by Gary Murphy
… one for consumers, to keep the price of goods to the consumer down, but also to keep control of industrial raw materials, to keep costs to industry down. That was the proposal. It didn’t develop as it was strongly opposed politically, both within Fianna Fáil and the opposition and also by Irish manufacturers. The Federation of Irish Manufacturers were very hostile to it.45
McElligott responded to the proposal by arguing trenchantly that the public interest did not require such a drastic degree of supervision and control of industry.46Even more significantly, Irish industry was atypically united in its opposition. A conference called by the Federation of Irish Manufacturers (FIM) was attended by fifty-seven industrial associations, and concluded rather dramatically that ‘until this country has declared for a Communist form of Government, the Bill should be withdrawn’.47The federation also demanded a meeting with the new Taoiseach to discuss what it considered to be the general belief among ministers – as well as the general public – that manufacturers made excess profits at the expense of the consumer. One such industrialist in the textile business recalled:
… [the] horror with which businessmen viewed this rather draconian bill. What was the point in setting up in business and trying to foster an enterprise culture if at the slightest sign of bother the Government was going to come in and practically seize your company?48
Given the conservative nature of Irish society, Lemass’ innovative plans were not implemented by the first Inter-Party Government, despite Labour having supported the Control of Prices and Promotion of Industrial Efficiency Bill while in opposition (indeed, some of the earliest proposals from the expansionary coalition did involve direct administrative control of industry). It is questionable, however, if Fianna Fáil would have implemented these measures had it been returned to power, such was the opposition of interest groups, including the trade unions.
The workers divided
The position of the trade union movement was complicated by a split in January 1945, which had seen the Congress of Irish Unions (CIU) break from the Irish Trade Union Congress (ITUC). The split was the culmination of several years of division on tactics, and deeply felt animosity between William O’Brien, leader of the Irish Transport and General Workers’ Union (ITGWU), and James Larkin of the Workers’ Union of Ireland (WUI). From the mid-1920s there had been a growth in the number of trade unions operating in Ireland, leading to inter-union rivalry. As Emmet O’Connor has noted, ‘sometimes unions fought over their respective merits, sometimes over the advantages of craft or industrial unionism, sometimes over the principles behind Irish or British based unionism; always they fought over members’.49The proliferation of unions ran contrary to the ideal of ‘One Big Union’ championed by the country’s largest union, the ITGWU, which was involved in the inter-union disputes more often than not. Moreover, the ITGWU was an Irish union with a strong nationalist ethos, and resented the presence of British-based unions in the state. The number of unions and their propensity to fight not only employers but each other had left Seán Lemass increasingly exasperated. Convinced that consolidation of the movement was necessary, in 1936 he advised the ITUC that if the unions did not resolve its problems, the Government would intervene and do it for them. William O’Brien was happy to oblige, but the ITUC as a whole was not. Unhappy with the rejection of his proposal, in May 1939 O’Brien established the Council of Irish Unions as a faction within the ITUC for the pursuit of Irish national objectives. This mirrored a split of a year earlier when a majority of Labour Party TDs who were also members of the ITGWU had left to set up the National Labour Party.50
As a result of the unions’ failure to reorganise, the Government stepped in with its 1941 Trade Union Act, which was intended to ensure that only a small number of large Irish-based unions would be allowed to operate in Ireland. The act owed much to O’Brien’s thinking (he had advised the Government on its drafting), but was wholly unacceptable to most other unions, with Larkin’s WUI and the British-based amalgamated unions to the forefront of the opposition. The ITGWU and some others eventually split from the ITUC in January 1945 to form the rival CIU. Although the ITUC membership outnumbered the CIU’s by almost two to one (the CIU represented 77,500 workers, the ITUC 146,000),51the Government appeared to favour the smaller congress; in 1945, for instance, the Government nominated two CIU officials as Ireland’s delegates to the International Labour Organisation conference.52The ITUC received a boost in July 1946, however, when an appeal by the National Union of Railwaymen against the constitutionality of part III of the Trade Union Act (which had been rejected by the High Court in 1945) was upheld by the Supreme Court on the grounds that it contravened the right of the citizen to free association.53Furthermore, it seems that the Fianna Fáil Government, and Lemass in particular, was becoming suspicious of the CIU, which it felt was running a dirty operation.54By 1948 relations between the two had cooled to the point of freezing following the CIU’s failure to ensure that its National Labour Party deputies voted to keep a Fianna Fáil Government in office.55
It may have seemed that the unconstitutionality of banning British-based unions together with the CIU’s falling out with its erstwhile ally, Lemass, would bode well for the reunification of the movement, not least when two of its key rivals, William O’Brien and James Larkin, had left the stage,56and when both Labour and National Labour were together in Cabinet as members of the Inter-Party Government. The fissure between the two groups was not easily mended, however, and although the two labour parties reunited in 1950, the two congresses failed to follow suit for several years.
