Puerto Rico in the American Century: A History since 1898

Introduction

RESHAPING PUERTO RICO'S ECONOMY, 1898-1934 The first transformation of the Puerto Rican economy during the American Century took place in the immediate aftermath of the Spanish-AmericanWar. After a brief transition period, the ForakerAct of 1900 allowed for unrestricted trade between Puerto Rico and the United States. "An economic revolution from above and from the outside," as Miguel Guerra Mondragon put it, looking back from 1947, "was about to take place."1 Given the extraordinaryproductivity advantage of U.S. industry and agriculture , the installation of "free trade" betweenboth regions had severalimmediate and medium-term consequences in Puerto Rico. Export activities with an ample market in the United States, such as raw sugar, tobacco, and needlework industries, expanded tremendously. The income thus generated was increasingly spent on imports from the United States. The expanding sugar plantation economy reshuffled social relations in the coastal plains. Tobacco growing and cigar and cigarettemanufacturing also expanded and, like the sugar industry , attracted considerable U.S. capital investments. The needlework industry, which employed mostly women and children in their homes, also grew,above all after 1914. The principal market—indeed, practically the only market—for these products was the United States. By 1930, almost 95 percent of Puerto Rico's external trade waswith the United States. Bycontrast, coffee production entered a period of stagnation, crisis, and, after 1914, collapse. These shifts entailed changes in land tenure, income distribution, internal migration, and settlement; shifts also occurredin the relativeweight ofPuerto Rican and foreign owners of productive assets. Between 1900 and 1910, the population of Puerto Rico grew by 17.3 percent, but population in the canegrowing municipalities increased an estimated 45.4percent while population in the coffee-growing municipalities decreased by 4.2 percent. Guanica, the area where the largest sugar mill was erected, experienced phenomenal 2 MAP 2.1. Crop Distribution and Demographic Growth, 1900-1935 population growth of 121.4 percent in the same period.2 This tendency continued into the 19303 (seeMap 2.1). The working and domestic environment of most Puerto Ricans was deeply transformed as market relations penetrated into the core of the social fabric. If most rural dwellers had been propertylessbefore 1898, arrangements that in the past had allowed them some access to land for subsistencepurposes now gave way to a starker condition of wage dependence. The situation of wage earners was particularly precarious, since the sugar industry could offer employment only during five or six months of the year. Nevertheless, basic improvements in urban sanitation and health management helped reduce the death rate considerably, from 30 per 1,000 in 1899 to 18 per 1,000 in 1940-41. This, combined with a consistently high birth rate (around 40 per 1,000), led to rapid population growth during the decades following the U.S. occupation. Sugar, it should be underlined, wasthe decisivebut not the only sector of the Puerto Rican economy. By1935, sugarcane was grown in around one-third(34.5 percent) of all cultivated land (up from 15 percent in 1899). Coffee and tobacco combined accounted for another third of the total cultivated land. The remaining third was dedicated to food crops for local consumption. The undeniable centrality of sugar should not lead us to reduce the insular economy to a mere "sugar economy." Looking at the transformations of this period, World War I emerges as an important moment of change. The war coincided with the most prosperous period ever of the sugar industry, a deepening of the crisis in the coffee region, the beginning of a rapid expansion of a needlework industry, the largest and most successful labor mobilizations to date, and a quickening of migration to the United States, stimulated by the recruitment of Puerto Rican workers to war production activities in the United States. Colonial Initiatives, Native Hopes The economic consequencesof U.S. policies toward Puerto Ricowere not unexpected . Sugar interests in Puerto Rico, for example, eagerly demanded the lifting of all tariffs on Puerto Rican sugar going into the United States. Their woes during the three decades prior to 1898 explain their wager on free trade with the United States. World capitalism went through a long depression after 1873. The sugar industry washit byfalling prices,a symptom of the problem of overcapacitythat affected many other sectors. Competition between tropical cane sugar and RESHAPING PUERTO RICO'S ECONOMY * 35 European beet sugar sharpened. In Puerto Rico and other cane-growing areas, this context...