Economic Existence: Sugar and Labor: 1928-1930s
This Chapter will outline the economic conditions that troubled the sugar industry from 1928 to 1935, and the economic and political eventualities that unfolded throughout the thirty seven years of American rule in Puerto Rico. At the same time I will present the development and reality of the Puerto Rican labor force, its living conditions particularly in contrast to its counter-part in the face of prosperity.
I-The Puerto Rican Sugar Industry.
1- A Close Look at the Economic Reality.
The 1920s were years in which the price of sugar, in the US market, went from a record high $ 235.88 in 1920 to $ 95.25 in 1927. (see 30th Annual report of the Governor of Puerto Rico. p. 23) This wavering has already been attributed to the effects of W.W.I. on the world market. Nevertheless, the profits made by the industry during the war years were colossal. By 1925 the industry was producing record crops year after year. It has been estimated that three out of the four American Companies controlled 43.6% of the island's production. (see Morales Carrión. p. 209)
There was no doubt, sugar was the king of the Puerto
Rican economy. And in every governor's report for those years they acknowledge
so. From 1928 on sugar's price would decline steadily. But as we will see
this did not mean the end of profitability for the industry. The real reason
was the beginning of the worst economic depression in history which started
in 1929. Also the increase in the competition from sugar producers in the
US. Nevertheless the sugar industry remained robust from an economic point
of view. Esteban Bird, reporting on the prosperity of the sugar industry,
called this prosperity "unusual". He could only find three occasions, in
36 years, in which the industry experienced "slow times". But he added:
"...the prosperous years have been enough to wipe out the losses."
The following table, of three of the US sugar companies, gives a clear
view of the prosperity of the industry.
Comparison of Actual Profits with Estimated profits
at 12% Return on Investment- From 1920-1925.
(Thousands of Dollars)
South Porto Fajardo sugar
Dividends Aguirre Sugar
Cash $ 18,285 $ 24,913 $ 6,794 $ 49,992
Stock 780 7,418 2,372 10,570
$ 18,065 $
Dividends & 11,157 3,683 5,739 20,579
|Total Div.& $ 30,222
|Est. 12% $
5,400 $ 24,568
Return on not Investment.
$ 24,882 $
Source: Farr's Manual of Sugar Companies.
One has to take into consideration that 12% profit is only an estimate
and that is has been argued that it was higher because most of the sugar
companies kept inaccurate records. In any case this table shows how healthy
the sugar industry was. Bird estimated that : "The excess profits of these
three sugar mills during the last fifteen years are practically as large
as the total public debt of the island." The following table will
show the financial status of the three largest sugar producers of the island:
South Porto Rico, Fajardo Sugar, And United Sugar.
Combined Financial Data for the Three Largest Sugar Producers.
Capital does not Include Stock Dividends.
(Thousands of Dollars)
*Does not Contained Central Aguirre's Figures.year capital Assets Earnings Earning % Earnings %
of Capital of Assets
1928 $ 24,595 $ 70,155 $ 7,537 30.64 10.7
1929 $ 24,595 $ 75,554 $ 1,858 7.55 2.5
1930 $ 24,595 $ 71,585 $ 3,468 14.06 4.8
1931 $ 24,595 $ 61,768 $ 2,607 10.60 4.2
1932 $ 24,595 $ 61,584 $ 4,356 17.61 7.1
1933 $ 24,595 $ 62,945 $ 3,866 15.00 6.2
1934 $ 24,595 $ 59,513 $ 5,956 24.22 10.0
1935* $ 21,595 $ 44,301 $ 3,391 15.70 7.6
Aveg. $ 24,220 $ 63,425 $ 4,129 16.90 6.6
It is also important to remember that in 1934 United Sugar had closed its operations. Therefore the above figures would have been higher. Another fact worth mention is: "...more significant is the fact that after paying all expenses including labor, the 'entrepreneur' made $ 2,203 per farm over and above what he paid in wages to hundreds of people."
