Thursday, November 9, 1972

In the morning, Col. Moy Buhain (aide-de-camp to Speaker Villareal of the House of Representatives whom I had periodically served as economic adviser) dropped by to talk to me about the latest draft of the Steering Council. Obviously, he had already seen Speaker Villareal since our last talk. We were speculating on what will happen to the leaders of the country in the new political setup.

I told him that my understanding is that the President has a timetable to have the new Constitution approved by the middle of January so that Congress may no longer have to convene.

“What about Vice President Lopez? Right now he is in limbo. And what about (Senate President) Puyat? The other senators? And the speaker?”

“Theirs are problems as yet unresolved,” I replied. “Under the scenario under preparation, however, all of them would be members of the National Assembly. And there is a good chance, from my reckoning, that the President might want to have Speaker Villareal be the Speaker of the new Assembly,” I added.

Insofar as Lopez is concerned, it may be that after a while, the President would give up his post as president under the new Constitution. Already he has removed what few powers the president has left in our draft Constitution. Why did he have them transferred to the prime minister, as Atoy Barbero was telling me yesterday, so that all the powers are now vested in the prime minister? One possible answer is that he might then offer the presidency to Vice President Lopez, we conjectured. After all, under the Marcos Constitution, the president will now be elected by the Assembly and no longer directly by the Filipino people.

I went to the session hall in the afternoon. Some 40 delegates were scattered all over the session hall, chattering and flitting like birds lost in the wilderness.

No one seemed to know what was happening. The delegates were just whiling away their time. The reason? The Steering Council has decided that it was not ready to meet the 166-man body until Monday, four days from now.

Now, everything is the Steering Council! The Steering Council of 34 people decides everything while the rest of the 316 delegates are left guessing on what is happening, whiling away their time in speculations and small talks.

Greg Tingson, the famous evangelist, came to me, apparently bothered. He said, “Caesar, you and I profess Christian precepts. How shall we defend our actuations in this Convention?”

I was visibly troubled. Should we or should we not be in the provisional Assembly to be able to do what we could for the people at a time when we are needed most?

“It is apparent to me that this government has cast the die. There is no turning back. Should we not support it, abhorrent though it may be? Because if it fails, I foresee a revolution.” I was rationalizing; indeed, I was trying to convince myself.

“This is true,” Greg agreed readily. “For the sake of the country now, it should not fail.”

“But how can I join a dictatorial regime? I believe in human rights. I just cannot. I have pledged to fight all dictators in the world.” I was getting excited.

But if Marcos or Enrile should be out of power, Greg thought, the military would take over. We would then have a military government. Might not a transitional constitutional dictatorship be preferable to a military junta?

Between the devil and the deep blue sea? Is this now the situation of the country? Our fate is sealed?

The evil wrought on the country by the Steering Council is incalculable. However, be it said, its members are quite frank about what is happening; they keep on saying defensively that we cannot really express our own sentiments because the President wants this or that provision and that his will must be done.

It is quite true that, so far, some of the reforms of the President are laudable. I agree with Greg Tingson that these reforms may not have been done without martial law. But are these really worth the deprivation of our human rights? I do not think so.

It does not matter, of course, whether we want it or not. Martial law has been proclaimed and it looks like the state of emergency is here to stay.

My fundamental grievance against Marcos has to do with the violations of the human rights of dissenters and the creation of a climate of fear all over the land. Froilan Bacungan defended the action of the President last Sunday, telling me that if we can forget our personal interests and think only in terms of society and the country, then the deprivation of our freedom is well worth it.

In other words, instead of being bitter, Ninoy Aquino should just think of his incarceration as the sacrifice he is making for his country? And this should go for all others in the stockades, including ourselves, if we were arrested? Does this really make sense?

But the other problem that really bothers me is the fact that the President has practically staged a coup in the Convention. He has literally dictated some provisions of the new Constitution. This is indecent, immoral. And was it necessary? We have already given him—under duress—all that he wanted in terms of political power. Was it still necessary for him to impose his will on the other provisions? Unbelievable as it may seem, we now believe that it is, indeed, true that he has gone over the whole draft of the Constitution, provision by provision, and made corrections in them in his own handwriting.

Mene mene tekel upharsin. I can see the handwriting on the wall, similar to the one that appeared during Belshazzar’s feast.

I feel like crying, uttering a cry of anguish, like Othello, as he proposed to strangle his sweet wife: “But the pity of it, Iago. Oh, Iago, the pity of it!”

As some delegates were saying, it was indiscreet to have these notes of the President on the Constitution seen by several delegates. But did he even have to do it?

Even Lolo Baradi, a former ambassador and a loyal Marcos man, could not stomach what was happening.

