Devaluation speeches


Material Information

Devaluation speeches
Physical Description:
19 p. ;21 cm.
Williams, Eric Eustace


General Note:
Trade dictates devaluation decision. -- P.M. appeals for restraint.

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Source Institution:
UF Latin American Collections
Holding Location:
University of Florida
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All rights reserved by the source institution.
Resource Identifier:
aleph - 26821831
oclc - 02281716
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Full Text



Trade Dictates


TRADE, MARKETS and a desire to avoid plunging the coun-
try into a serious crisis, which could lead to further extensive
unemployment and hardship were the main factors which
dictated that the Trinidad and Tobago dollar had to be de-
* The decision to devalue also prevents the incomes of cane
farmers from dropping since our sugar would have been more
expensive in Britain and would be uncompetitive against sugar
from Commonwealth and other countries which had. devalued.
* Although there is forecast a 3-4 per cent rise in the index
of retail prices as a result of devaluation, yet not to have de-
valued would have meant that some of our traditional export
industries would have lost their markets and our new manu-
factures would have been unable t com pete on equal terms
in their main p4rliets. This would have resulted in a fall in
production an4l t(hreforg increased unemployment.
* Another effect if we did not devalue would have been that
nascent domestic oriented industries would have been put at a
disadvantage since the products from countries which had de-
valued would have sold more cheaply here.
* In the face of these disadvantages, the Cabinet decided it
must recommend devaluation. In the words of Dr. Williams in
Parliament s
"There is no doubt, however, that the long term
interests of this eoqutry will best be served ip the present
cireumstpnqc by devaluing the currency by the full
mopnt of the Uept d .ingdom dgltjon, thft is, by
4 pr Bent."
0 The full text of tb.e Minister's speech o. the House
of 'Representatives follows :

The new par value'in iJster- 4aanca poncy1. p
lingequals $2 40 S s cent- s anoune yestr
compared with -M erng da, yNvmer, 2st
equals $2.80~ U. S which was New Zealand, whc hwa
the rate before Nov'ernbr considerih deal~uaftin o
17th, 1967. e crec
The Unifted Kingd~om has' U(niteld Kingdo devauato'
introduced h h. h nows deasu
alonri. wit other, policies, in crren~cy by! 20 per cet
Abstrali s wever ,

order, to assist in rexnovincg a* Asrahshwe~
fund1ame'ntal II-disequilib .rium cided not t'devaa ue. (New
devauatin br cr

in -her b alanc e of' -paymen s ,Zaland' M VlU:i
ing win lie deth thatn :tial*oth
eon nh n 1: .igroRw Copund Ed.iwoe )*
~~ an4 a

pAling exeniture, a svee nationn ~i
bn- -teing, omworiwg themre- ie)-
orfd t qh eze pon hek haste incKa
tio1ia ci a 4eep r;ise ~ e wi~lrrde~ahi'a~ aBd~ w*,, i:iliUI

o pe cen. I 7 ..

thasdedaluetK h be de
pubiftcie x iture iali- thvere aves

Unitedn Kinn them.~ Den-~
Coone ofsr th~fUni -that.-nghe
t i o a n s e e p -:-';e "m ; k d

Koise ian L.~n~ --dealy de- dn a
United, ang'dom -Ba1 bRa-e
-raueevf her pogrtlenn
EsrnCrb p, 6rI~~ eny dacentn. Tob oli o

devlue autoe-mSttically
t use have takenMaarket

step a, naan CeyJ
ave devalued a~r 'treo~
Unite', Ki n.-g.4* iii -The-,` 11iteid W dd~life.

Cooies by tha ullte am ing-i
143ued, p acnt BIrA has ACTtON' her' c`.ruren by e-c-y
I~ %~~;Ii~'l74e, question., which Tr. m. i- sil
arrangements i t h th
Eastern Caribbean Cqrrency~l ~
D lo 0 -course of.r,,,ac-3~

0'. t b e, r in ependen coun- hort-te m ..a-n d,,.1 ng Ier

Ceylo'n gardor b, lori erm 'devel
~P~dWPhIRem efit' f thiss~ ,
have devlued. th" '6&ren p re S
cies b th ful aout o contr -if- .,b-,

ute for imported goods to the
maximum possible extent.

S As a minimum, Trinidad
and Tobago must take
sach action as will safe-
guard our present level
of production, employ-
ment and exports. But
decisions and action
taken n o w must further
our long-term develop-
ment interest to provide
expanding employment,
income and opportunity
-to the population.

* We must also take into
account the- decision by
this country to became
part of a Commonwealth
Caribbean F r e e Trade
Area with our neighbours
in 'the Caribbean. All the
other members of the
proposed 1 Commonwealth
Caribbean Free Trade
Area have devalued their
Currencies to the full ex-
tent of the United Kiag- devaluation, that b,
by 14.3 per cent.


