Dr Daly strongly defended the right to peaceful civil protest, such as the civil rights march held on Bloody Sunday to protest about internment, which he and many in Derry had considered a grave injustice.
He agreed it was a matter of concern that a peaceful march could be taken advantage of by rioters, but thought this was a hazard that had to be accepted.
"I mean, do you cease to protest at all . . . do you cancel all marches because there might be a fringe group that would cause a row?" he said during cross-examination by Mr Edwin Glasgow QC, for soldiers.
"I think the right to protest about something that is perceived as a grave injustice is a very important right in a democracy, and I think that the risk there is, is a risk that one has to live with," he added.
Mr Glasgow put it to the bishop that: " . . . in your long and distinguished vocation you have been an outspoken opponent of violence on all sides; it has not simply been a private abhorrence, it has been an outspoken matter that you have repeated often publicly?"
Dr Daly accepted Mr Glasgow's suggestion that he had been "the only priest, certainly the only man in this city, who publicly described as murder the attack on the Parachute Regiment barracks (at Aldershot) after this incident had occurred". He said a clear distinction should be drawn between peaceful civil protest marches and riots which risked causing serious injury.
He accepted Mr Glasgow's suggestion there were men of violence in Derry at the time and that they would not, by definition, have been likely to take him into their confidence.
Dr Daly added: " . . . but I would point out to you that the men of violence were not just civilians . . . and the men of violence on that particular day certainly were those in uniform". He also agreed with Mr Glasgow that there were two broad categories - people with guns who would kill, and young people who took part in rioting.
Dr Daly said rioting at the time was "almost a recreation" for young people, " . . . but certainly there was also organised people there who had a clear ambition politically and a method to achieve that ambition militarily.
"I might have agreed, and I do agree with their political ambition, their objective, but I disagreed with their methods."