“On All Saints’ Day, during the Cabinet meeting, the President made a slip on TV,” he told me. “He had asked Sec. Abad Santos, ‘what about the constitutional provisions on the judiciary? Are they already prepared?’ ‘Yes, sir,’ was the answer of the secretary. ‘We are preparing them.'”

The President was also reported by Lolo Baradi to have said: “I have some boys who are working with the Convention.”

Ikeng Corpuz has also seen the TV show and he and Lolo Baradi were laughing at these slips by the President. Obviously, Marcos did not realize that the TV was on when he uttered the incriminating remarks.

Moy Buhain had said this morning that he also saw this TV faux pas of the President. Or was this intentional? Come to think of it. Could it be that he had really wanted everyone to know that he was actively interfering in the writing of the Constitution? And thus intimidate every prospective oppositionist?

Ikeng Corpuz came to me and sat beside me. “You should now try to get your economic amendments in… I have read the provisions in the draft Constitution and I can not distinguish heads or tails in the article on the national economy,” he sighed.

Ikeng Corpuz is a good man but he really glosses over many things. He was obviously trying to compliment my understanding of the economic situation by supporting the provisions on economic policy that I have written. At the same time, he is also trying to impress me that he does understand their full import. But his actuations in the Convention have not been very consistent. Nevertheless, we have a certain attachment to each other.

Inggo Guevarra was in despair when he saw me. “There is nothing at all about industrial development in the new Constitution,” he wailed.

I had a dramatic meeting at the elevator with the delegate in real limbo—former Ambassador Eduardo Quintero, who had exposed Marcos’ payola in the Convention and had paid for his honesty by being framed by Marcos. Marcos had ordered dollar notes “planted” in his home. I’m sure history would proclaim him as one of the heroes of the Convention.

He saw me first and greeted me. He was with his daughter, who was obviously pleased to see me. I think they were happy over the fact that I had visited Quintero twice at the hospital.

About five army troopers were immediately behind Quintero, which suggested that Quintero is still under guard or some kind of house arrest. He looks somewhat stronger than the last time I saw him at the hospital. However, like Inggo Guevarra, he, too, may have arrived too late to vote. The voting had already closed sometime last week.

In the evening I attended the party given by Ting Jaime at the Club Filipino on behalf of the Philippine Chamber of Industries for Jess Tanchanco (our long-time Philippine Chamber of Industries first vice president) who has been appointed administrator of the National Grains Authority.

Several past presidents of the Philippine Chamber of Industries were there.

Don Fernando Sison, secretary of finance in the Macapagal administration, greeted me by saying that I looked pale and too thin last week at the meeting at the Hilton. (Ever since I heard that I would be arrested, my ulcerative colitis has worsened.)

In the course of our talk, we heard from Don Fernando that, perhaps, a general amnesty for political prisoners was forthcoming on the 15th of November. I thought that this would be a wise move on the part of Marcos. It would somehow heal the bitter division in the country caused by the incarceration of so many political prisoners.

Marianing del Rosario opined that many of Marcos’ reforms seem to be getting the support of the people. He does not like a dictatorship, Marianing said, but he might even support him in his drive for reforms. He thought Marcos would succeed with his “democratic revolution.”

“And if he fails?” I asked.

“If he fails, that is the end of all of us.”

Even Don Fernando said that if Marcos did well—and if he were to run for election later—he would support him.

Don Fernando mentioned that the President, during the Cabinet meeting, which was televised, had asked the Cabinet members whether the Constitution was already finished. He and Marianing were saying that the President did not hide anymore his interference with the framing of the Constitution.

“I take off my hat to the President,” Marianing said. “He is a brilliant man—for weal or for woe. During that Cabinet meeting, he showed such complete grasp of everything happening in the country. This was clearly shown in his discussion of the problems of each department.”

Don Fernando started telling me his inner thoughts.

He reminded me that at the meeting of PCI’s past presidents last week at the Hilton, the first advice that he gave was for us to adapt ourselves to the situation. Now he is especially advising me to take this stance.

“You have to survive.” He was very fatherly.

He added that this is a matter of survival for all of us, hence we have no choice except to adapt. “Bear in mind,” he said, “that martial law is here to stay with us for some time. I read the transitory provision and it shows clearly that martial law will be with us for many years.”

I suggested that this might turn out to be something like the situation in Spain.

“Yes, insofar as the duration is concerned. It will really take many years. Franco has been there since 1935 but with a very big difference. Franco is still a dedicated man and a poor man. He is a dictator but his major concern is the welfare of his people.”

He stressed that we must adapt and survive knowing that insofar as history is concerned, dictatorships do not really last forever.

“Where is Hitler now?” he asked rhetorically. “Where is Mussolini now? Or Genghis Khan?”

