Measures of Economic Co-operation

Mr. McGilligan: Mr. Chairman - In approaching the economic side of the work of this Conference, there are certain considerations which, I think, we would do well to bear in mind. Drastic changes in the economic structure or fiscal policy of any Member of the British Commonwealth cannot be effected by the mere passing of resolutions. New measures of economic co-operation, new developments in inter-Commonwealth trade must, of necessity, be based upon the existing economic structure. We must appreciate the chief elements in that structure before we can proceed to build on it. We have for the past week been discussing the political aspects of inter-Commonwealth relations, and have approached those matters from various national points of view. We shall, no doubt, approach the economic side of our work from points of view which will also indicate a variety of aspirations. But the whole proceedings of this Conference will lack reality should there appear any tendency to adopt an attitude on the political side of inter-Commonwealth relations which is not reflected in the proposals put forward for discussion when the economic side of those relations is being examined. To the peoples of the States which are Members of the Commonwealth, the most effective test of the practical measure of co-operation to which we attain will be a test on the economic plane. It has been my duty during the past week to urge upon meetings of the heads of delegations an Irish Free State point of view in the political sphere sometimes more advanced than that adopted by some other delegations. The heads of some other delegations have asserted with emphasis that their relations within the Commonwealth involve the closest ties in outlook and aspiration. It will create, I imagine, some confusion in the mind of the ordinary citizen should he discover that the intimate character claimed for those ties is inadequately reflected in the economic sphere.

 

Economic Relations between the Irish Free State and Great Britain

I am glad to have this opportunity of explaining the salient features of the economic relations between the Irish Free State and Great Britain, as well as other Members of the Commonwealth, because I have reason to believe that those relations have not hitherto been properly or fully appreciated. The Irish Free State takes 80 per cent of its imports from the Commonwealth. The Irish Free State sends 94½ per cent of its exports to the Commonwealth. I do not think it can be shown that any other Member of the Commonwealth has at present such close association in the economic sphere with its fellow members. As would be expected from the past history of Ireland and from its proximity to Great Britain, it is with Great Britain that practically all this exchange of commodities takes place. There is no other unit in the Commonwealth which imports from Great Britain or exports to Great Britain so high a percentage of the commodities it requires or the goods it produces. In manufactured goods, the imports of the Irish Free State from Great Britain are almost equal in value to those which the Irish Free State produces for itself at home. A situation in which a country produces little more than half its requirements in manufactured goods, and imports the other half from a neighbouring country, is obviously not a healthy one, and the fiscal autonomy of the Irish Free State has naturally been, and will continue to be, used, to increase the proportion of such goods manufactured at home, and diminish the proportion which has to be imported. Yet, such a process would have to be carried very far, farther than seems at present probable in the Irish Free State, before the proportion of the country's requirements in manufactured goods that had to be imported was reduced to a point comparable with the proportion in the other Dominions.

 

Importance of the Trade with Great Britain

The Irish Free State has never been reluctant to acknowledge its dependence on the British market, or to recognise that the British manufacturer in many instances finds Ireland his best customer. In fact, the Irish Free State is, among the Members of the Commonwealth, the third largest consumer of British and Dominion goods. It is, among all the nations, the fifth largest purchaser in the markets of the United Kingdom. In the list of buyers of many classes of goods exported from the United Kingdom, the Irish Free State stands first among the whole world. Included in such goods are motor cars and commercial motor vehicles, malt, bacon, refined sugar, oil cake and meal, wheat flour and offals, cement, women's and girls' clothing, certain kinds of hosiery, and boots and shoes. The full list is a long and important one. On the other hand, the Irish Free State is the largest Commonwealth supplier to Great Britain of meat, poultry and dairy produce together, and of many kinds of fish of common consumption. The trade in live cattle between the Irish Free State and Great Britain is the largest of its kind, both in quantity and value, between any two countries in the world. It is reasonable to say that the Irish Free State plays, and in view of its geographical position must continue to play, a supremely important part in the supply of food products for the British market. No country can, however, be content with a balance between its agricultural and industrial production which does not afford sufficient scope or outlet for the economic energies and abilities of its inhabitants.

