Formal recognition of Liberia’s sovereignty offered the government the opportunity to borrow on international markets that were growing rapidly during the second half of the nineteenth century. However, like other independent countries, Liberia would often find the terms on which it was able to borrow excessively costly, particularly as compared with colonized countries – a gap described in literature on sovereign debt as the "empire effect." Literature on the "empire effect" has thus far neglected any region of Africa outside of South Africa. This chapter focuses on Liberia’s efforts to borrow, beginning with the first loan the government raised in London in 1871. The terms of this loan were such that the government had little choice but to go into default. After renegotiating with its creditors, the Liberian government tried to return to the market but could only do so under what are described in the literature on sovereign debt as “supersanctions,” or infringements on the sovereignty of the borrowing country as a condition of borrowing. Literature on supersanctions has speculated that they replicated formal colonial rule. By comparing Liberia’s experience to that of British colonies in West Africa, this chapter shows that this was not the case: despite supersanctions which eventually extended the reach of foreign officials to include control over Liberia’s finances and its military, investors overseas neverregarded Liberia as a sound investment.

While supersanctions may not have improved the terms of Liberia’s loans very much, they did have unanticipated impacts on the structure of domestic political institutions. This chapter examines these effects, and in doing so offers a new interpretation of one of the more infamous phases in Liberia’s economic history: the 1930 League of Nations investigation into forced labor, when an investigative commission established by the League found that Liberian government officials had engaged in the use and export of forced labor. Over the first decades of the twentieth century, foreign financial controls imposed on the Liberian government as a condition of borrowing expanded from control over customs revenue to include nearly all sources of cash revenue by 1927. This chapter documents the Liberian government’s efforts to develop alternative sources of revenue with which to pay an expanded administrative establishment during repeated periods of fiscal crisis, and their ultimate turn toward a decentralized system of in-kind taxation in the form of forced labor and seizures of goods. These practices led to both domestic political upheaval and international isolation, and the threat of a League of Nations mandate over Liberia. This chapter contributes to a growing understanding of the contributions of forced labor to African government budgets in this period, as well as to work on the impacts of supersanctions on domestic institutions.