Papers Relating to the Foreign Relations of the United States, 1918

File No. 882.51/809

The Chargé in Liberia ( Bundy) to the Secretary of State

No. 213

Monrovia, May 15, 1918.

Sir: Referring to Legation’s confidential despatch No. 185, diplomatic, dated February 16, 1918,¹ with which was enclosed copy of an agreement proposed by the local manager of the Bank of British West Africa as the basis of a financial arrangement between Liberia and the bank, I have the honor to transmit herewith copy of this agreement as it has been recast and amended by the manager.

The Secretary of the Treasury has furnished the Legation this copy and informs me that he received it direct from the hands of the bank manager who persistently urges him to advocate the adoption of the scheme by the Government. The agreement in its revised form is undoubtedly much more onerous in its conditions as they relate to the Republic than it was originally.

It seems from what I have learned that the bank manager does not desire to show his hand too openly in pushing this agreement, but rather desires that Liberian officials take it up and foster sentiment in its favor as if the scheme really originated within the Government.

Nothing has as yet transpired to indicate that the bank manager is making any progress, so far as the Government is concerned, with the agreement. And under normal conditions it would doubtless never be given serious consideration. But the day comes on apace when the Republic will have to get financial assistance from some source. When that time arrives, and at the present rate it can not be much more than three months away, the Government will be compelled to face the facts:

1. That all custom revenue, head money, and rubber tax are pledged to the receivership which is heavily in arrears with the fiscal agents of the refunding loan.

2. That all internal revenues, excepting the Post Office Department which is now not self-sustaining, are pledged to the Bank of British West Africa, Ltd., to which the Republic will owe $100,000.

With all its assets hypothecated in this fashion, the task of getting money to run the Government will evidently not be an easy one.

It may be that the bank looks forward to this crisis as affording it the opportunity to obtain the hold desired on the Republic’s finances as the consideration required before giving the Government that assistance it must have to continue its existence.

Officials of the Government make frequent inquiry of the Legation as to whether the Government of the United States is favorably considering Liberia’s appeal for aid as communicated in my despatch No. 169, dated January 15, 1918.¹ It is generally felt that if the needed assistance can not be gotten from or through the United States, the future outlook for the Republic is exceedingly gloomy. Accordingly the Liberian Government is anxiously waiting for some word from the Department on this very vital matter.

I have [etc.]

Richard C. Bundy

[Enclosure]

Proposed agreement for financial reforms

An agreement made this _ _ _ _ _ _ _ day of _ _ _ _ _ _ _ _ _ _ _ _ _ in the year of Our Lord one thousand nine hundred and _ _ _ _ _ _ _ _ _ _ _ _ _ between the Government of the Republic of Liberia (hereinafter called the Republic), of the first part, and _ _ _ _ _ _ _ _ _ _ _ _ _ (hereinafter called the Bank), of the second part, which witnesseth

1. That the Republic hereby appoints the Bank as its sole official bankers for a period of twenty-five years or thereafter until such further period during Which the Republic shall be indebted to the Bank, subject to the conditions mutually agreed upon as hereinafter enumerated.

2. That the Republic hereby creates and will continue to recognize throughout the life of this agreement a financial advisory board (hereinafter called the Board) consisting of the Government Secretary of the Treasury, the General Receiver of Customs, the Bank manager for Liberia, the Chairman of the Ways and Means Committee of the Senate, and one annually elected member from the commercial community of Monrovia.

3. That the Republic shall have the right if required by it to appoint a commission (which shall include if necessary members drawn from other countries), every five years to enquire into and report upon the general conditions in the Republic resulting from the operation of this agreement, for reference to the United States of America, Great Britain, and France with a view to any necessary redress.

4. That the authority of the Board shall be final in all matters of finance connected with the internal revenues of the Republic, including receipts, expenditures, the appointment, prosecution, and dismissal of revenue officers, during the life of this agreement, and that the Board shall solely supervise all such matters.

5. That the Board be empowered hereby to draw up an annual budget and estimates in respect of internal revenues, which shall be submitted within one week of the opening of the annual sessions of the Senate and Legislature of the Republic for their information, and same shall be strictly observed and binding upon all officials and departments concerned.

6. That the Board shall be empowered hereby to draw up such laws, regulations, and by laws as in its opinion may be necessary for the proper financial conduct of the Republic under the terms of this agreement.

