President Arthur Barclay (1904-1912)
The 1912 Loan: More foreigners appointed

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 education.


External and internal threats to Americo-Liberian rule

President Arthur Barclay



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