The political and economic situation in 1966-1967

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Rifts in the coalition government

Soon after Guyana attained independence in May 1966, rifts which had started early in 1965 between the governing coalition parties, the PNC and UF began to widen. While supporters of the UF in the business sector were somewhat satisfied with the policies of the coalition government, they expressed reservations about its employment practices. But the leadership of the UF itself was becoming very worried about the ruthless manner in which the PNC leadership was creating jobs for their supporters at the expense of those who supported the UF.

At the same time, the grassroots support of the PNC and UF was becoming restless as a result of the government's failure to solve the unemployment problem and to check increasing inflationary trends and the drop in living standards. To absolve themselves from responsibility for the failures of the coalition, the PNC and the UF resorted to attacking each other. In 1966, Peter D'Aguiar, the UF leader and Minister of Finance, charged that he was not being adequately consulted by PNC leader and Prime Minister Forbes Burnham, particularly on government expenditures. Early in 1967, he accused the PNC section of the government with spending $1.5 million illegally on building the East Coast Demerara road, declaring that the Director of Audit had questioned the expenditure. Soon after, he asked for the removal of the Minister of Trade, UF member Mohamed Kassim, who promptly resigned from the party and joined the PNC. Kassim was not removed, and D'Aguiar, giving the impression that he was dissatisfied with the wasteful spending and the conduct of government affairs including frustrations by the lack of cooperation from Burnham, resigned from his post as Finance Minister on 26 September 1967. He was succeeded by Dr. Ptolomy Reid, a leading executive member of the PNC.

The UF in its organ, the Sun, also expressed strong criticisms and wrote about "squandermania" or public funds and blaming the PNC for failure to produce results. At the same time, the PNC launched attacks on the UF in the media and at public meetings. In an editorial, the PNC's New Nation declared that the coalition was on the verge of collapse and blamed the UF-controlled ministries for lack of achievements.

Sydney King (now known as Eusi Kwayana) and his ASCRIA group, while strongly backing the pro-western coalition government, from time to time issued statements to create the impression that the "socialist" PNC was encumbered by the "reactionary" UF. King had restored himself as a PNC loyalist, despite being expelled from the party in 1962, and was appointed by Prime Minister Burnham as head of the Guyana Marketing Corporation and, in addition, was empowered as the chairman of a national committee in charge of land distribution.

Political pressures

With all of these divisions publicly aired, Burnham, promoting himself as a pragmatic socialist, moved to strengthen the propaganda arm of the government by providing more resources to an expanded Ministry of Information to issue glowing reports of the regime's "successes" especially for foreign propaganda consumption. In 1967, he replaced Neville Bissember with Martin Carter, the renowned poet and an ex-PPP leading member of the 1953 period, as Minister of Information in 1967. He also appointed Kit Nacimento, the former UF election manager and a harsh critic of the PPP, as consultant to the Ministry.

To apply pressure on the opposition PPP and to clamp down on growing militancy of workers, the government had enacted in 1966 the National Security Act by which it could arrest and detain persons for long periods without trial.

Then on May Day 1967, faced with an increasing number of strikes, Burnham announced the intention of the government to enact anti-strike laws and other legislation for compulsory arbitration to settle labour disputes. But due to strong opposition from the PPP and resistance from some sections of the TUC, he reversed his position stating that the government would not enact anti-strike legislation, but would make provision for voluntary arbitration.

The strongest critic of the government was the PPP, some of whose supporters were still under detention on orders from the government. And with the coalition parties facing a backlash from their own supporters, they tried to divert pressures from themselves by attacking the opposition party as "communist" and for being "tied to Moscow".

At its congress held in August 1966, the PPP, in its Central Committee report declared: "To remain in power in the face of these growing difficulties, the coalition will attempt to destroy the PPP and all progressive organisations. It will use the weapons of anti-communism, fear, intimidation, individualism and opportunism. . . . The government will use the weapon of fear, detention and restriction to silence criticisms and political opposition. It will try to divert attention by creating scapegoats . . . . and will psychologically prepare the people either for no general election or for a fraudulent election in 1968."

Burnham was also planning ahead for the elections due in 1968. Through his Minister of Home Affairs, he set up in early 1967 his own election registration machinery manned by PNC activists, thus by-passing the Elections Commission. By this method he began the scheme to rig the elections.

Decline in agriculture

By mid-1966, the economic situation in the country had deteriorated. A business recession was quite visible and the cost of living was spiralling upwards. As compared with the average for 1962-1965, business turnover was about 30 percent lower.

And for a country highly dependent on agriculture, the government's policies were misdirected in that sector. The opposition PPP was of the view that because the rural areas were its strongholds, the coalition government was deliberately applying policies detrimental to the agriculture sector.

