Meeting of JJ with Fine Gael leadership
This took place in Leinster House on 3 December 1934. There is among JJ's surviving 1930s papers a typed record, sent to JJ with covering letter from John Kent the Private Secretary. There were present at the meeting: W Cosgrave, J Dillon, JM O'Sullivan, R Mulcahy, ER Orpen, E Blythe, JA Costello, P McGilligan, and an 'Economist', unnamed, but presumably JJ. Why did they feel it necessary in the written record to conceal JJ's identity? Was it perhaps to defend themselves from the charge of dealing with the dreaded Protestant colonial institution, TCD?
Dillon: Arising out of statement in Circular 2) Why do you say that you expect a crisis in the very near future, this winter, within six months?
JJ: Owing to very low prices for cattle, stall-feeding may cease this winter. If that happens there will be no manure available next spring for tillage preparations. This means a breakdown. Beef prices are so low that production is not worth while for farmers. Livestock is the basis of our agricultural economies. The present position is very serious.
Cosgrave: (a) Why if things are so serious, are Bank Clearances so high , why do they not show a decrease?
JJ: This is most probably due to a delay in reaction of the Bank Clearance figures to the general economic situation, among other causes.
(b) Why are Revenue Returns so well maintained?
Blythe: If you compare the individual heads of receipts in Customs Revenue for instance, you will probably find many decreases. The aggregate increase is due to wholesale imposition of tariffs - not to maintenance or increase of normal Customs Revenue.
JJ: a decrease in revenue is ultimately inevitable from Government policy. For example the loss in Customs Revenue from Sugar will be £1M per annum, ie £10 per ton on import of 100,000 tons Customs Duty.
Dillon: But the Government will impose an Excise Duty.
JJ: Agreed; an increased excise duty will be necessary.
Blythe: Income Tax is down 6d In the £. The 'natural' decrease as a result of this should only be £250,000 p.a. But the actual decrease in first 8 months of this year is about £400,000.
The Budget will be unbalanced. In this connection though increased expenditure will unbalance a budget it also results to some extent in adding to revenue.
Cosgrave: I have been told that Guinness new London Brewery will very soon be in production with a large output. This will mean corresponding decrease in production in Dublin with a large drop in Irish Revenue.
Dillon: With regard to the unemployment position, permanent unemployment means social upheaval and disintegration and ends the present system of private property. Can the threat of permanent unemployment for a large number of people be ended? The National Income of Saorstat Eireann is approximately £170 millions per annum. Can the State successfully intervene so as to distribute by direct action, some share of this national income to people who have no purchasing power?
JJ: The State can do much to maintain private property if it takes the part of intervening when things are bad and retiring as much as possible when prosperity returns. but the simple transfer of a certain volume of purchasing power from one set of individuals to another in the community will not involve any net increase in purchasing power.
Purchasing power is, to a considerable extent, bound up with the production of capital goods and when the production of capital goods slows down, purchasing power contracts. This is the trouble in the USA at present. The capital goods industries in America through decline in production have left about six million people unemployed. Roosevelt's NRA policy can only find employment for approximately two million out of a total of 12 million unemployed. The great problem in America, therefore, is to increase production and marketing of capital goods. This great difficulty, however, is not present to any great extent in Ireland. The NRA plan would stand a better chance of working here.
Dillon: Could not Society give free grants of purchasing power to certain persons?
JJ: This means money for nothing and involves a dangerous principle. A suggestion of this nature, promising a fixed minimum income to people, is dangerous because if adopted it would mean increasing the national debt, increasing money being a State liability.
Dillon: If the proposal, however, meant paying this fixed minimum income out of the national income, what would you say of it?
JJ: That would not mean adding to the sum total of purchasing power.
Dillon: But would not circulation of money involve some increase of trade and hence of production, etc. ?
JJ: This could not arise as the sum total of purchasing power would not be increased.
Cosgrave: The money which Dillon suggests being distributed would really circulate even if it were invested.
Dillon: To push the argument further, look at the cost of Gt Britain's post-war social services. The annual charge is more than the whole pre-war annual expenditure. If such an increase had been suggested in pre-war years it would have been regarded as preposterous. The increase has undoubtedly saved Great Britain from revolution.
Cosgrave: You must remember, however, that there are various factors which account for these inflated figures. At the present day the pound is no longer on the gold standard. You thus have inflation. The pound to-day equals 12 shillings pre-war.
JJ: Against this, however, the price level is not much higher than the pre-war level.
Dillon: Why not simply distribute the purchasing power and save administrative expenses instead of spending the money on social services which distribute the purchasing power indirectly?
