In a Free State

Did you know that Trinidad almost became part of the United States?

OK, that’s not quite true.  What happened was that at a summit at Camp Rapidan in October 1929, President Herbert Hoover told Prime Minister Ramsay MacDonald that the U.S. would cancel Britain’s war debt in exchange for Trinidad, Bermuda, and British Honduras.  Hoover only wanted Belize in order to split it up between Guatemala and Mexico, and nobody expected London to part with Bermuda.  (Strangely, MacDonald drew the opposite line at the summit, insisting on retaining Belize but showing no objection to giving up Bermuda.) 

The real prize was, of course, Trinidad. Hoover had worked there, the place had oil, and its location was perfect.  Between Trinidad and Puerto Rico U.S. planes could overfly the entire Lesser Antilles (and Venezuela), pretty much turning the Caribbean into an American lake.

How much did Hoover offer, you ask?  Well, in nominal terms, a little less than £1.0 billion.  In 2006 terms, £44 billion.  And as a percentage of Britain’s GDP, the equivalent of £254 billion today.  Not a bad deal for the U.K. 

MacDonald, of course, eventually said no.  Hoover later wrote that MacDonald knew that Hoover had previously suggested a moratorium on war debts, and therefore the perfidious British saw no reason to pay off what they owed. 

But what if MacDonald had said yes?

Trinidadians probably would not have gotten citizenship right away, but considering as Congress granted it to the Virgin Islanders in 1927, it’s hard to imagine them lacking it for long; certainly not past the Second World War.  (All those draftable soldiers!) 

As for political status, well, Eric Williams and Luis Muñoz Marín had a lot in common in terms of temperament, experience, ideology, and biography.  It isn’t hard to imagine both men jointly agitating for the status of an Associated Free State (hence the blog title) and both territories getting it in 1952.

The most obvious change would be that the citizens of the Commonwealth of Trinidad and Tobago would drive on the right.  Now, I am aware that the U.S. Virgin Islands still drives on the left ... but the USVI is small, and does not qualify for federal highway funds.  I don’t know for sure, of course, but I suspect that the Federal Highway Administration would have forced Trinidad to make the switch. 

The roads would be much better, more like Puerto Rico.  The intersection below, for example, would be a concrete spaghetti bowl.

Trinidad would also (probably) have fewer people.  Half of all Puerto Ricans live on the mainland; to match that, you’re talking about the emigration of somewhere between 300,000 and 600,000 additional Trinidadians.   

Would an American Trinidad subsidize the rest of the United States with its oil and gas production?  The answer is no.  Under the U.S. Constitution, all federal tax and tariff revenue collected in an unincorporated territory must be remitted to the government of that territory.  No taxation without representation, after all, unless you live in Washington, D.C.  The only exceptions are FICA payroll taxes (which are attached, of course, to Medicare and Social Security benefits) and corporate income taxes.   

A Commonwealth of Trinidad and Tobago, therefore, would not pay any direct federal taxes on its oil and gas production.  (Well, it would ... but the receipts would be turned over to Port-of-Spain.)  American oil companies operating in a hypothetical U.S. Trinidad might have to pay taxes on their profits earned on the island ... unless they managed to wrangle a special tax exemption. Companies investing in Puerto Rico did, in fact, enjoy such an exemption until very recently. I have little doubt that Governor Eric Williams would have been more than savvy enough to get Trinidad the same treatment.   

So, no new taxes, except for those tied to Social Security and Medicare.

But would a Commonwealth of Trinidad and Tobago be richer than the Republic we know?  I have my doubts.  The average nominal hourly wage in Trinidad (not including the petroleum industry) was US$4.54 in 2006.  That compares with US$8.08 in Puerto Rico, and seems to imply that Trinidadian wages would be higher were it part of the U.S. of A.

The catch is that a Trinidad tied to the U.S. dollar would certainly have caught a fairly severe case of Dutch disease, and the general price level would also be a lot higher.  (In fact, average hourly wages in Trinidad rise to US$6.43 if purchasing power is taken into account.)

