It is practically a cliché in discussions of the post-war Caribbean to state that the British government did nothing to foster the growth of secondary industry in the British West Indies after 1940, and even purposively frustrated development of this kind. The original fault is said to lie with the Moyne Commission since the Commission’s 1945 report did not expound the need for any major initiatives to foster the growth of industry in the region.1 In the standard story, a period of indifference by Britain to the development of new industry was only brought to an end by the intervention of W. Arthur Lewis when he published recommendations for economic diversification in ‘The Industrialization of the British West Indies’ in 1950.2 We are told that the adoption of Lewis’s ideas by the governments of the British Caribbean marked the first phase in the pursuit of industrial development over the long term. Some versions place emphasis on the importance of the Puerto Rican experience as a model for Lewis’s programme.3 In all accounts, the influence of Britain, or British advisors, on the industrialisation programmes that were created by the governments of the British Caribbean after 1940 is written out.
The story that has emerged, in all its permutations, does not stand up well to close investigation. This chapter will reconsider the dominant narrative by paying close attention to the chronology of events that led to colonies such as Trinidad creating their first pioneer industries legislation, and by evaluating the relative importance of a number of individuals and proposals to the eventual character of the Trinidad ordinances. The claim that Lewis’s work was decisive in setting in motion the first programmes for industrial development undertaken in the British Caribbean is easily overturned.4 Legislation to encourage industrialisation in Trinidad was in place before Lewis published his famous article. In addition, Trinidad’s policies for industrial development between 1950 and 1956 omitted many of the recommendations made by Lewis. They also did not conform to the Puerto Rican example in most important respects. The Pioneer Industries Act passed in Trinidad in 1950 offered modest concessions to industry, including income tax exemption and import duty relief on plant and machinery, and Trinidad’s legislative council also provided marketing funds for advertising the benefits of Trinidad to foreign investors. The legislation did not create a development corporation to provide capital to entrepreneurs or set up factories, making the Trinidad approach different from that of Jamaica, where an industrial development corporation was created in 1952. Overall, Trinidad’s industrialisation strategy in the first half of the 1950s bore more resemblance to the concessions for new industry advocated by the Colonial Office in London than the strategies promoted by Lewis or employed in Puerto Rico. This is unsurprising when we consider that one of the authors of the legislation passed in 1950 was an economic advisor seconded to Trinidad by the Colonial Office. This British advisor was Arthur Shenfield, an advocate of minimal state intervention in economic affairs (in contrast to Lewis), and later in life, President of the Mont Pelerin Society. This chapter shows that despite the threat presented by the US to the authority of British colonial rule, the Colonial Office was successful in steering policy for industry along lines it saw as desirable until the 1956 elections that brought Eric Williams to power. This success was achieved not by direct instruction by London but through the judicious use of expert advisors who promoted the more liberal road to development favoured by the Colonial Office. Only with the election of Williams did Trinidad embrace a different model, devised by Lewis. Lewis in turn drew upon the Puerto Rican programme for inspiration.
Development planning in Trinidad, 1945–52
Officials in London had come to express the view after 1942 that a degree of industrial development in Britain’s Caribbean territories was necessary to provide employment and raise the standard of living. Whilst the Colonial Office had clear preferences with regard to the way industrialisation should proceed in the British West Indies, responsibility for working out the details of policies for industrial development lay with colonial governments. In the spring of 1950, the Trinidadian government passed a Pioneer Industries Ordinance that had its origins in an economic survey initiated by the Governor of Trinidad, Sir John Shaw, in 1947. The Economics Committee that undertook the survey contained individuals who had been recently elected to the Trinidad legislative council after the implementation of constitutional reforms. Trinidad had held its first elections with full franchise in 1946 and the result was a legislature with nine elected members and nine members nominated by Shaw. This election brought the Trinidadian trade union leader Albert Gomes to prominence. Gomes became a member of the Economics Committee responsible for the survey of economic conditions on the island and was one of the authors of the Pioneer Industries Legislation.
The period after the end of the Second World War was one in which a consensus had emerged amongst metropolitan and colonial officials, colonial publics and non-British members of the Caribbean Commission on the necessity of industrialisation. It was not at all certain, however, from the perspective of the Colonial Office, that Britain would be able to guide its colonies along a desirable path of policy. Caribbean politicians elected to new legislative councils could be quick to perceive British self-interest at work in Colonial Office recommendations, believing that Britain sought to frustrate the development of industry that might compete with British firms. Alongside this lack of trust, there was also the issue of advisors representing the Caribbean Commission who promoted an alternative model of industrial development modelled on the Puerto Rican experience. The fact that the Trinidadian legislature was offered more than one vision of the path to industrial development was a serious problem from the perspective of officials in London. In a time of increasingly autonomous legislatures, the British government could not merely instruct its colonies in the British West Indies to follow its recommendations.5 In this context, expert advisors assumed great significance and it was by the provision of advice that Britain sought to encourage the British Caribbean governments to formulate policy along its preferred lines.
