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THE IMPACT OF HENRY PARKER-WILLIS AND THE FEDERAL RESERVE ON THE INSTITUTIONAL DESIGN OF THE IRISH CURRENCY ACT 1927*

Published online by Cambridge University Press:  24 July 2015

EOIN DREA
EOIN DREA*
Affiliation:
University College Cork and Wilfried Martens Centre for European Studies, Brussels
*
Wilfried Martens Centre for European Studies, Rue du Commerce 20, Brussels 1000, Belgium[email protected]
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Abstract

The Anglo-Irish Treaty of 1921 provided monetary independence to the newly established Irish Free State. The existing historiography views Irish monetary and banking policy post-independence as following British precedent in terms of the structure and design of state monetary institutions. However, this article considers how Professor Henry Parker-Willis's experience of establishing the United States (US) Federal Reserve system in 1913 had a direct impact on his work as chair of the Irish banking commission in 1926. This research highlights that Parker-Willis played a significantly more important role in formulating the Irish Currency Act 1927 than is currently recognized. It further identifies that Parker-Willis's design for a wholly independent, non-political Irish currency commission was primarily based on his disillusionment with the political interference then evident in the management of the Federal Reserve system. This article, therefore, challenges the dominant view that Irish monetary institution building in the 1920s automatically followed British precedent, but rather identifies the direct influence of US monetary structures on the development of Irish institutions. This is an internationalist dimension not recognized in the existing historiography.

Type
Articles
Information
The Historical Journal , Volume 58 , Issue 3 , September 2015 , pp. 855 - 875
Copyright
Copyright © Cambridge University Press 2015 

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Footnotes

*

I wish to thank Andy Bielenberg, Cormac O'Gráda, and three anonymous reviews for their comments and suggestions.

References

1 The Anglo-Irish Treaty of 1921 partitioned Ireland into the Irish Free State and Northern Ireland following the Irish War of Independence 1919–21. Relations between the Irish Free State and London in the 1920s were marked by tensions over the position of Northern Ireland, the role of the Irish Free State in the emerging commonwealth, and ongoing disputes arising from Ireland's financial liabilities for pre-1921 imperial expenses.

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24 Federal Reserve Act, sections 14–15.

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45 Bruce R. Dalgaard, South Africa's impact on Britain's return to gold (New York, NY, 1981), pp. 127ff.

46 Minutes of the Irish banks standing committee (IBSC), 30 Apr. 1925 (Allied Irish Bank (AIB), Munster and Leinster bank papers, 08.006). The IBSC was the body established by all the Irish commercial banks in 1920 to control competition, set charges, and agree interest rates.

47 Department of Finance memoranda, 24 July and 11 Aug. 1925 (National Archives of Ireland (NAI), Finance papers, 9/46/25).

48 Department of Finance memorandum, 15 June 1925 (NAI, Finance papers, 9/46/25).

49 The Irish bank members were Andrew Jameson (Bank of Ireland), J. J. O'Connell (National Bank), Francis J. Lillis (Munster and Leinster Bank), and R. K. L Galloway (Ulster Bank). In addition to C. A. B. Campion, the remaining members were Lionel Smith-Gordon (Industrial Trust Company of Ireland) and J. J. McElligott who acted as Brennan's deputy up to 1927 and later as his successor in both the Department of Finance and the Central Bank of Ireland.

50 Department of Finance memorandum, 22 June 1925 (NAI, Finance papers, 9/46/25).

51 Department of Finance memorandum, 16 May 1925 (University College Dublin Archives (UCDA), Ernest Blythe papers, 24/97a).

52 T. A. Smiddy to Joseph Brennan, 4 June 1925 (UCDA, Blythe papers, 24/97a).

53 Meltzer, History of the Federal Reserve, i, pp. 65–6 n. 10.

54 Note marked ‘urgent’ from Department of External Affairs to the Department of Finance, 15 Sept. 1925 (NAI, Finance papers, 9/46/25).

55 Henry Parker-Willis, Federal Reserve system (Chicago, IL, 1920), p. 4.

56 Henry Parker-Willis to T. A. Smiddy, 28 Dec. 1925 (NAI, Finance papers, 9/47/25).

57 Moynihan, Central banking, p. 50.

58 Parker-Willis to Smiddy, 28 Dec. 1925.

59 Joseph Brennan to the IBSC, 11 Jan. 1926 (NAI, Finance papers, 9/47/25).

60 Joseph Brennan to Ernest Blythe, 13 Jan. 1926 (NAI, Finance papers, 9/47/25).

61 Minutes of the IBSC, 8 May 1926 (AIB, Munster and Leinster bank papers, 08.006).

62 Minutes of the IBSC, 16 Feb. 1926 (AIB, Munster and Leinster bank papers, 08.007).

63 Memorandum, 10 Mar. 1926 (NAI, attorney general papers, 14/951).

64 Provincial Bank to Department of Finance, 2 Feb. 1926 (NAI, Finance papers, 9/47/25).

65 Banking Commission to the IBSC, 15 Oct. 1926 (National Library of Ireland (NLI), Joseph Brennan papers, MS 26/236).

66 Bank of Ireland to Banking Commission, 6 Nov. 1926 (NLI, Joseph Brennan papers, MS 26/236).

67 Drea, Eoin, ‘The Bank of England, Montagu Norman and the internationalisation of Anglo-Irish relations’, Financial History Review, 21 (2014), p. 63CrossRefGoogle Scholar.

