Puerto Rico: U.S. Commonwealth
It’s been more than 100 years since Puerto Ricans gained U.S. citizenship, yet that bit of history can still come as a surprise to many Americans. With 3.2 million inhabitants, Puerto Rico has more American citizens than 21 U.S. states, yet fewer voting rights than all of them. The islanders can vote in U.S. primaries but can only vote for the U.S. president if they relocate to the mainland. Puerto Rico has had a delegate in the House of Representatives without voting rights since 1901. Other non-voting delegates include the District of Columbia, American Samoa, Guam, the Northern Mariana Islands, and the U.S. Virgin Islands.
For 400 years Puerto Rico was a Spanish colony until it was invaded by the U.S. in 1898 during the Spanish-American War. With the Arabica bean introduced to the island in 1736, coffee had been a major industry there in the 1800’s, and production had soared in the central mountainous area with a growing market abroad. Unfortunately, when two hurricanes hit the island in 1899, coffee and sugar plantations were devastated. Farmers were forced to take loans so predatory that in 10 years U.S. banks and sugar companies owned the majority of Puerto Rican land.
In 1917 the Jones Act granted American citizenship to Puerto Ricans. Shortly after, 18,000 Puerto Ricans fought for the U.S. in World War I, and 65,000 served in World War II. The Great Depression caused a major migration of Puerto Ricans to the U.S. mainland in search of employment, particularly to New York City. A hurricane in 1932 also delivered a blow to crops in what had been an agriculturally prosperous period due to strong sugar and tobacco production.
In 1948 Congress passed an act to allow Puerto Ricans to elect their own governor. In 1952, Puerto Rico officially became a U.S. commonwealth, which allowed it to create its own constitution and granted it other powers of self-government.
In 1950, with a push to industrialize underfoot, the U.S. government and Puerto Rico launched Operation Bootstrap (Section 936), which gave tax breaks to mainland businesses to encourage relocating their production facilities to Puerto Rico rather than overseas, particularly pharmaceutical companies. At its peak, the island was home to 89 drug manufacturing plants. The initiative was generally a success for the island, but in 1996 President Bill Clinton signed a law that would phase it out over 10 years, removing the multibillion-dollar incentive for companies to operate there.
By 2006 the manufacturing companies were largely gone, and the global economy would soon be in a recession. Puerto Rico started issuing massive amounts of municipal bonds, essentially borrowing money to pay its bills. To sweeten the deal, the U.S. Congress allowed buyers of the bonds to be triple tax exempt: they didn’t have to pay local, state, or federal taxes on the bonds. Before long, the Puerto Rican government found themselves $70 billion in debt. However, due to a small amendment to a U.S. law in 1984, Puerto Rico cannot declare bankruptcy.
There has been much debate over whether Puerto Rico should become a U.S. state, but a bill proposing it has never made it to Congress. Meanwhile, benefits of U.S. statehood include an additional $10 billion per year in federal funds, the right to vote in presidential elections, higher Social Security and Medicare benefits, and a right for its government agencies and municipalities to file for bankruptcy.
Independent coffee farms still exist on the island, and Atilano is proud to soon be debuting a new coffee blend partially sourced from Puerto Rico, where our founder was born and raised.