The Acting Secretary of State to the Commission to Negotiate Peace
1722. Your 1639 April 17.16
The authority for entering into an arrangement with Liberia is based upon the Liberty Bond Acts under which the Secretary of [Page 474] the Treasury with the approval of the President was authorized to establish credits with the United States for any foreign governments engaged in war with the enemies of the United States, and to enter into such arrangements with any such foreign governments as may be necessary or desirable for establishing such credits, for certain specified purposes. The credit of $5,000,000 for Liberia was established last September after specific approval by the President on August 24.17 The purposes then outlined to the President are the same purposes as the United States now has in view in connection with the loan to Liberia, and any discussion of them is presumably unnecessary. The Secretary of the Treasury, however, has the responsibility for entering into the arrangements under which loans are made to associated belligerent governments and it is necessary that the arrangement with Liberia for the establishment of a loan and for the uses to be made of the advances thereunder should receive his approval.
The draft treaty in your 1639 has accordingly been submitted to the Treasury and after discussion with the Treasury officials the following suggestions are submitted.
- It seems to us to enter into a formal treaty with Liberia such as that outlined in your 1639 would be directly contrary to our conversations here with the British and French Embassies. They charged us with an intention to establish a protectorate over Liberia which was emphatically denied. In fact on January 16 a memorandum on this subject was sent to the British Embassy18 which among other things said “It should be emphasized that the new proposal of this government is in no way to be regarded as indicating that the United States has the slightest desire or intention of establishing a protectorate over Liberia, but rather purposes to maintain its historic position as Liberia’s next friend”.
- In view of the fact that your proposed treaty would establish American control by American officers in practically every important department of the Liberian Government—a control which is more extensive and intimate than the control of the United States in Caribbean countries—it is believed by us doubtful if the Senate would approve such a treaty for a country in Africa.
- In view of the powers of the Secretary of the Treasury under the loan Acts it is believed unnecessary to enter into a formal treaty in order to carry out the reforms which the United States had in mind in regard to Liberia. Working on this theory last autumn the Department presented to the British and French Embassies a memorandum dated November 19, 1918, a copy of which Mr. Stabler has which sets forth very roughly the purposes of the United States [Page 475] in making the loan to Liberia. It is understood from your 1512 April 719 that the British and French Governments are not adverse to this plan.
- The State and Treasury Departments concur in the view that it would be preferable to enter into an arrangement with Liberia without a formal treaty under something like the following procedure: Liberia to apply formally for a loan setting forth the purposes to which the loan is to be applied, and assurance that certain legislation would be passed and retained in force during the life of the loan providing for certain reforms, for the appointment of a general receiver of all revenues and a financial adviser, both to be acceptable to the United States, for effectively safeguarding equal commercial opportunities of all foreign countries and so on and ending with the hope that Liberia may count on the cooperation of the United States in giving effect to the contemplated reforms and the other measures of the program. Then the United States may reply in proper form, making if it is desirable its acceptance to the Liberian proposal conditional upon sufficient safeguards being provided by Liberia for the repayment of the loan, and making the continuance of the advances by the United States under the arrangement contingent upon faithful execution of the arrangement by Liberia.
The Department is most earnestly of the opinion for the reasons set forth that concluding a treaty with Liberia in the form proposed in your 1639 would be inadvisable at the present time if indeed it would be possible to conclude and ratify such a treaty in the circumstances, in time to meet the present critical situation.