The geographical situation of the Irish Free State results in dependence to a marked degree on the British market for the absorption of its exports. Thus, in the year 1929 when exports and re-exports were valued at £47,870,000, goods to the value of £44,172,000 or 92% of the total export trade were exported to Great Britain and Northern Ireland. In 1930 these markets took goods to the value of £41,781,000 out of an export trade valued at £45,731,000 or 91% of the total.

It follows therefore that the Free State export trade is peculiarly sensitive to circumstances prevailing in Great Britain and Northern Ireland and is bound to react to the economic conditions prevailing in these markets. The bulk of the export trade consists of live cattle, pigs, sheep, and various classes of foodstuffs; and although a decrease in the purchasing power in Great Britain or Northern Ireland may not affect this class of trade to the same extent as 'luxury' goods there is no doubt that, apart altogether from the question of foreign competition, the present exceptionally depressed condition of the principal Free State markets has adversely affected the export trade.

It is to be observed therefore that the effects of the world depression reaches the Irish Free State mainly through its principal market - Great Britain. These effects must be observed accordingly from this point of view having in mind that Irish producers have advantages of soil and climate for cattle and horse breeding, dairying, etc; they are close to their market and the share of the Irish Free State in the British import trade in agricultural products is small relatively to other countries. Exporters of live stock in particular have, owing to the freedom of the country from serious animal maladies, advantages over other possible competing countries.

In this way as in some others the Irish Free State, enjoying advantages in a special market, has not yet experienced the full weight of the economic depression which has proved so disastrous particularly in other agricultural countries dependent on the production of cereals and such products as have suffered the maximum fall in price. The Irish Free State has by no means escaped the results of the fall in commodity prices and it may be that during the year 1931 - as indications to date rather suggest - the depression may intensify and its effects become more serious. At the same time the examination of the general economic situation for the period 1921 up to the end of 1930 which follows suggests that for many reasons the Irish Free State had up to that date not suffered to the same extent as most other countries from the prevailing abnormal conditions.

The Provisional Government of the Irish Free State came into being on the conclusion of the Anglo-Irish Treaty in December 1921, so that the period under review from 1922 up to the end of 1930 represents the actual lifetime of the new Irish Government. Difficulties arising out of the establishment of the new State culminating in a Civil War depressed the economic conditions of the country to a considerable extent, and, further, delayed the steps which the Government took later in the direction of legislative and administrative action with the object of improving economic conditions.

It is not possible to state precisely the effects on production and trade in the country during the critical years from 1922 to 1924 as separate figures for the trade of the country were only made available in 1924 for the first time. Statistics, however, are available for the total produce of crops and the total numbers of livestock and these do not indicate any undue reduction either in the acreage of the principal crops or in the numbers of livestock in the country.

In the special circumstances of the creation of a new State it is first necessary to explain briefly the position of the National Finances as an important element in the general economic position. The following table shows that since the year 1924-25 both revenue and expenditure figures have been steady with a slight downward tendency under both heads.² The figures for the previous years can scarcely be regarded as normal having regard to the disturbed conditions which prevailed in consequence of the civil war.

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Since the establishment of the Irish Free State three long-term national loans have been floated all of which were fully subscribed. The present stock exchange quotation for each of these loans is considerably in excess of the issue price.

The first National Loan was floated in 1923. Amount issued £10,000,000; rate of interest 5% per annum; price of issue 95%. The loan is repayable at par on 1st December, 1945, the Government having the option to redeem the stock in whole or in part at par on or after 1st December 1935, on giving three months' notice. Present price, 104¼. Amount outstanding on 31.3.31, £8,186,500.

The Second National Loan was floated in 1927. Amount issued £7,089,175, rate of interest 5% p.a. Final repayment date 1st November, 1960. Of the total amount issued $15,000,000 was issued in the United States in $500 and $1,000 bearer bonds. The bonds of the external issue are convertible into stock of the internal issue at the rate of £102.14.10. Stock for each $500 principal amount of bonds. Price of issue 97. Present price; internal issue 106⅛; external issue 105½ (ex div.). Amount outstanding 31.3.31, £6,774,500.

The Third National Loan was floated in 1930. Amount issued £6,000,000; rate of interest 4½% per annum; price of issue, 93½. The loan is repayable at par on 1st October, 1970, the Government having the option to redeem the stock in whole or in part at par on or after 1st April, 1950, on giving three months notice. Present price, 102; amount outstanding on 31.3.31 - £5,914,000.