Over the past few days th.
governmentt h a s been mak.
na evtengive and intensive
nvestiga'.ions into the pro-
)1em posed bv the current
et of devaluations triggered
)ff bv the. devaluation of the
Jnited Kingdom pound.
In arriving at a decision on
his ma-ter, the. .Government
mad consultations on the im
dications of the devaluations

or the economic experience
mind outlook of individual
ndustrips w i t h particular
reference to the prospects of
maintaining and expanding,
he level of emo1oyment and
incomes in the country.
Cabinet: g a v e searching
thoughtt to the many ramifi-
-ations of this issue. The
primaryy objec ive of the
investigations and analyses
vas to identify the steps and
measures which would safe-
guard our interests b o t h in
he short-run and in the long-
.un. and be a- the same time
on.istent with our inter-
inational obligations, parti-
cularly with regard to
3omm.onwealth Caribbean
It would be appropriate to
considerr very briefly some of
he likely implications of thp
evaluation of the United
Kingdom pound, an d the
theirr currencies which have
devalued, on the economy in
general and on the fortunes
)f the principal industries in
;his country, assuming t h a I:
,he Trinidad a n d Tobago
lollar is not correspondingly


If the Trinidad and Tcbago
dollar is not devalued, then
,he immediate consequence
s that the imports which we.
make from the deva'uing
-ountries, measured in terms
)f local currency, will fall in

:tar macu.
ately ir
for >fari
A- 410-

scribeded earlier 'in,

t f

The devaluation will ..not
affect the export receipts o1
the cortee industry signifi-

Our ci.rus is marketed al-
mosL entirely m M n.e umned
ngciuom :anu o0ner aevaluing
countries under seciai jro-
tective arrangements... Our
principal competitors in these
markets' are Cyprus a n d
Israel and both countries
have devalued their curren-
cis. The industry wil there-
fore experience a fall in its
gross receipts, measured in
local currency of at- least 14
per cent. This can seriously
affect the viabiliy of the
industry w it h the conscp-
auences on production and
employment. .

About 65 per cent -of t h is
country's exports: go to coun-
tries which have devalued
their currencies. In these
niarkets our rum is sold in
competition with, rum. pro-
duced in the Caribbean and
The Caribbean competitor.
have devalued their currency
.o that our rum industry
would experience a reduction
i'n its gross receipts from ex-
ports, measured in terms n
local currency, by at least 10
per centt.
Th i.s industry is being
rountm-ed upon to expand and

to increase the total income
which can bi pro.uued from
.. 1 1 ." -W .,. .. i. .. &, 1"-
n u r' sugar-cane resources.
buti. such a re"iduction iits'eV.-
port income 'cap:j materia9llv
affect' ,its fr' for :the
future. .
The gross export :re6e'e4is
of, the corimodity. are.- not
likely to be, affected '"m 'any
material manner by d6vailua-
.. -CEMENT. -
All t h e exports .io c 6elat
are s o id to counLriees waici
have devalued their cur'e-
cies If thee is any. icre: "
in the prices of locaully prio-
duced cement,. these: market
will immediately' hiftfl 'to
.:cheaper sources Whichr.". ill:
.-be available in": .other ?.cou-
trief,.. for --example, 'Vene-
-zuela, .::. .... '......'.. -
SIn consequence, thed export
receipt.'.of: the:- cement-; indis-
try; measured -in ternis'-of
local currency, will fall' by
about 14 per cent'and- a'very
Large proper' ion of the out-
nut.' 'of: .the industrv:'.must' VP
exported in order forv .the
local cement industry to have
... 1 .1 '. ; :. *- .% ..
a viable operation. ,.
S. ANIUMAL. e.'.. ,
This findut y has been
developing ;a growing expqrt
trade. with.. the other .Co-
monwealth. .Caribbean: .. coun-
tries. ... At .the .ptesent. .timi
about 6Q0. pie.,ent of the. total
exports. of these.ods ,go to
these countries.. .. : ..
*5 c,

eturstance, pices will Sve
several de elopig Io
to be cut1byl'14 per cent,
Such a fall in local receipts al~os entirely oi

de:ndalmst e'tiel o
will seriously affect the local local market for their s
industry and m ay entail a Thy operate n
substantial cut back in pro- measure of protectionh di
ctiop. their early yeats. 'The
valuation in. some count
SEMI MANUFACTURED wi media ely e
AND MANrPACTURED these countries to r
GOODS their prices, rmeasuired
This country has exerted terms o the Trinid%
considerable efforts to Tobago dollar, and-
develop a manufacturing sec- quietly make irod
the local market.
tor, to provide new jobs for
our g r ow i n g population. I other s te
Many of these plants require valuati n if olher comiT)
ani xport market orderto countries i gie a
etage to the foreign prod
be viable. ."N I I
i bvis-a-vis, t te local -prodi
About 70 per cenI of the ec- This will require either
ports of the semi-manufac- other protection -ia and4ri
toured a-n d manufactured Creases or-could meani
dispperace of

