Department's real property transactions during the period August 1955 to March 1959, observed as follows:

"This comparison is proof of the effectiveness of the real property review program as it is administered by the Assistant Secretary of Defense (Properties and Installations)."

The vagueness of the language of article VII, the lack of definition of terms therein, and the failure to set up specific procedures which would be feasible make this article of the bill objectionable.

Article VIII of this proposed bill in its present form is also objectionable. This article purports to transfer harbors, streams, bodies of water and submerged lands, in and around Puerto Rico, to that Commonwealth. Article VIII seems to attempt to follow the stated purpose of the Submerged Lands Act (43 U.S.C. 1301); namely, the transfer of ownership of land beheath navigable waters, although here the transfer would be to the Commonwealth, rather than to a State. It is apparent, however, that in this attempt, article VIII fails short of the act in some respects and in others, attempts to go too far.

Because of the magnitude of problems that this legislation could create for the military departments in the land and water areas, it is the recommendation of the Department of Defense that consideration of those portions of S. 2023 concerning land and water areas be postponed until a thorough study of the problems involved can be made.

This report has been coordinated within the Department of Defense in accordance with procedures prescribed by the Secretary of Defense.

The Bureau of the Budget advises that there is no objection to the submission of this report.

Sincerely yours,

HON. JAMES E. MURRAY,

R. L. KIBBE,
Captain, U.S. Navy,

Deputy Chief of Legislative Affairs

(For the Secretary of the Navy.)

DEPARTMENT OF THE INTERIOR,

OFFICE OF THE SECRETARY, Washington, D.C., September 11, 1959.

Chairman, Committee on Interior and Insular Affairs,
U.S. Senate, Washington, D.C.

DEAR SENATOR MURRAY: This will reply to your request for the views of this Department on S. 2023, a bill to provide for amendments to the compact between the people of Puerto Rico and the United States.

Because the bill relates largely to specialized matters outside the particular competence of this Department, we cannot make a recommendation as to whether it should or should not be enacted. As will appear below, however, we fully support what we understand to be the principal objectives of the bill, and we consequently consider that suitable legislation to achieve those objectives should be enacted.

Beginning with the enactment in 1947 of the bill authorizing the people of Puerto Rico to elect their own Governor (61 Stat. 770), the Congress has displayed its confidence in the maturity and wisdom of the Puerto Ricans and in their ability to manage their own affairs. It reaffirmed that confidence in 1950 and again in 1952, by enactment of Public Law 600 of the 81st Congress (64 Stat. 319), by which the people of Puerto Rico were authorized to draft their own constitution, and Public Law 447 of the 81st Congress (66 Stat. 327), by which the constitution so drafted was ratified by the Congress, with certain modifications. By these actions, the Congress has given meaning to the statement of Elihu Root of 60 years ago that "*** it is our unquestioned duty to make the interests of the people over whom we assert sovereignty the first and controlling consideration in all legislation and administration which concerns them, and to give them, to the greatest possible extent, individual freedom, self-government in accordance with their capacity, just and equal laws, and opportunity for education, for profitable industry, and for development in civilization."

These words define accurately what we conceive to be the responsibility of the United States with respect to the people of our offshore areas. It is in light of that responsibility that we have examined S. 2023, relating to Puerto Rico's status and to the rights and responsibilities of her people.

As we read it, S. 2023 is designed to achieve at least four basic objectives which we regard as useful and laudatory. The bill would, first, attempt to clarify the legal status of the Commonwealth of Puerto Rico and its relationship to the Federal Government. Inasmuch as considerable confusion has existed on these subjects since 1952, as evidenced particularly by conflicting judicial decisions, we think it eminently desirable for the Congress to consider anew what that status and relationship were intended to be as a result of the laws giving rise to the Commonwealth; and, by enactment of appropriate new legislation on the subject, to make clear what Puerto Rico's status and relationship to the United States should be, at least for the immediate future. The reexamination of these matters seems to us timely and desirable.

