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Dáil Éireann - Volume 35 - 28 May, 1930

Public Business. - Finance Bill, 1930—Second Stage.

Mr. Blythe: I move the Second Reading of the Finance Bill, 1930. There is very little in the Bill which has not been the subject of a financial resolution or which was not referred to in the Budget statement. The matters that are new are matters of relatively minor importance. There are two section—Sections 2 and 3—which give certain relief in cases where hardship would arise in consequence of the basis of assessment on the three years' average being changed to the basis of the preceding year. I think that those reliefs are more a subject for discussion on the Committee Stage. The other matters which were not dealt with in the Budget statement are contained in Section 16, in which provision is taken, if a suitable opportunity arises, for redeeming Compensation Stock. The outstanding amount of Compensation Stock is beginning to grow small. It is issued in seven series, and a complicated system of drawings has to take place. If it were possible to extinguish that particular stock and to bring to an end that particular system of drawing it would be desirable.

In Section 15 power is taken to invest in British short-term securities the Exchequer balance. Heretofore, when there has been a substantial balance in the Exchequer, we have been generally able to arrange to get special rates of interest for that balance. Occasions might arise when better returns could be obtained by investing the whole or part of the balance than by simply having it lying in the Exchequer account. Section 18 provides for the discharge of death duties by tendering stock of the Third National Loan. That was part of the conditions of issue of the Loan. It is to enable the promises set out in the prospectus to be fulfilled. If the Loan were to remain at issue price it is possible that there might be a loss of six or seven thousand pounds a year arising out of that particular position, but as the market price of the Loan goes up the amount to be met out of the Central Fund will be growing less. After a year or two I think that that particular provision will prove to be of little consequence from a financial point of view.

Mr. MacEntee: With regard to the novel features of this Bill to which the Minister has referred, I think, with him, that they could best be dealt with and argued on Committee Stage, but I must at the outset take leave to doubt the Minister's statement that the loss to the Exchequer under Section 18 of the Bill will not exceed more than six thousand or seven thousand pounds.

I certainly should be glad to hear the grounds upon which he bases his assertion that as the market price of this particular loan goes up the loss to the Exchequer is going to diminish.

This Bill, like all previous finance measures for which the present [13] Minister has been responsible, is characterised by a pernicious improvidence. Time and again, we, in this House, have criticised the Minister's policy and have asked him to face fully up to the responsibilities which the Government's continuous extravagance involved. The Minister has consistently declined to do so. Instead of meeting the burdens of the State as they accrue from year to year, he has adopted the doubtful practice of selecting certain items of expenditure, classifying them as abnormal and defraying them out of borrowed money. He has continued this course year after year until, on his own showing, the dead-weight burden of the public debt is now over £25,000,000. The consequence of the Minister's policy in this regard is seen in the growing amount which must be set aside each year for the service of that debt. In 1925-6, the amount required for interest and sinking fund charges was £899,572. In 1929-30, the debt service, expressed in terms of money, required £1,708,222. It is well to point out, however, that these two figures do not give a true comparison between the public debt charge in in 1925 and the public debt charge in 1929-30, because in 1925-6 the cost of living index stood at 188, as compared with the basic figure of 100 for the year 1914, whereas in 1929-30 the same index stood at 176.25. If the service of debt, therefore, instead of being expressed in terms of this variable money unit, be expressed in terms of the commodities which the money would have purchased in the two years under comparison, the service of debt in the year 1929-30, instead of being £1,708,222 is actually £1,823,592, or more than twice as much as it was in the year 1925-26.

One of the claims put forward by the present Government has been that they have decreased the burden of taxation during the last four or five years. It has been argued that as the Government in 1925.6 collected £21,597,000 in tax revenue, and in 1929-30 collected only £20,601,000, there had been an actual and relative decrease in taxation in [14] the year 1929-30 as compared with the year 1925-26. If, however, the relative purchasing value of money in these two years again be taken into consideration, we find that whereas the Government collected £21,597,000 in 1925-26, on the basis of the commodity values prevailing in that year, they actually collected in 1929-30 £21,974,000, or an increase of £377,000 over the figure for the year 1925-26.

In the course of his Budget statement, the Minister took occasion to refer to the cost of the social services in the State and to express the fear that we could scarcely afford to maintain these even at their present standard. I should like the House to consider for a moment what the effect of this continuous policy of borrowing has been so far as the social services are concerned, how this increase in the annual debt charges has reacted upon such things as Old Age Pensions, Education and the like. Of the moneys which were collected in the year 1925-6, there were available for the services of the State, other than the service of the public debt to which I have referred, the sum of £20,697,428, whereas in the year which has just closed, 1929-30, notwithstanding the fact that the absolute burden of taxation increased by £377,000 over what it was in the year 1925-6, the actual amount available for the same services—the general services of the State, excluding the service of the public debt— was only £20,150,000, so that, because of the policy of reckless borrowing which the Minister has pursued, there is available at the present day for social and other services approximately £1,000,000 less than there was in the year 1925-6. Small wonder that the Minister, having these facts to deal with, should come to the Dáil and tell us we are unable to maintain the social services in this State at the same standard as they are maintained in Great Britain and Northern Ireland.

The policy which the Minister has pursued of increasing the public debt might be excusable if it had [15] been unavoidable and inevitable but, in the very years during which he was mortgaging the future of our people, the Minister and his Government paid over to Great Britain over £20,000,000 in respect of land annuities and over £9,000,000 in respect of pensions to ex-members of the Royal Irish Constabulary. If it had not been for these unwarranted and unjustifiable payments, the State, notwithstanding the general extravagance of the Government, would be free from debt and would have available to undertake such capital works as might be deemed desirable no less a sum than £4,000,000. There would be £4,000,000 to defray the cost of any further capital development, allowing for the cost of rationalising the creameries and the cost of developing the Shannon, which are responsible for some portion of the present debt. In addition to this £4,000,000 of free capital available, there would be released from the service of the public debt the sum of £1,708,000 or, expressed in the terms of money of the year 1925-6, £1,823,000—a sum more than sufficient to provide social services in this State at the same standard and upon the same scale as they are provided in Great Britain and Northern Ireland.

In the course of his speech proposing Deputy T.J. O'Connell for the Presidency of the Executive Council, Deputy Morrissey of the Labour Party said:

We [that is the Labour Party] say that there are thousands of people unemployed, thousands of people who require houses and who require food and clothing, and we state clearly and emphatically that we are satisfied that within the Treaty we have all the freedom which we require for the full economic development of this country. We are satisfied on that point and if we find, at any time, there is anything in the Treaty which will prevent us from giving full effect to our economic policy and our social policy, then we propose to get the best brains [16] of this country, the best intellects that the country can produce— the very best men—to go across to England and have it out with the English people on the question of the Treaty.

There is no question of the Treaty involved in this issue of the land annuities and R.I.C. pensions, but the whole economic and social policy of the Labour Party is—as the figures which I have stated prove— involved in it. The figures which I have given for the dead weight of the Public Debt and for the amount of the tax revenue devoted each year to the service of that debt show that unless this question of the land annuities and R.I.C. pensions can be reopened in favour of this State, there is no hope and no possibility that this social and economic policy about which Deputy Morrissey talks so much will ever become effective.

Deputy Morrissey is prepared to have a show down with the British on the question of the Treaty if he finds that his Party are prevented by it from giving effect to their social and economic policy. Now that we have shown that that social and economic policy cannot be given effect to so long as the present position prevails—so long as the present ultimate financial settlement is accepted by the Labour Party and the majority in this House—is Deputy Morrissey and his Party prepared to have a show down with England on these comparatively minor items, from his point of view, of land annuities and R.I.C. pensions? If he is, then Deputy Morrissey and his leader, Deputy T.J. O'Connell, must have changed their minds. We welcome the change, remembering how they voted against the motion introduced by this Party to retain these annuities in this country pending a re-investigation of the whole question as to the liability to pay them.

Mr. T.J. O'Connell: That was not the motion.

Mr. McEntee: It was clearly explained, in the course of the [17] speeches introducing the motion, that that was the course which should be adopted in order that we might compel this question to be reopened. I hope that when Deputies T.J. O'Connell and Morrissey are speaking in Longford-Westmeath they will announce their conversion to the policy of Fianna Fáil in this regard.

