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

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