Papers Relating to the Foreign Relations of the United States, 1926, Volume II

882.51/1925

The Liberian Secretary of State (Barclay) to the Secretary of State

Monrovia, December 9, 1926.
[Received January 31, 1927.]

1199/M. F.

Excellency: I have the honour to advise you of the approval by the Legislature of Liberia of the Loan Agreement between the Government of said Republic and the Finance Corporation of America, which agreement provides for certain actions to be taken by the Secretary of State of the United States in circumstances therein specified.

I transmit herewith a certified copy of said Agreement and in behalf of my Government request that the Department of State of the United States will undertake the obligations imposed upon it by this Agreement.

I have [etc.]

Edwin Barclay

[Enclosure]

Joint Resolution Passed by the Liberian Legislature December 7, 1926, Ratifying the Loan Agreement Between the Government of Liberia, the Finance Corporation of America, and the National City Bank of New York⁶³

A joint resolution ratifying the agreement concluded between the Government of the Republic of Liberia and the Finance Corporation of America, a corporation organized under and by virtue of the laws of the state [of] Delaware, United States of America, and the National City Bank of New York, a national banking association organized and existing under the laws of the United States of America, said agreement being dated for convenience as of the 1st day of September 1926.

It is resolved by the Senate and the House of Representatives of the Republic of Liberia in Legislature assembled:

• Section 1. That the agreement set forth in the preamble hereof is hereby ratified and approved and the President is hereby fully authorized and empowered to consummate and place in full force and effect the provisions thereof as set forth in the copy of the said agreement as written at the end of this Joint Resolution, and made a part hereof.
• Section 2. Any laws or parts of laws conflicting with the provisions of this Joint Resolution are hereby repealed.

[Agreement]

Agreement, dated, for convenience, as of the 1st day of September, 1926, by and between the Government of the Republic of Liberia, of the first part (hereinafter referred to as the Government); Finance Corporation of America, a corporation organized and existing under and by virtue of the laws of the State of Delaware, United States of America, of the second part, (hereinafter referred to as the Corporation) and The National City Bank of New York, a national banking association organized and existing under the laws of the United States of America, of the third part, (hereinafter referred to as the Fiscal Agent);

Whereas, the Government represents to the Corporation that it desires to provide for the adjustment of its outstanding indebtedness, and to arrange for

a. The construction of certain public works in the form of roads, bridges, and wharves, and the development of its harbors and communications;

b. Encouraging and development of agriculture;

c. The development of the sanitary organization, including the establishment and maintenance of hospitals;

d. Construction of schools and the encouraging of education among the peoples of the Republic;

e. The maintenance of the frontier force and its development;

f. The general economic development of the country; and

Whereas, the Government represents to the Corporation

A. That Schedule A hereto embraces a statement as of December 31st, 1924, of the entire funded debt of the Government, external and internal, and all indebtedness of the Government incident to the current administration of the Government and all claims against the Government, including claims disputed by the Government as to their validity or amount, or both,

B. That Schedule B hereto embraces all funded debt of the Government, external and internal, and all indebtedness of the Government and claims against the Government, payment of which is or has been directly or indirectly charged, or is claimed to be charged on any of the customs of the Government, on exports or imports, or on head moneys, or on any part of any thereof, or on other revenues of the Government from whatever source derived:

Now, therefore, this Agreement witnesseth;

Article I. The Government covenants with the Corporation that it will cause to be sanctioned, created and issued its “External Forty Year Sinking Fund Seven Per Cent. Gold Bonds” (hereinafter referred to as the “Bonds”) in the aggregate principal amount of Five Million Dollars ($5,000,000), gold coin of the United States of America, to be dated as of January first, 1926, to mature on January first, 1966, to bear interest from the date thereof at the rate of seven per cent. (7%) per annum, payable semi-annually on July first and January first in each year, to be executed by the Secretary of the Treasury of the Government, or by such other officer of the Government as may be designated in writing to the Fiscal Agent by the President of the Government, to be imprinted with the seal of the Government or a facsimile thereof, and to have interest coupons attached, executed with the facsimile signature of its Secretary of the Treasury, and to be authenticated by the signature of the Fiscal Agent thereon indorsed, which Bonds, interest coupons and Fiscal Agent’s Certificate are to be substantially in the forms hereto attached, marked Exhibit “A”. Only such Bonds as shall be so authenticated shall be valid or obligatory for any purpose, and such authentication upon any outstanding Bond shall be conclusive evidence and the only competent evidence that such Bond is one of the Bonds of this Loan. The Bonds shall be issued in the denomination of $.500 or $1000 as the Corporation may designate, and shall be registerable as to principal but not as to interest.

The Government hereby appoints The National City Bank of New York as Fiscal Agent of the Government, with duties and powers hereinafter set forth. The Fiscal Agent shall maintain at its Head Office in the Borough of Manhattan, City and State of New York, United States of America, a book or books in which shall be kept a record of Bonds registered as to principal, and it may establish such regulations with reference to the registration of Bonds as it may deem necessary or advisable; the cost of such registration to be paid, as and when stated to it, by the Government.

Article II. The Government covenants that both principal 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 Agent, 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 under the authority of the Government or any taxing authority thereof.