Sugar had been good to the American "entrepreneur"
in spite of the latest decline in prices. Although sugar prices had been
low during the last eight years, production and exports had increased.
Furthermore, earnings remained high notwithstanding the fluctuations. This
conclusion is substantiated by the figures in tables 3 & 4.
Figures for sugar Production, Exports, and Prices (1928-1935)
Source. 35th Annual Report of the Governor of Puerto Rico.
Total Sugar Production per Year
Source: 35th Annual Report of the Governor of Puerto Rico
The figures above clearly show that the sugar industry remained in a very strong economic position. The sugar industry continued to be the number one supporter of the Puerto Rican economy in spite of price changes and the Costigan-Jones Act of 1934. (The Costigan-Jones Act will be discussed in more detail).
Finally, and more important, the sugar industry was able to remain in such economic health because it managed to retain more of its profits than any other agricultural industry in Puerto Rico. They managed to do this for one simple reason: the sugar industry paid the lowest taxes in Puerto Rico. And even after the hurricanes of 1928 and 1932 devastated the agricultural sectors, coffee and tobacco in particular the sugar industry, though hit by the disasters, remained much stronger than the others and kept paying less taxes.
Esteban Bird's Report (1937) and a study done by the Brookings Institute in 1928-29, agreed that the sugar industry's ability to pay and contribute more to the Puerto Rican economy had been severely diminished because the real value of their property had been reduced. (see Bird. pp. 102-107) The tax situation was so unbalanced that in 1928 the Governor of Puerto Rico started to reform the tax laws. In his 1928 Annual Report he explained the reason: "There has been no complete revision of valuation of properties since 1917-18. In 1925-26 and 1926-27 another revision was commenced...the work was discontinued for want of appropriations..." The 1928 Annual Report details the excise taxes collected for that year amounted to $ 7,333,661 but a comparison between sugar and tobacco will show the magnitude of the gap in taxes paid. While tobacco products paid in excess of $ 2,614,583 sugar products paid only $ 922,746. In 1928 the total amount collected from sugar exports was $ 54,579 million, while only $ 17,235 were collected from tobacco exports. (see 28th Annual Report. pp. 12-13, 26) Again the sugar industry got away with this because of the under-assessment in their properties. Here is one example : "The irrigated area...is perhaps as a whole the most valuable sugar-cane area...'little of it could be purchased at $ 500 an acre' but the average assessed valuation of this property is only $ 286."
The following tables will show the differences between
the real taxable assets of three of the four American sugar companies.
Taxable Assets and Assessed Valuation
(Value in Thousand of Dollars)
Source: Bird's report
SOUTH PORTO RICO SUGAR Co.
Source: Bird's Report
"Judging under-valuation or over-valuation by the differences between the value of taxable assets as reported in the balance sheets published by the concern in question and the assessed valuation, we must conclude that the property of the sugar industry has been under-assessed to a very large extent."In 1935 the Puerto Rico reconstruction Administration (P.R.R.A.) popularly called by Puerto Ricans "La Pra", founded under President Roosevelt's New Deal policies, conducted a thorough assessment of a sample of sugar industries. Although out of the six industries assessed none was American, this assessment nevertheless would provide a further sense of the under-valuation of the sugar properties.
Assessed Valuation According to Tax Records
and as Determined by the P.R.R.A.- 1935-1936
(Value in Thousand of Dollars)
The final proof that the sugar industry was not paying its fair share of taxes is found in the comparison made by Bird between sugar and other agricultural industries:
"When taxes paid for the same group of farms are expressed in percentages of gross income the situation is as follows:
"The evidence is conclusive that as represented from these samples, all types of farms are paying more taxes than sugar-cane...in relation to both their gross and net income."
