The Bard of Bootstrap
(See Cover)
The minds of men in underdeveloped lands all over the world were turned last week to a crowded Caribbean island that flies a proud one-star flag beside the Stars and Stripes. To men in New Delhi, Accra, Bangkok and Morocco, tiny Puerto Rico, which has clawed its way in 15 years to a nearly doubled standard of living, spoke an urgent message of hope through self-help--and spoke it with the special clarity of a teacher who is only ten pages ahead of the class.
Durga Das, who as editor of India's Hindustan Times visited Puerto Rico last year, marveled: "The face of the island is being changed." Ghana, which modeled its civil-service training on Puerto Rico's, was getting advice on industrialization from two of the island's experts. Prabha Prachasubhaniti of Bangkok Technical Institute copied in his school a workshop setup he had seen in Puerto Rico. Mehdi ben Barka, president of Morocco's Consultative Assembly, took inspiration for his development program (TIME, Sept. 9) from a look at the island last fall.
At La Fortaleza, the Governor's mansion in San Juan, the architect of Puerto Rico's progress was forthrightly proud of the foreign plaudits. Under Governor Luis Munoz Marin (pronounced Moonyos Marine), the Puerto Rican government spends some $770,000 a year helping observers and students from abroad to come to the showcase island; since the program began, the total is 5,000. But Munoz is by no means satisfied with his accomplishments. Asked "Where do you go from here?" he exploded: "Man, we are not here yet!"
"Arriba Nixon!" Only 15 years ago a Democratic Senate committee investigated Puerto Rico and pronounced its problems "unsolvable." Only twelve years ago Puerto Rico's retiring New Dealing Governor Rexford Guy Tugwell chose The Stricken Land as the title for his book about the island. Today Puerto Rico: CJ Boasts a per capita income of $443 (v. $742 for West Germany, $2,009 for the U.S.), which is surpassed in Latin America only by oil-rich Venezuela. P: Costs the U.S. Treasury next to nothing. P: Governs itself in orderly democracy within an imaginative new "Commonwealth" relationship to Washington. P: Gives the world, anxiously watching Algeria and Cyprus, a shining example of an experimental colonial policy that turned out well.
Last month, when Vice President Nixon left rioting Venezuela in saddened haste, he flew to San Juan. That night he spent 40 minutes wading four blocks through cheering Puerto Ricans ("Arriba Nixon!") to the wrought-iron gates of 400-year-old La Fortaleza, where Munoz gave him a state dinner in the ancient fort's great candlelit dining room. Said Nixon: "I couldn't think of a better place to be." Said Munoz: "Mr. Vice President, esta en su casa [you are in your house]."
Sun & Slums. Puerto Rico nowadays is an exciting, sunny, scrubbed and cultured place to be. In terrain, it is a blue central mountain range skirted with rustling fields of sugar cane, crisscrossed with winding blacktop roads; the land is dotted with clean villages that still have the Spanish colonial look. The island would fit tidily inside Connecticut. With a population of 2,300,000, Puerto Rico is as crowded as the U.S. would be if all the people in the world were packed into it.
The capital city of San Juan (pop. 400,000) sits on two islands between a bay and a lagoon. Its sights are blue-bricked streets, ancient masonry, white skyscrapers, rain-dappled, flamboyant trees, traffic jams of Fords, Chevies, Opels, Consuls, Taunuses and Vespa scooters. In the old city, hand-printed poems of amor on sale at 25-c- flutter from a clothespin in a dowdy doorway next to a modern furniture store whose neon sign shouts: "Use Nuestro Layaway Plan." But San Juan also has festering El Fanguito and neighboring swampland slums of stilted crackerbox shanties, partly cleared but still the home of 100,000.
Suntanned, swim-suited tourists from New York, who can fly to San Juan for $45, clack in their clogs through the lobbies of the Caribe Hilton and the new San Juan Intercontinental hotels. Twenty miles west of the capital, richer visitors will soon be able to loaf at Laurance Rockefeller's Dorado Beach Hotel, now abuilding, and golf under Pro Ed Dudley at the Robert Trent Jones course. "There is a great atmosphere of construction, vitality, change," says Roger Baldwin, who advises Puerto Rico on civil liberties, "and a great sense of leadership."
