The first years of the Irish state saw the continuation of free market and free trade policies and practices favoured by Britain. As Mary Daly has put it, ‘The Irish public service inherited the British practice of stringent spending control and a profound distaste of government involvement in the economy’. These policies were also suited to the needs of the dominant agricultural sector, highly dependent on trade in live cattle exports. In the period 1929–32 changing international circumstances, as well as increasing concern over the lack of a strong industrial sector, led to a gradual shift towards protectionism. This process gathered momentum under the first Fianna Fáil government. The impact of the ‘economic war’ with Britain (1932–8) further exacerbated the state’s economic problems and complicated the policy landscape.
Lemass’s first ministry
Seán Lemass, as Minister for Industry and Commerce, attempted to develop and implement an active policy of industrial development. In 1932 an industrial development branch was established within his department to examine proposals for the development of new industries and the expansion of existing ones, but neither the Department of Finance nor his cabinet colleagues supported Lemass in these efforts.
In what was for then an extraordinarily radical move, now long forgotten, Lemass set up the Industrial Research Council (IRC) in 1934. It is difficult to ascertain who persuaded him to take this initiative but in all probability it was Laurence J. Kettle. In any event, Lemass appointed him chairman of the new IRC.
In his speech to the Dáil in February 1934 on establishing it, Lemass noted the absence of any coordinated effort here to direct the scientific investigation of industrial problems. Addressing the first meeting of the IRC in 1934 Lemass went on to say: ‘In view of the progress made in other countries in encouraging and organising industrial research, the government sees a need for such research in Ireland and believes that scientific industrial research must be an element of the government’s programme’. The council, which had 24 members drawn from industry and academia, was expected to offer advice on research for the better utilisation of Irish natural resources and for improved technical processes in industry. The IRC operated under Laurence Kettle’s chairmanship until 1946. It established a technical library service, provided some funding for research scholarships, promoted research in the use of resources such as peat, seaweed and clay, and helped in the establishment and work of the Emergency Scientific Research Bureau during the war years.
Very early in its existence the IRC realised that, if it was to achieve its aims, it needed its own operating organisation, with appropriate staff and laboratories. This was conveyed to Industry and Commerce in 1938 and in December 1941 the department sent a letter to the council setting out proposals for the establishment of a national institute for industrial research. Unsurprisingly, given the circumstances at the time, it was not until 1946 that legislation was introduced to set up the new agency, to be called the Institute for Industrial Research and Standards (IIRS).
Addressing the new IIRS in April 1947, Lemass said that the importance of science to industry was now generally recognised and that, in the absence here of large private firms conducting their own research, there was a need for such an institute to facilitate industrial development. The activities of the IIRS would include research, investigations, tests and analyses with a view to achieving this objective.
The impact of Marshall Aid
The new agency acquired Glasnevin House and five acres of grounds for its headquarters. Its establishment coincided broadly with the provision of Marshall Aid to Europe, and this could have been an opportunity to obtain finance for laboratories and equipment through that Fund’s Technical Assistance Programme. As researched by Bernadette Whelan, however, the whole Irish experience was marred by controversy and confusion. The Irish government wanted grants rather than repayable loans, but the US State Department was unwilling to give grants initially, as Irish wartime neutrality was still strongly resented. In addition, Ireland was seen, both by its own people and by outsiders, as overwhelmingly an agricultural producer, with little industrial potential, so that the bulk of the funds were allocated to agriculture. In all, Ireland received grant aid of around £6 million and loans of £40 million. Of the grants 86% went to agriculture and land development, including £1.84 million to establish the Agricultural Institute (now Teagasc).
Seán MacBride, as Minister for External Affairs in 1950, was one of the few to see that things could be done differently, influenced, for example, by the third minority report of the 1938 Banking Commission. He noted in a memo to government that ‘tremendous scientific and technical developments have been taking place in industry in the last ten years, of which we have little knowledge. Our failure to make use of the Technical Assistance Programme is regrettable.’ By this time the implementing agency for the Marshall funds at the wider European level, the Economic Co-operation Administration (ECA), was also beginning to urge the use of the funds for industrial development. But until the return of Lemass to the industry ministry in June 1951 the department had applied only for tourism support. At Lemass’s insistence a sum of £130,000 was included for laboratories and equipment for the IIRS.
One outcome of the Marshall Aid process was a report commissioned in 1951 from American economists by the first inter-party government and published in 1952 as An appraisal of Ireland’s industrial potentials (the Stacy May report). This confirmed Lemass’s view that industrial development had at least as much potential as had agriculture.
It had four key recommendations:
1. greater application of technology in industry;
2. increased foreign capital;
3. reduction of tariffs and greater emphasis on exporting;
4. tax allowances as investment incentives.
The Departments of Agriculture and Finance opposed the publication of this report, while Lemass wished to use it as a White Paper on industrial development. The government actually rejected these wide policy recommendations, many of which, however, eventually resurfaced in Economic development in 1958.
A comprehensive programme of ECA technical assistance for industry was agreed in 1951. Before it could be implemented, however, all US aid was discontinued because of Ireland’s non-participation in the Mutual Security Act (NATO). A great opportunity to carry out a large-scale assessment of existing weaknesses, potential solutions and opportunities for industrial development and expansion was thus missed. Throughout most European countries in the 1950s an extensive programme of US-funded and assisted technical/productivity measures was put in place to modernise industry. This was administered through the European Productivity Agency, operating under the aegis of the OEEC (later OECD), in which Ireland did not participate.
