When Ireland took on a renewed struggle for independence around 1920, it came with a need to raise money. So, the rebel government set up a loan drive and built a system of distribution that bore some resemblance to the war loans raised by governments elsewhere just a few years earlier during the First World War. However, loans for aspiring nations are not quite like those for recognized ones. The Irish loan drive was at least halfway an underground operation subject to official opposition. Still, the loan in need was raised.

First Dáil – 1919

            The 1918 general election in the United Kingdom resulted in dozens of Irish constituencies flipping to the nationalist party Sinn Féin from the more temperate Irish Parliamentary Party. The election brought Ireland closer to guerilla war and independence. The more immediate result of the election though was that many new members of parliament chose to take seats not in London but in Dublin.

           The first Dáil Éireann, or Irish Assembly, convened in January 1919 with only the Sinn Féin members elected in 1918 attending, though the invitation was extended to the other candidates elected in Irish constituencies. This assembly set about achieving an independent Irish Republic. Besides a president, four ministers were appointed to the new government, including a Minister of Finance. The role of Minister of Finance was crucial because achieving the Dáil’s objectives was not without financial costs.

The meeting of the First Dáil took place in the Mansion House, Dublin

           Money would need to be raised in order to fund efforts to secure recognition of an independent Ireland at the Versailles peace conference then underway, develop new Irish state institutions in parallel to the existing ones, and fund a war for independence. Because a parallel government was being established, the advent of an independent Ireland entailed not just smuggling arms or activities of that sort but also the establishment of courts, the funding of ambassadors abroad, and so on. However, as the Dáil had no taxes it could collect, the amounts needed to fun all this would need to be borrowed.

Internal Loan

            To that end, Michael Collins, the nationalist hero then ‘merely’ the Minister for Finance for the aspiring Irish Republic, put forward a motion to raise a £250,000 loan. This was approved on April 4, 1919. The loan would be raised in Ireland by the sale of 20-year bonds which would carry 5% interest payable only after 6 months had passed from the end of British rule over Ireland. Subscriptions for the loan were received starting from late August.

            As a loan funding a rebel government, it could not be raised through a bank or insurance company of course. Rather, individuals had to be convinced to buy the bonds being issued and patriotic feeling, far more than any prospect for repayment with interest, was the more important inducement to invest. The lack of any official support meant that subscriptions could not be recorded at a bank or post office or a prominent public location at all. There was no conventional infrastructure for the raising of a national loan at the disposal of this government.

            The subscriptions had to be collected by circular. In an island with a population then of around 4.3 million people, two million leaflets and 500,000 copies of the prospectus were printed. Besides this, 50,000 letters were sent to potential wealthy subscribers. To avoid using the postal system, special couriers distributed these and collected subscriptions. Advertisements were placed in sympathetic newspapers and a promotional silent film was even produced.

            Official scrutiny of the loan drive was always a threat to the organizers but this increased as the political situation worsened. Amounts raised had to be placed in bank accounts using fictitious names to obscure the origins of the money. Subscriptions taken in gold were stored under the floor of a Dublin homebuilder’s house at 6 Harcourt Street. The building was raided in mid-1919 but the gold was recovered undiscovered. After this, the treasury of the Irish republican movement was moved down the road to 76 Harcourt Street in September, only for raids to force yet another move early in 1920.

            Only £30,000 had been raised by the end of 1919, but counting promises for future subscriptions, this came to £100,000. From here, orders increased rapidly. As the fighting intensified in the first half of 1920 though, efforts to block the loan were stepped up even further, culminating not in its destruction but in the assassination of the forensic accountant-turned-intelligence officer hired by the British to stop the loan, Alan Bell. By the end of the loan drive, July 17, 1920, the target was exceeded as £371,849 had been raised.

External Loan

            Besides the loan raised in Ireland, the Dáil raised an external loan marketed in the United States. The Dáil Éireann’s president, Éamon de Valera, travelled to America in June 1919 to promote the loan, joined shortly thereafter by James O’Mara, a trustee for the national loan drive.

