The Progress of Puerto Rico, U.S.A. [1950?]

5282

P%mí& z Mi

— ;d C 5»

AO ASTRA PER ASPERA

THE PROGRESS OF

PUERTO RICO, USA.

Govemment Development Bank for Puerto Rico San Juan, Puerto Rico

Introduction

Puerto Rico is a community o£ more than 2,000,000 Ameri-

cans and is a part of the American poiitical and economic system. The Island was ceded by Spain under the covenants of the Treaty of Paris after the Spanish-American War. Inspired by the ideal of continental Americans, Puerto Rico has advanced re-

markably and, aithough its general level of socio-economic advancement is below that of mainland United States, it ranks

with the jtppi three pr four Latin,American countries in every Índex of economic activity notwithstanding the fact that Puerto Rico is very small in size and that it lacks the wealth of resources possessed by the countries south of the Río Grande.

The Island enjoys a very stable poiitical situation and outstanding poiitical leadership. The history of poiitical stability in Puerto Rico has no precedent in South América and only

few nations in the world can boast a record comparable to that of Puerto Rico.

For such a small Island, not endowed by nature with vast resources, to have attained an economic development which ranks with the three most advanced countries in Latin América is an achievement. But Puerto Rico aims at the American

standard of life; is working very hard to attain it; and is fighting forcefully to overeóme the obstacles presented by limited resources with all the energy, imagination and modern tech-

nology developed as a progressive American community.

This booklet aims to show at a glance the progress attained

by Puerto Rico as a part of the economic system of the United States.

Esteban A. Bird

Executive Vice President

TT :ñ

PART A

LAND USE IN PUERTO RICO AND LABOR DISTRIBUTION

Changes ín Use of Crop Land, Puerto Rico THOUSANDS OF CUERDAS HARVESTED 900

FRUITS &

COTTON

SUGAR GANE

FOCO CROPS

1909

1919

1929

1935

1939

1948

Source: Hill, E. B., and Descartes, S. L., An Economic Background for Agrícultural Research ¡n Puerto Rico, Bulletin 51, University of Puerto Rico Agricultural Experi-

ment Station, 1909-1935; l6th Census of the United States, 1940, Agriculture, Puerto

Rico for 1939 and División of Statistics, Bureau of the Budget, Office of the Governor for 1948.

Land is the most important source of wealth and income. Puerto Rico ¡s making the fullest possible use of its land resources.

The increase in land devoted to the cultivation of food crops is very sig-

nificant. In the last 15 years land devoted to such uses has been expanded by 60 per cent. However, sujar cañe cultivation is and probably will continué to be the foundation on which the structure of the Island's economy rests. It is the crop besf adapted to the natural and economic conditions. The sugar cañe plant is relatively little affected by hurricanes and recuperates rapidly from hurricane damage. Moreover, the sugar cañe crop fits the social and economic requirements of an overpopulated Puerto Rico better than any other crop.

It yields high returns per acre, its cultivation requires a large amount of labor per acre, and it has a reasonably stable and expanding market. So,

although food acreage has increased, it pays Puerto Rico to specialize in the| production of high-vaiue-per-acre crops and to obtain much of its foodstuflFs from the mainland in exchange for such crops. It would take Puerto Rico over two million acres of land to raise the food which it consumes. It pays

for this food with the returns of one seventh of the same acreage of land devoted to sugar production.

Land Use in Puerto Rico PER CENT 100

100

Í:i:TIMBER, BRUSH,SWAMP, PUBLIC AND OTHER USE i

liliUBliUiliUitCjllllJM

1828

1900

1912

1935

1940

1948

Source: Murphy, L. S., Forests of Puerto Rico . . . Their Physical and Economic Environment, U.S. Department of Agriculture, Bulletin 354; 1916 and 1940 Census of Agriculture; 1948 from División of Statistics, Bureau of the Budget, Office of the Governor.

That Puerto Rico is driving at the fullest use of its land resources is readily

appreciated from the fact that land under cultivation has advanced from 12% in 1900 to approximately 50% in 1948. Pasture land has decreased from 52% in 1900 to 32% in 1948.

Agricultural and Other Employment in Puerto Rico

THOUSANDS 650

•650

600

600

I

I OTHER AAANUFACTURING 500

500 —

AGRICULTURE 400

400

300

300

200 — WZ/Xj\

I I I I I I I I I I

100 —I

1899

1910

1920

1930

1940

I

200

I

100

1948

PER CENT

AGRICULTURAL EMPLOYMENT 1899

1910

1920

1930

1940

1948

Source: Census Reports of the U.S. Department of Commerce; War Department Report (1899); División of Labor Statistics, Puerto Rico Department of Labor (1948).

A larger proportion of the population engaged in other industries and

services as compared to those employed in agriculture, forestry, and fishing

is indicative of a high degree of advancement. Non agricultural employment in Puerto Rico has increased from 39 per cent to 61 percent between 1910 and 1948.

8

Net Income Distribution by Industrial Origin: Fiscal Years 1939-40 to 1945-46 PER CENT 10

I

20

I

I

'

30

I

40

50

60

7 0

'

1939

MF6.

SUG

1940

OTHER IND

1

ALL

L

11li •¿¿¿i

vOTHER

m 1 aTTl

OTHER FARMING

AGR.

1941

OTHER IND

MFG.

1942

ALL OTHER

iill

r

OTHER FARMING

AGR. 1943

MFG.I

OTHER INDUSTRY

1944

■liiiffl

ALL

OTHER

p [INDUSTRY

OTHER FARMING

AGR. 1945

■ OTHER

1946

1sip ■

ALL

V.OTHER

rrr 10

20

30

40

50

60

70

Sources: The Net Income of Puerto Rico Economy—^fiscal years 1939-40 to 1945-46 prepared by the División of Statistics, Burean of the Budget, Office of the Governor.

Agriculture is still Puerto Rico's primary industry and its most important source of income, but its relative importance has declined considerably and consistently. The net income obtained from agriculture is gradually becoming less than the net income derived from non agriculturai endeavors.

