That Congress' power to dispose of the territory includes the power to "dispose" by contract or agreement was also demonstrated in Ashwander v. T.V.A., 297 U.S. 288 (1936). That case involved the validity of a contract of sale of electric energy from the Government to the Alabama Power Co. Plaintiffs argued that there was no constitutional authority for such an exercise of the power to dispose partially of the property or territory of the United States by contract. The court held, however, that this constituted a valid exercise of the constitutional power to dispose of property under article IV, section 3, clause 2. It held, referring to United States v. Gratiot, supra, that Congress could lease as well as sell lands; that it could dispose of lands or territory but reserve certain rights, such as salt springs; that it could dispose of lands but retain mineral rights; that it could mine minerals from its land and dispose of them; and that, therefore, it could convert water power into electric energy and validly dispose of it as well. In short (id. at 336): "*** it lies in the discretion of the Congress, acting in the public interest, to determine of how much of the property it shall dispose.'

(3) The effectiveness of compacts entered into pursuant to the territorial power. From these principles it follows that Congress may enter into an effective contract respecting its territorial powers. Its power in the territories has been derived from two sources: Article IV of the Constitution and the sovereign powers of the United States. In the exercise of its article IV powers Congress has authority to make contracts; in the exercise of its sovereign powers respecting the territories, Congress may here, as in other areas of sovereignty, make aggreements.

The binding nature of contracts entered into pursuant to the territorial power, including contracts with the people of a territory, was made clear in Stearns v. Minnesota, 179 U.S. 223 (1900). That case involved the interpretation of a contract made in 1850 between the United States and the Territory of Minnesota granting certain Federal land to the Territory in trust, before Minnesota was admitted as a State in 1858.

The Court said (249-250): "Acceptance by a trustee of the obligations created by the donor of a trust completes a contract. Such contracts, we have seen, have been frequent in the history of the Nation, and their validity has not only never been questioned, but has been directly affirmed. Tucker v. Ferguson, 22 Wall. 527, 22 L. ed. 805."

In Beecher v. Weatherby, 95 U.S. 517 (1877), the Court had before it an offer of what was carefully characterized as a "compact" (id. at 523) between the United States and the people of the Territory of Wisconsin, contained in the enabling act under which that State was later admitted to the Union. The offer was accepted and the "compact" completed by the people of the Territory acting through their constitutional convention, before admission to statehood. The Court affirmed that that "compact" was binding upon the United States (523-524):

"The convention which subsequently assembled accepted the propositions, and ratified them by an article in the Constitution, embodying therein the provisions required by the act of Congress as a condition of the grants. With that Constitution the State was admitted into the Union in May 1848, 9 Stat. at L. 233. It was, therefore, an unalterable condition of the admission, obligatory upon the United States, that section sixteen (16) in every township of the public lands in the State, which had not been sold or otherwise disposed of, should be granted to the State for the use of schools. It matters not whether the words of the compact be considered as merely promissory on the part of the United States, and constituting only a pledge of a grant in future, or as operating to transfer the title to the State upon her acceptance of the propositions as soon as the sections could be afterward indentified by the public surveys. In either case, the lands which might be embraced within those sections were appropriated to the State." [Emphasis supplied.] See also First National Bank v. Yankton, supra; Louisiana v. William T. Joyce Co., 261 Fed. 128, 132 (5th Cir. 1919).

The Northwest Ordinance, to be discussed more fully hereafter, also contained articles of compact respecting Congress' territorial power. So clear was the binding nature of the compact that Story used it as evidence of the fundamental national nature of the Constitution itself. Writing shortly before the Civil War on the then burning issue of the extent to which the Constitution was a compact between States which each individually was competent to withdraw from, he said (1 Story on the Constitution [Bigelow Ed. 1891], 267-8 n. 1):

"The Ordinance of 1787, for the government of the Northwestern Territory, contains (as we have seen) certain articles declared to be 'articles of compact'; but they are also declared to 'remain forever unalterable, except by common consent'. So that there may be a compact, and yet by the stipulations neither party may be at liberty to withdraw from it, or absolve itself from its obligations." [Emphasis supplied.]

There is, in short, no special rule in the case of the territories; history and a century and a half of practice of the United States respecting the territories clearly demonstrates Congress' powers to enter into effective agreements pursuant to its territorial powers.

C. Compacts made pursuant to the territorial power may deal with governmental rights (1) The Northwest Ordinance was adopted by the Continental Congress under the Articles of Federation in 1787. (1 Laws of the United States, 475; 1 Stat. 50, 51 n.) It made provision for the interim government of the territory by a governor and secretary to be appointed by Congress and subsequently by a territorial legislature to be elected by the people. The Ordinance then went on to provide, as follows:

"And for extending the fundamental principles of civil and religious liberty, which form the basis whereon these republics, their laws and constitutions are erected; to fix and establish those principles as the basis of all laws, constitutions, and governments, which forever hereafter shall be formed in the said territory; to provide also for the establishment of States, and permanent government therein, and for their admission to a share in the federal councils on an equal footing with the original States, at as early periods as may be consistent with the general interest.

