[Enclosure]
The President of the Finance Corporation of
America (Wm. P. Belden) to
the Liberian Secretary of the Treasury (Dennis) and the
Financial Adviser (McCaskey)
[New York City,] June 3,
1932.
Dear Sirs: We have the honor to invite
your attention to certain matters relevant to the Loan Agreement
of September 1, 1926 occasioned by defaulted interest and
sinking fund payments.
This situation has assumed further seriousness by the failure of
the Liberian Government to effect a budget for 1932 in balance
with the estimated revenues for such period and we are advised
that there has been no plan promulgated for liquidating these
items in default, or for assuring the payment of all current
obligations for 1932.
On January 1, 1932 there was due interest in the amount of
$76,720.00 and a sinking fund payment in the amount of
$31,542.00. The funds which the Government of the Republic of
Liberia had deposited
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with the National City Bank of New York, Fiscal Agents, under
Article V of the Loan Agreement and which were paid upon these
obligations were only $15,059.04, all of which were applied
against interest leaving a deficit of $61,660.96 on account of
interest and the entire sinking fund payment of $31,542.00, or a
total of $93,202.96 in default as of January 1, 1932.
We now understand that the total current liabilities of the
Republic of Liberia known and estimated as of March 31, 1932 are
approximately $400,000.00.
We are informed of Treasury Department’s circular of September
22, 1931 providing that all revenues accruing from Hut and Real
Estate taxes from the first day of October 1931 will be
earmarked for application towards the payment of interest,
sinking fund and other services of the Loan, which the assigned
revenues are at present inadequate to meet, these being in
addition to the Customs and Head-monies heretofore assigned.
Notwithstanding the above additional assigned revenues we are
advised by the National City Bank of New York, Fiscal Agents,
that since January 1, 1932 and up to and including May 2, 1932,
no remittances have been made for the interest and sinking fund
for the first six months of 1932, all of which are due for
deposit with the Fiscal Agents on or prior to May 1, 1932.
The economic crisis in Liberian Fiscal affairs was pointed out to
the Liberian Government by the Finance Corporation of America in
our letter of December 16, 1930 through National City Bank of
New York, Fiscal Agents, but irrespective of this, the advice of
the Financial Adviser in the reduction of the Government budget
was not accepted and expenditures were continued during 1931
using as a basis the last previously approved annual budget. As
a result the expenditure of the Liberian Government in 1931
totalled $702,194.12, while its revenues from all sources for
1931 totalled only $482,028.73.
This same situation again prevails for the calendar year 1932. We
are in receipt of copies of letters of January 22, 1932 and
February 16, 1932 from the Financial Adviser to the Honorable
Secretary of the Treasury, together with other correspondence
pertaining thereto, in which the insufficiency, omissions and
irregularities of the proposed 1932 budget were pointed out by
the Financial Adviser, and his approval, therefore, necessarily
withheld. We understand that subsequently on March 15th a budget
was approved by the Liberian Government for the ten months March
to December 1932 totaling $674,948.30, which for the same
reasons stated the Financial Adviser was unable to approve, and
the budget for 1930 again had to be used for the purpose of
checking expenditures for the year 1932.
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In view of such critical financial situation Finance Corporation
is naturally greatly concerned as to the security of the
outstanding bonds under the Loan Agreement.
We have the honor to request your advice as to the benefits that
have thus far accrued to the prior obligations under the Loan
Agreement by allocation of Hut taxes and Real Estate taxes since
October 1, 1931, in addition to the previously assigned revenues
of Customs duties and head-monies, and your advice as to the
further steps that are being taken in order to balance the
current budget for 1932.
Under the present circumstances we deem it necessary to protest
the failure of the Liberian Government to provide for the prompt
carrying out of all its obligations under the Loan Agreement,
and must hereby respectfully request that the Government
allocate from its other revenues, not now specifically assigned,
such further sums as shall be sufficient to make up the
deficiencies cited above, in accordance with Article VII of the
Loan Agreement. We respectfully request the Liberian Government
to directly advise us on these points and what it proposes to do
to relieve these conditions of default and what further steps it
will take to insure for the Government that state of its
finances as will permit it to continue to maintain its
obligations under the Loan Agreement.
We have [etc.]
Finance Corporation of
America[
Wm. P.
Belden
,]
President
