The Acting Secretary of State to Messrs. Shearman & Sterling
Sirs: The receipt is acknowledged of your letter of January 28, 1927, concerning the submission to the Department, by the Republic of Liberia, of an executed counterpart of a Loan Agreement between the Republic of Liberia, the Finance Corporation of America, and the National City Bank of New York, as Fiscal Agent, with a request on the part of the Liberian Government to be informed whether the Department of State of the United States would undertake the obligations imposed upon it by this Agreement. You ask that the Finance Corporation of America and the Fiscal Agent, as the other two parties to [Page 137]the Agreement, be notified of the decision of this Government in the matter.
In reply, you are informed that the Department has received the Agreement in question from the hands of Mr. Sidney de la Rue, Receiver General of Customs and Financial Adviser of the Republic of Liberia, together with a note from the Secretary of State of the Republic of Liberia,3 advising the Department of the approval by the Legislature of Liberia of the Loan Agreement and requesting that this Government undertake the obligations allotted to it by the Agreement.
The Department has instructed the American Legation at Monrovia to acknowledge the receipt of the note and of the copy of the Agreement, stating that it is the understanding of this Government that the approval of this Agreement by the Liberian Legislature now enables the Liberian Government to take such measures as may be necessary for the retirement of the bonds issued under the 1912 Loan Agreement,4 under which this Government performs certain functions analogous to those contemplated under the present Agreement, and to inform the Liberian Government that this Government, upon the extinguishment of the 1912 Loan, will be glad to assume the responsibilities allotted to it by the terms of the present Agreement.
It appears from the Agreement of September 1, 1926, between the Government of Liberia and the Finance Corporation of America that the Government of Liberia has hypothecated for the service of the loan to be made pursuant to that Agreement the same revenues as are hypothecated by the Agreement of March 7, 1912, between the Liberian Government and certain bankers. The Liberian Government will readily appreciate that the Department could not appropriately consent to participate in any action under the new Agreement which would have the effect of transferring the revenues hypothecated under the Agreement of 1912 to the service of the loan made pursuant to the new Agreement, so long as any of the bonds issued under the Agreement of 1912 remain unpaid. The transfer of the revenue from the service of the 1912 loan to the service of the new loan, so long as any of the 1912 bonds remain unpaid would entail a violation by the Liberian Government of the Agreement of 1912 to which the parties to the 1912 Agreement and the holders of the 1912 bonds could appropriately object, as might also the Governments of Great Britain and France, which are involved in the 1912 Agreement, as is the Government of the United States. Therefore, until the 1912 bonds are called in, the Department will be unable to recommend to the President that he take any action under [Page 138]the new Agreement, except to the extent that such action may be taken consistent with the terms of the 1912 Agreement.
It is the intention of the Department to recommend to the President that he designate Mr. Sidney de la Rue as Financial Adviser under the new Agreement as soon as the 1912 bonds have been called and the Department understands that Mr. de la Rue is making provisional arrangements for the selection of the financial officers envisaged in the new Loan Agreement and that these nominations will be made formally and officially as soon as Mr. de la Rue is appointed under the new Agreement.
The American Legation at Monrovia has further been instructed to explain the position of this Government so that there may be no uncertainty or misunderstanding as to the implications of the new Agreement so far as they affect this Government, and to assure the Liberian Government of the willingness of this Government to cooperate in effecting the substitution of the new Agreement for the Loan Agreement of 1912.
The Department takes pleasure in repeating to the Finance Corporation of America and to the National City Bank of New York, as Fiscal Agent, the other two parties to the Agreement, the assurances given the Liberian Government.
I am [etc.]