These rumors have no foundation in fact, and you may take such action as
the situation may seem to you to warrant to contradict them.
For your information, it may be said that the restrictions placed on the
extension of further credits, under the Defense and Security Act of
1917, were deemed, on the inauguration of the present Administration, to
have made it impossible to consummate the Loan with the original credit
made available in 1920. Consequently, the question of securing the
required funds from Congress has had to be taken up anew. There is
enclosed herewith a copy of the communication addressed by the Secretary
of State to the President, under
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date of July 29, 1921, reviewing briefly the course of the
negotiations in the case, explaining their present status, and
recommending the extension of the loan of five million dollars sought by
the Liberian Government. The President has, in turn, communicated the
Secretary’s recommendation with his approval, to Congress. The
information contained in the communication to Congress has been made
public through the medium of the press in the United States.
You are authorized to make the contents of the enclosed letter known in
Liberia either publicly or privately, as you may deem best.
[Enclosure]
The Secretary of
State to President Harding6
Washington, July 29,
1921.
The President: I beg to submit the
following considerations with respect to the proposed loan to the
Republic of Liberia.
An examination of the course of the negotiations produces the
conviction that commitments have been made by this Government which
impose a moral obligation to make the loan. The negotiations were
had, and proceeded to the point of an announced commitment, at a
time when the broad authority conferred in connection with the
prosecution of the war was adequate to the consummation of the plan,
and the fact that this authority may not be deemed longer to exist,
while making it impossible to proceed without Congressional
sanction, does not, in my judgment, change the fact that assurances
were given which should be made good.
The history of the negotiations, as they appear from the information
at my command, may be stated as follows:
Liberia being at war with the enemies of the United States, a loan
credit of five million dollars was extended by the Secretary of the
Treasury on September 9, 1918,7 under the
authority of the Act of April 24, 1917, “To Authorize an issue of
bonds to meet expenditures for the national security and defense,
and for the purpose of assisting in the prosecution of the war, to
extend credits to foreign governments,
[Page 368]
and for other purposes.” On September 12,
1918,8 the Government of Liberia was notified of
the opening of this credit and negotiations were initiated covering
the terms, service and general purposes of the loan. The Loan Plan
drawn up was intended to safeguard the money so advanced by American
administration of expenditures and collection of revenues, and also
to provide for repayments of all moneys due other foreign creditors,
which would mean their withdrawal from participation in the
financial and other public affairs of Liberia. The governments
interested were advised of the opening of this credit. The Loan Plan
for various reasons was not submitted to the Liberian Government
until June 15, 1920, and the Liberian Legislature requested certain
modifications. It was clearly understood, both by the Liberian
Government and by the Government of the United States, at that time,
that there was no question of a withdrawal of the offer of the money
already promised, the time when the credit should be made available
merely depending on a satisfactory agreement as to details of
administration.
Relying on the assurance that the United States was ready to enter
into a definite agreement, the President of Liberia came to
Washington sometime ago with other Plenipotentiaries to conclude the
negotiations. In anticipation of this journey and at the request of
this Government, the Liberian Government gave to him and his
associates full and necessary authority to conclude the Loan Plan,
and, since that time, it is understood they have been prepared to
sign an agreement providing for the necessary administrative
measures adequately to secure the loan.
It should also be pointed out, in appreciating the moral obligation
of this Government, that the Republic of Liberia, which had her
origin largely through the efforts of American citizens, and at
various times has sought the aid and counsel of this Government,
decided, upon the entrance of the United States into the war, to
make common cause with this country and the Allies against Germany.
It was largely in consequence of this participation that the
economic situation of Liberia was imperiled and that her Government
was compelled to make appeal for financial aid. It was in these
circumstances that Liberia was assured that the United States, her
traditional friend, who had been generous in assistance to the other
Nations fighting against Germany, would come to her relief.
In view of these circumstances and of the obligation to which they
give rise, to which we cannot fail to be sensitive, I need not dwell
upon the fact that the extension of this loan is highly important
from the standpoint of the proper protection and promotion of
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American commercial
interests on the West coast of Africa. The advantages which will
accrue to our people are not to be ignored, although in the presence
of the considerations already mentioned, they need not be detailed
or stressed.
In conclusion, permit me to observe that, apart from any question of
our obligation or of any benefits accruing to ourselves, our people
have always been especially interested in the welfare of Liberia
because of the close relation which its prosperity may be deemed to
have to all that pertains to the advancement of the negro race. The
Republic of Liberia has been fostered through American interest, and
at this critical time in her history we have opportunity to give a
practical expression of our continued solicitude and by coming to
her aid in this severe exigency to promote permanent relations of
the closest friendship.
Respectfully,
