The Economic War 
1932 -1938

   In July 1932 the British Government imposed levies on Irish cattle exports in order to recover the value of land annuities which the Fianna Fail government decided to withhold.  A 20% duty was imposed on the Irish Cattle and on the other main agricultural exports to the United Kingdom.  These duties were later increased in severity and between July 1932 and March 1935 had produced a revenue of £10,700,000 against the alleged Irish default of £14,500,000.  Britain needed to protect her own agriculture in the context of the worsening World Depression and this led Britain to restrict the import of Irish Beef and veal into the U.K.  Irelands answer to this was to impose its own duties on imports from Britain, as the European court of Justice was not an option back then.  Britain has successfully used the court in its dealings with France.  One of which was five shillings on a ton of coal and coke and 20% in proportion to value on cement, electrical goods, machinery, iron and steel.  This annoyed the British, as Coal Mining was a huge industry in Britain.   By 1936 things had reached a farcical state.  The import list, which contained nearly 2,000 categories, showed over half of them subject to tariffs many in the range of 50% -70%.  The average tariff level rose from 9% in 1931 to 45% in 1936.  However nearly all of these impositions represented DeValeras idealistic protectionist policy rather than being retaliatory actions.  The Economic impact of this policy was that Industrial exports declined to a mere £600,000 by 1935.  It was too expensive to export.  The volume of agricultural exports as you would expect also declined haling between 1930 and 1938.  Cattle exports collapsed dramatically from £12,700,000 in 1931 to a disappointing £4,300,000 in 1934.  Overall there was a contraction in home demand.  The reduction in farm incomes had a deteriorating effect on the other sectors of the economy, in particular the industry sector.  This Economic War had to be resolved because of the disastrous implications it was having on Irish exports.  In 1935 steps were taken in the right direction with the Cattle-Coal Pact.  Restrictive quotes on Irish cattle were raised by 33% in return for an Irish promise to import coal from all British coalmines.  In 1938 The Anglo-Irish Trade Agreement restored Anglo Irish trade relations back to normal.  However the Irish government had to undertake to pay a lump sum of £10,000,000 to the British Exchequer. a large costly penalty the result of DeValeras stupidity.  Both countries decided sensibly to abolish emergency duties.  
  

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UCD ECONOMIC HISTORY