Senator HAWES. That means during the legislative session.

The CHAIRMAN. Then the Senator means within three months of the beginning of the legislative session?

Senator KING. Three months following submission.

Senator HAWES. I would rather go into that in executive session. Mr. Chairman, I have sent for this report of a new estimate of American investments abroad, by the United States Department of Commerce. They state that in the Philippine Islands the investments are $81,435,000 in direct loans; in indirect, $84,810,000, a total of $166,245,000. When we take the American investments in the Latin American countries, beginning with Mexico, and see how much American money we have invested, all the way from Mexico down to the Argentine

Senator KING. Five billions.

Senator HAWES. We get an enormous sum of American money invested in Latin American countries, for which we are asking no protection whatever.

Mr. BRUCE. Am I still a witness, Mr. Chairman?

The CHAIRMAN. You are excused.

May I say that in connection with the apparent discrepancy between the Department of Commerce figures and these figures reported from the Bureau of Insular Affairs, probably one of the items is $30,000,000 in mercantile establishments. That is included in the statement of the Bureau of Insular Affairs, which would naturally not be included. in the statement of money invested in securities.

Senator HAWES. Mr. Chairman, I will ask that this table be put in the record.

The CHAIRMAN. Very well.

TABLE 8.-Private long-term American investments in Africa, Asia, and Oceania, by types, at end of 1930

1 Estimated at about $46,000,000 by Prof. C. F. Remer, American Investments in China, p. 37, published by the Institute of Pacific Relations, 1929 (see text).

Excluding portfolio investments.

NOTE.-Subject to adjustments made necessary by the international securities movement (see text).

(The following statement submitted by the Philippine Commission on the views expressed by the Secretary of War in his foregoing testimony was ordered made a part of the record of this hearing:)

The War Department being the administrative branch of the United States Government directly charged with the supervision of Philippine affairs, the statement made by the Secretary of War before this committee can not but command careful attention. Hence the Philippine Commission, after analyzing it conscientiously, considers it its duty to express its views on the important points brought out in his testimony. This the commission will do with frankness and without equivocation, sincere in its purpose to aid this committee in arriving at definite and just conclusions.

The Philippine Commission is in substantial accord with Secretary Hurley upon the following fundamental facts:

1. The validity of the title of the United States to the Philippine Islands precisely as granted by the treaty of Paris and a later supplementary treaty. It should be added, however, that the treaty of Paris left to the Congress of the United States the determination of the future status of the inhabitants of the Philippine Islands.

2. The American policy in the Philippines represents a new conception in dealing with subject peoples, its purpose being not exploitation but "to introduce and develop the basic conceptions of free government." The aim has always been, as President Roosevelt stated, "to make them fit for self government after the fashion of really free nations."

3. Independence has always been the objective of American policy in the Philippines. The true and clear purport of this policy appears in the repeated declarations of authorized officials, especially Presidents of the United States, and in the congressional commitment contained in the Jones Act. Philippine independence is more than a mere policy; it is a solemn promise made by the United States to the people of the Philippine Islands which must be fulfilled.

4. From the inception of American sovereignty in the Philippines the powers of government have been gradually transferred to Filipino officials, until ˇat the present time the government is in a very large degree in their hands.

5. The people of the Philippine Islands, after more than 30 years of association with the United States, have demonstrated their capacity to govern themselves. In this connection, it is only fair to note that Secretary Hurley qualifies this assertion with the remark that 40 per cent of the territory of the islands is inhabited by people who in their majority are non-Christians and who have not attained the degree of political education which the Christian Filipinos have achieved. While this reference of Secretary Hurley is in a sense correct, it should be recalled that only a very small portion of the area mentioned by him is actually occupied by non-Christian Filipinos, and that more than 80 per cent of such area is unoccupied Government land. It should also be noted that the non-Christian population of the Philippines is less than 9 per cent of the total population of the islands, and that the Christian population of the nine special Provinces referred to by Secretary Hurley exceeds either the Mohammedans or pagans in those Provinces. Secretary Hurley places emphasis on the fact that the non-Christians are still represented by appointive representatives in the legislature. This is true. They are represented in the Philippine Legislature by 2 but of 24 members of the senate and by 9 appointive delegates out of a total membership of 97 in the lower house. But this fact should not be taken as the measure of the political capacity of these people. That their representatives are still appointive is neither their choice nor their desire. It is an arrangement established by the Congress of the United States which the Legislature of the Philippine Islands is without power to change. Secretary Hurley stated the truth when he affirmed in the course of his testimony that there are to-day among these people many well-educated men and women who could with credit represent them in the legislature.