The net income obtained from other agriculturai activities, beside sugar cañe during 1945-46, the last year for which statistics are available, was more than $27 millions in excess of the net income derived from sugar cañe

cultivation. In the fiscal year 1939-40 the net incomes from sugar cañe cultivation and from all other agricultural pursuits combined, taken as percentage of the total net insular income, were practically identical. Each contributed 15 per cent of the total net income. But, since 1940-41 the proportion of the total net income derived from other types of agriculture has been increasingly larger. For 1945-46, other types of agriculture are shown to have produced 15 per cent of the total net income of Puerto Rico against some 10 per cent for sugar cultivation.

PER CENT 40

40

35

35

30

30

25

25

/AGRICULTURE

r U ^-1

20

20

15

15

AAANUF/^CTURING 10

10

i>1939-40

1940-41

1941-42

1942-43

1943-44

1944-45

1945-4é

Sources: The Net Income of Puerto Rico Economy—^fiscal years 1939-40 to 1945-46 prepared by the División of Statistics, Burean of the Budget, Office of the Governor.

10

PART B

TRADE FACTS ABOUT PUERTO RICO

"A 300 MILLION PURCHASER OF AMERICAN GOODS"

World's Commerce with Puerto Rico and Share of the

United States therein, Fiscal Years 1915-16 to 1947-48

MILLIONS OF OOLLARS

550

Worid's Commerce with Puerto Rico 500

.United Stotes Commerce * with Puerto Rico 450

450

400

350

€

400

350

300

300

250

250

200

150

100

100

50

1915-16

1925-26

1935-36

1945-46

Source: Annual Book on Statistics of Puerto Rico; Fiscal Year 1947-48; Puerto Rico Department of Agriculture and Commerce.

The bulk of the trade of Puerto Rico is with the United States. It con-

sistently ships to and parchases from the mainland between 90 and 98 per cent of all trade. There is a marked trend for an increasing trade. For the year ending on June 30, 1948, Puerto Rico's external trade amounted to

$552,472,553, of which 94.67%, or $523,001,064, was carried on with the mainland.

12

Puerto Rico's Rank in the Export Trade of the United States: 1948

$1,000,000 a Day Market for American Goods Valué

Country

(Million Dollars)

All countrt'es

1. Cañada

1,858.5

2. Germany 3. United Kingdom

862.0 636.9

4.

France

586.6

5.

6.

Venezuela México

515.0 511.4

7.

8.

Brazil Unión of South Africa

496.4 490.7

9. Rep. of Philippines 10.

465.9

Cuba

438.1

11. Italy 12. Argentine

412.1 378.3

U^uertp.JUco

14. Japan

322.8

15.

309.1

Netherlands

Latin América 1.

Venezuela

515.0

2.

México

511.4

3.

4.

Brazil Cuba

496.4 438.1

5. Argentine

378.3

6.

7.

Puerto BAco Colombia

337.9^ 195.3

Chile

105.0

8.

9.

10.

Panama Curacao

91.7 82.8

Source: Bureau of the Censos, U.S. Department of Commerce.

Puerto Rico is a market for American goods of tremendous importance.

Compared to all Latin American countries, Puerto Rico ranked first in dollar volume of goods purchased from the United States between 1933 and 1936 when the United States was most in need of an export market. In recent

years, Puerto Rico has been the sixth largest purchaser of United States goods in all Latin América. It buys some $340 million worth of goods annually.

Almost a $1,000,000 a day market!

13

Puerto Rico's Position in the Export Trade of the United States on a Per Capita Basís: 1948

Per capita purchase from United States

Country 1.

2.

(dolíais)

Puerto Rico Cañada

157.8 156.4

3. Panama Republic

125.8

4.

5.

117.1 41.6

Venezuela Unión of South Africa

6. Costa Rica 7. Netherlands 8.

34.4 31.6

Greece

30.1

9. Argentino 10. Philippines Republic

23.5 23.3

11.

21.4

México

12. Dominican Republic

21.1

13.

14.

15.

Chile Colombia Australia

18.7 18.1 14.8

16.

France

14.1

17. Germany

13.1

18. United Kingdom

12.7

19.

10.2

Brazil

20. Italy

9.1

21.

Cuba

8.5

22. Japan

4.0

Source: Valué of Imports taken from the Monthly Summai^ of the Foreign Commerce of the United States; Population from the Monthly Bulletin of the United Nations.

ai In terms of per capita trade, Puerto Rico ranks first in the export trade of the United States, and surpasses the Latiñ American republics by a wide margin. Puerto Rico, allowing for its size as measured by population, is a better market than any of the other countries in Latin América which outrank it in dollar terms. These countries, over the pre-war emergency years, made only 17 to 71 per cent of their total purchases in the United States.

Puerto Rico made 91 per cent of its purchases on the mainland.

14

External Merchandise Trade of Puerto Rico, Fiscal Years 1942 to 1948 MILLIONS OF DOLLARS 400

400

350

350

300

300

L.nMOc:o7 ruK'

250

250

200

200

150

SHIPMENTS,

150

1

100

100

50

50

1942

1943

1944

1945

1946

1947

1948

Source: Balance of External Payments of Puerto Rico, Fiscal Years 1941-42 to 1947-48

by Belén H. Cestero; División of Statistics, Bureau of the Budget, Office of the Governor.

Shipments from Puerto Rico in dollar valué reflect an upward trend from the beginning of the century to the year 1926-27. From 1927-28 until 1941-42 their valué was stabilized at a slightly lower level than the 1926-27

peak. During the war and post war years the trend was definitely upward.

Adjusting for changes in the price level of shipments, prior to 1922, volume rose relatively little although the trend was slightly upward. From 1922 to the depression year of 1930, the rise in shipment valúes was maintained, in spite of falling prices. After 1930 the trend leveled off as a result of the depression on the mainland, but after 1940-41 the trend again is definitely upwards due sometimes to an increase in volume and others to an increase in price with the growing mainland income during and after World War II. 15

Purchases by Puerto Rico followed a rísíng trend until the end of the

1920's, and fell with the advent of the depression, but they recovered quickly and continued a steady upward trend. Adjusted for changing price levels, purchases have steadily increased to the point where they are some 60% greater by volume than for the 1935-39 period. Purchases by Puerto Rico are closely related to insular income, and their increasing trend is a good index of larger consumption on the Isiand.

