The Chardón Plan

Digitalization and edition by Luis A. García Nevares, Ph. D.

Report of the Puerto Rico Policy Commission

I. Introduction

The economic problem of Puerto Rico, in so far as the bulk of its people is concerned, may be reduced to the simple terms of progressive landlessness, chronic unemployment and implacable growth of the population.[1] A policy of fundamental reconstruction should, therefore, contemplate the definite reduction of unemployment to a point, at least, where it may be adequately dealt with by normal relief agencies; the achievement of this, largely by restoration of the land to the people that cultivate it, and by the fullest development of the industrial possibilities of the Island. These achievements will be unavailing, however, if population growth cannot be checked, or at least reduced. This last factor is of very great importance because, even if a parity between population and employment—as to farming or to industrial jobs—can be approximately achieved, it cannot be maintained unless the rate of population growth can be kept within the scope of further economic development. It therefore seems to be highly desirable, probably imperative, that a land restoration and industrial development program, combined with a policy of emigration to suitable environments, be fully worked out as soon as possible. The carrying out of these programs should then progress as rapidly as the means at hand and the nature of the specific problems presented may determine.

For purposes of illustration, we may take the unemployment figure arrived at by the local offices of the Federal Emergency Relief Administration. It is estimated by that office that there are in Puerto Rico not less than 150,000 heads of families permanently unemployed. This covers roughly about half the population. A study of the possibilities should determine what proportion of these may absorbed over a period of years by the maximum industrial development as determined by present knowledge and conditions. The unemployment remaining beyond such possibilities of industrialization must obviously be taken care of by the return of the land in small farms to agricultural workers and by emigration that will provide employment in other regions. Although a scientific scheme of birth control should be part of any far‑sighted policy for Puerto Rico, it cannot be hoped that it will be socially effective until the standard of living, and therefore the sense of responsibility of the mass of the population, has been substantially improved. It will probably be effective in keeping the rate of growth down in the future, after the improvement brought about by economic reconstruction has begun to be felt by the population as a whole.

A. Industrialization

We are not in a position to make very specific recommendations as to development of new industries, as this is a subject that has not been surveyed in Puerto Rico as adequately as it should have been. We have, of course, plenty of labor, and such small industries as have managed to be founded and to survive to date seem to demonstrate that the Puerto Rican worker is easy to train in new trades and vocations. We have already developed about 100,000,000 kilowatt hours of electric power, and the potentialities are probably double that figure. We have local cheap raw materials such as final molasses for rum manufacture and possibly for the manufacture of motor fuel; bagasse for rayon and building materials; limestone and clay for cement manufacture; sea island cotton for the manufacture of certain textiles, etc. Within economic distance of Puerto Rico raw materials are found, such as wood in Santo Domingo, hides in Venezuela and Texas, etc., which may be processed into finished products by Puerto Rican industry; and, of course, we have agricultural products, both animal and vegetable, to be processed and preserved. It may be feasible to develop other industries which, like the art linens, hand embroideries and garment industries, require from Puerto Rico only the contribution of its labor, skill, and management.

In determining upon an industrialization policy for Puerto Rico, perhaps the local market should be considered as the first goal in many cases, though facilities should be provided for the development of industrial exports. Many of the goods now imported into Puerto Rico can and should be produced on the Island.

With these general purposes in view, so far as industrialization is concerned, we believe that the following steps would be necessary[2]:

1. Cheapening industrial credits by extension of all possible facilities now within the scope of the Reconstruction Finance Corporation.
2. The assessment of a high income tax, to be abated if invested in new industries, determined by the Government under conditions laid down by the Government—and this should include employment conditions—so as to throw a substantial part of local capital available into channels of planned development. Industries should be selected on two main principles: availability of markets and preponderance of payroll in operating costs.
3. The protection of the local market, by a local tariff. In order to avoid the possibility that such a tariff will develop into an instrument of exploitation, it could be set up on the condition that the industries protected would be regarded as public utilities in so far as the limitation of profits is concerned, perhaps allowing them the choice between no protection and no limitation on the one hand, and protection and limitation on the other. A local tariff would also serve as a lever for opening up external markets both to the products of Puerto Rican industry and Puerto Rican agriculture.

B. Land

The policy of crop reduction brought about by the Sugar Act will probably prove beneficial to Puerto Rico, independently of the current need for stabilization of the American sugar market; and it will probably, also, prove a valuable contribution to a more rational Caribbean economic policy in its relations to United States. It must be borne in mind, however, that a program of reconstruction for the Island begins with the handicap of a sudden reduction of 150,000 tons of sugar with a value of about $9,000,000, which will increase the number of unemployed by approximately 15,000 workers. It seems very desirable, therefore, that compensation for these immediate losses be made in the form of permanent reconstruction and not merely as transitory benefit payments. The plan submitted herewith proposes to invest the money available for compensation in the purchase of cane lands and sugar mills, the land so acquired to be given in exchange for marginal cane lands, and from the farms now occupying such lands cane would be retired, and subsistence homesteads would be set up in them. The farmers in the marginal cane lands would thus be compensated by receiving good cane lands in exchange, in equitable proportion, and the workers left without employment by cane retirement would receive the homesteads. These subsistence homesteads should be large enough to provide for a small cash crop, as the workers acquiring them would not have opportunity to earn wages in industry under immediate conditions. This accomplishes the maximum purposes of compensation for sugar reduction. But it simultaneously accomplishes much more. In the first place, compensation in land is socially sounder than compensation in cash, which may be misspent possibly making the recipients again dependent upon the community. In the second place, the cane reduction would be permanent instead of transitory. In the third place, the sugar mills acquired in the public interest would function as processing and marketing centers and possibly serve as a competitive yardstick to establish more equitable return to cane growers and cane workers throughout the industry. This redistribution of income, from the industrial to the agricultural factor in sugar production, would not only encompass long‑delayed economic justice to farmers and workers, but it would also actually retain in the Island a large proportion of the millions that now flow out each year in the form of excess absentee profits[3]. Estimating the amount thus retained on the Island at the conservative figure of $6,000,000 a year, this sum alone would cover the payroll of not less than 15,000 workers at substantially higher wages than those now obtaining. This is, again, a conservative estimate. To this should be added the economic activities stimulated by the circulating velocity of the worker’s dollar. The balance sheet of the policy suggested would be, in tentative figures, as follows:

Reduction in employment caused by reduction in sugar	15,000
Workers that would derive their livelihood out of subsistence farms set up in formerly marginal cane lands	about 17,000
Workers employed through the retention in the Island of $6,000,000 of absentee profits	15,000
Net reduction in unemployment:	17,000

It is estimated in our Sugar Plan that this result can be brought about by an expenditure of an amount approximately equal to the Puerto Rican processing tax over the three‑year period specified by the Jones‑Costigan Act.

Even after this substantial achievement, the bulk of the Puerto Rican problem would remain before us. Probably not more than 50,000 workers could be absorbed by the most complete industrialization that can now be envisaged. Adding this highly speculative figure to the somewhat tentative total figure of 17,000 already set down as the number of laborers possibly employed by the operation of the sugar policy, we have a total of 67,000 to be subtracted from the total figure of the unemployed, and that not immediately but over a period of time. As the Emergency Relief Administration’s estimate of our unemployment, counting heads of families alone, is given as 150,000, we would still have before us the task of taking care of 83,000 workers. This must be accomplished, to a great extent, through coffee, fruit, and tobacco rehabilitation, but mainly through emigration and through further homesteading. The adoption of an intensive system of coffee cultivation, as proposed elsewhere in this report, will give employment to 10,000 additional workers. The proportion to be taken care of by emigration on the one hand and by the land policy on the other would have to be determined after specific knowledge of emigration possibilities to suitable regions had been acquired.

In connection with the sugar policy here suggested, and with the general land policy, it would seem necessary to enact promptly adequate legislation prohibiting corporations, partnerships, and individuals from purchasing or otherwise securing ownership of any land, the acquisition of which would push their holdings beyond the limitation of 500 acres. This restriction has existed in the Organic Act of Puerto Rico since 1900 as regards corporations. Having had no teeth or any attorneys‑general interested in enforcing it, this provision of the Jones Act has been either cunningly evaded or entirely disregarded. There would probably be grave danger to the economic stability of the Island in an attempt to enforce this land ownership limitation suddenly and universally; but a future restrictive policy extensive to partnerships and individuals, as well as to corporations, is absolutely necessary in connection with the suggested policy of establishing public Centrals, which may eventually be used as a yardstick to assure a fair deal to the “colonos” and workers of the Island. The reason is this:

Centrals today own on an average 60% of the cane they grind, 40% being produced by farmers. By the operation of the yardstick principle, it is intended that the farmers obtain full equitable return for the cane they supply to the mill. The mill, however, would continue to derive the full return from their own administration cane. There would be considerably more profit for the mills in their owning the land than in their buying the cane from the farmers. Therefore, the danger would be present of the mills tempting the farmers with large offers to sell their land to them, and thus the effect of the public Centrals acting as yardsticks to compel the retention on the Island of wealth produced on the Island would be invalidated.

C. Coffee

Coffee is, from the point of view of social welfare, a very desirable crop for Puerto Rico. It is now in ruins due to hurricanes, low prices, and lack of credit facilities. Its production in the past has often reached half a million quintals. It is now 90,000 quintals. Every effort should be made to rehabilitate this industry.

In stating that coffee is a very desirable crop for Puerto Rico, we are considering the following factors:

It is the only agricultural product of the Island which can be classed as unsurpassed in quality, being considered as a luxury product in European markets; it is not dependent upon the tariff policies of the United States; land is more evenly distributed in coffee than in any other crop; fruit and food crops can be grown simultaneously with coffee; growing under shade, its land coverage has an important effect on water run‑off and, consequently, on forestation and on hydroelectric power; it does not compete with any product of the United States.

From a social and technical point of view, coffee rehabilitation requires: Cheap hurricane insurance; cheap production credits; cheap fertilizers; reforestation, development of seedbeds, to make the present recovery and future recoveries from hurricanes as rapid as possible; and some provision whereby coffee laborers will receive the use or the title to homes and to small acreages in exchange for labor paid for from reconstruction funds. The coffee growers are now in such distressed financial condition that they can hardly cover payrolls; coffee laborers, landless, jobless, are subject to charity relief.

Coffee needs, also, an effective educational campaign which would bring about the adoption of an intensive system of cultivation and fertilization, resulting in increasing the crop output, reducing its cost, and giving more employment.

From the commercial viewpoint, every effort should be made to regain the markets temporarily lost through shortage of production. Trade agreements in favor of Puerto Rican coffee, negotiated by the State Department, with Italy, Spain, France, Germany, etc., would probably assure the recovery of the markets that Puerto Rican coffee has lost. While endeavoring to increase production to its former level, provision must be made for marketing.

D. Citrus Fruits

A very prosperous citrus fruit industry was developed in Puerto Rico in recent years, chiefly by continental Americans. This group, which has made a substantial contribution to the Puerto Rican economy, and to our farming and cooperative methods, should receive all possible aid in a reconstruction program. Their chief needs at present are similar to those of the coffee growers. Excessive shipping costs, however, probably affect the fruit growers more disastrously than any other agricultural group.

E. Tobacco

Tobacco is another Puerto Rican crop that has always enjoyed a certain quality reputation. This reputation has been considerably impaired of late through a number of factors involving the technique of manufacture and marketing. The present acreage‑reduction program seems to be working well. Besides the common needs of all Puerto Rican agriculture, already mentioned in regard to other crops, perhaps the most important steps that can be taken in favor of tobacco would be the strengthening of cooperative facilities and the establishment of a central selling agency. Research work for the improvement of varieties and cultural procedures is also greatly needed.

The increase in employment arising from the rehabilitation of coffee, tobacco and citrus fruits would be, of course, deducted from the number of the unemployed that cannot be dealt with in any way save emigration.

F. Emigration

There are many Puerto Ricans successfully earning their living in the continental United States, in Santo Domingo and in the Virgin Islands. Organized emigrations, however, have in the past proved generally unsuccessful. This may, perhaps, be attributed to the fact that similar environments and suitable conditions have not been sought in the past for organized emigrations. Contingents of Puerto Ricans have been taken as workers to Georgia, Arizona, and Hawaii. Of these emigrations only the one to Hawaii has proved partially successful, and that perhaps may be attributed to certain similarities in working conditions and environment.

Emigration, however, may eventually become imperative in any well‑coordinated policy to improve economic conditions in Puerto Rico. Possibilities should be explored as to mass colonization projects in underpopulated regions of tropical countries similar to Puerto Rico, not only in climate but also in language, religion, racial stock, traditions, and culture.

These emigrants should go to settle farmlands, not to be exploited as wage laborers. It would probably be very helpful if part of their home organization and environment could be carried with them—priests, ministers, schoolteachers, social workers who would be known to them, and, perhaps, general supervisors, natives of Puerto Rico, who might be vested for a time with the rank of U. S, consular officials. Santo Domingo, Cuba, and Costa Rica are suggested as the neighboring countries which have underpopulated regions and which afford conditions more closely approximate to those obtaining in Puerto Rico. Venezuela and Brazil may be tried also. We understand that outside labor will be needed in the construction of the Pan American Railway through Central America, and that laborers will be given an opportunity to settle land along the line. Puerto Rican laborers could well be employed and subsequently settled in connection with this project.

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The suggestions and recommendations contained in this report are predicated upon our conviction that the United States, under the present administration, will at all times place the welfare of the Puerto Rican people above the interests of particular groups and that the only interest that must be recognized as deserving special preference in the premises is the prestige of the American nation as a whole in connection with the development of a rational and equitable economic policy in the Caribbean. As a result of the plans suggested, it is probable that the United States would temporarily lose perhaps as much as 15% of its trade with Puerto Rico. This would mean, by present figures, a loss of perhaps $10,000,000 a year to American exporters[4]. An increase in employment and prosperity in Puerto Rico would be likely to more than cover this temporary loss in a number of years, through an increase in our purchasing power which will immediately result in increased trade with the mainland. But even assuming that it would not be covered, it must be borne in mind that Puerto Rico is headed toward a major social catastrophe, which can hardly be postponed for more than twenty years unless something fundamental is accomplished. The issue, therefore, is as between the possible loss of several millions to American exporters and the practical certainty of social chaos in Puerto Rico. Quite independent of the fact that such chaos would entail a much greater economic loss to the United States, but purely as a problem in responsibility and humanity, there can be little doubt as to how the American people would wish such an issue to be decided, or as to how a high order of American statesmanship, once convinced of its reality, will decide it.

II. Disposal of the Sugar Surplus

The most urgent problem which has to be satisfactorily solved for the Island is the disposal or financing of the sugar surplus of our present crop.

The following is our estimate of the surplus:

Estimated crop			1,050,000 t
	Sugar quota (Sugar Act)	803,000 t
	Home consumption	57,000 t
	Probable carryover in fields	20,000 t
			-880,000 t
Surplus			170,000 t
Estimated value @ $50 per ton – $8,500,000

The disposal of this surplus, through direct purchase for relief or through adequate Federal financing, or through both, has to be urgently solved, since this “frozen” sugar is severely affecting general credit in the Island and has greatly demoralized business transactions as evidenced by the following radiogram:

For General Blanton Winship, Governor of Puerto Rico, care Bureau of Insular Affairs, War Department, Washington, D. C. Supplementing our conversation reference the sugar situation in relation to the program of this office, I should like to report the following. All district associations for production loans to Colonos have been perfected and three of them have forwarded documents to establish discount relationship with Federal Intermediate Credit Bank of Baltimore for approval. Others will be forwarded for approval as rapidly as their incorporation is approved by Baltimore and Washington. In the meanwhile, Colonos who have been cultivating their coming crop from their liquidations now find themselves handicapped as several centrals have notified Colonos that there will be no further liquidation on sugar in excess of their individual proportion of the quota. In view of the fact that the new crop of cane ratoons must be immediately cultivated Colonos are looking to us for production loans which, of course, we cannot make until we have completed the relationships between the local associations and the Federal Intermediate Credit Bank which we are rushing at this end with all possible speed. Another problem is that many centrals are endeavoring to establish their own budgets with the Commercial Banks, and they are anxious to know if we would be making production loans by June 15, as they must complete their financial arrangements by that time, and they have notified their Colonos that no refaction contracts can be signed after June 15. This places upon us the responsibility of giving both the Colonos and the centrals some assurance as to just when we can begin making production loans. Still another problem will confront us as soon as we are ready to make loans in that a satisfactory grinding contract must of necessity be a requisite of our security and there is much uncertainty among Colonos as to the type of grinding contracts that would be offered. All of these point to the absolute necessity of the sugar question and the establishment of definite authority in the administering of the sugar industry so that we may work rapidly with proper assurance just as soon as the documents for our local credit associations are approved. I shall appreciate your making these points clear to my superiors in Baltimore and Washington, –Production Credit Corporation of Baltimore, Miles H. Fairbank, Puerto Rican Representative.

Another radiogram has been received from the business representatives of the Island which pictures a still more difficult situation, to quote as follows:

“Governor Blanton Winship, Bureau of Insular Affairs, War Department, Washington, D. C. – Representatives all interests assembled this afternoon to consider extremely grave situation created by uncertainty regarding future agricultural operations unanimously voted to call your attention to difficult dangerous position general business conditions in Island today, due to practical stoppage of activities owing to continued uncertainty as to disposition 1934 sugar crop surplus. Day by day situation grows more serious. General business industry agricultural unable continue operation due inability make intelligent plans and secure necessary financing until definite announcement made regarding surplus and final plans for distribution quota. Even local Federal financing agencies refuse consider any requests for loans until above matters definitely decided. We consider it essential in order to maintain social structure and avoid imminent danger chaos you should not leave Washington until action taken to provide means to continue local activities uninterruptedly. Unemployment increasing at alarming rate thousands of laborers laid off because employers unable to retain them are parading throughout Island demanding work in place of charity. – Filipo L. de Hostos, President of the Assembly and Puerto Rico Chamber of Commerce; Ramón Aboy Benítez, President Puerto Rico Sugar Producers Association; Rafael Carrión, Puerto Rico Barkers Association.”

In order to put an immediate check to the possibility of a business collapse in the Island, preference, by all means, should be given to this matter, which is very urgent and pressing at this moment.

Our Committee, therefore, proposes the purchase of one hundred thousand tons surplus sugar for relief in mainland.

Governor W. I. Myers of the Farm Credit Administration has suggested the following solution for disposing of the additional surplus sugar: That the local banks finance the surplus sugar at a price reasonably lower than its world market price and that the extra credit risk necessary to increase the credit up to a price reasonably lower than the mainland market be assumed by the Commodity Credit Corporation; another alternative would be for the local banks to finance the sugar up to reasonable limit lower than mainland price and that the extra risk be guaranteed by Commodity Credit Corporation. This, however, needs special action of the President, and it is urgently recommended that this matter be brought to his consideration.

III. Plan for Sugar Readjustment and Partial Economic Reconstruction of Puerto Rico

A. Introductory Remarks

In the formulation of plans for applying the Jones‑Costigan Act to Puerto Rico, our Committee believes that the general economic conditions of the Island must be taken into consideration. The bare objective of sugar reduction of the Act would be served as it is done in the mainland by compensating farmers and workers for losses in their crops and for unemployment due to sugar reduction during the three years in which the Act will be in effect. It has appeared to us, however, that a plan could be devised by which long‑standing economic ills of the Island may be permanently, though partially, alleviated by assigning the proceeds of the processing tax for the benefit of general agriculture. A plan providing for permanent improvement can be devised for practically the same amount of expenditure as a plan which would afford only temporary benefits. It is with this broader social object in view that we have prepared the attached plan.

Among the most serious problems of Puerto Rico are the following:

1. Inadequate returns to farmers and workers from the operation of the sugar industry.
2. The outflow of several million dollars annually as a result of large absentee holdings.
3. The rapid disappearance of the small farmer group which is being absorbed by the large corporations.
4. Insufficient production of foodstuffs.

Our purpose has been to attack these problems in connection with the sugar reduction policy of the Administration and aim at their partial solution in correlation with that policy. The opportunity is unique in our history.

Compensation in the way of benefit payments and payroll coverage could undoubtedly do adequate justice to the specific growers and laborers concerned during the three years of the law’s operation. Compensation in the form of a far‑reaching economic policy as here proposed would do equal justice to the same groups, and, in addition, compensate the Puerto Rican community as a whole for its sugar loss and besides, improve the economic conditions for the mass of the people.

Our plan proposes: (1) to acquire a certain acreage of good cane lands; (2) to acquire and operate the Centrals that go with it; (3) to exchange the good land so acquired for marginal cane lands; (4) to retire cane growing from these marginal lands; (5) to dispose of this marginal land in small subsistence farms, to the workers left without employment by cane retirement, for food production purposes; (6) to manage the publicly‑owned Centrals on the basis of a full return in sugar to the farmers for their cane, on condition that their increased income shall be shared with the workers in equitable proportion; (7) the establishment, through the experience in the operation of the public Centrals, of a yardstick which will eventually compel similar treatment to farmers and workers throughout the sugar industry; (8) to use the profits of the public Centrals—which should not exceed what is usually allowed public service corporations—for further rehabilitation work; (9) the construction of adequate housing accommodations for the new farmers and, as far as possible, for the workers in the public Centrals; (10) to provide for adequate agricultural education for 16,000 workers who will settle on the subsistence farms.

In this manner, the farmers on the marginal cane lands would be compensated by receiving good cane lands in exchange, and the workers by receiving subsistence farms for the production of their own food and of small cash crops. Sugar reduction as contemplated by the Jones‑Costigan Act would thus be accomplished not for three years, but permanently, and the farmers and workers concerned would be adequately compensated not for three years but permanently. The sugar reduction Purposes of the Act would thus be carried out. Over and above that, several important advantages must be enumerated: (1) farmers formerly operating on marginal lands would thereafter operate on good cane lands; (2) men hired for an average of 150 days a year at a wage of 60¢ to 80¢ a day would thenceforward be independent farmers on their own lands, working the full year; (3) food production would increase, making the Island more self‑sustaining; (4) land monopoly would be broken up over a large area, helping to balance the social structure of the Island; (5) by compelling full returns to farmers and workers throughout the industry, several million dollars that now flow out of Puerto Rico in the form of absentees’ profits would remain in the Island, affecting the standard of living and the possibilities of economic development of the whole community; and (6) the profits of the public Centrals would be a permanent source of funds for social improvement.

Thus, several of the major problems of Puerto Rico would be partially solved over and beyond mere compensation for sugar reduction.

The estimated cost of this policy would not be considerably above the proceeds of the processing tax returnable to Puerto Rico for three years. The tax will amount to over twenty‑four million dollars. The cost of the policy described above and proposed in detail in the attached plan would be only about thirty‑three million dollars.

The advantages of this plan over and above the bare benefit payments are so obvious that its adoption, it seems to us, depends only upon the factor of its feasibility. We have gone very carefully into the problems of sugar estate management, controlled cooperative organizations of farmers, direct production credits and food‑producing capacity of the soils where marginal cane is now grown. With the essential condition that the plan be kept free from the intervention of petty politics, we are convinced that it can be successfully worked out. Sugar technology has made great progress in the Island, in the hands of native citizens, and our technical experts should be given a chance now, under our plan, to serve the social interests of Puerto Rico, rather than the interests of a small group.

B. The Plan

1. Purpose

To aid in a general program for stabilizing the price of sugar and maintaining it on a profitable level through proper adjustment of supply and demand. To divide more equitably the profits of the industry among mill owners, colonos, and laborers. To permanently divert the marginal cane lands from cane growing into diversified agriculture, especially the production of food crops.

2. Immediate Objective

To reduce the sugar crop of Puerto Rico for 1935 to 865,000 tons. This contemplates a reduction of 150,000 tons.

3. Method

We propose the purchase of several cane mills and their lands with a total production capacity of over 250,000 tons, using the proceeds of the processing tax levied on sugar consumed on the mainland. The mills are to be leased to a semi‑public corporation which will operate them as processors of sugar cane; the lands to be exchanged for marginal cane land owned by colonos in all parts of the Island.

a. Temporary Organization for the Purchase of Mills

To carry out the purchase of these mills and dispose of their lands as later on described, a temporary organization known as the Board of Appraisals shall be set up. This Board shall consist of two sections:

1. Factory and Equipment Division—whose personnel should be a chemical engineer, a mechanical engineer, and a civil engineer, all with sugar manufacturing experience.
2. Agricultural Division—whose personnel should consist of not less than three agronomists, one soil technologist, and one civil engineer, all experienced in sugar cane culture. An experienced accountant shall be a member of both of these divisions.

The estimates and recommendations of this Board shall be submitted for appropriate action to the General Board or officials in charge of the whole economic program for the rehabilitation of Puerto Rico. The men selected for the Board of Appraisals may be either government officials or persons employed temporarily for this service. The factory division of the appraisal board may cease immediately after the purchase of the mills, but the agricultural section will continue the work of appraising the farms of those colonos desiring to exchange their lands for the cane land of the mills purchased, as later explained.

4. Procedure

a. Semi‑Public Corporation

In the success of this plan, it is vital that it be operated under a system which will guarantee a stable, efficient businesslike organization. It has to be kept absolutely free from political influence. With the experienced technical personnel which we have in the Island, there is no question as to the feasibility of the plan.

This could safely be accomplished by the creation of a semi‑public corporation similar to Dr. Taussig’s plan for the Virgin Islands. Appendix G is the charter of the “Virgin Islands Company” which has control of the sugar industry of Saint Croix.

The Secretary of Agriculture will organize the “United Puerto Rico Company” with a capital stock of $30 in three shares of $10 each; one will go to the Secretary of Agriculture, another to the Secretary of the Interior, and a third to the Governor of Puerto Rico, as representative of the President of the United States. These stockholders will select a board of directors of seven members, who will select the executive officer or manager. The “United Puerto Rico Company” will purchase and operate the properties, including mills, lands, equipment, subsistence farms, etc., and hold them in trust for the People of Puerto Rico.

Further legal details as the proposed semi‑public corporation are to be worked out by the legal advisors of the Department of Agriculture in consultation with attorneys from Puerto Rico, who know the technicalities of our corporation law.

b. Mills and their Operations

The mills purchased are to be operated by the semi‑public corporation as processors only. The mills will charge the sugar cane growers for the cost of manufacture, including depreciation and upkeep, and will set aside for emergencies, new construction, and/or further rehabilitation program, a sum not to exceed 10% of the assessed valuation of the mills, including equipment. All the benefits of the industry except as above specified will go to the growers (colons).

The mills will operate all heavy agricultural equipment, establish seed and experimental fields, manage the Colonia Centers further on described, and perform for the growers all other services requested by the growers, charging for all services at cost on a pro‑rata basis. The salaries of the employees and workers of the mills will be determined by the price of sugar, so that they will share in the profits of the industry.

c. Lands and Colons

The good cane lands obtained by purchase are to be divided up into small holdings of varying area (forty to one hundred acres—an average of about fifty acres) and offered in exchange to the colonos of the Island cultivating marginal cane lands, at a rate depending on the conditions and fertility of the individual holdings. This rate is estimated to be an average of two marginal to one good cane land acre. In carrying out the exchange of lands it should be the general policy not to allow corporations to take advantage of this plan, nor to allow any one person or partnership to obtain more than one hundred and fifty acres.

It should be possible for a person with a knowledge and practice of agriculture to buy up to one hundred acres of good cane land under a long‑term payment plan. This is to allow the present majordomos and agricultural workers of the Centrals purchased to become colonos or cane growers, since they are among the most proficient cane producers.

Mortgages, or debts guaranteed by marginal cane land may be transferred to the new good cane land holdings or arrangements made with the Federal Farm Credit agencies to take them over.

The small sugar cane growers (colonos) thus established, together with the present colonos of the Centrals, are to be the sugar cane growers of the mills. They will be grouped into production credit and marketing cooperatives to obtain credit from the Farm Credit agencies already operating in the Island. Advances should be made to colonos to build their homes in Colonia Centers at a low rate of interest, payment to be made in a period of five to ten years.

It is estimated that with the advantage of financing their crop with low interest money, cooperative buying of fertilizers and materials, large scale implement cultivation, adequate technical guidance and grinding cane at cost, the colonos will receive at least from twenty to thirty percent more gross income from their crop than what they are now getting. The colonos that are transferred from marginal to good cane land will increase their net income to a considerable degree, depending on individual circumstances.

It is estimated that the distribution of land acquired with the mills will be as follows:

Good cane land		38,000 acres
	Marginal cane land	12,600 acres
	Pastureland	15,000 acres

Six thousand acres of good cane land should be reserved for experimental purposes, seed selection beds, and for direct selling to majordomos and experienced cane agriculturists.

By exchanging at a ratio of two to one the rest of the good cane lands, plus the 12,600 marginal acres acquired in the properties, we would have a total of about 76,600 marginal cane land acres to divide into small subsistence farms, as further on provided for.

d. Laborers

Under this plan there will be two kinds of treatment for the laborers:

i. Wage earners

One group will continue as wage earners. The wages of these laborers will be determined by the price of sugar and a cost of production survey to be carried out under the direction of the General Board. They will also have improved living conditions as follows:

(1) Colonia Centers

In each colonia or cultivation district into which the lands of the colonos will be grouped, there is to be selected a tract of land of varying area in which the Colonia Center will be located. In these tracts of land, the mills will erect warehouses for fertilizers and agricultural implements, machine shops for repairs of trucks, tractors, and other equipment, first aid rooms, community houses, schoolhouses, etc. The tracts of land will be subdivided into a few one‑acre plots and more numerous one‑fourth‑acre plots; the acre plots to be sold to colonos who might desire to take advantage of the facilities of the Colonia Centers and build their homes there. The one‑fourth‑acre plots are to be used as building lots for small concrete houses to be constructed by the mills and leased to wage earners at a nominal rent.

The Colonia Centers will be supplied with water systems, telephone connections with the mill, and rural road connections with the main Carretera system of the Island. Modern dairies will be established in each one to supply milk at cost to colonos and laborers, and a social worker will be in charge of its community house and first aid room.

The management and upkeep of the Colonia Centers will be under the control of the mills which will charge the colonos for services rendered to them.

It is estimated that to remodel the existing facilities for Colonia Centers and to build the extra buildings and structures needed to carry out this phase of the plan, it will be necessary to build about 6,000 additional small houses in about forty colonia centers. It will also be necessary to spend about $20,000 per center on water systems, community houses, first aid rooms, and dairy barns. The total cost of these improvements will amount to $2,600,000.

ii. Settlers for the Small Farms

The other group of wage earners will be selected as settlers for the small farms to be created on the marginal cane lands retired from cane cultivation. The procedure will be as follows:

(1) Subsistence Farms

The marginal cane land obtained by exchange, plus twenty thousand acres purchased from big landowners (at $50 per acre), will be divided into small farms of about ten acres average area. These farms will be provided with small, four‑room, reinforced concrete houses and sheds for farm animals. They will be stocked with at least a cow, two sows, rabbits, and poultry. These small farms will be sold under a long‑term payment plan to selected wage earners.

