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The Puerto Rican Economy Linked with the Mainland
By WALTON HAMILTON

low of about 10 or less per thousand


A message from
FLASH the front
of victory forbrings a
Puerto
Rico. For the first time since births
was reached.
A clash of cultures emerged, manifest
and deaths were first set down in the in one of the most difficult problems in
shorthand of statistics, the current year all human statecraft. The birth rate,
will show no net increase in population. indigenous to the island and blessed by
A hope, as fervently as skeptically held, Spanish tradition, was violently at odds
has become a reality. Policy, rather with the upstart death rate imported
than rampant Nature, is in the saddle; from the mainland. Take the simple
at last the people of the island are in figure of 40 as the minuend; set the
command of their own destiny. magic number 10 down as the subtra-
The news item is more significant as hend; a literal indulgence in subtrac-
symbol than as fact. As the island tion gives as the remainder the startling
came to us from Spain, it brought along figure 30. If for any year of the last
no more than a potential problem of twenty this remainder is multiplied by
population pressure. A colonial status as many thousands as then made up the
has its own way of limiting numbers, population, the product will show how
for it matches an excessive birth rate very mischievous such a continuing fig-
with a negligently high death rate, and ure can be.
creates an equation whose terms are At the turn of the century, the stand-
misery and poverty. ard of life in Puerto Rico was nothing
appropriate to a book on Utopia. As
THE DEMOGRAPHIC IMBALANCE year has followed year, the squeeze play
of this sequence of 30's has threatened
As the island was reoriented towards the men and women of the island with
the American Continent, the demo- an "iron law" as inexorable as any
graphic balance, unstable and unhealthy economist of the old school ever ex-
as it was, could no longer be preserved. hibited. However large the harvest of
The urge to procreation was little crops and of commodities, the harvest
touched by the techniques which else- of babies was even larger. A threefold
where impose a merciful barrier be- problem emerged: the flood of immigr6s
tween human impulse and the end Na- from Heaven had to be abated; jobs
ture would have it serve. But the drive must be had, on the island or overseas,
of science, though rampant in a host of for a host of new workers; and the
technologies, in time claimed medicine; standard of life had to be driven ever
and the ways and means of sanitation, upward.
prevention and early detection of dis-
eases, and up-to-date therapy were Two RETARDING FACTORS
brought to the island. In due course,
while the birth rate clung to the lower A question of population pressure
40's in the gracious old Spanish way, never exists in isolation. It has its
the death rate began to drop and did demographic habitat and it is always
not stop its decline until the continental conditioned by the culture within which
76
THE PUERTO RICAN EcONOMY LINKED WITH THE MAINLAND 77

it is set. In Puerto Rico, two factors, can with the continental economy across
which in another situation might be of twelve to sixteen hundred miles of ocean.
little consequence, pile hazard on hazard To its people and government, the fu-
to arrest its solution. The one is that sion of the insular into the mainland
Puerto Rico is an island; the other, far economy is a first-and ever conscious
more serious, is the threat of insularity. -objective of public policy.
The geographic status of island is not
LINES OF PUBLIc POLICY
in itself fatal. A people must possess
an economy with which to provide the Thus the pressure of population upon
necessities, the comforts, and (is it too a people pent up in a small island,
much to ask?) something of the frivoli- distant from the mainland, fixes the
ties of life. As a condition of existence, lines of public policy. The three an-
an island may continue to create its swers to the instant question are a de-
own economy. If, however, it is small, crease in the birth rate, an exodus of
and Nature or Nature's god has failed surplus workers, and the provision of an
to provide resources in adequate va- expanding number of jobs. But each
riety and quantity, it cannot in these of these gives rise to other questions,
modern times go it alone. It must step until the whole orbit of policy is en-
out into the world, accept the good compassed.
old rule of catch-as-catch-can, and look The reduction of births presents a
about for a prosperous industrial sys- kind of closed circle; for "planned
tem with which to fuse its own economy. parenthood" depends upon knowledge,
It is, however, distance, with its threat education, and an advanced standard of
of insularity, which presents the greater life which it is the very purpose of the
barrier. Let some Heaven-sent catas- fall in the birth rate to effect. If mi-
trophe uproot the island and set it down gration is to provide a safety valve,
intact as a peninsula off the eastern passage must be available, reliable, and
shore of Maryland, or even an island a cheap-and Puerto Rico must con-
score of miles off the New Jersey coast, sciously strive to make it so. If more
and the distinctive problems of Puerto and more jobs are to be found, indus-
Rico would disappear over night; for tries must be brought to the island; and
then persons, the materials of manufac- they do not come unless overseas mar-
ture, and commodities ready for human kets for their products are assured. The
use would easily and cheaply move be- whole design in industrial development
tween island and mainland. But, as Na- must be shaped to overseas demand,
ture has contrived it, distance now spells and the agricultural system of the island
separation, the long journey, the ocean must be made to provide peoples at
haul, movement beset with inhibitions, a distance with fruits and vegetables
high expense, and vexations. which they cannot grow for themselves.
On the mainland the industrial sys- Thus, escape from a sentence to pov-
tems of the several states are linked erty can be had only along the long,
and their identities lost in a national narrow, and expensive avenues which
economy. On the mainland the 'opera- stretch away from the island. These
tion of the industry, agriculture, and avenues have become tentacles, which,
commerce of the several states presents stretching out from an insular focus,
little need for the formulation of pub- hold in their grasp the destiny of Puerto
lic policy and rarely becomes a matter Rico. They constitute a series of "life
of critical concern. In contrast, Puerto lines" which it is the dominant aim of
Rico must effect such linkage as it public policy to cherish and enlarge.
78 THE ANNALS OF THE AMERICAN ACADEMY

