Anglo-Irish economic conflict

Last updated August 27, 2019

The Anglo-Irish Trade War (also called the Economic War) was a retaliatory trade war between the Irish Free State and the United Kingdom from 1932 to 1938.^[1] The Irish Government refused to continue reimbursing Britain with land annuities from financial loans granted to Irish tenant farmers to enable them to purchase lands under the Irish Land Acts in the late nineteenth century, a provision which had been part of the 1921 Anglo-Irish Treaty. This resulted in the imposition of unilateral trade restrictions by both countries, causing severe damage to the Irish economy.

A trade war is an economic conflict resulting from extreme protectionism in which states raise or create tariffs or other trade barriers against each other in response to trade barriers created by the other party. Increased protection causes both nations' output compositions to move towards their autarky position.

The Irish Free State was a state established in 1922 under the Anglo-Irish Treaty of December 1921. That treaty ended the three-year Irish War of Independence between the forces of the self-proclaimed Irish Republic, the Irish Republican Army (IRA), and British Crown forces.

The United Kingdom of Great Britain and Northern Ireland, commonly known as the United Kingdom (UK) or Britain, is a sovereign country located off the north-western coast of the European mainland. The United Kingdom includes the island of Great Britain, the north-eastern part of the island of Ireland, and many smaller islands. Northern Ireland is the only part of the United Kingdom that shares a land border with another sovereign state, the Republic of Ireland. Apart from this land border, the United Kingdom is surrounded by the Atlantic Ocean, with the North Sea to the east, the English Channel to the south and the Celtic Sea to the south-west, giving it the 12th-longest coastline in the world. The Irish Sea separates Great Britain and Ireland. The United Kingdom's 242,500 square kilometres (93,600 sq mi) were home to an estimated 66.0 million inhabitants in 2017.

The Great Depression was a severe worldwide economic depression that took place mostly during the 1930s, beginning in the United States. The timing of the Great Depression varied across nations; in most countries, it started in 1929 and lasted until the late 1930s. It was the longest, deepest, and most widespread depression of the 20th century. In the 21st century, the Great Depression is commonly used as an example of how intensely the world's economy can decline.

Protective policy

On taking over power and coming into office in 1932, the new Fianna Fáil government under Éamon de Valera embarked upon a protectionist policy in economic dealings, and tariffs were introduced for a wide range of imported goods, mainly from Britain, the Free State's largest trading partner by far.^[2] This was thought necessary to develop native industry, move away from over-dependence on Britain, as well as its failure to develop industrially under free market conditions.^[3] It was also to compensate for the drastic fall in demand for Irish agricultural products on international markets, due to the Great Depression which had begun in 1929. Other means had also to be found to help the disastrously undermined balance of trade and the mounting national debt. A vigorous campaign was set in motion to make the Free State agriculturally and industrially self-sufficient by the then Minister for Industry and Commerce, Seán Lemass. Every effort was taken to add to the measures brought in by the previous government to boost tillage farming and industry and to encourage the population to avoid British imports and "Buy Irish Goods".

Fianna Fáil, officially Fianna Fáil – The Republican Party, is a conservative political party in Ireland.

Éamon de Valera was a prominent statesman and political leader in 20th-century Ireland. His political career spanned over half a century, from 1917 to 1973; he served several terms as head of government and head of state. He also led the introduction of the Constitution of Ireland.

Protectionism is the economic policy of restricting imports from other countries through methods such as tariffs on imported goods, import quotas, and a variety of other government regulations. Proponents claim that protectionist policies shield the producers, businesses, and workers of the import-competing sector in the country from foreign competitors. However, they also reduce trade and adversely affect consumers in general, and harm the producers and workers in export sectors, both in the country implementing protectionist policies and in the countries protected against.

Non-payment of land annuities

The government sought to go further and end the repayment to Britain of land annuities. These originated from the government loans granted to Irish tenant farmers by the Land Commission from the 1880s, which had enabled them to purchase lands from their former landlords, under the Irish Land Acts. In 1923, the previous W. T. Cosgrave government had assured Britain that the Free State would honour its debts and hand over the land annuities and other financial liabilities. Under the 1925 London Agreement,^[4] the Free State was relieved from its treaty obligation to pay its share towards the public debt of the United Kingdom.^[5] The Free State's liability to supervise and pass on land annuities payments led to controversy and debate on whether they were private or public debts.^[6]^[7] In 1932, de Valera interpreted that the annuities were part of the public debt from which the Free State had been exempted, and decided that the Free State would no longer pay them to Britain. His government passed the Land Act of 1933 that allowed the money to be spent on local government projects.^[8]

The Land Acts were a series of measures to deal with the question of peasant proprietorship of land in Ireland in the nineteenth and twentieth centuries. Five such acts were introduced by the government of the United Kingdom between 1870 and 1909. Further acts were introduced by the government of the Irish Free State after 1922.