During the 1964 election campaign, the PNC had promised farmers that each of them would receive 30 acres of land with proper drainage and irrigation, and that they would be guaranteed good markets and fair prices. The party also said that the Cuban rice market acquired by the PPP government would be retained, and farmers would obtain for rice $10 more per bag than was obtained from Cuba.

However, by 1966, the situation was quite the opposite. In the first place, there was grave land hunger. The plans laid out by the PPP government for drainage and irrigation schemes were scrapped; a drainage and irrigation project for 6,000 acres of land in the Pomeroon area, which should have been a follow-up to the Tapakuma land development scheme, was shelved. The government also decided not to proceed with the planned Mahaica-Mahaicony-Abary and the Greater Canje projects, both of which would have made available hundreds of thousands of acres for agriculture. Instead, the government withheld irrigation water from Black Bush Polder farmers in 1966 and threatened to increase drainage at irrigation charges throughout the country.

Adding further woes on farmers, the coalition government cancelled all trade agreements with Cuba, thus refusing to sell rice to that lucrative market. This cancellation was clearly due to the anti-communist posture of the coalition government which, at the same time, restricted imports from socialist countries. The refusal to trade with Cuba also hit many Amerindian loggers and saw-millers very hard since railway sleepers they produced could no longer be exported to that country.

After the abandonment of the Cuban market, the government employed the Connell Rice and Sugar Company of the USA, with a retainer fee of a little over a quarter of a million US dollars a commission of 1 percent, to sell Guyana's rice abroad outside the Commonwealth Caribbean territories. This rice was sold by Connell under its own brand name "Rooster". Connell also paid the Rice Marketing Board a low price while selling in the world market at higher prices.

Based on statistics published by the Economic Survey of Guyana, 1966, there was a progressive decline in agriculture. For the agriculture sector including sugar, rice, ground provisions, other crops, and livestock, the Gross Domestic Product was 19 percent in 1966. (It was 22.5 percent in 1961, 22.2 percent in 1962, 24 percent in 1963, 21.4 percent in 1964, 20.5 percent in 1965). It was clear that the position of agriculture in 1966-67 had deteriorated even when compared with 1964, the worse year of civil unrest, riots and disturbances in the country.

This was due to the fact that government had no overall policy in the various fields - drainage and irrigation, minimum guaranteed prices, bonuses, price control, land distribution - which was necessary for success in agricultural production.

Everything was done to shackle agriculture and to discourage the farmers. In the face of an increased cost of living and rising costs of production, prices received by farmers for products such as plantains, milk, citrus, coffee and rice fell drastically. And as a result of withdrawal by the Rice Marketing Board (RMB) of certain grades of rice and reduction in prices, rice farmers suffered heavy losses.

The coalition government placed added burdens on the rice producers by its merger of the Rice Marketing Board (RMB) and the Rice Development Corporation (RDC). But in doing so, it removed control of the industry from the rice producers and deliberately created a huge bureaucracy, resulting in heavy losses at both the Rice Development Corporation and the Rice Marketing Board.

Before this change, farmers had a majority of 11 out of 16 members on the RMB; with the change, the number was reduced to only 3. And when up to 1964, profits were made by both the RMB and RDC, there were continuous losses in 1965, 1966 and 1967.

The merger was strongly opposed by the rice farmers whose net income was sharply reduced, since the losses suffered by the two entities, along with the debts they owed, were passed on to them.

Other areas of agriculture also suffered. Benefits received by the farmers were reduced; for instance, crop bonuses for the diversification of agriculture were cut by 45 percent in 1967 when compared to 1966. And aid to the fishing industry was also by roughly 45 percent - from $92,000 in 1966 to $50,000 in 1967.

Duty free gasoline concessions for the rice and timber industries were abolished while prices escalated for agricultural machinery and parts, and increased licences for tractors and trailers. Subsidies for rice bags and insecticides were also eliminated.

The decline in agriculture resulted in increased imports of foods, which jumped from $28.7 million in 1964 to $30.7 million in 1965 and $33.4 million in 1966. In terms of the balance of visible trade, which showed a surplus from 1961 to the end of 1964, there was a deficit in 1965 and 1966 by $4.3 million and $7.6 million respectively; and in the first half 1967 by $26 million.

Meanwhile, the government produced a White Paper claiming that it was losing $14 million annually as a result of subsidies to agriculture in the form of guaranteed minimum prices and crop bonuses, subsidised drainage and irrigation rates, and deficits by the Transport & Harbours Department. D'Aguiar, the Finance Minister, made it clear that the government could not afford these losses; that in the future government bodies like the Guyana Marketing Corporation and the Transport & Harbours Department must pay their way. This accounted for increases in fares and freights on trains and steamers, which affected farmers considerably, especially in the river bank communities and remote areas.

Slow progress in industrialisation

While in 1966-1967, the future for agriculture was bleak, it was no different in the manufacturing sector.

