Mr. WARING. The Army and the Navy have been settling claims filed by inhabitants of the Philippines, not only Philippine citizens but American citizens and others as well, for property which the Army and Navy took over, either during the early days of the war, or during the days of the reoccupation of the Philippines.

For example, take as a concrete illustration the Luzon Stevedoring Co. which handles the loading and unloading operations in the harbors of the Philippines. They had a large number of tugs and barges. When the war broke out the Navy promptly requisitioned all of them. Later, when the Japanese came in and bombed Manila and eventually conquered the city, those properties were lost.

The Luzon Stevedoring Co. therefore filed a claim against the Navy for the property which the Navy had taken from the company. Claims of that type, then, are being handled by the Army and the Navy.

The Navy has given us a complete list of all of the claims which it has paid. This list we will check against all of the claims filed with us to assure that there will be no duplication of payment.

The Army is similarly supplying us with a complete list which we check to make sure that a claimant does not have claims in two places, attempting to duplicate payment.

We pay, under the terms of the act, for losses incurred as a result of enemy action, or as a result of the action of our own troops, including property which was of necessity destroyed because the enemy was using it as fortresses or otherwise, and for property that was destroyed or stolen because of looting, which in turn resulted from the breaking down of civil order during the period of reconquest.

Mr. CHIPERFIELD. Strangely enough, we provide by law that the United States compensate claims of a character you mentioned and yet there are losses due to the activities of our Army and Navy in this country that our own citizens cannot recover for.

Mr. WARING. I understand that is so. Without passing judgment one way or the other, I merely want to say for the information of this committee and the record, that in my opinion we have a very special situation in the Philippines.

I hesitate to mention this matter before the Foreign Affairs Committee of the House because I am sure many members of this committee are far better informed on such subjects than I am, but the United States has invested 50 years in the Philippines in an endeavor to bring these people to a point where they could govern themselves and in an endeavor to establish a democratic form of government in the Philippines.

Mr. Chairman, I believe firmly that our reputation and our prestige are very much at stake in the success of this Philippine experiment, and I believe that because of the peculiar relationship that exists between the Philippines and the United States, that we have a special obligation to the Philippines that we cannot well afford to overlook, either in their interest or our own.

Mr. CHIPERFIELD. Mr. Mundt, have you completed your questioning? Mr. MUNDT. Yes.

Mr. CHIPERFIELD. Mr. Jarman.

Mr. JARMAN. In other words, on the claim proposition, for the buildings in the walled city, those claims are submitted to you?

Mr. WARING. That is right.

Mr. JARMAN. How about the Government buildings?

Mr. WARING. That would be submitted under a separate title of our act, Title 3, which authorized the appropriation of $120,000,000 for the restoration of public property and services. Four agencies of our Government were given major resonsibility under that title:

Public Roads Administration, for the restoration of public roads in the Philippines; the Army engineers for the restoration of ports; Public Health Service, for the restoration of public health services; and our Commission for the restoration of public buildings and property.

Of the $120,000,000 authorized, the State Department after consultation with the Philippine Government, through our Ambassador in the Philippines, has tentatively allocated to our Commission, $57,000,000 for the restoration of the public buildings, and it also includes public irrigation system, Government corporations, and such basic projects for health as public water works.

Mr. JARMAN. What is the progress of reconstruction in Manila? Mr. WARING. They had gotten started, and they are doing an ingenious job of improvisation.

They have available today in their own land, cement and lumber, but they lack and desperately need other types of building materials which they cannot produce for themselves and were never equipped to produce before the war. These include structural steel, electric wiring, plumbing fixtures, and hardware of various types. These things they cannot produce, and they need them to hasten the rehabilitation process.

One of the grave requirements is not only for housing but also for industrial machinery of various kinds. The sugar centrals need industrial machinery to grind the cane which is now being produced. The mining industry needs mining machinery so that the mines may be reopened. And the sawmill industry requires equipment for the production of much needed lumber.

As some of you may recall, the Philippines before the war, was was the second largest producing area of gold under the United States flag. It was exceeded only by California.

Mr. JARMAN. What is the condition of the Manila Hotel?

