On August 8, 1899, a Category 4 hurricane made landfall in Puerto Rico. It was the feast day of Saint Cyriacus in the Roman Catholic calendar, and so, following the practice of the times, the cyclone was named San Ciriaco. The estimated death toll was 3,369 human beings; the losses amounted to 20 million dollars, as the storm destroyed the coffee crop and the rest of the agriculture. Out of a population of one million, about 250,000 people were left without food or shelter, while electrical, telephone and telegraphic services were completely lost.
Exactly seven months later, on March 8, 1900, the United States Senate discussed whether to make Puerto Ricans reimburse the U.S. government for hurricane relief, a prospect that even Senator Edmund Pettus, who was also the Grand Dragon of the Ku Klux Klan in Alabama, deemed to be “illegal and hardly decent.” Puerto Ricans would pay for it all, and then some.
One hundred and twenty years later, our bill is even stiffer — more than 100 billion dollars — a debt that did not benefit us at all, and which is only payable with our very livelihoods, and the concomitant death of any last hope for a livable future.
Boston Brahmins and Sugar
Even before July 25, 1898, when the U.S. invaded Puerto Rico, American capitalists and politicians were already counting on its annexation as a locus for business expansion and speculation. Among them were Boston businessmen and financiers, who arrived in Puerto Rico immediately after the signing of the armistice on August 12. One of them, John Dandridge Henley Luce, was a close friend and brother-in-law of the junior senator from Massachusetts, Henry Cabot Lodge. On July 15, ten days before the invasion, Luce wrote to Lodge: “As an imperialist, you may not be surprised that I wish to be in the front row of colonial expansion! In short, I am very anxious to go to Porto Rico [sic].”
Luce and his partners wanted, the letter went on, “to get if possible the Secretary of the Treasury to make us a U.S. government depository.” Lodge obliged, assisting them in having their newly created bank appointed as the fiscal agent of the U.S. military government in Puerto Rico. After President McKinley himself intervened, all deposits of the U.S. military government in Puerto Rico went to their bank. By 1899, they had enough money to buy the Central Aguirre Sugar Estate, then comprised of 2,000 acres.
Their capitalist venture initiated a trend, surviving to this day, of using the island for making money and fleeing the site with most of the loot. Puerto Rico has been a source of cheap land and cheaper labor, a tax haven, a place with home-grown engineers, technicians, and administrative workers — able, disciplined, but cheap workers — at the service of American corporations and their profits.
Unlimited Expansion Demands Unchecked Power
Capitalists are relentless in their expansion mania. Democratic politics means self-rule, that is, government by consent, relying on deliberation, persuasion, and compromise in search of the common good. In 19th-century Europe, the capitalists — the “bourgeoisie” — began to undermine such politics (or its possibility). Hannah Arendt expounded on how European capitalists abandoned their preference for leaving government to the aristocrats, prompting the imperialist expansion of the late 19th and early 20th centuries. Capitalism yielded imperialism, beginning with the “scramble for Africa.” Thus began the era of globalized capitalism.
The United States is arguably the most capitalist of all capitalist countries. In contrast to Europe, capitalists have comprised the U.S. ruling elite from the outset –the wealthy, the owner class, the slaveholders with their immense plantations, the merchants and industrialists. That is why, from the beginning, the U.S.A. was about expansion: the Northwest Territories; the Louisiana Purchase; the other acquisitions by treaty and war, until they had nowhere else to go, while capitalism kept fumbling with a cycle of depressions, financial swindles, and crashes.
Hence, it has been essential to ponder whether the logic of capitalism, with its eternal drive for expansion, is antithetical to democratic politics, and inconsistent with the geographical and human limits of the nation-state.
Arendt said that such antithesis and inconsistency are unavoidable. She argued that the nation-state is ill-suited for expansion, for imperialism, because it is “based upon a homogeneous population’s active consent to its government.” Hence, in the case of conquest, it would have “to enforce consent rather than justice, that is, to degenerate into tyranny.” After all, genuine consent “cannot be stretched indefinitely, and is only rarely, and with difficulty, won from conquered peoples.”
