by Gary Murphy
This led to some innovative IDA schemes being put into operation. A 1951 grants scheme for new industrial investments in underdeveloped areas provided infrastructural development by the state, land and buildings to new industry, grants for the full cost of new factories, fifty-per-cent grants for the cost of new machinery and equipment, training grants, exemptions from local charges, and reduced electricity rates. The scheme was managed by a new grants authority, An Foras Tionscal, which was loosely tied to the Department of Industry and Commerce but was semi-independent, like the IDA.80The conservative faction in the public-policy arena were again very much opposed to such a scheme. Finance argued that ‘in view of the present and prospective condition of the Irish exchequer, it is merely common sense to refrain from taking on new commitments either of a capital or a current nature’.81As a response to the thousands leaving the country every year, this was hardly inspiring stuff.
A helping hand?
The Marshall Plan was one such potential commitment, and brought with it opposing views within the political and administrative Irish elite. It is commonly accepted in much historical analysis of this period that Ireland was a reluctant participant in the European Recovery Programme (ERP).82The predominant view supports T.K. Whitaker’s oft-quoted words:
No one who took part in preparing the Recovery Programme (and that includes myself) ever looked on it as a development programme, but rather as an exercise that had to be undertaken to persuade the Americans to give us Marshall Aid.83
Whitaker – at that stage moving up to the top echelons of the Irish civil service – has consistently argued this point ever since, and has been supported by others who were involved at the time.84Charles Murray, who succeeded Whitaker as secretary of the Department of Finance, substantiated this interpretation, claiming that:
Some maintain that preparation of documents to validate our claim for Marshall Aid represented Ireland’s first steps in economic planning. I never felt that myself and I think it was very much a paper effort. I’m not decrying it in that sense but certainly it fell far short of the inter-departmental involvement in Economic Development.85
Yet the Department of Finance’s view was not the only one within Irish administration circles in this period. Tom Murray of the Department of Industry and Commerce reckoned that ‘it was the first effort to forecast the economic future’, while Frederick Boland of the Department of External Affairs noted that ‘it did lay Ireland open to planning’.86
Evidence exists that the first Inter-Party Government had a certain commitment to Europe and European integration, and that – ultimately – Ireland’s application to join the EEC in 1961 has its genesis in the response of the Department of External Affairs to the Marshall Plan. At the original Marshall Aid discussions – held from July to September 1947 under the auspices of the Committee for European Economic Co-operation (the precursor to the Organisation for European Economic Co-operation) – Ireland’s representative, the secretary of External Affairs, Frederick Boland, made an important speech in which he said Ireland would sign the Plan no matter what the Government was able to negotiate for itself.87As Boland later commented, ‘we didn’t look to get anything free out of the thing but our interest was that Europe should be prosperous, because without a prosperous Europe, we couldn’t be prosperous ourselves’.88Seán MacBride – who succeeded Eamon de Valera as Minister for External Affairs – also considered himself to be something of a Europhile, which contrasted greatly with his Anglophobia, and he took a keen personal interest in the course of European integration, and welcomed to Dublin various groups supporting that particular aim. He sent a delegation to the Congress on European Union, held in The Hague in May 1948, and was very supportive of the setting up of the Council of Europe in 1949.89
Before the 1948 general election, de Valera had already appointed the Department of External Affairs as the controller of Ireland’s participation in the European Recovery Programme, and in May 1948 the Inter-Party Government confirmed that decision. De Valera’s Fianna Fáil Government was originally hesitant about the exact meaning of the Marshall Plan. As Minister for External Affairs, de Valera did not attend the conference in July 1947, but instead sent Seán Lemass, the Minister for Industry and Commerce, and Paddy Smith, the Minister for Agriculture. It may be that as the US Congress insisted that Marshall Aid be contingent on the liberalisation of European trade, de Valera sent the political representatives of those departments that would be most affected by such a move. De Valera also sent Boland to Paris; one of the most able civil servants in the history of the Irish state, he was to play a key role.
