securities could she give us for the future? These questions should be answered by history." Mr. Haussermann should be convinced. The best solution of the Philippine problem is the immediate restoration of the Philippine Republic, with all its consequences. Whether or not afterward Japan from Davao will extend her sphere of action, that pertains to the future, and there are no more prophets now. No one knows what destiny reserves for us. Japan may conquer this country through violence to subjugate us, as she did in Korea and as she is doing in China. Or she may content herself with being our friend or ally Both are within the possibility. Whatever it may be, however, one thing is true-Uncle Sam, with all her power and good will, cannot defend the Philippines against aJapanese invasion, and if she cannot do that, the best she could do is to withdraw honorably to her home. In that way she will have the gratitude and blessing of her 18,000,000 "little brown brothers." Hon. MILLARD E. TYDINGS, CHICAGO, ILL., April 3, 1939. Chairman, Senate Committee on Territorial and Insular Affairs, Senate Office Building, Washington, D. C. MY DEAR SIR: I sincerely appreciate your kindness in securing for the evaporated milk industry unanimous consent of the Committee on Territorial and Insular Affairs to file a memorandum supporting the provisions of S. 1028, requiring an increase of the Philippine import duty on evaporated milk. Miss Corinne Barger, clerk of your committee, has been kind enough to supply me with a copy of volume XII of the hearings on S. 1028 which, at page 713, contains my telegram to you of March 13. I am deeply appreciative of your courtesy in having this telegram inserted in the committee record. In order not unduly to trouble you, I am taking the liberty of forwarding our industry's memorandum directly to Miss Barger for insertion in the committee record on S. 1028. For your convenience and ready reference, however, I am enclosing a copy of our memorandum. On behalf of the evaporated-milk industry, permit me to thank you for your courteous consideration of our interests as provided in your Philippine bill, S. 1028. Respectfully yours, FRANK E. RICE. MEMORANDUM SUPPORTING AN INCREASE OF THE PHILIPPINE IMPORT DUTY ON EVAPORATED MILK, AS PROVIDED IN S. 1028 (TYDINGS), SUBMITTED BY THE ORGANIZATION OF THE EVAPORATED MILK INDUSTRY UNDER THE AGRICULTURAL ADJUSTMENT ADMINISTRATION milk States. * * * * Requirements of the Tydings bill (S. 1028) that the Philippine Government, before January 1, 1940, (1) amend its constitution to embody the provisions of this measure, and, following such amendment, (2) enact "such laws as are recommended in the (Joint Preparatory Committee on Philippine Affairs) report relating to increases of the Philippine import duty on evaporated * are essential to the welfare of the dairy industry of the United Three million American farmers and their 12,000,000 dependents are supported by the production and distribution of milk and its products. Our 25,000,000 milk cows produce over $1,500,000,000 annually in cash farm income-more than any other single agricultural commodity. The manufacture of evaporated milk is an integral part of the dairy industry. The amount of raw milk transformed into evaporated milk in 1937 was in excess of 1,250,000,000 pounds— the equivalent of the production of more than 1,000,000 milk cows. For this milk American dairy farmers were paid approximately $67,000,000. This was the major and, in many instances, the sole source of cash income for more than 200,000 dairy farmers. Thirty-two percent of the value of all dairy products exported from the United States in 1937 was evaporated milk. The Philippines is the leading export market for United States evaporated milk. In recent years, however, the Philippine tariff on foreign evaporated milk has proven an ineffective bar to encroachment on this market by the Netherlands and Japan. As a result, there has been thrown back on the domestic market an ever-increasing amount of milk which, normally, would have gone to the Philippines. The existing dairy surplus in this country is well known and needs no comment. PHILIPPINE MARKET CREATED THROUGH AMERICAN EDUCATION Our position of predominance in the Philippine evaporated-milk market is not without justification. From the turn of the century American evaporatedmilk manufacturers have made a sincere effort to educate the Filipinos in the advantages to health of an adequate amount of wholesome milk in the diet. Nutritionists and nurses have been sent to the Islands to assist in this work. Educational programs have been sponsored in the schools. Scientific literature on the economy and general virtue of milk and