File No. 882.00/583
The Chargé in Liberia (
Bundy) to
the Secretary of State
No. 210
Monrovia,
May 10, 1918.
Sir: For the information of the Department
I have the honor to transmit the following report with reference to
the progress of reforms suggested to the Liberian Government based
on diplomatic instruction No. 23 dated April 4, 1917,1 relative thereto.
On February 11, 1918, I addressed a note to the Liberian Secretary of
State requesting data of the Government which would enable the
Legation to make a report in detail concerning the progress actually
made toward giving practical effect to the suggested reforms.
Replying on March 30, 1918, the Secretary of State forwarded to the
Legation with his note copy of letter addressed to him by the
Secretary of the Treasury setting forth the progress made with that
portion of the program of reforms that relates particularly to
finance. Reports on reforms connected with the Interior and War
Departments could not be given now, the Secretary of State
explained, for reason that the head of these Departments, Mr. John
L. Morris, is on a mission in the interior, but that on his return
these reports will be forthcoming.
I furnished the Financial Adviser with a copy of the report made by
the Secretary of the Treasury on the progress of financial reforms
and requested him to comment in detail on the various items it
contains. The Financial Adviser has complied with my request and has
given very fully his views on the statements of the Secretary of the
Treasury touching financial reforms.
The Legation feels it is only fair to say that considerable progress
has been made with some of the financial reforms suggested. A great
deal more would no doubt have been done if it had been possible to
get an auditor. Until an auditor is brought into this situation
there will be no way of securing that efficient management of the
Republic’s finances which is so necessary. It is probably not to be
expected that much more will be done than has already been
accomplished unless, as beforesaid, an auditor can be gotten. While
giving the Government due credit for that degree of progress
achieved in the matter of financial reforms, the fact can not be
ignored that there are still many changes for the better relating to
the country’s fiscal affiairs, that should be made and can be
neglected only to its detriment.
I have [etc.]
[Enclosure 1]
The Liberian Secretary of State
(
King) to
the American Chargé (
Bundy)
Monrovia,
March 30, 1918.
Mr. Chargé d’Affaires: Referring to
your note dated February 11,2 I now have the honor to enclose you herewith
copy of a letter addressed to me by the honorable Secretary of
the Treasury, with respect to the progress that has been made by
the Liberian Government in the matter of carrying into effect
the various measures contained in the American program of
definite reforms, as far as the financial situation is
concerned.
[Page 518]
With regard to the suggested reforms in connection with the
Interior and War Departments, I beg to state that a report upon
the same will be furnished you upon the return of the honorable
Secretary of the Interior and War from his present tour in the
hinterland.
With distinguished consideration [etc.]
[Subenclosure]
The Liberian Secretary of the Treasury
(
Walker) to the Liberian Secretary of State (
King)
Sir: In response to your letter of
recent date requesting information concerning the progress that
has been made by the Government in the matter of carrying into
effect the various measures contained in the American program of
definite reforms, for the American Chargé d’Affaires ad interim, I have the honor to furnish
you with the following data relating to the financial
situation:
1. The depositary agreement and the bank loan agreement with the
Bank of British West Africa, are being strictly observed.
2. All public moneys are now controlled by the Secretary of the
Treasury with the exception of the Post Office funds. The
Financial Adviser has not, as yet, effected the reorganization
of the postal service with the Postmaster General as would bring
these funds under control of the Secretary of the Treasury, as
was contemplated in the program.
3. The pension list has been revised, and all pensioners
heretofore receiving pensions without legal warrant have been
dropped.
4. The expenses on account of the Judiciary service are very
carefully scrutinized whenever payments on account of court
expenses are made. A substantial saving is thus effected, and
the judges are loyally assisting in this effort to reduce
expenditures.
At the last session of the Legislature, the Attorney General
presented a bill designed to very materially cut down judiciary
expenses. The main features of this bill were: (a) to divide the Republic into two
judicial districts instead of four as now obtain; (b) to have two jury sessions of the court
in each county or territory a year instead of four as at
present. This bill would have effected a saving of at least
$15,000 a year in salaries and expenses without jeopardizing the
interest of either the State or of litigants. Unfortunately this
bill was tabled by the Legislature.
5. The salaries of the members of the Legislature have been
reduced to $500 per annum.
6. A schedule of payment of salaries has been drawn up and agreed
to by the Bank of British West Africa. No disbursements not
contained in this schedule are being made. This plan of payment
has been printed and published.
7. The staffs of the various Departments had already been reduced
to what is considered the minimum before the American program
was presented to the Government. Nevertheless a few other
employees were dropped while many were displaced in the
rearrangement of the War, Interior and Educational Departments;
the Educational and Interior Departments were amalgamated by
Legislative enactment, and the War Department was placed under
the Secretary of this combined Department by the President. The
reduction of officials was not confined wholly to the
Departments. The office of the judge of the monthly and probate
court and that of superintendent of Montserrado County were
abolished, the auditors of the several counties and two
commissaries were dropped, and clerks to the several
superintendents.
