Find a Security Clearance Job!

Military

Back to the Table of Contents

Liberia in Receivership

In 1906 President Barclay secured another British loan of 100,000 at a slightly lower rate of interest that allowed the Liberian government to liquidate the old debt and begin new development projects. A fund of 40,000 was allocated to the Britishowned Liberian Development Corporation to build roads and improve harbor facilities, but within a few years the company went bankrupt, leaving only 15 miles of road to show for the investment.

On the basis of recommendations made by a presidential commission, the United States government in 1912 agreed to be cosigner with Britain, France, and Germany in underwriting a $1.7 million international loan to redeem the 1906 loan and other accumulated debts. The receipts from Liberian customs revenues were pledged as security for the loan under an international receivership, and an American was appointed receiver general to supervise the collection of duties. Trade with Germany, which accounted for three?fourths of Liberia's foreign commerce in 1914, was cut off because of the war in Europe, causing revenues to plummet by 1917 to less than half their prewar level. No matter how well managed, the receipts of the customs service were insufficient under these conditions to service the loan. Further credit was impossible to obtain, but an agreement was reached with the British?owned Bank of West Africa in Sierra Leone to assume the debt on the condition that all government domestic revenues were deposited in the bank, which then remitted a monthly allowance of $9,000 to Monrovia to meet government operating expenses.

Britain and France expressed concern about the threat posed by the presence of German interests in Liberia to their neighbor ing colonies, and the Allied powers complained about "anarchical conditions" existing there. At the urging of the United States, therefore, Liberia declared war on Germany in April 1918. Liberia's contribution to the Allied war effort was nominal, but physical damage was nonetheless inflicted on the country because of its involvement; in June Monrovia was shelled by a German submarine. More serious was the seizure of German assets, which dealt a devastating blow to commercial activity within the country.

As a belligerent, however, Liberia qualified to receive war relief fiends from the United States under the Liberty Loan program. United States president Woodrow Wilson authorized a lowinterest $5 million loan that would have been adequate to repay the country's debts and leave ample funds for development. Calling the United States "Liberia's best friend," the Monrovia government consented to having its revenues placed in receivership to the United States, but a number of other strings were also attached to the loan, including American supervision of economic reform. The Liberian legislature considered the terms humiliating but accepted them because, as the United States explained, Liberia might be compelled to accept mandate status unless its affairs were put in order. The Liberty Loan faced opposition in the United States Congress, however, and Senator William Borah expressed misgivings in a speech on the Senate floor that, given Liberia's record of defaulting on loans, the United States might find that it would have to send a gunboat to exact repayment. The offer of a United States loan to Liberia was dropped by the new administration that came to Washington in 1921.

An unusual proposal for American economic assistance came from Marcus Garvey, the controversial leader of the Harlem-based United Negro Improvement Association (UNIA). Founded in 1916 as a self-help organization, the UNIA promoted a "back-to-Africa" movement among American blacks and had attracted considerable popular following in the United States. Styling himself the "Provisional President of Africa," Garvey envisioned large?scale migration as the prelude to the liberation of Africa from colonial rule and its political unification. As part of this larger scheme, he promised in 1920 to raise a subscription to pay off all of Liberia's debt in excess of $2 million in return for being allowed to transfer the UNIA's headquarters to Monrovia. He also spoke of settling 20,000 black families from the United States in Liberia. The United States was embarrassed by Garvey's intrigues, which made the colonial powers sufficiently uneasy to complain both to Washington and to Monrovia. In 1924 the UNIA was proscribed in Liberia, President King condemning it as an organization "which tends to intensify racial feelings of hatred and ill will. " The object of Liberian policy, he said, was the "making of a nation and not of a race."

Although Garvey had pledged funds that Liberia desperately needed, it is doubtful that its government was ever willing to put the country in Garvey's hands or risk foreign intervention, as acceptance of his conditions might have done. Garvey had challenged the Americo-Liberian elite to improve the lot of native Africans, who he said were "treated like slaves," and appealed to an African nationalism that was alien to them. This unusual episode did, however, reopen debate on the question of immigration and its potential impact on Americo-Liberian society.

On taking office in 1920, President King set an independent course for Liberia in working its way out of its economic dilemma. Recovery required investment, and investment necessarily required foreign involvement; but King was determined to keep the ultimate direction of economic and financial policy in Monrovia rather than in a foreign capital. King opened the hinterland to development by foreign investment and applied a policy of stringent austerity to the public sector. The customs service, under the continued direction of the international receivership, had beome more efficient in collecting duties. The country's economic performance began to improve by the mid-1920s, responding to better management, an infusion of fresh American capital, and the recovery of the world economy. In 1923 Liberia was able to pay the interest on the 1912 loan for the first time in eight years, and government receipts of nearly $1 million in 1925 were the highest ever collected.

Back to the Table of Contents



NEWSLETTER
Join the GlobalSecurity.org mailing list