Imposition of Duties (Confirmation of Orders) Bill, 1939—(Certified Money Bill)—Second Stage.

Wednesday, 5 July 1939

Seanad Éireann Debate
Vol. 23 No. 1

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

Minister for Industry and Commerce (Mr. Lemass): Information on Seán F. Lemass  Zoom on Seán F. Lemass  As Senators are aware, it is necessary, in accordance with the provisions of sub-section (2) of Section 1 of the Emergency Imposition of Duties Act, 1932, that any Order made under that Act, which is not merely an Order revoking the whole of an Order previously made, should be confirmed by an Act of the Oireachtas within eight months of the date on which it is made. This Bill is one of a number, of similar Bills introduced from time to time for the purpose of confirming Orders such as those set out in the schedule to the Bill. Most of these Orders have still a considerable time to run before they would cease to be operative if not confirmed. In accordance with the usual practice, we are bringing the Bill to the Dáil and Seanad at the earliest opportunity, so that the Oireachtas may express whatever view it wishes upon it. As to the Orders scheduled in the Bill, none of them is of exceptional importance. Some of them are of comparatively minor importance and give effect merely to drafting changes or minor modifications in the original Orders which these subsequent Orders amend. Six of the Orders represent proposals for the reduction of duties now in operation in consequence of [32] recommendations received from the Prices Commission. The remainder of the Orders represent proposals for new duties.

Sir John Keane: Information on John Keane  Zoom on John Keane  This is the sort of measure which tends to bring democracy into disrepute. Once the Minister has been given these powers and the Government has been allowed to build up a series of tariffs and controls as complex and complicated as the income-tax code or the land purchase code, it is perfectly impossible for the House to deal in detail with the multiplicity of items affected. In any remarks I have to make, I cannot attempt to comment specifically on items in the Bill, but I cannot let the opportunity pass without making a protest—though it be a belated and ineffectual protest—against the whole of the policy contained in and implied by this measure.

This policy of tariffs, supplemented by quotas and by undisclosed licences, given we do not know to whom at the will of the Government, and, generally, the policy which was embarked upon to produce a balanced economy, has put our economy completely out of gear and has given us an utterly unbalanced economy. It has given us an uneconomic position in manufacturing industry and it has produced neglect of our primary industries in agriculture. So far as this Bill is concerned, the House cannot be much more than a debating society because the Minister has got these powers and he is exercising them virtually in totalitarian fashion. Nobody knows what is going on. Against the psychology of the procedure, I should like, even at this late hour, to make a protest. All freedom of expression and all outspoken comment on these matters is driven underground. Nobody concerned says what he thinks. All realise that they will get on better by being good boys. They know that if they do not behave, the Government have a hundred ways of hampering them by way of price control, price regulation, and regulations as regards opening up here and there. So, you have this completely false, furtive, clandestine, underground spirit and attitude towards the whole of this policy. If the Minister were to [33] throw off his mask, which permits him to make a good case whatever he himself may really feel, if he were in conference, with the lights down, by the fireside, I wonder if he would say that he was pleased with his handiwork.

For the past ten years, I could not help having considerable doubts as to whether the whole of this structure which we have been building up was really sound and in the interests of the country. We were told that this policy was going to make the country self-contained. On the verge, probably, of a European crisis, has that been the result? Have we not given hostages to fortune by the creation of these manufacturing industries, since practically every item of our raw material must come in with the assistance and good will of some other country? Would it not have been far healthier to have expanded our agricultural economy and produced more and more so that we would be able to hold that produce and to bargain with it for the manufactured articles we would require in case of war? I regard the whole of this policy —I have always said so—as utterly unsound, and I say that it is not justified by the results. What are the results? The results are an increase in net output, measured in money, of some £9,000,000, and an increase of employment of 53,000 or 60,000.

Would it not have been better and healthier if we had got even 20,000 fewer people employed—that would represent about one year's emigration —and if we had got thoroughly sound industries ancillary in some cases to agriculture, industries depending much more closely on the raw materials of the country, such as cement, in which 80 per cent. of the raw material required is produced at home? Would it not have been better if we had inquired into these matters deliberately and allowed the interests affected to have their say somewhat on the lines of the discredited. Tariff Commission, as the Minister would describe it? We might have 20,000 persons less in employment than we have at present, but we would be on a far sounder basis. We would not have this unhealthy, clandestine spirit working underground against freedom of trade, freedom of [34] speech and freedom of action in every way.

