Volume 8 1945~1948


Doc No.
Date
Subject

No. 402 NAI DT S14134A

Memorandum of a meeting held in the Cabinet Room on the Irish response to the Sterling Area Crisis

Dublin, 6 September 1947

The Minister for Finance presided at a meeting held in the Cabinet Room at 11.30 a.m. on Saturday, 6th September, to consider matters arising from the Aide Mémoire handed to the British Representative by the Taoiseach,1 and to examine questions likely to be discussed at the conversations between representatives of the Irish and British Governments and between members of the Sterling Area Group which are to take place in London on the 18th and 19th September.

The following were present:- The Minister for Finance, Secretary to the Government, Secretary, Department of Agriculture, the Secretary and Mr. Williams, Department of Industry & Commerce,2 Mr. C.C. Cremin, Department of External Affairs, Mr. Seán Ó Muimhneacháin, and Mr. Lynch, Department of Finance.3

The Minister asked the representative of the Departments of Agriculture and Industry and Commerce to furnish material in support of the views set out in the third paragraph of the Taoiseach's Aide Mémoire to the British Representative. A feature of the work at the forthcoming Conference in London would be to submit arguments for the fair apportionment over the next nine months or so between the members of the Sterling Area Group of the foreign exchange resources of Great Britain which were now reduced to £600,000,000. The problem, however, would have to be considered in all its aspects, not merely from the narrow dollar viewpoint. If the United Kingdom recognise the desirability of a fair division of foreign exchange resources between sterling area countries, it should also recognise the importance of a fair division between these countries of the supplies of goods and raw materials available within the sterling area. The Minister asked the Department of Industry & Commerce representatives whether they could provide evidence to show the extent to which the United Kingdom had been making a 'corner' in essential supplies. Had it been preventing the entry to the free market of wool supplies? Has Ireland been refused access to cheap Canadian wheat which the United Kingdom has obtained for itself? In the Minister's view there would be a strong case for demanding a higher allocation of dollars if it could be shown that the United Kingdom prevented Ireland from getting a fair proportion of low-cost essential commodities.

The annual British consumption of petrol was 80 gallons per head of population; the Irish average was 22 gallons. The average annual British consumption of coal was 4½ tons per head; the Irish average was less than 1 ton. To facilitate discussion with the United Kingdom of any proposals for restricting Irish petrol supplies the Minister thought it would be desirable to have particulars of the relative importance of public transport and private transport in Ireland and Great Britain (These statistics were being compiled in the Department of Finance).

In regard to fuel it was agreed that this country should attempt to secure sterling area coal of quantity, quality and price similar to those obtaining in Great Britain. We should expect the same proportion of pre-war requirements as the British consumer was getting at present.

The Minister then referred to the positive contributions Ireland might make towards reducing expenditure of foreign exchange by the sterling area. He instanced specially the results which might be expected from better prices for Irish cattle. Furthermore, if the United Kingdom provided reasonable supplies of raw materials (e.g. cotton) it would be possible to operate many Irish factories to the full capacity. He thought that quite a definite contribution could be made by Ireland in this matter especially in view of the shortage of labour in the British cotton industries. Mr. Leydon was of opinion that the Irish mill at Athlone was working well under full capacity. He said, however, that the Tánaiste had discussed this question with the President of the British Board of Trade4 and that nothing much had come of it, but he agreed that it should be raised again at British Cabinet level. He would furnish the Minister for Finance with details of industries in which an additional shift could be worked and would ascertain what statistics were available relating to the loss of key workers in particular Irish industries through emigration.

Mr. Sean Ó Broin asked whether there might not be a danger that the United Kingdom would press for an extension of rationing if this country were to demand a really equitable distribution of both foreign exchange and supplies throughout the sterling area. The Industry & Commerce representative said that this matter had been raised before, but the United Kingdom authorities accepted the view that there were severe limitations to the effectiveness of rationing in an agricultural country.

Mr. Leydon said he would like to stress that this country should insist on a fair share of foreign exchange as well as of supplies. He would not like to have the country depending to an undue extent on the United Kingdom or on any particular part of the sterling area for its supplies. We should, he said, continue to develop our foreign trade and this would involve a considerable amount of dollar expenditure.

In summary the Minister stated our position - we should demand a fair share of the supplies and foreign exchange resources of the sterling area. If we were refused certain supplies at the cheap rates at which the United Kingdom was able to purchase certain commodities as a result of her having cornered a market, we could be justified in demanding an increased dollar allocation for obtaining these essentials in a more expensive market, e.g. wheat and wool. The Department of Industry & Commerce should also submit evidence of any marketing arrangements particularly favourable to United Kingdom into which the United Kingdom had entered in connection with (New Zealand) butter, tea, rubber and jute.

1 See above No. 398.

2 John Williams, Deputy Secretary, Department of Industry and Commerce.

3 Patrick 'Paddy' Lynch (1917-2001), public servant and economist, Administrative Officer, Department of Finance (1941-8); private secretary to the Taoiseach and policy advisor, Department of the Taoiseach (1948-50); Assistant Secretary to the Government (1950-2). Lynch held a wide range of public service and academic posts after 1952, full details of which are given in his entry in the Dictionary of Irish Biography.

4 Sir Stafford Cripps.