The intuition behind the Dutch disease is pretty simple.  Consider California.  (Yes, I know, most examples of this phenomenon are drawn from commodities.) It exports movies and software, a boatload of movies and software.  That brings a s—tstorm of money into the state, and drives up the cost of real estate, dry cleaning, legal services, medical treatment, and all the other non-tradable services that a modern economy consumes.  Californians earn more than other Americans, but a good chunk of that difference is eaten up in a higher cost-of-living.

For movies-and-software, read oil.  In fact, the Dutch disease was named for the Netherlands’ experience after the North Sea oil and gas discoveries of the 1960s.  As you can imagine from the name of the phenomenon, the Dutch disease isn’t necessarily a bad thing.  Sure, oil means that nobody in Alberta is going to build an auto plant, but does that mean that Alberta would really be better off without the oil?

There are things that an country with its own currency can do to combat the Dutch disease, but a Commonwealth of Trinidad and Tobago would not have its own currency.  Therefore, even if nominal wages in our hypothetical dollarized Trinidad were a little less than twice as high — around the level of Puerto Rico — the price level in our hypothetical Trinidad would probably also be around twice as high.  (From personal experience, I would say that everyday services are at least twice as expensive in San Juan as in Port-of-Spain, and Port-of-Spain is right smack in the middle of an oil boom.) 

That said, the income distribution would be much more equal.  U.S. minimum wage laws, Medicaid, and food stamps would see to that.

I don’t think the place would feel much more dramatically prosperous on the ground, though, even if much of Trinidad’s deep poverty disappeared in a hail of minimum wage jobs and WIC offices.  The opening picture on this entry is of Amma pointing at her childhood church.  The above picture is in the same neighborhood.  The area is a poor part of Port-of-Spain, one that Amma’s parents inveighed me not to go into.  Other than the relative lack of cars (and graffiti, roller-blading children, or horse-riding teenagers) it doesn’t look any worse than the poorer parts of Ponce or San Juan. 

While Trinidad does have a few shantytowns left — well, at least one, called, ah, Shantytown — most of the island looks, feels, and is no poorer than many existing insular possessions of the United States. 

Would U.S. defense spending have provided a path to greater prosperity?  A Caribbean version of Guam?  Probably not.  First, Guam isn’t all that rich, although it is very well off compared to those other Pacific islands tragically abandoned by their former colonizers after they’d squeezed out everything they could.  (Viz, Nauru.)  Second, Chaguaramas wouldn’t have made it through BRAC, and you can google both terms if you’re confused.   

Wouldn’t Trinidadians be better educated, though?  Again, probably not.  Both Puerto Ricans and Trinidadians average about 12 years of schooling, with Puerto Rico having both more drop-outs and more college graduates.  So I’ve got some doubts that a Trinidad linked to the U.S. would do much better than it has in that respect. 

What about tourism?  Hard to say.  Piarco airport would have been improved earlier, of course, but I can’t see any reason why American Trinidad would have attracted more tourists than Trinidadian Trinidad.  Quite the reverse, in fact — Eric Williams would still have been in charge for several decades, national pride would have been even more prickly, and most importantly, something like the Black Power movement would still have happened and would have attracted a lot more attention on the mainland.  A nicer airport just doesn’t quite seem like enough to compensate.    

So what would be different, besides the quality of the roads?  (And I’m not knocking the importance of road quality here.)  Well, three things, I think.  First, the U.S. relationship with Venezuela would be even more troubled than it is.  That would make life on the island interesting, to say the least. 

Second, as I mentioned, the income distribution in Trinidad would be a lot more equal.  In all fairness, that’s not a small change, even if average incomes would probably not be all that different.   

Third, less crime.  But not for the reason you think.

Before 1999, Trinidad averaged around 10 homicides per 100,000 per year, half the Puerto Rican rate and rather less than the typical Southern state.  In fact, the rate slowly declined throughout the late 1990s, bottoming out in 1999 at 8.2.  There is absolutely no reason to think that being part of the United States would have made any difference in these levels or these trends.