It would seem that nature held a grudge against Puerto Rico. Since 1898 the island had been visited by numerous hurricanes or severe rain storms. The two most damaging being San Ciriaco and the rain storm of 1926. Both severely ravaged the agricultural sector of the island. (see 28th Annual Report of the Governor of Puerto Rico. p.29) The year of 1928 had been productive and uneventful, until September.
September 13, 1928 brought to Puerto Rico a new nightmare in the name of hurricane San Felipe. If San Ciriaco had been powerful it paled next to the destructiveness of the new phenomenon. It rained so heavily that it has been reported that scientists refused to believed their own instruments. (see Fernández. p. 99) It was calculated that the amount of rain that fell was the largest recorded in Puerto Rico in over thirty years: "Wind velocities probably exceeded 160 miles an hour, but there was no way to be certain because the 'balloon shed collapsed'." The damage caused by San Felipe was massive:
"Red cross officials reported complete and utter devastation: houses destroyed, the main crops ruined, and large industries such as the sugar centrales...-demolished... . No one had an exact estimate of deaths, but in some ways the dead were lucky, because no one had any idea how to feed the living."For the sugar industry the economic effects of the hurricane would not be felt until the following harvest. But as far as 1928 was concerned the sugar crop was the largest in the industry's history (see tables 3 & 4) although the price of sugar declined. In his Report the governor of Puerto Rico stated that the increase in production was due not to material increase but to "variatal selection and successful control of cane diseases"
1929 would be a different year. This was the first year, since the occupation, that the sugar industry had low profits. The damage to the sugar industry was enormous: "In city and country alike the storm left its destructive mark. Sugar mills...were left a shapeless mass of debris...the loss of the sugar crop was 32%, with a money value of $ 17,337,180." In 1928 the sugar production was 586,760 tons. Out of this 471,244 tons were exported to the United States, 25,500 to other countries for a total of 612,220. The remainder was not exported because said Governor Towner: " Large portions of the product were withheld and not marketed because of low prices."
In that same Report the Governor also reported that: "The value of the exportation of sugar since the year 1916 had not fallen so low as this year. The quantity exported this year was the smallest since 1925." (see tables 3 & 4)
For the sugar industry 1929 was a nightmare. San Felipe devastated the sugar crop, on the other side 1929 marked the beginning of the worst economic depression in the history of the United States. The Depression knocked the sugar prices to an all time low. There is an all Puerto Rican proverb that says: "Si los Estados Unidos estornudan, a Puerto Rico le da gripe" which means, if the United States sneezes, Puerto Rico catches a cold.
Historian Fernado Picó describes the effects of the depression in Puerto Rico's sugar industry: "For the already demolished agrarian economy of Puerto Rico, the Depression that started in 1929 in the US represented the final straw, sugar prices in the American market came crashing down."
By 1930 the sugar industry had recovered from San Felipe. but the same could not be said about the Depression. The effects of it were felt in the prices of sugar. The total amount of the sugar crop this year was 866,109 tons. Out this 721,217 were exported to the US the remainder to other foreign countries. This represented an increase of 279,349 tons from the previous year. However, the price of sugar decreased by .32 cents. Nevertheless, sugar exports showed a remarkable increase of more than 18 million dollars. In 1930 the sugar industry reported the biggest sugar crop in its history. And this one year after the devastation of San Felipe.
This is how Carlos E. Chardon, Commissioner of Agriculture and Labor, described the outcome of the sugar industry for that year: "Puerto Rico and its agriculture have suffered from the general economic Depression which has generalized throughout the world. Although the price of sugar does not correspond with the hopes of the leaders in the industry, the situation is very satisfactory." It is important to add that in achieving this record no additional land or capital was needed. At the same time all five sugar districts experienced a healthy increase in production. These indicated that the industry had completely recovered. (see 30th Annual Report. p. 151)
By 1931 the agricultural sector was still feeling the afflictions of San Felipe and the Depression. The Governor reported: "Three of our principal crops have had bad years...farmers had been unable to get sufficient good prices." But the sugar industry exported more sugar than the year before although prices declined again. (see table 4) In 1932 the island was visited by another hurricane: San Ciprián. But as the figures showed it did not cause major damage to sugar production. (see tables 3 & 4) The Depression though, kept prices low.
