Thursday, 27 March 1952
Seanad Éireann Debate
Professor Johnston: I am glad the debate lasted into the second day, because it is very undesirable that two professional economists should inflict their views on the House on the same day, and yet perhaps I am a professional economist with a difference, for, in fact, if I may make some personal explanation, I only came into this business by what Gilbert and Sullivan would call a set of curious chances. About 39 years ago, I became a member of the staff of Trinity College, Dublin, at a rather early age, and Dr. Mahaffy, who was then a very important person in the place, thought I was too young to be allowed to settle down in the academic groove, so he got me elected to an ecumenical travelling fellowship, the conditions of which were that I should travel around the world and observe the conditions of men and society in the various countries I visited—a very pleasant and agreeable kind of fellowship to hold. I made that journey around the world visiting, amongst other places, India, China and the United States of America, and the effect of it was to give me a profound interest in the social phenomena and economic conditions which I found existing in these far-away countries. In the result, I abandoned culture, as Dr. Mahaffy afterwards complained, and developed a keen interest in social philosophy, and especially in agricultural co-operation, so that perhaps I was somewhat of a disappointment to Dr. Mahaffy as well as to various others of my friends.
In that kind of way, I have always tended to look on national problems from what one might call the ecumenical point of view. I should like to consider our present economic problem in its world setting, but not at too great length, because what we have to do we must do as a responsible independent nation, responsible for our own national policies. The first thing we must realise is that nine-tenths of our economic troubles are the direct result of the impact on us of the present international  tension which is reflected in the rearmament race which is disorganising the economy of countries with which we are connected and indirectly disorganising our own. It would be well if we had more international contacts so that we could pull our weight in the effort to lessen this international tension and perhaps bring back the rest of the world to a more rational and less quarrelsome frame of mind; but now that we are no longer a member of the Commonwealth, our international contacts are distinctly limited.
It might be possible that, if we made application, we would be allowed to join the Comintern, but I do not think we are likely to make that application and I do not think I would recommend it. It would certainly be possible, if we made application, that we could join the N.A.T.O. but I would equally deprecate and stoutly oppose any such step on our part. There remains only the one genuine world-wide, and, presumably, impartial, organisation, namely, U.N.O. It is worth while putting on record the facts with regard to our efforts to belong to U.N.O. When we originally made application—I think, in 1947—our application was vetoed by Russia, but, since then, Russia has altered her point of view and has agreed to the admission of Eire, provided that about a dozen other nations which are also candidates are allowed to join at the same time. That has been vetoed by America, so that the country which now keeps us out of U.N.O., as well as a dozen other nations along with us, is no longer Russia but America, and we have no impartial world-wide platform in which we may express our opinion about international matters.
That is a pity because U.N.O. embodies a great idea and there are various organisations connected with it which are doing very useful work and which in their way help to preserve and perhaps improve the conditions of humanity and lessen the dangers of a third world war. There is one organisation connected with U.N.O. to which I think we do belong—the F.A.O. In that connection I should like to draw  the attention of the House to a book, The Geography of Hunger, written by the chairman of the F.A.O. which is of tremendous interest to everyone who is interested in the welfare of undeveloped and half-starved people in every part of the world. However, that is by the way.
Our refusal to join the other semi-international organisation, N.A.T.O., has led to the jibe that “They are all out of step except our Paddy.” But we are not so completely out of step as all that, for there are other sane countries in the world, notably Sweden and Switzerland, which are members neither of the Comintern Pact nor of N.A.T.O., and we are in good company so long as we preserve our sanity with countries like Sweden and Switzerland in a world which is rapidly becoming utterly mad. In fact, I feel so strongly about the lunacy of the world in general that I think, from our national point of view, the only sane economics are the economics of Sinn Féin. We are surrounded for the most part by lunatic nations and what in a normal world I would regard as economic folly may in our present circumstances and from our point of view be the only wise economic procedure.
In the inter-war period I was a vigorous opponent of the self-sufficiency policies practised at that time by the Government in power, but I think under present conditions the only sound thing to do is to increase to the maximum extent—and that, unfortunately, is not very great—the degree of national self-sufficiency that we can have both in agriculture and in industry.
With that object in view I contributed certain articles to a paper which is probably read by some of you but not read by all of you, namely, the Irish Press, and because those articles appeared only in one paper, the etiquette of the other papers was such that they could make no reference to them. However, with your permission, I hope to refer to some of the points I made in the course of those articles, so as to give the papers generally no excuse for remaining silent about these points if they think they are of public  interest. This may lead to the national aspects of my contribution to this debate.
Senator O'Brien had something to say yesterday about the whole matter of food subsidies. I may say, without developing the point at any length, that I am altogether opposed to preserving those subsidies in any shape or form. I want to see the whole £15,000,000 that we are spending on food subsidies saved for the Exchequer and the whole community brought back to economic reality so that everybody, everywhere, pays the full economic cost of all the food that he eats and nobody anywhere can have any economic interest in feeding wheaten products to the greyhounds or the pigs.
That is a somewhat heroic measure and, if done at all, as I hope it will be done, it will require to be qualified by important concessions to the poorer classes in the community who would find the burden of dearer food very heavy. But, even so, I would hope it would lead to a substantial improvement in the financial position.
My objection to subsidies is not only that they produce an atmosphere of unreality in our fundamental economic relations but that in some aspects of their effects they act as a positive discouragement to desirable economic activity. Take the subsidy on butter for example. That operates to give to the creamery milk supplier a price for milk which corresponds to a price for butter of about 4/- a lb., but the consumer pays for his butter a subsidised price of only 3/- per lb. and in the result the important section of the community who make farmers' butter at home in the non-creamery districts have to compete with the subsidised butter in their efforts to sell theirs. They find the price that they can get for their farmers' butter artificially reduced by the operation of the subsidy so that it is no longer worth their while to exert themselves to produce and to sell a surplus of farmers' butter in the non-creamery district.
The proportion of our total butter  supply which is normally produced on farms in areas where there are no creameries is quite considerable. Normally, something like two-fifths of our total butter supply is the produce of farmers' home-dairy operations, and one result of this undesirable working of the subsidy principle in connection with butter is that farmers have diminished the number of cows that they keep in the non-creamery districts and have diminshed the output of butter whch they make for themselves or for sale in the local markets.
The figures for that are quite interesting and are readily available. You will find them in the appropriate number of the Irish Trade Journal. It appears that total butter production increased from 1,024,000 cwt. in 1948 to 1,190,000 cwt. in 1950, that is including farmers' butter and creamery butter. But, in the same interval the production of farmers' butter diminished from 417,000 cwt. to 369,000 cwt. In other words, the increase in butter, which was the object that it was desired to bring about by raising the price of milk supplied to the creameries, was negatived by the reduction in the output of farmers' butter.
Even more significant is the number of cows on farms not sending milk to the creameries. In 1948 there were 542,000 cows on such farms. In other words, nearly half the cows in the country were on farms not in creamery districts at all. In 1950 the number was 509,000. In 1951 it was 491,000 and that downward trend is probably still continuing. That is a reduction of about 50,000 cows in the course of a very few years on non-creamery farms.
You might ask what would happen if you simply wiped out the butter subsidy and established a free market in butter. My guess is that in a free market the price of creamery and first-class farmer's butter would settle down somewhere in the region of 3/6 to 4/-, and the total production of butter would rapidly increase. We would no longer need to import New Zealand butter because at that price it would be worth the while of farmers in the non-creamery districts to produce and sell all the butter they could conveniently manage to produce. We would then reach the point where we  would have a surplus of butter available for export and then we would have to negotiate with our neighbours to find out at what price they would take that butter.
For years, Britain has been exploiting the monopoly position she enjoyed during the war in order to buy butter on a long-term basis from countries like New Zealand and Australia at a price which favoured the buyer but which turned out in the long run to be anything but encouraging to the Dominions producer, and the effect of that, in Australia at any rate, has been that the whole Australian economy has tended to go over more and more to industrialisation and to get out of agricultural production of butter or otherwise to an increasing extent, so that the output of Australian butter is diminishing, and even in Australia itself there is sometimes a shortage of butter. I have read in some responsible journal that in the black market for butter in Sydney the price rose as high as 10/6 a pound.
In other words, the whole world butter market is in a state of chaos, largely on account of the over-control and over-regulation and uneconomic price fixing and, sooner or later, the world butter market will have to be freed. In a free world butter market we have nothing to fear about the future price at which we can sell surplus Irish butter if and when such a surplus emerges. Meanwhile, I hope we will take a chance and abolish the butter subsidy and free the whole butter market at home and do the best we can to get the best price we can if and when a butter surplus emerges.
There are other points that I made in the course of those articles which may or may not be worth while emphasising now. Talking about capital expenditure and savings, I did, I think, make the point that if we indulge in capital expenditure at home, whether on public account or private account, or both, in excess of national savings, that is bound to stimulate the total of imports and is likely to have a prejudicial effect on the balance of payments.
I think Senator O'Brien made the same point yesterday and there is no  need for me to dwell on it at undue length but, obviously, the money that is spent on producing capital goods at home becomes almost immediately consumer income so far as the people employed in producing those goods are concerned and is spent on consumer goods very largely, either of domestic or foreign origin. There is a temporary pressure on available supplies of consumer goods. That is not a case for abolishing or cutting down capital expenditure entirely, but it is a case for giving a high priority to such forms of capital expenditure as will lead to a greater degree of production and a desirable increase in the supply of goods available on the home market.
In that connection the claims of agriculture for a high priority are well founded because in the past agriculture, which is one of the greatest of our national assets, has been one of the most neglected, and therefore there is a wider margin for increasing the value of the national income by an expansion of our agricultural output. There are forms of capital expenditure in connection with agriculture which can give a remarkably quick return. The effect of the application of some fertilisers will be noticed in the same year, and will give a return in that year. Some other fertilisers will give their return over a period of years. One of the most desirable improvements which could be made to the land would be an improvement in the grass produced on pasture land. That applies particularly to cases of worn out pasture fields which would need reseeding. That is an expensive operation, but it must be remembered that grass laid down in that way will give an immediate return within a few months. Grass laid down in May will give a return in July or August as feed for animals. That is a type of expenditure which gives a quick and good return, and therefore is one that should receive every encouragement from the powers that be.
