882.01 Foreign Control/915
Report by Mr. Harry A. McBride, Special Assistant to the Secretary of State, Upon Conditions in Liberia
[The report opens with a brief review of events in Liberia from January to May 1934, here omitted.]
After the rejection of the League Plan, affairs were in a chaotic state, neither the Government nor its opponents knowing quite what the next step would be. Undoubtedly, a strong hand at the head of the Government was necessary and Barclay has certainly shown great strength in holding the Government together and in planning for the future of his country during this period. Notwithstanding the feeling against white supervision, President Barclay and his followers have also fully recognized the pressing need of certain reforms, somewhat along the lines recommended by the League of Nations, though not embracing all of its suggestions. They, however, claim with vehemence that the Liberian Government is entirely capable itself of instituting at least what seem to them to be the most urgent and necessary of these reforms.
On August 11 the Liberian Secretary of State Simpson and Representative Russell were sent to Geneva ostensibly to endeavor to assure the League that Liberia could and would reform itself. Apparently up until the middle of August 1934, President Barclay had, however, not yet developed any coordinated plan of action in this respect. But, on August 28th, he had set down on paper and subscribed to his “Plan of the Liberian Government” which shows what is to be attempted. His two letters in explanation of the plan together with other enclosures are appended hereto as an annex to this report.
The Plan in itself is good, and if it were faithfully carried out many of the important reforms which the League experts considered immediately necessary, would in effect, be accomplished.
It provides for the employment of various foreign specialists to aid the Government, the most important being an administrative officer of high rank (offered to a former Vice Governor of Belgian Congo who was unable to accept. Liberia is now seeking an American for this position) who would not only have charge, under the President, of hinterland administration but would also supervise and correlate the work of the other specialists. In so far as hinterland and native tribal administration is concerned, he would be assisted by a second foreign administrative officer.[Page 807]
It provides for the return of fiscal control to the American fiscal officers under certain conditions that might be acceptable to the Financial Adviser providing the Liberian Government would cooperate faithfully with him in making his control effective and in following his suggestions as far as possible in budgetary matters and in reduction of government expenses. It reiterates that Liberia has no intention of repudiating its foreign loan. It contains a provision to secure an American officer to reorganize the Liberian Frontier Force. The Plan proposes the funding of the internal debt but in view of the present financial stress, postpones this action until a later date.
It provides for an intensification over three years in the development in public works, especially the construction of motor roads to open up the hinterland so that its products may be brought down to the coast in greater quantities for export, and so that administrative inspection and tax collection in the hinterland may be facilitated. This is obviously a revenue producing improvement of great importance and the first main highway to the border of the French Colonies which will be some 230 miles long, has already reached a point 61 miles inland from Monrovia. In addition, it is estimated that sections of the road now completed far in the interior total some fifty to sixty miles and that within two years the first main highway from Monrovia to the French border will be finished.
The Plan calls for continued improvement in the administrative and judicial machinery of the government, for instruction to the farming community in better methods of agriculture and for a mineralogical survey which is already under way and which has proven the existence of deposits of gold, diamonds and other minerals. A certain amount of encouragement is being given to other local enterprises such as rice cultivation, soap making, and the manufacture of distilled spirits, sugar and aerated soft drinks.
It recognizes Liberia’s responsibility in regard to health. A Bureau of Public Health and Sanitation with broad powders has been created and a hospital established. It is planned, in cooperation with the various foreign Mission establishments to spread this work gradually over the whole country. This task will be in charge of two specialists (a Pole and a Hungarian) who are already working in Monrovia.
The section on education calls for an American specialist to supervise this work and to improve the present facilities. A teachers’ training school, to be staffed by trained instructors from America, is now being organized so that the standard of teaching in the country may be raised.
The employment of an economic or trade specialist (a Pole) is provided for and he has already assumed his duties in Liberia. He will [Page 808] endeavor to improve Liberian export products through better standards of grading to find new markets for these products and to propose trade agreements with other countries in order to foster Liberian exports. Such an agreement is said to already have been reached with Poland.
The Plan definitely sets forth that the government fully realizes the economic value to the country of the large Firestone rubber plantations and that the government will give every reasonable support and encouragement to the operation of this company.
Comment upon the Plan
The essential weaknesses of the Liberian Plan are three-fold:
(I) The success and effectiveness of the Plan depend solely upon the sincerity and good faith of the Liberian Government in carrying forward this attempt at rehabilitation during the next three years, and past history and experience in this respect give rise to serious doubts upon this point. The League experts felt strongly that some definite authority and control must be given to the various foreign advisers and assistants, notwithstanding the fact that in certain instances this authority might be considered as temporary relinquishment of certain sovereign rights on the part of Liberia. This question of infringement of sovereignty was the principal reason for Liberia’s refusal of the League Plan and the Liberian Government now reiterates in its three year program that it is still unwilling to concede any authority or control in derogation of the powers and authority of the President, Legislature or Courts.
