Hugh Gibson’s Food Mission Diary: Herbert Hoover in Manila, 1946

(above) British Pathé newsreel of a portion of former President Herbert Hoover’s mission to assess food requirements for devastated parts of the world, 1946.

While this diary is part of the Herbert Hoover papers, the diary of Hugh Gibson gives a useful glimpse into an interesting mission –Hoover’s task to survey the globe to see food requirements for devastated countries– and American perspectives about those countries and peoples. Among the nations visited was the Philippines. See The Food Mission Diaries of Hugh Gibson (1946 and 1947), particularly 2nd diary: 1st trip (part II), 1946 April 27–June 19, which contains the portion on the Philippines.  The entry starts at the bottom of page 11 and concludes the Philippine portion in the middle of page 20. It provides an American’s impressions of war-devastated Manila (Monday, April 29, 1946):

We drove through the ruined town which is far worse than it looks from the air. Instead of having been destroyed with bombs which scatter the walls, these buildings were for the most part knocked out by artillery and fire, so the walls still stand in utter desolation. Some of the newer structures stood up better to the punishment but there is very little that is fit for habitation. Wherever there is a vacant lot the squatters have swarmed in with scraps of corrugated iron, ply-board or tin and have erected shanty towns of the most appalling variety. With a weak government there is some doubt as to how and when they can get these people out.

It also includes an interesting vignette of a visit to Malacañan Palace in April, 1946 (pages 11-15, Monday, April 29, 1946):

 Malacañan was occupied by the Japs and consequently escaped destruction. It was mined but as so often happened, when the time came the enemy was so busy getting out that he neglected to carry out his fell purpose.

We were escorted up the red-carpeted staircase and through several big drawing rooms in one of what was a tremendous and rather fine chandelier. Holes showed where two other had hung. It seems the Japs made off with them but there is hope they may be hidden somewhere near at hand as it is doubtful whether they could have been packed and shipped in time at their disposal.

Osmeña was waiting at the door to receive us and escorted us across the room to instal us in big arm chairs. Then he sat down, composed his features and was silent in several languages at once. After waiting for him to sound off the Chief [Hoover] made some remark about being happy to tell him that an idea had appeared this morning as to how the Philippine food needs could be met. Osmeña nodded his head without batting an eyelash. He did not ask what the solution was, but nodded and then stopped as if turned off. The Chief made another remark and again got a nod for his reply. [U.S. High Commissioner] McNutt leapt into the fray with two efforts and got two nods for his pains. As things were rollicking along at this rate servants came in with champagne. Osmeña raised his glass and uttered two words: “Your health.” After this outburst of garrulity he relapsed into silence and after a time the Chief allowed he must not take up any more of his time. He evidently agreed as he offered no protest, but accompanied us all the way downstairs to get his picture taken by the waiting photographers.

This entry gives a glimpse of the reaction of Americans to the increasingly hard-of-hearing Osmeña; and incidentally documents the absence of two of the three large Czechoslavak chandeliers in the Reception Hall of the Palace –in the 1950s Minister of Presidential Protocol Manuel Zamora would recount that the chandeliers had been taken down for cleaning right before the war broke out, and were buried for safekeeping for the duration of the war.

On page 18 of the diary, there is also an account of a dinner given in honor of Hoover by the American High Commissioner, Paul V. McNutt, in which President Osmeña and President-elect Manuel Roxas were both present:

At 7:30 dinner at the High Commissioner’s. He has an agreeable house facing the bay, adequate but nothing like the style of Malacañan which [Frank] Murphy stupidly gave over to the Philippines so that he could go and live near the Elks Club. The High Commissioner has been a vagrant ever since and it has not added to his prestige. Murphy built a house of the water front where he and [Francis B.] Sayre lived, which may have been comfortable inside but which looks like of the less distinguished Oklahoma high schools. Why we had to put up something of that sort in a country where there is a distinguished native style is a mystery. Fortunately the cursed thing was thoroughly bombed and it is to be hoped that something decent will be be built or required for our new diplomatic mission.

Most of our party was asked to the dinner, a number of official Americans and several Filipinos, including the President and his wife and the President-elect and his. There was no love lost between then. I sat next to Señora de Osmeña. Directly across her was Señora Rojas [sic], wife of the Pres. elect. Not one word was exchanged between them through the dinner although McNutt did his valiant best. My neighbor is as chatty as her husband is taciturn and kept up a steady flow of conversation –but I haven’t an idea of what she talked about. Perhaps she does this as compensation like Mrs. Coolidge.

It was hot as blazes and we dripped through dinner which was served out of doors in a loggia. The thermometer stood at 102 which is high for people who were not so long ago in the snows of Scandinavia. We had some talk among the men after dinner…

In the same entry, there is another interesting vignette: about agrarian conditions:

FitzGerald ran into an interested situation here today. The Government people are crying famine and calling for help in securing rice for the starving. It seems that after the war the people in the valleys of Northern Luzon decided to get rid of their landlords and take over the land for themselves. So they shot some landlords and chased the rest away. Thereupon Mr. Osmeña’s boys moved in, organized a cooperative, and announced it would take the place of the landlords. Of course the landlords had been wrong to take half of the rice as their share, so the co-operative would take only thirty percent. However Osmeña’s party was essential to keeping the co-operative afloat, and there were some expenses of the underground which had to be met, so another ten percent would be knocked off for that. The net result is that Osmeña and his people have forty percent of all the rice crop of the region hidden away in hundreds of little warehouses, ready to play politics or make a fortune, or both. But it does indicate that the people are not going to do so badly with all the fruit and vegetables that grow so easily and all the fish they can have in any quantity.

