That is something that we were all very much concerned about and one of the reasons I backed Ralph Paiewonsky is the fact that I was absolutely sure that, I had made up my mind, that he was the best man in the islands for that position.

Our biggest fear, sir, was that some stranger not familiar with the problems of the territory would come down there and perhaps repeat the mistakes that had been made in the past.

Senator KUCHEL. Thank you. No further questions.

The CHAIRMAN. Mr. Miller.

Senator MILLER. I would like to ask Mr. De Lugo, you state in your statement that you are a commentator for WIVI?

Mr. DE LUGO. Yes, sir.

Senator MILLER. Ís that your only occupation outside of being a member of the legislature?

Mr. DE LUGO. Yes, sir.

Senator MILLER. How long have you had that as your sole occupation?

Mr. DE LUGO. For many, many years. I have been with WIVI for about 5 years and before that I was in radio station WSDA in St. Thomas from the time they started radio. Prior to that I had been in radio in Puerto Rico and also in the Armed Forces.

Senator KUCHEL. Are you on a straight salary basis with WIVI? Mr. DE LUGO. Yes, sir.

Senator KUCHEL. No commissions of any kind?

Mr. DE LUGO. No. Every so often I ask that my salary be increased.

Senator KUCHEL. You were here yesterday?

Mr. DE LUGO. Yes, sir.

Senator KUCHEL. You know of the interests of the Paiewonsky family? Are any of those interests advertisers with WIVI? Mr. DE LUGO. No, sir; I don't think we have any.

Senator KUCHEL. You have no financial tie with the Paiewonskys? Mr. DE LUGO. There is absolutely no financial tie between myself and Ralph Paiewonsky. We have never had any financial dealings at all.

The CHAIRMAN. Are there additional questions?

Senator BURDICK. Mr. De Lugo, how long have you been a member of the legislature?

Mr. DE LUGO. For 4 years.

Senator BURDICK. Were you in the room all during the testimony yesterday?

Mr. DE LUGO. Yes, sir.

Senator BURDICK. You heard the testimony about the Virgin Islands Corporation and how it was losing money over the years? Mr. DE LUGO. Yes, sir.

Senator BURDICK. Do you as a member of the legislature have any jurisdiction in any way over Virgin Islands Corporation?

Mr. DE LUGO. No, I do not, sir. As has been pointed out, it is a Federal operation. I wish I could have a voice perhaps or that the Virgin Islands people would be given a larger voice in the operation of the Virgin Islands Corporation.

It was pointed out yesterday that the Virgin Islands Corporation is run by absentee management to a certain extent. The board of directors has on it only one native Virgin Islander. Senator BURDICK. You answered my question.

Now my point is, have you ever as a member of the legislature, made any recommendations that would change the operation of the Virgin Islands Corporation?

Mr. DE LUGO. I have spoken to the Interior Department during the last few years requesting that they expand the program that they initiated some years ago, of making available to small farmers government land and allowing them to farm it. It was very successful.

I have urged that some of this land that is not in sugarcane at the present time be subdivided and be made available to the people of the Virgin Islands for homes. I have requested that VICORP—there are many houses that they have, these houses that they put cane workers in, and they are not bad houses, but many of them are closed up and we are now faced with a housing problem in St. Croix, too. I have requested and the Governor has said he was going to request it of the president of VICORP that these houses be opened up and be rented to the people in the islands who are faced with a housing problem but VICORP has maintained a strict policy, if you don't work for VICORP you can't live in the houses, and they closed up the houses and let them go to pieces.

Senator BURDICK. Have you ever made any other recommendations? Mr. DE LUGO. A few of the recommendations, I am very much concerned at the present time, Senator, with the power situation. As you know, I am sure many of you are aware of the power situation, I know you are, having been in the islands, aware of the power crisis that we face in St. Thomas. Now this St. Croix the same thing is happening. This is because the company has not invested in new equipment, has not bought additional generators. As far as they are now being in generators, small generators, the old ones are breaking down. When I left the islands a few days ago they could not supply enough power, and they hoped they would have another generator on the line by 10 o'clock that night, they could not supply enough power for the islands of St. Croix. This is a very serious thing.

