Agreement Between the Government of Liberia and the Finance Corporation of America, Signed March 16, 1935
Agreement, dated, for convenience, as of the first day of January, 1935, by and between the Government of the Republic of Liberia, of the first part, (hereinafter referred to as the Government), Finance Corporation of America, a corporation organized and existing under and by virtue of the laws of the State of Delaware, United States of America, of the second part, (hereinafter referred to as the Corporation), [Page 926] and The National City Bank of New York, a national banking association organized and existing under the laws of the United States of America, of the third part (hereinafter referred to as the Fiscal Agent);
Whereas, the Government and the Corporation entered into a Loan Agreement as of the first day of September, 1926, in which the Fiscal Agent was party of the third part, which Agreement thereafter became effective upon ratification by the Government, and is in effect; and
Whereas, the Government represents to the Corporation that it finds itself unable to fulfill certain of the obligations undertaken by it by virtue of the terms and conditions of said Loan Agreement; and
Whereas, the Government is desirous of modifying certain of the obligations undertaken by it under and by virtue of the terms of said Loan Agreement; and
Whereas, the Government represents to the Corporation that it has decided to undertake a Three-Year Plan for the accomplishment of certain important improvements in sanitation, public instruction, hinterland administration, judicial system, interior road extension and other matters of social and economic welfare; and to that end will retain, in addition to the officers appointed under the Loan Agreement, the services of six competent foreign specialists, of whom the majority, including the Chief Administrative Specialist, are to be American citizens; and
Whereas, the Corporation fully sympathizes with these purposes and is desirous of cooperating with the Government for their attainment:
Now, Therefore, this Agreement is executed for the purpose of modifying and supplementing said Loan Agreement in the following respects only To Wit:
Article I of the said Loan Agreement is hereby amended so as to provide for a reduction of the basic interest rate from seven per cent (7%) per annum, to five per cent (5%) per annum. Effective January 1, 1935, and continuing until December 31, 1942, the “External Forty-Year Sinking Fund Seven Per Cent. Gold Bonds” shall bear interest at the rate of five per cent (5%) per annum, payable semi-annually on January 1st and July 1st in each year.
- It is understood and agreed that while the Government is obligated for the payment of interest at said five per cent (5%) per annum on all outstanding Bonds issued under said Loan Agreement, [Page 927] the Government shall be relieved from the payment of said interest for any calendar year when the total revenues and receipts of the Government shall be less than $450,000.00, (which amount is required for the operating expenses of the Government, certain public works and salaries and allowances of the three fiscal officials, the military adviser, and the six foreign specialists), and in this event, the said interest shall be waived and condoned.
- For any calendar year when the total revenues and receipts for the Government shall exceed $450,000.00, all of such excess to and including such an amount as will equal five per cent (5%) interest for one year on all outstanding Bonds issued under the said Loan Agreement of 1926, shall be set apart by the Government and paid over to the Corporation for application against and/or liquidation of the said five per cent (5%) interest for such calendar year. In the event such excess over and above $450,000.00 shall not be sufficient to liquidate fully such five per cent (5%) interest for such calendar year, then the amount constituting the difference between such excess and the five per cent (5%) interest for such calendar year shall be waived and condoned.
- In the event the total revenues and receipts of the Government for any calendar year shall exceed $450,000.00, plus the amount necessary to liquidate fully such five per cent (5%) interest for such calendar year, and until such time as the amortization requirements of the said Loan Agreement of 1926 are no longer in arrears and are being currently complied with, at least thirty-three and one-third per cent (33⅓%) of such excess shall be applied to amortization of the Bonds issued and outstanding under the terms of the Loan Agreement of 1926, and/or under the terms of this Supplementary Agreement, and at least thirty-three and one-third per cent (33⅓%) of such excess shall be applied towards the liquidation of the principal only of the Government’s floating debt existing on December 31, 1934, which floating debt on that date was in an amount of approximately $650,000.00, and in no event to be applied against any floating indebtedness created after December 31, 1934.
- In the event such floating debt shall have been liquidated in full prior to the time that the amortization requirements of the Loan Agreement of 1926 are no longer in arrears and are being currently complied with, then at least fifty per cent (50%) of the excess of the total revenues and receipts of the Government for each calendar year over and above $450,000.00, plus the amount necessary to liquidate fully such five per cent (5%) interest for such calendar year shall be applied to amortization of the Bonds issued and outstanding under the terms of the Loan Agreement of 1926 and/or under the terms of this Supplementary Agreement.