But in the year 2000, suddenly, inexorably, crime began to rise.

Kidnapping for ransom soon joined homicide.  From 10 in 2001, they leaped to 29 in 2002, 51 in 2003, 28 in 2004, and 58 in 2005.  The government recently — with the active help of the FBI — busted a major ring that included (but was not limited to) four Trinidad Regiment officers who left the barracks at night to kidnap unsuspecting victims.  That (and other enforcement efforts) have dragged the number back to 17 in 2006 and only 7 as of August 2007, but the explosion was both unprecedented and unnerved a lot of people. 

So what happened to make 1999 the last year of falling crime in Trinidad?  Trinidad was never a major drug transshipment point — where would you ship it to?  The oil boom did expand the local cocaine market, and fueled violence, but the crime rise started before oil prices started to skyrocket.  In addition, other places have experienced similar booms (with similar increases in the demand for drugs) without seeing an explosion in crime.  And even more strangely, the crime explosion occurred all across Caricom, even in countries that haven’t seen petroleum-fueled booms.

What happened was that the U.S. started deporting non-citizen felons at the end of their sentences, even if they were legal residents.  The number of criminals dumped on Trinidad rose from 6 in 1998 to 214 in 1999.  In 2005, it was 305.  The total came to 1,599.  That’s a lot of violent criminals to drop on an island with only 1.1 million people.   

If Trinidad had been a Commonwealth, then there would have been no way for criminals hardened in New York and trained in that state’s prisons to be dumped back on island.  They’d be American citizens, and they’d go back to Brooklyn upon release, into a community and a police force ready to deal with them.

So there you have it.  The second biggest benefit that being a territory of the United States would have brought Trinidad is ... protection against the policies of the United States.

Comments

[Will Baird]

Californians earn more than other Americans, but a good chunk of that difference is eaten up in a higher cost-of-living.

A-frakkin-men.

I make almost 50% more than friends back in NM yet for many things, I cannot afford them here in Cali.

Excellent post, Noel. It's about a bit of history I didn't know about and the WI extrapolated is fascinating and very well thought out.

[claudia]

Noel, would you post this over at shw-i? If you don't care to, may I?

One nit pick: "Guam isn’t all that rich" -- hum? Guam's per capita income is around $15,000, which is the highest in the island Pacific outside Hawaii, and compares pretty well to $9,000 for Trinidad.

Guam's situation is complicated by the fact that it's becoming a two-tier society: you have native Guamanians plus the military, and then you have the Micronesians. The former groups have a nice flat income distribution, so that pretty much everyone has at least the basics and the bulk of the population lives no worse than West Virginians. The Micronesians, well, oh dear. But it's a sharply bimodal distribution.

"Second, Chaguaramas wouldn’t have made it through BRAC"

Well, here the Guam analogy breaks down -- BRAC has been very good to Guam. The bases there have been getting steadily bigger.

-- It gets gnarly and contingent. The central fact of Guamanian history is the Japanese occupation and the American counterattack three years later. The Japanese military were their usual wonderful selves -- beating, torture, murder, rape, humiliation, requisition of supplies, etc. etc. etc. So by the time the US came back, the Guamanians were /very very/ glad to see us.

Result: Guamanians love the US military. Army, Navy, Marines, whatever. They join the volunteer military in droves -- even today -- and they make Guam an incredibly welcoming place for US servicemen.

Knock-on result of /that/: a startling number of military retirees on Guam. Like, thousands. A military pension will go a long way on Guam, the people are friendly, the climate is great, and there's a snowball effect -- the presence of lots of retirees makes it more likely more will come. And the retirees have had a huge effect on Guam; they've made it more American, in about three different ways. (Keep in mind that military retirees can be as young as their late 30s... we're not talking a bunch of old folks in gated communities here.)

So. Would there be a similar evolution on *Trinidad? Probably not.

But there might be... something. Bears thinking about.

Doug M.

[Dennis Brennan]

(re: Anglo-US horse-trading discussions).

