It was the aggressively Keynesian themes of Lemass that dominated the Fianna Fáil election campaign. Its main press appeal was headed ‘This is the issue: how to put our men and machines to work.’113 The resultant triumph for the party – a gain of thirteen seats from sixty-five to seventy-eight and its highest ever share of the poll at 53 per cent114 – meant that Lemass's position as Tánaiste and heir apparent to de Valera had been made impregnable. He was able to insist that MacEntee be moved from Finance to Health and be replaced by one of his closest political allies, Jim Ryan.115 However, the main immediate beneficiaries of the expansionary ethos that Lemass had given to the election campaign were the party old guard. The result was a sharp contrast to the North, where a Times special correspondent noted that while Brookeborough's cabinet was filled with ‘vigorous and youngish men’, de Valera's government was ‘remarkable’ for the continuing representation of the revolutionary generation:
Four of his twelve colleagues served, as he did, in the Easter Rising. This is almost exactly in time and approximately in spirit, as though about half Mr Macmillan's government wore the Mons Star. Three others of the thirteen took part in the ‘War of Independence’. The hold on the republic of this ageing group of men is far stronger than that of the coalition which preceded it.116
De Valera, seventy-four and almost blind when he became Taoiseach for the last time, would not hand over to Lemass for another two years, much to his deputy's increasing frustration. But, although the changes in economic policy came more slowly than Lemass wanted, there was no doubting that new directions were being plotted.
One indication was the important role played by the dynamic and intellectually formidable Secretary of the Department of Finance, T. K. Whitaker. Whitaker had been recommended for the top position in Finance in 1956 by the economically traditionalist Gerard Sweetman, who may have been impressed by Whitaker's analysis of the unsatisfactory performance of the Irish economy, which he explained by a low level of investment caused by a too rapid expansion of personal and state expenditure in the post-war period. He was particularly critical of high levels of state expenditure in areas of ‘social’ investment such as housing. He was also dismissive of the application of Keynesian ideas to Ireland.117 There was an implicit target in this section of the analysis: the ‘Clery's Ballroom speech’, a strongly Keynesian manifesto delivered by Lemass to the Fianna Fail organization in Dublin on 1 October 1955. This manifesto was an adaptation of the 1954 Vanoni Plan for post-war reconstruction in Italy.118 In it Lemass attacked the view, still dear to the hearts of Finance officials, ‘that the sole object of government policy should be to keep public expenditure at the lowest possible level’.119 Its centrepiece was a proposal to create 100,000 jobs in five years through a major programme of public expenditure.
For the first two years of the new government Jim Ryan's budgets reflected the traditional Finance view. There were cuts in the public capital programme with severe deflationary effects. Whitaker was aware that Lemass's imminent shift to the Taoiseach's position would demand more from his department than the assertion of traditional arguments. The previous government's decision to set up a Capital Investment Advisory Committee without reference to Finance had come as a shock, and there was a fear that Lemass's growing ascendancy would result in either Industry and Commerce or the Department of the Taoiseach seizing the initiative in economic policy.120 Therefore, when Whitaker asked Ryan for authorization to work out an integrated programme of national development for the next five or ten years, he was aiming as much at maintaining Finance's hegemony in the policy process as at addressing what he admitted was a mood of national despondency.
What has subsequently been recognized as the Lemass–Whitaker partnership in forging a new course out of the 1950s stagnation needs to be seen as a much more ambivalent and tension-filled relationship. Whitaker's report, subsequently published as Economic Development, was delivered to the government in May 1958. As Brian Girvin has noted, the report's influence on subsequent economic success may have been exaggerated.121 There was much in it that reflected the traditional policy style and approach of the Department of Finance and some at least would have made painful reading for Lemass, particularly the jibe at ‘setting up fanciful employment targets’. There was an emphasis on the primacy of export-oriented agriculture, something that Lemass rejected as an approach because it failed to comprehend that industry was the only possible engine of future growth. A major aim of the report was to restrict demand, and here it resulted in a continuation of the deflationary impact of budgetary policy. Only in advocating an easing of the restrictions on foreign investment in Ireland, a move towards freer trade and, at least formally, the need for a development perspective to be at the centre of state policy was it compatible with Lemass's views.
