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company employs some 2,500 Filipinos. The minimum pay we pay to our employees is 1 peso per day. We give free dental, free medical, free hospitalization to all employees and their families. We also give free housing to plantation employees. A peso a day is the minimum and it graduates from there up.
There is one other feature that we Americans operating in the Philippines do business under which is a handicap to us—the fact that we are liable, as individuals, to United States Federal income taxes, which is not a particular part of this bill, but it might be well to call it to your attention that that is a handicap to us out there as individuals because other aliens doing the same kind of business, or a competitive business, do not operate under that handicap.
Now, that is all I have to say. I have lived for years in the islands. I know the situation fairly well out there and I would be very pleased to answer any questions that you might ask that would help you in your deliberations.
The CHAIRMAN. I believe that is all, Mr. Crawford. Are there any other witnesses who desire to be heard this morning? (Off the record remarks.)
STATEMENT OF VICENTE VILLAMIN
Mr. VILLAMIN. My name is Vicente Villamin; my address in town is 1135 Sixteenth Street. I am speaking for myself as a private Filipino citizen.
I wish to submit what I think are two capital defects in the Philippine bill, S. 1028, and suggest that they may be examined and rectified.
The first defect is this: The bill sets forth a plan of a limited, declining preferential trade between the United States and the Philippines from 1946 to 1960. This plan is to be incorporated in an "executive agreement." This agreement is made immune from denunciation for 7 years. But—and here is the basis of my first criticism—it is subject to revocation on 6 months' notice upon the showing that either party has, quoting the bill, "adopted measures or practices which would tend to nullify or impair” the advantage secured under the agreement.
An example of this is a case where, say, in 1947 the Philippines decide to give preferential treatment on textiles from Japan for a compensatory treatment by Japan of Philippine sugar., That act would give the United States ground to revoke the agreement on 6 months' notice. This revocative sanction, of course, runs reciprocally.
The effect of this provision is to deprive the Philippine government of the treaty-making power which it should acquire automatically with the assumption of independent sovereignty. In practice, this means that while the Philippines will drift commercially toward zero in 1960, it is shorn of power to initiate a parallel action from 1946 to make up with increasing trade with foreign countries through agreements what it will lose progressively in its commerce with the United States under the plan of dissolving the Philippine-American commercial relations as set forth in the pending bill.
The second defect is this: The plan of trade dissolution, euphemistically called a readjustment program, will take the form, as I already stated, of an executive agreement between the President of the United States and the President of the Philippines. The pertinent provision of the bill gives the former only permissive, not mandatory, authority to enter into such agreement. This point is basic beyond overstatement. It makes manifest the fact that there is no reasonable or rational certainty that there is going to be any agreement at all when the fateful year of 1946 rolls around. The actualization of such an agreement 7 years from now would depend on so many conditions and circumstances then prevailing that it looks very much like the bill is holding out to the Filipinos a hope whose realization is inherently and impressively problematical.
A treaty, as the joint preparatory committee has urged but not adopted, would invest the plan with more stability, but it will not cure the fatal defect of the deprivation of the Philippines of the sovereign power to seek beneficial commercial relations with foreign countries as its commerce with the United States is relaxed and wound up. Then, too, it must be recognized that it is legally and diplomatically impracticable to agree upon a treaty now, define its terms in a congressional enactment now, and then put it into effect 7 years from now.
I believe these two defects, if found incurable, would render the measure not only innocuous but delusive as well.
Therefore two questions arise :
Firstly, would not progressive disintegration of the PhilippineAmerican commerce as provided under the bill be more painless to the Philippines than its abrupt cessation, as would happen if the Philippines were to be placed on a foreign basis with the declaration of political independence in 1946? My answer is this: It is preferable, arithmetically and logically, to have 5 years more of the existing free-trade arrangement of no tariff duties and no declining quotas and trust not only to the magnanimity of the United States but also to the eventual recognition of the relative value of the economic potentialities of the Philippines for a new deal for the period after 1946, frankly admitting the open uncertainty of this course, which is corresponded by the overt uncertainty of the plan in the bill. At least, under this program, if the export-tax provision is abrogated the Philippines will not make any sacrifice as it faces the uncertainty, economic and political, in 1946, as it would have to make under the plan described in the bill.
Secondly, what is a reasonable alternative that is simple and effective to the bill S. 1028? My answer is this: Let Congress proceed in this session to repeal the export-tax provision, section 6 (e), in the Tydings-McDuffie Act, which provision, if not abrogated, will go into effect in November 1940. That is all I am suggesting as the alternative to the pending bill and I am going to elucidate on it presently.