I have referred to the fact that we regard this Bill as unsatisfactory, because it gives effect to the policy enunciated by the Minister in his Budget statement of meeting his deficits by borrowing. Section 18 of the Bill empowers the Minister to take steps to fulfil certain conditions attaching to the recently floated Third National Loan. I propose to consider, from the point of view of the taxpayer, some features of that loan. It is remarkable how sensitive the Minister for Finance and the Government are regarding this question. One would almost think that they regard the borrowing of money as a sacred rite or as a religious ceremony, the conduct or significance of which may neither be questioned nor gainsaid except under the odium of blasphemy. For the last three weeks, members of the Government have postured on public platforms as though they were sitting on eggs, and have proclaimed their alarm lest a chance word or an acute criticism would cause them to lose their balance and create havoc and destruction in the Government nest. From their speeches it would almost seem as if the Minister for Finance and his colleagues, and other members of his Party, regarded themselves as so many golden geese whose fruitful ovaries are enriching the State, instead of so many greedy gobblers who have devoured its substance. Of course, the Minister and the Government resent criticism when they are endeavouring to delude people that this loan has been issued upon more favourable terms than the first and second loans. They have made capital out of the fact that the nominal rate of interest is 4½ per cent., instead of 5 per cent. as in the case of the earlier issues. Therefore, since they were anxious to secure all the kudos [18] they might get from this misstatement of the real position, they attempted to prevent criticism by raising a hullabaloo about the damage that might be done to the loan then in issue. But the loan has been issued; it has been closed. As the Minister has told us, it has been oversubscribed, and whatever we may have to say about it now cannot in any way damage it and need no longer be restrained.

I should like, however, to make quite clear at this stage that what I have to say about the financial wisdom of this operation is not to be taken as indicating that if it comes into office a Fianna Fáil Government will in any way shirk the burden which the financial improvidence of the Minister will have left to it. I should like to make it clear that we shall honour to the full the whole liability, whether for sinking fund or for interest, which the Minister has incurred in respect to this and preceding loans.

Now what are the real facts as to the terms upon which the money recently borrowed was secured? The first 5 per cent. national loan was issued on 24th November, 1923. It bore interest at 5 per cent. and was issued at £95 per £100 of stock. It was redeemable in 1935-45 and the actual interest on the assumption that it would be redeemed at the first available date in 1935 was, I think, £5 8s. 6¾d. per cent.; but the actual interest, if it were redeemed at the end of the term in 1945, would have been £5 6s. 10d. per cent. The second loan was issued on 3rd December, 1927, bearing interest at 5 per cent. at an issue price of £97 per £100 of stock. It was redeemable at any period between 1950 and 1960. If that loan be redeemed in 1950, the actual interest charged during the period will have been £5 2s. 7¾d. per cent. If the redemption is deferred until 1960, the actual interest will be £5 1s. 10½d. The third loan, the loan just issued, bears interest at 4½ per cent. and was issued at £93 10s. per £100 of stock. It is redeemable from 1950 to 1970. The actual interest if the loan be redeemed in 1950 will be £5 0s. 7d. per cent., and if the redemption [19] is deferred until 1970 will be £4 17s. 6d. per cent.

I should like the House to compare these yields. The first loan, if it be redeemed at the earliest date, will bear interest of £5 8s. 6¾d. The second loan if it be redeemed at the earliest date, will bear interest at £5 2s. 7¾d. The third loan, if redeemed at the earliest date, will bear interest at £5 0s. 7d. per cent. At first sight it would appear that the third loan has been borrowed upon slightly more favourable terms than either of its two predecessors, but we have to take into consideration the cost and the value of money on the occasions on which these loans were floated. In the case of the loan just issued, the English bank rate stood at 3 per cent. In the case of the second loan, upon the date of issue the English bank rate stood at 4½ per cent. In the case of the first loan, the English bank rate stood at 4 per cent. What, therefore, is the fact? That actually when you take into consideration the cost of money at the present day and at the dates of the first and second loans, respectively, the interest on the present loan is from 13s. 1¼d. to 10s. 8d. per cent. higher than the interest on the first loan and from 27s. 11¼d. to 26s. 7½d. higher than on the second, taking into consideration the value of money at the respective dates of issue.

There is another feature about these three loans to which I should like to advert, and that is the fact that they have all been issued at a discount. It has been the custom of the Minister continuously to do that. He has seemed to think that there was some political advantage—there certainly was not any financial advantage—likely to accrue to his Party if he were able to delude the public into the belief that the credit of the State stood higher than it actually did. He seems to think that the people will lose hope and will give up heart unless he is able to ensure to them a dose of financial spoof every time a financial operation has to be undertaken by [20] him. It seemed to those of us who take an interest in this question that when the advisability of issuing a loan was under consideration and the time seemed opportune the Minister, in view of the general position of the State and of the general position of the money market, would have thought it opportune to discontinue this policy of issuing loans at a discount, and that instead of issuing the last loan at a discount and bearing interest at the nominal rate of 4½ per cent. he would have taken the bull by the horns and issued it at 5 per cent. at par. That, I think, would have been the sounder course for him to have adopted, because then we should have known where we really are and we would not have been mortgaging the future, the future which is the only thing that the people of this country have to look to or have any hope for.

The grounds upon which the flotation of a loan at a discount can be justified are broadly:

(1) that the inducement offered to the investing public is such as to ensure that the State will be able to make the issue upon terms which will at least compensate for the resultant disproportionate increase in the public debt, or

(2) that the economic position of the State is such that a reduction in interest charges must be aimed at even although the capital debt be increased.

Now with regard to the first of these considerations, the offer of such inducement as will enable the State to make the issue upon terms which will compensate for the disproportionate increase in the public debt, we must ask ourselves whether in considering such inducements as may be offered to him in connection with the issue of any loan the investor takes into account and truly evaluates all the factors which determine the true value of the issue. If he does so, then the exact form of the issue searcely matters. But, if he does not, if he omits to take into consideration every privilege and every advantage, remote as well as immediate, which the State offers. [21] or if he estimates these at anything less than their full true value, then the issue at a discount will not have served its purpose and the State will lose, for it will have given something for nothing, or at least something for which it does not receive adequate return. That the investor does in fact assess all the factors of a discounted loan at their true and correct value is very much to be doubted. In these matters the very long view which is necessary is seldom taken. The average man looks first to the immediate return for his money and he scarcely ever looks beyond that. Even in those exceptional cases in which he does take the long view, we may be sure that the investor heavily discounts the ultimate benefits which he is promised.

Now the assumption which underlies an issue at a discount is that the public will pay more for it than for one giving an equivalent real yield issued at par. The principal inducements offered are, as in the case of this loan, a guarantee that the capital invested in it at the outset will appreciate in value and a certain assurance against a diminution of income when the stock is redeemed. Possibly the guarantee that this capital would appreciate would be a decided attraction for an investor in the case of a comparatively short-term issue. But the attraction diminishes rapidly if the period of the loan is extended, and in the case of a loan issued, as the third national loan has been issued, for a period of from thirty to forty years, it is practically non-existent. Therefore, the offer of a long-term loan at a discount and at a nominally lower rate of interest than would be demanded if the stock were issued at par will, in nine cases out of ten, involve the sacrifice of the discount without ensuring in return any commensurate reduction in the interest charges. I think the figures I have cited show that while money is cheaper in 1930 than it was in 1927, we are borrowing money at practically the same rate of real interest.

As against the statements which I [22] have put forward, it may be contended that one of the features of the capital appreciation is the immunity from income tax which is offered to certain investors and that that immunity makes the possibility of capital appreciation a very real inducement to subscribe to the loan. But, if all the circumstances be examined, it is very doubtful whether this assumed immunity is a very active factor. For one thing, it does not extend universally to the subscribers to the loan. In the case of the small investors, who presumably in a country like ours would form the bulk of the subscribers, it does not operate at all, since they would probably not be assessable for income tax in any case. But, it is precisely those investors who are least likely to gain from exemption from the tax who are the chief agents in fixing the price of the stock, so that the price will be fixed, irrespective of whether the stock immunises a certain deferred income against taxation or not. Again, what the investor gains in exemption from income tax is lost by the State, so that the more effective the exemption, and, therefore, the more effective the inducement to invest become, the higher the real cost of the loan. But, as I have endeavoured to show, it is questionable whether the privilege of partial income tax immunity offered in a loan really operates to appreciate the price of the stock and therefore reduce the real interest charge upon the State, so that although the State loses by the exemption it is questionable whether it receives anything like commensurate advantage in return. I think it will be generally admitted that a lender in considering a proposition to borrow generally looks to the immediate return which the intending borrower offers for his money. But when a loan at a discount is offered to him the lender is asked to take something less than the full market return which he might otherwise secure on his capital and is asked to forego that difference in return for a certain appreciation at the end of a term of years. But life is uncertain and [23] the investor to whom this inducement is offered may never see the end of that term of years, may never live to reap that appreciation. Therefore the stock so issued tends to become for him something of a speculation, and he asks a correspondingly increased yield from it and generally secures it.

