16 September 1942
For a period of five months immediately before 16 Sept ivk2 when the movement of rearmed resistance began and rapidly gained momentum all over Mindanao, the provincial and municipal coffers were practically empty.
The financial problem, however, could not be side-tracked. The issue had to be met squarely. In the beginning, this problem solved itself in the form of voluntary contributions in cash or in kind, in the extensive and intensive food-production program; in the commandeering of equipment, foodstuffs and other supplies backed up with the official announcement that every item taken by the Army would be paid for and, finally, the printing of Emergency Currency Notes which paved the way for the stabilization of the economic life of the people.
Immediately after the surrender of the USAFFE in Mindanao on 10 May 192, the retreating unsurrendered USAFFE officers and men who found their way into Misamis Occidental, were taken for rations in a temporary camp at Barrio Guba, Clarin, where the provisions for soldiers were stored. When the supply was almost exhausted, instructions were issued to the men to return to their respective homes. Excepted were the personnel of the lst Company, PC, Misamis Occidental,
These movements were made upon orders of Maj FABIAN B. MEJIA, PC, Provincial Inspector for Misamis Occidental at the outbreak of the war. Major MEJIA did his best to alleviate the deplorable condition into which the unsurrendered officers and men were thrown.
Men Without Funds
Many of the soldiers and officers came from Luzon, Visayas and some from Mindanao. How were they to reach their homes in the absence of necessary transportation facilities? Most of them did not have any clothes except the tattered ones on their bodies. Most of them were not paid just before the surrender. Consequently, they had no money to spend.
They asked Maj MEJIA that they be paid their salaries for a month’s period at least, that of April 1942. The Provincial Inspector did not object to making payments provided proper vouchers were accomplished. The amount available was, however, inadequate, The situation of the men was so tight that they even went to the extent of going from house to house in order to get something to eat.
And then, a new turn of events developed – robberies and thieveries. The Provincial Civilian Retief Administration (CRA), a pre-war government entity, helped to remedy this deplorable state of affairs. Part of its funds was then allotted for the chartering of sailboats to return the officers and men residing of the Visayas and Mindanao to their respective home areas.
Then came 16 Sept 1942. Unsurrendered officers and men who had been laying low in the mountains and civilian volunteers from all walks of life including the men from the professions, flocked to the recruitment stations. The number of recruits increased to unexpected proportions and then, came the big question: How should the organization be maintained, especially in the matters of feeding the troops?
No Immediate Pay Assured
The militia Organization in the provinces of Misamis Occidental and Zamboanga were organized in the latter part of September 1942 into the Occidental Misamis-Zamboanga Sector with Maj MEJIA as Sector Commander. His greatest problem was the garrisoning of the different places under his sector and furnishing the men the necessary needs. These men were made to understand that there were no available funds as yet to pay them, and no steady supply of food with which to feed them. That the services they were performing were voluntary, at least for the present – although they could have plenty to expect in the future.
Major MEJIA, under instructions from FERTIG, disapproved the Commandeering of foodstuffs and other supplies. But despite the precaution taken, commandeering took its course and with it all the attendant evils.
Civilian Cooperation Sought
MEJIA called into conferences all the prominent people of the province of Misamis Occidental and caused the holding of community assemblies. Through these media, the people were informed of the sad state of the local treasuries and the imperative necessity of resorting to voluntary contributions in the form of cash or in kind. They were made to understand that the Army must be fed, if it must be expected to succeed at all. In clear, unequivocal terms the purposes and aims of the organization were stressed, the fight against the Japs and the suppression of lawlessness emphasized.
The point was well driven home; the people responded favorably. Committees were created in all towns composed of municipal mayors, municipal treasurers, secretaries, councilors and other influential persons. Voluntary contributions were properly receipted for by local persons and turned over to the municipal treasurer who in turn delivered the receipts to the corresponding army authorities. As the guerrilla movement grew, the same methods of appeal to the masses and manner of collection were adapted.
Emergency Notes Printed
In some municipalities in Mindanao, local governments printed very crude emergency notes in small denominations as medium of exchange the circulation of which was valid only within confines of the municipalities printing and issuing them. The purpose was served all right. The notes were in due time collected and put out of circulation.
