As the owner of bonds issued under the Loan Agreement we feel that the
security of the bonds has been impaired by the failure of the Liberian
Government to perform its obligations under the express a;nd implied
terms of the Agreement and by conduct on the part of the Liberian
Government which might very properly be interpreted as
[Page 400]
designed to obstruct or defeat the due and
proper administration of the Loan.
We feel that unless these breaches are promptly corrected and adequate
measures immediately taken to restore the administration of the Loan to
its full effectiveness, it is not unreasonable to anticipate the coming
about of such an unsatisfactory condition in the financial affairs of
the Liberian Government as will result in an incapacity on its part at
that time to perform its obligations under the Loan Agreement, a
happening we feel sure the Liberian Government will be as anxious to
avoid as we are.
We therefore respectfully request your aid in bringing about such action
on the part of the Liberian Government as will restore the
administration of the Loan to its full effectiveness according to the
terms of the Agreement.
[Enclosure]
The Finance Corporation of
America at Cleveland to the National City Bank of New York
Cleveland, June 14, 1930.
Under date of March 4, 1930 you transmitted to us the request of the
Liberian Government that we take up $100,000 face value Liberian
bonds on April 1, 1930. We replied on March 29 that we would take
this request under advisement. As the owner of bonds of Liberia
issued under the Loan Agreement dated September 1, 1926 between the
Government of the Republic of Liberia and Finance Corporation of
America, we have been seriously disturbed at the failure on the part
of the Liberian Government to observe and carry into effect certain
of the terms of such Agreement which vitally and detrimentally
affects the security of the bonds, and unless adequate and
appropriate measures are taken to restore the administration of the
Loan to its full effectiveness according to the purposes and terms
of the Loan Agreement, Finance Corporation regrets that it must
continue to hold under advisement the Government’s request for our
acceptance of delivery of bonds.
We have observed that:
- 1.
- The Government has refused to make payment of the salaries
of the employees of the revenue service, both customs and
internal from funds available and due such employees, in
violation of the express terms of Section 1 of Article XIII
of the Loan Agreement, and has notified the Financial
Adviser that it proposes to continue
[Page 401]
to refuse to make such payments out of
the specifically assigned revenues of the Government in
priority to payment of salaries to other employees of the
Government not entitled to such priority under the express
terms of Article XIII of the Loan Agreement.
- 2.
- The Government has failed to issue a certain Executive
Order in the form and manner requested by the Financial
Adviser pursuant to authority given by Article XII,
paragraph 1 of the Loan Agreement and necessary to carry
into effect rules and regulations governing the operation of
the Fiscal Service.
- 3.
- The Government has failed to formally designate a
depositary bank as provided in Article XVIII of the Loan
Agreement.
- 4.
- The Secretary of State and the Secretary of the Treasury
have failed to compel certain consular officers of the
Government to submit an accounting of and pay consular fees
into the treasury although their attention has been called
to such delinquencies.
- 5.
- The Government has failed to diligently or effectively
prosecute officers of the Fiscal Service for malfeasance in
office, and has failed and refused to institute suit on the
bonds of such officers to secure reimbursement of the
financial loss so sustained by the Government in revenues
specifically assigned to the service of the Loan.
- 6.
- The Secretary of the Treasury failed to prepare and submit
to the Financial Adviser the budget at the time and in the
manner as specifically required by the Loan Agreement,
although the Government had been previously notified by the
Financial Adviser of the time provided for such preparation
and submission, thus delaying and hampering the
administration of the Fiscal Service of the Loan.
- 7.
- The Liberian Government has denied the authority of
nomination of an acting Financial Adviser by the President
of the United States under the Loan Agreement.70
- 8.
- Upon remonstrance by American Supervisor of Customs
against unlawful shipment of certain labor from Montserrado,
the Secretary of the Treasury replied in writing approving
and directing such action asserting that “the organic law of
this country … gives the President the right to set aside or
annul any existing acts of the Legislature. No subordinate
administrative official in the President’s administration
can refuse to comply with his instructions, and when this is
done he becomes personally responsible and
unanswerable.”
- 9.
- The authority of the Financial Adviser over the officers
of the Fiscal Service has been repeatedly and openly
challenged and a program of obstruction to the service of
the Loan has been carried out by the Liberian Government;
for example:
- a.
- In derogation of the express terms and intent of
the Loan Agreement, the Government addressed the
Financial Adviser in writing, asserting that the
Financial Adviser is a member of and subject to the
Treasury Department of the Government of
Liberia.
- b.
- In derogation of the express terms and intent of
the Loan Agreement, the Government addressed a
communication from its Solicitor General to the
Financial Adviser, asserting that the Supervisor of
Internal Revenue is a member of the Treasury
Department of Liberia and is subject to the
Secretary of the Treasury.
- c.
- From time to time the Government has appointed to
the Customs and Internal Revenue Service officials
and employees without
[Page 402]
the previous advice of the
Financial Adviser as contemplated in Article IX; and
without previous consultation with or the
information to the Financial Adviser.