A comparison of the real yields given by British Government securities which have been issued at par and issued at a discount respectively will make that case quite clear, and will support and substantiate the argument which I am making that discounted issue at a lower nominal rate of interest than would be offered if the issue were made at par, seldom, if ever, justifies itself, and I believe certainly does not justify itself in the case of this State. So much for the effect of an issue at a discount upon the investor. What is the other ground on which an issue at a discount may be defended? Is it that there will be a consequent decrease in the annual burden of the State charges? The expedient of issuing a loan at a discount has been adopted in those cases in which it was desired to maintain the appearance, the mere appearance, of a steady and consistent policy of debt redemption, while, at the same time, securing a reduction of a total debt charge without directly appearing to scamp the sinking fund provision. But in fact the effective operation of the sinking fund provision is reduced just in the same way as if part of the charge therefor were to be met by fresh borrowing. In order that the sinking fund might operate really effectively it would be necessary to compensate for the discount at which the loan is issued by an increase in the contribution from the revenue to the sinking fund. Apart altogether from this, however, it is clear that the issue at a discount is founded on two separate views of the future trend of economic factors which are scarcely consistent with each other. The first of these conflicting views is that the trend of interest rates will be downward, for [24] it is only upon that supposition that the issue will prove attractive to the investor; the second of them is that during the currency of the loan the general price level will tend to rise. But if the interest rates go down, so also will the price level and, in such circumstances, the burden of the debt will be increased. The more closely, therefore, we examine it the less justification there appears for the course which the Minister has adopted.

It may be pleaded that the premier security of the State ought to carry a lower nominal rate of interest than five per cent., so that cognate stock, such as the bonds of the Agricultural Credit Corporation, might be issued on nominally more favourable terms than they are at present. The fact of the matter, however, is as a general rule people who invest in these stocks are not people to be deceived by appearances. They look under the more or less insubstantial inducements which the Minister offers; they go to the root of things and they determine the price at which they will lend money, not by whether the Minister has issued a loan nominally at four and a half per cent., but by the real interest charge of five per cent. which he does pay on that security, a higher relative charge in 1930 than he had to pay for a larger sum of money in the year 1927. They go, as I said, to the root of matters, and it does not matter whether there is an issue on the market of stock nominally at four and a half per cent. What is going to determine them when they come to lend money to the State is its financial and its economic stability and the real burden of the public debt. They are not going to be deceived by the Minister's continuous propaganda that we have only a public debt of £25,000,000. They are not forgetting about the land annuities or the ex-R.I.C. pensions, and it is precisely because these things are not overlooked in the money market that the Minister in the year 1930 has to pay more for his money, I repeat, than he had to pay in 1927. It does not matter whether or [25] not Deputy Morrissey implores us not to hit the Minister with the loan in his hands, it does not matter what the Minister or the Government may say, they will not be able to borrow money for this State on more favourable terms than they are doing at present until they tackle the real financial problem in this State, the problem which is written in the ultimate financial settlement.

Mr. T.J. O'Connell: Whatever the House may think of the elaborate statement made by Deputy MacEntee, I fancy that the Party managers in Longford and Westmeath will not be very thankful for his abject confession of failure so far as the social services of the country are concerned in the future, for he made an admission here to-day—I do not know whether or not he is conscious of it— that cannot but be damaging to his Party interests, not alone in Longford and Westmeath, but in the future. He presumes that Deputy Morrissey and myself have changed our minds in regard to the question of the land annuities. We do not happen to have such a record for changing our minds as the Party to which Deputy MacEntee belongs. But we have not changed our minds on the matter.

Mr. MacEntee: Did you ever make them up?

Mr. O'Connell: I am glad that the Deputy confesses that he has some kind of mind to change. It is the only evidence——

An Ceann Comhairle: Now!

Mr. O'Connell: I apologise. I should not have minded that. Deputy MacEntee said that he has now conclusively shown that the social and economic services of this country cannot be improved to the position we would like to have them improved to and that he says he would like to have them improved to unless this question of the land annuities and the ex-R.I.C. pensions are settled. We have from the Minister for Finance, of course, a definite statement that he can see no chance in the immediate future of improving the social and economic [26] conditions of this country or of raising them to a standard equivalent to what they are in Great Britain and Northern Ireland. Deputy MacEntee comes along and says he, too, can see no hope. In fact, he has shown, he says, conclusively that it is impossible to raise the social and economic services of this country to the standard of Great Britain and Northern Ireland unless they get the land annuities and the ex-R.I.C. pensions. That is where Deputy MacEntee and ourselves disagree. We believe that the social and economic services of this country can be very much improved even though we have not the land annuities and the ex-R.I.C. pensions. It is quite obvious that they can be improved to a still greater extent if and when these moneys are available, but we have it now from Deputy MacEntee, the shadow Minister for Finance in the Fianna Fáil Party, that we must wait for the land annuities and the ex-R.I.C. pensions before we can effect an improvement in our social and economic services. So that all the fine talk we heard in 1923, 1924, 1925 and 1926 about the improvement of the social conditions that could be effected goes by the board, because at that time the land annuities had not been discovered as an issue in party politics.

Mr. Lemass: The ultimate financial settlement was only made in 1926.

Mr. MacEntee: And was an issue in the June and September elections in 1927.

Mr. O'Connell: The ultimate financial settlement has been mentioned. We have repeatedly stated that we would have been very glad if we had the assistance of the Fianna Fáil Party at the time the boundary settlement, out of which it arose, was being made. But that is history into which we do not want to go at the moment. I was especially glad to hear Deputy MacEntee's statement with regard to the loan and the future of the loan. That is a change of mind and a change of heart that one is always glad to notice.

[27] Mr. Lemass: There is no change there.

Mr. O'Connell: I was thinking of the statement made on the first loan and of the criticisms that were issued about the people who did invest their money in the first loan. I think that a statement such as Deputy MacEntee made is all to the good, and personally I was very glad to hear it.

Mr. MacEntee: Deputy MacEntee never made a statement which was not consistent with the one he made before.

Mr. O'Connell: I am not alluding to Deputy MacEntee personally, but I certainly say that people in his ranks to-day did make such statements and did issue statements urging that the first national loan should not be subscribed to.

Mr. Davin: It is on record.

Mr. O'Connell: These things are on record, as Deputy Davin states. I am in some difficulty to discover exactly what Deputy MacEntee's financial policy is, because he objects to increased taxation of any kind and he urges that the present taxation ought to be reduced very considerably. He objects at the same time to what he calls the reckless borrowing policy of the Minister. If the industries of the country are to be set going and if the people are to be set to work—if there is to be a general revival and general activity—we must have the life blood, the money or credit; it must be provided in some way. After all that is what make the wheels go round, that is the petrol that keeps the engine running. If it is not to be provided in one or other of those ways I cannot at the moment see how it is to be provided.

I am not one of those who charge the Minister with reckless borrowing. My criticisms have rather been in the other direction, that the credit of the State, which is high, is not being used to a greater extent than it has been used, because I feel that money saved and invested in profitable enterprises which would be of [28] national benefit would be money very well used, and my complaint against the Minister always has been that he has been too conservative in that particular direction. Now if he is going to be attacked because his borrowing has been reckless and because he has been conservative in the raising of money, I cannot quite follow what Deputy MacEntee has in mind; it is one of these inconsistencies we are frequently up against. There is another matter I would like to refer to for a moment. I was expecting I would hear something further from Deputy MacEntee on the matter, but he has not referred to it. I believe he has changed his mind in this matter too since he spoke on the 8th May. On the 8th May he made, what I think for Deputy MacEntee at any rate, a rather extraordinary statement. In column 1549 Deputy MacEntee is reported as having stated:—

“When the Finance Bill is before the House on the Second Stage we may take an opportunity of referring to some of the abuses in the present administration for the Act. I hope to hear from the Minister some justification for the steps which the Revenue Commissioners are taking to collect income tax at the present moment, particularly for the procedure relating to those cases where fraud is either alleged or where false returns are made. We are informed that the fact has been concealed from the taxpayer that in cases where a wrongful return has been made, if the taxpayer subsequently withdraws that wrongful return and substitutes a correct one he is not subject to any penalty. We are informed that that practice is not made known to the public, and that in consequence many people under the impression that they were liable to penalties in respect of returns that, if they were aware of the law, they would have taken steps to amend, have, rather than incur penalty, accepted the alternative of allowing a full investigation dating back many [29] years before 1922. That and some other matters we will take an opportunity of raising on the Second stage of the Finance Bill.”

Now I read into that, rightly or wrongly, an appeal for the people who have been guilty of fraud, who have made fraudulent returns to the income tax collector. That is the inference I draw from it.

Mr. MacEntee: On the plea only that the people should be entitled to all the advantages of the present law. They have certain rights under the law to-day which are concealed from them.

