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

882.6176 F 51/69

The Secretary of Legation at Monrovia (Wharton) to the Secretary of State

Monrovia, December 29, 1925.
[Received February 5, 1926.]

No. 318
Diplomatic

Sir: This Legation has the honor to transmit the following report in confirmation of cablegram number 43 dated December 28th, 1925.⁶²

On Wednesday the 16th of December, His Excellency President King, delivered his annual message to the National Legislature. Copies of this message will be transmitted to the Department when available. The message was well received except general criticism because nothing was stated either with reference to the Firestone concession, the loan, or the mission of the Liberian Secretary of State, Hon. Edwin Barclay, to the United States and France. This omission proved shrewd political strategy.

Later, however, at a private meeting all agreements were read to the National Legislature, cabinet, and elder statesmen, (ex-president Arthur Barclay, ex-president D. E. Howard, etc.)

This Legation is well informed that at this meeting President King spoke very favorably towards the United States and Secretary Barclay’s report. Those present were permitted to discuss at length all agreements. …

. . . . . . . . . . . . . .

The apprehension relative to the large number of American employees to enter Liberia is entirely over for a cable from Mr. Firestone denying the report that 30,000 men were to be used, was read at this meeting. Further, upon considering the millions of dollars necessary for such a staff of men, the utter impossibility of this propaganda was self evident.

This Legation has little doubt concerning the outcome of the Loan agreement with the Finance Corporation of America, nevertheless, the points raised will make it necessary for an extension, for it is impossible for this agreement to be submitted to the Legislature and negotiations concluded by January 1st, the expiration date of the said corporation’s offer. There is a general feeling that should the time be extended the agreements will be modified and ratified before the end of January 1926.

Many points have been raised and contrary views expressed relative to the loan agreement, especially with reference to powers of the Financial Adviser, number and salaries of officials provided, and the pledging of all revenues of the country. However, this Legation is enclosing the present proposed amendments of the President which he hopes will so modify the agreement that it will be acceptable to the Legislature.

These amendments should give no great concern, e. g.:

(a) Art. II and the omission of the words “in time of war as well as time of peace” may be considered surplusage;

(b) omission of “direct and control” Art. VII paragraph 2, page 8;

(c) the change of the wording in Art. IX compels the President to show cause for removal while the Financial Adviser under this amendment does not “request” but merely has to withdraw his recommendation in order to remove an officer. There is nothing stated relative to the Financial Adviser showing cause for such withdrawal of his recommendation;

(d) mere omission of two words “suitable” and “actual” which are implied when omitted;

(e) striking out that “No custom house shall be established or discontinued or opened or closed without consultation with and the agreement of the Financial Adviser”; so far as the agreement of the Financial Adviser and his powers hereunder is concerned the objection may be considered justifiable as usurping sovereignty. There is sufficient control left in the Financial Adviser under the budget;

(f) change in paragraph 6 is absolutely necessary in order to comply with Article 3 section 4 of the Liberian Constitution;

(g) addition to Art. X should not be objectionable;

(h) the change in Art. XV seems to be fair and reasonable for the loan must be refunded and until that time no loan can be floated.

In view of the foregoing proposed modifications, while there may arise some difficulty yet unseen, an extension is necessary and it is hoped the desired end will be effected.

This Legation has been placed in an exceedingly embarrassing position for no copies of the agreements reached or signed by the American corporations and the Liberian Commission have been received. It is appreciated that the negotiations are not with the United States Government, however, though this Legation may be familiar with the agreements prior to the visit of Mr. Edwin Barclay, yet there exists a hiatus and it is with difficulty, considering the depleted staff at this post and an unwarranted expenditure of time in obtaining and understanding important information relative to the advancing of American interests, [sic]

I have [etc.]

Clifton R. Wharton

[Enclosure 1]

The General Receiver of Customs of Liberia (De la Rue) to the American Minister (Hood)

[Monrovia,] December 28, 1925.

Sir: I have the honor to report, for transmission to the Department that the Agreement with the Firestone and incidentally, the Agreement with the National City Bank of New York have been before the Liberian Legislature in joint session, and have been explained to the Cabinet by the Secretary of State.

2. The Firestone Agreements were the first matters taken up, and with one or two small and unimportant points were generally received with satisfaction. The point that caused the most apprehension and discussion was occasioned by an American newspaper printing that 30,000 American employees would be employed here by Mr. Firestone. The representatives viewed this suggestion with considerable apprehension as it represents a larger number of persons than is contained in the Americo-Liberian population. There was a strong and decided effort to limit the number of employees from the United States which Mr. Firestone would be permitted to bring into this country. Happily I believe this matter is now settled without such legislation being deemed necessary.

3. Another point raised was the question of phraseology in the No. 2 Agreement (Firestone) wherein it was stated that upon Mr. Firestone selecting the land, title would pass. It was thought that this was misleading because the only estate Mr. Firestone would have would be a leasehold estate, and further, it did not specify that he was to pay rent upon taken [taking] possession. This point has been covered by a letter from Mr. Ross and I believe that matter is closed also.

4. The question of the Agreement with the National City Bank of New York has raised a storm of discussion, but up to the present time, I have no reason to be apprehensive as to its successful passage. The delay in getting the documents to Monrovia did not permit the President and Cabinet to make any study of the various papers before the meeting of the Legislature, nor did it permit them to explain to the leaders what it was all about. This has resulted in rendering it impossible to bring the matter properly before the Legislature before January 1, 1926, which date is specified as being the date when the offer on the part of the Finance Corporation of America and the National City Bank expires.

