John Gerard Hanafin (Fianna Fail)

I take the opportunity to endorse what Senator Bradford said. I look forward to a campaign which will be constructive, positive and forward-looking based on policy and with a view to what is best for Ireland. In terms of the vision the different parties have for Ireland and how they will explain to the electorate the rationale for decisions, I hope they will try to avoid any knee-jerk reactions which do not reflect the reality of the situation surrounding decisions made and that we put them in the context of the circumstances that prevailed at the time. I look forward to a brighter future which I am certain is the aim of every party in this House.

The Bretton Woods Agreement is an historic agreement reached in 1944. It was preceded by the Atlantic Charter which, interestingly, was agreed in 1941 between Winston Churchill and President Roosevelt of the United States. I mention the confidence of the United States at that time in terms of how it viewed the future. Even before it entered the Second World War, it indicated the type of world it wanted to see after it. It was a remarkable show of self-confidence and self-belief on the part of the United States at that time that it indicated the type of world it envisaged. It outlined the type of trade, access to goods, access to the seas and the rights of individual trading nations. That all came to pass with the Bretton Woods Agreement in 1944 and the establishment of the International Monetary Fund and the International Bank for Reconstruction and Development.

The reason for looking forward was as a result of the difficulties of the 1930s. The 1930s were overshadowed by the boom 1920s which was followed by the crash in 1929 when it became obvious that people could not repay the massive amount of credit pushed into the economies of the world. That was followed by the Depression.

We were very fortunate that we had that historic analysis. I firmly believe we would have had a second Depression as a result of the financial crisis in the United State in 2007 and 2008 except for the fact that people knew the mistakes made in the 1930s, subsequent to the 1929 crash. The mistakes made in the 1930s not only led to the extension of the Depression but were a major contributor to the Second World War and to other wars. Wars have an economic basis.

Measures taken included the introduction by the United States of the Smoot-Hawley Tariff Act which placed tariffs on 20,000 goods imported into the United States. It then used depreciation of its currency to ensure it had access to other markets. Nazi Germany introduced a favourable exchange rate mechanism and favourable trade arrangements with countries trading with it. The British Empire had a preference for its own colonies and the French followed suit. There was a strong need for a world system of economics that included access to markets.

The head of the US Federal Reserve, Ben Bernanke's, doctoral thesis was on the Great Depression and he knew how to handle the difficulties which arose in 2007 and 2008. We faced a very serious situation. I gave a great quote from the film "Wall Street: Money Never Sleeps" previously in the House. One of the elderly advisers on Wall Street played by Eli Wallach was asked what to do when Lehman Brothers collapsed. He said it was 1929 all over again except this time it would be worse because it would happen quickly, banks would close, ATMs would stop spitting out money, there would be panic on the streets, jobs would be lost, standing orders would not be paid and that it would be the end of the world.

Thankfully, there was a man who knew how to deal with the situation and he immediately pumped money into the market. The Americans increased the amount of money in circulation to ensure there was not a liquidity problem. Rather than do the obvious thing, cut their markets, ensure production for their own country only and introduce tariffs to protect their own jobs, they ensured the world economies stayed open. This is part of the work the IMF does and what the Bretton Woods Agreement catered for.

I am sorry one part of the Bretton Woods Agreement was changed in 1971 by Richard Nixon, namely, going off the gold standard. I still believe that having the gold standard as a back up fund is the best way forward. Again, as each difficulty arises and as the situation changes, we see what is necessary. We are now emerging from what could have been one of the most serious Depressions since 1929.

The fact we are increasing our quota from .385 to .528, which has historically been under-represented in the IMF, that we will achieve cheaper funding and that we are full participants in the IMF is welcome. Other major economies have benefited, including France in 1947. The UK has twice gone to the IMF for assistance. As the Minister mentioned, the new IMF is not the same as the IMF which got involved in Africa and Latin America in the 1980s and which unfortunately got a bad reputation. Now it is seen as having more of a consultative and assistive role. I am very proud we are able to patriciate fully in this.