Secondly, S. 2023 anticipates the assumption by the government of the Commonwealth of increased functions and responsibilities, and this seems to us a logical step. It is clear to all who are familiar with developments in Puerto Rico in the last decade that its progress has been extraordinary, and it is thus reasonable but no less commendable, for the people of Puerto Rico to wish to move forward in assuming a greater measure of responsibility. This willingness, as evidenced by the spirit of article VI of the bill, for example, seems to us to do great credit to the people of the Commonwealth.

Thirdly, the bill further evidences Puerto Rico's willingness to assume a greater measure of fiscal responsibility. Although the internal revenue laws of the United States, including the income tax laws, would in large part remain inapplicable to Puerto Rico under article III, a change of some consequence with respect to the excise tax treatment accorded to Puerto Rican products would result from article III (d). Under existing law, Puerto Rican products brought to the mainland are subject to the same Federal excise tax as applies to similar products of domestic manufacture, but such tax is paid over by the Federal Government to Puerto Rico. Under the provisions of article III (d), Puerto Rican products shipped to the mainland would be subject to a Puerto Rican tax (which is not now the case), but they would also be subject to the U.S. tax to the extent of whatever difference might exist between the United States and the Puerto Rican tax. This latter amount would be paid to the Federal Treasury, rather than to the Puerto Rican Treasury. We have been informed that this provision may result in an increase of Federal revenues to the extent of approximately $4 million annually. The amount will, of course, depend upon the rates adopted by Puerto Rico concerning its own excise tax. If its tax should rise to the level of the Federal tax, the full revenue from this source would accrue to Puerto Rico, and none would come to the Federal Treasury. So long as the Puerto Rican tax does remain below the Federal level, however, the Federal Treasury will benefit from the provisions of article III(d). We are not in a position at this time to endorse the specific provisions of article III(d), but we applaud the spirit which they manifest.

Finally, S. 2023 would amend the Federal Relations Act in order to remove provisions which are obsolete or inappropriate in light of Puerto Rico's status. We consider this objective desirable. For example, we see no reason to perpetuate the debt limitations now contained in section 3 of the Federal Relations Act (48 U.S.C., sec. 745), and consider that this is a subject which the people of Puerto Rico should control, through the amendment of their constitution as anticipated by section 2 of the bill. We would similarly agree that section 11 of the Federal Relations Act (48 U.S.C., sec. 794), should be deleted as obsolete. Section 11 provides that reports required by law to be made by the Government of Puerto Rico to the United States be submitted to the head of the department designated by the President, and that the President may place matters pertaining to Puerto Rico in the jurisdiction of such department. This Department formerly had executive branch responsibility for Puerto Rico. No longer, however, are any reports required, and no longer does this Department or any other exercise supervision over Puerto Rico. The section should consequently be repealed.

To the extent that S. 2023 is designed to accomplish the foregoing purposes, we fully support its objectives. Other departments and agencies will comment upon detailed provisions of the legislation. We wish at this time to comment upon only one. The proposed new title of the basic law governing Puerto Rico's relationship with the Federal Government, i.e., "The Articles of Permanent Association of the People of Puerto Rico with the United States," implies to us a freezing of Puerto Rico's current status, and it appears to be designed to foreclose any future consideration of the status question. This administration has made clear that it seeks to keep the door open for the people of Puerto Rico to seek whatever status they prefer, within the limits of the Federal Constitution. In our view, the people of Puerto Rico should have complete freedom to decide

whether their ultimate destiny should be statehood, or independence, or a continuation of Commonwealth status. We recommend that the legislation, including the proposed title, be amended so as to insure that the question of Puerto Rico's ultimate status will be left open for future consideration by both the people of Puerto Rico and the Congress.

