The 1871 loan:
Prelude to a coup-d'etat

As Liberia lacked the financial means to finance the expansion into the interior and the economic development aimed at, President Roye looked abroad for the necessary means. Like his predecessor, President Payne, he inherited an almost empty Treasury.

In these years the effects of the economic recession were clearly felt by the Liberian Government. The trading activities had declined as a result of the Ports of Entry Law of 1864, which had resulted in substantial losses for the Liberian Treasury - the Government being dependent on international trade for most of its revenue.

In 1871 a £ 100,000 loan (approximately US $ 500,000) was obtained by Liberia from a British bank of which the Consul-General for Liberia in Great-Britain, David Chinery, was an agent. The negotiations were conducted by two Liberian representatives of President Roye, his Secretary of the Interior and the Speaker of the House of Representatives. President Roye was in London at the same time to settle the boundary dispute with the British over the Galinhas territory. He agreed with the severe terms of the loan:

  1. Liberia's future customs revenues guaranteed the repayment of the loan.
  2. Large deductions were made from the loan before it was given to Liberia. (The loan was placed at a rate of 70% meaning a loss of 30% for the Liberian Treasury.)
  3. The loan had to be repaid within 15 years.
  4. The loan carried an interest rate of 7% per year.
  5. An advancement of three years interest payment was withheld by the British.

The deductions and unfavourable loan conditions were among the chief reasons why not more than £ 20,000 (US $ 100,000) of this loan eventually reached Liberia. According to some authors only an amount of £ 8,000
(US $ 40,000) found its way into the Liberian Treasury.

When the terms of the loan became known in Monrovia a wave of protests emerged. At the same time another issue had upset the Americo-Liberian community in Liberia. President Roye interpreted a proposed amendment of the Constitution is such a way that he was allowed to stay in office for another two years.

In October 1871 the dispute over this issue and the dissatisfaction with his handling of the financial affairs of the country resulted in riots, street fights between supporters of the two rival political parties, the Republican Party and the True Whig Party, and the shelling of the President's residence. Reportedly, President Roye himself started the actual fighting by flinging hand grenades to the crowds in the streets of Monrovia.

In fact, the underlying cause of the fighting was the "colour-conflict", the struggle for political power between the mulattoes and the people of darker complexion. President Roy was arrested and the Liberian Legislature subsequently declared him deposed. True Whig Party supporters were arrested on a large scale, some were murdered (among whom the Secretary of the Treasury, Findley). After the arrest of President Roye the affairs of the country were taken over by a junta of three men: Reginald A. Sherman, Charles B. Dunbar, and Amos Herring.

Source: Fred P.M. van der Kraaij, ‘The Open Door Policy of Liberia. An Economic history of Modern Liberia’ (Bremen, 1983), Chapter 2, The origins of the Closed Door Policies and Open Door Policies 1847-1947, pp. 25-26.


© fpm van der kraaij