The supervising teachers and, if possible, the teachers in the main centers of population should be young men imported from America with such native assistants in the smaller near-by towns as they could supervise. These elementary schools would serve as feeders for the higher schools in the larger centers of population. I am advised that the missions in Liberia have native assistants now ready to take up this work. They have been trained in their present schools here.

The Bureau of Insular Affairs of the War Department would doubtless be able to select all the commissioners and teachers needed for this work from men of experience in our insular possessions.

The bank manager has repeatedly asked me to point out in what definite way he might be able to cooperate and help Liberia. The last paragraph of my letter to the bank manager is in answer to this request. Although the law has been enacted authorizing the auditor and it is generally known that he has been requested from the United States Government, it is a matter of considerable interest to the foreigners here as to why he has not been detailed. It is thought by some that no earnest effort has been made to secure an auditor and that the American Government, the Financial Adviser, and the Liberian Government are not sincere in their declared efforts to secure his services. I base [etc.] H. F. WORLEY

[Subenclosure]

The Financial Adviser of Liberia (Worley) to the Manager of the Bank of British West Africa (W. H. Ross-Bell)

MONROVIA, March 30, 1918.

SIR: I have the honor to give you below the plan which I have proposed to the Government of Liberia for the collection of internal revenue. Although I have explained this to you quite in extenso several times, I would like to get it before you formally.

A line drawn 40 miles from and parallel with the coast would include all the civilized towns and settlements. I purpose dividing this coast division into three parts to be in charge of the three receivers of customs in their respective districts for the establishment and collection of internal revenue in the manner hereinafter outlined for the boundary.

All of the interior beyond this 40-mile strip I would divide into four districts by lines running at right angles with the coast. Mr. T. C. Mitchell, the present American Commissioner General, would be in charge of this interior at some point on the St. Paul River near Tinsou or Bulikai, at least for the present. One commissioner would be in charge of each district with a Liberian directly under him for purposes of instruction. I can secure competent men for this work who have had from five to ten years experience in larger fields than this in the insular possessions of the United States.

There is at present authority for the assessment of a hut tax of $1 per annum. Each commissioner would go through his district assessing the property and preparing duplicate tax registers, one copy of which would be filed in the Treasury Department at Monrovia. Stub or duplicate tax receipts would be printed to correspond with the numbers in the tax registers. Additional receipts, suitably numbered, would be provided for huts subsequently erected and assessed.

As far as possible, these taxes would be assessed and collected through the chief's, holding them responsible for same. I would utilize them to the greatest possible extent as long as they are loyal.

Periodically a Treasury official, under escort of a commissioned officer of the frontier force and suitable guard of soldiers, would make a tour collecting this money and transporting it to Monrovia. Each district commissioner would make out a voucher, giving the details of the money being transmitted, which both he and the Treasury official would sign in duplicate, one copy being retained by the commissioner in book form and the other accompanying the money to the Treasury Department.

It would require about two years to fully assess a district, and thereafter the taxes should steadily increase in each district except some village or town be visited by fire. Any material reduction in the taxes of any district would have to be explained in detail in writing and be authenticated by the Commissioner General and, if possible, by the Treasury official. After two years the assess

91114-30 41

ment and collection of these taxes in each district might be gradually turned over to the Liberian understudy.

At my request, Mr. Mitchell has made an estimate of the huts in the section immediately along the boundary, and he reports that there are some 100,000 of them. Everyone here who has any knowledge of the boundary agrees that this is conservative. Mr. Mitchell knows nothing of the great interior between the 40-mile strip along the coast and the boundary. In the intermediate interior are the populous Vais, Golas, Kpwessis, Grebo, etc.

Accepting his estimate for the section immediately along the boundary alone, we might easily count on $100,000 the first year. I purpose spending not to exceed one-half of this amount for the cost of establishing the system and expense of collection, schools, and roads running down to the coast. The cost of collection would include travel allowance. The one thing which every native chief wants is a school to be able to "make a book." It is the height of his ambition that his boy shall know how to read and write. These teachers would be carefully selected with a view to their morals and character. Some of them, especially supervising teachers, might have to be imported. We have had splendid results in our insular possessions where the native children were taught to read, write, and do number work. We found that some of the boys had the capacity to take a higher education and these were sent to the larger centers for advanced work in high schools or preparatory schools. If any of them developed and showed they were capable of going further, we sent them to a college located at the capital where they would come into contact with the Government, which theretofore was an intangible something they could not understand. Liberia College might be developed into the needed college here. Manual or technical training and education is also a part of this educational plan and some of the boys would take this course and be taught the dignity of labor by precept and example.

A common language would be taught them and their friendly contact with the Government, that was giving them something in return for their taxes, would make for peace and good order among them and in their relations with the Government.

Heretofore the native claims that he has cut the roads and kept them open without remuneration. It is a part of my plan to pay him, in part, for this work. It would not be much, but it would be a source of encouragement and stimulation.

These three expenses would not be allowed to exceed $50,000, which would leave $50,000 per annum, which we are not receiving now from this territory. The great intermediate interior should produce $100,000 and the coast, with its various forms of taxes, etc., should produce $100,000. If the plan of returning 50 per cent to each district in betterment and education, etc., were adhered to, this would still leave a net total internal revenue of $150,000, which is altogether possible even in these times. Later, under intensive production and normal trade conditions, this should be much increased.

Of course the Government will continue to receive the 20 per cent surtax on all imports established by the act approved March 12, 1915, and the 20 per cent on exports established by the act approved February 1, 1918. During the last fiscal year the former amounted to $20,077.26 and the latter is estimated to be more than $5,000 per annum based on the last full year for which figures are available.

The Treasury is now sending a representative up and down the coast in the interest of the internal revenue, and you have doubtless noted the marked increase in these revenues within the past few months.

I attach a rough map with explanatory footnotes.' The part nearest to the boundary and within the dotted line is the section Mr. Mitchell has estimated on.

The one moral aid which you could give the Government and the Financial Adviser at present that would outweigh almost any other would be to assist in having an auditor sent out under the enabling act approved August 2, 1917. He would be of great assistance in establishing this system of taxation and collection and in keeping proper checks on it and the collection and accounting for inoneys. The Government of the United States is now seeking a suitable man for this position. I believe the auditor would be of material assistance to the bank, even though indirectly.

Very truly yours,

Not printed.

H. F. WORLEY

File No. 882.51/809

The Secretary of State to the Secretary of the Treasury (McAdoo)

1

WASHINGTON, July 11, 1918.

SIR: Referring to my letter of June 1, 1918, concerning the appeal made by the Government of Liberia for a loan of $5,000,000 from the United States, I have the honor to enclose herewith a copy of a despatch from the American Chargé d'Affaires at Monrovia covering a draft of an arrangement which the Bank of British West Africa is endeavoring to have the Government of Liberia, in its necessity, agree to.

I think it will be apparent to you, as it is to this Department, that unless financial assistance is rendered to Liberia by this Government, there is danger of Great Britain obtaining a predominating control of the country through this British bank. The urgent needs of Liberia, as pointed out by the Chargé d'Affaires, would seem to make it necessary for Liberia to obtain financial relief from some quarter at an early day, and it is my hope that it will be found permissible and possible for this relief to be afforded by the United States without further recourse to the British bank. In any event, final decision should not be delayed.

I have [etc.]

For the Secretary of State:
WILLIAM PHILLIPS

File No. 882.51/814

The Consul at London (McBride) to the Secretary of State

No. 9

LONDON, July 15, 1918. SIR: I have the honor to enclose herewith a draft of a supplemental agreement between the Government of Liberia and the Bank of British West Africa.

The financial situation in Liberia has become such that some form of assistance is required at once, and this proposed agreement has been submitted by the Bank of British West Africa to the Foreign Office in London, to be later forwarded to the French Government at Paris and the American Government at Washington.

I am informed by the manager of the Bank of British West Africa that if the necessary assistance is to be given, action should be taken as soon as possible, and I am therefore sending the draft of the agreement in order that the Department may be acquainted with its provisions. I have [etc.]

[Enclosure]

HARRY A. MCBRIDE

Draft agreement of June 24, 1918

Supplementary agreement entered into this

1918 be

tween Government of Liberia (hereinafter called The Government) of the first part and Bank of British West Africa Limited (hereinafter called The Bank) of the second part.

'Ante, p. 521.

1. This agreement shall be supplemental to and shall be construed in conjunction with the agreements of 4th February 1916 and 21st February 1917.' 2. (a) In addition to the services rendered by the Bank under the foregoing agreements the Bank, in consideration of the guarantee given in the agreement of 1918 signed by representatives of France, United King. dom, United States of America, ahd Liberia, shall during the month of 1918 and each month thereafter during the continuance of the present war and for twelve months thereafter, at the request of the Liberian Government approved by the General Receiver of Customs, advance to the Government a sum not exceeding 10.000 dollars for the purpose of making payments authorised by the budget as passed by the Liberian Legisla ture. The money so advanced shall be placed to the debit of a No. 3 account. Provided that if and when the balance standing to the debit of the No. 3 account shall have reached the sum of 150.000 dollars no further advances shall be granted by the Bank.

(b) In consideration of the agreement contained in the last preceding subclause (a) and of the advances to be made thereunder, the Government hereby extend the life of the depositary agreement until the 31st December 1922, or until such later date as and when the entire indebtedness of the Government to the Bank under this agreement shall have been repaid.

3. In addition to the monthly advances authorised in Clause 2 the Bank shall, at the request of the Liberian Government approved by the Genera! Receiver of Customs, advance to the Government and debit to their No. 3 account a sum not exceeding $10.000 in any calendar year for the purpose of making payment of interest upon the new 3 per cent internal bonds and for redemption of such internal bonds with any balance of the said $10.000 not absorbed by interest payments. All bonds so redeemed shall be handed to the Bank for cancellation and shall remain in the custody of the Bank.

4. If at any time during the life of this agreement, owing to the exigencies of war or by reason of general or specific instructions issued by the British Government, the Bank shall be unable to give effect to any or all of the provi sions of this agreement or the depositary agreement, it is understood and agreed that no liability shall attach to the Bank.

5. The terms upon which the Bank shall make advances to the Government under Clause 2 subclause (a) and Clause 3 of this agreement are as follows: (a) A commission of one-half of one per centum upon the principal amounts of each loan.

(b) Interest to be charged at the rate of seven per centum per annum upon the daily balance standing to the debit of the Government's No. 3 account, with the Bank.

(c) The commission shall be paid at the time each loan be made and a statement of interest shall be furnished by the Bank to the Secretary of the Treasury monthly, when settlement will be made.

6. When the Bank under the provisions of Clause 2 (Section (a)) or Clause 4 of this agreement shall cease to make further advances to the Government, all of the revenues deposited with the Bank up to the sum of ten thousand dollars ($10.000) monthly shall be available for expenditure by the Government as authorised by the budget notwithstanding any indebtedness which may be outstanding against the Government with the Bank at that time. All sums deposited in excess of ten thousand dollars ($10.000) monthly shall be retained by the Bank and placed toward the reduction of the Government's indebtedness to the Bank in respect of advances made and charges thereon under the agreement dated 21st February, 1917, until such indebtedness be extinguished, after which the revenue in excess of $10.000 per month shall be retained by the Bank and applied in reduction of the indebtedness under this agreement.

7. During the life of this agreement the Bank on their part agree, subject to the provisions of Clause 4 hereof, to maintain a banking establishment at Monrovia, as at present, for the purposes set out in the depositary agreement as amended. If at any time during the life of these presents the Bank shall dispose of the whole or any portion of their business in Liberia, the Bank shall have the right to transfer this agreement to any bank, firm, or company that may thus become their assigns.

8. In the event of the Bank having in its possession at the expiration of the period provided by Clause 2(b) hereof for the termination of the depositary agreement any Liberian silver or copper coin received by the Bank under Clause 4 of the depositary agreement, the life of the depositary agreement shall be extended until the Government shall have taken back the whole of such silver or copper coin if so requested by the Bank, as provided for in Clause 4 of the depositary agreement.

9. This agreement shall run concurrently and expire with the depositary agreement as set forth in Clause 2 Sub-clause (b) and Clause 8 hereof.

10. The General Receiver of Customs shall in his official capacity as Financial Adviser to the Liberian Government sign this agreement as evidence that same has received his consideration and meets with his approval.

File No. 882.51/809

The Acting Secretary of State to the Secretary of the Treasury (McAdoo)

WASHINGTON, July 25, 1918. SIR: On July 11 I transmitted to your Department a copy of a despatch from the American Legation at Monrovia which enclosed a copy of an agreement proposed by the Bank of British West Africa as the basis of a financial arrangement between Liberia and the Bank. A perusal of this agreement shows very clearly that the Bank of British West Africa is attempting, in exchange for advances made from time to time to the Liberian Government, to obtain a political control of and supervision over the Government of Liberia. The acceptance by the Government of Liberia of the proposals of this bank under the bank's settled general financial policy would set aside and render unnecessary the position of American Financial Adviser under the loan of 1912, mentioned in this Department's letter of June 1, and would thus take much of the oversight of the financial affairs of Liberia from the present control of the United States through the Financial Adviser.

The Chargé d'Affaires in his covering despatch states that "if the needed assistance can not be gotten through the United States, the future outlook for the Republic is exceedingly gloomy" and that "the Liberian Government is anxiously waiting for some word from the Department on this very vital matter."

In this connection I beg to refer once more to this Department's letter to you of June 1, commending the application of the Liberian Government for a loan from the United States, and to add the following observations for your consideration:

The Liberian State was founded by free negroes, sent by the American Colonization Society in 1822, and in 1847 Liberia was declared an independent State by the Government of the United States. Since that time this Government has followed with sympathetic interest the fortunes of Liberia and has lent to the Liberians encouragement and assistance in their endeavor to establish a free government based on democratic principles.

Shortly after the outbreak of the European war, Liberian trade became disorganized, owing partly to the British black list operating against the German traders in Liberia, and partly to the fact that the British coast wise traffic had been greatly restricted. After the United States entered the war, the conclusion was reached that it