Mr. O'Connell: I would be very much surprised to hear if it was the law. I venture to say it was not the law. I hold it would not be the Revenue Commissioners' duty to point out to any person who is guilty of a fraud the fact that he is guilty of a fraud: “We have discovered now you have been guilty of a fraud, and, therefore, if you like, you can mend your hand now that we have discovered you.” That would be an extraordinary thing to ask the Revenue Commissioners to do, but who are these people who have been discovered to be guilty of these frauds? We have repeatedly here, and the Deputy also, made appeals for the small income taxpayer. It is not the small income taxpayers who are affected here or that the Revenue Commissioners are after. People have come to me and asked me to appeal for them. I have not done so. They were people who made big profits in 1920, '21 and '22, and concealed these profits from the Revenue Commissioners in their returns. Some of them invested their money outside this country and some lodged their money in banks outside this country. These are the people who, through the detective efforts of the Revenue Commissioners have been discovered in their frauds and have been mulcted, and, in my opinion, rightly mulcted, for their frauds. I have no sympathy whatever with them and I am surprised that Deputy MacEntee should have any sympathy with them. These are not people who are stuck for a few shillings, [30] a pound, or two or three pounds, or who owe the Revenue Commissioners one or two pounds. In 1923, in spite of the protests of the Labour Party, the tramway drivers and railway men were got after because a section was inserted in the Finance Act of that time making it compulsory on the employer to stop the wages of the working man who was not paying his income tax. It is not at all impossible that employers who were stopping the wages of the working men and acting as collectors for the Minister for Finance were themselves defrauding the revenue.

I would like to enter my protest very strongly against any sympathy whatsoever being shown these people. If I felt and believed that the Revenue Commissioners were finding these people out and getting the money that was often made by profiteering in the past when such things could be done with impunity I would be inclined, instead of blaming them, to clap them on the back because all the money that was got in in that way will relieve the burden on the shoulders of the smaller income taxpayers whom we are all very anxious to relieve. I do not believe as I say that Deputy MacEntee seriously had any sympathy with them but I do not want to see them encouraged and I certainly do not think there is anything in the point which Deputy MacEntee makes that the Revenue Commissioners are bound any way to point out to them what their privileges are if they discover them in fraud.

There is a matter which has been brought to my notice and that of many other Deputies in regard to the Finance Bill which I would like to mention for a moment and ask the Minister what his views on it are. It is in connection with a circular issued by the Football Association of the Irish Free State. I do not think that a discrimination should be made between any games in so far as the financial policy of the country and the collecting of taxes are concerned. We may all have our view and be supporters of one particular game or another. People [31] are entitled to play any games they wish to play and I do not think there should be any discrimination made in the Finance Act between one game and another. There are certain reliefs given to one form of football and to hurling and they are not given to other forms of football. Personally I can see no justification for that. As I say, we may have our views and be supporters or followers of one particular form. Others may prefer to support, follow or play, another form but I think in so far as the State is concerned it ought not to make a discrimination against one particular form of sport as against another unless there is some sound or good reason and I have not heard any sound or good reason for such discrimination.

As to this new provision introduced here about the hawkers, it was pointed out to me in the financial resolution, I do not know where it comes in exactly, that there is a provision that where vegetables are sold—I cannot see the definition about vegetables at the moment— the tax will not be payable. That was as it appeared in the financial resolution in any case but I think the wording has been changed.

Mr. Blythe: The exemptions were not in the resolution.

Mr. O Connell: The exemptions make it clear because as it read originally it did appear that a person taking corn to market and selling it from a cart would have to pay a licence duty. I know that was never intended but the words “farm produce” will cover that.

Mr. Lemass: It appears to me that Deputy O'Connell is inclined to anticipate events. He devoted the greater portion of his remarks to criticising and enquiring about the financial policy of Deputies on these benches as if the General Election had already taken place. He had, in fact, nothing whatever to say about the financial policy of the Executive Council.

Mr. O'Connell: We have been saying it for seven years.

[32] Mr. Lemass: In the course of his remarks he mentioned only the matter dealt with in the circular of the Football Association. I do not know if that means that the location of the Labour Party flag has been shifted in any way and whether we are now to reckon Deputy O'Connell as an ally of the Government or not. I hope not.

Mr. Davin: If you think it you can proceed to prove it.

Mr. Lemass: I am not even suggesting it. I expressed a hope.

An Ceann Comhairle: The hope is in order but the proof is irrelevant.

Mr. Lemass: Deputy O'Connell, however, is entitled to the information for which he has asked and I think it will be very easy to give it to him. He quotes Deputy MacEntee as saying that the social services of the State cannot be improved unless its right to retain the land annuities and the amount now expended in respect of R.I.C. pensions is asserted successfully. I do not think that the truth of that statement requires any very elaborate demonstration. The social services of the State can be improved in certain particulars, but I doubt very much if it would be possible to carry into effect the programme of improved social services which we would like to see in operation until the expenditure of this huge annual sum has been stopped. The Fianna Fáil policy in respect to social services has been made clear in this Dáil on many occasions. I might remind Deputy O'Connell and other Deputies that we believed that the old age pensions services should be extended even under existing circumstances and introduced a Bill designed to effect that improvement, which Bill passed its Second Reading here by a majority. In so far as the old age pensions services were sought to be improved under that Bill, we believed it could be done even before the question of the land annuities and the R.I.C. pensions had been settled. We believe that it is possible considerably to extend the benefits payable under the National [33] Insurance Act by effecting administrative economies. There is a large sum expended every year in a wasteful manner administering these Acts which could be more usefully devoted to increasing the benefits payable under them. We believe that social services should be extended even within the existing conditions. We do not believe, however, that it will be possible to establish here the state of affairs we desire to see, the state of affairs Deputy O'Connell professes to desire to see, unless this annual drain upon our resources is stopped. There is no need for the drain. It has been amply demonstrated that the payment of this money is not required under any existing international agreement of a binding nature. Long ago the advocates of the payment, whether on the Government Benches or the Labour Benches, abandoned the pretence that such legal obligation exists.

Mr. Davin: Will the Deputy quote any reference by any speaker from the Labour Party Benches in this House who advocated the continued payment?

Mr. Lemass: The Party that casts its vote to continue the payment must be presumed to favour it.

Mr. O'Connell: They did not cast a vote.

Mr. Davin: The Party cast a vote against a repudiation policy.

Mr. Lemass: There was no repudiation policy ever advocated in this House. You cannot repudiate a debt that does not exist. A motion was introduced here asking that the amount received by the Government in respect of land annuities should be paid into the Central Fund instead of being paid automatically to the British Treasury as at present. We did not even ask the Dáil to stop payment; we merely asked the Dáil to make an internal arrangement which would require that a separate vote would be taken each year before payment would be made. Seven members of the Labour Party refused to do that. The entire Cumann na nGaedheal [34] Party refused to do it. Deputy Davin and his allies, Deputy Heffernan and the members of the Farmers' Union, stood loyally shoulder to shoulder on that issue.

Mr. Davin: I did not stand for repudiation.

Mr. Lemass: We did not ask for repudiation.

An Ceann Comhairle: That motion has been decided.

Mr. Lemass: As the Ceann Comhairle says, that motion has been decided. The Dáil refused to give the Irish people the benefit of the doubt. There are quite a number of people who were very silent in that debate now prepared to admit that there is a doubt. I have said that the pretence that there is any legal obligation to make the payment has long since been abandoned by those who, nevertheless, insist that payment must continue. The Minister for Finance gives as his reason for continuing the payment the fear that he says exercises his mind——

Mr. Blythe: I know what the Deputy is going to say, but I will not answer back.

An Ceann Comhairle: We all know what the Deputy is going to say.

Mr. Lemass: Then it is not necessary for me to say it.

An Ceann Comhairle: Exactly. We cannot discuss the reasons for or against the payment of land annuities.

Mr. T.J. O'Connell: There are any amount of other opportunities.

An Ceann Comhairle: There are. Deputy MacEntee introduced the matter quite relevantly and he kept from discussing the pros and cons. We cannot discuss the pros and cons on this Finance Bill, because if we did so we could discuss them on every Finance Bill until the matter was settled.

Mr. Davin: Leave that to Mr. Geoghegan, unless he changes his mind.

[35] Mr. Derrig: I do not exactly know what Deputy Davin's remark was about Mr. Geoghegan.

An Ceann Comhairle: I did not hear Deputy Davin.

Mr. Derrig: I think he made a remark about Mr. Geoghegan changing his mind. I think he ought to withdraw that.

Mr. Davin: Quote my remark.

Mr. Lemass: Mr. Geoghegan will soon be here to speak for himself.

Mr. Davin: Perhaps he may change his mind.

An Ceann Comhairle: I did not hear Deputy Davin, but if the Chair had the power the Chair would rule out of order any mention of the names of the counties in the by-election now taking place and the names of all or any of the candidates.

