IRISH ECONOMICS

Evening Post, Volume CXX, Issue 105, 30 October 1935, Page 16

IRISH ECONOMICS

ALARM OVER FUTURE

BRITAIN'S CHANGED VIEWS

DANGER TO TRADE

: Anyone who tries to understand the economic policy of the Free State is ; struck at once by the fact that not \ only are the Free State infant urban , industries protected But State subsidies ■ are given in one form or another to 1 keep up the price of almost everything which the farmer produces, writes the Irish correspondent of the "Manchester Guardian." At first sight such an arrangement seems absurd, ana in debate the Opposition take much plea- ; sure in holding it up to ridicule. Yet i it is probable that the Opposition, if it came into power, would find itself compelled to follow the same policy : except in one respect. ■ The one point on which the Opposi- . tion and the present Government • genuinely differ is the economic war. ■ Mr. Cosgrave certainly believes that . he could easily end this and get the ! special Britfsh duties withdrawn. This : would enable the Free State to do away with the countervailing bounties . granted on the export of agricultural : produce. Cattle at least could be sold ■in the British market within the . limits of the British quota without ; State assistance. But this would merely remove an acci- . dental aggravation .of the malady from which the Free Sta^e now suffers. The root of the disease would still be there. i Let us see what it is. THE FORMER SYSTEM. In 1921 the Free State became by its ; own choice an i independent country ; which had to rely on its own resources or its own bargaining power. It inherited from the old regime a high standard of living, a small population, [ and a rural economy which aimed ' chiefly at supplying Great Britain with meat, butter, and eggs, importing in ex ' change wheat and most of the neces--1 saries and luxuries of life. This economy was, of course, based [ on the principles of Free Trade, and : laissez-faire. It was attacked by Ireland's economic nationalists on the L ground that it failed to make the 1 fullest use of the land and compelled ■ the farmers' younger sons and daugh ters to emigrate. Nevertheless'; it was 1 maintained under Mr. Cosgrave and " defended by his Minister for Agricul ! ture, Mr. Hogan, who pointed out that • it enabled the country to draw the ut ■ most profit from its natural fitness for I animal husbandry, and contended that this system of farming could actually ' be made to support a greater popula- : tion than wheat growing, if —as he as L sumed—the. British market would al , ways be ready to pay for all that the ■ Free State's animal husbandry could r pi'oduce. WORLD COMPETITION. '. But just before the close of Mr. Cosy grave's regime that assumption was , falsified by the world slump in agricul ; tural produce. The Free State farmer ' found himself undersold by new competitors in the British market. Even in ; the country towns of the Free State' ; itself Polish bacon and New! Zealand ' butter began to be offered at a price which spelt ruin to the Irish producer. ' Mr. Cosgraye's Government were com- ' pelled to try emergency, measures for 1 the farmer's protection, but before they had leisure /to take, a •'"■ comprehensive \ view of the changed situation Mr. de Valera succeeded to power, and it fell " to his Cabinet to shape the new policy. : most part, not in strictly comparable • form. The index of business activity in Great Britain, compiled by the "Economist," not only has regained all , the ground lost during the early psfrt [ of the depression, but has risen since " the beginning of this year to a new [ high record,' surpassing even the peak ; activity of 1929. ; RECOVERED MORE. , Comparisons between individual ■ branches of industry and trade in the two countries show divergent results, ; but, on the whole, tend to bear out the • conclusion that British activity declined ■ much less sharply than American as : a result of the depression and has re- ■ covered a greater share of its loss, ; though not much more in actual magnitude. . ' Railway freight traffic, exports of 1 manufactured products, and activity 1 in the coal and steel industries repre- ; sent partial exceptions to this state--1 merit; in all these cases, the degree of ! decline was greater in the United ! States, but the degree of recovery has ■ also been greater. In the cotton-tex- ; tile industry, both decline and recovery have been sharper in Great Britain. Ini construction activity, electric- ; power production, imports of raw ma- ' terials, the comparison is entirely in. 1 favour of Great Britain; the decline • was. less severe, and the. recovery has been greater. All three, in fact, l reached new high records last .year. > In the automobile industry, the reces- • sion was less sharp in Great Britain; ' the recovery has also been less in perl centage terms, although all the ground i lost has been regained and a new high i level was attained in 1934. • Employment figures are not strictly - comparable, but tend to show the same { sort of comparison as the automobile ■ industry, except that British employl ment in all trades last year did not quite equal the r pre-depression peak. . As is the case in this country, the t employment situation in the distribu--1 tive trades is relatively favourable, I while that in general industry, and par- • ticularly in the heavy trades, is much less so. "- -FEU. LESS.'' On the -whole, it appears that, while recovery in; Great Britain has proceeded further than that in this country in comparison with pre-depression figures, this favourable showing is due not so much to a more rapid pace in British recovery as to a less drastic decline in the early years of the depression. One striking contrast, however, does stand out in. the recovery phase; the upward movement in Great Britain has been steady and has continued up to the present time, while that in the United States has been characterised by a series of wide upward and downward swings, with little or no net progress since the middle of 1933. The situation in Great Britain is more static, and is, moreover, very dependent on the course of foreign trade, which is badly disorganised at present, and is always subject to a larger number of factors beyond the control of any one country. In Great Britain, however, there is little misgiving of the sort that has interfered, and is still interfering, with recovery in this country. The revival that has occurred has been of a normal and solid character that inspires faith in its enduring qualities. It owes nothing to monetary manipulation or to governmental borrowing and spending. Even should no further marked revival take place in the immediate future, Great Britain would be in a position to "carry on" without disastrous consequences. The state of affairs in this country is, by contrast, of an essentially temporary sort that must be altered in one way or another in the not distant future—if not by the sound business recovery that is universally desired, then by drastic changes in governmental conditions, with the uncertain and unpredictable consequences that such changes inevitably bring.