882.51/1941½

Mr. Harvey S. Firestone, Jr., to Mr. Harvey S. Firestone9

Dear Sir: I hand you herewith copy of executed Loan Agreement between the Government of the Republic of Liberia and Finance Corporation of America, with the National City Bank of New York as Fiscal Agent.

The history of the negotiations of this Loan Agreement dates back to a clause incorporated in one of the early drafts of Planting Agreement No. Two, signed by you on January 12, 1925,10 and taken immediately thereafter to Liberia by Mr. W. D. Hines. This clause reads as follows: [Page 145]

“It is further agreed that the Lessee shall use his best efforts to secure either from the Government of the United States or from some other person or persons, a loan of not less than $2,000,000.00, or more than $5,000,000.00, upon all the terms and conditions of the loan of $5,000,000.00 which was contemplated in the proposed Agreement between the Government of Liberia and the Government of the United States and was approved by the Government of Liberia on or about the … day of …, 19 . … Such loan, whether made by the Government of the United States or by others, to be under the terms and conditions last mentioned, and the Government of Liberia agrees to accept such loan on such terms if it can be secured within five years from this date.”

As a result of further negotiation, the clause regarding the Loan was changed and appears as follows in the Planting Agreement Number Two, as finally executed:

“It is further agreed that the Lessee shall use its [his] best efforts to secure either from the Government of the United States, or, with the approval of the Secretary of State of the United States, from some other person or persons, a loan of not less than $5,000,000 to establish a credit for public development in the Republic of Liberia to the end that the credit may be a revolving credit, set up through reserves so as to meet the future requirement of funds for such development. Such loan shall be upon the terms and conditions to be negotiated by a Commission to be appointed by the President of Liberia, who shall proceed promptly to the United States for such purpose. It is understood that such terms and conditions as agreed upon shall be subject to the approval of the Legislature of the Republic of Liberia.”

Instead of sending a Commission, President King of Liberia sent Secretary of State Edwin Barclay to the United States to negotiate the terms of the Loan Agreement in addition to completing and signing the Planting Agreement. Secretary Barclay arrived in the United States on August 11 [12], 1925; Mr. de la Rue arrived about August 20, 1925.

To facilitate the negotiations, a corporation of nominal capital with the name “Finance Corporation of America” was incorporated, (September 11, 1925) under the laws of the State of Delaware.

During the latter part of August and the first half of September, successive drafts of a Loan Agreement were prepared by Colonel Ralph Crews of Shearman and Sterling, the original draft being based on the proposed 1921 United States Government Loan to Liberia which failed of ratification by the American Congress. During this time Colonel Crews was assisted by Mr. Harvey S. Firestone, Jr., and Mr. de la Rue. Colonel Crews talked with Secretary Barclay from time to time and secured his thoughts on various points. Subsequently a Loan Agreement which was satisfactory both to Secretary Barclay and ourselves was completed, printed and initialed [Page 146]as satisfactory by Secretary of State Barclay on September 17, 1925, subject to the approval and sanction of the Liberian Legislature.11

This Loan Agreement was accepted by the Liberian Legislature on January 28th and February 16, 1926, subject to many modifications which were not acceptable to us and we so advised them. For the next few months no particular attempt was made to straighten out the terms of the Loan Agreement, as everyone felt that there would be no use further negotiating the Loan Agreement until the Planting Agreement had been satisfactorily straightened out; without a satisfactory Planting Agreement, a Loan Agreement was of no interest.

Mr. Hines left for Liberia the middle of March 1926, and Mr. de la Rue arrived here in April, 1926. No tangible conclusion of the Loan Agreement was attempted while Mr. de la Rue was in the United States, as we felt it would be better to await until my arrival in Liberia in September, 1926.

On October 20, 1926, the Liberian Government received from Shearman and Sterling, over Mr. Guy Cary’s signature, a letter dated September 17, 1926,12 transmitting a new, reprinted Loan Agreement, executed by Finance Corporation of America,13 which contained some of the provisions that the Liberian Legislature had included in its Resolutions of January 28 and February 16, 1926, and also contained provisions that Finance Corporation of America desired, but some of which were objectionable to the Liberian Government. Negotiations were completed satisfactorily and the Liberian Legislature ratified a revised Loan Agreement agreeable to all parties on December 7, 1926.14

On January 25, 1927 Mr. de la Rue arrived in the United States bringing with him the final completed Loan Agreement properly executed by the Liberian Government. He also brought with him proper proofs of the correct legal procedure in connection with the ratification and execution of the Loan Agreement by the Republic of Liberia, as well as the opinion of Liberian counsel and all other data required by Shearman and Sterling enabling them, as counsel for Finance Corporation of America and the Fiscal Agent, to formally approve the terms of the Agreement, the procedure of its execution and the bond issue itself.

On March 3, 1927, the United States Department of State wrote Finance Corporation of America agreeing to assume the obligations imposed upon the United States Government by the terms of the Loan Agreement.

[Page 147]

Mr. de la Rue left the United States on May 4, 1927, having made all necessary arrangements for the prompt and proper commencement of the new Loan Agreement on July 1, 1927, at which time the 1912 Loan will be refunded.

In addition to handling all of the details to carry out the transition from the old Loan Agreement to the new Loan Agreement on July 1, 1927, Mr. de la Rue engaged all the additional personnel necessary under the new Loan Agreement, namely:

  • Ralph H. Birkmire for Bonded Auditor,
  • Charles Colegrove for Assistant Bonded Auditor, and
  • Cathey M. Berry for Supervisor of Internal Revenue.

C. T. Bussell, who has been Mr. de la Rue’s assistant under the old Loan will take the position of Supervisor of Customs under the new Loan Agreement.

Respectfully submitted,

Harvey S. Firestone, Jr.
  1. Circumstances under which this copy was received by the Department not known.
  2. Foreign Relations, 1925, vol. ii, p. 394.
  3. Foreign Relations, 1925, vol. ii, p. 463.
  4. Not printed; see letter of Sept. 25, 1926, from Guy Cary to the Department, Foreign Relations, 1926, vol. ii, p. 546.
  5. Ibid., p. 548.
  6. Ibid., p. 574.