Fascinating, I had never heard of this. Would the proposed US hand-off of Belize to Mexico/Guatemala have been part of additional horse-trading with those countries, or just a good-will gift?

[James Bodi]

I'm not so surprised that Bermuda would be given up (its value as a naval base to the RN was not what it was and it had no other poiont), but am that Belize would be preferred to it. I wonder why.

[Noel Maurer]

James: Hoover wondered that too. In his memoirs, he actually sounds a bit peeved at MacDonald for insisting on keeping Belize.

Not as peeved as he was in his (probably correct) belief that the onset of the Depression caused the British to figure that they'd never have to repay the debt anyway, but peeved.

Dennis: Hoover intended the transfer of Belize to build better relations with Latin America, so I don't think he intended there to be much horse-trading. Congress might have had different ideas, of course.

Doug: go ahead, post it on SHWI.

[Michael]

Wow. That neighborhood actually looks a lot better than some places here in Ponce. And PR's mean per capita income is in the $5000 range, if I recall my CIA Factbook correctly.

I'm interested in your point on education levels. I don't think the comparison between T&T (of English influence) and PR (of Spanish) holds. There's an incredible anti-intellectual sentiment here, especially out on the island (i.e. not in San Juan). Now that our daughter is taking civics, we're starting to learn a little history -- turns out one of the reasons Ponce doesn't have much in the way of universities is that the nationalists really, really resented the universities. There were bombings and shootings -- I believe that the nationalists considered university-educated people to be colonial power. (You would not believe how much it helped my understanding of PR when I realized that the jibaros were *rednecks* who simply speak Spanish due to an accident of history.)

And I'm not sure if that translates to T&T or not. The current situation is that money in PR comes from what I think of as banking, medicine, and law -- but NOT from productive pursuits like agriculture or engineering or manufacturing. Manufacturing, pace your earlier rundown of the PR economy, generates money, but it's largely mainland pharma and hardware companies building light-weight, big-money items like hard drives and Viagra; the engineers are American and thirty-year technicians make $11/hour. Not a high-status industry, you see. (This is just my naive observation, not actual statistics, but I sometimes feel like I'm starting to understand these people.)

So all that stunts the growth of education here. If T&T were a Free Associated State, I'd think you might see something a little more like Texas, with oil coming out of the ground and at least some of it being processed by native companies. I dunno. But that might support a healthier economy on the whole.

But it sounds like it does anyway. I don't think USian-ness would change that. My two bits, just trying to sound like I know something.

[Noel Maurer]

I wouldn't call banking, law, or medicine "unproductive" --- all three are necessary inputs for a modern economy, and your country can go seriously off the rails if the first two are malfunctioning. (And having the third go awry probably isn't all that helpful either.) And banking services are very exportable --- as is, in some circumstances, medicine.

But you've got my main instinct down: inasmuch as T&T has already capitalized on the energy industry, I'm not sure that it would have been able to do significantly better inside the U.S. of A. After all, gross profit remittances from T&T were only $1.3 bn in 2006 on exports of $11.7 bn. That's a lot of value-added kept on the island.

The caveat is that being under federal courts would offer a lot of juridical certainty, and that plus federal subsidies --- Trinidadian production would be included as part of "energy independence" --- might have led to substantially more downstream investment. Emphasis on "might."

[Michael]

Ha. I wondered if somebody would kibbitz on my word choice -- if it doesn't produce something, it ain't productive. Any engineer or farmer will tell you that, so as a Hoosier I'm bound to see it properly. And don't go saying that they produce something insubstantial like capital fluidity or stability, either. My main point was more about the attitudes towards education anyway, even if I did get sidetracked.

For the longest time, I laughed that everybody here was a doctor, and the ones that weren't, were lawyers. But then I started to realize that the real money people are the bankers. There are a lot of them, too. It just seems to me that bankers don't go in for a lot of social or technical change in a society, and PR shows that.