instrument which would ensure an ever


CONTRAST WITH THE MAINLAND advancing march. To this end the peo-
The problem facing Puerto Rico has ple made the government an agency
no likeness on the mainland. The sev- of its will and entrusted to it the task,
eral states have been the children of not of dominion, but of leadership in a
Providence. A continental area, an co-operative venture. In response to
abundance and variety of resources, public demand, a political structure
and an advancing technology blessed emerged, with its complement of de-
with the Midas touch have made the partments, agencies, and authorities,
United States a land of potential plenty. each of which had, as its distinct task,
To convert resources into wealth, men responsibility for a facet of public
have needed only to seize the chances policy. And these various policies con-
spread before them. The national stituted a program for removing the in-
economy has emerged as an unplanned sularity which distance had created.
entity shaped into greatness by an in- In this venture Puerto Rico has driven
finity of small plans. The detail of the arts of statecraft to their very lim-
tasks essential to the creation of indus- its. It has had to brush off and furbish
trial empire has in general been left "to up for new uses techniques of political
whom it may concern." The fixing of economy which had long been in re-
targets has had little place in public pose. It was also compelled to play by
affairs; and in the creative process the ear, to improvise, and to invent, as its
craft of statesmen has had at best a program was driven towards its goal.
minor role. An initial question was to determine
With the Commonwealth of Puerto which way to face. Even if a choice is
Rico it has not been so. Nature has clear, the people of Puerto Rico like to
not handed it out on a silver waiter; its be asked. Here, as elsewhere, the in-
gifts have been so scanty as to demand evitable must be a matter of free will.
of the people that they create their own
DIRECTION OF POLICY
opportunity. It could leave neither the
creation of its own economy or its link- Three alternatives, at least in form,
age with an over-all industrial system were available. Puerto Rico might have
to fortune or to "the invisible hand" directed policy towards the attainment
which guides money-making to ap- of independence or of such an affecta-
pointed ends. If there was to be prog- tion of independence as Cuba sports.
ress, there was no escape from the long- It might have aimed at becoming the
time view, the use of statecraft, the hub of a great Caribbean economy. Or
drawing and constant revision of plans, it might have sought industrial union
the fixing and attainment of targets. It with the continental states.
could not entrust its destiny to persons, The sentimental case for independ-
natural or corporate, whose dominant ence was strong. There was too much
concern was with their own balance pride in a traditional culture and too
sheets and whose principal interests lay much reverence for the ancient liberties
elsewhere. of Spaniards for Puerto Rico willingly
Puerto Rico had alert, enterprising to accept a colonial status. But on the
citizens, plenty of them; but their ef- material side, little was to be said for
forts had to be given direction. Indi- going it alone. At best, as a sovereign
viduals had to act for themselves, as among sovereigns it could win for itself
they do in all free countries; but they only a small and insecure place. An at-
had to act towards forging an economic tempt to go it alone would have under-
THE PUERTO RICAN ECONOMY LINKED WITH THE MAINLAND 79

