A Semi-State Archipelago without Ships: Seán Lemass, economic policy and the absence of an Irish Mercantile Marine by Dr Bryce Evans (Liverpool Hope University). Dr Bryce Evans is a graduate of the University of Warwick and University College Dublin. He is Lecturer in Modern History at Liverpool Hope University. His most recent publication is a biography, Seán Lemass, Democratic Dictator (2011). Email: evansb1@hope.ac.uk.

Abstract Ireland’s sovereignty has always been tied to the sea and its resources. As a new report makes clear, once its seabed area is taken into account Ireland is one of the largest EU states.1 Yet the state has consistently failed to utilise its 900,000 square km of marine resources. With the Irish government now under pressure from the EUIMF troika to accelerate the sale of state assets, the issue of economic sovereignty has come under the media spotlight. The issue of economic sovereignty is closely linked to the protectionism pursued by early Fianna Fáil administrations under Minister for Industry and Commerce Seán Lemass. By looking back to this early period, this paper argues that the ownership of state assets is central to the assertion of national sovereignty. At the same time it takes issue with the media tendency to nostalgise about this ‘golden age’ and juxtapose it against current conditions. It does so by highlighting the gaps in early economic sovereignty, examining Sean Lemass’s failure to establish an Irish mercantile marine in the 1930s and 1940s and linking this to the state’s continued failure to utilise its marine sector for the benefit of all. 2

During the Celtic Tiger years, name-dropping Seán Lemass (1899-1971) became

de rigeur for Ireland’s politicians. In his autobiography, former Taoiseach Bertie

Ahern said ‘I never miss a chance to state my belief that Lemass was in the

vanguard of almost every great event and decision that shapes the Ireland in

which we live’.3 An examination of Dáil records from the last decade or so bears

out this last claim. References to Lemass and the ‘Lemass legacy’ were made

repeatedly by Ahern, his coalition partners, and their political rivals in a

discursive battle over who was fit to don the emperor’s robes. Political discussions in which Lemass’s greatness was heralded covered an eclectic range of topics.4 Confirming this trend in 2009, Ahern’s successor Brian Cowen invoked

Lemass in justifying his government’s fateful banking bail-out.5

A visionary commonly invoked as the ‘father of modern Ireland’ Lemass was, at

the same time, capable of mistakes. Tony O’Reilly, Ireland’s first billionaire and

arguably the greatest success story of Ireland’s ‘economic miracle’, said of

Lemass, his personal hero, ‘he had what every great politician needs: he was an

extraordinarily good poker player!’6 O’Reilly’s observation, ostensibly flattering,

is more astute than many of the platitudes on Lemass offered up by politicians.

Lemass liked nothing more than a game of poker and, as all card-sharps know,

sometimes the gamble fails to pay off. This short article offers an example of one

of those critical gambles that foundered: the failure of Lemass and his

government colleagues to establish an Irish merchant marine in the 1930s. It

demonstrates that state ownership of transport assets, then and now, is integral

to the question of national economic sovereignty.

The British and Irish Steam Packet Company

The current ascendancy of air travel has obscured the primacy of shipping in the

early decades of independence. In the revolutionary period, Sinn Féin prioritised

the establishment of an Irish merchant navy. Several famous events in the

national struggle had illustrated the centrality of maritime movement of

resources to national aspiration. These included the debacle of Roger Casement

aboard the Aud; the use of the Helga to shell Dublin; nationalist gun smuggling;

and later Free State forces’ amphibious landings during the Civil War.7

Yet after independence, British domination of Irish shipping continued. Services

across the Irish Sea were operated by British companies, which employed many

Irish people but whose ships were registered in British ports. ‘Irish’ ships flew

under the red ensign of the British merchant fleet and sailed under British Board

of Trade regulations; examinations for certificates of maritime competency were

held in Ireland, but the question papers were British; and the Irish tricolour was

completely absent from the high seas.8 More importantly, Ireland was totally

dependent on British companies for the importation of essential bulk cargoes

like wheat, maize, timber and fertilisers as well as coal supplies from Wales.

