882.51/1558
The Minister in Liberia (Hood) to
the Acting Secretary of State
Monrovia, September 7,
1922.
[Received October 12.]
No. 107
Diplomatic
Sir: This Legation has the honor to herewith
transmit the reply of the Liberian Government, in answer to the
Department’s cablegrams No. 17, dated May 20th [23d], No. 23, dated July 13th, and No. 26, dated August 17th,
regarding certain financial information requested, and the reasons for
the action taken in the matter of the use of the German Liquidation
Funds with the Bank of British West Africa.
With reference to the action taken by this Legation in the matter of the
German Liquidation Funds, it has the honor to submit that as shown in
the dispatch to the Department, No. 58, dated May 12th,18 with enclosures from the
General Receiver of Customs and the Secretary of the Treasury of the
Republic of Liberia, the whole embarrassing condition of the Liberian
Government was set forth. As early as April 15, 1922, in the Legation’s
cablegram No. 16, the President of Liberia said,
[Here follows the text of the telegram printed on page 616.]
Following this, Legation’s cablegram, No. 18a, of May 15th, to the
Department, said the following:
[Here follows the text of telegram printed on page
617 as telegram no. 18, May 13.]
To this, the Department replied by asking that the Liberian Government
produce certain financial information, which it was unable to do in time
to get any word from the United States, that would relieve the
situation.
During all of this period, the Manager of the Bank of British West Africa
had been basing his action with the Liberian Government and his
representations to his directors in London, upon whatever assurance
could be given by this Legation of the loan becoming effective. This
Legation was able, for some time, to present the facts concerning the
loan in such a way as to hold the credit of the Bank for the Government;
but finally, the prolonged delay and inability to state anything
sufficiently assuring brought a cablegram from London withdrawing the
credit of the Bank unless the American Minister would endorse the German
Liquidation proposition.
The operations of the Bank of British West Africa are almost the subject
of as much consideration in the British Colonial offices as if they were
affairs of direct government action; all the foreign nations, here
represented, regarding [regard?] the pending loan
negotiations
[Page 624]
as the
announcement of the United States’ willingness to become sponsor for
Liberia. It is difficult to realize the emergency of the situation
without immediate and direct contact with the condition.
The Legation had cabled the Department on April 15th concerning the
situation, but had no reply until sending another cablegram, dated May
15th [13th?], during which period the crisis had
only been averted by Legation’s aforesaid representations; the situation
every hour grew more acute, all time had elapsed.
In this grave condition, and embarrassed and perplexed situation, this
Legation acted:
- (1)
- Because the crisis was as these dispatches have indicated, or
else the Government of Liberia, the Manager of the Bank of
British West Africa and the London directors falsified
them.
- (2)
- Because this Legation understood the policy of the United
States toward Liberia, as far as it could legitimately be, was
to save and preserve it as an independent autonomous
State.
- (3)
- That the circumstances confronting the Liberian Government at
the time the action was taken, would compel it to cease
functioning, and this failure, considering it’s relation to all
foreign powers; and especially to those to whom it was indebted,
must have precipitated international complications.
- (4)
- Because the endorsing of the German Liquidation Collateral
Plan did not involve the United States unless the Loan Agreement
became effective.
- (5)
- Because the matter had to be decided before any further
instruction could have been received, the Bank of British West
Africa having waited one month for some information from this
Legation with regard to the pending Loan Agreement, as would be
sufficient guarantee for further advances to the Liberian
Government.
This Legation feels severely and regrets exceedingly the disapproval
expressed at what at the time seemed to be the best and only course that
could be taken.
I have [etc.]
[Enclosure 1]
The Liberian Acting Secretary of State
(Barclay) to the American
Minister (Hood)
Monrovia, August 25,
1922.
Mr. Minister: With further reference to
your despatch of July 22nd, 1922, embodying the full text of a cable
from the Department of State, Washington, with regard to the
financial arrangements of May 27th between the Liberian Government
and the Bank of British West Africa Limited, I have now the honour
in behalf of the Government of Liberia to offer the following
observations thereon:
[Page 625]
It will be remembered that President King, before he left Washington
on his last visit submitted a memorandum19 to the Department of
State pointing out that owing to the terms of the then existing
arrangements between the Bank of British West Africa Limited, and
the Liberian Government, a financial crisis as then foreseen was
imminent, and therefore requested the Department to use its good
offices to the end of securing the consent of the Bank of British
West Africa to increase the annual unit of the credit to one hundred
and fifty thousand dollars instead of one hundred and eight thousand
dollars, beginning as from the first of October, 1921, and
continuing until the proposed Loan Plan goes into operation. In
acknowledgment of this memorandum the Department of State in an
undated note to President King,20 stated, “the matters
called to the attention of the Department in this letter will
receive careful consideration.”