- The Government shall forthwith, after the date at which this Agreement becomes effective, execute and deliver to the Corporation additional bonds provided for under the said Loan Agreement of 1926 in the principal amount of three hundred and thirty-five thousand U. S. dollars ($335,000.00) in liquidation of past due interest coupons as of January 1st, 1935, inclusive, which coupons shall upon delivery of said bonds be surrendered to the Fiscal Agent for cancellation. Bonds issued in payment of overdue interest as herein provided shall be redeemable at par at any interest date upon notice given in the manner provided in Article V of the Loan Agreement, and the said bonds shall be stamped with a notice to that effect, and shall bear interest coupons beginning with coupons to mature as of July 1st, 1935.
Under the provisions of Article IX of the Loan Agreement for the readjustment of the salaries of the fiscal officers, in the event of a substantial change in money values, and, in recognition of the existing financial emergency, to reduce the cost to the Government of the operation of the fiscal service required by the Loan Agreement, the fourth paragraph of Article IX of the Loan Agreement is hereby amended to read as follows:
“1. A Financial Adviser, who shall be designated and appointed as hereinbefore stated, at a salary of $9,000.00 per annum U. S. Currency.
“2. An official who shall be designated Supervisor of Revenues, and shall perform the duties devolving under the Loan Agreement upon the incumbents of the offices of Supervisor of Customs and Supervisor of Internal Revenue, (which are abolished), at a salary of $5,000.00 per annum, U. S. Currency.
“3. A bonded Auditor appointed by Agreement between the President of the Republic of Liberia and the Fiscal Agent, at a salary of $5,000.00 per annum U. S. Currency.
“4. A bonded Assistant Auditor, who shall be appointed by the President of the Republic of Liberia.
“The salaries of the officers named in sub-paragraphs 1, 2, and 3 hereof shall be paid monthly in pounds sterling at the selling rate of exchange for United States dollars prevailing at the respective monthly due dates of payment.”
The first sentence of Article VIII is hereby amended to read as follows:
“As an additional guarantee of the prompt payment of the Loan and to insure the efficient organization and functioning of the Liberian Fiscal Service and the administration thereof, the Government covenants and agrees 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 said office.”
Article IX is hereby amended by the addition of the following paragraph:
“The number of the employees of the Financial Adviser, the Fiscal Officers and the Fiscal Service shall be sufficient for the efficient collection, audit, disbursement and administration of the revenues of the Government. The personnel shall be appointed by the President of Liberia upon the nomination by the Financial Adviser of persons qualified to fill vacancies. The Financial Adviser shall select his nominees from the Civil Service lists of qualified persons, if such be available; otherwise his nominations may be made at large, upon such tests of fitness as he may deem advisable. Such personnel shall serve under the jurisdiction of the Financial Adviser, who shall bear in mind the desire of the Government for the proper training of Liberian citizens for positions of trust and responsibility. The duties of such personnel, insofar as they may not have been prescribed by law, shall be prescribed by such regulations in pursuance thereof as may be issued from time to time by the Financial Adviser. The property and supplies for the use of such officers and employees shall be under the jurisdiction of the Financial Adviser. The number of employees of the Financial Adviser, the Fiscal Officers, and the Fiscal Service shall not exceed the average number of employees during the year 1930 or the average number of employees for the three-year period next preceding, whichever be greater, except by agreement between the President of Liberia and the Financial Adviser.”
In Article IX, after the sentence:
“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”,
the subsequent sentence is hereby amended to read as follows:
“Such officers in the performance of their duties shall be responsible to the Financial Adviser; provided, nevertheless, that the Auditor and Assistant Auditor shall not be subject to control in making decisions upon matters within their jurisdiction.”