There were some distinct differences between Economic Development and the White Paper Programme for Economic Expansion, published in November 1958. The Programme set out a growth target of 2 per cent a year in the 1959–63 period and specified a five-year investment programme. There was also more emphasis on industry, and some of Whitaker's suggested cuts in areas such as farm price subsidies and the rural electrification programme were not implemented.122 Whatever positive psychological impact the very notion of a plan for economic expansion may have had on actual economic performance was insufficient to counteract the rather minimalist nature of the proposed government expenditure. Despite the government's projection of it as a £220 million Five Year Plan, there was only £53 million in actual new expenditure, the rest being composed of pre-Whitaker commitments.
The crucial event for the inauguration of the expansion of the 1960s was not the publication of either document but Lemass's election as Taoiseach by the Dáil on 23 June 1959 after the ailing de Valera had been persuaded to retire. It soon became clear that Lemass would dominate economic policy formation and give the Programme a much more expansionary slant than Whitaker was happy with. No longer would the balance of payments be fetishized: the Organization of European Economic Cooperation was informed that the next balance of payments crisis would be met through the depletion of reserves rather than by deflationary measures. At the same time the proposals for government expenditure in the Programme were substantially exceeded after 1959, to the chagrin of such champions of financial orthodoxy as the Central Bank.
The relationship between the adoption of economic programming and the economic success of the 1960s is still a matter of debate for scholars, but the dominant tendency is one of scepticism.123 Certainly the public expenditure and budgetary components of Economic Development and the Programme would not in themselves have caused the jump from an average annual growth rate of 1 per cent between 1950 and 1958 to a 4 per cent annual average between 1959 and 1973.124 It was the broader political dimension of the ‘watershed’ documents that was crucial. As Tom Garvin has put it, ‘It took the economic and social crisis of the mid 1950s to force through a fundamental rethinking of Irish economic policies.’125 The notion of a critical moment in the life of the nation demanding radical new measures made it easier for Lemass to justify the reversal of policy involved in the Industrial Development Act of 1958, which made the first serious breach in the Control of Manufactures Acts. This, together with the existing provision for tax relief on profits from exports, laid the basis for the transformation in Ireland's external trade that would occur in the next decade as manufactured goods replaced cattle and other agricultural products as the largest category in Irish exports. But Lemass was aware that further liberalization of the Irish economy would be demanded in the context of the broader European tendency towards free trade. In particular, protectionism would have to be phased out. This, he realized, could be politically difficult, given the strong threat to the jobs of many workers, often Fianna Fáil supporters, in the protected industries. To make change more acceptable, the strongly Keynesian perspectives he had first set out in 1945 needed to be maintained. As a result, public policy and the political climate
in Ireland were to move further to the left than at any time since the formation of the state.
