776.11/1–2653: Telegram

The Ambassador in Liberia (Dudley) to the Department of State


344. Department’s instruction No. 18, January 16.1

Department’s views on Steadman report, tax problems and the possible adverse effect of hasty action on foreign investors agreements discussed today with Tubman in lengthy informal cordial talk. Tubman expressed appreciation for Department’s concern and aid in problems his government.

Stated he understands Department’s motive is solely to assist Liberians and he will continue to welcome such advice and assistance.

His message to Legislature designed as agenda for discussion and not positive recommendation. Following points made by Tubman during discussion:

There will be no excess profits tax.
No action affecting foreign investors will be taken ex parte.
There will be no attempts made to influence changes in any present agreements except Firestone’s. The wording of this agreement, according to Tubman, is regarded by Liberians as archaic and not in keeping with its sovereignty. He states the 1950 amendment should have been a new agreement thereby changing the onerous phraseology in the old [Page 506] 1935 agreement. This [is] the matter he will discuss with Larabee when he arrives.2
He believes the income tax is the fairest method of taxation for all future investors and fully recognizes the reasoning of foreign investors in insisting on an agreed upon ceiling beyond which any tax of general application will not apply.

Tubman assures that he has always recognized the sanctity of agreements and has never taken unilateral action. He desires to point out, however, that certain agreements have been made with Liberia where the other side has all the technical information and have been later discovered to be unconscionable. He cited the five cent iron ore agreement.3 This is entirely satisfactory. The language in the Firestone agreement was forced upon Liberia as he put it while she had her back to the wall. After making these points he dwelt upon the good to the country foreign investors had brought despite certain inequities.

Tubman on the budget has decided not to request a fiscal expert from Washington at this time. In my opinion he will give the job to Margey, former Firestone bank manager now employed with the Treasury Department here.4

On the whole I consider Tubman’s attitude very good. He appears to be thinking seriously and definitely appreciates Department’s continuing advice.

His final statement was to the effect that he knew Steadman had exceeded his terms of reference in his assignment and that he was not accepting all of his tax proposals but was very grateful for the entire job done.

  1. Not printed; it instructed the Embassy to review with Tubman the Department’s reaction, therein set forth, to Steadman’s report and to the Liberian President’s annual message, and to attempt to dissuade him from implementing the proposals until they could at least be reviewed by a permanent fiscal expert. (776.11/1–1653)
  2. Larabee had been summoned to Liberia by Tubman to discuss the proposed increment in the tax rate Firestone was obliged to pay. However, he indicated that he could not arrive prior to the desired deadline of Nov. 15, 1952 because of health problems. (876.112/12–352)
  3. The Liberia Mining Company had secured an 80-year concession in August 1945 which called for a fixed royalty of 5 cents per ton of ore removed from an area of some 3 million acres, plus a variable sum dependent on the New York price of Bessemer-grade pig iron. See Liberia: America’s African Friend by R. Earle Anderson (Chapel Hill, 1952), p. 183.
  4. Louis A. Margey was the former Vice President and General Manager of the Firestone-owned Bank of Monrovia between 1943 and 1949.