Reinforced concrete is the only durable building material under our conditions. Flying termites, hurricanes, earthquakes, and weather conditions make all other possible building materials inadequate.

The farms will be divided into groups of about two hundred fifty, according to zones or regions, and each group will be served by a Central Service Farm under the direction of a technical agriculturist who will advise the small farm owners in modern methods of crop production and animal industry. At each Central Service Farm there will be provided warehouse and packing house facilities, special agricultural implements to be leased to farmers at a nominal cost, as well as purebred stud animals to improve the animal stock of the region. Educational facilities will also be provided through an adequate system which will provide practical instruction in farming.

There is a substantial proportion of marginal lands in the hands of small colonos of one to twenty acres in area. To these colonos will be offered the opportunity of changing their status to subsistence farm owners, giving them the proper assistance under this plan.

All other farmers may avail themselves of the facilities of the Central Service Farm, provided the subsistence farm owners are first taken care of.

Value and Terms of Payment of Subsistence Farms

Ten acres @ $50 an acre		$500
Farmer’s House		300
Animal Sheds		50
Animals:
	1 cow	75
	2 sows	25
	Rabbits and poultry	10
Equipment and work oxen for every three farms
	1 small plow 1 harrow 1 pair of work oxen	Total value – $120	$40
Total Value of Farm		$1,000

Payments: Twenty‑three years installment plan. No capital payment first three years. No property tax first five years. Two percent interest payment from first year on.

Cost of the Central Service Farms

Average area 50 acres [5]

Buildings:
Agriculturist house	$1,500
Community house and First Aid Room	1,500
Barns	1,500
Warehouses & Packing Sheds	1,500
Slaughterhouse	500
Total Buildings		$6,500
Animals:
2 Purebred bulls @ $250 (Guernseys or Ayrshires)	$500
10 Boars @ $20 (Duroc Jersey, Poland China, Hampshire)	200
4 Work Oxen	200
Total Animals		900
Equipment		600
Total		$8,000

Annual Expenses of Central Service Farms

Agriculturist in charge	$1,200
Social Worker	900
Labor	1,000
Upkeep and Feed	600
Total	$3,700

The two percent interest charge of the value of the small farms should be used to cover the running expenses of the Central Service Farms and the Subsistence Farm Board. The money left after covering these expenses should go into the Subsistence Farms Trust Fund. When the farmers have paid part of the capital and the interest charges would not cover the running expenses of the organization of service farms, part of the taxes paid by the small farmers should be used to cover the deficit.

(2) Qualifications of Settlers

Wage earners selected for subsistence farms should be native born Puerto Ricans and/or American citizens with not less than three years’ residence in Puerto Rico. They should be between 21 and 45 years of age with at least three years’ experience in agriculture, should be of good moral conduct, never having been convicted of felony in the courts of Puerto Rico or United States.

The laborers selected should preferably know how to read and write Spanish or English, and those selected who do not know how to read and write Spanish or English should sign an agreement by which they will oblige themselves to comply with such requirement in the first three years of their occupancy of the land.

No person may own or receive benefits from more than one subsistence farm.

(3) Subdivision and Transference of Holdings

The ownership of the holding is not complete until full payment has been made and is therefore subject to the rules and regulations enacted by the Subsistence Farms Board.

Subdivision of the holdings should not be allowed except in very special circumstances in which the productivity of the land or location of the holding may make such a procedure advisable. Such subdivision of holdings can only be carried out by expressed permission of the Subsistence Farm Board.

The inheritance of subsistence farms should be regulated by the proper authority having in view the principle that holdings should not be subdivided and that the occupant shall at all times be a capable agriculturist.

Sale of holdings cannot be carried out except by permission of the Subsistence Farm Board and after the Board’s approval of the buying party.

If a settler acquires land which has not been under the control of the Subsistence Farm Board, such land will not be subject to the rules and regulations of the Board.

The land or buildings of the subsistence farms cannot be mortgaged nor obtained in judicial sale for the payment of any kind of debt of the owner.

(4) Settlement and Selection of Settlers

As the marginal cane lands are being acquired by exchange, a general survey should be made of each farm, and the lands grouped into regional zones of two to three thousand acres in area. Division of the land into plots of ten acres in average areas should be carried out by a civil engineer with the advice of an experienced agriculturist.

FALTA LA PÁGINA 26 EN EL PDF

Laborers not selected will receive an additional compensation of 250 per working day. The general cost of the selection of settlers, which will also cover at least 50% of the labor cost of houses, is estimated as follows:

12,000 applicants at 50¢ per day for 75 working days	$450,000
Compensation to workers not selected @ 25¢ per day, 75 working days, 2,000 laborers	37,500
Organization, Supervision, Instruction, Social Work	50,000
Total	$537,500

(5) Agriculture in the Subsistence Farms

The ten‑acre plots of the subsistence farms maybe divided as follows: Four acres for permanent pasture and production of foodstuffs for the animals; two acres for the production of foodstuffs for the settler’s family; and the remaining four acres for the cultivation of cash crops.

The wage earners of Puerto Rico consume very little milk and meat products. It has been estimated that meat consumption in Puerto Rico is under ten pounds per person per year. The rearing of rabbits is, in our opinion, one of the most feasible ways of supplying meat to our rural population, and that explains why they have been included in the animals to be supplied to the subsistence farms. In connection with this problem also, a small, sanitary slaughterhouse has been included in the Central Service Farms to be administered under special rules and regulations of the Insular Health Department in order to facilitate the distribution of cheap meat to the community.

The following are the cash crops that may be raised under the present restrictive economic conditions:

1. Irish potatoes – of which Puerto Rico, in 1933, imported 46,891,146 pounds, valued at $414,565.
2. Beans, dried – imports in 1933, 38,557,896 pounds, valued at $1,175,774.
3. Vegetables and truck‑crops for the local and/or the New York winter market; peppers, tomatoes, onions, etc.
4. Animal products, especially pork products, of which Puerto Rico imported $3,723,484.
5. Local food crops and vegetables.

It will be necessary to group the subsistence farms into production and marketing cooperatives to be able to handle these products properly and profitably. The agriculturist in charge of the Central Service Farm will act as regional manager of each group of farms and the warehousing and packing facilities of the farm used for these cooperatives.

(6) Compensation Payments to Cane Growers

The officials in charge of carrying into effect the provisions of this plan should aim to finish the exchange of good land for marginal land not later than December 1, 1934, so that the average age of the cane growing in the marginal lands shall be as low as possible. Since most of the cane growing in these marginal lands will be ratoons, and estimating them at an average of six months, an average compensation of $30 per acre is recommended.

The total cost of compensation payments for the growers of 64,000 acres marginal cane land will be $1,920,000.

5. Results

a. Sugar Reduction

Out of 50,600 acres of cane land obtained by purchase of the mills, 38,000 acres are good cane land and 12,600 acres are marginal cane land. Six thousand acres of good cane land are reserved for experimental purposes, seedbeds, and for direct selling. By exchange of the 32,000 acres good cane left, there are obtained 64,000 acres of marginal cane land. These 64,000 acres of marginal cane land, together with the 12,600 acres of marginal cane land obtained by purchase of the mills, or a total of 76,600 acres, are retired from cane cultivation and divided up into 7,500 subsistence farms. At an average production of two tons of sugar per acre of marginal cane land, sugar production is reduced permanently by approximately 152,200 tons.

b. Colons

About six hundred and forty or more sugar cane growers will be transferred from lands barely supplying their needs to lands and conditions where their income will be substantially increased. The income of the present colonos of the sugar mills purchased will be increased from 20% to 30%. By direct and indirect competition, the public centrals will tend to bring about a more equitable distribution of income among the mill owners, colonos and laborers in the mills privately owned.

c. Laborers

The laborers that will continue as wage earners cultivating the sugar cane lands will be paid higher wages and will be supplied with better living quarters and a better social environment.

The Puerto Rico Sugar Producers Association reports that at its peak the sugar industry of the Island was using 123,000 laborers in the production and harvesting of the 1934 crop on 266,546 acres of land. According to the Association, 113,161 laborers were being used in the fields and 10,485 in the factories.

We are withdrawing from cane production 76,600 acres of land, or 28.73% of the acreage now under cultivation. Estimating that, on the average, an acre of marginal cane land gives employment to two‑thirds of the labor an acre of good cane utilizes and estimating an average labor load for the sugar industry as a whole of about 85,000 laborers, the withdrawal of this marginal cane will permanently suppress work for about 16,260 laborers.

From the 1930 census figures, it is calculated that there are 1.7 persons, ten years of age and over, per family gainfully occupied. In establishing, therefore, 10,000 families on the subsistence farms[6], we are placing over 17,000 laborers on these lands. Under tropical conditions we estimate the subsistence farms we are establishing will require seasonal extra help, providing work for far more laborers than those estimated.

The average wage income of the Puerto Rican cane laborer is about $150 per year, or $255 per family (1.7 wage earners)[7]. Not less than 80% of this income is used for food. The subsistence farms will supply the laborer’s family with more and better‑balanced food, besides providing a net income of not less than $200 per year in cash crops and animal products.

In the organization and construction of the Subsistence Farms, Central Service Farms, and Colonia Centers, there will be paid the following amounts in wages:

	Man‑Days		Amount Wages
Subsistence Farms Selection of settlers and construction of houses and buildings of service farms.
12,000 laborers @ 500 per day for 75 days	900,000		$450,000
2,000 laborers, not selected, @ 25¢ per day extra for 75 days	–		37,500
2,000 skilled Workers for construction of houses and buildings @ $2.50 per day	150,000		375,000
Colonia Centers Construction of 6,000 small homes and community houses, dairy barns, water systems, etc., for 40 Colonia Centers[8]
1,300 skilled construction workers $2.50	97,500		243,750
3,250 unskilled laborers @ 90¢	243,750		219,375
Total	1,391,250		$1,325,625

This will be an additional labor income of not less than $1,325,625 to be used and distributed in the marginal cane lands to relieve labor conditions during the period of readjustment.

We have not estimated the man‑days nor wages tote paid for crushed stone and sand, nor the transportation of cement and lumber, all of which will greatly increase these figures.

The man‑days lost for not cultivating the 76,600 acres of marginal cane land during the time the plan is being carried into effect will be well under 500,000 man‑days and wages less than $500,000.

d. Benefits for the Island as a Whole

A great area of the Island now held by large absentee landowners is divided up into small holdings and sold to resident farmers. Part of the Outflow of the income of the Island, now going to a relative few absentee owners in the form of dividends and interest on capital, will be retained in the Island and distributed among a great number of farmers and wage earners, increasing thereby their consuming power. This, it should be pointed out, will benefit continental United States manufacturers.

The plan will increase the number of cows in the Island by about 12% and the milk production by a far greater proportion since the breeds selected are much better producers than our average cow.

The swine population will be increased by about 30%, with purebred, high‑producing animals, making possible the establishment of a cooperative rendering and packing establishment of pork products for the local market.

From 20,000 to 30,000 acres of fairly productive land will be dedicated to the production of vegetable food products for home consumption. By obvious economic interrelations, the general welfare of the whole population will be substantially improved.

6. Cost

a. Mills and Lands

Purchase price of mills with an estimated production capacity of 250,000 tons sugar, 50,600 acres of cane land, 15,000 acres of pastureland, cultivation and transportation, equipment, etc.	$19,000,000
20,000 acres extra land from large landowners @ $50 per acre	1,000,000
Total Mills and Lands	$20,000,000

b. Development of Colonia Centers

Water systems, community houses, dairy barns, etc. for 40 Colonia Centers @ $20,000	$800,000
6,000 laborer’s houses @ $300 each	1,800,000
2,000 cows, 40 bulls, for Colonia Centers	160,000
Advances to colons for home building	500,000
Total Colonia Centers	$3,260,000

c. Subsistence Farms

Houses, Animal Sheds, Buildings and Equipment:
10,000 small concrete houses @ $300	$3,000,000
10,000 animal sheds @ $50	500,000
Buildings for 40 Central Service Farms @ $6,500 ea.	260,000
Equipment for 10,000 Subsistence Farms @ $20	200,000
Equipment for 40 Service Farms @ $600	24,000
Fencing and Miscellaneous Improvements	500,000
Total	$4,484,000

d. Animals for Subsistence Farms

10,000 cows @ $75	$750,000
20,000 sows @$12.50	250,000
Rabbits and poultry	100,000
80 purebred bulls @ $250	20,000
400 boars @ $20	8,000
6,840 work oxen @ $50	342,000
Total	$1,470,000

e. Organization and Operation of Plan

General organization	$200,000
Selection of settlers (50% of $537,500)	268,750
Operation for one year of Service Farms	165,000
Selection and transportation of animals	300,000
Total	$933,750

f. Agricultural Education

40 Agricultural Rural Schools @ $10,000	$400,000
40 Agricultural teachers @ $1,200	48,000
Equipment, seeds, and animals	40,000
Overhead for inspection, etc.	12,000
Total	$500,000

g. Resume of Cost

Mills and Lands	$20,000,000
Colonia Centers
Buildings and Houses	2,600,000
Animals	160,000
Subsistence Farms and Service Farms
Buildings	3,760,000
Animals	1,470,000
Equipment	224,000
Compensation Payments
Compensation payments for 64,000 acres of cane land, 3‑6 months old @ $30	1,920,000
Organization and operation of plan	933,750
Agricultural Education	500,000
Approximate cost of moving two mills from the north to the south coast	300,000
Total Cost of Plan	$31,867,750

IV. A Tentative Plan for the Refining in the Plant of the Puerto Rican American Refinery of 165,000 Tons of Cuban Raw Sugars

In connection with the plans now being proposed for the rehabilitation of Puerto Rican agriculture, it seems possible that an agreement could be worked out with the abovementioned company in line with the plan herein suggested. According to the Sugar Bill, the quota of refined sugar for Puerto Rico is limited to 803,000 tons. If it could be possible under the law to refine in Puerto Rico an amount equivalent to the full capacity of this refinery, we could import into the Island 165,000 tons of Cuban raw sugars which would pay in the customs a duty of $1.50 cwt. This would amount to the sum of $30 per short ton, which, for the total amount of 165,000 tons, would make a total of $4,950,000, which could come through Puerto Rican customs as duty on this imported Cuban sugar.

Since the Cuban quota has been fixed by the Secretary of Agriculture, these 165,000 tons imported into Puerto Rico would form part of that Cuban quota for raw sugar, the only difference being that the same would be refined in Puerto Rico instead of in continental United States. It appears reasonable that Puerto Rico be permitted to take advantage of the fact that it is American territory covered by the tariff law and that such an industry as the refining of sugar could be promoted on the same basis as it can be done in the continent. In other words, we will be taking advantage of our condition under the flag for the development of this industry. Part of the money coming into the Island from the duty paid for the imported sugar could then be incorporated to the general rehabilitation fund and part of it will be devoted to a general tax reduction program and the creation of a permanent emergency fund to be used for hurricane disaster.

If the abovementioned program is found to be possible, details could be arranged with the Puerto Rican American Refinery so that a mutually convenient agreement could be entered by both parties concerned.

V. Land Policy

The problems of Puerto Rico, due to its density of population, are greatly aggravated by the concentration of its farmlands in a few large holdings, especially absentee corporations. The following data, taken from the 1930 Census, show the distribution of farmlands:

Table I. Fifteenth Census of The United States – 1930
Outlying Possessions and Territories
(Municipality Table)
Farms and Farm Property: 1930, 1920 and 1910 (part)

Item	type of measurement	1930 (April 1)	1920 (January 1)	1910 (April 15)
Farms, total	number	52,965	41,078	58,371
Operated by
Owners	number	43,101	36,407	46,779
Full Owners	number	40,480	34,442	43,297
Part Owners	number	2,621	1,965	3,482
Managers	number	3,374	1,213	1,170
Tenants	number	6,490	3,458	10,422
Approximate area of Puerto Rico[9]	acres	2,198,400	2,198,400	2,198,400
Lands in farms, total	acres	1,979,474	2,022,404	2,085,162
In farms operated by
Owners	acres	1,166,976	1,485,208	1,457,345
Full Owners	acres	1,040,161	[10]	[10]
Part Owners	acres	126,815	[10]	[10]
Managers	acres	676,760	351,335	401,747
Tenants	acres	135,738	185,861	226,070

As a result of the policies of the Homestead Commission and because of the practice of farmers of dividing up their farms between members of the family in order to be able to obtain larger loans from the Federal Land Bank, the number of farms has apparently increased from 41,078 to 52,965 in the decade 1920‑1930. That this increase has been due to the dividing up of the small farms and not to a decrease in absentee ownership is shown by the decrease of the area of land in farms operated by owners from 1,485,208 acres to 1,166,976 acres in the same decade. The land in farms operated by managers has increased in the same period of time from 351,335 to 676,760 acres. This shows that the last decade has been especially difficult to small owners.

Table II
Fifteenth Census of The United States
1930 Outlying Possessions and Territories
(Municipality Table II – Page 216)
Farms and Farm Acreage by Size

Size of Farm	All Land in Farms (acres)	Improved Land (acres)
Under 3 acres	3,909	3,714
3 to 9 acres	127,523	92,963
10 to 19 acres	147,503	91,620
20 to 49 acres	264,712	153,225
50 to 99 acres	226,464	130,533
100 to 174 acres	201,928	118,568
175 to 259 acres	143,884	87,969
260 to 499 acres	196,061	118,332
500 to 999 acres	168,050	96,257
1,000 acres and over	499,440	329,103

The area of land in farms of over one hundred acres is almost twice that of farms under 100 acres. The area of land in farms of over five hundred acres is over one‑third of the total land in farms. These startling numbers do not tell the whole story, for they cover all types of soils—rich alluvial soils and broken, stony, hilly, red clay soils. Comparing the distribution of farmlands of the interior mountain towns with the distribution of farmlands or municipalities lying in the rich alluvial coastal plains of the north and south coasts, it is easily seen that the concentration has really taken place in the rich alluvial lands.

Table III
Fifteenth Census of The United States – 1930
Outlying Possessions and Territories
(Municipality Table II – Page 216)
Farms and Farm Acreage by Size
(South Coastal Plain Towns)

farm size	Guánica		Sta. Isabel		Guayama		Salinas		Arroyo
	All Land	Improved Land	All Land	Improved Land	All Land	Improved Land	All Land	Improved Land	All Land	Improved Land
Under 3 acres	14	14	10	10	30	28	14	14	38	38
3 to 9 acres	116	103	19	19	667	470	155	95	402	343
10 to 19 acres	45	37	23	20	1,053	622	190	121	334	286
20 to 49 acres	155	115	60	21	1,383	804	646	358	625	402
50 to 99 acres	322	168	–	–	2,044	1,072	371	289	301	213
100 to 174 acres	943	252	–	–	2,412	1,333	1,132	667	350	254
175 to 259 acres	922	525	175	130	857	276	870	489	435	205
260 to 499 acres	2,318	698	–	–	3,032	1,181	857	430	685	353
500 to 999 acres	2,483	1,481	876	776	3,285	1,929	721	70	780	700
1000 acres & over	40,049	12,654	18,351	7,426	14,322	11,471	60,575	50,690	16,599	14,737

Table IV
Fifteenth Census of The United States – 1930
Outlying Possessions and Territories
(Municipality Table II – Page 216)
Farms and Farm Acreage by Size
(East and North Coastal Plain Towns)

farm size	Humacao		Fajardo		Loíza		Toa Baja		Arecibo
	All Land	Improved Land	All Land	Improved Land	All Land	Improved Land	All Land	Improved Land	All Land	Improved Land
Under 3 acres	85	77	37	33	104	96	26	23	44	39
3 to 9 acres	1,687	1,003	817	345	1,475	1,013	353	235	2,930	1,663
10 to 19 acres	1,635	807	809	266	1,660	285	315	175	3,957	1,985
20 to 49 acres	2,064	1,101	1,052	417	3,309	1,623	516	317	8,949	3,861
50 to 99 acres	1,627	638	1,306	466	2,862	1,693	585	453	9,575	4,034
100 to 174 acres	807	462	894	544	2,327	1,488	331	183	6,419	2,618
175 to 259 acres	476	316	175	–	830	801	429	390	4,329	1,515
260 to 499 acres	1,234	825	2,283	1,028	1,958	952	1,236	913	5,551	1,634
500 to 999 acres	2,593	1,672	700	33	4,671	1,584	3,209	2,120	4,393	1,493
1000 acres & over	26,613	22,909	25,338	18,914	20,575	13,732	5,031	4,831	26,049	13,826

Table V
Fifteenth Census of The United States - 1930
Outlying Possessions and Territories
(Municipality Table II—Page 216)
Farms and Farm Acreage by Size
(Interior Towns)

farm size	Adjuntas		Barranquitas		Comerío		Aguas Buenas
	All Land	Improved Land	All Land	Improved Land	All Land	Improved Land	All Land	Improved Land
Under 3 acres	76	74	52	52	3	7	36	35
3 to 9 acres	2,391	1,968	1,515	1,280	597	485	1,416	1,066
10 to 19 acres	2,810	2,158	2,228	1,783	1,009	750	2,118	1,391
20 to 49 acres	5,715	4,328	5,022	3,899	2,896	2,032	4,659	2,934
50 to 99 acres	3,732	2,872	3,911	2,804	2,750	1,781	3,188	2,091
100 to 174 acres	6,158	4,504	3,460	2,567	2,050	1,105	3,316	2,087
175 to 259 acres	6,509	4,536	1,613	1,190	1,245	939	878	584
260 to 499 acres	6,898	4,940	1,029	667	3,523	2,899	262	243
500 to 999 acres	4,439	3,414	633	633	1,784	1,075	1,603	1,288
1000 acres & over	3,792	2,220	1,339	1,099	1,065	945	–	–

Table V (cont.)
Fifteenth Census of The United States - 1930
Outlying Possessions and Territories
(Municipality Table II—Page 216)
Farms and Farm Acreage by Size
(Interior Towns)

farm size	Las Marías		Maricao		Lares		Jayuya		Orocovis
	All Land	Improved Land	All Land	Improved Land	All Land	Improved Land	All Land	Improved Land	All Land	Improved Land
Under 3 acres	13	13	7	7	68	63	32	32	50	50
3 to 9 acres	820	692	323	225	2,860	2,148	1,467	1,265	3,071	2,230
10 to 19 acres	1,649	1,286	501	354	3,800	2,537	1,327	1,003	4,991	3,012
20 to 49 acres	2,781	2,028	1,862	1,293	7,014	4,524	3,023	2,254	8,936	5,050
50 to 99 acres	4,054	3,083	2,188	1,413	5,236	3,709	2,415	1,879	6,233	3,496
100 to 174 acres	5,505	4,075	5,203	3,404	5,598	4,033	2,480	1,948	5,922	2,896
175 to 259 acres	3,123	2,419	5,115	3,303	5,539	4,380	2,059	1,598	2,435	1,238
260 to 499 acres	7,036	5,236	6,462	4,435	5,755	4,098	5,124	3,454	2,307	1,460
500 to 999 acres	2,701	2,143	2,346	1,202	3,578	2,429	4,418	3,083	2,024	1,490
1000 acres & over	–	–	–	–	–	–	6,283	3,896	3,226	2,400

 

In some of the coastal plain municipalities with very extensive and rich agricultural lands, concentration has reached its extreme limit. The municipality of Salinas with 65,531 acres of land has only 89 farm operators and 60,575 acres of its lands are in farms of over 1,000 acres. Guánica with 47,367 acres of farmland has only 71 farm operators and 40,049 acres of the land are in farms of over 1,000 acres. A similar situation is found in many other municipalities like Guayama, Santa Isabel, Fajardo, Humacao, Arecibo, Manatí, etc.

Appendix H shows the chemical analysis of soils of the coastal plains compared with the soils of the interior highland. The lands of the coastal plains are rich alluvial soils, neutral to slightly alkaline in reaction. As is true of all lateritic soils, the plant nutrient content of the highland soils is very low. The P₂O₅ content of the interior highland soils ranges from 1/10 to 1/15 of the content of the coastal plains lands. The K₂O and CaO content is also very low as compared with those of the coastal plains. The farmer of the interior highland soils, besides having the great drawback of broken topography, has to lime and fertilize heavily to get a fair return for his labor.

The yardstick principle of the sugar plan will certainly induce the private sugar corporations to acquire all the land they can from the colonos, offering attractive prices, if no other means are possible.

To develop, therefore, a sound agricultural situation, we have drawn up a land policy designed to retrieve land from the large landholders and distribute it among our large landless agricultural class. To carry this policy into effect we may adopt either of the following procedures:

1. Enforce the 500‑acre clause of the Jones Act with its possible disruption of the economic structure of the Island.
2. Modify the land policy of the Jones Act along the following lines:
   1. Prohibit the further acquisition of land by owners of over 500 acres in area.
   2. Create a fund which will enable the government to be on the market for any sale of land of over 500 acres in area.
   3. The Insular government to exercise its power of eminent domain at intervals of over three years, acquiring 10% of the area of farms of 500 acres in area.

The lands so acquired by the government are to be subdivided into small farms of varying areas and sold on long term installment plans to selected trained landless citizens.

As a further extension of this land policy, a Division of Reclamation and Drainage should be established to study the possible reclamation of our swampy and alkaline lands, both public and private. To show the importance of the reclamation of swampy land, we would briefly discuss two such possible projects where immediate action may be taken.

A. The Tiburones Reclamation Project

The Tiburones Basin is a swampy area about 17 kilometers long and two to three kilometers wide, extending from near the town of Barceloneta to the town of Arecibo. About twenty years ago a franchise was granted by the government of Puerto Rico to Mr. Wenceslao Borda to drain the swampy area and enjoy its holding for 49 years. It was provided that at the end of ten years two‑thirds of the land should be under cultivation or cultivable. It is the personal knowledge of one of the members of this Commission that that provision was never carried out and that the land is in as swampy a condition today as it was twenty years ago. This tract of land can be easily retrieved by the government. It is estimated that with the expenditure of not more than $150,000 this area can be reclaimed, adding about 4,000 acres of good agricultural land to the government holdings and improving the condition of not less than another 4,000 acres of private property.

North of the town of Carolina there is a tract of land of 15,000 acres, 8,000 of which belong to the Insular Government and the rest to private individuals. This tract of land can be drained by construction of dikes and operation of centrifugal pumps.

Both the Tiburones tract and the tract north of the town of Carolina are located in thickly populated sections of the Island and, after reclamation, could be devoted to almost any type of agriculture. In any one of these tracts, a rice cultivation project could be carried out to see whether Puerto Rico can produce some of the enormous amounts of rice it imports. Appendix shows the rice imports of the Island.

To carry out this policy a revolving Trust Fund of $10,000,000 is recommended. To this Trust Fund should be added from time to time some of the earnings of the semi‑public sugar mills. The semi‑public corporation should also be allowed to issue 3% bonds guaranteed by first mortgages on the lands acquired or reclaimed.

VI. Plan for the Rehabilitation of the Coffee Industry

A. Historical

Previous to the American occupation of Puerto Rico, the coffee industry of the Island constituted the main agricultural industry and the chief source of income for the Island. Puerto Rican coffee had an excellent demand in the Spanish, French, Italian and other European markets, and about 50,000,000 pounds of the choice product were shipped to Europe every year. In 1897, the year before the American occupation, coffee exportations from Puerto Rico amounted to 51,711,000 pounds, which were sold at a price ranging from 25 to 30 Spanish pesos per hundredweight. Puerto Rican coffee is of a mild type and is considered of excellent quality to be served without cream in the form of demitasse, and for this purpose it enjoys a very high repute in the European markets. This makes possible the regaining of an export market for the Puerto Rican product in case an excess over the consumption needs of the Island is produced in the future.

Immediately after the establishment of the American sovereignty in Puerto Rico, two major calamities befell the coffee industry of the Island, to-wit: The loss of the Spanish market and the destruction of the coffee plantations by the hurricane of 1899. From the effects of the windstorm the industry recuperated very slowly, being up to some 17,000,000 pounds in 1905 and reaching again normal production in the year 1915 when 51,125,000 pounds were exported.

B. The Present Situation

Since the year 1915 coffee exports from Puerto Rico have been decreasing for various reasons, but, nevertheless, the value of the coffee exportations has averaged over $5,000,000 during the last ten years. In the meanwhile, the sugar industry has progressed by leaps and bounds and has become the largest source of revenue and employment in Puerto Rico. In the year 1928 another disastrous hurricane ravaged the Island of Puerto Rico and practically destroyed the crop, as well as the coffee plantations. With the help of the Hurricane Relief Commission funds, the coffee farmers of the Island began again to habilitate their farms, but the coffee crop for that year amounted to less than 5,000,000 pounds. In the year 1932 another hurricane visited Puerto Rico and, although it did not cause so much damage as the one of 1928, part of the crop was destroyed as well as considerable damage done to the trees, especially on the plantations located on the northern slope of the mountains. The farmers continued, however, to take care of their farms as best they could, and production last year was up to 10,000,000 pounds. By this time, the coffee consumption of Puerto Rico had increased to about 15,000,000 pounds, with the result that the Island has temporarily converted itself from an exporter to an importer of coffee. At the same time, the European market has been practically abandoned, only the finer grades having been shipped to that continent on account of the inducement of the high prices there obtained.

During the last two years, considerable headway has been made in the regaining of the European market and our coffee has been commanding prices ranging from $20 to $30 per hundredweight, while Brazilian coffee and similar grades were being sold in the American market at prices ranging between $6 and $10 per hundredweight. To protect the home consumption market for our coffee, as well as to prevent the importation of foreign coffee for re‑exportation from the Island, an insular import duty of $15 per hundredweight has been put into effect by our Legislature. In this way it has been possible to maintain the coffee price in Puerto Rico within a range of $18 to $22 per hundredweight. This price will be satisfactory under normal conditions of production. Evidently, neither the lack of a market nor the lack of reasonable prices, is the cause for the present condition of the industry.

