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The Industrial Development Authority, 1949–58: establishment, evolution and expansion of influence

Published online by Cambridge University Press:  20 July 2015

Frank Barry  and
Mícheál Ó Fathartaigh
Frank Barry*
Affiliation:
Trinity College Dublin
Mícheál Ó Fathartaigh*
Affiliation:
Trinity College Dublin
*
aSchool of Business, Trinity College Dublin, frank.barry@tcd.ie
bSchool of Business, Trinity College Dublin, mofathartaigh@hotmail.com
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Abstract

Established in 1949 in the face of Fianna Fáil hostility, and greeted with suspicion by both the department of Industry and Commerce and the department of Finance, the Industrial Development Authority within ten years had carved out a powerful position for itself within the bureaucracy. By the early 1950s, while Seán Lemass was still wedded to the concept of import-substituting industrialisation, the I.D.A. was formulating its vision for ‘industrialisation by invitation’ and lobbying internally for the introduction of export profits tax relief. The adoption of this measure in 1956 initiated the low corporation-tax regime that remains in place to this day. Though frequently conflated, the reorientation of industrial policy in the 1950s and the dismantling of tariff barriers in the 1960s were quite separate initiatives. That the establishment of the I.D.A. and the adoption of export profits tax relief were opposed by the department of Finance and enacted by inter-party governments clearly distinguishes them from the later trade-liberalisation initiative associated with the partnership of T. K. Whitaker and Lemass. The present paper explores the circumstances surrounding the establishment of the I.D.A. and traces its evolution and expanding influence over the first ten years of its existence.

Type
Research Article
Information
Irish Historical Studies , Volume 39 , Issue 155 , May 2015 , pp. 460 - 478
Copyright
© Irish Historical Studies Publications Ltd 2015 

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References

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41 Ibid.

42 Ibid.

43 ‘Department of External Affairs: memorandum for the government: Industrial Development Authority’, 9 Nov. 1950 (N.A.I., Department of the Taoiseach [DT] S 14474 A).

44 John O’Brien, secretary of the Federated Union of Employers, apparently turned down the offer of membership.

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54 Seanad Éireann deb., lxxxiii, 564–5 (18 Dec. 1975).

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58 Horgan, , Lemass, pp 144–145Google Scholar.

59 Dáil Éireann deb., cxxvi, 1514 (12 July 1951).

60 Irish Times, 7 Sept. 1967. As will be seen below, it appears that the secretary of Industry and Commerce had come by this time to see the value of the I.D.A. as an ally in the department’s battles with Finance. This would have been an important consideration for Lemass as well.

61 Draft department of Finance reply to department of External Affairs memorandum to government, 7 Jan. 1949 (U.C.D., McGilligan papers, P35b/47(4)).

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69 Seanad Éireann deb., lxxxiii, 564–5 (18 Dec. 1975).

70 Letter from John Leydon, secretary of the department of Industry and Commerce, to Muiris Ó Muimhneacháin, secretary of the department of An Taoiseach, 26 Jan. 1950 (N.A.I., DT S 14474 A).

71 Internal minute to taoiseach, 11 Nov. 1949 (N.A.I., DT S 14474 A); ‘Interim report of the Industrial Development Authority regarding industrial exports’, 27 Sept. 1949 (ibid., DT S 11752 A); ‘Report of the Industrial Development Authority regarding industrial exports’, 14 Dec. 1949 (ibid.).

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73 Ibid., p. 342.

74 The full membership is reported in N.A.I., DT S 14818 A.

75 The department had been arguing for some form of tax relief for exporters since 1945; the September 1949 interim report of the I.D.A. surmised that financial inducements – which might take the form of tax remission on the profits of export trade – were needed ‘to attract products to the export pool’. The second report of the D.E.A.C., issued in August 1950, recommended the granting of a tax concession on all profits earned by exports or re-exports which earned dollars for the country: Barry, ‘Export profits tax relief’.

76 Inter-departmental conference on the reports of the D.E.A.C., 5 Oct. 1950 (N.A.I., Department of Finance [DF] F49/1/51/10 C).

77 Ibid.

78 ‘Extension of the activities of Córas Tráchtála Teoranta’ memorandum, 9 Sept. 1954 (N.A.I., DT S 14818 C). Peter Murray notes that its promotional activities were extended to non-dollar areas in 1954: Murray, , Facilitating the future: US aid, European integration and Irish industrial viability, 1948–73 (Dublin, 2009), p. 208Google Scholar.

79 The Consultative Committee of C.T.T., meeting on 25 October 1956, ‘welcomed the announcement of a concession to exporters which had long been advocated’: N.A.I. DF 200/10/56.

80 Dáil Éireann deb., cxxvi, 1544–5 (12 July 1951); ibid., 1672 (17 July 1951).

81 Dáil Éireann deb., cxxvi, 1515 (12 July 1951); ‘Report of Meeting: Technical Assistance’, 11 Sept. 1951 (N.A.I., Department of Foreign Affairs [DFA] 305/57/226).