Lusty Statesman. Luis Munoz Marin (TIME Cover, May 2, 1949), who provides the sense of leadership, is a man with a bear's body and the somber visage of a St. Bernard. On the crystal chandelier over his desk nests a pair of birds that fly in and out of the always open door. "He is kind to animals," says his wife Inez, "and even kinder to humans." His salary is $10,000 a year. His wealth, as itemized before the 1956 election, consisted of $562 and a house with 16 years yet to go on its FHA mortgage; when he went to New York recently, he bought his tickets on a fly-now-pay-later basis.
But he has no Spartan scorn for the good life. Last week he returned from a vacation cruise aboard the yacht of a wealthy friend. Was he by any chance accepting a questionable favor? "Only demagogues," snaps Munoz, "cannot afford to be seen anywhere except drinking bad gin with a man who has no shoes on." He has a mighty temper and lusty tastes. There is only one liquor he is cool toward --much to the distress of the promoters of Puerto Rico's excellent rums. After chain-smoking most of his life, he gave it up nine years ago.
Vice President Nixon says Munoz is "a man all of us can be immensely proud of." Even Angel Ramos, publisher of San Juan's anti-Munoz daily El Mundo, says: "I don't think the hemisphere has a greater statesman." In 1956 the Freedom House Award (earlier winners: Eisenhower and Churchill) went to Munoz.
He works a twelve-hour day and works his assistants just as hard; when he began his vacation cruise, four of them tottered off to see doctors. And the evenings at La Fortaleza are likely to be busier than the days. "You're invited to dinner," recalls Adolf A. Berle Jr., longtime (1938-44) Assistant Secretary of State. "Presently a couple of people heave in--top government officials, somebody whom you eventually recognize to be Pablo Casals,* maybe a poet or so, and some exile who is ignored in the U.S. but is about to become President of Venezuela, for example. Oh. philosophy in the fortress flies to high heaven. It's splendid!"
"Get Puerto Rico." Under Spain, Puerto Rico was a peaceable colony, untouched by the early 19th century revolts that freed South and Central America. On Feb. 9, 1898, just nine days before Munoz was born (a few blocks from La Fortaleza), Spain's Governor inaugurated a forward-looking constitutional government of semi-autonomy under the Spanish crown, devised by Munoz' statesman-father, Luis Munoz Rivera. But Theodore Roosevelt, on his way to fight in nearby Cuba, advised his congressional supporters to "prevent any talk of peace until we get Puerto Rico." Five months after Munoz was born, U.S. General Nelson A. Miles landed, took the island in 17 days, and promised to "bestow upon you the immunities and blessings of our liberal Government." Congress thereupon set up a government that denied Puerto Ricans U.S. citizenship and made all local laws subject to congressional repeal.
Munoz Rivera soon moved his family to New York, and later to Washington, where he became Puerto Rico's Resident Commissioner in 1910, persuaded Congress to give islanders U.S. citizenship. Son Luis studied law at Georgetown University, quit the classroom for a period of writing poetry, newspaper correspondence, magazine articles (for H. L. Mencken's Smart Set and American Mercury, among others). He read widely (Shaw, Ibsen, Chesterton, Conrad) and joined the Socialist Party, a group that in Puerto Rico was mostly composed of cigarmakers. Thus formed, he returned in 1926 to Puerto Rico to live.
By then, a few big U.S. companies had converted Puerto Rico into a sugar barony whose 100,000 cane cutters, paid 10-c- an hour, gladly sold their votes for $2 to elect company lawyers to the island legislature. Unemployment ran to a third of the working force. Theodore Roosevelt Jr., the old Rough Rider's son. named Puerto Rico's Governor in 1929, found ''babies who were little skeletons." schoolchildren "trying to spur their brains to action when their little bodies were underfed." Luis Munoz Marin turned for a while into a fiery supporter of independence for Puerto Rico. He stormed at the U.S. as an "opulent kleptomaniac" that "niched life-giving pennies from the pockets of a pauper." He termed Puerto Rico a "factory worked by peons, fought over by lawyers, bossed by absent industrialists and clerked by politicians."
