The Economic War and its Aftermath


In 1932 Fianna Fail-Labour government came into power and embarked on a radical change in economic policy. The government decided to suspend payment of the annuities owed to Britain under the Land Purchase Acts of 1903. This was part of its programme for government as well as self-sufficiency both in agricultural and industrial produce. Immediately, in retaliation, Britain imposed ad valorem duties of 20 per cent (later increased to 40 per cent) on most imports from Ireland. The Free State government introduced tariffs and quotas on a wide range of manufactured goods, including farm machinery. It banned the import of coal from Britain, hence the cant ‘burn everything British except its coal’. Farmers were encouraged to reduce their reliance on raising cattle for the British market and to concentrate instead on the domestic one. In future it was hoped that most Irish sugar would be produced from Irish sugar-beet; that up to fifty percent of Irish flour would be derived from Irish wheat; and that pigs and poultry would be fattened on home grown-grown barley and oats instead of imported maize. The new policy altered the role of the Dept of Agriculture and the relationship between farmers and the state. The Cumann na Gael (FineGael) government had supported the DATI-IAOS programme of  advice and education on improving the quality and marketing of Irish products. Now the emphasis changed to price stabilization, bounties and compensation payments, subsidies to domestic producers, and measures designed to achieve the government’s self sufficiency programme. The so called ‘economic war’ was responsible for a sharper fall in agricultural prices and for a more belated recovery than would have been warranted by the simple operation of international market conditions. Some 50 per cent of output before 1932 was exported. By the second third of the decade only a third of the output was exported. With the decline of exports Government policy was implemented with even more vigour. This policy was spear-headed by the key new Dept in government of Industry and Commerce with Sean Lemass as Minister. On the other hand the Minister for Agriculture lost a lot of his power, which was headed up by James Ryan, a farmer’s son and qualified medical doctor from Wexford. Manufacturing commanded greater importance, particularly when these interests did not coincide with agriculture. Britain’s policy for the 1930s’ had changed and took steps to reduce imports of agricultural produce that could be produce by British farmers. Commonwealth countries like Canada had to agree to a ‘voluntary’ reduction of shipments of live cattle. Denmark and Holland also experienced a decline in the volume and value to Britain. In that first year Lemass also presented de Valera with a number of more radical proposals. According to Daly he proposed setting of Marketing Boards as in the U.K.; referring to the sharp fall that had taken place for agricultural exports and emphasized that it had nothing to do with British tariffs  ref: s 6274 Economic Committee. ………In his opinion the collapse in livestock prices had destroyed any realistic prospect of developing tillage. ………………………Consequently self-sufficiency would inflict further damage on the Irish livestock industry. Lemass claimed that although, wheat was not dependent on a healthy livestock trade, that it would nevertheless necessary to offer a subsidy amounting to £4 per acre, which was greater than the wages paid and profits earned per acre. ………………………He recommended reducing agricultural output to the quantity that was necessary to meet the needs of the Irish people, together what would be exported at a profit, or even at a loss, in order to pay for essential imports. Farmers and farm workers not needed to produce essential food should be taken off the land and employed in public works. ………………….Export bounties should cease, with the money being used to subsidize food prices. Untenanted land should be subdivided into five-acre plots and given to labourers. Lemass must obviously have been impressed with Neville Chamberlain’s socialist programme for the 1885 British election.



Daly goes on to say ‘it is unclear whether Lemass intended these “revolutionary” proposals to implemented; they may very well have been to scare the Cabinet into abandoning the Economic War……………………. “until we are in a better position to fight it” and attempting to negotiate a secure market in Britain for Irish agricultural produce. On this, at least, it seems probable that the Department would have agreed. The Department of Agriculture does not seemed to have responded directly to Lemass revolutionary proposals,………………………..J.J. McElligott of the Dept of Finance ……………………… was unquestionably better “for the full advantage to be taken of our natural agricultural resources than that people should be maintained in idleness and lands and farms allowed to become derelict”. Various arguments appeared to have gone on behind the scenes, particularly between Ryan’s and Lemass’s Depts. Lemass wanted Marketing boards under his Department, whereas Ryan’s Dept of Agriculture and the DATI personnel felt differently as it was dependent on half of what was produced by farmers to be exported and mainly to Britain. And in the case of Livestock farming, some five sixth’s of its output in 1929/30 was exported and mainly to Britain.  The Department of Agriculture personnel would have appeared to have had the expertise in these matters. Lemass viewpoint would have seemed to have come out in top because as a temporary compromise the Dept of External Affairs saw after exports. New markets were sought in Germany and Belgium providing for exports of cattle, butter, and eggs in return for Ireland importing coal. According to Daly even some efforts to secure alternative markets were regarded as foolhardy, or desperate, such as the attempt to strike a deal with Poland, which was a major agricultural exporter.



