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| Sunday, 25 January 2004 |
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Sri Lanka's economy before independence by Aryadasa Ratnasinghe Sri Lanka's economy prior to Independence (1948), was mainly affected by the great trade depression, as a result of World War II, which broke out in 1939, between the United Nations, headed by Great Britain, the US., the USSR, France and China on the one side, and the Axis Powers of Nazi Germany, Fascist Italy and Japan with their satellites on the other side. Sri Lanka, being largely dependent on the three primary agricultural products (viz: tea, rubber and coconut), the country's economy became particularly vulnerable to inflation due to uneconomic and unfavourable conditions, but there was a great demand for rubber in the manufacturing industry to make tyres and tubes for vehicles used in warfare. Consequently, Sri Lanka became the chief exporter of rubber to the Allies, with the fall of Malaya to the Japanese forces in 1942. The prices of both tea and coconut products fluctuated less violently, but moved in sympathy, owing to reduced spending, specially in the European countries, torn by the War. The fall in prices of estate products was so unsatisfactory, that marginal estates and smallholdings were compelled to go out of production. Some were closed down an unprofitable undertakings. Nevertheless, some estates continued production by retrenching excess labour, causing unemployment as the greatest social threat. Coconut oil mills were also shut down due to shortage of copra for the industry. The quick response or the immediate result of the economic depression, was under-employment rather an unemployment, because much of the Indian labourers, working on tea and rubber plantations, returned to India. The local labourers either returned to their villages or stayed in estates doing limited work, or took to manual labour independently on casual basis. The government revenue suffered a severe setback and the result was the heavy curtailment of public expenditure (chiefly on public works) and the increase in taxation eventually added to reduce the economic stability. From 1926 to 1932, the value of rubber exported fell from Rs. 170 million to Rs. 13 million. From 1925 to 1933, the value of coconut products fell from Rs. 81 million to Rs. 29 million. From 1927 to 1932, the value of tea fell from Rs. 294 million to Rs. 108 million. Tea always had a ready market in most European countries (as 'green gold'), and specially the high-grown teas growing above 4,000 ft. in altitude. The rubber boom soon vanished after the War in 1945. There was extreme poverty in the country, and only a very few of the elite class lived in the lap of luxury. In rural areas, most people suffered from poverty and destitution and disease. The child mortality rose high, and pregnancy resulted in the death of many mothers during or after childbirth, and in most cases the midwives were quacks, but possessed of experience. Home delivery was common, and hospitalisation was a rarity, due to lack of proper transport and the means to get to a hospital. The malaria epidemic took its worst turn in 1935, when 5,454,781 patients were treated in dispensaries, which diminished the economic life of the country. (Sessional Paper VII of 1947). In addition, dysentery, enteric, diarrhoea, cholera, dengue, filariasis, ankylostomiasis, ascariasis etc. sapped the vitality of the living, reducing the productivity of the island. In 1938, there were only 145 hospitals including 21 rural hospitals, 250 central dispensaries and 188 branch dispensaries plus 427 visiting stations and 722 estate dispensaries. All these contributed to the poor economy of the country. When Japan entered the World War II in 1941, the imperial forces poured into the island, and created a great demand, not only for agricultural products, but also for manual labour which was scarce and expensive. The fall of Myanmar to the Japanese forces, deprived the island of its staple food, and there was some difficulty until the national palate was adapted to the Australian wheat, which was made available on ration. To overcome the food shortage situation without rice, paddy production was geared up under the Grow More Food Campaign organised by the government. Many forlorn paddy fields were soon brought under cultivation and 'chena' (dry land) cultivation was also developed extensively to face the food crisis. On the other hand, Sri Lanka enjoyed an unprecedented prosperity built mainly on Imperial expenditure. The living index was brought to a low level and the domestic expenditure was within reach of every householder. Paddy was sold at six rupees a bushel (i.e., 37 cents a measure) or 18 cts. a measure of rice. Before the War, a measure of super-grade 'mutusamba' was sold for 12 cts., and 'milchard', the lowest quality of rice for 8 cts. a measure. Most of the imported rice came from Myanmar, Thailand, Indonesia, China, which were mainly paddy growing countries. In Sri Lanka, the markets were flooded with imported rice, and being sold so cheap, farmers did not bother to cultivate their fields, wasting time and energy. In those days there were no agro-chemicals as we have today to bumper their harvests by protecting from pests and insects. On the housewives list, a pound of quality tea was 50 cts., a bottle of coconut oil was 15 cents, a coconut was 3 cents, a cake of bathing soap was 10 cents and washing soap was 8 cents, a gallon of petrol was Rs. 1.30, and a bottle of kerosene oil was 10 cents, a cup of tea with fresh cows-milk was 5 cents, a pound of butter was Rs. 1.20, the cheapest cigarette (the elephant brand) was 1 cent, a pound of beef, without bones, was 40 cents, and with bones 35 cents, a pound of quality fish was 60 cents, a tin of baby milk (Lactogen) was Rs. 1.75, and Cow & Gate was Rs. 1.50, a bottle of Horlicks was 2.00 rupees and malted milk was Rs. 2.25. A hair cut was 10 cents and with shave was 15 cents, a quality pair of men's footwear was Rs. 25, and the lowest house rent, with all facilities, was Rs. 25 per month. The bus fare from Colombo to Kandy was Rs. 2.50 per passenger. There were no luxury household items, as we find today, the only exception being radio sets with valves. The average clerical wage was Rs. 50, for a principal of a school it was Rs. 80. The daily wage for a mason was Rs. 2.50. Liquor did not move as what we observer today. A bottle of 'double distilled couldron-mixed arrack' was sold in taverns for Rs. 2.50 a bottle. 'Kasippu' was never heard of then and only elderly men were addicted to liquor. During the War, when metal minting was not done, paper notes were in circulation from 5 cents upwards, with restrictions in regard to the limit of legal tender. Today's currency notes have no restrictions in circulation. The most important feature in currency during the War was the inflation, ruthlessly inflated in order to finance allied war expenditure. What really happened was that Britain gave sterling to the Reserve Bank of India and got rupees created in India. Later some of the rupees were given to Sri Lanka Currency Board and got rupees created in Sri Lanka. This process went on at a growing tempo from 1942 onwards. The War created a vacuum for food and the Colonial government took steps to ration food items to avoid a possible famine. At one stage, the whole economy of the island was bristling with controls to prevent the blackmarket making hay while the sun shines. Weekly rations were issued under four categories. Infants were issued with half a measure of rice and half pound of flour. Accordingly, children were issued, ordinary adult 1 and working adult 1 1/4 measures of rice with other food items. Other items rationed were dhal, flour, sugar, chillies, dry-fish and such other essential items. Money market was tight and majority of the island's population were poor to make a substantial living. |
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