goods produced here is sold disappearance o soi
to Caribbean countries where these industries.
they wow compete ,with goods 0IAV 'o OR
produced in the region as EMIALS
well as with goods produced n
In- iew.9f he. pr

outside the, region, 'including
aranemnt f he i

Japan, Puerto Rico, United arrangements f l e
States, and the United dKing- ustr otav
devaluat on wll
e. e ffect or'the income
In- order to hold these mar- sured in te rm
kets it may beeestrvto Olar. from the oil ineu
~ctv &tt ~to~The before. there 1. 1b
cut prices to the exf 'nt- of thp hreo.. hr i l
devaluation, that i' bv 14 oer h a .n e in the if
eiir rcebi' accruing the coun'ttv,
cL, Th export rei I tst
from the manufacturer, mea. ( government, from the
sure in local currency will industry as A-result of
fallby this amount. This will devaluations.
seriously dislocate manynro On' the- other hand,
duc'ing unidts -and -cani ead to Petro-chemical i nd u s.t
a considerable reduction in which is the fastest groN
employmeOnt -generally. ihdustrvy"in the, country,.

The main markets for thb The maintenance of the par
petro-chemicals produced are value of the Trinidad and
the United States, the United Tobago dollar will not affect
Kingdom, Denmark and .the the receipts of IB.W.I.A. or its
Commonwealth Caribbean. current operating position
and these last three countries because, under t he IATA
have all devalued. The main- arrangements, air fares are
tenance of the parity of the denominated in U.S. dollars.
Trinidad and Tobago dollar On the other hand, port
at its present level will there- and harbour dues will be-
fore mean a loss of export come higher in Trinidad and
receipts, measured in term Tobago as compared with
of local currency, from petro other parts in the Caribbean
chemicals by 2 per cent. here the currency has been
devalued. This will affect
TOURISM the arrival and bunkering of
ships, and any such develop*
mi*.0% _. _. in will nacraruinpi'thpA nr, ,

countries of the Caribbean
will immediately mean t h a t
t h e local prices for tourists
will be higher than they are
in other competing tourist
resorts in the Caribbean
This country therefore stands
to lose much of its tourism
to the other countries, with a
corresponding fall in local in-
come from this industry.

Equally, on the other hand.
since prices. for tourists in
the other Caribbean countries.
will be lower than they would
be here, there will be a ten-
dency for t h e local holiday.-
maker to divert his holidays
to those islands. This will
mean a serious blo w to
tourism and c a n effectively
dampen the interest being
currently expressed in this
country to expand tourist
facilities and provide more
jobs in this industry for
which the potential is great

sent difficulty at the port,.
It will lead to a reduction in
the activity at the port, with
the consequences which such
reduction m u s t' inevitably
The devaluation of th e
U.K. pound will mean that
the annual payment, mea-
sured in terms of local
currency equivalent, on t he
public debt held in the United
Kingdom will fall by $500,000.
On the other hand, Govern-
ment revenues will fall f o r
at least two reasons :-
(a) Customs duties will fall
because of the lower
values, measured in
local currency, of goods
imported from 4ev ,~,
ing countries; and
(b) the reduced export, and
possibly, local receipts
of the industries men-
tioned earlier will re-


sut wnerpow ie$t 1Suc tA sw i ol as-b
.f im:byall A -these ftojn~ upn yotedmm
i~~t1e.b er of t h~ e sterling~ areao
The '44de4 b-l~aance' will which mw e ae a part, n
thmefk dete';iira,,e 'sub-; w ou Id, finally, encone
stanitially a n-d by more thant oppQsition' from Our` partners
fbei decrease"* in puthic debt in the Commonwealth Carib-
~rgebean Free Trade Area. Iti
This brief "surnmiary, i3 therefore necessary to direc
g~f~flcieit' -to `-h 6`m-h the realisgt~ic ,consideration to* e
rriin a*ndi -:..'f:.. th'e:!ITrlni- possible. consequences ofa
Aid. A'd Tcbagb dollar- at, its devaluation of 14.3 per cit
Pzesent ;par- value would 7keel MOp;''IE
the""'46al rPiie 'IeveF -steady..IPR-RCE
But,. it couldjl' at the. same'
tipplunge the country inoThe initial effect w~ill be
~ ~rio~ &sis It- culd that prices of goods impor~e
setks ps -'dI --coulty from countries' w i h h v
~f2 h exo~ not deval ued will increase.
industrie's o%-er -th a 'n' petro-, Prices of imports from, on
leu a~d fhtlie urrnt tries which -have devalue
l04bl of, unebiployment 'stand- will remain stable'. -fThe over-I
inig,at 14-per' cent, -this -step alavrg pes n
I~heoe I~d ofr port prices, excluding petro-
ther extensive unemnlcymrept leoum,, isr caenlt.dt
and hardship. .It .could bring but8pr9et
abou t & riedulc~t:ion in' 'the' nr e- 'LOCAL PRINCES>
s:eftinkme-titu t-6 a rd's
066aifi: n AV` eki~orts-- fro The effect of the higher m
thee dounfti~v m coilisequently potpie ill partiallyre
AfJd'P.,f h*t Ii e programme, of flect thems~elves in hiigher
kuiu*tiialiZa i~n. local prices. At the retil'
level food prices in the c~ou
tECSO ry will increase byaou. cent. and the level of th
3ti oW~-,necessary, to con- retailprcsidxwl i
sider the "onsequences which by over 3.per cent
Vwee ifu~ e, devalued' the
rj~da. a.ancd. Tbago dollar However as, against ths
tthe. extentof t h e. United the viability fteepr n
Kingom..oun 'tht. i by manufacturing~ industries i
A t14. per, -cent-, I be enhanced with- imporat
I shuld. be pointed1 out consequences for t h e mai-
t.,t -the' MF, would,. raise' tenanc'e of t he leyel'of m
cp derable .opposition" if, at ploymen' and the prote tio