"It is hereby ordained and declared, by the authority aforesaid [following italic supplied. That the following articles shall be considered as articles of compact between the Original States, and the people and States in the said territory, and forever remain unalterable unless by common consent to wit:"

The "articles of compact" guaranteed freedom of religion (art. I); insured the inhabitants of the territory the benefits of habeas corpus and jury trial, “of a proportionate representation of the people on the legislature," bail, moderate fines, and freedom from laws interfering with private contracts (art. II); stated that education would be encouraged and the rights of Indians protected (art. III); guaranteed that the territory would remain a part of the United States, that the inhabitants would be subject to the federal debts and taxed according to a "common rule and measure" and that the navigable waters would be common highways and "forever free ***without any tax imposed, or duty therefor" (art. IV) insured that from three to five States would be formed from the territory to be admitted on equal footing with the Original States whenever any had 60,000 "free inhabitants" (art. V); and prohibited slavery in the territory (art. VI).

The compact of the Northwest Ordinance continued in effect under the Constitution. The draftsmen of the Constitution, who were sitting in Philadelphia at the same time that the Continental Congress was meeting in New York, intended to construct a government with the capacity to take on the obligations of that compact. One of the first official acts of the First Congress under the new Constitution was the act of August 7, 1789, 1 Stat. 50, the purpose of which was stated as follows:

"Whereas, in order that the ordinance of the United States in Congress assembled, for the government of the territory northwest of the river Ohio may continue to have full effect, it is requisite that certain provisions should be made, so as to adapt the same to the present Constitution of the United States." [Emphasis supplied.]

The new provisions made by the act of August 7, 1789, did not in any way affect the binding terms of the articles of compact but were limited to administrative matters, including the provision that the President, rather than the Continental Congress, would appoint the officers of the Territorial government. These articles of compact dealt with and fundamentally affected the manner in which the sitting Congress or future Congresses could thereafter exercise its powers in the Territory. For example, although Congress may dispose of Territorial powers completely, such as in the case of the Philippines, Congress in this instance bound itself to exercise its Territorial powers in such a way as to retain the Northwest Territory as part of the United States. Congress, to take another example, also may exercise its Territorial powers in such a way that the personal guarantees and equality provisions of the Constitution do not extend to the Territory and it is not incorporated into the United States. However, under the Articles of Compact of the Northwest Ordinance, Congress had bound its hands and those of future Congresses so that constitutional rights, including trial by jury, could no be denied people of the Territory without their "common consent. To cite a further example, the waterways of the Territory might have been subject to congressional control and regulation, and trade thereon could have been subject to duties and imports. Yet, in the articles of compact, Congress committed itself to the proposition that these waterways would remain free highways

of commerce. Finally, and perhaps most significant for the future, by agreement in the articles of compact, Congress was bound not to permit slavery in the Northwest Territory.

(2) As Story pointed out, this compact bound Congress in the exercise of its otherwise complete Territorial power (2 Story on the Constitution, Bigelow Ed. 1891, Sec. 1328):

"The power of Congress over the public territory is clearly exclusive and universal; and their legislation is subject to no control, but is absolute and unlimited, unless so far as it is affected by stipulations in the cessions, or by the ordinance of 1787, under which any part of it has been settled." [Emphasis supplied.] (3) This power of Congress to dispose of a part of its Territorial prerogatives and retain others by compact, first illustrated in the Northwest Ordinance, has been confirmed by the courts. As stated in Justice Catron's concurring opinion in Mayor of Mobile v. Eslava, 41 U.S. (16 Pet.) 234, 258-259 (1842), referring especially to "compacts":

"Whilst Territories, the people inhabiting the countries now composing the new States were subject to the will of Congress; unrestrained further than restrictions were imposed by the Federal Constitution; and by compact, where the lands had been ceded by an original State, or by treaty, when acquired from a foreign nation. The power of Congress was, and now is, in the Territories, almost absolute. ***" [Emphasis supplied.]

Again, in First National Bank v. Yankton, 101 U.S. 129, 133 (1880), the Court affirmed the power of Congress to "grant away" its sovereign Territorial power through contract. There, referring specifically to the power to overrule legislation by the Territorial legislature, the Court said:

"In the Organic Act of Dakota there was no express reservation of power in Congress to amend the acts of the Territorial legislature, but none was necessary. Such a power is an incident of sovereignty, and continues until granted away." [Emphasis supplied.]

From these principles, and from the early example of the Northwest Ordinance, it follows that Congress may, in the exercise of its power to make compacts, deal with governmental rights in the Territories.

