Senator CARROLL. Do you think that these 10 or 15 families really have a humanitarian interest in these people that are in lower income groups?

Mr. DE CASTRO. I would say the majority of them have and I would say that those few persons who do not have such interests do not have any way of controlling conditions in the islands. Conditions are controlled by a majority of the people.

Senator CARROLL. If you turn this into a tourist mecca—and everybody wants the tourist to come in to spend money, even in my State tourism is a very important and growing industry-do you think it would be a good idea to turn the Virgin Islands into a gambling mecca?

Mr. DE CASTRO. Senator, you touch on a subject which is very close to my heart.

Senator CARROLL. Before you answer that, I am going to ask the man who is nominated to be Governor how he feels about this subject. Then I will come back to you, because I want to touch your heart on this one.

Mr. PAIEWONSKY. Senator, I am definitely against gambling, but I think I should in my answer tell you some of the steps that we took against it so that you would know the stand of our family. Several years ago the Legislature of the Virgin Islands passed a law authorizing gambling, not realizing the extent of what would happen, figuring it would bring tourists into the islands. Overnight these machines that are commonly called one-armed bandits were installed in almost every business establishment, including the hotels and shops all over the Virgin Islands. Our family was one of the families that refused to permit these machines to be placed in any one of our establishments. That is the record.

In addition to this, my brother and myself have conducted a crusade against this law until we brought about its repeal. I think that should answer your question. I think in the islands the members of the legislature, the members of the government, have known for years my position on gambling. I issued a statement also to the New York Times which was published on Sunday.

Senator CARROLL. You mean last Sunday.

Mr. PAIEWONSKY. Last Sunday. I would like to just read one part of that because this is my frank opinion about it and I think it is wellsince you have asked the question, that it should be expressed on the record.

The question was asked that the new Governor has been reported in favor of organized gambling. He strongly denied this, pointing out that his family, a force in the islands' economy, had always refused to permit gambling machines in their shops and theaters. "I don't think people should be allowed to make a living out of gambling," Mr. Paiewonsky explained, that "the tragedy of Cuba, corruption, leading to disaster, came on the heels of gambling."

I feel very strongly on this particular point, Senator.

Senator ČARROLL. I think that is a very fine statement because when you draw in gambling, the first thing you know you will have the syndicate in there. And then your thousands of poor people will see all this grandeur and all this spending which they will not participate in except indirectly. You will have a difficult problem in the Virgin Islands.

Mr. PAIEWONSKY. I think we have sufficient to offer in the line of climate, beauty, and free port as an attraction to bring people to our shores. I believe the charm and quaintness of the islands, the old Danish architecture, all of those things lend to a very fine tourist development, and I think those are more than sufficient to overcome any degree of satisfaction that people might feel they can get through gambling.

Senator GRUENING. May I interrupt a moment? I would like to inquire what time Governor de Castro's plane is leaving, because we don't want him to miss it.

Mr. DE CASTRO. I won't miss it. I am leaving at 5 o'clock.

Senator CARROLL. I will not pursue this, but the more I get into this the more interesting it becomes. I have taken all the time from my colleague from Colorado who has really given me some valuable information, because he has traveled down in the Virgin Islands and I have not.

Mr. DE CASTRO. May I make my statement on gambling now?

Senator CARROLL. Yes. I am not going to forget your heart, and I think this is appropriate at this time.

Mr. DE CASTRO. Senator Carroll, I have had the misfortune, or fortune perhaps, of becoming Governor just at the time that large hotels began to come into the Virgin Islands, just at the beginning of the tourist boom.

May I say that I was under pressure at that time to go to the legislature to have gambling authorized. I resisted it with every effort I could command. I made public statements that so long as I was Governor I wouldn't permit it and so long as I lived in the Virgin Islands I would resist it with every power at my command.

I felt then and I feel now that gambling will spoil the Virgin Islands. I feel that there is no opportunity for gambling in the islands, that people would not like it. It would destroy the islands as a decent, fine, tourist resort. We would get the worst group of people and not the finest as we are getting now.