Regarding industrialisation, except for one mosquito coil factory, little was done in 1966 and much of 1967 to establish new industrial enterprises. All that was done was the extension of some existing factories.

It was apparent that local investors preferred trading to manufacturing enterprises. As a result, industrial projects for the manufacturing of glass, cement, bicycle tyres, shoes, food processing, among others - planned before 1965 - were shelved.

On 2 June 1966, the government amended the Industrial Development Corporation Ordinance, renaming it the Economic Development Corporation. The corporation was formed to promote, facilitate and undertake the establishment of industry. However, the amendment removed the keyword "undertake", thus indicating that the corporation could only "facilitate and promote". This was seen as a sign that the government, despite the PNC's claim that it was socialist, was not keen in promoting public enterprise such as government ownership of industrial, banking, insurance and trading concerns.

As regards the future development of industry, the prospect was dismal. The Economic Survey of Guyana, 1966 stated:

"In 1966 fixed investment in the manufacturing sector did not achieve the level expected and is now estimated at $2.5 million; and practically a third of this was attributed to the Guyana Electricity Corporation. It is apparent that most companies did no more than maintain their capital intact."

The Governor of the Bank of Guyana admitted in mid-1967 that no loans were made up to the end of 1966 from the Private Investments Fund, which was established with the help of US$2 million from the US Agency for International Development. A major obstacle might have been the particular condition that goods and services must be purchased from the United States of America for the establishment of light industries.


The immediate post-independence period was marked by a growing unemployment problem. This was borne out in 1967 by a man-power survey which showed that the unemployment rate was 17 percent for Georgetown and 23 percent for the rural areas. The factors responsible included: mechanisation, as in the sugar industry; the result of a fall in trading in agricultural machinery due to the lack of purchasing power of rice farmers; retrenchment; and the growing number of school-leavers. The man-power survey report showed that there were about 30,000 children, 14 years and over, in primary schools who would be thrown on the labour market because of the government's decision to reduce the age level in the all-age schools.

While the labour force was increasing by about 8,000 to 10,000 a year, the 7-year (1966-72) development programme placed less than 2,000 persons in government employment. Meanwhile, retrenchment continued unabated. About 1,000 workers were retrenched in the sugar industry during 1966, while the sea defences and the Transport and Harbours Department retrenched about 1,000 workers in early 1967. In August 1967, Manganese Mines Ltd. of the North West District retrenched 150 workers, and at the end of the year a further 600 became unemployed when operations were closed down. Two months later, Demerara Bauxite Company announced that 1500 workers would be retrenched during over the next 18 months.

All of these factors produced a migration pattern of people leaving the rural areas for Georgetown in search of employment.

In addition, the cost of living was on the increase. Higher prices and increased taxation on consumer goods led to a lowering of the standard of living. Contributory factors included the increase in railway fares and freight costs: the withdrawal of subsidy on cooking oil; and the government's decision to limit education in all-age schools from GCE to College of Preceptors level; and the failure of the government to standardise primary-school textbooks.

The PPP blamed wasteful expenditure of public funds by the government, and to bribery, corruption and nepotism as other factors. It noted that the 1961-64 PPP government had 10 Ministers and 3 Junior Ministers while the PNC-UF coalition government had 15 Ministers and 6 Junior Ministers. The PPP pointed to the fact that the Prime Minister spent more than a quarter of a million dollars to repair and redecorate the building formerly occupied by the Director of Agriculture as his residence, while certain government functionaries such as Attorney General Sonny Ramphal and the High Commissioner in London, Lionel Luckhoo, were being paid abnormally high salaries and allowances.

Other economic issues

It was obvious, too, that the economy was suffering because of a lack of confidence in the government from a substantial proportion of the population.

In 1965, the deficit was cleared by the collection of arrears of income tax and in April 1966, the budget was balanced by the $5 million independence gift (for development) from the British government. There was an additional inflow of $2.5 million from taxation on consumer commodities such as "yachting" boots, exercise books, cotton goods, and khaki drill, which negatively affected the poor.

On the attainment of independence, the country was nearing bankruptcy. At the end of December 1964, the PPP government had left a general revenue balance of $5.4 million. But one year later, the PNC-UF coalition government reduced it to $0.6 million and owed $8 million.

In his budget speech on April 5, 1966, the Finance Minister D'Aguiar admitted:

"Indeed, with this deficit and the advances to the Post Office Savings Bank and the Rice Marketing Board, the cash balances have deteriorated by $8 million during this year. The government in fact had a bank overdraft of about $6 million and outstanding Treasury Bills of $1.8 million at 31 December, 1965. The position will worsen in the near future. A spending spree, an expanding bureaucracy and security apparatus, and increasing debt charges will all add a crushing burden on the people, which will have to be met either by more taxation and/or loss of services already enjoyed, such as education, pensions, health, subsidies and bonuses."