It is too late in the day to make this protest but, as one who has consistently protested against this policy, I feel more justified than ever before in complaining and protesting in respect of this whole, unsound structure which is dependent on its supplies of raw material on other countries, and which has entrenched capital. Although I am a capitalist myself, I am opposed to the entrenchment of capital behind tariff walls. Capital is being entrenched in inefficiency and labour has been entrenched to the extent that labour rates in this country are higher than in almost any other country in Europe. That is the result of the Minister's policy, and I feel it my duty as a member of this Assembly to make a protest once again against the whole policy represented by this measure.

Mr. Honan: Information on Thomas V Honan  Zoom on Thomas V Honan  I reiterate my belief in the protection policy of the Government. In most of the industries, especially the more successful ones, the difficulty referred to regarding the importation of raw material from foreign countries hardly exists. The principal industries that have been established in the country during the last five or six years aim mainly at manufacturing articles from raw materials obtained in our own country. Cement has been mentioned by Senator Sir John Keane. The raw material for that commodity could be obtained in abundance for the next thousand years around the estuary of the Shannon and the Fergus. The raw material for a small factory established in my own town is produced within two miles of the town. Practically all the local industries, with which I am acquainted, get their raw materials in the particular locality.

Sir John Keane: Information on John Keane  Zoom on John Keane  Elastics and cotton, for instance.

Mr. Honan: Information on Thomas V Honan  Zoom on Thomas V Honan  Most of the manufacturing process is carried on here.

Cathaoirleach: Information on Seán Francis Gibbons  Zoom on Seán Francis Gibbons  And, of course, they are not mentioned in this Bill.

[35]Mr. Honan: Information on Thomas V Honan  Zoom on Thomas V Honan  The raw material is a very small portion of the cost of elastic. As a matter of fact most of the manufacturing process is carried on in this country. If, as I said before, we are going to keep our people in this country, we must protect our home industries. There is a general outcry against emigration. Hands are raised in pious horror against emigration, but can anybody produce a better plan for dealing with emigration than to increase the industries of the country and to divide up the land in order to provide employment for our young people? If anybody can produce a better plan than that I should like to see it. I have to repeat again that I have seen large farms divided up where formerly a man and a dog attended to a couple of hundred acres of land. Now, there are 15 or 20 families, averaging about five persons each, or round about 100 people in all, making a fairly decent living on that ranch, as it was called. In the same way, many of the industries are affording employment. In my own town, we have two small industries which are providing employment for nearly 170 persons. Were it not for the protection that these industries have been given, they could not survive and the result would be that these 170 persons would have to emigrate with the others about whom we hear so many complaints. The outcome of the policy of protection may be some increase in the price of the article produced, but even though it costs a little more, it is worth that little extra cost if we are able to keep our people and our money at home. The money is kept at home and it is circulating in the country. I think the Minister and the Government are wise in maintaining the policy of protection for the industries they have established and I hope they will continue to maintain that policy.

Professor Johnston: Information on Joseph Johnston  Zoom on Joseph Johnston  Senator Sir John Keane has made the speech that I would like to have made, but I should not like to allow this occasion to pass without saying exactly what I think about the Minister and his attempt to create an industrial Utopia by this policy of manufacturing everything from zip-fasteners to Christmas [36] crackers. I do not believe that we are going to achieve any kind of Utopia by means of these innumerable restrictions on commerce designed to establish a host of small industries. There is in these matters the point of view of the individual interest concerned and the point of view of the nation, or the general interest. Undoubtedly the particular interest does benefit by restricted competition, but when you multiply these restrictions all round the circle, the advantage gained by the particular interest is more than negatived by the general disadvantage which it shares in consequence of the universalisation of the policy in question. The Minister's policy would not be so objectionable if he confined his attention to a few well-selected industries, restrict his protection to them and leave the rest of the nation's economy alone.

