Irish Provisional Government, 1922: a case study of economic policymaking in a new state

ABSTRACT

Nationalists believed that Ireland had not thrived economically under the Union. This article explores economic policymaking under the 1922 Provisional Government which administered the 26 counties during the one-year transition phase from British to Irish Free State jurisdiction. It is a case study which examines the fate of pre-independence economic programmes; the reorganisation of the economic portfolios of the civil service; the handling of immediate economic problems; as well as the formulation of plans and priorities for Ireland’s future. The Provisional Government faced an unprecedented array of internal and external problems, in particular the economic depression and deflation in the wake of the First World War (1914–1918); the economic damage of the Irish War of Independence (1919–1921); and the divisive and violent Irish Civil War (1922–3) - the result of rupture in the main nationalist political party, Sinn Féin, over acceptance of the Anglo-Irish Treaty settlement, which provided for the creation of the Irish Free State as a dominion rather than as a fully sovereign republic. Depspite these setbacks, the Provisional Government needed to enforce its authority and demonstrate its ability to govern by being seen to competently address economic issues.

KEYWORDS:

• Provisional Government
• Ireland
• economic policy
• economy
• 1922

Introduction

An exhibition of Irish-made goods was opened by President Éamon de Valera at 40 Upper O’Connell Street (then Sackville Street) in Dublin on 16 December 1921. It was organised by the Dublin Industrial Development Association (DIDA) and funded by Dáil Éireann, the Dublin-based Irish parliament that had been instituted by the Sinn Féin party in 1919 when its MPs refused to take their seats at Westminster. He was presented with a golden key inscribed in Irish which had been specially made by West and Son, a Dublin jeweller in existence since 1720 (Young Ireland/Éire Óg, 24 December 1921, p. 1). The inscription was illuminated and designed by the Craftworkers and Co, specialists in decorative arts and a co-operative company set up in 1920. De Valera stayed only 10 min, returning to a meeting of Dáil Éireann (Irish Times, 17 December 1921, p. 8). Manufacturers, members of the chambers of commerce, businesspeople, press, trades unionists and professionals, in all about 500–600 people had assembled. To have such a space, and the timing of its inauguration, just after the signing of the Anglo-Irish Treaty on 6 December, providing for the creation of the economically independent, self-governing Irish Free State, seemed to chime with a potentially optimistic new beginning for Irish industry.

Nationalists believed that Ireland had not thrived economically under the Union, and this had been a key impetus for their pursuit of self-government (Daly, 1992, p. 11; Kennedy, 1996, p. 36; O’Day, 2000, pp. 1–31; Ó Gráda, 1997). This article explores aspects of economic policymaking under the nationalist Provisional Government in the transition to the new Irish state in 1922. The Irish Civil War (1922–1923) has been the focus of the literature of this period (Curran, 1980; Gannon & McGarry, 2022; Hopkinson, 1988/2004). Indeed, the economic aspects of the Irish revolutionary period generally have tended to be overshadowed by consideration of the political, cultural, and military (Bew, 1994; Fitzpatrick, 1997; Foster, 2014; Garvin, 1981/2005a; Maume, 1999; O’Halpin, 1987; Wheatley, 2005). In addition, many Irish economic histories have focused on the pre- and post-independence periods rather than on the transition (Bielenberg, 2009; Bielenberg & Ryan, 2013; Meenan, 1970). The impact on the economy of regime change cannot be underestimated however, as seen from the histories of the successor states in Eastern Europe after the First World War (Berend, 2000). In summary, details for Ireland have remained relatively underexplored until recently and then only in selected areas (Doyle, 2019; Garvin, 1996/2005b; Lucey, 2015).

This study starts by setting the scene, examining the economic record of Dáil Éireann from 1919 and then the constraints under which the Provisional Government operated. Next an overview of the integration of the economic elements of Dáil Éireann’s operations and those of the British administration in Ireland into a coherent civil service is given. The Provisional Government endeavoured to make economic plans but was faced with urgent economic problems. The cost of living and unemployment are among the issues explored. It also needed to advance economic policies around, for instance, land redistribution and the use of protection. Reconciling all constituencies in the new state, fulfilling the Treaty requirements, meeting the expectations of spoils from nationalists, and challenges to establishing legitimate government, complicated the task (Regan, 2000, p. 33). The situation was further compounded by the economic damage of the War of Independence and the split in Sinn Féin over acceptance of the Treaty, with the latter leading to the Civil War. This and general economic conditions made for an inauspicious start to a new state. Economic depression and deflation after the First World War saw the deflation rate in the United Kingdom in 1921 at −8.7 per cent, falling to −13.9 per cent in 1922 and then −6.0 per cent in 1923 (Bank of England, n.d.). Meanwhile, the agricultural price index fell from 288 in 1920, the peak of agricultural prices, to 160 in 1922 and continued to fall (Kennedy, Giblin, & McHugh, 1988, p. 36).

The Provisional Government set out to create the Irish Free State under the Treaty terms and the face of growing anti-Treaty opposition. Decisions were made, and structures put in place which endured and influenced Ireland’s economic future. Many Irish people expected immediate transformative economic change, others wanted continuity and stability – weary of the negative economic impact of the War of Independence, concerned about worsening global economic conditions and the unknown impact of decoupling from Britain. From an economic perspective, the Provisional Government had to strike a balance between these competing expectations and, latterly, the demands of civil war, while being seen to be in control of the economy. This article examines the course taken.

Dáil Éireann’s economic record

Between 1919 and 1921, Dáil Éireann promoted governmental programmes representing a subversive attempt to create a counter-state (Mitchell, 1995, p. 43). Its Sinn Féin members sought to address issues of economic policy and control and prove Ireland was capable of self-government. Dáil Éireann was on a war footing as a revolutionary government, so was limited in scope. It ruled by decree, lacked the legislative powers or proper administrative structures necessary to properly implement measures passed and had very little money. A key differentiator however was its desire for a more active role for the state in economic development, in contrast to Britain’s more laissez-faire approach. Dáil Éireann undertook a range of economic projects. The flagship Commission of Inquiry into the Resources and Industries of Ireland, instigated by Arthur Griffith, was concluding its work in early 1922. It produced reports on dairying, coal, industrial alcohol, milk production, peat, fisheries, stockbreeding, and waterpower and emphasised co-operative and labour perspectives and improvement in the sectors via state intervention. Ernest Blythe in the Department of Trade created a consular service with representatives in the United States, France, Germany, Italy, Switzerland, and Belgium. Robert Barton, while in the Department of Agriculture, set up the National Land Bank and Land Settlement Commission in response to increasing land agitation.

