EDIBLE OHS: A PROPOSED PROJECT
IN
UNITED STATES - LIBERIAN ECONOMIC COORDINATION
A THESIS
SUBMITTED TO THE FACULTY OF ATLANTA UNIVERSITY
IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR
THE DEGREE OF MASTER OF BUSINESS ADMINISTRATION
BY
STEPHEN JOHNSON
SCHOOL OF BUSINESS ADMINISTRATION
ATLANTA, GEORGIA
JUNE 1950 ii
3 *=> TABLE OF CONTENTS
Part I
Page
INTRODUCTION vi General Review vi Arrangement of Subject Matter vii Source and Presentation of Data .... ix
Chapter
I. EDIBLE OILS 1 Composition or Structure 1 Derivation 1 Physical Properties 2 Chemistry of Fats . 3 Scope of the Central Theme 4
II. REGIONAL DISTRIBUTION OF PRIMARY SOURCES AND THEIR CULTIVATION 5
III. THE EDIBLE OIL AS A COMMODITY OF COMMERCE. . 19 Size and Constitution of the Industry . 19 1949 United States Production 23 Prices 26 United Kingdom Edible Oil Situation . . 26 International Trade in Edible Oils. • . 33
IV. ASSESSMENT OF THE EDIBLE OIL AS AN ECONOMIC COMMODITY 40
V. HISTORICAL SKETCH OF THE UNITED AFRICA COM¬ PANY (SUBSIDIARY OF LEVER BROTHERS), PRI¬ MARILY AS PRODUCERS AND DEALERS IN EDIBLE OIL 61
Part II
I. LIBERIA IN INTERNATIONAL TRADE 66
II. SOCIO-POLITICAL STRUCTURE OF LIBERIA .... 71
III. PREVAILING ECONOMIC PATTERN OF LIBERIA ... 78
IV. LIBERIAN EDIBLE OIL PROJECT 87 iii
TABLE OF CONTENTS
Or Page
JUSTIFICATION OF DIVISION OF FUNCTIONS: LIBERIAN FARMERS COOPERATIVE - AMERICAN CORPORATE MANUFACTURING ENTERPRISE 97
AZX 104 I. Excerpt a from G. W. Brown’a Economic "Plantation, Capitalism, Loans and Forced Labor * 104 II. Friendship, Commerce and Navigation Treaty Between the United States and Liberia 107 III. Principles Applying to Mutual Aid for Defense Agreement Between the United States and Liberia 120 IV. Construction of a Port and Port Works Agreement Between the United States and Liberia 123 V. Alien Land Law 125 VI. An Act Permitting Unrestricted Trade in the Hinterland of Liberia Both to Citizens and Aliens. ... 127 VII. Social Legislation 129 VIII. An Act Relating to the Construction and Regulations of Cooperative Socities 131
BrRAPHY 133
t iv
LIST OF TABLES
Table Page 1. Primary Materials - U. S. Factory Production And Consumption 27 2. U. S. Fats And Oils Production From Domestic Material 28
3. Average Wholesale Prices of Leading Fats and Oils - United States 29 4* United Kingdom: Consumption of Fats and Oils, by Types And Uses 32 5* Annual Production of Main Oil Seed Crops in Principal Producing Countries and Exports by Countries 36 6. Some Oils And Fats Used in Soap Manufacture in The United States 44
7. Oils And Fats Used in The Production of Margarine in The United Kingdom 46 8. Oils And Fats Used in The Production of Compound Lard in The United States 49 9. Estimated U. S. Production, Value And Per Capita Consumption of Commercial Salad Dressing and Re¬ lated Products 1937-1948 53 10. Use of Vegetable Oils in Commercial Production of Salad Dressing, Mayonnaise and Related Products - Specified Years 55 V
LIST OF CHARTS
Chart Page
1. Vegetable Oils Used in Commercial produc¬ tion of Salad Pressing, Mayonnaise and Related Products 1946, 1947 and 1948 50 2. Estimated Total Commercial Production of Salad Pressing, Mayonnaise, and Related Products 1939-1948...... 51 3. Average Monthly Price (Quotations, HYC Prums . 56 INTRODUCTION
General Review:- In the following thesis the author has set as his. goal the justification of the economic proposition that the systematic coordination of the material and tech¬ nological resources of the United States and Liberia should redound to the well being of their respective peoples.
To give a pragmatic significance to this economic ab¬ straction, it has been necessary to select a vehicle which not only has a broad social appeal, but strikes at the very vitals of the peoples involved, thus looming importantly in the social planning of the two countries involved. After an exhaustive exploration, edible oils was decided upon as the central theme.
The universal culinary as well as industrial or technical demand for this commodity group in both peace and war, and the complementary character of American and Liberian resources germane - in proper combination - to its commercial produc¬ tion, finally determined the authorfs selection. Fats and oils are derived from oleaginous vegetable sub¬ stances, animals and marine life. Within the rather con¬ fining limits of a thesis, however, it has been thought advisable to restrict the discourse to vegetable and animal types; with specific treatment of hydrocarbons derived from peanuts, cotton seed, soy bean, copra, palm kernels and peri¬ carp (fruit), and of butter and lard. The significance of fats and oils may be readily assessed
vi vii
in terms of the global annual volume of output, the economic applications of this commodity group, and its geographical distribution as an industry. Moreover, it is perhaps of more than passing significance that the United States and British governments see the necessity of publishing official reports at regular intervals, treating in an exhaustive manner, the past behavior of the industry as well as current , while pro¬ viding a scientific evaluation of future trends.
The author is not aware of any previous work which has attempted definitively to treat the subject matter handled in his present thesis. However, the social implications of an economic solidarity between the peoples of the United States and Liberia find a distinct place - by logical inference - in many socio-political treatises on Liberia by both American and foreign authors.'*' Arrangement of Subject Matter.- For purposes of clarity and preservation of logical sequence the present work is divided into two parts. The first part defines the central theme of the thesis following this order:
1. Definition of Edible Oils - in terms of the character of the commodity, and of its primary and secondary sources.
■*"Among these may be cited: Brown, S. W. The Economic History of Liberia; Huberich, C.H. The Political and Legisla¬ tive History oi Liberia; Buell, R. L. Liberia. A Century of Survival; Uewland, Captain H. 0. West Africa (or Handbook for Traders, Financiers, et cetera). viii
2. Regional distribution of the raw materials
constituting the primary sources of the
product.
3. The edible oil as a commodity of commerce
imro lving :
a. Description of the processes of pro¬
duction from the plant stage to the
finished product.
b. Constitution and size of the producing
industry.
c. Marketing of the finished product.
d. Economic applications of the commodity.
4. Assessment of edible oil as an economic commodity.
5. Historical sketch of the United Africa Company
(subsidiary of Lever Brothers) primarily as
producters and dealers in edible oil.
In the second part of the thesis, the author endeavors to prove - on the basis of the edible oil industry - the validity of the economic proposition described in the first paragraph supra. The following salient features are accordingly emphasized:
1. Liberia in international trade.
2. Socio-political structure of Liberia, stressing
political stability over a sustained period.
3. Prevailing economic pattern of Liberia, including:
a. Description of alien comraerieal rights.
b. Forms of business organization and ix
existing relationship between state and private enterprise. o. The Liberian currency. d. The labor situation and labor legis¬ lation. e. Existing financing facilities. f. Treatment of a hypothetical Liberian Edible Oil Project. g. Justification of division of functions between Liberian Farmers 1 Cooperative and American Corporate Manufacturing Enterprise. Sources and Presentation of Data;- About the only primary source on which the author has been able to draw is his own personal experience and observations in the two countries. For documentary data he has had to depend in the main on United States public documents and authors, while coloring his re¬ search with some material from British sources. Throughout the work there has been a sustained effort at preserving objectivity of treatment, while opinions, wherever expressed from necessity, have been couched in language calcu¬ lated to convey a genuine impression of logic and frank dis¬ couragement of any subjective tendency. The statistical presentation has been minimized in terms of technicality, in order to achieve a direct and arresting ap¬ peal for the theme embodied in the "economic" proposition under treatment. Statistical data have therefore been presented in terms of percentages for relative measures and tables for indication of absolute trends. Figures employed are con¬ fined to pie and bar charts. The series being in all cases discrete, it has been thought advisable to utilize the arithmetic mean as the sole measure of central tendency, the median being discountenanced for lack of suitable "array" anl because of the depiction of data on the basis of chronology rather than magnitude. CHAPTER I
EDIBLE OILS Part I
Composition or Structure»- It is usual to confine the term fat (or vegetable or animal oil, if liquid) to "esters” of fatty acids formed from the esterification of glycerol.
Esters, except those of high molecular weight are liquids. They are neutral substances, colorless, usually of pleasant odor. In general they are lighter than water. The lower esters are somewhat water-soluble; solubility decreases with rise of molecular weight. Esters are freely soluble in alcohol and ether.
Esters have low boiling points, often lower than those of the acids and alcohols involved in their preparation. The structure of an ester is such that it cannot associate as can either acid -, or alcohol; hence it has a 'normal' boiling point. The fats and fixed oils are esters of a special class, in-as-much as all are derived from glycerol. Ordinarily by the term fat one refers to a substance which is solid at room temperature, liquids being termed oils. Dérivât ion.- Pats and oils are obtained from vegetable tissues (seeds, fruits) by breaking the tissues and applying pressure. Solvent extraction is also used. Some fats can be
"Spieser, Louis P. and Mary. Organic Chemistry (Hew York, 1944), p. 4. 1 2 rendered. The crude animal matter is heated in water, where¬ upon the fat melts and floats on the water. (The temperature is controlled to 40°-50° in rendering the highest quality fat for pharmaceutical and edible purposes.) Physical Properties.- Pats are colorless, odorless, and tasteless. They have a specific gravity less than that of water. Insoluble in water, they are but sparingly soluble in alcohol and freely soluble in carbon disulfide, turpentine, carbon tetrachloride, ether, light petroleum oils, et cetera.
Pats themselves are good solvents; thus in perfume making lard has been used to extract the flower oils from the flower petals. Pats may not be distilled at ordinary pressure with¬ out decomposition.
The most important acids found in fats are oleric, pal¬ mitic, stearic, linoleic and linolenic.
TABLE OP COMMON ACIDS OP PATS
Emperical* Name Pormula Source
Butyric C4H8°£ Butter fat
Capric G10H20°2 Butter fat, coconut oil Laurio C12H24°2 Coconut oil, spermaceti
Palmitic C16H32°2 Palm oil, animal fats
Stearic G18H36°£ Beef, mutton tallow
Oleric °18H34°2 Almond lard oil, peanut oil linoleic C18H32°E Cottonsead oil, peanut oil Linolenic gl8H3Q.?2 Linseed oil 3 *Emperical Formula = smallest ratio in which the elements present may combine.
Chemistry of the Fats.- First in importance is the re¬
action of hydrolysis which may be carried out with superheated steam alone,or with the help of acid or base. The latter pro¬ cess, which yields soaps,is called saponification. Rancidity of fats may be due to hydrolysis upon standing, which in the case of butter yields volatile acids of un¬ pleasant odor. Another form of rancidity is due to oxidation
of unsaturated fats promoted by light and heat. This oxida¬ tion yields aldehydes and acids which have strong odors.
Hydrogenation of oils is practised in order to raise the melting point of oils for use in the kitchen, for soap making and for the preparation of margarine.
A butter substitute (oleomargarin) may be made by mixing hydrogenated oil with suitable vegetable fats, churning the mixture with milk or cream, adding salt and perhaps a small amount of butter. Webster’s Hew International Dictionary gives a chemical definition of fats as follows:
Any of a class of neutral compounds (composed of carbon, hydrogen and oxygen) of which the different varieties of natural fat are mixtures. They are glyceryl esters of certain acids, as stearic, palmitic, et cetera, and on saponification yield glycerol. They are combustible, cannot be distilled unchanged, and are soluble in others but not in water. Fats which are liquid at ordinary temperatures are called fatty oils or fixed oils. Animal fat is composed mainly of esters of stearic, palmitic and oleic acids. Butter contains, in addition to the above, butyrin, et cetera, and vegetable fats exhibit considerable 4 variety of composition. The fats form one of the three great classes of energy-yielding foodstuffs, furnishing approximately nine calories per gram.1
For the purpose of this thesis, the definition of "edible oils" shall be construed to apply to hydrocarbons expressed in terms of the vegetable oils derived from such primary sources as peanuts, cottonseed, soybean, coco-nut, palm and olive; and of animal fats in the forms of butter and lard derived from the COY/ and pig respectively. This defini¬ tion will also be broadened to include the secondary forms compounded from primary fats, the most important of such forms assumed being oleo-margarin.
1,Webster's Mew International Dictionary. 2nd edition, p. 922, CHAPTER II
REGIONAL DISTRIBUTION OP PRIMARY SOURCES AND THEIR
CULTIVATION
Cotton.- Like tobacco , cotton has a considerable climatic range, though it too is sensitive to frost, and it grows best on light limestone soils in warm, moist, even climates, where the summer is long and where there is salt in the soil or in the air. It is the most important of all sub-tropical plants and, as an annual, has wide climatic range; much more than half the total crop in the world being grown in temperate
latitudes. The largest amounts are grown in China and the United States, that is essentially ’’continental" areas; but the finest quality comes from "marine” climates (e. g. various
islands just inside the tropics where the heat is not ex¬
cessive, e. g. the West Indies and Pijis. This Sea-island cotton is gathered from the Gossypium Barbadense plant. Barbados and other West Indian islands a
century ago provided far more than half the total crop of the world. Brazil cotton resembles West Indian cotton in length, but the excessive heat makes it much coarser; the short-staple
Indian cotton suffers also from excessive heat and from want of bright sunshine during the Monsoon summer; the fine and long Egyptian product profits by an abundance of bright sun¬ shine while the water supply is regulated by irrigation.
5 6 In the selection and cultivation of the cotton plant on Agricultural Experimental Stations in West Africa, every effort is made to prevent cross-pollination of the flowers, as in that way plants of poor quality cross with those producing cotton of good quality so that the quality of the resulting crop is lowered. The cotton plant thrives in many parts of West Africa and could he grown far more widely than it is if other export crops were less profitable. Cotton will grow in districts with a rainfall as low as twenty inches provided that the soil is suitable and the rain¬ fall well distributed. The main cotton growing districts in West Africa, however, have a rainfall of between thirty-five and fifty inches and the success of the cotton crop is largely dependent on the proper distribution of this rainfall. The Soya Bean.- The soya bean is produced most largely in Manchuria, northern China, and Japan; Manchuria being the chief exporter. One half the total cargo from the Par East to England comes from this cource. The soy bean is an erect plant with small violet or yellow flowers in clusters in the axils of the leaves and oblong two-to-five seeded hairy pods. It may be sown either broadcast or in rows one and a half to two feet apart. It requires a rich loamy soil, a moderate rainfall, good drainage and a fair amount of lime. The soil should be kept thoroughly tilled during its period of growth. It should be harvested 7 "before it is quite ripe, otherwise the pods split and many of the seeds are lost.
The seeds are of great food value and are rich in oil, which is competing with cotton-seed oil in the world’s markets.
They can he cooked and eaten whole or used in soups , and, if roasted and ground, they can he made into a beverage something like coffee.
It is thought that one of the reasons for the compara¬ tive failure of soya heans in West Africa is that the necessary soil organisms or bacteria are missing. The Ground Hut.- The ground nut is an annual plant, pro¬ bably a native of Soiith America, growing to a height of one foot and generally spreading eighteen inches or more along the ground. The leaves are pale green, compound with four leaf¬ lets and the flowers are golden yellow. After fertilization the petals fall and the flower stalk elongates and turns downwards until the tiny developing ovary is buried below the surface of the soil. There are two main types of ground nuts known, namely the ’’bunched" and the "running" types. The varieties of "bunched" ground nuts grow to a height of one foot or eighteen inches and do not spread far along the ground; whereas the "runing" varieties do not grow so high and their stems run along the ground for one or two feet or even more. The main require¬ ments of the ground nut are a light or medium rainfall of 8 between thirty and fifty inches and plenty of sunshine. The soil should not be too stiff or clayey, as the plant will not be able to bury its fruits in stiff compact soil. Eich, sandy loam is the best and if the soil is rich in lime, so much the better. During growth the soil should be kept free from weeds and thoroughly loosened so that the flowering stalks can easily bury themselves underground. One of the advantages of the ground nut is that it forms an excellent cover crop and keeps the soil damp underneath. It is an excellent catch-crop also when planted in the interval between two long-standing crops in a rotation. Ground nuts can flourish wherever maize flourishes, but especially in South East Asia, Latin America and tropical
Africa; India and French West Africa being the greatest ex¬ porters, while France is much the largest importer (nearly seventy per cent of the total). Monsoon climates are very favourable to the plant, especially on limestone. India with a yield of 1,700,000 tons, sixty-five per cent raised in Madras, is the largest exporter (465,000 tons); but Gambia is relatively the most important, as this is the only large ex¬ port from Bathurst (60,000 tons), and the average yield (1,400 pounds per acre) is much larger (400 pounds) than in India. The Senegal crop is, however, of even finer quality than the
Gambia crop; and the total West African export nearly equals the Indian. Production is very large in China.
Tanganyika, East Africa promises to becane a chief source 9 of supply in the near future. The importance attached to this
East African project may he gleaned from the following de¬
tails :
Work was begun at Kongwa in central Tanganyika, under the mangement of the United Africa Company. Fifteen months later, control passed to the Over¬ seas Food Corporation. The British Government in¬ tends later to transfer the undertaking to the Tanganyika Government and eventually to the people of Tanganyika themselves, possibly on a cooperative basis. The original plan was to clear 150,000 acres in 1947, 450,000 in 1948 and so on, at an estimated cost of £23,500,000 ($71,400,000). Serious difficulties and delays did indeed arise. In the face of such obstacles progress was slow. How the acreage is being cut from 3-g- to two million, but it is hoped that by a rotation of sun flowers and cereals, instead of letting the land lie fallow between peanut crops, the 600,000 long tons of oil seeds in the original plan may still be produced. Of the estimted £25,500,000 (#71,400,000) for the total cost, £20,000,000 (#56,000,000) has already been advanced, but the increased price of peanuts may balance the increased cost production. In the opinion of the 1948 United nations Visting Mission to Tanganyika, the scheme is a bold economic undertaking, which may contribute to the alleviation of the present world shortage of fats and oils, and in the long run be of great benefit to the inhabi¬ tants of Tanganyika.1 The Coconut.- The coconut supplies come from two main
areas, the East Indies and Oceania, the former being much the more important. The tree is definitely a native of tropical
coastlands, especially in the Philippines and the Butch East Indies. British imports come mainly from Malaya, Ceylon and
Sumatra. In 1926 the Straits Settlements exported 180,000
^•Prom Barkness to Light - New Developments in British Africa published December 1^49 by British Information Services, p. 11. 10 tons of copra, and Ceylon 115,000 tons.
As before the war of 1914-18, the East Indies are much the largest producers of copra (300,000 tons); hut the most progress in production has been made by the Philippines (200,000), the Pacific Islands (nearly 180,000) and Ceylon (nearly 100,000). A considerable proportion of United States' import comes from the West Indies.
Although the coconut is generally seen at the sea coast, it can be grown with as great success inland, provided that the soil is well drained. Coconuts do not like clay soils and do best in loamy soil where there is good drainage and an under ground flow of water. In rich soils of this nature the best results are obtained. The coconut is grown from seed, and great care should be taken in selecting seed for planting. All nuts should be shaken first, and if the liquid can be heard in¬ side the nuts are likely to be fertile. Large well formed nuts are most likely to contain the largest kernels, and when planted will yield better fruits than nuts sown at random.
The nuts are picked up from the ground and not from the tree. They generally fall at night and should not be allowed to lie on the ground more than three or four weeks before planting.
