In 1911, the last year of his Administration, Barclay obtained a loan of
US $ 1.7 million 1). The loan’s conditions, however, were worse than those of
the 1906 Loan. Barclay acted – most remarkable – contrary to his own
statements and beliefs, since in 1909 he had stated that:
1) The Loan Agreement was ratified in
1912 during the administration of President Howard. For this reason it
became known as the 1912 Loan.
“Loans will not under present circumstances help the Republic unless they
be invested in reproductive works, likely to lead to a large increase in
revenue, through the development of the country. Obtained purely to assist
the revenue by increasing receipts they are simply ruinous, and will
augment, not ease, the financial strain.” (Source: Annual Message 1909)
In 1912 the precarious financial situation of the Liberian Government
resulted in a reduction of the salaries of the civil service by 33 ˝
percent and the discontinuity of the debt service on the 1906 Loan. One
could say that the 1912 Loan was a necessity, although it would have been
an illusion to believe that it provided a solution to Liberia’s problems.
The sole purpose of the new loan was the amortization of all debts and
financial obligations of the Liberian Government.
The price Liberia had to pay in order to secure the loan – the largest
amount it ever borrowed – was heavy.
The Government gave up part of its sovereignty. A General Receiver of
Customs who also acted as Financial Advisor to the Republic, was appointed
by the President of the USA. Due to his appointment the powers of the
Liberian Secretary of the Treasury were limited. Part of the public
revenues was assigned to the General Receiver, who paid the debt service,
the salaries and expenses of the Receivership, the Customs Service and the
Frontier Force. Also three Receivers were appointed, one each by Great
Britain, France and Germany. Again the future customs revenues of the
Republic plus Head Moneys were pledged. The 5 per cent interest loan had a
maturity of 40 years and was provided by US, German, British and Dutch
bankers, the last mentioned being represented by the French Government.
The debt service on this loan was close to US $ 100,000 a year, which
represented approximately 40% of the then Government revenues.
The participation of American, British, German and Dutch bankers in the
1912 Loan followed logically from these countries’ political and economic
interests in Liberia. The British interests were the largest. It is
therefore not surprising that British took the lion’s share of the US $
1.7 million to Liberia. German interests came next. In the Liberian ports
most of the foreign ships were German as this country was Liberia’s main
trading partner in the beginning of the twentieth century. In 1908 for
example, out of 347 steamers that called at the Port of Monrovia (one
steamer per day!) 233 were German.
Shortly after the funds were received Liberia was forced by the British
Government to appoint additional British Customs Officers and to create a
“Frontier Force” with a British Major as its commanding officer. The
financial consequences of this decision may be illustrated by the fact
that the amount spent on the Frontier Force exceeded those for health and