The Plan contains the definite statement, however, that “in employing these specialists, the Government is undertaking to follow literally their suggestions in every respect, except where those suggestions are constitutionally impossible to be carried out, or where they are really objectionable for any fundamental reason, in which instance an honest and fair discussion and ironing out of the points of view will be made before it will be rejected”. The rights to be exercised by the specialists will be set out in their contracts with the Liberian Government and any questions arising as to those rights will be settled by special arbitrators, one each to be appointed by the parties and the third to be agreed upon by the two thus appointed. It is further provided that the specialists are to be secured in countries not having any territorial contiguity to Liberia. The Liberian Government is at present thoroughly aroused as to the necessity for instituting in effective manner at least some of the reforms provided for in the Plan and for that reason it is to be expected that fairly ample authority will be granted by the President at least to those specialists who are working upon the reforms concerning which the Government itself is most interested.[Page 809]
(II) The Plan calls for the employment of several foreign specialists but Liberia is to use its own judgment as to whom these men shall be, what past experience they shall have had, and the manner in which they shall be recruited. Much depends upon the strength of character, ability, experience, loyalty and disinterestedness of the foreign specialists as to whether the program is to be effective, and the probability of Liberia’s being able to choose men of the requisite qualifications and fitness without aid or advice of some more experienced nation or group of nations, is doubtful.
(III) The national financial structure upon which the successful development of the plan is dependent offers certain drawbacks. Liberian figures show that revenues during the first six months of 1934 amounted to $233,309, as compared with $217,077 for 1933, an increase of $16,232. As well over one-half of the annual revenue is collected in the second semester, these figures, if they are accurate, show that something over $500,000 is now being collected annually. Customs revenue shows a decline due to considerable extent to the increasing importation of Japanese merchandise. As the tariff is on an ad valorem basis the cheaper Japanese goods, especially footwear and cotton goods, cause a loss of customs revenue. On the other hand the collection of internal revenue (hut tax) has been intensified and shows an increase. There are charges of mal-practice on the part of Liberian tax collectors in collecting these taxes, and some of them are undoubtedly well-founded, yet it must be taken into consideration that native tribes in most parts of Africa have constantly resisted the payment of any form of taxation, and that, if fairly collected, the Liberian hut tax of one dollar per year is not unjust or exorbitant as compared with similar taxes in the neighboring colonies.
The budgetary requirements for 1935 as shown on pages 17 and 18 of the Annex to this report, call for an expenditure of $568,040, and there are reasons for believing that revenues may possibly equal this figure. Furthermore, it is estimated that a surplus from the present year amounting to at least $70,000 will be carried over into next year’s available funds.
It would seem that the prospect for economic improvement in Liberia is good. The Firestone Rubber Plantations are now beginning tapping operations, thus giving more or less permanent employment to some 4,000 additional native laborers earning from fifteen to twenty-five cents per day. So far as the government is concerned this will facilitate the collection of hut taxes in the central district, it will increase the government revenue derived from the one percent export duty on rubber and, as a large part of the native earnings go toward purchases of imported merchandise, it will cause [Page 810] an increase in customs revenue. If these rubber operations are fostered and aided by the government there will undoubtedly be a considerable and steady increase in revenues during the next two or three years.
The second promising factor is the motor road construction now going forward. As these roads penetrate gradually inland, trade in native products is stimulated and already the production of native rice, which ten or fifteen years ago was used almost exclusively for local consumption in the hinterland, has grown to such extent that it is now used in the civilized towns on the coast and even exported to neighboring colonies. The government loses the revenue it formerly derived from large importations of foreign rice but it gains of course in revenue from other imported merchandise purchased by the rice growers with their new source of wealth. Motor transport will facilitate the shipment of palm products from the interior and, in time, will bring down to the coast for shipment from Liberian ports quantities of kola nuts from the rich Liberian kola forests—an article for which there is a steady and lucrative demand in the French colonies to the north. These motor roads and the opening up of the hinterland should also result ultimately in better and more effective hinterland administration and a wider spread in hut tax collections in districts now rather isolated and inaccessible.
The third important prospect is that there appears to be a probability of mineral exploitation, especially in gold and diamonds, which even though developed on a small scale would add certain sums to the government revenue. This development is now in the hands of a Dutch company, to which a concession has been granted.
Thus, judging from figures supplied by the Liberian Treasury Department it would appear that the present financial situation is not entirely desperate insofar as current needs are concerned, and also that the future prospect, if the finances are properly administered, is not at all bad.