With air travel in its infancy, controlling shipping was critical in securing

economic sovereignty. Pointing to Irish subservience to British commercial

interests, the popular nationalism of Fianna Fáil promised to establish a firmer

foothold for Irish economic sovereignty.9

Soon after the party was elected in 1932 the youthful new Minister for Industry

and Commerce, Seán Lemass, invited Ireland’s ship owners to government

buildings. As well as conveying passengers between Britain and Ireland, the

cross-channel ships operated by these magnates carried vast cargoes of goods,

food stuffs, and livestock between the two islands.10 In line with Fianna Fáil’s

protectionist agenda, Lemass proposed to them that 50 per cent of staff

employed on their ships be Irish.11

This remained a proposal, however, and not a demand. This was because the

largest of the shipping companies represented at the meeting was the ferry

operator, British and Irish Steam Packet Company (B&I).12 B&I was always

regarded as ‘an Irish company’. However it operated as a subsidiary of the giant

British shipping company Coast Lines Ltd, which was based in Liverpool.

In the 1920s B&I expanded, confirming its dominance over the Irish shipping

trade. In 1926 the company acquired controlling stakes in smaller shipping

companies operating from Dublin’s North Wall and other Irish ports.13 In 1930

The Times reported on Coast Lines’ highly profitable business. The company

provided a complete link of shipping services around the British coast, with

operations in 24 ports and agents in the others.14

If Lemass and the Fianna Fáil administration wanted to end the British grip on

Irish business, it followed that the shipping trade would be a critical part of the

plan. And if the Irish state wanted to enter the mercantile marine market, the

Irish arm of Coast Lines’ operation – B&I – was key.

Yet the economic war, which began in July 1932, did not bring with it the

founding of an Irish merchant fleet to challenge British commercial hegemony in

the sector. After the conflict began, officials from the Department of Finance

noted anxiously that the dispute would leave Ireland’s food supplies in a dire

position.15 While Lemass had set about establishing a series of semi-state

companies to bridge the gap in native capital and expertise,16 it seemed that the

elephant in the room was being ignored.

A letter to the Irish Independent in February 1933 correctly identified merchant

shipping as the missing link in the growing chain of Irish protected industries

and semi-state concerns. ‘In the effort being made to start and revive industries

in the Saortstat, no notice seems to be taken of an industry that once flourished

in every town on the sea coast – the mercantile marine.’ The letter went on to

outline how the state owned just 25 auxiliary motor vessels and 12 small

steamers and was losing out to ‘foreign monpolies’ which controlled the cargo

trade. Ireland paid £400,000 per year for foreign-imported cargoes, the author

claimed, while privately-owned Irish ships were being bought up by companies

‘allied to colliery interests’. Lemass should grant protection to Irish shipping, the

piece concluded: buying ships was, in the early years of Depression-ravaged

Europe, ‘never cheaper’; ‘give the seafaring community a chance!’17

Industry professionals echoed these sentiments. In 1934 a renowned Irish ship

captain openly criticised the government’s inaction on the matter. Free State

ships were being driven out by foreign competition, he claimed. Ireland’s

independence did not extend to the sea, where it ‘had no place on the high seas

because even ships registered in Dublin fly the red ensign’.18 An Irish merchant

marine, argued the President of the Irish Chamber for International Trade, would

end dependence on the British market by bringing Irish malt to Switzerland,

tweed to Sweden, herrings to Poland, and the country’s cattle, beer and biscuits

to the entire world.19

As the first letter indicated, the Irish government was well placed to take

advantage of the low prices for ocean-going vessels during the shipping

depression of the 1930s. Moreover, the reckless business dealings of Lord

Kylsant, the owner of Coast Lines, were to bring him notoriety as the man who

sank the White Star Line. Kylsant’s corporate irresponsibility provided a unique

opening for the Free State government. Kylsant’s business empire, which included the shipping line of Titanic fame and the Belfast shipbuilder Harland and Wolff, collapsed in 1931 and Kylsant was imprisoned.

