THE POST-WAR POLITICAL ECONOMY OF TRINIDAD AND TOBAGO- I

PERIOD I: THE SECOND WORLD WAR

It is debatable whether the Riots of 1937 or the advent of the Second World War had the greater impact on subsequent developments in Trinidad and Tobago. Following the Butler-led riots in 1937-38 the British Government set up the Moyne Commission to “investigate social and economic conditions in Barbados, British Guiana, British Honduras, Jamaica, the Leeward Islands, Trinidad and Tobago, and the Windward Islands, and matters connected therewith, and to make recommendations”. This Commission had scarcely finished its field investigation when the British Government joined the war against Hitler.

The war diverted interest from the essentially local disturbance and gave rise to the American occupation of the Territory. The Riots of 1937 and the American occupation were major formative events in the development of the country’s post-war history. The American occupation began in 1941 and ended June 1967. It had a tremendous and enduring influence on the country’s political and economic structure, and on its values and view of the world. Serious enquiry into the documentation of these aspects of the territory’s history must be considered a priority study.

ECONOMIC IMPACT OF THE WAR

Trinidad and Tobago were considerably affected by the war and so this period of our study enquires into the specific ways in which the war manifested itself in the economy.

In 1939 the local population was just under half a million (473,000). Birth rates and death rates were typically high, at 31 and 16 per 1,000 respectively.

In the provision of goods and services for this rapidly growing population, agriculture (comprising sugar, cocoa, coffee, citrus and ground provision) and petroleum formed the backbone of the economy, while employment was heavily concentrated in agriculture, government and services, the last being especially finance, transportation and distribution. Such was the situation until the Americans arrived in 1941. Then the construction of American Defence Bases made the U.S. forces into a major employer of local labour. But of this, more anon.

As is typical of small countries, especially when they are colonies, Trinidad and Tobago depended heavily on foreign trade for both the goods it produced and those it consumed. The pattern of trade was typical of underdeveloped territories: the things which we produced we did not consume and those which we consumed we did not produce. The 1941 blockade, therefore, might have been a matter of life and death for the territory were it not for two factors.

The first was that the blockade was a marine blockade and thus affected the movement of goods transported over great sea-distances. As a result, the import of goods from the U.K., already in relatively short supply, suffered greatly compared with those from North America; especially so since the Canadian and U.S. goods were in many cases hauled by rail to Florida to save on the sea voyage. The result was a drastic shift in sources of supply. For example, in 1936-39 an average of 37 percent of the territory’s imports came from the U.K. and 34 percent from North America. By 1944 the figures were 11 percent and 59 percent respectively.

The second factor was that the shortage, unavailability, and unreliability of some imports generated a significant increase in domestic supplies, not only of food but also of manufactures, to meet home demand. This response of local production to wartime pressures is significant in the light of the current situation.

Trinidad and Tobago has been facing a rapidly rising food-import bill which is costing close to $80 million of hard-earned foreign exchange. One objective of government policy is the minimisation of the food-import bill by a policy of import substitution.

It is not unfair to comment that there has been no significant success in this field. A few products for example, pigeon peas may have shown great promise, but overall the basic problem is still to be solved. The cause of the relatively weak response may be lack in the local population – government included – of either ability to meet this challenge or entrepreneurship, or lack of serious intent arising out of the knowledge that there is an alternative – to import the food. The experience of the war would suggest that there is no lack of ability or entrepreneurship, within the community to deal with this problem. The second explanation therefore seems valid. Indeed, the wartime response to shortages, and the response in 1963-64 to a government policy limited to pigeon peas end other legumes, and some ground provisions, suggests the lack of serious intent as the main shortcoming.

RISE IN WARTIME FOOD PRODUCTION

“Grow more food. Man must live.” This sign scrawled on an old country bus told the story of the war efforts to supply locally the food requirements of the population. Agriculture and food production were seen as a virtue and not just an occupation. Slogans like “Back to the Land” gave agriculture an attraction and a status it has not since enjoyed. And the local genius for exploiting a situation was not at all lacking when in 1946 numerous candidates for the first adult-suffrage elections offered themselves proudly as ‘sons of the soil’ – and won.

In 1942 a Food Controller was appointed to regulate food imports, to encourage the domestic production of food, and to organise the distribution and marketing of all foodstuffs. A Price Control Committee was established and a system of rationing was coupled with the fixing of prices for certain commodities. Flour, rice, condensed milk, pickled meats, and some other staples of local diet were all subsidised and/or rationed to some degree. To stimulate local production, sugar cultivators were compelled to devote large areas to short-term crops such as vegetables, peas and beans. The element of compulsion, particularly with respect to sugar cultivators may still hold the key to the solution of the present problem.