One of Col FERTIG’s first acts when he assumed command of the Mindanao guerrillas was the activation of a section that was to take charge of the finances of the organization. He asked Capt CALIXTO DE LEON, an unsurrendered PA officer, later made Lt-Col, to organize it. Capt DE LEON set himself to the task.
Pay Scale Adopted
Capt. DE LEON organized a Finance Section but at that time, in the beginning, the only disbursement of funds authorized by the Commanding Officer was the payment of cash advance allowances to the officers and men effective as of 1 Oct 192, per GO #1-3, par 3, dated 14 Nov 1942:
Officers
Majors & Field Grades – $150.00 per month
Captains – 100.00 per month
lst Lieuts – 80.00 per month
2nd Lieuts – 70.00 per month
3rd Lieuts – 60.00 per month
Enlisted Men
Master Sergeant – 20.00 per month
First Sergeant – 18.00 per month
Technical Sergeant – 18.00 per month
Staff Sergeant – 15.00 per month
Corporal – 12.00 per month
Private 1st Class – 11.00 per month
Private – 10.00 per month
Later the Commanding Officer authorized the payment of $ .20 to each man per day for the purchase of viands and $ .25 for the purchase of rice or corn, Total for viands and rice or corn was later increased to $ .70 per man a day.
Voluntary contributions from the civilian population was finally stopped on 11 May 1943 by virtue of Circular #70, issued by Col FERTIG on which occasion he publicly thanked the loyal citizens who voluntarily and generously gave what they could for the maintenance of the soldiers.
Funds Allotted For Projects
Besides paying the cash allowances and cash rations for the officers and men, the Finance Officer disbursed funds, as specifically authorized by the Commanding Officer. Among these were the expenses entailed in the construction of an airfield, commonly known for security reasons as farm projects, the maintenance and operation of distilleries for the manufacture of oil and alcohol; and the operation of land and water transportation.
By 1943 the guerrilla movement in Mindanao had assumed an impressive magnitude in organization. Col FERTIG felt the time had come to make it imperative that money should by 211 means be printed. The growing undertaking, already attaining astonishing headway must be sufficiently and soundly financed.
The imminence of defeat before the time of surrender to the Japanese led the Philippine authorities to burn a great many of Philippine Treasury
Notes. Hence the USAFFE forces, especially those in the Visayas and Mindanao, were unable to receive monetary assistance from the outside. So it was necessary that President QUEZON issue an order to print Emergency Currency Notes for the various Visayan and Mindanao provinces. Consequently, President QUEZON authorized the printing of Emergency Currency Notes sometime in January 1942.
Money Printing Problems
Several provinces therefore were ordered to print currency notes usually in small denominations to relieve the situation they were confronted with. In the provinces there was very little equipment for printing. The principal center of the printing industry was Cebu and Mindanao. The supply of paper, printing ink and types were limited. There was no instructions for a uniform design and the only available photoengraving equipment outside of Manila was in the City of Cebu where the cuts for the Cebu Emergency Currency Board were made.
It was the plan to furnish Visayas and Mindanao with the currency notes issued by these Emergency Currency Boards.
A uniform water-marked paper was made by the Bais Paper Mills, Negroes Oriental, especially for the work. This paper was used by the Cebu Emergency Currency Board and the Mindanao Emergency Currency Board during the short time these boards functioned – that is, before Cebu was taken by the Japs in April and Mindanao in May 1942.
Jap Military Notes Circulated
Before the guerrilla forces occupied various areas in the Visayas and Mindanao, the Japanese Military Notes were being circulated along with the old Philippine Treasury Notes. This was the policy which was enforced by the Japanese Military Authorities.
All Philippine Emergency Currency was confiscated whenever possible by the Japs and those found with the Emergency Currency Notes were severely punished.
The guerrilla forces issued orders prohibiting the circulation of the Japanese Military Notes. It was therefore necessary in some localities that civil authorities issue emergency currency. This was done in some cases by means of amateurishly-made rubberstamps, wood engravings and printer’s type.
The emergency notes printed were small denominations such as ®.05, P.10 and R.20, They were printed by means of small printing press, typewriter or were mimeographed or with the simple use of hand stamp. In some provinces like Misamis Occidental, the balance of the unprinted and unspent money authorized to be printed by President QUEZON, were printed and circulated.