A receiver was appointed by the British government to dispose of Kylsant’s

holdings. He approached the Irish government in 1935, proposing to sell them

B&I. The importance of B&I to the Irish economy had already been amply

illustrated during the Economic War. When the Irish government ceased cattle

exports in December 1933, B&I cattle ships were the last to sail from the North

Wall to Liverpool and the first to sail back when trading resumed in January

1934.20 Furthermore, the government had committed itself to an Irish merchant

marine. In 1935 Lemass boasted that the ‘central direction of transport services’

had been achieved on the railways.21 The air services then in their infancy would,

he promised, come ‘under Irish control’. When, lastly, Lemass came to shipping,

he admitted ‘delays’ in ‘the development of an Irish mercantile marine’. He

claimed to be aiming to secure 5 per cent ownership of Irish Sea traffic, but

admitted ‘progress is much slower than I had hoped’. He nonetheless stated that

setting up a merchant marine was ‘not merely a matter of national prestige, but

also of vital economic importance.’22

Lemass, then, might have been expected to bite the British receiver’s arm off

when B&I was offered to the Irish state B&I in 1935. Instead the Irish

government demurred on the offer. In July 1935 Lemass made a tour of B&I’s

Dublin premises alongside the company’s general manager, David Barry. Both

Barry and Lemass expressed their hope for friendlier trade relations between

Britain and Ireland and both men said that they looked forward to the founding

of an Irish merchant marine.23 The flirtation between the Free State and B&I was

seen by many as a strong indication that the formation of an Irish merchant fleet, despite the delays, was nonetheless imminent. 24 The following year, the company again offered the Irish state a controlling interest in the B&I line. B&I had reported a significant increase in annual profits that year25 and The Times

reported that Coast Lines’ owners were willing for a large amount, if not all, of its

Irish subsidiary to be owned by either the Free State government or Free State

residents.26 Once again, B&I was offered to the Irish state, but this time the offer

was declined.27

Given the government’s public pronouncements on its intention to establish a

merchant marine, the decision not to acquire B&I appears strange. In fact,

contrary to Lemass’s public utterances on the subject, Irish shipping policy in the

1930s displayed traits which suggest an opposition to nationalising or protecting

the sector. Lemass may have been unwilling to invest in shipping because of the

relative decline in the trade in the decade. Yet, curiously, at the same time

Ireland remained a member of the British Imperial Shipping Committee, for

which the country paid a large annual subscription and in return received advice

on maritime transport improvement. Effectively, this cost was of no benefit

whatsoever to a country without a merchant marine.28

Although the Irish state was not interested in taking it over, B&I recognised that

its future lay in the Irish market, and offered shares to Free State citizens. The

company went into voluntary liquidation in 1936, emerging with the same name

but as a new company registered in Dublin.29 Nominally, the new B&I was now

an Irish company: the company’s title was even provisionally changed to Irish

Free State Lines.30 In reality, however, it was still British-controlled. This issue of

ownership appeared somewhat irrelevant with the easing of relations under the Anglo-Irish Trade agreement of 1938. As war approached, however, it would become clear that Lemass and the government had missed a vital chance to

consolidate Irish economic sovereignty.

War Arrives

In June 1939, with world war looming, the Irish crew of the B&I ship Normandy

Coast walked ashore at Dublin port in an act of protest against the transfer of the

ship’s port of registration from Dublin to Liverpool.31 Three months later, in

September 1939, there occurred a similar act in the port of Holyhead when the

British crews of one passenger ship and two cargo vessels (B&I owned and

registered in Dublin) refused to operate these ships under the Irish tricolour.32

These twin actions were more than mere expressions of nationalism, and more

than trifling maritime episodes. Rather, they point to the state’s failure to build

up its shipping portfolio in the 1930s as a major policy error.

The Irish crew who walked off the Normandy Coast worried that if they stayed

aboard their vessel under the red ensign they would find themselves under

attack from German U-boats.33 At the outbreak of war, the Irish government

instructed all Irish-registered vessels to fly the Irish flag and the protesting

sailors wanted it hoisted.34 But this, as the British sailors at Holyhead argued,

was illegal since a ship’s flag was ultimately determined by its country of

ownership.

Lemass’s top officials already knew that this was the case. In February 1939

Lemass’s departmental secretary, John Leydon, had instructed civil servants in

Industry and Commerce to draw up a memorandum illustrating just how

dependent Ireland was on other countries for essential supplies.35 When the

report came back in April 1939 it made for alarming reading.

