882.51/1506

The Minister in Liberia (Hood) to the Secretary of State

No. 65
Diplomatic

Sir: This Legation has the honor to submit for the information of the Department the situation here as shown in Legation’s Cablegrams No. 18a May 15, 5 p.m.,15 and No. 19 May 20, 4 p.m.16 The first setting forth an impending crisis, and the second indicating that it had come in the Liberian Financial situation making it imperative that something be immediately done. Herein are set forth the causes of, and reasons for the position this Legation felt compelled to take.

[Page 619]

The Manager of the Bank of British West Africa, Ltd., had three times, during the period covered by the above-mentioned Cablegrams, called at this Legation to know what answers had been received from the American Government. His last call prompted by a final Cablegram from his Directors in London, he stated that final action could be stayed no longer, unless there was a proposition placed before the bank that it could accept, approved by the American Minister and the Financial Adviser.

The Legation called a Conference of the Secretary of the Treasury of Liberia, the Bank Manager, and the Financial Adviser, and asked that the Bank of British West Africa make some proposition under which it could and would continue its advances to the Liberian Government. A Cablegram from the Directors at London having advised the Bank Manager that no proposition would be accepted except it had the approval of the American Minister made the whole matter virtually rest upon his action.

The result of this conference was the letter herewith transmitted as enclosure No. 1, which was taken before the Liberian Cabinet and adopted.

This Legation was placed in the position to either permit an immediate Financial crash come to the Liberian Government or avert it by giving its approval to the plan devised. Believing that it was the purpose of the United States Government to do whatever it legitimately could for the Liberian Government, to which it had admitted a traditional and moral responsibility, and the Liberian Government being on the very verge of bankruptcy, which if the crash came would involve serious international complications, and there not being even time to get another Cablegram response, the American Minister, and Financial Adviser felt compelled to take the action herewith transmitted.

It is to be noted however, that, if the American Loan becomes effective, then whatever obligations are assumed will be met by it, but if it does not the United States cannot be held responsible for Liberia’s obligations.

I have [etc.]

Solomon Porter Hood
[Enclosure]

The Liberian Secretary of the Treasury (Harris) to the Manager of the Bank of British West Africa, Ltd.

Sir: Confirming my letter of May 11th, 1922.

1.
I now have the honor to authorize that you segregate from the sum held in your bank to the credit of the Liberian Government [Page 620]on account of German Property Liquidation Funds, the amount of ten thousand pounds (£10,000): to be held as security for an overdraft up to the sum of ten thousand pounds (£10,000) in favor of the Liberian Government. It being understood that the purpose of this agreement is to increase the credit limit of the present Agreement of the Government with the Bank by the amount of ten thousand pounds: otherwise the terms and conditions regulating the advances as provided in the present Agreement are to be unchanged.
2.
It is to be understood that in the event the contemplated American Loan is established, such sums as may have been advanced by your institution against the security now handed you will form part of the general indebtedness of the Republic to your Bank, and upon this indebtedness being repaid this security will ipso facto revert to the Fund from which it is derived.
3.
In the event that the new American Loan is not established the security named in paragraph one of this letter will be held by the Bank subject to the repayment of the advances made over the present credit limit of $120,000.—and be released upon the reduction of the Government’s indebtedness to the sum of $120,000.00

Yours faithfully,

J. Jeremiah Harris

Secretary of the Treasury R. L.

Approved:
Solomon Porter Hood
American Minister and Consul General of the United States to Liberia
S. de la Rue
Acting Financial Adviser, General Receiver of Customs and Receiver of German Property Liquidation. R. L.

  1. See telegram no. 18, May 13, 5 p.m., p. 617.
  2. Not printed.