Principal Shipments from Puerto Rico to the United States, Fiscal Years 1942 to 1948 MllLIONS OF DOLLARS

SUGAR AND RfLATfD PRODUCIS

1942

1943

1944

1945

1946

1947

1948

Source: Balance of Externa] Payments of Puerto Rico, Fiscal Years 1941-42 to 1947-48

by Belén H. Cestero; División of Statistics, Bureau of the Budget, Office of the Governor.

16

Puerto Rico's outbound trade has undergone significant changes since the beginning of the century. Coífee accounted in 1895 for over 60 per cent of the total valué of the trade; dropped to less than 20 per cent in 1910; and to nothing in 1948. On the other hand, sugar accounted for some 25 per cent of the valué of total sales in 1895; by 1901 they constituted over 55

per cent of the dollar valué of shipments; and in 1948 were some 60 per cent of the total.

The other important change has occurred in the valué of shipments of tobáceo, needlework and rum. Valué of tobáceo shipments have fluctuated a

great deal and are characterized for wide variations. Needlework shipments have ranked next to sugar and show a marked upward trend in recent years.

The valué of rum shipments steadily increased since prohibition and by 1941 had reached seven times those of 1936. The valué of rum shipments rose

sharply during the war to a peak of some $35 millions in 1943-44 due to the scarcity of whisky on the mainland during the period. After the end of the war, rum consumption dropped sharply but the market will probably be stabilized at a point higher than that of the prewar year.

One significant fact about the outgoing trade of Puerto Rico is that with the

rise in rum shipments, refined sugar, needlework and other processed products, the importance of manufactured goods has increased relatively in the composition of Puerto Rico's outbound trade.

17

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(U V)

CTí

J3 U M

s

PU .

a

vj C4

U

<U

2 >-

i1 1I l-M (yj

f2 ^ c#5

<u *4h

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O

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C/5 ^ Oh TJ O

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Puerto Rico was in 1948 a $77 million dollar market for vegetable food products and beverages purchased from the mainland. Of these, rice, wheat, and flour were and are the most important. Edible animal products pur chased from the United States amounted to some $45 million, with pork products and fish as leaders. Cotton textiles, cigarettes, leather footwear, and 18

S E E

a

CüD

<

C O

E Ui

rt

a.

(L>

Q

3

D-

machinery were and are among the leading non-edible imports. Machinery and vehicles amounted to over $50,000,000 out of which $17,000,000 cov-

ered automobiles, parts, accessories and service equipment. From one fourth to one third of total purchases are constituted by edible food products and textiles, while manufactures account for some 20 per cent of the total.

19

o

54Í35

2363Í768 6,427,260 2,997,637 5 623 061 5,792,900 2,754,671

Malt, Liquors in Cans

Cotton Manufactures, (Not elsewhere specified) Synthetic, Textile Manufactures, (Not elsewhere specified) PoardjJPÍMk and Scantlings, Southern, Pine Dresseid Stones, Precious, Synthetic and Imitation (For Industrial Processing on the Island) Soap, Laundry

2 2^5 ^87

4,559,368 2,243,816 2,692,105 3,244,120

Boots, Shoes, Men's Welt

C'garettes Steel Bars, Concrete Reinforce Machine, and Parts Sugar Milis Ammonium Sulfate

D,y Ripc

6,375,860

Milk Dried Whole

(2nd Ranking)

37.60 48 09

2,616,577 4,021,443

Shoes, Women's, Misses, Cemented Dairy and Poultiy Feeds, Mixed

47.05

2,323,'638

6.30 14.91 16.89 22 35

ü:»

17 4^^

10.20

59.53 31.73 69.36 yjTf 49.11

47Í58

$2,764,422

Pork, Pickled or Salted

(Ist Ranking)

Percentage to Total U.S. Sales

Hams & Shoulders, Cured

Purchased by Puerto Rico

States on Selected Items: Calendar Year 1948

j. Descnption Commodity

of United

Puerto Rico's Ranking in the Export Trade

¡ií

(15 Ranking)

1.34 1.50

3.30 3.55

7.05 4.77

5.23

Total U.S. Sales

Percentage to

4.67

14.17 9.64

24.87

13.80

Source; Reports of the United States Department of Commerce, Calendar Year 1948.

methods of transportation."

are exempted from the requirement of filing manifests of such cargo aboard vessels leaving Continental United States ports for Alaska and Hawaii or leaving ports in Alaska or Hawaii for Continental United States ports or ports in other territories and possessions of the United States. The provisions for the exemption of shippers from the requirements for filing for declarations shipments by vessels were extended by regulation to all other

tions for merchandise moving between continental United States and the two territories of Alaska and Hawaii by vessel; and masters of vessels

In^rmation on shipments to Alaska & Hawaii not compiled by Bureau of census after March 1948. ^ "Under the provisions of Public Law 476, SOth Congress, enacted April 7, 1948, shippers are exempted from the requirement of filing declara-

^ Excluding exportation to Alaska & Hawaii.

Wheat Flour Wholiy, U. S. Wheat Auto Parts Repiacements

6,602,696 2,198,137

2,086,720 10,365,181

Woven, Synthetic, Yarn Fabric, Square Yard Passenger Cars, Chassis, New

(7th Ranking)

3,713,045 2,228,715

(5th Ranking)

5,299,800

Puerto Rico

Purchased by

Mük and Cream Evaporated Eiectric Refrigerator, Household

Motor, Fuei & Gasoline

(4th Ranking)

Commodity Description

'

4\^o'54i

Cotton, Printcloth, Printed *

2*194 065 4 522\o8

Mdse. Valué Less than 100 Dol

27464851

Rice, Miiled Including Brown Potatoes, White Fresh

11 549 412

Lard, Including Neutral

(3rdRanking)

Puerto Rico buys from practically all parts of the Nation. Lumbar, canned íish and canned vegetables from the Northwestj fresh and canned fruits, rice and beans from California; wheat flour, feeds and oii from the Middle West

and from Texas; pork products from the Corn Belt; machinery and automobile from Chicago, Detroit, Cleveland and other areas of the Lakes región, and Pennsylvania; textiles from New York, New England and the South; oil products from the Gulf ports; and a larga <^uantity of manufacturad goods from the Middle Atlantic Seaboard States.