On the basis of these undisputed facts, the political capacity of the whole Filipino people should not be questioned. Political capacity should be determined not by the level of enlightenment, experience, and capacity of a small minority of the population but rather by the average level reached by the majority of the people or the people as a whole.

6. The Filipino people are practically united in their desire for independence. Secretary Hurley, however, intimates that there are many among the non-Christian people who are opposed to it. He admits that the Christian Filipinos are more ready for self government than the non-Christians. It is difficult to understand

how Secretary Hurley can attribute strength and weight to expressions against independence among those who are less capable of understanding the consequences of independence, and at the same time deny the effectiveness of the desires of the bulk of the population who are better informed and more intelligent.

7. Great progress has been made in the Philippines not only in political preparation but in the advancement of education, sanitation, public improvements, and other lines of activity. It is also agreed that the Philippine government is sound financially and has a balanced budget. Philippine currency is on a stable basis. These achievements are the result of the joint efforts of Americans and Filipinos.

Having stated briefly the points upon which there is no controversy, we shall now proceed to examine the facts bearing upon the conclusions of Secretary Hurley with which we beg to disagree:

1. Secretary Hurley asserts that the promise of independence was conditioned by what he calls a composite objective, which includes capacity for selfgovernment, economic independence, and high social standards. Secretary Hurley argues that all of these accomplishments not having been reached, the Filipino people should not be granted their independence now or in the near future. He adds that it is impossible to forecast when these conditions will be attained, and urged the view that the time when independence is to be granted must be determined by certain definite achievements which can not be established in advance.

An examination of American policy toward the Philippines will show that the capacity of the people to set up a stable government is the only condition imposed by the United States for their independence. Stable government has a well-defined and accepted meaning and does not include the special conditions which Secretary Hurley desires to impose on the Philippines. Stability of government does not require economic independence. It certainly does not include the maintenance of prosperous trade relationships with other countries of the world. It does not necessitate the absolute assurance of economic prosperity for the whole people, let alone freedom from economic difficulties incident upon political changes or from the all too common possible adverse effects resulting from the free play of economic laws. Economic independence or self-sufficiency has been reached by hardly any country in the world. Whether the Philippines, being largely an agricultural country, will soon reach self-sufficiency is a debatable question. But one thing is certain: The Philippines will not reach that stage while they remain under the American flag, living an artificial life, under artificial trade and other unstable economic arrangements, which are beyond the power or right of their people to influence or command. To attain economic. stability, the Philippine nation, as soon as possible, must be placed on its own resources, with its people free to work out their own economic salvation in the competitive markets of the world. A postponement of their independence until balanced trade has been attained will surely add to their difficulties and problems when they are finally cut off from the American market. Moreover, it would also increase the difficulties which the change will bring about upon American trade with the Philippine Islands.