The budgetary provision for running expenses of the government is $500,000. This item includes however, sums for road construction, additional men for the frontier force and for the payment of certain administrative claims. It also includes items for the purchase of a revenue launch, radio apparatus, postal claims, and road building machinery. If a sufficient percentage of this $500,000 is carefully expended on revenue producing public works the figure would appear to be within reason. If, however, the greater part of this $500,000 is to be expended for increases in governmental personnel and salaries the financial structure will undoubtedly break down.
The essential weakness of Liberian finances at the present moment is the fact that no provision has been nor can now be made for the [Page 811] payment of its external and internal indebtedness. In view of the fact that prospects for the future are good it is thought that Liberia might gradually be able to put its financial house in order if it would be willing to give some sort of guarantee that, for the next six or eight years all sums collected by the government over and above $570,000 should be applied toward interest and amortization of its foreign loan and the consolidation of and gradual payments on its internal indebtedness.
It is essential that some readjustment should be made in the Loan Agreement with the Finance Corporation of America. Because of changed economic conditions throughout the world and because of the effects of the Liberian moratorium act, it seems necessary and expedient that negotiations between the Liberian Government and the Finance Corporation of America should take place at an early date with a view to placing Liberian finances again upon a business-like and definite feasible basis. Some sort of compromise along the lines of the offer of the Finance Corporation to the League Committee for the scaling down of loan charges, and a change in the depositary arrangement should be practicable. Inasmuch as it is probable under present conditions that Liberia would not ask for any further important advances from the loan, a certain degree of liberality and understanding with reference to the budgetary provisions (within the $570,000), which must be approved by the Financial Adviser, might be granted by the Finance Corporation. With reference to the depositary, it would seem that the contention of the Liberian Government that government funds should not be placed entirely in the hands of the loaning entity is well taken. They claim that the United States Trading Company Banking Department has been operating as a depositary under no guarantee to the government and with physical assets in Liberia of little value, whereas the present temporary depositary under the Moratorium Act (West and Company) has large assets in Liberia and has outside banking connections quite as satisfactory as those offered by the United States Trading Company.
The action of the Liberian Government in bringing into effect the Moratorium Act and thus entirely overriding the Loan Agreement is from every legalistic standpoint deplorable and inexcusable. The Liberian contention is that only the gravest national necessity with which the country had ever been faced, forced this action, and that unless this course had been pursued, the entire machinery of national government would have broken down. It is quite true that when the moratorium action was taken, the financial stress was practically unbearable.
The fact that this Moratorium Act still exists may make the initiation of any new negotiations for a revision of the Loan Agreement [Page 812] somewhat difficult. Liberia is willing to return to the Loan Agreement and is even anxious that fiscal affairs again be taken over by the American fiscal officers under that agreement. They would ask that only four provisions of the present Moratorium Act be incorporated in the new Loan Agreement: (1) reduction of fiscal officers from five to three; (2) reduction of salaries of the fiscal officers; (3) a change in the priorities of payments so that actual governmental expenses should be first; and (4) a change in the depositary arrangement.
In any new negotiations, they would, of course, also ask a reduction in interest charges on the loan.
The Government is today functioning in a fairly creditable and serious manner; the reforms called for by the Liberian plan would undoubtedly bring about considerable improvement in conditions in the country and there is every reason to believe that the worst period of the financial crisis has passed. This combination of facts would seem to warrant the Finance Corporation of America in extending its cooperation toward some revision in its Loan Agreement so that the Liberian Government may revoke the Moratorium Act and revert to the fiscal system contemplated in the Agreement. This becomes more evident when it is considered that the alternative appears to be a continuance of the present extremely unsatisfactory state of affairs in so far as the Finance Corporation is concerned.
All factions in the country are thoroughly alive to the need of certain reforms and improvements. If the Liberian plan is given a fair trial this active interest itself will assure a certain degree of success. President Barclay and his Government fully realize the great opportunity now offered to them in carrying out the provisions of the plan and will in all probability aid and assist in effective manner.
The plan is a compromise which will appeal to the various factions in Liberia. Its probable effect would be, to some extent at least, to unite the opposing factions within the country and, because of the present desire on the part of Liberia (a desire partly forced by necessity) actually to cause a considerable amount of creditable development.
Liberia should be a prosperous country. Its natural resources and native population are good—better in fact than in many West African districts. The potentialities in rubber, other agricultural products and minerals are well above average.
That the country is backward is quite true, but it has been obliged to fight its battles with few weapons, little administrative experience and, on many occasions, with a pitifully restricted pocketbook.
Neighboring regions have had the backing of strong mother countries, expert administrators, effective military forces and large sums for the opening up of the productive areas through railroads, motor [Page 813] roads, harbor facilities and with adequate police, medical and sanitary forces. This intensive exploitation is reflected in budgets several times larger than Liberia’s for areas of similar size and resources.
