The state of Northern Ireland was founded in 1921 and consolidated in the inter-war period. Analysts have claimed that this was accomplished through religious discrimination and populist patronage, despite the existence of Article V of the Government of Ireland Act, 1920. Utilizing a case study approach, this article examines how two pieces of legislation impacted on the labour movement in the region in the period 1921 to 1939. The Special Powers Act (first passed in 1922, and a permanent act from 1933), and the Trade Disputes Act, 1927, were both legislated by the inter-war Ulster Unionist Party (UUP) government of Northern Ireland. Labour activists suffered political discrimination, while they were intimidated through the legislation and organization was curtailed. These restrictions were carried out on the basis that the labour movement was considered a ‘disloyal’ section of the Northern Ireland populace. The article concludes that during the period 1921 to 1939 the state of Northern Ireland state was administered by the UUP through a moral economy of loyalty, due to the politicized nature of regional policy. The evidence suggests that as a result of the Government of Ireland Act, 1920, all those considered disloyal in Northern Ireland were liable to political discrimination, while those loyal were to be rewarded through patronage.