882.51/1119: Telegram

The Minister in Liberia (Johnson) to the Secretary of State

35. Following is General Receiver’s reply to Department’s number 19, April 28, 2 p.m.

“If order of the application of assigned revenues in the 1912 loan agreement is strictly observed, it will be necessary to pay immediately arrears and resume full payment of salaries of entire customs service. Full salaries would double present expense of collection and the back pay of the customs service is about $25,000. Total of any balance then on hand would have to be remitted on account of interest and sinking fund. This would cause, at present rate of exchange, a loss to the Liberian Government of approximately one third of each amount remitted. Receivership would then have nothing to meet charges for upkeep of frontier force which comes under article four, section (d), clause 3 and ahead of clause 4, under which Department suggests that American officials might be paid. In view of foregoing statement it does not appear practicable to the General Receiver to observe strictly order of disbursements provided in the loan agreement as it would precipitate financial crisis.

At present, General Receiver has on hand 24,000 pounds sterling and is holding same with a view to carrying out understanding with Treasury Department and provisions of financial plan of using this money here, after the loan credit becomes available, to avoid [physically] transmitting money to Liberia from the loan credit to pay Republic’s local obligations. By this understanding and plan, arrears of interest on 1912 bonds mentioned in exchange of notes with France and Great Britain would be paid from the loan credit at favorable rate of exchange and considerable saving to Liberia.

If any other means can be devised to pay salaries of American officials, it appears advisable at present for political reasons not to make advances from the new loan credit for these salaries only. Would it not be possible to arrange that the General Receiver will be permitted to continue to pay these salaries from assigned revenues for remaining short period before loan is effective?

No orders for materials have been placed in the United States except for use of administration work of receivership or use of frontier force. Cost of these materials has been paid from assigned revenues.”

Johnson