With increasing industrial unrest, employer-labour conciliation schemes were undertaken by the Department of Labour, overseen by Constance Markievicz and Joseph MacDonagh. In January 1921, Dáil Éireann took control of the Belfast Boycott. Initially a grassroots reaction to the Catholic pogroms in the summer of 1920, many in the Dáil were not convinced of its efficacy or, as Griffith said, feared it would be ‘practically a declaration of war on one part of their own territory’, and ‘an admission that Belfast was outside Ireland’ (Dáil Debates, 6 August 1920). However, following increased violence by British forces in the War of Independence, it provided a visceral way for Irish people to express their dissatisfaction. By August 1921, there were over 400 Belfast Boycott committees throughout the country, and ‘thousands of cases of dealings with Belfast’ were being investigated and ‘where necessary strong action taken’ (DE2/5 Department of Labour, Report, August 1921). On the back of this, Blythe launched a campaign for the development of Irish manufactures and industries, and a scheme for excluding British goods. He believed there would be a ‘complete industrial transformation’ if a policy excluding British goods was ‘steadily pursued’ (Dáil Debates, 17 August 1921). Damage to south-north trade, however, was evident also, for example flax-growers in Cork, dependent on northern buyers (Cork Examiner, 2 February 1922, p. 8).

At a more practical level, agricultural and industrial development was facilitated. One possibility was a dressed-meat factory, cold storage and packing plant in Waterford. In early 1920, meetings and a conference were organised locally by the Department of Agriculture and nearly £200,000 was raised from individuals and co-operatives to construct the premises, to be run as a co-operative (DÉ/2/100 Department of Trade and Commerce, Report, June 1920). With the rampant destruction of creameries by British forces, however, it was postponed. A month after the Truce in July 1921 and in preparation for negotiations, a ministerial reshuffle by de Valera saw Robert Barton appointed Minister of Economic Affairs and member of Cabinet. Reporting into Barton were the economic portfolios of the departments of Labour, Trade and Commerce, Agriculture, Fisheries, as well as the Belfast Boycott director, Joseph MacDonagh (Dáil Debates, 26 August 1921). Dáil Éireann also tapped into broader economic and business expertise to assist on the economic aspects of the Treaty negotiations. In their closing phases, complete economic autonomy for the Irish Free State was conceded.

The functioning of the Provisional Government

The Provisional Government was the precursor to the fully institutionalised government of the Irish Free State, which would come into being on 6 December 1922, as provided for under Article 17 of the Treaty. According to Attorney General Hugh Kennedy it ‘was not a complete transfer of government … it was a temporary transfer of the administration of certain functions of government for a period not to exceed a year’ (Fanning, 1978, p. 31). Its powers were circumscribed; it could not levy taxes and could legislate only on administrative matters within its control and for the period of its existence. Before the financial handover to the Provisional Government on 1 April 1922, budget estimates continued to be prepared by the British administration and approved exclusively in London. Some functions remained under British control throughout 1922, and into 1923, such as revenue, customs and excise, and the Land Commission. Funds received from the British Treasury could not, in theory, be used for any other purpose than those provided for at Westminster (McColgan, 1983, p. 92). Creating a new economic state framework involved the Provisional Government negotiating a middle-path between Dáil Éireann and its civil service, and the British civil service in Ireland, in addition to embarking on economic policymaking for the new state.

During the Treaty debates, Griffith stated that all administration would be redirected to Dáil Éireann’s ministries and ‘the Provisional Government would do nothing to consolidate the [Dublin] Castle [British] system of administration … but would on the contrary let that system wither and die’. Dáil Éireann would also continue to convene; Collins and Griffith intended that the Provisional Government would only act as a ‘committee of public safety’. The Dáil would then be ready to assume full authority on completion of Britain’s withdrawal (Maguire, 2008, pp. 124–125). In this way, it was anticipated that the Provisional Government would be seen as much a creation of the Dáil as the British. However, when Dáil Éireann approved the Treaty on 7 January 1922, de Valera resigned as president in protest. On seeking re-election, he was defeated by Griffith, who then became President of Dáil Éireann. Collins became Chairman of the Provisional Government. He also served as Minister of Finance. Blythe was the only holder of a Dáil Éireann economic portfolio to support the Treaty. Until the June 1922 elections, those opposed to the Treaty continued to participate in a fractious Dáil Éireann but did not hold office. In the first half of 1922, the authority of the Provisional Government was ambiguous and gave rise to suspicion because of its parallel operation with Dáil Éireann, the delay in British constitutional recognition and the disintegration of Sinn Féin.

The new Dáil Éireann appointees also became corresponding ministers in the Provisional Government (seeming to enhance its status relative to Dáil Éireann): Kevin O’Higgins became Minister of Economic Affairs, Patrick Hogan Minister of Agriculture and Fisheries, and Joseph McGrath Minister of Labour. Blythe remained in charge of Trade and Commerce in Dáil Éireann and became acting Economic Affairs and Home Affairs Minister in the Provisional Government. By the second half of 1922, the possibility of civil war had become reality. After the deaths of Collins and Griffith in August and at the first meeting of the Third Dáil on 9 September, W.T. Cosgrave became both President of Dáil Éireann and Chairman of the Provisional Government. Abstention by anti-Treaty Sinn Féin TDs of the Third Dáil allowed a consolidation of power and greater ease in conducting Dáil business. All ministers and their departments became common to both Dáil Éireann and the Provisional Government.

