extent of £6,000,000 in his Budget of 1948 and he did not reimpose any of that taxation. Later he went to the country for a loan of £12,000,000, which he secured,  and immediately after he secured it he proceeded to use that money to meet current expenditure which should have been met out of taxation.
Mr. Cogan: I have much better than that. I intend to quote Deputy McGilligan's own words in respect to the manner in which he applied that loan. Speaking on the 26th November, as reported in column 124, here is what Deputy McGilligan said about the way in which he used the loan he raised in 1948——
“When I first borrowed £12,000,000 from the public—I want this by way of contrast—and after that loan had been successfully floated, I felt in my innocence that I had a fairly easy time for some months ahead. I remember investigating at one time how this big sum of £12,000,000 was to be spent. The first shock I got was when it was hinted to me that I had not anything like that sum in hands because a big amount of debt was left by the previous Government and had to be liquidated. Fortunately, I did not appreciate how serious the weight of that debt was until I had asked for and got a return. The return showed me that I had barely £500,000 free. The rest had to be spent on liquidating the debts that Fianna Fáil left in 1948. One of the big items was what was displayed in this House as a great effort on the part of the Fianna Fáil Government in 1947. They raised what was known as a Transition Development Fund. As that was presented to this House, it was raised from ordinary taxation. However, if anybody investigates the finance accounts for that year they will find that whereas the £5,000,000 Transition Development Fund was put in as something to be raised out of the ordinary taxation, the accounts for that year were in a  deficit to the extent of almost the whole of the £5,000,000. I think £250,000 was not a deficit.”
Mr. Cogan: It proves an admission, for one thing, that the then Minister had been nine months in office before he understood the financial position. It proves that he remitted six million in taxation and introduced a Budget in 1948 in which he did not impose any additional taxation, and then proceeded to raise a loan. He did all that without examining the position in regard to current expenditure.
Mr. Cogan: That is a good point which Deputy Giles has made. I put the inter-Party Government into power to govern this country as a responsible Government but not to buy popularity by wasting and sabotaging the national financial position. I watched for three and a half years, and particularly the last two years, in cold anger while the inter-Party Government instead of building up and strengthening what I would describe as the inter-Party position, were playing pure Party politics. During their short term they were seeking to buy popularity at any price, regardless of the permanent injury that they might do  to the economic and financial structure of the nation.
Mr. Cogan: The Fine Gael Party, at the last election, went to my constituency and fought like tigers to get me out, but did not succeed. They brought an army of lawyers and barristers there. They sent even the coroner from County Kildare to the constituency in order to get me out and failed. I am not going to waste time on that.
An Ceann Comhairle: Deputy O'Higgins will probably contribute to this debate, and will have an opportunity of traversing everything Deputy Cogan says. He ought to allow Deputy Cogan to make his statement without interruption.
Mr. Cogan: The first is that the deficit in the balance of payments did not cause any good reason for anxiety. That was one. I think I have demolished that by showing that Deputy McGilligan was even more anxious about the position, or appeared to be as anxious about the position as the present Minister for Finance. He tried to prove that there was no necessity to impose additional taxation this year in order to balance the national accounts. Deputy Costello, Senior, came into the House and started to do sums with pencil and paper. The result of his “sums” was to try and prove that this year the present Government were budgeting for at least £10,000,000 more than could reasonably be expected to be the expenditure for this year. We do not hear anything about that now. Deputy Costello has  not come into the House since the Budget debate to tell us that the Government are raking in too much money to run the various Departments of State and to meet current expenditure. The Opposition Party seem to have run away completely from that case.