5. Modernization and Resistance: Northern Ireland 1945–1963
Ulster Unionism and British Socialism
Despite the British Labour Party's traditional sympathy with Irish nationalism, the strategic importance of Northern Ireland during the war had impressed itself upon leading members of the Attlee government. Although Baron Chuter-Ede, the Home Secretary, surprised and annoyed some of his officials by referring to Brooke's administration as ‘remnants of the old ascendancy class… very frightened of the catholics and of the world trend to the left’,1 he soon became a strong defender of Stormont against the interventionist demands of the substantial backbench ‘Friends of Ireland’ group. The key pro-Stormont minister in London was Herbert Morrison. Like many in the Labour Party, Morrison had been unsympathetic to unionism, but the war transformed his attitude. As Home Secretary he had regularly visited Belfast and in a speech in 1943 praised the loyalty of the North, contrasting this with Irish neutrality and declaring that it was bound to have a permanent effect on the attitude of the British people to the two Irish states.2 Although he had no direct involvement in Irish policy after the war, as Lord President and Leader of the House of Commons his views were influential on other senior members of the government, particularly Attlee and Lord Addison, the Dominions Secretary. In 1946, after a private visit to Ireland during which he had met de Valera and Lemass, Morrison wrote a memorandum for the cabinet in which he advocated total support for partition whatever the consequences for Britain's relationship with Eire. On the same trip he had also gone North, where he was privately dismissive of de Valera's regime: ‘Eire was in a bad way… the Government had no real human sympathy for the people.’ He impressed on his unionist hosts the need to cultivate Chuter-Ede and emphasized that the Attlee government did not intend to continue with nationalization beyond electricity, gas and transport, praising Brooke's government for ‘behaving like moderate socialists’.3 However, the pragmatic approach adopted by Brooke in his dealings with Labour had been assailed from the start by those who, like one senior Stormont official, denounced the direction of Brooke's government between 1945 and 1950 as ‘the path of the fellow-travellers to the Socialist State’.4
For some in the government and party, the division of powers set out in the Government of Ireland Act, which had assumed a laissez-faire world, had been superseded by the pro-Keynesian policy consensus at Westminster. This meant, according to Sir Roland Nugent, the Minister of Commerce, that Britain, even when the Conservatives returned to power, would accept a large amount of government planning and direction. While this was perhaps appropriate for a largely urban and industrial society, such policies were alien to Northern Ireland, where the importance of small-scale agriculture and medium-sized family firms produced a strongly individualist culture. The only way to avoid a major constitutional crisis that would play into the hands of anti-partitionists was to negotiate a much larger degree of independence in the form of the dominion status enjoyed by Australia and Canada.5
Nugent's vision of a largely independent Ulster liberating local agriculture and industry from ‘socialistic bureaucracy’ and with lower rates of direct taxation had at least one major problem. As the only working-class member of the cabinet, William Grant, the Minister of Health and Local Government, pointed out: ‘Any suggestion that our party had deserted its Unionist principles for Conservatism, or as our enemies would say, reactionary Toryism, would almost certainly result in the loss of a substantial portion of our Unionist–Labour support.’6 That support for dominion status had by 1947 become significant within the party reflected the dominance within it of the urban and rural middle class. This group was prone to complain that the North, rather than being a net beneficiary of the post-war welfare settlement, was being over-taxed to support a range of benefits that would only serve to undermine the ‘sturdy individualism’ of the province's workers. The war years had seen a large increase in the taxation generated in Northern Ireland, a combination of increased income produced by economic expansion and increases in tax rates. In 1939–40 income tax raised in Northern Ireland amounted to £4,485 million, and by 1944–5 it had risen to £18,711 million, while customs and excise revenue had quadrupled. As a result of these buoyant revenues the Imperial Contribution, Northern Ireland's share of the cost of the UK's defence and foreign policy, had soared from £1.3 million in 1939 to £36 million in 1945.7 At the core of the support for dominion status was the longing of the province's bourgeoisie and farming class for a reactionary utopia, an effectively independent state with low taxes and minimal social services.
Brooke's increasingly hard and dismissive tone towards dominion status reflected economic, political and constitutional considerations. He was influenced by the major financial benefits that flowed to the Northern Ireland Exchequer through a series of agreements negotiated with the Treasury from 1946. These ensured that the key principles of ‘parity’ and ‘step by step’ were maintained at a time when the range of services and benefits was being extended radically. The agreements covered National Insurance (including unemployment, sickness, maternity and retirement benefits) and social services (which dealt with non-contributory entitlements including national assistance, family allowances, old age pensions and health). Essentially they allowed for the transfer of resources to Northern Ireland when it could not pay for the cost of these services out of its own tax revenues. There was also provision for the Ministry of Finance to divert revenue from the Imperial Contribution to a new capital-purposes fund to support industrial development and other projects. It was made clear to Brooke and his ministers that the price of these favourable financial arrangements was closer Treasury control of the North's budgetary process.
