EXHIBIT NO. 37.--Statement of net charges to features during fiscal year July 1, 1916, to June 30, 1917. APPENDIX V. REPORT OF THE TREASURER. THE GOVERNOR OF PORTO RICO, San Juan, Porto Rico. DEPARTMENT OF FINANCE, OFFICE OF THE TREASURER, SIR: In compliance with your request of July 12, 1917, I have the honor to submit the following report for the fiscal year ended June 30, 1917: The outstanding feature of the work of the department of finance during the fiscal year just past has been the revision of the assessment of the real and personal property of the island subject to the property tax. A brief mention of the preliminary work of organization for this task was made in the report of the treasurer for the fiscal year 1915-16, as on the date of that report the newly augmented board of review and equalization had already met and formulated rules for the guidance of the assessors in carrying out this important duty, but the innumerable details of organization and of execution were yet to be considered and satisfactorily settled. When it is realized that the completed returns show a total number of 137,900 separate assessments, the great majority of which were of properties located in the interior of the island and remote from the main traveled roads and many of them on the precipitous mountain sides, where so many of the coffee properties are found, some idea can be gained of the magnitude of the work set out for performance by the department at the commencement of the fiscal year. As outlined in the preceding annual report, the corps of regular assessors was made the nucleus of the new and greatly increased force which was found necessary in order to complete the work thoroughly and within the time limit set of May 1, 1917, the date on which the completed assessments were to be placed in the hands of the board of review and equalization. Each of the experienced assessors was placed in charge of a squad made up of from six to eight of the newly appointed assessors and the groups so formed were arranged in pairs, so that work was started simultaneously in three widely separate parts of the island, each group working along the coast municipalities in the opposite direction from its companion group. In this way the comparatively level and accessible sugar lands of the coast, where the greatest increases in value had taken place since the last general revision of five or six years before, were given first attention, and this policy served in great measure to allay the apprehension, in so many cases unfounded, that the valuations of property were to be doubled or trebled, since the increases made in the valuations of the sugar properties, which were universally recognized as having increased tremendously in value, were generally admitted to be conservative and just. As has just been stated, the last general revision of the taxable property of the island was made during the period extending over the three years from the middle of 1909 until well into 1912 and resulted in an increase of approximately $45,000,000. Since that date the sugar industry has expanded enormously, increasing its production from a little over three hundred and fifty thousand tons to more than one-half million tons, and extending the cultivation of cane over an acreage more than 50 per cent greater than at the commencement of this period. It is interesting to note, by reference to the report of the treasurer for the fiscal year ended June 30, 1911, that the average value of $94.86 per acre of sugar land for a total area of 183,223 acres amounted to a total of $17,380,000, while during the same year the value of the product exported from Porto Rico reached the total of $24,479,000. It is true that the valuation of the land actually planted in cane does not reflect the true total of the investment in the sugar industry, but it affords at least a certain standard of comparison. In the report for the fiscal year 1915-16, made just one year ago, the assessed valuation of lands planted to cane had risen to $21,840,000 on an acreage which had increased in approximately the same proportion, the average value per acre throughout the whole island being $107.33, while the value of the product exported had increased to $45,809,000, or very nearly double the amount of five years before. That such a stupendous increase in the value of the crop should result in a proportionate increase in the value of the soil REPORT OF THE GOVERNOR OF PORTO RICO. which produced it was recognized by the sugar men themselves, but it was difficult for many of them to grasp the real increase in values which changed conditions had brought about. At the preliminary session of the board of review and equalization, at which representatives of the sugar industry were present by invitation, one prominent sugar grower insisted that no cane land in the northeastern portion of the island was worth more than $75 per acre, but the general consensus of opinion of growers from that section was that an assessment of $150 per acre would not be inacceptable. In the more favored districts from Vega Alta to Arecibo it was generally admitted that a considerably higher valuation might be placed, while the land included within the governmental irrigation district, on the south coast, with its assurance of sufficient water throughout the year, and most especially at those times when most urgently required, was conceded by everyone to be the most valuable of all. In practice it has been found that the extreme range of values for cane land in Fajardo, with very rare if any exceptions, reached $200 per acre. The highest priced lands in the Vega Alta-Arecibo district are generally assessed at $300 per acre, and the south coast irrigation district of Arroyo, Guayama, Salinas, and Santa Isabel showed some assessments of as high as $350 and $400 per acre. given are the maximum values assessed and therefore apply only to the exceptionally It must be understood that the figures valuable and productive lands of the sections named, and comprise only a minor portion of the total acreage, other lands of the same section of less productive character or having less favorable situation as regards transportation, water rights, and the numberless other conditions which go to make up the exceptionally desirable cane land, appearing at considerably lower amounts. The mill properties were undoubtedly of a great deal more value to their owners on the 15th day of January, 1917, the assessment day on which the value of property is taken for the ensuing fiscal year, than they were on the corresponding date five years before, from which most if not all the assessments of the 47 or 48 principal mills of the island had been taken, considered either from the standpoint of replacement value, capitalization on the basis of net profits, or the actual market value for which such a property of this class might be bought or sold. Under the terms of the Porto Rican law, the last is the real test of assessment value, and is the test which the assessor was instructed to apply in preference to all others, yet, for purposes of corroboration and as means of checking the accuracy of the assessment, both of the other tests have been considered as of some value. On the basis of replacement value, a superficial examination of the trade reports will demonstrate that the cost of equipment of this sort has increased to a tremendous extent within the last year or two, perhaps more during the period comprised in the fiscal year 1916–17 than during the preceding 23 months of the war, while the freight rates on imports of this class into Porto Rico have increased more than 50 per cent over those prevailing prior to the outbreak of the European war. Turning to a consideration of the second standard of estimated value, on the basis of capitalization of the net profits, it is estimated that the profits earned by the 39 principal mills grinding during the season of 1916-17 amounted to $12,600,000, while the total valuation for taxation purposes prior to the revision and reassessment, and as carried on the rolls in many cases without change for four or five years, of mills, machinery, buildings and improvements, railways lines and rolling stock, live stock, and in general all other property dedicated to the sugar business other than lands, and which included a number of other plants beside the 39 entering into the above calculation, was less than $25,000,000. As has been shown, the corresponding valuation of the land actually planted to cane was approximately $22,000,000, while if an allowance of approximately one-half of the land listed as pasture land is made as properly corresponding to the sugar industry on account of the additional acreage which it is well known is required by all large mills, the total values appearing in the previous assessment as pertaining to the sugar business will reach approximately $60,000,000. The net profits as given above, of course, apply only to the manufacturing earnings as distinguished from the agricultural profits, except on lands owned by the corporation owning and operating the mill. growers in the surrounding section, paying for the cane delivered at the mill either Each of the larger mills grinds for most of the on the basis of a fixed price per ton or at the rate of a certain percentage of sugar oʼn the gross weight of the cane, and these profits of the independent grower are therefore not included in the calculation. Of the figures shown, therefore, it would appear that the mills necessarily represented considerably less than the total of the estimated valuation of $60,000,000, and a reference to the assessment schedules for 1915-16 gives the mills listed as assessed together with all other property belonging to the corporations or companies operating them as owners, in the gross amount of $28,650,804, of which the net profits represent therefore approximately 45 per cent. of the assessments for the new year of the sugar mills and machinery, as distinguished from the other real or personal property of the centrals, shows that the maximum A comparison |