882.51/1907: Telegram
The Secretary of State to the Chargé in Liberia (Clark)
34. Your November 20, 10 p.m. Please inform President King that the Department, in accordance with his request for its informal good offices, has consulted with the Finance Corporation regarding the changes in Articles XV and XXV of the Loan Agreement proposed by the Liberian Government.
The Finance Corporation states that serious difficulties would be encountered in marketing bonds which could be refunded in 12 years and consequently it hopes that the Liberian Government will see its [Page 571] way clear to accepting Article XV as it now appears in the printed agreement. However, in case the Liberian Government is unable to do so, the Finance Corporation states that it would be willing to accept the Liberian amendment changing “12 years from the date hereof” to “25 years from the date of each issue of bonds”. The Finance Corporation points out that this would make the new loan agreement coterminous with the present 1912 Loan Agreement and it further states that 25 years is approximately the average life of foreign government bonds sold in the United States.
Regarding Article XXV the Finance corporation finds the change proposed in President King’s telegram to the Department too indefinite in its phraseology. However, it has informed the Department that it would be willing to accept the suggestion previously made to the effect that the third arbitrator, to be appointed by the American Secretary of State, be of a different nationality from the other arbitrators.
Article XV would thus 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, provided that this is not to be understood as restricting the Secretary of the Treasury from arranging temporary banking credit for carrying out a budget approved as herein provided; and provided further that the Government may negotiate with responsible bankers for a refunding loan at any time after 25 years from the date of each issue of bonds but before such refunding loan shall be accepted the Finance Corporation of America shall have the option of taking the new loan on the same terms and conditions as such bankers may offer.”
Article XXV would thus read “In case of dispute between the Government and either of the other parties to this Contract, the matter shall be referred for determination to arbitrators, one of whom shall be appointed by each of the parties to dispute; and, if such arbitrators shall be unable to agree among themselves, the Secretary of State of the United States of America shall be requested to appoint an additional arbitrator who shall be of different nationality from the other arbitrators. The decision of a majority of the arbitrators so appointed shall be binding and conclusive upon the parties to the dispute.”
In conveying this information to President King you may orally express your hope that the changes thus proposed by the Finance Corporation meet the objections raised by the Liberian Government.