Sins of the Father (12 page)

Éire may have been neutral during the Second World War, but in terms of its economy, the demands of Britain for Irish produce (as well as Irish labourers) took precedence.

Dublin responded with a report which assuaged the concerns of London, ‘[It] stated that substantial industrialisation was highly improbable and “the peasant character of the economy is evident from an analysis of agricultural equipment and of size of holding”.’
⁸²
In November 1947 an Irish delegation to London agreed that the ‘total number of cattle to be exported from Ireland to continental countries as from 21 February 1948 will be the subject of consultation between the Irish government and the British Ministry of Food’.
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The assertion in 1947 by G.D.H. Cole, Chichele Professor of Social and Political Theory at Oxford, that Ireland was Britain’s larder, was a somewhat painfully accurate description of a State that would declare itself, with hollow importance, a Republic a year later.

London’s questions about Ireland’s failure to modernise production in agriculture were not entirely without merit. The continuing preference for the dual-purpose Shorthorn over specialised beef and dairy breeds was a major factor in declining milk yields. As one commentator wrote in 1945:

Ireland was about to spend another generation in Monte Carlo gambling with a dual-purpose to secure a high milk yield and a first-class butcher’s beast. By the same breeding principles – by mating a thoroughbred with a Clydesdale [farm horse] – we should be able to win the Derby and plough the Rocks of Bawn.
⁸⁴

The use of chemical fertiliser was sporadic, and winter feeding the exception rather than the norm. ‘So great were the structural flaws in the Irish dairy industry’ writes Rouse, ‘that the government was obliged to import New Zealand or Danish butter as Irish farmers found it more profitable to keep their low-yielding herds on subsistence rations through the winter months than to engage in dairying.’
⁸⁵
James Dillon, who served as Minister for Agriculture from 1948 to 1951, told the Cork County Committee of Agriculture in February 1950 that the Irish farmer, working in a free market, possessed all the skills and opportunities to make best use of his land:

There may be a small minority of farmers who would like to have an inspector to wake him up in the morning, to dress them, to direct their daily work, and to tuck them into bed at night, but the vast majority of farmers of this country are well able to look after their own business, to make their own bargains, to hunt away from their gate anyone who seeks to exploit them, and effectively to make use of a profitable market when it is provided for them … it is to these farmers I look for the efficient operation of the agricultural industry in this country.

Dillon’s speech was not simply a populist piece of rhetoric aimed at a home audience – although it was certainly that – it also conveyed his ideological belief in individualised farming operations working in a free market as the pinnacle of efficiency; a view held by his party colleagues and, indeed, by many of the senior officials in the Department of Agriculture. Yet, as we have seen, there were serious structural inefficiencies within Irish agriculture – type of cattle bred, lack of fertilizer, diminishing dairy returns, antiquated machinery – and these were not going to disappear with a come-all-ye of ‘dem feckers up in Dublin’. A year later, the Irish government commissioned a report into the reality of Ireland’s economy and its possible future. It was compiled by the American consultancy firm Ibec Technical Services Corporation and entitled ‘An Appraisal of Ireland’s Industrial Potentials’. With no home crowd to please, its findings were a lot more sober than those of James Dillon.

Ibec began the report’s section on cattle by stating, ‘In the Irish economy, Cattle is King.’
⁸⁶
It said that its ‘examination of manufacturing activities in Ireland has brought into sharp focus the handicaps imposed by the relatively high prices of materials processed and the extraordinary degree of dependence upon imported materials’. Ireland needed to utilise its raw materials towards processing in order to increase jobs and income, and its greatest resources lay in agriculture. And within agriculture, it was the cattle industry, given its dominance, ‘that deserves attention as a major source of potential processing activity’.