C. The Role of the Coffee Industry in Puerto Rican Economy

In order to make clear the importance of the coffee industry to Puerto Rico, something must be said about the geography and topography of the Island. Puerto Rico is an island one hundred miles long by thirty‑five miles wide, shaped in the form of a rectangle, the long axis of which lies from east to west. A range of mountains running from east to west divides the Island into north and south coasts, consisting of low, alluvial flats which constitute the best sugar cane lands. Cane is also planted along the eastern and western coasts. The mountainous interior of the Island is about half of it dedicated to the cultivation of tobacco and minor crops; while the other half, lying toward the west, is mostly suitable and dedicated to coffee growing. In normal times the coffee plantations of the Island occupy over 200,000 acres of mountain land and give employment and maintenance to over 200,000 people. The fact that the coffee harvest comes at a time when the cane grinding season is over, makes it possible for the excess of labor from the mountains to go to the sugar centrals in search of work, coming back to their homes once the sugar crop is harvested and when there is need of them for the picking of the coffee crop. During the last few years, the area planted to coffee in Puerto Rico has decreased to about 150,000 acres, bringing about a corresponding unemployment among the peasants of the mountains. This has broken the former equilibrium on our laboring population with the result that many coffee farms have now been practically abandoned. The former inhabitants of the mountains have flocked to the towns by the thousands; they have become squatters in government and private marshlands and established, therefore, unsightly and undesirable slums, thus creating a serious social and economic problem. Outside of the need of the coffee industry to give employment to these people, coffee farms are a necessity to the general agriculture of the Island, since they constitute real forests with the corresponding beneficial effects on climate, precipitation, and regulation of water flow. Maintaining the coffee farms in normal condition is, therefore, tantamount to insure the best kind of reforestation for a large portion of our mountains. It must also be taken into consideration that coffee lands are the rural properties more evenly divided among the small, native farmers, the average holding being approximately 40 acres. At the present time the coffee farmers of Puerto Rico are trying desperately to hang on to their farms, but most of their properties are mortgaged to the Federal Lard Bank and carry also second liens consisting of crop production loans obtained since 1928 from the Hurricane Relief Commission.

D. Reasons for the Present Distressed Condition of the Coffee Industry

The principal causes for the actual disastrous condition of the coffee industry of the Island may be enumerated as follows:

1. Destruction of the plantations by the recent tropical hurricanes of 1928 and 1932.
2. Mortgage debts burdening their properties.
3. Crop production loans owing to the Hurricane Relief Commission.
4. Lack of further credit facilities for the financing of their crops.
5. Unfair prices for the coffee due to the contro1 of the local market by speculators.
6. Very low production of coffee per acre.
7. Lack of appropriate technical knowledge of coffee culture.

As a result of this situation, the labor conditions in the coffee areas are most distressing and a great percentage of the labor families live on the bare margin of existence, suffering the havoc of widespread hookworm infestation. The laborers lack adequate housing facilities, unemployment has enormously increased, and there has been a steady migration of farm laborers from the mountains to the coast towns.

E. Need of Rural Relief

The urgent need for some kind of rural relief that would make possible the rehabilitation of the coffee farms of Puerto Rico needs hardly be emphasized. The mountainous section of the country, where coffee is mostly grown, constitutes the very heart of the Island and to this day no other substitute crop has been found to take the place of coffee for those districts. Therefore, any plan for the rehabilitation of the rural population of Puerto Rico should first be directed to the coffee districts. Any intelligent plan for such relief work would naturally have to provide for basic and permanent correction of the various evils mentioned elsewhere in this discussion. Of some of these it would be possible to take care through already established agencies, Federal and Insular. Windstorm insurance must be provided to protect the coffee properties from hurricane losses; more liberal policies should be established by the Federal Land Bank and by the Intermediate Credit Bank; new facilities for production credits for marketing must be provided by the Production Credit Corporation and by the Bank for Cooperatives already operating in Puerto Rico. Better prices for the product would no doubt be secured as soon as the Coffee Cooperative Association is in condition to pignorate satisfactorily the coffee crop, making possible subsequent orderly marketing. There are, however, no effective agencies operating in Puerto Rico to take care of the other problems of the coffee farmers. There is immediate and urgent need of increased employment in the coffee sections so as to put an end to the present exodus of the mountain peasants from the coffee farms. The farmers are helpless to cope with the situation because of the lack of funds to work their farms. Being already heavily mortgaged, there can be little hope of new loans, however liberal the Federal Credit agencies now operating in the Island may be. The question boils itself down to a matter of outright rural relief.

F. Need of a Coordinated Plan for Rural Relief

For the rehabilitation of the coffee industry of Puerto Rico, we must repeat, some form of liberal and urgent relief is very necessary. Such help extended to the farmers and laborers of our mountains will tend to produce the following desirable results:

1. Rehabilitate the agricultural industry of the Island which is more necessary to the general welfare of the native population.
2. Will provide profitable employment and happier living conditions to nearly one‑third of our population.
3. Will provide a satisfactory and immediate remedy to the cityward drift of our mountain population, thus solving one of our most dangerous social and economic problems.
4. May start the return to the mountains of the excess population now unemployed in the towns and being taken care of by Federal Relief funds.
5. By the rehabilitation of the coffee industry, the property value of the coffee districts of Puerto Rico would be greatly increased, thus bringing about three important benefits:
   1. Provide adequate additional security for the mortgage liens of the Federal Lard Bank of Baltimore.
   2. Make possible the collection of crop loan liens in the hands of the Hurricane Relief Commission.
   3. Increase the income of the mountain municipalities (counties) now so much in need of additional revenue.

G. Necessity of a Plan for Rural Relief

From the abovementioned discussion we must conclude that the problems of our coffee industry are of paramount importance to the general welfare of the Island of Puerto Rico. The whole matter is interwoven with the general economic and social structure of the Island. So, any help given to the coffee farmers and their laborers will naturally permeate all of Puerto Rico. With this idea in mind, we have thought of a plan whereby relief offered in the coffee districts should go directly and jointly to the farmers and laborers, in such a way that both will benefit permanently from such measure. Also, we must consider that if a relief program is carried on for, say, a period of three years, the fact should be taken into consideration that at the end of such relief plan the farmers should be in a position to continue the operation of their farms with the regular credit agencies that may be left available, thus being in a position to supply the peasant. population with adequate and permanent employment.

The following plan we believe to be workable and appropriate to bring about the desired help and benefits to the coffee industry:

H. The Plan

Presupposing that coffee farms comprising a total gross acreage of 300,000 acres may be comprised within the plan, we propose to purchase 24,000 acres from the coffee farmers, for the purpose of establishing 8,000 subsistence plots for laborers. The purchase should be made by a Coffee Relief Commission appointed to take charge of the conduct of this plan. The price paid for these lands would be $25 per acre. It is realized that the actual market value per acre may be around $50, but since the farmers are to be otherwise benefitted by this plan it seems reasonable to expect that they would agree to this bargain. This may necessitate negotiations with the Federal Land Bank since most of the coffee farms are now mortgaged to that institution.

Each subsistence plot would be assigned to a laborer who must be the head of a family. A wage, bounty, or labor payment of $3 per week would be paid to each of these workers for five working days, or at a rate of 60¢ per day. Three days of the five worked each week should be dedicated to any type of field work required and directed by the farmers in their coffee plantations and the two remaining days in the subsistence plots. The payments and work will be under the contro1 of the Commission in such a way that laborers would be protected from unfair treatment by the landowners and at the same time the farmers would be assured that the proportion of the labor assigned to the coffee plantations is rendered by the laborers. It is expected that in this way the farmers would be able to bring back into production their coffee plantations; while the laborers would get used to growing most of their foodstuffs, thus becoming partially independent as to their daily sustenance.

During the crop season the coffee farmers would naturally be permitted to bring in extra labor for the picking of the coffee crop and they will be permitted also, subject to the regulations of the Commission, to buy from the laborers the two days of work corresponding to their subsistence plots in such a way that all the labor available could be used during the rush period of the picking season.

Such a scheme as this is expected to create small subsistence plots for 8,000 heads of families in plots of three acres each. On each of these plots we propose to build a small concrete house at an estimated cost of $300 per house. Concrete construction has been adopted as the only one of permanent nature under Puerto Rican mountain conditions, since wood rots very quickly or is easily destroyed by termites. Concrete construction is free from these drawbacks and at the same time affords much better resistance against our frequent tropical windstorms or hurricanes.

These houses, with their corresponding three‑acre plots, will be sold to the heads of families selected for this purpose under a liberal installment plan to be determined later by the Coffee Relief Commission. It is understood that the proceeds of the sale of plots and houses to laborers will be eventually dedicated to rural relief in the coffee districts.

These 8,000 laborers with their families will comprise 40,000 to 50,000 people. Each family will receive $156 a year in cash payment, plus the benefit of the crop of the subsistence plots. The total labor income of these families will amount to $1,248,000 a year, which will alleviate in a very substantial way the distressing situation of the coffee laborers of the Island. Evidently this plan should contribute to rehabilitate the coffee plantations in a permanent way. The farmers, moreover, would receive as payment for the 24,000 acres to be dedicated to subsistence plots $600,000, which should help toward their living expenses or to cover in part additional expenditures on their farms.

The plan proposes that the Commission will also provide for $120,000 for coffee seedbeds, $300,000 for fertilizers, $120,000 for the purchase of farm animals, and $2,400,000 for the building of living houses for laborers on those farms where housing facilities make such action necessary for the realization of the plan. This expenditure for houses is considered of great importance, because it is thought that nothing like a home and a piece of land can do more to keep the laborers in the mountains of Puerto Rico. The coffee seedbeds and the fertilizer tests will be prepared and carried out under the supervision and jurisdiction of the extension forces of the University of Puerto Rico.

Realizing that no financial setup for the coffee industry can be permanent without provisions for adequate insurance of the coffee crop and plantations against windstorm damage, we propose to create also a Coffee Insurance Fund. Crop insurance will be required by the Intermediate Credit Bank before farmers farming part of production credit associations can discount Production Credit Corporation notes. The Puerto Rican coffee growers production credit association has already been organized with a capitalization of $150,000. This means that this cooperative will be able to obtain crop loans from the Intermediate Credit Bank to the amount of $750,000. In order to make possible these loans, the farmers will have to provide crop insurance at least to an amount equal to the crop loans made by the bank. The rates now charged for hurricane insurance for coffee by the insurance companies operating in Puerto Rico are so high as to be actually prohibitive. It is very important, therefore, to provide the necessary insurance through some agency controlled by the government and operating without profit.

An initial capital of $750,000 is considered necessary in order to take care of actual needs. It is thought that this sum can be invested in U. S. Government Bonds yielding 3% annual interest. Premium rates for coffee insurance will be 6% so that the total income to the Coffee Insurance Fund would be 9% per year in non‑hurricane years. The average period of recurrence of these windstorms in Puerto Rico has been about fifteen years; therefore, after the windstorms of 1928 and 1932, we may reasonably expect a period of at least twelve years without another hurricane. In that period the initial fund will have doubled and the whole plan would have fair chances for permanent continuation. Eventually, as the financial structure of the fund becomes more solid, premium rates can be lowered in benefit of the farmers to such a measure as conditions may warrant. The creation of the insurance service is indispensable for the successful operation of the coffee cooperatives and the consequent financing of the coffee crops. We urgently recommend the appropriation of the funds requested for this purpose.

The general budget for this plan can be recapitulated as follows:

Expenses for the First Year
Payment to 8,000 laborers at $156 each per year	$1,248,000
Cost of 24,000 acres of land at $25 each	600,000
Fertilizers for 25,000 acres of coffee @ $12 per acre	300,000
For 300 coffee seedbeds @ $400 each	120,000
For purchase of farm animals $15 per farm	120,000
For 8,000 small concrete houses for laborers, plus latrines	2,520,000
For insurance fund	750,000
Administration expenses	120,000
Total for first year		$5,778,000
Expenses for the Second Year
Payment to 8,000 laborers 414 $156 each farmer per year	1,248,000
Fertilizers for 25,000 acres @ $12 per acre	300,000
For 150 coffee seedbeds @ $500	60,000
Administration expenses	50,000
Total for second year		1,658,000
Expenses for the Third Year
Total		1,658,000
Total appropriation for the three‑year period		$9,094,000

A special organization should, of course, be established in Puerto Rico to represent the rural relief commission and to lay plans to regulate and to conduct to a successful end the abovementioned coffee rehabilitation program. The total expenses for the first year would be $5,778,000. It seems to us that once the whole relief plan is set up and the program becomes operative, a much lower appropriation would be sufficient for subsequent years. Probably this would not need to exceed $1,700,000 per year. It is recommended that the plan be in operation for at least three years because only in this way we could hope to secure some permanent form of the much-needed rural relief for our mountains.

VII. Plan for Rehabilitation of Citrus Industry of Puerto Rico

A. Historical

Shortly after the American occupation a few hardy Americans, some of them ex‑soldiers who came with the Army in 1898, became interested in the production of citrus. Oranges, grapefruit, and limes were growing wild in the Island, and a few felt confident enough in the future of citrus to make small commercial plantings of grapefruit principally. These pioneers in this new industry had no easy time of it.

When, after much painstaking care, the trees began to bear, the question of transportation and marketing arose. The first few years attempts at marketing were very unsatisfactory. They knew very little about the grading, packing and transportation of fruit. Fruit was packed in unsuitable packages, very little attempt being made to grade it; it was hauled over rough roads to San Juan and placed in unsuitable, unrefrigerated boats. Decay developed enroute in the hot holds of the boats. Mostly losses resulted to the producer and by 1910 the fruit industry was in a very deplorable situation.

At this time, a cooperative marketing association was formed and in 1910 the Puerto Rico Fruit Exchange came into existence. Attention was given at once to improving the grading, packing and transportation. Losses turned into profits and by 1915 the growers were in a profitable condition, the net worth of the Puerto Rico Fruit Exchange had increased from $12,000 in 1910 to $60,000 in 1915, besides returning good dividends to the growers.

These profitable operations induced heavier plantings by the men already growing citrus and attracted new growers into the business. The next ten years up to 1925 showed a steady gain in the exports of citrus, and where the shipments in 1916 totaled only 296,613 boxes, this had risen by 1926 to 809,038 boxes, and the 1927‑28 crop totaled over 1,000,000 boxes.

The Puerto Rico fruit is of excellent quality and enjoys a good reputation in both the American and European market. In England it generally brings a better price than the fruit from any other section.

B. The Present Situation

After several years of prosperity, the growers were facing a period of several years of adversity, which so radically changed their situation that the producers of over 60% of the fruit who were prosperous, free from debt in 1928, were to be facing bankruptcy and loss of their farms and property in 1934.

The 1928‑29 crop on the trees was conservatively estimated at 1,200,000 boxes. This crop was not only the largest crop ever produced but was considered by everyone to be the cleanest and most desirable as far as size and quality was concerned of any ever produced in the Island. Prospects never were so bright. Besides having the best and largest crop ever produced, the market prospects were very encouraging. If the growers had not been prevented by unforeseen circumstances from marketing that crop, today, in spite of the low prices of the past three years and the hurricane of 1932, the majority of the growers would not need financing.

In early September just as shipments were beginning, a tropical hurricane struck the Island, completely destroying the citrus crop, causing heavy damage to trees, buildings, machinery, and supplies. The total damage to the citrus industry was estimated at $2,214,000. This storm destroyed over 35,000 bearing trees, injured approximately 125,000 more, out of which 60,000 have died up to the present time.

The hurricane led to the formation of the Fruit Growers Cooperative Credit Association, which organization aided in financing the citrus industry up to the present time, through the Federal Intermediate Credit Bank. The hurricane caused Congress to create the Puerto Rican Hurricane Belief Commission, which organization loaned $176,000 to rehabilitate the growers’ stricken property.

The Federal Land Bank at that time made considerable loans on mortgages, until their total loans on citrus property amounted to $446,400. The amount of private mortgages on citrus properties is unknown and cannot be accurately determined, but a conservative estimate is around $650,000.

Until the fall of 1928, the citrus growers of Puerto Rico had for many years received a nice profit from their fruit and were considered a first‑class credit risk by business houses, both in the United States and Puerto Rico. The latter had extended unlimited credit for supplies needed to rehabilitate the properties. In some cases, the amount of private credit exceeded the advances made by the Federal Intermediate Credit Bank and Hurricane Relief Commission. Private banks also had faith in the industry and advanced large sums of money to their clients on land mortgages and crop liens.

During the 1929‑30 season, prices remained good, and Puerto Rico shipped over 1,000,000 boxes of grapefruit at very satisfactory prices, because of short crops in competing sections and the restriction on the shipments of Florida grapefruit due to the infestation of the Mediterranean Fruit Fly.

In the spring of 1930, during the blooming period and the early stages of fruit growth, there was an abnormally dry spell, which materially affected the size, as well as the quality, of the fruit. Trees which had suffered from the 1928 hurricane and had then remaining on the trees most of the 1929‑30 crop, suffered materially and many of them died. Others did not fully recover until the spring of 1932, producing a light crop for 1930‑31 and 1931‑32.

The depression was not felt in the citrus industry until October 1931, but from that time on prices realized on practically all domestic sales of grapefruit were mostly below the cost of production. The growers could not meet their obligations, many borrowed from various sources to produce the 1930‑31 and 1931-32 crops, and many owed the supply houses for supplies of all kinds. Their indebtedness increased.

In September 1931 there was a severe hurricane that passed through a small portion of the citrus section. The damage was local but the total amount of damage to buildings, destruction of crops, etc. was approximately $250,000.

The 1932‑33 citrus crop of the Island was estimated at approximately 700,000 boxes of shippable fruit on the trees, and growers operating under restricted budgets considered that they would be able to market a considerable portion of their crop during the months of August, September and October, as the Florida crop was late. There would have been practically no competition during those months and growers were looking forward to a profitable season, and the payment of a large part of their debts. But once more destruction was only a few weeks off, and after only four shipments the worst hurricane the citrus industry had experienced traversed the entire citrus section on September 26, 1932. Over 92% of the remaining crop was destroyed. The loss to the citrus industry was over $2,000,000 with a property damage of about $200,000. Over 40,000 bearing trees were actually destroyed and over 112,000 additional trees were damaged.

At the present time, June 1, 1934, the citrus industry finds itself in the following financial situation. The Federal Land Bank has at this time due on its first mortgages on citrus properties $415,256. The Hurricane Relief Commission has advanced on citrus lands $176,050, none of which has been repaid. There is also due the Hurricane Relief Commission interest on these loans, the amount of which is unknown. The Federal Intermediate Credit Bank has loans, old and new, amounting to approximately $216,000. This makes a total due the Federal agencies from the citrus growers of $807,306, exclusive of the interest due on Hurricane Relief loans. The Insular Government immediately following the hurricane of 1932 advanced $50,000 to the citrus growers in order to assist them to purchase fertilizer which was needed at once and to temporarily protect the machinery and packing equipment which was exposed to the weather due to the damage done to packing houses by the hurricane. This was to be repaid by the growers who obtained the loan at the rate of four cents (4¢) per box and to be a first lien on present and future crops, with interest at the rate of five percent (5%). There is approximately $46,000 still due and payable on this loan. In addition to these debts, the growers owe unsecured debts to supply houses and private business houses of close to $1,500,000.

C. The Place of the Citrus Industry in the Economic Life of the Island:

The fruit industry is the fourth largest agricultural project in the Island, exceeded only by sugar, coffee, and tobacco. For purposes of taxation, the fruit property is assessed at many times the value of any other land devoted to agriculture in the Island. The fruit growers pay into the Insular Treasury a greater amount in proportion to acreage than any other phase of agriculture.

Growers who have kept accurate cost accounting records state that it costs $750 per acre to purchase the land, propagate, and bring citrus to the age of eight years, or what is considered a good bearing age. Thus, the 8,000 acres of bearing groves represent an investment of $6,000,000, while the total investment in the citrus industry, including 4,000 acres of young trees not yet in bearing, packing houses, equipment, etc., represents over $10,000,000.

The money invested in citrus groves represents what might be termed a permanent investment as once the ground is prepared, the trees planted and cared for until bearing age is reached, the investment is too great to consider pulling out the trees and planting some other crop. It is a much different problem in this respect than either cane or tobacco which might be considered an annual crop.

It is estimated that no fewer than 8,000 persons are employed regularly on the citrus plantations, which means that at least 30,000 persons depend upon this industry for their livelihood. At the peak times, the number of employees is increased to 10,000 persons and at such times, not less than 50,000 persons are supported by the industry. The fruit industry requires a higher type of laborer than in other lines of agriculture, and thus, as a general rule, when the industry is in a financial condition to do so, the wages paid in the fruit industry are higher. The housing and care of laborers is generally better than in other agricultural lines. Because of the serious financial condition of the growers, it has been necessary to reduce greatly the number of employees, as well as the rate of wages.

D. The Need of an Immediate Coordinated Plan for Rural Relief

The situation of the citrus grower and especially the laborers depending on the citrus industry is indeed tragic. If assistance does not come from some source within the next thirty days, a large percentage of the present owners will lose their farms, into which they have put their life savings, and upon which they have spent from twenty to thirty years building up the fourth largest agricultural industry of the Island, and the laborers will lose all hopes of earning a living in this field.

The trees have just been relieved of the load of the crop that they have been carrying since March and April 1933. Because of this load, because of lack of sufficient fertilizer during the past two or three years, there was very little early bloom, practically none during December and January and not very much in March and April. This means that Puerto Rico cannot place fruit on the early fall market, and it appears certain that the shipments from Puerto Rico will not amount to over 150,000 to 200,000 boxes between June 1934 and May 1935. It is possible that the small amount of fruit produced from the March and April bloom may be marketed in England during the winter. Most of the fruit section has experienced one of the driest Aprils and early May that has ever been known. The deficiency in moisture became alarming, and trees in many districts plainly showed the effects of the drouth. In one way this is a very good thing for the fruit industry. It has become evident during the past two years that Florida is having an earlier blooming date than they have had in the past, and Puerto Rico is having a later blooming date. This permits Florida to get on the early fall market and take the cream of the prices before Puerto Rico can get started. A June or July bloom gives us fruit when no one else is on the market and assures better prices. Therefore, the present relief plan, if accepted, should be enforced immediately.

The providing of the labor, as proposed elsewhere in this plan, besides materially helping the laborers, will permit the growers to increase their fertilizer and spraying bills, and help in the rapid rehabilitation of their grove.

E. A Plan for the Necessary Rural Relief

What has been said before was to b ring before you a picture of the citrus industry of Puerto Rico, its history, how it began, its trials and problems, how they were met and solved, and finally the present picture of a once prosperous and thriving industry brought to a point where it is impossible for the growers to obtain credit. The only ray of hope is the hope for relief and aid offered by the assistance of the Rural Relief Commission. The only assistance that can be offered to the laborers must come from the Rural Relief Commission.

The saving of the vast and productive citrus groves, the solving permanently of the now hopeless rural laborer problem, will unquestionably react upon the entire social and economic life of the Island. The relief plan which we offer should go to the laborers in such a way that the industry be permanently and substantially benefitted. We are sure that at the end of the three‑year period the owners will be in a much better position to meet their obligations, that they will be able to carry on their operations without much further financial assistance. If financing is necessary, they will be in such an improved financial condition that they will be able to arrange financing through the existing agencies for that purpose. The owners would be in a position to give employment of a. permanent and adequate nature to many more laborers than at present. We also feel certain that such a plan as this will permanently insure the growers of a higher type, more responsible, better class of permanent employee. The laborers, by having a small tract of land and a comfortable home which they own, will have a new interest in life and become better and more efficient citizens.

The following plan we believe to be workable and to offer a permanent solution to the financial problems now facing the owners of and the laborers in the fruit industry.

F. The Plan

The Executive Committee appointed to take charge of this work shall purchase whatever land is necessary from the growers to provide subsistence plots for the laborers, at the rate of two acres for each laborer, for those laborers selected. The land for this purpose shall be sold to the Commission at the rate of $50 per acre. The assessed valuation of this land is between $150 and $200 per acre, but as the growers are to be benefitted in other ways, it seems reasonable to expect that they will agree to sell at this price. It is understood and agreed that no land planted to fruit is to be selected by the Committee. As a big percentage of the fruit property is now under mortgage to the Federal Land Bank, it will be necessary to negotiate with them to learn if they are agreeable to selling the land at this price.

The grower is to select one‑fourth of the laborers whom he employs steadily, and these will be assigned by the Commission for subsistence plots. Each plot will contain two acres, and the laborer assigned to the plot must be the head of a family. A wage, bounty, or labor payment of $3 per week would be paid by the Commission to each of these workers, for five working days or at the rate of 60¢ per day. Three of the five days each week will be worked for the fruit growers in the groves and fields under the direction of the grower, and the other two days will be given to work in the subsistence plots. The payments and the work will be under the contro1 of the Commission in such a way that laborers would be protected from unfair treatment by the landowners and at the same time the owners would be assured the proportion of the labor assigned to fruit groves is rendered by the laborers. At time of harvest or other rush periods, the owner will be permitted to buy from the laborers the two days that he has for himself at a price approved by the Commission.

This scheme is expected to create small subsistence plots for 2,000 heads of families in plots of two acres each. It is recommended that this project be for a period of not less than three years. If it is certain that the period will be three years or more, then on each of these two-acre subsistence plots we propose to build a small concrete house at an estimated cost of $300 per house, plus $15 for a latrine. These houses, plots, etc. will be paid for by the Commission, but sold to the laborers on very liberal terms. It is also understood that the proceeds of the sale of the plots and houses to the laborers will go into a fund to be dedicated to further rural relief in the fruit districts.

Poultry and garden seeds up to $15 per subsistence plot will be purchased by the Commission for the laborer on each plot.

These 2,000 heads of families will comprise around 10,000 people. Each family will receive $156 a year in cash payment for his labor, plus the benefit of the crop from the subsistence plot, and products of his poultry. The laborer will be building for the future when he will own the place.

Besides, we are proposing that work be provided for 2,000 additional laborers, paid from Rural Relief funds at a rate of $3 a week, the laborers to work five days, four of which will be given to the citrus growers, and the fifth day will be devoted to raise food crops on half‑acre plots, provided for by the fruit grower. Thus, fully fifty percent of the laborers in the fruit industry will be on Rural Relief funds. This will partially take care of the labor problem and indirectly help the fruit growers to rehabilitate their farms.

It is only fair that a relief scheme of this kind be approved. Otherwise, the collapse of the citrus industry will permanently put out of work from 8,000 to 10,000 laborers, who could not be absorbed by any other industry. Such an amount of additional idle hands will greatly aggravate the unemployment problem now so serious in the Island and these would have to be put on the rolls of the Emergency Relief Fund to be fed and clothed by them.

The general budget for this plan is as follows:

Expenses First Year
2,000 latrines @ $15 each	$30,000
Fencing 2,000 farm lots @ $10	20,000
To supply 50% of labor	624,000
Purchase of 4,000 acres @ $50	200,000
To build 2,000 houses © $300	600,000
To purchase farm poultry @ $15 per farm	30,000
Administration expenses	50,000
Total for first year		$1,554,000
Expenses Second Year
To supply 50% of labor	624,000
Administration expenses	30,000
Total for second year		654,000
Expenses Third Year
Total		654,000
Total appropriation for three‑year period		$2,862,000

This plan will substantially benefit a $10,000,000 industry and place the producers in a better position to pay their debts. It provides for the relief of a permanent and definite nature for the laborer, as it provides for him and his family, a home, a little place that belongs to him, where he can raise food and poultry for his family. Compared to what will be accomplished, the expenditure of the sum of $2,800,000 over a three‑year period seems very insignificant. It will put the fruit industry in a position where it can employ much more labor than at present.

A special organization would have to be established in Puerto Rico to represent the Rural Relief Commission and to handle and regulate the expenditure of these funds.

We earnestly recommend the approval of this plan and that this be put into effect as quickly as possible.

VIII. Plan for Rehabilitation of the Tobacco Farms

A. Historical

Leaf tobacco has been for many years one of the main agricultural products of Puerto Rico. Since the times of the Spanish sovereignty, Puerto Rican tobacco has enjoyed a good reputation for its quality, a fact which made possible ready sales in the Spanish market, even in competition with the best grades of Cuban tobacco. With the American occupation, tobacco, like coffee, lost its European market; but in this case the loss was more than balanced because then Puerto Rican tobacco had free access to the highly protected American market. Several American tobacco companies began operating in Puerto Rico and purchased some of the best tobacco lands to become direct growers of leaf tobacco. At the same time, these companies established modern cigar and cigarette factories, and purchased the bulk of the crop.

The price of tobacco improved considerably, and, during a number of years, the tobacco industry enjoyed fair prosperity. Tobacco farmers were making reasonable profits and cultural methods were greatly improved. Tobacco soon became our second agricultural industry. In the year 1923‑24 there were 40,000 acres of tobacco planted in the Island with a total production of some 280,000 hundredweight. The total value of the exports of tobacco leaf, cigars and cigarettes for that year was $18,701,886.

After the end of the World War the price of tobacco improved in tune with that of other commodities and by the year 1926 production had gone up to 360,000 hundredweight, grown in 58,000 acres. The price paid to growers that year was 39¢ per pound. Stimulated by this price, the growers embarked into a very extensive planting program and 81,000 acres were harvested in 1927 with a total production of 500,000 pounds, the highest ever reached by the Island. The price, however, did not stay up and the crop was sold at an average price of 22¢ per pound. Consequently, the production dropped to 270,000 hundredweight for the succeeding year. It continued at about the same rate until the year 1931, when 373,000 hundredweight were produced, and the price dropped again to 20¢ per pound.

Discouraged by this low price, the tobacco growers, then, decided to control their crop and a violent non‑planting campaign was put into effect with the result that in 1932 only 10,079 acres of tobacco were planted, and 5,500,000 pounds of tobacco were harvested. This, however, did not help to improve prices and the average price for stemmed tobacco received by farmers dropped to 14¢ per pound in 1932 and 15¢ in 1933.

B. The Present Situation

The small crop produced in 1932 and 1933, as well as the low prices obtained for their product, brought the tobacco growers to the point of bankruptcy. The majority of the farms are now heavily mortgaged, and the farmers are badly in need of credit facilities and any other kind of rural relief.

The Agricultural Adjustment Act has been put into effect already in Puerto Rico in connection with the tobacco crop. About 10,000 farmers have signed crop reduction contracts with the Secretary of Agriculture and, in consequence, about $1,800,000 will be made available to the growers of the Island through benefit payments. This, however, will not benefit the laborers of the tobacco region, who are now, like those of coffee and fruit, in a very distressed condition.

The restricted crop for this year will probably amount to 220,000 hundredweight. Credit facilities will soon be available to the tobacco farmers by means of the cooperative organization by the Production Credit Corporation of Baltimore, a branch of which is operating in the Island. A production credit association has been organized at San Juan with a capitalization of $400,000. All of these measures will tend to relieve in great part the distressed condition of the tobacco growers of the Island, but additional and quick relief measures are necessary to help the labor situation. Our problem, therefore, is to provide adequate additional help to the more needy farmers and, most important still, to find some practical means of relief for the laborers of the tobacco districts of the Island.

C. The Role of the Tobacco Industry in Puerto Rican Economy

It has been pointed out that the tobacco industry is the second one in importance among our agricultural industries. Next to sugarcane, it is the most important of our supplies of exports. In some districts of the Island, like in the Caguas, Comerío and La Plata Valleys, tobacco is the main cash crop of the farmers. We do not know of any other paying crop that could take the place of tobacco in those sections; therefore, it seems most important that the growing of tobacco be placed on a profitable basis so as to continue to supply much needed employment to the peasants of the interior valleys of the Island. According to the report of the Brookings Institution on “Puerto Rico and its Problems,” the tobacco farms give employment to some 30,000 rural laborers, which means that this crop provides a livelihood to some 150,000 persons.

