If you buy a coffee in Monrovia, Liberia, you'll most likely pay using US dollars.
But your change will probably be a mixture of US dollars
and Liberian dollars, which hold a lower value
and act a small change.
This dual currency system can be very difficult for Liberians
who might be paid in Liberian dollars, but need to purchase imported food
or other goods in US dollars.
Why do US dollars circulate in Liberia,
and how did this dual currency system emerge?
Liberia was founded
in 1822 as a colony for freed African-Americans from the United States
between 1820 and 1904
16,000 African Americans migrated to Liberia.
The migration was organised by the American Colonization Society
and its subsidiaries
who issued their own coins and notes for migrants to use for supplies.
When the migrants arrived in Liberia,
they found multiple other currencies circulating in the region,
like the indigenous Kissi penny and European currencies like British
pounds, shillings and pence.
Liberia declared independence in 1847.
One of the first acts of the new government was to establish
its own currency – in the words of Liberia's first president,
"to mark the existence and the nationality of the republic".
This is the first Liberian coin.
One signed represents
the two key sources of Liberian wealth, trade and palm oil.
The other side depicts a woman wearing a phrygian or freedom cap,
an image associated with freed slaves.
This new Liberian money was intended to replace the Colonization Society currency.
However, the Liberian dollar had to compete with all the other
currencies in circulation.
In its early years
the Liberian government struggled with debt.
A quick source of revenue was to print paper notes
like this one from 1880.
Printing more money was a short term solution to the government's
financial troubles, but it had a long term cost.
The Liberian dollar began to lose its value against the other currencies
making imported goods much more expensive, and, for the government
increasing the cost of paying interest on foreign debt.
Because of all this, merchants and then the government
began to use the colonial currency of British West Africa instead.
This became Liberia's main
form of currency until 1943, though the Liberian dollar
still circulated a small change.
Even though they were using
British West African currency, Liberia's economic relationship
with the United States grew stronger during the 1900s from 1912.
The government's debt was in US dollars,
while tax revenue was collected in British West African currency.
Then in the 1930s
the value of the pound dropped relative to the dollar.
This made it hard for the government to pay the interest on its debt.
Finally, with help from the US, the US dollar replaced
British West African shillings as the primary currency in circulation.
Over the years, the Liberian government has tried
to return to a single currency system based on the Liberian dollar.
However, many people still use US dollars
for everyday transactions.
The US dollar is frequently used by people all around the world who want to use
a more stable currency for transactions, even if it isn't their national one.
The story of the dollar in Liberia shows
that this is nothing new.
When a country adopts a foreign currency,
it will have difficulty reversing the decision.
Monetary history can tell us a lot about other broader questions of history.
Questions of economic history, of political history, of social history.
So in this case, there's a kind of standard argument in the monetary
history of West Africa that development prospects of African countries
were in part undermined by the use of colonial currencies.
Liberia is an interesting case because it's one of the few places
in Africa to remain independent through the colonial period.
What the story of the Liberian dollar tells us
is that while the Liberian government
had the formal power to issue its own currency,
it lacked the fiscal and political capacity to maintain it
and maintain its value over time, leading to this adoption of a foreign currency.
So it lets us think more about the exercise of power and sovereignty
by countries in the developing world during the 19th century.