The emblem of membership will be a small American flag in the lapel or on left breast.. Any American citizen, male or female, is eligible for membership. No dues are assessed but voluntary subscriptions can be made to support specific enterprises. Men in uniform need no such proof of their loyalty. The fact that they are in service is ample proof of their patriotism, nevertheless their membership would be more than welcome. Because of the variety of interests in Puerto Rico I realize that there will be peculiar difficulties in starting and sustaining any such movement here. However, I think the idea is fundamentally sound and that we should send a letter to some magazine with a wide circulation such as say, Readers Digest. In our letter we would say that a small body of men interested in the public welfare began meeting weekly to talk over their problems. The movement grew until it embraced a good part of the leading citizens of San Juan. They decided to get together and fight their own battle for freedom. Even if this system doesn't work perfectly here, smaller American communities on the mainland might band together and form a tremendously strong body of public opinion to combat the forces of evil. Most of us are old enough to remember the days before and during the first World War days when laws were respected and obeyed far more than they have been since. Let us go back to creed of our fathers. It was more democratic and unifying than the present. Age of the smart chiseler and racketeer. EXHIBIT No. 9 Mr. Covo has advised that his remarks, which appear on page 221 of the hearings, concerned the following letter, dated April 26, 1943, received by him from Mr. B. W. Thoron, director of the Division of Territories and Island Possessions, Department of the Interior: DEPARTMENT OF THE INTERIOR, DIVISION OF TERRITORIES AND ISLAND POSSESSIONS, Washington, April 26, 1948. Mr. JACQUES Covo, San Juan, P. R. MY DEAR MR. Covo: Thank you for your letter of April 20 enclosing your report of the same date to Mr. Fortas. I am sorry to learn that relations between yourself and other Federal representatives in Puerto Rico have not been as close as I had hoped they would be. It seems to me, however, that you have perhaps devoted too much space in your report to criticism of others and their shortcomings rather than to setting forth any constructive suggestions to make the operation of the supply system more effective. A considerable portion of the duties of the Interior Department supply officer consists of reporting to the Division of Territories such facts as will make it possible to effect improvements in procedure both within the Department and within other Federal agencies. When you left Washington in March, there was a proposal under consideration to permit certain of the foodstuffs now being handled by Food Distribution Administration to be imported commercially. In order to carry out this proposal, it is essential that a detailed plan be worked out which will show the commodities to be transferred, the tonnages which may be required, and the method of allocating the proper proportion to each commercial importer. This is the type of specific plan which I expect you to prepare after consultation with the appropriate Federal and insular authorities, as well as informal consultation with experienced businessmen. As I see your duties, I feel that you should report as frequently as necessary on the various difficulties arising from the emergency supply program, both general merchandise as well as foodstuffs. As you report these serious difficulties would like to see them accompanied by suggestions for improvement. It must be kept in mind that the procedures on the basic phases of the program cannot be changed on a day-to-day basis. Hence the suggestions for improvement should be in line with existing procedure so far as possible. In reporting on such subjects as the black market, speculation, price control, food distribution, transportation, allocation of shipping space, various shortages, etc., it should be remembered that isolated cases or unrelated facts do not provide a basis for action here. It is only through accurate reporting of trends on each of these subjects that we here in Washington will be able to see the picture as a whole. For instance, in your letter of April 20 to Mr. Fortas you have reported on the excessive warehouse rentals paid by Food Distribution Administration. In a case of this kind I would like to have a complete report with specific recommendations from you as to what steps might be taken. I realize that the letter to Mr. Fortas was not intended to be a complete report. I also realize that the first 5 or 6 weeks on a new post is barely sufficient to become familiar with the local situation. At the same time, I would like to suggest that as you become familiar with each phase of the supply problem you start reporting on such aspects as in your opinion are important. I would like to warn you against becoming involved in conflicts of personality. This entire program is far more important than any individual's personal likes and dislikes. The success of your mission will largely depend on your ability to maintain a working relationship with all of the agencies, organizations, and individuals directly or indirectly connected with the program. If that working relationship becomes confined to any particular group, failure will be inevitable. I have every confidence that you can carry out this mission. Sincerely yours, EXHIBIT No. 10 B. W. THORON, Director. On page 225 reference was made to an inventory of Food Distribution Administration commodities in Puerto Rico, including stocks on dock as of April 28, 1943. The list, which was supplied by Mr. Covo at the end of the hearings, is in the committee files and can be inspected upon presentation of proper authority. EXHIBIT No. 11. On page 226 reference was made on line 22 to a communication which was read off the record. Mr. Covo later identified the following letter as that referred to. The letter, dated November 20, 1942, was written by Mr. Jack Fahy, supply officer for the Department of the Interior, to Mr. B. W. Thoron, also of the same Department. Mr. B. W. THORON, UNITED STATES DEPARTMENT OF THE INTERIOR, Director, Division of Territories and Island Possessions, Department of