Persuading de Valera's government to review its protectionist policies was a revolutionary act, writes Garret Fitzgerald
LAST WEEK a conference in Dublin celebrated the 50th anniversary of the economic development study that was submitted to Eamon de Valera's last government.
Our most distinguished retired civil servant, Dr TK Whitaker, participated in the conference as it was he who submitted the study when he was secretary of the Department of Finance.
To most people today that Civil Service initiative will seem a remote historical event of little relevance to their lives, but it was in fact a revolutionary action that saved the State from economic chaos less than 40 years after it achieved independence.
Only those with memories of Ireland in the 1950s know just how near the State came to such a fate. Between 1952 and 1958 continental Europe had enjoyed six golden years, its main states growing their economies by 40 - 60 per cent. However, the Irish economy had failed during those years to achieve any net growth. As a result, net emigration rocketed to a record figure of 58,000. Within a 12-month period to March 1958, our population fell by over 1 per cent.
The situation was so disastrous that many Irish people had come to believe that independence might have been a mistake.
At last week's conference, it was revealed that when de Valera had returned to power for the last time in March 1957, Whitaker submitted to his new minister - Jim Ryan - a memorandum dealing with the state of the economy.
Ronan Fanning, recently retired professor of modern history at UCD, rightly described this document to the conference as "apocalyptic".
For in it, Whitaker told Ryan that our State now faced "economic decay and the collapse of our political independence if we elect to shelter permanently behind a protectionist blockade".
It was extraordinarily courageous of Whitaker to have described his new taoiseach's disastrous attempts to make Ireland self-sufficient by means of blanket industrial protection.
But that was not all: in the same memo, Whitaker voiced the unthinkable. He added that "if we expect to fail it would be better for Ireland to move towards re-incorporation in the United Kingdom rather than wait until economic decadence becomes even more apparent".
On that day, he gambled his career, in the hope that by addressing the new government in such blunt and stark terms, he might shock them into a reversal of their economic policies. He won the gamble. Two months later, he succeeded in inserting into Jim Ryan's budget speech a commitment to "a comprehensive review of our economic policy" upon which Whitaker had started on his own initiative.
Later that year, he secured formal government approval for his project, which was submitted to cabinet in May 1958, and formed the basis of the government's programme for economic expansion.
A crucial, related government decision, taken despite resistance from some ministers, was the publication 10 days later of the full text of the proposals Whitaker had made to the government. As not all of his proposals had been adopted, this made the government programme vulnerable to public criticism, but this decision turned out to have a most positive effect.
It demonstrated to the public that the new programme was not a mere political exercise, but a genuine and courageous attempt to reverse the tide of history. Its publication secured almost universal support for the new programme.
Fine Gael refrained from any captious criticism, and was most careful not to rub Fianna Fáil's nose in what was a most humiliating reversal of that party's twin policies of protection of industry and promotion of grain rather than grass in agriculture.
I suspect much of the credit for this restraint must go to Gerald Sweetman, who in May 1956, as minister for finance, in the preceding government had promoted Whitaker to secretary.
In October 1956, during the closing stages of the second post-war coalition government, Fine Gael had taken steps to stimulate foreign investment and exports. At the autumn party conference in October 1956 the taoiseach, John A Costello, had announced an export profits tax relief scheme, which evolved into our 12.5 per cent corporate tax rate, and an extension of a western counties' industrial grants scheme to the whole State.
As a result of these reforms, even before the 1958 economic programme could kick in, we had virtually trebled our number of foreign-owned manufacturing firms and the value of our admittedly small volume of manufactured exports.
However, what Fine Gael had felt unable to do at that point was to challenge Fianna Fáil's disastrous industrial protection policy. That task Sweetman prudently left to his new departmental secretary to initiate in the aftermath of the March 1957 change of government.
So, when Whitaker successfully faced down the new Fianna Fáil government on this issue, Sweetman, by then opposition finance spokesman, was not going to weaken the impact of the Whitaker challenge by attacking the new programme for economic expansion.
All these events had been foreshadowed when, in May 1956, Whitaker had read a revolutionary paper to the Statistical and Social Inquiry Society of Ireland.
Several years earlier, I had been chosen to join people like Whitaker on that society's council - then the only forum to discuss economic issues seriously.
And I still vividly recall my excitement on the occasion of Whitaker's address that night. At last the suffocating consensus on policies that had been dragging our State towards economic collapse was being challenged from within the governance system itself. I knew then that the State that my parents had helped to establish 35 years earlier, might survive after all.