File No. 882.51/848
The Secretary of the Treasury ( McAdoo ) to the Secretary of State
Sir: In order to determine the extent to which the credit of $5,000,000 hitherto opened to the Republic of Liberia shall be made available to that Government it becomes necessary in the first place [Page 544] for this Department to know to what extent the Governments of Great Britain and France are to be parties to any new arrangement.
Unless further study should modify the views expressed below, it is the plan of this Department to make advances to Liberia for the purpose of accomplishing the following ends:
(1) To pay the arrears of interest on the 5 per cent bonds of 1912.
In connection with the payment of these arrears this Department will seek to obtain modifications of the trust agreement under which those bonds were issued so that provision will be made, among other things, for a sinking fund dependent on the revenues of Liberia instead of being fixed at a minimum amount as under the present agreement. In this way the sinking fund never can become a source of embarrassment to that Government. It is not equitable, nor is it feasible to exact from Liberia the repayment of its indebtedness at a rate greater than the resources of that country will permit, and I believe that the holders of the bonds will fully recognize the justice of this contention and assent to proper modifications as a condition for the advance by the United States of the funds necessary to pay the arrears of interest.
(2) To loan to Liberia the sums necessary to discharge the debts due to the British Bank of West Africa.
Other payments will undoubtedly be required to liquidate back salaries of officials, internal debts, and to provide for needed road improvements, etc., on some moderate scale.
So far as any such amounts are due to alien enemies of the United States, payment will either be made to the Alien Property Custodian or will be withheld in the Treasury of the United States until such time as their final disposition would be determined.
I should be glad to have an expression of the views of your Department as to the propriety of the above program. You will observe that that program involves two necessary steps: (1) A new arrangement with the bondholders of 1912; (2) some sort of supervision for the purpose of adjusting the internal debts, etc., of Liberia. Each of these steps will be different in point of form if the United States acts alone in this matter than they will be if Great Britain and France are to be associated with the United States.
Very truly yours,