Article III. The Fiscal Agent shall be entitled to treat the person in whose name any Bond shall at the time be registered as to principal, as the owner thereof for the purpose of receiving payment of such principal, and payment of or on account of the principal of any Bond which shall at the time be registered as to principal shall be made only to or upon the order of such registered owner. The bearer of any Bond which shall not at the time be registered as to principal, and the bearer of any interest coupon pertaining to any Bond (whether such Bond shall be registered as to principal or not) shall be deemed to be the absolute owner thereof for any and all purposes, and neither the Government nor the Fiscal Agent shall be affected by any notice to the contrary.

Article IV. In case any Bond, with interest coupons, shall be mutilated, destroyed or lost, the Government, in its discretion, may issue, and thereupon the Fiscal Agent shall authenticate and deliver, a new Bond of like series, denomination, tenor and date, in exchange and substitution for, and upon the cancellation of, the mutilated Bond and its interest coupons, or in lieu of and in substitution for the Bond and its interest coupons so destroyed or lost, upon receipt, in each case, of indemnity satisfactory to the Government and to the Fiscal Agent, and, in the case of the destruction or loss of any Bond or its interest coupons, upon the receipt, also, of evidence satisfactory to them of such destruction or loss.

Article V. For the payment of the interest on the outstanding Bonds and the amortization of the principal thereof at or prior to maturity, the Government will remit or cause to be remitted to the Fiscal Agent in the City of New York, United States of America, semi-annually on May first and November first in each year, (so long as any of the Bonds remain outstanding and unpaid and there shall not have been deposited with the Fiscal Agent a sum in cash sufficient to pay, and for the purpose of paying the same), an amount in cash sufficient to pay the interest to become due on all the Bonds then oustanding, on the next subsequent interest payment date; and in addition thereto, on or prior to November first, 1930, and on or prior to May first and November first in each year thereafter, such proportion of the sum of $70,000 as the aggregate principal amount of Bonds theretofore issued shall bear to the total authorized issue of $5,000,000.

From the sums so remitted from time to time, the Fiscal Agent shall first set aside a sum sufficient to pay the interest on the outstanding Bonds on the next subsequent semi-annual interest date, and after setting aside such sum the Fiscal Agent shall apply the remaining sums so received, from time to time, as a sinking fund for the retirement of the Bonds, after January 1st, 1931, in the following manner:

The Fiscal Agent shall apply the moneys in the sinking fund, as the same accrue and become available thereto, from time to time, to the purchase of Bonds in the open market (including, as well, any stock exchange) if obtainable with reasonable diligence at prices not exceeding 102 per cent, of the principal amount thereof, and accrued interest.

Any moneys in the Sinking Fund which shall not have been applied to the purchase of Bonds at least seventy days prior to the first day of October in each year shall be applied on such first day of October to the redemption of Bonds, by lot, at the redemption price of 102 per cent, of the principal amount thereof, as follows: The Fiscal Agent shall select by lot an aggregate principal amount of such Bonds equal as nearly as may be, to, but not exceeding, the moneys then in the Sinking Fund, and shall thereupon give notice of redemption of the Bonds so selected, by publishing the same at least once a week for four consecutive weeks, in each of two newspapers of general circulation, published in the Borough of Manhattan, City and State of New York, United States of America, the first publication to be at least sixty days prior to the date designated for redemption, and by mailing a copy of such notice to each registered owner of such Bonds at his address appearing upon the bond registry books, on or before the date of the first publication of the notice. Such notice shall call upon the holders of the Bonds mentioned therein to surrender the same, with all unmatured interest coupons attached, at the Head Office of the Fiscal Agent in the City of New York for redemption at the said redemption price on the date designated for such redemption. Notice of such redemption having been given as herein provided, the said Bonds shall, on the date designated in such notice, become due and payable, at the said Head Office of the Fiscal Agent, at the said redemption price plus accrued interest, anything herein or in said Bonds contained to the contrary notwithstanding. After such redemption date, the Bonds designated for redemption shall cease to bear interest.

Article VI. Any and all Bonds purchased or redeemed pursuant to any of the provisions of this Contract shall forthwith be cancelled by the Fiscal Agent and permanently retired and disposed of at the direction of the Government, and no further Bonds shall be issued in lieu thereof.

Article VII. The Government agrees that it will forthwith undertake negotiations with the present holders of the external and internal debt of the Republic for the adjustment of such debt and for the settlement of such claims as may be approved by the Financial Adviser hereinafter referred to, and that the Bonds herein provided to be issued by the Government and hereinafter termed “The Loan” shall be charged as a first lien,

On all customs duties of the Republic receivable on and after the date of the execution and delivery of this Agreement by the Government, whether in respect of imports or exports, and

On all of the revenues receivable on or after said date from head moneys and:—

The Government further agrees that in the event that the above revenues should prove insufficient for the service of the Loan the Government shall first allocate from its other revenues such sum as shall be sufficient to make up the deficiency.

Import and export duties of every kind and character whatsoever, headmoneys 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 and direction of the Financial Adviser and certain assistants appointed as hereinafter stipulated who shall cooperate 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, shall supervise and direct the collection of the revenues of the Republic from whatsoever source they may arise, and the application of the assigned revenues thereof to the service of the loan, which shall be administered in accordance with the terms of this agreement under rules and regulations to be made and to become effective for the purpose of carrying out the terms and provisions hereof.

Article VIII. As an additional guarantee of the prompt payment of the loan and to insure the efficient organization and functioning of the Liberian fiscal services, the Government covenants and agrees to appoint to its service said Financial Adviser, who shall be designated by the President of the United States of America to the President of the Republic of Liberia and, subject to his approval, appointed to the said office. The said Financial Adviser shall at all times be subject to removal by the President of the Republic of Liberia, upon the request of the President of the United States.

