January 9, 1936

Quezon in Malacañan in very good humor and is exercising his strong creative spirit in reorganizing and improving the Palace. Brief chat on landlord and tenant. Mrs. Quezon was there leading a squad of laborers carrying furniture. Jose Laurel there, who was formerly in the Executive Bureau, and later Secretary of the Interior; Quezon told me in his presence that Laurel was to be one of the new Justices. Spoke very highly of his qualifications; and added that Laurel was the greatest jurist among the Filipinos.

Wrote a memorandum on the reorganization of the Government and handed it to the a.d.c. in the afternoon.

Tea at Conrado Benitez’s house near the deposito in San Juan del Monte. Large party given for the United States Trade Commissioners. Arranged there with Miguel Cuaderno to visit his home town of Dinalupian in Bataan as  tourist but really to see the church landholding there of nearly 4,000 hectares, and composing an entire municipality. The agent of the Archbishop is a Spaniard; he raises rents every six months and dispossesses non-payers.

Talk with Bewley, director of Education; he says Osmeña is the best Secretary of Public Instruction they ever had.

Saw Osmeña and told him that the reason I saw so little of him nowadays is because it is the closed season on dancing!

Long talk with Dr. Dorfman, United States Trade Commission (expert). He sails for home on Saturday. We had a confidential discussion on the Philippine situation. He said the Commonwealth Government’s chief danger was their new army; that military men usually got their way in increased appropriations. That an unpaid army was a menace. Concerning trade relations with the United States, he agreed with me that it might be unwise for Filipinos to raise the question of amending the Tydings-McDuffie Act just now; that they might get more if they waited. He said political independence was possible without economic independence, and the latter could not be obtained unless the present laws were amended. That the Filipinos were unwilling to “cut the umbilical cord”; that they would probably ask Congress to postpone independence . He added that the present “prosperity” was confined to a small class (the upper crust), and that he had looked into dinner pails and entered houses, and the bulk of the population here had not shared in the “prosperity”; that when, for example, gold went from twenty to thirty-five dollars, the miners wages were actually reduced from one peso to 90 centavos; that when (five years hence) the export taxes were imposed, they would wipe out the sugar industry which cannot compete with Cuba, and also would destroy the cigar export trade to the United States. He said, further, that they must begin to limit imports here. Suggested a very heavy excise tax on cigarettes of “blended tobacco” –i.e., Americans; emphasized that they must begin to limit imports from the United States and increase those from other countries (Japan). He further said that the Filipinos were trying to think out schemes for additional advantages to United States business –and were even considered applying the United States Coastwise Trade Laws, which he thought a bad thing for the Philippines. I replied that we in the Philippines had, in my time, always strenuously opposed that. He stated that the United States sold 47 million dollars worth of goods annually to the Philippines, but gave up 18 million dollars for a premium on Philippine sugar, so the trade was probably not really worth anything to United States. I said that economic laws could not be violated without paying for it –he replied that they were paying now and would pay much more heavily later. About textiles he entirely agreed with me that we could not stop Japan; the the only factory here had no machinery newer than 1900; that only a Japanese textile mill could succeed here. I told him that on trade relations I had not been consulted at all –that my views on independence were too well known– that perhaps I was too old-fashioned in economics. He said that Cordell Hull’s new reciprocity treaties were really reciprocal, while the Filipinos wanted only one-sided advantages for themselves.

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