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SAORSTAT EIREANN
(IRISH FREE STATE)
Dublin, November 30, 1927.
The National City Company,
Guaranty Company of New York,
New York.
Dear Sirs:
tion with your purchase of $15,000,000 Irish Free State External Loan Sinking Fund
5% Gold Bonde (hereinafter referred to as the Dollar Bonds) issued simultaneously with an internal
issue of £4,006,925, as described below, I have pleasure in giving you the following information:
These loans are sanctioned by the Appropriation (No. 2) Act of 1927 and form part of a total
contemplated issue of £15,000,000. The Dollar Bonds of this Loan will be dated November 1,
1927, and will mature November I, 1960.
AREA AND POPULATION
The Irish Free State has an area of approximately 27,000 square miles, which is comparable
with the combined areas of the States of New Hampshire, Vermont and Massachusetts. The popula-
tion according to the 1926 census was 2,972,800.
HISTORY AND POLITICAL STATUS
The Irish Free State, as now existing, was established by virtue of a Treaty with Great Britain,
dated December 6, 1921, which defined the status of the Irish Free State as follows:
“Article I. Ireland shall have the same constitutional status in the Community
ce,
Ireland and an xccative responsible to that Parliament, and shall be styled and known
as the Irish Free Sta’
“Article II. Subject to provisions hereinafter set out the position of the Irish
nd
erning the relationship of the Crown or the representative of the Crown and of the
Imperial Parliamen| tt to the Dominion of Canada shall govern their relationship to the
Irish Free State.
The Constitution declares in Article I that ‘The Irish Free State is a coequal member of the
Community of Nations forming the British Commonwealth of Nations” and in Article II that “All powers
of government and all authority, legislative, executive and judicial in Ireland are derived from the
people of Ireland and the same shall be exercised in the Irish Free State through the organizations
established by or under, and in accord with, the Constitution.”
members of the British Commonwealth of Nations were declared by the Imperial Con-
ference of 1926 to be “equal in status, in no way subordinate one to another in any respect of their
omestic or external affairs.” The Irish Free State possesses, as does the Dominion of Canada, an
independent Parliament and enjoys membership in the League of Nations. The Irish Free State, like
Canada and Great Britain, has the right of legation. It has sent a Minister Plenipotentiary to Wash-
ington and has received a Minister Plenipotentiary from the Government of the United States.
SECURITY
ese Dollar Bonds are direct obligations of the Irish Free State. The Government covenants
that, should they issue or dispose of any bonds or contract or create any loan (internal or external)
secured by lien or charge on the public revenues, then the Dollar Bonds of this issue shall be secured
equally and ratably therewith.
PURPOSE OF LOAN
ough the issuance of these Bonds and of the £4,006,925 issued internally, the Irish Free
State is providing for expenses incurred in the hydro-electric development of the River Shannon, the
funding of certain floating indebtedness of the Government, and for other Government purposes.
GOVERNMENT DEBT
The debt of the neh Free State as at November I, 1927, was $3. 065,559, of which amount
$49,303,728 is funded d bt. The principal items in the debt consist
5% National Foams 1935-4! $43,905,563
ck
5% Compensa wn Sto 398,165
Savings Certificate: 12,621,754
Treasury Bil ile. 15,816,125
There are in addition contingent Habilites amounting to $16,443,417, consisting of 414% land
bonds, amounting to $14,788,320, and trade loan guarantees amounting to $1,655,097.
ere are also certain annuities a to the British Government, but the ee necessary to
meet these payments are provided mainly from sources independent of taxation and accordingly these
items are not included in the public debt.
otal gross debt, including this Loan, is equal to $39.54 per head, which compares with
$818 for ¢ Greet Britain, $298 for Canada, $369 for ‘Australia and $146 for South Afric
n December, 1923, a £10,000,000 5% National Loan, due 1935-45, was issued internally
at 95%. This Loan was heavily oversubscribed and has been quoted this year as high as 102%. Of
the total present issue £4,006,925 is being issued in the Irish Free State at 97 by a strong consortium
of the leading Irish banks headed by the Bank of Ireland.
GOVERNMENT ASSETS
Government assets, excluding lands, buildings, etc., owned as at November 1, 1927, amounted
to a 7,530,000. The principal items were advances to the Unemployment Insurance Fund $5,733,000,
e Shannon scheme funds $9,110,000, to the Local Loans Fund ve ah 000, and to the Cream-
eries Fund $2,608,000, while the Exchequer credit balance was $2,020,
REVENUES AND EXPENDITURES
e revenues paid into the Exchequer of the Irish Free State during the fiscal year ended
March 31, 1927, amounted to $121,954,000, of which $4,034,000 was extraordinary revenue. e
expenditure i in the year was $131,517,000, of which $16,011,000 was of a capital nature, the amount
of ordinary expenditure being $115,506,000. Additional capital sums were expended, including
$805,400 on extensions of the Telephone System, $3,428,000 on the Shannon hydro-electric under-
taking, and $243,300 on providing capital for industrial development. These amounts were raised
by an increase of the floating debt.
g the six months from April 1 to September 30, 1927, the tax revenue under the various
heads shows - a steady increase except in the case of the income tax and the corporation profits tax,
which, as from April, 1927, were yeduced by about 25%. On the lower basis the yields have been
well up to expectation.
During recent years ordinary revenues and ordinary expenditures have been as follows:
Ordinary Ordinary
Revenues Expenditures Surplus
$117,920,000 $115,506,000 $ 2,414,000
120,134,000 117,862,000 2,272,000
129,016,000 116,587,000 12,429,000
The interest and sinking fund requirements of the total funded debt, including this new issu
are equal to approximately 5.8% of the total normal revenues estimated for the year 1927-28, namely,
$113,191,000.
SINKING FUND AND REDEMPTION
These Bonds will be retired through the operation of a semi-annual sinking fund (based on
the cumulative principle), commencing March 24, 1928, calculated to be sufficient to retire the
entire issue at or before maturity. In case of any conversion of Stock into Bonds, or vice versa,
2:
which would e be een outstanding © such dates, had no such conversion occurred. Bonds are
redeemable, in “whole or in part, on any interest date prior to maturity, on thirty days’ prior pub-
lished notice, at 100, either through the operation of the sinking fund or, on or after November 1,
1950, at the option of the Government
CONVERSION FEATURE
Holders of the Dollar Issue are given the right, at any time after May 1, 1928, (in the manner
similar terms. Holders of Dollar Bonds who wish to convert must surrender Bonds to the Ameri-
can Fiscal Agent.