8. In accord with the spirit and letter of the program respecting
the giving of a living and respectable salary to heads of the
executive departments and other responsible officials of the
Government, under the rearrangement of the plan of payment which
the Government is following, the salaries of the judges of the
Supreme Court, of the Circuit Court, and those of the district
and county attorneys are being paid in full.
At the call session of the Legislature in July–August 1917, the
salaries of the cabinet members (reduced from seven to five in
number) were recommended to the Legislature to be raised to
$3,000 each, to be paid without deduction or retrenchment. This
recommendation had the approval of the Financial Adviser. The
Legislature, however, fixed these salaries as follows, to be
paid in full:
| Secretary of State |
$2,500 |
| Secretary of the Treasury |
2,500 |
| Attorney General |
2,000 |
| Secretary of War |
$2,000 |
| Secretary of Interior |
2,000 |
| Postmaster General |
2,000 |
[Page 519]
The Secretary of State was given an allowance for entertainment
of $400 per annum. It was subsequently arranged that the
Departments of War and Interior should be covered by one person
at a salary of $3,000.
The Legislature at its last regular session, just closed, altered
the salaries of the cabinet members again, making a uniform
salary of $1,500 per annum for each member. An understanding was
reached at a conference among the Executive, the Legislature,
and the Financial Adviser as to the payment of these salaries in
a manner so as not to disturb the existing plan of payment. That
arrangement was agreed upon to avoid the many embarrassments
presented by this sudden disturbance of what had been effected
such a short while before in respect of cabinet salaries, and
consisted in these officials voluntarily relinquishing parts of
their salaries to be applied to educational purposes. It was
understood that the act reducing salaries to $1,500 would not be
published and this would thus avoid giving the Bank of British
West Africa cause for charging the Government with having
disturbed the altered plan of payment.
9. An earnest and prolonged effort has been put forth to
adequately deal with the internal floating indebtedness of the
Government. An act calling for the registration of all claims
against the Government up to June 30, 1917, and providing for
the bonding of said claims as were found to be legitimate, was
passed by the Legislature in August 1917; an amendment to this
act was deemed necessary afterwards. This amendment was passed
at the regular session of 1917–18, making the bonds to be issued
in connection with this debt negotiable but not receivable by
the Government except by an annual redemption. The bonds are to
bear interest at 3 per cent per annum and to mature in 20 years.
The amended act makes all payments to the Government in cash
after June 30, 1918.
It was desired and expected by the Government that the Bank of
British West Africa should guarantee the interest on and the
redemption of these proposed bonds. In fact, the effort to thus
place the finances of the country on an absolutely cash basis
met with the most hearty approval of the bank, and it was felt,
and not without encouragement from the bank, that if the
Legislature should pass the act in the desired form, this
guarantee would be forthcoming. The bank, however, has not, up
to the present, seen its way clear to go this far in spite of
its encouragement. It is not unwilling to guarantee this
interest and redemption, but the bank insists that this feature
must be considered in connection with a general scheme for the
complete financial rehabilitation of the Republic in which very
large powers would be delegated to the bank. This is a new phase
in these negotiations, as this bond issue plan was from the
first considered as a proposition complete in itself.
The manager of the bank goes only so far as to say that the
Government may rely upon an advance, in addition to the monthly
advances now made under terms of the loan agreement of February
21, 1917, to cover the interest only on the amount of the
registered debt which the Government proposes to bond, namely,
$192,329.85, as well as the approximate amount of $10,000, yet
subject to registry don in keeping with the provisions of the
amendment to the original registration act, which extends the
time for registration of claims to April 30, 1918. This
assurance of an advance of $6,100 for interest is contingent
upon the Government indebtedness with the bank at the time the
interest is payable, July 1, 1919, being under the $100,000
limit of indebtedness under terms of the bank loan agreement.
Inasmuch as this limit will, in all probability, be reached long
before the above date, this cooperation on the part of the bank
[is] of very doubtful value in perfecting the Government’s bond
issue plan. The bank’s guarantee was sought in order to give
perfect stability to these bonds and to assure the holders that
interest and redemption would be paid regularly, thus enabling
the Government to easily exact cash payments to it in every
instance.
10. The Legislature, by act approved August 2, 1917, provided for
the appointment of a Government auditor, and defined his duties.
Much of the detail work of providing any new system of
accounting or reorganization of the Treasury service which may
be found necessary devolves upon this auditor. I believe this
auditor has been already designated by the United States
Government, to whom application was made by this Republic.
I have [etc.]