           The external loan had to be structured differently because an independent Ireland was not yet recognized by the U.S. government. So, instead of issuing what purported to be sovereign bonds, the Irish government’s representatives in America issued certificates that could be exchangeable into bonds of the Irish Republic only once it received recognition; in the meantime, they would accrue no interest. De Valera himself admitted that subscribers must understand that all this was quite speculative and they were not so much ‘investors’ as making a gift to Ireland, the return of which would depend on the very uncertain outcome of their cause, one that had been difficult to sustain over generations.

            Offices were established in New York and Chicago and O’Mara trained a batch of initial fundraisers who would, in turn, train others. The drive was successful; while salesmen of the certificates would follow de Valera around as he travelled in the United States, in New York alone, some 100,000 people bought certificates raising a sum more than half of the amount that was raised in Ireland itself. The success was largely owed to small ‘investors’, contributing just $10 on average.

            In all, $5,123,640 was raised, or nearly £1.1 million, from the external loan. However, a large portion of the money was purposely delayed in arriving in Ireland, as de Valera was concerned about sending too much to Ireland given the risk of confiscation. His own emerging rivalry with fellow nationalist hero and the Minister of Finance, Michael Collins, may have had something to do with this too.

            In any case, this meant more of the expense of actually waging the guerilla war had to be covered by the otherwise smaller internal loan. For the part of the external loan that was remitted to Ireland, the money raised was deposited in American banks and numerous smaller drafts were made payable to individuals in Ireland, generally obscure, who could be trusted to forward the money along to the Dáil. Rather than take chances with postage and customs officials, these drafts were carried across on passenger ships by messengers.

Trapped Funds

            After over two years of guerrilla war, Ireland secured its independence following a treaty concluded with the British government. This independence was immediately succeeded by a civil war between factions in favor and opposed to the treaty and the unused external loan funds remained trapped in America. After this, the funds were due to be transferred from the loan drive’s trustees to the Ministry of Finance of the victorious pro-Treaty government. This transfer was accomplished with the internal loan money in Ireland but could not be done successfully in the United States because subscribers to the loan were split on what they wanted done with the money, split along the civil war’s lines, and went to the courts to settle the question.

            A New York court sided with a faction that wanted the loan certificates’ unused proceeds returned to the subscribers rather than given to the new Irish government. It declared, in an opinion sure to please those who thought the pro-treaty side were insufficiently revolutionary, that that the new Irish government was more the successor to British rule over Ireland than it was a successor to the old wartime Dáil Éireann. The court justified this saying that the old Dáil never established “a de facto government, [and] it did not displace the existing de jure government”, so it was really only from British rule that a successor state could be formed and this state could not claim the money raised for a revolutionary movement set on its overthrowing.


            The Dáil loans were not conventional government borrowings. De Valera’s statement that the investments may as well have been considered gifts because of the risk of the venture was true of both the internal and external loans.

           While unconventional, the latter loan nonetheless illustrates a distinction that exists in sovereign borrowing, the difference between internal and external borrowing. Money raised abroad has to follow local rules and local courts are relevant to disputes arising after the borrowing takes place. In this case, the fact so much of the money raised was still in the U.S. meant that the American court’s ruling had a great deal of practical importance, which admittedly is rarely the case in differing circumstances, such as where the money is already gone. Still, history has shown that cross border sovereign lending often has a diplomatic and a more complex judicial dimension than internal loans.

More from the Tontine Coffee-House

           Read about the financing of the American and French Revolutions. Consider subscribing to this blog’s newsletter or checking out book recommendations, which include many of the sources often referenced in my posts. 

Further Reading

1.      Cogan, Frank. “An Office in Harcourt Street—The First Irish Department of Finance.” History Ireland, 2020, pp. 30–32.

2.      Coogan, Tim Pat. Michael Collins: A Biography. Hutchinson, 1990.

3.      Greene, Patrick O’Sullivan. A Century on: The Dáil Loan That Set the State on Road to Financial Sovereignty, The Irish Times, 4 Apr. 2019.

4.      Ridley, Nicholas. Michael Collins and the Financing of Violent Political Struggle. Routledge, 2018.

5.      Uren, Charles Keith. “The succession of the Irish Free State.” Michigan Law Review, vol. 28, no. 2, Dec. 1929, p. 149.

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