The authors found the country’s dependence on livestock exports to Britain somewhat archaic in the post-war western world. ‘The organisation of Ireland’s cattle industry is exceptional in the degree to which its product is disposed of through export shipments of live cattle,’ they wrote, ‘and, consequently, in the meagreness of its meat production from cattle in Ireland relative to the size of its cattle industry.’ It tried to uncover an economic explanation for livestock exports, but couldn’t find one. It deduced that there was a 14 per cent margin on cattle exports, but that this compared badly ‘with even the very low 43 per cent of additional value that was added to material costs at plant by Irish transportable goods manufactures in 1949’. Ireland was exporting cattle with comparatively little by way of jobs or profit to show for it.

Ibec held out a whole range of industries and products, if only Ireland took the decision to process cattle and not just export them. The report as a whole had a deep affect on Seán Lemass, who took to preaching from it. One can see why, as it positively bristles with energy and ideas for an Irish industrial future. As regards Ireland as a producer, rather than a supplier, the report had this to say:

… the initial processing alone in Ireland of live cattle worth £20 million would add £3.6 million of processing activity to the Irish economy … There would be available on the Irish market an additional £3.5 million of hides (468,000 times 60 pounds time 30 pence per pound) for local processing which, since the fellmongery and leather category adds some 41 per cent in net product to the cost of materials, might contribute another £1.4 million of processing activity. This could make a substantial contribution also to Ireland’s exchange position since Ireland’s leather imports in 1949 (net of leather imports) amounted to £1.3 million. If the additional supply of leather from a domestic source was not of a suitable type to displace imported shoe leathers, it might be used substantially to increase leather manufactures of other types in Ireland. Estimating upon the analogy of Ireland’s boot and shoe industry, in which the net product amounts to about 70 per cent of materials costs, this could increase manufactures based on leather by £2.52 million, (£3.5 for hides and £1.4 for leather processing minus £1.3 imports times 7). Offal value should amount to at least £3 per beast, and that would provide another £1.4 million of raw materials for processing.

It would be another ten years, though, until the enthusiasm for Ireland’s potential in Ibec’s report would find itself reflected in government policy, but by then industrialisation through direct foreign investment, rather than by the exploitation of Ireland’s agricultural and other raw materials, had become the preferred option.

In 1957 the Department of Finance produced a report which outlined what it saw as the structural deficiencies within the Irish economy, as well as possible solutions and a plan of action. It was published with modifications a year later and was called the ‘First Programme for Economic Expansion’. As already noted, since the foundation of the Irish Free State in 1922 the dominant export had been livestock, the dominant breed the Shorthorn, and the dominant problem the promotion of both above all other options. ‘First Programme’, however, had a solution to these economic hurdles: more of the same, but this time with credit. ‘A project to increase the cattle population by 300,000, with the emphasis on beef rather than milk production’ wrote
The Irish Times
, ‘is a feature of the government’s five-year plan for economic expansion.’
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The plan envisaged capital spending of up to £220 million and stated that ‘The extra cows necessary if beef output is to be increased should, therefore, be of beef rather than dairy strain’, which marked a definite, if belated, move towards specialised breeding, even if its call for ‘beef rather than dairy’ breeds gave the impression that cattle breeding in Ireland had ever been anything else. The report also stated that while ‘The aim will be to secure greater access to Continental markets [our] trade relations with Britain, however, will remain a matter of prime importance and every effort will be made to foster their development’. There were provisions made for the development of a fish-processing industry, subsidies for phosphates for land fertilisation and reclamation, and a guaranteed price for millable wheat. The emphasis of the report was on agriculture – more specifically, cattle exports to Britain. The only contrast with previous economic policy was in the matter of credit. Ireland was to break with the idea of a balanced budget, and commit itself to running a deficit in order to facilitate growth.

