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I also happen to be a Democrat.

The editor of the newspaper, the Home Journal, which many of you may have seen, which has endorsed Mr. Paiewonsky, is the leader of the Unity Party, the largest single party in St. Thomas.

I have heard a number of representatives speak up in favor of Mr. Paiewonsky, and have heard Governor Merwin say he thought it was an excellent choice. This indicates that there is almost unanimity of feeling in support of Mr. Paiewonsky.

I plead to this committee that you bear that in mind, also. My father was born in St. Croix. My mother was born in Puerto Rico. I was born in St. Thomas. My wife is from Oklahoma. I think I am broadminded about people from a lot of places.

I have lived here in Washington and worked in Washington in the Department of the Interior, the Division of Territories. I know some of the things, therefore, that do come up from time to time concerning government in the territories.

Let me add my own personal opinion. I do not believe I would be presumptuous in saying that I am in a position to give a valid and an informed opinion as to Mr. Paiewonsky's qualifications. That opinion is that he is well qualified.

In behalf of the folk who sent me up here, I ask and urge this committee that it take favorable action.

Thank you.
The CHAIRMAN. Are there any questions?
Senator BURDICK. Are you a lawyer?
Mr. CORNEIRO. Yes, sir.

Senator BURDICK. I was a lawyer, too, before I came to Congress. I was curious about how they practice law in the islands. What legal justification is there in the islands or elsewhere for granting a subsidy to two distilleries and not granting it to all? What legal justification ? · Mr. CORNEIRO. I have not been a party to that particular thing. I would imagine that there were justifications of an emergency, that the survival of these distilleries, the particular time was essential for the economy of the island.

Senator BURDICK. In other words, it was important that the two survive, it was not important that the third one survive?

Mr. CORNEIRO. My recollection is that at the time there were only those two in actual operation.

Senator BURDICK. You say that this gentleman by the name of Brauer was not operating the St. Thomas distillery at the time the subsidy was passed ?

Mr. CORNEIRO. I could not state that as a fact. My impression was that it was not in business at the time.

Senator BURDICK. Assuming it was in operation, how would you
justify it?
Mr. CORNEIRO. I think I would have been not for it.
Senator MILLER. What labor unions do you represent, sir?
Mr. CORNEIRO. Virgin Islands labor unions, affiliates of the AFL-
CIO.

Senator MILLER. Is that the main union there?
Mr. CORNEIRO. It is the major union there.
Senator MILLER. How many members do they have?

Mr. CORNEIRO. I think they have slightly over a thousand members in St. Thomas. I do not know how many they have in St. Croix.

Senator MILLER. What trade do the members practice? Mr. CORNEIRO. They cover all the ranges of activity. They cover people who are in manufacturing plants, small industries, people who work as longshoremen, people who work as carpenters on various construction jobs, hotel employees, sales clerks, the whole gamut of union organization.

Senator MILLER. Would some of their members be working for the Paiewonsky interests ? Mr. CORNEIRO. I would assume so.

Senator MILLER. Were any of them in the group that sent you up here?

Mr. CORNEIRO. Frankly, I don't know. I did not see all of these people. It was a matter of everybody going out and collecting and they got a kitty up. I just don't know who put up the money.

I just know a few of them. I know it was 10 to 15 people.

Senator MILLER. Ten to fifteen people contributed to your coming up here?

Mr. CORNEIRO. Yes. Senator MILLER. You do not know all of them? Mr. CORNEIRO. I would know all of them if I saw them but the names were not reported to me at the time.

The circumstances under which I came up were rush ones such as not to allow my going around and thanking them each. Senator MILLER. I have no further questions. The CHAIRMAN. Are there any other questions? Thank you very much. Mr. CORNEIRO. Thank you, Mr. Chairman.

The CHAIRMAN. We will have to find out what the schedule is next week. This will finish all the witnesses against Mr. Paiewonsky.

Senator BURDICK. To complete the record, I would like to ask before you leave, Mr. Brauer; are you coming back?

The CHAIRMAN. Would you please? Come back, Mr. Brauer.

