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The First World War and Its Aftermath
In 1912 the precarious financial situation of the Liberian
Government resulted in a reduction of the salaries of civil
servants by 33s per cent and the discontinuation of the debt
service (on the 1906 Loan) (121). 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 (122). 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 the Financial Advisor to the Republic was
appointed by the President of the U.S.A. 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 of the Frontier Force.
Also three Receivers were appointed, one each by Great Britain,
France and Germany (each paid $ 12,500 a year) (123). 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 U.S., German, British and Dutch bankers, the
last-mentioned being represented by the French Government. The
debt service on this loan was close to $ 100,000 a year which
represented approximately 40$ of the then Government Revenues
(124).
The participation of American, British, German and Dutch bankers
in the 1912 Loan followed logically from these countries'
political and economic interests in Liberia described and
analysed above. The British interests were the largest. It is
therefore not surprising that the British took the lion's share
of the $ 1.7 million loan 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 233 were German
(125). Subsequent events were highly influenced by external
factors. The outbreak of the First World War, the British
blockade of Liberia, and the subsequent drop of the country's
trade, greatly affected the course of Liberia's history.
After the first World War had started Liberia carefully
maintained a neutral policy in view of the vital nature of its
(trading) relations with Germany. The British reaction to this
policy, a sea-blockade of Liberia, virtually eliminated all
trade with Germany and hence affected the Liberian economy
significantly. In 1913 Liberian exports still totalled
$ 1,288,915 but they fell to $ 618,536 in 1917, a decrease of
more than 50 per cent (126) (see further Chapter 13). The
accompanying loss of revenues created new financial hardships
for the Government.