The worst feature of the inter-island shipping situation, however, is the disproportionately high rate schedule. It is notorious in Manila shipping circles that it costs more to send a bale of hemp from Leyte to Manila than it does to send the same bale across the Pacific ocean. Instances such as these are quoted quite frequently by business men. During the war, local shipping rates went skyward, the shipowners alleging increased costs in all items that go to make up expense of operation. When prices began to tumble a year or so ago, the shipowners still kept on asking for higher rates, out of pure habit, as it were. A complacent Public Utilities Commissioner has not seen the necessity or justice of having rates reduced.

Lower inter-island shipping rates would stimulate trade in Philippine products, thus tending to give the grower better prices. At the same time the prices of the articles that he uses and which must be brought from abroad will go down, thus reducing his cost of living and other expenses— a double benefit for the producer.

A system of modern, swift and serviceable steamship lines, connecting up the principal minor seaports-and these with the large ports-and reaching some of the hitherto neglected and unexploited regions of the Archipelago, will be of immeasurable value in developing the Islands economically. Governor-General Wood on more than one occasion has expressed his desire to see the inter-island shipping service improved and extended. The government can apply itself to no worthier or more constructive effort.

ARBITRATION OF DISPUTES

The suggestion has been made to the Board of Directors that the American Chamber of Commerce of the Philippine Islands should have a committee on arbitration to formulate rules for the settlement of disputes arising between members or between members and outsiders, here or outside of the Islands. The main idea back of this proposition is that in a large proportion of cases the disputes can be settled outside of court to the satisfaction of all parties concerned, thus obviating litigation.

It may be news to the majority of members of this Chamber, it certainly is to some, that two commercial disputes have been submitted to this Chamber for arbitration and both have been satisfactorily settled without litigation.

This form of settling disputes of a commercial nature is not original with this Chamber. It has been followed successfully by chambers of commerce in the largest cities of the world and is now a permanent institution in most of them.

The Chamber is in possession of sufficient data on the subject to enable a committee to proceed with the formulation of a workable set of rules and regulations for arbitration procedure within the Chamber. It should be noted that, in any event, abitration will be voluntary, but that once a case is submitted for arbitration, the decision must be considered final and binding upon both parties.

Members of the Chamber are requested to express their views on the proposition before March 31. If there are any objections to the general If there are any objections to the general plan they should be registered before that date. Those who voice no objection to such a plan will be assumed to favor it. Address all communications on the subject of arbitration to the Secretary.

These figures speak louder than words of the gradually decreasing American foreign business. This condition, it appears from various reports, is prevalent all over the world. Competition is becoming keener and the European and Asiatic countries are crowding the world's market places with goods and salesmen that are giving the American goods and salesmen a hard run for the business.

The United States Shipping Board and other authorities in Washington now appear to be trying to help out American foreign trade, but small, selfish, individual “blocs” in Congress―concerned only with matters visibly and directly affecting their own constituents and their own particular districts are making it difficult to put through national legislation of a more than local or regional application.

The foreign trade of the Philippines-an American possession-is being absorbed by foreigners. That should serve as an object lesson to those in the national capital who have not as yet come to realize what an important factor in the nation's business the foreign trade of the country has become.

TO OUR READERS

A gratifying response has been received to the cards sent out last month enabling members of the Chamber to subscribe to the JOURNAL without inconvenience. Nearly half the members of the Chamber are now regular subscribers--but that is not enough. We need the help of all to make the paper what we desire it to be, a truly representative organ of the American business community in the Islands. With every member subscribing, thus actively supporting the paper, and each one taking a personal interest in the JOURNAL'S policy and contents, it can grow into a much more important and influential organ than it is today.

Members can either pay their subscriptions in advance or request the Secretary to include the subscription cost-1.50 a quarter-in the regular quarterly statements. The cost of publication is high for a journal of this type-the last issue, for example, costing considerably more than the subscription price per copy for mechanical production, including paper. Members and non-members who desire to continue receiving the paper are urged to have their names placed on the subscription list immediately.

WEEKLY BANK REPORTS

Special Bank Examiner Ben F. Wright is to be commended for his newly inaugurated plan of issuing a weekly consolidated bank report showing 18 items of interest in connection with the finances of Manila's banking institutions. The statement, as issued by Mr. Wright, is the most complete and informing we have anywhere seen. It includes, we note, the item of "debits to individual accounts," which at present is replacing the clearing house totals in most American financial centers as an index to the volume of business.

Such statements as these, regularly issued, make it impossible for secret operations such as injured the Philippine National Bank under public's funds. the Concepción régime to be carried out. They are a safeguard of the

PHILIPPINE FOREIGN TRADE

The statistics on the foreign trade of the Philippine Islands for the year 1921, given in the February issue of this JOURNAL, will bear careful analysis and might be used as a warning to Washington statesmen, a warning that American business is losing its grip even in our own insular possessions and that the foreigner is making slow but steady inroads into our own fields.

