Memorandum from Seán MacBride to Paul Hoffmann 'General considerations on Ireland's position in relation to the European Recovery Program'

Ireland is anxious to contribute to the maximum of her ability to the economic recovery of Western Europe. Her desire to do so is based on her desire to assist in the creation of economic conditions that will enable the survival and the regeneration of free institutions and Christian civilization.

Ireland's approach to political and economic problems is not based on materialism; basically, Ireland is moved more by a genuine desire to serve the ideals in which she believes. These ideals are the democratic way of life, Christian social and economic principles, human liberty, the right to national self-determination and family life. Rightly or wrongly, Ireland believes in a policy based on idealism rather than on materialism. This does not mean that Ireland does not appreciate the urgency of co-operative action to render material aid. Indeed, Ireland was among the first nations to send large shipments of completely free gifts of food to European countries since the war ended; likewise, the Irish people voluntarily collected and sent very substantial assistance to the Italian Christian parties during the recent elections. There was no reward motive for these acts; the motive was based on idealism.

These matters are not stated out of any sense of self-righteousness or boastfulness but merely to emphasize the earnestness of our desire to do everything we can to co-operate fully with the United States in the splendid work it is doing in this sphere and to indicate our psychological approach to these problems.

The offer of assistance to Ireland by way of a dollar loan is greatly appreciated but it raises many complex problems which, in our view, will largely reduce, if not nullify, Ireland's own recovery and capacity to contribute to European recovery.

In the first place, our dollar earning capacity is negligible. Our balance of payments with the Western Hemisphere showed a deficit of ninety million dollars last year. We see no possibility of being able to improve materially on this position. Our exports are mainly food-stuffs to Europe; any increase in production will lead to increased exports only to Europe and it is not likely to affect appreciably our exports to the Western Hemisphere. Our invisible exports which form the bulk of our exports to the Western Hemisphere consist of emigrants' remittances, legacies, and tourist expenditures. Emigrants' remittances and legacies are by their nature likely to dwindle rather than increase.

In this set of circumstances, we see no way of earning additional dollars and, therefore, no way of being able to pay back or to service the proposed loan. We have, as a nation, a fundamental objection to undertaking obligations we see no prospect of meeting. We believe that states, in their dealings with each other, should set an example to their people as to the observance of the ordinary rules of morality. Least of all would we wish to run even the risk of a possible misunderstanding with a nation such as the United States for whom we have such genuine admiration and with whom we have such bonds of affinity and close friendship. In other words, we would rather tighten our belts than run the risk of a misunderstanding with one of our best friends.

Our objection to taking a loan is all the greater in that the bulk of the goods upon which we depend from the Western Hemisphere are not capital goods but consumption goods in respect of which it is even more difficult to justify borrowing and arrange for repayment. Yet these consumption goods are essential and cannot be obtained outside the dollar area; they are essential to ensure our viability on the one hand and to enable us to proceed towards recovery on the other.

Ireland's potential part in European recovery is of some importance inasmuch as her production potential is just in respect of these commodities which are projected to be still in short supply in 1952. The projection of Western European output of agricultural products shows that, even allowing for the successful operation of the recovery program, production will still be well below the pre-war levels in 1952.

Projected E.R.P. Goals Of Output For Western Europe In 1951-52

The actual shortages will be even greater than is revealed by the figures, for since 1934-38 there have been population increases and a higher standard of living is aimed at by 1952.

It is in the production of these very essentials that Ireland has a production potential capable of development, given the necessary facilities. Every additional ton of food produced and supplied by Ireland relieves pro tanto the burden voluntarily undertaken by the United States to provide that food or the dollars for its purchase. It does so with an economy of dollars and of foods in short supply.

One of the reasons urged as to why Ireland was not receiving aid by way of grant is that she had not sustained any real damage as a result of the war. This is entirely erroneous. Ireland is primarily an agricultural nation and as such is dependent on the productivity of her soil. Owing to the inability to maintain soil fertility due to absence of fertilizers and to maintain cattle, pig and poultry stocks owing to the absence of feeding stuffs, the agricultural industry was shattered as effectively as if it had been ravaged by war. In this respect, Ireland probably sustained no less damage than most other European countries. Many of these had within their procurement the necessary fertilizers and feeding stuffs; even some of the countries that suffered occupation fared better in this respect as the occupying forces relied upon the maintenance of their agricultural output because it was essential to their own economy.

Ireland's small farmsteads upon which her agricultural production is based are in effect her factories. There are 382,710 of them. During the war years and since, in order to feed herself and Britain, each one of these exhausted its soil fertility and livestock owing to the absence of feeding stuffs and fertilizers. It is just as if 382,710 small factories ran their machinery without lubricant until it became worn out.

Before the war, Ireland imported annually 400,000 tons of wheat, 300,000 tons of maize and 30,000 tons of oil cake. The absence of these imports meant that Ireland had to undertake the production of bread grains and alternative feeding stuffs though neither her climate nor her soil were suitable. By 1946, the area of land under the plough had been extended by over 62% above the pre-war area. This effort, despite the absence of fertiliser, had the double effect of reducing the livestock population and of impoverishing the soil to such a degree that in some areas cattle are now dying because of chemical deficiencies in the grass.

