Mr. PAIEWONSKY. No, sir; but they are being set up now.

The CHAIRMAN. Senator Hickey?

Senator HICKEY. Mr. Paiewonsky, do you broker the warehouse receipts? You spoke of the storing of your rum for a period of time. Do you broker warehouse receipts through the bank?

Mr. PAIEWONSKY. No, sir. That is not a current practice in the islands.

Senator HICKEY. You speak of bonding warehouses. Will that give you an opportunity to broker warehouse receipts?

Mr. PAIEWONSKY. Yes, sir.

Senator HICKEY. Is that in the plans of the new merged bank, to broker warehouse receipts?

Mr. PAIEWONSKY. The matter was discussed, and I do not know whether they will do it on a warehouse receipt basis, or whether they will just do it on an inventory basis. But the banks now are planning to do that, because that is good business for them.

Senator HICKEY. Now, when was this bank merged, this Chase National Bank?

Mr. PAIEWONSKY. I think the banks were merged almost 2 years ago. In September 1958.

Senator HICKEY. And under this plan of warehouse receipting, this would be the agency that would perhaps broker the warehouse receipts. Is that correct?

Mr. PAIEWONSKY. Yes, sir. There are two good banks now in the Virgin Islands, the Chase Manhattan and the First Philadelphia Bank & Trust Co.

Senator HICKEY. Are you interested in the Chase Manhattan?

Mr. PAIEWONSKY. Well, when we sold the banks, I, as I made the statement here I exchanged my shares in both banks for shares in Chase Manhattan and shares in the First Bank & Trust Co. of Pennsylvania.

Senator HICKEY. Are you the majority stockholder in one of those? Mr. PAIEWONSKY. Oh, no, a fraction of a percent.

Senator HICKEY. That is all.

The CHAIRMAN. Will you proceed with your statement?

Mr. PAIEWONSKY. This second bank, the West Indies Bank and Trust Company, was opened up to over 1,000 stockholders. The residents of the Virgin Islands accounted for the great majority of all stockholders and the great majority of all shares.

Senator ALLOTT. At that point, Mr. Paiewonsky, may I ask you: What percentage of this stock do you own?

Mr. PAIEWONSKY. Of the West Indies Bank & Trust Co.?
Senator ALLOTT. Yes.

Mr. PAIEWONSKY. I think it was about 4 percent, 4 or 5 percent.
Senator ALLOTT. And how much is owned by your family?

Mr. PAIEWONSKY. They have very little.

Senator ALLOTT. You yourself own 4 to 5 percent. Now, in the

other bank, what percentage do you own?

Mr. PAIEWONSKY. I own approximately 12 percent.
The CHAIRMAN. Other members of the family?
Mr. PAIEWONSKY. No; I am the only stockholder.
Senator DwORSHAK. The second bank was sold?

Mr. PAIEWONSKY. Yes. The second bank and trust company was merged on the same basis, an exchange of shares.

Senator DwORSHAK. How much profit was made when that second bank was sold? Do you recall? Was it quite a handsome profit? Mr. PAIEWONSKY. I think it was sold for approximately twice book value, approximately that.

Senator DwORSHAK. How long had it operated before it was sold? Mr. PAIEWONSKY. It started I think in 1935, 1935 or 1936. It was sold last year.

The CHAIRMAN. Go ahead.

Mr. PAIEWONSKY. With the bank's phenomenal growth, we felt that the best banking talent was needed, and we sold to the Chase Manhattan Bank. This has given the islands a new channel of funds and a broad base for further growth.

If the committee will indulge me for a moment, I would like to note that in 1954, on the 50th wedding anniversary of my parents, we established a Paiewonsky Golden Jubilee Scholarship Fund. Each year a grant of $2,000, designed to make possible 4-year attendance at a college in the continental United States, is awarded to the graduate of the Charlotte Amalie High School selected on merit and need. I have been a member of the selecting board, together with the high school principal and the bank official. I can advise that we aim to encourage the education of students who will return to the islands with needed skills-medicine, nursing, electrical engineering, et

cetera.

So in business and philanthropy, I and the other members of my family feel a keen sense of loyalty to the islands, concern for their welfare, and dedication to their progress.

As Governor I would want to do what is best for the islands, and its inhabitants.

Senator MILLER. What do you envision to be the No. 1 problem of the islands?