To us the most significant fact brought out by these statistics is the decrease in the percentage of total foreign trade carried on with the United States. In 1920 the United States had 66.5 per cent of Philippine foreign trade. In 1921 this percentage was reduced to 61.7, Japan, China, and the Netherlands have captured an increasing proportion of our foreign business.

We also note with apprehension the fact that Great Britain is rapidly resuming her predominant position in the Philippine foreign carrying trade. British vessels carried 43.2 per cent of Philippine foreign trade in 1921, as against only 37.4 per cent in the year before. American vessels were in second place in 1921, with 35.3 per cent, as compared with 45.3 per cent in 1920, when they were in first place.

THE PORT COMMISSION

On another page of this issue we print an unofficial, but accurate, translation of the Port Commission bill passed by the Philippine Legislature and awaiting the Governor General's signature. The Collector of Customs, quite properly, is constituted the permanent chairman of the Commission, composed of five members, whose chief function will be to exercise general supervision over the handling of cargo arriving and leaving by steamers. It is also empowered to lease or sell the government's cargo-handling plant-an: it is reliably reported that such a lease is contemplated.

Since the matter of cargo-handling is one that vitally concerns all merchants and since Manila is a port under the American flag and therefore one in which American shipping interests are deserving of primary consideration, it would seem that at least one of the five members appointed to the Board should be a member of the American Chamber of Commerce and act in representation of this Chamber. That is a point the settlement of which lies within the discretion of the Governor General.

The American Chamber of Commerce has devoted much time and study to the port question and is even now engaged in gathering the latest and most authentic data pertaining to cargo handling and port management. It would like to be of service in utilizing this data for the benefit of the business community.

Predicting a brilliant future for Philippine business because the wants of the people are constantly increasing Samuel F. Gaches, president of Č. Alkan, Inc., Manila, has written a review of Philippine business which was printed in the seventeenth annual trade review number of Typewriter Topics, the international office equipment monthly. Mr. Gaches' article follows: "The Philippine Islands are today feeling the reaction of war prosperity. Exclusively an agricultural country, producing hemp, copra, sugar and tobacco, the war made the Philippines a favored spot in an otherwise disturbed world. After the first two months of stagnation following the outbreak in 1914, the prices of all four staples increased steadily, reaching the highest point in the fall of 1919 and the spring of 1920. The combined value of exports increased from two hundred million in 1914 to six hundred million in 1920. The average unit value of the products of the country increased three-fold. The revenue of the government increased in proportion. The expenses followed the increase as a matter of course.

PEOPLES' WANTS INCREASED "Essentially progressive, their desires intensified by universal education during the years of American occupation, the Filipino people needed only the medium of ready money to possess all those things which are a part of western civilization. Public buildings were erected in provincial capitals and municipalities. Typewriters, adding machines, steel filing cabinets, and safes were imported to give them modern equipment. Magnificent trunk roads were built. Automobiles and trucks followed as necessities. New lands through which the trunk roads ran were opened up to settlers. Tractors took the place of the slow moving carabao and gang plows made thousands of acres ready for sugar planting. The latest styles in hats, collars, neckties, clothing, socks, shoes, and underwear, were in demand. Homes were built and furnished in the most approved American style.

"The last months of 1920, following the downward trend in prices of commodities, showed a slight falling off in business, but the real slump did not come until the opening of the year 1921. The world stopped buying. Hemp, which had always constituted the major part of the exports, began rapidly to seek a pre-war level; sugar and tobacco reached the lowest marks since 1907, with no buyers at that figure; copra alone maintained a fair price. Export and import houses established during the war closed their offices and withdrew their representatives.

THE DUMPING PERIOD "Imports, however, continued to increase. Goods which had been held up in New York and Pacific ports began to arrive. Merchandise contracted for in 1919 and 1920 while times were good and orders difficult to fill came in with the old high prices on the invoices. Every manufacturer in the United States who had a back order for the Philippines strained every effort to get that order filled during the fall of 1920. Most of them succeeded, and the warehouses of Manila were filled with goods which arrived too late to find a ready market.

"The year 1921 has been a year of effort to unload accumulated stocks. Losses have been and are still being taken, but the merchandise is slowly moving out-at a figure. It will probably take from eight to twelve months to clear the stocks of Manila and get business to a normal turnover. Bankers are cooperating and it is unlikely that any well-established business house will be more than temporarily inconvenienced in the readjustment.