And he closes with a snapshot of American official opinion on the prospects of Philippine independence:

On May 25 Rojas [sic] takes over as Pres. of the Commonwealth and on July 4th comes complete independence. The prospect is not rosy. The Osmeña government has had a year to put things in order. Congress is voting $600,000,000 for rehabilitation which is a fabulous amount compared to the work that has to be done. Many of the local people are already unhappy and look forward to disintegration as soon as the P.I. [Philippine Islands] are left to their own devices. The remark is frequently heard that within five years the people will be clamoring for the United States to move back in again. And at that they have not yet begun to envisage the possibility that China or Russia might move in. Asia for the Asiatics is a grand slogan but the mess they are going to make of it is terrifying.


Thursday, September 14, 1972

The bomb scare has been sweeping Manila in the past few days. Rebeck tipped me off on a rumor that the Convention would be bombed. He said this could not be mentioned in the Convention Hall because the delegates might panic. Even Raul Manglapus, he said, was preparing to leave at about 4:00 p.m.


May 16, 1970

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MALACAÑAN PALACE 
Manila

May 16, 1970
The Mansion, Baguio

10:50 PM, Sunday
May 17th

I write this only tonight as the trip by boat last night was rough and I went to sleep at 11:00 PM. We started from Pier 15 at 8:15 and arrived at the San Fernando pier at 9:45 AM today. Outside the breakwater we were on a SE course with the wind from the North so we were rolling a little. This stopped when we rounded Cochines point at the south of the Bataan Peninsula. But the swells in the China Sea made Bongbong sick, he had to be given half a bonamine. Stevie Cu Unjieng vomited twice and Tessie Yulo once. But the rest were all good sailors.

In the morning I left at 7:30 AM to Lipa City – Fernando Air Base to speak at the graduation of the Flying Cadets (19) and student officers (12 and PMA’ers). Had to travel by car and it took us one hour and a half because of the fact that the airplane crashes have made Meldy nervous everytime I fly. (We just received from PAL the picture of the AVRO plane that crashed at Pantabangan with its tail section blown off apparently by explosives, then the right wing disintegrating then turning upside down just before impact on the ground). The PAC plane of Boy Tuason, Andy Roxas and Peggy Lim had an engine burn on take-off, the pilot feathered it but banked steeply on the dead engine instead of the functioning one, so stalled and crashed on its nose. The PAL Fokker plane that crashed in Iligan took off below minimal requirements as it was raining heavily and visibility was 100 yards, hit a mound of dirt on the side, twisted around and burned after all the passengers had escaped the plane. The stewardess who was about to put on her belt was thrown off the door that flew open and died of a cracked skull (the only casualty).

Returned to Manila at 10:30 AM to arrive at the Escolta PNB building at 12:00 to address the Rice and Corn

 

May 16, 1970 ( Cont)

 

MALACAÑAN PALACE 
Manila

Federation convention.

Then went to Malacañang at 1:00 PM to meet Gen. Menzi on his Pulp and Paper project and the PHILCOX man, Tony Tiotko on the navigational aids valued at $12.5 million they are installing.

At 3:00 PM after some conferences and a 15 minute nap, I was at Del Monte to inaugurate the new 15,000 cavan a day rice polishing and processing plant of the Mindanao Progress Corporation of Roberto Tulio. Conference at Bonifacio 4:30 PM to 7:00. Malacañan to pick up some books, papers and clothes and was at the boat at 7:30 PM where I met Henry Martel on the Navotas reclamation project of Ramon Clinamco and Monching Cojuangco on the PLDT franchise which Maj. Fl. Leader Veloso badly mishandled. I had warned him that his asking ₱200,000 only for Montano the minority

floor leader was going to lead to a scandal. Monching Cojuangco also went ahead and paid the grease money although I do not believe Lening when he says that he did not keep any part of it. The House on the motion of Maning Zosa and the promptings of Danding Cojuangco voted to recall of the franchise and now there is a serious move to change Veloso as majority floor leader.

I scolded Monching a little for the bungling.

Imelda is smarting from Nini Quezon Avanceña’s remarks to Fanny Aldaba Lim that we may be hardworking, intelligent and sincere but we are making too much money. She mentioned Al Yuchengco. We are also supposed to own Atlas, Dole, AG&P and other big corporations. If they only knew!!!!

 


January 29, 1970

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Office of the President

of the Philippines

Malacañang

January 29, 1970

Thursday

The UP faculty had a demonstration this afternoon. They walked from Agrifina Circle to Malacañang, handed me a manifesto blaming the administration for “the pattern of repression.” No mention at all about who started the stoning nor the danger to the First Lady and me – nothing but police brutality. Dean Majul claimed they were referring to the government in general and that he who heads a house is responsible for the happenings in that house. Dean Escudero of Business Adm. says he was a Marcos Liberal and that it is a matter of faith. Dean Feria (apparently an American lady) of English says there was brutality, that her 17 year old daughter was near our car and did not see any stone thrown (she must need glasses otherwise where did the wound of Agent Tuson in the forehead come from). Dr. Francisco Nemenzo arrogantly proclaimed he was not content with the manifesto but after “seeing my reaction to it”, he was happy. I had said that I was disappointed in the faculty of my alma matter; that the UP was charged as the spawning ground of communism and that the manifesto was full of ambiguous generalities that had a familiar ring to them. Then I read a report that he had said he wanted the members of the faculty to be hurt by the police and that he had given directions to the Bertrand Russell Peace Foundation to prepare gasoline (apparently for Molotov cocktails), stones and other missiles to be used

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Office of the President

of the Philippines

Malacañang

in the Friday (Jan. 30th) rally, and that in the charge of communism in the UP, his name was mentioned. Tomorrow, the big student rally. But Gargaritano of the youth reform movement says the NUSP and the NSI will not come to Malacañang but go to Congress instead. The Kabataan Makabayan will come to Malacañang, though. Mayor Villegas has said that he will not allow the police to be near the demonstrators. I ordered him in writing to maintain peace and order in all rallies and demonstrations. He sent word that his press release did not mean he would keep the police away. I showed to the UP professors the Collegian which carried the communist party articles and said that I did not wish to stop this but that I hoped that the two sides of the question would be ventilated. VP Lopez called the editor of the Collegian a leftist.


