Filipino Finance

Further reasons why the War Department is little likely to heed the demand of the Philippine Independence Commission (TIME, Aug. 6) for the removal of Governor General Wood came to light. They have to do principally with Filipino finance. W. Cameron Forbes, speaking at the Williamstown Institute of Politics illuminated part of the situation. The rest was lit up by General Wood himself in a report just published.

Mr. Forbes is especially well qualified to speak on the Philippine situation because of service in the Philippine Government from 1904 to 1913 --as a member of the Philippine Commission, as Secretary of Commerce and Police, as Vice Governor, as Governor General. In 1921 he was also commissioned by President Harding to investigate Philippine conditions in collaboration with General Wood (before the latter's appointment as Governor General).

Republican Mr. Forbes criticized severely Democratic Mr. Harrison (whose Administration came between that of Forbes and that of Wood) because the latter "gave Filipino politicians power which they abused." A Government railroad was formed and the President of the Senate became President of the road. The railroad was so bungled that the gentleman had to retire from his second post. A Philippine National Bank was set up. But since an auditor examined its books, its President has been in jail. Mr. Forbes concluded that the Filipinos need not independence but a firm hand to guide them.

General Wood's disclosure tended to confirm this opera bouffe conception of insular politics. On Feb. 16, 1923, General Wood sent to the Philippine Legislature a message dealing principally with the Philippine National Bank. The Legislature never heard the Governor's words because the Quezon-Osmena group which controls the Legislature quietly suppressed the message. Lately members of the Democratic (minority) Party began to agitate for a disclosure of the message which they had never seen. Finally General Wood published it.

It deals with several reports of financial experts on the condition of the Philippine National Bank. The story is briefly that in six years of operation the bank lost $37,000,000, including the Government's entire investment in stock (98% of the whole), and including $15,000,000 of the Government's deposit of $24,000,000. Furthermore, behind $41,000,000 of deposits and $15,000,000 of circulating notes the bank has almost no reserves. These losses were achieved by arrant speculation, so that the bank now has on its hands several defunct businesses and large quantities of " frozen" assets. If the bank had been a private institution it would have been closed long ago. Parts of the experts' reports, dealing with questionable loans in which certain politicians were involved, are said to have been suppressed in the message so that General Wood could not be accused of playing local politics. It included, however, the statement by examiners that the bank had been operated "in violation of every principle which prudence, intelligence and even honesty could dictate." It was recommended that the bank be liquidated.

General Wood gave out this message to the press. Only one paper published it. The others, probably under the Quezon-Osmena domination, kept an impressive silence. The Herald (Quezon's own paper) declared that it would have to consult its lawyer before taking a chance of becoming a party to " the concerted action evidently designed to destroy the credit of the Philippine National Bank."