by Gary Murphy
There was nothing in MacCarthy’s remarks that could give solace to the thousands who had emigrated throughout the decade, and those still without jobs as the 1950s came to an end. Protectionism had clearly failed them, yet MacCarthy was insisting that it remain. His pessimism can be contrasted with the optimism of someone like Todd Andrews, who was asking the country to leave the dark days of the past behind it and begin afresh. As he told one audience:
I ask you to disabuse your minds of the pessimism so terribly expressed by Patrick Kavanagh: ‘It will never be spring always autumn, after a harvest always lost, When Drake was winning seas for England, we sailed in puddles of the past, seeking the ghost of Brendan’s mast’.90
Whitaker, however, was not seeking the complete abandonment of protection. For him, the problem was that protected manufacture for the home market offered little prospect of increased employment, and in a highly competitive world, continued protection could not guarantee the maintenance of existing employment at acceptable real wages. Thus, if employment opportunities were to be created for the fresh thousands who sought work every year, industry had quickly to become more efficient so that its products could be sold on an increasing scale in export markets. This could be achieved by accepting an external commitment to reducing tariffs, accompanied by appropriate industrial incentives and aids towards industrial adaptation and modernisation.
Whitaker advanced these arguments to MacCarthy in his reply (written on New Year’s Eve), but also attempted to launch a new line of attack. The Christmas spirit had not quelled his sharp instincts. He declared that it was over a decade since Industry and Commerce had felt it necessary to seek to establish the Industrial Efficiency Bureau to ‘force the pace of progress in industrial efficiency’. While this legislation had not been proceeded with, responsibility for making periodic reviews of existing tariffs was subsequently imposed on the IDA. Whitaker argued that these reviews had been infrequent, with very few tariffs being reduced:
There can be no doubt that an externally applied discipline, provided it is not too severe, will arouse less opposition, appear less discriminatory, and be more effective than a system operated entirely at the discretion of the domestic administration. The best way to get costs down to competitive levels is to face industrialists with the certainty that tariffs are going to be lowered. In their present mood and in an external trade relationship, I believe they will accept this pressure and react favourably to it.91
While this may indeed have been true, the reference to the IDA was bound to upset MacCarthy. Like Lemass originally, MacCarthy had opposed the setting up of the IDA, and had always suspected that the IDA was in some way trying to pre-empt the work of Industry and Commerce. In any event, he did not take kindly to Whitaker’s remark. Declaring that he could ‘never’ agree that the introduction of an externally applied discipline of tariff reductions would be sufficient justification in and of itself for entering a free trade association, he took Whitaker to task for arguing that there was a possibility of the country being left stranded on a high and narrow protectionist plateau on which acceptable living standards could be provided only temporarily and for a diminishing number of our people:
It is at least equally important … that we should not so minimise the risks of ‘Free Trade’ as to obscure the possibility that the plateau or whatever replaces it would be occupied by a diminished number of our people even though their living standards, because there were fewer of them, might be enhanced. We must remember that … increased emigration would, in our circumstances, be an almost inevitable consequence of reduction of industrial employment.92
Whitaker’s comment had been made in a letter to Con Cremin, secretary of External Affairs, which was copied to Industry and Commerce, Agriculture and the Taoiseach’s office. The Whitaker–MacCarthy correspondence was also copied to the other main departments, and would have been seen by Lemass.93It was a battle by proxy, and had political implications in that the mind of Lemass, the draftsman of the policy of protectionism in the 1930s, was there to be won. Cremin had responded to Whitaker’s original memorandum in a positive mode, but did have some significant objections. Yet it is noteworthy that he could validate criticisms of Whitaker’s document without starting a major administrative row, as was the case with the MacCarthy–Whitaker correspondence. Cremin was particularly worried about the possibility of a setback in industrial production as a result of the reduction of protection and a consequential outflow of redundant manpower. He did, however, maintain:
A good case appears to be made for modifying our protection policy and for bringing to bear an international commitment. It is a question, however, whether there is not a tendency to discount, on the basis of abstract reasoning which may not be entirely applicable in practice, the possible adverse effects of the removal of protection. It could be contended that, in the economic field, the circumstances prevailing are in some ways so unusual as to weaken, or at least introduce serious qualifications to, otherwise sound theoretical conclusions even when they can be supported by evidence elsewhere.94
Whitaker responded to Cremin’s comments by stating that he did not think:
The force of our reasoning is lessened by describing it as ‘abstract’ or by referring to our conclusions as ‘theoretical’. I have yet to see any convincing argument, on practical or theoretical grounds, for the opposite thesis, i.e. that the maintenance of a policy of high protection will raise employment and living standards and reduce emigration.95
While it was between Whitaker and MacCarthy that the cut and thrust of debate about protectionism was at its fiercest, Cremin’s involvement can be seen as descending from the days when Frederick Boland was intimately involved with Marshall Aid. Cremin also played an active role in the Government’s application to join the EEC in 1961.