September 8, 1945, Saturday

We took our breakfast at 5:00 o’clock. At 6:00 o’clock we were on our way to the airport. I could not explain why when we parted from each other most of us were silent and in tears. It was probably because we were not so optimistic as to what will be done to us in Manila. Or perhaps it was the result of about five months of paternal association among us. We arrived at the airport at about 8:00 o’clock due to the bad roads and stops caused by defects in the truck engine. The airport is near the town of Puerto Princesa itself. As we left the barracks and the colony itself, we felt something for these places that was hard to explain as they were the scene of our martyrdom for our beloved country.

At the airport we got a good glimpse of the might of the United States. There were countless B24’s which we saw in action in Manila and in Baguio, and B29’s which devastated and crippled Japan. We became more convinced that Japan had absolutely no chance.

We left the airport at about 8:30 a.m. in 24-seat transport of a line called “Atabrine”. It reminded us of the daily doze of Atabrine pills we took in Iwahig to protect ourselves against malaria. After going over countless small islands we arrived in Manila at about 10:45. There was nobody to receive us. Our guards had to telephone for trucks. One truck arrived at about 12:30 p.m.; we had been waiting impatiently on account of the extreme heat. The truck was small and one-half of it had to be filled up with our baggage. We had to be crammed in the small remaining space. The trip was as bad as when we were herded in a hold in a boat on our way to Iwahig. As we reached the main Manila South Road, and we turned left, it became clear to us that we were going to be incarcerated at the New Bilibid at Muntinglupa.

We arrived at this place at about 3 o’clock. There we were met by Minister Tirona, Mayor Guinto, Vice Minister Pedrosa and others. Later we met Don Miguel Unson.


August 31, 1945, Friday

I have been asked many times how the Japanese financed themselves during their regime.

They came here bringing with them Japanese military notes. It can be assumed for certain that those notes are not backed by reserves. There is nothing behind it except the backing of the Japanese government. As a matter of fact, they are not currency or money. They are in reality requisition slips. Instead of forcing the Filipinos to give them food, equipment and materials, they found this indirect and less painful way of attaining their wishes. At the beginning the circulation of the currency of the Commonwealth was allowed. Following the economic law that bad money drives away good money, the latter soon disappeared in the market. Later, the Japanese made the circulation of the currency of the Commonwealth illegal. Those caught exchanging military notes for Commonwealth notes were taken to Ft. Santiago and punished for committing a hostile act.

The Japanese government then established the Southern Development Bank. They did not use the two Japanese banks, the Yokohama Specie Bank and the Taiwan Bank, except that the Taiwan Bank was used to liquidate the American and other foreign banks. As a matter of fact, the Southern Development Bank was not a bank but acted as a branch here of the Japanese Government Treasury. It was given the sole power of note issue. All the military notes were distributed through it. I had numerous discussions with the Japanese as to the nature of these notes. They have always insisted that they were Southern Development Bank notes, whereas I always maintained that they were Japanese Government notes. I did not feel it proper for the Philippine Government to deal with a private bank.

The Japanese, unlike the Americans, practically made the countries occupied by them defray all the expenses of their Army. They did this by means of the issuance of military notes. I also have no doubt about this as I happened to see the Japanese Government budget. In the statement of income, there was included what was called Contribution of the Southern Islands. (I was not sure what they called it, but I am sure that there were billions — 17 billion as I remember — provided as income from the Southern Islands.) As there was no direct request for funds, necessarily they must come from the proceeds of the military notes. They cannot ask for direct contribution because nobody or very few would give. This was shown when subscriptions were opened for the Philippines to buy and donate an airplane to Japan. Very little was collected and the project was stopped. It would not have been possible to collect a sufficient amount to buy even a small airplane unless force was used, as was done in many cases. As a matter of fact, those military notes were no more, no less than requisition slips. The whole financing of the Japanese, including the expenses of the Army and Navy and what they called war development companies, was exclusively handled by the Southern Development Bank.

This bank made every effort to exercise all the powers of a Central Bank and of a clearinghouse. It insisted that all the other banks deposit their funds with it, especially the reserves of the banks. I opposed this very strongly. I was willing to stake even my life to uphold my view. All the bank managers naturally were afraid to have any sort of issue with the Japanese. I told them that they need not assume any responsibility. I gave them orders not to deposit with the Southern Development Bank without my express authority and order. At that time, there were already on deposit in the Southern Development Bank funds of the different banks amounting to about 1000,000,000 pesos. About three-fourth or four-fifth of the funds belonged to the Philippine National Bank.

It must be stated in this connection that at the beginning I had no supervision over the Philippine National Bank. Supervision was being exercised by Malacañan. The reason was that the P.N.B. was a government corporation and Malacañan was in charge of all national companies. Later, I found out that it was Executive Secretary Pedro Sabido who was handling P.N.B matters. Even after his appointment as Minister of the new Department of Economic Affairs, he attempted to continue exercising the powers; as a matter of fact, after his appointment, he became even more insistent. He contented that the supervision of the Philippine National Bank properly belonged to his department since the bank was a government corporation and his department was in charge of all government corporations. He further contended that the Department of Economic Affairs should control the Philippine National Bank to enable it to realize the purpose for which it was established and also to facilitate the financing of the national companies.

