Shortly after the declaration of independence, the Liberian government established the Liberian dollar as its national currency. According to President Joseph J. Roberts, it was intended to both promote commerce and demonstrate the sovereignty of the Liberian state. The first coins were minted in England, with the financial backing of a British banker and abolitionist, as the Liberian state did not then have the means to fund their minting itself. These token coins were later supplemented with paper money printed in Monrovia. The Liberian dollar was an unbacked paper currency. It was initially valued at par with the US dollar but quickly depreciated as the Liberian government turned to the printing press during repeated fiscal crises in the decades after 1847. This chapter chronicles the Liberian government’s efforts to sustain the value of its currency, the adoption by the turn of the century of British sterling as the primary medium of exchange, followed by the replacement of British currency by the US dollar in 1943. The case of Liberia illustrates that formal monetary sovereignty may have little significance for governments lacking the resources and capacity to sustain the value of their currency, which may force them to adopt others to sustain their trade and public finances.

This chapter examines the law of extractive resources and money to clarify law’s constitutive role in political economy and, in particular, its implication in the expansion of exploitation. It also indicates how at various past junctures certain legal institutions have been chosen over possible alternatives. It, thus, draws attention to the “institutional toolbox” available for identifying ways in which law may re-configure and transform political economy. More specifically, the chapter explores the distributive effects that law generates - by allocating jurisdiction and exploitation rights, as well as by submitting distribution conflicts either to resolution through political procedures or market mechanisms. It explains how the principles of permanent sovereignty over natural resources and monetary sovereignty provide the basis not only for domestic, but also for international politics to be conducted in the legal framework of international organisations (international commodity agreements and the IMF). The chapter proceeds to trace how the assertion of government control over natural resources led to the expansion and proliferation of markets, not only because it prompted the emergence of a transnational economic law, but also as it contributed to the reverse integration of the industry and consequent changes in the structure of commodity trade. The chapter points to linkages between resource extraction and trade on the one hand and the demise of Bretton Woods and liberalisation of capital markets on the other hand with the effect of further reducing the scope for politics. Finally, it proposes to take a closer look at monetary design both as a driver of extraction and as a potential means to contain exploitation.