Papers Relating to the Foreign Relations of the United States, 1925, Volume II

882.6176 F 51/48

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

Monrovia, June 5, 1925.
[Received July 7.]

No. 274
Diplomatic

Sir: This Legation has the honor, in confirmation of its cablegrams numbers 13, 14, 15 and 17⁴¹ dated May 13, 21 [22], 24 and June 3, 1925 respectively, to report as follows upon the Firestone Contracts:

1. Mr. William D. Hines, Mr. Harvey S. Firestone’s personal representative, asked that the Agreements be signed as he had brought them over without any farther negotiations or changes. To this the Liberian Government positively objected for the following reasons:

2. Because the draft brought back by Mr. Hines contained things which were not in the draft approved by the Liberian Legislature which had been taken by him to the United States for Mr. Firestone’s approval.

3. Because clause (K) of Agreement No. 2 said the Firestone Loan should be upon the same terms and conditions as the Loan of 1921, some features of which had always been objectionable:

(a) Especially as to the number of administrative officers and the powers given them.

(b) Notwithstanding this on account of the need of money and moral support from the United States, the Liberian Legislature unanimously endorsed it and the public looked forward hopefully to the beneficial results that would come from it.

(c) The failure of the loan was a great disappointment and left the country in a most embarrassing situation.

(d) The matter afterward became the storm centre of the Liberian Presidential Campaign of 1923. All this has left the public mind here in an irritated, unpleasant state relative to the Loan of 1921.

So true is this that even when the signing of the Agreements was urged with the statement of Mr. Firestone’s willingness to make whatever changes or modifications might be necessary after the signing, the Liberian Government felt a kind of apprehension about doing so while the expression remained embodied therein holding them to the same terms and conditions of the 1921 Loan.

4. The main objection to the Agreements, however, is that the Loan and Rubber Contracts are tied up together. The objection is that the Liberian Government does not wish to be obligated by a loan from any firm doing business in the country.

(a) It does want it very clearly understood that it is not for any want of confidence in, or any fear of, the Firestone Company, especially so long as Mr. Firestone himself is the head of the firm. It is, however, they allege, because no one can tell what changes in the personnel of the Firestone Company might take place and the Liberian Government might have to deal with a very different condition of things than now exists in the Firestone Company. Whatever the contractual stipulations were they might find themselves greatly embarrassed in the event of a change.

(b) A second reason, is, a precedent is given that might weaken the Liberian Government’s position in dealing with some other nationality upon the same question when it was attempting to defend a principle it had announced as a settled policy of not putting itself under obligations to a firm doing business in the country.

5. For the above reason the Government felt there should be a loan Agreement entirely separate and distinct from the Rubber Contract.

6. Under the above conditions the positive insistence that the Agreements be signed in the exact form they were presented had the effect of aggravating matters notwithstanding reasons which were strongly pressed as follows:

(a) That the Department, after a careful examination of the Agreements, had said, “it perceives no objection to Mr. Firestone proceeding to negotiate an agreement in the matter with the Government of the Republic of Liberia on the lines set forth in the draft agreements submitted to this Department”, which it would not have said unless it had been satisfied that the Agreements contained nothing but what was just to both parties.

(b) That Mr. Firestone’s purposes were not only absolutely honest but he was actuated by the purest motives for the good of Liberia and that the Firestone Company stood for all that was of the best in mercantile life in America.

(c) That since the Liberian revenues were not sufficient as assets of security for a loan of $5,000,000, the Rubber Agreement was tied up with the loan so that the great industrial operations and developments which would be carried on by the Firestone Company in Liberia would give the necessary assurance or security to those from whom the loan would be raised.

(d) That because of the failure of the loan of 1921 and the seeming understanding that the Department would use its goodly [sic] offices in lending whatever assistance, so far as it legitimately could, in securing a Bankers’ Loan, the Firestone proposition seems to offer, at this time, the best means of securing the ends.

(e) That there was now within the grasp of Liberia one of the best opportunities for economic development that could be presented.

(f) That there was also an exceptional opportunity of so interesting and involving American interests with Liberian as would more closely cement the already existing traditional bonds of friendship and thus bring to Liberia the things she most earnestly desired—whatever increased moral support the United States could legitimately and consistently give.

