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June 28, 1936

Sunday morning visit from Colin Hoskins. We agreed in disapproval of “nuisance taxes.” There was talk of warehouses and rural credit facilities. I asked him: “what is the use of doing these things for people with whom it is a cardinal principle never to pay back.” Very good talk in reply. Colin says sharp distinction must be drawn between debts owed to the government (taxes, credits &c.) and those to private concerns. People here do not feel a moral obligation to pay the government; in Spanish times here any broken-down Peninsular with family pull could get appointed a tax collector in the Philippines. (N.B. “tax farmer”). The Chinese, here for their part, had been brought up at home under a system of tax “squeeze”; American (Army and Havy officers &c. in spite of their oaths of office) would occasionally smuggle in goods from China. Why, then, blame the Filipinos? His chauffeur who had previously been out of employment for six months, now has 500 pesos in the savings bank. Houseboys &c carried not a centavo with them because they didn’t want to be drawn into crap games. When he was agent for the “Book of Knowledge” he sold (mostly in the Provinces) a half million pesos worth;–the 5% loss expected on payments was not reached. In selling lots for homes in Tondo etc., he finds 90% of the installment payers responsible. He had said to the Asociacion de Propietarios a few days ago that the 5% of non-payers were well-known irresponsible drifters:–and they assented. He concludes that the Rice and Corn Corporation will eventually come to building credit warehouses in the Provinces, and that generally speaking, taxes could be collected through an education of confidence in the government, so there is no real need of new taxes. (N.B. Quezon’s campaigns in the Provinces on this subject).

We agreed that the Filipinos are really a martial people, could pay for an army and wanted one. That MacArthur’s recent statement (tho belated) would have an excellent and permanent effect.