When I asked him how he would have voted on the transitory provision if he were a delegate, Don Fernando replied forthrightly that he would have voted “Yes.” He said he likes to think this is the kind of situation that President Laurel was in during the Japanese Occupation. It is a question of the fundamentals by which one lives, he said. He considers Laurel a hero, not a collaborator; many others were collaborators. He added that he had read the explanation of Pepe Calderon on why he voted “Yes” and it was very good.

He also informed us that many delegates in the Convention, from the time we were discussing the form of government we should adopt, were receiving ₱1,000 each per attendance to make sure that the provision on parliamentary form of government would win.

Really? I never knew this!

Don Fernando said there was so much publicity about people being dismissed from the government for malversing the calamity funds—but these are the small fry. Some people have been dismissed for malversing ₱10 million but the government has malversed nearly half a billion.

“How do you account for the funds? The President has not made any accounting. That is the reason why before martial law Senator Tolentino and others were asking that Malacañang make an accounting.”

“So you see,” he continued, “it is easy enough for the delegates to be paid. There are enough funds.”

He advised me to continue with my journal (this political diary) and have a copy entrusted to someone in case anything happens to me. He said this would not be useful now but it should be extremely useful in the future.


Wednesday, November 8, 1972

My amendments on the national economy as well as that on the National Assembly were filed today.

There was so much discussion on the powers of the Steering Council—which are more or less plenary—and the apparent deempowerment of the Sponsorship Council. Serging Tocao, a member of our Sponsorship Council, was enraged by the fact that the Sponsorship Council was being made a second-class council by the Steering Council when, under the rules, it is the Sponsorship Council that is supposed to write the Constitution for voting on third reading.

I thought the discussions were really a waste of time. I raised the question of whether or not we might still introduce major amendments to the provisions that have been written by the Steering Council if we thought that our amendments would improve the provisions already written. From the way my remarks were handled by Ikeng Corpus I got the feeling that the answer is no, we are not really strong enough to push through anything in the Convention. In other words, the situation was more or less hopeless.

“Verzweivelt aber nicht ernst” (desperate but not serious), this is how the Austrian people laugh off their national problems. But our situation is verzweivelt und hoffnungslos (desperate and hopeless).

Corpuz read the words of the resolution granting all the powers to the Steering Council. He said we ourselves had given them to the Council.

“Under duress,” I cried out. But everyone seemed resigned to the fact that we are now rewriting the Constitution the way Malacañang wants it.

Jesus (Jess) Garcia, a Marcos loyalist, leaned towards me and whispered that I should not be too vocal about my views because if I did not sign the Constitution, and if I did not vote with the majority, I would surely be arrested by the military. He swore that he has seen with his own eyes my name and that of my brother’s (Rebeck) among the list of 32 people who are supposed to be detained.

Again I hear I am going to the stockade. This is getting too much—everyone expects me to be arrested! But one consoling thing has come out quite clearly: there are many Marcos people—my political opponents—who, out of respect, for me, are concerned for my safety.

Joe Feria was also skeptical about our ability to change anything in the draft of the Steering Council, considering that during the voting on the Toto de la Cruz resolution vesting all powers on the Steering Council, only 12 had voted “No.” In other words, we are not really united in the Sponsorship Council. The majority in the Sponsorship Council have been so frightened that they voted with the tutas.

I suggested that a liaison committee be created to work through our amendments with the Steeling Council and also to find out just what provisions are special ones for Malacañang which may no longer be amended. It would be inconceivable that, as claimed by the Steering Council members, we may no longer change any provision. We thought that perhaps, Malacañang is interested only in some provisions, not in all, and that the Steering Council is using the name of Malacañang to get a carte-blanche to write the whole Constitution. I suggested that the group be headed by Ramon Encarnacion, with Noli Aguilar, Serging Tocao and Bongbong as members. These are also Marcos people but they are not in the Steering Council.

Justice Barrera soon joined our tete-a-tete.

It was established by Jess Garcia and Ikeng Corpuz that, actually, the contact man of Malacañang who reports there regularly is Bebet Duavit but another guy who is discussing the draft provisions with President Marcos is Tony de Guzman.

“Small wonder Tony has been lording it over in the meeting of the Council,” Joe Feria said. “He has been chairing some of the meetings of the Steering Council, with some technicians and experts of Malacañang and Congress in attendance.” During the meetings, Tony de Guzman would say, ‘Well, gentlemen, I am sorry to say that I don’t

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“The only important thing on the national economy is that it should be thrown open to foreign investments. This is what the President wants,” Atoy’s tone was definitive.

He added that insofar as the form of government is concerned, the powers of the president have been scrapped and all the powers have now been vested on the prime minister.

Jess Garcia intervened. “So you see it is only you (Atoy) who was right all the time on the system of government we should adopt. During the debates, while the delegates were split on whether to adopt a presidential or a parliamentary system, you had the guts to stand up and say that what is most desirable is a dictatorship.”