- d.
- The Attorney General has continually opposed and
repeatedly failed to comply with Executive Order No.
3, insofar as it relates to the control of purchases
of food for prisoners, though officially his
attention has been called to his omission to comply
with the said Executive Order.
- e.
- The salary of one of the foreign Consuls has been
increased without notice to, consultation with or
approval of the Liberian Legislature or the
Financial Adviser.
- f.
- The Secretary of the Interior while also Acting
Secretary of the Treasury, after a payroll had been
audited by the Auditor and Warrant for such payroll
had been signed, mutilated and altered such payroll
by crossing out thereon the name of a Department of
Interior employee named Labor, and substituted
therefore the name of another individual.
- g.
- Following protest by the Financial Adviser to the
Government against such unlawful act, the Government
subsequently appointed such Acting Secretary of the
Treasury to the position of Secretary of the
Treasury which he now continues to hold.
- h.
- The Secretary of the Treasury stated to a claimant
against the Government, prior to a hearing on such
claim before the Claims Commission of which the
Secretary of the Treasury was a member, that he was
in favor of and would vote for such claim but that
he was unable to state what action the Financial
Adviser and the American Auditor, the other members
of the Claims Commission, would take upon such
claim.
- i.
- Despite proof of repeated acts of obstruction to
the service of the Loan made by Financial Adviser to
the Government against the Secretary of the Treasury
in the presence of such Secretary of the Treasury,
of the American Auditor and of the American
Supervisor of Customs, and request for relief
therefrom, the conduct of interference and
obstruction by the Secretary of the Treasury in such
regard continues.
- j.
- Government officials have failed for more than a
year to accept or act upon suggestions of the
Financial Adviser that income of the Government was
diminishing to the point that it would be
insufficient to meet the budget and that steps to
reduce expenses should be immediately taken and
measures to provide additional revenues should be
adopted, which omission to promptly act upon such
suggestions has threatened impairment of the
security of the Loan.
These instances have compelled us to reach the conclusion
hereinbefore stated.
We acknowledge receipt of your letter of May 16, 1930 transmitting to
us a copy of the request of the Financial Adviser to be advised if
funds will be available from delivery of Liberian bonds as
requested. A copy of this communication will suffice we feel sure as
an answer to the inquiry of the Financial Adviser.
We likewise acknowledge receipt of your letter of May 22, 1930
enclosing a copy of a communication to you from the Secretary of the
[Page 403]
Treasury of Liberia,
dated May 3, 1930 (with memorandum attached dated April 23, 1930)
soliciting your good offices to assist the Government of Liberia in
consummating with the Bank of British West Africa a loan of funds
for the purpose of meeting the deficit which the Secretary advises
exists between revenues available and expenditures necessary to meet
the Budget for the calendar year 1930, and claiming authority on the
part of the Government to conclude such an arrangement under Article
XV of the Loan Agreement.
There is no anticipated revenue available to the Government of
Liberia for the remainder of this fiscal year sufficient to meet the
present Budget and liquidate this suggested loan, and therefore
Article XV contains no sanction for making such a loan without the
approval of the Financial Adviser which is withheld, in our opinion
for good cause because it seems to us that in the best interest of
all parties to the Loan Agreement no expedient should be adopted
which would hypothecate the revenues of the Government already
pledged to the security of the Loan.
In response to the request of the Secretary of the Treasury that we
suggest some other way of bringing about relief of the present
situation, we respectfully submit the following recommendation:
The 1925 budget of the Liberian Government provided $263,229.20 to
cover the cost of those functions of the Government which the 1930
budget provides shall be paid from unassigned revenues. We believe
if on July 1, 1930 the Government would reduce its budget to a basis
of $325,000 for annual expenditures out of unassigned revenues,
instead of approximately $450,000 as the 1930 budget now provides,
and, in addition would defer approximately $100,000 of current
accounts payable from unassigned revenues for payment out of the
next annual budget, that this would be an effective way for the
Liberian Government to accomplish its purpose.
Finance Corporation is certain, now that the above facts have been
brought to the attention of the Liberian Government, that the
Government will promptly remedy the conditions set out above with
respect to the administration of the Loan Agreement and in this
belief Finance Corporation is quite willing, in order to avoid
embarrassment to the Liberian Government meanwhile, and without
prejudice to its rights and its position as outlined above, to take
up $18,000 face value of bonds immediately for the following
specific purposes provided in the 1930 budget as follows:
| $11,000 |
being the difference between the $18,000 for special
sanitation work appropriated in the budget and $7,000
furnished from other sources for this purpose. |
| 5,000 |
for the grant of aid to the Booker T. Washington
Agricultural & Industrial Institute. |
[Page 404]
We request that a copy of this communication be transmitted by you to
the Liberian Government and to the Financial Adviser and we are
filing a copy thereof with the Department of State of the United
States.
Respectfully submitted,
Finance Corporation of America
By
[No signature indicated]
Vice
President