At the end of March of the present year the Liberian Government found
itself confronted with the financial crisis anticipated by President
King, the seriousness and urgency of which was fully realised by the
American Minister Resident at this Capital and the Acting Financial
Adviser.
On the thirteenth of April, 1922, President King, through the
courtesy of Your Legation, forwarded to the American Secretary of
State the following urgent and confidential cablegram:
[Here follows the text of telegram number 16, April 15, from the
Minister in Liberia printed on page
616.]
After the despatch of the above cablegram, by the President, the
situation was becoming more acute daily, and not having heard from
Washington, the Liberian Secretary of State on the tenth of May,
addressed a note to Your Excellency acquainting you with the
financial situation then confronting the Liberian Government, as
outlined therein, and requesting Your Excellency to immediately
advise Washington of the contents of said Note and inform the
Liberian Government of the State Department’s views in the
premises.
It was not until the twenty-third of May that answer to the above
representations was received asking for certain accounts, and
practically conveying the idea that the crisis, with respect to
which the American State Department’s intervention was sought, in
its opinion did not exist, or ought not to exist.
While the Liberian Government had no objections to furnish the
desired accounts, as since his return to Monrovia from the United
[Page 626]
States, President King
has been most anxious that upon the financial position in Liberia
from time to time the Government of the United States should have
the fullest and latest information, yet it was also conscious of the
fact, that to obtain all the data required for the accounts as asked
for would necessarily have taken some months to procure. In the
meantime, during this period, what was to be done to overcome the
pending financial crisis? No remedy, not even of a temporary
character, to relieve the situation was suggested by the American
State Department, whose attention had been called directly by
President King in his cable despatch of the thirteenth of April
herein above referred to, and subsequently through your Legation by
this Department in its Note of May tenth, 1922.
In the face of such a grave situation, and under the circumstances
above referred to, the Liberian Government had no alternative but to
take such steps that were in its opinion, as well as that of the
American Agents here on the spot, necessary to relieve the financial
situation which then presented itself, and considers that it was
fully justified in so doing.
It is a well understood and accepted principle of political
administration that those placed in supreme authority shall take
care that the State, the interests of which are committed to them,
suffer no harm.
I must further: point out to Your Excellency that the Liberian
Government cannot accept as existing the implications of fact, of
conduct, or of policy in the cable from the American Department of
State as embodied in your despatch now under reply.
The implications of waste as indicated by demand for accounts is [in]
the opinion of the Liberian Government quite unfounded. As a matter
of fact the Liberian Administration during the World’s war, and
since, has not, as most governments were compelled to do, augmented
salaries to meet the rise of prices, but rather reduced the already
meager official salaries by an average of fifty per cent, except
where action was forbidden, as in the case of Judges, and one or two
other officers, by the constitution of the State. Of this fact the
American State Department was fully cognizant.
The demand for accounts was also indicative, in the opinion of the
Liberian Government of a certain amount of distrust of the statement
of the President and also of the American Agents here on the spot as
to the imminent financial situation which the Liberian Government
would very soon be confronted with. That such a feeling of distrust
existed is further accentuated by the remarks made in the cable
under review, where it is said, “the Department is not convinced
from the information that such an emergency existed as required the
execution of the arrangement between the Bank in
[Page 627]
such haste as to render impossible to
await an expression from this Government with regard thereto.”
If such an attitude of mistrust of representations made by the
Liberian Government is to be maintained by the American State
Department, and especially when these representations are confirmed
by the American Agents here, and who are in a better position to
know the actual facts than those in the Department at Washington,
then there will be that lack of friendly cooperation and
understanding between the two Governments which is essential to the
carrying out of the projected program for Liberia’s financial
rehabilitation and development. The policy which the Liberian
Administration understood was to be adopted, was one of helpfulness,
of collaboration for the furtherance of its essential interests.