All recent reports on the country have stressed its backwardness as compared with these neighboring countries but have failed to compare Liberia today with Liberia twelve to fifteen years ago. When this comparison is made it becomes evident that Liberia has also developed and that the rate of development is now being somewhat accelerated. Fifteen years ago Monrovia’s population was some three thousand inhabitants. Today it has at least ten thousand.
Then there was one street suitable for motor traffic and only two motor cars. Today nearly all the streets have been leveled and cleared for motor traffic and there are dozens of cars and trucks in operation. It has electric lights, at least one or two good schools, a creditable water front, an excellent new customs house and a main trading street lined with well-stocked stores. There are now about 100 miles of motor roads out of Monrovia as compared with two or three miles in 1919. There are two good lighthouses on the coast. Even during this period of depression, revenues of the country amount to some $500,000 at the present time as compared with half that amount during some of the war years. In 1919, there was one small and practically abandoned rubber plantation in Liberia—today there are over 60,000 acres of flourishing rubber trees offering the country its greatest economic resource.
Less favorable factors are the contentions that the great increase in Monrovia’s population is to some extent caused by families moving to the capital from other towns along the coast and that those towns have deteriorated; also that the Americo-Liberian stock is fast dying out and that the new generations will be less capable of carrying on the government.
It is certainly true that the Americo-Liberian or “civilized” portion of the population is rapidly mixing with the native stock. There is also an increasing number of hinterland natives who are becoming well educated, some having degrees from American and European universities and it is largely upon these people that the responsibility for carrying on the government will rest in the future.
As to relations between the government and the hinterland tribes, there is still a great deal of controversy. The tribes claim gross malpractice in the collection of hut and other taxes and some of their complaints are undoubtedly justified. On the other hand, the government asserts that whenever malpractice or oppression on the part of tax collectors or district commissioners is discovered, these officials are immediately dismissed. President Barclay says that more care is being used than ever before in fomenting good relations with hinterland [Page 814] tribes and that headway is being made even with the Kru tribe, although considerable numbers thereof are still alienated. It has recently been more difficult because of the depression for the natives to pay their taxes and they have undoubtedly suffered hardship thereby, but with good prospects for improved conditions in the future, this hardship upon the native tribes should gradually be lessened. The opening up of the interior with motor roads should eventually benefit these tribes and decrease the friction and malpractice in administration.
No report upon conditions in Liberia should omit reference to the recent serious difficulties on the Kru Coast between the Liberian Government and the Kru tribes. No worthwhile comment, however, may be made without personal investigation and there was no time for this purpose. A complete document from President Barclay, giving the Liberian side of this controversy, was obtained, however, and appears as an annex hereto.23
Suggestion as to Policy to be Followed
In view of the personal interest of the Liberian President, higher officials and many of its citizens, in the success of the Liberian Plan, and the fact that the Plan itself provides for many of the reforms and developments contemplated in the League Plan, it would seem that if given a fair trial there is reason to believe that considerable improvement in conditions in Liberia would result. As its benefits become evident, additions thereto along the lines of the League’s suggestions could be made. If our Government decides to favor a trial of this Plan, it might make certain suggestions to Liberia with a view to strengthening still further the Plan’s provisions, which suggestions would probably be accepted if it were intimated that recognition of the present Liberian Government by the United States would follow.
It would first probably be necessary to outline the provisions of the Plan to the British, French and German Governments and to inform them that as the Plan appears to be as much as can be obtained in the way of reforms in Liberia at the present time, it is our feeling that it would be useless to make further efforts to induce the Liberian Government to acquiesce in a plan containing the full power and authority for foreign supervision provided by the League Plan and embodying all of its provisions; and we, therefore, feel that the best course is to offer no objection to Liberia’s placing the plan in operation. As every assurance has been given by President Barclay that the Plan will be faithfully carried out, it is felt that our Government, because of its traditional and historical interest in Liberia, should be willing to cooperate [Page 815] if requested to do so, and during this trial period to recognize President Barclay’s Government.
If our Government does not favor a trial of the Liberian Plan, there would appear to be only two alternatives—One, to countenance a continuation of the present state of affairs, which is most unsatisfactory, which offers little hope of definite improvement in the future and which certainly leaves Liberia’s foreign creditor (the Firestone interests) in a most unsatisfactory situation with no guarantee of any sort that payments upon the loan will ever be resumed; Two, to confront Liberia with a show of armed force either by the United States alone or by some international combination as a lever to procure the acceptance of the provisions of the League Plan in its entirety. This alternative seems to be out of the question because of the present policy of the American Government in its foreign relations.
Washington, October 3, 1934.