JJ: These suggestions are rather rough and ready. As matter of practical politics, in present circumstances, in this country, it should be possible to detach the Labour Party from its support of the Government. If this was done Fine Gael could expound its own economic policy to greater advantage.
Capt O'Sullivan: Referring back, what about Italy's economic and financial policy? They have public works a vast scale and financial backing through loans and increase in the public floating debt. Was this possible because of stabilisation of the lira at a high figure and keeping it there despite attack and maintaining the national credit and international finance standards of Italy?
JJ: Such a policy could be acted on by Fine Gael government even if it meant an increase of 20 millions in the floating debt.
Dillon: Ireland was not affected by the world financial depression in 1932. In fact, was rather doing well in spite of it. Is that not so?
JJ: The English floating debt amounts approximately to eight hundred millions. At the rate of one per cent at present, twenty million pounds could easily be raised in the Saorstat through a central bank, say, next May if a Labour defection from the Government resulted in a Fine Gael ministry. Such a policy of expenditure would improve the unemployment position and in general, improve the lot of the 120,000 people now unemployed.
Cosgrave: I disagree that this is possible. I doubt if there are twenty million pounds available for investment.
Blythe: JJ means an increase of 20 million pounds in new (bank money). There will of course be leakage. All this external trade will inevitably take some of the money out of the country. The 20 million pounds will really be a huge overdraft at the Central Bank.
Cosgrave: Are you sure that you can continue to borrow at the rate of one per cent for several years to come? The rate might increase to 3 per cent in a few years' time. If you take the often quoted 66 to 1 ratio as between Great Britain's financial strength and ours - my own opinion is that a more correct ratio would be 100 to 1 - if that were the case JJ's 20 million pounds possible floating debt here should really be 8 million.
Blythe: The 66 to 1 figure was not one based on very careful statistics. It was rather a random estimate suggested in Dail Eireann.
Cosgrave: In addition to the financial strength of country you have to consider our banking system which is not at all the same as the British.
JJ: That is so. We have no short-term loan market in Ireland but we could have one.
Cosgrave: There are other dangers. This programme would be most attractive even if it were unsound. Supposing another party proceeded to outbid by putting forward an unsound scheme. The last Government was careful of its finances and the present Government has dissipated its predecessors' savings. A new party might say "if you can have a floating debt of 20 millions and so decrease unemployment considerably, why not have a floating, debt of 40 millions or more and abolish unemployment altogether."
Dillon: What does JJ think of the Peadar O'Donnell type of economics and the Communist danger in this connection?
JJ: In this proposed policy you would undoubtedly take a risk but the alternative is a certainty. If unemployment increases and things keep on getting more difficult, agitation, Communist and the like are inevitable.
O'Sullivan: In connection with JJ's remark re the Labour Party, during the last 2 weeks people have mentioned to me that the Labour party are getting decidedly restless.
JJ: Agreed.
Cosgrave: In connection with the Labour Party, why was the idea of the Corporative State so unpopular?
JJ: There are many causes for that. One of the chief would be that we in Ireland share the British anti-fascist bias.
Cosgrave: But are not the Fascist and the Corporative State idea distinct things?
O'Sullivan: JJ is right. Irish and British ideas of Labour, Fascism and the like are much the same. That accounts for the opposition to the Corporative state.
Cosgrave: To return to another idea of mine, if Fine Gael were to adopt this economic policy, Fianna Fail would steal it, use it and distort it.
JJ: Agreed to some extent.
Dillon: Here is another problem for consideration. Agreed that the Fianna Fail government are most reckless, but still high Civil Servants in Finance and other departments are not reckless men. If things are bad now, they must, if they do their duty, warn the Government that they are bad. But it seems that they do not think things are too bad. Perhaps we are too pessimistic about things (some discussion on this point).
JJ: A Fine Gael new economic policy would involve public works in the first year to an extent of about five million pounds; the end of the economic war as part of the policy would be a great solvent of unemployment, but the Fine Gael government must be prepared to spend at least 20 million pounds.
Cosgrave: With regard to the unemployed, agriculture now counts for a large number of these. It is possible that many of them will never get back into employment.
Dillon: Not inclined to agree with this. There will very likely be a reaction and farmers may, after the economic war, employ even more labour than before.
JJ: Irish agriculture essentially a livestock one and livestock necessarily involves employment. A concentration of policy on the cattle and dairy industries means more employment. Bacon and poultry industries also mean employment. To quote an example -- a farm of 200 acres employing 20 men under present conditions. This farm is based on the raising of poultry, etc for export. If these 200 acres were divided into 30-acre farms, it is scarcely possible for the same area to support the same number of breadwinners.