3-c- a Dozen. But he changed his mind. Recently, standing in a long hallway at La Fortaleza with a cocktail in his hand,
Munoz said: "There comes a moment when a reasonable, intelligent man who wants to serve people says to himself. 'I want to see what's true about this fixed idea of mine.' " Munoz' own honest reappraisal forced him early in the '30s to begin hedging on the desirability of breaking away from the U.S. "I want my people to want independence," he explained to a friend in those days. "Once they do that, they will set powerful forces in motion and may bring things to the point where independence is unnecessary or even bad." Later, when Congress, piqued by anti-U.S. riots in Puerto Rico, briefly considered an independence bill that would have pushed the island outside U.S. tariff walls, Munoz had switched his views so much that he likened the bill to the Latin American ley de fuga--the custom of freeing a prisoner and shooting him in the back "while he escapes."
By 1938, when he formed his Popular Democratic Party and ran for the island Senate, Munoz had decided that "status is not the issue." To the jibaros, the country men, he promised labor laws and land reform instead of independence. He urged voters to "lend me your vote" rather than sell it to the opposition. His followers called him El Vate (The Bard) and elected him to office. In those days, needlewomen who worked at home in the island's second biggest industry after sugar were getting just 3-c- for hemming a dozen handkerchiefs.
Fomento. At that point Puerto Rico, its hungry people jamming an eroded land without oil, coal or iron, looked hopeless. Undeterred. Munoz counted the island's assets: plentiful labor, an open door through U.S. tariff walls for anything the island could grow or make, a ready-to-hand brain trust of half a dozen bright young U.S.-educated economists, professors and businessmen. Among them: Rafael Pico, now president of the government's bank, and Roberto Sanchez Vilella, now Secretary of State (Vice-Governor). Rex Tugwell. named Governor, implanted an efficient civil service and a knack for the kind of economic planning that is flexible enough to improvise when necessary. By long tradition, the Puerto Rican government had--and never lost--a notably un-Latin reputation for incorruptibility among top officials. With these assets, Munoz started the institution islanders call Fomento (development), a plan to "free the human spirit" in Puerto Rico by raising living standards above the animal level through industrialization.
To get factories going, Munoz tapped a young pharmacist (University of Michigan '32) named Teodoro Moscoso Jr., who left a job running his family's wholesale drug business in Ponce to form and boss Fomento. The program's principle, as summed up by Moscoso: "Economic development is not an end but a means of attacking poverty." It avoided political doctrines; Munoz early ruled that Fomento should "have no fixed taboos, no sacred cows in the choice of instruments to achieve a better standard of living."
The beginnings, nonetheless, were undeniably socialist. A Land Authority began to enforce an old law limiting corporate sugar holdings to 500 acres, broke up the big mainland-owned companies, formed collective-like "proportional profit" cane plantations. A TVA-style Water Resources Authority took over power production from several private power companies, and began wide-scale irrigation as well. Using $10.7 million in treasury funds, Fomento built or took over factories to make cement, glass and cardboard (for rum bottles and cases), shoes, tile.
The experience in the factories was distressingly clear proof that the government would have to raise an unthinkable $1 billion or $2 billion to build enough plants to industrialize the island. Without ado, Munoz & Co. sold the government-owned plants to get capital for what Moscoso calls the "incentive and promotional approach," aimed at giving a "multiplier effect" to the government's investment. Instead of "permitting" (in the word of many a nationalist demagogue) the entry of outside capital, Puerto Rico resolved to dragoon or inveigle it.