In the first official comment on the Marshall Plan, Lemass welcomed it, maintaining that Ireland ‘could not insulate herself from the effects of economic decline in other states, that question was true of all countries, but particularly of small ones’.90He also used the occasion to assert that Ireland’s economic development was hindered by the lack of political development, which was of course hampered by the ‘division of the national territory’. It was common for Fianna Fáil ministers to raise the partition issue on their travels, no matter what the circumstances, and by raising it here, Lemass was saying nothing unusual for an Irish minister. Indeed, when Fianna Fáil lost office in 1948, de Valera’s first action was to take himself off on an anti-partition tour of the US, Australia, New Zealand and India. Lemass’ final remarks stressed, however, that the Irish Government would do all in its power to help the conference succeed, and he welcomed the ‘growth of economic interdependence’, asserting that Ireland ‘is not in this conference to work against any nation or group of nations. We are here for our own good and for that of Europe’.91
Whatever about Lemass’ rather anodyne remarks, the importance of this conference for Europe is reflected in a report sent by Boland from Paris to Dublin in August 1947. It painted a pretty bleak picture of the Western European economic and political landscape:
Without outside aid of a magnitude that only something like the Marshall Plan can supply, Europe is headed for economic collapse and social revolution within the next two or three years. Even if this outside aid is forthcoming it is more than doubtful whether Western Europe can stand on its own legs after 1952 without reductions in living standards which Governments, already faced with dangerous internal communist drives, can only contemplate with the utmost dismay. It would be difficult to exaggerate the extent to which this realisation of the general position of Western Europe is conditioning the work of this conference.92
The drafting of the report outlining a joint European Recovery Programme was adopted on 22 September 1947. De Valera represented the Government, and outlined its thinking in relation to Marshall Aid:
To seek from another what one could supply by one’s efforts is always unworthy. It is doubly so when the assistance is requested from a friend who has proved himself generous repeatedly. I am happy to sign this report on behalf of Ireland because I believe it is an honest report. In it self-help is recognised as a primary duty, and no more aid is sought than is absolutely necessary if the damage of the war years is to be repaired within a reasonable period of time and the nations of Western Europe restored to a position in which they can provide for their own needs and preserve their traditional civilisation.93
While de Valera in this speech repeated his well-worn views on the need for economic self-sufficiency, the reality was that by the time Ireland signed the Convention for European Economic Co-operation in Paris on 16 April 1948, it was the first Inter-Party Government that would have the chance to utilise Marshall Aid.
Boland, to some extent, stuck to de Valera’s position when he outlined his view of what Marshall Aid and the Paris conference signified. In a letter to the secretaries of Agriculture, Industry and Commerce and Finance early in March 1948, he said:
The Marshall Plan is not a cure for the economic problems of Western Europe. If use is not made of the respite to tackle the problem, we shall all be in as bad a position at the end of the four ye
ar period as we are now. All this was clearly realised by the Paris conference.94
For the Inter-Party Government, however – and MacBride in particular – Marshall Aid seemed to hold out the prospect of enabling the implementation of an ambitious programme of development.
For Fianna Fáil, being in opposition for the first time since 1932 was not easy. A meeting of the parliamentary party in June 1948 discussed the signing of the Convention for European Economic Co-operation by the Inter-Party Government the previous April. Lemass pointed out that visits to Paris by himself, Paddy Smith and de Valera during 1947 were preliminary steps to the drawing up of the convention, and he was therefore seeking approval from the Fianna Fáil parliamentary party ‘not to oppose it’ when it came before the Dáil on 1 July 1948. He explained that the ‘Bilateral Economic Co-operation agreement between Ireland and the USA which was signed in Dublin on 28 June 1948 was a necessary step to be taken by each of the 14 participating European nations as a preliminary to the receipt of Marshall Aid’.95Lemass’ insistence that Fianna Fáil support the implementation of the Marshall Plan in Ireland is more than likely an indication of his belief that the Inter-Party Government would fall on its own sword before very long, at which time he would be in a position to oversee the spending of the Marshall largesse.
Grants, not loans
The Inter-Party Government was to prove more stable than Lemass imagined. In its consideration of the plan, a number of problems presented themselves: of primary concern was whether US aid would be granted in the shape of grants or loans. This led to a clash between the Government – specifically, MacBride – and the Central Bank and the Department of Finance. MacBride had made clear to the US State Department as early as May 1948 that Ireland needed a grant as it would not be able to repay a loan. A document written by T.K. Whitaker the following month graphically illustrated the need for a grant. While it was, in essence, an analysis of the weaknesses of the Irish economy, Whitaker called attention to the role that Ireland could play in the agricultural sphere in furtherance of the European Recovery Programme:
We can most effectively strengthen our own economic structure and contribute to the economic recovery of Europe by an increase in food production. The resultant expansion of Irish exports of meat, eggs and dairy produce, the high protein value which Ireland is particularly suited to produce, will meet an urgent European demand and reduce Europe’s present dependence on dollar sources of supply. Ireland depends on this recovery in food exports from their present depressed level for the increase in earnings necessary to restore equilibrium in her overall balance of payments. US aid is essential if these twin objectives are to be attained because the requisite improvement in agricultural output cannot be secured without imports of grains, feeding stuffs, machinery, and other commodities from the Western Hemisphere, for which Ireland, whose available dollar resources are meagre and uncertain is not in a position to pay.96