Article IX. 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 State 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, for sufficient cause stated, of his recommendation of such officer or officers.

The auditor and assistant auditor shall be appointed by agreement between the Government and the Fiscal Agent, and the Liberian Assistant Auditor shall be appointed by the President of the Republic of Liberia, to serve during his pleasure.

The officers to be so designated shall be qualified as to education and as to previous experience in similar or analogous positions in foreign service; and the President of the Republic of Liberia, before commissioning them for service hereunder, shall have the right to require satisfactory proof of such qualifications, with the exception only of the Financial Adviser:

1. A Financial Adviser who shall be designated and appointed as hereinbefore stated, at a salary of $12,500. per annum;

2. An official, who shall be designated Supervisor of Customs;

3. An official, who shall be designated Supervisor of Internal Revenue;

4. A bonded Auditor appointed by agreement between the President of the Republic of Liberia and the Fiscal Agent;

5. A bonded Assistant Auditor, appointed by agreement between the President of the Republic of Liberia and the Fiscal Agent;

6. A bonded Assistant Auditor who shall be appointed by the President of the Republic of Liberia.

The officers above mentioned shall perform such duties and employ such persons as may be defined by law or prescribed by the Government, with or upon the advice of the Financial Adviser as provided in Article XII. Said officers in the performance of their duties as above shall be responsible through the Financial Adviser. The salaries of said officers, with the exception of the Financial Adviser, shall be fixed from time to time by agreement between the Financial Adviser and the Government, but the total aggregate salaries of said officers, excepting only the Financial Adviser, shall not exceed the total aggregate sum of Thirty-two Thousand Dollars ($32,000); provided, however, that in the event of substantial changes in money values, the salary of the Financial Adviser and the above aggregate total amount for salaries of other officers may be from time to time increased or diminished by agreement between the Government and the Fiscal Agent.

In the absence or during disability of the bonded Auditor, the bonded Assistant Auditor appointed by agreement between the President of the Republic of Liberia and the Fiscal Agent shall act in his place and stead, and he shall be assisted by the bonded Assistant Auditor appointed solely by the President of Liberia. The salary of the bonded Assistant Auditor appointed solely by the President of Liberia is not incorporated herein but is to be determined by the Budget appropriation as made from time to time.

Such salaries paid to the Financial Adviser and the fiscal officers to be appointed as above stated shall include all allowances of any kind or character whatsoever, provided, however, that said officials shall in addition to such salaries be furnished suitable quarters by the Government; should the quarters furnished not be desired, commutation in lieu thereof will be given for the actual expense of quarters not to exceed the sum of eight hundred dollars ($800) annually; shall be furnished suitable medical care and attendance; shall be reimbursed for their actual traveling expenses incurred by them on official duty; and shall receive 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.

The Financial Adviser and the officers appointed by virtue of the provisions of this agreement shall be entitled to receive reasonable leaves of absence, cumulative over not more than two years, at full pay.

Article X. 1. The Corporation agrees to purchase from the Government and the Government agrees to sell, at the rate of $900 per bond of $1,000., together with interest accrued thereon from time to time, pursuant to the terms and provisions hereof, and in the manner hereinafter stated, such an amount of said Bonds as will provide funds to be used by the Government for the purpose stated in the preambles hereof, not to exceed, however, the total aggregate amount of $2,500,000 face value of said bonds.

2. Said Bonds shall be certified to by the Fiscal Agent for the purposes of identification, and from time to time delivered to the Corporation, or its nominee, as against payment therefor at the rate above stated, to be credited by the Fiscal Agent, out of moneys provided for that purpose by the Corporation, to the account of the Liberian Government in the City of New York. Said Bonds shall be so certified and delivered from time to time by the Fiscal Agent, at the request of the Secretary of the Treasury of the Government, with the written consent and approval of the Financial Adviser but not otherwise, and payment for said Bonds shall not be called for in excess of the following schedule, to wit:

3. During the calendar year 1927, not to exceed the total aggregate amount of $1,500,000, face value of said Bonds;

4. During the calendar year 1928, not to exceed the aggregate face amount of $500,000 of said Bonds;

5. During the calendar year 1929, not to exceed the aggregate face amount of $500,000 of said Bonds.

If the Government shall fail to call for the full amount of said Bonds provided for any one year the uncalled balance thereof shall not be cumulative except with the Corporation’s consent.

It is understood by the parties hereto that the Government may offer for sale in such amount as it may decide, the Bonds covering the remaining $2,500,000 authorized under this Agreement, when the total annual amount of the assigned customs duties and headmoneys has exceeded the sum of $800,000 for two consecutive years. Such additional Bonds shall only be sold in the American financial market and to or through the Finance Corporation of America or other American financial concern, bank or bankers doing business in the United States of America and the Finance Corporation of America shall be given the first opportunity to purchase such Bonds.

Article XI. 1. The Government hereby authorizes the redemption of all of its Bonds now issued and outstanding, commonly called the 5% Sinking Fund Gold Loan due July 1, 1952, under the agreement for Refunding Loan dated March 7, 1912, between the Republic of Liberia of the first part and Messrs. J. P. Morgan & Co., et al., of the second part. The redemption of said Bonds shall be promptly carried out by the Fiscal Agent for the account of the Government in such manner as it may deem to be to the best interests of the Government, pursuant to the terms and provisions of the indenture of March 7, 1912. For this purpose the Fiscal Agent shall use the first proceeds which it may receive from the sale of bonds as hereinbefore provided.