Coconuts are planted in nursery beds in good rich sandy loam. They are planted in rows three feet apart. Trenches one foot wide and six inches deep are dug in straight lines and the nuts are planted on one of their three flat sides. There 11 should "be a space of about two inches between each nut planted and all should be practically covered with soil. After a few weeks the first seed leaves appear and the roo1£ force their way through the fibrous husks and into the soil. After four to eight months the germinated nuts are ready for transplanting into their permanent positions. Large holes are prepared twenty-five to thirty feet apart, each hole being preferably four feet in diameter and two feet deep. The sub¬ soil is removed and the surface soil is mixed with humus of some kind and put into the hole. When it has three or four leaves the young coconut is transplanted in wet weather and it is planted so that the soil in the hole is six inches or one foot below the surface of the surrounding soil. In the early stages of a coconut plantation the main work is to keep the young plants free from weeds. This is best done either by intercropping, by green manuring or by the planting of cover crops. Intercropping is a difficult matter and new coconut plantations are generally made along the sea coast where it is usually impossible to grow other crops economically. Where possible, the planting of leguminous plants is ad¬ visable; annual green manure crops such as sword beans, Mucuna, Capo logonium, Dolichos and others being suitable to smother the weeds. Perennial leguminous plants such as pigeon peas, Tephrosia purpurea or others are also suggested as they do not require planting every year and are cheaper to maintain, since they form a thick shade and only require moderate weeding. 12 After four or five years the trees flower and produce their first fruits, hut it is only when they are five to eight years old that they begin to bear proper crops. One of the main commercial uses of the coconut is in the preparation of copra. Copra is the name given to the white kernel of the coconut which is always dried in some way before it is exported. For the making of copra ripe fruits are chosen. The best fruits are those which have fallen to the ground and which have not begun to germinate. If copra is to be made on a large scale, however, more nuts will be required than those lying under the trees, so that the trees must be climbed and ripe nuts cut down. The ripe fruits are then collected into piles, allowed to lie for as long as a month and are then split open. The kernels may be dried in three ways: by sun-drying, by smoking, or by oven-drying. Great care should be taken to store copra in a dry place as it is very hygroscopic, that is, it easily absorbs moisture from the air. The main points of importance in the preparation and storage of copra are (1) slow and thorough drying without being wet at all during the drying; (2) storing in dry houses and shipping with as little delay as possible; (3) keeping the moisture content below six per cent. The Oil Palm.- The oil palm is a native of Western Tropi¬ cal Africa as far South as the Congo. It thrives in the moist climate of the West African forest regions and does not seem to 13 suffer from proximity to the sea. Where the rain fall is suffi¬ ciently heavy it is even found growing along the seashore in Sierra leone and French Guinea. It is seldom found in the dense evergreen and deciduous forests of West Africa. It seems to thrive best in the forest region between the deciduous forest and open grassy savannah to the south, east or west of the closed forest. It does not thrive to the north of the closed forest, but always on the south towards the sea. The depth of this oil palm belt varies from a few miles to fifty miles or more. In such regions the oil palm may be quite common and is often the dominant tree. In West Africa the oil palm is seldon grown specially on plantations as it grows so abundantly in the wild state. In northern Higeria it is often specially cultivated in fertile valleys. In the East Indies, however, particularly on Java and Sumatra, the Dutch have a successful plantation system which has gradually been capturing the West African palm oil trade. The types are thin-shelled,the commonest have a waste (useless shell between the outer pulp and the kernel) of thirty per cent against fifty per cent in the thick-shelled African types; and the yield of oil is very much greater. The two most important West African varieties of oil palms are here described: 1. Dura (variety Macrosperma Welw) Hard-shell Palm Hut. This nut is one of the commonest varieties dis¬ tinguished by its large bright red fruits with dark 14
tips. When young the fruits are often black.
The shell is thick and hard, and the pericarp
is quite rich in oil. 2. Variety Tenera. Thin-shelled Oil Palm. This
variety differs by having a thin shell which can easily be broken by the teeth. The bunches are
smaller than those of the preceding varities. The fruits are entirely red and the pericarp is thick, fibrous and rich in oil. The nuts are much smaller
than those of thick-shelled varieties. They are quite round and are much further away from the base of the fruits.
Because of its high oil content and the ease with which the shells are broken this variety is recom¬
mended as most suitable for special cultivation in West Africa.
The Deli is the commonest variety grown on plantations.
It yields a high percentage of-oil and is the variety on which most of the East-Indian oil palm industry is founded. The fruits are larger than the average West African fruit. Trees of this variety are now growing at various stations on the Gold Coast. Prom seeds introduced from Indonesia, Liberia has recently embarked on the cultivation of this variety.
The oil palm is also noted in Paraguay and other Central American Republics. Its incidence, however, is of little economic importance. 15 The oil palm is propagated by seeds. In nature the ripe fruits drop to the ground and the natural regeneration of seedlings round the base of the tree is prolific. nevertheless, the oil palm is often quite difficult to propagate in the nursery. First, like most palms, it germi¬ nates slowly. The fruits, including the pericarp, are planted in nursery beds. They are choëen from high oil-yielding trees ■ and must be sown when thoroughly ripe. First of all the soil is dug deeply and the fruits planted three or four inches apart in rows one foot to eighteen inches apart. The nursery bed is kept well shaded and watered, and in two or three months the seedlings generally appear. In the Bast Indies the seeds are first soaked for seven or eight days, the water being warmed to a temperature of be¬ tween 45° and 50° centigrade (113° - 122° Fahrenheit) three times daily. In Malaya the seeds have been found to germinate well in sand-beds covered with a glass frame and kept well watered. After three to six months* growth the young seedlings are sometimes transplanted into bamboo pots or baskets where they are allowed to recover and grow big enough to plant out into their permanent positions. In large plantations the seedlings are generally allowed to grow for one year or more in the nursery and are then transplanted in rainy weather to their permanent positions. By this method there is more danger of some of the seedlings dying as palm seedlings usually transplant badly. All blanks should be filled as soon as 16 possible with new plants. The trees are planted out symme-- trically twenty-five feet by twenty-five feet and require rich soil with a rainfall of fifty inches or more. They will grow in poorer soil and with less rainfall, but do not give such good results. They generally do well in all districts where cacao thrives. Palm trees start yielding commercially in eight to ten years, each tree producing from two to twelve bunches of fruit per annum for most of its life time. It has been discovered that while with increasing age the number of bunches produced decreases, the weight per bunch increases. The oil palm produces both male and female flowers. The male flowers consist of tassel-shaped bunches of brown flowers full of golden-yellow pollen. The tree is cross-pollinated. In the East Indies artificial pollination is carried out, only pollen from the best-yielding trees being chosen. It is shaken into bags and then shaken over the female inflorescences when the stigmas are ripe. This method has resulted in a sub¬ stantial increase in the yield of palm oil from the hutch plantations. The estimated global aggregate of cattle is distributed as follows: America 195.000. 000 Asia 240.000. 000 Europe 110.000. 000 Africa (negligible) 17 South America has a percentage of cattle to population as high as 150, and Australasia one of over EOO, while that of Europe is only 29. Milch cattle is approximately distributed as follows: Argentina 38,000,000 Uruguay 9,000,000 Brazil 34,000,000 Queensland 7,000,000 Colombia 9,500,000 Hew Zeland 3,500,000 In the eastern states of the United States, popular den¬ sity encourages the raising of cattle for milk and cream, especially in the most densely populated area - Hew York State. The Central Lake States are also largely dairy areas; Iowa being the great butter area. In Europe the area of fertile soil with cool and humid climate, lying between the Channel and the Baltic, from Ireland and Brittany to Finland and Russia, is essentially a dairy district where winter shelter and winter feeding are necessary; but intensive tillage on the small farms supplies a large pro¬ portion of the fodder. Pigs.- Pigs, originally foxmd in temperate forest of oak and beech, now have a world wide distribution, being fed mainly on maize and barley, potatoes, clover and dairy by-products. For a firm flesh, pigs should be finished on coconut foods. They are reputedly the most profitable of all "meat" animals. Pig raising for lard is closely associated with maize growing. The overwhelming importance of the United States in the distribu¬ tion of pigs is largely accounted for by the exceptional value 18 of maize as a fattening food. This country boasts over twenty' five per cent of the total world's supply (68,000,000). All the grain-raising countries of Europe raise considerable num¬ bers. This includes France, Poland and Spain with some 5,000,- 000 each; Yugoslavia, Hungary and Itally with over 2,500,000 each. Roumania boasts about 3,000,000 and Russia some 7,000,000. CHAPTER III
THE EDIBLE OIL AS A COMMODITY OP COMMERCE
Section I Extraction of Pats
Commercial animal fata usually are extracted from tissue by heat treatment (rendering), which causes the cells to burst. The fat rises to the surface and is skinned off. The temperature is controlled to 40° - 50° in rendering the high¬ est quality fat for pharmaceutical and edible purposes. In other cases, steam is often used, generally under pressure in an autoclave. Olive oil "and palm oil, the most important fruit pulp fats, are often extracted by hydraulic presses. Seed oils are obtained either by compression or by solvent ex¬ traction (petroleum ether) from finely ground kernels. Crude fats are refined by a number of processes, such as treatment with absorbents to remove various impurities, with alkali to eliminate free fatty acids, with steam at diminished pressure to remove volatile impurities which are often responsible for unpleasant odors.’*’
Section II Constitution and Size of the Producing Industry
The main bulk of the edible oil processing industry is
1Pieser, Louis P. and Mary. Organic Chemistry (New York. 1944), p. 10. *
19 20 located in those parts of the world where the business of agri¬ culture is sharply divorced from any interlocking arrangement with urban industry, and where the farmer may be truly said to be independent of the urban industrialist. Accordingly, the constitution of the edible oil industry in the most signifi¬ cant areas of factory processing may be said to be on the dis¬ integrated rather than the integrated basis. One important exception ought to be noted, however, the United Africa Com¬ pany, a subsidiary of Lever Brothers of New York City, has completely integrated all phases of production within its organizational structure. Its vast plantations in the Belgian Congo now supply the primary products for its vast and far flung processing machinery which span at least three continents. Within the narrow limits of a thesis, the treatment of this all important phase of the subject must perforce be abridged to an essentially representative picture. Therefore, only a brief commentary on the "world" situation of edible oils and fats is offered, a more detailed analysis being accor¬ ded the "position" obtaining in the United States and the United Kingdom, the two most important processors. Paraguay’s production of vegetable oils in 1950 is forecast at 10,850 metric tons, about 1000 tons greater than the output in 1949. However, most of the increase will occur in the inedible vegetable oils. Of interest to United States importers is the anticipated increase in production of tung oil. Approximately 40,000 tung trees are expected to yield 6,000 tons of tung nuts. Tung oil production 21 will approximate 1,800 metric tons, as compared with 1,300 tons in 1949. In 1948 (through Eovember ) the United States im¬ ported 1,220 tons of tung nuts and 22,000 pounds of tung oil from Paraguay.1 The edible oil situation in the Argentine is reported as follows: Combined edible oil production from 1948-49 crops is estimated at about 300,000 metric tons, of which 120.000 tons, chiefly sunflower seed oil, are believed available for exportation. A sale in late December 1949 of 45,000 tons of semi-refined edible oils to the United Kingdon, consisting of 38,000 tons of sunflower seed oil and 7,000 tons of cotton seed oil storage space which has been taxed by accumulating supplies. The United States currency equivalent of the price paid by the United Kingdom is reported to be 14 5/8 cents per pound, f. o. b. Buenos Aires, a con¬ siderable reduction from the Argentine Trade Promo¬ tion Institute's official export quotation. As of January 1, 1950, Trade Promotion Institute's stocks were estimated at approximately 70,000 tons of sunflower seed oil and 200,000 tons of sunflower seed. However, it is expected that farmers this year will reduce the area planted to sunflower seed by fifteen? per cent from last season's record, 4,695,000 acres. Sweden's supplies of food fats and oils in the year ending August 31, 1950, are expected to be larger than in 1948-49. Although imports may decline, domestic production (principally butter, tallow, lard and rapeseed) is estimated at 176,200 metric tons, nearly 29,000 tons greater than in the preceding year. Consumption of about 172,000 metric tons of edible fats and oils is expected in 1949-50, as compared with 165.000 tons in 1948-49. In the year ended August 31, 1949, Sweden imported 56,400 metric tons of fats and oils for edible purposes, including copra(oil equivalent) 19,800 tons; whale oil,
Foreign Commerce Y/eekly. Vol. XXXVIII, Bo. 8 of February 20, 1950, published by United States Department of Commerce, Office of International Trade, p. 33. 2Ibid. p. 2. 22 15,000; and vegetable and animal fata and oils, 21,600. These imports were one-third greater than receipts in the preceding year and closely- approached prewar (1938-40 average) imports of 58,300 tons.1 Import Requirements and Governmental Control, Prance: - Imports into Prance of the so-called 'soft' vegetable oils (peanut or soy bean) or their oil seeds from sources other than French oversea territories will probably not be necessary before late 1950. Consumption requirements of 240,000 metric tons annually will be met partly from ex¬ pected imports of 1£5,000 tons (oil equivalent) of peanuts and peanut oil from French West Africa and production of 60,000 tons from domestic oilseeds. It is difficult to foresee how much of the remaining deficit may be made up by French north African olive oil, but estimates have ranged from 30,000 to 50,000 metric tons. The supply situation is not as favorable in the case of the 'hard* oils (coconut and palm), stocks of which wore burdensome last summer. They have now been largely absorbed, and it is expected that imports from non-French sources in 1950 may amount to approximately 50,000 tons (oil equivalent). The organization of the commerce in oil-seeds and vegetable oils in France has been changed radically. Since the war, a monopoly of all fat and oil imports , whether from French oversea Terri¬ tories or foreign countries, was vested in a semi- ■ governmental agency, the Groupement National d'Acbat des Produits Oleagineu, commonly called the GEAPO. This agency also purchased domestic oilseeds and and vegetable oils with a few minor exceptions, such as olive oil and walnut oil. By an order of December 31, 1949, the functions of the GEAPO were reduced greatly, and according to present plans it will be terminated by the end of May, 1950. Until its expiration, the GEAPO will re¬ tain the monopoly on imports of the ’soft' oils and their oilseeds, flaxseed and linseed oil, and on purchases of all domestic oilseeds of the 1949 crop. Commerce, both foreign and domestic, in all other fats and oil products, including ’hard* oils and oil-bearing materials, and all animal fats, has now reverted to private trade.'2 ^Foreign Commerce Weekly. Vol. XXXVIII, Eo. 8 of February 20, 1950, published by United States Departnent of Commerce, Office of International Trade, p. 33. 2 TIbid . p. 2. 23 1949 United States Production»- Reports covering the pro¬ gress of this year's crops indicate an even more favorable outlook for fats and oils production in the 1949-50 season than expected earlier. It is now estimated that output from domestic materials could reach 11.V billion pounds, 475 million pounds more than in 1948-49. The estimate for 1949-50 excludes an allowance of some £00 million pounds oil equiva¬ lent of oilseeds, principally soy beans, that may be available for shipment abroad. Including the oil equivalent of exported oilseeds, total new supplies from domestic materials in the 1949-50 season this may approach 11.0 billion pounds, 200 million more‘than the comparable figure for the past season.
If total new supplies of 11.9 billion pounds of fats and oils are actually realized in 1949-50, such a level would be sufficient to provide for a per capita consumption of sixty- eight pounds, one half more than in 1948-49, and still leave 1.25 billion pounds for net exports or increases in stocks. From present indications, net exports will be considerably below last season's record 950 million pounds. While October 1, 1949, stocks of 1.6 billion pounds of primary fats and oils were 400 million pounds above the low level of a year earlier, they were still 365 million pounds less than the prewar (1937-41) average for that date. Production of fats and oils from domestic materials in
1948-49 was the highest attained thus far in our (United
States) history. Output of 11.2 billion pounds was 1.4 24 billion higher than in the preceding season, and almost 200 million higher than the previous peak reached in 1943-44. The greatest gain in production occurred in cotton seed oil, but there were also substantial increase in soy bean oil, lard, butter, linseed oil and tallow, as well as grease. United States Production, 1949-50 Season. Revised Estimates » - The November crop report indicates 1949 harvests of oilbearing crops generally larger than were expected earlier. The cotton crop is now estimated at 15.5 million bales while cotton seed production, computed on the basis of average ratio of seed to lint, is placed at 6.3 million tons, 5 per cent higher than obtained in 1948, and the highest since 1937. The average per acre'yield of soy beans for 1949 is higher than that of 1948 owing to favorable growing and har¬ vesting weather; this year's estimated harvest is set at 215.2 million bushels, only five million bushels less than the record 220.2 million bushels produced in the previous season. There has also been some improvement in the peanut crop over earlier indications, although the 1.8 billion pounds estimated is still 21 per cent below the 1948 record crop. Production from domestic materials in the 1949-50 season is now placed at nearly 11.7 billion pounds, 475 million higher than the favorable production realized in the 1948-49 crop year. The estimate for 1949-50 is net of some 200 million pounds oil equivalent of oilseeds, principally soy beans, that may be available for shipment abroad in the new season. Including the 25 oil equivalent of exported oil seeds, total new supplies from domestic materials in 1949-50 thus may approach 11.9 billion pounds.
Higher prospective production in the 1949-50 season will be primarily attributable to a greater supply of the edible animal fats - lard and butter. Combined edible vegetable oils output of 3.8 billion pounds will be somewhat below the peak production obtained in the past season, with a reduction of
100 million pounds in soy bean oil more than offsetting small prospective increases in cottonseed and peanut oil. Lard production in 1949-50 is placed at nearly 2.9 billion pounds. In the case of butter the estimate for the new season has been raised to 1.8 billion pounds (creamery and farm butter combined), 115 million more than in 1948-49. Over-all milk supplies may be somewhat larger, whereas it is expected that exports of dairy products and domestic fluid milk and cream consumption will be smaller. Thus, supplies of milk for manufactured dairy products will be increased, the greatest expansion being most likely manifested in butter. If total new supplies of 11.9 billion pounds of fats and oils are actually realized in 1949-50, such a level, adjusted for butter expressed in terms of fat, would be sufficient to cover a per capita consumption of sixty-eight pounds for our increased population, one-half pound more than apparent con¬ sumption in the 1948-49 crop year; permit net exports of 950 26 million pounds; and still leave 300 million pounds for addi¬ tion to stocks. (See Table 1. page 27). The output trend for edible oils and fats in the United States may be inferred from the following table of compara¬ tive production data for intervals spanning the period 1942-43 to 1949-50. The growing economic inportance of soy bean oil is clearly indicated vis-a-vis cotton seed. The superior position in terms of quantity - sustained by lard, as compared with butter, is also to be noted. (See Table 2, page 28). Prices.- Recent prices of most major fats and oils have not changed materially from Kovember and December, 1949 levels. Among the edibles, only crude cotton seed oil at eleven cents in mid-January, 1950 was once cent higher than the average December quotation; and crude coconut oil quoted at 17i: cents (tax paid) was bout one-half a cent higher than in the preceding month of December. The year 1949 was the first of the post war years in which prices for most fats and oils commodities, particularly the edibles, did not show wide, erratic swings. In contrast to the situation in 1947 and 1948, when for some commodities the range in monthly prices last year generally did not exceed five cents. (See Table 3. page 29). United Kingdom Edible Oils Situation.- Consumption of fats and oils in the United Kingdom in 1947 was about 1,119,900 TABLE 1
PRIMARY MATERIALS : U.S. FACTORY PRODUCTION AND CONSUMPTION, AND FACTORY AND WAREHOUSE STOCKS, DEC. 1949 - NOV. 1949* (in Thousands of Pounds)
Factory Pr pduction Factory Consumption Factory Warehouse Dec. Nov. Dec. Nov. Stock Stock Vegetable Oils 1949 1949 1949 1949 Dec. 31 Nov. 30 1949 1949
Cotton seed, crude 217,619 252,640 190,049 206,672 181,587 162,355 Cotton seed, refined 172,940 188,938 133,830 144,799 218,210 174,981 Peanut, crude 26,211 31,408 13,981 15,318 19,708 12,214 Peanut, refined 13,205 14,722 6,606 9,557 8,743 4,809 Soy bean, crude 166,855 165,473 128,529 145,477 90,116 69,405 Soy bean, refined 119,251 133,442 104,727 129,801 59,985 57,976 Coconut, crude 42,726 55,482 45,222 48,532 146,739 134,570 Coconut, refined 24,304 25,363 22,344 23,287 9,016 8,676
Aninal Fat:
Lard rendered^ 260,000 225,000 Not Ava ilable 99,658 48,292 Lard refined^- 137.000 148.000 2,181 3.633 30,927 24,046
Source : United States Department of Commerce Bulletin, Facts for Industry, Series ML7-1-129. Washington: Government Printing Office, December 1949.
Data on production collected by U. S. Department of Agriculture. Refined lard production data represents Federally inspected lard. Lard stocks include quantities held in refrigerated storage amounting to 72,617,000 and 39,800,000 pounds for December 31 and November 30, respectively, as re¬ ported by the U. S. Department of Agriculture.
