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Liberia, Junk Bonds, and Rubber

by Deirdre Griswold, brought to you by Tendai Sunday, Aug. 03, 2003 at 9:42 AM



By Deirdre Griswold

What has the present desperate situation in Liberia got to do with junk bonds? Plenty, but you won't read about it in the corporate media.

The picture the world sees is one of desperation and chaos. Hundreds are being killed in a civil war that has people in Monrovia, the capital, calling for Washington to send "peacekeepers." Babies are starving, cholera has broken out because there is no clean drinking water, supplies of food and other necessities have been disrupted.

There are reportedly 4,500 U.S. troops in ships off the coast of Liberia, but the Bush administration is not rushing in to prop up the government of President Charles Taylor. It clearly wants him to leave, and has persuaded Nigeria to offer him asylum.

These are the developments that the U.S. and British media focus on. What they leave out is the history and context behind this grim situation. By not saying a word about how Liberia has been reduced to abject poverty by U.S. imperialist corporations, they fail to give people in the West any sense of why social and political tensions have reached the point of civil war for the second time in a decade. Instead, the capitalist press and media feed the racist myth that African people cannot be productive or govern themselves.

It is an outright lie, which is contradicted by the fact that African labor has been so productive that the capitalist investors who plunder the continent have become enormously wealthy.


This article is about one particular company--the Firestone Tire & Rubber Co.--which has squeezed billions in profits out of Liberia, beginning way back in 1925, when it virtually stole 1 million acres of land, paying the Liberian government only six cents an acre. It established the largest rubber plantation in the world at Harbel on the Farmington River, giving the company a route to the sea.

George Padmore, an activist and Africa scholar, wrote that "... the company demanded the Liberian government accept a loan of $5 million at the rate of 7 percent interest, failing which Firestone would not carry through its proposed development scheme. The Liberian people were reluctant to accept this heavy financial obligation but finally succumbed to the coercion of the great colossus of the north. Firestone was insistent that the government accept this loan in order that funds might be provided for the construction of railways and roads and to improve the harbor of Monrovia."

This "loan" began Liberia's indebtedness to the U.S. for building the infrastructure that U.S. corporations needed for their operations.

Firestone's huge plantation at first employed tens of thousands of workers. It drew young men from communal villages into the newly created money economy. The company put out slick brochures about how it provided housing, roads, clinics and schools for its workers.

But the reality was something else. Over the years the workers organized and struggled hard to try to improve their wages and working conditions. Their struggles were met with violence, shutdowns and, in recent years, wholesale layoffs.

By 1997, the work force on the plantation had shrunk to 8,000. The workers went on strike, demanding better social protection, improvements to their living and working conditions, and the redeployment of some 8,000 former employees of the company, according to a French Press Agency report of Sept. 10 of that year that was circulated by the International Confederation of Free Trade Unions. The strikers also accused Firestone of closing nine of its 45 units to reduce staff.

At least six workers were wounded when the strikers were fired on by government security forces and "peacekeepers" from ECOMOG. ECOMOG is an army of the English-speaking West African countries, in which Nigeria plays the dominant role. The Pentagon wants ECOMOG troops to be part of any intervention in Liberia today. From the point of view of U.S. strategists, it is an important weapon in the inter-imperialist struggle between the U.S. and Britain on one side and France on the other for control of lucrative African markets.


Four years after this strike of the Firestone workers, the workforce had been further reduced. Firestone, which had merged with the Japanese company Bridgestone, was getting out of the plantation business and moving its capital elsewhere.

David Goodman wrote in the May/June 2001 issue of Mother Jones magazine that "The 5,600 workers at the plantation are supposed to receive free housing. ... A walk around the Firestone plantation last November confirmed the dire living conditions of many workers. Among the densely packed homes were cardboard-and-metal shanties held together by scrap wood and wire. A group of houses faced a stinking trash dump in which children played. Families were living in the charred shells of homes destroyed during the war, some of which lacked roofs. None of the homes had water or electricity. The workers' housing sits just out of sight of the neatly manicured antebellum estates of company managers.

"The housing crisis has only added to the grievances of Liberian workers. With the nation's unemployment at 85 percent, they note, Fire stone can pretty much do as it pleases. According to union officials, the rubber tappers earn $2.53 a day, and work eight hours a day, six days a week. 'It is very difficult to live on these wages,' says union president Richard S. Fatorma. In addition, the union says, Firestone has nearly halved its workforce in the last decade--doubling the workload without increasing pay.

"Workers also complain that they feel ill from spraying trees with Difolatan, which enhances latex production. In the United States, federal health officials list Difolatan as a 'known or suspected carcinogen' that can cause asthma and skin irritation."

After all those years in which the Firestone corporation paid tens of thousands of workers just pennies an hour--and had them shot down if they organized and fought back--what did this corporation do with all the money it made?

One thing it did was get into the junk bond market. In the 1960s, Firestone made what one analyst called "a large cash infusion" into the fading Drexel Bank of Philadelphia, which then became Drexel Firestone. By 1973, after a merger, the firm had morphed into Drexel Burnham Lambert. It was a shooting star on Wall Street for over a decade until its most notorious officer, Michael Milken, was convicted of insider trading and went to jail. The company folded in 1990.

Money that had been squeezed penny by penny out of Liberian rubber workers went up in smoke.

There was great indignation on Wall Street over the way Drexel Burnham Lambert had squandered rich people's capital with its double dealing and risky investments. This was considered immoral and unconscionable, as well as illegal. But not a thought was given to where that original Firestone money had come from: African workers getting starvation wages.

Firestone had gotten so hooked on squeezing high profits out of its Liberian operations that it wanted nothing less than the spectacular yield promised by the junk bond market.

What the people of Liberia need is not more "peacekeepers" sent to suppress the workers and maintain exploitation, but real sovereignty and reparations from the billionaires and their corporations who have bled the country dry.

- reprinted from the Aug. 7, 2003 issue of Workers World newspaper -
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