I would like to say a few words in regard to the former Minister for Agriculture. I regard him with mixed feelings. In some aspects he is a person who says more than he should in many things and his general attitude  on international affairs would lead us into an Anglo-American alliance which, if certain wild men had their way, might bring us into a third world war. On account of his international attitude I have no use for the former Minister for Agriculture but as a Minister for Agriculture he was a distinct success. I think one of the things that saved the inter-Party Government from complete disaster in the last election was the fact that the country people liked the former Minister for Agriculture more than the city people liked the inter-Party Government; they were saved from complete defeat by the fact that the country people liked the policy of the former Minister for Agriculture.
I also agree with Senator O'Brien about the desirability of encouraging financial savings. Unfortunately one of the most necessary requisites for achieving this encouragement is an increase in the rate of interest which people can get for putting by some of their money and not consuming it all. That is something of which borrowers do not entirely approve. I would like to dissipate the idea that the banks, as such, have a completely one-sided interest in money being as dear as possible. One result of the recent increases, especially in the long-term rate of interest in London and elsewhere, has been that the capital value of the long-term securities has fallen appreciably. As we all know, the banks, both here and in Britain, have very large portfolios of long-term securities which they regard as amongst their most important long-term assets. When the value of these assets falls, as they have done, it means that the banks have to write down the value of that important part of their total assets, and the fact that they make further loans at a higher rate is negatived by the losses they have incurred in writing down the value of those large portfolios of long-term securities. Even if it is true that it is a bookkeeping loss from the point of view of the banks, they have no single interest in making money as dear as possible.
The whole matter of national saving is a difficult one. I have been looking  at White Papers recently and have found that the national savings are recorded at something like £20,000,000 in the years 1948 and 1949. I wonder if that is a reliable estimate, and if it is could we not get a more recent figure, say, for the year 1951 and the current year. I have not the slightest idea of what is the true amount of the internal savings or what it is likely to be in the course of the current year and I would like if we had some system whereby a reliable estimate could be made.
To the extent that we finance the production of capital goods either on private or on public account out of currently realised national savings within the economy there is no need or occasion for the repatriation of external assets, but if we attempted to develop our economy beyond the measure of currently made available national savings then we could only do so to the extent we disinvested or, as the phrase goes, repatriated our external assets. “Repatriation of external assets” is a mouth-filling phrase but it implies perhaps more than it says. It means selling securities of some kind by somebody, either on public or private account, and it is very undesirable to sell now for £77 war loan that you bought for £100 only three or four years ago. That situation must apply in thousands and thousands of personal cases and must apply even to State Departments or other organisations which hold large quantities of these British securities. One would hesitate therefore for a long time before advising either private or public interests to sell any large quantity of British securities at the present disastrous price level.
We must hope and pray that that present disastrous price level is only a temporary phenomenon and that in a very few years those securities will get back to something like par. If we had to sell any large quantity of those securities, not only would we have lost about 20 per cent. of the money value which we acquired when they were bought some years ago but also incur loss by their diminished buying power because, as we know, the £1 now buys considerably less than it bought five  years ago. There would be therefore a double national loss in any policy which involved large-scale repatriation of securities. That, therefore, is a reason why we should be extremely conservative about our general policy in the production of capital goods and should try as far as possible to keep it within the measure of national savings and confine it as far as possible to such objects as would give an immediate realisable return in the form of an addition to the total consumer goods available in our economy.
Further, in the course of those articles I pointed out the desirability of a financial policy keeping in mind the economic reactions of the financial policy practised. It should be aimed, not only at solving an immediate financial problem but at producing the right economic reaction and, above all, at bringing about a desirable increase of production and export capacity. Senators have been very eloquent about the failure of agricultural output to expand in recent years. We are all aware of what is called the inelasticity of agricultural output, but let me say at once that there was a substantial and desirable tendency for agricultural output as a whole to increase in the years 1948, 1949 and 1950. That, I think, was due to the fact that for the first time since 1932 we got a square deal in our price relations with the British buyer and that also for the first time in many years our agriculture as a whole appeared to be established with a reasonable balance between large, medium and small farms. Unfortunately, however, that situation did not continue.
During the inter-war years and especially during the economic war period I was probably considered to be a champion of the large farmers and was even looked upon in certain quarters as the friend of the ranchers. That, perhaps, was rather unfair, but there was an element of truth in it, because at that time I considered that the large-scale farmers were getting a raw deal and that it would be in the national interest, in the interest of the agricultural economy as a whole, that they should get back to the possibility of expanding production. On the other  hand, in those years the small-scale farmers also had a bad time but it was possible to do something for them while it was not possible to do much for people who depended mainly on cattle.
The boot is now on the other foot. Ever since the outbreak of the second world war people with farms of 50 to 100 acres and more were able to do pretty well for themselves because crop production and cattle production have been highly profitable, whereas people with 50 acres or less have had rather a raw deal because their particular kind of farming has been definitely unprofitable. Every person who knows Irish agriculture knows that the small farmer is primarily a processor of raw materials, many of which he must acquire from sources outside his own farm. Those sources are not necessarily foreign sources, but they are outside his own farm, and his only hope of increasing production and making a tolerable living for himself and his family is, if he can, to expand the purchase of raw materals which he uses, and which he has to buy, and make a profit on the margin between the price he pays for the raw materials and the price he gets for the finished article. All through the second world war the margin between the price of cereal raw materials and the finished egg and bacon products was altogether unsatisfactory. In fact, in that period it was nearly impossible for the small farmer to get any raw materials at all —certainly he could not get any Indian meal—and therefore he had rather a bad time. It was a physical impossibility for the small farmer to increase the production of his characteristic produce. He did, of course, increase the production of cash crops for sale, but in the nature of his work the small farmer can never make a livelihood solely on the production of cash crops for sale.
In the three years 1948, 1949 and 1950 that relationship between the price of Indian meal and the price of bacon and eggs was restored, which enabled the small farmer to get back into production and expand his output. It looked as if we were to have a period of agricultural improvement, but there  came along, in 1949, the devaluation of sterling, and one result of that was that the price of Indian meal shot up to 30/- and more per cwt., while the price of eggs and bacon was rigidly controlled at the level determined by the British Ministry of Food. It no longer paid the small farmer, therefore, to specialise in increasing the production of poultry and pig products. In fact, he would have been a born idiot if he did make any attempt in the only direction in which, in the ordinary way, he could increase production; he would have been simply inviting bankruptcy.
The dimensions of that problem are considerable, because, on looking up the statistics, one finds that, in 1936, there were 386,000 males engaged on farms under 50 acres in size. Therefore, the total number of persons engaged on farms of all sizes being only somewhere between 500,000 and 600,000 at that time, more than half of the total manpower engaged in Irish agriculture is engaged on farms under 50 acres; that means that, owing to circumstances which are largely beyond our control, about 300,000 of these people were inhibited from increasing production in the only possible way in which it was possible for them to increase it, because it was no longer financially wise for them to do so.
We cannot blame Deputy James Dillon for that unfortunate circumstance, except to the extent that some people may regard him as responsible for devaluation; and I do not think it would be fair to regard him as responsible for that, because he was not really responsible for the devaluation of sterling. There, one was faced with the case of external circumstances suddenly making it unprofitable for all small and medium-sized farmers to expand agricultural production in the only way in which they would normally find it possible to do so.
As I see it, the central problem that we have to face now is how to put back at least half the manpower occupied on Irish farms into a situation in which they can profitably expand  production. We must get rid of our traditional dependence on Indian meal as one of our major raw materials for animal product production and substitute for it a home-grown cereal, such a cereal as has definitely come along in recent years, namely, Ymer barley, which has all or nearly all the merits of Indian meal as a feeding-stuff and has, too, the great advantage of being capable of production in our own soil.
Those who grow and sell Ymer barley under present circumstances are able to get for it a price which is closely equivalent to the price of Indian meal but which certainly would not be conducive to the egg specialist or pig producer regarding it as a cheap food in relation to the present price of eggs and pigs. Therefore, in one way or another the price at which the small farmer can buy Ymer barley must be made cheap enough to make it worth his while to buy it, while at the same time the price at which the possible grower of that barley can sell it must be made attractive enough to bring about a substantial increase in the total acreage.
We must not forget, however, that we shall have to considerably extend the area under wheat at the same time in the national interest because wheat is another dollar product for which we can no longer afford to pay dollars. I am told by my farmer friends that the same kind of cultivation and the same kind of land are needed for the production of Ymer barley as for the production of wheat and that, in fact, Ymer barley is a fertility demanding cereal requiring richer land for good results than does the ordinary malting barley. I see no reason, therefore, why one should not guarantee a price for Ymer barley exactly the same as the price guaranteed for the growing of wheat, and I see every reason why the farmers generally should aim at producing at least 200,000 to 300,000 acres more of both Ymer barley and wheat in the current crop year.
My idea is that if barley is grown at all it must be grown by the larger farmers, the men with fifty acres of land and more, who can grow more grain than they need to use themselves  on their own farms and are, therefore, in a position to sell a substantial proportion of it to other farmers who cannot grow enough for their own requirements. I suggested that there should be a subsidy of £10 per ton paid in respect of Ymer barley sold off the farm. The person growing it should get a price of the order of £30 per ton, and the person buying it as feed on his own farm should be able to buy it at something like £20 per ton. That price would then bring it into such a relationship to the price of bacon and eggs as would make it possible for the smaller farmers to develop considerably the production of those important animal products.
I also made another suggestion which, I am sure, will be rather unpopular in certain quarters, namely, that in order to get the money to subsidise the price of barley one should put a tax of £5 per head on all cattle exported on the hoof. The net result of that would be to raise about £3,000,000 for a fund for subsidising Ymer barley. But it would also achieve other objects. It would give a boost, if I may be permitted to use that word, to the rapidly developing dead meat trade, which is something I think ought to be developed from the point of view of the long-term general requirements of our economy. More important still, it would be in the long-term interests of our live-stock industry as a whole, though from the short-term point of view it might perhaps be unpopular with certain farmers.