Integration of Dáil Éireann and the British administration in Ireland

Economic functions were scattered across the labyrinthine British administration in Ireland. Two recent creations, the Congested Districts Board (CDB) in 1891 and Department of Agriculture and Technical Instruction (DATI) in 1900 were the main segments concerned with economic development, albeit constrained in scope. The CDB and DATI had operated without reference to London or indeed to the Chief Secretary, which had occasionally caused tensions. CDB staff were primarily reallocated among the new Department of Agriculture and Fisheries, and Dáil Éireann’s Land Commission (Maguire, 2008, p. 135). Dáil Éireann’s Department of Agriculture, which had focused on land settlement, arbitration, and forestry, came together with DATI, which had focused on the business of agriculture. DATI had continued its operations relatively unscathed through the 1919–1921 period. Unlike the local authorities and London-controlled Local Government Board, Dáil Éireann had allowed the County Committees of Agriculture to maintain contact with DATI. Therefore, it remained intact, with some additional staff, through the transfer to the new state. In fact, DATI was not formally dissolved until 1931.

Economic Affairs took on the ‘administration of service in connection with Electricity, Trade and Commerce, Transport, Shipping’. This included those functions performed by the Board of Trade, which had branches or sub-offices in Ireland since 1919 but was controlled from Whitehall, and, similarly, the Ministry of Transport (TSCH/3/S1A, Provisional Government: formation and allocation of departments). The Board of Trade in Ireland had conducted the census of production, maintained outward passenger lists and patents, appointed a registrar of Irish companies, operated labour exchanges (until 1919) and overseen lighthouses. The Ministry of Labour, also controlled from London, which had operated from 1919, was amalgamated with the Department of Labour. Established in the early 1870s, the Land Commission and the Local Government Board (LGB) were independent departments, which, despite having the Chief Secretary as their ex-officio president, were not under the control of the British administration in Ireland but for the most part reported directly to Whitehall (Fanning, 1978, p. 3). The LGB had already been earmarked for complete transfer to a home rule government and was mostly incorporated into the Department of Local Government. The Land Commission remained a reserved service until its transfer in March 1923. The boards of customs and excise, and inland revenue continued under an agency arrangement with the British pending the establishment of the Free State.

As the British Treasury exercised increasing control over government departments during the nineteenth century, this had led to the creation of its Remembrancer’s Office in Ireland in 1870 – effectively its eyes and ears on the ground and directly under its control (Fanning, 1978, pp. 4–5). In May 1920, a team of British civil servants led by Sir Warren Fisher, permanent secretary to the Treasury, carried out a special investigation of the Irish civil service. Its recommendations resulted in James MacMahon, as Joint Under-Secretary with Sir John Anderson, being assigned ‘in his personal capacity, functions in relation to expenditure in Ireland analogous in all respects to those exercised in London by the Secretary to the Treasury’ (Fanning, 1978, p. 11). This represented a significant transfer of power to a new body, Treasury (Ireland), within the British administration in Ireland and in line with the 1920 Government of Ireland Act. The office remained in existance through the 1922 transitional period, with Percival Waterfield, together with Joseph Brennan, Secretary of the Irish Free State’s Department of Finance from February 1923 (and George Chester Duggan, future Principal Secretary at the Northern Ireland Ministry of Finance), responsible for its ultimate transfer (Fanning, 1978, p. 12). In Britain, Treasury control generally was greatly strengthened in the post-war period, and this was mirrored in the Irish Free State (Lowe, 1978, p. 282).

Despite Collins’s wish to replace an ‘alien and cumbersome administration’, the more realistic emphasis was on directing ‘departments away from British and toward Irish considerations’ (Maguire, 2008, p. 131). Replacement of those at the top was key to ensuring this, but most were Irish promoted from the old British administration. Thus, the Department of Finance was headed by Brennan and made up of other civil servants from the Chief Secretary’s office, the National Health Insurance Commission, customs, the LGB, as well as Dáil Éireann’s Finance and Local Government departments. The Department of Trade and Commerce was headed by Gordon Campbell, originally from the Ministry of Labour; Department of Agriculture by F.J. Meyrick of DATI, and Local Government by E.M. McCarron of the LGB. These promotions rankled with some. For example, Diarmuid Fawsitt, who had been the principal official in the Provisional Government’s Department of Economic Affairs, secretary of the Cork Industrial Development Association (instrumental in bringing Ford to Cork) and Irish Consul in New York from 1919, questioned the qualification of Campbell, son of Lord Glenavy (Regan, 1999, pp. 97–98).

The Provisional Government’s economic policy drafts

A statement of policy of the Provisional Government was drafted by its secretary, Diarmuid O’Hegarty, in early January 1922 (TSCH/3/52 Provisional Government: Statement of Policy). Under it, its main task was the preparation of the Constitution of the Irish Free State. Until then, it undertook to maintain public services: ‘It will be their duty to initiate the reorganisation of these services so as to bring them into harmony with Irish requirements’, which ‘would be pushed forward with all the energy and resources’ at its disposal. It was stated that the Provisional Government was ‘mindful of the hardships which the present economic conditions impose’, and that ‘immediate’ steps would be taken to ‘alleviate’ these. Grants to local public bodies stopped by the British when they had proclaimed allegiance to Dáil Éireann would be restored to enable this. For example, local authorities were urged to submit schemes for road repairs. The Provisional Government intended to ‘stabilise the National finances’ and to set up ‘a Committee to advise on Financial matters’. The ‘settlement of the proportion of liability for the National Debt and Pensions to be assumed by Ireland’ was a priority. The Provisional Government also wanted to initiate ‘an immediate investigation into the matters at issue between the Railway Companies and the Railway Workers in Ireland’.

