File No. 882.51/809
The Acting Secretary of State to the Secretary of the Treasury ( McAdoo)
Sir: On July 11 I transmitted to your Department a copy of a despatch from the American Legation at Monrovia which enclosed a copy of an agreement proposed by the Bank of British West Africa as the basis of a financial arrangement between Liberia and the Bank. A perusal of this agreement shows very clearly that the Bank of British West Africa is attempting, in exchange for advances made from time to time to the Liberian Government, to obtain a political control of and supervision over the Government of Liberia. The acceptance by the Government of Liberia of the proposals of this bank under the bank’s settled general financial policy would set aside and render unnecessary the position of American Financial Adviser under the loan of 1912, mentioned in this Department’s letter of June 1, and would thus take much of the oversight of the financial affairs of Liberia from the present control of the United States through the Financial Adviser.
The Chargé d’Affaires in his covering despatch states that “if the needed assistance can not be gotten through the United States, the future outlook for the Republic is exceedingly gloomy “and that” the Liberian Government is anxiously waiting for some word from the Department on this very vital matter.”
In this connection I beg to refer once more to this Department’s letter to you of June 1, commending the application of the Liberian Government for a loan from the United States, and to add the following observations for your consideration:
The Liberian State was founded by free negroes, sent by the American Colonization Society in 1822, and in 1847 Liberia was declared an independent State by the Government of the United States. Since that time this Government has followed with sympathetic interest the fortunes of Liberia and has lent to the Liberians encouragement and assistance in their endeavor to establish a free government based on democratic principles.
Shortly after the outbreak of the European war, Liberian trade became disorganized, owing partly to the British black list operating against the German traders in Liberia, and partly to the fact that the British coastwise traffic had been greatly restricted. After the United States entered the war, the conclusion was reached that it [Page 534] would be desirable for Liberia to rid herself of the German population in Liberia, in order that she might be free from German intrigue and commercial domination. This Government communicated with the British Government and obtained its assurance that all restrictions on Liberian trade would be withdrawn, provided that all Germans were removed from Liberia and that the Liberian Government took such measures as would effectively prevent German business from being carried on by persons who would merely act as representatives and restore them to their original owners in statu quo as soon as the war was over. The Liberian Government declared war upon Germany, and shortly after such a declaration was made, the German residents were removed. The Government of the United States thus stands in a peculiar relation to the action of the Liberian Government in declaring a state of belligerency with Germany and should, it seems to me, in view of its historic interest in that country and as nearest friend of Liberia, relieve the Liberians so far as practicable of the burdens resultant from the state of belligerency.
Unfortunately through the extension of submarine activities and the consequent decrease in world tonnage, it has not been practical up to the present time to restore active trade with Liberia, and as a result, the conditions in that country have been going from bad to worse until at last they have reached the present critical stage. In this emergency the Bank of British West Africa has made its offer to the Liberian Government, which Liberia will have no alternative than to accept unless immediate financial assistance is forthcoming from the United States.
The position of this Department is that the United States, having created Liberia and later encouraged her to enter the war against Germany, should come to her assistance now that that Republic is suffering acutely from the result of the war. If the assistance from the United States is not forthcoming, Liberia will be forced to accept the assistance offered by the Bank of British West Africa which, as I have pointed out, will place her in a position dependent to a powerful British institution.
It is against the policy of this Government at the present time to permit the State of Liberia to be forced into a position where she will be dominated or controlled by any European Government or its agent.
I have [etc.]