The coalition government in 1965 had removed foreign exchange controls which the PPP government had imposed in 1962; the result was a steady outflow of capital amounting to more than $15 million in 1965-66 which reduced Guyana's foreign reserves which eventually contributed to the devaluation of the Guyana dollar in November 1967 by 14.3 percent, the same extent as the British pound. This devaluation led to increased prices of goods from non-Commonwealth areas.

Investment was not expanding; in August 1966, John Jardim, a past president of the Chamber of Commerce, indicated that local investors were "holding their hands" as they were uncertain of the future. (Paradoxically, Jardim became a member of the PNC in January 1968!)

Further, there was a shortage of credits. The government, Georgetown Town Council, the Rice Development Company, the Rice Marketing Board and the Guyana Electricity Corporation were heavily committed in overdrafts with the commercial banks. Consequently, little money is available for credit to business and agriculture. And the Guyana Credit Corporation reached a position where it virtually stopped giving out loans, particularly to the "small man".

Added to all this, there was an increasing number of strikes, from 146 in 1965 to 172 in 1966, and 170 in 1967. In fact, the great majority were called by workers who were government supporters. These strikes were all due to the attitude of employers, increased taxes on consumer goods, and the government's economic, fiscal and trade policies.

There were concerns that the economy would face added pressures with the $300 million 7-year (1965-72) development plan. Since almost three-quarters of the expenditure was on infrastructure - roads, sea defence, harbours, airport, public buildings, etc. - most likely this was expected to cause increased debt charges with each succeeding year and annual budgetary deficits. Those charges which were 12 percent of budget expenditure in 1960 jumped to 16 percent in 1967.

But this plan itself was running into problems. In the first three years of the coalition government, the yearly average expenditure of $43 million was not reached; $24 million was spent in 1965, $32 million in 1966, and $41 million in 1967.

Despite all of these problems, the government insisted that all was well and that it intended to "maintain progress".

But production of real material wealth was negligible. The Economic Survey of Guyana, 1966 noted:

"In general the productive sectors, that is, those producing tangible goods, are expected in 1966 to provide an increase in net output of 4 percent. The services sector including construction would probably generate an increase in incomes of approximately 12 percent, while . . . . incomes arising from the current spending by Government - central and local will probably increase by 13 percent."

Much of the real wealth was produced in the bauxite sector, not in manufacturing and agriculture. The same Survey revealed: "Thus with the failure of other productive sectors to achieve any substantial real growth, it was the mining sector, particularly bauxite mining and processing, that accounted for some 22 percent of the growth in the economy during 1966."

Outside of the extractive bauxite industry, very little was achieved in the field of manufacturing. This sector accounted for only 7.2 percent of the Gross Domestic Product in 1966, mainly as an increase in production in industries already established. Actually, the Survey admitted that "the rate of expansion was slowing down."

Social concerns

By 1967, the declining economic and social conditions led to an increase in unemployment, crime and juvenile delinquency. So alarming was the situation that Chancellor of the Supreme Court threatened choke-and-robbers with life imprisonment, and a senior magistrate observed that if the crime rate continued to climb there would be no room in the jail.

Cleveland Hamilton, Deputy Lord Mayor of Georgetown, a strong supporter of the PNC also launched a vicious attack on the snobbery of the new ruling elite, and on bigotry, corruption, nepotism and favouritism in high places. He said:

"There is a real danger that a new, larger area of snobbery is being created in this country, or alternatively, that old areas are being activated or fertilised, or merely perpetrated or revived in a country where the professed aim by politicians and other leaders is the building of a classless or equalitarian society. . . ."

Commenting on bribery, he said:

"It is all over the place, and is fast becoming a national scandal. . . . Every citizen's position is in peril where he may not justly achieve what is bargained for, where h pays far more than he ought, and where even his rights may be delayed or even denied altogether. The harm done in any situation in which bribery, corruption, nepotism and favouritism assume national proportions and is a way of life from top down, can never be calculated."

Even the Civil Service Association (CSA), politically sympathetic to the PNC, in a letter in August 1967 to the TUC asking for its intervention, accused the government of causing a breach in industrial principle and a display of gross irresponsibility and arrogance. The CSA also expressed its grave dissatisfaction with several appointments made by the Public Service Commission (PSC) appointed and controlled by the Prime Minister. Some of the appointments the CSA considered "most questionable, and have seriously disrupted the association's confidence in the integrity of the PSC."

As a result, there is deepening disillusionment and frustration. So much had the situation deteriorated that a strong supporter of the coalition, writing under the pseudonym of Lucian, wrote in theGuyana Graphic on 16 June 1987: "Many people - Guyanese and non-Guyanese - are disgusted with the recent state of affairs in this country. Some are packing up to leave out of sheer frustration, while others are dejected from unbearable disgust."

31 August 2008