ABSTRACT
The Irish Free State acquired full fiscal autonomy from the United Kingdom (UK) as a consequence of the Treaty signed in December 1921. This enabled the new state to pursue independent trade and fiscal policies that came into effect from 1 April 1923, with the first tariffs introduced that year. Gradually more were added so that by 1931 there were 59 categories of goods subject to duty, which influenced the development of certain industrial sectors. There was a greater degree of continuity with pre-independence monetary arrangements. The proTreaty Cumann na nGaedheal government relied strongly on the economic establishment for political support. Although tariffs and customs duties were introduced on certain goods entering Ireland from the UK, the trading, financial and farming establishment sought continuity and opposed any prospect of wide-scale protectionism, which they feared would raise costs and reduce trade. Irish trade was conducted predominantly with the UK; the labour and capital markets in both countries were strongly integrated. Significantly, interest rates in Ireland continued to be governed by the London bank rate; the major Irish banks established a standing committee in 1920, which set overdraft and deposit rates with reference to British rates. The Irish banks assumed that if domestic interest rates were set lower than British rates funds would be re-deposited in the UK.1
