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Mr. SAYRE. I should be glad to do so. Might I suggest that the statement begin from the paragraph on the middle of page 45? Senator MILLER. Yes. Mr. SAYRE. That, I think, is the beginning of the subject. Senator MILLER. Yes. Mr. SAYRE. I would be very happy to, sir. Senator MILLER. Thank you. (The statement referred to above is as follows:)

DUTIABLE AND DUTY-FREE SUGAR IN THE UNITED STATES MARKET

For over 30 years prior to the inauguration of the quota system in 1934, sugar prices in the United States approximated world prices plus the preferential United States duty on Cuban sugar. Producers of duty-free sugar received the full United States price whether they were located in continental United States or in insular areas. In the case of sugar imported from Cuba, nearly all of the differential between the United States and the world price of sugar went to the United States Treasury; but, in the case of sugar produced in the United States and its insular areas, it went to the private producers.

Since the establishment of the quota system, the price of sugar in the United States has ceased to be linked directly to the world price. Instead, it has been the resultant of current domestic demand and the volume of permitted sales fixed in accordance with the provisions of the Sugar Act. Up to the present time this price has exceeded the world price, not only by much more than the United States duty on Cuban sugar, but also by more than the full duty. The average differential between the United States and world prices in 1937 was as follows: Average price, 1937,of raw sugar_96°

Cents per

pound United States price at New York--

3. 443 World price at New York-----

1. 319

Differential between United States and world prices_.

2. 124 1 In 1936 the spread between the average United States price at New York and the average world price at New York was 2.579 cents per pound; in the first quarter of 1938 the spread was 1.954 cents per pound.

Under the terms of the Independence Act, the Philippines, during the Commonwealth period, are permitted to sell the approximate equivalent of 970,000 short tons of 96° sugar duty-free in the United States market.? Because of this privilege Philippine producers received about $41,000,000 in 1937 (on the basis of average prices in that year) more than they would have obtained if they had sold an equivalent amount of sugar at the world price; only part of this amount, however, represented net profits to Philippine producers. This sum may also be regarded as the premium which the United States paid in 1937 for Philippine sugar on the present duty-free quota basis, as compared with what the cost to the United States would have been if it had purchased an equivalent amount of sugar at world prices.:

On the basis of existing United States duties, the annual loss in revenue to the United States Treasury resulting from the duty-free admission of Philippine sugar may be calculated to range from $36,375,000 to $17,460,000. If the United States should purchase sugar from any foreign supplier other than Cuba, the United States Treasury would collect a duty of 1.875 cents per pound. Based on the Philippine duty-free quota of approximately 970,000 tons, the revenue foregone by the United States Treasury amounts to $36,375,000. If the same amount of sugar were purchased from Cuba, the duty would be 0.9 cent per pound, or $17,460,000. In neither of the above cases would the increase in Treasury revenue operate to influence the price of sugar in the American market.

1 The price in the United States, however, could not long remain below the world price plus the United States duty on Cuban sugar, for, if such a decline should occur, the supply in the United States would be curtailed by the refusal of Cuban producers to sell in that market.

2 The export taxes during the second 5 years of the Commonwealth period are to be collected and retained by the Commonwealth government.

3 The duty-free quota of 970,000 short tons is equivalent to 1,940,000,000 pounds which, when multiplied by 2,124 cents per pound, equals $41,205,600. It is doubt however, whether the Philippines would have produced the quantity of sugar exported in 1937 'if it had not been accorded duty-free entry into the United States. It may also be observed that consumers in the United States pay similar premiums in purchasing sugar from domestic suppliers and, to a lesser degree, in purchasing it from Cuba.

In addition to the tariff revenue which it foregoes, the United States Treasury will forego all the revenue it collects on the processing of Philippine sugar marketed in the United States after September 1, 1937, inasmuch as the proceeds of this tax, amounting to 0.5 cent per pound on 96° sugar are by law to be remitted to the Philippine Government. Based on the Philippine dutyfree quota of approximately 970,000 short tons, these remittances will amount to $9,700,000 annually.

The CHAIRMAN. Senator Pittman, have you any questions you would like to ask.

Senator PITTMAN. No.
The CHAIRMAN. Senator King ?
Senator KING. No.
The CHAIRMAN. Senator Vandenberg?
Senator VANDENBERG. No.