I don't think that gambling will ever be legalized in the Virgin Islands again, and I still have a little voice in political and administrative measures there. It would be resisted with all the power that all of us could command. I know that Mr. Paiewonsky supported me in my stand against gambling in the islands.

That is all.

Senator CARROLL. I think that is a very clear-cut and commendable statement. I am personally thankful to you for stating your position. Just one or two more. As a former Governor how much political power is centered in the governorship? You know what I mean by political power.

Mr. DE CASTRO. The Governor is the constitutional executive and we have a legislature and a very strong and very vocal one, a very good legislature, I may say, of 11 members. The Governor has the power to approve or disapprove bills and they can pass bills over the Governor's veto.

Senator CARROLL. I understand that. That is not the political power I am talking about.

Mr. DE CASTRO. He has considerable political power.

Senator CARROLL. I am talking about the distribution of favors. I am talking about his influence in the business establishments of the islands.

This is the sort of thing I want to know. How much power could. you-not did you, but could you-have exercised if you wanted to throw your weight around a little bit?

Mr. DE CASTRO. On the business life of the islands?

Senator CARROLL. Yes.

Mr. DE CASTRO. I would say very little. The Governor has the limitations of an American Chief Executive. He has considerable political power. He can mold public opinion by public speeches and so on, but he cannot control the business of the islands.

Senator CARROLL. Can a good Governor be a powerful influence for good?

Mr. DE CASTRO. Oh, certainly, sir.

Senator CARROLL. Can a good Governor not do something about these people living under slum conditions?

Mr. DE CASTRO. Yes, sir; and it is being done all the time, Senator. It is being done all the time.

If you would come down to the islands you would see the public housing projects that have been started, that are completed, that are being built, and we now have a crack program of emergency public housing which is going on now to house people who are living under the worst conditions until we can build new public housing for them.

Senator CARROLL. Can a good Governor through these 10 or 15 families create a greater interest in what is happening to the people rather than just in how much money they can make?

Mr. DE CASTRO. I don't think that is a very strong deterrent condition in the islands. I wouldn't say the 10 or 15 families are oppressing anybody in the islands now. Those conditions just don't exist there, Senator Carroll.

Senator CARROLL. I am not talking about oppression. I am talking about improvement.

Mr. DE CASTRO. I think in the main these rich families are sympathetic with the improvement of the islands; yes, sir.

Senator CARROLL. Then just one last question to Mr. Paiewonsky. You and your family have been there 60 years.

Mr. PAIEWONSKY. The family has been there 60 years.

Senator CARROLL. Do you have a deep feeling about these people who are way down here in the low-income group?

Mr. PAIEWONSKY. I have, Senator.

Senator CARROLL. I know you have been a successful businessman. Personally I see nothing wrong in having a gift shop while serving as Governor. There would be nothing wrong with having a drygoods store or a drugstore. I don't know about your rum and molasses business and what has been going on. I am more concerned with the man who comes in to do a job.

What is the reason you want to be Governor of the Virgin Islands? Mr. PAIEWONSKY. Because I can do a job for the very people you are talking about, Senator, and I felt that I did a part of this when I organized the West Indies Bank. I think the record will prove that we have caused more homes to be built for people in the Virgin

Islands than in the previous maybe 20 or 30 years, in the short period that we were in existence, and we have gotten this ball moving in that direction and it was for the benefit of these people that I worked and worked strenuously.

I think my record in the islands will indicate, and if you talk to the low-income people, they are 100 percent behind me because they know that I am for them and want to help them, to elevate them in their position.

Senator CARROLL. In other words, you are saying that the lowincome groups are sympathetic to you and would be sympathetic to your appointment as Governor?

Mr. PAIEWONSKY. That is where I have the greatest support, sir, from the low-income-group people in the islands.

Senator CARROLL. I thank the Senator from Colorado for yielding. Senator ALLOTT. I would like to quote from what has probably become the most widely circulated educational memorandum from a Government official who recently made a survey of the Islands, Governor, and I just want to use one phrase. I hope to use this later in the hearings.

He says: "The housing plight is ghastly."