By the end of 1947 the number of cattle under one year was the lowest on record in this century. The pig population had fallen by half and the poultry population had fallen by one-third. This was due to the three factors already mentioned: absence of feeding stuffs; increased area under the plough; and lack of fertilisers.

The following table shows the extent of the damage to the soil fertility:

Output Per Acre in 1938 and in 1947

In brief, during the last ten years Ireland had to deplete her productivity by impoverishing her soil and depleting her livestock population in order to produce food for Britain and herself. This meant that in effect she was living on her capital and gradually destroying her production potential.

The problem of arresting this decay and of achieving a higher production than before the war involves the procurement of certain goods from the Western Hemisphere. These may be classified broadly into two categories:

• Consumer goods and incentive goods that are required to ensure viability during the process of European recovery; these range from wheat to tobacco. These foods, while not directly related to recovery, are nevertheless essential if the economy and program of recovery are not to be disrupted. For instance, if we have to concentrate on the production of wheat in a climate and in a soil which is unsuitable, our ability to produce meat will be disproportionately reduced.
• Goods directly essential to recovery: coarse grains, fertilizers, and agricultural machinery.

These two categories of requirements and the method of their financing are dealt with in the attached memorandum.¹

Our recovery program includes also plans for drainage, land reclamation and electricity generation in respect of which machinery will be required. These will also contribute to increased agricultural production. Increased generating capacity, coupled with rural electrification, would serve the double purpose of assisting agricultural production and of reducing the consumption of petroleum products.

Assuming availability of the goods required for the Western Hemisphere, the output of pigs, poultry and eggs can be increased very rapidly; from about 40,000 tons pig meat can be increased to 100,000 tons in 1950-51 and to 150,000 tons in 1951-52; eggs from 59,000 tons to 100,000 tons in 1950-51, and 120,000 tons in 1951-52; poultry from 17 million heads to 25 million heads in 1950-51 and 30 million heads in 1951-52.

The increase in the production of cattle, butter and other produce will be slower, as it is dependent on restoration of soil fertility.

It is, therefore, obvious that Ireland's contribution to European recovery is of considerable importance in that very sphere which is most vital.

Apart from the practical impossibility of acquiring the necessary dollars to service and repay the proposed loan, a further consideration arises if aid is not to be available by way of grant. The restoration must be dynamic if the targets set are to be reached. Without the aid of the special fund for this purpose, it will be difficult to arrest the decay, let alone to reach the targets set. The use of the special fund to inject the ingredients required in large doses over the next four years would play an indispensable part in the process of recovery.

The farmsteads are very small and impoverished. Out of 382,710 holdings 151,970 are below 15 acres; 88,752 are between 15 and 30 acres; 62,649 are between 30 and 50 acres; only 7,206 are above 200 acres. Many of these holdings include large areas of bogs and mountains that are practically unproductive.

The smallness of the holdings, upon which generally large families depend, coupled with the low economic levels of the population, preclude the expectation that the small peasant farmers will be able to inject into their farmsteads the goods that are essential to their recovery without the intervention of State aid. As explained before, these holdings which are the equivalent to our factories have exhausted themselves and are unable to recover without outside help. Nor will the economic levels permit the expectancy that they will in the future be able to bear added taxation burdens to repay loans of the magnitude required. The last income survey showed that 70% of the working population earned less than £3 per week. The economic levels may also be gauged by a comparison of the rates of pay to agricultural workers in Ireland and in Britain: in Ireland average wages of agricultural workers are 50 shillings per week as against 90 shillings per week in Britain.

A further problem of some magnitude must also be faced in relation to emigration. The population of that portion of Ireland comprised in the Twenty-six Counties is now well below three millions. The steep fall in the population is due to emigration caused principally by low economic conditions. Despite the fact that there is always a very considerable 'natural increase' of population, (about 6.9 per thousand), there is a constant decrease in the overall population due to emigration. The magnitude of this problem can be appreciated by the fact that out of a population of less than three millions, close to a quarter of a million have emigrated since before the war. We look to the recovery program for the economic utilisation of the manpower which is now under-utilised or lost to the national effort.

It is obvious that Britain's economic future will preclude her from providing an outlet for Ireland's surplus population indefinitely. Indeed, Britain is already finding it necessary to seek outlets for her own surplus population. Ireland is, therefore, faced with the task of absorbing her own natural population increase. This is a very important and pressing task which will tax our resources to the maximum.

A press interview given as a reason for the decision to exclude Ireland from aid by way of grant [word missing] the food consumption level per capita. In the first place, these figures presumably include the consumption of food by close to a million tourists and transit visitors whom we have sought to attract to our shores in order to reduce our adverse trade balances. Also, presumably not reckoned in this estimate was the unofficial outflow of food to the Six Counties and Britain which is by no means inconsiderable.

A more accurate test of the standards of life of the Irish people would be obtained by an examination of the weight tables, of the incidence of health and mortality statistics which are regrettably unsatisfactory, even by European standards.

Such is the general picture. It explains on the one hand Ireland's interest in the European Recovery Program and her desire to do her utmost to contribute to its success and, on the other hand, the problems which the task of Irish recovery presents, and our concerns that participation in the program should not entail the contracting of a heavy and irrepayable external debt.