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68TH ConcrEss,| HOUSE OF REPRESENTATIVES. (Document 1st Session. No. 229. VIRGIN ISLANDS OF THE UNITED STATES. LETTER THE ACTING SECRETARY OF THE NAVY, DRAFT OF PROPOSED LEGISLATION TO EXTEND THE PROVISIONS OF THE NATIONAL BANK ACT TO THE VIRGIN ISLANDS OF THE UNITED STATES. MARCHE 25, 1924.—Referred to the Committees on Banking and Currency and : Insular Affairs and ordered to be printed. <4 DEPARTMENT OF THE NAVY, Washington, March 22, 1924. The SPEAKER OF Tet HOUSE oF REPRESENTATIVES. My Dear Mg. Speaker: I have the honor to transmit herewith a draft of a proposed bill to extend the provisions of the national bank act to the Virgin Islands of the United States. The Virgin Islands of the United States, formerly the Danish West Indies, were Breansed from Denmark pursuant to the convention between the nited States and Denmark, signed August 4, 1916. These islands were formally occupied by the United States on January 17, 1917. In suggesting to this department the enactment of this proposed legislation; the honorable the Secretary of the Treasury expressed the following comments and ‘observations, which present clearly and succinctly the essentiil “facts relating to ‘the desirability of the legislation proposed: siech of I have the honér to ineclose herewith a draft of a proposed bill to extend the national bank act to the Virgin Islands of the United States, which, as you know, were purchased from Denmark pursuant to the convention between the United States and Denmark, signed August 4, 1916. io It is my understanding that the only bank in the ‘Virgin Islands that does a general banking business there is the National Bank of the Danish West Indies. This bank, which, as I understand it, is owned by four Danish banks, was or- ganized, as you are aware, under a concession granted by the Minister of Finances of the Government of Denmark under date of June 20, 1904, pursuant to the authority vested in him by Danish law No. 50 of March 29, 1904, the concession providing, among other things, that the bank should have exclusive right in the 2 VIRGIN ISLANDS OF THE UNITED STATES, Virgin Islands for a period of 30 years to issue bank notes, exchangeable with gold on demand of the holder, subject to the right of termination on certain conditions set forth in the law and in the concession. The United States, as you know, is under an obligation to maintain this concession in accordance with the terms upon which it was given. For your convenient reference I am inclosing herewith a copy of a report made by the special commissioners of the Treasury Department appointed by the Secretary of the Treasury in 1920 to investigate currency and banking conditions in the Virgin Islands. Copy of the law and concession above mentioned, as well as a copy of the convention of August 4, 1916, will be found in Appendix 2 of the report. While American currency is in use in the Virgin Islands, it is my understanding that it forms only about one-fifth of the total currency there, the Danish West Indian gold franc being still the legal standard of value in the islands. It is believed that it would be to the advantage of business in the islands, especially since by far the greater part of their trade is with this country, if Congress should make the United States dollar the legal standard of value there. It does not, however, seem to me advisable to request Congress to take such action while the Danish West Indian National Bank under its present control has the right to issue bank notes in the currency of the islands as from time to time established. It seems possible that at some future date the National Bank of the Danish West - Indies will desire to reorganize as a national bank under the national bank act of the United States. It is my belief that such a reorganization would be of advantage from the standpoint of this Government, particularly as it would remove the objection that now exists to the introduction of the United States dollar as the legal standard of value in the islands. Under the laws now in force, however, a reorganization of this kind would not seem possible, since Congress has not as yet extended the laws of the United States generally, nor the national bank act in particular, to the Virgin Islands. The purpose of the proposed bill is to extend the latter act to the islands, so that in case at a future date the bank should desire to reorganize as a national bank under our laws the requisite power to do so will not be lacking. Section 5146 of the Revised Statutes requires every director of a national bank during his whole term of service to be a citizen of the United States, and further provides that at least three-fourths of the directors must have resided in the State, Territory, or district in which the association is located for at least one year immediately preceding their election, and must be residents therein during their continuance in office. In this connection attention is invited to article 6 of the convention above named. This article defined the status of Danish citizens residing in the islands and provided for a procedure by which those remaining in the islands after the cession might preserve their citizenship in Denmark. Article 6 further provides that the civil rights and the political status of the inhabitants of the islands shall be determined by the Congress, subject to the stipulations contained in the convention. On this subject I beg to quote from a letter, dated March 9, 1920, written by the State Department to Senator William S. Kenyon, chairman of the joint commission to visit the Virgin Islands: “As Congress has not yet passed an act determining the civil rights and political status of the inhabitants of the islands, the department in issuing pass- ports to inhabitants of the Virgin Islands who, under the provision of the treaty, appear to be entitled to the protection of this Government, merely describes them as ‘inhabitants of the Virgin Islands entitled to the protection of the United States.” The status of such persons is considered analogous to that of those inhabitants of the Philippine Islands who, under the provisions of the treaty with Spain of December 10, 1898, and the act of Congress of July 1, 1902, are held to be ‘citizens of the Philippine Islands, owing allegiance to the United States,’ and are granted passports as such; that is, they have American nationality and are entitled to the protection of this Government, but have not the civil and political status of citizens of the United States.” The letter referred to is printed on pages 31-32 of the report of said joint commission, dated January, 1920 (H. Doc. No. 734, 66th Cong., 2d sess.). In view of the fact that those inhabitants of the Virgin Islands who have not retained their Danish citizenship do not appear to enjoy the status of citizens of the United States it has seemed to me advisable to provide, in the proposed bill, that such inhabitants shall be regarded as citizens of the United States within the meaning of section 5146 of the Revised Statutes, so that they may be eligible for VIRGIN ISLANDS OF THE UNITED STATES. 3 membership on the board of directors of such national bank as may be estab- lished in the Virgin Islands. The enactment by Congress of the proposed bill inclosed herewith would seem to be desirable unless you perceive some objection. It has already been referred to the Solicitor of the Treasury, the Comptroller of the Currency, and the “Governor of the Virgin Islands, and is regarded by them as in proper form to accomplish the desired purpose. I inclose herewith copy of letter from the Governor of the Virgin Islands, dated Deeember 27, 1922, from which you will note that the proposed bill entirely meets with his approval and that he sincerely hopes for its passage, as a desirable step forward in financial matters in the islands. The proposed bill has been prepared in this department as the result of a request previously made by this department to endeavor to find a solution for the financial problems existing in the islands. It is hoped that if it meets with your approval you will feel disposed to take appropriate steps to secure its enact- ment by Congress. This department is in accord with the views of the Secretary of the Treasury, as expressed in the foregoing, and recommends that the proposed legislation be enacted. Sincerely yours, T. ROOSEVELT, Acting Secretary of the Navy. A BILL To extend the provisions of the national bank act to. the Virgin Islands of the United States. Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That the national bank act, as amended, and all other acts of Congress relating to national banks, shall in so far as not locally inapplicable hereafter apply to the Virgin Islands of the United States: Provided, That such inhabitants of the Virgin Islands of the United States as resided therein and were Danish citizens on January 17, 1917, and who have not since that date elected to preserve their Danish citizenship in the manner provided for in article 6 of the convention between the United States and Denmark, signed August 4, 1916, shall be regarded as citizens of the United States within the meaning of section 5146 of the Revised Statutes, as amended: Provided further, That section 19 of the act of February 8, 1875 (Eighteenth Statutes at Large, page 311), shall not apply to the National Bank of Danish West Indies: Provided further, That any bank which shall organize under the authority of this act shall not have the right to issue bank notes until after the expiration of the concession granted to the National Bank of the Danish West Indies, or the relinquishment of such concession by said bank. 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