IRISH CREDIT NOT SUFFICIENT.
There remains the alternative of the new Irish Parliament financing the operation. This it must do by means of payment in cash to the selling shareholders, for reasons which will be hereafter stated, unless it wishes to start its career by a scheme of spoliation, which would not merely rob the shareholders (who are mostly Irish), but would destroy the credit of the Irish Government. Mr. Redmond has recently acknowledged that a large number of Irish railway shareholders are good Nationalists; and it is certain that a great portion of the ordinary stock is held by Irish farmers and traders; and much of the preference and debenture stocks are also held by Irish charities, convents, diocesan trustees, and monastic institutions. These persons will expect, and justly expect, cash on a compulsory purchase, on basis of market value, or capitalisation of dividend, so as to secure the same return of interest.
Could the Irish Government borrow £50,000,000, and at what rate? To borrow at a higher rate than the present return on Irish railway capital, namely, 3.77 per cent., would be to incur a loss on working the railways, from the outset, which Irish ratepayers or taxpayers would have to make up. The net receipts, at the time of the Commission's Report, were, in round figures, £1,600,000, and thus to borrow £50,000,000, even at 4 per cent., would mean an annual loss of £300,000 a year, even if there were no sinking fund. A 10s. per cent sinking fund would increase the total annual loss to £550,000.
But, could an Irish Government Guaranteed Railway Stock be issued at 4 per cent.? Would Ireland's credit stand better than that of Hungary, whose 4 per cent. gold rentes stand at 92, or of the Argentine, which has to borrow at nearly 5 per cent.? There are grave doubts whether the large sum required would be subscribed at all, at even 4 1/4 per cent, or 4 1/2 per cent. basis. It is not likely that English investors would take up such a loan, seeing that they have consistently fought shy of Irish investments, and they are not likely to change their views upon the break up of the Union.
It may be said that the sum required could be raised in Ireland—that patriotic feeling would stimulate the operation, and the large sum of money (over £50,000,000), lying on deposit at the Irish banks may be referred to as available. Patriotism that has not financed the Irish Parliamentary Party will not be likely to finance a gigantic railway loan. Nor is the large sum appearing as banking deposits really free money available for investment. With increase of deposits, the items of loans and advances in banking accounts have also correspondingly increased, and they largely balance each other. Not only is the money deposited by one customer lent to another, and therefore already utilized, but, to a large extent well known to bankers, the deposits, i.e. the credits to particular accounts, represent money lent to the persons having these accounts, and are not, in fact, their own free balances. So also credits in the accounts of one bank, figure as debits on the balance sheet of another bank. There probably has been in recent years considerable saving in Ireland, but it is also certain that those savings have largely gone, and will continue rightly to go in improvements of farms, which the Land Acts and Land Purchase Acts have made worth improving for their possessors. Those who have not saved enough borrow, and the bank advances represent largely the capital required by farmers and traders. The deposits, therefore, are being well used, and are not dead money. Divert them to any large extent to another purpose, and there will probably be a contraction of banking credit, which Irish farming and industry will be the first to feel.