882.51/1955a

The Secretary of State to President Coolidge

My Dear Mr. President: On September 1, 1926, an agreement was entered upon between the Liberian Government, the Financial Corporation of America, and the National City Bank of New York, Fiscal Agent, providing for a five million dollar loan to Liberia to adjust its outstanding indebtedness, including payment of the Liberian debt to the United States and the bonds issued under the 1912 loan agreement between the Liberian Government and certain American bankers. As under the 1912 agreement this loan is secured by a first lien on all Liberian export and import duties and on revenues received from head monies.

In the new agreement certain functions are assigned to this Government analogous to those assigned to it under the 1912 agreement and upon the request of the parties to the new agreement this Government on March 3, 1927, indicated its willingness to assume the responsibilities allotted to it by the terms of the present agreement so soon as its responsibilities under the old agreement should have been discharged with the payment of the 1912 bonds.

The Department is now advised by the attorneys for the Financial Corporation of America and for the National City Bank of New York, Fiscal Agent, that the National City Bank of New York acting as Fiscal Agent under the old loan agreement of 1912 duly called for redemption on July 1, 1927 all the outstanding bonds of the 1912 loan, and has paid and is paying off the same as and when presented. They ask whether this Department is now prepared to recognize the new loan agreement of September 1, 1926 as in full force and effect and to assume its new responsibilities.

These responsibilities are defined in the new agreement by the following articles:

(a) Appointment of Financial Adviser.

“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 [Page 153]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.”

(b) Customs and Internal Revenue Administration.

“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 denned 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 to 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, [Page 154]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.”

(c) Payment of the Liberian debt to the United States.

“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;”

(d) Appointment of officers to the Liberian Frontier Force.

“Article XII. 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 [Page 155]duty, and quarters, which shall be furnished by the Government. Such officers shall serve in the frontier service during the term of said Bonds. 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.”

(e) Arbitration in case of disputes.

“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.”

The Department was kept closely informed by the interested parties at all stages of the negotiations leading to the formulation of the new agreement of September 1, 1926, and, as I have indicated, it stated the willingness of this Government to assume the responsibilities allotted to it thereunder. With the payment of the 1912 bonds the moment for assuming those responsibilities appears to have come, and in this connection I would remind you that the Liberian debt to the United States of $35,610.46 was paid in full on July 6 by the Liberian Consul General who had been appointed Special Financial Representative of the Republic of Liberia for that occasion.32

For the moment the only duty incumbent upon this Government is the designation of a Financial Adviser by you to the President of Liberia. After consultation with the interested parties I am of the opinion that this position could best be filled by Mr. Sidney De la Rue, who has for the past five years occupied the analogous position of Receiver General of Customs and Financial Adviser under the old agreement. Mr. De la Rue was born in New Jersey in 1888 and has his permanent American residence at Philadelphia. From 1918 to 1920 he was an auditor in the military government in Santo Domingo and Porto Rico. In 1921 he went to Liberia as auditor, becoming Acting Receiver General of Customs in 1922, and in 1923 was formally appointed Receiver General of Customs and Financial Adviser of the Republic of Liberia. His administration of the Liberian Customs has been eminently successful and efficient. He enjoys the confidence of the Liberian Government, the National City Bank, and this Department, and I take pleasure in recommending [Page 156]to you that you designate him as Financial Adviser under Article VIII of the new agreement.

As regards the appointment of two officers to the Liberian Frontier Force under Article XII, Paragraph 3, I would state that at the present moment there are two American citizens serving as officers in the Liberian Frontier Force who were appointed under the terms of the 1912 agreement. As they hold contracts with the Liberian Government it does not seem necessary to take any action in respect of Article XII, Paragraph 3, during the life of those contracts.

As soon as I have learned your wishes with regard to the appointment of the Financial Adviser I shall communicate with the President of Liberia through the diplomatic channel.

I am [etc.]

Frank B. Kellogg
  1. See pp. 159 ff.