Chapter 13  

SOMETHING IS WRONG WITH THE COUNTRY

“My children and I have suffered a grievous loss … a wife who gave me a lifetime of devotion and love.”¹

JOHN A. COSTELLO, APRIL 1956

“There has emerged a feeling of malaise, a feeling that something is wrong with the country …”²

JOHN A. COSTELLO, SUMMER 1956

The most important and distressing problem facing Costello on his return to Ireland was the illness of his wife, Ida. He told Archbishop McQuaid that “unfortunately, I do not find my wife at all well on my return”.³ The Archbishop expressed his sympathy, and promised to “get very many prayers for her”.⁴ The Taoiseach also had spiritual support from his Labour colleague Jim Everett, who lent him a relic of Saint Pius x.⁵

Ida Costello, who was 65, had suffered from high blood pressure for some time, but while her husband was in the United States she was diagnosed with chronic bacterial endocarditis, an inflammation of the lining of the heart. She was admitted to Saint Vincent’s Private Nursing Home in Leeson Street in Dublin.⁶ On 19 April, Costello wrote to Eisenhower, once again thanking him for the reception he had received in the United States, and saying it had been “a very great pleasure to me to describe to my wife the generous cordiality which you extended to me”.⁷ The following morning, Ida Costello suffered acute heart failure and died.⁸

She was, Costello sadly wrote to McQuaid, “a wife who gave me a lifetime of devotion and love”, and her death was “a grievous loss” to him and to their children. He told the Archbishop that the family had “been greatly comforted by the kindness of so many friends, by the many Masses that have been offered for the repose of her soul and by the conviction of our Faith that God has her now in His kind hands”.⁹

The Taoiseach received a huge number of sympathy cards and messages of support, including a personal message from President Eisenhower, which he greatly appreciated.¹⁰ There was also a massive turnout for the removal and funeral. As the coffin was being brought out of the nursing home followed by Costello and his family, out of the crowd stepped Patrick J. Burke, a Fianna Fáil TD for North Dublin, popularly known as The Bishop because of his frequent attendance at funerals. He pushed himself forward to shake hands with the Taoiseach, in full view of the press cameras. “A groan from the watching crowd indicated what was thought of this lapse of good taste.”¹¹

The loss of his wife of almost 37 years was, naturally, a terrible blow for the Taoiseach, then just two months short of his sixty-fifth birthday. He had always been a devoted family man, always anxious to get home rather than attend parties or official functions,¹²and he and Ida had enjoyed a “very affectionate” married life together.¹³ A moving tribute was paid to Ida by James O’Brien, a friend who was then aide to the Mayor of New York. He wrote to Costello that “she left a legacy of sweetness and understanding to all who met her”.¹⁴

During his period of mourning, Costello avoided formal parties, and declined an invitation from the Irish Ambassador to the Vatican, Con Cremin, to return that summer to the Villa Spada in Rome, where he and Ida had spent time in 1955. “I have very precious memories of our stay with you last year. I have, however, decided not to go away anywhere at all this year, and I am sure that Patsy and you will understand this.”¹⁵ He was still refusing social invitations by the following February.¹⁶

His family rallied round, particularly his eldest daughter, Grace, married to Alexis FitzGerald. As he told one correspondent, he took “refuge in my daughter’s house on Sundays”¹⁷—her house on Nutley Road was not just a source of family comfort, but a place to escape the burdens of office. His other children also offered support. Eavan and her husband, Ralph Sutton, came up from Cork to spend Christmas with him. “Between them all they made it, if not a happy one, at least a peaceful and untroubled one.”¹⁸ In an effort to help fill his evenings, the family presented him with a television set that Christmas.¹⁹ He was to become a keen television watcher in later life—and, just as he used to work with the radio on in the background, was able to combine his viewing with work on his legal briefs.²⁰ As might be expected of someone of his conservative social views, he would criticise anything which he regarded as vulgar, but kept the set on anyway for the company.²¹

Ida Costello’s death was a bitter blow to her husband—but he seemed to deal with it as well as could be expected. Just how shattered he was became a matter of some political debate. James Dillon suggested in his memoir that “his heart was no longer in the business after that”. In fact, he suggested that the Taoiseach had “become weary of the business of governing”, and that his wife’s death was a factor in his decision to call a general election early in 1957.²² Not surprisingly, Declan Costello rejected such suggestions, which also surfaced when his father was removed as leader of the Opposition in 1959. Declan said his father carried on “absolutely normally”, and that he did not become moody or depressed.²³ However, it is difficult to believe such a deep personal loss didn’t have a profound effect on him. Another witness who saw the Taoiseach at close range at the time perhaps put it best, saying Costello “lost a bit of his bounce” after his wife died.²⁴

And as Taoiseach, he needed every bit of bounce he could manage, as the economic situation turned from difficult to desperate. His wife’s death also came as two by-elections were being fought—Fine Gael suspended its campaign as a mark of respect.²⁵ The inter-party candidates were facing an uphill battle in any event. Partly this was due to Sweetman’s introduction of import levies in March to try to choke consumer demand in an effort to address continuing balance of payments problems. The levies covered a wide range of goods, from cutlery to musical instruments and from tinned fruit to umbrellas,²⁶ and were widely unpopular. They did what they were designed to do—the current account deficit was reduced in 1956 and turned into a surplus in 1957, while the net foreign assets of the banking system also began to turn around. But they had a devastating effect on the economy, reducing employment and increasing emigration to an unprecedented figure during 1957 of 1.8 per cent of the entire population.²⁷

Sweetman’s austere approach was enthusiastically encouraged by the Governor of the Central Bank (and former Secretary of the Department of Finance), J.J. McElligott. He had written to the Minister at the start of the year, arguing that Ireland was “suffering from a prolonged and deep-rooted excess of demand in relation to home produced supply … Unless something positive is done to relieve materially this constant pressure of excessive demand which has permeated the whole economy, we are bound soon to receive a rude shock.” The public must have the facts placed before them, so they could consider “the full implication of living on capital, a way of life we have been indulging in for eight years”. He suggested the situation could be retrieved with “judicious adjustments” in economic and monetary policy—but the room for manoeuvre was now so limited that action must be taken soon, as it “may be about our last chance”. Increased production was, in the long term, the answer; but in the short term there must be a reduction in demand, through the control of non-productive capital spending. This was traditional Central Bank policy. McElligott also added a new criticism: the Government’s policy of keeping interest rates lower than in Britain, “which regrettably was much publicised as an achievement along the road of an independent monetary policy has done a lot of damage in boosting the feeling of prosperity which we have artificially built around ourselves”.²⁸

Whatever about the economic effects (see Chapter 11), lower interest rates were a positive for the Government from a political point of view. About the only good thing the import levies did politically was to help persuade the banks not to follow an increase in British interest rates, at least temporarily, at the start of 1956. Just before he left for the United States, Costello met the bankers along with Sweetman, and persuaded them to hold rates steady.²⁹ A few days before the by-elections, he wrote to thank the chairman of the Irish Banks’ Standing Committee, saying he hoped that “the national interest will continue to have the benefit of co-operation between the Government and the Banks in matters of common concern, based on mutual confidence and candid exchanges of opinion”.³⁰ This was only putting off the inevitable—the banks were to increase in interest rates a couple of months later. But would the decision have any impact on the two by-elections?

The short answer was no, as both contests showed a swing towards the Opposition. In Dublin North-East, Independent Patrick Byrne took 57 per cent of the vote and retained the seat of his late father, Alfie, while Fianna Fáil’s Charles J. Haughey received 43 per cent. But this was a large increase over the Fianna Fáil vote in the constituency in 1954—then, the party had only managed to win 32 per cent of the vote, while the Inter-party candidates between them took 59 per cent (other Independent candidates took 9 per cent). In Laois-Offaly, Labour’s William Davin had won just 11.3 per cent of the vote in 1954, compared to 43 per cent for Fianna Fáil and 45.6 per cent for Fine Gael (boosted by Oliver J. Flanagan’s huge personal popularity). When Davin died, Labour had the right to nominate the inter-party candidate, choosing the late Deputy’s son Michael. He boosted the Labour, but not the inter-party, vote, winning 44 per cent, and losing to the Fianna Fáil candidate, Kieran Egan.

These results, particularly the swing towards Fianna Fáil of 11 per cent and 13 per cent respectively, were the first real sign that the Inter-party Government was losing support. As we saw in Chapter 11, Government candidates had done reasonably well in by-elections up to then. Now the pressure was on, and Labour in particular was restive.