[Page 520]
[Enclosure 2]
The Financial Adviser of Liberia
(
Worley) to the American Chargé (
Bundy)
Sir: You have furnished me copies of a
letter from the Secretary of State, dated March 30, 1918, and a
report from the Secretary of the Treasury of March 12,
transmitted therewith, concerning the progress that has been
made by the Liberian Government in the matter of carrying into
effect the various measures contained in the program of
suggested definite reforms, and asked that I make some comment
on the same.
With the exceptions hereinafter noted, the report is accurate
according as I have knowledge of the facts.
I will take up the report of the Secretary of the Treasury ad seriatim under the various heads:
1. Except in certain aspects, which are not regarded as
particularly vital, the depositary agreement and the loan
agreement with the Bank of British West Africa are being
observed.
2. Considerable improvement has been made in the matter of
bringing all public moneys under the control of the Secretary of
the Treasury. It is thought that further improvement can yet be
made along this line, but under existing circumstances the
Financial Adviser is unable to pursue these matters in detail
without additional assistance. The Post Office Department has
not been reorganized because of the pressure of other business
which, from its importance, had to be accorded priority.
3. The Financial Adviser furnished the Secretary of the Treasury
with a digest of the pension laws together with a classification
of the pension list, and the latter has very materially revised
that list, bringing it practically into conformity with the law.
A further study is being made of the laws with a view to
securing from the Legislature at its next session amendatory
action which will bring the pension list more nearly into
conformity with the public needs.
4. Without the assistance of an auditor, I am unable to say
whether the expenses of the Judiciary are being carefully
scrutinized or any saving effected.
It is to be regretted that the bill drafted by the Attorney
General was not enacted by the Legislature. I can not give the
figures, but the saving would have been considerable. There is
too much machinery in the Judiciary at present.
5. The salaries of the Legislature were reduced to $500 per
annum, as stated.
6. A plan of payment has been drawn up, agreed to by the Bank of
British West Africa, and printed for public information. There
are only minor breaches in this plan of payment.
7. There have been some reductions and displacements in the
personnel of the Departments, but it is believed that other
reductions are possible. A portion of the money thus saved
should be given to the men retained, which will make for
increased efficiency. It will be necessary to make a personal
study of each Department and indicate the additional reductions,
but this can not be done by the Financial Adviser under the
present stress of work. If he had an assistant he could make
this study and indication, but if the auditor is sent, it might
well be left to him in collaboration with the Financial
Adviser.
The offices of superintendent of Montserrado County and judge of
the monthly and probate court of the same county were abolished
by an act approved August 2, 1917, but the clerk of the latter
was continued. I am informed that the auditors of all counties,
two commissaries, and the clerks of the several county
superintendents have been dropped.
8. The statement herein is materially correct. I have no
recollection in the matter, but all the memoranda which I have
kept of the conferences at which the salaries of the Cabinet
members were discussed show $2,500 and all calculations made by
me at that time, notes of which I have preserved, are based upon
that amount. I have been shown no evidence to the contrary.
The President added the War Department to the amalgamated
Department of Interior and Education.
The portions of the salaries relinquished by the Cabinet are to
be applied to educational purposes as well as to increase the
salaries of the various departmental staffs. The fact that the
act will not be published does not seem to
[Page 521]
remove the further fact that it is
now law. It was passed over the President’s veto and, although
the Legislature agreed to withdraw it, it did not do so.
9. The statement under this head is in keeping with the facts.
The internal indebtedness will be bonded up to June 30, 1918,
when the bonds are to be issued. There will now be no Government
paper or paper currency issued.
In view of the fact that this act, placing the Government’s
revenues on a cash basis, and a tariff act just enacted, fixing
a surtax on all exports, are estimated to increase the
Government revenues by some $30,000 per annum, the Financial
Adviser wrote the local manager of the Bank of British West
Africa, requesting that the latter permit the Government to use
some $10,000 of this increase—about $6,000 for interest and
about $4,000 for the annual redemption to give stability to the
bonds. This the bank has declined to do. Inasmuch as all
revenues of the Government are hypothecated to the bank and
monthly advances made by the latter may be expended only for the
purposes set out in the plan of payment, the bond issue appears
to be doomed to failure, however beneficial or desirable it
might be for Liberia’s future welfare, unless financial
assistance is forthcoming until the end of the war, after which
Liberia could assume these charges. The first payment of
interest and redemption will fall due July 1, 1919.
10. The auditor authorized to be appointed has been given very
full and plenary powers and authority, and the Financial Adviser
contemplates exercising certain of his functions through him.
All that part of the reform program which related to a proper
accounting system, reorganization of the Treasury Department,
consolidation of revenues, etc., revolves around the auditor and
must await his arrival. The results of the work of the Financial
Adviser will show very little fruit without the auditor.
I have [etc.]
