The friendly society

 Governor Carter refused to limit emigration because the remittances sent back to Barbados from the Panama workers had markedly improved the economy, especially for poorer tenant farmers.  In a country that had recently been on the brink of collapse, he was not going to tinker with that.

 
The direct impact of the remittances was not that large.  In 1906, when Carter declared their importance, they came to 73¢ (U.S.) per inhabitant per year; call it three days wages.  That is not nothing, but it is also not an economic revolution.  Over time remittances grew, peaking at $2.39 per person in 1913 — a bit more than a week’s labor for a male worker at 1910 wage rates.  Not nothing, but not the millenium, either.

But the indirect impact was huge.  First, it bolstered the growth of smallholders.  In 1897, an estimated 8,500 small proprietors held a bit less than 10,000 acres.  By 1912, 13,152 smallholders owned plots.   Assuming that the average size of holding remained constant, this represented an increase in smallholder ownership of 5500 acres, or over 22 square kilometers, five percent of the land area of Barbados.  By 1929, the number of smallholding households had further increased to 17,731.  Land ownership on the island remained astoundingly concentrated, but the percentage of Barbadians who owned property rose from 18% in 1897 to 40% by 1929.* 

Second, it supercharged the Barbadian banking system.  Barbadians opened 16,094 new accounts in government savings banks between 1906 and 1913, and deposits increased 88%.  In 1920, deposits per person surpassed $11.  That was a level of financial penetration about half of contemporary Spain and two-thirds of Italy; very high for a country as poor as Barbados.  It prefigured the island’s emergence as a regional banking center a half-century later. 

Third, it prompted the emergence of a Barbadian social insurance state.  The “friendly society” served as a form of insurance pool.  For a weekly fee of 10 to 12 pence, the societies provided their members with sickness insurance, unemployment insurance, death benefits, free scholarships to household members, and an annual “bonus.”  In 1901, there were 101 societies; between 1907 and 1910 a further 110 were founded, peaking at 260 in 1920.  Their membership grew from 13,933 in 1904 to 46,207 in 1920.  The 1921 census found that 156,312 people lived in households belonging to a friendly society.  That was 94 percent of the population.  Alongside the friendlies were the “landships,” which provided similar services along with ceremonial drills and uniforms modeled on the Royal Navy. Infant mortality continued to lag the rest of the Caribbean until the 1950s, but the societies aided a huge increase in literacy, to 93 percent by 1946. 

In short, remittances financed the creation of a smallholding class, a relatively large banking system, a social insurance scheme, and a big increase in educational attainment.  Eventually the government took over the latter two functions, but in a context of fairly high expectations.

Now, none of this is proof that remittances revolutionized Barbados. There are two counterhypotheses.  The first is straight out of Acemoglu, Johnson, and Robinson:  there were a lot of British settlers on the island, and so they had a vested interest in insuring that the British institutions that maintained law and order would survive and function.  So they did, and it was that underlying level of law what gave Barbados its later advantages.  (Some have argued that it helped that Barbados was small, flat, and overpopulated.)  The second is that the country beaches are really really nice, providing a great source of foreign exchange that is less volatile than other commodities and less likely to run out. 

But still. Add the above to the more direct effects of the remittances, and there seems to be a strong case that the Panama Canal was responsible for making Barbados into the very nice place that it is today.

Thoughts?

* Assuming four people per household and a constant household size.

Comments

[Jussi Jalonen]

In case you're wondering at the sudden outbreak of blue-crosses (and that one Estonian tricolor) on your map once again, I decided to link to your posts on Barbados. Actually, I wrote a short abridgment of your posts in Finnish to the Agricola-forum, the Finnish history network at the University of Turku. As you can see, I gave you proper references.