The CHAIRMAN. All right, we will be glad to hear from General Burnett now, and I apologize for keeping him.

STATEMENT OF BRIG. GEN. CHARLES BURNETT, CHIEF OF THE

BUREAU OF INSULAR AFFAIRS, WAR DEPARTMENT

General BURNETT. Mr. Chairman and gentlemen of the committee, I am appearing on behalf of the Secretary of War.

Mr. Sayre has reviewed the circumstances leading up to the drafting of the bill S. 1028 now under consideration by this committee and has stated the views of the Interdepartmental Committee of which he is chairman. As Chief of the Bureau of Insular Affairs, I have been asked to present to you the views of the War Department with respect to this proposed legislation.

The War Department supports unqualifiedly S. 1028, the bill which is now before this committee, and concurs in the statements made by Mr. Sayre when he appeared before you. One of its representatives, Col. Donald C. McDonald, was a member of the Joint Preparatory Committee and signed that committee's report. Another representative, Brig. Gen. Charles Burnett, the Chief of the Bureau of Insular Affairs, as a member of the Interdepartmental Committee, joined in that committee's approval of the report of the Joint Preparatory Committee. In addition, in October and November of last year, the Chief of the Bureau of Insular Affairs made a personal inspection of the Philippine Islands where he had an opportunity to discuss all phases of this question, not only with Filipino officials and other Filipino citizens, but with American residents as well. The War Department is therefore fully conversant with the various problems involved in this bill; it is aware, too, of the painstaking care and labor of both Filipino and American members of the Joint Preparatory Committee in their efforts to solve the problems involved in equal justness and fairness to the Philippines and to the United States.

The War Department feels that this bill is essentially just both to the Philippines and the United States; that practically all of the

many controversial points inherent in such a question have been discussed in an atmosphere of friendliness and mutual helpfulness and that the result cannot but be beneficial to both countries. From its knowledge of the background of the bill, from its appreciation of the many months of unselfish labor of the members of the Joint Preparatory Committee and from its belief in what the bill will mean in the future to both countries, the War Department believes that it is the best solution of a question, the solution of which is mandatory at this time. The War Department acknowledges a special interest in this

bill. It has administered, through its Bureau of Insular Affairs, the Philippine Islands for almost 40 years. The relationship between the two countries over this long period of years has been that of guardian and ward, and the War Department has been the agent of our Government in making effective this unique relationship between mother country and dependency. It is only natural, therefore, that the War Department is deeply interested in seeing that this relationship with which it has been so long and so intimately connected, should be terminated in a manner compatible with our dignity as a great nation. In the final analysis, we cannot evade a large degree of responsibility for the future success or failure of the new Nation which will be launched on July 4, 1946, under conditions which at best threaten to be very grave. As a matter of fact, the United States is largely responsible through its free trade laws for the present economic conditions in the Philippine Islands. We believe that our country would be most derelict in its duty if it pushed this frail bark out into the stormy international sea without taking every possible precaution for its future safety. The War Department believes that this bill does promise such protection to the Philippines while, at the same time, it safeguards our own proper and legitimate interests. For this reason it is hoped that the bill may be enacted into law.

Senator VANDENBERG. General, would this information be available? In line with Senator Miller's questions, what is the value of the developed property in the Philippine Islands which we shall turn over to the new Philippine government, or have turned over in the course of this transfer ?

General BURNETT. We have that data in our Bureau, sir.
Senator VANDENBERG. Have you any idea what it amounts to ?
General BURNETT. Not offhand.
Senator VANDENBERG. It is a large sum, isn't it?

General BURNETT. It is a large sum, and of course as this bill provides, we will receive a certain amount of property in return for that from the Philippine Government.

Senator VANDENBERG. What property will we get in return?

General BURNETT. We will get the locations, about 17 acres, of the High Commissioner's residence in Manila, a property worth considerably over $1,000,000; the High Commissioner's residence in Baguio, and the places which the State Department picks out for its consular representatives in the future.

Senator VANDENBERG. Will you furnish that general information in dollars and cents for the record ?

General BURNETT. Yes.
The CHAIRMAN. That wouldn't include Corregidor, would it ?

General BURNETT. The Army's policy is to turn over everything we have.

The CHAIRMAN. Guns and all ?