Therefore, I would beseech him, although I know I might as well address the wall, to reconsider the whole policy and to have the courage to abandon these tariff restrictions in cases where the aggregate effect of these restrictions, in creating employment and promoting wealth production, is obviously very little and the effect in increasing the cost of production and the cost of living for the community in general is obviously very great.

One aspect of the matter is that in the last ten or 15 years we have undoubtedly increased our industrial output by some £9,000,000. As against that, we have diminished the agricultural output by, at one time, some £20,000,000. Even now the agricultural output is probably some £15,000,000 less than it was and less than it would be if our economic policy had been sound all along. If we really want to enrich the country, we ought to concentrate on agricultural expansion and go slow in all this business of industrial development by means of commercial restrictions. This policy has had the effect of distorting the price structure and price relations as between different elements in the national economy. As the Minister for Finance told the House the other day, credit depends on profit and profit depends on the relation between different sets of prices—the prices that enter into the cost of production [37] and the prices at which specific goods are sold. If you distort these price relations, as the Minister has been distorting them by this policy, you are bound to destroy the credit basis of every interest that is not advantaged by the particular policy which the Minister is at the moment enforcing. If you want to get back on sound ground towards industry in general, you must get back to a freer economy and a diminution of these very objectionable commercial restrictions.

I think, from the point of view of democracy, this whole business of licences is open to grave objection. The Minister's policy is only tolerable at all because of the licensing provisions which accompany it and which make it possible in many cases to obtain, free of import duty, certain things which normally are taxed at import. But the necessity to apply for licences must mean an additional cost to the people who have to apply for those licences. It also involves a very objectionable relationship between citizens and the Government, as Senator Sir John Keane has pointed out. I should like to know, for my own information, what proportion of the goods, with reference to which a licence may be issued, did in fact come in free of duty under licence and what proportion was taxed. I should like also to have some guarantee that the issue of licences is on an absolutely fair and objective basis. Mind you, I have no information that it is on any other basis than one that is fair and objectively equitable, but, at the same time, the fact that businessmen are, in this matter, completely under the thumb of the Government, often tends to deprive these businessmen of that sense of democratic freedom and independence, with reference to a Government Department, which we would like to regard as one of the most valuable qualities of democratic citizenship. Even if those powers are exercised in the fairest possible manner, I think that the very existence of such powers is thoroughly objectionable, and, as a democrat, I must echo Senator Sir John Keane's protest against their existence.

Finally, the Minister's policy appears to be part and parcel of a [38] policy which may have had some reason for existence during the years which witnessed the so-called economic war, but after 1938, when we got back our free export market for agricultural products, we had a completely different external situation for our national economy and it was quite time that we should adjust our internal economic policies so as to make them correspond to the objective facts of the case as affected by the Agreement of 1938. Instead of that, we now seem to have a policy of maximum exports, agricultural and otherwise, and minimum imports. Whereas every student of elementary economics can tell you that you cannot increase exports unless you are also prepared to increase imports. A policy of maximum increase of exports plus maximum restriction of imports is bound to defeat itself and in the end we will have restricted exports as well as restricted imports. We must never forget that our whole industrial activity depends on the import of raw materials from abroad to the extent of some £22,000,000, if I remember rightly, in a normal year under present conditions. And whereas eight or ten years ago we exported some £8,000,000 of industrial finished goods, under present conditions our export of industrial finished goods is down to less than £5,000,000. So that with regard to £17,000,000 worth of imported industrial raw materials we must find some means of paying for those imports other than the export of industrial finished goods. The only other means you can find is in the export of agricultural produce except to the extent that you are prepared to draw on capital assets laboriously built up abroad mainly through the exertions of our agriculturists in former and better years. That fact ought never be forgotten. It is not a sound national policy to be relying on imported industrial raw materials in order to cater only for a home market and to build up industries which can never hope to compete on equal terms in a foreign market.

Mr. MacDermot: Information on Frank McDermot  Zoom on Frank McDermot  I do not want to make a speech. I merely wish to ask the Minister one question arising out [39] of Senator Honan's remarks. Senator Honan said that only an insignificant proportion of the raw materials of our industries is imported from abroad. I want to ask the Minister to tell us just what proportion of the raw material of our industries is imported from abroad or approximately what proportion.