27 TABLE 2
U. S. FATS AND OILS PRODUCTION FROM DOMESTIC MATERIALS* (Million Pounds)
Preliminary Estimate Crop Year 1942-43 1943-44 1944-45 L945-46 1946-47 1947-48 1948-49 1949-50
Cotton seed oil 1,401 1,236 1,324 1,018 973 1,275 1,704 1,835 Soy bean oil 1,206 1,219 1,347 1,415 1,530 1,533 1,806 1,750 Corn oil 240 214 217 183 250 200 225 225 Peanut oil 131 135 107 99 139 126 144 170 Olive oil 10 6 4 2 2 3 5 5 Total Edible Vegetable Oils 2,9 88 2,810 2,999 2,717 2,894 3,137 3,884 3,985
Lard and Tendered Pork Fat: Federally Inspected 1,944 2,541 1,374 1,311 1,666 1,628 1,855 2,125 Other 738 726 743 796 689 697 670 740 Total 2,682 3,267 2,117 2,107 2,355 2,325 2,525 2,865
Butter:
Creamery 1,725 1,510 1,420 1,109 1,366 1,196 1,375 1,485 Farm 347 331 330 331 320 303 316 315 Total 2,072 1,841 1,750 1,440 1,686 1,499 1,691 1,000
Other Animal Fats 272 213 202 130 173 142 180 180 Total Edible Animal Fats 5,026 5,321 4,069 3,677 4,214 3,966 4,396 4,845
^Source: U. S. Department of Commerce, Office of Domestic Commerce - Food Division Industry Report Fats and Oils, January, 1950. 28 TABLE 3
AVERAGE WHOLESALE PRICES OF LEADING FATS AND OHS - U. S. 1947-49* (Cents per pound)
1947 1948 1949 March June Sept. Dec. March June Sept. Dec. March .June Sept. Dec.
Lard, prime 27.3 19.6 17.5 25.9 22.2 20.7 20.4 17.7 12.3 10.9 LI.9 10.1 Steak, tank cars Chicago
Cottonseed oil, 32.5 25.7 20.4 25.0 24.7 33.1 24.7 18.5 13.2 10.7 12.6 9.9 crude tank cars, S. E. Mills
Soy bean oil, 29.3 22.3 17.3 24.2 22.5 26.0 22.3 18.3 12.5 10.2 11.3 10.0 crude tank cars, Midwestern Mills
^Source: Bureau of Labor Statistics and Trade Publications as reported in U. S. Department of Commerce - Office of Domestic Commerce - Food Division Industry Report - Fats and Oils, January, 1950.
29 30 tons (long), or slightly better than in 1945 (l,09£,700 tons) but this group of commodities as a whole continues to be among the scarcest in the whole British economy. This is true of both edible and industrial fats and oils. As compared with prewar trade, the reductions in the imports of butter and lard have been great. In 1947 butter was fifty-five per cent and lard seventy-nine per cent below 1938 levels,and these reductions, together with a sharp de¬ cline in the domestic production of animal fats, have made the United Kingdom more dependent upon vegetable oils. For its requirements of vegetable oils the United Kingdom is almost wholly dependent upon imports either of the oil¬ bearing seeds and nuts or unrefined or refined oils. With the single exception of linseed, it produces no oil crops. British colonial areas, particularly the tropical colonies, are important suppliers of vegetable oils. Insofar as edible fats and oils are concerned, figures are available for butter, margarine, lard and compound lard. The amount of olive oil and other liquid oils consumed for salad preparations and other cooking purposes is negligible. The British Government and the vegetable-oil industry are concerned about the long-term as well as the short-term shortage of vegetable fats and oils. The most disturbing factor is that India can no longer be counted on as an important source of peanuts. To relieve the shortage, the British Government embarked on a large-scale project for the 31 production of peanuts in the East African colonies years ago. The following table indicates that in recent years in¬ creases in vegetable oils for non-food uses has remained fairly constant. The consumption of pure lard, mainly the United States lend-lease product, was large dur ing the mid¬ war years but has subsequently declined to a low level. (See Table 4. page32). United Kingdom Prices and Marketing Situation.- All importations are made by the British Ministry of Food, generally through bulk contracts with the supplying countries. The prices paid by the Ministry for oilseeds and nuts and for processed oils are not revealed and little authentic infor¬ mation about import prices is available. The Ministry sells its products to manufacturers, whole¬ salers and other large users at fixed prices. The prices quoted are for four-week periods and revisions are made only at the end of such periods. The selling prices are believed to approximate roughly the cost of the stocks but there are no convenient means of comparison. Known increases in import prices are ordinarily followed by increases in the Ministry's selling prices some weeks later. For margarine and domestic cooking fats, a consumer subsidy - currently about 2-J- d ( 4 l/3 cents) a pound - is involved. The subsidy is paid to licensed processors to enable them to move their produce into retail channels at the controlled price. TABLE 4
UNITED KINGDOM: CONSUMPTION OF FATS AND OILS BY TYPES AND USES* (Thousands of long tons)
- Animal Fats ? Vegetable Oils’* Total Year Butter Lard Food Non Food For Food Non Food Total
1934-38 average 501. S 87.7 306.8 275.6 896.3 275.6 1171.9
1943 167.4 218.4 416.0 265.2 801.8 265.2 1067.0
1944 161.2 189.2 457.6 286.0 808.0 286.0 1094.0
1945 183.0 90.7 473.2 306.8 746.9 306.8 1053.7
1946 236.6 35.6 452.4 291.2 724.6 291.2 1015.8
1947 242.3 15.4 457.6 275.6 715.3 275.6 990.9
^Source: Compiled from Monthly Digest of Statistics and from Monthly Trade And Navigation Accounts of The United Kingdom as reproduced in U. S. Department of Commerce, Office of International Trade Bulletin, 'World Trade in Commodities", Vol. VI, Part 6, No. l+> "Fats and Oils" for November, 1948.
■^As crude oil. 2 Lard imports in calendar years noted. Changes in lard stocks and home production of lard not taken into account.
32 33
Sect ion III International Trade in Edible Oils
Exports»- Ground nut oil exports in 1934-38 amounted, on the average, to 180,000 tons a year; an increase of about 40,000 tons over the average of the preceding five-year period. European countries were the principal exporters, France, the Netherlands, the United Kingdom, Denmark and Germany being the most important. China was the only impor¬ tant ground nut producing country which exported substantial quantities of oil in addition to nuts, though the trade of India, the East Indies, and French West Africa was expanding. The bulk of the oil exported from Hong Kong was of Chinese origin. France continued to export until 194E, but exports from other European countries were negligible after 1939. Shipments from French West Africa showed a further marked ex¬ pansion, and in the latter part of the war, vtfien supplies from China and India were reduced to negligible proportions, it was the only source of any importance. The estimated production of the main oil seed crops in the principal producing countries in 1945 and 1946, in terms of oil, was nearly thirteen per cent below the 1934-38 average. This was due very largely to a substantial fall in the output of palm oils, a reduction of about one-third in the production of cotton seed oil, and some reduction in the output of olive oil. 34 The estimate for the soya bean crop on the other hand, showed an' increase of about twenty per cent. The reduction in the output of palm oils was due mainly to the lower production of these oils in the East Indies and the Philippine Islands. By 1947, however, the rate of output of Philippine copra was higher than before the war. The pro¬ duction of copra in Ceylon, which was well maintained during the war, was affected in 1946 by drought. Production of palm oil and palm kernels in British West Africa is still below the pre-war level, but it is appreciably higher in the Belgian Congo where production has been increasing steadily for a number of years. Exports.- The much reduced output of cotton seed oil has been brou^it about by a decline in the acreage devoted to cotton growing in most of the main producing countries. The acreage in 194 6 showed some slight recovery, but yields were low, particularly in Brazil and the United States. Practically the whole of the world output of olive oil is produced in the Mediterranean area and the supply varies considerably from season to season, depending on the climatic conditions. Total exports of vegetable oils (including seeds in terms of oil) in 1945 were little more than one-third of the 1934-38 average and exports in 1946, though showing some recovery, were still less than half of the pre-war level. The increase in 1946, compared with 1945, was due chiefly to heavier exports 35 of copra and coconut oil. (See fable 5,page 36) A development of considerable importance in the inter¬ national trade in vegetable oils and oil seeds in recent years has been the establishment or expansion of the oil seed crushing industries in the producing countries and the growing tendency of these countries to export oils instead of oil seeds. This \ development has been particularly noticeable in the greatly in¬ creased exports of linseed oil and sunflower seed oil from Argentina and of ground nut oil from i'rench West Africa. There has, however, been a big expansion in the output of vegetable oils in several producing countries, notably in India and Canada• Imports.- With the closing of the main markets in Con¬ tinental Europe the bulk of the available supplies during the war was shipped to the United Kingdom and to the United States, though fairly substantial consignments were sent to the Soviet Union under Lend lease in some years. Imports into the United Kingdom rose sharply in the early war years and, after a slight setback in 1942, reached a peak at about 880,000 tons, in terms of oil, in 1943, an increase compared with the average for 1934-38 of over fifty per cent. In 1945, however, imports were only at about the pre-war level and there was no marked recovery in 1946. The expansion in supplies during the war was due largely to increased imports of palm oil, palm kernels and groundnuts. Imports into the TABLE 5
ANNUAL PRODUCTION OF MAIN OILSEED CROPS IN PRINCIPAL PRODUCING COUNTRIES AND EXPORTS BY COUNTRIES* , (in thousand tons long oil equivalent)1
Production Exports Average Average 1934-38 1945 1946 1934-38 1945 1946
China 3190 2,820 2770 221 5 37 India 1933 2,061 2018 476 203 104 United States 1285 1,942 1830 10 65 67
Soviet Union 1060 640 770 14 Europe 1010 630 900 89 6 8
East Indies 732 88 141 521 1 33 Manchuria 720 590 560 485 70 75
British West Africa 640 590 590 455 360 386 Argentina 636 654 632 516 224 249
Phillippine Islands 440 40 460 338 8 380 French West and Eq. Africa 402 194 192 279 120 140
■«Source: Vegetable Oils and Oilseeds (Compiled in the Intelligence Branch of the Commonwealth Economic Committe, 1948) published by H. B. M. Stationery Office, London, 1948.
■*"The oil extraction rates for oilseeds vary from country to country, depending on the method of extraction, the oil content varying with the oilseed and conditions of cultivation. 36 37 United States during the war consisted mainly of palm oils and of linseed, castor seed and sunflower seed oil from South
America. Unlike the pre-war years, both Canada and South Africa obtained substantially large supplies during the war. The in¬ creased imports into Canada consisted mainly of copra, soya bean oil and sunflower seed oil. These were, however, offset to some extent by reduced imports of coconut oil and palm oil. The principal imports into South Africa were ground nuts and palm oil from West Africa. There were also fairly heavy im¬ ports of coconut oil and copra into Australia. United Kingdom Foreign Trade.- Total fats and oil imports, on an oil equivalent basis, amounted to 1,238,000 long tons in
1947 as compared with 1,616,000 in 1938. The 1947 total, how¬ ever, was well above the figures of 969,000 in 1945 and 1,008,- 000 in 1946. Insofar as vegetable oils are concerned, the import figures reveal that the United Kingdom has been obliged to take an increasing proportion of its inports as processed or semi-processed oil rather than as the raw material itself
(oil bearing seeds and nuts). This is an unwelcomed develop¬ ment since the United Kingdom has a large oil-processing in¬ dustry and the cake and meal by-products are urgently needed for feeding purposes in the country. Among the imports of oil seeds and nuts, palm kernels were the largest single item and far exceeded the imports in 38 1938. They were received mainly from British West Africa.
Copra also showed a good recovery, while imports of cotton seed, peanuts and various others were down sharply.
Exports and re-exports of fats and oils are relatively insignificant. United States Foreign Trade.- United States shipments of fats and oils abroad in the first nine months of 1949 totaled 1,765 million pounds, nearly three times as much as was ex¬ ported in the comparable period a year ago. In contrast im¬ ports of 786 million pounds were eighteen per cent less than in January - September 1948, with the reduction attributable principally to lower receipts of copra and tung oil. Bet ex¬ ports up to September 1949 amounted to 979 million pounds as contrasted with net imports of 339 million pounds in the first nine months of 1948.
Through November 1949, a total of nearly 2.1 billion pounds of fats and oil were sent abroad; more than twice as much as were exported in the entire year 1948 and equal to about four times our pre-war (1937-41) average exports. Major commodities exported in the first eleven months of last year were lard - 558 million pounds; soy bean oil, crude and re¬ fined - 371 million; soy beans, oil equivalent - 202 million; shelled peanuts, oil equivalent - 145 million; and cotton seed oil, crude and refined - 107 million. larger imports since August, 1949, primarily of Phillipine 39 oopra and coconut oil, have made the coraparison of last year’s total receipts with those of 1948 less unfavorable. Whereas in the first six months of 1949, total inports vaere nearly 190 million pounds or twenty-seven per cent lower than in the com¬ parable period of 1948, by November, total receipts of 1,039 million pounds were 85 million pounds or eight per cent lower than a year earlier. Through November 1949, the United States exported a billion pounds more fats than it imported, whereas in the same eleven months of 1948, she was on a net inport basis to the extent of 345 million pounds. CHAPTER IV
ASSESSMENT OP EDIBLE OIL AS AH ECONOMIC COMMODITY
Part I
One of the most serious shortages caused by the war is
that of oils and fats, and it still persists. Hot only is
there a substantial decline in the world production of these
essential commodities, but there is an even greater reduction
in the quantities entering int er national trade, and, as of
1948, in very few of the more important consuming countries
is the total supply available more than seventy-five per cent
of the quantity consumed before the war, while in many of
these countries consumption is little more than fifty or
sixty per cent of the pre-war level. One of the primary
causes of this deficiency is the wartime dislocation of the
trade in vegetable oils and oil seeds, and it is largely from
the restoration and expansion of this trade that increased
supplies of oils and fats generally must be expected. But
the rate of recovery so far has been slow.
The world production of fats and oils of all kinds in the
years just before the war amounted, on the average, to between
twenty-one and twenty-two million tons a year, of which the oil
equivalent of the oil seed crops represented roughly three-
fifths and animal fats and marine oils the remaining two-fifths.
World exports averaged about 5 3/4 million tons a year and of
this total vegetable oils, including oil seeds in terms of oil,
40 41 accounted for 4 l/4 million tons , while animal fats and marine oils each provided some 3/4 million tons. In 1946 the esti¬ mated world production was under twenty per cent less than the pre-war average, hut the total quantity of oils and fats which entered world trade fell by more than fifty per cent; the total
amounted to only 2 3/4 million tons, vegetable oils constitu¬ ting two million tons and animal fats the bulk of the remainder. Various demand and supply factors have contributed to the creation of the present situation. The demand for oils and fats have been increased by the normal rise in populations and by technical development which have tended to raise the actual or potential consumption both in consuming and in producing countries. In Continental Europe the decline in numbers of dairy cows, and pigs, formerly the chief source of the area's fat supply, has resulted in a greatly reduced output of animal fats and, in consequence, a greatly increased demand for im¬ ported vegetable oils. The greatest single factor on the supply side, however, has been the tremendous reduction in the supplies of vegetable oils and oil seeds from the countries in the Far East which were occupied by the Japanese. Before the war these countries, chiefly Malaya, the East Indies, the Philippine Islands, China and Manchuria, provided roughly forty per cent of the total world exports of vegetable oils and oil seeds; and, although there has been some recovery (notably in the case of the Philippines) the supplies available for export are still 42 very much below the pre-war level. Another significant factor has been the critical food situation in India, which has led to some change over from oil bearing crops to grain and pulse crops and a restriction of exports to meet increased domestic requirements. The number of vegetable oils important in international trade is comparatively small, seven of them usually accoun¬ ting for about ninety per cent of the total. These are coco¬ nut oil, palm and palm kernel oil, ground nut, linseed, soya bean, and cotton seed oil. The demand for fatty oils comes mainly from the food and soap making industries, large quantities being consumed in the manufacture of paints, varnishes, lubricants and for other purposes. Each oil has its own special characteristics and none is equally well suited for all purposes. The commercial development of hydrogenation and other improved processing methods have, however, made the different oils largely and increasingly interchangeable. It is now possible to use oils in the manufacture of margarine and cooking fats which for¬ merly were considered suitable for only inedible and indus¬ trial purposes. Even so, some oils are more generally used than others for particular purposes. Thus for the manufacture of marga¬ rine, the most important vegetable oils are usually coconut, palm kernel, palm, ground nut, cotton seed and soya bean. 43 Coconut, palm and palm kernel oils are also used widely for soap making, l'or compound lard, cotton seed oil usually pre¬ dominated, but soya bean oil and ground nut oil have been used more extensively in recent years. An important by-product of the oil seed crushing industry is the residual oil cake or meal, which is of considerable value on account of its high protein content. In most cases the weight of cake produced is much greater than that of the oil, though its value is smaller. The most important oil cakes fed to stock separately or mixed are cotton seed, soya bean, ground nut, linseed and coconut. The greater part of the available supplies of vegetable oils in the United States and Great Britain is utilized for the production of soap, margarine and compound lard. The United States is by far the most important soap pro¬ ducing country. Palm oil and palm kernel oil are not utilized to any con¬ siderable extent for soap making in the United States, where the main ingredients are inedible tallow and coconut oil. (See Table 6, page 44). Germany was the principal margarine producer before World War II and in 1934-38 its output of nearly 400,000 tons a year was equal to the combined total of the United Kingdom and the United States, which ranked next in importance. Margarine production in Germany and other continental TABLE 6
SOME OILS AND FATS USED IN SOAP MANUFACTURE B! THE UNITED STATES* (Thousand long tons)
Ingredients 1939 1940 1941 1942 1943 1944 1945 1946
Vegetable
Coconut 174 177 216 63 64 59 27 83
Palm 46 38 58 25 15 9 11 3
Palm Kernel 2 — 1 1 1 1 13 8
Olive, inedible 9 7 5 2 2 1 1 —
Soya bean 5 8 11 14 7 1 2 2
Tallow 351 351 474 531 402 469 439 392 Secondary Oils and Fats 85 76 85 85 125 148 176 l6l
•"■Source: Vegetable Oils and Oilseeds printed and published for the Commonwealth Economic Committee by His Majesty's Stationery Office, London, 1948.
44 45 countries declined appreciably after 1939. Output in the United Kingdom, however, reached new high levels; from 1941 - 1945 inclusive it exceeded the German pre-war average. Pro¬ duction in the United States also expanded after some reduc¬ tion in the earlier years, and in 1943 and 1945 it was double that of 1939. Tnere was a substantial recovery in production in Prance, Belgium and the Netherlands in 1945 and 1946. The consumption of oils and fats in the manufacture of margarine in the United Kingdom in 1934-39 amounted, on the average, to about 160,000 tons a year, of which vegetable oils and fats provided some 85,000 tons, about fifty-five per cent, and whale oil most of the remainder. During the five years, 1941-45, the quantity of oils and fats used rose to 340,000 tons a year, of which vegetable oils and fats accounted for as much as 280,000 tons, over eighty-two per cent. Coconut oil was the main ingredient before the war, but after 1936 ground nut oil was equally important, and during the war ground nut oil and palm kernel oil took the leading places, with, in some years, palm oil next in importance. (See Table 7, page 46).
The United States margarine industry utilized some 133,000 tons of oils and fats a year in 1934-38 and over ninety per cent of this quantity consisted of vegetable oils and fats. Marine oils are not used for margarine in the United States. In 1933 coconut oil accounted for seventy-five per cent of the total, but with the imposition of Federal excise taxes on imports of TABLE 7
OILS AND FATS USED IN THE PRODUCTION OF MARGARINE IN THE UNITED KINGDOM* (Thousand long tons)
Ingredients 1937 1938 1939 1940 1941 1942 1943 1944 1945 1946
Vegetable:
Groundnut 31 32 X** 50 88 98 62 108 114 82 Coconut 27 35 X 49 46 28 36 19 27 55 Cottonseed 14 16 X 14 6 1 5 4 6 1 Palm Kernel 10 8 X 66 84 84 90 103 100 70 Palm 3 6 X 34 52 40 60 56 26 15 Sesame — — X 1 1 5 6 1 1 1 Miscellaneous 1 4 X 6 5 8 17 7 7 8 Total 86 101 X 220 282 264 276 298 281 232 Animal : Oleo Stearine 4 4 X 2 3 1 1 2 2 1 Premier Jus 2 2 X 1 5 3 3 — — 1 Miscellaneous 3 9 X — — — — -— — — Total 9 9 X 3 8 4 4 2 2 2 Marine 66 X 80 "62 72 50 34 57 43 Total 161 177 X 303 352 340 330 334 340 277
*3ource: Vegetable Oils and Oilseeds printed and published for the Commonwealth Economic Committee by His Majesty's Stationery Office, London, 1948.
