tydings-kosciasowzki law

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TitleEconomic policy in the Philippines during the Americancolonialperiod

Author(s) Lam, Yip-wai, Constant.; g—imPI.

Citation

Issue Date 1980

URL http://hdl.handle.net/10722/28002

RightsThe author retains all proprietary rights, (such as patentrights) and the right to use in future works.


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T H E i r m s m o r fiorG L O NG

E C O N O M I C P O L I C E I N T I E P H I L I P P I N E S D U R I N G

THE AMERICAN COLONIAL PERIOD

A DISSERTATION

Submitted to the Faculty of Arts

o f t h e U n i v e r s i t y o f H o n g K o n g

in Par ti al Pulfillraent of the R eq ui re me nt s

For the De gree

M a s t e r o f A c t s

(IN CCMPAItATITE ASI AM ST UD IE S)

B y

Constaxit

LAM

； Y i p - v a i

Hoi)^ Ko ng

A u g u s t 1 9 8 0


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I hereby declare that this clir;3ert3.tion ropresents

my ov n wo rk an d t na t it ha s no t nrevio vinly be en s::bmi tteci to

this or any othe r insti tut ion s in annlj.cation for a de cr ee ,

d i p l o m a , o r a n y o t h e r q u a l i f i c a t i o n .

Constant LAM Yi:o-wai)


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TABLE OF CONTEIWS

PREFACE vii

Chapter

X Intro ductio n * 1

The Formulation of the Economic Policy

in the Philippines during the Colonial

Per iod * 1

An Overview * * * * 11

II Tariff Policy

The Period of the Mi lit ar y Gover nment 20

The Period of Preferential Tariff 22

The Period of Qualified Free Trade

with the Unite d States 25

The Peri od of Com plet e Trad e

with the United States 26

The Commonwealth Tariff 27

Impact of the Tariff System on the

Philippines

III Inter nal Revenu e Pol icy 36

I n t e r n a l S e v e n u e Sy s t e m ( 1 8 9 8 — 1 9 0 5〉 37

The Inter nal Reve nue Law of 1904 J8

Modifications after the Inter nal Reve nue

Lav of 1904

42


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Chapter

I n t e r n a l R e v e n u e S y s t e m o f t h e C o m m o n w e a l t h

P e r i o d ¢ 1 9 3 5 - 1 9 4 2 43

I m p a c t o f t h e I n t e r n a l R e v e n u e S y s t e m

o n t h e P h i l i p p i n e s * 4 4

T V M o n e t a r y a n d F i n a n c e P o l i c y * 4 8

I n t r o d u c t i o n o f t h e G o ld E x c h a n g e S t a n d a r d • * * 49

Th e Establishnerrt of Cu rr en cy Re se rv e Fun d • 51

T h e E s t a b l i s h m e n t o f t h e P h i l i p p i n e

N a t i o n a l E a n k 5 4

T h e C o m m o n w e a l t h G o v e r n m e n t P e r i o d 6 0

I m p a c t o f t h e M o n e t a r y a n d F i n a n c e P o l i c y

o n t h e P h i l i p p i n e s * • • , *“ ** * * « * * •“ ** » » » • * » * » 6 1

Y P r o v i s i o n o f I n f r a - s t r u c t u r e a n d G o v e r n m e n t s

I n t e r v e n t i o n i n t o B u s i n e s s

6 4

The Roa d Sy st em * 65

R a i l r o a d s * & 9

P o r t I m p r o v e m e n t a n d I n t e r — i s l a n d S h i p p i n g 7 2

G o v e r n m e n t ' s I n t e r v e n t i o n i n B u s i n e s s 7 5

I n d u s t r i a l P l a rm ir ig i n t h e C o m m o n w e a l t h

Period 81

S u m m a r y a n d O b s e r v a t i o n . * * • « * “ • “ * * * * » • 8 5

VI La^id Po li cy

L i m i t a t i o n o n G r a n t s o f L a n d 8 9

The Sol uti on of the Fri ar Lan d Iss ue 90


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Chapter

Home steading 95

Land Regis trati on * 95

工mprovemeirt of Pr od uc ti on 97

Legislative Measur es Regul atin g

Landlord-tena nt Relat ionsh ip 98

Common wealth Land and Agricu lture Pol icy 99

Measu re to Allev iate the Landlo rd-te nant

Relati onship *»• 100

Purc hase of Land ed Est ate s 101

Expansi on of Cultivate d Land 102

Impact of the Land and Agri cult ural Pol icy

on the Phi lipp ines * 102

YI I Conc lusio n 106

Sources Consult ed 112


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L I S T O P T A B L E S

1

#

U S S h a r e o f P h i l i p p i n e E x p o r t s a n d I m p o r t s

f

1 8 8 9 — 1 9 4 0 5 0

2 , G o n M o d i t y D i s t r i b u t i o n o f E x p o r t T r a d e ,

1 8 9 9—19 3 7 5 1

3* T o t a l M i l e a g e o f R o a d s i n

Existence

1 9 0 7 1 ^ 2 5 6 7

4*

K i l o m e t e r s o f R o a d s B u i l t , 1 9 5 6 — 1 9 4 1 6 9

5* P e s o I n v e s t m e n t s i n M a n u f a c t u r i n g , E x p o r t - P r o c e s s i n g

I n d u s t r i e s a n d i n S u g a r P r o c e s s i n g , 1 9 0 2

一

1 9 J B

. .

B 4

6 » G r o w t h R a t e s o f P h i l i p p i n e I n d u s t r y , 1 9 0 2 — 1 9 3 8 . … 8 5

7# A v e r a g e Y i e l d P e r A c r e

一

P r i n c i p a l R i c o

G r o w i n g R e g i o n s 9 8

8* Statxis of Per son s Wo rk in g Fa rm s

( P e r c e n t a g e b y Y e a r ) 1 0 5


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in all the sense a colony or Imperial possession of the United

Sta tes . Wit h the passage of the Tyd ing s^: cDu ffi e Ac t in 19 54，

the Fili pin o elite wsus how eve r give n the po wer to fo rm the

C o m m o n w e a l t h G o v e r n m e n t o f th e P h i l i p p i n e s u n d e r t h e a u s p i c e s

of the Uni ted State s Pr esi de nt. The ten yea rs pe ri od fro m 1935 to

1 9 4 6 u n d e r t he C o m m o n w e a l t h g o v e r n m e n t w a s n o r m a l l y r e g a r d e d a s

a t r a n s i t i o n a l p e r i o d p r e p a r i n g f o r u l t i m a t e i n d e p e n d e n c e . T h e

C o m m o n w e a l t h g o v e r r m e n t w a s , h o w e v e r , n o t an i n a e p e n d e n t

g o v e r n m e n t a s f o r e i g n p o l i c y a n d n a t i o n a l d e f e n c e m a t t e r s o f

the Phi lip pin es were to be dec ide d b̂j the Co ngr ess of the

U n i t e d S t a t e s r a t h e r t h a n b y t h e F i l i p i n o t h e m s e l v e s

t

I n

a d d i t i o n , th e U n i t e d S t a t e s p r e s i d e n t h a d t h e r i g h t t o v e t o

act s pas se d by the Phi lip pin e Con^press. As a saxrvey of th e

c o l o n i a l e c o n o m i c p o l i c y , i t w o u l d n o t b e c o m p l e t e , t h e r e f o r e ,

wit hou t goin g beyond 1955 into the Comm onwe alth pe ri od .

M o r e o v e r , d u r i n g t hi s p e r i o d , th e F i l i p i n o g o v e r n i n g e l i t e s w e r e

give n the chance to decide on the Inter nal eco nom ic po li ci es

*

of the country* A review of this peri od wi ll show wh et he r the

vision of the Filipino elites on the development of the

P h i l i p p i n e e c o n o m y i s a m e r e e x t e n s i o n o f t h e f o r m e r c o l o n i a l

for eig n admin istra tors or oth erw ise . This may shed ligh t 011

t h e f u t u r e g o v e r n m e n t e c o n o m i c p o l i c y o f t h e i n d e p e n d e n t P h i l i p p i n e

n a t i o n .

My survey stops at 1942 whe n the Jap ane se inv ade d the

P h i l i p p i n e s * S i n c e a f t e r t h e w a r , t h e P h i l i p p i n e e c o n o m y v a s

i n t o t a l d e s t r u c t i o n a n d t h e f e w y e a r s p r e c e d i n g i n d e p e n d e n c e

v i i i


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was mainly concerned with reconst ruction and reh abi lit ati on, this

part of the history has less releva nce to my st ud y.

The prese nt wor k seeks to rev eal the co lon ia l econoniic

policies in the Philipp ines around five themes , na me ly , t ariff

policy (Chapt er 2) , internal revenue policy (C hapter

5

p r o v i s i o n

of infrastructure and government interv ention into b usin ess

(Chap ter 5) ajid land poli cy (Chapt er 6) . Due to the li mi ta ti on

of time, I regret that I have left out those publi c pol ici es

such as labour and educati on which are inore pe ri ph er al to the

e c o n o m i c s p h e r e

#

Howe ver, it cannot be aenied that these

policies affect the economic development of the Philippines

g r e a t l y .

The arrangement of the materials in this dis ser tat ion

is topical* This has the advant age of giv ing a mor e det ail ed a nd

coherent treatment of each topical econo mic policy* The dang er

is that the reader may lose sight of the overall view of the

whole perio d unde r consid eratio n. I try to brid ge this ga p by

givi ng a brief review of the issues aff ecti ng the vhol e perio d

in the introduc

七

ion chapter.

I am deeply gratef ul to Br L Wr igh t for his pati ent

superv ision and invaluable guidance giv en me all alo ng th is

work* I wou ld not have teen able to finish this wo rk wit hou t

m y w i f e , C a t h e r i n e ' s s u p po r t a n d e n c o u r a g e m e n t . F i n a l l y , t o a l l

of the lecturers and my classmates in the Comparat ive Asi an Studie s

Course who have given precious comments and ref res hin g idea s on

my draf t, I express my appreciation*

i x


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Chapter I

Introduction

The Forniiilatlon of the iLconomic Policy in the Philippines during

the Colonial Period

The economic policy of the Philippines during the colonial

p e r i o d w a s d e t e r m i n e d n a i n l y b y t he g o v e r n i n g p o l i t i c a l e l i t e s .