In terms of the new valum
of the Trinidad and Tobago
dollar, gross export receipts
from sugar will rise by about
2 per cent so that at the very
worst, the industry will be
saved from any deterioration
in its current economic posi-
tion and cane farmers' in-
cnmp will not fall.

In view of the pricing
arrangements prevailing in
the international petroleum
industry, where prices are
fixed in terms of U S. dollars.
the devaluation of t h e local
currency will h a ve little
effect on this industry. Tay
and royalty receipts a r e
therefore expected to remain
the same so that the country
and the Government will re-
ceive the same amount in
terms of U.S. dollars 'as it
would have done without

In terms of the lower per
value of the Trinidad and
Tobago dollar, however, Tri-
mdad and Tobago will re-
ceive 14 3 per cent more from
the levies on these rom.

The gross export receipts,
measured in terms of local
currency, of this industry will
increase, and this ,increase
may be as high as 11 per

Without any expansion in
the volume of export sales or
m production the gross re-
ceipts f r o m exports of this
industry m ill rise by 12 per
cent and this will assist the
mdustry in its present posi-
There will be no substan
tial change in the gross ex-
port receipts trom coffee
The market for citrus will
be maintained and the gross
export receipts for the indus-
try will be kept at its present
level, measured in terms of
local currency. The industry
will therefore be saved from
a deterioration in its present
Gross export receipts, in
terms of local currency, from
the present exports of rum
will be about 4 per cent
higher than it is at present.
But more important, the in-
dustry will be able to main-
tain its competitive position
in its export markets and
consequently sustain its rate
of growth.
Gross receipts from current
exports of this commoidty
will rise by about 12 per cent.
There may be no substan-
tial expansion in the gross

eeeipts from 'he current ex- Lx NSPORTATION
ports of manufactured and To the extent that B A's
s e m, i manufactured goods. receipts r e a i n fixed in
The exports to 'the non- terms of U.S. doilara and
devaluing countries will re- that that part of its expendi-
suilt in some increase in local ture in local currency re-
currency. However, the sec- mains fixed at the reduced
tor will be able to maintain level of the Trinidad and To
its current position in its ex- bago dollar, the operating
port markets and consequent- position of BWIA, measured
ly sustain n the current in terms of a devalued Trii-
momentum towards expand- idad and Tob4go dollar, will
ing its exports. This will show an improvement.
make for greater viabFity in
the industries and assist in PU3LIC BUDGET
expanding employment and
income in this growing sec- The initial impact on the
tor.- public budget of the devaluF
It is true that some of these ation of the Trinidad and To-
industries depend on imports bago dollar by 14.3 er cent
from countries which have will be an increase of 14 per
not devalued their currencies cent, in terms of oal.cur-
and will have to pay higher rency, m the cost of servic-
prices for some of their ning the public debt, held. in

