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FIFTEENTH ANNUAL REPORT

OF

THE GOVERNOR OF PORTO RICO.

GOVERNMENT HOUSE,

San Juan, Porto Rico, September 8, 1915.

SIR: In pursuance of law I have the honor to present the following report of the Governor of Porto Rico covering the fiscal year ending June 30, 1915:

INTRODUCTION.

The period under review has been one of continued financial difficulty and economic strain. The reason for both was the great European war, which broke out almost at the beginning of the fiscal year and has continued to the present moment. It is, of course, inevitable that Porto Rico, in common with all the rest of the world, should have to bear a share in the business disturbances and losses that have resulted from this momentous calamity. And in Porto Rico as in the United States there have been, in foreign trade and business conditions, both gains and losses, but in the matter of the revenues of the government there have come heavy losses without any gains what

ever.

As is well known, the sugar industry holds a place of dominating importance in the foreign trade of Porto Rico, and the great increase in the price of this staple which immediately followed the outbreak of the war infused new life into this important industry and into all of its ramifications throughout the business of the island.

The immediate result was a large increase in the value of exports, which reached a total of $49,356,907, the highest total ever recorded with the exception of the year 1912. On the other hand, the coffee industry was disastrously affected by the dislocation of foreign exchanges and the interruption of the facilities for European commerce, where most of the Porto Rican coffee has always been sold. Moreover, the war caused an immediate and considerable rise in the prices of all imported foodstuffs, resulting in an increase in the cost of living, which produced much suffering among the laborers who were the least able to endure it. The result of these disturbances was a considerable reduction in the value of imports, which totaled for the year the sum of $33,884,296, a decrease of $2,522,491 from the figures of last year. The total external trade, however, reached the figure of $83,241,203, an increase of $3,731,654 over that of the year before, and produced a balance of trade in favor of the island of $15,472,611, which is larger by $3,269,108 than ever shown on that side of the trade ledger in the history of the island.

The exports of sugar, notwithstanding a decline in quantity of about 26,000 tons, increased in value by more than $7,000,000, due to an average increase in price of nearly $30 per ton. The exports of coffee on the other hand, notwithstanding an increase in quantity of almost 1,000,000 pounds, decreased in value by more than $1,000,000 because of a decline in average price of 2 cents per pound. Included in the coffee exports there were more than 4,000,000 pounds sent to the United States, and while this amount is not very impressive in itself, nevertheless it is several times as large as was ever sent to that destination in any previous year, and consequently leads to the hope that it may represent the beginning of the conquest of the American market for Porto Rican coffee, a consummation most devoutly wished for ever since the American annexation.

Porto Rico maintains and reemphasizes the tendency of its exterternal trade to confine itself to the United States. This year 88 per cent of all the external trade was carried on with the United States, reaching a total value of $73,241,751. The remainder of the external trade, valued at above $10,000,000, was distributed among foreign countries, Cuba still remaining far in the lead. Of the external purchases more than 91 per cent were made in the mainland markets of the United States, representing an expenditure therein of nearly $31,000,000, principally manufactured articles. In exchange for this the mainland markets received from Porto Rico $42,311,920 worth of merchandise, consisting almost exclusively of raw products, and all of which would necessarily have been imported from foreign countries had it not gone from this Territory. Porto Rico still maintains its position as one of the largest and most valuable of the world's customers of the United States, which it has become since 1901, when free trade with the mainland was established to the great advantage of both countries.

Internal business while struggling with the changes and inconveniences caused by the war has accepted the results, good and bad, with commendable fortitude. The sugar planters are making most of the opportunity afforded them by the present prices and have planted a very large acreage for next year. They have also made important economies in cost of production, and with another year of ood prices most of them will be able to liquidate their indebtedness and place themselves on a firmer financial footing.

During the fiscal year 1914-15 new domestic corporations, with a paid in capital of $18,300, and 9 foreign corporations, were officially registered and authorized to transact business of various kinds. These figures like those of last year show that an attitude of great uncertainty as to the future still possesses the minds of the business men of the island. However, there should be mentioned the fact that the foreign corporations which were registered during the year had a paid in capital of $1,245,120. Twelve domestic and two foreign corporations were dissolved.

Statements submitted to the Treasury Department by the recognized banking institutions of the island show that they are in excellent condition and still possess the confidence of the public, which they have earned by years of conservative and able management. Their deposits aggregated more than $11,300,000, a healthy increase over those of last year, and larger than those of any previous year

with the exception of 1913. The average cash reserve seemed ample to cover all contingences.

A consolidated report of the organized banks in operation in Porto Rico at the close of business June 30, 1915, will be found in Table 1 of the treasurer's report elsewhere in this volume.