D. Congress may relinquish or dispose of a part of its powers and retain others.

Congress has exercised its right to relinquish or dispose of its Territorial powers on many occasions.

(1) The most typical example of disposition or relinquishment of Territorial power is in connection with the creation of new States to be admitted to the Union, carved out of territory previously subject to Congress sole jurisdiction. Typically, in such cases, Congress first enacts an enabling act. This act authorizes the people of a Territory to call a constitutional convention and adopt a constitution. At this point, the people of the Territory enter upon the exercise themselves of sovereignty. Congress has stayed its hand so that they may draw up their own fundamental instrument of local government. This constitution is then submitted to Congress for approval. Upon approval by Congress of the constitution of the new State, Congress Territorial power over the area is at a complete end. The area has become a State and is admitted to the Union on an equal footing. Thereafter the sovereign powers are exercised, not by Congress, but by the people of the State. Congress then holds only the same limited consitiutional powers in respect to the new State as it does in respect to any other State. (See, e.g., Permoli v. New Orleans, 44 U.S. (3 How.) 589, 609 (1845).)

(2) Another example of total relinquishment of Congress sovereign Territorial powers, wholly unrelated to the process of creating a new State, was the Philippine Republic. The Philippine Islands were acquired by the United States under the same provision of the Treaty of Paris as Puerto Rico. The first Philippine Independence Act, the Hare- Hawes-Cutting Act of 1933, (47 Stat. 761), enacted by Congress over the veto of President Hoover, failed of ratification by the Philippine Legislature. The Tydings-McDuffie Act of 1934 (48 Stat. 456) became effective on acceptance of the Philippines, according to its terms, on may 1, 1934. The act authorized a local constitutional convention to draft a constitution for the government of the newly named Commonwealth of the Philippine Islands, specified certain required provisions, and provided that after the President of the United States certified its conformance thereto the proposed constitution be submitted for ratification to Philippine voters. It was further declared that on July 4, following the expiration of a period of 10 years from the date of inauguration of the new government under that constitution, the President of the United States would proclaim the complete independence of the Philippine Islands and the people thereof.

On July 4, 1946, after all of the conditions brecedent to independence stated in the Independence Act of 1934 had been met and the people of the Philippines had "clearly demonstrated their capacity for self-government," the President of the United States proclaimed that the "United States of America hereby withdraws and surrenders all rights of possession, supervision, jurisdiction, control, or sovereignty now existing and exercised by the United States of America in and over the Territory and people of the Philippines" and that he, for the United States, thereby recognized "the independence of the Philippines as a separate and selfgoverning nation" and acknowledged "the authority and control over the same of the government instituted by the people thereof, under the constitution now in force" (60 Stat. 1352, 1353).

(3) In the case of the creation of new States by the people of a Territory, and in the case of the Philippines, Congress eventually relinquished or disposed of all its Territorial powers. However, there is nothing which requires Congress in exercising its Territorial powers to make a total or complete disposition or relinquishment. It may dispose of a part of its powers and retain another.

The Northwest Ordinance represents an early example of partial relinquishment. It provided that Congress was barred from the exercise of certain particulars of its Territorial power, such as the imposition of tariffs and duties on the waterways; at the same time, however, the Territories remained subject to Congress power, except "so far as it is affected *** by the ordinance of 1787" (2 Story on the Constitution, Bigelow Ed. 1891, sec. 1328).

In addition, the Supreme Court has on several occasions confirmed the power of Congress to dispose of a part of the territory or property of the United States, or a part of its power in respect thereto, when it deems partial disposition appropriate. In Ashwander v. TVA, supra, the Court referred specifically to the Territorial clause and to Congress power to contract in respect to both the Territory and other property of the United States, and said (id. at 336): "*** it lies in the discretion of the Congress, acting in the public interest, to determine of how much of the property it shall dispose."

Finally, the Philippine Independence Act also may be construed as a partial disposition of Congress power over the Territory at the time of its enactment. By the act Congress provided that people of the Philippines were to draw up the basic instrument of their government and that the Commonwealth under that constitution would become independent within 10 years and Congress powers withdrawn.

There can be no doubt that this action by the Congress represented an effective step for the Phillippines beyond its previous status. As stated in Cincinnati Soap Co. v. United States, 301 U.S. 308, 319 (1937): "Undoubtedly, these acts have brought about a profound change in the status of the islands and in their relations to the United States." [Emphasis supplied.]