Emergency Note Printing Restricted
On 27 Mar 1943, Lt-Col FERTIG, by virtue of the authority vested in him as Commanding Officer of the Tenth Military District, by the Commanding General of the US forces in SWPA, issued a proclamation whereby he revoked the authority granted by the Provincial Boards of all provinces in Mindanao embraced in the Tenth Military District, to print Emergency Circulating Notes. And by the same authority, he revived the Mindanao Emergency Currency Board.
As the former members served the enemy or could not be located, it was necessary to appoint new members and these appointments were confirmed by the President of the Philippines on 10 Apr 1913, The members were composed of Judge FLORENTINO SAGUIN, Chairman; F.D. PACANA, Provincial Treasurer of Misamis Occidental and I. BARBASA, Auditor of the same province.
Currency printed by this board was legal tender and hence accepted in circulation throughout the guerrilla-occupied areas in Mindanao and in certain areas in some of the Visayan provinces. This relieved the tight financial situation. The emergency notes were circulated at par with the old Philippine Treasury Notes. Counterfeiting existed but in very negligible scale. Every effort was made by the Tenth Military District to curtail this evil.
Quezon Authorizes Twenty Million Pesos
President QUEZON authorized the printing of emergency notes in the amount of twenty million pesos and this amount was about covered in the subsequently printed emergency notes. Metal coins were practically out of circulation. The owners either hid them or if not, the Japs confiscated them.
The money needed by the Army and the existing provincial and municipal governments of Mindanao and Sulu for their expenses were advanced by the Mindanao Emergency Currency Board with the prior approval of the Commanding Officer of the Tenth Military District.
To lessen and minimize the expenses in running the local governments, municipal and provincial positions which were not absolutely necessary and could very well be dispensed with, were simply not filled in. Aside from this, only one-half of the salaries were paid, with the understanding that claims for the unpaid balance may be collected later under proper claims.
This arrangement was later modified and the paying of salaries was based on a table of graduated scale. No kick was registered as even the Tenth Military District personnel were receiving comparatively much less than the government employees.
Finance Officers Appointed
As sufficient funds became available, Division Finance Officers were designated in the different divisions then created whose duty it was to handle the finances of their respective divisions, and much later, each regiment designated its own finance agent officer.
In January 1944, the “A” Corps, Western Mindanao, was established consisting of the 105th, 106th, 108th and 109th Divisions. Lt-Col DE LEON remained as the Force Finance Officer while Maj BENJAMIN B. MERCA was designated Corps Finance Officer. In October 1944, a Force Auditing Section was organized headed by Lt SCHMEIKES and later by Lt S. S. SALVACION. This section was abolished in April 1945.
On 31 Mar 1945, the “A” Corps was abolished. Lt-Col CALIXTO DE LEGON was relieved as Force Finance Officer and assigned as Liaison Officer between the Headquarters Tenth Military District and the province of Sulu.
Before the President QUEZON left the Philippines in March 192, he created two central emergency currency boards – one in Cebu for the Visayan provinces and another in Dansalan, Lanao, under the name of Mindanao Emergency Currency Board or MECB.
First members of the MECB were Commissioner TEOPISTO GUINGONA, as Chairman; Mr. UBALDO D. LAYA, Provincial Treasurer for Misamis Oriental, and Mr. T. ALAGABAN, Auditor for the province of Lanao. This board functioned in Dansalan, Lanao, for about a month only, due to enemy invasion of Mindanao during the latter part of April 1942.
LAYA, under orders of General ROXAS, left Dansalan for Misamis Oriental on 1 May, 192. His place in the board was temporarily taken over by the Municipal Treasurer of Dansalan, JULIAN ABERILLA.