The need to eradicate bovine TB in order to retain access to the British market was a major incentive behind the increased investment in cattle. Concurrent with this was the move to entice foreign investment to Ireland. Overall, though, the most significant change in Irish economic policy was in the attitude towards industry and industrial exports. ‘While agriculture was our most important industry, and offered by far the greatest scope for expansion,’ said Lemass at a meeting in Tramore, Waterford in 1957, ‘it was very necessary also to foster the non-agricultural industries; and the only way to do that satisfactorily was by increasing the efficiency of our industrial organisation’.
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The livestock industry was by no means over, but the day of placing everything on cattle exports to Britain was beginning to come to an end.

In August 2007, Danny McCoy, director of policy at the Irish Business and Employers’ Confederation (Ibec), wrote an article for
The Irish Times
in which he outlined his opinion on the economic future of Ireland. ‘Reflection should reassure us that the Irish economy remains in good health,’ he said. ‘The belief that Ireland’s prosperity may be coming to a shuddering end does not stack up but a reality-check is nonetheless warranted.’
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McCoy noted the decline in construction and the drop-off in consumer spending as evidence that domestic growth would slow in the last quarter of 2007. ‘Yet none of these spell disaster for the economy,’ he wrote, ‘rather, they are signs of a welcome rebalancing of the economy. A rebalancing that we should cheer, not fear.’ The main reason why we should not worry, argued McCoy, was exports. ‘Ireland is a trading nation,’ he said, ‘and our prosperity is determined by our ability to sell our goods and services abroad.’

The strong performance of exports in 2006 and the first quarter of 2007 was offered as proof that whatever about the decline in domestic economic activity, a sustained growth in exports should see us right. The past was bright, the future brighter still. Ireland need only look after its exports, and the economy would look after itself. ‘This economy is a better bet than anything on offer on St Ledger’s Day,’ said McCoy.

Twelve months later the Irish banking system was on the verge of collapse, swamped by billions in bad debts. In February 2009, the standardised unemployment rate breached 10 per cent for the first time since 1997. By December of that year, Ireland’s national debt stood at €75.9 billion, or 65.6 per cent of GDP.
²
McCoy had gotten one thing right though. While merchandise exports stalled, service exports increased, and by the end of 2009 Ireland was the ninth largest services exporter in the world.
³

McCoy’s article was similar to others written in the months leading up to the 2008 crash, which were variations on the theme that exports will save the day. Yet, what is interesting about McCoy’s analysis is not so much the mantra of exports, but the assumption that the exports are
ours
. A similar view was held by others. In February 2007, the economist and former Taoiseach Dr Garret Fitzgerald wrote, in criticism of Irish output, that ‘during a period in which the volume of world trade has grown by one-third,
our exports of goods
have remained almost static’.
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In June of that year the Minister for Enterprise, Trade and Employment, Micheál Martin, spoke in positive terms about how Ireland’s two-way trade with China met the need ‘for raw materials, parts and components to feed
our own manufacturing facilities
’.
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In December, the then Minister for Finance, Brian Cowen, highlighted the fact that ‘almost 40 per cent of
our
exports are services-based’.
⁶
Two years later, as Taoiseach, he said in relation to the government’s economic strategy that ‘as the world economy recovers and demand for
our exports increases
, there will be more people in jobs, and our tax revenues will rise’.
⁷

Despite all the words of praise and, indeed, criticism of Irish exports, this sense of ownership was out of step with the facts on the ground. Since the 1970s, the majority of exports emanating from Ireland have been produced by multinationals; in 2008 they accounted for 88 per cent of all merchandise export sales. Yet the amount of people employed by IDA-supported companies in 2008 is only around 7 per cent of total employment.
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These companies paid €2.8 billion in corporation tax in 2009, and direct expenditure in the Irish economy via payroll costs, Irish materials and services amounted to €19.149 billion. However, total sales amounted to €109.64 billion. Around 80 per cent of the money generated by IDA-supported companies completely bypasses the Irish economy. The profits are repatriated to the country of origin. In 2009, chemical products made up 51 per cent of all merchandise exports from Ireland, the bulk of which were made with imported materials. The chemicals come in via containers, and go out via containers. Irish economic policy has developed exporters, but not exports.