2. The Government further authorizes the payment of all costs and expenses incident to the preparation of this Agreement, and the preparation and execution of said Bonds, including fees of the Corporation’s counsel, which the Fiscal Agent is hereby authorized and directed to pay from the first proceeds of said Bonds as aforesaid.

3. The remaining proceeds of said Bonds purchased by the Corporation shall be from time to time paid out by the Fiscal Agent for the account of the Government for the following purposes, in the following order of priority, to wit:

4. Thirty-Five Thousand Dollars, or such less amount as shall be sufficient to enable the Government to repay the advances heretofore made to it by the Secretary of the Treasury of the United States under the Act of September 24, 1917, known as “Second Liberty Loan Act” as amended and supplemented, and the interest thereon;

5. Such amount as shall be certified by the Financial Adviser as being sufficient to enable the Government to pay its internal funded debt, and the interest thereon;

6. Such amount as shall be certified by the Financial Adviser as being sufficient to enable the Government to pay its internal floating debt;

7. Improvements and developments as set out in the preamble on page 1, sub-paragraphs a, b, c, d, e and f.

Such payments shall be made from time to time by the Fiscal Agent from funds available in its hands therefor to the credit of the Government, upon the request of the Secretary of the Treasury of the Republic of Liberia, certified and approved in manner and form satisfactory to the Fiscal Agent by the Financial Adviser.

Article XII. 1. The Government agrees that the Secretary of the Treasury, Secretary of the Interior, Secretary of War, Postmaster General, and other officials shall co-operate with the Financial Adviser to bring order and system into the finances of the Government, and to that end, the Financial Adviser shall devise for the Republic of Liberia and for any local governmental authority therein such methods of accounting, rules and regulations for the collection, and administration of the public revenues and receipts as may be necessary to assure the collection of such revenues and the enforcement of the laws, rules and regulations pertaining thereto; and such administrative orders or regulations having been approved by the President of Liberia, (such approval, however, shall not be withheld provided said rules and regulations as provided for in this Article are not contrary to law and apply to the collection and administration of the public revenues and receipts) shall be issued at the request of the Financial Adviser by the department head for whose department or under whose jurisdiction any such regulations, rule or order applies. The Government shall fix penalties not inconsistent with the constitution and laws of Liberia for the violation of such administrative order, rules and regulations as may be issued as above.

2. Only the Financial Adviser as such is authorized to communicate directly with any official or branch of the Government, but by agreement between the Government and the Financial Adviser, any official appointed under this Agreement may be authorized to correspond directly with any official of the Government with whom he may have business.

3. For the further security of the revenues and receipts, the Government shall maintain the Liberian frontier force, and shall further maintain patrol service by sea as may be necessary from time to time. The patrol service by sea shall be administered by the Treasury Department Customs Service. The frontier force shall be administered by the War Department and the strength of the force shall be fixed by agreement between the President of Liberia and the Financial Adviser, and it shall not be increased or reduced in number without the agreement of the Financial Adviser, except temporarily in case of emergency declared to be such by the Government. Two duly qualified and experienced officers shall be recommended by the President of the United States to the President of Liberia, and if approved by the President of Liberia, shall be appointed by him to the said Frontier Force. These officers shall be one Major and one Captain. The total aggregate salaries of said officers shall not exceed the sum of eight thousand dollars ($8,000) per annum; provided, however, that such sum may be at any time increased or diminished by agreement between the Government and the Fiscal Agent. Such salaries shall include all allowances, except medical care and attendance, travel on duty, and quarters, which shall be furnished by the Government. Such officers shall serve in the frontier service during the term of said Bonds, and among their duties shall be to prepare a plan of reorganization of the force which shall be based on the idea of creating an efficient constabulary organization for the purposes aforesaid and which plan shall include the qualification and disciplining of all commissioned and non-commissioned officers and the training of the men in accordance with the best practice now obtaining in similar organizations.

4. The funds for the maintenance of the frontier force shall be administered by the Treasury Department under the same plan and system as for other sections of the Government.

5. The assigned 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 by the Government 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 annually reports of the financial administration and of the collection and application of all revenues and receipts. Such reports shall contain the detail of all financial transactions of the Government.

6. The Government covenants 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 has 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 designated 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. The auditor shall only refuse his approval of an order of transfer in case of:

(a) Non-appropriation.

(b) Over expenditure of appropriation,

(c) Incorrectness of account to be paid,

(d) Lack of approval by proper official or officials.

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.

7. The proceedings of the Legislature of Liberia relating to financial matters shall be reported stenographically daily by the Government and typewritten copies of such proceedings shall be furnished to the President of the Republic, the Heads of Department, and the Financial Adviser.

