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After the death of Kowsilia, the situation worsened in all the sugar estates with those on strike even shooting at strike breakers. As violence and terror continued, the new Governor, Sir Richard Luyt, declared a state of emergency on 23 May and British troops were brought in to assist in security. By this time, the Government had continuously expressed its concerns to the Governor that the Police Force and the Volunteer Force were acting in a partisan way and were showing open loyalty to the political opposition and doing very little to protect Indians from being attacked. The Government also accused the opposition PNC of supporting the violence through a central organisation which conducted operations though central planning and execution with military precision.

Critics of the PPP Government saw the strike as being used by the PPP to protest the imposition of proportional representation as the new electoral system for Guyana. They felt that the leadership and members of GAWU were essentially PPP members and supporters, and by prolonging the strike, the PPP, through the union, was flexing its muscles against the British Government. However, this argument could not be sustained, for it was obvious that the PPP could not gain political benefit from any violence in the country since such violence was destabilising the Government itself.

The Minister of Home Affairs, Janet Jagan, openly accused the police of not taking action to prevent the racial attacks, and even the Commissioner of Police, Peter Owen, failed to keep the Minister informed. This was clearly shown when the Commissioner refused to take the advice of the Minister in requesting the early assistance of British troops and police reinforcement on 24 May to prevent the attacks on Indians at Mackenzie and Wismar. Beatings, rapes, looting and arson were being committed in broad daylight and it was not until late in the afternoon that the Commissioner agreed to ask for a contingent of British troops to go to the area. In the aftermath of the attacks on Indians there, five persons were killed, hundreds were injured, many females were raped and brutalised, and over 200 houses and business places owned by Indians were burnt to the ground. The British troops from the following day assisted with the evacuation to Georgetown of Indians in the area. In all, 744 families comprising 3,399 persons (1,249 adults and 2,150 children) were evacuated.

In protest against the partiality displayed by the Police and the Volunteer Force, Janet Jagan resigned as Minister of Home Affairs on 1 June 1964.

On 6 July, a passenger launch, the "Sun Chapman", was blown up in an explosion on the Demerara River not far from the Wismar-Mackenzie area. The launch was returning from Georgetown and at least 38 persons, all African residents of the Wismar-Mackenzie area, died in the mishap. When the news of the explosion reached the community, Indians who had returned to work at Mackenzie were brutally attacked with the result that five of them died.

There were counter accusations as to what caused the explosion. PNC supporters claimed that a bomb was placed by PPP agents on the launch when it was in Georgetown; while PPP supporters claimed that the launch was transporting explosives to make bombs to attack Indians and their property. A subsequent police investigation could not determine what device caused the explosion and who was to blame.

From early in 1964, the British Government began a process to reduce the powers of the Guyana Government. In the first instance, on 26 February, by a special order signed by the Queen, a military force styled the Special Service Unit, under direct control of the Governor, was established. Then on 26 March, an Order in Council signed by the Queen gave the Governor full powers to make regulations for registration of voters for the elections under proportional representation. The Government was relieved of any authority on this matter. Then on 29 May, the British Government vastly extended the emergency powers of the Governor. The constitution was also amended by the British Government to prevent the Council of Ministers to have any control over the Governor's new powers. The constitution was further amended by the British Government on 23 June to allow for the new electoral system of proportional representation and for the election of a unicameral House of Assembly comprising of 53 members.

In effect, these acts reduced the constitutional authority of the Guyana Government since they removed the powers held by the Ministers and placed them in the hands of the Governor, who by mid-1964 had become a virtual dictator.

Armed with these dictatorial powers, Luyt on 13 June ordered the detention of 32 members of the PPP, including some legislators and Deputy Premier Brindley Benn, after accusing them of instigating the racial disturbances. Only two PNC members were put into detention, even though there was clear evidence of PNC involvement in the reign of terror, as was clearly indicated in the secret police report on the PNC Terrorist Organisation which Luyt had in his possession.

The detention of the PPP legislators caused the PPP to become a "minority" in the legislature. According to Dr. Jagan, this "amounted to a suspension of the constitution".

The Governor also ordered the seizure of all shotguns and rifles, but not automatic pistols and revolvers. This was evidently aimed at disarming PPP supporters (mainly rural dwellers) and while allowing dangerous weapons to be retained by the PNC and UF supporters who lived mainly in the urban areas.

The British troops were also involved in acts of repression against the PPP supporters in rural communities. The soldiers uprooted the red "jhandi" flags planted in the yards of homes owned by Hindus who displayed these flags as part of a religious rite. The soldiers, being ignorant of the Hindu culture, believed these were "communist" flags, and they proceeded to ransack the homes in the search for guns, and the occupants were assaulted and arrested. The Governor, no doubt aware of this situation, issued a special order granting legal immunity to the British troops, and this immediately drew a strong protest from the Premier, Dr. Jagan.

The GAWU finally called off the strike on 25 July without the recognition issue being resolved. Nevertheless, the terror and violence continued. In Georgetown, a senior civil servant, Arthur Abraham, and his seven children were killed when their home was set on fire. A cinema in the city was bombed and persons killed. Earlier in the month, the Guiana Import-Export Ltd. (GIMPEX) building on Regent Street and Freedom House, the PPP headquarters, on Robb Street were simultaneously bombed on 17 July. In the Freedom House bombing, aimed at assassinating the Party leadership, Michael Forde, an employee of the PPP bookshop on the ground floor, was killed.

The terror and violence in most of the affected areas came to a sudden end when the police in Georgetown on 9 August 1964 accidentally raided the hotel room of Emmanuel Fairbain, a PNC activist, and discovered a large collection of arms, ammunition and explosives. Fairbain was charged for being in possession of illegal weapons and explosives and was detained in prison where he died shortly after under mysterious circumstances.

According to the police records, the disturbances resulted in 176 persons killed and more than 900 persons seriously injured. More than 1,425 buildings were destroyed by arson, and about 15,000 persons (from 2,600 families) were displaced and they subsequently re-settled in areas where their race group was in the majority. The long-term result of these disturbances was that they increased racial polarisation in the country.

Ever since the violence, killings and terror escalated, the Commissioner of Police announced that investigations were going on to find those responsible for these deeds. Finally on 17 August 1964, he stated that the police were in the process of conducting enquiries into more than 100 murders including 22 in Georgetown. He declared: "Enquiries so far have revealed that there exists an organised thuggery which is centrally directed. A great effort is being made to bring those responsible for the deaths to justice but it is in the public interest that law abiding citizens should know now what they and the police are faced with in this country today."

On the same day, the Commissioner also swore to an affidavit in which he mentioned "the subversive and criminal activities of a criminal gang attached to a political party known as the People's National Congress."

After this revelation, more violence broke out during late August in the Mahaicony area where a number of Indian homes were attacked by gunmen and more than 13 persons, including children, shot dead. Eye witnesses named the killers, who included a policeman, but no charges were brought against them.