‘I want you to sit at this desk’
MacCarthy’s response to the original memorandum did not impress Whitaker. Whitaker had three points that he wanted MacCarthy to address if, as MacCarthy kept implying, there were no worthwhile prospects for the expansion of industrial exports to a European free-trading area. He pressed MacCarthy as to whether his pessimism was due to the non-competitive character of most of Irish industrial production; how it was proposed to overcome this, if the discipline of gradual tariff reduction was not applied; and what grounds were there for expecting that existing industrial output and employment could be maintained – never mind expanded – unless industry was somehow made to become more efficient in the near future. Whitaker clearly had no intention of giving up his attempts of swaying MacCarthy to a free trade position: ‘despite your rather forbidding reiteration of “I could never agree”, I have not abandoned the hope of persuading you to see matters from a dynamic rather than a static viewpoint’.96MacCarthy, however, was not in the business of seeing things from a dynamic viewpoint. Industry and Commerce under his leadership had by the late 1950s become a ‘department of disillusionment, without any backbone and not intellectually well endowed’.97A former official of the department has described the correspondence between Whitaker and MacCarthy in the following terms:
Industry and Commerce did not have any faith in what they were doing anyway. They were only going through the motions of putting up this resistance but it was easier for them to do that. MacCarthy had lost faith in the protectionist mindset. He was a very able man … yet he would go with the tide. He adopted the institutional position in that correspondence defending the traditional departmental view … The problem with Industry and Commerce was that the start of everything was a view expressed by the Minister.98
The power exercised by Lemass in Cabinet would seem to have had a detrimental influence on his officials in Industry and Commerce in that they did not really have to do any independent thinking. This mastery, however, made his officials in some way a lacklustre group in comparison to the other senior departments, most notably Finance. In any case, MacCarthy replied in kind to Whitaker, claiming that it grieved him:
… to note that our correspondence seems to have done little to bring this discussion down to earth. The view expressed in your letter that our industries would gain more from expanded exports than they would lose in the home market, and that there is no need to fuss about getting an adequate quid pro quo for joining either EFTA [European Free Trade Association] or Britain in a free trade association is so far removed from our viewpoint that … there is no point in continuing this correspondence.99
The implication at the nadir of the correspondence that Whitaker was talking economic theory rather than economic practicalities was undoubtedly calculated to leave MacCarthy holding the moral high ground. He, being the defender of traditional Irish industries, was not going to feed them to the wolves of free trade orthodoxy, while Whitaker was the shepherd who would abandon his flock to such economic precepts. Whitaker did have the final word, arguing that MacCarthy’s response could not be accepted as being a ‘fair or reasonable summary of the views expressed in my previous letters’.100This rather anodyne response did not disguise Whitaker’s anger at having failed to move Industry and Commerce towards a free trade perspective. The essence of the debate is best summed up Tadhg Ó Cearbhaill:
During the free trade negotiations, I was secretary of the committee of four secretaries and you talk about strong views, well whatever you think about their views being strong in writing they were far stronger in person … There is no doubt about it, a lot of roaring and shouting went on when protectionism was discussed.101
Meanwhile, Lemass – the apostle of protectionism – was sharpening his own thinking on the free trade question and on entry into a European trading bloc. He told a correspondent in July 1959:
It is of course true that the Irish economy at its present state of development is not producing enough resources to maintain all our population at the standard of living we desire them to enjoy. The fundamental task facing this country is to expand its total production so that this situation will be brought quickly to an end. This cannot be done, however, by just wishing for it but by sustained hard work in support of an intelligent development programme. The Programme for Economic Expansion provides one element and we are now trying to generate the other.102
This second element was to enter a free-trading body in an attempt to develop Irish industry and subsequently Irish exports. It went hand in hand with bringing new industry to Ireland. There is an inconsistency between the dynamic Lemass grasping the nettle of free trade as Taoiseach and that of his old department providing the main opposition to membership of a European trading bloc. The role of J.C.B. MacCarthy was hugely significant. He had entered the civil service at Finance in 1927, had served in Industry and Commerce from 1945, and had continued that department’s orthodoxy in terms of protection when he succeeded John Leydon as secretary in 1956. Moreover, most of the thinking in Industry and Commerce came from the top down. Thus, with Lemass’ exit it was vital that the department be infused with political strength. In this context, Lemass’ appointment of Jack Lynch to succeed him as Minister for Industry and Commerce was an important one.103He summoned Lynch to his office in the department and told him: ‘I want you to sit at this desk’. As Dermot Keogh points out in his recent biography of Lynch, the appointment was for the precise purpose of bringing about a shift to free trade.104Having been appointed by de Valera in 1957 as a minister at the Department of Education (with added responsibility for the Gaeltacht), Lynch was seen as progressive on economic issues. He had also had dealings with Lemass when he was responsible for the running of the Underdeveloped Areas Act in 1951 as parliamentary secretary to the Government and to the Minister for Lands. He had evidently impressed Lemass, and upon his appointment was told by the Taoiseach that Industry and Commerce was now his responsibility. While Lemass would be captain of the ship, Lynch had assumed the position of trusted lieutenant. Thus, Lynch – to an extent – took on the mantle of guiding Industry and Commerce away from a policy of protectionism, a policy that had been ingrained in its philosophy for a generation.
Lemass was key in persuading MacCarthy to accept the inevitability of tariff cuts. Once he, along with Lynch, had politically sided with the free trade position, MacCarthy was left in an administrative limbo. When Lemass was Minister for Industry and Commerce, and had explicitly supported the policy of protectionism, it was easy for MacCarthy to support him from within the administrative framework. With Lemass, as Taoiseach, now attempting to get Ireland into a European trading bloc, and supported eagerly by his own handpicked Minister for Industry and Commerce, MacCarthy was persuaded of the necessity of free trade and tariff cuts.
By the end of the 1950s, the Irish body politic had launched the way for an export-led industrialisation policy that was to dominate industrial and economic policy in the 1960s. Economic Development and the First Programme for Economic Expansion had both been extremely conscious of the changing nature of economic relations in the late 1950s. While neither declared the explicit aim of entering a free trade bloc, the initial steps to that outcome had been put in place. The formation of the EEC and EFTA would create two important trading blocs, and could offer economic opportunity or pose new threats. While the Government was not directly looking to Europe with the publication of Economic Development, there can be little doubt that it set in train the decision to apply to the EEC, and the further decision to reduce tariffs within that context.