Finally, he contended that, under the law, the Secretary of Finance is already the head of the bank, and it is not proper nor advisable for the Secretary of Finance to be also the Supervisor; otherwise; the Secretary of Finance would be supervising himself. I refused to devote much time and words to the discussion which was academic. So far as I was concerned, the argument I emphasized was that I found it impossible to supervise the banking and financing business unless all the banks were under me. Supervision over the P.N.B. was especially necessary since at least 70% of banking transactions in Manila was handled by the Philippine National Bank. I concluded in a memorandum to Pres. Laurel that if he decided to deny my request, I would strongly recommend that the supervision over all banks be transferred to the Ministry of Economic Affairs. After due consideration, the President told me that he fully agreed with me and he would immediately issue an order accordingly.

Days and weeks passed, the order did not come. I found out that the Minister of Economic Affairs was very insistent. So the President decided to submit it to the Council of State composed of Chief Justice Ramon Avanceña as President, and Don Miguel Unson, Don Pedro Aunario, Don Rafael Corpus, Don Ramon Fernandez and Don Jose Paez. The Council considered the matter very thoroughly and even heard the arguments of Minister Sabido. The President, and this was confirmed later by Don Miguel Unson and Don Rafael Corpus, advised that the Council upon preposition of Don Miguel Unson, decided unanimously in my favor. He assured me that he would issue the order forthwith.

Days passed; weeks passed, no order came. I decided to prepare the order myself and give it personally to the President. It was not signed and issued. I prepared another and left it with the President. After a few days, I asked him about it. He was surprised that I had not received it yet. I prepared another and this time I did not leave Malacañan without the President’s signature.

After the President signed the order, I immediately called Mr. Carmona, President of the P.N.B.. I must first state that under the order, I had all the powers of the Board of Directors of the Bank. I asked him about the deposits. He told me that he had submitted the matter to Malacañan and that no objection had been expressed on the part of Malacañan to the existing arrangement. When I asked for a written authority, he advised that he had not received any and that his experience was that he got no action from Malacañan on matters taken up by him, or at least action was delayed for weeks and even months.

I asked him to explain how he happened to have such a large deposit in the Southern Development Bank. He answered that from the very beginning the military people as well as the Manager of the Southern Development Bank requested him and even ordered him to deposit all excess funds of P.N.B., or funds not needed for ordinary daily transactions, with the Southern Development Bank. Pressure was used so that he had to make some deposit, but he assured me that it was far from what he could have deposited.

The Japanese reorganized the clearing house. Under the new system, all clearing balances were kept by the Southern Development Bank. There was no liquidation and the funds could be withdrawn only when the corresponding bank needed funds. So the deposit of P.N.B. in the Southern Development Bank increased everyday. This was also true as regards the other banks, Bank of the Philippine Islands and Bank of Commerce. They were also being required to make deposits. They said that they had to conform unless they wished their banks closed and their officers accused of a hostile act. I ordered them not to deposit. When they expressed fear, I told them that they should tell the Japanese that, per my order, they had to secure my approval. I also told them to withdraw their balances in the clearing house from the Southern Development Bank.

Mr. Hariguti Takahashi and the Manager of the Southern Development Bank came to me to request me to authorize the deposits. I flatly refused. This is one of many similar incidents I had with the Japanese. One instance was when a large Japanese sugar concern wanted to acquire the Philippine Refining Co., which was owned by the government and practically had the monopoly of sugar refining in the Philippines. An official of the company was told that an unfavorable recommendation from him would be interpreted as a hostile act. I told him to tell the Japanese to talk to me. The Japanese never came to see me. Another instance was when the Japanese Army proposed that the Textile Department of the National Development Company be constituted into a separate company and recapitalized with equal participation of the Philippine and Japanese governments. The participation was later changed to 40% for the Japanese and 60% for the Filipinos. I was made to understand that the plan had already been agreed upon by somebody in Malacañan. I prepared a memorandum strongly opposing the plan. The reason I gave was that the National Development Company, as any other national companies, was formed not for profit but rather to carry out national economic policies. Another time was when Colonel Utsonomiya, later promoted to General, approached me to ask me to allow the importation of opium. I told him that the laws prohibited the importation of opium and penalized its sale. Twice the Colonel approached me. I maintained my position. When it came to protecting our people and their rights, I ignored consequences absolutely.

In connection with the banks, a Japanese officer came to see me. He said that it had been reported to them that in the Ministry of Finance, there was somebody who was anti-Japanese and always worked against them. I knew it was merely a ruse. I answered that I assume responsibility for anything done in the Ministry of Finance.

Mr. Carmona wisely did his best to attain our purpose without unnecessary exposition. Carmona was so capable and prudent that he was able to withdraw a very good portion of the deposit and to maintain the deposit at a very low level.

My views and actions were fully reported to the President and he approved.

I had many other incidents. During a bombing raid, a boat loaded with military notes was blown up and all along Malate and Ermita, it rained notes. They were picked up by the people and spent. The Japanese who had the serial numbers of the notes prohibited the circulation. I protested on the grounds that the notes were already in the hands of innocent persons. For instance, there was Mrs. Mariquita de Ocampo who sold her furniture for 7,000 pesos as she needed the money. Afterwards, nobody would accept her money. What fault had she committed? Finally, the notes were accepted.

The Japanese wanted the administration to be self-supporting. They themselves prepared and imposed the approval of tax laws. From the beginning, my plan was not to change our tax laws; not to burden the people with more taxes than what they had to pay before the war. But how do we finance the government? Of course I had to make it look like I was trying to increase the income by means of assistance of our people. So I did not object to the increase in the income tax law, although I insisted that low incomes not be taxed and larger incomes not be taxed as heavily as in other counties. This is also the reason why I sold an amount of bonds instead from where I proposed to get the money.