There was therefore - with the exception of war damage - no heavy burden of debt, as compared with most other countries, to put the Irish Free State in a particularly unfavourable position just before the commencement of the general world depression. For the reasons which follow, while the Irish Free State cannot claim to have escaped the effects of the depression, and, as has been already stated, may find the position more difficult in the current year, there is evidence that these effects were not felt to the same extent as in most other countries.

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So far as production and consumption are concerned there would not appear to have been any decrease, taking the industries of the country as a whole. This satisfactory position is further evidenced in the following tables showing the total trade of the Irish Free State from 1924 to 1930 at actual values and as valued at 1930 prices.

^x Trade in 1924 abnormal on account of the large exports of livestock in that year.

It is clear that there has been substantial progress in the volume of trade during the period in question. Since 1925 imports have increased in volume by 12 per cent, exports and re-exports by 18 per cent and total trade by 15 per cent. Taking the country as a whole there is evidence of an increased purchasing power and higher standards of life.

It may be added that exports constitute a high proportion of Irish Free State production. In 1926 it is estimated that they constituted 31 per cent of gross production or 38 per cent of transport production (i.e. excluding the production of buildings, public utilities, etc.). In consequence, the trend in the volume and value of exports should give some indication of the trend in the volume and value of total production.

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One striking fact which has a bearing on the total unemployment is that the number of emigrants to countries out of Europe and not within the Mediterranean Sea has decreased in a marked way as the following table shows:

That the reduction is not due to the U.S.A. immigration policy is seen from the fact that emigration to the U.S.A. declined by 47% between 1925 and 1930, emigration to other non-European countries declined by 49% and the passenger movement statistics indicate that there was a considerable decline in emigration to the United Kingdom in 1930.

These figures are further evidence of an improved economic situation within the country and particularly so when it is borne in mind that for generations Ireland has suffered from a drain of population owing to unsatisfactory economic conditions within the country and a consequent inability to absorb in productive work the natural increase in population. While complete statistics are not available it seems that between 1929 and 1930 there was a slight increase in population.

Although agriculture is the principal industry and it might consequently have been expected that the Irish Free State would have suffered to the same extent as other agricultural countries from the economic depression, nevertheless the sharp drop in the prices of agricultural products has not up to the present affected the Irish Free State so seriously as certain of those countries in which the agricultural economy includes the production of grain on a large scale for export.

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The facts would seem to indicate that judged from any standard the Irish Free State has not suffered for various reasons to the same extent as most European countries. The geographical situation of Ireland in close proximity to a special market which has been accustomed for generations to cattle and food products from Ireland has no doubt been an important factor in lessening the effects on Irish agriculture of the world depression. There has been no serious disturbance in the ordinary course of trade as the market in question is large enough to absorb not only the present but a greatly increased production and at prices which cannot be so far regarded as unremunerative though the downward tendency of prices if accentuated may have serious repercussions on Irish agriculture.

It must be stated however that Government action in the matter of improved production, particularly in the direction of the standardisation of quality, coupled with large scale marketing organisation have secured a better demand and a higher price than heretofore for the country's principal agricultural exports relatively to similar produce from other countries and to that extent have tended to counteract the effect of falling prices in the British market. Various Acts have been passed and administrative measures have been taken to safeguard the farmer's position. In addition to these measures the Government have eased the position of the farmer by relieving him from time to time from a certain proportion of his normal liability to local taxation. This, coupled with certain improvements in local administration as well as reductions in general taxation has saved the farmer from the acute distress which was experienced in many other countries.

It has to be remembered that the Irish farmer is, as a result of a long series of Acts of Parliament, in possession of his land on comparatively easy terms, and, further, has the benefits of credit facilities for stocking and improvements not only through the ordinary banking channels but through a special Corporation (The Agricultural Credit Corporation) established under Government auspices. There have been further no such changes in rates of interest as would disturb either the agricultural or the other industries of the country.

While the foregoing gives a true picture of the situation as at the end of 1930 there are certain disquieting features which suggest that 1931 will prove a more difficult period. Already there has been a severe fall in live stock prices during the first part of 1931 and the slump which occurred in the dairying industry in 1930 when the exports of butter, cream and milk fell to slightly under four million pounds as compared with something over five million pounds in 1929 shows no sign of improvement. Dairy products, it is true, represented only 11½% of the total agricultural exports but dairy farming is such an essential feature of the Irish agricultural economy that a continued depression in that industry would react seriously on the whole of the farming population.