Ireland Needs EEC

Century of Endeavour

Why Ireland Needs the EEC

(c) Roy Johnston 1999

This work by JJ was published in 1962 by Mercier Press in Cork. In what follows I give the chapter headers, each followed by an abstract.

Prologue: Agriculture in an Unregulated World Economy

The background to the arguments to follow is outlined by JJ with reference back to agriculture in the unregulated world of the 1920s, in which context he had served in 1926 on a Prices Tribunal, making a close study of the relationship between the prices received by the farmers and the prices paid by the consumers, as they varied over time. The theoretical background at the time had been established by the American authors Foster and Catchings, and JJ had been able to crystallise his conclusions into a criticism of that book.

The problem is that '...agricultural production is not integrated into the normal machinery of credit to the same extent as commerce and industry.... if the bargaining power of agriculture, suitable organised everywhere for production, processing and marketing, could be put on terms of economic equality with non-agricultural commercial and industrial concerns, one of the hidden causes of periodic depression would be alleviated if not abolished..'. In other words JJ is re-iterating his classic 1920s Barrington Lectures position in support of the objectives of Plunkett House.

He then reiterates his earlier 1920s arguments about friction in the distributive system, in which he called for the imposition of a sales tax, treated as a pre-payment on 'Schedule D' Income Tax, thus favouring efficient retailers; he refers back to his 1927 SSISI paper.

JJ concludes be referring to the emergence of the cattle marts as an outlet for livestock producers alternative to jobbing dealers and 'tanglers'. He also mentions positively the role of the Irish Sugar Co, under MJ Costello, as a source of favourable credit, with the contracted supply of the beet crop, and as a source of innovative developments of possible relevance to horticultural producers, such as 'accelerated freeze-drying', which JJ recognised as a new technology of significance. He suggests that Costello is in effect picking up the mantle of Sir Horace Plunkett in this context (1)

Ch 1: Post-war Agriculture in an Irish Perspective

In this 20-page chapter JJ leans heavily on the 1959 UNFAO Report, which illustrates how '...the efforts of many States to regulate their national economies in the national interest have aggravated rather than solved many current agricultural problems...'.

After a wide-ranging survey of world conditions, in which the FAO material expands on on the need for price stabilisation in agriculture, JJ homes in on the relationship between Britain and Ireland, quoting from his 1945 contribution to the Report of the Committee in Inquiry on Post-Emergency Agricultural Policy, which he was able to re-iterate in 1951 on p78 of his Irish Agriculture in Transition.

The essence of his message is that if they had still been part of the UK they would have benefited from 'deficiency payments' to the tune of £150 per head of agricultural population, a factor which would seriously have deterred many of our rural population from going to England to seek such a sum in the form of supplementary wages. In the previous five years some 215,641 people had been lost.

In conclusion JJ remarks that '...there is a curious historical irony in the fact that some of the arguments for joining the Common Market are reminiscent of the more respectable considerations presumably urged in 1800 in favour of joining the Common Market of the United Kingdom. We all know how that turned out....'.

Ch 2: The Irish Economy in a European Perspective

In this chapter JJ draws upon the UN Economic Commission for Europe (ECE), where Ireland finds herself in the company of Turkey, Greece, Spain, Yugoslavia and Southern Italy. Income level in all but one of these countries is about 1/5 that of the other ECE countries, the exception being Ireland, whose income is twice that of the others, but still only about half that of the industrial countries of Western Europe. The key explanation of this anomaly is free movement of labour between Britain and Ireland.

Commenting on the use of State funding for land reclamation, JJ remarks that land reclamation funding was '...generally taken advantage of by the most enterprising type of farmer, who in many cases would have improved his land anyhow, and paid the full economic cost himself. Its indiscriminate operation in such cases involved an element of 'redistributive' expenditure which was socially as well as politically incapable of justification.'