At a meeting of the Provisional Government on 26 January, O’Higgins, Minister for Economic Affairs, requested the appointment of Henry Burgess as a ‘trade advisor’ (TSCH/1/1/1 Minutes of the Provisional Government, 26 January 1922). Burgess was a successful railway administrator and member of the Dublin Port and Docks Board. He had played a key role in Britain’s Ministry of Transport. From 1921, he had worked behind the scenes to bring about the Truce and then advised the Irish side during the Treaty negotiations. His subsequent appointment was indicative of a lack of attachment to old Sinn Féin economic ideals and perhaps a lack of internal expertise. O’Higgins and McGrath then met him and reported that he would ‘be available to work out policy’ as well as assist with Haulbowline shipyard, near Cork, which had appealed for help as it was in financial difficulty (TSCH/1/1/1 Minutes of the Provisional Government, 2 February 1922). A draft policy document by Burgess was received on 9 February 1922 (TSCH/1/1/1 Minutes of the Provisional Government, 9 February 1922). Unsurprisingly, given his background, he started with transport, suggesting the establishment of a commission to inquire into and report on the financial position of the railway companies, the best means of their consolidation, as well as labour conditions and locomotive repair services. In parallel, he recommended roadway reclassifications, with repairs, extensions, and widenings to develop ‘road motor traffic’ and link rail termini. The assessment of canals for heavy goods and the provision of sites for industrial development were also recommended.

For agriculture, Burgess advised a commission to inquire into the completion of land purchase and transfer to tenants, agriculutural subvention, the encouragement of tillage, livestock improvement and production, horse-breeding, the dead-meat industry, winter dairying, flax-growing, market gardening, beet and tobacco growing, and forestry. In relation to fisheries, examination of coastal fishing grounds’ preservation was proposed, as well as the improvement of harbours and piers, equipping of vessels, transit services and charges for fish, and curing and canning facilities. To develop energy resources, Burgess advocated the utilisation of inland and tidal water, exploitation of coal and mineral deposits and the determination of the most advantageous ways to convert ‘the almost inexhaustible supplies of peat’. He supported the expansion of arterial drainage schemes for the Shannon and Barrow rivers and the investigation of methods to mitigate coastal erosion and increase land recovery. In terms of general industries, he encouraged the determination of their current condition and development opportunities. He favoured the appointment of a ‘strongly representative commission’ to investigate and report on employer/employee relations in large companies.

Discussion of Burgess’s memo was deferred, before it was decided to issue it in portions, starting with details on land policy (TSCH/1/1/1 Minutes of the Provisional Government, 21 February 1922). However, no further work on it appeared to take place and a full statement of the Provisional Government’s economic policy was never issued. Nevertheless, it clarified the immediate concerns from a developmental perspective and, as will be seen, substantial use was made of commissions of inquiry. In practice, the Provisional Government spent much time dealing with immediate problems, which included cost of living issues, unemployment, and labour disputes, as well as emergency interventions in failing businesses or sectors. It was also under pressure to target reconstruction in the aftermath of the War of Independence and to start to address big longer-term issues such as land redistribution and the use of protection to stimulate industry. Key to many desired economic initiatives was of course, though, the availability of funding.

Cost of living and profiteering

Profiteering and the high cost of living were constantly cited as urgent issues during 1922, particularly because of their contribution to widespread industrial disputes and high unemployment. Prices had increased substantially since before the First World War, but deflation had resulted in demands for wage reductions from employers which were resisted, in part, as consumer food and drink prices had not fallen to the degree that agricultural commodity prices had. In February, O’Higgins was asked to submit a scheme to counter perceived widespread profiteering (TSCH/1/1/1 Minutes of the Provisional Government, 8 February 1922). The matter had already been under consideration by Blythe in 1921, when price displays and the setting up of local anti-profiteering committees had been recommended (DE/2/417 Anti-profiteering legislation; DÉ/4/11/76 Dáil Decree to set up an Anti-Profiteering Committee, January 1919). Ireland had been included in the first systematic cost-of-living index in Britain, which was compiled and published monthly by the Board of Trade from July 1914. There was a continuing perception, however, that prices in Ireland were higher than in many parts of Britain and by implication there was a higher Irish cost of living. On 10 June 1922, the Provisional Government appointed the Cost of Living Inquiry Committee, chaired by John Hooper, comprising representatives from the departments of Agriculture, Finance, Economic Affairs and Labour. Its task was to ‘calculate an official figure indicating in respect of Ireland the change in the cost of living at the present time compared with the cost of living in 1914’ (Ministry of Economic Affairs, 1922, p. 2).

This initial inquiry applied to the whole of Ireland and reported on 4 August 1922. It recorded retail prices in Irish towns of 500 inhabitants and upwards, calculated from returns collected by the Post Office, Ministry of Labour and LGB. The committee also distributed 5,000 questionnaires which were sent through schools to wage-earning households: 308 forms from 112 towns were completed, showing 57 per cent of income was spent on food, 7 per cent on fuel and light, 17 per cent on clothing and 18 per cent on other expenses, including rent. It was proposed that a cost-of-living calculation be carried out at three monthly intervals. The results showed ‘an increase in the Cost of living of the Wage-earning classes between July 1914 and June 1922 of 85.2 down from 91.4 per cent between July 1914 and March 1922’ (Ministry of Economic Affairs, 1922, p. 3). ‘[I]ncidentally’ the inquiry revealed that ‘relations between wholesale and retail prices of several important commodities and between the prices of the same commodity in similar localities’ required explanation. This was essentially profiteering and was to be investigated ‘with a view to determining whether any undue advantage is being taken’ and, if so, ‘the adoption of appropriate remedies’.

Intense debate in the Dáil led to demands for a commission to examine price gouging and impose sanctions on those making excessive profits. On 20 October 1922, the establishment of a Price Commission was announced to ‘inquire into and report on prices, costs or profits at all or any of the stages in the production distribution or sale’ of certain goods and in ‘any case in which prices costs or profits are in the opinion of the commission or of any committee thereof unreasonable, to make such recommendations as the commission or committee may think fit’ (Dáil Debates, 20 October 1922). The commission was appointed on 3 November 1922 and presented its final report on 20 October 1923. As part of its remit, local committees had been appointed in Cork, Waterford, Wexford, Galway, Sligo, Dundalk, Drogheda, Tralee, Limerick, and Athlone. The report, however, indicated some inherent difficulties. The commission relied on members of the public coming forward to tell it of instances of suspected profiteering but ‘[t]he consuming public have shown little interest … and rendered very little help’ (Ministry of Industry and Commerce, 1923, p. 6). The commission had not been endowed with statutory powers to collect information if not volunteered. Manufacturers and traders had been issued with questionnaires, but these had mostly not been returned. Where traders had appeared before it, evidence was only given in general terms and not about individual businesses. One local committee reported that members of the public said they would not give evidence as if prices went down, then wages would too. Independent TD Darrell Figgis called for the commission to ‘be equipped with the necessary legal power’ (Ministry of Industry and Commerce, 1923, pp. 9–10). He blamed the higher cost of living in Ireland on the ‘higher percentage of people dependent on distributive profits rather than on production’, with the only solution being ‘to create productive employment’. The commission was not renewed.