Article XII, paragraph numbered 3, is hereby amended to read as follows:
“For the further security of the revenues and receipts, the Government shall maintain a 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 Customs Service. The Frontier Force shall be administered by the War Department. The strength of the Frontier Force shall be fixed by agreement [Page 930] between the President of Liberia and the Financial Adviser, and it shall not be increased or decreased in number without the agreement of the Financial Adviser, except temporarily in case of emergency declared to be such by the Government. A duly qualified and experienced officer of American nationality shall be employed for the Government by the President of Liberia who shall report directly to the President of Liberia and who shall be senior in rank to the commanding officer of said Frontier Force. The salary of said officer shall not exceed the sum of (U. S.) $5,000.00 per annum; provided, however, that said sum may be at any time increased or diminished by agreement between the Government and the Fiscal Agent. Such salary shall include all allowances except medical care and attendance, travel on duty and quarters suitable for his rank, or commutation therefor on the basis provided for officers in the United States Army drawing pay at the same rate, which shall be furnished by the Government. Among his duties shall be the preparation and execution of a plan of organization 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 qualifications 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.”
Article XII, paragraph numbered 6, item designated (c) is hereby amended to read:
“(c) Incorrectness or irregularity of the account to be paid.”
Article XII, paragraph numbered 6, is hereby amended by the addition after the item designated (d) of the following:
“The decisions of the Auditor in relation to the approval or disapproval of accounts shall be final and conclusive, subject only to an appeal by the Government or the creditor to the Financial Adviser, which appeal shall be taken within ten days after notice of the ruling. The decisions of the Financial Adviser upon such appeals shall be final and conclusive upon the Executive but not upon the Judicial branch of the Government.”
Article XII, paragraph numbered 8, third sentence, is hereby amended to read:
“The Financial Adviser may only refuse to approve the Budget when and if the disbursements which should be included therein, as provided in this Agreement, or by obligation of law, have not been properly included, or when and if the Budget submitted by the Secretary of the Treasury exceeds the estimates of the revenues as prepared by the Supervisor of Revenues, in conjunction with the Comptroller [Page 931] of the Treasury, under the supervision of the Financial Adviser.”
Article XII, paragraph numbered 8, is hereby amended by the addition thereto, immediately before the last sentence thereof, of the following sentence:
“No special appropriation shall be passed by the Legislature except in accordance with a supplement to the annual budget prepared and approved as herein provided with respect to such annual budget.”
During the term of this Supplementary Agreement, as provided by Section XVII hereof, the first sentence of Article XIII and paragraphs one to six, inclusive, thereof are hereby amended to read as follows:
“The first $450,000 of the annual revenues and receipts of the Government shall be applied by the Government in the following order:
- To the payment of the salaries, allowances and expenses of the Financial Adviser, the Auditor, the Supervisor of Revenues, the Military Adviser and the six foreign specialists; and the salaries of their staffs.
- To all other operating expenses of the Government.
All revenues and receipts of the Government in excess of $450,000 annually shall be applied as provided in Section II hereof.”
Article XVIII, paragraph designated (b), is hereby amended to read:
“No unexpended credit to any account provided for in the budget may be transferred to any other account of the budget or to any new account except in accordance with a supplement to the annual budget prepared and approved as herein provided with respect to such annual budget. Any credit to any account remaining unexpended at the end of any fiscal year shall be released and taken into account in the preparation of the budget for the next ensuing year.”
It is understood and agreed that in any fiscal year, after the payment each month of the cost and expenses of the collection, application, audit and administration of the revenues and receipts, as provided in Section XII hereof, any balance of unassigned revenues may be applied to the ordinary expenditures of the Government.
In any calendar year when the total revenues and receipts of the Government shall be less than $300,000.00 for the first six months [Page 932] thereof, the interest on all the outstanding Bonds issued under the Loan Agreement of 1926, which is payable on July first of such year, need not be paid on that date, and in lieu thereof, the total interest on such Bonds for such year shall be due and payable on January first of the next succeeding year.
The word “dollar” or “dollars”, wherever used herein, unless otherwise specifically indicated, shall mean Liberian dollars on the basis that Four and Eighty One-Hundredths ($4.80) Liberian dollars is equivalent to One Pound (£1:0:0) English Sterling.
This Supplementary Agreement shall be and remain in force until the thirty-first day of December, 1937, upon the expiration of which period the provisions of the Loan Agreement of 1926 shall, ipso facto, again become operative as originally adopted, except as regards the amendments thereto made by Sections IV to XI, inclusive, and Section XIII, hereof, which shall continue in effect; provided, however, that Section I hereof shall continue in effect until the 31st day of December, 1942.
