« ZurückWeiter »
Governor GORDON. Most of our money is in time deposits. Mr. ABBOTT. In time deposits? Governor GORDON. That is right. Mr. ABBOTT. Have you at any time, or has the government of the Virgin Islands to your knowledge, experienced any difficulty in presenting checks and having them honored immediately for meeting the cost of government here?
Governor GORDON. Yes. When I was in Washington prior to coming down here there was some reluctance in cashing of checks, permitting a withdrawal against time deposits in one of the banks. That was prior to my coming down here. I think there were two occasions. Then there was one occasion after I got here.
Mr. ASPINALL. If you will yield there. What bank was it that showed some reluctance ?
Governor GORDON. It was the West Indies Bank.
Mr. ASPINALL. Who would be most familiar with the circumstances of that?
Governor GORDON. The commissioner of finance would be more familiar with it. I mentioned that because when I came here and the discussion arose with respect to the depositing of the funds, I made it quite clear to both banks that whenever I deposited funds in the bank I did not want any hesitancy in recognizing our demand for payment, because we had to operate our government and we could not afford to have somebody try to tell us that we cannot withdraw our own money. I made that statement to the banks.
Mr. ABBOTT. Under universal banking practices, deposits are either time or demand, are they not?
Governor GORDON. That is right. Some vary from 4 to 6 to 9 months Mr. ABBOTT. You could have a fixed period on time deposits? Governor GORDON. Yes.
Mr. ABBOTT. Are you saying, now, that for a given deposit—are they identified as 60-day or 90-day?
Governor GORDON. No, I did not do it that way. I just put them in on an unlimited time deposit, and it was with the understanding that we could draw our money out as we saw fit. We have always been able to present checks to the Virgin Islands National Bank, and we have been able to withdraw our money without any hesitancy in any amount. I think they have as collateral a long-term bond to cover our deposits.
Mr. ABBOTT. Under the Federal banking law, of course, they would be required to maintain a balance between their long-term and shortterm obligations.
Governor GORDON. That is right. That is why I mentioned at the outset that under the Federal banking laws under which national banks are organized and operate they have to keep a certain cash balance. But yet they have had sufficient cash balance to recognize our checks.
Dr. MILLER. I have one other question. I believe you said you recently set the interest rate, about a month ago, at 1 percent. Is that right? Governor GORDON. Yes. Dr. MILLER. What was it before that? Governor GORDON. Two percent.
to 1 year.
Dr. MILLER. I think that is all, Mr. Chairman.
Mr. ASPINALL. In other words, what you did, Governor Gordon, when you came down here was to change the procedure somewhat from what it was under your predecessor. Is that not right?
Governor GRDON. It depends upon what you mean by "change of procedure."
Mr. ASPINALL. Your predecessor had some money let out on what is known as time deposits, and those were deposits which could be very well held under the agreement until the time had expired. What you have really done is you really have the deposits on a demand. basis, do you not?
Governor GORDON. It almost amounts to demand, because I did not want to get into the same kind of controversy that existed when we got ready to draw out our money and needed it. That is why I had it clearly understood. I know ordinarily in any time deposit a bank can hold you to 30 or 60 days' notice, depending upon what provisions they make when you deposit it.
Mr. ASPINALL. That is right.
Governor GORDON. But I did not want to get into a controversy whenever we wanted our money because we do not operate with a great deal of surplus capital.
Mr. ASPINALL. Sometime after you came here the moneys were deposited in one bank, were they not?
Governor GORDON. Not after I came, because the first check I gotthe first check I got-I called the two banks up and said, “I will give you so much and you so much. Do you want the money?"
Mr. ASPINALL. Let me ask Mr. Claunch then. Before the Governor came, it is not a fact that one bank received most of the deposits?
Mr. CLAUNCH. That is true, and Governor Alexander, in fact just before he left, made an agreement that funds would be split between the two banks.
Mr. ASPINALL. The next question is: Does the Virgin Islands Government receive as much or more interest for the moneys that are deposited in the local banks than the Government of Puerto Rico does for the government moneys deposited in the Puerto Rican banks!
Governor GORDON. It has been quoted to me, without my knowing definitely myself, but according to my investigation, Puerto Rican bankers pay a lesser rate of interest on Puerto Rican money than Virgin Island bankers pay on our money.