Bei n^ an agrarian soc iety, the masse s in the Phi lip pin es w ere not

organis ed and for centuries they vexe denied the opp ort uni ty

to participate in the poli tical sce ne. A3 a re sul t, mo st of the

economi c lecislations were formulated accordi ng to the in ter est s

of the American colonial administrators and the upper class of

the Philip pines so ciet y.

For the American colonial administrators

f

the economic

interests in this country had direct and indirect influence on

their economic decisions

•

The main view s of these group s were

express ed in the debates of the Amer ican co n f e s s in this pe rio d.

On the other han d, from 1907 and onward s, the Fil ipi no elit es

vere given the opportunity to participate in the governrient

through the Philippine Ass emb ly. The ir opinions were refl ect ed

in the assembly*

It is important to note that right fro m the beg inn ing

of the annexa tion of the Phil ippi nes , many Americ ans oppo sed

t h i s k i n d o f o u t r i g h t o c c u pa t i o n * P r e s i d e n t H c K i n l e y

1

s p r o p o s a l

of retai ning the Phili ppines was debated in a furi ous ma nne r in

the Congre ss and there was a tie betwee n those agai nst a nd those

for the annexatio n of the Philippi nes* Fin al ly, the an nex ati on


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2

deci sion was pass ed wit h only one vote more than the ne ce ss ar y

two-third minimum no te s. Immediately after the passa ge of the

annexation decision in 1899, some senators lobby for a promise

of eventual independence to the Phili ppine s. Agai n there was a

tie on the vote on this and the Yice -Pre side nt had to vo te

again st it to break the tie. In the Con gre ss, the Repub丄 icans

vere generally Xor the annexation decision and the Democrats

against it.

A deeper analysis of the interest groups for and against

annex ation and the promise of independence for the Fi li pi no people

will reveal that It is an argument not so much based on party-

lines but on econ omic int ere st,

1

Accordin g to Constantino the American Su gar nef ini ng

Com pany and the Suga r Trust haa become the sixth larg est cor por ati on

in the Uni ted S tate s in 1890

T

s and it contr olled 98 per cont o f

the Uni ted States sugar ref ini ng industry* It was alle ged to

have supported McKin ley's campa ign for Preside ncy an d man y other

sen ato rs. In order to

se cu xe chsa-psr rsiw su^jar fo r i ts cw n

"benefits, this corpo rati on backed the Pre sid ent in fa vo uri ng

the armcxation of the Philippines.

On the other hand, the su^ar grovers were generally

against the anne xati on. They feared that cheap importe d sugar

from the Philippin es vould endanger their economic in ter es t.

1

C o n s t a n t i n o

t

Rena to, A History of the Phi lip pin es, H ：

Monthly Review Press, 1975 PP 285 - 285


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3

S e n a t o r S a m

;

e l M c E n e r y r e p r e s e n t i n g t h e s u g a r g r o w e r s o f L o u i s i a n a ,

f o r e x a m p l e , w a s th e s t r o n g es t o p p o n e n t o f t h e a n n e x a t i o n .

If the debate on the annexation was confined to the

fev years at the turn of the centur y, the debate on the ind epe nde nce

on

o f t h e P h i l i p p i n e 3 d r a ^ g e d

A

fo r the whole perio d of the Am eri ca n

colon ial controls Aga in the basis of the debate was eco nomi cjl*

Those lobby ing for an early indepen dence of the

Phil ippi nes incluae the 19 beet growi ng states vh ich were rep res ent ed

b y t h e A m e r i c a n F a r m B u r e a u F e d e r a t i c n

t

N a t i o n a l G r a n g e , N a t i o n a l

G r o w e r s

1

As so ci at io n, Nat ion al Cit y Ban k of l\tew Y or k , the K id—

western Dairy man and Southern Parmers which were represented "by

the Watioiial Dai ry Union and the Nat ion al kilk Pro duc ts As so ci at io n,

t h e A m e r i c a n C o r d a g e I n s t i t u t e a n d t h e A m e r i c a n F e d e r a t i o n o f

L a b o u r , A l l t h e se g r o u p s f e a r e d t h a t i m p o r t e d s u g a r , c o c o n u t

p r o d u c t s , c o rd a g e a n d i m m i g r a n t l a b o u r f r o m t h e P h i l i p p i n e s v o n l d

compete wit h them and thus lover their pro fit abi lit y. The ir voic e

f o u n d s u p p o r t i n m a n y s e n a to r s - F o r e x a m p l e , S e n a t o r A u g u s t i n e

B a c o n w h o w a s r e p r e s e n t i n g t h e s u g a r g r o w e r s o f G e o r g i a , w a s t h e

s t r o n g e s t s u p p o r t e r f o r g r a n t i n g i n d e p e n d e n c e t o t h e P h i l i p p i n e s

as soon as possible.

2

A c c o r d i n g t o T . A . f r i e n d

9

t h e i n t e r e s t g r o u p s o p p o s i n g

t h e g r a n t i n g o f i n d e p e n d e n c e t o t h e P h i l i p p i n e s w e r e m a i n l y t h o s e

2

F r i e n d

f

T heod ore A*

t

' A m e r i ca n I n t e r e s t s a n d P h i l i p p i n e

I n d e p e n de n c e , ^ $2 $ • 1 95 5* i n P h i li p p in e S t u d i e s V o l . 1 1 ,

1

舛

5’ n o. 4, pp* 505 — 525 ‘


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A

Americ ans with vested investments in the Phi lip pin es, impo rte rs

and processors of tax-free Philippine products, manufaotiirers

and exporter s of products to the tax-free Phil ippi ne m ark et and

"the Americ an businessmen in the Phi lipp ine s. The y were repr esen ted

by organisations such as the American Public Utilities Company,

"Food Co mpa nie s a nd Sta nda rd O il , the Cham ber of Coranierce on the

Pacific Co助 t and the Ame ric an ChaiQter of Com merc e in th e P hi li pp in es .

The last organi sation has been known to be the strong sup por tin g

o r g a n i s a t i o n f o r G o v e r n o r - G e n e r a l f o o d ' s p o l i c y i n t h e P h i l i p p i n e s .

The debate on the suitable time for even tua l i nde pen asn ce

of the Philippines was highly relevant to the fornulation of the

econ omic policy of the Phi lipp ines in this perio ds Fo r those who

supported the early independence of the Phi lip pin es, they oppo sed

the entry of big Americ an corperat ion into the Phi lip pin es for

fear that more Amer ican direct investmen t in the P hil ipp ine s

would increase American involvement in the Philippines and th^se would

hinder the pace of early independence

t

T h i s is t h e b a c k g r o u n d

for the land lim itat ion law in the land pol icy of the P hi li pp in es

as descri bed in Chapter 6» Mor eov er, the Amer ican farm int ere sts

supporting the early independence of the Philippines for their own

benefits were strong opponents of free trade between the Philippines

and the Unit ed State s, The y argued that protect ive t arif f was

important in prot ecti ng domestic farm i nte rest s.

On the other hand’ for those who support ed the c ont inu ati on

of Amer ican rule believ ed that the poten tial of the Phi li ppi ne

mark et has yet to be rea lis ed. They thought it es se nt ial in


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5

attrac ting more American investment into the Phil ippi ne ma rk et .

The y therefo re support ed the move to lift the lan d li mi ta ti on

law so that more land could loe acquir ed by Am er ic an im per ial ist s

for economic inve stme nt. In addit ion, they gen era lly s upp ort ed

the conc entr atio n of more pow er in the hand s cf the G ov er no r-

Gene ral rather than the Filipino dominated Phi lip pine As se mb ly .

T h e r e f o r e

#

the America n Cha mber of Conimerce s upp ort ed Woo d* s

policy in diluting the power of the Filipin o pol iti cal elit es

dur ing bis admi nist rat ion in 1?21 - 1927* Th is wa s i mp ort an t

as the

？

ilipino eli tes were all uni ted by the comm on i de ol og y o f

figh ting for nationa l independence, Tney had pre pared to do thei r

utt er most in furthering their cour se, even at the expe nse of

sacrificing economic dev elopment by attractin g more for eig n inves t-

ment in the colony*

In this debate on the date of independence

for

the

Filip ino peo ple , the Republ ican party was gener ally aga ins t

grant ing early independence to the Philippi nes* The y exp ecte d a

longer period of probatio nary tutelage- The Demo cra tic part y wa s

how eve r more supportive of an early independence* The y agreed

that more politi cal power should be given to the Fil ipi nos and

this woul d assist the transition of power to the Fi li pi no s. Aft er-

ward s these two attitudes were reflec ted in the d iff ere nt atti tude s

of the United States Presidents towards the Philippine quest丄 on*

Ihiripg 1898 to 195 5, the onl y Pre sid ent from the De mo cr at par ty

was Woodrow Wilson from 1^15 to 1921

*

T h e G o v e r n o r - G e n e r a l F r a n c i s

Burto n Harris on appointed by Presi dent Wil son acted qui te dif fere ntly

from the other Governo r-Genera ls and his polici es vas for mul ate d


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6

m a i n l y f o r t h e p r e p a x a t i o n o f a n e a r l y i n d e p e n d e n t P h i l i p p i n e s n a t i o n -

Apa rt from the vie ws of the diff eren t economi c gro ups

rega rdin g the date of independe nce for the Phi li ppi nes , the pre vai lin g

ideolo gy in the Unit ed States also coloured the vie ws of the

d ec is io n- ma ic er s o f t he e c o no m i c p o li c y i n t he P h i l i p p i n e I n l a t e

19"th to early 20th century, in the economic circle there vas a

^jreat debate on the effect ive nes s of the laiss ez- fai re type of

economi c policy* The Progress ive Move ment in the Un it ed Sta tes

movem ent led by middle class an d supporte d by the lows r c lass

Coinin g c^oimd* Between 1903 and 1906, many new ma ga zi ne s, ca lle d

1

inuckral:e ma^ asi rie s

T

prom otin g labour righ ts and atta cki ng "big

b u s i n e s s e n t e r p r i se s l i k e th e K o r ^ a n - E o c k e f e l l e r N o r t h e r n S e c n r i t i e s

were pub

丄

ifhea, I、any intell ectuals were d rawn int o thi s mo ve me nt

and they be^art to questi on the effectiveneB S of the sel f-r eg ula tin g

force of thG free mark et eco nom y. They argued that the ma rk et wa s

distorted by the monopolised big business enterprises arid the

govern ment had to take a more active role in protec tin g the inte rest s

of the

丄

1 m a n

1

.