D. Reasons for the Actual Distress Among Tobacco Farmers

Among the main causes for the unsatisfactory condition of our tobacco industry, the following may be mentioned:

1. The collapse of the price of leaf tobacco in the New York market during the year 1932.
2. The lack of credit facilities for crop financing and the lack of a proper marketing agreement with the dealers.
3. Mortgage encumbrance on the tobacco farms.
4. Low production per acre due to soil depletion and mosaic disease.
5. The great destruction of farm buildings—mostly drying sheds—brought about by the hurricanes of 1928 and 1932.
6. Lack of appropriate technical research for improved varieties and cultural procedure.

The results of this accumulation of unfavorable factors have been disastrous. Many farms have changed hands through foreclosure while others have been practically abandoned. Farm buildings are hopelessly inadequate, and living conditions for the farm hands are generally unsatisfactory and often deplorable. An increasing drift of farm laborers from the tobacco sections into the already overcrowded towns is one of the resulting evils that must be immediately corrected.

E. Need of Rural Relief for the Tobacco Districts

It goes without saying that, under the abovementioned conditions, there is urgent need of rural relief in the tobacco‑growing sections of Puerto Rico. Most of the farmers are in such dire financial straits that Farm Credit facilities and A.A. A. benefit payments would come too late for them unless something is done to bridge the gap between their present state of helpless bankruptcy and the better times in prospect.

Thus, the main problem of the tobacco districts of the Island is the distressed situation of the farm laborers. With most of their small homes destroyed by the hurricanes of 1928 and 1932, their living conditions are very poor and require immediate attention. The reduction of the acreage of tobacco during the planting seasons of 1931‑32 and 1932‑33 naturally resulted in a great deal of unemployment and suffering among the laborers of these farms. To make matters worse, the application of the A, A. A. to Puerto Rico, which is expected to benefit substantially all tobacco growers in the near future, will reduce the basic acreage planted for the coming year by 20% to 30%. This will obviously increase unemployment among the peasants, in direct proportion to the areas left out of cultivation. It is reasonable to estimate that some 5,000 laborers will be thus adversely affected. The adequate housing and employment of these peasants is an important question deserving of immediate attention. A carefully laid out plan for rural relief, to include both distressed farmers and destitute laborers, is accordingly considered very urgent for the tobacco growers of Puerto Rico.

F. Results Expected from the Proposed Relief Plan

Such a plan as mentioned above, will have to depend on rural relief facilities that could be made immediately available to the Island. The scheme should be carefully studied to meet our special conditions, so that any relief measure now applied to our tobacco‑growing regions will produce, with a minimum expenditure of money, a maximum amount of permanent benefit.

Among these desirable benefits the following should be enumerated:

1. Rural Relief will make possible the rehabilitation of the tobacco industry, which is the second in importance for Puerto Rico.
2. Will provide much needed employment and better living conditions to a large portion of our farm population.
3. Will aid, in a large measure, to prevent the cityward drift of our mountain population, thus helping to the solution of this important and ever increasing social and economic problem.
4. Will give work to many heads of families now dependent on Federal Emergency Relief funds.
5. The rehabilitation of the farms will make possible the collection of mortgage and crop loan liens now held by the Federal credit agencies now operating in the Island.
6. Increased income will be made available to the coffee-growing centers, which should bring about general revival of business and enable the farmers to pay their insular and municipal taxes now badly in arrears.

G. The Proposed Plan

Tobacco growing, like coffee culture, is closely interwoven with the economic structure of the Island. Since most of the crop is grown by small native landowners spread over a large portion of the Island, it must be considered, also, that tobacco‑growing takes up a large amount of hand labor and that, therefore, the revival of the industry will be a direct and permanent relief to the laboring country population.

The normal tobacco acreage of Puerto Rico is about 50,000 acres. Due to the A. A. A. crop reduction contracts, of which some 10,000 have been signed in the Island, the total area planted to tobacco for the coming year will be approximately 40,000 acres. This will be spread in numerous small farms with a probable gross acreage of 150,000 acres and a peasant population of some 150,000.

We propose a rural relief plan on a similar basis as that proposed for coffee. We propose to purchase from tobacco farmers 15,000 acres of land at a price of $40 each. This land will be divided into 5,000 subsistence plots, on each of which small concrete houses costing $300 apiece will be constructed. The purchase of this land will be directed in the same manner as presented in the coffee plan.

Each subsistence plot will be assigned to a laborer who must be the head of a family. A wage, bounty, or labor benefit payment of $3 per week will be paid to each laborer under the same terms as prescribed in the coffee farms. The houses will be sold to the heads of families under a liberal installment plan to be determined later by the Farm Commission.

The 5,000 laborers to be settled in these subsistence plots will account, with their families, for some 25,000 or 30,000 of the peasant population of the tobacco districts. Each family will receive $156 a year in wages, plus the benefits of appropriate living conditions and the produce of the subsistence gardens they will cultivate. The total labor income for the 5,000 heads of families would be $780,000 per year.

The plan further proposes that tobacco growers be helped by the Commission through the following relief measures:

1. Distribution of fertilizers for the small farms and for demonstration purposes.
2. The establishment and operation of 50 tobacco seedbeds for the distribution of sound, selected seed for free distribution. (Preference to be given to growers associated in cooperative organizations and to those cooperating with the A. A. A. crop reduction policy).
3. The establishment of a tobacco Experimental Farm where much‑needed tobacco breeding and varietal studies will be conducted in search of more productive commercial varieties.

The complete budget for this plan can be recapitulated as follows:

Expenses for the First Year
Wages paid to 5,000 laborers at $156 per year	$780,000
Cost of 15,000 acres of land @ $40 each	600,000
Fertilizers	100,000
For 50 tobacco seedbeds @ $1,000 each	50,000
For purchase of farm animals @ $15 per farm	75,000
For 5,000 concrete houses & latrines for heads of families @ $300 each	1,575,000
Hurricane Insurance Fund for drying sheds	200,000
For the creation of a Tobacco Experimental Farmland, equipment, personnel, etc.	60,000
Administration and operating expenses	80,000
Total for First Year		$3,520,000
Expenses for the Second Year
Wages paid to 5,000 laborers at rate of $156 each per year	780,000
Fertilizers	100,000
Seedbeds	50,000
Tobacco Experimental Farm, Operating expenses	20,000
Administration expenses	50,000
Total for Second Year		1,000,000
Expenses for the Third Year
Total		1,000,000
Total appropriation for the three‑year period		$5,520,000

An adequate organization must be set up to take care of the establishment and operation of this plan in the Island. It is expected that after a period of three years the machinery of tobacco production will come back to normal, that production credit associations and marketing cooperatives would be organized, and all existing farm credit facilities already set into operation. The tobacco‑growing industry would be thus set on the way to permanent recovery.

IX. The Coconut Industry

All around the coasts of Puerto Rico there are long stretches of sandy beaches on which extensive coconut groves are planted. In the year 1920 there were some 17,000 acres under cultivation, but the hurricanes of 1928 and 1932 played havoc with the trees, either uprooting or badly damaging them, so that now there are probably much less than 8,000 acres of damaged coconut groves. Moreover, the destructive disease known as Bud Rot has made its appearance in many groves, and, if this is not quickly controlled, the coconut groves will be eventually destroyed, as were those of Cuba years ago. The disease is very infectious and spreads so rapidly that all the trees would be infected and destroyed within a short time if not attacked by vigorous measures of control. Since these sandy lands are practically useless for any other crop, it seems important that something be done to bring about the rehabilitation of these plantations and to provide additional employment and better living conditions to the laborers.

We propose that the sum of $541,700 be allocated for this purpose, after a similar plan as projected for coffee. The expenses in connection with the proposed relief work are estimated as follows:

Expenses for First Year
Wages of 400 laborers @ $156 per year	$62,400
Cost of 800 acres of land @ $50 each	40,000
Cost of 400 small concrete houses and 400 latrines for laborers	126,000
Purchase of farm animals, $15 per	6,000
For 100 half‑acre seedbeds $400 each	40,000
Eradication of Coconut Bud Rot[11]	57,000
Organization and Administration	30,000
Total for first year		$361,400
Expenses for Second Year
Wages of 400 laborers $156 per year	62,400
For care of seedbeds	5,000
For Bud Rot Eradication (Continuation of Campaign)	14,250
Administration	10,000
Total for second year		91,650
Expenses for Third Year
Wages to laborers	62,400
Care of seedbeds	2,000
Bud Rot Eradication Campaign	14,250
Administration	10,000
Total for third year		88,650
Total Cost of Coconut Plan		$541,700

X. Forestry Program

A hundred years ago an English writer described Puerto Rico as “an island completely covered with forests.” Presently the mountains have been for the most part denuded of forest, except for scattered remnants of the original vegetation in the higher elevations and the mangrove swamps in the littoral. The Luquillo National Forest comprising about 17,000 acres constitutes the only solid block of remaining virgin vegetation. In the Central Cordillera there are still to be found some valuable forests, covering the high peaks, but being in private ownership, these are fast disappearing, and we estimate that within a generation or so, this Central Cordillera, which constitutes the physiographic backbone of the Island, will be completely denuded of forests.

The Insular Government, with the limited means at its disposal, has shown a sympathetic attitude towards a conservation policy. An Insular Forest Service was established since 1917. Insular forest areas have also been created, the most important of which is in Maricao and comprises about 5,000 acres. Our budget for the Forest Service has been around $30,000. The Federal Government contributes to the salary of the chief forester and has an extension man paid with Clark‑McNary funds, not aggregating over $5,000 a year. With these limited resources, we have only been able to keep in forest, under government control, a little over one percent of the area of the Island. It has been estimated that the area which should go to forest, above the 2,000 ft. line and not in conflict with agriculture, is over 300,000 acres, or 15% of the whole.

An effort should be made now to establish a permanent forest policy, with definite objectives and careful planning. The Federal Government has to take the lead and ample funds should be provided. This project will go hand in hand with the other projects for the permanent rehabilitation of the Island.

Our committee, after consultations with the forester, Mr. Silcox, suggests that a definite attack be made and recommends the purchase of 100,000 acres in the interior mountainous section to be declared as insular forests. Money may be made available from the general sugar processing tax, which is under the jurisdiction of the Secretary of Agriculture. We estimate that 25,000 acres may still be found of the mountain palm forest in the high peaks of the Central Cordillera. The balance will have to be reforested.

A maximum of $15 per acre would place the cost of purchasing 100,000 acres at $1,500,000. Provision has then to be made to reforest 75,000 acres. It has been estimated by the Insular Forest Service that the cost of seedbeds, holing, planting, and replacement will be $15 per acre the first year, with $2 additional for replacements for two consecutive years.

It is very important in connection with a forestry program that provision be made for research, for teaching Forestry in our College of Agriculture, and for the training of a number of native foresters.

Section 2 of the Act of Congress approved May 22, 1928 provides for the creation and maintenance of several forest experiment stations. It states:

That for conducting fire, silvicultural and other forest investigations, the Secretary of Agriculture is hereby authorized, in his discretion, to maintain the following forest experiment stations for the regions indicated, etc., … and one in the tropical possessions of the United States in the West Indies.

Unfortunately, the project has not been carried out due to failure in obtaining funds. Such a project is now feasible, and we are suggesting that the Forest Experimental Station be now established in connection with the University of Puerto Rico. Appendix J is a memorandum from Dr. Clapp, of the Forest Service, on this subject.

We are proposing a tentative estimate of cost of a ten‑year forestry program on the basis of a 100,000‑acre project. The total cost is $4,172,900.

We are recommending the continuance of the present cooperative agreement between the U. S. Forest Service and the Insular Department of Agriculture and Commerce.

The appropriation of $1,125,000 for seedbeds, planting and $300,000 for replacements will have to be spent mostly in labor. Assuming that this be 80%, we can tentatively estimate how this will affect unemployment in the interior mountainous region. It will mean an approximate labor income for 1,000 heads of families the first year and about 2,000 during the succeeding six years.

 

Tentative Budget for Ten‑Year Forestry Program
Year	1	2	3	4	5	6	7	8	9	10
1.   Purchase Mountain Forest	(15,000) $225,000	(10,000) $150,000
2.   Purchase Other Lands	(15,000) 225,000	(15,000) 225,000	(15,000) $225,000	(15,000) $225,000	(15,000) $225,000
3.   Seedbeds, Planting, etc.	(5,000) 75,000	(10,000) 150,000	(15,000) 225,000	(15,000) 225,000	(15,000) 225,000	(15,000) $225,000
4.   Replacements	–	10,000	30,000	50,000	60,000	60,000	$60,000	$30,000
5.   Supervision for No. 3	3,000	6,000	9,000	9,000	9,000	9,000
6.   General Overhead	5,000	10,000	10,000	10,000	10,000	10,000	10,000	10,000	$10,000	$10,000
7.   Fencing & Other Equipment	5,000	10,000	30,000	30,000	30,000	30,000
8.   Research	20,000	20,000	25,000	25,000	30,000	30,000	35,000	35,000	35,000	35,000
9.   Education & Extension—
Professorship of Forestry	3,600	3,600	3,600	3,600	3,600	3,600	3,600	3,600	3,600	3,600
B.A. Fellowships	4,000	4,000
M.A. Fellowships			2,400	2,400
Extension Foresters	–	3,600	3,600	3,600	3,600	3,600	3,600	3,600	3,600	3,600
Extension Publications	500	500	500	500	500	500	500	500	500	500
	$566,100	$592,700	$564,100	$584,100	$596,700	$371,700	$112,700	$82,700	$52,700	$52,700
(Figures in parentheses refer to acreage) Total budget for the ten‑year program – $4,172,900

 

XI. Farm Credit in Puerto Rico

Since the times of the Spanish regime in Puerto Rico, the question of adequate credit facilities has been one of the main problems of our farmers. Outside of the crop loans made to cane growers by the sugar mills, there were very few credit facilities for the farmers of the Island. The large colonos of sugar growers were often able to negotiate crop loans through local banks, but this was practically impossible for the small planter. Farmers growing coffee usually obtained crop production loans from the Spanish merchants, who were, in almost every case, coffee dealers who supplied these crop loans in order to be able to purchase from the farmers a considerable part, if not all, of their coffee crop.

Interest charges on these loans fluctuated between 10% and 12%. Tobacco growers were mostly financed by representatives of the large tobacco and cigar manufacturing companies or by dealers who sought in this way to gain control of a certain percentage of the Puerto Rican crop. Interest charges for these crop loans also fluctuated in general between 10% and 12%. Generally speaking, the cane growers have always been the ones in a better position to obtain credit facilities, but even in their case interest charges on crop loans were set at a rate of 12%.

It is evident that with the abovementioned conditions obtaining in the Island, the need for satisfactory credit facilities was greatly felt by all Puerto Rican farmers. When the Federal Land Bank was established in the Island some ten years ago, many of the native landowners took advantage of the relatively liberal policy of this bank and proceeded to make loans such as this bank could offer—namely, first mortgage loans with the farm as security. Later on, the Intermediate Credit Bank began operations in the Island and for the first time the farmers began to have some sort of favorable credit facilities.

Due to the hurricane of 1928 and 1932 which practically destroyed the coffee industry of the Island and to the collapse of the tobacco and the sugar markets after the year 1930, the Puerto Rican farmers were, in general, unable to meet their obligations with these Federal credit agencies. The results have been that the Federal Land Bank has had to foreclose on several farm properties, and the Intermediate Credit Bank has practically discontinued operation in the Island. For the last couple of years or so, no new loans have been made by the Federal Land Bank for various reasons. The bank has been practically in liquidation, while similar institutions on the continent have been loaning hundreds of millions of dollars to the American farmers.

The reasons given by the bank authorities for the suspension of the new loans were that, according to a decision rendered by the U. S. District Court of Boston, debts for income tax to the government of Puerto Rico were to be given preference over loans such as those held by the bank. To correct this situation, the Puerto Rican legislature in the last extraordinary session approved (August 24, 1933) Act No. 14, by which mortgage liens and crop loans were declared to be preferred liens having priority over any other charge or lien for taxes or for any other costs. In spite of this, both the Federal Land Bank and the Intermediate Credit Bank have continued their policy of inactivity so that credit facilities from these sources have been practically denied to the farmers of Puerto Rico. It seems very urgent that these farm credit institutions resume normal operations in the Island as soon as possible in order to give Puerto Rican farmers the same kind of credit facilities now being extended by these organizations to the farmers of the continent.

A Puerto Rican branch of the Production Credit Corporation of Baltimore has been operating in San Juan for the last three months. Under the guidance of this agency, several production credit associations have been organized already in Puerto Rico. At the time of this writing there have been six associations set up for cane growers and one each for fruit, tobacco, and coffee. In order to help to provide initial capital for this type of cooperatives, the legislature of Puerto Rico has enacted an act appropriating $100,000 to be used for this purpose at the discretion of a commission headed by the Commissioner of Agriculture and Commerce. In connection with this matter, we wish to call attention to the fact that in view of the limited collateral that can be made available by the farmers of Puerto Rico under the actual circumstances, a definite and liberal discount policy should be set up for the Puerto Rican branch of the Production Credit Corporation in order to make possible the obtaining of these credit facilities by the Puerto Rican farmers.

There are two other credit agencies which, according to the law, are extensive to Puerto Rico, to wit: The Bank for Cooperatives and the Land Bank Commissioner’s Loans. The first of these credit agencies can supply working capital for marketing farmers cooperatives and these facilities will soon be very much needed in the Island in order to make possible the disposal of the farm products in a gradual and orderly manner. It seems very urgent that a branch of the Bank for Cooperatives be established in Puerto Rico as soon as possible.

The Land Bank Commissioner’s Loans should also be made immediately available to the Island. These credit facilities will supply the only way by which many of our farmers could prevent foreclosure of their farms. For some reason unknown to the writer, this type of loans has not been as yet made available to the Island. Since so many of the farms now mortgaged in Puerto Rico owe less than $5,000 and can thus be released by this type of loans, it seems very desirable that this credit agency be immediately made available to Puerto Rico.

Other credit agencies which should be put into operation immediately in Puerto Rico are the Homeowners’ Loan Corporation and the Federal Savings and Loan Association. Homeowner loans are greatly needed in the Island, since there are large numbers of homeowners among the middle class who have their properties mortgaged at high interest rates, often as high as 12%. Most of these people have no other hope of retaining possession of their homes outside of the relief that may be offered in the form of homeowners’ loans. Due to wholesale destruction of houses by the severe hurricanes of 1928 and 1932, there is great need for large numbers of low‑priced homes such that our middle classes can afford. It goes without saying that this kind of loans will make possible speedier relief for distressed homeowners, increased credit for new home building and repair, wider employment in the building trades and strong Federal protection for private savings. All these things are urgently needed in Puerto Rico. Credit facilities that would make safe the ownership of their homes would be a veritable godsend to the middle classes of our population.

The facilities of the Commodity Credit Corporation are urgently needed also in Puerto Rico. Sugar and coffee should be added to the list of eligible commodities on which loans may be made by this Corporation. This is especially important in the case of sugar. A surplus of this commodity will be left in the hands of Puerto Rican producers this year due to the crop limitation provided in the Jones‑Costigan Sugar Act. The Federal Surplus Relief Corporation may also help in the disposal of this surplus.

In general, we wish to recommend emphatically that all such Federal credit agencies as are extensive to Puerto Rico under recent recovery legislation be made immediately available to the Island. Only in this way we could expect to have in the Island in the near future a complete and properly coordinated credit and relief structure, the timely operation of which will result in a basic and lasting rehabilitation.

XII. Cotton Possibilities

Several years ago, our Island had under cultivation close to 20,000 acres of “sea‑island” cotton of excellent quality. Cotton cultivation is very desirable because (a) it grows in semi‑arid places where scarcely any other crop can be economically grown, and (b) because it requires a great deal of hand labor and thus provides much needed employment to the small landowners and their families.

At present no “sea‑island” cotton is grown in the Island except for a few acres planted in experimental farms in order to preserve a supply of selected seed available for the future. The demand for this long‑staple type of cotton has so greatly decreased in the mainland as to make our sea‑island cotton practically unmarketable. Since, however, our soil and climatic conditions are especially well adapted for the growing of cotton, we are proposing that a sum of $20,000 be appropriated for the trial of other prospective commercial varieties to be conducted over a period of three years. Taking advantage of the fact that no cotton outside of a few experimental plots is now being cultivated in the Island, we propose to conduct a vigorous campaign aiming at the complete eradication of the Pink Bollworm in Puerto Rico. The work has been planned to last three years and calls for a total appropriation of $80,054. (See Appendix K). An additional fund of $80,000 should be set aside in order to provide for the possible securing of a profitable market and the consequent expansion of the industry, including the establishment of a cooperative ginnery to be operated as a non‑profit organization for the benefit of the farmers.

XIII. Industrial Development

Puerto Rico has very limited natural resources, except its soil and its potential waterpower. The only mineral resource of some importance is the iron ore deposit of Cerro las Mesas in Mayagüez, which under present circumstances cannot be profitably worked. Manganese is found in the Juana Díaz deposits and traces of gold are still to be found in some riverbeds. Puerto Rico has no coal or oil supply, but it can develop waterpower up to an estimated amount of 200,000,000 kilowatt hours. Oil may be imported from Venezuela or coal from the Birmingham fields at reasonable prices. Under the present economic structure and the Tariff Act we can expect to develop industries along the following lines only:

• Industries based on agricultural raw materials now produced, or on agricultural raw material that can be grown under our conditions.
• Industries based on our density of population, i.e., on cheap and abundant labor.
• Industries based on low tariff or free list raw materials imported from nearby countries.
• Industries the products of which are bulky and cheap and whose selling price, therefore, is greatly influenced by transportation charges.
• Service and miscellaneous industries.

Naturally, our industrial development has been in the past and will greatly continue to be in the future along groups (a) and (b), since our only great resources are the soil and cheap labor. Even in this case, however, the development—excepting sugar cane manufacture—has not been large enough. This, in our opinion, has been due chiefly to two main causes: lack of capital and the competition from similar products of continental United States manufacturers.

Sugar refining should naturally have been our greatest industry, had there ever been enough capital available in the Island to finance the establishment and operation of refining plants. Considering that the raw materials for this industry, raw sugar, is the main product of our Island, it seems most reasonable that this form of industrialization be eventually fostered to its maximum capacity. To Puerto Rico, with its teeming thousands of unemployed, it is a question of life or death to develop every available natural resource; accordingly, no hindrance should be placed on this, our most natural industrial development. The Jones‑Costigan Bill provides for a limitation of our exports of refined sugar into continental United States; however, our Commission believes that the highest possible consideration should be given to the need of employment in Puerto Rico and that no permanent restriction should be put on this, our possible largest industry.

Puerto Rico can produce a great variety of vegetable products and fruits which, properly canned or preserved, can supply the local market and afford a profitable export product. The canning of vegetable and fruit products may be greatly developed by appropriate government aid. The establishment of cooperative canning factories should be financially encouraged or a system of small canning plants developed.

The Food Research Division of the U. S. Department of Agriculture has developed a method for the preparation of bottled orange juice, a product which is reported to be equal to the fresh juice in both appearance and flavor and quality. The process is based on thorough de‑aeration and quick (flash) pasteurization and is recommended as very promising for commercial exploitation. Puerto Rico produces very large quantities of excellent oranges which are grown in a semi‑wild way in the coffee plantations. Some 500,000 boxes of these fine fruits are probably lost yearly for lack of marketing facilities, and it seems important that some way be found to utilize this waste. The New York market can easily absorb all the orange juice bottled in Puerto Rico; thus, once the commercial possibilities of the method are thoroughly tested, the preparation of bottled orange juice may develop into a fairly important and profitable industry.

If the subsistence farm phase of the sugar plan is carried through as recommended, there will be distributed among these farmers about 20,000 sows of good breeding stock. This increase in the swine population of the Island will make possible the establishment of a cooperative packing plant for pork products capable of supplying a substantial part of the products now imported. It is recommended that capital for the establishment of such a packing plant should be furnished at low interest rate to a producers’ cooperative under the semi‑public corporation formed by subsistence farm settlers and other interested farmers. (Appendix L).

Bagasse is now used only for fuel in the sugar industry. The fuel value of a ton of bagasse is approximately equal to a barrel of fuel oil. Bagasse as a raw material for pulp for paper, rayon, or insulation board is of greater economic and social value than bagasse as fuel. The Arthur D. Little Lab. on a report rendered to the Hawaiian Sugar Producers Association, pointed out that there is no technical difficulty in the use of bagasse as a source of paper pulp and that only economic considerations needed to be taken into account. The Dupont interests in 1928 were considering the establishment of a bagasse pulp mill in Puerto Rico, using a process developed by their industrial experiment station. They did not go on with the project, due to the depression.

A process for obtaining pulp for rayon has been developed by the U. S. Department of Agriculture, and under an agreement with the Hawaiian Sugar Producers Association, a pilot plant is under construction in Hawaii to test it under semi‑commercial conditions. The agreement specifically provides that the data and knowledge obtained in the operation of this pilot plant can be used in other cane producing regions of Continental United States or its possessions.

Puerto Rico imports all of its lumber for construction purposes. In boards and planks alone, it imports about $1,000,000 per year. There are two processes in commercial exploitation for the manufacture of interior partition boards from bagasse. Boards manufactured by one of these processes have been in use in Puerto Rico for several years with excellent results. They are much better for interior partitions than lumber because they are immune to termite attack. It is our opinion that they can be manufactured to be sold at a lower price than regular lumber.

As a by‑product of the sugar industry, there are produced in Puerto Rico about 40,000,000 gallons of blackstrap molasses. Most of this molasses is exported to the United States, some used by a local distillery, and some used for cattle feed. Blackstrap molasses can be made the basis for either the production of nitrogenous cattle feed (as is done in Germany with beet molasses) or the manufacture of a motor fuel to take the place of some of the gasoline now imported. An alcohol‑gasoline blend or an alcohol‑ether can be placed on the market at a price lower than the present price of gasoline.

Other industries that merit study for their aid and development are: (a) the growing of cassava for starch manufacture; (b) the utilization of coconut husk fiber for the manufacture of mats and brushes; (c) the production of coconut oil or the cultivation of some oilseed bearing plant for the production of oil for soap manufacture; (d) the production of nicotine and other insecticidal plants would also be a nice industrial project. Plans for the establishment of this latter project are making headway under the Bureau of Plant Industry.

At present, over half of our population goes barefooted due to their financial inability to purchase durable shoes at their present high prices. The control of certain of the diseases prevalent in our rural population would be much easier if there were available at a relatively low price a durable shoe suitable to tropical rural conditions. The control of the widespread hookworm disease would be greatly facilitated in this way. We are strongly recommending, therefore, a survey of the economics of shoe manufacturing and marketing in Puerto Rico, with the view of establishing a shoe manufacturing plant to produce as its principal product a standardized, low‑priced durable shoe.

Puerto Rico imports for its use and as raw material for its needlework and garment industry several millions of dollars’ worth of cotton goods. A great proportion of these cotton goods is bleached, undyed material. It should be possible to interest at least one firm operating mills in continental United States to establish one of its units in Puerto Rico and take advantage of its abundant labor and local market. Cotton can be purchased in the southern seaports and routed to Puerto Rico, instead of to northern mills. Cotton spinning and weaving is such a large user of labor that although there are certain technic‑economic difficulties to this project, it should be thoroughly studied in detail to determine its feasibility.

The native straw hat weaving industry centered around Cabo Rojo should be encouraged financially to develop a workers cooperative industry. This industry has good chances of a financial success and very interesting social possibilities.

In recent years industries based on our cheap labor have developed at a great pace. Unfortunately, the growth of these industries has resulted in an undue exploitation of the workers. Its uncontrolled growth has resulted in over organization and keen competition for the same markets with subsequent failures. There is, nevertheless, a great chance for improvement and growth by developing variety in the products produced and the opening of new markets.

Puerto Rico has several clay beds and kaolin deposits which are excellent for manufacture of ceramic goods of various grades. Packing, breakage, and freight charges usually make a great proportion of the price paid for these goods by the consumer, especially in the low-price products. There is an assured place in Puerto Rico for a small plant for the production of firebrick and other low‑priced ceramic products. Local capital should be encouraged to undertake such a project and financial aid in the form of long term, low interest money offered to its incorporators.

The manufacture of low‑priced furniture for the local market from native or imported hardwoods should be fully encouraged. It should be possible to establish several scattered small furniture shops, working under a cooperative agreement to manufacture the same type and design of furniture sets, to sell through a single wholesale selling agency. Technicians, or groups of technicians, desiring to enter into such a plan may receive low interest long term money—up to one‑half or three‑fourths—of the amount needed for the purchase of tools and machines. This, like all other cooperatives suggested under this plan, should be established on the controlled cooperative principle.

There are several service industries which it will be necessary to help to expand or establish for the better development of the industrial and general reconstruction plans. First among these is a cement industry. Under our exacting climatic conditions, concrete is the only durable and hence socially economical construction material. Under different agricultural projects we have recommended the construction of 32,000 small concrete laborers’ houses. At present cement prices, over one‑third of the total cost of these houses will be paid for cement. This would involve an expenditure of over $3,200,000. Besides the construction of these houses, there are several other proposed plans which will use a fairly large quantity of cement. Puerto Rico has abundant raw materials—tertiary limestone and clay—for the manufacture of cement. Power for grinding the limestone rock may be obtained from either one of the existing government hydroelectric power plants, or from one of the various power sites to be developed. Fuel oil or coal may be imported from Venezuela or the continental United States.

Major E. C. Eckel, Geologist of the Tennessee Valley Authority and nationally known expert on cement manufacturing, considers such a project feasible. He estimates the plant to cost $2 per barrel year production if the plant is small, and $1.75 or lower if plant is fairly large. Under Puerto Rico conditions, he estimates a semi‑public cement plant can produce cement at not over $1.50 per barrel. (See Appendix M).

Another of the service industries that merits careful study is the production of bottles, containers, and cheap glassware for the local market. The wide use of methods of food preservation in the home and the commercial sanitary distribution of food need cheap glass containers. This industry can be established in connection with firebrick and ceramic products industry or established as a semi‑public corporation.

Cheap power and fuel are necessary for the development of industrial enterprises. Although Puerto Rico has no supply of coal or oil, it is not so badly endowed as to waterpower resources. It is estimated that the developed hydroelectric power is about half of the total possible development.

There are various power sites on the north coast that should be developed in connection with irrigation districts. Irrigation is practiced at present on the South Coast and in the new Isabela district. On the North Coast it is practiced by large corporations that can afford to make so heavy outlays of capital. It is necessary to help the farmers of the region to assure their crop from short but very intense periods of drought of frequent occurrence.

