Two entries from The Online Etymology Dictionary

liberal (adj.)

c.1375, from O.Fr. liberal "befitting free men, noble, generous," from L. liberalis "noble, generous," lit. "pertaining to a free man," fromliber "free," from PIE base *leudheros (cf. Gk. eleutheros "free"), probably originally "belonging to the people" (though the precise semantic development is obscure), from *leudho- "people" (cf. O.C.S. ljudu, Lith. liaudis, O.E. leod, Ger. Leute "nation, people"). Earliest reference in Eng. is to the liberal arts (L. artes liberales; see art (n.)), the seven attainments directed to intellectual enlargement, not immediate practical purpose, and thus deemed worthy of a free man (the word in this sense was opposed to servile or mechanical). Sense of "free in bestowing" is from 1387. With a meaning "free from restraint in speech or action" (1490) liberal was used 16c.-17c. as a term of reproach. It revived in a positive sense in the Enlightenment, with a meaning "free from prejudice, tolerant," which emerged 1776-88. Purely in ref. to political opinion, "tending in favor of freedom and democracy" it dates from c.1801, from Fr. libéral, originally applied in Eng. by its opponents (often in Fr. form and with suggestions of foreign lawlessness) to the party favorable to individual political freedoms. But also (especially in U.S. politics) tending to mean "favorable to government action to effect social change," which seems at times to draw more from the religious sense of "free from prejudice in favor of traditional opinions and established institutions" (and thus open to new ideas and plans of reform), which dates from 1823.

"Conservative, n. A statesman who is enamored of existing evils, as distinguished from the Liberal, who wishes to replace them with others." [Ambrose Bierce, "Devil's Dictionary," 1911]

liberty

c.1375, from O.Fr. liberté "freedom," from L. libertatem (nom. libertas) "freedom, condition of a freeman," from liber "free" (see liberal)

"The spirit of liberty is the spirit which is not too sure it is right." [Learned Hand, 1944]

Nautical sense of "leave of absence" is from 1758. To take liberties "go beyond the bounds of propriety" is from 1625. Sense of "privileges" led to sense of "a person's private land" (1455), which yielded sense in 18c. England and America of "a district within a county but having its own justice of the peace," and also "a district adjacent to a city and in some degree under its municipal jurisdiction" (e.g. Northern Liberties of Philadelphia).

Interesting that Liberal and Liberty have the same Latin root, and that liberal implied "favorable to individual political freedoms".