According to Patrick J. Sammon in his book “In the Land Commission – A Memoir 1933-1938” ‘Landless people came into their own, following the coming to power of the Fianna Fail Government in 1932. ….. For the eight year period from 1934 to 1942 it emerges …. That a total area in the order of 80,000 acres could well have been allotted to 2,750 landless applicants – each farm containing twenty seven acres of good land or equivalent’. Mr. Sammon goes on to write in another part of his book: ‘While the “Big Houses” of the landed gentry had flourished, they provided employment for gardeners, grooms, estate agents and the like …… offsetting these losses of employment opportunities is the security and freedom from want conferred on the former employees who secured compensation from the Land Commission following the acquisition of the Estate in the shape of holdings and parcels of land’. All this was taking place when most farmers in Ireland were losing money. It may have been a wiser policy for the land Commission to act as a landlord, leasing out the land like the local Co. Councils in Britain, and still continue to do. However, the thinking of the time, particularly by Fianna Fail is well expressed by Sammon when he writes: ‘ The sociological impact of the elimination of the Landlord Class offers scope for much interesting study. As a class, the landlords had acted badly by the tenants: it is not as if a cadre of benevolent landowners, who had functioned as leaders of the people, had been displaced. Successors of the original planters in most cases left no great void in the Irish scene’. Other opinion would say that, the state could very well have acted in a similar fashion as the “Good Landlords” had done before the Land Acts had been passed. A Land Commission based leasing system would have been more of a guardian for the new farmers, who in most cases lacked the skills of operating a business, farming education, money, etc. These were not the farmers, who were contacting the local agricultural and technical service; it was their neighbours who invariably had a much bigger farms. The farming system that has developed since the land Acts, has now resulted in 85 per cent of our farm production coming from fifteen per cent of the farms. A State leasing of land scheme would surely have given us a more balanced system of production.     



In the meantime going back to the 1930s, several committees were set-up by the Government to try an alleviate the farming crisis and while Irish livestock farmers were suffering badly, stories of farmers bringing cattle home from the monthly fair because the price was too low, having to sell them at the following month’s fair at half the price, were experienced throughout the Twenty Six Counties. Ryan complained about the substantial assistance given to industrialist with less generous treatment to farmers and insisted that the specific circumstances of farming were not given sufficient weight in the formulation of economic policy. He appealed for an increase in the export bounty for cattle, sheep and horses, should be quadrupled, but he also acknowledged that this would be an impossibility. In July 1934 the Cabinet decided after a Department of Agriculture proposal, that a ‘free beef scheme’, for all recipients of unemployment and home assistance be introduced until the end of 1936. Under the scheme each person that qualified got one and half pounds of meat per week. The scheme proved to be extremely popular. Men who received unemployment assistance refused to take jobs on relief works because they would forfeit their entitlement to free beef. Daniel Twomey, secretary to the Department of Agriculture, told the Banking Commission, ‘There are very large numbers of people in this country who were formerly on bread and tea line and who are now eating meat at least once per day’.  However, the high cost remained a problem. In January 1934, when the crisis of the livestock was most acute, the Department of Agriculture began to explore the possibility of buying diseased animals, and cows with poor milk yields for conversion to meat meal; as newspapers carried reports of dead livestock left lying in fields and cattle being killed in public places. By May 1934 the Department Robert Briscoe a Fianna Fail T.D., a cattle exporter Con Crowley and a German businessman negotiated the building of a Meat Plant at Roscrea – the state providing 75 per cent of the cost – up to £16,000, in return for receiving preference shares. The Department of agriculture paid £2.10s for each animal and arranged for the animals to be transported to Roscrea at the Department’s expense. In 1936, 45,000 animals were brought in under the scheme.  Another plant was opened up in Waterford to process young animals from south Munster. This one was in conjunction with Irish Co-Operative Meats Limited (Later known as Clover Meats). The C-Op agreed to provide a premises, equipment, and working capital for a ten year monopoly of the sale of canned meat and meat extract in Ireland. The plant would purchase cattle from the Department at 10s a cwt; the Department would pay farmers 16 s a cwt and would pay the cost of transport.  In December 1934, Britain and Ireland had a ‘Coal-Cattle’ pact, whereby the Free State would buy a certain amount of British coal for their buying a certain amount of its beef, whereby Irish cattle held in the U.K. for three months were entitled to a British subsidy.   In 1935 over 671,000 cattle were exported to Britain, compared with 511,000 for 1934. The value of those exports rose from £4.25 million to £5.36 million. The trade agreement with Britain in the spring of 1938 ended the Economic War. This brought a decided improvement in the market for agricultural exports; but that there would still be restrictions in relation to the volume of supply. The greatest benefit went to the livestock trade and it increased to £10 million and by 50 per cent by 1940 over the 1938 figures. One wonders if it would not have saved money to have had the Coal Pact and indeed the Trade Agreement before the above factories were negotiated. Or not to have started an economic war that one had no hope of winning.