~ ~ ~ .S dolas For. 1968 the : : e6~h
materials and other imports. U.S. dollars. For 968, tl,
However, in many instance's increase in public debt
it will be possible to shift charges, which may result
sources of supply. Further, from the devaluation, is 21/2m
the higher prices will only Trinidad and Tobago dollars.
affect part of their inputs. On the other hand, public
And finally, their competitors revenues in the form of cus-
in the export markets of toms duties gill rise. Fur-
these industries will encoun- ther, the improved positionlof
ter the same costs. The local some of, the export and other
industries will therefore at industries in this country,
least be in an equally com- which is likely to ensue from
peti'ive position as comIared devaluation, should result in
with otloer foreign suppliers. higher total public revenues,.
The public revenues could
TOURISM therefore show an improved
The relative position of the A SSE S
Trinidad and Tobago industry ASSESSMENT
will be maintained, so that Devaluation will assist at
the present momen um can least in maintaining the pres-
be expected to fructify and ent level of exports.
lead to the desired expansion At the minimum it will
in facilities and jobs. assist traditional export in-


dustries to keep their present
markets and will enab e the
new manufacturers to com-
pete on equal terms in their
main markets and to compete
on somewhat improved terms
in other markets in which
they are now trying to break
It will permit the existing
industries to maintain the
present level of employment.
Devaluation will, however,
have a direct cost to the com-
munity. This cost is an in-
crease in the retail prices
paid bv the consumer of
somewhat in excess of 3 per
'Fundamentally, therefore,
the issue as to whether or not
to devalue revolves around
the importance to be attached
by this nation to the follow-
ing factors,' given its current
social and economic position
and the requirements for long
term viability :-
(a) the internal dislocation
and increasing unemploy-
ment which could result
from the reduced local
receipts w h i c h will
accrue to some of the
principal industries in the
country, a factor which
will lead to serious un-
employment in the coun-
(b) the reduced eynort re-
ceints, the possible loss of
export markets for local-
ly manufactured and
semi-manufactured goods
which thp cnnntrv hqs
been developing slowly
for the past few years

and a reduction in the
momentum to expand ex-
ports leading to a slowing
down in industrial
(c) an increase in the level of
retail prices by an
amount in excess of 3 per
cent, probably even in ex-
cess of 4 per cent.
These problems clearly
have important social conse-
The essential isse there-
fore is whether we should
maintain the present
value of the Trinidad and
Tobago dollar and plunge
the country into serious
economic difficulty, in-
crease the level of unem-
ployment and destroy the
manufacturing base which
we have been developing
for the past few years: or
Whether we should de-
value the currency in line
with those other coun-
tries, in particular, the
Commonwealth Caribbean
with whom we have
agreed to form a Free
Trade Area, and thus
assist in expanding pro-
duction and employment
at the cost of an increase
in prices to be paid by
the local consumer, an
increase in prices which
might not even be obvi-
ated by maintaining the
present par value of the
There is a further point.
One of the factors which
must be taken into account in
a matter of this kind is the

real possibility that even if of, whci c this country is a
we decide to maintain the member This approval has
value of the currency at the been obtained.
pre senL level there will b. There will be certain conse-
speculation on the Ipart jof quences arising out of the de-
certain people that deval.u- valuation. Internal prices will
Station is coming. have to rise somewnaL. i.uL
The fact that Guyana, Bar- in. order to ensure that such
bados and Jamaica as well a price increases are kept at
other large countries have al- the minimum, the price con-
ready devalued their curren- trol machinery of the Govern-
cies will make it extremely ment has been strengthened
difficult to avoid the specula- and serious steps will be
tion,that the Trinidad and To- taken by the Government to
bago dollar will be ,.de- ensure that unscrupulous peo.
valued, If such speculation pie do not. use the excuse of
gains momentum then de- devaluation to increase prices
valuation might very soon be artificially.
an unavoidable consequence Further, the present drive
in spite of a~ll our best now underway to ensure the
efforts, payment of income taxes.
CONCLUSION will be maintained .nd if
Taking all. the +fac'Ors into necessary intensified.
TFinally, certain industCies
account it appears that in the may experience some teim
present integration circum- porary difficulty result
stances, the country's best of the devalai Ge
interest will be served by de me dvluation. dn lere t
valuing the Trinidad and To- examin e v ryc refl wy
bag, olar o heextntof examne v:ery carflywy
dollar to te ent of and means of using its press
14.3 per cent, and so estab- ent battery of fiscal incen-
lish a parity vis-a-vis the tives as well as other devices
UTnited States dollar, of Trin- to give assistance to such in-
idad and Tobago $100 equals dustries.
U.S. $050, and vis-a-vis gold, The devaluation of the
$TT 1.00 e~qu alIs 0.444355 .Trinidad and Tob .ag o
grams of fne gold. The dala
parity of the Trinidad and diffdollar i tae ceuntry.
Tobago dollar vis-a-vis the dfiute ntecut#
pound sterling will remain at There Is however r, no
the present level of Trinidad doubt that the long' term
and Tobago $1.00 equals 4 Iterests of this country
shillings and two pence.. will best be served in the
present circumstances by
OTHER ACTION devaluing the currency by
The establishment of the the full amount of the
new nar value of the currency United Kingdom devalua-
required t :he anr roval of +the tl'+n+ i.+that+: is b 4

