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The United States and the Economic Development of Puerto Rico

Published online by Cambridge University Press:  03 February 2011

Harvey S. Perloff
Harvey S. Perloff
Affiliation:
University of Chicago
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Extract

Puerto Rico became an insular possession of the United States following the Spanish-American War in 1898. Shortly thereafter the island was brought within the monetary and tariff structures of the United States, and mainland capital began to flow into the island, especially in the form of investments in the sugar industry. These factors were mainly responsible for shaping the Puerto Rican economy and for tying it closely to the economy of the United States.

Type
Articles
Information
The Journal of Economic History , Volume 12 , Issue 1 , Winter 1952 , pp. 45 - 59
Copyright
Copyright © The Economic History Association 1952

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References

1 For details, see Perloff, Harvey S., Puerto Rico's Economic Future (Chicago: University of Chicago Press, 1950), pp. 110–44Google Scholar; United States Tariff Commission, “Puerto Rico's Economy with Special Reference to United States-Puerto Rican Trade” (Washington, D.C., May, 1943Google Scholar; mimeographed); Sammons, Robert L. and Cestero, Belén H., Balance of External Payments of Puerto Rico, 1942–46 (Rio Piedras: Social Science Research Center, University of Puerto Rico, 1948)Google Scholar; and Cordero, Rafael de J., La Economia de Puerto Rico y sus problemas (San Juan: Departamento de Instrucción, 1949).Google Scholar

2 Free trade was actually established on July 25, 1901, by presidential proclamation, after the insular legislature had provided a system of local taxation in accordance with the provisions of the Foraker Act. Until that date, goods shipped between the island and the mainland were subject to a tariff amounting to 15 per cent of the regular tariff schedule then in effect on trade between the United States and foreign countries. The customs duties collected during that period were used to finance insular government operations.

3 This, of course, provides only a very rough approximation, considering the difficulties of estimating the “true” value of many types of investments. The study of Gayer, Homan, and James includes a careful estimate of the returns on absentee investment in the sugar industry. For the years 1923 through 1935, the total earnings of the three major American-owned companies were estimated to have been 10.2 per cent on the average annual investment in Rico, Puerto; The Sugar Economy of Puerto Rico (New York: Columbia University Press, 1938). pp. 152–56.Google Scholar

4 There is no doubt, however, that the relative gains and losses for Puerto Rico from its tariff assimilation with the United States shows a decided gain for the island. For a discussion of this point, see United States Tariff Commission, “Puerto Rico's Economy,” pp. 106–9.

5 For a description of this program, see United Nations, Economic Development in Selected Countries, II (February 1950), 182–118Google Scholar; Grace, and Tugwell, Rexford G., “Puerto Rico's Bootstraps,” Harper's Magazine, February 1947, pp. 160–69Google Scholar. An excellent statement of accomplishments, problems, and plans is provided by the Message of Governor Luis Muñoz Marin to the Seventeenth Legislature at its Third Session, May 14, 1951 (San Juan: Government Service Office, 1951).Google Scholar