Sins of the Father
Page 8
For its part, the Free State government held true to these trickle-down principles by cutting services to the working classes while providing a helping hand to the graziers and livestock exporters, as well as urban middle-class house buyers (as we saw in chapter one). It undertook to encourage industry only insofar as such measures entailed no negative change in ranchers’ incomes. The senior officials in the Irish civil service, particularly those in the Department of Finance who had served under the British administration, ‘emphasised a tradition of financial austerity and avoidance of government intervention. A largely conservative party advised by a thoroughly conservative administrative elite resulted in economic orthodoxy.’42 The government’s economic policies favoured graziers and livestock exporters but ‘offered little to those facing emigration or inadequate living standards’.43
In October 1924, six months after the government had passed the Housing Act which gave purchase subsidies of between €60 to €100 to middle-class households, the Minister for Industry and Commerce told the Dáil in a debate on unemployment and welfare assistance that ‘there are certain limited funds at our disposal. People may have to die in this country and may have to die through starvation.’ This was in response to the documented accounts of starvation which were coming in from around the country. In January 1925, Dr Brian B. Crichton, who had a long association with the Coombe and Rotunda hospitals, told the Rotary Club that ‘a child’s chances of life in the City of Dublin are worse than were the chances of a soldier in the trenches during the Great War’.44 He said that women often came to him to the clinic but ‘instead of medicine, he often gave a note to some philanthropic organisation to enable them to get food’. The same month, the Clare Health Board was informed of a man and his wife who lived near Kilmikil, who had died of starvation and neglect. The relieving officer had found the woman ‘lying in a corner of a filthy and verminous room, covered only by a dirty rag. The man was also in a deplorable condition, weak and hungry.’45 In another case, a doctor visited a house in ‘New Hall, near Ennis, and found two old people living in a terrible condition of filth. They had been eating portions of the carcase of a calf, which was lying in the kitchen.’46 In Longford, two married women were charged with stealing potatoes from the mental asylum garden. ‘I took the potatoes for my children, who are starving at home,’ said one of the women. The judge said that from his knowledge no one need starve in Longford. When the defendants’ lawyer asked the judge had he read the report in the local newspapers about cases of starvation, the judge replied, ‘Yes: and I saw it contradicted.’47 It was increasingly clear that Cumann na nGaedheal was protecting the financial self-interests of the class it represented, while the rest of the nation could, quite literally, starve.
In terms of the economy, the government’s plan to keep things as they were ignored the obvious fact that they weren’t. The island had been partitioned into two separate political entities, with the twenty-six-county Free State now responsible for its own fiscal affairs. Yet, the approach of Cumann na nGaedheal and the senior officials within government was to behave as if Ireland remained a regional economy within the UK. The problem was that the type of financial redistributions and shared costs which regions could expect while part of a greater national economy were now all but gone. (One example of this was the social housing fund set up under the 1919 Housing Act, which allocated grants and loans to local authorities to build sanitary accommodation for the urban and rural working classes. With the War of Independence and subsequent partition of the island, that funding stream was now shut off for the twenty-six counties.)
Ireland was now a nation-state. ‘Fiscal separation from the UK meant that Irish exports to Britain of protected commodities became subject to British import duties, and all imports into Ireland became dutiable at the same rates as goods imported into Britain.’48 But instead of working towards the creation of a national economy with an independent fiscal policy and actual agricultural products for export (not just livestock), the Irish government took to protecting the relatively small percentage of farmers, financiers and administrators who made a comfortable living from the structural deficiencies of the Irish economy, while consigning the rest of the population to poverty and emigration. In real terms, this meant the continuation of ‘free-trade’ in livestock and finance, while finished products were subject to tariffs and quotas. The three government-appointed commissions set up to examine the economy – the Commission on Agriculture (1924), the Fiscal Inquiry Committee (1923) and the Banking Commission (1927) – all decided in their majority reports that things should remain as they were, that ‘Ireland would maintain parity and financial links with sterling, produce food for Britain, and retain a free-trade industrial sector.’49
The conservatism of Cumann na nGaedheal did not stop with economics. Divorce was banned in 1925, while in 1926 the Department of Justice under Kevin O’Higgins set up the Committee on Evil Literature. Its purpose was to consider ‘whether it is necessary or advisable in the interest of the public morality to extend the existing powers of the State to prohibit or restrict the sale and circulation of printed matter’. It was followed by the Censorship of Publications Act (1929), which sought ‘to make provision for the prohibition of the sale and distribution of unwholesome literature’. The Irish Free State may have wanted its economy to remain petrified in a pre-partition wonderland, but it had definite views on the morality of its citizens, and on this it took a more vigorous course.
