The Minister in Liberia (Walton) to the Secretary of State

No. 83

Sir: I have the honor to refer to my telegram No. 47, December 24, 8 a.m. and the Department’s telegram No. 33, December 31, 12 noon, relative to the unofficial, confidential information that the Government of Japan and private Dutch interests are separately negotiating with the Liberian Government for concessions to develop rich iron deposits near Cape Mount.

I have carefully noted the Department’s suggestion with respect to me expressing orally in my personal capacity, an opinion, if requested, predicated upon the observations referred to; and I wish to state no comment has been made owing to President Barclay’s absence from Monrovia. Negotiations are only in the preliminary stages, and the decision of the President will be the determining factor as to their consummation or non-consummation.

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While there appears to be little likelihood that serious consideration will be given any gesture made by the Japanese Government, the Secretary of the Treasury maintains a distinctly favorable attitude toward the proposal submitted by the manager of the Holland Mining Syndicate on behalf of the company he represents, whose stockholders are said to be principally of his (Dutch) nationality.

In January there arrived in Monrovia from Europe the mineralogist of the Holland Syndicate who discovered iron deposits while searching for diamond in Liberia. He was accompanied by a German mineralogist sent by the Dutch interests seeking the concession to verify the claims that the iron deposits are of such high quality as to warrant exploitation on a large scale. The work of assaying is now in progress.

The manager of the Holland Mining Syndicate recently conferred with the Firestone legal representative from the United States temporarily in Liberia, to ascertain what would be the attitude of the Firestone Company toward the mining of iron in the Republic by European capital, and if the building of a port and railroad would be regarded as running counter to the Loan Agreement.53

The legal representative was in no position to make a commitment to the manager of the Holland Mining Syndicate as to Firestone’s position, and promised to take up the matter in detail with his principals upon his return to Akron, Ohio.

One proposal provides that the Liberian Government reimburse the company for the construction of harbors and railroad out of the royalties received. The consensus is that such an arrangement conflicts with the temporary Loan Agreement which provides that two-thirds of all Government revenues above $450,000 shall be applied toward amortization. This tentative arrangement expires at the end of 1937; however, the terms in the Loan Agreement committing the Government to meet payments on its external debts through assessed revenues will continue in force.

Another proposal of the Dutch company, in the hope of circumventing the Loan Agreement, is that there be no money transactions conducted between the Liberian Government and the company during the life of the lease; that is to say, no royalties or pecuniary emoluments be received whatsoever by the lessor from the lessee, with the understanding that the lessor ultimately come in possession of the harbor and railroad. In the interim, the economic benefits to be derived by Liberia from the project would be in wages to native labor and customs revenues.

In conversation with the manager of the Holland Mining Syndicate, who is officiating in the role of a promoter, and well known for [Page 833] his frankness in his business dealings, I was informed that he considered it far better strategy to seek the good will and cooperation of the Firestone Company at this time than subsequently incur pronounced opposition and find the Loan Agreement an obstruction and a source of much trouble and large expense.

The Department will be advised accordingly of future developments in the matter and of the sentiments expressed relative thereto by the President of the Republic of Liberia.

Respectfully yours,

Lester A. Walton
  1. Agreement between Liberia and the Finance Corporation of America, signed March 16, 1935; Foreign Relations, 1935, vol. i, p. 925.