The last point they have tried to concentrate on is that the Government borrowed at an excessive rate of interest in the case of the recent loan. I was interested in that particular point. I wanted to see how the borrowing of the present Government under the recent loan compared with the borrowing of the inter-Party Government under Marshall Aid. I tabled a question with a view to eliciting information on that point because I was anxious to see what was this country's indebtedness under the Marshall Aid Loan. I am not going to weary the House by reading the full reply which I received. I found that 30 years hence, when I suppose most of us will be beginning to feel the weight of years— when, I suppose, Deputy MacBride will be flourishing a beautiful white beard and when Deputy O'Higgins, Deputy O'Sullivan and Deputy Rooney will have laid aside their rubber feeding bottles and will have reached an adult outlook—we will be paying, under Marshall Aid, $9,000,000 per year to repay the debt that was incurred by the inter-Party Government. That sum of $9,000,000 will have to be sent in dollars to the United States. It will not do to send sterling. We will have to send that sum to the United States either in dollars or in goods. Thirty years hence our ships will be ploughing the Atlantic ocean carrying supplies of our choicest goods, if we have not the dollars, to the United States in repayment of the Marshall Aid Loan.
When this matter was referred to before, Deputy Dillon said: “Well, if you did not approve of Marshall Aid why did you spend the balance of sterling that was left when the inter-Party went out of power? Why did you not send that back to the United States?” Is it not clear to anyone except Deputy Dillon that the United States are not interested in sterling? They required dollars, and the dollars  had to be borrowed. What did the present Government find when they came into office?
They found, on one side, that the dollars had been borrowed and that they had been spent on the importation of goods from the dollar area. They found, on the one hand, a heap of goods that had been imported from the United States. Does anybody think that the United States will take back these goods, that Uncle Sam is interested in nylons or in mouse traps? Would the United States be prepared to re-import goods which they had exported to this country? This Government found a balance of £20,000,000 in sterling in the Counterpart Fund, but against that were debts and liabilities amounting to far more, to over £30,000,000 which had to be liquidated immediately within this financial year in which the present Government took office.
Let us not hear any more about the wonderful ingenuity—I suppose there was a certain amount of ingenuity in it—and let us not hear any more about the financial genius that was displayed by the inter-Party Government during their period of office. All they did was to seek to buy a little popularity by spending as much as possible without incurring the odium of raising the money. The head of the present Government has imprinted on the national financial policy his strong, firm and honest principles. He has done just as the honest farmer will do. The honest farmer will seek to balance his accounts, and the present head of this Government has sought to ensure that this nation's accounts are balanced.
The farmer who spends more than the income from his farm must inevitably go down to bankruptcy and ruin. The nation which spends more than it can earn must inevitably go down to ruin and decay. It is the policy of the Government and of the distinguished head of the Government to ensure that this will not happen, that the independence of this country so dearly bought will not be bartered away and that our children and children's children will not have to experience degradation and  slavery as a result of the policy of an incompetent Government in this country designed for one purpose and one purpose only, enabling them to purchase cheap popularity.
In the course of the past year, valiant efforts have been made to expand this nation's economy. Every item of legislation introduced in this House has been designed in that direction. The speeches of the Minister for Agriculture and the Minister for Industry and Commerce have been not gloomy but hopeful and confident speeches. Both of them have emphasised the fact that this nation can expand production both in agriculture and industry if obstructionist tactics are not allowed to impede the nation's progress.
At the outset I said I had sympathy with Deputy Hickey's point of view. I have often felt that something should be done in regard to the whole question of banking and credit. I would appeal to the Minister to do something more in regard to that. I have no use for mere escapism in dealing with questions of this kind. Propositions which are not backed up by a sound, clear-cut, definite plan for financial and economic reform are merely a form of escapism. I think Deputy MacBride has indulged in that form of escapism. He was a monetary reformer, and so was Deputy McGilligan. They were monetary reformers before they came into office and they have become monetary reformers again since they left office. During the period they were in office they left that policy in abeyance.
I suggest to the Minister that it would be a good thing not to set up another banking commission composed of bankers, but a Select Committee of this House to investigate the whole financial position, the whole position in regard to credit and banking and report to this House how these problems can be solved. They will not be solved on the lines which Deputy MacBride suggested, the lines of putting up plausible theories designed to win a little popular support, theories which can be discarded immediately Deputy MacBride succeeds in gaining office. His hopes in that respect are  not very bright. His Party is finished. Like the Cheshire cat it has disappeared leaving nothing but a grin behind it. I hope we will not have to witness any more of the kind of tactics he pursued in the past. I hope that he will now have learned his lesson and will adopt a more responsible attitude towards our economic and financial affairs.
