The Reluctant Taoiseach

by David McCullagh

  The other difficulty was what to do with Seán MacBride. Freddie Boland, the Irish Ambassador in London, told British officials that Costello “felt under some obligation” to MacBride, but that the younger generation in Fine Gael “had refused to accept his inclusion in the Government”.196 This seems extremely unlikely. In fact, MacBride was offered a Cabinet position, but declined. It appears the Clann executive was not in favour of him taking a post,197 but in any event he believed that with only three TDS, his party was not in a strong enough position to take part. As he put it in a public statement on the eve of the Government’s formation, “With all the good will in the world on the part of all concerned, I would ultimately find myself in the position of a lodger who was not paying for his keep.” He stressed that there was no policy difference, nor was there disagreement on the portfolio he would occupy. The Clann simply didn’t have enough TDS.198

  MacBride’s decision may have been a relief to many in Fine Gael, but Costello appeared to regret it. Replying to a letter of congratulation from MacBride’s wife, Catalina, the new Taoiseach wrote, “We are sorry that Seán will not be more closely associated with us than he is.”199 But, as he told the Dáil, the new Government would have “his full support and … his experience and his knowledge and goodwill”.200 Events were to show that MacBride was not quite as reliable or supportive as Costello expected.

  Instead, Liam Cosgrave, just 34 years old, became Minister for External Affairs. Other young ministers included Corish (35) and Tom O’Higgins (37) in Health, which left the average age of the Cabinet at 52.201 Costello made the job offers himself202—there is no indication of whether he consulted with Mulcahy as party leader before doing so. He only told Tom O’Higgins at one o’clock on the day the new Dáil was to meet that he wanted him to be Minister for Health. The two men met in the Law Library. Costello had just finished a court appearance and was on his way to change before going to Leinster House. He told the younger man he wanted him to join the Government. “I am sure I must have looked as astonished as I felt, because I remember his saying something like: ‘Do you want to?’ to which I stammered an affirmative answer and asked: ‘What post?’ He then said, quite formally: ‘I want you to become Minister for Health in my Government, and furthermore, I want you to take health out of politics’. And that was that.”203

  The other new face in the Cabinet was Pa O’Donnell, victor of the Donegal West by-election in November 1949, who became Minister for Local Government. The Parliamentary Secretaries appointed by the new government were Michael Donnellan of Clann na Talmhan, who was given responsibility for the Office of Public Works; Labour’s William Davin, who was appointed to the Department of Local Government (after his death in 1956 he was replaced by Dan Spring); and four members of Fine Gael: Denis O’Sullivan, who was Chief Whip, Oliver J. Flanagan, who was Parliamentary Secretary to Dillon in Agriculture; Patrick Crotty in Industry and Commerce; and Costello’s newly elected running mate, John O’Donovan, who took the new post of Parliamentary Secretary to the Government.204

  O’Donovan’s position was so novel that questions were asked about it in the Dáil. Costello explained that he was not given any executive functions—he was instead to devote his experience as an economist “to assisting the Government and myself in the formulation of economic and financial policy and in the examination of particular economic and financial problems as they arise … it is this way that his special ability, knowledge and experience can, at present, be best utilised in the national interest”.205

  In his Dáil speech on the nomination of ministers, Costello said the country had suffered in the previous six years because of the political instability of both the Inter-party and Fianna Fáil governments. This government, he insisted, “has stability and it is going to last”.206 His old friend Arthur Cox—who was one of the Taoiseach’s 11 nominees to the Seanad, where he sat as an Independent—was perhaps more prescient: “You have a tough time before you—but at least it will be interesting!”207

  Chapter 11

  GIVING THE PEOPLE QUIET

  “We have given the people quiet over the last nine months and we want to maintain that situation.”1

  JOHN A. COSTELLO, MARCH 1955

  “We have done reasonably well despite the many bewildering problems with which we were confronted.”2