Mr. Lemass: The purpose of this Bill is to impose certain charges on the taxpayers of this State. In the discussion on that Bill it is desirable that Deputies should bear in mind the fact that there is being paid out by the Irish people a sum exceeding four millions a year under the socalled Ultimate Financial Settlement made in 1926. We cannot lightly impose additional burdens on our taxpayers while that other burden has to be carried. But if that other burden is removed, as it will be removed before long, then it will be possible for us to finance schemes of social service beyond the wildest dreams of the Labour Party. It is not necessary for me to say that the Fianna Fáil attitude towards the social services of this State is at least in accordance with the attitude of the Labour Party. We hope to make the social services of the State equal to, if not better than, those prevailing in the six north-eastern counties and Britain, but particularly in the six north-eastern counties. By doing so we will be giving practical effect to the policy that the Minister for Finance has given lip service to-to make conditions here so attractive that the people in the [36] other part of the country will desire unity with us. The Fianna Fáil Party can do that, because the first act of this Party when in office will be to stop this payment; automatically with the election of a Fianna Fáil Government this payment will stop and the money will be available.

Deputy O'Connell said he was in some difficulty in his efforts to discover what was Deputy MacEntee's policy in relation to borrowing. Deputy MacEntee used the term “reckless borrowing.” There has been reckless borrowing. There has been borrowing to meet expenditure which could not be regarded as nonrecurrent expenditure. Every year certain sums have been deducted from the Estimates for supply services and provided for out of borrowed money. That was reckless finance. That operation was one which has damaged the credit of the State and limited the facilities for borrowing for other and productive services.

Mr. Esmonde: Will the Deputy give an instance?

Mr. Lemass: Certainly. This year a sum of £1,100,000 was deducted from the Estimates for supply services and not provided for out of taxation.

Mr. Esmonde: Will the Deputy give one particular instance—one particular payment?

Mr. Lemass: Army pensions.

Mr. Esmonde: Where was the borrowing in that connection?

Mr. Lemass: Look it up and see. There are certain services for which we would like to see money provided on a much more lavish scale than it has been provided heretofore, and in respect of which we would place no limit upon the amount the Minister for Finance might seek to secure. The service of housing is a case in point. Apart from the wisdom of embarking upon large development schemes during a time of depression and unemployment, and for that purpose borrowing money, the social [37] need of improved housing is so great that the problem should be faced as one of first magnitude, and all the resources of the State, if necessary, should be mobilised in order to solve it. The census of 1926 showed that housing conditions in the Free State area were probably as bad as, if not worse than, in most other countries in Europe. In that year some 55,000 houses were shown to be needed for the proper accommodation of the people of this country. Again and again we have tried to make the Dáil realise its duty in connection with that matter. I have frequently tried to impress upon the minds of Deputies that in the city in which we are meeting there are 68,000 human beings living in dwellings that have been described in the cold official phrase as “unfit for human habitation and incapable of being made so fit.” I would like if I could to make every Deputy here repeat those figures and words so that they would become impressed upon his mind.

Despite the fact that this great housing problem faces us the Government appears to be absolutely indifferent to it. They have secured the erection, since 1922, of 17,830 houses. The need is 50,000 houses. Of the houses which have been built under the Housing Acts only 31 per cent. are situated in urban districts where they are most urgently required. The number of families living in single rooms in tenement dwellings in Dublin has increased by 5 per cent. since this Government came into office. The Government's only reaction to the publication of the housing figures ascertained by the census was to reduce the amount hitherto available for the encouragement of building. The number of houses built under the Housing Acts in 1929 was 2,733, which figure is to be compared with 3,644 built in 1927. It cannot be argued that houses are not being built more rapidly because the resources are not available. There are lying derelict in this country deposits, which are not being worked, of the materials required for the construction of houses. Unemployment amongst the skilled building trade [38] operatives is rapidly increasing. In 1926 there were 891 skilled building trade operatives unemployed, and in 1929 that figure had increased to 1,286, an increase of 44 per cent. in the three years. To deal properly with a problem of that kind borrowing is necessary. We cannot finance any adequate housing schemes out of revenue. We cannot possibly get such a scheme under way so long as we are content merely to give small building grants to private individuals or local governing bodies. If we are going to get the houses that are urgently needed constructed within the next ten years the State must undertake the job as a State job. There must be some authority established by the State, financed and controlled by the Government, given all the necessary powers either to engage directly in the building of these houses or to arrange for their construction under contract.

If there was a great disaster here, a great flood, a great earthquake or a great fire, as a result of which 68,000 people in one city had to live in conditions unfit for human habitation, we would all agree that no effort should be spared to repair the damage as quickly as possible and provide proper accommodation for these people. There has not been a great disaster, but we nevertheless have that number of people living in dwellings unfit for human habitation. The attitude of the Government towards this matter appears to be one of callous indifference. For the borrowing of money to finance housing operations on a large scale there would be unanimous approval from all sections. For the borrowing of money to balance the Budget and meet recurrent expenditure there can be nothing except criticism.

If there was a great disaster here, a great flood, a great earthquake or a great fire, as a result of which 68,000 people in one city had to live in conditions unfit for human habitation, we would all agree that no effort should be spared to repair the damage as quickly as possible and provide proper accommodation for these people. There has not been a great disaster, but we nevertheless have that number of people living in dwellings unfit for human habitation. The attitude of the Government towards this matter appears to be one of callous indifference. For the borrowing of money to finance housing operations on a large scale there would be unanimous approval from all sections. For the borrowing of money to balance the Budget and meet recurrent expenditure there can be nothing except criticism.

When Deputy MacEntee described the Government's borrowing policy as a reckless one, he was expressing an opinion held by a number of other people in this country. It is a haphazard policy proceeding from day to day and not based upon any considered plan. Deputy O'Connell referred to certain remarks of Deputy MacEntee concerning the steps [39] taken by the Revenue Commissioners to collect arrears of income tax. We have no sympathy with anyone who has tried to defraud the revenue, but we want to see the Revenue Commissioners operating under the law as laid down by the Dáil. The point raised by Deputy MacEntee was that in certain respects the Revenue Commissioners were so straining their powers as in effect to be acting in an illegal manner. That opinion is not merely held by Deputy MacEntee; it is held by a very large number of the most eminent senior counsel in Ireland. If Deputy O'Connell has any doubt on that matter let him consult some of them. There is, in fact, in legal circles an impression that the Revenue Commissioners have taken to themselves powers which no statute, either of this Parliament or the British Parliament ever gave them. We are also concerned with the fact that because of the drastic methods that they applied in some cases industries have been closed down and the unemployment problem aggravated. Whatever might be the justice of forcing from certain industrialists the arrears of tax which they did not pay, expediency should also be taken into account, and if the forcing of the tax from them will result in the collapse of their industries, then expediency would show that it should not be done and some arrangement for deferred payment should be made which would enable the industries to keep operating.

Attempts have been made by many Cumann na nGaedheal speakers at public meetings to twist a certain speech made by me and a speech made by Deputy O'Kelly into an attack upon the Third National Loan. The speech which I made and which was so criticised was one in which I gave figures, taken from official Government publications, to show that since 1922 the area under every crop has substantially declined and that, simultaneous with the decline in the tillage area, the number of cattle of all classes has decreased [40] also. Is it seriously suggested that this State's credit stands so low that it cannot possibly borrow money except on false pretences and by the suppression of relevant information that the people should have? That apparently was the idea that animated the writers in the “Irish Independent” who addressed themselves to this matter. I do not know what idea animated certain others who spoke, except perhaps a desire to say something that the “Independent” would publish.

The Third National Loan was a good investment; Deputy MacEntee has adequately demonstrated that fact. I think he has even proved that the State is paying more for the money it is getting than it need pay under existing market conditions. Because it was a good investment it was fully subscribed. If the Government now want to redeem their prognostications and send that loan over par let the Minister for Finance, in concluding this debate, announce an early general election. I quite seriously suggest that the country was not perturbed by the publication of the statistics relating to the decline of agricultural production, because it knew that in a very short time a serious effort would be made to repair the damage done. In any case, a comparison between the agricultural situation of to-day and the agricultural situation in 1922 will at least serve the purpose of showing the scope for improvement that exists. If we boast that as a result of our policy the area under tillage will be increased within twelve months by 213,000 acres, then we are merely claiming that we can reproduce in 1930 the situation that actually existed in 1922, before the blighting effects of this Government came into operation.