In September 1947 Shaw formed an Economics Committee to undertake a comprehensive survey of economic conditions in Trinidad and make recommendations for the future. The decision to undertake a full economic survey was largely a response to criticism from the Colonial Office concerning Trinidad’s inability to produce a coherent programme for development. Trinidad was notified of a £1.2 million allocation from the CDW Act in December 1945 and was required to present the office with a ten-year plan for approval.6 The colony was described by officials as ‘extremely backward’, however, when it came to its capacity to produce a workable plan.7 When it was finally released, Trinidad’s ten-year development plan included large funds for road building, the extension of sanitation works, the development of the airport and the provision, or extension, of a number of hospitals. Apart from a concern with infrastructure, there was little indication of any planning for industrial development.8 In April 1947, the Secretary of State for the Colonies, Arthur Creech Jones, asked the Governor to modify the colony’s development plan so that more of the projects were ‘directly revenue producing’, or in other words, projects more clearly intended to improve the economic position of Trinidad. Specifically, the Secretary of State asked that more attention be paid to encouraging manufacturing industry. Creech Jones recommended that Trinidad request an economic advisor to travel to the island from Britain.9
The Economics Committee created in 1947 included amongst its members the economist C. Y. Shepherd of ICTA and a number of members elected to the legislature the year before.10 One beneficiary of the 1946 election was Albert Gomes who won his North Port-of-Spain seat as a candidate for the United Front (UF), beating the famous nationalist leader Uriah Butler, who had contested this seat rather than fight in the oilfield area of the south where his party, the British Empire Workers and Citizens Home Rule Party, had its strongest support. The UF had been formed in early 1946 through the consolidation of a number of left-wing organisations. In 1946, 47 per cent of the population of the colony were black, 35 per cent were East Indian and the remainder were described in the census of that year as mixed, white, Syrian, Chinese or other.11 Gomes was of Portuguese descent and it has been said that his success amongst voters was due in part to the fact he did not belong to the larger black or Indian populations of Trinidad and was able to unite factions that might otherwise be opposed.12 After his election to the legislative council, Gomes agreed to sit on the Executive Council and was invited to serve on the Economics Committee and the Finance Sub-Committee.13
The economic survey was completed in 1949 and made a number of recommendations to address the difficult conditions that Trinidad was facing, including some economic diversification. In the post-war period, Trinidad was almost completely reliant on two industries, sugar and oil, and of these, the sugar industry was in poor shape. Production of sugar had fallen dramatically during the war. In 1944 an inquiry chaired by F. C. C. Benham, the Economic Advisor of the CDW Org, had described Trinidad’s sugar industry as ‘heading towards extinction’. Wartime conditions were responsible on two counts – soaring food prices had led independent cane farmers to switch to producing food crops. In addition, there had been an exodus of workers from the sugar estates, attracted by the better wages helping construct the American bases.14 The result was that total labour in the sugar estates during crop time dropped to 16,700 in 1943, from around 25,000 in 1940.15 The colonial government attempted to rehabilitate the industry by providing a planting subsidy, grants for the estates and a guaranteed price for the sugar harvest. There was also a move to improve the very low wages paid to sugar labourers. In December 1944 the All Trinidad Sugar Estates and Factories Workers Trade Union came to an agreement with the Sugar Manufacturers Federation for a 15 per cent increase in the rate paid to field and factory workers, plus holidays with pay.16 Despite these attempts to revive the sugar industry, workers who left for alternative employment did not always return once the American bases were complete. The industry had still not recovered in 1947 and Trinidad was failing to reach the quota allocated to it by the British government.17 The 1947 Economics Committee stated that improved living standards for all agricultural workers were necessary to attract people back to the land. Agricultural workers did not just need better wages they also required opportunities for education, better housing, medical care, and decent food and clothing, or in other words, ‘a share of the privileges and duties of citizenship’.18 Intervention by the Labour Government in Britain led to the creation of a Sugar Industry Labour Welfare Fund in 1947 across the British Caribbean, financed from a cess on sugar exports. It was used to provide loans at 1 per cent interest to sugar workers so they could buy or build a house and leave the notorious barrack housing on the estates, some of which was unchanged since construction in the mid nineteenth century.19
While sugar was the biggest employer on the island, by far the most valuable Trinidadian export was oil, which by 1947 represented 76 per cent of the total value of Trinidad’s exports.20 The oil production facilities in the south of the island had been modernised during the war and plant had been constructed to produce high-grade aviation fuel for Britain.21 Workers for the oil companies received better wages and had a higher status than those on the sugar estates and this industry attracted migrants to Trinidad from other smaller Caribbean islands. Nationalist leader Uriah Butler had come to Trinidad from Grenada as an oil worker.22 Despite the relatively higher wages paid in this industry, living conditions for labourers could be extremely basic, and relationships between black workers and white managers of companies such as Trinidad Leaseholds could be very poor. The racism of managers recruited from South Africa for work in the oil industry had been one of the grievances cited to investigators into the causes of the 1937 riots.