Despite the weaknesses wrought by division, the creation of the Labour Court under the 1946 Industrial Relations Act strengthened the unions by bringing them into the mainstream and establishing them as a part of the ‘social furniture’.57There was also a sense of achievement at the setting up of the court, with the writer and WUI official, James Plunkett Kelly, speaking of it as a symbol of:
… the victory of trade unionism in its fight for a respected and influential place in the social and economic life of modern Ireland. Here was the beginning of a new stage in labour relations, with its machinery for direct negotiations and conciliation representing new privileges for trade unionism, but also putting on its shoulders new responsibilities.58
Yet while it had these new responsibilities, the greatest problem for the union movement was the existence of two congresses. Both employers and Government met with both congresses together, and – as Donal Nevin points out – ‘were not slow to play one off another to the detriment of workers. Lemass was not too bothered by two congresses as it kept the Labour Party and the labour movement as a whole weak’.59While this may indeed have been the case, Lemass was to suffer politically during the Fianna Fáil Government of 1951–54 when he found himself sidelined by Seán MacEntee’s performance as Minister for Finance. As Brian Girvin points out, in a political environment where Lemass was clearly the architect of the Government’s industrial strategy, his failure to co-opt and integrate into his support base a unified congress weakened him within Fianna Fáil.60Alternative industrial and economic strategies would have received a better hearing if the workers’ movement had been united, especially since a boosted Lemass would have exerted more influence within Government. He had been able to defeat the conservative elements within the party on the issue of co-operation with the Labour Party after the 1943 general election, but following the 1948 election was unable to counter the conservative economics dominant in Fianna Fáil, and was effectively marginalised by MacEntee.61
At a time when Irish politics in general was moving in a conservative direction, the trade union movement was unable to present a united common front to the state or the employers. The consequences of this were grave. Despite the ascension to power in 1948 of the expansionist Inter-Party Government, conservative economic policy prevailed. Wage levels remained depressed for a considerable time, while unemployment and emigration rose sharply.
The power and th
e glory
The creation of the Industrial Development Authority (IDA) in 1949 – combined with a package of industrial incentives – amounted to a significant increase in Government control of industry. The IDA had the support of important sectors of the business community. According to the original proposal, it was to have two functions: primarily, it was to initiate schemes to establish new industries and to investigate the necessity of revising tariffs, quotas and other protective measures; it also had powers to subpoena witnesses and documents relating to Irish industry. The original content was, however, modified to exclude provisions for IDA control of industry. Lemass was critical of the setting up of the IDA, fearing that it would usurp the traditional role of the Department of Industry and Commerce. Some of Lemass’ objections sprang from the fact that the new agency consisted of former officials of Industry and Commerce doing the same tasks for the IDA as they had done for the department.62Bew and Patterson speculate that Lemass’ opposition to the formation of the IDA was ‘bowing both to party and industrialists’ pressure’.63While this may, to an extent, be true, it seems more likely that he thought that the IDA would supersede Industry and Commerce in attempting to develop the country’s industrial sector. Tadhg Ó Cearbhaill also maintains that Lemass’ great fear was that the Department of Industry and Commerce would have been downgraded by the time Lemass returned to office.64He had, however, recognised that increasing exports alone could be an effective stimulus for the economy. The IDA echoed his view, and maintained that an increase of manufacturing exports should be the clear focus of any export policy. Recognising the difficulties facing exporters, it proposed that an organisation to promote and co-ordinate exports be established:
We hold the definite view that there is no likelihood of any appreciable increase in industrial exports on the basis of the individual efforts of manufacturers. Our manufacturers as a whole have very limited knowledge or experience of export trade and apart from their reluctance to enter into an unknown and highly competitive field, the share of any particular manufacturer in export trade would be relatively so small that it could not bear the expense of an adequately staffed and operated export department.65
Industrial exports, the IDA added, would not be generated unless financial inducements were forthcoming. Finance, however, was dismayed at the prospect of public finance or tax concessions being made available to exporters. There was, it claimed:
An air of unreality about this interim report of the IDA. It does not seem to come to grips with the problem at all. If, however, the Government agree to the proposals, there is not the slightest doubt that the manufacturers will receive the IDA with open arms. Why shouldn’t they? The state will be doing for them something which they should do themselves.66
The Department of Finance was worried about the creation of the IDA on two accounts: primarily, that industrial incentives would be inflationary, and, secondly, that the creation of a new bureaucratic agency with resources to attract capital was ‘a dangerous machine for the exercise of corruption’.67Minister for Finance Patrick McGilligan also had doubts about the scheme:
The Board should not be envisaged as a board of mastermind planners – to divert and plan the industrial development of the country – but rather as a Board of fact finders and advisors to the community and to the Government on the activities of private enterprise. They are there to search out possibilities of industrial development, to collect facts and statistics and to bring them to the notice of entrepreneurs in some fair and suitable manner. It should definitely not be within their scope or function to themselves run or plan industry or any branch thereof.68