  JOHN A. COSTELLO, NOVEMBER 1955

  As the Dáil prepared to break up early in July, Costello was pleased with progress. “I believe that the new Government has got off to a good start. I felt it was vital to secure from the start public confidence in the new administration and to make it clear that there was no longer any political instability. I believe both objectives have been attained. The personnel of the new Government—particularly because of the number of young Ministers in it—has given satisfaction.”3

  This point was frequently mentioned in commentary on the new government. The Leader, for instance, praised “the weight given to members of the younger generation” in the Cabinet. An editorial considered that the new Taoiseach “envisages a radical revolution of previous fiscal policy”, although it claimed this would have been easier if the Government hadn’t committed itself to restoring the butter subsidy.4 As well as a (relatively) youthful image, the new government also enjoyed a solid majority in the Dáil. And the Cabinet seemed likely to be more harmonious without Clann na Poblachta. As Liam Cosgrave put it many years later, there was “less nonsense talked with MacBride and Browne missing”.5

  Shortly after Costello was elected Taoiseach, he received a courtesy call from the American Ambassador, William H. Taft III. Grandson of a president, and son of an influential senator known as “Mr Republican”, Taft was very well connected indeed. He was also friendly with Costello already, which may in part explain his flattering comparison between the new Taoiseach and his predecessor. “He does not retain the formal approach and aloofness of Mr de Valera. His manner is pleasant and unassuming. He listens to others with much greater interest and attention than his predecessor does.” However, Taft went on to observe, “I have noted that he is somewhat impressionable and that his temper is easily aroused by what he considers unreasonable.”6

  Jack Costello would have to confront much that he considered unreasonable in his second term as Taoiseach, but for the moment things were going smoothly. Maurice Moynihan, excluded from Government meetings during the First Inter-party Government, carried out his normal duties as Secretary to the Government in the Second, making things considerably easier for Costello. The Taoiseach also had a car at his disposal again, and two Garda drivers—Sergeant Paddy Byrne, who had driven him before, and Mick Kilkenny, who found Costello to be “a thorough gentleman” who never uttered an evil word and always showed charity to others. Unlike some others over the years, he didn’t keep drivers hanging around for hours outside the house, and always ensured they had a meal.7 Costello rejected a Garda offer to put an unarmed patrol at his house, as had been done in 1948; in fact no special police protection arrangements were made for any of the new ministers.8

  Ironically, the first potential crisis the Government faced concerned the same issue which helped sink the First Inter-party Government—health. As we saw in the previous chapter, Fine Gael and Labour had differed in their views on the 1953 Health Act. Now, a Fine Gael Minister for Health, Tom O’Higgins, had to implement it. During the election campaign, his Fianna Fáil predecessor, Jim Ryan, had signed a regulation requiring health authorities to provide certain services from 1 August. But according to O’Higgins, the authorities simply weren’t ready to provide the services. And if the regulation remained in force it would mean the existing limited right to hospital accommodation for dispensary patients and insured workers would in effect be abolished.9

  That, at least, was his view. But he also realised that his Labour Party colleagues, who had supported the Act, “would not take kindly to an apparent postponement of its operation at the behest of a Fine Gael Minister”. After briefing Costello and Norton, O’Hig
gins went on a charm offensive with Labour TDS, culminating in an address to a meeting of the Parliamentary Labour Party. He must have been persuasive, because his position was endorsed, with Jim Larkin proposing a vote of confidence in his handling of the issue.10 Legislation postponing the implementation of the 1953 Act went through the Dáil before the summer recess. To ensure it became law before 1 August, the new Seanad was “exceptionally” summoned to meet on the earliest possible date, 22 July.11

  The “ticking time-bomb” left for O’Higgins by his predecessor had been defused; but the new Minister proved to have more fundamental changes to the health system in mind. An advisory body he set up in January 1955 recommended an insurance-based approach, rather than the State-funded service envisaged by both Noël Browne and Jim Ryan. Costello made his preferences clear in the Dáil some months later, when he lauded a Budget provision to give tax relief for medical insurance. “We want our people not to have their hands out to the taxpayer for their health service but rather to be enabled, out of their own resources, to establish and maintain their own independence by providing against their own ill-health … We feel that this line offers the best approach both from the point of view of the individual and of the moral law.”12 It also fell in with the wishes of the medical profession.

