Office of the Historian

882.01 Foreign Control/678: Telegram (part air)

The Consul at Geneva (Gilbert) to the Secretary of State

Geneva, October 9, 1933—5 p.m.
[Received October 11—8:30 a.m.]

227. From General Winship. My telegram No. 226, October 9, 4 p.m. The summary of my detailed statement is as follows:

[“]On February 7, 1933, the Liberian Secretary of State submitted a lengthy memorandum (League document C/Liberia/34, February 28, 1933) making certain allegations with respect to the establishment and operation of the Finance Corporation of America loan of 1926. The following June, Mr. Grimes submitted a further document consisting of a letter prepared by K. Jeffries Adorkor, Junior, a Liberian in the Bureau of Audit, concerning the expenditure of approximately $156,000 of the proceeds of the Finance Corporation loan. Following the adopting on June 27, 1933, by the Council Committee on Liberia of the revised League plan of assistance and Mr. Ligthart’s report, Mr. Grimes submitted a third statement (included in the League document number C.421.M.214/1933 VII).71

Aside from certain statements in the document last mentioned, which relate exclusively to his opposition to the revised League plan, Mr. Grimes’ main contentions are as follows:

(1)
That in 1926 Liberia ‘did not desire a loan, either for financial or economic rehabilitation, or any other exigency’ (document of February 7, 1933) but that its ‘reluctant’ acceptance was forced on Liberia by Firestone interests.
(2)
That ‘a large proportion of the amount of the Loan was misspent and even thrown away, without any benefit to Liberia …‘72 (paragraph 3 memorandum annexed to revised League plan dated June 27, 1933).
(3)
That the present economic condition of Liberia is due to the existence of the Finance Corporation loan of 1926 and to the bad judgment or incompetence of the advisership officials appointed thereunder.

The American representative has carefully examined the statements made or sponsored by Mr. Grimes, and in many instances he has been able to check his allegations with the original records. The American representative finds Mr. Grimes’ statements inaccurate and misleading, and his conclusions without foundation. A detailed statement in connection with Mr. Grimes’ contentions is being submitted for the information of the Committee. It is shown therein:

(1) That Liberia sought the Finance Corporation loan for the following reasons:

(a)
In order to liquidate the internal and floating debts, which had risen to over $600,000, and
(b)
In order to relieve Liberia of the customs receivership established under the 1912 loan.73

Both of these objectives were realized under the Finance Corporation loan agreement.

The American Government concerned itself in the loan to the extent of extending good offices during preliminary discussions, and of intimating that, should Liberia so request, the American Government would be willing to assume certain clearly defined functions with respect to arbitration and the designation of loan officials. The American Government did not induce American capital to invest in the loan, nor did it assume responsibility for its security.

(2) Over 90% of the proceeds of the bonds issued under the Finance Corporation loan went to retire prior obligations of Liberia. That less than 10% was utilized for other purposes was due to Liberia’s early violations of the loan agreement and to the refusal of the Liberian Government satisfactorily to settle these matters. Had they been settled, further funds would have been made available for general purposes. Mr. de la Rue, first Financial Adviser under the loan, had to do with the expenditure of only approximately $50,000 from loan funds, and not $156,000 as alleged in a Liberian statement. The question of Mr. de la Rue’s judgment in this matter is one of opinion.

(3) The foreign officials serving Liberia under the Finance Corporation loan agreement have been men of character, experience and proven ability. They have given the Liberian Government constructive advice on repeated occasions. Among other matters, they have advised the Liberian Government regarding:

Waste of public funds in the maintenance of overstaffed or unnecessary institutions and bureaus; failure of the Government to enforce the payment of delinquent taxes; failure of the Government to prosecute Liberian officials for embezzlement, or to take action against them under their bonds; failure of the Government to enforce the payment into the treasury of consular and other fees; failure of the Government to foster or encourage commerce, or to open the hinterland to trade; failure of the Government to interest itself in the condition of the million and a half native people, or to utilize the taxes collected from the natives for their benefit.

The advice and recommendations of the foreign officials appointed under the Finance Corporation loan agreement have been met with opposition or indifference on the part of the Liberian Government. The failure of the Government to act is responsible for the conditions which exist in Liberia at present. The unwillingness of the Liberian Government to accept competent advice has not been confined to the relations of the Government with the various American advisers appointed under the loan agreement, or previously. The majority of the recommendations of the 1930 Commission of Inquiry do not appear to have been put into effect, and the recommendations made to Liberia by the experts appointed under the auspices of the League of Nations since 1931 have been opposed.”

Among enclosures submitted with the detailed statement are a list of [Page 942] 31 separate recommendations made to the Liberian Government by the Financial Adviser, and a list of 15 recent incorrect statements by Grimes, together with corrections. [Winship.]

Gilbert
  1. None of Mr. Grimes’ statements is reprinted.↩
  2. Omission indicated in the original telegram.↩
  3. For correspondence relating to the refunding loan of 1912, see Foreign Relations, 1912, pp. 667 ff.↩