During the year a general election was held for the position of Resident Commissioner, at Washington, members of the house of delegates, mayors, and members of the municipal councils, and of school boards. The election was warmly contested throughout the island by both of the leading political parties and several minor parties and the keenest interest was manifested from the beginning of the contest for the nominations until the close of the polls on election day.

The result of the vote was the election of 19 members of the house of delegates from the Unionist Party and 16 from the Republican Party. All the members of the house qualified at the opening of the legislature and took part in the work of the house, this being the first session since the election of 1906, in which was present a minority representation.

The Hon. Luis Muñoz Rivera was reelected for a third term as Resident Commissioner from Porto Rico at Washington by a plurality of 34,687.

The degree of interest in this election may be judged by the fact that there were cast 204,233 votes, which were 54,588 more than in the previous election in 1912, when there was a total of 149,645. The manner in which this contest was conducted, the respect shown by the citizens generally, not only for the law but for the rights of others, and the peace and good order which prevailed throughout the island on election day were exceedingly gratifying to all those who are watching with interest and anxiety the progress of the Porto Ricans toward self-government.

Some defects in the laws governing elections and registration of voters were, however, brought to light, for which the legislature will try to find a remedy.

The development of agriculture is still receiving careful attention, and the insular board of commissioners of agriculture is not only pushing its own work, but cooperating with the Federal experiment station at Mayaguez and with private enterprises in all efforts to make new discoveries and disseminate useful information for the purpose of improving cultivation and increasing the amount, quality, and variety of the products of the farms. This is eminently befitting, as agriculture is almost the sole resource of the people of the whole island. The insular board of commissioners of agriculture in addition to its other work, which is briefly explained elsewhere in this report, formally accepted, September 12, 1914, the donation of the experiment station of the Sugar Producers' Association, located at Rio Piedras, and is now conducting this station for the benefit of agriculture in general with special attention to sugar culture, in accordance with the terms of the gift. They are doing this work in thorough cooperation with the Federal station at Mayaguez. Both stations are laboring assiduously to secure greater diversification of agricultural products, as well as better planting, cultivation, fertilization of all crops, and in general increased prosperity of all those engaged in this great basic industry of the island. Owing to the unusually

large amount of ignorance, poverty, and helplessness among the agricultural laborers and farmers of Porto Rico, much difficulty has been encountered in securing their cooperation with these agencies for improvement, especially in the matter of adopting new methods of doing things which for generations have been done in stereotyped and obsolete ways. It is urgently recommended that Congress come to the aid of the island in this respect by making an appropriation for agricultural demonstration work, such as is made for the benefit of all the States and Territories in the American Union.

There is especial need for such work among the coffee planters, for various reasons. This is the only great exporting industry which has received no appreciable benefit from the American annexation. It is the industry that is susceptible of the greatest development both in the quantity and quality of its production, and it is the industry that has the largest number of small landholders and producers and employs the poorest, cheapest, and most helpless labor, and is therefore in greatest need of aid from the Government.

It is estimated that by careful attention to these matters mentioned above, by extending coffee planting to other mountain lands adapted to coffee and to nothing else, by emancipating the small producer from the cruel necessity of pledging his little crop in advance to the merchant, a practice which destroys his freedom in disposing of it, and by securing a reasonable hold on the near-by market in the United States, the total production could be trebled or quadrupled within a comparatively few years. This would be a great boon to the whole island.

The bureau of weights and measures, organized under the law passed August 18, 1913, in its second report, published elsewhere in this volume, exhibits results of the greatest interest and importance which have already been of inestimable benefit to all classes of people, especially to the poorest, who are in most need of protection from possible frauds in retail trade. The chief of this bureau estimates a very large saving in cost of articles of prime necessity to the consumers as a result of the reforms and prosecutions instituted by this bureau. It was a matter of the greatest possible regret that the imperious necessity of reducing expenditures which confronted the legislative assembly in 1914 made it unavoidable that the appropriations for education should be cut down for the fiscal year covered by this report. The legislature treated the department of education with all the liberality possible under the distressing circumstances, but in view of the fact that the appropriations for this department had been doubled at one stroke the year before, considerable reduction was absolutely necessary. Nevertheless, after making the reduction, the appropriations for education for 1914-15 were still some three or four hundred thousand dollars more than they had been for any previous year, except the year 1913-14.

It will be seen from the report of the commissioner of education that the total enrollment for the year 1914-15 is 168,319 and that it was reduced from 207,010, the total enrollment for the year previous. But it should be noted that this large decrease in the number of pupils enrolled was due not solely nor chiefly to the reduced appropriations, but rather to a ruling of the department fixing the maximum number that could be enrolled under one teacher at 80 pupils. It was found that during the previous year in some of the more populous barrios frequently as many as 150 and sometimes more pupils

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