FURTHER STATEMENT OF A. M. BRAUER, PRESIDENT, ST. THOMAS

DISTILLERIES, INTERNATIONAL Senator BURDICK. During the time that the Paiewonsky firm and the Skeoch firm was receiving the subsidies and during the time that they had the privilege or were buying molasses for 7 cents, I think you testified you were getting your molasses outside the islands?

Mr. BRAUER. Not at that time. Molasses was procured outside the island. We could not get any from the Virgin Islands Corporation at all at that time.

Senator BURDICK. What did you have to pay for your molasses ? Mr. BRAUER. It cost me 19 cents a gallon.

Senator BURDICK. You were paying 19 cents when they were buying it for 7 cents from the Virgin Islands Corporation.

Mr. BRAUER. That is right.
Senator BURDICK. During the same time?

Mr. BRAUER. That is right.

I think the market price quoted by the trade paper was 17 cents per gallon. That is the trade paper every so often, but it is authentic. It cost me 2 cents delivery on top of that.

Senator BURDICK. Were you in the business of distilling liqueur and using molasses in your operation during the calendar year 1957 ?

Mr. BRAUER. No, I could not get any molasses.
Senator BURDICK. When were you in business?
Mr. BRAUER. In 1954; we put up the distillery in 1957.
Senator BURDICK. You were not in business in 1957?

Mr. BRAUER. We were in business in 1956. We were in business in 1955, 1954.

Senator BURDICK. But you were in business in 1957?

Mr. BRAUER. We were in business in 1957 but we could not get any molasses.

Senator BURDICK. Did you make any attempt to get it from Virgin Islands Corporation? Mr. BRAUER. That is right. Senator BURDICK. You could not get it? Mr. BRAUER. That is right.

The CHAIRMAN. Do you have any copies of letters which you sent to Virgin Islands Corporation, or any copies of replies which they sent to you indicating that molasses was not available to you because it must be sold only to people who had the subsidy.

Mr. BRAUER. I have a letter that I wrote to the Governor of the Virgin Islands at that time, in my possession. At this time I questioned the wisdom of this molasses subsidy.

The CHAIRMAN. I am trying to find out if you asked for molasses and they refused you molasses. Do you have any record of that, or was this purely verbal ? Mr. BRAUER. I would have to look at my files, Senator. The CHAIRMAN. Will you please examine them. Mr. BRAUER. They are down in the Virgin Islands. The CHAIRMAN. I do not mean today. Mr. B'RAUER. I will do so, if I have it, I will send it on.

The CHAIRMAN. We would very much like to have a statement from you, whether you can or cannot find, where you addressed the Virgin Islands Corporation and asked for molasses during this period of subsidy and they were unable to supply you. That is what we would like to know. Mr. BRAUER. I will look up my records.

Senator GRUENING. Following up your inquiry, I think it would be useful to have as nearly as we can get it, Mr. Brauer, an exact statement as to when he first applied for molasses, to whom he applied, who replied he could not have it, and what further events there were that indicate responsibility for this refusal.

Mr. BRAUER. Senator Gruening, I will look up my records from the inception of the time I asked for molasses. I do know that there has been more than one occasion I asked Dr. Bartlett for it and I was refused. He was the head of Virgin Islands Corporation.

Senator GRUENING. What is his name?
Mr. BRAUER. Bartlett.
The CHAIRMAN. Thank you.

You supply it to us.

Senator DWORSHAK. Did he give you any reasons for refusing to make available the molasses?

Mr. BRAUER. He told me they were contracting. All the molasses was contracted.

Senator DWORSHAK. To these two distilleries?

Mr. BRAUER. I believe his reference was just that they were contracting. He did not say to whom or what, but I am sure I have something in my files. Mr. LEVENTHAL. I would like to suggest a question about the timing.

Senator METCALF. I am not quite sure. I did not quite get the answer.

Did you say you are operating the distillery in 1954? Mr. BRAUER. No; I said we started to operate, we started to put up a plant. It was completed in 1954. I can look up the records.

Senator METCALF. You were operating one in 1955?
Mr. BRAUER. That is right.
Senator METCALF. And in 1956 ?
Mr. BRAUER. That is right.

