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Puerto Rico in the Great Depression

Industry, Commerce, and Labor
From Puerto Rico: A Guide to the Island of Boriquén
Federal Writers Project, 1940

Publishing Information
  1. The industries of Puerto Rico consist principally in the processing of agricultural products (sugarcane, coffee, tobacco), and the finishing by cheap hand labor of products manufactured in the United States (cotton, linen, and silk garments). Three principal factors have thus far prevented the development of industry on a large scale: the lack of minerals and fuel resources; the fact that most profits are exported, allowing no great local accumulation of capital for re-investment; and the lack of tariff protection for local industry against the "dumping" of competitive products made in the United States.

  2. The early Spanish settlers worked mines estimated to have produced about $4,000,000 in gold. When these were depleted, the colonists turned to agriculture. Tobacco, maize, and root crops had been cultivated by the Boriquén Indians prior to the arrival of the hidalgos. In the year 1516 sugar-cane was planted for the first time, marking one of the most significant events in the history of the Island.

  3. During the Colonial period local industries were handicapped by restrictive policies of the home government, the lack of capital, and inadequate transportation. An example was the prohibition of the natives from distilling rum, in order to preserve the market for Spanish wines.

  4. At the end of the eighteenth century, most of the agricultural products were still for local and domestic use, with little surplus to export. Ginger, sugar, molasses, and hides were the principal products. Tobacco was acquiring commercial importance, but Spain made a monopoly of it. Native molasses found a good market in the New England colonies. It was this by-product of the sugar cane that came to constitute one of the leading exports of the triangular trade, carried chiefly by Yankee clippers, which prospered between New England ports, the West Indies, and the slave-exporting ports of Africa. Ginger cultivation was temporarily prohibited in 1603, many of the settlers having found its cultivation easier than sugar, and consequently abandoning the production of sugar.

  5. Up to 1778 the only people allowed to settle in Puerto Rico were Spaniards; but a royal decree in that year allowed foreign Catholic laborers to settle, and lands were given them. This was, modified by the "Decree of Grace" of 1815, whereby all foreigners of whatsoever faith from friendly nations were admitted. A royal order in 1813 appointed consuls to Puerto Rico, but it was not until 1820 that North American consuls arrived. In 1816 certain restrictions were adopted which required immigrants who had not established domicile to leave the Island in three months' time. This order marked the golden age of Puerto Rico. Not only did its population increase, but its commerce and agriculture rapidly developed. The first statistics on the Island's trade were published February 13, 1827. In 1834, 1,247 vessels called at her ports, 300 being American. From that date onward, trade flourished.

  6. Cattle raising was an important and lucrative industry from early colonial days, and remained so until pasture lands began to be turned into sugar fields. In 1899 it ranked fourth as a source of wealth, netting more than half a million dollars a year. Cattle were exported to the Virgin Islands and French and British Caribbean possessions.

  7. The sugar industry is today mainly dependent on United States demand. All sugar, except that held for home consumption, is shipped to the mainland. There are 45 modern centrales or sugar mills, scattered throughout the Island, with a capital investment of $56,000,000. Industrial byproducts of the sugar cane are molasses, alcohol, and bagasse. The last has acquired potential importance as a raw material for building-board, but as yet has not been commercially developed.

  8. The distillation of rum and alcohol is one of the oldest industries of Puerto Rico, and was rapidly increasing in importance until the passage of the Insular prohibition law. Since the repeal of the 18th amendment, several million dollars have been invested in distilleries, of which there are 11 large and a number of smaller units. The type of rum is similar to that of Cuba, and it is rapidly becoming popular in the United States and Europe. The exportation in 1939-40 of rum to the United States amounted to 700,618 gallons valued at $3,194,849.

  9. Most of the tobacco grown in Puerto Rico is stripped at home and then shipped to the United States, where it is manufactured in blends with other cigar tobaccos. Large quantities of cigars and cigarettes, however, are manufactured locally. Practically all the cigarettes made are for the local market, but over half the cigars are exported to the mainland. Peak production was reached in 1920, when 321,340,198 cigars and 581,348,820 cigarettes were made. The industry has had a serious set-back due to economic conditions throughout the world, and to the two severe hurricanes of 1928 and 1932. The competition of American cigarettes has also been a retarding factor. There are about seventy cigar factories and one manufacturing cigarettes, and many tobacco-stripping establishments.