As early as February 1956, US Ambassador Bill Taft was speculating on an early election, suggesting that Labour could pull the plug on the coalition if austerity measures were taken. He thought Norton could keep his party in line “so long as things were going along fairly quietly, but the odds were that they would bolt if anything controversial like a new economic programme came up”. His British counterpart, Alexander Clutterbuck, thought an immediate collapse unlikely, predicting a compromise over the Budget which “may tide things over for a while”.³¹ Clutterbuck was right. Sweetman’s budget at the beginning of May increased taxes to further tackle the balance of payments problem, including a heavy rise in duty on petrol and cigarettes, and cut £5 million from spending. But it also increased welfare benefits. In Costello’s words, the Government had “carried out a difficult task in difficult times in this Budget in the most humane way possible”.³² In the assessment of Labour’s most recent historian, the Budget “did not lead to Labour losing much face, but neither did it provide anything for those who wanted the government to adopt a positive policy to halt the economic crisis”.³³ There was more gloom to come.

On 1 June, preliminary results from the census carried out in April were released—and those results were devastating. The population was 2,894,822, the lowest ever recorded. The natural increase in the population was the highest recorded since 1881, but was more than wiped out by increased emigration of over 200,000, or more than 40,000 people in each of the five years since the previous census. Since 1951, the population had declined by 65,771.³⁴ It was, according to the Provisional United Trade Union Movement, “a great shock to our people … The future of the nation is at stake and it is against this background that all economic questions must be judged.” In a memorandum to the Government, the unions argued that the “alarming trends” revealed by the census should put the “temporary economic problems” of the balance of payments into their proper perspective.³⁵

In the midst of this gloom, the death of Fianna Fáil TD Pa McGrath of Cork Borough precipitated another by-election, which was held at the start of August. Fianna Fáil had moved the writ with unusual speed, in order to “seek profit from the Government’s difficulties”, as Costello put it when opening the Fine Gael campaign. The Taoiseach said the country was suffering from “a serious but not an incurable disease”. Complete recovery was certain “if the patient himself co-operates in the efforts to cure him”. That co-operation, he suggested, should start with a vote for an inter-party candidate in the by-election. He appealed to voters “to strengthen the hands of the Government to deal with our very serious problems and difficulties, and not to weaken them in these critical times”. He accused MacEntee of having deliberately caused the cost of living to rise when he was Minister for Finance. By contrast, the Inter-party Government had “adopted every device, orthodox and unorthodox, in an endeavour to keep down the prices of essential commodities, and allowed them only to rise where such increase was inevitable and beyond our control”.³⁶

The Dáil debate on the Taoiseach’s estimate came in the middle of the campaign. During that debate, in the words of the New York Times, both Government and Opposition “faced up to the fact that the country was in a critical situation”.³⁷ Costello spoke of a “trinity of problems” facing the country—emigration, unemployment, and the balance of payments deficit. “Any one of these problems would be formidable by itself; taken together, they are both a warning and a challenge to the country.” He said there were two dangers—that of overestimating the difficulties, thus causing “panic and despair at home and a lack of confidence abroad”, or of underestimating them, which could lead to apathy and a failure to take corrective measures.³⁸

Among those measures was another dose of austerity. Sweetman complained on 20 July that despite the earlier introduction of import levies, “virtually no net improvement has so far been achieved. It is essential that further reductions in imports be effected.” He urged colleagues to review their departmental purchasing programmes to reduce or defer any imports.³⁹ And on the twenty-fourth, just over a week before polling day, the Government agreed to increase import levies and extend them to new items, and to cut a further £5 million from Government spending.⁴⁰ The Leader noted the Government’s promise “that if this shirt is not hairy enough to make the citizen itch into economic virtue a still more penitential garment will be provided”.⁴¹

It was not, to say the least of it, an ideal background for a by-election. Costello made a virtue of necessity in his eve-of-poll speech. The fact the Government had taken such measures in the middle of an election campaign showed “its confidence that the people want the truth and won’t be frightened by it … Recent events have demonstrated the unity and strength of the Government and their resolution to do what is right even at the risk of losing support.” He admitted some hardship had resulted, but said it was nothing like that caused by the 1952 Budget. He claimed his Government had “tried to temper the wind to the shorn lamb” by taxing inessential, or less essential, expenditure.⁴²

His confidence in the voters was somewhat misplaced. The Fianna Fáil candidate, John Galvin, won 53 per cent of the vote, up 10 percentage points since the general election. Fine Gael was down 12 per cent to 29 per cent, and Labour down 2 per cent to 11 per cent. Costello put a brave face on the result, observing that it was based on “the smallest poll possibly ever recorded in Ireland”, and merely showed that “the Opposition has obtained a temporary electoral advantage” from the country’s economic problems. “The result does not dismay the Government. It will continue to perform the duty of carrying out those policies which cannot be popular but which are demanded in the national interest.”⁴³

If the domestic economic and political situation was parlous, it was about to get a whole lot worse, thanks in large part to international factors. In July, Egypt nationalised the Suez Canal. In response, Britain, France and Israel cooked up a fairly disreputable—and transparent—plot to get rid of the Egyptian leader, Colonel Nasser. At the end of October, the Israelis invaded; a week later, the British and French landed, ostensibly to keep the warring sides apart, in reality to seize the canal. The operation was a military triumph and a political disaster. Eisenhower was having none of it, forcing the British into a humiliating climbdown which destroyed the health and the career of Prime Minister Anthony Eden. The other consequences included an oil shortage which threatened to paralyse the western world. The British Embassy advised that oil supplies would be about 60 per cent below normal for some months, because the canal and the Iraq pipeline were both out of action.⁴⁴ The result was an intensification of the economic problems facing Costello.

There was already significant discontent within inter-party ranks, expressed forcefully by the Taoiseach’s son Declan. At a meeting of inter-party TDS, the younger Costello directly challenged Sweetman’s policies, calling for a much more radical approach. Declan was applauded by many of the Labour TDS—Sweetman was not amused. He told Declan privately that his speech was “shocking and unfair”, and a breach of his responsibilities as a Fine Gael TD. At the next party meeting, he made those criticisms public. Jack Costello had been due to chair the meeting, but tactfully absented himself when Sweetman warned him of what he was going to say. It was an awkward situation for all concerned, especially as the Taoiseach and his Minister for Finance were not getting on at this stage⁴⁵ (although it should be noted that Ken Whitaker, the Secretary of the Department of Finance, was not conscious of any friction between the two men⁴⁶—presumably they didn’t parade their differences in front of civil servants).

Labour backbenchers were also deeply disaffected by now. Jim Larkin, in many ways that party’s conscience while it was in government, was severely critical of the coalition in September 1956. He told a meeting of Labour’s Dublin Regional Council that the economic situation was a warning to the Government, but a “danger” to Labour. “It is contrary to Labour’s whole traditional policy to pursue and support negative measures, such as the curtailment of capital investment, reduced housing activities, and economies through disemployment. Labour has a positive policy, and before it is too late Labour must declare for progress and against retrogression and decline.”⁴⁷

But as far as Sweetman was concerned, the only realistic policy was further austerity. At the beginning of October, he got Government approval for yet more import levies, although he held off actually introducing them when the trade figures for September showed some improvement. But he publicly warned that Ireland was “not out of the woods yet. Let us behave like adults and not like children … We must keep our heads. We have no cause or excuse for relaxing our efforts until we have closed the fatal gap in our Balance of Payments.”⁴⁸ In private, Sweetman warned colleagues of the need to keep spending under control. “To ignore that need must make for a disastrous worsening of an already serious economic and financial situation. Present difficulties will be aggravated if decisive action … is not taken immediately to limit public expenditure.”⁴⁹ In later years Costello was to state his belief that his government “went too far and too quickly” with austerity measures, that they could have sought alternative economic advice “and we might consequently have taken the chances and let matters right themselves and let the balance of payments right itself without all those remedial measures”.⁵⁰

It was not, to put it mildly, a good time to be in government. After a particularly depressing Cabinet meeting, new Minister Patrick Lindsay recalled feeling “thoroughly dejected”. Brendan Corish tried to cheer him up, telling him it wasn’t always like that. Lindsay, ever the realist, replied, “Well, I’m afraid it’s going to be like that for my time anyway, because we’re going out the next time.”⁵¹ That was certainly likely as long as the only thing the Government could offer the public was more of Sweetman’s austerity. But was there any possible alternative, along the lines suggested by Declan Costello and Jim Larkin, that could offer the country—and the Government—some hope?