MECB has difficulties
Events happened after 1 May 1942. On 2 May 1942, the Japs occupied Dansalan. Information received by LAYA from SAM J. WILSON when they met in Talakag, follows:
WILSON from the Headquarters of Gen FORT at Bubong, Lanao, was to contact General ROXAS at Cagayan, but could not do so due to the blasting of the Cagayan bridge just when WILSON was about to cross it. The latter said that the MECB records, supplies and a few pieces of its equipment including a hand cutting machine, as well as some printed and numbered but uncut notes of RP 2,00 denomination had to be hurriedly evacuated from Dansalan in the dead of the night on 1 May 192 by truck toward Tamparan, Lanao, under the charge of DONATO DACUSIN, Treasurer of Sulu, who acted as Executive Officer and Secretary of the MECB. DAGUSIN was murdered by the Moros while on the way to Tamparan on or about 5 May 1942. WILSON who furnished this information did not make any mention as to what happened to the funds in the hands of DACUSIN. It was presumed however, that the money was taken by the Moro criminals.
The MECB resumed functioning for the first time at barrio Matugas, Misamis Occidental from 5 April 1943 to 26 June 1943 where a total of P 3,021,520.00 were printed.
The MECB encountered many hardships during its existence. The intense enemy patrols to locate the mint – and so the transfer from one place to another of the press and other printing paraphernalia – the dismantling, setting up and dismantling again – lack of food – sickness suffered by the personnel.
Yet somehow, the MECB acquitted itself more than creditably, doing wonderfully we1l in turning out the much-needed currency notes to finance the gigantic undertaking of running an Army of some 33,000 officers and men and of alleviating the conditions of the people of Mindanao as a whole.
Total economic collapse and disintegration of the guerrilla forces was definitely avoided.
Invasion by the enemy on 26 Jun 1943 of the province of Misamis Occidental caused the transfer of the printing outfit to Liangan, Lanao, where it began to function from 5 Sept 1943 to 1 Nov 1943; turning out a total of P2,689,00.00. At this time, Mr. UBALDO D. LAYA, former member of the MECB was requested by Col FERTIG to join. He reported on 5 Sept 1943 and immediately took charge of the work and supervised the printing.
Press Called “Rice Mill”
The printing press was called the “rice mill” to maintain secrecy. It was located at the edge of a forest. About it, Col FERTIG, in a personal note to Commander JOSEPH WILLINGHAM, USN, dated 18 Sept 1943, wrote:
“Our mint consisted of a small nipa shack in a cornfield, md I believe that it is probably the most unique mint now functioning under the supervision of the government of the United States.”
The Liangan site considered insecure, another transfer was effected, to Upper Agusan, this time up the Agusan River. In Esperanza, Agusan, printing started 13 Dec 1943 to 25 Jan 1944, where a total of P4,970,630.00 was turned out.
Enemy Seeks Mint Destruction
Enemy pressure caused transfer again to Loreto, Upper Agusan River, where work was resumed 15 Mar 1944. On 5 Jul 1944, for the first time the personnel of the mint discovered that printing money, though legally, was not at all heathy. Enemy planes swopped down, bombed and strafed Loreto. The first bomb hit and destroyed the personnel quarters of the mint; the second bomb fell on an empty house in front of the office building; the third fell way out of town and the fourth fell on the river bed just in front of Loreto. There were no casualties, however,
Total amount printed at Loreto up to 25 Oct 1944 was P3,651,445.00.
Total amount printed at Matugas, Liangan, Esperanza and Loreto up to 25 Oct 1944 – P44,342,995.00.
In Oct 1944, negotiations were made to set up “a branch printing press at Dipolog which was imperative due to increased enemy pressure in the province of Agusan and vicinity. This was also made to have the “A” Corps some accessibility to the mint. The press of ANGEL SOTTO was rented.
The work began in Sent 1944 un to April 1945, Over P7, 000,000.00 were turned out by this mint.
The printing of Philippine Emergency Currency is a Philippine Government undertaking. No army officers and men were employed with the exception of Lt-Col SAM J. WILSON who acted as technical adviser and liaison officer of the Philippine Government and the Tenth Military District.
Inflation Dangers
The subject of finance is interwoven with the economic problems which beset the guerrilla movement. Efforts were exerted to minimize the increasing difficulties of living, by rigid control of adverse economic factors.
Inflation of prices in the free areas. Sky-high prices of commodities of prime necessities was partly controlled by the organization of the Food Supply Administration on 23 Dec 1942 and the Trading Post Administration organized later, both under the control of the Director of Civil Affairs for the province concerned. The primary purpose of the FSA was the distribution of food and commodities to the civilian population at a reasonable and fair price by control of supply and distribution.