Even during the time of the Commission, we borrowed money from the Army, It reached the amount of ₱23,000,000. During the Republic, I secured a credit of over ₱100,000,000 from the Bank of Japan, about ₱50,000,000 of which I got through the Southern Development Bank. When I submitted it to the Cabinet, there was some opposition. I did not argue, but after the meeting I explained to Minister Osias who was the one strongly opposed that my purpose was to charge to the Japanese as much of our expenses as possible. The Japanese Army after the establishment of the Philippine Republic tried to collect our previous indebtedness of ₱23,000,000. I declined on the ground that the Executive Commission was a mere instrumentality of the Japanese Administration. The amount was never paid.

Returning to inflation, I could do nothing as the Japanese did not want to give any power which would enable me to do something. I thought and thought about what to do until I came up with the idea of establishing a Central Bank if I could get the Japanese to approve my conditions. Some of them were: (1) That the Central Bank shall have the sole power of issue of notes. With this I meant to curb the unbridled issue of notes by the Japanese and the unlimited grant of credits to Japanese companies. (2) That the Ministry of Finance shall have jurisdiction and power of supervision over the Japanese banks. I demanded this most important power to control large credits given by the Japanese banks to Japanese companies and nationals. (3) That the Central Bank shall be the depository of the reserves of the other banks. And (4) That the Central Bank shall handle the clearing house balances.

The Japanese were opposed to my plan at the beginning, but in view of the fact that we were a Republic and they therefore could not openly deprive us of the right to exercise powers belonging to all independent states, they changed their tactics. They instead did their best to delay the establishment of the bank. They put up all kinds of objections and suggested many modifications. They wished preferential treatment or at least equal treatment for Japanese banks. I could not of course accept this. Mr. Haraguti, while I was speaking before the National Assembly about the establishment of a Central Bank, sent me a memorandum. I got the impression that he was opposed to it or wanted to delay it. I immediately suspended the proceedings and charged that Mr. Haraguti was out of line. He immediately saw me and tried to explain that such was not his intention. I know English well, I believe, and I had no doubt that my interpretation was correct.

The bill was approved by the Assembly but upon the request of Speaker Aquino a provision was inserted to it so that the establishment of a Central Bank would depend upon the promulgation order by the President. Aquino at the beginning was strongly opposed to the bank; later, he withdrew his objection but was evidently not interested in its establishment. However, the Japanese had not given up. We had no facilities here for the printing of notes and this had to be done in Japan. We prepared the necessary designs. We were told that all the printing presses were busy printing notes for other countries and that they could not begin making delivery until May, I believe of 1945. I went to Japan where I made every effort to expedite it but in vain. I was told that the delivery had to be periodic and the amounts for each period could not be very much. The matter remained in that state until hostilities in the Philippines began.

Another reason why I wanted the Central Bank was that I did not want to have a shortage of notes. We had a terrible crisis about the first months of 1944 because the ships used for transporting the notes were probably sunk or blown. The Japanese banks had no more available notes and the Southern Development Bank had only about ₱10,000,000 in notes of 10, 20 and 50 centavos. The Japanese banks suspended payment, and there was a run in all the banks as the public feared that the banks had no more funds. The Japanese banks, including the Southern Development Bank, wanted to get the notes of the Filipino banks. I refused to authorize the Filipino banks to loan their funds to the Japanese banks. I also instructed the Manager of the Philippine National Bank to withdraw a part of its deposit from the Southern Development Bank. We were all very much worried. Stoppage of payment of banks would paralyze business. All demands for withdrawal in Filipino banks were met. The Philippine National Bank, however, had to offer notes in small denominations. Generally, those wishing to withdraw big amounts desisted as the package of the money would be quite bulky. After a few days, shipment of notes came and the crisis passed. Because of this, I inquired about machines and materials in the Philippines that could be used in case of shortage of notes. We could print here but in limited quantities.

* * * * *

We heard on the radio that Truman had said that the Philippines might have her independence in 4 or 5 months. This means that we may have our independence by next January. I welcome it; I want to have it right now. We would have been spared the loss of billions of pesos and thousands of lives if only people ceased to be mentors of other people.

This means the election will have to be held soon. We may not even be able to take part in the elections. Until we are cleared, we cannot be of much service.

According to the radio, Ambassador Vargas was found in Tokyo and he is a very worried man. He was generally criticized for having been very weak with the Japanese. We were aware of it and we thought him a useless man and an incapable executive. But after we reflected, it may well be that under the circumstances, he did what would be of the greatest benefit to the people. Supposing that instead of getting the confidence of the known murderers, the Japanese, he had fought and defied them. He becomes a hero. But he sacrificed his country for w would have meant direct or almost direct rule by the Japanese. Instead of 200,000 dead, we probably would have had to mourn the loss of millions of our countrymen. Vargas has done much for our country.


August 30, 1945, Thursday

Taruc and Alejandrino left this morning.

It is reported that there is terrible inflation in Manila. Prices, especially of foodstuffs, are very high. Rice, for instance, is reported cost 200 pesos. There must be a great deal of suffering. How can employees live on the salaries they generally receive? And it seems that nothing is being done to combat inflation. At least we have not read of any. On the contrary, it seems that reckless spending and speculation are being tolerated. War always brings inflation. It is because of the enormous expenditures that have to be made in connection with the war effort. Inflation is caused by over circulation or by the fact that the money circulating cannot be absorbed by production and the requirements of business. It cannot entirely be eliminated but it can be minimized.

There are many measures that can be taken for the purpose. The first step is to go into the source of money — and this is the large expenditures for the Army and Navy in the Philippines. Steps can be adopted in this connection as I am sure the Americans will be willing to help and to cooperate. During the Japanese regime this was inpossible as they ignored absolutely any request for their assistance. Japanese companies and even individuals compelled the sale to them of Filipino businesses, and they invested lavishly in almost everything. Necessarily, the circulation became so enormous that the purchasing power of the military notes went as low as 1 peso for 500 to 1000 military notes. The U.S. Army and Navy can help very much absorbing a good portion of the payments made by them. The soldiers could be made to send more money home or to invest in government bonds, etc.