**No data available for this year. 46 47 coconut oil in the following year the proportion fell to under thirty por cent in 1937 and 1938, and in these years cotton seed oil provided about half of the annual totals. Cotton seed oil remained the main ingredient throughout the war, and, with supplies of coconut oil very much reduced, soya bean oil took second place. The total consumption of oils and fats for the production of margarine in 1941-45 averaged 190,000 tons a year. The total for 1946 was 208,000 tons.
Compound Lard.- The United States and the United Kingdom are the only large producers of compound lard, the United
States being by far the most important. There has, however, been a rapid development in this industry in the United Kingdom; the output of, 132,000 tons in 1939 being three times as great as in 1930. Production rose still further in 1940, but after that year it fell to very low levels. There was some recovery in 1945 and in 1946 production returned to its pre-war level.
Cottonseed oil is the chief ingredient of compound lard in the United States, and of 670,000 tons of oils and fats used annually, for the production of this commodity in 1934-38, cotton seed oil accounted for seventy per cent and other vegetable oils a further twenty per cent. The consumption of cotton seed oil declined during the war and after 1943 the first place was taken by soya bean oil which has become steadily more important since 1934.
Salad Dressings And Related Products.- Other significant food derivatives from edible fats and oils are salad dressing, 48 mayonnaise, sandwich spreads and allied products. (See Table 8, page 49). Vegetable oils consumed in the manufacture of salad dress¬ ing products in the United States amounted to 376 million pounds in 1948 as compared to 342 millions in 1947 and 22.2 million in 1946. Cotton seed, soy bean and corn oil accounted for ninety-seven per cent of the total oil used. (See Chart I, page 50. ) During 1948 the United States' production of salad dress¬ ing, mayonnaise and related products continued to increase over previous years. Total commercial output is estimated at 89.5 million gallons, an increase of 10.2 million gallons or 12.9 per cent over 1947, when producticn reached an all time high. Production in 1948 more than doubled the output in pre¬ war years. Manufacturer's invoice value increased by 37.9 million or 19.8 per cent as compared with 1947. Higher average unit prices in 1948 accounted for the greater per¬ centage increase in dollar value than in volume. (See Chart II, page 51.) U. S. Consumption per capita of 4.9 pints reached the peak level in the history of the industry during 1948 despite the higher price trend. In the years 1947 and 1948 there was an unprecendented ex¬ pansion in the production of salad dressing products, which occurred after a period of five years when the industry was TABLE 8
OILS AND FATS USED IN THE PRODUCTION OF COMPOUND LARD IK THE UNITED STATES* (Thousand long tons)
Ingredients 1937 1938 1939 1940 1941 1942 1943 1944 1945 1946
Vegetable: Cotton seed 519 470 404 367 397 309 255 219 217 224 Palm 55 51 50 15 39 13 — — — — Soya bean 40 62 90 95 96 150 254 277 305 332 Ground nut 26 23 23 10 36 17 23 27 23 19 Sesame 13 2 — — — — — — — — Coconut 6 12 9 8 10 2 — — — 8 Miscellaneous 4 1 3 1 — 14 8 5 9 4 Total 663 TST 579 “495“ 578 505 540 528 554 137
Animal: Tallow 30 33 25 18 18 25 35 27 35 20 Stearine 13 15 11 7 10 14 13 10 11 6 Lard — 1 3 8 23 27 17 17 10 9 Miscellaneous — — 1 — 1 — 1 1 2 1 Total 43 49 40 33 52 66 “55“ 55 58 13
Marine: Fish 10 7 9 5 3 3 6 1 2 — Total 716 528 534 533 574 612 584 5l4 123
*Source: Vegetable Oils and Oilseeds printed and published for the Commonwealth Economic by His Majesty's Stationery Office, London, 1948. 49 CHART I
S/EGETR3LE OILS US£D IN COMMETIC/HL TKOJJUCTlON Of SAUIH JESSING-, MITONNAISB A/va3 '-RELATED TKODUCT^ /Î44 , IHY ANU
0TH£K ô.lf % DTH^T? X'^/H fÛH- 0*7%
14 <+ 6
22Z.I MILLION TOOfOS Ith-I 14^8 34-1-9 MILLION P SOUTtCElDErfiKlMENT OFsCOMMEKCe, OrflC-£ Of DOMESTIC. Co/*?ME7?Cg 50 CHART II dope. : + J*i «yo/V/V fit / S £ -tf . . SRLftJï JZJZ6.S Sifi/Gr 51 52 practically at a standstill due to the restricted use of raw materials during the war period. Rationing of vegetable oils was the principal curtailing factor and although these regula¬ tions were terminated in late 1945, indirect government con¬ trols affecting oil supplies continued through most of 1946. Therefore 1947 was the first year since 1941 when the industry's chief raw material was completely free from government controls. In addition, in 1947 manufacturers could use sugar in greater quantities. Rationing of this commodity, first insti¬ tuted in May, 1942, was terminated in July, 1947. With im¬ proved availability of all raw materials, output of salad dressing products, which had remained below the sixty million gallon level, has risen to 89.6 million gallons, a record breaking total. (See Table 9, page 53). Cotton seed oil continued as the principal oil used by the industry. Usage of cotton seed oil increased from 145 million pounds in 1947 to 171 million in 1948, comprising 45.6 per cent of the total use, and 17.9 per cent increase over the amount used in 1947. Soy bean oil usage increased from 88 million pounds in 1947 to 104 million in 1948, which represented an 11.8 per cent gain. While the amount of soy bean oil used by the salad dress¬ ing industry has varied in relation to the total amount of oils * used, there has been a continuous upward trend in the actual TABLE 9 ESTIMATED U. S. PRODUCTION, VALUE AND HER CAPITA CONSUMPTION OF COMMERCIAL SALAD DRESSING AND RELATED PRODUCTS 1937-48* Production Manufacturers' Per Capita (Million Gallon) Invoice Value Consumption Year (Million Dollars) (Pints) 1937 38.2 49.9 2.4 1938 38.6 48.4 2.4 1939 41.7 48.3 2.5 1940 43.7 51.8 2.6 1941 50.3 63.4 3.0 1942 53.1 79.8 3.1 1943 50.9 8l.fi 3.0 1944 58.7 95.4 3.4 1945 51.6 85.6 2.9 1946 57.9 111.6 3.3 1947 79.3 191.3 4.4 1948 89.5 229.2 4.9 *Source: Steele, Anna M. Salad Dressing, Mayonnaise . And Related Products} U. S. Department of Commerce - Office of Domestic Commerce . (Washington: 1949). 53 54 amount of soy bean oil consumed. The 104 million pounds used in 1948 was 11.8 per cent more than 1947 and 46.5 per cent over the amount used in 1946. (See Table 10, page 55). Of the edible oils considered in this thesis, soy bean oil is the only one utilized in the factory consumption of vegetable oils by the paint and varnish industry which has averaged nearly 500 million pounds annually for the past seven years. Consumption for the first eleven months of 1949 amounted to 83 million pounds as compared with the all time high of 100 millions for the year 1948 which represents approximately 100 per cent of the average factory consumption for the period 1932-36 which stood at 10,796,000 pounds. (See Chart III, page 56.) While consumption during the war period fell considerably below the 1948 figure, it was never less than 19 million, fluctuation for the war interval ranging from 19 to 25 millions between 1943 and 1945.^ International Controls and Tariffs Over Pats and Oils Effective October 31, 1949, the following commodities were •^Industry Report. "Pats and Oils", January 1950 by U. S. Department of Commerce, Office of Domestic Commerce, Pood Division. TABLE 10 USE OF VEGETABLE OILS B! COMMERCIAL PRODUCTION OF SALAD DRESSING, MAYONNAISE AND RELATED PRODUCTS, SPECIFIED YEARS* 1946 1947 1948 Thousand Percent Thousand Percent Thousand Percent Kind Pounds of Total Pounds of Total Pounds of Total Cottonseed 92,997 41.9 145,101 42.5 171,473 45.6 Corn 56,352 25.4 106,915 31.3 88,719 23.6 Soy bean 70,709 31.8 88,292 25.8 104,341 27.7 Sunflower 1,950 0.9 — — — — Peanut 124 y 1,064 0.3 2,533 0.7 Other —— 2/ 506 0.1 3/ 9,263 2.4 Total 222,132 100.0 341,878 100.0 "376,329 100.0 ^Source: Steele, Anna M. Salad Dressing, Mayonnaise And Related Products (Washington: 1949), U. S. Department of Commerce - Office of Domestic Commerce. 1/ Less than one-tenth of one per cent. 2/ Consists of 394,000 pounds of tea seed oil and 112,000 pounds of sesame oil. 3/ Consists of 24,710 pounds of olive oil, 497,341 sesame oil, the balance being blended mixtures of various oils. 55 CHART III /WVft**£ /vlOrtTMuY -pKtCfc SoQRCê- \).S.J)£i>fïK7M£cJT Of CoMnURCt OFFICE OFJsOr*ÉSTlÇ Co/uMgreCfc 56 57 removed from export control by the U. S. Office of Interna¬ tional Trade and placed on general license for exportation to all destinations Castor Oil, Commercial Cotton Seed Cake and Meal Coconut Oil, crude and Linseed Cake and Meal refined Coconut Sesame Cake and Meal Palm Oil, crude and Palm Kernel Oil, edible and refined inedible Palm Nuts and Kernels Soy Bean Cake and Meal Castor Beans Peanut Cake and Meal Copra Sperm Oil Hitherto these commodities required a validated export license before they could be shipped to the Group "R" coun¬ tries of Europe and adjacent areas. The termination of this requirement removes all remaining control over fats and oils exports. Annecy Trade Agreement.- The trade agreement conference held at Annecy, Prance from April 8 to August 27, 1949, en¬ abled ten new countries to negotiate with each other and with twenty-one of the original twenty-three parties to the Geneva Agreement. The new countries are Denmark, Domicon Republic, Finland, Greece, Haiti, Italy, Liberia, Nicaragua, Sweden and Uruguay. The major U. S. concession in the fats and oils field was a reduction in the duty on edible olive oil. The special duty of seven cents a pound on imported butter, made applicable to a maximum of fifty million pounds under the Geneva Agreement, Industry Report. "Fats and Oils", January 1950 by U. S. Department of Commerce, Office of Domestic Commerce, Food Div is ion. 58 was extended to an additional ten million pounds. With the participation of Liberia in the Annecy negotiations, the binding of the free rate in palm oil was extended to that country. Such a concession had already been granted by the United States to countries participating at the Geneva Con¬ ference held in the Summer and l'ail of 1947. Concessions obtained by the United States from the newly acceding countries include the following: 1. Denmark and Finland bound the duty - free treatment on soy beans. E. Haiti bound the present favorable rate on butter and lard. 3. Finland established a twenty-five per cent ad valorem rate on lard, subject to an import quota of 1,000 metric tons. 4. Italy reduced the duties on lard and fat back to twenty-five per cent ad valorem from thirty- five per cent. b. Haiti bound the present rate on lard. Each of the ten new countries will become parties to the General Agreement on ‘Tariffs and Trade (GATT) after signatures of two-thirds of the original contracting parties are obtained and after the country itself has signed the Protocol of Terms of Accession and is prepared to put into effect the general provisions of GATT and the tariff concessions it negotiated. 59 The United States concessions will become effective at the same time that the concessions granted by the newly acceding countries are put into force. The latest date on which an acceding country may sign is May 30, 1950. The following excerpt is cited in confirmation of the significance of edible oils in international economics: The next decade, said Sir John, would see ’more strenuous conditions,' with declining prices and increased competition from other countries... .Palm produce, groundnuts and cocoa are still the most important exports of Nigeria. And though the in¬ creased volume of exports of these has been impor¬ tant higher prices account for most of the increase in the value of Nigeria’s post war exports. And there is nothing permanent about these prices.... Two-thirds of Nigeria’s exports are 'oils and oil¬ seeds’. There has been since the war a world shortage of vegetable oils. But in 1950 there is a surplus of many oils and fats in the American con¬ tinent, which, but for the dollar shortage, could depress world prices. Vegetable oil production in the non-dollar world is also increasing. Nigeria's Economic Priorities: There is no pros¬ pect of a world surplus of oils and fats, in the sense that mankind's needs can easily be satisfied. But there is every prospect of a world surplus at present prices. In these circumstances Nigeria must look to two things - increased production per acre and per man hour, and improved quality. The first affects chiefly groundnuts, the second affects chiefly palm products. What are the prospects of palm produce? One of Nigeria's greatest economic problems is to change her palm oil from ’technical' to 'edible*. And to achieve this, hand presses and Pioneer Oil Mills are essential. The oil palm produce Marketing Board is offering now a price for ’edible’ very much higher than for 'technical' , and this should provide for producers, the Board considers, 'a marked incentive' ....There is for Nigeria no more important economic task than to improve the quality of her palm oil and to increase the yield of her oil palms.1 1 West Africa, issue of March 18, 1950, p. 1. 60 Commer ci al ITev/s. - Wholesale prices for edible and vegetable oils in Britain on February 28 were as follows:"*' BRITISH OIL PRICES* Edible Oils, ex works, per ton net naked: Coconut oil, crude £106 Deodorized groundnut oil £114 Dedorized palm kernel oil £112 Vegetable Oils (for technical purposes) Palm oil, crude, West African "soft" c.i.f. per ton £100, 10s Palm kernel oil, crude, naked ex wcrte per ton £105, 10s Current Exchange Rate: £l(sterling) - #2.80 (M.S.) 1 West Africa. issue of March 18, 1950. CHAPTER V HISTORICAL SKETCH OP LEVER BROTHERS' TOUTED AFRICA COMPANY (SUBSIDIARY OF UNILEVERS) The United Africa Company, Ltd. is the biggest enterprise in all Africa, the world's largest trading company, and a wholly owned subsidiary of the Anglo-Butch Lever Brothers and Unilevers combine. Trading on the Grand Scale.- The basic operation at Opabo, one of the last of the old-time river stations, is repeated, on both smaller and larger scale, all over central and West Africa, up at Kauo, several hundred miles north, the world's greatest ground nut (peanut) market; over at Ibadan, the largest and most modern city of Nigeria, whe re nearly half a million people spawn and trade under an ocean of galvanized iron roofs. In 1947 U. A. C. brought nearly $115 million worth of African produce from natives and their middlemen, raised $6 million worth of oil on its plantations in West Africa and the Congro; took in some $8 million from its 518 crafts on the Niger and the Congo and from its wholly owned line, which operates a fifteen-ship, 120,000 ton fleet between the United Kingdom and West Africa. On the other side of the ledger, it sold nearly $145 million worth of merchandise, mostly in West Africa and the Congo. 61 62 All this amounts to nearly $300 million worth of business - about 45 per cent of the produce buying and 30 per cent of the merchandise sales in all West Africa, and nearly as much in the Congo. (Besides those under U. A. C.’s jurisdiction, Unilever’s African interests include soap and margarine fac¬ tories and food processing companies in South Africa, the Rhodesia’s, Nyasaland and West Africa). This great territory stretches more than 3,000 miles from the hump of West Africa in Senegal through the Congo to East Africa. Its area is roughly equal to that of the United States and its population is some 50 million. U. A. C.’s great strength and two-thirds of its business lie in the Gold Coast and Nigeria, where it alone does 60 per cent of the buying and nearly half the mer¬ chandise sales. Wherever you go in this region, the size of Germany, France and Italy combined, U. A. C. is supreme. From Competition to Combination.- This uncomfortable enimenoe was achieved by William Hesketh Lever, the Viscount Leverhulme of the Western Isles, founder of Lever Brothers, who about the turn of the centuiy was drawing toward the domination of the British soap industry. Having brought 200,000 acres and planted 17,000 acres of coconut palms in the Solomons, he turned his attention to Africa, whose principal oils were and are palm oil and palm-kernel oil, squeezed from the fruit of the oil-palm tree. Lever itching to correct waste by means of plantations, headed for the Congo after experiencing 63 some difficulty with the British Government in West Africa. The Belgian authorities accorded him a warn reception. In 1911 he founded the Huileries du Congo Belge with a con¬ cession to develop 1,875,000 acres provided he paid agreed minimum wages, established schools, hospitals, et cetera. Today Huileries du Congo Belge has nearly all its average in oil palms; 80,000 on a plantation basis, employs upwards of 40,000 natives, and produced 37,000 tons of oil and 16,000 tons of kernels last year. Between 1920 and 1929 U. A. C. succeeded in establishing in West Africa through the acquisition of two rivals, the Royal Niger Company and African and Eastern Company. U. A. C.'s chief purchases are palm oil and palm kernels, cocoa, ground nuts, and hides; and it harvests and saws tim¬ ber. Most of the cocoa comes from the Gold Coast and most of the rest from Nigeria and the Congo. The company buys this produce in 1,771 stations, some doing a business of $5 million or more a year, others consisting of a native employee or con¬ cessionaire on a commission basis. In addition to the 80,000 acres of plantations run by Huileries du Congo Belge, U. A. C. Pamol Ltd. operates palm oil plantations in Nigeria and the Cameroons. The plantations have proved themselves vastly superior to the native farm methods. The trees are more than twice as productive, and the oil is of consistently high quality, being expressed from 64 the pericarp in plants right on the estate. Total cost has been cheaper than the price paid for native produce in all except the deep depression years. And today (January, 1948) the finest palm oil can be produced for about half of the £25 a ton that the inferior native product brings. As a result of such differences in cost, the plantation-farmed East Indies passed Nigeria in palm-oil exports in 1936 and the Congo is rapidly catching up. The British Government surely will control fats and oils for a long time. It seems determined, indeed, to peg them until the world supply, now a bare 17,500,000, is some?/here near the 22 million tons needed to put per capita consumption on a pre-war basis. A question that will inevitably arise when controls are repealed concerns Unilever’s buying power. One of the arguments for the merger of the Dutch marga¬ rine and British soap interest that resulted in the Unilever combine-was that together they could buy more than a third of the 5,800,000 tons of fats and oils normally handled in inter¬ national commerce. Nineteen years after its founding, U. A. C. has arrived at an admirable commercial supremacy. Although its relations with the natives are better than they used to be they have not yet matched its commercial progress. The company is probably still vulnerable commercially, a new American or British Com¬ pany with plenty of Negroes in its management might give it a 65 devastating ride. U. N- C. is also vulnerable to public opinion. How that India is practically independent, West Africa is one of the most critical frontiers on earth, one of the few remaining chances for liberal western civilization to give a good account of itself. As the dominant enterprise in this area, U. A. C. has to define success as performance that does credit not only to itself but to the free enter¬ prise system. It has to bridge the gap between the middle 1800’s and middle 1900’s.^ Adapted from Fortune Magazine (January, 1948) Volume XXVII, Ko. 1, CHAPTER I LIBERIA IE IE TERRA TIORAL TRADE Part II Liberia's geographical location in the center of the West African Bulge gives her a position of tremendous strategic value from both a military as well as an economic standpoint. It is not at all surprising, therefore, that she should have "become in the coarse of her brief history the victim of systematic foreign exploitation and the focus of much con¬ troversy.^- The range of her international ties includes both small and weak nations, while she maintains direct treaty re¬ lationships with the most important of the western powers in¬ cluding the United States, Britain, France and Germany (pre war). Within the past decade Liberia's former unbiased foreign policy has developed a positive bias in favor of the United States; and Liberia's economic structure today may be 2 safely said to rest squarely upon American financial support. A Ports of Entry Law, suggested in the 1864 report of a See Appendix I, p. - Excerpts from G. W. Brown's Economic History of Liberia, Section E, "Plantation Capitalism", Loans and Forced Labor. p See Appendix. II, p. - Treaty of Friendship, Commerce and Navigation Between the United States and Liberia, signed at Monrovia August 8, 1938. 66 67 Special Committee on Public Accounts, was passed by the legis¬ lature in 1865, to protect the customs revenue against foreign traders who frequently disregarded the revenue laws of the Republic. These traders were thereafter restricted to sea ports on the coast line, Robertsport, Monrovia, Marshall, Buchanan, Greenville and Cape Palmas. Between 1870 and 1924 no less than four international loans were contracted, the most important of vhich were the loans of 1911 and 1926. While all of these loans were broadly of a refunding character, that granted under the Loan Agree¬ ment of 1926 with Mr. Harvey Firestone of the United States carried a political flavor, inasmuch as its effect was to stabilize Liberia’s territorial boundaries at the expense of an unprecendented land concession to an American interest, which in consequence acquired a paramount status in the nation’s economy. The consideration for this loan was the grant by Liberia of 1,000,000 acres of her best lands to the Firestone Corporation on a ninety-nine year lease. (1924). Following the International Conference of Berlin terminated in 1885 which sanctioned the partition of Africa among the European Powers, France - by an unilateral act - incorporated all Liberian territory beyond the San Pedro and Cavalla Rivers, forcing a reluctant Liberia to accept the "fait accompli" in a Treaty of 1892, which set the Cavalla River as the boundary between the two countries, France paying an indemnity of 68 25,000 francs to Liberia. Between 1890 and 1914 Germany more than any other European State occupied a pre-eminent position in Liberian foreign and international trade. Germans had established trading posts linking the coast with the interior whereby they were able to command strategic positions in the export of raw materials. The Germans also dominated the banking field for a while daring this period. Indeed the Bank of British West Africa was forced to withdraw from Liberia under competitive pres¬ sure from the Deutsche-Liberia Bank. Between 1917 and 1925 she temporarily yielded much of the ground she had gained in the pre-war years. By 1927, however, Germany had once more re-entrenched herself and as late as 1939 Hamburg absorbed approximately seventy per cent of Liberia’s export of raw materials, especially piassava, palm oil and palm kernels. Liberia, as well as any other West African country, was swept into the current generated by the Japanese landslide in tex¬ tiles. In the face of the crushing competitive power of Japan’s textile trade, backed by comparatively cheap labor as well as by a perfectly synchronized productive machinery, American and European textile goods had to withdraw. Indeed, virtually all of the trading houses in Liberia, including even the conservative British, resorted to the import of Japanese textiles instead of their own. Since 1942 the bulk of the foreign trade has been with the 69 United States, which gives every promise of remaining Liberia's best customer. Rubber, the most important export item both as to value and volume, is an exclusive American monopoly. The same is also true of (the second most inportant export commodity) raw gold. The trade in palm products is still in its infancy, as far as the United States is concerned. The Firestone Plantations Company has, however, commenced a nation-wide distribution of palm scions supplied from its own oil palm nurseries in Liberia; and, by 1952, it is estimated that palm products will rank next to rubber in inportanee as an American export monopoly. The volume of piassava export reached an all time high in the period 1937-1939, with Ham¬ burg as the chief market. As a peacetime commodity, however, piassava appears to enjoy rather gloomy prospects. American needs in this line seem to be rather limited. The British, Dutch and French, on the other hand, appear to be amply supplied with this commodity by their own tropical possessions. The only serious rivalry encountered by the United States since 1942 in the Liberian import trade has been from Britain and her African possessions. Much of the canned fruits, fish and wines consumed are imported from South Africa, whereas Britain herself has accounted for t be bulk of the salt and a substantial fraction of whiskey and textile inports. In the overall picture, however, America looms preponderantly in all phases of the inport trade, enjoying an easy monopoly of 70 petroleum products, soap, as well as tobacco and cigarettes. CHAPTER II SOCIO - POLITICAL STRUCTURE OP LIBERIA ' Part II This phase is primarily concerned with the analysis of the cultural pattern of Liberia and its relation to the poli¬ tical structure as developed and at present maintained. It seeks to outline with lucidity and brevity the Liberian way of life which is so admirably set forth in the preamble to the national constitution and in the Bill of Rights constitu¬ ting Article I thereof.1 With tremendous frankness the preamble admits : The end of the institution, maintenance, and administration of government is to secure the exis¬ tence of the body politic, to protect it, and to furnish the individuals who compose it, with the power of enjoying in safety and tranquility, their natural rights, and the blessings of life; and when¬ ever these great objects are not obtained, the people have a right to alter the government and to take measures necessary for their safety, prosperity and happine ss In the Bill of Rights is to be found unequivocal acknow¬ ledgement of the democratic thesis of the inherent equality of all men and of the inviolable right of the individual to the untrammelled enjoyment and defense of life, liberty, prosperity 1Excerpted from the Constitution of the Republic of Liberia, Preamble and Article I, Bill of Rights. 