At present there is a lack of a desirable relationship between the price of milk and the price of beef. The milk interests want that relationship improved by hook or by crook by an increase in the price of milk. I personally would like to see that relationship improved by a decrease in the national price of beef. In either event one would restore a desirable relationship but, from the point of view of the cost of living and from the point of view of the national revenue, it would be a good idea to bring that desirable relationship back by reducing the price of beef cattle in the home market rather than by increasing the price of milk and butter in that market.
 One side of the present unsatisfactory relationship between the price of milk and the price of beef is that if a farmer had a two-year-old heifer last autumn and wanted to sell that animal, the prospective buyer would probably ask him if she was in calf. If the seller said she was he would have got perhaps £5 less than the price he would have got if she had been without a calf and was capable of being turned into a beef animal for sale the following year. In other words, the present excessive price for beef cattle is tempting farmers, for the sake of a quick financial gain, to turn into beef animals that should in the long run be turned into cows and used to develop the breeding capacity of the live stock population as a whole. I regard that as a disastrous trend in the present situation for nothing is more important than that we should increase the numbers of well-fed cattle, especially breeding stock, in the country.
If we turn an excessive number of heifers of the type that should be made into cows, in the long run, into beef animals we will reduce our total cattle population and impoverish our agricultural economy as a whole. Another Senator has already drawn attention to the statistics and I compliment him on having realised their great importance. If you look at the Irish Trade Journal you will find that in June, 1951, the number of milch cows as a whole was less by 19,000 than in 1950 but, much more sinister and more menacing still, heifers in calf in 1951 were less by 34,000 than in 1950. That is the trend which I would like at all costs to reverse. One way of reversing it would be to make beef cattle cheap, if necessary by taxing the export of beef cattle so as to make it less attractive for farmers generally to sacrifice good cow heifers to the beef trade.
That more or less finishes what I have said in the course of these articles except that I ended up by making a suggestion which I hope the Minister will consider very seriously with reference to the losses of Córas Iompair Eireann. The annual loss to the taxpayer in the running of the public transport services is something like  £1,500,000. In general it is a sound idea in finance to create such conditions as will induce citizens to do for their own interest what is in the public interest anyhow. People are much more likely to follow a policy which is in the public interest if it is also in their own interests to follow that policy. By suitably devised taxation procedures you can get people to behave in a way which is socially advantageous, because it is to their personal interest to do so.
The great problem that Córas Iompáir Éireann has hitherto found insoluble is how to deal with the fact that more and more private businesses find it convenient to own and run their own transport and use the public transport system only on the few rare occasions when it suits them to do so. To remedy that I suggest that any owner of a lorry or a goods vehicle should be let off with a comparatively nominal rate of tax, say, £5 a vehicle, provided that he uses it only within a radius of a few miles of his own place of business, that few miles being so arranged that it will bring him to the nearest railhead or the nearest station on Córas Iompair Éireann and also to the nearest market town. If lorry owners found that by paying only £5 a vehicle they could have the convenience of their own transport in limited but important ways instead of having to pay £20 or £30, which is the full tax rate, it is amazing how soon they would discover that it was to their interest to use their own transport only for doing messages to the local Córas Iompair Éireann station or goods depot, and how quickly they would find it to their interest to work in with the public transport system instead of completely ignoring it as they do at present. Some scheme along those lines might go far to solve a hitherto insoluble problem which Córas Iompair Éireann have found, and without any serious loss to the public revenue it might eliminate that substantial drain on the public revenue which we suffer through having to subsidise Córas Iompair Éireann to the extent of about £1,500,000 a year.
Dr. Jessop: Might I say, as a new recruit to this Assembly, that I have listened with great interest to this debate? Nevertheless, I am not quite clear as to the proper scope of matters to be raised, though I gather it is fairly wide. As I am not precisely clear on this point, I am not going to try to make any really serious constructive contribution, but would like to support some of the matters raised by Senators who have spoken already. Senator O'Brien mentioned the necessity for investing in education, and that is a point of view which I would like to support as strongly as I possibly can. We are often told that this is a small country and that we have not got many very valuable resources and, therefore, cannot afford to spend large sums on education and similar services. I think the argument must be used in precisely the reverse direction, that, because we are only a small country with comparatively limited resources, we cannot afford not to spend to the limit on education, in particular. Every citizen must be made to reach the highest pitch of efficiency, and this is not to be confined to the technical aspects which Senator O'Brien mentioned, such as agricultural and medical research—in which I am interested myself—but should extend to all aspects of education.
We must be prepared to make our people and each one of them as efficient a member of the community as we can. That can be done only by broadening the basis of education, which must not be limited to the age of 14. We must have a very wide basis and our teachers must be encouraged to remain in our country. It must be made worth their while to do so, and we must retain men of the highest principle and the widest possible range of experience. I know that is going to cost more, but that, I take it, is what Senator O'Brien means when he says you must invest money in education. I support that viewpoint very strongly.
Another point raised by a number of speakers, including Senator O'Brien and Senator Fearon, was the question of the need for savings. This is, of  course, related to the need for investing money in matters like education. I am concerned regarding certain aspects of public services which at the moment are running very near the minimum level—for instance, medical science, medical education, medical research and hospital treatment. To take hospital treatment, the voluntary teaching hospitals here have recently been told that they must not spend more on any individual patient—to include maintenance, nursing and medical treatment —than £5 a week. That is just impossible. You cannot provide all the requisites of maintenance, nursing and treatment for the majority of patients at the present level of medical treatment.
Take the case of the recently investigated drug cortisone. If a man is suffering from arthritis—rheumatism—he may need to be treated for that. During the last year or so supplies of cortisone were available from the Medical Research Council for certain poor people and their treatment has been an experiment or a matter of research. It has now gone beyond the sphere of medical research. It should now become a matter of routine treatment of people suffering from this disease. But one week's such treatment may cost a patient £4 or £5. How can any hospital supply that treatment if its total cost must be kept within £5? There is only one answer—that the rich man can buy cortisone while the poor man cannot. It means one level of treatment for the rich and another for the poor, which is the very reverse of what we would like it to be.
This is only one aspect of the problem which I would like to raise. I take it that if the moneys from which these needs are ordinarily met are limited and cannot be expanded, and if we want to expand our services to keep in line with modern development, then one possible source is that of increased savings, which Senator O'Brien, Senator Fearon and others have suggested. I would like to support them in that suggestion as strongly as I possibly can, as well as in the point about investing money in education.
Mr. Summerfield: I should like to  apologise for my absence yesterday. I was in London and I missed the Minister's opening speech on this important matter and also the speeches made by Senators on the Bill. In the few remarks I intend to make, I want to do something to counter, so far as I can, the damaging effect of some of the speeches as reported in to-day's papers. I was rather surprised to read the report of Senator O'Donnell's remarks in which he declared that industry was never in such a bad way. I wonder do speeches of that kind do anybody any good? They certainly do not portray the real facts and I think it is speeches such as that which have helped to create the slump which exists to-day, in so far as a slump does exist. That slump is largely artificial and might not exist, if we had not had speeches such as the speech to which I refer.
It would be idle to deny that industry is having a difficult time. It is well known that there are bigger stocks of finished goods in the country than ever in normal times, but that is not altogether a bad thing. In so far as stockpiling consists of essential goods or goods for capital equipment, machinery and so on, the money spent on them was a good and wise expenditure. I am happy to say—and this is known to more than myself—that even at this moment there is a considerable industrial expansion going on in the country. I am afraid that that expansion will not be as rapid as it would have been, now that the cost of money has gone up. I am sorry that we have to accept it that, when Britain increases her bank rate, we must willynilly follow suit. I had hoped, as many others had hoped, that, when we got our political freedom, we would have shaken off the financial strait-jacket, too, but in so far as it remains, it must have a very damaging and hurtful effect on companies, most of whom are operating on bank overdrafts.
A study of recent balance sheets will reveal that the increase in the bank rate of 1 per cent. will diminish the yield to the investor by 1 per cent. It will mean an automatic decrease of revenue to people with money invested in industry, and, in turn, the State will  get a lower revenue, because there will be less money to tax. I do not want to speak without a sense of responsibility on this matter. I do not want to argue that all is well with industry. As I have indicated, there is a recession of trade now, but I believe that if we stop talking about a slump and concentrate rather on focusing attention on the things that are happening, the new businesses being created, we will speedily put an end to what I firmly believe is an artificial situation, but a situation that is not doing the country any good.
I want strongly to support the suggestions made by Senator O'Brien to the Minister that, at this critical time, the Minister will not do anything to increase income-tax. Income-tax in this country, as has already been eloquently argued by Senator O'Brien and other Senators, is not fairly borne and not fairly shared. The companies with their audited accounts and the man with the fixed income, whether he is the professional man or a member of the better-paid class of manual worker to-day, are the people from whom the Cæsar is collecting his last cent; but there is that big section of the community which is notably enjoying a more than average degree of prosperity at present and which escapes the income-tax net. I join with Senator O'Brien and others who urged on the Minister that nothing should be done to increase income-tax, because, with a further increase in the rate of income-tax, plus the high cost of money, I fear the consequences that will result in business.
I know that people have urged that there should be economies in the cost of Government. That is becoming a rather trite saying, but while we all feel that the cost of Government has soared to outlandish heights, is it not rather ironical to suggest economies in administration when we are faced with the introduction of new measures, social service measures and others, which inevitably will inflict an enormously increased load on the taxpayers? I wonder whether I will be accused of heresy or recklessness if I suggest that this is not the time to  introduce new measures which inevitably will increase the tax load on the people. If we accept the present time is abnormal—and with the effort to restore sterling to its normal strength, we are passing through a difficult period—why not let us wait a while before we, of our own act, introduce new measures which must and will increase the cost of running the country, and therefore diminish the actual spending of our people?
At the close of his remarks Senator Johnston referred to Córas Iompair Éireann, and made a suggestion with which I have to disagree completely. He suggested that, in the interests of Córas Iompair Éireann, those people who own their own private transport should be induced, by the giving of a lower rate of registration tax, to work within a limited radius and feed the railway stations. If the Senator knew as much about transport as he obviously does about agriculture, he would not have made that suggestion at all, because one of the biggest items of expense in connection with transport in any part of the world to-day is the amount of handling involved, and it would at once be obvious, if the short radius operator had to have a second handling charge added to his costings, that the cost would greatly outweigh the economy effected by the lower rate of tax.
