882.6176 F 51/48

The Liberian Secretary of State ( Barclay ) to Mr. W. D. Hines 27

Sir: I have the honour to advise you that the Government of Liberia have given due consideration to the Agreements in relation to your Principal’s prospective rubber and other enterprises in Liberia which were submitted by you on the 19th of February, 1925,27a and are of the opinion that the Agreements, with the exceptions hereinafter noted, furnish acceptable bases for their endorsement of the Firestone operations in the Republic.

The Government regret exceedingly to find themselves unable to accept these Agreements in their entirety. The reason for this, is that a very careful examination of them discloses the surprising fact that in aspects which the Government of Liberia consider fundamental they depart from the understanding reached as a result of the protracted negotiations last year when in a letter to the Secretary of State dated June 19, 1924,28 he was given to understand by you that the documents then submitted by him represented terms and conditions mutually acceptable. This impression was emphasized by Mr. Firestone’s cablegram to President King dated December 24, 1924,29 by which His Excellency was advised in express terms that the Agreements were approved.

By these unqualified declarations the President was led to submit to the Liberian Legislature the Agreements arrived at in 1924. This Department of the Government gave the necessary approval to the executory agreements and authorized the Executive to execute them substantially in the form in which they had been submitted.

Up to the approval of the Agreements by the Legislature this Government was of the opinion that the mutuality which is a necessary [Page 422] prerequisite to all agreements, existed between your Principals and them. The introduction of matters into the documents you have recently submitted, matters which at the time of our first discussions were neither directly nor even remotely suggested or contemplated,—destroys in large measure our previous understandings and, unless eliminated would tend to reopen the discussion as to terms and conditions.

The Government would consider this as undesirable in every point of view, and are therefore willing and ready, as I have already intimated to sign an agreement from which the unforeseen provisions have been eliminated.

I desire to make it clear that the objections to which I am referring have no relations at all to the rents, royalties or rate of revenue tax which your Principal or his assigns might have to pay; for the Government are not desirous of imposing any conditions which would render it economically impossible for you to produce rubber in competition with other rubber producing countries. The principal objections which are found to your proposals are:

The word supplies employed in Article II, clause (a) of Agreement Number Two and in the similar provision of Agreement Number One, must be used in a restrictive sense, and the supplies contemplated under such provisions must have direct relation to agriculture and not an indirect relation. The other exemptions included in your proposals under this clause are too far-reaching for the Government to bind themselves in the terms there stated. It is hoped that this provision will remain as stated in the accompanying document.29a
The same observation it is thought must apply to clause (b) of Article II of Agreement Number Two of your proposals.
The Government does not see its way to grant the Lessee railway rights outside the lands leased by him and therefore have eliminated that right from clause (d) of your proposals.
Paragraph (e) it is suggested must be modified conformable with the accompanying document.
Paragraph (g) should similarly be modified to include every operation other than agricultural as the general idea underlying the grants made to this Agreement is that they apply absolutely to agricultural enterprises.
As to Article III (d) I must respectfully insist upon the view expressed to you, Mr. Cheeks and Mr. Ross by the President when you had an interview with His Excellency last year, to the effect that this Government in no circumstance will place itself under financial obligations to your Company. This is a matter of fundamental policy and it is hoped you will not insist upon provisions which would embarrass [Page 423] the Government in their loyal desire to reach an acceptable accord with your Principal. This provision carries within it the elements of future misunderstandings. This is undesirable. The Government desire an agreement which will, as far as possible, be automatic in its working and prefer even at the risk of some future loss not to introduce conditions that have to be interpreted, construed and eventually submitted to the final arbitrament of a foreign Government. To avoid this, this Government would infinitely prefer that the payments to be made by the Lessee shall be at a flat rate which should obtain during the life of the Agreement.
It is thought that the ultimate clauses of paragraph (e) Agreement Number Two Article III are open to exception on the ground that they represent an attempted restraint upon certain inherent sovereign powers of this Government and imply the existence within this Republic of a condition of tax aberration which is not in accord with fact nor conforms to our ideas of ordered Government. The provision of the original Agreement in this point of view would therefore seem to be preferable, as under it all details might be worked out in accord with the Treasury Department.
The Government in concluding an agreement with your principal have acted upon the assumption that he or his assigns will have on the spot an Agent fully empowered and authorized to deal with all matters arising under the Agreements. It is therefore difficult to understand, if the Government’s view is correct, why clause (f) of Article III should foresee a system of notices to be served in America whilst an authorized Agent of the Lessee is immediately accessible locally. The Government whilst being in accord with your view that no technical reason should be construed as a default, submit the provisions of the accompanying document as a more acceptable formula.
Article IV, Agreement II, (c) would be more acceptable to the Government if framed as in the accompanying document.
The Government find themselves unable to accept clause (k) of this Article. The object of its inclusion as stated by you in our first interview, viz., to furnish the Government with funds to carry out the necessary improvement in transportation facilities without imposing this charge upon the capital resources of your Principal or his Assigns, recommend[s] itself to the Government as reasonable in every point of view. But this Government would find itself embarrassed if they were to use the intermediation of a private concern operating in Liberia under grants from the Government for this purpose, and if they were to secure the loan upon the condition of an agreement the terms of which are impracticable. Your Principal, however, may be assured that, recognizing as the Executive Government do the intimate connection between means of transport and [Page 424] economic development, they will use every endeavour within the next few years with the assistance of the American Department of State to secure in America, if possible, funds necessary for this purpose, provided the terms and the conditions be such as may be satisfactory to the Legislature of Liberia. They will have no objection to those interested in your proposals giving any assistance or participating in the flotation of such a loan. In view of this assurance, the Government would be pleased if you could appreciate their point of view and understanding why they must insist upon the elimination of clause (k).

As a result of the observations made in the last paragraph it is thought that as your principal would not be called upon to undertake any obligation under Agreement Number Three that Agreement should be considered as cancelled.

The observations made with reference to Agreement Number Two apply to similar provisions of Agreement Number One.

I have [etc.]

Edwin Barclay
  1. Copy transmitted to the Department by the Minister in Liberia under covering despatch of June 5; received July 7.
  2. See drafts, pp. 389403.
  3. Ante, p. 368.
  4. Not found in Department files.
  5. No enclosures found with file copy.