882.51/1506: Telegram

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

23. Referring to the Department’s cable May 23, and your despatch 65 May 31. The Department disapproves of your action and that of [Page 621]the Acting General Receiver of Customs in officially approving the arrangement of May 27 between the Liberian Government and Bank of British West Africa without first having obtained instructions so to do …

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Immediately upon the receipt of this instruction you will inform the Liberian Government of the contents of this paragraph and cable briefly its reply:—You will say that in view of the fact that German Liquidation funds which may lawfully be held by Liberia are pledged by the Liberian Government in financial plan signed by the Plenary Commission of Liberia and the Secretary of State of the United States as a part of the security of the $5,000,000 loan and this plan has been laid before Congress by the President for consideration in connection with the joint resolution to authorize the loan, the Department is unable to understand the action of the Liberian Government in concluding without the consent of this Government the arrangement of May 27 with the Bank of British West Africa. The Department is not convinced by the information before it that such an emergency existed as required the execution of the arrangement between the Government and the Bank in such haste as to render it impossible to await an expression from this Government with regard thereto and desires that the Liberian Government define its position in this matter. Moreover in addition to the foregoing there are certain embarrassing questions of principle involved in the form of the arrangement which the Department finds so objectionable as to make its termination desirable. As it is stated in Legation’s cable 18 dated May 13, 5 p.m. that revenues were positively expected to arrive between June and September amply sufficient to cover security, the Department expects the receipt of these revenues to effect the termination of the arrangement with the Bank and restoration of the £10,000 sterling to the German property Liquidation fund.

It is also expected that any advances which may be made against this security shall be applied only to legitimate current expense of Government and that adequate facilities shall be afforded Acting General Receiver to verify such expenditures for information of the Minister for report to this Government.

You will also say that the Department is not unmindful of the fact that the delay in granting the loan has precluded an effective settlement of Liberia’s financial difficulties, but the Department is doing everything in its power to expedite the consummation of the loan and expects that favorable action by the Senate upon the joint resolution establishing the credit will shortly be taken.

Hughes