amount of the P. W. A. allotment which I had here last week, and the exact amount has slipped my mind. That is why I am unwilling to say that $4,700,000 is the correct amount. Mr. CRAWFORD. Are you familiar with the conferences that were had with Colonel Rigby, and Governor Winship on this same subject as to the requirements you would need for further financing on the Garzas project? Mr. THORON. I have at various times conferred with them, Governor Winship, Colonel Rigby and others, at the time we were considering financing of the Garzas project. Mr. CRAWFORD. Would you mind submitting for the record a fairly clear detailed statement showing how the funds were made available for the completion of the Garzas project tying it in as best you can with the $4,700,000 figure used by Mr. Lucchetti? Mr. THORON. A statement showing the source of funds? Mr. CRAWFORD. Yes; showing the source of funds which have been made available, specifying the bond issues if any, their terms, that is, the amount, rate of interest, grants, and so forth, tying it in as best you can with the $4,700,000 figure. Mr. THORON. Yes, sir. (The statement referred to is as follows:) FEDERAL WORKS AGENCY PUBLIC WORKS ADMINISTRATION-STATEMENT IN REGARD TO THE GARZAS HYDRO-ELECTRIC PROJECT (PWA Docket No. P. R. 1084-P-F) The Public Works Administration has made an allotment of $1,235,000 by way of grant and $1,510,000 by way of loan, to be secured by bonds payable primarily from the revenues of the undertaking and additionally from any available revenues of the system of the Utilization of Water Resources. The offer to purchase the bonds was conditioned upon the enactment of legislation satisfactory to the Administrator. Act No. 21 of the Second Special Session of the Fourteenth Legislature of Puerto Rico, approved June 17, 1939, was accepted by the Public Works Administration as compliance with that condition. The Public Works Administration is informed that there has been expended on the dam, tunnels and appurtenances, prior to the Public Works Administration allotment, the sum of $2,058,572.68, under the auspices of the Puerto Rico Reconstruction Administration, and that there has also been expended the sum of $70,689.99 for transmission and distribution lines, from an allotment by the same agency. Public Works Administration is not aware of the need for any additional fund over and above those already expended and the unexpended portion of the Public Works Administration allotment to carry the project to completion. B. W. THORON, Director, Finance Division. APRIL 4, 1940. Mr. CRAWFORD. State whether or not there are any reservations made by your division or your department with reference to pending or prospective legislation in the event it does not materialize whether these funds will be available. Mr. THORON. In regard to any legislation now pending? Mr. CRAWFORD. Yes; or prospective legislation. Mr. THORON. Or prospective? Mr. CRAWFORD. Yes. I want to know if there is any reservation on the use of those funds which you will schedule. Mr. THORON. I can't state now that other than the ordinary P. W. A. restrictions which require compliance with the usual wageand-hour regulations and expenditure of the funds for which they are indicated there are no reservations on the P. W. A. loan or grant. Mr. CRAWFORD. If you prepare a statement the way I have outlined there I think it will answer all my questions in that respect. Now, are you familiar with the statement published by the department of government showing the amounts and purposes for which funds allocated to the Puerto Rican Reconstruction Administration are being expended? Mr. THORON. I am not familiar with any statements in regard to the Puerto Rico Reconstruction Administration. Mr. CRAWFORD. I think those are all the questions I care to ask the witness, Mr. Chairman. The CHAIRMAN. Are there any further questions, ladies and gentlemen of the committee? Mr. OSMERS. You have referred to this bill? Mr. THORON. H. R. 8239? Mr. OSMERS. Yes. Mr. THORON. Yes, sir. Mr. OSMERS. In your opinion, do you see any reason why the Government of the United States should enact this legislation when the Puerto Rican Legislature has, apparently, shown a disposition to act along similar lines? Mr. THORON. As I stated