the incident could be closed by the dismissal of the officer it would be desirable that the Liberian Government take that action. It has also been suggested that the dismissal be made provisional pending ultimate exchange of views between the German and American Governments after full reports have been received.

Use good offices with the German Government and ask that the demand on Liberia be modified so that the Liberian Constitution be not violated and point out that Liberia's willingness to dismiss the officer and apologize even before report of investigation is received would seem all that could be equitably expected. If the German Government refuses to waive its demand upon Liberia suggest that the Liberian Government give a guaranty that the dismissed officer be not again employed in the Liberian Frontier Force.

Make it clear to the German Government that in view of the marked consideration of German wishes from the very beginning of the Liberian negotiations, this Government feels justified in expecting on the part of Germany a patient and liberal attitude toward Liberia and a cordial cooperation with this Government to save the Liberian Government from embarrassments.

KNOX.

File No. 882.00/457.

The Secretary of State to the American Chargé d'Affaires.

[Telegram.]

DEPARTMENT OF STATE, Washington, January 14, 1913. German Foreign Office has cabled Consul at Monrovia accepting proposed compromise. President merely agreeing verbally in your presence not to employ accused officer during his term of office. German Foreign Office considers incident closed.

ΚΝΟΧ.

CLAIMS OF GERMAN MERCHANTS AGAINST LIBERIA; FORMATION OF A CLAIMS COMMISSION; GOOD OFFICES OF THE UNITED STATES.

File No. 882.51/494A.

The Secretary of State to the American Chargé d'Affaires.

[Telegram-Extract.]

DEPARTMENT OF STATE, Washington, December 19, 1912. Referring to your several reports as to recent disturbances at different points in Liberia and to the recent visit of the German cruiser Panther, the result of exaggerated accounts from the German press, it would seem that the German Government is rightfully entitled to ask indemnity from the Liberian Government for the destruction of German property at Brewerville and possibly other points. The German Ambassador informs me that upon the demand of his Gov

ernment in this regard the Liberian Government at first promised to satisfy the claims of German merchants interested at once but has now changed its position and insists that the question must be left to the decision of the Liberian courts. In reply I informed the Ambassador I had every confidence that the judicial decision would be an equitable one, but you will discreetly bring to the knowledge of the proper officials the sympathetic interest this Government takes in the satisfactory settlement of this question.

*

ΚΝΟΧ.

File No. 882.51/495.

The American Chargé d'Affaires to the Secretary of State.

[Telegram-Extract.]

AMERICAN LEGATION, Monrovia, December 23, 1912.

Department's December 19. Am cooperating heartily with German Consul to adjust existing difficulties but believe efforts more fruitful if German commanders assume more friendly attitude toward Liberian Government.

BUNDY.

File No. 882.51/519.

The American Chargé d'Affaires to the Secretary of State.

No. 76.]

AMERICAN LEGATION, Monrovia, January 13, 1913. SIR: I have the honor to make the following report with respect to the efforts made to reach a satisfactory settlement of the claims. of the German merchants:

During the first discussion concerning these claims, it was very apparent that the German Consul and nearly all of the merchants were strongly opposed to permitting the claims to go before the Liberian courts for adjudication. The fact that most of the claims were for losses sustained by the merchants at places not ports of entry, and were therefore not legally entitled properly to become the subject of diplomatic representations, according to contract and Liberian laws, seems to have made little or no difference in the firmness of the German contention that the claims should not be submitted to the Liberian courts.