I n t h e P r o g r e s s i v e M o v e m e n t , a g r a r i an r e f o r m e r s a n d

conservationiats pushed new restraints on

七

he land ma rk et by end ing

t h e r a i l r o a d l an d g r a n t s a n d r e f o r m i n g th e h o m e s t e a d l a w s , R e s t r i c t i o n

on the sale of pu"blic land wa s ach iev ed by these g ro up s. La bo ur

gro ups on the othe r han d wer e able to force the governmerit to

i n t r o d u c e m o r e l a b o u r l a v s s a f e g u a r d i n g t h e i r i n t e r e s t s . T h e

P r o g r e s s i v e N o v e m e n t g a i n e d i t s f o r c e e s p e c i a l l y i n t h e p e r i o d

f o l l o w i n g t h e C i v i l W a x w h e r e s e v e r e a nd s o m e t i m e s p r o l o n g ^ d e p r e a s i o n

s t r u c k t h e U n i t e d S t a t e s , I n t h i s p e r i o d , m e m b e r s of t h e D e m o c r a t i c


17/127

. 7

Party were more sympathetic to the views 01 the Pro gre ssiv e Move ment *

i.iany Demo crats f avou red more govern men t inte rve nti on to reg ula te

the econom y and the Party adopte d the free c oinag e of si lv er as a

plank in its party platform a^ against the self-regula-ting gold

s t a n d a r d .

Ne ver th ele ss, the depr essi on at the tturn of the ce nt ur y

was ver y l)rief_ Izi gen era l, the Ame ric ans enjoy ed pro spe rit y* Th e

Republican party belieyed that this prosperity was due to the

success of the self-re gulatin g mar ket . The Progr essiv e m ove me nt

remained a force outside the g o v e n m en t bure aucr acy durin g 1897 to

1907 whe n the Hepubli cans controlled b oth the Congress an d the

P r e s i d e n c y ,

This situation changed when Taft and Wilson "became

presidents from 1909 to 1915 and 1915 to 1921, respectively.

Some historians claimea that Taft was basicall y a cons erva tive

Republican who had to succumb to the increasing force of the

P r o g r e s si v e M o v e m e n t . W i l s o n , h o w e v e r , w a s a s i n c e r e b e l i e v e r i n

some of the views in the Progress ive Movement* Und er his le ade rsh ip,

a Fede ral Trade Commis sion was establisheu to make the bi g b usi nes s

enterpr ises or trusts accountable for their deeds in cou rt• Wi ls on

also made many concession to the farming groups and the labour unions•

He also carried out an active conservation program me by est abl ish ing

a fed era l Water Pove r Commissio n to regulate private dev elo pme nt

of water poyer site s. Und er

似

ilsor^s term of pre sid enc y^ the

government intervened actively in the economy and public life of

t h e U n i t e d S t a t e s ,


18/127

8

The influence of the Ir^g ress ive Mov em ent was als o

r e f l e c t e d i n t he p o l i c y of t h e G o v e r n o r — G e n e r a l i n th e P h i l i p p i n e s ,

Ha rri son , the Govern or-Gen eral appoin ted by V/ilson, was gr eat ly

infl uence d by the trogressive Movemen t and he had su ppo rte d active

gov ern men t inte rven tion into the Phi lip pin e econoirsy. Hi s po lic ies

in this aspec t is desc ribe d in Cha pte r 5»

The survey of the factors contr ibut ing to the for mul ati on

of a part icul ar economio policy in the Phili ppin es wou ld no t be

complete without mentioning the influences of the Filipino elites

or the

*

iltistrado cl as s

1

*

The ilustrado class was the veal七 h y, p o l i t i c a l l y o u t -

standing and conscious

j

l i p i n o e l i t e s . A c c o r d i n g t o C w e n 3 , t h e y

w e r e d e s c e n d e n ^ s o f p r e - S p a n i s h d a t u s a n d C h i n e s e M e s t i z o s . T h e y

migh t be urb an tasbd or rura l based* The hace ndpr os

•

ca ci qu es ^Jid

pri nci pal a were members of the ilustra do class who had r ur al

power origin* They were unit ed by the same odu cat ion backtjround

and. pers onal clientele and we alt h. In gene ral

f

they mi ght be

called the uppe r class of the Phil ippi ne so ciety who inc lud ed

"big lan down ers , urban real estate owners and usu rio us mo ney le nde rs •

Bei ng sceptical of the Fir st Phil ippi ne Rep ubl ic led by

A g u i n a l d o , w h i c h h a d s e m i - p r o l e t a r i a n e l e m e n t s , t h e y s w i f t l y

turn ed to support the Uni ted States occup atio n of the Philip pin e

13*

T h e i r s u p p o r t f o r A m e r i c a n l e a d e r s h i p w a s f u r t h e r c o n s o l i d a t e d b y

the move of the Ameri cans to grant educ atio n opp ort uni tie s to a ll

F i l i p i n o s , W h e n c o m p a r e d w i t h t h e S p a n i s h r u l e , t h e A m e r i c a n s

^ O w e n , N o r m a n G * C o m p a d r e C o l o n i a l i s m : s t u d i e s o n

t h e P h i l i p p i n e s u n d e r A m e r i c a ^ k u l e

f

M i c h i g a n P a p e r o n S o u t h

and Southest Asia No, 3»


19/127

sudde nly became more bene vole nt. The conscio us pol icy of the

Americans to co-opt the ilustrado class into the political

ar en a als o pl ea se d the i lust ratio clas s •

This inten tional move of the Aner ican s to co-op t the

i lust ratio class into the pol iti cal proc ess was tak en as

impor tant signs of the 'good relat ions hip' betwee n the

col oni ser s and the Fil ipin o people* Thi s was need ed "by the

Amer ican s to shov that they ver e not suppre ssin g the Fi lip ino

society at large when they suppressed the revolutionaries of

the Fir st Phi lip pin e ^epu"blic- The ilus trad o cl as s, the

respe ctabl e class 211 the Philip pines soc iet y, on the other

ha nd , also sanctioned this move to bri ng about law and orde r

in the colony.

The appointment of the three Filipinos in the

Philippine Commission headed b y William Howard Taf t ^ as

indicative of the determination of the Americana to rely on

the help of the upp er class in ruling the colon y rig ht from

the start* IPhe thr ee me mbe rs we re

Jose Luzuriaga, a sugar planation ovner from the

island of Negro s, who fled to the U. S. Authoritos to

plea d for troops to occupy Ueg ros and to pro tec t

him and his fellow landowners fr om the re volutio nists

；

Benito Legard a, a Mani la landowner and moneyle nder who

openly expressed contempt for his own people; and Trindad

H_ Pardo de

Tavera

a landow ner and arist ocrat who w ant ed

U*S* state hood for the Phili ppine s and who founde d a


20/127

10

‘ subservient Federal Party to recruit Filipin os to serve

the U. S, regime and to^ convince those r esis ting conq uest

to give up,

Taft also helped to form the Federal Party of the

Philipp ines which controlled hy the Ame ric ans • Po lit ica lly ,

the Amer ica ns secured the suppor t of the ilus tra do cla ss b y

putting restriction on the voters fox the municipal off ic er s.

Acc ord ing to law, a vote r for munic ipa l off ice rs mu st "be ma le , at

least twenty-three years old, wit h addit ional requ ire men t of

holdin g office during the Spanish per iod , or pay ing a mi nim um

of fifteen dollars of tazes per annum or knowing English or

Spa nis h, This mea nt that voti ng was limi ted to the upp er class*

This restriction was not lifted until the passage of the Jones

Act which broadened the suffrage by cancelling "the additional

requ irem ents for a rrale voter* Th er ef or e, in the early A me ri ca n

col oni al per iod , the ilustraidq class was f irm ly en tre nch ed

p o l i t i c a l l y .

The ilustrado class of the Phi lip pin es rep res ent ed

the most conservative land-ow ning sector of the Social str uct ure ,

Their idea of economic progress was limited to

1

c o m m e r c i a l a n d

agricul tural changes that were not distu rbed b y ind ust ria lis ati on.

There was a consisten t unwillin gness o f the ilustra do cl ass to

increase taxation in the agricul tural sec tor as this wo ul d be

contrary to their economic inte rest s. Th ey ver e also reluc tan t

to pursue a more progressive i nternal revenue poli cy as they vo uld

not like thei r wea lth t̂ be taxed awa y. Mo re ov er , the ilus trad o

class we^. opponents of foreign in vestme nts in the Ph il ip pi ne s,

P o m e r o y , ¥ i l l i a n

+ +

J . , A n A m e r i c a n M a d e . S t r a g e d y , I n t e r n a t i o n a l

Publ ishe rs, Mew York , 1^74, h ” . ^


21/127

11

lest the invest ment of modern agricu ltura l enterpri ses in

the Philippines would compete with their own land interests and

they supported the land limita tion law for fore ign ent erp ris es

entering the Philippines,

The opposition of the IXustrado class to gre ate r for eig n

involvement in the Philippines coincided with their

coimioti

ideology of promoting Independence for the Phi lip pin es. Indep endenc e

was taken to mean the control of the government by the Filipinos, or

more specifically, the control by the ilustrado class.

All in all, the ilustr ado class vaa conser vati ve In

politics* The eDunomio poli cy formu late d during the Am er ic an

colonial period clearly reflected this tendency of the ilustrado

class*

An Overview

Immediately after the signing of the Treaty of Paris

cedi ng the Phili ppines to the Uni ted States* the war be tw ee n

the two natio ns began- This mark ed the mil ita ry rule of the

Philippines by the Ameri cans. During this per iod , 1&98 to

1901, much effort of the mili tar y gov ernm ent was spent on publ ic

constr uction wor k so as to facilit ate the sup pres sio n of the

resistent movement of the Filipinos*

Dur ing this pe rio d, Schiirman was a ppoi nted by Pr es id en t

KcKinley to look Into the situation of the Philippines and

recommend the most suitable form of governments The Sc hux man

report was published in 1900 which recommende d that the Phi lip pin es

should have its own separate finance from the Un ite d Sta te s, it

should also have its own self-supp orting finan cial str uct ure .


