THE WHITTAKER/LEMASS REVOLUTION: PUSHING ON AN OPEN DOOR AND CALLING IT INNOVATION
Despite the popular perception of Ireland as a closed, backward economy until the arrival of Whittaker and his economic program, the State had always had a relatively open economy. Even in the 1950s, the value of its imports and exports was between between 66 and 70 per cent of GDP. The problem was the nature of those exports, and the destination. Ireland exported, but it exported mainly to Britain, and mainly livestock.
Nor did the pursuit of foreign investment begin with Whittaker and Lemass. The First and Second Inter-Party governments made the attraction of foreign investment to Irish shores a core element of economic policy.
In January 1956 the Minister for Industry and Commerce, William Norton, undertook a tour of the United States in an effort to secure foreign investment for Ireland. Later that month the Taoiseach, John A. Costello, said in a speech in Cork that ‘it was the desire to increase investment, more particularly in export industries which prompted the government to send [the Minister] on a number of missions abroad to induce foreign capitalists to invest in such industries.’
The trip was a cause of some concern in Irish business circles, and led the government to offer reassurances. The Taoiseach told a meeting of the Federation of Irish Manufacturers in February 1956 that ‘foreign industrialists… were to be encouraged to start factories here for the production of goods not already produced in Ireland, or which were being produced in insufficient quantity, and also, and perhaps more especially, for the production of goods for export.’
In August 1955 Norton visited West Germany where he stressed to German officials that ‘that Ireland’s existing trade agreement with Britain allowed large varieties of goods to be imported into Britain from Ireland duty free and that Ireland had similar arrangements with Canada, Australia, New Zealand and South Africa.’ ‘Germans industrialists’ he said, ‘would be able to export to these countries free of tariff if they set up plants in Ireland.’
As with the Taoiseach in 1956, William Norton stressed that ‘the object is not to encourage people to come in and compete with existing industries which are supplying the market, but to come in and make commodities which are being imported.’ This move towards foreign investment was also pushed by the Organisation for European Economic Co-operation (OEEC), which said in its 1955 report on Ireland and Portugal that ‘greater attention might be directed towards encouraging an increase of foreign direct capital investment in Ireland.’
In October 1955 the Irish and American governments signed an agreement which allowed Ireland to take part in the United States Investment Guarantee Programme, which was set up to encourage production and trade by means of American foreign investment abroad. In November the head of the Irish Development Authority (IDA), Dr. James Beddy, said in Bonn, Germany, that Ireland ‘was interested in the establishment of any and every industry.’ He told a reporter that ‘many towns, particularly in the West of Ireland, were willing to supply new industries with free building sites and grant them 33 per cent exemptions from rates for seven years.’
At a meeting of the Boston Chamber of Commerce in January 1956, William Norton said that Ireland had ‘an intelligent and adaptable labour supply, an advantageous position for international trade, generous tax and import regulations designed to stimulate industry, easy conversion of Irish earnings into dollars, and stable political and economic conditions.’ He added that ‘capital directly invested may be freely repatriated at any time.’
Foreign investment as the path to economic and industrial growth was firmly at the heart not just of Irish government policy, but also of European and American policy as well.
I’ll be dealing with this more in the book I’m working on, but as an example here’s an article from the Irish Times, dated 6 February 1956.
The key part of the article is from the summary of Taoiseach Costello’s speech in Cork:
Foreign industrialists… were to be encouraged to start factories here for the production of goods not already produced in Ireland or which were being produced in insufficient quantities, and also, and perhaps for especially, for the production of goods for export.
This was not only a key part of Irish economic policy in the 1950s, it remains so to this day.
And what was one of the key elements of the Whittaker-penned First Programme for Economic Expansion? Well, more cattle.
The 1956 article on foreign investment.
TAOISEACH STRESSES NEED TO CATCH TIDE OF FOREIGN INVESTMENT.
Discussion
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Comment by: Aidan R
Sep 24th 2010 at 21:09
Excellent article and a much needed analysis.
Comment by: William Wall
Sep 26th 2010 at 09:09
Looking forward to that book, Conor. I expect to see a few of our most cherished fictions exploded.
Comment by: Conor McCabe
Sep 26th 2010 at 09:09
Thanks William. there’s a body of work out there which I’m drawing from and which casts a cold eye on 20th c. Irish history and society. People like Ruth McManus, Paul Rouse, Chris Eipper, Ray Crotty, and John Feehan. All are well worth reading for what they can tell us about Ireland and Irish history.