The New Deal in Puerto Rico

The current Governor of Puerto Rico is in deep denial. Faced with local territorial government insolvency and ominous economic decline for his people, the Governor of America’s last large and populous territory (home to 3.5 million U.S. citizens) longs for the island’s return to the days of FDR and New Deal era federal largesse.

The Governor’s dreamy ruminations no doubt also evoke fond memories of a bygone era when President Lyndon Johnson’s “Great Society” anti-poverty crusade brought waves of federal social engineering technocrats and corporate carpetbaggers to island shores. Those were heady times, when Washington promised “jobs and prosperity” through the magic of government managed economics, and there was pay-to-play money aplenty to go around.

Those were the days of wine and roses for local politicians willing to pander for votes under the banner of the “commonwealth” party, promising a better future by rejecting the historical path of U.S. territories to social progress through either statehood or nationhood. Instead, the “commonwealth” party promoted the myth that territorial status would morph into a “unique bilateral political compact,” with a utopian blend of the best features of both statehood and independent nationhood, without the full burdens of either.

The political party bosses who perpetrated this obvious political hoax, cynically offering the “best of both worlds” to citizens facing an uncertain choice between the only two real options, shrewdly adopted the legally meaningless but clever political marketing brand “commonwealth.” This “all things to all people” political Ponzi scheme was packaged to have special appeal for those attracted to left-wing idealism of the 1930’s and 1940’s.

But the leader providing catalyst for establishment of the “commonwealth” scheme under federal law, without disclosing its true purposes and goals to Congress, was a renegade from FDR’s economic policy “Brain Trust,” a man named Rexford Tugwell. A brilliant and visionary man of his times, Tugwell was an architect of the New Deal expansion of federal powers and the national government’s role in American society.

But the intensely driven Tugwell urged FDR to extend the New Deal even further, and embrace the necessity of expanding government controlled and owned business enterprises. Tugwell argued the private sector could not produce the wealth needed to sustain social order in the modern era of global development. This drew enough attention that Tugwell ended up on the cover of Time Magazine in 1936, perhaps giving the liberal sage a little too much high profile notoriety for a White House economic adviser.

“Tugwell was too far left for the realists in FDR’s inner circle, so he was exiled to Puerto Rico, where his far left central planning and control schemes couldn’t do any real harm, or so they thought,” explains Howard Hills, adviser on territorial law and policy in the Reagan Administration. Hills studied Tugwell’s impact in Puerto Rico after meeting him in 1976 at the Center for the Study of Democratic Institutions at Santa Barbara, California.

“I was invited to speak at the Center in Montecito because CSDI published a study I had written on recent Supreme Court civil rights cases. I sat next to Tugwell for lunch and we had such a lively discussion he took me aside for a private conversation in his office after the proceedings ended. He had great charm, erudite wit, and a lucid recall of history.” Having learned first hand that Tugwell was a kind man of generous spirit, Hills came to admire him personally and respect him as a true believer in the cause of social justice – as he understood it.

Today as a veteran of Reagan’s territorial law and policy team in the National Security Council, Hills advocates for self-determination to define the status of the five remaining U.S. territories. Although he views Tugwell as having been a misguided liberal imperialist, Hills empathically describes him as a singular figure who, “once had the President’s ear, but was so persistently extreme in his progressiveness that FDR finally gave him the hook, pulled him off the national stage. But he did not retreat back into academia and stepped up to the plate when he was given Puerto Rico as a sociological laboratory for social engineering experiments that were too radically socialist to attempt in the 48 states.”

Hills notes, “At the time Stalin sent advisers who fell out of favor to Siberia, if they were lucky. And no one ever knew what happened to ill-fated economic planners who disappointed Hitler. But a more congenial FDR cordially dispatched his pal Tugwell to serve as Governor of a tropical island territory already socially, politically and economically enmeshed in the American nation. Not a bad place to end up for a guy who was the target of a palace purge.”

Tugwell was appointed in the waning days “progressive imperialism,” before Congress deigned to allow the U.S. citizen body politic elect their Governor democratically. Even though U.S. citizens from the territory served in WWII by the tens of thousands, fighting for democracy against the Nazis and imperial Japan, with a stroke of the pen the President’s protégé became the New Deal’s viceroy in the imperial capital of San Juan.”

Tugwell went to work trying to prove the efficacy and virtues of centralized economic planning, command economics, government enterprise and public ownership of the means for production of the island’s wealth. Although constrained by underdevelopment on the island compared to the mainland, Tugwell intrepidly institutionalized his agenda by establishing public sector utilities and social services, as well as government mandated and managed urban planning.

The actual results and broader implications of Tugwell’s social and political experiments will be examined in the next installment of this four part series on the impact of the New Deal in Puerto Rico.