evaporated milk has been made available to the university, schools, libraries, public institutions, and welfare agencies in the Islands. American companies have maintained well-trained staffs and established offices in the Philippines in an effort to make evaporated milk available to the Filipino people at fair and reasonable prices. Year after year, the Filipinos have increased their acceptance of evaporated milk as an important item in their diet. During the period 1912-36, there were consumed in the islands a total of 323,590,198 pounds of evaporated milk valued at $24,312,567. Of this amount the United States alone supplied 298,219,759 pounds valued at $22,310,746. In the manufacture of this amount of evaporated milk a total of 670,994,457 pounds of raw milk produced on American dairy farms were utilized. During the period 1916-34, the United States annually supplied from 97 to 99 percent of all evaporated milk imported by the Philippines. Our exports to the islands had grown from 4,000,000 pounds in 1912, to 24,000,000 in 1934. INEFFECTIVE PHILIPPINE TARIFF THREATENS UNITED STATES PARTICIPATION IN THE PHILIPPINE EVAPORATED-MILK MARKET Since 1934, other countries have made serious inroads on the United States evaporated-milk market in the Philippines. Although Philippine consumption of evaporated milk increased during the years 1934-36, United States participation in this business declined from 99 5 percent in 1933, to 84.5 percent in 1935, to 53.8 percent in 1936, and available figures for 1937 indicate this ratio declined to 38 percent. The Netherlands has become, since 1934, the principal supplier of evaporated milk to the Philippines. Its present position of preference in this market is due to the subsidization of the evaporated-milk industry in Holland. James H. Moyle, Commissioner of Customs, in a statement released October 18, 1938, and approved by Stephen B. Gibbons, Acting Secretary of the Treasury, has pointed out that 66 * * bounties or grants * * * are being paid or bestowed on evaporated milk * produced in the Netherlands." * * This places Holland in the position of exporting its evaporated milk at a competitively lower price than the United States can meet, even under our "free trade" arrangement with the Philippines, and in spite of the fact that the Philippine tariff imposes on imports of evaporated milk from Holland a duty of 10 percent ad valorem. The extent of Holland's encroachment on the Philippine market is shown clearly in the following table, compiled from the annual reports of the Insular Collector of Customs: Japan is a new factor in the Philippine evaporated milk market. Her first commercial shipments to the Islands were made in 1932, and amounted to 332,198 pounds valued at $11,691. She has steadily increased her shipments since 1934, and now enjoys third place ranking in the Philippine market. In 1936, the Islands imported 1,112,493 pounds of evaporated milk valued at $45,161, from Japan. Not unlike the Netherlands, Japan has attained this position in the Philippine market, we are informed and believe, by reason of, first, the subsidization of her producers of evaporated milk and, second, conditions of employment not comparable with those existing in this country. Unless and until the Japanese subsidy is compensated by an effective Philippine tariff, it may be expected she will continue to export surplus evaporated milk to the Philippines at prices lower than our manufacturers can meet. The ineffectiveness of the present Philippine tariff on foreign evaporated milk as a means of preserving the Philippine market for the United States has been adroitly estimated by the Joint Preparatory Committee on Philippine Affairs when, in its report of May 20, 1938, it said: "The Philippine tariff imposes a duty of 10 percent upon imports of evaporated milk from foreign countries. The computed ad valorem duty on dairy products entering the Philippines from foreign countries was 8.2 percent in 1936. The fact that the effective rate is lower than the statutory rate is due to the Philippine Parity Act, which, for duty-assessment purchases, undervalues the Netherland currency in respect of its current exchange value." The Joint Preparatory Committee on Philippine Affairs thereupon recommended that the Philippine tariff on evaporated milk be raised from 10 percent ad valorem to 25 percent ad valorem. The committee believed, and justifiably. in view of the United States evaporated-milk industry's enviable record of fair dealing with the Philippines, that 66* ** * such a change would operate to increase American participation in the Philippine market and that such a transfer in the source of supply would not result in raising prices by the