William Thomas Cosgrave was an Irish Fine Gael politician who served as President of the Executive Council from 1922 to 1932, Leader of the Opposition from 1932 to 1944, Leader of Fine Gael from 1934 to 1944, Leader of Cumann na nGaedheal from 1923 to 1933, Chairman of the Provisional Government from August 1922 to December 1922, President of Dáil Éireann from September 1922 to December 1922, Minister for Finance from 1922 to 1923 and Minister for Local Government from 1919 to 1922. He served as a Teachta Dála (TD) from 1921 to 1944. He was a Member of Parliament (MP) for the North Kilkenny constituency from 1918 to 1922.

After a series of high-level talks in 1932, discussions broke down in October 1932 on whether the liability to pay the land annuities should be adjudicated by a panel chosen from experts from the British Empire (the British suggestion), or from the whole world (the Irish view). In counterclaim, De Valera required the British to:

The British Empire comprised the dominions, colonies, protectorates, mandates and other territories ruled or administered by the United Kingdom and its predecessor states. It originated with the overseas possessions and trading posts established by England between the late 16th and early 18th centuries. At its height, it was the largest empire in history and, for over a century, was the foremost global power. By 1913, the British Empire held sway over 412 million people, 23% of the world population at the time, and by 1920, it covered 35,500,000 km² (13,700,000 sq mi), 24% of the Earth's total land area. As a result, its political, legal, linguistic and cultural legacy is widespread. At the peak of its power, the phrase "the empire on which the sun never sets" was often used to describe the British Empire, because its expanse around the globe meant that the sun was always shining on at least one of its territories.

Pay back the £30 million already paid in Land Commission annuities, and
Pay the Irish Free State £400 million in respect of Britain's alleged overtaxation of Ireland between 1801 and 1922.^[9]^[10]

Conflict deepens

To recover the annuities, British Prime Minister Ramsay MacDonald retaliated with the imposition of 20% import duty on Free State agricultural products into the UK, which constituted 90% of all Free State exports. UK households were unwilling to pay twenty per cent extra for these food products. The Free State responded in kind by placing a similar duty on British imports and in the case of coal from the UK, with the remarkable slogan (from Jonathan Swift in the 1720s): "Burn everything English except their coal". While the UK was much less affected by the ensuing Economic War, the Irish economy was badly affected.

Internally, the Irish Government did not actually end its own collection of annuities that were costing its farmers over £4 million annually. In the background, unemployment was extremely high, the effects of the Great Depression compounded the difficulties, removing the outlet of emigration and reducing remittances from abroad. The government urged people to support the confrontation with Britain as a national hardship to be shared by every citizen. Farmers were urged to turn to tillage to produce enough food for the home market.

The hardship of the Economic War, which impacted particularly on farmers, was enormous and exacerbated class tensions in the rural Free State. In 1935, a "Coal-Cattle pact" eased the situation somewhat, whereby Britain agreed to increase its import of Irish cattle by a third in return for the Free State importing more of Britain's coal. As the cattle industry remained in dire straits, the government purchased most of the surplus beef for which it paid bounties for each calf slaughtered as they could not be exported. It introduced a 'free beef for the poor' scheme, the hides finding use only in the tanning and leather industries. For many farmers, especially the larger cattle breeders, the agricultural depression had disastrous consequences. Similar to the "Land War" of the previous century, they refused to pay property rates or pay their land annuities. To recover payments due, the government counteracted by impounding livestock which were quickly auctioned off for less than their value. Farmers campaigned to have these sales boycotted, and blocked roads and railways. Police were called in to protect buyers of the impounded goods and some people were killed by the so-called "Broy Harriers".^[11] The government's senators would not attend a September 1934 Senate debate on the outcome of such a fracas in Cork.^[12]

With farmers having little money to spend, there was a considerable decline in the demand for manufactured goods, so that industries were also affected. The introduction of new import tariffs helped some Irish industries to expand when Lemass introduced the Control of Manufactures Act,^[13] whereby the majority ownership of Free State companies was to be limited to Irish citizens. This caused dozens of larger Irish companies with foreign investors, such as Guinness, to relocate their headquarters abroad and pay their corporate taxes there.^[14] Additional sugar beet factories were opened at Mallow, Tuam and Thurles. The Economic War did not seriously affect the balance of trade between the two countries because imports from Britain were restricted, but British exporters were very critical of their government due to the loss of business they also suffered in Ireland, by having to pay tariffs on goods they exported there. Both the pressure they exerted on the British government and the discontent of Irish farmers with the Fianna Fáil government helped to encourage both sides to seek settlement of the economic dispute.

