In 1958 Terence O'Neill proposed an eye-popping wheeze for solving unemployment: 'Can Lough Neagh be drained? It would be equivalent to a new county.'

In 1963, 50 years ago, Terence O'Neill succeeded Lord Brookeborough as Prime Minister at Stormont. With a reputation for efficiency and moderation, he was a new Prime Minister for a new era.

O'Neill was no 'man of the people'. His ancestors had lived in Ulster as aristocrats since the 17th century. He was proud that he shared his name with the ancient Gaelic dynasty of Ó Néill. his grandfather was Lord Crewe, a member of Gladstone's pro-Home Rule Liberals in the 1890s.

His father, a unionist, had been the first MP to die in action in the First World War. As a child, O'Neill met and had tea with Haile Selassie, the Emperor of Ethiopia.

O'Neill served bravely in the Second World War. Fighting in France, he smuggled banquets of fine food for his comrades and coolly sang French songs under shell-fire. When he spared the life of a terrified Mongolian, the grateful prisoner insisted upon acting as his saviour's servant.

In 1944, O'Neill was wounded and temporarily caught behind enemy lines in Holland. He was tended by the Ten Horn family who recalled that he "was forever apologising for troubling us".

O'Neill came to live in Northern Ireland in 1945. He would have preferred to enter politics at Westminster, but found himself elected to Stormont.

O'Neill always thought his colleagues ignorant about the outside world. One Unionist MP, he recalled, was astonished to hear how few Catholics lived in Britain: "Boys a boys, Britain must be a wonderful Protestant country!" Later, when Prime Minister, O'Neill had a private washroom installed to avoid having to pass through the Members' Room.

As Minister of Finance from 1956 to 1963, he built a reputation for elegant sophistication and technical efficiency. But behind the scenes O'Neill was fizzing with the most radical ideas. In 1958 in proposed an eye-popping wheeze for solving unemployment: 'Can Lough Neagh be drained? It would be equivalent to a new county. ... County Neagh would have no mountains or bogs and might be quite fertile, it could be planted with trees and people and a new town could be built at its centre. (Strangford is smaller and has salt water and tide but could perhaps also be considered.)'

Once Prime Minister O'Neill set about 'transforming the face of Ulster'. A new town was built, and controversially named Craigavon after the unionist hero.

Railway lines were closed and motorways constructed. A new university opened, but due to unionist opposition to investment in nationalist areas was located at Coleraine rather than Londonderry. O'Neill wanted to modernise, but discrimination and sectarianism dogged every step.

Still, this was a time of hope. The Unionist Party ran a competition for school children, the theme being Ulster in the 1970s. The winner was the young Tom Paulin, later to become an internationally recognised poet and television celebrity. Paulin wrote his essay in the style of a News Letter Editorial dated 3 April 1975. This imagined a 1970s Ulster "famous the world over" for its "cordial, friendly atmosphere" with remaining differences of opinion discussed "without bloodshed or violence." History proved cruel to this O'Neillite dream!

O'Neill broke taboos by visiting Catholic schools and meeting with Sean Lemass, the Taoiseach. The two premiers may have discussed a united Ireland, and in private O'Neill certainly hoped and believed that one day the border would disappear. O'Neill relished these PR stunts as "real James Bond-type operations", and he kept even his senior minister Brian Faulkner in the dark.

In 1965 the Rev Ian Paisley launched an 'O'Neill Must Go' campaign. Paisleyism reminded O'Neill of 1930s fascism, and he remained defiant.

Often he fought alone. In 1966 O'Neill failed even to win support from the visiting Queen Elizabeth II. "How can one drag Northern Ireland, kicking and screaming, into the second half of the twentieth century if single-handed, unaided even by one's Queen?", he wondered.

O'Neill knew that legislation alone could not solve sectarian division. He instituted Civic Weeks and a Programme to Enlist the People to encourage Catholics and Protestants to mingle. When the civil rights movement exploded in 1968, O'Neill was clear-sighted that reform must be generous and immediate. He asked his cabinet, "Can any of us truthfully say in the confines of this room that the minority have no grievance calling for a remedy?"

O'Neill called a general election for February 1969. He campaigned against opponents within his own party and supported pro-O'Neill Independent candidates. His ambition was no less than to rebuild unionism from bottom up as a non-sectarian movement. But he was nearly defeated by Paisley in Bannside, and he returned as a lame-duck Prime Minister.

As Northern Ireland spiralled towards disaster O'Neill resigned in April 1969, but not before forcing through the priority reform of 'one person, one vote' in local government elections. His last act was to deny the leadership to his old rival Faulkner.

O'Neill saw himself as a representative of the comfortable bourgeoisie who lost to the populists. "While good men sleep and honest men play their golf and their bridge," he sadly reflected, "these others, with unwavering zeal, are chipping away at the foundations of our democracy."

'These others' are now the establishment, with Peter Robinson and Martin McGuinness sharing O'Neill's old job.

They could learn from O'Neill: from his mistakes but also his undoubted moral courage.

Belfast Telegraph