Despite the failure to secure ECA funding, Industry and Commerce continued to plan for technical assistance projects to be financed by the exchequer. By the mid-1950s industry was showing an increasing interest in participating. Finance, however, continued to oppose such proposals and effectively vetoed most of them. When Finance’s attitude changed in the late 1950s, Industry and Commerce received exchequer funding of between £200,000 and £300,000 per annum throughout the 1960s for technical assistance projects.
Developments in the 1950s
From the beginning the IIRS was resource-constrained. Its annual operating grant was initially £15,000, increased to £35,000 in 1954. The Lemass-inspired application for Marshall Aid was not approved until 1956 and the new laboratory not completed until 1960. Together with difficulty in obtaining sanction to hire suitable staff, this meant that the IIRS was only able to make a relatively small contribution to industrial research. Kettle argued in vain that there was a need for more such applied research, not less, in times of economic crisis.
In 1957 Kettle retired, having spent twelve years as chair of the IRC and a further eleven years on the industrial research committee of the IIRS. He died in 1960 at the age of 82. In the latter years of the 1950s things began to change. The ECA had encouraged the establishment of the Industrial Development Authority (IDA) in 1950 and the Export Board/Córas Tráchtála (CTT) in 1952. The IDA was to ‘initiate proposals for the development of Irish industry’ and ‘to advise on steps necessary for the expansion and modernisation of existing industries’. In 1956 the second inter-party government introduced a policy of tax exemption on exports, viewed as a way of attracting inward investment without damaging indigenous firms.
In Economic development (1958) Kenneth Whitaker noted the importance of research in agriculture for keeping Ireland up to date with technical and scientific progress. A similar approach was vital for industrial development and, to achieve this, the IIRS would be reorganised and given additional funding. In 1961, therefore, Industry and Commerce introduced legislation to strengthen and expand the IIRS. The annual grant limit of £35,000 was removed and funding to meet future needs was pledged.
![Seán MacBride during the general election of 1948. As Minister for External Affairs in 1950 he noted, in a memo to government, that ‘tremendous scientific and technical developments have been taking place in industry in the last ten years, of which we have little knowledge. Our failure to make use of the Technical Assistance Programme [under Marshall Aid] is regrettable.’ (Getty Images/Time Life Pictures)](https://historyireland.com/wp-content/uploads/2013/12/economics4.jpg)
The 1960s and beyond
With the reorganisation of the IIRS in 1961 Lemass completed the process of putting in place a substantial industrial support structure, covering technology (IIRS), exporting (CTT) and support for firms (IDA). The different elements of the system did not, however, work together as intended to make industry, particularly indigenous firms, internationally competitive. In 1966 the chairman of the IDA, J.J. Walsh, called for a fundamental reappraisal of industrial policy and engaged US consultants A.D. Little to assist in the process.
Lemass’s successors in the industry ministry did not have his vision or his strength. By the early 1970s the IDA had effectively taken over the industrial development portfolio and had focused its efforts almost exclusively on attracting inward investment, at which it proved extremely successful, although at a significant cost in terms of grant assistance and taxes forgone.
By the 1970s the IIRS had developed a wide range of technical capabilities (including its role as the Irish standards agency) in support of industry and as a source of independent advice, consultancy and testing services for the state and its agencies. It employed around 400 professional engineers, scientists and specialised technicians. It had developed links and research collaborations with other technical support agencies in countries like Denmark, Sweden, Finland and the Netherlands, as well as with the Fraunhöfer Institutes, which had contributed significantly to the development of a vibrant small and medium-sized industrial sector in Germany. The IIRS earned nearly half of its operating costs from fees and research contracts but, with its longer-term objectives and results, it could not achieve the politically attractive immediate employment impacts of the inward investment policy. It remained critically short of funding for laboratories and equipment until the advent of EU structural funds in the late 1980s.
In 1988, in a cost-saving exercise, the IIRS was merged with the National Board for Science and Technology (a science policy body rather than an applied research organisation) to form Eolas (the Irish science and technology agency). This in turn was merged with part of the IDA in 1993 to form Forbairt, which later became Enterprise Ireland. Since this merger the technical capabilities of the IIRS have been dismantled and phased out. It remains unclear whether this was what had been intended by the Department of Enterprise (successor to Industry and Commerce) at the time of the 1993 merger. This outcome contrasts with the evolving vision of the role of technology and applied research in industrial development, as first recognised by Lemass and Kettle with the establishment of the Industrial Research Council in 1934, and with the continuing commitment of other countries, large and small, to its potential for innovation and prosperity. HI
Michael Fitzgibbon is an economist and former Head of Science and Technology Policy and Programme Evaluation in Forfás. Dermot O’Doherty is a consultant on innovation and business networks and was Strategic Planning Manager in Eolas, the Irish science and technology agency.
Read More:
Institute for Industrial Research and Standards
Further reading
M. Daly, Industrial development and Irish national identity 1922–1939 (Dublin, 1992).
M. Fitzgibbon, ‘Irish industrial and science policies 1960–2010’, in Administration (2011).
P. Murray, Facilitating the future? (Dublin, 2009).
B. Whelan, Ireland and the Marshall Plan (Dublin, 2000).