We may take a sip of comfort from the return of Guinness to Dublin

RUMOURS that Guinness was planning to wind up operations at St James's Gate, Dublin, and move its headquarters to the Park Royal Brewery near London were finally killed off this week with the news that the Park Royal operation is being closed down instead.

The whole thing could have had devastating economic implications for this country, especially from a psychological standpoint. Guinness is not only one of our more famous exports, but it has always had a reputation for being a good employer, with a social conscience.

Anyone who thought the move to Britain was unthinkable because of the ties of the Guinness family with Dublin has little understanding of the commercial world. The Guinness family no longer owns the company and international corporations are famous for lacking either a heart or a conscience. They are interested only in profit.

Schlitz, which was one of the more popular beers in the United States, was promoted as 'the beer that made Milwaukee famous'. When the workers at Schlitz went on strike some years ago, they made the mistake of thinking that the city could not do without Schlitz, but found out the hard way that everybody could without it. The beer no longer exists.

Guinness has been brewing in Dublin since 1759. The decision to stay there is probably a tribute to EU free trade, because Guinness at Park Royal was initiated during the height of protectionism in the midst of the Economic War between Britain and Ireland.

Our independence movement was prompted by a desire to build up our own economy independently, so the English would not be able destroy various Irish industries as they had done for centuries whenever they challenged their trade.

On October 3, 1932, JH Thomas, the London government's dominions secretary, reportedly pounded on the table as he warned the Earl of Iveagh that unless Guinness built a brewery in England, the British government would impose extra duty on imported Guinness in line with the ongoing Economic War. Guinness sales had already been hit by a 30% rise in duty in the special budget introduced by the national government of Ramsay MacDonald in September 1931. This had led to a 20% drop in business, so Guinness was naturally anxious to avoid the implications of an import tax.

JH Thomas or Jimmy, as colleagues called him was legendary for his volatility, tactlessness and breezy vulgarity. The son of an unmarried mother, he left school and went to work on the railroad at the age of 12.

He helped to found the National Union of Railwaymen and became its general secretary. Yet, even with his background, he became a dreadful snob with deep imperial feelings that were to complicate Anglo-Irish difficulties after his appointment as Dominions Secretary in 1931. Lloyd George called Thomas "the greatest blatherer living", a title that he seemed to earn when he leaked budget secrets to his golfing buddies, thereby facilitating their insider trading.

When he shouted, 'tee up!' while playing golf, for instance, this was taken as it was intended as a leak that the duty on tea was going up in the budget. Following a judicial tribunal he was forced to resign from politics in 1936, but he had already done extensive damage to Anglo-Irish relations.

The Economic War was supposedly in retaliation for the de Valera government withholding land annuities to Britain to cover the cost of tenants purchasing their farms around the turn of the century. In reality it was attempt to compel de Valera to abandon plans to achieve complete independence by revising the 1921 Treaty.

Cumann na nGael actively resorted to underhanded and, indeed, treacherous politics. In April 1932, Senator John McLoughlin, the leader of the Seanad, brought Thomas a secret message from the leader of the opposition, WT Cosgrave, encouraging the British to adopt an intransigent attitude towards de Valera. Cosgrave asked for "a firm and early statement" from the British government. A couple of days later Donal O'Sullivan, the clerk of the Seanad, told the dominions secretary that Cosgrave was anxious for the British to outline the actions they would take if Fianna Fáil persisted with plans to do away with the Treaty oath prescribed for members of the Oireachtas.

WITHIN the terms of the Statute of Westminster (1931) the Irish Free State had the authority to act as de Valera was doing, so the British picked their fight on the land annuities issue, even though they knew that the Dublin government had a good case.

The 1921 Treaty specifically left financial issues to subsequent negotiations, and the 1925 agreement doing away with the Boundary Commission absolved the Irish Free State from servicing the British national debt. De Valera was prepared to submit the dispute to international arbitration. Neville Chamberlain, the chancellor of the exchequer, privately admitted to his colleagues in March 1932 that de Valera had "an arguable point", because the wording of the Boundary Commission agreement absolved the Irish government "from liability for the service of the Public Debt of the United Kingdom, and that the Irish annuities form part of the Public Debt".

Chamberlain warned the cabinet that there was "a certain risk that an arbitrator might hold that Mr de Valera is right from a purely legal and technical point of view, and it would seem most undesirable that we should expose ourselves to such a decision". They were determined to bring de Valera's government to its knees.

They refused Dev's offer of arbitration, so he withheld the annuities. They then placed a 20% duty on selected Irish imports as a substitute means of collecting the revenue.

The British case really rested on a secret agreement signed in 1923, which de Valera did not even know about until he came to power. If there was a valid agreement obligating the Free State to pay the annuities, he said it would be "scrupulously honoured". He refused to accept the 1923 agreement, however, because it had never been submitted to the Dáil. The only kind of ratification to which the British could point was the extraordinary argument put forward by Jimmy Thomas that the agreement had been popularly ratified by Cosgrave's return to power following the next general election in 1927.

Ironically that involved the infamous Jinks affair when Cosgrave retained power on the casting vote of the Speaker after Johnny Jinks missed the vote. He had been plied with drink by a couple of government deputies and packed off on the train to Sligo. It was preposterous to contend that the Irish people had ratified the agreement when they were ignorant of its existence, not to mention its specifics.

Moving the Park Royal operation to Dublin provides not only a symbolic end to consequences of the Economic War; it is also an affirmation of our independence.