Anyway, good point on the stability question, but if you had profitable industry (as PR doesn't much, really) then wouldn't you equally be losing money to Washington in taxes? Given the overall poverty of the Caribbean, that might not be much of a question, because you'd still be getting a bunch back in the welfare components you mention -- it's definitely a major boost to Puerto Rico, but for T&T with an actual industry in question, the overall balance might not be such a groovy thing. I don't know nearly enough about the situation to have an opinion there, just thinking out loud.

Definitely a thought-provoking notion, though. Rife with counterfactual goodness.

[Noel Maurer]

Hmmm. I doubt you're being serious in your first paragraph, but here goes.

Bankers and lawyers produce a real, honest-to-goodness service. When you need that service, you'd be screwed if it weren't available for purchase. In order for that service to be available for purchase, it needs to be ... ah ... produced.

That's it, end of story, but I'm pretty sure you're being deliberately silly ... right?

The part about whether bankers are a font for change or not, well, that's a different issue. I'd just suggest that generalization is bad --- in some times and places, bankers and other financiers are small-c conservative, in others they're quite small-r radical. It all depends.

Finally, the tax question. I think I may revise the post, because I forgot to mention something so basic that I stupidly assumed assumed everyone knew it: unincorporated territories of the United States are exempt from almost all federal taxation. Payroll taxes and other taxes held to fall on individuals are a general exception, but that's it.

Customs and federal excise taxes collected in the territories are remitted back to their treasuries, meaning that a Commonwealth of Trinidad and Tobago would probably not pay any federal taxes on its oil and gas production.

American companies operating in a hypothetical Trinidadian associated free state would in theory have to pay taxes on their profits earned on the island ... unless they managed to wrangle a special tax exemption. Companies investing in Puerto Rico did, in fact, enjoy such an exemption until very recently. I suspect that Trinidad would have been able to get the same treatment, although I also suspect that Congress would have clawed any Trinidadian exemptions on oil and gas extraction (as opposed to refining, liquifying, or other processing) back during the oil crises of the 1970s.

[Noel Maurer]

I just got around to reading what Doug posted on SHWI.

One fellow made a good point: an American Trinidad /would/ make an excellent drug-transshipment point, since Piarco International Airport would now be only one customs-free flight from the mainland.

That fact would have probably led to an earlier crime increase.

Whether that might have provided fellows like Frank Lucas an opportunity to create longer-lasting crime organizations is left as an exercise for Carlos.

Another fellow - Doug, in fact - pointed out that returning veterans also might have had a significant impact on the island. I don't know. Lots of African-Americans served in Trinidad between 1940 and 1962. I doubt that many of them would have chose to stay, and I doubt that Trinidadian draftees would have made much of a systematic impact on the island's culture or politics. But I have no /reason/ for those doubts.

Thoughts?

[Alex]

Recruits into the British Army and especially the RAF made a huge difference to all the West Indian and African colonies in the postwar era, so I'd assume the same effect would hold for the US forces. A lot of them either agitated for independence or else re-emigrated to the UK.

Although. The Trinidadian and Jamaican RAF guys and the 81st (WI) Infantry Division veterans served in a racially integrated system.

The US recruits would have been veterans of a segregated army; would they have been more or less radical?

[Noel Maurer]

Good question. I doubt that service would have translated into a powerful independence movement. By analogy, it didn't in Puerto Rico. That's not to say that ex-soldiers didn't become independentistas, just that it didn't lead to a broad-based independence movement.

More theoretically, radicalization in the U.S. context could be easily co-opted by the broader civil rights movement. There wasn't an equivalent in the U.K., I don't think.

Finally, much of the motive for Caribbean independence came from the U.K. itself. The fundamental reasons islands in other countries became independent was that the metropoles offered integration and complete uncaveated citizenship as an option (even in the Kingdom of the Netherlands), something Britain made clear was never on the table.

[Noel Maurer]

Alex: there's three other things worth noting, I think. The first is that the British military practiced de facto segregation (extravagantly so in WW1, less so in WW2) so I'm not sure that the reaction to the U.S. military would be worse.

