National Loan 1920

The National Loan 1920


(thesis of. J. Considene paper UCC arch. by kind permission)

Within days of being appointed Minister for Finance in 1919 Collins set about raising the funds necessary if Dail Eireann was to fulfil its stated ambition of providing an alternative government to the British one that was operating from Dublin Castle.
The immediate needs were those associated with establishing independence – the military resources of the Irish Volunteers and IRB plus the diplomatic resources of the Irish delegation to the Paris peace conference. These areas of expenditure were to remain the largest during Collins’s time in Finance. In 1921, Defence expenditure was £137,483 and Foreign Affairs expenditure was £30,000. Annual expenditure on other areas such as Agriculture, Education and local government averaged around £4,000 each (Carroll 2002:11). During the early months of 1919 the Dail survived on private donations. For example, Anna O’Rahilly provided £2,000, Sinn Fein gave £1,300 by way of a loan, and the American organisation called the Friends of Irish Freedom started sending money beginning in June 1919 with $100,000 (Carroll 2002:4). However these funds would not prove sufficient and on April 10th De Valera stated that Collins who had become Minister for Finance replacing Eoin McNeill would be shortly announcing a loan issue on behalf of the Dail. Initially £250,000 was to be sought in Ireland and an equal amount abroad.

(James Mark Sullivan……Film Producer, Lawyer and Friend of Michael Collins. Was Born in Dromaloughane, near Killarney, Co.Kerry, on the 6th January 1870, and emigrated with his family to the United States in 1882.He had a keen interest in law and attended Yale Law School, where he flurished and his law career took off in Connecticut in 1902. In 1906 he moved his practice to New York City.  James Sullivan had very strong family ties to the Irish cause. He was related to Alexander M. Sullivan and Timothy D. Sullivan, members of the Young Ireland Movement. Timothy D. Sullivan was Lord Mayor of Dublin from 1886 to 1887. He returned to Ireland and married Nell O’ Mara on October 11th 1910, in St.Munchin’s, Limerick. James was 40 years old and Nell 12 years younger at 28.

In March 1916 he established the Film Company of Ireland, the most important Irish film production company of the silent era. It had no permanent studio, movies were made on location, and actors were sourced from The Abbey Theatre. They aimed to make films to aid the nationalist cause. The headquarters were on Sackville Street, but moved office to 34 Dame St Dublin later on. 3 early short Irish theme films he made were lost in the fire of Easter week.

He was a friend of Michael Collins, they kept in contact regularly by letter and telegram. Michael Collins had organised with James to film the Republican Loan film in 1919. Thomas Mac Donagh’s Brother John, was working for him and it was John MacDonagh who recorded the Republican Loan Film, on a break in filming “Willy Reilly and his Colleen Bawn”.

John MacDonagh, said that: “In those dangerous and exciting times, no cinema owner would dare risk exhibiting the Republican Loans film so it was planned for a few volunteers in fast cars to visit certain cinemas, rush the operator’s box, and, at gun-point, force the operator to take off the film he was showing, and put on the Loan film.”  (ABOVE) Rod Dennison with thanks)

Collins took responsibility for raising the domestic part of the loan, while De Valera and Harry Boland took responsibility for the American fund raising efforts.

(During his period in Stafford jail before transfer to Frongach, Collins was located in a cell next to J.J McElligott a Cambridge Graduate who together with Joseph Brennan (financial advisor to Collins during the Treaty negotiations) were to dominate Irish fiscal and monetary administration in the Dept of Finance for the next 30 years).

The domestic bonds were sold in units of £1, £5, £10, £20, £50 and £100. Twenty five percent was to be paid up front/ 25% on 1st August 1919 and the remainder on 1st November 1919. Interest payments were to be made twice yearly once the Republic had received international recognition (Carroll 2002:6).

The American bond certificates were sold in denominations of $10, $25, $50, $100 and $10,000. The purchaser would receive a certificate that could be exchanged at par for a gold bond paying 5% interest one month after the Republic had received international recognition (Carroll 2002:17). The monies collected were made payable to the three Trustees of Dail Eireann – Eamon DeValera, James O’Mara and Bishop Michael Fogarty of Killaloe. While the conditionality of the promises to repay did not deter subscriptions, the establishment and recognition of the Republic combined with the position of the Trustees was to have serious legal consequences for the ownership of the monies.

After the Treaty split a variety of organisations sought control over the monies both in Ireland and in the America.

Collins set about the logistical task of organising the loan in circumstances that were far from conducive to success. Even the idea of a band of revolutionaries as distinct from a sovereign government, seeking loans from the general public with a promise of repayment once the Republic was established seems difficult to imagine. As the year progressed the British authorities took greater steps to suppress nationalist activities.

They stopped many newspaper advertisements of the loan. Raids were made on the locations where the provisional government were thought to be operating. The terms bond, certficate and bonds-certificate are used interchangeably throughout this paper.

The reason for the range of terms is that the issue of whether the issuer was sovereign is doubtful in international law. In fact, the term bond-certificate was used in America to circumvent this problem. Officially the Republic was not established until 1949. However, it could be argued that what was meant was the establishment of a 32-county Republic rather than the 26 County Republic that ultimately was recognised.
Announcements of public meetings to promote or sell the bonds resulted in the arrest of the organisers. People were arrested for possession of the bonds or the prospectus. To compound the problems Collins faced the Dail was declared an illegal organisation on September 12th 1919.