60% Profits. The tools devised and marshaled for the jobs were 1) tax exemption, 2) unabashed encouragement toward high profits even when based, as at first, on low wages, 3) patient coddling of the fearful and uninformed investor with every kind of assistance. U.S. Federal income taxes do not apply in Puerto Rico, and any new business not provably running away from U.S. taxes or unions was freed from the island income tax for ten years. Profits could and did run to 60% of sales; Fomento Chief Moscoso says: "We found this not too high a price to pay for our accelerated rate of development."
Fomento even hired expert U.S. economists to sit down with prospects, show them how high returns might run. It offered them ready-built plants at low rent, loans from the Fomento bank, cheap power from the efficient Water Resources Board, accurate statistics. Nor did Fomento wait for investors to come. Ted Moscoso can often be seen in Fomento's plush offices in the new Tishman Building on Manhattan's Fifth Avenue, striding down a corridor on his way for some "belly-to-belly selling" of a businessman interested in setting up a manufacturing plant in Puerto Rico. "We have learned," he says, "that the U.S. businessmen we deal with today are as different from the plantation and sugar-mill colonials as we ourselves are from malaria-ridden serfs."
U.S. manufacturers, big and small, poured in, chiefly to make products--pens, radios, brassieres, baby shoes--that needed a good deal of hand work and could be transported cheaply. Hastening to the island came Paper-Mate, General Electric, Maidenform, B.V.D., Consolidated Cigar, Weston, Union Carbide, Parke, Davis & Co., Remington Rand, Bostitch and others (see map). Last week the 667th factory--a cutlery plant in Gurabo --went into production. For the catalytic $40 million in loans, plant construction and promotion, Fomento got the island $275 million in investment, 80,000 new jobs. Like the moving needles on the instrument board of a climbing plane, all the economic indicators rose. 1940 1957
Gross Product $287 mill. $1.2 bill.
Av. Family Income $660 $2,400
Business Profits $ 99 mill. $367 mill.
Power 166 mill. kw-h 1.3 bill. kw-h
Public revenues from indirect taxes, noncorporate income taxes and other tolls on the speeded economy jumped from $27.5 million to $198 million; each of Fomento's investments stirred a burst of economic activity that ultimately returned to the treasury four times as many dollars as were laid out. Wages rose, now average $1,500 a year.
Flops & Switches. Failures came often enough to keep the bootstrap-tuggers from getting smug. Tax exemption means nothing if profits are nothing, and 169 factories (of the 667 that started) have gone under for such reasons as obsoletion of market, lack of distributing facilities, attempting to make a product exclusively for the still relatively small Puerto Rican market. The government, too, had its failures. The Land Authority tried valiantly, even mechanized sugar loading by a system that blows the semirefined product from trucks or railroad cars., into ships, eliminating bags. But it could not meet its allotted task of increasing output of sugar, and its lands and plants may be sold to local capitalists if they will agree to mechanize harvesting, keep wages up, shun attempts at political control.
Equally flexibly, Fomento, unable in 1946 to find a capitalist to build a hotel, put up the pattern-setting Caribe Hilton with its own $5,000,000, brought U.S. Hotelman Conrad Hilton in to run it. Hilton made $1,000,000 the first year, was encouraged to go ahead with what is now his worldwide chain.
Munoz and his men are so unashamedly pleased with Operation Bootstrap that their formula for the future is more of the same. Goals: 2,500 factories by 1975, with a standard of living then equal to that of the U.S. now. The U.S. recession is hurting the island, and with unionization and rising wages, the tax-exemption law, which expires at the end of 1963, is left as the main incentive. But in a single week recently, U.S. investors were in Puerto Rico to study prospects in plastic webbing, dresses, sportswear, tourist hotels, motorboat trailers, wall tiles, plastic toys, scientific apparatus, shoe machinery and cookies.
What does Bootstrap cost the U.S.? "What does Missouri cost the U.S.?"