I did not prepare any very full notes for this debate, because I had a lot on my mind while across the water, but, having seen statements such as were published in the papers to-day, I felt that I should, as a man representative of an industry and concerned with a number of industries, try to do something in so far as I could to repair the damage done by what I can only regard as a rather reckless statement made in the House yesterday.
Pádraig Ó Siocfhradha: Tá an díospóireacht seo ag éirí beagán leadránach. Níl fonn ormsa morán cainte, ach tá pointe nó dhó gur mhaith liom tagairt dóibh. An príomh-cheann díobh, baineann sé leis an talmhaíocht, an fheirmeoireacht. Ba mhaith liom a thathaint ar an Aire aire ar leith agus spéis ar leith a chur i gceist gnéithe áirithe den talmhaíocht. Is clos dúinn  le déanaí cuid mhaith gearánta faoi scéal soláthair bainne—feirmeoirí agus lucht bó ag gearán nach leor an t-ioncam atá acu as an ngné sin den talmhaíocht agus iad ag bagairt deireadh a chur leis an ngné seo talmhaíochta agus dul le saghsanna eile. Mholfainn don Aire agus don Aire Talmhaíochta aird ar leith a thabhairt ar an ngné sin den obair, mar is rud fíor-thábhachtach é agus, maidir le tionscail mór na feirmeoireacht sa tír seo, is rud é nach féidir dúinn ligint dó dul in olcas nó aon lagú teacht air. Níl aon chineál feirmeoireachta is tairbhí faoi láthair ná an chuid a bhaineann le soláthar bainne agus, dá bhrí sin, le curadóireacht. Baineann an dá rud lena chéile.
Tá gné eile ann, an chuid eile den talmhaíocht seo, is é sin soláthar agus beathú feola. Ní rudaí iad sin nach bhfuil dlúth-cheangal eatorthu. Is chuige sin atáim-se ag moladh don Aire go gcuirfí spéis ar leith ann agus go dtabharfaí aire ar leith ná tiocfaidh aon olc sa chéad ghné, sin gné soláthair an bhainne agus an churadóireacht a bhaineann leis sin.
Gan an chéad rud sin, an churadóireacht agus an bainne, ní bheidh an dara cuid ann mar, má tharlaíonn go raghaidh aon cuid de na feirmeoirí do réir mar bhíodar ag bagairt le déanaí, le fosaíocht ín ionad curadóireacht, ní bheidh i gceann cúig blian gamhna agus stoc óg acu le cur ar a gcuid talún féin. Má théann siad le fosaíocht in ionad curadóireacht, raghaidh laghdú tubaisteach ar líon na mbeithíoch, ar líon an stoic óig sa tír agus chaillfimid tairbhe an ghnó eile go bhfuil ár dtráchtáil thar lear ag brath air, is é sin díol feola thar tuinn amach.
Má tnéann feirmeoir a bhfuil cúig beithígh aige le fosaíocht in ionad bainne agus stoc óg a thógaint, sin cúig gamhna gach bliain de laghdú ar líon an stoic óig a bheidh sa tír. Má théann 100 leis an gcleas, nó 1,000 leis an gcleas, is fuirist a aithmt cad é an toradh a bheas air sin agus as san ach machtnamh agus staidéar a dhéanamh air.
Do mholfainn don Aire Airgeadais, má bhíonn baint aige sín leis an scéal, agus don Aire Talmhaíochta, a bheith fíor-chúramach ná ligfear don chlaonadh  sin ag aon chuid de feirmeoirí na tíre teacht chun críche. Tá tubaist sa rud sin. Ba mhaith liom a thuiscint go dtuigtear a thábhacht agus go dtuigtear an tubaist atá ann.
Sa ghné sin den obair, sa talmhaíocht sin, tá saibhreas mór tionscal na tíre, do réir na bhfigiúirí, agus is dóigh liom gur sa chuid sin den talmhaíocht, an bainne agus an churadóireacht, is bun agus is bunús leis. Is ansan atá leas tionscal sin na hÉireann agus is ansan atá leas tionscal díolta na feola, cuirimíd amach beo nó marbh é. Ba mhaith liom a thathaint ar an Aire cúram a dhéanamh air sin.
Tá ana-chuid tráchta againn le tamall, anseo agus lasmuich ar sholáthar leasúchán talún, leasú tacair, leasú go gcaithfidh an feirmeoir dul go dtí an siopa agus a cheannach. Ní déantar aon ró-thrácht ar leasú nádúrtha, leasú a déantar ag na beíthígh. Sin ní gur cheart don Roinn Talmhaíochta cúram ar leith a dhéanamh de agus gan a oheith ag síor-thrácht agus ag gríosadh na bhfeirmeoirí chun leasú tacair do chur ar an dtalamh. Is mór an difríocht atá idir an dá shaghas leasúcháin. Dar liomsa, agus lena lán daoine go bhfuil baint acu le feirmeoireacht is rud sealadach an leasú tacair sin. Baineann sé níos mó de bhrí as an talamh i mbliain nó dhá bhliain agus ní cuirtear aon rud ar ais sa talamh in ionad an ní sin a baintear as. Ní mar sin don leasú ceart, an leasú nádúrtha. Nuair a húsáidtear an leasú nádúrtha cuirtear thar n-ais sa talamh cuid mhaith de na rudaí a baintear as. Is dóigh liom gur ceart go ndéanfaí cúram de sin agus go ndéanfar gríosadh ar na daoine chun a leithéid sin de leasú d'úsáid.
Nuair bhí mé óg fuaireadar mórchuio leasú talún as an bhfarraige agus as an tráigh, feamannach, sliogáin, gaineamh ar an tráigh, agus rudaí eile. Ní bactar anois leis na rudaí sin. Is dóigh liom gur tubaist é sin. Is dóigh liom gur caitheamh airgid gan riachtanas bheith ag dul go dtí na siopaí chun leasú tacair d'fháil.
Cúpla ní mar sin ba mhaith liom a thathaint ar an Aire. Mar dúirt mé, is dóigh liom go bhfuil an díospóireacht ro-fhada cheana, ro-scaipithe, agus gur féidir dúinn argóint a dhéanamh ar  cheist ar bith. N'fheadair an bhfuilimid ag dul aon phioc ar aghaidh ar an Vóta.
Beidh an díospóireacht ar siúl nuair a thiocfas an Meastachán os ár gcomhair. Táimid beagáinín tuirseach den chámeadh ar an Rialtais agus de na tagairtí poiliticiúla, pearsanta, a chuala ó gach taobh den Tigh agus do chomhairleoinn go raghamais ar aghaidh agus go dtugaimis an cead don Aire atá sé a lorg.
Mr. Loughman: We have had several very interesting speeches from experts in economics and I, who have no claim to that title, would like to refer to two subjects, namely, savings and taxation, from the point of view of the ordinary layman.
With regard to savings, I believe that the ordinary wage-earner, particularly the small wage-earner, is saving just as much as he can. His savings in the main are made through ordinary insurance and State insurance, which is more or less compulsory. I believe that the wage-earning classes, in the main, cannot do any more saving than they are doing at the present time.
There is the other class, the people who have greater means. A number of these save by investment in industry and various other methods. The number of those who put their money in the banks and, as was suggested by Senator O'Donnell yesterday, draw one per cent. on it, is not very big. At any rate, even on this question of £100, if they are putting it into the bank it would seem to me if they had any sense they would put it into the savings bank which would give them a higher rate of interest. So far as savings are concerned, I believe that, with the present undeveloped state of the country, it would be much better for people who have money to put it into industry or agriculture than leave it in the bank or other accounts.
With regard to taxation, my impression is that people are constantly complaining of increases in taxation and conveniently forgetting that money  values have decreased considerably. They are also forgetting that, in the main, increases in taxation are for the purpose of giving to the lower-paid people of the country greater social services, some of which they did not have at the time of which Senator O'Donnell was speaking, when we were all much younger and believed we could run the country well and cheaply. At that time we had only a small fraction of the social services we have to-day. I believe that if we want to have these services, taxation must continue at the present level or go even higher, and I go further and say that if we are getting good value for the amount collected in taxes, then there is nothing wrong with increased taxation.
We hear, for instance, that the £1 is now worth only 10/- and some people say it is worth only 5/-. We know that some years ago when the £1 was worth £1 taxation was half what it is to-day. If that is so, is it not reasonable, with all the services we now have, that taxation should be higher in order that we should maintain those services? At any rate, so far as I am concerned I would like, just as everybody else would, to see taxation lower, but at the same time I would like also to see the services we have maintained and improved. For instance, if we are to have the Social Welfare Bill, which is having its Second Reading in the Dáil to-day, then the workers must be prepared to save through their contributions, the employers must be prepared to pay their contributions and the State out of taxation must also be prepared to contribute. At any rate, I believe it is not increased taxation that is a menace but bad, increased taxation for unworthy purposes.
Yesterday Senator O'Higgins spoke to us of the extravagance of the present Government. I was a member of Dáil Éireann for quite a number of years and one of the stock phrases of the Opposition of that period was the “squandermania extravagance of Fianna Fáil”. There was a much greater squandermania and extravagance by the inter-Party Government during its three years of office than there was during the whole 15 years of the  Fianna Fáil régime. For instance, in the three and a half years of the inter-Party Government there was raised by loan something in the region of £90,000,000 for which the people must pay and are, in fact, paying at the present time, but in the 15 years of the Fianna Fáil régime they raised a similar sum. It would seem to me that the raising and spending of money to the extent that the inter-Party Government did during their short period of office was extravagance and it would also seem to me that when Senator O'Higgins said we were shouting from the hill-tops that the country was on the verge of bankruptcy, it was likely that it would have been if we had continued to raise and spend money at that rate. We might, of course, have been able to spend in that way for a limited length of time, but we all know what would happen if we had continued to do that. Luckily, I think, for this country, the term of the inter-Party Government ended as quickly as it did, because it would seem that if the nation was to continue raising money to that extent and to spend it with so little advantage to the country we would have been bankrupt.