8. The Government shall annually enact a budget which shall set up in detail the estimates of revenues and receipts for the fiscal year and shall duly appropriate and provide in the said budget for the costs and expenses of collection of the revenues and receipts, and the expenses of the various departments of the Government, including the salaries and expenses of the Financial adviser and his staff, as herein provided, the service of the loan, general administrative expenses, public works and improvements and all other amounts which under this Agreement or otherwise the Government is by existing laws or understandings, contracts or engagements, required or obligated to pay; and this shall be done in the following way:—At least thirty days before the opening of each regular session of the Legislature of Liberia, the Secretary of the Treasury shall prepare an itemized budget for the ensuing year, which shall contain statements in detail of the probable revenues and receipts of the Government for the ensuing fiscal year from all sources, and of all proposed expenditures chargeable in any manner against such revenues and receipts. This proposed budget shall be prepared in consultation with the Financial Adviser, whose duty it shall be to assure that the amounts proposed to be appropriated for expenditure shall not exceed the resources of the Government, as shown by careful examination and comparison of the revenue estimates, and who shall further examine the proposed budget to ascertain that all expenditures which are provided to be made by virtue of any of the provisions of this Agreement shall have been properly included in the proposed statement of expenditures. The Financial Adviser may only refuse to approve the budget when and if the disbursements which should be included therein as provided in this agreement or by obligation of law have not been properly included, or when and if the budget submitted by the Secretary of the Treasury exceeds the estimates of the revenues. In the event of the failure of the Financial Adviser to approve the budget as prepared by the Secretary of the Treasury of Liberia, for any of the reasons above stated and defined, the budget of the previous year shall be operative in so far as it applies to the ordinary operating expenses of the Government and the expenditures provided to be made by virtue of any of the provisions of this Agreement, for the ensuing fiscal year only. Within 10 days after the enactment of the budget, the Secretary of the Treasury of Liberia shall deliver to the Financial Adviser a copy thereof as enacted and a statement of all appropriations, regular and special, which shall have been made. All accounts of the Government shall be subject to examination and verification by the Financial Adviser at all reasonable times.

9. All revenues and receipts of the Government shall be deposited in a bank designated jointly by the Fiscal Agent and the Government as the official depositary. All deposits made with said depositary and all payments made therefrom shall be in accordance with the provisions hereof.

Article XIII. The assigned revenues and receipts shall be applied by the Government as follows:

1. To the payment, as they arise, of all costs and expenses of collection, application, and administration of the revenues and receipts, including the salaries of the Financial Adviser and the officers appointed hereunder, and the salaries of the employees of the revenue service, both customs and internal, the cost and expenses of maintaining the frontier force, and any other legitimate expenses or obligations incurred under this agreement, and all amounts incident to the service of the loan except as to payments on account of principal and interest, for which provision is hereinafter made.

2. Thereafter to the payment of the Fiscal Agent on the dates hereinbefore stated, of an amount equal to the interest to be due and payable on the next semi-annual interest date hereinbefore stated.

3. Thereafter to sinking fund payments provided for in Article V hereof.

4. Thereafter to the payment of such sums from the residue as may be necessary to enable the Government to pay such other current administrative expenses of the Government, as may be approved for payment in accordance with the provisions of Articles XII and XVIII.

5. The remainder thereof shall be applied so far as may be necessary to the payment of any other amounts which the Government may, with the approval of the Financial Adviser be required to pay.

6. The sums that may remain after the payments provided in the first five clauses of this article have been made shall be applied as follows:

Such sums shall be credited by the depositary to an account hereinafter referred to as the reserve account. Moneys in the reserve account shall be applied, in so far as possible, only for the improvement of public education in Liberia and for public works, except that in emergency, declared to be such by the Government, the same may be applied to some purpose not covered by the ordinary budget. Moneys shall be transferred for expenditure from the reserve account by agreement of the Secretary of the Treasury and the Financial Adviser. In case of a disagreement between the Secretary of the Treasury and the Financial Adviser, the question of such transfer shall be referred to the President of Liberia and his decision thereon shall be final. Whenever and for so long a period as the assigned revenues and receipts shall be insufficient to meet the payments required to be made by clauses 1, 2, 3, 4 and 5 of this article, the depositary shall cease paying out the moneys from the reserve account and such funds shall be applied by the Government to meet the payments provided in clauses 1, 2, 3, 4, and 5 of this article.

7. At the end of each fiscal year, all unexpended balances of the budget or appropriations shall be reported, together with notation of any commitments or reservations or amounts outstanding in suspense against the same, and the budget for the following year shall take into consideration any outstanding commitments or unadjusted balances, but no sums shall be expended after the close of the fiscal year against the preceding years budget, the purpose being that all expenses for each year shall be budgeted annually.

8. The Government shall make no expenditures, except as hereinbefore provided and for the purposes and in the manner hereinbefore provided, and shall not incur any liability or obligation to make expenditures otherwise. All salaries and expenses incident to the collection, application and administration of the assigned revenues and receipts and maintenance of the frontier force shall be disbursed in accordance with the provisions of this agreement.

9. The Government and the Financial Adviser, or such person as he may designate, and the Auditor shall have the right at any time and from time to time to examine and audit the books and accounts of the depositary in connection with its acts as depositary. Monthly or quarterly statements of such accounts shall be rendered by the depositary to the Financial Adviser and to the Fiscal Agent. A copy of said monthly or quarterly statements shall be furnished by the depositary to the Secretary of the Treasury of Liberia.

10. Agencies or branches of the depositary shall be opened or established at such places in the interior or on the coast of Liberia as the Government, upon the advice of the Financial Adviser, may decide are necessary for the protection of the revenues and receipts, and for their convenient application and administration.