Mr. Lemass: Information on Seán F. Lemass  Zoom on Seán F. Lemass  Senator Sir John Keane has protested against this Bill on the ground that it is bringing democracy into contempt. I think he has used that argument before. He urged that the giving of executive powers to the Government—that is, powers which enable them to act in the national interests without necessarily seeking specific legislative sanction from the Dáil and Seanad in advance —is destructive of democracy. I disagree with him entirely. I think I might describe these measures, the giving of these powers to the Government, as making democracy efficient. I think nothing is likely to bring democracy into contempt except inefficiency, and if in the world of to-day, when democracies are facing other forms of government which, because of their nature, can necessarily be made much more efficient than the democracies, we in the democracies fail to take whatever steps are necessary to give us the maximum efficiency possible with our system of government. then we are bound to disappear eventually. It is, I think, a poor service to democracy to urge that the executive authority of the democratic States should be stripped of the power of effective action. Taking the particular case in point: the democracy of this country decided in favour of a policy of industrial development. They decided in favour of a policy of industrial tariffs, and the Government, representing the executive authority of that democracy, had necessarily to provide themselves with the means to give effect to the decision of our people. It is only from those who are opposed to the will of the democracy of this country, those who want to obstruct and defeat the intentions and the expressed desires of the Irish people, that protests of that kind come.

[40]Professor Johnston: Information on Joseph Johnston  Zoom on Joseph Johnston  We only want to educate the democracy.

Mr. Lemass: Information on Seán F. Lemass  Zoom on Seán F. Lemass  I am talking to the uneducated minority now, the people who have not realised that the people of this country, having made up their minds upon a particular course of action, are going to proceed with that course of action irrespective of whether they like it or not. There is a small minority in this country which, in the past, had the function of dictating to the Irish people what they should do. They realise that day is over. The Irish people are not going to be dictated to by them, and having made up their mind to carry out a certain course they are going to see that the Government has the power to do it, whether it happens to fall in with their particular desires or not.

Let us examine the particular objections to our industrial policy that were advanced here. We are told we should only have industries which are established for the purpose of utilising native raw materials. May I say in advance that the great majority of our industries are in that category? A very large number of them are utilising native raw materials. Of course, when one uses the term “raw materials” one must be quite clear as to what one means. The clothing industry, for example, uses native raw materials, woollen cloth, linens, stuffing, buttons and similar commodities, purchased from other Irish producers. The woollen manufacturers are using, to a large extent, Irish-spun yarn. They are buying their raw materials from other Irish producers but the yarn manufacturers get a large proportion of the wool from which they make the yarn from abroad. Will Senators, therefore, say our clothing manufacturers are using imported materials? The same applies in the case of the boot manufacturers. They are using Irish-made leather. They are using Irish-made linen thread to sew the leather. They are using Irish varnishes and paints and polishes to complete the article. Even the fittings of the boot are made here. But behind them are the leather manufacturers. They get these raw materials [41] within the country but those from whom they get them possibly have to import certain materials from abroad in order to enable them to produce the raw materials of the boot manufacturers. The great majority of our industrialists are getting the raw materials here. But, are we to have no industry at all except one which uses native raw materials? That is surely a most astounding proposal to put forward. And why is it put forward merely in relation to this country? Senator Sir John Keane speaks with contempt of the idea of our trying to establish the rubber industry. Is the rubber industry any more unnatural in this country than in Great Britain? Is it any more unnatural here than it is in France, Germany, or any country in Europe? If it has been the correct and sensible thing for the British to manufacture rubber tyres, rubber footwear, and rubber equipment of various sorts, why should it not be the correct and sensible thing for the Irish people to do the same?

Professor Johnston: Information on Joseph Johnston  Zoom on Joseph Johnston  We have only 3,000,000 people to provide a market.

Mr. Lemass: Information on Seán F. Lemass  Zoom on Seán F. Lemass  We are manufacturing economically. If the Senator can demonstrate, in reference to any particular commodity, that the cost of its manufacture here, by reason of the smallness of our market, is so far above the cost of manufacturing that commodity in another country that no national gain results, then I am prepared to agree with him that that particular industry is not desirable and should not be established here, at least from the economic point of view, though there may be other reasons to be taken into account.

Sir John Keane: Information on John Keane  Zoom on John Keane  Surely there are several such industries?