written the fact of isolation. Independ- a free people. Faced with a question of
ence, as a ranking official of the govern- "either or," they elected to have both.
ment puts it, "is a grand gospel for a
MEANS OF TRANSPORTATION
man who has never studied economics."
A commercial primacy in the Carib- But long before the constitution was
bean was an all but impossible goal. ratified by the record-breaking vote of
Flags were many; a host of political a politically minded people, the program
barriers stood firm; and there was no for economic union was well under way.
instrument of transport adequate to the On the mainland we take for granted
task of empire building. The alluring our avenues of trade and our instru-
prospect was not to be forgotten; but ments of transport. Although in times
for the immediate future, it could not be of crisis we have set up commissions, in
looked upon as the main chance. normal times we are not disturbed at
The decision to look to the mainland, the capture of these agencies by the
inevitable as it was, was not attained very interests they were set up to con-
without a struggle. At first it seemed trol. But to the people of the island,
to involve a choice between economic means for the movement of people and
union and political independence. The of cargo are more than mere facilities.
economic assets were all on the side They are alike instruments of policy
of union; the arguments against union and, in the insular language, "bridges"
were all political in character. An ad- to the mainland. It is impossible to
vance in the standards of life could be think of an item in the government's
achieved only through a place in a far-reaching and forward-looking pro-
larger industrial system; but the peo- gram which for its realization does not
ple of Puerto Rico were unwilling to demand access to adequate, inexpensive,
surrender, even to their fellow citizens reliable, and economical means of car-
of the several states, the power to shape riage.
their own destiny. This need is as imperative as it is
As late as 1949 there seemed no way obvious. On the continent people can
to escape the dilemma. Puerto Rico move in short trips, and a handful of
was not content to remain a possession, dollars is usually enough to get from
a colony, or even a territory of the here to there. Between island and main-
United States. Yet it was not ready or land there must be a long journey or
able to take on the responsibilities of a none at all, and for the ordinary per-
state of the Union. sons the pinched savings of months are
Confronted with the necessity for necessary to pile up the half-hundred
choice, the people of the island resorted dollars or more for passage money.
to political invention. In co-operation On the continent there are always at
with the Congress of the United States, hand the alternatives of airplane, Pull-
they set about creating for Puerto Rico man or railroad coach, highway bus, or
a distinctive place in the federal union, a hitchhike. Between island and main-
shaped alike to its necessities and to its land, the railroad does not run; auto-
aspirations. The Organic Act was re- mobiles, whether of modern design or
placed by a Federal Relations Act; the ancient vintage, are not available; and
citizens were endowed with the power as the Governor has paraphrased Kip-
to write their own constitution, estab- ling, "There ain't no buses running
lish their own system of self-govern- from the Bronx to Mayaguez." So the
ment, and secure for themselves and airplane and the ocean carrier alone are
their posterity the ancient liberties of at hand; and necessity has effected a
80 THE ANNALS OF THE AMERICAN ACADEMY