General BURNETT. That is a matter which will have to be adjusted between our War Department and the Philippine government as to the cost.

The CHAIRMAN. But the fort itself is not mobile?
General BURNETT. No, sir.

The CHAIRMAN. Could you put in that figure for Senator Vandenberg, the cost of what might be called the unmovable improvements ?

General BURNETT. I will do the best I can, sir, that is a pretty intangible sort of thing.

The CHAIRMAN. Everything except the mobile property?
General BURNETT. Yes.

Senator VANDENBERG. You made the statement that “we cannot evade a large degree of responsibility for the future success or failure of the new nation which will be launched on July 4, 1946?”

General BURNETT. Yes, sir.

Senator VANDENBERG. Do you mean to assert that we have a residuary responsibility for what happens to the Philippine Commonwealth after it is turned loose?

General BURNETT. No, sir; that was meant to imply that we should start them off in a way that they can maintain an independent government.

The CHAIRMAN. Economically?
General BURNETT. Yes, sir.

Senator VANDENBERG. I just wanted to make it plain that you aren't taking in too much territory in that statement.

General BURNETT. No.

The CHAIRMAN. In other words, while this bill gives them a better chance economically to survive until 1960, from a military, naval, and international standpoint, we are completely out of the islands in 1946? General BURNETT. Oh, yes.

The CHAIRMAN. Are there any other representatives of the State Department or the committee who would like to testify before we put on the representatives of the Filipino people?

Mr. SAYRE. No, sir; I think not.

The CHAIRMAN. Señor Osmena, I suppose you will be the first witness, and would tomorrow at 10:30 a. m. suit you?

Mr. OSMENA. Yes, sir.

The CHAIRMAN. Then we will recess until 10:30 tomorrow morning, at which time we will hear from Señor Osmena.

On second thought, in view of the fact that we only have four Senators here now, and tomorrow is Washington's birthday, and it may be impossible to get a quorum—I haven't consulted the other members of the committee-in order to be doubly certain that we have a large attendance we had better make it Thursday morning at 10:30.

(Whereupon, at 11:50 a. m., an adjournment was taken until 10:30 Thursday morning, February 23, 1939.)

COMPLETE INDEPENDENCE OF THE PHILIPPINE INLANDS

THURSDAY, FEBRUARY 23, 1939

UNITED STATES SENATE,
COMMITTEE ON TERRITORIES AND INSULAR AFFAIRS,

Washington, D. C. The committee met, pursuant to adjournment, at 10:30 a. m. in room 357, Senate Office Building, Senator Millard E. Tydings (chairman) presiding

Present: Senators Millard E. Tydings (chairman), Miller, Vandenberg, Hayden, Pittman, Gibson, and King.

The CHAIRMAN. The committee will come to order.
I have just received a letter from Vice President Osmena, in which

he says:

DEAR MR. CHAIRMAN: In connection with the hearing today on the new Philippine bill before the Senate Committee on Territories and Insular Affairs, I regret very much to advise you that I am suffering from bronchial cold with fever and my doctor advised me to stay in bed. In order not to delay the presentation of our views on the bill, I have asked one of my associates, Mr. Benito Razon, to appear before your committee and read my prepared statement. Mr. Razon will be glad to answer any questions which the members of the committee may desire to ask. I hope this arrangement is satisfactory. Sincerely yours,

S. OSMENA,
Vice President of the Philippines, on

Special Mission to the United States. So we will hear Mr. Razon now.

STATEMENT OF HON. SERGIO OSMENA, VICE PRESIDENT OF THE

PHILIPPINES, ON SPECIAL MISSION TO THE UNITED STATES

Mr. Razon. Mr. Chairman, on behalf of the Commonwealth of the Philippines I am here today to present our views with respect to Senate bill 1028 now under consideration by the Committee on Territories and Insular Affairs.

I wish at the outset to express the gratitude of the people of the Philippines to the Government and people of this great American democracy, not only for what they have done for us but also for their continued interest in our welfare and for their desire to complete their mission of helping establish the Philippine Republic. The very fact that this committee is now met for the purpose of studying a measure further to safeguard the stability of an independent Philippines is one more evidence of America's noble and unselfish purpose.

We consider ourselves very fortunate to have in this committee the chairman and members who in the past have taken a deep interest in Philippine affairs. Senator Tydings, the worthy chairman, is the

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