World War II Emergency and Guerilla Currency

INTRODUCTION

The outbreak of war in December 1941 brought about a vast increase in Philippine military and governmental expenditures, This in turn resulted in a critical shortage of coins and small denomination notes. The situation was further aggravated when Commonwealth President Manuel L. Quezon decreed an advance of three months' salary to all government employees. In effect this was a bonus, as all employees remaining at their posts were th receive their regular salary also.

Provincial treasuries, regional banks and commercial enterprises were all dependent upon Manila for their currency supplies. The deteriorating military situation soon made this impossible.

To provide the desperately needed currency - including fractional notes for small change - President Quezon created Currency Committees which were authorized to print emergency currency.

Provincial treasuries were soon called upon to pay for Commonwealth expenditures, and to ensure an adequate money supply. President Quezon authorized provincial governments to print currency if such could not be obained from currency committees already established. Even before such authorization, some provinces had, of necessity, resorted to the use of couponized checks.

All emergency curency issued under Presidential authority had the same validity as regular Philippine currency and was legal tender throughout the entire Philippines, regardless of where it was printed. Exchange rate was to stay at 2:1; 2 Pesos = 1 U.S. dollar.

There came into being to separate areas, the occupied and the unoccupied or free. In the occupied area only regular Philippine bank notes and and Japanese military currency was permitted to circulate. In free areas (excluding Luzon and Cebu) Japanese military currency was prohibited and emergency currency, outlawed by the Japanese, continued in circulation.

To finance the free civil governments and the guerilla military forces, currency was issued under various authority. Some was issued under military authority, and some under authority granted by President Quezon prior to his departure from the Philippines. But the majority of it was was printed by currency committees appointed by President Quezon via radio from Washington.

This post-surrender currency is often referred to as uerilla currency. However, all issues under presidential authority were officially designated by President Quezon as emergency currency. In theory it had the same validity as regular Philippine currency. In practice, such was not the cae. Although there was some inter-island acceptance, these currencies circulated primarily in the area of issuance, or in adjacent areas. Nor did the currency ever achieve acceptance on a par with regular Philippine bank notes despite penalties for discrimination against it. The prolific amount printed in some areas such as Panay (Iloilo currency) and Negros (Montelibano currency) resulted in successive depreciation until the notes were actually worth a tenth of their face value. Although not as severe, similar depreciation took place in other areas.

From catalogue