Mr. MacBride: One of the drawbacks of having to sit out a speech of the nature of the speech which has just been made is that one's mind is inclined to wander away from the speech that is being made and to look at old Dáil reports. While Deputy Cogan was talking, I was thumbing through the Dáil debate which took place when the Marshall Aid loan was being discussed by the House on 1st July, 1948, and, believe it or not, I found that Deputy Cogan congratulated me on the agreement that we had made.
“We seek, more or less, the cooperation of that great nation in doing the thing which the American nation thinks ought to be done—that is, to increase our output and thereby put ourselves in a position to help other nations by our exports, and thus contribute to the general wellbeing and prosperity of the other nations who are linked up directly in this agreement.”
“This nation has had the strongest ties of friendship with the people of the United States. The United States have contributed in a very large measure to helping this country in her struggle for independence, just as people of our race have helped the struggle for independence in the United States and in building up that great and free nation.”
I will not bore the House with more quotations from the many platitudes of Deputy Cogan on that occasion. As Deputy Cowan is sitting nearby it might be well to remind the House that Deputy Cowan did not escape from Deputy Cogan on that occasion. This was the day when this House without a division, without any opposition from these benches, agreed to the agreement for a loan without any speech from the Deputy who is now the Minister for Finance. Deputy Cogan referred to Deputy Cowan on that day and said:—
“Deputy Cowan has delivered a very remarkable speech and I think a deliberately mischievous speech. He talks about the United States ‘flooding this country with a mission’, about their having certain rights as to how we balance our Budget or conduct our affairs here, but he did not tell us what would happen if the enemies of the United States were to take control of the country and of all Western Europe.”
“There are many ways of facing a question of this kind, many ways of advancing arguments in favour of proposals without saying definitely, clearly, and in a forthright way what you mean, but we all know what Deputy Cowan wants. He wants to spike this agreement, and if other nations were to follow the line which Deputy Cowan suggests this nation should follow we know what would happen. There is not much that this small nation can contribute to the strength of the Western European nations.”
Mr. MacBride: Let us give credit where credit is due. If any section of this House wants to accuse the then Government of having put the country in pawn to the United States of America, let me remind the House that there was no division on that agreement, that the only Deputy who got up to oppose it or criticise it in any way was Deputy Cowan.
Mr. MacBride: As we are discussing Marshall Aid and as the Minister has so often found it necessary to seek to cast a slur on the United States inferentially by suggesting that this country by some provision or other is in pawn——
Mr. MacBride: ——as he suggested even in Dublin that the future of the country was at stake because of the American elections, let us have a look at the same Dáil Report and see what the Leader of the present Government said on that occasion.
Mr. MacBride: Let us see what his Leader said on that occasion, speaking, presumably, with the full authority of his Party. The Minister for Finance was silent on that occasion; he did not even think it worth his while to address the House in connection with that agreement. The Taoiseach, Deputy de Valera, as he then was, spoke in regard to Marshall Aid and in regard to a loan. I am quoting from column 2059, Volume 111 of the Dáil Debates, of the 1st July, 1948:—
I would like to emphasise those words. That is a fair statement of the position as it then was, that we needed capital development, that we had not the resources to carry out that capital development from the sources from which it might have been available.
That was Deputy de Valera's contribution on the question of taking a loan from the United States then. Deputy de Valera, the Leader of the Opposition, as he then was, had expressed some worry as to our ability to repay the loans that we might get in dollars.
Mr. MacBride: I will deal with it now. At that time no dollars were available. A few months before the Government, of which Deputy de Valera was then Taoiseach, had entered into an agreement in London to limit drawings from the sterling area reserve.
