882.51/1150: Telegram
The Chargé in Liberia (Bundy) to the Secretary of State
[Received July 25—2:52 a.m.]
48. Please rush reply to this cable, events here likely to move fast in next few days.
Financial Adviser informs Legation that at meeting [of Cabinet?] held July 16th, at which he was present it was decided by President King and majority of members to put before Legislature the Department’s draft of the financial plan and a modified draft of the plan as altered by the Executive Government. Financial Adviser reports that modified draft is what the President will recommend and use his influence with Legislature to have enacted as embodying the conditions under which Liberia desires to obtain the five million dollar loan credit. Financial Adviser states he informed the President and Cabinet members that he strongly advised without result against alterations and expressed opinion that proposed changes would not be favorably received by the Department.
Copy of modified draft of the plan not yet available but Financial Adviser furnishes Department the following as substance of principal alterations made in financial plan as drafted by Department:
- 1.
- Sufficient sum requested of the United States Treasury to enable Liberian Government to retire its internal funded debt.
- 2.
- The internal revenues are not assignable. They are withdrawing (withdrawn] from the security to be given for the American loan, and receivership is entirely dissociated from the collection and administration of the internal revenues.
- 3.
- No guarantee is asked of the United States Treasury of any deficit in Republic’s budget. Apparently it would be [attempted] to maintain Government proper apart from the receivership on the internal revenues freed from control of and without reference to the receivership.
- 4.
- All foreign officials now employed or who may hereafter be employed by the Government are to be paid from assigned revenues whether connected with receivership or not.
- 5.
- Functions of Financial Adviser and General Receiver are completely separated; former to control all disbursements but manner of control very vague and the latter confined solely to collection of assigned revenues.
- 6.
- All moneys collected including assigned revenues to be deposited to the credit of the Secretary of the Treasury administered and applied by that official with advice of Financial Adviser but such advice is not necessarily binding on the Secretary of the Treasury with reference to internal revenues.
- 7.
- Receivership is to be composed of a Financial Adviser, a General Receiver, and three deputy receivers. All other officials, called in Department plan administrative assistants, are excluded from receivership administration and are not provided place in modified plan except as to their salaries.
- 8.
- General Receiver is to have no power to organize customs patrol if Government fails to do so.
- 9.
- Government consents to maintain frontier force but all reference to retention of American officers is eliminated.
- 10.
- Budget is to be prepared by Secretary of the Treasury and Financial Adviser but latter has no power of approval or disapproval. Provision in article II near end of third paragraph of Department’s plan that budget and appropriation acts shall be adopted in a manner satisfactory to Department of State of the United States is omitted from modified plan.
- 11.
- All reference to loan agreement of 1912 as in article IV paragraph (g) and article VIII eliminated.
- 12.
- Whole of articles V and VII eliminated.
- 13.
- Provision in article IV that no customhouse may be opened or closed without assent thereto of the General Receiver eliminated.
- 14.
- [Authority of General Receiver] defined in article IV section (a) second paragraph to fix penalties for violation of receivership regulations as provided in reform program and joint resolution of November 6 [7,] 1916, is eliminated.
- 15.
- Practically all restrictive or restraining clauses of the Department’s plan are omitted or nullified by limitations in modified plan. Very many of the provisions eliminated are in the refunding loan agreement of 1912–16.
In addition to foregoing there are several other alterations in Department’s plan any one of which might seriously impair its effectiveness as security for loan.
[Page 81]Legation believes that either one of following motives actuated President King in altering Department’s plan as above indicated: 1st. He may desire by proposing conditions impossible of acceptance by the United States to cause in this way the defeat of the American loan without actually rejecting the plan proposed by the Department. 2d. He would probably favor accepting American loan if it may be gotten on his own terms. 3d. Foreseeing that Liberia must make loan from some source he desires Legislature to enact his modified plan to be used merely as a basis of further negotiations with the United States to be conducted during interval between now and December when it is rumored British interests presumably Liberian International Corporation of London would present Liberian Legislature with loan scheme in terms such as would enable Liberian Government to do practically as it pleased with the money borrowed.
. . . . . . . . . . . . . .
Although Legislature was called for July 19th, sufficient members have not arrived Monrovia to form quorum and plan has not been yet sent Legislature by President. This has prevented ex-President Howard and his supporters from yet publicly beginning agitation in favor of accepting American loan with a few mild modifications in financial plan.
Legation frequently told that Liberian officials and citizens who are opposing Department’s plan say that they believe the measures of control and restrictions therein emanated from Legation and General Receiver and that the United States itself does not really think it necessary that such provisions be included in financial plan and if these measures are deleted or even if American loan is not accepted no offense thereby would be given the United States.
If Legislature takes any action contrary to the suggestions and advice of the Department so that loan is not soon made available it is practically certain that several of the American officials who came to Liberia to be part of receivership administration will not assume any responsibility and request transportation to the United States. Already Wanzer and Miller have resigned and the President has accepted their resignations. Only earnest persuasion of Legation has temporarily prevented other American officials from resigning.
So much opposition to financial plan as proposed by Department has developed on the part of the Liberian Government that Legation has not yet presented the supplementary agreement as to functions and authority of officials of the receivership administration.16 [Page 82] It is thought that this agreement as it now stands would be more unacceptable to the Government than the financial plan. Matters relating to it will be treated in another cable. Legation thoroughly convinced that a strong and positive statement should be made to the Liberian Government which would if possible prevent President King from misleading and taking advantage of the Liberian people and Legislature to further his own questionable ends. With this idea in view will the Department authorize the Legation to communicate following or something even stronger to the President of Liberia:
“The American Government has a deep interest in seeing Liberia a self-supporting country ultimately independent of all foreign financial control. [It therefore carefully considered financial plan before submitting it to the Liberian Government. In order that the obligations which have been assumed at the request of Liberia may be adequately discharged] and the desire of the United States above mentioned fulfilled, no fundamental alterations in this plan such as have come to the attention of this Government will meet with approval, and failure to be guided by these suggestions made in good faith for the purpose safeguarding and perpetuating the sovereignty and independence of the Republic may cause the revival of the question of establishing a mandate or protectorate over the Republic which the United States through its friendly activities at the Peace Conference prevented.”
Besides probably deterring contemplated mutilations of the financial plan this statement would give much moral support to Howard and his supporters who favor Department plan. It is felt that any statement which the Department may authorize should not contain any intimation that the United States might withdraw from it as withdrawal would serve well end to which President appears to be working.