Anglo-Irish Trade War - Conflict Deepens

Conflict Deepens

The hardship the Economic War foisted particularly on the farming community was enormous and exacerbated class tensions in rural Ireland. In 1935, a "Coal-Cattle pact" eased the situation somewhat, whereby Britain agreed to increase its import of Irish cattle by a third in return for Ireland importing more of Britain’s coal. But the cattle industry remained in dire straits, the government forced to purchase most of the surplus beef for which it paid bounties for each calf slaughtered as they could not be exported. It introduced a ‘free beef for the poor’ scheme, the hides finding use only in the tanning and leather industries. For many farmers, especially the larger cattle breeders, the agricultural depression had disastrous consequences. Similar to the "Land War" of the previous century, they refused to pay property rates or pay their land annuities. In order to recover payments due, the government counteracted by impounding livestock which were quickly auctioned off for less than its value. Farmers campaigned to have these sales boycotted, and blocked roads and railways. Police had to be called in to protect buyers of the impounded goods, violence was inevitable and fatalities were frequent.

With the farming community having little money to spend, there was a considerable decline in the demand for manufactured goods, so that industries were also affected. The introduction of new import tariffs helped some Irish industries to expand when Lemass introduced the Control of Manufactures Act, whereby the majority ownership of Irish companies was to be limited to Irish citizens. This caused dozens of larger Irish companies with foreign investors, such as Guinness, to relocate their headquarters abroad and pay their corporate taxes there. Additional sugar beet factories were opened at Mallow, Tuam and Thurles. The Economic War did not seriously affect the balance of trade between the two countries because imports from Britain were restricted, but British exporters were very critical of their government due to the loss of business they also suffered in Ireland, by having to pay tariffs on goods they exported there. Both the pressure they exerted on the British government and the discontent of Irish farmers with the Fianna Fáil government helped to encourage both sides to seek settlement of the economic dispute.