Tackling unemployment

Like many European countries, Ireland had experienced high structural unemployment resulting from the post-war economic slump. This had been exacerbated by the domestic conflict, withdrawal of the British Army and their families from garrison towns and the low level of industrial employment. In the week ended 14 February 1922, 51,793 persons were registered unemployed (Irish Independent, 22 February 1922). This did not include those who did not qualify for unemployment insurance, such as agricultural labourers and those employed in domestic service, thought to number at least 20,000. Unemployment numbers for the 1920s are problematic and difficult to interpret (Ó Gráda, 1997, p. 437). In September 1922, the Department of Industry and Commerce absorbed the Department of Labour, ‘seeing to the two needs – the need of providing work for the unemployed and the need for developing to the full all the resources of the country’, according to O’Higgins (Dáil Debates, 9 September 1922). This was supported by the Labour Party, with W.M. O’Brien of the opinion that ‘the having of a separate Labour Ministry is following the English model, and in this respect, as well as others, it is not desirable’ (Dáil Debates, 10 September 1922). It may also have been a means to reduce friction in state intervention between employers and labour. The recommendation of the 1922 Geddes Report to axe the UKs Ministry for Labour as a cost-cutting measure was not followed (Lowe, 1978, p. 283).

Unemployment insurance, part of the department’s new remit, was in disarray by the end of 1922 as insured workers had exhausted their benefits and others had not accumulated enough credits. In October, McGrath admitted: ‘we have not got plans but we have not lost sight of the question’ (Dáil Debates, 20 October 1922). He suggested the ‘whole English (unemployment) scheme’ that had been inherited needed reformulation. However, no overhaul was contemplated at the time, though the period of unemployment insurance was extended and the rates marginally increased. The opposition pressed for a commission but a committee on the relief of unemployment was not constituted until 1927. Pre-independence assumptions that costs could be cut by reducing social welfare levels proved difficult to implement. The rates of the Old Age Pensions Act, 1908 and the Unemployment Insurance Act, 1911 when introduced were considered more appropriate to a highly industrialised economy than a rural one. However, any suggestion of reducing rates was not well received.

The traditional ways of addressing unemployment through public works were pursued. Cosgrave indicated that £1 million had been made available for housing to local authorities but that ‘by no means anything like a large part of it had been taken up’ (Dáil Debates, 20 October 1922). £275,000 had also been set aside for roads and £100,000 for relief of distress on the western seaboard. O’Higgins questioned: ‘to what extent is it the duty of the government to intervene in a matter of this kind’ and whether government ‘is merely to attempt to create and maintain a condition of things which will leave the freest possible scope to the individual enterprise’ or should go further. Ultimately, however, he believed that whether ‘this state will live or die is a question which only its citizens can answer’ and ‘will depend on the spirit of work, on the spirit of industry in its population’ (Dáil Debates, 20 October 1922). Fear was evident across the Dáil that unemployment led to ‘irregularism’, though not all agreed. Governments across Europe struggled to deal with mass unemployment. In Ireland, there was an intense frustration that things could not improve economically until normal conditions returned. Recruitment into the National Army reduced unemployment temporarily, and it was hoped that once reconstruction got underway things would improve. Yet by the end of 1923, the unemployment insurance fund was overdrawn by £1 million (Dáil Debates, 14 December 1923). Unemployment was not addressed in any substantive way and emigration figures averaged 33,000 per annum throughout the 1920s (Kennedy, Giblin, & McHugh, 1988, p. 38).

Intervention in labour disputes

Dáil Éireann’s Department of Labour had intervened effectively in strikes between 1919 and 1921, usually at the request of strikers, leading, perhaps, to an expectation of improved conditions for workers under self-government. During January–April 1922, the Department of Labour claimed to have resolved 51 labour disputes. However, the Provisional Government was challenged by two significant disputes later in the year, involving the railway companies and postal service.

The labour situation in Irish railways had been brewing for some time. Twenty-eight private railway companies had been taken over by the British government in 1916 and employees given pay increases and a wartime bonus. When they were returned on 15 August 1921, revenues had doubled but costs had quadrupled (Rigney, 2022). The 1921 Carrigan arbitration tribunal had recommended wage reductions and extensions to working hours, which employees refused. On 12 January 1922, when negotiations broke down, Henry Burgess was asked to help mediate (DÉ Cabinet minutes, 12 January 1922). Wages cuts were suspended, while the Provisional Government set up a commission to examine the future of administration of Irish railways. It reported in October 1922 and recommended their state purchase. The government rejected this on cost grounds. However, the impending collapse of one of the companies in January 1923 forced its hand and they were gradually amalgamated, mostly into one company, Great Southern Railways, by 1925. During the Civil War, anti-Treaty forces solicited support from the railway unions, ultimately to little avail. During 1922, regarding the railways as an essential service, the government paid ‘guaranteed days’ to the railway companies to compensate workers’ wages when the railways could not function due to attacks by anti-Treaty forces. It also set up the Railway Protection and Maintenance Corps; at its peak employing nearly 4,000 men.