JJ then goes on to re-iterate his earlier conviction, that '...if the State owned all our agricultural land as a kind of universal landlord (as indeed Michael Davitt recommended) this problem would not arise. The State could get back over a period of years a full return for its productive capital investment in improving the 'national farm' by a suitable enhancement of the annual rent. All farmers would be leaseholders of the State...'.

Finally, on industry, '...the "infant industries" of the 1930s era have now come of age but neither of our rival political parties, while in power, has made any considerable reduction in the tariff protection which they enjoy..'. We have here an echo of the arguments of his 1934 'Nemesis of Economic Nationalism' in which he pointed out the danger of strangling the home market and restricting the growth potential of industries capable of export-development.

Ch 3: The International Importance of British Agriculture

JJ here comes up with arguments supporting the thesis that free trade in agricultural products was the basis of the pre-1914 monetary stability. If a developing country wanted capital investment, it simply went to the London capital market, and paid for its loans with products exported to Britain under Free Trade. The link with the value of money was via the Gold Standard.

The Ottawa conference in 1932 brought agricultural free trade to an end. This was in effect a pilot project for the EEC common agricultural policy, which currently maintains artificially high prices in a privileged industrial parts of the world, and depresses agricultural prices for developing countries dependent on agricultural exports, creating the 'third-world development aid' problem.

The 'deficiency payment' procedure for subsidising British farmers at the taxpayer's expense was inflationary, despite its apparent link to a 'cheap food policy'.

Ch 4: The Irish Economy in Retrospect from 1957

This chapter is a reprint of a pamphlet published in the black year of 1957. JJ begins with a 'clinical history', looking back over colonial times, and identifying the roots of the current crisis in British agricultural protectionism originating in the early 30s. He goes on to contrast the Irish industrial policy with the Danish, the latter being closely linked with a prosperous agricultural system and unprotected by tariffs, despite proximity to major industrialised countries.

He then homes in on the role of Dublin as dominant factor in the displacement of labour and capital from rural Ireland, and as regards the transport infrastructure. The heavy capital cost of relocating the population is an important burden on the national economic balance-sheet, consequent on flawed industrial policy.

In a section headed 'protectionist alcoholism' JJ revisits his 'Nemesis of Economic Nationalism' in retrospect from 1957, and is in a position sadly to say 'I told you so'. In his final paragraph he reminds us that '..the former agricultural labourer who becomes a builders labourer in Dublin doubtless gains in terms of real wage, but he is no longer producing for export. His wages are now derived to a considerable extent from an increase in the dead weight national debt...'.

Ch 5: The Eclipse of the Small Farmer in Ireland

This chapter analyses the global scene as regards the market for pig and poultry products, these being the staple means of support of the small farmer, rather than cattle. He homes in on the problem of how to match the output of the feeding barley producing areas in the south-east with the pig producing areas of the north midlands, the flow being dominated by transport costs and merchants profits.

In such a situation it was impossible to compete with the then current deficiency payment system in Britain. He quotes British economists (eg Professor Nash of the University of Wales) to the effect that British subsidies on pig production are adding more to the import bill for feed than would be paid for finished bacon from Denmark (Lloyds Bank Review July 1956). The remedy of this situation is outside the power of the Irish government; perhaps in the Common Market the problem could be addressed.

Ch 6: Privileged and Unprivileged Agriculture in Ireland

This chapter, based on an Irish Time series of articles, compares agriculture in Northern Ireland with that in the Republic, the former benefiting from the UK subsidies. In the mid 20s the gross output of Northern agriculture was about a quarter of that in the Free State. In the mid-50s it was more than half. In the North, the agricultural population had been maintained, while in the Free State, and later in the Republic, people were leaving at a steady rate. Output per acre in the North was over twice that in the Republic. The argument is overwhelming for joining an economic system which is friendly to agriculture, which the European Common Market promises to be.