The bulk of Ireland’s imports came from Britain and its commonwealth.36 The

value of shipping shares held by Free State residents was pitiful . In B&I – the

largest and most important shipping company to Ireland – only £158,000 of the

£1,342,000 share capital was Irish.37 And of all the ships in Irish ports, a measly 5

per cent were Irish-owned. The memo made it clear that ‘if war should break out

we are at the mercy of the United Kingdom’ and that ‘economic activities of this

country could be completely paralysed’.38

With war only months away, Ireland’s supply of key commodities such as coal,

wheat, maize, petrol and timber was completely at the mercy of the British.39

Leydon described the memo as of ‘vital importance’ and instructed it to be

circulated to ministers immediately.40 By this stage, however, it was too late.

The newly formed Irish Emergency Supplies Branch of Industry and Commerce

frantically consulted Whitehall on whether British-owned ships would be

requisitioned en masse from Ireland as part of the war effort.41 But the British

had already made this cynical calculation. As early as the Munich Crisis of

September 1938, the regulation of the shipping trade was to the forefront of

British Board of Trade thinking. The Board had already decided, by this early

stage, that in the event of a conflict a British blockade would cut off maritime trade, forcing Irish neutral shipping into British hands because of the lack of other markets.42

When it came to shipping policy, it appeared that the Irish government had been

sleeping in the wheelhouse. Britain had been centralising control of shipping for

a long time. Consequently, there was a sharp decline in Irish steam shipping due

to British requisitions. In 1926 there were 152 steam ships registered in Ireland,

by 1937 this had fallen to 14143 and at the outbreak of war neutral Ireland had

just 56 ships. None of these vessels were ocean-going; all were designed for

short sea journeys. Amazingly, with very low power engines they were all

dependent on wind for propulsion.44

It is evident, then, that the order for Irish-registered vessels to fly the tricolour

was a desperate act intended to obscure the government’s failure to establish a

mercantile marine by ramping up national tensions. Irish policy-makers knew

that wartime shipping developments were potentially devastating. There was no

legislation in place to prevent Ireland being deprived of its ships and, with them,

a significant arm of its independence.

When war arrived, B&I’s ships were requisitioned by Britain; the biggest losses

were B&I’s newly built state-of-the-art sister ships Leinster and Munster.47

Similarly, in 1938 the building of an oil refinery in the port of Dublin had brought

seven large German tanker vessels to Dublin. These ships were requisitioned by

Britain two days after the outbreak of war. As Secretary of the Department of

External Affairs Joseph P. Walshe emphasised to de Valera a week before war

broke out, shipping remained an area of ‘our economic life’ still dictated by

Britain.48

This grave situation was assuaged somewhat by the ‘phoney war’ status of the

early conflict. Irish policy-makers knew just how drastic the situation could

become if there was an escalation in marine warfare; but from September 1939

to March 1940 Ireland still had access to neutral imported supplies, albeit at a

very inflated cost.49 By April 1940, this relatively benign period was over. In that

month Lemass travelled to London for talks with British Secretary of State for

Dominion Affairs, Anthony Eden. Eden warned Lemass that the ‘elimination of

competition’ on shipping, meaning that Ireland would no longer be able to

charter her own ships.50 It now seemed likely that Ireland would have little

choice but to make concessions to the British in return for access to shipped

imports. However, after France fell to Nazi Germany in early June 1940,

Taoiseach Éamon de Valera turned down the British offer to end neutrality in

return for the use of Irish ports.

By January 1941, the drastic supply situation in Ireland forced Lemass to finally

centralise control by founding Irish Shipping Ltd, a company in which the

government held the controlling share.51 The company amalgamated the few

Irish-owned shipping concerns, most of which had already suffered the loss of

several vessels to U-boats and mines.52 Irish Shipping Ltd is today remembered

fondly as a plucky small fleet which braved marine warfare to keep Ireland from

starvation. But its few, rusty, hazardous old vessels exemplified the failure to

establish a proper merchant marine in the 1930s. The company’s first ship, Irish Poplar. was a Greek merchant vessel which had been found drifting and abandoned by Spanish fishermen after being bombed; it had been stripped of

everything of value by the Spanish; and on its first voyage its mainmast

collapsed.53 While 138 Irish sailors met their deaths on its ships, the company’s

commercial operations were subject to cut-throat competition from private

buyers in Thailand, Switzerland and the Americas.54 Even after the establishment

of Irish Shipping Ltd, Britain was free to flex her maritime muscles to Ireland’s

