Resistance came from both the Federation of Irish Industry (FII) and Lemass's old department. Officials at Industry and Commerce argued that many of the 65,000 workers in the main protected industries would be vulnerable and that tariffs would have to be maintained for at least another decade.5 However, some industrialists accepted that a phasing out of tariffs was inevitable. In 1960 Lemass had told the FII that it should study the problems that different sections of industry would face with freer trade. The organization had employed Garret FitzGerald, a young economics lecturer and financial journalist, to carry out a pilot study of the highly protected woollen and worsted industry. His report concluded that, unless there were drastic improvements in efficiency and marketing, the industry would face serious difficulties under free trade conditions and many firms would disappear.6 This survey encouraged the government to create the Committee on Industrial Organization (CIO) in 1961. Composed initially of representatives of industry, officials and independent experts, it was extended to include workers’ representatives and became the first of a number of tripartite institutions that Lemass was to use very successfully to build a national consensus around themes of economic modernization, growth and planning.
The CIO surveyed twenty-two industries employing about half of the total manufacturing workforce in the Republic. Its report painted a depressing picture. While there were some sectors that hoped to hold their own in a free trade situation, many more (including footwear, knitwear, wool, shirts, paper, steel and electrical equipment) expected considerable losses and the possibility of going out of business.7 Lemass's response was that only systematic tariff reduction would provide the necessary drive and discipline to ensure improvements in efficiency and an expansion of exports. Although this harsh message was somewhat softened by the fact that the government committed itself to a phased reduction, starting with across-the-board cuts of 10 per cent in 1963 and 1964, there was no concealing that by the end of the decade, or soon after, Irish industry would have to sink or swim in a free trade environment. But fundamental to pacifying industry and possible doubters in his own party was the clear commitment that liberalization did not mean laissez-faire. An Industrial Reorganization Branch was created in Industry and Commerce, and substantial amounts of financial and technical assistance were to be provided for those industries that demonstrated a commitment and a capacity to change.
De Gaulle's veto on Britain's application in 1963 did not ease the pressure for change. Lemass returned to his earlier objective of a free trade agreement with Britain as a transitional measure towards eventual EEC membership. Although the Conservative government remained unsympathetic, the return of Labour in October 1964 was seen in Dublin as propitious. This initial optimism suffered a blow when, owing to a balance of payments crisis, the British imposed a 15 per cent levy on all imports with the exception of food and raw materials. However, Lemass skilfuly used Wilson's desire for a breakthrough in Anglo-Irish relations to reopen the trade question, and on 14 December 1965 the Anglo-Irish Free Trade Agreement was signed in London.
The Agreement seemed to some traditional nationalists a gross betrayal of Fianna Fáil's founding principles. In the Dáil, Seán Treacy, a Labour TD from the republican heartland of County Kerry, attacked Fianna Fáil for reneging on its principles: ‘[they] have perpetrated an act of union with Britain more final, binding and irrevocable than the Charter of Henry II or the Act of Union.’8 There was also opposition within the Department of External Affairs, which had produced a paper on the political implications of the Agreement arguing that ‘the resulting concentration of our trade “eggs” in one basket would inevitably have an inhibiting effect on our freedom of action in the political field and would expose us to greater political pressure by Britain.’9
Lemass displayed both his underlying radical purpose and his finely honed political skills in jettisoning economic nationalism. He contributed powerfully to a recasting of Irish nationalist discourse, which has been well summed up by Peter Mair:
Whereas in the earlier period the national interest had been seen to demand political, cultural and economic isolation, in the later period it came to imply the achievement of material prosperity. Independence per se was no longer sufficient, rather economic and social self-respect were necessary… Nationalism remained a key motif, but by the 1960s the success of the nationalist endeavour was to be measured in wealth and economic growth rather than in cultural or territorial integrity.10
Soon after becoming Taoiseach, Lemass had defined the supreme national task as ‘to consolidate the economic foundation of our political independence… it should be no exaggeration to say that our survival as an independent state depended on our success.’11 Economic success became the supreme national value because only through it could national unity be restored. While his approach to Ulster unionism and the northern state could be refreshingly revisionist, he did not hesitate to use anti-partitionism as a means of giving a nationalist veneer to policies that could have appeared heretical to traditional Fianna Fáil supporters. Economic success in the Republic would remove one of the main unionist objections to unification:
There are people today in the north-east of the country who say that we are here paying an uneconomic price for our freedom. We have got to prove them wrong. We have got to demonstrate that we can bring about a higher level of achievement and greater progress with freedom than without it.12
By 1961, with the first clear evidence of the success of the new policies, Lemass was publicly contrasting the ‘dynamism’ of the South with the North's growing unemployment problem and Brookeborough's resort to begging missions to London:
We are proving that there are better ways of dealing with the country's problems than by sending deputations to plead for help from others. The bread of charity is never very filing. I am convinced that the success of our economic programme can be a decisive factor in bringing about the change of outlook which the North requires and the discarding of all the old fallacies and prejudices on which partition has rested.13