In fact the Taoiseach had been working on just such a policy for some months, and was to make a major speech outlining his Policy for Production in October. Because it was announced after Larkin’s criticism of the Government’s economic policy, many assumed it was a reaction to those comments. Others have credited Health Minister Tom O’Higgins with the original suggestion for a policy initiative. In his memoirs, O’Higgins said he called for a fresh declaration of aims and a new policy for development in a memorandum to Government.⁵² This memorandum doesn’t seem to have survived, but is referred to in a later document by Costello, which quotes O’Higgins as saying they must give “evidence of a Government in action getting down to the job”.⁵³ Even if O’Higgins was the first to formulate the idea, he was pushing an open door as far as Costello was concerned. It was clear that something needed to be done.

The pressure for positive action was increased by looming by-elections, in Dublin South-West and Carlow-Kilkenny, following the deaths of Fine Gael’s Peadar Doyle and Fianna Fáil’s Thomas Walsh respectively. In mid-August, Alexis FitzGerald urged his father-in-law that “everything from all over the country should be thrown into a desperate battle in Dublin and Carlow-Kilkenny”. He offered a very comprehensive list of ideas for improving the Government’s image, including moves on health insurance, developments in foreign policy, and economies in the Civil Service. He wanted to maximise the publicity surrounding the establishment of the Department of the Gaeltacht by holding a news conference in Irish—which would be the first ever held by any government. FitzGerald also suggested that Costello should announce a change to the method of electing the Senate. As he observed, this would “delight nine tenths of the people”, although it would upset Fine Gael senators “who will feel that they wouldn’t get in if the Senate were any good”. FitzGerald also proposed a move on a National Concert Hall, more capital for agriculture, and the establishment of a Rent Tribunal. He warned his father-in-law that Fine Gael propaganda was “terrible”, recommending the appointment of “some clever young person” such as “that young genius Garret FitzGerald” to improve it.⁵⁴

All of this should be included in what he called Costello’s “Queen’s Speech”, a reference to the British practice of outlining a government’s legislative programme in a speech delivered by the monarch. FitzGerald advised the Taoiseach to get a strategy planned, and a timetable from ministers for the implementation of policy. “A spirit of siege warfare and urgency should be encouraged in the Government and party.”⁵⁵ His father-in-law later said it was Alexis “who outlined and thought up the various schemes which were put into operation and which are now … bringing benefit to this country by way of the export trade”.⁵⁶ The “young genius” Garret FitzGerald also credited Alexis, along with Patrick Lynch, for the initiatives that “started the reorientation of the inward-looking post revolutionary Irish economy to the world outside”, a process later “brought to fruition” in the First Programme for Economic Expansion.⁵⁷

Certainly, many of Alexis FitzGerald’s ideas were reproduced in a memorandum by Costello (unfortunately undated) which outlined the economic and political necessity for a major initiative. “Positive steps must be taken without delay to bring about a radical cure.” He stressed that the restrictive measures which had been taken were “temporary and palliative”; now it was time to try something else, specifically an attempt to promote exports. “A clear and bold policy must … be announced … Such a policy would give hope, show that the Government is alert and alive to the necessity not merely of restriction but of expansion which they appreciate is the real and only permanent remedy for present difficulties … In my view the public … are really groping for signs of hope, and some positive action to give grounds for relief for the future. I am convinced that if a plan … for increased production were now put before them the public would react very favourably.” He observed that Fianna Fáil were accusing the Government of making false promises of early prosperity. While this was not true, it was true that Costello’s own speeches before and during the election had led people to believe “that changes of a constructive nature would follow the formation of the new Government. It is no answer that these constructive proposals were honestly made. None of them have been followed up. This is what matters.”

Costello followed this bleak assessment of his government’s performance with an analysis of the political difficulties facing them. Far from being exaggerated, he believed, “they are insufficiently appreciated”. There was no guarantee the Government could survive two more by-election defeats, and if it fell without having introduced at least a number of constructive measures “distinctively not Fianna Fáil in character”, the whole idea of inter-party government would be discredited. Therefore, the Government must be bold and decisive. “The people will forgive mistakes. They will not forgive inactive caution.” He wanted the new policy to be announced in a major speech, by him, around 20 September. This would set the scene for the raising of a new national loan, as well as preparing the ground for the by-elections. Legislation would be required, and this should dominate Dáil business in the weeks before the by-elections, so the Government could recapture the political initiative. The Taoiseach wanted one piece of legislation, “which should be given some striking title like the Expansion of Exports and Productivity Bill”.⁵⁸

The Taoiseach wanted as many decisions as possible, even on minor matters; he wanted them to “comprise new ideas, show originality, create public interest, and be different from Fianna Fáil policy”; they should also relate to what had been said while they were in opposition, so they wouldn’t be seen as panic measures. “The object must be … to garner for the Government the psychological advantages of making the public feel that this is the beginning of a new chapter … The people want a tonic and unless we can give it to them there can be nothing but disaster.” One of the more important suggestions was a tax break for extra exports. He also wanted the Government to finally establish the long-promised Capital Investment Board. Significantly, the Taoiseach accepted that much of what had been called capital spending could not really be described as such. While “desirable and necessary … it has not added to the income-producing power of the community”. He drew a distinction between building a hospital, which would lead to expenses rather than income, and establishing a factory which yielded incomes for workers.⁵⁹ This was something of a reversal of his previous attitude to capital spending.

Costello’s blunt memorandum struck a chord with his ministers. Liam Cosgrave complained that the Government was failing in its propaganda, and hadn’t explained to the public why the import levies had been imposed. Many people thought they were a revenue raising device, rather than an attempt to correct the balance of payments. “Finally, this Government lacks originality and is in effect merely administering the affairs of State with varying degrees of efficiency.” He strongly endorsed Costello’s proposals, which should be pursued vigorously. “Otherwise, we will continue to lose public support because we have failed to show the public that we are capable of giving the leadership which the Nation requires.”⁶⁰ McGilligan warned of the “danger that Fianna Fáil may come back not because the public really desire them but because those now in power have failed to come up to popular expectation”. He believed there was still time to win back public support, but the budgets of 1957 and of 1958 (“if the Government last out to the latter date”) were pivotal. The people must be made to understand the difference between the inflationary Fianna Fáil proposals and the Government’s “selective remedial measures”. There must be action on the cost of living, taxation and rates, the cost of government and local services—otherwise “defeat for the present Government is inevitable and inter-party collaboration in Government is doomed”.⁶¹

On 5 October, Costello delivered his speech to a meeting of inter-party TDS and senators at the Engineers’ Hall in Dawson Street (the text had been approved by Government the day before).⁶² The overall tone was optimistic, suggesting trade figures had “taken a turn for the better and there is good ground for hope that the immediate measures found necessary by the Government are proving effective”. Now it was time to introduce a programme for economic expansion. “These decisions are calculated to expand our production, both for home use and for export, and enable the country to balance its international payments even without any need to call on our external assets. They are also calculated to increase savings, and increase investment at home so that we may develop this under-developed country.”

He stressed the importance of agriculture, saying that increased agricultural exports would pay for the imports of capital goods and material needed for industrial development. In the previous year, the export of cattle and beef was worth £42.5 million, or 40 per cent of Ireland’s total export trade. Given that Britain was to ban the import of cattle which were not certified to be tuberculosis free, he committed the Government to spending up to £1 million a year on a scheme to eradicate bovine tuberculosis. But while there was an emphasis on agriculture, Costello said, “Government encouragement of industrial development will continue to be given as vigorously as ever.” There would be a 50 per cent tax remission on profits from extra exports; grants for new factory buildings and tax relief for hotels; a campaign to encourage savings; and a Capital Investment Committee. Significantly, he stressed that Ireland would continue to welcome foreign capital investment.