Since the inflation is a result of under-production and of the fact that businesses can not absorb the money in circulation, no effort should be spared to increase our agricultural and industrial production. Likewise, our commerce must be increased. Every incentive should be given to normalize and develop business. In this connection, the Filipino merchants should be given encouragement as much as possible. To increase production and facilitate the movement of commodities, transportation and communications must be restored and improved. Sufficient trucks should be assigned to the sources of production. Boats should be secured at once to resume the inter-island intercourse.

When there is inflation every conceivable means must be adopted to curb and regulate prices. When there is a big demand and very little supply, the prices increase and if there is no limit prescribed or stock limits are not enforced, prices soar to heights that most people cannot reach. Foodstuffs specially must be controlled. Our experience during the Japanese regime was that rice affected prices immeasurably; it practically regulated prices. Every time the cost of rice went up, prices of all other commodities and services followed. When a market vendor increased his price, he alleged that he has to pay more for his rice. When a “cochero” increased his fare, he alleged that he has to pay more for his rice. The worst sufferers, the employees, demanded better salaries and those demands had to be granted. But everytime increases were made, more money circulated and the result was the worsening of inflation — a vicious circle.

The best remedy is to enable the employees to acquire essential commodities at reasonable prices. They are more interested in acquiring what they need to live rather than cash which cannot buy what they need. House rents must also be regulated. But we must not be unreasonable about this. During the Japanese regime landlords were treated rawly. Rents were fixed at not more than 75% of pre-war rents. Most landlords suffered, especially those who belonged to the middle class with a fixed income. The worst feature of this order of rent control was that the order did not apply to houses and buildings newly rented which were rented out at exhorbitant rates. But the present landlords must not be allowed to charge very high.

Another necessary measure is the control of banks, insurance and other companies that receive and invest funds. Banks should be required to have a larger reserve so as to tie up a good portion of the money. Their investments should be controlled. Under no circumstances should money for speculation businesses be allowed. On the other hand, all investments which will increase production or which will develop business should be encouraged. Wisely managed, this may be a very effective measure against inflation.

Also, efforts should be made to import commodities for trade. The purpose is to increase commerce and thus more circulation can be absorbed. Arrangements must be sought so that more bottoms could be assigned to the Philippines.

Another hedge against inflation is taxation. Big incomes must be taxed higher than the ordinary so as to withdraw more money from circulation or speculation. Higher taxes should also be imposed on speculative enterprises. On the other hand, the taxes on production and transportation enterprises should not be increased.

Another means against inflation is the issuance of bonds. Every effort should be made to make the people save money by investing in bonds. Unlike previous sale of bonds purchases by banks, insurance companies and other investment enterprises should not be emphasized. Instead, the public in general should be invited to invest to the limit. But if the proceeds of the sale of bonds will be circulated again, then we gain nothing. They should be impounded and if spent, they must be invested in production enterprises or in the construction or reconstruction of public buildings and other permanent improvements.

When there is inflation the laborers and other persons rendering services do not suffer very much. It is because they can charge for their services as much as might be needed by them to live. A “cochero”, for instance, can increase his fare if necessary to live.

There are other measures that can be taken to combat inflation.

As to whether inflation is highly undesirable, there are some differences of opinion. Some contend that it is desirable. The great majority of economists, however, hold the opposite view. There is no doubt that it benefits debtors. It is heaven for debtors. Producers are also generally benefited. The only trouble is that they seldom learn the lessons taught by previous inflations. They generally expand greatly, and when depression comes, and depression generally follows at the wake of inflation, they find themselves with equipment and facilities that they have to scrap. They find that they cannot continue their business at the same pace without leading themselves to insolvency.

But there is no doubt that inflation is a curse, and evil which must be combatted with decision and energy. The great majority of the people suffer from it and if allowed to go unchecked the whole economy of the country will be dislocated.


August 16, 1945, Thursday

This morning, I modified my opinion as to when we will leave. I believe now that it will not be before the end of this month. It will be sometime in September or October. The reason for my change of view now is that I think Laurel, Aquino and Vargas, who are still in Japan, will be brought to the Philippines and I think their cases as well as the Ministers’ will be tried or investigated at the same time. Since the cases of those three or more serious, they may not be considered until after some time and, therefore, our cases will also be delayed.

It is reported by radio that Emperor Hirohito will fly to Manila, in a Japanese plane from Tokyo to Okinawa and in an American plane from Okinawa to Manila. MacArthur has been designated as Commander-in-Chief to receive the surrender of Japan. The representatives of the vanquished always come to the Headquarters of the Supreme Commander or to the place indicated by the latter. MacArthur’s headquarters is in Manila; therefore, the Japanese Representative should go there. But why Hirohito precisely. I can’t understand why it cannot be Premier Suzuki. I do not believe the United Nations will deal with the Premier, however; he will probably be one of those to be arrested and accused as a war criminal. But his cabinet can fall and a Pacifist Cabinet could be created under the Premiership of Konoye, Konoye can then sign the peace terms. But it seems it has to be Hirohito. What a humiliation! Before, he was a proud ruler, considered as god himself. His words were law and divine order at the same time. Now he is under the orders of MacArthur.

I suggested to Compadre Serging Osmeña that he write a letter to his father. I so suggested because it seems that they are already in good terms. I explained to him that his father is an experienced and shrewd politician. Serging ought to know that just now his father is at a disadvantage as regards the collaborationists inasmuch as Roxas has openly thrown himself on their side. I told Serging that he write his father that there is discontent here on account of his passive attitude. He should suggest to his father to do something; to make a “golpe” (sensational and radical act) which will boost his stock among the “collaborationists” and such “golpe” should be a general amnesty proclamation freeing everybody accused of collaboration. This may incline the collaborationists to his side or at least put him in a better position to approach them later. I found Serging rather reluctant for reasons which he explained. The reasons involved family relations among the father, mother-in-law and Serging.