division of tasks between them. Al- nonscheduled carriers. In 1948 the gov-
though airplanes carry freight, the rates ernment instituted a proceeding before
are prohibitive save for articles of high the Civil Aeronautics Board asking for
value and small bulk. And although the certification of a carrier to fly a
one boat makes fortnightly trips be- "sky-bus" service between San Juan and
tween San Juan and New York, and all New York, and of another regular car-
freighters have space for a few pas- rier as a competitor to Pan American.
sengers, the ocean liner is outmoded as Almost at once, relief from isolation
a carrier of persons. was forthcoming. Hardly had the peti-
tion been filed when Pan American an-
EFFECTUATING AIR CARRIAGE nounced a tourist flight at a figure of
$90 one way. As hearings on the peti-
It follows, therefore, that air and tion piled up evidence of insular needs,
ocean carriage present targets of pub- Pan American reduced this tourist rate
lic policy. From 1943 down to this to $75. The decision of the Board, an-
date, the Government of Puerto Rico nounced early in 1951, granted Eastern
has been engaged in a struggle to se- a certificate to fly in competition with
cure to its people adequate and reliable Pan American; and at once Eastern, in
air transport at rates they can afford to addition to its regular flights, announced
pay. Without such a service, executives a tourist service at a one-way rate of
of government and of business cannot $64, and Pan American followed suit.
easily come and go; the provision of Riddle was also given a temporary cer-
jobs on the island is arrested; the tour- tificate to carry cargo over the New
ist trade cannot cater to persons with York-Miami-San Juan route.
modest purses; and the result is want of The tourist services thus forced upon
a means of sending the surplus of willing Pan American and Eastern by the Gov-
workers to jobs on the mainland. ernment of Puerto Rico have served the
At the end of World War II, Puerto reluctant carriers well. Eastern carries
Rico was badly served by a single air far more tourist than regular passen-
carrier. San Juan was not exactly a gers; and the New York-San Juan run
whistle stop on the way to Latin -a 1,200-mile flight without a stop-
America, but rates were very high, has become the most profitable leg in
schedules were inconvenient and not the Pan American imperium.
lived up to; and accommodations were The officials of the government, how-
bad and hard to get. There was in ever, have regarded a one-way rate of
Puerto Rico a backlog of passengers for $64 as no more than an intermediate
whom it would have taken months to point. It is far more than the masses
find seats. of the people can afford to pay, leaves
At the end of the war, surplus mili- huge layers of potential traffic untapped,
tary planes became available to veter- and imposes a barrier against the mi-
ans at low prices. As a result, a num- gration of workers to the mainland and
ber of nonscheduled carriers appeared the creation of new jobs at home. A
to offer service at reasonable rates, to series of careful calculations has indi-
make available travel by air to thou- cated that a sky-bus business can be
sands to whom it had been only a operated safely and soundly at a rate
dream, and to break the congestion. In not to exceed $42.50 each way.
1946 the Government of Puerto Rico On two occasions chairmen of the
had to intervene to prevent the Civil Board have suggested to officials of the
Aeronautics Board from grounding these insular government procedures by which
THE PUERTO RICAN ECONOMY LINKED WITH THE MAINLAND 81

such a sky-bus service might be au- have been approved promptly and with-
thorized; on each occasion the govern- out resort to formal hearing.
ment, in applications to the Board, has The whole realm of transportation re-
followed these suggestions-only to have veals no precedent for this arrangement,
its petitions denied. Although the need no similar instance of the shaping of a
has been acknowledged, the Civil Aero- tariff by all who are concerned.
neutics Board has been studiously care- A further venture in joint responsi-
less about implementing it. As this is bility was recently taken. In August
being written, a third petition to the last, ranking officials of the government
Board is being drawn. sat down with the high officials of the
ocean carriers in the Puerto Rico trade
FACILITATING OCEAN SHIPPING for a three-days conference. This con-
ference was held in New Orleans on the
The government has been likewise long-time problems of the Puerto Rico
mindful of ocean shipping. Here, too, trade. The dominant theme was how
it has resorted to invention to give ef- costs-and accordingly rates-could be
fect to its policy. The island reaches held to the lowest possible level. There
across the water for a large part of was discussion of how a system of docks
its food supply; brings in the greater designed to serve a colonial port could
amount of the materials which it fabri- be revised to meet the needs of a mod-
cates; and sends to mainland markets ern industrial community; of how ships
the bulk of the crops and the commodi- could be scheduled to reduce the time
ties which it produces. As the level of of the turnaround; of how new methods
shipping costs rises, the island is pushed and new devices could be made to speed
away from the mainland; as it falls, the and to cheapen the handling of cargo;
island is drawn closer. and of how wastes could be eliminated
In 1946 an arrangement was entered and a new efficiency brought to the an-
into, by the terms of which all tariffs cient arts of loading and unloading. It
are to be made by a process of collec- used to be said that "shipping follows
tive bargaining between representatives the cargo"; it was the sense of the
of the government and of the ocean car- meeting that ocean shipping is an in-
riers. The procedure opens the carriers' strument for industrial development and
books to the other party, provides for the creation of cargo.
discussions with all interested groups,
NECESSITY FOR TRADE
and eventuates in a series of joint meet-
ings at which the schedules take shape. It is, however, not enough to broaden
The concern is alike with the level the "bridges" which connect island and
and with the structure of rates. It has mainland, or even to shorten them with
been possible through this method to see every declining carriage charge. It is
to it that the total burden of costs is necessary also to take thought about
distributed among commodities in such the number of persons and the composi-
a way as to be most easily borne. Pro- tion of the stream of cargo which can
motional rates are granted to industries be made to pass across the stretch of
just getting started on the island, and water. On the eve of the first indus-
food products for insular consumption trial revolution a Scot named Adam
are carried at the lowest rates which Smith argued that free play should be
circumstances allow. Once framed, the given to a division of labor, the pattern
tariffs are submitted to the Federal for which had been woven by Nature
Maritime Board; and thus far they itself. As the second industrial revoln-
82 THE ANNALS OF THE AMERICAN ACADEMY