The Taoiseach concluded on an upbeat note. “The Balance of Payments problem is a short term problem which can be and is on the way to being solved … Pessimism is not warranted and is not helpful. Faint hearts will contribute nothing either to the solution of our immediate problems or to planning the measures required to ensure future prosperity. We are justified in pointing with pride to what has hitherto been achieved, and, in contemplating those achievements, we may well take courage and face the future with calm resolve, with confidence and with hope.”⁶³ His 2-hour speech was greeted with an ovation, and was “reckoned to have restored inter-party unity, which seemed to be in jeopardy in recent weeks”. James Larkin and Seán MacBride, described in the media as the two chief critics of the Government, both welcomed the programme. Larkin praised the “new positive constructive programme” and urged early implementation to reduce unemployment. MacBride’s main complaint was that the programme had been delayed so long, but he said it was better late than never, and it gave some evidence of “positive, constructive planning”. A vote of confidence in the inter-party leadership was proposed by Labour’s Tom Kyne, seconded by Dan Morrissey of Fine Gael, with MacBride and Thomas O’Hara of Clann na Talmhan speaking in support.⁶⁴

The British Embassy found it difficult to judge the probable effectiveness of the plan, given the lack of detail, but reported that “moderate opinion seems to be that, although it has been left very late, the plan may prove reasonably effective, if it is implemented with speed and energy”.⁶⁵ Press reaction was mixed. The Irish Independent felt Costello was over-optimistic about the economic situation, and that his proposals were long-term, when “what the country needs at the moment is an immediate short-term policy to meet the present grave crisis”. The Irish Press found little to disagree with in what the Taoiseach said. “The statement would be reasonable and even brave were it not so threadbare, not to mention the woeful record of Mr Costello’s Government since it took office … No promises can hide the failure of the Government … more than fine words and promises based on past failures are needed.” The Irish Times was more positive. “The plan Mr Costello announced yesterday is the one that ought to have been put before the country thirty years ago. The pity is that we have had to wait for it until a moment of ‘crisis’.”⁶⁶

But it was precisely because of the desperate economic situation that Costello had been able to secure agreement to his proposals. As we have seen, the Capital Investment Committee and changes to the Control of Manufactures Acts had been resisted by Finance and Industry and Commerce respectively for more than two years. As Tom Garvin noted, “it took the crisis of 1956 to finally unblock residual resistance to wide-ranging policy shifts”.⁶⁷

Arguably the most important development was the tax break for exports. Similar measures had been suggested twice before—in the Foreign Trade (Development) Bill of 1945, and on the recommendation of the Dollar Exports Advisory Committee in 1950—but had been blocked by the Revenue Commissioners.⁶⁸ Tax relief for exports, as well as for industrial buildings and coal mining, was introduced in the Financial (Miscellaneous Provisions) Act in December.⁶⁹ It was, according to Patrick Lynch, the first significant departure from the system of company taxation introduced in 1842. While it took some years to become effective, he wrote in 1967, “it is now the most important single spur towards improving efficiency in Irish industry and extending our trade abroad”.⁷⁰ Lynch was hardly a neutral observer, but he was right to stress the importance of export tax relief. If nothing else, it was an important step on the road towards an outward looking, export driven economy—and one which is rarely credited to Costello and his government.

Another area where change was signalled in Costello’s speech was on the Control of Manufactures Acts. As we saw in Chapter 11, the Taoiseach had been trying unsuccessfully to reduce restrictions on foreign investment. In his 5 October speech, he noted the number of developments “made possible by the personal and financial impetus and the technical help of industrialists from other countries”. He said he was sure the public would welcome Norton’s campaign to attract more foreign investment. Norton later told the Taoiseach that the IDA was to follow up all American industrial contacts “vigorously and without delay, and that no opportunity will be lost of opening up new contacts with a view to the possibility of industrial development here”. The Minister was also keen on “special tax concessions to industry so as to enable this country to compete with other countries which are also trying to attract foreign industrialists”.⁷¹ It was to be left to the new Fianna Fáil government to actually amend the legislation, a move signalled by Lemass in May 1957.⁷² It is certainly arguable that Costello had prepared the ground for this change, as well as others. However, the amount of credit he could take in this case was limited by the failure to actually take action.

The Capital Investment Advisory Committee was also an important development, although perhaps not in the way Costello would have expected. The terms of reference outlined in his policy speech gave the Committee the brief to advise government “on the volume of public investment from time to time desirable, the general order of priority appropriate for the various investment projects, and the manner in which such projects should be financed”. It was chaired by John Leydon, former Secretary of the Department of Industry and Commerce, and included Lieutenant General M.J. Costello of Irish Sugar, Kevin McCourt of the IDA, economists Patrick Lynch and Louden Ryan, and Ruairí Roberts of the Irish Congress of Trade Unions.⁷³

Despite Sweetman’s opposition to the Committee (see Chapter 11), he managed to set its agenda, asking it to concentrate first on the expected deficit of around £12 million in the capital budget. Its first report, published at the end of January 1957, ruled out a cut in capital spending, as this would cause an unacceptable increase in unemployment. Borrowing was not feasible, so “the sole remaining method of finance is by way of reductions in current Exchequer expenditure”. The Committee recommended abolishing the subsidies on butter and flour, saving £2.4 million and £6.4 million respectively, and ending the agricultural rate relief grants to local authorities, which would save £5.6 million. It also warned against allowing wages to rise to compensate for higher prices when the subsidies were abolished. The report argued that “the elimination of these subsidies would establish an indispensable condition of economic expansion by bringing prices and costs into a more realistic relationship”. Not surprisingly, Ruairí Roberts of ICTUsigned a minority report disagreeing with this line.⁷⁴

In later years, Costello himself was critical of the Committee, accusing it of having “a bland unconcern for political practicalities”.⁷⁵ Even at the time, it was clear that its proposals would have been unacceptable to Labour, while John O’Donovan claimed in a 1973 interview that when Sweetman told Fine Gael colleagues on 25 January 1957 that he intended to abolish food subsidies, four of them threatened resignation—Liam Cosgrave, Tom O’Higgins, Patrick McGilligan and O’Donovan himself.⁷⁶ The only surviving member of the group mentioned, Liam Cosgrave, has no memory of any such meeting, or of a threat to resign.⁷⁷ He does, however, confirm the depth of feeling on the issue of food subsidies at the time, so there may be some basis for O’Donovan’s story. In any case, the general election meant it was no longer a problem the Inter-party Government would have to deal with. Not alone did the new Fianna Fáil government cut the subsidies, they also directed capital spending away from “social” to “productive” investment.⁷⁸ This was also to be a theme of the First Programme for Economic Expansion, an example of how decisions taken by the Inter-party Government informed the sea-change in economic policy spearheaded by Lemass and Ken Whitaker.

Another such decision was the appointment of Whitaker as Secretary of the Department of Finance. His promotion “contravened the hitherto sacrosanct principle of seniority”, as he got the job ahead of the longer-serving Sarsfield Hogan. In his history of the Department, Ronan Fanning suggests that the decisive proponent of Whitaker’s appointment was McGilligan.⁷⁹ Some believed Hogan was passed over because of his son’s involvement in the (temporary) theft of one of the Lane paintings, mentioned in Chapter 7, others to the fact that his “undisguised passion for rugby had contributed to a somewhat distant relationship with the worlds of economics and high finance”.⁸⁰ Whatever the reasons for not appointing Hogan, there were compelling ones for Whitaker’s promotion. He was immensely capable, and more in tune with modern ideas about economics than many of his contemporaries. This is not, of course, to suggest that he lacked an appreciation of the economic perils facing the State. Three and a half months after his appointment, he wrote to Sweetman, saying he was “the only Minister who fully understands how narrowly we have avoided failure in recent months”.⁸¹

The use of the word failure is significant. As Tom Garvin noted when quoting the above letter, “the rhetoric of the Republic as a failed state was quite noticeable at the time”.⁸² It’s easy to see why. Between 1951 and 1958, GDP rose by less than 1 per cent per annum, and Irish GDP per head fell from 75 per cent of the western European average to just 60 per cent. As Gary Murphy has observed, “it was during the 1950s that Ireland went into relative decline against similar states in Western Europe”.⁸³ Whitaker remembered the 1950s as “a very grim time—we were in the slough of despond, a time when people were asking if we had a future”.⁸⁴ There is plenty of reason to see the 1950s as the dismal decade, the nadir of Irish independence. For this, political leaders on all sides must take much of the blame.

On the other hand, the 1950s were also the time when important decisions were taken which paved the way for the growth of the 1960s. The change in Irish fortunes is usually attributed to the First Programme for Economic Expansion, to the work of Ken Whitaker and to the leadership of Lemass. But it is wrong to ignore the important role of Costello and of the second Inter-party Government in broadening public debate and preparing the way for important initiatives on foreign investment and export led growth. As Whitaker wrote in 2006, “the foundations of new policies for economic growth were being laid and the appropriate institutions established” at this time.⁸⁵ Unfortunately for Costello’s reputation, although he had sketched out an economic reform agenda in 1953, he only began making progress on it after his government had presided over an economic crisis; and he was removed from power before his ideas could be implemented. This is why Lemass and Whitaker get the credit for the Irish economic transformation.

