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 10_s._ 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.