2. Secretary Hurley alleged with insistence that the Filipino leaders have not formulated an economic program for independence. This statement is incorrect. All the pleas for independence presented by Filipino representatives have always called the attention of Congress to the fact that to bring about a liquidation of American-Philippine trade relations without injury to the interests concerned or harm to the Philippine economic structure, once a definite time for independence is fixed, reasonable arrangements should be effected for the adjustment of economic relationships. Such a program is contained in the Hawes-Cutting bill and in the Hare bill, and its purpose is to maintain substantially the status quo as to the volume of reciprocal free trade with the United States for a period of five years, during which time it is believed economic conditions would be adjusted to meet the new situation which will prevail upon complete severance of political ties; more specifically, to allow Philippine industries now dependent upon the free American market, a time for adjustment when they may be placed on a competitive basis. While this readjustment is taking place, production of articles not dependent on the American free market will necessarily receive an impetus. At the same time the Filipinos will have an opportunity to develop new markets for their export products. The result will be to stabilize economic conditions and permit of economic development on solid and lasting foundations. What the effect of these temporary trade arrangements will be on the finances of the Philippine Government will not be difficult to surmise. Should economic

conditions in the islands be maintained until they can reasonably adjust themselves after independence, when the Philippines will find itself outside of the tariff walls of the United States, the Filipinos believe that they would then be at least as financially able to support their independent government as they now are. Moreover, should the new burdens and responsibilities which independence will entail require the expenditure of funds which are not now provided for, the Filipino people will undoubtedly be ready to increase the tax burdens they are at present carrying.

Beyond the scheme proposed in the Hawes-Cutting bill and in the Hare bill covering economic relations during the intervening period prior to independence, it is not intelligently possible to formulate another program. Nor should it be required as a condition precedent to congressional action on these bills. No country in the past aspiring to its independence was required to have an economic program. The United States, upon the declaration of its independence, did not even consider such a problem. Cuba did not offer one before the withdrawal of American sovereignty.

Uninformed as the Filipinos are to-day of the terms and conditions upon which their independence may be granted, and of the time when the withdrawal of American sovereignty will actually take place, they are not now able to anticipate a hypothetical situation and take it as a basis upon which to formulate an economic program covering their industries, their trade, and the finances of their government.

With reference to the Philippine National Bank, Secretary Hurley asserted that independence in five years would produce its collapse, alleging that the bank now has frozen assets closely tied up with the sugar industry. The Hawes-Cutting bill or the Hare bill does not propose to kill the sugar industry in the Philippines. It specifically provides for continued favorable conditions affecting the industry during the 5-year period. The sugar mills of the Philippines owe the National Bank about 25,000,000 pesos. During the last five years these mills had paid to the bank P21,000,000 on the capital and P15,000,000 interest on the original indebtedness of P46,000,000. These figures will show that there were present trade relations with the United States to continue for some time, the mills may be expected to pay on the capital indebtedness the same amount which they paid during the last five years, so that at the end of the 5-year period the mills would only be indebted to the bank in the amount of about P5,000,000.

Secretary Hurley also mentions the fact that the withdrawal of the American army from the Philippines would reduce the circulation of the islands by $12,000,000 a year. By what course of reasoning Secretary Hurley arrives at this conclusion is difficult to understand. In the first place, the United States army does not spend $12,000,000 a year in the islands. An examination of the official records will show that the amount actually spent in the Philippines for salaries and supplies purchased in the Philippines is much less. This suspension of such expenditures would not necessarily affect the circulation of the Philippines any more than a reduction in an equal amount of the value of Philippine exports to the United States. What will result will be a proportional reduction in the value of the imports from the United States to the Philippines.

The Filipino leaders are not unaware of all the elements which enter into the Philippine question. They have taken pains to view them in their true aspects and to inform their people of their significance. The Filipino people understand that independence will bring about a termination of reciprocal free trade relations with the United States. They know it may produce economic hardships and increase tax burdens, but they are prepared to meet the responsibilities which will devolve upon them.

3. Secretary Hurley, as far as can be deduced from his testimony, considers the economic unpreparedness of the islands as the one great obstacle to independence. He is positive in his belief that economic readiness can only be brought about through the achievement of a balanced trade with the United States. It is difficult to understand how the balancing of commercial exchange between the United States and the Philippines would make the Islands any more prepared for their independence than they are to-day. The result that would follow political separation, namely, the disruption of free trade reciprocity, would injure Philippine and American trade as much if a balanced trade existed, as it would at present. If at all, the difference would be that at the end of a long period of years necessary to bring about a balanced trade, the Philippines might be involved in greater difficulties because of increased production of commodities now enjoying protection in the American market, or the stimulation of other products equally protected and which are not now being produced.