Mr. WARING. They have done a good job in restoring the Manila Hotel. With improvisation and ingenuity, they have put it back in almost the shape it was before the war with the exception of the new air-conditioned wing. This is still ruined, and nothing has yet been done about it.

However, the old part of the hotel is practically there.

Mr. JARMAN. Approximately how many vessels are there in the Manila harbor? I am speaking of sunken vessels.

Mr. WARING. Over 100. I think the number is 130.

Mr. JARMAN. It was 400 originally, was it not?

Mr. WARING. I do not recall the figure. It may well be, but I do know that during the liberation, our air force in less than 1 hour's time, sunk over 100 vessels in the Manila Harbor.

Mr. JARMAN. A while ago reference was made to the amount of $400,000,000. Was this bill under which you operate introduced by Senator Tydings? ·

Mr. WARING. It was sponsored by Senator Tydings and Mr. Bell.

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Mr. JUDD. As a member of the Committee on Insular Affairs, I helped write this act. It was introduced in the House by Mr. Bell, the chairman, and we worked on it 6 weeks almost every day. Most of the bill was written on our side and not in the Senate.

I will say in passing that figure you inquire about was pretty much picked out of the air. I think I made the motion for $400,000,000. Some wanted only $100,000,000, some $250,000,000. Some estimates were that about $600,000,000 would ultimately be needed. We did not want to put it that high to begin with.

We did not know who the chairman would be, but we did not want to encourage the commission to say, "Here is $600,000,000. We will go to town.

We reduced that administrative expense to 1 percent, knowing it would probably have to go higher. One percent or $4,000,000 is not going to be enough, Mr. Waring, if you are going to need the full $400,000,000, but if you should not need that much, we did not want to authorize 4 percent or $16,000,000 for handling perhaps only $200,000,000 in claims.

As I recall, the matter was discussed in the debate on the House Floor and is reported in the Congressional Record.

Mr. JARMAN. I take it that while it was a shot in the dark, it was a shot in the dark fired after exhaustive discussion.

Mr. JUDD. Yes, the best estimates were that it would probably run to $600,000,000. We were not willing to go the whole limit at the start. Some said give the Commission only $100,000,000 at first and let them come again. We finally agreed on an authorization of $400,000,000, thinking that was a reasonable compromise and then we would have to see after a year of experience.

Mr. WARING. Actually, it might be of interest to you, Mr. Judd and the members of the committee, to know that the Philippine Government employed the services of a very competent American engineering firm to reassess the war damage in the Philippines in connection with their claim for reparations from Japan, and based on prewar values, the engineering firm estimated the total amount of damage at $1,165,000,000, of which $230,000,000 was for public property and $935,000,000 for private property damage during the war.

The $935,000,000 figure, I am satisfied, is a fairly accurate figure, from the damage which I myself have seen in Manila and elsewhere throughout the Philippines and it serves to answer, I think where the $400,000,000 figure will be adequate.

Mr. JUDD. I do not think it will be.

Mr. JARMAN. How long have you been out there? You went with the first contingent, I imagine?

Mr. WARING. That is right.

I have been twice in the Philippines before the war but on this particular assignment I went out first. in July last, in an endeavor to find adequate living quarters for our staff, which presented a very real problem.

We were fortunate, however, in finding a solution. The Manila Hotel agreed to remodel two old barracks buildings which were next to the Hotel and we placed ourselves temporarily in those quarters. Meanwhile, the Philippine Government agreed to build 55 houses near Manila, and our staff will lease those houses from their own private resources, from the Philippine Government.

Also, we had to find office space for our offices; that was a difficult task. We have leased a building temporarily. But on an old Army site near the city hall, we are building six prefabricated steel, twostory navy barrack buildings and we will use those for offices during the life of the Commission.

Mr. JARMAN. What is the size of your personnel now?

Mr. WARING. At the present time it is 310.

Mr. JARMAN. You will have to substantially increase it?

Mr. WARING. We are, if we are going to get through with this job within the time limit set by Congress and we are anxious to do that if humanly possibly.

Mr. FULTON. Could we have more of your background, sir?

Mr. WARING. I first came with the Government in 1934.

I was connected for 8 years with the United States Tariff Commission, and in the last few years as an advisor to the Commission. Then for 2 years I directed the research operations of the coordinator of Inter-American Affairs.