Not all sections of the government were happy with the continuation of the status quo. In April 1924, the Cumann na nGaedheal TD for Cavan, Seán Milroy, told the weekly meeting of the Dublin Rotary Club that:
[The people of the Free State] had been told that any departure from the old fiscal regime which they had inherited would jeopardise, if not seriously injure, Ireland’s foreign trade. Anyone who had studied that foreign trade knew that it was uneconomic – largely an export of foodstuffs and raw material. [Milroy] asked those who opposed Protection to cease talking about theories and to take cognisance of the realities.50
Officials in the Department of Industry and Commerce also urged the use of tariffs as a means of economic and industrial development. The tasks which the Free State needed to undertake in order to turn itself from a regional to a national economy, it was unwilling to carry out. There was an ideological element to this, with free trade invariably put forward as the solution to Ireland’s economic problems.
In June 1923, the Fiscal Inquiry Committee was established to examine the fiscal situation for industry and agriculture and to report on any changes needed to foster growth. It was chaired by Timothy Smiddy, professor of economics at University College Cork and economic advisor to Michael Collins in the lead-up to the Treaty negotiations. (he would later serve as the Free State’s Minister in Washington.) Despite the fact that the overwhelming majority of those who gave evidence called for protection, the Committee concluded that high wages and a lack of skilled labour, and not the uneven ‘free-trade’ links with Britain, were undermining the growth of native industry. The historian Mary E. Daly notes that ‘there was no minority report, so the message of free trade and the priority afforded to agriculture and export industries was not challenged’.51
The argument that tariffs would add to the cost of agricultural production – as was made not only by the Fiscal Inquiry Committee but also by the graziers’ supporters in Cumann na nGaedheal – ignored the important fact that fertilizer and agricultural machinery made up the bulk of important agricultural producer goods; the rest was home produced. The main cost for a grazier was the purchase of young stock, which almost invariably came from small farmers, and ‘this cost was the income of the small farmer who had reared the stock’.52 Yet the call for tariffs was made with regard to consumer goods. Any widening of import duties would have hurt a graziers’ pocket – were he to continue to buy imports – but not necessarily his profit. As the historian J.J. Lee put it:
… dogmatic free traders
cleverly succeeded in confusing all farmers’ purchases with farming ‘costs’. There was no immediate reason why protection on consumer goods should have directly and sharply increased famers’ costs of production, as distinct from cost of living. The convenient confusion between famers’ consumer purchases and producer purchases was a shrewd propagandistic non-sequitur.53
The idea that the consumer power of well-to-do farmers and graziers should be protected at all costs made no economic sense to a country with the type of structural deficiencies such as those of the Irish Free State.
One contemporary commentated on the fact that ‘close on forty Irish manufacturing industries gave evidence before the Fiscal Inquiry Committee in support of protective tariffs, and each one of these, with one trifling exception, were prejudiced or damnified by the report, not upon the merits of each case, but upon general principles’.54 The Dublin Industrial Development Association condemned:
… the non-judicial and extraordinary manner in which the great weight of evidence in favour of some form of protection was brushed aside by the Fiscal Inquiry Committee while all who abstained from tendering evidence were, for no very cogent reason, assumed to agree with the present system of free imports.55
The Fiscal Inquiry Committee, which included such free-trade stalwarts as Professor C.F. Bastasble of TCD, ‘a survivor of the great days of Victorian liberalism when free trade was regarded by British economists as a religion rather than a policy’,56 had found that the solution to Ireland’s economic woes: put all your livestock and biscuits in the John Bull basket, and things will work out okay. The grand old sages of Irish economic thought, rather like the much-maligned insane, were staunch believers in doing the same thing over and over again in anticipation of a different result.