The Supreme Court has never had occasion to consider directly the extent to which Congress was bound by the provision of the act to the effect that the newly constituted Government of the Commonwealth of the Philippines would be granted independence and that Congress would eventually withdraw all its territorial powers. Congress never attempted to amend or modify the act unilaterally. The procedure for the complete withdrawal of territorial power set forth in the act was, however, analyzed in Hooven & Allison v. Evatt, 324 U.S. 662, 673-674 (1945). The Court there said, by way of dieta, that the area was subject to plenary power of Congress. It is important to realize, however, that this statement referred to the situation prior to 1934 when the Philippine Independence Act was passed. Until the Philippine Independence Act, of course, the area was subject to plenary power. However, that process "culminated" with the 1934 act. The Court at 324 U.S. 676 accurately described the status of relationships after the act in the following language:

***The United States retained certain powers with respect to our trade relations with the islands, with respect to their financial operations and currency, and the control of their foreign relations. *** Thus, by the organization of the new Philippine Government under the constitution of 1935, the islands have been given in many aspects, the status of an independent government, which has been reflected in its relations with the outside world." [Emphasis supplied.]

In short, Congress may dispose of or relinquish its territorial powers, partially or completely, at once or progressively. It may do this by compact, just as it may exercise all its other "supreme" powers by contract. And these compacts or contracts with the people of a territory are as binding and effective as any other in which the trust of the Government of the United States is pledged.

II. THE COMPACT BETWEEN THE UNITED STATES AND THE PEOPLE OF PUERTO RICO

We have in the preceding section considered the question of the power of Congress to enter into binding compacts with the peoples of U.S. territories. We shall now examine whether such a compact was entered into upon enactment by Congress of Public Law 600 and its acceptance by the people of Puerto Rico. In view of the historical use of the compact technique in American political history, to which we have referred above, it was natural that this instrumentality should be used to resolve the question of Puerto Rico's status. Indeed, as we shall discuss, the compact theory figured largely in Puerto Rican political thought for many years. Specifically, the great example of the Northwest Ordinance was a source of inspiration to some of those who sought a status for Puerto Rico that avoided independence and nationalism, on the one hand, and insured freedom, dignity, and democracy, on the other. (See, for example, the article in 1946 of Hon. Luis Munoz Marin, referred to hereinafter.)

From the earliest days of its acquisition by the United States, the position of Puerto Rico in relation to the United States had been a matter of special treatment. It was not, like Hawaii and Alaska, incorporated in the United States. Its fiscal and political systems were not integrated with those of the Federal Union. The taxing scheme of the Federal Union was not extended to Puerto Rico, nor were all of the provisions of the Federal Constitution. Puerto Rico was not being prepared for assimilation or integration as a federated State of the Union. It was an "unincorporated" territory, as distinguished from areas which were pointed toward statehood. See Balzac v. People of Porto Rico, 258 U.S. 298 (1922).

At the same time, Puerto Rico was not definitely pointed toward independence. like Cuba and the Philippines. Its geographical, cultural, and economic position obviously prevented its treatment by either of the obvious methods. Indeed, the Foraker Act and the Jones Act took cognizance of Puerto Rico's special situation and its need for tailored treatment by economic and political provisions which were unique. Basic to the governmental arrangements which Congress made for Puerto Rico prior to 1950 was a progressive increase of self-government, but these provisions retained the fundamental territorial or "colonial" characteristic; that is, they were solely the creation of the ruling power; they were not based upon consent; and they were subject to change at any time by the unilateral action of the ruling power.

By 1950, Puerto Rico had reached the point where continuation of territorial or "colonial" government was impossible. It was a constant source of hostile propaganda, harmful to the United States and profoundly distressing to the people of Puerto Rico. It was the basis for terrorist activity by a small band of "nationalists"-activity which has been nonexistent for the past several years, incidentally. Because of this unrest, the territorial rule was a serious deterrent to economic progress in Puerto Rico. The technique chosen to resolve this problem resembled that which the United States had used in dealing with the final governmental arrangements for other territories. In the other instances, in agreement with the people of the territory, congressional sovereignty was relinquished; Congress vested or revested the people of the territory with sovereign rights; and the territory became a federated state or an independent state. In the case of Puerto Rico, neither of these ultimate arrangements was desired or practical. Puerto Rico did not want to or could not be either a federated state or independent. Accordingly, it became as its title in Spanish states-a free and associated state: not federated as part of the Union, but possessed of self-government like a federated state, and associated with the Federal Union on mutually agreed terms. The important point, for present purposes, however, is that the process by which this was accomplished paralleled that of other territories in the sense that Congress, by agreement with the people, gave to the people of the territory certain of the rights which Congress possessed up to that point-essentially those relating to internal government. Beyond this point, instead of agreeing that ultimately the people of the territory and the United States would not be politically interrelated (as in the case of the Philippines) or that their relationship would be that of a federated state to Federal Union (as in the case of Alaska and Hawaii), it was agreed that the interrelationship would be on specific terms, mutually agreed. It was in this context that the compact was born. There can be no doubt that a compact between the parties was created.

A. The instruments of compact

The existence of a compact between the Government of the United States and the people of Puerto Rico is clearly seen from the very text of the constitutional