“Several weeks later, in his speech opposing the ‘no reelection’ provision on the president, Teroy Laurel adverted to the maverick resolution of one of the delegates advocating a dictatorship,” I concurred.

Atoy shrugged his shoulders. He went down with me to the secretariat to look at my amendments. He warned me that insofar as amendments by substitution are concerned, they are out. But I informed him that I have my second alternative amendments on the national economy. He responded by saying that if they would strengthen the article concerned and if they would not lengthen it entirely, they may be considered.

I assured him that they would not lengthen. And, I said, he can throw away my nationalistic provisions—what can I do?—if the government really wants an open policy on foreign investments.

I was earnestly asking for Atoy’s help. He was good enough to promise that he is going to look over my second alternative amendments by substitution in which I had sought to incorporate all our committee ideas on the national economy. I would, however, try to find a way to insert on the record my amendments by substitution not only on the national economy but also on the declaration of principles. I believe that in the latter case, we are expressing a philosophy of government and we should at least express our views and have them on record even if we knew that they would not be accepted.

This may be a footnote to history. During my talk before the Sponsorship Council this morning I mentioned that I still feel like putting on record, for the benefit of the next generation, my thoughts on this matter even if I may no longer be heard by my colleagues in the Convention.


Tuesday, October 24, 1972

At 7:15 a.m., Sonny Alvarez called up. This was an unexpected call from a dear friend over whose safety I am concerned.

            Sonny is one of the most committed delegates to the Convention. His concern for the poor and vulnerable sectors of society is genuine. And his social vision is broad. It is for his convictions that he is under suspicion by the military—as a leftist.

            An excellent debater, Sonny has impressed many of us at the Convention. He is my alter ego at the Convention.

Sonia Aldeguer and Raul Roco are the two other closest and dearest friends with whom I have spent long hours of discussion and fellowship.

When martial law was proclaimed, Sonia was in Rome; she is a novice of the Religious of the Sacred Heart. Sonny and Raul both went into hiding immediately after martial law was proclaimed.

Sonny said he was coming to see me in the house for some advice. I told him that I was about to leave for Rizal Park to jog. We could meet there. He agreed.

I waited for more than an hour but Sonny did not appear. Upon returning home, I was informed that he had come to the house and left word that he was proceeding to President Macapagal’s house. He was once—when still a UP student—an aide to Macapagal.

On the way to the meeting at 10:15, I met Toto de la Cruz. Of the three men in the Con-Con special group, Toto is about the closest to Sonny. Sonny wanted to know if there is any way by which he could be made to vote without endangering himself. Toto replied that he is not sure how this could be done but that, in any case, he is going to think about it and consult the other two.

At the economic, group meeting, we made quite a bit of progress in integrating the different provisions. After a while, we decided that we had worked so much—from 10:30 a.m. to 2:45 p.m. and so we were going to adjourn to meet again on Thursday. We decided that Ding Quintos and Manong Raquiza should definitely be there so we could discuss the provisions on agriculture and natural resources and land reform. Preferably Teresita (Tessie) Flores should also be there so we could also listen to her draft provisions on social justice. We also decided to invite Celso Gangan to discuss the report of the Auditing Committee and Ben Campomanes and Fanny Cortez-Garcia for their drafts on foreign loans as well as monetary and credit policies.

We did gain much headway today.

Upon our adjournment at 2:45 p.m., I received a call from one of the Con-Con secretaries, Miss Perfecto, saying that Cecille Guidote, Sonny’s fiancée, had phoned and left a cryptic message: I am supposed not to have heard from anyone; I have not spoken to anyone.

I did not quite comprehend the full impact of the message, considering my earlier discussions with Sonny. I was under the impression that he wanted me to do something to enable him to vote.

At the session hall, before we started, I asked President Macapagal whether Sonny had seen him and he answered that he had but that their meeting was inconclusive.

Macapagal was optimistic. We added that the opportunity to vote that was given to Romy Capulong and Raul Roco is not specifically limited only to the two of them, so he (Macapagal) could always interpret this to mean that Sonny could also be allowed to vote.

Macapagal was not sure whether Sonny would want to vote “Yes,” though, “considering his ideological persuasions.”

I am, of course, very happy for Romy Capulong and Paul Roco, of whom I’m very fond. But I could not see the relevance to Sonny of the lifting of their warrants of arrest. And of how ideological persuasions could influence him one way or the other.

I suggested to Macapagal that, perhaps, he could talk to the three new powers—Francis Zosa, Toto de la Cruz and Ven Yaneza.

He replied that it is not necessary to talk to the three because any one of them would be sufficient. He felt that of the three, the one most flexible on this matter is Francis. He repeated that it is a matter of Sonny’s own decision.

I gathered later that their discussions were indeed inconclusive.

