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71st Congress, 3d Session . . . . . . . . . . House Document No. 825, Vol. III

 
                                        LIBERIA                                  411

Diplomatic No. 35 Monrovia, November 13, 1930.

[Received December 10.]

Sir: I have the honor to refer to the Legation's telegram No. 151 of October 29, 5 p. m.(77) reporting that arrangements had been concluded for the establishment of a bank by the United States Trading Company, a subsidiary of the Firestone Plantations Company. In compliance with the President's request that the good offices of the Fiscal Agents be used in securing or establishing a bank at Monrovia to replace the Bank of British West Africa, which had announced it would cease all operations in Liberia on October 31, 1930, a representative of the National City Bank of New York, Mr. Robert B. Gwynn, arrived in Monrovia in early October to make a survey report on the banking situation here. Full details of his report, was submitted by cable on October 20th and the negotiations up to the establishment of the new bank have not been cabled to the Department, as it was understood that information in regard thereto was being supplied by the National City Bank and the Firestone Company in the United States.

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77. Not printed.

COMMENT Page 412 left out as it is the Report mentioned on the next page

                                                                             413
Partly on the basis of this report, which seemed to promise a small profit but no great opportunity for future expansion under present conditions, it is understood that the National City Bank declined to establish a branch in Liberia. It is believed that this report was not determining factor in this decision of the National City Bank but merely confirmed its disinclination to take this step.

Negotiations were then inaugurated on behalf of the Firestone interests which felt the need for the establishment of an institution, which could satisfactorily handle Government moneys and provide for a means of transferring interest and amortization funds under the Loan Agreement as well as certain commercial facilities. Their action in this matter would also appear to have been influenced by the fear that an irresponsible Government organization or national bank might be established. These negotiations culminated in a depositary agreement concluded between the Government of Liberia and the United States Trading Company, a subsidiary of the Firestone Company of Liberia, in accord with Article XVIII of the Loan Agreement of 1926.

It has been thought that in addition to providing adequate protection to Government revenues and to holders of bonds issued under the Loan Agreement by establishing an adequate means for transportation of interest and amortization payment, the agreement further insures a more satisfactory income and an augmented profit to the task in handling of government funds by an increase from one to one half percent. commission. No branches will be established to take the place of the former suboffice of the British Bank at Harper and agents at Robertsport, Buchanan, River Cess, and Greenville, although arrangements have already been concluded with the Oost Africanishe Company, a Dutch Trading Company to receive and forward Government revenues from these ports of entry.

In consideration for the services offered by the United States Trading Company--Banking Department, and in the hope that its operations will be extended in the future the President has agreed that U.S. Currency will be created legal currency for the Republic of Liberia and that the depositary of Government funds shall have the to import and export currency according to its needs. Bills embodying these changes will, it is understood, be submitted to the session of the Legislature

The President in his annual message this Year further stressed the necessity for securing the services of an expert on banking procedure to make a study of existing laws toward the preparation of a commercial code, adequate for modern business requirements.

Two experienced men from the National City Bank of New York have been loaned to the United States Trading Company for its banking department, and the bank as constituted opened its doors on

COMMENT: Notice the players in this deal. Also there is to be no political involvement as stated in these papers on the banking aspect. I see loads of political involvement, much the same that goes on in government deals today.