From Albert B. Friedman, The Viking Book of Folk Ballads of the English-Speaking World (Viking, 1959, 1963, p. 411):

How and when the ballad originated remains a mystery. The Flying Cloud was Donald McKay's trimmest California clipper. Built in 1851, she set a record that same year by plowing from New York around Cape Horn to San Francisco in eighty-nine days and twenty hours--a record not yet beaten. Of a much less fortunate design, the slow Ocean Queen served her owners as an immigrant boat during the 1850s. Neither was ever a slave or pirate ship. Their names were borrowed arbitrarily to grace a tale with which the ships had nothing to do. The events the ballad describes must have happened, if they ever really happened, in the 1820s, when Britain, Spain, and the United States were making a concerted drive to stamp out piracy and unlicensed "blackbirding" in West Indian waters. While Hollahan (the usual form of the name) was in Newgate awaiting trial, some ballad writer may have got hold of the young lrish cooper's story and spun it into a broadside goodnight, as an earlier writer had done for Captain Kidd. But there is no record of a Hollahan trial and no broadside print. Horace Beck argues mistily (JAF, 66:123) that "The Flying Cloud" is a modernized combination of two lost mid-eighteenth-century pieces about Caribbean piracy. More arresting, though not quite proved, is William Doerflinger's suggestion in Shantymen and Shantyboys (1951, pp. 135, 334-35) that the ballad was inspired by a twelve-and-a-half cent temperance tract "purporting to be the confession of one of the crew of the notorious Benito de Soto, on the eve of his execution in Cadiz in 1829." Those who sang "The Flying Cloud" in dockside dives and inland taverns were merely amused, we may be sure, by the cautionary sting in the tail stanza.