However, notwithstanding the above reasons, the Liberian Government maintains its position which is set forth in its dispatch to this Legation No. 432/D, a copy of which is enclosed, dated April 28, 1925,⁴² containing also a copy of a letter addressed to Mr. W. D. Hines.⁴³

There then began a series of conversations between Mr. Hines, the Financial Adviser and the Liberian Government during which numerous propositions were drafted and again and again revised in the attempt to find a basis agreeable to both parties, during which time the Liberian Government became apprehensive that the delay in signing the Agreements might appear as if it did not appreciate the goodly [sic] offices of the Department and consequently sent, through this Legation, the message contained in cablegram No. 13, dated May 13, 1925, to fully explain its position and requested an expression from the State Department. A common basis of agreement seemed to have been found in an addendum which, with a copy of despatch No. 488/D, dated May 18, 1925, is herewith transmitted.⁴⁴ This addendum, if accepted by Mr. Firestone, would make the agreements acceptable for the signature of the Liberian Government.

It was thought the matter had been virtually solved until in a conversation about it with one of the Cabinet officials, a construction was placed on statement (d), paragraph 7, page 3, which construction made the whole addendum particularly objectionable to the representative of Mr. Firestone. The following is the statement:

“(d) The Agreements and this addendum shall be considered valid and effective only upon their ratification by the Legislature of the Republic of Liberia and that this ratification automatically carries with it authority for the Executive Branch of the Liberian Government to contract for and enter into a loan on the aforementioned basis”.

This statement had been interpreted to mean that after the ratification, by the Liberian Legislature, of the agreements with the addendum, the President would have the right automatically to go forward and contract for, and enter into, a loan without any farther reference to the Legislature for further ratification. The President, however when asked, said this was not so but that after he had entered into and contracted for a loan upon the basis stated in paragraph 7—(a), (b) and (c)—of the addendum, the whole transaction then must go back to the Legislature for its ratification.

This attitude greatly perturbed Mr. Firestone’s representative who, after cabling Mr. Firestone and receiving instructions, withdrew the agreements, hence breaking off negotiations and left for the United States.

At this time the last cablegram from the Department No. 10 and dated May 22, 1925, had been received and transmitted by this Legation to the Liberian Government, but no reply had been received until after Mr. Hines’ departure. During the negotiations and discussions that had gone on between the President and Secretary of State, Mr. Hines and this Legation and from authentic reports of some remarks made during Liberian Cabinet meetings, it seemed possible that the Department of State and this Legation might appear to be forcing something upon Liberia or making some special effort in the interest of a particular American firm. In order, therefore, that such a reply upon the whole situation might be elicited from the Government of Liberia as would leave no misapprehensions or misunderstandings, the following questions were asked:

1. Does the Government of Liberia really need and desire a loan from the United States?

2. Does it, or not, desire the United States, at this time, to use its goodly [sic] offices in securing such a loan?

3. Is this Legation correct in the statements it has made that if a loan is secured from the United States, the Government of Liberia is prepared to offer its revenues subject to such supervision and inspection as would be necessary in carrying out the purposes of the loan?

4. Is the attitude of this Legation correct in that it has so strenuously pressed both in dispatches and in oral representations in saying that it was not merely financial help and economic development Liberia needed and desired but the moral support of the United States?

The whole temper and feeling of the Liberian Government has been modified by the Department’s cable No. 10 and their reaction is set forth in their dispatch No. 521/D, dated May 28, 1925, a copy, herewith transmitted.⁴⁵

(a) It is known the Liberian Government desires to resume negotiations.

(b) That if Mr. Firestone will maintain the spirit he has seemed to manifest as reflected in the cablegrams from the Department and the Department will continue its good offices, the Agreements will be signed.

(c) That the whole matter will be expedited by the President calling a special session of the Liberian Legislature and then after he shall have contracted for and entered into the loan, even recalling for a subsequent ratification.

The position of Mr. Firestone seems now gradually to be more fully understood and the attitude of the Department most fully realized.

I have [etc.]

Solomon Porter Hood

41. Telegrams Nos. 15 and 17 not printed.
42. Ante, p. 424.
43. Ante, p. 421.
44. Neither printed; for substance of the addendum, see telegram No. 14, May 22, from the Minister in Liberia, p. 431.
45. Note of the Liberian Secretary of State to the American Minister, printed on p. 433.