After spending many weary days in futile discussion, I proposed as a compromise that the matter should be finally decided by an international commission composed of five members, the Governments of the United States, Germany, France, Great Britain and Liberia appointing one member each; the findings of a majority of the commission to be final and binding alike upon the Governments of Germany and Liberia. I informed the Liberian Government, and the German Consul as well, that I could not pledge the Government of the United States to support this proposal, as it had emanated from me personally and without the knowledge of my Government. How

ever, I promised to lay the matter before the Department and secure, if possible, some expression from it as to the feasibility of such a scheme, and ascertain whether or not the Government of the United States would favor an arrangement of this kind. Meanwhile, I suggested that the Liberian Government acknowledge liability for the losses and make a proposal to the German Government to adjust the claims along a line in keeping with the international commission idea; the ultimate adoption of this method to be of course contingent upon all of the Governments mentioned becoming a party to it. The Liberian Government acted upon my suggestion and replied to the German Consul's demands respecting the claims (inclosure No. 1) in terms which called for the adjudication of the claims either by the Liberian courts or by an international commission (inclosure No. 2). Adjudication of claims by the Liberian courts was included in the proposal of adjustment to prevent waiving of the right to settle the matter in that way if it should become expedient to revert to that method. Before presenting the international commission plan to the Liberian Government I had fully and freely discussed the proposition with the British Consul General, the French Vice Consul and the German Consul. All agreed that it appeared to meet the conditions adequately, but could do nothing more than give their personal approval to the scheme before communicating with their respective Governments. This, I understand, they have done. What results have attended their efforts is not known to me yet.

I was led to propose the commission plan not only as a compromise, but also for the following additional reasons:

First. It appears to me very likely that it might be quite difficult to have these claims treated with absolute fairness by the Liberian courts at this time. There is so much anti-German sentiment in the country at present that the element of feeling might easily prevail where reason ought to control. Without doubt the Executive Government would be inclined to deal perfectly fair with the question, but it is questionable whether or not it could exert enough influence en the courts to secure an equitable adjustment of the claims. Then too, it seems to me to be inadvisable to encourage the Executive Government to exert influence on the courts even in the interest of a righteous cause, as such a procedure is distinctly irregular. At this time all efforts ought to be directed toward the elimination of practices that are open to question.

Second. If the claims are presented to the Liberian courts, it would be difficult to have the adjustment satisfy the merchants should the awards be much reduced from the original amounts presented, and it is not unlikely that the claims will be exorbitant. An international commission, acting without prejudice or bias, could well make large reductions and still not have its findings questioned or repudiated.

Third. The payment of these claims, by whatever means they are adjudicated, becomes a matter of great importance since the Receivership will undoubtedly be called upon to furnish the money to liquidate them, and an international commission's findings would therefore probably receive much more consideration than those of the Liberian courts. Moreover, it seems to me that any additional obligations contracted by the Liberian Government ought to be with

the knowledge of all the Governments that are identified with the loan agreement, because new obligations might seriously impair the security of the bonds. While the proposal of an international commission ignores the Liberian courts, which normally ought to treat these claims, I believe this method uses a means that will protect the Republic as effectively as the courts, perhaps even more so. In any event the precedent thus established cannot, in my opinion, embarrass the Liberian Government in the future should other claims arise against it.

Other reasons could be enumerated, but I think those already stated are sufficient to indicate my point of view.

It is significant that when these claims were first talked over by the German Consul and myself it was intimated to me that in the aggregate they would not amount to more than twenty-five or thirty thousand dollars. After the international commission plan of settlement was proposed, the claims took a sudden jump to sixty thousand dollars or more. It is my personal opinion that the merchants will endeavor to secure damages not only for goods actually lost, but also for profits they would have made if their business had been going on without interruption in the disturbed areas.

Before closing this despatch I had a call from the German Consul, who informs me in confidence that his Government thinks a commission of five too large and unnecessary, and it makes a counterproposal, that the commission be composed of three members, one each representing the German and Liberian Governments, and these two to be empowered to choose a third member who will be a disinterested party. This modification might be acceptable, it appears to me, if the other Governments have no objection. Personally, I think that a commission composed of five members chosen as before indicated would give better satisfaction to all the interests involved. However, if that plan cannot be carried out, the next best thing will be tried. I expect that certain phases of this matter will have been taken up with the Department by cable before the arrival of this despatch. Should that not be the case, I earnestly request that the Department furnish me with its views on this matter at the earliest practicable moment.