But compulsion is rarely enough, and even if it were, it is rarely wise to use it alone. A system of guaranteed prices was offered to producers and as a result of the opening of some 30 Government depots, storage and marketing facilities were greatly improved. Food processors including soap, edible-oil and margarine producers were successfully offered encouragement to expand after the 1941 embargo. The unavailability and unreliability of foreign supplies and the resulting rise in their prices, coupled with the increased demand generated by the high incomes earned on the American bases, gave a great spurt to domestic food-growing and processing and to domestic production of manufactures.

Though the application of subsidies did help to keep prices down, it is very significant that there was no increase in the importation of staples, and that domestic supplies increased in such order that there was only a moderate rise in the cost of living and moreover the prices of the imported components of the cost of living were rising faster than those of the domestic contribution.

Thus, by the end of the war the total acreage under food production was 2½ times the 1939 figure. The output of some crops such as rice, sweet potatoes, yams and Indian corn had increased significantly. Through this, the cost of living rose only 80 percentage points between 1939 and 1944 compared with 113 percentage points for import prices.

The end of hostilities however led to a return to the earlier pattern of consuming what we did not produce and producing what we did not consume. The difficulty of matching the pattern of local demand with the structure of local supplies is even more acute today. This was the war experience of considerable relevance to the present situation.

The attempts by the recent governments to re-organise the rural agricultural sector have not been very successful. When however wartime conditions imposed the necessity, local production responded more readily than the last ten years of internal inducements have been able to cause it to. Externally imposed restrictions seem to be significantly more effective in transforming the structure of the local economy than the local government policy.

It may be argued that the evidence is not conclusive, in the sense that the impact of American expenditures within the economy provided new expanded markets for many commodities. The impact of these expenditures however, was essentially similar to the impact of increased purchasing-power during the more recent boom of the 1950s. In this later period however, increased purchasing-power did not result in substantial increases in domestic output, especially of foodstuffs. The great increase in consumption was satisfied by a great increase in imports.

EFFECTS OF THE AMERICAN BASE

The presence of the American Base in the territory, as distinct from other effects of the war, had important specific consequences for the Trinidad economy. It affected the utilisation of labour, the territory’s wage structure and, of greatest importance, it affected the society’s values and view of the world.

One very direct impact of the U.S. occupation was the shortage of labour which the base construction caused. At the peak of its construction activity in 1942-43 about 30,000 men, between 15% to 20% of the labour force were working for the ‘Yankee dollar’ though some workers were not assured of more than a couple of days’ work per fortnight, the earnings were usually sufficient to maintain them until another day’s employment was obtained. Moreover, more than the 30,000 actually employed were drawn from the rest of the economy, as many idlers “waited near the precincts of the bases from day to day in bright anticipation” of getting ‘a wuk down the Base.’

The impact of the American demand for labour, at relatively high wages, showed up in reduced empowerment and production in the sugar and cocoa industries. Employment in sugar, for example, fell from approximately 30,000 at reaping time in 1939 to about 18,000 in 1943, rising to 21,000 in 1944, when the American Base construction was over. Sugar acreage likewise fell from 31,000 in 1937 to 20,000 in 1943 and with it production from 155,000 tons in 1936-37 to 71,000 tons in 1943.

Construction of the American base did not merely offer a great deal of employment, it did so at higher-than-average daily earnings. For one thing, the Americans exacted more work per day from their employees than was normal in the territory. For another American wage-rates were slightly higher than those paid either in sugar or in Government Public Works. Moreover, up-grading of workers on the slightest evidence of proficiency made working with the Americans even more attractive. In mid-1942 casual labourers on US bases were earning $1.15 a day as against 80 cents in sugar and 95 cents in Government Public Works. It was a workers’ paradise and sugar planter’s curse. For those interested in the distorted pattern of the territory’s wage structure it may be useful to enquire more closely into the question of how much wage rates paid on the U.S. Base may have contributed to the creation of a problem almost always complete attributed to the oil industry.

Finally, a word on the social aspects of the American occupation. The injection of American values into the society is a rather difficult aspect of the American occupation to document. Certainly, it does appear that the local population felt that in many ways they were not the equal of the foreigners, whose privileged position and social pre-eminence were not altogether unexploited.

While not delving into the more sordid social aspects of American life in Trinidad, it is meaningful to note that in many ways, including Sparrow’s very expressive calypso which rejoiced that the “Yankees gone and Sparrow take over now”, the population revealed a feeling of – at last – regaining something they had lost to their Invaders. The value dominance of the Americans seeped into the Trinidadian social fabric and their military sophistication was much admired. Unfortunately, the population seems to have missed their example of hard work.