Speaking of the effects that emigration from Panama had on Barbados, there's something of a Finnish parallel. The example that comes to mind is the province of Ostrobothnia, where the emigration to the United States and Canada played a significant role in the transformation of the region. Emeritus professor Heikki Ylikangas - who used to be a ground-breaking and brilliant scholar before his recent descent to the Abyss - made a very convincing case arguing that the large-scale emigration of surplus population from Ostrobothnia to the Americas allowed the region to unload the social problem which, in Southern Finland, contributed to the outbreak of the Civil War in 1918. In part, this would also explain why Ostrobothnia became the main stronghold of the White forces right from the beginning; all the potential Reds had left to America already before the war.

(For those who don't know, emigration was far more widespread in Ostrobothnia than elsewhere in Finland. In this respect, the region was very exceptional.)

Of course, in Barbados, the impact of the emigration on the society was probably not quite similar, but still, it seems that the unloading of the excess population to Panama also played a role in defusing a socially problematic situation.

Cheers,

J. J.

[Noel Maurer]

Hi, Jussi,

The reference thing was an in-joke with Doug, but I very much appreciate it nonetheless.

I think you're right about the political effect of emigration on Barbados. I think I'll post something on the 1937 riots, once I'm done grading papers.

It's strange. This is the first time in my academic career where I've had a group of student papers that are (a) uniformly good; and (b) full of information that I did not know. It makes reading them much more fun, but it also makes grading them much more miserable. At another place, I could just give out uniform high grades, but HBS requires a forced curve.

It is a good problem to have.

[Noel Maurer]

Say, Jussi, I'm curious ... do you have a translation of your last two paragraphs?

[Jussi Jalonen]

It's nothing important, just wrapping up the historical info, and also opening the door for a general discussion of the likely parallels in the history of Finland.

Here's a rough translation:

"Having gained affluence and self-confidence within the new social order, the local Afro-Caribbean working class organized itself into trade unions during the following decade [the 1930s] and began a campaign for its political rights. A new political organization, Barbados Progressive League, the predecessor of the Barbados Labour Party, was formed. As a result of intensive campaign, the property restrictions on the franchise were removed by 1950, and the crown colony adopted a universal suffrage. The island nation was well-prepared for its independence in 1966.

Barbados, which managed to avoid catastrophe partly because of the Panama Canal project, and gained lasting benefits in the process, is an interesting example of the unique synergy of colonialism, where the actions of one colonial power could occasionally produce positive social and economic results also to the colonies of another power. This example may very well have parallels also in the history of Finland, from the era when our homeland was also a part of a multi-national empire."

In the following messages, the discussion moves to the effects of emigration on the Finnish society. Aside the Ostrobothnian example that I've already mentioned here, there's also speculation whether the mass emigration of Finnish workers to Sweden in the post-war era may have released this country from a potentially volatile social element. For example, there's a suggestion that without the Swedish outlet, rural populism and left-wing radicalism might have featured more visibly in the Finnish society during the '70s.

(Of course, I also had to include a link to a music video by Rihanna.)

But, I didn't mean to divert the attention to eastern Fennoscandia. Let's return to Barbados.

Cheers,

J. J.

[Noel Maurer]

Sir, if you want to put up some guest posts here about eastern Fennoscandia, I think that our readership (all four of them!) would appreciate it.

Back to grading now.

[Randy McDonald]

Jussi: The geographical origins of Finnish emigrants and the comments to your history crosspost being what they are, is there any speculation about why Swedish-speakers were so overrepresented in the Finnish emigration?

(Also, am I correct in thinking that Google Translate is starting to provide pretty fluent translations from the Finnish?)

Noel: Could Barbados' highly successful experience with mass emigration be relevant elsewhere in the world now? Your posts make it look like Barbados' the paradigm for a third-world polity that escaped immiseration thanks to open immigration policies.

[Jussi Jalonen]

Coastal Ostrobothnia had (still has) several Swedish-speaking majority parishes as well as completely Swedish-speaking parishes. Since Ostrobothnia was already overrepresented in the Finnish emigration, for reasons specific to that province, it also went without saying that Swedish-speaking Ostrobothnians would also be somewhat overrepresented in the overall emigration.

