When 'Butch' Stewart rallied Jamaicans to declare war on devaluation

When 'Butch' Stewart rallied Jamaicans to declare war on devaluation

BY DESMOND ALLEN Executive editor - special assignment allend@jamaicaobserver.com

Monday, September 15, 2014

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THE 1990s will be remembered for several major events that would change the Jamaica we knew and set the country on a radically new path.

In 1993, P J Patterson won his first general election to secure his own mandate as prime minister and led his People's National Party (PNP) thereafter to an unprecedented three consecutive terms after taking the reins from Michael Manley, then going on to become the longest serving prime minister of Jamaica.

In the mid-1990s, the meltdown of the financial sector put the economy in a tailspin and saw the rise of Finsac, the controversial Financial Sector Adjustment Company and the economic slaughter of many indigenous businessmen by punishing interest rates.

In 1998, the Reggae Boyz, led by Rene Simoes and Captain Horace Burrell, took Jamaica to the finals of the Soccer World Cup in France for the first and only time, arriving there as the smallest country among 32 to qualify and leaving there ahead of even the powerful United States.

But prior to those life-changing events for a nation, Jamaica witnessed an event of sheer glory that unleashed a patriotic fervour matched only by the qualification for the World Cup.

The Save-the-dollar campaign, better known as the 'Butch' Stewart Initiative (BSI) after its author, Gordon 'Butch' Stewart is 22 years this year, but remains as memorable as the day in April 1992 when the hotel mogul decided he could not sit by any longer and watch the Jamaican people being crushed under the weight of the wildly devaluing dollar.

Stewart devised a very complex marketing plan in which he was banking on the patriotism of Jamaicans, and based on his belief that whenever "push came to shove, Jamaicans can be relied on to put their shoulders to the wheel and rally to the cry of their country". It was a masterful plan that had Patterson himself and even the austere International Monetary Fund (IMF) cheering as it galvanised Jamaican society in a never-before-seen attack on devaluation.

"As I recall it, the Jamaican currency had spiralled out of control, dropping from J$16 to US$1 to almost J$31 to US$1 almost overnight," Stewart said when invited to reflect on the event.

"The price of everything was literally doubling. The pain and hardship on the people were immense. As a person who grew up in the St Ann countryside, I could identify with that pain. I was moved to come up with a very complex marketing plan that would get to the soul of every patriotic Jamaican at every level of the community -- from the man in the street to the big businessman; the media and all the national institutions," Stewart recounted.

"We called a press conference in Montego Bay to announce the plan. As the element of surprise was imperative, no part of the strategy was discussed with even one single other person. I announced that each week Sandals would inject US$1 million into the foreign exchange market at a rate of J$25 to US$1. The dollar was at the time trading at J$31 to US$1. The plan had two effects:

"The confidentiality hit like a bolt of lightning and it had tremendous credibility at the very outset. We felt the Titanic began to move and as the currency revalued, we dropped our rate to J$24.50 to US$1 and kept pulling it down to $24 and so on. Before long the media joined in, led by Dr Leahcim Semaj who became a really good friend of mine. He used his talk show The Night Doctor to rally ordinary Jamaicans from all walks of life to take their US currency from under the mattress and sell it to the banks.

The speculators who were benefitting from the drop in the value of the currency were forced to start dumping their dollars into the system as the revaluation solidified. When Rex James of NCB stepped into the campaign it also lent a lot of credibility to the initiative as it sent a major signal to the business community which wasted no time in getting on board. The landslide of goodwill pushed even the sceptics to become a part of the effort.

"It was the most incredible landslide of support. We had said at the start that we would lodge US$1 million a week but as the effort grew we lodged considerably more. The campaign had a serious effect on the weighted average at the Bank of Jamaica and consequently influenced the revaluation of the dollar. It was a wave that could not be stopped. The revaluation brought back some stability to the economy and an ease in the price spiral. Every imaginable product had a fall in price and it was gratifying to see that.

"Later it became a very delicate situation as to when to stop the revaluation, because had it gone further, it could have led to severe dislocation for the average cost of inventory goods in the warehouses, dislocation for businesses and could have devastated the country on a whole.

"But it had held for a long time. However, after the 1993 elections and a change of finance ministers, it seemed that a lot of money was printed and the dollar resumed its downhill drop. It is worth noting that the revaluation was by no means a fluke. The time was crucial. The whole exercise cost us US$25 million (and not US$17 million as reported by the Jamaica Observer on Friday, September 12). That investment up till today I regard as the best I had ever made, as I was paying back the people and the land that I loved so much.

"It is hard to imagine when you look back 22 years ago at the unbelievable outpouring of goodwill that the initiative generated. Investors got courageous and were brimming with confidence. The feel-good factor was experienced across the length and breadth of the society. We felt as though we had won a great battle. Even the PNP took advantage of the goodwill and romped home to another term in office," said Stewart.

Jamaicans will long remember the 'Butch' Stewart Initiative. Never before has one individual contributed so much in solid cash to the well-being of an entire nation.

Tomorrow: What the politicians said about the Butch Stewart Initiative


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