The men who form the United States foreign policy are now surprised to find themselves faced with a serious problem in the Philippine Islands. After four years of independence, the Philippines are in a bad way.

The Communist supported Hukbalahap revolt in central Luzon is gaining popular following among the large landless agricultural class. Government controls designed to stop growing inflation have only hindered the progress of business. The treasury is empty, school teachers go unpaid, and large construction projects are at a standstill.

Almost two billion dollars of American money has been poured into the country since 1946, but conditions are still getting worse--not better. This is due primarily to the basic Philippine economy, which has retained its fully colonial status while the Islands moved to political independence.

Standard Does Not Rise

When the United States took over in 1900, it respected the full property rights of the tiny landowner class of the old Spanish colonial regime. With most of the land owned by a few landlords, the bulk of the population--the tenants and agricultural workers--has improved its standard of living little during the last 50 years.

Meanwhile, a 40 percent increase in population over the past 20 years means that the Philippines, an agricultural nation, must import food to stay alive.

By gearing Philippine economy to produce raw materials for an industrial American market, and by working through the old land tenure system, the United States could do little to prepare for a stable, independent Philippine economy.

On July 4, 1946, the U. S. pulled out of the Philippine Islands, leaving behind a democratic American-styled government. In the same year, however, passage of the Bell Act provided that Philippine trade would be directed toward the United States by tariff preferences, that the Islands' natural resources be open to U. S. businessmen on an equal footing with Filipinos, that the currency be pegged to the American dollar, and that Philippine profits and capital could not be moved to the U. S. without consent of the American president.

No Confidence, No Money

Actually, lack of confidence in the new regime has severely limited American business investment. But the presence of American business competition on an equal basis has stunted local business. Meanwhile the regime has stayed in power on the strength of U. S. government disbursements which provided relief food supplies, money for construction projects, and other necessities. Thus the only possible internal sources of permanent economic development--private enterprise and the Philippine government--have failed.

Now the Islands' government is in trouble. Inflation, resulting from unwise spending of American payments, has reduced the real income of rural and urban workers. They are becoming restive. As the Hukbalahap revolt became stronger, sudden military expenses drained the treasury.

Bell Report

The report of the Bell Commission, set up by President Truman to investigate a solution to Philippine economic problems, has just made its report. It recommends a complete house-cleaning of the government financial structure--severe tax revision, enforcement of minimum wages for all workers, and reapportionment of crop shares for tenant farmers. The plan recommends a pact of commerce and navigation which would further direct Philippine economy to prevent waste of the 250 million dollars of loans and grants to carry out the plan.

Philippine reaction to the plan has been more favorable than expected. So far the free Philippine press has placed the blame for the country's present position squarely on corrupt mismanagement of affairs by President Elpidio Quirino's government. The press has welcomed the Bell Commission as a means of lifting the country back to solvency, in spite of the many strings attached.

Threat of Rebellion

Maybe the Bell program is drastic enough to solve eventually the basic problem of the agricultural laborer and tenure--maybe not. Whatever positive action the U. S. government takes in the Philippines will be broadcast by Communists as another clear example of Western dollar imperialism.

But if American takes no action, the Philippine Islands will soon be ripe for a successful Communist-becked popular uprising. The United States will then be forced to put down the revolt with American troops and to establish martial law, or to give up the twenty-three military, naval, and air bases she holds in the Islands.