The importance of Puerto Rico to the export trade of the United States is not realizad until one is confrontad with the fact that the Island is first rank-

P^tchaser from the mainland of women s shoes, dairy and poultry feeds, laundry soap, precious and semiprecious stones sent to the Island for indus

trial processing, curad hams and shoulders, pickled pork, cotton manufac tures, synthetic textile manufactures, and of boards, planking and scantlings.

Puerto Rico buys from the mainland ovar $27 million of rice, $111/2 million of lard, $4^/2 million of print-cloth cotton. Its purchases of passenger cars and chassis exceed $10 million, and motor fuel and gasolina bought at the United States exceed $7 million. Wheat flour purchased from the mainland amount to $6,600,000. Also the Island is in second position as a buyer from

the United States of dried milk, man s shoes, dry ripe beans, cigarettes, reinforced concrete steel bars, and of ammonium sulfate.

The importance of Puerto Rico as a market for the United States is un-

mistakable when it is realizad that in certain pork products, dairy and poultry feeds, malt, cotton manufactures, boards, planking and scantlings, precious stones, and laundry soap, sales to Puerto Rico constitute on the average 50 per cent or ovar of the total United States exports in the respective goods mentioned. Twenty five per cent of all the rice exportad from the United States are purchased by Puerto Rico, and Puerto Rico takes 37 per cent of all the women's shoes and almost 20 per cent of all the mens shoes exportad from the United-States.

22

fiiiilQ PART C

BANKING RESOURCES

Bank Assets, Puerto Rico, by Selected Years

MILLIONS OF DOLLARS

1922 23

"25

30

'33

40

45

Source: Puerto Rico Department of Finance. División of Bank Examinéis.

24

47

Bank Deposits by Type, Puerto Rico, Selected Years, 1922 to 1948 MILLIONS OF DOLLARS 300

300

TOTAL DEPOSITS

3? *40 *41 '42 *43 *44 '45 *46 '47 *48

MILLIONS OF DOLLARS

OTHER DEPOSITS THAN GOVERNMENT

I

I Other Deposits Current Deposits — 120

Privóte Soving Deposits

1922 '23

75

*30

'35

*40

'41

'42

'43

*44

'45

'46

'47

'48

Source: Puerto Rico Department of Finance. División of Bank Examiners.

25

Bank Debíts in Puerto Rico MILLIONS OF DOILARS

Source: Puerto Rico Department of Agricultura and Commerce; Puerto Rico Clearing House; Puerto Rico Bankers' Association.

Bank Loans in Puerto Rico, Selected Years, 1922 to 1948 MILLIONS OF DOLLARS

1922

25

'30

'35

39 40

W 43 M « 46 47 48

Source: Puerto Rico Department of Finance, División of Bank Examiners.

26

Capital resources and credit are indispensable to economic development.

Total bank assets in Puerto Rico exceed $330 million and, although such a

figure is extremely modest compared to the vast banking resources available on the mainland, it is an important accumulation of capital for a small com-

munity the size of Puerto Rico. In terms of deposits per capita, the Island surpassed in 1947 all Latin American republics except Argentina and Cuba and was a very cióse third in the total ranking. Bank assets and deposits have grown steadily and the growth of Bank Debits figures is most encouraging. Likewise loans have grown in relation to the economic expansión of the Island, and in accordance with the availability of funds as evidenced by

bank deposits. The relation between the growth of loans and the growth of deposits is well balanced. Also, the relation, for the local banking system,

of deposits to capital structure is better than the ratio of ten to one and which is considered as very adequate..

Banking in Puerto Rico is in an advanced stage of development. The short term needs for the so-called commercial credit is well taken care of

by three relatively large commercial banks with aggregate resources of cióse to $150 million, by three other smaller local institutions, by branches of the two largest National Banks of the United States, and by the branches of two large Canadian Banks which have operated in Puerto Rico for many

years. A branch of The Federal Land Bank of Baltimore provides long term credit to farmers for the purchase of land; to make improvements; and for

other purposes of capital investment in agriculture. The Bank of Coopera tivos and The Federal Intermedíate Credit Bank, as well as the commercial

banks operating on the Island, supply shorter term credit to farmers. The Federal Housing Administration insures home mortgages to facilítate home construction or home purchases, and the Reconstruction Finance Corporation and the Government Development Bank for Puerto Rico make long term

loans to industry and commerce. Puerto Rico, however, lacks some of the institutions and instruments which provide facilities for the raising of capital

funds. Such an aspect of finance is underdeveloped but the Government

Development Bank for Puerto Rico and the Puerto Rico Industrial Develop ment Company have focussed their attention on this limitation and are hopeful of attaining success in developing such facilities.

0

27

r"

¡■Mili

0l5S PART D

PUERTO RICO A PROVEN FIELO OF INVESTMENT

Neither the Government of Puerto Rico, its 77 municipalities or other political subdivisions ñor any of its agencies or instrumentalities have ever defaulted or been delinquent in their obiigations. There has never been a default of a single Federal Housing Administration loan on the Island and cióse to $50,000,000 of these are outstanding. The credit record of farmers in Puerto Rico is considered outstanding by the Federal Land Bank of Bal-

timore and by the Farm Credit Administration in Washington. The credit

history and record of Puerto Rico and its institutions is unsurpassed by that of any other country in the world.

Puerto Rico is not a boom town of the moment. Capital investment in

Puerto Rico is not a speculative adventure. This community is an enduring and stable investment area within the American economic scene. It is here

that American capital successfully founded and developed the sugar industry.

Since 1900 it has been American investors who have invested in the Govern

ment securities which have financed the roads, bridges, schools, streets, waterworks, and other public improvements; and Puerto Rican credit has never

been delinquent. The railroad system and other public service enterprises were built with American and Canadian capital invested in Puerto Rico; the oil companies have invested millions of dollars in erecting facilities orí the

Island; National, State, and Canadian Banks have satisfactorily been doing credit business here for years. In short, over $10 million annually is paid

by Puerto Rican debtors on externally held investments.