2 Ibid. 71 72 and the pursuit of happiness. Slavery is banned, and trial by jury is generally guaranteed, as well as just compensation for private property expropriated in the public interest. The liberty of the press and the freedom of worship are equally secured, taxation without represent at ion is prohibited and the martial law may be implemented only upon the direct autho¬ rization of the Legislature. Finally Section 20 of the Bill of Bights assures to all: That all prisoners shall be bailable by suffi¬ cient sureties; unless for capital offences, when the proof is evident, or the presumption great; and the privilege and benefit of the writ of habeas corpus shall be enjoyed in this Republic, in the most free, easy, cheap, expeditious and ample manner, and shall not be suspended by the Legisla¬ ture, except upon the most urgent and pressing occasions and for a limited time not exceeding twelve months. Within the liberal framework provided by the Rational Constitution, Liberia permits maximum flexibility in the con¬ duct of her internal affairs. The religious and ethnic patterns of the Republic would rival the most complicated mosaic. For here the Christian faith strides side by side with indigenous animism, paganism and Islam. The established western concept of monogamy as found in the littoral area, stands in sharp contra-distinc¬ tion with the indigenous practice of polygamy in the vast interior. Of over-riding significance, hovrever, is the funda¬ mental clevage in the two prevalent concepts of land tenure. The westernized settler on the coast holds his title to land 73 "in fee simple", where his indigenous African compatriot be¬ yond the forty mile coastal limit participates in the joint ownership of land on the customary African basis of communal tenure. Under the latter system title to land is vested in the community, the chief being a mere trustee for his people, to whom he parcels out the communal holdings for cultivation in the communal interest. While certain prerogatives may evolve out of long and continuous tenure, the individual family enjoys a chattel right in realty, confined solely to use, without the power to transfer or otherwise alienate. So important is this peculiar theory of conmunalism that the entire code regulating Interior Affairs is predicated thereon. On this particular aspect George Brown has this to say: The African neither sells, pawns, nor alienates his land. It belongs to the common ancestors and is held in common for all members of the tribe and an equal birthright and a social her it age... .land is a possession of tribal life according to African custom, being free to all members of the tribe. To this communal possession in African institutions, no amendment whatever is possible. Thus the perpetual holding of land or water by individuals such as is permitted and fostered under the law of the West is a direct contradiction of African practices, and con¬ stitutes a violent impact upon this basic feature of their social order. The juridicial authority of the Chief Justice of the Re¬ public is confined to the littoral countries, the indigenous ■*3rown, G. W . Economic History of Liberia. "Has Natural Economy Perished? ",p. 218. 74 interior "being governed by Executive degree promulgated and enforced through the Secretary of the Interior» And whereas in the counties appeals lie from inferior courts through circuit courts to the Supreme Court, in the case of the interior provinces judicial appeals lie from the chief's court through the department of the Interior to the Chief Executive, legal concepts and processes being derived from established native customs and traditions, in the latter case. The legal status of aliens in Liberia is clearly defined in the Alien Residence Act, 1928. Citizens and aliens are on an equal footing as regards fundamental right. However, owner¬ ship of realty is exclusively confined to Liberian citizens who must be of Negro descent. Nevertheless, in so far as the real estate is applied to its legitimate and specified pur¬ poses, this ban is lifted in the case of colonization, missionary, education, or other benevolent institutions. In general, for a lease on land to be valid, it must be limited to twenty years, the rent accruing to the lessor annually. A lease for any longer period, except under special dispensations, is against the constitution and contrary to public policy."1- Alienage.- The legal status of aliens is admirably summarized by Willoughby: 1 See Appendix IV, An Alien Land Law, p.125. 75 As regards the status of aliens, that is, subjects of other States, who are temporarily or permanently domiciled in a State.it may be said that the fact that they are within its terri¬ torial limits makes them, in a broad constitu¬ tional sense, members of that State, and, there¬ fore, subject to the authority of its laws, though they still remain the subjects or citizens of their native States. In fact, being under the protection of the State where they are, they owe an allegiance to it according to the maxim protectio trahit subjectionem, et subjectio protectionem. Webster, when Secretary of State, in his report on Thrasher's case in 1851, declared: Independently of a residence with intention to continue such residence, independently of the taking of any oath of allegiance, or or renouncing any former allegiance, it is well known that by the Public Law an alien, or a stranger bom, for so long a time as he continues within the dominions of a foreign government, owes obedience to the laws of that government, and may be punished for treason or other crimes as a native born subject might be, un¬ less his case is varied by some treaty speculations. This principle thus stated by Webster has been several times quoted and approved by the Supreme Court, i. e., United States v. Carlisle (16 Wall. 147); United States v. Wong Kim Ark (169 M. S. 649) This doctrine is also announced in the Liberian cases of Ditchfield v. Doss en and Zeiser v. Montgomery cited infra. Bight and Disabilities of Aliens.- An alien is a person not owing allegiance to the Republic of Liberia. Under the Alien Residence Act of February 18, 1928, (Laws, 1928): '1'Huberich, Charles H. The Political and Legislative History of Liberia. Vol. II, ppT 1069-77. 76 "Alien includes any person not; a native-born or naturalized citizen of Liberia." ' v Liberia recognized the possibility of a person owing allegiance to more than one country; this double nationality does not make him an alien, if one of the countries of his allegiance is Liberia, The definition alien is broad enough to include stateless persons. Citizens and aliens are on equal footing as regards f undament al right. The equality of the alien with the citizen is also dealt with in an opinion of Attorney General L. E. Grimes in the Liberian Rubber Corporation Controversjr (Unpublished Interior Department, 5-23-26; Ser» 106-9 - *26): In the Declaration of our Independence upon which recognition of our Sovereignty was given by the Government of Her late Majesty Queen Victoria we guaranteed that our courts of justice were 'open equally 'to the stranger and the citizen for the redress of grievances, for the remedy of in¬ juries, and for the punishment of crime.’ To this declaration we have consistently adhered, improv¬ ing and modernizing our judicial administration from time to time so as to fully measure up to our national and international responsibilities in this regard. The extension of the presidential term of office to eight years instead of two coupled with the complete reorgani¬ zation of the Liberian constabulary and frontier forces, and the accelerated process of law have all combined to produce a state of internal quietude and political stability. The 77 national tent now is definitely on economic development. The extension of the constitutional suffrage and representation in the legislature to the interior in recent times has had a very pacifying effect on the dissident indigenous elements in the provinces which are gradually developing to a status of equality with the counties in the littoral. CHAPTER III PREVAILING ECONOMIC PATTERN OP LIBERIA Part II Alien Coramerical Right a.- The first act, regulating revenue and commerce, approved January 28, 1848 (Constitution of the Republic of Liberia, with the Laws of the Republic en¬ acted in 1848, page 21, Article II, Section 1) provides: That the lawful commerce of all nations shall be on equal footing in this Republic, and shall be entitled to the same privileges and protection, and be subject to the same regulations; nevertheless, the same or any part thereof, may be at any time abrogated or modified by treaty or commercial arrangement. Aliens engaged in the practicing of any pro¬ fession, trade or occupation enumerated in the Schedule shall be assessed twice the same sum charged against the native citizens in the above Schedule. Under Article VI of the same code the cost of Letters Patent to citizens is fixed at twenty-five dollars, while the cost to aliens is fifty dollars. The droit d*aubaine never existed in Liberia. The personal property of the deceased passes to citizens and aliens on equal terms. The succession to real estate is subject to the law relating to alien ownership of land (infra). Aliens, even non-resident aliens can be the incorporators and act as directors of a Liberian corporation* The Consular Convention between Liberia and the United 78 79 States, October 7, 1938, provides on this point (Article VIII) as follows: In case of the death of a national of either of the High Contracting Parties without will or testament ràiereby he has appointed testamentary- executors, in the territory of the other High Con- tracting Party, the Consular Officer of the State of which the deceased was a national and within whose district the deceased made his home at the time of death, shall, so far as the laws of the country permit and pending the appointment of an administrator and until letters of administration have been granted, be deemed qualified to take charge of the property left by the decedent for the preservation and protection of the same. Such consular officer shall have the right to be appointed as administrator within the discretion of a tribunal or other agency controlling the administration estates is administered so permit. Whenever a consular officer accepts the office of administrator of the estate of a deceased countryman, he subjects himself as such to the juris¬ diction of the tribunal or other agency making the appointment for all necessary purposes to the same extent as a national of the country where he was appointed.1 Forms and Functioning of Business Organizations.- Foreign enterprises operating in Liberia are organized and operate on a corporate basis, their home offices being registered in their native countries. Of Liberian origin, no corporate or joint-stock business organization exists. An attempt in the late thirties of this century at forming a' sugar cooperative failed to crystallize. Collectivism is unknown. Recently, experiments in commercial and transport partnerships appear 1Huberioh, Charles H. The Political and Legislative His¬ tory of Liberia, Vol. II, pp. 1069 - 1070. 80 to have gained ground, a?.though these trials have yet to assume serious proportions. On the whole , it would be fair to con¬ clude that individualism is the prevailing pattern of Liberian business organization, with foreign capital supplying the sinews and reaping dividends accordingly. Basic industries in Liberia are restricted to the two ex¬ tractive fields of mining and agriculture. In both of these genetic industries foreign vested interests have assumed the leading role. Foreign leadership in the field of agriculture is represented by the firestone Plantations Company which accounts, for over seventy-five per cent of the total rubber output, exercising a buying and export monopoly over the entire rubber production of Liberia. Recent annual shipments of rubber by this company to the United States average thirty - five million pounds valued at over $7,000,000. The preponderant vested interest in mining is controlled [ ' 1 " ‘ by the Liberian Mining Compariy which has been granted on eighty year’s concession over the Borai Hills iron ores de¬ posits, with additional rights to prospect for other ones. As to industrial production methods, native Liberia is still mediaeval, the factory system being virtually unknown. Over the entire area, however,one beholds unmistakable evidence of the "domestic" system, under which the master craftsman (with perhaps the help of. a tew hands) working under his own roof, produces primarily to order, allowing for only a % 81 narrow marginal surplus. Production is not related to popular demand, there being no specific means of determining the volume of demand at any one time , nor of scientifically pre¬ dicting trends. Of the secondary occupations, the following list is fairly representative: Baking Print ing Photography Carpentry Distillation Brickmaking Boat Building Hand Weaving Leather Curing Goldsmi thing Shoe Repairing Palm Oil Expression Auto, Radio and Battery Changing Liberian Currency and Banking.- Hard or metallic money in small denominations was essential for trade, customs and tax collec¬ tion among the pioneers and tribes people. In 1835, colonial cent pieces had been circulated by the American Colonization Society* One and two cent pieces of copper were first issued in 1847 by the Republic. In 1854, with the financial assistance of R. R. G-urley, the first Liberian coins were cast in England in denominations of one, two, twenty-five and fifty cents. More coppers were issued in 1892 and 1896. In 1896 coinage also included bronze pieces; and ten, twenty-five and fifty cent denominations in silver. Ten years later a similar issue omitted the ten cent pieces, '-^here was some currency in two dollar bills, but paper money was not of sound value. With few exceptions trade with the interior was carried on by barter.1 Prom the inception of her national independence in 1847 down to 1943 - a span of ninty-six years - Liberia for all practical purposes remained a member of the sterling block, ''‘Brown, G • W. Economic History of Liberia. (Washington, D.C.,1941), p» 218. 82 the unit of currency for all commercial transactions being the British pound to which the nominal Liberian dollar ms pegged at the theoretical exchange rate of 4.80. Since 1944, how¬ ever, the U. S. dollar has superseded the British pound as the actual medium of exchange, a parity of exchange being established between it and the nominal national currency unit. United States Federal Beserve notes ranging from 5Lto §>20.00 and fractiona 1 money - including halves, quarters, dimes, nickels and cents - are in circulation. Of the original Liberian currency, only the pennies are now in use. There is no foreign exchange mart, but local British firms continue to buy sterling at the fixed exchange rate of $4.00 to the L. Ho other foreign currency enjoys this privilege. Modern banking operations were first introduced in Liberia by the Bank of British West Africa, a British banking institution. Following its withdrawal from Liberia, a local German firm served as the state depository, discharging other banking functions as well. It was in turn replaced by the United States Trading Company (Banking Department) which eventually resolved itself into the only bank now operating in the country under the name and style of the Bank of Monrovia, Incorporated.! ■*"Brown, G. W. Economic History of Liberia. (w«qVn r^tnn p.n. _ 1941), p. 230. 83 Under the Loan Agreement of 1926 with the Firestone Plan - tations Company, the Bank of Monrovia, which is one of its subsidiaries, serves as sole local depositoiy for the Liberian Government, in addition, it performs the usual functions of a commercial and savings bank. Its overseas correspondent is the national City Bank of Hew York (London Branch)while the various branches of the Bank of British West Africa serve as its correspondents in British West Africa. Within the last six years this bank, as a government agency, has been granted the export monopoly of Liberian gold. Licensed gold vendors sell all of their available hoard to the bank at $25.00 per ounce troy (rather low price compared to $40.00 here) The bank in turn exports the gold for disposal on the United States market, crediting the Government of Liberia with the net proceeds. The Labor Situation in Liberia.- Labor in the modern in¬ ternational sense is only just beginning to manifest its impor¬ tance in Liberia. Up to date no trade unions exist, for the simple reason that Liberia has virtually no skilled labor - there having existed until recently but a few avenues for the utilization of skills. Moreover, there would seem to have existed a total absence of any labor legislation up till 1943. In this year, however, a legislative enactment came into being, the substance of the preamble being as follows: ■^See Appendix VI, Workmen’s Compensation and Protection Act, an act fixing minimum wage, p.129. 84 1. To define and protect the rights of the working class. S. To provide a legal basis for employer-employee relat ionship. 3. To ensure social security and economic justice for the worker by relating wages to current cost of living. Some of the specific provisions of this act are note¬ worthy: Section 4 (a) "provides a minimum wage of three cents per hour for unskilled workmen, farm laborers and domestics, for a working day of eight hours, with overtime at a time and half." Incidentally, the Firestone Plantations Company has failed to pay even this minimum as revealed in the workers1 list of grievances underlying the recent strike for higher wages and better working conditions on the Firestone Company’s 85,000 acre rubber plantations in Liber ia.-1- Section 10 (a) specifically limits the eligibility of foreign workers in Liberia to administrative, supervisory or technical posts, permitting assignments to lower jobs only by reason of the inadequacy of Liberian labor therefor. The new industrial concessionaires now operating in the country will very likely create a substantial demand for varying ~^The Pittsburg Courier. March 11, 1950. 85 labor skills and a large force of skilled labor. It is not inconceivable, therefore, that foreign labor may have to be imported in large numbers for industrial purposes, unless Liberia can meet the demand by establishing vocational schools In any case, in the absence of any collusion on the part of management, there is a strong likelihood of the law of supply and demand producing a scarcity value for even unskilled labor. Moreover, the present trend towards collective action for redress of grievances promises the birth of trade union¬ ism in the not too distant future. The existing relationship between State and private enter prise is determined as in 1847 by those sections of the Bill of Rights as found in Article I of the Constitution of the Republic which guarantee: 1. The rights of enjoying and defending life and liberty; of acquiring, possessing and protec¬ ting property. 2. The right to judgment of his peers, or the law of the land, prior to the forfeiture of life, liberty, property or privilege. 3. Immunity from local search and seizure of person, except on warrant lawfully issued upon probable cause supported by oath. 4. The right to just compensation for property ex¬ propriated for public use. 5 • The right to a free press. 86 However, social legislation passed between 194E and 1943 specifically aims to impose certain curbs on the freedom of private enterprise, viz: The first is the Legislative Act of January 9, 1942 authorizing the President to establish a National Economy Committee. The second is The Workmen's Com¬ pensation and Protection Act. These laws, according to Huberich, typify the universal trend towards governmental control over private business and the relation of employer and employee, and follow the broad lines of similar legislation in the United States and Eng¬ land, adopting the rules framed for highly civilized states to the needs of a preponderantly agricultural community.^ ■*-See Appendix VI, Social Legislation, p.129. CHAPTER IV LIBERIAN EDIBLE OIL PROJECT Part II The climatic and soil conditions essential to the success¬ ful cultivation of at least four primary sources of edible oils are found to exist in Liberia. These are peanuts,oil palm, coconut and cotton. While not yet appearing in commercial quantities, pigs and cattle are known to thrive well in different parts of the Liberian interior. In his handbook of practical information for planters and financiers, Captain H.O. Rowland has this to say: Liberia has been rightly termed the garden spot of West Africa. Exports consist for the most part of palm oil, palm kernels, piassava, coffee, rubber... .But only a small part of the country is at present tapped for these products, and they abound in plenty. Coconuts also abound....Ko place in West Africa, per haps, is more fruitful of this product than the Liberian coastlands, where it grows in a manner calculated to fill East African cultivators with wondering envy. Yet, curiously enough, no effort seems to have been made to exploit it, but assuredly it is a product which would richly repay exploita¬ tion on systematic lines. Another product which, properly cultivated, should yield a most satisfactory return is cotton, fbr which the soil is admirably suited. Cattle, sheep and goats thrive extremely well, but for all that, no attempt is made to establish an abattoir, dairy or cold storage meat supply, with the inevitable result that the health of the community ...suffers severely. Here, therefore, there would seem to be another opening for enterprise, properly 87 88 directed, which should yield excellent results.^ Up to eight year ago the oil palm, which ranks next to rubber in Liberia1s economy, occurred merely as a natural flora. The Firestone Plantations Company, however, has since then carried out successful test on its experimental palm nuseries with improved varieties of foreign origin; and scions from the most adaptable varieties are now disseminated over the country. Under this fresh impetus, promising oil palm plantations are gradually springing up. The coconut palm which is found chiefly on the Kru Coast has a very wide range, but it as yet is uncultivated. None¬ theless, fairly large groves occur, especially in Sinoe County which supplies the bulk of the coconuts now consumed. The local demand for peanuts, as food, is wide and nearly in¬ elastic; being up to the moment in inadequate supply. Under the stimulation of the Liberian Department of Agriculture, farmers are now placing a larger acreage of Land under peanut cultivation. The bulk of Liberian cattle originated from the Futa Jalon Plateau of French Guinea where a Semitic race of Fulas engages exclusively in cattle rearing. These nomades periodically bring droves of oxen to the North boundary of Liberia and sell ^Ne\vland, Captain H. Osman, "West Africa", Liberia-Trade and Commerce. Edited by Daniel O’Connor. London:' 192E, p. 315. 89 them to the Mandingos who inhabit this region. The bulk of local meat is supplied by this area. Ko ranches exist, how¬ ever, and animal husbandry on a scientific basis still awaits exploitation. Germane to the successful prosecution of any industrial project are the basic factors of financing, production, and marketing, regardless of the accident of geography. In Liberia, therefore, as in the United States, the con¬ siderations inherent in sound industrial financing must be reckoned with. Final Consideration.