Ch 7: Horticultural Developments

This chapter, which is given in full, regales the reader with some of JJ's experience with horticulture as a supplementary small-farm activity. It is 'anecdotal', in the manner disparaged by the economic Establishment, but I prefer to describe it as an account of some pilot-projects which would have been generalisable, provided the marketing were taken care of.

Ch 8: Public Enterprise and the Industrial Infrastructure

This chapter gives a positive assessment of the role of the State in setting up by public enterprise key components of the economic infrastructure, quoting from Garrett Fitzgerald's work 'State Sponsored Bodies'. He brings in a reference to the significance of this in an all-Ireland context, via a delegation of Irish Association members from the North, who visited Bord na Mona installations in 1954, during JJ's Presidency of the Association. He also comments on the failure of the private sector to match the rate of expansion of the State infrastructural sector, echoing a current comment by Patrick Lynch. He argued that the infrastructure provided by the State should now put us in a position to develop industry on top of it, to compensate for the agricultural handicap, and equalise our economic position relative to the North, enabling the politics of all-Ireland unity to be discussed seriously.

Ch 9: Industrial Achievement and Potential

This chapter covers the industrial turnaround which followed in the late 50s and early 60s consequent on the IBEC Report of 1952 and its being taken on board in the policy changes of the late 50s now associated with the name of Whittaker. Export-led industries, increasingly dependent on a skilled work-force, and often under foreign ownership, were the alternative to the stagnation of small-scale tariff-protected import substitution firms. The Shannon Airport Free Trade Zone is also analysed.

Ch 10: The Common Market - a Ray of Hope?

This chapter addresses the problem of 'temperate foodstuffs' and the Commonwealth food imports to the UK, which in the process of both the UK and Ireland joining, JJ foresees arguments being made for the opening up of free trade in agricultural products, in which situation low-cost producers like Ireland would benefit, and the industrialised countries would absorb a greater proportion of their workforce into industry.

JJ's final sentence: 'there is room for a considerable increase in the import of 'temperate foodstuffs' from overseas by all the industrialised counties of Western Europe.'(2)

Epilogue: Agriculture in an Ill-regulated World Economy

I give some quotes from this epilogue, which summarise the message of the book as a whole: He does comparisons ranging for the 20s to the 60s, in the US, UK, Germany, Denmark etc. "..Ireland occupies an intermediate place between Denmark and the peasant counties of Eastern Europe..". He argues that subsidised agricultural production fuels inflation. The situation is however dominated by vast defence expenditures, which act as a stabiliser. JJ concludes as follows:

"...The supreme test for the statesmanship of the Western World will be in its ability to substitute a policy of economic 'brinkmanship' for a policy of strategic 'brinkmanship' without falling down on the job....the overseas expenditure of billions of pounds and dollars in constructive investment, and establish the foundations for an international economy which will have a social and ethical as well as a merely economic stability....".

Notes

1. A comment with hindsight is perhaps here relevant. The analogy is apt, in that Plunkett's co-operative movement was somewhat of a 'top-down' phenomenon, promoted from his State situation in the Department of Agriculture. Costello's attitude was similar, being the manager of a State company; he did try to deal with horticultural co-operatives when these began to emerge in the 1960s, for example under the lead of Fr McDyer in Glencolumcille; he gave them extended credit. I treat this in the 60s in the record of my own political experience. (RJ Jan 2000)

2. When it became clear in 1972 that this would not be the case, and that Ireland would join the 'rich men's club' of totally protected agriculture, JJ opposed it, and lent such support as he could give in his last few years to the 'Common Market Defence Campaign'.

(we will perhaps hotlink here to subsequent publications in sequence, in popularising mode)

[To 'Century' Contents Page] [To 'Barrington' in the 60s]
[1960s Overview]

Some navigational notes:

A highlighted number brings up a footnote or a reference. A highlighted word hotlinks to another document (chapter, appendix, table of contents, whatever). In general, if you click on the 'Back' button it will bring to to the point of departure in the document from which you came.