  10. The coffee industry is exclusively in the hands of native agriculturists, many of whom are small land owners, and for that reason it is called "the small man's crop." Most of the coffee exported has gone to Europe in the past, but only $51,785 worth was exported to foreign countries in 1939-40. Very little has been consumed in the United States until recently, because of the fierce competition it has to meet from other mild coffee. Although coffee is a "small man's crop," and less valuable than sugar, tobacco, and fruit, it is of peculiar practical and sentimental interest to the Island, and the subject of much Puerto Rican legislation. In order to increase domestic consumption of native coffee, the Insular Legislature has imposed a tax of 18 cents per pound on all imported roasted coffee. There are seven large coffee roasting plants on the Island, and several small ones. The 1939-40 crop amounted to 23,498,000 pounds, only 3,258,699 pounds of which were exported to the United States.

  11. The fruit industry started on a large scale after the American occupation. • Grapefruit, pineapple, limes, lemons, and coconuts are the chief fruits both for local consumption and export. Bananas, avocados, mangos, melons, caimitos, nísperos, and other tropical fruits are raised for domestic consumption only.

  12. There are more than 75 fruit-packing plants in operation. The estimated yield of "wild" oranges for 1939 was 800,000 crates and that of grapefruit 350,000 crates. The pineapple production has increased greatly.

  13. The fruit-canning industry has made excellent progress in Puerto Rico since its establishment shortly before 1915. There are six canning factories with the most modern machinery turning out excellent quality products under strictly sanitary conditions. Their normal combined export per annum is from 250,000 to 350,000 cases. In 1938-39 the value of canned fruit shipped to the United States amounted to $368,017.

  14. When American immigration laws closed the doors to imported cheap labor from Europe and Asia, certain continental United States industries affected by this restriction found in Puerto Rico abundant cheap labor for the manufacture of their products. The most notable instance has been in the needle work and garment industry. Embroideries of all kinds, handkerchiefs, ladies' dresses, and ladies' underwear, many of them of excellent workmanship, are manufactured in about 150 organized shops and in innumerable homes by countless women and girls who do individual work for contractors. At the French Colonial Exposition in 1931, Puerto Rican hand embroideries won several Grand Prix and gold medals in competition with the best work from all parts of the world. The finest quality of Puerto Rican hand-made silk lingerie is sold in the best stores of many of the largest cities of the United States.

  15. Fine children's garments and millinery are also important items in the Island's manufactures. There are about 30 establishments of importance and many smaller shops that manufacture men's cotton and linen trousers and complete suits, as well as men's shirts and underwear. All these garments are well made, and are gaining much favor in the United States for summer wear. Woolen rug making is also becoming an important industry.

  16. Cotton, linen, wool, rayon, and silk manufactures of all kinds, valued at $14,845,703, were exported to the United States in 1939-40. Practically all the materials for these manufactures were imported from the mainland.

  17. The cotton industry is concerned only with raising the crop, ginning it, and sending the lint to the United States.

  18. Other small industries include the processing or manufacture of cattle feed, fertilizer, quick lime, furniture from native or imported hardwoods, salt from sea water, buttons, straw articles, hair nets, silk stockings, preserved fruits and candy, and the cutting and polishing of jewels.

    COMMERCE

  19. At the time of the American occupation more than 90 per cent of Puerto Rican trade was with countries other than the United States. Today, 90 per cent of the total Island trade is with the mainland and 10 per cent with other countries. Puerto Rico has become the United States' second-best customer in Latin America, and in 1938 ranked tenth in the world as a market for mainland goods.

  20. The increase in volume of the Island's total export trade since 1898 has been tremendous. In 1901 it amounted to $8,583,967; in. 1939 it was $86,486,570. Trade with the United States in 1890 was about 22 per cent of that year's total export trade; in 1939 about 95 per cent.

  21. The chief reasons for the Island's commercial progress since 1900 have been the introduction of American capital, and the ready access to the American market. Under the Spanish rule trade in agricultural products—the Island's chief source of wealth—found little encouragement. High import and export duties frustrated any expansion of external trade. A further boost to native goods came when the Island was placed under the United States tariff structure. This resulted in a rapid development of the agricultural resources.

  22. Puerto Rico in 1939 imported $75,684,719 worth of goods from the United States. Most of the imports were food items. Others were cotton manufactures, iron and steel manufactures, cigarettes, automobiles, machinery, and fertilizers. Imports from other countries amounted to $7,039,563.

  23. Exports to the United States amounted to $84,782,650. Besides sugar, fruits and tobacco, the United States bought Island coconuts, coffee, vegetables, hides, skins, and cotton, linen, and silk manufactures. Exports to foreign countries amounted to $1,703,920 in 1939.

  24. The advantages of the American tariff are offset, however, by the terms of the coastwise shipping act as it applies to Puerto Rico. Only American ships may tarry freight between the Island and continental United States.

  25. The domestic commerce of Puerto Rico is lively and fast-moving throughout the Island, especially in the larger cities and towns, but particularly so in San Juan, its commercial metropolis and capital. Modern stores of all types, well stocked with merchandise of every description, are found in every town.