4. Secretary Hurley maintains with great insistence the impossibility of fixing a definite time for independence because he claims that it is beyond the vision of practical men to map out a satisfactory economic program which could be successfully terminated in a stated period. With this view we can not agree. If the objective is clear and well defined, certainly it is not impossible to formulate a program and a stated time for its achievement. Accepting the opinion of Secretary Hurley that the sudden termination of the privileges which Philippine products now enjoy would bring about the collapse of some of the most important industries in the Philippines and result in economic depression in the Islands, it would seem plain that what the Philippines really needs is the fixing of a definite time for independence so that a proper adjustment to the new conditions which will obtain after independence may be made. The normal operation of economic laws would require a definite period. Besides, without such a period it would be difficult to expect this readjustment to take place, for it would only be natural for the Filipinos not to exert themselves for its attainment until a definite date is fixed for the change that is to eventuate. Leaving the future political status undecided will merely prolong the existing uncertainty which is not conducive either to economic stability or to the solution of the economic intricacies of the present situation.

The theory of definite accomplishments is so vague and so uncertain as to give no hope of successful results. It will satisfy no one who desires a definite settlement of the Philippine problem and will not pave the way for the solution of the economic difficulties which confront the Filipino people. Instead of disentangling the Philippines from the economic system of the United States, it will merely involve the islands in a closer artificial relationship with the United States which can not be terminated at any future time without serious injury to both countries. On the other hand, with the determination of a fixed time when the Philippines shall be placed outside of the tariff walls of the United States, merchants and producers of both countries are informed of the change that will occur. In this case we would only need a reasonable time to prepare ourselves for the change in order to escape avoidable consequences.

5. Secretary Hurley makes repeated protestations of a sincere desire to bring about the independence of the Philippines. However, this deep concern for the future welfare and security of the Filipinos is such that were his expectations and fears to be accepted, it would be fair to state that the Philippine Islands would never attain their independence. He desires, for example, to elevate the social standards and the political and economic capacity of the non-Christian Filipinos at least to the same levels attained by the Christian Filipinos. Under American Sovereignty such a task would require many generations. And even then it would be doubtful if the Mohammedan Filipinos would ever attain social standards which Secretary Hurley might consider satisfactory, for their religious and moral conceptions are different from Christian civilization.

Secretary Hurley also would require the Philippine Islands to build up a system of military and naval defense which would make them impregnable against foreign aggression. There are very few countries in the world to-day which are in such a strong position. Frankly, if this condition were imposed upon the Filipino people it would be tantamount to a denial of our independence. Ability to maintain a naval and military establishment adequate to withstand aggression from without is not now possessed by the Filipino people, and they will not be able to develop such a system of defense for many years to come. But there are to-day in the world influences and instrumentalities, other than military force, which are deemed sufficient for the preservation of national integrity, and the Filipino people have the right to rely on them. Recent happenings in China should not be cited to justify assumptions as to what will happen in an independent Philippines five years from now. The two countries are differently situated, and the cross interests and conflicting purposes of other nations bearing on China happily do not obtain as regards the Philippines. 6. Great emphasis is laid by Secretary Hurley on what he terms the special responsibility which the United States Government assumed with respect to the Mohammedan Filipinos. He claims that when the United States forces disarmed the Moros they were given assurances that the United States would exercise tutelage over them until they were able to defend their rights and, besides, to protect them against what he calls their "hereditary enemies," the Christian Filipinos. Secretary Hurley could hardly have cited a fact more lacking in historical foundation or more widely divergent from the views of those who have been most intimately associated with both Mohammedan and Christian Filipinos and the events referred to. The Mohammedan Filipinos were disarmed, about

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