tion roars on, the target of Adam Smith in the export of skilled archers. A way
stands as firm as ever; but the gifts of was found to export scenery by bringing
Nature and a hands-off policy by the in people to view it. The skill of eye
government are no longer adequate to and hand was developed; a host of
its realization. We know now that Na- handicrafts grew up. As skills increased,
ture provides only inert materials; that the products in which they were em-
it is "the progress of the useful arts" bodied became more valuable.
which turns these stuffs into usable re- Today it is the value added by manu-
sources; and that it is only by taking facture to products which go abroad
thought thereto that a community can that fetches in return the materials for
win for itself salvation. living well and advancing culture. Eng-
It became obvious years ago that if land was a sheep pasture headed for no-
Nature was allowed to take its course, where in particular, until it felt the
Puerto Rico might as well cancel its quickening touch of overseas trade,
date with destiny. If a people is to go which in turn led to an industrial revo-
it alone, Nature must be prodigal with lution which converted it-for a glorious
its gifts. If, instead, a people is willing century and a quarter-into "the work-
to set out into a world economy, a shop of the world." Only as a people
dearth along the physical front is not of has forgotten its insularity and sought
necessity a handicap. In days of old it to discover for itself a set of tasks which
was Thebes, not Athens, upon which it could perform in a larger economy,
Nature had smiled; yet it was Athens, has opportunity come to knock at the
not Thebes, which became great in com- door.
merce and greater in culture.
AGRICULTURAL TRADE
The wealth of Malaya is today due in
large measure to the cultivation of the It has been necessary, therefore, for
rubber tree-a plant not even indige- Puerto Rico to take stock of what the
nous to the region. The great event in island had, or could contrive, to offer
Malayan history has been the advent of to the continental market. In keeping
the automobile in the United States- with its past, the inventory began with
an event which a people halfway across agriculture.
the globe was quick to capitalize to its Under Spain there had grown up a
own advantage. plantation system with sugar as the
Scotland, as poor a land as ever the staple crop. But, like the kindred sta-
sun shone on, at the beginning of the ples of corn, wheat, cotton, and to-
eighteenth century piped down on its bacco, sugar fell on evil days and be-
national glories, traded in its parlia- came a candidate for farm relief. If a
ment for full rights in the rising British fair price was to be assured, there had
economy, and within a hundred years to be a check on tropical growth. So
created for itself a highly skilled popu- Puerto Rico was content to accept the
lation which proceeded to conquer the quota fixed under a succession of Sugar
Empire. Acts. Although more acres were avail-
Providence has not lavished gifts upon able and technical advances were still
Switzerland; yet the people who inhabit raising the yield per acre, sugar could
that mountainous region have managed no longer be depended upon to take
to win for themselves as high a stand- care of the increase in population or to
ard of life as any in all Europe. There advance the art of living.
was a beginning in the export of the A coffee culture, which had been al-
Swiss Guard-as there was to the north lowed to decline, was revived. By the
THE PUERTO RICAN ECONOMY LINKED WITH THE MAINLAND 83