Traditional territorial nationalism was also used to disarm the criticisms of tariff reductions that came from large sections of Irish industry. In advance of any free trade agreement with Britain, Lemass offered tariff reductions to northern manufacturers, to the chagrin of their counterparts in the Republic. When delegations of angry southern industrialists met Jack Lynch, the Minister for Industry and Commerce, they were rebuffed and told that the reductions ‘would be a considerable help in reducing suspicion and advancing national unity’.14
The shift in nationalist discourse was impelled by harsh economic realities, but it was soon rooted in economic success. By December 1962 a delighted Lemass could boast in the Dáil that ‘in many industrial occupations [there was] a scarcity of workers and in many areas full employment had been realised.’15 The performance of the Republic's economy for the next decade would continue to justify his early optimism. During the period 1959–72 manufacturing output increased by 5.9 per cent per annum, as compared with an overall growth rate of just under 4 per cent. Employment in manufacturing rose from 169,000 to 212,000. The pattern of the export trade showed a marked change: in 1960 industrial goods represented only one third of total exports, but by 1972 this share had risen to 55 per cent. An important source of change was the influx of foreign capital attracted by the government's relaxation of controls, its commitment to join the EEC, its generous tax allowances, and other inducements and wages that were low by American and West European levels. By 1973 new foreign-owned firms employed some 40,000 workers, or one fifth of the manufacturing workforce in the Republic.16
Economic historians sceptical of the role played by Economic Development and the First Programme for Economic Expansion have pointed out that during the 1960s international trade was buoyant, the terms of trade moved in Ireland's favour, and the doubling of the British rate of growth between 1959 and 1963 had a locomotive effect on the Irish economy.17 It is also true that moves to open up the economy and
attract foreign capital had been initiated by the two inter-party governments. Yet, it is difficult to deny the elements of decisiveness and coherence that Lemass gave to the process of reintegrating the Republic into the international economy. Perhaps even more important was his determination that Ireland's development strategy would not be based on a liberal model but would take a semi-corporatist form involving partnership between the state, trade unions and employers.
The reunification of the trade union movement in the Irish Congress of Trade Unions in 1959 encouraged Lemass to return to some of the themes of social partnership that he had first raised during the Emergency. Some of his own close associates were critical of his allegedly benign and uncritical attitude towards organized labour. In fact, his approach towards the Irish trade union movement, whatever its limitations as an economic strategy, was very much a vital political resource. It enabled him to re-establish Fianna Fáil's image as a broadly progressive force, something that had been severely damaged by its uninspiring performance in government and opposition during the 1950s. Gone was de Valera's emphasis on the virtue of frugality: as Lemass told delegates to the 1959 Ard-Fheis, ‘We used to say that we preferred freedom in a hair shirt to the fleshpots of serfdom, but that is not a choice we have to make. I believe in the beneficial force of disciplined nationalism.’18
Although there had been no trade union involvement in the formulation of the First Programme, the leader of the largest union in the country, the Irish Transport and General Workers' Union, praised the government for ‘its imagination, initiative, enthusiasm and tendency to long term planning which has attracted many new industries to the country’.19 The executive of ICTU was pleased to be wooed by Lemass through involvement in the CIO, in trade union advisory councils set up to consider problems of industrial adaptation to free trade, and, from 1963, in a new tripartite forum of unions, employers and government, the National Industrial Economic Council (NIEC), chaired by T.K. Whitaker.20
A central purpose of Irish corporatism, as of its European counterparts, was to control wage demands that could threaten Irish industry's competitiveness. In the period 1960–64 unit wage costs rose by 17 per cent in the Republic, compared to 7 per cent in Britain.21 Trade union leaders were expected, in return for a consultative role in economic policy-making and the promise of real economic and social gains for their members, to deliver wage discipline. From this perspective Irish corporatism failed. The removal of the fear of unemployment led to a new confidence amongst rank-and-file trade unionists who were determined to press for higher wages and shorter hours. There was a sharp upturn in industrial conflict: in 1964 Ireland topped the world league in man-hours lost through strikes.22 Lemass's frustration with what he complained was the ‘lack of cohesion and authority in the trade union movement’23 had initially encouraged an attempt to impose discipline. A White Paper, Closing the Gap, published in February 1963, proposed that the Employer–Labour Conference produce binding guidelines for wage increases and a pay freeze in the public sector. The sharp response from the ICTU, which withdrew its representatives from all government-sponsored bodies including the CIO and the Employer–Labour Conference, produced a rapid retreat, and the rest of Lemass's premier-ship would see little application of the stick but much of the carrot in the government's approach to the unions. He was soon to declare that national policy should take a ‘shift to the left’ and promised more government measures to ensure the translation of economic progress into improved social conditions in areas such as education, health and state benefits. This was more than rhetoric: social spending by government, which had declined from 14.8 per cent of GNP in 1952 to 13.7 per cent in 1962, rose to 16.6 per cent in 1966.24 Lemass was also involved in the negotiations that led to the first national wage agreement in 1964, which some of his critics in the party regarded as too generous.