Mr. PAIEWONSKY. We have a number of No. 1 problems. We have the problem of water, electricity, roads, harbors, airports, middle income housing, and the creation of industries to give diversification, so that we can give our people work in the islands.

Senator MILLER. Do you have any plans to solve those problems? Mr. PAIEWONSKY. Oh, yes, sir. I have lived with these things. I have been on the Governor's advisory committee. I am the chairman of the Governor's tourist and industry advisory committee. And we have worked with these problems.

Senator MILLER. Have you taken any action as a member of the legislature along those lines?

Mr. PAIEWONSKY. I am not a member of the legislature at the present time, sir. I served in the legislature from 1936 to 1946, and have served on committees of the legislature, such as the organic act committee, and other committees in an advisory capacity, and have served on many of the committees for the Governor in an advisory capacity. And we have made certain recommendations to the legislature.

Senator MILLER. And has the legislature taken action on those recommendations?

Mr. PAIEWONSKY. The legislature has taken action on a few of the matters, yes.

Senator MILLER. Have there been some of your major recommendations which the legislature did not carry out?

Mr. PAIEWONSKY. Well, I do not think I have had the opportunity to make the major recommendations. I think that is in the realm of the Governor and the executive department.

Senator MILLER. Is there any congressional legislation that would be needed?

Mr. PAIEWONSKY. I think from time to time we do need some congressional legislation; yes, sir.

Senator MILLER. Do you have any particular legislation in mind? Mr. PAIEWONSKY. Well, there have been several bills, certain suggestions for the changing of the organic act, and for the granting of the people of the Virgin Islands a greater degree of autonomy, such as giving them a nonvoting delegate in the Congress of the United States, and the right to elect their own Governor, and also the right to vote in a national election for President and Vice President.

I think those are the three major things that have been requested recently of the Congress. I think there are also plans of the home rule committee asking for a greater degree of home rule for the people of the Virgin Islands. This is a legislative program.

Senator MILLER. And what was your position on those?

Mr. PAIEWONSKY. Well, I am in favor of the three proposals. I feel that the people of the Virgin Islands have reached a high degree of maturity. I have advocated this in the national Democratic platform. I think it was incorporated in the previous Democratic platform and then reiterated again in this last one-the right to elect their own Governor, and for resident delegate. And there was an addition this year which asked for their right to vote for the President and Vice President of the United States in a similar manner as granted to the District of Columbia.

Of course, that would be a constitutional amendment.

Senator MILLER. And you are in favor of this home rule proposal, also?

Mr. PAIEWONSKY. The question of the home rule proposal, sir-I would have to take a closer look at it. It was not involved. I understand they hired a professional person in this direction, and I do not know what the actual recommendations are. I do feel that certain matters can be done to give the islands--or maybe it can be done within the executive branch of the Government.

Senator MILLER. Well, would you, as Governor, be making a recommendation for some kind of home rule program for the islands?

Mr. PAIEWONSKY. After I have given the matter careful study, sir: because I think right now we have enough government. And I do not feel that we want to extend and create a more expensive type of government. I think we want to have a more efficient type of government. And maybe it can be done by less government rather than more government, as far as bureaus are concerned.

Senator MILLER. Do you have anything in mind, specifically, by way of Federal appropriations or activities down there?

Mr. PAIEWONSKY. At the present time, under our economic provisions that we have, I do not believe that it is necessary for the Government of the Virgin Islands to request any Federal appropriations. I think we have a formula worked out, the one worked out by the 83d Congress, which has created the economic impetus that we are experiencing at the present time.

The CHAIRMAN. I am sorry, Mr. Paiewonsky. We are going to have to answer a quorum call.

We will be in recess for 10 minutes.

(Short recess.)

The CHAIRMAN. The committee will be in order again.

You may proceed.

Mr. PAIEWONSKY. As Governor I would want to do what is best for the islands, and its inhabitants. I do not believe that I would have any occasion to consider or take any action benefiting my retail, theater, and realty holdings except insofar as these would benefit together with the rest of the islands and their inhabitants from a sound and vigorous administration conducted in the interest of all the people. I do not visualize that these retail holdings and real estate holdings will raise any specific conflict of interest problem.

Senator ALLOTT. May I interrupt you there, sir?
The CHAIRMAN. Senator Allott.

