841D.51/135
Memorandum by the Assistant Secretary of State (Castle)
The Minister of the Irish Free State1 came to see me at my request to talk about the Irish bond situation. I told the Minister that what I wanted to see him about was to ask whether he knew what progress was being made toward the eventual repayment by the Irish Free State of the balance of the money due on the 1921 bonds. I pointed out to him that, of course, the Free State had repeatedly made the statement that it intended to repay this money and that as three years had gone by without its having taken action, that there were many people in the United States, holders of these bonds, who were beginning to think that they were not going to do it.
The Minister seemed somewhat embarrassed. He insisted that the Free State was going to make the payment even though he felt that the decision of the court in New York2 legally let them out. He said the court kept the money in this country on the ground that the Free State did not legally inherit the money from the defunct republic and, if this was so, it had no legal obligation to pay. He said, however, that the attitude of his Government was that after all this money had been given to free Ireland, that Ireland had gotten a part of this money and that the Government ought to and intended to repay the money. He said, however, that he had no information that any plans at the moment were being made. I pointed out to him that if the Free State should repay the money now rather than in two years, the advantage to it would obviously be very much greater. He said that the bondholders would get comparatively little money from the amount awarded by the court in New York3 since the expenses of the committees were enormous. He said that one of the committees, which had only been at work for a year, asked for $650,000 and had only been allowed $90,000, that the bondholders would [Page 84] find, after all the expenses had been paid, that the people who really gained by the transaction were Messrs. Walsh4 and the rest who had brought the action in the court. I said this might well be so, that I knew nothing about it, but that obviously if the bondholders got very little from the money in America and were paid the balance by the Free State, it was quite clear that sentiment would be in favor of the Irish Free State. The Minister showed me an article which had just come out in the Irish World, in which the suggestion was made that the bondholders pay over to the committee or else allow the committee to retain this money which was due the bondholders. The argument was made that they had subscribed for the sake of creating an Irish Republic, that this had not yet been successful and that what they ought to do was to turn over the money now held in New York for Valera5 to carry on his campaign against the Free State. The Minister said that very large amounts of money had been subscribed in the United States for the last election and that this had affected the Free State people very seriously. It was obvious that Mr. Walsh was back of this proposal and if he had any interest in the bondholders themselves he would realize that this kind of thing would not make the Free State eager to return the rest of the money.
- Timothy A. Smiddy.↩
- Decision by Mr. Justice Peters, of New York Supreme Court, on May 11, 1927; 129 Miscellaneous Report 551; 222 N. Y. S. 182 (1927).↩
- Judgment on June 17, 1927, with appointment of receivers.↩
- Frank P. Walsh and John T. Ryan, counsel for the Irish Republic Bondholders’ Committee, New York City.↩
- Eamon De Valera, agent for the so-called Irish Republic.↩