Åland islands also had an exceptionally high ratio of out-migration. I'd think that this was a normal phenomenon everywhere in Europe, coastal regions and islands were usually directly plugged to the the global economy and were consequently the first ones to provide emigrants to the Americas.

Of course there were other directions for those who lived inland. While the Ostrobothnians heard the call of the West, the people in Eastern Finland were sometimes drawn to the bright lights of St. Petersburg.

Cheers,

J. J.

[Doug M.]

There are African equivalents to the Friendly Societies, most notably the _tontines_ of Francophone West and Central Africa. Tontines seem to be more purely financial, though. And given that African culture transplanted to Barbados,had to first survive 150 years of fairly brutal plantation slavery, I'm inclined to suspect it's an independent development.

Doug M.

[Alex]

In the UK, the friendly society is a classical northern working-class institution, like the Miners' Welfare, the rugby league club, the constituency Labour party, and the union branch. In fact, they were very often integrated with the union - unions or even big regional or craft union branches would have their own society.

Societies still exist in the UK both as mutually-owned insurers (my parents had and may still have savings in more than one) and as part of trade unions. I would guess that the idea was imported from the UK, and further that they may have been a surrogate for trade unions if and when they weren't permitted by the colonial government.

[Noel Maurer]

Hi, Alex:

You're right! It turns out be very easy to verify that the idea was imported from Britain. (The West Indian sources say Scotland, but that might be folk wisdom.) They weren't significant until the influx of Panama money, but the institution existed.

That bears on Randy's question. There was an embryonic institution on the island that could be expanded to receive remittances and channel them in ways that proved socially and politically productive. A similar tidal wave of remittances, arriving in a place with no (or different) collective tradition, might have very different results.

In addition, we shouldn't underestimate the impact of the fact that Barbadians trusted both the private and government-owned banks. Or that there already was a proficient (if very small) banking system in place. The same wave of remittances, but with a corrupt and inefficent banking system, also might have produced a rather different result.

So here's a hypothesis about Barbadian history. (It's a restatement Acemoglu-Johnson-Robinson, but in a less extreme manner, I suppose.) The English* in Barbados were greedy bastards with little concern for local welfare, and thus their state came near collapse around 1900. But they also lived in Barbados, and thus brought with them institutions that the mere fact of British rule would not have delivered; among them, the friendly society and the government savings bank.

We can then add in a third benefit: imperial rule. As long as the white minority rule Barbados, the Empire placed limits as to how much they could oppress or tyrannize the local population, simply because the governor would step in. (This happened, for example, when they tried to limit emigration.) Similarly, British courts protected the banking system from arbitrary interference by the government.

In other words, Barbados may have had a lot of necessary-but-not-sufficient institutions in place, needing the influx of Panama money as a catalyst. Other countries in similar situations may simply depopulate, not develop.

The flip side of the hypothesis, of course, is that there may be countries out there that would have developed, but that never received the positive economic shock that they needed.

Any possible examples of the latter?

* They called themselves English. In addition, my wife traces her last name directly to a pair of Scottish brothers who came to Barbados after Emancipation to build rum barrels; I am therefore enjoined to make the distinction where it applies.

[Irene Thompson]

I had always figured the main reason behind the success of Barbados had been their importing fairly large numbers of Irish and African slaves during the 1600s. Henry Cromwell sent about 80000 Irish slaves, and I've seen reports that there were also 80000 African slaves, making 160000 slaves in all. This was very interesting, as it paints a clearer picture of how the wealth of a nation changes rather quickly.

[Michael Bradshaw]

I am interested in finding out about friendly society roles in other Caribbean locations. In Bermuda, far to the north, these bodies found a number of roles. Bermuda had a large White population rather than the swamping numbers of Blacks elsewhere in the Caribbean. Here friendly societies offered an alternative world experience to that presented by the racist and complete control of the White oligarchy