Dublin Opinion

I’m working on the last chapter at the moment, which is about the banks and the Irish pound, and I just came across this piece in the Irish Times.

It’s from 1931 and the issue is the severing of Sterling from the Gold Standard and the effect this would have on the Irish economy, given the fact that due to the 1927 Currency Act the Irish pound was legally bound to have the same value as Sterling at all times. It was an insane policy, but one which suited Irish banks as it gave their main product, credit, a weight in value it wouldn’t have had if the Irish pound was actually related to serving the dynamics of the economy.

However, not to get into talking about currency and money, but just to highlight this little bit of information regarding Ireland’s external trade in 1931 which was mentioned almost in passing in the original article.

The last analysis of world trade by the League of Nations showed that the Free State occupied the twenty sixth place in absolute magnitude of external trade in a list of seventy-nine other countries, and was ahead of such countries as Germany, the United States and France in its volume of export trade per head of population.

Again, as I’ve said before, Ireland always had an open economy, but the problem was what it exported, and where - until the late 1950s essentially Ireland exported cattle to Britain. It was the single largest export and the trade dominated everything else.

It should also remind us that the mantra of “exports” by Brian Cowen and Brian Lenihan is simplistic and self-serving.

Ireland has always exported. It has always been an open economy.

It is the nature of those exports, however, and the relationship those exports have with the rest of the economy, especially secondary industry and services, which is where the focus should be.

It is my feeling that the analysis which puts forward Ireland as a closed, subsistence economy until Whittaker and Lemass show up is dominant because it allows right-wingers make out that free trade saved Ireland from itself, when in fact it was the use of national borrowing after 1957 for growth and the lifting of the ban on internal market industry from exporting, which marked the Whittaker Revolution.

Ireland didn’t suddenly become an open economy in 1958. The dynamics of that open economy changed, but in terms of trade it was already open. The problem was that it exported livestock and comparatively little else, and that Britain was the buyer.