Monday, 8 August 2011

Trinidad's Economy

King Sugar, King Cocoa, King Oil

Trinidad’s ongoing development was dependent on various economies throughout the centuries. Starting with the island’s first substantial settlement after the Cedula of Population in 1783, there were three distinct phases: the sugar economy, which started in the 1780s, the cocoa economy, which began around 1870 and had its heyday in the first decades of the 20th century. Finally, the oil economy which commenced in 1910, and proved to be the economic backbone of Trinidad in the 20th century.

The Sugar Economy:

In the 1830s, Trinidad was - contrary to Tobago - still largely an undeveloped island. Vast amounts of fertile and potentially productive land were still untouched by enterprise. In 1838, only approx. 43,000 acres were cultivated out of a total acreage of 1.25 million. The cultivated land stretched in a narrow band from Chaguaramas to Arima, and from Port-of-Spain to San Fernando, surrounded by a vast, virgin forest.

In 1884 about 60% of the European sugar market was being satisfied by beet sugar, which was grown and produced in Europe. This commodity began to enter the British markets, making cane sugar production in Trinidad even less profitable. To make up for the shrinking margins, the acreage under cane was increased, from 41,639 acres in 1868 to 52,150 acres in 1877. However, with the advent of Indian indentureship, which began in 1845, the sugar economy was preserved.

Tobago, which previously had a very successful sugar economy long before Trinidad, was on the verge of bankrupcy by the 1880s, when sugar prices collapsed. Unlike Trinidad, it had no vast, uncultivated lands, and the soil was almost exhausted by years of cane cultivation. Also, it did not have the finances necessary to modernise its sugar refineries and to diversify into other crops. After emancipation, many ex-slaves in Tobago left the estates to work on their own small plots of land and to pursue small trading and crafts. West Indian and East Indian immigrants were attracted by Trinidad’s higher wages and did not come to Tobago in large numbers. Absentee owners did not oversee their investments properly. In 1899, the British government realised that Tobago was a great liability to the Crown, and the decision was made to attach the small island as a ward to Trinidad.

The Cocoa Economy:

Cocoa had always been cultivated in Trinidad - it is indigenous to the New World and the Amerindians were quite acquainted with the ‘Aztec’s chocolate’. Chocolate and drinking cocoa became items of mass consuption in the industrialised countries in the second half of the 19th century, and from 1870 onwards, cocoa became an export item for Trinidad planters and merchants.

The gradual improvement of transportation (roads, railways and bridges) had a positive impact on that process as well, as it removed obstacles to cultivation of the land. The collapse of the sugar estates between 1884 and 1903 freed up capital, labour and some land for cocoa cultivation. Former sugar workers started to work in cocoa plantations. Cocoa is not as capital-intensive as cane, and many local families of all ethnic backgrounds were able to mobilize their personal resources to finance the build-up of cocoa estates.

The market situation remained favourable up to the 1920s. Exports had averaged 8 million pounds a year in 1871-1880, by the decade of 1911 - 1920 they averaged 56.3 million pounds. King Sugar had been dethroned!

King Cocoa facilitated greatly the opening up of previously uninhabited areas of Trinidad, the valleys of the Northern Range, the country between Sangre Grande and the east coast, central Trinidad and the deep south. New villages were created, old settlements like Arima and San Fernando grew and prospered.

Cocoa contributed significantly to the prosperity of Trinidadians on the whole. It was not exclusively a large estate crop, and small producers were able to make a profit as well. When King Cocoa fell in the 1920s and 1930s, it had opened up the island, strengthened its economy and enriched its social and cultural development.

The Beginnings of the Oil Economy:

Strictly speaking, the awareness of petrochemical products in Trinidad started in the 16th century, when Sir Walter Raleigh caulked his ships at the Pitch Lake in La Brea. But it wasn’t until 350 years later that the petrochemical industry in Trinidad took its first tentative steps.

In 1857, the Merrimac Oil Company, an oil firm from the United States, drilled the first successful oil well in the world in La Brea. They struck oil at 280 feet, but the well was abandoned in 1859, when the company ran into financial difficulties. The demand was still very limited.

Ten years later, Captain Walter Darwent, an American soldier, established an oil company in 1865, the Paria Petroleum Company Limited. Darwent maintained that combustible fuel could be refined from oil drilled from the earth, and his entrepreneurial opponent Conrad F. Stollmeyer held the view that the ideal fuel could be distilled out of the asphalt from the pitch lake.

Darwent struck oil with three wells drilled in Aripero and San Fernando. In 1867, they were producing up to 60 gallons a week. (For comparison, total oil production in Trinidad today is around 125,000 barrels per day.)

Oil production and refining remained difficult, and after Darwent died only 47 years of age, Trinidad’s oil industry remained dormant for another 40 years. At the turn of the century, Randolph Rust and John Lee Lum resuscitated it.

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