Mr. Lemass: Information on Seán F. Lemass  Zoom on Seán F. Lemass  I am not disposed to disagree with Senator Keane, but I will say that there are very few and unimportant. The great majority of our industries are fully economic, if any rational meaning is applied to that word. Of course, Senator Johnston will not accept that point of view at all, although I notice that he was not above comparing the value of our [42] industrial exports this year with those of eight or nine years ago, without mentioning the fact that the disappearance of certain exports was due entirely to the disappearance of an industry which consisted entirely of assembling parts brought in from abroad to be manufactured into commodities for export. That applied in the case of the Ford tractors. They were not using native raw materials; they were employing Irish labour only, but the disappearance of that industry was at the whim of the firm that had established it here. Perhaps I should not say it was a whim: probably there were good reasons for making the transfer. At any rate, they produced the variation in the figures that the Senator quoted without explaining.

I have said before, and I am going to say again, something that nobody has shown to be untrue; that is, the development of healthy industrial activity here is in no way inconsistent with a maximum possible expansion of our agricultural production. Senators have spoken as if one was incompatible with the other, as if one was opposed to the other, and as if we could not have both together. Why not? What is there to prevent us developing our industrial activities in every sensible direction, in developing every industry which can be set up in order to supply the home market or in order to provide an export business; whilst, at the same time, we secure the maximum possible agricultural production and the maximum possible export of agricultural produce?

Mr. MacDermot: Information on Frank McDermot  Zoom on Frank McDermot  I think it was the Minister who used to talk as if the two things were inconsistent.

Sir John Keane: Information on John Keane  Zoom on John Keane  A lot depends on the Minister's interpretation of the word “healthy”.

Mr. Lemass: Information on Seán F. Lemass  Zoom on Seán F. Lemass  Senator Johnston said that we should have a few well selected industries. They are all too few. We want at least double the number we have at present, and we will have double that number before we stop. If somebody rises to criticise the Government's policy on the ground that we have not been successful in establishing enough industries, that there are too few at present, and that [43] many more could be brought in, I would have difficulty in answering him. We have far too few industries in this country. The Senator will not agree with me, and I do not agree with him, but that is inevitable, I suppose, where one cannot get absolutely uniformity of opinion on matters of detail.

Senator Johnston will not agree that we ought to have the elastic factory at Ennis. I believe that we ought to have it, and I think it is a magnificent industry and that it is doing excellent work and giving splendid employment in a district where employment was very much needed. Of course, it is not in accordance with the set theories of Senator Johnston or Senator Keane, but let them go down to Ennis and have a look at it.

Mr. Quirke: Information on William Quirke  Zoom on William Quirke  It is doing a big export trade, too.

Mr. Lemass: Information on Seán F. Lemass  Zoom on Seán F. Lemass  Let them realise what that employment means to the town of Ennis and what it means to the farmers around Ennis and to the whole of the community that resides in or about Ennis. There are some hundreds of other factories which are also doing excellent work. Some of them there are that I will find fault with: I have not hesitated to give expression to some criticism of them in public.

Sir John Keane: Information on John Keane  Zoom on John Keane  What about the alcohol factory?

Mr. Lemass: Information on Seán F. Lemass  Zoom on Seán F. Lemass  The Senator has referred to a factory that was not set up by private enterprise, but one that was started by the Government and that is being run by the Government for a number of reasons that bear no relations to the purely economic reasons that occupy the Senator's mind. Perhaps if a war should develop over Europe we would be very glad to have these alcohol factories. There may be other activities also that we would be very frantically striving to bring in under such circumstances which in peaceful conditions we would never attempt. One must try to provide for eventualities, and in that particular case we can do so on a satisfactory basis by creating an industry which is prepared to buy at good prices the produce of the local farmers. I do not [44] know that the Senator has any objection to that industry on the ground that it does not use native materials, because it does use them to the fullest possible extent, and materials are only imported to the extent that native materials are not being supplied.