68 Henry Parker-Willis to J. J. McElligott, 3 Nov. 1926 (NAI, Finance papers, 9/47/25).

69 Moynihan, Central banking, pp. 41–2.

70 Ibid., p. 72.

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75 Final Reports of the Banking Commission (Dublin, 1927), pp. 61–5.

76 Henry Parker-Willis to J. J. McElligott, 12 Apr. 1927 (NAI, Department of Foreign Affairs papers, 1/GR/299/2).

77 J. J. McElligott to Henry Parker-Willis , 14 Apr. 1927 (NAI, Department of Foreign Affairs papers, 1/GR/299/2).

78 Joseph Brennan to Henry Parker-Willis, 9 Apr. 1927 (NLI, Joseph Brennan papers, MS 26/18).

79 Henry Parker-Willis to J. J. McElligott, 6 May 1927 (NLI, Joseph Brennan papers, MS 26/18).

80 Joseph Brennan to John Costello (attorney general), 28 July 1927 (NAI, attorney general papers, 2002/14/675).

81 J. J. McElligott to Henry Parker-Willis, 11 Oct. 1926 (NLI, Joseph Brennan papers, MS 26/234).

82 Henry Parker-Willis to J. J. McElligott, 3 Nov. 1926 (NLI, Joseph Brennan papers, MS 26/234).

83 Ibid.

84 Ibid.

85 Ibid.

86 Joseph Brennan to Henry Parker-Willis, 2 Feb. 1927 (NLI, Joseph Brennan papers, MS 26/241).

87 Leon Ó Broin, No man's man: a bibliographical memoir of Joseph Brennan (Dublin, 1982), p. 137.

88 Fanning, Department of Finance, p. 189.

89 Parker-Willis to McElligott, 6 May 1927.

90 Moynihan, Central banking, pp. 72–90.

91 Ibid., p. 83.

92 Donal O'Sullivan, The Irish Free State and its senate (London, 1940), p. 550.

93 Minutes of the IBSC, 27 Apr. 1926 (Royal Bank of Scotland, Ulster bank papers, 361).

94 Ibid.

95 Henry Parker-Willis to Ernest Blythe, 13 July 1927 (NLI, Joseph Brennan papers, MS 26/245).

96 Henry Parker-Willis to Joseph Brennan, 11 June 1927 (NLI, Joseph Brennan papers, MS 26/245).

97 Joseph Brennan to Henry Parker-Willis, 3 Aug. 1927 (NLI, Joseph Brennan papers, MS 26/18).

98 Parker-Willis to Blythe, 13 July 1927.

99 Currency Act 1927 (no. 32 of 1927), Dublin, section 4 (1).

100 Currency Act 1927, sections 14–38.

101 Currency Act 1927, section 14 (1).

102 James Meenan, The Irish economy since 1922 (Liverpool, 1970), p. 216.

103 Currency Act 1927, section 31 (1–4).

104 Currency Act 1927, section 14 (2).

105 Currency Act 1927, section 26 (1).

106 Currency Act 1927, sections 15 (2) and 19 (1–3).

107 Department of Finance memorandum, 25 Feb. 1929 (UCDA, Blythe papers, 24/298).

108 F. G. Hall, Bank of Ireland, 1783–1946 (Dublin, 1949), p. 358.

109 L. C. Cuffe to Joseph Brennan, 12 Aug. 1929 (NLI, Joseph Brennan papers, MS 26/26). Cuffe was a well-known Dublin businessman elected to the Currency Commission at its inception in 1927. He was forced to sell, at a considerable loss, his entire portfolio of bank shares on his election to the Currency Commission.

110 First interim report of the Banking Commission (Dublin, 1926), section 11.

111 Miniss, J. B., ‘The first interim report on currency of the Irish Free State Banking Commission’, Journal of the Institute of Bankers in Ireland, 30 (1928), p. 223Google Scholar.

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114 Michael D. Bordo, Could the United States have had a better central bank?, paper presented to the symposium on the Federal Reserve centenary, Washington, DC, Feb. 2012, p. 1.

115 Parker-Willis, ‘Government influence’, p. 321.

116 Broz, International origins, p. 53.

117 Brennan, ‘Currency system’, pp. 26–7.

118 Honohan, ‘Currency board or central bank’, p. 45.

119 Parker-Willis, ‘Government influence’, pp. 320–9.

120 Economist, 31 Dec. 1927.

121 Irish Times, 10 June 1926.

122 Diary of Montagu Norman, 7 and 12 Apr. 1926 (Bank of England archives, Montagu Norman papers, ADM 34/15). The former meeting was also attended by C. A. B. Campion (member of Irish Banking Commission 1926) and the latter by Sir Otto Niemeyer (treasury official and later adviser to the governors of the Bank of England 1927–38). Further analysis of Parker-Willis's role may be provided in relevant treasury files which were not viewed as part of this research.

123 O'Gráda, New economic history, pp. 425–6.

124 Moynihan, Central banking, pp. 68–9.

125 Pratschke, ‘Establishing of Irish pound’, p. 74.

126 Duncan, ‘Currency system’, p. 277.