REPORT OF THE GOVERNOR OF THE VIRGIN ISLANDS + 5

investment in plant equipment and machinery, the company will em-
ploy 1,200 to 1,500 persons in various categories of employment dur-
ing the construction period, which will take about 18 months. About
400 employees will be employed on a permanent year round basis to
run the plant, with job opportunities for professional, executive,
skilled and semiskilled workers, which will contribute substantially
to a higher standard of living for the people of the Virgin Islands.
 A major problem for consideration is the question of what to do
about the Virgin Islands Corporation (a wholly owned Federal
corporation) and its sugar operation, which seems to be plagued with
increasing deficits year after year. A brief look into the history of
this corporation reveals that in 1957 the Public Works Subcommittee
of the Committee on Government Operations of the United States
House of Representatives recommended that the next 3 to 5 years
should be regarded as a period for testing the economic soundness
of Vicorp's sugar operations and that the corporation should be
continued in Government ownership during that time.
 The Committee further recommended that Congress should study
the results with the view of disposing of the sugar industry to private
industry or to the territorial government, if it showed a profit and if
reasonable safeguards could be agreed upon to protect the islands'
economy, or with a view to setting up a program for the discontinu-
ance of the operation and disposing of its assets if it continued to be
unprofitable.
 The 5-year testing period shows that the corporation sustained an
average annual loss of some $378,000. Also, the figures on employ-
ment show that the corporation is in the odd position of importing
practically all of its labor force to harvest a crop which is being
processed and marketed at a loss.
 The Federal Government undertook the sugar operations on St.
Croix in 1934 as a relief project to rescue a population economically
stranded by bankruptcy of the major sugar factory. The sugar op-
eration in St. Croix cannot justify itself financially on its past per-
formance, which shows an average loss of $378,000 over the last 5
years. Neither can it justify itself on the other premise for which it
was created: that is, to provide employment for the natives of St.
Croix.
 Another important consideration is the fact that labor costs are
constantly increasing and the need for higher wages and other in-
creased costs of operation will tend to make the losses greater and
greater each year. Since the sugar industry generally depends on
cheap labor it will become extremely difficult to keep such an industry
going without a very substantial subsidy, which must now come out
of local government matching funds, which ordinarily would be