I can understand members of Cumann na nGaedheal being anxious to suppress the information which official publications give concerning the effect of their government. It is no pleasure to the Minister for Agriculture or to the Minister for Finance to learn that productive enterprise here has been almost [41] sterilised by their incompetence and inefficiency. The whole country can recognise that incompetence now by its results. It is for that reason I say that the Third National Loan will probably jump over par on the day on which any Minister announces the early approach of a general election. The early approach of a general election will mean the exit of this Government from office. The money raised by the Third National Loan was required in the main to meet commitments already entered into and which any Government would have had to honour. I am aware that certain Cumann na nGaedheal speakers, either by direct statement or by insinuations, have attempted to convey the impression that a Fianna Fáil Government would repudiate one or other of the National Loans, and some Labour Party speakers were not slow in following that example. Those statements are, of course, untrue, but I doubt if there is any use in trying to impress upon the minds of those who uttered them that they are doing irreparable damage, not to the Fianna Fáil Party, but to the credit of the State, by making them. Supporters of Fianna Fáil do not believe these statements, but there are people who know very little about Fianna Fáil who are inclined to believe them, and who, consequently, believe that a financial crisis will follow a change in the majority of this House.

Deputies must reconcile themselves to the fact that that change is going to take place, and if they are anything more than party politicians, if they have any desire to serve the interests of the country irrespective of party, they will not make the path of their successors more difficult than it will be by irresponsible statements of that kind. The biggest offender—not in that matter, but in matters of a similar kind—is the Minister for Finance. He has not hesitated to attempt to provoke disloyalty to a Fianna Fáil Government in the ranks of the Army and the police force by stating that in his opinion the first act [42] of a Fianna Fáil Government would be to dismiss efficient officers. The first act of a Fianna Fáil Government would be nothing of the kind. The Minister for Finance knows that well, but he does not care, so long as he can gain a vote for his Party, whether the whole future prospects of this State are jeopardised or not.

I was very glad to learn that the issue of the Third National Loan was successful. I would remind Deputies that there was another issue of stock equally good from the point of view of yield and equally good from the point of view of security, which was not so successful. That was the issue of stock recently undertaken by the Agricultural Credit Corporation. The failure of that issue, and the failure of other Irish issues in recent years, brings to the forefront the serious problem of the export of Irish capital. The Minister for Industry and Commerce estimated that in 1926-27 this State received in income from investments abroad the sum of £12,500,000. In the following year that income had decreased to £12,000,000. The decline was not due to any repatriation of capital for use here, but to the realisation of foreign holdings for the purpose of meeting the adverse trade balance. There is, however, a very large volume of Irish capital now held abroad which is required here, if not the whole of it, at any rate a substantial part of it. Money is required to finance agricultural credit; money is required to finance other semi-State schemes; money is required to finance ordinary private industrial enterprises, and it is not forthcoming. It is hard to say how much money is required by Irish industry, because the Trade Loans Act, as Deputies are aware, was not fully availed of, and in fact there are guarantees which can be given under that Act if applications are made for them. Speaking from memory, there has been no issue within the past twelve months, although the Act was continued last year. I would like to know if it is the intention of the Government to [43] continue that Act this year, or if they intend to allow it to expire at the end of June when it falls due for expiration?

Irish capitalists who go abroad to find openings for investing their money have several reasons, the most important of which is, possibly, the fact that the tradition of seeking investment abroad is very strong among the Irish capitalist class, and also because the lead is given in that direction by financial institutions here. It is also, of course, an important factor that better opportunities for investment exist abroad. There is nothing approaching a capital market here, and there is not the same opportunity of capital appreciating as obtains abroad. We think, however, that the Government should be concerned to break down that tradition and should force the financial institutions of the State to give a proper lead in the matter when national interests so require. It is an extraordinary fact that the Irish joint stock banks invest a much higher proportion of their funds in long-term investments than the banks of most other countries. In the year 1928 the investments of Irish banks were 43.8 per cent. of their total deposits and note liabilities. and that figure falls to be compared with the figure of 16.8 per cent. for English banks, excluding the Bank of English, and 30.5 per cent. for Scotch banks. The greater part of the investments held by the Irish joint stock banks are foreign investments, and they constitute one of the easiest channels through which Irish capital can be exported. I do not know if they are following that policy out of anti-Irish prejudice or because they believe it happens to suit their financial interests best, but I think that this Government should seek to devise some means of ensuring that the policy for the banks which would be in the best national interest would also be the policy which would be best in their own financial interest.

The revenue authorities have estimated that a sum of approximately [44] £15,000,000 is invested abroad in respect of insurance business done here. I do not think it is unreasonable to ask the Government to take steps to provide for the investment of all, or at any rate the greater part of that money in Irish securities. In that connection a Departmental Committee was established by the Minister for Industry and Commerce in 1924 to consider the question of industrial insurance business only. That Committee produced a number of important recommendations dealing with industrial insurance in general, but with particular reference to the problem resulting from the fact that the greater part of the business is in the hands of foreign companies.

In the year 1923 the British Government passed an Act which prohibited Free State insurance companies from doing industrial business in England. The Committee did not propose retaliatory action here, but they did suggest that these British companies should be compelled to lodge with the Accountant-General of the Free State securities equal in value to their liabilities to their clients in this country. That Committee reported in 1924, but as in the case of most of the other committees established by this Government, its report is lying, probably covered with dust, in the Department of Industry and Commerce ever since. In any case there is a serious problem to be faced here arising out of the fact that Irish capital goes abroad to seek investment, and that when money is required for improvement purposes here, such as financing agricultural credit, it is not available.

The Banking Commission established by this Government reported that the machinery for financing industrial enterprises of all kinds in this State was adequate. I think that events have proved the Banking Commission to be wrong. It would, at any rate, be advisable that the whole question should be reexamined soon in the light of our experience of the five years that have elapsed since the Banking Commission [45] was established. I think that national interests require also that the policy of remitting income tax on incomes derived from investments in Irish securities should be more favourably examined than it has been in the past. It is, of course, the official policy of the Fianna Fáil organisation so to alter the rules governing the assessment of income for income tax purposes as to discriminate in favour of investors who invest capital in Ireland as against those who invest it abroad.

It would be much more desirable that a policy of that kind should be embarked on with the consent of all parties, and as a result of impartial inquiry than that it should be enforced on the country as the result of a purely party vote in the Dáil. All parties profess a desire to give encouragement to Irish industrial enterprise, and, in so far as we proclaim that aim in common, it should not be impossible to devise some means by which we could work in common for that end. If we are going to remove the great social evils of unemployment and emigration, we cannot do so while we are at the same time wasting our strength in factional strife. However we may disagree on the big issues that split the country, we can work together in this direction, but so far no indication of willingness to do so has come from the benches opposite. Ministers and those associated with them appear to be more anxious to score party points in debate than to do anything for the country.

Mr. Davin: It is between the two of you.

Mr. Lemass: The Labour Party does not count, anyway.

Mr. Davin: In your opinion.

Mr. Lemass: The problems of unemployment and emigration are very serious here. I wonder whether Deputies realise that they are much more serious here than in most other countries. Those Deputies who read the news in the papers know how greatly the failure of the existing British Government to remedy the [46] unemployment situation is perturbing the people of that country. Deputies who study the American and German newspapers in the library here know how greatly the unemployment problem is disturbing the people of those countries. Here we have an unemployment problem which is just as big as theirs and an emigration problem which they have never known, yet the Government appear to be anxious merely to pretend that those problems do not exist. They talk nonsense about them both in the Dáil and country. One Cumann na nGaedheal Deputy, in fact, stated that we were living in the happiest and most progressive period that the Irish people have ever known.

The net loss through population suffered by the Free State is four times higher than that suffered by Great Britain, the next highest country in Europe. I cannot tell the number of unemployed, as the figures disclosed by the Census have been suppressed, but no estimate has put that figure below 50,000. While serious economic problems like those exist, it is the duty of the Government to concentrate all their energy on finding solutions, yet the Government appear to treat them with indifference, and it is because of that that the Dáil should not be satisfied to allow them to remain in office. Apart from political differences, which are now being debated in the constituency in which a by-election is taking place, there are economic differences which would, owing to the policy of the Government, justify the Dáil in voting against this Bill, thus putting an end to the existing régime which has so weakened the vitality of the Irish nation that, unless it ends very soon, a revival will be almost impossible, no matter what party takes office or what policy is put into operation.

Mr. J.X. Murphy: Is Deputy Lemass not aware that the banks must keep a large proportion of their funds in readily realisable securities? Where are they to be found in Ireland? There are not [47] enough of them to go around. They do not go far enough. Some of those funds must therefore go abroad.

Mr. Lemass: I pointed out that the joint stock banks in the Free State invest in long term securities a much higher proportion of their funds than do the banks of other countries and that the majority of their investments are in foreign securities. Securities are available here. There is, for instance, the Agricultural Credit Corporation Stock.

Mr. J.X. Murphy: Is not that very small?

Mr. Lemass: Small and all as it is, it was not subscribed.

