Foreign Relations of the United States, 1952–1954, Africa and South Asia, Volume XI, Part 1

876.10/11–3054: Telegram

The Secretary of State to the Embassy in Liberia

official use only

Washington, November 30, 1954—6:59 p.m.

64. Department’s 63.¹ November 29 meeting held Export-Import Bank staff with representative First Boston and Liberian officials. Meeting conducted in friendly informal manner. Discussed following Liberian objections negotiate loan First Boston: hypothecation 50% revenues respectively from LibMinCo and Firestone because this would tie up too much revenue and hamper government operations; proposal establish reserve covering one year’s debt service as cushion against default; and requirement that Liberians liquidate current short-term debt. Liberians also object because loan on such terms not politically expedient.

Amb. Simpson suggested revenue hypothecation be reduced to 25% respectively from LibMinCo and Firestone.² First Boston indicated readiness submit to potential investors any proposals Liberians consider satisfactory but cautioned that loan would be difficult to place if security reduced too much. Simpson also raised question Eximbank participation in loan with First Boston. Eximbank did not commit itself but did not close door such participation.

First Boston prepared work out cash flow schedule enable Liberians meet obligation assign revenues without impairment government operations. Proposed reserve fund be reinvested in US Government bonds to reduce net cost Liberia maintaining reserve. Cited interest insurance company and perhaps other institutional investors making funds available.

Further tripartite meeting to be held New York December 1³ to determine extent to which Liberian objections may be overcome.

Dulles

1. Not printed; it indicated that the Export-Import Bank Board had decided on Nov. 26 that it could not act upon the Liberian request for it was precluded by statute from acting in instances such as this when a private source offered reasonable terms. (876.10/11–3054)
2. Larabee thereafter advised Ambassador Simpson to abide by Tubman’s stated position which was not to pledge any revenues if he hoped to gain a positive result. The Ambassador subsequently informed the Department on Dec. 6 that Liberia had notified the First Boston Corporation of its unwillingness to assign any revenues in order to secure the loan. (876.10/12–754)
3. A Liberia Mining Company meeting prevented the Liberians from going through with this.