The impact of Costello’s October speech on Lemass’s thinking was obvious even at the time. As we saw in Chapter 11, his Clery’s Ballroom speech had signalled a new direction for Fianna Fáil, although Costello had dismissed it because it failed to even mention agriculture. In January 1957 he made another policy speech, which according to his biographer John Horgan was “calculated to mend his hand in relation to certain elements of the plans recently announced by Costello’s Government, which had been accompanied by specific proposals for both industry and agriculture. His recommendations for the improvement of the agricultural sector addressed an issue that had been conspicuous by its absence from his Clery’s Ballroom speech, and his espousal of tax-free profits for exports, while it echoed speeches he had made as far back as 1948, was also an attempt to trump Costello’s proposals.”⁸⁶ The Leader commented favourably on Lemass’s “thoughtful and painstaking proposals”, which it said were sound and realistic, although they did not “differ all that much from the outline of policy made by the Taoiseach last October”.⁸⁷

As well as promoting a positive policy, Costello also made efforts to ensure his ministers didn’t unnecessarily antagonise the public. In August, Alexis FitzGerald had suggested that he might tell ministers “to be particularly careful not to have rows with any groups for the moment and to turn away wrath with soft words in every instance”.⁸⁸ It was a good idea, and Costello acted on it, telling ministers at a Cabinet meeting “to see that none of their Departments caused any further irritation among sections of the community which would do us political damage”.⁸⁹ One minister who took this injunction to heart was James Everett, who ordered Garda drivers of State cars to stop parking illegally, as this was “simply inviting adverse criticism from members of the public”.⁹⁰

A more serious matter was corporal punishment in schools, an issue which had become controversial after Owen Sheehy Skeffington raised it in the Seanad.⁹¹ Mulcahy decided he should meet this “attack … on our Clerical management and on nuns and brothers as teachers” by clarifying exactly what was permitted. Up to then, the only instruments officially allowed for corporal punishment were a light rod or cane. In view of the “existing and traditional position”, Mulcahy added the strap (a heavy leather article) to this list. This was done “to remove doubt on the part of those traditionally using it and on the part of the public”. Not surprisingly, though, the circular was interpreted by the newspapers as the Minister approving the use of the strap.⁹² Sheehy Skeffington denounced Mulcahy’s action as “cowardly and callous”, claiming that instead of taking firm action against those who broke the rules, he had changed the rules to suit them.⁹³ Seán MacBride put down a Dáil motion calling for the regulation to be withdrawn.⁹⁴

After the issue was raised at the inter-party meeting on 5 October, Costello reminded Mulcahy of the need to avoid controversy. The Taoiseach said he was “writing you this personally as I would not wish you to think that it is a direction to you in your own Department, but I think it is not a matter that we should allow to be the subject of public discussion which would divert attention from our constructive proposals”. While he assumed the Department “has a good case for it nevertheless I urge you to withdraw the regulation”. He added that he had heard an unconfirmed rumour that there was “almost something in the nature of a riot” at one Christian Brothers school “because of the undue use of corporal punishment”.⁹⁵

Mulcahy agreed to withdraw the offending circular. But he also made it clear that he felt he had no role in school discipline. Unless a teacher did something that could lead to criminal charges, there was no sanction available to the Minister against “a Clerical Manager or a Clerical teacher unrepudiated by his or her Religious Superior”.⁹⁶ Like his predecessors and successors, Mulcahy was not inclined to interfere in how the Church ran educational facilities—a failure which contributed to the climate of secrecy surrounding serious abuses, particularly in residential institutions.

Of course, the immediate reason for avoiding public controversy, and for the 5 October policy speech, was the pending by-elections in Carlow-Kilkenny and Dublin South-West. In a speech in Mooncoin in Kilkenny, Costello said his government, after taking remedial action, was now putting forward constructive proposals, unlike the Opposition. He said the reason Fianna Fáil was not offering any precise policy was because “they cannot agree on one … Nobody knows whether it is Mr Lemass’s policy of free spending of money, to be got from nobody knows where, or Mr MacEntee’s policy of heavy taxation even for Capital purposes that is to prevail.”⁹⁷

The Taoiseach stressed that Fianna Fáil had not said the Government’s actions in trying to control the balance of payments deficit were wrong. Therefore, he suggested optimistically, “if the electors show now in a striking manner their approval … the results will provide a salutary lesson for the future leaders of our democracy, and an encouragement to public men generally to act in a responsible manner”.⁹⁸ Just in case this call for an endorsement of austerity didn’t work, he also had an inducement for voters, in the shape of an extra £1 million for job creation in “productive employment”.⁹⁹ He told a meeting in Dublin South-West that the “only thing we have to fear in these by-elections is apathy on the part of the electorate”.¹⁰⁰ But he was clearly well aware that they had a lot more to fear than that.

Despite his policy speech, despite his efforts to avoid annoying the electorate, the results were as bad as could have been expected. In Carlow-Kilkenny, Fianna Fáil’s Martin Medlar retained the seat of his late party colleague Thomas Walsh. His vote, at 58 per cent, was up 12 per cent on the last general election, while Fine Gael support was down 6 per cent and Labour dropped 1 per cent. Dublin South-West was much worse. The deceased deputy, Peadar Doyle, was a member of Fine Gael, so that party supplied the sole inter-party candidate, Edmond Power. He took 40 per cent of the vote—compared to the 53 per cent won by inter-party candidates in 1954. Fianna Fáil’s Noel Lemass took 60 per cent, an increase of 20 percentage points.

Costello had aimed to change the political mood, and had failed. He put on a brave face, saying the losses were not unexpected and rejecting Fianna Fáil’s clamour for a general election. The Taoiseach high-mindedly told an audience in Rathmines that “the Government of a country is not a game to be played by political Parties for Party purposes”. He pointed out that Fianna Fáil had argued in 1953 and 1954 that no country could be governed if by-election defeats inevitably led to general elections. Of course, Fianna Fáil had only said that because Jack Costello had been arguing the exact opposite. But now, he suggested, there was a difference: while the inter-party Opposition had rejected the Fianna Fáil government’s policy, and outlined an alternative, the same was not true now.¹⁰¹ It was an ingenious if rather thin argument. It probably fooled nobody, least of all the Taoiseach. His private mood was revealed in a letter to Tom Bodkin, who had again declined an offer to take over the Arts Council: “I have had so many frustrating disappointments that one more does not make any difference.”¹⁰²

The voters may not have been particularly impressed, but at least Seán MacBride and his two colleagues appeared to be back on board after the October policy speech. In November, the Clann leader wrote to Costello with some “brief” (nine pages!) suggestions about economic policy in the light of the Suez Crisis. He concluded his letter with an offer to secure more information if required, telling the Taoiseach, “I shall be entirely at your disposal.” A further “brief memorandum on the need for a ten year economic development plan”—which ran to 26 pages plus appendices—was prepared by MacBride for Costello at the end of November.¹⁰³ As late as 12 January, MacBride was sending advice to Costello on how to cope with the unemployment situation.¹⁰⁴ There was no apparent reason for Costello to have any fears about MacBride’s continued support—but that was about to change, and the change had nothing to do with economic policy.

In Chapter 11, we saw Costello’s restrained response to Republican violence, particularly the raid on Roslea barracks, and his warning that if such violence continued, the Government would take action. A subsequent report by Chief Superintendent P.J. Carroll noted that there was “a temporary setback” to the IRA following the Taoiseach’s statement and a condemnation of violence by the Catholic hierarchy. However, these initiatives “had no lasting effect in deterring persons from joining the IRA or taking part in its militant activities”. The Gardaí continued the policy of “observation” of IRA activities until May 1956, when the Government ordered a clampdown on IRA training camps and arms dumps. By then, though, “the IRA had changed their tactics … and gave no opportunity for effective police action”.¹⁰⁵

The IRA had not made tactical changes simply to frustrate police action; the organisation was planning a major push against Northern Ireland, Operation Harvest, more popularly known as the Border Campaign. This opened on the night of 11 November with the destruction of six Customs posts, a raid on Gough Barracks in Armagh and the destruction of a BBC transmission station in Derry.¹⁰⁶ A month later, the campaign escalated, with attacks on RUC barracks. Unionists condemned the Dublin Government for failing to stop cross-Border attacks.¹⁰⁷

On 14 December, the Government decided to use the Gardaí and the Army to deal with the IRA. A statement agreed at a Cabinet meeting referred to Costello’s warning in 1955. “Since these organisations have again arrogated to themselves powers and functions that belong to the duly elected representatives of the people … the Government have now determined to take … such steps as the Government deem necessary and appropriate to prevent activities which, if they were allowed to continue, would inevitably cause loss of life and would involve the danger that civil war might ensue.”¹⁰⁸ The Irish Times said there was no need to underline the gravity of the statement—but observed that it was now up to the Taoiseach and his government “to demonstrate the sincerity of their words by immediate and vigorous action”.¹⁰⁹ This was done by deploying the Army to assist the Gardaí on the border. That weekend, 13 men were arrested at a farm outside Scotstown in Monaghan.¹¹⁰