Article XIV. None of the provisions of the present Agreement shall be deemed or construed to create any trust or obligation in favor of any holder of any of the outstanding obligations of indebtedness of Liberia or in favor of any owner of any coupons or claim for interest on, or in respect of any thereof, or in favor of any holder of any claims against Liberia. Any and all claims against the Government which may not be discharged under the provisions of the present Agreement shall be submitted to a claims commission, composed of the Secretary of the Treasury of Liberia, the Auditor and the Financial Adviser. This claims commission shall have power to determine the validity of any and all such claims, and its decision shall be final.

Article XV. 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 twenty 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 XVI. 1. The Government of Liberia hereby agrees that the fiscal agency created by the agreement of March 7th, 1912, shall lapse with the payment of the Bonds secured thereby, and shall be in all respects superseded by the provisions of this agreement.

2. The three separate agreements heretofore entered into by the Government with the Firestone Plantations Company, a Delaware corporation, providing for,—

1. Lease of the Mount Barclay Rubber Plantation,

2. Lease of certain lands of the Government for the purposes of planting and growing rubber thereon,

3. Improvements to the harbors of the Government, and respectively containing immunity in respect of the payment of taxes and duties as therein stated, are hereby in all respects ratified, approved and confirmed, and it is understood and agreed between the parties hereto that this agreement is entered into in all respects subject to the provisions of said agreements between the Government and the Firestone Plantations Company, in so far as the same relate to the payment of taxes and duties on the part of it, the said Firestone Plantations Company.

Article XVII. The Government shall enact all such legislation as may be required for the complete authorization and legalization of the present agreement and of all action called for by the present agreement on the part of the Government or necessary or convenient to carry out the terms and provisions thereof.

Article XVIII. The Government covenants to designate as the depositary hereunder, such bank in the city of Monrovia, in Liberia, as shall be agreeable to the Fiscal Agent, and such designation shall be terminated by the Government upon the request of the Fiscal Agent. Any arrangement which the Government may make with the depositary shall embody the provisions of this agreement and such depositary shall undertake to comply herewith. In case the depositary shall cease to act as such by reason of such termination of its designation or otherwise, a new depositary shall be designated in the same manner as above provided. Moneys paid to the depositary for the account of the Government, as provided in this agreement, shall be held by the depositary and paid out as follows:

Moneys paid to the depositary under the provisions of Article XIII shall be deposited in one or more special deposit accounts, as may be from time to time determined necessary or desirable, and no expenditures shall be made therefrom. Transfer from these accounts of moneys to be disbursed shall be on order of transfer requested by the Secretary of the Treasury and approved by the Auditor, in accordance with the provisions of Article XII, paragraph 6, and countersigned by the Financial Adviser, and such transfer shall be made only to a disbursement account to be opened and maintained by the designated depositary, on which disbursement account checks may be drawn for expenditure, as hereinafter provided.

Moneys paid to the depositary hereunder, whether remitted by the Fiscal Agent or deposited by the Treasury Department or any other officer or agency of the Government, shall be deposited in one or more deposit accounts to be opened and maintained by the depositary, and shall be transferred for disbursement to one or more disbursement accounts to be likewise opened and maintained by the depositary and shall not otherwise be expended or transferred. Such transfers from deposit account to disbursement account shall be made only as provided in the foregoing paragraph.

Moneys in the disbursement account or accounts which are to be disbursed in accordance with the provisions of this Agreement shall be disbursed in the following manner, viz:

a. No sum shall be disbursed in amounts greater than those provided by the budget, but

b. Unexpended credit to any account provided for in the budget may be transferred to any other account of the budget by agreement of the Secretary of the Treasury and the Financial Adviser, who shall certify such decision to the Comptroller for appropriate notation in the appropriation ledger. In case of a disagreement between the Secretary of the Treasury and the Financial Adviser, the question shall be referred to the President and his decision thereon shall be final.

c. Should it be deemed necessary and desirable moneys available by reason of accumulated credits as provided for in Article XIII, paragraph 6, may be used, and an extraordinary or supplemental budget may be prepared for their disbursement, by and with the joint approval of the Secretary of the Treasury and the Financial Adviser and authorized by the executive power. Such moneys shall be available for disbursement from the disbursement account or one of the disbursement accounts the same as other funds of the Government.

d. All moneys available for disbursement shall be expended only upon the submission to the auditor of a properly authorized and verified account showing the name or names of the person or persons to whom said moneys are to be paid, and the article of the budget or appropriation law whereby such expenditure is authorized shall appear on the face of the request for payment, together with any other necessary information to enable the Auditor properly to examine and check the warrant for payment. Upon the Auditor duly examining and verifying the balance of the appropriation credit against which said voucher is to be paid, the Auditor shall signify his approval by an order of release from the designated deposit account to the designated disbursement account, of a sum sufficient to meet the check or checks to be made and drawn in payment of said warrant. Thereupon the Secretary of the Treasury shall sign the check and the Auditor shall countersign to indicate his verification of the article of the appropriation law, the correctness of the charge, and the correctness of the check, whereupon said check may be paid by the designated depositary on presentation by the person to whom the same is drawn or by the specific person to whose order it has been transferred.

e. No checks shall be payable to bearer.

The Auditor shall prepare at the end of each month a statement to each departmental head and to the President and Financial Adviser, which shall show the condition of each article and detail of the current appropriations showing the amount appropriated, the Amount expended to date, the amount reserved in suspense, if any, and the balance available for disbursement.