22/127

12

Schurman further proclaimed the policy of

M

to the people of

the Philippines"*

工ii this co nt ext , Taf t was ap poin ted as th e fi rs t

civil Gove rnor -Gen eral of the civil governm ent to rep lace the

mil itar y goverruoent in 1901 . This began the so- cal led Ta ft

era whic h lasted until Under Taft's dire ctio n

f

the

col onia l admin istra tors established a close and intim ate

alliance wit h the ilustra do class in runni ng the co lo ny

4

Taft himsel f was consci ous in selecting men who wou ld be as

orthod ox in matt ers as the A m e n ^ Taft saw the alli ance w it h the

ilustra do class as safe and suitable for the Ame ric an rul e. Du xi ng

T a f t

1

s ru le , the Spooner Act was passed gi ving the Pre si de nt of

the Uni ted States the power of appointing admi nis tra tor s to the

Phi lip pin es to fo rm the governonent. In 190 2

f

the Coop er Act

was passed allowing the Philippines to organise a popularly

elected Assem bl y. In 1900 the Partido Fede ral vas for med u nde r

the patronage of the Americans and the first Assembly election

was helti in 190 7. Obviou sly enoug h, the ilustrado cl ass got a

firm hold of the Assembly and this continued to the end of the

A m e r i c a n r u l e .

Ta ft , bei ng the son of the Secretary of War in Pre sid ent

G r a n t

*

s cabin et, had a brother work ing as lawyer for the J. P,

Mor gan "banking gr ou p, Taf t had sympath y with the peo ple of the

Progr essiv e Moveme nt but he was rather a conserv ative Rep ubl ica n»

He was eager during his administration to help the

entvy of

America n investment in the Philippines* He wanted the Phili ppin es

to becom e a profitable m arket for the Uni ted States

•

He mai nta ine d :


23/127

13

r

rh e p r o m o t i o n o f t h e ir m a t e r i a l a n d i n t e l l e c t u a l

wel fare w il l nec ess ari ly develop wants on -their pa rt fo r

t h i n g s w h i c h i n t i m e s o f p o v e r t y t h e y r e g a r d a s l u x u r i e s ,

vhich, as they grow more educated and as they grow

w e a l t h i e r * b e c o m e n e c e s s i t i e s . T h e c a x r y i n g o u t o f th e

p r i n c i p l e , " t h e P h i l i p p i n e s f o r t h e F i l i p i n o s " i n f i r s t

p r o m o t i n g t h e w e l f a r e , m a t e r i a l , s p i r i t u a l , a n d

intellectual of the people of these Islands is the one

course wh ic h can create any mar ket here' am ong the pe op le

f o r A m e r i c a n g o o d s5 »

D u r i n g t h e e a r l y y e a r s o f T a f t ' s g o v e r n a n c e o f t h e P h i l i p p i n e s >

h e f a c i l i t a t e d t h e e n t r a n c e o f A m e r i c a n t e x t i l e p r o d u c t s ,

A m e r i c a n i n v e s t m e n t s 111 r a i l r o a d , p u b li c u t i l i t i e s , m i n i n g

a n d s u g a r c e n t r a l s i n t h e P h i l i p p i n e s . H e a l s o p r o p o s e d t o r a i s e

t h e 2 5 > 0 0 0 a c r e s m a x i m u m l i m i t o f l a n d w h i c h c o u l d b e a c q u i r e d

b y a f o r e i g n e n t e r p r i s e f o r i n v e s t m e n t a s h e b e l i e v e d t h a t

t h i s l a n d l i m i t a t i o n l a w v a s i n i m i c a l t o m o r e f o r e i g n i n v e s t m e n t s .

G o v e r n o r - G e n e r a l

Lvike

W h i t e ( 1 9 0 4 - 6 )

t

H e n r y G . I d e

¢ 1 9 0 6

and Jam es P, Smi th (1906 -9) did no t alt er su"bstantially

t h e p o l i t i c a l a n d e c o n o m i c p o l i c y l a i d d o w n h y T a f t . M o r e o v e r ^

T a f t a c t u a l l y b e c a m e t h e P r e s i d e n t o f t h e U n i t e d S t a t e s f r o m

1909 to 1913 and surel y he wan te d his own po li cy to be ca rr ie d

o u t i n t h e c o l o n y •

T h e G o v e r n o r - G e n e r a l o f t h e P h i l i p p i n e s d u r i n g 1 9 0 9

t o 1 9 1 3 w a s C a m e r o n P o r b e s . A g a i n , h e d i d n o t a l t e r m u c h

t h e p o l i c i e s f o r m u l a t e d b y T a f t . H o w e v e r , h e p l a c e d m o r e

e m p h a s i s o n t h e d e v e l o p m e n t o f t h e i n £ r a - s t r u c t u r e o f t h e

P h i l i p p i n e s ( S e e C h a p t e r 5 ) a n d h e b e g a n to u s e t h e m o n e t a z y

r e s e r v e f u n d o f t he P h i l i p p i n e s i n w a y s d i f f e r e n t f r o m h i s

^ Q u o t e d f r o m A l f o n s o , O s c a r *

n

T a f t v i e w s o n 'The

P h i l i p p i n e s f o r t h e F i l i p i n o s ,

1 t T

A s i a n S t u d i e s ( D e c e m b e r ,

1 9 6 8 ) , p , 2 4 4 .


24/127

H

predec essors. This had great repercussion on the econ omy of

the Philippin es and this was dealt vith in Cha pter 4’ on the

monetary and finance policy of the period,

When Voodr ow Wilson succeeded as the Pr esi den t

of the Uni ted Stat es in 1913* He cons cio usl y tri ed to p-uraue

a policy towards Philippines different from the Republican

Par ty. He appointbd Francis Burton Harrison as the Go vern or-

General of the Philippines from 1913 to 1?21

*

Under tfilson,

he established free trade with the Philippines by the Underwood

Tariff Act (described in Chap ter 2) whic h was con gru ent wit h

the poli cy of the Democrat ic party* The Jones Act was also

passed in 1916 promising eventu al independence for the Si lip ino

people

•

Und er the same Act the poli tica l system of the Phil ipp ine s

was change d to give more polit ical power to the Fil ipi nos * The

Phil ippi ne Commissioii wa s repla ced b y a Ph il ipp in e Seriate and a

House of

liepre

s ent at iv

e s *

Suff rage was also "broadened.

Bei ng a Demo crat believing in the ideo lo gy of the

Progressive Move ment , Harrison thonght government interv entio n

vas essential in creating a "better society and could correct

the possible side-effects of the self-regulating mark et & r c e s .

Unde r Harrison's rule, he introduced many governm ent enterp rises

in the Phi lip pin es. The inter venti on of the gov ern men t into

the econom y was also enormo usly enlar ged . This was descrilDed

in Chapter 5_

When the Republican party won the presiden cy elec tion

again und er the term of War ren G* H axd ing and C alv in Co olidge

in 1921—5 and 192J-9 respectively, they changed a^ain

the

policy

of the Democratic Part y. President Harding appointed L eona rd


25/127

Woo d and W , Cameron Fortes to head a mission to inve stiga te the

econo mic situation of the Philippines immediat ely after the

return of &overnor- General Ha rri son ,

The mission reported that the insular currency va s

no longer backed by gold, the tank had over-extended its

credit and there was widesp read inefficiency in the gov ern men t

operat ed businesses* Man y Republicans tlamea this on the

D e m o c r a t

T

s p o l i cy o f i n c r e a s i n g t he g o v e r n m e n t ^ i n v o l v e m e n t

in busines s excessiv ely and the prematur a decision of giv in g

more polit ical power to the Filip ino s.

Presid ent Harding was therefore convinced tha t the

thili ppine s was not yet suitable for independence and h e

appointe d Wood to correct the situation in the Ph ili ppi nes ,

W o o d a r r i v e d i n P h i l i p p i n e s i n 1 92 1 as t h e G o v e m o r - G e n e r a l .

Wo od Was a staunch advocate of laisses- faixe

pri ncip les. He argued that the self-reg ulating ma rke t sys tem

should be restored in the Phili ppines as in the'Taft pe ri od .

He urge d the disposal of governm ent-own ed busines ses and

encoura ged the entrance of foreign cap ital to the is la nd s.

In repe ati ng the same argu merit, Wo od pled ged a chang e i n the

land limita tion law , Neverth eless this was neve r sup por ted h y

the ilustrado land-owning class.

The conflict ing view of Woo d and the Fi lip ino

poli tici ans culmi nated in the Cabi net Cris is in 1925* The

bitt ern ess betwe en the two parties corttinued un ti l Wo od di ed

in office in 1927*


26/127

6

At the beginning of the 1930

T

s

t

more Amer ican s bega n

七o feel more deeply that the Philippines was a liabil ity rat her

•than ail as set for the Unite d Stat es give n the fa il ur e of gr ea te r

investment in the Philippines and the unsuccessful effort in the

furt her expansion of the Philippine market for Amer ica n go od s.

As depression set in

t

farm and labour groups beg an thei r

campai gn to impose more tariff on imported agri cult ural

pro duc ts. They supported therefore an early or defin ite

independence for the Philippines

#

Fin all y, in 1935 the Ka re -

Haw es Cuttin g Act vas passed and later replac ed by the Tyd ing s-

McSuffie Act whic h was basically the same In pro mis ing the

exa ct date of indepe ndence for the Phili ppine s* It sta ted

that after one year of the enactment of the Act, the Philippine

Legislatu re was to call a constit utional conv enti on and

independen ce woul d be granted to the Phili ppines afte r a ten years

period of transitign*

T h e G o v e r n o r - G e n e r al s a f t e r W o o d g e n e r a l l y m a i n t a i n e d

good relat ions hip with the ilus trad o clas s, Tljey did n ot

introduce man y new economic policies in the P hilipp ines*

Hen ry L . Stimson (1928-9) for example lnd tried to sti mula te

again more foreign investment in the Philippi nes* Nev er the les s

not much progress va.s m a d e . H e a l s o e n c o u r a g e d t h e f o r m a t i o n

of co-operative farm ing in rural area, espec ially the re gio n

around sugar centrals so as to increase efficiency* Dw ig ht

Davi s (1929-32) after Stimson emphasised^ on the othe r ha nd , the

importance of diversifi cation of the Philipp ine eco no my . He

beli eved a viable independent'ec onomy was essent ial for the

future independent state* Theodor e Roos evel t,

Jr (1932-3) and


27/127

17

Frank Mu rp hy (193 3-5) did not introduce any nev idea on t he

economic development of the Philip pines. Their interest w as

mainly concentrate d on political matters rela ting with demo crac y

and suffrage.