Although the arrested men had to be released because no arms or incriminating documents were found,¹¹¹ it was at least an indication that Costello was prepared to take action. The American Ambassador reported to Washington that there was a “violent cleavage” within Cabinet, with Norton opposing the Government action. Ambassador Taft speculated that the IRA might have been prompted to challenge the Government’s authority because of its “growing weakness … resulting from economic crisis and losses in recent by-elections”.¹¹² The American Embassy was not impressed with the Government’s response, saying it was “still reluctant to arrest IRA leaders”, and that what had been done so far “does not represent what the police could accomplish if given a free hand”.¹¹³

The British were also sceptical of Costello’s efforts. On 12 December the Ambassador, Alexander Clutterbuck, expressed his government’s concern to Cosgrave. On the eighteenth, he followed up by delivering a formal communication from his government to the Taoiseach. This again expressed concern, and hoped that the promised action against the IRA would be effective and successful. Unusually, British Prime Minister Anthony Eden outlined the contents of this message in the House of Commons. Eden went on to stress that under the 1949 Ireland Act, Northern Ireland was “an integral part of the United Kingdom”, and therefore the safety of its inhabitants was a direct responsibility of his government.¹¹⁴ The Taoiseach told Clutterbuck that his Government “was making a mistake in delivering such a note and registering a protest … such action exacerbated Irish Government annoyance at Britain’s failure to treat partition as the point at issue, as well as giving rise to a resentful feeling that the British Government was interfering”.¹¹⁵

A formal written response followed on Christmas Eve. It pointed out that the Government’s attitude had been made plain in a number of public statements, and that the measures that might be required were “for determination by the Irish Government solely, in the light of their experience and judgment and in discharge of their responsibility to Dáil Éireann”. It reminded the British of Costello’s statement of November 1955, when he had pointed out that the root cause of violence was partition. “While fully sharing the desire of the British Government for a continuance of good relations, they find it a matter of the deepest concern that there has, so far, been no indication of any change of attitude on the part of either the British or the Six-County Government towards the problem of Partition.” Eden’s statement in the House of Commons that Northern Ireland was an integral part of the United Kingdom “is one that could never, in any circumstances, be accepted by an Irish Government … The Six Counties are part of the national territory of Ireland, and it remains the profound conviction of the Irish Government that the evils attendant on Partition can be eradicated only by the removal of their basic cause.”¹¹⁶

While this was fairly traditional nationalist fare, Cosgrave was also working on a new tack. In January, he sought Cabinet approval for an approach to the British Government to seek improvements in the treatment of nationalists within Northern Ireland. Cosgrave reported that, in the view of leading Nationalist politician Eddie McAteer, some senior Unionists recognised that the violence was due to the frustration of normal constitutional political activity. Therefore, he argued, the time might be right to ask the British to take action, although the approach would have to be made in secret to avoid encouraging the men of violence.¹¹⁷

Enda Staunton has argued that this concentration on reform within Northern Ireland rather than on the removal of partition marked “the genesis of a new policy which, with some relapses, was to continue to the present day”.¹¹⁸ If it was an attempt to change the parameters of debate away from the sterile concentration on the Border, it didn’t work. London viewed the démarche as yet another attempt to remove partition, and rejected it on those grounds.¹¹⁹

Despite the lack of any encouragement whatever from London, Costello and his colleagues agreed to begin a study in each Department of the practical consequences of an end to partition.¹²⁰ The Taoiseach announced his “positive policy” towards the North at the Fine Gael Ard Fheis on 6 February 1957. The British thought there was “nothing new so far as a united Ireland was concerned” in the speech, but recognised that his idea of carrying out preparatory work was “novel”.¹²¹ When he returned to office, de Valera recommended that Departments should continue these studies. The Department of External Affairs, however, reported that most Departments didn’t consider the matter urgent, and there are no further entries on the file, indicating that nothing was done about it.¹²²De Valera attempted to put out feelers to London through the former British Representative, Lord Rugby, but the new Prime Minister, Harold Macmillan, wasn’t biting. “I do not think that a united Ireland—with de Valera as a sort of Irish Nehru—would do us much good. Let us stand by our friends.”¹²³

While Costello was rejecting British pressure for more robust action, he was also facing criticism for the action his Government had taken. Independent TD Jack McQuillan urged the Taoiseach to “discontinue immediately [the] use of Irish Army and Gardaí as instruments of British policy in helping to maintain Partition”. Costello reminded McQuillan that the right to determine issues of peace and war, and to maintain armed forces, was vested in the Oireachtas. The Gardaí and the Army were not being used as instruments of British policy, but to safeguard the institutions of the State. “I trust that you will appreciate the … magnitude of the evil that could ensue if any elected representative of the people were to lend his support to activities that are based on defiance of the democratic institutions of this State.”¹²⁴

But as the year turned, the situation got much worse. On 30 December a 23-year-old (Catholic) RUC constable, John Scally, was killed in a raid on the barracks in Derrylin in Fermanagh.¹²⁵ And on New Year’s Day, two IRA men were killed in a raid on theRUCbarracks in Brookeborough, also in Fermanagh.¹²⁶ The funerals of Seán South and Fergal O’Hanlon saw a massive show of public sympathy for the “martyrs”, and Clare and Dublin county councils passed motions of sympathy for them.¹²⁷ Northern Nationalists reacted with even more emotion. As a 15-year-old from Tyrone, Austin Currie later recalled, “it was, in truth, satisfying to see someone putting the boot into the arrogant and dominating unionists”.¹²⁸

McQuillan, along with Patrick Finucane (who had left Clann na Talmhan), called for the recall of the Dáil, the sending of United Nations observers to the North, and the release of seven men arrested in Cavan on New Year’s Eve.¹²⁹ The arrested men, who had been charged under the Offences Against the State Act, included a future Chief of Staff of the IRA, Ruairí Ó Brádaigh.¹³⁰ Costello rejected their demands out of hand,¹³¹ but recognised the need “to steady public opinion in these matters”.¹³² On the evening of Sunday 6 January he addressed the Irish people on Radio Éireann.

Three young Irishmen (he included the RUC man, Scally) had died in the past week; the Government was resolved to prevent further attacks. He and his colleagues believed that Partition “cannot, and never will, be ended by force”; but “a small group, with no basis of legitimate authority, is seeking to embroil our country in war”. He dismissed as a “wicked misrepresentation” the idea that the Gardaí and Army were being used to maintain partition. In fact, they were preventing actions which would make divisions between Irishmen permanent. “Neither appeals for sympathy with young men who have put themselves in danger nor natural sorrow for tragic deaths should be allowed to betray any of us into an appearance of encouraging these actions.”¹³³

The British Foreign Secretary, Selwyn Lloyd, told Ambassador Boland that Costello’s statement was “extremely good”.¹³⁴ The number of letters from Republican sympathisers, particularly in America, showed that it had greatly annoyed that constituency. But Costello remained defiant. One correspondent argued that “a lot of bloodshed” would be needed to end partition; the Taoiseach said bloodshed would “make the problem harder to solve and could very easily make it impossible to solve at all”.¹³⁵

But was Costello serious about putting a stop to the IRA? The answer was yes—up to a point. The private secretary to the Minister for Justice recalled that the Government was determined to use the ordinary criminal code rather than special powers and internment, to which Costello and Everett, as well as their colleagues, were “temperamentally opposed”. Apart from anything else, Ireland didn’t want to be the first country to seek a derogation from the recently signed European Convention on Human Rights.¹³⁶However, the Offences Against the State Act was used, and two days after Costello’s speech arrests of suspects began in earnest. Most of the IRA Army Council and GHQ staff were quickly picked up and convicted.¹³⁷ Responding to later criticism from MacEntee that the Government had used the ordinary courts to deal with the IRA threat, he said the fact that a military tribunal had not been needed was “a distinct contribution to the effective handling of a difficult situation”.¹³⁸