For the year 1945, I was a special assistant to the Secretary of Commerce in charge of International Affairs of the Department. Mr. JUDD. Who was Secretary then?

Mr. WARING. Mr. Jones was Secretary when I came in in January. He was succeeded by Mr. Wallace in March. I joined the staff in January, when Mr. Jones was Secretary. Then, in 1946, I transferred to the Export-Import Bank as advisor on Far Eastern Affairs, and it was from that position that the President appointed me to my present task.

Prior to that, I had done educational work and was a banker in California.

Mr. JONKMAN. Mr. Chairman, I am not very familiar with this legislation. I would like to ask whether or not this is a final indemnification to the Philippine people for their losses or will we, for instance, be subrogated for those claims, in any reparations to be made by Japan?

Mr. WARING. Provision is made in the act for recovery by the United States of bullion or coin which would revert to the Treasury of the United States to cover any expenditures made under this act.

The President is accorded authority to utilize capital assets received by way of reparations, by turning those capital assets over to the Commission for the assistance to claimants if he so desires.

Definite provision is made for recaptiure by the United States Treasury in coin or bullion.

Further, I would like to point out, although it is not completely germaine, that the War Damage Corporation in the United States collected premiums on war risk insurance throughout this country. The Corporation collected premiums resulting in a net profit of $210,000,000, and that sum, against which fortunately for all of us, no payments had to be made, has been returned to the Treasury, so that it might be considered a partial offset against this expenditure. Mr. JONKMAN. You mean premiums we paid here to be protection for our property, if not used would be used as an offset on this?

Mr. WARING. It might be done insofar as the Government is concerned. It made no payments, and I am sure everyone is quite happy that we did not have to make them.

Mr. JONKMAN. That is no reason we should throw it away on some nonrelated claim. Are we to be subrogated, assuming that the $400,000,000, will do it? You said something about $935,000,000 reparation damages for the Philippines against Japan. Would we get our $400,000,000 back out of that $935,000,000 if those reparations are paid?

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Mr. WARING. I said there is provision in the act for that.

Mr. JONKMAN. Does it mean we will be subrogated? I have not read the act.

Mr. JUDD. It is covered. They cannot under the act pay claims that can be reimbursed from Japanese sources. That is one of the things forbidden in the act. There is a whole series of such exemptions. We wrote it as tightly as we could.

Section 105 (b) reads "any money or bullion received by the United States from the Japanese Government or the Japanese people by way of reparations or indemnity on account of war losses in the Philippines shall be covered into the Treasury of the United States until the value of said money or bullion so covered into the Treasury is equal to the sum of the amounts appropriated for the people of compensation under this title" and so on.

Thus first claim on money or bullion recovered from the Japanese goes to the Treasury until the amount so recovered, if we do get that much, equals the amount appropriated under this bill.

Mr. JONKMAN. We are subrogated for the amount we pay out, then? Mr. JUDD. That is right.

Mr. VORYS. That is in bullion?

Mr. JUDD. Of course McArthur has claims on Japanese resources to pay for the occupation of Japan. The Philippines do not have the sole claim. This is part of a complicated picture.

We wrestled with the question as to whether we could give it first claim on all Japanese reparations and the War Department said we could not, because it must get reimbursement from such sources as are available in Japan to pay for the occupation.

Furthermore, there is another bill, as you probably know, to use the money recovered from sale of seized Japanese alien property in this country to reimburse Americans for loss of their private property which could not be handled under this or other bills. Thus there are Japanese property in this country, Japanese resources in Japan, money or bullion that may come as reparations from Japan, or maybe seized by the United States in Japan.

Mr. JONKMAN. With your superior knowledge of that situation. what do you think of the chances of getting this $400,000,000 back from Japan?

Mr. JUDD. I do not think they are too good. Mr. Waring, has any been received, as far as you know?

Mr. WARING. Not that I know of, because the whole reparations matter has not been settled. There are not only the United States claims but McArthur's claims for occupation. You also have the claims of China and Australia, and the claims of French. Indo China, and the British for Singapore and Hong Kong, and the Soviet Union claims as well, also claims for the Netherlands Indies.

Mr. JONKMAN. Let me put the question this way. Assuming, as has been estimated, that the Philippine war claims for damage to