The personnel employed was granted limited police powers to enforce compliance with regulations issued by the Administration. A1l officers of the USFIP and the military police were required to assist in the performance of their duty. In order to coordinate the efforts of the FSA and
the USFIP, Capt LEON GATMAYTAN, former Superintendent of Schools for Misamis Occidental, was assigned on detached service with the Tenth Military District, as General Manager.
The FSA was authorized to buy all imports and to control the exports, In no case were exports allowed to get into enemy-occupied areas.
Trading Posts Established
The primary purpose of the TPA was the establishment of trading posts in each municipality to encourage the distribution of food to the consumer at a limited profit. Efforts were exerted to control the prices of the prime necessities of life like rice and corn.
Much later the FSA and TPA were entirely severed from all connections with the USFIP and made an entirely civil government undertaking. Mr. GATMAYTAN continued as its General Manager.
The workings of these organizations were far from perfect and their efficiency not faultless. Yet these entities had supplies and civilian population with food within their limited reach, and had saved the Army hundreds of pesos in the purchase of food which otherwise would have cost much more.
Farm Projects Sponsored
Community farms and Victory Gardens, poultry and hog raising projects, sponsored by the Army and civil officials, were intensified everywhere. In spite of the. presence of plant pests and animal diseases; floods and drought, and on top of it active enemy patrols which seemed to have conspired together during a period of turmoil and distress, the products produced improved the food situation impressively and led to the lowering of prices.
Carabao sleds, carts, sailboats and launches were some of the means utilized in the transportation of foodstuffs from one place to another. In two or three sectors, trucks were used but only for short distances as most of the roads and bridges were unserviceable – either blasted purposely in the early days of the war or destroyed by action of the elements, and never repaired.
Home Industries Encouraged
In all places, the civil government waged a campaign directly supported by the Army for the development of home industries.
Weaving was encouraged. Cloth was manufactured from cotton, ramie and abaca fiber. Finished products were in great demand which, of course, could not be met because of the limited production. Cigarettes, crudely manufactured, substituted for American brands – though a poor substitute, were in big demand. The biggest handicap was the lack of paper.
Salt, soap, coconut oil, and alcohol from tuba were produced in sufficient quantities to supply civilian and army needs. The intensified stimulus for the production of food products included the tending of home gardens, and the employment of unarmed soldiers in Army farm projects. It is consoling to note that even during the dark days, Mindanao had been able to share food with the adjacent areas in the Visayas, like Leyte, Cebu and Bohol.
INFLATION NO CONCERN OF JAPS
The enemy did nothing to check the rise in prices of commodities. The circulation of Japanese emergency notes in unlimited quantities and absolutely worthless, caused the sky-high rise of commodities.
At one time, the price of one cavan of palay was reported to have been no less than P1,000.00 in Cagayan and a little less in other Jap-held towns. The currency of the Japs was never accepted in the free areas. Yet, as the free areas were immediately outside the Jap-held towns, the inflation therein affected the guerrilla-held territory.
No Taxes Collected
Due to intensive enemy activity and the subsequent unstable factors affecting the living conditions of the people, little attempt was exerted by the civil government to collect any taxes, except in some cases in internal revenue tax collection on tobacco and market fees which, of course, is not worth mentioning.
Troop Morale Stimulated
The landing of the American Liberation Forces under Gen MACARTHUR on Leyte on 20 Oct 1944, closed the darkest period in the Philippine History.
Executive Order Noe 22, issued in Nov 1944, by President SERGIO OSMEÑA, published a new schedule of pay and allowances for officers and men of recognized guerrilla organizations. This had tremendous effect on raising the standard of living of the soldiers and officers, those who had spent three years in indescribable hardships, fighting the enemy in jungles end plains, rivers, lakes and seas; leaving family and other loved ones behind. This order raised the morale of all the people.