However, the day before Costello lost office, a Garda report indicated that the results had been limited. Chief Superintendent P.J. Carroll estimated the active strength of the IRA at 943, and predicted that “the increase in numbers will tend to continue, as the militant activities in the Six Counties will attract youths and the emergence of Sinn Féin as an active political party will help to secure members for the IRA”.¹³⁹ After he returned to power, de Valera adopted a tougher approach, introducing internment in July. The difference in treatment under the two governments is indicated by the experience of one Republican activist, jailed for two months in January under the Offences Against the State Act, then interned for 18 months in July. The same activist observed of Costello that he had been “straightforward, and restrained and dignified … Republicans could not complain that they weren’t given fair trial.”¹⁴⁰ Although the internees were released at the end of 1958, sporadic continuing violence led to the reconstitution of the Special Criminal Court in November 1961.¹⁴¹ The Border Campaign was finally called off in February 1962.¹⁴²

To return to the aftermath of Costello’s broadcast condemning IRA activities, he gratefully acknowledged the support given to him by de Valera.¹⁴³ The leader of the Opposition was doing his best to be helpful, calling a meeting of the Fianna Fáil parliamentary party for 15 January which unanimously agreed a motion saying there could be no armed force except under the control of the Government. Less helpfully, the meeting also discussed the possible use of force by any future government to end partition. “While no definite decision was taken, the views expressed indicated that the employment of force at any time in the foreseeable future would be undesirable and likely to be futile.” The fact that “no definite decision” was taken on the future use of force indicates the underlying tensions in the party, as John Horgan has pointed out.¹⁴⁴ Costello, however, looked on the positive side of the motion, telling Fianna Fáil TD Dan Breen that “with the assistance of your leader, public opinion has been steadied and is now behind the effort to uphold the legality of the Constitution”.¹⁴⁵

If there was tension within Fianna Fáil over the Government’s crackdown on the IRA, it was nothing to the tensions within Clann na Poblachta. MacBride and Con Lehane advised against pulling the rug from under Costello’s government. The only alternative was the return of de Valera, who would be even tougher on the IRA. In the emotion of the moment, though, the Republican activists who dominated the Clann executive insisted that their three TDS should put down a vote of no confidence in the Government.¹⁴⁶

On 28 January Clann na Poblachta announced that it was “impossible” to continue supporting the Government, and a motion of no confidence was put down in the names of MacBride and his two fellow TDS, John Tully and Kathleen O’Connor. The motion was carefully crafted to put economic problems first. The three reasons it gave for withdrawing confidence from the Government were the failure to produce a long-term economic development programme, the failure to anticipate the unemployment crisis and take effective measures against it, and finally the failure “to formulate and pursue any positive policy calculated to bring about the reunification of Ireland”.¹⁴⁷ MacBride always insisted it was the economy which prompted the motion—a very lengthy statement to Dublin constituency representatives went into great detail on all the warnings he had given the Government on the subject, and doesn’t mention partition or the Border Campaign once.¹⁴⁸ A statement by the party’s Ard Comhairle was more forthcoming; after a lengthy diatribe against the Government’s economic failings, it accused Costello and his colleagues of “acting as Britain’s policeman against a section of the Irish people”.¹⁴⁹

On the day the Clann put down its motion, the Taoiseach happened to be discussing cross-Border relations with Trinity College senator William Bedell Stanford. He showed him MacBride’s letter, and “spoke sadly about the ‘dastardliness’ of this manoeuvre … he seemed greatly saddened by the ruthlessness of party politics, and disappointed at not having taken the gun out of politics as he had hoped in 1948. But he showed plenty of moral force and physical energy despite his rather slight build, and he still looked fit after his gruelling three years in office.”¹⁵⁰ He wrote a rather hurt reply to MacBride, saying he had agreed to become Taoiseach with the aim of taking the gun out of Irish politics, and of helping to end “the bitterness between personalities and Parties that was poisoning the public life of the country. My first hope has not yet been fully realised. So far as the second hope is concerned, I do not intend, for my part, to permit recent events to add any further bitterness.”¹⁵¹ The British Ambassador reported to London that “to say that the Government are angered and disgusted at MacBride’s behaviour is to put it mildly. Another six months would, it is felt, have made all the difference … both on the political and economic fronts a new chapter might have been opened. To be compelled to go to the country at this moment, before they have had time to compete their work on either front, is hard enough; but to be forced to do so through the sheer opportunism of MacBride and his two followers is, they feel, the last word.”¹⁵²

Was an election inevitable? Some felt it wasn’t. As we saw above, Dillon believed Costello could and should have tried to soldier on, but that he had lost heart after the death of his wife. Dillon thought that if MacBride had known that Costello would call an election, he would have withdrawn his motion of no confidence.¹⁵³ However, this seems unlikely, as it was not MacBride but the Clann executive that insisted on putting the motion in the first place. In any event, a hard-headed look at the numbers in the Dáil showed the Government’s position was untenable. Fianna Fáil’s Thomas Derrig had died in November, leaving the Dáil with 146 members, one of whom, Ceann Comhairle Patrick Hogan of Labour, would not vote unless there was a tie. Fine Gael had lost two seats and Labour one in by-elections, while Patrick Finucane of Clann na Talmhan had withdrawn his support from the Government in a dispute over milk prices and the failure to supply a factory for Listowel, as promised in the North Kerry by-election.¹⁵⁴ After the loss of Clann na Poblachta’s three votes, this left the inter-party grouping with 71 seats (excluding the Ceann Comhairle), while Fianna Fáil, Clann na Poblachta and the Independents likely to vote against the Government had 74.¹⁵⁵ Any faint hope that Fianna Fáil might support the Government in an act of anti-IRA solidarity were dispelled when de Valera put down his own no confidence motion the day after MacBride’s.¹⁵⁶ The British Ambassador described the Clann’s sudden withdrawal of support as “a bombshell to the country”, while the Fianna Fáil motion “finally dashed” any hope of Costello’s government remaining in power.¹⁵⁷

Determined to avoid inevitable defeat in the Dáil, Costello advised the President on 4 February that he would be seeking a dissolution on the twelfth of the month (the day the Dáil was due back after the Christmas recess). Polling day was to be Tuesday 5 March, with the new Dáil to meet on 20 March.¹⁵⁸ Announcing his plans nearly a week before the formal dissolution of the Dáil allowed Costello to use the Fine Gael Ard Fheis on the sixth to launch his election campaign. He acknowledged that an election at that time “must be gravely damaging to the national interest”, but insisted he had no alternative. Responsibility rested with those parties who had put down motions of no confidence. These made an election inevitable, showed “a reckless and irresponsible disregard of the country’s interests”, and were “criminal and miserable acts of sabotage”. He said the real reason for MacBride’s action was, “to put it quite bluntly, because of Government action against the unlawful use of force”.

The Taoiseach suggested a federal solution to the problem of partition, promising that minority rights would be respected in a united Ireland. “The spirit of peace cannot thrive in any community where there is discrimination against a particular category of people … The object of our policy is a reunion willingly entered into and fully safeguarding the rights of all minority interests.” He also again deplored the outbreak of violence and repeated his Government’s determination to tackle it.¹⁵⁹ His speech was welcomed by the British Government, which saw it as containing “some of the most significant and moderate comment on the Partition issue to have come out of Dublin for some time past”.¹⁶⁰

The Government made some efforts to lighten the economic gloom. Even before the election was called, it had rescinded an earlier decision to restrict the public capital programme to £27 million. This decision had been made in November 1956, but at the start of the year Sweetman was complaining that Departments had submitted estimates for capital spending totalling £38 million. The Government avoided the hard decisions on cutting those estimates by deciding that the limit on capital spending should be increased to between £38 and £40 million, in order “to avoid a further deflationary effect on the economy”.¹⁶¹ On 16 January Costello announced a £4.5 million “mini capital budget” to bring relief to the unemployed. As he later pointed out, these moves were announced before MacBride’s no-confidence motion precipitated the election.¹⁶²

The same could not be said of certain other Government decisions. A few days before the election, it decided to reduce the price of tea. Lemass claimed there was no justification for this move¹⁶³—except, presumably, possible political advantage. The Taoiseach also successfully interceded with CIÉ Chairman Ted Courtney (a contributor to his election fund) over the proposed dismissal of painters by the company. Costello wrote after the election to thank him: “It is a comfort to both of us that your action was not a mere political one but resulted in the saving of distress to a large number of families. That is your consolation and mine.”¹⁶⁴

There was some good economic news during the course of the campaign, with trade figures for January showing an increase of £3.7 million in exports, up 50 per cent on the same month in the previous year. Imports had fallen by £2.3 million on January 1956. In the light of these encouraging figures, Costello claimed the Government was “entitled to full credit for stopping the rot in the balance of payments and for producing a clear, definite and practical policy for increasing production”.¹⁶⁵ However, he admitted that his Government’s plans and policies were “only partially showing results” because of the unexpected timing of the election. The Taoiseach also stressed the scale and scope of the problems which had hit the country at the one time, and faced the Government “with difficulties which no other Irish Government ever has had to face”.¹⁶⁶