[it r ato a M one : ++++i ++L :+itary Fun4+? cent ++++:: ++++....... + ++++++++....++++++
i::+: + i : ++ ++ .++i++ Y:+U ++: :+ +++++++:;++!+::+++ + # % ++ :+++f12, 1K++ +++ ?+++ ++ +++ ++ + + ++ ++
; +,, ++ + i+:++++++++ i++ +++::+ "+ +++ + ++:++:++ i+++: +++++++ '+z +++++++ +++i \ h + + +++ + ++++ +++++ + +++ + ++

Why We Had to Devalue

A Call, to Keep Clear Heads'
television and radio on Wednesday 22nd
November, 1967 the Prime Minister, Dr.
The Rt. Hon. Erie Williams, spoke to the
nation on the reasons for and consequences
of devaluation.
Concluding Dr. Williams appealed to all
sections for e I q a r heads and restraint in
this hour of serious economic concern.
The full text of the address follows :
Good evening Ladies and ing to exercise our initiative
Gentlemen : in foreign policy by trying to
AS you all should know by form closer links not only
now, Parliament today with the newly independent
passed an Act which has had countries and the Associated
the effect of changing the ex- of the Commonwealth
ternal value of the Trinidad Caribbean, but also still re-
and Tobago dollar from U.S. tain substantial trading links
58.5 cents to 50 cents -- a de- with the United Kingdom.
valuation of 14.3 per cent This, incidentally, is the
which is exactly the same as reason why we are so con-
the extent of the British de- cerned over the impact on
valuation which took place on our economy of the possible
Saturday last. entry of Britain into the
I would like to say a few European Common Market.
words to you about the back- Sugar is still our biggest
ground to this step which the single export apart from oil
Parliament of this country and it is still the biggest em-
has taken. ployer of our labour fully
For centuries past we in 20,.000 persons earn their
Trinidad and Tobago have livelihood in this industry.
been tied both poli ically and And most of these workers
economically to Britain. Re- have many dependents. We
cently we obtained our poli- rely heavily on the British
tical independence. But many market in exporting our
economic links with Britain sugar. We also rely on the
have remained. Since Inde- British market for our exports
pendence we have been seek- of citrus and citrus products,

rum, petro-chemicals, and British niarket for a large
cocoa and coffee. Even in re- part of our traditional ex-
spect of oi the United King- ports. I should also mention
dcm market absorbs a not that we still obtain a con-
inconsiderable amount of our siderable proportion of our
domes ic production. imports of commodities o her
Let me briefly illustrate to than crude oil from the
you by a few figures the im- TUnited Kingdom. We now
portance of the British mar- import from that source no
ket to us here in Trinidad and less than 25 per cent of our
Tobago. The figures I shall total imports of goods other
cite all refer to last year, than crude oil.
1966. It is not only a question of
In that year the total valtie trade links with Britain. It is
of our exports of sugar and true that we do onot receive
molasses was about $35m, of as much private investment
which $26. 6m went to the capital from Britain as we
United Kingdom, the rest used to in the past. But it is
going to Canada, the USA still the case that we have
and other West Indian coun- close currency and monetary
tries. Our total exports of links with that. country. In
citrus and citrus products fact we are a I:member of the
amounted to some $5.8m, Sterling Area and we there-
with no less than $2.83m going fore hold a substantial part
to the United Kingdom. A of our financial reserves in
fair amount of our new ex- sterling in the United King-
ports of fertilisers was also dom. As a result of the de-
shipped to the United King- valuation of the United King-
dem: $1.3m out of a total of dom pound, we suffered a loss
$31.6m. Sales of rum, cocoa of 14 per cent in the value of
and coffee to the United King- that part of our financial re-
dom market, 'while smaller in serves held in sterling.
abqolu'e terms than sugar, This is the background
citrus and fertilisers, were against which I would like to
dscuss. withvou thp r
nevertheless not negligible. discuss with you the reason
Exnorts of these' three com- why we decide to devalue our
modities to the United King- currency along with that of
rlom amounted to $/m, the United Kingdom. But
$1 3m. and one hundred thou- first of all let me say a few
sand dollars respectively. We words about the reasons why
even succeeded in selling $/2m the United Kingdom herself
worth of miscellaneous manu- had to devalue.
Factures and semi-manufac- Every country's receints of
hircm to the same market. foreign currency from its ex-
I do not wish to tire you ports of goods (such as
wih .statistics. All I wish to suiar) and of services (such
do is to bring home to you as tourism~, shipping services
our great dependence on the and income from overseas in-