The National City Bank of New York has executed this Supplemental Agreement as Fiscal Agent at the request of the other parties hereto, upon the express understanding and agreement that no new duties or responsibilities are incurred by it hereunder and that it shall continue entitled to all the exemptions, assurances and indemnities provided for in the Loan Agreement of 1926; and upon the further understanding that said Supplementary Agreement shall be and become effective only as and when all the Bonds outstanding under the Loan Agreement shall have been stamped by the Fiscal Agent with an appropriate legend reciting the execution and delivery of this supplemental and amendatory agreement.
This Supplementary Agreement shall come into force and effect when duly approved by the Legislature of the Republic of Liberia after execution on behalf of the Government by the officer or officers thereunto duly authorized; provided, that the Legislature of Liberia shall have previously repealed all Legislative Acts and Executive Orders in contravention of the Loan Agreement of 1926, including the following measures heretofore enacted by it, namely: [Page 933]
- The Act passed over the veto of the President constituting Chapter Seven of the Public Acts of the Thirty Sixth Legislature at the fourth session thereof entitled “An Act to Relieve the Strain Upon the Revenue of this Republic”;
- The Joint Resolution approved December 23, 1932, entitled “Joint Resolution Authorizing the President of Liberia to Suspend Payment of Interest and Amortization on the 7% Gold Loan of 1926, and for other purposes”;
- The Act approved January 6, 1933, entitled “An Act Providing for the Funding of the National Floating Debt”:
- The Act approved January 31, 1933, entitled “An Act Relating to the Officials of the Loan Agreement; and
- The Joint Resolution approved January 12, 1934, entitled “A Joint Resolution Amendatory to a Joint Resolution Authorizing the President of Liberia to Suspend Payment of Interest and Amortization on the 7% Gold Loan of 1926, and for other purposes, being Chapter II of the Acts of the Legislature of Liberia, approved December 23, A. D. 1932.”
A. J. Sawyer
The Government of the Republic of
By Gabriel L. Dennis
Secretary of the Treasury
F. C. Fisher
Finance Corporation of
By Harvey S. Firestone, Jr.
K. J. Adorkor
National City Bank of New
By John Loomis
This Agreement made and entered into this 16th day of March, A.D. 1935, by and between Gabriel L. Dennis, Secretary of the Treasury, acting for and on behalf of the Government of the Republic of Liberia, of the first part, and Firestone Plantations Company, a corporation organized and existing under and by virtue of the laws of the State of Delaware, United States of America, engaged in business in the Republic of Liberia, of the second part, hereinafter known and referred to as the Company,
- First. The Company undertakes and agrees that it will forthwith proceed to cause the organization under the laws of a state of the United States of America of a corporation, to be called Bank of Monrovia, authorized by its charter or articles of incorporation to engage in the business of banking in the Republic of Liberia and other foreign countries.
- Second. That the Company will cause the said Bank of Monrovia to apply for authorization to engage in the business of banking under the laws of the Republic of Liberia and to establish its principal place of business in the said Republic in the City of Monrovia.
- Third. Upon the establishment in Monrovia of the said Bank of Monrovia the Government, at any time subsequent to the 30th day of [Page 934] June, 1935, with the consent of the National City Bank, of New York, first had, will on the request of the Company designate said Bank of Monrovia its depositary for the purposes of the applicable provisions of the Loan Agreement of 1926 between the Government and Finance Corporation of America, and to that end will enter into an Agreement with the said Bank in accordance with the terms of the pro forma Agreement hereunto attached, marked Annex A and made a part hereof.
- Fourth. As security for the performance of its obligations to the Government, the Company will cause the Bank of Monrovia, simultaneously with the execution of the Depositary Agreement, to place in escrow in a bank in New York or London, bearer bonds of the Liberian Government, issued pursuant to the Loan Agreement of 1926, of the par value of Three Hundred Thousand dollars ($300,000.00) pursuant to an escrow agreement in terms as set forth in the form hereunto appended, marked Annex B, and made a part hereof.
In Witness Whereof, the parties hereunto have caused this agreement to be written and executed in Monrovia, Liberia, the day and year first above set forth.
A. J. Sawyer
The Government of the Republic of
By Gabriel L. Dennis
Secretary of the Treasury
|F. C. Fisher||
Firestone Plantations Company
By Harvey S. Firestone, Jr.
|Approved and Accepted:
President of Liberia