The wealthy and the aspirants to wealth saw in the limits of the regulatory nation-state an obstacle to be eliminated, but not before they used it as their instrument for enabling their cherished capitalist expansion all over the globe. Moreover, capitalism is proving to be incompatible with democracy, at odds with the common good for which democracy is supposed to aspire or enable. We are arguably living at the dawn of a totalitarian plutocracy, because, as Arendt wrote, “only the unlimited accumulation of power could bring about the unlimited accumulation of wealth.”
American Capitalism Goes to Puerto Rico
Beginning in 1898, the U.S. acquisition of “overseas territories” is only intelligible as a new stage in capitalist expansion, out of what Arendt has called “economic necessity.” The logic of capitalism is unlimited expansion, and the nation-state proved too limited, its population too small, for such a monster. Pedro Cabán expounded on it, pointing to the “economic dislocations and political disorders” that took place in the United States during the last decades of the 19th century. Cyclical crises prompted American capitalists and policymakers to embark on economic expansion outside the geographical limits of their nation-state, the expansion that we call “imperialism.” Exactly the same dynamic was taking place in Europe, and the response was also the same: imperialist expansion to make possible capitalist sprawl.
After 1898, the Puerto Rican economy and institutions were reorganized to meet the capitalist and strategic interests of the United States. Lodge’s brother-in-law was among the first of countless capitalists who, to this day, go to the Island to make money by paying little or no taxes, paying lower wages than those they would have to pay elsewhere, and failing to reinvest the profits in Puerto Rico.
At the turn of the 20th century, the obliteration of any chance of autonomous economic development yielded an impoverished army of agricultural workers, from which the mostly-American sugar companies drew their underpaid, underfed hands. It was a peonage system, already implemented in the southern United States after 1865, which for decades kept a significant portion of the African-American population in a state of quasi-slavery.
By 1930, Puerto Ricans were poorer and more exploited than they had been under Spanish rule. The post-WWII modest reforms, and a new wave of American capitalist investment, this time mostly industrial instead of agricultural, are explained by the postwar boom, the Cold War, and the pressures of the anti-colonial movement. The model of industrialization by invitation, which included tax exemptions and almost guaranteed profits, began to fail as early as the 1960s and ultimately collapsed. As Ed Morales explains, the industrial investment was gradually substituted by toxic financial products, spearheaded by Puerto Rico’s municipal bonds, which featured an attractive triple tax-exemption.
Deprived of the means for autonomous, self-propelled economic growth, Puerto Rico’s government became the Island’s main employer, while ultimately falling in the debt trap to just keep operating. To be sure, its financial collapse was accelerated or made worse by bad policies, many of them neoliberal in nature, as well as by the outright corruption of a ruling elite sporting a deep, monstrous contempt toward their fellow Puerto Ricans. (I have already written about the characteristics of that elite.) Some of the members of the Fiscal Board, including its chairman José Carrión III, are part of that clique of heartless monsters. It is no wonder, and no accident, that the board is a textbook case of conflicts of interest.
Wall Street sold to their clients more Puerto Rican bonds than the Island’s government could ever repay. Ed Morales describes one of the familiar consequences of such financial conundrums: “When the speculative bubble burst in the form of default, austerity was mandated to provide investor remedy.” Austerity, the medicine prescribed by the Fiscal Board created and installed by Congress, already had the foreseeable effect of depressing even more an economy that was already in dire straits. The Board’s response is another instance of using, in the words of George Monbiot, “crises as both excuse and opportunity to cut taxes, privatize remaining public services, rip holes in the social safety net, deregulate corporations and re-regulate citizens.”
Hurricane María was only one among several causes of Puerto Rico’s devastation, a storm which began to gather decades ago. The Fiscal Board is administering the worse of all pills, in what could be the finishing blow to the hope of a recovered and stronger Puerto Rico. As in 1899, the response of the U.S. government to the havoc brought by María and by the Fiscal Board has been to help as little as possible, while ultimately Puerto Ricans will foot the bill.
In 1900 the U.S. government imposed tariffs on Puerto Rican products, making the Island’s population pay many times over the meager hurricane relief they received. Today’s austerity, and the carving out of the Island for the benefit of the John Paulsons of this world, is a case of history repeating itself with a vengeance.
Featured image: Joe Raedle/Getty Images