Lemass, economic policy and the absence of an Irish Mercantile Marine

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.