Economics always plays a vital role in creating nations, because economics forms the basic relations that bind people together in shared practical interests from which other relations and interests grow – social, cultural and political. This creates a sense of interdependent ‘us’.
Consequently it is crucial to appreciate that two distinct economies emerged in 19th century Ireland, with opposed economic interests, a southern small farm economy and Ulster’s industrial one. And this still remains the case.
Irish nationalism explicitly advocated the ideal of a peasant-proprietor economy; small, self-sufficient farms producing for themselves and local markets. They wanted barriers erected against the outside world, protecting their internal markets from international ones, making them hostile to modern international economics and trade relations.
Meanwhile, Ulster, especially Belfast, was a modern industrial centre, linked to Britain for most materials and many services, whilst producing goods for Britain and inter- nationally. Additionally, Ulster’s industrial revolution was entirely home-grown, reaching out into international trade and markets due to its own endeavours.
This became the core economic problem behind partition: one wanted protection from international trade, the other was dependent on it. This made the economic needs of both diametrically opposed and requiring different parliaments likely to advance their interests, otherwise they died economically – jobs are lost and livelihoods disappear.
Ulster had to import coal, iron, and steel from Great Britain to keep its industries going and needed skilled labour and large scale capital investment to finance major industries like shipbuilding. This implied direct access to Britain and international markets and shared interests with Britain.
Ulster’s economic lifeblood, then as now, depended on remaining ‘British’; Irish markets were far too small to be viable for the goods and services Ulster produced.
This meant not only profits for investors but jobs for workers and the regular, unhindered ability to trade with the rest of the UK. This explains unionist fury at the current Brexit protocol, which modifies Article 6 of the Act of Union, thus undermining free trading within the UK.
Further, industry was naturally modern and progressive, requiring all those skills and knowledge founded in science, technology, rationality, reason and enlightened education. Part of Ulster’s early economic success lay in embracing the Enlightenment, uniting Reformed religion, science, and commerce, developing new work practices and technology (Ulster still retains its position as the scientific centre of Ireland).
This also made Ulster a cosmopolitan region, noted for its progressive liberal politics, social beliefs, and institutions, all fired by economic development.
The security and livelihoods of Ulster depended on maintaining, unhindered, those British connections that Irish nationalism opposed, and still does. However, this didn’t mean that Ulster workers saw themselves as not Irish; indeed, prior to the formation of the Ulster Unionist Council (1905), Ulster stressed its role as the Irish leader of progress, science, and economic development.
Such progress was antipathetic to Irish nationalism (since Young Ireland, 1840s), which idealised the noble, rustic peasant, tied to the soil, traditional religion (mystic and non-scientific), and ancient folklores and lifestyles irrelevant to modern industry.
After the Famine there emerged a Southern rural economy based on small farms (30-50 acres) with small-town shop-keepers and professional services to meet local farming needs. Until the late 1870s they prospered, with captive local markets in Ireland and Britain, especially for perishable food which could not be transported long distances – vegetables, meat, dairy.
As the farmers prospered they took out loans to improve their farms or buy more land, thus increasing their debt repayment which added to their cost. Meanwhile, taxes began increasing in the late 19th century to pay for urban development, state education, and other new welfare demands made by an industrial economy, which did not directly benefit the southern farmer.
This occurred just when the farmer lost his ‘natural protection’ and therefore economic security and by the1880s refrigerated steam ships enabled the fast, cheap transit of mass produced perishable foodstuffs increasing competition.
These came from 100,000 acre American or Argentine farms, with new railways to transport livestock from inland farms to the coast for slaughter and then for transit in refrigerated steamships. Perishables ceased to persh, so Ireland lost its ‘natural protection’ from world competition and cheap international agricultural produce.
This meant cheaper food for industrial workers in Belfast (it still does) but economic loss for southern tenant farmers, now paying higher taxes and interest on loans. Thus in the 1880s, the southern Irish farming economy came under severe attack from the same forces of international trade that benefited Ulster’s industry, thus widening the economic gap.
Meanwhile, Ulster built the refrigerated steam ships that imported the previously perishable foodstuffs. Protection (including cultural barriers like Gaelic) now appealed to southern farmers, as did ‘land reform’ for tenant farmers.
Thus it was only in the 1880s that (southern) pressure for Home Rule emerged and intensified over the next 40 years. This is reflected in the Irish Convention (1917-18) called by the government to seek a final all-Ireland solution. All parties sent delegations to it, although Sinn Fein only as observers.
It worked hard for many months, both sides making sacrifices and compromises previously not envisaged (unionists even conceded Home Rule under the right economic circumstances). However, all foundered on one economic issue in an all-Ireland Home Rule Parliament, where should the final fiscal authority rest – London or Dublin?
For Ulster Unionists it had to be London to enable them to trade on equal terms with its major British markets and suppliers. For nationalists it had to be Dublin, to protect Southern agriculture from international competition.
Ultimately, it was the economic interests of opposed economies that counted. This made partition inevitable, also an internal issue within Ireland — an Irish problem, not an externally imposed one.
Although Ulster’s industrial economy has sadly declined, it's economic welfare still depends on the Union and it is still dominated by an industrial culture the south has never had and explicitly rejected in the Neo-Hibernian culture of the political class from the 19th century.
Meanwhile, as the 1958 (Dublin) Whitaker Report indicated, the Republic became an economically failed state. Its protectionism could not save an uneconomic economy, and Ireland had to reconsider its economic future.