There has been objection to the establishing of industries which use imported raw materials on the ground that difficulties will arise for them in the event of a European crisis. It seems to me a very shallow argument. Seeing that we will require in any circumstances the produce of these materials, I think that it will be much easier in the event of war to import the raw materials than to try to import the finished product. Senator Johnston shakes his head at that, but if he can think of one such industry let him explain. I cannot think of one. It may be that a number of these industries will be unable to carry on in the circumstances which would prevail in the event of a European war developing along lines which would result in serious interruption of ordinary sea-borne traffic coming to this country. In those circumstances we will be faced with a temporary suspension of many of our ordinary activities. So will other countries. I do not think that we can avoid that merely by not establishing certain industries here. If the Senator means to suggest that we can get a number of finished products with less difficulty than we can import the raw materials, I would like him to explain that idea, because certainly the thought never entered my head.

I am in complete agreement with the Senators who said that it is desirable that we should concentrate on expanding our agricultural production and in building up our agricultural exports. I think we should do that, and I think the Government is in effect doing what they suggest. I would like the Senators who made those remarks to elaborate them upon some other occasion. Possibly they have done so on an occasion when I was not here. When they talk about concentrating upon increasing our agricultural production or expanding our agricultural exports do they mean [45] that the Government should do it and should intervene in agriculture and control it by means of regulations, orders and decrees?

Professor Johnston: Information on Joseph Johnston  Zoom on Joseph Johnston  Certainly not.

Sir John Keane: Information on John Keane  Zoom on John Keane  The Government should not increase the cost of our agricultural production, as it has done by the tariff policy.

Mr. Lemass: Information on Seán F. Lemass  Zoom on Seán F. Lemass  It has done so by the social policy and by the agricultural wages action. One must try to strike a balance between what is desirable in any one direction and what is desirable in another. I certainly agree that the Government should not deliberately increase the cost of production more than necessary, but we have done a lot to lessen that cost by the halving of the land annuities. That was a substantial decrease in the cost of production, which quite a number of Senators choose to forget. I am quite glad to have that explanation that we should not increase the agricultural cost of production. Let Senators not talk about increasing agricultural production or expanding our exports if they mean that the Government should stand aside and hope to God these things will happen.

Mr. Johnston:  They will happen, if the Government stands aside.

Mr. Lemass: Information on Seán F. Lemass  Zoom on Seán F. Lemass  That is the old policy of laissez faire. If that is what Senator Johnston wants, I think that he stands alone. I do not believe that Senator Keane will agree with that policy, and I think there are certainly very few Senators who will say that our difficulties will disappear, that the country is going to become sound if the Government does nothing, or that chance or some of these mysterious economic factors will improve our situation.

Professor Johnston: Information on Joseph Johnston  Zoom on Joseph Johnston  I recommended laissez faire as an antidote to the poison that we have had in the last seven years.

Mr. Lemass: Information on Seán F. Lemass  Zoom on Seán F. Lemass  At any rate let the patient choose his own poison. The [46] Senator can call it poison if he likes, but the medicine has been chosen by a qualified practitioner.

Mr. Baxter: Information on Patrick Francis Baxter  Zoom on Patrick Francis Baxter  He is not qualified: that is the trouble.

Mr. Lemass: Information on Seán F. Lemass  Zoom on Seán F. Lemass  Well, we refuse to allow the medicine to be prescribed by a lot of quacks. However, the main purpose of my remarks is to get it clear that when Senators talk about concentrating upon increasing agricultural production and expanding agricultural exports, they mean that they believe that these things will happen if the Government does nothing, and that all the various proposals we get from time to time for Government activity of one kind or another in relation to agriculture will be opposed by them because they do not agree with them and do not think they can lead anywhere. No doubt they always held that view, although they did not express it until now. I do not. I think if we are going to get efficiency in production in industry and agriculture, it has got to be organised from the top and organised by some central authority in the national interest. I believe that farmers will be unable to secure the maximum output of which the land is capable, and that the country as a whole will be unable to obtain the maximum export which it is desirable to achieve, without systematic organisation, without organisation directed by people who have studied all the problems involved and all the difficulties which are going to arise. If we leave it to individuals, to the laws of chance, if we adopt the policy of laissez faire which Senator Johnston is so fond of, I think we will fail. I think that every country which has followed that advice has failed, and, with the world organised as it is to day, any Government that proposed to follow that advice would qualify for a madhouse.

Question put and agreed to.

Committee Stage ordered for Tuesday, 11th July.


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