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Analysis: As Brexit Draws To End, A Look At A Previous Costly Trade Dispute Between The Two Countries
By John gibney, Royal Irish Academy
The ‘Economic War’ is the name given to the bitter trade conflict between Ireland and Great Britain that lasted much of the 1930s. It originally began as a dispute over the continued repayment of annuities from the land, which were repayments of loans granted to Irish farmers by the British Treasury under the land laws of the late 19th and early 20th centuries. Grassroots opposition to return them emerged in the 1920s and the cause was considered an electoral issue by Fianna Fáil de Éamon de Valera.
When the party came to power in 1932, they quickly refused to pay them. The British response (which was primarily an attempt to get the money somehow) was to impose tariffs on a wide range of Irish agricultural products, especially live cattle and beef. Ireland retaliated with tariffs on imports of British manufactured goods and raw materials. Jonathan Swift’s call to burn everything British except his coal was dusted off, the Economic War began and lasted until 1938.
The trade war coincided with the more aggressive stance taken by Fianna Fáil towards the British after 1932, as they sought to reverse the provisions of the 1921 treaty that had created the Irish Free State as a Dominion within the Commonwealth. Upon taking office, Fianna Fáil successfully embarked on a sustained attempt to undo Ireland’s remaining connections to the British Empire, and this was the context that framed the Economic War.
But it was not just an economic weapon in a political arsenal: Fianna Fáil genuinely believed that economic independence had to be the foundation of future prosperity (and that annuities were better spent in Ireland than in Great Britain). His predecessors, Cumann na nGaedheal, had widely favored free trade but, after the Wall Street crash of 1929, many countries leaned toward protectionism. Ultimately, a small economy like Ireland’s was not suited to this, so Irish officials unsuccessfully searched for new markets in continental Europe and North America. The historical alignment of the Irish economy with that of Great Britain was determined by both geography and imperialism.
It’s hard not to look back at the Economic War and think that barriers can cause hardship
Land annuities were worth millions each year, but the stern stance of the British was driven by a desire to undermine Fianna Fáil in the hope that a small electorate would dispense with her services. In this, they were wrong when Fianna Fáil solidified her vote. Larger farmers bore the brunt of the restrictions on the livestock trade, but many small farmers were cut off by new welfare schemes. In the late 1930s, a large number of additional jobs were created in new industries; Ironically, many of them depended on British raw materials.
In 1934, there was a small improvement in British-Irish relations with the “coal and cattle pact”, which ensured increases in both British imports of Irish cattle and Irish imports of British coal. But the dismantling of the recently imposed tariffs and quotas between the two islands had to wait until the tripartite agreement of April 1938, which gave Irish products preferential access to the British market and vice versa.
Although symbolically important as a marker of independence, the Economic War inevitably affected Irish agricultural producers more than British consumers of their products – after all, the UK was the market for 90% of Ireland’s exports. But the British government of Neville Chamberlain negotiated with an eye on the impending European war that was supposed to be on the horizon in the late 1930s. It was very likely that Britain would once again have to rely on Ireland as a traditional supplier. food. The agreement also covered the return of naval facilities at the ‘Treaty Ports’ of Cobh, Berehaven and Lough Swilly, allowing Ireland to declare significant neutrality when war broke out the following year.
The Economic War ended before World War II began, and part of the agreement was a final resolution of the problem that had caused it. The government of ‘Éire’ (as it was called in the final text) agreed to pay a lump sum of £ 10 million as the final settlement of the annuity issue. Considering that the overall liability for annuities could have been as high as £ 100 million, a sum that almost certainly outweighed the economic ‘hit’ suffered by the Irish economy, it was not, to use the language of our time, a Bad business. .
The parallels, as someone once said, may not make sense. But with issues like sovereignty and trade relations in the ether in late 2020, it’s hard not to look back at the Economic War and think that barriers can cause difficulties. International relations are a fact as much of geography as of wishful thinking, and everyone in their right mind comes to the table eventually when reality intrudes.
Dr. John Gibney is Deputy Editor of the Royal Irish Academy Papers on Irish Foreign Policy series. The documents published in the DIFP series for the years 1919-1948 are freely accessible here. He is a former Research Council of Ireland adjudicatory.
The opinions expressed here are those of the author and do not represent or reflect the opinions of RTÉ
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