We believe that legislation to clarify Puerto Rico's status and to reaffirm our faith in the capacity of its people to govern themselves should be enacted at an early date. Such legislation will constitute a new indication of the Congress's regard for the "unquestioned duty" which Elihu Root described.

The Bureau of the Budget has advised that there is no objection to the submission of this report to your committee.

Sincerely yours,

ELMER F. BENNETT, Acting Secretary of the Interior.

Senator ALLOTT. Mr. Chairman, may I be heard for a moment at this time?

I have an executive meeting of the Appropriations Committee and it will be necessary for me to go there.

I do want to express, and I have previously expressed to the Governor this morning, my appreciation for his being here. It was my privilege to be in Puerto Rico last fall for 3 days, and I have been tremendously impressed with what has been accomplished there under his leadership.

I make this statement because I would not want him or anyone else to think I am leaving here simply because of lack of interest, but other duties make it necessary that I appear at another point.

Senator JACKSON. I understand that, Senator Allott, and I believe Senator Dworshak has a similar problem.

I think it might be helpful, Governor, if you sat up with the Resident Commissioner and you could both be there together. And if you want one of your assistants to be with you, that would be very fine. You may proceed.

STATEMENT OF DR. A. FERNÓS-ISERN, RESIDENT COMMISSIONER OF THE COMMONWEALTH OF PUERTO RICO

Commissioner FERNOS-ISERN. Mr. Chairman, I am grateful for the opportunity to appear in support of S. 2023 introduced by the distinguished chairman, Hon. James E. Murray. I have introduced a companion bill in the House of Representatives, H.R. 5926.

I shall be very brief in this supporting statement, in order that as soon as it is completed I may have, with your leave, the opportunity to present a very distinguished witness whose testimony I am sure you wish to hear. So I will not discuss the bill thoroughly and in detail at this time. I shall make only some general introductory remarks with reference to the background and the structure of the bill.

On March 19, 1959, the Governor of Puerto Rico, Hon. Luis MuñozMarín, approved a joint resolution of the Legislative Assembly of Puerto Rico, Joint Resolution 2 of the current session, to express in the name of the people of Puerto Rico the request that certain clarifications and modifications be made with reference to the present Puerto Rican Federal Relations Act, as it was provided for by section 4 of Public Law 600 of the 81st Congress. In accordance with said. law, enacted in the nature of a compact, the Commonwealth was created, and it was proclaimed on July 25, 1952.

Joint Resolution 2 was forwarded both to the President of the Senate and to the Speaker of the House of Representatives, and I understand

that it was referred to the respective corresponding committees of both Chambers. S. 2023 and H.R. 5926 are intended to implement into law the proposals of the Commonwealth of Puerto Rico as embodied in said resolution.

In drafting the modifications and clarifications requested, it was found that it would be much more convenient to redraft completely the Federal Relations Act than to try to amend its language almost from beginning to end as, in fact, would have been necessary. For this reason the procedure has been followed of deleting the Federal Relations Act from section 4 of Public Law 600 and inserting in lieu thereof the "Articles of Permanent Association." It is so proposed in S. 2023. In order better to understand the need for this procedure, it should be recalled that the Federal Relations Act was not new legislation enacted for the first time with Public Law 600. Rather, it consists of certain sections of the 1917 Organic Act of Puerto Rico which were not repealed upon the creation of the Commonwealth.

It was provided by Section 4 of Public Law 600 that, upon the constitution of the Commonwealth becoming effective, a number of the 58 sections of the Organic Act would stand repealed, but 21 were to continue in force and effect, as the Puerto Rican Federal Relations Act. They were to serve as the framework of the Federal relationships of the Commonwealth. Moreover, the Federal Relations Act not only consists of those 21 remaining sections of the 1917 Organic Act, for in turn very important provisions of the first Organic Act, enacted in 1900, were continued in force and effect under section 58 of the Organic Act of 1917. By reference they are a part of the Federal Relations Act itself.

