Eire

The five-year term of office of the Dáil expired in June 1937. In the subsequent election de Valera and Fianna Fáil were returned to power and, in a simultaneous plebiscite, the voters approved the new constitution. This document abolished the Irish Free State and established Eire as a “sovereign independent democratic state.” The constitution provided for an elected president as head of state; a prime minister as head of government; and a two-house legislature, with a new 60-member senate. Although it presumed to apply to all Ireland, its application in Northern Ireland was not to take effect prior to unification. It made no reference to the British monarch or to the Commonwealth of Nations, but de Valera indicated that Eire's relations with Britain would be governed by the External Relations Act of 1936. In 1938 the Irish writer and patriot Douglas Hyde became the first president of Eire, and de Valera became prime minister.
In 1938 a treaty ended the tariff war between Eire and Britain. It provided for the withdrawal of British forces from naval bases in Eire in exchange for a lump-sum payment to settle the annuities owed to Britain. The slight improvement in relations between the two nations was marred by a violent terrorist campaign in Britain conducted by the IRA.
Although Eire remained neutral in World War II (1939-1945), thereby demonstrating its independence, many of its citizens joined the Allied forces or worked in British war industries. In the immediate post-war period, the economic dislocations in Britain and Europe subjected the economy of Eire to severe strains, resulting in a period of rapid inflation and, indirectly, in the defeat of Fianna Fáil and de Valera in the elections of February 1948. John Aloysius Costello became prime minister, leading a coalition of six parties, the chief of which was Fine Gael. He called for lower prices and taxes, the expansion of industrial production, and closer commercial relations with Britain. In November 1948 Costello led the Dáil in passing the Republic of Ireland Bill.