The campaign was marked by repeated Fianna Fáil attacks on the very concept of coalition government. Costello complained that “the phrase ‘single party government’ drums through all their speeches … like the monotonous beat of an African tom-tom”.¹⁶⁷ It was true that Fianna Fáil happily made hay of coalition differences. Frank Aiken said the members of the Government “spent most of their time double-crossing the people who voted for them and preparing to double-cross one another”.¹⁶⁸ Jim Ryan said the country had suffered “not only the evils of a Coalition Government but the disaster of an incompetent Government”.¹⁶⁹ Lemass said they were not going to simply find fault with the Government; he said they “did their best” but were “condemned to failure from the start” by the fact they were a coalition. “Each party in it was, for the past year, trying to judge the right time, in its own party interest, to get out of it, and in the end the smallest party beat them to it.”¹⁷⁰ De Valera had a historical analogy. Recalling the “scurrying of the envoys that went from Party to Party when the first Coalition was being arranged”, he said it was “sadly reminiscent to some of us of the scurrying of envoys that took place at another important juncture in our history”.¹⁷¹ He didn’t actually mention the Treaty negotiations, presumably because his reference would have been understood by his audience.

But Costello didn’t take these attacks lying down. He pointed to differences between senior Fianna Fáil figures. “It is impossible to reconcile … Mr Lemass’s plan which contemplates a large increase in public expenditure of approximately £20 million a year with the ‘rigid economy’ favoured by Mr MacEntee.”¹⁷² Lemass, with a cheerful disregard for the facts, dismissed this as “nonsense”. He claimed that he and MacEntee “never had a fundamental disagreement on the aims of policy” (which of course is not the same as disagreement on the policy to achieve the aims). “Of course, we had arguments … every Minister worth his salt has arguments with the Minister for Finance sooner or later.”¹⁷³

The Taoiseach criticised Fianna Fáil for not producing an alternative policy, in contrast to his own Policy for Production outlined the previous October. However, he acknowledged that the new policy had just commenced and had yet to take effect. “It has been like a machine which is at work but whose productive benefits have not yet reached the consumer—they are still along the assembly belt.”¹⁷⁴ He also claimed that a sign of the “staleness of the political situation” was that the Fianna Fáil speeches “could all have been made … at any one of the four elections which have been held since the War”. The reason, he suggested, was that de Valera “refuses to discuss the real issues of policy”.¹⁷⁵ He had evidently forgotten his own refusal three years before to commit himself on policy. In fact, speeches in this series of elections were somewhat interchangeable—not within Fianna Fáil, but between government and opposition. The speeches Costello made in 1951 and 1957 as outgoing Taoiseach could easily have been made by de Valera in 1954; equally, his criticisms of the Government in 1954 were echoed by Fianna Fáil in 1957.

One new issue was the IRA’s Border Campaign. Former Fianna Fáil Justice Minister Gerry Boland claimed this was “a direct and inevitable result of Coalition policy. If carte blanche had not been given to this illegal organisation there would have been no Coalition Government in 1948 or 1954.”¹⁷⁶ Costello took grave exception to this, indignantly denying that his government had turned a blind eye to the IRA. He pointed out that the raid on Armagh barracks took place 10 days after his second government took office, and the “arming, drilling, recruiting and planning” for that operation were clearly going on while Fianna Fáil was in office. The Taoiseach said he had no apology to make for his policy, which had been “temperate, but firm”.¹⁷⁷ Following further criticism from MacEntee, he said the Government had accepted the challenge from the IRA “within 24 hours … notwithstanding Clann na Poblachta, and the recognition of the temptation which would be presented to Fianna Fáil. This Election has come about, not because of any weakness in the Government but because of the Government’s strength and devotion to principle, and because of its refusal in the national interest to make any compromise.”¹⁷⁸

The economic background music might have been dismal, but Costello remained upbeat, writing on 22 February that as he moved about the country, he found Government supporters “quietly confident of the result … I always endeavour to avoid forecasting. I certainly feel, however, that the Government, particularly in the last ten days, have gathered considerable support.”¹⁷⁹ Four days before polling, he predicted “a national rally” to the Government parties. “Such a rally would be a tonic not merely to the political system itself but to the national spirit generally … I have no doubt of your support.”¹⁸⁰ He should have.

In Dublin South-East, Costello still topped the poll—but his vote, at 28.4 per cent, was down almost 14 percentage points on 1954. That meant the end of John O’Donovan, whose seat was taken by Noël Browne, now running as an Independent. Browne’s first-preference vote of 24.8 per cent was four points higher than three years before, when he was a Fianna Fáil candidate. The other seat was taken by MacEntee, who was also just under a quota with 24.3 per cent of the vote. It was, ironically, a small transfer from Costello which elected Browne to the Dáil again.¹⁸¹ Nationally, Fine Gael lost the gains made in 1954, being reduced to 40 seats, the same number as in 1951. Labour slumped to 12 seats, and Clann na Talmhan to just three. The other Clann, which had precipitated the election, returned just one TD, John Tully; Seán MacBride would never be elected to the Dáil again. There were four Sinn Féin TDS, who were of course abstentionst. But the big news was the Fianna Fáil performance. In de Valera’s last general election as leader, his party won 78 of the 147 seats on offer.

The British Ambassador was surprised at “a landslide of these dimensions … since the whole campaign was deceptively quiet and even in its closing stages was marked by a discouraging lack of interest on the part of the general public”.¹⁸² But, as The Leaderpointed out, “Circumstances were hard on the government. They had to apply unpopular measures, and Mr Costello had the great sorrow of seeing his policy of ‘taking the gun out of politics’ apparently thwarted … Our gratitude to them is genuine, especially to Mr Costello who is patently a man devoid of personal ambition, and who has continued his disinterested service to the country when stricken with domestic sorrow.”¹⁸³

A typically pungent comment on the Government’s plight was offered by Patrick Lindsay, who travelled to Áras an Uachtaráin to surrender his seal of office with Costello and Dillon. As they passed a pub on the quays, Dillon said he’d never been in a pub except his own in Ballaghaderreen, which he sold because “when I saw people going home having spent so much money on drink, I decided that they were depriving their families of essentials”. Costello then chipped in the observation that he had only been in a pub once, in Terenure, “and was nearly choked by a bottle of orange”. To Lindsay, the pub was “the countryman’s club, where everything is discussed and where contacts are made”. He was horrified by the attitude of his colleagues. “****. I now know why we are going in this direction today and why we are out of touch with the people.”¹⁸⁴

The Taoiseach was more philosophical. As he told Archbishop McQuaid, “there are many compensations in defeat”, although he regretted that his Government had been “judged at the worst time and in the most adverse circumstances”.¹⁸⁵ To another correspondent, he observed that “defeat was inevitable in the circumstances. It is distressing that we should be judged on incomplete work, but such is the nature of democracy.” He added that he was “in no way discouraged”.¹⁸⁶ He spent his final weekend as Taoiseach in Cork with his daughter Eavan.¹⁸⁷

There was no suspense about the election of the Taoiseach in 1957, as de Valera was the only nominee. Costello opposed the nomination “in no spirit of animosity … but in the firm conviction that in present circumstances the Party to which he belongs is not equipped to provide the kind of Government which the country needs … That Party has so far shown no policy which would justify a Government being selected from it.” De Valera’s nomination was approved by 78 votes to 53.¹⁸⁸ Later, in the debate on the nomination of the members of the Government, Costello promised that Fine Gael would be a constructive opposition, and claimed they left behind them a “solid contribution to some of the difficulties” facing the country. He pointedly said his party would try to forget that Fianna Fáil had not given them any cooperation in the previous Dáil.¹⁸⁹

Despite his return to the opposition benches, Costello remained enthusiastic about politics, about Fine Gael, and about the inter-party approach. He told one correspondent that “so far as I have health and strength I will do everything possible to continue the fight and pass on the torch”. To that end, he planned to continue his efforts to bring “young people and new ideas” into Fine Gael so as to revive the party and “make it a force not merely in politics but in ideas throughout the country”. The former Taoiseach insisted that “we did a good service to the country by associating with the Labour Party”—they had been given an opportunity to see what government really involved.¹⁹⁰ But Labour were bruised by their experience, and by dealing with Sweetman in particular. Brendan Corish swore he would never again serve in government with the former Minister for Finance.¹⁹¹ It did not point towards a happy or a productive period in opposition.