From the Diaspora…Kaldor Budget and Black Friday February 16, 1962

Mar 30, 2014 News

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By Ralph Seeram
Mr. Forbes Burnham dealt with the harsh tax measures introduced by what was known as the Kaldor Budget and ended his speech by working on the emotions of his audience in the manner of Mark Anthony. “Comrades,” he exclaimed, “the fight starts now. Tomorrow at 2 o’clock in the afternoon there is a demonstration organized by the Trade Union Congress, a demonstration against the harsh proposals of the budget, which make life unbearable.
“No doubt the Riot Squad will be there. Do you still want to go? Comrades, remember that tomorrow Jagan’s army is coming down from Cane Grove and Windsor Forest. Do you still want to go? (Wynn Parry Commission).”

Thus started a series of events on February 12, 1962 that led to the burning and looting of several businesses in Georgetown on what is now described as Black Friday February 16, 1962.
This past week the Budget was presented and already the Opposition and the Government are having a “war of words” over what the Opposition Leader David Granger described as a “maintenance budget”.
This response by the Opposition Leader could be considered very civil when compared to the actions of the holder of that office 52 years ago.
In 1961 the PPP had won its third electoral victory. The country was just granted “self government”, but this was the period of the Cold War and Dr. Cheddi Jagan, the PPP Premier, was already labeled a Marxist by the West.
They felt that he would have created another Cuba in the Caribbean.
So in the run up to the 1962 budget, public servants were calling for an increase in wages, (they did not get any increases in the preceding years).
The government agreed to increase the salaries, but realized that there would be a shortfall in their budget to cover increased wages as well as capital projects. Dr. Jagan made an appeal to several western Governments for loans and other aids.
Because of his “suspected communist leanings” western governments were reluctant to assist him. In desperation he asked the United Kingdom Government for assistance to prepare the 1962 Budget.
Enter Economist Mr. Kaldor.
“At Dr. Jagan’s invitation, Mr. Kaldor, a well known economist of considerable experience who had served on the United Kingdom Tax Commission and had advised the Governments of India, Ceylon, Mexico and Ghana, was invited to consider the problem and suggest ways and means of raising additional revenue.
“The budget for 1962 was prepared upon the basis of his recommendations on January 31, 1962”.
The budget certainly had no communist or Marxist leanings; in fact it was praised by the New York Times and The London Times.
The Opposition in Parliament at the time comprised the PNC lead by Forbes Burnham and the smaller United Force led by Peter D’Aguiar who represented the business class.
The budget was described as “being laid to strengthen our economic position and raise living standards by accelerating the rate of economic growth through our own efforts”.
The Finance Minister Dr. Charles Ramkissoon Jacobs drew attention to the fact that the prevailing tax structure was biased in favor of the richer and propertied classes. He, accordingly, proposed some new taxes, the burden of which was to fall on the higher income groups only.
He proposed a capital gains tax, an annual tax on property and a tax on gifts. In addition to these, he proposed certain measures for preventing the evasion and avoidance of taxes. He also proposed a new mode of assessing the minimum measure of income tax in respect of commercial transactions.
He proposed that the minimum income of a businessman should be deemed to be two per cent of his annual turnover irrespective of whether his business had shown a profit or a loss, but wherever there was a loss it was to be set off against profits in the subsequent years.
It will be seen, at once, that this measure was aimed at dishonest businessmen who reported a loss year after year although their business continued to flourish.
In order to increase the flow of resources for development purposes, a scheme of compulsory savings was also to be introduced. This scheme contemplated a deduction at source equivalent to a contribution of five per cent of wage and salary income in excess of $100 a month and 10 per cent of other income in lieu of Government bonds redeemable after a period of seven years.
The Minister of Finance therefore proposed an increase in the import duty on certain goods which he considered were not necessities of life, e.g., alcoholic drinks, tobacco, concentrates for non alcoholic drinks, tea, motor spirit, perfumes, cosmetics, the more expensive dress fabrics, footwear, glassware, chinaware, jewellery, radios, refrigerators and motor cars.
He also proposed some increases on certain types of food for which adequate substitutes were available in the country. There was also an increase in the excise duties on rum and other spirits, and on beer. “
As soon as the Budget was tabled the attempt to bring down the government started on three fronts, the media led by the Chronicle with Kit Nascimento at the helm and the Argosy influenced by D’Aguiar.
They ran incendiary headlines making it sound as if the budget is an attack on the poor instead of the rich. The political front was even more vicious. D’Aguiar’s policy was clear “oppose, expose and depose”.
The Trade Union Council incited workers to strike while the PNC led by Burnham led mobs around Georgetown. The Wynn Parry Commission, in describing Burnham, said, “The real motivating force behind Mr. Burnham’s assault was a desire to assert him in public life and establish a more important and more rewarding position for him by bringing about Dr. Jagan’s downfall.”
The incitement of the mobs by the opposition leaders, trade union, as well as the business class, culminated on Black Friday, February 16, 1962. The riotous mobs attacked the Electricity Plant, the Water Works, Parliament as well as Premier Jagan’s residence as well as the business that supported the budget.
At the end of Black Friday 56 business were destroyed, 87 damaged by fire and 66 were looted. The Police had sought the help of the British Forces stationed in the country to contain the riot. One Police Superintendent was killed and 39 injured. Four looters were fatally shot and 41 injured.
Space does not permit me to give too many details, suffice to say the PPP survived the attempt to bring it down. The PNC and UF will try again in 1963 and 1964 but were unsuccessful in overthrowing the PPP government.
With the collusion of the British and the American Governments, they succeeded in changing the Electoral System to the one existing today Proportional Representation, PR. The following election the PPP secured the majority of votes but failed to get 50 per cent. That was the whole point of the PR system to deprive the PPP from forming another government.
The PNC and the UF joined forces to form the next government. Burnham would later out manoeuver the UF and with rigging the next election, formed a PNC Government.
There is a great irony in all of this, while the PNC and the UF said the PPP was out to destroy the Private Sector, it was the Burnham and the PNC that destroyed the Private sector, reducing the country to “suitcase” traders.
Today the Guyana Private Sector is thriving once again. The question is can it be destroyed by the Opposition again. Think Linden a few years ago, you can change the name but the stripes still remain. Some players in that episode of dark history are still around.
Today the charade continues between the Opposition and a corrupt PPP Government. The Opposition will cut the budget, government will spend. At least the discourse is civil comparatively speaking. I rather suspect this budget will eventually lead to another election; the voters will have to choose the lesser of two evils, the PNC record of dictatorship for some 26 years or a corrupt PPP.
Should not be a tough choice. Don’t ask me who I would vote for. I ran from the PNC dictatorship some three generations ago.
Ralph Seeram can be reached at email: [email protected]
PS: Main source for this article was the Wynn Parry Commission of Inquiry into Black Friday.

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