Moscoso retorts. Puerto Rico buys heavily beyond its own shores (mostly from the U.S.) and its purchases of goods and services top $800 million a year. It sells less, and its 1957 balance-of-payments deficit was $265 million. The deficit was redressed mostly by incoming capital, payments of $62.5 million to Puerto Rican veterans (who suffered heavy casualties in the Korean war), and money sent home by Puerto Ricans working in the U.S. Washington's grants-in-aid for such programs as health, housing and highways totaled $41 million (which is a bit more than islanders pay the U.S. Treasury in indirect taxes on imported consumer goods).
Beyond Nationalism. Politically, Munoz clung to his aspiration for eventual Puerto Rican independence until 1944. "That year," he recalls, "the Popular Party got 64% of the vote as against 38% in 1940. The Planning Board had written a paper on the economic consequences of independence, of being shut out of U.S. tariff walls. A Tariff Commission economist came down here, and I had two or three long talks with him. I said: 'Of course Puerto Rico cannot be independent in the same way as the Philippines, which have greater resources and lower population density, but let's see if it's possible to work something out.' He said: 'Suppose the U.S. gave Puerto Rico freedom and also free trade with the U.S.; other countries with most-favored-nation clauses in their treaties would demand it, too.' The whole treaty relationships of the U.S. would be messed up.
"Came the 1948 election. We outlined what later became the commonwealth relationship to the U.S. I got 61% of the vote. I remember that I was speaking at a roadside, and there was a big Negro standing there. I said to him: 'Independence is not an issue.' He said: 'I'm glad,' and made a gesture of cutting his own throat."
Munoz' thinking from that year went "beyond nationalism." Working with his staff and with the U.S. Congress, he wrote a bill that invented the concept of a "free, associated state." It was enacted "in the nature of a compact" between Congress (which approved it in 1950) and the Puerto Rican people (who ratified it in a referendum). Chiefly, the bill authorized Puerto Rico to write itself a constitution for complete local self-government and provided for U.S.-Puerto Rican relationship. Main effects:
P: Congress can no longer overrule island legislation.
P: Puerto Ricans continue to have no voting representative in Congress and cannot vote for the presidency (unless they move to one of the states)--but pay no U.S. income taxes.
P: Federal laws, including the draft, apply with pertinent exceptions, notably the minimum wage laws. P: Courts are locally appointed; appeals go to the U.S. First Circuit Court of Appeals and then the Supreme Court in Washington.
Says Adolf Berle: "Puerto Rico has independence in everything except economics, defense and foreign relations--and these three are international by hypothesis."* Moreover, the commonwealth concept is free to evolve, perhaps in the line of further shucking off of federal laws, or unlinking courts from the U.S. system. President Eisenhower long ago promised to recommend that Congress give Puerto Rico independence any time the islanders vote for it. Moscoso says Puerto Ricans sense their freedom because they "are in a room with the doors open."
But Bootstrap's hard pull has by no means yanked Puerto Rico to its announced objective of full employment; 13% of the labor force of 636,000 have no jobs (v. 18% at present in Detroit). Main reason: the natural increase in population keeps pace with industrialization. "There is an old saying here that a man must do three things during life: plant trees, write books and have sons," sighs Munoz. "I wish they would plant more trees and write more books."
One result of the population rise is heavy pressure for birth control, and early in Bootstrap the government unabashedly provided free contraceptives from 160 dispensaries. Under attack from the dominant Roman Catholic Church, the regime dropped word to clinic doctors not to push the practice. But postnatal sterilizations, at the request of the mother, are common; one estimate is that a fifth of all women 15 to 40 have been sterilized.
Since 1940, the birth rate has declined sharply; Puerto Rico's population rise lately is due entirely to a drastic drop in the death rate, which is now lower than the U.S.'s.
U.S. Migration. The safety valve for Puerto Rico's population pressure has been migration to the U.S. Puerto Ricans like their sunny island, but until jobs there are more plentiful, many of them will continue to yearn for the U.S. as it is described in the Broadway musical West Side Story:
Pink Oldsmobile in America, Chromium steel in America, Wire-spoke wheel in America--Very big deal in America!