Senator METCALF. And you would have operated one in 1957 had you been able to get the molasses?

Mr. BRAUER. Well, to make the record clear, we could never get molasses from the Virgin Islands Corporation. We were a small plant.

Senator METCALF. But you did find other sources for molasses in 1955 and 1956? Mr. BRAUER. That is right. Senator METCALF. In order to operate your distillery? Mr. BRAUER. That is correct. Senator METCALF. Thank you.

The CHAIRMAN. If there are no further questions we will be in recess until the call of the Chair.

I cannot tell you when it will be. We all have problems Monday and some of us have problems Tuesday, and so forth.

Mr. BRAUER. I want to correct one thing. In 1956 we were not distilling because we could not get sufficient molasses.

The CHAIRMAN. Mr. Hodge, do you have something you want to add ? Mr. HODGE. Yes, sir; Mr. Chairman. The CHAIRMAN. All right.

FURTHER STATEMENT OF WALTER I. HODGE, PRESIDENT, VIRGIN

ISLANDS LEGISLATURE, ST. CROIX Senator DWORSHAK. Mr. Chairman, I suggest that you swear this witness in; you did it with others.

The CHAIRMAN. Will you stand.

Do you solemnly swear the testimony you shall give before this Senate Interior and Insular Affairs Committee will be the truth, the whole truth, and nothing but the truth so help you God?

Mr. HODGE. I do, Mr. Chairman. I think for the benefit of the committee, since the legislature is involved, where question has arisen about discrimination against distilleries, in the island on the legis

lature passing a subsidy for two distillers only, that I would like to get the record straight.

The subsidy on account of the Suez Canal crisis as was put in the record before, the price of molasses was raised substantially higher.

Since 50 percent of our revenue is based upon the return of internal revenue on a matching dollar basis, the legislature was asked to pass a subsidy for the distilleries in the islands.

There were only two distilleries in the islands actually processing rum by sugarcane molasses at that time.

I just wanted to have that put in the record.

The CHAIRMAN. Is that why you put a grandfather clause in so nobody else could get any.

Mr. HODGE. No, Mr. Chairman. The CHAIRMAN. Did you put a grandfather clause in? Mr. HODGE. The legislation was written to provide for the manufacturers of rum who were actually using molasses.

The CHAIRMAN. Did you put a grandfather clause in it? Mr. HODGE. We put that in because these were the people who actually were keeping the economy of the island alive.

The CHAIRMAN. Did you put a clause in to provide that the only people who could get a subsidy were the people who had contracts with the Virgin Islands Corporation?

Mr. HODGE. No, sir.

The CHAIRMAN. You did not? Mr. HODGE. The clause provided that the people who could get the subsidy were the people who were actually producing rum at that time.

The CHAIRMAN. Law No. 197, of June 11, 1957, provides: For the period from March 1957 to June 30, 1958, the aforementioned subsidy shall be given to molasses producing, rum producing industries in the Virgin Islands, a portion of the rum producing industry on the basis of the gallon of molasses produced by them from the rum in accordance with the provisions established under their agreement with the Virgin Islands Corporation.

Mr. HODGE. No, sir; those were the only two people who were manufacturing rum at that time.

The CHAIRMAN. I asked you whether you confined it to the people who had contracts with Virgin Islands Corporation. You said no.

Now, does this sound as if you did or did not? Mr. HODGE. Mr. Chairman, the subsidy was not restricted to those two people only because the only reason that was put into the legislation was because they were the only two manufacturers in actual business.

Other distilleries at that time were only blending.

The CHAIRMAN. We apparently do not communicate back and forth. I asked you and I would like to again ask if you put language in the act to make sure that the subsidy got only to those people who were buying molasses from the Virgin Islands Corporation ? Mr. HODGE. Certainly, sir.

The CHAIRMAN. And since the Virgin Islands Corporation will only give its contracts to a couple of firms, you effectively put the subsidy in their hands, did you not?

Mr. HODGE. I don't know if the Virgin Islands Corporation would only give its contract to only a couple of firms.

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