- How much equity financing would be desirable and to -what extent must borrowed capital be used? In the case of oil processing - where the economic prospect is very promising - equity capital may very well constitute fifty per cent of the total capitalization; the balance being apportioned between long and short term debts.'1' Assuming a total capitalization of $150,000, this oil project would then call for a minimum "risk" or equity capital of $75,000. Capital once assembled must be resolved into the agents of production and intangible assets. Here again a distinction becomes necessary, as between fixed and working capital, in terms of gross current assets without any deduction for ■'■Do eke ray, James C. Financial Considerations in the Establishment of a Hew Small business. Small Business - U. S. Department of Commerce - Office of Domestic Commerce. \ 90 liabilities, i'he recommended per centage ratio of fixed tan¬ gible assets to total assets is 40 - 42.1 Working capital may be defined in the present context as that fraction of total investment being constantly converted from cash to merchandise to receivables back to cash. In the case of the edible oil industry, specializing in the manufacture and distribution of a consumer good, working capital expressed in the forms of inventories and receivables is relatively more important than fixed capital, the suggested percentage ratio being 58 - 60.2 In Liberia where local distributing channels are meagre and main reliance must be on export, the latter ration could very well be regarded as conservative. Where a shift from individual proprietorship to corporate organizational structure is contemplated, due regard must be had to the weighting of equity capital vis a vis prior securities. Assuming a minimum one half equity subscription to total capital funds and a paid-in surplus of some five per cent, the balance of forty-five per cent may be distributed as between ^Dockeray, James C. Financial Consideration in the Establishment of a Hew Small Business"! Small Business Divison U. S. Department of Commerce - Office of Domestic Commerce. 2 Ibid, p. 4. 91 the several capital forms might well be as follows: bonds 14, preferred stock 13, common 51, and surplus 22.1 2 It would be highly desirable, especially in the experi¬ mental stage to maintain a 200 per cent gap between the current replacement value of fixed tangible assets - that is assets or properties to be used for several years before the investment is recovered in cash - and the going market price of the total bond issues outstanding. This would be in keep¬ ing with the golden rule that bonded debt should be limited to such a fraction of that mortgaged property as might g reasonably be recovered by its seizure and sale. And since the prospects of meeting fixed charges in terms of interest on bonds (and prior dividends) must be predicated upon the earnings capacity of the corporation, a well established ratio of average annual earnings to interest charges in 3:1, and as between earnings and the combined interest and preferred stock dividend, 2:1. As between assets and forms of capital, the following criterion may be said to hold: "The combined figure for bonded debt and preferred stock may equal the value of fixed tangible 1 Gruthman and Dougal, Corporate Financial Policy. New York: Prentice-Hall Inc., p. 237. 2 Ibid.p. 240. 92 assets but should never exceed the working capital." Certain specific gauges of business resiliency need to be implemented in order to test the strength of a corporation as a going concern. Financial ratios serve this purpose admirably. The respective ratios of fixed assets and working capi¬ tal to total assets may be said to emphasize the different angles of the same problem - what is the proper proportion be¬ tween working capital, that is current assets, and fixed capital. In relation to the total assets these ratios may be expressed as 42 and 55 respectively, for food manufacture, P which includes edible oil processing. (Fixed 42; current 55). As a measure of credit solvency, the current ratio is widely employed, the ideal relation of current assets to current liabilities being usually regarded as 2:1. The marketability of any product may be assessed in terms of the "turnover" of working capital, the recommended ratio 3 in this case being 5-7. The higher this turnover, the better the operational efficiency. Finally, a very useful ratio is that of inventories to ^Guthman and Dougal, Corporate Financial Policy, hew York: Prentice-Hall Inc., p. 3. 2 Ibid. 3 Ibid. 93 current assets which for a fo od pro cess ing company should he fifty per cent.-1- Sources of Capital.- Liberian financing institutions have already been treated in Chapter III, page 19. It is sufficent then to state here that the possibility of financing an in¬ dustrial project from local subscriptions to equity or bonded security issues has never been substantiated by any case on record. Moreover no security exchanges exist, nor is there any evidence available of any practical Liberian experience in stock and bond tra nsactione for private financing. However, the Bank of Monrovia, Inc., a Firestone subsidary, does offer the usual financing facilities afforded by a commerical bank in the United States. All short term financing may therefore be referred to this source. But it would seem highly advi¬ sable for a prospective industrial enterprise to rely in the main in foreign sources for its long term capital require¬ ment s. Marketing Facilities.- The ultimate goal of all produc¬ tive effort is full distribution for consumption. Where, therefore, local conditions prove unfavorable to the attain¬ ment of this objective, export must be the logical alternative. On account of sparse popular density of forty-five to the square mile, the very low standard of living of the masses and the conspicuous absence of any thing like a strong economic 1This is true of industrials (foods) capitalized under a quarter million dollars. 94 middle class, Liberia cannot at this time guarantee anything like an attractive consumer's market. In addition local marketing channels are limited to a handful of foreign enter- preneurs already committed to distribute the manufactures of their own "home" producers. For perhaps the next generation, therefore, foreign markets must be relied upon to absorb the bulk of Liberian production, with foreign capital, furnishing the financial sinews. Labor.- The Liberian labor situation has been fully trea¬ ted in the discussion of the prevailing economic pattern of Liberia.1 Because of the virtual absence of any skilled labor in Liberia, those jobs in the oil expressing industry which call for mechanical skills will have to be serviced by foreign personnel for a long time to come. Equally so management and administrative personnel will have to be drawn from foreign sources. At the lower echelons of the organizational structure, however, semi-skilled and unskilled manual labor may be of Liberian origin. There is one factor of production, though, which Liberia possesses in abundance, and that is land. This happy exception is true, as much of the urban as of the rural areas. There¬ fore the choice of a suitable factory site ought not to present a problem. Also the adequate supply of the primary raw 1 Chapter III, Part II, page 78. 95 materials for oil processing should he easily resolved, through the cultivation of sufficient arable land which may be leased in thousand acre blocks from the Liberian govern¬ ment and private sources. FIGURE 1 CAPITAL STRUCTURE OF EDIBLE OIL PROJECT ASSUMED CAPITALIZATION: #100,000 Per centage Distribution1 Assets liabilities Current Assets 55 Accounts Payable 2 Fixed Assets 42 Bonds 14 Intangible Assets 3 Net worth: Preferred Stock 13 Common stock 51 Surplus 20 Total 100 100 1 This capital structure assumes an industry at the developmental state. At the primary or experimental stage, neither intangible assets nor surplus (earned) would be apparent. 96 FIGURE 2 CAPITAL STRUCTURE OP EDIBLE OIL PROJECT ASSUMED CAPITALIZATION: $100,000 Dollar ($>) Distribution Cash Accounts Payable 2,000 Accounts Receivable Bonds : -, 1st mortgage1 Inventories Debenture 14,000 Current 55,000 Net Worth: Land Preferred stock 13,000 Buildings Common stock-1- 51,000 Plant and Equipment Surplus1 20,000 Fixed Assets 42,000 Trade Marks Good Will Intangible Assets 3,000 $100,000 $100,000 In the experimental state, the common stock ration would have to be adjusted to accommodate the ratio allowance for "surplus", the la tter being gradually generated from retained earnings and perhaps from paid-in surplus» CHAP TES V JUSTIFICATION OF DIVISION OF FUNCTIONS: LIBERIAN FARMERS1 COOPERATIVE - AMERICAN CORPORATE MANU¬ FACTURING ENTERPRISE Part II Basically the issue here involved is a choice between the free enterprise of private capitalism and the controlled func¬ tioning of a socialistic economic pattern for a given geo¬ graphical area - Liberia. The underlying thesis of private capitalism is that enter¬ prise shall be operated primarily in the selfish interest of those who furnish the risk capital (equity), and that the con¬ trol and direction of policy shall be also vested in this privileged group, and that the maximum freedom from State in¬ tervention shall be enjoyed by it in an atmosphere of "imper¬ fect’' competition. On the other hand cooperative enterprise with its highly socialistic flavor postulates the theme that the "general good" shall constitute the supreme law. Accordingly it is a creature of the state from which it derives its organic structure. Beginning in the late forties of the 19th century, somewhat later on the continent, cooperative organi¬ zations of various types arose among the urban and rural masses. 97 98 So far as the internal organization of the asso¬ ciation themselves was concerned, the term coopera¬ tive had some basis in common practices; voting was on the principle of individual membership, rather than of stock held, membership was open; dividends on capital were fixed or limited, occasionally share holdings were limited; provisions were made for the return of surplus to the members on the basis of patronage; a fraction of this surplus being retained usually in a common fund for the furtherance of the ends of the cooperative organization. In some of the agricultural marketing associations, there are addi¬ tional clauses usually providing that as regards the product concerned the member is to do business only through his association. Thus competition between members is modified or eliminated, and the profit making motive is subordinated to advance the general good. Most of the organizations also contemplate the elimination of the profit of the middleman - store¬ keeper, moneylender, employer - especially when the superior bargaining position of the latter groups menaces the living standards of the groups so asso¬ ciated. Critics of the movement stress the fact that the only instances in which the movement has kept its ideological fervor and has represented a new economic social order have been in those countries in which it is linked with other movements - trade unions movement and the labor Party of Great Britian, the Polk School movement of Denmark, the Socialism of Belgium and even more decisively, the communism of Russia. Where no such connection has existed, the move¬ ment has no permanent hold, as in the United States, or else its sphere of operation is restricted to merely ameliorative or limited reforms. In Liberia cooperative enterprise must be irretrievably linked with the communal tenure of land. On this point George Brown avers : It is as though the coromunalism of Africans, ^Encyclopaedia of the Social Sciences, Volume 4, edited by Edwin R. Seligman and Alvin Johnson, p. 360. 99 aeorned and scoffed at and assaulted by the Westernism of Liberians has lived to- sec the instructive collapse of the invading and assailing economic system; and is slowly coming into its own. Individual wages, indi¬ vidual purchases made out of individual production have failed in Liberia. Communal life, communal produc¬ tivity is native and inherent in Liberia. The two systems have met, and the system of the African, while embracing the modifications and improvements intro¬ duced by the Western rulers, still holds the dominant position, Thus the marked line of distinction between the loan-ridden capitalism of the Liberians and the recent monetary communalism of the Africans may slowly disappear to leave, perhaps, a cooperative Liberia on on the one side the the Western capitalism of the foreign financial brokers on the other.... The speculative outcome of the -Black Republic of the African rests on him - the indigenous native Liberian - and in the effectiveness with which the new cooperative schemes, a modified form of African self- sufficiency, are carried out by all the citizens of Liberia.1 These observations provide a clue to the motive under¬ lying the Legislative Act of 1936, relating to the Regulation and Constitution of Cooperative Societies in Liberia. The object of the Society is the promotion of the economic interests of its members in accordance with the principles and liabilities set' forth under the Act of Creation. 9 The wealth of Liberia resides chiefly in her agricul¬ tural and livestock resources; and the future economic pros¬ perity of the country will depend largely upon the extent to •^Brown, G. A. The Economic History of Liberia. Washing¬ ton: The Associated Publishers, Inc., p. 227. 2 0See Appendix VII, page 131, "An Act Relating to the Con¬ stitution and Regulations of Cooperative Societies. 100 which these natural assets are developed in the interest of the masses. Based upon the principles of land ownership and produce in the self-sufficiency programme of African communalism, the Agricultural Societies Act was sponsored by President Barclay in 1936 and enacted into law the same year. Its stated objects are to represent the interests of agriculture in the Republic and to encourage its development. 1* To improve the conditions of production, harvesting, processing and marketing of agricultural produce. E. To assist technically and financially in the creation, maintenance and development of coopera¬ tive societies* 3. To assist agricultural communities and individual farmers by: a. Granting loans to members at reasonable rates of interest for useful and necessary purposes. b. Issuing goods (seed, agricultural tools, building materials) on credit. Obviously in a country with communal land tenure where the overwhelming majority of the people possess only meagre pur¬ chasing power and the preponderant majority have yet to escape the confining shackles of the village economy, there must obtain a large measure of direction and regulation of local 101 industry by a central agency sufficiently well-informed about general economic trends and adequately furnished with the financial sinews and yet sufficiently divorced from ownership to pursue a business policy aimed at the all-round improve¬ ment of the general social welfare. An improved socio-economic status for the worker, secu¬ rity from unemployment and irregular pay, workers' partici¬ pation in management, and finally public ownership and control of industry. These are the ends of all cooperative movements in the area of production, and these goals are still far from being gratified in Liberia. Vast aggregations of financial wealth, the tendency towards a centripetal concentration of economic power and the centrifugal dispersion of ownership, tremendous natural re¬ sources and abundant supply of highly trained workers , a vast reservoir of manpower coupled with a high level of natural purchasing power - these constitute the prerequisites of a successful corporate system of provate capitalistic enter¬ prise. Little wonder then that the United States of America should today be the unquestioned bastion of this form of economic enterprise. The virtually unlimited opportunities for assembling wealth in a new country, the consequent em¬ phasis on rugged individualism, plus the avid desire for personal independence - all these have combined to make America the home of corporate enterprise. 102 The size of the modern giant corporation is difficult to grasp. Many people would consider large a corporation having assets of a million dollars or an income of $50,000. In comparison with the average corporation the million dollar company would be large. But in comparison to the great modern corporation both are pigmies. On the basis of assets, the American Telephone and Telegraph Company would be equivalent to over 8,000 average sized corporations, and both the United States Steel Corporation and the Penn¬ sylvania Railroad Company to over 4,000.... Already the Telephone Company controls more wealth than is contained within the borders of twenty-one of the states in the country.1 The economic activity of the United States is today dominated by 200 giant concerns whose average assets amounted in 1950 to over 100 million, and fifteen of which have assets of over a billion dollars. Their combined assets amounted to 81 billions of dollars or nearly one half of all corporate g wealth in the United States. These 200 corporations cover such areas of industry as amusements, chemicals, coal, food products, drugs, tobacco, et cetera, mercantile, metal products, paper, public utili¬ ties, railroads, real estate, rubber, textiles, traction and transportation. They constitute the very framework of American industry; and the average individual is constantly and continually served by them. The foregoing considerations must lead to the logical 1 Berle, Adolph and Means, Gardiner. The Modern Corpora¬ tion and Private Property. Kew York: the MacMillan Co.,p. 18. 2 Ibid. 103 conclusion that liberia is in the given premises best quali¬ fied to produce and may be semi-process the raw materials which form the primary sources of edible oil; while American corporate enterprise could be counted upon to refine the crude materials and convert -into the multiple forms in which they are placed on the world's markets. APPENDIX I EXCERPTS PROM G. W. SHOOT’S ECONOMIC HISTORY OP LIBERIA, SECTION E: "PLANTATION, CAPITAL¬ ISM," LOANS AND FORCED LABOR The Loan of 1871 and Its Consequences In 1869, President Roye was in London attempting a settlement of the Sierra Leone boundary dispute, and he was requested by officials in hi s government to se¬ cure a loan of $500,000,...$500,000 was borrowed at a discount of thirty per cent, bearing seven per cent interest and payable in fifteen years* This high rate of interest was deemed justifiable as Liberia’s cre¬ dit was rated low, because all she had to offer as security was future customs receipts, consequently the Republic received only $350,000 of the principal sum of $500,000. Public officials, traders and other interested persons in Monrovia protested vigorously against these terms...The actual amount of money which finally reached the coffers of the State, though variously estimated, was about $40,000. Although various Liberian and British persons may have pro¬ fited through handling the loan, very little benefit actually accrued to the Republic.... In 1880, the Legislature issued ten years sis per cent domestic bonds to replace the rapidly de¬ preciating paper currency which was still in circu¬ lation.... In 1883, the Legislature provided that one half of the paper money paid into the Government Treasury should not be re-issued, and one tenth of all gold coins received should be held in a fund to meet foreign claims. Officials salaries were to be paid half in gold and half in paper currency. In 1884 the Legislature provided that domestic creditors should be paid two-thirds of their claims in gold and one-third in paper.... These efforts to withdraw Libera’s depreciated paper money might have helped to correct the evils of national finance had not the rebellion of the Grebo peoples in 1893 necessitated a further issue of cheap money; as a result of this issue paper currency fell seventy- five per cent below par value. The internal debt was larger and the national 104 105 receipts had sunlc far below an amount sufficient to carry on the administrative functions and to meet the interest on the 1871 loan. Resentment against the severe terms of this financial tran¬ saction expressed itself by a demand that the London bankers should re-adjust the principal sum. In 1898, following nearly thirty years of involved negotiations, the Republic finally accepted respon¬ sibility for approximately $375,000 at a progres¬ sive rate of interest of from three to five per cent. This interest was paid from 1898 until 1913, when the 1871 loan was refunded by the 1912 loan agreement. The Loan of 1912 Real bankruptcy seemed to threaten Liberia. Debts piled upon debts, and Ians calling for more loans created an alien system of financial control which seriously abridged the independence of the Republic. The International Loan of 1911 arranged through the food offices of the United States of America, brought 1,700,000 to Liberian credit and officials from four sovereign nations to control the finances of the coun¬ try. The Receivership was empowered under the terms of the agreement to oollect and administer the assign¬ ed revenues without the intervention of any Liberian off icials.... Customs revenues were placed in their charge as guarantee of the loan. As additional se¬ curity all revenues from exports and imports, duties on rubber, and all head moneys were pledged. Liberian revenue securities for the loan were transferred to the charge of the receivership for its services and earmarked "assigned revenues." In the execution of their functions to secure private property to its legal and rightful owners, the majority of the re¬ ceivers had power to suspend customs officials, make temporary appointments, rules and regulations relative to the assigned revenues, without interference from the Legislature of the Republic. They were also given the right to furnish adequate patrol of the country by land and sea if it was not supplied. Supervisory con¬ trol of the Frontier Force, the military arm of the nation, was vested indirectly in them. Money bills, arising in the House of Representatives and approved by the Senate, as provided in the Constitution of the Republic, were 'not law' until the receivership certi¬ fied them as coming within the budgeted appropriations. 