 

Policy for the Industrial Development of the Irish Free State

It will be recognised in Great Britain that the Irish Free State has hitherto been dependent to an abnormal extent on external sources for its requirements in manufactured goods. Without exception, I think, the other Dominions supply from their own resources and their own factories a very much larger part of their requirements, and the Irish Free State will naturally endeavour to manufacture for itself such goods as it can produce with economy and efficiency. Consistently with that ambition, which must not be mistaken for mere political vanity, the Irish Free State sincerely desires a growing enlargement and development of the trade between it and other Members of the Commonwealth. The value of the trade with other Dominions, notwithstanding the substantial decline in commodity prices, has increased during the last five years by over a quarter of a million pounds, and I believe that this new and most satisfactory development has only just begun. The value of the trade between the Irish Free State and Great Britain in the same period has declined in the case both of imports and of exports, but this feature is common to the trade between Great Britain and all the other Dominions. It can be attributed largely to the admitted general decline in prices.

Examined from other points of view, the economic relations between the Irish Free State and Great Britain are seen to be of the closest character. The estimated amount of the investment of Irish capital in British industry exceeds ninety million pounds; approximately twice the amount of the estimated investment of British capital in Irish Free State industries. In more than one respect, the present balance of advantage must be said to favour Great Britain; for instance, the cost to the revenue of the Irish Free State of the preferences accorded to Great Britain is almost five times the cost to Great Britain of the preferences accorded to Free State products. When the value of British re- exports is added to the value quoted by the Secretary of State for the Dominions for the exports of domestic produce it will be seen that the United Kingdom in fact buys some two million pounds less from the Irish Free State than the Irish Free State buys from her. However exigent the delegates of the Irish Free State may at times appear in political or constitutional questions arising out of Commonwealth relations, there can be no doubt that the present balance of economic advantage is in favour of Great Britain. The Conference will admit an essential justice in arrangements designed to secure to the Irish producer, under protective measures of the types adopted by other Dominions, a share of the home market comparable to the share already secured in their own markets by producers in those Dominions when it is realised that, as a purchaser of domestic together with foreign produce from the United Kingdom, the Irish Free State, per person, ranks at present absolutely the highest in the world.

Further, compared with Denmark, not a Member of the Commonwealth, but our chief competitor in the British market for agricultural produce, selling in that market almost twice as much as we do, the Irish Free State buys over five times as much of the products of the United Kingdom.

 

The Relation of Geographical Factors to Economic Policy

Each Dominion represented at this Conference has reviewed its own position in the economic sphere of the Commonwealth in such a way as to indicate that if possible at all, the formulation of any common policy, any general scheme, any uniform fiscal system, within the Commonwealth, would require many months of detailed examination before a definite outline could emerge. It is abundantly evident that the geographical situation of the Irish Free State must distinguish its position in essential points from that of other Dominions. But each of those Dominions can also point to geographical factors by which its economic policy and development must inevitably be controlled. If I have correctly understood the statements made by the representatives of Canada, Australia and New Zealand, they regard Great Britain as the centre of gravity of any system of economic co-operation which it would be within the compass of this Conference to devise. Because the facts are so little appreciated, and because, in relation to the Irish Free State, Great Britain occupies a more advantageous if not privileged position than in relation to any other Dominion, I have thought it necessary to emphasise the fact that a contribution by the Irish Free State towards a common policy of co-operation would not be inconsistent with an increased measure of industrial development at home. I have no doubt that Great Britain will long continue to be the chief external supplier of the Irish market, and feel it not unreasonable to hope that the Irish Free State will be enabled to become an even more important supplier of the British Market. I hope also that the growing exchange of commodities between the Irish Free State and other Dominions will rapidly extend in scope and in value. If negotiations for trade arrangements come in due course to be initiated, certain of the members of the Commonwealth, such as the Union of South Africa, New Zealand and India, will, no doubt, realise that, while the Irish Free State accords to their exports the full benefit of its preferential duties, no privileges whatever are accorded by them to the products of the Irish Free State.

I feel no doubt that every delegation represented here is animated by the entirely sincere desire to develop inter-Commonwealth trade to the mutual advantage of the participants. I feel no doubt that we all recognise this common aim to involve problems too complex and too delicate for solution by means of mere political formulas. We will not only benefit our own citizens, but also impress the rest of the world, according to the degree of prudence, patience and goodwill that we apply to the solution of those problems of which unemployment and under-employment, with all their attendant hardships and miseries, are the most evident symbols.

I, for one, anticipate that, as our discussion proceeds, we will arrive at some concrete understandings which, while they may not raise the level of prosperity within the Commonwealth far above that prevailing in the world at large, should promise advantages to those we represent of a kind more real than any other assembly of nations could hope to attain so speedily or so effectively.