To assert that Ireland would not be in a position to pay put down the Government’s marker in no uncertain terms: a grant would be required. Ireland’s dollar expenditure was normally met by the conversion of sterling earnings through the London exchange. However, the reserves of the sterling area had sunk so low that Ireland could no longer look to such reserves as a source of dollars. As its external investments were confined almost solely to Britain, with earnings predominantly in sterling, Ireland wanted a restoration of the free convertibility of sterling. Until this was achieved, however, the conservation and strengthening of the gold and dollar reserves of the sterling-area pool were paramount. Given such considerations, the Government entered into a formal agreement with the British wherein it would not rely on the sterling-area pool for dollar requirements during the ERP. For Whitaker, then:
The reserves of the pool being unavailable, Ireland’s dollar resources in the absence of aid under the European Recovery Programme would be entirely inadequate to defray the cost of essential imports from the dollar area. It is sufficient indication of the inadequacy of our resources that in 1947 current earnings of US dollars amounted to $28 million while dollar expenditure was approximately $120 million and is expected to remain of this order. Ireland’s dollar earnings, which consist for the most part of emigrants’ remittances, legacies and tourist receipts are not capable of material expansion; indeed, of their nature, they are uncertain and liable to contract.97
A similar, though more explicit, memorandum regarding Ireland’s case for a grant – entitled ‘General considerations on Ireland’s position in relation to ERP’ – began by proclaiming that:
Ireland is anxious to contribute to the maximum of her ability in the economic recovery of Western Europe. Her desire to do so is based on her desire to assist in the creation of economic conditions that will enable the survival and the regeneration of free institutions and Christian civilisation. Ireland’s approach to political and economic problems is not based on materialism; basically Ireland is moved more by a genuine desire to serve the ideals in which she believes. These ideals are the democratic way of life, Christian social and economic principles, human liberty, the right to national self-determination and family life. Rightly or wrongly Ireland believes in a policy based on idealism rather than on materialism.98
The language here is remarkably similar to that used when Ireland first applied to join the EEC. The application document carefully placed Ireland’s Christian heritage and its commitment to Christian values in a European context, and mentioned that:
[For] some centuries after the break up of the Roman Empire, Ireland was a haven of spiritual and intellectual life in which the essence of the European tradition was preserved and from which it was brought back again to many continental lands.99
The Marshall Aid document went on to place Ireland’s Christian beliefs in the context of the regeneration of Western Europe, maintaining that Ireland appreciated the urgency of co-operative action in rendering material aid:
Indeed Ireland was among the first nations to send large shipments of completely free gifts of food to European countries since the war ended. Likewise the Irish people voluntarily collected and sent very substantial assistance to the Italian Christian parties during the recent elections. There was no reward motive for these acts; the motive was based on idealism. These matters are not stated out of any sense of self-righteousness or boastfulness but merely to emphasise the earnestness of our desire to do everything we can to co-operate fully with the United States in the splendid work it is doing in this sphere and to indicate our psychological approach to these problems.100
Having outlined Ireland’s idealistic nature, and having all but said that Ireland was not a neutral spectator with regard to the West-versus-East conflict by virtue of having supported the Italian Christian parties, the document then referred to the US desire that Ireland continue to produce food for export to Western Europe. Reports by Willard Thorp, US Assistant Secretary of State, that Ireland needed only a loan as it had not sustained any real damage in the war were, the memorandum stated, ‘entirely erroneous’:
Ireland’s small farmsteads are in effect her factories. There are 382,710 of them. During the war years and since, in order to feed herself and Britain, each one of these exhausted its soil fertility and livestock owing to the absence of feeding stuffs and fertilisers. It is just as if 382,710 small factories ran their machines without lubricant until it [sic] became worn out.101
The premise was clear. Without a grant, Ireland had no chance of making any worthwhile contribution to the ERP:
On the one hand, Ireland’s interest in the European Recovery Programme and her desire to do her utmost to contribute to its success, and, on the other hand, the problems which the task of Irish recovery presents and our concern that participation in the programme should not entail the contracting of a heavy and irrepayable [sic] external debt.102
Such arguments fell on deaf ears in Washington, as the Americans quickly announced that Ireland’s initial amount would be a $2.5-million-dollar l
oan to cover the period April to June. Both the method of payment and the amount came as a shock to Seán MacBride.103
MacBride had assiduously courted George Garrett, the US minister (ambassador) in Dublin, since July 1947 in an attempt to persuade the Americans that aid should be given to Ireland in grant form. By the end of April 1948 it appeared to the Irish ambassador in Washington, Seán Nunan, that MacBride’s efforts might bear fruit. He reported to Boland that Paul Hoffman, the head of the Economic Co-operation Administration (ECA) – the organisation charged with administering Marshall Aid – had told him that:
He was at the University of Chicago with George Garrett, the American Minister and is a member of the same college fraternity. He said he had heard from Mr Garrett who spoke very highly of the attitude of our Government towards the European Recovery Programme and indicated that ours is not a ‘hat in hand’ attitude … I do think that Mr Garrett’s favourable report on our Government’s attitude towards the plan will do us no harm when the question of the terms on which aid will be given will be decided.104
The loan-versus-grant question was beginning to fray the nerves of Irish officials. When Ireland’s case came up at a meeting of the Foreign Relations Committee of the US House of Representatives, Willard Thorp asserted that Ireland should receive a loan as this was the best way for the country to rehabilitate itself. This was too much for Boland, who wrote to J.J. McElligott, secretary of the Department of Finance, in scathing terms about what he regarded as a particularly sorry episode:
