Rubber collected from wild-growing trees in the rain forest had been brought to the coast for sale by individual traders for some years before a British firm was granted a concession in 1890 to extract it systematically from trees on publicly owned and communal tribal lands. Royalties from the enterprise were paid directly into the Liberian treasury. In 1910 the British-owned Liberian Rubber Corporation began planting rubber trees on public land at Mount Barclay near Monrovia under a further concession obtained earlier from the government. The harvest from the trees, which came into service in 1917, proved disappointing, however, and the project was abandoned.
After World War I the Firestone Tire and Rubber Company set out to find an alternative source of rubber to avoid paying the artificially high prices charged by British and Dutch producers in Southeast Asia, who held a virtual monopoly on the world supply of the raw material. After surveying various locations, Firestone determined that Liberia offered the most suitable natural conditions for large-scale rubber production by an American company and approached its government on developing the Mount Barclay plantation. Although President King was eager to attract foreign investment, others in the government feared the effects on the country of so large an intervention as Firestone had proposed. For his part, Harvey S. Firestone, Jr., who had undertaken the survey, also had misgivings about the poor quality of transportation facilities in Liberia and the country's financial instability. Title to land was also a question standing in the way of investment in Liberia because the constitution prohibited foreign ownership.
Differences between the government and the company were overcome, however, by King's interest in obtaining investment in his country and Firestone's interest in securing a source of rubber that was not dependent on foreign producers, but Firestone drove the harder bargain. After several years of negotiations, an agreement was finally signed in 1926 granting Firestone a 99-year lease on 1 million acres of land at an annual rent of $.06 per acre. In addition, the company agreed to pay a 1-percent tax on gross income from its Liberian operation. (Both the rent and the tax were subsequently increased.)
At Firestone's insistence a second agreement was also concluded to ensure the company's investment against the government's going bankrupt. Firestone raised a private 40-year loan for $5 million at 7 percent interest financed by the Finance Corporation of America (FCA), a company subsidiary established for that purpose, and the National City Bank of New York. Half of the loan went to redeem old bonds and repay outstanding foreign obligations, and half was earmarked for construction projects that would benefit both the country and the company's operations there. Liberia was left with an annual commitment of $300,000 on the loan, serviced by customs and tax receipts that were held in receivership by the FCA. In addition, the Liberian government had to accept the services of an American financial adviser and supervisor of customs.
The effects of the Firestone agreements on Liberia were manifold. The company employed about 20,000 Liberians, providing them and their families with housing, medical care, education, and basic foodstuffs. It built roads, a rail line, and port facilities; extended telephone and telegraph services; and helpedto develop the country's hydroelectric potential. Firestone subsidiaries in Liberia -- the United States Trading Company and the Bank of Monrovia, which at one time was the only bank in the country -- contributed to development of rubber production by Liberian landowners and stimulated investment in other areas as well. Furthermore, the company made a valuable contribution in sponsoring research in tropical medicine.
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