We were told that the Minister for Industry and Commerce, Mr. Lemass, stated in 1948 that there was need for austerity and great point was made of that statement. Anybody who has any knowledge of the position of the country in that year will know that at that time there was no reason for austerity. If the same wise system of government as was carried out in the 15 years of Fianna Fáil had been continued over the three or four years of the inter-Party Government, it is probable that there would be no need even to-day for any austerity. I wonder why people, including Senators, will try to make a point of speeches such as that made by the Minister for Industry and Commerce in 1948 without taking into consideration the circumstances of the time.
At the change of Government Mr. Lemass pointed out that Fianna Fáil was handing over a country which was sound, and the hope was that, when it was handed back, it would be in an equally sound position. I doubt if the  country was in the same sound condition in 1951 when it was handed back to the present Government.
Senator O'Higgins was the first person, I think, in this debate to raise the bitter note. He spoke in a way which could not, by any stretch of imagination, be said to be constructive. We had speeches from Senator Douglas, from Senator O'Brien and from three or four others, and all of them, it would seem to me, argued the case without involving themselves in any bitterness, but Senator O'Higgins seemed to have no purpose in his speech other than arousing ill-feeling on this side of the House. He even went to the extent of saying that the speeches and actions of our Ministers since they became the Government were giving pleasure to Basil Brooke, were causing difficulties for anti-Partition, and providing amusement for Unionist circles in the North of Ireland. How he arrived at that conclusion I cannot imagine, but if the people in the North have any source of amusement in the present situation it must be when Senator O'Higgins and people of his views talk in that way, because all of us who are old enough to remember can point to him and those for whom he speaks as the very people who inflicted on this country Partition as it is at the present time—that is my opinion, at any rate. I have a distinct recollection of the old phrase of 1926: “A damn good bargain”. It is certainly amusing that Senator O'Higgins should now accuse us of being the people who provide the Government of Northern Ireland with amusement.
Then Senator O'Higgins and Senator O'Reilly tell us that Fianna Fáil is not the Government by the will of the people, but a Government by accident. I know that a couple of Senators replied to that statement, but I would like to add a few words. To my mind the reason why the several Independents who voted for Deputy de Valera as Taoiseach were elected was their opposition to the inter-Party Government, and there can be no doubt in the mind of any reasonable man that that is so. Deputy Cogan opposed the inter-Party Government in that election, and so did Deputies Browne,  Cowan, ffrench-O'Carroll and Flynn. They left their constituents in no doubt as to their attitude in the event of a vote in Dáil Éireann for the post of Taoiseach. I think also that during that election campaign the inter-Party group left the electorate in no doubt either about their views on these particular Deputies. Why, therefore, Senators O'Reilly and O'Higgins should now claim at this late hour that the Fianna Fáil Government are a Government by accident or not by the will of the people I cannot make out. I think it about time that that type of argument should be forgotten.
Mr. Loughman: That is all I wish to say on that subject. I was interested yesterday in a statement of Senator O'Brien's regarding income-tax. The reason I raise it is that I was not quite clear as to what he meant. He said that one person in 16 pay income-tax in this country, and that 15 out of 16 get away with it. If he intended to convey to us the idea that one person in 16 of the population of the country pay income-tax I think he was starting on very wrong grounds, because naturally income-tax is collected from the people who earn income from one source or another, and certainly half the people of the country are not liable for income-tax. Maybe if he gave us a comparison with some other country similar to this one we might be able to arrive at a fair conclusion. For instance, if he gave us a comparison with Scotland without Glasgow we might see what he meant, but the statement as he made it does not convey any meaning whatever to me.
Since Senator Colgan put a point about income-tax I would like to put to the Minister a case of hardship which I came across some time ago and which I would like him to examine. This case relates to allowances. I recently came across a man and his wife, both of them very old and invalids,  who are living now mainly on income derived from investments, from being directors of firms and things of that description. They must employ in their house a housekeeper, a maid and two nurses, a day and a night nurse. By far the greatest part of this old couple's income is spent on paying that help which they need in order to have something like the comfort they could enjoy when they were healthy. Because of the income-tax regulations as they stand to-day they can get no relief except the allowance given to ordinary married people. There is no other claim which they can make and as a result they must each draw on their capital to meet income-tax demands. Such cases are perhaps very few in the country, but I think it unjust that people situated as they are should be required to meet income-tax out of their capital. I would be glad if the Minister would examine such cases and, if possible, do something to rectify them.
I believe that we are fortunate at the present time in having in office a Government which has proved in the past capable of very useful service, and which is composed of Ministers who will work as a team and who can be relied upon, notwithstanding what may be said on the other side of the House, to place the interests of this country before those of any other country and to see that the people will get out of this country's resources the best possible living which it is possible to give. If the Minister, in introducing his Budget next week, finds that he must impose extra burdens on the people to tide us over our present difficulties I believe that the people will accept them willingly. Notwithstanding what Senator O'Higgins said I have no doubt whatsover that Fianna Fáil is a Government by the will of the people, not a Government by accident.
Mr. Burke: I do not propose to traverse any of the ground previously covered in this debate. I would, however, like to correct a statement made by Senator Loughman. He spoke about the cost of the last Government. I would ask him what is the present Government doing in relation to reducing  costs? The Book of Estimates for the coming financial year is considerably higher than any of the Estimates presented by Deputy McGilligan during the three years when he was Minister for Finance.
We should turn our attention primarily at this stage, I think, to the cost of government, both national and local. I suggest that the bill presented to us by the various county councils, corporations and by the Government to be met during the coming year is greater than the earning capacity of our people can carry. I would appeal to the Minister to set up a commission composed of our most competent experts to examine and set a ceiling— a maximum—beyond which the cost of government, both national and local, ought not to go and beyond which, if it did go, it would impair the national economy. Expenditure should then be reduced to something below that figure.
It is ridiculous in an agricultural country to expect our farmers—our basic producers—to work for long hours and many years while civil servants, local and national, work short hours and retire at the age of 65. The principal burden of our time is due to the creation of two different classes—one a privileged class and the other a class expected to provide the privileged with the ways and means of having all the things that are so desirable in a modern State.
The farming community is getting none of these things and that is the reason why the people are leaving the land and seeking a softer way of life. If we place a ceiling on national and local expenditure it is my belief that we shall then be moving, at any rate, in the direction of solving some of our problems and creating the type of economy that will give us a healthy industry and a healthy agriculture.
Many political speeches have been made during this debate. I do not propose to deal with politics, and I think it would be a good thing for this little nation if we could come together, even at this late stage, and form a national Government, composed of all the best elements in the State. We need them all. Those of us who are in public life realise the necessity for  having the best intellects to help us to solve our problems. We all know that we are not making anything like the progress we would like to make in industry, agriculture or education. I believe we will only solve these problems when we have a national Government, because then the problems will be approached in a non-Party spirit. Then, we will have a realistic approach as to the best ways and means of solving our difficulties.
In the United States of America, in Great Britain and in many other countries certain items of policy are considered to be above Party. No matter what Government is in power in Britain, Britain's foreign policy remains the same. We are a very young State, and our history over the past 30 years has made it difficult for us to co-operate in some respects. But in this year, 1952, there is a feeling on both sides that there are certain things on which decisions should be taken. It is shocking to think that every time we have a change of Government we have a change of agricultural policy.
We are all living, directly or indirectly, primarily from our agricultural industry, and we ought to be able to devise a policy in the best interests of agriculture, irrespective of what Government is in office. I think that is the most important task confronting the nation.
I am sorry that pressure of business has not allowed me to put my views more lucidly and more elaborately, but since I became a member of the Seanad four years ago I have been forcibly impressed by the necessity of getting away from politics for some period at least. At the end of that period, let us return to the two-Party system if we wish. We took that system from Britain. That system does not exist in Switzerland and yet Switzerland is just as good a democracy as any in Europe. It is not necessary that we should follow too slavishly the system across the water.
Here, we all know each other very well and it might be a good thing if we had a stronger national Government. Disruptive elements are able to impress themselves too forcibly on any Government because the balance between Government and Opposition  during the past 20 years has been a very slender one indeed. I think ten seats have been the most that ever divided Government and Opposition. Therefore disgruntled elements will always have to be placated. For that reason I think it is necessary that we should have a national Government to give us an opportunity of solving our vital economic, industrial, agricultural, educational and other problems.
I would ask the Minister to consider the suggestion I made as to the setting up of a commission on national expenditure. We are all agreed that expenditure has gone further now than the country can afford either nationally or locally. If we had a direction from those best qualified to tell us we might then be able to frame a suitable policy. I do not believe there is anything sacrosanct in services. If the wealth of the country will not permit us to have certain services, then we should be prepared to do without them and the services that we must have should be related to the amount of money at our disposal and the strength of our economy to bear them.
Mr. Tunney: I commend Senator Burke's statement to the House. It was a very reasonable statement, and if we could have more contributions of that kind I think it would be better for the country as a whole. For the last six months we have been listening to statements from very responsible people that the country is living beyond its means. I have a fair knowledge of a good cross-section of our people and I would like the Minister, when he is replying, to tell us what sections of our community are living beyond their means. Surely nobody will say the old age pensioner or the unemployed person is living beyond his means, because he has not sufficient means.
Surely no one will say that the agricultural worker is living beyond his means or that the railway or postal worker, or the lower paid civil servants or the builders' labourers, are living beyond their means? No one would suggest that of the tenant farmer. The peasant proprietors in Mayo, Galway,  Cork and Kerry — in many parts of rural Ireland—have to work every day of the week and even have to do some work on Sunday, to keep the home going. They have never one holiday from the cradle to the grave. The woman marries into the home and she never has a day's holiday, not to mind a week's holiday, in her lifetime. It is a continual struggle to keep the home together. These people make up a great portion of the nation and is there anyone who will say that they are living beyond their means?
We are bringing it down to a very small section. It must be the shopkeepers; yet shopkeepers will tell you that they are making no great profits. Many people in Ireland would like to know what sections are living beyond their means, since all those I have already mentioned have no means to live beyond—they are just existing—so I hope the Minister will reply to that question.
I am not satisfied with the present method of income-tax. With all due respect, I say that thousands are getting away without paying any, when they should be paying income-tax. It is the one section that pays all the time, those in permanent employment who cannot get away with it. There is also great hardship on a middle-class person who purchases his house and then has to pay income tax. Those middle-class people trying to provide their own homes should get a full rebate.