The purpose of the export tax provision is to raise the funds with which to liquidate the Philippine bonded debt; and its effect is to annihilate or weaken Philippine basic industries upon which the tax is to be imposed.
The provision is unnecessary now, first because of the formidable position of Philippine public finances and, second, if free trade is not
unduly tampered with, the paying capacity of the Philippine government will not be impaired and debilitated.
According to the report of the Joint Preparatory Committee, the Philippine net bonded debt in 1946 will be but approximately $21,000,000. Today the Philippine government has a cash surplus six times that amount. With the present trade and fiscal relations with the United States continuing unaltered to 1946, the Philippine financial position would be much stronger and more liquid. Several Philippine assets are in the United States and under the control of the American Government. They are the currency reserve fund and a substantial portion of the excise tax collections—these two funds amounting to over $100,000,000, besides the nearly $24,000,000 of profit arising from the dollar devaluation operation which the Congress in 1934 authorized to be paid to the Philippine treasury but which has not yet been forthcoming. And topping this formidable array of fiscal assets is the remarkable fact that the Philippine government has not yet defaulted on its bonded obligations, and there are no causes nor temptations for it to tarnish that magnificent record.
Concluding, I wish to reiterate that I am here as a private Filipino citizen. There is not behind me the authority of government, but I am confident there is behind me the authority of reason. The CHAIRMAN. Thank you. Is there any other witness who desires to be heard this morning? [No response.]
Well, gentlemen, we are going to conclude these hearings the first part of next week at the very latest, and possibly by the end of this week, if possible. There are some witnesses coming from a long distance that we will have to give precedence to whenever they come, coming from the State of Washington and from the State of California, especially to testify—and I am bound to say that although we have allotted time definitely to certain individuals, and we want to keep our promise, that if these two representatives coming that long distance should come in at any time, we will feel that in fairness to them we must give way for that period. Otherwise, we will go ahead with our schedule.
The committee has no desire or wish to prolong these hearings any further, and I will ask again—has everybody in this room who desires to be heard been heard? If not, speak out now because we are apt to close the door on you.
Mr. John B. GORDON. I am just in here by chance. The Finance Committee adjourned until 2 o'clock and there is a part of this record that I will have to study before making a presentation, so I will have to go on at a later date.
The CHAIRMAN. We will try to accommodate you.
The committee will stand in recess until 10:30 tomorrow morning, in this same room.
(Whereupon, at 11:25 a. m., the committee recessed until 10:30 Thursday morning, March 9, 1939.)
COMPLETE INDEPENDENCE FOR THE PHILIPPINE
THURSDAY, MARCH 9, 1939
UNITED STATES SENATE,
Washington, D. C. The committee met, pursuant to adjournment, at 10:30 a. m., in room 424, Senate Office Building, Senator Tydings (chairman) presiding.
Present: Senators Tydings (chairman), Pittman, Vandenberg, Clark, and Gibson.
Thé CHAIRMAN. Mr. Underwood, are you ready to proceed?
STATEMENT OF J. J. UNDERWOOD, MANAGER, SEATTLE CHAMBER
OF COMMERCE, WASHINGTON, D. C. Mr. UNDERWOOD. Mr. Chairman, my name is J. J. Underwood, and I represent the Seattle Chamber of Commerce.
I wish to state that this bill has been given very earnest consideration by a committee composed of gentlemen interested in foreign trade, and that, after consideration and after I myself went to the Philippines, we came to the very definite conclusion that this bill should be enacted.
I might say also, before I put in this statement, that at this very moment we are negotiating with the Maritime Commission for a line of ships to run to the Philippines, and we expect to conclude that agreement within the next week.
This Northwest area is very largely dependent on the Philippine trade.
The CHAIRMAN. What does that consist of
Mr. UNDERWOOD. Lumber-we sent out about 10,000,000 feet in 3 years. It is soft lumber. They haven't any soft lumber in the Philippines. The lumber there is so hard that it is almost impossible to drive a nail in it. Fish and fish products.
Fruit: We send about 800 boxes of apples every 2 weeks to Manila, at least we did during the time before the Dollar ships quit running.
Vegetables: We send a very large amount of vegetables consisting of cauliflower and lettuce and all that sort of thing. Now we are sending this frozen-pack stuff, and we send a good deal of stuff in cool storage.