Mr. MacBride: If the Deputy has any doubt about it let him refer to what Deputy de Valera said on that occasion. This position has been grossly misrepresented by different Deputies in the House. It is just as well that we should know what we are talking about. In November, 1947, Deputy de Valera attended a conference in London.
Mr. MacBride: I am going to quote. As a result of that conference certain agreements were entered into. If I am not mistakn there were sharp differences of views at the time between the then Minister for Finance and the then Tánaiste in regard to this particular provision; nevertheless, this provision was embodied in the agreement— Ireland's dollar requirements—and this is the text of the agreement:—
“It was agreed that the Irish Government, with a view to conserving the dollar resources of the sterling area, would effect substantial reductions in their drawings of dollars from the dollar pool for the period 1st October, 1947, to 30th June, 1948, bringing the net requirements to £14,000,000 plus Irish dollar earnings. This sum would be further reduced in the event of non-dollar wheat being procurable instead of dollar wheat. Expenditure in other currencies will also be kept to a minimum during the period.”
Mr. MacBride: No. It was worse; it was in relation to our own money, to our own investments, to the investments of this nation in Britain, to our own money which we could not get and which the British Government refused to hand over at this time and insisted to the then Taoiseach that  there should be an agreement limiting our rights to draw from our own moneys which we had foolishly, stupidly and madly, over a long period of years, sent over to England and accumulated there.
“On the 20th August last we received a communication from the British Government pointing out that they were limiting the convertibility of sterling. They indicated that the drawings on the available dollar resources had been increasing at an accelerating pace and that it was vital that what was left should be conserved to the utmost extent. They expressed the view that this was a matter of concern for all the countries in the sterling area and that it was desirable that those countries should come together to consider what action might be taken to see that the demand on dollars should be restricted to the extent that was obviously necessary. We considered the communication. We realised that it was a matter of concern to us that confidence should be preserved in sterling and that it was desirable that the remaining dollar resources should be utilised to the best possible advantage.”
Those were the reasons advanced by the then Taoiseach for the signing of this agreement. It had been agreed that our right to draw from the sterling area reserve of dollars was to be limited to the sum I have indicated during that period.
Mr. MacBride: A short time ago the Deputy was acting as Chairman and was very indignant if anybody so much as said “Boo”. He is now sitting in the House and if he wishes to make a speech I am sure we will be very glad to sit it out and listen to it.
Mr. MacBride: That was the position until June, 1948, when we took office. Deputies talk lightly about borrowing this money from America. Remember, it was a borrowing to which they agreed. It was a borrowing to which their Leader agreed on their behalf here in this House. It was a borrowing upon which there was not even a vote or a division challenged.
Mr. MacBride: If his friends in the Government now want to follow his lead and adopt his policy, I make them a present of that. What was the position then? We talk as if the borrowing of dollars was unnecessary. How were we going to buy the oil, the tobacco——
Mr. MacBride: ——the wheat and all the other commodities that we subsequently purchased from the United States of America unless dollars were made available to us? When I came into office Deputy de Valera, as Taoiseach, had already attended a conference in Paris and signed an agreement there. He had attended an O.E.E.C. conference and signed an agreement. A White Paper was published setting out a list of the imports we require from the United States of America under the Marshall Plan and one of my first acts on coming into office was to eliminate from that list a number of goods we considered it was not necessary to import. The list which was then prepared included coal and other commodities of that nature. The situation had changed and they were no longer required. One of my first acts as Minister for External Affairs was to examine that list and eliminate certain items from it.
In view of that would the Deputies on the Government Benches now stop playing Party politics? In view of their own act and of the acquiescence over three years how can they now accuse us of having put the country in pawn to the United States of America? How can they indulge in innuendoes of a type that might come from Deputy Cowan in relation to the danger of American imperialism here? Surely they should have a better sense of  responsibility than to pursue that particular line of conduct. I did think that the Minister would refrain from following that line of conduct, though he made some very unwise and rash statements in the beginning which might be considered to be damaging to our relations with America but I thought he had abandoned that line of country since. I think there are limits to the methods to which even hard pressed politicians should resort.