The early 1930s saw the Cumann na nGaedheal government forced to admit that its ‘nothing to see here’ strategy was not working and that the fundamental problems within the economy needed to be addressed. The economic downturn, the forced deflation brought on by the Irish currency’s parity link with sterling, and the crash in agricultural prices all added to the calls for protection, some from within the agricultural sector, and by December 1931 there were tariffs on butter, bacon and oats. The favouring of middle-class incomes over economic development – in tandem with the housing grants, the standard income tax rate was cut from 25 per cent in 1924 to 15 per cent in 1927, while farm incomes were already exempt from income tax – had left the State in the unenviable position of borrowing more and spending less. ‘Both taxes and expenditure fell marginally from 1926 to 1931,’ writes Daly, ‘though public debt rose from £14.1 million in 1926 to £29.3 million in 1931.’57 The Fianna Fáil TD Seán McEntee said that ‘The Churchillian principle which the Minister [for Finance, Ernest Blythe] had enunciated of meeting budgetary obligations by increasing the public debt … was simply an inducement to undertax and overspend’.58 The idea that tax breaks in lieu of structural change will save a shrinking economy has a half-life in Ireland that’s greater than plutonium, and just as toxic.
‘THE SMALL FARMER AND THE LABOURER ARE IN MORE NEED OF ASSISTANCE AND SUPPORT THAN ARE THE WEALTHY CLASSES’
Éamon de Valera, Sligo, 5 July 1930.
The Stock Market Crash and subsequent Depression saw governments across the world embracing protectionism with renewed vigour, and by the time Fianna Fáil came to power in 1932, Ireland was ‘virtually the last predominantly free-trading economy in the world’.59 The party initially formed a minority government with Labour Party support, but gained an overall majority after the snap election of 1933. It promised small farmers and urban workers significant changes and a positive difference to their lives. Policies included a campaign to encourage tillage; to break up the large grazier farms and destroy the rancher class; to divide the big farms among the small farmers and landless labourers; to introduce a general policy of protection; and to break the country’s commercial dependence on Britain.
Seán T. O’Kelly was made Minister for Local Government and almost immediately began work on providing social housing for the working classes and agricultural labourers. Seán Lemass, as Minister for Industry and Commerce, was equally enthusiastic, and set about introducing a series of protectionist measures to encourage indigenous industry. Éamon de Valera, as Taoiseach, withheld land annuities to the British government and sparked a tariff war, which led Britain to place 20 per cent duties on all Irish livestock and livestock products, and de Valera, in retaliation, imposing duties on British coal. The tit-for-tat measures put a dent in Fianna Fail’s limited economic reforms.
The most striking aspect of Fianna Fáil’s economic policy, though, was not that the Free State had finally caught up with the rest of the world and was using tariffs to protect and encourage domestic industry, but that, having committed itself to tackling the structural deficiencies in the Irish economy via tariffs, it then decided to fight with one fiscal arm tied behind its back. There was no move to create an independent Irish currency, no move to establish a central bank, and no move to break the crippling parity with sterling. In addition, the ‘bank rate remained at 3 per cent between June 1932 and August 1939 … and though national debt rose, budgets continued to be balanced or nearly so’.60 Furthermore, Fianna Fáil embraced protectionism as a means of creating industries which would produce for the needs of the Free State, and it alone, ‘In de Valera’s particular denomination of the tariff creed, the industries established were not expected to compete internationally, but were to service the home market.’61 He saw ‘little hope of establishing export industries, apart from food’ and freely admitted that this particular brand of protectionism – great effort for little growth – would involve sacrifices. He simply counselled the people to ‘forget as far as we can, what are the standards prevalent in countries outside this’.62 Where this left the opening of letters from emigrants writing home, and sending money to boot, de Valera did not elaborate.