  The political implications of health insurance were not lost on his son-in-law, Alexis FitzGerald, who urged Costello to have O’Higgins “go to town” on the issue, as “it is desirable and would attract the middle classes”.13 Legislation establishing the Voluntary Health Insurance Board was introduced in 1956;14 in the words of historian Dermot Keogh this measure, which was continued by the new Fianna Fáil government in 1957, “effectively put pay to ‘socialised’ medicine in Ireland”.15 This was a victory for Fine Gael, in line with the approach championed in opposition by Costello. In particular, it showed adroit handling by O’Higgins, one of the real stars of the Second Inter-party Government, and one of the Fine Gael politicians who retained a relationship with Labour in the long years of opposition after 1957.

  More fundamental than health for relations between Fine Gael and Labour was the economy. As we saw in the previous chapter, one of the first decisions of the new government was to reduce the price of butter. The new Minister for Finance, Gerard Sweetman, pointed out that this would cost £1.25 million for the year, while increased Civil Service pay sanctioned by the new government would cost another £900,000. He demanded new economies “at once” to offset this extra expenditure. “No time should be lost in pruning services and personnel regardless of the criticism which any worthwhile economies will inevitably provoke.” On 26 June, the Government agreed that each minister would examine his estimate along with Sweetman to reach agreement on economies, with disagreements being submitted to a newly established Estimates Committee, made up of Costello, Norton, Dillon and Sweetman.16 Thanks to the work of this committee, the 1955 Estimates showed a decrease of £2.75 million—as Costello pointed out in the Dáil, this was after £2 million had been spent on the butter subsidy, so the reduction on the previous government’s spending was close to £5 million.17

  Clearly, if it had been up to Sweetman, the Government would have been following a more conservative economic programme. He had quickly demonstrated that he had “the strength of character and independence of outlook necessary for a Minister who hopes to maintain the ascendancy of the Department of Finance over all other Departments”.18 This did not, of course, make him popular with his colleagues. But at the end of 1954 he was still on good terms with the Taoiseach, writing a letter of thanks to Costello on Christmas Eve “for your kindness and understanding … over all the past six months. At times I fear I must have sorely tired your patience.” He concluded by referring to himself as “the most explosive member of your Cabinet”.19

  Sweetman was to have cause for combustion early in the New Year. In the Dáil, he had insisted that the butter subsidy would be the last concession during the 1954/55 financial year.20 But in January, the Government decided that the Exchequer should absorb an increase in the price of tea, at an estimated cost of £1.2 million. The decision was made after a special 4-hour Cabinet meeting, which also discussed the wider Exchequer position.21 The cost of living had been one of the main issues in the election campaign, so there was considerable pressure on the Government, especially the Labour Party, to keep prices down. As The Leader commented, “Mr Norton at least will be able to reassure Mr Larkin that the Labour tail is wagging the dog. No more unfortunate method could, however, have been chosen …”22 British Ambassador Walter Hankinson agreed, saying “this curious Conservative-Labour alliance” had struggled to reconcile its promise to reduce both the cost of living and taxation. The tea situation had intensified this difficulty “to a degree almost pathetic”. The end result “served to support the guess that Mr Norton … was being awkward to his majority colleagues”. Hankinson also pointed to the curious torpor of the Government, saying it had “transacted the minimum of essential business before the long summer recess, produced nothing of much interest during the autumn session, and adjourned … for the longest permissible Christmas recess”.23

  In February 1955, Costello told the Fine Gael Ard Fheis that on entering government, they had “no illusions as to the magnitude of the effort that would be required to repair the ravages of … three wasted years and to revitalise the Irish economy … I think I am entitled to say that we have not done too badly … the economic barometer is now steady with at least a tendency to rise …”24 With some understatement, the British Embassy described the speech as “not particularly inspiring”.25 In truth, it was an extraordinarily downbeat assessment, particularly for an Ard Fheis. The Government had very little to show for its efforts, apart from a reduction in the price of butter and a stabilisation of the price of tea. What had happened to Costello’s Blueprint for Prosperity, his new thinking about capital investment and the attraction of foreign capital?