Mr. Esmonde: In the course of one of the strongest election speeches which I have ever heard in the Dáil, Deputy Lemass, I think, followed Deputy MacEntee in criticising the Minister because of the fact that he is paying a higher rate of interest on the new loan than he might reasonably be expected to pay. I do not think that that is logical criticism coming from Deputy Lemass, who has been announcing throughout the country that we are on the verge of a bog of bankruptcy. In his statement to-day, however, he very carefully avoided referring to that interesting phrase, “bog of bankruptcy.” He has not yet explained to the House how near we are to that bog and what effect our floundering in it will have on us. When I asked him to give an instance of ordinary expenditure paid out of borrowing, he mentioned Army pensions. According to Vote 56 the amount of such pensions is about £200,000. I would like the Minister to tell us whether we are paying that amount out of borrowed money.

Mr. Lemass: Nobody said that.

Mr. Esmonde: The Deputy said it.

Mr. Lemass: I did not.

Mr. Esmonde: I asked the Deputy for one instance in which ordinary expenditure was met out of borrowing.

[48] Mr. Lemass: Perhaps we could settle the matter by asking the Minister for Finance if anything was deducted from the Estimates for supply services in respect of Army pensions.

Mr. Blythe: I do not know that I could deal with that by way of interruption. Certain margins of sums representing arrears were in certain years treated as abnormal.

Mr. Esmonde: That is the only instance which Deputy Lemass gave. Both he and Deputy MacEntee tried, perhaps unconsciously, to damage the credit of this State by saying that we are living above our income and that we are meeting expenditure out of borrowed money. Perhaps they would give other instances. Deputy Lemass mentioned that the first step that was to be taken by the Fianna Fáil Government was in regard to the repayment of land annuities. On the other hand, the leader of his Party announced that their first work would be the establishment of a Republic for all Ireland and, secondly, the development of their new economic policy. As to which is the correct theory, whether Deputy Lemass or Deputy de Valera is right, we cannot judge. I was very grateful to see Deputy O'Connell supporting the plea for the exemption of football players from Schedule D in regard to income tax. If the Minister goes to Phoenix Park any Saturday he will see thousands of the youth of Dublin playing football there. It seems a pity that he should tax them when in other countries large sums are spent on providing facilities for games and athletics. I think that the Minister should not differentiate between different sections and different codes of sport in the remission of this tax, which provides a comparatively negligible sum. It is an irritating tax, and it is regarded as a grievance by many hundreds of thousands of young people in Dublin who play this particular form of game. I hope that the Minister will consider what Deputy O'Connell has said.

Mr. Davin: Deputy Lemass, speaking somewhere last Sunday, is reported [49] in the “Irish Independent” of Monday to have stated——

An Ceann Comhairle: Oh, oh!

Mr. Davin: I contend that this has a bearing on the debate.

An Ceann Comhairle: Suppose I agree that it has a bearing on the debate, would it not be better if Deputies did not quote from by-election speeches? It may be a counsel of perfection to ask Deputies to keep away from statements made at by-elections, but could we not keep out quotations?

Mr. Davin: Deputy Lemass himself would, I am sure, agree that there is nothing of a contentious nature about this portion of his speech.

An Ceann Comhairle: One quotation means other quotations, and then we are into the by-election. I would rather that the Deputy did not do it.

Mr. Davin: If I am not allowed to continue——

An Ceann Comhairle: I will allow the Deputy to make the quotation, but I think that the House would prefer that we should not have quotations from by-election speeches. I cannot, of course, rule the Deputy out.

Mr. Davin: This has nothing to do with the by-election but it has to do with the debate. Deputy Lemass is reported to have said: “They had all moved somewhat from the position they took up in 1922.”

An Ceann Comhairle: I apologise. The Deputy may proceed.

Mr. Davin: That is the position which several speakers who spoke before me have referred to. I do not think that there is any necessity for Deputy Lemass to apologise, either in the country or here, for changing his mind if he can give good reasons for having done so.

I am glad you realise now, sir, that there is nothing in the quotation I referred to. I merely quoted this portion of his reported speech to prove to the House that the Party to [50] which he belongs have changed their minds on several occasions on this question of the Land Commission annuities. Personally, I regret that the Land Commission annuity question should be made a party question either in debate here or in discussions outside the House. I have faith enough in every member of this House to believe that we would all be glad, as representatives of the citizens of this State, to save the State the money involved in that particular payment, provided—this is where I come in—we could do so without associating our own names or the honour of this country with the policy of repudiation.

[An Leas-Cheann Comhairle took the Chair.]

I myself and other members of this party spoke to prominent members of this House on both sides before, and about the time the motion to which Deputy Lemass referred came up for discussion. It was suggested—I challenge him to deny it—that the best method to approach this question was by way of conference between party leaders—that leaders of all parties in this House should find some way of taking national action to have this wrong, if there is a wrong, righted. That suggestion was turned down.

Mr. Lemass: By whom?

Mr. Davin: By some of the responsible leaders of your party.

Mr. Lemass: Who were they?

Mr. Davin: If there is a desire to approach the question from a national point of view, the way not to do it is to make it a party question in the country or in this House.

Mr. Lemass: As regards Deputy Davin's statement, so far as I am personally aware, his statement is altogether at variance with the facts.

Mr. Davin: My statement stands. If you are open to approach the solution of this question on national lines, conference between Party leaders is the only way to do it. Discussion here and at the crossroads [51] will only prejudice the people of this country in dealing with a neighbouring state on a serious national issue of that kind.

Deputy Lemass said that they had moved somewhat from the position that they took up in 1922. They have moved forward and backward to suit the varying views of the different sections of their own party and their own followers in the country. When this issue of the Land Commission annuities was first raised in the country—we find a great many converts on this issue—it was certainly conveyed to the people who were mainly concerned that if they could hold up the payment of these sums they would not have to pay the annuities.

Mr. Lemass: By whom?

Mr. Davin: That apparently was going too strong in the country and we had the further statement that although the money should be withheld and paid into the Central Fund that would not enable the annuitants to get rid of the responsibility for payment.

Mr. Allen: Quote the authority.

Mr. Davin: Now the suggestion is that the money will be given back by way of de-rating.

Mr. Allen: I would ask Deputy Davin to quote his authority for the statement he has made. There is no use in making a statement without giving any authority for it.

Mr. Lemass: He is giving his imagination free rein.

Mr. Davin: I have as much right to draw on my imagination as previous speakers of the Fianna Fáil Party had. The Deputy who has stood up behind me can explain clearly and to my satisfaction the present position of the Fianna Fáil Party in relation to this matter and whether or not they are prepared to go into a national conference for the purpose of approaching a national problem in that particular way.

[52] Mr. Allen: The Longford-Westmeath election is on.

Mr. Davin: At a particular period, when the issue became a burning one as between the farmer who did not pay his annuity and the fellow who did, it was made quite clear—the Party opposite were gaining knowledge by their experience in the country—that although the proposal was that the money should be withheld, notwithstanding that, the annuitants would have to pay. They said: “We will take it from you in the way of Land Commission annuities with the left hand and we will give it back to you with the right hand in the way of de-rating.” That is the gist of the speeches made to the farmers at the crossroads. Deputy Lemass and Deputy MacEntee come along and introduce the question here. They say that the social services could not be improved if they got into power unless this money was withheld. In other words, they say that they could not build houses or engage in any other social work unless the annuities were withheld. In the towns they say: “You cannot have houses built unless the annuities are withheld.” In the country they say: “You cannot have your land de-rated unless the annuities are withheld.” You cannot have it both ways.

Mr. Little: You can

Mr. Davin: I am always glad to hear Deputy Little elaborating on these big questions. No doubt, he will give us the benefit of his ripe experience as a lawyer on this matter. Speaking for myself, I say that this Party stands for peace at home and abroad, for friendly intercourse with neighbouring nations——

Mr. Little: Tell us about India.

Mr. Davin: Deputy Cooney will tell us about India when he speaks later. There is no member of the Fianna Fáil Party more competent to express an opinion on matters of that kind than Deputy Cooney.

Mr. Derrig: What about your friend, Jimmy Thomas?

[53] Mr. Davin: What about your friend Jimmy Geoghegan? The members of this Party believe that the proper way to approach this question of the Land Commission annuities is by opening up negotiations with the people with whom this agreement was made. The Ultimate Financial Settlement, of which the Land Commission annuity section is only a part, was never submitted for the formal approval of this House. It was, therefore, never ratified by this House. It is not an uncommon thing in a conference between State and State to re-open agreements of this or any other kind, but that can only be done by ordinary, recognised, international procedure—friendly discussion, negotiation and agreement. Supposing the British Government, acting as the Fianna Fáil Party propose to act in the case of the Land Commission annuities, said when a Fianna Fáil Government was in power that they would not continue to pay to the British Ex-Service men here the millions of pounds per year which they pay them at present, what would the Fianna Fáil Government say? So far as I am personally concerned, if I thought that the majority of the people of my constituency stood for the policy of repudiation, which is what the Fianna Fáil Party are standing for, I would resign my seat in Leix-Offaly rather than submit to it.

