The British Ambassador (Geddes) to the Secretary of State

No. 195

Sir: In compliance with instructions received from my Government I have the honour to draw your attention to certain conditions of the proposed loan from the Government of the United States to the Government of Liberia which are the cause of some concern to His Majesty’s Government:

Under Article IV of the Loan Agreement the principal and interest of the loan and the amounts required for its service are secured as a charge on all customs revenues payable to the Government of Liberia from the date on which the joint resolution of the United States Congress granting the credit is approved. Under Article I (5) it is provided that the sum of one million six hundred and fifty thousand dollars, or such less amount as may be required, shall be advanced from the proceeds of the new loan for the purpose of redeeming the outstanding bonds of the existing loan. These advances, under the same article, are apparently to be made at such times as shall be determined by the Secretary of State of the United States.

Under the agreement of 1912,11 however, providing for the existing five per cent Liberian loan, it is laid down that this loan is secured as a first charge on all customs received by the republic, whether imposed on exports or imports; on all revenues receivable from the rubber tax and, subject to a charge then existing in favour of the firm of A. Woermann on all revenues receivable from head moneys.

It thus appears that the Loan Agreement concluded between the Liberian Government and the United States Government alienates, in favour of the new loan, the security already pledged for the service of the existing loan, the interest payments of which are, as you are already aware, considerably in arrear. While the security for the existing loan is thus entirely taken away, its redemption is apparently only to take place at the discretion of the United States Government.

In these circumstances I should be grateful if I might be furnished, for the information of His Majesty’s Government, with an indication of the intentions of the United States Government in regard to the redemption of the existing loan. It is assumed by His Majesty’s Government that, as the security for the rights of the existing bondholders is likely to be alienated without any previous consultation with them, it is the intention of the United States Government that the 1912 five per cent loan shall be paid off immediately on the coming [Page 614] into force of the new Loan Agreement. An assurance on this point from the United States Government would however be much appreciated.

I have [etc.]

(For the Ambassador)
H. G. Chilton
  1. March 7, 1912; not printed.