In 1934, at the height of the Depression, the Puerto Rican sugar industry would find itself in a bitter confrontation with the US Congress. In 1934 the US Congress passed the Costigan-Jones Act. Historian Morales Carrión describes it like this: "...the Costigan-Jones Act put sugar production on a quota basis and paid bonuses to land owners for not growing cane."
Besides the limiting sugar exports the Costigan-Jones Act, or the Sugar Act as it was called in the island, would levy extra taxes . This year the United Porto Rico Sugar Company closed its doors bankrupted. This was not only due to the new law but to internal problems, mainly difficulties with the labor force. The consequences of the Sugar Act could be seen in the relation between sugar production vis a vis sugar exports. (see table 3) In 1934 the island produced the largest crop in history, past and future. At the same time the price went up considerably. But in 1935 production went down drastically.
The reasons for this were; the Sugar Act of 1934 and the aftermath of the labor revolts of 1933-1934. The labor conflicts and the Costigan-Jones Act changed the way the sugar industry did business in Puerto Rico. Nevertheless, sugar remained the number one export crop of the island and although to a lesser degree a very profitable enterprise.
3-The Living Conditions of the Sugar-Cane Worker: 1928-1930s
If one thinks of the prosperity of the sugar industry throughout its history and the bloody conflicts against the workers one would assume that by the end of the 1920s the overall situation of the sugar-cane worker had improved. But the reality was far from that. What is more disturbing is that this is not the conclusion of the labor advocates alone. But the same has been revealed by studies and reports conducted by some of the most conservative agencies in and outside of the island. Taking this into consideration one can only wonder what was the real situation of the Puerto Rican sugar-cane worker. Most of the sources used in this area are of an official nature. Therefore one could challenge the validity of said information. But, nevertheless, it helps to present a clear picture of the living conditions of the sugar-cane worker.
Let me begin this chronicle by quoting Bird's report on the conditions of the Puerto Rican sugar-cane worker:
"Facing the prosperity from an investor's point of view of the sugar industry in Puerto Rico stands one of most appalling pictures of poverty and helplessness in the world...his wage is barely sufficient to provide for proper nourishment...he goes barefooted;...lacks a permanent home; and does not own even a small piece of Land."The numbers, for the sugar industry, in the previous chapter painted the picture of perfect health. The numbers below will paint the picture of perfect misery and utter despair. Even the Department of Labor, an old ally of the sugar industry, was critical of the way the industry kept its records. They expressed doubts about the reliability of such. Furthermore they admitted that the way the industry kept its books made it impossible to make accurate assessments:
This was a common practice in the sugar industry. They had divided the work in so many different categories that sometimes it was impossible to know which job was which or who did it. In the Report of the Department of Labor, they listed 85 different types of jobs in sugar mills alone. To better understand how this added to the confusion here are some examples of said categories:
MechanicsEach category earned a different wage but were not individually identified.
As other historians have determined, the confusing practice of the sugar industry, the unreliability of their records and the unavailability of others, makes almost impossible to depict with certainty the total reality of the sugar industry. This was particularly true in so far as labor was concerned.
Therefore, although the data used here is verifiable,
let the reader be aware of its possible flaws.