Senator BURDICK. Now yesterday when we questioned Mr. Paiewonsky about these various companies he testified that the net worth of A. H. Riise Chemical & Distillery Corp. was far in excess of $451,000. I believe he said close to a million dollars. Did you ever raise any question or make any suggestion in regard to the loss that was taken by VICORP on molasses and the evident prosperity of the chemical company which did 70 percent of the business of VICORP? Mr. DE LUGO. I was not too aware of that problem, sir, until the administration asked us to meet with the manufacturers of rum, not primarily Mr. Paiewonsky. He was one of the main interests because he manufactures it but with those who were distillers in the islands. We were concerned that if something happened to the rum industry that we would lose these revenues that we at that time were trying to bring back to the islands.

Some went to the island of Puerto Rico. This was at the time of the Suez crisis. The molasses price had gone sky high. The representation that had been made to us and the way I made my judgment

is because the distillers said and they convinced me and convinced the Governor of the island, Governor Merwin, by presenting their books on the entire operation, that they would not be able to operate during this period buying molasses at the world price. Therefore we went along with this subsidy and the Interior Department also, naturally

at that time.

Senator BURDICK. Were you not concerned and are you not concerned now that apparently the people who do business with VICORP are making money in the molasses business and the VICORP itself loses money?

Mr. DE LUGO. Sir, may I say this, that if for one moment I thought VICORP, I believed that VICORP, was being subsidized or being used to the advantage of a privileged few I would campaign as vigorously as possible before you gentlemen urging you to abolish it immediately but I am not convinced of that. I know that VICORP at the present time is operated, it gives employment to the people, and it helps the island of St. Croix primarily. I do not believe that that is the case.

Senator BURDICK. Does not the deficit it is running concern you? Mr. DE LUGO. Certainly.

Senator BURDICK. What do you suggest be done about it?

Mr. DE LUGO. At the present time Virgin Islands Corporation I believe has said they are going to make money in the sugar operation this year because we have been lucky, we have had rain. Last year they lost because we didn't have rain.

The CHAIRMAN. Mr. Lausi, I would like to have from you a statement by what authority the Board of Directors of the Corporation changed the contract for the distillers to the financial damage of the United States. What authority they had in other words to modify the contract that said they should pay 2 cents less than the landing price bringing it down from 16 or 17 cents, first to 10 cents and then to 7 cents. What authority did they have to do that to the financial damage to the United States?

Mr. LAUSI. I could not give you authority for it now.

The CHAIRMAN. I want you to find out what it was and bring, if you will, the proper resolutions of the Board showing their desire to do that in order to see what the legality was of the transaction. Mr. LAUSI. I can tell you the reason for it.

The CHAIRMAN. I can understand the reasons but unfortunately you have to have law with you. I signed some papers not long ago and sent them in. I found out that the corporation had to say that I had authority to do it although I own the corporation. Mr. LAUSI. I will do that, Mr. Chairman.

Senator BURDICK. The fact remains Mr. De Lugo, that the distilleries doing business with VICORP were making money and VICORP was losing money in this field.

Mr. DE LUGO. That is right.

Senator BURDICK. You never did anything as a legislator?

Mr. DE LUGO. I have been in the legislature 2 years. I have not done anything about that. It is a Federal operation, sir. I have no voice in the operation of VICORP. I am concerned about it.

Senator BURDICK. You said you made recommendations regarding agriculture and regarding housing.

Mr. DE LUGO. Yes.

Senator BURDICK. You have never made recommendations regarding this field?

Mr. DE LUGO. I was not aware of this situation, sir, actually, until this hearing.

Senator BURDICK. Do you know a corporation known as Queen's Quarters, Inc.?

Mr. DE LUGO. Is that in St. Thomas or St. John?

Senator BURDICK. St. Thomas. Do you know anything about it?
Mr. DE LUGO. No, sir. There is a Queen's Restaurant.
Senator BURDICK. This is an import-export business?

Mr. DE LUGO. I know nothing about it.

The CHAIRMAN. Senator Long.