vestments) must over the
long run be equal to its pay-
ments in foreign curi $.cy for
its imports of goods and ser-
vices, unless the difference
between the two is covered
by lending abroad or borrow-
ing from abroad.
If it cannot meet an excess
of out-payments over in-pay-
ments by the receipt of loans
or long term investment
from abroad, it will suffer a
loss in its financial reserves
of gold and foreign currency
balances. If this loss of finan-
cial reserves is too big, the
country must take steps
either to increase its exports
of goods and services or de-
crease its imports of goods
and services.
The fact is that Britain's
exports of goods and services
have not been growing fast
enough in relation to her need
for imnorts of goods and ser-
vices from other countries.
At the same time. her situa-
tion hqs bern complicated by
the fact that her currency,
sterling, is a reserve cur-
rpncv one widely held by
rethr contnries (such as Trin-
iOrl rnrl Toba~n and most of
the Commonwealth) as well
as byv traders and bankers
for fh nurnrose of settling in-
tfrnatinnal business transac-
tions Since so manv forepin-
ers hold their currency, it is
verv vii'nprah'e to sudden
with1rnvi ~s This vulnerabil-
iv of Britfin as a nation
with a widely usedr reserve
ciirrnrcv has arled to the
prhnbmns of balancing her
exports and imports which

she faces in any case.
Britain's trade problems go
back a long way. Indeed, as
the first great exporter of in-
dustrial products, she never
quite fully adjusted to com-
petition from newer arrivals
on the world trading scen6-
the U.S.A. and Imperial
Germany before the First
World War, Japan and others
in the inter-war period, and,
since the Second World War
reconstructed economies of
West Germany and Japan
and more recently the Euro-
pean Common Market coun-
The 1949 devaluation was
in large part aimed at meet-
ing new United States com-
petition, but in the 1950s the
other countries I just 'men-
tioned added a further cut-
ting edge to competition in
manufactures among the in-
dustrial countries. Britain's
balance of payments con-
tinued to be a problem of
nagging concern.
The- remedy recently de-
cided upon by Britain was a
package of measures, in-
cluding the devalua'ien of
the pound sterling. Devalua-
tion works by making a
country's exports mere com-
petitive in outside markets
and by making its imports
dearer to people at home.
When accompanied by other
annronriate measures, de-
valuation helns to increase
exports and hrlld down im-
ports and so bring into ba'-
ance the country's external
The British devaluation has


had an impact on severs
other countries ith close
trading and other economic
links with the United Kini
dom. Thus, in Europe, Der
mark and Ireland which bot
depend heavily on the UnLe
Kingdom market have als
devalued, Israel, Malta an
Cyprus have done the sam(
as have Malawi and Hon
Kong. New Zealand has dE
valued even more than Br
tain, and here in the Con
monwealth Caribbean all (
us have devalued to the sam
extent as BriLain.
It is easy to see why w
and other countries hav
done so. Since we are all s
heavily dependent on th
British market, we all hav
to make our commoditie
cheaper to the British cor
summer as compared wit
goods from other countries
Otherwise we run the risk c
losing our markets in Br.
tain. This is particularly irr
portant for our and
ci'rus which for historic
reasons are even under noi
mal conditions produced b
us at a higher cost than ou
Moreover, if we had no
devalued, British goods, ii
many cases aided by lo\
rates of import d,,tv unde
the Commonwealth Preteren
tial sys? ppted -rnncrlv against oui
dm e s t i c industries, thu
bringing about widesorea(
unemployment and extensive
social and economic disloca
* Please understand this

Ladies and Gentlemc
we have not made t
choice to devalue o
currencies. Rather o
trading position vis-a-1
Britain imposed t
necessity of devaluati
upon us.
Here in Trinidad and I
bago we have had yet anoth
reason for devaluing our oN
currency. At present t
Commonwealth C a r i b be
countries take a large p<
centage of the exports of o
young manufacturing indt
tries, as well as a small
though important percent
of our older industries.
In 1966 our total exports
manufactures and sen
manufactures amounted
$13m of which the Commc
wealth Caribbean country
took over $8m. Our exports
sugar to this group of cou
tries amounted to abo
$1 5m. of citrus and citr
products $0 s5m. of fer'i'ise
$2 8m, of rum $1m.
This market also has gre
potential. Evactlv one mon
aco T had the honour to lec
Trinidad and Tobago's de'
Nation to a conference
Heads of Government
Cn,"monweajlh C a r i b bes
countries at which I cor
emitted nur country to enti
into a Free Trade Area wi
our Commonwealth Cari
bpan nPibbcmirs.
* If Trinidad and Tobat
hhd not devalued aloim
with the 'other West Ii
dian countries, not on
would we have been ste