  26. The aggregate bank deposits for the fiscal year 1937-38 amounted to $680,743,106, while in 1939 they increased to $683,650,195.

  27. Co-operative marketing associations have been operating successfully since the early 1930's. The Puerto Rico Reconstruction Administration is particularly interested 'in this movement, and is aiding individual farmers and small manufacturers who wish to start co-operatives.

    LABOR

  28. With the Spanish Conquest came the repartimientos or distribution of the Indians among the colonists (see History). A peace-loving race was dispossessed of its heritage and enslaved by the conquistadores in the mines and on the plantations. They found, however, in Father Bartolomé de las Casas a protector and militant exponent of their cause. This Franciscan friar spent a lifetime writing on behalf of the emancipation of the aborigines. His work La Historia de las Indias is an indignant protest against the treatment of the Indians by his fellow-countrymen. Word finally reached Rome, and on May 29, 1537, Pope Pius III issued a Bull excommunicating all settlers who practiced slavery among the Indians, or deprived them of their property even though they were pagans. The reward for Father Las Casas' untiring efforts came in 1542 when the natives were freed, but almost too late, for by that time they had become practically extinct, victims of hard labor and warfare.

  29. Negro slaves were first brought to the Island in 1513, for as early as this date there was already a lack of Indian labor. Beginning with the year 1560, Negroes were officially branded with the carimbo hot stamp on their foreheads, showing that they had been brought in legally and preventing their abduction from the Island by buccaneers and traders. This practice was abolished in 1784, and by 1820 the importation of slaves had ceased. In 1848 the purchase of freedom was made possible for children of slaves at 25 pesos per child at the time of baptism, and on March 22, 1873 all slaves were set free. A loan of 8,000,000 pesos was made by the government to reimburse slave-holders.

  30. In 1848, under the administration of Governor General Don Juan de la Pezuela, a system of employee records was 'introduced which tended to penalize the more industrious laborers and to keep them employed at a minimum wage. Governor Messina in 1862 decreed that laborers be paid in money instead of scrip, which had been the general practice; the decree, however, was disregarded. Workers were helpless, for they had no organization and there was no legislation to protect their rights. They were obliged to exchange the scrip for food in stores owned by employers. Goods were often of poor quality and underweight, while prices were comparatively high. Workmen who dared demand their wages in money did so at the risk of their jobs. These conditions have apparently not totally disappeared, despite legislation to the contrary. There are still many complaints made to the Department of Labor by workmen who are forced to deal at company stores.

  31. The organized labor movement began to spread in Puerto Rico just before the Spanish-American War. At the time there existed several craft societies of workers called gremios. Labor, however, had no political or civil rights. Propaganda meetings or assemblies were outlawed as illegal and criminal.

  32. In 1896 the Regional Federation of Workers of Puerto Rico was established as a chapter of the Spanish Federation which was later outlawed in Spain. The Island Chapter consequently met the same fate.

  33. In 1902, four years after the American occupation, the courts decided that laborers were entitled to the right of assembly. The decision was followed by the enactment of laws granting the right to organize and strike, forbidding employers to pay their employees with scrip or forcing them to buy in company stores, and other laws favorable to labor. The eight-hour work day for government employees had been proclaimed in 1899 by Major-General John M. Brooke, then the military Governor of the Island.

  34. The labor movement spread rapidly throughout the Island. By 1905, 123 unions had been organized. An Insular Federation of Labor was organized which became affiliated with the American Federation of Labor in the United States. Later it became known as La Federación Libre del Trabajo.

  35. The organized labor movement has for many years been largely identified with the Socialist party. The advances made by labor in the Island during the last quarter of a century have been instrumental in the formation of the Socialist Party of today.

  36. During the administration of Governor Theodore Roosevelt, Jr., the workers' interests were promoted through the creation of the Insular Department of Labor, established by an act of Congress passed as ah amendment to the 1917 Organic Act of the Island. Besides the Mediation and Conciliation Commission, which acts as a mediator between employers and employees in settling disputes, the Department maintains the following bureaus: the division of inspection, investigation, and interpretation of labor laws; employment service; division of accounts, property, and statistics; wage protection and claim bureau; bureau of women and children; division of economic social research and investigation; homestead commission; industrial commission dealing with workmen's compensation service; and the board of examiners of social workers. The department, through the Commissioner of Labor, makes an annual report to the Governor of the Island and publishes the Puerto Rico Labor News in Spanish and English.

  37. During the World War period the cost of living steadily increased, but wages did not keep pace with it. Labor presented a united front, and after much agitation and dispute between planters and laborers, wages were raised. In the period immediately after the war, however, Puerto Rico experienced a depression in the sugar industry which resulted in a lowering of wages. This was followed by plantation strikes, in many cases accompanied by cane-field fires, intimidation, riot, and even murder, provoked or incited by mayordomos, capataces, and the police force at the service of the employers.