Fomento executives freely admit that migration to the U.S. has given Bootstrap a more successful look than it would otherwise have, and they willingly aid migrants to go. But compared to the recent migration of 2,274,000 persons from the U.S. South to the North and West, the
Puerto Rican yearly average migration of 50,000 is a trifle. In New York City some Puerto Ricans have managed to gain for the rest an outsize reputation as gang fighters. West Side Story-style; actually, Puerto Ricans form 8% of the population, and their share of the crime rate is only slightly more than 8%.
In other U.S. cities Puerto Ricans have moved in with little furor. Some 6,000 Puerto Ricans live in Lorain, Ohio, drawn by work in the National Tube Co.'s mills. Says Carl Longwell, president of the United Steelworkers' local: "They are definitely as efficient as any other workmen"--which suggests that cutting Puerto Rican migration to the U.S. is no particularly desirable objective for anyone.
Operation Serenity. Characteristically, Munoz no sooner had Bootstrap going well four years ago than the poet in him came out. Was Puerto Rico turning materialist, losing its gracious leisure, abandoning its soul? Recalls a member of his staff: "He began talking about how industrialization was raising cities but destroying old values. He used to push a statue of Gandhi toward Moscoso while Moscoso was talking figures, rates, profits. One day Moscoso exploded: 'Stop shoving that statue at me! If I take it seriously, we will have no economic progress.' "
Says Munoz: "The supreme utility is freedom with reasonable comfort. The human being should have a passionate wash to be free rather than a passionate wish to be a possessor. In the old days you lived a good life, served God and went to Heaven. What are we living for? To beat the Russians? Own one automobile, two, three, four?"
As a result of such anxieties, Munoz started Operation Serenity, "an attempt to give to economic effort objectives that commend themselves to the spirit." On a budget now running $315,000 a year, Operation Serenity restores old churches, houses and forts, rediscovers folklore and old music: Puerto Rico bursts with pride at being the home of such artists as Cellist Casals and the late Nobel Prizewinning Poet Juan Ramon Jimenez. But Serenity has not eased the pull on Bootstrap. Munoz finally came around to the belief that "we must live like angels and produce like the devil."
Imaginative Lessons. For U.S. officials entrusted with reshaping policy after the warning-laden Nixon trip, the Puerto Rican advance is a textbook of imaginative lessons. In helping underdeveloped nations, the U.S. could well consider: P: A measure of tax forgiveness for corporations operating overseas, advocated by former Treasury Secretary George Humphrey to induce foreign investment. P: Support for big common markets--such as the proposed Latin American customs union--that will provide markets such as Puerto Rico has in the U.S. P: Official coolness to dictators, who are often corrupt and ultranationalistic. P: Greater tolerance for mixed economies in the Puerto Rican style, less insistence on making private enterprise a condition in granting loans. P: Any move toward freer trade.
In turn, underdeveloped countries could profit from Puerto Rico by: P:Replacement of hostility to private capital with an outright welcome, using tax incentives and hard-sell promotion. P: Official honesty; greasing endless palms frightens many businessmen. P: Sound planning and statistics. P: Playing down nationalism, working toward what Munoz calls "the post-nationalist world."
Most of the lessons demand radical wrenches from the status quo--but Puerto Rico's ground-breaking example is impressing the whole world. In the garden of a bungalow overlooking Amman in Jordan last week. Social Welfare Director Hussein Bushnak sipped Turkish coffee and spoke with warmth of his visit to Puerto Rico. "Before I went there, I had been told that work of great importance had been done." he said. "But I was astonished at the scope of what I saw." He added: "The Governor is an impressive man. He has achieved much."
*Catalonia-born Maestro Casals, who detests Spanish Dictator Francisco Franco so heartily that he will not play in Spain, moved to Puerto Rico in 1956 from his longtime home in self-exile in the French Pyrenean town of Prades. He played last April at the yearly Festival Casals in San Juan, is now in Prades for a reprise of the festivals he used to hold there. *A Reuters correspondent once needled Munoz with the question: "Yes, but when will Puerto Rico get economic freedom from the U.S.?" Shot back Munoz: "About the same time Britain does!"
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