Senator LONG. I would like to ask a question or two, Mr. De Lugo. There have been two descriptive titles applied to the Virgin Islands, very striking; we have heard them before. One is that its past is a poorhouse. More recently, that it is becoming a showcase of democracy. In the discussion so far it seems to me that we have dealt mostly with the material side of it, that is the economics of it. If we are going to make it a showcase for democracy we must deal with certain human equations also and the things that have a bearing on the social growth of people, the cultural growth, their outlook, quality. Something has been said about education.

You have a compulsory school attendance law as do all American communities. I am very indefinite, however, in my understanding of it as a result of comments yesterday as to how effective it is. Do all the children go to school, do they go for a full day or part of the day. What is the situation?

Mr. DE LUGO. For a short time about 2 years ago there were some children that could only attend classes and this was for a very brief period, because of lack of teachers and rooms at that time-we call split classes, only a half day. That has been remedied.

At the present time our teachers are excellent and all children go to school. The children that are living in these homes that members of this committee are concerned about, and rightly so, these children are receiving all of the privileges of Virgin Islands citizens.

They are attending school. They get all hospital benefits. In the Virgin Islands.we deny no one hospitalization because of economic reasons. If they are not in a position to pay and they are ill they are taken care of.

Senator LONG. How about recreational facilities?

Mr. DE LUGO. Recreational facilities, we have had a crash program on that because I am a firm believer that lack of recreational facilities breeds juvenile delinquency, contributes to it. At the present time we have a lot of recreational facilities. They are well organized. Baseball season, softball, basketball and both girls' teams and boys' teams, and I would say that we have done pretty well in that field. Senator LONG. What is the source of your teachers' supply, local people?

Mr. DE LUGO. Mainly local people. We do have quite a number of people from the mainland who are there. They are hired if we feel they can make a contribution to the island. I would say many of them have made excellent contributions to the territory.

Senator LONG. You heard the statement yesterday that the beginning salaries are approximately $3,500 a year. Is that correct? Mr. DE LUGO. Yes, sir.

Senator LONG. Is that your understanding?

Mr. DE LUGO. Yes, sir.

Senator LONG. How high do salaries go?

Mr. DE LUGO. They can go as high as $6,500.

Senator LONG. What would apply to administrative positions or

classroom?

Mr. DE LUGO. In administrative positions, the commissioner of education, who is an appointee of the Governor of the Virgin Islands with the confirmation of the legislature, supervises the entire educational program in the territory and he receives a salary of $11,000. I believe that is fixed by the organic act as a member of the cabinet. Senator LONG. You do that with only about 20 percent of your total budget. That is better, I think, than any of the States.

Thank you. I wanted the answers to those questions.
Mr. DE LUGO. May I volunteer something?

Senator DwORSHAK. When were you elected Democratic committeeman?

Mr. DE LUGO. I was elected just prior to the convention in Los Angeles.

Senator DwORSHAK. Did you contest for that office with anybody? Mr. DE LUGO. Yes, sir.

Senator DWORSHAK. Who was your opponent?

Mr. DE LUGO. My opponent was the man before you, Mr. Paiewonsky, who was national committeeman for 20 years.

Senator DwORSHAK. Did you think he was a good committeeman? Mr. DE LUGO. I thought he was an excellent one.

Senator DwORSHAK. Why did you want to take his job away from

him?

Mr. DE LUGO. I felt that I could make a contribution as national committeeman.

Senator DWORSHAK. You thought you could do a better job than he was doing? Isn't it quite illogical to imply that you thought that the man who was not doing a very good job as national committeeman would be an outstanding Governor of the islands?

Mr. DE LUGO. Actually, he was an excellent national committeeman. He was recognized by all factions of the community as an excellent national committeeman. The judgment of the islands will have to be awaited to see if I am better. I did not replace Mr. Paiewonsky because he was not a good national committeeman.

Senator DwORSHAK. It has been testified that there is almost unanimous support in the islands for Mr. Paiewonsky for the governorship? Mr. DE LUGO. That is so.

Senator DWORSHAK. But he did not have much support when he ran against you for the job of Democratic national committeeman? Mr. DE LUGO. Yes, he did. I believe I beat him by one vote or something like that.

Senator DWORSHAK. But you got a majority of the vote?

Mr. DE LUGO. Yes, but

Senator DwORSHAK. You ought to be the candidate for appointee for Governor?