  38. The chief handicap to the labor movement in Puerto Rico has been an over-crowded labor market and a low standard of living. Even during the height of prosperity, employment could not keep pace with increasing population. In addition, high land prices tempted colonos to sell their farms and crowd into the cities to spend the proceeds. In this manner many thousands of acres of land passed into the hands of absentee-owners, and in rapidly increasing numbers, Puerto Ricans who once had jobs as well as land found themselves without either. In addition, the state of affairs summed up in the frequently-repeated statement that Puerto Ricans "produce what they do not eat, and eat what they do not produce" added to the low standard of living.

  39. In the early 1930's, the Island's economic and financial life was at its lowest ebb. The Puerto Rico Emergency Relief Administration was organized in August, 1933, to provide direct relief, but soon branched into work relief and devoted its efforts toward economic reconstruction. In October, 1935, this agency gave way to the Federal Relief Administration, which continued relief work.

  40. In 1936 the Puerto Rico Reconstruction Administration took over the work initiated by the two former relief agencies. The Administration aims at something more permanent than temporary work relief projects.

  41. By the end of 1939, the Administration had provided labor to the extent of 139,626,321 man-hours. The peak of employment had been reached in November 1936, just prior to the beginning of the annual sugar harvest, when a total of 59,062 were employed, 95.5 per cent from relief rolls. In November 1939, due to curtailment of funds, 22,964 persons only were employed. The Work Projects Administration set up in the fall of 1939 a separate organization, with Governor Leahy as administrator, to prosecute work relief projects similar to those formerly undertaken by the PRRA, which shifted its emphasis away from work relief as such to the continuance of rural rehabilitation for needy persons.

  42. According to the census of 1935, sugar as an industry provided the greatest employment, with 94,718 listed as working on farms and 16,162 in centrales or factories—a total of 110,880. Needlework ranked second, with 50,371 reported sewing in the home, 13,202 working in clothing factories, and 6,655 in embroidery and kindred factories— a total of 70,228. Tobacco ranked third as an industry providing employment, with 38,186 reported working on tobacco farms and 14,714 employed in processing plants, and cigar and cigarette factories. The number of employable workers without employment has been variously estimated up to a maximum of 350,000.

  43. The revival of Act 45 on April 1, 1937, which was approved by the Insular Legislature on June 9, 1919, established minimum wages for working women, but caused general dissatisfaction among industrialists all over the Island. This act declares it to be unlawful for any employer of women and girls in industrial and commercial occupations or public service undertakings in Puerto Rico to pay wages lower than $4.00 per week to women under 18 years of age and less than $6.00 per week to women over 18 years. The Supreme Court of Puerto Rico declared this act constitutional in 1920 and again in 1921, but in 1924 declared it unconstitutional, and so it stayed until the Commissioner of Labor revived the law in 1937. The needlework industry attacked the constitutionality and validity of the law before the District Court of San Juan and applied for an injunction to prevent the Commissioner of Labor from enforcing its provisions. At the same time the members of that industry contended that the law did not apply to home work. The tobacco-stripping industry also instituted proceedings, contending that tobacco stripping is part of agricultural processes and that, even if it is not, it is an agricultural enterprise excluded from the provision of the law. The district court of San Juan declared the law to be constitutional but not applicable to homework. Both parties appealed, and the appeal in 1940 was still pending before the Supreme Court of Puerto Rico.

  44. The Fair Labor Standards Act went into effect in October, 1938, prescribing a minimum wage of 25 cents an hour and a 44-hour week, and forbidding oppressive child labor. This act is applicable to Puerto Rico, but does not cover the majority of Island workers, who are engaged either in agriculture, the processing of agricultural products, or in intra-state commerce.

  45. According to the Puerto Rico Labor News, in a report covering 28 important industries for 1937-38, only six of these industries worked full-time during the year. Average earnings in urban districts for males ranged from a high of $13.00 per week in the printing trades to a low of $2.52 per week for dock workers. As a rule women received lower wages than men. Agricultural workers averaged lower wages, although 8 of the 28 industries were the main activities in which rural workers find employment. Wages in these industries averaged for males from $8.13 a week in sugar factories to $2.37 a week in coffee growing. In only two trades (printers and dock workers) were the average hourly earnings over 25 cents, and in some cases women workers earned an average of 2 1/2 or 3 cents an hour. Lowest wages earned by rural workers were in truck gardening. In this activity, men worked 38.9 hours a week, at an average weekly wage of $2.26. Women worked 46.7 hours, with a weekly rate of $1.78, and children worked a full week of 48 hours, receiving $1.50 per week.