Such legislation, adopted as far back as 1900, or at least as far back as 1917, except for minor amendments later adopted, evidently cannot be expected to conform adequately to the situation created with the advent of the Commonwealth. If only for the purpose of modifying its language, so as to bring it up to date and make the proper references to the Commonwealth, a thorough revision of the Federal Relations Act would be called for. Since, in addition, several new developments are proposed, the necessity to redraft the Federal Relations Act becomes evident. As to the new title, it is apparent that "Articles of Permanent Association of the People of Puerto Rico with the United States" is more descriptive and better conveys the intent of a freely accepted association and of the permanence of that association.

Practically each of the 15 "Articles of permanent association" parallels and reflects, in identical order, a corresponding section of the Federal Relations Act. I suggest, therefore, that to see what clarifications and modifications are made in the Fedearl Relations Act by adopting the "Articles of permanent association," each one of the articles be compared with the corresponding section of the Federal Relations Act.

I might interpolate here, Mr. Chairman, that there is a pamphlet being printed where this work is done, and I have some advance prints, but they still need correction. I also would like to say that there are some provisions in the bill, the "Articles of permanent association," that are not found in the present Federal Relations Act but are present law, only that the subject matter has been dealt with separately in the course of time and they are brought into the "Articles

of permanent association" because they belong in the structure of relationships therein referred to.

Because of its importance and in order to evaluate the merits of the bill, I should like now to refer to the fact-which follows from what I have already said that the provisions of the Federal Relations Act dealing with fiscal and economic matters did not begin with the creation of the Commonwealth. When at the turn of the century, Puerto Rico ceased to be a part of the Spanish monarchy and began its life under United States sovereignty, the economy of Puerto Rico, from its previously existing pattern, readjusted itself to a new framework of fiscal and trade relations created by the Congress for Puerto Rico under the first Organic Act, that is, in 1900. Puerto Rico, therefore, has lived and developed within that framework for nearly 60 years. Such provisions of the Federal Relations Act as created this framework are fundamentally continued in the "Articles of Permanent Association." There is not much new in them in this respect. The most important change proposed represents an endeavor of the Commonwealth to contribute, to the extent that its economic development may gradually permit, to the support of the Federal Government.

Politically, the fundamental change brought about with the creation of the Commonwealth in 1952 is not to be found so much in what relates to the respective governmental functions and operations in Puerto Rico, in charge either of the Federal or the Puerto Rican Governments. The fundamental change was that the entity operating as a local government in Puerto Rico until 1952 ceased, and was substituted by another which has been operating in Puerto Rico since that date, in accordance with the terms of Public Law 600. Previously, under an Organic Act, enacted by the Congress, there was in Puerto Rico a government for the people of Puerto Rico. Since 1952, under a constitution adopted by the people themselves, there is in Puerto Rico a government by the people of Puerto Rico.

Since that date, and in order that the provisions of the Organic Act of 1917-together with the provisions of the Organic Act of 1900, which the Organic Act of 1917 continued-may have served the purpose of a Puerto Rican Federal Relations Act, it has been necessary to interpret them in the context of a new situation. This has offered difficulties and has given rise to litigation and debate. In reenacting The provisions of the Federal Relations Act, so as to dispel such difficulties and end debate, clarification of language is very important. The principles that are basic to the compact are, of course, of great importance. My point, however, is that the present bill clarifies and does not change these principles as we understand them.

Most of the concepts heretofore contained in the Federal Relations Act are carried into the "Articles of Permanent Association." This is evident proof of an important fact: The creation of the Commonwealth of Puerto Rico did not simply happen. The Commonwealth has been the result of a gradual evolution; of a continuous, uninterrupted process. In fact and reality, the beginning of the political concept which has evolved into the Commonwealth is to be found in the provision of the Organic Act of 1900, some of which, as we have seen, have stood the test of time to this date. The 1900 Organic Act organized the Puerto Rican people into a body politic: "The People