The move to impose tariffs, however, once taken, was quite robust. James F. Meehan, in his 1970 study, The Irish Economy Since 1922, noted that:
… at the end of 1931, the list of tariffs covered 68 articles including nine revenue tariffs. At the end of 1936 it covered 281 articles including seven revenue tariffs. These figures do not include a profusion of quotas and other restrictions. At the end of 1937 it was calculated that 1,947 articles were subject to restriction or control.63
Irish industry did expand as a result. The number of new industrial jobs generated between 1932 and 1936 was at least 40,000.64 This increase in jobs, along with the substantial increase in house construction, meant that southern Ireland saw not only the first sustained growth in employment since the famine, but also a modest increase in prosperity in urban areas.65 In keeping with the goal of national self-sufficiency, the government passed the Control of Manufactures Acts 1932 and 1934. These made it illegal for any business, unless it had been granted government permission to do so, ‘to make, alter, repair, ornament, finish or to adapt for sale any article, material, or substance or any part of any article, material, or substance’ unless at least 51 per cent of the nominal share capital and two-thirds of share with voting rights were held by Irish nationals. There was also an increase in the Semi-State sector, with the establishment of bodies such as Comhlucht Siúicre Éireann, Bord na Móna, the Industrial Credit Company, Ceimici Teoranta, Aer Lingus, the Irish Life Assurance Company, and the Irish Tourist Board.66
Concurrent with the move towards non-export protectionism was the campaign to encourage farmers to move from pasture to tillage, in particular, grain. ‘A bounty was offered for calf skins, subsidies were introduced for wheat and sugar beet, import controls were imposed on sugar and tobacco, and relief was offered on rates in proportion to the amount of non-family labour employed.’67 Wheat and flour to the value of around £7 million was being imported into the State and Fianna Fáil believed that it was time to redress this imbalance and make Ireland self-sufficient.68 The Minister for Agriculture, Dr J
ames Ryan, argued that increased tillage would see employment rise by as much as 50,000, with an extra £3 million in wages pumped into the economy as a result.69 Again, the main idea was to create self-sufficiency in grain, as well as providing enough employment as to keep people on the land.
The results were mixed. There was increased production of wheat and sugar beet, ‘but at the expense of other crops, not at the expense of cattle’.70 A comparison between the 1926 and 1936 census shows that while the number of people engaged in agriculture dropped by 26,091 (from 670,076 to 643,985), the number of paid agricultural employees – as opposed to family members working on farms – increased by 1,998 (from 138,658 to 140,656). There was an increase of around 5,000 agricultural workers who didn’t live on the farms they worked, but a drop of over 3,000 in agricultural workers who did. Ray Crotty notes that ‘during the decade 1929-39, Leinster, the province with the greatest increase in tillage, showed the largest decline in agricultural employment. In Connaught, by contrast, where the decline in rural employment was very slight, there was a sharp fall in the tillage acreage.’71 It seems reasonable to accept his conclusion that in terms of promoting tillage as a means of increasing employment, there is ‘neither on a country nor on a provincial basis … any evidence whatever that wheat or sugar beet growing had this effect’.72 Cattle production for export had a tendentious hold on all aspects of Irish agriculture.
Land redistribution was another key element of Fianna Fáil’s plans to transform rural Ireland. The 1933 Land Act gave the Land Commission extra powers, while the amount spent on redistribution went from £2.7 million in 1931, to £7.6 million in 1936.73 ‘We may be told that a county is rich because of its profusion of grass,’ said the Fianna Fáil TD for Meath, James Kelly, in 1932, ‘but this merely gives us a wealth which cannot be diffused at present amongst our people. In fact, a large percentage of our poverty can be attributed to this cause.’74 In this, Kelly was voicing an analysis which was central to the Ranch Wars, and was an underlying issue of conflict during the 1880s agitation.