With regard to the Fianna Fail home market development idea, expansion of the home market is only possible through increase in population.
McGilligan: The Government are not so talkative about ideas as they were. They have come up against facts and figures. Aiken and Ryan in the Dail recently.
Mulcahy: Yes, their figures are interesting and can be made available easily.
JJ: Tillage interdependent with cattle. Root crops etc and cereal crops in rotation. Compare Adam Smith's remarks on Scottish economic history. However with regard to the wheat policy, wheat is hard on land and the land requires heavy manuring.
McGilligan: Agreed largely with this line of argument.
With reference to JM O'S on labour, agreed that they are becoming critical of Government. Facts and figures are hitting the Government. Compare Aiken on agriculture and the quota system.
JJ: Quota systems are a real danger.
Cosgrave: But look at New Zealand which has increased its exports of meat considerably in the last few years to Great Britain.
McGilligan: About the quota - we should question Ryan about his acceptance of the cattle quota allotted to us.
JJ: Yes, he and the rest of the Government have taken the quota system lying down.
Cosgrave: The worst of it is that the quota system has been applied to Ireland not as part of normal policy but because of the economic war. As far as Ireland is concerned it can be argued that the quota system is not part of general British economic policy.
(It is possible to pick up from the foregoing a clear picture of JJ's 1934 political position. He supported FG and was in good standing with them. He also was friendly to Labour, as evidenced among other things by the Woods/Larkin episode above.
JJ's ideal vision was commercial farming in large units, whether Milestown-type capitalist or Ralahine-type co-operative, implied a large farm labour workforce, potential Labour supporters. The Fianna Fail land division into 30-acre subsistence lots was anathema, as was protectionism, which he saw as the road to croneyism, based on his brother's Indian experience; despite this Fianna Fail valued his services and aspired to use them, as evidenced by the Lemass letter.
We have here perhaps a foreshadowing of the Labour-FG coalition which was later to emerge, though without the type of co-operative-oriented policies to which JJ aspired. RJ October 2000.)
***
His 1934 book Nemesis of Economic Nationalism was a political broadside against de Valera's tariffs policy, and the thinking behind the 'economic war'. This undoubtedly earned him the votes of critical TCD graduates who had kept touch with Ireland (many being abroad) so that his bid to get into the Senate in 1938 was successful, and he became an active and well-informed critic of government from a public platform off and on for over a decade.
The overall politics of the College however was reflected by the fact that Lord Carson was the president of the London Graduates Dining Club.
Press Campaigning 1935-38
My father kept among his papers some press cuttings from the economic war period, some of which were raw material for his arguments, other being records of such public interventions as he was able to make. I summarise them here.
December 21, 1935, Irish Times: Speaking at Wesley College JJ covered teaching through Irish, Protestant interests in Ireland, and the Free State industrial revival. He supported learning Irish as one might learn French at school, but opposed teaching other subjects through it where English was the mother tongue. He supported stoutly the Protestant identity as part of the national mainstream: '...we do not regard ourselves as in any sense outlanders in this island, which is our native land..'. He foresaw negative outcomes of current economic policies: '...is there not some danger that the nation will be exploited by industrial monopoly, or a series of industrial monopolies, in the interests of an ascendancy class which is not entirely native Irish, Protestant or Catholic?'.
The Independent also took it up, with the header 'Protestants Get Square Deal'; they picked up JJ's reference to Partition, which '...was in the highest possible degree an injury to the Protestant interest, north and south...'.
There is an undated letter to which JJ replied on March 7 1936 from one JEW Flood, on Union Club paper (Carlton House Terrace), from which I have abstracted the following:
'I've had your silly little piece of schoolboy impertinence to Thomas. I've also read the article... no-one in England cares one tinker's, Highland or Continental damn what Ireland (the IFS that is) does or thinks. Ireland is no longer a political issue in Parliament or elsewhere over here... the sooner the twirps in Ireland realise that the better... Ireland is no longer a political pawn and therefore doesn't count.. do you really think that any article by any FTCD could affect the prospects of an individual candidate?... all the best to you and I'm glad to see there is someone with the guts to write as you did giving the facts as he sees them and facing the logical consequence. More power to your elbow... PS Mr Thomas is no longer Sec of State for the Dominions.
JJ must have written to JH Thomas, and it trickled down to this guy, who seems to have been a contemporary of JJ in Dungannon Royal School, because he refers to 1905 background. It illustrates the cultural gap between the Free State and England which JJ was trying to bridge.