So much for that. Coming now to the overall economic position I find it difficult to discuss the Central Bank and the report of that body in the way in which they should be discussed because of the deliberate, or perhaps genuine, misconceptions that seem to exist in the minds of some members of the House. I often find myself in the difficulty of not knowing whether a Deputy is saying something which is obviously incorrect with the knowledge that he is doing so for the purpose of playing Party politics or whether he is labouring under a genuine misapprehension as to the position. That is one of the difficulties I find in dealing with the economic and financial position of the country.
Let me put an analogy to the House. If a fire breaks out in a house and there is somebody in the House the occupant has to break the windows in order to attract attention. I have felt myself over the last three or four years to be in the position of somebody trying to attract attention to a grave danger. I felt I had to throw bricks at the plate-glass windows of the Central Bank in order to focus attention on what I considered to be one of the major evils of our political and economic organisation. I think I can say that I have succeeded to a large extent in drawing attention to the issues involved. I welcome the discussions that have taken place. I realise that there is a good deal of educational work still to be done in order to make people appreciate the issue.
I appeal to the members of the Government to realise now that the whole position will have to be reviewed and dealt with. The tide has turned. It is no longer possible to dismiss me as an  irresponsible or to say that I do not know what I am talking about, that I am trying to make mischief, that I am talking nonsense. The Minister for Finance should admit to himself that those days are gone and that he is now faced with these problems and that they are problems which must be dealt with.
I welcome the suggestion made by Deputy Vivion de Valera earlier in this debate. The suggestion was echoed to some extent by Deputy Cogan but, coming from Deputy Cogan, it means nothing. Coming from Deputy de Valera it carried a certain weight. The suggestion was that a small all-Party Committee of the House should be appointed to examine the position of the Central Bank and our overall financial position. I think we would get results from the appointment of such a Committee.
I think that would be a wise step to take. I appreciate that any serious examination and any serious reorganisation of our internal monetary system and our external monetary relations with the British Treasury would require careful investigation and more or less the unanimous agreement of the different sections in the House. I realise only too well that it is very easy to misrepresent the position and to depict any change as a dangerous change. Therefore, I would welcome the formation of a committee of this nature. I do not know whether Deputy Major de Valera was talking with the authority of his Party or was merely throwing out the suggestion as a personal suggestion. I know that many other members of the Government Party feel gravely disturbed by the position and do not, frankly, understand the position. Nevertheless, until some step of that nature is taken it is necessary to deal with the position as it now is. I welcome the constructive approach to these questions by Deputy J.A. Costello and Deputy McGilligan who accept now the position that there is a need for a complete revision of our existing monetary policy and organisation. I welcome them because I feel that the more agreement we can have on these questions in the House the better
 In the course of his speech in this debate, and also on other occasions, Deputy J.A. Costello put forward a number of specific proposals that would have my complete support and agreement. For instance, he advocated the provision of a national investment board that would be charged with the task of providing an outlet for moneys which we normally export from the country. He also made a number of suggestions concerning the provision of a money market and a security market here.
These are constructive suggestions. If I am not mistaken, some of these suggestions have been endorsed by members of the Government Party in the course of the debate. I think some of the Deputies sitting behind the Minister actually appealed to him to take some steps in that direction. I hope, therefore, that when the Minister is winding up this debate he will not adopt the attitude which he has so frequently adopted in this House of seeking to use the situation for Party purposes or seeking to avoid issues by making personal attacks of one kind or another.