* * * * *

Excerpts from a letter of Roy W. Howard, the principal owner of Scripps-Howard newspapers, dated at Manila, July 30, 1945 to Arsenio Luz:

My chief purpose in coming here, aside from a desire to confer with Gen. MacArthur and get a picture of the general situation, was to see if I could be of any help to you. I wish that it were possible for me to report success, but after pursuing every line that is open, and discussing your case with everyone I know who might be in a position to help, I am afraid that as far as your immediate release is concerned, my effort has been a failure.

It is my sincere belief, Arsenio, that in spite of any action that can be taken, including even legal action, the group held in Palawan now will be kept there until the conclusion of the war with Japan. I realize that this is going to be very tough, and I doubt whether were I in your place it would be possible for me to reconcile myself to the belief that remaining there is the best course. But in my efforts I have run into a few facts which, without in any sense justifying the action taken against you, throw a light on the situation which I want to pass along to you.

In my efforts I have talked to Gen. MacArthur, Gen. Thorpe, head of the C.I.C., Pres. Osmeña, Manuel Roxas, Phil Buencamino, Salvador Araneta, Manolo Elizalde, Chick Parsons, Paul McNutt, and others. They have all been very sympathetic and have helped me to the best of their ability. But we have all run into a stone wall in that Gen. MacArthur is embarked on a course which I am convinced he believes to be in the best interest of the Filipinos, and from which I do not believe it is going to be possible to dissuade him. As I see it, the situation boils down to about this:

MacArthur is fighting a war and doing a most magnificent job of it. However, the job is one calling for the most intense concentration, and despite what I am sure is his keen realization of a pot of political and purely domestic needs, he is having a straight line and giving no consideration to any proposition except killing Japs.

I have no doubt that he suspects there are men at Palawan who are entirely innocent, and many who have been guilty of nothing more serious than indiscretion or bad judgment. To attempt to sort those men out, however, would, if justice were to be done, be equivalent to bringing about trials at this time. I can see many reasons why this would be inadvisable, the chief one being that at the rate of which feeling is dying down, it is obvious that there will be much less emotionalism attaching to collaboration trials later on, than would be the case today.

If trials were to be held today, they would of necessity be trials before an American military tribunal. I suspect Gen. MacArthur feels that not only will Filipino courts be more competent to judge Filipino psychology, but that Filipinos, knowing the conditions existing in Manila and the pressure that put to bear on people like yourself, will be infinitely more lenient than would be the case with a hard-boiled, wholly impersonal military court. In any event, Arsenio, at the end of the week’s effort, in which I have thrown in everything I have without obtaining any redress in your case, I am forced to say that I think that is the way the thing stands, and while Gen. MacArthur has promised to have prepared for his own personal consideration a review of your case, I do not honestly advise you to count on much of anything happening in consequence.

The real purpose in writing this letter is this: I do not need to tell you, I am sure, that my own faith in your innocence of any action prejudicial to the United States has never waned. That will not be either news or a surprise to you. What is more important, however, to you… something which I am not sure you fully appreciate is that no one from Gen, MacArthur down has expressed to me the slightest belief that any action which you took under the stress of occupation conditions was in any sense an action aimed against the interests of the United States, and no one to whom I have talked has expressed the slightest doubt of your loyalty to the United States and to your American friends. That goes straight, Arsenio, and without any discount.

To give you a complete picture, however, I must add that some of your friends, even though they are understanding and tolerant, feel that you may have on occasion been a bit indiscreet and not used your head as effectively as might have been the case. Everyone realizes, however, that hindsight is sometimes better than foresight, and I haven’t the slightest doubt that aside from the discomfit and inconvenience of being held in custody for the very few months during which this war is going to continue, you will ultimately be restored to complete standing in this community and given a complete bill of health.

If your old sense of humor is still working, and I have no doubt that you still possess it even though it may have been scuffed up a bit, you may smile at a line of reasoning which I have given Carmen, and which I put forward in all seriousness. I realize the ridiculousness of a man on the outside arguing to the man who is detained, on the virtues of being in jail, and yet I think in your case there is some virtue in the situation.

Let me explain: If it were possible to exercise any influence to get you sprung at the present time, and I had an opportunity to do so, I would advise you to turn your back on such an opportunity. My reasoning is this: if you were to come out under such circumstances and without a trial, there would always be hovering over you a suspicion that may be you were at liberty not because of innocence, but because of some pull you were able to exercise. Such a situation would be a handicap to you and your family for the rest of your life. On the basis of what I have been told, and I am not going to attempt to state here which man or men most influenced my judgment (although I assure you they were among your best friends and American well wishers), I believe that the hearing which you will certainly get immediately upon the conclusion of the war and the turning of this whole problem over to the Philippines, will give you a clean bill of health and completely establish your innocence of any action that would prejudice your standing either with Filipinos or Americans. For whatever my judgment is worth, the value of this bill of health and official establishment of your innocence will over the long haul more than compensate for the few additonal weeks or months that you may be denied your liberty.

As I said, this argument, sound though I am convinced it is, may be one easier for me to make on the outside than for you to accept on the inside. I know, however, that you will not doubt my honesty, even though you should doubt my judgment, when I tell you my opinion of the tremendous value which I believe will attach to your exoneration, as distinct from the situation which might result if you were released in consequence of political pressure, even though there was the possibility of exerting political pressure, a possibility which I am sure does not exist.

I would of course have come to Palawan to see you, had it been possible to do so. I even made some efforts in that direction, but became convinced that not only could I have been of no value to you down there, but to have made the trip might have in some degree prejudiced your case.