Article XIX. The Fiscal Agent accepts its appointment as such, and agrees to perform its obligations under this Contract upon the terms and conditions herein set forth, including the, following:

(a) If the Fiscal Agent shall at any time be in doubt as to its rights or obligations hereunder or with respect to the rights of any holder of any Bond, the Fiscal Agent may advise with legal counsel, and anything done or suffered by it in good faith in accordance with the opinion of such counsel shall be conclusive in its favor as against any claim or demand by the Government or any holder of any Bond. If any dispute shall arise between the Fiscal Agent and the Government hereunder the same shall be settled by arbitration as provided in Article XXV hereof.

(b) The Fiscal Agent shall not be responsible to the Government or to any holder of any Bond for any mistake or error of fact or law or for the exercise in good faith of its discretion or for anything which it may do or cause to be done in good faith in connection therewith, except only for its own wilful default.

(c) The appointment of the Fiscal Agent by the Government is irrevocable, except for good and sufficient cause; but the Fiscal Agent may resign at any time, by giving notice of resignation to the Government at least four weeks before such resignation takes effect, and by publishing such notice at least once a week for four consecutive weeks in each of two newspapers of general circulation, published in the City of New York, United States of America.

(d) In acting under this contract, the Fiscal Agent is solely the agent of the Government and does not enter into or assume any obligation or relationship of agency or trust for or with any of the holders of any Bond or its interest coupons.

Article XX. It is expressly understood, however, that all power and authority temporarily delegated under this agreement to the Financial Adviser or any officer appointed hereunder is granted solely for the purpose of facilitating the carrying out of this agreement, and upon the discharge by the Government of the obligations herein assumed all said power and authority so delegated shall automatically revert unimpaired to the Government.

Article XXI. The Government shall pay to the Fiscal Agent reasonable compensation for all services rendered hereunder and a sum equivalent to one-quarter of one per cent, of the face amount of all interest coupons, as paid, and to one-eighth of one per cent, of the principal amount of all Bonds, as retired, whether paid at maturity or purchased or redeemed prior to maturity, as hereinbefore provided. Payment of such compensation shall be made to the Fiscal Agent in gold coin of the United States of America, in the City of New York, upon statements rendered semi-annually by the Fiscal Agent to the Government, as hereinafter provided. The Fiscal Agent shall allow and pay to the Government on moneys other than deposits for the payment of coupons or the redemption of Bonds, remaining on deposit with the Fiscal Agent for thirty days, or more, interest at the rate of two per cent, per annum. The Fiscal Agent may treat all such moneys as time deposits. The Fiscal Agent shall not be answerable for the default or misconduct of any agent or attorney appointed by it in pursuance hereof if such agent or attorney shall have been selected with reasonable care, in which case, the Fiscal Agent shall be reimbursed and indemnified by the Government against any liability or damage which it may sustain or incur in the premises and the Fiscal Agent shall have a lien upon any moneys deposited in the Sinking Fund preferential to that of the Bonds, for any such liability or damage.

Article XXII. The Fiscal Agent shall render to the Secretary of the Treasury of Liberia in each year semi-annual statements of account covering the semi-annual periods ending December 1 and June 1 in each year of all receipts and payments and expenses made or incurred by it during the respective periods, provided that the first statement shall be rendered for the period commencing with the date of this Contract and ending June 1, 1927. Unless objection to any such statement of account shall be made by the Secretary of the Treasury to the Fiscal Agent within two months after the receipt of such statement of account by him particularly specifying the ground or grounds of such objection or objections, the statement of account shall be deemed to be correct and conclusive between the Government and the Fiscal Agent. The Government shall promptly pay or cause to be paid as part of the service of the Bonds, the expenses of the Fiscal Agent as shown in such statement. The expenses of such service may include among other things expenses of printing and advertising, cost of exchange and remittance of funds, brokerage charges, postage, cable, telegraph and telephone charges, charges of legal counsel and other usual expenditures.

Article XXIII. Nothing in this Contract expressed or implied is intended, or shall be construed, to give any person, other than the parties hereto, any right, remedy or claim or by reason of this Contract or any covenant, stipulation or condition herein contained.

Article XXIV. Notices to the Government in connection with this Contract or the performance of any of the terms hereof, may be given by written communication, or by cable, addressed to the Secretary of the Treasury of the Republic of Liberia at Monrovia. Notices from the Government to the Fiscal Agent in connection with this Contract may be given by written communication, or by cable, addressed to The National City Bank of New York, at No. 55 Wall Street, New York City, United States of America.

Article XXV. 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 two arbitrators. The decision of a majority of the arbitrators so appointed shall be binding and conclusive upon the parties to the dispute.

Article XXVI. The Bonds may, at the option of the corporation, be engraved in such form as to be eligible for listing on the New York Stock Exchange, and the Government agrees in such case to furnish such information as may be required in connection with any application to list such Bonds on the said Stock Exchange. The Government will pay, as a part of the expenses in connection with the service of the Bonds, the cost of such listing.

Article XXVII. The obligations of the Corporation under this Contract are expressly conditioned upon the due ratification and sanction of this Contract by the Legislature of the Republic of Liberia, and upon approval by counsel for the Corporation of the legality of the loan and the form and legality of the Bonds, including all proceedings in connection with the authorization, sanction and issue of the loan and the said Bonds; and the Government agrees to furnish to the Corporation prior to the delivery of any Bonds, all such documents, instruments, assurances and proof of legality as counsel for the Corporation and the Corporation may require. If the Legislature shall fail to ratify and sanction this Contract, or if the Government shall fail to deliver to the Corporation a temporary Bond within sixty (60) days after such ratification, or if counsel for the Corporation shall be unable to give their approval as above provided in this Article XXVII, then the Corporation and the Fiscal Agent shall be, respectively, relieved and discharged from any and all obligations or duties under this Contract, and the Government shall pay to the Corporation and the Fiscal Agent, respectively, all expenses which they shall have paid or incurred respectively in connection herewith.