On 1 April 1922, the Provisional Government assumed control of the Irish postal service which was losing over £1 million annually (Hanley, 2022, p. 133). A cost-of-living bonus had been given to postal workers during the First World War, based on the cost-of-living index, to counter the effects of high inflation. They resisted Provisional Government attempts to reduce wages in March 1922 in line with deflation. This resistance, in part due to the historically inadequate wages for many in the lower grades, was acknowledged by a commission set up to investigate Post Office wages and working conditions under Senator James Douglas. The Provisional Government, though; particularly Postmaster General, J.J. Walsh, took a hard line in the case of the postal workers’ strike in September 1922, fighting it for eighteen days to enforce pay cuts, and conceding only to phase them over three months. Intimidation was used and accusations of disloyalty and hijacking of the dispute by anti-Treaty elements were made (Hanley, 2022, p. 128), in response to damage incurred to Post Office telephone equipment. Before the strike, the Department of Home Affairs issued the statement: ‘The Government does not recognise the right of the civil servants to strike’, which aggravated the situation (Irish Times, 11 September 1922, p. 5). Cost-cutting appeared to be a major motivation – the Post Office’s annual deficit was more than halved by 1926 (Hanley, 2022, p. 133). The treatment of the postal and railway workers highlights the Provisional Government’s determination to reduce its own costs and assist employers in doing likewise. The manner with which the postal strike was dealt, just as the Civil War deepened, shows how the precarious political climate negatively impacted government reaction, or perhaps provided an excuse for it.

Financing economic policy

As discussed, the Provisional Government was constrained in terms of raising money, and the money paid into its exchequer by the British Treasury barely covered daily administration. When it met the day after the handover of Dublin Castle, the only decision taken was ‘to ask the Bank of Ireland to act as the financial agent of the Government and to endeavour to negotiate a credit of up to £1 million from that bank’ (TSCH/S9 Provisional Government: Financial accommodation by the Banks, 1922). The credit was agreed and on request increased in June to £3 million. The Munster and Leinster Bank also provided accommodation up to £20,000. The monies received did not cover unanticipated, additional expenditure in 1922 such as the expansion of the army, schemes for reconstruction, recommendations of postal, railway or other commissions, the cost of civil service reinstatements and pensions, or compensation for those injured in the war and their dependants. In addition, pre-independence expectations of cost-cutting by reducing a bloated British civil service in Ireland were constrained regarding transferred civil servants by Treaty provisions. This was approached instead through reorganisation and differentiation for new entrants (Maguire, 2008, pp. 178–179).

The need for economy was constantly urged. Collins very forcefully made the case at meetings (TSCH/1/1/2 Minutes of the Provisional Government, 10 May 1922). Cosgrave did the same in the Dáil, saying ‘I am not in a position … to urge the Dáil or the country to pledge its credit for what it cannot afford to pay … we have no credit to mortgage. Absolutely none’. He outlined the consequences if they should fail, saying if the ‘establishment of order and other necessary measures do not reduce the public charges, we have not sufficient resources and can only see before us the prospect of following the path of financial folly, which has brought several countries of continental Europe to the condition of abject misery’ (Dáil Debates, 20 October 1922). He continued: ‘on this account many proposals for public expenditure which at other times might receive favourable consideration, will now need to be rejected or deferred’ . The costs of the Civil War increased the burden, with few places to turn for financing. Tax evasion and avoidance, which had taken hold during the War of Independence, continued. Despite fears that it would run out of money, the British refused to ‘nurse the Free State government over the crisis’, as requested by Andrew Jameson, a director of the Bank of Ireland, in April 1923 (Fanning, 1978, pp. 91–92). Nevertheless, the First National Loan of £10 million, floated in Dublin at the end of 1923, was oversubscribed, showing public confidence in the state (McLaughlin, 2021).

Reconstruction

For reconstruction, the initial focus during 1922 was to secure British compensation for damage, destruction and injuries between 21 January 1919 and the Truce on 11 July 1921, as provided for in the Treaty. The Compensation (Ireland) Commission was set up in May 1922, with Thomas Shaw, a Liberal peer, as chair; James Dowdall, a Cork businessman as the representative of the Provisional Government; and C. J. Howell Thomas, Deputy Chief Valuer to Westminster’s Board of Inland Revenue (Dáil Debates, 22 September 1922). Under the Damage to Property (Compensation) Act, covering the period 12 July 1921 - 20 March 1923 and introduced on 12 May 1923, the compensation scheme was administered by the County Courts, with liability falling on taxpayers rather than ratepayers. Personal injuries were addressed through the Compensation (Personal Injuries) Committee, set up in April 1923 with County Court Judge William Johnston as chairman, Dr Thomas Hennessy, and Dr Henry Kennedy adjudicating. The Dáil had voted a sum of £250,000 for distribution in December 1922 (Dáil Debates, 13 December 1922). Cosgrave described compensation as ‘our greatest financial problem’ (Dáil Debates, 6 October 1922). The awards under the Shaw commission were paid out by the Irish government, but recovered from the British government ‘where damage was done by their forces or in their interests’. Property loss compensation accounted for £1 million in 1923 and £10.4 million, or over one-third of tax revenue, in 1924 (Fitzgerald & Kenny, 2020, p. 821).

There were hopes that broader reconstruction could be funded to address unemployment. On 4 December 1922, the Department of Industry and Commerce proposed a co-ordination of funds: unemployment benefit from it together with relief from Local Government, the White Cross Committee, St Vincent de Paul, etc., to be applied to reconstruction. It was anticipated this would involve measures to stimulate industries as well as public works (TSCH/3/S3185 Commission on Reconstruction and Development 1923). The Commission on Reconstruction and Development was set up on 7 February 1923, with Sir John Purser Griffith, senator, as chair. It was to advise on ‘the principles on which works of reconstruction and of development should proceed’, ‘the prospects of trade and industry, and employment’, the means of ‘stimulating trade and industry, employment therein’ and the provision of unemployment relief (FIN/1/1385 Appointment of Commission on Reconstruction and Development, 1923). It produced one interim report, dated 31 May 1923. It focused on road improvement, which was seen as ‘the most suitable type of work in an emergency to absorb surplus labour’ (TSCH/3/S3185 Commission on Reconstruction and Development, 1923). A five-year programme was proposed with a budget of £1,050,000. This was not taken up by the government and the commission did not appear to make any further contribution. Reconstruction and development did not proceed in a co-ordinated fashion. The ongoing Civil War resulted in uncertainty and the diversion of funding to compensation and the army. The latter amounted to £7.5 million in 1923 and £10.6 million in 1924 (Fitzgerald & Kenny, 2020, p. 821).