In the period after 1945 there were many episodes of strikes and riots amongst workers in the sugar and oil industry, and these signs of poor industrial relations caused great concern to colonial officials contemplating the potential for industrial development. In January 1947 a state of emergency was declared in the south of Trinidad after a strike shut down most of the oil fields. After oil wells were set alight in the Guapo district, the Governor imposed a curfew and created an exclusion zone that prevented anyone coming within 100 yards of the oil wells, tanks and refineries in an attempt to prevent further acts of sabotage.23 The state of emergency was then extended to the whole island and the police were given the freedom to arrest anyone who did not move on request or give their name and address. Police used tear gas and batons after a crowd of supporters led by Butler invaded the Red House, the building housing the Legislative and Executive Councils in Port-of-Spain. The police also raided the headquarters of Butler’s union in the capital, arresting hundreds of people after fighting broke out and a policeman was shot.24
Further strikes followed in May involving around 1,400 workers on the sugar estates, and there were more acts of sabotage in the oil fields. The legislative council invited the British trade union official F. W. Dalley to Trinidad to investigate. In his report, Dalley emphasised the importance of collective bargaining as the means by which workers should peacefully resolve their grievances with their employers rather than resorting to violence. The island’s main daily newspaper, the Trinidad Guardian, condemned the strikes and called for responsible behaviour by the trade unions, while acknowledging that everyone knew that the high cost of living was a factor contributing to unrest.25 The official figures showed the cost of living index at 221 in 1947, from 100 in 1935.26 The Trinidadian people had endured hardship during the war, with severe shortages of food as shipping was diverted, and a high level of inflation. After the war, the high cost of foodstuffs was exacerbated by the dollar shortage as Trinidad was dependent on imported food items from North America. Between 1939 and 1947, imports from the sterling area shrank and those from Canada and the United States grew so that by 1947, 70 per cent of imports came from the dollar countries, compared to 51 per cent in 1939. The New World Group economist Edwin Carrington said of Trinidad in this period, ‘the things which we produced we did not consume and those which we consumed we did not produce’.27 In an attempt to alleviate the privation affecting the colony, a Food Controller was appointed in 1942 to regulate food imports, encourage the domestic production of crops and organise food distribution. A Price Control Committee created a rationing system and introduced government subsidies and fixed prices for rice, flour and condensed milk. Price controls were still in place by 1947 on imported foodstuffs such as rice.28
As well as facing rising prices, many workers in Trinidad struggled to find sufficient employment. A letter to the Colonial Office relayed the opinion of one judge in Trinidad that ‘Uriah Butler is trying to stage a political comeback by exploiting the dissatisfaction of intermittently employed people with their insufficiency of income.’ The letter writer, the Barbadian lawyer and one-time Attorney General of Trinidad, C. W. W. Greenidge, continued, ‘the harbour strike was due to the fact that there are now two to three times as many waterfront workers as are needed in Port-of-Spain and that, while the daily wage of 2 Dollars, 56 cents (10/8d) was good, labour was diluted and very few of the workers earn more than two or three days wages a week’.29
The 1949 Economic Survey recommended that the production of citrus fruits, rice, cocoa and food crops should all be expanded so that the colony had a broader base of agricultural activity.30 It also promoted the need for secondary industry to increase exports, reduce dollar expenditure and help to create purchasing power.31 The war had not led to a large amount of new industry in Trinidad because of the difficulty in importing machinery, but some existing industries had expanded their capacity to meet increased demand for edible oils, margarine, soap, match-making and clothing. Simple engineering tasks had been taken up by local engineering establishments that carried out repair and replacement work for the sugar industry and for shipping.32 In terms of government support for industrial development, Trinidad had a Local Industries Board in operation from 1941 with the function of exploring the possibility of establishing new industries. The achievements of this body were not readily apparent, however. In an article in May 1947 the Trinidad Guardian accused the government of inertia when it came to helping industry, citing the example of an aggrieved guava jelly manufacturer refused a sugar quota. The editorial asked, ‘Where then is the official support for local industries?’. Trinidad, it stated, needed action not words.33
The main recommendation of the Industries Sub-Committee report was the creation of an Economic Advisory Board. The colony’s new Economic Adviser, A. A. Shenfield, took up the position of chair of this board when he arrived in January 1949, two years after the Governor had agreed to the suggestion that such an advisor would be helpful.34 Shenfield had a degree in economics from the University College of Wales and had studied law at the University of Birmingham. He joined the London and Cambridge Economic Service in 1937 and in the general election of 1945 he had stood as a Liberal MP although he subsequently broke with the party because of their endorsement of economic planning. The Economic Advisory Board that Shenfield headed, and which also included Gomes, made general recommendations to the Governor on economic matters and provided information to industrialists. It authorised the release of foreign exchange (usually dollars) to allow a firm to buy equipment or raw materials and gave special assistance to some producers of exports, including an allocation of sugar to producers of jam.35 Shenfield interviewed applicants who sought government support to help start an industrial venture and he visited the premises of new firms.36 Apart from this, the major achievement of the Economic Advisory Board was to draw up legislation that gave special concessions to new, or pioneer, industry.
The Income Tax (In Aid of Industry) Ordinance and an Aid to Pioneer Industries Ordinance were both passed into law in March 1950.37 The basic provisions of the ordinances were an income tax holiday for new industry for five years, and duty-free imports of machinery and factory construction materials for the same period. Some special concessions were also provided for the cement and oil industries. Cement manufacturers benefited from a tax holiday and duty-free imports for ten years, and the oil refiner Trinidad Leaseholds was allowed to import crude oil for refining duty-free for twenty-five years from the 1 January 1949.38 In addition, four areas were selected for development as industrial estates, with government providing roads and water.
Soon after Trinidad passed its new legislation, a complaint was passed to the Colonial Office from a Scottish beer producer. A Trinidad-based firm, the Caribbean Development Corporation, had established a brewery in Trinidad under the new Pioneer Industries Legislation and the business enjoyed exemption from income tax and a relatively low rate of duty. The managing director of the Scottish brewing firm, John Jeffrey and Co, complained to his MP that as a result of the advantages enjoyed by this Trinidad-based business, his firm had lost an order of more than 32,000 bottles of beer.39 James Griffith, the Secretary of State for the Colonies, defended the Trinidad policy, stating that the measures to encourage new industry in Trinidad were ‘perfectly legitimate and necessary’. Griffith pointed out in his response that the Colonial Office could not, in fact, intervene. Decisions about the operation of the Pioneer Industries Legislation lay with the Trinidadian legislature since ‘as you will be aware, constitutional changes have recently been made which further devolve responsibility for local affairs on the Colonial Government’.40