Effect on Irish elections

Remarkably, despite the general hardship the government vote held up in 1932–38. Firstly de Valera had called the 1933 election within a year of taking office, before the worst effects had been felt. The July 1937 election saw a drop in support for him, but also for his main rival, the Fine Gael party, and he continued in office with the tacit support of the Labour Party. The number of Dáil seats contested in 1937 had been reduced from 153 to 138 seats, leaving less chance for smaller parties to win seats.

On the same day as the 1937 election the Constitution of Ireland was adopted by a plebiscite, moving the State further away from the constitutional position envisaged by the 1921 Anglo-Irish Treaty. The new Constitution was approved by 56.5% of voters who, because of the high numbers abstaining or spoiling votes, comprised just 38.6% of the whole electorate.^[15]^[16]^[17]

Coal-Cattle Pact and resolution

In 1935 tensions began to ease off between Britain and Ireland. With the 20% tax duties on imports, coal and cattle were becoming increasingly harder to buy because of the prices. There was such a surplus of cattle in Ireland that farmers had to begin to slaughter their cattle, because they could not be sold to the British. Britain and Ireland then signed the Coal-Cattle pact^[18] which meant that buying these commodities would be cheaper and easier to get. The coal-cattle pact indicated a willingness to end the "Economic War".

The resolution of the crisis came after a series of talks in London between the British Prime Minister Neville Chamberlain and de Valera, who was accompanied by Lemass and James Ryan. An agreement to reach an acceptable settlement was drawn up in 1938, enacted in Britain as the Eire (Confirmation of Agreements) Act. Under the terms of the three-year Anglo-Irish Trade Agreement all duties imposed during the previous five years were lifted.

Although the period of the Economic War resulted in severe social suffering and heavy financial loss for Ireland, its outcome was publicised as favourable. Ireland was still entitled to impose tariffs on British imports to protect new Irish industries. The treaty also settled the potential £3million-per-annum land annuities liability by a one-off payment to Britain of £10 million, and a waiver by both sides of all similar claims and counter-claims.^[19] As it was known in the 1930s that the Land Annuities payments in Northern Ireland of some £650,000 p.a. were being retained by its government, and not passed on to London, it remains unclear why the Irish government did not mention this in the course of negotiations.^[20]

It also included the return to Ireland of the Treaty Ports which had been retained by Britain under a provision of the 1921 Treaty. With the outbreak of World War II in 1939 the return of the ports allowed Ireland to remain neutral.

Long-term effects

Population (in millions) from 1841 - 2011 IrelandRepublicPopulation1841.PNG — Population (in millions) from 1841 – 2011

Protectionism remained a key element of Irish economic policy into the 1950s, stifling trade and prolonging emigration. Its architect, Seán Lemass, is now best remembered for dismantling and reversing the policy from 1960, advised by T. K. Whitaker's 1958 report "First Programme for Economic Expansion". This then became an important part of Ireland's application for entry into the European Economic Community in 1961 and eventual accession in 1973. The Republic's population rose in the late 1960s for the first time since the Free State's formation in 1922.

Related Research Articles

The Irish Civil War was a conflict that followed the Irish War of Independence and accompanied the establishment of the Irish Free State, an entity independent from the United Kingdom but within the British Empire.

Seán Francis Lemass was an Irish Fianna Fáil politician who served as Taoiseach and Leader of Fianna Fáil from 1959 to 1966. He also served as Tánaiste from 1957 to 1959, 1951 to 1954 and 1945 to 1948, Minister for Industry and Commerce from 1957 to 1959, 1951 to 1954, 1945 to 1949 and 1932 to 1939 and Minister for Supplies from 1939 to 1945. He served as a Teachta Dála (TD) from 1924 to 1969.

The Governor-General was the official representative of the sovereign of the Irish Free State from 1922 to 1936. By convention, the Office of Governor-General was largely ceremonial. Nonetheless, it was controversial, as many Irish Nationalists regarded the existence of the office as offensive to republican principles and a symbol of continued Irish involvement in the United Kingdom, despite the Governor-General having no connection to the British Government after 1931. For this reason, the office's role was diminished over time by the Irish Government.