Furthermore, the Government of Liberia does not understand why the
very unusual step of communicating the censure of your Government
upon its official representative here should be made to it. The
Liberian Government finds itself most embarrassed by such a
procedure, as it could not, without violating official proprieties
attempt to vindicate the actions of the American Official
Representative.
With regard to the General Receiver of Customs and Financial Adviser,
it is respectfully submitted that under the existing Loan Agreement
of 1911 [1912?], he is a Liberian Official,
recommended indeed by the President of the United States, but
commissioned and paid by the Liberian Republic. The General Receiver
of Customs in financial matters, is the adviser of the Liberian
Government. Therefore, when the American State Department subjects
him to its official censure and further directs that censure be
communicated to the Government of Liberia, there is but one
inference to be drawn, and that is, that both the officer and the
administration he is serving are occupying such subordinate
positions with reference to the Government of the United States as
make them both amenable to its direct authority and fit subjects for
administrative rebuke. This implication the Government of Liberia
cannot admit; as the effect would be to neutralize any efficient
service which said officer might be able to render, or the
Government of Liberia might require, since he would under such
circumstances be compelled to consider himself not at liberty to
give advice before his ideas had previously been approved by the
Government of the United States.
The Government of Liberia does not understand the meaning and intent
of the American State Department’s instructions to the Acting
General Receiver to the effect, “that the Department expects him to
protect financial interests of Five Million Dollar Loan
Negotiations.” In the financial agreement of October 1921, the
Government of the United States expressly stipulated that it was not
to be considered
[Page 628]
bound by
the said agreement until it has been passed by Congress, and had
been approved by the President of the United States.
Upon that understanding it was approved by the Legislature of
Liberia. It is therefore most respectfully submitted that the
Liberian Administration within the terms of the Agreement concluded
with the Plenary Commission, had perfect liberty of financial action
so far as the revenues upon which the proposed loan are to be
secured until the agreement comes into force. To say otherwise,
would mean that the agreement created at the time of the signature a
status quo which bound Liberia
indefinitely, or at least until the agreement had received
Congressional approval. In other words, Liberia from the 28th of
October, 1921, was absolutely bound by the terms of an agreement not
yet in force or approved by the American Congress. This implication
the Government of Liberia regrets it cannot admit, but rather it
takes the position that until the Government of the United States
becomes duly empowered to assume and carry out the obligations
placed upon it under the provisions of the proposed Loan Agrement of
1921, the said Agreement remains inoperative and therefore none of
the rights and privileges therein conceded and granted, can be
legally exercised. However, as the Liberian Government does not wish
its position as herein above indicated, to be misunderstood, and
probably construed as a desire on its part for concealment of facts,
the necessary financial data requested in Your Excellency’s despatch
of May twenty-fifth, 1922,21 have been prepared and
is herewith transmitted, as well as the appended copy of the special
arrangement with the Bank of British West Africa Limited, in which
will be seen, on perusal, that all interests which might appear to
be jeopardised in the future by said arrangement were carefully
safeguarded and protected.
In conclusion Mr. Minister, I desire to point out that while my
Government is fully conscious and appreciative of the efforts that
are being put forth by the American State Department to hasten the
consummation of the proposed loan by Congress, yet it must frankly
admit that the very long delay of Congress in giving its approval to
the proposed loan has been a source of grave embarrassment to the
Liberian Administration, in practically every phase of its
activities. If this situation is not early remedied, it would have a
most disastrous effect upon the vital interests of the Republic, the
possibilities of which must be of great moment and concern to the
Liberian Government. Hence, we cannot too strongly emphasize the
urgency for immediate action on the part of the American
[Page 629]
Congress with respect to
the agreement concluded with the Liberian Plenary Commission by your
Government now a year ago, less two months.
With the assurances [etc.]
[Enclosure 2]
The Liberian Secretary of the Treasury
(Harris)
to the Liberian Acting Secretary of State
(Barclay)
Monrovia, August 31,
1922.
Dear Mr. Secretary: With further reference
to your despatch No. 420/L in connection with the cablegram received
from Washington State Department requesting more information
respecting the revenues and the collateral security offered the Bank
of British West Africa Limited, from the German Liquidation Fund,
for the continuation of our monthly advances until at such time that
the Government assets are in a more healthy condition, in reply, I
have the honor to submit the following information:—
(1) “Exact
amount remaining in the Bank of British West Africa Limited,
July 1, 1922”.