Trinidad’s industrialisation strategy, 1950–56
One historian has claimed that the initiatives put in place by Trinidad’s Economics Committee meant that ‘The Shaw Committee was clearly more favourably disposed toward industrialization than the Colonial Office.’41 This conclusion is difficult to support given the expectation of the Colonial Office that industrial development would be part of the Trinidad’s post-war plans and the fact that the office had sent an economic advisor from Britain to help with this. The authors of Trinidad’s Pioneer Industries Legislation were Shenfield and Gomes.42 Gomes was re-elected to the legislative council in 1950 as a member of the Party of Political Progress, described by Ivar Oxaal as, ‘a rather conservative, middle-class organization’.43 In 1950, constitutional reform led to the creation of a ministerial system, and between 1950 and 1953, Gomes was Minister of Labour, Industry and Commerce and until 1956 he was effectively Chief Minister.44
A lack of sources makes it difficult to fully reconstruct the events and discussions that led to the creation of Trinidad’s Pioneer Industries Legislation. Shenfield studied the provisions in Jamaica for the encouragement of industry that resulted in the Jamaica Pioneer Industries (Encouragement) Law of 1949 and visited Puerto Rico, before rejecting the work of PRIDCO as a model for Trinidad.45 Something of Shenfield’s views about what constituted appropriate methods for encouraging Caribbean development can be surmised from two articles he wrote for New Commonwealth in the 1950s.46 Here Shenfield painted a rather downbeat picture of the economic position of Britain’s Caribbean colonies. The situation, as he put it, was that they were all minor contributors to the world markets that existed for their primary products, unable to compete in terms of price with the high-volume, low-cost producers of oil, sugar, citrus fruits and rice. Referring to the growth of secondary industry in the British Caribbean, Shenfield said, ‘Such development cannot take the place of the basic industries [sugar, bananas, oil], but it can make a valuable contribution; and it is sound in principle where, as in Trinidad but not in Jamaica, it is not founded on the protection of high-cost producers.’ In both articles, Shenfield expressed his disapproval of the fact that Jamaica was using tariffs and quotas to help new industry. Shenfield noted that by 1958, Jamaica and Trinidad had experienced reasonable rates of economic growth but he disputed the claim that this was due to the growth of secondary industry in the case of Jamaica on the basis that its use of protection had meant a cost had been incurred by the colony’s primary producers. Again, he expressed greater approval for the Trinidadian case: ‘a fair number of new enterprises have been established, especially in Trinidad, not by tariffs or quotas but by taxation reliefs which have in fact involved little or no cost to the rest of the economy’.47 Shenfield allowed that the encouragement of pioneer industries might require government support, stating his acceptance of the argument for ‘infant industries’ as a special case.48 The exceptional measures that governments might contemplate to help new industries should not include protection by tariffs, however.
After his time in Trinidad, Shenfield took up a post as the Economic Director of the Federation of British Industries (FBI). Neil Rollings has shown the role played by Shenfield in disseminating neoliberal ideas amongst British businessmen during his tenure as Economic Director of the FBI between 1955 and 1967.49 From the 1960s onwards, Shenfield had a successful career as an academic economist in the US. He was an early supporter of Hayek, between 1972 and 1974 was President of the Mont Pelerin Society, and was involved with the Institute of Economic Affairs and the Adam Smith Institute in Britain.50 Shenfield’s work in Trinidad indicates that at this point in his thinking he believed that there were acceptable modes of government support for new industries in places such as Trinidad, but his views on this were clearly different from contemporary economists such as Lewis and others, who advocated planning and a much larger role for the state in supporting industrialisation.
Gomes spoke of Shenfield in appreciative tones in his autobiography of 1974, describing him as someone with ‘initiative, imagination and common sense’ as well as being ‘forthright and uninhibited’ in expressing his views.51 Speaking on the issue of industrial development in his autobiography, Gomes expressed views that echoed those of Shenfield in his New Commonwealth articles, criticising government methods that supported uneconomic industry and in doing so had adverse consequences for the agricultural sector.52 The degree to which an accord in views existed between Gomes and Shenfield is also demonstrated by the critical comments Gomes made about trade unions in his autobiography, in which he quoted Shenfield in order to make his case. Gomes had begun his own political career as a trade unionist; he was involved in the formation of the Federated Workers Trade Union and was President-General from 1942 to 1944. He had been elected to the legislative council in 1946 as a representative of the UF, formed by the amalgamation of a number of organisations that represented labour. By the time he came to write his autobiography, however, Gomes was accusing workers of being as full of self-interest as their employers, saying that they obstructed development by their constant demands for greater wages. Gomes quoted an extract from a speech made by Shenfield at the Trinidad Chamber of Commerce in April 1964 in support of his point. Referring to Shenfield as ‘the country’s Economic Adviser fifteen years before, and mine for many years’, Gomes endorsed the claim of Shenfield that the underlying cause of high unemployment in Trinidad was the behaviour of labour itself. Claiming that there was no need for the high level of unemployment that existed in Trinidad, Shenfield told his audience that the root cause was ‘that the price of the service which the worker delivers to the employer, including the cost of stoppages and other interferences with production, is too high. Hence some of the labour cannot be sold and remains unemployed’.53
The need to avoid strikes and riots was a priority for the Trinidadian government as it came to implement its new industrialisation strategy in the 1950s. Both Gomes and the Governor Hubert Rance warned workers on numerous occasions that since industrialisation was dependent on enticing businessmen to invest in the island, Trinidad had to present an image that it was friendly to business.54 In the Governor’s address of 1950, Sir Hubert Rance told his audience:
Customs and income tax concessions may attract and catch the eye, but fair play, sound industrial relationships and a healthy constitutional Trade Unionism are an essential requirement for an industrialization programme. Anyone who damages or endangers the Colony’s reputation in this respect, be he aligned with employer or worker will do the country grave disservice. He will literally be robbing the unemployed of their chances of work with all that means for them and their families.