The Irish Republic was a revolutionary state that declared its independence from the United Kingdom in January 1919. The Republic claimed jurisdiction over the whole island of Ireland, but by 1920 its functional control was limited to only 21 of Ireland's 32 counties, and British state forces maintained a presence across much of the north-east, as well as Cork, Dublin and other major towns. The Republic was mostly strongest in rural areas and it was still able to influence the population in urban areas that it did not directly control through influence by the military forces of the new Republic.

The Irish Oath of Allegiance was a controversial provision in the Anglo-Irish Treaty of 1921, which Irish TDs and Senators were required to swear before taking their seats in Dáil Éireann and Seanad Éireann before the 'Constitution Act, 1933' was passed on 3 May 1933. The controversy surrounding the Oath was one of the principal issues that led to the Irish Civil War of 1922–23 between supporters and opponents of the Treaty.

The Irish state came into being in 1922 as the Irish Free State, a dominion of the British Commonwealth, having seceded from the United Kingdom under the Anglo-Irish Treaty. It comprises 26 of the island of Ireland's 32 counties. The 1937 constitution renamed the state Ireland. In 1949 it explicitly became a republic under the terms of the Republic of Ireland Act 1948, definitively ending its tenuous membership of the British Commonwealth. In 1973 it joined the European Communities.

James Ryan was an Irish Fianna Fáil politician who served as Minister for Finance from 1957 to 1965, Minister for Health from 1947 to 1948 and 1951 to 1954, Minister for Social Welfare from 1947 to 1948 and 1951 to 1954 and Minister for Agriculture from 1932 to 1947. He served as a Teachta Dála (TD) for Wexford from 1918 to 1965.

The Provisional Government of Ireland was the provisional government for the administration of Southern Ireland from 16 January 1922 to 5 December 1922. It was a transitional administration for the period between the ratifying of the Anglo-Irish Treaty and the establishment of the Irish Free State. Its legitimacy was disputed by the Anti-Treaty delegates to Dáil Éireann.

Ireland has been neutral in international relations since the 1930s. The nature of Irish neutrality has varied over time, and has been contested since the 1970s. Historically, the state was a "non-belligerent" in the Second World War and has never joined NATO, although during the Cold War it was anti-communist and aloof from the Non-Aligned Movement. The compatibility of neutrality with Ireland's membership of the European Union has been a point of debate in EU treaty referendum campaigns since the 1990s. The Seville Declarations on the Treaty of Nice acknowledge Ireland's "traditional policy of military neutrality", reflecting the narrow formulation of successive Irish governments. Others define Irish neutrality more broadly, as having "a strong normative focus, with a commitment to development, United Nations peacekeeping, human rights and disarmament".

Patrick Smith was an Irish Fianna Fáil politician, who served as a Teachta Dála from 1923 until 1977; a tenure of 53 years, the longest in the state. He held a number of ministerial positions within the governments of Éamon de Valera and Seán Lemass.

Ireland was part of the United Kingdom of Great Britain and Ireland from 1801 to 1922. For almost all of this period, the island was governed by the UK Parliament in London through its Dublin Castle administration in Ireland. Ireland faced considerable economic difficulties in the 19th century, including the Great Famine of the 1840s. The late 19th and early 20th centuries saw a vigorous campaign for Irish Home Rule. While legislation enabling Irish Home Rule was eventually passed, militant and armed opposition from Irish unionists, particularly in Ulster, opposed it. Proclamation was shelved for the duration following the outbreak of World War I. By 1918, however, moderate Irish nationalism had been eclipsed by militant republican separatism.

Following the establishment of the Irish Free State, three deep water Treaty Ports at Berehaven, Queenstown and Lough Swilly were retained by the United Kingdom in accordance with the Anglo-Irish Treaty of 6 December 1921.

The original Irish Republican Army (IRA) fought a guerrilla war against British rule in Ireland in the Irish War of Independence between 1919 and 1921. Following the signing of the Anglo-Irish Treaty on 6 December 1921, the IRA in the 26 counties that were to become the Irish Free State split between supporters and opponents of the Treaty. The anti-Treatyites, sometimes referred to by Free State forces as Irregulars, continued to use the name Irish Republican Army (IRA) or in Irish Óglaigh na hÉireann, as did the organisation in Northern Ireland which originally supported the pro-Treaty side. Óglaigh na hÉireann was also adopted as the name of the pro-Treaty National Army, and remains the official legal title of the Irish Defence Forces. This article deals with the anti-Treaty IRA that fought against the Irish Free State in the Irish Civil War, and with its successors up to 1969, when the IRA split again.