Article XXVIII. This Agreement shall come into force and effect when approved by the Legislature of the Republic of Liberia, and duly executed in behalf of the Government by the officer or officers thereunto duly authorized.

	The Government of the Republic of Liberia, [seal]
Attest, S. de la Rue Financial Adviser, R. L.	By, J. Jeremiah Harris Secretary of the Treasury of the Republic of Liberia
[seal] Attest, Edgar Hackney Secretary	Finance Corporation of America, By, A. M. Colton President
[seal] Attest, E. C. Bogerty Assistant Cashier	The National City Bank of New York, Fiscal Agent By, William W. Hoffman Vice President & Trust Officer

[Subenclosure—Exhibit A]

(Form of Bond)

No.—

$—

Republic of Liberia

External Forty Year Secured Sinking Fund Seven Per Cent Gold Bond

For value received, the Republic of Liberia (hereinafter referred to as the “Republic”) promises to pay to Bearer, or if the ownership of this Bond be registered, to the registered owner hereof on the first day of January, 1966, the principal sum of . . . . . . . Dollars, and to pay interest thereon from the date hereof at the rate of seven per cent. per annum semi-annually on July 1 and January 1 in each year, until such principal sum is paid; but any such interest falling due at or before the maturity of this Bond shall be paid only upon the presentation and surrender of the attached interest coupons as they severally mature.

Both principal and interest of this Bond are payable at the Head Office of the Fiscal Agent, The National City Bank of New York, in the Borough of Manhattan, City and State of New York, United States of America, in gold coin of the United States of America, of or equal to the present standard of weight and fineness, 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 under the authority of the Republic or any taxing authority thereof. This Bond is one of a duly authorized issue of $5,000,000, aggregate principal amount, of Bonds of the Republic of Liberia, designated as its “External Forty Year Secured Sinking Fund Seven Per Cent. Gold Bonds” all of like date and maturity and similar tenor, except as to denomination. The terms of issue of the said Bonds are set forth in a certain Loan Agreement, dated as of September 1, 1926, of which a copy is on file with the Fiscal Agent hereinafter mentioned, to which contract reference is made for the terms thereof.

The due and punctual payment of the principal and interest of this Bond and of all sums required by the said contract to be paid on account of the Sinking Fund are secured and guaranteed by a first charge upon all the customs duties and other revenues of the Republic, subject only to a prior charge thereon for expenses of administration, and further; The Government agrees that in the event that the above revenues should prove insufficient for the service of the Loan the Government shall first allocate from its other revenues such sum as shall be sufficient to make up the deficiency.

This Bond may be redeemed at 102 per cent. of the principal hereof through the operation of the Sinking Fund provided for in the said Loan Agreement, on any semi-annual interest date prior to maturity, upon at least sixty days prior notice, published in two daily newspapers of general circulation, in the Borough of Manhattan, City and State of New York.

The Government of the Republic of Liberia hereby certifies and declares that all acts, conditions and things required to be done and performed and to have happened precedent to and in the issuance of this Bond have been done and performed and have happened in strict compliance with the constitution and laws of the Republic.

This Bond shall be transferable by delivery unless registered in the owner’s name at the said Head Office of the Fiscal Agent, such registration being noted hereon. After such registration, no further transfer hereof shall be valid unless made at said office by the registered owner in person or by duly authorized attorney and similarly noted hereon; but this Bond may be discharged from registration by being in like manner transferred to bearer and thereupon transferability by delivery shall be restored. This Bond shall continue to be subject to successive registrations and transfers to bearer, at the option of the holder or registered owner, but no registration shall affect the negotiability of the attached interest coupons, which shall continue to be payable to bearer and transferable by delivery merely.

Bonds of this issue, of the denomination of $500, are exchangeable, at the option of the respective holders thereof, for a like aggregate principal amount of Bonds of this issue, of the denomination of $1,000, in the manner and upon payment of the charges provided in the said contract.

This Bond shall not be valid or obligatory for any purpose until authenticated by the execution by the Fiscal Agent of the certificate indorsed hereon.

In witness whereof, the Republic of Liberia has caused this Bond to be executed on its behalf by its . . . . . , and impressed with a facsimile of its seal of State, attested by . . . . . . . , and the attached interest coupons to be executed with the fascimile signature of its Secretary of the Treasury, as of the first day of January, 1926.

(Form of Interest Coupon)

No.—

$—

On the first day of . . . . . . . , 19 . . , unless the Bond herein mentioned shall have been called for previous redemption, the Republic of Liberia will pay to Bearer, at the Head Office of The National City Bank of New York, in the Borough of Manhattan, City and State of New York, . . . . . . . Dollars, in United States Gold coin, being six months’ interest then due on its External Forty Year Secured Sinking Fund Seven Per Cent. Gold Bond, No. . . . . .

(Form of Fiscal Agent’s Certificate)

This is one of the Bonds described in the within mentioned Loan Agreement.

The National City Bank of New York,
as Fiscal Agent,
By . . . . . . .

63. Topical notes appearing in the margin of the text of the agreement have been omitted.