882.51/1370b
The Secretary of State to
President Harding
Washington, January 4,
1922.
My Dear Mr. President: The Legislature of
Liberia convened on December 5. President King, who with his fellow
commissioners arrived at Monrovia on the U. S. S. Denver on December 3, has doubtless already made public the
details of the financial plan for aiding Liberia which was signed at
Washington on October 28,2 and it seems likely that foreign interests not
in favor of the plan will endeavor to obstruct it unless by timely
action on the part of this Government, the loan provided for in the plan
is made available at an early date. I do not wish to take any further
steps in the matter until I have first laid it before you, thinking that
you may prefer yourself to address the Senate Finance Committee and
point out the necessity for prompt action.
It is incumbent upon us not to lose time because when this Government
consented to receive the Liberian Commission, which was in the Autumn of
1920, the Liberian Government was informed that it was expected that a
definite agreement could be reached which would be put into force
without delay.3 Because
of the time consumed in perfecting the plan, Liberia, in order to meet
current expenses, has been forced to have recourse to the Bank of
British West Africa. This Bank which has made certain advances states
its determination to make no further advances after the present credits
are exhausted, which will be about the first of March, 1922. After that
date all Liberian revenues must go to the international receivership and
to the Bank of British West Africa, and the Government will have nothing
whatever with which to provide for its administrative expenses.
[Page 607]
I enclose herewith a memorandum intended to show that Congress should
without delay make available to Liberia the credit of $5,000,000
contemplated in the loan plan.
Faithfully yours.
[Enclosure]
Memorandum on the Necessity to Reestablish
Promptly the Credit of $5,000,000 for the Republic of
Liberia
In appreciating the moral obligation of the Government of the United
States to the Republic of Liberia, it should be pointed out that
upon the entrance of the United States into the world war, Liberia
made 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 imperilled and that her Government
was compelled to appeal for financial aid. In these circumstances
the United States gave assurance that it would come to her relief as
it had come to the relief of other nations fighting against Germany.
Accordingly a loan credit of $5,000,000 was extended by the
Secretary of the Treasury on September 9, 1918,4
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 and for other
purposes.” On September 12, 1918,4 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 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 monies due
other foreign creditors, and thus cause their withdrawal from
participation in the financial and other public affairs of Liberia.
The Governments interested were informed of the opening of this
credit, but for various reasons the loan plan was not submitted to
the Liberian Government until June 15, 1920. The Liberian
Legislature requested certain modifications in the loan plan, but it
was clearly understood, both by the Liberian Government and by the
Government of the United States that there was no question of
withdrawal of the offer of the money already promised, the time when
the credit should be made available merely depending upon the
conclusion of a satisfactory agreement as to details of
administration.
Replying [relying] on the assurance that the
United States was ready to enter into a definite agreement, the
President of Liberia
[Page 608]
came
to Washington some time 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.
The negotiations were brought to a successful issue and the plan was
signed on October 28, 1921, whereupon the President of Liberia with
his fellow commissioners returned to Liberia.
The Legislature of Liberia has been in session since December 5,
1921. President King has no doubt laid the loan arrangement before
that body. The loan terms and provisions are, therefore, now
publicly known throughout Liberia and in those European countries
interested in Liberian affairs.
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 broad authority
conferred in connection with the prosecution of the war, was
adequate to the consummation of the plan, but the fact that this
authority may not be deemed longer to exist, while making it
impossible to proceed without congressional sanction, does not
change the if act that assurances were given which should be made
good. In view of these circumstances and of the obligation to which
they give rise, to which this Government cannot fail to be
sensitive, it is not necessary to dwell upon the fact that the
extension of the loan is imperative. And now that the loan plan has
been signed and carries the same implications as the earlier
publicly-announced commitment, it is plainly to be seen that on all
moral grounds the credit of $5,000,000 for Liberia must be
reestablished. The situation is one which calls for immediate and
appropriate action.
This Government should reestablish the Liberian credit not only
because its honor is engaged but for other reasons as well. From the
standpoint of our interest in the Negro race, of our traditional
friendship for Liberia, of the proper protection and assistance of
American trade, and of the new trade routes of the American merchant
marine on the West Coast of Africa, it is essential.
In order to complete these statements and to throw light upon other
factors in the situation, the following considerations are detailed
to show the necessity for the reestablishment of the credit.
- 1.
- The close relation which the prosperity of Liberia has to all
that pertains to the advancement of the Negro race makes the
situation of that Government a subject of vivid and constant
concern. At this critical time in Liberia’s history we have
opportunity to give a practical expression of our continued
solicitude by coming to her aid in her present severe exigency.
The reestablishment of the credit would demonstrate the real
interest our Government has
[Page 609]
always felt in the welfare of the Negro
and remove the unfavorable impression which has come about in
the Negro population of the United States on account of the
withdrawal, for technical reasons, of the credit established
during the war.
- 2.
