Evening star., 1947-10-05

the Reconstruction Finance Corp.
to lend or extend up to SIS ,000, 900
credit to the Philippines.
However, a rider was attached.
The advance could 'be made only
after consultation with the National
Advisory Council on International
Monetary and Financial Problems.
To obtain accurate information on
which to base its advice, the council
suggested and the two governments
agreed to, a joint study commission
on Philippine finances. Recon-
mendations were sought on taxes,
the budget, public debt, currency
and banking reform, exchange and
trade problems, reconstruction and
development.
Chosen for the job were Edgar
Grossman, New York banker, who
represented the State Department;
Arthur w. Stuart of the Treasury
Department and John Exter, rep
resenting the Board of Governors
of the Federal Reserve System.
The Filipino members were Miguel
Cuaderno, Secretary Of Finance; Pho
Pedrosa, Commissioner Of Budget,
and Vicente Carmona, president of
the Philippine National Bank. All
were appointed by President Roxas.
Roxas Gives Approval
After four months of study, which
included extensive field trips as
we'll as intensive research in Ma
nila, the six members brought the
draft of their report to President
Roxas for his comments. Two day.
long sessions we're necessary before
agreement was reached. In the end,
however, Mr.. Roxas accepted the
contention that his country did not
need aid from the United States, but
could finance itself in the future
if certain suggested reforms were
carried out.
The report as finally published
makes five main proposals. They
are:
/. The conservation OF the pres
ent ample foreign exchange by
control over, imports.
2. Tax revision designed to reduce
the budget deficit to manageable
in the 1948 fiscal year,
and to eliminate 1t In 1949.
8. A program OF domestic borrow
ing to meet the 1s48 budget deficit
and to provide future capital funds.
4. Strengthened and expanded
and credit facilities.
5. Establishment of a managed
system and . central
bank.
All these points represent i'm
portant departures from the policies
we have followed in the Philippines
for half a century. Several like
wise involve serious reversals Of
thinking for the Filipino leaders.
A Paradox in Dollars
The commission found the Philip
pines to be unique among former
occupied nations in having abundant
dollar resources, a stable currency
and unrestricted imports. The out
put Of several Of the islands basic
is low, but money in
come remains at high level, there
is no evident lack OF basic necessi-
ties, and the high-income groups
are consuming CONSPICUOUS quantities
Of luxuries."
"The basic reason for this para
dox." the report says, "is that the
United States has already spent and
will continue to spend large sums
Of money in the islands both to
its military objectives and to
compensate the Philippine govern
ment and people for a share Of their
losses and their services in the war
against Japan"
Receipts between 1945 and 1850
are expected to total more than
4, ,Oo0, 600, 600 pesos $4,000, ,O00, ,000
Since this happy condition is not
likely to continue beyond 1850 or
1851, the commission urges the re-
public to take advantage Of its pres
ent good fortune by buying now the
goods 1t will need to pay its own
way later.
Every encouragement should be
given to imports Of capital equip !
ment for the reconstruction and |
Of the nations farms, I
mines, fisheries and factories" 1t
says. mo restrictions should be
placed on imports Of essential con-
sumner goods. On the other
hand, imports OF - nonessentials
should be strictly limited. Jewelry,
high priced automobiles and other
luxuries ought not to absorb ex-
change which might otherwise be
used for the permanent improve
ment Of the country"
In the taxation line. the commits