Papers Relating to the Foreign Relations of the United States, 1927, Volume III

882.51/1942

The Chargé in Liberia (Wharton) to the Secretary of State

Monrovia, Liberia, May 5, 1927.
[Received May 28.]

No. 463
Diplomatic

Sir: I have the honor to report that I have complied with the Department’s instructions No. 334, of March 4, 1927, relative to the assumption by my Government of the responsibilities allotted to it by the terms of the Loan Agreement between the Government of Liberia and the Finance Corporation of America.

On April 22, 1927, in presenting my note dated April 19, 1927, to the Secretary of State of Liberia, I supplemented it with the oral explanatory observations set forth in the Department’s No. 334, of March 4, 1927. A copy of the Liberian Government’s reply thereto is herewith enclosed.

With reference to the Liberian Government’s reply of April 25, 1927, I took occasion a few days later, April 28, 1927, in an informal conversation with the Secretary to enquire the exact meaning of the words “reasonably object.” The Secretary replied that his Government at no time had ever repudiated its debts and always had paid its debts; further that his Government in its agreement with the Finance Corporation had safeguarded the rights of the bondholders of the 1912 Loan.

I replied that while I had assured him of the willingness of my Government in effecting the substitution of the new Agreement, it was absolutely necessary to direct his attention to the rights of the holders of the bonds of the 1912 Loan to avoid any misunderstanding as to the implications of the new Agreement so far as they affected my Government; further that nothing was said with regard to the Liberian Government’s not paying its debts and I wish he would explain to me just what he meant.

The Secretary confidentially said he did not mean my observations had imputed to his Government a disregard of the rights of the bondholders, nor did he mean that the 1912 bonds would not be refunded, but there was a tendency on the part of certain people, … to raise unnecessary questions whenever the matter of refunding the 1912 Loan came up. He further said that in the past such questions had been raised without any justification whatsoever and therefore he had inserted the words “reasonably object.”

I have [etc.]

Clifton R. Wharton

[Enclosure]

The Liberian Secretary of State (Barclay) to the American Chargé (Wharton)

Monrovia, Liberia, April 25, 1927.

379/D

Sir: I have the honour to acknowledge receipt of your despatch of the 19th of April 1927, with reference to the request of this Government made to the Government of the United States that they undertake certain obligations specified in the Loan Agreement between the Republic of Liberia and the Finance Corporation of America, and to say that I have taken careful note of the verbal explanatory observations made by you while presenting the note above referred to.

Whilst expressing my Government’s appreciation of the prompt manner in which the Government of the United States has met its request, I beg leave to say with reference to the conditions attached to the United States Government’s acceptance of the obligations laid upon it by the said Loan Agreement, that in concluding that agreement with the Finance Corporation of America for a credit of Five Million Dollars the Government of Liberia was fully conscious of its obligations under the 1912 loan agreement; and that in view of those obligations, provisions have been made for the retirement of the 1912 loan before the proceeds of the new loan can be applied to any other purpose, as will more fully appear by reference to the terms of the Loan Agreement of September 1, 1926.

I desire to emphasize that the Government of Liberia will see to it that no action be taken under the new agreement to which the bondholders of the 1912 loan can reasonably object.

I have [etc.]

Edwin Barclay