30

Income on Externally-held Investments in Puerto Rico, Fiscal Years 1942 to 1948 I

I Bonds, Loans and Mise. Investments

V//Á Other Direct Investments

m Mainland Sugar Companies MiaiONS OF DOLLARS

1942

1943

1944

1945

1946

1947

1948

Income on Externally-held Direct Investments in Puerto Rico, Other than Sugar, Fiscal Years 1942 to 1948 MILLIONS OF DOLLARS 6.5

6.5

6.0

6.0

5.5

5.5

5.0

5.0

4.5

4.5

MANUFACTURING PUBLIC UTILITIES

4.0

/LGRICULTURE

3.5

4.0

(OTHER THAN SUGAR]Il BANKING

3.5

3.0

3.0

2.5

2.5

2.0

2.0 1.5

1.5 fM C T D 11H 1 ITir^KI

1.0

10 1 K11SU MvJIN

.5

1942

1943

1944

1945

1946

1947

1948

Source: Balance of External Payments of Puerto Rico, Fiscal Years 1941-42 to 1947-48

by Belén H. Cestero; División of Statistics, Bureau of the Budget, Office of the Governor.

31

Net Earnings of Mainland Sugar Companies Operating in Puerto Rico, Fiscal Years 1942 to 1948 MILLIONS OF DOLLARS 10

10-

y//////\ Income Tax withheid Net Income

1942

1943

1944

1945

1946

1947

1948

Source: Moody's Industriáis; Reports of Companies to the Securities and Exchange Commission; Withholding Tax Returns filed with tlie Insular Treasury.

Puerto Rico produces annually some $10 million income on investments

made on the Island and held on the mainland. The stability of this income as welJ as its origin is shown for the fiscal years 1942 to 1948 which are the only available figures. It can be asserted that the income on investments

held on the mainland shows a definite upward trend from the beginning of the century to the present date. The earnings made and the dividends paid by the sugar industry during the last half century is almost legendary, and the income of externally held direct investments in manufacturing, public utilities, banking, and distribution businesses shows an equal stability and upward trend.

32

Income on Puerto Rican Investments Abroad, Fiscal Years 1942 to 1948 MILLIONS OF DOLLARS

1942

1943

1944

1945

1946

1947

1948

Source: Balance of External Payments of Puerto Rico, Fiscal Years 1941-42 to 1947-48

by Belén H. Cestero; División of Statistics, Bureau of the Budget, Office of the Governor.

As a result of the accumulation of capital during the war years, banks and Insular Government agencies have invested heavily in U. S. Government bonds and the trend of income in Puerto Rican investments on the

mainiand is definitely upwards since 1942.

33

Farm Credit Administration

Number and Amounts of Loans Made in Puerto Rico from

May 1,1933 through June 30,1949, and Loans Outstanding June 30, 1949

Loans made May 1, 1933

INSTITUTION

Loans outstanding

through June 30, 1949 Number

Amount

June 30, 1949 Number

Amount

Farm mortgage loans:

Federal land banks Land Bank Commissioner Total

1,789 $12,126,900 2,851 $10,119,042 2,006 4,942,700 1,218 1,940,180 3,795

17,069,600

4,069

12,059,222

Loans to cooperatives: Federal intermedíate credit

banks (direct)

not

available

Banks for cooperatives Agricultura! Marketing Act Revolving Fund Total

<*70 — 70

not

*>551,162 available

27,968,939

— 1,883,351

®6

—

—

28,520,101

—

6

1,883,351

Other loans and discounts: Federal intermedíate credit

banks

not

not

available *>117,727,013 available

8,469,823

*>10,500

*>63,601,107

5,216,623

*>4

*>28,140

10,504

Production credit

associations'

Regional Agricultura! Credit Corporation « Total

Grand total

2,354

—

—

181,356,260

2,354

13,686,446

14,369 226,945,961

6,429

27,629,019

Less: Federal intermedíate credit bank loans to and

discounts for other Farm Credit Administration

institutions NET TOTAL

not

available

not

82,762,648 available

6,507,236

14,369 $144,183,313 6,429 $21,121,783

® Includes loans made both prior and subsequent to May 1, 1933. *>Includes renewals.

o Does not include advances in connection with the CCC programs. ^Represents commitments on which initial disbursements have been made.

® Number of cooperativo associations having loans outstanding.

' Exeludes data for production credit associations which have been placed in liquidation. s Includes data through April 15, 1949. In accordance with Public Law 38, 81st Congress, the R. A. C. C. of Washington D. C., was dissolved and, as of April 16, 1949, its assets were transferred to Farmers Home Administration.

SOURCE: FARM CREDIT ADMINISTRATION — SEMIANNUAL REPORT — JUNE 30, 1949.

34

More than 14,000 loans amounting to over $225 milHon have been madc from May 1, 1933 through June 30, 1949 and as of the latter date some 8,000 loans have been paid amounting to cióse to $200 million. The $27 million of loans outstanding represent unmatured balances. The losses on

loans made by the Farm Credit Administration in Puerto Rico during the last 16 years have been negligible.

Repayments to Loans Made by Puerto Rico to Federal Lending Agencies, Fiscal Years 1942 to 1948 MILLIONS OF DOLLARS 28

28

Baltimore Bank for Cooperatives

— y///////i

federal Intermedíate Credit Bank of Baltimore Others

i

1942

1943

1944

1945

1946

1947

1948

Source: Balance of External Payments of Puerto Rico, Fiscal Years 1941-42 to 1947-48

by Belén H. Cestero; División of Statistics, Bureau of the Budget, Office of the Governor.

Repayments to loans made by Federal lending agencies for the period 1942 to 1948 vouches for the increasing use of farm credit facilities on the

island and for the ability of local farmers to successfully meet their obligations.