With the establishment of the Commwea丄 th of the

Philip pines under President Maun uel ^ueson (1955- 44), the

Fil ipi nos fina lly gained full polit ical control of the

Phil ippi nes. Though the Unite d States still had sorer igniy

over the Philippines, the Filipino elites were able to pursue

man y econ omic policies at their own des ign . Thi s bro ugh t a

revi val of government intervention into the private busines ses*

The early years of the Common-wealth was marked loy increasing

socia l unrests* The Sakda lista Rev olt (1955) was the mos t

famous in the per iod . These happe nings had also pus he d the

Commo nwealt h government to adopt some more progressi ve econo mic

polici es to effe ct a more equitabl e social str uct ure . Unfort-una tely

r

the progressiv eneS3 of the Commonwealth gove rnment was fre que ntl y

in pape r on ly . Thi s could be seen in the rec ons tru cti on of the

inte rna l revenue policy in this peri od (Chapter 5)• It is

stri cksn ^ to note that during the Commonwealth per io d, the

Filipin o p olitical elites did not formulate any economic pol ici es

which were radical ly different from the colonial admi nist rato rs •

They remi ned as conservativ e as before

*


28/127

Chap ter II -

Tariff Policy

The tariff system introduced by the Americans in the

Philipp ines has been the most potent force in det ermi nin g the

future econo mic developmen t of the islands* Thr oug hou t the peri od

u n d e r s t u d y

#

the tariff system was und er the stricte st con tr ol of

the Uni ted Sta tes goveimme nt, name ly in the han ds of the C ong res s

and the President of the United State s. The mother c ount ry

consistently souît a policy to increase trade with the colony*

As most of the legislation conoerning tariff policy vas installed

by the imper ial cou ntr y, it is not hard to find eviden ce in the

Buts eûe nt disc ussio n that many; laws tended to favour Uni ted

S t a t e s

f

econo mic interest mor e than the Phili ppine s*

For the Philippines

thus» the fomrulation of the

tariff policy was a reflec tion more of exoge neaus t han ind ige nou s

factors* In the mother country , the Reptî can Part y was kno wn

to be a trad itio nal advocate of a protec tive tariff in fo rei gn

tr ad e. The Democ ratic Party* on the other ha nd , vas com mit ted

to a fre e trade policy* Nev er the le ss, these stands weire not

str ict ly foll owed by party meabers* In the num erou s vot es on

tari ff lav s, ve find that the econo mic intere st of a p ar ti cu la r

group vas more effective in determining the voting behaviour

of a senator rather than his party allegiance* Amo ng the vari ous

pressure groups, the sugar and tobacco interests are of highest

sign ific ance . Whenev er new legislation hit the inte rest of these

t w o g r o u p s

f

severe opposition ensued* Thus Alfonso r ema rk ed,


29/127

19

Philippine tariff hopes (to reduce the ringley

rate) were felled by part y pol iti cs. But

opposition otherwise developed and was

manifested according to economic inte rest s

rather than along party lin es.

An ad di ti on al fa ct or whi ch deiieniiined th e "tariff po li cy of t he

Phili ppine s was the consideration of Chi na. The Uni ted State s

liad alw ays supp orte d a Open Door Poli cy

for

C hina and th is

atti tude was logicall y expected also in the P hil ippi nes *

In discussing the tariff policy of ±ho Philippine

isla nds, American-Philippines tariff policy was of pa ramo mit

importance especially after 1913 when the United States-

Philip pine trade was over 60 percent of all Phil ippi ne forei gn

tra de. Actua lly, the special Am eric an-Philippine tari ff

relations after 19〇9 shaped the subsequent economic devel opmen t

of the Philippin es^ With in a few ye ars time after fre e -trade

with the United

States,

Philippines beca me solely de pend ent on the

United State s mar ket for the sale of its prim ary prod ucts* At

the same *time

T

tr ade with other countries tende d to r etrea t

to the backgro und* The ensuing disc ussi on of ±he tari ff polic y

of "the Phi l ippines wil l therefo re follow the sev era l

2

distinctiv e periods of Philippine-American trade;

•j

Alfonsof Os ca r, M* Theo dor e Roosev elt a nd th e

Philip pines 1897-1909-’ Quezon City : Univers ity of Ph ilip pine s

P r e s s , 1 9 7 0 , p - 1 3 2 ,

2

The a bove periodi zatio n was ad opte d from A m ado

A* Cas tro 's classific ation in his article

r r

Philippine-J\merioan

Tariff and Trade Relations, 1$89-1954

t r

in the Ph ilip pine

E c o n o m i c J o u r n a l

t

Nurn"ber Sev en, Fir st Sa nes ter 19^5» V ol . IV ,

No.l pp. 29-57.


30/127

20

1. The period of the military gov er nm en t— Au gu st 20,

189 8 -to Ma rc h 8 , 1902*

2. The preferential t a r i f f — March 8, 1902 to August

1909*

3. Qualified free t r a d e — August 1909 to Ocrtoter

1913.

4* Complete free trade~ Oci;ober

3’

1913 to Nov emb er

1935-

5- Ths Commonwealth一 November 15, 1935*

The Period of the Miiitary

Government

During the initial occupation of the P hil ipp ine s,

the Ame rican s adopt ed a tariff s tructure ver y simil ar to "the

Spani sh schedule* In the Spanish sched ule, a bas ic

t

specific

duty on imports was levied at ten percent of the off ici al

valua tion of imported Gommodity, In addition the re wa ^ a

two percen-t unlo adi ng "tax and a six perce nt ext rao rdi na ry

tax on imports which wore collectively termed as ad val or em .

To compl icat e the pictu re, there wer e also a ten p erc ent

ha rbo ur im prove ment tax inc luded in th e basi c -tariff and a

consumption tax , Little change was made 011 this schedul e

except that th e ad val or柳 was collected at a single rate of

six percent at this period.

This extraordinary -tax was levied ori gin all y in

1896 to finance Spanish military operat ions and it was appl ied

again st a tat le of fix ed Spanish off ici al valuaiiioxis* Th is

tab le was diffe rent from the ens use d to oolleci; Tsasic spe cif ic

duty on imports and was criticised for its arbi trar ines s t y

Americans*


31/127

21

The Americans^ h owever , wer e crit ical of "this Sp anis h

Schedule* They regarded it as regres sive becau se it impos ed

hig h rates on nec essi tie s as against the low rat es on luscuries*^

Sec ond ly, it was irratio nal thai; the same rate was lev ied on

ar-tioles of the same kind but of diff ere nt quality* Th e

calculation of the tariff was also criticised for its complexity

since each product was assessed, accordi ng to its com pon ent s

which each ma^f have different iax rates* Lastly , th e Americans

beli eve d that the tariff rate was too hi gh .

As a result, in June, 19〇0» a boar d of tar iff rev isi on

wa s ap poi nte d by Ge nera l Arthur MacArthxir to vfork out a m or e

satisf actory measure* After receivi ng the report from the "bcard

f

the Sec reta ry of War sent it "to all majo r bu sin ess gr ou ps in

Unit ed States for oommen%* After th is , it wag ena cte d by t he

Philippine Commission in 1901.

According "to Grunder and Livezey

t

"the "d es ir e t o

accord a sympathetic ear

to

interested America ns b eca me stan dard

p r a c t i c e

1

^ in future drafting process of Philippine tar iff mea sur es.

^ It was asse ssed that the effec tive tariff r at e on

rice was 1 8*2^ whil e the rate on prepar ed food wa s onl y 9*4

^

；

similarly, the rate on ooiiton cloth was 25 •够 wher eas s ilk was

taxed at 2 0 . o n l y . (Repor-fc of tiie Philippine Peac e Comm issi on,

S‘Doc. N o . 1 38

T

56th Cong., 1st sess*

f

1900, pp , 99- 100 , Quoted

from Gies ecke, Leonard F . History of American Econo mic Poli cy

in the Philippines During the American Colonial Period, 1900-19B5i

(Uni vers ity of Te xa s) , Univ ersi ty Microfilin Interna-tional 1975 p-62

5

〃 Garel A Grunder and Willi am E . Live zey

PhiXippinas

i

arid the U nited St ate s, Greenwood Pre ss, 1973- (First Pub lis hed :

1951) P. 106


32/127

22

Durin g this peri od, the leg al status of "the Ph ili pp ine s

was also c larifi ed in a series of Insula r cases heard in th e

Un it ed Sta tes Sup rem e Court in 1901- The cou rt decid ed, -that

the Phili ppine s wa s not a foreign "territory of th e Un it ed Stat es•

A s a r e s u l t , the U nit ed States tariff laws on fore ign imp ort ing

coun tries wer e not applicable to the Philippines* Ho we ve r, the

Court dec ided fu rther that thougji the Phili ppin es shou ld not

be con si de re d as a foreign "territory bat l ike Pue rto R ic o, xt

was not an "incor porat ed" state as the res t of -the Un it ed Stat es*

It fol lo we d thai; the Congr ess had the pow er 1;o re gu la te tr ad e

between the "incorporated'

1

and the "unincorporated， * states*

Aft er these decis ions , the congress wa s atle to re- ena ct th e

Phili ppin e "tariff act of Uovon ber, 15’ 1 9 0 U

The Perio d of Pref eren tial Ta riff

A s m e n t i o n e d a b o v e ,

七

he decisio n of the Sup re me

Court in the Insular Cases had place d the power of ena ct ing

tari ff laws in -the hand s of the Con gre ss of Un it ed St at es .

