431 / 736
a point where it would be necessary to choke off the rush
of foreign firms and export orders, probably valuing up
the Irish £ ; the Irish tourist going abroad would find
his £i was worth perhaps 303. in Britain and $3.50
or $4—instead of $2.40—in America.
He referred to rising interest rates, particularly in
regard to mortgages, some of which had been raised
recently to 9%> and he suggested that everyone would be
happier if by stopping rising prices, mortgage rates could
be cut down to 3% or 4%.
Referring to export-import gap, he said this had
widened dangerously. In 1967 there had been an import
surplus of £i5m. ; in 1970 there looked like being a
deficit of £7Om. or more ; the country's foreign exchange
reserves at the end of 1969 were something over £29om.
Allowing tint some cash had to be left in the current
account for current business, he said a deficit of this size
could be met out of reserves only for a year or two.
FOREIGN LENDER
Beyond that—three unattractive possibilities presented
themselves, the country could borrow more abroad and
mortgage the country still deeper to the foreign lender ;
it could devalue the Irish £ which would have a devast
ating effect, not only on the cost of living, but on the cost
of production ; or it could have another burst of stop-go,
shut-down growth, raise unemployment and emigration,
spread poverty and so squeeze prices and cut the demand
for imports.
" You paid vour money," said Professor Fogarty, " and
you took your choice. Once we let ourselves get into a
position where these were the alternatives, we were
anyway bound to lose."
Speaking in more detail on the cause of rising prices
and what could be done, he said people often saw prices
as somehow galloping away by themselves for the hell of
it by the sinister capitalist.
In general, this did not happen. Prices only went up
when they were pushed ; the question was where did
the push come from and how much could be done to
control it.
One push came from the rising cost of imports—but
there wss not much we could do about that ; another
push came from public expenditure ; rising taxation
accounted for getting on for half of the rising prices in
i968-: 69, but when looked around at the desperate
need for public expenditure in Ireland, at the low level of
pensions and family allowances, at the need for more
housing and better health services, at the shortage of
money for university development or for a proper pro
gramme of overseas aid, it was obvious that it would be
sheer sccial irresponsibility to talk of cutting the total of
Government spending and taxation ; every penny of public
expenditure that could be got was needed.
PUBLIC EXPENDITURE
Professor Fogarty said that in face of present needs
of public expenditure in Ireland, the man who dodged
his taxes was an enemy of the people. He might be a
fanner or professional man who took his receipts in £10
notes and forgot to declare to the revenue ; he might be
a wage earner who demanded a wage increase when the
Government put up turnover tax or the tax on cigarettes
and drink. He put the two, he said, in the same bracket.
The professional man who swindled the poor and needy
by dodging his income tax had at least usually the decency
not to bo"st of what he was doing.
Yet another push towards higher prices, he said, came
or could come from profit margins. There were some
curious misconceptions, he said, about profits. Paid-out
profits of companies and corporations in Ireland (inclu
ding semi-State corporations like the E.S.B.) were 2s.
in the £ of the national income ; the I2th round, especi
ally if one allowed for its probable overflow into pensions,
farm incomes and the rest, looked like costing more like
45. in the £.
Quoting Mr. Michael Mullen, of the Irish Transport
and General Workers' Union, as reported in the press
recently saying the time had come for the I2th round to
be paid out out of profits, Professor Fogarty said to get
anything like the figure Mr. Mullen was looking for, one
would have to throw in reinvested profits—which was
the same thing as eating seed corn—and to take over a
large slice of the so-called " profits " of farmers, shop
keepers and professional men which were in fact these
people's wages. He doubted if this was what Mr. Mullen
meant.
On the subject of profits which, he said, were there
even if not as much as some people thought, Professor
Fogarty spoke of the purposes profits served, not only
as a reward for shareholders but above all as a source of
new capital for the future, and said there was reason to
think profits in Irish firms were too low rather than too
high ; one had to look at the question of profits politically,
in the sense of industrial relations politics rather than of
party lines.
AGREED PRINCIPLES
OTHER INCOMES
" It was politically out of the question to control other
forms of income, especially pay, unless there was a control
of dividends ; this, he said, must be a control which
affected and was seen to affect individual dividends just
as specifically as pay controls were seen to affect indivi
dual's pay.
He E!SO said that farm incomes had risen fast in recent
years and that there could be some savings on them ;
the problem, for farmers today was to keep with the rise
in other incomes ; if other incomes did not rise, farm
incomes would not need to follow them.
He was, he said, less satisfied about shopkeepers and
some independent professions. The Government had good
reascn, he said, for its recent decision to call on the Fair
Trrde Commission to look into fees of professional men
such as house agents.
Professor Fogarty said shopkeepers' margins and
independent professional men's fees amounted to little
over is. in the £ of the national income ; what happened
to them was unlikely to have more than a marginal effect
on prices as a whole. This, he said, left pay (not only
wages), and this was by far the biggest item in income,
expenditure and the cost of production ; it accounted for
around three-fifths of all personal incomes.
A rise in pay fed through fast and directly and with
massive effect into costs and prices. Pay in Ireland, as in
Britain, he said, and in other countries for which there
were statistics, did tend to race ahead independently,
autonomously and, come what may, he did not expect
that to be a popular thing to say to a trade union audience
but pay was the spearhead and leading cause of rising
nrices ; they would never see an end to rising prices and
high mortgage rates or a proper rate of growth in employ-
merit and an end to emigration until pay increases were
stabilised at a level consistent with steady instead of
rising orices.
Stating how important it would be to get ag-eement
between unions employers and the Government about
the principles
a pay and dividend policy and saying
145