detriment.55

For the remainder of ‘the Emergency’, shortages of essential goods became a fact

of life and public health suffered as a consequence. Irish officials were often

forced to rely on the benevolence of senior figures within the British

establishment in order to procure essential goods. On one occasion it took the

prediction of ‘famine conditions in Ireland’ by a British peer to secure the release

from Britain of chemicals used to prevent potato blight.56 During the Second

World War, an estimated 20 million people died from starvation, malnutrition

and related diseases: a figure exceeding the 19.5 million combat deaths.57 The

eerie yet realistic prospect of starvation was never far from the minds of Irish

policy-makers during the Emergency and the ‘narrative of absence’ surrounding

the grim material shortages experienced during the Emergency in Ireland has

since become archetypal.58

Lessons

Basil Peterson’s 1962 Irish maritime history – Turn of the Tide – contained a

foreword from then Taoiseach Seán Lemass. Lemass admitted that the absence

of a merchant marine in the 1930s was an almost ‘fatal defect in our national

economy’ but blamed British ‘measures of commercial policy and lack of political independence’ for the oversight.59 Peterson went along with this line. Although highlighting the fact that state inaction on a mercantile marine in the 1930s was

‘retrograde and negative’ he muffled his implicit criticism of Lemass by

reverting to simplistic anti-partitionism.60 The official record relating to shipping

is similarly evasive, even ‘bizarre and Orwellian’ in parts.61 This is attributable to

the determination of Leydon, Lemass’s faithful lieutenant, that any material that

cast the government in a bad light ‘should not be left open to delving historians

of the future’.62

Fortunately, enough historical records have survived to enable clear lessons to

be taken from the issue of merchant shipping in the 1930s and 1940s. When it

came to British economic bullying, de Valera’s cabinet’s humane calculation that

mass civilian casualties had to be avoided is laudable, as the human cost of the

North Strand bombing of Dublin of 31 May 1941 conveys forcefully. On the other

hand, Churchill was snubbed with a key arm of Ireland’s economic sovereignty

lacking and Ireland suffered great material deprivation as a result. With better

planning and procurement of vessels in the 1930s, such a Catch-22 decision need

not have arisen for Irish policy-makers.

Lemass later claimed that ‘not even the Archangel Michael’, if he were in charge

of the country, would have been able to prevent wartime shortages.63 However,

there is little doubt that the scale of these shortages and of the sacrifice of Irish

sailors would have been less considerable had the government pushed ahead

with its aim to establish a mercantile marine in the 1930s. In the course of a

post-war lecture on careers at sea, Captain Henry Freyne, the Principal Examiner

of Masters and Mates for the Department of Industry and Commerce, conceded:

‘If we had had a fleet of just one hundred tramp steamers at the outbreak of the

war we would know very little of the difficulties caused by the war in Ireland.’64

In a speech delivered against a backdrop of material hardship in June 1941,

Lemass rounded on his critics. ‘I have had the records of the house examined

from the date on which the war started to the end of 1940 and not once during

that whole period did a single member … mention the word “ship” in this House

much less urge on the government any course of action in relation to ships’.65

This was classic Lemassian bluff. His nemesis James Dillon recognised it

immediately, responding to Lemass’s truculent speech by yelling ‘blatherskite!’

at him from across the chamber. Whether or not the issue had been raised in

1940, Lemass knew that the ownership of shipping was raised repeatedly as a

matter of public policy throughout the preceding decade. As early as 1932 it was

pointed out that Ireland’s lack of ownership of ‘sailing or shipping services’ was

aggravating unemployment.66 The acquisition of more shipping was variously

urged on the government in connection with the nationality of children born at

sea,67 the design of an Irish merchant navy jack,68 and the appointment of

company directors to semi-states.69

Yet in this extraordinarily defensive speech of 1941, Lemass came closer to the

truth about why a merchant marine was not established in the 1930s.

Fundamentally, the perfidious Albion was not to blame. He and other policy

makers had gambled that the world war would be ‘a war of exceptional rapidity’,

a limited conflict which would not impinge on Ireland’s shipped imports,

allowing Ireland to sit back and observe before emerging unscathed.70 The

country would be a rather parasitic neutral, reliant only on other neutrals.