before, if legislation which did not contain certain serious disabilities were enacted by the Puerto Rican Legislature and there were no question of its authority to declare bonds not to be a debt of the people of Puerto Rico, I do not think this would be so important. Mr. OSMERS. Well, of course, the Governor has not acted upon the bill down there yet, and we are just talking about proposals in respect to that legislation there. Mr. THORON. Yes. Mr. OSMERS. Of course, I seriously question as a matter of broad policy, of course, aside from the narrow question that we are discussing and that you are prepared to testify upon, the extent to which this Government should enter into Puerto Rican affairs. Mr. THORON. Yes. Mr. OSMERS. We want these insular possessions to stand upon their own feet, and to finance themselves, and to legislate for their own benefit, and we have provided them with an organic law which apparently has that objective in mind, and I am very happy to hear your testimony that if appropriate legislation were passed by the Puerto Rican Legislature that they should be the ones to enact the legislation. Mr. THORON. If they have full authority to do it under the Organic Act. Mr. OSMERS. Could you see any great hardship, or could you see any evil consequences in the Puerto Rican Legislature stating that these bonds should become a debt upon the people of Puerto Rico? Mr. THORON. I think that would change the fundamental basis of the whole thing. The intent both of the Puerto Rican bill and of this bill is to promote the development of this enterprise without it becoming a burden in any way, directly or indirectly, on the insular treasury. To insert such a provision would be to destroy the whole object which is sought to be attained in both bills. Mr. OSMERS. In other words, to make a self-supporting power system? Mr. THORON. Yes. There is, I understand, only about $3,000,000I can give you a statement as to the outstanding debt of the people of Puerto Rico prepared in the Interior Department which shows an available balance of only $3,415,681-of bonds which could be issued for all purposes under the Organic Act. Mr. OSMERS. Certainly that is a very narrow margin before they reach the limit. Mr. THORON. Yes. The CHAIRMAN. Do you want to insert that in the record, Mr. Thoron? Mr. THORON. Yes, if the committee cares to have it. The CHAIRMAN. Is there any objection? Mr. MILLS. What is it? Mr. THORON. It is a table of the debt of the people of Puerto Rico, as to debt limit. Mr. MILLS. I should like to have that in the record, Mr. Chairman. The CHAIRMAN. Are there any objections? The Chair hears none. It is so ordered. (The following papers were filed by Mr. Thoron in connection with his statement:) PUBLIC INDEBTEDNESS OF PUERTO RICO Under the act of Congress approved March 2, 1917 (sec. 3), commonly referred to as the Organic Act of Puerto Rico, as amended, the insular government and the municipalities of San Juan, Ponce, and Mayaguez are permitted to incur public indebtedness up to 10 percent of the aggregate tax valuation of their property; each of the other municipalities is prohibited from incurring a similar indebtedness in excess of 5 percent of the aggregate tax valuation of its property. The aggregate assessed valuation of the taxable real and personal property in the island of Puerto Rico on September 30, 1939, amounted to $312,573,915; therefore, the amount of public indebtedness, which the government of Puerto Rico is authorized to incur within the 10-percent limitation, is $31,257,391. The following bonds were outstanding as of January 2, 1940: Hydroelectric system (Toro Negro project) of 1931. Hydroelectric system (Toro Negro project) of 1932-- $500, 000 500, 000 Irrigation (Guayama or south coast) of 1925. 250,000 125, 000 500, 000 Irrigation (Guayama or south coast) (refunding) of 1935. 120, 000 600, 000 Hydroelectric_ Borrowing capacity of the insular government, Jan. 2, 1940 Bonds outstanding. Deduct: Refunding (municipal) 4 percent electric-power revenue___ Sinking funds (insular): $25, 765, 000 1,055, 500 $27, 440, 500 $541, 666 Statement of bonded indebtedness of Puerto Rico, Dec. 31, 1939 Puerto Rico 4-percent ment. $700,000 400,000 250,000 400,000 200,000 200,000 500,000 1,000,000 250,000 |