Senator Kissane mentioned turf yesterday. I feel very keenly on that question. No coal should go into any portion of the country where turf could be produced. It is criminal to see coal going to areas where people could provide turf and give good employment at home with a reasonable standard of comfort, instead of people having to go over to dig coal to send back to places which have turf at their doorsteps. I hope the Minister will take serious note of this, as the way the turf position has been handled up to the present has been no credit to anybody. Despite the excellent summer we had last year, thank God, I saw turf sold in Dublin to poor people that, far from lighting a fire, if you had a fairly  decent fire it would put it out. That turf should not have been carried to Dublin at all. Somebody was carrying it when it was not three weeks cut, not to mind saved.
I would appeal to the Minister to take a keen interest in the turf question, to see that those in charge understand how it should be sent to the people. Everybody remembers a few years ago during the crisis that certain people intent on getting rich quickly made thousands, though they should be in prison for their lifetime. If they committed those things in other countries they would be in prison. They got rich quickly on the wants of the unfortunate poor people and to the detriment of those living in the bogs. I know thousands and thousands of families who would sooner do without a fire than let turf into the home, as they were charged before for something which was not turf, and it will take a long time to change their ideas about it.
In regard to wheat, I am satisfied that a decent price is being given to the Irish farmer. I believe that the increased price should be maintained and that we should not import wheat if it can be grown here. That has been the policy of both Governments, and one of them cannot boast a lot over the other on that point.
Senator Loughman said the previous Government wasted money. It is easy for a Senator or Deputy to make that broad statement. If I have a statement to make, I nail the person on the spot. When Senator Loughman went so far, he should have mentioned the particular Minister who wasted some of the country's money. I have watched the inter-Party Government fairly closely, as I have watched any other Government, and I would be enlightened very much if Senator Loughman or anyone else would bring that charge to finality and show the particular Minister who did waste or squander money. It is a very serious statement to make. In fact, it is a dishonest statement unless you have proof of it.
Finally, I would be glad to hear the Minister say what section of the community is living beyond its means.  When Britain was ruling us directly we always said that if they could be driven out, the Irish people would have a higher standard of life, that their presence was the reason for our low standard, for the border-line of starvation. We believed in that policy, which was the policy of Sinn Féin, and we got the Irish people to drive the British out so as to raise the standard of living. I am one of those who are satisfied that the standard has been raised reasonably well, but not for a moment would I agree that it has been raised too high. We should not have that type of statement being made by responsible Ministers, that we must get back to starvation if we are to exist at all. This country is capable of producing the best food in the world. The farmer labourer in Dublin and Meath spends the whole year attending live stock, producing the best beef in the world, but for years and years he cannot ever taste, even for one occasion in the year, that meat he is producing for others, because his means would not allow it. I hold that the person who works hard is entitled to a reasonable standard of life from the community, and there is nobody who will say that those who work hard have reached that standard yet.
If responsible Ministers were to continue in that line, saying that there must be austerity and poverty, that we can live only on the border-line, what encouragement is there for young people to stay in Ireland? They will want to get out. Their friends in America will tell them of the high standard there and they will want to get away as quickly as they can. I am one of those who say the opposite. I believe that our Irish people should have a Christian standard of life which I am satisfied the country is capable of giving and which would encourage our young people to stay in the country. I know that there is a kind of mania among some of our young people for going abroad and I know that there are isolated cases of people who emigrated who need not have left the country, but the majority in days gone by had to go. Let us not now encourage them to go.
As the previous speaker suggested, it is not a matter of what Deputy  Loughman on that side says or what Deputy O'Higgins on this side says. It is time that all that was stopped. The Irish people have a right to elect whatever Government they like and it is the right of any man in Leinster House to vote for whatever man he wants to see Taoiseach. The Irish people have a perfect right to that freedom. It is said that the previous Government got in by a trick and it is said now that this Government got in by a trick. I do not believe in that. The previous Government was elected by the Irish people, as was this Government, and it is stupid for anybody to say otherwise. The sooner that kind of thing is put to one side the better for the country.
Every person elected as a member of this or the other House has his own mind. If he does something wrong, he will have to answer to the people and, if he does a grave injustice, he will have to answer to God. I appeal to everybody concerned to give of their best. There are good brains in every Party, men who, I believe, are capable of forming a Government second to none in the world. I appeal to everybody to drop the bitterness, to work for Ireland and to abandon this practice of making frightening statements about our having to live in poverty. This could be a comfortable country, and let us not drive all the youth out of it.
Mr. S.T. Ruane: Listening to the speeches delivered here, one point struck me very forcibly—how readily the views of certain Senators change when they change from one side of the House to the other. During the debate on the Central Fund Bill last year, we heard quite a lot about the high cost of living and, as a matter of fact, it was a point which was stressed more than any other during that debate which, like this debate, lasted two days. During the general election which followed, we were familiar with the picture which was generally circulated through the provincial papers depicting a harassed housewife balancing her pencil on her finger and thinking, with a worried look, how she would balance the family budget. It  would be very interesting if the artist who conceived that picture could give us what he thinks would be a faithful representation of that lady to-day.
I quite agree with what Senator Burke says, that one of the faults in this country is the tendency of one Government to cut across the good work done by another or to try to formulate a different policy regardless of the consequences. There is something good in the worst of us and something bad in the best of us, and we should have at least reached the stage at which we would get the good in both of us together and forget about the bad. When the previous Minister for Finance was engaged in putting through the Shannon hydro-electric scheme, he received every opposition from the Opposition Benches, but they were wise enough to follow in his footsteps when they succeeded him and to carry on the work of hydro-electrification. Similarly, in the case of the Carlow sugar beet factory established by the late Deputy Paddy Hogan. That was referred to as another white elephant by the Fianna Fáil people, but they were wise enough to see that that elephant produced four calves during their term of office.
The point that impresses very much the ordinary plain people who do not profess to be economists or financial experts is that, in 1947, shortly before the change of Government, the present Minister for Industry and Commerce warned the people that they were about to enter on four years of acute difficulty, when economic disaster would threaten the country from every side. There was a change of Government a month after, and the people went through three or three and a half years of a period of progress and prosperity. I know that the prosperity which the people enjoyed is attributed to the dissipation of money by the then Administration, but I want to point out that, before the inter-Party Government decided on the experiment which made it possible to develop this country—and there is no doubt that it was developed in a manner which every right-thinking person appreciates, during their period of office—they called together the representatives of the Press, and announced their intention  to have two Books of Estimates, two Budgets in future, a capital Budget and a Budget for current expenses. Any person studying the two books could find out with very little difficulty the amounts the Government were prepared to spend on capital expenditure and what they were prepared to spend otherwise. As a result of that experiment, a certain amount of development was carried out, and, although the much talked of balance of payments widened, there was a considerable reduction in the number of unemployed and a very considerable increase in housing. Hospitalisation was provided for people who for years were on the waiting list and, generally speaking, a new look was put on the country as a result of that policy. It was criticised very adversely, but though the Opposition were asked from time to time to point out any item with which the Opposition disagreed, they did not do so, and now they propose to carry on the work of land rehabilitation and the other work carried on by the previous Government, but they are going to do it out of taxation, and, as we may see from the Book of Estimates, they are not going to carry it on on the scale on which it was carried on by the previous Government. They have substantially reduced the amount provided for various services, so much so that there will be a certain amount of unemployment, and the work of development which the country needs will not be carried on as expeditiously and as efficiently as it was during the three and a half years of the inter-Party Government.
When I heard certain Senators yesterday commenting on stagnation in agricultural production and suggesting that agricultural production was falling off, that the condition of the country was disimproving and that it would need more than a miracle to save it, I could not but advert to a statement made by a neutral and impartial expert last May, Mr. Foster, the E.C.A. administrator, who in his report said:—
“The suspension of E.C.A. aid is the best possible recognition of the strides the Irish people have taken  towards economic self-sufficiency under the impetus of the Marshall plan. With the dollars and technical assistance provided through the E.C.A. help Ireland has accomplished agricultural and other economic reforms in three years that otherwise would have taken a generation to achieve.”
I cannot reconcile the glowing report of affairs in Ireland of an experienced man of that kind, a man who has no axe to grind, who is neither a supporter of one side nor the other but a neutral observer sitting on the fence, with the despondent views expressed by other Senators during this debate.
We can also understand the position in England, where they find an austerity programme absolutely necessary to help them to overcome their financial difficulties. This country is, however, in a different position, as has been pointed out from time to time. This is a creditor nation. Hundreds of millions of money of this country are abroad and there is no reason in the world why Irish citizens should be asked to lower their standard of living or to deprive themselves of certain necessaries of life simply because the balance of payments is out of focus.
I was glad to hear Senator Professor O'Brien stating yesterday that Ireland was not the only country that made the experiment of repatriating external assets, that a country which is very frequently held out to Ireland as one that we should follow did the same at one period, and as a result brought about conditions that have made that country one of the foremost in Europe to-day.
Be that as it may, I can say, as a result of contact with people in my county and adjoining counties, that the  experiment made by the inter-Party Government has the whole-hearted approval of the vast majority of the people and that, if and when they get the opportunity, they will again bring about conditions where that experiment can be continued. Any views expressed to the contrary on the other side are simply wishful thinking, and those that express them are very well aware of the fact.
Minister for Finance (Mr. MacEntee): This debate has ranged over so wide a field and the speeches have been so discursive that one might justifiably despair of making an ordered and comprehensive reply. So far as the polemic side of it is concerned, I think we can say that Senator Hartnett, in his speech yesterday, has won all the honours on that particular aspect of the debate. I will, therefore, try to address myself to a number of somewhat dissociated matters which have been raised, and will endeavour to set Senators right where they have gone wrong.
Senator Douglas, who opened the debate for what, despite all the strictures that have been passed upon the suggestion that such a thing as Party politics exists in the Seanad, I will call the Opposition, said that the Dáil debates have created uncertainty and bewilderment. I think that is quite true, but the uncertainty and bewilderment have been created by the attempt of those who are associated with the Opposition to the present Government to deny the obvious facts.
