Liberty III was built as a civilian schooner-rigged pilot boat of the same name in 1896 by John Bishop at Gloucester, Massachusetts. On 10 September 1917 the U.S. Navy acquired her under a free lease from her owner, the Boston Pilots Relief Society, for use as a section patrol boat during World War I. She was enrolled in the Naval Coast Defense Reserve on 15 September 1917 and commissioned on 20 or 21 September 1917 as USS Liberty III (SP-1229) with Ensign Murdoch McLean, USNRF, in command.