I looked for Toto. “Toto,” I said, “I understand that it is better that we assume that nothing has been said, that I didn’t tell you anything, that we didn’t hear from Sonny.”

            “Bakit naman?”

“I do not know but I gather that this is the best thing under the circumstances.”

“All right.” He was greatly relieved.

The meeting then started at the session hall. Ikeng Corpus stood up to say that the Sponsorship Council had been meeting under the chairmanship of Delegate Prof. Augusto Caesar Espiritu, who has the matter under control. Some applause followed the commercial.

I talked to Celso, the closest among us to Sonny. He had not seen Sonny at all lately. I told him that I had heard from Cecille. Celso is afraid that in two days’ time, the option would run out so in this brief period, we should find ways of helping Sonny. So we went to the office to phone Cecille. To my surprise, the answer that we got was very negative.

Cecille was very tense. She was absolutely determined that it is best that nothing should have been heard, that no one knows what is happening and no one knows where Sonny is.

“It is best that we leave it at that,” she said with finality. “Anyway, the voting would have nothing to do with Sonny’s liberty; it will not guarantee Sonny his freedom.”

Of course, she is right. It is his freedom that is important. The others are of little consequence.

Cecille added that she is almost desperate. And her phone is tapped.

I felt sorry for her. I wonder if she was speaking on her own out of her concern for Sonny? Or was this Sonny’s own decision?

Celso and I were also getting desperate ourselves.

“How long will he continue in hiding?” Celso asked gloomily. “He cannot be hiding forever.”

In bewilderment and near depression, Celso and I parted. I proceeded to my meeting with two business partners, Dr. Ricky Soler and banker Ting Orosa, Jr., at the Hyatt Regency Hotel.

Ting was in a light mood. “Honorable Delegate, we have not met for a long time.”

I answered, “Yes, Honorable Orosa, that is so.”

Ricky bantered, “He has been in the stockade.”

“I was presenting myself but they wouldn’t take me,” I quipped.

We were introduced to the Marketti people from Belgium who were having a meeting with Ricky. They left after a while.

A minute later, Ricky received a long distance call from Col. Freddie Ablan. He is in Singapore on some business negotiations. Apparently, a joint venture is being organized by Freddie Ablan and Sig Siguion-Reyna with the people from Belgium. Ricky was hoping our Consultasia management group would be able to do the project study on the matter.

We continued talking in a light vein. But Ting was getting fidgety after a while.

“You know, Ricky,” he said with some apprehension, “all hotels are now bugged.” His last words trailed off into a whisper.

He emitted a soft, nervous laughter.

Ricky insisted, quite proudly, that his office was not bugged. But Ting persisted in a trembling whisper: “All hotels are now bugged, Ricky.”

Ricky stood up and said triumphantly. “You want to be sure that this place is not bugged? I’ll show you.”

He walked briskly towards his desk. We bent to look under it. And we nearly froze in fright. A bugging instrument, precisely was right there—planted under Ricky’s desk! The telephone speaker was firmly stuck there!

Ricky was visibly shocked. Ting turned pale.

We calmed down after a while. Then we continued our discussion. We felt that perhaps there would be no more tapping instruments in the room. I showed them the two Grandjean memos on our proposal to float bonds in Europe.

Ting is one of our ablest bankers. The banker’s banker, some people say. It is such a pity that he was not able to leave the country in September. He could have gone with Grandjean in Zurich to Wuttke and other bankers to work on the government’s bond project.

Ricky responded that Ting should have no difficulty leaving; he (Ricky) could make the arrangements with Colonel Salientes—the undersecretary of defense. He was very sure he could get a clearance from the DND for Ting provided Ting receives a cable from abroad saying his presence is necessary at a business meeting of a given date.

“But I can not make the same offer for Dr. Espiritu.” Ricky gave me a whimsical look and smiled.

Ting answered that this was not even necessary because the closest man to the President himself, namely Bobby Benedicto, is working on his clearance papers. Nevertheless, he said, it seems almost impossible to leave. It is not easy to get a clearance to leave now even on a legitimate business trip.

We somehow got to talking about the possibility of my taking a business trip, too. Ricky repeated that I should not attempt to apply because my name was previously in “the list” and that according to Sig Siguion-Reyna, it was only removed by Enrile. Ting seconded the advice saying that at the moment I should not apply for a clearance for a business trip because the military are suspicious of me.

“What makes you think this way?” I asked in apprehension.

“This is a fact; I heard this.”

“Why? Why this?” I persisted.

Ting suggested that when I was president of the Philippine Chamber of Industries, and likewise when I served as a member of the National Economic Council, I must have made statements which were critical of President Marcos. He therefore advised me not even to attempt to apply.