The partition of Ireland divided the island of Ireland into two jurisdictions, Northern Ireland and Southern Ireland. It took place on 3 May 1921 under the Government of Ireland Act 1920. Today, the former is still known as Northern Ireland and forms part of the United Kingdom, while the latter is now a sovereign state also named Ireland and sometimes called the Republic of Ireland.

The Anglo-Irish Trade Agreement was signed on 25 April 1938 by Ireland and the United Kingdom. It aimed to resolve the Anglo-Irish Trade War which had been on-going from 1933.

Laurence Ginnell was an Irish nationalist politician, lawyer and Member of Parliament (MP) of the House of Commons of the United Kingdom of Great Britain and Ireland as member of the Irish Parliamentary Party for Westmeath North at the 1906 UK general election. From 1910 he sat as an Independent Nationalist and at the 1918 general election he was elected for Sinn Féin.

Fianna Fáil was founded on 23 March 1926 when a group of Dail deputies led by Éamon de Valera split from Sinn Féin. This happened because de Valera's motion calling for elected members be allowed to take their seats in the Dáil, if and when the controversial Oath of Allegiance was removed, failed to pass at the Sinn Féin Ard Fheis. The new party adopted its name on 2 April of the same year. From the formation of the first Fianna Fáil government on 9 March 1932 until the 2011 general election, the party was in power for 61 of 79 years. Its longest continuous period in office was 15 years and 11 months. Its single longest period out of office, in that time, has been four years and four months. Seven of the party's eight leaders have served as Taoiseach. It was the largest party in Dáil Éireann at every general election from the 1932 general election until the 2011 general election, when it suffered the worst defeat of a sitting government in the history of the Irish state.

References

↑ Time (Magazine) – IRISH FREE STATE: Economic Civil War. Monday, Jul. 25, 1932 Archived 13 August 2013 at the Wayback Machine
↑ Coogan, Tim Pat (2003). Ireland in the Twentieth Century. London: Hutchinson. p. 187. ISBN 0091794277. Britain accounted for approximately 96% of Irish exports
↑ "Archived copy". Archived from the original on 24 March 2016. Retrieved 2015-08-12.CS1 maint: Archived copy as title (link)
↑ 1925 Agreement terms
↑ Anglo-Irish Treaty 1921 Article 5
↑ De Valera; Tim Pat Coogan; Arrow Books (1993), pp. 379–380. ISBN 978-0099958604
↑ The British Irish Free State (Consequential Provisions) Act 1922 had completely abolished the Land Commission, which was re-established in and for the Irish Free State in 1923.
↑ Land Act 1933 debate and vote Archived 7 June 2011 at the Wayback Machine
↑ The Annual Register 1932, pp.125-126.
↑ Dail adjournment debate, 19 Oct 1932, with comments on the dispute by De Valera (as President of the Executive Council)
↑ Irish History 1851–1950, Austin Reid, Folens Press (1980), Economic War 1933–38, pp. 223–226. ISBN 0-86121-113-8
↑ "Cork Shootings-Motion"; Seanad debate of 6 September 1934
↑ CM Act 1932 online; the Act is often mis-spelt as the "Control of Manufacturers Act"
↑ CM Act, section 2 Archived 3 October 2012 at the Wayback Machine
↑ "9th Dáil 1937 General Election". ElectionsIreland.org. Retrieved 16 April 2009.
↑ "Dáil elections since 1918". ARK Northern Ireland. Retrieved 16 April 2009.
↑ Nohlen, D & Stöver, P (2010) Elections in Europe: A data handbook, pp1009-1017 ISBN 978-3-8329-5609-7
↑ "Ireland In The Early 20th Century". REP Insight Resource Packs. Birmingham Repertory Theatre. Retrieved 12 August 2015.
↑ Donal Ó Drisceoil; When Dev defaulted: the land annuities dispute, 1926–38. History Ireland (2011) vol. 19; accessed on 9 Jan 2017
↑ https://api.parliament.uk/historic-hansard/commons/1937/may/06/northern-ireland-imperial-contribution Hansard, 6 May 1936; Neville Chamberlain reply, NORTHERN IRELAND (IMPERIAL CONTRIBUTION AND EXCHEQUER GRANTS).