The economics of the dominion status case simply disregarded the fact that Northern Ireland could not maintain her post-war standards of social services on her own income, even ignoring the questions of the cost of defence and law and order. Farmers might whinge about having to pay National Insurance contributions for their labourers, yet if the province became a dominion they would also lose the benefits of price guarantees for their produce, which represented a payment from the British Exchequer of £3 million in 1948. Brooke pointed this out to a Tyrone landowner who had written to him demanding that the premier ‘cease to follow England along her socialist road to ruin’.8
Brooke had to take the possibility of defections of Protestant workers seriously. Even some of the leading proponents of dominion status in the cabinet accepted that it was not an option if it involved any deterioration in working-class living standards, a fairly damning concession to political realism. Brooke spelled out the danger to a party rally in Larne:
The government is strongly supported by the votes of the working class, who cherish their heritage in the Union and to whom any tendency towards separation from Britain is anathema… The backbone of Unionism is the Unionist Labour Party Are those men going to be satisfied if we reject the social services and other benefits we have by going step by step with Britain?9
Brooke was convinced that any move to change radically the framework of the Government of Ireland Act would reopen the Irish question at Westminster, and ‘once that Act is open for fundamental amendment, Westminster would, some would say gladly, seek to merge Northern Ireland with Éire rather than grant greater independence to Northern Ireland’ 10 This exaggerated the amount of anti-partitionist sentiment in the higher reaches of the British state. More typical would have been the reflections of a senior Home Office official on the danger that ‘if Eire workers continue to flood North there will in some future election be a Nationalist majority and a Government that wants to break with the United Kingdom and join with Eire.’ The experience of the war, which showed the vital importance of British control of the coast and ports of Northern Ireland, meant that such a prospect ‘may raise grave strategic problems’.11 This sort of thinking determined the civil service advice
to the Attlee cabinet after the Free State's withdrawal from the Commonwealth in 1948 that ‘it will never be to Great Britain's advantage that Northern Ireland should form a territory outside His Majesty's jurisdiction. Indeed it would seem unlikely that Great Britain would ever be able to agree to this even if the people of Northern Ireland desired it.’ 12 The government did not go as far as this, but in the Ireland Act of 1949 there was a significant strengthening of the Unionist position by the assurance that Northern Ireland would not cease to be part of the UK without the consent of the provincial parliament.
By 1948 the Prime Minister had won the economic and political arguments not only within the cabinet but also within the parliamentary party, where the leading proponent of dominion status, the MP for South Tyrone, W. F. McCoy, had the support of just two other MPs. There remained much unease at the general direction of government policy in the party at constituency level, particularly in rural areas and in the border counties. Here the conservatism of farmers was allied with a broader fear of the disruptive effects of welfarism on the local class and sectarian balance of power. One prominent Unionist in Londonderry supported dominion status as a means by which the government could ensure that the only immigrants from the South were members of its Protestant minority. In this way the extra labour needed if the city was to expand would not undermine Protestant control of its government.13 The welfare state and the associated drive by Stormont to buid up alternative sources of employment created much turbulence within unionism, and it implicitly raised major questions about the future direction of the state. McCoy's supporters were aghast not simply at the possibility of a deluge from the South but also at evidence that some working-class unionists were becoming less deferential. As one female party activist complained to the MP, ‘things had come to a pretty pass’ when McCoy's services were declined at the opening of an Orange fête in Dungannon because of his support for policies that were perceived to threaten a recently opened factory. The local Orangemen were apparently all pro-Labour.14 For many rural and border unionists, Brooke's support for the welfare state and new industrial development policies was a slap in the face for ‘loyal farmers’ who, as one wife of a Tyrone landowner put it, ‘are more valuable voters than the factory workers, whose politics may be inclined to be Red or Green!’15
Ireland Since 1939 Page 17