Among the various power developments, the Arecibo River Hydroelectric projects at Palmieri, Morones and Dos Bocas merit especial mention. With a total estimated outlay of $1,800,000 there would be developed a total of 7,000 horsepower. In connection with these projects an extensive irrigation district can be developed in the Arecibo Valley. From the Garzas Hydroelectric and Irrigation Project in the South Coast may be obtained 4,000 horsepower and water to irrigate 6,000 acres in the Guayanilla and Yauco municipalities at a total cost of $5,000,000.

There are various other power sites of varying potentiality from which may be obtained about 15,000 more horsepower.

Mr. A. Luchetti Otero, Chief Engineer, Utilization of Water Resources, recommends in a cable to the Commission:

Present growth of hydroelectric system owned and operated by the government and desirable future development for widespread use of electricity in the Island dictate as the immediate next step that privately owned systems operating under franchise in the Island be purchased outright by the government. Present worth of private systems about $7,000,000. Economic considerations as to cheapening of electric rates to the public for household and for farming and other industrial uses fully warrants such purchase as part of scheme of further developing the waterpower resources and utilizing production to best advantage. (Appendix N).

There are three privately‑owned power systems in the Island. The two largest are absentee corporations, one of them a Canadian company serving about 35 towns including the capital, San Juan. The power rates of these companies have been rather high.

A. Recommendations

Most of the industrial projects outlined in this report need to be studied in detail by qualified experts before definite action can be taken. It is therefore recommended that under the semi‑public corporation established in the sugar project, a division of industrial development, survey and research be created. This Division will carry out the more specific plans outlined in this report, select experienced technologists to carry out studies for the possible development of other industries, and carry out research for the possible utilization of local raw materials or byproducts of existing industries. The section should be endowed with not less than $150,000 for its establishment and $50,000 yearly for personnel and equipment.

The establishment of the industries studied by the Industrial Development Division shall be carried out in accordance with the general underlying principles of this report.

Most free traders will have to admit that industries cannot be developed in any region unless protected in their first few struggling years of their establishment and development.

It would be next to impossible to develop certain industries in Puerto Rico if protection is not afforded to them from the potent and highly organized continental American manufacturers. Even semi‑public enterprises may find their existence threatened by dumping and price‑cutting wars. In our opinion, the only effective way to protect our infant industries would be to grant powers to the Insular Legislature to levy custom duty on products of all countries, including continental United States.

We do not want to see Puerto Rico a protectionists haven. Tariff protection should be granted up to reasonable socially desirable limit for the first few years of the industry establishment and, after that preliminary period, the industry should be allowed to decide whether to continue protected but under public utility regulations or go unhampered on a free market.

The Keller‑Copeland Act recently approved by Congress provides for the establishment, operation, and maintenance of foreign trade zones in ports of entry of the United States to expedite and encourage foreign commerce. The Commission recommends that the necessary steps be taken so that either the semi‑public corporation created in the sugar reduction plan or the Insular Government be granted the power to establish foreign trade zones in the ports of San Juan, Ponce and Mayagüez. The establishment of such foreign trade zones will greatly enhance our possibilities for industrialization in the immediate future.

It is urged that $14,000,000 be allocated for the purchase of the privately‑owned systems and developing of two of the most strategically situated and promising power sites.

The following allocations are recommended for projects partially studied, and whose desirability we are thoroughly convinced:

1. Cement plant of 500,000 barrels per year. Capacity – $900,000. There will be needed at least 1,500,000 barrels of cement for the construction of the laborers’ houses in the different plans approved. There will also be needed an unestimated but fairly large amount of cement for the several other projects. Cement sells in Puerto Rico at $2.15 to $2.25 per barrel. Estimating that the plant would supply only half the cement used in all projects, and that only 50¢ would be the differential in price (see Appendix M), it is calculated that this saving would make at least half the total cost price of the plant. Puerto Rico imported about 200,000 barrels of cement in 1933—a subnormal year for new constructions. It is requested that Major E.C. Eckel, Geologist of the Tennessee Valley Authority be sent to Puerto Rico to make the necessary survey and arrangements for the establishment of this plant. Work should begin on it as soon as possible. (Appendix M).
2. Cooperative Packing Plant, with a yearly capacity of 200,000 hogs – $500,000. Puerto Rico imports about $3,700,000 of pork products. The standard breeds of hogs do fairly well under Puerto Rican conditions. (Appendix E).
3. An experimental plant for the preparation of bottled orange juice, with a year capacity of 40,000 gallons, figuring on processing 100 field boxes per day. – This plant could include also pilot plants for manufacture of vinegar and for the manufacture of wine and cordials from orange juice. The total cost, including materials and operating expenses, for 100 days is estimated at $37,500. (Appendix O).

XIV. Transportation

A. The Coastwise Shipping Act and its Effect on our Trade

After the American occupation of Puerto Rico, the national coastwise laws were made applicable to Puerto Rico. It meant that all the products we exported to, or imported from, the United States had to be carried in American bottoms. Foreign competition was thus banned.[12]

At the time of the change of regime, more than 90% of our trade was with countries other than the United States. After a lapse of 35 years, things have changed. Our total trade now is 90% with the United States and 10% with other countries. That trade must be carried in American vessels, the most expensive ones in existence.

The spirit underlying the coastwise laws is explicable in the Continent. In the Continent they had to cope with foreign competition. Numerous canals affording inland facilities had been opened and were to be opened to traffic after heavy financial sacrifices. The railroads represented billions of dollars of the people’s money. Any outside competition might imperil, if not destroy, the whole financial structure. But in Puerto Rico, not a part, geographically, of Continental United States, the application of the coastwise laws—measures of an economic character and purview—has been a decided disadvantage. The Filipinos were right in opposing the coastwise laws. In our case, geography and economics do not seem to meet.

The Brookings Institution report sums up the disadvantages of the coastwise shipping laws to Puerto Rico as follows (p. 411‑412):

The handicap to Puerto Rican trade manifests itself in three distinct ways. In the first place, it increases the cost of Puerto Rican imports by the extent to which the rates charged by American ships are higher than those charged by other ships. The concrete significance of this may be illustrated by the fact that Cuba, which, of course, is not subject to American shipping laws, can bring rice all the way across the Pacific at a cost of only one‑tenth of a cent a pound more than the cost of bringing it from Louisiana.

In the second place, the requirement that American ships shall be used tends to offset somewhat the advantage which the tariff gives to Puerto Rico in selling in American markets. In the case of sugar, for example, the Cuban rate on raw sugar to New York is 10 or 11 cents a hundred, while the corresponding rate from Puerto Rico is 15 cents, and on refined sugar the rate from Cuba is around 13 cents and from Puerto Rico around 21 cents.

In the third place, if Puerto Rico were free to use foreign shipping whenever it found an advantage in so doing, it is quite probable that it would be able to build up a larger trade with foreign countries than it now has. If a foreign ship bringing goods to the Island, for example, could then pick up a cargo for American as well as foreign ports, it is not improbable that more foreign ships would call at Puerto Rican ports. This would open the way for the Island to buy many of its imports in foreign markets instead of having these same goods shipped to it as “Reexports” from the United States. It would thus profit not only by the lower rate on foreign shipping but also by a saving of handling charges on the mainland.

This is not the place to argue whether laws designed to establish the American Merchant Marine are good or bad from the standpoint of the mainland, but it is distinctly unfortunate that so large a share of the cost of carrying out such a policy is placed upon the shoulders of Puerto Rican consumers, whose purchasing power is far below the American standard.

Diffie’s recent book Puerto Rico: A Broken Pledge is very critical against the corporative interests that monopolize our trade. It states, under the title of “Comparative Shipping Costs,” as follows (pp. 120):

The fact that Puerto Rico is forced to trade with the United States in American ships only is not in itself an evil. Only when rates applying between Puerto Rico and the United States are higher than those Puerto Rico could obtain if she had free bargaining power would such a decision be justified.

There seems, however, to exist no discrimination against Puerto Rico from New York to ports in the other West Indies. The freight rates are about the same.

In strong contrast with these rates, however, are those applying to South American ports. To ship canned goods from New York to Chile, a distance of more than 4,000 miles, the cost is only 20 cents a thousand miles for each hundredweight. For the same product, Rio de Janeiro pays only 15 cents per 1,000 miles for each hundredweight; whereas, as has been seen, Puerto Rico must pay 33 cents. To import cement, the cost to Puerto Rican shippers is 25 cents a hundredweight, while Panama, 600 miles further from New York pays only 30 cents, and Colombia, still further from New York, pays but 21½ cents. How great this difference is may be more readily seen in the difference in costs per 1,000 miles. Where Puerto Rico must pay more than 17 cents. Colombia’s rate is only 10 cents. To ship canned milk also costs Puerto Rico a great deal more than it does her neighbors to the south: Chile pays but 23 cents, Panama but 20, and Ecuador but 15 cents a thousand miles for each hundredweight, as compared with the rate of 33 cents charged to Puerto Rico. It costs Colombia only 17 cents and Haiti only 22 cents a thousand miles for importing rice, while Puerto Rico must pay a rate of 27 cents for the same product. Chile and Panama pay but 16 and 18 cents respectively a thousand miles for shipping flour, and the same product costs 23 cents when sent to Puerto Rico.

We also find that the rate on certain products is a great deal more from American ports to Puerto Rico than from European ports to Puerto Rico. Dried vegetables from Europe pay 17 cents a thousand miles for each hundred‑weight, and, as has been said, the same products pay 23 cents when brought from New York. Just how great the discrimination is and how much Puerto Rico loses in some cases by being cut off from foreign markets is vividly shown in the cost of importing rice. Puerto Rico must pay 37½ cents a hundredweight from New York, whereas the cost from Japan to San Francisco, a distance three and one‑half times as great, is but 20 cents. In this case, Puerto Rico is paying almost seven times the shipping rate that San Francisco has to pay.

In a report submitted by one connected with the fruit industry to Dr. J. A. Dickey, dated April 26, 1934, discussing the handicaps with which our fruit industry had to deal, it is stated:

Most of the other citrus sections except those in the extreme Southwest have lower transportation costs than Puerto Rico. It costs Puerto Rico more to put fruit in any market outside of New York City than it does practically any other section in the United States. Florida has lower transportation costs to New York City than does Puerto Rico. Almost all of the foreign producing countries have a lower transportation cost to competitive markets than has Puerto Rico. This is particularly true in the English market where Palestine, South Africa, Jamaica and almost all other sections have lower costs of transportation than has Puerto Rico. Even California, shipping to the English market and going through the Panama Canal, has a lower rate than does Puerto Rico.

Puerto Rico has inadequate and unsatisfactory transportation. As far as the service is concerned on the one line that is used by the Puerto Rico growers, there is no particular objection, as this line supplies pre‑cooling and refrigeration for our fruit. But the most serious problem that Puerto Rico growers have to consider is the fact that all of our fruit moves over this one line, sailing from Puerto Rico on Thursday and arriving in New York on Monday. This is more of an objection than most of the growers in Puerto Rico realize, as in seasons of heavy shipments the arrival on one boat in New York of from 35,000 to 40,000 boxes in one day causes the buyers to take advantage of the situation and keep prices low. Some solution of this problem must be found, and this can be found, provided the growers work together for the correction of this unsatisfactory method of shipping. There is probably no other producing section in the United States, and very few in the world, that has this condition to contend with.”

To sum up, the shipping rate payments and marine insurance on imports alone amounted to $5,980,000 (Brookings Report, p. 584) in the year 1927‑28. It is estimated that the total freight payments for commerce with the United States exceeds $10,000,000 in a normal year.

There is no question that this represents an undue heavy burden on the productive resources of the Island and its consuming population. Something should be done, after thorough investigation of the matter with the Coastwise Shipping Act, either eliminate it entirely in so far as Puerto Rico is concerned—thus following the precedent of the Philippines—or invest the President with power to suspend its application to Puerto Rico, if deemed necessary for the economic betterment of its inhabitants.

Objections might be made on the grounds that this action would be unconstitutional. This allegation, in our opinion, would not prosper since the Supreme Court of the United States has already passed upon it in similar cases.

Obviously, the best interests of a detached territory may often demand that its ports be treated very differently from those within the states. And we can find nothing in the Constitution itself or its history which compels the conclusion that it was intended to deprive Congress of power so to act. (See Pennsylvania v. Wheeling & B. Bridge Co. (Pa. 1856) 18 How. 421, 15 L. Ed. 435; Knowlton v. Moore (N.Y. 1900) 178 U. S. 107, 44 L. Ed. 995.)

The attitude of the Bureau of Insular Affairs of the War Department, though conservative, is well expressed by General F. L. Parker in a recent report dated August 22, 1933: “…in entire external trade (Puerto Rico) was subject to certain disadvantages as regards shipping rates and facilities—the result of the inclusion of the Island in the operation of the United States coastwise shipping laws.”

If as a matter of administrative policy, the Coastwise Shipping Act is to continue effective in the Island, we strongly recommend that the United States Shipping Board be approached and use be made of the steamships “Monticello” and “Mount Vernon” which are lying idle near Annapolis, Chesapeake Bay. These boats have a displacement of 17,000 tons and a speed of 23 knots. We have reliable information about the condition of these boats: The hulls are in remarkably good condition and the engine equipment in fairly good shape.

These steamers could be remodeled with the use of P. W. A. funds. They would reduce the sailing time between San Juan and New York from 90 to 65 hours. They could be operated by a semi‑public corporation similar to the one recommended for sugar, operating at cost plus a limited profit (probably 8%), as a necessary concomitant for the rehabilitation of the Island.

XV. Tourist Possibilities

In the Island of Puerto Rico, the United States has what is probably the most perfect natural Vacation Land in the Western hemisphere, and an Island of peculiar appeal to the traveler from the United States. In these days of social and economic crises, it has a stable government, and its money is not subject to the whims of Foreign Exchange, which, with the present devaluation of the dollar, is an important consideration to the American traveler in the selection of an objective, and one of which immediate advantage should be taken.

A. Its Appeal to Americans

Puerto Rico offers all the attraction of the strange, tropical, and Spanish atmosphere, and it does so without the accompanying disadvantages of foreign laws, money, language, or crude sanitation. To the American tourist it eliminates the unpleasant Customs examination both on the Island and in the home port. To the visitor the Island offers every possible facility for enjoying its beauties—fine motor roads, excellent water supply, modern hospitalization, and sanitation.

B. Climate

Certain it is that few areas enjoy as delightful a climate as does Puerto Rico. Its location within the trade wind belt and its mountainous surface makes it one of the most favored regions of the Tropics. It is warm but always comfortable, having uniformity of temperature without the enervating monotony which is so trying to the Northerner.

C. Physical Characteristics

Including its smaller dependencies, Puerto Rico has an area of a little over 3,400 square miles and forms a rough parallelogram about one hundred miles long by thirty‑five miles wide. It has a mountainous central backbone, extending the Island’s length from East to West, with an average elevation of twenty‑five hundred feet from which some peaks rise to about five thousand feet.

D. Historic Background

To the visitor with a taste for the historic, Puerto Rico offers a fertile field for the study of early, almost medieval Americana, for he will recall that it was here Columbus landed on his second voyage, and that by his side stood the romantic Ponce de Leon. Firmly established by 1508, the colony was shortly afterward attacked by the French, and being also constantly harassed by foes of the Spanish Empire, there was constructed at San Juan one of the most massive systems of fortification the New World was ever to know. Even now these walls are objects of awe and admiration and constitute a unique monument of military engineering. Almost impregnable, these works withstood the almost constant attacks of roving buccaneers and pirates, while such military leaders as Sir Francis Drake and the Duke of Cumberland withdrew before their might.

E. Terra Incognita

This island, so rich in natural beauty and the traditions of a great and romantic past, is probably the least known part of the United States. Countless continental Americans do not seem to know that it is the home of over a million and a half American citizens. Letters have been written to an imaginary American consul at San Juan, and a few have been known to ask if it were a part of the Philippine archipelago.

This vagueness about Puerto Rico is unfortunate but understandable if an attempt to obtain tourist information is made. The various agencies offer little or no information as to climate, scenery, health, bathing facilities, golf or tennis clubs, or even hotel accommodations. The sole source to which the inquiries is referred is the office of the New York‑Puerto Rico Steamship Company. Here one will find an attractive pamphlet on the islands of the Caribbean which, incidentally, includes Puerto Rico.

F. The Problem

Briefly, the tourist situation in Puerto Rico may be summarized to consist of a “vicious circle,” its segments being inadequate and expensive transportation, lack of publicity and inferior hotel accommodations. Obviously, the circle must be broken, and the initiative must apparently come from governmental sources.

G. Publicity

This initiative is now taking form. During the past year, the Department of Agriculture and Commerce created a Bureau of Publicity as an initial attack on the situation. Literature is being prepared to advertise the Island of Puerto Rico to the American tourist, while other forms of advertisement are now being studied.

H. Hotels

The question of hotel accommodation is one of paramount importance, and one in which it is felt Federal help will be especially needed. There is at present on the Island one first‑class hotel, the Condado, in San Juan, designed by the eminent architects, Warren and Wetmore, and constructed some years ago by American interests at a cost of over a million dollars. This hotel is ideally situated on a rocky elevation of the ocean front and is accessible to the heart of San Juan by a ten‑minute ride. With the sea before it and a great natural lagoon at its back, the hotel enjoys a location unequalled in the West Indies.

I. The Condado’s History

Constructed originally with a capacity of ninety‑six rooms and sixty‑six baths, the Condado proved too small to operate economically and serve the tourist trade. This, combined with the advent of prohibition, and the resultant diversion of tourist traffic to other islands, made the hotel an unsuccessful business venture and it was accordingly closed after several years. Eventually purchased by a wealthy Spanish resident of the Island for three hundred thousand dollars, it has since been operating, although in a most unsatisfactory manner.

J. Proposed Development of Condado

Inquiry into the possible development of the hotel has shown that, by increasing its capacity with the addition of a hundred rooms, each with bath, the Condado would fulfill its function as the premiere hotel of the Island and, within a comparatively short time, become self‑supporting. The estimated cost of such addition is three hundred thousand dollars, while development of the lagoon in keeping is estimated at fifty thousand dollars. It should be noted that the existing structure contains sufficient kitchen, dining, and lounge service to supply the increased capacity without any further expansion of their present facilities.

K. Costs

After a careful study of the situation, it has been found that local private interests have insufficient capital to take care of this development. Accordingly, the Governor of Puerto Rico recently obtained an option on the purchase of the hotel for three hundred thousand dollars. Thus is made available for six hundred and fifty thousand dollars a hotel establishment, the actual cost of which would be almost a million and a half dollars, exclusive of the land.

L. Increasing Employment

The advantages of refinancing and operating this hotel are many. It is obviously of immense importance to the future development of the tourist trade on the Island. It is also immediately apparent that the proposed expansion will necessitate the employment of a large amount of labor, not only on the actual construction but also in the maintenance. Also, the increased activity will undoubtedly motivate local hotel interests to emulation with a corresponding increase in employment. This means that increased buying power will be available to the inhabitants of the Island, as the money would be dispensed locally.

M. Hotel Combinations

It will be remembered that there exists in Puerto Rico the Coamo Springs having therapeutic value similar to Warm Springs, Georgia, and that a combination of effort could be arranged to the advantage of both hotels. Then, too, the Condado could undoubtedly become the nucleus of a hotel and camp system embracing the whole Island. The possibilities grow with each consideration of the subject.

N. Federal Interest

This project is considered of sufficient importance to merit the attention of the Administration. Federal aid made available for the financing of this project will be well in accord with any general plan for the economic rehabilitation of Puerto Rico.

O. Transportation

Of corresponding importance is the question of transportation between the Island and the mainland. Obviously, the finest hotel can be of little value if it is inaccessible. Also, a means must be supplied for reaching the continental markets if agricultural production is to be encouraged. At the present time Puerto Rico is sadly lacking in fast, frequent ocean transportation. The subject has been investigated by R. Martin Stevenson of the Society of Naval Architects and Marine Engineers, who has prepared a report entitled “Puerto Rico and the Tourist Trade.”

XVI. Tax Reduction Program

No plan for the economic rehabilitation of Puerto Rico would be complete without taking into consideration the grave problem of our public debt and the great need for a general tax readjustment. We are proposing herewith a tentative plan which will utilize a substantial amount of the processing tax in reducing the heavy burden of taxation of the farming class and, in doing this, accomplish: (a) Compensate farmers in a manner equivalent to benefit payments; (b) partially solve the problem of municipal finances; (c) help in the solution of the problem of the Isabela Irrigation District.

A. The Public Debt of Puerto Rico and the Problem of Property Taxes on Farms

The public debt of Puerto Rico is divided into municipal and insular, as follows:

Debt of the Insular Government:
Bonds and Notes			$28,500,000
Debt of the Municipalities:
Bonds and Notes	17,500,000
Accounts Payable	2,000,000		19,500,000
Total			$48,000,000

The amount of $46,000,000 of bonds and notes is redeemable at an annual rate of $2,000,000 with an annual charge of $2,000,000 for interest, or a total charge of $4,000,000 per year: $2,000,000 to cover the insular debt requirements, and $2,000,000 for that of the municipalities.

With the exception of some temporary loans redeemable out of the general fund of the Insular Government, and irrigation bonds, the debt is redeemed with the proceeds of the special taxes on property. The bonds representing the municipal debts are all redeemed with property taxes.

Taking into consideration the preponderance of agriculture over all other activities, we can say for practical purposes that the burden of the public debt, both insular and municipal, is being suffered by the farmers.

Due to the effects of the depression the taxpayer has lost his ability to pay taxes, and the collection of property taxes levied in the amount of $7,000,000 per annum has resulted in a failure, as can be noted by the following figures:

Property taxes in arrears pending collection at the close of the fiscal year, June 30, 1931	$4,670,958.24
Portion of taxes in process of attachment	$4,258,165.44
Property taxes in arrears pending collection at the close of the fiscal year June 30, 1932	$5,862,497.28
Portion of taxes in process of attachment	$5,465,603.65
Property taxes in arrears pending collection at end of fiscal year June 30, 1933	$7,176,910.28
Portion of taxes in process of attachment	$6,102,653.62

In two years, the accumulation of uncollected receipts has nearly doubled, with the following results:

In 1931‑1932, property taxes to be collected for the municipal and school budgets were as follows:

Current year	$994,877.82
Previous years	693,898.66
Total to be collected during fiscal year		$1,688,776.50
Amounts actually collected:
Current year taxes	568,449.28
Previous year’s taxes	317,590.15
Total amount actually collected during fiscal year		$886,039.43
Figuring the results on a percentage basis:
Amounts collected represent	52.42%
Amounts left uncollected	47.58%
In 1932‑1933 taxes to be collected were:
Current year	982,060.20
Previous years	859,859.63
Total amount to be collected during the fiscal year		$1,841,919.83
Amounts actually collected during the fiscal year:
Current year taxes	509,606.67
Previous year’s taxes	251,982.55
Total amount actually collected during fiscal year		$781,591.22
Figuring the results on a percentage basis:
Amounts collected represent	41.33%
Amounts left uncollected	58.67%

All budgetary revenue resources estimated for each fiscal year are appropriated to meet the services. The total revenue estimates are encumbered with budgetary expenses and the failure in the collection of the revenue causes the accumulation of budgetary accounts payable, the total of which increases each yeah at least in the same proportion that collection decreases.

The following figures show the annual increase of accumulating accounts payable of the municipalities, as well as the corresponding increase in revenue left in process of collection:

End of fiscal year	Accumulated Accounts Payable, budgetary	Revenue which remained uncollected (including property taxes and other revenue)
June 30, 1931	$1,515,000	$1,975,000
June 30, 1932	1,795,000	2,490,000
June 30, 1933	2,090,000	3,060,000

In the report rendered by the Auditor’s Office as of June 30, 1933 (see page 14), it is as stated that outstanding accounts payable of municipalities increased during the last five years from $868,624.00 to $2,752,671.15. This amount includes:

1. Salaries of officers and employees, pending payment in many cases during periods of from two to five years.
2. Salaries of physicians and nurses rendering charitable services.
3. Maintenance of hospitals.
4. Merchants’ bills for materials and supplies.
5. Rents of schoolhouses.
6. Salaries of teachers payable with municipal funds.
7. Laborers’ wages.
8. Electric light service in 34 municipalities served by the P.R. Ry. Lt. & Power Co., bearing a penalty of 9% interest.

This situation has two undesirable effects:

1. Creditors of accounts not bearing interest, such as the personnel, sell their claims with a discount of from 10% to 30%, when possible, the dates of maturity being undetermined and payment contingent on the possibilities of collection.
2. The cost of the services has therefore increased or has not suffered possible reasonable reductions.

In spite of such a condition, due primarily to the failure of collection of taxes, the payments of bonds, notes, and interest thereon of both the insular and municipal Governments, has been made at maturity, although redemption funds come out of property taxes. Payment has been possible for the following reasons:

1. Because when the portion of the collection of taxes pertaining to redemption funds is not sufficient, the deficiencies are covered with the portion of the tax collections pertaining to the general funds. Such portion is already encumbered with budgetary expenses and its application to the debt service is an additional cause for the constantly increased accumulation of accounts payable. This is why in many municipalities accounts payable left outstanding at the close of the fiscal year are about 90% of the amount of the current budget.
2. Because in various municipalities the rate of the special taxes for the creation of the redemption funds are excessive as compared with the requirements of principal and interest, and cash has been accumulated unnecessarily to the detriment of the taxpayers, The municipalities of Ponce and Arecibo are examples of these cases.
3. Because as a last resort, deficiencies of redemption funds are covered with the general funds of the Insular Treasury, with the corresponding undesirable effects on the operating budget of the Insular Government.

The effects of this condition in the general budget of the Insular Government are, however, insignificant if we consider the fact that while property taxes are the most important source of revenue of the municipalities, representing from 75% to 80% of their total budget, the Insular Government budget receives only $400,000 from property taxes, which is only 4% of the total amount of its budget.

A consolidation of the debt by floating a new bond issue has been discarded as a remedy, not only because of the possible difficulties which may be encountered in the market for the sale of the new bonds, but primarily due to the fact that in the majority of cases the right of the people to redeem bonds and notes before maturity was not reserved. Unfortunately, also, loans were contracted without following a coordinated policy for the debt service. It seems desirable that the Government of Puerto Rico, whenever possible, should try to redeem before maturity outstanding bonds or notes which were issued bearing high rates of interest. In some cases, interest notes on bonds are as high as 5½% and on notes as high as 8%.

The problem of municipal and insular indebtedness is not one confined to Puerto Rico. It has been recognized by Congress to be a national emergency, in Act No. 251‑73d Congress, entitled “An Act to Amend an Act entitled “An Act to establish a uniform system of bankruptcy throughout the United States”, approved July 1, 1898, and Acts amendatory thereof and supplementary thereto”, approved May 24, 1934. The remedy applied by the National Government under its limited constitutional authority in the mainland, regarding the subject, was to extend the jurisdiction of the Federal Courts in Bankruptcy, providing that municipalities and taxing districts, at their initiative, and with the approval of 51% of their creditors (credits) may submit to the Court a plan for the readjustment of the debts. The Court is to hear the petitioners as well as the opposition, and the decision is only coercive to minority creditors.

This remedy cannot be applied in Puerto Rico, both for reasons of policy and of law, as follows:

1. The Legislature of Puerto Rico cannot pass laws impairing the obligations of contracts; thus, the coercive feature of the statute could not be applied to minority creditors.
2. If the Federal Act be made applicable to Puerto Rico, it would not be effective in practice, because bondholders residing in continental United States possess from 75% to 90% of the debt and they are sure to collect the total amount of their claims, as explained on pages 110 and 111 of this report; thus, they will never give their consent to a readjustment whereby their payments would be reduced.

In the following pages recommendations are submitted, including possible measures coordinated with the general reconstruction plan, which may be considered proper remedies for the problem.

B. Suggestions on the Problem of the Public Debt of Puerto Rico with a view of Reducing the Tax Burden and Irrigation Fees on Farms

1. Under our scheme the Insular Government will have to take over or assume the entire municipal debt outstanding, which in round figures is composed of the following:

Bonds and Notes	$17,500,000
Accumulated Accounts Payable	2,000,000
Total	$19,500,000

The current budgetary indebtedness, estimated at $2,000,000, will be funded in the form of notes to be issued by the Insular Government, bearing a reasonable interest rate, redeemable by series during a period of four years out of the new redemption fund referred to later on in this memorandum, the Government reserving the right to cancel them before maturity.

2. Municipalities will in turn issue refunding bonds to the Insular Government to cover their indebtedness. Such refunding issues should be redeemable according to a new amortization plan, flexible enough to admit necessary readjustments. It is presumed that a period of three years should be considered a reasonable period of transition during which to apply and develop the basic measures for the economic reconstruction of agriculture; thus, the redemption plan should be prepared on the basis that no special additional taxes be levied during said period. Subsequently a special tax could be levied to provide resources for the redemption fund later on mentioned in this report (See (c) and (d) under No. 4), if the other sources of revenue from which the said fund is to be created were at that time insufficient to meet the requirements of principal and interest. Otherwise, a portion of the new refunding bonds should be cancelled each year under authority of law, in the same proportion that the municipal bonds and notes of the old issues be redeemed by the Insular Government.
3. The Insular Government will have to meet, therefore, the annual payments of principal and interest of the whole debt, which represents the payment of about $5,000,000 every year.

As the cost of interest decreases as the principal is reduced, the estimated maximum of $5,000,000 will be gradually reduced.

A general redemption fund to meet the requirements of the entire debt will be created from the following sources:

• From transfers out of the trust fund hereinafter mentioned.
• From revenue coming out of duties on sugar imported from Cuba to be refined in Puerto Rico, of which at least $200,000,000 annually should be deposited in this fund.
• From the proceeds of a special tax to be levied by the Insular Government in case the proceeds from source (b) be for some reason reduced after the three years transitional period.
• From funds to be received by the Insular Government out of the redemption of the refunding bonds of the municipalities in case the circumstances might not render desirable their cancellation, such funds to be raised by the municipalities by the levying of a special tax after the three years transitional period, during which it is expected that the farmers had recovered their ability to pay.

Any surplus in the new redemption fund during any year after covering the requirements of principal and interest, should be used to retire before maturity bonds or notes bearing high rates of interest in order to reduce as fast as possible the public debt of the Island.

The cancellation of bonds or notes before maturity may be carried out in two ways:

• By using the right reserved to the people for such redemption in cases where such right was reserved, and
• By purchasing in the market the said securities whenever possible.

The amount of $4,000,000 out of the processing tax on sugar during three years, shall be deposited with the Insular Treasury to be held in trust, to be granted to the farmers in the form of a reduction to the tax burden, as well as in reduced fees for irrigation service.

This trust fund shall be known as “Fund for the Benefit of General Agriculture to be granted to Farmers in the form of Reduced Taxes and Irrigation Fees.”

Disbursements out of this trust fund should only be made in the form of transfers to substitute whatever reduction of taxes to farmers be made by the Legislature as well as reductions to be made to fees for irrigation service.

