In some Australian versions, the one by the Seekers for example, the second line of the chorus is "Whacko the derry-oh". This used to be a common phrase in Australian vernacular and I recall reading somewhere (probably in one of Bill Wannan's articles in the Australasian Post in the 1960s) that it was a corruption of an Irish phrase meaning to get drunk or go on the spree. There is a Scots Gaelic word "daorach" which means drunkenness. Assuming there is a similar word in Irish, it could well have been corrupted to "derry". I also once heard a version with Australian place-names:
'One day as I was walking across the Weddin Mountains' and
'I bade farewell to the jail in Parramatta town'.