The 1950s had ended with Irish industrial development policy in a state of confusion. At an administrative level, Finance was leading the way, arguing for substantial changes in the protected sector. Supported by External Affairs, Agriculture and the IDA, it was determined to bring Ireland into a European trading bloc, and thereby expand the country’s economic frontiers. In this, it first met intransigent hostility from Industry and Commerce, but a wind of change was blowing across Irish industry itself, which, under a new leadership, was to play an important role in getting the department to face up to the challenges of free trade. Ultimately, Industry and Commerce was playing a losing game. Changes in the Control of Manufactures Acts and new incentives to induce foreign industry to locate in Ireland were evidence that the Department of Industry and Commerce had found itself on the losing side in the battle of ideas.105
1 Horgan, Lemass, p. 354.
2 Girvin, Between Two Worlds, p. 180.
3 O’Rahilly interview.
4 T. Desmond Williams, ‘The politics of Irish economics’, The Statist, special issue on Ireland, 24 Oct. 1953, p. 24.
5 Lynch interview.
6 Michael Gallagher, The Irish Labour Party in Transition, 1957–82 (Dublin, 1982), pp. 179, 293 n. 79.
7 UCDA, Costello papers, P190/551, copies of memorandum outlining the principal objects of the Government’s policy, nd, 1954.
8 Boland, Reminiscences.
9 Round Table, vol. 40 (1956), p. 375.
10 ILHSA, Norton papers, box 6 (103), Department of Industry and Commerce, memorandum on setting up of state-owned pulp and paper industry, 15 Oct. 1956.
11 Bew and Patterson, Seán Lemass, p. 82.
12 ILHSA, Norton papers, box 3 (59), speech by Beddy on investment possibilities in Ireland, 22 Mar. 1955.
13 William Norton, ‘Ways to prosperity’, The Irish Times Review and Annual, 1957, p. 4.
14 O’Rahilly interview.
15 UCDA, McGilligan papers, P35C/117, Department of Finance notes on speech by Taoiseach, 5 Oct. 1956.
16 UCDA, McGilligan papers, P35C/117, O’Donovan to Sweetman, n.d., Jan. 1956.
17 UCDA, Costello papers, P190/713 (17), policy suggestions from the attorney general, nd, but by context Sept. 1956.
18 This paper is reprinted in T.K. Whitaker, ‘Ireland’s development experience’ in T.K. Whitaker, Interests (Dublin, 1983), pp. 19-54.
19 Ibid., p.9.
20 UCDA, McGilligan papers P35/117. Costello’s speech was to an inter-party meeting in Dublin; it was entitled ‘The policy for production’, and formed the basis for Fine Gael’s manif
esto in the 1957 general election.
21 John F. McCarthy, ‘Ireland’s turnaround’ in John F. McCarthy (ed.), Planning Ireland’s Future: The Legacy of T.K. Whitaker (Sandycove, 1990), p. 68 n. 36.
22 UCDA, MacEntee papers, P67/391, Sweetman address to electors of Kildare, nd, but by context Mar. 1957.
23 Ibid., P67/391, speech by de Valera in Cork, 31 July 1956.
24 Ibid., P67/392(6), speech by MacEntee at Naas, 3 Mar. 1957.
25 Ibid.
26 Ibid., P67/392(6), speech by MacEntee at Dún Laoghaire, nd, but by context early Mar. 1957.
27 Ibid.
28 Horgan, Seán Lemass, p. 158.
29 This memorandum can be found in UCDA, MacEntee papers, P67/53(1), with criticisms by MacEntee marked in pencil in the margins.
30 UCDA, Fianna Fáil party papers, P176, party committee meeting, FF48, 7 Sept. 1955.
31 UCDA, Costello papers, P190/741 (21), memorandum on Deputy Lemass’ Full Employment Policy, nd.
32 UCDA, Fianna Fáil party papers, P176, party committee meeting, FF48, 17 Nov. 1954.
33 MacEntee’s reaction is quoted in Ronan Fanning, ‘The genesis of Economic Development’ in McCarthy (ed.), Planning Ireland’s Future, p. 95. The exact quote can be found in UCDA, MacEntee papers, P67/815, where it is termed ‘note of meeting with Dev’. MacEntee rarely mentioned political events in his diary, and does not offer any explanation for de Valera’s decision.