Rance warned his audience that riots on the island garnered bad publicity for Trinidad at a time when many places sought to encourage investment by manufacturers: ‘a reputation once lost in this present scramble for new industries is not easily regained’.55
Gomes’ political trajectory from union leader to ‘moderate right-wing politician’, in the words of the Colonial Office, made him extremely unpopular amongst some of his original supporters in Trinidad and he received numerous death threats during his tenure on the Executive Council.56 Gomes claimed that he was as unpopular with business leaders as he was with labour because of his insistence on the need to dismantle the system of price controls and bulk purchasing schemes that had been introduced to relieve wartime shortages. Gomes defended his actions in this area with a statement that Shenfield seems likely to have endorsed: ‘the market mechanism works to everyone’s advantage when it is not trammelled by restrictions and controls’.57
The basic principle that informed the industrialisation strategy created by Shenfield and Gomes was to provide conditions conducive to foreign investment. Good industrial relations, tax holidays and duty-free imports were key. It is impossible to assess the degree to which contact with Shenfield contributed to Gomes’ belief in the centrality of private enterprise for the industrial development of Trinidad. Whatever the origins of his change of political priorities, the strategy that Gomes promoted for industrial development between 1950 and 1956 did not include government loans or a development corporation that might operate its own factories. In contrast, Jamaica created an industrial development corporation in 1952 to provide government finance to business, to purchase land and build factories, and participate in the management of an enterprise that received a loan.58 In addition, the Jamaican government authorised protective tariffs against imports in an effort to support local business.
With its rejection of tariffs and the provision of tax holidays and duty-free imports, the legislation of Shenfield and Gomes was in keeping with the recommendations of the Colonial Office. The Trinidad ordinances were underpinned by an attachment to a more liberal political economy than the more far-reaching and state-directed strategies advocated by Lewis or the Caribbean Commission. One account of the emergence of the Pioneer Industries Legislation in Trinidad claims that Gomes acknowledged in his autobiography the influence of Lewis.59 There is no such reference by Gomes, and the fact that Lewis did not publish his recommendations for the industrialisation of the British West Indies until three months after Trinidad had passed its Pioneer Industries Ordinance makes this impossible. Furthermore, the article published by Lewis in 1950 on industrial development in the British Caribbean included a critical evaluation of the initiatives that had been recently introduced in Trinidad and Jamaica.60 Similar criticisms were made by C. J. Burgess of the Caribbean Commission in a report on incentives for industry across the Caribbean discussed at a Caribbean Commission conference in 1952. In addition, a group of leading British businessmen expressed strong reservations about the ordinances, albeit from a rather different political perspective. A major focus of debate about the most suitable route to industrialisation was the model provided by Puerto Rico’s Operation Bootstrap. For individuals such as Lewis, who advocated state-directed economic development, the Puerto Rican experience was an important and persuasive example of how real change could be effected by government initiative. For some representatives of British business who believed in a limited role for the state and freedom of action for entrepreneurs, the Puerto Rican programme was a red herring, providing little of value to the British colonies because of the very different conditions that prevailed there.
Lewis and Burgess
Lewis was invited to act as a consultant on industrial development to the Caribbean Commission by Eric Williams in his role as Deputy Chairman of the Caribbean Research Council.61 Williams arranged for Lewis to visit Puerto Rico in 1949 and then ensured the wide circulation of the two articles that Lewis subsequently wrote for the Caribbean Economic Review: ‘Industrial development in Puerto Rico’ published in 1949 and ‘The Industrialization of the British West Indies’ published in May 1950.62 Williams described the latter to Lewis as ‘one of the most magnificent monographs I have ever seen’, and said that the Secretary General of the Caribbean Commission, Lawrence Cramer, believed it to be ‘compulsory reading for all people in the West Indies’.63 The Commission regarded Lewis’s work as their best opportunity to determine the future direction of Caribbean industrial development.
Lewis’s two articles formed the centrepiece of a conference on industrial development held by the Caribbean Commission in Puerto Rico in 1952 attended by representatives from the Colonial Office and Caribbean politicians such as Gomes, and Alexander Bustamante from Jamaica. Both Lewis’s articles and other material promoted by the Caribbean Commission contained critical commentary on the Pioneer Industries Legislation. The Puerto Rican programme was invariably presented first in the papers circulated to delegates, with subsequent discussion noting the ways in which other territories deviated from this model in terms of their policies.64 Clearly, at the Caribbean Commission, Puerto Rico’s industrialisation programme was the exemplar to be followed by all the Caribbean territories.
In the discussions at the conference it was noted that Trinidad and Jamaica had achieved the most of all the British territories in developing plans to encourage industry. The similarities between the policies adopted in Trinidad and Jamaica and the initiatives of Puerto Rico included provision of relief from import duties on machinery and tax exemption for new business. Trinidad and Jamaica had also undertaken publicity work intended to entice investors. They had contacted industrialists by mail, made promotional visits to the US and UK, and from 1950 onwards, they produced pamphlets – Opportunity for Industry in the case of Trinidad, and Invest In Jamaica produced by the Jamaican government. This publicity work was on a much smaller scale than that of Puerto Rico, however. Puerto Rico had permanently staffed offices in New York, Chicago and Los Angeles to advertise the benefits of the island to American investors.65
Despite some similarities between the initiatives of Britain’s Caribbean territories and those of Puerto Rico, the delegates of the conference also identified substantial differences. Development boards or corporations did not exist in the British Caribbean at the time of the meeting (although by the end of 1952 Jamaica had created an industrial development corporation). Puerto Rico was the only territory to make direct government investments in industry, with the creation of government factories to produce cement, clay, glass, paper, shoes and leather, and PRIDCO had built factories to be leased to industry. In addition, Puerto Rico was also the only Caribbean territory with a government development bank, and this was considered particularly significant. C. J. Burgess, Executive Secretary for Economics on the Caribbean Research Council, noted that as the number of places that aspired to industrialisation increased, there was intense competition for capital investment and it was not at all clear in his opinion where the finance would come for new industrial ventures in Trinidad and Jamaica.66 In his articles, Lewis recommended the formation of an industrial development bank to act as a lender of last resort, and an industrial development corporation that would act for the whole of the British Caribbean.67 Overlooked in most discussions of Lewis’s vision of British Caribbean industrial development is the fact that his plan for West Indian industrialisation was inseparable from his belief in the necessity of a British West Indies federation.68 Federation of all the British West Indies colonies had been under discussion since the Montego Bay Conference of 1947. The Colonial Office hoped to counter the influence sought by the US in the region through the formation of a British West Indies federation that would give a stronger voice for the British colonies in the Caribbean.69 Lewis was an advocate of federation on economic grounds and he believed a customs union was crucial to create large markets for manufactured goods and to prevent competition between industries arising in different Caribbean territories.70 The Colonial Office shared Lewis’s concern that uncoordinated industrial development would result in colonies vying with each other for foreign investment. The need for internal free trade and a consistent regime of duties between the British West Indies and countries outside the union formed a key part of the rationale for West Indian Federation. In the short term, a Regional Economic Committee (REC) was created that met for the first time in May 1951 and discussed, amongst other things, whether a more uniform pioneer industries legislation or some coordination of industrial development was needed.71 Despite the concerns that were raised, this coordination did not occur.
