File No. 882.51/651.

Chargé Bundy to the Secretary of State.

No. 95.]

Sir: For the information of the Department I have the honor to make the following report with respect to financial conditions in Liberia and certain emergency legislation remedial in nature passed at the extra session of the Legislature in March last called by the President for that purpose. * * *

[Page 639]

It will be perfectly evident from an inspection of the figures representing the receipts for the war period that only the most rigid economy and careful management could meet administration and collection charges, pay interest and sinking fund as promptly as possible, and provide funds sufficient for the upkeep of a frontier force of approximately 600 men. This latter charge was not however assumed by the Receivership until after the bankers had declared it to be their understanding that the Frontier Force constituted one of the first liens against the assigned revenues. The interpretation put on Article 4 by the bankers respecting the Frontier Force must be regarded as a most salutary action and prevented what might easily have been a real calamity to the country. For the Receivership had definitely decided that it did not have the power under the loan agreement, by any interpretation it was privileged to make, to provide funds for the maintenance of the Frontier Force so long as interest was in arrears. * * *

Great credit should be given the Receivership for the economy and skill with which the funds collected by its [omission] have been managed since the war began. When it was apparent that there would be a great reduction in receipts the Receivership on its own initiative pruned the personnel of the customs service to such an extent that only those were retained who were indispensable to the conduct of business reasonably to be expected. Under ordinary conditions the monthly expenses for cost of collection, administration, and application of the assigned revenues were approximately $7,291. The Receivership is now paying against these charges about $4,227 per month. Some arrears are therefore necessarily accumulating under these heads. * * *

While the Receivership early in the war period released all employees it could do without, the Government made no move in this direction. And a full civil list has been carried right along although it was evident there was but very little money with which to pay public employees. In normal times the civil list is much too large and now, when the Government’s business is greatly reduced due to the war, even greater reductions in the number of Government employees could be made without in the least degree impairing the public service. At the same time the accumulation of large arrears would be prevented. This question never claimed the serious attention of the Government until March at the special session of the Legislature. * * *

The Government is undoubtedly very hard pressed. How far it can drag along, in its present manner of going, drawing behind it a burden that increases rapidly as the weeks go by, is an indeterminate question.

In conclusion I feel that I can not omit to emphasize the fact that the present financial condition of Liberia is due entirely to the lack of ships to carry away her produce and bring in the goods required. Relief to this country could take no better form than a line of direct American steamers calling at Liberian ports.

I have [etc.]

Richard C. Bundy.