It is true that, since 1947, this community has been liquidating its external assets at a rate which considerably exceeds any real remunerative capital investment in this country. The fact that they are doing so manifests itself in the deficit on our balance of payments. This problem had manifested itself in an acute fashion during the year 1950. When the change of Government took place, it was my duty to look at that position and, as a result of that examination, I decided that I should be lacking in all sense of public responsibility if I did not place the facts before the people at the earliest opportunity. I  did that in June. My colleague, the Tánaiste and Minister for Industry and Commerce, called attention to it in subsequent speeches. It was done again before the Dáil rose for the Summer Recess.
But, how did those who should be as concerned as the Government naturally is to ensure that the economic position of this country is not deteriorating proceed to address themselves to the problem which was expressed in the figures which I presented to Parliament and to the people? They were like the yokel, the gentleman from the backwoods, who paid his first visit to the zoo and saw there a giraffe and, looking at it, threw up his hands and said: “I do not believe there is any such animal.” That is precisely the attitude that was taken by Deputy Costello, by Deputy McGilligan, by the various lesser lights of the Opposition Parties who spoke, following their leadership, throughout the country.
Nobody who has access to the Government files is under any illusion as to what the real belief of Deputy Costello, Deputy McGilligan and Deputy Dillon was because it was quite clear that this was a problem which was causing our predecessors grave concern even when it was manifesting itself in a less acute fashion than it began to do early in 1951.
In fact, we have this admission, made by Deputy Dillon, that when our predecessors decided to embark upon a certain line of policy they called together the representatives of the daily newspapers; they told them what it was proposed to do and they told them what the probable results of the policy which they had decided upon would be and how the consequences would manifest themselves in the huge adverse balance of payments which we have experienced, not only in 1951 but also in 1950. I gathered from Deputy Dillon that the whole purpose of that conference was to try to keep these facts from emerging into public view and, to the extent to which there was any advertence to them on the part of members of the public, to damp down any possible controversy or agitation which might arise.
In so far as there has been any confusion  or any uncertainty or bewilderment, such as Senator Douglas suggested, in the public mind, it is due to the fact that, as I have stated here, the Opposition have decided to ignore and continue to overlook the grave aspects of our present trade position. It is not going to be possible for us, even if this Government decided or were inclined to keep the truth of the matter from the public, to defer taking very drastic action to deal with that situation. The position, as I am sure Senators now know, is that the gold and dollar reserves of the whole sterling area—a monetary unit of which we are members by our free choice; a monetary unit of which we are not merely members, by our free choice, but to which we are inevitably compelled to be members of so long as the existing pattern of our trade continues —is rapidly melting away, or at least they were rapidly melting away.
We are as interested in the maintenance of the purchasing power of our currency just as much as the British are interested in the purchasing value of their currency, or the Australians, New Zealanders or South Africans or any other member of the sterling area who is trying to keep his currency on a parity with that of Great Britain is concerned, to secure that the purchasing value of the British £ will not go down and to ensure that the reserves of the sterling area as a whole will not be still further diminished. We are interested in ensuring that the currency in which we have to buy from other countries will remain unimpaired and, if possible, continue to become stronger until perhaps many years from now it will be what it once was, the hardest and most viable currency in the whole world.
There is, as I have stated, a confusion and uncertainty which the Opposition to the Government have tried to create in the public mind, but that cannot deter us from taking in concordance with the other members of the sterling area the necessary steps which are essential for us to protect and safeguard what, by the convention of the sterling area, belongs to it as a unit. That will involve a drastic restriction of imports from those  countries from whom we could not afford to buy if the sterling area were broken up, and sterling were to depreciate as rapidly as it could do. In the light of the fact that we have a large adverse balance of trade with the dollar area and with the non-dollar non-sterling area, we must, if we are going to try to continue to maintain our present standard of living, take the necessary action to ensure that we shall be able to maintain the parity with British currency.
If we do not do that, because of the fact that we do not export to the dollar countries or to the non-dollar non-sterling countries any significant bulk of our products and we have no means, therefore, of obtaining, except through the sterling area in present circumstances, anything like an adequate supply of hard currency to enable us to maintain our trade with other countries, we shall have to take, in the coming year, and we have already begun to impose, drastic reductions and restrictions upon our imports from those countries. But the restrictions which have been imposed will have to be intensified. There is a target which we are satisfied we must meet, a target which is our own selection and our own creation, and we intend to meet it and realise it, because if we do not then there will follow in this country widespread unemployment and widespread hunger.
Among the things which we can do in this situation most easily and which will impose less hardship on all sections of the community is to reduce the travel allowance. Senator Douglas dwelt at quite some length on the fact that we have announced that we propose, when we have completed the necessary arrangements with O.E.E.C., to reduce what may be described as the holiday travel allowance to £25 per person. We heard a great deal about the benefits of foreign travel and about depriving certain people of a short vacation to which they looked forward each year and how this foreign travel knits the bonds of culture closer between our country and the Continent. There is no person who will deny the advantages to be derived from a holiday spent abroad where one sees  for oneself how people outside this island live and where our natural insular tendencies and conceptions may be broadened by the knowledge of what is on the other side of the hill, but as far as travel allowances and the general problems are concerned let us remember that if we do not cut the travel allowances we will have less hard currency—and virtually every currency in Europe is hard as against ours—to buy the raw materials essential to the maintenance of our industry and our agriculture, less perhaps to buy even the food which we require in order to maintain ourselves.
When we are talking about it, therefore, let us realise that in fact the choice which we have to make is whether we are to have more food for our people, more food for the many, or more foreign holidays for the few. I think that there is no person who will not agree that when the choice is put before us in that way—and that is the choice—despite the fact that we may be deprived of some relaxation, some pleasure, even some education, it is desirable that we should at any rate do nothing which will deprive us of resources for things which are more essential to the maintenance of employment and of the general standard of living of our people than foreign holidays can ever be held to be.
Mr. MacEntee: That is based on the average allowance used by our people who went abroad last year. The actual expenditure in foreign currency was about £43 per head, as a fraction over 20,000 of our people went abroad. One does not know how the reduction in this allowance will affect people who might have gone to the Continent for their holidays, and therefore an  estimate of the probable saving is difficult to make. The tendency will always be to understate it. If we assume—and I think it is a large assumption in this connection—that as many people go abroad as went last year and that their expenditure this year is proportional to the overall cut which is being made in the allowance, we shall probably save not less than £400,000, almost £500,000.
Mr. MacEntee: I do not propose to debate at any length with Senator Fearon as to whether the volume of Estimates and the nature of the services which the State is now providing for the people as a whole indicate that we are developing into a totalitarian State. All I have to say on that point is that the type of services which the volume of Estimates covers is precisely the same as was covered in 1950-51. There has not been any radical change in the character of the Government's activities. We have still afforestation; we still subsidise houses and food; we still provide old age pensions and widows' and orphans' pensions; we still provide for the education of our people and the defence of our people. There is not, therefore, any radical change in the services for which we are asking so much more money than last  year. Therefore, if we are progressing or developing towards a totalitarian State that progress, that development, did not begin in this year. I do not know whether Senator Fearon has been accustomed on the occasion of the Central Fund Bill to make the same point, but if this is the first year he has made it, I want at least to relieve his fears to this extent: We are no further on the road to totalitarianism this year than we were last year, and I hope that we will not be any further next year or in any subsequent year.
Senator O'Brien generally admitted the need for the Irish banks to increase their rates last week, having regard to the fact that if they did not do so there would be a heavy withdrawal of funds. He suggested that in, I think, 1931 the Irish banks had been slower to follow the change in the British bank rate than they have shown themselves to be this year. It is true that in 1931 there was a little longer delay in adjusting the rates here to the bank rates in Great Britain because the banks and perhaps the Government of the day—I do not know—had some belief that the deposits in our banks are largely immobile.
Unfortunately for the banks at that time this turned out not to be a fact and within a very very short time indeed they had to take action to put their rates back again into their former relation with the rates which the British banks allowed to their depositors and charged to their borrowers. I think it was Senator O'Brien—he will forgive me if by any chance I should ascribe to him a suggestion which he may not have made—or Senator McGuire who suggested that the banks ought to be put in the same position as manufacturers and traders are and that they should have to go before the special Prices Advisory Committee.
Mr. MacEntee: Everybody will have noticed that it was with the greatest reserve that I ascribed that proposition to anybody. I see Senator O'Donnell blushing. I think that the Senator must have been talking quite  extempore when he made that suggestion. It seems a very good one; but, after all, he must remember that the banks have only one raw material —the deposits which are lodged with them—and, therefore, if they propose to retain these deposits, or increase them, or secure deposits from people who have not yet made up their minds to try to save instead of spending, they will have to increase the price which they will give, or the fee which they will give, in order that they may have the use of these deposits.
It is a very simple matter for them and for others to calculate precisely on the basis of the figures over some definite period what the increase in the deposit rate will cost them and as they know the extent to which their customers have availed of accommodation and the extent of their advances to customers they also know the amount of money and the quantity of raw material, so to speak, they will have to use for the purpose of their business and the extent to which this raw material will have to carry the general advance in price, to put it that way, which they have paid for that material. That is to say, if there is with them £240,000 worth of deposits or in interest bearing current accounts and they increase the deposit rate by 1½ or 1 per cent. according to the size of the deposit and the mobility of the deposit, as that is really what the distinction in value is intended to mark, then they know that that will cost them so much; they know that they have a smaller volume of advances and on that they must get back what it cost them to pay the increased rates on their deposits.
It does not therefore require any prolonged investigation to see what the ultimate result will be on the assumption that no economies in the administration of the banks are possible. If it were intended that the banking position ought to be taken up with the banks and that the banks must close a certain number of their branches and must dispense with a considerable section of their staff in order that the general working expenses, apart from the costs of deposits to them, should be reduced or cut down, then one  might have a certain investigation, as Senator O'Donnell suggested.
My understanding of the matter is that the last Government, the Government which Senator O'Donnell supported, took the view that the expenses of the banks ought to be increased, that the wages and salaries ought to be increased and that there was no room for economy. The banks, I am glad to say, did not take that particular point of view. They do believe there is room for economy and I understand they are reducing the number of their branches in certain areas where they believe the community is already overserviced with banks. But they have also certain commitments to their staffs which impose a certain brake upon them in regard to the reduction of what is by far the larger proportion of their expenses—the cost of banking personnel.