Second, most Trinidadians would serve in WW2 via their local National Guard units, along the lines of the other insular territories. They'd be insulated from overall segregation.

Finally, one of the big issues in the British Caribbean was that the U.K. didn't treat colonial veterans equally --- the first left-wing party in Trinidad was called the British Empire Workers and Citizens Home Rule Party --- with independence sentiment growing as it became clear that the British government was unwilling to treat the islands on the same basis as the U.K. itself.

Of course, you asked about radicalization, not independence --- and there, I think you're right. But it slices oddly: in Puerto Rico, for example, the Socialists were also the strongest proponents of statehood.

[chuckles]

Very interesting piece.
The statistics about the forced repatriation of US criminals is very telling.

However, from my knowledge, I think you downplay the cocaine trade somewhat.
With a brother-in-law in the Coast Guard and a father-in-law a former police officer, I've heard plenty of direct evidence that cocaine smuggling is a huge problem.
T&T has strong transport links to Europe and Britain, in particular. The latter, to it's shame has the highest usage of cocaine in the EU.
Furthermore, with Jamaica a near warzone and Mexico heading that way, because of the trade, new outlets are needed. T&T also has strong tranpsort links to Miami.

Of course, the two things may not be unconnected. There is, it's sad to say, a wealth of knowledge about drug dealing in the American criminal world. Surely some of that knowledge, not to mention contacts, will have come with those repatriated.

The knock-on effect is manifold. Those, smaller time local dealers make plenty of money, for sure. The men who run the trade to and from T&T are, inevitably, enormously wealthy.
Yet, as I'm sure you know, it distorts the whole economy. Public servants are poorly paid. The temptation for a policeman to turn their eye or, worse, become actively involved is huge, considering the money involved.
Politicians and bureaucrats can be bought.
The influx of money into areas which were, previously, universally poor distorts the micro economies. This sudden, corrupt wealth encourages others to make their money by nefarious means. Hence the kidnaps, car-jackings and general lawlessness.
There is dirty money everywhere and numerous citizens have been compromised.
A wonderful island has been brutalised, not for the first time.

[Noel Maurer]

It took me a long time to respond, so I hope Chuckles is still out there!

Short version: good point. I think you're correct. What with no customs checks for flights off the island, Trinidad would be an amazing point-of-entry for drugs into the United States. The result would be an increase in violence, albeit for different reasons than in our world.

A wonderful island brutalized, indeed.

[J.H.]

Why wouldn't there be customs checks?

In the United States you have six separate customs territories (I think we can thank the incorporation doctrine for this) consisting of:

1. The United States Customs Territory (or more officially the Customs Territory of the United States) which includes ONLY the 50 states, D.C. and Puerto Rico - http://www.tampaftz.com/what-is-an-ftz/key-terminology.aspx , http://www.gpo.gov/fdsys/pkg/CFR-2008-title19-vol1/xml/CFR-2008-title19-vol1-sec101-1.xml , https://www.census.gov/prod/1/ftd/ft895-95/ft895-96.pdf

2. American Samoa

3. Guam

4. Northern Marianas (which like Puerto Rico styles itself as a Commonwealth)

5. US Virgin Islands

6. US Minor Outlying Islands

There is no reason to think that Trinidad and Tobago as a US territory would not similarly be a separate customs territory like the US Virgin Islands are (especially as the islands would have been acquired after the Virgin Islands and I believe after Puerto Rico had been brought into customs unification with the USA already) and thus there would be customs checks when arriving in Miami from Piarco...

[Noel Maurer]

It's possible, but I'd be surprised. On the Trinidadian side, you'd certainly have Eric Williams pushing to get into the customs zone -- historically, when territories pushed for it, they got it. (The USVI wanted to keep a free port status; that wouldn't be as valuable to the Commonwealth of Trinidad and Tobago.) On the American side you'd have pressures to bring Trinidad in, since oil and gas rich Trinidad would be an important market for American goods and the island would be an important base for U.S. investment.

So while it's certainly possible, it's not how I'd bet. But Doug Muir would know more.