This sati sfie d mos t in terests in the Uni ted States "because fro m

"thence the Un ited States Congr ess had th e power to ma ni pul at e

trad e laws to favou r the local economic Interests*

The re-e nac ted Phil ippi ne Tari ff Act of 1901 "became

law on March 8

f

1^02* This Act soxxght to red uce the ov er al l

tarif f rat e of the Spanish Schedule on imports from all

co un tr ie s and th e re gr es si vi ty of "the sys-fcem. It al so a im ad

at the encou rag eme nt of "the use of mac hin es V lev yin g l ess

duty on imported farm maciiinery and the encouragement of the


33/127

5

impor tatio n of America n good s. On the other han d, the ex por t

duties of sugar and tobacco followed the old Spanish Schedule

whil e the duty levied on copra and hemp dou ble d. Fu rt he rm ore ,

a new expo rt tax was raised on r ice .

Apart from re~enact丄tig 七he above Phi lipp ine ta ri ff ,

t h e C o n g r e s s p a s s e d t h r e e o t h e r p r o v i s i o n s . T h e f i r s t o f

thes e provi ded for the payment of 75 percen t of the stan dard

M n g l e y r a t e s o f P h i l i p p i n e p r o du c t s e n t e r i n g t h e U n i t e d . S t a t e s .

The second prov isio n maintained that export duti es on P hil ip pi ne

goo ds destined, to the Unite d State s should be ab ol is he d and

inte rnal reve nue taxes on Anerica n goods coming into the

Phil ippin e marke t should also be remitte d to Am eri ca n pro du ce r.

Th

丄

5

；

was also applicab le to the Unite d State s where tax es and

dut ies col lected on Philipp ine imports should "be ref und ed to

the Phil ippi nes Treasury some time in the fut ur e. Th ir dl y, th e

Cong ress approv ed the extension of the Unit ed States coa sta l

shippin g law s to the Phili ppine s. The lack of Ame ric an ship s

how eve r ma de the applicat ion of the law impo ssi ble a nd su"bseq.uently,

the Congres s -voted for it3 postponem ent for sev eral tim es . U p

to the end of the Coloni al rule this law was never exer cise d

i n t h e P h i l i p p i n e s .

A s a p r e l i m i n a r y o b s e r v a t i o n , T h e P h i l i p p i n e T a r i f f

Act and the Congr ess decision remove d the fear of ma ny lo cal

sugar and tobacco farmers on the competition of imported cheap

Phi lipp ine sugar and tobacco as the Din gle y rate eff ect ive ly

barre d the entry of a large volum e of Phil ippin e su gax and

t o b a c c o . T h e G o v e r n o r G e n e r a l of t h e P h i l i p p i n e C o m m i s s i o n

had consis tentl y argued for a reduct ion of the 75 per cen t

Ding ley rate but of no a vai l.


34/127

24

On the other han d, the system of refundab le du ti es

bet wee n the Unite d States and the Phil ippin es actua lly b ro ug ht

a redu ction in the revenue of the Philippi ne Gov er nm en t, At

"the tim e wh en thi s law was passe d the ref und ed du ty co ll ec te d

by the Phil ippi ne Govern ment was very small as the imp ort of

sugar and tobacco to the Uni ted St ates was not grea t in amount *

However, the refund system of duties collected

for

U n i t e d

Sta tes' produc ts trou^ht loss to the rev enue of the Phi li ppi ne

G o v e r n m e n t

*

Phe refu nded exp ort du ty of go ods go in g to th e

U n i t e d S t a t e s w a s a c t u a l l y a. s u b s i d y f o r t h e c o r d a g e m a n u f a c t u r e r s

in Am eri ca beca use the major product s in dema nd in the U ni te d

Stat es at this period was hemp and coconu ts*

Between 1902 and 1909

，

n u m e r o u s b i l l s w e r e i n t r o d u c e d

in Con gre ss to reduce the tariff rate but none of these wo n

m a j o r i t y s u p p o r t . M o s t o f t h e o p p os i t i o n c a m e f r o m t h e U n i t e d

Stat es far m inter ests yho disapproved th e floo ding of t he

U n i t e d S t a t e s

1

s m a r k e t w i t h c h e a p s u g a r a n d o t h e r a g r i c u l t u r a l

pro duc ts fr om the Philippin es* ‘

In 1905» the Congr ess consi dered an other bil l to

rev ise the tariff system in fav our of Uni ted St ate s I nte res ts

throug h a recla ssifi catio n of cotto n goo ds to fa vou r th e

n a r r o w - w i d t h l o o m s o f t h e U n i t e d S t a t e s t o th e d o u b l e - w i d t h

loom s employe d in Surope* Thou ght the two goods wer e

prac tica lly the sam e, the TInlted States rega rded t he lat ter

looms as finished or seuii-finished material and charged it

wit h hig her duties* This again showed tbe prej udic e of the

C o n g r e s s i n t h e e c o n o m i c i n t e r e s t s o f t h e i m p e r i a l c o u n t r y .


35/127

5

The Period of RualUTied Free Trade with the United： States

An important consideration which deterred the

Unite d States from granting free trade to the Phi lipp ines

was the equality provi sion of the Treat y of Paris * The

Treaty stated that any concessions in favo ur of Ameri can

goods would automatically extend to Spanish go od s. This

treaty would be enforced up to 1909*

As the Treaty of Paris lapsed on August 5, 1909»

Presi dent Taft signed the Payne-Aldric h Taxlff Act wh ich

established quali fied free trade between the Unite d States

and the Phi lip pin es. It should te noted that the pas sage

of this Act was consistent with the views of President Taft

as far back as the days when he was Governor-general of the

Philippine Commission who had argued for a reduction of the

tariff so as to boos t trade bet wee n the Uni ted Sta tes and

the Philippines*

The Philip pine section of the Payiie-Aldrich la w

sanctioned the principle of free trade between the TTnited

States and the Philippines with the following qualifications ：

1* Sice was not on the free trade list*

2* An nua l quot as ware limite d on

cxgaxs 150>000,000

wrappe r and filler totacco 1,000, 000 lb s,

sugar 300,000 gro ss tons*

Not more than 20 percent of imported manufactured

goods from the Philippines should consis t of

foreign materials,

Free trade under the Philippine section of this

act accordi ng to Castro^ meant a reducti on of about $1 mi llio n

^ Castro

t

loc^ cit. , p p . 29 - 56‘


36/127

26

in the Phi lip pin e customs rev enu e. A new tariff schedu le f or

the Phil ipp ine s was set up and it was made with an un der st and in g

tha t tari ff pr oced ures sh ould be brought in line wi七h the syst em

in the Uni ted Sta tes . The Philippi ne duties on good s c omi ng

from ot her coun tries was thus charged on the new rate i n the

Phil ippi ne Tariff Act of 1?09. On the who le, the new sch edu le

charg ed luss tariff than the old tariff s truc ture .

In conc lusi on, the Philip pine tariff act ad mit ted

fre e of duty all Americans impor ts. A mode rate tariff w as

impose d on good s fro m other coun trie s. Sbcport of hem p co pr a,

to"baoco and sugar had continued to pay export taxes if it

was go ing to foreign countries except the United. St at es .

It should be noted that the Payne -Aldr ich Ac t was

"bitterly opposed by the Philip pine Eeside nt Commis sio ner s in

th e "United Stat es . The y "believed that in the lon g run th is

woul d "be hig hl y prejud ici al to the economic in ter est of th e

P h i l i p p i n e s . F i l i p i n o o p p o s i t i o n s w e r e a l s o c e n t r e d o n t h e

los s of reve nue du e to the imp osit ion of this neVr tari ff l a w .

The Perio d of Compl ete Free Trad e with the Unit ed State s

Comp let e free trade with the United. States sta rte d

wit h the en actme nt of the Under wood Tariff Act 011 Oct obe r 3 ,

191 3. Thi s act retained the Phil ippin e section of the

Pay ne-A ldri ch tariff with the remo val of the limi tati ons on

the qt^antitles of duty-free entry of sugar and tobacco to the

Uni ted Sta te s. Th e enactment of this lav repre sente d the

vic tor y of those people who had consi stentl y fought for fre e

t r a d e b e t w e e n t h e U n i t e d S t a t e s a n d t h e P h i l i p p i n e , n o t a b l y

Ameri can impo rters to the Philippines

會

.American exporters in


37/127

27

t h e P h i l i p p i n e s a n d t h e D e m o c r a t i c P a r t y . I t i s w o r t h w h i l e t o

n o t e t h a t t h i s A c t w a s p a s s ed w h e n V i l s o n , a D e m o c r a t , g a i n e d h i s

hold, of the Wh it e H ou se .

U n d e r w o o d T a r i f f A c t s t i p u l a t e d f u r t h e r t h a t r i c e

should be put in the free li st. Phil ippin e goods con tai nin g

more than 20 percent foreign material had to pay import duties

a s i n t h e p a s t . E x p o r t d u t i e s o n P h i l i p p i n e h e m p , s u ^ a r , c o p r a ,

a n d t o b a c c o s e n t to o t h e r f o r e i g n c o u n t r i e s w e r e a l so a b o l i s h e d .

In 1 916 , the Jones Act was passed to grant the

P h i l i p p i n e l e g i s l a t u r e t h e p o w e r t o e n a c t i t s o w n t a r i f f l a w s

w i t h a l l n a t i o n s o t h e r t h a n t h e U n i t e d S t a t e s o n t h e c o n d i t i o n

that it was appr oved "by the Pres iden t of the Un ite d St at es .

A c c o r d i n g t o C a s t r o , " t hi s r i g h t w a s n e v e r o f g r e a t

c o n s e q u e n c e a s o n l y s p o r a d i c a l l y w a s i t i n v o l v e d f o r t h e p u r p o s e

of mak ing tariff ch anges" and for the whol e period be fo re the

Com mon wea lth , "the Philippin e tariff was not systematically-

revis ed sinc e its enactment by Congre ss in 19 09."^

K

Th e

{

C o p ^ n w e a l t h T a r i f f

S h e G r e a t D e p r e s s i o n i n t h e U n i t e d S t a t e s d u r i n g t h e

thirt ies caused quite a lot of hard ship in the a gri cul tur al

s e c t o r * T h e p r o t e c t i o n i s t v o i c e b e c a m e l o u d e r a n d l o u d e r *

I n t h e y e a r s 1 9 5 0 — 3 2 n u m e r o u s t i l l s a n d r e s o l u t i o n s v e x e

p r o p o s e d

to

c u t o f f t h e p r e f e r e n t i a l r e l a t i o n s b e t w e e n t h e

U n i t e d S t a t e s a n d t h e P h i l i p p i n e s , G r a d u a l l y , m o r e p e o p l e i n

the United. States were persu aded by farm inte rest s to b el ie ve

that the colony was a tnixden or liability rather than an asset

7

C a s t r o * l o c j c i t , , p * 4 0 *


38/127

28

to the Uni ted S tates. Farm groups

dairy organisations and

domestic sugar producers concluded that the only way to restrict

Philippine imports was by cutting loose the tie between the United

Stat es and the Phi lip pin es. Aft er gra nti ng inde pen de nce , the ITnitecl

States had no responsibility to the colony and therefore was free

to place tariff barriers against Philippine impo rts.

