very few of us Americans who have had experience in governing dependencies. It so happens that I am one of those men. I have been Governor-General of Cuba, Civil Governor of the Moro Province, and Commanding General of the Philippine Division. And I have travelled very extensively in British Colonies, where I have studied the problems of administration.

" "If this Philippine experiment fails, although the Filipinos are directly in charge of it, it will nevertheless go down in history, and properly so, as an American failure.

66

'Now, throughout my many years of public life, I have always preached the duty of service to our country. I have preached it both by the printed page and from the platform.

"Well, then, I feel that right here I have an opportunity to demonstrate to my fellow citizens that I meant what I said. As the President is giving me the opportunity, I am going to accept the position, regardless of what it costs me. And, come what may, I shall stick to it to the end.

" "I am a poor man. Yes. That is true. But this is a contribution to my country that I want to make.""

So, on October 15, 1921, he started in-on as thankless a job as ever a man undertook-started in with his eyes wide open to the cost of it, knowing what lay ahead.

At that moment, it is said, a child might have played with the lions of the Islands. They were not disposed to roar. In fact, they were scared-so badly scared that even the fiercest among them talked of retiring to the jungle as weary of public life.

But

The obvious thing for the new Executive to do would indeed have been the thing they were all expecting-to make a clean sweep of the installed machine and start afresh. such was not the purpose of the new Governor-General. His theory was that, since he must handle these people anyway, in or out, it might as well be in-that he would best work upon the material in hand with the tools that lay readiest.

"Weakling!" cried the American old-timers in the Islands, only half-seeing what he was at.

"Milksop!" cried they. "Granny! Why doesn't he get after the rascals and make them hunt their holes! Why doesn't he swing the battle-axe?"

But those who called for the battle-axe forgot just what Mr. Harrison had chosen to forget-that the Governor-General of the Philippines is bound to govern under the law-under the Organic Act. The men whom they would have beheaded were elective officers of an elected body.

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3

"Well, anyway, the Council of State is a mischievous excrescence," our old-timers pursued, "The idea of tying the Governor-General up to what may be a gang of conspirators against the public weal! That is ridiculous! Let him begin by abolishing the Council of State."

Now, the Council of State is indeed an extra-legal body without authority for existence by the Organic Act. The Governor-General probably could abolish it at will. Yet the fact remains that all the mass of laws put through the Philippine Legislature in Mr. Harrison's day is so thoroughly entangled with the Council of State, the whole routine of administrative procedure so wound up in it, as to be inextricable except by means of a major operation performed by the United States Congress.

The heat of the Americans, however, was natural. They were not all paragons, but they had done, as a whole, excellent work in the Islands, extending trade and credit, opening the country, bettering conditions everywhere, through many weary years. They had never been rewarded by large profit. Not one of them had "made a fortune" in any modern sense of the term. Yet they had continued steady, enlightened labour. They had observed order under many provocations. As Secre

3 The Council of State under the Governor-General consisted of the Vice-Governor-General, the President of the Senate, the Speaker of the House and the Secretaries of the several Departments. It was created by executive order of Mr. Harrison and was, whatever its other qualities, one of the conspicuous examples of encroachment upon the prerogatives of the United States Government, as defined in the Organic Act.

tary Baker had so wisely foreseen, they had nevertheless become the object of much unfair discrimination. And they had never received, from any Insular administration, as much consideration as they probably felt that their record deserved.

And yet, the one thing first incumbent upon the new Executive was not to jump in and clean the political stables, but to stop the crevasse in the Treasury dyke-and to stop it quick. For the eleventh hour was past and the twelfth far spent.

When General Wood took office the Government was bankrupt, with a deficit of about $20,000,000 and no credit. And the peso stood at 17 per cent discount. There was no reserve fund and no confidence. Business was dead. The bottom of all things was just about to drop out.

But the peso, immediately on General Wood's appointment, began to rise. His name plus the several financial measures that he pushed through the Legislature made it possible to get from America a new rescue loan of $22,500,000. And his two successive annual budgets-those of 1922 and 1923-at last raised things to the zero point, just as by skill and patience, by strength and labour, a sunken ship is raised to the surface of the sea.

The money that had been lost was Filipino money, lost by Filipinos. The rescue money was American money; for it may be taken as an enduring fact that no Filipino buys his own, or any other government's bonds-not while he can loan out his surplus at fantastic rates of usury. And the man who now administered that American rescue money was determined to stand watch over it and see it do its rescue work.

"The lid is down on the Treasury-box," said the new Governor-General. "It still can be opened by the lever of sound investment and legal enterprise. But free and unsecured circulation of public funds among political friends is finished."

"This man lacks polish," murmured the politicos, one to the other. "This is a rough and tactless type. Militaristic. Brusque. How much more agreeable was Mr. Harrison's smile!"

Nevertheless, they did as they were bid. For, as has been said, they were seriously, personally scared. They acquiesced in a radical lopping of overgrown personnel throughout the departments; in a reduction of the swarm of motor cars that everybody had voted to everybody else; in the number and expenses of the insular ships; in a considerable variety of other things until the sum of their acquiescing amounted to a total reduction of 37 per cent in the annual expense of the Islands.

And all this necessary work was helped-or so the Governor-General hoped-by his conciliatory policy of retaining the old cabinet that he had found in office upon his arrival; of retaining the Council of State; and of labouring diligently to maintain peaceful relations with the Legislature.

In the midst of which the curtain flew up on that amazing divertissement entitled "The Philippine National Bank."

Chapter X

FOR THE TIRED BUSINESS MAN

THE Philippine National Bank was created in 1916, in the joyous days of Harrison. The Philippine Legislature, in giving it birth, endowed it with the right to issue notes, to do commercial business and to invest not more than 50 per cent of its capital in agricultural loans.

The Legislature then ordered into the coffers of its new creation all municipal and provincial funds throughout the archipelago, as well as all funds of the Insular Government, withdrawing from other banks for the purpose.

Next, it imported from America Dr. H. Parker Willis, Secretary of the U. S. Federal Reserve Board, and made him President of the bank. Dr. Willis remained in office for nearly a year, gave much good advice which was consistently ignored, and so departed. They then put in, as President, Mr. Samuel Ferguson, American, a man whose qualifications are said to have been that he had been clerical secretary in Mr. Harrison's office, without one day's experience in banking. He died a year later. His ignorance of banking was inclusive.

Mr. Ferguson having passed on, General Venancio Concepcion succeeded to the vacant chair. General Concepcion was a small Filipino politician with a shady record. General Concepcion's further equipment for the post equalled that of his predecessor, excepting for the facts that he had had no clerkship in the Executive office and that he was understood to be sober.

Dr. H. Parker Willis, in his brief day, had been able to insert a few Americans into the bank personnel, but to these