The Assistant Secretary of State (Harrison) to the Under Secretary of the Treasury (Winston)
My Dear Mr. Winston: I beg to acknowledge the receipt of your letter of December 27, 1926, regarding the debt of $26,000, with interest, owed by the Republic of Liberia to the United States.38
You will doubtless recall that Article I of the 1921 Loan Agreement between the United States and Liberia made provision for the payment of this debt.39 However, this Agreement while ratified by the Liberian Government, failed to receive ratification by the Congress of the United States and consequently never became effective.
The principle of recognition of this debt appears in the recent Loan Agreement between the Finance Corporation of America and the Government of the Republic of Liberia (National City Bank of New York, Fiscal Agent) and the Department understands that Article XI of that Agreement reads as follows:40
- “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, [Page 160]1912. For this purpose the Fiscal Agent shall use the first proceeds which it may receive from the sale of bonds as hereinbefore provided.
- 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.
- 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:
- 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.
- 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;
- Such amount as shall be certified by the Financial Adviser as being sufficient to enable the Government to pay its internal floating debt;
- 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.”
The Department further understands that this agreement provides for the issuance of bonds according to the following schedule:
- During the calendar year 1927, not to exceed the total aggregate amount of $1,500,000, face value of said Bonds;
- During the calendar year 1928, not to exceed the aggregate face amount of $500,000 of said Bonds;
- During the calendar year 1929, not to exceed the aggregate face amount of $500,000 of said Bonds.
It is believed that the proceeds of the sale of these Bonds will be more than sufficient to meet the charges listed in Article 11, paragraphs 1 to 4, and that in due course the Fiscal Agent will, on behalf of the Liberian Government pay the Liberian debt to the United States with interest.
The Department has informed the Fiscal Agent of your inquiry and has asked to be advised of the probable date upon which it will be able to take up the question of the payment of this debt.
Upon receipt of the Fiscal Agent’s reply the Department will communicate with you further.