damental economic de- that devaluation raises
vision with our West the price of non-Sterling
Indian neighbours with goods in the home mar-
whom we are committed ket, production for local
to a programme of econo- use should be stimulated.
mic integration, but we ... :
would also have been Not least, we can capitalise
placing our goods at a on the greater cheapness of
disadvantage in the pro- Trinidad and Tobago for
posed Caribbean Free North American and South
rade Area. American tourists. I can
assure all those local produc-
SIn short, L a di es and ers who wish to intensify
Gentlemen, Trinidad and their export drive that the
Tobago had to devalue to Government will give them
protect its position in the the fullest possible backing.
British market, in the
Commonwealth C a r 1 b- THE DARK SIDE
bean market and, not
S least, in our own home But every coin has two
market. sides. While the devaluation
of our dollar has been the
AN OPPORTUNITY indispensable cond.t on for
ut 'thiSps protecting, and even expand-
But this is not the end of ing, our domest!'c produc-
the story. There are two fur-. ton and domestic employ-
ther consequences which I ment, it will unfo tunaey
would like to clarify for you. have some effect in ~ncreas-
One 'su c h consequence ing the prices of some im-
gives our exporters a great ports for the local consumer
opportunity an opportunity -both r'ch and poor. It 's
to sell more of our local difficult to make a precise
goods in markets in the Wes- calculation of the ric-e in
tern Hemisphere countries lv n i co.'s, but the evidence
whose currencies have not w 'ch we have sugests that
been devalued. Both our large the retaIl nr're index shri'd
and small farmers and r'se by between 3 and 4
manufacturers, many of per cent as a result of the
Shorm have excess capacity, devaluation.
can seize upon this oppor- I want you to understand
tunitv to win for Trinidad that such a TI'se :n nrcec o
and Tobaro markets in Can- so me imnor.e.. comm.d'tes
ada. the U.S.A. and Latin I inherent 'n th: art of de-
America. valuation Itself. It is n fact
0 Nor should the oportun-o the very essecnr of t'e nro-
itv to substitute more c of thI readiis'ment sf
E'S *Nnds for Ima orts in .costs: and prices wh"h'
our home ma rk et be s fmu'ates exports and holds


The Government has
taken a very d ff cult de-
cisiton to devalue and I
call upon the public to
show an understanding of
the dilemma which faced
us in the Cab net.
Either no devaluation, no
cost of living increases
and widespread un-
employment and cut-
backs in production.
Or the preservation of our
external markets, the
possibility of more pro-
duction, m ore exports
and more jobs and a
moderate rise in the cost
of living.
I promise that the Govern-
ment :s go'ng to take every'be step to protect the
public against the act vties
-of any unscrupulous per-
son who tr'es to increase
prices without economic
just'ficat'on. We already have
the machinery in the form of
price control. I here c 'I
upon you, a'i housewives
and groups such as the
Coniime s' Associat'on, to
exercise the utmost vi.glance
on norce 'noreases and to
bring to the attention of
Government any p-'re in-
c-rpfe wh'ch you feel is

But at the same time I ask
ycu all to show some under-
standing and frrb,'rance.
It 's not only the People of
Trin'dad and Tobago who
w 11 be exnerienc;in a r'se
f", e c,-t f 1'v'ng. The
British puble' w"' he. ^hbe
Jamn'cin nubl'c wil be, the
pnblic ;n (Ivyana and Ba ba-
dos and the Leeward, and

Windward Islands w'11 be So
w 11 the public in IsUael,
Denma-k, New Zealand,
Hong Kong, Malawi, Ma ta,
Cyprus and many other coun-
I would like to add that we
do not anticipate any worsen-
ing of t h e Government's
budgetary position .as a re-
sult of the devaluation. True.
many of our expenditures
measured irn terms of Trini-
dad and Tobago currency
will increase for example
the charges payable on o u r
overseas public debt. At thr
same time our tax revenue
derived from companies and
individuals producing for ex-
port and in s o me cases for
the. home market should in-
crease by somewhat more.
The. yield from import duly
as a result of higher prices
should also show some in-
In the same way many
farmers and manufacturers
(both large a n d small) will
flnd that, although seinme of
their costs of production in
leral currency go un, they
will be earning m o r e
currency than before for
every sale. they make in
foreign markets or on the
home market.
We should all of us try to
see the problem in proper
perspective. Every cloud has
a silver liningr. Even th*
workers of this country who
face a higher cost of living
should trv to see that by th.
devaluation the jobs of many
have been protected and that
the creation of new job oppor-

tunities for t he unemployed n merchants, white-cc
may even be stimulated by workers, act in a restrain
the devaluation, fashion. Let us remem
that this is not an indivic
National Problemn or sectional problem. .1
is a Trinidad and Tob
And so, Ladies and (entle- -problem.
men, this is the position. Let me in conclusion
We face a national problem how heartened I was at
brought .about by inter- maturity and calm display
national factors. Let us all since last Saturday by t
keep clear heads. Let us ll Banking a n d Business c
quietly an d efficiently sei*e munity, by the Trade Ur
the trading opportunities b- Movement, by t he ordin
fore us. Let us all, workers. citizens and by the Pres
manufacturers, f a r nme f., Good night.

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Devaluation speeches / LGC
HG794 .W54

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