106 System wa3 to be established in the finances of the country, and the entire income was pledged to capital services and interest on debts and loans. The Legislature of the Republic of Liberia was forced to pass all necessary measures of appro¬ val before January 1, 1912, at which time the agree¬ ment was to go into effect. APPENDIX II FRIENDSHIP, COMMERCE AND NAVIGATION TREATY BETWEEN THE UNITED STATES AND LIBERIA, SIGNED AT MONROVIA, AUGUST 8, 1939 Arti cle I The nationals of each of the High Contracting Parties shall ho permitted to enter, travel and reside in the terri¬ tories of the other; to exercise liberty of conscience and freedom of worship; to engage in professional, scientific, religious, philanthropic, manufacturing and commercial activity which is not forbidden by the local lav/; to own, erect or lease and occupy appropriate buildings and to lease lands for residential, scientific, religious, philanthropic, manufacturing, commercial and mortuary pursue; to employ agents of their choice, and generally to do anything inci¬ dental to or necessary for the enjoyment of any of the fore¬ going privileges upon the same terms as nationals of the State of residence or as nationals of the nation hereafter to be most favored by it, submitting themselves to all local laws and regulations duly established. The nationals of either High Contracting Party within the territories of the other shall not be subjected to the payment of any internal charges or taxes other or higher than those that are exacted of and paid by nationals of the State or residence. The nationals of each High Contracting Party shall enjoy freedom of access to the courts of justice of the other on conforming to the local laws, as well for the prosecution as for the defense of their rights, and in all degrees of juris¬ diction established by law. The nationals of each High Contracting Party shall re¬ ceive within the territories of the other, upon submitting to conditions imposed upon its nationals, the most constant pro¬ tection and security for their persons and property, and shall enjoy in this respect that degree of protection that is re¬ quired by international law. Their property shall not be taken without due process of law and without payment of just compensation. Nothing contained in this Treaty shall be construed to affect existing statutes of either of the High Contracting Parties in relation to emigration or to immigration, or the 107 108 right of either of the High Contracting Parties to enact such statutes, provided, hor/ever , that nothing in this paragraph shall prevent the nationals of either High Contracting Party from entering, traveling and residing in the territories of the other Party in order to carry on international trade or to engage in any commercial activity related to or connected with the conduct of international trade on the same terms as nationals of the most favored nation. Article II With respect to that form of protection granted by national State or Provincial laws establishing civil liability for bodily injuries or for death, and giving to relative or heirs or dependents of an injured person a right of action or a pecuniary compensation, such relatives or heirs or dependents of the injured person, himself a national of either of the High Contracting Parties and injured within any of the territories of the other, shall, regardless of their alienage or residence outside of the territory where the injury occurred, enjoy the same rights and privileges as are or may be granted to nationals, and under like conditions. Article III The dwellings, warehouses, manufactories, shops and other places of business, and all premises thereto appertaining of the nationals of each of the High Contracting Parties in the territories of the other, lawfully sued for any purposes set forth in Article I, shall be respected. It shall not be allow¬ able to make a domiciliary visit to, or search of any such buildings and premises, or there to examine and inspect books, papers or accounts, except under the conditions and in con¬ formity with the forms prescribed by the laws, ordinances and regulations for nationals of the State of residence or nationals of the nation most favored by it. Article IV Where, on the death of any person holding real or other immovable property or interests therein within the territories of one High Contracting Party, such property or interest there¬ in would, by the laws of the country or by a testamentory dis¬ position, descend or pass to a national of the other High Con- tracing Party, whether resident or non-resident, where he was not disqualified by the laws of the country where such property or interests therein is or are situated, such national shall be allowed a term of three years in which to sell the same, 109 this term to be reasonably prolonged if oircumstances render it necessary, and withdraw the proceeds thereof, without re¬ straint or interference and excempt from any estate succession, probate or administrative duties or charges other than those which may be imposed in like cases upon the nationals of the country from which such proceeds may be drawn. Nationals of either High Contracting Party may have full power to dispose of their personal property of every kind with¬ in the territories of the other, by testament donation, or otherwise, and their heirs, legatees and donees, of whatsoever nationality, whether resident or non-re sident, shall succeed to such personal property, and may take possession thereof, either by themselves or by others acting for them, and retain or dispose of the same at their pleasure subject to the payment of such duties or charges only as the nationals of the High Contracting Party within whose territories such property may be or belong shall be liable to pay in like cases. In the same way, personal property left to nationals of one of the High Contracting Parties by nationals of the other High Contracting Party, and being within the territories of such other Party, shall be subject to the nationals of the High Contracting Party within whose territories such property may be or belong shall be liable to pay in like cases. Article Y The nationals of each of the High Contracting Parties in the exercise of the right of freedom of worship, within the territories of the other, as herein above provided, may, with¬ out annoyance or molestation of any kind by reason of their religious belief or otherwise, conduct services either within their own houses or within any appropriate buildings which they may be at liberty to erect and maintain in convenient situation, provided their teachings or practices are not contrary to public morals; and they shall also be permitted to bury their dead according to their religious customs in suitable and convenient places established and maintained for the purpose, subject to the mortuary and sanitary laws and regulations of the place of burial. Article VI In the event of war between either High Contracting Party and a third State, such Party may draft for compulsory military service nationals of the other having a permanent residence with in its territories and who have formally, according to its laws, declared an intention to adopt its nationality by naturaliza¬ tion, unless such persons depart from the territories of said belligerent Party within sixty days after the declaration of war 110 Such right to depart shall apply also to persons possessing the nationality of both High Contracting Parties unless they habi¬ tually reside in the territory of the country drafting for com¬ pulsory military service. It is agreed, however, that such rights to depart shall not apply to natives of the country drafting for compulsory military service, who, after having become nationals of the other Part, have declared an intention to acquire or resume the nationality of the country of their birth. Such persons shall nevertheless be entitled in respect of this matter to treatment no less favorable than that accorded the nationals of any other country who are similarly situated. Article VII Between the territories of the High Contracting Parties there shall be freedom of commerce and navigation. The nationals of each of the High Contracting Parties equally with those of the most-favored nation, shall have liberty freely to come with their vessels and cargoes to all places, ports and waters of every hind within the territorial limits of the other which are or may be open to foreign commerce and navi- gat ion. Article VIII With respect to customs duties or charges of any kind imposed on or in connection with importation or exportation, and with respect to the method of levying such, duties or charges, and with respect to all rules and formalities in con¬ nection with importation or exportation, and with respect to all laws or regulations affecting the sale , taxation or use of imported goods within the country, any advantage, favor, privilege or immunity which has been or may hereafter be granted by either High Contracting Parties to aiiy article originating in or destined for any third country, shall be accorded imme¬ diately and unconditionally to the like' article originating in or destined for the other High Contracting Party. With respect to the amount and collection of duties on im¬ ports and exports of every kind, each of the two High Contrac¬ ting Parties binds itself to give to the nationals vessels and goods of the other the advantage of every favor, privilege or immunity which it shall have accorded to the nationals, vessels and goods of a Third State, whether such favored State shall Ill have been accorded such treatment gratuitously or in return for reciprocal compensatory treatment. Every such favor, pri¬ vilege or immunity which shall hereafter be granted to nationals, vessels or goods of a Third State shall simul¬ taneously and unconditionally, without request and without com¬ pensation, be extended to the other High Contracting Party, for the benefit of itself, its nationals, vessels, and goods. Article IX neither of the High Contracting Parties shall establish or maintain any import or export prohibition or restriction on any article originating in or destined for the territory of the other High Contracting Party, which is not applied to the like article originating in or destined for any third country. Any abolition of an import or export prohibition or restriction which may be granted even temporarily by either High Contracting Party in favor of an article originating in or destined for a third country shall be applied immediately and unconditionally to the like article originating in or destined for the territory of the other High Contracting Party. If either High Contracting Party establishes or maintains any form of quantitative restriction or control of the impor¬ tation or sale of any article in which the other High Contrac¬ ting Party has an interest, or imposes a lower import duty or charge on the importation of sale of a specified quantity of any such article than the duty or charge imposed on importa¬ tions in excess of such quantity, the High Contracting Party taking such action shall, upon request, inform the other High Contracting Party as to the total quantity, or any charge therein, of any such article permitted to be imported or sold, or permitted to be imported or sold at such lower duty or charge during a specified period, and shall allot to the other High Contracting Party for such specified period a proportion of such total quantity as originally established or subsequent¬ ly changed in any manner equivalent to the proportion of the total importation of such article which the other High Contrac¬ ting Party su plied during a previous representative period, unless it is mutually agreed to dispense with such allotment. Neither of the High Contracting Parties shall, by import licenses, regulate the total quantity of importations into its territory or sales herein of any article in which the other High Contracting Party has an interest, unless the total quantity of such article permitted to be imported or sold during a. quota period of not less than three months shall have been established and unless the regulations covering the issurance of such licenses or permits shall have been made public before such regulations are put into force. 112 Article X If either High Contracting Party establishes or maintains, directly or indirectly, any form of control of the means of international payment, it shall, in the administration of such control: fa) Impose no prohibition, restriction or delay on the transfer of payment for imported articles the growth, produce or manufacture of the other High Contracting Party, or of pay¬ ments necessary for an incidental to the importation of such article s. fb) Accord unconditionally, with respect to rates of ex¬ change and taxes or surcharges on exchange transactions in con¬ nection with payments for or payments necessary and incidental to the importation of articles, the growth, produce,or manu¬ facture of the other High Contracting Party, treatment no less favorable than that accorded in connection with the importa¬ tion of any article whatsoever the growth, produce, or manu¬ facture of any third country; and (c) Accord unconditionally, with respect to all rules and formalities applying to exchange transactions in connection with payments for or payments necessary and incidental to the importation of articles the growth, produce or manufacture of any third country. 7/ith respect to non-commercial transactions, each High Contracting Party shall apply any form of control of the means of international payment in a non-discriminatory manner as between the nationals of the other High Contracting Party and the nationals of any third country. Article XI In the event that either High Contracting Party establi¬ shes or maintains a monopoly for the inportation, production or sale of a particular product or grants exclusive privileges, formally or in effect, to one or more agencies to import, pro¬ duce or sell a particular product, the High Contracting Party establishing or maintaining such monopoly, or granting such monopoly privileges, shall, in respect of the foreign purchases of such monopoly, or agency, accord the commerce of the other High Contracting Party fair and equitable treatment. In making its foreign purchases of any article such monopoly or agency shall be influenced solely by competitive considerations such as price, quality, marketability, and terms of sale. 113 Article XII All articles which are or may he legally imported from foreign countries into ports of the United States of America or are or may he legally exported therefrom in vessels of the United Stes may likewise he imported into those ports or ex¬ ported therefrom in Liherian vessels , without being liable to any other or higher duties or charges whatsoever than of such articles as were imported or exported in vessels of the United States; and reciprocally, all articles which are or may he legally imported from foreign countries into the ports of liberia or are or may he legally exported therefrom in Liherian vessels may likewise he imported into those ports or exported therefrom in vessels of the United States without being liable to any other or higher duties or charges whatsoever than if such articles were imported or exported in Liherian vessels* In the same manner there shall he perfect reciprocal equa¬ lity in relation to the flags of the two countries with regard to bounties, drawbacks, and other privileges of this nature of whatever denomination which may he allowed in the terri¬ tories of each of the Contracting Parties, on goods imported or exported in national vessels so that such bounties, draw¬ backs and other privileges shall also and in like manner he allowed on goods imported or exported in vessels of the other country. Article XIII The nationals, goods, products, wares, and merchandise of each High Contracting Party within the territories of the other shall receive the same treatment of nationals, goods, products, wares and merchandise of the country with regard to internal taxes, transit duties, charges in respect of ware¬ housing and other facilities and the amount of drawbacks and export bounties. Article XIV The merchant or other private vessals and cargoes of one of the High Contracting Parties shall within the territorial waters and harbors of the other Party in all respects and un- condi tionally be accorded the same treatment as the vessel and cargoes of the Party, irrespective of the port of departure of the vessel, or the port of destination, and irrespective of the origin or the destination of the cargo. It is espe¬ cially agreed that no duties of tonnage, harbor, pilotage, lighthouse, quarantine, or other similar or corresponding duties or charges of whatever denomination, levied in the name or for the profit of the Government, public 'functionaries, private individuals, corporations or establishments of any 114 kind shall he imposed in the ports of the territories or terri¬ torial waters of either country, upon the vessels of the other, which shall not equally, under the same conditions, he im¬ posed on national vessels. Article XV Merchant vessels and other privately owned vessels under the flag of either of the High Contracting Parties, and carry¬ ing the papers required hy its national laws in proof of nationality shall, both within the territorial water of the other High Contracting Party and of the high seas, he deemed to he the vessels of the Party whose flag is flown. Article XVI Merchant vessels and other privately owned vessels under the flag of either of the High Contracting Parties shall he permitted to discharge portions of cargoes at any port open to foreign commerce in the territories of the other High Con- t racting Party, and to proceed with the remaining portions of such cargoes to any other ports of the same territories open to foreign commerce, without paying other or higher tonnage dues or port charges in such cases than would he paid hy national vessels in like circumstances, and they shall he permitted to load in like manner at different ports in the same voyage outward, provided, however, that the coasting trade of the High Contracting Parties is exempted from the pro¬ visions of this article, and from the other provision of this Treaty, and is to he regulated according to the laws of each High Contracting Party in relation thereto. It is agreed, however, that nationals and vessels of either High Contracting Party shall within the territories of the other enjoy with respect to the coasting trade most-favored-nation treatment. Article XVII limited liability and other corporations and associations whether or not for pecuniary profit, which have been or may hereafter he organized in accordance with and under the laws, National, State or Provincial, of either High Contracting Party and which maintain a central office within the territories thereof, shall have their juridicial status recognized hy the other High Contracting Party provided that they pursue no aims within its territories contrary to its laws. They shall enjoy free access to the courts of law and equity, on conforming to the laws regulating the matter, as well as for the prosecution 115 as for the defense of rights in all the degrees of jurisdiction established by law. The right of corporations and associations of either High Contractint Party which have been so recognized by the other to establish themselves in the territories of the other Party or to establish branch offices and fulfill their functions therein shall depend upon and be governed solely by the con¬ sent of such Party as expressed in its National, State or Provincial laws. Article XVIII The nationals of either High Contracting Party shall en¬ joy within the territories of the other,upon compliance with the conditions there imposed, such rights and privileges as have been or may hereafter be accorded the nationals of any other State with respect to organization of and participation in limited liability and other corporations and associations, for pecuniary profit or otherwise,including the rights of pro¬ motion, incorporation, purchase and ownership and sale of shares and the holding of executive or official positions therein. In the exercise of the, foregoing rights and with re¬ spect to the regulation or proceedure concerning the organiza¬ tion or conduct of such corporations or associations, such nationals shall be subjected to no condition less favorable than those which have been or may hereafter be imposed upon the nationals of the most-favored nation. The right of any of such corporations or associations as may be organized or con¬ trolled or participated in by the nationals of either High Con¬ tracting Party within the territories of the other to exercise any of their functions herein, shall be governed by the laws and regulations, National State or Provincial, which are in force or may hereafter be established within the territories of the Party wherein they propose to carry on their activities. The foregoing stipulations do not apply to organization of and participation in political associations. Article XIX The nationals, including corporations and associations of either High Contracting Party shall enjoy In the territories of the other Party, upon compliance with the conditions there imposed, most-favored-nation treatment in respect of the ex¬ ploration for and exploitation of mineral resources; provided that neither Party shall be required to grant rights and pri¬ vileges in respect of the mining of coal, phosphate, oil, oil shale, gas and sodium on the public domain, or in respect of the ownership of stock in domestic corporations engaged in such 116 operations, greater than its nationals, corporations and asso¬ ciations receive from the other Party. It is understood, however, that neither High Contracting Party shall he required by anything in this paragraph to grant any application for any such right or privilege if at the time such application is presented thé grant of all similar appli¬ cations shall have been suspended or discontinued. Article XX Commercial travelers representing manufacturers, merchants and traders domiciled in the territories of either High Con¬ tracting Party shall on their entry into and sojourn in the territories of the other Party and on their departure there¬ from be accorded the most-favored-nation treatment in respect of customs and other privileges and of all charges and taxes of whatever denomination applicable to them or to their samples. If either High Contracting Party requires the presenta¬ tion of an authentic document establishing the identity and authority of a commercial traveler, a signed statement by the concern or concerns represented, certified by a consular officer of the country of destination shall be accepted as satisfactory. Article XXI There shall be complete freedom of transit through the territories including territorial waters of each High Con¬ tracting Party on the routes most convenient for inter¬ national transit, by rail, navigable xvaterway, and canal, other than the Panama Canal and waterways and canals which constitute international boundaries, to persons and goods coming from, going to or passing through the territories of the other High Contracting Party, except such persons as may be forbidden admission into its territories or goods of which the importation may be prohibited by law or regulations, pro¬ vided that the foregoing shall not be construed to prevent either High Contracting~Party from excluding aliens from spe¬ cial areas within its territories closed to visit by law, military order or regulations. The measures of a general or or particular character which either of the High Contracting Parties is obliged to take in case of an emergency affecting the safety of the State or vital interests of the country may, in exceptional cases and for as short a period as possible, involve a deviation from the provisions of this paragraph, it 117 being understood that the principle of freedom of transit must he observed to the utmost possible extent. Persons and goods in transit shall not be subjected to any transit duty, or to any unnecessary delays or restric¬ tions, or to treatment as regards charges, facilities or any other matter less favorable than that accorded to the most- favored nation. Goods in transit must be entered at the proper custom house, but they shall be exempt from all customs or other similar duties. It is understood that all goods in transit through the territory of the United States of America and all goods in transit through the territory of liberia when warehoused or otherwise stored shall be subject to storage charges. All charges imposed on transport in transit shall be reasonable, having regard to the conditions of the traffic. Nothing in this Article shall affect the right of either of the High Contracting Parties to prohibit or restrict the transit of arms, munitions and military equipment in accor¬ dance with treaties or conventions that may have been or may hereafter be entered into by either Party with other countries. Article XXII Nothing in this Treaty shall be construed to prevent the adoption of measures prohibiting or restricting the exporta¬ tion or importation of gold or silver, or to prevent the adop¬ tion of such measures as either High Contracting Party may see fit with respect to the prohibition, or the control, of the export for sale for export, of arms, ammunition, or implements of war, and in exceptional circumstances, all other military supplies. Subject to the requirement that under like circumstances and conditions, there shall be no arbitrary discrimination by either High Contracting Party against the other High Contrac¬ ting Party in favor of any third country, the stipulations of this Treaty shall not extend to prohibitions or restrictions (l) imposed on moral or humanitarian grounds; (2) designed to protect human animal, or plant life or health; (3) relating to prison-made goods; (i) relating to the enforcement of police or ravenue laws. The stipulations of this Treaty do not extend to advan- 118 tages now accorded or which may hereafter he accorded to neigh¬ boring States in order to facilitate short frontier traffic, or to advantages resulting from a Customs Union to which either High Contracting Party may become a party so long as such advantages are not extended to any other country. The stipulations of this Treaty do not extend to advan¬ tages 'now accorded or which may hereafter be accorded by the United States of America, its territories or possessions or the Panama Canal Zone to one another or to the Republic of Cuba. The provisions of this paragraph shall continue to apply in respect of any advantages now or hereafter accorded by the United States of America, its territories or possessions or the Panama Canal Zone to one another, irrespective of any change in the political status of any of the territories or possessions of the United States of America. Article XXIII Subject to any limitation or exception hereinabove set forth or hereafter to be agreed upon the territories of the High Contracting Parties to which the provisions of this Treaty extend shall be understood to comprise all areas of land and water over which the Parties, respectively, claim and exercise dominion as sovereign thereof, except the Panama Canal Zone. Article XXIV The present Treaty shall come into force in all of its provisions on the day of the exchange of ratifications and shall continue in force for the term of five years from that day. If within one year before the expiration of five years from the date on which the present Treaty shall oome onto force, neither High Contracting Party notifies to the other Party an intention of terminating the Treaty upon the expira¬ tion of the aforesaid period of five years, the Treaty shall remain in full force and effect after the aforesaid period and until one year from such a time as either of the High Con¬ tracting Parties shall have notified to the other Party an intention of terminating it. The present Treaty shall, from the date of the exchange of ratifications, be deemed to supplant the Treaty of Commerce and Navigation between the United States of America and Liberia, concluded at London on October 21, 1862. 