  During the election campaign, officials in the Department of the Taoiseach had looked at Costello’s proposal for a Capital Investment Board. A memorandum for de Valera concluded that while the proposals bore some similarities to those advanced by J.M Keynes, Costello had “given very few details”. He hadn’t, for instance, made any distinction between public and private investment. Whoever wrote the memo appeared unimpressed with the concept.26 However, that was while Costello was leader of the Opposition. Once he became Taoiseach, officials dutifully began exploring the idea, seeking information from the London Embassy about how the British National Investment Council had operated. The answer was: not very well. Freddie Boland reported the impression that the Council was “purposeless and unnecessary” and had been allowed to lapse.27

  Costello doesn’t appear to have pushed the idea any further at this point. Instead the running was taken up by Sweetman, who proposed a “survey” of the State capital programme to find out whether “this large expenditure is contributing to national wealth and productive employment”, and whether it was correctly balanced between productive and non-productive investment.28 A committee of officials, chaired by Ken Whitaker, was established, but it worked slowly. After two years, it had completed a general review and a chapter on rent control, and had done preliminary work on the ESB and housing.29 The general survey suggested that “works of social benefit and works of inferior productivity which entail a redistribution rather than an increase of incomes should … be kept within bounds and a better balance struck in the State capital programme as between economic and social objectives”.30 Given Costello’s vocal support for social investment in housing and hospitals, this was hardly what he was looking for. In any case, a committee of officials was emphatically not what he had advocated in opposition.

  In 1956, the Commission on Emigration recommended the establishment of an Investment Advisory Council; Sweetman argued that this would serve “no useful purpose”.31 A similar demand from a trade union delegation in June of that year provoked a defensive response from the Tao
iseach. He said he had advocated the establishment of a Capital Investment Board, and he hadn’t changed his mind. But, he added rather lamely, “the Government could not do everything at once”.32 Costello did manage to include the Capital Investment Committee as part of his landmark economic speech in October 1956 (see Chapter 13). But the fact that it took two and a half years, and a desperate economic situation, before he could get his idea adopted as Government policy, speaks volumes about the limits on his influence, even as Taoiseach.

  It was the same story with his other big idea, that of opening up the Irish economy to more foreign investment. As we saw in Chapter 7, he had in 1948 described the Control of Manufactures Act as “outmoded and outdated” and “humbug”.33 But little had been done during the term of his first government to address this issue. Second time around, he appeared more anxious to act. On 25 June 1954, the Taoiseach asked the Department of Industry and Commerce to examine possible changes to the Control of Manufactures Acts, which ensured factories were Irish-owned and Irish-financed. He wanted to know if the legislation should be amended “so as to permit, subject to any necessary safeguards, a greater inflow of external capital into Irish industry”.34

  A powerful head of steam was building up for change; in January 1955, the State investment bank, the ICC, called for relaxations to the Control of Manufactures Act.35 The Central Bank and the Department of Finance also called for changes to the restrictions on foreign capital, although they thought the Act was so “outmoded and unsound” that it should be repealed rather than amended.36 Change was also urged by two members of the Commission on Emigration, economist James Meenan and Costello’s son-in-law Alexis FitzGerald. The latter argued that “no other well-intentioned legislation has so retarded the progress of industry”. FitzGerald pointed out that if capital was important, then “intelligent experienced capital, i.e. capital in the control of experienced entrepreneurs, is most vital”.37