President Arthur Barclay (1904-1912)
The 1906 Loan: Foreigners in strategic positions

In the early 1900s, the Liberian economy and public finance were in great difficulties. In the first year of the Administration of President Arthur Barclay there was a Public Debt of $ 800,000 - most of which resulted from the pernicious 1871 Loan. This compares very unfavourably with the $ 8,000 debt of the Government in 1850.

Lacking the financial means to finance the development of the interior, Barclay looked for foreign capital and in 1906 he concluded in England a six percent £ 100,000 (US $ 500,000) loan.
The 1906 Loan was secured from a British consortium headed by the banker Erlanger through the intermediary of Sir Harry Johnston 1), the Chairman of the Liberian Development Company, Ltd. President Barclay had granted this company a concession with unprecedented rights and privileges for reasons of promoting internal economic development and in order to obtain the English Loan.
1) Sir Harry Johnston is the author of one of the classic works on Liberia:
'Liberia', 2 vols. (New York, 1906).


The Liberian Development Company Ltd. was granted a monopoly with respect to the prospecting for minerals and gold/diamonds in the counties of Montserrado and Maryland. Furthermore, the company had acquired a near-monopoly for the construction of a transportation and communication network in the country, the establishing of a National Bank, the importation of equipment and machinery for the construction industry and the exploitation of natural resources, for all industrial enterprises, for the leasing of land, for fisheries, as well as the guaranteeing of loans in general.

The English company was also allowed the establishing of a Police Force, which was to protect its properties. The latter privilege followed logically from the company’s scope of operations – virtually covering all aspects of economic development – whereas the region involved covered the whole of the Republic’s territory over which the Liberian Government claimed jurisdiction but which it did not control effectively. Interestingly, the Liberian Government had no control over the Liberian Development Company Ltd., which had no obligations towards the Government.

The conditions of the 1906 Loan were heavy and very prejudicial to the interests of Liberia. An amount of
30,000 had to be paid annually as interest until the entire loan was repaid. Furthermore, two Englishmen were put in charge of the customs revenues of the Republic as a security to the British financers, thus endangering the Republic’s sovereignty.

Moreover, the absence of any improvement in the country’s public finances, economic development and infrastructural facilities only contributed to leading the republic further downhill. The payment of the domestic debt took US $ 150,000 whereas an amount of nearly US $ 200,000 was transferred to Harry Johnston’s Liberian Development Company Ltd. An amount of US $ 35,000 was given as a loan to the company by the Liberian Government (!) whereas the rest, an amount of about US $ 150,000 was to be spent on the construction of roads by the company. Reportedly, the company only constructed 15 miles of automobile roads in the Careysburg District and placed a small launch on the St. Paul River. Then it announced the funds were exhausted.

In view of the foregoing it is not surprising that, contrary to its objectives, the 1906 Loan resulted in increasing Liberia’s political and economic-financial dependence. In 1911 the Public Debt had soared to almost US $ 1.4 million. Even more surprising, President Arthur Barclay continued the vicious circle by negotiating another loan.

The 1912 Loan:
More foreigners appointed

President Arthur Barclay



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