The Hare-Hawes**Cutting Ac t was thus pass ed in De ce mb er ,

1932 whic h stated that the Phili ppin es wou ld be a Couanonwealth of

the Unit ed St ates for a transitional period of ten years befo re

full indepen dence. During the p e r i o d t h e tariff system "between

the Uni ted St ates and the Commonwealth w as fixed as follows :

1. All import and ex port bi lls should "be appr ove d

by the Presi den t of the Unit ed States*

2* Th e 1 imitatio ns on putl ic delit wer e to be fix ed

by the Congress,

J. A gradual export tax wa s to "be im po se d on the

Philippine exports to the America maricet at the rate of 5 percent

of the regula r Unite d States duty for the sixth ye ox ; 10 per cent

on the seventh year and so on wit h 5 percent more eve ry yea r

unt il 25 perc ent of the Unite d State s duty was coll ecte d. Upon

ind epen denc e, the full Unite d States duty ^b b to "be collected.

4 , Annu al quotas were set on the follo wing pr oduc ts ：

Unrefined sugar 800,000 long torts

Refined sugar 一 50,000 long tons

Coconut oil — 200,000 lo ng tons

Cordage — 5,000,000 pou nds .

Ebccessive Imports above the set quotas to the United

States should pay full import du ty. Ko provision was ho wev er made


39/127

29

on the limitation of American imports into the Philippin e isl and s.

Moreover, as the Act stated, the Commonwealth had no authority to

restric t imports of American pr oduc ts.

T^r political reasons, the Philippine legislature

rejecte d the Hare-Hav es-Cutti ng Ac t. Mawn uel Quezon then we nt to

the Uni ted State s to lobty more favou rable terms for the

Phil ippi nes. This resulted in the passing of the lyding s-McB affi e

Act on Mar ch 24 , 1934 which differed little the forme r Ac t

in its tra de provi sions*

There were' some mino r modificat ions to the quot as set

in the Tydings-McDu ffie Act after wards . For exam ple, the Jone s-

Costigan Ac t passed in Ma y, 1934 stated that sugar import s into

the United States were placed under a system of quotas to be set

by the Secretary of Agriculture* Acco rdin gly, quot a roug hly e ^ual

to that provided in the Tydings-McDuffie Act was set and became

retroactive to Janua ry, 1954* This caused wide criti cism fro m

the Filipin os* The Revenue Act of Ma y, 1934 (US ) on the other

hand imposed an internal processin g tax of 3 perce nt on each

pound of coconut oil and extended this to all Philippine oil

imp orts . This action also caused great dismay amo ng the

Philippine pe opl e. Lastly the Cordage Act of June 14， 935* relaxed

the quota of Philippine cordage to the absolute quota of 6,000,000

pounds for three years before the re-application of the q^uota

limi t set down T?y the Tydings- McDuf fie Ac t .

In 1937, Preeident Roosevelt and ftaeaon created a

Joint Preparatory Committee for Philippins Affairs to study the

trade rel atio ne between the Unit ed Stat es and the Philip pines *

Hie study culminated in the passage of the Tydings-Kocialkowski

Act in July 51 , 1959- The main idea of the Act inc lud ed the

sugge stion to extend the period, of adjus tmen t teyo nd the ten


40/127

5

yea rs peri od, and up to i9 60, and to replac e the scheme fey

increasing export duties by annual declining duty-free quotas.

Nevert heles s^ the recommendations of this Act were prac tise d

for only one year in 1941

•

When the Japanese occupied th e

island in 1942 , foreign trade of the Philip pines was vir tua ll y

at a standstill*

Impact of the Tariff System on the Philippines

The tariff system in the Philippines created the

dependence of the Philippines on the Uni ted Stat es, This coul d

te seen in the following table :

Ta"bXe 1

tfS Share o f Philip pine Exp orts an d Im po rt s, 1 889

- 1 9 4 0

8

Percentages

Total

Period

Trade Yea r E xpo rts Import s

188 9 - 19 08 23.7 1889

26

7

1902

40

12

1916 - 1925

62. 8 1908 52 •

1 7

(1910) (40)

192 6 - 19 55

71-4

1923-28

75

(1929)

(62)

195 6 - 194 0 72.9

1930-55

83

6 5

Thou^ti the figu res are no t exac tly com pa ra bl e, we can

see that the trade pattern of the Phil ippi nes was great ly aff ect ed

by its tariff law s. In the Ame ric an mark et atso rbed onl y

of the tota l expo rts . In 1908 it ros e to 32 pe rc en t due to

prefer ential trade . But after the intro ducti on of qual ifie d free

S o u r c e 8

；

Valdep enas, T.B* The Emer genc e of the Ph ilip pine

Piguxe in brac kets from Gran der & L iv es ey ,

o p . c i t . A p ' 2 1 2

：

Pctpy^ 丨TT7


41/127

trade with quota, expert to the United States rose to 5(^

in 1 9 H * The percentage increased greatly after the Und erw ood -

Simmo ns Free Trad e Ac-t provision in 191J to 70 per cen t in 192 0

and in 193 5. A direct result of thia was the dec lin e of trad e

with othe r coun tri es. This could "be seen in the Uni ted St at es

share of total trade which was only 25.7 in 1889-1908 bat jumped

to

7 2 . 9

during 1936-1940.

*Phe special tariff relati onship with t he Uni ted St at es

also "brou^it a stimulus to a number of primary products which

were in gr eat demsind in the American ma rke t. These were su ga r,

abaca^ copr a, coconut oil and tobacco prod ucts . Table 2.2 below

show s the distrilratioii of the dif fer ent p rim ary ex po rt cro ps fr om

1899-1937 in the export trade.

Table 2

a

Commodity Distritnution of Export Trade, 1899 - 1937

PercentaRea

Coconut Tobacco

Period Suga r Abac a Copr a Oil

Products

Total

1699 25.3^

53.8?£

4 .

豨

*

88.375S

1900-05

10.7

64.55

10.40 6.25 91.8 8

1904-0 9 14*35 59.25

14.1$ 3.45

91 .20

1910-15

18.75 59.35

25.25

9.80

93.15

1 9 H - 2 0

20.12

36.64

9

命

42

14-62^

9-17

89.97

1921-25

29.21

19.76 13.74

14.70

9.07

86 . 48

1928-50 54.10

16.06 11.56

12.40 2.70 76.62

1951-34

56.57

6.89

7.45

9.16

5.25

83 . 10

1955-57

38.20

12.63

10.76 11.93

4-0

77.52

Sources : Hug o Mil ler , Econo mic Condit ions in the EhlliPT>ine3

T

B o s t o n ,

1920 . Joint Preparatory Committee on Philip pine Af fa ir a,

Repo rt of J&y 20, 1938 Statistical Bul let in.

g

Quoted from : Vald epen as, op» c it. , p .

11

了


42/127

3

A s n o t e d b y O w e n ^

t

mutu al free trade of the Un it ed Sta te s

and the Phili ppine s did not benefit all produc ts expo rte d to the

U n i t e d S t a t e s f r o m P h i l i p p i n e s . F o r e x a m p l e

f

at the per io d wh en

t h e P a y n e - A l d r i c h A c t o f 1 9 0 9 w a s p a s s e d , t h e U n i t e d S t a t e s a l s o

began a sli曲 t downward revision of American duties 011 t h e i m p o r t s

o f a l l o t h e r c o x m t r i e s . T h i s r e d u c t i o n w a s c a r r i e d f a r t h e r a l s o

at the time when the Unde rwood Ta riff Ac t of 1913 wa s en ac te d.

Only unt il 1922 did the Uni ted Stat es raised tari ff on coco nut oil

a n d c o r d a g e t h r o u g h t he F o r d n e y - M c C u m b e r T a r i f f A c t .

The

peak of

t h e U n i t e d S t a t e s p r o t e c t i v e m o v e a g a i n s t f o r e i g n i m p o r t s w a s

the set ting up of a hig hly tariff wall in 1950 thro ugh the

Sm oot -H awl ey {Tariff* Ne ve rt he le ss , a"baca and copr a fr om al l

countries were never subject to tariff control and Philippine

exp ort of tieee two products wa s not bene fite d b y the free tra de

wi th the Uni ted Stat es as it stil l had to compete wit h oth er

c o u n t r i e s . T h i s e x p l a i n e d t h e a p p a r e n t g r e a t e r f l u c t u a t i o n s o f

these two prod ucts in Table 2* 2. It wa s ma inl y a res pon se to

i n t e r n a t i o n a l c o m p e t i t i o n a n d d e m a n d ,

4

As a res ult , Owen remark ed tha t it wa s "the ir oni es of

c o l o n i a l i s m t h a t p r e c i s e l y t ho s e P h i l i p p i n e p r o d u c t s w h i c h

c o m p e t e d w i t h A m e r i c a n g o o d s b e n e f i t e d m o s t f r o m th e i m p e r i a l

11

t a r i f f r e l a t i o n s h i p " . T h e p r i m a r y e x p o r t s f r o m t h e P h i l i p p i n e s

t o th e U n i t e d S t a t e s w h i c h b e n e f i t e d f r o m t h e t a r i f f r e l a t i o n s h i p

w e r e s u g a r

t

c o c o n u t o i l , c o r d a g e , t o b a c c o a n d e m b r o i d e r i e s . A l l

t h e s e p r o d u c t s e x p e r i e n c e d a ' g r e a t l e a p f o r w a r d ' a f t e r t h e y e a r

1922 vhen t h e y b e c a m e ' p r o t e c t e d ' p r o d u c t s in t h e A m e r i c a n m a r k e t .