119 Article XXV The present Treaty shall be ratified, and the ratifica¬ tions thereof shall be exchanged at Monrovia as soon as possible. In witness whereof the respective Plenipotentiaries have signed the present Treaty and have affixed their seals there¬ to . Done in duplicate, at Monrovia, this eight day of August nineteen hundred and thirty eight. [_ Seal_7 Lester A. Walton /"~Seal_/ C. L.Simpson APPENDIX III PRINCIPLES APPLYING TO MUTUAL AID EQR DEPENSE AGREEMENT BETWEEN THE UNITED STATES AND LIBERIA, SIGNED AT NEW YORK, JUNE 8, 1943 Article I The Government of the United States of America will con¬ tinue to supply the Government of the Republic of Liberia with such defense articles, defense services, and defense in¬ formation as the President of the United States of America shall authorize to be transferred or provided. Article II The Government of the Republic of Liberia will provide to the Government of the United States of America such arti des, services, facilities or information as it maybe in a position to supply. Article III The Government of the Republic of Liberia will not with¬ out the consent of the President of the United States of America transfer title to, or possession of, any defense arti¬ cle or defense information transferred to it under the Ace of March 11, 1941 of the Congress of the United States of America or permit the use thereof by anyone not an officer, employee, or agent of the Government of the Republic of Liberia. Article IY If, as a result of the transfer to the Government of the republic of Liberia of any defense article or defense infor¬ mation, it becomes necessary for that Government to take any action or make any payment in order fully to protect any of the rights of a citizen of the United States of America who has patent rights in and to any such defense article or information the Government of the Republic of Liberia will take such action or make such payment when requested to do so by the President of the United States of America. Article V The Government of the Republic of Liberia will return to 120 121 the United States of America at the end of the present emer- fency, as determined by the President of the United States of raerica, such defense articles transferred under this Agree¬ ment as shall not have been destroyed, lost or consumed and as shall be determined by him to be useful in the defense of the United States of America or of the Western Hemisphere or to be otherwise of use to the United States of America* Article VI In the final determination of the benefits to be provi¬ ded to the United States of America by the Government of the Republic of Liberia full cognizance shall be taken of all property, services, information, facilities, or other bene¬ fits or considerations provided by the Government of the Re¬ public of Liberia subsequent to March 11, 1942, and accepted or acknowledged by the President on behalf of the United States of America. Article VII In the final determination of the benefits to be provi¬ ded to the United States of America by the Government of the Republic of Liberia in return for aid furnished under the Act of Congress of March 11, 1941, the terms and conditions thereof shall be such as not to burden cornier ce between the two countries, but to promote mutually advantageous economic relations between them and the betterment of world-wide eco¬ nomic relations, i'o that end, they shall include provision for agreed action by the United States of America and the Re¬ public of Liberia, open to participation by all other coun¬ tries of like mind, directed to the expansion, by appropriate international and domestic measures, of production, employ¬ ment, and the exchange and consumption of goods, which are the material foundations of the liberty and welfare of all peoples; to the elimination of all forms of discriminatory treatment in international commerce; to the reduction 9f tariffs and other trade barriers; and, in general, to the attainment of all the economic objectives set forth in the Joint Declaration made on August 14, 1941, by the President of the United States of America and the Prime Minister of the United Kingdom, known as the Atlantic Charter. At an early convenient date, conversations shall be begun between tire two Governments with a view to determining, in the light of governing economic conditions, the best means of attaining the above-stated objectives by their own agreed action and of seeking the agreed action of other like-minded Governments. 12£ Article VIII This Agreement shall take effect as from this day's date. It shall continue in force until a date to "be agreed upon by the two Governments. Signed and sealed in the city of hew York invduplieate this eighth day of June 1943. APPENDIX IV AGREEMENT BETWEEN THE UNITED STATES AND LIBERIA, SIGNED AT MONOROVIA, DEC. 31, 1943 CONSTRUCTION OP A PORT AND PORT YORES Article I The Government of the United States of America will make available to the Government of the Republic of Liberia under the terms of the Mutual Aid Agreement of June 8, 1943, such funds as may be allotted by the Administrative agency of the Government of the United States of America which is or may be authorized and empowered to administer the provisions of the Act of Congress of the United States of America approved March 11, 1941, in the form of a credit under conditions to be determined by such administrative agency, for the survey¬ ing of the estuary of the St. Paul River and such other sites in the vicinity of M0nrovia and Marshall as may be necessary for the satisfactory location of the port, and for the con¬ struction of a port and port site in the vicinity of Monrovia or Marshall as may be eventually preferred by the Government of the United States of America and the Government of the Re¬ public of Lpberia. Article II The Government of the Republic of Liberia will enter into a contract with an American company, duly incorporated in the United States of America for the effectuation of the necessary survey, or surveys, and the construction of the port and port works and access roads, which American company, upon preparing its plans and estimates, shall submit said plans and estimates, to the Government of the United States of America and to the Government of the Republic of Liberia for approval. Article III The Government of the Republic of Liberia agrees to the establishment of the port as a free port, or foreign trade zone, to be operated for the mutual benefit of the United States of America and the Republic of Liberia and all nations with which the United States of America and the Republic of Liberia maintain friendly relation, -under such conditions and by such means as may henceforth be provided. ïhe Government of the Republic of Liberia undertakes to make available, with¬ out cost, to the operating company provided for in Artice V, 123 124 auch. land and rights in land as may he necessary for the con¬ struction of the free port and such land and rights in land contiguous to the port site as may he necessary for the effi¬ cient operation, maintenance and protection of the free port. Article VII The Government of the Republic of Liberia, upon request, will grant to the Government of the United States of America the right to establish, use, maintain, improve, supplement, guard and control, in part or their entirety, at the expense of the Government of the United States of America, such naval, air, and military facilities and installations at the site of the port and in the general vicinity thereof, as may be desired by the Government of the United States of America for the protection of the strategic interests of the United States of America in the South Atlantic. The Government of the United States of America under¬ takes to respect, in the future as in the past, the terri¬ torial integrity, sovereignty, and political independence of the Republic of Liberia. Article VIII The Government of the United States of America shall be exempt from the payment of Liberian taxes of any kind in connection with the construction, operation or maintenance of its naval, air and military facilities and installations under this Agreement. Article IX This Agreement shall take effect on the date of signature signed and sealed in Monrovia in duplicate this thirty-first day of Lecember 1943. APPENDIX V Aim LAND LAW* By the common law, an alien cannot take lands and hold the same as against anyone hut the Crown or the State. Article V, Section 12 of the Constitution provides: No person shall he entitled to hold real estate in this Republic unless he he a citizen of the same. Nevertheless this article shall not he construed to apply to colonization, missionary, education, or other benevolent institutions so long as the pro¬ perty or estate is applied to its legitimate purpose. A lease held under the Constitution with respect to aliens in treaty stipulations with Liberia extends to mere chattel right; that is, the lessee can only hold the right of the use of the land and tenement. A lease of land to an alien for ninety-nine years is an evasion of the prohibition of the Constitution, and it is therefore unconstitutional. To constitute a good lease the term should not ex¬ ceed twenty years, and the rent should accrue to the lessor annually. The lease of land to an alien for more than twenty years is against the Consti¬ tution and public policy, and therefore is void. Nor the Constitution prohibits an alien from even an imaginary claim to land, and therefore the law will not give aid to it, however much it may be disguised. The prohibition does not extend to foreign colonization, missionary, educational or other benevolent institutions so long as the property or estate is applied to its legitimate purpose. The Attorney General has expressed the opinion that a missionary institution, in order to come within the excep¬ tion, must be incorporated. Lands acquired for benevolent purposes are alienable, but escheat to the Republic if diverted to other uses, even though the grantee is a citizen. Quoted in part from The Political and Legislative History of Liberia by C. H7 Huberich. Section VI,Vol II, p. 1090. 125 126 By treaty the rights of the nationals of the contracting Parties may be granted a specified time within which they may hold and dispose of real propertjr to which they have succeeded by devise or descent. Thus, in the Treaty of August 8, 1938, between liberia and the United States (U. S. Treaty Series, Bo. 956) it is provided in Article IV: ’There, on the death of any person holding real or other immovable property or interests therein within the territories of the High Contracting Party, such property or interests therein would by the laws of the country or by a testamentary disposition, de¬ scend or pass to a national of the other High Contrac¬ ting Party, whether resident or non-resident, were he not disqualified by the laws of the country where such property or interests therein is or are situated, such national shall be allowed a term of three years in which to sell the same, this term to be reasonably prolonged if circumstances render it necessary and withdraw the proceeds thereof, without restraint or interference and exempt from any estate succession, probate or administrative duties or charges other than those which may be imposed in like cases upon the nationals of the country from which such pro¬ ceeds may be drawn. / APPENDIX VI AN ACT PERMITTING UNRESTRICTED TRADE IN THS HINTER' LAND OP LIBERIA, BOTH TO CITIZENS AND ALIENS* Whereas it is the desire of the Government to open the entire interior to trade and commerce subject to the provi¬ sions hereinafter specially mentioned: Therefore it is enacted: Section 1:- That from an immediately after the passage of this Act, any individual, firm or Corporation, Liberian or alien, having an established place of business in any of the ports of entry of the Republic, shall be permitted to trade at any place in the Hinterland without any other restrictions save those hereinafter mentioned. Section £:- Upon application to the Secretary of the Interior for, and in, behalf of the Republic if any merchant or mercantile firm established as provided in Section 1 here¬ of said Secretary of the Interior shall be privileged to lease at a reasonable rental to such individuals, firm or corporation a plot of land not exceeding one(l) acre from the public do¬ main as a place for establishing his business and erecting suitable buildings in the Hinterland, which lease shall run for a period not exceeding twenty-one years with the privilege of renewal for a further period of twenty-one years upon terms and conditions to be agreed upon at the expiration of the first term, provided, however, that should any citizen possess land in fee in the vicinity required, nothing in this Act, or in any previous act, shall prevent him from leasing any portion of his land to such individual, firm or corpora¬ tion should it be mutually desirable. Section 3:- Should the said individual, firm or trader (1) violate any of the provisions contained in Section 6 infra or (2) abandon the site for a period of two (2) consecu¬ tive years, then the said land with the buildings thereon shall revert to the Government with all the improvements thereon and without any liability to the Government whatever, provided that before the expiration of the period of the two years aforesaid said lessee shall be priviledged to sub-lease the remainder of the term thus demised to any other person, firm, or corporation upon the approval of the Secretary of the Interior first had and asserted to in writing. * Quoted in sections from original document. 127 1S8 Section 5:- In the employments of agents, factors, clerks, or other employees in any business thus established preference shall be in all cases given to Liberian citizens. Section 7:- This Act shall repeal the Act of 19S3 and all previous Acts inconsistent with the provisions hereof. This Act shall take effect immediately and be published in hand bills. Any law to the contrary notwithstanding. Approved De ce nib er 18, 1930 APPENDIX VII SOCIAl LEGISLATION* The first of the legislative Acts is that of January 9, 1942 - 1943, authorizing the President to establish a national Economy Committee, to be composed of three or more persons, one of whom shall be a representative of the consumer class. The Act provides, inter alia: Section III:- It shall be the duty of the National Economy Committee to take all appropriate measures to prevent pro¬ fiteering by corporations, firms .traders, and peddlars as well as to control by the enforcement of regulations which shall be made and published by the Committee from time to time, fixing the maximum prices at which food products and other commodi¬ ties of both domestic and foreign origin may legitimately be sold. Section IV:- Profiteering in this Act shall be understood as receiving or demanding a price for a commodity higher than that fixed by the National Economy Committee. Section VI:- (As amended by Acts, 1942 - 1943) The Committee shall have the power to compel the production by importers of goods imported; and, after inspecting said invoices and check¬ ing them with official reports furnished by Consular offi¬ cials of the Republic, and information gathered from other sources, the Committee shall be authorized to fix the maximum price and profit that may be assessed on any given article sold in Liberia during the present European conflict. Sale of goods above the regulated price shall be deemed profi¬ teering and shall be punishable by the seizure of the entire stock of the article out of which such sale in excess -of the regulated price may have been made. Said stock shall be con¬ fiscated to the Government of Liberia, and the trading license of the corporation, firm, or trader against whom a decision is made for profiteering shall be suspended for a period to be fixed by the Committee or such license shall be definitely cancelled if in the opinion of the Committee the facts justify such cancellation, and the Bureau of Revenue shall be accor¬ dingly notified. * Quoted in part from The Political and Economic History of Liberia by C. H. Huberich, Vol. II, p. 1250, Section III. 129 130 The second of these Acts is the Workmen's Compensation and Protection Act of January 29, 1943 (Acts 1942 - 1943). The Act applies to all skilled and unskilled workers, in¬ cluding agricultural laborers, office and hospital workers, nurses and domestic servants, employed at a daily, weekly or monthly wage. It fixes the minimum wage, hours of labor, provides for hospitalization and compensation for injuries sustained in the course of employment, prohibits strikes, re¬ stricts employment of alien workers, provides for a Labor Registry, Labor Courts and Labor Agents. The Act makes' punishable any physical violence to any employee. Section 5:- The legal working day shall consist of eight hours and the employer shall pay a full day's wage to each workman, whether or not the office of business or job is open or lasts eight hours per diem, except for casual labour or in case a workman is dismissed for inefficiency, lack of qualification or unfitness for his job. Section 7: - Ho workman shall be dismissed from his job except upon one week's notice or two week's pay in lieu of notice. Should a workman be dismissed for inefficiency and lack of qualification, he shall receive in payment for his services only such compensation as he would be entitled to for the period of his employment. Section 10:- (b) No workman not a Liberian citizen shall be employed at rates not identical with wages paid Liberian citizens in similar positions, the question of competency and length of services being always taken into account. Section 14:- Each employer shall be responsible for the cost of hospitalization of any workman in his employ whose health may be affected by virtue of his employment or who may be injured in the course of his employment. Section 16:- The minimum wage rates fixed in Section 4 hereof shall be increased fromtime to time in proportion to in¬ creases in the average price level for commodities as of January 1, 1943. Such increased minimum wages may be reduced below the minimum rates fixed in Section 4 of this Act. Section 22:- This Act shall go into effect on the first day of February A". D. 1943. Any law to the contrary notwithstanding. Approved January 29, 1943. APPENDIX VIII AN ACT RELATING TO THE CONSTITUTION AND REGULA¬ TIONS OE COOPERATIVE SOCIETIES* This Act may "be cited as the Cooperative Societies Act, 1936. Registration:- The President may appoint a person to be Registrar of Cooperative Societies and may appoint Assistant Registrars as may be required, who shall act under the control of the Registrar and who shall perform such of the duties and exercise such of the powers of the Registrar as the Registrar may from time to time commit to them. Societies Which May Be Registered:- Subject to the provisions hereinafter contained, a Society which has as its object the promotion of the economic interests of its members in accor¬ dance with Co-operative principles, or a Society established for the purpose of facilitating the operations of such socie¬ ties, may be registered under this Act with or without limited liability: Provided that unless the President by general or special order otherwise directs: (a) the liability of a Society of which a member is a registered society shall be limited; (b) the liability of a society of which the primary object is the creation of funds to be lent to its members and of which the majority of the members are agriculturists and of which no member is a registered society, shall be unlimited. No member, other than a registered Society, shall hold more than one-fifth of the share capital of any Cooperative Society. Rights and Liabilities of Members:- No member of a regis¬ tered society shall exercise the rights of a member unless or until he has made such payment to the Society in respect to membership or acquired such interest in the Society as may from time to time be prescribed by Rules made under this Act or by the by-laws of such society. No person shall be a member of more than one registered society with unlimited liability without the approval of the Registrar. * Quoted in part from The Economic History of Liberia by G. W. Brown. 131 132 Do member shall hold more than such proportion of the share capital of .the society, subject to a maximum of one-fifth, as may from time to time to be prescribed by rules. Each member of a registered society shall, notwithstanding the amount of his interest in the capital, have one vote only as a member in the affairs of the society; provided that a Co-operative Society which is a member of any other Cooperative shall have as many votes as may be prescribed by the by-laws of such other Society, and may, subject to such by-laws, appoint any number of its members, not ex¬ ceeding the number of such votes, to exercise it voting power. Duties and Privileges of Registered Societies:- Every regis¬ tered society shall have an address, registered in accordance with the Rules, to which all notices and communications may be sent and shall send to the Registrar notice of every change thereof. The registration of a society shall render it a body corporate by the name under which it is registered, with perpetual succession and a common Seal, and with power to hold movable and immovable property of every description, to enter into contracts, to institute and defend suits and other legal pro¬ ceedings, and to do all things necessary for the purpose of its constitution. Exemption from Taxation:- The president has right in the case of any registered society or class of registered societies to reduce or remit temporarily or permanently fa) stamp duties fd) real estate tax (b) registration fees fe) any tax duty or impost now (c) licenses in force or introduced after the passage of this Act. Property and Funds of Registered Societies:- (l) A registered society shall not make a loan to any person other than a member: provided, that with the consent of the Registrar, it may make loans to other registered societies. (2) A re gia- tered society shall not lend money on the security of immovable property and save with the permission of the Registrar to be given generally in the case of any society it shall not lend money on the security of movable property. BIBLIOGRAPHY Books ,Bartholomew, J., and Lyde, F. W. An-Atlas of Economic Geography. London: Oxford University Press, 1928, Berle and Means. The Modern Corporation and Private Property. Hew York: The Macmillan Company, 1940. Brown, G. W. The Economic History of Liberia. Washington, D. C. : The Associated Publishers, Inc., 1941. Commonwealth Economic Committee, Intelligence Branch. Vegetable Oils and Oil Seed3. London: Iiis Britannic Majestyis Stationery Office, 1948. Fieser, Louis F. , and Mary. Organic Chemistry. Boston: 3). C. Heath Company, 194¥. Guthmann, H. G. and Dougall, H. E. Corporate Financial Policy. Hew York: .Prentice Hall, Inc., 1940. Huberich, Charles. Political And Legislative History of of Liberia. Vol.s I and II. London: His Britannic Majesty’s Stationery Office, 1940. Irvine, P. R. West African Agriculture - Soils and Crops. London: Oxford University Press, 1928. Hewland, Captain H. Osman. West Africa - A Handbook for the Planter. Financier, et cetera. London: Daniel O’Connor. r_ Seligman, E. R. and Johnson, A. Encyclopaedia of the Social Sciences. Vol. 4. Thomas, S. E. Elements of Economics. London: The Gregg Publi¬ shing Company, Ltd., 1936. Bulletins and Pamphlets Carey, Joyce. "Britain and West Africa", distributed by British Information Services. Hew York: Longman, Green and Company, 1947. Monthly Digest of Statistics, Ho. 48 by the Central Statistical Office. London: His Majesty’s Stationery Office, 1949. 133 134 Public Documents U. S. Office of Domestic Commerce, Food Division. Industry Report - Pats and Oils, January, 1950. 7/a shin gton: Government Printing Office, 1950. U. S. Office of International Trade. World Trade in Commo¬ dities. November 1948, Pats and Oils. Vol. VI. Part 6. Do. 4. Washington: 'Government Printing Office. U. S. Office of Domestic Commerce - Pood Division. Industry Report - Pats and Oils, November. 1949. Washington: Government Printing Office, 1949. U. S. Office of Domestic Commerce. Salad Dressing, Mayonnaise and Related Products, 1948. Washington : Government Printing Office, 1948. U. S. Office of International Trade. Poreign Commerce Weekly. Vol. XXXVIII, No. 8. Washington: Government Printing Office, 1950. Ü. S. Office of Domestic Commerce, Small Business Division. Pinanoial Considerations in the Establishment of a New Small Business. Washington: Government Printing Office, 1949. Articles The Pittsburgh Courier. March 11, 1950. West Africa. "West Africa”, March 18, 1950 . Portune, January 1948.