It is only in those circumstances that Senator O'Donnell's proposal would be of any practical utility. When, as I have said, the increase in the deposit rates and, therefore, of the cost of money, to the banks is known, and when it is also known what proportion of those deposits will be let out at interest by the banks, then it is clearly a case of mere mathematical adjustment, and it would be quite unnecessary and of very little value to have the banks go before the Prices Advisory Body on a matter of that sort.
A great deal has been said by Senator O'Donnell and by Senator McGuire about the reaction which the increase in the bank rate may have. I sensed in Senator McGuire's speech a certain resentment that the banks should pay more to the people who save and put their money on deposit, because he suggested that if the banks are prepared to pay more to people who save in order to induce them to be thrifty he will have to pay something more for the accommodation he secures from the banks. Therefore, leaving altogether on one side this very fundamental question of preserving these deposits in our banking system, he seemed to think that everybody  ought to stint himself and mortify himself in order that he might put more money into the bank at what would be regarded as a suitable rate so that he, and others like him, might have cheap money in order to make large profits.
That is the sort of thing that evokes great resentment among the ordinary people. They feel that, like those who are interested in big business, whether it is manufacturing or distributing, they should get a reasonable return for their labours. Those who, by the exercise of thrift in regard to the spending of their own earnings, produce capital for manufacturers, distributors and others, take the view that they are entitled to some adequate and reasonable recognition of the fact that their thrift has involved them in self-denial; it has meant that they have gone without something they might have liked to buy. They say, therefore, that they are just as much entitled to receive a fair remuneration and a fair recognition of what that saving has meant to them as Senator McGuire, Senator O'Donnell or anybody engaged in business or industry who feels he ought to get an adequate return on his initiative and enterprise.
I do not want to decry the enterprise and initiative of Irish manufacturers, but I think they must, if they are going to continue to be so readily supported and upheld by the Irish people, have regard to the fact that other sections of the community have their interests to look after and are quite entitled to have them served in the manner I have suggested. Of course, we are talking about the need for new capital, and we shall be talking about that later. We are talking about the need to encourage thrift and savings. The only way in which we can do that is by making it worth while, by offering the inducements which people think are sufficient to compensate them for the self-denial which they have to practise the moment they begin to save.
Senator Colgan mentioned the incidence of income-tax and Senator Hartnett referred to the desirability of making a new issue of savings certificates. I do not propose to deal with  those particular points to-day. We shall probably have an opportunity of discussing them on another occasion.
In the course of Senator Douglas' speech—and I think it was repeated by other speakers for the Opposition—it was suggested that we had in some way violated a principle that had been laid down by our predecessors in regard to the manner in which the American Loan Counterpart Fund should be used. As I said in referring to some remarks by Senator Fearon, there was not anything new in this volume of Estimates. There is included there projects which our predecessors categorised as capital projects, projects to be met out of borrowing. There are also—in addition to these capital projects which are in the volume of Estimates—a great many other capital undertakings which have to be furnished through the Exchequer, like the Electricity Supply Board, Bord na Móna and the Local Loans Fund. The Government has not raised money for any purpose except to honour the commitments which had been made previously by our predecessors when they published the volume of Estimates, and when they gave certain sanctions to these large spending bodies like the Electricity Supply Board, to the Commissioners of Public Works in regard to the Local Loans Fund, and to Bord na Móna. All the moneys that have been borrowed or realised in other ways have been utilised for these purposes.
It has been suggested that our utilisation of the Counterpart Fund has been particularly blameworthy, that in some way or other we had violated a sound principle which had been laid down by my predecessor. I have the figures. As Senators know, there was a change of Government last year. The present Government took over what was then a going concern, and had to maintain all these activities. It had to get the money from wherever it was possible to get it, having regard to the large conversion operation which had just been carried through. Because of that, the Government had recourse to the Counterpart Fund in order to maintain those services and finance the capital development to which he referred.
 What has been the actual position? There has been some suggestion that Deputy McGilligan may have had to have recourse to the Counterpart Fund to a minor degree, whereas we had drawn upon it wholly. The position is very simple. Before the change of Government my predecessor had drawn £18,000,000 from the Counterpart Fund.
Mr. MacEntee: Over the first six months, practically, of 1951. This is what all the pother has been about. It is for this that we have been criticised all over the country, for doing in a longer period what Deputy Gilligan had to do. I do not regard it as being at all a very proper thing to do but we were left in such a position that we had no other resort. We could not ask the Electricity Supply Board to try to get out of the contracts they had already made. After all, these are long-term contracts which in many cases take four or five years to fulfil and in regard to which special terms of payment have been laid down.
Senator Tunney said he had heard that the country was living beyond its means and then went on to make a series of debating points. I notice he is not in the Chamber to listen to the answer. When we say the country is living beyond its means we do not mean that any particular section could not spend more but we mean that the community collectively is importing and buying very much more than it is producing and that, having regard to the volume of visible imports and the volume of visible exports and the adjustments which have to be made for invisible imports and exports on either side, we experienced last year a deficit on our balance of payments of the order of about £66,000,000.
Now I am not giving that as a definite figure and I want to say that so as to safeguard myself against possible  misrepresentation when, sometime in the middle of this year, the more accurate computation will be published. To the best knowledge available to us at the present time the adverse balance of payments will be of the order of £66,000,000. Whether it is £64,000,000, £60,000,000 or even £50,000,000, it is still much too large; in fact, we are not self-supporting and we are not self-sustaining so long as we have such a huge and uncovered deficit on our balance of payments.
Therefore, when we find ourselves in this position, that our banks and other people have to realise a substantial portion of their external assets in order to continue to finance that adverse trade balance, we can say quite definitely that the country as a whole is living beyond its means. I do not mean to say that every person in the country, in regard to his own domestic expenditure, is living beyond his means. Many people are living well within their means, but, taking all the spending agencies into account, the Government, as well as the local authorities, the Electricity Supply Board, Bord na Móna and the rest, we are engaging in an expenditure which our existing volume of trade and economic activity is not able to support and maintain. That is why I say, and everybody has been saying, that the country is living beyond its means.
The other thing we want to get into our minds is that we cannot continue to do that. Over the past three years, about £155,000,000 of external assets have been realised and that would leave us, on the best computation I can have made by a skilled investigator into this matter, in the position that at the moment the surplus of our net external assets has been reduced to something of the order of £125,000,000. That would keep this country going for more than two years, if present trends were to continue. We should then not have any external assets to realise, and the only resort that would be left to us, if we wanted to continue to maintain the existing situation for a little time longer, would be to try to borrow from somebody else. Who would lend to a country in these circumstances,  unless they lent for some political motive, in order to get some lien, some right, over the political conduct of this people?
That is why my predecessor, when speaking in the Dáil on the Budget last year, pointed out that these external assets were the mainstay of our political independence, and, when we talk about trying to reduce this adverse balance, remember that what we are really doing is trying to maintain our political independence and to secure once again our economic independence, to the extent to which a trading nation can ever be said to be independent of its customers. That is the situation plainly, clearly and simply, and that is why the Government regards the question of the balance of payments, coupled with the budgetary problem, as being so grave and so serious that it will have to be dealt with in a very short time, irrespective of whatever odium or criticism the Administration responsible for dealing with it may be subjected to.
I do not want to follow Senator Ruane into the ancient archives of public debates in this country, but I think it should be made quite clear that, when the Shannon scheme was mooted, there was no opposition to electrical development, as such, in this country, but there was a very grave difference of opinion between those who were competent to judge the engineering and financial merits of the Shannon scheme as to whether the Liffey development or the Shannon development should have been proceeded with first. I say there is very good ground for arguing that, if the Liffey development had preceded the Shannon development, the over-all capital cost of both schemes would have been considerably below what they have, in fact, turned out to be. That, however, is all dead and gone; but let us not hear any more about people who are opposed to electrical development in this country. There was, as I have said, on the part of those competent to judge, a very definite difference of opinion as to whether it was wiser to go ahead with the Liffey development before the Shannon development, and I think  that, if the position were examined, it could be shown that, if the Liffey development had been taken first, we could have had both rivers developed, but at considerably lower cost than, in fact, has been incurred.
Mr. MacEntee: I will say this, that, in 1935, there was an investigation took place which was carried out by the same experts as considered the Shannon scheme. The experts who considered and reported on the Shannon scheme were not asked to report on the difference between the Shannon and the Liffey undertaking, but the report of these experts, which has not been published, would indicate, as I have said, that it would have been better to have gone ahead with the scheme which would have required a lower capital outlay and would have reduced transmission costs to the centre of demand considerably rather than the one that was in fact adopted.
Mr. MacEntee: There is no point in continuing that controversy. Again, with regard to the beet factories, let us see what happened there. There was a sugar beet undertaking established in Carlow. I think it was a good thing that it should have been established, but I do not think that the agreement entered into by those who set up that factory was what one would describe as a very businesslike agreement or a very shrewd agreement or good bargain. I think—I may be wrong—that that agreement, which provided that the projectors of the Carlow Beet Factory, the owners and proprietors of that factory, would get their sugar beet for nothing and that, in addition, a very substantial subsidy would be paid on the sugar manufactured, was not a good agreement. Outside of that, so far as the establishment of the sugar beet industry was concerned, I think it was a good thing.
I do not want to decry, beyond what  is required in self-defence, the merits of that undertaking or the initiative of those who established it, but what I can say is that we were able to buy out that undertaking from the foreigners for a considerable sum—it cost £400,000—and were able, on the basis of that undertaking, to establish three others which now supply practically the whole of the ordinary domestic consumers' needs for sugar in this country. The companies have been flourishing and prosperous, and the profits of the undertaking have been retained here for the benefit of the Irish people. I do not want to say any more than that.
There may be some aspects of this debate with which I have not dealt but you have been very patient with me, Sir. Senator Johnston had some very interesting proposals to put forward and suggestions to make but I think it would not be proper for me to start to discuss them here. There was one which was exceedingly attractive if we could only manage to get the farmers of Ireland to agree to it. I do not think there is anything more I could usefully say in reply to the debate.
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