4. The total property tax rate could be substantially reduced or at least the special taxes now in force for the redemption of loans could be entirely repealed. These taxes fluctuate in our municipalities from about 25/100 of one percent to 75/100 of one percent on taxable property, plus 35/100 for the Insular Government.

The total tax rate including municipal and insular purposes fluctuates in each locality from 1.85% to 2.61%.

Reductions are estimated to be from 0.65% to 1.10%.

Therefore, the average reduced rates could be from 1.20% to 1.41%.

The reduction should be made primarily for the benefit of the farmers, including their lands and other properties. The taxpayers, therefore, could be divided into groups for purposes of taxation. In this way the $4,000,000 to be provided from the processing tax on sugar during the three years will be the basis for the reduction of the tax on farmlands and other properties. It has already been held by United States Supreme Court that the grouping of taxpayers by classes does not conflict with the constitutional limitation of uniformity.

The first classification will therefore be of (a) farmers and (b) non‑farmers. Taxes on farmers will be reduced, based on the $4,000,000 coming out from the processing tax and taxes on non‑farmers on the basis of the duties to be collected on imported sugar from Cuba. A further classification might be made among the farmers themselves, taking into consideration either the acreage of their farms or the valuation of their properties. This second classification should be made with the purpose of benefitting the smaller farms in accordance with the spirit and purpose of the general rehabilitation program. This graduated reduction of the tax will be an aid for the development of the land policy inasmuch as it would tend to subdivide the larger farms into small ones in order to reduce taxation. However, in order to avoid a judicial attack to the reduction policy by the big taxpayers with the corresponding temporary disturbance to the whole plan, it is recommended that the reduction be made on a uniform basis, provided that the Income Tax Law be amended establishing graduated tax rates.

C. General Considerations

The measures suggested are submitted, based on the following considerations:

1. The levying of a special tax for the redemption of bonds forms a part of the contracts entered into with bondholders, and “no law shall be passed impairing the obligation of contracts.”
2. The good faith of the people of Puerto Rico has been pledged for the payment of principal and interest of all bonds, including bonds floated by municipalities. This is also a provision of the contracts entered into with the bondholders.
3. The people, through the legislative power, have the right to substitute ax a special tax with other resources to be devoted to the redemption of the public debt, provided that such a substitution will not be an impairment of the obligations.
4. The legislature has power to pass a remedial or corrective act based on the above principals.
5. Such remedial legislation should give power to the administration in order that the Executive, through the taxing machinery, may be able to make the necessary adjustments of the tax rates when desirable, taking into consideration both the requirements of the public debt and the relative sound economic conditions of the farmers.
6. Additional indebtedness of municipalities to be taken over and assumed by the insular government will not affect and therefore will not exceed the constitutional limitation of the insular government for the incurring of debts. This is so because the municipalities contracted these debts pursuant to authority delegated to them by the legislature in accordance with the Organic Act. Furthermore, the charge to the insular Government is offset by the corresponding amount of refunding bonds to be issued by the municipalities, which before being cancelled shall constitute an asset of the Treasury.

D. Results

If the measures suggested are substantially applied, the following results should be expected:

1. Benefit payments shall be granted to farmers in the form of reduced taxes out of the processing tax on sugar, thus making possible the application of this fund for the general benefit of agriculture.
2. The public debt now amounting to $48,000,000 which represents about 20% of the total amount of the assessed valuation of the Island, will be rapidly reduced.
3. Import duties on sugar from Cuba will be applied not in the form of government expenses but as an investment for the reduction of the public debt.
4. Collection of property taxes will become more effective, thus making other funds coming out from this source financially sound.
5. Municipalities will operate on a sound financial basis, as they will be able to frame their budgets not on the basis of income to be accrued during the year, but on the basis of income to be collected, thus making their transactions on a practical cash basis. This will in turn reduce operating costs and increase efficiency, solving thereby the municipal problem of the whole Island.
6. The form of municipal outstanding accounts payable will be changed from ordinary claims without a specific maturity date of no commercial value to negotiable instruments which will aid in clearing credits now tied up in the banks, business concerns, and the general public.
7. Public confidence in the municipal government will be regained, and the morale of officers and employees will be strengthened, if they are paid the salaries regularly.
8. The insular government will not be in need of providing general budgetary funds to meet deficiencies of redemption funds in detriment of other services.
9. The problem of the debt of the Isabela Irrigation Service will be solved. Repeated measures to solve this problem have failed to avoid constant deficiencies in the past. This is one of the most important problems which has been, and still is, under the consideration of the Legislature, it being second in importance to the municipal problem.
10. Fees for irrigation service now charged to farmers will be reduced, directly benefiting agriculture.

XVII. Miscellaneous Projects

A. Government Granaries and Canning Plants

Puerto Rico imports every year a large amount of food products which can be grown in the Island, but the production of which has in the past been found unprofitable to the farmers. Among these products we may mention maize, tomatoes, peppers, cucumbers, peas, and various kinds of beans. Of dried kidney beans alone, the Island imported $1,175,774 during the fiscal year 1932‑33. A large portion of these possibly could be produced in the Island, thus serving the dual purpose of providing the farmers with a chance to grow an additional cash crop and at the same time supplying much needed employment to farm laborers.

The main reason for the failure of these home‑grown crops to find adequate market in the Island in the past has been the fact that the local markets are yearly overloaded and consequently demoralized during the harvest season. Prices, naturally, are too low to allow any profits to the farmers. Later on, after the farm produce is either spoiled without selling or in the hands of speculators, the prices are bound to go unreasonably high with consequent detriment to the consumers and without any benefit to the farmers.

To correct this condition, we propose to establish in the Island adequate facilities for the fumigation and storage of such products like corn and beans which otherwise are quickly destroyed by the weevil under our climatic conditions. This would necessitate the establishment of government‑operated granaries, properly equipped to store the products brought by the farmers. We propose to build ten or fifteen of these dry bean and corn warehouses, which would be operated under the insular Department of Agriculture and Commerce as government bonded warehouses. For this purpose, we estimate the sum of $150,000 would be needed for the first year. Further appropriation of $10,000 for each for two subsequent years should be made available to finance the operation of the granaries during this test period. Once the idea is sold to the farmers and their full cooperation is obtained, it is reasonable to expect that the project will be self‑liquidating and of permanent benefit to the farmers of the Island.

In order to take care of more perishable farm produce such as tomatoes, peppers, peas, string beans and similar vegetables, as well as of fruits of various kinds, we propose to establish a number of small canning plants to be distributed in the more favorable districts where the crops are grown. For these projects we estimate the sum of $150,000 will be needed, plus $20,000 yearly for operating expenses during the next two years.

The total appropriation for the building of these granaries and warehouses and for their subsequent operation during the three‑year period would probably amount to $360. No attempt is here made to determine the size, type aid method of operation of these facilities, because it is realized that some experimentation and many changes may be necessary to meet the local condition of the Island. Eventually these warehouses and canning plants may be organized in the form of government supervised cooperatives which will operate as processors, storers and marketing agents for the produce of the farmers.

B. Establishment of Freshwater Fish Hatcheries

A recent survey of the fish fauna of Puerto Rico conducted by the U. S. Bureau of Fisheries brought to light the fact that our rivers possess no endemic species of fishes and that only those marine types as have been able to become adapted to a freshwater environment are now found in our streams. The chances for importing into the Island desirable species of game fishes have been considered excellent. Even rainbow trout are thought adaptable to our mountain streams. Considering the great need of increasing the protein‑rich foods in the diet of our peasants, the stocking of our numerous rivers with desirable game species of fish has been considered a worthy project. A plan for the establishment of fish hatcheries in the Island has been prepared with the advice of the Bureau of Fisheries, providing for an expenditure of $96,100 during a period of three years. (See Appendix P). After this period, provisions have been made to have the work taken up and continued by the Division of Fisheries of the Insular Department of Agriculture and Commerce.

C. Cattle Tick Eradication

The cattle tick has been for many years one of the greatest scourges of the cattle in Puerto Rico. It not only transmits the Texas Fever among the imported animals but also causes great damage by stunting the native cattle. Since the lack of meat is the greatest cause of the unbalanced diet of our poorer classes, it seems very important that the relief be extended to the cattle raising industry. A plan for an eradication campaign to last for a period of three years has been prepared with the advice of experts from the United States Department of Agriculture, carrying a total appropriation of $562,520. This work will be conducted by the Veterinary Division of the Insular Department of Agriculture, with Federal advice and cooperation. It is recommended that funds for this work be made available from the general sugar processing tax funds. (See Appendix P‑1).

D. Eradication Campaign Against Bovine Tuberculosis

The total number of cows reported as milked in Puerto Rico in the census of 1930 was 78,412. The present number will be possibly slightly larger and closer to 80,000 head. It is estimated that 4% of these cattle will react positive to the tuberculin test, so that 3,200 milk cows are probably at present affected with tuberculosis. These tubercular animals are being milked daily and thus constitute a dangerous source of infection to consumers of their milk, especially children. This condition is considered a dangerous menace to the public health of the Island and hence deserving immediate consideration.

A vigorous and well‑planned campaign should be conducted for the eradication of the disease, providing for the destruction of affected animals, as well as for adequate corresponding compensation to their owners. We understand that the Jones‑Connally Act makes available funds for work of this nature and that the law is applicable to Puerto Rico. From this, or from any other source, sufficient funds should be allocated for the necessary eradication campaign. The work must be conducted for a sufficient period of time—at least three successive years—in order to provide reasonable assurance of its permanent success.

The estimated expenses for the three‑year eradication campaign, including compensation payments, would be $228,450—a small sum indeed considering the magnitude and importance of the problem. No better investment could be made for the safeguard of the health of Puerto Rican children. (See Appendix Q).

There is already in the Island a Veterinary Division operating under the Department of Agriculture and Commerce, which could easily take care of the execution of this plan. Trained veterinarians are available in Puerto Rico who can follow the same technical methods utilized in the States for this kind of work, thus ensuring the appropriate use of the funds assigned for the purpose. The need of this important eradication campaign has been recognized for a long time, but sufficient insular funds have never been available for the purpose. We urgently recommend the allocation of the necessary funds to take care of this problem.

E. Agricultural Research

The Adams, Hatch and Purnell Funds for Agricultural Research will be made available to the University of Puerto Rico, beginning July 1, 1934, with an initial sum of $25,000 which will increase annually up to a limit of $90,000 in 1943‑44.

Plans have been approved for the creation of a Department of Agricultural Economics in our Experiment Station to initiate fundamental research in the economics of crop production, farm management, and problems of distribution and marketing.

F. Extension in Agriculture and Home Economics

Cooperative plans have been approved between the Department of Agriculture and the University of Puerto Rico for an extension program which will/be intensified mostly in the coffee regions, in connection with the coffee relief program. Work in home economics demonstration will be initiated for the first time in the Island under the University of Puerto Rico.

For carrying out this extension program, $70,000 from Smith‑Lever Funds will be made available July 1, 1934, this sum to be increased annually at the rate of $15,000 up to 1943‑44, as provided by the Act of Congress of March3, 1931.

G. Soil Survey

An agreement has already been entered between our Commission and the Bureau of Chemistry and Soils for the completion of the soil survey of Puerto Rico (Appendix R). A sum of $35,000 has been made available for this survey and the work is to be completed in a ten‑month period, beginning July 1, 1934.

H. Soil Erosion Work

Another memorandum of agreement has been approved providing for a soil erosion survey (to be carried in cooperation of the soil survey), investigational studies and extension work in soil erosion. The cooperating parties are the Department of Agriculture, the Department of Interior, and the University of Puerto Rico. These studies are of basic importance to our soil conservation policy and a three‑year program has been tentatively approved. A sum of $107,000 is proposed herewith to carry on this work, to be managed under a cooperative agreement.

I. Medical, Nutritional and Parasitological Research

The Schoo1 of Tropical Medicine of the University of Puerto Rico under the auspices of Columbia University has submitted to our Committee a list of nine research projects to be included in connection with our program of economic rehabilitation. Our Committee has carefully studied these projects and recommends the approval and financing of the following:

1. Treatment, Contro1 and Eradication of Schistosomiasis mansoni and a general parasitological survey of the Island. Cost, $40,000.
2. Incidence of endemic abortion in cattle and swine and its relation to human infection and public health. Cost, $15,000 for a period of three years.
3. The influence of nutrition on experimental tuberculosis. Cost, $15,000 for a period of three years.
4. Study of nutritional value of native foodstuffs with particular reference to the chemical composition, vitamin content and physiological effects. Cost, $25,000 for a period of three years.
5. Study of the medicinal properties of plants native in Puerto Rico. Cost, $15,000 for a period of three years.

Arrangements have been made with Dr. J. R. Mohler, Chief of the Bureau of Animal Industry to send one or two specialists to the Schoo1 of Tropical Medicine to continue the parasitological survey of the Island.

Appendix S gives a detailed account of the projects recommended for approval, prepared by the director of our Schoo1 of Tropical Medicine.

J. Hurricane Research

Tentative arrangements have been made with a noted physicist to initiate cooperative relationships between the Radio Corporation of America and the University of Puerto Rico for a program of research in radiotelegraphy. This work would be of great interest as evidenced by the installations of special equipment for photographic records of conditions of the ionosphere at two observatories of the Department of Research in Terrestrial Magnetism of the Carnegie Institution—one near Huancayo, Peru and another in Watheroo, Australia, and one under the direction of the U. S. Bureau of Standards at Washington, D. C. The scientific value of this program, in view of the importance of the study of the upper regions of the atmosphere, will result not only in practical application to radio transmission and reception but also in research problems bearing on correlations of geophysical phenomena.

In this connection, opportunities for research in the use of radio methods for the location of hurricanes are very tangible. Appendix T is self‑explanatory in connection with this project, and we are proposing the allocation of a $15,000 fund for hurricane research for the year 1934‑35.

K. Crop Reports, Prices, and Farm Income

This service would be of great importance to Puerto Rico, especially under the present situation of transference of marginal sugar lands to the production of food crops. Crop estimates are basic in the formulation of plans for the disposal of crops, allocation of quotas, and the presentation to the farmers of outlook material by which to guide future production. It would prove a great help in the administration of the Sugar Control Bill and other farm credit and rural relief measures. The service includes statistics of prices and farm income which are essential to the correct judgment of the success of the sugar contro1 plan and the transference of marginal sugar lands to food crops.

Mr. W. F. Callander, head of the Crop Reporting section of the U. S. Department of Agriculture, feels that Puerto Rico should be included in the service. It has not been done before due to lack of funds. Under present circumstances, funds could be provided by the A.A.A. for the extension of the service to Puerto Rico. Mr. Callander estimates that the establishment of the service will cost as follows:

Yearly Expenses:
1 statistician	$4,400
1 clerk	1,620
1 clerk	1,400
Travelling expenses	1,000
Total yearly expenses		$8,420
Equipment		1,000
Total		$9,420

The project may be conducted cooperatively between the Crop Reporting system of the United States and the Insular Department of Agriculture and Commerce.

L. Social and Economic Research

A social reconstruction program of the magnitude of the one which will be initiated in Puerto Rico needs careful checking and accurate measurement of social progress achieved.

Under the proposed sugar plan, for example, we need to determine the economic changes of the colonos transferred from the marginal to the good cane lands, and the social betterment of the workers who are to go to the subsistence farms. It is only in this way that progress can be measured.

Aside from this, there are problems of distribution, transportation and marketing which need to be studied by specialists. A lump sum of $50,000 should be set aside for Social and Economic Research to be undertaken by a special bureau of the semi‑public corporation or by the University of Puerto Rico.

M. Slum Clearance

The attention of any visitor that goes to San Juan, Ponce, Mayagüez or any other town is drawn to the miserable quarters of the poor that have settled in the suburbs. Most of their houses are built in mangrove swamps, swarmed with mosquitoes.

Thousands of people live under the most adverse sanitary conditions, and it is a question of humanity that attention be given to this grave social problem.

We are proposing that a liberal sum of money, say $5,000,000, for clearing these slum sections be devoted to the partial solution of this problem. Cities like San Juan, Ponce, Mayagüez and Arecibo, where conditions are getting worse every day, should be given preference.

XVIII. Closing

In closing this report, we wish to express our gratitude to the Secretary of Agriculture for the honor bestowed upon us through his invitation to come to the National Capitol to undertake the work just accomplished. The opportunity has been unique, and we have endeavored to measure up to the responsibilities involved. Our recommendations, as far as our judgement was able to determine, have been free from bias and prejudice; for only in that way we have deemed it possible to accomplish our task bearing the interests and the welfare of Puerto Rico above all other considerations. The splendid cooperation given to us by the Technicians of the various Departments of the government and by the directors of the Farm Credit Administration and of similar Federal agencies, has been to us a great assistance as well as a source of inspiration for service. For these favors we wish to express our sincerest appreciation.

                                                   Respectfully submitted,

                                                   Carlos E. Chardón
                                                   Chancellor, Univ. of Puerto Rico

                                                   R. Menéndez Ramos
                                                   Commissioner of Agriculture & Commerce

                                                   R. Fernández García
                                                   Chief, Department of Chemistry,
                                                   Univ. of Puerto Rico

Date: June 14, 1934

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XIX. Appendixes

Appendix A – Population: Births and Deaths Report

With rates per thousand population for 25 years
(from the Insular Dept. Of Health)

Births and Deaths Report with rates per thousand population for 25 years (from the Insular Dept. Of Health)

Fiscal Year	Population[13]	Births	Rate per 1000 Population	Deaths	Rate per 1000 Population
1900‑1901	973,387	19,930	20.4	35,781	36.7
1901‑1902	983,459	25,898	25.3	24,447	24.8
1902‑1903	993,531	30,123	30.3	25,552	25.7
1903‑1904	1,003,603	40,053	39.9	22,694	22.6
1904‑1905	1,013,675	28,472	28.0	23,050	22.7
1905‑1906	1,023,747	32,226	31.4	25,927	25.3
1906‑1907	1,033,819	34,778	33.6	27,132	26.2
1907‑1908	1,043,891	34,701	33.2	23,530	22.5
1908‑1909	1,053,963	38,088	36.1	22,049	20.9
1909‑1910	1,118,012	37,343	33.4	24,751	22.1
1910‑1911	1,133,674	37,692	33.2	26,579	23.4
1911‑1912	1,149,336	39,874	34.6	27,607	24.0
1912‑1913	1,164,998	41,002	35.1	26,034	22.3
1913‑1914	1,180,660	45,609	38.6	21,775	18.4
1914‑1915	1,196,322	46,947	39.2	23,664	19.7
1915‑1916	1,211,984	45,590	37.6	26,572	21.9
1916‑1917	1,227,646	42,259	34.4	34,939	28.4
1917‑1918	1,248,308	43,261	34.6	34,457	27.7
1918‑1919	1,258,990	53,348	42.4	39,974	31.7
1919‑1920	1,299,809	50,729	39.0	30,280	23.2
1920‑1921	1,315,870	47,961	36.4	29,396	22.3
1921‑1922	1,333,846	52,033	39.0	30,098	22.5
1922‑1923	1,351,822	50,348	37.2	28,533	21.1
1923‑1924	1,381,238	51,722	37.4	25,886	18.7
1924‑1925	1,398,796	54,556	39.0	31,350	22.4

Appendix B – “International” Income Account

Year Ending June 30, 1928

(From Brookings Institute Report, p. 583‑584)
(Figures are given in thousands)

OPERATIONS RESULTING IN NET INCOME TO PORTO RICO:
Commodity trade:[14]
Recorded exports of commodities	$103,535
Sales of bunker coal and oil	827
Ship chandlery and ship repairs	50
		$104,412
Less:
Recorded imports of commodities	(92,342)
Contraband imports of liquor	(1,000)
		(93,342)
			$11,070
Gifts and contributions:
For educational purposes		95
Foreign missions and churches		320
Health		70
Scientific research		21
			506
Federal expenditures in Porto Rico			2,712
Advertising			400
Net total from operations listed above			14,688
OPERATIONS RESULTING IN NET OUTGO FROM PORTO RICO:
Freight payments and marine insurance on imports			5,980
Commissions:
Payments		4,290
Less receipts		(100)
			4,190
Remittances:
Sent to Porto Ricans living outside the Island		1,232
Less amounts received from Porto Ricans living abroad and in continental United States		(930)
			302
Tourist trade:
Outgo by Porto Ricans		582
Less income from outsiders		(472)
			110
Insurance transactions (exclusive of marine)			1,980
Motion picture royalties			160
Cable and radio charges			247
Lottery tickets			1,000
Interest, dividends, and rent paid to:
Continental and foreign investors by Porto Rican government	$2,072
Federal Land Bank and Intermediate
Credit Bank	676
Continental and foreign investors by private persons and corporations,	9,400
		12,148
Less amounts received by:
Insular government on external investments	(35)
Private persona and corporations on external investments	(1,094)
		(1,129)
			11,019
Miscellaneous items of outgo			57
Net total for items listed above			25,045
NET DEFICIENCY for all trade and service operations			($10,357)

Appendix C – Puerto Rico’s Trade with the United States Compared with Foreign Countries, in 1932‑33

(From Puerto Rico Chamber of Commerce reports)

Exporting Countries	Importing Countries
1.	Canada	146,159,517	1.	England	257,240,742
2.	Japan	114,488,709	2.	Canada	194,393,131
3.	Philippines	86,694,003	3.	Germany	127,984,506
4.	Hawaii	82,506,629	4.	Japan	108,373,017
5.	England	73,787,666	5.	France	105,775,511
6.	PUERTO RICO	73,387,498	6.	Hawaii	53,551 179
7.	Brazil	70,660,852	7.	Italy	51,183,285
8.	Germany	67,542,973	8.	PUERTO RICO	48,886,844
9.	Cuba	54,329,359	9.	China	43,869,934
10.	Colombia	52,595,811	10.	Philippines	41,488,531
ll.	France	39,691,424	11.	Netherlands	40,039,344
12.	Italy	37,574,122	12.	Belgium	37,914,405
13.	Alaska	29,437,562	13.	Mexico	33,255,513
14.	Mexico	28,822,328	14.	Argentina	30,960,566
15.	British India	27,473,149	15.	Brazil	27,815,356
16.	China	25,990,434	16.	Spain	26,070,637
17.	Netherlands	25,590,070	17.	Australia	24,904,588
18.	Sweden	21,048,514	18.	Cuba	24,153,701
19.	Belgium	18,398,019	19.	Alaska	20,326,998
20.	Venezuela	14,442,099	20.	British India	17,319,410

Appendix D – External Trade of Puerto Rico

United States

External Trade of Puerto Rico with United States.

FISCAL YEAR	IMPORTS	EXPORTS	TOTAL
1909‑10	$27,097,654	$32,095,645	$59,193,299
1910‑11	34,671,958	34,765,409	69,437,367
1911‑12	38,470,963	42,873,401	81,344,364
1912‑13	33,155,005	40,538,623	73,693,628
1913‑14	32,568,368	34,423,180	66,991,548
1914‑15	30,929,831	42,311,920	73,241,751
1915‑16	35,892,515	60,952,768	96,845,283
1916‑17	49,539,249	73,115,224	122,654,473
1917‑18	58,945,758	65,514,989	124,460,747
1918‑19	57,898,085	71,015,351	128,913,436
1919‑20	90,724,259	133,207,508	223,931,767
1920‑21	97,074,399	103,388,227	200,462,626
1921‑22	57,400,028	66,229,771	123,629,799
1922‑23	64,743,462	77,007,257	141,750,719
1923‑24	80,590,021	80,754,975	161,344,996
1924‑25	79,349,618	84,411,792	163,761,410
1925‑26	83,046,553	88,106,570	171,153,123
1926‑27	87,046,319	100,574,001	187,620,320
1927‑28	79,743,088	96,662,610	176,405,707
1928‑29	85,078,596	76,418,210	161,496,806
1929‑30	73,078,779	95,097,640	168,176,419
1930‑31	68,018,167	94,876,997	162,895,164
1931‑32	52,826,794	83,645,863	136,472,657
1932‑33	48,886,844	73,388,298	122,275,142

Trade with Other Countries

External Trade of Puerto Rico with other countries.

FISCAL YEAR	IMPORTS	EXPORTS	TOTAL
1909‑10	3,537,201	4,864,574	8,401,775
1910‑11	4,115,039	5,152,958	9,267,997
1911‑12	4,501,928	6,832,012	11,333,940
1912‑13	3,745,057	8,564,942	12,309,999
1913‑14	3,838,419	8,679,582	12,518,001
1914‑15	2,954,465	7,044,987	9,999,452
1915‑16	3,058,641	5,778,805	8,837,446
1916‑17	4,005,975	7,855,693	11,861,668
1917‑18	4,443,524	8,779,033	13,222,557
1918‑19	4,502,275	8,480,689	12,982,964
1919‑20	5,664,275	17,603,941	23,268,216
1920‑21	8,405,304	8,890,348	17,295,652
1921‑22	6,775,121	5,942,800	12,717,921
1922‑23	7,201,043	5,285,793	12,486,836
1923‑24	8,779,603	7,525,565	16,305,168
1924‑25	11,154,983	10,407,152	21,562,135
1925‑26	12,211,711	10,618,281	22,829,992
1926‑27	11,764,431	7,493,433	19,257,864
1927‑28	12,599,241	6,872,120	19,471,361
1928‑29	12,782,164	5,304,660	18,086,824
1929‑30	10,844,050	4,468,565	15,312,615
1930‑31	8,419,243	3,523,930	11,943,173
1931‑32	8,454,307	2,771,075	11,225,382
1932‑33	5,859,067	2,018,157	7,877,224

Appendix E – Food Product Imports, Year 1932‑1933

(From Governor Beverley’s Report)

From the United States

Food Product Imports, Year 1932-1933, from the United States.

Animal and Animal Products:
Meat Products
Beef and veal	$38,236
Pork	2,061,795
Canned Meats	203,195
Other Meats	156,505
		$2,459,731
Animal Oils and Fats (Mostly lard)		1,494,408
Dairy Products
Milk, dried, evaporated & condensed	361,118
Butter	185,347
Cheese	233,443
Infant’s food, malted, etc.	23,225
		803,133
Fish
Codfish, salted	103,871
Canned and other fish	148,625
		252,496
Eggs in the shell	91,859
Other animal products	5,067
		96,926
Vegetables and Vegetable Products:
Grains and Preparations
Corn	49,812
Cornmeal	239,667
Corn breakfast food	9,424
Oats	43,374
Oatmeal, etc.	88,392
Rice	5,016,796
Rice screenings, etc.	18,041
Wheat flour	1,281,774
		6,747,280
Biscuits and Crackers		429,906
Fodders and Feeds		449,211
Vegetables and Preparations
Beans, dried	1,175,774
Peas, dried	145,806
Potatoes, white	411,636
Onions	102,827
Other fresh vegetables	32,091
Canned vegetables	186,523
Ketchup and other tomato sauces	91,247
Vinegar	32,053
Yeast	58,140
Other miscellaneous	33,714
		2,269,811
Fruits and Preparations
Fresh fruits	162,216
Canned fruits	98,796
Other fruit preparations	16,600
Nuts	25,096
		302,708
Vegetable Oil and Fat, Edible
Cottonseed, soybean, corn oil, etc.	45,450
Cooking fats other than lard	54,423
Cocoa, powdered	29,071
Chocolate, sweetened	20,211
Coffee	71,033
Miscellaneous	46,273
		366,461
Confectionery
Chocolate	124,519
Other	183,022
Chewing gum	36,428
Beverages	334,113
Miscellaneous	4,142
		682,224
Total		$16,254,295

From foreign countries

Food Product Imports, Year 1932-1933, from foreign countries.

Animal and Animal Products:
Cattle	27,943
Hogs	211
		28,154
Meats
Poultry	1,370
Canned meats	30,239
Beef and veal	34,615
Pork, pickled and salted	12,420
		78,644
Dairy Products
Milk	2,319
Butter	28,190
Cheese	73,365
		103,874
Fish
Canned fish	21,805
Fish, salted or pickled	785,083
All other fish	4,131
		811,019
Vegetables and Vegetable Products:
Corn and rice	36,853
Biscuits and Macaroni	11,413
Miscellaneous	3,353
		51,619
Vegetables
Beans and peas	105,918
Potatoes	2,929
Garlic	68,547
Other vegetables	34,394
		211,788
Plantains and Bananas		89,713
Olives	8,419
All other fruits	24,119
Nuts	4,862
Olive Oil	117,493
		154,893
Cocoa and Chocolate	14,675
Coffee, roasted	112,199
Tea and spices	9,067
		135,941
Candy and chewing gum	31,513
Mineral water and beverages	101,034
		132,547
Total		$1,798,192
Total from the United States		$16,254,295
Total from Foreign Countries		1,798,192
Grand Total		$18,052,487

Appendix F – Puerto Rico’s Rice Imports during the years 1914‑1929 in bags of 100 lbs.

(From Puerto Rico Chamber of Commerce reports)

Arrivals

Puerto Rico’s Rice Imports during the years 1914-1929 in 100-pound bags, arrivals.

Fiscal Year	San Juan	Other Ports	Total	Bags per Day
1914‑15	550,892	684,322	1,235,214	3,400
1915‑16	680,345	811,001	1,491,346	4,090
1916‑17	650,881	901,753	1,552,634	4,260
1917‑18	612,278	644,627	1,256,905	3,450
1918‑19	892,674	693,412	1,586,086	4,350
1919‑20	730,454	632,221	1,362,675	3,730
1920‑21	787,960	768,898	1,556,858	4,270
1921‑22	849,365	777,739	1,627,104	4,460
1922‑23	781,540	858,897	1,640,437	4,500
1923‑24	915,539	871,689	1,787,228	4,900
1924‑25	856,047	908,449	1,764,496	4,830
1925‑26	910,759	904,919	1,815,678	4,980
1926‑27	951,237	915,678	1,866,915	5,120
1927‑28	912,454	921,725	1,834,179	5,030
1928‑29	1,005,934	995,588	2,001,522	5,480
1932‑33	1,422,827	1,027,462	2,450,289	6,713

Appendix G – Ordinance

Ordinance

to create a corporation to be known as “The Virgin Islands Company” and to establish and define its powers, and for other purposes.

Whereas, the sum of 111,000,000 has been made available by the Public Works Administration of the United States for the rehabilitation of the Virgin Islands of the United States, and

Whereas, said sum will be placed in trust of the incorporators of The Virgin Islands Company to be created by this ordinance,

Now therefore, be it enacted by the Colonial Council of the Municipality of St. Thomas and St. John in session assembled:

Section 1. In order to aid in effecting the economic rehabilitation of the Municipality of St. Thomas and St. John and of the Virgin Islands of the United States, and in order to promote the general welfare of the people of the Municipality of St. Thomas and St, John and of the Virgin Islands of the United States, Harold L. Ickes, Oscar L. Chapman; and Paul M. Pearson, of the Virgin Islands of the United States (hereinafter referred to as the incorporators) are hereby created and constituted a body corporate by the name of “The Virgin Islands Company”, hereinafter referred to as the Corporation.