The political pay-off for Lemass's identification with economic programming and his positive relationship with the leadership of the trade union movement was seen in the 1965 general election. In his first election as Taoiseach in 1961 it had been too early for the gains of the new policies to be registered and, with a low turnout reflecting what J. J. Lee calls ‘uncertain public morale’, Fianna Fáil's vote dropped from 48.3 to 43.8 per cent and its number of seats from seventy-eight to seventy, leaving Lemass to lead a minority government.25 However, in the 1965 election its share of the vote rose to 47.4 per cent and its number of seats to seventy-two, at a time when it faced the most significant challenge from the Labour Party since 1943. It was the first time in Fianna Fáil's history that it gained votes as an incumbent government after a full term of office.
But if the political achievement of Lemass was clear by the time of his retirement in 1966, his economic legacy was more ambiguous. Those who, like Whitaker, had doubts about his nudging of public policy to the left seemed to draw increasing support from the evidence that economic growth was accompanied by strikes, wage inflation and increasingly large balance of payments deficits. Economic programming itself was being thrown into question by the widening gap between forecasts and results. The First Programme had avoided setting specific targets; the Second Programme, launched in 1963, did commit itself to more precise objectives, including a net increase in employment of 81,000 by 1970 and a reduction of net emigration to 10,000 a year by the same date. While the forecasts for industrial growth were fulfilled, the continuing problems of agriculture meant unemployment remained higher than expected, and emigration, which had fallen in the early 1960s, rose again in 1965 to over 20,000 and did not fall below 15,000 for any year between 1963 and 1967.26 Government expenditure also rose faster than planned. As a result of these major discrepancies the Second Programme was brought to a premature conclusion and replaced by a (supposedly more realistic) Third Programme to cover the period 1969–72. Given the rapid economic transformations that the Republic was undergoing in the 1960s and its more open relation to the international economy, the whole programming project had an air of unreality about it. Yet, at its heart was Lemass's search for a development project based on class collaboration rather than on conflict. This would leave a lasting imprint on public policy in the South.
Lemass and Northern Ireland
Lemass's reputation as a supreme iconoclast, as a radical force making an often reluctant party substitute reality for fantasy, has been seen as exemplified in his policy towards Northern Ireland. Indeed, J. J. Lee has argued that he was the first Taoiseach actually to have a northern policy.27 The core of this policy was constructive engagement with Stormont, and its symbolic highpoint was his meeting with Terence O'Neill at Stormont on 12 January 1965, the first such meeting since 1922. However, there were important elements of continuity with his predecessor's approach to Northern Ireland.
It is true that, as Jonathan Bardon states, Lemass abandoned the overt irredentism of previous governments.28 However, some of what have been seen as his innovations – for example, the idea that northerners could be attracted only by a higher standard of living in the Republic – had already been articulated by de Valera, who had many other subtle and even heretical views on the subject. Despite the traditional nationalist fixation on Britain's primary responsibility for ending partition, de Valera as he approached retirement had shifted the focus, telling a group of American journalists in 1957, ‘The solution of the partition question was strictly an Irish problem, one that must be worked out between Irish people in the north and south. It must be achieved on a satisfactory basis for both sides.’29 This directly anticipated one of the central themes in Lemass's discourse on Northern Ireland. In his Ard-Fheis speech in 1957 de Valera also raised the notion of functional cooperation that would dominate Lemass's approach: ‘the proper way to try to solve the problem of partition was to endeavour to have as close relations as possible with the people of the Six Counties and get them to combine with us in matters of common concern.’30
If Lemass produced little that was new in the way of ideas on Northern Ireland, hi
s premiership was notable for a serious attempt to implement those that de Valera had articulated but had done little about for fear of annoying the more republican section of the party – above all his veteran Minister for External Affairs, Frank Aiken. His more active approach to Northern Ireland was in part a reflection of his long immersion in economic and industrial policy, which made him prone to see the radical policy reversals of the late 1950s as creating the material basis for political accommodation. It has been already noted how he used the supreme importance attached to Irish unity in Fianna Fáil's traditional ideology to sell EEC membership to the party. However, there can be no doubting the genuineness of his belief that the dismantling of customs barriers associated with the European project would have major political spillover effects: ‘In the long term economic considerations influence and determine political arrangements. The identity of economic interest in the two areas into which Ireland is now divided will, in time, bring about political unity.’31 Although he was also prepared to recognize that the division on the island was more than a tariff barrier – ‘it represents a spiritual cleavage which has its origins deep in our history’ – there could be no doubting his belief that religious and cultural divisions were increasingly anachronistic survivals that would be displaced by economic modernization. His own private religious agnosticism and his renowned lack of interest in the Irish language and the other cultural accoutrements of Irish identity,32 so important to de Valera, caused him to underestimate the power of more primordial voices in both nationalism and loyalism.
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