Mr. Derrig: I think Deputy Davin should have sufficient respect for his friends in power across the water to speak more carefully about what he calls “repudiation.” He will remember that the present Chancellor of the Exchequer of Great Britain stated on a celebrated occasion that a certain financial agreement, in which his country was involved, should be revised because it did not do justice to his country. He was attacked, as we are now attacked, and it was said that he was standing for a policy of repudiation. Yet when he went to the Hague and fought his country's battle—he got only two millions pounds a year as a result, whereas we are looking for three million pounds—friend and foe [54] applauded him. In this country, we have quite a different attitude.

If Deputy Davin wants this question to be discussed as a national question, why does he not himself give the impression that he is sincere in the matter? I deny Deputy Davin's statement that there were any proposals afoot with the Fianna Fáil Party for the discussion of this whole matter by the leaders of the different parties in this House. I know nothing of that. My colleagues know nothing of it, and when Deputy Davin comes here to make statements of that kind, he ought to produce some authority in support of them. If, as he says, the issue is being prejudiced—I hold it is not being prejudiced; I hold the Irish claim is being strengthened as time goes on—by a certain amount of misrepresentation, it is precisely because some of those people whom one would expect would look upon this as a national matter refuse to do so. They prefer to take up a party attitude, and to dismiss the whole question arbitrarily and summarily, with such phrases as “embezzlement.” I cannot believe that Deputy Davin is sincere when he says that he wants this question discussed as a national matter. This question was brought before the House very solemnly and very formally. When a resolution in the widest terms in which we could draft it was brought before the House in order to get a verdict, as far as possible without committing individuals or parties in the House, on the general policy of revision of the agreement—when such a resolution was brought before the House Deputy Davin voted against it——

Mr. Davin: Does the Deputy seriously suggest that the resolution was worded so as to call for revision?

Mr. Derrig: I do not. I said it was drafted in the broadest possible manner so as to make it possible for those who could not see eye to eye with us to vote for it on broad national lines. The resolution was worded in such a way as to enable the whole House to vote for it.

[55] Mr. T.J. O'Connell: It was not a question of revision.

Mr. Derrig: The resolution enabled parties to vote on broad lines without prejudice to the ultimate manner in which the question ought to be settled.

Mr. O'Connell: There is no question of revision. Deputy Lemass will not pay. That is the way he will settle the question.

Mr. Lemass: That is the way we propose to reopen the question. We do not propose to pay and argue afterwards.

Mr. Davin: Was that the way Snowden dealt with Germany.

Mr. Lemass: Exactly.

Mr. Derrig: If the issue has been prejudiced by being misrepresented in various ways, the reason is that the country was not given an opportunity by the Government in power, who wanted to make the issue a party one lest it should be said that they had made a mistake or that they were not as infallible since they took up office as they have tried to make the people believe. If we have to go round platforms, it is not that we want to use that method to deal with the question of legal rights and wrongs with an international aspect. They cannot be properly dealt with on by-election platforms. We have no other opportunity of dealing with the matter. So long as the Government and the Press refuse to discuss the question as a national issue in the way in which it ought to be discussed, we have no other method open to us. As I said here when discussing the question on the motion, the old Irish Unionists—the old landlord party—whenever a question of Ireland's financial rights in the days of the old Parliamentary Party arose, stood shoulder to shoulder with their Nationalist fellow-countrymen. They were against self-government, but they said: “If we are to have self-government let us not be fooled on the financial side; let us see that we get our fair share.” That ought to [56] have been the attitude of every member of this House, as I said on the motion. Deputy Davin is not doing himself justice in this matter. Whatever the rights and wrongs of the question may be, I do sincerely hope the change of attitude on the part of Deputy O'Connell and Deputy Davin——

Mr. Davin: And Fianna Fáil.

Mr. Derrig: Will cause a change of attitude on the benches opposite.

Mr. O'Connell: I deny that there has been a change of attitude on my part.

Mr. Clery: Deputy O'Connell, in starting off, thought fit to drag personal and party matters into the debate.

Mr. O'Connell: I did not start it— Deputy MacEntee started it.

Mr. Clery: Not being satisfied with the ground covered, Deputy Davin spoke of a change of attitude on the part of Fianna Fáil. My impression of Deputies O'Connell and Davin is that they need never change their attitude in order to be understood by the people. The people understand quite well where Deputies Davin and O'Connell stand now, and always stood in national matters. As far as the Labour Party is concerned, and Labour in general, it is quite good and national if it only focussed more of its attention on its leaders nationally and otherwise to get them to come up to the expectations of the Labour Party. Deputy Davin and Deputy O'Connell are always crying out for peace at home and abroad—even peace at any price. If they would take my advice, in their own interests, they would cease to be always imagining places for themselves on the Front Bench of a government party, and then their outlook would not be so blurred on national matters and they would be better leaders of a genuine Labour Party, which we could and should have in this country. They always talk of the two big Parties. and try to say something different from the two big Parties, regardless [57] of whether Labour in the country wants it or not. I am afraid they both fail to appreciate, and very often ignore, what would make a genuine James Connolly Labour Party in this country, if they wanted to. They put it on their placards when they want to have a popular demonstration, and then come back to the House and talk about peace at home and abroad.

Mr. O'Connell: What does the Deputy want—Is it war?

Mr. Clery: When I wanted it I did not go out and preach that I wanted it.

Mr. Davin: You have Deputies in your Party who ran away from war.

Mr. Clery: Probably we are all out of order in talking of war and peace, but it certainly comes badly from the leaders of the Labour Party who are now talking about it. I only wanted to make a few remarks about matters contained in this Bill. Perhaps it is time that I should come to them, but if Deputy Davin is not satisfied I am quite willing to go on a little longer. What I want to object to particularly is the imposition of a £10 tax on lorries doing business through the country. My impression is that it will do no good to the small towns or to the people who are doing the business and who will be taxed and no good to the consumer. It will do good only to the Minister, because he will get quite an amount of revenue which will be collected easily and cheaply. The tax will bring no extra business to the small towns in the West, or I believe in any other part of the country. As I said here before, if these people find it profitable to do business throughout the country in travelling shops they can easily find means to make it profitable to pay the extra £10 per year. The small towns in the West are doing perhaps 50 per cent. less trade than they did ten or twelve years ago. I believe that that is not over-rating the loss suffered by the small towns. You have a very large number of small business people in these towns barely existing at present, business is so [58] bad. When we consider the amount of income tax and other taxes squeezed out of small business people during the last four or five years, we should at least come to the conclusion that something is due from the Government to those people. To impose a tax of £10 on travelling shops is not the way to build up these towns again, give them back their business, and some of the little prosperity they had years ago. If a tax of £40 or £50 were imposed, it might be said that less business would be carried on from door to door.

When we pleaded here for some help for the flour milling industry, and asked for protection for it in order to build up some industry in the country, we were met by speeches from Cumann na nGaedheal Deputies, both in the House and throughout the country, that we were attempting to raise the cost of living. They stated that if our proposals in regard to the flour milling industry and other industries were carried out the consumer would have to pay. That argument is often put up, even by the Labour Party, that the consumer will always have to pay. If you put a tax of £10 on travelling shops the only effect it will have is that the consumer will be made to pay. The owners of these travelling shops will get the extra £10 from the consumers. In very remote parts of the country the people who will have to pay the extra tax will be the very poorest of the poor. The well-to-do classes have the means of transport to take them to the towns to do their shopping, but the poorer classes have to be content with the travelling shops. There is, perhaps, no other method for them of getting their requirements. The men who run the travelling shops are aware of that, and can always put something extra on the price, and these people will have to pay. In that way these people will be hit by this tax, and the cost of living for them will go up.

If the Minister goes ahead with this new tax and decides not to make it such as would bring business to the towns by increasing it, there is [59] one way in which the proposal might be improved, and that is by inserting some clause which would force the people who do business by means of these travelling shops to carry scales around with them, and prevent them from carrying around parcels of goods already made up and weighed. Whenever they sell goods they should be compelled to weigh them in the presence of the purchaser. If that were done, it would be an improvement on matters as they stand at present. At present the people very often are compelled to buy parcels of goods already made up, and they do not know whether they get full weight or full value for their money.

Mr. Little: Deputy Davin suggested that we were trying to have it both ways on the question of the land annuities. It is a simple sum in subtraction. If we succeed in getting the four and a half millions, which is the total of the land annuities and the R.I.C. pensions, which