Mr. ASPINALL. And the Puerto Rican moneys are on about the average of what the States receive, and that, in fact, the banks in the Virgin Islands return a little bit larger?
Governor GORDON. I do not know whether I could agree with the statement it is average because, as I recall offhand, it varies in the different States from 4 percent on down.
Mr. ASPINALL. But the average was around 1 percent.
Governor GORDON. I would not say the average was around 1 percent. I have not figured it out.
Mr. ASPINALL. I do not want to beg the question, but I want the record to show that it is my understanding that the banks in the Virgin Islands are returning to the government for the use of government
funds a little bit more as far as interest is concerned than the average returned in the States. If I am not correct, we can find out later.
Govornor Gordon. You may be right. I do not know. I would not dispute your word because I could
not say. I fixed it at 1 percent because † felt it was fair to the banks and fair to the government, and that is what I was interested in doing
You know sometimes you cannot compare things. I do not think you can necessarily compare what Puerto Rico does with what the Virgin Islands does, and I would hate to see that comparison always set up and taken as axiomatic that is the way it ought to be. There are too many factors involved that
might be variable. Mr. ASPINALL. That
is right. But, on the other hand, I do not like to see the banks in the Virgin Islands criticized for the use of Federal moneys which happen to be in their possession, because apparently they cannot be put to use because of the inability of the government to get together to expend those moneys.
Governor GORDON. I do not want to see the banks criticized.
Mr. ABBOTT. Mr. Aspinall, would it be your desire to obtain that information in Washington
Mr. ASPINALL. Yes, I think it would be a good idea.
Governor GORDON. I would say I could get my finance file and give this committee a copy of every letter that was received, copies of letters from different places throughout the United States. Also the recommendations made by my finance commissioner to me as to the amount of interest to be charged before I fixed the interest. I can give you copies of those letters.
Mr. ABBOTT. Could you also do this, Governor? Supply figures showing the amount of Territorial funds since they have been so treated and so labeled-all drawback funds—but, in any case, under the organic act those funds which may be expended as the legislature directs to show the amounts of funds on deposit in local depositories, by depository, for perhaps the last 2 fiscal years? Governor GORDON. Yes, we can do that.
Mr. ABBOTT. Would it be difficult to indicate the rate of interest paid on those funds?
Governor GORDON. No; that would not be difficult.
Mr. O'BRIEN. May I say that I agree with the Governor that comparisons are not always a fair thing. Each area has its own problems. I think if and when we make these figures a part of the record we should emphasize that the Governor's 1-percent rate compared with the 2-percent rate has purchased for the government a considerable amount of elbowroom with respect to your ability to get the funds when you need them.
Governor GORDON. That was very important to my thinking: I do want to get this in the record to give you a little background as to why I sent the suggestion down to the legislature, and they approved it, about reducing it to one-twentieth of 1 percent.
The former Governor was in my office, and he said it was a mistake when he signed the 2 percent interest, the minimum of 2 percent interest. I do not know whether it was a mistake or not. I questioned that.
I told him, "I cannot see how you say it was a mistake because you signed the law.”
He said he did not realize all the implications in it and what it would cost the local banks in rendering the services, and they are certainly entitled to some profit in rendering the services to the Virgin Islands government.
Mr. O'BRIEN. If you get the interest rate too high, you might be carrying the money around in your hip pocket.
Governor GORDON. They could refuse.
Governor GORDON. We would be in the position of having no depository in the Virgin Islands . We cannot invest in bonds. There is no provision in the present law.
Mr. ABBOTT. It requires that they be deposited locally until such time as they are obligated and expended, does it not?
Governor GORDON. That is right.
Mr. ABBOTT. The interpretation has been that it must have been the intent of Congress that these be Territorial funds from the moment certified by the Treasury Department to the Virgin Islands?
Governor GORDON. We have always interpreted it in that manner.
Mr. ABBOTT. The staff conferred with the Treasury Department in Washington, also the experts on the Hill, the Banking Currency Committee, and we were advised that the United States in American-flag areas, as distinguished from foreign countries, does not have any time deposits of Federal funds; they work upon a cash basis and, of course, a demand basis, a temporary transfer with a warrant immediately drawn. So we have no comparison from a Federal level.