the Interior, Washington, D. C. DEAR MR. THORON: The local storm over the last distribution of rice has already been reported to you. I would like to describe what we are doing to prevent a repetition of the excitement. This time we have about 65,000 bags for distribution throughout the island. We have assigned a fixed number of bags to each of the 76 municipalities. From each of the towns outside of San Juan, Arecibo, Mayaguez, and Ponce (where Agricultural Marketing Administration warehouses are located) we are calling in one or more wholesalers to receive the quota of rice assigned to their town. At the same time, we are notifying the mayor of the town that we are delivering so much rice to such and such wholesaler of his town and by implication we are inviting him to regulate the distribution. These wholesalers from the small towns are not, in many cases, exclusively wholesalers. They have, more often than not, been doing a combination wholesale-retail business, and San Juan wholesalers in normal times also supplied a good part of the small town retailers' purchases. By concentrating the entire quota of rice for one town in the hands of local merchants only, we are excluding the larger San Juan wholesaler from his former trading area. We found we are justified in this solely because of the fact that we received so many telegrams during the last rice distribution indicating clearly that San Juan wholesalers were not in most cases making any provision to distribute the rice to the rural areas. We found many cases here in which family friends of the wholesaler bought the wholesaler's entire stock of rice to take home and hoard. In other cases, the wholesaler sold his entire allotment to 1 store. In other cases, groups of 10 people formed in the streets in front of the wholesaler's doors to purchase collectively 10 sacks of rice. Thus a rice distribution that could have amounted to approximately 2 pounds for every man, woman, or child in Puerto Rico actually meant that a few people secured large amounts and the majority of Puerto Rico secured none. The value of this experience was simply that we gave the wholesaler a chance to justify the 45 cents per bag margin of profit. The only real justification for this profit lies in the fact that the wholesaler should through his experience and business judgment have been able to secure for us even distribution. Since the wholesaler failed us in this, we feel justified in taking further steps to see that the rice actually does get to the towns on a per capita basis. While it may seem unfair for us to prevent the wholesaler in San Juan from serving the small town, we feel that our first obligation is to see that the rice actually reaches every town, and the only way we can assure this under present scarcity conditions is to have the small town merchant come in and get his rice and for us to notify the town's mayor of this fact. As for distribution in the four cities where Agricultural Marketing Administration warehouses are located, we have ordered wholesalers not to sell a single bag of rice to anyone except licensed retailers (however, wholesalers will be allowed to sell two sacks of rice to each recognized hospital, asylum, or public institution) on pain of losing their privilege to buy Agricultural Marketing Administration products. We have fixed the quota of every retail store regardless of the size, at 10 sacks of rice (all of this arrangement applies to this one shipment or rice alone). This quota seemed very unfair to me when I first heard of it, but it springs from the following situation: A large store here in San Juan doing $150,000 yearly volume will sell only one-half as much rice as a smaller store doing $50,000 a year. The reason for this situation is that rice is essentially, at least in normal times, a poor man's food. Hence, the fixed quota of 10 sacks per store has a definite tendency to get the rice in relatively larger quantities to the poorer people who cannot afford the higher priced food items available to wealthier people in the larger stores. I am reporting these details because I am quite sure that you will receive complaints. Our whole policy here is based on "does it work". We will make every effort to preserve normal channels of commerce as long as these channels can be used to deliver the goods and to sell them within the legal price ceilings, but if the trade continues to fail us in this, we will be forced to change our distribution methods. Very sincerely yours, JACK FAHY, United States Department of the Interior Supply Officer. P. S.-I enclose the actual number of sacks of rice to be distributed to each town in Puerto Rico from each of the four Agricultural Marketing Administration warehouses: (The table showed the following numbers of sacks of rice to be located in the four principal municipalities: San Juan, 32,073; Arecibo, 7,962; Mayaguez, 11,305; and Ponce, 14,916. This method is used to conserve space.) EXHIBIT No. 12 The second reference on page 226 to a communication which was read off the record was later identified by Mr. Covo as the following letter of April 19, 1943, from Edward J. Bash, Director of the Food Distribution Administration, addressed to Maj. Ralph Olmstead, Food Distribution Administration, Washington, D. C. It reads as follows: Maj. RALPH W. OLMSTEAD, FOOD DISTRIBUTION ADMINISTRATION, Deputy Director, Food Distribution Administration, Washington, D. C. April 19, 1943. DEAR MAJOR OLMSTEAD: Retailers, consumers, and various civic groups, including the Centro de Detallistas de Provisiones de Puerto Rico (Puerto Rican Retail Grocers Association), have long complained of the difficulty which retailers and consumers faced in securing merchandise in many of the municipalities. This has been due to the fact that Food Distribution Administration merchandise intended for particular municipalities has been sold, frequently, in others because of certain price, transportation and other advantages or considerations. Combination wholesale-retailers, also, retained the supplies which they procured from the Food Distribution Administration for their own retail outlets, denying other retailers the opportunity to secure stocks. Retailers groups and consumers, generally, have become more and more insistent that each municipality be assured its share of