Although the U.S. has poured some $2 billion into the Philippines since 1945, the new republic is on the verge of bankruptcy. In Washington last February, the Philippines' President Elpidio Quirino had talked over his troubles with President Truman, asked for a U.S. Economic Mission. Truman sent to Manila able Daniel W. Bell, former Under Secretary of the U.S. Treasury and now president of the American Security & Trust Co.
Sweeping Charges. A month ago Bell made his report to the President. Rumors that it contained sweeping charges of corruption and mismanagement against the Quirino administration soon leaked to Manila. Last week the press office of the Malacanan Palace, President Quirino's White House, issued a mimeographed statement. It suggested that the Bell report be made public, "to end unbridled speculation." The statement then went on to an angry attack upon the U.S. It said:
"Philippine 'bankruptcy and corruption' have an intimate relation to the American example in racketeering and to the insidious inspiration provided by conspicuous consumption, otherwise known as the so-called American standard of living . . . [but] the Filipinos are mere pikers compared to their more accomplished and eminently successful mentors, who have had and still have a vast continent in which to base their operations . .. Filipinos . . . are inefficient all right—even in their grafting . . . With more time and greater chances they will yet show they can equal or even surpass the stink familiar and now taken for granted in Washington . . ."
Reporters traced the statement to Federico Mangahas, President Quirino's private secretary and ghostwriter. Next day Quirino disavowed authorship, but Manila believed that in a hopping-mad moment he had read and approved the statement.
"Strictly Conditioned." President Truman promptly released the Bell report. Its recommendations: 1) increased taxation on high incomes and reform in the tax collector's office; 2) cutting up big estates for homesteaders, and production credits for small farmers; 3) encouragement for new industries; 4) two-year emergency tax of 25% on imports; 5) encouragement for trade unions; 6) higher civil service salaries, to reduce the temptation of graft; 7) U.S. to grant a $250 million loan, "strictly conditioned."
Said Bell: "There are officials in the Philippine government who are aware of the dangers [of the] pervading economic unbalance between production and needs . . . but the measures that could halt the deterioration have not been put into effect. Inefficiency and even corruption in the government service are widespread. Leaders in agriculture and in business have not been sufficiently aware of their responsibility to improve the economic position of the lower-income groups. The public lacks confidence in the capacity of the government to act firmly . . . The situation is being exploited by the Communist-led Hukbalahap movement to incite lawlessness and disorder."
At week's end some Philippine newspapers were serializing the 53,000-word Bell report like a sensational mystery story. To give the story point, Washington made an offer of a $250 million five-year loan to the Philippines on condition that Manila carry out the reforms recommended in the Bell report.