7. The Board shall in no instance be permitted to grant concessions or otherwise decide on financial matters not within the scope of this agreement, unless it has first obtained the approval and sanction of the Senate and Legislature of the Republic.

8. That the Republic hereby agrees to refer all questions of finance and applications for concessions to the Board for their final approval before any measures in connection with same shall be made law.

9. That the Board shall be empowered to create and maintain an armed police or constabulary force of not more than 500 men and officers to be utilized for revenue purposes, as distinct from customs purposes, which force shall be recruited entirely from the citizens of the Republic and officered by regular officers only as selected by the Board from any first-class army in the world.

10. That the Bank shall keep all Government credits accounts free of all charges, and to keep all Government debit accounts at 7 per cent per annum interest on the daily balances of same.

11. That the Bank shall countersign all cheques drawn against Government accounts, subject to arrangements made from time to time by the Board, and that any cheque not so signed shall be invalid and inoperative.

12. That the Bank shall inaugurate at its own expense such systems of accounting as in its opinion may be necessary for the proper management of Internal revenues received by it, which systems shall be binding upon all officials and departments concerned.

13. That the Bank shall submit to a system of auditing of all Government accounts kept by it, as shall be provided for by the Board.

14. That the Bank shall appoint travelling collectors in its own pay, whose duty it shall be to obtain and collect revenues already collected by Republican revenue commissioners in the pay of the Republic, and to report on and receive local complaints on the work of such commissioners to the Board.

15. That the Bank shall be required to open under its own management and officers full branches at Monrovia, Grand Bassa, Sino, Cape Palmas, and one other branch in the interior as shall be decided by the Board. And that the Bank shall, at the request of the Board, open such other branches as may be considered necessary, provided that proportionate remuneration be made by the Republic as stipulated for in Clause 16.

16. That the Bank shall open full agencies at such other places in the Republic as shall be required by the Board, provided the services of an European firm of financial repute and good standing can be obtained at such places.

17. That all transfers of money to places within the Republic effected by the Bank on behalf of the Republic shall first be authorized by the Board, and shall be subject to a commission of ½ per cent if made in account, or 1 per cent if made in coin, plus all proper expenses connected with such transaction.

18. That all transfers of money to places without the Republic effected by the Bank on behalf of the Republic shall first be sanctioned by the Board, and shall be subject to a commission of 1 per cent if made in account, or 1½ per cent if made in coin, plus all proper expenses connected with such transaction.

19. That the Bank shall keep proper registers of the Liberian Government internal indebtedness bonds as created by the acts passed by the Senate and Legislature of the Republic in 1917 and 1918, and to arrange for the issuance in proper form of such bonds in full conjunction with the Board.

20. That the Bank shall, at the request of the Board, during the life of this agreement guarantee and pay to the Republic the minimum sum of $500,000 per annum, payable in equal monthly instalments which shall be applied as hereinafter stated, such sum being met out of revenues received by the Bank and such advances to make up any deficiency as may be necessary.

21. That the advances made by the Bank against revenues or loans shall be utilized only in accordance with the budget and estimates drawn up by the board as provided for in Clause 5 in this agreement, limited to the following purposes:

(a) Payment of official salaries as per Schedule 1 attached hereto which shall form part and parcel of this agreement, up to a sum not exceeding $250,000 per annum;

(b) Maintenance of the police force as provided for in Clause 9 in this agreement, including salaries as per Schedule 2 attached hereto which shall form part and parcel of this agreement, up to a sum not exceeding $75,000 per annum;

(c) Maintenance of roads and highways up to a sum not exceeding $24,000 per annum;

(d) Maintenance of telegraphs up to a sum not exceeding $18,000 per annum;

(e) For educational purposes and upkeep of schools up to a sum not exceeding $12,000 per annum;

(f) For providing for the redemption and interest on the bonds of the Republic up to a sum not exceeding $10,000 per annum;

(g) For upkeep of harbour buoys and lighthouses up to a sum not exceeding $5,000 per annum;

(h) For upkeep of public buildings and other general contingencies, including stationery, furniture, insurance, and such other matters approved of by the Board in each instance, up to a sum not exceeding $12,000;

(i) Payment of the bank fee of $50,000 per annum;

(j) Provision for payment of all Bank interest and charges as may be incurred by adjustment with above provisions, but only in connection with heads (c), (d), (g), and (h), if necessary.

1. Not printed.
1. Ante, p. 505.