Senator ALLOTT. I was checking the Virgin Islands Code Annotated a few moments ago. I am referring now to volume V of the Virgin Islands Code Annotated, page 215, chapter 85, section 2401, and the subsequent sections, providing for the assessment of property in the Virgin Islands.

Now, I do not find here any directive in the assessment requiring an equalization of property, even though that may be implied by the general law.

I refer to section 2404, particularly, which I will read as it is:

Assessment of property factors to be considered. In computing the actual value of real property subject to taxation, the assessor shall take into consideration all of the following elements and incidents: (1) The location and surroundings; (2) quality or fertility; (3) condition of structures; (4) recent cost to the present owner; (5) recent sale price of adjacent property; (6) recent bona fide holder; (7) accessibility; (8) proximity to public facilities, convenience, and utilities; and (9) rental or income derived directly from the property.

Now, is it not a fact, Mr. Paiewonsky, with relation to the statements you have just made, that there is a great variation in the assessment of values, depending upon whether the person owning the property is a native of the islands, or whether it has been purchased? Mr. PAIEWONSKY. I do not think that is a correct statement, sir. And I can say that the Governor of the Virgin Islands undertook a study and a survey for a complete reassessment.

Senator ALLOTT. When did this occur?

Mr. PAIEWONSKY. This is about to go into effect at this moment. I think Governor de Castro, who is here, and who was working as a budget officer of the present administration, can enlighten you on this particular program.

I think a scientific team has been working on this now for over a year, and they have come up with their final recommendations, and the Government is about to put this into operation at this moment. Senator ALLOTT. You say that you do not imagine that your real estate holdings will raise any specific conflict-of-interest problems. It is a fact that you and your family hold extensive real estate holdings on St. Thomas, not only within the town of Charlotte Amalie, but outside!

67160-61 -3

Mr. PAIEWONSKY. The property we own is mostly commercial property within the town of Charlotte Amalie, sir.

Senator ALLOTT. And do you not also own considerable property which is susceptible of development for future residential sites? I do not recall the name of the particular drive, but along the areas which go up into the hills, there?

Mr. PAIEWONSKY. No, sir; that was sold some time ago. We do not own that. We have disposed of that.

Senator ALLOTT. Now, who was that sold to?
Mr. PAIEWONSKY. I do not know the name.

I had 3 acres all together on the top of that hill. My brother had, I think, 8 or 12. And he sold his to-I believe the person's name was Smith, someone from New England.

I am not familiar with the people that bought it. This was several years ago.

Senator ALLOTT. What would be the extent of the total holdings of you, yourself, that is, either you or your wife, outside of Charlotte Amalie?

Mr. PAIEWONSKY. The only property that I own in partnership with my brother outside of Charlotte Amalie is part of Hassell Island, which is an island off the shore.

Senator ALLOTT. That is the place where you have your own sum

mer home?

Mr. PAIEWONSKY. No; we have not built a home there yet, but we plan to do that, sir.

Senator ALLOTT. Your brother has developed it to some extent?

Mr. PAIEWONSKY. My brother has developed his portion, yes, sir, or is in the process of developing.

Senator ALLOTT. And this is the only property outside of Charlotte Amalie that you or your family own on St. Thomas?

Mr. PAIEWONSKY. That is correct.

Senator ALLOTT. Now, what is the situation with respect to St. Croix?

Mr. PAIEWONSKY. The only property that we own in St. Croix, that I own, is a building site on which I was building a home, because I was residing in St. Croix, operating the distillery, and it constitutes I think maybe an acre and a half or 2 acres, which is a home plot. Senator ALLOTT. Where is that located?

Mr. PAIEWONSKY. That is located on the estate of Budsberg, right opposite the Buccaneer Hotel, on the other side of the road from the Buccaneer Hotel. And the distillery is the only other property that we have in St. Croix.

Senator ALLOTT. I understand, of course, that you still own this distillery.

The CHAIRMAN. Go ahead.

Mr. PAIEWONSKY. However, if any such situation conflict of interest should develop, I would undertake to step aside from the situation 'so that the decision could be made by the Government Secretary as Acting Governor in accordance with the provisions included by Congress in 1954 in the Revised Organic Act of the Virgin Islands.

Senator ALLOTT. Now, may I ask you another question, there?
Who appoints the Government Secretary?