Colm Barnes maintains that large sections of Irish capital joined the Department of Finance in its opposition to the investigative powers of the IDA, but not to the creation of the board itself. He agreed with McGilligan’s views that the board should not be made up of a gang of ‘crack-pot socialist planners’, ‘but as long as manufacturing men were involved, we thought it would be all right’.69The complaints had a marked effect on the final make-up and powers of the IDA. Its first board of directors included representatives of the FIM and the Federated Union of Employers (FUE), as well as prominent company directors; all these, however, were expansionist in viewpoint.70The president of the FIM publicly welcomed the formation of the IDA, and expressed pleasure at the level of consultation between the FIM and Government ministers and departments.71Schemes to promote exports had been proposed since 1946, but met with indifference from protected capital and the outright opposition of the Department of Finance. Lemass had attempted to introduce a bill to assist industries engaged in foreign trade, and a new Foreign Trade Corporation was to oversee an exporters’ insurance scheme and to provide grants to exporters for factory premises and training. The scheme was eventually withdrawn because of opposition from Finance on the predictable grounds of cost. One other initiative was the establishment of the Dollar Export Advisory Committee in 1950, which was an attempt to devise policy initiatives to achieve meaningful growth in manufacturing enterprise and to stimulate exports to the United States of America. This, however, was as much a response to the general economic turmoil that resulted from a shortage of dollars in Europe, as a major policy commitment to use government money to increase economic growth.72
The development of Córas Tráchtála Teoranta as a promotional agency for Irish exports did not meet the recommendations of the IDA, as it was basically an advisory body and did not have the finance or the power to induce industrialists to export.73Yet without Government intervention, it was unlikely that many manufacturers would develop an export trade. Many of those involved in industry at the time have commented on a perception within industry generally that it would not survive free trade; thus, they were satisfied to produce for the home market only. According to a number of industrialists active at the time, there was great security in Irish manufacturing industry because it had a captive market and high tariff walls that kept out imports; consequently, most Irish industries were not geared towards international competition.74The success of import substitution and the continuing expansion of the protected sector in the late 1940s and early 1950s indicated that further possibilities for internal growth remained available. Daniel Morrissey, Minister for Industry and Commerce in the first Inter-Party Government, drew attention in the Dáil to the high level of imports in 1950, estimating that £60 million of such imports could be replaced by Irish products, and with it the creation of 45,000 new jobs. He also claimed that there was still considerable scope for further industrial development within the protected economy.75There is no real evidence that such possibilities for industrial expansion did indeed exist. Industrialists did not view their businesses in such a manner. While they accepted the need for a strong industrial arm for what was essentially an agricultural country, the main aim of industrialists, it seems, was to provide employment and make a reasonable profit. Most businessmen of the time did not even know how to go about attempting to export. Few companies had staff able to communicate in a foreign language. The idea that Irish industry could compete with foreign companies was not entertained, and there was little sense of entrepreneurship. It is reasonable to assume that if industrialists could make an ample profit without providing employment, they would do so, but what is striking is that earning a profit was not considered the harbinger of industrial success.
Lemass had pinpointed the problems of industrialists. In a letter to a Cork industrialist, William Dwyer – who had stood previously as an unsuccessful Dáil candidate for Cumann na nGaedheal, and with whom Lemass carried on an intermittent exchange – he berated the lack of entrepreneurial drive:
The extent to which industrial development is to be brought, must be decided by national policy and not by the interests of individual industrialists. It has always been a handicap to our industrial progress that the best of our industrial leaders show a tendency to exhaust their initial impetus and to slow down and stop when they have reached a stage of development which
gives them maximum security with the minimum of additional effort … The function of Government as I see it is to keep on pushing development to the limits of practicability whether individual industrialists like it or not.76
While Lemass may have felt that the Inter-Party Government failed to push industrial developments to the limit – as suggested by one of his biographers, Michael O’Sullivan – he cannot escape the charge that most of his post-1948 industrial ideas were opposed by Irish industrialists. Lemass did make strenuous efforts to give Irish industry a fundamentally strong basis; for instance, he had Joseph McCullough – in his capacity as a member of the National Economic Advisory Group of Cumann na n-Innealtoiri (the engineers’ association) – carry out a confidential report for him on the idea of overseas contracting. As McCullough later pointed out to me, ‘Irish people had been contracting all over the world since after the First World War, so I set out to examine could we do that here [in Ireland]’.77The IDA, however, clearly had some way to go if it hoped to persuade Irish industry to develop an export-led approach to business. One of the IDA’s main problems was that it lacked any power to grant incentives for the attraction of foreign industries to the country; thus, its establishment should be seen not as a complete break with previous industrial policy in that it was not an alternative approach but a method of supplementing the framework already in existence.78
There was, to an extent, a consensual approach to the validity of protection. Tadhg Ó Cearbhaill has commented on how there was a scaling down of the number of new tariffs after the war, with no new quotas introduced, and how this was an agreed political objective:
Yet while both Governments were trying to use protection only as a last resort, industrial policy was originally designed to replace imports. A local development group that went into Industry and Commerce were handed the import statistics and prepared reports on what we could make here. The view was taken that a secure home base, protected if necessary, was the best basis for developing exports. If the Government were expecting an industry to develop exports, that industry was entitled to have its own market secure. Teams from Industry and Commerce, employers and unions went off to the United States to study methods there. This was to encourage industry to become more efficient, not by compulsion, but it was visualised that protection had to be scaled down.79