In a discussion of the function of industrial development corporations, Lewis noted that Trinidad had earmarked four areas on the island as industrial estates – two near Port-of-Spain, one near Arima and one near San Fernando. Government intended to provide water and roads and offer leases to businesses for twenty-five years, with the option to renew.72 Lewis was critical of this initiative, however, on the basis that setting aside land was not sufficient to attract businessmen; a government needed to provide factories.73 Lewis also criticised tax holidays and duty-free imports for pioneer industries, saying that these types of concession were weak instruments to attract investment. The five-year income tax holiday, in particular, was said to be of little incentive to foreign industrialists if they still had to pay income tax to their home governments.74 This criticism was borne out by the controversy that developed as it became apparent that income tax relief in Trinidad did not benefit British manufacturers as they still had to pay UK rates of tax.75 The Sunday Guardian in Trinidad reported in October 1951 that not a single British company had established a factory on the island since the passing of the Pioneer Industries Ordinance in the spring of 1950. Gomes made the point in person to Colonial Office officials at a meeting in September 1951 that this tax anomaly meant that Trinidad could rely only on American and other non-British sources of capital.76 Representations were made to the Colonial Office at the REC in 1951 in an effort to get Britain to amend the law to encourage UK firms to invest in the British Caribbean but the Treasury would not budge.77 The Sunday Guardian also claimed at the end of 1951 that the UK was refusing to allow American and Canadian businesses in Trinidad to import plant and machinery from the dollar countries (a reference to the limited availability of dollars to the colonies for expenditure on imports) and questioned whether Britain was seriously committed to British West Indies industrial development or had ‘thought it expedient to pay lip-service’.78
The outcome of the 1952 conference in Puerto Rico was recommendations for development banks and corporations derived from the reports of Burgess and Lewis. Burgess claimed that the existing policies for industrial development developed by Trinidad and other colonies were ‘inadequate in scope and intensity’, and governments were urged to assume far greater responsibility to ‘generate a greater industrial momentum’.79 For officials at the Colonial Office in London, however, the obstacle to industrial development was not the absence of government initiative and finance along the lines of Operation Bootstrap but rather the narrow range of industries that were ever likely to be economic. In a revealing remark that would seem to embody the Colonial Office attitude, Permanent Under-Secretary of State Hilton Poynton wrote to his colleagues, ‘One would presume that if there were a lot of such industries, private enterprise would have got on to them.’80 Poynton conceded, however, that the Colonial Office might further support Caribbean industrialisation by identifying those industries best suited to the region. The Colonial Office decided to consult eminent businessmen, and in 1952 a delegation of British industrialists was dispatched to the British West Indies to give their assessment of the strategies currently employed by the colonies and make recommendations for new industries for the future.81
The mission of British industrialists
The report produced by the mission of British industrialists who toured the Caribbean in 1952 was intended to provide support for British West Indies governments in improving their programmes of industrialisation and quite possibly to act as demonstration that Britain was not indifferent to the challenges involved in encouraging industrial development in the Caribbean colonies.82 Its publication proved so controversial, however, that it threatened to further undermine the Colonial Office’s claim that it was fully committed to the development of secondary industry.
After consultation with the Federation of British Industries, the Secretary of State for the Colonies, James Griffith, selected a delegation of UK industrialists comprising J. L. S. Steel (a director of ICI), L. Rose (L. Rose & Co, a manufacturer of lime cordial and lime marmalade), W. W. S. Robertson (W. H. A. Robertson & Co, engineers), Lt Col H. E. Pierce (Hall & Co) and G. H. Spencer of rubber goods maker George Spencer Ltd. The group undertook a tour of Jamaica, Trinidad, Barbados and British Guiana and visited over a hundred industrial establishments.
In their report, the authors admitted that several times during their tour, ‘it was suggested to us that our findings might be influenced by a desire on the part of the United Kingdom manufacturers to restrain the development of industries in Colonies which might be competitive with exports from the United Kingdom’. The final report offered reassurance that the intention was to make recommendations that would first and foremost be of benefit to the Caribbean, even when they might negatively affect British exports. Alongside these claims, the report began with an upbeat appraisal of the prospects for future industrial development in the Caribbean, stating that ‘the volume of industrial production will be nearly doubled within the next ten years, provided no unexpected and untoward political developments take place.’83
The positive appraisal of opportunities for industrial development was largely forgotten, however, in the response to the more critical aspects of the report. The mission of industrialists described their role to see if industry established in the British Caribbean was economically sound, and to assess the value of the strategies that had been adopted. The report condemned attempts to encourage industry that included the use of tariffs or quotas for imports.84 Aside from protection, the report voiced strong criticism of references to the Puerto Rican experience and queried aspects of the operation of Jamaica’s Industrial Development Corporation. The delegation expressed their approval of the loans provided by the corporation to business and the creation of industrial estates but not the fact that the Corporation was to run factories itself, commenting, ‘throughout the world the history of industries started by Government or official corporations has not been a happy one’.85
The repeated references by Caribbean politicians to the idea that the British West Indies should emulate Puerto Rico’s Operation Bootstrap prompted the mission of industrialists to claim that Operation Bootstrap had in fact not been a complete success, and in particular that the four state-run factories had all made losses during the years they were government controlled. A more fundamental issue raised in the report was that it was the special relationship that Puerto Rico enjoyed with the United States that was in fact largely responsible for the success of the island’s industrialisation programme. American manufacturers were able to take advantage of the low wages in Puerto Rico to set up factories and then import manufactured goods to the United States without incurring any customs duty since Puerto Rico was constitutionally part of the United States. The territories of the British West Indies did not enjoy a similar relationship with any country in the region that might provide a large market for their goods.86 With regard to the possibility of UK manufacturers creating factories in the British West Indies to supply the markets of Central and South America, the authors of the report thought this was unlikely. Goods made in the Caribbean would cost more than those made in Britain because of the expense of importing raw materials, the freight costs for construction materials, and the absence of any favourable ratio of labour costs.87 The growth of industry was therefore dependent on internal consumption.
