The Economic War Flashcards
What were the reasons for the economic war?
DV refused to pay land annuities to Britain
NI allowed to retain its annuities, DV felt IFS should be treated equally & allowed to retain annuities
DV’s government refused to pay pensions of retired RIC officers & former British civil servants
What were land annuities?
In the past, Britain had made loans to Irish tenant farmers to help them buy their land
Land annuities were repayments of these loans
DV stopped payments as they drained IFS’s limited resources & he wanted to revive weak economy
They were worth £5 million per year
How did the economic war start?
British government angry at DV because of breaking previous financial agreements between the 2, so took steps to recover money
Britain imposed 20% import duty on all goods from IFS & later imposed quotas for livestock
IFS retaliated by putting import duties on goods from Britain & NI, including coal, cement, electrical goods, machinery, iron & steel
DV held election in 1933 to show British that people of IFS supported action & launched propaganda campaign against British
What was De Valera looking to achieve with economic war?
He knew trade could cause financial problems, but hoped it would bring benefits
He thought it might result in self-sufficiency & diversity in agriculture
DV wanted to encourage entrepreneurs; if price of British goods in IFS increased it might encourage Irish to open own businesses to compete with British
He saw economic war as part of his campaign against British control
What were the short-term effects of the economic war on Britain?
It’s share of IFS market fell from 76% in 1932 to 54% in1935
There was shortage of imported Irish beef & dairy products
Some evidence to suggest unemployment increased in Britain
What were the short-term effects of the economic war on IFS?
Economic war cost IFS £48 million
Cattle industry (lifeblood of economy) saw 35% reduction in cattle exports & declining prices for beef in Ireland meant many farmers went bankrupt
In spite of government grants, there was limited agricultural diversification as only larger farmers able to make switch & no markets for new goods
Unemployment increased from 29,00 in 1931 to 138,000 in 1935
Trade deficit increased & exports declined from £750,000 to £500,000 per year
Cost of living increased whilst standard of living fell
Emigration increased
Very few industries due to lack of investment
What were the short-term effects of the economic war on NI?
Their prosperity depended on cross-border trade with IFS, so struggled to find new market for goods
Its farmers were hurt by retaliatory duty imposed by DV & cross-border boycott
Smuggling increased
What were the positive outcomes of the economic war?
In IFS, lack of coal coming from Britain led to period of growth in local peat industry & small-scale farmers helped by reduction in land annuities payments
In NI, farmers benefitted as they provided Britain with goods no longer being supplied by IFS
How did the economic war end?
In 1935, Britain & IFS signed Coal-Cattle Pact which eased some of economic pressures, but financial problems continued, which negatively affected their political interaction
In 1938, there were 3 months of complex negotiations to find solution to different concerns of Britain & IFS
For British PM, main concerns were land annuities, economic relations with IFS, strategic defence areas on Ireland & maintaining commonwealth
For DV, issues were stopping land annuities, economic relations with Britain, ending partition & British occupation of treaty ports
In April 1938, 3 Anglo-Irish Agreements were signed which ended economic war and settled grievances. Agreement covered finance, trade & defence
What were the key terms of the Anglo-Irish agreements?
Land annuities were ended. Eire made one-off payment of £10 million to Britain in settlement, instead of £78 million owed
Britain & Eire removed all duties which had been placed on each other’s goods during previous 5 years
They guaranteed better treatment of each other’s exports for 3 years, although some quotas & tariffs still existed
Eire allowed to impose duties on number of imports from Britain to protect its new industries
Britain returned treaty ports to Eire without conditions
Why did Britain & Eire sign the Anglo-Irish agreements in 1938?
Economic difficulties strained relationships between Britain, Eire & NI meant willingness to negotiate settlement
Deteriorating political situation in Europe also encouraged Britain to end economic war
Economic war had detrimental impact on economies on Britain, Eire & NI as they were dependant on trading with each other’s markets
Eire’s economy almost collapsed, especially cattle industry, with unemployment, debt, emigration & balance of trade deficit increasing
Cost of economic war to Eire was £48 million
Britain’s share of eire’s markets fell by approx 25% & it was short of beef & dairy products
There was increase in unemployment due to dispute, & NI’s cross-border trade was interrupted
Neville chamberlain preoccupied with potentially dangerous events in Europe such as increasing aggression shown by Germany, so was willing to appease Eire
Chamberlain hoped concessions by Westminster would make Eire less hostile to Britain & secure its help in future war
Chamberlain prepared to return to Eire the 3 treaty ports
Why was chamberlain prepared to give De Valera the treaty ports?
They were run-down & expensive to refurbish
They were rarely used
Unlikely ports could be used during war unless Eire permitted their use
Chamberlain believed de Valera would allow British access to ports if war occurred
Why did De Valera want the treaty ports?
He was opposed to presence of British troops in Eire
Their return would give Eire greater independence, essentially in foreign policy
It would make neutrality from international war possible
What were the impacts of the Anglo-Irish Agreements in Britain?
Britain gained financially from agreements, but lost in terms in defence as Eire didn’t allow Britain use of the treaty ports in WW2
Winston Churchill warned this may happen, but chamberlain had acted on advise of military chiefs
Chamberlain was disappointed when DV responded to return of treaty ports by asking for declaration against partition, which Britain refused to give
What were the impacts of the Anglo-Irish Agreements in Eire?
It benefitted most from agreements
relationship with between Britain & eire initially hostile, but improved in 1938 as old grievance of treaty ports settled & trade agreements established
One-off land annuities payment of £10 lion meant extra £5 million per year to spend in eire
Return of treaty ports removed another link with britain
Increased eire’s independence & made it possible to be neutral during WW2
Continuation of partition severe disappointment in eire
DV called general election in which voters showed their approval of agreements by returning Fianna Fáil to power with comfortable majority
