The Economic War 1932-1938

Mind-Map on The Economic War between 1932 and 1938.

GCSE History



Peace, War and Neutrality: Britain, Northern Ireland and Ireland

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  • The Economic War
    • Land Annuities
      • 1870 Land Act- tried to solve the problem by giving tenants the chance to buy back the land they were farming from the landowners.
        • To allow this to happen, the British gov. had loaned tenants the necessary funds. Each year the farmers had paid back a part of the loan. These payments became know as Land Annuities.
          • 1922-1932- the money was collected by the Irish gov. by the Irish government and sent to London.
          • Irish farmers disliked making these payments.
            • Following De Valera's election he stopped these payments.
              • He argued  that:                            1) The Irish economy was suffering from the consequences of a global economic depression.                     2) The British gov. had abolished land annuities for NI's farmers so it was only fair to treat the Free State the same.
    • The War Begins
      • Britain's response to de Valera's actions
        • Imposed duties of 20% on Free State imports
          • Irish government reacted in two ways
            • January 1933- de Valera called a snap election. This ensured that there would be no other parties threatening to leave the gov. during the crisis, therefore strengthening his position.
            • Dublin gov. imposed similar duties on imports from all parts of the UK, including NI.
              • It's probable that de Valera hoped that making British goods more expensive would encourage Irish people to set up their own businesses and produce similar goods much more cheaply.
                • If there were any complaints about the harshness of the economic situation, de Valera could simply blame the British for starting it.
      • The STANDOFF (known as the Economic War) continued for 6 years.
        • 1935- both sides seemed to indicate some willingness to improve relations by agreeing a Coal~Cattle Pact that made trade in these two essential commodities much easier.
          • Given that 90% of Irish exports went to Britain, the Economic War had a significant impact.
    • The Irish Economy
      • Irish famers probably suffered the most with a 35% reduction in cattle exports
        • Resulting in a massive overproduction of beef.
        • Much of the reduction came from a decrease in production, with Britain which had been the Free State's biggest market; however
        • Dublin gov. encouraged farmers to explore new markets by offering subsidies to increase production of crops such as sugerbeet and wheat.
          • These crops were grown at the expense of other more traditional crops such as barley.
            • It was only really the bigger farmers that made the switch. Smaller-scale farmers kept on growing the more traditional crops and so didn't benefit from the subsidies.
              • From this point on, living standards fell even though taxes were raised to compensate farmers. At the same time, small-scale farmers somehow did benefit from the reduction of annuity payments, now made it to the Dublin gov.
                • Industrial sector- not as badly affected as agriculture, not a massive success either,
                • The new Irish indutries were not able to sell their products abroad and so the economy suffered a trade deficit.
                  • The lack of coal imports from the UK did result in a period of growth for the local peat industry.--_
    • British and Northern Irish Economies
      • EW lead to a deterioration in Dublin's relations with both London and Belfast.
        • Economically it had a much greater impact on the NI economy than on the British economy.
          • However, there is some evidence that unemployment in Britain did increase somewhat as a result of the Economic War.
            • While Britain had many other markets for it's goods, much of NI's economic prosperity had been built on the existence of strong cross-border trade with the Free State and this was hit by the duties imposed by de Valera.
              • All such trade came to a halt during the 6 years  increased as a method of avoiding the payment of duties.
                • On the other hand, NI's farmers were given the opportunity to provide Britain with produce no longer being suppiled by the Irish


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