In terms of the overall growth of industry in the British West Indies, the mission of industrialists stated that they had not found evidence to support the assertion that most industrialisation had occurred in the last few years, or that the rate of growth had been substantial in that period. They stated that the statistics available indicated that industrial production had been growing steadily for the past twenty years or so. This suggested that the introduction of pioneer industries ordinances from 1949 onwards had not made a significant difference. The report also made some specific criticisms of industries that had benefited from pioneer status but which appeared to merely undertake the final assembly of products made from parts imported from the dollar countries. It was suggested that two US companies, the Myerson Tooth Corporation, a manufacturer of false teeth, and the Simplex Time Recording Company, had created factories in Trinidad merely to take advantage of the access to the sterling area and were not intended to be long-term investments.88 The factories did not have much capital equipment and did not employ large numbers of people:
The Myerson factory is merely a packing station for consignments for the firm’s customers in the sterling area. It is true that they polish up the teeth after they have broken them out of the plastic sheets in which they are sent down from the USA; but that is a very small operation by a couple of girls.89
In the view of the mission, these factories would most likely close down once free convertibility with the dollar was restored.90
The delegation singled out two businesses based on the use of sugar or sugar cane as a raw material as potentially important, however. One was a factory in Jamaica that made anhydrous alcohol from molasses to be mixed with petrol for cars, and the other was a factory engaged in the production of sugar cane wax. A Barbados sugar cane wax pilot plant had been set up under the Pioneer Industries Legislation of that island. This project was the result of research undertaken with a grant from the CPRC and done partly in Wiggins’ laboratory in Trinidad. The mission recommended market surveys were undertaken into the potential for sugar cane wax along with further technical work into producing a more consistent product.91
Despite the favourable comments on the future of industrial development in the British Caribbean, and the care that was taken to identity potentially successful ventures, the mission’s report came in for heavy criticism in the British Caribbean, where it was taken as evidence that the UK wished to discourage manufacturing in the region in favour of its own exports. There was particular anger about the criticisms of the Pioneer Industries Legislation.92 Albert Gomes told the Trinidadian press that the legislation was making a real contribution to industrial progress.93 The Jamaican Minster of Trade and Industry complained that the report was not constructive. Officials at the CDW Org expressed the view that the positive aspects of the report could ‘be swamped by the indignation at some of its brash and perfunctory generalisations’.94 Hugh Foot, the Governor of Jamaica, wrote to the Colonial Office complaining about the report on 15 July 1953, saying he thought it would ‘do more harm than good’.95
The negative response to the confidential circulation of the report caused the Colonial Office to debate whether they should distance themselves a little from the mission’s conclusions, before eventually deciding that there was nothing to be gained from this since the remarks made about the methods and the scope for industrial development made by the mission were likely to be representative of the views of any potential investor who contemplated an enterprise in the British Caribbean, ‘Their yardstick throughout was “will it pay?”.’96 The Colonial Office believed that the report fulfilled an important function in checking some of the grand claims that were being made about the scope for industrialisation in the British West Indies.97 Amongst politicians and the public in the British Caribbean the effect of the report was negative, however; it worked to further undermine the claim in London that the British government supported Caribbean economic diversification. It also did not succeed in its aim of prompting a re-evaluation of the path to industrial development that had been chosen by the British Caribbean territories, neither leading to reform of existing pioneer industries legislation, nor spurring changes to the role of Jamaica’s Industrial Development Corporation. In fact, by the end of the 1950s, Trinidad came to adopt a new industrial development policy that moved the island’s strategy closer to the recommendations of Lewis and the model provided by Puerto Rico. The turning point in Trinidad was the 1956 elections that saw Gomes lose his seat and Eric Williams’ People’s National Movement assume power.
The People’s National Movement come to power
Williams’ contract was not renewed by the Caribbean Commission and he left the organisation in 1955. After spending the rest of the year giving lectures in public in Trinidad and having discussions about the future of Trinidadian politics in private with friends such as George Padmore, C. L. R. James and Lewis, a constitution and manifesto was devised for a new political party to be launched in January 1956, the People’s National Movement or PNM.98 The PNM went on to win thirteen of the twenty-four seats on the legislature in the election of 1956, garnering 39 per cent of the vote overall. The Governor, Edward Betham Beetham, made arrangements that allowed the PNM to form the first government free of British control by giving two of the nominated seats to Williams’ party and giving his guarantee that two of the ex-officio members would vote with the PNM.99
The PNM manifesto of 1956 was critical of the achievements of the Pioneer Industries Legislation passed in 1950 on the grounds that it had not made a notable contribution to increased employment or national output. Instead, Williams’ party pledged to undertake a comprehensive economic survey and a study of industrial potential in order to create new jobs.100 After the election, the new legislature passed a motion to consider the operation of the Pioneer Ordinances, and the chairman of the committee formed to do this, Patrick Hobson, visited Jamaica and Puerto Rico in July 1957 and studied Lewis’s work on Puerto Rico’s industrial programme.