Regardless of what you have said, the facts are that in the Virgin Islands you essentially have a two-class society in which those on top are people of considerable wealth, and you have no real middle class society in the Virgin Islands, do you?

Mr. DE CASTRO. Yes, sir. What was that question?

Senator ALLOTT. You said 500 or 600 families out of the total

lation would be in what you called the middle class group.

Mr. PAIEWONSKY. In need of housing.

Mr. DE CASTRO. In need of housing we said.

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Senator ALLOTT. While we are talking about that, the housing that has been built has been public housing. The bank did not finance that, did it?

Mr. PAIEWONSKY. No; private housing.

Mr. DE CASTRO. The bank financed private housing considerably. Senator ALLOTT. And those houses have been primarily of a luxury type?

Mr. DE CASTRO. No, sir.

Senator ALLOTT. Where are these houses built?

Mr. DE CASTRO. When I was in the West Indies Bank the bank made hundreds of thousands of dollars of loans to small property owners, houses that were valued at between $10,000 to $12,000 that are not luxury type houses.

Senator ALLOTT. Where are these houses built?

Mr. DE CASTRO. All over the Island of St. Thomas and some in St. Croix, homes built by local people or old homes refurnished on small loans by the bank.

Senator ALLOTT. Let me ask you one further thing. Is the slum area just east of Charlotte Amalie cleared as of this time?

Mr. DE CASTRO. I suspect you are referring to the slum area to the west of Charlotte Amalie.

Senator ALLOTT. No. I am talking about that area where you go on the main street along the waterfront. Maybe my direction is wrong.

Mr. DE CASTRO. That is east of the city of Charlotte Amalie. That is east of the city of Charlotte Amalie.

That area is due and has plans for an urban renewal program now. Senator ALLOTT. Has this area been cleared?

Mr. DE CASTRO. No, sir, not yet, but, Senator, in clearing any area in St. Thomas the problem comes in furnishing temporary housing to put those people in while the area is being cleared.

In other words, you can't clear an area until you have provided housing somewhere else, and that is where the problem lies and it is being worked upon quite vigorously. I mean a close study.

You quoted from a gentleman's report. I know the gentleman. I talked with him for many hours. It was I who arranged for him to make the tour of the slum area.

The Governor said take that gentleman out personally and see these areas, and we discussed it at length.

Senator ALLOTT. I saw the area, too, and went through it.

Mr. DE CASTRO. But he did not compare what is being done to relieve those conditions and I assure you, Mr. Chairman, that considerable has been done and is being done.

Senator ALLOTT. Mr. Chairman, I am going to have to leave for this legislation pending on the floor, so I will cease my questions at this time.

Senator GRUENING. Are there other questions?

Senator HICKEY. I just have one for the Governor, Mr. Chairman. Senator GRUENING. Senator Hickey.

Senator HICKEY. Mr. Governor, I was in the islands several years ago and I got the impression that there were many youngsters in the islands who should be going to school who were not able to go to school because there were not schools for them, either public or private. Is that true?

Mr. DE CASTRO. May I ask the question how long ago were you in

the islands?

Senator HICKEY. Three years ago.

Mr. DE CASTRO. Senator, I think there must be an error somewhere because there is compulsory public education and every child of school age goes to school and those few who might be found to be truant are picked up very rapidly by truant officers.

I would say our system of public education covers every child who is eligible by age to go to school.

Senator HICKEY. With respect to these children who live in the slum areas that have been discussed, is that true there also?

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Mr. DE CASTRO. Oh, yes, sir. Since you were there the school gram has increased considerably. We just broke ground 2 weeks ago for a large elementray school out on the east end of Charlotte Amalie with 38 rooms and we are going to break ground within 2 weeks for another small school with about 12 rooms on the western end of the city.

The educational conditions have improved greatly, Senator. I am glad you asked the question. It is quite basic.

Senator HICKEY. You have plenty of teachers, do you?

Mr. DE CASTRO. We would have more. We have enough teachers at the present time so that at this time there are no children that go to school only for a half day on St. Thomas and that goal is being achieved throughout the islands, yes, sir.