Now for one more point, and then I’ll wind up this interminably long letter. In April, before his death on August 1st, I visited President Quezon at Miami, Florida. At that time he was on his death bed and I think fully realized that his number was up. He talked with extreme difficulty and only in a whisper, because the tuberculosis had reached his throat. I won’t attempt to quote all of his conversation, but merely that which has a bearing on your situation, and on his unshakeable faith in you and confidence in your loyalty and integrity. There had at that time come back to the United States varied stories of collaborative action being taken by Filipinos. Cases discussed with a number of these people, some of whom I knew and others whose names had slipped me, but whom he insisted I had met and who knew me. Finally, he turned to me and said:

Roy, I do not know about all of these people. I am worried about Jorge Vargas. The reports on what Jorge is doing are not good, though I find it very difficult to believe that any one so long associated with me would turn out to be disloyal to me, to the Filipino people, and to the United States. I must admit that I am having to reserve judgment. About some of your friends, however, I would advise you to have faith, just as I have. There are some of them to whom disloyalty would be impossible and I include in this list Alunan, Joe Yulo, Arsenio Luz, Phil Buencamino…’

In addition he named those several others — people whom probably I would recognize if I saw them, but whose names at the time did not mean much to me.

Quezon told me at that time the instructions that he had left with his friends, and added that he was now in touch with those men by clandestine short wave radio. He also told me that within a week he had received a call from one of his men, a Filipino doctor, who had returned to the States from Manila within the preceding forthnight.

At home I have a diary memorandum which I wrote that night, in which I have Quezon’s exact words. The foregoing quotation, however, is to all intents and purposes correct and accurate.

…I am no seventh son of a seventh son, but I venture the prophecy that this war will be over before the end of the year and that your complete restoration to your family and to the position which you have so well earned in this community, will have been effected before the New Year is many days old.

Mr. Howard is one of the two or three great newspapermen in the United States now living. The news above is the most authoritative we have received inasmuch as it is the result of his personal conferences with MacArthur in whose hands our destiny lies. Therein it is clear that we will not be released while the war lasts. He believes that even if we can go now we should not accept it as there will always be the suspicion that we got out as a result of influence. Whereas if we are acquitted after due trial, we will be given a clean bill of health, and, therefore, be restored to our old position in the community. Such was my opinion from the beginning. We do not positively know what we are charged of. But under the circumstances, we presume that it must be treason to our country and disloyalty to the United States. As to the latter, I have never been disloyal to the United States but if they insist, I would not mind it because after all deep in my heart I do not recognize loyalty to any country other than my own. But the charge of treason to my country is very serious. From all indications at the present time, only prejudiced Filipinos believe that we have been traitors and they constitute a very small portion of our population. But how about future generations who do not know the facts personally? If our declaration of innocence now is not recorded, they may get the idea that we have done something against our country. So it is preferable that we be submitted to a trial in order that our formal vindication may be decreed if we are found not guilty.


August 2, 1945, Thursday

We began a Novena to San Judas Tadeo, my wife’s favorite saint. She used to go to the Cathedral to pray before the saint. Paredes is the leader. He also has been going to confession. We were wondering whether he had left the Masonry in which he was an ex-grand Master and one of the most prominent.

It was reported that Cummings, when he was Attorney General, rendered the opinion that collaborators would lose their citizenship. The best legal talents are here in this camp and they all said that they could not understand how Cummings could render such an opinion.

We received another version of the instructions of Pres. Quezon. It was in the form of a cablegram to Col. Nakar, Commander of the USAFFE forces in Northern Luzon, which reads as follows:

For Gov. Quirino and Gov. Visayas, Masaya, Isabela. In reply your telephone re instructions to you in case occupation your province by Japanese, you must remain in your post to maintain peace and order and protect civilian population until Japanese take over government authority. In case you asked by Japanese to continue performing functions you should use discretion considering best interests your people but should be sure no personal or official aid and comfort to enemy especially its military activities. Municipal police should continue maintaining peace and order until relieved by Japanese but Constabulary should immediately join nearest Philippine Army detachment. In case you withdraw to hills or mountains keep in touch with Voice of Freedom, or another station in occupied territory or K.G.E.I. San Francisco for possible further contact with Commonwealth Government. Quezon.

The telegram was dated Washington, April 18, 1942.

Above is substantially the same as other instructions given, which I have previously mentioned.

This day the Lieutenant came with an American who was looking for me. I became rather nervous. It turned out that he was Mr. L. C. Ashmore of the C.I.C. I thought he came to investigate me. He introduced himself and he seemed to be very nice. He said that the Manila office had sent him a letter to ask me certain questions on Imports and Exports during the Japanese occupation and also certain business practices of the Japanese. He gave me an outline of what he wanted. I immediately prepared a memorandum on the different matters contained in his memorandum and, on August 15th when he came back, I handed it to him. I kept copies of his memorandum and mine.

On account of the Luz’s illness, we have been recalling his many acts. Zulueta recounts that one afternoon, Luz called Alunan and himself, and with Luz’s forefinger on his lips to indicate that they should make no noise, he led them to a corner. Luz said he had very important news and Alunan and Zulueta became very anxious to know what they were. Suddenly he stood up and sang “Pregunta a Las Estrellas.”

Shortly after his arrival, he asked that we hold a special prayer for the soul of his mother as it was the anniversary of her death. He prepared a prayer which he said with full devotion. But his prayer was that Madrigal give his millions to our cause.

The next day he called us all to a meeting. He said he had very important news to transmit. Since we did not know him very well then, we were very eager to hear what he had to say. After a long preliminary which kept us more anxious, he broke down and began to cry. He announced that he was suffering from malaria and he hoped that we would not mind if he stayed with us. In chorus, we told him that we had no objection.