Q w e n , N * G

f c

( e d ) C o m p a d x e C o l o n i a l i s m : S t u d i e s o n

the Philippines mider Ajnerican Rule

會

M i c h i g a n , 1 97 1

p. 109

11

O w e n , I b i d ,


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5

The incre ase in export was more spectac ular for sugar* In 190 0

it earn ed only 5 million pe sos tut in 1954* its expo rt ea rni ngs

was 131 million peso s. Tobacco was the only produ ct whi ch did no t

prosper due to tariff protection because of the change of Ame ric an

consumer taste towards cigarettes.

The Btlmulation of the prote cted primary exp ort prod uct s

also generated an I increase in their pro por tio n on the tota l acre age*

This problem wil l be discussed more thoroughly In Cha pte r si x.

Y e t

f

the most importa nt single impact of the tarif f

system had been on the economic devel opmen t of the Phi lip pin es,

As has alread y been note d, the tariff system in the Phil ippi nes

was in the fir m cont rol of the Uni ted Stat es govern ment* Th is

made the Philippine governme nt unable t o direct econom ic dev elo pme nt

of the isla nds by the mani pulat ion of the tariff struc ture-

Industrializatiorj "became qui te imp oss ibl e give n the

special tariff relatio nship between the Uni ted State s and the

Phil ippi nes. Given the free entry of all Unit ed States i mpo rt s,

the Phili ppine s just could not compet e wit h the indu stri al pr odu cts

of the TJnited Stat es whic h enjoyed the sca le of prod uct ion and

advance technology* Mor eov er, the Unit ed State s was bas ical ly

interested in se curing the Philipp ines as a supplier of raw

mater ial and a marke t for its indus trial prod ucts . This bei ng the

cas e, no effort was made to industri alise the economy of the

Philippines through taxiff revision*

Mor eov er, the limitati on on the use of foreign comp onen ts

in Philippine manufacturing products sending to the United States

prevent ed the Philippine s from devel oping indust ries simil ar to

Japan vhic h use d a lot of foreign raw mat eri als .


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4

T h e t o t a l r e s u l t s c o m b i n e d to c r e a t e t h e v u l n e r a b i l i t y

o f t h e P h i l i p p i n e e c o n o m y . I f w e c o m p a r e t h e m a j o r e x p o r t s o f

the Philippines at the end of 1941 to those of 1899, they were

pra cti cal ly the same : sug ar, copr a, coconu-t oi l, tobac co and

aba ca acc oun ted for about $Ofc of the tota l export* It is a cl ich e

t o r e p e a t t h e a r g u m e n t t h a t p r i m a r y p r o d u c t s a r e m o r e v u l n e r a b l e

t o p r i c e c h a n g e s a n d c a u s e d i n s t a b i l i t y i n t h e n a t i o n a l e c o n o m y .

But this is exa ctl y the case for the Phi lip pin es in the 19 40s *

T h e m a n y y e a r s o f f r e e t r ad e w i t h t h e U n i t e d S t a t e s

h a d a l s o m a i n t a i n e d a n d s h e l t e r e d t h e i n e f f i c i e n c y o f t h e p r o d u c t i o n

m e t h o d i n t h e P h i l i p p i n e s * T h e c a s e a t p o i n t i s s u g a r p r o d u c t i o n .

T h e c o s t o f s u g a r p r o d u c t i o n o f t h e P h i l i p p i n e s w . e s t i m a t e d a t

12

double the cost of production in J a v a , W h e n c o m p a r e d w i t h C u b a ,

t h e t o t a l p r o d u c t i o n c o s t p e r p ou n d f o r P h i l i p p i n e s w a s 1 . 1 1 c e n t s

wh ile it wa s only 5- 52 cents for Cuba.^"^

I agree wit h Owen that 'from a str ict ly ec on om ic

s t a n d p o i n t . . . A m o r i c a n t a r i f f p o l i c y h a s b e e n b e n e f i c i a l r a t h e r

t h a n d e l e t e r i o u s ' T h e b o o m i n t he p r i m a r y p r o d u c t s m a r k e t

had brou^it sulDstantial ecorjoroic gain to the who le eco nom y of the

P h i l i p p i n e s . T h e f a i l u r e o f t h e c o l o n i a l g o v e r n m e n t t o t a k e

adv ant age of this gain and to re- stru ctu re the eco nom y of t he

P h i l i p p i n e s , h o w e v e r , h a d g r e a t r e p e r c u s s i o n o n t h e f u t u r e

d e v e l o p m e n t o f t he P h i l i p p i n e s . F a c e d w i t h i n c r e a s i n g p o p u l a t i o n

12

O w e n

t

o p .

cit*

t

p.110

F i g u r e c a l c u l a t e d f r o m t h e U S T a r i f f C o m m i s s i o n , R e p o r t

No* ?3 appe ared in L.C* S tin e

，

l

T h e E c o n o m i c P o l i c y o f

t h e C o m m o n w e a l t h G o v e r n m e n t o f t h e P h i l i p p i n e I s l a n d s '

i n t h e J o u r n a l o f E a s t A s i a t i c S t u d i e s , V o l X, Mar. 1 9 6 6 p , 8

K O w e n , o p . c i t * , p* 1 1 1


45/127

5

and aggrav ating tenancy relationships» the Phil ippi nes, imme diate ly

after independence, was left to puzzle on how to cope with these

prob lems given its static and agrarian ec on om y.


46/127

Chapter III

Internal Hevenue P oli cy

The ma^or concern of the Ame ric an adminis trat ors in

running the newl y acquired colony of the Phili ppine s was to mak e

i t e c o n o m i c a l l y s e l f - s u f f i c i e n t . T h i s i m p l i ed t h a t t h e a d m i n i s -

trators should run the govern ment with the small est possi ble sum

of revenue and it would be most desirable if "the Philippine

Co mm is si on coul d create some surpl us in the "budget. Br oa dl y

speaking：, the fiscal po licy of t h e P h i l i p p i n e C o m m i s s i o n d u r i n g

the Ame ric an period from 1898-1 934 vas conser vative an d of

laissez-faire* type*

It is interesting to note that the Filipino il^istrados

consen ted to thin pol icy . They beli eved that an incr ease i n the

CL

bud get wou ld prob abl y imp ly^h eavi er ta x "burden on the m as they

wer e the? wel l-o ff sec tor and vere expe cte d to sh ar e a gre at er par t

of the tax burden

n

This perce ption was rein forc ed by the procl a-

mat ion of the America ns to replace the regr essi vene ss of the Spani sh

econ omic policy and create a just soc iet y. Sec ond ly, the Phi lipp ine

Ass emb ly believed that by keep ing the executiv e short of fu nd s, the y

could gain greate r control of the politica l appar atus* Thi s would

hel p in expan ding their power ajid fin all y the rea lis ati on of their

comm on goal of'pol itical independence*

F o r t he n e w l y c r e a t e d C o m m o n v e a l t h G o v e r n m e n t u n d e r t h e

auspices of the Ame ric an govern ment depar ted little at firs t

from the Internal revenue system designed for them by the f ormer

col onia l pow er. There were afterwa rds severa l mea sur es to mak e

the taxa tion system more progressi ve so as to pac ify the grea t

56


47/127

37

maj ori ty of the popul ation . How ever , the tax structu re to the

end of the Commonw ealth period differed i nsign ifica ntly from

t he A m e r i c a n p e r i o d .

Internal Revenue System (1898一 90^)

In this period the American "basically followed the

Spani sh system with some modifications * The Spani sh sys tem was

h i g h l y co m p l e x a n d a r c h a i c . M o r e o ve r # i t w a ^ g e n e r a l l y r e g r e s s i v e ,

Ihiring the Spanish period from 1894-95* the mos t Imp ort ant

source of direct taxes came from the cedula and its va ri an ts : the

Chin ese p oll tax and the trib utes from the wild tri bes

*

T h e s e

represented 58 percent of all Internal revenues collected* The

most important indirect taxes were receipts from the opium cont rac t

and the lotteries * Th^e provided 16*9 percent of al l in ter nal rev enu e

t a x r e c e i p t s ?

The cedula was a charge made for certi ficat es o f identit y*

Al l persons over the age of eigh teen , male and fem ale , wer e req uir ed

to pay for these certif icates* The re wer e six tee n class es of oeri;i-

ficates and it varied gener ally accordi ng to the income of the pe rs on ,

The gobernadoroilloa and ca^ega as veil as people of the chur ch w ere

exempted from the cedula tax* The Chines e poll tax was a di scr imi -

nato ry form of the cedula imposed on Chi ne se. It was gen era ll y

higher than the cedula on the Filipinos*

The Spania rds based o n the urbazia and in du st ri a ta xe s

to comp ute the ce dul a. The urbaiia was a tax on ur ba n ho us es an d

the Industr ia was a tax on indust ry and commerce* Ag ri cu lt ur al

products were exempted from t ax .

Laton "America n Inte rnal Reve nue Po lic y in the

P h i l i p p i n e s t o 1 9 16 " i n N o r m a n G . O w e n ( e d . ) , c d t ” p. 1 3 4 .


48/127

3«

The other major forms of indirect tax came from

"the sale of documentary stamps and the nat ion al lo tt er y.

The government monopolies of opium selling was also a major

revenue-producing item.

During the first six years of the American

administration of the Philippines, the military governm ent

suspen ded the contract for the sale of opium , lottery* and

min t charges for coinage of money* ¥i th the estab lis hme nt

of the civil government^ the urba na was reploced b y a tax o n

rea l es ta te . This became known as the land tax*

The land, tax was lev ied on both ur ban a nd r u x a l

real estates» It waa assessed at the rate of 1¾ percent of

the markeli value of the rea l estate* Once o f U r the la nd ta x

was imposed, the administrators found that the system was

hardl y work ing. In the first instanc e, land title in ru ral

are a was in utte r conf usion . Secondly* the process of app rai sin g

the land value was highly influenced by political and familial

fac tor s and was riot fair* Thirdl y^ the intr odu cti on of th e

taxa tion system on agricultural land was an inn ova tio n o f

the Amer icans this encountered nume rous objec tions fro n

the land- ownin g clas s. This land tax was susp ende d in 1906

and 1907 bec ause of lsad harvests and s tro ng res is ta nc e fr om

the ilustrado land-owing class . More impo rtant

f

the land

tax was a local rather than a nati onal tax and there va s

ample room for evasion by the landlords

他

0 simultaneously

were also the political domin

tydings-kosciasowzki law

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