I said a few minutes ago that it was no longer possible to dismiss lightly the proposals and the criticisms made by myself, by Deputy Hickey and by other members of this House on the economic position of this country because the people are beginning to understand the issue more clearly and because, too, other parties who could not be suspected of being ultra-progressive or of being irresponsible have also come to a stage where they share our viewpoint on these issues. Quite apart from that, however, we have had a report recently—a much publicised report—from a number of American businessmen, economists and experts who carried out a survey of our industrial potential. They cannot be accused of being affiliated with Clann na Poblachta or with any particular political Party in this country. These men carried out an independent investigation. True, possibly, they did not have as long a time or as full an opportunity to examine the position of this country as one might desire. Presumably they are experts who are used to  dealing with such positions. They made their examination and came to certain conclusions. Unfortunately, a sufficient number of copies of this report were not available to enable every member of this House to obtain a copy for himself. Indeed, I gather from questions asked in the House that even the newspapers were not able to obtain copies of this report. I should like to draw the attention of the House, therefore, to some passages in this report.
Mr. MacEntee: Before the Deputy proceeds to do so, may I say that I understood that I would be given a few minutes in which to reply in order that this debate might conclude to-night, to meet the general wishes of the House?
Mr. MacEntee: If the Deputy concludes and allows me to move the Adjournment, I will not take more than 20 minutes or half an hour to-morrow morning—or, if you like, I will forgo the right of replying and we will have the division to-night at half past ten.
Mr. MacBride: In view of the discussion which we have just had, I shall not read out the extracts from this report which I had intended to read. I want to say, however, that these experts realised that our present monetary situation and relationship with Britain was completely inconsistent with our national aspirations and was inconsistent with a policy of development which, I presume, Deputies on both sides of this House wish to see achieved. Running throughout this report are criticisms of the Central Bank policy—of the policy of the commercial banks—whereby our earnings and savings are invested outside the country. I am sorry I cannot read these extracts to the House. I think Deputies should seek to obtain a copy of the report and to study it. It deserves careful study.
The motion which I put down has been criticised on a number of scores by Deputies from the Government side —on the score that it was a tricky motion and that it was not clear. I do not think there is anything tricky or that is not clear in the motion. In the first two paragraphs, I ask the House to declare that the report of the Central Bank is not a report of its proceedings and that the report which the Central Bank issued was issued by them without authority. Any Deputy who reads that report of the Central Bank will agree that it is not a report of the proceedings of the Central Bank. Any Deputy who reads the report will have to agree that it is clearly a political document advocating political views, advocating policies which ought to be determined by this House. I object, and if Deputies have any self-respect they will object, to any conclave of bankers, or of civil servants seeking to dictate policy to this country. They have done so over a number of years to the detriment of the country. As a result of the banking  policy which has been pursued over a great number of years we have built up investments in London, moneys which should be utilised for the development of this country. As a result of that we have unemployment here. Of course so long as we continue to export the earnings and the savings of this nation and invest them outside the country, the country will remain undeveloped and we shall have unemployment. Of course, if we have unemployment we shall have emigration. That is inevitable.
It is those issues which I would appeal to the House to consider and examine objectively. I would ask them to resist the temptation to make Party capital on one side or the other. There is no use in coming along and saying that I was Minister in a Government for three years and that I did not change the financial or monetary system. Of course I did not but it was not a Clann na Poblachta Government. I went to the people in 1948 on a clear-cut policy but I did not get the support of the people. Of course I was not able to change the views of the other Parties or of the main Party in the Government but I am glad to say that by now all Parties on this side of the House are agreed on the fundamentals of the situation. The only people who will not agree on the fundamentals of the situation are those sitting on the opposite benches. Let me say this in defence of the Fianna Fáil Party, that apart from the Minister who is now sitting on the Government Front Bench, most of the other members of the Fianna Fáil Party in their hearts agree with our policy but for Party reasons they will not admit it.