It is important to indicate that from 1916 to 1920 wages for the sugar-cane worker went up. This was the direct result of the war prices and the labor disputes during those years. From 1923 to 1927 wages remained unchanged. The annual earnings per family was $ 105. (see Galvin. pp. 77-78) In 1928 an increase in the earnings of the sugar-cane worker was detected (see Bird. p. 45) but this increase was not in real wages rather in work hours due to over-production:
"In general it may be said that the economic situation of laborers engaged in the cultivation and grinding of sugar cane is similar to that reported in the past...However, there has been an increase of more than 10% in employment due to a largely increased production...and in wages some as high as $ 14 per week."There was also deceitful information pertaining to what a sugar-cane worker supposedly earned full time; This is fraudulent because the fact was that no sugar-cane worker ever worked on a full time basis. In his report Bird clarifies the difference between full time wages and the actual wages earned by a sugar-cane worker. This would also give us a clear picture of what they actually earned:
"In the year 1934-35 the average full-time earnings per week for sugar-cane cultivators were $ 5.76 but the average actual earning per week were only $ 3.34...lower than in 1933-34... The average number of persons per family being 5.3 and the number of working persons 1.5, the average earnings per person per day amounts approximately to $ 0.13..."With the data available for this study I was able to put together the following tables to show the sugar-cane wages for the years of 1932 to 1933.
Sample Showing Full Time Hours per Week, Actual Weekly Hours,
Full Time Earnings per Week and Actual Weekly Earnings of Workers Employed
Planting Sugar Cane for the Years of 1932 to 1933.
Work per Week
In 1934 wages increased an average of 30% for all sugar workers. But such increase did nothing to improve the standard of living of the sugar-cane worker. The increase in wages never corresponded with the increase of the prices. Instead, in 1934 living conditions deteriorated. The Department of Labor in its 1934 report expressed showed:
"In spite of these increases we regret to state that the conditions under which our workers labor have not improve...the cost of food (last year) for workers...having to support a family of five, was $ 11.17 for one week. With present prices the cost would be $ 17.50, which is an increase of 58%."We should note the following: this does not take into consideration the need for clothing, medical expenses, etc. Also it does not mention that sugar work is seasonal. Therefore, a sugar-cane worker may be out of work some times up to 6 months in one year.
Facts in the Bird Report disputes the figures given by the Department of Labor. Bird, based on an investigation conducted by the Brookings Institute, set sugar-cane wages much lower. The data also showed that the average family was larger than previously indicated. In his report Bird portrays the living conditions of the Puerto Rican sugar-cane worker far worse, if such is possible:
"After making allowances for seasonality of employment, supplemental labor of women and children...various agencies have estimated that the typical wage income of sugar laborers is around $ 170.00 a year. A survey of family wages made by the Brookings Institute in 1929, when wages were at a higher level than the present, indicated that families average 8.1 persons, the average worker per family being 1.8, the average weekly income was $ 6.71; $ 3.49 per worker; and .85 cents per person. This resulted in a disposable income of approximately 12 cents per person per day to cover all daily requirements. These families spent .94 cents of their weekly earnings for food, the largest single item being polished rice, a dog's diet."Bird was blunt but honest in his analysis . To make his point further he made the following comparison: "Twelve cents per person per day is only four cents more than the food required for feeding a hog in the United States..."
Table Showing the Distribution of Workers (Males) Employed in the Sugar
Cane Planting in Puerto Rico During the Years 1932-1934, with Reference
to the Wages
per hour Paid in Plantations Inspected by the Department of Labor.
| Under 5 cents per hour 679
5 cents and under 6 cents per hour
6 '' '' '' 7 '' '' ''
7 '' '' '' 8 '' '' ''
8 '' '' '' 9 " " "
9 " " " 10 " " "
10 " " " 11 " " "
11 " " " 12 " " "
12 " " " 13 " " "
13 " " " 14 " " "
14 " " " 15 " " "
15 " " " 16 " " "
16 " " " 17 " " "
17 " " " 18 " " "
18 " " " 19 " " "
19 " " " 20 " " "
20 " " " 22 " " "
22 " " " 24 " " "
24 " " " 26 " " "
26 " " " 28 " " "
28 " " " 30 " " "
30 " " " 32 " " "
32 " " " 34 " " "
34 " " " 36 " " "
36 " " " 38 " " "
40 " " " 42 " " "
42 " " " 45 " " "
45 " " " 50 " " "
50 cents and over per hour
Total of workers per year
Since the sugar-cane worker never earned wages that could allow him to have an adequate standard of living, the ramifications of his deplorable earnings were many. The most significant was death. The sugar cane areas had the highest mortality rates in the island. Furthermore the principal cause was malnourishment. The illnesses that hounded the sugar-cane worker had almost, been eradicated throughout the island by 1935. These were enteritis, tuberculosis and diarrhea. (see Bird. p. 43) To find the reason why the deaths from tuberculosis were so high among the sugar-cane worker one has only to examine the housing conditions under which they lived. Since turbeculosis is mainly transmitted by breathing, the living space shared by a family was of foremost importance. Once again, in a inspection of living quarters, the Department of Labor found that the housing situation of the sugar-cane worker was deplorable. Furthermore, it concluded that it did not comply with the minimum requirements of the Health Department.