35

PART E

INDICES OF ECONOMIC ACTIVITY

Annual Trade of Puerto Rico, Selected Years 1900-01 to 1947-48

Statistics on purchases from and shipments to the mainland reflect busi ness activity very closely in Puerto Rico. The difference in purchases over shipments is accounted for by the fact that the actual total valué of Puerto

Rico's sales is greater than the selling prices obtained through the usual trade channels. The Island receives the excise taxes levied by the Federal Government on certain sales and it also receives payments made by the Federal Government in connection with its agricultural programs. Moreover, every federal expenditure for National Defense and Veterans Administration Benefits allow Puerto Rico to match funds for larger purchases of goods. There is a steady growth of the dollar valué of both sales and purchases.

MILLIONS OF DOLLARS 400

400

SHIPMENTS /

PURCHASES

IfOO-OI

1909-10

1919-20

1929-30

1939-40

«.1947-48

Source: Annual Book on Statistics, 1948, Department of Agriculture and Commerce.

38

Cement Production in Puerto Rico, Calendar Years, 1939 to 1948 THOUSANDS OF BARREIS

2,400

2,400

2,200

2,200

2,000

2,000

1,800

1,800

1,600

1,600

1,200

1,200

1,000

200

1939 1940

1941

1942

1943

1944

1945

1946

1947

1948

Source: Puerto Rico Department of Agriculture and Commerce.

39

Estimated Valué of Building Permits, Puerto Rico, Cal endar Years 1937 to 1948 MIUIONS OF DOLLARS

'40

-41

^urce: Annual Book on Statistics of Puerto Rico; Fiscal Year 1947-48; Puerto Rico Department of Agricuiture and Commerce.

Since 1939 Puerto Rico produces practícally all the cement it consumes.

Building materials as well as the valué of building permits reflect the activity in the construction trade, which is a reliable index of economic activity.

Both Índices in the case of Puerto Rico are indicative of the tremendous expansión of constmction after World War II. 40

Electric Power (Kilowatt-hours) Generated, Calendar Years 1937 to 1948 MILLIONS OF KILOWATT HOURS 475

475

450

STEAM

4i<dWI!mf HYDRO

1937

*38

*39

40

'41

'42

*43

'44

*45

'46

'47

'48

Source: División of Statistics, Bureau of the Budget, Office ot the Governor

Puerto Rico lacks coal and petroleum, and makes up for this deficiency through the development and expansión of electric power. The Island more than doubled its electric power production between 1937 and 1948. Steam

plant development is now underway with a goal of over 300 millions of additional KWH production for the immediate future. A new hydroelectric plant was inaugurated in January 1949 and it produced immediately 50 million KWH. Hydroelectric production has been closely linked with irrigation for agriculture for a fuller utilization of water resources. A program at pres-

ent underway will add 30,000 acres to irrigated areas as a by-product of hydroelectric development. Puerto Rico leads all countries in South América in per capita production of electric power.

41

Motor Vehicle Regístration, Puerto Rico, Fiscal Years 1939 to 1948

THOUSANDS OF MOTOR VEHICLES REGISTERED 50

50

1939

1940

1941

1942

1943

1944

1945

1946

1947

1948

Source: Puerto Rico Department of the Interior.

In order to move its people and its commerce more swiftly and efficiently, Puerto Rico has developed a system of roads which has become, both in size and quality, a great accomplishment. Every country in South América is

surpassed by Puerto Rico in the number of roads per square mile and the Island is not far behind many of the States in this respect. Motor vehicle registration shows a tremendous growth, and in terms of automobiles per one thousand ^ople, Puerto Rico outranks every Latin American repubiic with the exception of Argentina, Panama and Uruguay.

42

Income Tax and General Excise Tax Collections, Government of Puerto Rico, Fiscal Years 1934-35 to 1947-48

MILLIONS OF DOLLARS

EXCISE TAXES

INCOME

1935

'36

37

'38

'39

'40

'41

'42

'43

'44

'45

'44

'47

'48

Source: Annual Reports of the Treasurer of Puerto Rico.

The income tax and general excise tax collections of the Government of Puerto Rico are a very good index of the condition of the economy, inas-

much as these types of taxes reflect very closely the ability to pay. In addition to this, the swift increase of the income tax collection portrays the

effort made by the people of Puerto Rico in taxing themselves to push forward the comprehensive program of development and public works initiated in the fiscal year 1941-42.

43

Assessed Valuation of Property, Puerto Rico, by Selected Years, 1902-1949 MILUONS OF DOLLARS 450

450

400

350

1902

1905

1910

1915

1920

1925

1930

1935

1940

'43

'44

1949

Source: Puerto Rico Department of Finance.

Assessed valuation of real and personal property ín Puerto Rico subject to taxation has increased by more than 350% during the last fifty years or in absolute figures around $350,000,000. Of this gain in assessed valuation

the last eight yea.ts account for $123,000,000. During the latest fiscal year assessed valuation jumped approximately $35,000,000. Authoritative sources

estimate that if the assessed valuation of the taxable property was converted into market valúes the figure that will evolve, with all probability, would exceed the billion dollar mark.

44

fííík PART F

THE USE OF GOVERNMENT REVENUES

AND THE DEBI OF THE GOVERNMENT

Public Indebtedness, Puerto Rico, 1930-1949

MILLIONS OF OOLLARS.

1930

1935

1940 *41

*42

*43

*44

'45

*46

*47

'48

*49

MiUlONS OF DOLLARS

INSULAR

VT/A MUNICIPAL

1930

1935

1940

1941

1942

1943

1944

1945

1946

1947

1948

1949

Source: Puerto Rico Department of Finance.

Public indebtedness, Insular and Municipal, has been reduced steadily since 1930 from around $49 millions to $24.8 millions, or a reduction in

total indebtedness of over 50 per cent. The insular debt in the span of 18 years has been lowered year after year for a reduction of slightly over 60 per cent from the peak of 1930. The reduction in the Municipal indebtedness in the same period amounted to some 41 per cent. Puerto Rico has conserved

its credit resources and used the large revenues of the war period for economic development.

4ó

The people of Puerto Rico, we repeat, have aiso made a great effort in taxing themselves to finance the extensive program of development and public works initiated in 1941-42. Total recurrent revenues of the Government increased from $25.4 miliions to $91.9 millions between 1930-40 and 1948-

49, an increase of 31/2 times which compares to an increase in total insular net income of from $227.8 millions to $652.6 millions, or somewhat less than three times.