Mr. MacEntee: Deputy MacBride has founded the case for a change upon a report prepared by foreign experts. I want that to be kept in mind. It has been alleged that this serious problem of the deficit in our balance of payments was a figment of my imagination, some sort of bogey-man conjured up by me in order to frighten the bad boys of the Opposition. I am going back to quote Deputy MacBride's authority. I have the report here and it is termed: “Industrial Potentials of Ireland; an appraisal.” It was prepared by the  American experts, the Ibec Technical Services Corporation, under the E.C.A. project initialled by our predecessors. Here is what these experts say about the position as they found it when they came here in the middle of 1951 just as the Coalition Government was going out of office—I am quoting from page 17:—
“Now that E.C.A. loan assistance has been discontinued, difficulties threaten to present themselves in acute form. It is estimated that Ireland's sterling balances at the end of 1951 were of a dimension approximating £300,000,000. Something like £54,000,000 of this amount is needed for coverage of Irish currency. Private investments abroad at that time were estimated at about £100,000,000 but this could hardly be drawn down except by the voluntary action of the investors or through official direction, entailing a degree of coercion that is hardly compatible with democratic procedures.”
“The remaining £150,000,000 that might be considered as available for repatriation threatens to be soon exhausted at anything like the current rates of withdrawal which are estimated at over £30,000,000 in 1950 and at almost £70,000,000 for 1951. Meanwhile an even more vexing problem is presented by the dollar area accounts of Ireland as may be seen from Table 17.”
“If there is any virtue in paying attention to storm warnings it would appear that the above evidence points to trouble of hurricane dimensions against which there is no safe anchorage in Irish ports.”
Here is what the European experts, drawn from France, Britain, the  Netherlands, Belgium, the United States and other countries had to say about the position here as it existed when we took office in June, 1951:—
“The price inflation in Ireland has been appreciable.... There are two serious tasks to be faced, first, to limit the rise in prices and second, to deal with the balance of payments deficit which has more than doubled over the last year.”
“The net sterling assets of the commercial banks fell by £22,000,000 between June, 1950, and June, 1951. By one means or another, measures will, therefore, have to be found to reduce the overseas deficit.”
“The combination of problems outlined above places Ireland in a very difficult position. It should be possible to take direct measures to expand exports but this would probably go only a short way towards solving the external payments problem.... The reduction of the balance of payments deficit will inevitably entail a reduction of expenditure, in order to bring it into line with the national income. This will call for strong fiscal measures on the part of the Government, and a high degree of co-operation and restraint on the part of all sections of the community.”
That is the justification for the policy which we have pursued, pursued in order to save the country from the “trouble of hurricane dimensions” which the American experts warned us was coming. That was the justification for the measures which we have taken in an effort to solve these critical problems. It was not only because the Central Bank's criticisms of the policies pursued by our predecessors happened to be in accord with these experts' views that these measures were undertaken, but because our own good sense, our good judgment and our knowledge of public affairs dictated the same course.
 Let me get back to Marshall Aid. Deputy MacBride, who is an expert at misrepresentation, has advanced his own Party view, quoted the Taoiseach in order to bolster up his own Party case. Deputy MacBride pretends he wants a non-Party approach to these problems, but all his efforts have been devoted to keeping his own Party alive. Deputy MacBride has tried to place his Party above all others in Ireland. Despite all his efforts, however, it is now reduced to himself and his faithful Sancho Panza. I beg Deputy Tully's pardon. That is a jocose remark. Everybody who knows Deputy Tully's national record will know that he has been a gallant soldier and I do not want him to be offended by anything I may have said.
I want, however, to come back to the question of Marshall Aid. Deputy MacBride quoted from a speech by the present Taoiseach, when he was Leader of the Opposition, made in the Dáil in June 1948, when he gave reasons why he was not prepared to oppose the proposals which the Government of the day were setting before the House. He said that he admitted quite frankly that when we were in office in 1947 we found that we needed capital for capital development, and that we had not the foreign currency resources to provide that capital equipment: that we could not get it unless we had dollars and therefore we were not going to oppose the plan which the then Government was setting before the House because we regarded it as of vital importance to get the capital equipment.
However, how was this sum of $146,000,000, which was obtained from America, spent on capital equipment? Out of that total of $146,000,000 a sum of $15,000,000 was spent on raw materials for industry; $10.8 million were spent on machinery, vehicles and equipment; $35.7 million were spent on tobacco imports; $13.3 million on petroleum products, while there were spent on wheat and on coarse grains which we could have produced for ourselves at home no less than $66,000,000. That was not expenditure on capital equipment but on consumption goods which we were trying to persuade the  Irish people they could provide for themselves from their own land by their own industry.
