The First Steps

In the Philippines, the first weak steps along the road of reconstruction were taken. In bombed and burned Manila the Rotary Club began its weekly Thursday luncheons. In the Manila Hotel socialites and dressmakers staged the capital's first fashion show and ball since 1941 against a background of charred greystone walls. The Islands' top dressmaker, Ramon Valera, turned out 24 gowns in two weeks (with material at $50 a yard), then collapsed from overwork. The first trickle of civilian goods had arrived from the U.S., tumbling black market prices 50%. And the Islands had shipped their first large load of hemp (2,000,000 Ibs.) to the U.S.

But the basic economy of the Islands, still largely controlled by the U.S. Army, was still very sick. Little had been done to solve the Islands' biggest problems: 1) shattered transportation lines; 2) the lack of money to rebuild homes and industry.

Beer & Inflation. Only a start had been made. The big San Miguel Brewery was bottling beer and Coca-Cola, but the entire output was being taken by the Army. At Cebu the huge Government-owned Portland cement plant was nearing its prewar production, but was still unable to meet the demand.

The potent Elizalde interests, which have a finger in most Filipino enterprises, expect to start two ships plying between the Islands this month. The Philippine Airlines has been reorganized, with the help of 560,000 pesos from Transcontinental & Western Air Inc., in exchange for a 28% interest in the company. But it is still awaiting planes to resume flying. Procter & Gamble's Philippine Manufacturing Co. (soaps, lard, coconut products) does not expect to get into production until next spring. Most industrial plants were destroyed, along with the Islands' chief industrial cities, Manila, Cebu and Iloilo. Salvage work on plants which might be restored easily was hamstrung by the inflation which had shot wages and materials sky high.

The Bill Is Totaled. Now that it had time to assess the war damage, the Philippines Chamber of Commerce estimated the cost of needed machinery and equipment at a staggering one billion pesos ($500,000,000). Most businessmen pinned their hopes for new capital on war damage payments from the U.S. But the U.S. as yet has made no decision on paying them. The Commonwealth, with a budget of 400,000,000 pesos and income of 7,000,000 pesos, has no cash to hand out to anybody.

Nor could exports pay the way. All of the 41 sugar centrals were damaged by the Japs, and much sugar land was ruined in an abortive Jap attempt to raise cotton. In the tobacco-growing Cagayan Valley in northeastern Luzon, only one cigar factory escaped serious damage. (The tobacco industry once furnished 25% of Government revenues.) The rich gold mines (prewar output $39,000,000) were caved in and looted of machinery. Small farmers have no tools; most of their clumsy carabaos, the Filipinos' animal of all work, had been slaughtered for food.

Will the U.S. Pay? Exporters estimated that at best it would be 18 months before they would have tobacco to ship abroad in volume; three years for sugar, four to five years for gold. Only hemp and copra can be exported in quantity in the near future.

In the long run, Filipino businessmen knew that reconstruction is more a political than an industrial problem. Will the U.S. advance funds to shore up the bankrupt Philippine Treasury and grant long-term credits for the purchase of machinery? More important, will Philippine independence, scheduled for June 1, 1946, mean that the U.S. will throw up a tariff wall against the import of sugar, tobacco and other products into the U.S. market? If this happens, many a Filipino businessman feels that reconstruction will be impossible.

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