Resources of the Insular Government of Puerto Rico and their Utilization, Fiscal Years 1941-42 to 1948^49 Amount

Item

(Million dollars)

Total resources®

Government receipts Authorized bond issue Total

705 8 713

Utilization^

Current expenditures

Operating expenditures Unemployment emergency programme Sub-total

424 22 446

Construction of public works

107

Grants to public corporations Debt service and redemption

144 16

Total

713

Source: Financing Economic Development in Puerto Rico 1941-1949. Prepared by S. L. Descartes.

47

The principal source of revenue of the Government during the fiscal year 1948-49 was excise taxes on a series of varied articles. These provided some 53 per cent of total insular collections. The second most important source of

revenue for the same year was the income tax on persons and corporations

providing $26.4 millions, or some 35 per cent of total insular collections.

The property tax is the third most important source of revenue. The over-

whelming bulk of the tax burden rests on the income tax, which is consid-

ered the most progressive form of taxation, and the excises are levied mostly

on a co olic beverages, cigarettes, gasoline, automobiles and accessories, and

on electric equipment and accessories. None of the excises cover foodstuffs or articles essential to the basic necessities of life.

The significant changes in the revenues of the Government are the increase m the revenues accraing from the income tax and excises. Since 1940 meóme tax collections were raised over ten times, while the social income

ot the Island increased about 2^ times.

revenues of the Government has permitted the

nf r f rolr r

2 Í J- ^

P°5==ible to increase the proportion of P" The combiLd effect of w^ter, school lunch

the cent. living conditions has resulted in a decline in the deathu rate of some 30 per

¿í thTíiTv n^°'hs or in economic ^lotted for regular public functions alSted S rinmí T One hundred and foSy millions was and economic dev Y ° corporations for services basic to industrial allltS toTlln? ''"portant share of $55 million was the ctlZín T development such as cuW cultural cZn? Company and !.T'n the Puerto Rico Industrial Development the PueL Rico Company.

Agrisu?h rschook o 5^°^

A 48

Operating Expenditures, Insular Government of Puerto Rico, by Main Functions, 1947-1948

IN MIUIONS OF OOLURS

HEALTH ANO PUBLIC WELFARE

PUBLIC SAFETY ANO

PROTEaiON^ y 2 ROAOS ANO

CONSERVATION OF PUBLIC

WORKS.

3.8 AGRICÜLTURE ANO COMMERCE

0.8 RECREATION

Source: Annual Book on Statistics of Puerto Rico; Fiscal Year 1947-48; Puerto Rico Department of Agriculture and Commerce.

Out of $93.1 million of appropriations to cover the operating expenses of the Government, $26.8 million or almost 37 per cent of the total was

spent for education and $17.0 millions, or 23 per cent of the total, was spent for Health Service. Glose to 60 per cent of the operating budget is

spent on education, and in the improvement and maintenance of the health of the people.

The increase in government services has resulted in increasing by 25 per cent the number of children of school age attending schools; students at the

University increasing almost two fold from 5,869 in 1941-42 to 11,000 in 1947-48. The mortality rate decreased 335^ per cent and life expectancy has been lengthened from 46 to 57 years. The pólice forcé was increased 2.1 times; 41 fire stations were built through the Island; municipal rural road mileage under conservation was more than doubled, and vast programs of soil conservation and agricultural scientific experimentation were undertaken.

There can not be any question about the fact that Puerto Rico not only conserves its credit and cash resources, but that it has spent wisely in current

operations, and used part of its resources in not less wiser investment in agencies designed to foster economic development.

49

Summary of Long-Term Financing of the Government of

Puerto Rico for Public Works and Public Corporations from Domestic Sources and United States Money Markets, September 15, 1949 Amount

Item

(Million dollars)

Government appropriations Appropriations of the Insular Government for executive departments Appropriations of the Insular Government for public corporations Total government appropriations Domestic purchases of bond issues Puerto Rico Water Resources Authority bonds, 1947 issue Development Bank for Puerto Rico Other local banks and institutions Sub-Total

Puerto Rico Aqueduct & Sewer Authority, 1949 issue Puerto Rico Development Bank Other local banks Sub-Total

Temporary financing Government Development Bank Puerto Rico Water Resources Authority notes Puerto Rico Industrial Development Company Puerto Rico Land Authority notes Sub-Total

107.3

143.6 250.9 4.0 7.0 11.0

0.5 2.5 3.0

4.3 3.0 3.6 10.9

Other local banks

Puerto Rico Industrial Development Company Total temporary financing

Total long-term domestic financing and appropriations Resources from United States money markets

1.7 12.6

277.5

Sale of bond issues

Puerto Rico Water Resources Authority bonds, 1947 issue Puerto Rico Aqueduct & Sewer Authority, 1949 issue Total from United States money markets GRAND TOTAL

37.0 22.7 59.7 337.2

Source: Financing Economic Development in Puerto Rico 1941-1949. Prepared by S. L. Descartes.

Long term financing of the Government of Puerto Rico for public works and public corporations has been done overwhelmingly from the Island's own resources. Gut of a total of $337.2 million of Government appropria tions and long term financing, $277.5 million pertain to long term domestic financing and appropriations, and $59.7 million were obtained from the United States money markets.

50

Total Enrollment in the Public Day Schools of Puerto Rico, Fiscal Years 1898-99 to 1947-48

THOUSANDS 225

1898-99

1923-24

1902-03

1926-27

1906-07

1910-11

1930-31

1934-35

1914-15

1938-39

1918-19

1942-43

1922-23

1947-48

Source: Annual Report of the Commissioner of Education, Fiscal Year 1947-1948.

Puerto Rico's progress in education during the last fifty years is astounding.

Total enrollment in public schools was increased four times by 1908-09 over

that registered in 1899-1900, ten years before. By 1918-19 the enrollment in schools had been doubled as compared with that of the previous years.

In 1928-29 the number of children in school was ten times that of 1899-

1900 and over 40 per cent larger than the enrollment ten years previous.

