During the year July 1, 1950, to June 30, 1951, the peoples of Micronesia have demonstrated increasing ability to undertake responsibility for their political, economic, social, and educational advancement. Understanding and acceptance of democratic principles and procedures have contributed to greater indigenous participation in self-government and judicial affairs. Increased opportunities for interisland contact have stimulated social consciousness of the relations between the various cultures in the Territory. Sharing in the development of economic projects initiated by the Administration has given the people experience in business ventures. Appreciation of the worth of education has increased the numbers of students in the schools and made possible the expansion of the curricula.

Political achievements have been noteworthy both on the municipal and district level. Thirteen more municipalities have chosen to elect their magistrates, thus increasing the number of elected magistrates to 70 percent of those holding office. The Palau Congress has continued to function well. The Marshall Islands Congress met for the first time on July 4, 1950, and in its deliberations has shown a keen realization of problems of the area. A charter for the Ponape Congress has been prepared in accordance with previously expressed desires of the people and is now being studied by the Provisional Congress which met for the first time in the spring of this year. A charter for the Saipan Congress, giving the Congress advisory powers, is now being discussed by the Saipanese. Legislative studies have continued to be made at the staff level and recognition of local customs is reflected in the planning for extension of indigenous participation in government. The teaching of the functions of democracy in the schools as well as civil guidance by Administration officials have contributed greatly to the extension and implementation of democratic attitudes. The responsibility for direction of Administrative programs was clarified by the issuance of Interim Regulation No. 3–50, reorganizing the Staff of the High Commissioner.

The islanders are playing an increasing part in the judicial system of the Territory. They are members of several courts and thus are in positions where they can correlate modern law and local indigenous law. Criminal procedures, provisions for law enforcement, provisions for protecting the public health, safety, and morals of indigenes by orders restricting residence, and the Judicial Code have been formalized by the promulgation of Interim Regulations No. 2-51, No. 4-51, No. 6-51, and No. 8-51. A "Public Defender and Counselor" was appointed in the fall of 1950 to provide protection for the legal rights of the people and to advise and represent them in civil cases before the courts. The Pacific Islands Insular Constabulary has been reorganized and representative members trained in police and penal procedures at the Constabulary Training School at Truk.

The economic situation of the Territory has shown considerable improvement during the past year. This is due both to the further diversification of island economy by Administration-sponsored projects, and to increased production of copra and the high price which it brought on the world market during much of the year. The policy recently adopted by the Administration of making the Island Trading Company the sole exporter of copra and the operation of the previously established Copra Stabilization Fund, benefited copra growers when the price of this commodity collapsed in the spring of 1951. Money available from the Island Trading Company's Economic Development Fund has been invested in several new projects including poultry and duck breeding, and the planting of cacao. ITC has set aside an additional $150,000 for the purchase of boats to be used in island passenger and cargo service and two have already been acquired and are in operation. Control of shipping for the benefit of the indigenes has been provided for by Interim Regulation No. 7-51. A survey has been made of the posssibility of establishing cattle ranches in the Northern Marianas. Research and survey projects by the Pacific Science Board sponsored by the Office of Naval Research, the United