Deputy MacBride endeavoured to draw some analogy between the course which had been pursued by his predecessors in 1947 and the Government of which he was a member in relation to this question of dollar resources. What did we do? We did not borrow foreign dollars. We went to the British and said: “We are entitled to get our share out of the dollar pool,” but they said: “There is a very critical problem there, and you are as concerned as we are to ensure that the sterling which you get for the goods you sell to us will at least retain its purchasing power.” We quite frankly admitted that was the problem, but we said: “We are entitled to get our share of the dollars anyhow.” We did agree to restrict our share to £14,000,000 or $56,000,000 for the period from November, 1947 to June, 1948. We were to get out of that sterling pool $56,000,000, and, in addition, we were to have our own dollar earnings, which were mounting at that time at the rate of $20,000,000 a year. That is to say, we were to get $76,000,000 without having to pledge the resources of this country to the United States of America. We were to get them because they belonged to us; we owned them, and the British acknowledged our right to get them.
That was the position. But what happened in regard to Marshall Aid? The Coalition went over to negotiate the 1948 agreement. Let me remind the House how differently we dealt with them when they were negotiating with the British and of the manner in which they have dealt with us ever since 1932? We did not try to queer the pitch for them; we were not even severely critical of some of the bargains which they made. We may have been remiss in that, but there was one thing we had made up our minds on. We were going to give them a chance and not going to make their negotiating  position with the British any weaker by any criticism at that time. What happened? Remember, the British had conceded our right to draw dollars from that pool. By agreement, the amount was limited, but our right to draw from it was conceded. What happened then? They were compelled, when they went over to enter into these negotiations on the Marshall Aid loan to agree to this:
“The Government of Ireland will use their utmost endeavours to obtain the maximum amount of aid available under the E.R.P. with the object of ensuring, so far as practicable, that their recourse to the sterling area pool for hard currencies will not involve any ultimate drain on the pool.”
That agreement was entered into by Deputy MacBride who was then Minister for External Affairs, by the then Taoiseach and by Deputy Dillon. What does that mean? Deputy Cogan has told the House—that we shall be paying back $128,000,000 for the next 30 years, and that, at the final stage of that repayment, the annual burden on this country will be of the extent of $9,000,000 a year. That is the difference between the manner in which we approached our financial relations with the British Government and that in which our immediate predecessors approached that problem.
I want to say this—I do not want to be misunderstood—that I deny I have criticised American foreign policy. I have no right to do so. But I have pointed out to the people of this country, and I am entitled to do it, that with international tension mounting higher, it behoves us in this country to put our own house in order, and to ensure that we shall not be under obligations, financial or otherwise, to any Power outside this State.
Blowick, Joseph. Carew, John.
Costello, John A.
Crotty, Patrick J.
Dillon, James M.
Dockrell, Henry P.
Dockrell, Maurice E.
Doyle, Peadar S.
Esmonde, Anthony C.
Hession, James M.
Kyne, Thomas A.
Lynch, John (North Kerry).
Byrne, Thomas N.J. McAuliffe, Patrick.
Madden, David J.
Murphy, Michael P.
O'Gorman, Patrick J.
O'Higgins, Thomas F. (Jun.)
Palmer, Patrick W.
Rogers, Patrick J.
Blaney, Neil T.
Brady, Philip A.
Calleary, Phelim A.
Collins, James J.
Corry, Martin J.
Crowley, Honor Mary.
Davern, Michael J.
de Valera, Vivion.
Hillery, Patrick J.
Kennedy, Michael J.
Little, Patrick J.
Lynch, Jack (Cork Borough).
Ó Briain, Donnchadh.
Rice, Bridget M.
Ryan, Mary B.
Sheldon, William A.W.
Walsh, Laurence J.
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