OFFICE EQUIPMENT OUTLOOK "Along certain lines the future of office equipment is bright in the Philippines. Although there are excessive stocks of all mechanical office devices, including typewriters, adding machines, cash registers, safes, and steel filing cabinets in Manila, they should find a market during 1922. Typewriters are in general use throughout the Archipelago, and as merchants become more

prosperous they find the need of adding machines and cash registers. Steel filing furniture will be the most difficult to sell. The sales of 1919 and 1920 were largely due to the newly established import houses and the government. The government is practically out of the market for the present on account of the necessity of prac ticing economy; the import houses have closed. leaving the field largely to the old well-established firms who are themselves well supplied with modern steel cabinets.

"Foreign politics have little effect on the Philippine Islands except in so far as they relate to affairs in the Orient. The prosperity of the Philippine Islands and the success of every business house, whether exporting or importing, depends on the economic situation. Good crops with good prices make good business.

A GROWING MARKET

"The benefits of the free trade between the United States and the Philippine Islands are mutual. This is a growing market for the Anierican manufacturer which, if fostered, will in years be an important item in American export trade.

The

"The outlook for business in the Philippines in 1922 is good. The booming years of 1919 and 1920 must be forgotten and the years to come taken as a continuation of 1913 and 1914. high prices brought on by the war caused new lands to be tilled, created new desires for better things among the Filipinos, and it is only a rank pessimist who can look for a return to pre-war days.

"A whole generation has reached maturity since the war began in 1914. It has become accustomed to treat as necessities things which were formerly luxuries-it has created new luxuries for itself-it will go on creating and striving to attain. The outlook for the future is excellent."

PHILIPPINE-AMERICAN CHAMBER PICKS OFFICERS

The Philippine-American Chamber of Commerce of New York has elected the following officers to hold office during the coming year:

President, Charles J. Welch, Welch, Fairchild & Co.; vice-president, Charles B. Orth, Hanson & Orth, Inc.; treasurer, Adolph Kopp, Philippine National Bank; secretary, Vicente Villamin, a Filipino business man in New York.

Directors: H. Parker Willis (chairman); E. B. Bruce, president Pacific Development Corporation; P. F. Ellis, manager Asia Banking Corporation; Carl W. Hamilton, president Visayan Refining Corporation; Adolph Kopp, manager, Philippine National Bank; G. T. Lincoln, partner Henry W. Peabody & Co.; William S. Macleod, vice-president Macleod & Co. (International Harvester Co.); Charles D. Orth, president Hanson & Orth, Inc.; John H. Pardee, president J. G. White Management Corporation; L. I. Sharp, vice-president International Banking Corporation; R. J. Trodden, representative Barber Steamship Lines; F. P. Pipe, representative Compañía Tabacalera; Vicente Villamin, representative of various Philippine firms: Charles J. Welch, president Welch, Fairchild & Co.; H. A. Whitlock, vice-president Whitlock Cordage Company; Charles F. Wreaks, director Wilcox, Peck & Hughes.

A move has been started in Peking, Shanghai, and elsewhere in the North China to raise the $30,000,000 needed to buy back the TsinanfuTsingtao (Shangtung) railway from Japan. Students' organizations, chambers of commerce and other organizations are taking the initiative to obtain the needed sum through the sale of bonds secured by the railway. David Z. T. Yui, one of the "people's delegates" to the Washington Conference, who has just returned to China, is active in his support of the measure.

save the situation. It fell to my lot, and later to that of Mr. John S. Hord, to undertake this task. I speak advisedly in saying that in the campaign undertaken by us comparatively little assistance was rendered by the Bureau of Insular Affairs. This is particularly true of our efforts to have the relief made retroactive to include the years 1918 onward. We were told by the Chief of that Bureau that insistence by us upon the retroactive feature would seriously prejudice, if not defeat, our case.

A PROBLEM OF EDUCATION

Your representative found that most Senators and Congressmen had never been informed, and had no idea whatever, that Americans in the Philippines were being penalized in favor of foreigners. The whole problem resolved itself very early into educating Congress and the public generally as to the facts; that is, the iniquity and absurdity of discriminating against our foreign traders while spending billions upon a merchant marine and other agencies to "develop" our foreign commerce. What was done in this regard, largely through the efforts of your representative and those of Messrs. Powell and Seitz of Shanghai, you already know.

Mr. Taft (through the Philadelphia Public Ledger and the chain of papers served by it) condemned the 1918 Revenue Act in its application to the Philippines and urged that Congress give immediate relief. The United States Chamber of Commerce, representing the enlightened opinion of the business men of our country, went strongly on record against the policy of taxing Americans upon income derived from sources outside the United States. The National Foreign Trade Convention at Cleveland, attended by representatives of practically every import and export house in the United States, unanimously favored exempting our foreign traders from this unequal burden, the concluding paragraph of their resolution reading:

The United States is the only great commercial nation which pursues this policy and we urge Congress to abandon it in the forthcoming revision of the revenue laws.

