Confidential Report from Timothy A. Smiddy to Patrick McGilligan (Dublin)
(M.P. Sp. 1005/12/27) (Confidential)

My dear Mr. Minister:¹

When in New York last week I took the opportunity to evoke the views of some of the prominent bankers there on the present political situation of the Irish Free State. They were of opinion that the credit of the Irish Free State was adversely affected by the small majority of the Government and would continue so until either President Cosgrave shows that, in spite of a small majority, he is likely to maintain the reins of Government, or until the party of Mr. de Valera will give evidence of sane administrative ability to run the country on constitutional lines.

I said to them 'I suppose you would measure the decrease of our credit by 1 or 1½%'. They replied, 'No, but from 3 to 4% at present'.

In my letter to the President (M.P. 1005/5/27)² I stated that our credit had not been affected by the results of the June election. Evidently, the entry of the party of Mr. de Valera into the Dáil and the increase of its polling at the last election have brought about a change in the point of view of Wall Street towards the Irish Free State.

Personally, I am of opinion this decrease in our credit is only temporary, and I am inclined to think that our credit at present has not decreased to the extent of having to pay 8 to 9% for money in New York, or to float a loan at these figures. If a formal proposition was submitted to bankers here, I feel my view would be corroborated. But, evidently, our credit has been adversely affected by the recent election.