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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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