full amount of the increase in duty, in as much as competition between American firms would operate to prevent such an eventuality." PROVISIONS OF THE TYDINGS BILL WOULD TEND TO BRING ABOUT EQUALITY AND JUSTICE The Tydings bill (S. 1028) would require, by section 7 (a), subsections (1) and (2), among other things, that the Philippine government, before January 1, 1940, effectuate "the recommendations of the Joint Preparatory Committee on Philippine Affairs by the enactment of such laws as are recommended in the said report relating to * * increases of the Philippine import duty on evaporated milk * * * * * * *"" * * * Without reservation, the evaporated-milk industry endorses these provisions of the Tydings bill as being definitely in the best interests of our producers (the American dairy farmers), our workers (who should not be forced to compete with poorly paid and subsidized labor of foreign countries), our manufacturers (whose investments and good will in the Philippines are in jeopardy), and the Filipino people (whose health and welfare have long been importantly considered by our industry). Respectfully submitted. FRANK E. RICE, Managing Agent. GEORGE O. TIFFINEY, Counsel. BIRDWOOD, Hon. MILLARD E. TYDINGS, Thomasville, Ga., February 13, 1939. United States Senate, Washington, D. C. MY DEAR SENATOR: I have carefully studied the proposed modification of the present so-called Philippine independence law, which also bears your name, and believe that it should pass. While there are certain aspects in the present set-up which I could wish were different, understand entirely that they were the result of a compromise of conflicting interests. I believe the provisions of the amendment now under consideration will give the Filipinos an opportunity to adjust themselves gradually to the changed conditions, and not be subject to a change so drastic and violent in their economic status in July 1946 as to be highly dis advantageous to the Philippine Islands and to all associated with them. As the United States is intimately associated with them it seems to me that it would be very disadvantageous, also, for the United States with their extensive interests in the Orient, to have so serious a situation thrust upon a former dependency as would happen with the abrupt closing of the United States to products from the Philippine Islands. The plan of progressive diminution of quotas seems to me to be calculated to meet this difficulty in a practical and a statesmanlike manner. Sincerely yours, W. CAMERON FORBES. WASHINGTON, D. C., APRIL 11, 1939. Hon. MILLARD E. TYDINGS, Chairman, Committee on Territories and Insular Affairs, United States Senate, Washington, D. C. SIR: I am enclosing herewith copy of a resolution approved by the National Assembly of the Philippines endorsing the recommendations of the Joint Preparatory Committee on Philippine Affairs which are embodied in the bill now pending consideration by your committee, S. 1028. If it be possible, I request that this resolution be made a part of the record of the hearings on this bill before the committee. Very respectfully, S. OSMEÑA, Vice President of the Philippines on Special Mission to the United States. [Radiogram] FEBRUARY 18, 1939. SECWAR, Washington. Following is text of Resolution No. 7, adopted by National Assembly, February 14, 1939: "RESOLUTION ENDORSING THE RECOMMENDATIONS OF THE REPORT OF THE JOINT PREPARATORY COMMITTE ON PHILIPPINE AFFAIRS "Whereas the President of the United States, after consultations with the President of the Philippines, created on April 14, 1937, the Joint Preparatory Committee on Philippine Affairs for the purpose of studying and making recommendations concerning trade relations between the United States and the Philippines; "Whereas the said committee has submitted its report embodying recommendations designed to place American-Philippine trade relations on a more fair and equitable basis and to permit the Philippines to plan its economic adjustment in preparation for independence; and "Whereas the President of the Philippines has submitted to the National Assembly the report of the said committee for favorable consideration and corresponding action: Now, therefore, be it "Resolved, That the National Assembly express, as it hereby expresses, its full endorsement of the recommendations of the Joint Preparatory Committee on Philippine Affairs, as contained in its report dated May 20, 1938; and, be it further, "Resolved, That the Special Committee of the National Assembly created to consider the report be directed to draft the necessary legislation to implement said report for submission to the assembly in due course." 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