Industrial finance in independent Ireland: The Trade Loans (Guarantee) Acts, 1924-1939

Abstract

This thesis examines and analyses the first industrial policy initiative undertaken in independent Ireland. The Trade Loans (Guarantee) Act, 1924, allowed the state to guarantee loans borrowed by firms for their business development, and thereby aimed to promote industrial employment. The thesis describes the background and development of the scheme up to 1940. Industrial finance encountered a difficult start in 1924-5. The problem was solved first by direct state involvement, followed by a public-private remedy which was unsuccessful. Industrial finance was then reviewed in 1932-3 resulting in significant amendments to the legislation. In addition, the ICC was established as a state initiative to provide industrial financing services. I describe the operation of the scheme and I construct a database from the published archival and administrative records. The database contains records of 108 firms with loans approved to the value of £1,473,250. By interrogating the database, I show the distinctive features of the firms and their locations, the financing institutions from which they borrowed, and the employment generated during the term of the loans. I also show that a quarter of the loans defaulted costing the state over £330,000. I conclude that the loan guarantee scheme went through an experimental pilot phase under Cumann na nGaedheal followed by a development phase under Fianna Fáil with a three-fold increase in the number of loans approved. Furthermore, there was a corresponding development in the state’s involvement in providing industrial finance with the eventual establishment of the ICC. I conclude that this was an Irish solution to the so-called Macmillan Gap – the particular problem of raising long-term finance for small enterprises. Finally, I conclude that the loan guarantee scheme made a greater contribution to the development of industrial finance than its modest and short-term contribution to new employment.