merchandise. The insular legislature unanimously resolved that warehouses be established in every municipality where sales could be made to retailers directly, eliminating wholesale merchants. Several months ago, the Centro de Detallistas de Provisiones de Puerto Rico requested that merchandise not be sold to wholesalers also engaged in the retail business. They also asked that effective means be provided to check on the resale of Food Distribution Administration merchandise and to make certain that every retailer have opportunity to provide his customers with merchandise being distributed by the Food Distribution Administration. Following long consultation with the trade and receiving many consumer and civic appeals by communication and delegations, this office circularized wholesale purchasers with letter and affidavit form to attempt to guarantee that retailers and consumers in each municipality would have opportunity to buy their quota of available supplies. A copy of the circular letter dated March 18, 1943, and of the affidavits for use of individuals and corporations are attached. The affidavit was designed to secure cooperation of wholesalers in selling merchandise within the municipality to which the supply was apportioned. Where the firm was a combination of wholesale and retail business, cifort was made to secure agreement that only a portion of the merchandise would be used in the firm's retail outlet so that other retailers could obtain supplies for their consumers. An incidental purpose of the affidavit was to provide a methodical means for wholesalers to purchase, at Food Distribution Administration offices, without the necessity of personally buying the merchandise. Many firms preferred to designate an agent, but some of these agents contributed to violations of the regulations, or the intent of regulations, to control prices and sell merchandise without special considerations. Some agents sold the merchandise of the firm they represented to other wholesalers and buyers. There are attached copies of a translation of a resolution passed at the annual assembly of the Centro de Detallistas de Provisiones de Puerto Rico confirming the organization's insistence that the Food Distribution Administration require wholesalers to distribute merchandise intended for a municipality within such municipality. Previously, they had officially requested such action as follows: "There are a number of reasons to support our request, the main one of which is that each municipality now receives a quota of commodities in proportion to its population. It is logical that if a specified number of wholesalers receive a quota of commodities for a given municipality, these commodities should be distributed among the retailers that do business in that municipality. If wholesalers are allowed to dispose of these commodities for sale in another municipality, the result will be that the municipality to which the merchandise was allocated will not get it, while merchants and consumers in the other municipality will receive commodities in excess of the quota allocated to them. "We believe that after the Food Distribution Administration has allocated specified quotas to each municipality, it can order at the same time, and this should be done, that these commodities be sold exclusively within the limits of the municipality to which the quotas were allocated. This system will solve the problem of the retailers, who thereby will have access to these commodities in the municipality where they have their business, and the consumers will greatly benefit inasmuch as they will not be deprived of the commodities that were directly allocated to them by the Food Distribution Administration under the quota system. It will also help largely to put an end to the black market, which is thriving precisely upon the needs of the merchants and consumers, who, not having access to specified commodities which are scarce in their respective towns, look elsewhere for them and pay speculative prices to obtain them." Frankly, it has not been our intention to take any action against those not filing affidavits or to withhold sales of merchandise where they have refused to execute the affidavit. The major purpose was to try to secure cooperation for the benefit of consumers who were not able to get necessities because retailers in their municipalities were not in as favorable a position as those in other municipalities or because the retailers did not have an historical record of combined wholesale and retail business. It might be called a psychological effort. It is our plan to post lists of merchandise sold to each wholesaler in the United States post office of the municipality in which the wholesaler is located. We are also requesting merchants to furnish lists of sales of specific commodities that are in heavy demand but scarce supply. These two efforts will make it possible for the retailers in a municipality to know what their suppliers receive from the Food Distribution Administration. It will enable us to determine what manner of distribution is conducted on critical items. Sincerely yours, EXHIBIT No. 13 EDWARD J. BASH, Caribbean Area Director. Mr. Covo's letter of resignation as supply officer for Puerto Rico and the Virgin Islands, to Mr. B. W. Thoron, written May 25, 1943, and referred to on page 227, is as follows: UNITED STATES DEPARTMENT OF THE INTERIOR OFFICE OF THE SUPPLY OFFICER San Juan, P. R. (Written at Raleigh Hotel, Washington, D. C., May 25, 1943) Mr. BENJAMIN W. THORON, Director, Division of Territories and Island Possessions, United States Department of the Interior, Washington, D. C. MY DEAR MR. THORON: The position of supply officer for Puerto Rico and the Virgin Islands which I headed in San Juan, P. R., for the United States Department of the Interior, having been discontinued, I, therefore, kindly request that your accept my resignation as Interior Department supply officer, effective immediately. Thanking you for past courtesies, I remain, Yours very sincerely, EXHIBIT No. 14 JACQUES COvo. On page 227 reference was made to a cable addressed to Mr. Covo from Mr. B. W. Thoron, Director of Territories and Island Possessions, Department of the Interior, indicating that Mr. Covo's position as supply officer was being discontinued. The cable was as follows: |