“Perhaps, after a while, after things shall have quieted down, the military would allow you to leave but at the moment, you should really stay put,” he warned me.

I felt unhappy about these confirmations by my two partners that it would be difficult for me to secure a clearance for business travel. It was some comfort, however, to hear Ricky confirm that I was no longer in the DND list.


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.


December 1, 1936

Glad November is over–somehow or other this is nearly always a worrisome month;–this year it was even worse than usual both because of Doria’s illness, and by reason of the lack of discretion, not to say greediness of some of ay associates in business.

At Malacañan at 9:30. Quezon was in the barber chair, just finishing an interview with Cuenco, former Assemblyman from Cebu whom he introduced to me as the new Secretary of Public Works and Communications. Three days ago, Cuenco had been announced as the new Mayor of Cebu, but it appears that Osmeña as the Boss of Cebu was obliged to offer some opposition, to the appointment of one of the opposing party. Vargas was present with Quezon and handed him Cuenco’s appointment as a Cabinet member, explaining that Osmeña had intimated his acquiescence in that rather than having to consent to Cuenco’s being Mayor of his city–never believing Quezon would agree. It looks as if Osmeña had been out-jockeyed!! The President told Vargas to get this appointment right into Cuenco’s hands, so that nothing could happen to interrupt it. When, a half hour later I reported this appointment to Claro Recto and Rafael Corpus, they both said: “This will break up the coalition!” but when I replied that Osmeña had already agreed, Corpus remarked “That’s the trouble–Osmeña is too easy.”

I then reported to the President my recent conversation with Foulds, British Consul General, in which I gained the information that the heads of foreign states such as Kings and President were not invited to the Coronation. To this Quezon made no comment:–he had probably learned this himself from Foulds, but he was obviously disappointed. My last point for Quezon that morning was a report of a conversation with Tommy Wolff last Friday night in which he stated that by accepting Filipino citizenship I had “not a friend left”–“except you, Tommy” I interrupted, at which he began to stammer. Quezon told me “not to let these fellows get under my skin.” I went on to say that Wolff was getting in the frame of mind of the late Paul Reinsch, American Minister of China, who had come to believe that the inhabitants of the country wished him harm (and went mad). Quezon at once said that Wolff’s mind was weakening from too much conviviality. He then observed that he “could not stand seeing any of his friends under the influence of liquor.”

I told Quezon about the troubles caused to newly forming mining companies by the excessive zeal of the promoters–that I had joined the Central Exchange under the urging of Speaker Montilla believing he was back of it–that I never heard of Prats until then–that I had induced Don Ramon Fernandez to join with me and we had gone to work to secure a Produce Exchange as something of real value for the future, and thanks to Quezon’s assistance had obtained it. Shortly after this conversation Corpus reported to me that the President had vetoed the bill on exempting Produce Exchanges from more than one sales tax–thus making them impossible except when run by the government. (This I doubt).


May 27, 1936

Luncheon alone with Quezon at Malacañan. He appeared in very good spirits; is swimming daily in his tank, and played golf at Wak-Wak at 5 o’c. this morning. Spoke with pleasure of my appearance of good health and asked me to go with him on the Negros trip to the Southern Islands June 3-15, with the members of the Assembly. I accepted. He spoke also of the speed with which he had acted at once on Miguel Unson’s recommendation for the creation of a budget commission and had appointed Marabut at the head. I said the Governor of Leyte would think this was the result of his public complaint when we were in Catbalogan in April because no Leyte men were high in government office–a complaint which the President had denounced blisteringly before the crowd (advocating a national, not a local outlook). Quezon said this was so, and as he had so many sound reasons for doing so, he would suspend that Governor for one month, to avoid his increasing his undesirable influence over his province thru the appointment of his friend Marabut.

I spoke to the President of the good time we had had at the dance at Masbate–he invited me to a small dance at Malacañan Friday night–said he had sent for Corpus from Masbate to come to Manila on government business, but the latter had not had the sense to bring those charmers with him!

I asked him (for Unson) what his attitude would be on the question of the transfer of the Provincial Treasurers from the Department of the Interior to the Department of Finance (Quirino?). He said that was a subject as to which as much might be said on one side as the other–that he would accept the recommendation of the Survey Board. (Later I told this to Unson, thinking he would act at once as I advised, but Unson began to deliberate!) I enquired of Quezon about the repeated kicks emanating from the United States Congress towards the Philippines nowadays, and whether they could not later be reasonably straightened out. He seemed doubtful, but evidently is not ready to talk about it. (Nazario tells me that at the last press conference he said it was “up to the American businessmen,” and hinted at reprisals by the Filipinos.) I told him the simile of American psychology–when a son grows up the father does nothing more for him; Quezon liked that. I said that some Americans appeared to be peevish now because after all that had been done for them the Filipinos had insisted on separation. He replied: “Well! then why did they give us independence?”