- The Republic of Liberia had its origin in the efforts of
American citizens. Liberia was founded by men who were sent to
West Africa by the American Colonization Society with funds
supplied by Americans. The movement was assisted by President
Monroe, Henry Clay, and other prominent citizens. The Liberian
Declaration of Independence, its Constitution, flag, coinage,
etc., are replicas of those of the United States and nowhere in
the world is there a foreign government built so closely upon
the model of the United States. Liberia’s capital, Monrovia, is
named for an American President and many of its towns bear
American names. Liberia has at various times sought the aid and
counsel of the United States which up to the present have always
been freely given.
- 3.
- The loan to Liberia is of great importance for the protection
and assistance of American commercial interests in West Africa.
Liberia (which is about the size of the State of Ohio) is
immensely rich in natural resources but this wealth is in the
interior and almost entirely unexploited. It has the richest
palm forests in Africa. It has minerals, hardwoods, coffee,
cocoa, gold and diamonds. With but little expenditure roads
would make these resources available—only two or three hundred
miles would be required—and Liberia would become not only
self-supporting but rich.
- 4.
- Palm oil, Liberia’s greatest product, has become in Europe an
essential raw material, almost as important as petroleum. It is
used for the manufacture of soap, glycerine, edible oils and in
the steel and tin plate industry. The United States has no
independent source of supply of palm oil and now that it also is
becoming an extensive user of such oil, our importers find that
they can obtain it only through firms in London, Liverpool,
Antwerp and other European ports where it is received from the
British and Belgian colonies in Africa. Liberia could be a vast
and independent source of supply for American
manufacturers.
- 5.
- Liberian ports are now the only ones on the West African coast
where American ships may operate without discriminatory
competition and where they may readily obtain the necessary
labor to work their ships along the coast. The location of
Liberia is such that in the future it will be of great value as
a coaling and oil station not only for our merchant marine but
for our Navy. It lies along the great north and south trade
routes and the Liberian Government is anxious to have a coaling
station established there.
- 6.
- In any effort made by American cable and radio companies to
expand their business along the West African coast, Liberia is
the
[Page 610]
only point at
which they may now establish themselves with the assurance of
the support and cooperation of the local authorities. Indeed,
the Liberian Government now desires to interest the American
Government or an American private concern in taking over and
operating the former German wireless station and cable at
Monrovia.
- 7.
- Liberia’s financial embarrassment, while directly due to the
war, is also traceable to the encroachment of the British and
French interests. One-third of the territory attributed to
Liberia in 1892, has since been lost by the Liberian Government
and joined to the British Colony of Sierra Leone on one side or
to the French Colony of the Ivory Coast on the other. At times
when this Government was not able to give to Liberian matters
the attention they merited (shortly after the Civil War and
again in 1906), the Liberian Government was furthermore induced
by British capitalists to accept loans for public improvements
under such terms and provisions that only a small percentage of
the proceeds became actually available for use, so that, in
1909, Liberia found itself indebted to the extent of more than a
million dollars. President Roosevelt recognized the need for
action and sent a Commission to Liberia in the early part of
that year and brought about an arrangement by which American
bankers agreed to make an advance of $1,700,000 upon the
security of the customs revenues to meet Liberia’s needs. An
International Receivership was set up composed of an American, a
Britisher, a Frenchman, and a German, which has never operated
successfully enough to afford the necessary relief.6
- 8.
- This ineffectual receivership must now be replaced by some
effective and capable control. The crisis in the economic and
financial affairs of Liberia precipitated by her participation
in the war diminished her revenues by more than two-thirds and
the salaries of her government officials were, with their
consent be it said, cut to less than one-half what they were in
1914. Obviously such a situation cannot go on. It seems quite
evident that without assistance it will be impossible for the
Government to attain solvency or for the Republic to recover its
stability.
- 9.
- Failure to grant the credit desired will compel Liberia to
turn to other sources for the financial aid which it must find
at once. If it does so whatever there is of advantage in the
Liberian situation will be secured by the country making the
loan. Liberia desires, as she has shown by signing the loan
plan, to obtain her funds from America from which source she has
received the most disinterested advice and counsel. Liberia has
become accustomed to the supervision of her finances by
Americans who have been employed
[Page 611]
under the International Receivership as
officials by the Liberian Government. It seems quite within the
nature of the case, therefore, that Americans should take hold
of the present situation and aid Liberia in solving her
difficulties. Failure to do so would be a species of desertion
and it is doubtful whether the financial equilibrium of the
country would ever be restored. The extent to which American
prestige will thereby be impaired needs only to be mentioned to
be appreciated.
- 10.
- The granting of a credit of $5,000,000 to Liberia will enable
the United States to make good its moral obligation, to live up
to its historical obligation, to safeguard the commercial
interests of the two countries and to demonstrate the sincerity
of its interest in Negro affairs. It should enable Liberia,
under American supervision, to refund its entire indebtedness,
to reorganize its finances and to make the public improvements
upon which the increase in public revenues will depend. Under
the plan agreed upon the revenues are confidently expected
within three years to amount to more than $600,000 per annum, a
sum not only ample to meet the current expenses of the
Government but to assure the payment of the principal and
interest of the loan. Since the public revenues are pledged in
their entirety as security for the loan, it would seem that on a
purely financial basis the loan is a sound business;
proposition.