The delegates to this Convention were instructed to write their Senators and Congressmen urging that this handicap to our foreign trade be removed.

Herbert Hoover, Secretary of Commerce, in addressing the Annual Convention of the United States Chambers of Commerce at Atlantic City in April, 1921, said:

Every merchant will agree with me that the sale of goods abroad is a matter of salesmanship and national sentiment as well as of quality and prices. None except our own citizens can properly represent these factors. We can liken our present foreign marketing system to a supply train and a general staff, with no fighting men on the front. Our Our competitors hold the front line and naturally we lose the market when competition arises. If our laws are inadequate to stimulate, protect and give equality to American citizens who exile themselves in trade abroad, then we should legislate further. One thing is certain, that so long as non-resident Americans are the only nationality who pay taxes to their home government on foreign earnings, they have no equality in competition.

The above was quoted on the floor of the Senate on July 26, 1921, by Senator Ransdell, of Louisiana, who further stated:

Do you, Senators on the other side of the aisle, know that when a private exporter in this country sends his goods to Europe, Asia, or Africa he has to pay income and excess-profits taxes on his earnings, while his foreign competitor who sells goods in the same countries does not have to pay those taxes at all? The United States is the only country in the world which imposes income and excess-profits taxes upon the earnings of her people engaged in foreign trade. At the proper time, no matter what issue the pending bill may take, I propose to offer an amendment to the revenue laws correcting that great inequality and placing our foreign traders on terms of parity with the traders of other countries.

*

John Hays Hammond, in addressing the Cotton Growers Association at Philadelphia, made much the same statement as that of Secretar Hoover above quoted.

PLENTY OF Support

The exemption in question was backed by the Treasury Bureau, which Bureau recommends revenue legislation. Both the State Department and the Department of Commerce were solidly behind the China Trade Act, which carried this tax exemption feature. The New York Journal of Commerce, the most influential trade publication in the United States, came out flat and repeatedly in favor of placing our foreign traders on an equality with those of other countries. The New York Tribune, commenting editorially on the attitude of Congress in the matter, said:

The American government's ability for handicapping business that the overwhelming majority of our people would encourage amounts to almost positive genius.

Without exception, so far as I know, the proposed relief was supported and urged by every trade journal and every trade organization throughout the United States to whom the matter was referred. It was also supported by every person or concern having the most rudimentary knowledge of our foreign trade and its imperative requirements.

As you know, through the initiative of your Chamber, Acting Governor-General Yeater

sent a cable to the Secretary of War strongly urging favorable action in the matter by Congress and stating that bankruptcy faced most American concerns in the Islands unless relief was granted. The same is true of cable along much the same lines sent by General Wood and Governor Forbes, which cable was transmitted at your initiative and not through recommendation of the Bureau of Insular Affairs.

When General McIntyre states, therefore, that "lobbyists from the Philippines and China hurt the cause of federal tax revision," he bulks in with them and equally condemns Chief Justice Taft, Secretaries Hughes, Mellon, and Hoover, John Hays Hammond, Acting Governor-General Yeater, General Wood and ex-Governor Forbes, the United States Chamber of Commerce, the National Foreign Trade Council, and every person, organization and newspaper throughout the United States with intelligence and patriotism enough to examine the facts.

All of the above were back of your “lobbyists," standing sponsor for their arguments and the righteousness of their cause.

NO SPECIAL INTERESTS Served By his sweeping criticism General McIntyre also condemns the business men of the Philippines and of China, who, through their representatives, were asking Congress for a square deal and that it refrain from stacking the cards in favor of their opponents.

No special interests were involved in the demand upon Congress nor were any special privileges requested. It was simply a struggle to relieve our foreign trade generally from the handicap of the 1918 Revenue Act, and to give such trade a fighting chance for success in the markets of the world. In the event of favorable action by Congress it would profit American business men in Mexico City, Buenos Aires, and Patagonia, equally with those resident in Manila or Shanghai. No person of intelligence ever disputed this fact or reflected upon the bona fides of the arguments advanced by your representatives. The House of Representatives by a vote of three to one passed the China Trade Act, with tax exemption included. The fact that this latter feature was stricken from the Senate bill was not due primarily to any antagonism thereto, but largely because the Committee believed it was a matter to be included in the general revenue act. This was was later After full hearing, the Senate Finance Committee provided in the new revenue act that income derived from sources outside the United States should not be taxed. This indicates that the "process of education" had made substantial progress, with every chance for full relief at an early date. We might state, incidentally, that (Continued on page 30)

done.