There is readily available comparison with what is done with State funds, Territorial funds in Alaska and Hawaii and, of course, in Puerto Rico.
Mr. O'BRIEN. Before proceeding to the next point, I note we have some visitors in the room. I wonder if Dr. Taylor, for the record, would introduce the group or tell us who they are.
Dr. TAYLOR. Yes, Mr. Chairman. The visitors in the room this morning are members of the senior class of the Charlotte Amalie High School. The students are with their teacher, Miss Gabriel.
Miss Gabriel, perhaps you would come forward and give the committee a little information about the young persons you brought with you.
STATEMENT OF REHENIA A. GABRIEL, TEACHER, CHARLOTTE
AMALIE HIGH SCHOOL, ST. THOMAS
Miss GABRIEL. I have with me members of the social-studies division of the Charlotte Amalie High School, and we have here representatives of the senior class. We have members from classes 1, 2, 3, and 4. We are, of course, particularly interested in whatever is going on because as part of the social-studies curriculum we study Virgin Islands history, and apart from that we stress current events. So anything on the local, national, or international scene is of interest to us.
Mr. O'BRIEN. Thank you very much. I might say for the committee, in fact for both committees, you are most welcome. I assume one of these days some of you will be sitting a little farther toward the front, perhaps, answering questions somewhat similar from committees somewhat similar. But I hope that you will leave the room today with one conviction in your mind—that no matter whether the people are asking questions up here or answering them, they all have a common objective-the economic welfare and the good government of the Virgin Islands.
It just so happens under the system we have now that your local government and the vistors here have a share in that government. Perhaps it will not always be that way. But I want you to feel that, even if the questions are occasionally sharp or penetrating, there is nothing personal whatsoever involved. We are all looking for better government for you and your parents. It is nice to have you here.
The persons from the Charlotte Amalie High School social-studies division are as follows: Chester Nicholas
Mae Newton Rhudel Potter
Sydney Hatchett Ernest Gerard
Alicia Goodings Florine Marsh
Iris Francis Linda Smith
Carol Jensen Jens Todman
Lucia Cid Angel Le Bron
Christian Felix Louis Petersen
Roy Schneider Elroy Sprauve
Viola Calistro Gilberto Rojas
Delphine Brown Joyce Dawson
Beatrice Hendricks Ione Maloone
Angel Corneiro Zenobia Matthias
Richard Abbott Elroy de Castro
Rehenia A. Gabriel, teacher Lola Roberts
John P. Scott, principal Mr. ABBOTT. Were there any other comments on the discussion just had before we proceed with the balance of section 8? Were there any comments on section 8 (b) from any of the panel members?
Mr. AMBROSE. I do have a question on 8 (d). I beg your pardon. Mr. ABBOTT. Are there any on 8 (c)?
(Subsequently the St. Thomas Chamber of Commerce submitted the following recommendations on subsection 8 (c) for consideration :)
Customs duties—free port. Section 8 (c):
We recommend the addition of an additional proviso to section 8 (c) reading as follows: "The import duties now in effect in the Virgin Islands on the date of the approval of this act may be reduced, repealed, or restored from time to time by the Legislature of the Virgin Islands: Provided, That the Secretary of the Treasury shall designate the several ports and subports of entry in the Virgin Islands and shall make such rules and regulations and appoint such officers and employees as he may deem necessary for the administration of the customs laws in the Virgin Islands of the United States; and he shall fix the compensation of all such officers and employees and provide for the payment of all such officers and employees and other expenses out of the internal-revenue collections under section 28, subsection ii, of this act.”
Justification: We do not wish to have our present customs offices abolished or to reduce their staff. The Bureau of Customs and its various branch offices have many duties to perform other than the collection of duties. In the case of our customs offices, we would like to see their functions extended to the clearing of goods exported from the Virgin Islands to the United States, including goods purchased here by tourists to take back home. At the present time the Virgin Islands is considered foreign territory for customs purposes. Hence, all tourist purchases must be inspected and cleared by custom officials in Puerto Rico—the nearest port of entry into the United States. This works a hardship on our visitors in the form of delays at customs in Puerto Rico which sometimes cause the missing of plane connections on the return trip home. Similarly, our manufacturers who ship to the United States are handicapped by the lack of customs