IN THE FIELD of industrial relations there is a well-known paradox to the effect that backwardness may open the way to leadership. That is to say, a completely archaic system may lend itself to radical change more easily, and with less capital loss, than one that may have been up-to-date only yesterday. Considerations of this nature enter into a comparison of the evolution of the Philippines under American leadership with that of the Netherlands Indies during the same period. At the time that the United States discarded the crumbling Spanish administrative machinery and made a fresh start, employing new methods and new personnel, in the Netherlands Indies, too, a renovation was initiated, which, however, could not be dissociated from the past. It is worth remarking that the political unity of those Netherlands East Indies which played such an outstanding role in world economy during the first four decades of this century was only very gradually established during the nineteenth century and was barely completed between i900 and i9io. The phrase "three centuries of colonial rule", implying that such a long period should have produced greater results, is accordingly unjust and unscientific; moreover, one cannot evaluate earlier periods by present-day moral standards. The element of truth, however, to be found in this phrase is that the Dutch people do have an Indonesian tradition several centuries old. Generation after generation have worked, married and settled in the Indies. They have acknowledged their descendants of mixed blood, so that. today at least 200,000 Netherlanders of mixed race regard Indonesia as their fatherland. Dutchmen have built up the social and spiritual capital which has given to the country its modern equipment; Dutch science has taken deep root in the Indonesian field. A true appreciation of these facts reveals that not merely colonialism, or imperialism, or capitalism is involved in the present insistence by a wide sector of Dutch political opinion on retaining the unity of the realm, though at the same time it is perfectly willing to reform the