In 1938-39 the children in schools had been increased by 20 per cent of the number enrolled in 1928-29, and in 1947-48 the schools have been ex-

panded to edúcate 100,000 more children than in the past nine years.

51

Total and Per Capita Expenditures, Public Schools of Puerto Rico, Fiscal Years 1928-29 to 1947-48 MILLIONS OF DOLLARS 20

20

18 -TOTAL

18

i

16

16

14

14

12

10

lililí■

>

12 10

8 ó •

4 2

1928-29

1930-31

1940-41

1935-36

1945-46

1947 48

DOLLARS

65

65

«> —PER PUPIL-

60

if

55

55

50

-50

45

II i

- 45

40

i i i

— 40

35

K

30 — 25 —

i i i i i i

— 35

■!■

— 25

i i i I I I I I n I I I I I I I I I I I I I I I I I I I I I

I I I I I I I I I I I I I I I I I I I I I I I I I I I I 1928-29

1930-31

1935-36

1940-41

i i i i

i i i i

1945-46

i i i i

— 30

— 20 — 15

10

—

5

1947-48

Source: Annual Reports of the Commissioner of Education, and Bureau of Statistics, Department of Education.

Faced with the economic depression of the early 30's and with the results

of two devastating hurricanes in 1928 and 1933, expenditures for public schools in Puerto Rico were leveled off from 1928-29 to 1934-35. But total

expenditures were not substantially reduced in the face of the most adverse period that the Island has experienced in modern times. From then on, total expenditures show an upward trend until 1943-44 when, as a result of the

capital accumulations during the war period, the annual total spent for edu cation has almost doubled in five years. There are few countries South of

the Rio Grande which spend relatively so large a proportion of their budget for education. Literacy has increased from 23 per cent in 1900 to 76.4 per cent in 1948, and Puerto Rico surpasses every country but three in Latin América in literacy. Latest statistics show that 37 per cent of the population speak, or write some English.

52

University of Puerto Rico, Enrollmeat, Academic Yeais 1920-21 to 1948-49 THOUSANDS 11.5

U20-21

11.5

1224-25

1929-30

1934-35

1939-40

44^3

40^9

Source: Office of the Registrar, University of Puerto Rico.

The increase ¡n the enrollment of the University is phenomenal. It por-

trays the thirst of the people for higher education and is indicative of progress. In the first ten years after 1920-21 enrollment at the University has more than doubled. From 1930 to 1940 it has tripled, and in the last ten

years it has again increased by 2.2 times. Higher education is another goal of the present social and economic program for the Island.

53

Death Rates Per 1,000 Population, Puerto Rico, 1935 to 1948

PER 1,000 POPULATION 22

20

18

16

14

12

10

1935

10

*36

*37

*38

*39

*40

'41

*42

*43

'44

'45

*46

*47

'48

Source: Puerto Rico Department of Health.

The death rate is a very good índex of economic conditíons. Health conditions have improved a great deal in Puerto Rico. The death rate has been

reduced from more than 31 per thousand to 12 per thousand since the beginning of the century. Average life expectancy at birth has been increased from 39 years in 1910 to 57 years in 1947-48. This places Puerto Rico at par with the most advanced nations of the world in spite of the fact that Puerto Rico has to contend with the disadvantages of a tropical climate. The death rate in Puerto Rico is lower than in any country of Latín América.

54

Oi

47 80 164 92 35 56 139

55

95

Bolivia Brazil Chile Colombia Honduras México Panama

Paraguay

Perú

34.8

11.8

13.1

11.1 20.5 48.0 18.1 10.1 35.4 43.3

87.2

4.6

1.7

2.0 5.0 10.7 3.3 1.1 8.4 31.2

29.0

13.7

1943

habitants

121.9

121.9

35.8 46.3 195.6 49.2 49.2 121.9 121.9

190.7

200.4

1947

person

year per

70.7

50.9

4.0 30.2 28.0 18.0 18.0 15.4 50.9

96.4

80.4

1947

per person"

deposits

bank

Prívate

40

40

33 35 78 41 28 42 100

110

216

1946

dollars

person in

trade per

4.3

2.7

10.9 4.0 8.5 3.2 1.7 5.7 2.9

23.5

50.8

1943

miles

square

per 100

mileage

Highway

5.3

3.4

1.3 6.6 17.5 4.4 1.7 8.3 11.0

30.1

10.4

1943

inhabitants

per 1,000

Telephone

42

25

20 50 76 43 52 55 65

85

68

1943''

more

oíd or

10 years

persons

Per cent literacy,

"Data for Argentina and Bolivia is for 1946.

'•The figure is from "United States Census, 1940".

"Not available.

obtained from the Monthly Bulletin of Statistia published by the Statistical Office of the United Nations, May 1948.

"National Income Estimates o fthe Latín American G>untries" published by the Inter-American Statistical Institute. The rest of the data was

Source-, Data on literacy, motor vehicles, telephones,'radios and highway mileage was obtained from Basic Data on Other American Republics published by the CoH>rdinator of Inter-American Aifairs, Washington D. C, 1945. Data on national income per capita was obtained from the

122

334

1943

1940

Argentina

babitants

1,000 in- per 100 in-

power

purchasing

Kílowatt-

hours per

foreign

Motor

vehicles

dollars of

comparable Radios per

PUERTO RICO

Country

Total

Income per eapita ¡n

COMPARED TO OTHER LATIN AMERICAN COUNTRIES

NATIONAL INCOME PER CARITA AND OTHER INDICES OF LIVING STANDARDS. PUERTO RICO

Puerto Rico has attained a standard of living and of social economic

development that surpasses in general all Latin American countries excepting Argentina, Chile and Uruguay; countries with many times the resources of

the Island. But the Americans in Puerto Rico will not stop at the highest level of living of Latin América. Puerto Rico must attain the levels of

living of the mainland. In the path leading to such legitimate aspiration lie many obstacles. There are only 2,200,000 acres of land in Puerto Rico and

that many people, and only 1,000,000 acres may be used in intensive agriculture. Puerto Rico has the density of population of an industrial country but an agricultural economic pattern. The Island is engaged in the task of changing that pattern, and it seems to be well on its way.

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