Lemass had made the false calculation that neutral countries such as Greece and

Norway would not be ‘engulfed in the vortex’ and that Ireland could rely on these

states for its imports, even with Britain at war. The government planned to

‘charter the vessels of other neutral nations to serve our needs [rather than]

send ships bearing our flag into these dangerous waters, carrying with them all

the risks to neutrality’.71

So what lessons in policy-making can be learnt from this failed gamble?

Firstly, as a premise on which Ireland’s merchant fleet was neglected, it was an

unsound one. It ignored the lessons of history in assuming that one of the world’s

premier maritime powers would not exercise economic blockade warfare in time

of war: a tactic which Britain, as a Thalassocratic empire, had used for centuries.

Against the wishes of the trade, British shipping had been entirely given over to

the state by October 1939.72 This was the culmination, not the start, of a process

of British centralisation clearly suggestive of war on a large scale which would

draw neutrals as well as combatants ‘into the vortex’.

Secondly, Irish policy makers – and Lemass in particular – neglected a key

component of national trade and enterprise in focusing on a glitzier option.

Lemass would have noted that by 1938 an air freight section had opened at

London’s Baltic Exchange for the first time, signalling its great commercial

potential. Unfortunately, though, war rendered air freight stillborn.73 In the

context of the poor profitability of coastal trading in 1930s, plumping for air

travel was understandable, but not at the outright expense of shipping. The

relative decline of the sector and the breaking up of Kylsant’s personal empire

meant that the Irish state could have expanded its merchant marine much more

cheaply. As the British Ministry of War Transport acknowledged, during the

1939-45 conflict it was shipping – above other transport links – which had fundamentally saved the British population from falling below the ‘starvation

mark’.74

This leads to the question of responsibility for bad planning. The absence of a

mercantile marine in a country ‘with an immense seaboard ’ was cited by a Fine

Gael deputy as de Valera’s failing, part of his ‘inability to plan on a large scale for

the welfare of this country’.75 While a lack of coordinated and forthright

leadership was certainly a factor, the failing was also Lemass’s as Minister for

Industry and Commerce. Shipping was closely linked to railway transport in this

period. In this regard, Lemass’s well-known prejudice against the traditionally

unionist Great Southern Railways may have blinkered him to the possibility of

large scale maritime expansion.

This, in turn, highlights the desirability of better dialogue between the state and

industry experts. It is evident that Lemass was at times outflanked by foreign

firms, which manipulated shareholding patterns in order to get around the

restrictions of the protectionist Control of Manufacturers’ Act (1932).76 Lemass

was criticised by the Federation of Irish Industry for allowing shares in so-called

Irish companies to be held by these wealthy foreigners.77 For his part, Lemass

felt that ‘private enterprise let us down’ when it came to the stockpiling of

supplies. The big issue for the large Irish importing firms was risk: they were

reluctant to have large supplies on their hands if the war turned out to be a short

conflict, in which case they would be forced to dispose of their stock cheaply in a

falling market. 78

In summary, the failure to establish an Irish mercantile marine highlights the

navigational uncertainties of the Irish semi-state archipelago in the 1930s and

40s. In a 1986 Dáil debate concerning B&I, Bertie Ahern denounced British companies winning contracts over Irish companies in the shipping trade.79 In pursuing this argument, Ahern saw himself as the inheritor of the pragmatic commercial nationalism pursued by Lemass as Taoiseach between 1959 and 1966: B&I was nationalised by Lemass’s government in 1965 and its ships would later operate as Irish Ferries. But shipping as a national issue had a much greater lineage and Lemass, as this study proves, a much patchier record in managing the sector.

Although economic and political circumstances have undergone enormous

transitions since, certain lessons are clear. Although neoliberal mantra may deny

the fact, for an island nation a diverse state-owned (or partly owned) transport

portfolio is a central plank of economic sovereignty. For a state with such a large

seaboard, the consistent failure to exploit marine resources represents a

significant gap in early Irish protectionism. But even after the dismantling of

protectionism, marine resources remained overlooked. If Ireland failed in the

past to take proper advantage of its vast marine resources in the national

interest, it still fails today. Significantly, the state has now recognised (see

www.ouroceanwealth.ie) the scale of this historic and contemporary neglect of

the marine sector.