Until the directors are selected, the incorporators shall have the direction of the affairs and of the organization of the corporation, including the power to adopt bylaws, to elect a President of the corporation (who shall hold office until his successor shall have been elected in the manner provided in the bylaws) and to issue not more than three shares of the stock of the corporation. The incorporators may act by a majority vote at a meeting held upon waiver of notice signed by all of the incorporators, setting forth the time and place of such meeting. The presence of a majority of the incorporators shall be requisite and sufficient to constitute a quorum at each of such meetings.

Section 2. Except as otherwise specifically provided in this Ordinance, the corporation:

• May adopt, use, and from time to time alter at pleasure, a corporate seal, which shall be judicially noticed.
• Shall have succession in its corporate name.
• May sue and be sued in its corporate name.
• May adopt, amend, and repeal bylaws for the management of its property and the regulation and government of its affairs.
• Shall have such powers, and may appoint such officers or agents, as may be necessary or appropriate for the exercise of the powers herein specifically conferred upon the corporation.

Section 3. The nature of the business to be transacted, and the objects and purposes to be promoted and carried on by the corporation shall be:

• To aid in effecting the economic rehabilitation of the Virgin Islands of the United States, and to promote the general welfare of the people of the Virgin Islands of the United States and to exercise all of the powers conferred upon it herein in order to so advance and accomplish such economic rehabilitation and promotion of the general welfare.
• To acquire or assist in acquiring in any manner, dispose of or assist in disposing of in any manner, construct, build, establish, own, equip, operate, maintain, improve, administer and supervise any buildings, plants, mills, factories, forests, parks, mines, industries, power plants, farms, gardens, orchards, dairies, agricultural processing enterprises, commercial establishments, cooperative enterprises, market agencies, or other improvements and facilities, or any other enterprises or activities of any kind necessary or desirable to the economic well‑being of the inhabitants of the Virgin Islands, and to perform any other necessary or desirable operations or functions in connection therewith.
• To buy, lease, acquire by gift, or in any other manner acquire or assist in acquiring, and to sell, lease, mortgage, pledge, assign, transfer or otherwise dispose of or assist in disposing of, without restriction or limit as to amount, any land or lands or real property of any description and wheresoever located, and any right or title of any sort therein, including structures or other improvements thereon or therein, and any kind of personal property whatsoever and wheresoever located, without restriction or limit as to amount, for any purpose or use necessary or desirable in order to accomplish the purposes, powers and objects stated in this ordinance.
• To acquire or assist in acquiring in any manner, dispose of or assist in disposing of in any manner, establish, own, equip, and operate, maintain, improve, administer, and supervise farms and to engage in any and all types of agricultural production upon such farms and to dispose or aid in disposing of any of the products of such farms.
• To carry on the business of refining sugar and of processing sugarcane, and the business of manufacturing any and all products and by‑products of sugar and of sugarcane.
• To expend moneys out of its earned surplus in any kind of charitable, educational, advisory or relief activity whatsoever in connection with any of its enterprises in the Virgin Islands of the United States in furtherance of the objects, purposes and activities stated in this ordinance.
• To cooperate with any governmental agency or agencies within the United States of America, whether national, state, or municipal and with any governmental agency or municipality within the Virgin Islands of the United States, and with any public or private agency whatsoever, with a view to performing the objects and purposes of the corporation as stated in this ordinance.
• Tb accept and administer grants, loans, deliveries of money, commodities or land made to the corporation by any person or corporation or governmental agency, or under and pursuant to the statutes, or any statute of the United States, or of any of the several States, or ordinance of the Colonial Council of the Municipality of St. Croix or of the Colonial Council of the Municipality of St. Thomas and St. John.
• To enter into, make and perform contracts of every kind and description with any person, firm, association, corporation, municipality, county, state, body politic, or government or colony or dependency thereof.
• To borrow or raise moneys for any of the purposes of the corporation and, from time to time, without limit as to amount, to draw, make, accept, endorse, guarantee, execute and issue promissory notes, drafts, bills of exchange, warrants, bonds, debentures, and other negotiable or non‑negotiable instruments and evidences of indebtedness, and to secure the payment of any thereof and of the interest thereon by mortgage upon or pledge, conveyance or assignment in trust of the whole or any part of the property of the corporation, whether at the time owned or thereafter acquired, and to sell, pledge or otherwise dispose of such bonds or other obligations of the corporation for its corporate purposes.
• To make loans for and otherwise aid in the purchase of, to acquire or assist in acquiring in any manner, to construct, equip, improve, maintain, administer, operate and supervise, to dispose of in any manner, and to aid in constructing, equipping, improving, maintaining, administering, operating and supervising subsistence homesteads and subsistence homestead communities within the Virgin Islands of the United States.
• To accomplish, effect or assist in any manner the transportation or movement of persons and property to and from the Virgin Islands of the United States, and from any one place on the Virgin Islands of the United States to any other place thereon.
• To make loans to any person or persona for the purpose of aiding in the purchase, building, improving, equipping and maintaining of subsistence homesteads, and to aid such persons by loans or otherwise to acquire lands, buildings, tools, machinery, livestock, seeds, fertilizer, construction materials, books, clothing, food, feed, and any and all commodities or things necessary or useful in connection with the life of such persons on subsistence homesteads.
• To manufacture, purchase or otherwise acquire, own, mortgage, pledge, sell, lease, assign and transfer, or otherwise dispose of, to invest, trade, deal in and deal with goods, wares, and merchandise, and personal property of every class and description.
• To make loans to any person, firm, association, or corporation within the Virgin Islands of the United States in order to accomplish any of the purposes or objects stated in this ordinance.
• To have one or more offices and to carry on all or any of its operations or businesses.
• In general, to carry on any and all other business and to do any other act or thing in connection with or necessary or convenient to the attainment of the foregoing objects, powers and purposes, and to have and exercise all the powers and privileges conferred by the ordinances and laws of the Municipality of St. Thomas and St. John upon corporations for profit and to do any and all of the things hereinbefore set forth to the same extent as natural persons might or could do.
• The foregoing clauses shall be construed both as objects and powers and it is hereby expressly provided that the foregoing enumeration of specific powers shall not be held to limit or restrict in any manner the powers of the corporation.
• Nothing contained in this ordinance shall be construed as granting to the corporation any special privileges as against any person, firm, or corporation engaged in any similar enterprise within this municipality.

Section 4. The stock of the corporation shall be represented by certificates, the form of which shall be determined by the incorporators, signed by the president and sealed with the seal of the corporation, and shall be transferable. The total number of shares of stock which the corporation shall have authority to issue shall be three, and the par value of each of such shares shall be $10, amounting in the aggregate to the sum of $30. Such shares shall be issued only in consideration of money actually received. No dividends, salaries or profits of any type or description whatever shall ever be issued, paid, or made available to any of the incorporators or holders of the said stock or to any one on their behalf, but all of the earnings, income and profits which may be derived by the corporation from the operations of any of its powers hereunder, shall be expended in effecting the economic rehabilitation of the Virgin Islands of the United States and in promoting the general welfare of the inhabitants of the Virgin Islands of the United States.

Section 5. Each stockholder shall at every stockholder’s meeting be entitled to one vote in person or by proxy, for each share of the capital stock held by him. Stockholders’ meetings shall be held annually, the place of such meeting to be specified in the bylaws of the corporation, and notice of such meetings shall be delivered personally, or by depositing the same in the post office, properly addressed to each stockholder, at least twenty days before such meeting. Special meetings may be held at such times and places and upon such notice as the bylaws may prescribe. Any such notice, whether of an annual or a special meeting, may be waived in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein. One or more stockholders, by agreement, declaration of trust, conveyance in trust or other written instrument, filed at the principal office of the corporation, may confer the right to vote, consent or otherwise act with respect to his or their shares upon a person or persons designated in or as provided in such instrument, subject to the terms and conditions and for any period therein specified.

Section 6. The corporation shall have perpetual existence, subject to dissolution as in this ordinance provided.

Section 7. The business of this corporation shall be managed by a board of directors who need not themselves be stockholders but shall be elected by the stockholders. So far as possible the Directors shall be natives of the Virgin Islands of the United States or citizens of the United States; all of whom shall have established legal residence in the Virgin Islands of the United States. A quorum of the directors for the transaction of business at any meeting duly called, shall be a majority of the members thereof. The number of directors to constitute the board shall be stated in the bylaws.

Section 8. The incorporators and, if the bylaws so provide, the stockholders and directors shall have power to hold their meetings and to have one or more offices within or without the Virgin Islands of the United States.

Section 9. The original bylaws of the corporation may be adopted by the incorporators. Thereafter the stockholders shall alone have the right to make, alter or repeal the bylaws of the corporation.

Section 10. When and as authorized by the affirmative vote of the holders of all of the stock issued and outstanding, given at a stockholders’ meeting, duly called for that purpose, or when authorized by the written consent of the holders of all of the stock issued and outstanding, the board of directors shall have the power:

• To authorize and cause to be executed, mortgages and liens upon the real and personal property of the corporation.
• To dissolve the corporation and to wind up its affairs.

Section 11. An action may be maintained by the Government Attorney in the name and in behalf of the people, to procure a judgment dissolving the corporation and forfeiting its corporate rights and franchise for either or any of the following causes:

• Where the corporation is insolvent, as evidenced by a return of no property found on execution, or by a judgment or decree in insolvency proceedings.
• Where it has suspended its ordinary and lawful business for at least three years.
• Where it is a party to an illegal combination in restraint of trade,
• Where the law imposes the penalty of dissolution.

Section 12. The principal office of the corporation shall be located within the Municipality of St. Thomas and St. John. All the books, records, papers, documents, and files of the corporation shall be kept at the said principal office of the corporation and shall at all reasonable times be open to the inspection of every stockholder of the corporation or to his duly constituted agent or representative.

Section 13. In the event of the dissolution of the corporation the then stockholders of the corporation shall cause all of its assets, other than money; to be sold at such time or times, at such place or places, and in such manner as they shall deem best, and the proceeds of such sale or sales together with all other moneys remaining in possession of the corporation after the payment of its debts and expenses, shall be expended under order of the District Court of the Virgin Islands of the United States on motion of the Chairman of the Colonial Council for the Municipality of St. Thomas end St. John, in such manner as to promote the general welfare of the inhabitants of the Virgin Islands of the United States.

Section 14. The corporation shall at all times maintain complete and correct books of account, which shall at all times be open to inspection by any stockholder or director of the corporation. The board of directors shall prepare and publish annually, as soon after the close of each fiscal year as convenient, a balance sheet, an operating statement, and a report of the business of the corporation for the year.

Section 15. This ordinance, or any provision herein contained, may be amended, altered, changed, or repealed, and all rights conferred herein are granted subject to this reservation, but no such amendment, alteration, change or repeal shall operate to impair the obligation of any contract theretofore made by the corporation under any power conferred in this ordinance.

Section 16. In case the corporation rents or leases tax free property or properties located in the Municipality of St. Thomas and St. John, it must pay to the said municipality an amount equivalent to the property taxes that would have been paid if these properties were privately owned. The corporation shall be subject to all the tax laws of this municipality.

Section 17. This ordinance may be cited as “The Virgin Islands Company Act of 1934”.

Thus passed by the Colonial Council for St. Thomas and St. John at the extraordinary meeting held the 9^th April, 1934.

 VALDEMAR A. MILLER V. A. CHRISTENSEN

             Secretary                                Chairman

The above Ordinance is hereby sanctioned and approved in whole. Witness my hand and the Seal of the Government of the Virgin Islands of the United States at St. Thomas, this sixteenth day of April, A.D. 1934.

               (SEAL)                 PAUL M. PEARSON
                                                                        Governor

Appendix H – Chemical Analysis of Soils

(Analysis made at the Insular Experiment Station)

Chemical analysis of soils made at the Insular Experiment Station.

Soli series names	Depth of Sample (inches)	pH Value	Percentage on Dry Basis
			Total N2	1% Citric Acid Solution
				P2O5	CaO	K2O
Southern Coastal Plains
Serrano Clay	0-15	8.6	–	0.016	0.697	0.030
Serrano Fine Sandy Clay Loam	0-12	8.2	0.10	0.015	0.625	0.014
San Anton Silt Loam	0-12	7.4	0.12	0.032	0.350	0.028
San Anton Silty Clay Loam	0-12	7.6	0.11	0.051	0.537	0.030
San Anton Loam	0-20	8.4	0.07	0.015	0.242	0.015
San Anton Fine Sandy Loam	0-12	7.4	0.07	0.036	0.416	0.018
San Anton Silty Clay	0-12	8.4	0.27	0.056	0.647	0.025
San Anton Loam-Dark Colored phase	0-12	8.2	0.10	0.037	0.565	0.030
Paso Seco Silty Clay	0-10	8.1	0.17	0.081	0.490	0.026
Cintrona Fine Sandy Loam	0-24	8.2	0.05	0.027	0.785	0.023
Ursula Clay	–	8.7	0.29	0.016	0.847	0.035
Santa Isabel Silty Clay Loam (Poorly drained phase)	0-12	7.4	0.23	0.016	0.772	0.057
Santa Isabel silty Clay	0-3	6.9	0.22	0.049	0.452	0.042
Como Clay	–	7.0	0.29	0.043	0.510	0.038
Juana Díaz Clay Loam	0-6	6.4	0.15	0.006	0.302	0.011
Santa Isabel Clay	0-6	8.0	–	0.013	0.430	0.023
Descalabrado Silty Clay	0-6	7.9	–	0.007	0.492	0.012
Descalabrado Silty Clay Loam	0-5	7.4	–	0.017	0.417	0.025
Machete Loan	–	6.6	–	0.012	0.220	0.018
Patillas Silt Loam	0-6	6.6	–	0.007	0.140	0.008
Northern Coastal Plains
Coloso Silt Loam	0-12	7.9	0.15	0.052	0.754	0.006
Coloso Clay	0-7	5.8	0.22	0.014	0.314	0.016
Coloso Silty Clay Loam	0-6	7.0	0.27	0.029	0.561	0.012
Coto Clay Heavy texture phase	0-7	7.1	0.24	0.014	0.313	0.036
Estación Silt Loam	0-10	5.9	0.12	0.010	0.134	0.017
Toa Sandy Loam-low bottom phase	0-12	6.7	0.13	0.028	0.326	0.019
Toa Silt Loam	0-25	7.0	0.19	0.012	0.349	0.010
Toa Loam	0-6	6.6	0.15	0.016	0.386	0.019
Toa Silty Clay	0-12	6.4	0.10	0.012	0.331	0.017
Fajardo Silt Loam	0-8	5.2	0.18	0.002	0.147	0.016
Interior Highland
Naranjito Silty Clay Loam	0-9	5.7	–	0.001	0.149	0.025
Via Clay	0-12	5.1	0.13	0.004	0.315	0.010
Alonso Clay	0-8	5.7	0.22	0.002	0.346	0.017
Los Guineos Silty Clay Loam	0-6	5.0	–	0.001	0.157	0.011
Jayuya Clay Loam	0-5	5.4	0.12	0.001	0.158	0.027
Utuado Clay Loan Steep Phase	0-4	5.6	0.13	0.022	0.346	0.013
Picacho Stony Clay Loam Steep Phase	0-10	5.1	–	0.005	0.240	0.065
Ciales Clay Loam	0-5	5.5	0.08	0.003	0.336	0.026
Catalina Silty Clay	0-18	5.2	0.19	0.001	0.072	0.007
Catalina Clay	0-15	5.9	0.17	0.012	0.129	0.004

Appendix I – Coconut Bud Rot Eradication

The infectious disease known as Bud Rot is the most destructive enemy of our coconut groves. It will eventually destroy all of the trees unless vigorous work of control is immediately undertaken. The causal agent of the disease spreads very rapidly from tree to tree, mostly carried by the insects known as Rhinoceros beetles, that burrow into the stew of the plants on which they feed.

Control measures for the eradication of the disease must therefore follow two lines of attack, to wit: (a) the cutting down and burning of all infected palms and (b) the trapping and destruction of the beetles. The campaign must be intensive and thoroughly coordinated and should be continued for a period of at least three years in order to provide reasonable probabilities of permanent success.

A budget for the necessary campaign for Bud Rot eradication has been estimated as follows:

Salaries and Wages:
Director of campaign	$2,000
Seven Inspectors at $1,000 per year	7,000
250 laborers, 100 working days each at one dollar per day	25,000
25 Foremen, 100 working days, at $1.25 per day	3,125
One stenographer and clerk	1,000
Collection of Rhinoceros beetles 200,000 dozen at 5¢ per dozen	10,000
		$48,125
General Expenses:
Travelling	5,000
Equipment and accessories	2,000
Telegraph and Telephone	150
Postage and Freight	300
Printing and Stationery	400
Incidentals	1,000
		8,850
Total for the first year		56,975
Expenses for the Second Year (Estimated at less than 40% of those for the first year)		20,000
Expenses for the Third Year (Estimated at 50% that of preceding year).		10,000
Total cost of three‑year campaign		$86,975

Appendix J – Forest Research in Puerto Rico

June 7, 1934

U. S. Forest Service

The research so far done in the field of tropical American forestry has gone little beyond (1) forest botany or dendrology, (2) a limited amount of work in forest ecology, (3) the identification phase of wood technology, and (4) a relatively small amount of work on strength and other properties of tropical woods.

What in general research should supply is (a) the scientific foundation, biological, sociological, and economic, for the entire forestry enterprise, and (b) the supplemental information which will permit practical application in forest management and the full and efficient use of all the products of the forest. The work which should be done may be grouped in the following fields:

1. To round out and complete the work in forest botany.
2. Forest ecology or silvics, a large and exceedingly complex field because of the number of trees species and forest types and of other plant species and forms of life which make up the tropical forest. This work should establish much of the needed scientific basis for silviculture and forest management.
3. Silviculture and forest management, including the important problem of artificial reforestation, the restoration to productivity of deteriorated forests, the maintenance and management of productive forests, the determination of possible growth and yields, the entire field of protection against forest insects and forest diseases, and in the drier parts of the island against forest fires.
4. Forest genetics, including work on the best strains or races of native species reaching ultimately into the development of improved strains, hybrids, etc. Closely related is the field of introduction, which might include such things as conifers for the drier portions of the island, of rubber, acacias, etc.
5. The watershed problem, including the contro1 of erosion, the regulation of streamflow, and of forest management with relation to satisfactory watershed conditions.
6. Utilization, including the fundamental strength, chemical, and other properties of woods and other products of the forest with reference to improved utilization, new forms of utilization, the possibility of using minor and unknown species, protection of wood against insects and decay, etc. An additional utilization problem is that of forage for the grazing of domestic livestock.
7. The economic field, including a wide range of problems is land planning in reference to forest and other forma of land use and the possibilities of making the forest contribute in the largest possible way to social and economic welfare. The work could be organized as a unit in the University of Puerto Rico. For most effective handling it would require limited areas of land dedicated exclusively to research and probably limited additional laboratory facilities for the more strictly biological research. Possibly because of the high cost of equipment, etc., work on the properties of woods and other forest products could be handled most effectively at the Forest Products Laboratory at Madison, Wis.

There is, in sum, the opportunity for a large amount of work in a broad field in which as yet only a little has been done. It can be closely connected with the training and development of men not only for work in Puerto Rico but also in other tropical American countries. finally, a wonderful opportunity is afforded for leadership in the research phase of tropical forestry for the American continent.

                                                                Earl H. Clapp,
                                                         Assistant Forester
                                                       U. S. Forest Service

Appendix K – A Three‑Year Project for the Eradication of the Cotton Pink Bollworm

Cotton growing was discontinued about three years ago and the only cotton found on the Island today is in the manner of wild varieties or volunteer plants in formerly cultivated fields. Since the pink bollworm is a limiting factor in cotton production in Puerto Rico, a project for the destruction of volunteer plants and other host plants would be of great benefit to the cotton industry of the Island. Of the other plants in which the pink bollworm breeds, Maga (Montezuma speciosima) is the most important; Okra and Emajaguilla are of secondary importance. As much as half of the pods may be infested at some times in some Maga trees. It seems to us that the time is ripe for a well‑planned and systematic campaign. No such splendid opportunity could be frequently found in any country or for any crop in the control of injurious maladies or insect pests as prevail in Puerto Rico at the present time with temporary abandonment of the cultivation of the crop.

The following project aims at a thorough search and destruction of all wild or voluntary cotton plants, and of all Okra plants growing in the two cotton growing areas. Maga trees, because of their value as fine wood, would not be destroyed, but cut back severely enough to destroy all pod that may harbor the larvae of the insect.

Since we are not growing any cotton in the Island this year, it seems to us that a vigorous and well‑planned campaign of destruction of volunteer cotton, Maga and Okra plants should begin simultaneously in both districts, and be continued for at least three years in the abovementioned manner, provided no large fields of cotton are planted during the time this project is in force. On the other hand, if cotton should be planted in the Island during the next and successive planting seasons, the plan would necessarily be modified as required to meet the different conditions.

A three‑year budget for this eradication campaign has been estimated as follows:

First Year
Salaries
Chief Entomologist in Charge	$2,400
Field Inspector	1,200
Four Assistant Inspectors (two months only at $100 per month)	800
Stenographer and clerk	1,000
Total Salaries		$5,400
Wages
400 laborers, 80 days at $1 daily	24,000
40 Foremen, 60 days at $1.50	3,600
Total wages		27,600
General Expenses
Equipment and accessories
440 Machetes at 80¢ each	352
50 Axes at $2 each	100
Kerosene (for burning plants and torches)	1,000
Travelling Expenses	1,200
Telegraph and Telephone	50
Printing and Stationery	200
Postage and Freight	100
Incidentals	200
Total general expenses		3,202
Total cost for first year		36,202
Second Year
Salaries (same as for 1st year)		5,400
Wages (Estimated 50% as for 1st year)		13,800
General Expenses (Less 50% of previous year expenses for Equipment and accessories		2,726
Total cost for second year		21,926
Third Year
All expenses same as for previous year.		21,926
Total cost of three‑year campaign		$80,054

Note: It is understood that this project will not be undertaken until a thorough investigation is conducted to ascertain the future possibilities of the cotton industry in Puerto Rico. Only in case the prospects for the revival of the industry appear reasonably assured would the abovementioned expenses be considered justified.

Appendix L – Cooperative Packing Plant in Puerto Rico

1. Memorandum to Puerto Rico Policy Commission. (From letter dated May 23, 1934.) By B. Z. Russell – Senior Animal Husbandman in Swine Investigations.

Re: Producing enough hogs in Puerto Rico to supply the pork that is now imported from the United States.

In your memo of May 12, you list the following imports of pork and pork products for the fiscal year 1932‑1933:

Type of meat	Lbs.
Loins and other fresh or frozen	240.259
Hams and shoulders, cured	10,984.681
Bacon	365.229
Other pork, pickled or salted	15,730.106
Sausage (not canned)	2,266.386
Sausage (canned)	1,026.556
Sausage ingredients, salted or otherwise cured (canned)	4,625.441
Pork (canned)	176.737

By telephone you gave me the amount of lard imported as being 23,629,000 pounds.

For calculating purposes, I have grouped some of these outs. Fresh or frozen loins imported are but a comparatively small item. Loins, bacon, and other pork pickled and salted have been grouped. All the sausages have been grouped with canned pork. In making calculations on these items some corrections must be made. Sausages not canned would be a dried product. It is necessary to add about 50 percent in weight to this to make it comparable to fresh meat, making this item 3,399.579 pounds. All sausages such as are imported into your country contain from 50% to 70% of beef. I have however computed it on a 50% basis. This would make the net amount of pork imported in the form of sausage 4,619,157 pounds.

Hams and shoulders are imported cured. About 12% in weight should be added to the reported pounds to make it to a fresh meat basis, and lard fat loses about 25% in rendering. By making these corrections the following would be the pounds of pork imported as I have grouped the outs.

Hams and shoulders	10,984.681
Add 12%	1,318.162
			12,302.843
Bellies			16,335.594
Sausages — not canned	2,266.386
Add 1/2	1,133.193
		3,399.579
Pork canned		176.737
Sausage canned		1,026.556
Sausage ingredients		4,625.441
		9,228.313
Less beef 1/2		(4,614.156)
			4,614.157
Lard	23,629,000
Add 1/3 for rendering	7,876,333
			31,505.333
			64,757.927

It is practically impossible to say how many hogs would be needed to produce the pork products you import. The following shows the percent of a dressed carcass each of the above outs represent and also the percent of the total imports the same out represents.

Type of meat	Percent of carcass	Percent of 1932‑33 imports
Hams and shoulders	34.00	19.00
Bellies (bacon)	11.50	25.23
Sausage	4.30	7.12
Lard	20.00	48.65

I have used a hog with a live weight of 240 pounds as a basis of calculation and 75 percent dressing yield, or a carcass weighing 180 pounds.

The following table shows the number of pounds each of the various cuts out from a 180‑pound carcass.

Hams and shoulders	61.2
Bellies	20.7
Sausage	7.74
Lard	36.00

To produce the number of pounds of the various outs imported the following number of hogs would be required in each case.

Hams and shoulders	201,027
Bellies	789,159
Sausage	596,144
Lard	875,148

Because of the fact that hams and shoulders would be a much larger percent of the carcass than any of the other outs, in fact nearly as large as the other three, I would recommend the amount of importations of these outs be taken as a basis for calculating the number of hogs required, or 201,027. If this number was produced, they would produce the following amount of each of the other outs.

Bellies	4,161.259
Sausage	1,555.949
Lard	7,236.972

This would mean that a considerable amount of these three products would need to be imported provided the proportion of the various cuts imported in 1932‑1933 was maintained.

The percent of the carcass of each of these various cuts depends to some extent at least on how they may be cut.

A fair estimate of the average number of pigs a sow will produce in 12 months would be 10. This is based on the plan of rebreeding the sow as soon as can be done after she weans a litter, which would mean having sows farrow at all seasons of the year, after the plan had been in operation for 2 or 3 years. Because of the climatic conditions in Puerto Rico, I am quite sure this can be safely done.

The production of 10 pigs per sow would require, in round numbers, 20,000 sows. It is safe to say that 10 percent of these sows would not produce pigs because of sterility, abortion, accidents, etc., which would make the requirement 22,000 sows.

If the boars are kept up and not turned loose with the sows and the sows given a single service, I estimate that one boar would be required for each 40 sows, or a total of 550 boars.

If the plan is to be put into effect in the fall of 1934, I would recommend the purchase of both sows and boars farrowed in the spring of 1934, with possibly some farrowed in the fall of 1933.

2. P. Henschien – Architect – Chicago. (From letter dated May 22, 1934.)

The plant will be designed as a complete unit for the preparation of meats and byproducts. Standard requirements would therefore include space and equipment as follows:

• Killing floor, with maximum daily capacity of 1,000 hogs.
• Hog Cooler – capacity for two days killing, 2,000 hogs,
• Cold Storage Rooms – for curing and preparing meats.
• Hog Cutting Floor,
• Lard Refinery,
• Grease Rendering Department,
• Fertilizer Department,
• Smoke houses – for hams and bacon,
• Sausage Factory,
• Packing, loading, and shipping facilities,
• Office, dressing rooms and toilets for employees,
• Boiler plant with 50% reserve capacity,
• Refrigerating plant with 50% reserve capacity,
• Stock yards for three days killing supply, or 3,000 hogs,
• Plant to be designed for future expansion in all departments,
• Design and equipment to conform with the standard regulations of the Bureau of Animal Industry, Washington, D. C., and suitable for tropical climate.

Cost of buildings, machinery, and equipment, ready for operation, is estimated at	$466,000
Architect’s commission – (6%)	28,000
Total	$494,000

3. William H. Knehans, Chief Engineer, Packers Architectural & Engineering Co., St. Louis, Mo. (From letter dated May 25, 1934).

A plant to handle two hundred thousand hogs per year, with all the necessary equipment for the manufacture of the usual line of pork products and the proper working up of the offal would cost approximately Four Hundred and Fifty Thousand Dollars. This would include a power generating plant. Buildings would be of reinforced concrete and brick construction and the equipment the latest and most efficient.

As to our services will say we will furnish all the necessary plans and specifications and supervision for a fee of 5% based on the cost of plant and equipment.

4. E. Jordan & Co., Designers & Manufacturers, Baltimore, Md. (From letter dated May 23, 1934.)

As an estimate on your packing plant including the complete processing departments would cost approximately $200,000, we do not believe our rough estimate would be very much out of the way, that is, we do not believe the complete cost would be much more than $200,000 or $250,000, or very much under $200,000.

If you have to have a stock yard, this would be approximately $10,000 more.

5. Stadler Engineering Co., New York. (From letter dated June 4, 1934.)

We have gone carefully into the matter and estimate that you can erect a complete Plant, including Buildings, Insulation, all necessary Packing‑House Machinery and Equipment, Boiler, Refrigeration Equipment, etc., for the sum of Five Hundred and Thirty Thousand Dollars ($530,000) This Estimate is based Upon the assumption that the site for the proposed Plant will have sewerage and water‑supply facilities, and also that no unusual conditions exist in connection with the soil on which the Plant is to be erected.

The main building will be a three (3) story and basement structure of reinforced concrete, designed to afford ample space for all departments and to conform with all standards and requirements of the U. S. Bureau of Animal Industry as to sanitation, floor and wall finish, etc. Also, the Plant would be designed to embody the most modern and economical equipment of its various types in all branches.

The Third Floor would contain the Hog Killing and Dressing Departments, Hog Coolers with capacity for 1200 hogs, and Pork Cutting Department with necessary equipment to handle 150 hogs per hour.

The Second Floor would contain the Offal Room, Inedible Melter Charging Room, Casing Room, Sausage Making (with necessary Cooler for the sausage kitchen) and General Offices.

The First Floor would contain the Inedible Melter and Crackling Storage Rooms, Lard Refinery, Smoked Meat Room, and Coolers for fresh pork, lard, bacon, and a Sales Cooler, also Shipping Room, Shipping Office, and the main Men’s Dressing Room.

The Basement would contain the Sweet Pickle Cooler, Ham Soaking and Washing Room, Hog Hair Drying Room and Dry and General Storage. The building is to be furnished with three elevators, one for inedible and two for edible products, smokehouses for hems and sausage, two stair towers and one independent stair for inedible department, dressing rooms for men and women and office for the U. S. Government Inspector.

The above estimate and summary is to include one‑story hog pens with a capacity of 1500 hogs to have the necessary ramp or incline to permit the proper passage of animals to the killing floor, also a garage with room for twelve (12) cars.

Appendix M – Notes on Cement Plant’s Cost in Puerto Rico

By Edwin C. Eckel – Geologist

Tennessee Valley Authority

A small modern cement plant with one kiln would yield about 200,000 barrels in an actual year’s operation. If for safety an extra kiln, but without extra grind machinery, were added the total cost of constructing the plant would not be over $500,000 and might perhaps be kept down to $400,000.

