Sins of the Father by Conor McCabe Read Free Book Online

CONCLUSION
    The 2008 banking crisis was not caused by an outbreak of moral failure or individual weakness. The significant power of Irish banks to dictate economic and monetary policy, and to protect themselves against the negative consequences of such policies, had developed over decades. The social and economic forces which fed and sustained that power run deep within Irish society. The exploration of those power dynamics, their significant strengths and structural weaknesses, has been the central theme of this book, and what follows is a brief summary of those main points.
    At the time of its independence, the Irish Free State was a fully-integrated part of the UK economy. Its role within that economy was primarily agricultural, more specifically, the provision of livestock for the finishing farms and slaughterhouses of England. This relationship, not surprisingly, benefitted livestock breeders and traders, who had come to prominence in the post-famine era, as land was cleared and secured for grazing rather than tillage. This became a source of conflict within Irish rural society, between small farmers and graziers. Upon independence, however, it was the graziers who were in the ascent and Irish economic policy developed with their interests very much at heart. The end of formal political links with Westminster meant that the Free State was now an independent country but without an independent economy. In order to secure its future, it needed to expand its industrial base and develop new markets. For this it needed credit, something that a central bank based around a national currency could provide.
    The Irish banking system, however, was entirely focused towards the London financial markets and resistant to the development of a national currency subject to democratic oversight and focused on the economic demands of the state. The first banking commission rejected outright any move towards fiscal independence and Irish parliamentary control. The need to expand agricultural and industrial output, in order to provide an economic base for sustainable communities, was pushed to one side. The result was increased emigration, with the Free State providing not only cattle and finance to the UK, but also a steady stream of labour. The lack of industrial growth also meant that there wasn’t a sufficiently strong economic base to provide the standard of living demanded by the aspirational Irish urban middle class, who turned to the state for grants and tax relief in order to fund the type of home ownership and petit-bourgeois lifestyle they read about in the newspapers, and watched on cinema screens.
    The emergence of Fianna Fáil as a political force in 1927, followed by its rise to power in 1932, saw a change in aspects of economic policy, with greater use of tariffs to encourage industrial growth. These initiatives were soon hampered by self-inflicted blows. The party kept the parity link with sterling. It also decided to focus on the expansion of production for the home market only. The structural deficiencies within Irish agriculture, including the continued use of the Shorthorn for both dairy and beef production and the serious lack of a food processing industry, remained untouched, as did any attempt to expand exports to anywhere except Britain. The second banking commission recommended the establishment of a central bank, which in its first act outlined its commitment to parity with sterling, a move which immediately undermined the very reason for its existence. Irish credit remained pitched at sterling levels, stifling growth.
    The demands placed on the Irish economy in order to maintain parity included periodic deflations, which were timed in line with the dynamics of the British, not Irish, economy, and an obsessive concern with inflation at home. By the end of the 1940s the Irish state was more dependent on Britain then it had been at the time of independence, while an overweight Irish pound stood drenched in sterling