82 Departmental conference no. 288, 23 Feb. 1953 (N.A.I., DIC 2000/13/8).

83 Dáil Éireann deb., cxlii, 821 (28 Oct. 1953); departmental conference no. 322, 30 Nov. 1953 (N.A.I. DIC 2000/13/9).

84 Irish Independent, 23 Feb. and 22 Aug. 1953, 14 Sept. 1954 and 15 Apr. 1955; Seanad Éireann deb., xlv, 1747 (22 Mar. 1956).

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87 The undeveloped areas were Donegal, Leitrim, Sligo, Roscommon, Mayo, Galway and Kerry, and the districts of west Cork and west Clare. The ‘command and control’ mechanism included restrictions being placed on the location of firms applying for licences under the Control of Manufactures Acts: Daly, Mary E., ‘An Irish Ireland for business?: the Control of Manufactures Acts, 1932 and 1934’ in Irish Historical Studies, xxiv, no. 94 (1984), pp 246–272CrossRefGoogle Scholar at 261. Firms had also been offered monopoly positions if they agreed to establish in particular areas (Irish Times, 20 July 1935).

88 Facsimile of report of meeting between J. C. B. MacCarthy, secretary of the department of Industry and Commerce, and J. P. Beddy, 29 Mar. 1958 (N.A.I., DIC IND/INDC/4/244).

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96 Letter from W. H. Taft, member of staff of the E.C.A. mission in Ireland, to J. R. Nelson, of the E.C.A. headquarters in Washington D.C., 26 Nov. 1949 (National Archives and Research Administration (U.S.A.), Record Group 469, Box 2), cited in Murray, Facilitating the future, pp 22, 205.

97 Ibid. The controls on foreign investment had never been strictly policed (Daly, ‘Irish Ireland for Business’). As to why they remained on the statute books for so long, see Barry ‘Export profits tax relief’.

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99 Department of Finance response to reports 1, 2 and 4 of the D.E.A.C., 27 Sept. 1950 (N.A.I., DF F49/1/51/9 A). Italics added.

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101 ‘Department of Industry and Commerce: memorandum for submission to the government on paragraph 7 (industrial development) of statement of government policy’, 22 Oct. 1951 (N.A.I., DT S 11987 B).

102 Dáil Éireann deb., cxxxiii, 441–2 (9 July 1952).

103 Ibid.

104 Amusingly, given that ‘hardware other than hollowware’ was one of the sectors he asked them to concentrate on, one of the foreign firms that established in 1957 was a producer of enamelled hollowware.

105 Murray, , Facilitating the future, p. 22Google Scholar (based on documentation held at N.A.R.A. – the National Archives and Research Administration, U.S.A.)

106 These recommendations received the strong endorsement of the secretaries of External Affairs and Industry and Commerce, and of Morrissey, the minister for Industry and Commerce, who described it as ‘the first sensible suggestion on the industrial side which had come from the ECA’: correspondence between Daniel Morrissey, minister for Industry and Commerce, and F. H. Boland, secretary of the department of External Affairs, 10 Mar. 1950 (N.A.I., DFA 305/57/112, i).

107 Murray, , Facilitating the future, p. 23Google Scholar (based on documentation held at N.A.R.A.).

108 I.B.E.C. Technical Services Corporation, Industrial potentials of Ireland: an appraisal, 1952, p. 70.

109 Whelan, , Marshall Plan, pp 345–350Google Scholar; Murray, , Facilitating the future, pp 6Google Scholar, 28, 36.

110 This raises the intriguing possibility that the reference to Puerto Rico was inserted at the behest of the I.D.A., which (as the report states) had been furnished with – and had responded to – an earlier draft. Unfortunately no files detailing the interactions between the I.D.A. and the report’s authors have come to light.

111 N.A.I., Fin/F200/10/56.

112 Barry, ‘Export profits tax relief’. On the Lemass trip to the U.S.A., see particularly ‘ Mr Lemass offers an Irish welcome to U.S. investors’, Irish Times, 6 Oct. 1953.

113 Morrissey speech to the Waterford Chamber of Commerce, (U.C.D., Costello papers, P190/418(4)).

114 Seanad Éireann deb., xlv, 1747 (22 Mar. 1956).

115 Dáil Éireann deb., cxlix, 525–6 (23 Mar. 1955).

116 Irish Independent, 21 June and 6 July 1956.

117 ‘Attractions of Ireland as a location for industries: facilities granted to industrialists’, Nov. 1956 (N.A.I., DT S 15293 A).

118 See Irish Times, 14 Sept. 1955 for information on Faber-Castell; Irish Times; 27 May 1954 for Sligo Models; and Irish Times, 30 Nov. 1957 for Couper Works.

119 Brock, Catherine, ‘Public policy and private industrial development’ in J. A. Bristow and A. A. Tait (eds), Economic policy in Ireland (Dublin, 1968), p. 160Google Scholar. See also Dáil Éireann deb., clx, 2373–80 (13 Dec. 1956), and Kennedy, Kieran A., Giblin, Thomas and McHugh, Deirdre, The economic development of Ireland in the twentieth century (London and New York, 1988), pp 62–63Google Scholar.

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121 Ibid.

122 Ibid.

123 Department of Industry and Commerce memo: ‘Attraction of American capital investment in Irish industry’ (N.A.I., Fin F 200 10 56).

124 ‘Attractions of Ireland as a location for industries’, Nov. 1956 (N.A.I., DT S 15293 A).

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