Economic development – new approaches

As Minister for Trade and Commerce in Dáil Éireann, Blythe in his April 1922 departmental report referred to ‘the more cordial attitude of foreign officials’ and ‘numerous plans for the development of direct trade and direct freight services with Ireland’ (Dáil Debates, 26 April 1922). However, the consular trade function was moved to the Department of External Affairs and the ‘numerous plans’ did not materialise. He also said his department had ‘been in touch with representatives of all commercial and industrial interests in a way that was not previously possible’. Andrew Jameson, President of the Dublin Chamber of Commerce, at its annual general meeting in January, said that a benefit of self-government to Irish business would be that it would now ‘be in direct contact with the national government and will have a powerful voice in the making of commercial laws and regulations’ (Irish Times, 26 January 1922, p. 4). He contrasted this to ‘hitherto, the story of deputations to London and of urgent protests, which often received little other than a polite hearing’ . Economic Affairs or Trade/Industry and Commerce had not been portfolios in the British administration in Ireland and the latter struggled to create a role for itself. Its suggestions in relation to economic development commprised the introduction of protection for Irish industries and the introduction of government guarantees for long-term loans to industry – like those already in operation in Britain since 1920 (Daly, 1992, p. 19). In his ministerial report in April 1922, Blythe also denounced the exclusion of British goods, which he had previously promoted, saying it had been ‘part of a policy too rigid and arbitrary to be really sound economically or to be justifiable except to meet a war-time emergency’ (Dáil Debates, 26 April 1922). However, he promised a ‘carefully considered customs tariff’ in due course.

Burgess’s draft policy document of February 1922 contained no specific mention of industrial protection. Nevertheless, post-war British safeguarding industries legislation, or McKenna duties, applied in Ireland during 1922 and tariff barriers would also apply from 1 April 1923, potentially impacting several significant Irish exports to Britain. Output from the Ford plant in Cork, for example, was detrimentally affected (Grimes, 2008). Industry representatives constantly protested about the deteriorating economic situation; factory closures, shorttime working, reduced demand, transport difficulties, the unofficial continuance of the Belfast Boycott, and other issues. Legislative protective measures were regularly requested by various manufacturers. For instance, Irish tobacco manufacturers wrote to Blythe, suggesting ‘some protection in the form of a different tax should be afforded them against the encroachment of English tobacco manufacturers’ (Minutes of DÉ Cabinet, 3 February 1922).

Commissions or committees of inquiry were a preferred method for the Provisional Government and its immediate successors to deal with economic policy questions. In relation to protective tariffs, the Fiscal Inquiry Committee, chaired by T.A. Smiddy, Professor of Economics and Commerce at University College Cork, was appointed by the Executive Council of the Irish Free State (which succeeded the Provisional Government from 6 December 1922) in June 1923. It was asked to report: (a) As to the effect of the existing fiscal system, and of any measures regulating or restricting imports or exports, on industry or agriculture in the Free State and (b) As to the effect of any changes therein intended to foster the development of industry and agriculture and to the economic relations of the Free State with other countries (Dáil Debates, 15 June 1923). The committee came out against protection as, amongst other reasons, it could damage Ireland’s major export industries and lead to domestic price rises as well as the creation of vested interests (Devlin & Barry, 2019). The decision prompted much dispute. The terms of reference, composition of the committee and its investigation were criticised. Subsequently, a policy of selective protection was followed during the 1920s.

For Ireland’s largest but troubled industry, the Commission on Agriculture was set up in November 1922, with J.P. Drew, Professor of Agriculture at University College Dublin, as chair, ‘to inquire into and report on the causes of the present depression in agriculture and to recommend such measures as will secure for agriculture and other industries subsidiary to it an assured basis for future expansion and prosperity’ (Ministry of Agriculture, 1924, p. 5). Agriculture was in a turbulent state, as borrowing at high interest rates during the boom war years had left farmers in financial difficulty. Agricultural labour had to contend with demands for wage reductions as a result, as well as the loss of jobs as thousands of acres had gone out of tillage since the repeal in 1921 of the 1917 Corn Production Act, which had guaranteed prices. The focus of the majority report was on improving the quality and marketing of Irish agriculture through government-sponsored measures. It was supportive of the co-operatives’ role but emphasised the need for professional development. It was against the subvention of agriculture but urged investment in agricultural education. The report provided Patrick Hogan with a blueprint for his time as Minister of Agriculture in the 1920s.

No final solution to the land question had been achieved by 1922, rather rising expectations of further land redistribution which had been all but stalled since the onset of the First World War (Dooley, 2004b, p. 176). Illegal land occupation and cattle driving was an escalating problem during the Civil War, which Hogan warned could result in long drawn-out ‘sordid and fairly bloody’ land agitation (TSCH/3/S1943 Memorandum of seizures of land). In this case no commission was considered, but substantial funding of £25–30 million had to be found. Hogan urged that advantage be taken of ‘getting English credit on easy terms’ (TSCH/3/S1943 Memorandum of seizures of land). Following secret negotiations in February 1923, the British government agreed to guarantee the land bonds issued as consideration to vendors and the Irish government undertook to collect the annual annuities in full and remit them to the British Treasury. The Land Commission was not transferred to the Free State until April 1923. The following month the £30 million Land Act of 1923 was passed. It is regarded as contributing to a substantial decline in anti-Treaty support (Dooley, 2004a, p. 53).

Alternatives

Turning now to the alternative economic strategies offered at the time. The Labour Party exhibited a lack of engagement due to internal contradictions. Early in January 1922 the Labour Party, following consultations, declined representation on the Provisional Government (Meeting of the Provisional Government, 21 January 1922). Feeling it could not take sides on the Treaty, It organised a ‘Strike against Militarism’. This strike, which took place on 24 April 1922, was strongly supported but had little impact. Labour did well in the June general election but failed to connect its political influence with economic policy, even in areas where it had significant interest. There was an opportunity for the Labour Party and trades unions to influence the shape of industrial relations. Instead, there appeared to be a certain lack of leadership and a sense that trades unions lacked control over their members. Unions were also perceived to be linked to anti-Treaty elements, agitation and destruction of property, an image which made them less trustworthy industrial partners (O’Connor, 1985, p. 110). Labour provided the main opposition in the Dáil after September 1922, energetically countering the government’s economic proposals but not presenting effective, costed alternatives. Examples included tax penalties on investments outside Ireland and a requirement that those on government salaries or receiving unemployment benefit spend a designated amount on Irish goods. It continually pressed for greater spending on education and training. Its leader Thomas Johnson called out the government’s ‘introduction of financial difficulty’ as ‘the bogey that is going to prevent for ever any settlement of the [economic] problem’ (Dáil Debates, 20 October 1922).