This, however, was not actually followed. Executive Order of the President dated 10 Mar 1942 was made effective. And so beginning 17 Apr 1945, the day American Forces started the Mindanao Campaign of Liberation, the officers and men have been paid in Philippine Treasury Certificates, commonly known as Victory Notes. The following schedule of salaries was followed:
Officers
Quarters
Rank Annual Pay Monthly Pay Allowance
Major General P16,000.00 P1,333.33 P200.00
Brigadier General 12,000.00 1,000.00 200.00
Colonel 8,000.00 666.67 200.00
Lieut-Colonel 7,000.00 583.33 200.00
Major 6,000.00 500.00 160.00
Captain 4,800.00 400.00 140.00
1st Lieutenant 4,000.00 333.33 100.00
2nd Lieutenant 3,000.00 250.00 80.00
3rd Lieutenant 2,400.00 200.00 60.00
Line and Medical Service Enlisted Men
Master Sergeant P1,032.00 P86.00 P16.00
Technical Sergeant 840.00 70.00 16.00
1st Sergeant 810.00 70.00 16.00
Staff Sergeant 720.00 60.00 16.00
Sergeant 612.00 51.00 12.00
Corporal 444.00 37.00 12.00
Private 1st Class 264.00 22.00 8.00
Private 216.00 18.00 8.00
The following represent the trial balance sheet for the Tenth Military District since its organization on 16 Sept 1942 to 31 May 1945:
a. RECEIPTS
Cash Advances from MECB P15,315,998.29
Cash Advances from FFO (Capt P. F. CEDDRAN, Actg FFO) 3,710,650.00
Cash Advances from the Provincial Treasurer, Occidental Misamis 923,000.00
Cash Advances from the Province of Lanao 1, 300,000.00
Cash Advances from the Province of Zamboanga 700,000.00
Miscellaneous 1,455.00
Plus: Transfer of accountability from Actg FFO & MECB 97,200.00 ______________
TOTAL P22,048.303.29
b. DISBURSEMENTS:
Cash Loan to American, Swiss and Other Foreign born citizens P29, 360.00
United States Pensioners 71,683.15
Cash Advances; Transferred Accounts;
SWPA Personnel; Army & Navy
Personnel; Reverted PC & USAFFE
Officers’ Allowance; Allotments;
Officers’ Additional Allowance;
American Officers’ Additional
Mess Allowance; and Miscellaneous
Accounts Receivable 11,387,306.10
Expenditures 10,331,015.62
______________
TOTAL P 21,819, 364.87
c. CASH ON HAND AS OF 31 MAY 1945 228,938 .42
______________
GRAND TOTAL P22,048,303.29-22,048,303.29
d. The expenditures of P10,331,015.62 were distributed as follows:
Hq 10th Military District P358,647.47
Force Radio Section 36,697.08
105th Division 1,212,131.28
10th Division 740,221.92
107th Division 565,044.24
108th Division 2,059,694.40
109th Division 2,186,740.21
110th Division 3,198,074.95
75th Inf, 7th Md 42,868.33
41st Inf, X Corps 174,550.60
125th Inf Regt 20,000.00
Provinces 165,941.40
Miscellaneous 168,518.20
___________
TOTAL P10,929,130.08
FINAL PHASE
Redemption Of Emergency Notes
The printing, issuance and disbursements of the Philippine Emergency Currency Notes were authorized by Commonwealth President MANUEL L. QUEZON, who, in turn, had the full authority to do so, empowered as he had been by the National Assembly of the Philippines, by virtue of the Emergency Powers Act.
The role played by the Philippine Emergency Currency Notes in the life of the guerrillas and that of the civilian population could not be less emphasized. The money circulated as legal tender and on the strength of the assurance of redemption after the termination of the emergency, has helped in no small measure in maintaining the economic stability of the people during the darkest period in their history.
Primarily, however, the basic employment of the Emergency Currency was in the war effort actively engaged in by the Mindanao guerrillas, especially in the gathering of intelligence information for the evaluation and use of Higher Headquarters. This phase, as time has proved, has been well-done and markedly successful.
It speaks well for the people – soldiers and civilians alike, that they accepted without reservation this form of monetary exchange, completely trusting in the rectitude of their own government and that of the United States.
Source: History of the Mindanao Guerrillas by the American Guerrillas of Mindanao (AGOM), Unpublished Manuscript.
