The Acting Secretary of State to the Chargé in Liberia (Wharton)
Sir: The Department has received from the hands of Mr. Sidney De la Rue, Receiver General of Customs of the Republic of Liberia, a note dated December 9 from the Liberian Secretary of State,5 advising the Department of the approval by the Legislature of Liberia of the Loan Agreement between the Government of Liberia and the Finance Corporation of America, transmitting a certified copy thereof, and requesting that this Government undertake the obligations allotted to it by the Agreement.
You are instructed to address the following note to the Secretary of State of Liberia and to present it in person:
“I have the honor to inform you that I am instructed by my Government to acknowledge to you the receipt of your note of December 9 addressed to the Secretary of State of the United States, advising him of the approval by the Legislature of Liberia of the Loan Agreement between the Republic of Liberia and the Finance Corporation of America, and transmitting a certified copy thereof.
“You request, on behalf of your Government, that my Government undertake certain obligations as defined in the instrument under reference.[Page 139]
“It is the understanding of my 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, under which my Government performs certain functions analogous to those contemplated in the present Agreement. My Government desires me to state that upon the extinguishment of the 1912 Loan it will be glad to assume the responsibilities allotted to it by the terms of the Loan Agreement between the Government of Liberia and the Finance Corporation of America.”
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 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.
You may supplement your note to the Liberian Secretary of State with oral explanatory observations on the basis of the foregoing so that there may be no uncertainty or misunderstanding as to the implications of the new Agreement so far as they affect this Government. [Page 140] You should, at the same time, assure him of the willingness of this Government in effecting the substitution of the new Agreement for the Loan Agreement of 1912.
I am [etc.]