The County Committees of Agriculture changed dramatically during the period leading up to 1938/39. In the seven years ending 1939, the cost of running the service increased by 34 per cent. They had now become involved in unemployment relief works, administering grants for schemes to extend or re-build creameries and to provide shelter belts. They continued to run egg-laying competitions and to provide subsidies for agricultural shows and grants for bee-keeping, but there was a growing emphasis —————–to promote new enterprises such as onion growing. New poultry houses were now grant aided as well as poultry equipment. They were even involved in grant aiding of rotary blowers to pump poisonous gas into rabbit burrows in order to reduce rabbit pest numbers. In some counties rabbit export grants were given and a grant to exterminate foxes.

The responsibilities of the Dept of Agriculture expanded considerably after the de Valera government came to office. Officials had now to deal with applications for licences to import parrot food, prize drakes, puppy food, macaroni, and many other exotic items. It had to determine the proportion Irish wheat to be used by flour millers, set the price of butter and the level of export subsidy, keep a close eye on poultry exports to Britain and the possible threat of British restrictions. From 1935 the Department had the authority to buy and store oats. The Department’s Export Advisory Committee purchased and exported cattle to continental Europe. Compound feed could only be manufactured under licence, it analysed the feed to ensure that it contained the stipulated proportion of home-grown grain. No wonder staff numbers had more than doubled between 1926 and 1936, most of which occurred when the new government were appointed in 1932.  A whole new beaurocracy had been installed not alone in Agriculture but in all Departments of government in a time that the country was broke. Division four in the new Department set-up was called Intelligence and General Four, which employed over 150 staff, was concerned with the Slaughter of Sheep and Cattle Act and Elimination of Old and Diseased Cows.

Horrific memories of the 1930s’ recall cattle being seized from farmers who defaulted on their rates and calves being slaughtered and a crisis in Irish agriculture. Some vestiges of these according to Daly crop up in Department files, such as a widow living on twenty acres who was unable to sell her stock, or the small farmers on the Ox Mountains who slaughtered their stock and sold meat door-to-door. John Healy in his Book Nineteen Acres wrote: These were the years of the Economic War. I knew nothing about it then. In Charlestown I would see hundred of bicycles come down from all the townlands around Charlestown for the “free beef”. You’d see men wobbling home, parcels of fresh meat under the springs of the carrier, the blood coming through the brown paper’

By 1937 the acreage of Sugar Beet had increased to 62,000. It was decided to build factories in Carlow, Mallow, Thurles and Tuam. The committee decided against a Co-operative venture and opted for partly public subscription with the balance provided by the State. In 1933 R.C Ferguson of the Department of Industry and Commerce noted that ‘while tillage for beet is practically impossible in Donegal, Connemara and certain other parts of the country, potatoes could be raised’. Ferguson noted that potatoes could be used to make industrial alcohol. The Department of Agriculture was very much in favour because of the huge surpluses due to the Economic War. Lemass kept the project very much under the control of Industry and Commerce, according to Daly “there is no evidence that the Department of Agriculture were consulted”. Distilleries were erected at Cooley in County Louth, Carrickmacross, County Monaghan, Corroy and Carndonagh, County Donegal and Labbadish, County Mayo. From the beginning all the factories suffered a shortage of potatoes, and the Cooley plant in 1937 with best prospects of supply could only acquire 7,000 tons and after that had to import molasses. No evidence either, from government records that information with regard to supply was sought from the local Committees of Agriculture Advisors nor the Co-ops by the Department of Industry and Commerce. For example, they could have found out that potatoes were being converted into starch at Farsid, Aghada, Co. Cork in the early 1800s. Lewis (1837) briefly noted ‘Here at the Rostellan mills for making starch from potatoes, conducted by Mr. Prendergast but other manufacturing may have been carried out as well’ ref CHAS Journal 1996-Patrick Holohan.  Potatoes were reported as ‘being sought for the cotton manufacturers’ being a superior dressing to American flour previously chiefly used for that purpose. The starch was said to be easily extracted, each stone yielding one and a half pounds of starch, giving a return of over £18 per acre at 1830s’ prices.   Furthermore it is extraordinary, in relation to supplies of potatoes, and viability that they should have all been erected in a cluster around Northern Ireland or had it something to do with votes. The production of industrial Alcohol continued at Carndonagh and Cooley. Ceimicí Teoranta then produced glucose at their Corroy plant, using imported maize starch. The company diversified into potable alcohol production in 1971—72. Ceimicí’s operations were as of 1980, therefore, confined to the following areas of activity: Industrial and potable alcohol production at the Cooley, County Louth, and Carndonagh, County Donegal, distilleries and production of glucose at their plant at Corroy, County Mayo. By 1996, the area under potatoes in Co. Louth had dropped to 1,000 Hectares, in Mayo had dropped to 3,000 Ha by 1980 from 16,000 Ha in 1897 and in Donegal dropped from 17,000 Ha in 1897 to just 3,000 Ha in 1996. By 2007 the total area under potatoes for the twenty six counties as a whole had dropped to 12,700 Ha.



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