I called Quezon’s attention to the controversy over appropriations for the Department of Labour between Secretary Torres and Miguel Unson, in which Torres called Unson “not interested in the poor man”–Quezon at once said Unson was extremely interested in the welfare of the poor. He added that he had one Cabinet minister who was “useless” and “worthless,” namely Torres; that he had nearly fired Torres several months ago; that Torres kept calling up (3 times) in a recent Cabinet meeting the proposal to build four story concrete tenement houses for labourers. Quezon finally snubbed him, and explained that tenements to house 100 families would only make the other 900 families wild; that a four story building was “too much work” for a labourer to climb; that concrete as a material in this climate was too hot–“why not leave them in their nipa houses?”

An article in the Bulletin, May 29, described a quarrel between officials of the Department of Labour and some labour leaders as to which group should get the credit for the “higher wage” movement. Apparently, government officials claim the labour leaders are “trying to steal the show.” “There is no reason for this sudden antagonism” a high labour official stated, “as in the past we have always sided with the labour element.” This displays an utter lack of public responsibility, similar to the debates in the Municipal Council of Manila over the cochero registration ordinance–these speeches are only cadging for the cochero vote.

Quezon spoke highly of Sandiko–as did I–I told him Sandiko wishes to go to America to study the labour question there. He was interested.

A. D. Williams was brought in by Vargas, to receive instructions about air-conditioning the President’s room at Malacañan Palace. Was asked to have the work finished in two weeks–Quezon adding: “I don’t want to do it for my successor.”

We talked of Geo. White’s visit and of our old friends in Congress–Quezon said he had liked the Ohio delegation of that day, except R. J. Buckeley who had voted against independence for the Philippines offered in the Clarke Amendment (1916).

Quezon agreed with me about the type required for “Public Defender.”


February 3, 1936

Dinner at Malacañan for Cabinet–Doria wore her new black dress which was a great success, and Quezon asked her chaffingly if she was in mourning for King George? Corpus, President of the Philippine National Bank, sat on one side of me, and spoke con amore of how I supported him as Director of the Bureau of Lands against American attacks. He said Secretary Denison only supported him when, as Governor General, I ordered it. I urged Corpus to write his memoirs–he said he had been a newspaper reporter for five years before I appointed him as Director of Lands, but that his own style was only anecdotal.

Talked with Under-Secretary Albert, who remembers not only the Philippine Revolution against Spain, but later on an interview he had with President Wilson; he came back here sharing a cabin with Quezon when I arrived in the Manchuria in Oct. 1913. He said that Quezon was much excited when he secured my appointment as Governor General through Secretary of State William Jennings Bryan in 1913–he then said: “now we are sure to get independence.” Albert gave Doria some complimentary accounts of me as a public speaker.

After dinner, I talked for a half hour with the President. He told me of his difficulties in appointing Judges, and said that Osmena had urged on him the nomination of Rafael Palma to the Supreme Court. That he (Quezon) had wanted to appoint him, and had consulted Chief Justice Avanceña and other Justices–that they had been rather non-committal, but when Quezon returned from Baguio, and asked them again about Palma, the Supreme Court Justices had meanwhile heard Don Rafael Palma argue a case before them and were now certain that he was not qualified to be a Justice. Quezon said that Osmeña had asked for an appointment with him every day for a week, and that he had given every excuse, especially that he was tired, until it was too late for Osmeña to interfere again. Osmeña then told Quezon that they were better able to select the judges than was the bench. I called his attention to how Osmeña had nearly wrecked by administration by his insistent recommendation of Venancio Concepcion as President of the Philippine National Bank. We agreed that Osmeña was a bad judge of men. I called his attention to the efforts I made for five years to induce him (Quezon) to break with Osmeña. He replied: “It took me twenty years.”

Osmeña had also persistently tried to get an appointment with Quezon to argue in favour of Aldanese. Quezon and I agreed that the Collector of Customs was personally straight, but Quezon said he had been put in an awkward position by Governor Wood. I complained that the Philippine Government was full of graft, and asked whether it was not because Governor Murphy has had his head in the clouds. Quezon said, “no, you must not think that of Murphy”–that the original fault was with Governor General Wood–that corruption was rife under him. That his successor, [sic] Governor General Davis had announced in a speech in Honolulu that he was going out to the Philippines to clean up graft in this country. That while Davis was here, he never knew anything at all about the country.

The announcement of the Government’s decision to cancel the lease of the arrastre to Simme & Gilke had subjected Quezon to a perfect bombardment of letters of protest from Americans. They state that the lease of the arrastre to the Manila Terminal Co. under Governor Wood had greatly improved the freight service at the Manila docks. Quezon said that perhaps it had not been done any too well before but that he was going to turn it over to the Manila Railroad Co. and have Paez manage it; that the Manila Terminal Co. had been making 500,000 pesos a year out of it. That they had offered Aldanese a large salary for extra service with the Manila Terminal Co.; that Governor Wood had permitted him to accept; [that it was “unethical” for the Collector of Customs to have another salary from a business firm.] This practice had been stopped November 15 under the new constitution.