The final report of Hobson’s committee noted that at first glance it might seem that Trinidad’s industrialisation programme had been a success. Fifty-seven manufacturers had been given pioneer status in the seven years since 1950, of which forty-three were still in operation. This was said to compare favourably with Puerto Rico, where the initial seven-year period of Operation Bootstrap between 1942 and 1949 had seen fifty-five industries created. The report continued, however, that despite this record, the achievements of Trinidad’s industrialisation programme were ‘pitifully inadequate’.101 For a start, the process of endowing pioneer status was far too slow and firms were finding it difficult to get imported machinery and materials cleared while they waited for licences.102 In addition, the number of people who had gained employment as a result of the Pioneer Industries Legislation was very small. The report made comparisons between Trinidad’s initiatives to encourage manufacturing and those of Jamaica, noting that the amount of money used for advertising and marketing industrial opportunities in Jamaica was over ten times that spent by Trinidad.
Not unsurprisingly given Williams’ promotion of Lewis’s work when he was working for the Caribbean Commission, the solution to the issue of how to encourage greater industrial development in Trinidad was to be found in the recommendations of Lewis and the model provided by Puerto Rico.103 The outcome was an industrial development corporation for Trinidad created in 1959. Amongst the functions of the corporation was the surveying of raw materials available to industry, recommendations for new industries suited to Trinidad and an expanded marketing campaign. The corporation also identified land for industrial estates, drew up plans for housing and schemes of civic improvement and issued business loans.104
The PNM won a second election in 1961 and Trinidad gained its independence in 1962. By 1963 there were ninety-nine pioneer industries in operation. The industrialisation-by-invitation approach meant that 80 per cent of the capital invested in industry was either American or British. Whilst the growth of manufacturing had been given a significant role in addressing the pressing issue of unemployment, it had very limited success. Only around 4,666 direct jobs had been created and yet rapid population growth meant the total labour force on the island had expanded between 1950 and 1960 by 100,000. In a longer analysis of Trinidad’s economic performance between 1939 and 1967, the economist Edwin Carrington asserted that over this time, changes in the government or the introduction of new policies had not contributed to any major change in the performance and structure of the economy of Trinidad. In his words, the economy appeared to be largely unresponsive to the introduction of new initiatives and incentives.105 His assessment of the impact of the pioneer industries legislation was that while the costs to government had been great, the scheme had failed to provide the gains that were originally forecast. The picture painted by Carrington in 1968 was one of foreign-owned companies providing little employment and with poor linkages to the local economy – 60 per cent of raw materials were imported, for example. The presence of foreign-owned companies had also failed to engender any entrepreneurial expertise amongst local businessmen. Despite the limited success of the Pioneer Industries programme, the Trinidadian economy grew at a rate of 8.5 per cent pa between 1951 and 1961.106 This impressive growth was due to the performance of the oil industry that saw a seven-fold expansion in revenue between 1946 and 1956.107
In the longer term, none of the recommendations for policies to encourage industrial development that were promoted to Britain’s Caribbean territories between 1940 and 1960 resulted in significance changes to the structure of their economies or reduced the high levels of unemployment. Dissatisfaction with the industrialisation-by-invitation approach led Caribbean economists such as Lloyd Best to produce a strong critique of Lewis’s model. The differences between the ideas of Lewis, the Colonial Office and the US section of the Caribbean Commission that were so important in the 1940s and 1950s became irrelevant by the 1960s when Caribbean economists and politicians sought to reduce the dependence of places like Trinidad on foreign capital. The New World Group criticised Lewis’s model for perpetuating the colonial legacy, and the PNM undertook a programme of nationalisation under the banner of ‘Economic Independence’ that by 1971 included government control of the sugar industry.
This chapter has provided a reassessment of accounts of the genesis of Trinidad’s Pioneer Industries Legislation. The conventional story tells us that new initiatives for industrialisation in Trinidad were informed by the famous works of Lewis published in 1949 and 1950. This account has shown that Lewis’s work was only important for the policies introduced to encourage industrial development in Trinidad after 1956, on the election of Eric Williams. A Colonial Office nominated advisor and advocate of laissez-faire economics, Arthur Shenfield, and the Trinidadian politician Albert Gomes created the first substantial legislation to encourage new industry in Trinidad in 1950. Their vision of development was more in line with the liberal approach favoured by the Colonial Office in Britain than the initiatives that were promoted by Lewis.
In the post-war Caribbean, the emergence of more than one vision of industrial development gave politicians in each of the Caribbean territories choices to make. One outcome of the divergence in views as to what constituted sound policy to encourage manufacturing was that Trinidad’s first initiatives to encourage the process of industrialisation did not consist of the same techniques as other territories such as Jamaica. Caribbean political economy was not uniform in character in the post-war period, although it eventually converged on the model provided by the Puerto Rican experience. Interestingly, despite the differences that existed between the ideas promoted by the Colonial Office through their advisors and the model presented by Lewis, both sets of recommendations placed importance on a federation of British West Indies territories in order to increase the size of the market for manufactured goods and to prevent different colonies competing with each other in the industrial sector. The federation collapsed in 1962 and the question of how to secure an adequate market for goods produced in the British Caribbean was never resolved. The fact that the success of firms that participated in Operation Bootstrap often resulted from the free access that manufacturers on the island had to the large US market was largely ignored by those that sought to promote Puerto Rico as an appropriate model for Caribbean nations. This raises the question of the extent to which politicians and policy makers actually depended upon the Puerto Rico experience for a model of industrial development, despite their claims that this was so. The significance of this high-profile programme may have sometimes resided more in its utility as a rhetorical device for politicians who had a preference for state spending and state direction in order to produce much deeper and faster economic and social change in the British Caribbean than the Colonial Office in London believed was prudent.