creation of species adapted to the local technical advice of many kinds had to
habitat, a pineapple industry was built be offered.
up. At first the Industrial Development
It was not, however, until 1949 that a Company went into the production of
program for the maximum utilization of various articles-cement, glass, paper.
soil resources moved into its stride. But presently it became clear that the
The growing season in Puerto Rico is functions of the government and of pri-
an all-year-round affair. For that rea- vate enterprise were complementary, not
son, the island can provide fresh fruits competitive. It was the office of the
and vegetables even in the months in state to look ahead, to discover oppor-
which the Rio Grande Valley lies fal- tunities, to fit ventures into a flexible
low. Here air transportation, which is pattern which had meaning; it was the
becoming available, allows Puerto Rican task of the company which came to the
products of superior quality to reach island to carry on as a going concern.
Atlantic and midwest markets in a But from the first, industrial develop-
state fresh enough to command pre- ment has not been a thing apart, but an
mium prices. An outgrowth of the re- aspect of a larger program. It is a
cent New Orleans meeting is a venture creature of population pressure and
which aims at the discovery of fruits came into being to provide jobs to will-
and vegetables, easily grown on the ing workers. If commodities are to be
island, for which a market exists, or produced for which there is a conti-
can be created, in the region of the nental market, it is imperative that "the
Gulf and the Mississippi River. Here, new industry" make the maximum use
as always, the target of public policy is of the insular labor supply.
the creation of an agronomy as far as The drive must take into account the
possible complementary to-rather than most basic of all facts-that the domi-
competitive with-that of the several nant resource of Puerto Rico lies in the
states. skills of its people. It must sell its
labor in the mainland market in the
INDUSTRIAL DEVELOPMENT form of value added by that labor to
But a population of two and a quar- the raw materials of manufacture. Long
ter million cannot live by agriculture ago, Scotland, England, and Switzerland
alone. As with the England which learned that in the export trade, the
sought to find a place for itself in the value added to an article by unskilled
world, roles must be created for mer- labor is of little account; that it is
chant adventurers and for honorable the value added by highly trained skills
companies which will make the island that enhances the market price and
their home. So the Industrial Devel- brings real purchasing power in return.
opment Company, an agency of public The people of Puerto Rico are rich
policy, was set up and given the all but in potential skills; these skills are being
impossible task of luring plants across made actual by expenditures on educa-
the ocean to a land with an ancient tion, which represents a larger part of
tradition, where the requisite raw ma- the government's income than is de-
terials are hard to come by, and kindly voted to so creative a purpose by any
channels of trade have not yet been state in the Union. It is for this rea-
driven. The advantages of insular lo- son that the reiterated beat for the pro-
cation had to be demonstrated; an in- gram for industrial development falls
centive had to be provided in exemp- not upon tall smokestacks and heavy
tion from taxes for a limited time; and investments, but upon the number and
84 THE ANNALS OF THE AMERICAN ACADEMY

the high degree of skills in the jobs It is inevitable that the birth rate will
brought into being. experience a progressive decline. As its
task of providing for additional souls
SIZE OF THE TASK becomes lighter, Puerto Rico will be
free to direct its public policy at the
All of this makes it clear that in larger target of advancing and enrich-
Puerto Rico public policy has had to ing its standard of life. Value added by
take on a gigantic assignment. In the skilled labor to the commodities sent to
cases of Scotland, Switzerland, and even mainland markets will bring in return an
England, time was indulgent, and cen- increasing stream of purchasing power.
turies were allowed for gracious accom- For Puerto Rico, the way to progress
modation. The pressure of a popula- and prosperity lies in the conversion
tion never adapted to its habitat com- of dormant capacities into human skills
mands haste. In recent years the task and the employment of its highly trained
has been made easier by an exodus of labor in the production of commodities
thousands to the mainland. Here it is and services which all the people of the
better for the island that those who several states want. A proud people,
migrate should be the unskilled; for true to its tradition and proud of its
skills are more easily picked up in the American citizenship, is hammering at
States, and the island cannot afford to the barriers of insularity. It lies ahead
squander training upon workers who do -but Puerto Rico is arranging its own
not remain. rendezvous with destiny.

Walton Hamilton, Ph.D., Washington, D. C., is with the law firm of Arnold, Fortas
and Porter, which represents the Commonwealth of Puerto Rico in Washington. He has
taught history, economics, and law at Yale University, Amherst College, and the universi-
ties of Texas, Michigan, and Chicago. He is author of The Power to Govern (1937),
The Pattern of Competition (1940), and other books.

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