August 26, 1942

At lunch.

Quezon opened by declaring that he was the happiest man in the world today. He had received the best news since leaving the Philippines. Reported a telephone conversation with “Chick” Parsons, who had just arrived on the Gripsholm from the Far East. Parsons is an American whom the Filipinos receive as one of themselves. He is Panamanian Vice Consul at Manila and because of this is believed not to have been “confined to quarters” by the Japanese. He telephoned Quezon this morning that he had frequently seen Vargas and Alunan and the rest and they are still absolutely loyal to Quezon. Quezon had received on Corregidor a letter from Vargas written just as the Japanese were entering Manila, in which Vargas stated that wherever he might be, whether (as Quezon’s arrangement had been), in Malacañan–the Japanese permitting–or in his own house, “you will always have a loyal servant in me.” Parsons is coming down to Washington tomorrow to report, as Quezon didn’t wish to continue the conversation over the telephone.

Quezon then began to talk again about the history of the American regime in the Philippines. He said that there were three Governors General who left the Islands with the hatred of most of the Americans there. Taft “because of his brave fight against the Generals while the swords everywhere were still rattling in the scabbards”; Stimson “because he put the foreign (and American) banks under the control of the government for the first time”; and myself, “for giving self-government to the Filipinos.”

Governor General Wright was an easy-going man–a southerner Republican–adding “you know what that means.” He was Forbes’ ideal. Did not go over well with the Filipinos.

Quezon then told the story of the “Bank Control” incident. He said Stimson and I were the bravest of the American Governors General because neither of us really cared whether we held on to our “job” or not. Stimson hadn’t wanted to accept the post, and returned to the United States within eighteen months to become Secretary of State.

The bank incident arose as follows: I (the present writer) had tried to put the foreign banks under Philippine Government control in my time, but had been stopped by a cable from “that imperialist Secretary of War whom Mr. Wilson had to relieve later–Lindley M. Garrison.” In Stimson’s time, Lagdameo was still Insular Treasurer, and was also Inspector of banks; he was one of the most honest and hard working of the government officials, and was sadly underpaid. When hardup he once borrowed 200 pesos from an American, formerly Insular Treasurer and a good friend, who was by then an officer in the Banco de las Islas Filipinas, (Spanish bank). This man entered the loan on the bank’s books not as from himself, as Lagdameo supposed, but as from the bank. So Stimson called Quezon in and told him the story and said he would have to fire Lagdameo. Quezon said he was inclined to agree with him but would like to talk with Unson, the Secretary of Finance. Unson told Quezon that Lagdameo was a man of perfect honesty–“if it had been 20,000 pesos, instead of 200 pesos. I might not think so–the smallness of the sum, in my eyes, confirms his honesty. If he is dismissed from the service, I shall resign as Secretary of Finance.” Quezon reported this back to Stimson who at once saw the seriousness of the situation. Quezon said it would be disastrous to his administration, such was the complete confidence of the public in Unson. “But,” he said, “I can show you a way out of it–put the banks under government inspection, appoint an American as inspector and leave Lagdameo, who has too much work anyway as Insular Treasurer. Stimson agreed, but Quezon told him of the political danger of a move so violently opposed by the banks as was government control. Stimson was quite indifferent to that–hadn’t even known that these banks were not subject to government inspection, and insisted that they ought to be. So Quezon had the law passed after giving hearings to protests from the bank lawyers. Then Stimson agreed to hold hearings before signing the bill, whereupon Quezon rushed around to know whether this meant he was not going to sign the act. Stimson smiled and said: “These people have the right to be heard, and I have the right to disregard their advice.”

Stimson staged a big public meeting in Malacañan Palace with lots of chairs, and sat there on a sort of throne, listening very seriously. Jim Ross, Dewitt et al. as lawyers made arguments. Roxas (Speaker) made a serious statement on the subject which he had studied. Stimson allowed two or three days to pass, and then signed the bill.

“Tiny” Williams of the National City Bank of New York had from the beginning, led the campaign against the bill and was organizing powerful interests in the United States by cable. Stimson sent for him and said: “I am leaving the Philippines in fifteen days and shall be Secretary of State when I land in the United States. If you do not withdraw your effort to coerce me, I shall as Secretary of State be disinclined to show any favours to the National City Banks abroad, and not much support.” Williams broke all records in getting to the cable office.

When Stimson left, Quezon in bidding him good-bye and congratulating him on a successful administration added that he had bad as well as good things to tell him–that the Americans in the Islands hated him worse than they did Harrison. Stimson replied: “My God, is it as bad as that?”

Quezon said that Stimson believed that I had tried to replace American officials too fast. Quezon added that, if I had not done so, my administration would have been a failure, for I would have lost the confidence of the Filipinos.

Stimson was a non-social man, who saw few people outside his official duties.

Taft’s speech to his opponents in the Philippines (sometimes credited to me–F.B.H.) was to the “Lions of the Press”; to them he said the waters on both sides of Corregidor are wide enough to allow then all to go home in one day.

Archbishop of Manila, Msgr. O’Doherty was formerly a close friend of Quezon, who had given up his friendship for the Archbishop after a series of cold-blooded abandonments by the latter of those who had served him loyally; beginning with General Thos. L. Hartigan who would have been penniless in his last years if Quezon had not helped him. Hartigan as lawyer for the Church had made 15,000,000 pesos for the archepiscopal see. Then came the Archbishop’s abandonment of Whitaker (son of an Oxford Don) who had made himself responsible for some of the Church’s debts (Visayan Refining Co.). Then the Archbishop went back upon O’Malley and Father Fletcher. Quezon sent for the Archbishop and told him he had lost faith in him; listened to O’Doherty’s explanations of each of the four cases and then replied that he was no longer his friend; that he would continue to show him every official and personal courtesy–but “he was through.”

High Commissioner Sayre, who got back from Corregidor to the United States before Quezon, wrote a report to the State Department thru Secretary Ickes, pointing out those whom he believed to be the “Fifth Columnists” in the Philippines, and suggesting that Quezon was one. Learning of this on his arrival, Quezon spoke at the Press Club (no publicity) referring to High Commissioner Sayre who was present, and to the latter’s suspicions. This led Sayre to go to Secretary Ickes, who had held up Sayre’s letter, and to demand that it be forwarded. Ickes still did not act, until Sayre sent a written request which Ickes could not ignore. So he forwarded Sayre’s letter with the endorsement: “President Quezon, a Filipino, does not yield in loyalty to F.B.S., an American–his value to this country is one thousand times greater.” In fifteen days Sayre was out of office.

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