May 30 1936, Irish Times: In a report headed 'Drawbacks of Wheat / Present Systems Dangers / Warning by an Economist' JJ's Athy Barrington Lecture was reported. The contents of the report is basically that of the unpublished 'wheat' typescript which I have reproduced and made accessible, primarily from the 1930s academic module of the hypertext. This cutting therefore identifies it with the Barrington Lecture stream, which was an important political outlet for JJ's ideas.
August 8 1936, Irish Times: In the 'Books of the Week' feature JJ did a substantial review of two books on monetary policy, one a study of Swedish experience by Bromley Thomas, and another on monetary reform by Paul Einzig. This was technical, aimed at the specialist reader, but JJ brought out the current political relevance via issues like cheap money, the role of the State in public works, and the basis of credit being the existence of people with money in their pockets wishing to buy things which the seeker of credit was in a position to produce.
September 12 1936, Irish Times: Again in 'Books of the Week' JJ wrote a devastating review of a book on British agriculture written by a committee of the Rural Reconstruction Association. This he dismissed as 'romantic obscurantism', in that it promoted a British agricultural protectionist policy, the net effect of which would be to bankrupt those agricultural exporting countries (such as ourselves and the Argentine) who depended in the British market, and make them unable to absorb British industrial exports.
The foregoing generated some controversy, and on October 10 there was published a letter from JJ replying to points raised by the Secretary of the Rural Reconstruction Association, robustly standing over his position, and dismissing the RRA people as 'blind Samsons' intent on converting the next Imperial conference into a Boston tea-party. He also managed to bring in a back-handed complement to de Valera for thoughtfully providing an 'economic war', thus taking Ireland out of the contest.
January 30 1937, Irish Times: A review of a book by AL Rouse 'Mr Keynes and the Labour Movement' gave JJ a further chance to make the case for the agricultural producers, whom he held were globally impoverished by the trade-union-organised labour aristocracy in the industrialised countries.
JJ also had among his papers a copy of an article in the New York Times magazine, April 3 1938 by Harold Callendar, and a covering letter from the author dated July 8; he had been in Spain when it appeared and had only then got back. The article was headed 'Riddle of the Two Irelands and an Empire' and was an analysis, with some historical depth, of the then current Anglo-Irish scene, in which he had used JJ's work on the evaluation of the economic war and its effect on agricultural production.
July 10 1938, Sunday Times: There was a report by their Dublin correspondent of the Centenary Reunion of the past graduates of the Albert Agricultural College, which was addressed by de Valera, and by JJ. This was in a sense a public celebration of the ending of the 'economic war', with de Valera admitting the need to develop agricultural exports. JJ used the occasion to go over the ground of his July 6 Seanad speech, in the presence of de Valera.
This speech was also reported positively in the Sunday Independent on July 10 1938, and there had been a preview of the speech when JJ had presided at the end of term celebrations in the Royal School Cavan, as reported in the Irish Times on July 2 1938.
It could reasonably be said that once JJ got into the Seanad he never missed an opportunity to promote both the Protestant and the agricultural interests.
Britain and the Commonwealth
JJ's ideas on these issues are best picked up from his Seanad speeches. He did however visit London in April 1939; I remember this episode; we stayed in a small hotel in Bloomsbury. The visit was I think motivated by the sense that the war was coming, and he wanted me and my mother to have a chance to see London before it was destroyed. We also paid a visit to JJ's brother Harry, then in medical practice somewhere in the Highgate neighbourhood. We dutifully visited the British Museum, Madame Toussauds, Buckingham Palace for the changing of the guard (following the footsteps of Christopher Robin!), the zoo at Regents Park and the usual attractions. While my mother and I were doing this, JJ must have been off politicking, because there are among his papers open passes for the Commons and the Lords, giving access to the Dominions Gallery, members lobby, terrace and library throughout 1939. His status is given as 'Senator J Johnston, Member of Empire Parliamentary Association'.
I have no record of what he tried to do, but he probably activated old Oxford contacts, and would have tried to explore the possibility of adjusting the infamous 1934 fat cattle subsidy, which had killed the possibility of Irish agriculture being a supplier of finished animals or meat, and condemned Ireland to being primarily a seasonal exporter of store cattle on the hoof. He made repeated efforts in the Seanad to get the Government to address this problem, and convert Ireland into an expanded and efficient supplier of meat, which would have been in the British interest during the war, a genuine 'win-win' outcome to a non-zero-sum game.
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