To query 1.
| (a) |
Exact debit balance due Bank of British West Africa Ltd.
July 1, 1921, £17,502.2.0, or $84,010.08. |
|
| (b) |
Exact debit balance due Bank of British West Africa Lt.
July 1, 1922, £28,944.11.6. |
$138,933.96 |
(2) “Exact
amount of Internal Revenues including Hut Tax collected for
period July-Dec. 1921, and Jan. to April 1922.”
To query 2.
| (a) |
Amount Internal Revenues collected including Hut Taxes to
Dec. 31, 1921 for six months |
$119,241.25 |
| Note: Lost in the exchange rate at Bank on five
Franc pieces $19,000.00 |
|
| (b) |
The amount Internal Revenues from January to April
1922 |
$27,344.70 |
| Note: It is to be observed that the increase of
the revenue collection is always during the last six months
of the year. |
|
(3) “Estimate Internal Revenue including Hut Tax to be received
during portion of time from May to September 1922.”
To query 3.
| (a) |
Estimate collection for above period approximately |
$100,000.00 |
[Page 630]
(4) “Has
all Hut Tax due this fiscal year been collected? If so, when
does the next year Hut Tax begin?”
To query 4.
- (a)
- Not yet; about 28% collected.
- (b)
- Begins January 1923.
- Note: Revenues for the two first quarters (March and June) are
usually small.
(5) “What
is the floating debt to date, and by what amount has it
increased since March 31, 1920 [1921?]?”
To query 5.
| (a) |
The floating debt to July 1, 1922 |
$436,742.20 |
|
“ |
“ |
“ |
|
1921 |
366,674.79 |
| (b) |
Increased by |
$70,967.41 |
| (c) |
Statement of present floating
Indebtedness: |
|
floating indebtedness of liberia
july 1, 1922
| Due B. B. W. A. Ltd. to July 1, 1921: |
|
|
| On acct. Loan Agreement 1917 |
$106,346.70 |
|
| Interest and Com. from 1917 |
32,587.20 |
$138,933.90 |
| Due Account sums advanced Plenary Commission |
|
18,140.00 |
| Due Advances U. S. Gov’t. Lib. Commission to Paris Peace
Conference |
|
30,000.00 |
| Floating indebtedness (estimated by the G. R. C. handed
American Legation Mar. 31, 1917 [1921]: |
|
|
| Arrears L. F. F. officers to Mar. 21 |
$22,462.68 |
|
| “ “ men “ “ “ |
93,537.32 |
|
| “ salary Customs Service |
19,000.00 |
|
| “ “ Civil Administration to March 1922 |
34,151.70 |
|
| Due on revenue cutter Nov. 30, 1920 Las Palmas |
10,096.26 |
|
| Additional interest (estimated) |
300.00 |
|
| L. F. F. outstanding bills and other obligation
receivership |
2,100.00 |
|
| Loan Ex. Mining Company |
8,000.00 |
189,647.96 |
| Woermann headmoney contract |
4,083.63 |
|
| Awarded German Merchants for damages River Cess War |
5,601.77 |
|
| Due estate J. G. B. Lee |
1,720.29 |
|
| Due J. L. Memmett & Co. Acct. school books etc |
484.63 |
|
| Dutch Co. for advances Minister Crommelin a/c salary for
supplies Kru coast Commission 1916, and Stipend |
7,418.47 |
|
[Page 631]
| Post office indebtedness to Money Order Bureau and
Sea-transit fee including interest |
$17,833.60 |
|
| Due League of Nations (about) |
12,076.37 |
|
| Due U. S. Navy Department |
1,370.51 |
|
| Due Bureau Union Int. & Artistic |
1,476.42 |
|
| Due Hy. Goode & Sons, & Wm. Kidd & Arthur
Williams |
3,611.20 |
|
| French Cable Co. and other claims |
3,143.45 |
|
| Claim Indian Merchants |
1,200.00 |
$60,020.34 |
|
|
$436,742.20 |
For your better information you will find a copy of the Bank’s letter
referred to, as well as a Memorandum to His Excellency the President
of Liberia.22
I have [etc.]