Quezon next talked about the (Baguio) Constabulary Academy case, where he had just dismissed eight of the cadets, including his own nephew, for hazing and had transferred Colonel Johnson, the Commandant. The cadets whom he had examined personally concerning this case, had replied that they thought the regulation against hazing was a dead letter. I told him how President Thomas Jefferson in the last year of his life had ridden down from Monticello to the new University of Virginia and had dismissed his own two nephews (my great uncle Cary and his cousin Carr) for a student prank. He said he wished he had known of this, for he would have cited it as a precedent in this Constabulary case.


December 25, 1935

Talk with Rafael Corpus, former director of Agriculture and new President of the Philippine National Bank. He told how Wood had tried to liquidate the bank; how eventually all the money supposed by Wood to be lost in sugar mills had been made good –even Philippine Vegetable Oil paid back 50%. Said he discovered more and more how the economic basis for the country was laid during my administration.

Sugar– said it was O.K. for seven years.

Hemp– said Sumatra’s attempt to rival the Philippines had failed.

Rice– said next year would be worse than this; that the floods in Pangasinan etc., had ruined the crop; that sugar had absorbed much of the rice land.

Iron– said Economic Council must establish a steel industry here –Japan was now taking 300,000 tons of iron ore yearly from Paracale in the Philippines– that our coal in Mindanao was just right for iron, but was too hard for ships. We had all the materials at hand, and even if it would compete with the United States we must insist on it. It was also a matter of national defense. We need a mineral survey, particularly of the vast and untouched iron fields of Surigao, reserved for the government.

Government of Quezon– said it had taken well so far.

Roy Howard article– said the fear of Japan was very real and the commercial classes would like an anchor –either the United States or England. Said fear of Japan did not penetrate to the common people in the provinces.

Sakdal & Communism– a very real problem –said some Filipinos had gone to the International in Russia and had come back with money. General Valdes told him one of these leaders had 50,000 pesos. Valdes confirmed this to Corpus.

Japanese– said they were very bold; that they were watching the development of the Davao matter; that they had been allowed by connivance or by supineness of Filipino officials to get these lands illegally and should not be blamed. Corpus says it was the Filipinos’ own fault.

Christmas dinner (lunch) with the Headquarters Commander of the 31st Infantry, the only regiment of American soldiers left in the Philippines. Excellent home food and a far better entertainment than last Christmas at Luxor in Egypt. Captain & Mrs. Lussier and Captain & Mrs. Howell.

Dinner with Mr. & Mrs. Samuel Gaches. Talk with old Colonel J.N. Wolfson who told me that McKinley’s secret instructions to Taft when he sent him out here to the Philippines as the first Civil Governor were to prepare the Filipinos as rapidly as possible for self-government –hence the “little brown brother” (and Taft’s fight for power against the United States army). Colonel Wolfson also told me of being retained recently (he is over 80 years of age) by 81 inhabitants from Tarlac who had been ousted from their lands by a local cacique under claim of a prior Spanish title, even tho some of them had Torrens titles. The judge of first instance in Tarlac had decided in favor of the cacique —Wolfson got this reversed in the Philippine Supreme Court.


December 2, 1935

An hour and a half with Foley (New York manager of the Philippine National Bank) over the Manila RR. bond purchase –his ideas and mine are very similar but he looks on it chiefly from the point of view of a banker, while I can, perhaps, see better the government policies involved. He predicts a change in the management of Philippine National Bank here and says Miguel Cuaderno, and perhaps Corpus, must go.

Foley advocates the issue of 5 million pesos of Philippine Commonwealth 5% bonds, to establish the government’s credit; says the whole issue can be supported by the Philippine National Bank in New York. Would like to go home via Europe and feel out the situation in Switzerland, France and England on this bond issue, and says also that while in London he can drop a few hints to Scott and Priestley that they should make a better offer on Manila RR. bonds.

One hour with A. Roces, Sr. in Vanguardia offices; he seemed glad to have me act as intermediary between him and Quezon. Appeared surprised when I showed him the two offending articles; said he had not seen them, and would correct the misstatement; he is about to become “dictator” of all his editorial policies –re-news his intention “without reservation” to support Quezon. Dis-approved of Quezon’s visit to the bandit country but had not commented on it. He was very cordial and friendly, and expressed pleasure at my appointment as adviser –but said it should not have been confined to communications, but have been general. Said he would make an appointment for me to talk with Manuel Roxas tomorrow.