5. Under those circumstances, the President has directed the Secretary of State to cable the National City Bank requesting that the matter be held open and the time extended to the 30th of January, in which request I totally concur as I believe this will bring about a satisfactory ending to the negotiations.

6. In the above connection, the President has requested me to transmit, through the Legation, to the American State Department, by telegraph, my concurrence in the request for this extension of time for the reasons given above. I therefore request you to transmit a cable to the Department incorporating this idea and suggesting to them that the extension requested by the Liberian Government will, in my opinion, result in an entirely satisfactory ending within the next two or three weeks.

I have [etc.]

S. De la Rue

[Enclosure 2]

Proposed Liberian Amendments to Draft Loan Agreement

article ii should read:

The Government covenants that both principle [sic] and interest of the Bonds will be paid promptly as they respectively become due and that any and all sums and expenses in connection with the service of the issue will be paid in conformity with Article V hereof, and that payments shall be made in the Borough of Manhattan City and State of New York, United States of America, at the Head Office of the Fiscal Agents in Gold Coin of the United States of America of or equal to the present standard of weight and fineness and shall be paid without deduction for or on account of any taxes assessments or other governmental charges or duties now or hereafter levied or to be levied by or within the Government or by any taxing authority thereof.

article vii, paragraph 2, page 8:

Import and export duties of every kind and character whatsoever, headmonies and all other taxes, imposts and revenues of the Republic shall be collected through the Customs, Postal and Internal Revenue Administration, to be maintained by the Government under the supervision of the Financial Adviser and certain Assistants appointed as hereinafter stipulated who shall co-operate with the Treasury, Postal and Interior Department Officials in the manner hereinafter prescribed. The Government obligates itself to appoint from time to time during the entire life of the Loan the Fiscal Officers required by the terms of this Agreement, who during the life of this Agreement, [sic] These Officers shall supervise the collection of the revenues of the Republic from whatever source they may arise, and the application thereof to the service of the loan in accordance with the terms of this agreement or as provided in rules or regulations to be made effective for the purpose of carrying out the provisions and terms hereof.

article ix should read:

The organization of the customs and internal revenue administration of the Republic shall be supervised by the following officers who shall be nominated by the Financial Adviser, to the President of the Republic of Liberia, (the Financial Adviser having first reported the names of the officers nominated to the Secretary of the United States), and shall be by the President of the Republic of Liberia appointed and commissioned to the respective offices with duties as defined in this Instrument. These Officers shall hold their appointment during good behavior but shall be subject to removal by the President of Liberia for cause, or upon the withdrawal by the Financial Adviser of his recommendation of such officer or officers.

The Auditor and the Assistant Auditor shall hold their appointment during good behavior but may be removed by the President of Liberia for cause or upon the withdrawal of the Fiscal Agents of their recommendation of such officer or officers.

page ii, article ix last paragraph but one:

Such salaries paid to the Financial Adviser and the fiscal officers to be appointed as above stated include all allowances of any kind or character whatsoever, provided, however, that said officials shall in addition to such salaries be furnished medical care and attendance; shall be reimbursed for their traveling expenses from the point of departure in the United States at time of appointment or employment to their post in Liberia and return to the United States on termination thereof; and not more often than once in two years, shall receive their actual traveling expenses by ordinary route to the United States and return. Such expenditure shall conform to the regulation now enforce [in force] or which may hereafter be promulgated by the Audit Bureau of the Treasury Department of Liberia.

The Financial Adviser and his assistants shall be entitled to receive reasonable leaves of absence, cumulative over not more than two years, at full pay.

article xii, paragraph 5 shall read:

The revenues and receipts shall, during the term of said Bonds be payable only in gold, of the present standard of weight and fineness of gold coin of the United States of America, or its equivalent and the rates and the amounts thereof shall not be decreased without the approval of the Fiscal Agent, but may be increased so as to meet the expenses of the service of the loan, and the expenses of the administration of the Government. The Comptroller of the Treasury, together with the Auditor, shall prepare for the Secretary of the Treasury, the Fiscal Agent and the Financial Adviser quarterly and annual reports of the financial administration and of the collection and application of the assigned revenues and receipts. Such reports shall contain the detail of all financial transactions of the Government.

paragraph 6 shall read:

The Government convenants to install and maintain the pre-audit system, whereby all accounts of the Government before payment shall be duly presented to the Auditor and shall be audited. The Auditor, upon the submission of any account for his check and after examination of the appropriation to which it is chargeable to ascertain that the same had not been over expended and that the account is correct, properly verified and payable, shall indicate his approval by appropriate signature and shall approve the transfer from the general deposit account in the official depositary to the disbursement account in the designated depositary of a sum sufficient to meet the Secretary of the Treasury’s check for the particular account and payee specified. No payments shall be made except under warrant of the President in accordance with the budget or appropriation law and all payments shall be made by check on the disbursement account to be opened and maintained in the designated depositary of the general Government. Payments to troops or other payments which must be made in cash shall be by check to a bonded paymaster, who shall make the detail of disbursements in accordance with the audit rules and regulations which are to be prepared and enforced in accordance with the provisions hereinbefore stated.

add to article x the following clause:

It is understood by the parties hereto that the Government may at any time it deems desirable offer for sale in such amounts as it may decide the bonds covering the remaining Two and one-half million dollars authorised under this agreement.

article xv should read:

Until the Government has repaid the whole amount of the loan and all expenses incident to the service thereof, no floating debt shall be created and no loan for any purpose shall be made, except with the written approval of the Financial Adviser, but that the Government may at such time as it sees fit negotiate a refunding loan for the retirement of the present loan.

62. Not printed.