I am [etc.]

[Inclosure 1.]

RICHARD C. BUNDY.

The German Consul to the Secretary of State of Liberia.

J. No. 887.1

GERMAN CONSULATE, Monrovia, December 30, 1912. DEAR SIR: With your declaration of November 6 the Government of the Republic of Liberia has taken over the guaranty for the protection of life and property of all foreigners residing within the areas affected by the existing unrest.

This declaration of your Government has been accepted by my Government with despatch of November 12, J. No. 700; the contents of this despatch has been carefully noted, without any objection by your Department of State, with its despatch No, 582 of November 14.

In a verbal declaration of the 16th instant you made me understand that the declaration of November 6 had to be interpreted in a restrictive manner, that

the indemnity for damages of property sustained by foreigners could be aecorded only after an appeal has been made to the Liberian courts and without being made the subject of diplomatic intervention and in accordance with the law concerning the trade of foreigners interiorwards or coastwise beyond ports of entry.

In accordance with the instructions I have received from my Government I have to declare that my Government cannot accept any restrictive interpretation of the first declaration and that it holds the Liberian Government responsible for any damages sustained by German firms.

I respectfully beg in the name of my Government at the earliest date the declaration whether the Liberian Government is willing to pay the damages sustained by German firms, of which I will hand particulars as soon as I have got them myself.

I have [etc.]

[Inclosure 2.]

BARON GROTE.

No. 1.1

The Secretary of State of Liberia to the German Consul.

DEPARTMENT OF STATE,

Monrovia, January 1, 1913. DEAR BARON: I have the honour, in keeping with my note to you of the 30th of December last, to communicate to you the views of the Liberian Government on the subject-matter of your despatch J. No. 881, dated the 29th of December.

1. The Liberian Government considers the discussion of claims of German subjects for losses alleged to have been sustained by them, growing out of the disorders at River Cess and its adjacent coast, quite premature at this time, since no claims whatever have up to the present moment been presented to the Liberian Government by German subjects; and until the presentation of such claims to the Liberian Government by German merchants and the former's refusal to admit and satisfy their claims, I respectfully submit that they could not be properly made a subject of discussion between the two Governments, especially upon the lines and to the extent indicated in your said despatch.

2. With reference to the declaration made in my despatch of November 6, 1912, to your predecessor, to the effect that "The Government of Liberia guarantees protection for the life and property of all foreigners residing within the affected areas", and the construction placed upon it by your Government I beg to say that the Liberian Government regrets that it cannot harmonize its view with the construction placed by your Government upon its declaration above quoted.

The protection guaranteed by the Government of Liberia for the lives and property of foreigners residing within the affected areas is only that protection which such foreigners would be entitled to under the existing laws of Liberia, and further only to such foreigners who were and are still legitimately residing and carrying on business within disturbed areas.

The Government of Liberia is most firm in its conviction on this point, as it cannot at all imagine that the Imperial German Government would for a moment insist upon compensation being given to such of their subjects who might be residing and carrying on mercantile operations within the disturbed areas in open violation of the laws of the Republic permitting foreigners to reside and trade at non ports of entry.

The Imperial German Government has always in the past lent its influence in securing from its subjects residing in Liberia full respect for the laws of the Republic. And the Liberian Government therefore has every confidence that your Government will continue such a correct and friendly policy.

However, as an evidence of the Liberian Government's sincere desire to meet as far as practicable the expressed wish of the Imperial German Government and also to maintain those most friendly relations which have so uniformly in the past existed between the two Governments, I have been directed by His Excellency the President to state that upon presentation to the Liberian Government of the claims of German subjects for losses said to have been sustained by them, due to disorders at Brewerville, River Cess and its adjacent coast, it will admit liability for all claims to which German subjects may be en