Three interesting questions suggest themselves at this point. The first is to what extent one can attribute the fall in acreage and production of the export staples to diversion of labour to American-base construction, in view of the fact that at the same time domestic food-production was increasing. Could it not be that in the face of shrinking export agricultural markets, resources were transferred to domestic agricultural sector, thereby resulting in decrease in the production for the former and an increase in the production of the letter. The implication of this possibility is that exports were sacrificed for import-replacing domestic production. If this was so then the wartime import-substitution claims have a very hallow ring. For true import-substitution assumes the maintenance of export earnings.

What little data is available suggests a dual explanation. First, the total agricultural production. i.e. domestic agriculture plus export agriculture fell a bit although domestic agriculture did increase. Secondly, resources (chiefly labour) did shift from export agriculture to domestic agriculture and to American-base construction.

The second question relates to the expansion in domestic agricultural output. Was it estate or peasant agriculture which responded to the need for increased domestic food-production? The evidence seems to suggest that added to the internal factors the externally imposed difficulties of trade blockade and submarine danger which effectively reduced trade seemed not only to discourage estate production of export agricultural crop but also peasant production; especially so, as domestic crops became more and more attractive cash-crops under the system of guaranteed prices. Peasant export agricultural producers turned increasingly to domestic agricultural production, and estates under compulsion and in some cases enlightened self-interest moved in the same direction, though they adjusted chiefly by letting the lands lie idle in the face of the labour drift. At the same time, there was a large exodus of the labour from the estates to the U.S. base in the face of comparatively low wages and ‘dirty work’ on the estates. Also, many labourers on the estates who had little plots of their own turned increasingly away from estate labouring to working on their own plots producing food for their own consumption to supplement and replace scarce imports and to earn some cash from the marketing boards. Thus, resources employed in export agriculture shifted partly to the U.S. base construction and partly to domestic agriculture.

The third question requires an enquiry into the ownership of the capital resources that went into the increase in domestic production of both food and manufactures. In the former, if food processing is excluded, it seems clear enough that the capital was profits of estate owners and peasants, the latter being local and the former foreign and local. The capital used for this must have been slight as peasant agriculture requires little per unit output. In the manufacturing sector however, the source and ownership of capital was apparently foreign.

FINANCING OF THE WAR ECONOMY

During the war, there was a sharp decline in traditional agricultural exports of sugar, molasses, cocoa and copra. Only rum exports increased significantly, probably in response to increased U.S. demand due to whisky shortage. Oil maintained its overwhelming predominance. Imports did not decline, with the important exception of machinery imports, which fell drastically, for obvious reasons. Thus, overall, the territory’s visible trade balance quickly shifted from a small surplus in 1939 to a sizeable deficit in 1944. Further, the source of imports shifted, as already mentioned.

In the fiscal field, government revenues had more than doubled between 1939 and 1944 but expenditures rose even faster. Customs receipts, which were the major source of government revenue (over 50% in 1939), did not rise as fast as import prices, because most duties were specific rather than ad valorem. Thus by 1944 customs receipts accounted for only 40 percent of government revenues.

Income tax which was of relatively minor importance in 1939 (contributing about 7% to 8% to revenue increased significantly due to increase of the rates during the war), and brought in over 20% of revenue in 1944. Further, certain emergency taxes and an oil levy were introduced in 1940 and these brought in sizeable revenues.

The impact of government expenditures during this period may have been equivocal. The government budget ran a continuous surplus indicating that, on balance, government expenditures were anti-inflationary. Furthermore, the government was an important contributor to the import surplus. This latter fact may be interpreted as anti-inflationary since it increased the quantity of goods and services available to the country. However, when it is remembered that import prices were rising faster than domestic prices one may well conclude otherwise.

In attempts to mobilise local savings and to offset inflationary pressures, various types of loan securities were issued under the War Loans Ordinance. Though the response was not one of complete indifference, Prest reports that “generally speaking, the response was disappointing to the government as neither the wealthier business men nor the main companies showed themselves eager to subscribe”. In characteristic manner, however Prest reports that “on the other hand, it must be remembered that substantial contributions were made from all quarters to the British Government in the form of GIFTS, loans and subscriptions to securities” – a very familiar pattern, isn’t it?

On the expenditure side, the impact of the war manifested itself in several ways. Over the 1939-44 period, the Trinidad government spent about $13 million on defence, of which about $5 million went as contributions to H.M.’s Government. Also, between 1940 and 1943 about $9 million, in the form of four interest-free loans, were made available to H.M.’s Government. When one adds to all this the utilisation of Chaguaramas, Waller Field, Carlsen Field, for the war effort by the U.S. It appears patently clear how correct it was to remark as we did earlier that Trinidad and Tobago were not a little affected by the war!

The war proved much easier to terminate than the American occupation, for in 1945, the former ended but the latter continued. Trinidad and Tobago, continuing its externally imposed role as ‘reluctant host’ to American troops, turned its attentions – like the rest of the world – to stocktaking, and – in her own case – to nation building.