882.6176 F 51/20

Memorandum by the Economic Adviser, Department of State (Young)

Memorandum of conversation concerning the proposed Firestone rubber concession in Liberia.

  • Present: The Assistant Secretary of State,
  • Mr. Harvey S. Firestone,
  • Mr. Amos C. Miller,
  • Mr. Young.

Following the conference in the Secretary’s office, the representatives of the Firestone Company called for the purpose of further discussing the terms of the proposed agreements.

(1) Mr. Harrison stated that the Department felt that the period proposed during which Agreement No. 2 might be in effect, i. e., 99 years, with an option to extend it for 50 years more, was excessive. [Page 388] It was pointed out that it might be in the interest of the company, as well as of the Liberian Government, to have a briefer term and some more flexible arrangement with respect to fiscal relations between the company and the Government. The representatives of the company agreed that the periods were too long, and suggested that they would give consideration to finding a formula which would shorten the maximum period to not over 99 years, and would embody some provisions for adjustment of fiscal relations. Mr. Firestone was not certain which type of arrangement he would prefer. The following general types of arrangements were discussed:

A concession for 50 years, with an option to renew for a further period up to 99 years, such option to be exercised at any time after a fixed period, say 10 or 25 years:
A year term concession, such as 99 years, with provisions for adjusting the fiscal relations periodically, e. g., at the end of 50 years and each 10 years thereafter.

Mr. Firestone stated that after more careful consideration he would indicate to the Department the changes he would suggest as to the above point.

(2) It was also pointed out that the contract provided that no tax on the exportation of rubber should be paid when the New York price was less than 15 cents per pound. It was suggested that, without being able to know what might be the future course of the price of rubber in the light of possible technical and other developments, it might be better to omit the provision exempting the company from the tax when the price fell below 15 cents. Mr. Firestone stated that he recognized that the tax in such a case would be almost negligible as a factor in the company’s business, and indicated that he would probably eliminate reference to the 15 cent limit.

With respect to the question of adjusting fiscal arrangements, mention was made of the possibility of some form of arbitration, e. g., the Liberian Government to appoint one arbitrator, the company to appoint one and the Secretary of State to appoint a third.

(3) Reference was made to the proposed loan, which Mr. Firestone thinks may perhaps eventually be obtained from this Government. Mr. Harrison pointed out that it is important that the Liberian Government should not in any way be led to believe that the Government of the United States is making any commitment with respect to such a loan. It was further pointed out that the Department in the past had not made it a practice of going farther, in the case of private loans to Governments of certain Latin-American countries, than to assist by agreeing to facilitate the settlement of disputes by appointment of an arbitrator, and, with respect to supervision of loans, to lend its good offices in connection with the selection of a supervisor of customs revenues.

[Page 389]

(4) Mr. Firestone and Mr. Miller indicated that they would take under advisement the points raised, and would communicate further with the Department in due course.

A[rthur] N. Y[oung]