Frank O’Connor captures Collins’s application “It is characteristic of Collins that from the beginning he does not seem to have thought at all of the impossibilities latent in the scheme; to him it meant exactly what it said, and he tolerated none of the slackness which could, and did so easily arise from its inherent fantasticalness. He was a born improvisator, and from the moment he was appointed Finance Minister the department of Finance began to function; within a few weeks his mighty Loan was under way, and even to-day, when we have forgotten or can no longer imagine the preposterous conditions under which the department worked – censorship, imprisonment, confiscation, murder – one is filled with respect for the variety and thoroughness of the work performed” (O’Connor 1937 page86).

Amazingly, “everyone got their receipts” (Coogan 1991 Chapter 12).

The difficulties that Collins was operating under would have defeated most individuals. However Collins was different to most and his exceptional capabilities set him apart as the following quote from J.J. Lee illustrates. ‘Collins will therefore give rise to sharp differences of opinion however much he is studied, even among genuine seekers after historical truth. There are, however, certain areas of general agreement among his biographers, Few dispute his exceptional energy, exceptional physical courage, exceptional moral courage, exceptional administrative ability, all meshed into a larger than life personality’. (Lee 1998:24) It was just as well Collins possessed these exceptional characteristics because in addition to Finance he held three other important military positions: Adjutant- General, Director of Intelligence and Director of Organisations. And, he used these military positions with their associated resources to ‘protecf his efforts in Finance’.

For example, when in March 1920, a British magistrate Alan Bell was getting close to locating some of the proceeds of the loan that were deposited in the Banks, Collins had him taken from a tram in Sandymount Avenue and shot dead. Another example was when British forces raided the Finance offices and arrested Ernest Blythe (a future Minister for Finance), Collins had the responsible detective shot dead – although another contributing factor was that the same detective had picked MacDiarmada out for the filing squad after 1916 (Coogan 1991:117). One other example is worth noting. On 23rd September 1920, less than 2 months before ‘Bloody Sunday’ many of the British officers that were to be killed on ‘Bloody Sunday’ shot John Lynch from Kilmallock, County Limerick in the Exchange Hotel in Dublin. Lynch was the local Sinn Fein organiser of a loan and was in Dublin to hand over £23,000 in subscriptions to Collins – (Coogan 1991:157-8).

The loan campaign was an outstanding success, although at times Collins doubted it saying that he “never imagined there would be so much cowardice, dishonesty, hedging, insincerity, and meanness in the world, as my experience of this work has revealed” (Coogan 1991:127).

The uptake of the Loan was helped by the use of high profile public endorsements. In Ireland, Archbishops Harty of Cashel and Walsh of Dublin plus Bishop Fogarty of Killaloe supported the loan (Costello 1997:47 and Carroll 2002:8). At the other side of the Atlantic, “Captain Robert Monieth, of Roger Casement’s Irish Brigade and Peter Golden the poet and leader of the Irish Progressive League were hired as organisers” (Carroll 2002:20).

By the end of July 1920, the internal loan had raised £355,000 and the figure rose to £370,163 by September when it closed down. The geographical source of the non-American funds was dominated by the counties of Munster as Table 1 illustrates.




The fundraising efforts by Eamon deValera and Harry Boland in America were even more successful in terms of the amount of money raised. A total of $5,123,640 (just over £1million sterling) bond certificates were sold in the United States before mid-1921. While De Valera’s visit to America was unsuccessful in that it failed to get American diplomatic recognition for the Irish Republic and contributed to the split in the Irish-American nationalist movement/ it more than achieved its target in terms of fund raising. For this De Valera was primarily responsible. A second bond drive in America in the latter part of 1921 raised only $622,720. It was cut short by the Treaty signing of 6th Dec of that year. £500.000 sterling was returned to the Loan Fund from American sources creating a fund totaling approx £875,000 Sterling. – (Ref. “Michael Collins in his own words” Dr Francis Costello, Gill & Macmillan 1997)


The Consequences of the National Loan

While the Irish Free State government had passed ‘The Dail Eireann Loans and Funds Act, 1924’ providing for the repayment of internal and external loans, the Act was overtaken by events in the legal arena. Because of its purpose and organisation the National Loan gave rise to a number of problems. Subscriptions were sought with a promised repayment once the Republic was recognized internationally. As the Republic was not established did the pro-Treaty side have a right of access to the monies? This question was to be the subject of legal dispute in the Irish and American courts.

The Irish case went to trial in the High Court in Dublin during July 1924. The republican anti-Treaty side argued that the Free State government was not the successor of the first Dail Eireann but got its legitimacy from the Crown. They also argued that the replacement of DeValera and O’Mara as Trustees was illegal. However, their arguments were unsuccessful and they subsequently lost on appeal to the Supreme Court.

The Irish Free State government were hopeful that the Irish judgement might influence proceedings in the American Courts. The American case was complicated by the intervention of a bondholder’s committees seeking to lay claim to the monies. The judgement of May 1927 presented the Irish Free State and the Republicans with a dilemma. While agreeing with the republican side that a Republic was never established, and that the Irish Free State government was the successor to the British government and not the Dail Judge Peters also concluded that DeValera and O’Mara had no right to the funds. The Bondholders Committees were granted their rights to the funds”.