It is assumed that Venezuela or other crude oil would be used as fuel in the kilns. If tariffs make this too expensive it will be well to investigate the cost of Virginia or Alabama coal delivered in Puerto Rico. For the power needed in the plant operation, which would be in the neighborhood of 700 horsepower, I am assuming that electric power can be purchased more cheaply from the Government plant than it could be produced from a coal‑driven power plant.

All this is based on the assumption that the raw material supplies are satisfactory and well located and on the known levels of wages. Aside from fuel for the kilns, the only operating materiel which would have to be imported steadily is gypsum. This could probably be &soured more cheaply from the quarries in Nova Scotia which are on tide water.

Based on what is known at the moment about labor, fuel, power, etc., I feel that a Government cement plant might make a good Portland cement in a small mill such as above described for not over $1.50 per barrel, and that if the fuel and power costs are lower than I am now assuming the total cost of cement might be as low as $1.20 per barrel. As compared with a commercial mill, a Government plant can obviously save from $0.30 to $0.40 a barrel because it does not need to include salesmen’s expenses, provisions for bad debts, advertising, etc.

As for time required:

1. Examination and sampling of the raw material deposits would take around one week to ten days. Plus Steamer rims to P. R. and return, the work would involve some three weeks total.
2. Building a small mill would take 6 to 8 months normally. In a slack construction year such as this it could probably be done quicker.
3. With good luck all around a mall might therefore be producing cement by Jan. 1, 1935.

Appendix N – Industrial Development

Radiogram from Mr. A. Lucchetti, Chief

Utilization Power Resources

June 7/34

“Undeveloped power sites available, according to preliminary surveys, are Garzas Hydroelectric and Irrigation Project, 4,000 horsepower and water to irrigate 6,000 acres in Guayanilla and Yauco districts, estimated cost $2,000,000. This project may be enlarged and extended westward to irrigate Lajas Valley with the additional source of Rosario River, this scheme in my opinion preferable to present contemplated plan of impounding reservoir on San German River. Preliminary estimate for irrigation development $3,000,000. Jauca Hydroelectric Project, 4,000 horsepower, estimated coat $1,200,000, development also affords additional waters diverted into the Buena River for irrigation of 2,000 acres of land in the vicinity of Ponce. Arecibo River Hydroelectric Projects at Palmieri, Morones and Dos Bocas, 7,000 horsepower, estimated cost $1,800,000. Rio Yahuecas Hydroelectric Project 2,000 horsepower estimated cost $600,000. Rio Blanco of Lares Hydroelectric Project, 3,000 horsepower, estimated coat $900,000. Rio Guacio Hydroelectric Project at Alto Sano, 5,000 horsepower, estimated cost $1,300,000. Carite Hydroelectric Plant Number 5, 600 horsepower, estimated cost $150,000. Toro Negro Hydroelectric Plant Number 2, 1,000 horsepower, estimated cost $250,000. Present growth of hydroelectric system owned and operated by government and desirable future development for widespread use of electricity in the island dictate as the immediate next step that privately owned systems operating under franchise in the island be purchased outright by the government. Present worth of private systems about $7,000,000 economic consideration as to cheapening of electric rates to the public for household end for farming and other industrial uses fully warrant such purchase as part of the scheme of further developing the waterpower resources and utilizing production to best advantage. Estimated direct cash income from operation of complete island system not less than $4,000,000 a year. Present installed capacity continuously operating at government plants 9,000 horsepower with production this year 33,000,000 kilowatt‑hours, total production of all public service systems including the government 75,000,000 kilowatt‑hours. Estimated total production obtainable by unified system after development of aforementioned projects 200,000,000 kilowatt‑hours.”

Appendix O – Plan and Estimated Cost of Orange Juice
Experimental Plant, Puerto Rico

Capacity of operation: 100 field boxes of fruit per day, equivalent to 400 gallons of juice.

Plan of operation: Orange juice is extracted on hand burring machines, de‑aerated, end flash pasteurized. Containers are returnable, 12‑oz. bottles with crown closures, retail price 10 cents plus 3 cents bottle deposit. For first 100 days, the plant will be operated on an average at half capacity, gradually increasing to full capacity, whereupon return for goods sold will furnish operating capital.

Capital needed for first 100 days:

Cost of building	$5,000
Cost of equipment	2,000
Installation, wiring, plumbing, etc.	500
Operating capital, 100 days, and materials including fruit	17,000
Labor	2,000
U. S. Dept. of Agriculture supervision, 60 days Expenses (Salary paid by U. S. Dept Agriculture)	1,000
	$27,500

Detailed Cost of Equipment

Fruit cutter.	$100
Reamer – Southeastern – Orlando
4 heads at $50	200
Wooden table	20
Trough to screen	5
Screener – Southeastern – Orlando
complete with motor	150
De‑aerator
2 – 15‑½ gal. beer barrels	35
Fittings	65
Vacuum pump	175
Juice pump	150
Pasteurizer	75
Temperature controller	150
Pre‑cooler	75
Filler	150
Closing machine	150
Cooler	75
Bottle washer	100
Boiler	100
Miscellaneous, such as knives, buckets, hose, etc.	225
Total equipment	$2,000

Coat of Operation for 60 days (50 operating days)

15 days additional allowed for installation.

Cost of installation
Labor	$300
Materials	200
	$500
Materials
Fruit 10,000 boxes at $1	$10,000
Bottles 200,000 at 3 cents	6,000
Crowns at 36 cents per gross	500
Labels and paste	500
	$17,000

Labor
Extracting, 4 men at $1	4
Floor labor, 10 men at $1	10
Other labor, 4 men at $1.50	6
100 operating days at	20	$2,000

Vinegar Plant

Using equipment of juice plant for extraction of oranges.

Plant of operation: Orange juice is mixed with cane juice and fermented.

Capacity of operation: 400 gallons of vinegar per day, using 100 gallons of orange juice or 25 boxes.

Additional equipment

Juice pump	$150
Fermenting vats
7 – 500 gal. at $50	350
Generators, 2 at $100	200
Cane crusher	300
Operating Capital and Materials	3,000
	$4,000

Wine and Cordial Plant

Using equipment of juice plant for extraction of oranges.

Plan of operation: Orange juice is fermented and aged for wine. Fermented juice is distilled, and the alcohol distillate is used for manufacture of cordials.

Capacity of operation: 200 gallons of wine, or 75 gallons of brandy or cordial, per day.

Additional equipment:

10 fermentation vats, 1500 gals. at $100	$1,000
Wine aging receptacles and sundry equipment	1,000
1 cooling coil	100
1 still, 100 gal. overflow capacity	1,900
Operating capital and materials	2,000
	$6,000

Total Cost of Project, including working capital for 100 days.

Orange Juice Plant	$27,500
Vinegar annex	4,000
Wine and Cordial	6,000
Total	$37,500

Appendix P – Plan for the Establishment of
Freshwater Fish Hatcheries in Puerto Rico

A careful survey of the fish fauna of the freshwater bodies of Puerto Rico was recently conducted by Dr. Samuel F. Hildebrand, Senior Ichthyologist of the Bureau of Fisheries. As results of his investigations Dr. Hildebrand found that, with the exception of some crustacea, there are no truly freshwater species of fishes in Puerto Rico and that the fishes now found in our rivers are marine species which have adapted themselves gradually to freshwater habitat or environment. The numerous rivers of the Northern coast of the Island were found favorable for fish growing, while the mountain streams of the interior were found well adapted for the growth of such desirable game fish as the Rainbow Trout. Eggs of this genus of trout were imported and some 10,000 of these are now thriving nicely in a reservoir made for the purpose at the Luquillo Federal Forest.

General conditions for the establishment of a desirable freshwater fish fauna are considered very favorable. Since our rivers are free from truly freshwater fishes there are now no undesirable species in them; hence we can go ahead and import only the most desirable kinds as a basis for our future fish fauna. These may be chosen considering mainly their value as game and food.

The importance of creating a desirable supply of edible fishes in our rivers will be evident when we consider that Puerto Rico imports every year over one million dollars in fish and fish products, mostly from Canada in the form of dry codfish. This constitutes an important part of the daily diet of our country laborers, who can hardly afford to buy meat, eggs, milk, or other source of protein rich food. It is well known that the diet of the Puerto Rican peasants is very deficient; not precisely because of the quantity of food consumed but on account of its being unbalanced. The great deficiency is caused by the lack of protein rich foods such as milk, eggs, and meat.

It is considered that the establishment of a freshwater fish fauna in our rivers can do much to alleviate this situation. Possibly fishponds could eventually be established and operated after the manner of Java and the Philippine Islands, where immense amounts of food fishes are thus raised.

Since the Insular government has no funds available for the initial cost of the necessary fish cultural station, it is hereby requested the necessary funds be provided for the purpose. Our plan calls for an appropriation of $29,700 for the first year and subsequent annual appropriations of $16,600 for a period of five years. After this time, the project will be well under way and the Department of Agriculture and Commerce will be able to take care of the work. A Division of Fisheries has been created for the purpose, within the budget of the Department. We feel that with the requested Federal help during the first five years, excellent work of a permanent nature can be done in this connection, mostly on behalf of the poorer class of the Island.

The accompanying budget has been prepared with the advice of the Bureau of Fisheries. It is herewith submitted with the request that a sum sufficiently large to cover the same be assigned to Puerto Rico.

The total appropriation would be as follows:

For the first year	$29,700
For 4 subsequent years at $16,600 per year	66,400
Total	$96,100

This work is to be conducted in Puerto Rico by the Division of Fisheries of the Department of Agriculture and Commerce in cooperation with and under the technical advice of the Federal Bureau of Fisheries.

Proposed Budget for the Fresh Water
Fish Cultural Station in Puerto Rico

Personnel, Construction, Equipment and Operation
for Four Subsequent Years

Estimate, 1935

	No.	Salary
Personal Services:
Professional Service:
Director, Division of Ornithology & Fisheries	1	$3,000
Biologist	1	2,400
Sub‑professional Service:
Foreman of Fish Cultural Station	1	1,500
Clerical, administrative, and fiscal service:
Fishery Inspector	1	1,500
Clerk	1	900
Total permanent employees	5	9,300
Temporary personnel (labor)		2,000
Total personal services			$11,300
Construction and operation of hatchery buildings, ponds, and equipment		15,000
Office and scientific equipment		1,000
			16,000
Field operations:
Travel and subsistence for surveys and inspections in stocking streams		1,200
Travel and subsistence of expert from U. S. and shipments of eggs and fish from U. S.		600
Travel of fishery inspector		600
			2,400
Total for first year			29,700
Estimate for personnel, operation, and maintenance for second year
Total personal services	11,300
Hatchery operation and maintenance	2,500
Field Operations	2,800
		$16,600
Total for four years			66,400
Grand total for the entire project			$96,100

Appendix P‑1 – Cattle Tick Eradication Campaign

No plan of agricultural rehabilitation could be considered complete without including the necessary provisions for the eradication of the cattle tick from Puerto Rico. The damage done by the insect to our cattle is acknowledged as enormous. Not only is the tick the carrier of the Texas Fever organism, so fatal to imported breeds of cattle, but it constitutes also the greater hindrance to the fattening and growth of the native cattle kept in the open range. There are no Federal funds provided for this work in Puerto Rico; therefore, we recommend that appropriations for this campaign be made available from the processing tax funds assigned to the Island. The country is so small that it presents a very self‑contained and unique problem. A well‑planned and vigorous campaign of eradication conducted under the Insular Department of Agriculture with the advice and cooperation of the Federal Bureau of Plant Industry has very good chances of success. The benefits brought to our farmers by this sort of campaign are self‑evident and will be worth many times the expenditures incurred by the work. The complete eradication of the cattle tick from the Island will be a permanent form of much needed rural relief.

The eradication campaign will consist of compulsory dipping of all fever‑tick infected animals—cattle, mules, and horses—every fifteen days. Possibly government regulations will be needed to establish necessary quarantines and to make farmers cooperate to this work, but all this can be done under existing laws. If need be, no trouble would be encountered in getting its necessary legislation enacted.

The following budget for a tick eradication campaign to be conducted during a period of three years is considered worthy of emphatic recommendation. It has been prepared with the advice of Dr. W. M. MacKellar, Chief of the Division of Tick Eradication of the Bureau of Animal Industry, U. S. Department of Agriculture.

Budget for a Three‑Year Campaign
for Cattle Tick Eradication in Puerto Rico

(Approved by Bureau of Animal Industry)

PERSONNEL:
1 Director in Charge	$3,600
7 District Supervisors @ $1500 each	10,500
30 Local Inspectors @ $1200 each	36,000
50 Range Riders @ $1000 each	50,000
2 Stenographers @ $1200 each	2,400
2 Clerks ® $1000 each	2,000
			$104,500
DIPPING VATS:
Construction of 200 dipping vats @ $400 ea.	80,000
Repairs of existing vats	10,000
Arsenical solution for 300 vats (60 Gal. per year @ 60¢ per Gallon)	10,800
Chemical Regent and kits for analyses of dipping solution	400
			101,200
GENERAL EXPENSES:
Office
Office Supplies (Stationery, Desks, Typewriters, etc.)	3,000
Printing matter for propaganda (Posters, Circulars, Exhibition of films, etc.)	5,000
Postage and Freight	2,000
Telegraph, telephone, and light	1,000
Rental of offices	2,500
		13,500
Travelling Expenses
Director, $100 per month	1,200
7 Inspectors @ $60 per month	5,040
30 Local inspectors @ $40 per month	14,400
		20,640
Incidental Expenses		5,000
Total General Expenses			39,140
Total for First Year of Campaign			244,840
For Second year
Subtract construction of dipping vats	($80,000)
Decrease repairs appropriation to half.	(5,000)
		(85,000)
Total Appropriation for Second Year			159,840
Total Appropriation for Third Year			159,840
Total Cost of Three‑Year Campaign			$564,520

Appendix Q – Tentative Budget for a Three‑Year Campaign
for the Eradication of Bovine Tuberculosis

(Approved by Bureau of Animal Industry)

Salaries
Chief Veterinarian, in charge of campaign	$2,600
4 assistant veterinarians @ $2000 per year	8,000
4 junior assistants @ $1000 per year	4,000
1 stenographer and clerk	1,000
Total Salaries		$15,600
Travelling Expenses
Veterinarians and assistants		10,000
General Expenses
Printing and Propaganda material	1,000
Stationery	100
Postage and Freight	500
Telegraph and telephone	200
Total General Expense		1,800
Equipment and Accessories
Ear Tags	500
Tuberculin	4,000
Sets for application of test	300
Extra needles and parts	50
Alcohol, cotton, etc.	200
4 Autopsy sets	100
Total Equipment and Accessories		4,950
Incidentals		2,000
Compensations for registered purebred animals at the rate of $50 each—others at $20—estimated at $1,600 per year, figuring that 40,000 cows would be tested each year and 4% be positive; estimating 25% as imported breeds and the rest native long horned cattle, the compensation funds needed would be as follows:
400 improved breeds @ $50	20,000
1200 native cows @ $20	24,000
Total for compensations		44,000
Total Cost of Campaign Per Year		78,350
Total Cost of Three‑Year Campaign		$235,050

The number of milk cows now in the Island is taken as 80,000. The Fifteenth Census of the United States (1930) gave the figure of 78,412. It is estimated that due to increase in number of cows because of new heifers coming into milk, the total number of cows tested for the total period of three years would amount to 120,000. Thus, the number of animals treated per year to cover the Island would have to be 40,000.

Appendix R – Memorandum of Agreement

MEMORANDUM OF AGREEMENT between the Puerto Rican Policy Commission and the Bureau of Chemistry and Soils of the United States Department of Agriculture.

The following points are suggested as the basis upon which the Puerto Rican Policy Commission and the Bureau of Chemistry and Soils of the United States Department of Agriculture agree to cooperate to complete the soil survey of the Island of Puerto Rico.

1. The Bureau of Chemistry and Soils agrees to furnish the required number of trained soil surveyors together with four assistants who will be selected locally, to complete the soil survey of Puerto Rico within a ten‑month period, beginning July 1, 1934.
2. The Bureau of Chemistry and Soils will furnish an inspector to correlate the soil types of the areas mapped with those found elsewhere, to prepare the necessary reports and supervise the work.
3. The Bureau of Chemistry and Soils agrees to prepare copies of the field maps so as to furnish the Commission with black and white copies of the maps and with multigraph copies of the reports immediately upon completion of the field work.
4. The Bureau of Chemistry and Soils agrees to furnish the Puerto Rican Commission with printed copies of all field reports in full, together with final copies of the printed maps upon their completion.
5. The Puerto Rican Commission agrees to finance this project to an amount not to exceed Thirty‑Five Thousand (435,000) Dollars except for the final printing costs mentioned under paragraph four.
6. The responsibility and authority for the technical details of the work are to be the responsibility of the Bureau of Chemistry and Soils. Suggestions from the Commission regarding any special differentiations to be made will be carried out to their best ability by the Bureau of Chemistry and Soils.

Date	May 23, 1334		R. Menéndez‑Ramos
			Member of Puerto Rican Commission
Date	May 23, 1934		Carlos. E. Chardón
			Member of Puerto Rican Commission
Date	May 23, 1914		R. Fernández‑García
			Member of Puerto Rican Commission
Date	May 23, 1334		Henry G. Knight
			Chief, Bureau of Chemistry and Soils
Approved:
R. G. Tugwell
Secretary, Department of Agriculture
Date	May 23, 1934

Appendix S – Medical, Nutritional and Parasitological Protects

(Prepared by the School of Tropical Medicine)

Treatment, Control, and Eradication of Schistosomiasis
mansoni in Puerto Rico

(Liver fluke Disease of Man)

Object

Since over 10% of the people in infected areas are incapacitated for work, this disease is an important economic factor here on the Island.

Before definite public health measures are undertaken for the study of the control and mass treatment of the disease, it would be most important to determine the proper methods of attack. It might be shown that eradication of the intermediate host (the water snail) would solve the problem in a cheaper and simpler manner than mass treatment.

This disease is found largely in the coastal region of the Island, where the larger percentage of the population resides in an area extensively irrigated for the growth of sugarcane, as has been shown by surveys already completed by the School of Tropical Medicine. It is recommended that a district be chosen for an extensive experiment extending over a period of time that would include: (1) Survey of incidence of the disease, (2) percentage of infected snails in irrigation areas, (3) problem of eradication of the snails, and (4) treatment and control of the infected individuals.

This project has a double advantage in that, should methods of eradication of snails be found possible, we immediately have at our disposal a means for the contro1 and prevention of the liver fluke of $20,000. sheep and goats, which is a great economic problem in Puerto Rico. This disease is so prevalent in the northern part of the Island, that it is practically impossible to raise goats in that section. The general health of the cattle infected with this parasite seriously affects milk and meat production. It is estimated that here on the Island about 10% of the livers from infected cattle contain this parasite and must, therefore, be destroyed.

Cost

An estimated cost of this project for the treatment, control, and eradication of Schistosomiasis mansoni in a limited area is $15,000.

An estimated cost for the project of studying the control and eradication of the liver parasite of cattle, sheep and goats is approximately $20,000.

The total cost for the projects on these two parasites, including a general parasitological survey of the Island, would be approximately $40,000.

A Study of the Medicinal Properties of
Plants Native in Puerto Rico

Object

To determine if medicinal plants, at present unknown to medical science, exist in the Island of Puerto Rico, and to isolate the active principals if found, and study their pharmacological and chemical properties on experimental animals.

Like all the countries, Puerto Rico has its local herbal remedies. It is not unreasonable to suppose that some new and valuable drugs might be obtained from such an investigation, which might lead to the growing of medicinal plants for northern consumption.

Cost

This project, which will involve the salaries of pharmaceutical chemists and toxicologists, would involve approximately $15,000 for a period of five years.

                                            George W. Bachman,
                    Director School of Tropical Medicine

 

Study Of Nutritional Value of Native Foodstuffs
with Particular Reference to the Chemical Composition,
Vitamin Content, and Physiological Effects

Object

Since Puerto Rico is importing between 50 and 75% of its food requirements, the problem is linked with that of economics. We are importing the cheapest energy foods, rice and beans, and the question arises whether the foods grown on the Island are adequate to supplement the defects of the imported products. This question can only be answered by further study of native food plants.

A subsidiary question arises: Can we raise here profitably those foods necessary to properly supplement our food supply, if they have not already been grown? This question is largely an agricultural one but is directly linked with the knowledge that can only be obtained through the cooperation of the Agricultural Department of the University of Puerto Rico and the nutritional work of the Schoo1 of Tropical Medicine.

Cost

This project has cost, during the last five years, the total sum of $36,000. With the chemicals and apparatus on hand, this project could be completely studied for the sum of 125,000 extending over a period of three years.

 

The Influence of Nutrition on Experimental Tuberculosis

Object

To prove whether dietary factors, such as vitamin B1 or B2, etc. play any role in experimental tuberculosis.

Work already under way, in cooperation with the Departments of Bacteriology and Pathology, indicates that certain dietary factors may affect the course of the disease. This problem is of considerable importance and directly affects public health here on the Island. It might be well to point out, that already work along this line from the Department of Chemistry, indicates that diet plays some role in this disease in experimental animals.

Cost

The estimated cost, based upon 4 years of extensive study of the nutritional values of foods, is approximately 115,000 for a period of three years.

Incidence of Endemic Abortion in Cattle and Swine
and its Relation to Human Infection
and Public Health

Object

From past experience, it is known that infection in cattle in Puerto Rico is very high and is causing a great economic loss to the farmer, besides the possibility of human infection. In 1923, a survey was made by the Department of Bacteriology of the Schoo1 of Tropical Medicine, which showed that all herds supplying the city of San Juan with milk were infected with Brucella abortus, the incidence ranging from 20% to 30% in the various areas.

This project will entail:

1. A complete survey of all important dairy herds and swine areas.
2. Milk inspection in San Juan District.
3. Bacteriological studies of strains isolated and the development of a rapid method for testing infection in animals. (This study, which has been under investigation for some time, has already shown promise of a method for a rapid diagnosis).

Cost

Based upon preliminary investigations, the estimated cost of this project would amount to about $15,000 for a period of three years.

Appendix T – Letter from Jno. A. Fleming

JAF
WES

Copy for Dr. Kenrick
Carnegie Institution of Washington
Department of Research in Terrestrial Magnetism

5241 Broad Branch Road, R.W.
Washington, D.C.
June 2, 1934 (No. S‑1)

Dr. Carlos Chardón,
Chancellor, University of Puerto Rico,
San Juan, Puerto Rico

Dear Dr. Chardón:

It has come to my attention that Professor G. W. Kenrick is approaching you in connection with the possibility of arranging for a program of research in radiotelegraphy at your University.

Professor Kenrick’s subject is one in which this Department is greatly interested, as is evidenced by the installations of special equipment for photographic records of conditions of the ionosphere at our two observatories—the one near Huancayo, Peru, and the other near Watheroo, Western Australia. Professor Kenrick has cooperated with us in the installation of similar apparatus during the International Polar Year at the Alaska Agricultural College and School of Mines, near Fairbanks, Alaska. We, therefore, have had ample opportunity of seeing the character and quality of research work of which he is capable and have no hesitancy in recommending his proposals, as well as himself, to your favorable consideration.

As regards the scientific value of the program, which he has in mind, there can be little question, in view of the importance of the study of the upper regions of the atmosphere, not only in respect to the practical applications in radio transmission and reception, but also in research problems bearing on correlations of geophysical phenomena, such as terrestrial magnetism and electricity, and meteorological conditions with radio phenomena. The importance of the fields in which Professor Kenrick is engaged and the esteem. in which his work is held by responsible persons and organizations is amply evidenced by the financial support given him in grants from the National Research Council, the Permanent Science Fund, and the Rumford Fund of the American Academy of Sciences, as well as the aid given by our own Institution.

Since there is a magnetic observatory of the United States Coast and Geodetic Survey near San Yuan, we would have the advantage of securing the necessary geophysical data for use in the radio program without additional cost.

Trusting that you will find it possible to take this opportunity of promoting scientific endeavor and research,

                                                             Sincerely yours,

                                               (Signed) Jno. A. Fleming
                                                              Acting Director

Appendix T‑1 – Letter from G. W. Kenrick

June 7, 1934

Memorandum for: Dr. C. E. Chardón

Frame: Dr. G. W. Kenrick

Subject: Use of Radio Methods for the Location of Hurricanes.

In accord with your request and my letter of June 4, 1934, I am submitting this preliminary report relative to Static Direction Finding.

General Principle and Procedure: So far as is known, the most successful method employed for the location of static associated with storm disturbances utilizes a number of widely separated radio direction finders which give a visual indication of the direction of each static crash received. Through an appropriate system of intercommunication (telegraphic, or preferably telephonic) the bearing of each individual static crash which is observable simultaneously at the various points is noted, and the position of origin determined by familiar triangulation methods. The equipment for this system was first evolved in England and the method has been used there with considerable success.[15]

Modified and improved equipment is now in process of development here in America, but the writer knows of only one installation which has thus far been consistently operated.[16][17] This, of course, does not permit triangulation or three‑point bearings. The problem of the development of this system for the location of tropical hurricanes in the vicinity of Porto Rico may be conveniently divided into three parts.

1. The development or acquisition of several direction finder units for use in the triangulation methods.
2. The development or acquisition of a suitable intercommunication network in order to permit simultaneous observations to be taken at widely separated observation points.
3. The location of observing points, the coordination of the observations, and the prompt collection of the data obtained with meteorological disturbances.

I will now briefly review the present status of these problems.

1. So far as is known there have been six radio direction finding units of the Watson Watt type in. America, i.e., three original Watt type units purchased by the Navy, two redesigned units developed at the Naval Research Laboratory, and one special setup made by the A. T. & 3`. Co. at Houlton, Maine. (21 (3) The construction of other units by the Navy is awaiting further research study of the problem of the best design. This study is now in progress at the Naval Research Laboratory. One of the purposes of the writer’s proposed trip to Washington involving reserve duty at the Laboratory is to ascertain in detail the present status of this research and to see whether or not it may be possible to secure the loan of equipment for further study in Porto Rico and associated triangulating points. The estimated cost of the proposed project is to a considerable extent contingent on whether suitable equipment is available at this time for loan, or whether it will be necessary to purchase the equipment. The tentative estimate submitted in my previous letter for the development of the project assumed that a suitable loan of equipment could be effected.
2. In order to carry on simultaneous observations at widely separated points, it is necessary to have available a radio telegraph or telephone transmitter of substantial power to permit ready and perfect intercommunication. Telephone facilities are much preferable for this purpose. It is believed that telegraph facilities may be secured through loan, but the development of an independent radio telephone circuit of substantial power is believed to be highly desirable for this work.
3. As a result of conferences already carried out or pending, the writer has several suggested points at which triangulation observations may be undertaken. The selection of the points to be finally chosen is part of the proposed preliminary program. It is hoped that the liaison work and the direction of the collection and correlation of data can be carried out with the close collaboration of the University of San Juan and the writer.

Estimated Expenses. It is hoped that the expense of this project may be kept down in the early stages of its development through the appropriate loan of equipment and facilities in order that the system finally worked out may take advantage of early experience. Avery approximate estimate of the distribution of costs for the various parts of this five‑year program is as follows:

I.	4 Direction finder units @ $5000.	$20,000
II.	A.    Intercommunicating transmitter and receiver (San Juan control station)	20,000
	B.    Installation and technical problems associated with problems 1 and 2.	10,000
III.	Five‑year personnel charges for liaison and the taking and reduction of data	50,000
	Five‑year total	$100,000

Immediate Program It is suggested that during the coming year the following program be attempted.

1. Acquisition (through loan if possible) of suitable observing equipment.
2. Selection of cooperating observers, distribution, and installation of equipment to provide at least three points for observation.
3. Construction and testing of suitable intercommunicating system.
4. Preliminary tests and observations during hurricane season of 1935.

It is impossible to form a very exact estimate of the cost of this proposed project during the fiscal year 1934‑1935 until we ascertain more definitely inhowfar the equipment and cooperation necessary for the program can be secured by loan or donation. Tentatively, however, it is believed that at least $10,000 or $15,000 could be effectively utilized. In particular, problem 2 presents no unique technical difficulties, and work toward a suitable intercommunicating transmitter may be immediately undertaken. It may be of interest to note that such a transmitter would not be limited in its application to this project but would also be of great value during periods of emergency such as those associated with hurricanes or other disasters.

                                                 Respectfully submitted,

                                                  (Signed) G. W. Kenrick

---

Notas

[1] Appendix A shows the appalling increase in population, with an increase in birth rate from 20.4 to 39.0 in 25 years and a decrease in death rate of 36.7 to 22.4.

[2] This document has been edited to facilitate reading and to enhance accessibility.

[3] Appendix B shows how in a normally good year like 1927-28, in spite of an apparently favorable balance of $14,688,000, the net deficiency of the “international” income account was $10,357,000.

[4] Appendices C and D are of interest in connection with the commerce of Puerto Rico. Appendix E shows the imports of animal and vegetable products. Appendix F shows the rice imports between 1914 and 1932.

[5] Price of land is not included in estimating the cost of the Service Farm since it was obtained by exchange. Estimating that there will be created at least 10,000 small farms, it is necessary to build at least forty Central Service Farms (an average of 250 small farms per service farm). The total cost of the Service Farms is $300,000.

[6] We will have 7,500 subsistence farms on the marginal lands plus 2,500 farms on other lands purchased.

[7] We are estimating the grinding season at 5½ months or 24 weeks, equivalent to 120 workdays. At an average wage of $1.00 per day, this would be $120. During the dead season we estimate that the workers work for 40 days, which at 75¢ a day means $30,00 additional income. Therefore, a wage-income of $150 per wage earner is the equivalent of 160 days.

[8] We have estimated that roughly the work on the community houses, dairy barns, etc., will be equivalent to 500 small houses.

[9] Area given is total area, as area for land only is not obtainable.

[10] Not reported separately.

[11] See Appendix I

[12] In this and subsequent paragraphs we have drawn freely from a memorandum submitted to Governor Winship by Attorney Miguel Guerra Mondragon, March 5, 1934.

[13] Estimated except for census years.

[14] No movement of specie reported for 1928.

[15] R. A. Watson Watt and J. F. Hord, An Instantaneous Direct Reading Goniometer. Journal of the Institute of Electrical Engineers, London, 64 No. 353 P. 611

[16] S. W. Dean, Correlation of Directional Observations of Atmospherics with Weather Phenomena. Proceedings Institute of Radio Engineers, Vol. 17, No. 7, pp. 1185-1191, July 1929.

[17] A. E. Harper; Some Measurements of the Directional Distribution of Static, Proceedings Institute of Radio Engineers, Vol. 17, No. 7, pp. 1214-1224, July 1929.