In contrast, other sectional interests advocated low taxes and cost reductions. The Farmers’ Party, with seven TDs, wanted reduced labour costs and spending on agricultural training and marketing. The Businessmen’s Party, supported largely by ex-unionist businessmen and professionals, had one TD, and promoted low taxes and low government spending. Anti-Treaty Sinn Féin continued to participate in Dáil Éireann up to the June election, but made any debate on economic or other issues very challenging. It did not elaborate on the economic aspects of its vision of a self-governed Ireland either before or during the June 1922 elections. Thereafter, it abstained from the Dáil, distancing itself from the Provisional Government. Later in the year, former TD, Liam Mellows discussed with de Valera the possibility of joining forces with Labour to access a larger constituency; however, others, such as Aodh de Blacam, were opposed, saying it ‘would antagonise many of our best friends’ and would be ‘nationally and perhaps ethically unsound’ (O’Neill, 2015, p. 158). It was only after the Fiscal Inquiry Committee released its report favouring free trade over protection that a Sinn Féin economic sub-committee was appointed. It concluded that to avoid continuing emigration Ireland must industrialise, but that this would only be possible with tariff protection. Effectively a policy constructed to appeal to those who felt passed over by Cumann na nGaedheal, it was built on over the coming years.

Conclusion

The foregoing discussion shows how achieving the aspiration for a change of regime in Ireland and economic independence – albeit compromised by the terms of the Anglo-Irish Treaty – quickly became a challenge to keep the lights on and manage what resources were to hand. Urgently integrating two administrations and trying to develop short- and longer-term economic policies, those involved, despite all the ideals and energy that had brought them to that point, had little room for manoeuvre. In the short-term, efforts to address unemployment and the high cost of living were hampered by lack of funding and legislative authority, but more fundamentally by a lack of real initiative beyond the traditional public works. The hard line taken on labour disputes would be continued, taking its lead from labour’s perceived links to anti-Treaty elements and the drive to lower costs. Economic development, it was presumed, would follow from stable economic conditions. Initiative became mired in arguments over protection rather than emancipated through looking at the economy more strategically, as suggested by Henry Burgess. Regaining Irish agricultural exports’ diminished reputation drove an agricultural policy based around improved quality and low input costs. In relation to land, the quick and incisive moves to restart land redistribution via the 1923 Land Act show how it was perceived chiefly as a political imperative. The economic ideas pursued, such as they were, owed most to pragmatism born of circumstance. In addition, the Provisional Government urgently needed to bolster its authority and prove its ability to govern. With ‘instinctive caution’ (Hoppen, 1999, p. 240), and hoping to instil confidence, orthodox economic thinking prevailed.

While wanting, as Patrick Hogan said, ‘some Gaelic social and economic ideals’, these proved difficult to define or to implement (Dáil Debates, 12 September 1922). Nevertheless, the Provisional Government saw its policies as consistent with the ideals of the revolutionary nationalist leadership (Donnelly, 2023, p. 143). The work of Dáil Éireann had prepared it to some degree, however many of those who had held economic portfolios or interests before 1922 were either dead or did not support the Treaty. The autocratic legacy of Dáil Éireann, reinforced by the Sinn Féin split and the Civil War, had the effect of making the government distrustful. As 1922 went on there was less discussion and disclosure of economic plans, and a reliance on commissions to delay decisions or preview policy. Hamstrung by a lack of finance and capacity to legislate, in the course of 1922 implementing the Treaty became the singular objective.

The foregoing discussion also demonstrates the degree to which certain individuals, with specific experience or expertise, very quickly became essential to navigating the terrain of government and plotting next steps. These were civil servants, politicians, advisors, those who served on the various commissions, the unions, and the business community. Civil servants and certain business interests are often blamed for what is seen as the ‘triumph of continuity’ (Daly, 1992, p. 13) but the reality was both more complex and driven by practicality. While economic analysis was framed with reference to the legacy of the colonial period and the need to overcome colonial restrictions to enhance economic development, ultimately Ireland’s dependence on British markets made it a short step to prioritising agriculture rather than other types of economic development.

During 1922, the opposition defined itself in contrast to the Provisional Government’s evolving economic policy, either presenting no alternatives or emphasising expectations of immediate economic change with un-costed proposals. Fear of civil war and then its arrival dominated the thinking of the Provisional Government. It is important to locate economic policymaking against the political, economic, and military uncertainties that shaped public policy more generally. Having said that, the Provisional Government, from an economic perspective, seemed remote and so immersed in the task of governing that it did not seek a wider economic compact with the Irish public. There is no doubt this formative year set the tone for how the government of the Irish Free State would move beyond the ‘procedure of an emergency character’ that was the Provisional Government in terms of economic action and policies (Dáil Debates, 13 December 1922).

The DIDA’s permanent exhibition of Irish-made goods on O’Connell Street was enthusiastically promoted in the early months of 1922, but the premises were damaged in the fighting to dislodge the anti-Treaty forces from the Four Courts during the Civil War. This did not deter the DIDA from organising a pageant of Irish industry for the impending Tailteann Games, which were then postponed. Started through the Gaelic League and with the involvement of Arthur Griffith, the DIDA was part of a enthusiastic economic departure which had increased in confidence and ideas in the lead up to independence and, despite setbacks, appeared to anticipate better times ahead.

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Anna Devlin

Anna Devlin is a PhD candidate in the Department of History, Trinity College Dublin ‘Imagining Ireland's self-governed economic future 1893-1923’ is the title of her research which is funded by an Irish Research Council GOIPG scholarship and due for completion in 2024.