Those requirements stated that each person should have at least an average of 500 cubic feet of living space and 3000 cubic feet of air. The inspection found that the average space was 305.4 and as low as 118.9 in the poorest areas. (see Report of Department of Labor. pp. 9-10) It was also reported that the average number of persons per house was 4.8. Under such conditions it is not difficult to understand the relentlessness of tuberculosis.
To better grasp the living conditions under which
the sugar-cane worker had to live let us use simple math. The highest wages
(average) made by a worker were $ 43.55 per month. Out of this he had to
pay $ 6.20 per month for rent (average) and, as stated before, $ 17.50
per week or $ 70.00 per month for food. The total is $ 76.20 per month,
almost twice what they earned: "twelve cents per person per day is the
root of all evil; it ought to dispel the brutal contempt for these laborers."
From 1930 to 1935 the living conditions of the sugar-cane worker worsened. Their wages went down and prices went up. The situation was so distressing that the Department of Labor had to acknowledge the predicament of the workers. At the same time it tried to excuse its inability to improve it or to force the sugar industry to do so:
"...we assert that the trouble with our workers is not the lack of civilization but the poverty under which they labor...some contend that no higher wages can be paid to the Puerto Rican sugar laborers because what they accomplish is not worth more. This is but begging the question; it ignores the fact that they do not accomplish more because with such starving wages, they cannot properly feed themselves...the thing to wonder at is not that they do so little but rather that they accomplish so much. The government, however...has been doing all it can to improve the conditions above set forth...we have a ray of hope in the darkness of despair of our people."No one could have captured how the misery and hopelessness was devouring the island and its people better than Puerto Rico's national composer Don Rafael Hernandez. In 1932, when the Great Depression was engulfing Puerto Rico, Don Rafael wrote "Lamento Borincano" or Borican Lament. This song illustrated the despair of the Jibaro and his perseverance. His song became the hymn of the 1930s and a picture of history subsequently. Here are some of its lyrics roughly translated:
'el jibarito' goes
singing like this,
thinking like this,
dreaming like this
on his way:
'if I sell my goods
a new dress for my mother
I'm going to buy.
everything is deserted
the town has died from neediness
We can hear the wailing
in my God forsaken Borinquén.
After more than three decades in Puerto Rico the economic track-record of the sugar industry was one of success. It had managed to grow beyond its own expectations. And in spite of the economic depression it fulfilled its primary mission to provide dividends to its stock-holders. During the times of economic crisis the sugar industry managed to maintain its earnings above any other industry in the island. It accomplished this feat by undermining all legal precepts and coercing all legitimate and lawful institutions that appear powerless in the face of the sugar industry.
In contrast to the prosperity experienced by the
sugar industry the labor force did not succeed in bringing about the same
results. Furthermore, the sugar industry resisted, adamantly, in sharing
its revenues with the workers. Thirty seven years after the Americans arrived
in Puerto Rico promising the islanders all the benefits that "Democracy
and Republicanism" brought to the American worker, the situation of the
Puerto Rican Sugar-cane worker was, nevertheless, as deplorable as ever.